Scudder Pathway Series
Conservative Portfolio
Balanced Portfolio
Growth Portfolio
Supplement to Prospectus dated November 15, 1996
If the prospectus you previously received is dated prior to May 21, 1997, please
note the following supplemental information. This includes changes made to the
prospectus since November 15,1996. If you would like to receive the most current
complete prospectus, please call 1-800-225-2470. The following table is to be
inserted after the section entitled "Expense Ratios of the Underlying Scudder
Funds" on page 3:
Underlying Scudder Funds Expense Ratio
------------------------ -------------
Money Market Fund
Scudder Cash Investment Trust 0.83%
Bond Mutual Funds
Scudder Emerging Markets Income Fund 1.44%
Scudder Global Bond Fund+ 1.00%
Scudder GNMA Fund 0.96%
Scudder High Yield Bond Fund+ 0.00%
Scudder Income Fund 0.98%
Scudder International Bond Fund 1.26%
Scudder Short Term Bond Fund 0.80%
Equity Mutual Funds
Scudder Classic Growth Fund+ 1.25%
Scudder Development Fund 1.24%
Scudder Emerging Markets Growth Fund+ 2.00%
Scudder Global Discovery Fund 1.60%
Scudder Global Fund 1.34%
Scudder Gold Fund 1.50%
Scudder Greater Europe Growth Fund+ 1.97%
Scudder Growth and Income Fund 0.78%
Scudder International Fund 1.15%
Scudder Large Company Growth Fund 1.07%
Scudder Large Company Value Fund 0.92%
Scudder Latin America Fund 1.96%
Scudder Micro Cap Fund+ 1.75%
Scudder Pacific Opportunities Fund 1.75%
Scudder Small Company Value Fund 1.50%
Scudder 21st Century Growth Fund+ 1.75%
Scudder Value Fund+ 1.25%
The Japan Fund 1.16%
Based on the foregoing, the ranges for the average weighted expense ratio borne
by the Conservative Portfolio, Balanced Portfolio and Growth Portfolio are
expected to be 0.16% to 1.72%, 0.31% to 1.83% and 0.47% to 1.94%, respectively.
Ranges are provided since the average assets of the Portfolios invested in each
of the Underlying Scudder Funds will fluctuate.
Example
Using the midpoint of the ratios set forth above, the total pro rata expenses
relating to a $1,000 investment, assuming a 5% annual return and redemption at
the end of each period, are listed below. Investors do not pay these expenses
directly; they are paid by each Underlying Scudder Fund before it distributes
its net investment income to a Portfolio. (As noted above, the Portfolios have
no redemption fees of any kind.)
Portfolio 1 Year 3 Years
--------- ------ -------
Conservative Portfolio $10 $30
Balanced Portfolio 11 34
Growth Portfolio 12 38
See "Portfolio organization--Special Servicing Agreement" for an explanation of
the Special Servicing Agreement. This example assumes that each Portfolio
reinvests all dividends and distributions paid by the Underlying Scudder Funds.
This example should not be considered a representation of past or future
expenses or returns. Actual expenses and returns of each Underlying Scudder Fund
vary from year to year and may be higher or lower than those shown.
+ The following funds maintained their expenses at the following rates for
their respective fiscal periods: Scudder Classic Growth Fund: 1.25%,
Scudder Emerging Markets Growth Fund: 2.00%, Scudder Global Bond Fund:
1.00%, Scudder Greater Europe Growth Fund: 1.50%, Scudder High Yield Bond
Fund: 0.00%, Scudder Micro Cap Fund: 1.75%, Scudder 21st Century Growth
Fund: 1.75% and Scudder Value Fund: 1.25%. If the Adviser had not
maintained the Funds' expenses, the total return for the period would have
been lower. Please see the appropriate Underlying Scudder Fund prospectus
for details.
October 17, 1997
<PAGE>
The following tables are to be inserted after the section entitled "Financial
Highlights" on page 4:
Scudder Pathway Series: Conservative Portfolio
The following table includes selected data for a share outstanding throughout
the period and other performance information derived from the financial
statements.
If you would like more detailed information concerning the Portfolio's
performance, a complete portfolio listing and audited financial statements are
available in the Portfolio's Semiannual Report dated March 31, 1997 and may be
obtained without charge by writing or calling Scudder Investor Services, Inc.
For the Period
November
15, 1996
(commencement of
operations) to
March
31, 1997
(Unaudited)
----------------------------------------------------------------------------
Net asset value, beginning of period $12.00
Income from investment operations: .16
Net investment income
Net realized and unrealized gain on investment transactions .10(a)
Total from investment operations .26
Less distributions:
From net investment income (.14)
From net realized gain on investments (.15)
Total distributions (.29)
Net asset value, end of period $11.97
----------------------------------------------------------------------------
Total Return (%) 2.19**
Ratios and Supplemental Data
Net assets, end of period ($ millions) 9.9
Ratio of operating expenses to average daily net assets (%) (b) --
Ratio of net investment income to average daily net assets (%) 3.3*
Portfolio turnover rate (%) 58.2*
(a) The amount shown for a share outstanding throughout the period does not
accord with the change in the aggregate gains and losses in the portfolio
securities during the period because of the timing of sales and repurchases
of Portfolio shares in relation to fluctuating market values during the
period.
(b) This Portfolio invests in other Scudder Funds, and although the Portfolio
did not incur any direct expenses for the period, the Portfolio did bear
its share of the operating, administrative and advisory expenses of the
Underlying Scudder Funds.
* Annualized
** Not annualized
<PAGE>
Scudder Pathway Series: Balanced Portfolio
The following table includes selected data for a share outstanding throughout
the period and other performance information derived from the financial
statements.
If you would like more detailed information concerning the Portfolio's
performance, a complete portfolio listing and audited financial statements are
available in the Portfolio's Semiannual Report dated March 31, 1997 and may be
obtained without charge by writing or calling Scudder Investor Services, Inc.
For the Period
November 15, 1996
(commencement of
operations) to
March 31, 1997
(Unaudited)
-----------------------------------------------------------------------------
Net asset value, beginning of period $12.00
Income from investment operations: .18
Net investment income
Net realized and unrealized gain on investment
transactions -- (a)
Total from investment operations .18
Less distributions:
From net investment income (.16)
From net realized gain on investments (.07)
Total distributions (.23)
Net asset value, end of period $11.95
-----------------------------------------------------------------------------
Total Return (%) 1.50**
Ratios and Supplemental Data
Net assets, end of period ($ millions) 127.9
Ratio of operating expenses to average daily net assets (%) (b) --
Ratio of net investment income to average daily net assets (%) 3.1*
Portfolio turnover rate (%) 58.0*
(a) The amount shown for a share outstanding throughout the period does not
accord with the change in the aggregate gains and losses in the portfolio
securities during the period because of the timing of sales and repurchases
of Portfolio shares in relation to fluctuating market values during the
period.
(b) This Portfolio invests in other Scudder Funds, and although the Portfolio
did not incur any direct expenses for the period, the Portfolio did bear
its share of the operating, administrative and advisory expenses of the
Underlying Scudder Funds.
* Annualized
** Not annualized
<PAGE>
Scudder Pathway Series: Growth Portfolio
The following table includes selected data for a share outstanding throughout
the period and other performance information derived from the financial
statements.
If you would like more detailed information concerning the Portfolio's
performance, a complete portfolio listing and audited financial statements are
available in the Portfolio's Semiannual Report dated March 31, 1997 and may be
obtained without charge by writing or calling Scudder Investor Services, Inc.
For the Period
November 15, 1996
(commencement of
operations) to
March 31, 1997
(Unaudited)
-----------------------------------------------------------------------------
Net asset value, beginning of period $12.00
Income from investment operations: .20
Net investment income
Net realized and unrealized gain on investment transactions .01(a)
Total from investment operations .21
Less distributions:
From net investment income (.16)
From net realized gain on investments (.13)
Total distributions (.29)
Net asset value, end of period $11.92
-----------------------------------------------------------------------------
Total Return (%) 1.75**
Ratios and Supplemental Data
Net assets, end of period ($ millions) 27.0
Ratio of operating expenses to average daily net assets (%) (b) --
Ratio of net investment income to average daily net assets (%) 3.2*
Portfolio turnover rate (%) 12.1*
(a) The amount shown for a share outstanding throughout the period does not
accord with the change in the aggregate gains and losses in the portfolio
securities during the period because of the timing of sales and repurchases
of Portfolio shares in relation to fluctuating market values during the
period.
(b) This Portfolio invests in other Scudder Funds, and although the Portfolio
did not incur any direct expenses for the period, the Portfolio did bear
its share of the operating, administrative and advisory expenses of the
Underlying Scudder Funds.
* Annualized
** Not annualized
<PAGE>
The following table replaces the table in the section entitled "Investment
objectives and policies" on page 8:
-----------------------------------------------------
Underlying Scudder Funds in which the Portfolios
may invest.
-----------------------------------------------------
-----------------------------------------------------
Equity Mutual Funds
Scudder Classic Growth Fund
Scudder Development Fund
Scudder Emerging Markets Growth Fund
Scudder Global Fund
Scudder Global Discovery Fund
Scudder Gold Fund
Scudder Greater Europe Growth Fund
Scudder Growth and Income Fund
Scudder International Fund
Scudder Large Company Growth Fund
Scudder Large Company Value Fund
Scudder Latin America Fund
Scudder Micro Cap Fund
Scudder Pacific Opportunities Fund
Scudder Small Company Value Fund
Scudder 21st Century Growth Fund
Scudder Value Fund
The Japan Fund
Bond Mutual Funds
Scudder Emerging Markets Income Fund
Scudder Global Bond Fund
Scudder GNMA Fund
Scudder High Yield Bond Fund
Scudder Income Fund
Scudder International Bond Fund
Scudder Short Term Bond Fund
Money Market Fund
Scudder Cash Investment Trust
-----------------------------------------------------
The following modifies the section entitled "Description of the Underlying
Scudder Funds":
Scudder Income Fund is a diversified investment company which seeks a high level
of income, consistent with the prudent investment of capital, through a flexible
investment program emphasizing high-grade bonds. The Fund invests primarily in a
broad range of high-grade, income-producing securities such as corporate bonds
and government securities. Under normal market conditions, the Fund will invest
at least 65% of its assets in securities rated within the three highest quality
rating categories of Moody's Investors Service, Inc. ("Moody's") (Aaa, Aa and A)
or Standard & Poor's ("S&P") (AAA, AA and A), or if unrated, in bonds judged by
the Fund's investment adviser, Scudder, Stevens & Clark, Inc. (the "Adviser"),
to be of comparable quality at the time of purchase. The Fund may invest up to
20% of its assets in debt securities rated lower than Baa or BBB or, if unrated,
<PAGE>
of equivalent quality as determined by the Adviser, but will not purchase bonds
rated below B by Moody's or S&P or their equivalent. During the fiscal year
ended December 31, 1996, the average monthly dollar-weighted market value of the
bonds in the Fund's portfolio was rated as follows: 56% AAA, 4% AA, 20% A and
20% BBB.
Scudder Greater Europe Growth Fund is a non-diversified investment company which
seeks long-term growth of capital through investments primarily in the equity
securities of European companies. Although its focus is on long-term growth, the
Fund may provide current income principally through holdings in dividend-paying
securities.
The Fund will invest, under normal market conditions, at least 80% of its total
assets in the equity securities of European companies. The Fund defines a
European company as follows:
o A company organized under the laws of a European country or for which the
principal securities trading market is in Europe; or
o A company, wherever organized, where at least 50% of the company's
non-current assets, capitalization, gross revenue or profit in its most
recent fiscal year represents (directly or indirectly through subsidiaries)
assets or activities located in Europe.
The Fund may invest, under normal market conditions, up to 20% of its total
assets in European debt securities. Within this 20% limit, the Fund may invest
in debt securities which are unrated, rated, or the equivalent of those rated
below investment-grade.
When, in the opinion of the Adviser, market conditions warrant, the Fund may
hold foreign or U.S. debt instruments as well as cash or cash equivalents,
including foreign and domestic money market instruments, short-term government
and corporate obligations, and repurchase agreements without limit for temporary
defensive purposes and up to 20% to maintain liquidity.
Scudder Large Company Growth Fund is a diversified investment company which
seeks to provide long-term growth of capital through investment primarily in the
equity securities of seasoned, financially-strong U.S. growth companies.
The Fund's equity investments consist of common stocks, preferred stocks and
securities convertible into common stocks of companies which are of
above-average financial quality and offer the prospect for above-average growth
in earnings, cash flow or assets relative to the overall market as defined by
the Standard & Poor's 500 Composite Price Index ("S&P 500").
The Fund invests at least 65% of its total assets in the equity securities of
seasoned, financially- strong U.S. growth companies which are considered to be
of above-average financial quality. The common stocks issued by these companies
qualify, at the time of purchase, for one of the three highest equity ranking
categories (A+, A or A-) of S&P or, if not ranked by S&P, are judged to be of
comparable quality by the Adviser. Rankings by S&P are not an appraisal of a
company's creditworthiness, as is true for S&P's debt security ratings, nor are
these rankings intended as a forecast of future stock market performance. In
addition to using S&P rankings of earnings and dividends of common stocks, the
Adviser conducts its own analysis of a company's history, current financial
position, and earnings prospects.
The Fund allocates its investments among different industries and companies, and
adjusts its portfolio securities based on long-term investment considerations as
opposed to short-term trading. While the Fund emphasizes U.S. investments, it
<PAGE>
can commit a portion of assets to the equity securities of foreign growth
companies which meet the criteria applicable to domestic investments. The Fund
may invest in convertible securities which must be investment-grade.
Scudder Large Company Value Fund is a diversified investment company which seeks
to maximize long-term capital appreciation through a value-driven investment
program. The Fund invests in marketable securities, principally common stocks
and, consistent with its objective of long-term capital appreciation, preferred
stocks. The Fund is free to invest in a wide range of marketable securities
which the Adviser believes offer the potential for long-term, above-average
appreciation. The Fund will normally invest at least 65% of its assets in the
equity securities of large U.S. companies, i.e. those with $1 billion or more in
total market capitalization. The Fund looks for companies whose securities
appear to present a favorable relationship between market price and opportunity.
These may include securities of companies whose fundamentals or products may be
of only average promise. The Fund may invest up to 20% of its net assets in debt
securities when management anticipates that the capital appreciation on debt
securities is likely to equal or exceed the capital appreciation on common
stocks over a selected time, such as during periods of unusually high interest
rates. Such debt securities may be rated below investment-grade, or of
equivalent quality as determined by the Adviser. However, the Fund will invest
no more than 10% of its net assets in securities rated B or lower.
The Japan Fund is a diversified mutual fund which seeks to achieve long-term
capital appreciation by investing primarily in equity securities (including
American Depositary Receipts) of Japanese companies. Equity securities are
defined as common and preferred stock, debt securities convertible into common
stock (sometimes referred to as "convertible debentures") and common stock
purchase warrants.
Under normal conditions, the Fund will invest at least 80% of its assets in
Japanese securities, that is, securities issued by entities that are organized
under the laws of Japan ("Japanese companies"), securities of affiliates of
Japanese companies, wherever organized or traded, and securities of issuers not
organized under the laws of Japan but deriving 50% or more of their revenues
from Japan. These securities may include debt securities (Japanese government
debt securities and debt securities of Japanese companies) when the Adviser
believes that the potential for capital appreciation from investment in debt
securities equals or exceeds that available from investment in equity
securities.
The Fund may also invest up to 30% of its net assets in equity securities of
Japanese companies which are traded in an over-the-counter market. These are
generally securities of relatively small or little-known companies that the
Adviser believes have above-average earnings growth potential. The Fund may
invest up to 20% of its assets in cash or short-term government or other
short-term prime obligations in order to have funds readily available for
general corporate purposes, including the payment of operating expenses,
dividends and redemptions, or the investment in securities through exercise of
rights or otherwise, or in repurchase agreements. Where the Adviser determines
that market or economic conditions so warrant, the Fund may, for temporary
defensive purposes, invest more than 20% of its assets in cash or such
securities.
The following modifies the section entitled "Distribution and performance
information":
<PAGE>
Provided below are performance figures for the Scudder Managed Retirement
Trust-Income (the "MRT/Income"), the Scudder Managed Retirement Trust-Balanced,
(the "MRT/Balanced") and the Scudder Managed Retirement Trust-Growth (the
"MRT/Growth") (collectively, the "MRTs"), each a collective investment trust for
defined contribution plans offered by the Adviser. The MRTs invest their assets
within the Scudder Family of Funds and have the same investment adviser and same
lead portfolio manager as the Portfolios. MRT/Income, MRT/Balanced and
MRT/Growth have substantially similar investment objectives, policies and
strategies as Conservative Portfolio, Balanced Portfolio and Growth Portfolio,
respectively.
Unlike the Portfolios, however, the MRTs impose a trustee fee and an audit fee
at the trust level. Of course, the following performance figures are not
necessarily indicative of the future performance of a Portfolio.
Average Annual Total Returns for periods ended October 31, 1996
1 Year 3 Years Life of Fund
------ ------- ------------
MRT/Income 10.62% 7.37% 7.43%*
MRT/Balanced 13.89% 9.51% 10.89%@
MRT/Growth 15.92% 11.03% 11.51%*
*For the period beginning August 23, 1993.
@ For the period beginning August 31, 1991.
The following modifies the section entitled "Transaction information":
For your protection and to prevent fraudulent redemptions, on written redemption
requests in excess of $100,000 we require an original signature and an original
signature guarantee for each person in whose name the account is registered.
The following modifies the section entitled "Shareholder benefits":
Personal Counsel(SM) -- A Managed Fund Portfolio Program
If you would like to receive direct guidance and management of your overall
mutual fund portfolio to help you pursue your investment goals, you may be
interested in Personal Counsel from Scudder. Personal Counsel, a program of
Scudder Investor Services, Inc., a registered investment adviser and a
subsidiary of Scudder, Stevens & Clark, Inc., combines the benefits of a
customized portfolio of pure no-load Scudder Funds with ongoing portfolio
monitoring and individualized service, for an annual fee of generally 1% or less
of assets (with a $1,000 minimum). In addition, it draws upon Scudder's more
than 75-year heritage of providing investment counsel to large corporate and
private clients. If you have $100,000 or more to invest initially and would like
more information about Personal Counsel, please call 1-800-700-0183.
The following modifies the section entitled "Scudder tax-advantaged retirement
plans":
Scudder No-Fee IRAs. These retirement plans allow a maximum annual contribution
of up to $2,000 per person for anyone with earned income (up to $2,000 per
individual for married couples if only one spouse has earned income). Many
people can deduct all or part of their contributions from their taxable income,
and all investment earnings accrue on a tax-deferred basis. The Scudder No-Fee
IRA charges you no annual custodial fee.
