Scudder
Real Estate
Investment Fund
Annual Report
December 31, 1998
Pure No-Load(TM) Funds
A pure no-load(TM) (no sales charges) mutual fund which seeks long-term capital
growth and current income by investing primarily in equity securities of
companies in the real estate industry.
SCUDDER (logo)
<PAGE>
Scudder Real Estate Investment Fund
- --------------------------------------------------------------------------------
Date of Inception: 4/06/98 Total Net Assets as of Ticker Symbol: SCREX
12/31/98: $18.1 million
- --------------------------------------------------------------------------------
o The Fund posted a total return of -13.00% for the period, outpacing the
- -17.82% return of its unmanaged benchmark, the Wilshire Associates Real Estate
Securities Index.
o Management has taken advantage of the sector's poor overall performance by
purchasing fundamentally sound, undervalued securities with capable management
teams, strong cash flows, and reasonable valuations.
o The Fund has been overweight in the residential REIT sector, which held up
relatively well in the down market, and underweight in mortgage REITs, which
performed poorly.
Table of Contents
3 Letter from the Fund's President 16 Financial Highlights
4 Performance Update 17 Notes to Financial Statements
5 Portfolio Summary 20 Report of Independent Accountants
6 Portfolio Management Discussion 21 Shareholder Meeting Results
9 Glossary of Investment Terms 24 Officers and Trustees
10 Investment Portfolio 25 Investment Products and Services
13 Financial Statements 26 Scudder Solutions
2 - Scudder Real Estate Investment Fund
<PAGE>
Letter from the Fund's President
Dear Shareholders,
Financial assets of all stripes endured a period of unusually high
volatility in 1998, as markets adjusted to a more uncertain outlook for the
global economy. Real estate investment trusts, which traditionally possess a low
level of correlation with the broader market, were one of the worst-performing
sectors in the U.S. stock market. In this challenging environment, the strict
risk control strategy employed by Scudder REIT Fund allowed it to outperform its
unmanaged benchmark, the Wilshire Associates Real Estate Securities Index,
during the reporting period.
As we evaluate another year of strong performance for the U.S. stock market
and ponder what lies ahead, we believe the importance of diversification cannot
be overstated. This straightforward principle is particularly important
following eight consecutive years of strong returns for domestic equities. Under
such conditions, investors can be easily lulled into believing that annual gains
of 20% or higher are normal, when in fact long-run returns have averaged half of
that amount. While it is possible that the U.S. stock market could record yet
another period of strong performance in 1999, we believe that a portfolio with
adequate exposure to several asset classes such as fixed income, small cap,
international equities, and real estate securities will be the most successful
over the long term.
For those of you who are interested in new Scudder products, we recently
introduced the Scudder Tax Managed Growth Fund, investing in stocks of medium-
to large-sized U.S. companies, and Scudder Tax Managed Small Company Fund, which
invests in stocks of small U.S. companies. Using a combination of quantitative
and fundamental research, the funds focus on companies with strong earnings
growth, reasonable valuations, and favorable risk profiles. Both funds strive to
maximize after-tax returns by systematically taking into account the tax
implications of portfolio transactions and seeking to offset capital gains by
realizing losses when appropriate.
Thank you for your continued investment in Scudder Real Estate Investment
Fund. If you have any questions about your investment, please call Scudder
Investor Information at 1-800-225-2470, or visit our Web site at
www.scudder.com.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder Real Estate Investment Fund
3 - Scudder Real Estate Investment Fund
<PAGE>
Performance Update as of December 31, 1998
Fund Index Comparisons
- -----------------------------------------
Total Return
----------------
Period Growth
Ended of
12/31/98 $10,000 Cumulative
--------------------------------------------
Scudder Real Estate Investment Fund
--------------------------------------------
Life of Fund* $ 8,700 -13.00%
--------------------------------------------
Wilshire Associates Real Estate Securities
Index
--------------------------------------------
Life of Fund* $ 8,218 -17.82%
--------------------------------------------
* The Fund commenced operations on April
6, 1998.
Growth of a $10,000 Investment
- -----------------------------------------------
THE PRINTED DOCUMENT CONTAINS A LINE CHART HERE
CHART DATA:
Scudder Real Estate Investment Fund
Year Amount
- -----------------------
4/6/98* $10,000
4/98 $ 9,717
5/98 $ 9,650
6/98 $ 9,560
7/98 $ 9,088
8/98 $ 8,289
9/98 $ 8,904
10/98 $ 8,767
11/98 $ 8,749
12/98 $ 8,700
Wilshire Associates Real Estate Securities Index
Year Amount
- -----------------------
4/6/98* $10,000
4/98 $ 9,647
5/98 $ 9,552
6/98 $ 9,497
7/98 $ 8,799
8/98 $ 7,761
9/98 $ 8,323
10/98 $ 8,181
11/98 $ 8,368
12/98 $ 8,218
The Wilshire Associates Real Estate Securities Index is a market capitalized
weighted publicly traded real estate index. The index is rebalanced monthly and
returns are calculated on a buy and sell basis. Index returns assume
reinvestment of dividends and, unlike Fund returns, do not reflect any fees or
expenses.
Returns and Per Share Information
- -----------------------------------------------
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
ILLUSTRATING THE FUND TOTAL RETURN (%) AND
INDEX TOTAL RETURN (%)
CHART DATA:
<TABLE>
<CAPTION>
1998
- -------------------------------------------------------------------------------
<S> <C>
Net Asset Value $ 9.92
- -------------------------------------------------------------------------------
Income Dividends $ .53
- -------------------------------------------------------------------------------
Capital Gains Distributions $ --
- -------------------------------------------------------------------------------
Fund Total Return (%) -13.00
- -------------------------------------------------------------------------------
Index Total Return (%) -17.82
- -------------------------------------------------------------------------------
</TABLE>
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 Real Estate Investment Fund
<PAGE>
Portfolio Summary as of December 31, 1998
Asset Allocation
- -----------------------------------------
A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
Equity Holdings 99%
Cash Equivalents 1%
--------------------------------------
100%
======================================
Fund management seeks to remain as
close to fully invested as possible.
Sector Diversification
(Excludes 1% Cash Equivalents
- ----------------------------------------
A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
Retail Outlets 28%
Residential 23%
Recreation 13%
Diversified 9%
Industrial 8%
Office 8%
Health Care 5%
Self-Storage 4%
Mortgage 2%
-------------------------------------
100%
=====================================
The Fund provides broad exposure to
the overall real estate market by
investing in nine diverse subsectors.
Top Ten Equity Holdings
(21% of Portfolio
- ---------------------------------------------------------
1. MGI Properties, Inc.
Owner of multi-use industrial facilities, office
buildings, apartment complexes and shopping
centers
2. Innkeepers USA Trust
Owner of upscale extended-stay hotels
3. Sunstone Hotel Investors, Inc.
Owner of upscale hotels
4. Equity Residential Properties Trust
Owner of apartment properties
5. Essex Property Trust, Inc.
Developer and manager of multifamily residential
properties
6. The Macerich Company
Owner and manager of regional and community
shopping centers
7. Duke Realty Investments, Inc.
Ownership and rental of office, industrial and
retail properties
8. General Growth Properties, Inc.
General partnership interest in an operating
partnership which owns enclosed mall properties
9. Shurgard Storage Centers, Inc.
Developer and manager of personal and business self-storage centers
10. Charles E. Smith Residential Realty, Inc.
Real estate investment trust
We took advantage of weakness in
the sector to invest in strong
companies with unusually low
valuations.
5 - Scudder Real Estate Investment Fund
<PAGE>
Portfolio Management Discussion
In the following interview, Co-Lead Portfolio Managers Philip S. Fortuna and
Jennifer P. Carter discuss Scudder Real Estate Investment Fund's strategy and
the market environment during the period since the Fund began operations on
April 6, 1998.
Q: What were some of the key factors affecting REIT performance during the
reporting period?
A: After posting steady returns for seven consecutive years, real estate
securities encountered difficult conditions in 1998. Although a confluence of
factors contributed to the sector's downturn, we believe that the problems were
psychological rather than structural. Investors were rattled by the notion that
REITs' quest for growth was leading to poor management decisions, such as
excessive construction and unreasonably high bids for existing properties. While
this perception exacted a substantial toll on REIT prices in the short term, the
phenomenon is consistent with investors' traditional overreaction to supply and
demand issues. The potential for falling interest rates to encourage speculative
building was also viewed as a negative, but the resurgence in domestic growth
may mean that REIT prices have already discounted the worst effects of this
trend. Further dampening investor sentiment was the Congressional action
eliminating paired-share REITs, through which the stock of two companies under
the same management is sold as a unit. Although the market reacted negatively to
this legislation, it is unlikely to have a long-term impact on the Fund's
individual holdings. In short, we believe that the drop in REIT prices was
largely overdone. Consequently, we have been taking advantage of the favorable
valuations to add to our positions in the strongest individual securities.
Q: How did the Fund perform in this environment?
A: The Fund's total return from its inception to December 31, 1998, was -13.00%,
which compared favorably to the -17.82% return of the unmanaged Wilshire
Associates Real Estate Securities Index. Although we were disappointed by the
Fund's negative total return, we believe that its strong performance relative to
the benchmark demonstrates the value of our quantitative model and disciplined
risk control strategy. In general, it is reasonable to expect that the Fund will
outperform the Index when the latter is falling, but will trail it when the
environment is more favorable. Since we tend to invest in less speculative
securities with lower price-to-cash flow multiples, Fund holdings generally have
less room to fall when the market turns south.
Q: How do REITs work?
A: REITs pool their stockholders' money to purchase real estate properties such
as office buildings, shopping malls, industrial parks, warehouses, hotels,
apartment complexes, health care facilities, self-storage centers, or mortgages
secured by real estate. As managers of these properties, REITs distribute a
portion of the rental income and proceeds from property sales back to their
shareholders. Since REITs are required by law to distribute 95% of their annual
net earnings to stockholders, they usually pay higher dividends than typical
U.S. common stocks.
Q: What are the advantages of investing in REITs?
A: Real estate investment trusts can offer many benefits to long-term investors,
such as high current income, diversification potential, and the ability to
6 - Scudder Real Estate Investment Fund
<PAGE>
obtain the major benefits of real estate investing without directly owning
property. REITs tend to have stronger defensive characteristics since their
rising yields will often attract buyers when their stock prices are falling. In
addition, the fact that REITs' asset values will rise along with property prices
means that they can serve as an excellent hedge against inflation.
Q: What is your portfolio strategy?
A: We utilize a proprietary quantitative model that identifies undervalued real
estate securities with stable or improving cash flow growth. Specialized
portfolio management techniques help us to assess the risk associated with each
individual security, as well as its potential impact on the return patterns of
the overall portfolio. We also employ a strict sell discipline and review the
portfolio regularly to identify holdings that no longer meet our criteria. In
order to manage risk, we strive to diversify among the nine different subsectors
of the REIT market and maintain a weighting of no more than 2-2.5% in any single
security when possible. As a result of this strategy, the effects of the
occasional disappointment in a subsector or individual REIT are minimized. Our
weighting in the top ten holdings will generally be fairly low; as of December
31, for example, this number was only 21%.
In a period when the subsectors of the REIT market posted widely disparate
returns, the Fund benefited from being well positioned in its sector weightings.
Our largest divergence from the benchmark index was an underweight position in
mortgage REITs, a more speculative subsector that posted the worst returns of
the nine that we follow. Our strategy also led us to overweight residential
7 - Scudder Real Estate Investment Fund
<PAGE>
REITs, which was one of the subsectors least affected by the downturn in real
estate securities.
Q: What is your outlook for REITs?
A: We believe that real estate securities offer solid fundamentals and
attractive valuations at these levels. With the sector so beaten down, it is
possible to invest in well structured REITs with strong management teams, steady
cash flow growth, and unusually low valuations. Although the industry has
encountered a variety of challenges recently, the process of adaptation has
already begun. For example, increasing levels of joint ventures, new financing,
and project development may be reasons for the long-term investor to be
encouraged. In addition, we believe that valuations have reached bargain levels
given that earnings growth is expected to remain in the double digits, and the
average REIT yields over 8%.
Going forward, it is important for investors to keep in mind that since the real
estate market moves in extended cycles, the Fund is designed to be a long-term
investment. As a consequence, it is not appropriate to use it as a tactical
device, or to evaluate it with a short-term perspective. Instead, the Fund
should be utilized as a powerful tool for portfolio diversification.
Historically, REITs have provided investors with an extremely low level of
correlation to the S&P 500, as the events of 1998 proved. We believe that over
the long-term, a strategy that combines quantitative analysis and risk control
will provide high current income and solid risk-adjusted returns for Fund
shareholders.
Scudder Real Estate
Investment Fund:
A Team Approach to Investing
Scudder Real Estate Investment 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.
Philip S. Fortuna assumed Co-Lead Portfolio Manager responsibilities along
with Jennifer P. Carter in 1998. Mr. Fortuna joined the Adviser in 1986 and
has over 12 years' experience in global planning and quantitative services.
Ms. Carter joined the Adviser in 1992 and has nine years of investment
industry experience, with three years specializing in real estate research.
James M. Eysenbach, Portfolio Manager, joined the Adviser in 1991 and has 11
years' investment experience, specializing in quantitative research, analysis
and portfolio management.
8 - Scudder Real Estate Investment Fund
<PAGE>
Glossary of Investment Terms
DEFENSIVE SECURITIES Stocks and bonds that are more conservative
than average, and tend to perform better
than the overall market when that market is weak.
Often, non-cyclical stocks are used to establish a
defensive position, since they tend not to be as
severely affected during economic slowdowns.
FUNDS FROM OPERATIONS The measurement of cash flow that is used to
(FFO) evaluate the financial performance of a REIT. It
subtracts the depreciation of properties from the
REIT's net income, providing a more effective gauge
of management's performance.
MORTGAGE REIT A REIT that invests in loans secured by real estate.
These mortgages may be originated and underwritten
by the REIT, or the REIT may purchase preexisting
mortgages on the secondary market. The other kind of
REIT is an equity REIT, which takes an ownership
position in real estate, instead of acting as a
lender.
QUANTITATIVE MODEL A model that evaluates measurable factors for a
universe of companies such as the value of assets,
cost of capital, cash flow, and stock price.
REAL ESTATE INVESTMENT A company, usually traded publicly, that manages a
TRUST (REIT) portfolio of real estate to earn profits for
investors. A REIT functions in a similar fashion to a
mutual fund in that its investors obtain the
potential benefits of a diversified portfolio under
professional management. Equity REITs take equity
positions in real estate; shareholders receive income
from the rents received from the properties and also
receive capital gains as buildings are sold at a
profit.
WEIGHTING (OVER/UNDER) Refers to the allocation of assets -- usually in
terms of sectors, industries, or countries
-- within a portfolio relative to the portfolio's
benchmark index or investment universe.
(Sources: Scudder Kemper Investments, Inc.; Barron's Dictionary of
Finance and Investment Terms)
9 - Scudder Real Estate Investment Fund
<PAGE>
Investment Portfolio as of December 31, 1998
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements 0.9%
- ------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreement with State Street Bank dated 12/31/1998 at 4.85%, to be
repurchased at $170,092 on 1/4/1999, collateralized by a $170,000 U.S. ----------
Treasury Note, 6.25%, 8/31/2000 (Cost $170,000) ....................................... 170,000 170,000
----------
<CAPTION>
Shares
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks 99.1%
- ------------------------------------------------------------------------------------------------------------------------------
Diversified 9.3%
Colonial Properties Trust ............................................................... 10,000 266,250
Duke Realty Investments, Inc. ........................................................... 15,700 365,025
First Union Real Estate Investments ..................................................... 49,300 289,638
Glenborough Realty Trust Inc. ........................................................... 10,700 218,013
Kilroy Realty Corp. ..................................................................... 6,500 149,500
MGI Properties, Inc. .................................................................... 14,700 410,681
----------
1,699,107
----------
Mortgage 1.7%
Capstead Mortgage Corp. ................................................................. 6,200 25,575
Dynex Capital, Inc. ..................................................................... 24,600 113,775
Thornburg Mortgage Asset Corp. .......................................................... 22,800 173,850
----------
313,200
----------
Health Care 5.2%
HRPT Properties Trust ................................................................... 16,400 230,625
Health Care REIT, Inc. .................................................................. 10,700 276,863
National Health Investors Inc. .......................................................... 7,700 190,094
OMEGA Healthcare Investors, Inc. ........................................................ 8,300 250,556
----------
948,138
----------
Industrial 7.9%
CenterPoint Properties Corporation ...................................................... 9,800 331,363
EastGroup Properties, Inc. .............................................................. 17,200 317,125
First Industrial Realty Trust, Inc. ..................................................... 9,300 249,356
Meridian Industrial Trust, Inc. ......................................................... 8,100 190,350
TriNet Corporate Realty Trust, Inc. ..................................................... 5,500 147,125
Weeks Corp. ............................................................................. 7,400 208,588
----------
1,443,907
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 - Scudder Real Estate Investment Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Office 7.8%
Brandywine Realty Trust ................................................................. 11,600 207,350
CarrAmerica Realty Corp. ................................................................ 14,400 345,600
Great Lakes REIT, Inc. .................................................................. 14,400 225,900
Highwoods Properties Inc. ............................................................... 8,000 206,000
Koger Equity Inc. ....................................................................... 7,700 132,344
Reckson Associates Realty Corporation ................................................... 13,700 303,969
----------
1,421,163
----------
Recreation 12.8%
Boykin Lodging Company .................................................................. 10,800 133,650
Equity Inns Inc. ........................................................................ 25,700 247,363
FelCor Suite Hotels, Inc. ............................................................... 13,600 313,650
Franchise Finance Corporation of America ................................................ 2,900 69,600
Innkeepers USA Trust .................................................................... 34,700 409,894
National Golf Properties, Inc. .......................................................... 11,200 324,100
RFS Hotel Investors, Inc. ............................................................... 14,700 180,075
Sunstone Hotel Investors, Inc. .......................................................... 42,300 399,206
Winston Hotels, Inc. .................................................................... 32,500 266,094
----------
2,343,632
----------
Residential 23.1%
Berkshire Realty Co. .................................................................... 24,100 228,942
Camden Property Trust ................................................................... 3,400 88,400
Charles E. Smith Residential Realty, Inc. ............................................... 10,800 346,950
Chateau Communities, Inc. ............................................................... 10,200 298,988
Cornerstone Realty Income Trust, Inc. ................................................... 19,200 201,600
Equity Residential Properties Trust ..................................................... 9,539 385,733
Essex Property Trust, Inc. .............................................................. 12,700 377,825
Gables Residential Trust ................................................................ 13,600 315,350
Home Properties of New York Inc. ........................................................ 6,500 167,375
Irvine Apartments ....................................................................... 7,700 245,438
Manufactured Home Communities, Inc. ..................................................... 12,500 313,281
Mid-America Apartment Communities, Inc. ................................................. 12,100 274,519
Summit Properties Inc. .................................................................. 16,100 277,725
Town & Country Trust .................................................................... 18,100 290,731
United Dominion Realty Trust, Inc. ...................................................... 12,500 128,906
Walden Residential Properties, Inc. ..................................................... 13,000 265,688
----------
4,207,451
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 - Scudder Real Estate Investment Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Retail Outlets 27.8%
Bradley Real Estate, Inc. ............................................................... 13,400 274,700
CBL & Associates Properties, Inc. ....................................................... 7,800 201,338
Chelsea GCA Realty, Inc. ................................................................ 5,400 192,375
Commercial Net Lease Realty ............................................................. 20,900 276,925
Crown American Realty Trust ............................................................. 33,000 255,750
Developers Diversified Realty Corporation ............................................... 17,200 305,300
General Growth Properties, Inc. ......................................................... 9,500 359,813
Glimcher Realty Trust ................................................................... 16,000 251,000
IRT Property Company .................................................................... 25,600 256,000
JP Realty, Inc. ......................................................................... 2,300 45,138
Kimco Realty Corporation ................................................................ 5,100 202,406
The Macerich Company .................................................................... 14,300 366,438
Mills Corp. ............................................................................. 14,900 296,138
New Plan Excel Realty Trust ............................................................. 9,480 210,338
Pan Pacific Retail Properties, Inc. ..................................................... 14,900 297,069
Saul Centers, Inc. ...................................................................... 16,000 248,000
Simon Property Group, Inc. .............................................................. 9,300 265,050
Tanger Factory Outlet Centers, Inc. ..................................................... 10,100 213,994
Urban Shopping Centers, Inc. ............................................................ 7,000 229,250
Western Investment Real Estate Trust .................................................... 18,800 222,075
Westfield America, Inc. ................................................................. 6,500 112,125
----------
5,081,222
----------
Self-Storage 3.5%
Public Storage, Inc. .................................................................... 10,300 278,744
Shurgard Storage Centers, Inc., "A" ..................................................... 13,800 356,213
----------
634,957
- ------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $20,881,924) 18,092,777
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $21,051,924) (a) 18,262,777
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The cost for federal income tax purposes was $21,051,924. At December 31,
1998, net unrealized depreciation for all securities based on tax cost was
$2,789,147. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $189,977 and aggregate gross unrealized depreciation for all securities
in which there was an excess of tax cost over market value of $2,979,124.
The accompanying notes are an integral part of the financial statements.
12 - Scudder Real Estate Investment Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of December 31, 1998
<TABLE>
<S> <C> <C>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
Investments, at market (identified cost $21,051,924) ................. $ 18,262,777
Cash ................................................................. 101
Dividends and interest receivable .................................... 136,749
Receivable for Fund shares sold ...................................... 13,512
Deferred organization expenses ....................................... 10,022
----------------
Total assets ......................................................... 18,423,161
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Payable for Fund shares redeemed ..................................... 262,287
Other payables and accrued expenses .................................. 66,496
----------------
Total liabilities .................................................... 328,783
-------------------------------------------------------------------------------------------
Net assets, at value $ 18,094,378
-------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Unrealized appreciation (depreciation) on investments ................ (2,789,147)
Accumulated net realized gain (loss) ................................. (667,321)
Paid-in capital ...................................................... 21,550,846
-------------------------------------------------------------------------------------------
Net assets, at value $ 18,094,378
-------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($18,094,378 / 1,824,072 outstanding shares of beneficial
interest, $.01 par value, unlimited number of shares ----------------
authorized) ....................................................... $9.92
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 - Scudder Real Estate Investment Fund
<PAGE>
Statement of Operations
for the period April 6, 1998 (commencement
of operations) to December 31, 1998
<TABLE>
<S> <C> <C>
Investment Income
- ----------------------------------------------------------------------------------------------------------------------------
Income:
Dividends ............................................................. $ 882,874
Interest .............................................................. 41,674
----------------
924,548
Expenses:
Management fee ........................................................ 112,781
Services to shareholders .............................................. 117,755
Custodian and accounting fees ......................................... 31,990
Trustees' fees and expenses ........................................... 13,858
Auditing .............................................................. 21,000
Registration fees ..................................................... 38,935
Reports to shareholders ............................................... 16,651
Legal ................................................................. 11,798
Amortization of organization expense .................................. 1,978
Other ................................................................. 6,635
----------------
Total expenses before reductions ...................................... 373,381
Expense reductions .................................................... (197,642)
----------------
Expenses, net ......................................................... 175,739
-------------------------------------------------------------------------------------------
Net investment income (loss) 748,809
-------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from investments ............................. (717,426)
Net unrealized appreciation (depreciation) during the period on
investments ........................................................ (2,789,147)
-------------------------------------------------------------------------------------------
Net gain (loss) on investment transactions (3,506,573)
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ (2,757,764)
-------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 - Scudder Real Estate Investment Fund
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the Period
April 6, 1998
(commencement
of operations) to
Increase (Decrease) in Net Assets December 31, 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ....................................................... $ 748,809
Net realized gain (loss) from investment transactions ....................... (717,426)
Net unrealized appreciation (depreciation) on investment
transactions during the period ........................................... (2,789,147)
-----------------
Net increase (decrease) in net assets resulting from operations ............. (2,757,764)
-----------------
Distributions to shareholders:
From net investment income .................................................. (741,912)
-----------------
From tax return of capital .................................................. (222,451)
-----------------
Fund share transactions:
Proceeds from shares sold ................................................... 24,951,658
Net asset value of shares issued to shareholders in reinvestment of
distributions ............................................................ 832,002
Cost of shares redeemed ..................................................... (3,998,104)
Redemption fees ............................................................. 29,749
-----------------
Net increase (decrease) in net assets from Fund share transactions .......... 21,815,305
-----------------
Increase (decrease) in net assets ........................................... 18,093,178
Net assets at beginning of period ........................................... 1,200
-----------------
Net assets at end of period ................................................. $ 18,094,378
-----------------
Other Information
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period ................................... 100
-----------------
Shares sold ................................................................. 2,126,236
Shares issued to shareholders in reinvestment of distributions .............. 81,009
Shares redeemed ............................................................. (383,273)
-----------------
Net increase (decrease) in Fund shares ...................................... 1,823,972
-----------------
Shares outstanding at end of period ......................................... 1,824,072
-----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 - Scudder Real Estate Investment Fund
<PAGE>
Financial Highlights
The following table includes selected data for a share outstanding throughout
the period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
For the Period
April 6, 1998
(commencement
of operations) to
December 31,
1998 (a)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
--------------------
Net asset value, beginning of period .............................................................. $12.00
--------------------
Income from investment operations:
Net investment income ............................................................................. .41
Net realized and unrealized gain (loss) on investments ............................................ (1.98)
--------------------
Total from investment operations .................................................................. (1.57)
--------------------
Less distributions from net investment income ..................................................... (.41)
Tax Return of capital ............................................................................. (.12)
Redemption fees ................................................................................... .02
--------------------
Total distributions ............................................................................... (.51)
--------------------
--------------------
Net asset value, end of period .................................................................... $ 9.92
--------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) (b) .............................................................................. (13.0)(c)**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ............................................................ 18
Ratio of operating expenses, net to average daily net assets (%) .................................. 1.25*
Ratio of operating expenses, before expense reductions, to average daily net assets (%) ........... 2.66*
Ratio of net investment income to average daily net assets (%) .................................... 5.32*
Portfolio turnover rate (%) ....................................................................... 33.72*
</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 1%
redemption fee on shares held less than one year.
* Annualized
** Not annualized
16 - Scudder Real Estate Investment Fund
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Scudder Real Estate Investment Fund (the "Fund") is a non-diversified series of
Investment Trust (the "Trust") (formerly Scudder Investment 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 with remaining maturities greater than sixty days are
valued by pricing agents approved by the Officers of the Fund, whose quotations
reflect broker/dealer-supplied valuations and electronic data processing
techniques. If the pricing agents are unable to provide such quotations, the
most recent bid quotation supplied by a bona fide market maker shall be used.
All other debt securities are valued at their fair value as determined in good
faith by the Valuation Committee of the Board of Trustees. Money market
instruments purchased with an original maturity of sixty days or less are valued
at amortized cost.
Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian,
receives delivery of the underlying securities, the amount of which at the time
of purchase and each subsequent business day is required to be maintained at
such a level that the market value is equal to at least the repurchase price.
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.
At December 31, 1998, the Fund had a net tax basis capital loss carryforward of
approximately $475,000 which may be applied against any realized net taxable
capital gains of each succeeding year until fully utilized or until December 31,
2006, the expiration date.
In addition, from November 1, 1998 through December 31, 1998, the Fund incurred
approximately $192,000 of net realized capital losses. As permitted by tax
regulations, the Fund intends to elect to defer these losses and treat them as
arising in the fiscal year ended December 31, 1999.
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 1% of the current net asset value of the shares
will be
17 - Scudder Real Estate Investment Fund
<PAGE>
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 quarterly. During any particular year, net realized gains from investment
transactions, in excess of available capital loss carryforwards, would be
taxable to the Fund if not distributed and, therefore, will be distributed to
shareholders. An additional distribution may be made to the extent necessary to
avoid the payment of a four percent federal excise tax.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. These
differences relate primarily to non-taxable distributions and certain securities
sold at a loss. 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.
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
For the period ended December 31, 1998, purchases and sales of investment
securities (excluding short-term investments) aggregated $26,448,915 and
$4,652,403, respectively.
C. Related Parties
Under the Management Agreement (the "Agreement") with Scudder Kemper
Investments, Inc. ("Scudder Kemper" or the "Adviser"), the Adviser directs the
investments of the Fund in accordance with its investment objectives, policies,
and restrictions. The Adviser determines the securities, instruments, and other
contracts relating to investments to be purchased, sold or entered into by the
Fund. In addition to portfolio management services, the Adviser provides certain
administrative services in accordance with the Agreement. The management fee
payable under the Agreement is equal to an annual rate of 0.80% 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 April 30, 1999 in order to maintain the annualized expenses
of the Fund at not more than 1.25% of average daily net assets. Accordingly, for
the period ended December 31, 1998, the Adviser did not impose any of its fee
amounting to $112,781.
Effective September 7, 1998, Zurich Insurance Company ("Zurich"), majority owner
of the Adviser, entered into an agreement with B.A.T Industries p.l.c. ("B.A.T")
pursuant to which the financial services businesses of B.A.T were combined with
Zurich's businesses to form a new global insurance and financial services
company known as Zurich Financial Services. Upon consummation of the
transaction, the Fund's Management Agreement with Scudder Kemper was deemed to
have been assigned and, therefore, terminated. In December 1998, the Board of
Trustees and the shareholders of the Fund approved a new
18 - Scudder Real Estate Investment Fund
<PAGE>
investment management agreement with Scudder Kemper, which is substantially
identical to the former Management Agreement, except for the dates of execution
and termination.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
period ended December 31, 1998, SSC did not impose a portion of its fee, which
amounted to $66,155. The amount imposed aggregated $35,849, all of which is
unpaid at December 31, 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 period ended December 31,
1998, STC 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 ended
December 31, 1998, SFAC did not impose a portion of its fee, which amounted to
$18,706. The amount imposed aggregated $9,419, of which $44 is unpaid at
December 31, 1998.
The Fund pays each Trustee not affiliated with the Adviser an annual retainer,
plus specified amounts for attended board and committee meetings. For the period
ended December 31, 1998, Trustees' fees and expenses aggregated $13,858.
D. Line of Credit
The Fund and several Scudder Funds ("The Participants") share in a $850 million
revolving credit facility for temporary or emergency purposes, including the
meeting of redemption requests that otherwise might require the untimely
disposition of securities. The Participants are charged an annual commitment fee
which is allocated among each of the Participants. Interest is calculated based
on the market rates at the time of the borrowing. The Fund may borrow up to a
maximum of 33 percent of its net assets under the agreement.
19 - Scudder Real Estate Investment Fund
<PAGE>
Report of Independent Accountants
To the Trustees of Scudder Investment Trust and the Shareholders of Scudder Real
Estate Investment Trust:
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 Real Estate Investment Fund
(the "Fund") at December 31, 1998, the results of its operations, the changes in
its net assets, and the financial highlights for the period April 6, 1998
(commencement of operations) to December 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 audit. We conducted our audit
of these financial statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit, which included confirmation of securities at December 31, 1998 by
correspondence with the custodian, provides a reasonable basis for the opinion
expressed above.
Boston, Massachusetts PricewaterhouseCoopers LLP
February 12, 1999
20 - Scudder Real Estate Investment Fund
<PAGE>
Shareholder Meeting Results
A Special Meeting of Shareholders (the "Meeting") of Scudder Real Estate
Investment Fund (the "Fund") was held on December 15, 1998, at the office of
Scudder Kemper Investments, Inc., Two International Place, Boston, Massachusetts
02110. At the Meeting the following matters were voted upon by the shareholders
(the resulting votes for each matter are presented below).
1. To approve a new Investment Management Agreement for the Fund with Scudder
Kemper Investments, Inc.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
1,109,318 35,498 32,063 0
2. To approve the revision of the Fund's fundamental lending policy.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
1,062,021 47,577 51,887 15,394
- --------------------------------------------------------------------------------
* 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.
21 - Scudder Real Estate Investment Fund
<PAGE>
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intentionally
left blank.
22 - Scudder Real Estate Investment Fund
<PAGE>
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intentionally
left blank.
23 - Scudder Real Estate Investment Fund
<PAGE>
Officers and Trustees
Daniel Pierce*
President and Trustee
Henry P. Becton, Jr.
Trustee; President and General Manager, WGBH Educational Foundation
Dawn-Marie Driscoll
Trustee; President, Driscoll Associates; Executive Fellow, Center for
Business Ethics, Bentley College
Peter B. Freeman
Trustee, Corporate Director
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 Real Estate Investment 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 Real Estate Investment Fund
<PAGE>
Scudder Solutions
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Investment Plan QuickBuy
A convenient investment program in which money is Lets you purchase Scudder fund shares
electronically debited from your bank account monthly to electronically, avoiding potential mailing delays;
regularly purchase fund shares and "dollar cost average" money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from a previously designated bank
fewer when it's higher, which can reduce your average account.
purchase price over time.*
Automatic Dividend Transfer Payroll Deduction and Direct Deposit
The most timely, reliable, and convenient way to Have all or part of your paycheck -- even government
purchase shares -- use distributions from one Scudder checks -- invested in up to four Scudder funds at
fund to purchase shares in another, automatically one time.
(accounts with identical registrations or the same
social security or tax identification number).
* Dollar cost averaging involves continuous investment in securities regardless of price
fluctuations and does not assure a profit or protect against loss in declining markets.
Investors should consider their ability to continue such a plan through periods of low price
levels.
Around-the-clock electronic account service and information, including some transactions:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- www.scudder.com
1-800-343-2890
Personal Investment Organizer: Offering
Personalized account information, the ability to account information and transactions, interactive
exchange or redeem shares, and information on other worksheets, prospectuses and applications for all
Scudder funds and services via touchtone telephone. Scudder funds, plus your current asset allocation,
whenever you need them. Scudder's Site also
provides news about Scudder funds, retirement
planning information, and more.
Retirees and those who depend on investment proceeds for living expenses can enjoy these convenient,
timely, and reliable automated withdrawal programs:
- ------------------------------------------------------------------------------------------------------------------------------
Automatic Withdrawal Plan QuickSell
You designate the bank account, determine the schedule Provides speedy access to your money by
(as frequently as once a month) and amount of the electronically crediting your redemption proceeds
redemptions, and Scudder does the rest. to the bank account you previously designated.
Distributions Direct
Automatically deposits your fund distributions into the
bank account you designate within three business days
after each distribution is paid.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
26 - Scudder Real Estate Investment 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 Real Estate Investment 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.
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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