Scudder
Growth and
Income Fund
Annual Report
December 31, 1998
Pure No-Load(TM) Funds
A fund with a disciplined approach to common stock investing seeking 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
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Date of Inception: 5/31/29 Total Net Assets as of Ticker Symbol: SCDGX
12/31/98: $7.6 billion
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o Scudder Growth and Income Fund returned 6.07% for the 12-month period ended
December 31, 1998, reflecting the modest performance of the Fund's
value-oriented investment style in a market dominated by a small number of
large-cap growth stocks.
o Despite the unfavorable market environment, the Fund maintained its overall
4-star risk-adjusted rating from Morningstar among 2,802 domestic equity funds
as of December 31, 1998.^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 TaxInformation
6 Portfolio Management Discussion 30 Shareholder Meeting Results
12 Glossary of Investment Terms 32 Officers and Trustees
13 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 3-star rating for the three-year period and a 4-star rating for
the five- and ten-year periods among 2,802, 1,702, and 732 funds,
respectively. Past performance is no guarantee of future results.
2 - Scudder Growth and Income Fund
<PAGE>
Letter from the Fund's President
Dear Shareholders,
The past year has been a difficult one for funds offering a disciplined value
approach such as the Scudder Growth and Income Fund. The Portfolio Management
Discussion which follows highlights the dichotomy of the U.S. stock market in
1998 where high growth and large size were favored and priced at premium
valuations versus more mundane and value oriented investments. For instance, the
seventeen best performers in the S&P 500 accounted for 50% of the gains in this
index. How long investors will continue to buy growth at any price is anyone's
guess. However, we remain convinced that the growth and income style of
investing is viable and a sound building block for many investor portfolios.
Despite its disappointing performance in the past year, the Fund's long-term
record is commendable. In fact, SmartMoney magazine rated the Fund among its top
seven of 500 domestic equity funds for dependable returns in their February 1999
issue^1. Going forward, the management team will continue to utilize the
investment discipline that has proven so successful over the long-term,
believing that it is only a matter of time before investors once again place an
emphasis on fundamentals.
As we evaluate another year of strong performance in the stock market and
ponder what lies ahead, the importance of diversification cannot be overstated.
This straightforward principle is particularly important following eight
consecutive years of strong returns in domestic equities. In such an
environment, investors can be easily lulled into believing that annual gains of
20% or higher are normal, when long-run returns have averaged half of that
amount. While it is possible that the U.S. stock market could record yet another
period of strong performance in 1999, we believe that investors with adequate
exposure to several asset classes, such as fixed income, small cap, and
international equities, will be the most successful over the long term.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder Growth and Income Fund
^1 SmartMoney screened a universe of 500 domestic equity funds for
above-average, load-adjusted five-year performance (making an exception for
small-cap funds not yet five years old, since they often perform better in
their early years) as well as below-average expenses, turnover and risk.
The resulting funds were assigned 0 to 10 points in six categories --
performance, susceptibility to market timers, expenses, tax efficiency,
experience, and stock-picking ability. SmartMoney also eliminated a few
finalists, for reasons such as rapid asset growth.
3 - Scudder Growth and Income Fund
<PAGE>
Performance Update as of December 31, 1998
Fund Index Comparisons
- -----------------------------------------
Total Return
-------------------
Period Growth
Ended of Average
12/31/98 $10,000 Cumulative Annual
--------------------------------------------
Scudder Growth and Income Fund
--------------------------------------------
1 Year $ 10,607 6.07% 6.07%
5 Year $ 22,728 127.28% 17.85%
10 Year $ 45,529 355.29% 16.37%
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S&P 500 Index
--------------------------------------------
1 Year $ 12,858 28.58% 28.58%
5 Year $ 29,393 193.93% 24.05%
10 Year $ 57,974 479.74% 19.20%
--------------------------------------------
Growth of a $10,000 Investment
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CHART DATA:
Yearly periods ended December 31
Scudder Growth and Income Fund
Year Amount
- ---------------------------
'88 $10,000
'89 $12,636
'90 $12,341
'91 $15,817
'92 $17,330
'93 $20,032
'94 $20,552
'95 $26,960
'96 $32,939
'97 $42,922
'98 $45,529
S&P 500 Index
Year Amount
- ---------------------------
'88 $10,000
'89 $13,167
'90 $12,759
'91 $16,646
'92 $17,920
'93 $19,724
'94 $19,984
'95 $27,493
'96 $33,804
'97 $45,087
'98 $57,974
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.
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
ILLUSTRATING THE FUND TOTAL RETURN (%) AND
INDEX TOTAL RETURN (%)
CHART DATA:
Yearly periods ended December 31
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value $ 14.14 $ 12.77 $ 15.76 $ 16.20 $ 17.24 $ 16.26 $ 20.23 $ 23.23 $ 27.33 $ 26.31
- -----------------------------------------------------------------------------------------------------------------------------
Income Dividends $ .69 $ .67 $ .55 $ .53 $ .45 $ .51 $ .56 $ .57 $ .58 $ .61
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Capital Gains Distributions $ 1.77 $ .34 $ -- $ .50 $ 1.01 $ .91 $ .48 $ .87 $ 2.20 $ 2.09
- -----------------------------------------------------------------------------------------------------------------------------
Fund Total Return (%) 26.36 -2.33 28.16 9.57 15.59 2.60 31.18 22.18 30.31 6.07
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Index Total Return (%) 31.63 -3.11 30.40 7.61 10.06 1.32 37.58 22.96 33.38 28.58
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</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, 1998
Asset Allocation
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A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
Common Stocks 97%
Convertible Stocks 2%
Convertible Bonds 1%
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100%
--------------------------------------
The Fund is fully invested in stocks with relatively high dividend yields and
below-average valuations.
Sector Diversification
(Excludes 0.4% Cash Equivalents)
- ---------------------------------
A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
Financial 19%
Manufacturing 18%
Communications 13%
Energy 10%
Durables 9%
Consumer Staples 8%
Health 7%
Utilities 6%
Construction 4%
Other 6%
--------------------------------------
100%
--------------------------------------
The Fund's relative dividend yield strategy precluded it from significant
weightings in growth-oriented sectors such as technology, which was among the
best performing.
Ten Largest Equity Holdings
(25% of Portfolio)
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1. Xerox Corp.
Leading manufacturer of copiers
and duplicators
2. Corning Inc.
Specialty glass manufacturer
3. Bell Atlantic Corp.
Telecommunications services
4. American Home Products Corp.
Major diversified pharmaceutical
company
5. H.J. Heinz Co.
Major manufacturer of processed
foods
6. Bristol-Myers Squibb Co.
Diversified pharmaceutical and
consumer products company
7. GTE Corp.
Nationwide telecommunications
company
8. Sprint Corp.
Diversified local and long
distance telecommunications
services
9. First Union Corp.
Commercial banking
10. BellSouth Corp.
Telecommunications services,
systems, and products
Management selects securities for the portfolio by choosing individual
companies with attractive fundamentals that offer above-average dividend
yields.
For more complete details about the Fund's investment portfolio, see page 13. A
quarterly Fund Summary and Portfolio Holdings are available upon request.
5 - Scudder Growth and Income Fund
<PAGE>
Portfolio Management Discussion
We asked Rob Hoffman, lead portfolio manager of Scudder Growth and Income Fund,
to review the market environment and fund performance for the 12-month period
ended December 31, 1998. His comments follow.
Q: For 1998, the U.S. stock market posted another 20%+ return. How do
you explain another year of strong performance for U.S. stocks?
When you consider that profit growth actually decelerated over the course of
1998, the market's rise is hard to justify. However, a closer look reveals that
most of the market's performance, as measured by the unmanaged S&P 500 Index,
was driven by a handful of very large growth stocks. These stocks, due to their
substantial market capitalization, were a heavy influence on the return of the
index. Because the S&P 500 is a market-cap-weighted index, the largest stocks
have had the greatest impact on its performance. When you examine the S&P's
return on an equal-weighted basis, we see that the average stock returned about
half that of the market-cap-weighted return. (The equal-weighted return was
13.8%, versus 28.58% for the market-cap-weighted return.) In fact, 70% of the
stocks in the S&P 500 underperformed the market-cap-weighted return and 40% of
the stocks actually had negative returns for 1998.
Q: With market leadership confined to a handful of large-cap growth
stocks, how did the Fund's ongoing emphasis on relatively high yielding
stocks fare?
The Fund's discipline of investing in stocks with above-average dividend yields
was out of favor for most of the year. Our relative dividend yield strategy
typically puts us in "value stock" territory -- a sector that underperformed
growth stocks by a substantial margin in 1998. The spread between the
performance of "growth" and "value" stocks is clearly evident in the returns of
the large-cap Russell 1000 indices. For the year, the Russell 1000 Growth Index
returned 38.71%, while the Russell 1000 Value Index returned less than half --
15.63% for the same period. Over the 15 years that we have been managing the
Fund with our relative dividend yield strategy, we have never seen such a wide
disparity between growth and value investing styles.
Q: How did the Fund perform in this environment?
While the Fund historically has outperformed during market declines -- as it did
during the brief 15% market correction in August -- stocks continued to rally
for most of the year. With the market led by a few big growth stocks, funds that
are managed with a relative dividend yield strategy, such as Scudder Growth and
Income Fund, faced a substantial headwind. For the 12-month period ended
December 31, 1998, the Fund returned 6.07% versus a 28.58% return for the S&P
500.
Q: Many stocks that fell into the Fund's investment universe of high dividend
yield stocks were trading at valuation levels usually associated with a
recession. Yet, the U.S. economy remained healthy, and inflation and interest
rates reached record lows. Why wasn't there more interest in these attractively
valued stocks?
Concerns regarding a slowdown in global economic growth and U.S. profit growth
resulted in willingness on the part of investors to pay a high premium for the
6 - Scudder Growth and Income Fund
<PAGE>
largest and most liquid companies with the strongest earnings growth. In this
environment, many investors adopted a strategy of "growth at any price,"
resulting in unusually high price-to-earnings (P/E) ratios for a limited number
of stocks, especially growth stocks with the largest market-caps. This
phenomenon was evident in the 20 largest stocks in the S&P 500, which traded at
a P/E of 41x based on 1998 estimated earnings. In contrast, the bottom 480
stocks in the index traded at a P/E of 27.3x. We believe that, as corporate
profit growth has slowed over the last six calendar quarters and as many
companies are facing increasing competition and an inability to raise prices,
some investors think large growth companies are best positioned to weather a
profit slowdown. While this has been the case over the last year (and may
continue in the near-term), we believe that investors will eventually return to
investing in companies with solid fundamentals and attractive valuations.
Q: Market sentiment turned negative in the third quarter. How did
events in Russia and at Long Term Capital Management affect the
domestic equity markets?
The third quarter brought the announcement of the Russian currency devaluation
and debt moratorium, and the bailout of Long Term Capital Management's hedge
fund. These events sent shock waves through the domestic and world markets, as
investors feared the events would spread to other markets. The result was an
evaporation of liquidity and confidence, which sent investors fleeing to the
safest and most liquid investments, namely U.S. Treasury securities and blue
chip growth stocks.
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===============================================================
Attractive Valuations
===============================================================
Fund's
Portfolio S&P 500^1
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Dividend Yield 2.7% 1.31%
Price-to-Earnings per share^2 17x 24x
The Fund's above-average dividend
yield and below-average P/E indicate
attractive value relative to the market.
===============================================================
^1 The S&P 500 index yield does not reflect the effect of fund expenses and the
transaction costs which would otherwise lower its yield.
^2 P/E based on 1999 projected earnings as of 12/31/98.
Again, value stocks -- or stocks with high dividend yields -- were not at the
top of investors' lists. In an effort to head off further slowing of the U.S.
economy, the Federal Reserve cut short-term interest rates three times in the
August-October period. The rate cuts restored liquidity and confidence to the
stock and bond markets, and the S&P 500 went on to record its best quarterly
return since the beginning of the decade. In addition, reports of better than
expected earnings helped growth stocks finish the year with unusually strong
performance.
Q: What did this mean to investors?
We think it became increasingly apparent during this period that liquidity and
investor confidence are driving the market rather than good fundamentals at
individual companies. At some point we expect investors to return to investing
in companies with attractive fundamentals, which should work to the Fund's
advantage. However, the timing of that reversal is hard to predict, even given
7 - Scudder Growth and Income Fund
<PAGE>
the current record low valuations for many companies in the Fund's investment
universe.
Q: How did you manage the Fund in this environment?
Our investment strategy continued to focus on stocks with a high dividend yield
and our analysis of individual company fundamentals. Typically stocks with
dividends that are 120% or more of the S&P 500 yield are "buy" candidates for
the Fund. "Sell" candidates are stocks with yields that have fallen to about 75%
of the index. In looking at performance for the year, we can see that stocks
with essentially little or no yield were among the best performers -- stocks
that were not in our "buy" or "hold" range.
Q: What worked well for the portfolio during the year?
In general, the Fund's top ten holdings at the beginning of the year
dramatically outperformed our investment universe of relatively high yielding
stocks as well as modestly outperforming the market overall. In fact Ford, one
of our ten largest holdings was the best performing stock of those with yields
greater than 120% of the S&P, returning over 87% for the year. Other top ten
success stories included Xerox up 62%, Unilever up 35%, and
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
BAR CHART TITLE:
The Best Performing Stocks Were Outside of Our Investment Universe
BAR CHART DATA:
Total Return (%)
- --------------------------------------------------------------------------------
"Buy" "Hold" "Sell"
-------------------------- -------------------------
10.6% 10.4% 8.2% 14.1% 26.0%
- -----------------------------------------------------------------------
>150% 120-150% 80-120% >0-80% 0%
Stock yield as a percent of S&P 500
(The "Sell" area is shaded.)
BAR CHART FOOTNOTE:
Our relative dividend yield discipline placed stocks with little or no yield
(growth stocks) in the "sell" range -- the best performing sector in 1998. Over
the long term, the Fund's emphasis on stocks with above-average yields has
resulted in outperformance, especially during market declines.
8 - Scudder Growth and Income Fund
<PAGE>
Chase Manhattan Corp. up 32%. We also started out the year with Philips
Morris and TRW in the top ten. Both of these stocks were sold at prices
higher than their year-end close due to deteriorating fundamental
business prospects.
Q: Technology was a top-performing sector in 1998, but the Fund's
yield discipline usually precludes investing in tech stocks. Were you
able to participate in the tech rally in other ways?
The Internet is a powerful tool, which will change the face of commerce forever.
However, we have preferred to participate in the companies that "collect the
tolls" and produce the "asphalt" for the information superhighway. Our decision
to overweight the "toll taker" telecommunication companies helped the portfolio
dramatically, as the sector rose an aggregate 43%. Standout performers were
BellSouth up 81%, Sprint up 62%, Alltel up 50%, and Frontier up 46%. A
combination of low relative valuations at the beginning of the year, and the
increasing recognition that the local telephone companies' revenues and earnings
growths were being enhanced by the growth in value-added services helped these
stocks outperform.
In the "asphalt" category, we have focused on the increasing demand for
bandwidth, or "the number of lanes on the highway" through which electronic
information passes. As the Internet has grown, an increasing amount of
information must pass over conventional copper phone lines. These lines do not
offer enough capacity or speed to keep up with faster computers. The wider
bandwidth of fiber optic cable provides a solution. We think this will benefit
Corning, a producer of both fiber optic cable and photonics. We built our
position in Corning over the course of the year at prices substantially below
its year-end closing price. We believe Corning's 23% return in 1998, and 53%
return in the fourth quarter is just the beginning of a period of dramatic
outperformance.
Q: What other areas contributed to performance over the year?
The fourth quarter of 1997 saw the relative yields of electric utilities rise to
all time highs, even higher than the bleakest period of nuclear cost overruns
ten years earlier. New purchases and increased weights in the portfolio during
that time and early in 1998 resulted in positive contributions from Unicom, Duke
Energy, and Southern Company, which were up 31%, 20%, and 17.7%, respectively.
Finally, our underweight position in the consumer staple sector, as well as
specific stock selection, also added value as our discipline enabled us to avoid
weakness in Coke, Procter & Gamble, and Gillette. Instead, this area was led by
such Fund holdings as Avon up 47%, Philip Morris up 23%, and Unilever.
Q: The Fund's overweight position in industrial cyclicals was perhaps
one of the most significant detractors from performance. What happened
in this sector?
Over the year we gradually increased our holdings in industrial cyclicals,
largely chemical, paper/forest product, and metals stocks. This overweight
position had been in place since 1997, which was driven by recession level
valuations (including all time high relative yields), as well as extremely
favorable supply characteristics -- supply growth was contracting dramatically.
With perfect hindsight, we underestimated not only the impact of contracting
9 - Scudder Growth and Income Fund
<PAGE>
Asian economies on the supply/demand balance, and consequently the pricing of
the underlying commodities (e.g. ethylene, copper, pulp), but more importantly,
the negative investor perception that continued to depress these stocks.
A holding that had commodity exposure and also was in the process of
restructuring its business activities was among the hardest hit. Imperial
Chemical, a top ten holding at the beginning of the year and a position we added
to during the period, declined 46% on falling commodity prices and a capital
market that froze its ability to sell many of its non-core assets. Witco and
Lyondell, both relatively small positions in the portfolio, were affected
similarly. Paper stocks fared better than chemicals and metals, largely because
of their year end rally. In this area, our portfolio holdings actually
outperformed the fourth quarter S&P 500 return of 21%. The rally in paper stocks
was driven by a positive sentiment shift that occurred at the depths of the
September market. The global oversupply of pulp had become so severe that U.S.
companies began to respond with meaningful reductions in capacity in an attempt
to stabilize pricing.
Q: Real estate investment trusts (REITs) and bank stocks typically
perform well in a declining interest rate environment. How did the
Fund's holdings in these areas perform?
Perhaps the most frustrating move over the year was our decision to own a 5%
position in REITs. This strategy was driven by our desire to control the
downside volatility of the portfolio at a time when the valuation of the broad
market had reached what we viewed as an unsustainable level. The REITs we
selected appeared to have the necessary downside risk control characteristics:
low valuations, high absolute yields, and the likelihood that they would be able
to successfully manage their income through a potential real estate downturn. In
aggregate, our REITs grew their funds from operations anywhere from 13% to 18%
for the year, yet all REITs declined 10% and 20%.
For banks, we believed that recent interest rate cuts, unlike the cuts in the
early 1990s, would not increase profitability since the relatively flat yield
curve would not enable banks to borrow from the Fed, buy three-year Treasuries
and earn a positive spread as they did during the last banking crisis.
Consequently, we began reducing our bank exposure in mid-summer. In early fall,
on the heels of the Russia default and the virtual failure of Long Term Capital
Management, the Federal Reserve moved aggressively to cut short-term interest
rates. As it turned out, we underestimated the power of perception over
fundamentals. The market's powerful rebound from the early October lows (and the
corresponding rally in bank shares) was not driven by the drop in the Fed Funds
rate, but rather the perception that the Fed would continue to cut rates to
avoid a loss of confidence in the economy. In the fourth quarter, bank stocks
rallied strongly and we had already reduced our position there.
Q: Given the challenging year, why should investors stay invested in
the Fund?
For 15 years we have been running this Fund with the relative dividend yield
strategy, a benefit of which is providing some protection if the market
declines. In 1998 we saw that this approach still works, as the Fund
outperformed when the market corrected in August. The Fund has continued to
10 - Scudder Growth and Income Fund
<PAGE>
provide this benefit to shareholders over the long term, while also providing
top quartile returns in 1994, 1996, and 1997. In our opinion, the strategy is
not broken, but faced a strong headwind in 1998.
When, you may ask, will value stocks return to favor? The timing of this change
is difficult to predict, but value stocks have come back into favor after every
period of strong performance by growth stocks. With the recent strong
performance of growth stocks and the very attractive valuations of stocks we
hold in the portfolio, we do not think it is a good time to abandon the Fund's
relative dividend yield approach.
In addition, corporate profit growth is decelerating and current market
valuations are, in our view, clearly stretched to the limit. Given this
environment, the market could correct. If that occurs, we believe the Fund's
relative yield strategy should provide a significant level of downside
protection.
While we are not satisfied with the Fund's performance last year, we intend to
continue with our focus 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 price
appreciation over the long term.
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. (the "Adviser") professionals, each of whom plays an
important role in the Fund's management process. Team members work together to
develop investment strategies and select securities for the Fund's portfolio.
They are supported by the Adviser's large staff of economists, research
analysts, traders, and other investment specialists who work in our offices
across the United States and abroad. We believe our team approach benefits Fund
investors by bringing together many disciplines and leveraging our 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 the Adviser in 1990 and has 14 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 the Adviser 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 the Adviser since
1993.
11 - 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.
LIQUIDITY A characteristic of an investment or an asset
referring to the ease of convertibility into cash
within a reasonably short period of time.
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.
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 (P/E) A widely used gauge of a stock's valuation that
(also "earnings multiple") indicates what investors are 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: Scudder Kemper Investments, Inc.; Barron's Dictionary of
Finance and Investment Terms)
12 - Scudder Growth and Income Fund
<PAGE>
Investment Portfolio as of December 31, 1998
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreements 0.1%
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 12/31/1998 at 5%, to be
repurchased at $6,110,393 on 1/4/1999, collateralized by a $6,061,000 U.S. Treasury -------------
Bond, 3.625%, 1/15/2008 (Cost $6,107,000) .............................................. 6,107,000 6,107,000
-------------
Short Term Investments 0.3%
- ------------------------------------------------------------------------------------------------------------------------------
Bell Atlantic Network Funding Corp., 5.18%**, 1/21/1999 (Cost $19,943,000) ............... 20,000,000 19,943,000
-------------
Convertible Bonds 0.4%
- ------------------------------------------------------------------------------------------------------------------------------
Financial 0.1%
Real Estate
Security Capital Corp., Debenture, 6.5%, 3/29/2016 (b) (c) ............................... 16,750,000 9,388,375
-------------
Durables 0.1%
Automobiles
Magna International, Inc., 5%, 10/15/2002 ................................................ 6,700,000 7,638,000
-------------
Media 0.2%
Advertising
Omnicom Group Inc., 2.25%, 1/6/2013 ...................................................... 12,500,000 16,812,500
- ------------------------------------------------------------------------------------------------------------------------------
Total Convertible Bonds (Cost $36,769,432) 33,838,875
- ------------------------------------------------------------------------------------------------------------------------------
Shares
- ------------------------------------------------------------------------------------------------------------------------------
Convertible Preferred Stocks 1.9%
- ------------------------------------------------------------------------------------------------------------------------------
Consumer Staples 1.1%
Food & Beverage 0.8%
Suiza Foods Corp., 2.7% .................................................................. 1,316,100 56,921,325
-------------
Miscellaneous 0.3%
Ralston Purina Co., 7% ................................................................... 470,000 24,557,500
-------------
Health 0.6%
Biotechnology
Monsanto Co., 6.5% ....................................................................... 1,005,800 49,284,200
-------------
Financial 0.1%
Consumer Finance 0.0%
Advanta Corp., 6.75% ..................................................................... 4,000 56,000
-------------
Real Estate 0.1%
ProLogis Trust "B", 7.0% ................................................................. 308,300 8,131,413
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 - Scudder Growth and Income Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Metals & Minerals 0.1%
Precious Metals
Freeport McMoRan Copper & Gold, Inc., 7% ................................................. 500,000 7,437,500
- ------------------------------------------------------------------------------------------------------------------------------
Total Convertible Preferred Stocks (Cost $156,407,031) 146,387,938
- ------------------------------------------------------------------------------------------------------------------------------
Common Stocks 97.3%
- ------------------------------------------------------------------------------------------------------------------------------
Consumer Discretionary 1.8%
Department & Chain Stores
May Department Stores .................................................................... 1,212,400 73,198,650
Sears, Roebuck & Co. ..................................................................... 1,540,600 65,475,500
-------------
138,674,150
-------------
Consumer Staples 6.8%
Alcohol & Tobacco 1.9%
Philip Morris Companies, Inc. ............................................................ 2,694,300 144,145,050
-------------
Consumer Specialties 0.0%
Pennzoil-Quaker State Co. ................................................................ 58,000 859,125
-------------
Food & Beverage 3.3%
H.J. Heinz Co. ........................................................................... 3,095,050 175,257,206
Unilever NV (New York shares) ............................................................ 903,400 74,925,738
-------------
250,182,944
-------------
Package Goods/Cosmetics 1.6%
Avon Products Inc. ....................................................................... 2,660,100 117,709,425
-------------
Health 6.5%
Pharmaceuticals
American Home Products Corp. ............................................................. 3,640,300 204,994,394
Bristol-Myers Squibb Co. ................................................................. 1,281,000 171,413,813
SmithKline Beecham PLC (ADR) ............................................................. 1,180,400 82,037,800
Zeneca Group PLC ......................................................................... 862,621 37,613,600
-------------
496,059,607
-------------
Communications 12.5%
Telephone/Communications
Alltel Corp. ............................................................................. 1,825,400 109,181,738
Bell Atlantic Corp. ...................................................................... 3,651,896 207,473,342
BellSouth Corp. .......................................................................... 3,082,800 153,754,650
Frontier Corp. ........................................................................... 2,745,500 93,347,000
GTE Corp. ................................................................................ 2,504,700 168,910,706
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 - Scudder Growth and Income Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Sprint Corp.* ............................................................................ 1,990,700 167,467,638
Telesp Participacoes S.A. (pfd.)* ........................................................ 2,363,550,000 53,794,848
-------------
953,929,922
-------------
Financial 18.8%
Banks 9.5%
BANC ONE CORP ............................................................................ 1,598,762 81,636,785
BankAmerica Corp. ........................................................................ 2,549,446 153,285,441
Bankers Trust New York Corp. ............................................................. 557,600 47,639,950
Chase Manhattan Corp. .................................................................... 1,509,800 102,760,763
First Union Corp. ........................................................................ 2,529,952 153,852,706
Fleet Financial Group Inc. ............................................................... 1,493,800 66,754,188
KeyCorp .................................................................................. 2,210,600 70,739,200
US Bancorp ............................................................................... 1,401,900 49,767,450
-------------
726,436,483
-------------
Insurance 2.9%
EXEL Ltd. "A" ............................................................................ 1,633,910 122,543,250
Lincoln National Corp. ................................................................... 577,100 47,213,994
Safeco Corp. ............................................................................. 1,163,700 49,966,369
-------------
219,723,613
-------------
Other Financial Companies 1.6%
Federal National Mortgage Association .................................................... 1,611,700 119,265,800
-------------
Real Estate 4.8%
Acadia Realty Trust (REIT)* .............................................................. 31,400 164,850
Arden Realty Group, Inc. ................................................................. 1,351,100 31,328,631
Avalon Bay Communities, Inc. (REIT) ...................................................... 358,872 12,291,366
Boston Properties, Inc. (REIT) ........................................................... 1,073,200 32,732,600
Camden Property Trust (REIT) ............................................................. 338,500 8,801,000
Equity Office Properties Trust (REIT) .................................................... 1,818,300 43,639,200
General Growth Properties, Inc. (REIT) (d) ............................................... 1,939,800 73,469,925
Health Care Property Investment Inc. (REIT) .............................................. 359,300 11,048,475
Nationwide Health Properties Inc. (REIT) ................................................. 804,800 17,353,500
Prentiss Properties Trust ................................................................ 1,365,100 30,458,794
ProLogis Trust (REIT) .................................................................... 2,935,645 60,914,634
Security Capital Group, Inc. (b) (c)* .................................................... 15,969 10,328,613
Security Capital US Realty (REIT)* ....................................................... 2,889,152 27,446,944
Spieker Properties, Inc. ................................................................. 150,000 5,193,750
-------------
365,172,282
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 - Scudder Growth and Income Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Service Industries 0.2%
Environmental Services
Browning Ferris Industries ............................................................... 654,600 18,615,188
-------------
Durables 8.8%
Aerospace 3.5%
Lockheed Martin Corp. .................................................................... 1,288,728 109,219,698
Northrop Grumman Corp. ................................................................... 809,400 59,187,375
Rockwell International Corp. ............................................................. 2,007,300 97,479,506
-------------
265,886,579
-------------
Automobiles 3.6%
Dana Corp. ............................................................................... 2,175,342 88,917,104
Ford Motor Co. ........................................................................... 2,337,100 137,158,556
Meritor Automotive, Inc. ................................................................. 2,112,800 44,764,950
-------------
270,840,610
-------------
Construction/Agricultural Equipment 1.1%
Caterpillar Inc. ......................................................................... 746,900 34,357,400
PACCAR, Inc. ............................................................................. 1,146,100 47,133,363
-------------
81,490,763
-------------
Tires 0.6%
Goodyear Tire & Rubber Co. ............................................................... 948,700 47,850,056
-------------
Manufacturing 17.4%
Chemicals 5.9%
Akzo-Nobel N.V. .......................................................................... 1,862,940 84,796,300
Dow Chemical Co. ......................................................................... 765,000 69,567,188
E.I. du Pont de Nemours & Co. ............................................................ 1,065,800 56,554,013
Eastman Chemical Co. ..................................................................... 1,133,600 50,728,600
Imperial Chemical Industries PLC ......................................................... 15,020,575 130,266,593
Lyondell Petrochemical Co. ............................................................... 2,928,500 52,713,000
-------------
444,625,694
-------------
Containers & Paper 1.6%
Boise Cascade Corp. ...................................................................... 1,323,240 41,020,440
Temple-Inland, Inc. ...................................................................... 1,290,700 76,554,644
-------------
117,575,084
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 - Scudder Growth and Income Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Diversified Manufacturing 1.2%
Canadian Pacific Ltd. (Ord.) ............................................................. 2,545,700 47,696,560
Olin Corp. ............................................................................... 1,336,100 37,828,331
St. Joe Paper Co. ........................................................................ 279,300 6,546,094
-------------
92,070,985
-------------
Electrical Products 1.4%
Emerson Electric Co. ..................................................................... 900,600 54,486,300
Thomas & Betts Corp. ..................................................................... 1,258,100 54,491,456
-------------
108,977,756
-------------
Industrial Specialty 2.9%
Corning Inc. ............................................................................. 4,727,350 212,730,737
Wyman-Gordon Co. ......................................................................... 606,300 6,214,575
-------------
218,945,312
-------------
Machinery/Components/Controls 0.7%
Parker-Hannifin Group .................................................................... 1,727,900 56,588,725
-------------
Office Equipment/Supplies 3.4%
Xerox Corp. .............................................................................. 2,175,650 256,726,700
-------------
Specialty Chemicals 0.3%
Witco Corp. .............................................................................. 1,537,500 24,503,906
-------------
Energy 10.0%
Oil & Gas Production 0.8%
Conoco Inc. "A"* ......................................................................... 2,755,100 57,512,713
PennzEnergy Co. .......................................................................... 58,000 946,125
-------------
58,458,838
-------------
Oil Companies 7.7%
British Petroleum PLC .................................................................... 5,703,062 84,978,349
Chevron Corp. ............................................................................ 471,800 39,129,913
Mobil Corp. .............................................................................. 916,300 79,832,638
Royal Dutch Petroleum Co. (New York shares) .............................................. 815,600 39,046,850
Societe Nationale Elf Aquitaine .......................................................... 816,000 94,282,955
Texaco Inc. .............................................................................. 1,951,100 103,164,413
Total S.A. "B" ........................................................................... 510,323 51,662,103
Total S.A. (ADR) ......................................................................... 396,253 19,713,587
YPF S.A. "D" (ADR) ....................................................................... 2,753,400 76,923,113
-------------
588,733,921
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17 - Scudder Growth and Income Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Oil/Gas Transmission 1.5%
Williams Cos., Inc. ...................................................................... 3,579,000 111,620,063
-------------
Metals & Minerals 1.5%
Precious Metals 0.1%
Freeport McMoRan Copper & Gold, Inc. "A" ................................................. 542,590 5,256,341
-------------
Steel & Metals 1.4%
Allegheny Teledyne Inc. .................................................................. 3,860,915 78,907,450
Phelps Dodge Corp. ....................................................................... 211,000 10,734,625
Reynolds Metals Co. ...................................................................... 377,400 19,884,263
-------------
109,526,338
-------------
Construction 3.7%
Building Products 1.5%
Georgia Pacific Group .................................................................... 1,913,300 112,047,631
-------------
Forest Products 2.2%
Georgia Pacific Timber Group ............................................................. 1,289,200 30,699,075
Westvaco Corp. ........................................................................... 1,029,800 27,611,513
Weyerhaeuser Co. ......................................................................... 2,217,800 112,691,963
-------------
171,002,551
-------------
Transportation 2.8%
Railroads
CSX Corp. ................................................................................ 3,286,900 136,406,350
Norfolk Southern Corp. ................................................................... 2,303,000 72,976,313
-------------
209,382,663
-------------
Utilities 6.5%
Electric Utilities
CINergy Corp. ............................................................................ 2,494,100 85,734,688
Duke Energy Corp. ........................................................................ 1,729,736 110,811,213
PacifiCorp ............................................................................... 3,872,300 81,560,319
Southern Company ......................................................................... 2,573,500 74,792,344
Unicom Corp. ............................................................................. 2,642,300 101,893,694
Wisconsin Energy Corp. ................................................................... 1,306,700 41,079,381
-------------
495,871,639
- ------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $5,746,192,243) 7,398,755,744
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $5,965,418,706) (a) 7,605,032,557
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
18 - Scudder Growth and Income Fund
<PAGE>
- --------------------------------------------------------------------------------
(a) The cost for federal income tax purposes was $5,963,248,302. At December
31, 1998, net unrealized appreciation for all securities based on tax cost
was $1,641,784,255. This consisted of aggregate gross unrealized
appreciation for all securities in which there was an excess of market
value over tax cost of $1,954,238,232 and aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost
over market value of $312,453,977.
(b) Securities, in part or whole, valued in good faith by the Valuation
Committee of the Board of Trustees at fair value amounted to $11,285,325
(.15% 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, 1998 aggregated
$20,100,000. These securities may also have certain restrictions as to
resale.
(c) Restricted Securities are securities which have not been registered with
the Securities and Exchange Commission under the Securities Act of 1933.
The aggregate fair value of restricted securities at December 31, 1998,
amounted to $11,285,325, which represents .15% of net assets. Information
concerning such restricted securities at December 31, 1998 is as follows:
Security Acquisition Date Cost ($)
-------- ---------------- --------
Security Capital Corp., Debenture,
6.5%, 3/29/2016 4/18/1996 16,750,000
Security Capital Corp. 4/18/1996 3,350,000
(d) Affiliated Issuer (See Notes to Financial Statements)
* Non income producing.
** Annualized yield at time of purchase; not a coupon rate.
The accompanying notes are an integral part of the financial statements.
19 - Scudder Growth and Income Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of December 31, 1998
<TABLE>
<S> <C> <C>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
Investments, at market:
Unaffiliated issuers (identified cost $5,916,776,794) ............. $7,531,562,632
Affiliated issuers (identified cost $48,641,912) .................. 73,469,925
----------------
Total investments, at market (identified cost $5,965,418,706) ........ 7,605,032,557
Cash ................................................................. 488
Receivable for investments sold ...................................... 13,658,839
Dividends and interest receivable .................................... 17,106,418
Receivable for Fund shares sold ...................................... 14,875,733
Receivable for foreign tax recoverable ............................... 1,738,638
Other assets ......................................................... 36,395
----------------
Total assets ......................................................... 7,652,449,068
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Payable for Fund shares redeemed ..................................... 64,754,310
Accrued management fee ............................................... 2,793,015
Other payables and accrued expenses .................................. 2,650,381
----------------
Total liabilities .................................................... 70,197,706
------------------------------------------------------------------------------------------
Net assets, at market value $7,582,251,362
------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Undistributed net investment income .................................. 7,600,144
Net unrealized appreciation (depreciation) on:
Investments ....................................................... 1,639,613,851
Foreign currency related transactions ............................. 101,822
Accumulated net realized gain (loss) ................................. 19,486,484
Paid-in capital ...................................................... 5,915,449,061
------------------------------------------------------------------------------------------
Net assets, at market value $7,582,251,362
------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, offering and redemption price per share
($7,582,251,362 / 288,145,757 outstanding shares of beneficial ----------------
interest, $.01 par value, unlimited number of shares authorized) ... $26.31
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
20 - Scudder Growth and Income Fund
<PAGE>
Statement of Operations
year ended December 31, 1998
<TABLE>
<S> <C>
Investment Income
- ----------------------------------------------------------------------------------------------------------------------------
Income:
Dividends -- Unaffiliated issuers (net of foreign taxes
withheld of $2,372,248) ............................................ $ 206,684,055
Dividends -- Affiliated issuers ...................................... 2,735,118
Interest ............................................................. 16,432,153
----------------
225,851,326
----------------
Expenses:
Management fee ....................................................... 34,062,247
Services to shareholders ............................................. 20,003,325
Custodian and accounting fees ........................................ 833,171
Trustees' fees and expenses .......................................... 51,072
Reports to shareholders .............................................. 1,431,547
Registration fees .................................................... 393,962
Auditing ............................................................. 57,620
Legal ................................................................ 65,219
Other ................................................................ 167,754
----------------
57,065,917
-------------------------------------------------------------------------------------------
Net investment income 168,785,409
-------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments .......................................................... 493,463,043
Futures .............................................................. 24,424,234
Foreign currency related transactions (Net of CPMF tax $126,858) ..... (601,255)
----------------
517,286,022
----------------
Net unrealized appreciation (depreciation) during the period on:
Investments .......................................................... (286,234,888)
Foreign currency related transactions ................................ 129,557
----------------
(286,105,331)
-------------------------------------------------------------------------------------------
Net gain (loss) on investment transactions 231,180,691
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 399,966,100
-------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
21 - Scudder Growth and Income Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Years Ended December 31,
Increase (Decrease) in Net Assets 1998 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income (loss) ....................... $ 168,785,409 $ 129,959,345
Net realized gain (loss) from investment
transactions .................................... 517,286,022 491,947,652
Net unrealized appreciation (depreciation) on
investment transactions during the period ....... (286,105,331) 808,698,122
---------------- ----------------
Net increase (decrease) in net assets resulting from
operations ...................................... 399,966,100 1,430,605,119
---------------- ----------------
Distributions to shareholders from:
Net investment income .............................. (166,588,779) (126,973,242)
---------------- ----------------
Net realized gains on investment transactions ...... (564,589,614) (499,553,699)
---------------- ----------------
Fund share transactions:
Proceeds from shares sold .......................... 2,391,306,573 2,222,518,008
Net asset value of shares issued to shareholders in
reinvestment of distributions ................... 685,005,575 585,826,807
Cost of shares redeemed ............................ (1,996,432,615) (965,320,076)
---------------- ----------------
Net increase in net assets from Fund share
transactions .................................... 1,079,879,533 1,843,024,739
---------------- ----------------
Increase (decrease) in net assets .................. 748,667,240 2,647,102,917
Net assets at beginning of period .................. 6,833,584,122 4,186,481,205
Net assets at end of period (including undistributed
net investment income of $7,600,144 and ---------------- ----------------
$5,816,401, respectively) ....................... $7,582,251,362 $6,833,584,122
---------------- ----------------
Other Information
- ----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period .......... 250,081,688 180,244,068
---------------- ----------------
Shares sold ........................................ 84,380,304 84,125,982
Shares issued to shareholders in reinvestment of
distributions ................................... 25,378,540 22,057,223
Shares redeemed .................................... (71,694,775) (36,345,585)
---------------- ----------------
Net increase (decrease) in Fund shares ............. 38,064,069 69,837,620
---------------- ----------------
Shares outstanding at end of period ................ 288,145,757 250,081,688
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
22 - Scudder Growth and Income Fund
<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,
1998(a) 1997(a) 1996(a) 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
----------------------------------------------------------
Net asset value, beginning of period ......................... $ 27.33 $ 23.23 $ 20.23 $ 16.26 $ 17.24
----------------------------------------------------------
Income from investment operations:
Net investment income ........................................ .62 .62 .60 .55 .49
Net realized and unrealized gain (loss) on investment
transactions ............................................... 1.06 6.26 3.84 4.46 (.05)
----------------------------------------------------------
Total from investment operations ............................. 1.68 6.88 4.44 5.01 .44
----------------------------------------------------------
Less distributions from:
Net investment income ........................................ (.61) (.58) (.57) (.56) (.51)
Net realized gains on investment transactions ................ (2.09) (2.20) (.87) (.48) (.91)
----------------------------------------------------------
Total distributions .......................................... (2.70) (2.78) (1.44) (1.04) (1.42)
----------------------------------------------------------
----------------------------------------------------------
Net asset value, end of period ............................... $ 26.31 $ 27.33 $ 23.23 $ 20.23 $ 16.26
- ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) ............................................. 6.07 30.31 22.18 31.18 2.60
Ratios and Supplemental Data
Net assets, end of period ($ millions) ....................... 7,582 6,834 4,186 3,061 1,992
Ratio of operating expenses to average net assets (%) ........ .74 .76 .78 .80 .86
Ratio of net investment income to average net assets (%) ..... 2.20 2.31 2.77 3.10 2.98
Portfolio turnover rate (%) .................................. 40.8 22.2 26.6 26.9 42.3
</TABLE>
(a) Based on monthly average shares outstanding during the period.
23 - Scudder Growth and Income Fund
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Scudder Growth and Income Fund (the "Fund") is a diversified series of
Investment Trust (the "Trust") (formerly Scudder Investment Trust). The Trust is
organized as a Massachusetts business trust and is registered under the
Investment Company Act of 1940, as amended, as an 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 Stock Market, Inc.
("Nasdaq"), 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 Nasdaq 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, whose 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 is equal to at least the repurchase price.
Futures Contracts. A futures contract is an agreement between a buyer or seller
and an established futures exchange or its clearinghouse in which the buyer or
seller agrees to take or make a delivery of a specific amount of an item at a
specified price on a specific date (settlement date). During the period, the
Fund purchased securities index futures as a temporary substitute for purchasing
selected investments.
Upon entering into a futures contract, the Fund is required to deposit with a
financial intermediary an amount ("initial margin") equal to a certain
percentage of the face value indicated in the futures contract. Subsequent
payments ("variation margin") are made or received by the Fund each day,
dependent on the daily fluctuations in the value of the underlying security, and
are recorded for financial reporting purposes as unrealized gains or losses by
the Fund. When entering into a closing transaction, the Fund will realize a gain
or loss equal to the difference between the value of the futures contract to
sell and the futures contract to buy. Futures contracts are valued at the most
recent settlement price.
Certain risks may arise upon entering into futures contracts including the risk
that an illiquid secondary market will limit the Fund's ability to close out a
futures contract prior to the settlement date and that a change in the value of
a futures contract may
24 - Scudder Growth and Income Fund
<PAGE>
not correlate exactly with changes in the value of the securities or currencies
hedged. When utilizing futures contracts to hedge, the Fund gives up the
opportunity to profit from favorable price movements in the hedged positions
during the term of the contract.
Foreign Currency Translations. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency transactions are translated into U.S. dollars
on the following basis:
(i) market value of investment securities, other assets and liabilities at
the daily rates of exchange, and
(ii) purchases and sales of investment securities, dividend and interest
income and certain expenses at the daily rates of exchange prevailing
on the respective dates of such transactions.
The Fund does not isolate that portion of gains and losses on investments which
is due to changes in foreign exchange rates from that which is due to changes in
market prices of the investments. Such fluctuations are included with the net
realized and unrealized gains and losses from investments.
Net realized and unrealized gain (loss) from foreign currency related
transactions includes gains and losses between trade and settlement dates on
securities transactions, gains and losses arising from the sales of foreign
currency, and gains and losses between the ex and payment dates on dividends,
interest, and foreign withholding taxes.
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code of 1986, 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.
25 - Scudder Growth and Income Fund
<PAGE>
B. Purchases and Sales of Securities
For the year ended December 31, 1998, purchases and sales of investment
securities (excluding short-term investments) aggregated $3,748,211,994 and
$3,033,703,695, respectively.
The aggregate face value of futures contracts opened and closed during the year
ended December 31, 1998 was $860,671,948.
C. Related Parties
Under the Management Agreement (the "Agreement") with Scudder Kemper
Investments, Inc. ("Scudder Kemper" or the "Adviser"), the Adviser directs the
investments of the Fund in accordance with its investment objectives, policies,
and restrictions. The Adviser determines the securities, instruments, and other
contracts relating to investments to be purchased, sold or entered into by the
Fund. In addition to portfolio management services, the Adviser provides certain
administrative services in accordance with the Agreement. The management fee
payable under the Agreement is equal to an annual rate of 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, 0.405% on
the next $1,500,000,000, 0.3875% on the next $4,000,000,000 and 0.37% of such
net assets in excess of $10,000,000,000, computed and accrued daily and payable
monthly. For the year ended December 31, 1998, the fee pursuant to the Agreement
amounted to $34,062,247, which was equivalent to an annual effective rate of
0.44% of the Fund's average daily net assets.
Effective September 7, 1998, Zurich Insurance Company ("Zurich"), majority owner
of the Adviser, entered into an agreement with B.A.T Industries p.l.c. ("B.A.T")
pursuant to which the financial services businesses of B.A.T were combined with
Zurich's businesses to form a new global insurance and financial services
company known as Zurich Financial Services. Upon consummation of the
transaction, the Fund's Management Agreement with Scudder Kemper was deemed to
have been assigned and, therefore, terminated. In December 1998, the Board of
Trustees and the shareholders of the Fund approved a new investment management
agreement with Scudder Kemper, which is substantially identical to the former
Management Agreement, except for the dates of execution and termination.
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, 1998, the amount charged to the Fund by SSC aggregated
$7,512,891, of which $574,455 is unpaid at December 31, 1998.
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, 1998, the Special Servicing Agreement expense charged to the Fund amounted
to $335,008.
26 - Scudder Growth and Income Fund
<PAGE>
Scudder Trust Company ("STC"), a subsidiary of the Adviser, provides
recordkeeping and other services in connection with certain retirement and
employee benefit plans invested in the Fund. For the year ended December 31,
1998, the amount charged to the Fund by STC aggregated $7,455,505, of which
$679,629 is unpaid at December 31, 1998.
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, 1998, the amount charged to the Fund by SFAC aggregated $424,247,
of which $35,517 is unpaid at December 31, 1998.
The Fund pays each of its Trustees not affiliated with the Adviser an annual
retainer, plus specified amounts for attended board and committee meetings. For
the year ended December 31, 1998, Trustees' fees and expenses aggregated
$51,072.
D. Transactions in Securities of Affiliated Issuers
An affiliated issuer is a company in which the Fund has ownership of at least 5%
of the voting securities. A summary of the Fund's transactions with companies
which are or were affiliates for the year ended December 31, 1998 are as
follows:
<TABLE>
<CAPTION>
Purchases Sales Dividend Market
Affiliate Cost ($) Cost ($) Income ($) Value ($)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
General Growth Properties, Inc -- -- 2,735,118 73,469,925
========================================================================
</TABLE>
E. Line of Credit
The Fund and several other Scudder Funds (the "Participants") share in a $850
million revolving credit facility for temporary or emergency purposes, including
the meeting of redemption requests that otherwise might require the untimely
disposition of securities. The Participants are charged an annual commitment fee
which is allocated among each of the Participants. Interest is calculated based
on the market rates at the time of the borrowing. The Fund may borrow up to a
maximum of 33 percent of its net assets under the agreement.
27 - Scudder Growth and Income Fund
<PAGE>
Report of Independent Accountants
To the Trustees of Investment Trust and the Shareholders of Scudder Growth and
Income Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Scudder Growth and Income Fund (the
"Fund") at December 31, 1998, 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 five years in the
period then ended, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1998 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
Boston, Massachusetts PricewaterhouseCoopers LLP
February 11, 1999
28 - Scudder Growth and Income Fund
<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 $2.085 per share from net long-term capital gains
during its year ended December 31, 1998, of which 100% represents 20% rate
gains. Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$540,000,000 as capital gain dividends for its year ended December 31, 1998, of
which 100% represents 20% rate gains.
For corporate shareholders, 100% of the income dividends paid during the Fund's
year ended December 31, 1998 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 Fund
<PAGE>
Shareholder Meeting Results
A Special Meeting of Shareholders (the "Meeting") of Scudder Growth and Income
Fund (the "Fund") was held on December 15, 1998, at the office of Scudder Kemper
Investments, Inc., Two International Place, Boston, Massachusetts 02110. At the
Meeting the following matters were voted upon by the shareholders (the resulting
votes for each matter are presented below).
1. To approve a new Investment Management Agreement for the Fund with Scudder
Kemper Investments, Inc.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*,
--- ------- ------- ------------------
144,480,781 3,964,192 6,087,377 0
2. To approve the revision of the Fund's fundamental lending policy.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
129,585,470 6,182,900 8,213,463 10,550,517
- --------------------------------------------------------------------------------
* 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.
30 - Scudder Growth and Income Fund
<PAGE>
This Page
intentionally
left blank.
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; President, Driscoll
Associates; Executive Fellow,
Center for Business Ethics,
Bentley College
Peter B. Freeman
Trustee, Corporate Director
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; Managing Partner,
Technology Equity Partners
Bruce F. Beaty*
Vice President
Philip S. Fortuna*
Vice President
William F. Gadsden*
Vice President
Robert T. Hoffman*
Vice President
Thomas W. Joseph*
Vice President
Valerie F. Malter*
Vice President
Ann M. McCreary*
Vice President
Thomas F. McDonough*
Vice President and Secretary
John R. Hebble*
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--
Prime Reserve Shares*
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 Corporate Bond 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 Dividend & Growth Fund
Scudder Growth and Income Fund
Scudder S&P 500 Index Fund
Scudder Real Estate Investment 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 Equity
- -------------
Worldwide
Scudder Global Fund
Scudder International Value Fund
Scudder International Growth and Income Fund
Scudder International Fund++
Scudder International Growth 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.
Industry Sector Funds
- ---------------------
Choice Series
Scudder Financial Services Fund
Scudder Health Care Fund
Scudder Technology Fund
Preferred Series
- ----------------
Scudder Tax Managed Growth Fund
Scudder Tax Managed Small
Company Fund
Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
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. ***Only the Scudder Shares of the Fund are part
of the Scudder Family of Funds. ++Only the International Shares of the Fund are
part of the Scudder Family of Funds. +++ +++A no-load variable annuity contract
provided by Charter National Life Insurance Company and its affiliate, offered
by Scudder'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 -- www.scudder.com
1-800-343-2890
Personal Investment Organizer: 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.
Distributions Direct
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 8,000 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
800 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 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 $230 billion in
assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts.
Scudder Kemper Investments has a rich heritage of innovation, integrity, and
client-focused service. In 1997, Scudder, Stevens & Clark, Inc., founded 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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