SCUDDER
INVESTMENTS(SM)
[LOGO]
----------------------------
MONEY MARKET
----------------------------
Scudder Cash
Investment Trust
Fund #065
Annual Report
May 31, 2000
The fund seeks to maintain stability of capital and, consistent with that, to
maintain liquidity of capital and to provide current income.
A no-load fund with no commissions to buy, sell, or exchange shares.
<PAGE>
Contents
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4 Letter from the Fund's President
6 Portfolio Management Discussion
13 Glossary of Investment Terms
15 Investment Portfolio
17 Financial Statements
20 Financial Highlights
21 Notes to Financial Statements
25 Report of Independent Accountants
26 Tax Information
27 Officers and Trustees
28 Investment Products and Services
30 Scudder Solutions
2
<PAGE>
Scudder Cash Investment Trust
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ticker symbol SCTXX fund number 065
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Date of Inception: o Short-term interest rates continued to rise over the
7/23/76 12-month period, directly benefiting money market
securities.
o Scudder Cash Investment Trust reflected the interest
Total Net Assets as rate increases as its 7-day average yield rose from
of 5/31/00: 4.14% to 5.58% over the 12 months.
$981 million
o An opportunistic strategy and commitment to high
quality money market securities resulted in a total
return of 5.01%, surpassing the average return of 362
taxable money market funds for the 12-month period
ended May 31, 2000.^1
o Management maintained a shorter average maturity than
its peers over most of the period, which provided
liquidity and the flexibility to reinvest in higher
yielding securities, especially toward the end of
the period.
^1 Source: Lipper Analytical Services, Inc., an independent analyst of
investment performance. Performance includes reinvestment of dividends
and is no guarantee of future results.
3
<PAGE>
Letter from the Fund's President
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Dear Shareholders,
Until March 10 the great bull market for "new economy" stocks seemed
unstoppable. However, rising interest rates eventually proved too much, as many
stocks with high valuations and little or no earnings experienced sharp
declines. While we believe the economy is being transformed by a technological
revolution, the now lower valuations have helped reduce the level of market
risk.
This kind of economic revolution combined with wide market swings can be
unnerving for investors. Yet, experience tells us that the best approach during
such periods is to take a step back and review one's long-term investment goals.
It is easy to get caught up in the quickly shifting winds, especially when it
has become only more convenient and economical to move from one investment to
the next. While we believe adjusting your investment portfolio by adding new
investments and harvesting others should be a regular ritual, I encourage you to
remain focused on your original purposes for investing.
If you are investing for retirement in 20 years and are seeking long-term gains,
we believe you should continue to invest in funds that will help you best
achieve those ends, such as domestic and international equity funds. If you are
investing for the short term (1-2 years) and don't want to risk your principal,
we believe you should not be considering technology or other narrowly focused
funds for a substantial portion of your portfolio. Stick to your plan, stay
focused, and avoid the latest fad. Unless you plan to devote your full-time
energies to investing every day, we think
4
<PAGE>
you will be better served by taking a long-term approach that includes exposure
to several asset classes. This includes domestic and international stock,
small-cap, fixed income, and money market funds.
As a shareholder in Scudder Cash Investment Trust you already hold a key element
of a well-diversified portfolio. The trust's conservative, high quality, and
very liquid investments provide relative stability, high current income, and a
short-term parking place for a portion of your investment portfolio. With
short-term interest rates rising and inflation moderate, investors are seeing
some of the best real yields for money market funds in years. For a detailed
discussion of management's investment strategy and portfolio positioning, I
encourage you to read the Portfolio Management Discussion with Frank Rachwalski
and Dean Meddaugh beginning on page 6.
For current information on the trust and your account, visit our Internet Web
site at www.scudder.com. There you'll find a wealth of information, including
the most recent performance, the latest news on Scudder products and services,
and the opportunity to perform account transactions. You can also speak with one
of our representatives by calling 1-800-SCUDDER (1-800-728-3337).
Thank you for your continued investment in Scudder Cash Investment Trust.
Sincerely,
/s/Linda C. Coughlin
Linda C. Coughlin
President,
Scudder Cash Investment Trust
5
<PAGE>
Portfolio Management Discussion
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May 31, 2000
In the following interview, portfolio managers Frank Rachwalski and Dean
Meddaugh discuss the market environment and their approach to managing the
trust.
Q: The U.S. stock and bond markets winced with each increase in short-term
interest rates by the Federal Reserve. How did the rate increases affect money
market securities over the 12-month period?
A: Money market securities are directly impacted by changes in short-term rates,
especially the federal funds rate, an important benchmark that is widely watched
by fixed income investors. With the U.S. economy strong, unemployment near an
all-time low, and consumer confidence high, concerns over an acceleration of the
inflation rate took center stage. Since the Fed has the responsibility to
conduct the nation's monetary policy and maintain stability of the financial
system, it continued to raise the federal funds rate in response to these trends
(see Changes in the Federal Funds Rate below).
One thing that investors have witnessed over the past year is the surprising
resiliency of the U.S. economy. Despite the Fed's raising rates six times and
one-and-three-quarters percentage points over the 12 months in attempts to slow
--------------------------------------------------------------------------------
Changes in the Federal Funds Rate
--------------------------------------------------------------------------------
Federal Funds New rate Change
--------------------------------------------------------------------------------
June 30, 1999 5.00% +0.25%
August 24 5.25% +0.25%
November 16 5.50% +0.25%
February 2, 2000 5.75% +0.25%
March 21 6.00% +0.25%
May 16 6.50% +0.50%
--------------------------------------------------------------------------------
The federal funds rate is the interest rate charged by banks with excess
reserves at the Federal Reserve district bank to banks needing overnight loans
to meet reserve requirements. The federal funds rate is the most sensitive
indicator of the direction of interest rates, since it is set daily by the
market and represents a very short maturity -- an overnight loan.
6
<PAGE>
growth, the U.S. economy continued to expand at a rapid clip. In the first
quarter of this year gross domestic product grew 5.5%. Reflecting signs that
inflationary pressures have been building, the consumer price index rose 3.1%,
up significantly from the beginning of the 12-month period.
While we think the Fed is closer to achieving its objectives of slowing the
economy and controlling inflation, we believe another rate hike is likely. With
recent consumer confidence numbers suggesting that consumers are not afraid and
are continuing their buying spree, we think the Fed will have to pursue a policy
of raising interest rates for the near term. However, the Fed may take a
cautious approach to raising rates prior to the November elections.
Q: How did you manage the portfolio in this environment?
A: We pursued two strategies, reflecting the two distinct environments over the
12 months -- the period leading up to the end of 1999 and the year-to-date
period. Toward the end of 1999, we continued to focus on maintaining a
sufficient level of liquidity in the portfolio while taking advantage of what
the market was offering. Generally, this meant maintaining a shorter average
maturity than our peers. This strategy was driven by our cautionary approach to
the Y2K changeover, which some had speculated might result in a shift to
short-term money market instruments at year-end. We maintained a higher than
normal level of liquidity in the portfolio in order to be prepared for
potentially high investor demand for cash. By maintaining a shorter maturity in
the rising interest rate environment, our existing holdings matured more
quickly, which enabled us to invest in higher yielding securities sooner than if
we had maintained a longer average maturity. A limitation of this strategy is
that we gave up a small amount of current yield by maintaining a shorter
maturity.
As it turned out, the Fed pumped a great deal of money into the financial system
by allowing monetary reserves to
7
<PAGE>
grow rapidly in the fourth quarter of 1999. Some speculated that this
super-liquid market helped to fuel the strong stock market rally. We think that
remaining very liquid (by maintaining a relatively short maturity at year-end)
was the right approach. If we had been invested in longer term securities and
there had been a high demand for cash by investors, it could have been costly to
raise cash at that time.
Q: How did the environment change at the beginning of 2000?
A: Y2K concerns essentially evaporated at the beginning of this year, as it
became clear that fears were overdone and the Fed would likely begin reducing
the excess market liquidity. We viewed this as an opportunity to pick up some
higher yielding paper by extending the portfolio's average maturity slightly.
However, the portfolio's maturity still remained significantly shorter than its
peers, given our expectations that rates would continue to rise. At the end of
the period, the portfolio had an average maturity of 16 days, which compares to
about 50 days for the average first-tier money market fund.
--------------------------------------------------------------------------------
Portfolio Maturity
(Average number of days)
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THE ORIGINAL DOCUMENT CONTAINS A LINE CHART HERE
LINE CHART DATA:
5/99 36
6/99 25
7/99 28
8/99 26
9/99 34
10/99 47
11/99 34
12/99 29
1/00 20
2/00 22
3/00 21
4/00 24
5/00 16
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8
<PAGE>
Q: How did the trust perform?
A: Reflecting the rising interest rate environment, the trust's yield rose.
Scudder Cash Investment Trust's 7-day yield increased from 4.14% to 5.58% over
the 12 months, which translated into compound effective yields of 4.23% and
5.73%, respectively. From a total return standpoint, the trust exceeded the
average one-year total return for 362 taxable money market funds as ranked by
Lipper Analytical Services, Inc.
Q: What is the quality of the short-term securities that you buy for the
portfolio?
A: We only invest in "first-tier" short-term securities in the portfolio. By
that we mean issues that are rated in the top rating categories according to
major credit rating agencies, such as Fitch Investors Service, Moody's Investor
Service, or Standard and Poor's. The top ratings have the lowest risk of default
and, while not insured by the FDIC or guaranteed, these securities are among the
safest available outside of U.S. Treasury bills. Basically, our philosophy is
that it does not pay to take on additional credit risk given the relatively
small yield advantage.
Q: The trust can invest in a variety of short-term securities. How did you
allocate the trust's assets?
A: In managing the portfolio, we focus on maintaining its average life (the
average maturity of the portfolio) within a target range and in selecting
floating-rate securities that will benefit the portfolio given current interest
rate trends. As a result, we generally do not make big asset allocation shifts
within the trust's portfolio. We attempt to maintain exposure to a broad
selection of securities, including high quality commercial paper, variable- and
floating-rate securities, U.S. government agency obligations, certificates of
deposit, and repurchase agreements. The majority of the portfolio remained
invested in high quality commercial paper (59%), which we maintained because of
its attractive values and high relative yields.
9
<PAGE>
The next largest area of concentration was floating-rate securities at 40% of
assets. "Floaters," as we call them, are highly correlated to short-term
interest rates because their yields are indexed to current short-term rates,
such as the prime rate -- the key lending rate charged by commercial banks to
its best customers. In the rising rate environment, the yield on these
securities adjusts upward sooner than traditional fixed-rate money market
securities. Since selling lower yielding money market securities to buy higher
yielding ones is impractical due to high transaction costs, floaters allow the
portfolio to participate in the higher yielding environment quickly and without
incurring additional transaction costs. In addition, floaters typically provide
slightly higher yields than fixed-rate money market securities with maturities
greater than 30 days.
We also held 1% of assets in repurchase agreements (commonly called "repos").
These very short-term loans (usually seven days or less) are collateralized by
U.S. government notes and provide a private sector yield, or a yield that is
comparable to non-government issued money market securities. These securities
tend to trade more cheaply than comparable Treasury bills and often represent
good value from our standpoint. Because these securities are collateralized by
Treasuries and have relatively short maturities, repos tend to react quickly
when interest rates change. Our holdings of repos benefited the portfolio as
rates rose over the period.
Q: What is your outlook for interest rates?
A: As we mentioned earlier, we think the Fed will raise rates at least one more
time before the November elections. Since we have recently begun to see signs
that the economy may be slowing in reaction to the higher rate environment, we
think the Fed may eventually be able to ease off its current policy of raising
short-term interest rates. Knowing when to stop raising rates is a tough job for
the Fed since the rate increases take time to work their way through the
economy. Typically it takes six months for the effects to begin showing up, so
the braking effects of this year's rate
10
<PAGE>
hikes on growth are still probably yet to come. In any case, this is a great
environment for money market fund investors because interest rates are rising
and real yields (after subtracting inflation) are still offering investors very
attractive returns.
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Trust Yields
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7-day 7-day
average compounded
yield effective yield
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May 31, 1999 4.14% 4.23%
May 31, 2000 5.58% 5.73%
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11
<PAGE>
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, each of whom plays 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 offices across the United
States and abroad. The Adviser believes that a team approach benefits fund
investors by bringing together many disciplines and leveraging the firm's
extensive resources.
Lead portfolio manager Frank J. Rachwalski joined the Adviser in 1973 as a money
market specialist within the fixed income group and assumed responsibility for
the fund's day-to-day management and overall investment strategies on January 1,
1998. Mr. Rachwalski has been responsible for the trading and portfolio
management of money market funds since 1974.
Portfolio manager Dean Meddaugh joined the Adviser in 1996 as a money market
manager. Mr. Meddaugh joined the team in 1999 and has seven years of investment
industry experience.
12
<PAGE>
Glossary of Investment Terms
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<TABLE>
<CAPTION>
<S> <C>
Commercial Paper Short-term debt 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 from the
face value of the security, although some are
interest-bearing and offer a high level of safety and
liquidity.
Federal Reserve The governing board of the Federal Reserve System, the
Board United States' central bank. The Board establishes policies
on such key matters as reserve requirements (the amount of
cash banks must have on hand) and other bank regulations,
sets the discount rate, tightens or loosens credit (raises
or lowers rates), and regulates the purchase of securities
on margin.
Federal Open Market The committee that sets interest rate and credit policies
Committee (FOMC) for the Federal Reserve System. The committee decides
whether to increase or decrease interest rates through
open-market operations. The committee's actions are closely
watched and interpreted by economists and stock and bond
market analysts, who try to predict whether the Fed is
seeking to tighten credit to reduce inflation or to loosen
credit to stimulate the economy.
Gross Domestic Gross domestic product is a commonly referenced measure of
Product (GDP) 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; weakening
growth can lead to a recession.
Inflation An overall increase in prices usually measured by the
Consumer Price Index (CPI) and the Producer Price Index
(PPI). CPI is calculated by the U.S. Bureau of Labor
Statistics and measures the cost of a basket of goods and
services over time. The PPI is calculated by the U.S.
Department of Labor and measures the wholesale cost of goods
over a specified period.
13
<PAGE>
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 The date a debt instrument is due and payable. For money
market securities, a short maturity provides better
investment flexibility, but tends to provide a lower yield;
a long maturity provides a higher yield, but requires the
investor to tie up money for a longer period (less
flexibility).
Money Market Short-term debt instruments, including banker's acceptances,
Securities commercial paper, negotiable certificates of deposit,
repurchase agreements, and Treasury bills. Most money market
instruments mature in less than one year and money market
funds typically have average maturities of less than 90
days. These securities have a high level of safety and
liquidity.
</TABLE>
(Source: Scudder Kemper Investments, Inc.; Barron's Dictionary of Finance and
Investment Terms)
Additional glossary terms are available at our Internet Web site --
www.scudder.com.
14
<PAGE>
Investment Portfolio as of May 31, 2000
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Principal
Amount ($) Value ($)
-------------------------------------------------------------------------------
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Repurchase Agreements 0.9%
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State Street Bank & Trust Company, 6.37%, to
be repurchased at $8,675,535 on 6/1/2000**
(Cost $8,674,000) ............................... 8,674,000 8,674,000
--------------------------------------------------------------------------------
Commercial Paper 59.1%
--------------------------------------------------------------------------------
Atlantis One, 6.45%, 6/6/2000 ...................... 20,000,000 19,982,167
Amsterdam Funding, 6.38%, 6/2/2000 ................. 35,000,000 34,993,826
Barton Capital Corp, 6.55%, 6/20/2000 .............. 33,357,000 33,242,215
Bavaria Universal, 6.46%, 6/9/2000 ................. 35,000,000 34,949,989
Bavaria Finance Funding, 6.37%, 6/5/2000 ........... 25,000,000 24,982,417
Corporate Receivables, 6.14%, 6/7/2000 ............. 15,000,000 14,984,775
Eureka Securitization, 6.64%, 7/14/2000 ............ 13,000,000 12,897,827
Falcon Asset Securitization Corp., 6.56%, 6/15/2000 41,000,000 40,896,042
Forrestal Funding Master, 6.22%, 6/22/2000 ......... 30,398,000 30,289,125
Galaxy Funding Corp., 6.58%, 6/13/2000 ............. 25,000,000 24,945,417
Moat Funding LLC, 6.56%, 6/14/2000 ................. 35,000,000 34,917,468
Monte Rosa Capital Corp., 6.23%, 6/20/2000 ......... 20,272,000 20,206,200
Olde Line Funding, 6.31%, 6/12/2000 ................ 30,000,000 29,942,617
Preferred Receivables Funding Corp., 6.12%, 6/1/2000 35,000,000 35,000,000
Sheffield Receivables Corp., 6.15%, 6/14/2000 ...... 27,250,000 27,190,073
Stellar Funding Group, 6.58%, 6/26/2000 ............ 30,000,000 29,863,750
Superior Funding Capital, 6.45%, 6/7/2000 .......... 20,000,000 19,978,600
Surrey Funding Corp., 6.55%, 6/6/2000 .............. 20,000,000 19,981,861
Sweetwater Capital Corp., 6.55%, 6/15/2000 ......... 25,110,000 25,046,332
Windmill Funding Corp., 6.48%, 6/20/2000 ........... 22,000,000 21,925,341
Wood Street Funding Corp., 6.17%, 6/19/2000 ........ 36,534,000 36,422,389
--------------------------------------------------------------------------------
Total Commercial Paper (Cost $572,638,431) 572,638,431
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Certificates of Deposit 20.9%
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Allfirst Bank, 6.51%*, 1/14/2001 ................... 15,000,000 14,997,238
Credit Suisse First Boston Corp., 6.72%*, 6/9/2000 . 39,000,000 39,000,000
Dresdner Bank, 6.58%*, 7/24/2000 ................... 49,000,000 48,997,235
Finova Capital Corp., 6.19%*, 6/12/2000 ............ 50,000,000 50,000,000
First Union National Bank, 6.63%*, 7/26/2000 ....... 35,000,000 35,000,000
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
<TABLE>
<CAPTION>
Principal
Amount ($) Value ($)
---------------------------------------------------------------------------------------
<S> <C> <C>
Goldman Sachs Group, 6.29%*, 10/2/2000 .................... 15,000,000 15,000,000
---------------------------------------------------------------------------------------
Total Certificates of Deposit (Cost $202,994,473) 202,994,473
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Short-Term Notes 19.1%
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Comerica Bank, 6.41%*, 6/13/2000 .......................... 30,000,000 29,999,515
GTE Corp., 6.3%*, 1/5/2001 ................................ 25,000,000 24,988,429
Heller Financial, Inc., 6.59%*, 6/7/2000 .................. 15,000,000 15,000,226
Heller Financial, Inc., 6.35%*, 7/7/2000 .................. 10,000,000 10,001,120
Heller Financial, Inc., 6.59%*, 8/11/2000 ................. 25,000,000 25,000,000
Key Bank NA, 6.76%*, 5/25/2001 ............................ 25,000,000 24,991,163
MBNA Bank, 6.28%*, 6/13/2000 .............................. 5,000,000 4,999,669
Skandinaviska Enskilda, 6.62%*, 8/29/2000 ................. 25,000,000 24,997,607
Transamerica Finance Corp., 6.2%*, 12/1/2000 .............. 25,000,000 25,000,000
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Total Short-Term Notes (Cost $184,977,729) 184,977,729
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Total Investment Portfolio -- 100.0% (Cost $969,284,633) (a) 969,284,633
---------------------------------------------------------------------------------------
</TABLE>
(a) The cost for federal income tax purposes was $969,284,633.
* 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 May
31, 2000.
** Repurchase agreements are fully collateralized by U.S. Treasury or
Government agency securities.
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
Financial Statements
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Statement of Assets and Liabilities as of May 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets
-----------------------------------------------------------------------------------------
<S> <C>
Investments in securities, at value (cost $969,284,633) ................. $ 969,284,633
Cash .................................................................... 2,065,605
Interest receivable ..................................................... 2,732,435
Receivable for Fund shares sold ......................................... 17,249,339
Other assets ............................................................ 61,810
---------------
Total assets ............................................................ 991,393,822
Liabilities
-----------------------------------------------------------------------------------------
Dividends payable ....................................................... 178,965
Payable for Fund shares redeemed ........................................ 8,397,345
Accrued management fee .................................................. 222,731
Accrued reorganization costs ............................................ 435,374
Accrued Trustees' fees and expenses ..................................... 26,254
Other accrued expenses and payables ..................................... 685,289
---------------
Total liabilities ....................................................... 9,945,958
-----------------------------------------------------------------------------------------
Net assets, at value $ 981,447,864
-----------------------------------------------------------------------------------------
Net Assets
-----------------------------------------------------------------------------------------
Net assets consist of:
Accumulated net realized gain (loss) .................................... (477,475)
Paid-in capital ......................................................... 981,925,339
-----------------------------------------------------------------------------------------
Net assets, at value $ 981,447,864
-----------------------------------------------------------------------------------------
Net Asset Value
-----------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share ($981,447,864 /
981,439,172 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.
17
<PAGE>
--------------------------------------------------------------------------------
Statement of Operations for the year ended May 31, 2000
--------------------------------------------------------------------------------
Investment Income
------------------------------------------------------------------------------
Income:
Interest ...................................................... $ 62,209,104
---------------
Expenses:
Management fee ................................................ 4,613,233
Services to shareholders ...................................... 5,508,182
Custodian and accounting fees ................................. 215,910
Auditing ...................................................... 43,878
Legal ......................................................... 24,242
Trustees' fees and expenses ................................... 133,800
Reports to shareholders ....................................... 143,341
Registration fees ............................................. 75,644
Reorganization ................................................ 486,368
Other ......................................................... 47,836
---------------
Total expenses, before expense reductions ..................... 11,292,434
Expense reductions ............................................ (1,573,738)
---------------
Total expenses, after expense reductions ...................... 9,718,696
------------------------------------------------------------------------------
Net investment income 52,490,408
------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
------------------------------------------------------------------------------
Net realized gain (loss) from investments ..................... (13,553)
------------------------------------------------------------------------------
Net gain (loss) on investment transactions (13,553)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 52,476,855
------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
--------------------------------------------------------------------------------
Statements of Changes in Net Assets
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Eleven Months
Year Ended May Ended May 31, Year Ended
Increase (Decrease) in Net Assets 31, 2000 1999 June 30, 1998
-----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations:
Net investment income ........... $ 52,490,408 $ 48,233,930 $ 60,342,332
Net realized gain (loss) on
investment transactions ...... (13,553) -- (17,463)
Net unrealized appreciation
(depreciation) on investment
transactions during the period -- 419,553 (94,354)
---------------- ------------------ ---------------
Net increase (decrease) in net
assets resulting from
operations ................... 52,476,855 48,653,483 60,230,515
---------------- ------------------ ---------------
Distributions to shareholders
from:
Net investment income ........... (52,490,408) (48,233,930) (60,324,869)
---------------- ------------------ ---------------
Fund share transactions at net asset
value of $1.00 per share:
Proceeds from shares sold ....... 2,463,134,788 2,183,832,499 1,976,992,854
Reinvestment of distributions ... 49,713,698 45,455,859 56,773,631
Cost of shares redeemed ......... (2,678,407,346) (2,264,700,201) (2,282,283,081)
---------------- ------------------ ---------------
Net increase (decrease) in net
assets from Fund share
transactions ................. (165,558,860) (35,411,843) (248,516,596)
---------------- ------------------ ---------------
Increase (decrease) in net assets (165,572,413) (34,992,290) (248,610,950)
Net assets at beginning of period 1,147,020,277 1,182,012,567 1,430,623,517
Net assets at end of period ..... $ 981,447,864 $ 1,147,020,277 $ 1,182,012,567
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<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>
------------------------------------------------------------------------------------
2000(a) 1999(b) 1998(c) 1997(c) 1996(c) 1995(c)
------------------------------------------------------------------------------------
<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
----------------------------------------------------
------------------------------------------------------------------------------------
Income from investment operations:
------------------------------------------------------------------------------------
Net investment income .048 .041 .048 .046 .048 .048
------------------------------------------------------------------------------------
Less distributions from:
------------------------------------------------------------------------------------
Net investment income and net
realized gains on investment
transactions (d) (.048) (.041) (.048) (.046) (.048) (.048)
------------------------------------------------------------------------------------
Net asset value, end of period $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
----------------------------------------------------
------------------------------------------------------------------------------------
Total Return (%) 5.01(e) 4.15(e)** 4.92(e) 4.73 4.89 4.90
Ratios to Average Net Assets and Supplemental Data
------------------------------------------------------------------------------------
Net assets, end of period 981 1,147 1,182 1,431 1,387 1,520
($ millions)
------------------------------------------------------------------------------------
Ratio of expenses before
expense reductions (%) 1.05(f) 1.02* .95 .86 .83 .78
------------------------------------------------------------------------------------
Ratio of expenses after expense
reductions (%) .90(f) .85* .85 .86 .83 .78
------------------------------------------------------------------------------------
Ratio of net investment income
(%) 4.86 4.44* 4.82 4.63 4.79 4.84
------------------------------------------------------------------------------------
</TABLE>
(a) For the year ended May 31, 2000.
(b) For the eleven months ended May 31, 1999. On August 10, 1998, the Board
of Trustees of the Trust changed the fiscal year end of the Fund from
June 30 to May 31.
(c) For the years ended June 30.
(d) Net realized gains were less than 6/10 of $.01 per share.
(e) Total returns would have been lower had certain expenses not been
reduced.
(f) The ratios of operating expenses excluding costs incurred in connection
with the reorganization before and after expense reductions were .99%
and .85%, respectively.
* Annualized
** Not annualized
20
<PAGE>
Notes to Financial Statements
--------------------------------------------------------------------------------
A. Significant Accounting Policies
Scudder Cash Investment Trust (the "Fund") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end, diversified
management investment company organized as a Massachusetts business trust. On
August 10, 1998, the Board of Trustees of the Fund changed the fiscal year end
of the Fund from June 30 to May 31.
The Fund's financial statements are prepared in accordance with accounting
principles generally accepted in the United States 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. The Fund values portfolio securities utilizing the amortized
cost method permitted in accordance with Rule 2a-7 under the 1940 Act and
pursuant to which the Fund must adhere to certain conditions. Under this method,
which does not take into account unrealized gains or losses on securities, an
instrument is initially valued at its cost and thereafter assumes a constant
accretion/amortization to maturity of any discount/premium.
All other securities are valued at their fair value as determined in good faith
by the Valuation Committee of the Board of Trustees.
Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian or
sub-custodian bank, 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
principal amount of the repurchase price plus accrued interest.
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code, as amended, which are applicable to regulated
investment companies and to distribute all of its taxable income to its
shareholders. Accordingly, the Fund paid no federal income taxes and no federal
income tax provision was required.
At May 31, 2000, the Fund had a net tax basis capital loss carryforward of
approximately $473,000, which may be applied against any realized net taxable
capital gains of each succeeding year until fully utilized or until May 31, 2004
($279,000), May 31, 2005 ($179,000), May 31, 2006 ($4,000), May 31, 2007
($2,000), and May 31, 2008 ($9,000), the respective expiration dates, whichever
occurs first.
21
<PAGE>
Distribution of Income and Gains. All of the net investment income of the Fund
is declared as a daily dividend and is distributed to shareholders monthly. Net
realized gains from investment transactions, in excess of available capital loss
carryforwards, would be taxable to the Fund if not distributed, and, therefore,
will be distributed to shareholders as least annually.
Investment Transactions and Investment Income. Investment transactions are
accounted for on the trade date. Interest income is recorded on the accrual
basis. Realized gains and losses from investment transactions are recorded on an
identified cost basis. Original issue discounts are accreted for both tax and
financial reporting purposes.
B. Related Parties
Under the Investment Management Agreement (the "Agreement") with Scudder Kemper
Investments, Inc. ("Scudder Kemper" or the "Adviser"), 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. The management fee
payable under the Agreement is 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. In addition, the Adviser has agreed to
maintain the annualized expenses of the Fund at not more than 0.85% of average
daily net assets until September 30, 2000. Certain expenses incurred in
connection with the reorganization are excluded from the expenses limitation.
For the year ended May 31, 2000, the Adviser did not impose a portion of its
fee, amounting to $1,500,396, and the portion imposed amounted to $3,112,837,
which was equivalent to an annualized effective rate of 0.29% 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 May 31, 2000, the amount charged to the Fund by SSC aggregated
$3,078,137, of which $234,983 is unpaid at May 31, 2000.
22
<PAGE>
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 May 31, 2000,
the amount charged to the Fund by STC aggregated $1,701,490, of which $127,984,
is unpaid at May 31, 2000.
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 May
31, 2000, the amount charged to the Fund by SFAC aggregated $89,784, of which
$7,230 is unpaid at May 31, 2000.
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
the potential to be invested in the Underlying Funds. For the year ended May 31,
2000, the Special Servicing Agreement expense charged to the Fund aggregated to
$79,288.
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 May 31, 2000, Trustees' fees and expenses aggregated $56,257. In addition,
a one-time fee of $77,543 was accrued for payment to those Trustees not
affiliated with the Adviser who are not standing for re-election, under the
reorganization discussed in Note E. Inasmuch as the Adviser will also benefit
from administrative efficiencies of a consolidated Board, the Adviser has agreed
to bear $38,771 of such costs.
C. Expense Off-Set Arrangements
The Fund has entered into arrangements with its custodian and transfer agent
whereby credits realized as a result of uninvested cash balances were used to
reduce a portion of the Fund's expenses. During the year ended May 31, 2000, the
Fund's custodian and transfer agent fees were reduced by $13,642 and $20,929,
respectively, under these arrangements.
23
<PAGE>
D. Line of Credit
The Fund and several Scudder Funds (the "Participants") share in a $1 billion
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, pro rata based upon net assets, 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.
E. Reorganization
In early 2000, Scudder Kemper initiated a restructuring program for most of its
Scudder no-load open-end funds in response to changing industry conditions and
investor needs. The program proposes to streamline the management and operations
of most of the no-load open-end funds Scudder Kemper advises principally through
the liquidation of several small funds, mergers of certain funds with similar
investment objectives, the creation of one Board of Directors/Trustees and the
adoption of an administrative fee covering the provision of most of the services
currently paid for by the affected funds. Costs incurred in connection with this
restructuring initiative are being borne jointly by Scudder Kemper and certain
of the affected funds. These costs, including printing, shareholder meeting
expenses and professional fees, are presented as reorganization expenses in the
Statement of Operations of the Fund.
24
<PAGE>
Report of Independent Accountants
--------------------------------------------------------------------------------
To the Trustees and the Shareholders of Scudder Cash Investment Trust:
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, 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 May 31, 2000, the results of its operations, the changes in its net
assets, and the financial highlights for each of the periods indicated therein,
in conformity with accounting principles generally accepted in the United
States. 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 auditing standards generally accepted in the United States,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at May 31, 2000 by correspondence with the custodian,
provide a reasonable basis for the opinion expressed above.
Boston, Massachusetts PricewaterhouseCoopers LLP
July 7, 2000
25
<PAGE>
Tax Information
--------------------------------------------------------------------------------
By now shareholders for whom year-end tax reporting is required by the IRS
should have received their Form 1099-DIV and tax information letter from the
Fund.
Please consult a tax adviser if you have questions about federal or state income
tax laws, or on how to prepare your tax returns. If you have specific questions
about your account, please call 1-800-SCUDDER.
26
<PAGE>
Officers and Trustees
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
Linda C. Coughlin* Kathryn L. Quirk*
o President and Trustee o Trustee, Vice President and Assistant
Secretary
Henry P. Becton, Jr.
o Trustee; President and General Manager, Jean C. Tempel
WGBH Educational Foundation o Trustee; Managing Director, First Light
Capital
Dawn-Marie Driscoll
o Trustee; Executive Fellow, Center for Ann M. McCreary*
Business Ethics, Bentley College; o Vice President
President, Driscoll Associates
Frank J. Rachwalski, Jr.*
Peter B. Freeman o Vice President
o Trustee; Corporate Director
and Trustee John Millette*
o Vice President and Secretary
George M. Lovejoy, Jr.
o Trustee; President and Director, Fifty John R. Hebble*
Associates; Chairman Emeritus, Meredith o Treasurer
and Grew, Inc.
Caroline Pearson*
Wesley W. Marple, Jr. o Assistant Secretary
o Trustee; Professor of Business
Administration, Northeastern *Scudder Kemper Investments, Inc.
University, College of Business
Administration
</TABLE>
27
<PAGE>
Investment Products and Services
--------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
The Scudder Family of Funds+++
--------------------------------------------------------------------------------
<S> <C>
Money Market U.S. Growth
Scudder U.S. Treasury Money Fund Value
Scudder Cash Investment Trust Scudder Large Company Value Fund
Scudder Money Market Series -- Scudder Value Fund***
Prime Reserve Shares* Scudder Small Company Value Fund
Premium Shares* Scudder Micro Cap Fund
Managed Shares*
Scudder Tax Free Money Fund+ Growth
Scudder Classic Growth Fund***
Tax Free+ Scudder Large Company Growth Fund***
Scudder Limited Term Tax Free Fund Scudder Select 1000 Growth Fund
Scudder Medium Term Tax Free Fund Scudder Development Fund
Scudder Managed Municipal Bonds Scudder 21st Century Growth Fund***
Scudder High Yield Tax Free Fund***
Scudder California Tax Free Fund** Global Equity
Scudder Massachusetts Limited Term Worldwide
Tax Free Fund** Scudder Global Fund
Scudder Massachusetts Tax Free Fund** Scudder International Growth and
Scudder New York Tax Free Fund** Income Fund
Scudder Ohio Tax Free Fund** Scudder International Fund++
Scudder Global Discovery Fund***
U.S. Income Scudder Emerging Markets Growth Fund
Scudder Short Term Bond Fund Scudder Gold Fund
Scudder GNMA Fund
Scudder Income Fund Regional
Scudder Corporate Bond Fund Scudder Greater Europe Growth Fund
Scudder High Yield Bond Fund Scudder Pacific Opportunities Fund
Scudder Latin America Fund
Global Income The Japan Fund, Inc.***
Scudder Global Bond Fund
Scudder International Bond Fund Industry Sector Funds
Scudder Emerging Markets Income Fund Choice Series
Scudder Health Care Fund
Asset Allocation Scudder Technology Fund
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio Preferred Series
Scudder Pathway Growth Portfolio Scudder Tax Managed Growth Fund
Scudder Tax Managed Small Company Fund
U.S. Growth and Income
Scudder Balanced Fund
Scudder Dividend & Growth Fund
Scudder Growth and Income Fund***
Scudder Select 500 Fund
Scudder S&P 500 Index Fund
</TABLE>
28
<PAGE>
--------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
--------------------------------------------------------------------------------
Retirement Programs and Education Accounts
--------------------------------------------------------------------------------
Retirement Programs Education Accounts
Traditional IRA Education IRA
Roth IRA UGMA/UTMA
SEP-IRA IRA for Minors
Inherited IRA
Keogh Plan
401(k), 403(b) Plans
Variable Annuities
Scudder Horizon Plan**+++ +++
Scudder Horizon Advantage**+++ +++ +++
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
Closed-End Funds#
-----------------------------------------------------------------------------------------
<S> <C>
The Argentina Fund, Inc. Montgomery Street Income Securities, Inc.
The Brazil Fund, Inc. Scudder Global High Income Fund, Inc.
The Korea Fund, Inc. Scudder New Asia Fund, Inc.
</TABLE>
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 or classes thereof 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 Class S 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
Kemper Investment's insurance agencies, 1-800-225-2470.
+++ +++ +++ A no-load variable annuity contract issued by Glenbrook Life and
Annuity Company and underwritten by Allstate Financial Services,
Inc., sold by Scudder Kemper Investment'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.
29
<PAGE>
Scudder Solutions
--------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
Convenient Automatic Investment Plan
ways to invest,
quickly and A convenient investment program in which money is
reliably electronically debited from your bank account monthly to
regularly purchase fund shares and "dollar cost average" --
buy more shares when the fund's price is lower and fewer
when it's higher, which can reduce your average purchase
price over time.*
Automatic Dividend Transfer
The most timely, reliable, and convenient way to purchase
shares -- use distributions from one Scudder fund to
purchase shares in another, automatically (accounts with
identical registrations or the same social security or tax
identification number).
QuickBuy
Lets you purchase Scudder fund shares electronically,
avoiding potential mailing delays; money for each of your
transactions is electronically debited from a previously
designated bank account.
Payroll Deduction and Direct Deposit
Have all or part of your paycheck -- even government checks
-- invested in up to four Scudder funds at one time.
* 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- Scudder Automated Information Line: SAIL(TM) --
clock electronic 1-800-343-2890
account
service and Personalized account information, the ability to exchange
information, or redeem shares, and information on other Scudder funds
including some and services via touchtone telephone.
transactions
Scudder's Web Site -- www.scudder.com
Personal Investment Organizer: Offering account information
and transactions, interactive worksheets, prospectuses and
applications for all Scudder funds, plus your current asset
allocation, whenever your need them. Scudder's site also
provides news about Scudder funds, retirement planning
information, and more.
30
<PAGE>
--------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
Retirees and Automatic Withdrawal Plan
those who depend
on investment You designate the bank account, determine the schedule (as
proceeds for frequently as once a month) and amount of the redemptions,
living expenses and Scudder does the rest.
can enjoy these
convenient, Distributions Direct
timely, and
reliable Automatically deposits your fund distributions into the
automated bank account you designate within three business days after
withdrawal each distribution is paid.
programs
QuickSell
Provides speedy access to your money by electronically
crediting your redemption proceeds to the bank account you
previously designated.
For more Call a Scudder representative at
information about 1-800-SCUDDER
these services
Or visit our Web site at
www.scudder.com
Please address The Scudder Funds
all written PO Box 2291
correspondence Boston, Massachusetts
to 02107-2291
31
<PAGE>
About the Fund's Adviser
Scudder Kemper Investments, Inc. is one of the largest and most experienced
investment management organizations worldwide, managing more than $290 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 over 80
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Financial Services 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 Financial Services Group. The Zurich Financial Services 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
INVESTMENTS(SM)
[LOGO]
PO Box 2291
Boston, MA 02107-2291
1-800-SCUDDER
www.scudder.com
A member of the [LOGO] Zurich Financial Services Group
