Scudder
Classic Growth
Fund
Semiannual Report
February 28, 1997
Pure No-Load(TM) Funds
A fund seeking long-term growth of capital with reduced share price volatility
compared to other growth mutual funds.
A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
SCUDDER (image)
<PAGE>
Table of Contents
2 In Brief
3 Letter from the Fund's President
4 Portfolio Summary
5 Portfolio Management Discussion
8 Investment Portfolio
12 Financial Statements
15 Financial Highlights
16 Notes to Financial Statements
18 Investment Products and Services
19 How to Contact Scudder
In Brief
o Scudder Classic Growth Fund provided a total return of 19.39% for the
abbreviated fiscal period ended February 28, 1997.
o Stocks delivered strong performance as robust corporate earnings, relatively
low interest rates, and modest inflation favored the Fund's emphasis on large
company growth stocks.
o The Fund benefited especially from significant industry weightings in the
technology and finance sectors, both of which performed well during the period.
2 - SCUDDER CLASSIC GROWTH FUND
<PAGE>
Letter From the Fund's President
Dear Shareholders,
We are pleased to present Scudder Classic Growth Fund's first semiannual
report to shareholders for the abbreviated fiscal period from September 9, 1996
to February 28, 1997.
Your Fund's strong performance was especially gratifying considering the
Fund's relatively conservative approach. Large company stocks provided some of
the best performance during the period, including growth stocks of America's
leading companies, the primary focus of your Fund's investments. A complete
discussion of your Fund's activities begins on page 5.
Scudder Classic Growth Fund invests in many of America's leading growth
companies while seeking less price volatility than other growth funds. This
investment approach is rooted in a style that Scudder, Stevens & Clark, Inc. has
used in managing privately managed accounts for decades. The Fund is designed to
serve as a core equity holding in a diversified portfolio. We believe that
satisfying long-term investment returns can result from this approach.
The outstanding performance of U.S. stocks over the last two years has
caused many investors to consider what, if any, adjustments they should make to
their portfolios. In general, diversification across several asset classes can
provide balance to an investment portfolio. Most investors should consider
complementing their core holdings with representation from the money market,
fixed income, international, and small cap stock areas. The performance of these
distinct asset classes does not always move in tandem with one another, helping
to reduce a portfolio's overall price volatility.
For those of you who are interested in new products and services, we
recently introduced the Scudder Pathway Series. Pathway simplifies investing
through the 'fund of funds' approach and offers four distinct portfolios:
Conservative, Balanced, Growth, and International. Each portfolio invests in a
select mix of Scudder Funds, providing flexibility, diversification, and
simplicity for regular and retirement plan investors. For more complete
information on Scudder products and services, please turn to page 18.
Thank you for your investment in Scudder Classic Growth Fund. If you have
questions about your account, please call our Investor Relations representatives
at 1-800-225-2470; they will be happy to assist you. Or, visit our Internet Web
site at http://funds.scudder.com.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder Classic Growth Fund
3 - SCUDDER CLASSIC GROWTH FUND
<PAGE>
PORTFOLIO SUMMARY as of February 28, 1997
- ---------------------------------------------------------------------------
ASSET ALLOCATION
- ---------------------------------------------------------------------------
Equity Holdings 97%
Cash Equivalents 3%
- --------------------------------------
100%
- --------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
A FULLY INVESTED APPROACH WAS
IMPLEMENTED DURING THE PERIOD.
- --------------------------------------------------------------------------
SECTOR DIVERSIFICATION
(Excludes 3% Cash Equivalents)
- --------------------------------------------------------------------------
Financial 19%
Technology 16%
Health 13%
Energy 12%
Manufacturing 12%
Consumer Discretionary 8%
Consumer Staples 6%
Durables 6%
Service Industries 5%
Other 3%
- ---------------------------------------------
100%
- ---------------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
THE FUND'S TOP INDUSTRY HOLDINGS
- - FINANCIAL AND TECHNOLOGY - WERE
IMPORTANT CONTRIBUTORS TO
PERFORMANCE.
- --------------------------------------------------------------------------
10 LARGEST EQUITY HOLDINGS
(24% OF PORTFOLIO)
- --------------------------------------------------------------------------
1. AMERICAN EXPRESS CREDIT CORP.
Travel and investment services, insurance, banking
2. CITICORP
Provider of broad range of financial services,
including banking and consumer finance
3. INTEL CORP.
Semiconductor microprocessors
4. ROYAL DUTCH PETROLEUM CO.
International energy company
5. COMPAQ COMPUTER CORP.
Leading manufacturer of personal computers
6. AMERICAN INTERNATIONAL GROUP, INC.
Major international insurance holding company
7. COLUMBIA/HCA HEALTHCARE CORP.
Leading hospital management company
8. GENERAL MOTORS CORP. H
Producer of high technology electronics
9. FRANKLIN RESOURCES INC.
Mutual fund investment advisor
10. EXEL, LTD.
Provider of liability insurance
THE FUND'S HOLDINGS ARE WELL
KNOWN AND REFLECT ITS EMPHASIS
ON LEADING AMERICAN COMPANIES.
- -----------------------------------------------------------------------------
For more complete details about the Fund's investment portfolio,
see page 8. A monthly Investment Portfolio Summary and quarterly Portfolio
Holdings are available upon request.
4 - SCUDDER CLASSIC GROWTH FUND
<PAGE>
Portfolio Management Discussion
Dear Shareholders,
This report for Scudder Classic Growth Fund covers the abbreviated semiannual
period from the Fund's inception on September 9, 1996 to February 28, 1997.
During this almost six-month period, the Fund's net asset value per share
increased from $12.00 to $14.29, including a $0.04 income dividend, for a total
return of 19.39%. This return compares favorably to the performance of the
overall stock market and similar growth funds for the period.
This has been an ideal environment for the Fund's introduction. Stocks continued
to rally and high quality large company stocks, in particular, led the market
indices to new highs. The Fund further benefited from significant weightings in
sectors that performed well -- namely technology and finance. We were pleased
with these results considering the Fund's relatively conservative approach.
The Fund seeks to participate in the growth potential of America's leading
companies. In doing so, the Fund attempts to avoid the greater price volatility
that is characteristic of more aggressive growth funds. In managing the Fund, we
focus on established U.S. companies with histories of consistent earnings
growth. Typically these are medium- and large-sized firms distinguished by solid
management, a strong franchise, and dominance in their market niche.
Market Environment
Stocks were propelled higher over the period by continued strong corporate
earnings and relatively benign inflation. Economic growth was robust during the
third and fourth quarters of 1996, exceeding the 3.4% overall growth rate for
the year. Corporate earnings continued to be reported ahead of expectations at
many large companies, but there were also a few disappointments. Completing an
almost perfect scenario for equity investors, inflation remained subdued and
interest rates were relatively low by historical standards. However, long-term
rates crept up toward the end of the period and real, inflation-adjusted rates
remained high.
Stocks of large, leading American companies were among the best performers in
this environment as most reported strong earnings gains. Many of these companies
have been able to leverage their typically substantial global presence and vast
distribution networks. These large companies have also continued to focus on
productivity improvements and acquisitions to increase revenues. Technology
companies have been notable beneficiaries because they are providing the tools
for higher efficiency and lower costs.
New and better technology is continuing to promote productivity improvement in
many industries. Large companies, in particular, are enjoying significant
dividends from the application of technological advances. These companies have
been investing heavily in technology over the last several years, and the
benefits are multiplying. The substantial impact of technology in the 1990s has
been compared to the industrial revolution of the late 1700s, which radically
transformed U.S. manufacturing techniques. Technological improvement is a
long-term secular trend that should provide continuing benefits to many of the
established companies in which the Fund invests.
5 - SCUDDER CLASSIC GROWTH FUND
<PAGE>
Portfolio Highlights
The technology sector represented a significant portion of the portfolio at 16%
of portfolio assets. A good example of a company that is a world leader in the
technology industry is Intel, one of the Fund's top ten holdings. Intel is the
leading maker of microprocessors, a critical component of personal computers.
The stock has performed well, and we expect the company to continue to play a
leading role in the future growth of the technology industry.
The financial services area, at 18% of portfolio assets, was another sector that
contributed strongly to Fund performance. In the banking industry,
restructurings and consolidations have continued. Banks such as Citicorp -- the
largest U.S. banking company measured by revenues and the world's leading credit
card issuer -- are steadily repositioning and expanding overseas to remain
competitive. In addition, low interest rates have provided lenders with a low
cost of funds and attractive profit margins.
The strong bull market has also been good for earnings at securities firms and
diversified financial companies. American Express, the Fund's largest holding,
is one the United States' leading financial services companies and the largest
corporate travel agency. This high quality company has recently been focusing
more closely on its core corporate travel and credit card businesses.
A Conservative Approach
to Growth
Scudder Classic Growth Fund is different in that it seeks long-term growth of
capital with lower price volatility than the average growth fund. In pursuing
this goal, we target seasoned companies with strong competitive positions. We
also seek to avoid stocks associated with unreasonably high expectations, which
typically trade at high prices relative to their earnings, sales, or revenues.
These high-expectation stocks are often very volatile, declining sharply at the
first sign of disappointment. While the prices of some stocks are bid up because
of a company's rapid growth prospects, we prefer to pay for earnings that we
believe are sustainable. Our investment focus is on stocks with consistent
earnings growth rates that we believe are reasonably valued.
We employ both fundamental and quantitative techniques in selecting stocks for
the portfolio. The investment process begins with narrowing the universe of
growth stocks by screening out companies with weaker competitive positions and
financial statements. Then we assign a rating to each stock based on its
relative valuation. Through this process we attempt to identify stocks with the
best potential performance.
We also take a diversified approach to the Fund's industry exposures by
maintaining representation in many sectors. We believe this broad
diversification can help to reduce the Fund's share price volatility.
6 - SCUDDER CLASSIC GROWTH FUND
<PAGE>
Outlook
We recognize that the outstanding stock market performance of the past two years
is unlikely to continue forever. However, we expect a favorable environment for
U.S. equity investors over the long term. Economic growth should remain healthy
in 1997, but slow to more moderate levels, reflecting the effect of a strong
U.S. dollar and a challenging environment for most companies seeking to raise
prices. The market could also experience greater volatility in the months ahead.
However, the fundamentals remain positive: global liquidity is ample, growth is
moderate, inflation is low, and productivity continues to improve at many
companies. We believe that leading American companies -- our primary focus for
the Fund's investments -- will provide some of the best potential opportunities
in this environment.
Sincerely,
Your Portfolio Management Team
/s/William F. Gadsden /s/Bruce F. Beaty
William F. Gadsden Bruce F. Beaty
Lead Portfolio Manager Portfolio Manager
7 - SCUDDER CLASSIC GROWTH FUND
<PAGE>
Investment Portfolio as of February 28, 1997 (Unaudited)
Principal Market
Amount ($) Value ($)
- --------------------------------------------------------------------------------
Repurchase Agreements 3.2%
- --------------------------------------------------------------------------------
Repurchase Agreement with State Street Bank
and Trust Company dated 2/28/97 at 5.31%,
to be repurchased at $688,304 on 3/3/97,
collateralized by a $690,000 U.S. Treasury ----------
Bond, 7.125%, 2/15/23 (Cost $688,000) ........... 688,000 688,000
----------
Shares
- --------------------------------------------------------------------------------
Common Stocks 96.8%
- --------------------------------------------------------------------------------
Consumer Discretionary 7.5%
Department & Chain Stores 5.3%
Costco Companies, Inc. .......................... 8,800 225,500
Gap Inc. ........................................ 7,500 247,500
Home Depot, Inc. ................................ 7,800 425,100
Walgreen Co. .................................... 5,400 230,850
----------
1,128,950
----------
Hotels & Casinos 1.0%
Mirage Resorts Inc.* ............................ 9,000 223,875
----------
Specialty Retail 1.2%
Tiffany & Co. ................................... 7,200 250,200
----------
Consumer Staples 5.8%
Alcohol & Tobacco 1.7%
Anheuser-Busch Companies, Inc. .................. 8,300 369,350
----------
Food & Beverage 1.1%
Sara Lee Corp. .................................. 5,900 228,625
----------
Package Goods/Cosmetics 3.0%
Clorox Co. ...................................... 2,600 310,700
Procter & Gamble Co. ............................ 2,700 324,338
----------
635,038
----------
Health 13.2%
Hospital Management 2.3%
Columbia/HCA Healthcare Corp. ................... 11,400 478,800
----------
Medical Supply & Specialty 2.4%
Becton, Dickinson & Co. ......................... 7,000 344,750
STERIS Corp.* ................................... 6,500 164,125
----------
508,875
----------
Pharmaceuticals 8.5%
American Home Products Corp. .................... 3,100 198,400
Johnson & Johnson ............................... 3,900 224,738
Merck & Co., Inc. ............................... 2,300 211,600
The accompanying notes are an integral part of the financial statements.
8 - SCUDDER CLASSIC GROWTH FUND
<PAGE>
Market
Shares Value ($)
- --------------------------------------------------------------------------------
Novartis AG (ADR) ............................... 4,200 239,663
Novartis AG (ADR) Rights (b)* ................... 210 13,299
Pfizer, Inc. .................................... 3,000 274,875
Schering-Plough Corp. ........................... 2,400 183,900
Warner-Lambert Co. .............................. 5,400 453,600
----------
1,800,075
----------
Financial 17.9%
Banks 4.7%
Citicorp ........................................ 5,000 583,750
J.P. Morgan & Co., Inc. ......................... 1,900 199,738
Norwest Corp. ................................... 4,400 218,900
----------
1,002,388
----------
Insurance 6.2%
American International Group, Inc. .............. 4,000 484,000
EXEL, Ltd. ...................................... 10,300 454,488
MBIA Inc. ....................................... 3,900 380,738
----------
1,319,226
----------
Consumer Finance 1.1%
Associates First Capital Corp. .................. 5,000 241,250
----------
Other Financial Companies 5.9%
American Express Credit Corp. ................... 9,400 614,525
Federal National Mortgage Association ........... 9,500 380,000
Travelers Group, Inc. ........................... 4,900 262,763
----------
1,257,288
----------
Media 1.1%
Advertising
Omnicom Group, Inc. ............................. 4,800 238,200
----------
Service Industries 5.1%
Investment 3.4%
Franklin Resources Inc. ......................... 8,000 468,000
Merrill Lynch & Co., Inc. ....................... 2,700 259,200
----------
727,200
----------
Miscellaneous Commercial Services 1.7%
Manpower, Inc. .................................. 7,000 264,250
Sabre Group Holdings Inc. ....................... 3,500 98,875
----------
363,125
----------
The accompanying notes are an integral part of the financial statements.
9 - SCUDDER CLASSIC GROWTH FUND
<PAGE>
Market
Shares Value ($)
- --------------------------------------------------------------------------------
Durables 5.4%
Aerospace 4.7%
Lockheed Martin Corp. ........................... 3,429 303,467
Rockwell International Corp. (New) .............. 4,700 304,325
United Technologies Corp. ....................... 5,100 383,775
----------
991,567
----------
Telecommunications Equipment 0.7%
Ascend Communications, Inc. ..................... 3,000 156,750
----------
Manufacturing 11.5%
Chemicals 3.6%
E.I. du Pont de Nemours & Co. ................... 2,900 311,025
Praxair Inc. .................................... 4,700 228,538
Sigma-Aldrich Corp. ............................. 7,000 214,375
----------
753,938
----------
Diversified Manufacturing 3.5%
General Electric Co. ............................ 2,000 205,750
TRW Inc. ........................................ 5,400 282,825
Textron, Inc. ................................... 2,600 256,425
----------
745,000
----------
Electrical Products 1.8%
ABB AB (ADR) .................................... 1,700 189,975
Emerson Electric Co. ............................ 1,900 188,100
----------
378,075
----------
Machinery/Components/Controls 2.6%
Ingersoll-Rand Co. .............................. 4,700 223,250
Parker-Hannifin Group ........................... 7,400 323,750
----------
547,000
----------
Technology 15.7%
Diverse Electronic Products 2.2%
General Motors Corp. H .......................... 8,000 472,000
----------
Electronic Data Processing 6.8%
Compaq Computer Corp.* .......................... 6,300 499,275
Hewlett-Packard Co. ............................. 5,500 308,000
International Business Machines Corp. ........... 1,800 258,750
Sun Microsystems, Inc. .......................... 12,600 389,025
----------
1,455,050
----------
Office/Plant Automation 1.3%
Cabletron Systems Inc.* ......................... 4,400 132,000
The accompanying notes are an integral part of the financial statements.
10 - SCUDDER CLASSIC GROWTH FUND
<PAGE>
Market
Shares Value ($)
- --------------------------------------------------------------------------------
Cisco Systems, Inc.* ............................ 2,600 144,625
----------
276,625
----------
Semiconductors 5.4%
Applied Materials, Inc.* ........................ 7,700 389,813
Intel Corp. ..................................... 3,650 517,837
KLA Instruments Corp.* .......................... 5,600 233,450
----------
1,141,100
----------
Energy 12.2%
Engineering 1.1%
Fluor Corp. ..................................... 3,700 224,313
----------
Oil Companies 9.4%
Amoco Corp. ..................................... 3,300 278,850
Atlantic Richfield Co. .......................... 2,400 300,000
Exxon Corp. ..................................... 4,000 399,500
Mobil Corp. ..................................... 2,500 306,875
Repsol SA (ADR) ................................. 5,500 209,000
Royal Dutch Petroleum Co. (New York shares) ..... 2,900 501,700
----------
1,995,925
----------
Oil/Gas Transmission 1.7%
Enron Corp. ..................................... 5,300 211,338
Williams Cos., Inc. ............................. 3,400 148,750
----------
360,088
----------
Transportation 1.4%
Airlines 1.0%
AMR Corp.* ...................................... 2,800 220,150
----------
Railroads 0.4%
Canadian Pacific Ltd. ........................... 3,300 81,675
- --------------------------------------------------------------------------------
Total Common Stocks (Cost $18,846,069) 20,571,721
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total Investment Portfolio--100.0% (Cost $19,534,066) (a) 21,259,721
- --------------------------------------------------------------------------------
* Non-income producing security.
(a) The cost for federal income tax purposes was $19,534,066. At February 28,
1997, net unrealized appreciation for all securities based on tax cost was
$1,725,655. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $1,968,027 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$242,372.
(b) Securities valued in good faith by the Valuation Committee of the Board of
Directors at fair value amounted to $13,299 (.1% of net assets). Their
values have been estimated by the Board of Directors in the absence of
readily ascertainable market values. However, because of the inherent
uncertainty of valuation, those estimated values may differ significantly
from the values that would have been used had a ready market for the
securities existed, and the difference could be material. These securities
may also have certain restrictions as to resale.
The accompanying notes are an integral part of the financial statements.
11 - SCUDDER CLASSIC GROWTH FUND
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of February 28, 1997 (Unaudited)
Assets
- --------------------------------------------------------------------------------
Investments, at market (identified
cost $19,534,066) (Note A) ........................ $ 21,259,721
Cash ................................................ 950
Receivable for Investments sold ..................... 229,945
Receivable for Fund shares sold ..................... 48,702
Dividends and interest receivable ................... 34,954
Foreign taxes recoverable ........................... 342
Due from Adviser (Note C) ........................... 111,789
Deferred organization expenses (Note A) ............. 23,537
---------------
Total assets ........................................ 21,709,940
Liabilities
- --------------------------------------------------------------------------------
Payable for investments purchased ................... 165,333
Payable for Fund shares redeemed .................... 1,076
Accrued management fee .............................. 43,614
Other accrued expenses (Note C) ..................... 99,922
---------------
Total liabilities ................................... 309,945
-------------------------------------------------------------------------
Net assets, at market value $ 21,399,995
-------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------
Net assets consist of:
Undistributed net investment income ................. 1,576
Unrealized appreciation on investments .............. 1,725,655
Accumulated net realized gain ....................... 128,802
Paid-in capital ..................................... 19,543,962
-------------------------------------------------------------------------
Net assets, at market value $ 21,399,995
-------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
Net Asset Value, offering and redemption price
(Note A) per share ($21,399,995 /1,497,276
outstanding shares of beneficial interest,
$.01 par value, unlimited number of shares ---------------
authorized) ....................................... $14.29
---------------
The accompanying notes are an integral part of the financial statements.
12 - SCUDDER CLASSIC GROWTH FUND
<PAGE>
Statement of Operations
for the period September 9, 1996 (commencement
of operations) to February 28, 1997 (Unaudited)
Investment Income
- --------------------------------------------------------------------------------
Income:
Dividends (net of foreign taxes withheld of $596) ..... $ 97,974
Interest .............................................. 24,820
----------------
122,794
Expenses:
Management fee (Note C) ............................... 43,614
Services to shareholders (Note C) ..................... 20,768
Custodian and accounting fees (Note C) ................ 40,442
Trustees' fees and expenses (Note C) .................. 15,306
Auditing .............................................. 9,557
Registration fees ..................................... 28,246
Reports to shareholders ............................... 15,725
Legal ................................................. 8,941
Amortization of organization expense (Note A) ......... 2,464
Other ................................................. 4,687
----------------
Total expenses before reductions ...................... 189,750
Expense reductions (Note C) ........................... (111,789)
----------------
Expenses, net ......................................... 77,961
--------------------------------------------------------------------------
Net investment income 44,833
--------------------------------------------------------------------------
Realized and unrealized gain on investment transactions
- --------------------------------------------------------------------------------
Net realized gain from:
Investments ........................................... 128,802
Net unrealized appreciation during the period on
investments ......................................... 1,725,655
--------------------------------------------------------------------------
Net gain on investment transactions 1,854,457
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 1,899,290
--------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
13 - SCUDDER CLASSIC GROWTH FUND
<PAGE>
Statement of Changes in Net Assets
For the Period
September 9, 1996
(commencement of
operations) to
February 28, 1997
Increase (Decrease) in Net Assets (Unaudited)
- --------------------------------------------------------------------------------
Operations:
Net investment income ................................... $ 44,833
Net realized gain on investments ........................ 128,802
Net unrealized appreciation on investment
transactions during the period ........................ 1,725,655
---------------
Net increase in net assets resulting from operations .... 1,899,290
---------------
Distributions to shareholders from net investment income (43,257)
---------------
Fund share transactions:
Proceeds from shares sold ............................... 21,968,039
Net asset value of shares issued to shareholders in
reinvestment of distributions ........................... 42,483
Cost of shares redeemed ................................. (2,467,760)
---------------
Net increase in net assets from Fund share transactions . 19,542,762
---------------
Increase in net assets .................................. 21,398,795
Net assets at beginning of period ....................... 1,200
Net assets at end of period (including undistributed ---------------
net investment income of $1,576) ...................... $21,399,995
---------------
Other information
- --------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period ............... 100
---------------
Shares sold 1,672,201
Shares issued to shareholders in reinvestment of
distributions ......................................... 3,115
Shares redeemed ......................................... (178,140)
---------------
Net increase in Fund shares ............................. 1,497,176
---------------
Shares outstanding at end of period ..................... 1,497,276
---------------
The accompanying notes are an integral part of the financial statements.
14 - SCUDDER CLASSIC GROWTH FUND
<PAGE>
Financial Highlights
The following table includes selected data for a share outstanding throughout
the period (a) and other performance information derived from the financial
statements.
For the Period
September 9, 1996
(commencement
of operations) to
February 28, 1997
(Unaudited)
- --------------------------------------------------------------------------------
Net asset value, beginning of period .............................. $12.00
-----------
Income from investment operations:
Net investment income ............................................. .04
Net realized and unrealized gain on investments ................... 2.29
-----------
Total from investment operations .................................. 2.33
-----------
Less distributions from net investment income ..................... (.04)
-----------
Net asset value, end of period .................................... $14.29
- --------------------------------------------------------------------------------
Total Return (%) (b) .............................................. 19.39**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ............................ 21
Ratio of operating expenses, net to average daily net assets (%) .. 1.25*
Ratio of operating expenses before expense reductions, to
average daily net assets (%) .................................... 3.04*
Ratio of net investment income to average daily net assets (%) .... .72*
Portfolio turnover rate (%) ....................................... 31.2*
Average commission rate paid ...................................... $.0363
(a) Based on monthly average shares outstanding during the period.
(b) Total return is higher due to maintenance of the Fund's expenses.
* Annualized
** Not annualized
15 - SCUDDER CLASSIC GROWTH FUND
<PAGE>
Notes to Financial Statements (Unaudited)
A. Significant Accounting Policies
Scudder Classic Growth Fund (the "Fund") is a diversified series of Scudder
Investment Trust, a Massachusetts business trust and is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed 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. 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.
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.
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.
Distribution of Income and Gains. Distributions of net investment income, if
any, 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. 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.
16 - SCUDDER CLASSIC GROWTH FUND
<PAGE>
Organization Costs. Costs incurred by the Fund in connection with its
organization 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
During the period September 9, 1996 (commencement of operations) to February 28,
1997, purchases and sales of investment securities (excluding short-term
investments) aggregated $20,842,799 and $2,125,524, 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 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. In
addition, the Adviser has agreed not to impose all or a portion of its
management fee until August 31, 1997 in order to maintain the annualized
expenses of the Fund at not more than 1.25% of average daily net assets. For the
period September 9, 1996 (commencement of operations) to February 28, 1997, the
Adviser did not impose any portion of its management fee, which amounted to
$43,614. Further, due to the limitations of the Agreement, the Adviser also
reimbursed the Fund for other non-related party expenses, which amounted to
$30,874. The Adviser's reimbursement payable to the Fund for the period
September 9, 1996 (commencement of operations) to February 28, 1997, amounted to
$111,789.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
period September 9, 1996 (commencement of operations) to February 28, 1997, SSC
did not impose any portion of its fee, which amounted to $16,953.
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 period September 9, 1996
(commencement of operations) to February 28, 1997, STC did not impose any
portion of its fees, which amounted to $484.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records of the Fund. For the period
September 9, 1996 (commencement of operations) to February 28, 1997, SFAC did
not impose any portion of its fee, which amounted to $19,864.
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 period September 9, 1996 (commencement of operations) to February 28, 1997,
the Trustees fees and expenses aggregated $15,306, of which $250 is unpaid at
February 28, 1997.
17 - SCUDDER CLASSIC GROWTH FUND
<PAGE>
Investment Products and Services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
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 Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund*
Scudder Massachusetts Limited Term
Tax Free Fund*
Scudder Massachusetts Tax Free Fund*
Scudder New York Tax Free Fund*
Scudder Ohio Tax Free Fund*
Scudder Pennsylvania Tax Free Fund*
U.S. Income
- -----------
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder High Yield Bond Fund
Global Income
- -------------
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
Asset Allocation
- ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
U.S. Growth and Income
- ----------------------
Scudder Balanced Fund
Scudder Growth and Income Fund
U.S. Growth
- -----------
Value
Scudder Large Company Value Fund
Scudder Value Fund
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund
Scudder Large Company Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Growth
- -------------
Worldwide
Scudder Global Fund
Scudder International Fund
Scudder Global Discovery Fund
Scudder Emerging Markets Growth Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund
Retirement Programs
- -------------------
IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan *+++ +++
(a variable annuity)
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.
For complete information on any of the above Scudder funds, including management
fees and expenses, call or write for a free prospectus. Read it carefully before
you invest or send money. +++Funds within categories are listed in order from
expected least risk to most risk. +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.
18 - Scudder Classic Growth Fund
<PAGE>
How to Contact Scudder
Account Service and Information
- --------------------------------------------------------------------------------
For existing account services and transactions
Scudder Investor Relations -- 1-800-225-5163
For 24 hour account information, fund information, exchanges, and an
overview of all the services available to you
Scudder Electronic Account Services -- http://funds.scudder.com
For information about your Scudder accounts, exchanges and redemptions
Scudder Automated Information Line (SAIL) -- 1-800-343-2890
Investment Information
- --------------------------------------------------------------------------------
For information about the Scudder funds, including additional
applications and prospectuses, or for answers to investment
questions
Scudder Investor Relations -- 1-800-225-2470
[email protected]
Scudder's World Wide Web Site -- http://funds.scudder.com
For establishing 401(k) and 403(b) plans
Scudder Defined Contribution Services -- 1-800-323-6105
Scudder Brokerage Services
- --------------------------------------------------------------------------------
To receive information about this discount brokerage service and to
obtain an application
Scudder Brokerage Services* -- 1-800-700-0820
Personal Counsel(SM) -- A Managed Fund Portfolio Program
- --------------------------------------------------------------------------------
To receive information about this mutual fund portfolio guidance and
management program
Personal Counsel from Scudder -- 1-800-700-0183
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 Chicago San Francisco
Boston New York
Scudder Investor Relations and Scudder Funds Centers are services provided
through Scudder Investor Services, Inc., Distributor.
* Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061 --
Member NASD/SIPC.
19 - SCUDDER CLASSIC GROWTH 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 over 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.
SCUDDER (image)
