This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
60-6-65
MIS60S
Scudder
Quality Growth Fund
Semiannual Report
April 30, 1995
o A fund seeking long-term growth of capital through investment primarily in
the equity securities of seasoned, financially strong U.S. growth
companies.
o A pure no-load(TM) fund with no commissions to buy, sell, or exchange
shares.
<PAGE>
SCUDDER QUALITY GROWTH FUND
- --------------------------------------------------------------------------------
CONTENTS
2 In Brief
3 Letter from the Fund's President
4 Performance Update
5 Portfolio Summary
6 Portfolio Management Discussion
9 Investment Portfolio
14 Financial Statements
17 Financial Highlights
18 Notes to Financial Statements
21 Officers and Trustees
22 Investment Products
and Services
23 How to Contact
Scudder
IN BRIEF
* Strong corporate profits and growing investor optimism that the economy may
experience a "soft landing" have pushed the U.S. stock market to new highs
in recent months, with many quality stocks leading the way.
* Scudder Quality Growth Fund returned 6.60% in the six months ended April 30,
1995, better than the 6.53% on average for the 564 growth funds tracked by
Lipper Analytical Services.
* The Fund's exposure to stocks of cyclical (or economically sensitive)
companies was reduced.
* Additions were made to existing holdings whose valuations have become more
attractive, including some key healthcare-related stocks.
2
<PAGE>
LETTER FROM THE FUND'S PRESIDENT
- --------------------------------------------------------------------------------
Dear Shareholders,
After being troubled in 1994 by the prospect of inflationary economic
growth, investors now appear more sanguine about long-term investment
opportunities. Corporate profits have generally exceeded expectations, and
inflation has remained subdued. Since December, investors have steadily returned
to the stock and bond markets, sending prices higher and yields lower. The
unmanaged S&P 500 Index returned an impressive 12.95% in the four months ended
April 30, 1995, compared with just 1.32% for all of 1994.
For 1995 as a whole, we believe overall gains will be somewhat more modest
than the strong returns posted thus far this year. While valuations are still
reasonably healthy, some stocks have risen at rates that cannot be sustained
over the long term. What's more, we believe various economic developments
portend slower growth late in the year and in 1996: a buildup of retail
inventories and consumer installment debt, a growing dependence on foreign
capital with its resulting pressure on interest rates, and slackening sales in
certain segments of the economy such as housing and automobiles. Longer term,
the trends are positive. Thanks to years of corporate restructuring and the
proliferation of technological advances, the global economy appears to be moving
into an era of deflationary growth with corporate profitability intact.
Moreover, the world's emerging economies are likely to play a very positive role
in improving our trade balances. Also, the apparent shift to fiscal conservatism
in the U.S. Congress and in other major economies should have positive
implications for interest rates.
As the investment landscape unfolds, Scudder Quality Growth Fund will
continue to invest in a diversified portfolio of stocks believed to offer
above-average growth potential. If you have questions about your Fund or your
investments, please call a Scudder Investor Relations representative at
1-800-225-2470. Page 23 provides more information on how to contact Scudder.
Thank you for choosing Scudder Quality Growth Fund to help meet your investment
needs.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder Quality Growth Fund
3
<PAGE>
Scudder Quality Growth Fund
Performance Update as of April 30, 1995
- -----------------------------------------------------------------
Growth of a $10,000 Investment
- ------------------------------------------------------------------
Scudder Quality Growth Fund
- ----------------------------------------
Total Return
Period Growth -------------
Ended of Average
4/30/95 $10,000 Cumulative Annual
- --------- ------- ---------- -------
1 Year $11,193 11.93% 11.93%
Life of
Fund* $14,715 47.15% 10.24%
S&P 500 Index
- --------------------------------------
Total Return
Period Growth -------------
Ended of Average
4/30/95 $10,000 Cumulative Annual
- --------- ------- ---------- -------
1 Year $11,747 17.47% 17.47%
Life of
Fund* $15,659 56.59% 11.99%
*The Fund commenced operations on May 15, 1991.
A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:
Scudder Quality Growth Fund
Year Amount
- --------------------
5/15/91* 10000
10/91 11375
4/92 11748
10/92 12793
4/93 12628
10/93 13751
4/94 13146
10/94 13804
4/95 14715
S&P 500 Index
Year Amount
- --------------------
5/15/91* 10000
10/91 10796
4/92 11586
10/92 11874
4/93 12658
10/93 13648
4/94 13331
10/94 14175
4/95 15659
The Standard & Poor's (S&P) 500 Index is an unmanaged
capitalization-weighted measure of 500 widely held common
stocks listed on the New York Stock Exchange, American Stock
Exchange, and Over-The-Counter market. Index returns assume
reinvestment of dividends and, unlike Fund returns, do not
reflect any fees or expenses.
- -------------------------------------------------------------------
Returns and Per Share Information
- -------------------------------------------------------------------
A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) and Index Total
Return (%) with the exact data points listed in the table
below.
Yearly periods ended April 30
- ----------------------------------
<TABLE>
<S> <C> <C> <C> <C>
1992* 1993 1994 1995
--------------------------------
Net Asset Value... $14.05 $15.30 $15.40 $15.88
Income Dividends.. $ .03 $ .03 $ .07 $ .15
Capital Gains
Distributions..... $ .02 $ -- $ .24 $ 1.09
Fund Total
Return (%)........ 17.48 7.50 4.10 11.93
Index Total
Return (%)........ 15.86 9.25 5.31 17.47
</TABLE>
All performance is historical, assumes reinvestment of all dividends and
capital gains, and is not indicative of future results.
Investment return and principal value will fluctuate, so an investor's
shares, when redeemed, may be worth more or less than when purchased.
If the Adviser had not maintained the Fund's expenses, the average annual
total return for the one year and life of Fund periods would have been lower.
4
<PAGE>
Portfolio Summary as of April 30, 1995
- ---------------------------------------------------------------------------
Diversification
- ---------------------------------------------------------------------------
Equity Securities 94%
Cash Equivalents 6% The Fund invests in stocks of financially
---- strong companies with histories of rising
100% earnings and the potential for above-
==== average growth.
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
Sectors (Excludes 6% Cash Equivalents)
- --------------------------------------------------------------------------
Financial 15%
Consumer Staples 14% The boom in personal computer sales has
Technology 13% contributed to a surge in technology
Health 12% stocks, while the prospect of a more
Consumer Discretionary 9% sustainable pace of economic activity
Energy 8% has led to gains in consumer staples
Manufacturing 8% stocks.
Media 7%
Durables 6%
Other 8%
----
100%
====
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
Ten Largest Equity Holdings
- --------------------------------------------------------------------------
1. American International Group, Inc.
Major international insurance holding company
2. PepsiCo. Inc.
Soft drinks, snack foods and food services
3. Federal National Mortgage Association
Insurer and holder of mortgage loans
4. Columbia/HCA Healthcare Corp.
Leading hospital management company
5. Eli Lilly Co.
Leading pharmaceutical company
6. Motorola Inc.
Manufacturer of semiconductors and communication products
7. Home Depot, Inc.
Building supply/home improvement stores
8. Sara Lee Corp.
Processed foods maker
9. General Electric Co.
Leading producer of electrical equipment
10. American Telephone & Telegraph Co.
Telecommunication services and business systems
The Fund has increased its exposure to financial services stocks, many
of which represent good value following last year's negative interest-rate
environment.
For more complete details about the Fund's Investment Portfolio, see page 9.
A monthly Investment Portfolio Summary is available upon request.
5
<PAGE>
SCUDDER QUALITY GROWTH FUND
PORTFOLIO MANAGEMENT DISCUSSION
- --------------------------------------------------------------------------------
Dear Shareholders,
By and large, investors have grown more optimistic in recent months that
the U.S. economy will slow without slipping into recession. This sentiment,
combined with a repatriation of investment dollars from overseas markets,
boosted stock prices sharply in the first few months of 1995. A variety of
stocks have participated in the rally, but the stocks of high-quality,
financially strong companies seemed to have benefited the most, as investors
looked for ways to help reduce some of the risk in their portfolios.
In this environment, Scudder Quality Growth Fund produced a total return of
6.60% during the six-month period ended April 30, 1995, from a combination of
price change and distributions. The Fund distributed a relatively large $1.09
per share capital gain distribution in December after selling a number of
holdings that had appreciated rapidly in price. The Fund also distributed a
$0.15 per share income distribution. Investment results over longer periods are
equally encouraging. Since its inception on May 15, 1991, the Fund has provided
an average annual total return of 10.24%. For additional performance
information, including a comparison with the unmanaged S&P 500 Index, please
turn to page 4.
Scudder Quality Growth Fund invests primarily in financially strong U.S.
companies, each with a history of rising earnings and above-average growth
potential. In addition, investments are made on the basis of superior corporate
cash flow and below-average debt compared with the average for the companies
that make up the S&P 500 Index. These measures are then supplemented with an
assessment of each company's management as well as our fundamental analysis of
earnings quality.
In the aggregate, U.S. equity markets have been relatively strong in recent
months, but several discernible trends appear to be propelling certain sectors
and dampening others. The boom in personal computer sales, for example, has
contributed to a surge in the prices of technology stocks. Also, the prospect of
a more sustainable pace of economic activity has led to an improvement in
consumer staples stocks. Conversely, heightened competition among long-distance
telephone providers has resulted in disappointing prices for telecommunications
6
<PAGE>
PORTFOLIO MANAGEMENT DISCUSSION
- --------------------------------------------------------------------------------
stocks. And 1994's higher interest rates negatively impacted earnings, and
therefore the stock prices, of many financial services and other
interest-rate-sensitive companies.
Some Positions Increased Where Valuations Have Improved
During the past six months, we have added to existing positions where
valuations have become more attractive. For example, the Fund increased its
position in Columbia Healthcare, a medical care provider benefiting from reduced
costs. Other recent purchases include Merck, a pharmaceutical company that has
maintained its excellent record of bringing new drugs to market to supplement
its already strong portfolio of patented products. Also, we added to the Fund's
holdings of General Motors Class E shares (formerly Electronic Data Systems),
which provides systems integration services; and broadcaster Capital Cities/ABC,
which has seen higher TV ratings. At the same time, the Fund established new
positions in Clorox, a consumer products company with a strong domestic
presence; and Loral, a defense electronics company.
To help provide liquidity for recent purchases, we sold or reduced the
Fund's holdings in a number of issues. In some cases, these sales were the
result of a decision to shift out of certain industries; in others, profits were
realized in stocks whose prices had appreciated significantly. For example, the
Fund's position in Allegheny Ludlum, a metals and minerals company, was
eliminated in an effort to reduce the Fund's emphasis on industries whose sales
are linked to the rise and fall of economic cycles. Meanwhile, we reduced the
Fund's positions in food products company CPC International, after its stock had
risen and met our price target; and CBS, as the broadcaster's ratings and
profits have decreased.
Looking Ahead
Our forecast calls for continued growth in real gross domestic product at
roughly a 3% rate over the remainder of the year. Corporate profits, which
generally have exceeded expectations, should moderate but remain healthy with
gains of approximately 16% expected for the rest of 1995. Much of the good news
on profits has been reflected in the performance of the stock markets so far
this year, and some stocks have risen at rates that cannot be sustained over the
7
<PAGE>
SCUDDER QUALITY GROWTH FUND
- --------------------------------------------------------------------------------
long term. Although valuations are relatively healthy, it is possible that
market participants may take profits in the near term and pause to assess the
viability of sustained economic growth. We generally do not try to make
short-term market timing decisions in the belief that active market timing is an
ill-advised and costly endeavor. Instead, we intend to maintain our fundamental
strategy of investing in quality companies with reasonable valuations and
prospects for above-average earning growth over the next several years. It is
our belief that this approach will continue to provide competitive returns for
long-term investors seeking capital appreciation.
Sincerely,
Your Portfolio Management Team
/s/Bruce F. Beaty /s/Michael K. Shields
Bruce F. Beaty Michael K. Shields
8
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO as of April 30, 1995 (Unaudited)
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Principal Market
Portfolio Amount ($) Value ($)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
--------------------------------------------------------------------------
5.8% REPURCHASE AGREEMENT
--------------------------------------------------------------------------
7,641,000 Repurchase Agreement with State Street
Bank and Trust dated 4/28/95 at 5.9%,
to be repurchased at $7,644,757 on 5/1/95,
collateralized by a $7,660,000 U.S. Treasury
Note, 6.75%, 6/30/99 (Cost $7,641,000)........ 7,641,000
----------
--------------------------------------------------------------------------
94.2% COMMON STOCKS
--------------------------------------------------------------------------
Shares
--------------------------------------------------------------------------
CONSUMER DISCRETIONARY 8.3%
Department & Chain Stores 5.4% 57,166 Home Depot, Inc. .............................. 2,386,681
14,000 J.C. Penney Inc. .............................. 612,500
26,000 May Department Stores.......................... 942,500
85,200 Wal-Mart Stores Inc. ......................... 2,023,500
25,000 Walgreen Co. ................................. 1,175,000
----------
7,140,181
----------
Hotels & Casinos 0.2% 12,700 Carnival Corp., Class A........................ 315,913
----------
Restaurants 1.1% 40,000 McDonald's Corp. .............................. 1,400,000
----------
Specialty Retail 1.6% 44,700 Pep Boys - Manny, Moe & Jack................... 1,151,025
35,900 Toys "R" Us Inc.* ............................. 906,475
----------
2,057,500
----------
CONSUMER STAPLES 12.8%
Consumer Electronic &
Photographic Products 1.4% 16,000 Duracell International Inc. ................... 704,000
21,000 Whirlpool Corp. ............................... 1,149,750
----------
1,853,750
----------
Food & Beverage 7.9% 34,000 Albertson's Inc. .............................. 1,075,250
10,200 CPC International Inc. ........................ 597,975
55,800 ConAgra Inc. .................................. 1,855,350
13,400 General Mills, Inc. ........................... 817,400
88,000 PepsiCo Inc. .................................. 3,663,000
84,900 Sara Lee Corp. ................................ 2,366,588
----------
10,375,563
----------
Package Goods/Cosmetics 3.5% 6,200 Clorox Co. .................................... 364,250
19,200 Colgate-Palmolive Co. ......................... 1,348,800
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
<TABLE>
SCUDDER QUALITY GROWTH FUND
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
% of Market
Portfolio Shares Value ($)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
11,700 Gillette Co. ............................ 959,400
29,000 Procter & Gamble Co. .................... 2,026,375
----------
4,698,825
----------
HEALTH 11.5%
Health Industry Services 1.2% 20,700 U.S. HealthCare, Inc. ................... 553,725
27,500 United Healthcare Corp. ................. 996,875
----------
1,550,600
----------
Hospital Management 2.6% 81,300 Columbia/HCA Healthcare Corp. ........... 3,414,600
----------
Pharmaceuticals 7.7% 22,400 Abbott Laboratories ..................... 882,000
40,000 Baxter International Inc. ............... 1,390,000
41,000 Eli Lilly Co. ........................... 3,064,750
17,400 Johnson & Johnson ....................... 1,131,000
33,600 Merck & Co. Inc. ........................ 1,440,600
20,400 Sandoz Ltd. AG (ADR) .................... 668,100
22,000 Schering-Plough Corp. ................... 1,658,250
----------
10,234,700
----------
COMMUNICATIONS 2.5%
Cellular Telephone 0.8% 17,400 AirTouch Communications, Inc.*........... 467,625
20,900 Vodafone Group PLC (ADR)................. 666,188
----------
1,133,813
----------
Telephone/
Communications 1.7% 43,400 American Telephone & Telegraph Co. ...... 2,202,546
----------
FINANCIAL 13.7%
Banks 5.1% 42,175 Banc One Corp. .......................... 1,244,163
55,650 Mellon Bank Corp. ....................... 2,184,263
45,900 Norwest Corp. ........................... 1,216,350
65,600 State Street Boston Corp. ............... 2,082,800
----------
6,727,576
----------
Insurance 5.9% 34,900 American International Group, Inc. ...... 3,725,575
23,600 EXEL, Ltd. .............................. 1,073,800
6,000 General Re Corp. ........................ 764,250
27,500 MBIA Inc. ............................... 1,725,625
11,800 PMI Group, Inc. ......................... 439,550
----------
7,728,800
----------
Other Financial Companies 2.7% 41,100 Federal National Mortgage Association.... 3,627,075
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
% of Market
Portfolio Shares Value ($)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MEDIA 6.4%
Advertising 1.1% 37,400 Interpublic Group of Companies Inc. ... 1,421,200
---------
Broadcasting &
Entertainment 4.7% 3,000 CBS Inc. .............................. 192,375
24,000 Capital Cities/ABC Inc. ............... 2,028,000
34,000 Time Warner Inc. ..................... 1,245,250
18,200 Viacom Inc. "B"*....................... 834,925
33,000 Walt Disney Co. ....................... 1,827,375
---------
6,127,925
---------
Cable Television 0.6% 44,500 Tele-Communications Inc. "A" (New)*.... 851,063
---------
SERVICE INDUSTRIES 5.3%
EDP Services 2.9% 18,000 Automatic Data Processing, Inc. ....... 1,156,500
26,000 First Data Corp. ...................... 1,462,500
28,100 General Motors Corp. "E"............... 1,215,325
---------
3,834,325
---------
Environmental Services 0.2% 11,100 WMX Technologies Inc. ................. 302,475
---------
Miscellaneous Commercial
Services 1.1% 6,300 First Financial Management Corp. ...... 460,688
7,600 Flightsafety International Inc. ....... 374,300
21,800 Sysco Corp. .......................... 610,400
---------
1,445,388
---------
Printing/Publishing 1.1% 31,200 Reuters Holdings PLC "B" (ADR)......... 1,419,600
---------
DURABLES 5.4%
Automobiles 0.7% 25,600 Magna International, Inc. "A" ......... 886,400
---------
Telecommunications
Equipment 3.3% 26,300 DSC Communications Corp.* ............. 973,100
37,800 General Instrument Corp.* ............. 1,289,925
9,900 L.M. Ericsson Telephone Co. "B" (ADR).. 663,919
34,200 Nokia Corp. AB Oy (ADR) ............... 1,402,200
---------
4,329,144
---------
Tires 1.4% 77,800 Cooper Tire & Rubber Co. .............. 1,906,100
---------
MANUFACTURING 7.4%
Diversified Manufacturing 5.4% 19,400 Dover Corp. ........................... 1,261,000
42,000 General Electric Co. .................. 2,352,000
35,000 Minnesota Mining & Manufacturing Co. .. 2,086,875
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
<TABLE>
SCUDDER QUALITY GROWTH FUND
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Market
Portfolio Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
14,000 TRW Inc. ..................................... 1,041,250
6,000 Thermo Electron Corp.*........................ 323,250
---------
7,064,375
---------
Electrical Products 2.0% 14,000 ASEA AB (ADR) ................................. 1,155,000
23,000 Emerson Electric Co. .......................... 1,546,750
---------
2,701,750
---------
TECHNOLOGY 12.0%
Computer Software 1.9% 15,700 Microsoft Corp.* .............................. 1,283,475
20,900 Oracle Systems Corp.* ......................... 637,450
22,900 Sybase Inc.*................................... 555,325
---------
2,476,250
---------
Diverse Electronic Products 3.1% 41,000 General Motors Corp. "H"....................... 1,604,125
43,800 Motorola Inc. ................................. 2,491,125
---------
4,095,250
---------
Electronic Data Processing 1.9% 18,800 Ceridian Corp.* ............................... 648,600
27,400 Hewlett-Packard Co. ........................... 1,811,825
---------
2,460,425
---------
Military Electronics 0.4% 13,000 Loral Corp. ................................... 611,000
---------
Office/Plant Automation 2.1% 37,000 Cabletron Systems Inc.*........................ 1,757,500
24,800 Cisco Systems, Inc.* .......................... 988,900
---------
2,746,400
---------
Semiconductors 2.6% 21,200 Intel Corp. ................................... 2,170,350
11,700 Texas Instruments Inc. ........................ 1,240,200
---------
3,410,550
---------
ENERGY 7.5%
Engineering 1.2% 31,000 Fluor Corp. ................................... 1,596,500
---------
Oil Companies 5.0% 20,000 Amoco Corp. ................................... 1,312,500
30,000 Chevron Corp. ................................. 1,421,250
21,000 Exxon Corp. ................................... 1,462,125
12,000 Mobil Corp. ................................... 1,138,500
10,000 Royal Dutch Petroleum Co. (New York shares).... 1,240,000
---------
6,574,375
---------
Oil/Gas Transmission 1.3% 52,100 Enron Corp..................................... 1,771,400
---------
METALS AND MINERALS 0.9%
Steel & Metals 24,000 Nucor Corp. ................................... 1,152,000
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Market
Portfolio Shares Value ($)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UTILITIES 0.5%
Electric Utilities 15,100 Empresa Nacional de Electricidad SA (ADR)....... 709,700
-----------
TOTAL COMMON STOCKS (Cost $110,847,427) ........ 124,355,037
-----------
================================================================================================================
TOTAL INVESTMENT PORTFOLIO - 100.0%
(Cost $118,488,427) (a)........................ 131,996,037
===========
<FN>
* Non-income producing security.
(a) The cost for federal income tax purposes was $118,780,419. At April 30, 1995,
net unrealized appreciation for all securities based on tax cost was $13,215,618.
This consisted of aggregate gross unrealized appreciation for all securities
in which there was an excess of market value over tax cost of $15,586,479 and
aggregate gross unrealized depreciation for all securities in which there was
an excess of tax cost over market value of $2,370,861.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
<TABLE>
SCUDDER QUALITY GROWTH FUND
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------------------
APRIL 30, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
Investments, at market (identified cost $118,488,427)
(Note A)................................................... $131,996,037
Cash ......................................................... 822
Receivables:
Investments sold .......................................... 3,772,347
Fund shares sold .......................................... 224,136
Dividends and interest..................................... 186,954
Deferred organization expenses (Note A)....................... 11,188
------------
Total assets............................................. 136,191,484
LIABILITIES
Payables:
Investments purchased...................................... $4,575,158
Fund shares redeemed ...................................... 58,818
Accrued management fee (Note C)............................ 75,424
Other accrued expenses (Note C)............................ 80,500
----------
Total liabilities........................................ 4,789,900
------------
Net assets, at market value................................... $131,401,584
============
NET ASSETS
Net assets consist of:
Undistributed net investment income........................ $ 345,603
Unrealized appreciation on investments..................... 13,507,610
Accumulated net realized loss.............................. (325,064)
Shares of beneficial interest.............................. 82,731
Additional paid-in capital................................. 117,790,704
------------
Net assets, at market value................................... $131,401,584
============
NET ASSET VALUE, offering and redemption price per
share ($131,401,584 / 8,273,056 outstanding
shares of beneficial interest, $.01 par value,
unlimited number of shares authorized)..................... $15.88
======
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- ----------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 1995 (UNAUDITED)
- ----------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividends............................................... $1,091,941
Interest................................................ 128,117
----------
1,220,058
Expenses:
Management fee (Note C)................................. $407,946
Services to shareholders (Note C)....................... 164,262
Custodian and accounting fees (Note C).................. 42,108
Trustees' fees (Note C)................................. 15,616
Reports to shareholders................................. 30,485
Auditing................................................ 24,140
Legal................................................... 3,260
Amortization of organization expense (Note A)........... 4,932
State registration...................................... 18,098
Other................................................... 13,919 724,766
------------------------
Net investment income................................... 495,292
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized loss from investments...................... (40,669)
Net unrealized appreciation on investments
during the period .................................. 7,458,901
----------
Net gain on investments................................. 7,418,232
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.... $7,913,524
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
<TABLE>
SCUDDER QUALITY GROWTH FUND
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
<CAPTION>
SIX MONTHS
ENDED
APRIL 30, YEAR ENDED
1995 OCTOBER 31,
INCREASE (DECREASE) IN NET ASSETS (UNAUDITED) 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income........................ $ 495,292 $ 1,114,659
Net realized gain (loss) on investments...... (40,669) 7,612,915
Net unrealized appreciation (depreciation)
on investments during the period........... 7,458,901 (8,282,506)
------------ ------------
Net increase in net assets
resulting from operations.................. 7,913,524 445,068
------------ ------------
Distributions to shareholders from:
Net investment income ($.15 and $.08
per share, respectively)................... (1,069,236) (573,627)
------------ ------------
Net realized gains from investment
transactions ($1.09 and $.24 per share,
respectively).............................. (7,769,783) (1,793,533)
------------ ------------
Fund share transactions:
Proceeds from shares sold.................... 25,767,484 30,065,461
Net asset value of shares issued to
shareholders in reinvestment of
distributions.............................. 8,642,766 2,309,792
Cost of shares redeemed...................... (15,347,170) (43,432,867)
------------ ------------
Net increase (decrease) in net assets from
Fund share transactions.................... 19,063,080 (11,057,614)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS............ 18,137,585 (12,979,706)
Net assets at beginning of period............ 113,263,999 126,243,705
------------ ------------
NET ASSETS AT END OF PERIOD (including
undistributed net investment income
of $345,603 and $919,547, respectively).... $131,401,584 $113,263,999
============ ============
OTHER INFORMATION
INCREASE (DECREASE) IN FUND SHARES
Shares outstanding at beginning of period.... 7,006,138 7,689,455
------------ ------------
Shares sold.................................. 1,675,432 1,895,781
Shares issued to shareholders in
reinvestment of distributions.............. 595,642 144,448
Shares redeemed.............................. (1,004,156) (2,723,546)
------------ ------------
Net increase (decrease) in Fund shares....... 1,266,918 (683,317)
------------ ------------
Shares outstanding at end of period.......... 8,273,056 7,006,138
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
THE FOLLOWING TABLE INCLUDES SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD AND OTHER PERFORMANCE INFORMATION
DERIVED FROM THE FINANCIAL STATEMENTS.
<CAPTION>
FOR THE PERIOD
SIX MONTHS MAY 15, 1991
ENDED (COMMENCEMENT
APRIL 30, YEARS ENDED OCTOBER 31, OF OPERATIONS)
1995 --------------------------------- TO OCTOBER 31,
(UNAUDITED) 1994(B) 1993(B) 1992(B) 1991
----------- --------------------------------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ......................... $16.17 $16.42 $15.30 $13.65 $12.00
------ ------ ------ ------ ------
Income from investment operations:
Net investment income (a) .................................. .06 .16 .06 .02 .03
Net realized and unrealized gain (loss) on investments ..... .89 (.09) 1.09 1.68 1.62
------ ------ ------ ------ ------
Total from investment operations ............................. .95 .07 1.15 1.70 1.65
------ ------ ------ ------ ------
Less distributions from:
Net investment income ...................................... (.15) (.08) (.03) (.03) -
Net realized gains on investment transactions .............. (1.09) (.24) - (.02) -
------ ------ ------ ------ ------
Total distributions .......................................... (1.24) (.32) (.03) (.05) -
------ ------ ------ ------ ------
Net asset value, end of period ............................... $15.88 $16.17 $16.42 $15.30 $13.65
====== ====== ====== ====== ======
TOTAL RETURN (%) ............................................. 6.60** .39 7.49 12.47 13.75**
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period ($ millions) ....................... 131 113 126 101 30
Ratio of operating expenses net, to average daily
net assets (%) (a) ......................................... 1.24* 1.25 1.20 1.25 1.25*
Ratio of net investment income to average daily
net assets (%) ............................................. .85* .96 .39 .24 .83*
Portfolio turnover rate (%) .................................. 101.8* 119.7 111.4 27.4 11.5*
<FN>
(a) Reflects a per share amount of expenses, exclusive of
management fees, reimbursed by the Adviser of ........ $ - $ - $ - $ - $ .01
Reflects a per share amount of management fee not
imposed by the Adviser of ............................ $ - $ - $ - $ .01 $ .02
Operating expense ratio including expenses
reimbursed, management fee and other expenses
not imposed (%) ...................................... - - - 1.40 2.67*
* Annualized
** Not annualized
</FN>
</TABLE>
17
<PAGE>
SCUDDER QUALITY GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (Unaudited)
- --------------------------------------------------------------------------------
A. SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
Scudder Quality Growth Fund (the "Fund") is a diversified series of Scudder
Investment Trust (the "Trust"). The Trust 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 policies
described below are followed consistently by the Fund in the preparation
of its financial statements in conformity with generally accepted accounting
principles.
SECURITY VALUATION. Portfolio securities which are traded on U.S. or foreign
stock exchanges are valued at the most recent sale price reported on the
exchange on which the security is traded most extensively. If no sale occurred,
the security is then valued at the calculated mean between the most recent bid
and asked quotations. If there are no such bid and asked quotations, the most
recent bid quotation is used. Securities quoted on the National Association of
Securities Dealers Automatic Quotation ("NASDAQ") System, for which there have
been sales, are valued at the most recent sale price reported on such system.
If there are no such sales, the value is the high or "inside" bid quotation.
Securities which are not quoted on the NASDAQ System but are traded in another
over-the-counter market are valued at the most recent sale price on such
market. If no sale occurred, the security is then valued at the calculated
mean between the most recent bid and asked quotations. If there are no such
bid and asked quotations, the most recent bid quotation shall be used.
Short-term investments having a maturity of sixty days or less are valued at
amortized cost.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian,
receives delivery of the underlying securities, the amount of which at the
time of purchase and each subsequent business day is required to be
maintained at such a level that the market value, depending on the maturity of
the repurchase agreement and the underlying collateral, is equal to at least
100.5% of the resale price.
FEDERAL INCOME TAXES. The Fund's policy is to comply with the requirements
of the Internal Revenue Code 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.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
DISTRIBUTION OF INCOME AND GAINS. Distributions of net investment income are
made annually. 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
shareholders annually. An additional distribution may be made to the extent
necessary to avoid the payment of a four percent federal excise tax.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax
regulations which may differ from generally accepted accounting principles. The
differences primarily relate to investments in certain securities sold at a
loss. As a result, net investment income (loss) and net realized gain (loss) on
investment transactions for a reporting period may differ significantly from
distributions during such period. Accordingly, the Fund may periodically make
reclassifications among certain of its capital accounts without impacting the
net asset value of the Fund.
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.
ORGANIZATION COSTS. Costs incurred by the Fund in connection with its
organization and initial registration of shares have been deferred and are
being amortized on a straight-line basis over a five-year period.
OTHER. Investment security transactions are accounted for on a trade date
basis. Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis.
B. PURCHASES AND SALES OF SECURITIES
- --------------------------------------------------------------------------------
For the six months ended April 30, 1995, purchases and sales of investment
securities (excluding short-term investments) aggregated $62,877,212 and
$58,164,757, respectively.
C. RELATED PARTIES
- --------------------------------------------------------------------------------
Under the Fund's Investment Management Agreement (the "Agreement") with
Scudder, Stevens & Clark, Inc. (the "Adviser"), the Fund pays the Adviser a
fee equal to an annual rate of 0.70% of the Fund's average daily net assets,
computed and accrued daily and payable monthly. As manager of the assets of
the Fund, the Adviser
19
<PAGE>
SCUDDER QUALITY GROWTH FUND
- --------------------------------------------------------------------------------
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 Agreement provides that if the Fund's expenses, exclusive of
taxes, interest, and extraordinary expenses, exceed specified limits, such
excess, up to the amount of the management fee, will be paid by the Adviser. In
addition, the Adviser has agreed not to impose all or a portion of its
management fee until February 29, 1996 in order to maintain the annualized
expenses of the Fund at not more than 1.25% of average daily net assets. For
the six months ended April 30, 1995, the fee pursuant to the Agreement amounted
to $407,946.
Scudder Service Corporation ("SSC"), a wholly-owned subsidiary of the Adviser,
is the transfer, dividend paying and shareholder service agent for the Fund.
For the six months ended April 30, 1995, the amount charged by SSC aggregated
$144,147, of which $25,273 is unpaid at April 30, 1995.
Effective November 1, 1994, Scudder Fund Accounting Corporation ("SFAC"), a
wholly-owned subsidiary of the Adviser, assumed responsibility 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 April 30, 1995, the
amount charged to the Fund by SFAC aggregated $26,310, of which $4,824 is
unpaid at April 30, 1995.
The Fund pays each of its Trustees not affiliated with the Adviser $4,000
annually plus specified amounts for attended board and committee meetings. For
the six months ended April 30, 1995, Trustees fees aggregated $15,616.
20
<PAGE>
OFFICERS AND TRUSTEES
- --------------------------------------------------------------------------------
Daniel Pierce*
President and Trustee
Henry P. Becton, Jr.
Trustee; President and General Manager, WGBH
Educational Foundation
Dudley H. Ladd*
Trustee
George M. Lovejoy, Jr.
Trustee; Chairman Emeritus, Meredith & Grew,
Incorporated
Wesley W. Marple, Jr.
Trustee; Professor of Business Administration,
Northeastern University
Juris Padegs*
Trustee
Jean C. Tempel
Trustee; Director, Executive Vice President and
Manager, Safeguard Scientifics, Inc.
Jerard K. Hartman*
Vice President
Robert T. Hoffman*
Vice President
Thomas W. Joseph*
Vice President
David S. Lee*
Vice President
Douglas M. Loudon*
Vice President
Thomas F. McDonough*
Vice President, Secretary and Assistant
Treasurer
Pamela A. McGrath*
Vice President and Treasurer
Edward J. O'Connell*
Vice President and Assistant Treasurer
Bruce F. Beaty*
Vice President
Coleen Downs Dinneen*
Assistant Secretary
*Scudder, Stevens & Clark, Inc.
21
<PAGE>
INVESTMENT PRODUCTS AND SERVICES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
The Scudder Family of Funds
-----------------------------------------------------------------------------------------------------------------
<S> <C>
Money Market Income
Scudder Cash Investment Trust Scudder Emerging Markets Income Fund
Scudder U.S. Treasury Money Fund Scudder GNMA Fund
Tax Free Money Market+ Scudder Income Fund
Scudder Tax Free Money Fund Scudder International Bond Fund
Scudder California Tax Free Money Fund* Scudder Short Term Bond Fund
Scudder New York Tax Free Money Fund* Scudder Short Term Global Income Fund
Tax Free+ Scudder Zero Coupon 2000 Fund
Scudder California Tax Free Fund* Growth
Scudder High Yield Tax Free Fund Scudder Capital Growth Fund
Scudder Limited Term Tax Free Fund Scudder Development Fund
Scudder Managed Municipal Bonds Scudder Global Fund
Scudder Massachusetts Limited Term Tax Free Fund* Scudder Global Small Company Fund
Scudder Massachusetts Tax Free Fund* Scudder Gold Fund
Scudder Medium Term Tax Free Fund Scudder Greater Europe Growth Fund
Scudder New York Tax Free Fund* Scudder International Fund
Scudder Ohio Tax Free Fund* Scudder Latin America Fund
Scudder Pennsylvania Tax Free Fund* Scudder Pacific Opportunities Fund
Growth and Income Scudder Quality Growth Fund
Scudder Balanced Fund Scudder Value Fund
Scudder Growth and Income Fund The Japan Fund
Retirement Plans and Tax-Advantaged Investments
-----------------------------------------------------------------------------------------------------------------
IRAs 403(b) Plans
Keogh Plans SEP-IRAs
Scudder Horizon Plan+++* (a variable annuity) Profit Sharing and Money Purchase
401(k) Plans Pension Plans
Closed-End Funds#
-----------------------------------------------------------------------------------------------------------------
The Argentina Fund, Inc. The Latin America Dollar Income Fund, Inc.
The Brazil Fund, Inc. Montgomery Street Income Securities, Inc.
The First Iberian Fund, Inc. Scudder New Asia Fund, Inc.
The Korea Fund, Inc. Scudder New Europe Fund, Inc.
Scudder World Income
Opportunities Fund, Inc.
Institutional Cash Management
-----------------------------------------------------------------------------------------------------------------
Scudder Institutional Fund, Inc.
Scudder Fund, Inc.
Scudder Treasurers Trust(TM)++
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. +A portion of the
income from the tax-free funds may be subject to federal, state, and local taxes. *Not available in all
states. +++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, Stevens & Clark, Inc. are traded on various stock exchanges. ++For information on Scudder
Treasurers Trust,(TM) an institutional cash management service that utilizes certain portfolios of
Scudder Fund, Inc. ($100,000 minimum), call 1-800-541-7703.
22
<PAGE>
HOW TO CONTACT SCUDDER
- --------------------------------------------------------------------------------
Account Service and Information
-------------------------------------------------------------------------------------------------------------
For existing account service and transactions
SCUDDER INVESTOR RELATIONS
1-800-225-5163
For account updates, prices, yields, exchanges, and redemptions
SCUDDER AUTOMATED INFORMATION LINE (SAIL)
1-800-343-2890
Investment Information
-------------------------------------------------------------------------------------------------------------
To receive information about the Scudder funds, for additional
applications and prospectuses, or for investment questions
SCUDDER INVESTOR RELATIONS
1-800-225-2470
For establishing 401(k) and 403(b) plans
SCUDDER DEFINED CONTRIBUTION SERVICES
1-800-323-6105
Please address all correspondence to
-------------------------------------------------------------------------------------------------------------
THE SCUDDER FUNDS
P.O. BOX 2291
BOSTON, MASSACHUSETTS
02107-2291
Or stop by a Scudder Funds Center
-------------------------------------------------------------------------------------------------------------
Many shareholders enjoy the personal, one-on-one service of the
Scudder Funds Centers. Check for a Funds Center near you--they can
be found in the following cities:
Boca Raton New York
Boston Portland, OR
Chicago San Diego
Cincinnati San Francisco
Los Angeles Scottsdale
-------------------------------------------------------------------------------------------------------------
For information on Scudder For information on Scudder
Treasurers Trust,(TM) an institutional Institutional Funds,* funds
cash management service for designed to meet the broad
corporations, non-profit investment management and
organizations and trusts that uses service needs of banks and
certain portfolios of Scudder Fund, other institutions, call
Inc.* ($100,000 minimum), call 1-800-854-8525.
1-800-541-7703.
-------------------------------------------------------------------------------------------------------------
Scudder Investor Relations and Scudder Funds Centers are services provided through Scudder
Investor Services, Inc., Distributor.
* Contact Scudder Investor Services, Inc., Distributor, to receive a prospectus with more complete
information, including management fees and expenses. Please read it carefully before you invest or send money.
</TABLE>
<PAGE>
23
<PAGE>
Celebrating 75 Years of Serving Investors
- --------------------------------------------------------------------------------
Established in 1919 by Theodore Scudder, Sidney Stevens, and F. Haven
Clark, Scudder, Stevens & Clark was the first independent investment counsel
firm in the United States. Since its birth, Scudder's pioneering spirit and
commitment to professional long-term investment management have helped shape the
investment industry. In 1928, we introduced the nation's first no-load mutual
fund. Today we offer 36 pure no load(TM) funds, including the first
international mutual fund offered to U.S. investors.
Over the years, Scudder's global investment perspective and dedication to
research and fundamental investment disciplines have helped us become one of the
largest and most respected investment managers in the world. Though times have
changed since our beginnings, we remain committed to our long-standing
principles: managing money with integrity and distinction; keeping the interests
of our clients first; providing access to investments and markets that may not
be easily available to individuals; and making investing as simple and
convenient as possible through friendly, comprehensive service.
