Scudder
Cash Investment
Trust
Annual Report
June 30, 1998
Pure No-Load(TM) Funds
A money market fund for investors seeking stability of capital and, consistent
therewith, liquidity of capital and current income.
A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
SCUDDER (logo)
<PAGE>
Scudder Cash Investment Trust
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Date of Inception: 7/23/76 Total Net Assets as of Ticker Symbol: SCTXX
6/30/98: $1.18 billion
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o Scudder Cash Investment Trust provided a total return of 4.92% for the year.
o The Fund's 30-day net annualized yield at the end of June 1998 was 4.80%.
o Despite the stability of interest rates, the Fund's average maturity was
gradually shortened toward the end of the period, in anticipation of possible
rate hikes in the near future given the continuing strength of the U.S. economy.
Table of Contents
3 Letter from the Fund's President 16 Notes to Financial Statements
4 Portfolio Management Discussion 19 Report of Independent Accountants
7 Glossary of Investment Terms 20 Officers and Trustees
9 Investment Portfolio 21 Investment Products and Services
12 Financial Statements 22 Scudder Solutions
15 Financial Highlights
2 - Scudder Cash Investment Trust
<PAGE>
Letter from the Fund's President
Dear Shareholders,
We are pleased to present the annual report for Scudder Cash Investment
Trust for the fiscal year ended June 30, 1998.
During the 12-month period covered by this report, the U.S. economy enjoyed
ongoing strength, including a still-climbing stock market, a strong dollar, high
consumer confidence, and low unemployment. Earlier this year the Federal Reserve
worried that the U.S. economy was growing too rapidly, but so far the Fed has
left rates unchanged. Bond prices generally rose during the period and the
30-year Treasury bond yield declined to a new low.
Money market funds generally provided attractive returns during the period
for those investors seeking a stable share price and an interest-paying
alternative to cash. For its most recent fiscal year ended June 30, 1998, the
Fund provided a positive total return of 4.92%. Its 30-day net annualized yield
at the end of June was 4.80%. For more detail on the events of the past 12
months and your managers' outlook for the year ahead, please turn to the
discussion beginning on page 4.
For those of you interested in new Scudder products and services, we would
like to take this opportunity to highlight two upcoming additions to our
international category, both of which are scheduled to begin operations on
September 1st. Scudder International Growth Fund will seek long-term capital
appreciation by investing primarily in the equity securities of foreign
companies with high earnings growth potential, and Scudder International Value
Fund will seek long-term capital appreciation by investing primarily in
undervalued foreign equity securities. For further information on these new
funds, please call 1-800-225-2470.
Thank you for choosing Scudder Cash Investment Trust to help meet your
investment needs. If you should have any questions regarding your investment, or
any of the Scudder Funds, please do not hesitate to call us at the number above,
or visit our Web site at http://funds.scudder.com.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder Cash Investment Trust
3 - Scudder Cash Investment Trust
<PAGE>
Portfolio Management Discussion
Dear Shareholders,
The U.S. economy continued its lengthy run of prosperity during your Fund's most
recent fiscal year, although toward the end of the period there was some
evidence that perhaps the trend was beginning to weaken. During the year, the
Fund's investments in short-term, high quality securities provided a balance to
more aggressive stock and bond holdings. Scudder Cash Investment Trust
maintained its $1.00 share price throughout the period and provided a positive
total return of 4.92% for the 12 months ended June 30, 1998, compared with the
4.96% average return of 298 taxable money funds tracked by Lipper Analytical
Services for the same period. The Fund's 30-day net annualized yield at the end
of June was 4.80%.
U.S. Economy
Continues Strong
For the Fund's 1998 fiscal year, the domestic economy was encouraged by a number
of positive fundamentals that bolstered the overall investment environment.
Consumer confidence was very high and employment was strong, with many new jobs
being created during the period. We experienced two back-to-back quarters of
strong GDP growth in the fourth quarter of 1997 and the first quarter of 1998,
although the numbers for the most recent quarter ended June 30 are likely to be
weaker.
The record run in the U.S. stock market, which has now extended over seven
years, showed signs of abating in early 1998, as high valuations and
decelerating corporate profit growth began to be felt. Overseas, Asia's troubles
became more visible, particularly in the world's second-largest economy, Japan,
which is now officially in recession. Concerns over Asia, combined with slowing
profit growth in the United States and high valuations for U.S. equities, are
prompting renewed interest in the relative safety and more reliable returns of
domestic fixed income securities. Bond prices have generally been rising and the
benchmark 30-year Treasury bond yield (which moves in the opposite direction of
bond prices) declined to a new low. U.S. government issues have been
particularly expensive lately, due to a lack of supply in the Treasury market --
a result of the strong economy allowing the government to pay down some of its
debt.
Average Maturity Shortened in
Anticipation of Rising Rates
During the course of the year, we kept a watchful eye on the Federal Reserve
Board, particularly in early 1998 when the possibility of rate increases seemed
likely in view of Fed concerns over the rapidly growing domestic economy. The
strength of the U.S. dollar, however, has eliminated any need for the Fed to
tighten the money supply so far. Short-term interest rates have now been
anchored below 5.5% for over a year and a half, with the last major change
occurring in February of 1997. In this stable environment, we took advantage of
smaller movements in the market, such as those occasioned by tax periods and
quarter ends.
During the first half of the Fund's fiscal year, as inflation fears cooled and
it seemed likely that the Fed would continue to keep rates stable for a while,
we extended maturities in the portfolio. Average maturity was 67 days at the end
4 - Scudder Cash Investment Trust
<PAGE>
of December 1997. Longer maturities offer the ability to lock in yields when
interest rates appear unlikely to rise, in exchange for slightly higher risk.
However, in the second half of the fiscal year, the continued stability of
monetary policy seemed less assured; therefore, we took a more defensive
position, gradually shortening the average maturity to 30 days as of June 30,
1998. Issues with shorter maturities are beneficial in the event of rate hikes,
because principal comes due earlier and may be reinvested at the higher
prevailing rates.
Increased Focus on Variable
Rate Investments
Over the period, the portfolio was invested in a diversified mix of high-quality
money market instruments, including commercial paper, certificates of deposit
issued by major banks, U.S. government securities, repurchase agreements, and
short-term obligations from highly-rated companies. The portfolio is fully
invested in first tier debt instruments only, which has been the policy of the
Fund historically. We continued to overweight commercial paper because it tends
to offer some of the highest money market yields available. At the end of June,
commercial paper accounted for 51% of the portfolio.
In addition, we have increased our holdings in floating and variable-rate
securities, which have longer maturities (of up to one year), a high correlation
with short-term interest rates, and indexing features. The indexing
characteristic means that the rates of these securities are tied to another rate
- -- such as the prime rate or the 30-day commercial paper rate -- and are
adjusted upward or downward periodically when the base rate changes.
Variable-rate securities tend to have a yield advantage of five to ten basis
points versus similar fixed-rate issues that mature in 30 days.
Outlook for Increased
Volatility Ahead
It is likely that the domestic economy will continue to be strong for the near
term, as it is still supported by a number of positive fundamentals. During the
most recent quarter, we saw the earliest signals suggesting that this strength
may begin to wane in the future, possibly owing to the Asian crisis finally
impacting the United States. However, we do anticipate a return to trend growth
for the second half of the year.
Our strategy going forward is to continue monitoring the economic environment,
watch the Fed closely for any indication of a change in monetary policy, and
keep the average maturity of the portfolio defensively short. As this already
prolonged economic boom for the U.S. economy continues, it leaves us wondering
what might happen next and when. This uncertainty has created an outlook that
supports shortening the Fund's maturity, as we believe a rise in rates is most
likely the next event.
More generally, unless you are a long-term investor, we believe there is little
reward for investing in longer-dated fixed income investments, with long-term
Treasuries currently yielding around 5.60%, against money market yields in the
5.10% to 5.20% range. Money market funds have been providing decent returns, and
5 - Scudder Cash Investment Trust
<PAGE>
we believe they are presently very attractive compared to bonds, for which we
anticipate more volatility ahead.
In the months ahead, the Fund's management team will continue to collect
economic data and carefully monitor the investment climate as it positions your
Fund for current income plus liquidity and stability of capital. In an uncertain
investment environment such as this, Scudder Cash Investment Trust offers the
safety and stability of short-term, high-quality money market instruments. We
continue to believe in the value of owning a money market fund as part of a
well-diversified portfolio.
Sincerely,
Your Portfolio Management Team
/s/Frank J. Rachwalski, Jr. /s/John W. Stuebe
Frank J. Rachwalski, Jr. John W. Stuebe
Scudder Cash Investment Trust:
A Team Approach to Investing
Scudder Cash Investment Trust is managed by a team of Scudder Kemper
Investments, Inc. (the "Adviser") professionals who each play an important
role in the Fund's management process. Team members work together to develop
investment strategies and select securities for the Fund's portfolio. They are
supported by the Adviser's large staff of economists, research analysts,
traders, and other investment specialists who work in our offices across the
United States and abroad. We believe our team approach benefits Fund investors
by bringing together many disciplines and leveraging our extensive resources.
Lead Portfolio Manager Frank J. Rachwalski joined the Adviser in 1973 as a
money market specialist of fixed income and assumed responsibility for the
Fund's day-to-day management and overall investment strategies on January 1,
1998. Mr. Rachwalski has over 25 years of industry experience. Portfolio
Manager John W. Stuebe joined the Adviser in 1979 as a fixed income trader for
money market securities. Mr. Stuebe has over 19 years of industry experience.
6 - Scudder Cash Investment Trust
<PAGE>
Glossary of Investment Terms
CERTIFICATE OF DEPOSIT A debt instrument issued by a bank that
usually pays interest. Maturities range from
a few weeks to several years, and interest
rates are set by competitive forces in the
marketplace.
COMMERCIAL PAPER Short-term obligations with maturities
ranging from 2 to 270 days, and issued by
banks, corporations, and other borrowers to
investors with temporarily idle cash. These
instruments are unsecured and usually
discounted, although some are
interest-bearing, and offer a high level of
safety and liquidity.
FEDERAL RESERVE BOARD (FED) Governing board of the Federal Reserve
System, which establishes policies on reserve
requirements and other bank regulations, sets
the discount rate, tightens or loosens the
availability of credit in the economy, and
regulates the purchase of securities on
margin.
GDP Gross domestic product is a commonly
referenced measure of the health of the U.S.
economy, and refers to the market value of
the goods and services produced by labor and
property in the United States. Too strong
economic growth can lead to accelerating
inflation; weak growth can lead to a
recession.
INFLATION An overall increase in the prices of goods
and services, as happens when business and
consumer spending increases relative to the
supply of goods available in the marketplace
-- in other words, when too much money is
chasing too few goods. High inflation has a
negative impact on the prices of fixed-income
securities.
LIQUIDITY A characteristic of an investment or an asset
referring to the ease of convertibility into
cash within a reasonably short period of
time.
MATURITY Reaching the date at which a debt instrument
is due and payable. A bond due to mature on
January 1, 2010 will return the bondholder's
principal and final interest payment when it
reaches maturity on that date.
MONEY MARKET Market for short-term debt instruments,
including banker's acceptances, commercial
paper, negotiable certificates of deposit,
repurchase agreements, and Treasury bills.
Money market instruments are traded through
dealers, money center banks, and the Open
Market Trading Desk at the New York Federal
Reserve Bank. All of these instruments have a
high level of safety and liquidity.
7 - Scudder Cash Investment Trust
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PRIME RATE The base rate that banks use in pricing
commercial loans to their best and most
creditworthy customers. The rate is
determined by the Federal Reserve's decision
to raise or lower prevailing interest rates
for short-term borrowing.
REPURCHASE AGREEMENT (REPO) Agreement between a seller and a buyer,
usually of U.S. Government securities,
whereby the seller agrees to repurchase the
securities at an agreed-upon price and,
usually, at a stated time. As a money market
vehicle, repos refer to the process of a
government securities dealer (usually a bank)
borrowing from an investor (typically a
corporation with excess cash) to finance its
inventory, using the securities as
collateral.
TOTAL RETURN The most common yardstick to measure the
performance of a fund. Total return --
annualized or compound -- is based on a
combination of share price changes plus
income and capital gain distributions, if
any, expressed as a percentage gain or loss
in value.
YIELD The dividends or interest paid on a security,
expressed as a percentage of the security's
current price.
(Sources: Scudder Kemper Investments, Inc.; Barron's Dictionary of Finance and
Investment Terms)
8 - Scudder Cash Investment Trust
<PAGE>
Investment Portfolio as of June 30, 1998
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements 0.4%
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Repurchase Agreement with State Street Bank and Trust Company dated 6/30/1998
at 5.75%, to be repurchased at $5,118,817 on 7/1/1998, collateralized by a -----------
$3,555,000 U.S. Treasury Bond, 13.75%, 8/15/2004 (Cost $5,118,000) .................... 5,118,000 5,118,000
-----------
Commercial Paper 50.9%
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Apex Funding Corp., 5.63%, 7/31/1998 .................................................... 16,131,000 16,054,601
Banner Receivables Corp., 5.72%, 7/14/1998 .............................................. 4,000,000 3,991,738
Banner Receivables Corp., 5.63%, 7/14/1998 .............................................. 15,000,000 14,969,504
Banner Receivables Corp., 5.63%, 8/5/1998 ............................................... 23,887,000 23,756,252
Baxter International, 5.55%, 7/16/1998 .................................................. 17,500,000 17,459,531
Baxter International, 5.55%, 8/4/1998 ................................................... 18,000,000 17,905,650
Broadway Capital Corp., 5.62%, 8/10/1998 ................................................ 17,000,000 16,893,708
Broadway Capital Corp., 5.64%, 7/6/1998 ................................................. 23,128,000 23,109,883
CSW Credit Inc., 5.51%, 7/17/1998 ....................................................... 10,000,000 9,973,980
CSW Credit Inc., 5.58%, 7/20/1998 ....................................................... 21,400,000 21,336,977
Cooper Industries, Inc., 6.3%, 7/1/1998 ................................................. 25,000,000 25,000,000
Countrywide Home Loan, 5.52%, 7/8/1998 .................................................. 10,000,000 9,987,733
Countrywide Home Loans, 5.54%, 7/7/1998 ................................................. 10,000,000 9,990,767
Credit Suisse First Boston, 5.55%, 7/9/1998 ............................................. 7,000,000 6,990,410
Frontier Corp., 5.57%, 7/2/1998 ......................................................... 19,240,000 19,237,023
General Electric Capital Corp., 5.35%, 7/21/1998 ........................................ 40,000,000 39,871,193
Gotham Funding Corp., 5.68%, 7/9/1998 ................................................... 15,000,000 14,981,067
Gotham Funding Corp., 5.65%, 7/31/1998 .................................................. 20,000,000 19,905,276
GTE Corp., 5.53%, 7/10/1998 ............................................................. 28,000,000 27,961,258
Lehman Brothers Inc., 5.57%, 8/17/1998 .................................................. 25,000,000 24,816,332
Madison Funding Corp., 5.55%, 7/13/1998 ................................................. 10,000,000 9,981,500
Madison Funding Corp., 5.54%, 7/16/1998 ................................................. 20,000,000 19,953,833
Nomura Holding America Corp., 5.63%, 7/10/1998 .......................................... 25,000,000 24,961,943
Nomura Holding America Corp., 5.65%, 7/13/1998 .......................................... 15,000,000 14,969,666
Old Line Funding Corp, 5.54%, 7/8/1998 .................................................. 10,000,000 9,989,228
Ranger Funding Co., 5.65%, 7/7/1998 ..................................................... 21,828,000 21,807,445
Sanwa Business Credit, 5.6%, 7/13/1998 .................................................. 40,000,000 39,919,254
Sanwa Business Credit, 5.58%, 7/20/1998 ................................................. 18,000,000 17,944,898
Thunder Bay Funding, 5.56%, 7/10/1998 ................................................... 42,000,000 41,941,620
Twin Towers Inc., 5.55%, 7/10/1998 ...................................................... 9,668,000 9,654,586
Windmill Funding, 5.58%, 7/17/1998 ...................................................... 17,000,000 16,957,840
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Total Commercial Paper (Cost $592,304,840) 592,274,696
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9 - Scudder Cash Investment Trust
<PAGE>
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Certificates Of Deposit 15.3%
- ------------------------------------------------------------------------------------------------------------------------------
Bankers Trust Co., 5.91%, 8/7/1998 ...................................................... 10,000,000 10,000,538
Bankers Trust Co., 5.97%, 8/28/1998 ..................................................... 15,000,000 15,002,135
First National Bank of Boston, 5.87%, 10/14/1998 ........................................ 15,000,000 14,999,192
First National Bank of Boston, 5.9%, 7/15/1998 .......................................... 40,000,000 40,000,516
Huntington National Bank, 5.8%, 9/22/1998 ............................................... 17,525,000 17,522,840
Huntington National Bank, 5.625%, 1/12/1999 ............................................. 10,000,000 9,990,799
J.P. Morgan & Co., 5.8%, 7/28/1998 ...................................................... 10,000,000 9,999,507
National Westminster Bank, 5.85%, 7/22/1998 ............................................. 10,000,000 9,999,901
National Westminster Bank, 5.855%, 8/7/1998 ............................................. 20,000,000 19,999,979
Sun Trust Bank, 5.8%, 7/24/1998 ......................................................... 30,000,000 29,997,638
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Total Certificates Of Deposit (Cost $177,520,161) 177,513,045
- ------------------------------------------------------------------------------------------------------------------------------
U.S. Government Agency Obligations 10.5%
- ------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Association, 5.261%, 7/14/1999* ............................... 56,000,000 55,830,880
Student Loan Marketing Association, 5.82%, 9/16/1998 .................................... 20,000,000 20,018,800
Student Loan Marketing Association, 5.261%, 7/12/1999* .................................. 46,500,000 46,337,250
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Total U.S. Government Agency Obligations (Cost $122,499,198) 122,186,930
- ------------------------------------------------------------------------------------------------------------------------------
Short-Term and Medium-Term Notes 22.9%
- ------------------------------------------------------------------------------------------------------------------------------
American Honda Finance Corp., Floating Rate Note, 5.668%, 5/26/1999* .................... 44,500,000 44,484,425
Bankers Trust Co., Floating Rate Note, 5.6%, 4/30/1999* ................................. 15,000,000 14,987,100
Chrysler Financial Corp., Medium Term Note, 6.24%, 11/2/1998 ............................ 10,000,000 10,009,500
Chrysler Financial Corp, 5.375%, 10/15/1998 ............................................. 10,000,000 9,990,400
CIT Group Holdings Inc., 5.875%, 11/9/1998 .............................................. 7,000,000 7,004,270
Goldman Sachs & Co., Floating Rate Note, 5.69%, 3/26/1999* .............................. 15,000,000 15,009,450
Household Finance Corp., Floating Rate Note, 5.638%, 3/9/1999* .......................... 20,000,000 19,994,380
Household Finance Corp., Medium Term Note, 5.69%, 5/28/1999 ............................. 20,000,000 19,995,400
IBM Credit Corp., Medium Term Note, 6.12%, 12/15/1998 ................................... 20,000,000 20,003,400
Lehman Brothers Holdings, Floating Rate Note, 5.706%, 3/22/1999* ........................ 25,000,000 24,997,500
Merril Lynch & Co., Floating Rate Note, 5.606%, 4/14/1999* .............................. 30,000,000 29,982,000
Morgan Stanley, Floating Rate Note, 5.616%, 11/13/1998* ................................. 25,000,000 25,000,000
Sigma Finance Corp., Floating Rate Note, 5.63%, 4/27/1999* .............................. 25,000,000 24,998,750
- ------------------------------------------------------------------------------------------------------------------------------
Total Short-Term and Medium-Term Notes (Cost $266,526,600) 266,456,575
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $1,163,968,799) (a) 1,163,549,246
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 - Scudder Cash Investment Trust
<PAGE>
- --------------------------------------------------------------------------------
(a) The cost for federal income tax purposes was $1,163,968,799. At June 30,
1998, net unrealized depreciation for all securities based on tax cost was
$419,553. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $44,174 and aggregate gross unrealized depreciation for all securities
in which there was an excess of tax cost over market value of $463,727.
* Floating rate notes are securities whose yields vary with a designated
market index or market rate, such as the coupon-equivalent of the Treasury
bill rate. These securities are shown at their rate as of June 30, 1998.
The accompanying notes are an integral part of the financial statements.
11 - Scudder Cash Investment Trust
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of June 30, 1998
<TABLE>
<S> <C>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
Investments, at market (identified cost $1,163,968,799) ............ $1,163,549,246
Cash ............................................................... 4,010,755
Receivable for Fund shares sold .................................... 7,258,498
Interest receivable ................................................ 13,154,296
Other assets ....................................................... 38,873
----------------
Total assets ....................................................... 1,188,011,668
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Dividends payable .................................................. 180,564
Payable for Fund shares redeemed ................................... 4,954,586
Accrued management fee ............................................. 163,664
Other payables and accrued expenses ................................ 700,287
----------------
Total liabilities .................................................. 5,999,101
-------------------------------------------------------------------------------------------
Net assets, at market $1,182,012,567
-------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Unrealized appreciation (depreciation) on investments .............. (419,553)
Accumulated net realized gain (loss) ............................... (476,564)
Paid-in capital .................................................... 1,182,908,684
-------------------------------------------------------------------------------------------
Net assets, at market $1,182,012,567
-------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($1,182,012,567 / 1,182,186,355 outstanding shares of
beneficial interest, $.01 par value, unlimited number ----------------
of shares authorized) ........................................... $1.00
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 - Scudder Cash Investment Trust
<PAGE>
Statement of Operations
year ended June 30, 1998
<TABLE>
<S> <C>
Investment Income
- ----------------------------------------------------------------------------------------------------------------------------
Interest ............................................................. $ 70,992,254
----------------
Expenses:
Management fee ....................................................... 5,260,517
Services to shareholders ............................................. 5,896,563
Custodian and accounting fees ........................................ 221,803
Trustees' fees and expenses .......................................... 52,414
Reports to shareholders .............................................. 314,093
Registration fees .................................................... 83,320
Auditing ............................................................. 39,616
Legal ................................................................ 22,640
Other ................................................................ 48,622
----------------
Total expenses before reductions ..................................... 11,939,588
Expense reductions ................................................... (1,289,666)
----------------
Expenses, net ........................................................ 10,649,922
--------------------------------------------------------------------------------------------
Net investment income 60,342,332
--------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments .............................. (17,463)
Net unrealized appreciation (depreciation) during the period on
investments ....................................................... (94,354)
--------------------------------------------------------------------------------------------
Net gain (loss) on investments (111,817)
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 60,230,515
--------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 - Scudder Cash Investment Trust
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Years Ended June 30,
Increase (Decrease) in Net Assets 1998 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ................................. $ 60,342,332 $ 67,095,055
Net realized gain (loss) on investment transactions
during the period .................................. (17,463) --
Net unrealized appreciation (depreciation) on
investment transactions during the period .......... (94,354) 911,613
---------------- ----------------
Net increase (decrease) in net assets resulting from
operations ......................................... 60,230,515 68,006,668
---------------- ----------------
Distributions to shareholders from net investment
income ............................................. (60,324,869) (67,095,055)
---------------- ----------------
Fund share transactions at net asset value of
$1.00 per share:
Shares sold ........................................... 1,976,992,854 2,146,433,255
Net asset value of shares issued to shareholders in
reinvestment of distributions ...................... 56,773,631 62,538,989
Shares redeemed ....................................... (2,282,283,081) (2,166,626,217)
---------------- ----------------
Net increase (decrease) in net assets from Fund share
transactions ....................................... (248,516,596) 42,346,027
---------------- ----------------
Increase (decrease) in net assets ..................... (248,610,950) 43,257,640
Net assets at beginning of period ..................... 1,430,623,517 1,387,365,877
---------------- ----------------
Net assets at end of period ........................... $1,182,012,567 $1,430,623,517
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 - Scudder Cash Investment Trust
<PAGE>
Financial Highlights
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
Years Ended June 30,
1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------------
Net asset value, beginning of period ......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-----------------------------------------------------------
Net investment income ........................................ .048 .046 .048 .048 .027
Less distributions from net investment income and net
realized capital gains (a) ................................. (.048) (.046) (.048) (.048) (.027)
-----------------------------------------------------------
Net asset value, end of period ............................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) ............................................. 4.92(b) 4.73 4.89 4.90 2.77
Ratios and Supplemental Data
Net assets, end of period ($ millions) ....................... 1,182 1,431 1,387 1,520 1,430
Ratio of operating expenses, net to average daily net
assets (%) ................................................. .85 .86 .83 .78 .82
Ratio of operating expenses before expense reduction, to
average daily net assets (%) ............................... .95 .86 .83 .78 .82
Ratio of net investment income to average daily net
assets (%) ................................................. 4.82 4.63 4.79 4.84 2.78
</TABLE>
(a) Net realized capital gains were less than 6/10 of $.01 per share.
(b) Total return would have been lower had certain expenses not been reduced.
15 - Scudder Cash Investment Trust
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Scudder Cash Investment Trust (the "Fund") is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
Security Valuation. Money market instruments purchased with original maturities
of sixty days or less are valued by the amortized cost method permitted in
accordance with Rule 2a-7 under the Investment Company Act of 1940, as amended.
Debt securities for which market quotations are readily available and which have
original maturities of sixty-one days or more from the date of valuation are
valued by pricing agents approved by officers of the Fund, whose quotations
reflect broker/dealer-supplied valuations and electronic data processing
techniques. If the pricing agents are unable to provide such quotations, the
most recent bid quotation supplied by a bona fide market maker shall be used.
Other securities are appraised at fair value as determined in good faith by or
on behalf of the Valuation Committee of the Board of Trustees. Repurchase
agreements are valued at cost which, when combined with accrued interest
receivable, approximates market.
Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian,
receives delivery of the underlying securities, the amount of which at the time
of purchase and each subsequent business day is required to be maintained at
such a level that the market value, depending on the maturity of the repurchase
agreement, is equal to at least 100.5% of the repurchase price.
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code, as amended, which are applicable to regulated
investment companies and to distribute all of its taxable income to its
shareholders. The Fund accordingly paid no federal income taxes and no provision
for federal income taxes was required. At June 30, 1998, the Fund had a net tax
basis capital loss carryforward of approximately $465,000, which may be applied
against any realized net taxable capital gains of each succeeding year until
fully utilized or until June 30, 2004, ($279,000), June 30, 2005 ($180,000) and
June 30, 2006 ($6,000), the respective expiration dates, whichever occurs first.
Distribution of Income and Gains. All of the net investment income of the Fund
is declared as a dividend to shareholders of record as of twelve o'clock noon on
each business day and is paid to shareholders monthly. During any particular
year, net realized gains from investment transactions, in excess of available
capital loss carryforwards, would be taxable to the Fund if not distributed and,
therefore, will be distributed to the shareholders. An additional distribution
may be made to the extent necessary to avoid the payment of a four percent
federal excise tax.
The Fund uses the specific identification method for determining realized gain
or loss on investments for both financial and federal income tax reporting
purposes.
Other. Investment transactions are accounted for on a trade-date basis (which in
most instances is the same as the settlement date). Interest income is accrued
pro rata to maturity. All premiums and discounts are amortized/accreted for both
tax and financial reporting purposes.
16 - Scudder Cash Investment Trust
<PAGE>
B. Related Parties
Effective December 31, 1997, Scudder, Stevens & Clark, Inc. ("Scudder") and The
Zurich Insurance Company ("Zurich"), an international insurance and financial
services organization, formed a new global investment organization by combining
Scudder's business with that of Zurich's subsidiary, Zurich Kemper Investments,
Inc. As a result of the transaction, Scudder changed its name to Scudder Kemper
Investments, Inc. ("Scudder Kemper" or the "Adviser"). The transaction between
Scudder and Zurich resulted in the termination of the Fund's Investment
Management Agreement with Scudder. However, a new Investment Management
Agreement (the "Management Agreement") between the Fund and Scudder Kemper was
approved by the Fund's Board of Trustees and by the Fund's Shareholders. The
Management Agreement, which is effective December 31, 1997, is the same in all
material respects as the corresponding previous Investment Management Agreement,
except that Scudder Kemper is the new investment adviser to the Fund.
Under the Management Agreement with Scudder Kemper, the Fund agrees to pay the
Adviser a fee equal to an annual rate of 0.50% of the first $250,000,000 of the
Fund's average daily net assets, 0.45% of the next $250,000,000 of such net
assets, 0.40% of the next $500,000,000 of such net assets and 0.35% of such net
assets in excess of $1,000,000,000, computed and accrued daily and payable
monthly. As manager of the assets of the Fund, the Adviser directs the
investments of the Fund in accordance with its investment objectives, policies,
and restrictions. The Adviser determines the securities, instruments, and other
contracts relating to investments to be purchased, sold or entered into by the
Fund. In addition to portfolio management services, the Adviser provides certain
administrative services in accordance with the Management Agreement. In
addition, the Adviser has agreed to maintain the annualized expenses of the Fund
at not more than .85% of average daily net assets until October 31, 1998. For
the year ended June 30, 1998, the Adviser did not impose a portion of its fee,
amounting to $1,289,666, and the portion imposed amounted to $3,970,851,
equivalent to an annual effective rate of .32% of the Fund's average daily net
assets.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
year ended June 30, 1998, the amount charged to the Fund by SSC aggregated
$3,099,779, of which $264,502 is unpaid at June 30, 1998.
Scudder Trust Company ("STC"), a subsidiary of the Adviser, provides
recordkeeping and other services in connection with certain retirement and
employee benefit plans invested in the Fund. For the year ended June 30, 1998,
the amount charged to the Fund by STC aggregated $1,883,755, of which $165,923
is unpaid at June 30, 1998.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records of the Fund. For the year ended
June 30, 1998, the amount charged to the Fund by SFAC aggregated $98,059, of
which $7,867 is unpaid at June 30, 1998.
The Fund is one of several Scudder Funds (the "Underlying Funds") in which the
Scudder Pathway Series Portfolios (the "Portfolios") invest. In accordance with
the Special Servicing Agreement entered into by the Adviser, the Portfolios, the
Underlying Funds, SSC, SFAC, STC, and Scudder Investor Services, Inc., expenses
from the operation of the Portfolios are borne by the Underlying Funds based on
each Underlying Fund's proportionate share of assets owned by the Portfolios. No
Underlying Funds will be charged expenses that exceed the estimated savings to
each respective Underlying Fund. These estimated savings result from the
elimination of separate shareholder accounts which either currently are or have
potential to be
17 - Scudder Cash Investment Trust
<PAGE>
invested in the Underlying Funds. For the year ended June 30, 1998, the Special
Servicing Agreement expense charged to the Fund amounted to $24,923.
The Fund pays each Trustee not affiliated with the Adviser an annual retainer
plus specified amounts for attended board and committee meetings. For the year
ended June 30, 1998, Trustees' fees and expenses aggregated $52,414.
18 - Scudder Cash Investment Trust
<PAGE>
Report of Independent Accountants
To the Board of Trustees and the Shareholders of Scudder Cash Investment Trust:
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, 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 Cash Investment Trust (the
"Fund") at June 30, 1998, the results of its operations for the year then ended
and the changes in its net assets for each of the two years then ended, and the
financial highlights for each of the five years 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 June 30, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
Boston, Massachusetts PricewaterhouseCoopers LLP
June 27, 1998
19 - Scudder Cash Investment Trust
<PAGE>
Officers and Trustees
Daniel Pierce*
President and Trustee
Henry P. Becton, Jr.
Trustee; President and General
Manager, WGBH Educational
Foundation
Dawn-Marie Driscoll
Trustee; President, Driscoll
Associates; Executive Fellow,
Center for Business Ethics,
Bentley College
Peter B. Freeman
Trustee; Corporate Director
George M. Lovejoy, Jr.
Trustee; President and Director,
Fifty Associates
Wesley W. Marple, Jr.
Trustee; Professor of Business
Administration, Northeastern
University
Kathryn L. Quirk*
Trustee, Vice President and
Assistant Secretary
Jean C. Tempel
Trustee; Managing Partner,
Technology Equity Partners
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
Vice President
Frank J. Rachwalski, Jr.*
Vice President
David Wines*
Vice President
Thomas F. McDonough*
Vice President, Secretary and
Treasurer
John R. Hebble*
Assistant Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
20 - Scudder Cash Investment Trust
<PAGE>
Investment Products and Services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series --
Premium Shares*
Managed Shares*
Scudder Government Money Market Series --
Managed Shares*
Tax Free Money Market+
- ----------------------
Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series--
Managed Shares*
Scudder California Tax Free Money Fund**
Scudder New York Tax Free Money Fund**
Tax Free+
- ---------
Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund**
Scudder Massachusetts Limited Term Tax Free Fund**
Scudder Massachusetts Tax Free Fund**
Scudder New York Tax Free Fund**
Scudder Ohio Tax Free Fund**
Scudder Pennsylvania Tax Free Fund**
U.S. Income
- -----------
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder High Yield Bond Fund
Global Income
- -------------
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
Asset Allocation
- ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
U.S. Growth and Income
- ----------------------
Scudder Balanced Fund
Scudder Dividend & Growth Fund
Scudder Growth and Income Fund
Scudder S&P 500 Index Fund
Scudder Real Estate Investment Fund
U.S. Growth
- -----------
Value
Scudder Large Company Value Fund
Scudder Value Fund***
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund***
Scudder Large Company Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Equity
- -------------
Worldwide
Scudder Global Fund
Scudder International Value Fund
Scudder International Growth and Income Fund
Scudder International Fund++
Scudder International Growth Fund
Scudder Global Discovery Fund***
Scudder Emerging Markets Growth Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund, Inc.
Industry Sector Funds
- ---------------------
Choice Series
Scudder Financial Services Fund
Scudder Health Care Fund
Scudder Technology Fund
Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
Retirement Programs
- -------------------
Traditional IRA
Roth IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan**+++ +++
(a variable annuity)
Education Accounts
- ------------------
Education IRA
UGMA/UTMA
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder Global High Income Fund, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder Spain and Portugal Fund, Inc.
For complete information on any of the above Scudder funds, including management
fees and expenses, call or write for a free prospectus. Read it carefully before
you invest or send money. +++Funds within categories are listed in order from
expected least risk to most risk. Certain Scudder funds may not be available for
purchase or exchange. +A portion of the income from the tax-free funds may be
subject to federal, state, and local taxes. *A class of shares of the Fund.
**Not available in all states. ***Only the Scudder Shares of the Fund are part
of the Scudder Family of Funds. ++Only the International Shares of the Fund are
part of the Scudder Family of Funds. +++ +++A no-load variable annuity contract
provided by Charter National Life Insurance Company and its affiliate, offered
by Scudder's insurance agencies, 1-800-225-2470. #These funds, advised by
Scudder Kemper Investments, Inc., are traded on the New York Stock Exchange and,
in some cases, on various other stock exchanges.
21 - Scudder Cash Investment Trust
<PAGE>
Scudder Solutions
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Investment Plan QuickBuy
A convenient investment program in which money is Lets you purchase Scudder fund shares
electronically debited from your bank account monthly to electronically, avoiding potential mailing delays;
regularly purchase fund shares and "dollar cost average" money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from a previously designated bank
fewer when it's higher, which can reduce your average account.
purchase price over time.
Automatic Dividend Transfer Payroll Deduction and Direct Deposit
The most timely, reliable, and convenient way to Have all or part of your paycheck -- even government
purchase shares -- use distributions from one Scudder checks -- invested in up to four Scudder funds at
fund to purchase shares in another, automatically one time.
(accounts with identical registrations or the same
social security or tax identification number).
Dollar cost averaging involves continuous investment in securities regardless of price
fluctuations and does not assure a profit or protect against loss in declining markets.
Investors should consider their ability to continue such a plan through periods of low price
levels.
Around-the-clock electronic account service and information, including some transactions:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- http://funds.scudder.com
1-800-343-2890
Scudder Electronic Account Services: Offering
Personalized account information, the ability to account information and transactions, interactive
exchange or redeem shares, and information on other worksheets, prospectuses and applications for all
Scudder funds and services via touchtone telephone. Scudder funds, plus your current asset allocation,
whenever you need them. Scudder's Site also
provides news about Scudder funds, retirement
planning information, and more.
Retirees and those who depend on investment proceeds for living expenses can enjoy these convenient,
timely, and reliable automated withdrawal programs:
- ------------------------------------------------------------------------------------------------------------------------------
Automatic Withdrawal Plan QuickSell
You designate the bank account, determine the schedule Provides speedy access to your money by
(as frequently as once a month) and amount of the electronically crediting your redemption proceeds
redemptions, and Scudder does the rest. to the bank account you previously designated.
Distributions Direct
Automatically deposits your fund distributions into the
bank account you designate within three business days
after each distribution is paid.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
22 - Scudder Cash Investment Trust
<PAGE>
Mutual Funds and More -- Brokerage and Guidance Services:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Brokerage Services Scudder Portfolio Builder
Offers you access to a world of investments, A free service designed to help suggest ways investors like
including stocks, corporate bonds, Treasuries, plus you can diversify your portfolio among domestic and global,
over 8,000 mutual funds from at least 150 mutual as well as equity, fixed-income, and money market funds,
fund companies. And Scudder Fund Folio(SM) provides using Scudder funds.
investors with access to a marketplace of more than
500 no-load funds from well-known companies--with no Personal Counsel from Scudder(SM)
transaction fees or commissions. Scudder
shareholders can take advantage of a Scudder Developed for investors who prefer the benefits of no-load
Brokerage account already reserved for them, with Scudder funds but want ongoing professional assistance in
no minimum investment. For information about managing a portfolio. Personal Counsel(SM) is a highly
Scudder Brokerage Services, call 1-800-700-0820. customized, fee-based asset management service for
individuals investing $100,000 or more.
Fund Folio funds held less than six months will be charged a fee for redemptions. You can buy
shares directly from the fund itself or its principal underwriter or distributor without
paying this fee. Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061.
Member SIPC.
Personal Counsel From Scudder(SM) and Personal Counsel(SM) are service marks of and represent a
program offered by Scudder Investor Services, Inc., Adviser.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
Additional Information on How to Contact Scudder:
- ------------------------------------------------------------------------------------------------------------------------------
For existing account services and transactions Please address all written correspondence to
Scudder Investor Relations -- 1-800-225-5163 The Scudder Funds
P.O. Box 2291
For establishing 401(k) and 403(b) plans Boston, Massachusetts
Scudder Defined Contribution Services -- 02107-2291
1-800-323-6105
Or Stop by a Scudder Investor Center
For information about The Scudder Funds, including Many shareholders enjoy the personal, one-on-one service of
additional applications and prospectuses, or for the Scudder Investor Centers. Check for an Investor Center near
answers to investment questions you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470 Boca Raton Chicago San Francisco
[email protected] Boston New York
</TABLE>
23 - Scudder Cash Investment Trust
<PAGE>
About the Fund's Adviser
Scudder Kemper Investments, Inc., is one of the largest and most experienced
investment management oganizations worldwide, managing more than $200 billion in
assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts. It is one of the ten largest mutual fund companies in the
U.S.
Scudder Kemper Investments has a rich heritage of innovation, integrity, and
client-focused service. In 1997, Scudder, Stevens & Clark, Inc., founded 79
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Group. As a result, Zurich's subsidiary, Zurich Kemper Investments,
Inc., with 50 years of mutual fund and investment management experience, was
combined with Scudder. Headquartered in New York, Scudder Kemper Investments
offers a full range of investment counsel and asset management capabilities,
based on a combination of proprietary research and disciplined, long-term
investment strategies. With its global investment resources and perspective,
the firm seeks opportunities in markets throughout the world to meet the needs
of investors.
Scudder Kemper Investments, Inc., the global asset management firm, is a member
of the Zurich Group. The Zurich Group is an internationally recognized leader in
financial services, including property/casualty and life insurance, reinsurance,
and asset management.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
SCUDDER
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