INSTITUTIONAL GOVERNMENT PORTFOLIO
INSTITUTIONAL CASH PORTFOLIO
INSTITUTIONAL TAX-FREE PORTFOLIO
- --------------------------------------------------------------------------------
ANNUAL REPORT
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
Board of Directors
<S> <C>
DAVID S. LEE^(1) Chairman of the Board; Managing Director, Scudder, Stevens
& Clark, Inc.
EDGAR R. FIEDLER(1)^(2)^(3) Vice President and Economic Counsellor, The Conference Board;
formerly Assistant Secretary of the Treasury for Economic Policy
PETER B. FREEMAN(2)^(3) Corporate Director and Trustee
ROBERT W. LEAR(2)^(3) Executive-in-Residence and Visiting Professor, Columbia
University Graduate School of Business; Director or Trustee,
Various Organizations
DANIEL PIERCE^(1) President; Chairman of the Board, Scudder, Stevens & Clark, Inc.
^(1)Member of Executive Committee
^(2)Member of Nominating Committee
^(3)Member of Audit Committee
</TABLE>
- --------------------------------------------------------------------------------
Officers
DAVID S. LEE Chairman of the Board
DANIEL PIERCE President
STEPHEN L. AKERS Vice President
K. SUE COTE Vice President
CAROL L. FRANKLIN Vice President
JERARD K. HARTMAN Vice President
KATHRYN L. QUIRK Vice President
THOMAS W. JOSEPH Vice President and Assistant Secretary
THOMAS F. McDONOUGH Vice President and Secretary
PAMELA A. McGRATH Vice President and Treasurer
2
<PAGE>
Dear Shareholder:
Operated exclusively for institutions and their clients, Scudder Institutional
Fund, Inc., which includes Institutional Government Portfolio, Institutional
Cash Portfolio, and Institutional Tax-Free Portfolio, provided competitive
investment results in 1996. These three money market portfolios seek to provide
high levels of current income while preserving capital and maintaining
liquidity.
All three portfolios seek to maintain a net asset value of $1.00, and have done
so since their inception. (There is no guarantee, of course, that each portfolio
will maintain stable net asset values.) The Institutional Tax-Free Portfolio
seeks to provide income exempt from Federal income tax.
Total net assets for Institutional Government Portfolio, Institutional Cash
Portfolio, and Institutional Tax-Free Portfolio were $423 million on December
31, compared with $408 million at the start of the year, which does not include
the assets of Institutional Federal Portfolio. Institutional Federal Portfolio
ceased operations on September 30, 1996. A table showing dividend payments and
other financial information for the twelve months ended December 31, 1996, as
well as the last five years ended December 31 for each portfolio is on page 16.
In addition, please see the following pages for financial statements for the
year ended December 31, 1996, as well as a list of each portfolio's investments.
If you have any questions concerning the Scudder Institutional Fund, Inc.,
please call toll free (800) 854-8525.
/s/David S. Lee
David S. Lee
Chairman
3
<PAGE>
<PAGE>
SCUDDER INSTITUTIONAL FUND, INC.
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
GOVERNMENT PORTFOLIO
<TABLE>
<CAPTION>
MATURITY PRINCIPAL VALUE
DATE AMOUNT (NOTE 2a)
---------- ------------- -------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS - 9.1%
Repurchase Agreement with State Street Bank dated
12/31/96 at 6.0% (proceeds at maturity $4,304,434)
collateralized by a $4,055,000 U.S. Treasury Bond,
7.125%, 2/15/23, (Cost $4,303,000) (note 3) ................ 1/2/97 $ 4,303,000 $ 4,303,000
------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 91.1%
Federal Home Loan Bank Discount Note .......................... 1/16/97 4,500,000 4,490,213
Federal Home Loan Bank Discount Note .......................... 1/17/97 4,000,000 3,990,738
Federal Home Loan Bank Discount Note .......................... 4/24/97 2,500,000 2,458,959
Federal Home Loan Bank Discount Note .......................... 5/5/97 2,000,000 1,961,629
Federal Home Loan Mortgage Corp. Discount Note ................ 1/17/97 5,300,000 5,287,727
Federal National Mortgage Association Discount Note ........... 1/7/97 2,000,000 1,998,267
Federal National Mortgage Association Discount Note ........... 6/5/97 3,000,000 2,933,608
Student Loan Marketing Association, 5.39% ..................... 1/14/97* 11,700,000 11,700,000
Student Loan Marketing Association, 5.57% ..................... 1/7/97* 8,000,000 8,011,851
------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (cost $42,832,992) ...................................... 42,832,992
------------
TOTAL INVESTMENTS - 100.2% (cost $47,135,992)** .................................................. 47,135,992
------------
OTHER ASSETS AND LIABILITIES - (0.2%)
Cash ............................................................................................. 907
Interest receivable and other assets ............................................................. 192,294
Dividend payable ................................................................................. (206,724)
Management fee payable (note 4) .................................................................. (8,882)
Accrued expenses (note 4) ........................................................................ (83,992)
------------
(106,397)
------------
NET ASSETS - 100.0%
Applicable to 47,029,595 shares of $.001 par value Capital Stock outstanding;
5,000,000,000 shares authorized (note 5) ...................................................... $ 47,029,595
============
NET ASSET VALUE PER SHARE ........................................................................ $1.00
=====
</TABLE>
* Date of next interest rate change.
** Cost for federal income tax purposes.
See notes to financial statements.
4
<PAGE>
SCUDDER INSTITUTIONAL FUND, INC.
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
CASH PORTFOLIO
<TABLE>
<CAPTION>
MATURITY PRINCIPAL VALUE
DATE AMOUNT (NOTE 2a)
-------- ------------- ------------
<S> <C> <C> <C>
CERTIFICATES OF DEPOSIT -- 3.7%
Societe Generale, 5.37% (cost $10,000,000) .................... 1/22/97 $ 10,000,000 $ 10,000,000
------------
COMMERCIAL PAPER -- 62.3%
American Express Credit Corp. ................................. 1/7/97 12,000,000 11,989,400
AVCO Financial Services Inc. .................................. 1/21/97 11,000,000 10,967,550
Barclays U.S. Funding Corp. ................................... 1/15/97 12,000,000 11,974,193
Beneficial Corp. .............................................. 9/25/97 5,000,000 4,803,458
Centric Funding Corp. ......................................... 1/13/97 10,000,000 9,981,833
Ciesco L.P. ................................................... 1/3/97 15,000,000 14,995,521
CIT Group Holdings, Inc. ...................................... 1/23/97 10,000,000 9,967,428
Commerzbank AG ................................................ 2/28/97 10,000,000 9,914,772
Dresdner U.S. Finance, Inc. ................................... 1/7/97 10,000,000 9,990,933
General Electric Credit Corp. ................................. 1/28/97 10,000,000 9,960,100
Household Finance Corp. ....................................... 1/15/97 12,000,000 11,975,173
New Center Asset Trust ........................................ 1/14/97 13,000,000 12,974,650
Norfolk Southern Corp. ........................................ 1/6/97 10,000,000 9,992,653
Rabobank Nederland N.V. ....................................... 1/7/97 8,000,000 7,992,800
Rabobank Nederland N.V. ....................................... 6/9/97 5,000,000 4,883,621
Receivables Capital Corp. ..................................... 1/8/97 7,252,000 7,244,273
Republic New York Corp. ....................................... 1/15/97 10,000,000 9,979,078
------------
TOTAL COMMERCIAL PAPER (cost $169,587,436) ....................................................... 169,587,436
------------
REPURCHASE AGREEMENTS -- 2.2%
State Street Bank dated 12/31/96 at 6.0%
(proceeds at maturity $5,987,995)
collateralized by $5,645,000 U.S. Treasury
Bond, 7.125%, 2/15/23 (cost $5,986,000) (note 3) ........... 1/2/97 5,986,000 5,986,000
------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 14.3%
Federal National Mortgage Association, 5.18% .................. 3/14/97* 15,000,000 15,000,000
Student Loan Marketing Association, 5.39% ..................... 1/14/97* 14,000,000 14,000,000
Student Loan Marketing Association, 5.57% ..................... 1/7/97* 10,000,000 10,014,813
------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (cost $39,014,813) ...................................... 39,014,813
------------
</TABLE>
See notes to financial statements.
5
<PAGE>
SCUDDER INSTITUTIONAL FUND, INC.
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
CASH PORTFOLIO (continued)
<TABLE>
<CAPTION>
MATURITY PRINCIPAL VALUE
DATE AMOUNT (NOTE 2a)
-------- ------------- ------------
<S> <C> <C> <C>
NOTES -- 16.7%
Bank of America, 5.49% ........................................ 5/7/97 $ 11,000,000 $ 11,000,000
Bank of America Illinois, 5.7% ................................ 5/28/97 2,500,000 2,498,921
Fifth Third Bank, 5.36% ....................................... 1/8/97 10,000,000 10,000,009
FCC National Bank, 5.5% ....................................... 4/25/97 12,000,000 12,003,470
Pittsburgh National Bank, 5.275% .............................. 1/1/97* 10,000,000 9,995,126
-------------
TOTAL NOTES (cost $45,497,526) .................................................................. 45,497,526
-------------
TOTAL INVESTMENTS -- 99.2% (cost $270,085,775)** ................................................ 270,085,775
-------------
OTHER ASSETS AND LIABILITIES -- 0.8%
Cash ............................................................................................ 146
Receivable for Portfolio shares sold ............................................................ 2,843,195
Interest receivable and other assets ............................................................ 779,143
Dividend payable ................................................................................ (1,359,898)
Payable for Portfolio shares redeemed ........................................................... (1,144)
Management fee payable (note 4) ................................................................. (39,584)
Accrued expenses (note 4) ....................................................................... (137,799)
-------------
2,084,059
-------------
NET ASSETS -- 100.0%
Applicable to 272,169,834 shares of $.001 par value Capital Stock outstanding;
5,000,000,000 shares authorized (note 5) ..................................................... $ 272,169,834
=============
NET ASSET VALUE PER SHARE ....................................................................... $1.00
=====
</TABLE>
* Date of next interest rate change.
** Cost for federal income tax purposes.
See notes to financial statements
6
<PAGE>
SCUDDER INSTITUTIONAL FUND, INC.
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
TAX-FREE PORTFOLIO
<TABLE>
<CAPTION>
CREDIT PRINCIPAL VALUE
RATING* SHORT-TERM MUNICIPAL SECURITIES -- 99.8% AMOUNT (NOTE 2a)
- ------- ------------ ------------
<S> <C> <C>
ALASKA
A-1+ Alaska Housing Finance Corp., General Mortgage Revenue, Series 1991-A,
VRDN, 4.3%, 6/1/26 ...................................................... $ 3,000,000 $ 3,000,000
MIG-1 Valdez, Alaska, Marine Terminal ARCO Transportation Alaska Inc. Project,
Series 1994A, TECP, 3.4%, 3/11/97 ...................................... 3,000,000 3,000,000
------------
TOTAL ALASKA ........................................................ 6,000,000
------------
ARIZONA
A-1 Apache County, Arizona, Industrial Development Revenue, Tucson Electric
Co., Springerville Project, VRDN, 4.10%, 12/15/18 ....................... 2,500,000 2,500,000
A-1+ Apache County, Arizona, Industrial Development Revenue, Tucson Electric
Co., Springerville Project, Series 1985 A, VRDN, 4.10%, 12/1/20 ......... 500,000 500,000
A-1+ Pima County, Arizona, Industrial Development Authority, Tucson Electric
Power Co., Series 1982 A, VRDN, 4.10%, 7/1/22 ........................... 1,900,000 1,900,000
------------
TOTAL ARIZONA ....................................................... 4,900,000
------------
CALIFORNIA
P-1 California State General Obligation, TECP, Series 1996, 3.55%, 1/14/97 ..... 1,750,000 1,750,000
SP-1+ California State General Obligation, RAN, Series 1996, 4.5%, 6/30/97 ....... 1,000,000 1,002,513
SS&C City of Riverside, California, Countrywood Apartments, Multi-Family
Revenue, Series 1985D, Weekly Demand Bonds, 4.125%, 5/1/05 .............. 1,500,000 1,500,000
A-1 Lancaster, California, Willows Project Series, Weekly Demand Bonds,
4.15%, 2/1/05 ........................................................... 1,000,000 1,000,000
MIG-1 Los Angeles County California, TRAN, 4.5%, 6/30/97 ......................... 3,000,000 3,010,206
------------
TOTAL CALIFORNIA .................................................... 8,262,719
------------
COLORADO
A-1+ Clear Creek County, Colorado, Colorado Counties Financing Program,
Series 1988, VRDN, 4.05%, 6/1/98 ........................................ 205,000 205,000
A-1+ Regional Transportation District, Colorado, Special Passenger Fare
Revenue Bond, Series 1989 A, VRDN, 4%, 6/1/99 ........................... 2,500,000 2,500,000
------------
TOTAL COLORADO ...................................................... 2,705,000
------------
</TABLE>
See notes to financial statements.
7
<PAGE>
SCUDDER INSTITUTIONAL FUND, INC.
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
TAX-FREE PORTFOLIO (continued)
<TABLE>
<CAPTION>
CREDIT PRINCIPAL VALUE
RATING* AMOUNT (NOTE 2a)
- ------- ------------ ------------
<S> <C> <C>
CONNECTICUT
AAA Hartford Redevelopment Agency, VRDN, 3.85%, 6/1/20 ......................... $ 2,000,000 $ 2,000,000
------------
FLORIDA
A-1+ Orlando, Florida, Wastewater System Revenues, Series 1990 A, TECP,
3.6%, 2/25/97 ........................................................... 1,000,000 1,000,000
A-1 Sarasota County, Florida, Public Hospital District, Sarasota Memorial
Hospital, Series 1993A, TECP, 3.7%, 2/18/97 ............................. 2,500,000 2,500,000
MIG-1 University of Northern Florida, Capital Improvement Revenue, VRDN,
4.05%, 11/1/24 .......................................................... 2,000,000 2,000,000
------------
TOTAL FLORIDA ....................................................... 5,500,000
------------
GEORGIA
A-1+ Burke County, Georgia, Pollution Control Revenue, Ogelthorpe Power,
Vogtle Project, Series 1994-A, VRDN, FGIC Insured, 4%, 1/1/19 ........... 1,000,000 1,000,000
A-1+ DeKalb Private Hospital Authority, Egleston Children's Hospital at Emory
University, Series 1994 B, VRDN, 4.15%, 3/1/24 .......................... 1,400,000 1,400,000
------------
TOTAL GEORGIA ....................................................... 2,400,000
------------
ILLINOIS
MIG-1 Illinois Educational Facilities Authority, University Pooled Finance
Program, VRDN, FGIC Insured, 4.25%, 12/1/05 ............................. 1,810,000 1,810,000
------------
KENTUCKY
MIG-1 Mayfield, Kentucky, Multi-City Lease Revenue, Kentucky League of Cities
Funding Trust, VRDN, Series 1996, 4.3%, 7/1/26 .......................... 1,000,000 1,000,000
------------
LOUISIANA
MIG-1 Louisiana Public Facilities Authority, Hospital Revenue, Willis Knighton
Medical Center, VRDN, AMBAC Insured, 4.2%, 9/1/25 ....................... 3,000,000 3,000,000
------------
MARYLAND
A-1 Anne Arundel County, Maryland, Baltimore Electric & Gas Company, TECP,
3.6%, 3/5/97 ............................................................ 1,200,000 1,200,000
------------
MASSACHUSETTS
SP-1 Massachusetts Bay Transportation Authority, Series B, 4.75%, 9/5/97 ........ 1,000,000 1,005,204
------------
MINNESOTA
A-1+ Regents of the University of Minnesota, Series 1996 A, TECP, 3.6%,
2/10/97 ................................................................. 1,000,000 1,000,000
------------
MISSOURI
SP-1+ Missouri HEFA School District, Advance Funding Notes, Series 1996 C,
Kansas City School District, 4.5%, 9/8/97 ............................... 1,000,000 1,003,959
------------
</TABLE>
See notes to financial statements.
8
<PAGE>
<TABLE>
<CAPTION>
CREDIT PRINCIPAL VALUE
RATING* AMOUNT (NOTE 2a)
- ------- ------------ ------------
<S> <C> <C>
MONTANA
MIG-1 Montana State General Obligation, Unlimited, TRAN, Series 1996, 4.5%,
6/27/97 ................................................................. $ 2,000,000 $ 2,007,806
------------
NEW MEXICO
A-1+ Albuquerque, New Mexico, Gross Receipts/Lodgers Tax, Series 1991, VRDN,
4.10%, 7/1/22 ........................................................... 2,000,000 2,000,000
P-1 Farmington, New Mexico, Pollution Control Revenue, Arizona Public
Service Co., Series 1994 B, VRDN, 5%, 9/1/24 ............................ 570,000 570,000
------------
TOTAL NEW MEXICO .................................................... 2,570,000
------------
NEW YORK
MIG-1 New York City, New York, General Obligation, Series A-4, VRDN,
5%, 8/1/22 .............................................................. 3,000,000 3,000,000
A-1+ New York City, New York, General Obligation, Series 1994 H-3, TECP, FSA
Insured, 3.5%, 2/11/97 ................................................. 600,000 600,000
------------
TOTAL NEW YORK ...................................................... 3,600,000
------------
NORTH CAROLINA
MIG-1 North Carolina Medical Care Commission, Carol Woods Project, VRDN,
5%, 4/1/21 .............................................................. 300,000 300,000
A-1+ North Carolina Municipal Power Agency #1, Catawaba Project, Series
1996A, TECP, 3.55%, 2/20/97 ............................................. 2,000,000 2,000,000
------------
TOTAL NORTH CAROLINA ................................................ 2,300,000
------------
OHIO
MIG-1 Cuyahoga County, Ohio, Health & Education, University Hospital of
Cleveland, VRDN, 5%, 1/1/16 ............................................. 2,300,000 2,300,000
A-1+ Ohio State University Revenue, General Receipts Bonds, VRDN,
Series 1986 B, 4.05%, 12/1/06 ........................................... 1,600,000 1,600,000
------------
TOTAL OHIO .......................................................... 3,900,000
------------
OREGON
MIG-1 Oregon General Obligation, Series 1973-G, VRDN, 4%, 12/1/18 ................ 1,900,000 1,900,000
------------
PENNSYLVANIA
SS&C Elk County, Pennsylvania, Industrial Development Authority, VRDN,
3.795%, 3/1/04 .......................................................... 1,000,000 1,000,000
A-1+ Emmaus, General Authority Pennsylvania, Local Government, VRDN,
4.15%, 3/1/24 ........................................................... 1,000,000 1,000,000
A-1 Emmaus, Pennsylvania, General Authority, Local Government Revenue Bond
Pool Program, 1989 Series G-5, VRDN, 4.20%, 3/1/24 ...................... 1,200,000 1,200,000
A-1+ Emmaus, Pennsylvania, General Authority, Local Government Revenue Bond
Pool Program, Series 1989 G, VRDN, 4.15%, 3/1/24 ........................ 1,500,000 1,500,000
MIG-1 Philadelphia, Pennsylvania, TRAN, 4.5%, 6/30/97 ............................ 1,000,000 1,002,606
</TABLE>
See notes to financial statements.
9
<PAGE>
SCUDDER INTUTIONAL FUND, INC.
STATEMENT NET ASSETS
DECEMBER 31, 1996
TAX-FREE PORTFOLIO (continued)
<TABLE>
<CAPTION>
CREDIT PRINCIPAL VALUE
RATING* AMOUNT (NOTE 2a)
- ------- ------------ ------------
<S> <C> <C>
SP-1 Philadelphia, Pennsylvania, School District, TRAN, Series 1996-1997,
4.5%, 6/30/97 ........................................................... $ 2,000,000 $ 2,004,748
------------
TOTAL PENNSYLVANIA .................................................. 7,707,354
------------
SOUTH CAROLINA
MIG-1 South Carolina Jobs-Economic Development Authority, Franciscan Sisters
of the Poor, St. Francis Hospital, VRDN, 4.95%, 7/1/22 .................. 1,900,000 1,900,000
------------
TENNESSEE
MIG-1 Clarksville, Tennessee, Public Building Authority, Pooled Financing,
Series 1990, VRDN, MBIA Insured, 4.0%, 7/1/13 ........................... 2,785,000 2,785,000
MIG-1 Franklin, Tennessee, Industrial Development Revenue, Franklin Oaks
Apartments, VRDN, 4.25%, 12/1/07 ........................................ 2,000,000 2,000,000
A-1+ Metropolitan Nashville Airport Authority, Tennessee, VRDN, 4.95%,
10/1/12 ................................................................. 900,000 900,000
------------
TOTAL TENNESSEE ..................................................... 5,685,000
------------
TEXAS
P-1 Angelina & Neches River Authority, Solid Waste Disposal, VRDN, Series
1984 B, 5%, 5/1/14 ...................................................... 1,000,000 1,000,000
MIG-1 Angelina & Neches River Authority, IDC, Solid Waste Disposal, Series
1984 D, VRDN, 5%, 5/1/14 ................................................ 900,000 900,000
A-1+ Austin, Texas, Utility Systems Revenue, TECP, 3.4%, 3/18/97 ................ 3,000,000 3,000,000
P-1 Grapevine, Texas, Industrial Development Authority Corp., VRDN, 4.95%,
12/1/24 ................................................................. 300,000 300,000
A-1+ Harris County Children's Hospital, VRDN, 4.0%, 8/1/20 ...................... 1,000,000 1,000,000
MIG-1 Harris County, Texas, TAN, Series 1996, 4.5%, 2/28/97 ...................... 1,000,000 1,001,150
MIG-1 Lone Star, Texas, Airport Improvement Authority, Series A-4, VRDN,
4.95%, 12/1/14 .......................................................... 400,000 400,000
A-1+ San Antonio, Texas, Electric & Gas City Public Services, Series 1995 A,
TECP, 3.5%, 1/28/97 ..................................................... 3,000,000 3,000,000
P-1 San Antonio, Texas, Electric & Gas City Public Services, Series 1988 A,
TECP, 3.45%, 3/10/97 .................................................... 1,500,000 1,500,000
A-1+ San Antonio, Texas, Water System Revenue, Series 1995, TECP, 3.6%,
2/7/97 .................................................................. 1,500,000 1,500,000
MIG-1 Texas, TRAN, Series 1996, 4.75%, 8/29/97 ................................... 1,000,000 1,005,202
SP-1+ Texas, TRAN, Series 1996, 4.75%, 8/29/97 ................................... 3,000,000 3,015,620
------------
TOTAL TEXAS ......................................................... 17,621,972
------------
</TABLE>
See notes to financial statements.
10
<PAGE>
<TABLE>
<CAPTION>
CREDIT PRINCIPAL VALUE
RATING* AMOUNT (NOTE 2a)
- ------- ------------ ------------
<S> <C> <C>
VERMONT
SS&C Vermont Industrial Development Authority, Mount Snow, Limited
Series 1904, VRDN, 3.795%, 4/1/99 ....................................... $ 630,000 $ 630,000
MIG-1 Vermont Student Assistance Corporation, VRDN, 3.65%, 1/1/04 ................ 2,700,000 2,700,000
------------
TOTAL VERMONT ....................................................... 3,330,000
------------
WASHINGTON
A-1+ State of Washington, Various Purpose General Obligation, Series 96B,
VRDN, 4%, 6/1/20 ........................................................ 2,400,000 2,400,000
MIG-1 Washington Healthcare Facilities Authority Revenue, Fred Hutchinson
Cancer Center, VRDN, Series 1996, 5.25%, 1/1/23 ......................... 300,000 300,000
A-1 Washington Public Power Supply System, Nuclear Project #1, 1993
Series 1A-1, VRDN, 4.10%, 7/1/17 ........................................ 4,800,000 4,800,000
MIG-1 Washington Public Power Supply System, Projects #1 and #3, Refunding
Revenue, Series 1993-1A1, VRDN, 4.10%, 7/1/18 ........................... 1,475,000 1,475,000
------------
TOTAL WASHINGTON .................................................... 8,975,000
------------
WISCONSIN
AAA Wausau, Wisconsin, Pollution Control Revenue, Minnesota Mining and
Manufacturing, Series 1982, VRDN, 4.22%, 8/1/17 ......................... 500,000 500,000
------------
TOTAL INVESTMENTS (Cost $103,784,014)** .................................... 103,784,014
------------
OTHER ASSETS AND LIABILITIES -- 0.2%
Interest receivable and other assets .................................................. 594,597
Receivable for investments sold ....................................................... 100,000
Due to custodian bank ................................................................. (37,618)
Dividend payable ...................................................................... (300,570)
Management fee payable (note 4) ....................................................... (13,255)
Accrued expenses (note 4) ............................................................. (103,055)
------------
240,099
------------
NET ASSETS -- 100.0%
Applicable to 104,024,113 shares of $.001 par value Capital Stock outstanding;
2,000,000,000 shares authorized (note 5) ........................................... $104,024,113
============
NET ASSET VALUE PER SHARE ............................................................. $1.00
=====
</TABLE>
** Cost for federal income tax purposes.
See notes to financial statements.
11
<PAGE>
SCUDDER INSTITUTIONAL FUND, INC.
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
TAX-FREE PORTFOLIO (continued)
- --------------------------------------------------------------------------------
* CREDIT RATINGS (UNAUDITED) SHOWN ARE EITHER BY MOODY'S INVESTORS SERVICE,
INC., STANDARD & POOR'S CORPORATION OR SCUDDER:
MOODY'S STANDARD & POOR'S
P-1 A-1/A-1+ Commercial paper of the highest quality.
MIG-1/MIG-1+ SP-1/SP-1+ Short-term tax-exempt instrument of the best
quality with strong protection.
VMIG-1 Short-term tax-exempt variable rate demand
instrument of the best quality with strong
protection.
ABBREVIATIONS USED IN THE STATEMENT:
TECP Tax Exempt Commercial Paper
TAN Tax Anticipation Note
SS&C These securities are not rated by either Moody's or Standard &
Poor's. Scudder has determined that these securities are of
comparable quality to rated acceptable notes on a cash flow basis
and are of appropriate credit for the standards required by the
Fund's investment objective.
VRDN Variable Rate Demand Note
TRAN Tax Revenue Anticipation Note
RAN Revenue Anticipation Note
See notes to financial statements.
12
<PAGE>
SCUDDER INSTITUTIONAL FUND, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
GOVERNMENT CASH TAX-FREE
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest Income ............................................... $ 3,458,695 $ 15,518,054 $ 3,518,859
------------ ------------- ------------
EXPENSES (note 2c):
Management fee (note 4) ....................................... 96,302 430,252 149,789
Shareholder services (note 4) ................................. 27,640 26,666 24,808
Directors' fees and expenses (note 4) ......................... 9,389 12,530 10,324
Custodian and accounting fees (note 4) ........................ 44,726 69,392 61,584
Professional services ......................................... 7,906 43,360 14,166
Reports to shareholders ....................................... 1,900 6,096 8,192
Registration fees ............................................. 2,839 3,604 3,114
Miscellaneous ................................................. 12,739 15,342 5,346
------------ ------------- ------------
Net expenses ............................................... 203,441 607,242 277,323
------------ ------------- ------------
NET INVESTMENT INCOME AND INCREASE IN NET
ASSETS FROM OPERATIONS ..................................... $ 3,255,254 $ 14,910,812 $ 3,241,536
============ ============= ============
</TABLE>
See notes to financial statements.
13
<PAGE>
SCUDDER INSTITUTIONAL FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
GOVERNMENT PORTFOLIO
-------------------------------
1996 1995
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income and increase in
net assets from operations ......... $ 3,255,254 $ 3,796,930
Dividends (notes 2b and 2d) ........... (3,255,254) (3,796,930)
-------------- --------------
-- --
-------------- --------------
CAPITAL STOCK TRANSACTIONS (note 5):
Proceeds from sales of shares ......... 264,453,259 432,240,116
Net asset value of shares issued in
reinvestment of dividends .......... 974,278 1,131,510
-------------- --------------
265,427,537 433,371,626
Cost of shares redeemed ............... (298,316,303) (471,317,385)
-------------- --------------
Increase (decrease) in net assets
from capital stock transactions .... (32,888,766) (37,945,759)
-------------- --------------
Total increase (decrease) in net assets .. (32,888,766) (37,945,759)
NET ASSETS:
Beginning of period ................... 79,918,361 117,864,120
-------------- --------------
End of period ......................... $ 47,029,595 79,918,361
============== ==========
</TABLE>
See notes to financial statements.
14
<PAGE>
<TABLE>
<CAPTION>
CASH PORTFOLIO TAX-FREE PORTFOLIO
------------------------------- -------------------------------
1996 1995 1996 1995
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income and increase in
net assets from operations ......... $ 14,910,812 $ 18,218,019 $ 3,241,536 $ 3,440,240
Dividends (notes 2b and 2d) ........... (14,910,812) (18,218,019) (3,241,536) (3,440,240)
-------------- -------------- -------------- ---------------
-- -- -- --
-------------- -------------- -------------- ---------------
Capital Stock Transactions (note 5):
Proceeds from sales of shares ......... 752,470,938 924,578,235 323,081,752 522,266,284
Net asset value of shares issued in
reinvestment of dividends .......... 4,463,405 6,908,170 390,286 907,361
-------------- -------------- -------------- ---------------
756,934,343 931,486,405 323,472,038 523,173,645
Cost of shares redeemed ............... (734,192,638) (953,063,076) (298,497,238) (611,981,728)
-------------- -------------- -------------- ---------------
Increase (decrease) in net assets
from capital stock transactions .... 22,741,705 (21,576,671) 24,974,800 (88,808,083)
-------------- -------------- -------------- ---------------
Total increase (decrease) in net assets .. 22,741,705 (21,576,671) 24,974,800 (88,808,083)
NET ASSETS:
Beginning of period ................... 249,428,129 271,004,800 79,049,313 167,857,396
-------------- -------------- -------------- ---------------
End of period ......................... $ 272,169,834 $ 249,428,129 $ 104,024,113 $ 79,049,313
============== ============== ============== ===============
</TABLE>
See notes to financial statements.
15
<PAGE>
SCUDDER INSTITUTIONAL FUND, INC.
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
RATIO OF RATIO OF NET
OPERATING INVESTMENT
NET ASSET NET ASSET EXPENSES INCOME NET ASSETS
VALUE, AT NET VALUE, AT TO AVERAGE TO AVERAGE END OF
BEGINNING INVESTMENT DIVIDENDS END TOTAL DAILY DAILY PERIOD
PERIOD OF PERIOD INCOME PAID OF PERIOD RETURN NET ASSETS NET ASSETS (MILLIONS)
- --------------------------- --------- ---------- --------- --------- ------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GOVERNMENT PORTFOLIO
Year ended 12/31/96 ........ $ 1.00 $ .051 $ (.051) $ 1.00 5.17% 0.32% 5.06% $47
Year ended 12/31/95 ........ 1.00 .055 (.055) 1.00 5.60 0.39 5.46 80
Year ended 12/31/94 ........ 1.00 .040 (.040) 1.00 4.09 0.28 3.89 118
Year ended 12/31/93 ........ 1.00 .030 (.030) 1.00 3.01 0.26 2.97 196
Year ended 12/31/92 ........ 1.00 .037 (.037) 1.00 3.74 0.24 3.69 247
CASH PORTFOLIO
Year ended 12/31/96 ........ 1.00 .052 (.052) 1.00 5.33 0.21 5.21 272
Year ended 12/31/95 ........ 1.00 .057 (.057) 1.00 5.88 0.25 5.73 249
Year ended 12/31/94 ........ 1.00 .041 (.041) 1.00 4.13 0.24 3.94 271
Year ended 12/31/93 ........ 1.00 .031 (.031) 1.00 3.16 0.22 3.12 468
Year ended 12/31/92 ........ 1.00 .038 (.038) 1.00 3.88 0.25 3.66 662
TAX-FREE PORTFOLIO
Year ended 12/31/96 ........ 1.00 .032 (.032) 1.00 3.29 0.28 3.25 104
Year ended 12/31/95 ........ 1.00 .036 (.036) 1.00 3.69 0.35 3.61 79
Year ended 12/31/94(a)(b) .. 1.00 .027 (.027) 1.00 2.74 0.27 2.73 168
Year ended 12/31/93 ........ 1.00 .023 (.023) 1.00 2.32 0.29 2.30 125
Year ended 12/31/92 ........ 1.00 .029 (.029) 1.00 2.92 0.31 2.82 96
</TABLE>
(a) The annualized operating expense ratio including expenses, reimbursed
management fee, and other expenses not imposed would have been 0.29% for the
year ended December 31, 1994 for the Tax-Free Portfolio.
(b) Total returns are higher, for the period indicated, due to the maintenance
of the Portfolio's expenses.
16
<PAGE>
SCUDDER INSTITUTIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
Scudder Institutional Fund, Inc. (the "Fund") is an open-end diversified
management investment company which currently has three active money market
investment portfolios: the Government Portfolio, Cash Portfolio and Tax-Free
Portfolio (collectively the "Portfolios"). The Federal Portfolio ceased
operations on September 30, 1996.
2. SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies followed by the Fund are:
(a) Security Valuation-Each of the Portfolios values its investments using
the amortized cost method, which involves initially valuing an investment at its
cost and thereafter assuming a constant rate of amortization to maturity of any
premium or discount. This method results in a value approximating market.
(b) Federal Income Taxes-The Fund intends to qualify each Portfolio as a
regulated investment company under subchapter M of the Internal Revenue Code and
to distribute all of its taxable and tax-exempt income, including any realized
net capital gains, to shareholders. Therefore, no Federal income tax provision
is required.
(c) Allocation of Expenses-Expenses not directly chargeable to a specific
Portfolio are allocated primarily on the basis of relative net assets.
(d) Dividends-Dividends from net investment income are declared each
business day to shareholders of record that day and paid on the first business
day of the following month.
(e) Other-Investment transactions are recorded on trade date. Interest
income, including the accretion or amortization of discount or premium, is
recorded on the accrual basis. Discounts or premiums on securities purchased are
accreted or amortized, respectively, on a straight line basis over the life of
the respective securities. Distributions to shareholders are recorded on the
ex-dividend date.
3. REPURCHASE AGREEMENTS
It is the Fund's policy to obtain possession, through its custodian, of the
securities underlying each repurchase agreement to which it is a party, either
through physical delivery or book entry transfer in the Federal Reserve System
or Participants Trust Company. Payment by the Fund in respect of a repurchase
agreement is authorized only when proper delivery of the underlying securities
is made to the Fund's custodian. The Fund's investment manager values such
underlying securities each business day using quotations obtained from a
reputable, independent source. If the Fund's investment manager determines that
the value of such underlying securities (including accrued interest thereon)
does not at least equal the value of each repurchase agreement (including
accrued interest thereon) to which such securities are subject, the investment
manager will ask for additional securities to be delivered to the Fund's
custodian. In connection with each repurchase agreement transaction, if the
seller defaults and the value of the collateral declines or if the seller enters
an insolvency proceeding, realization of the collateral by the Fund may be
delayed or limited.
4. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The investment advisory agreements between Scudder, Stevens & Clark, Inc.
("Scudder"), the Fund's investment manager, and the Fund on behalf of each
Portfolio provide for a management fee payable each month, based upon the
average daily value of each Portfolio's net assets, at annual rates of 0.15%.
Scudder Service Corporation ("SSC"), a subsidiary of Scudder, is the
Portfolio's shareholders service, transfer and dividend disbursing agent. For
the year ended December 31, 1996, the amount charged to each of the Portfolios
by SSC was $23,477, of which $2,292, remains unpaid.
17
<PAGE>
SCUDDER INSTITUTIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (continued)
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of Scudder, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records for the Portfolios. For the year
ended December 31, 1996, the amount charged to the Portfolios by SFAC was
$30,000 for the Government Portfolio, $42,445 for the Cash Portfolio, and
$30,340 for the Tax-Free Portfolio, of which $2,500, $3,669, and $2,500,
respectively, remain unpaid at December 31, 1996.
The Fund has a compensation arrangement under which payment of directors'
fees may be deferred. Interest is accrued (based on the rate of return earned on
the 90 day Treasury Bill as determined at the beginning of each calendar
quarter) on the deferred balances and is included in "Directors' fees and
expenses." The accumulated balance of deferred directors' fees and interest
thereon relating to all active Portfolios comprising the Fund aggregates
$189,254 an applicable portion of which is included in accrued expenses of each
of the Portfolios.
5. CAPITAL STOCK
At December 31, 1996, the Fund had 25,000,000,000 shares of $.001 par value
capital stock authorized, of which 5,000,000,000 shares each have been
designated for the Government Portfolio and Cash Portfolio, and 2,000,000,000
shares have been designated for the Tax-Free Portfolio. Net paid in capital in
excess of par value was $46,982,565 for the Government Portfolio, $271,897,664
for the Cash Portfolio and $103,920,089 for the Tax-Free Portfolio. At December
31, 1996, one holder of record of the Government Portfolio held approximately
99% of the outstanding shares; one holder of the Cash Portfolio held
approximately 75% of the outstanding shares; and one holder of the Tax-Free
Portfolio held approximately 79% of the outstanding shares.
18
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
SCUDDER INSTITUTIONAL FUND, INC.
In our opinion, the accompanying statements of net assets 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
the Institutional Government Portfolio, Institutional Cash Portfolio, and
Institutional Tax-Free Portfolio (each a separate Portfolio of Scudder
Institutional Fund, Inc., hereafter referred to as the "Fund") at December 31,
1996, the results of each of their operations for the year then ended, the
changes in each of their net assets for each of the two years in the period then
ended and the financial highlights for each of the five years in the period then
ended, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's 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 generally accepted auditing standards 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
December 31, 1996 by correspondence with the custodian, provide a reasonable
basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
February 19, 1997
- --------------------------------------------------------------------------------
FEDERAL TAX STATUS OF 1996 DIVIDENDS (UNAUDITED)
The total amount of dividends declared in 1996 by both the Government
Portfolio and Cash Portfolio of Scudder Institutional Fund, Inc. is taxable as
ordinary dividend income for Federal income tax purposes. None of this amount
qualifies for the dividends received deduction available to corporations.
All of the dividends from the Tax-Free Portfolio declared in 1996 are
exempt from Federal income tax. However, in accordance with the Internal Revenue
Code, you are required to report them on your 1996 Federal income tax return.
Although dividend income from the Tax-Free Portfolio is exempt from Federal
taxation, it may not be exempt from state or local taxation. You should consult
your tax advisor as to the state and local tax status of the dividends you
received.
- --------------------------------------------------------------------------------
19
<PAGE>
Institutional Government Portfolio
Institutional Cash Portfolio
Institutional Tax-Free Portfolio
345 Park Avenue, New York, New York 10154
(800) 854-8525
Investment Manager
Scudder, Stevens & Clark, Inc.
345 Park Avenue
New York, New York 10154
Distributor
Scudder Investor Services, Inc.
Two International Place
Boston, Massachusetts 02110
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Fund Accounting Agent
Scudder Fund Accounting Corporation
Two International Place
Boston, Massachusetts 02110
Transfer Agent and
Dividend Disbursing Agent
Scudder Service Corporation
P.O. Box 9242
Boston, Massachusetts 02205
Legal Counsel
Sullivan & Cromwell
New York, New York
- --------------------------------------------------------------------------------
The Portfolios are neither insured nor guaranteed by the U.S. Government. Each
Portfolio intends to maintain a net asset value per share of $1.00 but there is
no assurance that it will be able to do so.
This report is for the information of the shareholders. Its use in connection
with any offering of the Company's shares is authorized only in case of a
concurrent or prior delivery of the Company's current prospectus.
INSTITUTIONAL GOVERNMENT PORTFOLIO
INSTITUTIONAL CASH PORTFOLIO
INSTITUTIONAL TAX-FREE PORTFOLIO
ANNUAL REPORT
DECEMBER 31, 1996
