Scudder
Growth and
Income Fund
Semiannual Report
June 30, 1996
Pure No-Load(TM) Funds
A fund with a disciplined, value-oriented approach to common stock investing.
Offers opportunities for long-term growth of capital, current income, and growth
of income.
A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
<PAGE>
Table of Contents
2 In Brief
3 Letter from the Fund's
President
4 Performance Update
5 Portfolio Summary
6 Portfolio Management
Discussion
9 Investment Portfolio
18 Financial Statements
21 Financial Highlights
22 Notes to Financial
Statements
25 Officers and Trustees
26 Investment Products
and Services
27 How to Contact Scudder
In Brief
Scudder Growth and Income Fund provided a total return of 8.86% for the
six-month period ended June 30, 1996, roughly in keeping with the average of the
527 growth and income funds tracked by Lipper Analytical Services and the
unmanaged S&P 500 Index. For the trailing 12 months, the Fund returned 23.78%, a
return well above the historic norm for stocks generally and above the average
of its peer group.
The six-month period covered by this report was one of generally rising U.S.
stock prices. However, during the period sector leadership rotated and stocks
began to display a much higher degree of volatility.
The overall tilt of the portfolio this year has been in favor of cyclical stocks
at the expense of more defensive issues, as our relative yield valuation work
continues to point to certain stocks as historically undervalued and already
reflecting recession fears.
2 - SCUDDER GROWTH AND INCOME FUND
<PAGE>
Letter From the Fund's President
Dear Shareholders,
We are pleased to present the newly redesigned semiannual report for
Scudder Growth and Income Fund. The new format, which is being implemented on a
test basis with select Scudder funds, is designed to enhance the attractiveness
and readability of the reports. Let us know what you think.
In this era of electronic information we have also taken a look at our
abbreviated quarterly reports, which you generally receive during the month
after the end of your fund's first and third fiscal quarters. Going forward,
these printed reports will be discontinued, and portfolio information will be
made available on a more timely basis -- each month, in most cases -- through
Scudder's Web site, Scudder's automated information line (SAIL), and by calling
Investor Relations.
As detailed in the management discussion which follows, the Fund provided a
solid total return of 8.86% for the six-month period ended June 30, 1996. For
the one-year period ending June 30, the Fund's return was a gratifying 23.78%,
reflecting in large part a period of generally rising U.S. stock prices.
While domestic equity returns in the aggregate have been positive over the
first half of 1996, stock prices have become much more volatile in the last few
months. Investors have reacted strongly to any earnings disappointments or sign
of accelerating growth which might lead to higher inflation. We do not believe
that inflation will accelerate to any meaningful degree in the near term. A
pause in the bull market or even a correction would not be a surprise, but the
long-term outlook for investors in our view is constructive. While past results
of course do not guarantee success going forward, Scudder Growth and Income
Fund, with its emphasis on high income and relative value in stock selection,
has historically performed well in difficult and less buoyant markets.
Thank you for your continued investment in Scudder Growth and Income Fund,
and please do not hesitate to call Investor Relations at 1-800-225-2470 with any
questions about your account.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder Growth and Income Fund
3 - SCUDDER GROWTH AND INCOME FUND
<PAGE>
PERFORMANCE UPDATE as of June 30, 1996
- ----------------------------------------------------------------
FUND INDEX COMPARISONS
- ----------------------------------------------------------------
Total Return
Period Growth --------------
Ended of Average
6/30/96 $10,000 Cumulative Annual
- --------------------------------------
SCUDDER GROWTH AND INCOME FUND
- --------------------------------------
1 Year $12,378 23.78% 23.78%
5 Year $21,759 117.59% 16.82%
10 Year $33,160 231.60% 12.74%
- --------------------------------------
S&P 500 INDEX
- --------------------------------------
1 Year $12,600 26.00% 26.00%
5 Year $20,759 107.59% 15.71%
10 Year $36,480 264.80% 13.80%
- -----------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- -----------------------------------------------------------------
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:
YEARLY PERIODS ENDED JUNE 30
SCUDDER GROWTH AND INCOME FUND
Year Amount
- ----------------------
'86 $10,000
'87 $11,447
'88 $10,868
'89 $13,333
'90 $14,252
'91 $15,240
'92 $18,325
'93 $20,962
'94 $22,564
'95 $26,789
'96 $33,160
S&P 500 INDEX
Year Amount
- ----------------------
'86 $10,000
'87 $12,516
'88 $11,653
'89 $14,047
'90 $16,363
'91 $17,573
'92 $19,930
'93 $22,646
'94 $22,965
'95 $28,952
'96 $36,480
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 JUNE 30
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
-------------------------------------------------------------------------------
NET ASSET VALUE... $17.01 $ 13.11 $15.38 $13.56 $13.81 $16.04 $17.20 $17.00 $18.53 $21.85
INCOME DIVIDENDS.. $ .66 $ .50 $ .60 $ .71 $ .64 $ .52 $ .51 $ .47 $ .51 $ .56
CAPITAL GAINS
DISTRIBUTIONS..... $ 1.13 $ 2.36 $ - $ 2.11 $ - $ - $ .54 $ 1.04 $ .94 $ .42
FUND TOTAL
RETURN (%)........ 14.45 -5.04 22.68 6.89 6.93 20.25 14.39 7.64 18.72 23.78
INDEX TOTAL
RETURN (%)........ 25.18 -6.89 20.52 16.50 7.38 13.43 13.65 1.40 26.07 26.00
</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.
4 - SCUDDER GROWTH AND INCOME FUND
<PAGE>
PORTFOLIO SUMMARY as of June 30, 1996
- ---------------------------------------------------------------------------
ASSET ALLOCATION
- ---------------------------------------------------------------------------
Common Stocks 93%
Convertible Bonds 3%
Convertible Stocks 3%
Cash Equivalents 1%
- --------------------------------------
100%
- --------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
The Fund remains invested principally
in common stocks of companies
with high relative yields.
- --------------------------------------------------------------------------
SECTOR DIVERSIFICATION
(Excludes 1% Cash Equivalents)
- --------------------------------------------------------------------------
Financial 20%
Manufacturing 17%
Health 12%
Consumer Staples 11%
Durables 8%
Energy 8%
Communications 6%
Utilities 5%
Consumer Discretionary 5%
Other 8%
- ---------------------------------------------
100%
- ---------------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
Cyclical groups such as manufacturers have
become an area of increased focus for the Fund.
- --------------------------------------------------------------------------
10 LARGEST EQUITY HOLDINGS
(19% OF PORTFOLIO)
- --------------------------------------------------------------------------
1. XEROX CORP.
Leading manufacturer of copiers and duplicators
2. STUDENT LOAN MARKETING ASSOCIATION
Student loan financing programs
3. PHILIP MORRIS COMPANIES INC.
Tobacco, food products and brewing
4. TRW INC.
Defense electronics, automotive parts and systems
5. UNITED TECHNOLOGIES CORP.
Manufacturer of areospace equipment, climate control systems, and elevators
6. E.I. DU PONT DE NEMOURS & CO.
Chemical producer
7. BANKERS TRUST NEW YORK CORP.
Commercial banking
8. SHERING-PLOUGH CORP.
Pharmaceutical and consumer products
9. BAXTER INTERNATIONAL INC.
Manufacturer and distributor of hospital and laboratory products and
services
10. TOTAL SA
International oil and gas exploration and production
Top holdings include manufacturing, financial, and consumer staple companies.
- -----------------------------------------------------------------------------
For more complete details about the Fund's investment portfolio,
see page 9. A monthly Investment Portfolio Summary and quarterly Portfolio
Holdings are available upon request.
5 - SCUDDER GROWTH AND INCOME FUND
<PAGE>
Portfolio Management Discussion
Dear Shareholders,
Scudder Growth and Income Fund provided a total return of 8.86% for the
six-month period ended June 30, 1996, as compared to 9.24% for the average
growth and income fund tracked by Lipper Analytical Services and the 10.10%
return of the unmanaged S&P 500 Index. For the trailing 12 months, the Fund
returned 23.78% versus 22.13% for the average of its peer group and 26.00% for
the Index.
Long-term relative performance remains strong, as the Fund's total returns for
the trailing three-, five- and ten-year periods have all exceeded those of its
Lipper average.
Stocks Display
Increased Volatility
The six-month period covered by this report was one of generally rising U.S.
stock prices. Even in the face of a declining bond market, fears of Federal
Reserve interest rate hikes, and increasingly higher stock values, the S&P 500
Index provided a return of more than 10%. However, during the period sector
leadership gyrated and stocks began to display a much higher degree of
volatility.
This new environment was precipitated by stronger-than-anticipated February
employment figures which led to a 171 point drop in the Dow Jones Industrial
Average on March 8. Leadership for the remainder of the first quarter rotated
away from sectors perceived as resilient in the face of weak growth and consumer
spending, such as health, food, tobacco, and energy. Instead, sentiment shifted
towards cyclical groups that should respond positively to a stronger economy,
including retail, manufacturing, and durables. Such cyclical groups became an
area of increasing focus for Scudder Growth and Income Fund, which added
exposure to such sectors as auto/auto parts and paper/forest products, while
maintaining its overweight position in chemicals.
Another significant shift in sentiment occurred around the middle of the second
quarter, as consumer staples and growth stocks came roaring back to the
forefront. Technology stocks had an extremely strong showing early in the
quarter, only to give some gains back in June. The Fund's focus on larger
companies and high relative yields resulted in modest underperformance over the
second half of the period, as smaller capitalization stocks outperformed larger
ones and growth stocks outperformed value.
Consumer staples stocks were large positive contributors to the Fund's absolute
return, but our selections lagged the returns of the sector primarily due to
investments in cereal manufacturers, which declined in June following virtually
industry-wide price cutting. Additionally, our increased exposure to cyclical
stocks, which significantly benefited the portfolio through April, acted as a
drag on performance later in the second quarter. Specifically, the Fund's paper,
chemical, and durable goods stocks (e.g. Boise Cascade, Dow Chemical, and Ford
Motor) largely underperformed the market, and our overweight positions in these
groups therefore hurt performance. Finally, the resumption of the dramatic rally
of technology stocks during the second quarter detracted from the Fund's
relative performance: the Fund will typically have negligible representation in
this sector since high relative yields are rare among high-tech stocks.
The Fund's healthcare position benefited from the market's shift back to
defensive "growth" stocks midway through the second quarter, led by Bausch &
Lomb as well as several outperforming pharmaceutical stocks. Also among the
strong performers were the Fund's oil stocks, which rallied along with oil
6 - SCUDDER GROWTH AND INCOME FUND
<PAGE>
prices when the UN sanctioned the resumption of Iraqi oil sales after a two-year
hiatus. Performance of holdings in this sector was led by international stocks,
which had lagged for much of last year. For example, Elf Aquitaine, Total, and
YPF all posted returns exceeding those of most of their U.S. peers.
The portfolio's largest sector, financial, posted mixed results. While most of
our bank stocks underperformed the market in the face of rising interest rates
and credit quality concerns, real estate investment trusts (REITs) performed
well, including Developers Diversified, Health Care Property, and Equity
Residential. We raised portfolio exposure to REITs last quarter when their
already historically high yield spreads versus Treasuries essentially signaled
that these stocks had little downside risk even in the event of a rise in
interest rates.
Portfolio Strategy
Despite, or perhaps because of, the rotational nature of the market, we have not
made great strategic shifts in the portfolio over the period. Rather, we have
continued to incrementally employ some of the strategies we initiated in the
first quarter of 1996. The overall tilt of the portfolio this year has been in
favor of cyclical stocks at the expense of more defensive issues. While this
strategy might appear to be inconsistent with the view that the economy will
enter a slowdown within the next year, our relative yield valuation work
continues to point to certain cyclically leveraged stocks as historically
undervalued and already reflecting recession fears. By contrast, groups such as
healthcare and consumer staples are discounting a fairly high degree of
optimism. New or increased portfolio positions in cyclicals include Ford Motor,
heavy duty truck manufacturer PACCAR, paper/forest product stocks Weyerhaeuser
and Westvaco, and metals companies Phelps Dodge and Allegheny Ludlum.
We have also continued to look for opportunities in consumer cyclicals, namely
in retail-oriented stocks. Valuations in this group have looked appealing for
some time, given the sector's dismal underperformance in 1994 and 1995. While we
were correct in identifying these stocks as opportunities for 1996, we did not
increase our exposure quite as quickly as we would have liked. We sold Melville
on price strength after their final restructuring announcement, as well as
Intimate Brands, which was, after a rocky start, a very successful short- term
holding which became fully-valued in our view. In turn, we added to existing
holdings May Department Stores and Sears. We also established a position in K
Mart, via its new convertible preferred issue, which offered an attractive way
for us to participate in this refinanced company with completely new (and highly
motivated) management. At the end of June, the total "cyclical" exposure
(including consumer and industrial cyclicals) represented approximately 34% of
the portfolio, up from 28% at the beginning of the year.
Profit taking in many of the non-economically sensitive consumer stocks which
have done well for the portfolio over the past year or more funded the shift
into cyclicals. In the pharmaceutical sector, for example, stocks have in many
cases doubled off their 1994 lows, and we have taken opportunities provided by
price strength to pare holdings in that group. Now that the fears of healthcare
reform have largely dissipated, and many of these companies have embarked on a
new wave of industry consolidation and restructuring, their stocks have
dramatically outperformed the market. Since the beginning of the year, the
7 - SCUDDER GROWTH AND INCOME FUND
<PAGE>
portfolio's total healthcare weighting has been cut by 2 1/2 percentage points,
standing now at about 12% of equities.
We also took profits in several strong-performing consumer staples stocks such
as Avon, Colgate, and Clorox, and redeployed proceeds into more attractively
valued stocks in the same sector. These include Duracell, whose stock has fallen
on hard times as investors question the sustainability of the company's
historical growth rate; Unilever, the Anglo-Dutch conglomerate which is
undergoing a restructuring and management reshuffle; and Tambrands, an existing
holding to which we added after the stock declined almost 20% from its second
quarter high following an earnings shortfall. We have moderately increased the
Fund's overall weighting in tobacco stocks, reflecting our belief that the
stocks are too heavily discounting the well-known litigation risk surrounding
the industry.
Looking Ahead
Over the near term, we do not envision any radical shifts in the Fund's
composition. While equity volatility could continue to increase -- the trend has
been up for the past six quarters -- as investors are faced with seemingly
contradictory economic data, we will not attempt to outguess the market with
tactical adjustments to the portfolio. One of the benefits of our relative yield
discipline is that it keeps us continually focused on a certain subset of the
market, enabling us not to be derailed by the never-ending distractions of
economic and market "noise." Our analysis of late has shown compelling value in
only a few areas (e.g. REIT's, retailers and paper/forest products), and we have
increased the Fund's commitment to such groups. As we have seen in the past,
such moves may not always reward the Fund immediately. In the meantime, however,
investors are "paid to wait" while such stocks provide an above-average yield,
and their low valuations mitigate downside risk in a volatile market.
Historically, the Fund's focus on yield and value has helped performance during
difficult equity markets.
We believe Scudder Growth and Income Fund, with its systematic approach to stock
selection, is positioned to provide competitive performance over time despite
changing market environments. Thank you for your continued investment in the
Fund.
Sincerely,
Your Portfolio Management Team
/s/Robert T. Hoffman /s/Kathleen T. Millard
Robert T. Hoffman Kathleen T. Millard
/s/Benjamin W. Thorndike /s/Lori J. Ensinger
Benjamin W. Thorndike Lori J. Ensinger
8 - SCUDDER GROWTH AND INCOME FUND
<PAGE>
INVESTMENT PORTFOLIO as of June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT($)(b) VALUE($)
- -------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS 0.6%
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreement with Donaldson, Lufkin & Jenrette
dated 6/28/96 at 5.45%, to be repurchased at $20,428,274 on
7/1/96, collateralized by a $20,636,000 U.S. Treasury
Note, 5.5%, 2/28/99 (Cost $20,419,000) ........................ 20,419,000 20,419,000
----------
COMMERCIAL PAPER 0.3%
- -------------------------------------------------------------------------------------------------
Ford Motor Credit Co., 6.15%, 7/8/96 (Cost $9,988,044) .......... 10,000,000 9,988,044
----------
FOREIGN BONDS - NON U. S.$ DENOMINATED 0.1%
- -------------------------------------------------------------------------------------------------
National Power PLC, 6.25%, 9/23/08 (Cost $4,438,999) ............ GBP 2,500,000 4,542,525
----------
CORPORATE BONDS 0.2%
- -------------------------------------------------------------------------------------------------
FINANCIAL
Siemens Capital Corp. with warrants, 8%, 6/24/02
(Cost $7,177,934) ............................................... 5,500,000 7,480,000
----------
CONVERTIBLE BONDS 3.3%
- -------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY 0.1%
DEPARTMENT & CHAIN STORES
Federated Department Stores, Inc., Debenture, 5%, 10/1/03 ....... 4,000,000 4,540,000
----------
HEALTH 0.2%
PHARMACEUTICALS
Sandoz Capital BVI Ltd., Debenture, 2%, 10/6/02 .................. 5,810,000 6,187,650
----------
FINANCIAL 1.2%
BANKS 0.5%
MBL International Finance Bermuda, 3%, 11/30/02 ................. 16,140,000 18,783,732
----------
INSURANCE 0.5%
Security Capital Corp., Debenture, 6.5%, 3/29/16 (c) (d) ........ 16,750,000 16,750,000
----------
OTHER FINANCIAL COMPANIES 0.2%
First Financial Management Corp., Debenture, 5%, 12/15/99 ....... 4,560,000 8,550,000
----------
SERVICE INDUSTRIES 0.6%
MISCELLANEOUS COMMERCIAL SERVICES
ADT Operations Inc., Liquid Yield Option Note, 7/6/10 ........... 24,000,000 13,440,000
Jardine Strategic Holdings Ltd., Debenture, 7.5%, 5/7/49 ........ 6,151,000 6,673,835
----------
20,113,835
----------
DURABLES 0.1%
AUTOMOBILES
Magna International, Inc., Debenture, 5%, 10/15/02 .............. 4,000,000 4,120,000
----------
The accompanying notes are an integral part of the financial statements.
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PureNo-Load[Trademark]FundsPureNo-Load[Trademark]FundsPureNo-Load[Trademark]Funds
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</TABLE>
9-SCUDDER GROWTH AND INCOME FUND
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT($)(b) VALUE($)
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING 0.2%
Diversified Manufacturing
Thermo Electron Corp., 4.25%, 1/1/03 ............................ 5,000,000 6,156,250
----------
TECHNOLOGY 0.7%
Computer Software 0.2%
Softkey International, Inc., Senior Note, 5.5%, 11/1/00 ......... 8,260,000 6,566,700
----------
ELECTRONIC DATA PROCESSING 0.5%
Apple Computer, Inc., Debenture, 9%, 6/1/01 ..................... 16,000,000 15,280,000
Silicon Graphics Inc., Debenture, 11/5/13 ....................... 7,500,000 3,750,000
----------
19,030,000
----------
CONSTRUCTION 0.2%
Homebuilding
Empresa ICA Sociedad Controladora S.A., 5%, 3/15/04 ............. 9,300,000 5,928,750
- -------------------------------------------------------------------------------------------------
TOTAL CONVERTIBLE BONDS (COST $109,774,947) ..................... 116,726,917
- -------------------------------------------------------------------------------------------------
SHARES
- -------------------------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS 3.0%
- -------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY 0.5%
Department & Chain Stores
K Mart 7.75% .................................................... 352,400 19,117,700
----------
HEALTH 0.8%
HEALTH INDUSTRY SERVICES
FHP International Corp.,"A", Cum. $1.25 ......................... 1,100,200 28,055,100
----------
MEDICAL SUPPLY & SPECIALTY
U.S. Surgical Corp., "A", Cum $2.20 ............................. 25,000 778,125
----------
FINANCIAL 0.2%
Consumer Finance
Advanta Corp., 6.75% ............................................ 7,500 339,375
----------
REAL ESTATE 0.2%
Security Capital Industrial Trust "B" ........................... 278,000 6,428,750
----------
MANUFACTURING 0.6%
CONTAINERS & PAPER 0.1%
Boise Cascade Corp. "G", Cum $1.58 .............................. 60,100 1,833,050
International Paper Co., 5.25% .................................. 47,000 2,068,000
----------
3,901,050
----------
INDUSTRIAL SPECIALTY 0.3%
Cooper Industries, Inc., 6% ..................................... 606,300 10,155,525
----------
The accompanying notes are an integral part of the financial statements.
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PureNo-Load[Trademark]FundsPureNo-Load[Trademark]FundsPureNo-Load[Trademark]Funds
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</TABLE>
10-SCUDDER GROWTH AND INCOME FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE($)
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
WHOLESALE DISTRIBUTORS 0.2%
Alco Standard Corp., 6.5% ....................................... 96,100 7,976,300
-----------
TECHNOLOGY 0.2%
ELECTRONIC DATA PROCESSING
Ceridian Corp., 5.5% ............................................ 50,000 5,550,000
-----------
ENERGY 0.3%
OIL & GAS PRODUCTION
Parker & Parsley Capital Corp., 6.25% ........................... 180,500 9,927,500
-----------
METALS & MINERALS 0.4%
Precious Metals
Freeport McMoRan Copper & Gold, Inc., Cum. $1.25 ................ 500,000 13,625,000
- -------------------------------------------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $96,527,921) ........... 105,854,425
- -------------------------------------------------------------------------------------------------
COMMON STOCKS 92.5%
- -------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY 3.9%
DEPARTMENT & CHAIN STORES
J.C. Penney Co., Inc. ........................................... 745,600 39,144,000
May Department Stores ........................................... 306,000 13,387,500
Rite Aid Corp. .................................................. 1,702,700 50,655,325
Sears, Roebuck & Co. ............................................ 715,300 34,781,463
-----------
137,968,288
-----------
CONSUMER STAPLES 11.1%
ALCOHOL & TOBACCO 4.0%
Anheuser-Busch Companies, Inc. .................................. 515,200 38,640,000
Philip Morris Companies Inc. .................................... 741,300 77,095,200
RJR Nabisco Holdings Corp. ...................................... 788,580 24,445,980
-----------
140,181,180
-----------
CONSUMER ELECTRONIC & PHOTOGRAPHIC PRODUCTS 0.2%
Duracell International Inc. ..................................... 165,000 7,115,625
-----------
CONSUMER SPECIALTIES 0.1%
A.T. Cross Co. "A" .............................................. 160,600 2,850,650
-----------
FOOD & BEVERAGE 3.1%
General Mills, Inc. ............................................. 559,500 30,492,750
H.J. Heinz Co. .................................................. 1,526,850 46,378,069
Quaker Oats Co. ................................................. 582,700 19,884,638
Unilever NV (New York shares) ................................... 89,700 13,017,713
-----------
109,773,170
-----------
The accompanying notes are an integral part of the financial statements.
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</TABLE>
11-SCUDDER GROWTH AND INCOME FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE($)
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
PACKAGE GOODS/COSMETICS 3.7%
Avon Products Inc. .............................................. 583,000 26,307,875
Clorox Co. ...................................................... 327,400 29,015,825
Kimberly-Clark Corp. ............................................ 662,900 51,209,025
Tambrands Inc. .................................................. 640,700 26,188,613
-----------
132,721,338
HEALTH 10.8%
Health Industry Services 0.3%
U.S. HealthCare, Inc. ........................................... 205,500 11,302,500
-----------
MEDICAL SUPPLY & SPECIALTY 1.4%
Bausch & Lomb, Inc. ............................................. 1,139,000 48,407,500
-----------
PHARMACEUTICALS 9.1%
American Home Products Corp. .................................... 705,800 42,436,225
Baxter International Inc. ....................................... 1,088,100 51,412,725
Bristol-Myers Squibb Co. ........................................ 404,300 36,387,000
Eli Lilly & Co. ................................................. 496,158 32,250,270
Schering-Plough Corp. ........................................... 844,500 52,992,375
SmithKline Beecham PLC (ADR) .................................... 590,200 32,092,125
Warner-Lambert Co. .............................................. 857,400 47,157,000
Zeneca Group PLC ................................................ 1,356,100 29,989,772
-----------
324,717,492
-----------
COMMUNICATIONS 5.9%
TELEPHONE/COMMUNICATIONS
Alltel Corp. .................................................... 1,239,600 38,117,700
GTE Corp. ....................................................... 990,000 44,302,500
Hong Kong Telecommunications Ltd. (ADR) ......................... 843,840 15,189,120
Koninklijke PTT Nederland ....................................... 810,000 30,680,739
NYNEX Corp. ..................................................... 773,700 36,750,750
Sprint Corp. .................................................... 745,300 31,302,600
Tele Danmark A/S (ADR) .......................................... 200,000 5,075,000
Telecom Corp. of New Zealand .................................... 1,901,000 8,004,277
-----------
209,422,686
-----------
FINANCIAL 18.3%
BANKS 7.7%
AmSouth Bancorp. ................................................ 235,000 8,489,375
Argentaria Corporacion Bancaria de Espana ....................... 474,000 20,699,660
The accompanying notes are an integral part of the financial statements.
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PureNo-Load[Trademark]FundsPureNo-Load[Trademark]FundsPureNo-Load[Trademark]Funds
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</TABLE>
12-SCUDDER GROWTH AND INCOME FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE($)
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Bankers Trust New York Corp. .................................... 742,700 54,866,963
Chase Manhattan Corp. (New) ..................................... 607,400 42,897,625
CoreStates Financial Corp. ...................................... 877,800 33,795,300
First Bank System Inc. .......................................... 745,100 43,215,800
J.P. Morgan & Co., Inc. ......................................... 503,300 42,591,763
KeyCorp (New) ................................................... 440,500 17,069,375
Nordbanken AB ................................................... 128,500 2,484,592
Wilmington Trust Corp. .......................................... 182,800 5,929,575
-----------
272,040,028
-----------
INSURANCE 3.6%
Allstate Corp. .................................................. 444,605 20,285,103
EXEL, Ltd. ...................................................... 458,000 32,289,000
Hartford Steam Boiler Inspection & Insurance Co. ................ 287,400 14,118,525
Lincoln National Corp. .......................................... 968,200 44,779,250
Security Capital Corp. (c) (d)* ................................. 15,968 17,324,833
-----------
128,796,711
-----------
Other Financial Companies 3.5%
Federal National Mortgage Association ........................... 1,356,500 45,442,750
Student Loan Marketing Association .............................. 1,043,000 77,182,000
-----------
122,624,750
-----------
REAL ESTATE 3.5%
Avalon Properties, Inc. (REIT) .................................. 217,100 4,721,925
Camden Property Trust (REIT) .................................... 338,500 8,039,375
Charles E. Smith Residential Realty, Inc. (REIT) ................ 73,800 1,771,200
Developers Diversified Realty Corp. ............................. 224,700 7,162,313
Equity Residential Properties Trust (REIT) ...................... 28,100 923,788
General Growth Properties, Inc. (REIT) .......................... 1,588,600 38,324,975
Health Care Property Investment Inc. (REIT) ..................... 359,300 12,126,375
Mark Centers Trust (REIT) ....................................... 31,400 325,775
Meditrust SBI (REIT) ............................................ 468,400 15,632,850
Nationwide Health Properties Inc. (REIT) ........................ 604,800 12,776,400
Post Properties Inc. (REIT) ..................................... 61,900 2,189,713
Security Capital Industrial Trust (REIT) ........................ 391,500 6,900,188
South West Property Trust Inc. (REIT) ........................... 451,300 6,036,138
Spieker Properties, Inc. (REIT) ................................. 150,000 4,087,500
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
PureNo-Load[Trademark]FundsPureNo-Load[Trademark]FundsPureNo-Load[Trademark]Funds
- --------------------------------------------------------------------------------
</TABLE>
13-SCUDDER GROWTH AND INCOME FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE($)
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Vornado Realty Trust (REIT) ..................................... 88,800 3,629,700
-----------
124,648,215
-----------
MEDIA 0.4%
Print Media
Reader's Digest Association Inc. "A" ............................ 313,000 13,302,500
-----------
SERVICE INDUSTRIES 1.3%
MISCELLANEOUS CONSUMER SERVICES 0.9%
H & R BLOCK INC ................................................. 1,021,100 33,313,388
-----------
PRINTING/PUBLISHING 0.4%
DUN & BRADSTREET CORP ........................................... 230,600 14,412,500
-----------
DURABLES 7.6%
AEROSPACE 4.8%
AAR CORP ........................................................ 398,400 8,117,400
LOCKHEED MARTIN CORP ............................................ 575,813 48,368,292
NORTHROP GRUMMAN CORP ........................................... 71,000 4,836,875
ROCKWELL INTERNATIONAL CORP ..................................... 729,400 41,758,150
UNITED TECHNOLOGIES CORP ........................................ 578,400 66,516,000
-----------
169,596,717
-----------
AUTOMOBILES 2.6%
Dana Corp. ...................................................... 660,900 20,487,900
Eaton Corp. ..................................................... 290,100 17,007,113
Ford Motor Co. .................................................. 1,077,500 34,884,063
Genuine Parts Co. ............................................... 429,100 19,631,325
-----------
92,010,401
-----------
CONSTRUCTION/AGRICULTURAL EQUIPMENT 0.2%
PACCAR, Inc. .................................................... 175,500 8,599,500
-----------
MANUFACTURING 16.5%
CHEMICALS 4.5%
DSM Group NV .................................................... 356,100 35,390,765
Dow Chemical Co. ................................................ 484,700 36,837,200
E.I. du Pont de Nemours & Co. ................................... 748,200 59,201,325
Lubrizol Corp. .................................................. 140,000 4,252,500
Lyondell Petrochemical Co. ...................................... 948,900 22,892,213
-----------
158,574,003
-----------
CONTAINERS & PAPER 0.9%
Stone Container Corp. ........................................... 1,055,900 14,518,625
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
PureNo-Load[Trademark]FundsPureNo-Load[Trademark]FundsPureNo-Load[Trademark]Funds
- --------------------------------------------------------------------------------
</TABLE>
14-SCUDDER GROWTH AND INCOME FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE($)
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Westvaco Corp. .................................................. 573,200 17,124,350
-----------
31,642,975
-----------
DIVERSIFIED MANUFACTURING 4.1%
Dresser Industries Inc. ......................................... 1,137,600 33,559,200
Olin Corp. ...................................................... 270,800 24,168,900
St. Joe Paper Co. ............................................... 93,100 6,004,950
TRW Inc. ........................................................ 834,500 75,000,688
Teledyne Inc. ................................................... 159,800 5,772,775
-----------
144,506,513
-----------
ELECTRICAL PRODUCTS 1.2%
Philips Electronics N.V ......................................... 191,000 6,215,479
Philips NV (New York shares) .................................... 286,300 9,340,538
Thomas & Betts Corp. ............................................ 691,200 25,920,000
-----------
41,476,017
-----------
INDUSTRIAL SPECIALTY 0.3%
Corning Inc. .................................................... 320,300 12,291,513
-----------
MACHINERY/COMPONENTS/CONTROLS 0.7%
S.K.F. AB "B" (Free)* ........................................... 785,000 18,676,360
Timken Co. ...................................................... 203,900 7,901,125
-----------
26,577,485
-----------
OFFICE EQUIPMENT/SUPPLIES 3.0%
Xerox Corp. ..................................................... 1,992,000 106,572,000
-----------
SPECIALTY CHEMICALS 1.8%
ARCO Chemical Co. ............................................... 180,000 9,360,000
Betz Laboratories Inc. .......................................... 613,800 26,930,475
Petrolite Corp. ................................................. 340,000 10,688,750
Witco Corp. ..................................................... 458,200 15,750,613
-----------
62,729,838
-----------
ENERGY 7.3%
OIL COMPANIES
Exxon Corp. ..................................................... 294,800 25,610,750
Murphy Oil Corp. ................................................ 372,800 16,915,800
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
PureNo-Load[Trademark]FundsPureNo-Load[Trademark]FundsPureNo-Load[Trademark]Funds
- --------------------------------------------------------------------------------
</TABLE>
15-SCUDDER GROWTH AND INCOME FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE($)
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Pennzoil Co. .................................................... 480,100 22,204,625
Repsol SA (ADR) ................................................. 484,000 16,819,000
Royal Dutch Petroleum Co. (New York shares) ..................... 229,000 35,208,750
Societe Nationale Elf Aquitaine ................................. 506,000 37,239,948
Texaco Inc. ..................................................... 234,900 19,702,238
Total SA "B" .................................................... 497,177 36,899,874
Total SA (ADR) .................................................. 386,046 14,331,958
YPF S.A. "D" (ADR) .............................................. 1,609,900 36,222,750
-----------
261,155,693
-----------
METALS & MINERALS 1.6%
PRECIOUS METALS 0.2%
De Beers Consolidated Mines Ltd. (ADR) .......................... 265,000 8,943,750
-----------
STEEL & METALS 1.4%
Allegheny Ludlum Corp. .......................................... 707,800 13,359,725
Freeport McMoRan Copper & Gold, Inc. "A" ........................ 542,590 16,209,876
J & L Specialty Steel, Inc. ..................................... 201,700 3,000,288
Phelps Dodge Corp. .............................................. 268,400 16,741,450
-----------
49,311,339
-----------
CONSTRUCTION 1.4%
FOREST PRODUCTS
Georgia Pacific Corp. ........................................... 470,400 33,398,400
Weyerhaeuser Co. ................................................ 364,500 15,491,250
-----------
48,889,650
-----------
TRANSPORTATION 1.9%
AIRLINES 0.4%
Delta Air Lines, Inc. ........................................... 172,457 14,313,931
-----------
RAILROADS 1.5%
Canadian National Railway Co. ................................... 1,119,500 20,570,813
Norfolk Southern Corp. .......................................... 120,100 10,178,475
Union Pacific Corp. ............................................. 313,800 21,926,775
-----------
52,676,063
-----------
UTILITIES 4.5%
ELECTRIC UTILITIES
CINergy Corp. ................................................... 494,500 15,824,000
CMS Energy Corp. ................................................ 227,600 7,027,150
China Light & Power Co., Ltd. (ADR) ............................. 2,332,800 10,497,600
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
PureNo-Load[Trademark]FundsPureNo-Load[Trademark]FundsPureNo-Load[Trademark]Funds
- --------------------------------------------------------------------------------
</TABLE>
16-SCUDDER GROWTH AND INCOME FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE($)
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
National Power PLC (ADR) ........................................ 239,500 5,837,813
PacifiCorp ...................................................... 507,300 11,287,425
Pacific Gas & Electric Co. ...................................... 756,800 17,595,600
PowerGen PLC .................................................... 2,862,000 14,623,017
PowerGen PLC .................................................... 750,000 5,462,678
PowerGen PLC (ADR) .............................................. 970,200 20,131,650
Southern Company ................................................ 606,000 14,922,750
Texas Utilities Co., Inc. ....................................... 210,000 8,977,500
Unicom Corp. .................................................... 950,300 26,489,613
-----------
158,676,796
- -------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS (Cost $2,469,263,651) ....................... 3,282,142,705
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO - 100.0% (Cost $2,717,590,496) (a) ... 3,547,153,616
- -------------------------------------------------------------------------------------------------
<FN>
- ----------
* Non-income producing security.
(a) The cost for federal income tax purposes was $2,715,214,218. At June 30,
1996, net unrealized appreciation for all securities based on tax cost was
$831,939,398. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $865,370,274 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$33,430,876.
(b) Principal amount is stated in U.S. dollars unless otherwise noted.
CURRENCY ABBREVIATIONS
GBP British Pound
(c) Securities valued in good faith by the Valuation Committee of the Board of
Trustees. The cost of these securities at June 30, 1996 aggregated
$33,500,000. See Note A of the Notes to Financial Statements.
(d) Restricted Securities -securities which have not been registered with the
Securities and Exchange Commission under the Securities Act of 1933.
Information concerning such restricted securities at June 30, 1996 is as
follows:
Security Acquisition Date Cost($)
-------- ---------------- -------
Security Capital Corp., 6.5%, 3/29/16 4/18/96 16,750,000
Security Capital Corp. 4/18/96 16,750,000
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
PureNo-Load[Trademark]FundsPureNo-Load[Trademark]FundsPureNo-Load[Trademark]Funds
- --------------------------------------------------------------------------------
</FN>
</TABLE>
17-SCUDDER GROWTH AND INCOME FUND
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
as of June 30, 1996 (Unaudited)
<CAPTION>
ASSETS
- ----------------------------------------------------------------------------------------------------
<S> <C>
Investments, at market (identified cost $2,717,590,496) (Note A) $3,547,153,616
--------------
Cash ............................................................. 1,211,589
Collateral held for securities loaned (Note A) ................... 250,919,400
Dividends and interest receivables ............................... 13,024,136
Receivable for investments sold .................................. 28,667,271
Receivable for fund shares sold .................................. 9,140,125
Receivable for foreign taxes recoverable ......................... 1,635,926
Other assets ..................................................... 5,896
--------------
Total assets ..................................................... 3,851,757,959
LIABILITIES
- ----------------------------------------------------------------------------------------------------
Collateral on securities loaned (Note A) ......................... $250,919,400
Payable for investments purchased ................................ 41,319,514
Payable for fund shares redeemed ................................. 6,565,737
Accrued management fee (Note C) .................................. 1,461,294
Other accrued expenses (Note C) .................................. 1,216,226
--------------
Total liabilities ................................................ 301,482,171
- ----------------------------------------------------------------------------------------------------
NET ASSETS, AT MARKET VALUE ...................................... $3,550,275,788
- ----------------------------------------------------------------------------------------------------
NET ASSETS
- ----------------------------------------------------------------------------------------------------
Net assets consist of:
Undistributed net investment income .............................. $30,186,612
Net unrealized appreciation on:
Investments ................................................... 829,563,120
Foreign currency related transactions ......................... 2,949
Accumulated net realized gain .................................... 102,045,059
Shares of beneficial interest .................................... 1,624,672
Additional paid-in capital ....................................... 2,586,853,376
- ----------------------------------------------------------------------------------------------------
Net assets, at market value ...................................... $3,550,275,788
- ----------------------------------------------------------------------------------------------------
NET ASSET VALUE
- ----------------------------------------------------------------------------------------------------
Net asset value, offering and redemption price share]
($3,550,275,788/162,467,208 shares of capital stock outstanding,]
$.01 par value, unlimited number of shares authorized ............ $ 21.85
--------------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
PureNo-Load[Trademark]FundsPureNo-Load[Trademark]FundsPureNo-Load[Trademark]Funds
- --------------------------------------------------------------------------------
</TABLE>
18-SCUDDER GROWTH AND INCOME FUND
<PAGE>
STATEMENT OF OPERATIONS
<TABLE>
six months ended June 30, 1996 (Unaudited)
<CAPTION>
INVESTMENT INCOME
- ----------------------------------------------------------------------------------------------------
<S> <C>
Income:
Dividends (net of foreign taxes withheld of $419,057) ............ $ 56,258,262
Interest ......................................................... 4,429,005
------------
60,687,267
Expenses:
Management fee (Note C) .......................................... $ 8,348,642
Services to shareholders (Note C) ................................ 3,636,268
Custodian and accounting fees (Note C) ........................... 388,769
Trustees' fees and expenses (Note C) ............................. 18,823
Reports to shareholders .......................................... 356,816
Legal ............................................................ 14,821
Auditing ......................................................... 26,884
Federal and state registration ................................... 192,801
Other ............................................................ 44,050
------------
13,027,874
- ----------------------------------------------------------------------------------------------------
Net investment income ............................................ 47,659,393
- ----------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS
- ----------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments ...................................................... 101,646,295
Foreign currency related transactions ............................ (146,909)
------------
101,499,386
Net unrealized appreciation during the period on:
Investments ...................................................... 127,986,032
Foreign currency related transactions ............................ 7,906
127,993,938
------------
Net gain on investment transactions .............................. 229,493,324
------------
- ----------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............. $277,152,717
- ----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
PureNo Load[Trademark]FundsPureNoLoad[Trademark]FundsPureNo Load[Trademark]Funds
- --------------------------------------------------------------------------------
</TABLE>
19-SCUDDER GROWTH AND INCOME FUND
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED
1996 DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS (UNAUDITED) 1995
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ............................ $ 47,659,393 $ 78,522,376
Net realized gain from investment transactions ... 101,499,386 63,930,236
Net unrealized appreciation on investment
transactions during the period ................. 127,993,938 546,323,308
-------------- --------------
Net increase in net assets resulting
from operations ................................ 277,152,717 688,775,920
-------------- --------------
Distributions to shareholders from:
Net investment income ($.13 and $.56 per
share, respectively) ........................... (19,944,379) (78,569,568)
-------------- --------------
Net realized gains on investment transactions
($.04 and $.48 per share, respectively) ........ (7,031,614) (69,054,578)
-------------- --------------
Fund share transactions:
PROCEEDS FROM SHARES SOLD ........................ 532,627,912 829,474,858
Net asset value of shares issued to shareholders
in reinvestment of distributions ............... 24,338,581 133,306,288
Cost of shares redeemed .......................... (318,075,009) (434,428,526)
-------------- --------------
Net increase in net assets from Fund
share transactions ............................. 238,891,484 528,352,620
-------------- --------------
INCREASE IN NET ASSETS ........................... 489,068,208 1,069,504,394
Net assets at beginning of period ................ 3,061,207,580 1,991,703,186
Net assets at end of period (including
undistributed net investment income of -------------- --------------
$30,186,612 and $2,471,598, respectively) ...... $3,550,275,788 $3,061,207,580
-------------- --------------
OTHER INFORMATION
- ----------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN FUND SHARES
Shares outstanding at beginning of period ........ 151,318,741 122,454,972
-------------- --------------
Shares sold ...................................... 25,359,670 45,610,829
Shares issued to shareholders in reinvestment of
distributions .................................. 1,129,197 6,927,513
Shares redeemed .................................. (15,340,400) (23,674,573)
-------------- --------------
Net increase in Fund shares ...................... 11,148,467 28,863,769
-------------- --------------
Shares outstanding at end of period .............. 162,467,208 151,318,741
-------------- --------------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
PureNo Load[Trademark]FundsPureNoLoad[Trademark]FundsPureNo Load[Trademark]Funds
- --------------------------------------------------------------------------------
</TABLE>
20-SCUDDER GROWTH AND INCOME FUND
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
The following table includes select data for a share outstanding throughout each
period and other performance information derived from the financial statements.
<CAPTION>
SIX MONTHS
ENDED
JUNE 30,
1996 YEARS ENDED DECEMBER 31,
(UNAUDITED) 1995 1994 1993(b) 1992 1991 1990 1989 1988 1987 1986
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
---------------------------------------------------------------------------------------
period .............. $20.23 $16.26 $17.24 $16.20 $15.76 $12.77 $14.14 $13.18 $12.31 $15.02 $15.35
---------------------------------------------------------------------------------------
Income from
investment
operations:
Net investment
income .............. .30 .55 .49 .49 .57 .57 .65 .67 .60 .68 .67
Net realized and
unrealized gain
(loss) on
investment
transactions ........ 1.49 4.46 (.05) 2.01 .90 2.97 (1.01) 2.75 .86 (.07) 1.96
Total from
investment
---------------------------------------------------------------------------------------
operations .......... 1.79 5.01 .44 2.50 1.47 3.54 (.36) 3.42 1.46 .61 2.63
---------------------------------------------------------------------------------------
Less distributions from:
Net investment
income .............. (.13) (.56) (.51) (.45) (.53) (.55) (.67) (.69) (.59) (.68) (.68)
NET REALIZED GAINS
ON INVESTMENT
TRANSACTIONS ........ (.04) (.48) (.91) (1.01) (.50) -- (.34) (1.77) -- (2.64) (2.28)
---------------------------------------------------------------------------------------
Total distributions ... (.17) (1.04) (1.42) (1.46) (1.03) (.55) (1.01) (2.46) (.59) (3.32) (2.96)
---------------------------------------------------------------------------------------
Net asset value,
---------------------------------------------------------------------------------------
end of period ....... $21.85 $20.23 $16.26 $17.24 $16.20 $15.76 $12.77 $14.14 $13.18 $12.31 $15.02
- --------------------------------------------------------------------------------------------------------------
TOTAL RETURN(%) ....... 8.86** 31.18 2.60 15.59 9.57 28.16 (2.33) 26.36 12.01 3.50 18.27
RATIOS AND SUPPLEMENTAL
DATA
Net assets, end of
period ($ millions) .. 3,550 3,061 1,992 1,624 1,166 723 491 490 402 392 385
Ratio of operating
expenses to average
net assets (%)(a) ... .78* .80 .86 .86 .94 .97 .95 .87 .92 .89 .83
Ratio of net
investment income
to average net
assets (%) .......... 2.86* 3.10 2.98 2.93 3.60 4.03 5.03 4.47 4.63 4.24 4.19
Portfolio turnover
rate (%) ............ 25.4* 26.9 42.3 35.5 27.5 44.7 64.7 76.6 47.6 59.5 45.3
Average commission
rate paid (c) ...... $.0560 $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
- ----------
<FN>
(a) The Adviser did not impose a portion of its management fee amounting to
$.02 per share for the year ended December 31, 1992. If all expenses,
including the management fee not imposed, had been incurred by the Fund,
the annualized ratio of expenses to average net assets for such year would
have been 1.08% and the total return would have been lower. This ratio
includes costs associated with the acquisition of certain assets of Niagara
Share Corporation on July 27, 1992; exclusive of these charges the ratio
would have been .92%.
(b) Effective January 1, 1993, the Fund discontinued using equalization
accounting.
(c) Average commission rate paid per share of common and preferred stocks is
calculated for fiscal years beginning on or after September 1, 1995.
* Annualized
** Not Annualized
- --------------------------------------------------------------------------------
PureNo Load[Trademark]FundsPureNoLoad[Trademark]FundsPureNo Load[Trademark]Funds
- --------------------------------------------------------------------------------
</FN>
</TABLE>
21-SCUDDER GROWTH AND INCOME FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
A. SIGNIFICANT ACCOUNTING POLICIES
Scudder Growth and Income 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 Fund's
financial statements are prepared in accordance with generally accepted
principles which require the use of management estimates. The policies described
below are followed consistently by the Fund in the preparation of its financial
statements.
SECURITY VALUATION. 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.
Portfolio debt securities with remaining maturities greater than sixty days are
valued by pricing agents approved by the officers of the Fund, which quotations
reflect broker/dealer-supplied valuations and electronic data processing
techniques. If the pricing agents are unable to provide such quotations, the
most recent bid quotation supplied by a bona fide market maker shall be used.
Short-term investments having a maturity of sixty days or less are valued at
amortized cost.
All other securities are valued at their fair value as determined in good faith
by the Valuation Committee of the Board of Trustees. Securities valued in good
faith by the Valuation Committee of the Board of Trustees at fair value amounted
to $34,074,833 (.96% of net assets) and have been noted in the investment
portfolio as of June 30, 1996.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian,
receives delivery of the underlying securities, the amount of which at the time
of purchase and each subsequent business day is required to be maintained at
such a level that the market value, depending on the maturity of the repurchase
agreement, is equal to at least 100.5% of the resale price.
SECURITY LENDING. The Fund may seek to increase its income by lending portfolio
securities. Such loans may be made through the Fund's authorized agent to
registered broker/dealers and are required to be collateralized by cash in an
amount at least equal to the market value plus accrued interest of the
securities loaned. The collateral is invested, and a negotiated percentage of
the interest earned is remitted to the Fund. This income is included as a
component of interest income. At June 30, 1996, the Fund loaned securities with
an aggregate market value of $242,237,991 which represents 6.8% of total net
assets.
RESTRICTED SECURITIES. The Fund may not purchase restricted securities (for
these purposes, restricted security means a security which cannot be sold to the
public without registration under the Securities Act of 1933 or the availability
of an exemption from registration, or which is subject to other legal or
contractual delays in or restrictions on resale), if, as a result thereof, more
than 5% of the value of the Fund's total assets would be invested in restricted
securities. The aggregate fair value of restricted securities at June 30, 1996,
amounted to $34,074,833 which represents 0.96% of net assets.
- --------------------------------------------------------------------------------
PureNo Load[Trademark]FundsPureNoLoad[Trademark]FundsPureNo Load[Trademark]Funds
- --------------------------------------------------------------------------------
22-SCUDDER GROWTH AND INCOME FUND
<PAGE>
FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency transactions are translated into U.S. dollars
on the following basis:
(i) market value of investment securities, other assets and liabilities at
the daily rates of exchange, and
(ii) purchases and sales of investment securities, dividend and interest
income and certain expenses at the daily rates of exchange prevailing
on the respective dates of such transactions.
The Fund does not isolate that portion of gains and losses on investments which
is due to changes in foreign exchange rates from that which is due to changes in
market prices of the investments. Such fluctuations are included with the net
realized and unrealized gains and losses from investments.
Net realized and unrealized gain (loss) from foreign currency related
transactions includes gains and losses between trade and settlement dates on
securities transactions, gains and losses arising from the sales of foreign
currency, and gains and losses between the ex and payment dates on dividends,
interest, and foreign withholding taxes.
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. The Fund
accordingly paid no federal income taxes and no provision for federal income
taxes was required.
DISTRIBUTION OF INCOME AND GAINS. Distributions of net investment income are
made quarterly. 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. 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. These
differences relate primarily to non-taxable distributions and certain securities
sold at a loss. As a result, net investment income 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 specific identified cost method for determining realized gain
or loss on investments for both financial and federal income tax reporting
purposes.
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 June 30, 1996, purchases and sales of investment
securities (excluding short-term investments) aggregated $721,937,404 and
$417,211,967, respectively.
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PureNo Load[Trademark]FundsPureNoLoad[Trademark]FundsPureNo Load[Trademark]Funds
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23-SCUDDER GROWTH AND INCOME FUND
<PAGE>
C. RELATED PARTIES
Under the Investment Management Agreement (the "Agreement") with Scudder,
Stevens & Clark, Inc. (the "Adviser") the Fund has agreed to pay the Adviser the
equal to an annual rate of 0.60% on the first $500,000,000 of the Fund's average
daily net assets, 0.55% on the next $500,000,000, 0.50% on the next
$500,000,000, 0.475% on the next $500,000,000, and 0.45% of such net assets in
excess of $2,000,000,000, computed and accrued daily and payable monthly. As
manager of the assets of the Fund, the Adviser directs the investments of the
Fund in accordance with its investment objective, 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 also 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. For the six months ended June 30, 1996, the fee
pursuant to both the Management Agreement and the Agreement amounted to
$8,348,642, which was equivalent to an annual effective rate of .50% 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
six months ended June 30, 1996, the amount charged to the Fund by SSC aggregated
$1,914,414, of which $322,073 is unpaid at June 30, 1996.
Scudder Trust Company ("STC"), a subsidiary of the Adviser, provides
recordkeeping and other services in connection with certain retirement and
employee benefit plans invested in the Fund. For the six months ended June 30,
1996, the amount charged to the Fund by STC aggregated $1,090,955, of which
$351,255 is unpaid at June 30, 1996
Scudder Fund Accounting Corporation ("SFAC"), a 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 June 30, 1996, the amount charged to the Fund by SFAC
aggregated $119,885, of which $41,388 is unpaid at June 30, 1996.
The Fund pays each Trustee not affiliated with the Adviser $4,000 annually, plus
specified amounts for attended board and committee meetings. For the six months
ended June 30, 1996, Trustees' fees and expenses aggregated $18,823.
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PureNo Load[Trademark]FundsPureNoLoad[Trademark]FundsPureNo Load[Trademark]Funds
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24-SCUDDER GROWTH AND INCOME FUND
<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; President and Director,
Fifty Associates
Wesley W. Marple, Jr.
Trustee; Professor of Business
Administration, Northeastern
University
Juris Padegs*
Trustee
Jean C. Tempel
Trustee; General Partner,
TL Ventures
Bruce F. Beaty*
Vice President
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
Valerie F. Malter*
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
Coleen Downs Dinneen*
Assistant Secretary
*Scudder, Stevens & Clark, Inc.
25 - SCUDDER GROWTH AND INCOME FUND
<PAGE>
Investment Products and Services
The Scudder Family of Funds
- ---------------------------
Money Market
Scudder Cash Investment Trust
Scudder U.S. Treasury Money Fund
Tax Free Money Market+
Scudder Tax Free Money Fund
Scudder California Tax Free Money Fund*
Scudder New York Tax Free Money Fund*
Tax Free+
Scudder California Tax Free Fund*
Scudder High Yield Tax Free Fund
Scudder Limited Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder Massachusetts Limited Term
Tax Free Fund*
Scudder Massachusetts Tax Free Fund*
Scudder Medium Term Tax Free Fund
Scudder New York Tax Free Fund*
Scudder Ohio Tax Free Fund*
Scudder Pennsylvania Tax Free Fund*
Growth and Income
Scudder Balanced Fund
Scudder Growth and Income Fund
Income
Scudder Emerging Markets Income Fund
Scudder Global Bond Fund
Scudder GNMA Fund
Scudder High Yield Bond Fund
Scudder Income Fund
Scudder International Bond Fund
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Growth
Scudder Capital Growth Fund
Scudder Development Fund
Scudder Emerging Markets Growth Fund
Scudder Global Discovery Fund
Scudder Global Fund
Scudder Gold Fund
Scudder Greater Europe Growth Fund
Scudder International Fund
Scudder Latin America Fund
Scudder Micro Cap Fund
Scudder Pacific Opportunities Fund
Scudder Quality Growth Fund
Scudder Small Company Value Fund
Scudder Value Fund
The Japan Fund
Retirement Plans and Tax-Advantaged Investments
- -----------------------------------------------
IRAs
Keogh Plans
Scudder Horizon Plan*+++ (a variable annuity)
401(k) Plans
403(b) Plans
SEP-IRAs
Profit Sharing and Money Purchase
Pension Plans
Closed-End Funds#
- -----------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The First Iberian Fund, Inc.
The Korea Fund, Inc.
The Latin America Dollar Income Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder New Asia 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.
26 - SCUDDER GROWTH AND INCOME FUND
<PAGE>
How to Contact Scudder
Account Service and Information
For existing account service and transactions
Scudder Investor Relations
1-800-225-5163
For personalized information about your Scudder accounts;
exchanges and redemptions; or information on any Scudder fund
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
Visit the Scudder World Wide Web Site at:
http://funds.scudder.com
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 Treasurers Trust(TM), an
institutional cash management service for corporations,
non-profit organizations and trusts which utilizes certain
portfolios of Scudder Fund, Inc.* ($100,000 minimum), call:
1-800-541-7703.
For information on Scudder Institutional Funds*, funds designed
to meet the broad investment management and service needs of
banks and other institutions, call: 1-800-854-8525.
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.
27 - SCUDDER GROWTH AND INCOME FUND
<PAGE>
Celebrating Over 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 40 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.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
