SCUDDER
INVESTMENTS(SM)
[LOGO]
- ----------------------
BOND/DOMESTIC
- ----------------------
Scudder Corporate
Bond Fund
Fund #308
Annual Report
January 31, 2000
For investors seeking a high level of
current income through investment primarily
in investment-grade corporate debt
securities.
A no-load fund with no commissions to buy,
sell, or exchange shares.
<PAGE>
Contents
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4 Letter from the Fund's President
6 Performance Update
8 Portfolio Summary
9 Portfolio Management Discussion
14 Investment Portfolio
18 Financial Statements
21 Financial Highlights
22 Notes to Financial Statements
26 Report of Independent Accountants
27 Officers and Trustees
28 Investment Products and Services
30 Scudder Solutions
2
<PAGE>
Scudder Corporate Bond Fund
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ticker symbol SCCBX fund number 308
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Date of Inception: o In a period of rising interest rates, Scudder
8/31/98 Corporate Bond Fund benefited from strong security
selection,
extensive diversification, and a neutral duration
strategy.
Total Net Assets
as of 1/31/00: o The 30-day SEC yield stood at 8.11% as of the end of
$40 million the period, compared to 7.57% on July 31, 1999.
o Over the twelve-month reporting period, the fund
finished in the top 31% of the "corporate debt funds
BBB-rated" category, according to Lipper Analytical
Services.^1
^1 Source: Lipper Analytical Services, Inc., is an independent analyst of
investment performance. Performance includes reinvestment of dividends and
capital gains. For the period ended January 31, 2000, Scudder Corporate Bond
Fund's Lipper ranking was 35 out of 141 funds for the six-month period and 41
out of 134 funds for the one-year period.
3
<PAGE>
Letter from the Fund's President
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Dear Shareholders,
The U.S. economy continued to exceed investors' growth expectations over the
past twelve months, capping the longest economic expansion in the nation's
history. While this remarkable environment was accompanied by equally impressive
performance from the domestic equity markets, it has not been favorable for
bonds. Strong economic growth and tight labor markets have sparked fears of
accelerating inflation. In an effort to fend off potentially excessive growth
that could harm the U.S. economy in the long run, the Federal Reserve publicly
cautioned investors and increased key short-term interest rates three times in
the second half of 1999. By January, the continued strength of the domestic
economy had raised fears that the Fed would be forced to raise rates several
more times in 2000.
We never like to see price declines, but as professional investment managers we
know that the bond market's ups and downs are inevitable. With the cyclical
nature of the fixed income markets as a given, we believe that the job of your
fund's management team is to seek high current income and the best total returns
(price changes plus dividend income) in all market environments. This means
exceeding the performance of our peers in rising markets and declining less in
falling markets. We believe that the fact that the fund has outperformed its
peer group average over the most recent reporting period is indicative of its
success in achieving this goal. For more information on the fund's strategy
4
<PAGE>
and management's outlook for the bond market, please turn to the Portfolio
Management Discussion that begins on page 9.
For current information on the fund and your account, visit our Internet Web
site at www.scudder.com. There you'll find a wealth of information, including
the fund's most recent performance, the latest news on Scudder products and
services, and the opportunity to perform account transactions. You can also
speak with one of our representatives by calling 1-800-SCUDDER (1-800-728-3337).
Thank you for your continued investment in Scudder Corporate Bond Fund.
Sincerely,
/s/Lynn S. Birdsong
Lynn S. Birdsong
President,
Scudder Corporate Bond Fund
5
<PAGE>
Performance Update
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January 31, 2000
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Growth of a $10,000 Investment
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THE ORIGINAL DOCUMENT CONTAINS A LINE CHART HERE
LINE CHART DATA:
Lehman Brothers
Scudder Corporate Corporate Intermediate
Bond Fund Bond Index*
8/98 10000 10000
10/98 10178 10217
1/99 10553 10423
4/99 10472 10382
7/99 10252 10224
10/99 10337 10403
1/00 10340 10347
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Fund Index Comparison
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<TABLE>
<CAPTION>
Total Return
Growth of Average
Period ended 1/31/2000 $10,000 Cumulative Annual
- ------------------------------------------------------------------------------------
Scudder Corporate Bond Fund
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<S> <C> <C> <C>
1 year $ 9,799 -2.01% -2.01%
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Life of Fund** $ 10,340 3.40% 2.39%
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Lehman Brothers Corporate Intermediate Bond Index*
- ------------------------------------------------------------------------------------
1 year $ 9,927 -0.73% -0.73%
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Life of Fund** $ 10,347 3.47% 2.43%
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</TABLE>
* The Lehman Brothers Corporate Intermediate Bond Index is a subset of the
companies in 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.
** The Fund commenced operations on August 31, 1998.
6
<PAGE>
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Returns and Per Share Information
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THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
ILLUSTRATING THE SCUDDER CORPORATE BOND FUND TOTAL RETURN (%) AND
LEHMAN BROTHERS CORPORATE INTERMEDIATE BOND INDEX* TOTAL RETURN (%)
Yearly periods ended January 31
1999** 2000
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Fund Total
Return (%) 5.53 -2.01
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Index Total
Return (%) 4.23 -0.73
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Net Asset
Value ($) 12.27 11.18
- ----------------------------------------------------------------------
Income
Dividends
($) 0.36 0.82
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Capital
Gains
Distributions
($) 0.03 0.02
- ----------------------------------------------------------------------
* The Lehman Brothers Corporate Intermediate Bond Index is a subset of the
companies in the Lehman Brothers Corporate Bond Index with maturities of less
than 10 years, calculated on a total return basis. Index returns assume
reinvested dividends and, unlike Fund returns, do not reflect any fees or
expenses.
Performance is historical and assumes reinvestment of all dividends and
capital gains and is not indicative of future results. Total return and
principal value will fluctuate, so an investor's shares, when redeemed, may
be worth more or less than when purchased. If the Adviser had not maintained
the Fund's expenses, total returns for the Fund would have been lower.
** The Fund commenced operations on August 31, 1998.
7
<PAGE>
Portfolio Summary
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January 31, 2000
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Diversification
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A GRAPH IN THE FORM OF A PIE CHART APPEARS HERE, ILLUSTRATING THE EXACT DATA
POINTS IN THE TABLE BELOW.
The fund remains focused
Corporate Bonds 65% on high-quality
U.S. Treasury Obligations 22% corporate bonds issued
U.S. Government Agency by companies with
Pass-Thrus 7% strong, stable cash
Foreign Bonds-- flows.
U.S.$ Denominated 4%
Asset Backed 1%
Cash Equivalents 1%
- ------------------------------------
100%
- ------------------------------------
- --------------------------------------------------------------------------------
Quality
- --------------------------------------------------------------------------------
A GRAPH IN THE FORM OF A PIE CHART APPEARS HERE, ILLUSTRATING THE EXACT DATA
POINTS IN THE TABLE BELOW.
Management increased its
U.S. Government Agencies & positions in both high
Treasury Obligations 28% yield issues and
AAA* 7% government securities.
AA 1%
A 22%
BBB 15%
BB 15%
B 11%
NR 1%
- ------------------------------------
100%
- ------------------------------------
* Category includes cash equivalents
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Effective Maturity
- --------------------------------------------------------------------------------
A GRAPH IN THE FORM OF A PIE CHART APPEARS HERE, ILLUSTRATING THE EXACT DATA
POINTS IN THE TABLE BELOW.
Over the last six
Less than 1 year 2% months, management has
1 through 5 years 38% decreased the
5 through 8 years 22% portfolio's weighting in
8 through 10 years 26% bonds with maturities of
Greater than 10 years 12% less than 5 years and
- ------------------------------------ more than 8 years, and
100% increased its position
- ------------------------------------ in intermediate- term
Weighted average effective issues.
maturity: 8.18 years
For more complete details about the Fund's investment portfolio, see page 14. A
quarterly Fund Summary and Portfolio Holdings are available upon request.
8
<PAGE>
Portfolio Management Discussion
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January 31, 2000
In the following interview, portfolio manager Robert S. Cessine discusses the
Scudder Corporate Bond Fund's strategy and the market environment during the
twelve-month period ended January 31, 2000.
Q: The bond market produced extremely weak performance over the past year. What
were some of the causes of this downturn, and how has it affected corporate
bonds?
A: Bond prices have been under significant pressure in recent months, but the
good news for investors in the fund is that corporate bonds have held up
relatively well in relation to Treasuries. The fact that growth in both the
United States and the overseas economies has come in well above expectations has
dampened bond market performance since early last year. Treasury yields began
1999 at slightly above 5%, reflecting the widely held expectation that growth
would remain tame and that deflation, not inflation, would be the market's
primary concern. As the year progressed, however, it became apparent that the
global economy would in fact be much stronger than expected. Asia staged a sharp
recovery, thereby removing one of the key factors that was supporting bond
prices. Commodity prices also staged a rebound, led by the surge in oil prices
to nine-year highs in January 2000. On the domestic front, continued gains in
the stock market helped fuel a 9% increase in holiday sales, and the gross
domestic product posted a strong 5.8% gain in the fourth quarter. Most
important, very low levels of unemployment sparked concerns that a sharp
increase in wage growth was inevitable. While actual evidence of inflation on
the consumer level remains spotty, the consensus among market participants is
that the Fed will be forced to raise rates on multiple occasions during the
course of this year. These factors have combined to create an extremely negative
environment for bonds. The yield on the benchmark 30-year Treasury issue, which
stood at 5.19% on January 31, 1999, rose to a peak of 6.75% by January 20, 2000.
Five- and ten-year Treasury
9
<PAGE>
notes were hit especially hard in the latter half of the period.
Corporate bonds did not perform well on an absolute basis over the past year,
but the sector did manage to outperform Treasuries. While a strong economy is a
negative from an interest rate standpoint, it can also provide a boost to
corporate earnings. This, in turn, provides a solid underpinning for corporate
bond prices. The sector has also benefited from its attractive yields in
relation to Treasuries and other sectors of the market. Although corporate bond
prices came under pressure during the third quarter as investors anticipated a
supply-demand imbalance arising from Y2K concerns, this fear ultimately proved
unfounded. As a result, the sector was able to rebound from artificially
depressed levels throughout the fourth quarter of 1999.
Q: How did the fund perform in this environment?
A: Over the twelve-month period ended January 31, 2000, the fund returned
- -2.01%, which trailed the -0.73% return of its benchmark, the Lehman Brothers
Corporate Intermediate Bond Index. According to Lipper Analytical Services, the
fund outperformed the -2.79% average return of funds in its peer group
(corporate debt funds BBB-rated) and finished in the top 31% of comparable
funds. We attribute the fund's strong performance versus its peers to good
security selection and our decision to maintain a neutral duration strategy over
the second half of the period.
Q: How is the fund positioned within the corporate sector?
A: We continue to focus on bonds issued by companies with strong, reliable cash
flows. The financial press generally focuses on the way a company's earnings
affect its stock price, but the strength and quality of earnings is also an
important driver of corporate bond prices. In managing the portfolio, we utilize
intensive credit research in order to avoid companies whose bonds can "blow up"
10
<PAGE>
due to low-quality earnings. Another benefit of this approach is that it has led
us to sectors that have done very well over the past year. In particular, we
have positioned the portfolio to benefit from the rally in the media and telecom
areas. Our holdings in bonds issued by Intermedia, Level 3, Qwest, and TCI were
strong performers. In addition, our position in the energy sector -- including
holdings in bonds issued by Apache, Barrett Resources, Louisiana Land and
Exploration, Conoco, and Petrogeo Services -- was boosted by the sharp rise in
oil prices.
Over the latter part of the period, we made a point to increase the fund's
diversification. This was accomplished by spreading the fund's holdings among a
wider range of sectors, and striving to limit its positions sizes in individual
bonds. We are confident that the fund's diversified mix of bonds issued by
companies in a variety of industries -- including utilities, financials,
retailers, and auto manufacturers -- will help it produce steady performance
over time.
Q: What was your strategy with respect to duration and credit quality?
A: Six months ago, we mentioned that we were in the process of reducing the
fund's duration in order to bring it to a neutral level with respect to its
benchmark. We accomplished this by trimming its position in bonds with the
longest maturities (20-30 years) and investing in intermediate-term bonds, which
we believed were more attractive from a risk/reward standpoint. Although
intermediate-term issues underperformed amid the bond market volatility that has
so far characterized this year, this decision has had a positive impact on fund
performance in the negative interest rate environment of the last six months.
As of January 31, the average credit quality of the fund's holdings stood at A2,
which was unchanged from the end of July. We achieved this rating by employing a
"barbell" approach, whereby we balanced our increased over- weighting in high
yield issues (which carry ratings of BB or
11
<PAGE>
below) with a larger position in bonds rated A or AA. The impetus for this
strategy has been our belief that high-quality investment grade bonds and high
yield issues offer better value than bonds that lie in between the two ratings
categories (such as those rated BBB).
Q: What is your outlook for the year ahead?
A: We believe that the bond market will remain unsettled well into 2000.
Economic reports should continue to have a significant impact on short-term
market movements as investors search for signs of incipient inflation. Until
there is a clearer indication that the Fed will be able to move away from its
current bias toward higher rates, we believe that bond market performance will
remain volatile. We will therefore maintain a neutral duration strategy until
the interest rate outlook stabilizes. In doing so, we intend to position the
portfolio to ride out the effects of further bond market volatility, while at
the same time providing the portfolio with the flexibility to increase the
fund's interest rate exposure once it becomes apparent that the Fed is finished
raising rates.
12
<PAGE>
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 offices across the United States and abroad.
The Adviser believes that a team approach benefits fund investors by bringing
together many disciplines and leveraging the firm's extensive resources.
Portfolio manager Robert S. Cessine 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 18 years of industry experience.
13
<PAGE>
Investment Portfolio as of January 31, 2000
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<TABLE>
<CAPTION>
Principal
Amount ($) Value ($)
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Repurchase Agreements 0.3%
- -----------------------------------------------------------------------------------
<S> <C> <C>
State Street Bank and Trust Company, 5.68%, to be ----------
repurchased at $103,016 on 2/1/2000 (Cost $103,000)* .. 103,000 103,000
----------
- -----------------------------------------------------------------------------------
U.S. Treasury Obligations 22.4%
- -----------------------------------------------------------------------------------
U.S. Treasury Bond, 5.25%, 2/15/2029 ..................... 950,000 791,322
U.S. Treasury Bond, 6.125%, 8/15/2029 .................... 1,450,000 1,380,212
U.S. Treasury Note, 5.5%, 8/31/2001 ...................... 3,125,000 3,073,719
U.S. Treasury Note, 6.125%, 12/31/2001 ................... 800,000 792,376
U.S. Treasury Note, 5.875%, 11/15/2004 ................... 2,100,000 2,030,112
U.S. Treasury Note, 7.5%, 2/15/2005 ...................... 500,000 515,235
- -----------------------------------------------------------------------------------
Total U.S. Treasury Obligations (Cost $8,621,685) 8,582,976
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
U.S. Government Agency Pass-thrus 2.5%
- -----------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., 5.75%, 7/15/2003 ----------
(Cost $1,025,610) ..................................... 1,000,000 957,660
----------
- -----------------------------------------------------------------------------------
Collateralized Mortgage Obligations 4.2%
- -----------------------------------------------------------------------------------
Federal National Mortgage Association, 6.5%, 3/1/2028 .... 1,375,243 1,277,686
Federal National Mortgage Association, 7.25%, 1/15/2010 .. 349,930 347,799
- -----------------------------------------------------------------------------------
Total Collateralized Mortgage Obligations (Cost $1,732,936) 1,625,485
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Foreign Bonds -- U.S.$ Denominated 4.0%
- -----------------------------------------------------------------------------------
PacifiCorp Australia LLC, 6.15%, 1/15/2008 ............... 1,000,000 896,640
Petroleum Geo-Services, 6.625%, 3/30/2008 ................ 500,000 455,970
Tembec Industries, Inc., 8.625%, 6/30/2009 ............... 200,000 195,000
- -----------------------------------------------------------------------------------
Total Foreign Bonds -- U.S.$ Denominated (Cost $1,702,720) 1,547,610
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Asset Backed 1.3%
- -----------------------------------------------------------------------------------
Automobile Receivables
First Security Auto Owner Trust, Series 1999-2 A3, 6%, ----------
10/15/2003 (Cost $500,000) ............................ 500,000 493,047
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
<TABLE>
<CAPTION>
Principal
Amount ($) Value ($)
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Corporate Bonds 65.3%
- ------------------------------------------------------------------------------------
<S> <C> <C>
Consumer Discretionary 2.8%
Finlay Fine Jewelry Co., 8.375%, 5/1/2008 ................. 250,000 225,000
Harrah's Operating Co., Inc., 7.875%, 12/15/2005 .......... 250,000 236,250
NBTY Inc., Series B, 8.625%, 9/15/2007 .................... 150,000 137,250
Tricon Global Restaurants, 7.65%, 5/15/2008 ............... 500,000 468,125
----------
1,066,625
----------
Consumer Staples 7.4%
Bass America Inc., 6.625%, 3/1/2003 ....................... 500,000 485,510
Fleming Companies, Inc., Series B, 10.625%, 7/31/2007 ..... 250,000 225,000
Pepsi Bottling Holdings, Inc., 5.625%, 2/17/2009 .......... 500,000 434,000
Phillip Morris Companies, Inc., 7.2%, 2/1/2007 ............ 400,000 374,368
Safeway Inc., 7.25%, 9/15/2004 ............................ 375,000 368,756
The Great Atlantic & Pacific Tea Co., Inc., 7.7%, 1/15/2004 1,000,000 949,960
----------
2,837,594
----------
Communications 11.5%
AT&T Corp., 6%, 3/15/2009 ................................. 250,000 222,318
Allegiance Telecom, Inc., 12.875%, 5/15/2008 .............. 250,000 277,500
Intermedia Communications, Inc., Series B, 8.875%,
11/1/2007 .............................................. 250,000 231,250
Level 3 Communications, Inc., 9.125%, 5/1/2008 ............ 250,000 230,000
McLeodUSA Inc., 8.125%, 2/15/2009 ......................... 500,000 450,000
Metromedia Fiber Network, Inc., 10%, 12/15/2009 ........... 175,000 175,000
Qwest Communications International, 7.5%, 11/1/2008 ....... 1,000,000 964,160
SBA Communications Corp., Step-up Coupon, 0% to
3/1/2003, 12% to 3/1/2008 .............................. 400,000 272,000
Sprint Capital Corp., 5.875%, 5/1/2004 .................... 500,000 479,800
Sprint Capital Corp., 6.125%, 11/15/2008 .................. 600,000 536,088
Sprint Capital Corp., 6.375%, 5/1/2009 .................... 650,000 590,896
----------
4,429,012
----------
Financial 13.6%
Bank United Capital Trust, Series B, 10.25%, 12/31/2026 ... 250,000 222,275
Capital One Bank, 6.57%, 1/27/2003 ........................ 250,000 241,175
First Union Institutional Capital II, 7.85%, 1/1/2027 ..... 1,000,000 922,400
Firststar Bank, 7.125%, 12/1/2009 ......................... 200,000 190,134
FleetBoston Financial Corporation, 7.375%, 12/1/2009 ...... 200,000 193,920
Ford Motor Credit Corp., 5.75%, 2/23/2004 ................. 500,000 468,070
General Electric Capital Corp., 7%, 2/3/2003 .............. 425,000 421,281
General Motors Acceptance Corporation, 7.75%, 1/19/2010 ... 350,000 346,521
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
Principal
Amount ($) Value ($)
- --------------------------------------------------------------------------------
Goldman Sachs Group, Inc., Series B, 7.8%, 1/28/2010 . 375,000 370,226
National Westminster Bank PLC, 7.375%, 10/1/2009 ..... 400,000 385,876
PNC Funding Corp., 7%, 9/1/2004 ...................... 200,000 194,800
Prudential Insurance Co., 6.375%, 7/23/2006 .......... 1,000,000 925,030
Salomon Inc., 7.3%, 5/15/2002 ........................ 350,000 348,341
----------
5,230,049
----------
Media 8.8%
AMFM Inc., 8%, 11/1/2008 ............................. 500,000 498,750
British Sky Broadcasting Group PLC, 6.875%, 2/23/2009 400,000 353,224
Charter Communication Holdings LLC, 8.25%, 4/1/2007 .. 500,000 460,000
Liberty Media Group, 8.25%, 2/1/2030 ................. 250,000 248,540
News America Holdings, Inc., 9.25%, 2/1/2013 ......... 500,000 541,820
Outdoor Systems, Inc., 8.875%, 6/15/2007 ............. 250,000 255,313
TCI-Communications, Inc., 8%, 8/1/2005 ............... 1,000,000 1,020,470
----------
3,378,117
----------
Service Industries 3.1%
Allied Waste North America, 7.375%, 1/1/2004 ......... 250,000 225,000
Cendant Corp., 7.75%, 12/1/2003 ...................... 500,000 494,605
Integrated Electrical Services, Inc., 9.375%, 2/1/2009 500,000 481,250
----------
1,200,855
----------
Durables 3.8%
Daimler-Benz NA Holdings, 7.375%, 9/15/2006 .......... 500,000 490,675
Ford Motor Credit Corp., 7.375%, 10/28/2009 .......... 500,000 488,350
Lear Corp., Series B, 7.96%, 5/15/2005 ............... 500,000 475,600
----------
1,454,625
----------
Manufacturing 0.6%
Radnor Holdings Corp., 10%, 12/1/2003 ................ 250,000 240,000
----------
Technology 3.6%
IBM Corp., 5.1%, 11/10/2003 .......................... 1,000,000 922,500
Xerox Corp., 5.5%, 11/15/2003 ........................ 500,000 463,800
----------
1,386,300
----------
Energy 4.5%
Barrett Resources Corp., 7.55%, 2/1/2007 ............. 300,000 278,850
Duke Energy Corp., 10%, 8/15/2001 .................... 500,000 517,220
Louis Dreyfus Natural Gas Corp., 6.875%, 12/1/2007 ... 500,000 446,895
Pioneer Natural Resources Co., 6.5%, 1/15/2008 ....... 400,000 335,272
Williams Gas Pipeline Center, 7.375%, 11/15/2006 ..... 150,000 146,124
----------
1,724,361
----------
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
<TABLE>
<CAPTION>
Principal
Amount ($) Value ($)
- ------------------------------------------------------------------------------------
<S> <C> <C>
Construction 0.6%
Nortek, Inc., Series B, 9.125%, 9/1/2007 ................ 250,000 236,250
----------
Transportation 0.9%
Delta Air Lines, Inc., 7.9%, 12/15/2009 ................. 100,000 96,138
Delta Air Lines, Inc., 8.3%, 12/15/2029 ................. 250,000 239,750
----------
335,888
----------
Utilities 4.1%
Cleveland Electric Illumination Co., Series B, 7.67%,
7/1/2004 ............................................. 600,000 585,161
Detroit Edison Co., 7.5%, 2/1/2005 ...................... 375,000 373,466
Houston Lighting & Power Capital Trust II, Series B,
8.257%, 2/1/2037 ..................................... 250,000 228,125
Niagara Mohawk Power Corp., 6.625%, 7/1/2005 ............ 400,000 378,244
----------
1,564,996
----------
- ------------------------------------------------------------------------------------
Total Corporate Bonds (Cost $26,280,208) 25,084,672
- ------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $39,966,159) (a) 38,394,450
- ------------------------------------------------------------------------------------
</TABLE>
(a) The cost for federal income tax purposes was $40,000,752. At January 31,
2000, net unrealized depreciation for all investment securities based on
tax cost was $1,606,302. This consisted of aggregate gross unrealized
appreciation for all investments in which there was an excess of value over
tax cost of $108,047 and aggregate gross unrealized depreciation for all
investment securities in which there was an excess of tax cost over value
of $1,714,349.
Included in the portfolio are investments in mortgage or asset-backed
securities which are interests in separate pools of mortgages or assets.
Effective maturities of these investments may be shorter than stated
maturities due to prepayments.
* Repurchase agreements are fully collateralized by U.S. Treasury or
Government agency securities.
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
Financial Statements
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities as of January 31, 2000
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets
- --------------------------------------------------------------------------------------
<S> <C>
Investments in securities, at value (cost $39,966,159) ................ $ 38,394,450
Cash .................................................................. 164
Receivable for investments sold ....................................... 3,044,142
Receivable for Fund shares sold ....................................... 12,396
Interest receivable ................................................... 682,451
Due from Adviser ...................................................... 458,321
------------
Total assets .......................................................... 42,591,924
Liabilities
- --------------------------------------------------------------------------------------
Payable for investments purchased ..................................... 2,179,254
Dividends payable ..................................................... 30,409
Payable for Fund shares redeemed ...................................... 23,972
Accrued expenses and payables ......................................... 159,356
------------
Total liabilities ..................................................... 2,392,991
- --------------------------------------------------------------------------------------
Net assets, at value $ 40,198,933
- --------------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------------
Net assets consist of:
Undistributed net investment income ................................... 25,511
Net unrealized appreciation (depreciation) on investments ............. (1,571,709)
Accumulated net realized gain (loss) .................................. (1,369,004)
Paid-in capital ....................................................... 43,114,135
- --------------------------------------------------------------------------------------
Net assets, at value $ 40,198,933
- --------------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share ($40,198,933 /
3,597,134 outstanding shares of beneficial interest, $.01 par value, ------------
unlimited number of shares authorized) ............................. $ 11.18
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
- -----------------------------------------------------------------------------
Statement of Operations for the year ended January 31, 2000
- -----------------------------------------------------------------------------
Investment Income
- -----------------------------------------------------------------------------
Interest ...................................................... $ 2,771,356
------------
Total income .................................................. 2,771,356
------------
Expenses:
Management fee ................................................ 253,396
Services to shareholders ...................................... 385,340
Custodian and accounting fees ................................. 42,186
Trustees' fees and expenses ................................... 26,313
Reports to shareholders ....................................... 9,247
Auditing ...................................................... 21,233
Legal ......................................................... 9,317
Registration fees ............................................. 36,820
Other ......................................................... 10,406
------------
Total expenses, before expense reductions ..................... 794,258
Expense reductions ............................................ (794,258)
------------
Total expenses, after expense reductions ...................... --
- -----------------------------------------------------------------------------
Net investment income 2,771,356
- -----------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- -----------------------------------------------------------------------------
Net realized gain (loss) from investments ..................... (1,369,004)
Net unrealized appreciation (depreciation) during the period on
investments ................................................ (2,191,253)
- -----------------------------------------------------------------------------
Net gain (loss) on investment transactions (3,560,257)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ (788,901)
- -----------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Period
August 31, 1998
Year Ended (commencement of
January 31, operations) to
Increase (Decrease) in Net Assets 2000 January 31, 1999
- ------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ............................. $ 2,771,356 $ 901,007
Net realized gain (loss) on investment transactions (1,369,004) 141,244
Net unrealized appreciation (depreciation) on
investment transactions during the period ...... (2,191,253) 619,544
------------ ---------------
Net increase (decrease) in net assets resulting
from operations ................................ (788,901) 1,661,795
------------ ---------------
Distributions to shareholders:
From net investment income ........................ (2,770,256) (901,007)
------------ ---------------
From net realized gains ........................... (63,549) (81,962)
------------ ---------------
Fund share transactions:
Proceeds from shares sold ......................... 16,709,082 36,901,098
Reinvestment of distributions ..................... 2,511,399 956,646
Cost of shares redeemed ........................... (12,114,708) (1,821,904)
------------ ---------------
Net increase (decrease) in net assets from Fund
share transactions ............................. 7,105,773 36,035,840
------------ ---------------
Increase (decrease) in net assets ................. 3,483,067 36,714,666
Net assets at beginning of period ................. 36,715,866 1,200
Net assets at end of period (including
undistributed net investment income of $25,511 ------------ ---------------
at January 31, 2000) ........................... $ 40,198,933 $ 36,715,866
------------ ---------------
Other Information
- ----------------------------------------------------------------------------------
Shares outstanding at beginning of period ......... 2,991,753 100
------------ ---------------
Shares sold ....................................... 1,433,580 3,063,041
Shares issued to shareholders in reinvestment of
distributions .................................. 217,346 78,297
Shares redeemed ................................... (1,045,545) (149,685)
------------ ---------------
Net increase (decrease) in Fund shares ............ 605,381 2,991,653
------------ ---------------
Shares outstanding at end of period ............... 3,597,134 2,991,753
------------ ---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<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>
- ------------------------------------------------------------------------------------
2000(a) 1999(b)
- ------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $12.27 $12.00
-----------------
- ------------------------------------------------------------------------------------
Income from investment operations:
- ------------------------------------------------------------------------------------
Net investment income .82 .36
- ------------------------------------------------------------------------------------
Net realized and unrealized gain on investment transactions (1.07) .30
-----------------
- ------------------------------------------------------------------------------------
Total from investment operations (.25) .66
- ------------------------------------------------------------------------------------
Less distributions from:
- ------------------------------------------------------------------------------------
Net investment income (.82) (.36)
- ------------------------------------------------------------------------------------
Net realized gains on investment transactions (.02) (.03)
-----------------
- ------------------------------------------------------------------------------------
Total distributions (.84) (.39)
- ------------------------------------------------------------------------------------
Net asset value, end of period $11.18 $12.27
-----------------
- ------------------------------------------------------------------------------------
Total Return (%) (c) (2.01) 5.53**
- ------------------------------------------------------------------------------------
Ratios to Average Net Assets and Supplemental Data
- ------------------------------------------------------------------------------------
Net assets, end of period ($ millions) 40 37
- ------------------------------------------------------------------------------------
Ratio of expenses before expense reductions (%) 2.04 2.55*
- ------------------------------------------------------------------------------------
Ratio of expenses after expense reductions (%) 0.00 0.00*
- ------------------------------------------------------------------------------------
Ratio of net investment income (%) 7.11 6.96*
- ------------------------------------------------------------------------------------
Portfolio turnover rate (%) 104 97*
- ------------------------------------------------------------------------------------
</TABLE>
(a) For the year ended January 31, 2000.
(b) For the period August 31, 1998 (commencement of operations) to January 31,
1999.
(c) Total returns would have been lower had expenses not been reduced.
* Annualized
** Not annualized
21
<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") which is registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), as an open end management investment
company and is organized as a Massachusetts business trust.
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 debt securities purchased with an original
maturity greater than sixty days are valued by pricing agents approved by the
officers of the Fund, whose 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 instruments 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 or
sub-custodian bank, 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
principal amount of the repurchase price plus accrued interest.
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code, 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.
At January 31, 2000, the Fund had a net tax basis capital loss carryforward of
approximately $425,000 which may be applied against any realized net taxable
capital gains of each succeeding year until fully utilized or until January 31,
2008, the expiration date, whichever occurs first.
In addition, from November 1, 1999 through January 31, 2000, the Fund incurred
approximately $909,000 of net capital realized losses. As permitted
22
<PAGE>
by tax regulations, the Fund intends to elect to defer these losses and treat
them as arising in the fiscal year ending January 31, 2001.
Distribution of Income and Gains. All of the net investment income of the Fund
is declared as a daily dividend and is distributed to shareholders monthly. 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 at least annually.
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.
Investment Transactions and Investment Income. Investment transactions are
accounted for on the trade date. Interest income is recorded on the accrual
basis. Realized gains and losses from investment transactions are recorded on an
identified cost basis. All discounts are accreted for both tax and financial
reporting purposes.
B. Purchases and Sales of Securities
During the year ended January 31, 2000, purchases and sales of investment
securities (excluding short-term investments and U.S. Government obligations)
aggregated $18,004,259 and $17,923,421, respectively. Purchases and sales of
U.S. Government obligations aggregated $26,238,054 and $20,080,465,
respectively.
C. Related Parties
Under the Investment Management Agreement (the "Agreement") with Scudder Kemper
Investments, Inc. (the "Adviser"), the Adviser directs the investments of the
Fund in accordance with its investment objective 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
23
<PAGE>
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 April
30, 2000 in order to maintain the annualized expenses of the Fund at not more
than 0.0% of average daily net assets. For the year ended January 31, 2000 the
Adviser did not impose any portion of its management fee amounting to $253,396.
Further, the Fund's reimbursement due from the Adviser for the year ended
January 31, 2000 amounted to $458,321.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
year ended January 31, 2000, SSC did not impose any of its fees amounting to
$29,137.
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 year ended January 31,
2000, 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 year ended
January 31, 2000, SFAC did not impose any of its fees amounting to $37,500.
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 proportionate share of assets owned by the Portfolios. No
Underlying Funds will be charged expenses that exceed the estimated savings to
such 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 year ended January 31, 2000, the
Special Servicing Agreement expense charged to the Fund amounted to $337,799.
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 year ended January 31, 2000,
the Trustees' fees and expenses of the Fund not imposed aggregated $13,500 and
the amount imposed aggregated $12,813.
24
<PAGE>
D. Expense Off-Set Arrangements
The Fund has entered into arrangements with its custodian and transfer agent
whereby credits realized as a result of uninvested cash balances were used to
reduce a portion of the Fund's expenses. For the year ended January 31, 2000,
the Fund's custodian and transfer agent fees were reduced by $1,200 and $1,204,
respectively, under these arrangements.
E. Line of Credit
The Fund and several Scudder Funds (the "Participants") share in a $1 billion
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, pro rata based on net assets, 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.
F. Plan of Reorganization
On February 7, 2000 the Trustees of the Fund approved an Agreement and Plan of
Reorganization (the "Reorganization") between the Fund and the Scudder Income
Fund, pursuant to which Scudder Income Fund would acquire all or substantially
all of the assets and liabilities of the Fund in exchange for redesignated
shares ("Class S") of the Scudder Income Fund. The proposed transaction is part
of Scudder Kemper's initiative to restructure and streamline the management and
operations of the funds it advises. The Reorganization can be consummated only
if, among other things, it is approved by a majority vote of the shareholders of
the Fund. A special meeting of the shareholders of the Fund to approve the
Reorganization will be held on or about July 13, 2000.
As a result of the Reorganization, each shareholder of the Scudder Corporate
Bond Fund will become a shareholder of the Class S shares of the Scudder Income
Fund and would hold, immediately after the closing of the Reorganization (the
"Closing"), that number of full and fractional voting shares of the Class S
shares of the Scudder Income Fund having an aggregate net asset value equal to
the aggregate net asset value of such shareholder's shares held in the Fund as
of the close of business on the business day preceding the Closing. The Closing
is expected to take place during the third quarter of 2000. In the event the
shareholders of the Fund fail to approve the Reorganization, the Fund will
continue to operate and the Fund's Trustees may resubmit the Plan for
shareholder approval or consider other proposals.
25
<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, 2000, the results of its operations, the changes in its
net assets and the financial highlights for each of the periods indicated
therein, in conformity with accounting principles generally accepted in the
United States. 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 audits. We conducted our audits of these financial
statements in accordance with auditing standards generally accepted in the
United States 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
audits, which included confirmation of securities at January 31, 2000 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
Boston, Massachusetts PricewaterhouseCoopers LLP
March 17, 2000
26
<PAGE>
Officers and Trustees
- --------------------------------------------------------------------------------
Lynn S. Birdsong* Kelly D. Babson*
o President and Trustee o Vice President
Henry P. Becton, Jr. Robert S. Cessine*
o Trustee; President and General o Vice President
Manager, WGBH Educational
Foundation Valerie F. Malter*
o Vice President
Dawn-Marie Driscoll
o Trustee; President, Driscoll Ann M. McCreary*
Associates; Executive Fellow, o Vice President
Center for Business Ethics, Bentley
College Gary A. Langbaum*
o Vice President
Peter B. Freeman
o Trustee; Corporate Director and John Millette*
Trustee o Vice President and Secretary
George M. Lovejoy, Jr. John R. Hebble*
o Trustee; President and Director, o Treasurer
Fifty Associates
Caroline Pearson*
Wesley W. Marple, Jr. o Assistant Secretary
o Trustee; Professor of Business
Administration, Northeastern *Scudder Kemper Investments, Inc.
University, College of Business
Administration
Kathryn L. Quirk*
o Trustee; Vice President and
Assistant Secretary
Jean C. Tempel
o Trustee; Venture Partner,
Internet Capital Group
27
<PAGE>
Investment Products and Services
- --------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
<S> <C>
Money Market U.S. Growth and Income
Scudder U.S. Treasury Money Fund Scudder Balanced Fund
Scudder Cash Investment Trust Scudder Dividend & Growth Fund
Scudder Money Market Series -- Scudder Growth and Income Fund
Prime Reserve Shares* Scudder Select 500 Fund
Premium Shares* Scudder S&P 500 Index Fund
Managed Shares* Scudder Real Estate Investment Fund
Scudder Government Money Market
Series -- Managed Shares* U.S. Growth
Value
Tax Free Money Market+ Scudder Large Company Value Fund
Scudder Tax Free Money Fund Scudder Value Fund***
Scudder Tax Free Money Market Scudder Small Company Value Fund
Series -- Managed Shares* Scudder Micro Cap Fund
Scudder California Tax Free Money Fund** Growth
Scudder New York Tax Free Money Fund** Scudder Classic Growth Fund***
Scudder Large Company Growth Fund
Tax Free+ Scudder Select 1000 Growth Fund
Scudder Limited Term Tax Free Fund Scudder Development Fund
Scudder Medium Term Tax Free Fund Scudder 21st Century Growth Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund Global Equity
Scudder California Tax Free Fund** Worldwide
Scudder Massachusetts Limited Term Scudder Global Fund
Tax Free Fund** Scudder International Value Fund
Scudder Massachusetts Tax Free Fund** Scudder International Growth and
Scudder New York Tax Free Fund** Income Fund
Scudder Ohio Tax Free Fund** Scudder International Fund++
Scudder International Growth Fund
U.S. Income Scudder Global Discovery Fund***
Scudder Short Term Bond Fund Scudder Emerging Markets Growth Fund
Scudder GNMA Fund Scudder Gold Fund
Scudder Income Fund Regional
Scudder Corporate Bond Fund Scudder Greater Europe Growth Fund
Scudder High Yield Bond Fund Scudder Pacific Opportunities Fund
Scudder Latin America Fund
Global Income The Japan Fund, Inc.
Scudder Global Bond Fund
Scudder International Bond Fund Industry Sector Funds
Scudder Emerging Markets Income Fund Choice Series
Scudder Financial Services Fund
Asset Allocation Scudder Heath Care Fund
Scudder Pathway Conservative Portfolio Scudder Technology Fund
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio Preferred Series
Scudder Tax Managed Growth Fund
Scudder Tax Managed Small Company Fund
</TABLE>
28
<PAGE>
- --------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
- --------------------------------------------------------------------------------
Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
Retirement Programs Education Accounts
Traditional IRA Education IRA
Roth IRA UGMA/UTMA
SEP-IRA
Keogh Plan
401(k), 403(b) Plans
Variable Annuities
Scudder Horizon Plan**+++ +++
Scudder Horizon Advantage**+++ +++ +++
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Closed-End Funds#
- -----------------------------------------------------------------------------------------
<S> <C>
The Argentina Fund, Inc. Montgomery Street Income Securities, Inc.
The Brazil Fund, Inc. Scudder Global High Income Fund, Inc.
The Korea Fund, Inc. Scudder New Asia Fund, Inc.
</TABLE>
For complete information on any of the above Scudder funds, including management
fees and expenses, call or write for a free prospectus. Read it carefully before
you invest or send money.
+++ Funds within categories are listed in order from expected least
risk to most risk. Certain Scudder funds or classes thereof 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.
29
<PAGE>
Scudder Solutions
- --------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
Convenient Automatic Investment Plan
ways to invest,
quickly and A convenient investment program in which money is
reliably electronically debited from your bank account monthly to
regularly purchase fund shares and "dollar cost average" --
buy more shares when the fund's price is lower and fewer
when it's higher, which can reduce your average purchase
price over time.*
Automatic Dividend Transfer
The most timely, reliable, and convenient way to purchase
shares -- use distributions from one Scudder fund to
purchase shares in another, automatically (accounts with
identical registrations or the same social security or tax
identification number).
QuickBuy
Lets you purchase Scudder fund shares electronically,
avoiding potential mailing delays; money for each of your
transactions is electronically debited from a previously
designated bank account.
Payroll Deduction and Direct Deposit
Have all or part of your paycheck -- even government checks
-- invested in up to four Scudder funds at one time.
* 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- Scudder Automated Information Line: SAIL(TM) --
clock electronic 1-800-343-2890
account
service and Personalized account information, the ability to exchange
information, or redeem shares, and information on other Scudder funds
including some and services via touchtone telephone.
transactions
Scudder's Web Site -- www.scudder.com
Personal Investment Organizer: Offering account information
and transactions, interactive worksheets, prospectuses and
applications for all Scudder funds, plus your current asset
allocation, whenever your need them. Scudder's site also
provides news about Scudder funds, retirement planning
information, and more.
30
<PAGE>
- --------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
Retirees and Automatic Withdrawal Plan
those who depend
on investment You designate the bank account, determine the schedule (as
proceeds for frequently as once a month) and amount of the redemptions,
living expenses and Scudder does the rest.
can enjoy these
convenient, Distributions Direct
timely, and
reliable Automatically deposits your fund distributions into the
automated bank account you designate within three business days after
withdrawal each distribution is paid.
programs
QuickSell
Provides speedy access to your money by electronically
crediting your redemption proceeds to the bank account you
previously designated.
For more Call a Scudder representative at
information about 1-800-SCUDDER
these services
Or visit our Web site at
www.scudder.com
Please address The Scudder Funds
all written PO Box 2291
correspondence Boston, Massachusetts
to 02107-2291
31
<PAGE>
About the Fund's Adviser
SCUDDER
INVESTMENTS(SM)
[LOGO]
PO Box 2291
Boston, MA 02107-2291
1-800-SCUDDER
www.scudder.com
A member of the [LOGO] Zurich Financial Services Group
Scudder Kemper Investments, Inc. is one of the largest and most experienced
investment management organizations worldwide, managing more than $290 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 over 80
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Financial Services 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 Financial Services Group. The Zurich Financial Services 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.
