Scudder
Growth and
Income Fund
Annual Report
December 31, 1997
Pure No-Load(TM) Funds
A fund with a disciplined approach to common stock investing offering
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.
SCUDDER (logo)
<PAGE>
Scudder Growth and Income Fund
- --------------------------------------------------------------------------------
Date of Inception: 1929 Total Net Assets as of Ticker Symbol: SCDGX
12/31/97: $6.83 billion
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o For the 12-month period ended December 31, 1997, Scudder Growth and Income
Fund returned 30.31%, reflecting another strong year for the U.S. stock market.
o The Fund's ability to nearly keep pace with the market over the period is
impressive given its defensive characteristics.
o A continuing emphasis on stocks with above-average dividend yields helped the
Fund weather increased market volatility during the second half of 1997.
o The Fund maintained its overall 4 star risk-adjusted rating from Morningstar
among 2,332 domestic equity funds as of December 31, 1997.^1
Table of Contents
3 Letter from the Fund's President 24 Notes to Financial Statements
4 Performance Update 28 Report of Independent Accountants
5 Portfolio Summary 29 Tax Information
6 Portfolio Management Discussion 30 Shareholder Meeting Results
11 Glossary of Investment Terms 32 Officers and Trustees
12 Investment Portfolio 33 Investment Products and Services
20 Financial Statements 34 Scudder Solutions
23 Financial Highlights
^1 Source: Morningstar. Ratings are subject to change monthly and are
calculated from the Fund's three-, five-, and ten-year average annual
returns in excess of 90-day Treasury bill returns with appropriate fee
adjustments, and a risk factor that reflects Fund performance below 90-day
T-bill returns. In an investment category, 10% of funds receive 5 stars and
the next 22.5% receive 4 stars. In the domestic equity category, the Fund
received a 4 star rating for the three-year period, a 4 star rating for the
five-year period, and a 4 star rating for the ten-year period. Past
performance is no guarantee of future results.
2 - Scudder Growth and Income Fund
<PAGE>
Letter from the Fund's President
Dear Shareholders,
This report marks Scudder Growth and Income Fund's 69th year of operations,
and one of its most impressive. This 12-month period is the third consecutive
year that the Fund has returned more than 20%. However, the favorable investment
environment appears to have changed during the second half of 1997, with the
currency crisis in Asia and the prospect of slowing profit growth in the United
States. While we think the investment environment continues to remain healthy, a
return to performance that is closer to the 10% average long-term return for
stocks is more realistic going forward. We think you should keep this in mind
as you read the detailed discussion of the Fund's activities which begins on
page 6.
As you may know, the Fund's investment adviser has changed its name to
Scudder Kemper Investments, Inc. from Scudder, Stevens & Clark, Inc., reflecting
the acquisition of a majority interest in Scudder by Zurich Insurance Company,
and the combining of Scudder's business with that of Zurich Kemper Investments,
Inc. We think these changes are positive and should broaden our resources in
managing the Fund.
For those of you who are interested in new Scudder products, we recently
introduced a new industry sector fund, Scudder Financial Services Fund, one of
Scudder's Choice Series funds. The Fund seeks long-term growth by investing in
financial services companies in the U.S. and abroad. In addition, two other
Choice Series funds will be launched on March 2: Scudder Health Care Fund,
seeking long-term growth from health care companies located around the world,
and Scudder Technology Fund, pursuing long-term growth by investing in companies
that develop, produce, or distribute technology. For further information on
these new funds, please call 1-800-225-2470.
Thank you for your continued investment in Scudder Growth and Income Fund.
If you have any questions about your account, please call Scudder Investor
Relations at the toll-free number above, or visit our Internet Web site at
http://funds.scudder.com.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder Growth and Income Fund
3 - Scudder Growth and Income Fund
<PAGE>
PERFORMANCE UPDATE as of December 31, 1997
- ----------------------------------------------------------------
FUND INDEX COMPARISONS
- ----------------------------------------------------------------
Total Return
Period Growth --------------
Ended of Average
12/31/97 $10,000 Cumulative Annual
- --------------------------------------
SCUDDER GROWTH AND INCOME FUND
- --------------------------------------
1 Year $13,031 30.31% 30.31%
5 Year $24,768 147.68% 19.89%
10 Year $48,077 380.77% 17.00%
- --------------------------------------
S&P 500 INDEX
- --------------------------------------
1 Year $13,338 33.38% 33.38%
5 Year $25,160 151.60% 20.25%
10 Year $52,566 425.66% 18.04%
- -----------------------------------------------------------------
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 December 31
SCUDDER GROWTH AND INCOME FUND
Year Amount
- ----------------------
'87 $10,000
'88 $11,201
'89 $14,153
'90 $13,824
'91 $17,716
'92 $19,411
'93 $22,438
'94 $23,021
'95 $30,197
'96 $36,895
'97 $48,077
S&P 500 INDEX
Year Amount
- ----------------------
'87 $10,000
'88 $11,659
'89 $15,352
'90 $14,876
'91 $19,407
'92 $20,893
'93 $22,996
'94 $23,299
'95 $32,054
'96 $39,412
'97 $52,566
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 December 31
<TABLE>
<CAPTION>
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------
NET ASSET VALUE... $13.18 $ 14.14 $12.77 $15.76 $16.20 $17.24 $16.26 $20.23 $23.23 $27.33
INCOME DIVIDENDS.. $ .59 $ .69 $ .67 $ .55 $ .53 $ .45 $ .51 $ .56 $ .57 $ .58
CAPITAL GAINS
DISTRIBUTIONS..... $ - $ 1.77 $ .34 $ - $ .50 $ 1.01 $ .91 $ .48 $ .87 $ 2.20
FUND TOTAL
RETURN (%)........ 12.01 26.36 -2.33 28.16 9.57 15.59 2.60 31.18 22.18 30.31
INDEX TOTAL
RETURN (%)........ 16.56 31.63 -3.11 30.40 7.61 10.06 1.32 37.58 22.96 33.38
</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 December 31, 1997
- ---------------------------------------------------------------------------
ASSET ALLOCATION
- ---------------------------------------------------------------------------
Common Stocks 92%
Convertible Bonds 4%
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's approach to selecting
stocks with above-average
dividend yields provided
downside protection as volatility
increased during the second half
of the year.
- --------------------------------------------------------------------------
SECTOR DIVERSIFICATION
(Excludes 3% of Cash Equivalents)
- --------------------------------------------------------------------------
Financial 22%
Manufacturing 17%
Consumer Staples 11%
Utilities 9%
Communications 9%
Durables 8%
Energy 7%
Health 6%
Consumer Discretionary 5%
Other 6%
- ---------------------------------------------
100%
- ---------------------------------------------
A graph in the form of a pie chart appears here, illustrating the exact data
points in the above table.
Healthcare, energy, utilities, and
manufacturing sector holdings
outperformed the market over the
year.
- --------------------------------------------------------------------------
10 LARGEST EQUITY HOLDINGS
(20% OF PORTFOLIO)
- --------------------------------------------------------------------------
1. XEROX CORP.
Leading manufacturer of copiers and duplicators
2. Bell Atlantic Corp.
Telecommunications services
3. H. J. HEINZ CO.
Major manufacturer of processed foods
4. UNILEVER NV
Diversified conglomerate
5. TRW INC.
Defense electronics, automotive parts and systems
6. Ford Motor Co.
Leading automobile manufacturer
7. GTE CORP.
Nationwide telecommunications company
8. IMPERIAL CHEMICAL INDUSTRIES PLC
Leading international chemical producer
9. PHILIP MORRIS COMPANIES INC.
Tobacco, food products and brewing
10. Chase Manhattan Corp.
Commercial banking
Xerox a strong performer in
the first half--declined on
worries over the potential of
the currency crisis in
Southeast Asia.
For more complete details about the Fund's investment portfolio, see page 12. A
monthly Investment Portfolio Summary and quarterly Portfolio Holdings are
available upon request.
5 - Scudder Growth and Income Fund
<PAGE>
Portfolio Management Discussion
An Interview with Robert T. Hoffman
Lead Portfolio Manager,
Scudder Growth and Income Fund
Q: How would you sum up the year?
A: Given the shifting mood of the market in 1997, it's difficult. The first half
of the year was essentially a continuation of 1996 -- investors enjoyed the bull
market, but kept looking over their shoulders for signs of inflation. In March,
when the Federal Reserve (Fed) increased a key short-term interest rate, fears
of higher rates persisted given the Fed's history of taking multiple actions.
Q: What about the second half?
A: Several things changed in the second half. Inflation concerns were replaced
by concerns about a global slowdown in growth, driven by the economic collapse
and liquidity crunch in Asia, which threw local markets into a tailspin. By
October, no one seemed to have any conviction about the extent of the effect, if
any, the Asian contagion would have on markets closer to home. U.S. investors
overreacted to the news, resulting in almost daily market gyrations in both
directions.
Q: This sounds a bit grim.
A: I wouldn't say grim, but the "best of all worlds" environment has definitely
changed. Despite significant selloffs in August, October, and December, the S&P
still ended the year with a 30%-plus gain for the year. At the same time,
certain market sectors remained depressed, as investors rotated into more
defensive issues, and as shareholders pondered the long-term implications of the
Asian crisis. Questions centered on whether this was a temporary phenomenon, or
the beginning of a much longer, protracted period of global deflation. Also,
many wondered if the S&P price-to-earnings multiple of 22 could be sustained in
a slower growth environment.
Q: How did the Fund perform for the 12-month period ended December 31, 1997?
A: The Fund performed very well, in my opinion, returning 30.31% for the 12
months. This return represents an increase in the Fund's net asset value from
$23.23 at the end of 1996 to $27.33 on December 31, 1997, and includes income
distributions of $0.58 per share and a capital gain distribution of $2.20 per
share. This ranks the Fund among the top 26% (160th) of 611 growth and income
funds, as tracked by Lipper Analytical Services. Relative to the market, the
Fund's performance was roughly in keeping with the 33.38% return of the S&P 500
Index, a significant achievement, I think, considering the Fund's tendency to
only outperform in weak markets.
Q: Why invest in the Fund if it is only matching the performance of the markets?
A: You raise an important point. As you may know, performance numbers do not
tell the whole story about the Fund or investing in general, for that matter. If
all you are seeking is to match the returns of the stock market, then an index
fund may be what you need. However, Scudder Growth and Income Fund is not
designed to just mirror the market. We pursue a disciplined, relative yield
strategy that seeks to provide attractive returns in relation to the U.S. stock
market, that has resulted in lower risk than the market overall. We believe that
6 - Scudder Growth and Income Fund
<PAGE>
this strategy is appropriate for many investors, especially those who are
seeking lower volatility and consistent returns over the long term. The
environment has been ideal for stock investors over the last seven years;
however, when we enter a more difficult environment, we believe many investors
will be looking for funds that hold up better than the market indexes.
Q: How did the Fund's top holdings perform?
A: The majority of our largest holdings significantly outperformed the S&P
during the year. Near the close of the period, three of our top performers gave
back some of their gains, most notably Philips Electronics and Xerox. Although
we had been taking profits in both names to reduce our exposure, we were not
aggressive enough to dampen the negative impact these holdings had on the Fund's
returns. We would stress, however, that despite the recent weakness, both
stocks, as well as the majority of our top holdings, still dramatically
outperformed the market for the 12-month period.
Q: How did the Fund's "relative yield" discipline hold up in this environment?
A: Excluding the impact of the two stocks listed above, the strategy benefited
the portfolio. A lack of technology holdings (due to their characteristically
low dividend yields) cushioned the Fund from many of the profit warnings out of
Silicon Valley that stemmed from the crisis in Asia. Our strategy of increasing
the electric utility weighting, in response to a 10-year peak in the industry's
relative yield, proved timely as these companies, with largely domestically
generated earnings, were immune from the multiple contractions from slower
overseas growth forecasts. We continue to believe that if 1998 proves a
difficult year for profits, our strategy of investing in companies with low
expectations, evidenced by high relative yields, should help to provide a
degree of protection from further downdrafts.
Q: Expanding profit growth contributed to the prolonged rise in U.S. stock
prices. How long can it continue?
A: The key to long-term sustainable growth eventually rests on top line revenue
growth. Internal restructuring efforts, asset swaps, and financial engineering
are only short-term measures for boosting profits. If one believes that slower
growth overseas will not only dampen demand for U.S. goods, but that it will
also bring continued pricing pressure (as the U.S. is flooded with cheap imports
in the wake of Asian currency devaluations), we may not have seen the last of
the bumps in the road.
Q: What areas contributed the most to Fund performance over the year?
A: Despite the sector's weak performance in 1997, the Fund's health care
selections performed very well, due primarily to our weighting in drug stocks.
As prices rose, we reduced our weighting by eliminating Warner Lambert and
trimming our position in Schering-Plough. The Fund benefited from the fact that
all but one of our health care holdings significantly outperformed the S&P for
the year. I should point out, however, that many U.S. drug companies have
7 - Scudder Growth and Income Fund
<PAGE>
-------------------------------------------------------
Higher Yields ...
...and Attractive Valuations
-------------------------------------------------------
Fund S&P 500
Yield 2.1% 1.6%^1
The Fund's dividend yield
exceeded the market as measured
by the S&P 500.
-------------------------------------------------------
Price-to-Earnings per share 17.6x 21.8x
(current calendar year as of 12/31/97)
The Fund's below-average valuation
provided downside protection as
volatility increased during the period.
-------------------------------------------------------
^1 The S&P 500 yield does not reflect the effect of fund
expenses and transaction costs which would otherwise lower
its yield.
reached full valuation, as market hype over new product-driven growth has worked
its way into a number of stocks. As enthusiasm increases, so does the risk of
disappointment.
Q: Energy stocks were another solid contributor to portfolio performance.
What worked well?
A: Our foreign energy holdings -- Elf Aquitaine, Total, and YPF -- outperformed
the market for the full year, while one of our newer holdings, Williams
Companies, with a 22.4% return in the fourth quarter, provided a haven in a
nervous market. As Williams Companies' domestic earnings base cushioned the
portfolio from negative news overseas, investors began to take notice of its
growing communications subsidiary, sporting growth rates twice that of the core
business.
Q: Last year at this time you mentioned building up the Fund's underweighting
in electric utilities. How has this strategy been working?
A: Electric utilities were a modest drag on portfolio performance for most of
the year, but our increasingly overweight position in this area proved
particularly rewarding, especially toward the end of the year. Not only did this
weighting (at 8% of assets at year-end) provide defensive benefits during the
market corrections, but our individual stock selection had a meaningfully
positive impact for the year. The resolution of regulatory uncertainty in
California and Illinois boosted the share prices of Pacific Gas & Electric and
Unicom. Despite the recent outperformance of the utility sector, we would point
out that overall valuations remain well below normal. Thus, we have continued to
add to this group in aggregate.
Q: How did the manufacturing sector perform?
A: This sector held back performance, due primarily to price weakness in two of
the largest holdings, Philips Electronics and Xerox, as mentioned earlier. These
stocks did, however, outperform for the 12 months with returns of 53% and 43%,
respectively. We had been trimming both positions in the second half of the year
as both a risk control measure (specifically to reduce a large portfolio
weighting that had become even larger through outperformance) and based in part
on relatively full valuations. Ultimately, we believe that both stocks offer
8 - Scudder Growth and Income Fund
<PAGE>
attractive upside opportunity through new product rollouts, in the case of
Xerox, and asset restructuring, in the case of Philips.
Q: The Fund's holdings of financial stocks held back performance somewhat,
despite the strong performance of this sector. Why?
A: Our REIT (real estate investment trust) holdings lagged other companies in
the financial sector, specifically U.S. banks, which provided very strong
returns. However, securities such as REITs were not hit as hard by concerns over
the Asian crisis because of their earnings leverage to the U.S. market. We
believe that the Fund's REIT holdings will continue to provide both downside
protection from further market volatility and upside potential through
consolidation and acquisition-driven growth.
Q: How did you manage the portfolio in the increasingly volatile market?
A: Our investment discipline has been an important tool in controlling exposure
to price volatility. It has helped to steer us toward undervalued stocks that
have defensive characteristics in volatile and declining markets. Our model's
"buy" signals in the electric utility and REIT sectors are evidence of this. In
a more general sense, however, we continue to ask ourselves what each stock
price is reflecting, both from a "big picture" perspective and on an individual,
company-by-company basis.
9 - Scudder Growth and Income Fund
<PAGE>
Q: Are we entering a period of slower global growth?
A: Our short answer is, yes. Is this expectation adequately reflected in the
U.S. equity market? Probably not. While slower global growth may have immediate
implications for corporate profitability and stock prices, we take the long view
when it comes to investing the portfolio. As a result, we continue to remain
focused on those stocks which we believe already reflect a difficult operating
environment, since they are less likely to disappoint further. We think our
relative yield approach, supported by the fundamental research of our analysts,
will ultimately benefit the Fund in a variety of market environments by
providing downside protection and the potential for upside surprises.
Scudder Growth and
Income Fund:
A Team Approach to Investing
Scudder Growth and Income Fund is managed by a team of Scudder Kemper
Investments, Inc. (SKI) professionals who each play an important role in the
Fund's management process. Team members work together to develop investment
strategies and select securities for the Fund's portfolio. They are supported
by a large staff of economists, research analysts, traders, and other
investment specialists who work in our offices across the United States and
abroad. We believe our team approach benefits Fund investors by bringing
together many disciplines and leveraging SKI's extensive resources.
Lead Portfolio Manager Robert T. Hoffman has had responsibility for setting
the Fund's stock investing strategy and overseeing the Fund's day-to-day
operations since 1991. Rob joined SKI in 1990 and has 13 years of investment
industry experience. Kathleen T. Millard, Portfolio Manager, has focused on
strategy and stock selection since she joined the firm and the team in 1991.
Benjamin W. Thorndike, Portfolio Manager, is the Fund's chief analyst and
strategist for convertible securities. Ben joined SKI in 1983 as a portfolio
manager and the Fund in 1986. Lori Ensinger, Portfolio Manager, joined the
Fund in 1996 and focuses on stock selection and investment strategy. Lori has
worked in the investment industry since 1983 and at SKI since 1993.
10 - Scudder Growth and Income Fund
<PAGE>
Glossary of Investment Terms
DIVIDEND YIELD With stocks, a company's payment of earnings to
shareholders divided by its share price. For
example, a stock that sells for $10 and pays
annual dividends totaling $1 has a yield of 10%;
if the stock price goes up to $20, the yield
would fall to 5%.
FUNDAMENTAL RESEARCH Analysis of a company's financial statements to
project future stock price changes. Considers
past records of sales and earnings as well as
the future impact of products, consumer markets,
and management in weighting a company's
prospects. Distinct from technical analysis,
which evaluates the attractiveness of a stock
based on historical price and trading volume
movements.
MARKET CAPITALIZATION The value of a company's outstanding shares of
common stock, determined by multiplying the
number of shares outstanding by the share price
(shares x price = market capitalization). The
universe of publicly-traded companies is
frequently divided into large-, mid-, and
small-capitalizations. "Large-cap" stocks tend
to be more liquid and less volatile, while
"small-cap" stocks in the aggregate have more
potential for earnings growth and are typically
more volatile.
OVER/UNDER WEIGHTING Refers to the allocation of assets -- usually by
sector, industry, or country -- within an
investment portfolio, relative to a benchmark
index or investment universe.
PRICE-EARNINGS RATIO A widely used gauge of a stock's valuation that
indicates what investors are (P-E or earnings
multiple) paying for a company's earning power
at the current stock price. Often based on a
company's projected earnings for the coming 12
months. A higher "earnings multiple" indicates
higher expected earnings growth and greater
risk; a lower multiple is usually associated
with mature or out-of-favor companies, and lower
stock price volatility.
VALUE STOCK A company whose stock price does not fully
reflect its intrinsic value. A stock's relative
value is often measured by price-earnings ratio,
price-book value ratio, dividend yield, or some
other valuation measure, relative to its
industry or the market overall. Value stocks
tend to display lower price volatility and carry
higher dividend yields.
(Sources: SKI; Barron's Dictionary of Finance and Investment Terms)
11 - Scudder Growth and Income Growth
<PAGE>
Investment Portfolio as of December 31, 1997
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreement 0.1%
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 12/31/97 at 6.5%,
to be repurchased at $3,082,113 on 1/2/98, collateralized by a $2,287,000 U.S. ------------
Treasury Bond, 8.75%, 8/15/20 (Cost $3,081,000) ....................................... 3,081,000 3,081,000
------------
Short-Term Investments 2.6%
- ------------------------------------------------------------------------------------------------------------------------------
Dresdner US Finance Inc., 5.74%, 1/5/98 ................................................. 40,000,000 39,974,489
FCar Owner Trust I, 5.61%, 1/8/98 ....................................................... 50,000,000 49,945,458
JP Morgan, 5.80%, 1/8/98 ................................................................ 30,000,000 29,966,167
New Center Asset Trust, 5.89%, 1/16/98 .................................................. 40,000,000 39,901,833
Ford Motor Credit Co., 5.71%, 1/8/98 .................................................... 20,000,000 19,977,794
- ------------------------------------------------------------------------------------------------------------------------------
Total Short-Term Investments (Cost $179,765,741) 179,765,741
- ------------------------------------------------------------------------------------------------------------------------------
Corporate Bonds 0.2%
- ------------------------------------------------------------------------------------------------------------------------------
Miscellaneous ------------
Omnicom Group Inc, 1/6/13 (Cost $12,539,063) ............................................ 12,500,000 13,125,000
------------
Convertible Bonds 3.6%
- ------------------------------------------------------------------------------------------------------------------------------
Consumer Discretionary 0.5%
Department & Chain Stores
Federated Department Stores, Inc. Debenture, 5%, 10/1/03 ................................ 11,700,000 15,795,000
Home Depot Inc., 3.25%, 10/1/01 ......................................................... 16,500,000 22,316,250
------------
38,111,250
------------
Health 0.1%
Pharmaceuticals
Sandoz Capital BVI Ltd., Debenture, 2%, 10/6/02 ......................................... 5,810,000 8,874,775
------------
Financial 1.2%
Banks 0.9%
Deutsche Bank Financial Inc., Convertible to Daimler Benz AG shares, Zero Coupon, 2/12/17 97,410,000 43,347,450
MBL International Finance Bermuda Trust, 3%, 11/30/02 ................................... 16,140,000 16,753,320
------------
60,100,770
------------
Real Estate 0.3%
Security Capital Corp., Debenture, 6.5%, 3/29/16 (b) (c) ................................ 16,750,000 20,183,031
------------
Service Industries 0.7%
Miscellaneous Commercial Services 0.4%
Tyco International, Ltd., Liquid Yield Option Note, 7/6/10 .............................. 24,000,000 29,370,000
------------
Miscellaneous Consumer Services 0.3%
CUC International Inc., 3%, 2/15/02 ..................................................... 14,000,000 17,482,500
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 - Scudder Growth and Income Growth
<PAGE>
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Durables 0.1%
Automobiles
Magna International, Inc., Debenture, 5%, 10/15/02 ...................................... 6,700,000 7,989,750
------------
Manufacturing 1.0%
Diversified Manufacturing
Loews Corp., 3.125%, 9/15/07 ............................................................ 60,021,000 60,471,158
Thermo Electron Corp., 4.25%, 1/1/03 .................................................... 5,000,000 6,275,000
------------
66,746,158
- ------------------------------------------------------------------------------------------------------------------------------
Total Convertible Bonds (Cost $206,770,373) 248,858,234
- ------------------------------------------------------------------------------------------------------------------------------
Shares
- ------------------------------------------------------------------------------------------------------------------------------
Convertible Preferred Stocks 1.4%
- ------------------------------------------------------------------------------------------------------------------------------
Consumer Discretionary 0.3%
Department & Chain Stores
Kmart 7.75% ............................................................................. 386,000 19,927,250
------------
Financial 0.1%
Consumer Finance 0.0%
Advanta Corp. 6.75% ..................................................................... 7,500 201,563
------------
Real Estate 0.1%
Security Capital Industrial Trust "B", 7% ............................................... 308,300 9,827,063
------------
Manufacturing 0.3%
Containers & Paper 0.0%
International Paper Co. 5.25% ........................................................... 47,000 2,279,500
------------
Industrial Specialty 0.2%
Cooper Industries, Inc. 6% .............................................................. 606,300 11,064,975
------------
Office Equipment/Supplies 0.1%
Ikon Office Solutions, Inc., 5.04% ...................................................... 96,100 6,510,775
------------
Metals & Minerals 0.2%
Precious Metals
Freeport McMoRan Copper & Gold, Inc., Cum. $1.25 ........................................ 500,000 10,843,750
------------
Consumer Staples 0.5%
Food & Beverage
Ralston Purina Group, 7%, 8/1/00 ........................................................ 470,000 32,723,750
- ------------------------------------------------------------------------------------------------------------------------------
Total Convertible Preferred Stocks (Cost $87,352,946) 93,378,626
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 - Scudder Growth and Income Growth
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Common Stocks 92.1%
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Consumer Discretionary 4.3%
Department & Chain Stores
J.C. Penney Co., Inc. ................................................................... 1,287,700 77,664,406
May Department Stores ................................................................... 772,900 40,722,169
Mercantile Stores, Inc. ................................................................. 1,012,900 61,660,288
Rite Aid Corp. .......................................................................... 987,600 57,959,775
Sears, Roebuck & Co. .................................................................... 1,205,500 54,548,875
------------
292,555,513
------------
Consumer Staples 10.6%
Alcohol & Tobacco 2.3%
Philip Morris Companies, Inc. ........................................................... 2,855,100 129,371,719
RJR Nabisco Holdings Corp. .............................................................. 788,580 29,571,750
------------
158,943,469
------------
Consumer Electronic & Photographic Products 1.0%
Whirlpool Corp. ......................................................................... 1,244,000 68,420,000
------------
Food & Beverage 4.8%
General Mills, Inc. ..................................................................... 559,500 40,074,188
H.J. Heinz Co. .......................................................................... 2,858,750 145,260,234
Unilever NV ............................................................................. 400,000 24,658,480
Unilever NV (New York shares) ........................................................... 1,885,200 117,707,175
------------
327,700,077
------------
Package Goods/Cosmetics 2.5%
Avon Products, Inc. ..................................................................... 1,070,100 65,677,388
Kimberly-Clark Corp. .................................................................... 2,084,000 102,767,250
------------
168,444,638
------------
Health 5.5%
Pharmaceuticals
American Home Products Corp. ............................................................ 705,800 53,993,700
Baxter International, Inc. .............................................................. 1,088,100 54,881,044
Bristol-Myers Squibb Co. ................................................................ 1,023,600 96,858,150
Schering-Plough Corp. ................................................................... 1,002,200 62,261,675
SmithKline Beecham PLC (ADR) ............................................................ 1,180,400 60,716,825
Zeneca Group PLC ........................................................................ 1,356,100 48,030,458
------------
376,741,852
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 - Scudder Growth and Income Growth
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Communications 8.3%
Telephone/Communications
Alltel Corp. ............................................................................ 1,825,400 74,955,488
Bell Atlantic Corp. ..................................................................... 1,623,348 147,724,668
BellSouth Corp. ......................................................................... 1,541,400 86,800,088
Frontier Corp. .......................................................................... 2,033,100 48,921,469
GTE Corp. ............................................................................... 2,504,700 130,870,575
Sprint Corp. ............................................................................ 1,154,100 67,659,113
Telecom Corp. of New Zealand ............................................................ 1,901,000 9,216,860
------------
566,148,261
------------
Financial 20.2%
Banks 10.6%
AmSouth Bancorp ......................................................................... 352,500 19,145,156
Banc One Corp. .......................................................................... 1,169,300 63,507,606
BankAmerica Corp. ....................................................................... 223,000 16,279,000
Bankers Trust New York Corp. ............................................................ 570,200 64,111,863
Chase Manhattan Corp. ................................................................... 1,168,300 127,928,850
CoreStates Financial Corp. .............................................................. 1,239,600 99,245,475
First Chicago NBD Corp. ................................................................. 273,600 22,845,600
First Union Corp. ....................................................................... 1,274,600 65,323,250
J.P. Morgan & Co., Inc. ................................................................. 503,300 56,809,988
KeyCorp ................................................................................. 869,800 61,592,713
NationsBank Corp. ....................................................................... 1,073,400 65,276,138
US Bancorp .............................................................................. 584,700 65,449,856
------------
727,515,495
------------
Insurance 3.7%
EXEL, Ltd. (ADR) ........................................................................ 916,000 58,051,500
Lincoln National Corp. .................................................................. 968,200 75,640,625
Mid Ocean, Ltd. ......................................................................... 702,800 38,126,900
Safeco Corp. ............................................................................ 1,700,300 82,889,625
------------
254,708,650
------------
Other Financial Companies 1.0%
Federal National Mortgage Association ................................................... 649,900 37,084,919
Fleet Financial Group, Inc. ............................................................. 473,200 35,460,425
------------
72,545,344
------------
Real Estate 4.8%
Avalon Properties, Inc. (REIT) .......................................................... 467,100 14,450,906
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 - Scudder Growth and Income Growth
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Camden Property Trust (REIT) ............................................................ 338,500 10,493,500
Charles E. Smith Residential Realty, Inc. (REIT) ........................................ 73,800 2,619,900
General Growth Properties, Inc. (REIT) (d) .............................................. 1,939,800 70,075,275
Health Care Property Investment Inc. (REIT) ............................................. 359,300 13,586,031
Mark Centers Trust (REIT) ............................................................... 31,400 282,600
Meditrust Corp. (Paired Stock) (REIT) ................................................... 562,829 20,613,612
Nationwide Health Properties Inc. (REIT) ................................................ 804,800 20,522,400
Prentiss Properties Trust (REIT) ........................................................ 1,000,000 27,937,500
Post Properties Inc. (REIT) ............................................................. 61,900 2,514,688
Security Capital Corp. (b) (c) .......................................................... 15,968 22,201,334
Security Capital Industrial Trust (REIT) ................................................ 2,611,645 64,964,669
Security Capital Industrial Trust Warrants (expire 9/18/98)* ............................ 82,478 433,010
Security Capital US Realty .............................................................. 2,889,152 41,025,958
Spieker Properties, Inc. (REIT) ......................................................... 150,000 6,431,250
Vornado Realty Trust (REIT) ............................................................. 177,600 8,336,100
------------
326,488,733
------------
Miscellaneous 0.1%
Jardine Strategic Holdings Ltd. ......................................................... 2,015,611 5,240,589
------------
Service Industries 0.3%
EDP Services 0.1%
First Data Corp. ........................................................................ 209,606 6,130,976
------------
Environmental Services 0.2%
Browning Ferris Industries .............................................................. 378,600 14,008,200
------------
Durables 7.3%
Aerospace 1.5%
Lockheed Martin Corp. ................................................................... 472,328 46,524,308
Rockwell International Corp. ............................................................ 1,149,600 60,066,600
------------
106,590,908
------------
Automobiles 4.8%
Dana Corp. .............................................................................. 1,867,800 88,720,500
Echlin, Inc. ............................................................................ 1,538,800 55,685,325
Ford Motor Co. .......................................................................... 2,748,200 133,802,988
Meritor Automotive, Inc. ................................................................ 2,245,900 47,304,269
------------
325,513,082
------------
Construction/Agricultural Equipment 1.0%
PACCAR, Inc. ............................................................................ 1,288,100 67,625,250
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 - Scudder Growth and Income Growth
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Manufacturing 14.8%
Chemicals 4.5%
Akzo-Nobel NV ........................................................................... 461,645 79,593,180
Dow Chemical Co. ........................................................................ 484,700 49,197,050
Eastman Chemical Co. .................................................................... 852,100 50,753,206
Imperial Chemical Industries PLC ........................................................ 8,357,000 130,525,798
------------
310,069,234
------------
Containers & Paper 0.5%
Boise Cascade Corp. ..................................................................... 48,140 1,456,235
Westvaco Corp. .......................................................................... 1,090,300 34,276,306
------------
35,732,541
------------
Diversified Manufacturing 3.1%
Olin Corp. .............................................................................. 1,351,200 63,337,500
St. Joe Paper Co. ....................................................................... 93,100 8,425,550
TRW Inc. ................................................................................ 2,568,000 137,067,000
------------
208,830,050
------------
Electrical Products 2.4%
Philips Electronics NV .................................................................. 1,720,300 103,165,399
Philips Electronics NV (New York shares) ................................................ 387,700 23,455,850
Thomas & Betts Corp. .................................................................... 830,800 39,255,300
------------
165,876,549
------------
Industrial Specialty 0.2%
Corning Inc. ............................................................................ 320,300 11,891,138
------------
Machinery/Components/Controls 0.2%
SKF AB "B" (Free) ....................................................................... 785,000 16,711,385
------------
Office Equipment/Supplies 2.3%
Xerox Corp. ............................................................................. 2,114,400 156,069,150
------------
Specialty Chemicals 1.6%
ARCO Chemical Co. ....................................................................... 180,000 8,403,750
BetzDearborn Inc. ....................................................................... 613,800 37,480,163
Witco Corp. ............................................................................. 1,537,500 62,749,219
------------
108,633,132
------------
Technology 0.4%
Electronic Components/Distributors
AMP Inc. ................................................................................ 652,100 27,388,200
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17 - Scudder Growth and Income Growth
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Energy 6.6%
Oil Companies 5.9%
Lyondell Petrochemical Co. .............................................................. 948,900 25,145,850
Pennzoil Co. ............................................................................ 458,600 30,640,213
Royal Dutch Petroleum Co. (New) ......................................................... 815,600 44,195,325
Societe Nationale Elf Aquitaine ......................................................... 731,000 85,000,000
Texaco Inc. ............................................................................. 1,567,800 85,249,125
Total S.A. "B" .......................................................................... 510,323 55,525,177
Total S.A. (ADR) ........................................................................ 396,253 21,992,042
YPF S.A. "D" (ADR) ...................................................................... 1,580,200 54,023,088
------------
401,770,820
------------
Oil/Gas Transmission 0.7%
Williams Cos., Inc. ..................................................................... 1,778,800 50,473,450
------------
Metals & Minerals 1.5%
Steel & Metals
Allegheny Teledyne Inc. ................................................................. 2,398,315 62,056,389
Freeport McMoRan Copper & Gold, Inc. "A" ................................................ 542,590 8,308,409
J & L Specialty Steel, Inc. ............................................................. 1,709,700 17,203,856
Phelps Dodge Corp. ...................................................................... 268,400 16,707,900
------------
104,276,554
------------
Construction 2.9%
Building Materials 0.4%
Martin Marietta Materials, Inc. ......................................................... 660,000 24,131,250
Forest Products 2.5%
Georgia Pacific (Timber Group) .......................................................... 1,146,100 26,002,144
Georgia Pacific Corp. ................................................................... 1,207,200 73,337,400
Louisiana-Pacific Corp. ................................................................. 417,200 7,926,800
Weyerhaeuser Co. ........................................................................ 1,323,400 64,929,313
------------
172,195,657
------------
Transportation 1.1%
Railroads
CSX Corp. ............................................................................... 1,162,400 62,769,600
Norfolk Southern Corp. .................................................................. 360,300 11,101,744
------------
73,871,344
------------
Utilities 8.3%
Electric Utilities
CINergy Corp. ........................................................................... 2,159,100 82,720,519
</TABLE>
The accompanying notes are an integral part of the financial statements.
18 - Scudder Growth and Income Growth
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CMS Energy Corp. ........................................................................ 227,600 10,028,625
Duke Energy Co. ......................................................................... 1,794,436 99,366,894
Entergy Corp. ........................................................................... 828,200 24,794,238
Long Island Lighting Co. ................................................................ 982,100 29,585,763
Pacific Gas & Electric Co. .............................................................. 1,773,200 53,971,775
PacifiCorp .............................................................................. 2,147,400 58,650,863
PowerGen PLC ............................................................................ 5,012,710 65,202,343
PowerGen PLC (ADR) ...................................................................... 500,100 26,567,813
Southern Company ........................................................................ 587,200 15,193,800
Unicom Corp. ............................................................................ 2,155,100 66,269,325
Wisconsin Energy Corp. .................................................................. 1,206,700 34,692,625
------------
567,044,583
- ------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $4,423,136,813) 6,300,286,074
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $4,912,645,936) (a) 6,838,494,675
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Non income producing.
(a) The cost for federal income tax purposes was $4,908,855,927. At December
31, 1997, net unrealized appreciation for all securities based on tax cost
was $1,929,638,748. This consisted of aggregate gross unrealized
appreciation for all securities in which there was an excess of market
value over tax cost of $1,949,785,900 and aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost
over market value of $20,147,152.
(b) Securities valued in good faith by the Valuation Committee of the Board of
Trustees at fair value amounted to $42,384,365 (.62% of net assets). Their
values have been estimated by the Board of Trustees 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. The cost of
these securities at December 31, 1997 aggregated $33,500,000. These
securities may also have certain restrictions as to resale.
(c) Restricted Securities -- securities which have not been registered with
the Securities and Exchange Commission under the Securities Act of 1933.
Information concerning such restricted securities at December 31, 1997 is
as follows:
Security Acquisition Date Cost ($)
-------- ---------------- --------
Security Capital Corp., Debenture,
6.5%, 3/29/16 4/18/96 16,750,000
Security Capital Corp. 4/18/96 16,750,000
(d) Affiliated Issuer (See Notes to Financial Statements)
The accompanying notes are an integral part of the financial statements.
19 - Scudder Growth and Income Growth
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of December 31, 1997
<TABLE>
<CAPTION>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investments, at market:
Unaffiliated issuers (identified cost $4,864,004,024) ............ $6,768,419,400
Affiliated issuers (identified cost $48,641,912) ................. 70,075,275
Total investments, at market value ----------------
(identified cost $4,912,645,936) ................................. 6,838,494,675
Receivable for investments sold ..................................... 5,297,223
Dividends and interest receivable ................................... 19,970,878
Receivable for Fund shares sold ..................................... 13,019,077
Receivable for foreign tax recoverable .............................. 1,176,256
Other assets ........................................................ 62,132
----------------
Total assets ........................................................ 6,878,020,241
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased ................................... 30,994,705
Payable for Fund shares redeemed .................................... 8,059,245
Accrued management fee .............................................. 2,547,917
Other payables and accrued expenses ................................. 2,834,252
----------------
Total liabilities ................................................... 44,436,119
-------------------------------------------------------------------------------------------
Net assets, at market value $6,833,584,122
-------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Undistributed net investment income ................................. 5,816,401
Net unrealized appreciation (depreciation) on:
Investments ...................................................... 1,925,848,739
Foreign currency related transactions ............................ (27,735)
Accumulated net realized gain ....................................... 66,347,065
Paid-in capital ..................................................... 4,835,599,652
-------------------------------------------------------------------------------------------
Net assets, at market value $6,833,584,122
-------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, offering and redemption price per share
($6,833,584,122 / 250,081,688 outstanding shares of beneficial
interest, $.01 par value, unlimited number of shares ---------------
authorized) ...................................................... $27.33
---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
20 - Scudder Growth and Income Growth
<PAGE>
Statement of Operations
year ended December 31, 1997
<TABLE>
<CAPTION>
Investment Income
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Income:
Dividends--Unaffiliated issuers (net of foreign taxes withheld of
$3,182,189) ...................................................... $ 149,288,227
Dividends--Affiliated issuers ....................................... 2,985,748
Interest ............................................................ 20,259,034
-----------------
172,533,009
-----------------
Expenses:
Management fee ...................................................... 26,072,293
Services to shareholders ............................................ 13,568,308
Custodian and accounting fees ....................................... 1,232,691
Trustees' fees and expenses ......................................... 43,737
Reports to shareholders ............................................. 799,110
Registration fees ................................................... 648,393
Auditing ............................................................ 56,292
Legal ............................................................... 46,728
Other ............................................................... 106,112
-----------------
42,573,664
--------------------------------------------------------------------------------------------
Net investment income 129,959,345
--------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments ......................................................... 492,380,210
Foreign currency related transactions ............................... (432,558)
-----------------
491,947,652
-----------------
Net unrealized appreciation (depreciation) during the period on:
Investments ......................................................... 808,740,214
Foreign currency related transactions ............................... (42,092)
-----------------
808,698,122
--------------------------------------------------------------------------------------------
Net gain on investment transactions 1,300,645,774
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $1,430,605,119
--------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
21 - Scudder Growth and Income Growth
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Years Ended December 31,
Increase (Decrease) in Net Assets 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations:
Net investment income .................................................. $ 129,959,345 $ 99,189,004
Net realized gain from investment transactions ......................... 491,947,652 212,741,586
Net unrealized appreciation on investment transactions during
the period .......................................................... 808,698,122 415,550,751
---------------- -----------------
Net increase in net assets resulting from operations ................... 1,430,605,119 727,481,341
---------------- -----------------
Distributions to shareholders from:
Net investment income .................................................. (126,973,242) (95,258,805)
---------------- -----------------
Net realized gains on investment transactions .......................... (499,553,699) (149,937,532)
---------------- -----------------
Fund share transactions:
Proceeds from shares sold .............................................. 2,222,518,008 1,116,527,351
Net asset value of shares issued to shareholders in
reinvestment of distributions ....................................... 585,826,807 224,992,117
Cost of shares redeemed ................................................ (965,320,076) (698,530,847)
---------------- -----------------
Net increase in net assets from Fund share transactions ................ 1,843,024,739 642,988,621
---------------- -----------------
Increase in net assets ................................................. 2,647,102,917 1,125,273,625
Net assets at beginning of period ...................................... 4,186,481,205 3,061,207,580
Net assets at end of period (including undistributed net ---------------- -----------------
investment income of $5,816,401 and $6,401,797, respectively) ....... $6,833,584,122 $4,186,481,205
---------------- -----------------
Other Information
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period .............................. 180,244,068 151,318,741
---------------- -----------------
Shares sold ............................................................ 84,125,982 51,282,565
Shares issued to shareholders in reinvestment of distributions ......... 22,057,223 9,848,328
Shares redeemed ........................................................ (36,345,585) (32,205,566)
---------------- -----------------
Net increase in Fund shares ............................................ 69,837,620 28,925,327
---------------- -----------------
Shares outstanding at end of period .................................... 250,081,688 180,244,068
---------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
22 - Scudder Growth and Income Growth
<PAGE>
Financial Highlights
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
Years Ended December 31,
1997(d) 1996(d) 1995 1994 1993(b) 1992 1991 1990 1989 1988
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of ----------------------------------------------------------------------------------------------
period .......................... $23.23 $20.23 $16.26 $17.24 $16.20 $15.76 $12.77 $14.14 $13.18 $12.31
Income from investment ----------------------------------------------------------------------------------------------
operations:
Net investment income .............. .62 .60 .55 .49 .49 .57 .57 .65 .67 .60
Net realized and unrealized gain
(loss) on investment
transactions .................... 6.26 3.84 4.46 (.05) 2.01 .90 2.97 (1.01) 2.75 .86
----------------------------------------------------------------------------------------------
Total from investment operations ... 6.88 4.44 5.01 .44 2.50 1.47 3.54 (.36) 3.42 1.46
Less distributions from: ----------------------------------------------------------------------------------------------
Net investment income .............. (.58) (.57) (.56) (.51) (.45) (.53) (.55) (.67) (.69) (.59)
Net realized gains on investment
transactions .................... (2.20) (.87) (.48) (.91) (1.01) (.50) -- (.34) (1.77) --
----------------------------------------------------------------------------------------------
Total distributions ................ (2.78) (1.44) (1.04) (1.42) (1.46) (1.03) (.55) (1.01) (2.46) (.59)
----------------------------------------------------------------------------------------------
Net asset value, ----------------------------------------------------------------------------------------------
end of period ................... $27.33 $23.23 $20.23 $16.26 $17.24 $16.20 $15.76 $12.77 $14.14 $13.18
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return (%) ................... 30.31 22.18 31.18 2.60 15.59 9.57 28.16 (2.33) 26.36 12.01
Ratios and Supplemental Data
Net assets, end of period
($ millions) .................... 6,834 4,186 3,061 1,992 1,624 1,166 723 491 490 402
Ratio of operating expenses to
average net assets (%) .......... .76 .78 .80 .86 .86 .94(a) .97 .95 .87 .92
Ratio of net investment income to
average net assets (%) .......... 2.31 2.77 3.10 2.98 2.93 3.60 4.03 5.03 4.47 4.63
Portfolio turnover rate (%) ........ 22.2 26.6 26.9 42.3 35.5 27.5 44.7 64.7 76.6 47.6
Average commission rate paid (c) ... $.0605 $.0572 -- -- -- -- -- -- -- --
</TABLE>
(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 years beginning on or after January 1, 1996.
(d) Based on monthly average shares outstanding during the period.
23 - Scudder Growth and Income Growth
<PAGE>
Notes to Financial Statements
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
accounting principles which require the use of management estimates. The
policies described below are followed consistently by the Fund in the
preparation of its financial statements.
Security Valuation. 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 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 most recent 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 other than money market securities with an original
maturity over 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. Money market instruments purchased with an original
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 repurchase price.
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, as amended, 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 10% of the value of the Fund's total assets would be invested
in restricted securities. The aggregate fair value of restricted securities at
December 31, 1997, amounted to $42,384,365 which represents .62% of net assets.
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.
24 - Scudder Growth and Income Growth
<PAGE>
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, as amended, which are applicable to regulated
investment companies and to distribute all of its taxable income to its
shareholders. The Fund accordingly paid no federal income taxes and no provision
for federal income taxes was required.
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 year ended December 31, 1997, purchases and sales of investment
securities (excluding short-term investments) aggregated $2,411,425,070 and
$1,194,595,274, respectively.
C. Related Parties
Under the Investment Management Agreement between the Fund and Scudder, Stevens
& Clark, Inc. ("Scudder" or the "Adviser") which was in effect prior to May 1,
1997 (the "Agreement"), the Fund agreed to pay the Adviser an annual rate of
approximately 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, 0.45% on the next $1,000,000,000, and 0.425% of such
net assets in excess of $3,000,000,000, computed and accrued daily and payable
monthly.
Effective May 1, 1997, the Fund, as approved by the Fund's Board of Trustees,
adopted a new Investment Management Agreement (the "Management Agreement") with
Scudder. Under the Management Agreement the Adviser directs the
25 - Scudder Growth and Income Growth
<PAGE>
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 Management Agreement. The
management fee payable under the Management Agreement is equal to an annual rate
of approximately 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, 0.45% on the next $1,000,000,000, 0.425% on the next
$1,500,000,000, and 0.405% of such net assets in excess of $4,500,000,000,
computed and accrued daily and payable monthly.
Effective December 31, 1997, Scudder and The Zurich Insurance Company
("Zurich"), an international insurance and financial services organization,
formed a new global investment organization by combining Scudder's business with
that of Zurich's subsidiary, Zurich Kemper Investments, Inc. As a result of the
transaction, Scudder changed its name to Scudder Kemper Investments Inc.
("Scudder Kemper"). The transaction between Scudder and Zurich resulted in the
termination of the Fund's Investment Management Agreement with Scudder. However,
a new Investment Management Agreement between the Fund and Scudder Kemper was
approved by the Fund's Board of Trustees and by the Fund's Shareholders. The
Management Agreement, which is effective December 31, 1997, is the same in all
material respects as the corresponding previous Investment Management Agreement,
except that Scudder Kemper is the new investment adviser to the Fund. For the
year ended December 31, 1997, the fee pursuant to these agreements amounted to
$26,072,293, which was equivalent to an annual effective rate of 0.46% of the
Fund's average daily net assets.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
year ended December 31, 1997, the amount charged to the Fund by SSC aggregated
$6,262,085, of which $541,140 is unpaid at December 31, 1997.
The Fund is one of several Scudder Funds (the "Underlying Funds") in which the
Scudder Pathway Series Portfolios (the "Portfolios") invest. In accordance with
the Special Servicing Agreement entered into by the Adviser, the Portfolios, the
Underlying Funds, SSC, SFAC, STC, and Scudder Investor Services, Inc., expenses
from the operation of the Portfolios are borne by the Underlying Funds based on
each Underlying Fund's proportionate share of assets owned by the Portfolios. No
Underlying Funds will be charged expenses that exceed the estimated savings to
each respective Underlying Fund. These estimated savings result from the
elimination of separate shareholder accounts which either currently are or have
potential to be invested in the Underlying Funds. For the year ended December
31, 1997, the Special Servicing Agreement expense charged to the Fund amounted
to $241,803.
Scudder Trust Company ("STC"), a subsidiary of the Adviser, provides
recordkeeping and other services in connection with certain retirement and
employee benefit plans invested in the Fund. For the year ended December 31,
1997, the amount charged to the Fund by STC aggregated $4,655,851, of which
$469,097 is unpaid at December 31, 1997.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records of the Fund. For the year ended
December 31, 1997, the amount charged to the Fund by SFAC aggregated $338,966,
of which $32,524 is unpaid at December 31, 1997.
The Fund pays each Trustee not affiliated with the Adviser $4,000 annually, plus
specified amounts for attended board and committee meetings. For the year ended
December 31, 1997, Trustees' fees and expenses aggregated $43,737.
26 - Scudder Growth and Income Growth
<PAGE>
D. Transactions in Securities of Affiliated Issuers
An affiliated issuer is a company in which the Fund has ownership of at least 5%
of the voting securities. A summary of the Fund's transactions with companies
which are or were affiliates for the year ended December 31, 1997 are as
follows:
<TABLE>
<CAPTION>
Purchases Sales Dividend Market
Affiliate Cost ($) Cost ($) Income ($) Value ($)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
General Growth Properties, Inc 12,116,400 -- 2,985,748 70,075,275
==========================================================
</TABLE>
27 - SCUDDER GROWTH AND INCOME FUND
<PAGE>
Report of Independent Accountants
To the Trustees of Scudder Investment Trust and the Shareholders of Scudder
Growth and Income Fund:
We have audited the accompanying statement of assets and liabilities of Scudder
Growth and Income Fund, including the investment portfolio, as of December 31,
1997, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the ten years in the period then
ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Scudder Growth and Income Fund as of December 31, 1997, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the ten years in the period then ended in conformity with generally accepted
accounting principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
February 3, 1998
28 - Scudder Growth and Income Growth
<PAGE>
Tax Information
By now shareholders for whom year-end tax reporting is required by the IRS
should have received their Form 1099-DIV and tax information letter from the
Fund.
The Fund paid distributions of $2.12 per share from net long-term capital gains
during its year ended December 31, 1997, of which 65% represents 20% rate gains.
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$477,651,988 as capital gain dividends for its year ended December 31, 1997, of
which 78.6% represents 20% rate gains.
For corporate shareholders, 98.03% of the income dividends paid during the
Fund's year ended December 31, 1997 qualified for the dividends received
deduction.
Please consult a tax adviser if you have questions about federal or state income
tax laws, or on how to prepare your tax returns. If you have specific questions
about your Scudder Fund account, please call a Scudder Investor Relations
Representative at 1-800-225-5163.
29 - Scudder Growth and Income Growth
<PAGE>
Shareholder Meeting Results
A Special Meeting of Shareholders (the "Meeting") of Scudder Growth and Income
Fund (the "Fund") was held on October 24, 1997, at the office of Scudder Kemper
Investments, Inc. (formerly Scudder, Stevens & Clark, Inc.), Two International
Place, Boston, Massachusetts 02110. At the Meeting, as adjourned and reconvened,
the following matters were voted upon by the shareholders (the resulting votes
for each matter are presented below). With regard to certain proposals, it was
recommended that the Meeting be reconvened in order to provide shareholders with
an additional opportunity to return their proxies. The date of the reconvened
meeting at which the matters were decided is noted after the proposed matter.
1. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
114,362,502 4,718,851 3,418,684 5,962,317
2. To elect Trustees.
Number of Votes:
----------------
Trustee For Withheld
------- --- --------
Henry P. Becton, Jr. 118,701,742 3,798,295
Dawn-Marie Driscoll 118,685,587 3,814,450
Peter B. Freeman 118,669,156 3,830,881
George M. Lovejoy, Jr. 118,687,298 3,812,739
Dr. Wesley W. Marple, Jr. 118,705,297 3,794,740
Daniel Pierce 118,709,012 3,791,025
Kathryn L. Quirk 118,612,723 3,887,314
Jean C. Tempel 118,699,665 3,800,372
3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise. (Approved on December 2, 1997.)
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
123,316,265 11,355,389 7,682,785 248,061
30 - Scudder Growth and Income Fund
<PAGE>
4. To approve certain amendments to the Declaration of Trust. Sufficient
proxies had not been received by December 2, 1997 to approve the
amendments to the Declaration of Trust. Management has determined not to
continue to seek shareholder approval for this item.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
125,439,639 9,537,814 7,625,047 0
5. To approve the revision of certain fundamental investment policies.
<TABLE>
<CAPTION>
Number of Votes:
----------------
Broker
Fundamental Policies For Against Abstain Non-Votes*
-------------------- --- ------- ------- ---------
<S> <C> <C> <C> <C>
5.1 Diversification 102,323,047 7,289,769 6,924,904 5,962,317
5.2 Borrowing 101,558,540 8,011,062 6,968,118 5,962,317
5.3 Senior securities 102,071,234 7,503,754 6,962,732 5,962,317
5.4 Concentration 102,092,863 7,486,775 6,958,082 5,962,317
5.5 Underwriting of securities 102,186,604 6,350,308 8,000,808 5,962,317
5.6 Investment in real estate 100,001,983 6,438,760 10,096,977 5,962,317
5.7 Purchase of physical 99,745,061 6,691,104 10,101,555 5,962,317
commodities
5.8 Lending 99,910,539 6,518,743 10,108,438 5,962,317
</TABLE>
6. To ratify the selection of Coopers & Lybrand L.L.P. as the Fund's independent
accountants.
Number of Votes:
----------------
For Against Abstain
--- ------- -------
113,749,148 2,052,180 6,698,709
* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary power
to vote on a particular matter.
31 - 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
Dawn-Marie Driscoll
Trustee; Executive Fellow, Center
for Business Ethics
Peter B. Freeman
Trustee, Corporate Director and
Trustee
George M. Lovejoy, Jr.
Trustee; President and Director,
Fifty Associates
Wesley W. Marple, Jr.
Trustee; Professor of Business
Administration, Northeastern
University
Kathryn L. Quirk*
Trustee, Vice President and
Assistant Secretary
Jean C. Tempel
Trustee; General Partner,
TL Ventures
Bruce F. Beaty*
Vice President
Philip S. Fortuna*
Vice President
William F. Gadsden*
Vice President
Jerard K. Hartman*
Vice President
Robert T. Hoffman*
Vice President
Thomas W. Joseph*
Vice President
Valerie F. Malter*
Vice President
Thomas F. McDonough*
Vice President, Secretary and
Assistant Treasurer
Edward J. O'Connell*
Vice President and Assistant
Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
32 - Scudder Growth and Income Fund
<PAGE>
Investment Products and Services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series --
Premium Shares*
Managed Shares*
Scudder Government Money Market Series --
Managed Shares*
Tax Free Money Market+
- ----------------------
Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series--
Managed Shares*
Scudder California Tax Free Money Fund**
Scudder New York Tax Free Money Fund**
Tax Free+
- ---------
Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund**
Scudder Massachusetts Limited Term Tax Free Fund**
Scudder Massachusetts Tax Free Fund**
Scudder New York Tax Free Fund**
Scudder Ohio Tax Free Fund**
Scudder Pennsylvania Tax Free Fund**
U.S. Income
- -----------
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder 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
Scudder S&P 500 Index 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 Growth and Income 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, Inc.
Retirement Programs
- -------------------
Traditional IRA
Roth IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan**+++ +++
(a variable annuity)
Education Accounts
- ------------------
Education IRA
UGMA/UTMA
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder Global High Income Fund, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder Spain and Portugal Fund, Inc.
For complete information on any of the above Scudder funds, including
management fees and expenses, call or write for a free prospectus. Read it
carefully before you invest or send money. +++Funds within categories are listed
in order from expected least risk to most risk. Certain Scudder funds may not be
available for purchase or exchange. +A portion of the income from the tax-free
funds may be subject to federal, state, and local taxes. *A class of shares of
the Fund. **Not available in all states. +++ +++A no-load variable annuity
contract provided by Charter National Life Insurance Company and its affiliate,
offered by Scudder's insurance agencies, 1-800-225-2470. #These funds, advised
by Scudder Kemper Investments, Inc., are traded on the New York Stock Exchange
and, in some cases, on various other stock exchanges.
33 - Scudder Growth and Income Fund
<PAGE>
Scudder Solutions
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Investment Plan QuickBuy
A convenient investment program in which money is Lets you purchase Scudder fund shares
electronically debited from your bank account monthly to electronically, avoiding potential mailing delays;
regularly purchase fund shares and "dollar cost average" money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from a previously designated bank
fewer when it's higher, which can reduce your average account.
purchase price over time.
Automatic Dividend Transfer Payroll Deduction and Direct Deposit
The most timely, reliable, and convenient way to Have all or part of your paycheck -- even government
purchase shares -- use distributions from one Scudder checks -- invested in up to four Scudder funds at
fund to purchase shares in another, automatically one time.
(accounts with identical registrations or the same
social security or tax identification number).
Dollar cost averaging involves continuous investment in securities regardless of price
fluctuations and does not assure a profit or protect against loss in declining markets.
Investors should consider their ability to continue such a plan through periods of low price
levels.
Around-the-clock electronic account service and information, including some transactions:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- http://funds.scudder.com
1-800-343-2890
Scudder Electronic Account Services: Offering
Personalized account information, the ability to account information and transactions, interactive
exchange or redeem shares, and information on other worksheets, prospectuses and applications for all
Scudder funds and services via touchtone telephone. Scudder funds, plus your current asset allocation,
whenever you need them. Scudder's Site also
provides news about Scudder funds, retirement
planning information, and more.
Retirees and those who depend on investment proceeds for living expenses can enjoy these convenient,
timely, and reliable automated withdrawal programs:
- ------------------------------------------------------------------------------------------------------------------------------
Automatic Withdrawal Plan QuickSell
You designate the bank account, determine the schedule Provides speedy access to your money by
(as frequently as once a month) and amount of the electronically crediting your redemption proceeds
redemptions, and Scudder does the rest. to the bank account you previously designated.
DistributionsDirect
Automatically deposits your fund distributions into the
bank account you designate within three business days
after each distribution is paid.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
34 - Scudder Growth and Income Fund
<PAGE>
Mutual Funds and More -- Brokerage and Guidance Services:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Brokerage Services Scudder Portfolio Builder
Offers you access to a world of investments, A free service designed to help suggest ways investors like
including stocks, corporate bonds, Treasuries, plus you can diversify your portfolio among domestic and global,
over 6,000 mutual funds from at least 150 mutual as well as equity, fixed-income, and money market funds,
fund companies. And Scudder Fund Folio(SM) provides using Scudder funds.
investors with access to a marketplace of more than
500 no-load funds from well-known companies--with no Personal Counsel from Scudder(SM)
transaction fees or commissions. Scudder
shareholders can take advantage of a Scudder Developed for investors who prefer the benefits of no-load
Brokerage account already reserved for them, with Scudder funds but want ongoing professional assistance in
no minimum investment. For information about managing a portfolio. Personal Counsel(SM) is a highly
Scudder Brokerage Services, call 1-800-700-0820. customized, fee-based asset management service for
individuals investing $100,000 or more.
Fund Folio funds held less than six months will be charged a fee for redemptions. You can buy
shares directly from the fund itself or its principal underwriter or distributor without
paying this fee. Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061.
Member SIPC.
Personal Counsel From Scudder(SM) and Personal Counsel(SM) are service marks of and represent a
program offered by Scudder Investor Services, Inc., Adviser.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
Additional Information on How to Contact Scudder:
- ------------------------------------------------------------------------------------------------------------------------------
For existing account services and transactions Please address all written correspondence to
Scudder Investor Relations -- 1-800-225-5163 The Scudder Funds
P.O. Box 2291
For establishing 401(k) and 403(b) plans Boston, Massachusetts
Scudder Defined Contribution Services -- 02107-2291
1-800-323-6105
Or Stop by a Scudder Investor Center
For information about The Scudder Funds, including Many shareholders enjoy the personal, one-on-one service of
additional applications and prospectuses, or for the Scudder Investor Centers. Check for an Investor Center near
answers to investment questions you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470 Boca Raton Chicago San Francisco
[email protected] Boston New York
</TABLE>
35 - Scudder Growth and Income Fund
<PAGE>
About the Fund's Adviser
Scudder Kemper Investments, Inc., is one of the largest and most experienced
investment management oganizations worldwide, managing more than $200 billion in
assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts. It is one of the ten largest mutual fund companies in the
U.S.
Scudder Kemper Investments has a rich heritage of innovation, integrity, and
client-focused service. In 1997, Scudder, Stevens & Clark, Inc., founded 79
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Group. As a result, Zurich's subsidiary, Zurich Kemper Investments,
Inc., with 50 years of mutual fund and investment management experience, was
combined with Scudder. Headquartered in New York, Scudder Kemper Investments
offers a full range of investment counsel and asset management capabilities,
based on a combination of proprietary research and disciplined, long-term
investment strategies. With its global investment resources and perspective,
the firm seeks opportunities in markets throughout the world to meet the needs
of investors.
Scudder Kemper Investments, Inc., the global asset management firm, is a member
of the Zurich Group. The Zurich Group is an internationally recognized leader in
financial services, including property/casualty and life insurance, reinsurance,
and asset management.
This information must be preceded or accompanied by a
current prospectus.
Portfolio changes should not be considered recommendations
for action by individual investors.
SCUDDER
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