Scudder
Dividend &
Growth Fund
Semiannual Report
June 30, 1999
- -------------
No-Load Funds
- -------------
A no-load fund seeking high current income and long-term growth of capital
through investment in income-paying equity securities.
SCUDDER
<PAGE>
Scudder Dividend & Growth Fund
Date of Inception: 7/17/98 Total Net Assets as Ticker Symbol: SDGFX
of 6/30/99: $25.5 million
o Scudder Dividend & Growth Fund's 13.72% surpassed the 12.39% return of the
unmanaged S&P 500 Index for the six-month period ended June 30, 1999, reflecting
the sharp rebound in value-oriented segments of the market and the fund's
individual security selection.
o Large-cap growth stocks, which dominated first quarter returns, trailed in the
second quarter as market performance broadened to include value-oriented and
smaller-cap issues.
o Management maintained an emphasis on income-producing equity securities (which
typically involve less risk than non-income producing or growth-oriented
securities), including common stocks with value characteristics, real estate
investment trusts, and convertible securities.
Table of Contents
3 Letter from the Fund's President 17 Financial Statements
4 Performance Update 20 Financial Highlights
5 Portfolio Summary 21 Notes to Financial Statements
6 Portfolio Management Discussion 24 Officers and Trustees
10 Glossary of Investment Terms 25 Investment Products and Services
11 Investment Portfolio 26 Scudder Solutions
2 - Scudder Dividend & Growth Fund
<PAGE>
Letter from the Fund's President
Dear Shareholders,
Dividend-paying equity securities rallied dramatically toward the end of
the six-month report period and your fund's holdings of value-oriented common
stocks, real estate investment trusts, and convertible securities benefited
significantly from a turnaround. After more than a year of dominance by
large-cap growth stocks, the strong rebound was a welcome tailwind to your
fund's investment approach.
While we are pleased with the fund's performance, we think this rebound
serves as an important reminder of the cyclical nature of investing and the need
to stick with a consistent investment approach.
We know it is unrealistic to expect our shareholders to remain invested
indefinitely, but we remain concerned about the temptation to switch funds based
on short-term events. In this age of instantaneous information, buying and
selling has become easy for many investors. Recent innovations including online
trading and the development of the Internet provide investors with powerful
tools to make better and more informed decisions quickly and at low cost.
However, these developments have increased the risk that some investors will
emphasize short-term gains at the expense of their long-range goals.
While each individual's investment strategy and goals are unique to their
particular situation, following a consistent strategy and sticking with a
long-term approach should be constants for every investor. As you review this
report and the discussion with the fund's portfolio managers, we hope that you
will keep this in mind. It has been the foundation of our investment discipline
for years and we think investors can benefit from this same approach to
investing.
For those of you who are interested in complementing your existing
holdings, we recently introduced two funds: Scudder Select 500 Fund -- which
invests in a subset of the stocks in the unmanaged S&P 500 Index, and Scudder
Select 1000 Growth Fund -- which invests in a subset of the stocks in the
unmanaged Russell 1000 Growth Index. For further information on these new funds,
please visit our Web site at www.scudder.com or call us at 1-800-SCUDDER
(1-800-728-3337).
Thank you for your continued investment in Scudder Dividend & Growth Fund.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder Dividend & Growth Fund
3 - Scudder Dividend & Growth Fund
<PAGE>
Performance Update as of June 30, 1999
- -----------------------------------------------------------
Fund Index Comparison
- -----------------------------------------------------------
Total Return
- -----------------------------------------------------------
Growth of
Period Ended 6/30/1999 $10,000 Cumulative
- -----------------------------------------------------------
Scudder Dividend & Growth Fund
- -----------------------------------------------------------
Life of Fund* $10,917 9.17%
- -----------------------------------------------------------
S&P 500 Index
- -----------------------------------------------------------
Life of Fund* $11,722 17.22%
- -----------------------------------------------------------
S&P 500 Index (60%), Morgan Stanley Real Estate
Investment Trust Index (20%), Merrill Lynch All
Convertible Index (20%)
- -----------------------------------------------------------
Life of Fund* $11,093 10.93%
- -----------------------------------------------------------
* The Fund commenced operations on July 17, 1998. Index comparisons begin on
July 17, 1998.
- -----------------------------------------------------------
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 Dividend & Growth Fund S&P 500 Index
7/17/98 10000 10000
7/98 9408 9447
9/98 9388 8599
12/98 10204 10430
3/99 10545 10914
6/99 11604 11722
S&P 500 Index (60%),
Morgan Stanley Real Estate Investment Trust Index (20%),
Merrill Lynch All Convertible Index (20%)
10000
9430
8668
9957
10246
11093
The Standard and Poor's (S&P) 500 Index is a capitalization-weighted index of
500 stocks. The index is designed to measure performance of the broad domestic
economy through changes in the aggregate market value of 500 stocks representing
all major industries. The Morgan Stanley REIT Index is a total-return index
comprised of the most actively traded real estate investment trusts and is
designed to be a measure of real estate equity performance. The Merrill Lynch
All Convertible (MLAC) Index is composed of all types of U.S. domestic
convertible instruments (bonds, preferred, etc.). 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:
Period Ended June 30
1999
- --------------------------------------------------------------------------------
Net Asset Value $ 12.76
- --------------------------------------------------------------------------------
Income Dividends $ .31
- --------------------------------------------------------------------------------
Capital Gains Distributions $ --
- --------------------------------------------------------------------------------
Fund Total Return (%) 9.17
- --------------------------------------------------------------------------------
Index Total Return (%) 17.22
- --------------------------------------------------------------------------------
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 would have been lower.
4 - Scudder Dividend & Growth Fund
<PAGE>
Portfolio Summary as of June 30, 1999
- ----------------
Asset Allocation
- ----------------
A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
Common Stocks 56%
REITs 20%
Convertible Bonds 15%
Convertible Preferred 5%
Cash Equivalents 4%
-------------------------
100%
-------------------------
Dividend-paying securities rebounded dramatically in the second quarter directly
benefiting the fund's holdings of value-oriented common stocks, convertibles,
and REITs.
- ------------------------------
Sector Diversification
(Excludes 4% Cash Equivalents)
- ------------------------------
A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
REITs 20%
Financial 14%
Manufacturing 10%
Communications 10%
Health 10%
Energy 7%
Media 6%
Durables 6%
Consumer Discretionary 4%
Construction 3%
Other 10%
------------------------------
100%
------------------------------
The fund's holdings of industrial cyclical and communications stocks were among
its best performers while our finance holdings and an underweighting in
technology held back performance.
- ---------------------------
Ten Largest Equity Holdings
(25% of Portfolio)
- ---------------------------
1. Boston Properties, Inc.
Commercial and industrial real estate developer
2. Home Depot Inc.
Building material and home improvement stores
3. Corning Inc.
Speciality glass manufacturer
4. MedImmune Inc.
Developer of products for the prevention and
treatment of infectious diseases
5. American International Group, Inc.
International insurance holding company
6. Spieker Properties, Inc.
Independent equity investment trust which owns
and develops commercial real estate
7. AMB Property Corp.
Operator of industrial properties and shopping
centers
8. Arden Realty Group, Inc.
Owner of office properties
9. Apartment Investment &
Management Co.
Owner of diversified portfolio of multifamily
apartment properties
10. Xerox Corp.
Manufacturer of copiers and duplicators
A number of the fund's REIT holdings, which have primarily been in the office
and industrial areas, are well represented in the top ten.
For more complete details about the Fund's investment portfolio, see page 11.
A quarterly Fund Summary and Portfolio Holdings are available upon request.
5 - Scudder Dividend & Growth Fund
<PAGE>
Portfolio Management Discussion
We asked portfolio managers Rob Hoffman, Lori Ensinger, and Nicholas Anisimov to
review the market environment and the fund's performance for the six-month
period ended June 30, 1999. Below are highlights of their discussion.
Q: Investors witnessed a dramatic change in stock market leadership over the six
months as the dominance of large-cap growth stocks faded and value stocks and
small- and mid-cap issues took the lead. What precipitated this change in
investor sentiment?
A: A shift in perception about the strength of the U.S. economy resulted in a
significant rotation in market leadership. At the beginning of 1999, restrained
economic growth with virtually no inflation and expectations of lower interest
rates was the prevailing economic outlook. By April, concerns over an
overheating economy with inflationary pressures and rising long-term interest
rates took center stage. Signs of a rebound in Asian economies, sharp increases
in depressed commodity prices, and earnings disappointments in several large
growth and technology companies were all primary drivers for the shift away from
growth stocks into value and smaller-cap issues, including real estate
investment trusts and convertible securities.
Q: When did you see signs of a shift?
A: A powerful rally among cyclical companies began in April, reversing the trend
of market dominance of the largest growth and technology shares, which began in
1998 and continued throughout the first three months of this year. In addition
to large value-oriented companies, small capitalization and international
(especially Asian) stocks were among the strongest performers during the final
three months of the report period. Conversely, high-flying Internet stocks were
particularly hard hit as the market sold the most expensive, momentum-oriented
stocks in favor of purchasing companies with improving fundamentals and
compelling valuations that would benefit from the recovering global economy. On
June 30th, as expected, the Federal Reserve raised interest rates a minimal
quarter point and signaled a return to a "neutral bias" with regard to future
rate increases. This action pleased investors and propelled the equity markets
to record highs.
Q: How did the fund perform?
A: The fund performed well, returning 13.72% for the six-month reporting period
that ended June 30, 1999. The majority of this return was earned during the
second quarter when value stocks recorded one of their best relative quarterly
performances in twelve years. The fund's six-month performance surpassed the
12.39% return of the unmanaged S&P 500 Index and the 12.87% return of large-cap
value stocks as measured by the Russell 1000 Value Index. While these numbers
don't exactly sound like Internet stock returns (and the fund does not assume
the risks associated with Internet stocks), a closer look at the first and
second calendar quarter returns clearly shows the turnaround for value stocks,
which includes many of the dividend-paying securities in which the fund invests
(see table on page 7).
Q: How do you manage the Fund?
A: We allocate assets primarily in three areas. The majority of the portfolio
(approximately 55% of assets) is invested in stocks with value
6 - Scudder Dividend & Growth Fund
<PAGE>
- --------------------------------------------------------
Value Takes the Lead from Growth
- --------------------------------------------------------
1st 2nd
quarter quarter
1999 1999
Scudder Dividend & Growth Fund 3.67% 10.05%
S&P 500 Index 4.98% 7.06%
Russell 1000 Value Index 1.44% 11.27%
Russell 1000 Growth Index 6.36% 3.85%
While growth stocks led value stocks during the first quarter, investors
witnessed a dramatic reversal in the second quarter as value stocks rose
strongly.
characteristics, many of which pay dividends. Real estate investment trusts
comprise about 20%, convertible securities about 20%, and the balance is
invested in cash. Our approach to investing in the portfolio's largest component
has been governed by a proven value-oriented strategy that seeks to identify
attractively valued companies based on a relatively high dividend yield. On June
30th we augmented this approach by including two additional value measures --
price/cash flow and price/earnings ratios -- in an effort to increase the size
of our "fishing pond."
For the real estate investment trust (REIT) portion of the portfolio, we focus
on REITs that are operating in supply-constrained markets, and that have access
to capital and broad management capabilities. On the last point, we are
interested in firms that perform all management tasks equally well, including
acquisition, disposition, development, building, and property management.
In the convertible bond portion of the portfolio, we begin by reviewing the
companies that are recommended by our equity investment analysts. Then we look
at the structure of the particular security. Convertible bonds, preferreds,
"mandatories," and other types of convertibles each have pros and cons. We
attempt to structure the types of holdings to provide diversification and
balance both within the convertible portion of the portfolio and in the overall
portfolio. The last step is to weigh the upside and downside potential of each
security.
Q: In the common stock part of the portfolio, what worked well?
A: The fund's holdings of industrial cyclical stocks -- an area we were early in
last year -- were among the fund's best performers. Our industrial cyclical
holdings were principally responsible for the fund's remarkable rebound. Oregon
Steel Mills, Dow Chemical, Georgia Pacific (forest and building products), and
Phelps Dodge (steel and metals) are included in this category and helped
performance. While we used the early strength in the sector to eliminate Boise
Cascade (we were not as enthused about the prospects of their paper grades
versus our other paper holdings) and Imperial Chemicals Industries (where our
conviction level in management had deteriorated), our decision to stick with our
overall valuation thesis clearly paid off.
Two other stocks in the industrial cyclicals area also made important
contributions: Meritor, an auto parts manufacturer that was spun off from
Rockwell in late '97, and Lyondell, a chemical company that was one of our
weakest performers last year. Lyondell's earnings are highly correlated to the
price of ethylene, and both stocks rose smartly during the period. Even after
such good
7 - Scudder Dividend & Growth Fund
<PAGE>
performance, each stock still ranks among the cheapest in the portfolio, which
we think bodes well for the stocks' future potential.
Q: With technology stocks getting much of investors' attention over the last
year and a half, what has been your exposure to this area?
A: Given the high valuations of many tech issues and our emphasis on cheap
stocks, the portfolio has been underweighted in this area. In the common stock
portion of the portfolio our valued-oriented discipline leads us to focus on
tech stocks that are out of favor or have valuations that do not fully reflect
their fundamental prospects. While there have been few stocks that qualify, we
have been able to participate in the technology sector in other ways.
We are continuing to invest in the "toll takers" of the information
superhighway. As gateways to the Internet, we believe these kinds of companies
will benefit from the Internet's rapid growth and need for infrastructure. Our
focus has been on local telephone companies, which we think will benefit as more
and more business (both internally and externally) migrates to the Internet. Our
holdings of Ameritech, Bell Atlantic, GTE, SBC Communications, BellSouth, and
Frontier were all up strongly over the six months.
In the information superhighway category, we also include Corning, a leading
maker of fiber optics. Corning falls into the "asphalt" (or infrastructure)
category of our theme. We believe as the need for bandwidth or "the number of
lanes on the highway" continues to grow at an exponential rate, firms that
provide products to speed up Internet connections should benefit. We continue to
be encouraged by Corning, which recently won a major contract to supply 80% of a
new five million mile broadband fiber optic network that will connect 17
European nations.
We have also been able to gain exposure to the technology area through our
holding of EMC Corp., 3.25% convertible bonds. EMC makes disc storage systems
and this holding allows us to participate in the tech area. The strong
performance of this security during our holding period helped it reach our price
target quickly and the security was sold just prior to the end of June.
Similarly, our holding of PSINet 6.75% convertible preferred provides exposure
to the tech sector with a security that we believe offers more downside
protection than the common stock equivalent.
Q: REITs had a dismal 1998, but this year has been a different story. Tell us
about the turnaround and its effect on the fund's holdings.
A: REITs rebounded along with value stocks in the final months of the period,
but for the six months returned 4.62% as measured by the unmanaged Morgan
Stanley Real Estate Investment Trust Index. As of June 30th, the fund's REIT
holdings comprised 20% of assets.
After weak performance in 1998, these securities had become attractive values.
As interest rates rose, REITs' above-average yields, low price/earnings ratios,
and short duration compared to large-cap growth and technology stocks have made
them compelling values. A few leveraged buyouts and some hostile takeovers also
helped to highlight their cheap valuation levels. We've also seen a number of
8 - Scudder Dividend & Growth Fund
<PAGE>
share buybacks, which, when actually completed, have been another positive. One
of the more notable events was Warren Buffet's new 5% stake in three REITs in
April, which contributed to the runup.
The dynamics of the REIT market have changed in the last few years. Previously,
investors could make money by buying properties cheaply, but now supply and
demand have returned to equilibrium. As a result, REIT managers must manage
their expenses and retention rates and, at the same time, find other ways to
increase profits. Our focus has turned to REITs with development strategies
because we believe this type is among the most promising in the current
environment. A good example is our holding of AMB Properties, which has been
harvesting industrial properties at attractive prices and reinvesting in higher
yielding properties in the retail sector. Another holding, Boston Properties, is
following a similar path by expanding its presence in New York, Boston, and the
District of Columbia through development.
The growth of the Internet is also effecting REITs. Many of the more
commodity-oriented tenants -- such as card shops, bookstores, and drugstores --
are coming under increasing competitive pressures from Internet retailers like
Amazon.com. Others -- such as our holding of Equity Office Properties Trust,
which sells access to high speed telecommunications and the Internet in their
properties -- are reaping benefits as nearly all of the additional revenue from
these services falls to the bottom line.
Q: The financial sector (excluding REITs) continues to comprise the largest
industry sector. How has the rising rate environment affected these companies?
A: Modestly rising rates are not necessarily bad for bank stocks because
slightly higher rates imply underlying strength in the domestic economy. As long
as the Federal Reserve does not embark on an aggressive campaign to fight
inflation by raising rates dramatically, we are not especially concerned about
our holdings in this area. We were, however, disappointed with First Union, one
of our larger holdings at the beginning of the period, which announced a profit
warning. The announcement was the result of the bank's higher than expected
expenses associated with a decision to invest in Internet banking services and
lower than expected synergies from its recent acquisitions of CoreStates
Financial and The Money Store. While we trimmed our exposure in the stock, we
are maintaining a position based on the bank's strong East Coast franchise and
attractive valuation.
Q: With many market gurus forecasting a slowdown in the second half, what is
your outlook for the fund and the kinds of companies in which it invests?
A: While we don't necessarily expect a repeat of the huge outperformance of
value over growth stocks, we believe that the foundation is in place for both
value and growth to perform well. In the REIT sector, we have a neutral outlook.
However, our weighting could increase if there is a significant downturn in the
stock market since REITs tend to perform well following a market decline.
9 - Scudder Dividend & Growth Fund
<PAGE>
Glossary of Investment Terms
DIVIDEND YIELD With stocks, a company's payment of earnings to
shareholders divided by its share price. For
example, a stock that sells for $10 and pays annual
dividends totaling $1 has a yield of 10%; if the
stock price goes up to $20, the yield would fall to
5%.
FUNDAMENTAL RESEARCH Analysis of a company's financial statements to
project future stock price changes. Considers past
records of sales and earnings as well as the future
impact of products, consumer markets, and management
in weighting a company's prospects. Distinct from
technical analysis, which evaluates the
attractiveness of a stock based on historical price
and trading volume movements.
LIQUIDITY A characteristic of an investment or an asset
referring to the ease of convertibility into cash
within a reasonably short period of time.
MARKET CAPITALIZATION The value of a company's outstanding
shares of common stock, determined by the multiplying
the number of shares outstanding by the share price
(shares x price = market capitalization). The
universe of publicly traded companies is frequently
divided into large-, mid-, and small-capitalizations.
OVER/UNDER WEIGHTING Refers to the allocation of assets --
usually by sector, industry, or country -- within an
investment portfolio relative to a benchmark index or
investment universe.
PRICE/EARNINGS RATIO A widely used gauge of a stock's valuation that
(P/E or earnings indicates what investors are paying for a company's
multiple) earning power at the current stock price. Often
based on a company's projected earnings for the
coming 12 months. A higher "earnings multiple"
indicates higher expected earnings growth and greater
risk; a lower multiple is usually associated with
mature or out-of-favor companies, and lower stock
price volatility.
VALUE STOCK A company whose stock price does not fully reflect
its intrinsic value. A stock's relative value is
often measured 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 lower price
volatility and carry higher dividend yields.
(Sources: Scudder Kemper Investments, Inc.; Barron's Dictionary of Finance and
Investment Terms)
An expanded list of terms is located at our Web site, www.scudder.com.
10 - Scudder Dividend & Growth Fund
<PAGE>
Investment Portfolio as of June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Short Term Notes 4.0%
- ------------------------------------------------------------------------------------------------------------------------------
------------
Federal Home Loan Mortgage Corp., 4.6%, 7/1/1999 (Cost $1,010,000) ................. 1,010,000 1,010,000
------------
Convertible Bonds 14.8%
- ------------------------------------------------------------------------------------------------------------------------------
Consumer Discretionary 2.8%
Department & Chain Stores
Home Depot Inc., 3.25%, 10/1/2001 .................................................. 249,000 696,266
------------
Health 5.0%
Pharmaceutical 1.2%
Alpharma Inc., 5.75%, 4/1/2005 ..................................................... 229,000 302,280
------------
Biotechnology 3.8%
Alza Corp, Zero Coupon, 7/14/2014 .................................................. 510,000 333,413
MedImmune Inc., 7%, 7/1/2003 ....................................................... 89,000 613,321
------------
946,734
------------
Financial 3.7%
Insurance 2.4%
American International Group, Inc., 2.25%, 7/30/2004 ............................... 424,000 595,720
------------
Other Financial Companies 1.3%
American Express Corp., 1.125%, 2/19/2003 .......................................... 282,000 339,105
------------
Media 3.3%
Advertising
Interpublic Group of Companies, 1.8%, 9/16/2004 .................................... 325,000 389,594
Omnicom Group, Inc., 4.25%, 1/3/2007 ............................................... 165,000 421,988
------------
811,582
- ------------------------------------------------------------------------------------------------------------------------------
Total Convertible Bonds (Cost $2,988,295) 3,691,687
- ------------------------------------------------------------------------------------------------------------------------------
Shares
- ------------------------------------------------------------------------------------------------------------------------------
Convertible Preferred Stocks 5.1%
- ------------------------------------------------------------------------------------------------------------------------------
Health 1.2%
Biotechnology
Monsanto Co., 6.5% ................................................................. 7,700 308,963
------------
Financial 1.2%
Other Financial Companies
American General Deleware LLC, 6% .................................................. 3,300 308,550
------------
The accompanying notes are an integral part of the financial statements.
11 - Scudder Dividend & Growth Fund
<PAGE>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Service Industries 1.2%
EDP Services
PSINet Inc., 6.75%* ................................................................ 6,000 289,500
------------
Energy 1.5%
Oil & Gas Production
Williams Cos., Inc., com $3.5 ...................................................... 1,820 362,180
------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Convertible Preferred Stocks (Cost $1,206,470) 1,269,193
- ------------------------------------------------------------------------------------------------------------------------------
Common Stocks 76.1%
- ------------------------------------------------------------------------------------------------------------------------------
Consumer Discretionary 0.6%
Department & Chain Stores
Rite Aid Corp. ..................................................................... 6,100 150,213
------------
Consumer Staples 2.4%
Alcohol & Tobacco 0.2%
Philip Morris Companies, Inc. ...................................................... 1,300 52,244
------------
Food & Beverage 0.9%
Albertson's Inc. ................................................................... 400 20,625
H.J. Heinz Co. ..................................................................... 3,900 195,488
------------
216,113
------------
Package Goods/Cosmetics 1.3%
Avon Products, Inc ................................................................. 6,000 333,000
------------
Health 3.3%
Pharmaceuticals
American Home Products Corp. ....................................................... 6,900 396,750
Bristol-Myers Squibb Co. ........................................................... 2,600 183,138
Glaxo Wellcome PLC (ADR) ........................................................... 2,000 113,250
SmithKline Beecham PLC (ADR) ....................................................... 1,800 118,913
------------
812,051
------------
Communications 9.9%
Telephone/Communications
Alltel Corp. ....................................................................... 2,600 185,900
Ameritech Corp. .................................................................... 1,900 139,650
Bell Atlantic Corp. ................................................................ 7,300 477,238
BellSouth Corp. .................................................................... 6,300 295,313
Frontier Corp. ..................................................................... 6,400 377,600
The accompanying notes are an integral part of the financial statements.
12 - Scudder Dividend & Growth Fund
<PAGE>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
GTE Corp. .......................................................................... 5,000 378,750
SBC Communicatons, Inc. ............................................................ 4,900 284,200
Sprint Corp. ....................................................................... 4,600 242,938
Telesp Participacoes S.A. (ADR) .................................................... 4,200 96,075
------------
2,477,664
------------
Financial 27.5%
Banks 5.1%
BANK ONE CORP ...................................................................... 2,400 142,950
Bank of America Corp. .............................................................. 4,800 351,900
Chase Manhattan Corp. .............................................................. 2,400 207,900
First Union Corp. .................................................................. 2,900 136,300
Fleet Financial Group Inc. ......................................................... 5,200 230,750
KeyCorp ............................................................................ 3,600 115,650
US Bancorp ......................................................................... 2,800 95,200
------------
1,280,650
------------
Insurance 1.9%
Lincoln National Corp. ............................................................. 1,800 94,163
Marsh & McLennan Companies, Inc. ................................................... 900 67,950
Safeco Corp. ....................................................................... 1,800 79,425
XL Capital Ltd. " A" ............................................................... 4,200 237,300
------------
478,838
------------
Other Financial Companies 1.0%
Federal National Mortgage Association .............................................. 3,600 246,150
------------
Real Estate 19.5%
AMB Property Corp .................................................................. 24,300 571,050
Apartment Investment & Management Co. .............................................. 13,200 564,300
Arden Realty Group, Inc. ........................................................... 23,100 568,827
Boston Properties, Inc. (REIT) ..................................................... 20,600 739,025
CenterPoint Properties Corp. (REIT) ................................................ 13,400 490,775
Equity Office Properties Trust (REIT) .............................................. 17,800 456,125
Equity Residential Properties Trust (REIT) ......................................... 7,000 315,438
ProLogis Trust (REIT) .............................................................. 14,100 285,525
Spieker Properties, Inc. ........................................................... 15,300 594,788
Taubman Centers, Inc. .............................................................. 20,000 263,750
------------
4,849,603
------------
The accompanying notes are an integral part of the financial statements.
13 - Scudder Dividend & Growth Fund
<PAGE>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Media 2.4%
Broadcasting & Entertainment 1.6%
AMFM Inc. .......................................................................... 3,500 387,625
------------
Cable Television 0.8%
Adelphia Communications Corp. "A"* ................................................. 1,000 192,875
------------
Service Industries 0.3%
Printing/Publishing
McGraw-Hill Inc. ................................................................... 1,300 70,119
------------
Durables 5.4%
Aerospace 2.4%
Lockheed Martin Corp. .............................................................. 6,400 238,400
Northrop Grumman Corp. ............................................................. 1,800 119,363
Rockwell International Corp. ....................................................... 3,900 236,925
------------
594,688
------------
Automobiles 2.0%
Ford Motor Co. ..................................................................... 6,400 361,200
Meritor Automotive, Inc. ........................................................... 5,700 145,350
------------
506,550
------------
Construction/Agricultural Equipment 1.0%
Caterpillar Inc. ................................................................... 2,100 126,000
PACCAR, Inc. ....................................................................... 2,100 112,088
------------
238,088
------------
Manufacturing 10.0%
Chemicals 2.6%
Akzo Nobel N.V. (ADR) .............................................................. 3,000 127,125
Dow Chemical Co. ................................................................... 1,300 164,938
E.I. du Pont de Nemours & Co. ...................................................... 2,100 143,456
Eastman Chemical Co. ............................................................... 1,300 67,275
Lyondell Chemical Co. .............................................................. 7,600 156,750
------------
659,544
------------
Containers & Paper 0.6%
Temple-Inland Inc. ................................................................. 2,000 136,500
------------
Diversified Manufacturing 0.6%
Canadian Pacific Ltd. (Ord.) ....................................................... 6,100 145,654
------------
The accompanying notes are an integral part of the financial statements.
14 - Scudder Dividend & Growth Fund
<PAGE>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Electrical Products 0.8%
Emerson Electric Co. ............................................................... 1,400 88,025
Thomas & Betts Corp. ............................................................... 2,500 118,125
------------
206,150
------------
Industrial Specialty 2.6%
Corning Inc. ....................................................................... 9,200 645,150
------------
Machinery/Components/Controls 0.7%
Parker-Hannifin Corp. .............................................................. 4,000 183,000
------------
Office Equipment/Supplies 2.1%
Xerox Corp. ........................................................................ 8,800 519,750
------------
Technology 0.2%
Semiconductors
Conexant Systems, Inc.* ............................................................ 1,050 60,966
------------
Energy 5.4%
Oil & Gas Production 1.5%
Conoco Inc. "A" .................................................................... 4,600 128,225
Royal Dutch Petroleum Co. (New York shares) ........................................ 2,300 138,575
Total Fina SA (ADR)* ............................................................... 1,800 115,988
------------
382,788
------------
Oil Companies 3.1%
Mobil Corp. ........................................................................ 2,300 227,700
Societe Nationale Elf Aquitaine (ADR) .............................................. 3,300 242,756
Texaco Inc. ........................................................................ 4,600 287,500
------------
757,956
------------
Oil/Gas Transmission 0.8%
Williams Cos., Inc. ................................................................ 4,700 200,044
------------
Metals & Minerals 1.4%
Steel & Metals
Allegheny Teledyne Inc. ............................................................ 10,700 242,088
Oregon Steel Mills, Inc. ........................................................... 4,600 61,238
Phelps Dodge Corp. ................................................................. 300 18,581
Reynolds Metals Co. ................................................................ 400 23,600
------------
345,507
------------
The accompanying notes are an integral part of the financial statements.
15 - Scudder Dividend & Growth Fund
<PAGE>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Construction 2.7%
Building Products 0.8%
Georgia Pacific Group .............................................................. 4,300 203,713
------------
Forest Products 1.9%
Georgia Pacific Timber Group ....................................................... 5,500 138,875
Weyerhaeuser Co. ................................................................... 4,900 336,875
------------
475,750
------------
Transportation 2.1%
Railroads
CSX Corp. .......................................................................... 6,700 303,594
Canadian National Railway Co. ...................................................... 1,800 121,449
Norfolk Southern Corp. ............................................................. 3,400 102,425
------------
527,468
------------
Utilities 2.5%
Electric Utilities
CINergy Corp. ...................................................................... 7,100 227,200
PacifiCorp ......................................................................... 13,300 244,388
Unicom Corp. ....................................................................... 4,100 158,106
------------
629,694
- ------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $17,359,641) 18,966,105
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio-- 100.0% (Cost $22,564,406) (a) 24,936,985
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Non-income producing
(a) The cost for federal income tax purposes was $22,577,656. At June 30,
1999, net unrealized appreciation for all securities based on tax cost was
$2,359,329. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $2,986,810 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$627,481.
The accompanying notes are an integral part of the financial statements.
16 - Scudder Dividend & Growth Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Assets
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investments, at market (identified cost $22,564,406) ............. $ 24,936,985
Cash ............................................................. 447,536
Receivable for investments sold .................................. 12,848
Dividends and interest receivable ................................ 82,680
Receivable for Fund shares sold .................................. 8,093
Due from Adviser ................................................. 1,553
Other assets ..................................................... 155
----------------
Total assets ..................................................... 25,489,850
Liabilities
- -----------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased ................................ 5,004
Payable for Fund shares redeemed ................................. 4,535
Other payables ................................................... 1,859
----------------
Total liabilities ................................................ 11,398
-------------------------------------------------------------------------------------------
Net assets, at value $ 25,478,452
-------------------------------------------------------------------------------------------
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Undistributed net investment income .............................. 7,967
Unrealized appreciation (depreciation) on investments ............ 2,372,579
Accumulated net realized gain (loss) ............................. (892,740)
Paid-in capital .................................................. 23,990,646
-------------------------------------------------------------------------------------------
Net assets, at value $ 25,478,452
-------------------------------------------------------------------------------------------
Net Asset Value
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share ($25,478,452
/1,996,974 outstanding shares of beneficial interest, $.01 par ----------------
value, unlimited number of shares authorized) .................... $12.76
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17 - Scudder Dividend & Growth Fund
<PAGE>
Statement of Operations
six months ended June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Investment Income
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Income:
Dividends (net of foreign taxes withheld of $2,505) .............. $ 322,090
Interest ......................................................... 43,626
----------------
................................................................................... 365,716
Expenses:
Management fee ................................................... 89,020
Services to shareholders ......................................... 69,954
Custodian and accounting fees .................................... 24,742
Trustees' fees and expenses ...................................... 12,460
Reports to shareholders .......................................... 7,298
Auditing ......................................................... 10,502
Legal ............................................................ 3,738
Registration fees ................................................ 26,700
Other ............................................................ 7,214
----------------
Total expenses before reductions ................................. 251,628
Expense reductions ............................................... (162,588)
----------------
Expenses, net .................................................... 89,040
-------------------------------------------------------------------------------------------
Net investment income (loss) ..................................... 276,676
-------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from investments ........................ (27,420)
Net unrealized appreciation (depreciation) during the period on
investments ................................................... 2,793,249
-------------------------------------------------------------------------------------------
Net gain (loss) on investment transactions 2,765,829
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 3,042,505
-------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
18 - Scudder Dividend & Growth Fund
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Increase (Decrease) in Net Assets For the Period
July 17, 1998
Six Months Ended (commencement of
June 30, 1999 operations) to
(Unaudited) December 31, 1998
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income (loss) ................. $ 276,676 $ 356,956
Net realized gain (loss) from investment
transactions .............................. (27,420) (870,914)
Net unrealized appreciation (depreciation) on
investment transactions during the period . 2,793,249 (420,668)
---------------- ----------------
Net increase (decrease) in net assets
resulting from operations .................... 3,042,505 (934,626)
---------------- ----------------
Distributions to shareholders:
From net investment income ................... (274,972) (360,021)
---------------- ----------------
Fund share transactions:
Proceeds from shares sold .................... 3,337,505 30,200,611
Net asset value of shares issued to
shareholders in reinvestment
of distributions .......................... 253,144 328,598
Cost of shares redeemed ...................... (5,516,366) (4,599,126)
---------------- ----------------
Net increase (decrease) in net assets from
Fund share transactions ...................... (1,925,717) 25,930,083
---------------- ----------------
Increase (decrease) in net assets ............ 841,816 24,635,436
Net assets at beginning of period ............ 24,636,636 1,200
Net assets at end of period (including
undistributed net investment income of ---------------- ----------------
$7,967 and $6,261, respectively) .......... $25,478,452 $24,636,636
---------------- ----------------
Other Information
- ---------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period .... 2,170,880 100
---------------- ----------------
Shares sold .................................. 273,264 2,567,341
Shares issued to shareholders in reinvestment
of distributions .......................... 20,880 29,706
Shares redeemed .............................. (468,050) (426,267)
---------------- ----------------
Net increase (decrease) in Fund shares ....... (173,906) 2,170,780
---------------- ----------------
Shares outstanding at end of period .......... 1,996,974 2,170,880
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
19 - Scudder Dividend & Growth Fund
<PAGE>
Financial Highlights
The following table includes selected data for a share outstanding throughout
each period (a) and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
For the Period
July 17, 1998
Six Months (commencement
Ended June 30, of operations)
1999 to December 31,
(Unaudited) 1998
- ---------------------------------------------------------------------------------------------------------------------
-----------------------------------
<S> <C> <C>
Net asset value, beginning of period .......................................... $11.35 $12.00
-----------------------------------
Income from investment operations:
Net investment income ......................................................... .14 .17
Net realized and unrealized gain (loss) on investment transactions ............ 1.41 (.65)
-----------------------------------
Total from investment operations .............................................. 1.55 (.48)
-----------------------------------
Less distributions from net investment income ................................. (.14) (.17)
-----------------------------------
Total distributions ........................................................... (.14) (.17)
-----------------------------------
-----------------------------------
Net asset value, end of period ................................................ $12.76 $11.35
-----------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Total Return (%) (b) .......................................................... 13.72** (4.00)**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ........................................ 25 25
Ratio of operating expenses, net to average daily net assets (%) .............. .75* .75*
Ratio of operating expenses before expense reductions, to average
daily net assets (%) ........................................................ 2.12* 2.56*
Ratio of net investment income to average daily net assets (%) ................ 2.33* 3.36*
Portfolio turnover rate (%) ................................................... 66.7* 41.4*
</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
20 - Scudder Dividend & Growth Fund
<PAGE>
Notes to Financial Statements (Unaudited)
A. Significant Accounting Policies
Scudder Dividend and Growth Fund (the "Fund") is a diversified series of
Investment Trust (the "Trust") which is registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), as an open-end management investment
company organized as a Massachusetts business trust.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
Security Valuation. Investments are stated at value determined as of the close
of regular trading on the New York Stock Exchange. 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 ("Nasdaq"), for which there have been sales, are valued at
the most recent sale price reported. 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, or if no sale occurred, at the calculated mean between the most recent
bid and asked quotations on such market. If there are no such bid and asked
quotations, the most recent bid quotation shall be used.
Portfolio debt securities purchased with an original maturity greater than sixty
days are valued by pricing agents approved by the officers of the Trust, whose
quotations reflect broker/dealer-supplied valuations and electronic data
processing techniques. If the pricing agents are unable to provide such
quotations, the most recent bid quotation supplied by a bona fide market maker
shall be used. Money market instruments purchased with an original maturity of
sixty days or less are valued at amortized cost.
All other securities are valued at their fair value as determined in good faith
by the Valuation Committee of the Board of Trustees.
Foreign Currency Translations. The books and records of the Fund are maintained
in U.S. dollars. Investment securities and other assets and liabilities
denominated in a foreign currency are translated into U.S. dollars at the
prevailing exchange rates at period end. Purchases and sales of investment
securities, income and expenses are translated into U.S. dollars at the
prevailing exchange rates on the respective dates of the transactions.
Net realized and unrealized gains and losses on foreign currency transactions
represent net gains and losses between trade and settlement dates on securities
transactions, the disposition of forward foreign currency exchange contracts and
foreign currencies, and the difference between the amount of net investment
income accrued and the U.S. dollar amount actually received. That portion of
both realized and unrealized gains and losses on investments that results from
fluctuations in foreign currency exchange rates is not separately disclosed but
is included with net realized and unrealized gains and losses on investment
securities.
Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian or
sub-custodian bank, receives delivery of the underlying securities, the amount
of which at the time of purchase and each subsequent business day is required to
be maintained at such a level that the market value is equal to at least the
principal amount of the repurchase price plus accrued interest.
21 - Scudder Dividend & Growth Fund
<PAGE>
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code, as amended, which are applicable to regulated
investment companies and to distribute all of its taxable income to its
shareholders. Accordingly, the Fund paid no federal income taxes and no federal
income tax provision was required.
At December 31, 1998, the Fund had a net tax basis capital loss carryforward of
approximately $790,000 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 $65,000 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.
Distribution of Income and Gains. Distributions of net investment income, if
any, are made quarterly. Net realized gains from investment transactions, in
excess of available capital loss carryforwards, would be taxable to the Fund if
not distributed, and, therefore, will be distributed to shareholders at least
annually.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. As a result, net
investment income (loss) and net realized gain (loss) on investment transactions
for a reporting period may differ significantly from distributions during such
period. Accordingly, the Fund may periodically make reclassifications among
certain of its capital accounts without impacting the net asset value of the
Fund.
Investment Transactions and Investment Income. Investment transactions are
accounted for on the trade date. Interest income is recorded on the accrual
basis. Dividend income is recorded on the ex-dividend date. Certain dividends
from foreign securities may be recorded subsequent to the ex-dividend date as
soon as the Fund is informed of such dividends. Realized gains and losses from
investment transactions are recorded on an identified cost basis. All discounts
are accreted for both tax and financial reporting purposes.
B. Purchases and Sales of Securities
For the six months ended June 30, 1999, purchases and sales of investment
securities (excluding short-term investments) aggregated $7,797,557 and
$10,476,464, 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 approximately 0.75% of
the Fund's average daily net assets computed and accrued daily and payable
monthly. In addition, the Adviser agreed not to impose all or a portion of its
management fee until April 30, 2000 and to maintain the annualized expenses of
the Fund at no more than 0.75% of the average daily net assets. For the six
months ended June 30, 1999, the
22 - Scudder Dividend & Growth Fund
<PAGE>
Adviser did not impose any of its fee, which amounted to $89,020. Further, due
to the limitations of such Agreement, the Adviser's reimbursement payable to the
Fund at June 30, 1999 amounted to $1,553.
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 June 30, 1999, SSC did not impose any of its fee, which
amounted to $53,265.
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 June 30,
1999, 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 six months
ended June 30, 1999, SFAC did not impose any of its fee, which amounted to
$18,750.
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 June 30, 1999, Trustees' fees and expenses aggregated
$12,460.
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 pro rata 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.
23 - Scudder Dividend & 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; 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; Venture Partner,
Venture Capital Group
Bruce F. Beaty*
Vice President
Jennifer P. Carter*
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
John Millette*
Vice President and Secretary
John R. Hebble*
Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
24 - Scudder Dividend & 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 --
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 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 Select 500 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 Select 1000 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
Variable Annuities
Scudder Horizon Plan**+++ +++
Scudder Horizon Advantage**+++ +++ +++
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.
For complete information on any of the above Scudder funds, including management
fees and expenses, call or write for a free prospectus. Read it carefully before
you invest or send money. +++Funds within categories are listed in order from
expected least risk to most risk. Certain Scudder funds or classes thereof may
not be available for purchase or exchange. +A portion of the income from the
tax-free funds may be subject to federal, state, and local taxes. *A class of
shares of the Fund. **Not available in all states. ***Only the Scudder Shares of
the Fund are part of the Scudder Family of Funds. ++Only the International
Shares of the Fund are part of the Scudder Family of Funds. +++ +++A no-load
variable annuity contract provided by Charter National Life Insurance Company
and its affiliate, offered by Scudder's insurance agencies, 1-800-225-2470. +++
+++ +++A no-load variable annuity contract issued by Glenbrook Life and Annuity
Company and underwritten by Allstate Financial Services, Inc., sold by Scudder's
insurance agencies, 1-800-225-2470. #These funds, advised by Scudder Kemper
Investments, Inc., are traded on the New York Stock Exchange and, in some cases,
on various other stock exchanges.
25 - Scudder Dividend & 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 -- 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 Dividend & 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 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
transaction fees or commissions. Scudder
shareholders can take advantage of a Scudder
Brokerage account already reserved for them, with
no minimum investment. For information about
Scudder Brokerage Services, call 1-800-700-0820.
Fund Folio funds held less than six months will be charged a transaction fee. 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.
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 Dividend & 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 $280 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 80
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Financial Services Group. As a result, Zurich's subsidiary, Zurich
Kemper Investments, Inc., with 50 years of mutual fund and investment management
experience, was combined with Scudder. Headquartered in New York, Scudder Kemper
Investments offers a full range of investment counsel and asset management
capabilities, based on a combination of proprietary research and disciplined,
long-term investment strategies. With its global investment resources and
perspective, the firm seeks opportunities in markets throughout the world to
meet the needs of investors.
Scudder Kemper Investments, Inc., the global asset management firm, is a member
of the Zurich Financial Services Group. The Zurich Financial Services Group is
an internationally recognized leader in financial services, including
property/casualty and life insurance, reinsurance, and asset management.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
SCUDDER