UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM N-CSRS
Investment Company Act file number 811-1702
SCUDDER DYNAMIC GROWTH FUND
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(Exact Name of Registrant as Specified in Charter)
222 South Riverside Plaza, Chicago, IL 60606
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (617) 295-2663
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Salvatore Schiavone
Two International Place
Boston, Massachusetts 02110
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(Name and Address of Agent for Service)
Date of fiscal year end: 9/30
Date of reporting period: 3/31/2004
ITEM 1. REPORT TO STOCKHOLDERS
[Scudder Investments logo]
| ||
Semiannual Report to Shareholders | ||
March 31, 2004 | ||
Contents |
<Click Here> Performance Summary <Click Here> Portfolio Summary <Click Here> Investment Portfolio <Click Here> Financial Statements <Click Here> Financial Highlights <Click Here> Notes to Financial Statements <Click Here> Account Management Resources <Click Here> Privacy Statement |
This report must be preceded or accompanied by a prospectus. To obtain a prospectus for any of our funds, refer to the Account Management Resources information provided in the back of this booklet. We advise you to consider the fund's objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other important information about the fund. Please read the prospectus carefully before you invest.
Investments in mutual funds involve risk. Some funds have more risk than others. This fund is subject to stock market risk. Stocks of small- to medium-sized companies involve greater risk than securities of larger, more established companies, as they often have limited product lines, markets or financial resources and may be more sensitive to erratic and abrupt market movements than securities of larger, more-established companies. Additionally, the fund may focus its investments on certain industry sectors, thereby increasing its vulnerability to any single industry or regulatory development. All of these factors may result in greater share price volatility. Please read this fund's prospectus for specific details regarding its investments and risk profile.
Scudder Investments is part of Deutsche Asset Management, which is the marketing name in the US for the asset management activities of Deutsche Bank AG, Deutsche Investment Management Americas Inc., Deutsche Asset Management Inc., Deutsche Asset Management Investment Services Ltd., Deutsche Bank Trust Company Americas and Scudder Trust Company.
Fund shares are not FDIC-insured and are not deposits or other obligations of, or guaranteed by, any bank. Fund shares involve investment risk, including possible loss of principal.
All performance shown is historical, assumes reinvestment of all dividends and capital gains, and does not guarantee future results. Investment return and principal value fluctuate with changing market conditions so that, when redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted. Please visit scudder.com for the product's most recent month-end performance.
The maximum sales charge for Class A shares is 5.75%. For Class B shares, the maximum contingent deferred sales charge (CDSC) is 4% within the first year after purchase, declining to 0% after six years. Class C shares have no adjustment for front-end sales charges but redemptions within one year of purchase may be subject to a CDSC of 1%. Unadjusted returns do not reflect sales charges and would have been lower if they had. Class I shares are not subject to sales charges.
Returns and rankings during all periods shown for Class B, C and I and for the 3-, 5- and 10-year periods shown for Class A reflect a temporary fee waiver and/or expense reimbursement. Without this waiver/reimbursement, returns and rankings would have been lower.
Performance figures do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the sale of fund shares. Returns and rankings may differ by share class.
Returns shown for Class B and C shares for the periods prior to their inception on May 31, 1994 are derived from the historical performance of Class A shares of the Scudder Dynamic Growth Fund during such periods and have been adjusted to reflect the higher gross total annual operating expenses of each specific class. Any difference in expenses will affect performance.
Average Annual Total Returns (Unadjusted for Sales Charge) as of 3/31/04 | |||||
Scudder Dynamic Growth Fund | 6-Month++ | 1-Year | 3-Year | 5-Year | 10-Year |
| Class A | 9.80% | 43.17% | -5.24% | -4.69% | 2.29% |
| Class B | 9.45% | 41.84% | -6.21% | -5.64% | 1.19% |
| Class C | 9.23% | 42.00% | -6.10% | -5.43% | 1.38% |
| Russell Midcap Growth Index+ | 17.58% | 49.63% | 5.00% | 2.29% | 10.27% |
| S&P 500 Index++ | 14.08% | 35.12% | .63% | -1.20% | 11.68% |
Scudder Dynamic Growth Fund | 6-Month++ | 1-Year | 3-Year | 5-Year | Life of Class* |
| Class I | 10.26% | 43.93% | -4.74% | -4.19% | 1.47% |
| Russell Midcap Growth Index+ | 17.58% | 49.63% | 5.00% | 2.29% | 9.42% |
| S&P 500 Index++ | 14.08% | 35.12% | .63% | -1.20% | 10.44% |
Sources: Lipper Inc. and Deutsche Investment Management Americas Inc.
++ Total returns shown for periods less than one year are not annualized.* Class I shares commenced operations on July 3, 1995. Index returns begin June 30, 1995.
Net Asset Value | ||||
Class A | Class B | Class C | Class I | |
| Net Asset Value: 3/31/04 | $ 3.25 | $ 2.78 | $ 2.84 | $ 3.44 |
| 9/30/03 | $ 2.96 | $ 2.54 | $ 2.60 | $ 3.12 |
Class A Lipper Rankings - Mid-Cap Growth Funds Category as of 3/31/04 | ||||
Period | Rank | Number of Funds Tracked | Percentile Ranking | |
| 1-Year | 250 | of | 497 | 51 |
| 3-Year | 339 | of | 399 | 85 |
| 5-Year | 227 | of | 249 | 91 |
| 10-Year | 90 | of | 92 | 97 |
Source: Lipper Inc. Rankings are historical and do not guarantee future results. Rankings are based on total return unadjusted for sales charges with distributions reinvested. If sales charges had been included, results might have been less favorable. Rankings are for Class A shares; other share classes may vary.
Growth of an Assumed $10,000 Investment (Adjusted for Maximum Sales Charge) |
[] Scudder Dynamic Growth Fund - Class A [] Russell Midcap Growth Index+[] S&P 500 Index++ |
 |
Yearly periods ended March 31 |
The Fund's growth of an assumed $10,000 investment is adjusted for the maximum sales charge of 5.75%. This results in a net initial investment of $9,425.
The growth of $10,000 is cumulative.
Comparative Results (Adjusted for Maximum Sales Charge) as of 3/31/04 | |||||
Scudder Dynamic Growth Fund | 1-Year | 3-Year | 5-Year | 10-Year | |
Class A | Growth of $10,000 | $13,494 | $8,019 | $7,415 | $11,824 |
| Average annual total return | 34.94% | -7.10% | -5.81% | 1.69% | |
Class B | Growth of $10,000 | $13,884 | $8,084 | $7,425 | $11,260 |
| Average annual total return | 38.84% | -6.84% | -5.78% | 1.19% | |
Class C | Growth of $10,000 | $14,200 | $8,280 | $7,563 | $11,463 |
| Average annual total return | 42.00% | -6.10% | -5.43% | 1.38% | |
| Russell Midcap Growth Index+ | Growth of $10,000 | $14,963 | $11,576 | $11,197 | $26,577 |
| Average annual total return | 49.63% | 5.00% | 2.29% | 10.27% | |
| S&P 500 Index++ | Growth of $10,000 | $13,512 | $10,191 | $9,414 | $30,191 |
| Average annual total return | 35.12% | .63% | -1.20% | 11.68% | |
Scudder Dynamic Growth Fund | 1-Year | 3-Year | 5-Year | Life of Class* | |
Class I | Growth of $10,000 | $14,393 | $8,643 | $8,072 | $11,357 |
| Average annual total return | 43.93% | -4.74% | -4.19% | 1.47% | |
| Russell Midcap Growth Index+ | Growth of $10,000 | $14,963 | $11,576 | $11,197 | $21,989 |
| Average annual total return | 49.63% | 5.00% | 2.29% | 9.42% | |
| S&P 500 Index++ | Growth of $10,000 | $13,512 | $10,191 | $9,414 | $23,848 |
| Average annual total return | 35.12% | .63% | -1.20% | 10.44% | |
The growth of $10,000 is cumulative.
* Class I shares commenced operations on July 3, 1995. Index returns begin June 30, 1995.+ Russell Midcap Growth Index is an unmanaged index that measures the performance of those Russell Midcap companies with higher price-to-book ratios and higher forecasted growth values. The stocks are also members of the Russell 1000 Growth Index.
++ The Standard & 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.
Index returns assume reinvestment of dividends and, unlike Fund returns, do not reflect any fees or expenses. It is not possible to invest directly into an index.
In the following interview, Portfolio Managers Audrey M.T. Jones and Samuel A. Dedio discuss Scudder Dynamic Growth Fund's performance, strategy and the market environment for the six-month period ended March 31, 2004.
Q: How did the US stock market perform during the semiannual period?
A: The past six months provided a positive backdrop for the stock market, which continued its rally that began in March of 2003. First, the economy continued to stage an impressive recovery from the post-bubble recession. Gross domestic product (the total market value of all goods and services produced in the United States) rose 4.1% in the fourth calendar quarter of 2003, which followed on the heels of the 8.2% growth registered in the third quarter. The continuation of the recovery helped fuel the ongoing rebound in corporate earnings and raised expectations that full-year earnings for 2004 will be strong as well. In addition, the fact that inflation pressures remained muted enabled both the US Federal Reserve and other central banks around the world to maintain accommodative, growth-oriented interest rate policies. These factors, in combination, enabled the US stock market to post strong returns for the full period.
However, the semiannual period was not without challenges. After producing steady gains from October through mid-January, the market faltered in the latter half of the first quarter. Concerns about an increasingly uncertain outlook for the US economy and the resurgence of geopolitical turmoil, such as the Madrid rail bombings, prompted investors to take profits in areas that had performed well in 2003. Stocks staged a comeback in the final two weeks of the period as terrorism concerns dissipated somewhat and bargain hunters moved in to take advantage of the sell-off.
Overall, the market environment for the full six months provided a continued positive environment for growth stocks. But in contrast to the second and third quarters of last year, the group as a whole underperformed value stocks across all market capitalizations. Mid-cap stocks outperformed their large-cap counterparts for the period, as investors continued to be rewarded for moving down the capitalization spectrum.
Q: How did the fund perform in relation to its benchmark and its peer group?
A: For the six-month period ended March 31, 2004, the fund returned 9.80%. (Fund return is for Class A shares unadjusted for sales charges. If sales charges had been included, return would have been lower. Past performance is no guarantee of future results. Please see pages 3 through 5 for performance of other share classes and more complete performance information.) This represented underperformance with respect to both the 17.58% total return of the fund's benchmark - the Russell Midcap Growth Index - and the 15.36% average return of the 519 funds in the Lipper Mid-Cap Growth Funds category.1
1 The Lipper Mid-Cap Growth Funds category includes portfolios that invest at least 75% of equity assets in companies with market capitalizations of less than 300% of the dollar-weighted median market capitalization of the middle 1,000 securities of the S&P SuperComposite 1500 Index. These portfolios typically have above-average price-to-earnings ratios and price-to-book ratios compared with the S&P MidCap 400 Index. It is not possible to invest directly in an index or a Lipper category.We are displeased with the fund's recent relative performance. However, we believe it is important to measure performance from a longer-term perspective than is afforded by a six-month interval. This importance becomes apparent when we review the primary reasons for underperformance: our focus on higher-quality stocks and the fund's underweight position in the smallest, most speculative companies in the market.2 In managing the fund, we strive to invest in companies with above-average growth prospects and reasonable valuations. More specifically, we use fundamental research to identify companies with innovative products, leading or dominant market positions, a high rate of return on invested capital and the ability to finance the majority of their growth through internal sources (rather than taking on debt or selling more equity). This means that we avoid lower-quality and heavily indebted companies, micro caps and stocks selling for less than $5 per share.
2 "Underweight" means a fund holds a lower sector or company weighting than the benchmark index. "Overweight" means a fund holds a higher weighting than the benchmark.During the reporting period, these types of lower-quality companies outperformed. While this will often be the case at times when the economy and stock market are recovering from a downturn, this type of market environment is usually short-lived and does not reward those who attempt to chase the performance of lower-tier stocks. Investing in lower-quality companies, even for the short term, would mean exposing the fund to excessive risk. Therefore, we believe the best way to generate long-term outperformance is by using a disciplined investment style to identify higher-quality companies. We anticipate that our approach will prove effective when measured over a multiyear period.
Q: What other factors hurt performance during the period?
A: The biggest drag on performance was the fund's holdings in the health care sector. More specifically, the fund is underweight in the equipment and services area, which performed better than the health care sector as a whole. At the same time, it holds a corresponding overweight in the underperforming pharmaceuticals industry. We are taking steps to adjust this positioning by assessing the fund's subsector weightings relative to those of the benchmark. The worst-performing holding in health care was Biovail Corp., which was also the largest negative individual contributor. (As of 3/31/04, position in Biovail was sold.)
Performance also was hurt by stock selection within industrials. Here, performance in the commercial services subgroup was weighed down by holdings in private secondary-education stocks such as ITT Educational Services, Inc. and Corinthian Colleges, Inc. Both performed well in the 2003 calendar year but lagged in the first quarter of 2004 when it was announced that ITT was being investigated by the Securities and Exchange Commission and the U.S. Justice Department for submitting false information to the federal government to secure grants and financial aid payments. We continue to hold positions in the stocks in the fund, believing that they will be supported in the long term by continued market acceptance as well as growth in revenue and earnings.
Q: What were some of your decisions that helped performance?
A: Our stock selection in consumer stocks was favorable, which was a positive given the sector's large representation in the mid-cap benchmark. Our third-largest individual contributor was Chico's FAS, Inc., a specialty retailer of women's fashions. The company's Chico's brand targets the 35-and-up age group, while its new brand - Pazo - targets women 25-40 years old. Chico's is becoming increasingly popular and is experiencing earnings growth well above its peer-group average. The company has beaten earnings estimates for the past three quarters, and analyst estimates for the upcoming quarter and year have been rising. Chico's stock closed the reporting period up significantly from the beginning of the period.
We also received strong performance from our position in GTECH Holdings Corp., which operates on-line lottery systems and supplies equipment and services to lottery authorities in the United States and overseas. Given that states are suffering heavy budget shortfalls and need to close the gap, many have turned to lotteries as an alternative to raising taxes. As a result, GTECH has benefited from higher revenues and expanding profits, and its stock rose over the course of the semiannual period.
The top contributor to performance overall was Harman International Industries, Inc., which makes an "infotainment" system for automobiles that allows them to run DVD players and global positioning systems (GPS). More cars are being produced with one or both of these features. For instance, BMW used to make these technologies available only in its 7-Series, but they now can be added to the 5-Series as well. Harman also supplies its system to the Mercedes E Class, the Audi 8 and the Porsche Cayenne. On the domestic front, Chrysler is offering Harman's system as an option on the Dodge Ram pickup. Consumer preference for both the GPS and DVD options is rising rapidly, and Harman has been well-positioned to capitalize on the trend.
Q: Are you still finding investment opportunities even after the strong market rally of the past year?
A: Yes. One benefit of investing in mid caps is the ability to select from a wide range of companies and put our strong research capabilities to work. We continue to add to the fund's positions in the consumer sector as well as areas that can benefit from rising capital spending by corporations, namely the technology and industrial sectors. The fund maintains a modest overweight in all of these areas.
We believe that the return to a more rational market environment is inevitable. When this occurs, investors who focus on fundamental research and individual stock selection are likely to be rewarded. As a result, we are not changing our approach by investing in smaller, more speculative companies. Although the fund's relative performance was not strong when viewed within the short, six-month time frame, we are confident in the long-term potential benefits of our investment approach.
The views expressed in this report reflect those of the portfolio managers only through the end of the period of the report as stated on the cover. The managers' views are subject to change at any time based on market and other conditions and should not be construed as a recommendation.
Asset Allocation | 3/31/04 | 9/30/03 |
| Common Stocks | 99% | 94% |
| Cash Equivalents | 1% | 6% |
| 100% | 100% | |
Sector Diversification (Excludes Cash Equivalents) | 3/31/04 | 9/30/03 |
| Information Technology | 31% | 29% |
| Consumer Discretionary | 21% | 15% |
| Health Care | 18% | 19% |
| Financials | 10% | 10% |
| Industrials | 9% | 12% |
| Energy | 4% | 5% |
| Materials | 3% | 2% |
| Consumer Staples | 3% | 7% |
| Telecommunication Services | 1% | 1% |
| 100% | 100% | |
Asset allocation and sector diversification are subject to change.
Ten Largest Equity Holdings at March 31, 2004 (27.9% of Portfolio) | |
| 1. Corinthian Colleges, Inc. Provider of higher education | 3.3% |
| 2. Invitrogen Corp. Developer of research kits | 3.1% |
| 3. Vishay Intertechnology, Inc. Manufacturer of electronic components | 3.0% |
| 4. Harman International Industries, Inc. Manufacturer of high fidelity audio and video components | 3.0% |
| 5. Cognos, Inc. Manufacturer and distributor of software | 2.8% |
| 6. Celgene Corp. Producer of pharmaceuticals | 2.8% |
| 7. Columbia Sportswear Co. Manufacturer of active outdoor apparel | 2.6% |
| 8. Caremark Rx, Inc. Provider of pharmaceutical services in the United States | 2.5% |
| 9. Investors Financial Services Corp. Provider of asset administration services | 2.5% |
| 10. Tempur-Pedic International, Inc. Manufacturer of foam mattresses and pillows | 2.3% |
Portfolio holdings are subject to change.
For more complete details about the fund's investment portfolio, see page 14. A quarterly Fact Sheet is available upon request. Information concerning portfolio holdings of the Fund as of month end is available upon request on the 16th of the following month. Please see the Account Management Resources section for contact information.
| Value ($) | |
Common Stocks 99.3% | ||
| Consumer Discretionary 20.8% | ||
| Automobiles 1.5% | ||
| Thor Industries, Inc. | 147,400 | 3,959,164 |
| Hotels Restaurants & Leisure 5.3% | ||
| Alliance Gaming Corp.* | 171,100 | 5,497,443 |
| GTECH Holdings Corp. | 100,300 | 5,931,742 |
| The Cheesecake Factory, Inc.* | 58,000 | 2,675,540 |
14,104,725 | ||
| Household Durables 5.3% | ||
| Harman International Industries, Inc. | 99,600 | 7,928,160 |
| Tempur-Pedic International, Inc.* | 397,900 | 6,223,156 |
14,151,316 | ||
| Media 1.4% | ||
| Entercom Communications Corp.* | 79,800 | 3,612,546 |
| Specialty Retail 4.7% | ||
| Advance Auto Parts, Inc.* | 105,400 | 4,286,618 |
| Chico's FAS, Inc.* | 122,300 | 5,674,720 |
| Regis Corp. | 61,300 | 2,724,172 |
12,685,510 | ||
| Textiles, Apparel & Luxury Goods 2.6% | ||
| Columbia Sportswear Co.* | 125,400 | 6,952,176 |
| Consumer Staples 2.9% | ||
| Beverages 1.3% | ||
| Constellation Brands, Inc. "A"* | 111,100 | 3,566,310 |
| Food Products 1.6% | ||
| Dean Foods Co.* | 123,900 | 4,138,260 |
| Energy 3.5% | ||
| Energy Equipment & Services | ||
| BJ Services Co.* | 76,300 | 3,301,501 |
| Rowan Companies, Inc.* | 287,300 | 6,059,157 |
9,360,658 | ||
| Financials 9.7% | ||
| Consumer Finance 1.1% | ||
| Providian Financial Corp.* | 218,800 | 2,866,280 |
| Diversified Financial Services 8.6% | ||
| Ameritrade Holding Corp.* | 392,800 | 6,049,120 |
| Chicago Mercantile Exchange | 42,700 | 4,130,798 |
| Investment Technology Group, Inc.* | 259,400 | 3,968,820 |
| Investors Financial Services Corp. | 163,100 | 6,739,292 |
| Labranche & Co., Inc. | 183,800 | 2,060,398 |
22,948,428 | ||
| Health Care 17.7% | ||
| Biotechnology 9.2% | ||
| Invitrogen Corp.* | 113,700 | 8,151,153 |
| Martek Biosciences Corp.* | 107,200 | 6,110,400 |
| MedImmune, Inc.* | 118,100 | 2,725,748 |
| Millennium Pharmaceuticals, Inc.* | 177,400 | 2,998,060 |
| Neurocrine Biosciences, Inc.* | 77,500 | 4,580,250 |
24,565,611 | ||
| Health Care Equipment & Supplies 1.1% | ||
| Kinetic Concepts, Inc.* | 66,100 | 2,964,585 |
| Health Care Providers & Services 2.5% | ||
| Caremark Rx, Inc.* | 203,300 | 6,759,725 |
| Pharmaceuticals 4.9% | ||
| Celgene Corp.* | 154,200 | 7,347,630 |
| NPS Pharmaceuticals, Inc.* | 200,326 | 5,719,307 |
13,066,937 | ||
| Industrials 9.4% | ||
| Airlines 1.4% | ||
| SkyWest, Inc. | 187,600 | 3,609,424 |
| Commercial Services & Supplies 6.6% | ||
| Corinthian Colleges, Inc.* | 266,900 | 8,823,714 |
| ITT Educational Services, Inc.* | 110,400 | 3,444,480 |
| Stericycle, Inc.* | 113,600 | 5,436,896 |
17,705,090 | ||
| Road & Rail 1.4% | ||
| Swift Transportation Co., Inc.* | 216,800 | 3,722,456 |
| Information Technology 30.7% | ||
| Communications Equipment 4.4% | ||
| Adaptec, Inc.* | 621,900 | 5,447,844 |
| Emulex Corp.* | 202,400 | 4,309,096 |
| Foundry Networks, Inc.* | 123,300 | 2,117,061 |
11,874,001 | ||
| Computers & Peripherals 1.6% | ||
| Network Appliance, Inc.* | 198,400 | 4,255,680 |
| Electronic Equipment & Instruments 5.2% | ||
| Jabil Circuit, Inc.* | 198,600 | 5,844,798 |
| Vishay Intertechnology, Inc.* | 376,500 | 8,034,510 |
13,879,308 | ||
| Semiconductors & Semiconductor Equipment 14.6% | ||
| Applied Micro Circuits Corp.* | 1,080,700 | 6,214,025 |
| Linear Technology Corp. | 139,100 | 5,149,482 |
| Microchip Technology, Inc. | 142,500 | 3,784,800 |
| National Semiconductor Corp.* | 100,000 | 4,443,000 |
| QLogic Corp.* | 113,500 | 3,746,635 |
| Teradyne, Inc.* | 240,400 | 5,728,732 |
| Varian Semiconductor Equipment Associates, Inc.* | 97,700 | 4,103,400 |
| Xilinx, Inc.* | 150,300 | 5,711,400 |
38,881,474 | ||
| Software 4.9% | ||
| Cognos, Inc.* | 241,500 | 7,500,990 |
| Intuit, Inc.* | 126,300 | 5,668,344 |
13,169,334 | ||
| Materials 3.3% | ||
| Containers & Packaging 2.3% | ||
| Packaging Corp. of America* | 271,300 | 6,120,528 |
| Metals & Mining 1.0% | ||
| United States Steel Corp. | 71,200 | 2,653,624 |
| Telecommunication Services 1.3% | ||
| Wireless Telecommunication Services | ||
| Nextel Partners, Inc. "A"* | 285,400 | 3,613,164 |
| Total Common Stocks (Cost $212,049,743) | 265,186,314 | |
Preferred Stock 0.1% | ||
| Information Technology 0.1% | ||
| Software | ||
| fusionOne* (c) | 690,608 | 99,448 |
| Planetweb, Inc. "E"* (c) | 413,603 | 0 |
99,448 | ||
| Telecommunication Services 0.0% | ||
| Diversified Telecommunication Services | ||
| Convergent Networks, Inc.* (c) | 345,565 | 44,923 |
| Total Preferred Stock (Cost $6,000,001) | 144,371 | |
Cash Equivalents 0.6% | ||
| Scudder Cash Management QP Trust, 1.1% (b) (Cost $1,665,341) | 1,665,341 | 1,665,341 |
| Total Investment Portfolio - 100.0% (Cost $219,715,085) (a) | 266,996,026 | |
* Non-income producing security.
(a) The cost for federal income tax purposes was $224,685,777. At March 31, 2004, net unrealized appreciation for all securities based on tax cost was $42,310,249. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $61,564,185 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $19,253,936.
(b) Scudder Cash Management QP Trust is also managed by Deutsche Investment Management Americas Inc. The rate shown is the annualized seven-day yield at period end.
(c) The Fund may purchase securities that are subject to legal or contractual restriction on resale ("restricted securities"). Restricted securities are securities which have not been registered with the Securities and Exchange Commission under the Securities Act of 1933. The Fund may be unable to sell a restricted security and it may be more difficult to determine a market value for a restricted security. Moreover, if adverse market conditions were to develop during the period between the Fund's decision to sell a restricted security and the point at which the Fund is permitted or able to sell such security, the Fund might obtain a price less favorable than the price that prevailed when it decided to sell. This investment practice, therefore, could have the effect of increasing the level of illiquidity of the Fund.
Schedule of Restricted Securities | ||||
Securities | Acquisition Date | Acquisition Cost ($) | Value ($) | Value as % of Net Assets |
| Convergent Networks, Inc. | September 2000 | - | 44,923 | .02 |
| fusionOne | October 2000 | 3,750,001 | 99,448 | .04 |
| Planetweb, Inc. "E" | September 2000 | 2,250,000 | - | - |
| Total Restricted Securities | 144,371 | .06 | ||
The accompanying notes are an integral part of the financial statements.
Statement of Assets and Liabilities as of March 31, 2004 (Unaudited) | |
| Assets | |
| Investments: Investments in securities, at value (cost $218,049,744) | $ 265,330,685 |
| Investment in Scudder Cash Management QP Trust (cost $1,665,341) | 1,665,341 |
| Total investments in securities, at value (cost $219,715,085) | 266,996,026 |
| Receivable for investments sold | 1,671,729 |
| Dividends receivable | 50,745 |
| Interest receivable | 5,051 |
| Receivable for Fund shares sold | 60,135 |
| Other assets | 11,690 |
| Total assets | 268,795,376 |
| Liabilities | |
| Payable for Fund shares redeemed | 831,165 |
| Accrued management fee | 207,308 |
| Other accrued expenses and payables | 360,944 |
| Total liabilities | 1,399,417 |
| Net assets, at value | $ 267,395,959 |
| Net Assets | |
| Net assets consist of: Accumulated net investment loss | (2,016,797) |
| Net unrealized appreciation (depreciation) on investments | 47,280,941 |
| Accumulated net realized gain (loss) | (331,808,413) |
| Paid-in capital | 553,940,228 |
| Net assets, at value | $ 267,395,959 |
The accompanying notes are an integral part of the financial statements.
Statement of Assets and Liabilities as of March 31, 2004 (Unaudited) (continued) | |
| Net Asset Value | |
| Class A Net Asset Value and redemption price per share ($223,858,184 / 68,926,673 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized) | $ 3.25 |
| Maximum offering price per share (100 / 94.25 of $3.25) | $ 3.45 |
| Class B Net Asset Value, offering and redemption price (subject to contingent deferred sales charge) per share ($32,679,806 / 11,775,386 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized) | $ 2.78 |
| Class C Net Asset Value, offering and redemption price (subject to contingent deferred sales charge) per share ($10,617,849 / 3,740,624 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized) | $ 2.84 |
| Class I Net Asset Value, offering and redemption price per share ($240,120 / 69,730 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized) | $ 3.44 |
The accompanying notes are an integral part of the financial statements.
Statement of Operations for the six months ended March 31, 2004 (Unaudited) | |
| Investment Income | |
| Income: Dividends | $ 223,833 |
| Interest - Scudder Cash Management QP Trust | 40,301 |
| Total Income | 264,134 |
| Expenses: Management fee | 1,162,646 |
| Services to shareholders | 493,249 |
| Custodian fees | 6,041 |
| Distribution service fees | 517,335 |
| Auditing | 25,893 |
| Legal | 3,891 |
| Trustees' fees and expenses | 15,143 |
| Reports to shareholders | 38,487 |
| Registration fees | 28,372 |
| Other | 4,094 |
| Total expenses, before expense reductions | 2,295,151 |
| Expense reductions | (35,334) |
| Total expenses, after expense reductions | 2,259,817 |
| Net investment loss | (1,995,683) |
| Realized and Unrealized Gain (Loss) on Investment Transactions | |
| Net realized gain (loss) from investments | 17,317,013 |
| Net unrealized appreciation (depreciation) during the period on investments | 10,190,572 |
| Net gain (loss) on investment transactions | 27,507,585 |
| Net increase (decrease) in net assets resulting from operations | $ 25,511,902 |
The accompanying notes are an integral part of the financial statements.
Statement of Changes in Net Assets | ||
| Increase (Decrease) in Net Assets | Six Months Ended | Year ended September 30, 2003 |
| Operations: Net investment income (loss) | $ (1,995,683) | $ (2,541,453) |
| Net realized gain (loss) on investment transactions | 17,317,013 | (70,009,022) |
| Net unrealized appreciation (depreciation) on investment transactions during the period | 10,190,572 | 156,446,777 |
| Net increase (decrease) in net assets resulting from operations | 25,511,902 | 83,896,302 |
| Fund share transactions: Proceeds from shares sold | 25,843,154 | 41,693,562 |
| Cost of shares redeemed | (46,219,110) | (73,127,815) |
| Net increase (decrease) in net assets from Fund share transactions | (20,375,956) | (31,434,253) |
| Increase (decrease) in net assets | 5,135,946 | 52,462,049 |
| Net assets at beginning of period | 262,260,013 | 209,797,964 |
| Net assets at end of period (including accumulated net investment loss of $2,016,797 and $21,114, respectively) | $ 267,395,959 | $ 262,260,013 |
The accompanying notes are an integral part of the financial statements.
Class A | ||||||
Years Ended September 30, | 2004a | 2003 | 2002 | 2001 | 2000 | 1999 |
| Selected Per Share Data | ||||||
| Net asset value, beginning of period | $ 2.96 | $ 2.06 | $ 3.02 | $ 9.10 | $ 6.12 | $ 5.30 |
| Income from investment operations: Net investment income (loss) | (.02)b | (.02)b | (.02)b | (.03) | (.08)b | (.04)b |
| Net realized and unrealized gain (loss) on investment transactions | .31 | .92 | (.94) | (4.73) | 3.42 | 1.27 |
Total from investment operations | .29 | .90 | (.96) | (4.76) | 3.34 | 1.23 |
| Less distributions from: Net realized gains on investment transactions | - | - | - | (1.32) | (.36) | (.41) |
| Net asset value, end of period | $ 3.25 | $ 2.96 | $ 2.06 | $ 3.02 | $ 9.10 | $ 6.12 |
| Total Return (%)c | 9.80** | 43.69 | (31.79)d | (57.42)d | 55.94 | 23.91 |
| Ratios to Average Net Assets and Supplemental Data | ||||||
| Net assets, end of period ($ millions) | 224 | 217 | 168 | 325 | 821 | 565 |
| Ratio of expenses before expense reductions (%) | 1.43* | 1.23 | 1.08 | 1.14e | 1.34 | 1.01 |
| Ratio of expenses after expense reductions (%) | 1.43* | 1.23 | 1.07 | 1.10e | 1.33 | 1.01 |
| Ratio of net investment income (loss) (%) | (1.24)* | (.94) | (.74) | (.67) | (1.02) | (.64) |
| Portfolio turnover rate (%) | 49* | 134 | 59 | 132 | 156 | 133 |
| a For the six months ended March 31, 2004 (Unaudited). b Based on average shares outstanding during the period. c Total return does not reflect the effect of any sales charges. d Total return would have been lower had certain expenses not been reduced. e The ratios of operating expenses excluding costs incurred in connection with a fund complex reorganization before and after expense reductions were 1.11% and 1.10%, respectively. * Annualized ** Not annualized | ||||||
Class B | ||||||
Years Ended September 30, | 2004a | 2003 | 2002 | 2001 | 2000 | 1999 |
| Selected Per Share Data | ||||||
| Net asset value, beginning of period | $ 2.54 | $ 1.78 | $ 2.65 | $ 8.29 | $ 5.67 | $ 4.98 |
| Income from investment operations: Net investment income (loss) | (.03)b | (.04)b | (.04)b | (.08) | (.16)b | (.10)b |
| Net realized and unrealized gain (loss) on investment transactions | .27 | .80 | (.83) | (4.24) | 3.14 | 1.20 |
Total from investment operations | .24 | .76 | (.87) | (4.32) | 2.98 | 1.10 |
| Less distributions from: Net realized gains on investment transactions | - | - | - | (1.32) | (.36) | (.41) |
| Net asset value, end of period | $ 2.78 | $ 2.54 | $ 1.78 | $ 2.65 | $ 8.29 | $ 5.67 |
| Total Return (%)c | 9.45d** | 42.70 | (32.83) | (57.94) | 53.95 | 22.78 |
| Ratios to Average Net Assets and Supplemental Data | ||||||
| Net assets, end of period ($ millions) | 33 | 35 | 31 | 63 | 186 | 136 |
| Ratio of expenses before expense reductions (%) | 2.68* | 2.13 | 2.01 | 2.26e | 2.51 | 2.28 |
| Ratio of expenses after expense reductions (%) | 2.51* | 2.13 | 2.01 | 2.25e | 2.50 | 2.28 |
| Ratio of net investment income (loss) (%) | (2.32)* | (1.84) | (1.68) | (1.82) | (2.19) | (1.91) |
| Portfolio turnover rate (%) | 49* | 134 | 59 | 132 | 156 | 133 |
| a For the six months ended March 31, 2004 (Unaudited). b Based on average shares outstanding during the period. c Total return does not reflect the effect of any sales charges. d Total return would have been lower had certain expenses not been reduced. e The ratios of operating expenses excluding costs incurred in connection with a fund complex reorganization before and after expense reductions were 2.19% and 2.19%, respectively. * Annualized ** Not annualized | ||||||
Class C | ||||||
Years Ended September 30, | 2004a | 2003 | 2002 | 2001 | 2000 | 1999 |
| Selected Per Share Data | ||||||
| Net asset value, beginning of period | $ 2.60 | $ 1.82 | $ 2.70 | $ 8.39 | $ 5.71 | $ 5.00 |
| Income from investment operations: Net investment income (loss) | (.03)b | (.04)b | (.04)b | (.06) | (.13)b | (.08)b |
| Net realized and unrealized gain (loss) on investment transactions | .27 | .82 | (.84) | (4.31) | 3.17 | 1.20 |
Total from investment operations | .24 | .78 | (.88) | (4.37) | 3.04 | 1.12 |
| Less distributions from: Net realized gains on investment transactions | - | - | - | (1.32) | (.36) | (.41) |
| Net asset value, end of period | $ 2.84 | $ 2.60 | $ 1.82 | $ 2.70 | $ 8.39 | $ 5.71 |
| Total Return (%)c | 9.23d** | 42.86 | (32.59) | (58.02) | 55.38 | 23.10 |
| Ratios to Average Net Assets and Supplemental Data | ||||||
| Net assets, end of period ($ millions) | 11 | 11 | 8 | 11 | 21 | 10 |
| Ratio of expenses before expense reductions (%) | 2.54* | 2.05 | 1.91 | 1.97e | 2.10 | 1.93 |
| Ratio of expenses after expense reductions (%) | 2.51* | 2.05 | 1.91 | 1.89e | 2.10 | 1.93 |
| Ratio of net investment income (loss) (%) | (2.32)* | (1.76) | (1.58) | (1.46) | (1.79) | (1.56) |
| Portfolio turnover rate (%) | 49* | 134 | 59 | 132 | 156 | 133 |
| a For the six months ended March 31, 2004 (Unaudited). b Based on average shares outstanding during the period. c Total return does not reflect the effect of any sales charges. d Total return would have been lower had certain expenses not been reduced. e The ratios of operating expenses excluding costs incurred in connection with a fund complex reorganization before and after expense reductions were 1.89% and 1.89%, respectively. * Annualized ** Not annualized | ||||||
Class I | ||||||
Years Ended September 30, | 2004a | 2003 | 2002 | 2001 | 2000 | 1999 |
| Selected Per Share Data | ||||||
| Net asset value, beginning of period | $ 3.12 | $ 2.16 | $ 3.16 | $ 9.38 | $ 6.27 | $ 5.39 |
| Income from investment operations: Net investment income (loss) | (.01)b | (.01)b | (.01)b | (.02) | (.05)b | (.01)b |
| Net realized and unrealized gain (loss) on investment transactions | .33 | .97 | (.99) | (4.88) | 3.52 | 1.30 |
Total from investment operations | .32 | .96 | (1.00) | (4.90) | 3.47 | 1.29 |
| Less distributions from: Net realized gains on investment transactions | - | - | - | (1.32) | (.36) | (.41) |
| Net asset value, end of period | $ 3.44 | $ 3.12 | $ 2.16 | $ 3.16 | $ 9.38 | $ 6.27 |
| Total Return (%) | 10.26c** | 44.44 | (31.65) | (57.33) | 56.87 | 24.66 |
| Ratios to Average Net Assets and Supplemental Data | ||||||
| Net assets, end of period ($ millions) | .24 | .25 | 3 | 7 | 20 | 12 |
| Ratio of expenses before expense reductions (%) | 2.10* | .72 | .60 | .71d | .97 | .58 |
| Ratio of expenses after expense reductions (%) | 1.01* | .72 | .60 | .70d | .96 | .58 |
| Ratio of net investment income (loss) (%) | (.82)* | (.43) | (.27) | (.27) | (.65) | (.21) |
| Portfolio turnover rate (%) | 49* | 134 | 59 | 132 | 156 | 133 |
| a For the six months ended March 31, 2004 (Unaudited). b Based on average shares outstanding during the period. c Total return would have been lower had certain expenses not been reduced. d The ratios of operating expenses excluding costs incurred in connection with a fund complex reorganization before and after expense reductions were .70% and .69%, respectively. * Annualized ** Not annualized | ||||||
A. Significant Accounting Policies
Scudder Dynamic Growth Fund (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end, diversified management investment company organized as a Massachusetts business trust.
The Fund offers multiple classes of shares which provide investors with different purchase options. Class A shares are offered to investors subject to an initial sales charge. Class B shares are offered without an initial sales charge but are subject to higher ongoing expenses than Class A shares and a contingent deferred sales charge payable upon certain redemptions. Class B shares automatically convert to Class A shares six years after issuance. Class C shares are offered to investors without an initial sales charge and are subject to higher ongoing expenses than Class A shares and a contingent deferred sales charge payable upon certain redemptions within one year of purchase. Prior to March 1, 2004, Class C shares were offered with an initial sales charge. Class C shares do not convert into another class. Class I shares are offered to a limited group of investors, are not subject to initial or contingent deferred sales charges and have lower ongoing expenses than other classes.
Investment income, realized and unrealized gains and losses, and certain fund-level expenses and expense reductions, if any, are borne pro rata on the basis of relative net assets by the holders of all classes of shares, except that each class bears certain expenses unique to that class such as distribution service fees, administrative fees and certain other class-specific expenses. Differences in class-level expenses may result in payment of different per share dividends by class. All shares of the Fund have equal rights with respect to voting subject to class-specific arrangements.
The Fund's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America which require the use of management estimates. Actual results could differ from those 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 on each day the exchange is open for trading. Equity securities are valued at the most recent sale price or official closing price reported on the exchange (US or foreign) or over-the-counter market on which the security is traded most extensively. Securities for which no sales are reported are valued at the calculated mean between the most recent bid and asked quotations on the relevant market or, if a mean cannot be determined, at the most recent bid quotation.
Money market instruments purchased with an original or remaining maturity of sixty days or less, maturing at par, are valued at amortized cost. Investments in open-end investment companies and Scudder Cash Management QP Trust are valued at their net asset value each business day.
Securities and other assets for which market quotations are not readily available or for which the above valuation procedures are deemed not to reflect fair value are valued in a manner that is intended to reflect their fair value as determined in accordance with procedures approved by the Trustees.
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 September 30, 2003, the Fund had a net tax basis capital loss carryforward of approximately $308,862,000 which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until September 30, 2010 ($194,045,000) and September 30, 2011 ($114,817,000), the respective expiration dates, whichever occurs first.
In addition, from November 1, 2002 through September 30, 2003, the Fund incurred approximately $35,206,000 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 September 30, 2004.
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 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 accounting principles generally accepted in the United States of America. These differences primarily relate to certain securities sold at a loss. 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.
The tax character of current year distributions, if any, will be determined at the end of the current fiscal year.
Other. Investment transactions are accounted for on the trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date net of foreign withholding taxes. Realized gains and losses from investment transactions are recorded on an identified cost basis.
B. Purchases and Sales of Securities
During the six months ended March 31, 2004, purchases and sales of investment securities (excluding short-term investments) aggregated $67,204,855 and $87,039,927, respectively.
C. Related Parties
Management Agreement. Under the Management Agreement with Deutsche Investment Management Americas Inc. ("DeIM" or the "Advisor"), the Advisor directs the investments of the Fund in accordance with its investment objectives, policies and restrictions. The Advisor 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 Advisor provides certain administrative services in accordance with the Management Agreement. The management fee payable monthly under the Management Agreement is equal to 1/12 of the annual rate of 0.65% of the Fund's average daily net assets computed and accrued daily, which is then adjusted monthly upward or downward by a maximum of 0.30% based upon the performance for the immediately preceding twelve months of the Class A shares of the Fund as compared to the performance of the Standard & Poor's 500 Index.
Accordingly, for the six months ended March 31, 2004, the fees pursuant to the Management Agreement were as follows:
| Base fee | $ 787,866 |
| Performance adjustment | 374,780 |
| Total fees | $ 1,162,646 |
Effective October 1, 2003 through September 30, 2005, the Advisor has agreed to contractually waive all or a portion of its management fee and reimburse or pay certain operating expenses of the Fund to the extent necessary to maintain the operating expenses at 1.50% of average daily net assets for Class A, B and C shares, respectively, and 1.00% of average daily net assets for Class I shares (excluding certain expenses such as Rule 12b-1 and/or service fees, trustees and trustee counsel fees, extraordinary expenses, taxes, brokerage and interest).
Service Provider Fees. Scudder Investments Service Company ("SISC"), an affiliate of the Advisor, is the Fund's transfer, dividend-paying agent and shareholder service agent. Pursuant to a sub-transfer agency agreement between SISC and DST Systems, Inc. ("DST"), SISC has delegated certain transfer agent and dividend paying agent functions to DST. The costs and expenses of such delegation are borne by SISC, not by the Fund. For the six months ended March 31, 2004, the amount charged to the Fund by SISC was as follows:
Service Provider Fee | Total Aggregated | Not Imposed | Unpaid at March 31, 2004 |
| Class A | $ 312,299 | $ - | $ 222,744 |
| Class B | 139,332 | 31,705 | - |
| Class C | 36,554 | 1,779 | - |
| Class I | 1,946 | 1,826 | - |
$ 490,131 | $ 35,310 | $ 222,744 |
Distribution Service Agreement. Under the Distribution Service Agreement, in accordance with Rule 12b-1 under the 1940 Act, Scudder Distributors, Inc. ("SDI"), a subsidiary of the Advisor, receives a fee ("Distribution Fee") of 0.75% of average daily net assets of Class B and C shares. Pursuant to the agreement, SDI enters into related selling group agreements with various firms at various rates for sales of Class B and C shares. For the six months ended March 31, 2004, the Distribution Fee was as follows:
Distribution Fee | Total Aggregated | Unpaid at March 31, 2004 |
| Class B | $ 133,679 | $ 21,767 |
| Class C | 44,071 | 7,321 |
$ 177,750 | $ 29,088 |
In addition, SDI provides information and administrative services ("Service Fee") to Class A, B and C shareholders at an annual rate of up to 0.25% of average daily net assets for each such class. SDI in turn has various agreements with financial services firms that provide these services and pay these fees based upon the assets of shareholder accounts the firms service. For the six months ended March 31, 2004, the Service Fee was as follows:
Service Fee | Total Aggregated | Unpaid at March 31, 2004 | Annualized Effective |
| Class A | $ 284,217 | $ 41,862 | 0.24% |
| Class B | 40,995 | 5,885 | 0.23% |
| Class C | 14,373 | 1,969 | 0.24% |
$ 339,585 | $ 49,716 |
Underwriting Agreement and Contingent Deferred Sales Charge. SDI is the principal underwriter for the Fund. Underwriting commissions paid in connection with the distribution of Class A and C shares for the six months ended March 31, 2004 aggregated $11,237 and $125, respectively.
In addition, SDI receives any contingent deferred sales charge ("CDSC") from Class B share redemptions occurring within six years of purchase and Class C share redemptions occurring within one year of purchase. There is no such charge upon redemption of any share appreciation or reinvested dividends. The CDSC is based on declining rates ranging from 4% to 1% for Class B and 1% for Class C, of the value of the shares redeemed. For the six months ended March 31, 2004, the CDSC for Class B and C shares aggregated $49,506 and $481, respectively. A deferred sales charge of up to 1% is assessed on certain redemptions of Class A shares. For the six months ended March 31, 2004, SDI received $48.
Trustees' Fees and Expenses. The Fund pays each Trustee not affiliated with the Advisor retainer fees plus specified amounts for attended board and committee meetings.
Scudder Cash Management QP Trust. Pursuant to an Exemptive Order issued by the SEC, the Fund may invest in the Scudder Cash Management QP Trust (the "QP Trust"), and other affiliated funds managed by the Advisor. The QP Trust seeks to provide as high a level of current income as is consistent with the preservation of capital and the maintenance of liquidity. The QP Trust does not pay the Advisor a management fee for the affiliated funds' investments in the QP Trust.
D. Expense Off-Set Arrangement
The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances were used to reduce a portion of the Fund's custodian expenses. During the six months ended March 31, 2004, the custodian fee was reduced by $24 for custodian credits earned.
E. Line of Credit
The Fund and several other affiliated Funds (the "Participants") share in a $1.25 billion revolving credit facility administered by J.P. Morgan Chase Bank 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, based upon net assets, among each of the Participants. Interest is calculated at the Federal Funds Rate plus 0.5 percent. The Fund may borrow up to a maximum of 33 percent of its net assets under the agreement.
F. Share Transactions
The following table summarizes share and dollar activity in the Fund:
Six Months Ended | Year Ended September 30, 2003 | |||
Shares | Dollars | Shares | Dollars | |
| Shares sold | ||||
| Class A | 5,515,786 | $ 17,841,065 | 10,750,826 | $ 26,396,706 |
| Class B | 2,008,357 | 5,589,548 | 5,024,492 | 10,647,555 |
| Class C | 846,797 | 2,407,414 | 1,725,147 | 3,731,260 |
| Class I | 488 | 5,127 | 391,412 | 918,041 |
$ 25,843,154 | $ 41,693,562 | |||
| Shares redeemed | ||||
| Class A | (9,801,856) | $ (31,815,891) | (19,216,790) | $ (46,569,104) |
| Class B | (3,830,871) | (10,656,765) | (8,766,669) | (18,394,412) |
| Class C | (1,305,001) | (3,710,165) | (1,670,737) | (3,570,247) |
| Class I | (10,726) | (36,289) | (1,914,302) | (4,594,052) |
$ (46,219,110) | $ (73,127,815) | |||
| Net increase (decrease) | ||||
| Class A | (4,286,070) | $ (13,974,826) | (8,465,964) | $ (20,172,398) |
| Class B | (1,822,514) | (5,067,217) | (3,742,177) | (7,746,857) |
| Class C | (458,204) | (1,302,751) | 54,410 | 161,013 |
| Class I | (10,238) | (31,162) | (1,522,890) | (3,676,011) |
$ (20,375,956) | $ (31,434,253) | |||
G. Regulatory Matters and Litigation
Since at least July 2003, federal, state and industry regulators have been conducting ongoing inquiries and investigations ("inquiries") into the mutual fund industry, and have requested information from numerous mutual fund companies, including Scudder Investments. We are unable to determine what the outcome of these inquiries will be or what the effect, if any, would be on the funds or their advisers. Publicity about mutual fund practices arising from these industry wide inquiries serve as the general basis of a number of private lawsuits against the Scudder Funds. These lawsuits, which previously have been reported in the press, involve purported class action and derivative lawsuits, making various allegations and naming as defendants various persons, including certain Scudder funds, Deutsche Asset Management ("DeAM") and its affiliates, certain individuals, including in some cases Fund Trustees/Directors, and other parties. DeAM has undertaken to bear all liabilities and expenses incurred by the Scudder funds in connection with these lawsuits, or other lawsuits or regulatory actions that may be filed making allegations similar to these lawsuits regarding fund valuation, market timing, revenue sharing or other subjects of the pending inquiries. Based on currently available information, DeAM believes the likelihood that the pending lawsuits will have a material adverse financial impact on a Scudder fund is remote and such actions are not likely to materially affect its ability to perform under its investment management agreements with the Scudder funds.
Automated Information Lines | ScudderACCESS (800) 972-3060 Personalized account information, information on other Scudder funds and services via touchtone telephone and for Classes A, B, and C only, the ability to exchange or redeem shares. |
Web Site | scudder.com View your account transactions and balances, trade shares, monitor your asset allocation, and change your address, 24 hours a day.Obtain prospectuses and applications, blank forms, interactive worksheets, news about Scudder funds, subscription to fund updates by e-mail, retirement planning information, and more. |
For More Information | (800) 621-1048 To speak with a Scudder service representative. |
Written Correspondence | Scudder Investments PO Box 219356Kansas City, MO 64121-9356 |
Proxy Voting | A description of the fund's policies and procedures for voting proxies for portfolio securities can be found on our Web site - scudder.com (type "proxy voting" in the search field) - or on the SEC's Web site - www.sec.gov. To obtain a written copy without charge, call us toll free at (800) 621-1048. |
Principal Underwriter | If you have questions, comments or complaints, contact: Scudder Distributors, Inc. 222 South Riverside PlazaChicago, IL 60606-5808 (800) 621-1148 |
Class A | Class B | Class C | |
Nasdaq Symbol | KSCAX | KSCBX | KSCCX |
CUSIP Number | 81114R-103 | 81114R-202 | 81114R-301 |
Fund Number | 004 | 204 | 304 |
This privacy statement is issued by Deutsche Investment Management Americas Inc., Deutsche Asset Management, Inc., Scudder Distributors, Inc., Scudder Investor Services, Inc., Scudder Trust Company and the Scudder Funds.
We never sell customer lists or individual client information. We consider privacy fundamental to our client relationships and adhere to the policies and practices described below to protect current and former clients' information. Internal policies are in place to protect confidentiality, while allowing client needs to be served. Only individuals who need to do so in carrying out their job responsibilities may access client information. We maintain physical, electronic and procedural safeguards that comply with federal standards to protect confidentiality. These safeguards extend to all forms of interaction with us, including the Internet.
In the normal course of business, clients give us nonpublic personal information on applications and other forms, on our websites, and through transactions with us or our affiliates. Examples of the nonpublic personal information collected are name, address, Social Security number and transaction and balance information. To be able to serve our clients, certain of this client information is shared with affiliated and nonaffiliated third party service providers such as transfer agents, custodians, and broker-dealers to assist us in processing transactions and servicing your account with us. In addition, we may disclose all of the information we collect to companies that perform marketing services on our behalf or to other financial institutions with which we have joint marketing agreements. The organizations described above that receive client information may only use it for the purpose designated by the Scudder Companies listed above.
We may also disclose nonpublic personal information about you to other parties as required or permitted by law. For example, we are required or we may provide information to government entities or regulatory bodies in response to requests for information or subpoenas, to private litigants in certain circumstances, to law enforcement authorities, or any time we believe it necessary to protect the firm.
Questions on this policy may be sent to:
Scudder Investments
Attention: Correspondence - Chicago
P.O. Box 219415
Kansas City, MO 64121-9415
August 2003
Notes |
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. [RESERVED]
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The primary function of the Nominating and Governance Committee is to identify
and recommend individuals for membership on the Board and oversee the
administration of the Board Governance Procedures and Guidelines. Shareholders
may recommend candidates for Board positions by forwarding their correspondence
by U.S. mail or courier service to the Fund's Secretary for the attention of the
Chairman of the Nominating and Governance Committee, Two International Place,
Boston, MA 02110. Suggestions for candidates must include a resume of the
candidate.
ITEM 10. CONTROLS AND PROCEDURES.
(a) The Chief Executive and Financial Officers concluded that the Registrant's
Disclosure Controls and Procedures are effective based on the evaluation of the
Disclosure Controls and Procedures as of a date within 90 days of the filing
date of this report.
Fund management has previously identified a significant deficiency relating to
the overall fund expense payment and accrual process. This matter relates
primarily to a bill payment processing issue. There was no material impact to
shareholders, fund net asset value, fund performance or the accuracy of any
fund's financial statements. Fund management discussed this matter with the
Registrant's Audit Committee and auditors, instituted additional procedures to
enhance its internal controls and will continue to develop additional controls
and redesign work flow to strengthen the overall control environment associated
with the processing and recording of fund expenses.
(b) There have been no changes in the registrant's internal control over
financial reporting that occurred during the filing period that has materially
affected, or is reasonably likely to materially affect, the registrant's
internal controls over financial reporting.
ITEM 11. EXHIBITS.
(a)(1) Certification pursuant to Rule 30a-2(a) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as
Exhibit 99.CERT.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as
Exhibit 99.906CERT.
Form N-CSR Item F
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: Scudder Dynamic Growth Fund
By: Richard T. Hale
---------------------------
Richard T. Hale
Chief Executive Officer
Date: May 28, 2004
---------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Registrant: Scudder Dynamic Growth Fund
By: Richard T. Hale
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Richard T. Hale
Chief Executive Officer
Date: May 28, 2004
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By: Charles A. Rizzo
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Charles A. Rizzo
Chief Financial Officer
Date: May 28, 2004
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