Scudder
Classic Growth
Fund
Annual Report
August 31, 1997
Pure No-Load(TM) Funds
A fund seeking long-term growth of capital with reduced share price volatility
compared to other growth mutual funds.
A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
SCUDDER (logo)
<PAGE>
In Brief
o Scudder Classic Growth Fund provided a total return of 45.20% for the slightly
less than twelve month period (September 9, 1996 to August 31, 1997). This
return compares very favorably to the 38.08% total return performance of the
unmanaged S&P 500 Index for the same period.
o U.S. stocks provided outstanding performance as robust economic growth, strong
corporate earnings, and benign inflation created an ideal environment for high
quality, large company stocks -- the Fund's primary area of emphasis.
o Overweight positions in selected technology and finance issues -- two strong
performing stock sectors during the period -- were significant contributors to
the Fund's favorable performance, especially considering its relatively
conservative approach.
Table of Contents
3 Letter from the Fund's President 18 Financial Highlights
4 Performance Update 19 Notes to Financial Statements
5 Portfolio Summary 22 Report of Independent Accountants
6 Portfolio Management Discussion 24 Officers and Trustees
10 Glossary of Investment Terms 25 Investment Products and Services
11 Investment Portfolio 26 Scudder Solutions
15 Financial Statements
2 - Scudder Classic Growth Fund
<PAGE>
Letter From the Fund's President
Dear Shareholders,
We are pleased to present Scudder Classic Growth Fund's first annual report
to shareholders for the abbreviated fiscal period from September 9, 1996 to
August 31, 1997.
Your Fund has made a solid start during its roughly 11-1/2 months of
operation, as it significantly outperformed the unmanaged S&P 500 Index and
comparable growth funds. This is gratifying considering the Fund's relatively
conservative approach to investing in America's leading growth companies. A
complete discussion of your Fund's activities begins on page 6.
On the heels of several back-to-back years of strong performance by the
U.S. stock market, another year of outstanding performance is almost hard to
believe. Recent returns have exceeded by a wide margin the approximately 10%
long run average for U.S. stocks. Considering the recent strength of the market,
we believe it is especially important for investors to have realistic
expectations for stocks. While we expect the environment that has contributed to
the stock market's good performance to continue, double-digit returns may not be
repeated in 1998. Part of a sound approach is an adequately diversified
portfolio with exposure to small-cap, foreign, emerging market, and fixed income
securities in addition to large-cap U.S. stocks. Our representatives can assist
you with assessing your needs and determining the next steps to achieving your
long-term goals. Please feel free to give them a call toll-free at
1-800-225-2470.
For those of you who are interested in new Scudder products, we recently
introduced Scudder International Growth and Income Fund, which pursues a
yield-oriented approach to investing in international equities. The Fund seeks
to provide long-term growth of capital plus current income. Investors who desire
international exposure but wish to take a more conservative approach may
appreciate the Fund's emphasis on dividend-paying stocks of established
companies listed on foreign exchanges. For further information on this new fund,
please turn to page 25.
Thank you for your continued investment in Scudder Classic Growth Fund.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder Classic Growth Fund
3 - Scudder Classic Growth Fund
<PAGE>
Performance Update as of August 31, 1997
- -------------------------------------------
Fund Index Comparisons
- -------------------------------------------
Total Return
- -------------------------------------------
Period Ended Growth of Average
8/31/97 $10,000 Cumulative Annual
- -------------------------------------------
Scudder Classic Growth Fund
Ticker Symbol: SCCGX
- -------------------------------------------
Life of Fund** $14,520 45.20% 45.20%
- -------------------------------------------
S&P 500 Index
- -------------------------------------------
Life of Fund** $13,808 38.08% 38.08%
- -------------------------------------------
- -------------------------------------------
Growth of a $10,000 Investment
- -------------------------------------------
A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:
S&P 500 Index
Year Amount
- ----------------------
9/96* $10,000
10/96 $10,276
11/96 $11,052
12/96 $10,833
1/97 $11,510
2/97 $11,600
3/97 $11,123
4/97 $11,788
5/97 $12,505
6/97 $13,067
7/97 $14,106
8/97 $13,316
Scudder Classic Growth Fund
Year Amount
- ----------------------
9/96* $10,000
10/96 $10,159
11/96 $10,928
12/96 $10,646
1/97 $11,433
2/97 $11,361
3/97 $10,892
4/97 $11,632
5/97 $12,419
6/97 $13,150
7/97 $14,422
8/97 $13,818
The Standard & Poor's (S&P) 500 Index is an unmanaged capitalization-weighted
measure of 500 widely held common stocks listed on the New York Stock Exchange,
American Stock Exchange, and Nasdaq Stock Market. Index returns assume
reinvestment of dividends and, unlike Fund returns, do not reflect any fees or
expenses.
* The Fund commenced operations on September 9, 1996. The graphed index
comparison begins September 30, 1996.
- -----------------------------------------------------------------
Returns and Per Share Information
- -----------------------------------------------------------------
A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) and Index Total
Return (%) with the exact data points listed in the table
below.
Yearly periods ended August 31
1997**
- --------------------------------------------------------------------------------
Net Asset Value $17.38
- --------------------------------------------------------------------------------
Income Dividends $ .04
- --------------------------------------------------------------------------------
Fund Total Return (%) 45.20
- --------------------------------------------------------------------------------
Index Total Return (%) 38.08
- --------------------------------------------------------------------------------
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 life of Fund period would have been lower.
** The Fund commenced operations on September 9, 1996.
4 - Scudder Classic Growth Fund
<PAGE>
Portfolio Summary as of August 31, 1997
- -------------------------------
Asset Allocation
- -------------------------------
Equity Holdings 97%
Cash Equivalents 3%
- -------------------------------
100%
- -------------------------------
The Fund maintains a fully
invested approach in quality
growth stocks.
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- ------------------------------
Sector Diversification
(Excludes 3% Cash Equivalents)
- ------------------------------
Financial 20%
Technology 18%
Energy 13%
Manufacturing 13%
Health 10%
Consumer Discretionary 10%
Consumer Staples 5%
Service Industries 4%
Durables 4%
Other 3%
- ------------------------------
100%
- ------------------------------
As overweighting in technology
and finance--the two strongest
performing industry
sectors--contributed to the
Fund's superior return.
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- -------------------------------
Ten Largest Equity Holdings
(23% of Portfolio)
- -------------------------------
1. Compaq Computer Corp.
Leading manufacturer of personal computers
2. American Express Credit Corp.
Travel and investment services, insurance,
banking
3. Intel Corp.
Semiconductor microprocessors
4. EXEL, Ltd. (ADR)
Provider of liability insurance
5. Royal Dutch Petroleum Co.
International energy company
6. American International Group, Inc.
Major international insurance holding company
7. Applied Materials, Inc.
Leading semi-conductor capital equipment
manufacturer
8. Home Depot, Inc.
Building supply/home improvement stores
9. BankAmerica Corp.
Commercial banking in California
10. Exxon Corp.
International energy company
Many of the Fund's top
holdings were among its
strongest performers, an
important contributor to its
outperformance.
For more complete details about the Fund's investment portfolio, see page 11.
A monthly Investment Portfolio Summary and quarterly Portfolio Holdings are
available upon request.
5 - Scudder Classic Growth Fund
<PAGE>
Portfolio Management Discussion
In the following interview, William F. Gadsden and Bruce Beaty, portfolio
managers of Scudder Classic Growth Fund, discuss the Fund's strategy and market
environment during the fiscal period.
Q: How did Scudder Classic Growth Fund perform for the abbreviated annual report
period?
A: For the period from the Fund's inception on September 9, 1996 to August 31,
1997, the Fund's net asset value per share increased from $12.00 to $17.38 for a
total return of 45.20%. This return compares very favorably to the 38.08% total
return performance of the unmanaged S&P 500 Index for the same period. On a
month-end basis, the S&P 500 returned 40.66% for the full twelve-month period
ended August 31, 1997. We were pleased with the Fund's performance, especially
considering its relatively conservative approach to investing for growth.
Q: What is responsible for the Fund's strong performance?
A: This has been an ideal environment for the Fund's introduction. Stocks
continued to rally, especially large company stocks, which provided excellent
results. The Fund benefited from its core emphasis on high quality, large
company stocks, and from overweightings in strong performing sectors, namely
technology and finance.
Q: How do you manage the Fund?
A: Scudder Classic Growth Fund is different in that it seeks long-term growth of
capital with lower volatility than the average growth fund. In pursuing this
goal, we target seasoned companies with strong competitive positions. In
particular, we seek to avoid stocks with unreasonably high expectations, which
typically trade at high prices relative to their earnings, sales, or revenues.
We prefer to pay for earnings that we believe are sustainable. Our investment
focus is on stocks with consistent earnings growth rates that we believe are
reasonably valued.
Q: How do you execute this investment approach?
A: We employ both fundamental and quantitative techniques in selecting stocks
for the portfolio. The investment process begins with narrowing a universe of
growth stocks by screening out companies with weaker competitive positions and
financials. Then we assign a rating to each stock based on valuation factors.
Through this process we attempt to identify stocks with the best potential
performance.
Q: The U.S. stock market turned in top performance during the period. What
contributed to this favorable environment?
A: Stocks were propelled higher by robust economic growth, solid corporate
earnings, and relatively benign inflation. The U.S. economy has remained
resilient, despite expectations that growth would decelerate to more sustainable
levels. Productivity has continued to improve and consumer confidence reached
record highs. Corporate profits, which were expected to moderate as the labor
market tightened and wages rose, continued to climb, albeit at a slower pace.
While these conditions provided a nearly ideal environment for equity investors,
concerns over the prospect of accelerating inflation and accompanying higher
6 - Scudder Classic Growth Fund
<PAGE>
interest rates contributed to an environment of increased market volatility.
Illustrative of these market jitters was an increase in the number of days with
100 point swings in the Dow Jones Industrial Average during the period. While
100 points has become less significant in percentage terms as the market has
risen over the last few years, overall price volatility has increased on a
relative basis. Nevertheless, stocks provided outstanding returns to investors
for the fiscal period.
Q: Why were large-cap U.S. stocks among the best performers?
A: Investors favored large-cap stocks for several reasons, including their
ability to meet earnings expectations and provide excellent market liquidity.
Strong earnings at many large companies propelled stocks higher. Many of these
companies have been able to leverage their substantial global presence and vast
distribution networks. Large companies have also continued to focus on
productivity improvement and acquisitions to increase revenues. Technology
companies have been notable beneficiaries of the productivity drive, as other
companies have purchased technology products to improve efficiency and lower
costs.
The benefits of technology are magnified at many large companies where even
small improvements in productivity can have an exponential benefit when applied
on a large scale. These companies have been investing heavily in hardware,
software, networks, and training during the 1980s and 1990s. We believe that
these substantial investments are beginning to provide significant dividends.
Technological improvement is a long-term secular trend that should provide
continuing benefits to many of the established companies which typify the Fund's
holdings.
Q: What changes have you made to the portfolio?
A: From the Fund's inception on September 9, 1996, we have continued to pursue a
disciplined strategy in selecting stocks. This approach has resulted in few
significant portfolio changes, with the Fund's sector diversification and
largest holdings looking similar to those of six months ago.
At 18% of assets, the technology sector continues to be overweighted in the
portfolio, and several of our holdings there experienced spectacular returns.
From the date of initial purchase, Compaq Computer rose more than 180%, Intel
was up more than 130%, and Applied Materials more than tripled its value through
August 31, 1997. Applied Materials is the leading global semiconductor capital
equipment manufacturer. They make equipment that semiconductor manufacturers use
to make computer chips. Chip makers, such as Intel, can use Applied's equipment
to turn raw silicon wafers into microprocessors. As better manufacturing
techniques are developed to make smaller and faster processors, firms such as
Applied Materials benefit directly. We believe Applied's long-term growth rate
is above 20%.
7 - Scudder Classic Growth Fund
<PAGE>
Q: Financial stocks constituted 20% of assets at the end of the period. What's
going on in this sector?
A: The Fund's financial stocks were strong contributors to performance. The
banking sector rose on the long-term trends of restructuring and consolidation.
Financial stocks were well represented in the Fund's top ten holdings, including
American Express, Exel, American International Group, and BankAmerica. The
strong bull market has been good for earnings at Franklin Resources, which is
continuing to benefit from the mutual fund industry's strong cash flows and
investors' focus on saving and investing for retirement.
Q: Were there any other standouts?
A: Warner-Lambert is one holding worth noting in the health care sector. The
firm received approval for two major drugs in the cholesterol and diabetes
areas. The two drugs are expected to increase sales by $2 billion over the next
few years, doubling Warner-Lambert's current pharmaceutical sales base. Once
investors realized the potential of these drugs, the stock rose sharply,
increasing more than 120% for the period.
Q: Were there any disappointments?
A: Every stock in a portfolio cannot always be a winner, no matter how good the
fundamentals, and we would be remiss if we did not mention a few holdings that
disappointed us. Our holding of the national health care provider Columbia/HCA
illustrates this point. While we still believe that the company has solid
investment fundamentals, the federal investigation into Medicare reimbursement
fraud and other allegations has created a cloud of uncertainty from which we see
no relief in the near future. This has made it difficult for a firm that is
relying on an acquisition strategy, hurting earnings in the short run. We
completed our liquidation of Columbia/HCA in early September 1997.
Another disappointment was Ascend Communications in the technology area. Ascend
makes remote access communications equipment for personal computers, and has
been in the midst of rolling out a new product. Such product transitions can be
difficult as customers sometimes wait for bugs to be worked out and price
reductions. However, we still believe in the long-term prospects for remote
access and continue to hold a position as of the end of the fiscal period.
Q: Are there any new themes in the portfolio?
A: A new area for the Fund over the last six months is oil field services. This
is one of the few industries where we see good pricing and strong demand for
services. Companies in this sector provide many services to the oil industry,
including seismic analysis, field testing, drilling equipment, and distribution.
After decade-long attrition, downsizing, and restructuring, we expect oil field
service companies to exhibit strong earnings as demand remains firm and
productivity enhancement filters down to the bottom line. For example, oil
companies are now able to drill deeper wells with a higher success rate because
of the improved technology provided by oil field services companies. This is
significant because it has effectively lowered the high cost of drilling these
wells. At the close of the period, the Fund had oil field service holdings in
Schlumberger and Santa Fe International.
8 - Scudder Classic Growth Fund
<PAGE>
Q: What is your outlook for the market and the Fund?
A: We avoid making predictions about the market and prefer to focus on picking
quality stocks that meet our investment requirements. Nevertheless, we think the
favorable investment environment of 1997 should continue into 1998. Economic
growth should remain healthy, but slow to more sustainable levels, reflecting
the strong U.S. dollar and a challenging environment for most companies to raise
prices. Company fundamentals remain positive: there is ample global liquidity,
growth is firm, inflation is low, and productivity continues to improve at many
companies. We believe that leading American companies -- the primary focus for
your Fund's investments -- will continue to provide some of the best
opportunities in this environment.
Scudder Classic Growth Fund:
A Team Approach to Investing
Scudder Classic Growth Fund is managed by a team of Scudder investment
professionals who each play an important role in the Fund's management
process. Team members work together to develop investment strategies and
select securities for the Fund's portfolio. They are supported by Scudder's
large staff of economists, research analysts, traders and other investment
specialists who work in Scudder's offices across the United States and abroad.
Scudder believes its team approach benefits Fund investors by bringing
together many disciplines and leveraging Scudder's extensive resources.
Lead Portfolio Manager William F. Gadsden, who joined Scudder in 1983, focuses
on overall investment strategy and has 15 years of investment industry
experience. Bruce F. Beaty, Portfolio Manager, focuses on securities selection
and assists with the creation and implementation of investment strategy for
the Fund. He joined Scudder in 1991 and has 16 years of investment industry
experience.
9 - Scudder Classic Growth Fund
<PAGE>
Glossary of Investment Terms
FUNDAMENTAL RESEARCH Analysis of companies based on the projected impact
of management, products, sales, and earnings on
balance sheets and income statements. Distinct from
technical analysis, which evaluates the
attractiveness of a stock based on historical price
and trading volume movements, rather than the
financial results of the underlying company.
GROWTH STOCK Stock of a company that has displayed above average
earnings growth and is expected to continue to
increase profits going forward.
LIQUIDITY A stock that is liquid has enough shares outstanding
and a substantial enough market capitalization to
allow large purchases and sales to occur without
causing a significant change in its market price.
MARKET CAPITALIZATION The value of a company's outstanding shares of
common stock, determined by the number of shares
outstanding multiplied by the share price (Shares x
Price = Market Capitalization). The universe of
publicly traded companies is frequently divided into
large-, mid-, and small-capitalizations. In general,
"large-cap" stocks tend to be more liquid than
"small-cap" stocks.
OVER/UNDER WEIGHTING Refers to the allocation of assets -- usually by
sector, industry, or country -- within a portfolio
relative to a benchmark index, (i.e. the S&P 500) or
an investment universe.
PRICE-EARNINGS RATIO (P-E) A widely used gauge of a stock's valuation that
(also "earnings multiple") indicates what investors are paying for a company's
earnings on a per share basis. Typically based on a
company's projected earnings for the next 12 months,
a higher "earnings multiple" indicates a higher
expected growth rate and the potential for greater
price fluctuations.
VALUE STOCK A company whose stock price does not fully reflect
its intrinsic value, as indicated by price-earnings
ratio, price-book value ratio, dividend yield, or
some other valuation measure, relative to its
industry or the market overall.
(Sources: Scudder; Barron's Dictionary of Finance and Investment Terms)
10 - Scudder Classic Growth Fund
<PAGE>
Investment Portfolio as of August 31, 1997
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements 3.1%
- ------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreement with State Street Bank and Trust Company dated 8/29/97 at
5.45%, to be repurchased at $1,647,997 on 9/2/97, collateralized by a -----------
$1,180,000 U.S. Treasury Bond, 12%, 8/15/13 (Cost $1,647,000) ......................... 1,647,000 1,647,000
-----------
Shares
- ------------------------------------------------------------------------------------------------------------------------------
Common Stocks 96.9%
- ------------------------------------------------------------------------------------------------------------------------------
Consumer Discretionary 9.3%
Apparel & Shoes 1.2%
Nike, Inc. "B" .......................................................................... 12,400 661,850
-----------
Department & Chain Stores 5.8%
Gap Inc. ................................................................................ 14,800 657,675
Home Depot, Inc. ........................................................................ 24,300 1,146,656
Price/Costco Inc.* ...................................................................... 18,800 677,975
Walgreen Co. ............................................................................ 22,000 592,625
-----------
3,074,931
-----------
Hotels & Casinos 0.9%
Mirage Resorts Inc.* .................................................................... 18,200 487,988
-----------
Specialty Retail 1.4%
Tiffany & Co. ........................................................................... 16,100 728,525
-----------
Consumer Staples 4.5%
Alcohol & Tobacco 1.2%
Anheuser-Busch Companies, Inc. .......................................................... 14,400 613,800
-----------
Food & Beverage 1.9%
H.J. Heinz Co. .......................................................................... 13,400 557,775
Sara Lee Corp. .......................................................................... 11,550 464,888
-----------
1,022,663
-----------
Package Goods/Cosmetics 1.4%
Procter & Gamble Co. .................................................................... 5,800 771,763
-----------
Health 10.0%
Hospital Management 1.0%
Columbia/HCA Healthcare Corp. ........................................................... 16,500 520,781
-----------
Medical Supply & Specialty 1.2%
Becton, Dickinson & Co. ................................................................. 13,800 661,538
-----------
Pharmaceuticals 7.8%
American Home Products Corp. ............................................................ 6,200 446,400
Johnson & Johnson ....................................................................... 7,900 447,831
Merck & Co. Inc. ........................................................................ 5,200 477,425
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 - Scudder Classic Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Novartis AG (ADR) ....................................................................... 9,300 664,950
Pfizer, Inc. ............................................................................ 12,500 692,188
Schering-Plough Corp. ................................................................... 10,400 499,200
Warner-Lambert Co. ...................................................................... 7,100 902,144
-----------
4,130,138
-----------
Financial 19.9%
Banks 4.4%
BankAmerica Corp. ....................................................................... 16,400 1,079,325
Citicorp ................................................................................ 7,000 893,375
J.P. Morgan & Co., Inc. ................................................................. 3,600 386,100
-----------
2,358,800
-----------
Insurance 8.2%
American International Group, Inc. ...................................................... 12,400 1,170,250
Conseco Inc. ............................................................................ 18,400 791,200
EXEL, Ltd. (ADR) ........................................................................ 24,000 1,317,000
Hartford Life, Inc. "A" ................................................................. 15,100 563,419
MBIA Inc. ............................................................................... 4,700 532,275
-----------
4,374,144
-----------
Consumer Finance 1.5%
Associates First Capital Corp. .......................................................... 13,300 772,231
-----------
Other Financial Companies 5.8%
American Express Credit Corp. ........................................................... 18,700 1,453,925
Federal National Mortgage Association ................................................... 18,200 800,800
Travelers Group, Inc. ................................................................... 12,700 806,450
-----------
3,061,175
-----------
Media 2.2%
Advertising 1.2%
Omnicom Group, Inc. ..................................................................... 9,500 643,625
-----------
Cable Television 1.0%
Tele-Comm Liberty Media Group "A"* ...................................................... 20,100 530,138
-----------
Service Industries 4.2%
Investment 3.2%
Franklin Resources Inc. ................................................................. 12,700 982,663
Merrill Lynch & Co., Inc. ............................................................... 11,600 713,400
-----------
1,696,063
-----------
Miscellaneous Commercial Services 1.0%
Manpower, Inc. .......................................................................... 12,900 550,669
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 - Scudder Classic Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Durables 3.4%
Aerospace 2.8%
Rockwell International Corp. ............................................................ 10,500 630,000
United Technologies Corp. ............................................................... 11,000 858,688
-----------
1,488,688
-----------
Telecommunications Equipment 0.6%
Ascend Communications, Inc.* ............................................................ 7,300 309,785
-----------
Manufacturing 12.4%
Chemicals 3.2%
E.I. du Pont de Nemours & Co. ........................................................... 12,300 766,444
Praxair Inc. ............................................................................ 9,400 502,313
Sigma-Aldrich Corp. ..................................................................... 13,200 430,650
-----------
1,699,407
-----------
Diversified Manufacturing 4.6%
Dresser Industries Inc. ................................................................. 16,000 668,000
General Electric Co. .................................................................... 8,400 525,000
TRW Inc. ................................................................................ 11,100 578,588
Textron, Inc. ........................................................................... 11,100 691,669
-----------
2,463,257
-----------
Electrical Products 1.7%
ABB AB (ADR) ............................................................................ 3,400 496,400
Emerson Electric Co. .................................................................... 7,400 404,688
-----------
901,088
-----------
Machinery/Components/Controls 2.9%
Ingersoll-Rand Co. ...................................................................... 10,100 607,263
Parker-Hannifin Group ................................................................... 14,800 951,825
-----------
1,559,088
-----------
Technology 17.3%
Diverse Electronic Products 6.4%
Applied Materials, Inc.* ................................................................ 12,200 1,151,375
General Motors Corp. "H" ................................................................ 15,900 1,010,644
KLA Instruments Corp.* .................................................................. 8,300 588,263
Teradyne Inc.* .......................................................................... 11,550 643,191
-----------
3,393,473
-----------
Electronic Data Processing 7.6%
Compaq Computer Corp.* .................................................................. 23,300 1,526,150
Hewlett-Packard Co. ..................................................................... 12,300 754,144
International Business Machines Corp. ................................................... 7,700 776,738
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 - Scudder Classic Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Sun Microsystems, Inc.* ................................................................. 21,100 1,012,800
-----------
4,069,832
-----------
Office/Plant Automation 0.7%
Cisco Systems, Inc.* .................................................................... 4,800 361,800
-----------
Semiconductors 2.6%
Intel Corp. ............................................................................. 14,800 1,363,450
-----------
Energy 12.6%
Oil Companies 8.5%
Amoco Corp. ............................................................................. 6,000 567,375
Atlantic Richfield Co. .................................................................. 9,400 705,000
Exxon Corp. ............................................................................. 16,800 1,027,950
Mobil Corp. ............................................................................. 8,300 603,825
Repsol SA (ADR) ......................................................................... 11,200 441,000
Royal Dutch Petroleum Co. (New York shares) ............................................. 23,200 1,177,400
-----------
4,522,550
-----------
Oil/Gas Transmission 1.3%
Enron Corp. ............................................................................. 9,800 377,913
Williams Cos., Inc. ..................................................................... 6,600 307,313
-----------
685,226
-----------
Oilfield Services/Equipment 2.8%
Santa Fe International Corp.* ........................................................... 15,600 698,100
Schlumberger Ltd. ....................................................................... 10,700 815,206
-----------
1,513,306
-----------
Transportation 1.1%
Airlines
AMR Corp.* .............................................................................. 5,800 584,350
- ------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $44,720,306) 51,576,122
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $46,367,306) (a) 53,223,122
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
(a) The cost for federal income tax purposes was $46,379,390. At August 31,
1997, net unrealized appreciation for all securities based on tax cost was
$6,843,732. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $7,295,181 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$451,449.
The accompanying notes are an integral part of the financial statements.
14 - Scudder Classic Growth Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of August 31, 1997
<TABLE>
<S> <C>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
Investments, at market (identified cost $46,367,306) ................. $ 53,223,122
Cash ................................................................. 131
Receivable for Fund shares sold ...................................... 157,623
Dividends and interest receivable .................................... 80,293
Deferred organization expenses ....................................... 6,401
Other assets ......................................................... 793
----------------
Total assets ......................................................... 53,468,363
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Payable for Fund shares redeemed ..................................... 68,960
Other payables and accrued expenses .................................. 173,620
----------------
Total liabilities .................................................... 242,580
--------------------------------------------------------------------------------------------
Net assets, at market value $ 53,225,783
--------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Undistributed net investment income .................................. 90,326
Unrealized appreciation on investments ............................... 6,855,816
Accumulated net realized gain ........................................ 1,068,807
Paid-in capital ...................................................... 45,210,834
--------------------------------------------------------------------------------------------
Net assets, at market value $ 53,225,783
--------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($53,225,783 / 3,062,114 outstanding shares of beneficial ----------------
interest, $.01 par value, unlimited number of shares authorized) .. $17.38
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 - Scudder Classic Growth Fund
<PAGE>
Statement of Operations
for the period September 9, 1996 (commencement
of operations) to August 31, 1997
<TABLE>
<S> <C>
Investment Income
- ------------------------------------------------------------------------------------------------------------------------------
Income:
Dividends (net of foreign taxes withheld of $4,375) .................. $ 322,628
Interest ............................................................. 72,315
-----------------
394,943
Expenses:
Management fee ....................................................... 164,645
Services to shareholders ............................................. 156,626
Custodian and accounting fees ........................................ 69,293
Trustees' fees and expenses .......................................... 25,558
Auditing ............................................................. 19,115
Registration fees .................................................... 57,511
Reports to shareholders .............................................. 17,069
Legal ................................................................ 8,887
Amortization of organization expense ................................. 5,035
Other ................................................................ 6,021
-----------------
Total expenses before reductions ..................................... 529,760
Expense reductions ................................................... (235,924)
-----------------
Expenses, net ........................................................ 293,836
---------------------------------------------------------------------------------------------
Net investment income 101,107
---------------------------------------------------------------------------------------------
Realized and unrealized gain on investment transactions
- ------------------------------------------------------------------------------------------------------------------------------
Net realized gain from:
Investments .......................................................... 1,068,807
Net unrealized appreciation during the period on investments ......... 6,855,816
---------------------------------------------------------------------------------------------
Net gain on investment transactions 7,924,623
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 8,025,730
---------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 - Scudder Classic Growth Fund
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the Period
September 9, 1996
(commencement of
operations) to
Increase (Decrease) in Net Assets August 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Operations:
Net investment income ............................................. $ 101,107
Net realized gain on investments .................................. 1,068,807
Net unrealized appreciation on investment transactions during
the period ...................................................... 6,855,816
---------------------
Net increase in net assets resulting from operations .............. 8,025,730
---------------------
Distributions to shareholders from net investment income .......... (43,257)
---------------------
Fund share transactions:
Proceeds from shares sold ......................................... 70,958,470
Net asset value of shares issued to shareholders in
reinvestment of distributions ................................... 42,483
Cost of shares redeemed ........................................... (25,758,843)
---------------------
Net increase in net assets from Fund share transactions ........... 45,242,110
---------------------
Increase in net assets ............................................ 53,224,583
Net assets at beginning of period ................................. 1,200
Net assets at end of period (including undistributed net ---------------------
investment income of $90,326) ................................... $53,225,783
---------------------
Other Information
- ------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period ......................... 100
---------------------
Shares sold ....................................................... 4,715,920
Shares issued to shareholders in reinvestment of distributions .... 3,115
Shares redeemed ................................................... (1,657,021)
---------------------
Net increase in Fund shares ....................................... 3,062,014
---------------------
Shares outstanding at end of period ............................... 3,062,114
---------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17 - Scudder Classic Growth Fund
<PAGE>
Financial Highlights
The following table includes selected data for a share outstanding throughout
the period (a) and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
For the Period
September 9, 1996
(commencement
of operations) to
August 31, 1997
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
-----------------
Net asset value, beginning of period ............................................... $12.00
-----------------
Income from investment operations:
Net investment income .............................................................. .06
Net realized and unrealized gain on investments .................................... 5.36
-----------------
Total from investment operations ................................................... 5.42
-----------------
Less distributions from net investment income ...................................... (.04)
-----------------
Net asset value, end of period ..................................................... $17.38
-----------------
- ----------------------------------------------------------------------------------------------------------------
Total Return (%) (b) ............................................................... 45.20**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ............................................. 53.2
Ratio of operating expenses, net to average daily net assets (%) ................... 1.25*
Ratio of operating expenses before expense reductions, to average daily net
assets (%) ...................................................................... 2.25*
Ratio of net investment income to average daily net assets (%) ..................... .43*
Portfolio turnover rate (%) ........................................................ 27.4*
Average commission rate paid ....................................................... $.0378
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) Total return would have been lower had certain expenses not been reduced.
* Annualized
** Not annualized
18 - Scudder Classic Growth Fund
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Scudder Classic Growth Fund (the "Fund") is a diversified series of Scudder
Investment Trust, a Massachusetts business trust and is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed by the Fund in the preparation of its
financial statements.
Security Valuation. Portfolio securities which are traded on U.S. or foreign
stock exchanges are valued at the most recent sale price reported on the
exchange on which the security is traded most extensively. If no sale occurred,
the security is then valued at the calculated mean between the most recent bid
and asked quotations. If there are no such bid and asked quotations, the most
recent bid quotation is used. Securities quoted on the Nasdaq System, for which
there have been sales, are valued at the most recent sale price reported on such
system. If there are no such sales, the value is the high or "inside" bid
quotation. Securities which are not quoted on the Nasdaq System but are traded
in another over-the-counter market are valued at the most recent sale price on
such market. If no sale occurred, the security is then valued at the calculated
mean between the most recent bid and asked quotations. If there are no such bid
and asked quotations the most recent bid quotation shall be used. Short-term
investments having a maturity of sixty days or less are valued at amortized
cost.
All other securities are valued at their fair value as determined in good faith
by the Valuation Committee of the Board of Trustees.
Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian,
receives delivery of the underlying securities, the amount of which at the time
of purchase and each subsequent business day is required to be maintained at
such a level that the market value, depending on the maturity of the repurchase
agreement, is equal to at least 100.5% of the repurchase price.
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code which are applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders. Accordingly,
the Fund paid no federal income taxes and no federal income tax provision was
required.
Distribution of Income and Gains. Distributions of net investment income, if
any, are made annually. 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 annually. 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.
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.
19 - Scudder Classic Growth Fund
<PAGE>
Organization Costs. Costs incurred by the Fund in connection with its
organization have been deferred and are being amortized on a straight-line basis
over a five-year period.
Other. Investment security transactions are accounted for on a trade-date basis.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis.
B. Purchases and Sales of Securities
During the period September 9, 1996 (commencement of operations) to August 31,
1997, purchases and sales of investment securities (excluding short-term
investments) aggregated $50,251,899 and $6,600,428, respectively.
C. Related Parties
Under the Fund's Investment Management Agreement (the "Agreement") with Scudder,
Stevens & Clark, Inc. (the "Adviser"), the Fund pays the Adviser a fee equal to
an annual rate of 0.70% of the Fund's average daily net assets, computed and
accrued daily and payable monthly. As manager of the assets of the Fund, 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 Agreement also provides that if the Fund's expenses, exclusive of
taxes, interest, and extraordinary expenses, exceed specified limits, such
excess, up to the amount of the management fee, will be paid by the Adviser. In
addition, the Adviser has agreed not to impose all or a portion of its
management fee until December 31, 1997 in order to maintain the annualized
expenses of the Fund at not more than 1.25% of average daily net assets. For the
period September 9, 1996 (commencement of operations) to August 31, 1997, the
Adviser did not impose any portion of its management fee, which amounted to
$164,645.
On June 26, 1997, the Adviser entered into an agreement with The Zurich
Insurance Company ("Zurich"), an international insurance and financial services
organization, pursuant to which Zurich will acquire a majority interest in the
Adviser, and the Adviser will form a new global investment organization by
combining with Zurich's subsidiary, Zurich Kemper Investments, Inc. and change
its name to Scudder Kemper Investments, Inc. Subject to the receipt of the
required regulatory and shareholder approvals, the transaction is expected to
close in the fourth quarter of 1997.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
period September 9, 1996 (commencement of operations) to August 31, 1997, SSC
aggregated $47,914, of which $37,902 was not imposed and $10,012 is unpaid at
August 31, 1997.
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 September 9, 1996
(commencement of operations) to August 31, 1997, STC aggregated $2,315, of which
$1,831 was not imposed and $484 is unpaid at August 31, 1997.
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
20 - Scudder Classic Growth Fund
<PAGE>
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. At August 31, 1997, the
Special Servicing Agreement expense charged to the Fund amounted to $98,711.
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
September 9, 1996 (commencement of operations) to August 31, 1997, SFAC
aggregated $39,879, of which $31,546 was not imposed and $8,333 is unpaid at
August 31, 1997.
The Fund pays each of its Trustees not affiliated with the Adviser $4,000
annually plus specified amounts for attended board and committee meetings. For
the period September 9, 1996 (commencement of operations) to August 31, 1997,
the Trustees fees and expenses aggregated $25,558.
21 - Scudder Classic Growth Fund
<PAGE>
Report of Independent Accountants
To the Trustees of Scudder Investment Trust and the Shareholders of Scudder
Classic Growth Fund:
We have audited the accompanying statement of assets and liabilities of Scudder
Classic Growth Fund, including the investment portfolio, as of August 31, 1997,
and the related statement of operations, the statement of changes in net assets,
and the financial highlights for the period September 9, 1996 (commencement of
operations) to August 31, 1997. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of August 31, 1997 by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Scudder Classic Growth Fund as of August 31, 1997, the results of its
operations, the changes in its net assets and the financial highlights for the
period September 9, 1996 (commencement of operations) to August 31, 1997, in
conformity with generally accepted accounting principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
October 2, 1997
22 - Scudder Classic Growth Fund
<PAGE>
This Page
intentionally
left blank.
23 - Scudder Classic Growth Fund
<PAGE>
Officers and Trustees
Daniel Pierce*
President and Trustee
Henry P. Becton, Jr.
Trustee; President and General
Manager, WGBH Educational
Foundation
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
Jean C. Tempel
Trustee; Managing Partner,
Technology Equity Partners
Bruce F. Beaty*
Vice President
William F. Gadsden*
Vice President
Jerard K. Hartman*
Vice President
Robert T. Hoffman*
Vice President
Thomas W. Joseph*
Vice President
David S. Lee*
Vice President
Valerie F. Malter*
Vice President
Thomas F. McDonough*
Vice President, Secretary and
Assistant Treasurer
Pamela A. McGrath*
Vice President and Treasurer
Edward J. O'Connell*
Vice President and Assistant Treasurer
*Scudder, Stevens & Clark, Inc.
24 - Scudder Classic Growth Fund
<PAGE>
Investment Products and Services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series --
Premium Shares*
Managed Shares*
Scudder Government Money Market Series --
Managed Shares*
Tax Free Money Market+
- ----------------------
Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series--
Managed Shares*
Scudder California Tax Free Money Fund**
Scudder New York Tax Free Money Fund**
Tax Free+
- ---------
Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund**
Scudder Massachusetts Limited Term Tax Free Fund**
Scudder Massachusetts Tax Free Fund**
Scudder New York Tax Free Fund**
Scudder Ohio Tax Free Fund**
Scudder Pennsylvania Tax Free Fund**
U.S. Income
- -----------
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder High Yield Bond Fund
Global Income
- -------------
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
Asset Allocation
- ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
U.S. Growth and Income
- ----------------------
Scudder Balanced Fund
Scudder Growth and Income Fund
Scudder S&P 500 Index Fund
U.S. Growth
- -----------
Value
Scudder Large Company Value Fund
Scudder Value Fund
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund
Scudder Large Company Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Growth
- -------------
Worldwide
Scudder Global Fund
Scudder International Growth and Income Fund
Scudder International Fund
Scudder Global Discovery Fund
Scudder Emerging Markets Growth Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund, Inc.
Retirement Programs
- -------------------
IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan**+++ +++
(a variable annuity)
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
The Latin America Dollar Income Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder Spain and Portugal Fund, Inc.
Scudder World Income Opportunities
Fund, Inc.
For complete information on any of the above Scudder funds, including
management fees and expenses, call or write for a free prospectus. Read it
carefully before you invest or send money. +++Funds within categories are listed
in order from expected least risk to most risk. 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. +++ +++A no-load variable annuity
contract provided by Charter National Life Insurance Company and its affiliate,
offered by Scudder's insurance agencies, 1-800-225-2470. #These funds, advised
by Scudder, Stevens & Clark, Inc., are traded on various stock exchanges.
25 - Scudder Classic Growth Fund
<PAGE>
Scudder Solutions
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Investment Plan QuickBuy
A convenient investment program in which you designate Lets you purchase Scudder fund shares
the purchase details and the bank account, and money is electronically, avoiding potential mailing delays;
electronically debited from that account monthly to designate a bank account and the transaction
regularly purchase fund shares and "dollar cost average" details, and money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from that account.
fewer when it's higher, which can reduce your average
purchase price over time.
Automatic Dividend Transfer Payroll Deduction and Direct Deposit
The most timely, reliable, and convenient way to Have all or part of your paycheck -- even government
purchase shares -- use distributions from one Scudder checks -- invested in up to four Scudder funds at
fund to purchase shares in another, automatically one time.
(accounts with identical registrations or the same
social security or tax identification number).
Dollar cost averaging involves continuous investment in securities regardless of price
fluctuations and does not assure a profit or protect against loss in declining markets.
Investors should consider their ability to continue such a plan through periods of low price
levels.
Around-the-clock electronic account service and information, including some transactions:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- http://funds.scudder.com
1-800-343-2890
Scudder Electronic Account Services: Offering
Personalized account information, the ability to account information and transactions, interactive
exchange or redeem shares, and information on other worksheets, prospectuses and applications for all
Scudder funds and services via touchtone telephone. Scudder funds, plus your current asset allocation,
whenever you need them. Scudder's Site also
provides news about Scudder funds, retirement
planning information, and more.
Retirees and those who depend on investment proceeds for living expenses can enjoy these convenient,
timely, and reliable automated withdrawal programs:
- ------------------------------------------------------------------------------------------------------------------------------
Automatic Withdrawal Plan QuickSell
You designate the bank account, determine the schedule Provides speedy access to your money by
(as frequently as once a month) and amount of the electronically crediting your redemption proceeds
redemptions, and Scudder does the rest. to the bank account you designate.
DistributionsDirect
Automatically deposits your fund distributions into the
bank account you designate within three business days
after each distribution is paid.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
26 - Scudder Classic Growth Fund
<PAGE>
Mutual Funds and More -- Brokerage and Guidance Services:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Brokerage Services Scudder Portfolio Builder
Offers you access to a world of investments, A free service designed to help suggest ways investors like
including stocks, corporate bonds, Treasuries, plus you can diversify your portfolio among domestic and global,
over 6,000 mutual funds from at least 150 mutual as well as equity, fixed-income, and money market funds,
fund companies. And Scudder Fund Folio(SM) provides using Scudder funds.
investors with access to a marketplace of more than
500 no-load funds from well-known companies--with no Personal Counsel from Scudder(SM)
transaction fees or commissions. Scudder
shareholders can take advantage of a Scudder Developed for investors who prefer the benefits of no-load
Brokerage account already reserved for them, with Scudder funds but want ongoing professional assistance in
no minimum investment. For information about managing a portfolio. Personal Counsel(SM) is a highly
Scudder Brokerage Services, call 1-800-700-0820. customized, fee-based asset management service for
individuals investing $100,000 or more.
Fund Folio funds held less than six months will be charged a fee for redemptions. You can buy
shares directly from the fund itself or its principal underwriter or distributor without
paying this fee. Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061.
Member SIPC.
Personal Counsel From Scudder(SM) and Personal Counsel(SM) are service marks of and represent a
program offered by Scudder Investor Services, Inc., Adviser.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
Additional Information on How to Contact Scudder:
- ------------------------------------------------------------------------------------------------------------------------------
For existing account services and transactions Please address all written correspondence to
Scudder Investor Relations -- 1-800-225-5163 The Scudder Funds
P.O. Box 2291
For establishing 401(k) and 403(b) plans Boston, Massachusetts
Scudder Defined Contribution Services -- 02107-2291
1-800-323-6105
Or Stop by a Scudder Investor Center
For information about The Scudder Funds, including Many shareholders enjoy the personal, one-on-one service of
additional applications and prospectuses, or for the Scudder Investor Centers. Check for an Investor Center near
answers to investment questions you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470 Boca Raton Chicago San Francisco
[email protected] Boston New York
- ------------------------------------------------------------------------------------------------------------------------------
New From Scudder: Scudder International Growth and Income Fund
Scudder International Growth and Income Fund takes a yield-oriented approach to investing in international equities. The
Fund seeks to provide long-term growth of capital plus current income. Investors who desire international exposure but
who wish to take a more conservative approach may appreciate the Fund's emphasis on the dividend paying stocks of
well-established companies outside the United States.
- ------------------------------------------------------------------------------------------------------------------------------
The share price of Scudder International Growth and Income Fund will fluctuate. International investing involves special
risks including currency fluctuation and political instability. Contact Scudder Investor Services, Inc., Distributor,
for a prospectus which contains more complete information, including management fees and other expenses. Please read it
carefully before you invest or send money.
</TABLE>
27 - Scudder Classic Growth Fund
<PAGE>
Celebrating Over 75 Years of Serving Investors
Established in 1919 by Theodore Scudder, Sidney Stevens, and F. Haven Clark,
Scudder, Stevens & Clark was the first independent investment counsel firm in
the United States. Since its birth, Scudder's pioneering spirit and commitment
to professional long-term investment management have helped shape the investment
industry. In 1928, we introduced the nation's first no-load mutual fund. Today
we offer over 40 pure no load(TM) funds, including the first international
mutual fund offered to U.S. investors.
Over the years, Scudder's global investment perspective and dedication to
research and fundamental investment disciplines have helped us become one of the
largest and most respected investment managers in the world. Though times have
changed since our beginnings, we remain committed to our long-standing
principles: managing money with integrity and distinction; keeping the interests
of our clients first; providing access to investments and markets that may not
be easily available to individuals; and making investing as simple and
convenient as possible through friendly, comprehensive service.
This information must be preceded or accompanied by a
current prospectus.
Portfolio changes should not be considered recommendations
for action by individual investors.
SCUDDER
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