Scudder
Classic Growth Fund
Semiannual Report
February 28, 1998
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.
<PAGE>
Scudder Classic Growth Fund
- --------------------------------------------------------------------------------
Date of Inception: 9/9/96 Total Net Assets as of Ticker Symbol: SCCGX
2/28/98: $90.1 million
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o Scudder Classic Growth Fund provided a total return of 13.33% for the
six-month period and 37.84% for the one-year period ended February 28, 1998.
o Stocks of established growth companies provided good returns on average for
the six months, despite sharp price declines in October and November for some
companies that were perceived to have significant earnings exposure to Asia.
o The Fund continued to benefit from the favorable investment environment in the
United States, as the economy continued to expand, inflation was benign,
interest rates declined and corporate earnings reports remained positive for
many companies.
o Management continued to emphasize the technology, financial and energy sectors
during the six-month period.
Table of Contents
3 Letter from the Fund's President 17 Financial Highlights
4 Performance Update 18 Notes to Financial Statements
5 Portfolio Summary 21 Shareholder Meeting Results
6 Portfolio Management Discussion 24 Officers and Trustees
8 Glossary of Investment Terms 25 Investment Products and Services
9 Investment Portfolio 26 Scudder Solutions
14 Financial Statements
2 - Scudder Classic Growth Fund
<PAGE>
Letter from the Fund's President
Dear Shareholders,
Your Fund produced double-digit returns for the six-month period ended
February 28, 1998. These strong results were achieved during a difficult period,
as the Asian financial crisis expanded and investors remained concerned over the
potential impact of slowing U.S. exports on corporate earnings. While the jury
is still out on Asia's effect on earnings, we believe that the full extent of
any damage may not appear immediately. We are continuing to monitor the
situation closely. However, the Fund's conservative approach to investing, which
emphasizes stocks with lower volatility than the market, should provide a
measure of protection during this uncertain time. Your Fund's management team
discusses the Fund's activities beginning on page 6.
At the beginning of 1998, your Fund's investment adviser changed its name
to Scudder Kemper Investments, Inc. from Scudder, Stevens & Clark, Inc.,
reflecting the acquisition of a majority interest in Scudder by Zurich Insurance
Company, and the combining of Scudder's business with that of Zurich Kemper
Investments, Inc. We think this combination is very positive, and will provide
your Fund's manager with expanded resources in managing the Fund.
For those of you who are interested in new Scudder products, we recently
introduced three industry sector funds that comprise the Choice Series: Scudder
Financial Services Fund seeks long-term growth by investing in financial
services companies in the U.S. and abroad; Scudder Health Care Fund seeks
long-term growth from health care companies located around the world, and
Scudder Technology Fund pursues long-term growth by investing in companies that
develop, produce, or distribute technology-related products or services. In
addition, April 6 marked the debut of our latest entrant in the growth and
income category, Scudder Real Estate Investment Fund, which seeks long-term
capital growth and current income by investing primarily in equity securities of
companies in the real estate industry. For further information on any of these
new funds, please call 1-800-225-2470.
Thank you for your continued investment in Scudder Classic Growth Fund. If
you have any questions about your account, please call Scudder Investor
Relations at the toll-free number above, or visit our Web site at
http://funds.scudder.com.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder Classic Growth Fund
3 - Scudder Classic Growth Fund
<PAGE>
Performance Update as of February 28, 1998
- -------------------------------------------
Fund Index Comparisons
- -------------------------------------------
Total Return
- -------------------------------------------
Period Ended Growth of Average
2/28/98 $10,000 Cumulative Annual
- -------------------------------------------
Scudder Classic Growth Fund
- -------------------------------------------
1 Year $ 13,784 37.84% 37.84%
Life of Fund* $ 16,457 64.57% 40.38%
- -------------------------------------------
S&P 500 Index
- -------------------------------------------
1 Year $ 13,502 35.02% 35.02%
Life of Fund* $ 15,664 56.64% 37.36%
- -------------------------------------------
*The Fund commenced operations on September 9, 1996.
Index comparisons begin September 30, 1996.
- -------------------------------------------
Growth of a $10,000 Investment
- -------------------------------------------
A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:
SCUDDER CLASSIC GROWTH FUND
Year Amount
- ----------------------
9/96* $10,000
11/96 $10,973
2/97 $11,361
5/97 $12,419
8/97 $13,818
11/97 $14,160
2/98 $15,660
S&P 500 INDEX
Year Amount
- ----------------------
9/96* $10,000
11/96 $11,053
2/97 $11,601
5/97 $12,506
8/97 $13,317
11/97 $14,206
2/98 $15,664
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.
- -----------------------------------------------------------------
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 February 28
1997* 1998
- --------------------------------------------------------------------------------
Net Asset Value $ 14.29 $ 19.34
- --------------------------------------------------------------------------------
Income Dividends $ .04 $ .04
- --------------------------------------------------------------------------------
Capital Gains Dividends $ -- $ .29
- --------------------------------------------------------------------------------
Fund Total Return (%) 19.39 37.84
- --------------------------------------------------------------------------------
Index Total Return (%) 16.01 35.02
- --------------------------------------------------------------------------------
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.
4 - Scudder Classic Growth Fund
<PAGE>
Portfolio Summary as of February 28, 1998
- -------------------------------
Asset Allocation
- -------------------------------
Equity Holdings 96%
Cash Equivalents 4%
- -------------------------------
100%
- -------------------------------
The Fund essentially was fully
invested in stocks of established,
high quality growth companies.
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- ------------------------------
Sector Diversification
(Excludes 4% Cash Equivalents)
- ------------------------------
Financial 21%
Technology 13%
Energy 11%
Manufacturing 11%
Consumer Discretionary 11%
Health 10%
Consumer Staples 8%
Durables 5%
Service Industries 5%
Other 5%
- ------------------------------
100%
- ------------------------------
Weightings in the financial,
technology, energy, and
manufacturing sectors continued
to comprise an important part of
the portfolio.
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- -------------------------------
Ten Largest Equity Holdings
(24% of Portfolio)
- -------------------------------
1. AMERICAN EXPRESS COMPANY
Travel and investment services, insurance,
banking
2. INTEL CORP.
Semiconductor memory circuits
3. HOME DEPOT, INC.
Building supply/home improvement stores
4. EXEL, LTD.
Provider of liability insurance
5. AMERICAN INTERNATIONAL GROUP, INC.
Major international insurance holding company
6. PROCTER & GAMBLE CO.
Diversified manufacturer of consumer products
7. COMPAQ COMPUTER CORP.
Leading manufacturer of personal computers
8. FRANKLIN RESOURCES, INC.
Mutual fund investment advisor
9. ROYAL DUTCH PETROLEUM CO.
International energy company
10. PARKER-HANNIFIN GROUP
Fluid control components
The Fund's emphasis on
established growth companies is
reflected in the familiar names
which comprise its top
holdings.
For more complete details about the Fund's investment portfolio, see page 9.
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 the
market environment during the six-month period.
Q: How did Scudder Classic Growth Fund perform?
A: For the six-month period ended February 28, 1998, the Fund returned 13.33%,
which compares to the 17.62% return of the Fund's benchmark, the unmanaged S&P
500 Index. Longer term, the Fund outperformed the market, as evidenced by its
37.84% one-year return versus the 35.02% return of the S&P 500 for the same
period. Among its peers, the Fund ranked in the top 13% (107th) of 851 growth
funds according to Lipper Analytical Services for the one-year period.
Q: Market volatility increased during the six-month period. Why?
A: The dominant investment variable affecting U.S. equities during the period
was Asia. The crisis began as a small ripple in the world's financial markets in
July with devaluation of Thailand's currency, and became a truly global
financial event by October. It was no longer an isolated incident involving
several smaller economies. The addition of South Korea -- the world's 11th
largest economy -- to the list of troubled countries threatened to derail any
recovery in Japan. Consequently, it very much became our problem as well.
Reaction to the Asian crisis in the U.S. stock market was swift, and for certain
sectors, punitive. Stocks and industries with significant Asian exposure
suffered the most.
Q: How did the Fund's investments hold up in this environment?
A: Many of the Fund's holdings that exhibited the greatest price appreciation
over the first half of 1997 declined sharply in the second half. For example,
Compaq and Applied Materials, which were up significantly in the third quarter,
each declined in excess of 20% in the year's final quarter due to concerns that
their businesses would be adversely impacted by the turmoil in Asia.
While the Fund outperformed the market over the last twelve months, it did not
keep up with the overall market in October and November, as many issues that
performed well in the first nine months of the year were the target of profit
taking as problems in Asia spilled over into global markets. Most investment
"disciplines" seem to have difficulty in an environment of indiscriminate
selling. We view the turmoil as a period of adjustment, and are confident that
our valuation discipline, broad portfolio diversification, and focus on company
fundamentals will serve the Fund well over the long term.
Q: The environment seemed to change in the first two months of 1998 as the
equity markets raced ahead with an 8.39% year-to-date return. What is your
explanation?
A: In short, Asian fears subsided and the U.S. scene continued to exhibit
healthy signs. Many investors were concerned that the Asian crisis would slow
U.S. exports to the region, thereby putting the brakes on the U.S. economy. This
would not be good for earnings, given that we already expected earnings growth
and the economy to slow in 1998. To date, earnings have not slowed with any
6 - Scudder Classic Growth Fund
<PAGE>
major significance, inflation and producer prices have remained benign, and
employment rose to one of the highest levels in 25 years. In addition, the
International Monetary Fund (IMF) continued to make progress with bailouts for
Malaysia and South Korea. Going forward, there is still a good chance the impact
of the crisis may need more time to show up in earnings. Nevertheless, the
markets were nearly jubilant in January and February.
Q: Do you have any concerns about the high valuations of U.S. stock prices?
A: Because we have had three consecutive years of 20%+ returns, we are watching
our valuations carefully. In this type of environment, our discipline of seeking
to avoid stocks with unreasonably high expectations -- which typically trade at
high prices relative to their earnings, sales, or revenues -- should prove
particularly valuable. We prefer to pay for earnings that are sustainable. Our
investment focus is on seasoned companies with strong competitive positions and
consistent earnings growth rates that we believe are reasonably valued. We think
this approach can result in long-term growth of capital with lower share price
volatility than the average growth fund.
Q: What areas have you been emphasizing?
A: We have continued to emphasize the financial sector, which is benefiting from
consolidations and restructurings, including issuers such as American Express,
Citicorp, and Franklin Resources. We have also been maintaining significant
positions, relative to the S&P 500, in the technology and energy sectors. Intel,
Compaq, Exxon, and Royal Dutch are examples in these areas and were among the
portfolio's largest holdings at the end of the period. Leading "blue chip"
consumer staples companies, such as Coca-Cola and Gillette, continue to appear
expensive according to our valuation measures.
Q: The Fund has had a significant commitment to the energy sector. How was it
affected by declining oil prices?
A: Our exposure to the energy sector, which has been via large multinational oil
companies and oil field service providers, crimped performance. This occurred as
oil prices weakened and investors worried about the sustainability of strong
global oil demand in light of a marked slowdown in Asia. Conversely, while those
portfolio holdings with perceived Asian exposure suffered, those deemed
relatively immune to global goings-on surged ahead.
Q: What is your outlook?
A: We continue to remain cautious regarding 1998 profits, a position we held
prior to the crisis in Asia. As a result, the crisis has not caused us to
dramatically alter our investment outlook. On the margin, however, our
expectations for earnings growth are trending somewhat lower. With current stock
market valuations rich and the prospect for meaningful earnings gains slim, it
is difficult to build the investment case for significant upward movement in the
U.S. stock market over the next twelve months. As a result, we believe investors
should expect equity market returns that are closer to the long-term historical
market average of 10% annually in 1998.
7 - 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 rapidly 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 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. 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
(also "earnings multiple") that 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. Value stocks tend to display
less price volatility and may carry higher
dividend yields.
Source: Scudder Kemper Investments, Inc.; Barron's Dictionary of Investment
Terms
8 - Scudder Classic Growth Fund
<PAGE>
Investment Portfolio as of February 28, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreements 4.2%
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 2/27/98 at 5.63%,
to be repurchased at $3,821,792 on 3/2/98, collateralized by a $3,780,000 -----------
U.S. Treasury Note, 5.125%, 3/31/98 (Cost $3,820,000) ................................. 3,820,000 3,820,000
-----------
Shares
- ------------------------------------------------------------------------------------------------------------------------------
Common Stocks 95.8%
- ------------------------------------------------------------------------------------------------------------------------------
Consumer Discretionary 10.0%
Department & Chain Stores 6.9%
Costco Companies, Inc.* ................................................................. 28,800 1,407,600
Dayton Hudson Corp. ..................................................................... 18,100 1,399,356
Home Depot, Inc. ........................................................................ 35,400 2,258,963
Walgreen Co. ............................................................................ 32,600 1,196,013
-----------
6,261,932
-----------
Hotels & Casinos 0.9%
Mirage Resorts, Inc.* ................................................................... 37,000 846,375
-----------
Specialty Retail 2.2%
AutoZone, Inc.* ......................................................................... 32,300 977,075
Tiffany & Co. ........................................................................... 21,200 996,400
-----------
1,973,475
-----------
Consumer Staples 7.5%
Alcohol & Tobacco 1.5%
Philip Morris Companies, Inc. ........................................................... 30,700 1,333,531
-----------
Food & Beverage 3.6%
H.J. Heinz Co. .......................................................................... 19,500 1,098,094
Keebler Foods Co.* ...................................................................... 6,900 216,488
Sara Lee Corp. .......................................................................... 15,250 861,625
Suiza Foods Corp.* ...................................................................... 17,000 1,101,813
-----------
3,278,020
-----------
Package Goods/Cosmetics 2.4%
Procter & Gamble Co. .................................................................... 25,800 2,191,388
-----------
Health 9.7%
Health Industry Services 1.5%
HEALTHSOUTH Corp.* ...................................................................... 31,400 847,800
Total Renal Care Holdings, Inc.* ........................................................ 16,500 531,094
-----------
1,378,894
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9 - Scudder Classic Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Medical Supply & Specialty 1.4%
Becton, Dickinson & Co. ................................................................. 20,300 1,291,588
-----------
Pharmaceuticals 6.8%
American Home Products Corp. ............................................................ 9,400 881,250
Bristol-Myers Squibb Co. ................................................................ 12,600 1,262,363
Johnson & Johnson ....................................................................... 11,200 845,600
Merck & Co., Inc. ....................................................................... 6,700 854,669
Novartis AG (ADR) ....................................................................... 13,000 1,187,875
Schering-Plough Corp. ................................................................... 15,300 1,163,756
-----------
6,195,513
-----------
Financial 19.8%
Banks 3.4%
BankAmerica Corp. ....................................................................... 22,600 1,751,500
Citicorp ................................................................................ 10,200 1,351,500
-----------
3,103,000
-----------
Insurance 10.2%
Allstate Corp. .......................................................................... 10,100 941,825
American International Group, Inc. ...................................................... 18,500 2,223,469
Conseco, Inc. ........................................................................... 24,800 1,164,050
EXEL Ltd. (ADR) ......................................................................... 34,000 2,250,367
MBIA, Inc. .............................................................................. 13,600 995,350
Travelers Group, Inc. ................................................................... 30,600 1,705,950
-----------
9,281,011
-----------
Consumer Finance 1.7%
Associates First Capital Corp. .......................................................... 19,200 1,536,000
-----------
Other Financial Companies 4.5%
American Express Company ................................................................ 27,400 2,467,713
Federal National Mortgage Association ................................................... 25,200 1,608,075
-----------
4,075,788
-----------
Media 3.1%
Advertising 1.8%
Omnicom Group, Inc. ..................................................................... 35,400 1,619,550
-----------
Cable Television 1.3%
Tele-Comm Liberty Media Group "A"* ...................................................... 41,850 1,148,259
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 - Scudder Classic Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Service Industries 4.8%
Investment 3.5%
Franklin Resources, Inc. ................................................................ 39,100 1,994,100
Merrill Lynch & Co., Inc. ............................................................... 16,200 1,159,313
-----------
3,153,413
-----------
Miscellaneous Commercial Services 1.3%
AccuStaff, Inc.* ........................................................................ 41,500 1,172,375
-----------
Durables 5.2%
Aerospace 4.0%
Lockheed Martin Corp. ................................................................... 12,100 1,411,919
Rockwell International Corp. ............................................................ 15,100 913,550
United Technologies Corp. ............................................................... 15,100 1,348,619
-----------
3,674,088
-----------
Telecommunications Equipment 1.2%
Nokia AB Oy "A" (ADR) ................................................................... 10,500 1,057,875
-----------
Manufacturing 10.6%
Chemicals 3.0%
E.I. du Pont de Nemours & Co. ........................................................... 18,090 1,109,143
Praxair, Inc. ........................................................................... 14,400 688,500
Sigma-Aldrich Corp. ..................................................................... 24,300 959,850
-----------
2,757,493
-----------
Diversified Manufacturing 3.5%
Dresser Industries, Inc. ................................................................ 22,100 987,594
General Electric Co. .................................................................... 12,000 933,000
Textron, Inc. ........................................................................... 16,100 1,206,494
-----------
3,127,088
-----------
Electrical Products 0.8%
Emerson Electric Co. .................................................................... 10,700 682,794
-----------
Machinery/Components/Controls 3.1%
Ingersoll-Rand Co. ...................................................................... 20,750 988,219
Parker-Hannifin Group ................................................................... 39,650 1,848,681
-----------
2,836,900
-----------
Office Equipment/Supplies 0.2%
Steelcase, Inc.* ........................................................................ 4,200 151,463
-----------
</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>
Technology 12.5%
Computer Software 0.9%
Computer Associates International, Inc. ................................................. 17,700 834,113
-----------
Diverse Electronic Products 2.2%
Applied Materials, Inc.* ................................................................ 34,400 1,266,350
Harris Corp. ............................................................................ 14,600 740,038
-----------
2,006,388
-----------
Electronic Data Processing 6.7%
Compaq Computer Corp. ................................................................... 62,800 2,013,525
Hewlett-Packard Co. ..................................................................... 18,500 1,239,500
International Business Machines Corp. ................................................... 13,100 1,368,131
Sun Microsystems, Inc.* ................................................................. 30,400 1,447,800
-----------
6,068,956
-----------
Semiconductors 2.7%
Intel Corp. ............................................................................. 26,900 2,412,594
-----------
Energy 10.9%
Oil Companies 6.6%
Atlantic Richfield Co. .................................................................. 13,100 1,018,525
Exxon Corp. ............................................................................. 22,800 1,456,350
Mobil Corp. ............................................................................. 11,700 847,519
Repsol SA (ADR) ......................................................................... 16,800 747,600
Royal Dutch Petroleum Co. (New York shares) ............................................. 34,500 1,873,781
-----------
5,943,775
-----------
Oil/Gas Transmission 1.1%
Williams Cos., Inc. ..................................................................... 31,350 1,024,753
-----------
Oilfield Services/Equipment 3.2%
Diamond Offshore Drilling, Inc. ......................................................... 17,900 811,094
Santa Fe International Corp. ............................................................ 17,800 630,788
Schlumberger Ltd. ....................................................................... 20,000 1,507,500
-----------
2,949,382
-----------
Transportation 1.7%
Airlines 0.9%
AMR Corp.* .............................................................................. 6,700 847,969
-----------
</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>
Railroads 0.8%
Wisconsin Central Transportation Co.* ................................................... 25,800 699,825
- ------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $71,528,196) 86,915,568
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $75,348,196) (a) 90,735,568
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
(a) The cost for federal income tax purposes was $75,348,196. At February 28,
1998, net unrealized appreciation for all securities based on tax cost was
$15,387,372. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $15,776,072 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$388,700.
The accompanying notes are an integral part of the financial statements.
13 - Scudder Classic Growth Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of February 28, 1998 (Unaudited)
<TABLE>
<CAPTION>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investments, at market (identified cost $75,348,196) ............... $ 90,735,568
Receivable for investments sold .................................... 344,985
Receivable for Fund shares sold .................................... 423,491
Dividends and interest receivable .................................. 99,014
Deferred organization expenses ..................................... 5,611
Other assets ....................................................... 1,074
----------------
Total assets ....................................................... 91,609,743
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased .................................. 1,333,767
Payable for Fund shares redeemed ................................... 49,090
Accrued management fee ............................................. 20,405
Other payables and accrued expenses ................................ 125,262
----------------
Total liabilities .................................................. 1,528,524
-------------------------------------------------------------------------------------------
Net assets, at market value $ 90,081,219
-------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Undistributed net investment income ................................ 6,301
Unrealized appreciation (depreciation) on investments .............. 15,387,372
Accumulated net realized gain (loss) ............................... 563,688
Paid-in capital .................................................... 74,123,858
-------------------------------------------------------------------------------------------
Net assets, at market value $ 90,081,219
-------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($90,081,219 / 4,657,233 outstanding shares of beneficial
interest, $.01 par value, unlimited number of shares ----------------
authorized) ...................................................... $19.34
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 - Scudder Classic Growth Fund
<PAGE>
Statement of Operations
for the six months ended February 28, 1998 (Unaudited)
<TABLE>
<CAPTION>
Investment Income
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Income:
Dividends .......................................................... $ 367,042
Interest ........................................................... 105,992
----------------
473,034
----------------
Expenses:
Management fee ..................................................... 236,767
Services to shareholders ........................................... 204,313
Custodian and accounting fees ...................................... 28,807
Trustees' fees and expenses ........................................ 8,522
Auditing ........................................................... 16,640
Registration fees .................................................. 21,052
Reports to shareholders ............................................ 16,965
Legal .............................................................. 6,074
Amortization of organization expense ............................... 790
Other .............................................................. 3,107
----------------
Total expenses before reductions ................................... 543,037
Expense reductions ................................................. (120,239)
----------------
Expenses, net ...................................................... 422,798
-------------------------------------------------------------------------------------------
Net investment income 50,236
-------------------------------------------------------------------------------------------
<CAPTION>
Realized and unrealized gain (loss) on investment transactions
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Net realized gain (loss) from investments .......................... 588,152
Net unrealized appreciation (depreciation) during the period on
investments ...................................................... 8,531,556
-------------------------------------------------------------------------------------------
Net gain (loss) on investment transactions 9,119,708
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 9,169,944
-------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 - Scudder Classic Growth Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the Period
September 9,
1996
Six Months (commencement
Ended February of operations)
28, 1998 to August 31,
Increase (Decrease) in Net Assets (Unaudited) 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ........................................ $ 50,236 $ 101,107
Net realized gain (loss) on investment transactions .......... 588,152 1,068,807
Net unrealized appreciation (depreciation) on investment
transactions during the period ............................. 8,531,556 6,855,816
---------------- ----------------
Net increase (decrease) in net assets resulting from
operations ................................................. 9,169,944 8,025,730
Distributions to shareholders from:
Net investment income ........................................ (134,261) (43,257)
---------------- ----------------
Net realized gains ........................................... (1,093,271) --
---------------- ----------------
Fund share transactions:
Proceeds from shares sold .................................... 47,992,282 70,958,470
Net asset value of shares issued to shareholders in
reinvestment of distributions .............................. 1,215,373 42,483
Cost of shares redeemed ...................................... (20,294,631) (25,758,843)
---------------- ----------------
Net increase (decrease) in net assets from Fund share
transactions ............................................... 28,913,024 45,242,110
---------------- ----------------
Increase (decrease) in net assets ............................ 36,855,436 53,224,583
Net assets at beginning of period ............................ 53,225,783 1,200
Net assets at end of period (including undistributed net ---------------- ----------------
investment income of $6,301 and $90,326, respectively) ..... $ 90,081,219 $ 53,225,783
---------------- ----------------
Other Information
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period .................... 3,062,114 100
---------------- ----------------
Shares sold .................................................. 2,647,092 4,715,920
Shares issued to shareholders in reinvestment of
distributions .............................................. 70,172 3,115
Shares redeemed .............................................. (1,122,145) (1,657,021)
---------------- ----------------
Net increase (decrease) in Fund shares ....................... 1,595,119 3,062,014
---------------- ----------------
Shares outstanding at end of period .......................... 4,657,233 3,062,114
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 - 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
Six Months Ended (commencement
February 28, 1998 of operations) to
(Unaudited) August 31, 1997
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period ......................................... $17.38 $12.00
Income from investment operations: ----------------------------------------
Net investment income ........................................................ .01 .06
Net realized and unrealized gain (loss) on investment transactions ........... 2.28 5.36
----------------------------------------
Total from investment operations ............................................. 2.29 5.42
----------------------------------------
Less distributions from:
Net investment income ........................................................ (.04) (.04)
Net realized gains on investment transactions ................................ (.29) --
----------------------------------------
Total distributions .......................................................... (.33) (.04)
----------------------------------------
----------------------------------------
Net asset value, end of period ............................................... $19.34 $17.38
- ------------------------------------------------------------------------------------------------------------------------
Total Return (%) (b) ......................................................... 13.33** 45.20**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ....................................... 90.1 53.2
Ratio of operating expenses, net, to average daily net assets (%) ............ 1.25* 1.25*
Ratio of operating expenses before expense reductions, to average daily net
assets (%) ................................................................. 1.61* 2.25*
Ratio of net investment income to average daily net assets (%) ............... .15* .43*
Portfolio turnover rate (%) .................................................. 40.5* 27.4*
Average commission rate paid ................................................. $.0455 $.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
17 - Scudder Classic Growth Fund
<PAGE>
Notes to Financial Statements (Unaudited)
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 an open-end management investment
company.
Effective April 16, 1998, the Fund will close to certain new no-load investors.
Current individual shareholders of the Fund, owners of shares of funds in the
Scudder Family of Funds, qualified retirement plan investors, and certain others
will continue to be eligible to purchase shares of the Fund on a no-load basis.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
Security Valuation. Portfolio securities which are traded on U.S. or foreign
stock exchanges are valued at the most recent sale price reported on the
exchange on which the security is traded most extensively. If no sale occurred,
the security is then valued at the calculated mean between the most recent bid
and asked quotations. If there are no such bid and asked quotations, the most
recent bid quotation is used. Securities quoted on the Nasdaq System, for which
there have been sales, are valued at the most recent sale price reported on such
system. If there are no such sales, the value is the most recent 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. 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 100.5% of the repurchase price.
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code, as amended, which are applicable to regulated
investment companies and to distribute all of its taxable income to its
shareholders. Accordingly, the Fund paid no federal income taxes and no federal
income tax provision was required.
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.
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.
18 - Scudder Classic Growth Fund
<PAGE>
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.
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 six months ended February 28, 1998, purchases and sales of investment
securities (excluding short-term investments) aggregated $39,502,378 and
$13,282,640, respectively.
C. Related Parties
Effective December 31, 1997, Scudder, Stevens & Clark, Inc. ("Scudder") and The
Zurich Insurance Company ("Zurich"), an international insurance and financial
services organization, formed a new global investment organization by combining
Scudder's business with that of Zurich's subsidiary, Zurich Kemper Investments,
Inc. As a result of the transaction, Scudder changed its name to Scudder Kemper
Investments, Inc. ("Scudder Kemper" or the "Adviser"). The transaction between
Scudder and Zurich resulted in the termination of the Fund's Investment
Management Agreement with Scudder. However, a new Investment Management
Agreement (the "Management Agreement") between the Fund and Scudder Kemper was
approved by the Fund's Board of Trustees and by the Fund's Shareholders. The
Management Agreement, which is effective December 31, 1997, is the same in all
material respects as the corresponding previous Investment Management Agreement,
except that Scudder Kemper is the new investment adviser to the Fund.
Under the Fund's Management Agreement with Scudder Kemper, 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 Management Agreement. The Adviser has agreed not to impose all or a
portion of its management fee until April 15, 1998 in order to maintain the
annualized expenses of the Fund at not more than 1.25% of average daily net
assets. For the six months ended February 28, 1998, the Adviser did not impose a
portion of its management fee amounting to $120,239, and the fee imposed
amounted to $116,528.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
six months ended February 28, 1998, the amount charged to the Fund by SSC
aggregated $75,848, of which $18,309 is unpaid at February 28, 1998.
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 six months ended February
28, 1998, the amount charged to the Fund by STC aggregated $4,949, of which
$1,155 is unpaid at February 28, 1998.
19 - Scudder Classic Growth Fund
<PAGE>
The Fund is one of several Scudder Funds (the "Underlying Funds") in which the
Scudder Pathway Series Portfolios (the "Portfolios") invest. In accordance with
the Special Servicing Agreement entered into by the Adviser, the Portfolios, the
Underlying Funds, SSC, SFAC, STC, and Scudder Investor Services, Inc., expenses
from the operation of the Portfolios are borne by the Underlying Funds based on
each Underlying Fund's proportionate share of assets owned by the Portfolios. No
Underlying Funds will be charged expenses that exceed the estimated savings to
each respective Underlying Fund. These estimated savings result from the
elimination of separate shareholder accounts which either currently are or have
potential to be invested in the Underlying Funds. For the period ended February
28, 1998, the Special Servicing Agreement expense charged to the Fund amounted
to $108,309.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records of the Fund. For the six months
ended February 28, 1998, the amount charged to the Fund by SFAC aggregated
$19,968, of which $3,631 is unpaid at February 28, 1998.
The Fund pays each of its Trustees not affiliated with the Adviser an annual
retainer plus specified amounts for attended board and committee meetings. For
the six months ended February 28, 1998, the Trustees fees and expenses
aggregated $8,522.
20 - Scudder Classic Growth Fund
<PAGE>
Shareholder Meeting Results
A Special Meeting of Shareholders (the "Meeting") of Scudder Classic Growth Fund
(the "Fund") was held on October 24, 1997, at the office of Scudder Kemper
Investments, Inc. (formerly Scudder, Stevens & Clark, Inc.), Two International
Place, Boston, Massachusetts 02110. At the Meeting, as adjourned and reconvened,
the following matters were voted upon by the shareholders (the resulting votes
for each matter are presented below). With regard to certain proposals, it was
recommended that the Meeting be reconvened in order to provide shareholders with
an additional opportunity to return their proxies. The date of the reconvened
meeting at which the matters were decided is noted after the proposed matter.
1. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
2,463,534 34,189 22,202 54,304
2. To elect Trustees.
Number of Votes:
----------------
Trustee For Withheld
------- --- --------
Henry P. Becton, Jr. 2,485,385 34,540
Dawn-Marie Driscoll 2,485,218 34,707
Peter B. Freeman 2,485,240 34,685
George M. Lovejoy, Jr. 2,484,263 35,662
Dr. Wesley W. Marple, Jr. 2,485,279 34,646
Daniel Pierce 2,485,385 34,540
Kathryn L. Quirk 2,484,540 35,385
Jean C. Tempel 2,485,246 34,679
3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
2,361,561 72,290 31,771 54,303
21 - Scudder Classic Growth Fund
<PAGE>
4. To approve certain amendments to the Declaration of Trust. Sufficient
proxies had not been received by December 2, 1997 to approve the
amendments to the Declaration of Trust. Management has determined not to
continue to seek shareholder approval for this item.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
2,414,407 45,077 29,327 53,346
5. To approve the revision of certain fundamental investment policies.
<TABLE>
<CAPTION>
Number of Votes:
----------------
Broker
Fundamental Policies For Against Abstain Non-Votes*
-------------------- --- ------- ------- ---------
<S> <C> <C> <C> <C>
5.1 Diversification 2,379,989 50,466 35,165 54,305
5.2 Borrowing 2,378,927 51,529 35,165 54,304
5.3 Senior securities 2,379,454 51,002 35,165 54,304
5.4 Concentration 2,379,331 51,125 35,165 54,304
5.5 Underwriting of securities 2,379,879 39,319 46,423 54,304
5.6 Investment in real estate 2,379,005 40,193 46,423 54,304
5.7 Purchase of physical 2,379,004 40,306 46,311 54,304
commodities
5.8 Lending 2,379,987 39,323 46,311 54,304
</TABLE>
6. To ratify the selection of Coopers & Lybrand L.L.P. as the Fund's independent
accountants.
Number of Votes:
----------------
For Against Abstain
--- ------- -------
2,468,134 18,579 33,212
* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary power
to vote on a particular matter.
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
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, College of Business
Administration
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
Jerard K. Hartman*
Vice President
Robert T. Hoffman*
Vice President
Thomas W. Joseph*
Vice President
Valerie F. Malter*
Vice President
Thomas F. McDonough*
Vice President, Secretary and
Treasurer
John R. Hebble*
Assistant Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, 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
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 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.
Industry Sector Funds
- ---------------------
Choice Series
Scudder Financial Services Fund
Scudder Health Care FUnd
Scudder Technology 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. +++ +++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 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 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 -- 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 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 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
</TABLE>
27 - Scudder Classic Growth 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 $200 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
U.S.
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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