-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S4laO0+jwx/HfdgQMY5r5WV3RU14k9tKKH/gmRFflL54xkMHDA43ML4lMLqBSh8o QFt6MQ5hPGp5WLwF945uKQ== 0000088053-04-000951.txt : 20041109 0000088053-04-000951.hdr.sgml : 20041109 20041109134934 ACCESSION NUMBER: 0000088053-04-000951 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 20040831 FILED AS OF DATE: 20041109 DATE AS OF CHANGE: 20041109 EFFECTIVENESS DATE: 20041109 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SCUDDER PATHWAY SERIES /NEW/ CENTRAL INDEX KEY: 0000926425 IRS NUMBER: 000000000 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-08606 FILM NUMBER: 041128682 BUSINESS ADDRESS: STREET 1: TWO INTERNATIONAL PLACE CITY: BOSTON STATE: MA ZIP: 02110 BUSINESS PHONE: 6172951000 MAIL ADDRESS: STREET 1: DEUTSCHE ASSET MANAGEMENT STREET 2: TWO INTERNATIONAL PLACE CITY: BOSTON STATE: MA ZIP: 02110 FORMER COMPANY: FORMER CONFORMED NAME: SCUDDER PRIME FUND DATE OF NAME CHANGE: 19940706 N-CSR 1 pwy.htm ANNUAL REPORT Scudder Investments

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

                                   FORM N-CSR

Investment Company Act file number 811-8606

                             SCUDDER PATHWAYS SERIES
                        --------------------------------
               (Exact Name of Registrant as Specified in Charter)

                             Two International Place
                        Boston, Massachusetts 02110-4103
                 ----------------------------------------------
               (Address of Principal Executive Offices) (Zip Code)

        Registrant's Telephone Number, including Area Code: (617) 295-2663
                                                            --------------

                               Salvatore Schiavone
                             Two International Place
                           Boston, Massachusetts 02110
                     ---------------------------------------
                     (Name and Address of Agent for Service)

Date of fiscal year end:        8/31

Date of reporting period:       8/31/04



ITEM 1.  REPORT TO STOCKHOLDERS

[Scudder Investments logo]

Scudder Pathway Series

Pathway Conservative Portfolio

Pathway Moderate Portfolio

Pathway Growth Portfolio

Annual Report to Shareholders

August 31, 2004



Contents


<Click Here> Performance Summaries

<Click Here> Information About Your Fund's Expenses

<Click Here> Portfolio Management Review

<Click Here> Portfolio Highlights

<Click Here> Portfolio Summaries

<Click Here> Investment Portfolios

<Click Here> Financial Statements

<Click Here> Financial Highlights

<Click Here> Notes to Financial Statements

<Click Here> Report of Independent Registered Public Accounting Firm

<Click Here> Tax Information

<Click Here> Trustees and Officers

<Click Here> Account Management Resources


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.

Diversification does not eliminate risk. The portfolios are subject to stock market risk, meaning stocks in the underlying funds may decline in value for extended periods of time due to the activities and financial prospects of individual companies, or due to general market and economic conditions. Investing in foreign securities presents certain unique risks not associated with domestic investments, such as currency fluctuation, political and economic changes and market risks. The underlying funds invest in individual bonds whose yields and market values fluctuate so that your investment may be worth more or less than its original cost. Derivatives may be more volatile and less liquid than traditional securities, and the portfolios could suffer losses on an underlying fund's derivative position. Please read each portfolio's prospectus for specific details regarding its 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.


Performance Summaries August 31, 2004


Pathway Conservative Portfolio

Classes A, B and C

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.

Returns and rankings during all periods shown reflect a fee waiver and/or expense reimbursement for the Pathway Conservative Portfolio as well as for some underlying funds. Without these waivers/reimbursements, 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 redemption of fund shares. Returns and rankings may differ by share class.

Effective April 1, 2004, the Portfolio implemented a new expense structure in which the Portfolio directly bears the fees and expenses of the Portfolio in addition to its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.

Returns shown for Class A, B and C shares for the periods prior to their inception on December 29, 2000 are derived from the historical performance of Class S shares of the Scudder Pathway Series: Conservative Portfolio during such periods and have been adjusted to reflect the higher gross annual total operating expenses of each specific class. Any difference in expenses will affect performance.

Average Annual Total Returns (Unadjusted for Sales Charge) as of 8/31/04

1-Year

3-Year

5-Year

Life of Class*

Class A

7.61%

2.72%

2.00%

3.85%

Class B

6.69%

1.94%

1.26%

3.08%

Class C

6.69%

1.91%

1.24%

3.07%

Russell 1000 Index+
11.33%
1.22%
-1.46%
6.70%
S&P 500 Index++
11.46%
.80%
-2.07%
6.59%
Lehman Brothers U.S. Aggregate Intermediate Index+
5.49%
5.86%
7.34%
6.77%
Lehman Aggregate Bond Index++
6.13%
6.19%
7.67%
6.90%

Sources: Lipper Inc. and Deutsche Investment Management Americas Inc.

* The Portfolio commenced operations on November 15, 1996. Index returns begin November 30, 1996.

Pathway Conservative Portfolio

Net Asset Value and Distribution Information

Class A

Class B

Class C

Net Asset Value:
8/31/04
$ 11.17 $ 11.17 $ 11.16
8/31/03
$ 10.69 $ 10.70 $ 10.69
Distribution Information:
Twelve Months:
Income Dividends as of 8/31/04
$ .33 $ .24 $ .24

Growth of an Assumed $10,000 Investment (Adjusted for Maximum Sales Charge)

[] Pathway Conservative Portfolio - Class A

[] Russell 1000 Index+
[] S&P 500 Index++
[] Lehman Brothers U.S. Aggregate Intermediate Index+
- - - - Lehman Aggregate Bond Index++
pwy_g10k5F0

Yearly periods ended August 31


The Portfolio'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.

Comparative Results (Adjusted for Maximum Sales Charge) as of 8/31/04

Pathway Conservative Portfolio

1-Year

3-Year

5-Year

Life of Class*

Class A

Growth of $10,000

$10,142

$10,216

$10,408

$12,649

Average annual total return

1.42%

.71%

.80%

3.06%

Class B

Growth of $10,000

$10,369

$10,396

$10,557

$12,666

Average annual total return

3.69%

1.30%

1.09%

3.08%

Class C

Growth of $10,000

$10,669

$10,584

$10,636

$12,654

Average annual total return

6.69%

1.91%

1.24%

3.07%


The growth of $10,000 is cumulative.

* The Portfolio commenced operations on November 15, 1996. Index returns begin November 30, 1996.

Pathway Conservative Portfolio

Comparative Results as of 8/31/04

1-Year

3-Year

5-Year

Life of Class*

Russell 1000 Index+
Growth of $10,000

$11,133

$10,369

$9,291

$16,525

Average annual total return

11.33%

1.22%

-1.46%

6.70%

S&P 500 Index++
Growth of $10,000

$11,146

$10,243

$9,009

$16,404

Average annual total return

11.46%

.80%

-2.07%

6.59%

Lehman Brothers U.S. Aggregate Intermediate Index+
Growth of $10,000

$10,549

$11,864

$14,247

$16,494

Average annual total return

5.49%

5.86%

7.34%

6.77%

Lehman Aggregate Bond Index++
Growth of $10,000

$10,613

$11,974

$14,470

$16,770

Average annual total return

6.13%

6.19%

7.67%

6.90%


The growth of $10,000 is cumulative.

* The Portfolio commenced operations on November 15, 1996. Index returns begin November 30, 1996.
+ Effective June 28, 2004, the portfolio changed its indices in conjunction with the policy change for the portfolio as follows: The Russell 1000 Index will replace the S&P 500 Index and the Lehman Brothers U.S. Aggregate Intermediate Index will replace the Lehman Aggregate Bond Index. The Lehman Brothers U.S. Aggregate Intermediate Index contains securities in the intermediate maturity range of the Lehman Brothers Aggregate Index. The Russell 1000 Index is an unmanaged price-only index of the 1,000 largest capitalization companies that are domiciled in the United States and whose common stocks are traded there. Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees or expenses. It is not possible to invest directly into an index.
++ The Lehman Aggregate Bond Index is a market-value-weighted measure of treasury issues, agency issues, corporate bond issues and mortgage-backed securities. The Standard & Poor's 500 (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 Portfolio returns, do not reflect any fees or expenses. It is not possible to invest directly into an index.

Class A Lipper Rankings - Income Funds Category as of 8/31/04

Period

Rank

Number of Funds Tracked

Percentile Ranking

1-Year

90

of

169

53

3-Year

83

of

110

75


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, rankings might have been less favorable. Rankings are for Class A shares; other share classes may vary.

Pathway Conservative Portfolio

Class AARP and Class S

Class AARP has been created especially for members of AARP. Class S is not available to new investors.

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 aarp.scudder.com (Class AARP) or myScudder.com (Class S) for the product's most recent month-end performance.

Returns and rankings during all periods shown reflect a fee waiver and/or expense reimbursement for the Pathway Conservative Portfolio as well as for some underlying funds. Without these waivers/reimbursements, 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 redemption of fund shares. Returns and rankings may differ by share class.

Effective April 1, 2004, the Portfolio implemented a new expense structure in which the Portfolio directly bears the fees and expenses of the Portfolio in addition to its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.

Returns shown for Class AARP shares for the period prior to its inception on September 25, 2000 are derived from the historical performance of Class S shares of Scudder Pathway Series: Conservative Portfolio during such periods and have assumed the same expense structure during such periods. Any difference in expenses will affect performance.

Average Annual Total Returns as of the 8/31/04

1-Year

3-Year

5-Year

Life of Class*

Class S

7.86%

2.94%

2.25%

4.10%

Class AARP

7.86%

2.94%

2.25%

4.10%

Russell 1000 Index+
11.33%
1.22%
-1.46%
6.70%
S&P 500 Index++
11.46%
0.80%
-2.07%
6.59%
Lehman Brothers U.S. Aggregate Intermediate Index+
5.49%
5.86%
7.34%
6.77%
Lehman Aggregate Bond Index++
6.13%
6.19%
7.67%
6.90%

Sources: Lipper Inc. and Deutsche Investment Management Americas Inc.

* The Portfolio commenced operations on November 15, 1996. Index returns begin November 30, 1996.

Pathway Conservative Portfolio

Net Asset Value and Distribution Information

Class AARP

Class S

Net Asset Value:
8/31/04
$ 11.17 $ 11.17
8/31/03
$ 10.69 $ 10.69
Distribution Information:
Twelve Months:
Income Dividends as of 8/31/04
$ .35 $ .35

Growth of an Assumed $10,000 Investment

[] Pathway Conservative Portfolio - Class S

[] Russell 1000 Index+
[] S&P 500 Index++
[] Lehman Brothers U.S. Aggregate Intermediate Index+
- - - - Lehman Aggregate Bond Index++
pwy_g10k5E0

Yearly periods ended August 31


Comparative Results as of 8/31/04

Pathway Conservative Portfolio

1-Year

3-Year

5-Year

Life of Class*

Class S

Growth of $10,000

$10,786

$10,908

$11,175

$13,677

Average annual total return

7.86%

2.94%

2.25%

4.10%

Class AARP

Growth of $10,000

$10,786

$10,908

$11,174

$13,676

Average annual total return

7.86%

2.94%

2.25%

4.10%


The growth of $10,000 is cumulative.

* The Portfolio commenced operations on November 15, 1996. Index returns begin November 30, 1996.

Pathway Conservative Portfolio

Comparative Results as of 8/31/04

1-Year

3-Year

5-Year

Life of Class*

Russell 1000 Index+
Growth of $10,000

$11,133

$10,369

$9,291

$16,525

Average annual total return

11.33%

1.22%

-1.46%

6.70%

S&P 500 Index++
Growth of $10,000

$11,146

$10,243

$9,009

$16,404

Average annual total return

11.46%

.80%

-2.07%

6.59%

Lehman Brothers U.S. Aggregate Intermediate Index+
Growth of $10,000

$10,549

$11,864

$14,247

$16,494

Average annual total return

5.49%

5.86%

7.34%

6.77%

Lehman Aggregate Bond Index++
Growth of $10,000

$10,613

$11,974

$14,470

$16,770

Average annual total return

6.13%

6.19%

7.67%

6.90%


The growth of $10,000 is cumulative.

* The Portfolio commenced operations on November 15, 1996. Index returns begin November 30, 1996.
+ Effective June 28, 2004, the portfolio changed its indices in conjunction with the policy change for the portfolio as follows: The Russell 1000 Index will replace the S&P 500 Index and the Lehman Brothers U.S. Aggregate Intermediate Index will replace the Lehman Aggregate Bond Index. The Lehman Brothers U.S. Aggregate Intermediate Index contains securities in the intermediate maturity range of the Lehman Brothers Aggregate Index. The Russell 1000 Index is an unmanaged price-only index of the 1,000 largest capitalization companies that are domiciled in the United States and whose common stocks are traded there. Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees or expenses. It is not possible to invest directly into an index.
++ The Lehman Aggregate Bond Index is a market-value-weighted measure of treasury issues, agency issues, corporate bond issues and mortgage-backed securities. The Standard & Poor's 500 (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 Portfolio returns, do not reflect any fees or expenses. It is not possible to invest directly into an index.

Class S Lipper Rankings - Income Funds Category as of 8/31/04

Period

Rank

Number of Funds Tracked

Percentile Ranking

1-Year

81

of

169

48

3-Year

75

of

110

68

5-Year

64

of

79

79


Source: Lipper Inc. Rankings are historical and do not guarantee future results. Rankings are based on total return with distributions reinvested. Rankings are for Class S shares; other share classes may vary.

Pathway Moderate Portfolio

Classes A, B and C

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.

Returns and rankings during all periods shown reflect a fee waiver and/or expense reimbursement for the Pathway Moderate Portfolio as well as for some underlying funds. Without these waivers/reimbursements, 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 redemption of fund shares. Returns and rankings may differ by share class.

Effective April 1, 2004, the Portfolio implemented a new expense structure in which the Portfolio directly bears the fees and expenses of the Portfolio in addition to its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.

Returns shown for Class A, B and C shares for the periods prior to their inception on December 29, 2000 are derived from the historical performance of Class S shares of the Scudder Pathway Series: Moderate Portfolio during such periods and have been adjusted to reflect the higher gross annual total operating expenses of each specific class. Any difference in expenses will affect performance.

Average Annual Total Return (Unadjusted for Sales Charge) as of 8/31/04

1-Year

3-Year

5-Year

Life of Class*

Class A

9.34%

1.83%

.77%

3.69%

Class B

8.49%

1.08%

.03%

2.93%

Class C

8.50%

1.04%

.01%

2.91%

Russell 1000 Index+
11.33%
1.22%
-1.46%
6.70%
S&P 500 Index++
11.46%
.80%
-2.07%
6.59%
Lehman Aggregate Bond Index+
6.13%
6.19%
7.67%
6.90%

Sources: Lipper Inc. and Deutsche Investment Management Americas Inc.

* The Portfolio commenced operations on November 15, 1996. Index returns begin November 30, 1996.

Pathway Moderate Portfolio

Net Asset Value and Distribution Information

Class A

Class B

Class C

Net Asset Value:
8/31/04
$ 10.63 $ 10.63 $ 10.62
8/31/03
$ 9.91 $ 9.91 $ 9.90
Distribution Information:
Twelve Months:
Income Dividends as of 8/31/04
$ .20 $ .12 $ .12

Growth of an Assumed $10,000 Investment (Adjusted for Maximum Sales Charge)

[] Pathway Moderate Portfolio - Class A

[] Russell 1000 Index+
[] S&P 500 Index++
[] Lehman Aggregate Bond Index+
pwy_g10k5D0

Yearly periods ended August 31


The Portfolio'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.

Comparative Results (Adjusted for Maximum Sales Charge) as of 8/31/04

Pathway Moderate Portfolio

1-Year

3-Year

5-Year

Life of Class*

Class A

Growth of $10,000

$10,305

$9,951

$9,792

$12,506

Average annual total return

3.05%

-.16%

-.42%

2.91%

Class B

Growth of $10,000

$10,549

$10,130

$9,936

$12,522

Average annual total return

5.49%

.43%

-.13%

2.93%

Class C

Growth of $10,000

$10,850

$10,316

$10,004

$12,508

Average annual total return

8.50%

1.04%

.01%

2.91%


The growth of $10,000 is cumulative.

* The Portfolio commenced operations on November 15, 1996. Index returns begin November 30, 1996.

Pathway Moderate Portfolio

Comparative Results as of 8/31/04

1-Year

3-Year

5-Year

Life of Class*

Russell 1000 Index+
Growth of $10,000

$11,133

$10,369

$9,291

$16,525

Average annual total return

11.33%

1.22%

-1.46%

6.70%

S&P 500 Index++
Growth of $10,000

$11,146

$10,243

$9,009

$16,404

Average annual total return

11.46%

.80%

-2.07%

6.59%

Lehman Aggregate Bond Index+
Growth of $10,000

$10,613

$11,974

$14,470

$16,770

Average annual total return

6.13%

6.19%

7.67%

6.90%


The growth of $10,000 is cumulative.

* The Portfolio commenced operations on November 15, 1996. Index returns begin November 30, 1996.
+ Effective June 28, 2004, the portfolio changed its indices in conjunction with the policy change for the portfolio as follows: The Russell 1000 Index will replace the S&P 500 Index. The Lehman Aggregate Bond Index is a market-value-weighted measure of treasury issues, agency issues, corporate bond issues and mortgage-backed securities. Russell 1000 Index is an unmanaged price-only index of the 1,000 largest capitalization companies that are domiciled in the United States and whose common stocks are traded there. Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees or expenses. It is not possible to invest directly into an index.
++ The Standard & Poor's 500 (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 Portfolio returns, do not reflect any fees or expenses. It is not possible to invest directly into an index.

Class A Lipper Rankings - Balanced Funds Category as of 8/31/04

Period

Rank

Number of Funds Tracked

Percentile Ranking

1-Year

191

of

546

35

3-Year

258

of

440

58


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, rankings might have been less favorable. Rankings are for Class A shares; other share classes may vary.

Pathway Moderate Portfolio

Class AARP and Class S

Class AARP has been created especially for members of AARP. Class S is not available to new investors.

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 aarp.scudder.com (Class AARP) or myScudder.com (Class S) for the product's most recent month-end performance.

Returns and rankings during all periods shown for Class S reflect a fee waiver and/or expense reimbursement. In addition, returns and rankings during all periods shown reflect a fee waiver and/or expense reimbursement for some underlying funds. Without these waivers/reimbursements, returns and waivers would have been lower.

Performance figures do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns and rankings may differ by share class.

Effective April 1, 2004, the Portfolio implemented a new expense structure in which the Portfolio directly bears the fees and expenses of the Portfolio in addition to its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.

Returns shown for Class AARP shares for the periods prior to its inception on October 2, 2000 are derived from the historical performance of Class S shares of the Scudder Pathway Series: Moderate Portfolio during such periods and have assumed the same expense structure during such periods. Any difference in expenses will affect performance.

Average Annual Total Returns as of 8/31/04

1-Year

3-Year

5-Year

Life of Class*

Class S

9.70%

2.10%

1.00%

3.95%

Class AARP

9.60%

2.07%

1.00%

3.94%

Russell 1000 Index+
11.33%
1.22%
-1.46%
6.70%
S&P 500 Index++
11.46%
.80%
-2.07%
6.59%
Lehman Aggregate Bond Index+
6.13%
6.19%
7.67%
6.90%

Sources: Lipper Inc. and Deutsche Investment Management Americas Inc.

* The Portfolio commenced operations on November 15, 1996. Index returns begin November 30, 1996.

Pathway Moderate Portfolio

Net Asset Value and Distribution Information

Class AARP

Class S

Net Asset Value:
8/31/04
$ 10.62 $ 10.62
8/31/03
$ 9.90 $ 9.90
Distribution Information:
Twelve Months:
Income Dividends as of 8/31/04
$ .23 $ .23

Growth of an Assumed $10,000 Investment

[] Pathway Moderate Portfolio - Class S

[] Russell 1000 Index+
[] S&P 500 Index++
[] Lehman Aggregate Bond Index+
pwy_g10k5C0

Yearly periods ended August 31


Comparative Results as of 8/31/04

Pathway Moderate Portfolio

1-Year

3-Year

5-Year

Life of Class*

Class S

Growth of $10,000

$10,970

$10,643

$10,512

$13,521

Average annual total return

9.70%

2.10%

1.00%

3.95%

Class AARP

Growth of $10,000

$10,960

$10,633

$10,511

$13,520

Average annual total return

9.60%

2.07%

1.00%

3.94%


The growth of $10,000 is cumulative.

* The Portfolio commenced operations on November 15, 1996. Index returns begin November 30, 1996.

Pathway Moderate Portfolio

Comparative Results as of 8/31/04

1-Year

3-Year

5-Year

Life of Class*

Russell 1000 Index+
Growth of $10,000

$11,133

$10,369

$9,291

$16,525

Average annual total return

11.33%

1.22%

-1.46%

6.70%

S&P 500 Index++
Growth of $10,000

$11,146

$10,243

$9,009

$16,404

Average annual total return

11.46%

.80%

-2.07%

6.59%

Lehman Aggregate Bond Index+
Growth of $10,000

$10,613

$11,974

$14,470

$16,770

Average annual total return

6.13%

6.19%

7.67%

6.90%


The growth of $10,000 is cumulative.

* The Portfolio commenced operations on November 15, 1996. Index returns begin November 30, 1996.
+ Effective June 28, 2004, the portfolio changed its indices in conjunction with the policy change for the portfolio as follows: The Russell 1000 Index will replace the S&P 500 Index. The Lehman Aggregate Bond Index is a market-value-weighted measure of treasury issues, agency issues, corporate bond issues and mortgage-backed securities. Russell 1000 Index is an unmanaged price-only index of the 1,000 largest capitalization companies that are domiciled in the United States and whose common stocks are traded there. Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees or expenses. It is not possible to invest directly into an index.
++ The Standard & Poor's 500 (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 Portfolio returns, do not reflect any fees or expenses. It is not possible to invest directly into an index.

Class S Lipper Rankings - Balanced Funds Category as of 8/31/04

Period

Rank

Number of Funds Tracked

Percentile Ranking

1-Year

154

of

546

29

3-Year

234

of

440

54

5-Year

237

of

367

65


Source: Lipper Inc. Rankings are historical and do not guarantee future results. Rankings are based on total return with distributions reinvested. Rankings are for Class S shares; other share classes may vary.

Pathway Growth Portfolio

Classes A, B and C

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.

Returns and rankings during all periods shown reflect a fee waiver and/or expense reimbursement for the Pathway Growth Portfolio as well as for some underlying funds. Without these waivers/reimbursements, 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 redemption of fund shares. Returns and rankings may differ by share class.

Effective April 1, 2004, the Portfolio implemented a new expense structure in which the Portfolio directly bears the fees and expenses of the Portfolio in addition to its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.

Returns shown for Class A, B and C shares for the periods prior to their inception on December 29, 2000 are derived from the historical performance of Class S shares of the Scudder Pathway Series: Growth Portfolio during such periods and have been adjusted to reflect the higher gross annual total operating expenses of each specific class. Any difference in expenses will affect performance.

Average Annual Total Returns (Unadjusted for Sales Charge) as of 8/31/04

1-Year

3-Year

5-Year

Life of Class*

Class A

11.19%

.66%

.20%

4.61%

Class B

10.36%

-.08%

-.53%

3.83%

Class C

10.34%

-.08%

-.54%

3.83%

Russell 1000 Index+
11.33%
1.22%
-1.46%
6.70%
S&P 500 Index++
11.46%
.80%
-2.07%
6.59%
Lehman Aggregate Bond Index+
6.13%
6.19%
7.67%
6.90%

Sources: Lipper Inc. and Deutsche Investment Management Americas Inc.

* The Portfolio commenced operations on November 15, 1996. Index returns begin November 30, 1996.

Pathway Growth Portfolio

Net Asset Value and Distribution Information

Class A

Class B

Class C

Net Asset Value:
8/31/04
$ 12.14 $ 12.02 $ 12.02
8/31/03
$ 11.08 $ 10.97 $ 10.97
Distribution Information:
Twelve Months:
Income Dividends as of 8/31/04
$ .18 $ .09 $ .08

Growth of an Assumed $10,000 Investment (Adjusted for Maximum Sales Charge)

[] Pathway Growth Portfolio - Class A

[] Russell 1000 Index+
[] S&P 500 Index++
[] Lehman Aggregate Bond Index+
pwy_g10k5B0

Yearly periods ended August 31


The Portfolio'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.

Comparative Results (Adjusted for Maximum Sales Charge) as of 8/31/04

Pathway Growth Portfolio

1-Year

3-Year

5-Year

Life of Class*

Class A

Growth of $10,000

$10,479

$9,613

$9,521

$13,392

Average annual total return

4.79%

-1.31%

-.98%

3.82%

Class B

Growth of $10,000

$10,736

$9,785

$9,658

$13,408

Average annual total return

7.36%

-.72%

-.69%

3.83%

Class C

Growth of $10,000

$11,034

$9,975

$9,735

$13,405

Average annual total return

10.34%

-.08%

-.54%

3.83%


The growth of $10,000 is cumulative.

* The Portfolio commenced operations on November 15, 1996. Index returns begin November 30, 1996.

Pathway Growth Portfolio

Comparative Results as of 8/31/04

1-Year

3-Year

5-Year

Life of Class*

Russell 1000 Index+
Growth of $10,000

$11,133

$10,369

$9,291

$16,525

Average annual total return

11.33%

1.22%

-1.46%

6.70%

S&P 500 Index++
Growth of $10,000

$11,146

$10,243

$9,009

$16,404

Average annual total return

11.46%

.80%

-2.07%

6.59%

Lehman Aggregate Bond Index+
Growth of $10,000

$10,613

$11,974

$14,470

$16,770

Average annual total return

6.13%

6.19%

7.67%

6.90%


The growth of $10,000 is cumulative.

* The Portfolio commenced operations on November 15, 1996. Index returns begin November 30, 1996.
+ Effective June 28, 2004, the portfolio changed its indices in conjunction with the policy change for the portfolio as follows: the Russell 1000 Index will replace the S&P 500 Index. The Lehman Aggregate Bond Index is a market-value-weighted measure of treasury issues, agency issues, corporate bond issues and mortgage-backed securities. Russell 1000 Index is an unmanaged price-only index of the 1,000 largest capitalization companies that are domiciled in the United States and whose common stocks are traded there. Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees or expenses. It is not possible to invest directly into an index.
++ The Standard & Poor's 500 (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 Portfolio returns, do not reflect any fees or expenses. It is not possible to invest directly into an index.

Class A Lipper Rankings - Multi-Cap Core Funds Category as of 8/31/04

Period

Rank

Number of Funds Tracked

Percentile Ranking

1-Year

208

of

685

31

3-Year

288

of

501

58


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, rankings might have been less favorable. Rankings are for Class A shares; other share classes may vary.

Pathway Growth Portfolio

Class AARP and Class S

Class AARP has been created especially for members of AARP. Class S is not available to new investors.

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 aarp.scudder.com (Class AARP) or myScudder.com (Class S) for the product's most recent month-end performance.

Returns and rankings during all periods shown reflect a fee waiver and/or expense reimbursement for the Pathway Growth Portfolio as well as for some underlying funds. Without these waivers/reimbursements, 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 redemption of fund shares. Returns and rankings may differ by share class.

Effective April 1, 2004, the Portfolio implemented a new expense structure in which the Portfolio directly bears the fees and expenses of the Portfolio in addition to its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.

Returns shown for Class AARP shares for the periods prior to its inception on September 25, 2000 are derived from the historical performance of Class S shares of the Scudder Pathway Series: Growth Portfolio during such periods and have assumed the same expense structure during such periods. Any difference in expenses will affect performance.

Average Annual Total Returns as of 8/31/04

1-Year

3-Year

5-Year

Life of Class*

Class S

11.50%

.90%

.43%

4.86%

Class AARP

11.50%

.90%

.43%

4.85%

Russell 1000 Index+
11.33%
1.22%
-1.46%
6.70%
S&P 500 Index++
11.46%
.80%
-2.07%
6.59%
Lehman Aggregate Bond Index+
6.13%
6.19%
7.67%
6.90%

Sources: Lipper Inc. and Deutsche Investment Management Americas Inc.

* The Portfolio commenced operations on November 15, 1996. Index returns begin November 30, 1996.

Pathway Growth Portfolio

Net Asset Value and Distribution Information

Class AARP

Class S

Net Asset Value:
8/31/04
$ 12.17 $ 12.17
8/31/03
$ 11.10 $ 11.10
Distribution Information:
Twelve Months:
Income Dividends as of 8/31/04
$ .21 $ .21

Growth of an Assumed $10,000 Investment

[] Pathway Growth Portfolio - Class S

[] Russell 1000 Index+
[] S&P 500 Index++
[] Lehman Aggregate Bond Index+
pwy_g10k5A0

Yearly periods ended August 31


Comparative Results as of 8/31/04

Pathway Growth Portfolio

1-Year

3-Year

5-Year

Life of Class*

Class S

Growth of $10,000

$11,150

$10,272

$10,216

$14,472

Average annual total return

11.50%

.90%

.43%

4.86%

Class AARP

Growth of $10,000

$11,150

$10,272

$10,216

$14,472

Average annual total return

11.50%

.90%

.43%

4.85%


The growth of $10,000 is cumulative.

* The Portfolio commenced operations on November 15, 1996. Index returns begin November 30, 1996.

Pathway Growth Portfolio

Comparative Results as of 8/31/04

1-Year

3-Year

5-Year

Life of Class*

Russell 1000 Index+
Growth of $10,000

$11,133

$10,369

$9,291

$16,525

Average annual total return

11.33%

1.22%

-1.46%

6.70%

S&P 500 Index++
Growth of $10,000

$11,146

$10,243

$9,009

$16,404

Average annual total return

11.46%

.80%

-2.07%

6.59%

Lehman Aggregate Bond Index+
Growth of $10,000

$10,613

$11,974

$14,470

$16,770

Average annual total return

6.13%

6.19%

7.67%

6.90%


The growth of $10,000 is cumulative.

* The Portfolio commenced operations on November 15, 1996. Index returns begin November 30, 1996.
+ Effective June 28, 2004, the portfolio changed its indices in conjunction with the policy change for the portfolio as follows: the Russell 1000 Index will replace the S&P 500 Index. The Lehman Aggregate Bond Index is a market-value-weighted measure of treasury issues, agency issues, corporate bond issues and mortgage-backed securities. Russell 1000 Index is an unmanaged price-only index of the 1,000 largest capitalization companies that are domiciled in the United States and whose common stocks are traded there. Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees or expenses. It is not possible to invest directly into an index.
++ The Standard & Poor's 500 (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 Portfolio returns, do not reflect any fees or expenses. It is not possible to invest directly into an index.

Class S Lipper Rankings - Multi-Cap Core Funds Category as of 8/31/04

Period

Rank

Number of Funds Tracked

Percentile Ranking

1-Year

185

of

685

27

3-Year

270

of

501

54

5-Year

176

of

343

52


Source: Lipper Inc. Rankings are historical and do not guarantee future results. Rankings are based on total return with distributions reinvested. Rankings are for Class S shares; other share classes may vary.


Information About Your Fund's Expenses


As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include distribution and service (12b-1) fees and other Fund expenses. Examples of transaction costs include sales charges (loads), redemption fees and account maintenance fees, which are not shown in this section. The following table is intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. In addition to the ongoing expenses which the Portfolio bears directly, the Portfolio's shareholders indirectly bear the expense of the underlying Scudder Funds in which the Portfolio invests. The Portfolio's estimated indirect expense from investing in the Underlying Scudder Funds is based on its August 31, 2004 allocation of Underlying Scudder Funds. In the most recent six-month period, Class A, B, C, AARP (excluding the Pathway Moderate Portfolio) and S shares limited these expenses; had they not done so, expenses would have been higher. In addition, certain of the Underlying Scudder Funds limited expenses; had they not done so, expenses would have been higher. The table is based on an investment of $1,000 made at the beginning of the six-month period ended August 31, 2004.

The table illustrates your Fund's expenses in two ways:

Actual Fund Return. This helps you estimate the actual dollar amount of ongoing expenses (but not transaction costs) paid on a $1,000 investment in the Fund using the Fund's actual return during the period. To estimate the expenses you paid over the period, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the "Expenses Paid per $1,000" line under the share class you hold.

Hypothetical 5% Fund Return. This helps you to compare your Fund's ongoing expenses (but not transaction costs) with those of other mutual funds using the Fund's actual expense ratio and a hypothetical rate of return of 5% per year before expenses. Examples using a 5% hypothetical fund return may be found in the shareholder reports of other mutual funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.



Please note that the expenses shown in these tables are meant to highlight your ongoing expenses only and do not reflect any transaction costs. The "Expenses Paid per $1,000" line of the tables is useful in comparing ongoing expenses only and will not help you determine the relative total expense of owning different funds. If these transaction costs had been included, your costs would have been higher.

Pathway Conservative Portfolio

Direct Portfolio Expenses and Value of a $1,000 Investment
for the six months ended August 31, 2004

Actual Fund Return

Class A

Class B

Class C

Class AARP

Class S

Beginning Account Value 2/29/04
$ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000
Ending Account Value 8/31/04
$ 989 $ 985 $ 984 $ 990 $ 990
Expenses Paid per $1,000*
$ 2.52 $ 6.28 $ 6.29 $ 1.28 $ 1.27
Hypothetical 5% Fund Return

Class A

Class B

Class C

Class AARP

Class S

Beginning Account Value 2/29/04
$ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000
Ending Account Value 8/31/04
$ 1,023 $ 1,019 $ 1,019 $ 1,024 $ 1,024
Expenses Paid per $1,000*
$ 2.57 $ 6.39 $ 6.40 $ 1.30 $ 1.29

Direct Portfolio Expenses and Estimated Indirect Underlying Scudder Fund Expenses and Value of a $1,000 Investment for the six months ended August 31, 2004

Actual Fund Return

Class A

Class B

Class C

Class AARP

Class S

Beginning Account Value 2/29/04
$ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000
Ending Account Value 8/31/04
$ 989 $ 985 $ 984 $ 990 $ 990
Expenses Paid per $1,000**
$ 5.53 $ 9.28 $ 9.29 $ 4.29 $ 4.28
Hypothetical 5% Fund Return

Class A

Class B

Class C

Class AARP

Class S

Beginning Account Value 2/29/04
$ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000
Ending Account Value 8/31/04
$ 1,023 $ 1,019 $ 1,019 $ 1,024 $ 1,024
Expenses Paid per $1,000**
$ 5.62 $ 9.43 $ 9.43 $ 4.36 $ 4.35

* Expenses are equal to the Portfolio's annualized expense ratio for each share class, multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by 365.
** Expenses are equal to the Portfolio's annualized expense ratio for each class plus the estimated indirect expense from investing in underlying funds in which the Portfolio invests, multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by 365.
Annualized Expense Ratios

Class A

Class B

Class C

Class AARP

Class S

Direct Portfolio Expense Ratio+

.50%

1.26%

1.26%

.26%

.25%

Estimated Indirect Expenses of Underlying Scudder Funds

.60%

.60%

.60%

.60%

.60%

Estimated Net Annual Portfolio and Underlying Scudder Funds Expenses

1.10%

1.86%

1.86%

.86%

.85%


+ The expense ratio reflects change to expenses within the most recent six-month period. Effective April 1, 2004, the Portfolio implemented a new expense structure in which the Portfolio directly bears the cost of those fees and expenses of the Portfolio. See Note B in Notes to Financial Statements.

For more information, please refer to the Fund's prospectus.

Pathway Moderate Portfolio

Direct Portfolio Expenses and Value of a $1,000 Investment
for the six months ended August 31, 2004

Actual Fund Return

Class A

Class B

Class C

Class AARP

Class S

Beginning Account Value 2/29/04
$ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000
Ending Account Value 8/31/04
$ 981 $ 978 $ 977 $ 983 $ 983
Expenses Paid per $1,000*
$ 2.46 $ 6.16 $ 6.20 $ 1.15 $ 1.28
Hypothetical 5% Fund Return

Class A

Class B

Class C

Class AARP

Class S

Beginning Account Value 2/29/04
$ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000
Ending Account Value 8/31/04
$ 1,023 $ 1,019 $ 1,019 $ 1,024 $ 1,024
Expenses Paid per $1,000*
$ 2.51 $ 6.28 $ 6.33 $ 1.18 $ 1.30

Direct Portfolio Expenses and Estimated Indirect Underlying Scudder Fund Expenses and Value of a $1,000 Investment for the six months ended August 31, 2004

Actual Fund Return

Class A

Class B

Class C

Class AARP

Class S

Beginning Account Value 2/29/04
$ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000
Ending Account Value 8/31/04
$ 981 $ 978 $ 977 $ 983 $ 983
Expenses Paid per $1,000**
$ 5.35 $ 9.05 $ 9.09 $ 4.05 $ 4.18
Hypothetical 5% Fund Return

Class A

Class B

Class C

Class AARP

Class S

Beginning Account Value 2/29/04
$ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000
Ending Account Value 8/31/04
$ 1,023 $ 1,019 $ 1,019 $ 1,024 $ 1,024
Expenses Paid per $1,000**
$ 5.46 $ 9.22 $ 9.27 $ 4.13 $ 4.25

* Expenses are equal to the Portfolio's annualized expense ratio for each share class, multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by 365.
** Expenses are equal to the Portfolio's annualized expense ratio for each class plus the estimated indirect expense from investing in underlying funds in which the Portfolio invests, multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by 365.
Annualized Expense Ratios

Class A

Class B

Class C

Class AARP

Class S

Direct Portfolio Expense Ratio+

.49%

1.23%

1.24%

.23%

.26%

Estimated Indirect Expenses of Underlying Scudder Funds

.58%

.58%

.58%

.58%

.58%

Estimated Net Annual Portfolio and Underlying Scudder Funds Expenses

1.07%

1.81%

1.82%

.81%

.84%


+ The expense ratio reflects change to expenses within the most recent six-month period. Effective April 1, 2004, the Portfolio implemented a new expense structure in which the Portfolio directly bears the cost of those fees and expenses of the Portfolio. See Note B in Notes to Financial Statements.

For more information, please refer to the Fund's prospectus.

Pathway Growth Portfolio

Direct Portfolio Expenses and Value of a $1,000 Investment
for the six months ended August 31, 2004

Actual Fund Return

Class A

Class B

Class C

Class AARP

Class S

Beginning Account Value 2/29/04
$ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000
Ending Account Value 8/31/04
$ 974 $ 970 $ 970 $ 975 $ 972
Expenses Paid per $1,000*
$ 2.52 $ 6.21 $ 6.31 $ 1.24 $ 1.25
Hypothetical 5% Fund Return

Class A

Class B

Class C

Class AARP

Class S

Beginning Account Value 2/29/04
$ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000
Ending Account Value 8/31/04
$ 1,023 $ 1,019 $ 1,019 $ 1,024 $ 1,024
Expenses Paid per $1,000*
$ 2.58 $ 6.36 $ 6.46 $ 1.27 $ 1.28

Direct Portfolio Expenses and Estimated Indirect Underlying Scudder Fund Expenses and Value of a $1,000 Investment for the six months ended August 31, 2004

Actual Fund Return

Class A

Class B

Class C

Class AARP

Class S

Beginning Account Value 2/29/04
$ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000
Ending Account Value 8/31/04
$ 974 $ 970 $ 970 $ 975 $ 972
Expenses Paid per $1,000**
$ 5.36 $ 9.04 $ 9.14 $ 4.07 $ 4.08
Hypothetical 5% Fund Return

Class A

Class B

Class C

Class AARP

Class S

Beginning Account Value 2/29/04
$ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000
Ending Account Value 8/31/04
$ 1,023 $ 1,019 $ 1,019 $ 1,024 $ 1,024
Expenses Paid per $1,000**
$ 5.48 $ 9.25 $ 9.35 $ 4.17 $ 4.18

* Expenses are equal to the Portfolio's annualized expense ratio for each share class, multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by 365.
** Expenses are equal to the Portfolio's annualized expense ratio for each class plus the estimated indirect expense from investing in underlying funds in which the Portfolio invests, multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by 365.
Annualized Expense Ratios

Class A

Class B

Class C

Class AARP

Class S

Direct Portfolio Expense Ratio+

.51%

1.25%

1.27%

.25%

.25%

Estimated Indirect Expenses of Underlying Scudder Funds

.57%

.57%

.57%

.57%

.57%

Estimated Net Annual Portfolio and Underlying Scudder Funds Expenses

1.08%

1.82%

1.84%

.82%

.82%


+ The expense ratio reflects change to expenses within the most recent six-month period. Effective April 1, 2004, the Portfolio implemented a new expense structure in which the Portfolio directly bears the cost of those fees and expenses of the Portfolio. See Note B in Notes to Financial Statements.

For more information, please refer to the Fund's prospectus.


Portfolio Management Review


Scudder Pathway Series: A Team Approach to Investing

Deutsche Investment Management Americas Inc. ("DeIM" or the "Advisor"), which is part of Deutsche Asset Management, is the investment advisor for Scudder Pathway Series. DeIM and its predecessors have more than 80 years of experience managing mutual funds and DeIM provides a full range of investment advisory services to institutional and retail clients. DeIM is also responsible for selecting brokers and dealers and for negotiating brokerage commissions and dealer charges.

Deutsche Asset Management is a global asset management organization that offers a wide range of investing expertise and resources. This well-resourced global investment platform brings together a wide variety of experience and investment insight across industries, regions, asset classes and investing styles.

DeIM is an indirect, wholly owned subsidiary of Deutsche Bank AG. Deutsche Bank AG is a major global banking institution that is engaged in a wide range of financial services, including investment management, mutual funds, retail, private and commercial banking, investment banking and insurance.

Portfolio Management Team

Janet Campagna

Managing Director of Deutsche Asset Management and Co-Manager of the portfolios.

• Joined Deutsche Asset Management in 1999. Investment strategist and manager of the asset allocation strategies group for Barclays Global Investors from 1994 to 1999.

• Head of Advanced Research and Quantitative Strategies.

• Over 12 years of investment industry experience.

• MS, Social Science, California Institute of Technology.

• PhD, Political Science, University of California at Irvine.

• Joined the portfolios in 2002.

Inna Okounkova

Vice President of Deutsche Asset Management and Co-Manager of the portfolios.

• Joined Deutsche Asset Management in 1999.

• Began investment career in 1999.

• Portfolio manager for asset allocation portfolios.

• MS, Moscow State University.

• MBA, University of Chicago.

• Joined the portfolios in 2002.

Robert Wang

Managing Director of Deutsche Asset Management and Co-Manager of the portfolios.

• Joined Deutsche Asset Management in 1995 after 13 years of experience in fixed income trading at J.P. Morgan.

• Portfolio manager for global and tactical asset allocation portfolios, with a focus on quantitative asset allocation, portfolio risk control and derivatives trading management.

• Joined the portfolios in 2002.

In the following interview, Co-Managers Janet Campagna, Robert Wang and Inna Okounkova and Investment Strategist Arnim Holzer address the economy, markets, portfolio management strategy and the resulting performance of Scudder Pathway Series during the 12-month period September 1, 2003, through August 31, 2004.

Q: Will you describe the key global, political and economic developments during the period?

A: After a strong rally in US equities in the fourth quarter of 2003, the market fell back due to concerns over interest rate policy, inflation, economic growth, energy prices and geopolitical events. The fourth quarter of 2003 was strong as the market began to anticipate economic recovery, and investors recognized that many areas of the market were undervalued. However, over the next two quarters, a significant head wind was whipped up by a combination of issues, including changes to the Federal Reserve Board's (Fed's) decision to raise interest rates as well as concerns about rising inflation, decelerating economic growth and soaring energy prices, all of which had an impact on the revenue growth of companies. Concerns regarding political affairs, convention activities and the threat of a terrorist act at the Olympics also gave investors reason for pause. So, equities just treaded water, which wasn't half bad in light of all the ongoing turbulence of the second and third quarters of the period. For the 12-month period, the equity market, as measured by the Russell 1000 Index, rose 11.33%.1 The international equity market, as measured by the Morgan Stanley Capital International EAFE Index, gained 22.64%.2

1 The Russell 1000 Index is an unmanaged, price-only index of the 1,000 largest-capitalization companies that are domiciled in the United States and whose common stocks are traded there. Index returns assume reinvestment of dividends and, unlike fund returns, do not reflect any fees or expenses. It is not possible to invest directly in an index.
2 The Morgan Stanley Capital International Europe, Australasia and Far East Index (MSCI EAFE®) is an unmanaged index that tracks international stock performance in the 21 developed markets of Europe, Australasia and the Far East. Index returns assume reinvestment of dividends and, unlike fund returns, do not reflect any fees or expenses. It is not possible to invest directly in an index.

Looking to bonds, despite tremendous volatility and concerns regarding the slowdown in economic growth, the yields paid out on a 10-year US Treasury bond were lower at the end of the period than at the beginning. There was much concern about inflation at the beginning of the second calendar quarter in 2004. In March, April and May, the 10-year bond's rate climbed from 3.70% to more than 4.80%, as the price of the 10-year bond fell. The price of a bond and its yield have an inverse relationship - - when one goes up; the other goes down. As investors subsequently had a change of heart and decided that neither economic growth nor inflation would be significant, the 10-year bond's price rallied in August, and its yield fell to approximately 4.20%. Given expectations for the near term, we think that yields are a bit low in this environment. We believe a fair range for expected annual Treasury yields would be closer to 4.40% to 4.75%.

The US dollar abruptly changed from a depreciating currency to an appreciating one as the Fed decided to increase the Fed funds rate. Typically, as interest rates rise, the carry that investors get from other currencies would no longer be advantageous against US dollar interest rates.3 As a result, the US dollar began to show strength.

3 A carry trade involves borrowing funds in one country's market where interest rates are low and purchasing an offsetting position in fixed-income securities in another country's market where a higher rate of interest is paid.

While we have witnessed strength in the US dollar vis-à-vis other currencies in the last six to nine months, we believe that the fundamentals in the form of the huge trade deficit still support the notion of a weaker dollar in the future. However, that is somewhat offset by the fact that rising interest rates eliminate some of the carry rate advantage that foreign currencies have held in the past.

Although the second- and third-quarter data were weaker than expected, we believe this simply demonstrated that the United States' economy had achieved a steady performance pace and was no longer accelerating. We think this stable environment should enable the Fed to continue increasing interest rates. We expect the Fed will go slowly once rates reach the 2.5% level early next year. The Fed is probably aiming for a target zone of between 3.5% and 4% by the end of 2005, but it will be sensitive to employment and economic data along the way.

Obviously, energy and commodity prices have been a big concern for investors. However, we don't see problematic inflationary pressure in the wings. We think that the current disparity between too little supply and too high demand in commodities such as oil and steel is cause for concern, but we don't believe commodities' prices are precursors to a major inflation problem.

On the international front, European and Japanese equity markets generally performed better, and international equities (on a US-dollar basis) proved a fair place to invest. We like what we have seen in Japan. Although the latest economic numbers are down, we are expecting good economic performance from Japan. The Japanese equity markets, as measured by the Morgan Stanley Capital International Japan Index, climbed 20.45% for the 12-month period ended August 31, 2004.4

4 The Morgan Stanley Capital International Japan Index (MSCI Japan) is an unmanaged, capitalization-weighted measure of equity securities listed on the Tokyo Stock Exchange. Index returns assume reinvested dividends and, unlike fund returns, do not reflect fees or expenses. It is not possible to invest directly in an index.

We are still concerned that Europe could remain the laggard in the global economy as it struggles to reach a cruising economic speed. However, based on several positive trends, one could make the case that European equity performance should improve. European companies are managing more frugally and negotiating with labor more efficiently, which should help profit margins. The stability of the euro will allow European companies to better anticipate sales, and the potential for stable global growth should also benefit European equities. The European equity markets, as represented by the Morgan Stanley Capital International Europe Index, gained 23.13% for the 12-month period ended August 31, 2004.5

5 The Morgan Stanley Capital International Europe Index (MSCI Europe) is an unmanaged, capitalization-weighted measure of 16 markets in Europe. Index returns assume reinvestment of dividends and, unlike fund returns, do not reflect any fees or expenses. It is not possible to invest directly in an index.

China has been a big topic of conversation during this calendar year, as there has been quite a bit of overheating (inflation) in many sectors of China, and the government is embarking on a controlled monetary policy slowdown. While we believe Chinese officials will be successful, the risks if they should fail are significant. China's trading partners, including Japan, Taiwan and Singapore, would suffer from a Chinese recession, as would Latin American suppliers of commodities. And a meltdown of China's banking system could spread financial pain to the United States. We believe that China is undertaking many of the correct steps to be successful, such as clamping down on bank lending and foreign investment. However, given the importance of China in Southeast Asia and its growing importance to global trade, the fallout would be painful, and we clearly need to watch this situation.

We believe that economic growth in the United States over the next year or two should help firm up global growth. From an investment point of view, we believe that equity returns will return to positive territory for 2004 as a whole, as investor risk aversion abates. We think that equity valuations are fair, and as a result of good earnings and dividends, we should see positive performance from equities in the near term. But we think that investors need to adjust to the reality that rising interest rates make it a more difficult environment. Although corporate profits have risen for the past five or six quarters, companies will not be able to sustain this upward trend, and we expect a slowdown in earnings as a result. In other words, we are a little more modest in our expectations of equity returns compared with what we have seen in the last two years. Investors need to adjust to the reality of rising rates and slowing profits.

Q: What changes to Scudder Pathway Series took place on June 30, 2004?

A: The board of trustees of Scudder Pathway Series approved changes to the investment policies of each portfolio that are designed to promote a more dynamic asset-allocation model and expand the range of underlying funds available for investment. To deploy this new model, we had to coordinate dramatic changes with all relevant areas within the firm, such as compliance, legal, tax accounting and the portfolio managers of the underlying funds. In employing the model, we will actively review the actual allocation on a continuous basis and make adjustments to take advantage of current or expected market conditions or to manage risk.

The overall allocation breakdown between equities and fixed income remains about the same in Scudder Pathway Conservative Portfolio and Scudder Pathway Moderate Portfolio - about 40/60 and 60/40, respectively. The biggest change occurred in Scudder Pathway Growth Portfolio, in which we reduced the strategic asset allocation in equities to 75% from 85% and, conversely, increased the allocation to fixed income to 25% from 15%. That was done in order to space the funds more evenly across time horizons (the times when an investor would ideally exchange money from one Scudder Pathway Portfolio to another). Whereas the time horizons are now spaced by approximately four years, previously we had a large time gap between Scudder Pathway Moderate Portfolio and Scudder Pathway Growth Portfolio.

Another big change was the switch from using the Lehman Brothers Aggregate Bond Index to using the Lehman Brothers Intermediate US Aggregate Bond Index in Scudder Pathway Conservative Portfolio's new strategic asset allocation.6 This was done to align duration of the fixed-income portion to the time horizon of this portfolio. The result of this change is that approximately half of the fixed-income assets are now allocated to short-term bond funds.

6 The Lehman Brothers Intermediate US Aggregate Bond Index covers the US investment-grade fixed-rate bond market, including government and credit securities, agency mortgage securities, asset-backed securities and commercial mortgage based securities. These major sectors are subdivided into more specific indices that are calculated and reported on a regular basis.

New strategic asset allocation (implemented on June 30, 2004)

Russell 1000

S&P 500

Russell 2000

MSCI EAFE

Lehman Brothers Intermediate US Aggregate Bond

Lehman Brothers Aggregate Bond

CSFB HY Index

3 Month T-Bill

Pathway Conservative:
Old
0%
37%
0%
3%
0%
50%
0%
10%
New

34%

0%

4%

5%

49%

0%

3%

5%

Pathway Moderate:
Old
0%
50%
3%
7%
0%
35%
0%
5%
New

49%

0%

5%

6%

0%

33%

2%

5%

Pathway Growth:
Old
0%
68%
5%
12%
0%
15%
0%
0%
New

60%

0%

6%

9%

0%

19%

1%

5%


In addition, we made the following changes based on the new model:

Added high-yield bonds via Scudder High Income Plus Fund to all three portfolios.

Increased small-cap allocations in Scudder Pathway Moderate Portfolio and Scudder Pathway Growth Portfolio.

Introduced small-cap equities for the first time to Scudder Pathway Conservative Portfolio.

Increased the allocation to international equities in Scudder Pathway Conservative Portfolio.

Reduced international equities in Scudder Pathway Moderate Portfolio and Scudder Pathway Growth Portfolio to be more in line with the peer group of each.

Set the strategic asset allocations in cash to 5% in all three portfolios.

Changed the fund's equity benchmark, the index that represents the large-cap portion of the strategic asset allocation model from the S&P 500 index to the Russell 1000 Index, so that mid-cap stocks are better represented in the portfolios.

We also made several changes to the policy and process. For example, we increased the allowable ranges for equities and fixed-income allocations.

Allocation to Equity Funds

Allocation to Fixed Income Funds

Scudder Pathway Conservative Portfolio

Old 30%-50%

New 25%-55%

Old 50%-70%

New 45%-75%

Scudder Pathway Moderate Portfolio

Old 50%-70%

New 45%-75%

Old 30%-50%

New 25%-55%

Scudder Pathway Growth Portfolio

Old 75%-95%

New 60%-90%

Old 5%-25%

New 10%-40%


In addition, we adjusted other constraints at the asset-class level, such as the range of small-cap equities and international equities.

At the fund level, we reviewed all Scudder funds for potential inclusion in Scudder Pathway Series fund lineup. In addition to holdings-based analysis, we ran our proprietary optimization program, called Portfolio Choice. Portfolio Choice looks at the volatility and correlations of the underlying funds to make sure that in 20,000 run simulations we have a good understanding of the different ways that these funds can blend to optimize the possibility of beating a benchmark while lowering the probability of underperforming. In the end, we excluded funds for which the recommended asset allocation was less than 50 basis points. As a result of this review, we added 10 new funds to the lineup. Four of those made it to the actual allocations:

Scudder Blue Chip Fund

Scudder-RREEF Real Estate Securities Fund

Scudder Micro Cap Fund

Scudder Japanese Equity Fund

We adjust the allocations of funds once a month, but those four are the only funds that made the annual list and currently have allocations. However, once a year we will review all eligible funds for potential inclusion in the Scudder Pathway Series lineup.

Q: Describe what components you use to manage and measure performance.

A: We apply the same proprietary methodology to Scudder Pathway Portfolios that we use for our institutional clients. Our strategy for managing the fund of funds portfolios and evaluating how they perform consists of two components: strategic asset allocation, tactical asset allocation and allocation to the underlying funds. To derive strategic asset allocation, we use a proprietary methodology that consists of the following steps: First, we assume that the market is efficient and that global market allocations to major asset classes are close to optimal. Next, we use several medium-term signals to adjust the allocations. We use signals that are likely to drive performance over the next several years, such as reversion to mean, the slope of the yield curve and currency rates.7

7 Mean reversion is a strategy that involves purchasing an underperforming stock or another type of security and holding the position until the market rebounds; it is based on the mathematical premise that all prices will eventually move back toward the mean, or average, return. Thus, if a stock is underperforming, its price will move toward its average value when the market rebounds. A yield curve shows the relationship between yields and maturity dates for a set of similar bonds, usually Treasuries, at a given point in time. The currency exchange rate represents the rate at which one currency may be converted into another. It is also called rate of exchange or foreign exchange rate.

Tactical asset allocation is determined by our Integrated Global Alpha Platform (iGAP). The iGAP platform collects investment ideas generated by a variety of fundamental and quantitative teams located around the world. It processes these ideas through a specially designed investment and portfolio engineering infrastructure, and turns them into model portfolios that take into account volatility, return objectives and portfolio constraints.

Q: How did the underlying funds perform over the 12-month period?

A: Underperformance was solely due to the impact of the underlying funds. This negative impact was felt in all three portfolios. The impact of tactical asset allocation was positive for all three funds. The performance under discussion is relative to the funds' old equity and bond indices. Because the equity funds were measured against the S&P 500 index and the bond funds were measured against the Lehman Brothers Aggregate Bond Index for 10 of the 12 months, we will refer to those indices in addition to the new large-cap equity and bond indices.

Scudder Fixed Income Fund provided a positive contribution. More important, the fund, which was the largest fixed-income holding over the past 12 months, outperformed the Lehman Brothers Aggregate Bond Index and the Lehman Brothers Intermediate US Aggregate Bond Index. Equity funds, on the other hand, detracted from performance, from a relative standpoint. Specifically, large-cap equities, such as those held in Scudder Large Company Growth Fund, underperformed the S&P 500 index and the Russell 1000 Index. There existed a performance divergence between growth and value in the last 12 months. The Russell 1000 Growth Index returned 14% less than the Russell 1000 Value Index. Similarly, all Scudder growth funds underperformed the S&P 500 index, while all the underlying Scudder value funds outperformed the S&P 500 index. However, the growth funds' underperformance outweighed the stronger performance of the value funds, so the overall contribution of the underlying equity funds was negative.

In the small-cap area, we see the same divergence. The Russell 2000 Growth Index lagged behind the Russell 2000 Value Index by 16%. So, the returns of the underlying small-cap growth funds were negative, while small-cap value funds contributed positively. For all three portfolios, the effect was slightly negative. International equity funds experienced the most weakness. Our three largest international holdings - Scudder International Equity Fund, Scudder International Select Equity Fund and Scudder International Fund - underperformed the MSCI EAFE® index.

Q: Any final thoughts for investors?

A: Let's talk about performance. Until a year and a half ago, the Pathway portfolios were managed similarly to the market and, as a result, much of our performance was in the second and third quartiles in terms of Lipper rankings. We also didn't have the breadth of funds that we have today. In the last year, we've worked diligently to add a greater range of funds. The three- and five-year numbers are returns that we're not necessarily proud of, but they are similar to what the market delivered. But in the last year, after we received board approval to include additional funds, we've seen improved performance from a risk-and-reward standpoint. It's our belief that we will continue to move in a positive direction thanks to our more diversified fund lineup. Of course, past performance is no guarantee of future results.

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.


Portfolio Highlights


Pathway Conservative Portfolio

Scudder Pathway Conservative Portfolio seeks current income and, secondarily, long-term growth of capital by investing substantially in fixed-income mutual funds, with a more moderate exposure to equity funds.

Performance

Scudder Pathway Conservative Portfolio provided a total return of 7.61% (Class A shares unadjusted for sales charges) for the 12-month period ended August 31, 2004. The portfolio underperformed the 9.28% average total return of its peers in the Lipper Income Funds category.9

9 Source: Lipper Inc. The Lipper Income Funds category comprises funds that normally seek a high level of current income through investing in income-producing stocks, bonds and money market instruments. It is not possible to invest directly in a Lipper category.

Performance was negatively affected by the returns of the underlying funds. Adept asset allocation, however, added value to absolute performance. More detailed performance information is provided in the Performance Summary section. Past performance is no guarantee of future results. (Please see pages 3 through 8 for a summary of the performance of other share classes.)

Portfolio Strategy

We overweighted equities every month of this period, which contributed positively because equities outperformed fixed income by more than 5%. Within fixed income, we underweighted cash and overweighted bonds. This, too, contributed positively because bonds outperformed cash by more than 5%. Within equities, we overweighted both domestic and international equities. The overweight in international equities especially helped because international equities were the best-performing asset class over the last 12 months. On balance, there wasn't much difference in performance between large caps and small caps - they both rose about 11%. Fund allocations were stable for the first 10 months and then changed significantly at the end of June when we retooled the strategic asset allocations. So, the changes over the last two months were as follows: We sold approximately half of our allocation in Scudder Fixed Income Fund. We invested the proceeds in short-term bond funds, which was consistent with the change in the strategic asset allocation. We also bought Scudder High Income Plus Fund to fulfill the new strategic asset allocation mandate of having some assets in high-yield bonds.

In equities, we sold about one-third of our holdings in Scudder Equity 500 Index Fund due to the new constraint that specifies that no more than 40% of equities can be allocated to any one equity fund. Simultaneously, we bought several new equity funds. In the large-cap area, we bought Scudder Blue Chip Fund and Scudder RREEF Real Estate Securities Fund. In addition, we added small-cap funds to Scudder Pathway Conservative Portfolio for the first time. Before late June, the portfolio had no allocation in small caps. In the international equity area, we added Scudder Japanese Equity Fund and Scudder Greater Europe Growth Fund.

Pathway Moderate Portfolio

Scudder Pathway Moderate Portfolio seeks a balance of current income and growth of capital by investing in a mix of money market, bond and equity mutual funds.

Performance

Scudder Pathway Moderate Portfolio provided a total return of 9.34% (Class A shares unadjusted for sales charges) for the 12 months ended August 31, 2004. The portfolio outpaced the 8.10% average return of its peers in the Lipper Balanced Funds category.10 The dominant factors affecting performance were the results of the underlying actively managed funds, which detracted from performance relative to the category, and adept asset allocation, which provided value and contributed positively to absolute returns. More detailed performance information is provided in the Performance Summary section. Past performance is no guarantee of future results. (Please see pages 9 through 14 for a summary of the performance of other share classes.)

10 Source: Lipper Inc. The Lipper Balanced Funds category comprises funds whose primary objective is to conserve principal by maintaining at all times a balance of both stocks and bonds. Typically, the stock/bond ratio is approximately 60%/40%. It is not possible to invest directly in a Lipper category.

Portfolio Strategy

In terms of tactical moves, we overweighted equities and bonds while underweighting cash. The positive impact of tactical asset allocation was larger in Scudder Pathway Moderate Portfolio due to the size of its positions. In terms of fund allocations, we moved a fairly small portion of fixed-income assets out of Scudder Fixed Income Fund and into Scudder High Income Plus Fund. Small caps were previously held in Scudder Pathway Moderate Portfolio. However, we increased the small-cap weighting by adding Scudder Micro Cap Fund, which is one of the newly available funds. Unfortunately, Scudder Micro Cap Fund underperformed in August.

Pathway Growth Portfolio

Scudder Pathway Growth Portfolio seeks long-term growth of capital by investing primarily in equity mutual funds. The portfolio also invests a portion of assets in fixed-income funds, which offer the potential for capital appreciation as well as income.

Performance

Scudder Pathway Growth Portfolio provided a total return of 11.19% (Class A shares unadjusted for sales charges) for the 12 months ended August 31, 2004. The portfolio strongly outperformed the 9.27% average return of its peers in the Lipper Multi-Cap Core Funds category.11 Whereas the actively managed underlying funds detracted from performance relative to the category, we were able to offset this negative factor through asset allocation. Notably, an overweight in international equities, which made great strides during the period, contributed significantly to portfolio performance. More detailed performance information is available in the Performance Summary section. Past performance is no guarantee of future results. (Please see pages 15 through 20 for a summary of the performance of other share classes.)

11 Source: Lipper Inc. The Lipper Multi-Cap Core Funds category comprises funds that, by portfolio practice, invest in a variety of market capitalization ranges, without concentrating 75% of their equity assets in any one market capitalization range over an extended period. Multi-cap funds will generally have 25% to 75% of their assets invested in companies with market capitalizations (on a three-year weighted basis) above 300% of the dollar-weighted median market capitalization of the S&P MidCap 400 Index. Multi-Cap Core Funds have wide latitude in the companies in which they invest. These funds normally compare their average price-to-earnings ratios, price-to-book ratios and three-year earnings growth figures with the US diversified multi-cap equity funds universe average.

Portfolio Strategy

In this portfolio, we overweighted equities, particularly international equities. Before June 30, 2004, we kept just enough cash on hand for liquidity purposes. Over the last two months, we raised the portfolio's cash position from 0.50% to 0.75%. Even so, we were significantly underweight in cash, as the new strategic asset allocation model now includes 5% cash, versus none previously. Due to the portfolio's smaller fixed-income weighting, the effect of bonds outperforming cash was of less concern for Scudder Pathway Growth Portfolio. In terms of underlying funds, we added Scudder Blue Chip Fund, Scudder Micro Cap Fund, Scudder Greater Europe Growth Fund and Scudder High Income Plus Fund to this portfolio. The timing of the allocation changes for Scudder Pathway Growth Portfolio was opportune. As mentioned, we reduced the equity allocation by 10% on June 30, and this occurred just before equities started underperforming bonds in July and August. So, that helped in terms of the portfolio's performance against its Lipper peers.

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.


Portfolio Summaries August 31, 2004


Pathway Conservative Portfolio

Asset Allocation

8/31/04

8/31/03



Money Market
2%
6%
Fixed Income
54%
52%
Equity
44%
42%

100%
100%

Asset Class Ranges

8/31/04

8/31/03


Fixed Income Funds
45-75%
50-70%
Equity Funds
25-55%
30-50%

Asset allocation is subject to change.

For more complete details about the portfolio's investments, see page 45. A quarterly Fact Sheet is available upon request. Information concerning portfolio holdings of the Portfolio 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.

Pathway Moderate Portfolio

Asset Allocation

8/31/04

8/31/03



Money Market
1%
1%
Fixed Income
37%
37%
Equity
62%
62%

100%
100%

Asset Class Ranges

8/31/04

8/31/03




Fixed Income Funds
25-55%
30-50%
Equity Funds
45-75%
50-70%

Asset allocation is subject to change.

For more complete details about the portfolio's investments, see page 47. A quarterly Fact Sheet is available upon request. Information concerning portfolio holdings of the Portfolio 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.



Pathway Growth Portfolio

Asset Allocation

8/31/04

8/31/03



Money Market
2%
1%
Fixed Income
21%
12%
Equity
77%
87%

100%
100%

Asset Class Ranges

8/31/04

8/31/03



Fixed Income Funds
10-40%
5-25%
Equity Funds
60-90%
75-95%

Asset allocation is subject to change.

For more complete details about the portfolio's investments, see page 49. A quarterly Fact Sheet is available upon request. Information concerning portfolio holdings of the Portfolio 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.

Following the Fund's fiscal first and third quarter-end, a complete portfolio holdings listing is filed with the SEC on Form N-Q. This form will be available on the SEC's Web site at www.sec.gov, and it also may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the SEC's Public Reference Room may be obtained by calling (800) SEC-0330.


Investment Portfolio August 31, 2004


Pathway Conservative Portfolio


Shares

Value ($)



Equity 44.2%

Scudder Blue Chip Fund "Institutional"
370,281
6,346,617
Scudder Capital Growth Fund "Institutional"
21,283
853,024
Scudder Equity 500 Index Fund "Institutional"
153,860
19,333,996
Scudder Greater Europe Growth Fund "S"
81,751
1,877,813
Scudder Growth and Income Fund "Institutional"
282,178
5,646,382
Scudder International Fund "Institutional"
41,866
1,590,904
Scudder International Select Equity Fund "Institutional"
141,568
2,396,752
Scudder Japanese Equity Fund "S"
47,550
470,741
Scudder Large Cap Value Fund "Institutional"
55,129
1,165,968
Scudder Large Company Growth Fund "Institutional"
101,661
2,205,037
Scudder Large Company Value Fund "Institutional"
69,570
1,659,950
Scudder Micro Cap Fund "Institutional"
24,659
483,312
Scudder RREEF Real Estate Securities Fund "Institutional"
18,965
360,525
Scudder Small Cap Growth Fund "Investment"
28,715
584,349
Scudder Small Company Stock Fund "S"
94,174
2,243,214
Scudder Small Company Value Fund "S"
45,285
1,195,069
Scudder-Dreman High Return Equity Fund "I"
30,117
1,171,567
Total Equity (Cost $45,820,268)

49,585,220


Fixed Income 53.7%

Scudder Fixed Income Fund "Institutional"
2,430,212
26,780,934
Scudder GNMA Fund "S"
992,209
15,041,894
Scudder High Income Opportunity Fund "S"
5,491
50,459
Scudder High Income Plus Fund "Institutional"
440,982
3,333,824
Scudder Income Fund "Institutional"
658,908
8,526,266
Scudder Short Duration Fund "Institutional"
210,402
2,120,851
Scudder Short Term Bond Fund "S"
413,979
4,297,098
Total Fixed Income (Cost $59,481,228)

60,151,326


Money Market 2.1%

Scudder Cash Investment Trust "S"
2,313,029
2,313,029
Scudder Money Market Series "Institutional"
58,630
58,630
Total Money Market (Cost $2,371,659)

2,371,659

Total Investment Portfolio - 100.0% (Cost $107,673,155) (a)

112,108,205


(a) The cost for federal income tax purposes was $109,544,460. At August 31, 2004, net unrealized appreciation for all securities based on tax cost was $2,563,745. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $4,329,267 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $1,765,522.
During the year ended August 31, 2004, purchases and sales of investment securities (excluding money market investments) aggregated $65,341,561 and $57,343,294, respectively.

The accompanying notes are an integral part of the financial statements.


Investment Portfolio August 31, 2004


Pathway Moderate Portfolio


Shares

Value ($)



Equity 61.7%

Scudder 21st Century Growth Fund "Institutional"
70,971
858,040
Scudder Blue Chip Fund "Institutional"
924,793
15,850,953
Scudder Capital Growth Fund "Institutional"
7,178
287,694
Scudder Emerging Markets Growth Fund "S"
78
1,136
Scudder Equity 500 Index Fund "Institutional"
399,953
50,258,081
Scudder Greater Europe Growth Fund "S"
175,670
4,035,145
Scudder Growth and Income Fund "Institutional"
783,727
15,682,369
Scudder International Equity Fund "Institutional"
115,565
1,129,074
Scudder International Fund "Institutional"
34,877
1,325,344
Scudder International Select Equity Fund "Institutional"
363,342
6,151,382
Scudder Japanese Equity Fund "S"
105,967
1,049,072
Scudder Large Cap Value Fund "Institutional"
154,736
3,272,665
Scudder Large Company Growth Fund "Institutional"
346,681
7,519,512
Scudder Large Company Value Fund "Institutional"
228,035
5,440,925
Scudder Micro Cap Fund "Institutional"
41,807
819,423
Scudder RREEF Real Estate Securities Fund "Institutional"
68,767
1,307,258
Scudder Select 500 Fund "S"
183,411
2,004,677
Scudder Small Cap Growth Fund "Investment"
33,281
677,266
Scudder Small Company Stock Fund "S"
227,655
5,422,748
Scudder Small Company Value Fund "S"
85,214
2,248,794
Scudder-Dreman High Return Equity Fund "I"
73,843
2,872,503
Scudder-Dreman Small Cap Value Fund "I"
18,420
540,244
Total Equity (Cost $119,489,156)

128,754,305


Fixed Income 37.0%

Scudder Fixed Income Fund "Institutional"
6,594,131
72,667,324
Scudder GNMA Fund "S"
6,770
102,633
Scudder High Income Opportunity Fund "S"
11,541
106,063
Scudder High Income Plus Fund "Institutional"
542,452
4,100,940
Scudder Income Fund "Institutional"
8,491
109,870
Scudder Short Term Bond Fund "S"
10,261
106,514
Total Fixed Income (Cost $76,493,414)

77,193,344


Money Market 1.3%

Scudder Cash Investment Trust "S"
2,721,080
2,721,080
Scudder Money Market Series "Institutional"
104,416
104,416
Total Money Market (Cost $2,825,496)

2,825,496

Total Investment Portfolio - 100.0% (Cost $198,808,066) (a)

208,773,145


(a) The cost for federal income tax purposes was $202,137,399. At August 31, 2004, net unrealized appreciation for all securities based on tax cost was $6,635,746. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $10,464,587 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $3,828,841.
During the year ended August 31, 2004, purchases and sales of investment securities (excluding money market investments) aggregated $76,081,390 and $79,232,884, respectively.

The accompanying notes are an integral part of the financial statements.


Investment Portfolio August 31, 2004


Pathway Growth Portfolio


Shares

Value ($)



Equity 77.3%

Scudder 21st Century Growth Fund "Institutional"
125,149
1,513,054
Scudder Blue Chip Fund "Institutional"
1,080,002
18,511,234
Scudder Capital Growth Fund "Institutional"
2,407
96,463
Scudder Emerging Markets Growth Fund "S"
36,197
529,927
Scudder Equity 500 Index Fund "Institutional"
505,485
63,519,205
Scudder Global Fund "S"
346
7,887
Scudder Greater Europe Growth Fund "S"
57,264
1,315,360
Scudder Growth and Income Fund "Institutional"
899,346
17,995,906
Scudder International Equity Fund "Institutional"
415,851
4,062,862
Scudder International Fund "Institutional"
123,607
4,697,078
Scudder International Select Equity Fund "Institutional"
528,328
8,944,592
Scudder Japanese Equity Fund "S"
51,150
506,381
Scudder Large Cap Value Fund "Institutional"
144,356
3,053,121
Scudder Large Company Growth Fund "Institutional"
450,867
9,779,306
Scudder Large Company Value Fund "Institutional"
396,563
9,461,987
Scudder Micro Cap Fund "Institutional"
42,860
840,060
Scudder RREEF Real Estate Securities Fund "Institutional"
90,995
1,729,818
Scudder Small Cap Growth Fund "Investment"
35,153
715,369
Scudder Small Company Stock Fund "S"
235,844
5,617,796
Scudder Small Company Value Fund "S"
103,570
2,733,200
Scudder-Dreman High Return Equity Fund "I"
76,330
2,969,239
Scudder-Dreman Small Cap Value Fund "I"
37,567
1,101,854
Total Equity (Cost $145,238,877)

159,701,699


Fixed Income 21.3%

Scudder Emerging Markets Income Fund "S"
1,428
14,348
Scudder Fixed Income Fund "Institutional"
3,799,477
41,870,237
Scudder GNMA Fund "S"
1,918
29,070
Scudder High Income Opportunity Fund "S"
4,847
44,548
Scudder High Income Plus Fund "Institutional"
267,107
2,019,331
Scudder Income Fund "Institutional"
3,470
44,901
Total Fixed Income (Cost $43,472,247)

44,022,435


Money Market 1.4%

Scudder Cash Investment Trust "S"
2,754,042
2,754,042
Scudder Money Market Series "Institutional"
101,769
101,769
Total Money Market (Cost $2,855,811)

2,855,811

Total Investment Portfolio - 100.0% (Cost $191,566,935) (a)

206,579,945


(a) The cost for federal income tax purposes was $196,276,159. At August 31, 2004, net unrealized appreciation for all securities based on tax cost was $10,303,786. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $14,413,138 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $4,109,352.
During the year ended August 31, 2004, purchases and sales of investment securities (excluding money market investments) aggregated $84,961,427 and $84,104,785, respectively.

The accompanying notes are an integral part of the financial statements.


Financial Statements


Statements of Assets and Liabilities as of August 31, 2004

Assets

Pathway Conservative Portfolio

Pathway Moderate Portfolio

Pathway Growth Portfolio

Investments in securities, at value (cost $107,673,155, $198,808,066 and $191,566,935, respectively)
$ 112,108,205 $ 208,773,145 $ 206,579,945
Interest receivable
17,901 43,475 25,579
Receivable for Portfolio shares sold
468,580 736,293 1,396,113
Total assets
112,594,686 209,552,913 208,001,637
Liabilities
Payable for Portfolio shares redeemed
222,704 253,614 165,978
Other accrued expenses and payables
114,349 196,566 198,777
Total liabilities
337,053 450,180 364,755
Net assets, at value

$ 112,257,633

$ 209,102,733

$ 207,636,882

Net Assets
Net assets consist of:
Undistributed net investment income
383,832 1,438,644 2,726,472
Net unrealized appreciation (depreciation) on investments
4,435,050 9,965,079 15,013,010
Accumulated net realized gain (loss)
(17,779,936) (59,103,629) (63,623,226)
Paid-in capital
125,218,687 256,802,639 253,520,626
Net assets, at value

$ 112,257,633

$ 209,102,733

$ 207,636,882


The accompanying notes are an integral part of the financial statements.

Statements of Assets and Liabilities as of August 31, 2004 (continued)

Net Asset Value

Pathway Conservative Portfolio

Pathway Moderate Portfolio

Pathway Growth Portfolio

Class A
Net assets applicable to shares outstanding
$ 16,518,626 $ 55,901,682 $ 38,658,859
Shares outstanding of beneficial interest, $.01 par value, unlimited number of shares authorized
1,479,447 5,258,332 3,183,465
Net Asset Value and redemption price per share

$ 11.17

$ 10.63

$ 12.14

Maximum offering price per share (100 / 94.25 of net asset value)

$ 11.85

$ 11.28

$ 12.88

Class B
Net assets applicable to shares outstanding
$ 5,662,364 $ 13,002,881 $ 14,124,826
Shares outstanding of beneficial interest, $.01 par value, unlimited number of shares authorized
507,021 1,222,991 1,175,115
Net Asset Value, offering and redemption price (subject to contingent deferred sales charge) per share

$ 11.17

$ 10.63

$ 12.02

Class C
Net assets applicable to shares outstanding
$ 3,539,144 $ 8,865,263 $ 9,060,718
Shares outstanding of beneficial interest, $.01 par value, unlimited number of shares authorized
316,987 834,468 753,622
Net Asset Value and redemption price (subject to contingent deferred sales charge) per share

$ 11.16

$ 10.62

$ 12.02

Class AARP
Net assets applicable to shares outstanding
$ 43,815,611 $ 7,759,201 $ 61,833,073
Shares outstanding of beneficial interest, $.01 par value, unlimited number of shares authorized
3,923,520 730,680 5,081,195
Net Asset Value, offering and redemption price per share

$ 11.17

$ 10.62

$ 12.17

Class S
Net assets applicable to shares outstanding
$ 42,721,888 $ 123,573,706 $ 83,959,406
Shares outstanding of beneficial interest, $.01 par value, unlimited number of shares authorized
3,825,500 11,633,882 6,896,995
Net Asset Value, offering and redemption price per share

$ 11.17

$ 10.62

$ 12.17


The accompanying notes are an integral part of the financial statements.



Statements of Operations for the year ended August 31, 2004

Investment Income

Pathway Conservative Portfolio

Pathway Moderate Portfolio

Pathway Growth Portfolio

Income:
Income distributions from Underlying Funds
$ 3,227,153 $ 5,174,836 $ 3,558,137
Total income
3,227,153 5,174,836 3,558,137
Expenses:
Distribution service fees
105,331 276,759 252,949
Services to shareholders
141,719 401,035 350,994
Custodian and accounting fees
29,835 46,253 44,370
Auditing
13,770 13,819 13,770
Legal
306 306 306
Trustees' fees and expenses
3,060 3,149 3,971
Reports to shareholders
14,229 17,814 32,037
Registration fee
23,562 24,307 23,103
Other
1,116 1,150 1,402
Total expenses, before expense reductions
332,928 784,592 722,902
Expense reductions
(85,582) (241,476) (213,603)
Total expenses, after expense reductions
247,346 543,116 509,299
Net investment income

2,979,807

4,631,720

3,048,838

Realized and Unrealized Gain (Loss) on Investment Transactions
Net realized gain (loss) from investments
2,582,553 10,036,733 12,314,317
Capital gain distributions from Underlying Funds
405,124 632,816 297,407

2,987,677

10,669,549

12,611,724

Net unrealized appreciation (depreciation) during the period on investments
2,040,288 3,256,878 5,271,348
Net gain (loss) on investment transactions

5,027,965

13,926,427

17,883,072

Net increase (decrease) in net assets resulting from operations

$ 8,007,772

$ 18,558,147

$ 20,931,910


The accompanying notes are an integral part of the financial statements.



Statement of Changes in Net Assets - Pathway Conservative Portfolio

Increase (Decrease) in Net Assets

Years Ended August 31,

2004

2003

Operations:
Net investment income
$ 2,979,807 $ 2,917,150
Net realized gain (loss) on investment transactions
2,987,677 (10,471,478)
Net unrealized appreciation (depreciation) on investment transactions during the period
2,040,288 14,310,323
Net increase (decrease) in net assets resulting from operations
8,007,772 6,755,995
Distributions to shareholders from:
Net investment income:
Class A
(410,367) (314,295)
Class B
(97,243) (59,006)
Class C
(57,486) (34,544)
Class AARP
(1,434,638) (1,378,996)
Class S
(1,369,600) (1,244,361)
Portfolio share transactions:
Proceeds from shares sold
34,442,801 26,288,978
Reinvestment of distributions
3,107,222 2,773,927
Cost of shares redeemed
(33,298,879) (29,385,951)
Net increase (decrease) in net assets from Portfolio share transactions
4,251,144 (323,046)
Increase (decrease) in net assets
8,889,582 3,401,747
Net assets at beginning of period
103,368,051 99,966,304
Net assets at end of period (including undistributed net investment income of $383,832 and $368,235, respectively)

$ 112,257,633

$ 103,368,051


The accompanying notes are an integral part of the financial statements.



Statement of Changes in Net Assets - Pathway Moderate Portfolio

Increase (Decrease) in Net Assets

Years Ended August 31,

2004

2003

Operations:
Net investment income
$ 4,631,720 $ 4,766,039
Net realized gain (loss) on investment transactions
10,669,549 (29,472,751)
Net unrealized appreciation (depreciation) on investment transactions during the period
3,256,878 39,663,758
Net increase (decrease) in net assets resulting from operations
18,558,147 14,957,046
Distributions to shareholders from:
Net investment income:
Class A
(867,682) (645,688)
Class B
(120,263) (134,629)
Class C
(75,716) (52,160)
Class AARP
(119,011) (85,176)
Class S
(3,018,025) (4,139,132)
Portfolio share transactions:
Proceeds from shares sold
91,295,199 51,684,760
Reinvestment of distributions
4,168,102 5,030,296
Cost of shares redeemed
(98,017,953) (81,019,686)
Net increase (decrease) in net assets from Portfolio share transactions
(2,554,652) (24,304,630)
Increase (decrease) in net assets
11,802,798 (14,404,369)
Net assets at beginning of period
197,299,935 211,704,304
Net assets at end of period (including undistributed net investment income of $1,438,644 and $409,263, respectively)

$ 209,102,733

$ 197,299,935


The accompanying notes are an integral part of the financial statements.



Statement of Changes in Net Assets - Pathway Growth Portfolio

Increase (Decrease) in Net Assets

Years Ended August 31,

2004

2003

Operations:
Net investment income
$ 3,048,838 $ 2,856,927
Net realized gain (loss) on investment transactions
12,611,724 (49,081,998)
Net unrealized appreciation (depreciation) on investment transactions during the period
5,271,348 62,671,718
Net increase (decrease) in net assets resulting from operations
20,931,910 16,446,647
Distributions to shareholders from:
Net investment income:
Class A
(430,523) (250,135)
Class B
(87,041) (50,152)
Class C
(34,525) (18,148)
Class AARP
(1,067,776) (914,847)
Class S
(1,534,528) (1,377,450)
Portfolio share transactions:
Proceeds from shares sold
60,835,637 37,275,279
Reinvestment of distributions
3,102,359 2,570,909
Cost of shares redeemed
(60,823,541) (51,166,843)
Net increase (decrease) in net assets from Portfolio share transactions
3,114,455 (11,320,655)
Increase (decrease) in net assets
20,891,972 2,515,260
Net assets at beginning of period
186,744,910 184,229,650
Net assets at end of period (including undistributed net investment income of $2,726,472 and $2,591,882, respectively)

$ 207,636,882

$ 186,744,910



The accompanying notes are an integral part of the financial statements.


Financial Highlights


Pathway Conservative Portfolio - Class A

Years Ended August 31,

2004

2003

2002

2001a

Selected Per Share Data
Net asset value, beginning of period

$ 10.69

$ 10.30

$ 11.31

$ 11.93

Income (loss) from investment operations:
Net investment incomeb
.29 .29 .36 .27
Net realized and unrealized gain (loss) on investment transactions
.52 .40 (.99) (.69)

Total from investment operations

.81 .69 (.63) (.42)
Less distributions from:
Net investment income
(.33) (.30) (.38) (.20)
Net asset value, end of period

$ 11.17

$ 10.69

$ 10.30

$ 11.31

Total Return (%)c
7.61d,e 6.85e (5.73) (3.51)**
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)
17 11 10 8
Ratio of expenses before expense reductions (%)
.57g .23f .23f .25f*
Ratio of expenses after expense reductions (%)
.39g .23f .23f .25f*
Ratio of net investment income (%)
2.58 2.77 3.32 3.43*
Portfolio turnover rate (%)
56 104 36 40
a For the period from December 29, 2000 (commencement of sales of Class A shares) to August 31, 2001.
b Based on average shares outstanding during the period.
c Total return does not reflect the effect of any sales charge.
d Total return would have been lower had certain expenses not been reduced.
e Total return would have been lower if the Advisor had not maintained some Underlying Funds' expenses.
f The Portfolio invests in other Scudder Funds and although this class did not incur any fees or expenses other than distribution/service fees for the period, the Portfolio did bear its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.
g Effective April 1, 2004, the Portfolio implemented a new expense structure in which the Portfolio directly bears the fees and expenses of the Portfolio in addition to its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.
* Annualized
** Not annualized

Pathway Conservative Portfolio - Class B

Years Ended August 31,

2004

2003

2002

2001a

Selected Per Share Data
Net asset value, beginning of period

$ 10.70

$ 10.31

$ 11.31

$ 11.93

Income (loss) from investment operations:
Net investment incomeb
.20 .21 .28 .23
Net realized and unrealized gain (loss) on investment transactions
.51 .40 (.99) (.69)

Total from investment operations

.71 .61 (.71) (.46)
Less distributions from:
Net investment income
(.24) (.22) (.29) (.16)
Net asset value, end of period

$ 11.17

$ 10.70

$ 10.31

$ 11.31

Total Return (%)c
6.69d,e 6.04e (6.36) (3.87)**
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)
6 4 2 2
Ratio of expenses before expense reductions (%)
1.26g .99f .95f 1.00f*
Ratio of expenses after expense reductions (%)
1.14g .99f .95f 1.00f*
Ratio of net investment income (%)
1.83 2.01 2.60 2.68*
Portfolio turnover rate (%)
56 104 36 40
a For the period from December 29, 2000 (commencement of sales of Class B shares) to August 31, 2001.
b Based on average shares outstanding during the period.
c Total return does not reflect the effect of any sales charge.
d Total return would have been lower had certain expenses not been reduced.
e Total return would have been lower if the Advisor had not maintained some Underlying Funds' expenses.
f The Portfolio invests in other Scudder Funds and although this class did not incur any fees or expenses other than distribution/service fees for the period, the Portfolio did bear its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.
g Effective April 1, 2004, the Portfolio implemented a new expense structure in which the Portfolio directly bears the fees and expenses of the Portfolio in addition to its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.
* Annualized
** Not annualized

Pathway Conservative Portfolio - Class C

Years Ended August 31,

2004

2003

2002

2001a

Selected Per Share Data
Net asset value, beginning of period

$ 10.69

$ 10.30

$ 11.31

$ 11.93

Income (loss) from investment operations:
Net investment incomeb
.20 .21 .27 .23
Net realized and unrealized gain (loss) on investment transactions
.51 .40 (.99) (.69)

Total from investment operations

.71 .61 (.72) (.46)
Less distributions from:
Net investment income
(.24) (.22) (.29) (.16)
Net asset value, end of period

$ 11.16

$ 10.69

$ 10.30

$ 11.31

Total Return (%)c
6.69d,e 6.04e (6.45) (3.87)**
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)
4 2 1 1
Ratio of expenses before expense reductions(%)
1.21g .99f .97f 1.00f*
Ratio of expenses after expense reductions(%)
1.14g .99f .97f 1.00f*
Ratio of net investment income (%)
1.82 2.01 2.58 2.68*
Portfolio turnover rate (%)
56 104 36 40
a For the period from December 29, 2000 (commencement of sales of Class C shares) to August 31, 2001.
b Based on average shares outstanding during the period.
c Total return does not reflect the effect of any sales charge.
d Total return would have been lower had certain expenses not been reduced.
e Total return would have been lower if the Advisor had not maintained some Underlying Funds' expenses.
f The Portfolio invests in other Scudder Funds and although this class did not incur any fees or expenses other than distribution/service fees for the period, the Portfolio did bear its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.
g Effective April 1, 2004, the Portfolio implemented a new expense structure in which the Portfolio directly bears the fees and expenses of the Portfolio in addition to its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.
* Annualized
** Not annualized

Pathway Conservative Portfolio - Class AARP

Years Ended August 31,

2004

2003

2002

2001a

Selected Per Share Data
Net asset value, beginning of period

$ 10.69

$ 10.30

$ 11.32

$ 12.16

Income (loss) from investment operations:
Net investment incomeb
.32 .31 .39 .44
Net realized and unrealized gain (loss) on investment transactions
.51 .40 (1.01) (.88)

Total from investment operations

.83 .71 (.62) (.44)
Less distributions from:
Net investment income
(.35) (.32) (.40) (.39)
Net realized gains on investment transactions
- - - (.01)

Total distributions

(.35) (.32) (.40) (.40)
Net asset value, end of period

$ 11.17

$10.69

$ 10.30

$ 11.32

Total Return (%)
7.86c,d 7.10d (5.57) (3.68)d**
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)
44 44 47 60
Ratio of expenses before expense reductions (%)
.15f -e -e -e
Ratio of expenses after expense reductions (%)
.13f -e -e -e
Ratio of net investment income (%)
2.83 3.00 3.55 3.95*
Portfolio turnover rate (%)
56 104 36 40
a For the period from September 25, 2000 (commencement of sales of Class AARP shares) to August 31, 2001.
b Based on average shares outstanding during the period.
c Total return would have been lower had certain expenses not been reduced.
d Total return would have been lower if the Advisor had not maintained some Underlying Funds' expenses.
e The Portfolio invests in other Scudder Funds, and although this class did not incur any direct expenses for the period, the Portfolio did bear its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.
f Effective April 1, 2004, the Portfolio implemented a new expense structure in which the Portfolio directly bears the fees and expenses of the Portfolio in addition to its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.
* Annualized
** Not annualized

Pathway Conservative Portfolio - Class S

Years Ended August 31,

2004

2003

2002

2001

2000

Selected Per Share Data
Net asset value, beginning of period

$ 10.69

$ 10.30

$ 11.32

$ 12.47

$ 12.45

Income (loss) from investment operations:
Net investment incomea
.32 .31 .39 .47 .65
Net realized and unrealized gain (loss) on investment transactions
.51 .40 (1.01) (1.03) .23

Total from investment operations

.83 .71 (.62) (.56) .88
Less distributions from:
Net investment income
(.35) (.32) (.40) (.58) (.65)
Net realized gains on investment transactions
- - - (.01) (.21)

Total distributions

(.35) (.32) (.40) (.59) (.86)
Net asset value, end of period

$ 11.17

$ 10.69

$ 10.30

$ 11.32

$ 12.47

Total Return (%)
7.86b,c 7.10c (5.57) (4.60)c 7.39c
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)
43 42 40 42 29
Ratio of expenses before expense reductions (%)
.23e -d -d -d -d
Ratio of expenses after expense reductions (%)
.13e -d -d -d -d
Ratio of net investment income (%)
2.84 3.00 3.55 3.98 5.30
Portfolio turnover rate (%)
56 104 36 40 26
a Based on average shares outstanding during the period.
b Total return would have been lower had certain expenses not been reduced.
c Total return would have been lower if the Advisor had not maintained some Underlying Funds' expenses.
d This Portfolio invests in other Scudder Funds, and although this class did not incur any direct expenses for the period, the Portfolio did bear its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.
e Effective April 1, 2004, the Portfolio implemented a new expense structure in which the Portfolio directly bears the fees and expenses of the Portfolio in addition to its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.

Pathway Moderate Portfolio - Class A

Years Ended August 31,

2004

2003

2002

2001a

Selected Per Share Data
Net asset value, beginning of period

$ 9.91

$ 9.38

$ 10.77

$ 12.04

Income (loss) from investment operations:
Net investment incomeb
.22 .21 .24 .17
Net realized and unrealized gain (loss) on investment transactions
.70 .55 (1.39) (1.31)

Total from investment operations

.92 .76 (1.15) (1.14)
Less distributions from:
Net investment income
(.20) (.23) (.24) (.13)
Net asset value, end of period

$ 10.63

$ 9.91

$ 9.38

$ 10.77

Total Return (%)c
9.34d,e 8.28e (10.83) (9.47)**
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)
56 35 23 15
Ratio of expenses before expense reductions (%)
.54g .23f .22f .25f*
Ratio of expenses after expense reductions (%)
.38g .23f .22f .25f*
Ratio of net investment income (%)
2.12 2.30 2.31 2.26*
Portfolio turnover rate (%)
37 101 57 58
a For the period from December 29, 2000 (commencement of sales of Class A shares) to August 31, 2001.
b Based on average shares outstanding during the period.
c Total return does not reflect the effect of any sales charge.
d Total return would have been lower had certain expenses not been reduced.
e Total return would have been lower if the Advisor had not maintained some underlying Funds' expenses.
f The Portfolio invests in other Scudder Funds and although this class did not incur any fees or expenses other than distribution/service fees for the period, the Portfolio did bear its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.
g Effective April 1, 2004, the Portfolio implemented a new expense structure in which the Portfolio directly bears the fees and expenses of the Portfolio in addition to its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.
* Annualized
** Not annualized

Pathway Moderate Portfolio - Class B

Years Ended August 31,

2004

2003

2002

2001a

Selected Per Share Data
Net asset value, beginning of period

$ 9.91

$ 9.38

$ 10.76

$ 12.04

Income (loss) from investment operations:
Net investment incomeb
.14 .14 .17 .13
Net realized and unrealized gain (loss) on investment transactions
.70 .55 (1.38) (1.32)

Total from investment operations

.84 .69 (1.21) (1.19)
Less distributions from:
Net investment income
(.12) (.16) (.17) (.09)
Net asset value, end of period

$ 10.63

$ 9.91

$ 9.38

$ 10.76

Total Return (%)c
8.49d,e 7.46e (11.42) (9.89)**
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)
13 9 8 8
Ratio of expenses before expense reductions (%)
1.21g 1.00f .90f,h 1.00f*
Ratio of expenses after expense reductions (%)
1.12g 1.00f .90f,h 1.00f*
Ratio of net investment income (%)
1.37 1.53 1.63 1.51*
Portfolio turnover rate (%)
37 101 57 58
a For the period from December 29, 2000 (commencement of sales of Class B shares) to August 31, 2001.
b Based on average shares outstanding during the period.
c Total return does not reflect the effect of any sales charge.
d Total return would have been lower had certain expenses not been reduced.
e Total return would have been lower if the Advisor had not maintained some Underlying Funds' expenses.
f The Portfolio invests in other Scudder Funds and although this class did not incur any fees or expenses other than distribution/service fees for the period, the Portfolio did bear its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.
g Effective April 1, 2004, the Portfolio implemented a new expense structure in which the Portfolio directly bears the fees and expenses of the Portfolio in addition to its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.
h The ratio of operating expenses includes a one-time reduction in certain liabilities of the Farmers Income with Growth Portfolio, the Farmers Balanced Portfolio and the Farmers Growth with Income Portfolio. The ratio without this reduction was .93%.
* Annualized
** Not annualized

Pathway Moderate Portfolio - Class C

Years Ended August 31,

2004

2003

2002

2001a

Selected Per Share Data
Net asset value, beginning of period

$ 9.90

$ 9.37

$ 10.76

$ 12.04

Income (loss) from investment operations:
Net investment incomeb
.14 .14 .16 .13
Net realized and unrealized gain (loss) on investment transactions
.70 .54 (1.38) (1.32)

Total from investment operations

.84 .68 (1.22) (1.19)
Less distributions from:
Net investment income
(.12) (.15) (.17) (.09)
Net asset value, end of period

$ 10.62

$ 9.90

$ 9.37

$ 10.76

Total Return (%)c
8.50d,e 7.44e (11.51) (9.89)**
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)
9 4 3 3
Ratio of expenses before expense reductions (%)
1.18g .99f 1.00f 1.00f*
Ratio of expenses after expense reductions (%)
1.13g .99f 1.00f 1.00f*
Ratio of net investment income (%)
1.36 1.54 1.53 1.51*
Portfolio turnover rate (%)
37 101 57 58
a For the period from December 29, 2000 (commencement of sales of Class C shares) to August 31, 2001.
b Based on average shares outstanding during the period.
c Total return does not reflect the effect of any sales charge.
d Total return would have been lower had certain expenses not been reduced.
e Total return would have been lower if the Advisor had not maintained some Underlying Funds' expenses.
f The Portfolio invests in other Scudder Funds and although this class did not incur any fees or expenses other than distribution/service fees for the period, the Portfolio did bear its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.
g Effective April 1, 2004, the Portfolio implemented a new expense structure in which the Portfolio directly bears the fees and expenses of the Portfolio in addition to its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.
* Annualized
** Not annualized

Pathway Moderate Portfolio - Class AARP

Years Ended August 31,

2004

2003

2002

2001a

Selected Per Share Data
Net asset value, beginning of period

$ 9.90

$ 9.37

$ 10.76

$ 13.80

Income (loss) from investment operations:
Net investment incomeb
.25 .24 .26 .29
Net realized and unrealized gain (loss) on investment transactions
.70 .54 (1.38) (1.84)

Total from investment operations

.95 .78 (1.12) (1.55)
Less distributions from:
Net investment income
(.23) (.25) (.27) (.31)
Net realized gains on investment transactions
- - - (1.18)

Total distributions

(.23) (.25) (.27) (1.49)
Net asset value, end of period

$ 10.62

$ 9.90

$ 9.37

$ 10.76

Total Return (%)
9.60c 8.54c (10.62) (12.19)c**
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)
8 4 3 4
Ratio of expenses (%)
.14e -d -d -d
Ratio of net investment income (%)
2.36 2.53 2.53 2.68*
Portfolio turnover rate (%)
37 101 57 58
a For the period from October 2, 2000 (commencement of sales of Class AARP shares) to August 31, 2001.
b Based on average shares outstanding during the period.
c Total return would have been lower if the Advisor had not maintained some Underlying Funds' expenses.
d This Portfolio invests in other Scudder Funds, and although this class did not incur any direct expenses for the period, the Portfolio did bear its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.
e Effective April 1, 2004, the Portfolio implemented a new expense structure in which the Portfolio directly bears the fees and expenses of the Portfolio in addition to its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.
* Annualized
** Not annualized

Pathway Moderate Portfolio - Class S

Years Ended August 31,

2004

2003

2002

2001

2000

Selected Per Share Data
Net asset value, beginning of period

$ 9.90

$ 9.38

$ 10.76

$ 14.30

$ 13.42

Income (loss) from investment operations:
Net investment incomea
.25 .24 .26 .33 .45
Net realized and unrealized gain (loss) on investment transactions
.70 .53 (1.37) (2.27) 1.60

Total from investment operations

.95 .77 (1.11) (1.94) 2.05
Less distributions from:
Net investment income
(.23) (.25) (.27) (.42) (.48)
Net realized gains on investment transactions
- - - (1.18) (.69)

Total distributions

(.23) (.25) (.27) (1.60) (1.17)
Net asset value, end of period

$ 10.62

$ 9.90

$ 9.38

$ 10.76

$ 14.30

Total Return (%)
9.70b,c 8.43c (10.52) (14.60)c 15.65c
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)
124 145 175 238 258
Ratio of expenses before expense reductions (%)
.23e -d -d -d -d
Ratio of expenses after expense reductions (%)
.12e -d -d -d -d
Ratio of net investment income (%)
2.37 2.53 2.53 2.75 3.23
Portfolio turnover rate (%)
37 101 57 58 28
a Based on average shares outstanding during the period.
b Total return would have been lower had certain expenses not been reduced.
c Total return would have been lower if the Advisor had not maintained some Underlying Funds' expenses.
d This Portfolio invests in other Scudder Funds, and although this class did not incur any direct expenses for the period, the Portfolio did bear its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.
e Effective April 1, 2004, the Portfolio implemented a new expense structure in which the Portfolio directly bears the fees and expenses of the Portfolio in addition to its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.

Pathway Growth Portfolio - Class A

Years Ended August 31,

2004

2003

2002

2001a

Selected Per Share Data
Net asset value, beginning of period

$ 11.08

$ 10.21

$ 12.61

$ 14.55

Income (loss) from investment operations:
Net investment incomeb
.17 .15 .12 .08
Net realized and unrealized gain (loss) on investment transactions
1.07 .85 (2.15) (2.02)

Total from investment operations

1.24 1.00 (2.03) (1.94)
Less distributions from:
Net investment income
(.18) (.13) (.10) -
Net realized gains on investment transactions
- - (.27) -

Total distributions

(.18) (.13) (.37) -
Net asset value, end of period

$ 12.14

$ 11.08

$ 10.21

$ 12.61

Total Return (%)c
11.19d,e 10.00e (16.61) (13.33)**
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)
39 24 18 18
Ratio of expenses before expense reductions (%)
.46g .22f .21f .25f*
Ratio of expenses after expense reductions (%)
.39g .22f .21f .25f*
Ratio of net investment income (%)
1.40 1.52 1.00 .81*
Portfolio turnover rate (%)
43 93 44 29
a For the period from December 29, 2000 (commencement of sales of Class A shares) to August 31, 2001.
b Based on average shares outstanding during the period.
c Total return does not reflect the effect of any sales charge.
d Total return would have been lower if the Advisor had not maintained some Underlying Funds' expenses.
e Total return would have been lower had certain expenses not been reduced.
f The Portfolio invests in other Scudder Funds and although this class did not incur any fees or expenses other than distribution/service fees for the period, the Portfolio did bear its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.
g Effective April 1, 2004, the Portfolio implemented a new expense structure in which the Portfolio directly bears the fees and expenses of the Portfolio in addition to its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.
* Annualized
** Not annualized

Pathway Growth Portfolio - Class B

Years Ended August 31,

2004

2003

2002

2001a

Selected Per Share Data
Net asset value, beginning of period

$ 10.97

$ 10.11

$ 12.55

$ 14.55

Income (loss) from investment operations:
Net investment incomeb
.08 .08 .03 .03
Net realized and unrealized gain (loss) on investment transactions
1.06 .84 (2.12) (2.03)

Total from investment operations

1.14 .92 (2.09) (2.00)
Less distributions from:
Net investment income
(.09) (.06) (.08) -
Net realized gains on investment transactions
- - (.27) -

Total distributions

(.09) (.06) (.35) -
Net asset value, end of period

$ 12.02

$ 10.97

$ 10.11

$ 12.55

Total Return (%)c
10.36d,e 9.17e (17.19) (13.75)**
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)
14 11 8 9
Ratio of expenses before expense reductions (%)
1.23g .97f .93f,h 1.00f*
Ratio of expenses after expense reductions (%)
1.13g .97f .93f,h 1.00f*
Ratio of net investment income (%)
.66 .77 .28 .06*
Portfolio turnover rate (%)
43 93 44 29
a For the period from December 29, 2000 (commencement of sales of Class B shares) to August 31, 2001.
b Based on average shares outstanding during the period.
c Total return does not reflect the effect of any sales charge.
d Total return would have been lower had certain expenses not been reduced.
e Total return would have been lower if the Advisor had not maintained some Underlying Funds' expenses.
f The Portfolio invests in other Scudder Funds and although this class did not incur any fees or expenses other than distribution/service fees for the period, the Portfolio did bear its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.
g Effective April 1, 2004, the Portfolio implemented a new expense structure in which the Portfolio directly bears the fees and expenses of the Portfolio in addition to its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.
h The ratio of operating expenses includes a one-time reduction in certain liabilities of the Farmers Growth Portfolio. The ratio without this reduction was .95%.
* Annualized ** Not annualized

Pathway Growth Portfolio - Class C

Years Ended August 31,

2004

2003

2002

2001a

Selected Per Share Data
Net asset value, beginning of period

$ 10.97

$ 10.11

$ 12.55

$ 14.55

Income (loss) from investment operations:
Net investment incomeb
.08 .08 .03 .03
Net realized and unrealized gain (loss) on investment transactions
1.05 .84 (2.12) (2.03)

Total from investment operations

1.13 .92 (2.09) (2.00)
Less distributions from:
Net investment income
(.08) (.06) (.08) -
Net realized gains on investment transactions
- - (.27) -

Total distributions

(.08) (.06) (.35) -
Net asset value, end of period

$ 12.02

$ 10.97

$ 10.11

$ 12.55

Total Return (%)c
10.34d,e 9.17e (17.19) (13.75)**
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)
9 4 3 3
Ratio of expenses before expense reductions (%)
1.21g .99f .95f 1.00f*
Ratio of expenses after expense reductions (%)
1.15g .99f .95f 1.00f*
Ratio of net investment income (%)
.65 .75 .26 .06*
Portfolio turnover rate (%)
43 93 44 29
a For the period from December 29, 2000 (commencement of sales of Class C shares) to August 31, 2001.
b Based on average shares outstanding during the period.
c Total return does not reflect the effect of any sales charge.
d Total return would have been lower had certain expenses not been reduced.
e Total return would have been lower if the Advisor had not maintained some Underlying Funds' expenses.
f The Portfolio invests in other Scudder Funds and although this class did not incur any fees or expenses other than distribution/service fees for the period, the Portfolio did bear its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.
g Effective April 1, 2004, the Portfolio implemented a new expense structure in which the Portfolio directly bears the fees and expenses of the Portfolio in addition to its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.
* Annualized
** Not annualized

Pathway Growth Portfolio - Class AARP

Years Ended August 31,

2004

2003

2002

2001a

Selected Per Share Data
Net asset value, beginning of period

$ 11.10

$ 10.24

$ 12.62

$ 15.32

Income (loss) from investment operations:
Net investment incomeb
.20 .18 .14 .19
Net realized and unrealized gain (loss) on investment transactions
1.08 .84 (2.14) (2.77)

Total from investment operations

1.28 1.02 (2.00) (2.58)
Less distributions from:
Net investment income
(.21) (.16) (.11) (.12)
Net realized gains on investment transactions
- - (.27) -

Total distributions

(.21) (.16) (.38) (.12)
Net asset value, end of period

$ 12.17

$ 11.10

$ 10.24

$ 12.62

Total Return (%)
11.50c,d 10.18d (16.39) (16.94)d**
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)
62 60 62 92
Ratio of expenses before expense reductions (%)
.22f -e -e -e
Ratio of expenses after expense reductions (%)
.13f -e -e -e
Ratio of net investment income (%)
1.67 1.74 1.21 1.44*
Portfolio turnover rate (%)
43 93 44 29
a For the period from September 25, 2000 (commencement of sales of Class AARP shares) to August 31, 2001.
b Based on average shares outstanding during the period.
c Total return would have been lower had certain expenses not been reduced.
d Total return would have been lower if the Advisor had not maintained some Underlying Funds' expenses.
e This Portfolio invests in other Scudder Funds, and although this class did not incur any direct expenses for the period, the Portfolio did bear its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.
f Effective April 1, 2004, the Portfolio implemented a new expense structure in which the Portfolio directly bears the fees and expenses of the Portfolio in addition to its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.
* Annualized
** Not annualized

Pathway Growth Portfolio - Class S

Years Ended August 31,

2004

2003

2002

2001

2000

Selected Per Share Data
Net asset value, beginning of period

$ 11.10

$ 10.24

$ 12.62

$ 17.85

$ 15.33

Income (loss) from investment operations:
Net investment incomea
.20 .18 .14 .20 .29
Net realized and unrealized gain (loss) on investment transactions
1.08 .84 (2.14) (3.43) 3.41

Total from investment operations

1.28 1.02 (2.00) (3.23) 3.70
Less distributions from:
Net investment income
(.21) (.16) (.11) (.36) (.29)
Net realized gains on investment transactions
- - (.27) (1.64) (.89)

Total distributions

(.21) (.16) (.38) (2.00) (1.18)
Net asset value, end of period

$ 12.17

$ 11.10

$ 10.24

$ 12.62

$ 17.85

Total Return (%)
11.50b,c 10.18c (16.39) (19.95)c 24.24c
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)
84 87 92 115 128
Ratio of expenses before expense reductions (%)
.25e -d -d -d -d
Ratio of expenses after expense reductions (%)
.12e -d -d -d -d
Ratio of net investment income (%)
1.67 1.74 1.21 1.41 1.67
Portfolio turnover rate (%)
43 93 44 29 27
a Based on average shares outstanding during the period.
b Total return would have been lower had certain expenses not been reduced.
c Total return would have been lower if the Advisor had not maintained some Underlying Funds' expenses.
d This Portfolio invests in other Scudder Funds, and although this class did not incur any direct expenses for the period, the Portfolio did bear its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.
e Effective April 1, 2004, the Portfolio implemented a new expense structure in which the Portfolio directly bears the fees and expenses of the Portfolio in addition to its proportionate share of the fees and expenses incurred by the Underlying Scudder Funds in which the Portfolio is invested.


Notes to Financial Statements


A. Significant Accounting Policies

The Pathway Conservative, Pathway Moderate and Pathway Growth Portfolios (the "Portfolios") are each a diversified series of Scudder Pathway Series (the "Trust") which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company organized as a Massachusetts business trust. The Portfolios invest primarily in existing Scudder Funds (the "Underlying Scudder Funds"). Each Underlying Scudder Fund's accounting policies and investment holdings are outlined in the Underlying Scudder Fund's financial statements and are available upon request.

Each Portfolio 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 but 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. Shares of Class AARP are designed for members of AARP. Class S shares of each Portfolio are generally not available to new investors. Class AARP and S shares are not subject to initial or contingent deferred sales charges.

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 services to shareholders, distribution service 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 each Portfolio have equal rights with respect to voting subject to class-specific arrangements.

The Portfolios' 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 each Portfolio in the preparation of its financial statements.

Security Valuation. Investments in the Underlying Scudder Funds are valued at the net asset value per share of each class of the Underlying Scudder Fund as of the close of regular trading on the New York Stock Exchange on each day the exchange is open for trading. Money market instruments purchased with an original or remaining maturity of sixty days or less, maturing at par, are valued at amortized cost.

Federal Income Taxes. Each Portfolio'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. Each Portfolio is treated as a single corporate taxpayer. Accordingly, the Portfolios paid no federal income taxes and no federal income tax provisions were required.

At August 31, 2004, the Pathway Conservative Portfolio had a net tax basis capital loss carryforward of approximately $15,909,000, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until August 31, 2008 ($3,000), August 31, 2009 ($886,000), August 31, 2010 ($2,882,000), August 31, 2011 ($2,914,000) and August 31, 2012 ($9,224,000), the respective expiration dates, whichever occurs first.

At August 31, 2004, the Pathway Moderate Portfolio had a net tax basis capital loss carryforward of approximately $55,774,000, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until August 31, 2008 ($7,000), August 31, 2009 ($946,000), August 31, 2010 ($18,170,000), August 31, 2011 ($14,881,000) and August 31, 2012 ($21,770,000), the respective expiration dates, whichever occurs first.

At August 31, 2004, the Pathway Growth Portfolio had a net tax basis capital loss carryforward of approximately $58,914,000, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until August 31, 2010 ($1,376,000), August 31, 2011 ($20,636,000) and August 31, 2012 ($36,902,000), the respective expiration dates, whichever occurs first.

Distribution of Income and Gains. Distributions of net investment income from Pathway Conservative and Pathway Moderate Portfolios, if any, are made quarterly. Distributions of net investment income from Pathway Growth Portfolio, if any, are made annually. Net realized gains from investment transactions, in excess of available capital loss carryforwards, would be taxable to each Portfolio if not distributed, and, therefore, will be distributed to shareholders at least annually. An additional distribution may be made to the extent necessary to avoid payment of a four percent federal excise tax.

The timing and characterization of certain income and capital gains distributions are determined annually in accordance with federal tax regulations which may differ from accounting principles generally accepted in the United States of America. These differences primarily relate to investments 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, each Portfolio may periodically make reclassifications among certain of its capital accounts without impacting the net asset value of the Portfolio.

At August 31, 2004, the Pathway Conservative Portfolio's components of distributable earnings (accumulated losses) on a tax-basis are as follows:

Undistributed ordinary income*
$ 383,832
Undistributed net long-term capital gains
$ -
Capital loss carryforwards
$ (15,909,000)
Net unrealized appreciation (depreciation) on investments
$ 2,563,745

In addition, during the years ended August 31, 2004 and August 31, 2003, the tax character of distributions paid to shareholders by the Pathway Conservative Portfolio is summarized as follows:

Years Ended August 31,


2004

2003

Distributions from ordinary income*
$ 3,369,334 $ 3,031,202

* For tax purposes short-term capital gains distributions are considered ordinary income distributions.

At August 31, 2004, the Pathway Moderate Portfolio's components of distributable earnings (accumulated losses) on a tax-basis are as follows:

Undistributed ordinary income*
$ 1,438,644
Undistributed net long-term capital gains
$ -
Capital loss carryforwards
$ (55,774,000)
Net unrealized appreciation (depreciation) on investments
$ 6,635,746

In addition, during the years ended August 31, 2004 and August 31, 2003, the tax character of distributions paid to shareholders by the Pathway Moderate Portfolio is summarized as follows:

Years Ended August 31,


2004

2003

Distributions from ordinary income*
$ 4,200,697 $ 5,056,785

* For tax purposes short-term capital gains distributions are considered ordinary income distributions.

At August 31, 2004, the Pathway Growth Portfolio's components of distributable earnings (accumulated losses) on a tax-basis are as follows:

Undistributed ordinary income*
$ 2,726,472
Undistributed net long-term capital gains
$ -
Capital loss carryforwards
$ (58,914,000)
Net unrealized appreciation (depreciation) on investments
$ 10,303,786

In addition, during the years ended August 31, 2004 and August 31, 2003, the tax character of distributions paid to shareholders by the Pathway Growth Portfolio is summarized as follows:

Years Ended August 31,


2004

2003

Distributions from ordinary income*
$ 3,154,393 $ 2,610,732

* For tax purposes short-term capital gains distributions are considered ordinary income distributions.

Other. Investment transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment security transactions are reported on trade date. Interest income is recorded on the accrual basis. Distributions of income and capital gains from the Underlying Scudder Funds are recorded on the ex-dividend date. Realized gains and losses from investment transactions are recorded on an identified cost basis.

B. Related Parties

Management Agreement. Under the Management Agreement with Deutsche Investment Management Americas Inc. ("DeIM" or the "Advisor"), the Advisor directs the investments of each Portfolio 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 each Portfolio. In addition to portfolio management services, the Advisor provides certain administrative services in accordance with the Management Agreement. The Advisor has agreed not to be paid a management fee for performing its services for the Portfolios. However, the Advisor will receive management fees from managing the Underlying Scudder Funds in which each Portfolio invests.

The Portfolios do not invest in the Underlying Scudder Funds for the purpose of exercising management or control; however, investments within the set limits may represent a significant portion of an Underlying Scudder Fund's net assets. At August 31, 2004, the Pathway Moderate Portfolio held the following Underlying Scudder Funds' outstanding shares: approximately 7% of the Scudder Fixed Income Fund. At August 31, 2004, the Pathway Conservative Portfolio and the Pathway Growth Portfolio did not hold more than 5% of the Underlying Scudder Funds' outstanding shares.

For the year ended August 31, 2004, the Advisor has agreed to reimburse expenses of $1,234, $1,700 and $1,666, respectively, for the Pathway Conservative, Pathway Moderate and Pathway Growth Portfolios.

Administrative Fee. Under the Administrative Agreement (the "Administrative Agreement"), the Advisor provided or paid others to provide substantially all of the administrative services required by each Portfolio.

For the period from September 1, 2003 through March 31, 2004, each Portfolio did not directly bear any fees or expenses other than distribution service fees on Class A, B and C shares. Shareholders of each Portfolio did directly bear their fair and proportionate share of the cost of operating the underlying Scudder Funds in which each Portfolio invests because each Portfolio, as a shareholder of the Underlying Scudder Funds, will bear its proportionate share of any fees and expenses paid by the Underlying Scudder Funds.

The Administrative Agreement between the Advisor and the Portfolios terminated March 31, 2004. Effective April 1, 2004, each Portfolio implemented a new expense structure. Under the new expense structure, each Portfolio directly bears the fees and expenses of the Portfolio, subject to the Advisor's contractual obligation to waive fees and reimburse expenses to maintain each Portfolio's operating expenses at 0.55%, 1.30%, 1.30%, 0.30% and 0.30% of the average daily net assets for Class A, B, C, AARP and S, respectively, through December 31, 2005. Each Portfolio will continue to indirectly bear the Portfolio's proportionate share of fees and expenses incurred by the Underlying Scudder Funds in which each Portfolio is invested.

Service Provider Fees. Scudder Investments Service Company ("SISC"), an affiliate of the Advisor, is the transfer, shareholder service and dividend-paying agent for Class A, B and C shares of the Fund. Scudder Service Corporation ("SSC"), a subsidiary of the Advisor, is the transfer, shareholder service and dividend-paying agent for Class AARP and S shares of the Fund. Pursuant to a sub-transfer agency agreement among SISC, SSC and DST Systems, Inc. ("DST"), SISC and SSC have delegated certain transfer agent and dividend-paying agent functions to DST. The costs and expenses of such delegation are borne by SISC and SSC, not by the Fund. For the period April 1, 2004 through August 31, 2004, the amounts charged to the Fund by SISC and SSC were as follows:

Services to Shareholders

Total Aggregated

Not Imposed

Unpaid at August 31, 2004

Pathway Conservative Portfolio

Class A
$ 34,024 $ 25,564 $ 1,609
Class B
7,803 5,392 2,411
Class C
3,366 1,905 676
Class AARP
32,103 9,241 16,494
Class S
63,658 42,246 8,774

$ 140,954

$ 84,348

$ 29,964

Pathway Moderate Portfolio

Class A
$ 134,632 $ 72,372 $ 40,026
Class B
19,726 8,783 7,683
Class C
10,184 2,992 5,554
Class AARP
4,826 - 4,041
Class S
311,297 155,629 103,576

$ 480,665

$ 239,776

$ 160,880

Pathway Growth Portfolio

Class A
$ 46,359 $ 23,411 $ 10,905
Class B
21,573 12,686 4,422
Class C
7,956 3,517 2,635
Class AARP
98,379 59,110 24,168
Class S
167,516 113,213 24,898

$ 341,783

$ 211,937

$ 67,028


Scudder Fund Accounting Corporation ("SFAC"), an affiliate of the Advisor, is responsible for computing the daily net asset value per share and maintaining the portfolio and general accounting records of the Portfolios. SFAC has retained State Street Bank and Trust Company to provide certain administrative, fund accounting and record-keeping services to the Portfolios. For the period April 1, 2004 through August 31, 2004, the amount charged to the Fund by SFAC for accounting services aggregated $26,928, $42,075 and $41,310, respectively, for the Pathway Conservative, Pathway Moderate and Pathway Growth Portfolios of which all are unpaid at August 31, 2004.

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 year ended August 31, 2004, the Distribution Fees were as follows:

Distribution Fees

Total Aggregated

Unpaid at August 31, 2004

Pathway Conservative Portfolio

Class B
$ 33,674 $ 3,423
Class C
20,005 2,112

$ 53,679

$ 5,535

Pathway Moderate Portfolio

Class B
$ 79,731 $ 7,524
Class C
50,088 5,412

$ 129,819

$ 12,936

Pathway Growth Portfolio

Class B
$ 93,027 $ 8,843
Class C
41,710 5,249

$ 134,737

$ 14,092


In addition, SDI provides information and administrative services ("Service Fee") to Classes 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 pays these fees based upon the assets of shareholder accounts the firms service. For the year ended August 31, 2004, the Service Fees were as follows:

Service Fees

Total Aggregated

Unpaid at August 31, 2004

Effective Rate

Pathway Conservative Portfolio

Class A
$ 33,759 $ 3,696

.24%

Class B
11,225 1,327

.25%

Class C
6,668 807

.25%


$ 51,652

$ 5,830

Pathway Moderate Portfolio

Class A
$ 104,320 $ 13,288

.23%

Class B
26,258 2,875

.25%

Class C
16,362 1,704

.25%


$ 146,940

$ 17,867

Pathway Growth Portfolio

Class A
$ 74,973 $ 7,136

.24%

Class B
29,802 2,511

.24%

Class C
13,437 1,359

.24%


$ 118,212

$ 11,006


Underwriting Agreement and Contingent Deferred Sales Charge. SDI is the principal underwriter for the Portfolios. Underwriting commissions paid in connection with the distribution of Class A shares for the year ended August 31, 2004 for the Pathway Conservative, Pathway Moderate and Pathway Growth Portfolios aggregated $8,149, $25,217 and $22,226, respectively. Underwriting commissions paid in connection with the distribution of Class C shares for the year ended August 31, 2004 for the Pathway Conservative, Pathway Moderate and Pathway Growth Portfolios aggregated $13, $0 and $0, 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 year ended August 31, 2004, the CDSC for Class B and Class C shares aggregated $32,264, $19,851 and $52,113, respectively, for the Pathway Conservative, Pathway Moderate and Pathway Growth Portfolios.

Other Related Parties. AARP through its affiliate, AARP Services, Inc., monitors and oversees the AARP Investment Program from Scudder Investments, but does not act as an investment advisor or recommend specific mutual funds. DeIM has agreed to pay a fee to AARP and/or its affiliates in return for the use of the AARP trademark and services relating to investments by AARP members in AARP Class shares of the Fund. This fee is calculated on a daily basis as a percentage of the combined net assets of the AARP classes of all funds managed by DeIM. The fee rates, which decrease as the aggregate net assets of the AARP classes become larger, are as follows: 0.07% for the first $6 billion of net assets, 0.06% for the next $10 billion of such net assets and 0.05% of such net assets thereafter. These amounts are used for the general purposes of AARP and its members.

C. Ownership of the Fund

At August 31, 2004, two shareholders held 17% and 11% of the outstanding shares of the Pathway Conservative Portfolio, two shareholders held 42% and 17% of the Pathway Moderate Portfolio and one shareholder held 17% of the Pathway Growth Portfolio.

D. Line of Credit

The Portfolios 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. Each Portfolio may borrow up to a maximum of 20 percent of its net assets under the agreement.

E. Share Transactions

Pathway Conservative Portfolio

The following table summarizes share and dollar activity in the Portfolio:


Year Ended August 31, 2004

Year Ended August 31, 2003


Shares

Dollars

Shares

Dollars

Shares sold

Class A
1,114,866 $ 12,404,337 580,843 $ 5,997,022
Class B
281,197 3,120,479 245,457 2,541,290
Class C
212,669 2,368,091 156,899 1,624,766
Class AARP
357,414 3,983,288 260,673 2,706,079
Class S
1,129,526 12,566,606 1,301,062 13,419,821

$ 34,442,801

$ 26,288,978

Shares issued to shareholders in reinvestment of distributions
Class A
36,212 $ 403,607 30,650 $ 312,056
Class B
8,345 93,111 5,696 58,130
Class C
4,918 54,860 3,383 34,544
Class AARP
107,178 1,191,974 111,245 1,130,268
Class S
122,619 1,363,670 121,922 1,238,929

$ 3,107,222

$ 2,773,927

Shares redeemed

Class A
(656,731) $ (7,319,826) (561,032) $ (5,859,349)
Class B
(157,971) (1,759,480) (107,049) (1,101,186)
Class C
(125,409) (1,399,218) (59,866) (622,044)
Class AARP
(697,676) (7,785,174) (784,072) (8,039,964)
Class S
(1,351,805) (15,035,181) (1,340,617) (13,763,408)

$ (33,298,879)

$ (29,385,951)

Net increase (decrease)

Class A
494,347 $ 5,488,118 50,461 $ 449,729
Class B
131,571 1,454,110 144,104 1,498,234
Class C
92,178 1,023,733 100,416 1,037,266
Class AARP
(233,084) (2,609,912) (412,154) (4,203,617)
Class S
(99,660) (1,104,905) 82,367 895,342

$ 4,251,144

$ (323,046)


Pathway Moderate Portfolio

The following table summarizes share and dollar activity in the Portfolio:


Year Ended August 31, 2004

Year Ended August 31, 2003


Shares

Dollars

Shares

Dollars

Shares sold

Class A
3,099,238 $ 32,792,083 1,826,807 $ 17,027,198
Class B
590,482 6,217,300 366,578 3,421,285
Class C
575,515 6,070,188 217,681 2,041,616
Class AARP
408,481 4,326,919 165,482 1,539,780
Class S
3,933,298 41,888,709 2,990,890 27,654,881

$ 91,295,199

$ 51,684,760

Shares issued to shareholders in reinvestment of distributions
Class A
81,669 $ 863,767 70,165 $ 642,730
Class B
10,875 115,278 14,384 131,515
Class C
6,545 69,431 5,695 52,082
Class AARP
10,572 111,857 8,321 76,057
Class S
286,027 3,007,769 453,025 4,127,912

$ 4,168,102

$ 5,030,296

Shares redeemed

Class A
(1,408,732) $ (14,973,977) (872,808) $ (8,130,784)
Class B
(303,227) (3,189,309) (276,738) (2,594,804)
Class C
(189,616) (2,019,539) (99,165) (915,385)
Class AARP
(72,340) (766,552) (144,992) (1,342,023)
Class S
(7,267,448) (77,068,576) (7,384,863) (68,036,690)

$ (98,017,953)

$ (81,019,686)

Net increase (decrease)

Class A
1,772,175 $ 18,681,873 1,024,164 $ 9,539,144
Class B
298,130 3,143,269 104,224 957,996
Class C
392,444 4,120,080 124,211 1,178,313
Class AARP
346,713 3,672,224 28,811 273,814
Class S
(3,048,123) (32,172,098) (3,940,948) (36,253,897)

$ (2,554,652)

$ (24,304,630)


Pathway Growth Portfolio

The following table summarizes share and dollar activity in the Portfolio:


Year Ended August 31, 2004

Year Ended August 31, 2003


Shares

Dollars

Shares

Dollars

Shares sold

Class A
1,910,196 $ 23,085,686 937,164 $ 9,337,305
Class B
510,421 6,079,131 428,538 4,272,539
Class C
526,784 6,309,526 179,182 1,804,853
Class AARP
278,443 3,378,261 272,002 2,816,473
Class S
1,821,880 21,983,033 1,893,245 19,044,109

$ 60,835,637

$ 37,275,279

Shares issued to shareholders in reinvestment of distributions
Class A
35,623 $ 428,911 25,317 $ 249,863
Class B
7,107 85,202 5,148 49,935
Class C
2,856 34,238 1,871 18,148
Class AARP
85,031 1,024,621 90,251 879,949
Class S
126,920 1,529,387 140,822 1,373,014

$ 3,102,359

$ 2,570,909

Shares redeemed

Class A
(955,248) $ (11,614,174) (555,849) $ (5,563,531)
Class B
(376,838) (4,429,360) (231,296) (2,306,394)
Class C
(147,397) (1,777,682) (98,014) (965,986)
Class AARP
(647,899) (7,806,738) (1,074,324) (10,687,707)
Class S
(2,930,852) (35,195,587) (3,183,499) (31,643,225)

$ (60,823,541)

$ (51,166,843)

Net increase (decrease)

Class A
990,571 $ 11,900,423 406,632 $ 4,023,637
Class B
140,690 1,734,973 202,390 2,016,080
Class C
382,243 4,566,082 83,039 857,015
Class AARP
(284,425) (3,403,856) (712,071) (6,991,285)
Class S
(982,052) (11,683,167) (1,149,432) (11,226,102)

$ 3,114,455

$ (11,320,655)


F. 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. It is not possible to determine what the outcome of these inquiries will be or what the effect, if any, would be on the funds or their advisors. Publicity about mutual fund practices arising from these industry-wide inquiries serves 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, the funds' investment advisors and their affiliates, certain individuals, including in some cases fund Trustees/Directors, officers, and other parties. Each Scudder fund's investment advisor has agreed to indemnify the applicable Scudder funds in connection with these lawsuits, or other lawsuits or regulatory actions that may be filed making allegations similar to these lawsuits regarding market timing, revenue sharing, fund valuation or other subjects arising from or related to the pending inquiries. Based on currently available information, the funds' investment advisors believe 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 their ability to perform under their investment management agreements with the Scudder funds.


Report of Independent Registered Public Accounting Firm


To the Trustees of Scudder Pathway Series and the Shareholders of Scudder Pathway Series: Conservative, Moderate, and Growth Portfolios:

In our opinion, the accompanying statements of assets and liabilities, including the investment portfolios, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Scudder Pathway Series: Conservative, Moderate, and Growth Portfolios (the three portfolios constituting the Scudder Pathway Series) (the "Funds") at August 31, 2004 and the results of their operations, the changes in their net assets and the financial highlights for each of the periods indicated therein, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Funds' management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States), which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2004 by correspondence with the custodian and transfer agent, provide a reasonable basis for our opinion.

Boston, Massachusetts
October 26, 2004

PricewaterhouseCoopers LLP



Tax Information (Unaudited)


For federal income tax purposes, the Pathway Conservative, Pathway Moderate and Pathway Growth Portfolios designate $600,000, $1,925,000 and $2,400,000, respectively, or the maximum amount allowable under tax law, as qualified dividend income.

Please consult a tax advisor if you have questions about federal or state income tax laws, or on how to prepare your tax returns. If you have specific questions about your account, please call 1-800-SCUDDER.


Trustees and Officers


The following table presents certain information regarding the Trustees and Officers of the fund as of August 31, 2004. Each individual's year of birth is set forth in parentheses after his or her name. Unless otherwise noted, (i) each individual has engaged in the principal occupation(s) noted in the table for at least the most recent five years, although not necessarily in the same capacity, and (ii) the address of each Trustee is c/o Dawn-Marie Driscoll, PO Box 100176, Cape Coral, FL 33910. Unless otherwise indicated, the address of each Officer is Two International Place, Boston, Massachusetts 02110. The term of office for each Trustee is until the next meeting of shareholders called for the purpose of electing Trustees and until the election and qualification of a successor, or until such Trustee sooner dies, resigns, retires or is removed as provided in the governing documents of the fund. Because the fund does not hold an annual meeting of shareholders, each Trustee will hold office for an indeterminate period. The Trustees of the Trust may also serve in similar capacities with other funds in the fund complex.

Independent Trustees

Name, Year of Birth, Position(s) Held with the Fund and Length of Time Served1
Principal Occupation(s) During Past 5 Years and
Other Directorships Held

Number of Funds in Fund Complex Overseen
Dawn-Marie Driscoll (1946)
Chairman, 2004-present
Trustee, 1987-present
President, Driscoll Associates (consulting firm); Executive Fellow, Center for Business Ethics, Bentley College; formerly, Partner, Palmer & Dodge (1988-1990); Vice President of Corporate Affairs and General Counsel, Filene's (1978-1988). Directorships: CRS Technology (technology service company); Advisory Board, Center for Business Ethics, Bentley College; Board of Governors, Investment Company Institute; former Chairman, ICI Directors Services Committee

48

Henry P. Becton, Jr. (1943)
Trustee, 1990-present
President, WGBH Educational Foundation. Directorships: Becton Dickinson and Company (medical technology company); The A.H. Belo Company (media company); Concord Academy; Boston Museum of Science; Public Radio International. Former Directorships: American Public Television; New England Aquarium; Mass Corporation for Educational Telecommunications; Committee for Economic Development; Public Broadcasting Service

48

Keith R. Fox (1954)
Trustee, 1996-present
Managing Partner, Exeter Capital Partners (private equity funds). Directorships: Facts on File (school and library publisher); Progressive Holding Corporation (kitchen importer and distributor); Cloverleaf Transportation Inc. (trucking); K-Media, Inc. (broadcasting); Natural History, Inc. (magazine publisher); National Association of Small Business Investment Companies (trade association)

48

Louis E. Levy (1932)
Trustee, 2002-present
Retired. Formerly, Chairman of the Quality Control Inquiry Committee, American Institute of Certified Public Accountants (1992-1998); Partner, KPMG LLP (1958-1990). Directorships: Household International (banking and finance); ISI Family of Funds (registered investment companies; 4 funds overseen)

48

Jean Gleason Stromberg (1943)
Trustee, 1999-present
Retired. Formerly, Consultant (1997-2001); Director, US General Accounting Office (1996-1997); Partner, Fulbright & Jaworski, L.L.P. (law firm) (1978-1996). Directorships: The William and Flora Hewlett Foundation; Service Source, Inc.

48

Jean C. Tempel (1943)
Trustee, 1994-present
Managing Partner, First Light Capital (venture capital group) (2000-present); formerly, Special Limited Partner, TL Ventures (venture capital fund) (1996-1998); General Partner, TL Ventures (1994-1996); President and Chief Operating Officer, Safeguard Scientifics, Inc. (public technology business incubator company) (1991-1993). Directorships: Sonesta International Hotels, Inc.; Aberdeen Group (technology research); United Way of Mass Bay; The Commonwealth Institute (supports women entrepreneurs). Trusteeships: Connecticut College, Vice Chair of Board, Chair, Finance Committee; Northeastern University, Vice Chair of Finance Committee, Chair, Funds and Endowment Committee

48

Carl W. Vogt (1936)
Trustee, 2002-present
Senior Partner, Fulbright & Jaworski, L.L.P. (law firm); formerly, President (interim) of Williams College (1999-2000); President, certain funds in the Deutsche Asset Management Family of Funds (formerly, Flag Investors Family of Funds) (registered investment companies) (1999-2000). Directorships: Yellow Corporation (trucking); American Science & Engineering (x-ray detection equipment); ISI Family of Funds (registered investment companies, 4 funds overseen); National Railroad Passenger Corporation (Amtrak); formerly, Chairman and Member, National Transportation Safety Board

48


Officers2

Name, Year of Birth, Position(s) Held with the Fund and Length of Time Served1
Principal Occupation(s) During Past 5 Years and
Other Directorships Held

Julian F. Sluyters3,5 (1960)
President and Chief Executive Officer, 2004-present
Managing Director, Deutsche Asset Management (since May 2004); President and Chief Executive Officer of The Germany Fund, Inc., The New Germany Fund, Inc., The Central Europe and Russia Fund, Inc., The Brazil Fund, Inc., The Korea Fund, Inc., Scudder Global High Income Fund, Inc. and Scudder New Asia Fund, Inc. (since May 2004); President and Chief Executive Officer, UBS Fund Services (2001-2003); Chief Administrative Officer (1998-2001) and Senior Vice President and Director of Mutual Fund Operations (1991-1998) UBS Global Asset Management
John Millette (1962)
Vice President and Secretary, 1999-present
Director, Deutsche Asset Management
Kenneth Murphy (1963)
Vice President, 2002-present
Vice President, Deutsche Asset Management (2000-present); formerly, Director, John Hancock Signature Services (1992-2000)
Paul H. Schubert3,5 (1963)
Chief Financial Officer, 2004-present
Managing Director, Deutsche Asset Management (2004-present); formerly, Executive Director, Head of Mutual Fund Services and Treasurer for UBS Family of Funds at UBS Global Asset Management (1994-2004)
Charles A. Rizzo (1957)
Treasurer, 2002-present
Managing Director, Deutsche Asset Management (April 2004-present); formerly, Director, Deutsche Asset Management (April 2000-March 2004); Vice President and Department Head, BT Alex. Brown Incorporated (now Deutsche Bank Securities Inc.) (1998-1999); Senior Manager, Coopers & Lybrand L.L.P. (now PricewaterhouseCoopers LLP) (1993-1998)
Lisa Hertz3 (1970)
Assistant Secretary, 2003-present
Assistant Vice President, Deutsche Asset Management
Daniel O. Hirsch4 (1954)
Assistant Secretary, 2002-present
Managing Director, Deutsche Asset Management (2002-present) and Director, Deutsche Global Funds Ltd. (2002-present); formerly, Director, Deutsche Asset Management (1999-2002); Principal, BT Alex. Brown Incorporated (now Deutsche Bank Securities Inc.) (1998-1999); Assistant General Counsel, United States Securities and Exchange Commission (1993-1998)
Caroline Pearson (1962)
Assistant Secretary, 1997-present
Managing Director, Deutsche Asset Management
Kevin M. Gay (1959)
Assistant Treasurer, 2004-present
Vice President, Deutsche Asset Management
Salvatore Schiavone (1965)
Assistant Treasurer, 2003-present
Director, Deutsche Asset Management
Kathleen Sullivan D'Eramo (1957)
Assistant Treasurer, 2003-present
Director, Deutsche Asset Management

1 Length of time served represents the date that each Trustee was first elected to the common board of Trustees which oversees a number of investment companies, including the fund, managed by the Advisor. For the Officers of the fund, the length of time served represents the date that each Officer was first elected to serve as an Officer of any fund overseen by the aforementioned common board of Trustees.
2 As a result of their respective positions held with the Advisor, these individuals are considered "interested persons" of the Advisor within the meaning of the 1940 Act. Interested persons receive no compensation from the funds.
3 Address: 345 Park Avenue, New York, New York
4 Address: One South Street, Baltimore, Maryland
5 Effective September 30, 2004, Mr. Sluyters and Mr. Schubert were elected as President of the fund and Chief Financial Officer of the fund, respectively.

The fund's Statement of Additional Information ("SAI") includes additional information about the Trustees. The SAI is available, without charge, upon request. If you would like to request a copy of the SAI, you may do so by calling the following toll-free number: 1-800-SCUDDER.


Account Management Resources


For shareholders of Classes A, B and C

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 219356
Kansas City, MO 64121-9356

Proxy Voting

A description of the fund's policies and procedures for voting proxies for portfolio securities and information about how the fund voted proxies related to its portfolio securities during the 12-month period ended June 30 is available 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 of the fund's policies and procedures without charge, upon request, call us toll free at (800) 621-1048.

Principal Underwriter

If you have questions, comments or complaints, contact:

Scudder Distributors, Inc.

222 South Riverside Plaza
Chicago, IL 60606-5808

(800) 621-1148

Nasdaq Symbol

CUSIP Number

Fund Number

Conservative Portfolio - Class A
SUCAX
811189-877
480
Conservative Portfolio - Class B
SUCBX
811189-869
680
Conservative Portfolio - Class C
SUCCX
811189-851
780
Moderate Portfolio - Class A
SPDAX
811189-844
481
Moderate Portfolio - Class B
SPDBX
811189-836
681
Moderate Portfolio - Class C
SPDCX
811189-828
781
Growth Portfolio - Class A
SUPAX
811189-810
482
Growth Portfolio - Class B
SUPBX
811189-794
682
Growth Portfolio - Class C
SUPCX
811189-786
782

AARP Investment Program Shareholders

Scudder Class S Shareholders

Automated Information Lines

Easy-Access Line

(800) 631-4636

SAIL™

(800) 343-2890

Personalized account information, the ability to exchange or redeem shares, and information on other Scudder funds and services via touchtone telephone.

Web Sites

aarp.scudder.com

myScudder.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) 253-2277

To speak with an AARP Investment Program service representative

(800) SCUDDER

To speak with a Scudder service representative.

Written Correspondence

AARP Investment Program from Scudder Investments

PO Box 219735
Kansas City, MO 64121-9735

Scudder Investments

PO Box 219669
Kansas City, MO 64121-9669

Proxy Voting

A description of the fund's policies and procedures for voting proxies for portfolio securities and information about how the fund voted proxies related to its portfolio securities during the 12-month period ended June 30 is available on our Web sites - aarp.scudder.com or myScudder.com (type "proxy voting" in the search field) - or on the SEC's Web site - www.sec.gov. To obtain a written copy of the fund's policies and procedures without charge, upon request, call your service representative.

Principal Underwriter

If you have questions, comments or complaints, contact:

Scudder Distributors, Inc.

222 South Riverside Plaza
Chicago, IL 60606-5808

(800) 621-1148

Ticker Symbol

Fund Number

Pathway Conservative Portfolio - Class AARP
APWCX
180
Pathway Conservative Portfolio - Class S
SCPCX
080
Pathway Moderate Portfolio - Class AARP
SPWBX
181
Pathway Moderate Portfolio - Class S
SPBAX
081
Pathway Growth Portfolio - Class AARP
APWGX
182
Pathway Growth Portfolio - Class S
SPGRX
082

pwy_Auto0pwy_backcover0


ITEM 2.         CODE OF ETHICS.

As of the end of the  period,  August  31,  2004,  Scudder Pathway Series has
adopted a code of ethics,  as defined in Item 2 of Form N-CSR,  that  applies to
its Principal Executive Officer and Principal Financial Officer.

There have been no amendments to, or waivers from, a provision of the code of
ethics during the period covered by this report that would require disclosure
under Item 2.

A copy of the code of ethics is filed as an exhibit to this Form N-CSR.


ITEM 3.         AUDIT COMMITTEE FINANCIAL EXPERT.

The Funds' audit committee is comprised solely of trustees who are "independent"
(as such term has been defined by the Securities and Exchange Commission ("SEC")
in regulations implementing Section 407 of the Sarbanes-Oxley Act (the
"Regulations")). The Funds' Board of Trustees has determined that there are
several "audit committee financial experts" serving on the Funds' audit
committee. The Board has determined that Louis E. Levy, the chair of the Funds'
audit committee, qualifies as an "audit committee financial expert" (as such
term has been defined by the Regulations) based on its review of Mr. Levy's
pertinent experience and education. The SEC has stated that the designation or
identification of a person as an audit committee financial expert pursuant to
this Item 3 of Form N-CSR does not impose on such person any duties, obligations
or liability that are greater than the duties, obligations and liability imposed
on such person as a member of the audit committee and board of directors in the
absence of such designation or identification. In accordance with New York Stock
Exchange requirements, the Board believes that all members of the Funds' audit
committee are financially literate, as such qualification is interpreted by the
Board in its business judgment, and that at least one member of the audit
committee has accounting or related financial management expertise.


ITEM 4.         PRINCIPAL ACCOUNTANT FEES AND SERVICES.


                         PATHWAY CONSERVATIVE PORTFOLIO
                      FORM N-CSR DISCLOSURE RE: AUDIT FEES

The following table shows the amount of fees that PricewaterhouseCoopers, LLP
("PWC"), the Fund's auditor, billed to the Fund during the Fund's last two
fiscal years. For engagements with PWC entered into on or after May 6, 2003, the
Audit Committee approved in advance all audit services and non-audit services
that PWC provided to the Fund.

The Audit Committee has delegated certain pre-approval responsibilities to its
Chairman (or, in his absence, any other member of the Audit Committee).

               Services that the Fund's Auditor Billed to the Fund

- --------------------------------------------------------------------------------
                                   Audit-                           All
       Fiscal        Audit        Related           Tax            Other
        Year         Fees          Fees             Fees            Fees
       Ended        Billed        Billed           Billed          Billed
     August 31,     to Fund       to Fund          to Fund         to Fund
- --------------------------------------------------------------------------------
2004               $33,167         $185             $6,800          $0
- --------------------------------------------------------------------------------
2003               $28,733        $1,205            $6,567          $0
- --------------------------------------------------------------------------------

The above "Tax Fees" were billed for professional services rendered for tax
compliance and tax return preparation.


           Services that the Fund's Auditor Billed to the Adviser and
                        Affiliated Fund Service Providers

The following table shows the amount of fees billed by PWC to Deutsche
Investment Management Americas, Inc. ("DeIM" or the "Adviser"), and any entity
controlling, controlled by or under common control with DeIM ("Control
Affiliate") that provides ongoing services to the Fund ("Affiliated Fund Service
Provider"), for engagements directly related to the Fund's operations and
financial reporting, during the Fund's last two fiscal years.


- --------------------------------------------------------------------------------
                                                                     All
                       Audit-Related         Tax Fees               Other
         Fiscal        Fees Billed to        Billed to           Fees Billed
          Year          Adviser and        Adviser and          to Adviser and
          Ended       Affiliated Fund    Affiliated Fund       Affiliated Fund
        August 31,   Service Providers  Service Providers     Service Providers
- --------------------------------------------------------------------------------
2004                    $767,051             $0                    $0
- --------------------------------------------------------------------------------
2003                    $517,013           $55,500                 $0
- --------------------------------------------------------------------------------

The "Audit-Related Fees" were billed for services in connection with the
assessment of internal controls, agreed-upon procedures and additional related
procedures.







                               Non-Audit Services

The following table shows the amount of fees that PWC billed during the Fund's
last two fiscal years for non-audit services. For engagements entered into on or
after May 6, 2003, the Audit Committee pre-approved all non-audit services that
PWC provided to the Adviser and any Affiliated Fund Service Provider that
related directly to the Fund's operations and financial reporting. The Audit
Committee requested and received information from PWC about any non-audit
services that PWC rendered during the Fund's last fiscal year to the Adviser and
any Affiliated Fund Service Provider. The Committee considered this information
in evaluating PWC's independence.


- --------------------------------------------------------------------------------
                                       Total
                                      Non-Audit
                                        Fees
                                      billed to
                                     Adviser and
                                     Affiliated     Total
                                       Fund       Non-Audit
                                     Service         Fees
                                    Providers      billed to
                                   (engagements     Adviser
                                      related        and
                                     directly     Affiliated
                        Total         to the         Fund
                      Non-Audit     operations      Service
                         Fees      and financial    Providers
         Fiscal         Billed    reporting of      (all other       Total of
          Year         to Fund       the Fund)     engagements)      (A), (B)
         Ended
        August 31,       (A)            (B)            (C)           and (C)
- --------------------------------------------------------------------------------
2004                  $6,800             $0         $1,430,816      $1,437,616
- --------------------------------------------------------------------------------
2003                  $6,567          $55,500       $5,741,860      $5,803,927
- --------------------------------------------------------------------------------


All other engagement fees were billed for services in connection with risk
management, tax services and process improvement/integration initiatives for
DeIM and other related entities that provide support for the operations of the
fund.



                           PATHWAY MODERATE PORTFOLIO
                      FORM N-CSR DISCLOSURE RE: AUDIT FEES

The following table shows the amount of fees that PricewaterhouseCoopers, LLP
("PWC"), the Fund's auditor, billed to the Fund during the Fund's last two
fiscal years. For engagements with PWC entered into on or after May 6, 2003, the
Audit Committee approved in advance all audit services and non-audit services
that PWC provided to the Fund.

The Audit Committee has delegated certain pre-approval responsibilities to its
Chairman (or, in his absence, any other member of the Audit Committee).

               Services that the Fund's Auditor Billed to the Fund

- --------------------------------------------------------------------------------
                                   Audit-                           All
       Fiscal        Audit        Related           Tax            Other
        Year         Fees          Fees             Fees            Fees
       Ended        Billed        Billed           Billed          Billed
     August 31,     to Fund       to Fund          to Fund         to Fund
- --------------------------------------------------------------------------------
2004               $33,167         $185           $6,800            $0
- --------------------------------------------------------------------------------
2003               $28,733        $1,205          $6,567            $0
- --------------------------------------------------------------------------------

The above "Tax Fees" were billed for professional services rendered for tax
compliance and tax return preparation.


           Services that the Fund's Auditor Billed to the Adviser and
                        Affiliated Fund Service Providers

The following table shows the amount of fees billed by PWC to Deutsche
Investment Management Americas, Inc. ("DeIM" or the "Adviser"), and any entity
controlling, controlled by or under common control with DeIM ("Control
Affiliate") that provides ongoing services to the Fund ("Affiliated Fund Service
Provider"), for engagements directly related to the Fund's operations and
financial reporting, during the Fund's last two fiscal years.


- --------------------------------------------------------------------------------
                                                                     All
                       Audit-Related         Tax Fees               Other
         Fiscal        Fees Billed to        Billed to           Fees Billed
          Year          Adviser and        Adviser and          to Adviser and
          Ended       Affiliated Fund    Affiliated Fund       Affiliated Fund
        August 31,   Service Providers  Service Providers     Service Providers
- --------------------------------------------------------------------------------
2004                   $767,051                $0                    $0
- --------------------------------------------------------------------------------
2003                   $517,013              $55,500                 $0
- --------------------------------------------------------------------------------

The "Audit-Related Fees" were billed for services in connection with the
assessment of internal controls, agreed-upon procedures and additional related
procedures.







                               Non-Audit Services

The following table shows the amount of fees that PWC billed during the Fund's
last two fiscal years for non-audit services. For engagements entered into on or
after May 6, 2003, the Audit Committee pre-approved all non-audit services that
PWC provided to the Adviser and any Affiliated Fund Service Provider that
related directly to the Fund's operations and financial reporting. The Audit
Committee requested and received information from PWC about any non-audit
services that PWC rendered during the Fund's last fiscal year to the Adviser and
any Affiliated Fund Service Provider. The Committee considered this information
in evaluating PWC's independence.


- --------------------------------------------------------------------------------
                                       Total
                                      Non-Audit
                                        Fees
                                      billed to
                                     Adviser and
                                     Affiliated     Total
                                       Fund       Non-Audit
                                     Service         Fees
                                    Providers      billed to
                                   (engagements     Adviser
                                      related        and
                                     directly     Affiliated
                        Total         to the         Fund
                      Non-Audit     operations      Service
                         Fees      and financial    Providers
         Fiscal         Billed    reporting of      (all other       Total of
          Year         to Fund       the Fund)     engagements)      (A), (B)
         Ended
        August 31,       (A)            (B)            (C)           and (C)
- --------------------------------------------------------------------------------
2004                    $6,800           $0       $1,430,816       $1,437,616
- --------------------------------------------------------------------------------
2003                    $6,567        $55,500     $5,741,860       $5,803,927
- --------------------------------------------------------------------------------


All other engagement fees were billed for services in connection with risk
management, tax services and process improvement/integration initiatives for
DeIM and other related entities that provide support for the operations of the
fund.



                            PATHWAY GROWTH PORTFOLIO
                      FORM N-CSR DISCLOSURE RE: AUDIT FEES

The following table shows the amount of fees that PricewaterhouseCoopers, LLP
("PWC"), the Fund's auditor, billed to the Fund during the Fund's last two
fiscal years. For engagements with PWC entered into on or after May 6, 2003, the
Audit Committee approved in advance all audit services and non-audit services
that PWC provided to the Fund.

The Audit Committee has delegated certain pre-approval responsibilities to its
Chairman (or, in his absence, any other member of the Audit Committee).

               Services that the Fund's Auditor Billed to the Fund

- --------------------------------------------------------------------------------
                                   Audit-                           All
       Fiscal        Audit        Related           Tax            Other
        Year         Fees          Fees             Fees            Fees
       Ended        Billed        Billed           Billed          Billed
     August 31,     to Fund       to Fund          to Fund         to Fund
- --------------------------------------------------------------------------------
2004               $33,167         $185           $6,800             $0
- --------------------------------------------------------------------------------
2003               $28,733        $1,205          $6,567             $0
- --------------------------------------------------------------------------------

The above "Tax Fees" were billed for professional services rendered for tax
compliance and tax return preparation.


           Services that the Fund's Auditor Billed to the Adviser and
                        Affiliated Fund Service Providers

The following table shows the amount of fees billed by PWC to Deutsche
Investment Management Americas, Inc. ("DeIM" or the "Adviser"), and any entity
controlling, controlled by or under common control with DeIM ("Control
Affiliate") that provides ongoing services to the Fund ("Affiliated Fund Service
Provider"), for engagements directly related to the Fund's operations and
financial reporting, during the Fund's last two fiscal years.


- --------------------------------------------------------------------------------
                                                                     All
                       Audit-Related         Tax Fees               Other
         Fiscal        Fees Billed to        Billed to           Fees Billed
          Year          Adviser and        Adviser and          to Adviser and
          Ended       Affiliated Fund    Affiliated Fund       Affiliated Fund
        August 31,   Service Providers  Service Providers     Service Providers
- --------------------------------------------------------------------------------
2004                   $767,051                 $0                    $0
- --------------------------------------------------------------------------------
2003                   $517,013               $55,500                 $0
- --------------------------------------------------------------------------------

The "Audit-Related Fees" were billed for services in connection with the
assessment of internal controls, agreed-upon procedures and additional related
procedures.







                               Non-Audit Services

The following table shows the amount of fees that PWC billed during the Fund's
last two fiscal years for non-audit services. For engagements entered into on or
after May 6, 2003, the Audit Committee pre-approved all non-audit services that
PWC provided to the Adviser and any Affiliated Fund Service Provider that
related directly to the Fund's operations and financial reporting. The Audit
Committee requested and received information from PWC about any non-audit
services that PWC rendered during the Fund's last fiscal year to the Adviser and
any Affiliated Fund Service Provider. The Committee considered this information
in evaluating PWC's independence.


- --------------------------------------------------------------------------------
                                       Total
                                      Non-Audit
                                        Fees
                                      billed to
                                     Adviser and
                                     Affiliated     Total
                                       Fund       Non-Audit
                                     Service         Fees
                                    Providers      billed to
                                   (engagements     Adviser
                                      related        and
                                     directly     Affiliated
                        Total         to the         Fund
                      Non-Audit     operations      Service
                         Fees      and financial    Providers
         Fiscal         Billed    reporting of      (all other       Total of
          Year         to Fund       the Fund)     engagements)      (A), (B)
         Ended
        August 31,       (A)            (B)            (C)           and (C)
- --------------------------------------------------------------------------------
2004                   6,800             $0         $1,430,816     $1,437,616
- --------------------------------------------------------------------------------
2003                   6,567          $55,500       $5,741,860     $5,803,927
- --------------------------------------------------------------------------------


All other engagement fees were billed for services in connection with risk
management, tax services and process improvement/integration initiatives for
DeIM and other related entities that provide support for the operations of the
fund.

ITEM 5.         AUDIT COMMITTEE OF LISTED REGISTRANTS

                Not Applicable

ITEM 6.         SCHEDULE OF INVESTMENTS

                Not Applicable

ITEM 7.         DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
                CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

                Not Applicable

ITEM 8.         PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT
                INVESTMENT COMPANY AND AFFILIATED PURCHASERS

                Not Applicable.

ITEM 9.         SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

The Committee on Independent Trustees/Directors selects and nominates
Independent Trustees/Directors. Fund shareholders may also submit nominees that
will be considered by the committee when a Board vacancy occurs. Submissions
should be mailed to: c/o Dawn-Marie Driscoll, PO Box 100176, Cape Coral, FL
33910.

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 registrant's last half-year (the
registrant's second fiscal half-year in the case of the annual report) that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal controls over financial reporting.

ITEM 11.        EXHIBITS.

(a)(1)   Code of Ethics  pursuant to Item 2 of Form N-CSR is filed and  attached
         hereto as EX-99.CODE ETH.

(a)(2)   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 Pathway Conservative Portfolio


By:                                 /s/Julian Sluyters
                                    -----------------------------------
                                    Julian Sluyters
                                    Chief Executive Officer

Date:                               October 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 Pathway Conservative Portfolio


By:                                 /s/Julian Sluyters
                                    -----------------------------------
                                    Julian Sluyters
                                    Chief Executive Officer

Date:                               October 28, 2004



By:                                 /s/Paul Schubert
                                    -----------------------------------
                                    Paul Schubert
                                    Chief Financial Officer

Date:                               October 28, 2004



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 Pathway Growth Portfolio


By:                                 /s/Julian Sluyters
                                    -----------------------------------
                                    Julian Sluyters
                                    Chief Executive Officer

Date:                               October 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 Pathway Growth Portfolio


By:                                 /s/Julian Sluyters
                                    -----------------------------------
                                    Julian Sluyters
                                    Chief Executive Officer

Date:                               October 28, 2004



By:                                 /s/Paul Schubert
                                    -----------------------------------
                                    Paul Schubert
                                    Chief Financial Officer

Date:                               October 28, 2004



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 Pathway Moderate Portfolio


By:                                 /s/Julian Sluyters
                                    -----------------------------------
                                    Julian Sluyters
                                    Chief Executive Officer

Date:                               October 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 Pathway Moderate Portfolio


By:                                 /s/Julian Sluyters
                                    -----------------------------------
                                    Julian Sluyters
                                    Chief Executive Officer

Date:                               October 28, 2004



By:                                 /s/Paul Schubert
                                    -----------------------------------
                                    Paul Schubert
                                    Chief Financial Officer

Date:                               October 28, 2004

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MJX7(82FRVZTZ"I??TZ@-:44_TR'O=0O176\C*%K>1,]Z77K]\DD7%>!8#<1F8WK*N=X'M1>5[!QC?E\Z7OER] MK]#J:T+]\H^_I_3O_SJH32>*$,`"E@\U@TG)/2;X@U;":"$)^N#[(;B+%59E M?C.\N`US&&(7#NF'*Q9BO(X8O1X^\;;:J\>%JGC%\Q&DB5^LK?CV4*#JZJ$$.\$B&[D_0"8R"L6P:G%KP$S&<7\KQS2,LEX3O.2$CUF,Z>2SS2.M*0GK9&````[ ` end EX-99.CODE ETH 10 code_prinofficers.txt Scudder/DeAM Funds Principal Executive and Principal Financial Officer Code of Ethics For the Registered Management Investment Companies Listed on Appendix A Effective Date [September 30, 2004] Table of Contents
Page Number I. Overview........................................................................3 II. Purposes of the Officer Code....................................................3 III. Responsibilities of Covered Officers............................................4 A. Honest and Ethical Conduct......................................................4 B. Conflicts of Interest...........................................................4 C. Use of Personal Fund Shareholder Information....................................6 D. Public Communications...........................................................6 E. Compliance with Applicable Laws, Rules and Regulations..........................6 IV. Violation Reporting.............................................................7 A. Overview........................................................................7 B. How to Report...................................................................7 C. Process for Violation Reporting to the Fund Board...............................7 D. Sanctions for Code Violations...................................................7 V. Waivers from the Officer Code...................................................7 VI. Amendments to the Code..........................................................8 VII. Acknowledgement and Certification of Adherence to the Officer Code..............8 IX. Recordkeeping...................................................................8 X. Confidentiality.................................................................9 Appendices..............................................................................10 Appendix A: List of Officers Covered under the Code, by Board.......................10 Appendix B: Officer Code Acknowledgement and Certification Form.....................11 Appendix C: Definitions.............................................................13
2 I. Overview This Principal Executive Officer and Principal Financial Officer Code of Ethics ("Officer Code") sets forth the policies, practices, and values expected to be exhibited in the conduct of the Principal Executive Officers and Principal Financial Officers of the investment companies ("Funds") they serve ("Covered Officers"). A list of Covered Officers and Funds is included on Appendix A. The Boards of the Funds listed on Appendix A have elected to implement the Officer Code, pursuant to Section 406 of the Sarbanes-Oxley Act of 2002 and the SEC's rules thereunder, to promote and demonstrate honest and ethical conduct in their Covered Officers. Deutsche Asset Management, Inc. or its affiliates ("DeAM") serves as the investment adviser to each Fund. All Covered Officers are also employees of DeAM or an affiliate. Thus, in addition to adhering to the Officer Code, these individuals must comply with DeAM policies and procedures, such as the DeAM Code of Ethics governing personal trading activities, as adopted pursuant to Rule 17j-1 under the Investment Company Act of 1940.^1 In addition, such individuals also must comply with other applicable Fund policies and procedures. The DeAM Compliance Officer, who shall not be a Covered Officer and who shall serve as such subject to the approval of the Fund's Board (or committee thereof), is primarily responsible for implementing and enforcing this Code. The Compliance Officer has the authority to interpret this Officer Code and its applicability to particular circumstances. Any questions about the Officer Code should be directed to the DeAM Compliance Officer. The DeAM Compliance Officer and his or her contact information can be found in Appendix A. II. Purposes of the Officer Code The purposes of the Officer Code are to deter wrongdoing and to: o promote honest and ethical conduct among Covered Officers, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; o promote full, fair, accurate, timely and understandable disclosures in reports and documents that the Funds file with or submit to the SEC (and in other public communications from the Funds) and that are within the Covered Officer's responsibilities; o promote compliance with applicable laws, rules and regulations; o encourage the prompt internal reporting of violations of the Officer Code to the DeAM Compliance Officer; and o establish accountability for adherence to the Officer Code. Any questions about the Officer Code should be referred to DeAM's Compliance Officer. - -------- ^1 The obligations imposed by the Officer Code are separate from, and in addition to, any obligations imposed under codes of ethics adopted pursuant to Rule 17j-1 under the Investment Company Act of 1940, and any other code of conduct applicable to Covered Officers in whatever capacity they serve. The Officer Code does not incorporate any of those other codes and, accordingly, violations of those codes will not necessarily be considered violations of the Officer Code and waivers granted under those codes would not necessarily require a waiver to be granted under this Code. Sanctions imposed under those codes may be considered in determining appropriate sanctions for any violation of this Code. 3 III. Responsibilities of Covered Officers A. Honest and Ethical Conduct It is the duty of every Covered Officer to encourage and demonstrate honest and ethical conduct, as well as adhere to and require adherence to the Officer Code and any other applicable policies and procedures designed to promote this behavior. Covered Officers must at all times conduct themselves with integrity and distinction, putting first the interests of the Fund(s) they serve. Covered Officers must be honest and candid while maintaining confidentiality of information where required by law, DeAM policy or Fund policy. Covered Officers also must, at all times, act in good faith, responsibly and with due care, competence and diligence, without misrepresenting or being misleading about material facts or allowing their independent judgment to be subordinated. Covered Officers also should maintain skills appropriate and necessary for the performance of their duties for the Fund(s). Covered Officers also must responsibly use and control all Fund assets and resources entrusted to them. Covered Officers may not retaliate against others for, or otherwise discourage the reporting of, actual or apparent violations of the Officer Code or applicable laws or regulations. Covered Officers should create an environment that encourages the exchange of information, including concerns of the type that this Code is designed to address. B. Conflicts of Interest A "conflict of interest" occurs when a Covered Officer's personal interests interfere with the interests of the Fund for which he or she serves as an officer. Covered Officers may not improperly use their position with a Fund for personal or private gain to themselves, their family, or any other person. Similarly, Covered Officers may not use their personal influence or personal relationships to influence decisions or other Fund business or operational matters where they would benefit personally at the Fund's expense or to the Fund's detriment. Covered Officers may not cause the Fund to take action, or refrain from taking action, for their personal benefit at the Fund's expense or to the Fund's detriment. Some examples of conflicts of interest follow (this is not an all-inclusive list): being in the position of supervising, reviewing or having any influence on the job evaluation, pay or benefit of any immediate family member who is an employee of a Fund service provider or is otherwise associated with the Fund; or having an ownership interest in, or having any consulting or employment relationship with, any Fund service provider other than DeAM or its affiliates. Certain conflicts of interest covered by this Code arise out of the relationships between Covered Officers and the Fund that already are subject to conflict of interest provisions in the Investment Company Act and the Investment Advisers Act. For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Fund because of their status as "affiliated persons" of the Fund. Covered Officers must comply with applicable laws and regulations. Therefore, any violations of existing statutory and regulatory prohibitions on individual behavior could be considered a violation of this Code. As to conflicts arising from, or as a result of the advisory relationship (or any other relationships) between the Fund and DeAM, of which the Covered Officers are also officers or employees, it is recognized by the Board that, subject to DeAM's fiduciary duties to the Fund, the Covered Officers will in the normal course of their duties (whether formally for the Fund or for DeAM, or for both) be involved in establishing policies and implementing decisions which will have different effects on 4 DeAM and the Fund. The Board recognizes that the participation of the Covered Officers in such activities is inherent in the contract relationship between the Fund and DeAM, and is consistent with the expectation of the Board of the performance by the Covered Officers of their duties as officers of the Fund. Covered Officers should avoid actual conflicts of interest, and appearances of conflicts of interest, between the Covered Officer's duties to the Fund and his or her personal interests beyond those contemplated or anticipated by applicable regulatory schemes. If a Covered Officer suspects or knows of a conflict or an appearance of one, the Covered Officer must immediately report the matter to the DeAM Compliance Officer. If a Covered Officer, in lieu of reporting such a matter to the DeAM Compliance Officer, may report the matter directly to the Fund's Board (or committee thereof), as appropriate (e.g., if the conflict involves the DeAM Compliance Officer or the Covered Officer reasonably believes it would be futile to report the matter to the DeAM Compliance Officer). When actual, apparent or suspected conflicts of interest arise in connection with a Covered Officer, DeAM personnel aware of the matter should promptly contact the DeAM Compliance Officer. There will be no reprisal or retaliation against the person reporting the matter. Upon receipt of a report of a possible conflict, the DeAM Compliance Officer will take steps to determine whether a conflict exists. In so doing, the DeAM Compliance Officer may take any actions he or she determines to be appropriate in his or her sole discretion and may use all reasonable resources, including retaining or engaging legal counsel, accounting firms or other consultants, subject to applicable law.^2 The costs associated with such actions may be borne by the Fund, if appropriate, after consultation with the Fund's Board (or committee thereof). Otherwise, such costs will be borne by DeAM or other appropriate Fund service provider. After full review of a report of a possible conflict of interest, the DeAM Compliance Officer may determine that no conflict or reasonable appearance of a conflict exists. If, however, the DeAM Compliance Officer determines that an actual conflict exists, the Compliance Officer will resolve the conflict solely in the interests of the Fund, and will report the conflict and its resolution to the Fund's Board (or committee thereof). If the DeAM Compliance Officer determines that the appearance of a conflict exists, the DeAM Compliance Officer will take appropriate steps to remedy such appearance. In lieu of determining whether a conflict exists and/or resolving a conflict, the DeAM Compliance Officer instead may refer the matter to the Fund's Board (or committee thereof), as appropriate. However, the DeAM Compliance Officer must refer the matter to the Fund's Board (or committee thereof) if the DeAM Compliance Officer is directly involved in the conflict or under similar appropriate circumstances. After responding to a report of a possible conflict of interest, the DeAM Compliance Officer will discuss the matter with the person reporting it (and with the Covered Officer at issue, if different) for purposes of educating those involved on conflicts of interests (including how to detect and avoid them, if appropriate). Appropriate resolution of conflicts may restrict the personal activities of the Covered Officer and/or his family, friends or other persons. Solely because a conflict is disclosed to the DeAM Compliance Officer (and/or the Board or Committee thereof) and/or resolved by the DeAM Compliance Officer does not mean that the conflict or its resolution constitutes a waiver from the Code's requirements. - ----------------- ^2 For example, retaining a Fund's independent accounting firm may require pre-approval by the Fund's audit committee. 5 Any questions about conflicts of interests, including whether a particular situation might be a conflict or an appearance of one, should be directed to the DeAM Compliance Officer. C. Use of Personal Fund Shareholder Information A Covered Officer may not use or disclose personal information about Fund shareholders, except in the performance of his or her duties for the Fund. Each Covered Officer also must abide by the Funds' and DeAM's privacy policies under SEC Regulation S-P. D. Public Communications In connection with his or her responsibilities for or involvement with a Fund's public communications and disclosure documents (e.g., shareholder reports, registration statements, press releases), each Covered Officer must provide information to Fund service providers (within the DeAM organization or otherwise) and to the Fund's Board (and any committees thereof), independent auditors, government regulators and self-regulatory organizations that is fair, accurate, complete, objective, relevant, timely and understandable. Further, within the scope of their duties, Covered Officers having direct or supervisory authority over Fund disclosure documents or other public Fund communications will, to the extent appropriate within their area of responsibility, endeavor to ensure full, fair, timely, accurate and understandable disclosure in Fund disclosure documents. Such Covered Officers will oversee, or appoint others to oversee, processes for the timely and accurate creation and review of all public reports and regulatory filings. Within the scope of his or her responsibilities as a Covered Officer, each Covered Officer also will familiarize himself or herself with the disclosure requirements applicable to the Fund, as well as the business and financial operations of the Fund. Each Covered Officer also will adhere to, and will promote adherence to, applicable disclosure controls, processes and procedures, including DeAM's Disclosure Controls and Procedures, which govern the process by which Fund disclosure documents are created and reviewed. To the extent that Covered Officers participate in the creation of a Fund's books or records, they must do so in a way that promotes the accuracy, fairness and timeliness of those records. E. Compliance with Applicable Laws, Rules and Regulations In connection with his or her duties and within the scope of his or her responsibilities as a Covered Officer, each Covered Officer must comply with governmental laws, rules and regulations, accounting standards, and Fund policies/procedures that apply to his or her role, responsibilities and duties with respect to the Funds ("Applicable Laws"). These requirements do not impose on Covered Officers any additional substantive duties. Additionally, Covered Officers should promote compliance with Applicable Laws. If a Covered Officer knows of any material violations of Applicable Laws or suspects that such a violation may have occurred, the Covered Officer is expected to promptly report the matter to the DeAM Compliance Officer. 6 IV. Violation Reporting A. Overview Each Covered Officer must promptly report to the DeAM Compliance Officer, and promote the reporting of, any known or suspected violations of the Officer Code. Failure to report a violation may be a violation of the Officer Code. Examples of violations of the Officer Code include, but are not limited to, the following: o Unethical or dishonest behavior o Obvious lack of adherence to policies surrounding review and approval of public communications and regulatory filings o Failure to report violations of the Officer Code o Known or obvious deviations from Applicable Laws o Failure to acknowledge and certify adherence to the Officer Code The DeAM Compliance Officer has the authority to take any and all action he or she considers appropriate in his or her sole discretion to investigate known or suspected Code violations, including consulting with the Fund's Board, the independent Board members, a Board committee, the Fund's legal counsel and/or counsel to the independent Board members. The Compliance Officer also has the authority to use all reasonable resources to investigate violations, including retaining or engaging legal counsel, accounting firms or other consultants, subject to applicable law.^3 The costs associated with such actions may be borne by the Fund, if appropriate, after consultation with the Fund's Board (or committee thereof). Otherwise, such costs will be borne by DeAM. B. How to Report Any known or suspected violations of the Officer Code must be promptly reported to the DeAM Compliance Officer. C. Process for Violation Reporting to the Fund Board The DeAM Compliance Officer will promptly report any violations of the Code to the Fund's Board (or committee thereof). D. Sanctions for Code Violations Violations of the Code will be taken seriously. In response to reported or otherwise known violations, DeAM and the relevant Fund's Board may impose sanctions within the scope of their respective authority over the Covered Officer at issue. Sanctions imposed by DeAM could include termination of employment. Sanctions imposed by a Fund's Board could include termination of association with the Fund. V. Waivers from the Officer Code A Covered Officer may request a waiver from the Officer Code by transmitting a written request for a waiver to the DeAM Compliance Officer.^4 The request must include the rationale for the request and must explain how the waiver would be in furtherance of the standards of conduct described in and underlying purposes of the Officer Code. The DeAM Compliance Officer will present this information - -------------- ^3 For example, retaining a Fund's independent accounting firm may require pre-approval by the Fund's audit committee. ^4 Of course, it is not a waiver of the Officer Code if the Fund's Board (or committee thereof) determines that a matter is not a deviation from the Officer Code's requirements or is otherwise not covered by the Code. 7 to the Fund's Board (or committee thereof). The Board (or committee) will determine whether to grant the requested waiver. If the Board (or committee) grants the requested waiver, the DeAM Compliance Officer thereafter will monitor the activities subject to the waiver, as appropriate, and will promptly report to the Fund's Board (or committee thereof) regarding such activities, as appropriate. The DeAM Compliance Officer will coordinate and facilitate any required public disclosures of any waivers granted or any implicit waivers. VI. Amendments to the Code The DeAM Compliance Officer will review the Officer Code from time to time for its continued appropriateness and will propose any amendments to the Fund's Board (or committee thereof) on a timely basis. In addition, the Board (or committee thereof) will review the Officer Code at least annually for its continued appropriateness and may amend the Code as necessary or appropriate. The DeAM Compliance Officer will coordinate and facilitate any required public disclosures of Code amendments. VII. Acknowledgement and Certification of Adherence to the Officer Code Each Covered Officer must sign a statement upon appointment as a Covered Officer and annually thereafter acknowledging that he or she has received and read the Officer Code, as amended or updated, and confirming that he or she has complied with it (see Appendix B: Acknowledgement and Certification of Obligations Under the Officer Code). Understanding and complying with the Officer Code and truthfully completing the Acknowledgement and Certification Form is each Covered Officer's obligation. The DeAM Compliance Officer will maintain such Acknowledgements in the Fund's books and records. VIII. Scope of Responsibilities A Covered Officer's responsibilities under the Officer Code are limited to: (1) Fund matters over which the Officer has direct responsibility or control, matters in which the Officer routinely participates, and matters with which the Officer is otherwise involved (i.e., matters within the scope of the Covered Officer's responsibilities as a Fund officer); and (2) Fund matters of which the Officer has actual knowledge. IX. Recordkeeping The DeAM Compliance Officer will create and maintain appropriate records regarding the implementation and operation of the Officer Code, including records relating to conflicts of interest determinations and investigations of possible Code violations. 8 X. Confidentiality All reports and records prepared or maintained pursuant to this Officer Code shall be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Officer Code, such matters shall not be disclosed to anyone other than the DeAM Compliance Officer, the Fund's Board (or committee thereof), legal counsel, independent auditors, and any consultants engaged by the Compliance Officer. 9 Appendices Appendix A: List of Officers Covered under the Code, by Board:
=========================================== ============================== =========================== ========================== Fund Board Principal Executive Principal Financial Treasurer Officers Officers - ------------------------------------------- ------------------------------ --------------------------- -------------------------- Boston Julian Sluyters Paul Schubert Charles Rizzo - ------------------------------------------- ------------------------------ --------------------------- -------------------------- Chicago Julian Sluyters Paul Schubert Charles Rizzo - ------------------------------------------- ------------------------------ --------------------------- -------------------------- Closed End (except Germany) Julian Sluyters Paul Schubert Charles Rizzo - ------------------------------------------- ------------------------------ --------------------------- -------------------------- New York Julian Sluyters Paul Schubert Charles Rizzo - ------------------------------------------- ------------------------------ --------------------------- -------------------------- MSIS Julian Sluyters Paul Schubert Charles Rizzo - ------------------------------------------- ------------------------------ --------------------------- -------------------------- Hedge Strategies Fund Julian Sluyters Alexandra A. Toohey Charles Rizzo - ------------------------------------------- ------------------------------ --------------------------- -------------------------- Germany** Julian Sluyters Paul Schubert Charles Rizzo =========================================== ============================== =========================== ==========================
* Central Europe and Russia, Germany, and New Germany Funds DeAM Compliance Officer: Name: Rhonda Brier DeAM Department: Compliance Phone Numbers: 212-454-6767 Fax Numbers: 212-468-5033 As of: [September 30], 2004 10 Appendix B: Acknowledgement and Certification Initial Acknowledgement and Certification of Obligations Under the Officer Code - -------------------------------------------------------------------------------- Print Name Department Location Telephone 1. I acknowledge and certify that I am a Covered Officer under the Scudder Fund Principal Executive and Financial Officer Code of Ethics ("Officer Code"), and therefore subject to all of its requirements and provisions. 2. I have received and read the Officer Code and I understand the requirements and provisions set forth in the Officer Code. 3. I have disclosed any conflicts of interest of which I am aware to the DeAM Compliance Officer. 4. I will act in the best interest of the Funds for which I serve as an officer and have maintained the confidentiality of personal information about Fund shareholders. 5. I will report any known or suspected violations of the Officer Code in a timely manner to the DeAM Compliance Officer. - -------------------------------------------------------------------------------- Signature Date 11 Annual Acknowledgement and Certification of Obligations Under the Officer Code - -------------------------------------------------------------------------------- Print Name Department Location Telephone 6. I acknowledge and certify that I am a Covered Officer under the Scudder Fund Principal Executive and Financial Officer Code of Ethics ("Officer Code"), and therefore subject to all of its requirements and provisions. 7. I have received and read the Officer Code, and I understand the requirements and provisions set forth in the Officer Code. 8. I have adhered to the Officer Code. 9. I have not knowingly been a party to any conflict of interest, nor have I had actual knowledge about actual or apparent conflicts of interest that I did not report to the DeAM Compliance Officer in accordance with the Officer Code's requirements. 10. I have acted in the best interest of the Funds for which I serve as an officer and have maintained the confidentiality of personal information about Fund shareholders. 11. With respect to the duties I perform for the Fund as a Fund officer, I believe that effective processes are in place to create and file public reports and documents in accordance with applicable regulations. 12. With respect to the duties I perform for the Fund as a Fund officer, I have complied to the best of my knowledge with all Applicable Laws (as that term is defined in the Officer Code) and have appropriately monitored those persons under my supervision for compliance with Applicable Laws. 13. I have reported any known or suspected violations of the Officer Code in a timely manner to the DeAM Compliance Officer. - -------------------------------------------------------------------------------- Signature Date 12 Appendix C: Definitions Principal Executive Officer Individual holding the office of President of the Fund or series of Funds, or a person performing a similar function. Principal Financial Officer Individual holding the office of Treasurer of the Fund or series of Funds, or a person performing a similar function. Registered Investment Management Investment Company Registered investment companies other than a face-amount certificate company or a unit investment trust. Waiver A waiver is an approval of an exemption from a Code requirement. Implicit Waiver An implicit waiver is the failure to take action within a reasonable period of time regarding a material departure from a requirement or provision of the Officer Code that has been made known to the DeAM Compliance Officer or the Fund's Board (or committee thereof). 13
EX-99.CERT 11 cert.txt CERTIFICATION Deutsche Asset Management [LOGO] A Member of the Deutsche Bank Group Chief Executive Officer Form N-CSR Certification under Sarbanes Oxley Act I, Julian Sluyters, certify that: 1. I have reviewed this report, filed on behalf of Scudder Pathway Conservative Portfolio, Scudder Pathway Growth Portfolio, Scudder Pathway Moderate Portfolio, a series of Scudder Pathway Series, on Form N-CSR; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. October 28, 2004 /s/Julian Sluyters Julian Sluyters Scudder Pathway Conservative Portfolio, Scudder Pathway Growth Portfolio, Scudder Pathway Moderate Portfolio, a series of Scudder Pathway Series Deutsche Asset Management [LOGO] A Member of the Deutsche Bank Group Chief Financial Officer Form N-CSR Certification under Sarbanes Oxley Act I, Paul Schubert, certify that: 1. I have reviewed this report, filed on behalf of Scudder Pathway Conservative Portfolio, Scudder Pathway Growth Portfolio, Scudder Pathway Moderate Portfolio, a series of Scudder Pathway Series, on Form N-CSR; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. October 28, 2004 /s/Paul Schubert Paul Schubert Chief Financial Officer Scudder Pathway Conservative Portfolio, Scudder Pathway Growth Portfolio, Scudder Pathway Moderate Portfolio, a series of Scudder Pathway Series EX-99.906 12 cert906.txt 906 CERTIFICATION Deutsche Asset Management [LOGO] A Member of the Deutsche Bank Group Chief Executive Officer Section 906 Certification under Sarbanes Oxley Act I, Julian Sluyters, certify that: 1. I have reviewed this report, filed on behalf of Scudder Pathway Conservative Portfolio, Scudder Pathway Growth Portfolio, Scudder Pathway Moderate Portfolio, a series of Scudder Pathway Series, on Form N-CSR; 2. Based on my knowledge and pursuant to 18 U.S.C. ss. 1350, the periodic report on Form N-CSR (the "Report") fully complies with the requirements of ss. 13 (a) or ss. 15 (d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. October 28, 2004 /s/Julian Sluyters Julian Sluyters Chief Executive Officer Scudder Pathway Conservative Portfolio, Scudder Pathway Growth Portfolio, Scudder Pathway Moderate Portfolio, a series of Scudder Pathway Series Deutsche Asset Management [LOGO] A Member of the Deutsche Bank Group Chief Financial Officer Section 906 Certification under Sarbanes Oxley Act I, Paul Schubert, certify that: 1. I have reviewed this report, filed on behalf of Scudder Pathway Conservative Portfolio, Scudder Pathway Growth Portfolio, Scudder Pathway Moderate Portfolio, a series of Scudder Pathway Series, on Form N-CSR; 2. Based on my knowledge and pursuant to 18 U.S.C. ss. 1350, the periodic report on Form N-CSR (the "Report") fully complies with the requirements of ss. 13 (a) or ss. 15 (d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. October 28, 2004 /s/Paul Schubert Paul Schubert Chief Financial Officer Scudder Pathway Conservative Portfolio, Scudder Pathway Growth Portfolio, Scudder Pathway Moderate Portfolio, a series of Scudder Pathway Series
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