Scudder
Cash Investment
Trust
Semiannual Report
December 31,1998
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
12/31/98: $1.17 billion
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o Scudder Cash Investment Trust provided total returns of 2.37% for the
six-month period and 4.83% for the 12 months ended December 31.
o The Fund's 30-day net annualized yield was 4.46% as of December 31, 1998.
o The majority of the Fund's investments are in high-quality commercial
paper, which can offer some of the highest money market yields available.
Table of Contents
3 Letter from the Fund's President 14 Notes to Financial Statements
4 Portfolio Management Discussion 17 Shareholder Meeting Results
6 Glossary of Investment Terms 20 Officers and Trustees
8 Investment Portfolio 21 Investment Products and Services
10 Financial Statements 22 Scudder Solutions
13 Financial Highlights
2 - Scudder Cash Investment Trust
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Letter from the Fund's President
Dear Shareholders,
The U.S. economy and financial markets displayed remarkable resiliency amid
1998's stormy global financial environment. Prices of U.S. equities as measured
by the Dow Jones Industrial Average and the S&P 500 Index rose 18.13% and
28.58%, respectively, during the year just passed, although the path upward was
a bumpy one. Treasury bond prices also rose as investors sought a safe haven,
and their yields declined to a 30-year low.
Scudder Cash Investment Trust offered investors an additional refuge during
1998's volatile times, which witnessed a Russian currency devaluation, more
economic troubles for Asia and South America, the near collapse of the Long Term
Capital Management hedge fund, and gyrating U.S. financial markets. Through its
investments in short-maturity, high-quality instruments, your Fund strives to
maintain a competitive yield and a stable $1.00 share price, no matter what the
market conditions. On December 31, 1998, Scudder Cash Investment Trust offered
investors a 30-day net annualized yield of 4.46%. For the six-month and 12-month
periods ended December 31, the Fund provided total returns of 2.37% and 4.83%,
respectively. Please read the Portfolio Management Discussion beginning on page
4 for additional information concerning your Fund's investment environment,
strategy, and outlook.
For those of you who are interested in new Scudder products, we recently
introduced the Scudder Tax Managed Growth Fund, investing in medium- to
large-sized U.S. companies, and Scudder Tax Managed Small Company Fund, which
invests in stocks of small U.S. companies. Using a combination of quantitative
and fundamental research, the funds will focus on companies with strong earnings
growth, reasonable valuations, and favorable risk profiles. Both funds strive to
maximize after-tax returns by systematically taking into account the tax
implications of portfolio transactions and seeking to offset capital gains by
realizing losses when appropriate.
Please see pages 21 through 23 for more information on Scudder products and
services.
As always, please call a Scudder Investor Information representative at
1-800-225-2470 if you have questions about your Fund or visit our Web site at
www.scudder.com. Thank you for choosing Scudder Cash Investment Trust to help
meet your investment needs.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder Cash Investment Trust
3 - Scudder Cash Investment Trust
<PAGE>
Portfolio Management Discussion
Dear Shareholders,
Amid outbreaks of turbulence in financial markets around the world, Scudder Cash
Investment Trust provided shareholders with a stable $1.00 share price and a
competitive yield during the Fund's most recent semiannual period ended December
31, 1998. The Fund's 30-day net annualized yield was 4.46% as of December 31.
For the six- and 12-month periods ended December 31, 1998, the Fund provided
total returns of 2.37% and 4.83%, respectively, roughly equivalent to the 2.37%
and 4.84% returns of similar money market funds during the same periods as
tracked by Lipper Analytical Services, Inc.
In Search of a Safe Haven
In the summer and fall of 1998, many investors sought safe havens in the form of
U.S. Treasury bonds and money market funds as a series of dramatic financial
crises rocked the global markets. In the international capital markets, the most
troublesome developments were Russia's short-term debt default and ruble
devaluation, Japan's continuing banking crisis and recession, the run on
Brazil's currency reserves (despite an IMF stabilization package), and the near
collapse of the Long Term Capital Management hedge fund. The Federal Reserve
lowered short-term interest rates by one-quarter of a percentage point on
September 29, October 15, and November 17 -- taking the unexpected step of
adjusting interest rates between Federal Open Market Committee meetings -- in an
attempt to restore order to financial markets. Although the Fed had reportedly
changed to a "neutral" stance on interest rate adjustments by late in 1998, the
more than 60 interest rate reductions by central banks around the world during
this period seemed to ease fears of rampant deflation and gave encouragement to
U. S. equity investors.
Emphasis from Highest Quality
During most of the six-month period ended December 31, we refrained from
extending the Fund's average maturity because money market yields at the longer
end of our acceptable maturity range did not offer attractive value. Yields of
longer-maturity money market securities were disproportionately low during
summer and early fall as the market awaited what turned out to be three Fed
easings. The Fund's average maturity stood at 27 days as of December 31, 1998,
versus 30 days as of June 30, 1998.
As part of its long-term policy, the Fund invests only in first-tier debt
instruments. Because of the heightened level of volatility present in all
financial markets during the period, we placed even greater emphasis on the
highest quality securities.
Over the period, the Fund maintained investments in a variety of money market
instruments, including commercial paper, variable- and floating-rate securities,
U.S. government agency obligations, certificates of deposit, and repurchase
agreements.
We continued to overweight commercial paper during the six-month period because
we believe it offered the most attractive value and some of the highest money
market yields available. At the close of the period, commercial paper
represented 52% of the Fund's assets. The Fund's second largest sector,
4 - Scudder Cash Investment Trust
<PAGE>
variable- and floating-rate securities (30% of assets), was attractive because
of these securities' longer maturities, their high correlation with short-term
interest rates, and their indexing features. Indexing means that the interest
rate of these securities is tied to another rate such as the prime lending rate,
and is adjusted up or down when the base rate changes. Variable-rate securities
typically hold an incremental yield advantage over fixed-rate issues that mature
in 30 days.
Economic Slowdown in 1999?
Shrinking corporate profit margins, a widening trade deficit, pressure on the
dollar, and troubles in the emerging markets could dampen U.S. economic growth
during the coming months. We do not doubt, however, the power of consumer and
investor confidence to overcome adversity, as has been shown throughout the
current economic expansion.
With the Federal Reserve "on hold" at present, we will pursue a cautious
strategy, and will lengthen the Fund's average maturity only when we believe the
Fund is adequately compensated for taking on additional risk. In addition, the
Fund will carefully select among the range of maturities it can invest in,
choosing short-term securities that we feel represent the best value.
We will continue to collect and analyze economic data and carefully monitor the
investment climate as we position the Fund for high current income, share price
stability, and liquidity. We believe that a prudently managed money market fund
such as Scudder Cash Investment Trust can be a valuable part of a balanced
investment portfolio.
Sincerely,
Your Portfolio Management Team
/s/Frank J. Rachwalski, Jr. /s/John W. Stuebe
Frank J. Rachwalski, Jr. John W. Stuebe
5 - Scudder Cash Investment Trust
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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.
GROSS DOMESTIC PRODUCT (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. Economic
growth that is overly strong 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 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.
6 - 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)
7 - Scudder Cash Investment Trust
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Investment Portfolio as of December 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount ($) Value ($)
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<S> <C> <C>
Repurchase Agreements 1.4%
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Repurchase Agreement with State Street Bank and Trust Company dated 12/31/1998
at 4.85%, to be repurchased at $16,043,641 on 1/4/1999, collateralized by a ------------
$15,635,000 U.S. Treasury Note, 6.25%, 8/31/2000 (Cost $16,035,000) ................... 16,035,000 16,035,000
------------
Commercial Paper 51.8%
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Amsterdam Funding Corp., 5.3%, 1/22/1999 ................................................ 20,000,000 19,937,300
Bayerische Vereinsbank AG, 5.83%, 1/4/1999 .............................................. 30,000,000 29,980,566
Coca-Cola Enterprises, Inc., 5.22%, 1/7/1999 ............................................ 17,000,000 16,982,844
Coca-Cola Enterprises, Inc., 5.12%, 3/17/1999 ........................................... 28,000,000 27,711,538
CSW Credit, Inc., 5.12%, 2/12/1999 ...................................................... 35,000,000 34,785,954
Eureka Securitization, Inc., 5.2%, 1/20/1999 ............................................ 35,000,000 34,900,250
General Motors Acceptance Corp., 5.24%, 2/11/1999 ....................................... 15,000,000 14,911,624
Goldman Sachs & Co., 5.1%, 2/24/1999 .................................................... 15,000,000 14,884,041
Goldman Sachs & Co., 5.438%, 3/26/1999 .................................................. 15,000,000 15,003,150
GTE Corp., 5.25%, 2/3/1999 .............................................................. 15,000,000 14,927,813
GTE Corp., 5.53%, 2/5/1999 .............................................................. 20,000,000 19,898,797
GTE Corp., 5.47%, 2/12/1999 ............................................................. 10,000,000 9,939,680
Household International, 5.18%, 3/4/1999 ................................................ 15,000,000 14,871,900
Intrepid Funding Master Trust, 5.14%, 2/9/1999 .......................................... 25,000,000 24,859,720
Lexington Parker Capital Corp., 5.43%, 2/3/1999 ......................................... 18,000,000 17,910,405
Madison Funding Corp., 5.33%, 2/18/1999 ................................................. 15,000,000 14,897,100
Madison Funding Corp., 5.43%, 2/4/1999 .................................................. 20,000,000 19,901,608
Merita North America, 5.35%, 1/8/1999 ................................................... 24,900,000 24,871,281
Merrill Lynch & Co., 5.13%, 1/29/1999 ................................................... 20,000,000 19,917,188
Mont Blanc Capital Corp., 5.17%, 1/14/1999 .............................................. 25,000,000 24,948,860
Mont Blanc Capital Corp., 5.38%, 1/29/1999 .............................................. 30,000,000 29,875,781
Morgan Stanley, Dean Witter Discover Co., 5.15%, 2/11/1999 .............................. 20,000,000 19,882,165
Preferred Receivables Funding Corp., 5.15%, 3/11/1999 ................................... 20,000,000 19,810,222
Sanwa Business Credit Corp., 6.1%, 1/6/1999 ............................................. 20,000,000 19,979,666
Sony Capital Corp., 5.2%, 1/13/1999 ..................................................... 43,000,000 42,918,322
Special Purpose Accounts Receivable Cooperative Corp., 5.2%, 3/19/1999 .................. 21,800,000 21,569,501
Transamerica Finance Corp., 5.15%, 1/14/1999 ............................................ 9,700,000 9,680,158
Variable Funding Corp., 5.21%, 1/14/1999 ................................................ 30,000,000 29,938,632
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Total Commercial Paper (Cost $609,684,371) 609,696,066
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</TABLE>
The accompanying notes are an integral part of the financial statements.
8 - Scudder Cash Investment Trust
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<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
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<S> <C> <C>
Certificates Of Deposit 8.1%
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Bankers Trust Co., 5.09%*, 7/23/1999 .................................................... 20,000,000 19,947,800
Bankers Trust Co. Floating Rate Note, 4.85%*, 4/30/1999 ................................. 15,000,000 14,979,898
First Union National Bank, 5.4%*, 11/16/1999 ............................................ 20,000,000 19,993,800
Goldman Sachs & Co., 5.358%*, 5/4/1999 .................................................. 30,000,000 30,000,000
Huntington National Bank, 5.625%, 1/12/1999 ............................................. 10,000,000 10,000,138
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Total Certificates Of Deposit (Cost $94,983,583) 94,921,636
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U.S. Government Agency Obligations 8.7%
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Federal National Mortgage Association, 4.7%*, 7/14/1999 ................................. 56,000,000 55,935,600
Student Loan Marketing Association, 4.7%*, 7/12/1999 .................................... 46,500,000 46,221,000
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Total U.S. Government Agency Obligations (Cost $102,500,000) 102,156,600
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Short-Term and Medium-Term Notes 30.0%
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American Honda Finance Corp., Floating Rate Note, 5.6%*, 5/26/1999 ...................... 44,500,000 44,475,525
Countrywide Home Loan, Medium Term Note, 5.598%*, 10/15/1999 ............................ 50,000,000 49,990,000
Household Finance Corp., Floating Rate Note, 5.19%, 3/9/1999 ............................ 20,000,000 19,989,414
Household Finance Corp., Medium Term Note, 5.25%*, 5/28/1999 ............................ 20,000,000 19,999,600
Lehman Brothers Holdings, 5.59%*, 10/1/1999 ............................................. 30,000,000 29,775,000
Lehman Brothers Holdings, Medium Term Note, 5.61%, 3/22/1999 ............................ 25,000,000 24,945,000
Merrill Lynch & Co., Medium Term Note, 5.49%*, 4/14/1999 ................................ 30,000,000 29,992,200
Monsanto Co., 5%, 4/12/1999 ............................................................. 25,000,000 24,659,292
NationsBank Corp., 4.83%*, 7/21/1999 .................................................... 40,000,000 40,080,000
Sigma Finance Corp., Floating Rate Note, 4.88%*, 4/27/1999 .............................. 25,000,000 24,966,250
Special Purpose Accounts Receivable Cooperative Corp., 5.12%, 4/15/1999 ................. 10,000,000 9,859,708
Transamerica Finance Corp., 5.53%*, 10/22/1999 .......................................... 35,000,000 35,000,000
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Total Short-Term and Medium-Term Notes (Cost $354,005,392) 353,731,989
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Total Investment Portfolio -- 100.0% (Cost $1,177,208,346) (a) 1,176,541,291
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</TABLE>
(a) The cost for federal income tax purposes was $1,777,208,346. At December
31, 1998, net unrealized depreciation for all securities based on tax cost
was $667,055. This consisted of aggregate gross unrealized appreciation
for all securities in which there was an excess of market value over tax
cost of $164,377 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$831,432.
* 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
December 31, 1998.
The accompanying notes are an integral part of the financial statements.
9 - Scudder Cash Investment Trust
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of December 31, 1998 (Unaudited)
<TABLE>
<S> <C> <C>
Assets
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Investments, at market (identified cost $1,177,208,346) ............ $ 1,176,541,291
Cash ............................................................... 2,315,667
Receivable for Fund shares sold .................................... 13,521,714
Interest receivable ................................................ 5,512,266
Other assets ....................................................... 33,661
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Total assets ....................................................... 1,197,924,599
Liabilities
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Dividends payable .................................................. 234,884
Payable for Fund shares redeemed ................................... 27,072,246
Accrued management fee ............................................. 138,556
Other payables and accrued expenses ................................ 664,283
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Total liabilities .................................................. 28,109,969
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Net assets, at market $ 1,169,814,630
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Net Assets
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Net assets consist of:
Unrealized appreciation (depreciation) on investments .............. (667,055)
Accumulated net realized gain (loss) ............................... (476,564)
Paid-in capital .................................................... 1,170,958,249
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Net assets, at market $ 1,169,814,630
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Net Asset Value
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Net Asset Value, offering and redemption price per share
($1,169,814,630 / 1,170,235,869 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.
10 - Scudder Cash Investment Trust
<PAGE>
Statement of Operations
year ended December 31, 1998 (Unaudited)
<TABLE>
<S> <C> <C>
Investment Income
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Interest ............................................................. $ 33,134,943
----------------
Expenses:
Management fee ....................................................... 2,549,623
Services to shareholders ............................................. 3,145,748
Custodian and accounting fees ........................................ 106,861
Trustees' fees and expenses .......................................... 6,520
Reports to shareholders .............................................. 180,168
Registration fees .................................................... 55,856
Auditing ............................................................. 22,450
Legal ................................................................ 10,204
Other ................................................................ 27,925
----------------
Total expenses before reductions ..................................... 6,105,355
Expense reductions ................................................... (984,648)
----------------
Expenses, net ........................................................ 5,120,707
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Net investment income 28,014,236
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Realized and unrealized gain (loss) on investment transactions
- ----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments .............................. 8,903
Net unrealized appreciation (depreciation) during the period on
investments ........................................................ (247,502)
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Net gain (loss) on investments (238,599)
-------------------------------------------------------------------------------------------
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Net increase (decrease) in net assets resulting from operations $ 27,775,637
-------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 - Scudder Cash Investment Trust
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months
Ended
December 31,
1998 Year Ended
Increase (Decrease) in Net Assets (Unaudited) June 30, 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ............................................... $ 28,014,236 $ 60,342,332
Net realized gain (loss) on investment transactions
during the period ................................................. 8,903 (17,463)
Net unrealized appreciation (depreciation) on
investment transactions during the period ......................... (247,502) (94,354)
------------------ ------------------
Net increase (decrease) in net assets resulting from
operations ........................................................ 27,775,637 60,230,515
------------------ ------------------
Distributions to shareholders from:
From net investment income .......................................... (28,014,185) (60,324,869)
------------------ ------------------
From net realized gains ............................................. (8,903) --
------------------ ------------------
Fund share transactions at net asset value of $1.00 per share:
Shares sold ......................................................... 1,217,746,367 1,976,992,854
Net asset value of shares issued to shareholders in
reinvestment of distributions ..................................... 26,371,536 56,773,631
Shares redeemed ..................................................... (1,256,068,389) (2,282,283,081)
------------------ ------------------
Net increase (decrease) in net assets from Fund share
transactions ...................................................... (11,950,486) (248,516,596)
------------------ ------------------
Increase (decrease) in net assets ................................... (12,197,937) (248,610,950)
Net assets at beginning of period ................................... 1,182,012,567 1,430,623,517
------------------ ------------------
Net assets at end of period ......................................... $1,169,814,630 $1,182,012,567
------------------ ------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 - 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>
Six Months
Ended
December 31,
1998 Years Ended June 30,
(Unaudited) 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------
Net asset value, beginning of period ................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------------------------------------------------------------------------
Net investment income ................................ .023 .048 .046 .048 .048 .027
Less distributions from net investment income
and net realized capital gains (a) ................. (.023) (.048) (.046) (.048) (.048) (.027)
---------------------------------------------------------------------------
Net asset value, end of period ....................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return (%) ..................................... 2.37**(b) 4.92(b) 4.73 4.89 4.90 2.77
Ratios and Supplemental Data
Net assets, end of period ($ millions) ............... 1,170 1,182 1,431 1,387 1,520 1,430
Ratio of operating expenses, net to average
daily net assets (%) ............................... .85* .85 .86 .83 .78 .82
Ratio of operating expenses before expense
reduction, to average daily net assets (%) ......... 1.01* .95 .86 .83 .78 .82
Ratio of net investment income to average daily
net assets (%) ..................................... 4.65* 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.
* Annualized
** Not annualized
13 - 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 is equal to at least the repurchase price.
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code of 1986, 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 December 31, 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 identified cost 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.
14 - Scudder Cash Investment Trust
<PAGE>
B. Related Parties
Under the Management Agreement (the "Agreement") with Scudder Kemper
Investments, Inc. ("Scudder Kemper" or the "Adviser"), 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 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 March 31, 1999. For the six months
ended December 31, 1998, the Adviser did not impose a portion of its fee,
amounting to $984,648, and the portion imposed amounted to $1,564,975,
equivalent to an annual effective rate of .26% of the Fund's average daily net
assets.
Effective September 7, 1998, Zurich Insurance Company ("Zurich"), majority owner
of the Adviser, entered into an agreement with B.A.T Industries p.l.c. ("B.A.T")
pursuant to which the financial services businesses of B.A.T were combined with
Zurich's businesses to form a new global insurance and financial services
company known as Zurich Financial Services. Upon consummation of the
transaction, the Fund's Management Agreement with Scudder Kemper was deemed to
have been assigned and, therefore, terminated. In December 1998, the Board of
Trustees and the shareholders of the Fund approved a new investment management
agreement with Scudder Kemper, which is substantially identical to the former
Management Agreement, except for the dates of execution and termination.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
six months ended December 31, 1998, the amount charged to the Fund by SSC
aggregated $1,648,292, of which $277,428 is unpaid at December 31, 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 six months ended December
31, 1998, the amount charged to the Fund by STC aggregated $1,070,489, of which
$183,650 is unpaid at December 31, 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 six months
ended December 31, 1998, the amount charged to the Fund by SFAC aggregated
$47,540, of which $7,887 is unpaid at December 31, 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 invested in the Underlying Funds. For the six months ended
December 31, 1998, the Special Servicing Agreement expense charged to the Fund
amounted to $112,232.
15 - Scudder Cash Investment Trust
<PAGE>
The Fund pays each Trustee not affiliated with the Adviser an annual retainer
plus specified amounts for attended board and committee meetings. For the six
months ended December 31, 1998, Trustees' fees and expenses aggregated $6,520.
C. Lines of Credit
The Fund and several Scudder Funds ("The Participants") share in a $850 million
revolving credit facility for temporary or emergency purposes, including the
meeting of redemption requests that otherwise might require the untimely
disposition of securities. The Participants are charged an annual commitment fee
which is allocated among each of the Participants. Interest is calculated based
on the market rates at the time of the borrowing. The Fund may borrow up to a
maximum of 33 percent of its net assets under the agreement.
16 - Scudder Cash Investment Trust
<PAGE>
Shareholder Meeting Results
A Special Meeting of Shareholders (the "Meeting") of Scudder Cash Investment
Trust (the "Fund") was held on December 15, 1998, at the office of Scudder
Kemper Investments, Inc., Two International Place, Boston, Massachusetts 02110.
At the Meeting the following matters were voted upon by the shareholders (the
resulting votes for each matter are presented below).
1. To approve a new Investment Management Agreement for the Fund with Scudder
Kemper Investments, Inc.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
630,171,796 22,296,349 30,948,408 0
2. To approve the revision of the Fund's fundamental lending policy.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
603,900,291 37,586,987 41,754,409 174,866
- --------------------------------------------------------------------------------
* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary power
to vote on a particular matter.
17 - Scudder Cash Investment Trust
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intentionally
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18 - Scudder Cash Investment Trust
<PAGE>
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intentionally
left blank.
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
7Associates; 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
Thomas W. Joseph*
Vice President
Ann M. McCreary*
Vice President
Frank J. Rachwalski, Jr.*
Vice President
David Wines*
Vice President
Thomas F. McDonough*
Vice President and Secretary
John R. Hebble*
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--
Prime Reserve Shares*
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 Corporate Bond 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
Preferred Series
- ----------------
Scudder Tax Managed Growth Fund
Scudder Tax Managed Small
Company 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 -- www.scudder.com
1-800-343-2890
Personal Investment Organizer: 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
800 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 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 $230 billion in
assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts.
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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