SCUDDER
INVESTMENTS(SM)
[LOGO]
-------------------------
EQUITY/DOMESTIC
-------------------------
Scudder Tax Managed
Growth Fund
Fund #306
Semiannual Report
April 30, 2000
The fund seeks long-term growth of capital
on an after-tax basis.
A no-load fund with no commissions to buy,
sell, or exchange shares.
<PAGE>
Contents
--------------------------------------------------------------------------------
4 Letter from the Fund's President
6 Performance Update
8 Portfolio Summary
10 Portfolio Management Discussion
14 Glossary of Investment Terms
15 Investment Portfolio
21 Financial Statements
24 Financial Highlights
25 Notes to Financial Statements
29 Officers and Trustees
30 Investment Products and Services
32 Scudder Solutions
2
<PAGE>
Scudder Tax Managed Growth Fund
--------------------------------------------------------------------------------
fund number 306
--------------------------------------------------------------------------------
Date of Inception: o A select group of biotechnology and Internet stocks
9/18/98 dominated returns for most of the six-month period,
but market performance broadened in the final two
months to include stocks with solid fundamentals and
more attractive valuations.
Total Net Assets as
of 4/30/00: o Reflecting the challenging market environment, the fund
$3 million returned 6.31% for the six-month period ended April 30,
2000.
o While the fund's investment approach was out of favor
over most of the period, its performance still came
close to matching the 7.20% return of its benchmark,
the S&P 500 Index.
3
<PAGE>
Letter from the Fund's President
--------------------------------------------------------------------------------
Dear Shareholders,
After more than two years of dominance by a handful of highly valued growth
stocks, many of the biggest gainers experienced sharp price declines over the
latter half of the six-month period. Rising interest rates and recognition that
valuations for many high priced stocks were unsustainable prompted the changed
environment. While an increased level of daily market volatility has accompanied
the transition, valuations are now generally lower for many stocks. We believe
that these lower valuations will actually support the investment environment
over the long term.
Witnessing such a transition often tests one's commitment to an investment
strategy. However, it has been our experience that investors with a well thought
out investment approach tend to be more successful investors over the long term.
While we expect the investment markets to remain volatile in the near term as
investors sort out the effects of higher interest rates and the currently strong
U.S. economy, we still believe there are many good investment opportunities. In
particular, we think maintaining a diversified approach with exposure to several
asset classes, including stocks with attractive valuations, may be a good hedge
against the daily gyrations of the markets.
4
<PAGE>
One of the most important strengths of Scudder Tax Managed Growth Fund is its
ongoing commitment to diversification and attractively valued stocks. In the
following pages, portfolio managers Rob Tymoczko and Mark Berroth describe how
their disciplined investment process benefited from the shift in investor
sentiment in the later half of the period. Their discussion begins on page 10.
For current information on your fund and your account, visit our Internet Web
site at www.scudder.com. There you'll find a wealth of information, including
the most recent fund performance, the latest news on Scudder products and
services, and the opportunity to perform account transactions. You can also
speak with one of our representatives by calling 1-800-SCUDDER (1-800-728-3337).
Thank you for your continued investment in Scudder Tax Managed Growth Fund.
Sincerely,
/s/Linda C. Coughlin
Linda C. Coughlin
President,
Scudder Tax Managed Growth Fund
5
<PAGE>
Performance Update
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April 30, 2000
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Growth of a $10,000 Investment
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THE ORIGINAL DOCUMENT CONTAINS A LINE CHART HERE
LINE CHART DATA:
Scudder Tax Managed
Growth Fund S&P 500 Index*
9/98** 10000 10000
10/98 10608 10814
1/99 11391 12638
4/99 11927 13228
7/99 12086 13207
10/99 11433 13591
1/00 11097 13947
4/00 12154 14569
--------------------------------------------------------------------------------
Fund Index Comparison
--------------------------------------------------------------------------------
Total Return
Growth of Average
Period ended 4/30/2000 $10,000 Cumulative Annual
--------------------------------------------------------------------------------
Scudder Tax Managed Growth Fund
--------------------------------------------------------------------------------
1 year $ 10,191 1.91% 1.91%
--------------------------------------------------------------------------------
Life of Fund** $ 12,154 21.54% 12.87%
--------------------------------------------------------------------------------
S&P 500 Index*
--------------------------------------------------------------------------------
1 year $ 11,014 10.14% 10.14%
--------------------------------------------------------------------------------
Life of Fund** $ 14,569 45.69% 26.83%
--------------------------------------------------------------------------------
* The Standard & Poor's 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. Index returns assume
reinvested dividends and, unlike Fund returns, do not reflect any fees
or expenses. Total return would have been lower if certain expenses had
not been reduced.
** The Fund commenced operations on September 18, 1998. Index comparisons
begin September 30, 1998.
6
<PAGE>
--------------------------------------------------------------------------------
Returns and Per Share Information
--------------------------------------------------------------------------------
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
ILLUSTRATING THE SCUDDER TAX MANAGED GROWTH FUND TOTAL RETURN (%) AND
S&P 500 INDEX* TOTAL RETURN (%)
Yearly periods ended April 30
1999** 2000
-------------------------------------------------------------------------------
Fund Total
Return (%) 19.27 1.91
-------------------------------------------------------------------------------
Index Total
Return (%) 32.27 10.14
-------------------------------------------------------------------------------
Net Asset
Value ($) 14.25 14.38
-------------------------------------------------------------------------------
Income
Dividends
($) .06 .14
-------------------------------------------------------------------------------
Capital
Gains
Distributions
($) -- --
-------------------------------------------------------------------------------
* The Standard & Poor's 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. Index returns assume
reinvested dividends and, unlike Fund returns, do not reflect any fees
or expenses.
** The Fund commenced operations on September 18, 1998. Index comparisons
begin September 30, 1998.
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 1-year and
life of Fund periods would have been lower.
7
<PAGE>
Portfolio Summary
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April 30, 2000
--------------------------------------------------------------------------------
Diversification
--------------------------------------------------------------------------------
The fund seeks to be
fully invested in a
Common Stocks 100% broad selection of large-
------------------------------------ and mid-cap stocks
with attractive
valuations.
--------------------------------------------------------------------------------
Sectors
--------------------------------------------------------------------------------
A GRAPH IN THE FORM OF A PIE CHART APPEARS HERE, ILLUSTRATING THE EXACT DATA
POINTS IN THE TABLE BELOW.
The fund benefited from
Consumer Discretionary 16% an overweighting in
Technology 16% energy and an
Utilities 15% underweighting in basic
Financial 11% materials. While an
Manufacturing 7% overweighting in
Durables 7% financials was reduced
Health 7% over the period, the
Service Industries 5% rising interest rate
Energy 4% environment was a
Other 12% distinct negative for
------------------------------------ these stocks.
100%
------------------------------------
8
<PAGE>
--------------------------------------------------------------------------------
Ten Largest Equity Holdings
--------------------------------------------------------------------------------
(21% of Portfolio) To identify individual
securities for purchase,
1. AES Corp. management utilizes a
Provider of electricity proprietary,
quantitative screening
2. Hewett-Packard Co. process that
Provider of imaging and printing systems, computing incorporates stock
systems and informational technology services valuation, trends in
fundamentals and price
3. Sybrov International Corp. momentum.
Manufacturer of laboratory and dental supply products
4. Scientific-Atlanta, Inc.
Manufacturer of broadband communication equipment,
test and measurement instruments and defense
electronic systems
5. Intel Corp.
Producer of semiconductor memory circuits
6. Florida Progress Corp.
Electric utility holding company
7. BellSouth Corp.
Marketer of personal computers and related products
and services
8. Puget Sound Energy, Inc.
Electric utility
9. Solectron Corp.
Manufacturer of computer products and subsystems
10. NSTAR
Electric and gas utility
For more complete details about the Fund's investment portfolio, see page 15. A
quarterly Fund Summary and Portfolio Holdings are available upon request.
9
<PAGE>
Portfolio Management Discussion
--------------------------------------------------------------------------------
April 30, 2000
In the following interview, portfolio managers Robert D. Tymoczko and Mark A.
Berroth discuss the market environment and their approach to managing the fund.
Q: Over the six months, a lot more changed than stayed the same. How would you
characterize this environment?
A: It's been a volatile period for stocks. After leading the market for most of
the six-month period, investors shifted away from a small group of biotechnology
and Internet stocks in favor of a broader range of established companies with
solid fundamentals and more reasonable valuations. The shift was triggered
primarily by heightened inflation fears, rising short-term interest rates, and
an apparent acknowledgement that the high prices of many growth stocks were not
sustainable. In February, we began to see the start of a turn in the markets. By
March and April it was in full swing, with many of the most highly valued stocks
losing more than half their market value, some in just a few days. While the
shift generally benefited Scudder Tax Managed Growth Fund's approach, the
reversal began late in the period and did not make up for the enormous gains of
the few high priced growth stocks that had been leading the markets over the
first four months of the period.
Q: How did the fund perform?
A: The fund performed better than we expected, given that its emphasis on
attractively valued stocks was not in favor for most of the six months. Early in
the period, the fund's diversified approach held back performance (as it held
back the performance of many diversified portfolios) while a few biotech and
Internet stocks generated enormous gains. In February, performance began to
broaden to include more of the stocks that meet our criteria, contributing to
the fund's improved performance. For the six-month period, the fund's 6.31%
return nearly matched the 7.20% return of its unmanaged benchmark, the S&P 500
Index.
10
<PAGE>
Q: What helped and hurt performance?
A: The portfolio's average market capitalization of $35 billion was
significantly lower than that of the $118 billion market cap of its benchmark.
However, the lower valuations of the portfolio's holdings hurt performance, as
did stocks with higher earnings stability and lower price volatility. These
stocks generally did not perform as well as stocks at the other end of the
spectrum. The disparity between growth and value is clear when you look at the
returns for these sectors over the six months: large-cap growth stocks returned
18.72% for the period, as measured by the Russell 1000 Growth Index versus
large-cap value stocks, which returned -0.99% as measured by the Russell 1000
Value Index.
Q: How do you manage the fund?
A: We focus on stocks that we believe are attractively valued. Essentially, we
are looking for good companies that are selling for less. We make this
determination by looking at several key valuation measures. For example, the
fund's price/earnings (P/E) ratio stood at 18x for the trailing 12-month period,
while the S&P 500 Index P/E was significantly higher at 30x. From a price/book
standpoint, the fund's ratio was 2.93 versus 5.04 for the S&P 500. At the same
time that we hold attractively valued stocks in the portfolio, we also attempt
to invest in companies with solid earnings growth rates. The fund's realized
monthly average earnings growth rate (12-month trailing period) exceeded the S&P
500 -- 17.07% for the fund versus 16.21% for the benchmark. In effect, we paid a
lot less for higher growth.
As you may know, investors have been focusing on "momentum stocks" until
recently. These stocks typically are last week's, last month's, and last year's
best performers, and their performance has little bearing on their underlying
company fundamentals. This type of environment, which is not grounded in
analyzing company fundamentals, has proven challenging for our approach.
11
<PAGE>
However, in March and April we were encouraged by signs that this environment
appeared to be changing in our favor.
Q: How did the fund's industry sector weights affect performance?
A: The fund benefited from an underweighting in energy, which was a weak
performer, and an overweighting in basic materials, which performed well. On the
negative side, our emphasis on attractively valued stocks has led to an
overweighting in the finance sector. While we reduced our exposure to this
sector over the period, the rising interest rate environment was a distinct
negative for many financial stocks. Performance was also held back by our
underweightings in the technology and health care sectors.
Q: The fund's investment universe is comprised of approximately 1,000 mid- and
large-cap U.S. companies. How do you assess each stock's return potential?
A: We rely on a proprietary, quantitative screening process to identify
attractively valued stocks with above-average capital appreciation potential. We
consider three primary factors: valuation, trends in fundamentals, and price
momentum. Our valuation measures tell us how cheap the security is relative to
our overall stock universe. Earnings trends suggest whether the company's
fundamentals are stable, improving, or deteriorating. Price momentum allows us
to assess how the market is responding to these fundamentals. Each company is
then ranked based on its relative attractiveness.
Q: What were the results of your individual stock selection process?
A: While specific factor and industry sectors held back performance, the fund's
stock selection criteria worked well. Similar to prior reporting periods, we had
a number of strong performers. Much like the market overall, we had a few stocks
that performed extremely well, but a number of stocks that produced average or
negative
12
<PAGE>
returns. We've included a table below that highlights the fund's top and bottom
performers for the six-month period.
--------------------------------------------------------------
Price return on shares held
for the six-month period
Top Five Performers ended April 30, 2000
--------------------------------------------------------------
Scientific Atlanta 127%
--------------------------------------------------------------
Xilinx 86%
--------------------------------------------------------------
Hewlett-Packard 82%
--------------------------------------------------------------
Adobe 73%
--------------------------------------------------------------
Intel 64%
--------------------------------------------------------------
--------------------------------------------------------------
Price return on shares held
for the six-month period
Bottom Five Performers ended April 30, 2000
--------------------------------------------------------------
Compuware -55%
--------------------------------------------------------------
Dean Foods -46%
--------------------------------------------------------------
Synopsis -33%
--------------------------------------------------------------
Thomas & Betts -30%
--------------------------------------------------------------
TJX Companies -29%
--------------------------------------------------------------
Q: What is your outlook for attractively valued stocks?
A: We've been living through a very unusual market environment for stock
investing that has broken old rules and defied many long-standing investment
principles. While we must always look forward in selecting attractive
investments, we maintain that there are limits to every extreme situation, such
as the recent outperformance of growth stocks over value stocks. We think
experienced investors know that the fund's diversified approach to buying stocks
of companies with good growth rates and attractive valuations continues to make
sense. As such, we believe that investing in these kinds of companies will
reward investors over the long term and will play an important role in a
properly diversified portfolio.
13
<PAGE>
<TABLE>
<CAPTION>
Glossary of Investment Terms
--------------------------------------------------------------------------------
<S> <C>
Growth Stock Stock of a company that has displayed greater than average
earnings growth and is expected to continue to increase
profits rapidly going forward. Stocks of such companies
usually trade at a higher price relative to earnings (higher
P/E) and can exhibit greater price volatility.
Market The value of a company's outstanding shares of common stock,
Capitalization determined by multiplying the number of shares outstanding
by the share price (shares x price = market capitalization).
The universe of publicly traded companies is frequently
divided into large-, mid-, and small-capitalizations.
Over/Under Weighting Refers to the allocation of assets -- usually by sector,
industry, or country -- within a portfolio relative to a
benchmark index (e.g., the S&P 500 Index), or an investment
universe.
Price/Earnings A widely used gauge of a stock's valuation that indicates
Ratio (P/E) (also what investors are paying for a company's earnings on a per
"earnings multiple") share basis. A higher "earnings multiple" indicates a higher
expected growth rate and the potential for greater price
fluctuations.
Quantitative Model A systematic approach to evaluating a security based on its
financial characteristics.
Standard Deviation A statistical measure of the degree to which an investment's
return tends to vary from the mean return. Frequently used
in portfolio management to measure the variability of past
returns and to gauge the likely range of possible future
returns.
Tax Basis The price paid by an investor for a stock or bond plus any
out-of-pocket expenses such as brokerage commissions. A
security's basis is used to determine capital gains or
losses for tax purposes when the stock is sold.
</TABLE>
(Source: Scudder Kemper Investments, Inc.; Barron's Dictionary of Finance and
Investment Terms.)
Additional glossary terms are available at our Internet Web site,
www.scudder.com.
14
<PAGE>
Investment Portfolio as of April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
Shares Value ($)
--------------------------------------------------------
--------------------------------------------------------
Common Stocks 100.0%
--------------------------------------------------------
Consumer Discretionary 16.2%
Apparel & Shoes 2.0%
Jones Apparel Group, Inc.* ....... 1,400 41,563
Liz Claiborne, Inc. .............. 400 18,525
---------
60,088
---------
Department & Chain Stores 7.5%
Best Buy Co., Inc.* .............. 600 48,450
Federated Department Stores, Inc.* 700 23,800
Gap, Inc. ........................ 675 24,806
Home Depot, Inc. ................. 450 25,228
Sears, Roebuck & Co. ............. 300 10,988
The Limited, Inc. ................ 600 27,113
TJX Companies, Inc. (New) ........ 500 9,594
Wal-Mart Stores, Inc.* ........... 900 49,838
---------
219,817
---------
Hotels & Casinos 0.4%
Harrah's Entertainment, Inc.* .... 600 12,338
---------
Recreational Products 0.6%
International Game Technology* ... 700 17,063
---------
Restaurants 2.0%
Brinker International Inc.* ...... 600 19,125
Outback Steakhouse Inc.* ......... 1,200 39,300
---------
58,425
---------
Specialty Retail 3.5%
BJ's Wholesale Club Inc.* ........ 300 10,631
Family Dollar Stores Inc. ........ 1,500 28,594
Intimate Brands, Inc. ............ 1,200 46,200
Tandy Corp. ...................... 300 17,100
---------
102,525
---------
Miscellaneous 0.2%
Stewart Enterprises, Inc. ........ 1,100 5,294
---------
Consumer Staples 2.8%
Food & Beverage 1.0%
Pepsi Bottling Group, Inc. ....... 1,300 28,031
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
Shares Value ($)
------------------------------------------------------
SUPERVALU, Inc. ................ 100 2,069
--------
30,100
--------
Package Goods/Cosmetics 1.8%
Colgate-Palmolive Co. .......... 300 17,138
Kimberly-Clark Corp. ........... 100 5,806
Nu Skin Asia Pacific Inc.* ..... 3,900 29,981
--------
52,925
--------
Health 7.2%
Biotechnology 2.0%
Amgen Inc.* .................... 400 22,400
Biogen, Inc.* .................. 600 35,288
--------
57,688
--------
Health Industry Services 1.0%
Wellpoint Health Networks, Inc.* 400 29,500
--------
Medical Supply & Specialty 2.6%
Bausch & Lomb, Inc. ............ 200 12,075
Sybron International Corp.* .... 2,100 65,363
--------
77,438
--------
Pharmaceuticals 1.6%
Forest Laboratories, Inc.* ..... 300 25,219
Merck & Co., Inc. .............. 300 20,850
--------
46,069
--------
Communications 2.2%
Telephone/Communications
Alltel Corp. ................... 100 6,663
BellSouth Corp. ................ 1,200 58,425
--------
65,088
--------
Financial 11.4%
Banks 2.3%
Chase Manhattan Corp. .......... 700 50,444
Commerce Bankshares Inc. ....... 1 31
Golden West Financial Corp. .... 500 17,063
--------
67,538
--------
Insurance 3.9%
Jefferson Pilot Corp. .......... 400 26,625
PMI Group, Inc. ................ 750 36,328
Transatlantic Holdings, Inc. ... 200 16,588
Unitrin, Inc. .................. 1,000 33,750
--------
113,291
--------
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
Shares Value ($)
----------------------------------------------------------------
Consumer Finance 1.8%
Citigroup, Inc. ............................. 900 53,494
--------
Other Financial Companies 3.4%
Edwards (A.G.) Inc. ......................... 600 22,575
Legg Mason, Inc. ............................ 1,100 41,594
Morgan Stanley Dean Witter & Co. ............ 200 15,350
TCF Financial Corporation ................... 900 21,038
--------
100,557
--------
Media 2.4%
Advertising 0.4%
Interpublic Group of Companies, Inc. ........ 300 12,300
--------
Broadcasting & Entertainment 0.7%
CBS Corp.* .................................. 324 19,035
--------
Print Media 1.3%
Knight-Ridder, Inc. ......................... 800 39,250
--------
Service Industries 5.1%
EDP Services 1.4%
Affiliated Computer Services* ............... 1,100 36,438
First Data Corp. ............................ 100 4,869
--------
41,307
--------
Investment 2.6%
Bear Stearns Companies, Inc. ................ 661 28,340
Donaldson, Lufkin & Jenrette Securities Corp. 500 20,844
Paine Webber Group, Inc. .................... 600 26,325
--------
75,509
--------
Miscellaneous Commercial Services 0.1%
Ecolab, Inc. ................................ 100 3,906
--------
Miscellaneous Consumer Services 1.0%
Ultramar Diamond Shamrock Corp. ............. 1,200 29,700
--------
Durables 7.3%
Aerospace 1.1%
Northrop Grumman Corp. ...................... 200 14,175
United Technologies Corp. ................... 279 17,350
--------
31,525
--------
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
Shares Value ($)
-------------------------------------------------------------
Automobiles 3.0%
Ford Motor Co. ......................... 900 49,219
General Motors Corp. ................... 300 28,088
Genuine Parts Co. ...................... 400 10,500
--------
87,807
--------
Construction/Agricultural Equipment 0.6%
PACCAR, Inc. ........................... 400 19,025
--------
Leasing Companies 0.4%
Hertz Corp. ............................ 400 12,475
--------
Telecommunications Equipment 2.2%
Scientific-Atlanta, Inc. ............... 1,000 65,063
--------
Manufacturing 7.0%
Chemicals 1.1%
Dow Chemical Co. ....................... 100 11,300
Rohm & Haas Co. ........................ 600 21,375
--------
32,675
--------
Containers & Paper 0.2%
Crown Cork & Seal Co. .................. 400 6,500
--------
Diversified Manufacturing 1.9%
Cooper Industries, Inc. ................ 500 17,156
Honeywell International, Inc. .......... 287 16,072
Tyco International Ltd. ................ 456 20,948
--------
54,176
--------
Industrial Specialty 2.6%
Johnson Controls, Inc. ................. 600 37,988
Sherwin-Williams Co. ................... 500 12,438
The Valspar Corp. ...................... 700 25,200
--------
75,626
--------
Machinery/Components/Controls 1.2%
Ingersoll-Rand Co. ..................... 700 32,856
Tenneco Automotive, Inc. ............... 300 2,663
--------
35,519
--------
Technology 16.0%
Computer Software 5.1%
Adobe Systems, Inc. .................... 200 24,188
Computer Associates International, Inc. 400 22,325
Comverse Technologies, Inc. * .......... 600 53,513
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
Shares Value ($)
------------------------------------------------------------
Electronic Arts, Inc.* ................ 200 12,100
Symantec Corp.* ....................... 200 12,488
Synopsys Ltd.* ........................ 600 25,200
---------
149,814
---------
Diverse Electronic Products 1.9%
Solectron Corp.* ...................... 1,200 56,175
---------
Electronic Components/Distributors 1.9%
Gateway, Inc.* ........................ 1,000 55,250
---------
Electronic Data Processing 4.2%
Apple Computer, Inc.* ................. 200 24,813
Hewlett-Packard Co. ................... 500 67,500
Unisys Corp. .......................... 1,400 32,463
---------
124,776
---------
Semiconductors 2.9%
Intel Corp. ........................... 500 63,406
Xilinx, Inc.* ......................... 300 21,975
---------
85,381
---------
Energy 3.9%
Oil & Gas Production 0.2%
EOG Resources. Inc. ................... 200 4,975
---------
Oil Companies 1.2%
Ashland Inc. .......................... 900 30,713
USX Marathon Group .................... 200 4,663
---------
35,376
---------
Oil/Gas Transmission 0.6%
El Paso Energy Corporation ............ 400 17,000
---------
Oilfield Services/Equipment 1.9%
Diamond Offshore Drilling, Inc. ....... 400 16,125
Noble Drilling Corp.* ................. 500 19,969
Tidewater Inc. ........................ 700 20,825
---------
56,919
---------
Metals & Minerals 0.4%
Steel & Metals
Alcoa, Inc. ........................... 200 12,975
---------
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
Shares Value ($)
--------------------------------------------------------------------------------
Construction 0.4%
Building Materials 0.1%
LaFarge Corp. ........................................... 100 2,525
--------
Building Products 0.3%
Masco Corp. ............................................. 400 8,975
--------
Transportation 2.8%
Airlines 0.7%
Southwest Airlines Co. .................................. 900 19,519
--------
Railroads 2.1%
Burlington Northern Santa Fe Corp. ...................... 500 12,063
Kansas City Southern Industries, Inc. ................... 700 50,313
--------
62,376
--------
Utilities 14.9%
Electric Utilities 13.7%
AES Corp.* .............................................. 800 71,936
Allegheny Energy, Inc. .................................. 1,300 39,488
Ameren Corp. ............................................ 1,400 51,363
Central & South West Corp. .............................. 1,000 21,688
DTE Energy Co. .......................................... 500 16,313
Florida Progress Corp. .................................. 1,200 58,800
NSTAR ................................................... 1,255 55,298
Puget Sound Energy, Inc. ................................ 2,400 57,000
Texas Utilities Co., Inc. ............................... 900 30,319
--------
402,205
--------
Natural Gas Distribution 1.2%
Reliant Energy, Inc. .................................... 1,300 34,613
--------
--------------------------------------------------------------------------------
Total Common Stocks (Cost $2,296,965) 2,939,490
--------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $ 2,296,965) (a) 2,939,490
--------------------------------------------------------------------------------
* Non-income producing security.
(a) The cost for federal income tax purposes was $2,296,965. At April 30,
2000, net unrealized appreciation for all securities based on tax cost
was $642,525. This consisted of aggregate gross unrealized appreciation
for all securities in which there was an excess of market value over
tax cost of $717,462 and aggregate gross unrealized depreciation for
all securities in which there was an excess of tax cost over market
value of $74,937.
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
Financial Statements
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Statement of Assets and Liabilities as of April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
Assets
--------------------------------------------------------------------------------------------
<S> <C>
Investments in securities, at value (cost $2,296,965) ........................ $ 2,939,490
Cash ......................................................................... 47,284
Dividends receivable ......................................................... 3,084
Receivable for Fund shares sold .............................................. 600
Due from Adviser ............................................................. 96,894
Other assets ................................................................. 25,448
------------
Total assets ................................................................. 3,112,800
Liabilities
--------------------------------------------------------------------------------------------
Accrued reorganization costs ................................................. 1,542
Other accrued expenses and payables .......................................... 88,205
------------
Total liabilities ............................................................ 89,747
--------------------------------------------------------------------------------------------
Net assets, at value $ 3,023,053
--------------------------------------------------------------------------------------------
Net Assets
--------------------------------------------------------------------------------------------
Net assets consist of:
Accumulated distributions in excess of net investment income ................. (1,386)
Net unrealized appreciation (depreciation) on investments .................... 642,525
Accumulated net realized gain (loss) ......................................... (142,388)
Paid-in capital .............................................................. 2,524,302
--------------------------------------------------------------------------------------------
Net assets, at value $ 3,023,053
--------------------------------------------------------------------------------------------
Net Asset Value
--------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share ($3,023,053 / 210,163
outstanding shares of beneficial interest, $.01 par value, unlimited number ------------
of shares authorized) ..................................................... $ 14.38
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
--------------------------------------------------------------------------------
Statement of Operations for the six months ended April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
Investment Income
--------------------------------------------------------------------------------
Income:
Dividends ..................................................... $ 27,393
Interest ...................................................... 141
---------
Total income .................................................. 27,534
---------
Expenses:
Management fee ................................................ 13,515
Services to shareholders ...................................... 4,703
Custodian and accounting fees ................................. 21,480
Auditing ...................................................... 10,574
Legal ......................................................... 2,374
Trustees' fees and expenses ................................... 14,950
Registration fees ............................................. 22,269
Reorganization ................................................ 1,551
Other ......................................................... 1,935
---------
Total expenses, before expense reductions ..................... 93,351
Expense reductions ............................................ (70,687)
---------
Total expenses, after expense reductions ...................... 22,664
---------------------------------------------------------------------------
Net investment income (loss) 4,870
---------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
---------------------------------------------------------------------------
Net realized gain (loss) from investments ..................... (9,902)
Net unrealized appreciation (depreciation) during the period on
investments ................................................ 211,956
---------------------------------------------------------------------------
Net gain (loss) on investment transactions 202,054
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 206,924
---------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
--------------------------------------------------------------------------------
Statements of Changes in Net Assets
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
April 30, 2000 October 31,
Increase (Decrease) in Net Assets (Unaudited) 1999
------------------------------------------------------------------------------------
Operations:
<S> <C> <C>
Net investment income (loss) ...................... $ 4,870 $ 10,687
Net realized gain (loss) on investment transactions (9,902) (132,486)
Net unrealized appreciation (depreciation) on
investment transactions during the period ...... 211,956 277,558
------------ -----------
Net increase (decrease) in net assets resulting
from operations ................................ 206,924 155,759
------------ -----------
Distributions to shareholders from:
Net investment income ............................. (33,713) (12,914)
------------ -----------
Fund share transactions:
Proceeds from shares sold ......................... 283,814 2,012,729
Reinvestment of distributions ..................... 26,274 12,056
Cost of shares redeemed ........................... (1,516,539) (410,090)
Redemption fees ................................... 6,157 3,477
------------ -----------
Net increase (decrease) in net assets from Fund
share transactions ............................. (1,200,294) 1,618,172
------------ -----------
Increase (decrease) in net assets ................. (1,027,083) 1,761,017
Net assets at beginning of period ................. 4,050,136 2,289,119
Net assets at end of period (including accumulated
distributions in excess of net investment
income of $1,386 and undistributed net ------------ -----------
investment income of $27,457, respectively) .... $ 3,023,053 $ 4,050,136
------------ -----------
Other Information
--------------------------------------------------------------------------------
Shares outstanding at beginning of period ......... 296,592 179,789
------------ -----------
Shares sold ....................................... 22,682 145,878
Shares issued to shareholders in reinvestment of
distributions .................................. 1,916 874
Shares redeemed ................................... (111,027) (29,949)
------------ -----------
Net increase in Fund shares ....................... (86,429) 116,803
------------ -----------
Shares outstanding at end of period ............... 210,163 296,592
------------ -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
Financial Highlights
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
Year ended October 31 2000(b) 1999 1998(c)
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $13.66 $12.73 $12.00
------------------------------
---------------------------------------------------------------------------------------
Income (loss) from investment operations:
---------------------------------------------------------------------------------------
Net investment income (loss) (a) .02 .04 .01
---------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investment
transactions .82 .94 .72
------------------------------
---------------------------------------------------------------------------------------
Total from investment operations .84 .98 .73
---------------------------------------------------------------------------------------
Less distributions from:
---------------------------------------------------------------------------------------
Net investment income (.14) (.06) --
---------------------------------------------------------------------------------------
Redemption fee .02 .01 --
---------------------------------------------------------------------------------------
Net asset value, end of period $14.38 $13.66 $12.73
------------------------------
---------------------------------------------------------------------------------------
Total Return (%) (d) 6.31** 7.77 6.08(e)**
---------------------------------------------------------------------------------------
Ratios to Average Net Assets and Supplemental Data
---------------------------------------------------------------------------------------
Net assets, end of period ($ millions) 3 4 2
---------------------------------------------------------------------------------------
Ratio of expenses before expense reductions (%) 5.49(f)* 5.40 25.9*
---------------------------------------------------------------------------------------
Ratio of expenses after expense reductions (%) 1.30(f)* 1.25 1.25*
---------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) .29* .29 .42*
---------------------------------------------------------------------------------------
Portfolio turnover rate (%) 49 61 --
---------------------------------------------------------------------------------------
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) For the six months ended April 30, 2000 (Unaudited).
(c) For the period September 18, 1998 (commencement of operations) to
October 31, 1998.
(d) Total return would have been lower had certain expenses not been
reduced.
(e) Shareholders redeeming shares held less than one year will have a lower
total return due to the effect of the 2% redemption fee.
(f) The ratios of operating expenses excluding costs incurred in connection
with the reorganization before and after expense reductions were 5.44%
and 1.25%, respectively.
* Annualized
** Not annualized
24
<PAGE>
Notes to Financial Statements (Unaudited)
--------------------------------------------------------------------------------
A. Description of the Fund
Scudder Tax Managed 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.
B. Plan of Reorganization
On February 7, 2000 the Trustees of the Fund approved an Agreement and Plan of
Reorganization (the "Plan") between the Fund and Scudder Select 500 Fund,
pursuant to which Scudder Select 500 Fund would acquire all or substantially all
of the assets and liabilities of the Fund in exchange for shares of Scudder
Select 500 Fund. The proposed transaction is part of Scudder Kemper Investments,
Inc.'s ("Scudder Kemper") initiative to restructure and streamline the
management and operations of the funds it advises. Costs incurred in connection
with this reorganization initiative are being borne jointly by Scudder Kemper
and certain funds and are included as reorganization expense in the Statement of
Operations of the Fund. These costs principally include printing, proxy meeting
expenses and professional fees. All funds under the reorganization initiative
are subject to an allocated charge of such costs except for certain funds not
expected to realize a reduction in the operating expense ratio. The Plan can be
consummated only if, among other things, it is approved by a majority vote of
the shareholders of the Fund. A special meeting (the "Meeting") of the
shareholders of the Fund to approve the Plan will be held on or about July 13,
2000.
As a result of the Plan, each shareholder of Scudder Tax Managed Growth Fund
will become a shareholder of the shares of Scudder Select 500 Fund and would
hold, immediately after the closing of the Plan (the "Closing"), that number of
full and fractional voting shares of Scudder Select 500 Fund having an aggregate
net asset value equal to the aggregate net asset value of such shareholder's
shares held in the Fund as of the close of business on the business day
preceding the Closing. The Closing is expected to take place during the third
quarter of 2000. In the event the shareholders of the Fund fail to approve the
Plan, the Fund will continue to operate and the Fund's Board may resubmit the
Plan for shareholder approval or consider other proposals.
C. Significant Accounting Policies
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management
25
<PAGE>
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.
All other securities are valued at their fair value as determined in good faith
by the Valuation Committee of the Board of Directors.
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.
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 October 31, 1999 the Fund had a net tax basis capital loss carryforward of
approximately $132,000 which may be applied against any realized net taxable
capital gains of each succeeding year until fully utilized or until October 31,
2007, the expiration date, whichever occurs first.
Distribution of Income and Gains. Distributions of net investment income, if
any, are made annually. Net realized gains from investment transactions, in
excess of available capital loss carryforwards, would be taxable to the Fund if
26
<PAGE>
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. Realized gains and
losses from investment transactions are recorded on an identified cost basis.
Redemption Fees. In general, shares of the Fund may be redeemed at net asset
value. However, upon the redemption or exchange of shares held by shareholders
for less than one year, a fee of 2% of the current net asset value of the shares
will be assessed and retained by the Fund for the benefit of the remaining
shareholders. The redemption fee is accounted for as an addition to paid-in
capital.
D. Purchases and Sales of Securities
For the six months ended April 30, 2000, purchases and sales of investment
securities (excluding short-term investments) aggregated $835,597 and
$2,123,306, respectively.
E. Related Parties
Under the Investment Management Agreement (the "Management 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
Management Agreement. The management fee payable under the Management Agreement
is equal to an annual rate of 0.80% of the Fund's average daily net assets,
computed and accrued daily and
27
<PAGE>
payable monthly. In addition, the Adviser has agreed not to impose all or a
portion of its management fee until February 28, 2001 in order to maintain the
annualized expenses of the Fund at not more than 1.25% of average daily net
assets. Certain expenses incurred in connection with the reorganization are
excluded from the expense limitation. Accordingly, for the six months ended
April 30, 2000, the Adviser did not impose any of its fee amounting to $13,515.
Further, due to the limitations of such Agreement, the Adviser's reimbursement
payable to the Fund for six months ended April 30, 2000, amounted to $96,894.
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 April 30, 2000, SSC did not impose any of its fee, which
amounted to $2,443.
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 April 30, 2000, 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 April 30, 2000, Trustees' fees and expenses aggregated
$14,950, of which $7,500 was not imposed.
F. Expense Off-Set Arrangements
The Fund has entered into arrangements with its custodian and transfer agent
whereby credits realized as a result of uninvested cash balances were used to
reduce a portion of the Fund's expenses. During the period, the Fund's custodian
and transfer agent fees were reduced by $177 and $62, respectively, under these
arrangements.
G. Line of Credit
The Fund and several Scudder Funds (the "Participants") share in a $1 billion
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 based upon net assets, 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.
28
<PAGE>
Officers and Trustees
Linda C. Coughlin* Bruce F. Beaty*
o President and Trustee o Vice President
Henry P. Becton, Jr. Jennifer P. Carter*
o Trustee; President and General o Vice President
Manager, WGBH Educational
Foundation James M. Eysenbach*
o Vice President
Dawn-Marie Driscoll
o Trustee; Executive Fellow, William F. Gadsden*
Center for Business Ethics, o Vice President
Bentley College; President,
Driscoll Associates Valerie F. Malter*
o Vice President
Peter B. Freeman
o Trustee; Corporate Director and Ann M. McCreary*
Trustee o Vice President
George M. Lovejoy, Jr. Kathleen T. Millard*
o Trustee; President and o Vice President
Director, Fifty Associates
Robert D. Tymoczko*
Wesley W. Marple, Jr. o Vice President
o Trustee; Professor of Business
Administration, Northeastern John Millette*
University o Vice President and Secretary
Kathryn L. Quirk* John R. Hebble*
o Trustee, Vice President and o Treasurer
Assistant Secretary
Caroline Pearson*
Jean C. Tempel o Assistant Secretary
o Trustee; Managing Director,
First Light Capital *Scudder Kemper Investments, Inc.
29
<PAGE>
Investment Products and Services
--------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
The Scudder Family of Funds+++
--------------------------------------------------------------------------------
<S> <C>
Money Market U.S. Growth
Scudder U.S. Treasury Money Fund Value
Scudder Cash Investment Trust Scudder Large Company Value Fund
Scudder Money Market Series -- Scudder Value Fund***
Prime Reserve Shares* Scudder Small Company Value Fund
Premium Shares* Scudder Micro Cap Fund
Managed Shares*
Growth
Tax Free Money Market+ Scudder Classic Growth Fund***
Scudder Tax Free Money Fund Scudder Large Company Growth Fund***
Scudder California Tax Free Money Fund** Scudder Select 1000 Growth Fund
Scudder New York Tax Free Money Fund** Scudder Development Fund
Scudder 21st Century Growth Fund
Tax Free+
Scudder Limited Term Tax Free Fund Global Equity
Scudder Medium Term Tax Free Fund Worldwide
Scudder Managed Municipal Bonds Scudder Global Fund
Scudder High Yield Tax Free Fund Scudder International Value Fund
Scudder California Tax Free Fund** Scudder International Growth and
Scudder Massachusetts Limited Term Income Fund
Tax Free Fund** Scudder International Fund++
Scudder Massachusetts Tax Free Fund** Scudder International Growth Fund
Scudder New York Tax Free Fund** Scudder Global Discovery Fund***
Scudder Ohio Tax Free Fund** Scudder Emerging Markets Growth Fund
Scudder Gold Fund
U.S. Income
Scudder Short Term Bond Fund Regional
Scudder GNMA Fund Scudder Greater Europe Growth Fund
Scudder Income Fund Scudder Pacific Opportunities Fund
Scudder Corporate Bond Fund Scudder Latin America Fund
Scudder High Yield Bond Fund The Japan Fund, Inc.
Global Income Industry Sector Funds
Scudder Global Bond Fund Choice Series
Scudder International Bond Fund Scudder Financial Services Fund
Scudder Emerging Markets Income Fund Scudder Health Care Fund
Scudder Technology Fund
Asset Allocation
Scudder Pathway Conservative Portfolio Preferred Series
Scudder Pathway Balanced Portfolio Scudder Tax Managed Growth Fund
Scudder Pathway Growth Portfolio Scudder Tax Managed Small Company Fund
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
</TABLE>
30
<PAGE>
--------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
--------------------------------------------------------------------------------
Retirement Programs and Education Accounts
--------------------------------------------------------------------------------
Retirement Programs Education Accounts
Traditional IRA Education IRA
Roth IRA UGMA/UTMA
SEP-IRA IRA for Minors
Inherited IRA
Keogh Plan
401(k), 403(b) Plans
Variable Annuities
Scudder Horizon Plan**+++ +++
Scudder Horizon Advantage**+++ +++ +++
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
Closed-End Funds#
-----------------------------------------------------------------------------------------
<S> <C>
The Argentina Fund, Inc. Montgomery Street Income Securities, Inc.
The Brazil Fund, Inc. Scudder Global High Income Fund, Inc.
The Korea Fund, Inc. Scudder New Asia Fund, Inc.
</TABLE>
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
Kemper Investment'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 Kemper Investment'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.
31
<PAGE>
Scudder Solutions
--------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
Convenient Automatic Investment Plan
ways to invest,
quickly and A convenient investment program in which money is
reliably electronically debited from your bank account monthly to
regularly purchase fund shares and "dollar cost average" --
buy more shares when the fund's price is lower and fewer
when it's higher, which can reduce your average purchase
price over time.*
Automatic Dividend Transfer
The most timely, reliable, and convenient way to purchase
shares -- use distributions from one Scudder fund to
purchase shares in another, automatically (accounts with
identical registrations or the same social security or tax
identification number).
QuickBuy
Lets you purchase Scudder fund shares electronically,
avoiding potential mailing delays; money for each of your
transactions is electronically debited from a previously
designated bank account.
Payroll Deduction and Direct Deposit
Have all or part of your paycheck -- even government checks
-- invested in up to four Scudder funds at one time.
* 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- Scudder Automated Information Line: SAIL(TM) --
clock electronic 1-800-343-2890
account
service and Personalized account information, the ability to exchange
information, or redeem shares, and information on other Scudder funds
including some and services via touchtone telephone.
transactions
Scudder's Web Site -- www.scudder.com
Personal Investment Organizer: Offering account information
and transactions, interactive worksheets, prospectuses and
applications for all Scudder funds, plus your current asset
allocation, whenever your need them. Scudder's site also
provides news about Scudder funds, retirement planning
information, and more.
32
<PAGE>
--------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
Retirees and Automatic Withdrawal Plan
those who depend
on investment You designate the bank account, determine the schedule (as
proceeds for frequently as once a month) and amount of the redemptions,
living expenses and Scudder does the rest.
can enjoy these
convenient, Distributions Direct
timely, and
reliable Automatically deposits your fund distributions into the
automated bank account you designate within three business days after
withdrawal each distribution is paid.
programs
QuickSell
Provides speedy access to your money by electronically
crediting your redemption proceeds to the bank account you
previously designated.
For more Call a Scudder representative at
information about 1-800-SCUDDER
these services
Or visit our Web site at
www.scudder.com
Please address The Scudder Funds
all written PO Box 2291
correspondence Boston, Massachusetts
to 02107-2291
33
<PAGE>
Notes
--------------------------------------------------------------------------------
<PAGE>
Notes
--------------------------------------------------------------------------------
<PAGE>
About the Fund's Adviser
Scudder Kemper Investments, Inc. is one of the largest and most experienced
investment management organizations worldwide, managing more than $290 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 over 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
INVESTMENTS(SM)
[LOGO]
PO Box 2291
Boston, MA 02107-2291
1-800-SCUDDER
www.scudder.com
A member of the [LOGO] Zurich Financial Services Group
