Scudder
Tax Managed
Small Company
Fund
Annual Report
October 31, 1998
Pure No-Load(TM) Funds
A pure no-load(TM) (no sales charges) mutual fund, which seeks long-term growth
of capital on an after-tax basis through investment in undervalued stocks of
small U.S. companies.
SCUDDER (logo)
<PAGE>
Scudder Tax Managed Small Company Fund
- --------------------------------------------------------------------------------
Date of Inception: 9/18/98 Total Net Assets as of 10/31/98: $1.58 million
- --------------------------------------------------------------------------------
o Scudder Tax Managed Small Company Fund returned 3.50% for the abbreviated
fiscal period from September 18, 1998 to October 31, 1998.
o A disciplined approach to selecting undervalued small-cap U.S. stocks is
followed in the pursuit of its goal of long-term growth of capital on an
after-tax basis.
o At the end of the period, the portfolio was broadly diversified with 163
securities and no position greater than 2% of assets. The Fund's median
market-cap was $252 million, which compares to the $398 million market-cap of
the unmanaged Russell 2000 Index.
Table of Contents
3 Letter from the Fund's President 19 Financial Highlights
4 Portfolio Summary 20 Notes to Financial Statements
5 Portfolio Management Discussion 23 Report of Independent Accountants
7 Glossary of Investment Terms 24 Trustees and Officers
8 Investment Portfolio 25 Investment Products and Services
16 Financial Statements 26 Scudder Solutions
2 - Scudder Tax Managed Small Company Fund
<PAGE>
Letter from the Fund's President
Dear Shareholders,
We are pleased to present the first report to shareholders for the
abbreviated fiscal period from the Fund's commencement of operations on
September 18, 1998 to October 31, 1998.
While this is a very short period to report on the Fund's activities, it
provides an opportunity to highlight the Fund's tax sensitive approach to
seeking long-term growth of capital through small-cap U.S. stocks. To that end,
we have included a discussion with your Fund's managers, Mac Eysenbach, Phil
Fortuna, Calvin Young, and Rob Tymoczko, which begins on page 5.
In the interview, the Fund's managers describe how their investment process
- -- unlike that used with many other mutual funds -- is designed to maximize
shareholders' after-tax returns by systematically analyzing each stock's
potential return on an after-tax basis. Also discussed is the use of a
quantitative valuation model that takes into account several key investment
characteristics in selecting securities for the portfolio and their approach to
risk control.
For those of you who are interested in new Scudder funds, we recently
introduced two international funds: Scudder International Growth Fund -- which
seeks to invest in high growth opportunities in both developed and developing
markets, and Scudder International Value Fund -- which seeks to invest in
undervalued foreign securities. For further information on these new funds,
please call Scudder Investor Information at 1-800-225-2470.
Thank you for your interest in Scudder Tax Managed Small Company Fund. If
you have any questions about your Fund, please call Scudder Investor Information
at the number above or visit our Internet Web site at www.scudder.com.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder Tax Managed Small Company Fund
3 - Scudder Tax Managed Small Company Fund
<PAGE>
Portfolio Summary as of October 31, 1998
Asset Allocation
- -----------------------------------------
A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
Common Stock 98%
Cash Equivalent, net 2%
--------------------------------------
100%
--------------------------------------
Management pursues a fully invested approach to seeking long-term growth of
capital from small-cap stocks on an after tax basis.
Sectors
- -----------------------------------------
A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
Manufacturing 20%
Financial 14%
Consumer Discretionary 14%
Service Industries 10%
Construction 8%
Durables 7%
Technology 5%
Energy 4%
Consumer Staples 4%
Other 14%
--------------------------------------
100%
--------------------------------------
The Fund's sector allocations are
the result of our individual stock selections, rather than bets on specific
industry sectors.
Ten Largest Equity Holdings
(9% of Portfolio)
- -----------------------------------------
1. Conestoga Enterprises, Inc.
Independent local telephone
utility
2. Mesaba Holdings, Inc.
Regional passenger airline
3. Zenith National Insurance Corp.
Multi-line insurance company
4. Varco International, Inc.
Manufacturer of oil and gas
drilling tools
5. CTS Corp. Manufacturer of
electro-mechanical components
6. Brightpoint, Inc.
Service provider to the wireless
communication industry
7. Advest Group, Inc.
Provider of banking and financial
services
8. Oshkosh Truck Corp.
Manufacturer of commercial and
military vehicles
9. Chartwell Re Corp.
Reinsurance underwriter
10. Technitrol, Inc.
Manufacturer of electronic
components
The Fund's top holdings are the result of our proprietary, quantitative approach
to identifying attractively valued small-cap stocks with above-average capital
appreciation potential.
For more complete details about the Fund's investment portfolio, see page 8. A
quarterly Fund Summary and Portfolio Holdings are available upon request.
4 - Scudder Tax Managed Small Company Fund
<PAGE>
Portfolio Management Discussion
We recently spoke with the Fund's portfolio management team -- Mac Eysenbach,
Phil Fortuna, Calvin Young, and Rob Tymoczko -- about their approach to managing
this Fund. Highlights of the discussion are below.
Q: What does Scudder Tax Managed Small Company Fund invest in?
A: Designed as a complement to the Tax Managed Growth Fund, the Small Company
Fund focuses on stocks smaller than the 1000 largest U.S. companies. These
stocks are similar in size or smaller than those in the Russell 2000 Index of
small stocks, which currently has a median market capitalization of $398
million.
Q: How does Scudder's approach to tax management differ from others?
A: Rather than focusing exclusively on non-dividend paying stocks, minimizing
portfolio turnover or indexing, Scudder actively manages these portfolios by
taking into consideration the implications of trading activity to maximize
after-tax returns. By successfully balancing the expected return trade-offs due
to differing tax rates for dividend income, short-term and long-term capital
gains, we seek to enhance shareholders' potential for post-tax returns. By
harvesting capital losses and selling securities with a high cost basis first,
the tax implications of trades can be minimized, resulting in lower average
annual distributions.
Q: Given a universe consisting of approximately 2,000 small U.S. companies,
how do you go about assessing each stock's potential return?
A: We rely on a proprietary, quantitative screening process to identify
attractively valued stocks with above-average capital appreciation potential. We
consider four primary factors: valuation, trends in fundamentals, price
momentum, and risk. Our valuation measures tell us how cheap the security is
relative to the overall small-cap universe. Sales and earnings trends suggest
whether the company's fundamentals are stable, improving, or deteriorating.
Price momentum allows us to assess how the market is responding to these
fundamentals. And, risk measures help us to understand the degree of financial
uncertainty for a given company. Each company is then ranked based on its
relative attractiveness.
Q: How are these rankings used to manage a tax-efficient portfolio?
A: We first build a diversified portfolio of attractively rated companies. To
limit individual security risk and provide trading flexibility, we typically
hold more than 150 securities. On an ongoing basis, we then use a tax-aware
portfolio optimization process to determine which securities should be replaced
due to diminishing growth prospects, while creating the lowest tax impact for
shareholders. The process allows us to keep the portfolio focused on
attractively rated companies, while managing overall portfolio risk and the tax
consequences of portfolio turnover.
Q: What should we expect to see from this approach?
A: As a result of this tax sensitive investment process, investors should see
fewer short-term gains, and lower capital gain and dividend income
distributions. Keep in mind, however, that our overriding goal is to generate
above-average after-tax returns, not minimize taxes. As a result, we will
5 - Scudder Tax Managed Small Company Fund
<PAGE>
realize gains, but only when we believe it is advantageous to do so on an
after-tax basis. Through our emphasis on risk control, we also expect the Fund
to have less downside risk than the typical small company fund.
Q: How is the Fund invested today?
A: Consistent with our disciplines, the Fund is essentially fully invested in
equities. At the end of the period, we held a broadly diversified portfolio of
163 securities with no position greater than 2% of assets. The median market
capitalization of the Fund was $252 million, which compares to the $398 million
market-cap of the Russell 2000. The typical Fund holding had a p/e of 12x
reported earnings versus 19x for the Index.
Q: What is your outlook for small-cap stocks?
A: Small-cap stocks have just come through a difficult period. In fact, on a
relative basis, the performance shortfall versus large-cap stocks over the past
year is the largest we have seen in the last 25 years. While small-cap stocks
have historically sold at higher p/e multiples than large-cap stocks, today that
relationship is reversed. Given the prospects for faster growth from small
stocks, this suggests that small-cap valuations are quite attractive. In short,
we believe it is a good time to be starting a small-cap fund.
Scudder Tax Managed
Small Company Fund:
A Team Approach to Investing
Scudder Tax Managed Small Company Fund is managed by a team of Scudder
Kemper Investments, Inc. (the "Adviser") professionals, each of whom
plays an important role in the Fund's management process. Team members
work together to develop investment strategies and select securities for
the Fund's portfolio. They are supported by the Adviser's large staff of
economists, research analysts, traders, and other investment specialists
who work in our offices across the United States and abroad. We believe
our team approach benefits Fund investors by bringing together many
disciplines and leveraging our extensive resources.
Lead Portfolio Manager James (Mac) M. Eysenbach has responsibility for
the Fund's day-to-day management and investment strategies. Mr. Eysenbach
joined the Adviser in 1991 as a senior quantitative analyst and has more
than 10 years of investment management experience, specializing in
quantitative research. Portfolio Manager Philip S. Fortuna joined the
Adviser in 1986 as a manager of institutional equity accounts. Mr.
Fortuna is currently director of the Adviser's quantitative group.
Portfolio Manager Calvin S. Young joined the Adviser in 1990 as a
quantitative analyst. Mr. Young has ten years of investment industry
experience with a special focus on small companies. Portfolio Manager
Robert Tymoczko joined the Adviser in 1997 as a quantitative analyst. Mr.
Tymoczko has five years of experience in quantitative research and
econometric modeling.
6 - Scudder Tax Managed Small Company Fund
<PAGE>
Glossary of Investment Terms
MARKET CAPITALIZATION The value of a company's outstanding shares of
common stock, determined by multiplying
the number of shares outstanding by
the share price (Shares x Price = Market
Capitalization). The universe of publicly traded
companies is frequently divided into large-,
mid-, and small-capitalizations.
OVER/UNDER WEIGHTING Refers to the allocation of assets --
usually by sector, industry, or country -- within
a portfolio relative to a benchmark index (e.g.
the Russell 2000 Index), or an investment
universe.
PRICE/EARNINGS RATIO A widely used gauge of a stock's valuation that
(P/E) (also "earnings indicates what investors are paying for a company's
multiple") earnings on a per share basis. A higher "earnings
multiple" indicates a higher expected growth rate
and the potential for greater price fluctuations.
QUANTITATIVE MODEL A systematic approach to evaluating a security based
on its financial characteristics.
STANDARD DEVIATION A statistical measure of the degree to which
an investment's return tends to vary from
the mean return. Frequently used in portfolio
management to measure the variability of past
returns and to gauge the likely range of possible
future returns.
TAX BASIS The price paid by an investor for a stock
or bond plus any out-of-pocket expenses such as
brokerage commissions. A security's basis is used
to determine capital gains or losses for tax
purposes when the stock is sold.
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. Value stocks tend to
display less price volatility and may carry higher
dividend yields.
(Sources: Scudder Kemper Investments, Inc.; Barron's Dictionary of
Finance and Investment Terms)
7 - Scudder Tax Managed Small Company Fund
<PAGE>
Investment Portfolio as of October 31, 1998
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks 100.0%
- ------------------------------------------------------------------------------------------------------------------------------
Consumer Discretionary 13.7%
Apparel & Shoes 1.3%
Garan, Inc. ............................................................................. 500 13,563
Wolverine World Wide, Inc. .............................................................. 500 6,531
------
20,094
------
Department & Chain Stores 2.4%
Ames Department Stores, Inc.* ........................................................... 600 11,025
Dress Barn Inc.* ........................................................................ 600 8,475
Fred's, Inc. "A" ........................................................................ 600 7,838
Jo-Ann Stores, Inc. "A"* ................................................................ 500 9,000
------
36,338
------
Home Furnishings 2.3%
Chromcraft Revington, Inc. .............................................................. 700 11,331
Interface, Inc. ......................................................................... 1,100 13,544
Oneida Ltd. ............................................................................. 700 10,019
------
34,894
------
Recreational Products 0.6%
The First Years Inc. .................................................................... 600 9,450
------
Restaurants 3.5%
Avado Brands, Inc. ...................................................................... 900 7,088
CEC Entertainment Inc.* ................................................................. 400 11,300
Rainforest Cafe Inc. .................................................................... 900 5,963
Ruby Tuesday, Inc. ...................................................................... 400 6,750
Ryan's Family Steak Houses, Inc.* ....................................................... 1,000 10,750
VICORP Restaurants, Inc.* ............................................................... 900 12,713
------
54,564
------
Specialty Retail 3.6%
Discount Auto Parts Inc.* ............................................................... 400 9,650
Inacom Corp.* ........................................................................... 400 7,750
Piercing Pagoda, Inc. ................................................................... 600 8,925
Rent-Way, Inc.* ......................................................................... 500 11,813
Russ Berrie & Co., Inc. ................................................................. 500 9,875
Wet Seal, Inc. "A"* ..................................................................... 400 8,450
------
56,463
------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8 - Scudder Tax Managed Small Company Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Consumer Staples 3.9%
Consumer Specialties 1.7%
Imperial Holly Corp. .................................................................... 1,100 7,838
Sola International, Inc.* ............................................................... 600 11,513
Watsco, Inc. ............................................................................ 400 6,775
------
26,126
------
Farming 0.6%
Tractor Supply Co.* ..................................................................... 400 9,900
------
Food & Beverage 0.6%
National Beverage Corp. ................................................................. 900 9,169
------
Package Goods/Cosmetics 0.5%
Chattem, Inc.* .......................................................................... 250 6,938
------
Textiles 0.5%
Hartmarx Corp.* ......................................................................... 1,700 8,606
------
Health 3.6%
Biotechnology 0.4%
Bio-Rad Laboratories, Inc. "A"* ......................................................... 300 6,619
------
Health Industry Services 2.7%
DVI, Inc.* .............................................................................. 700 10,938
Hanger Orthopedic Group, Inc.* .......................................................... 400 7,900
PharMerica, Inc.* ....................................................................... 1,700 5,738
Prime Medical Services, Inc.* ........................................................... 1,100 8,250
Syncor International Corp.* ............................................................. 450 8,213
41,039
------
Pharmaceuticals 0.5%
Medco Research Inc.* .................................................................... 400 7,250
------
Communications 1.1%
Telephone/Communications
Conestoga Enterprises, Inc. ............................................................. 500 16,480
------
Financial 13.9%
Banks 7.5%
Andover Bancorp, Inc. ................................................................... 300 9,375
BSB Bancorp, Inc. ....................................................................... 300 8,400
Columbia Banking System, Inc. ........................................................... 400 8,050
D & N Financial Corp. ................................................................... 500 9,625
Evergreen Bancorp, Inc. ................................................................. 300 8,325
First Federal Financial Corp. ........................................................... 500 8,188
</TABLE>
The accompanying notes are an integral part of the financial statements.
9 - Scudder Tax Managed Small Company Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
First Republic Bank* .................................................................... 300 7,425
JSB Financial, Inc. ..................................................................... 250 13,203
PFF Bancorp, Inc.* ...................................................................... 400 5,875
Parkvale Financial Corp. ................................................................ 575 12,075
Silicon Valley Bancshares ............................................................... 600 12,300
The Trust Company of N.J. ............................................................... 500 12,500
-------
115,341
-------
Insurance 4.6%
Acceptance Insurance Cos., Inc.* ........................................................ 500 9,813
Chartwell Re Corp. ...................................................................... 550 13,681
Guarantee Life Companies, Inc. .......................................................... 500 9,625
MMI Companies, Inc. ..................................................................... 500 8,031
National Western Life Insurance Co.* .................................................... 50 5,850
RLI Corp. ............................................................................... 300 9,825
Zenith National Insurance Corp. ......................................................... 600 15,338
-------
72,163
-------
Business Finance 0.9%
Advest Group, Inc. ...................................................................... 700 14,525
-------
Real Estate 0.2%
IMC Mortgage Co.* ....................................................................... 1,200 2,400
-------
Miscellaneous 0.7%
Resource Bancshares Mortgage Group, Inc. ................................................ 700 10,325
-------
Service Industries 9.7%
EDP Services 0.7%
Pomeroy Computer Resources, Inc.* ....................................................... 600 10,088
-------
Environmental Services 0.7%
URS Corp.* .............................................................................. 600 10,125
-------
Investment 1.4%
Interstate/Johnson Lane, Inc. ........................................................... 400 12,250
Southwest Securities Group, Inc. ........................................................ 500 9,250
-------
21,500
-------
Miscellaneous Commercial Services 5.4%
CORT Business Services Corp.* ........................................................... 500 9,813
Fleming Companies Inc. .................................................................. 800 8,150
Kaneb Services, Inc.* ................................................................... 1,700 7,756
Morrison Knudsen Corp.* ................................................................. 700 6,956
Personnel Group of America, Inc. ........................................................ 800 12,400
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 - Scudder Tax Managed Small Company Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Pinkerton's, Inc.* ...................................................................... 600 9,825
SOS Staffing Services, Inc.* ............................................................ 600 5,063
Veritas DGC Inc.* ....................................................................... 650 12,106
Volt Information Sciences, Inc.* ........................................................ 500 11,969
------
84,038
------
Miscellaneous Consumer Services 0.9%
Jan Bell Marketing, Inc.* ............................................................... 1,400 6,738
Westaff Inc. ............................................................................ 800 6,900
------
13,638
------
Printing/Publishing 0.6%
Merrill Corp. ........................................................................... 600 10,050
------
Durables 7.3%
Aerospace 3.0%
Aviall, Inc.* ........................................................................... 800 8,650
Banner Aerospace, Inc.* ................................................................. 1,000 7,938
Ducommun, Inc. .......................................................................... 600 9,600
Kaman Corp. "A" ......................................................................... 600 9,750
Primex Technologies, Inc. ............................................................... 300 11,025
------
46,963
------
Automobiles 3.5%
Coachmen Industries, Inc. ............................................................... 400 9,250
Intermet Corp. .......................................................................... 600 9,750
Monaco Coach Corp. ...................................................................... 300 9,113
Myers Industries, Inc. .................................................................. 500 12,000
Oshkosk Truck Corp. "B" ................................................................. 500 13,688
------
53,801
------
Leasing Companies 0.8%
AMERCO* ................................................................................. 300 7,050
Leasing Solutions, Inc.* ................................................................ 500 5,094
------
12,144
------
Manufacturing 20.2%
Chemicals 1.8%
Chemfab Corp.* .......................................................................... 500 10,500
Kronos, Inc.* ........................................................................... 300 10,800
Quaker Chemical Corp. ................................................................... 500 7,063
------
28,363
------
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 - Scudder Tax Managed Small Company Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Containers & Paper 0.6%
Alltrista Corp.* ........................................................................ 400 9,175
------
Diversified Manufacturing 3.7%
Cascade Corp. ........................................................................... 500 6,750
International Aluminum Co. .............................................................. 300 8,681
Justin Industries ....................................................................... 700 10,150
Mestek, Inc.* ........................................................................... 600 11,250
Park-Ohio Holdings Corp.* ............................................................... 700 10,281
Ralcorp Holdings, Inc.* ................................................................. 600 10,575
------
57,687
------
Electrical Products 2.7%
AFC Cable Systems, Inc.* ................................................................ 300 7,388
C&D Technologies, Inc. .................................................................. 400 9,750
Katy Industries, Inc. ................................................................... 500 10,250
Kuhlman Corp. ........................................................................... 300 7,950
SLI, Inc.* .............................................................................. 400 6,700
------
42,038
------
Industrial Specialty 5.7%
Chart Industries, Inc. .................................................................. 1,400 12,863
Gardner Denver Inc. ..................................................................... 500 7,188
Huffy Corp. ............................................................................. 800 10,150
Modtech, Inc.* .......................................................................... 400 6,750
National R.V. Holdings, Inc. ............................................................ 500 11,313
Optical Coating Laboratory, Inc. ........................................................ 600 9,975
RTI International Metals, Inc.* ......................................................... 400 5,950
Regal-Beloit Corp. ...................................................................... 300 6,319
Thermo BioAnalysis Corp.* ............................................................... 700 7,394
TransTechnology Corp. ................................................................... 500 10,531
------
88,433
------
Machinery/Components/Controls 3.9%
Amcast Industrial Corp. ................................................................. 700 11,988
Columbus McKinnon Corp. ................................................................. 500 8,250
Dura Automotive Systems, Inc.* .......................................................... 300 7,163
Varco International, Inc. ............................................................... 1,400 15,138
Varlen Corp. ............................................................................ 300 8,963
Woodward Governor Co. ................................................................... 400 8,800
------
60,302
------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 - Scudder Tax Managed Small Company Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Wholesale Distributors 1.0%
Brightpoint, Inc. ....................................................................... 1,200 14,700
------
Miscellaneous 0.8%
M&F Worldwide Corp.* .................................................................... 1,300 12,919
------
Technology 4.8%
Computer Software 1.0%
Caere Corp.* ............................................................................ 600 5,813
MAPICS, Inc.* ........................................................................... 500 9,438
------
15,251
------
Diverse Electronic Products 0.2%
SBS Technologies, Inc.* ................................................................. 200 3,238
------
Electronic Components/Distributors 2.5%
CTS Corp. ............................................................................... 500 14,813
Harmon Industries, Inc. ................................................................. 400 10,150
Technitrol, Inc. ........................................................................ 500 13,625
------
38,588
------
Military Electronics 0.6%
ESCO Electronics Corp.* ................................................................. 700 8,750
------
Precision Instruments 0.5%
Coherent, Inc. .......................................................................... 700 8,225
------
Energy 4.1%
Oil & Gas Production 1.7%
Plains Resources, Inc.* ................................................................. 500 8,500
Tesoro Petroleum Corp.* ................................................................. 800 11,850
UTI Energy Corp.* ....................................................................... 700 6,256
------
26,606
------
Oil/Gas Transmission 0.5%
World Fuel Services Corp. ............................................................... 500 7,000
------
Oilfield Services/Equipment 1.9%
Daniel Industries ....................................................................... 500 6,938
Pool Energy Services Co.* ............................................................... 1,000 13,344
Seacor Smit Inc.* ....................................................................... 200 9,563
------
29,845
------
Metals & Minerals 3.7%
Steel & Metals 3.2%
Armco, Inc.* ............................................................................ 2,500 11,875
Chase Industries, Inc. .................................................................. 700 9,275
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 - Scudder Tax Managed Small Company Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Commercial Metals Co. ................................................................... 500 13,313
Gibraltar Steel Corp.* .................................................................. 500 9,688
Lone Star Technologies, Inc.* ........................................................... 600 6,375
------
50,526
------
Miscellaneous 0.5%
Kaiser Aluminum Corp.* .................................................................. 1,100 6,944
------
Construction 8.0%
Building Materials 3.3%
Ameron International Corp. .............................................................. 300 10,931
Building Materials Holding Corp.* ....................................................... 800 8,900
Elcor Corp. ............................................................................. 300 8,700
Florida Rock Industries, Inc. ........................................................... 500 12,406
Genlyte Group, Inc. ..................................................................... 500 9,906
------
50,843
------
Building Products 2.3%
American Buildings Co.* ................................................................. 300 7,200
Holophane Corp. ......................................................................... 300 6,394
NCI Building Systems, Inc. .............................................................. 600 12,975
Robertson-Ceco Corp.* ................................................................... 1,200 9,600
------
36,169
------
Homebuilding 2.4%
American Homestar Corp. ................................................................. 400 6,550
Cavalier Homes, Inc. .................................................................... 1,000 9,688
MDC Holdings, Inc. ...................................................................... 700 12,294
Standard Pacific Corp. .................................................................. 900 8,719
------
37,251
------
Transportation 3.4%
Airlines 1.7%
Atlantic Coast Airlines Holdings ........................................................ 400 9,600
Mesaba Holdings, Inc. ................................................................... 900 16,425
------
26,025
------
Trucking 1.7%
Covenant Transport, Inc. "A"* ........................................................... 500 7,563
M.S. Carriers Inc.* ..................................................................... 500 10,750
U.S. Xpress Enterprises, Inc. "A"* ...................................................... 600 8,700
------
27,013
------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 - Scudder Tax Managed Small Company Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Utilities 2.6%
Electric Utilities 1.7%
TNP Enterprises, Inc. ................................................................... 400 13,500
UniSource Energy Corp.* ................................................................. 800 12,400
---------
25,900
---------
Natural Gas Distribution 0.9%
CTG Resources Inc. ...................................................................... 300 7,106
Energen Corp. ........................................................................... 400 7,200
---------
14,306
- ------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $1,449,763) 1,547,128
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $1,449,763) (a) 1,547,128
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The cost for federal income tax purposes was $1,449,763. At October 31,
1998, net unrealized appreciation for all securities based on tax cost was
$97,365. This consisted of aggregate gross unrealized appreciation for all
securities in which there was an excess of market value over tax cost of
$149,666 and aggregate gross unrealized depreciation for all securities in
which there was an excess of tax cost over market value of $52,301.
* Non-income producing security.
The accompanying notes are an integral part of the financial statements.
15 - Scudder Tax Managed Small Company Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of October 31, 1998
<TABLE>
<S> <C>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
Investments, at market (identified cost $1,449,763) .................... $ 1,547,128
Cash ................................................................... 42,716
Dividends receivable ................................................... 486
Reimbursement from Adviser ............................................. 40,550
----------------
Total assets ........................................................... 1,630,880
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased ...................................... 12,129
Other accrued expenses ................................................. 42,534
----------------
Total liabilities ...................................................... 54,663
--------------------------------------------------------------------------------------------
Net assets, at market value $ 1,576,217
--------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Undistributed net investment income .................................... 3,301
Unrealized appreciation (depreciation) on investment securities ........ 97,365
Paid-in capital ........................................................ 1,475,551
--------------------------------------------------------------------------------------------
Net assets, at market value $ 1,576,217
--------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share ($1,576,217 /
126,926 outstanding shares of beneficial interest, $.01 par value, ----------------
unlimited number of shares authorized) .............................. $12.42
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 - Scudder Tax Managed Small Company Fund
<PAGE>
Statement of Operations
for the period September 18, 1998 (commencement
of operations) to October 31, 1998
<TABLE>
<S> <C>
Investment Income
- ----------------------------------------------------------------------------------------------------------------------------
Income:
Dividends .............................................................. $ 958
Interest ............................................................... 849
----------------
1,807
Expenses:
Management fee ......................................................... 1,206
Services to shareholders ............................................... 3,348
Custodian and accounting fees .......................................... 8,860
Auditing ............................................................... 19,100
Registration fees ...................................................... 3,915
Reports to shareholders ................................................ 8,530
Legal .................................................................. 2,048
Other .................................................................. 4,233
----------------
Total expenses before reductions ....................................... 51,240
Expense reductions ..................................................... (49,256)
----------------
Expenses, net .......................................................... 1,984
--------------------------------------------------------------------------------------------
Net investment income (loss) (177)
--------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ----------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) during the period on
investments .......................................................... 97,365
--------------------------------------------------------------------------------------------
Net gain (loss) on investment transactions 97,365
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 97,188
--------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17 - Scudder Tax Managed Small Company Fund
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the Period
September 18,
1998
(commencement of
operations) to
Increase (Decrease) in Net Assets October 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Operations:
Net investment income (loss) ........................................... $ (177)
Net unrealized appreciation (depreciation) on investment
transactions during the period ...................................... 97,365
----------------
Net increase (decrease) in net assets resulting from operations ........ 97,188
----------------
Fund share transactions:
Proceeds from shares sold .............................................. 1,477,911
Cost of shares redeemed ................................................ (82)
----------------
Net increase (decrease) in net assets from Fund share transactions ..... 1,477,829
----------------
Increase (decrease) in net assets ...................................... 1,575,017
Net assets at beginning of period ...................................... 1,200
Net assets at end of period (including undistributed net investment ----------------
income of $3,301) ................................................... $ 1,576,217
----------------
Other Information
- ----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period .............................. 100
----------------
Shares sold ............................................................ 126,833
Shares redeemed ........................................................ (7)
----------------
Net increase (decrease) in Fund shares ................................. 126,826
----------------
Shares outstanding at end of period .................................... 126,926
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
18 - Scudder Tax Managed Small Company 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 18,
1998
(commencement of
operations) to
October 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
----------------
Net asset value, beginning of period .................................................................. $12.00
----------------
Income from investment operations:
Net investment income ................................................................................. --
Net realized and unrealized gain on investments ....................................................... .42
----------------
Total from investment operations ...................................................................... .42
----------------
Redemption fee ........................................................................................ --
----------------
Net asset value, end of period ........................................................................ $12.42
----------------
- ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) (b) .................................................................................. 3.50(c)**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ................................................................ 1.58
Ratio of operating expenses, net to average daily net assets (%) ...................................... 1.50*
Ratio of operating expenses, before expense reductions, to average daily net assets (%) ............... 38.75*
Ratio of net investment income (loss) to average daily net assets (%) ................................. (0.13)*
Portfolio turnover rate (%) ........................................................................... --
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) Total return would have been lower had certain expenses not been reduced.
(c) Total return does not reflect the effect to the shareholder of the 2%
redemption fee on shares held less than one year.
* Annualized
** Not annualized
19 - Scudder Tax Managed Small Company Fund
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Scudder Tax Managed Small Company Fund (the "Fund") is a diversified series of
Investment Trust (the "Trust"). The Trust is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
Security Valuation. Portfolio securities which are traded on U.S. or foreign
stock exchanges are valued at the most recent sale price reported on the
exchange on which the security is traded most extensively. If no sale occurred,
the security is then valued at the calculated mean between the most recent bid
and asked quotations. If there are no such bid and asked quotations, the most
recent bid quotation is used. Securities quoted on the Nasdaq Stock Market, Inc.
("Nasdaq"), 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 most
recent bid quotation. Securities which are not quoted on Nasdaq but are traded
in another over-the-counter market are valued at the most recent sale price on
such market. If no sale occurred, the security is then valued at the calculated
mean between the most recent bid and asked quotations. If there are no such bid
and asked quotations, the most recent bid quotation shall be used.
Portfolio debt securities other than money market securities with an original
maturity of over 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,
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 the repurchase price.
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code of 1986, as amended, which are applicable to regulated
investment companies, and to distribute all of its taxable income to its
shareholders. The Fund accordingly paid no federal income taxes and no provision
for federal income taxes was required.
Redemption Fees. In general, shares of the Fund may be redeemed at net asset
value. However, upon the redemption or exchange of shares held by shareholders
for less than one year, a fee of 2% of the current net asset value of the shares
will be assessed and retained by the Fund for the benefit of the remaining
shareholders. The redemption fee is accounted for as an addition to paid-in
capital.
Distribution of Income and Gains. Distributions of net investment income 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.
20 - Scudder Tax Managed Small Company Fund
<PAGE>
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 and net realized gain (loss) on investment transactions for a
reporting period may differ significantly from distributions during such period.
Accordingly, the Fund may periodically make reclassifications among certain of
its capital accounts without impacting the net asset value of the Fund.
The Fund uses the specific identified cost method for determining realized gain
or loss on investments for both financial and federal income tax reporting
purposes.
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 18, 1998 (commencement of operations) to October 31,
1998, purchases of investment securities (excluding short-term investments)
aggregated $1,449,763. There were no sales during the period.
C. Related Parties
Under the Fund's Investment Management Agreement (the "Management Agreement")
with Scudder Kemper Investments, Inc. (the "Adviser"), the Adviser directs the
investments of the Fund in accordance with its investment objectives, policies
and restrictions. The Adviser determines the securities, instruments and other
contracts relating to investments to be purchased, sold or entered into by the
Fund. In addition to portfolio management services, the Adviser provides certain
administrative services in accordance with the Management Agreement. The
management fee payable under the Management Agreement is equal to an annual rate
of 0.90% of the Fund's average daily net assets, computed and accrued daily and
payable monthly. In addition, the Adviser has agreed not to impose all or a
portion of its management fee until February 28, 1999 in order to maintain the
annualized expenses of the Fund at not more than 1.50% of average daily net
assets. Accordingly, for the period September 18, 1998 (commencement of
operations) to October 31, 1998, the Adviser did not impose any of its fee
amounting to $1,206. Further, due to the limitations of such Agreement, the
Adviser's reimbursement payable to the Fund for the period September 18, 1998
(commencement of operations) to October 31, 1998 amounted to $40,550.
On September 7, 1998, Zurich Insurance Company ("Zurich"), majority owner of the
Adviser, entered into an agreement with B.A.T Industries p.l.c. ("B.A.T")
pursuant to which the financial services businesses of B.A.T were combined with
Zurich's businesses to form a new global insurance and financial services
company known as Zurich Financial Services. Upon consummation of the
transaction, the Fund's investment management agreement with Scudder Kemper was
deemed to have been assigned and, therefore, terminated. The Board of Directors
of the Fund has approved a new investment management agreement with Scudder
Kemper, which is substantially identical to the former investment management
agreement, except for the dates of execution and termination. The Board of
Directors of the Fund will seek shareholder approval of the new investment
management agreement through a proxy solicitation that is currently scheduled to
conclude in mid-December.
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 18, 1998 (commencement of operations) to October 31, 1998, SSC
did not impose any of its fee, which amounted to $1,071.
21 - Scudder Tax Managed Small Company Fund
<PAGE>
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 18, 1998
(commencement of operations) to October 31, 1998, the Fund did not incur any
such fees.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records of the Fund. For the period
September 18, 1998 (commencement of operations) to October 31, 1998, SFAC did
not impose any of its fee, which amounted to $6,430.
The Trust pays each Trustee not affiliated with the Adviser an annual retainer,
plus specified amounts for attended board and committee meetings. For the period
September 18, 1998 (commencement of operations) to October 31, 1998, the Fund
did not incur any such fees.
22 - Scudder Tax Managed Small Company Fund
<PAGE>
Report of Independent Accountants
To the Trustees of Investment Trust and the Shareholders of Scudder Tax Managed
Small Company 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 Tax Managed Small Company
Fund (the "Fund") at October 31, 1998, the results of its operations for the
period then ended and the changes in its net assets and financial highlights for
the period September 18, 1998 (commencement of operations) to October 31, 1998,
in conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 18, 1998
23 - Scudder Tax Managed Small Company Fund
<PAGE>
Trustees and Officers
Daniel Pierce*
President and Trustee
Henry P. Becton, Jr.
Trustee; President and General
Manager, WGBH Educational
Foundation
Dawn-Marie Driscoll
Trustee; Executive Fellow, Center
for Business Ethics, Bentley
College; President, Driscoll
Associates
Peter B. Freeman
Trustee; Corporate Director and
Trustee
George M. Lovejoy, Jr.
Trustee; President and Director,
Fifty Associates
Wesley W. Marple, Jr.
Trustee; Professor of Business
Administration, Northeastern
University
Kathryn L. Quirk*
Trustee, Vice President and
Assistant Secretary
Jean C. Tempel
Trustee; Managing Partner,
Technology Equity Partners
Bruce F. Beaty*
Vice President
Philip S. Fortuna*
Vice President
William F. Gadsden*
Vice President
Robert T. Hoffman*
Vice President
Thomas W. Joseph*
Vice President
Valerie F. Malter*
Vice President
Ann M. McCreary*
Vice President
Thomas F. McDonough*
Vice President and Secretary
John R. Hebble*
Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
24 - Scudder Tax Managed Small Company Fund
<PAGE>
Investment Products and Services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series--
Prime Reserve Shares*
Premium Shares*
Managed Shares*
Scudder Government Money Market Series--
Managed Shares*
Tax Free Money Market+
- ----------------------
Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series--
Managed Shares*
Scudder California Tax Free Money Fund**
Scudder New York Tax Free Money Fund**
Tax Free+
- ---------
Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund**
Scudder Massachusetts Limited Term Tax Free Fund**
Scudder Massachusetts Tax Free Fund**
Scudder New York Tax Free Fund**
Scudder Ohio Tax Free Fund**
Scudder Pennsylvania Tax Free Fund**
U.S. Income
- -----------
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder Corporate Bond Fund
Scudder High Yield Bond Fund
Global Income
- -------------
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
Asset Allocation
- ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
U.S. Growth and Income
- ----------------------
Scudder Balanced Fund
Scudder Dividend & Growth Fund
Scudder Growth and Income Fund
Scudder S&P 500 Index Fund
Scudder Real Estate Investment Fund
U.S. Growth
- -----------
Value
Scudder Large Company Value Fund
Scudder Value Fund***
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund***
Scudder Large Company Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Equity
- -------------
Worldwide
Scudder Global Fund
Scudder International Value Fund
Scudder International Growth and Income Fund
Scudder International Fund++
Scudder International Growth Fund
Scudder Global Discovery Fund***
Scudder Emerging Markets Growth Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund, Inc.
Industry Sector Funds
- ---------------------
Choice Series
Scudder Financial Services Fund
Scudder Health Care Fund
Scudder Technology Fund
Preferred Series
- ----------------
Scudder Tax Managed Growth Fund
Scudder Tax Managed Small
Company Fund
Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
Retirement Programs
- -------------------
Traditional IRA
Roth IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan**+++ +++
(a variable annuity)
Education Accounts
- ------------------
Education IRA
UGMA/UTMA
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder Global High Income Fund, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder Spain and Portugal Fund, Inc.
For complete information on any of the above Scudder funds, including management
fees and expenses, call or write for a free prospectus. Read it carefully before
you invest or send money. +++Funds within categories are listed in order from
expected least risk to most risk. Certain Scudder funds may not be available for
purchase or exchange. +A portion of the income from the tax-free funds may be
subject to federal, state, and local taxes. *A class of shares of the Fund.
**Not available in all states. ***Only the Scudder Shares of the Fund are part
of the Scudder Family of Funds. ++Only the International Shares of the Fund are
part of the Scudder Family of Funds. +++ +++A no-load variable annuity contract
provided by Charter National Life Insurance Company and its affiliate, offered
by Scudder's insurance agencies, 1-800-225-2470. #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.
25 - Scudder Tax Managed Small Company Fund
<PAGE>
Scudder Solutions
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Investment Plan QuickBuy
A convenient investment program in which money is Lets you purchase Scudder fund shares
electronically debited from your bank account monthly to electronically, avoiding potential mailing delays;
regularly purchase fund shares and "dollar cost average" money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from a previously designated bank
fewer when it's higher, which can reduce your average account.
purchase price over time.*
Automatic Dividend Transfer Payroll Deduction and Direct Deposit
The most timely, reliable, and convenient way to Have all or part of your paycheck -- even government
purchase shares -- use distributions from one Scudder checks -- invested in up to four Scudder funds at
fund to purchase shares in another, automatically one time.
(accounts with identical registrations or the same
social security or tax identification number).
* Dollar cost averaging involves continuous investment in securities regardless of price
fluctuations and does not assure a profit or protect against loss in declining markets.
Investors should consider their ability to continue such a plan through periods of low price
levels.
Around-the-clock electronic account service and information, including some transactions:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- www.scudder.com
1-800-343-2890
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 previously designated.
Distributions Direct
Automatically deposits your fund distributions into the
bank account you designate within three business days
after each distribution is paid.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
26 - Scudder Tax Managed Small Company Fund
<PAGE>
Mutual Funds and More -- Brokerage and Guidance Services:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Brokerage Services Scudder Portfolio Builder
Offers you access to a world of investments, A free service designed to help suggest ways investors like
including stocks, corporate bonds, Treasuries, plus you can diversify your portfolio among domestic and global,
over 8,000 mutual funds from at least 150 mutual as well as equity, fixed-income, and money market funds,
fund companies. And Scudder Fund Folio(SM) provides using Scudder funds.
investors with access to a marketplace of more than
800 no-load funds from well-known companies--with no Personal Counsel from Scudder(SM)
transaction fees or commissions. Scudder
shareholders can take advantage of a Scudder Developed for investors who prefer the benefits of no-load
Brokerage account already reserved for them, with funds but want ongoing professional assistance in
no minimum investment. For information about managing a portfolio. Personal Counsel(SM) is a highly
Scudder Brokerage Services, call 1-800-700-0820. customized, fee-based asset management service for
individuals investing $100,000 or more.
Fund Folio funds held less than six months will be charged a fee for redemptions. You can buy
shares directly from the fund itself or its principal underwriter or distributor without
paying this fee. Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061.
Member SIPC.
Personal Counsel From Scudder(SM) and Personal Counsel(SM) are service marks of and represent a
program offered by Scudder Investor Services, Inc., Adviser.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
Additional Information on How to Contact Scudder:
- ------------------------------------------------------------------------------------------------------------------------------
For existing account services and transactions Please address all written correspondence to
Scudder Investor Relations -- 1-800-225-5163 The Scudder Funds
P.O. Box 2291
For establishing 401(k) and 403(b) plans Boston, Massachusetts
Scudder Defined Contribution Services -- 02107-2291
1-800-323-6105
Or Stop by a Scudder Investor Center
For information about The Scudder Funds, including Many shareholders enjoy the personal, one-on-one service of
additional applications and prospectuses, or for the Scudder Investor Centers. Check for an Investor Center near
answers to investment questions you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470 Boca Raton Chicago San Francisco
[email protected] Boston New York
</TABLE>
27 - Scudder Tax Managed Small Company Fund
<PAGE>
About the Fund's Adviser
Scudder Kemper Investments, Inc., is one of the largest and most experienced
investment management oganizations worldwide, managing more than $230 billion in
assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts. It is one of the ten largest mutual fund companies in the
United States.
Scudder Kemper Investments has a rich heritage of innovation, integrity, and
client-focused service. In 1997, Scudder, Stevens & Clark, Inc., founded 79
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Group. As a result, Zurich's subsidiary, Zurich Kemper Investments,
Inc., with 50 years of mutual fund and investment management experience, was
combined with Scudder. Headquartered in New York, Scudder Kemper Investments
offers a full range of investment counsel and asset management capabilities,
based on a combination of proprietary research and disciplined, long-term
investment strategies. With its global investment resources and perspective,
the firm seeks opportunities in markets throughout the world to meet the needs
of investors.
Scudder Kemper Investments, Inc., the global asset management firm, is a member
of the Zurich Group. The Zurich Group is an internationally recognized leader in
financial services, including property/casualty and life insurance, reinsurance,
and asset management.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
SCUDDER
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