<PAGE> 1
- --------------------------------------------------------------------------------
DEAR SHAREHOLDERS:
- --------------------------------------------------------------------------------
We are pleased to provide you with the Cash Equivalent Fund semiannual
report for the six month period ended January 31, 1998.
Your fund's management greatly appreciates your decision to invest in Cash
Equivalent Fund. During the past six months, each of the fund's portfolios,
Money Market, Government Securities and Tax-Exempt, registered solid performance
and achieved its objective of providing maximum current income consistent with
stability of principal.
ECONOMIC REVIEW AND OUTLOOK
As 1997 came to a close, the strong pace of economic growth continued,
annualized GDP grew at a robust rate of 4.3% in the fourth quarter, and
inflation remained benign. As we head into 1998, growth continues, and, as
expected, the Federal Reserve Board left interest rates unchanged at their
February meeting. The Federal Reserve remains concerned about the troubles in
Southeast Asia and the possibility of further contagion to other emerging
markets. However, continued strength in the economic indicators confirms that
the economy still carries a significant amount of momentum. Stronger GDP growth
in the second half of the year is likely to spark a concern in accelerated
inflation. In this context, money market funds such as Cash Equivalent Fund
should offer the opportunity for attractive yields and should continue to be an
excellent place to invest your money to help maintain stability of income.
Your fund's management thanks you for the vote of confidence you have shown
through your investment and continues its dedication to performance. We look
forward to serving your investment needs for years to come.
Sincerely,
Frank J. Rachwalski
Vice President and Portfolio Manager
March 3, 1998
Frank Rachwalski is Vice President of Scudder Kemper Investments, Inc. and Vice
President and Portfolio Manager of Cash Equivalent Fund. Mr. Rachwalski holds
B.B.A. and M.B.A. degrees from Loyola University.
PORTFOLIO RESULTS
For the six month period ended January 31, 1998, the fund's three portfolios had
the following net annualized yields:
The Money Market Portfolio had a net annualized yield of 4.85%.
The Government Securities Portfolio had a net annualized yield of 4.82%.
The Tax-Exempt Portfolio had a net annualized yield of 3.13% and a
tax-equivalent yield of 4.98%.
NOTES
An investment in the fund is neither insured nor guaranteed by the U.S.
Government, and there can be no assurance that a portfolio will be able to
maintain a stable net asset value of $1.00 per share.
Each portfolio's net annualized yield for the six month period ended January 31,
1998, is the annualized sum of the daily dividend rates for the period. The
tax-equivalent yield for the Tax-Exempt Portfolio is based on a marginal federal
income tax rate of 37.1%. Income from the Tax-Exempt Portfolio may be subject to
state and local taxes, and, for some investors, a portion of income may be
subject to the alternative minimum tax. Yields are historical and do not
represent future yields, which will fluctuate.
The views expressed in this report reflect those of the portfolio manager only
through the end of the period of the report as stated above. The manager's views
are subject to change at any time, based on market and other conditions.
<PAGE> 2
Cash Equivalent Fund 2
- --------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
Investments at January 31, 1998 (unaudited)
(Value in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Corporate Obligations Value
<S> <C>
BANKING--4.1%
---------------------------------------------------------
Nordbanken N.A., Inc.
5.83%, 3/16/98 $ 14,899
---------------------------------------------------------
(a)Societe Generale
5.53%, 4/16/98 14,993
---------------------------------------------------------
Sumitomo Bank Capital Markets, Inc.
5.90%, 2/3/98 9,998
---------------------------------------------------------
39,890
BUSINESS LOANS--17.8%
---------------------------------------------------------
Broadway Capital Corp.
5.68%, 4/22/98 14,816
---------------------------------------------------------
Corporate Receivables Corp.
5.83%, 2/26/98 14,942
---------------------------------------------------------
CXC, Inc.
5.86%, 2/25/98 9,963
---------------------------------------------------------
Enterprise Capital Funding Corp.
5.53%, 3/2/98 14,936
---------------------------------------------------------
Eureka Securitization, Inc.
5.82%, 2/20/98 9,971
---------------------------------------------------------
Gotham Capital Corp.
5.73%, 4/24/98 14,809
---------------------------------------------------------
International Securitization Corp.
5.83%, 3/18/98 24,824
---------------------------------------------------------
Jet Funding Corp.
5.89%, 4/20/98 9,876
---------------------------------------------------------
Kitty Hawk Funding Corp.
5.83%, 3/17/98 9,931
---------------------------------------------------------
Madison Funding Corp.
5.63%, 3/10/98 9,944
---------------------------------------------------------
Sigma Finance, Inc.
5.81%, 2/20/98 14,957
---------------------------------------------------------
Strategic Asset Funding Corp.
5.79%, 2/2/98 10,000
---------------------------------------------------------
Working Capital Management Co., L.P.
6.28%, 2/25/98 14,941
---------------------------------------------------------
173,910
CAPITAL AND EQUIPMENT LENDING--4.6%
---------------------------------------------------------
(a)American Honda Finance Corp.
5.83%, 2/2/98 10,003
---------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Value
<S> <C>
(a)Caterpillar Financial Services Corp.
5.56%, 5/18/98 $ 10,000
---------------------------------------------------------
Chrysler Financial Corp.
5.83%, 3/2/98 14,933
---------------------------------------------------------
Golden Manager's Acceptance Corp.
5.53%, 3/4/98 9,954
---------------------------------------------------------
44,890
CAPTIVE BUSINESS LENDING--4.1%
---------------------------------------------------------
(a)FINOVA Capital Corp.
5.65%, 2/13/98 15,000
---------------------------------------------------------
Oakland-Alameda County Coliseum, California
5.87%, 2/19/98 10,000
---------------------------------------------------------
Sony Capital Corp.
5.82%, 2/20/98 14,957
---------------------------------------------------------
39,957
CONSUMER LENDING--7.2%
---------------------------------------------------------
(a)Beneficial Corp.
5.58%, 2/17/98 10,000
---------------------------------------------------------
(a)(b)GMAC Mortgage Corporation of Pennsylvania
5.90%, 2/2/98 30,000
---------------------------------------------------------
(a)Household Finance Corp.
5.63%, 2/27/98 15,000
---------------------------------------------------------
Sears Roebuck Acceptance Corp.
5.54%, 3/10/98 14,918
---------------------------------------------------------
69,918
CONSUMER PRODUCTS--1.5%
---------------------------------------------------------
Coca-Cola Enterprises, Inc.
5.55%, 3/24/98 14,886
---------------------------------------------------------
DIVERSIFIED FINANCE--6.1%
---------------------------------------------------------
APEX Funding Corp.
5.74%, 4/30/98 14,795
---------------------------------------------------------
(a)CIT Group Holdings, Inc.
5.57%, 2/2/98 9,993
---------------------------------------------------------
General Electric Capital Corp.
5.81%, 2/27/98 9,960
---------------------------------------------------------
Old Line Funding Corp.
5.55% - 5.89%, 2/20/98 - 3/5/98 24,900
---------------------------------------------------------
59,648
</TABLE>
<PAGE> 3
Cash Equivalent Fund 3
- --------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
Investments at January 31, 1998 (unaudited)
(Value in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
<S> <C>
FINANCIAL SERVICES--5.6%
---------------------------------------------------------
(a)Bear Stearns Cos., Inc.
5.70%, 2/6/98 $ 10,000
---------------------------------------------------------
(a)CS First Boston, Inc.
5.67%, 2/2/98 5,000
---------------------------------------------------------
(a)Goldman, Sachs Group, L.P.
5.53%, 2/10/98 10,000
---------------------------------------------------------
(a)Merrill Lynch & Co., Inc.
5.68%, 2/4/98 10,000
---------------------------------------------------------
(a)Morgan Stanley, Dean Witter, Discover & Co.
5.59%, 2/18/98 10,000
---------------------------------------------------------
(a)Salomon, Inc.
5.80%, 2/4/98 10,000
---------------------------------------------------------
55,000
UTILITIES--2.0%
---------------------------------------------------------
MCI Communications Corp.
5.84%, 2/17/98 9,976
---------------------------------------------------------
New Hampshire Industrial Development Authority
5.87%, 2/19/98 10,000
---------------------------------------------------------
19,976
---------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS--53.0%
(average maturity: 33 days) 518,075
---------------------------------------------------------
BANK OBLIGATIONS
CERTIFICATES OF DEPOSIT AND BANK NOTES-U.S.
BANKS--19.0%
---------------------------------------------------------
(a)Amex Centurian Bank
5.68%, 2/5/98 10,000
---------------------------------------------------------
(a)AmSouth Bank of Alabama
5.51%, 2/23/98 9,996
---------------------------------------------------------
(a)Bank One
5.61%, 2/3/98 9,996
---------------------------------------------------------
(a)Bankers Trust Co.
5.69%, 2/2/98 24,999
---------------------------------------------------------
(a)Comerica Bank
5.77%, 3/23/98 9,996
---------------------------------------------------------
(a)CoreStates Bank, N.A.
5.57%, 2/20/98 10,000
---------------------------------------------------------
(a)First National Bank of Boston
5.67%, 2/2/98 9,999
---------------------------------------------------------
(a)First USA Bank
6.21%, 3/30/98 10,030
---------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Value
<S> <C>
(a)Key Bank, N.A.
5.58%, 2/2/98 $ 7,998
---------------------------------------------------------
MBNA America Bank, N.A.
5.87%, 2/23/98 10,000
---------------------------------------------------------
(a)Mellon Bank Corp.
5.68%, 2/9/98 9,999
---------------------------------------------------------
Morgan Guaranty Trust Co. of New York
(a) 5.63%, 2/2/98 12,999
5.80%, 3/23/98 25,000
---------------------------------------------------------
(a)Old Kent Bank
5.68%, 2/2/98 24,998
---------------------------------------------------------
186,010
CERTIFICATES OF DEPOSIT-FOREIGN BANKS--6.2%
---------------------------------------------------------
(a)Banque Nationale de Paris
5.61%, 2/2/98 10,000
---------------------------------------------------------
Swiss Bank Corp.
5.75%, 2/20/98 25,000
---------------------------------------------------------
Toronto Dominion Bank
5.56%, 4/9/98 25,000
---------------------------------------------------------
60,000
---------------------------------------------------------
TOTAL BANK OBLIGATIONS--25.2%
(average maturity: 23 days) 246,010
---------------------------------------------------------
(C)REPURCHASE AGREEMENTS
(Dated 2/98 - 4/98, collateralized by Federal
Home Loan Mortgage Corporation and Federal
National Mortgage Association securities)
---------------------------------------------------------
CS First Boston, Inc.
(held at The Chase Manhattan Bank)
5.50% - 5.51%, 3/11/98 - 3/19/98 50,000
---------------------------------------------------------
Chase Securities, Inc.
(held at The Chase Manhattan Bank)
5.55% - 5.75%, 2/11/98 - 4/8/98 100,000
---------------------------------------------------------
Goldman, Sachs & Co.
(held at The Bank of New York)
5.51%, 3/26/98 15,000
---------------------------------------------------------
Salomon Brothers, Inc.
(held at The Bank of New York)
5.75%, 3/3/98 25,000
---------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS--19.4%
(average maturity: 44 days) 190,000
---------------------------------------------------------
</TABLE>
<PAGE> 4
Cash Equivalent Fund 4
- --------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
Investments at January 31, 1998 (unaudited)
(Value in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
<S> <C>
U.S. GOVERNMENT AGENCY NOTE--2.1%
(average maturity: 4 days)
(a)Student Loan Marketing Association
5.61%, 2/3/98 $ 19,993
---------------------------------------------------------
TOTAL INVESTMENTS--99.7%
(average maturity: 32 days) 974,078
---------------------------------------------------------
CASH AND OTHER ASSETS,
LESS LIABILITIES--.3% 3,270
---------------------------------------------------------
NET ASSETS--100% $977,348
---------------------------------------------------------
</TABLE>
See accompanying Notes to Portfolios of Investments.
<PAGE> 5
Cash Equivalent Fund 5
- --------------------------------------------------------------------------------
GOVERNMENT SECURITIES PORTFOLIO
Investments at January 31, 1998 (unaudited)
(Value in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Short-Term Notes Value
<S> <C>
(Issued or guaranteed by U.S. government
agencies or instrumentalities)
-----------------------------------------------------------
(a)Export-Import Bank of the United States
Cathay Pacific Airways Limited
5.69%, 2/14/98 $ 10,702
KA Leasing, Ltd.
5.69%, 2/15/98 12,287
Kuwait Investment Authority
5.58%, 2/15/98 10,025
VARIG Brazilian Airlines
5.69%, 4/16/98 9,241
-----------------------------------------------------------
(a)Federal Farm Credit Banks
5.61%, 2/2/98 9,999
-----------------------------------------------------------
(a)Federal Home Loan Bank
5.70%, 2/2/98 15,601
-----------------------------------------------------------
Federal Home Loan Mortgage Corp.
5.68%, 3/6/98 4,975
-----------------------------------------------------------
Federal National Mortgage Association
(a) 5.23%, 2/3/98 13,934
5.70%, 3/25/98 4,960
-----------------------------------------------------------
(a)Overseas Private Investment Corp.
International Paper Co.
5.55%, 4/15/98 11,600
Omolon
5.71%, 2/3/98 4,445
-----------------------------------------------------------
(a)Student Loan Marketing Association
5.40%, 2/3/98 85,738
-----------------------------------------------------------
TOTAL SHORT-TERM NOTES--43.8%
(average maturity: 15 days) 193,507
-----------------------------------------------------------
<CAPTION>
(c)REPURCHASE AGREEMENTS Value
<S> <C>
(Dated 2/98 - 4/98, collateralized by Federal
Home Loan Mortgage Corporation, Federal National
Mortgage Association and Government National
Mortgage Association securities)
-----------------------------------------------------------
Bear, Stearns & Co. Inc.
5.55% - 5.87%, 2/11/98 - 3/4/98 $ 20,000
-----------------------------------------------------------
CS First Boston, Inc.
(held at The Chase Manhattan Bank)
5.64%, 2/2/98 20,000
-----------------------------------------------------------
Chase Securities, Inc.
(held at The Chase Manhattan Bank)
5.55%, 4/2/98 10,000
-----------------------------------------------------------
Morgan Stanley, Dean Witter, Discover & Co.
(held at The Bank of New York)
5.53% - 5.58%, 2/4/98 - 4/8/98 65,000
-----------------------------------------------------------
Nikko Securities Co. International, Inc.
(held at The Bank of New York)
5.53% - 5.74%, 3/11/98 - 4/15/98 47,000
-----------------------------------------------------------
Nomura Securities International, Inc.
(held at The Bank of New York)
5.54% - 5.84%, 2/11/98 - 4/6/98 60,000
-----------------------------------------------------------
Salomon Brothers, Inc.
(held at The Bank of New York)
5.65% - 5.81%, 2/2/98 - 3/3/98 20,000
-----------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS--54.7%
(average maturity: 37 days) 242,000
-----------------------------------------------------------
TOTAL INVESTMENTS--98.5%
(average maturity: 28 days) 435,507
-----------------------------------------------------------
CASH AND OTHER ASSETS,
LESS LIABILITIES--1.5% 6,552
-----------------------------------------------------------
NET ASSETS--100% $442,059
-----------------------------------------------------------
</TABLE>
See accompanying Notes to Portfolios of Investments.
<PAGE> 6
Cash Equivalent Fund 6
- --------------------------------------------------------------------------------
TAX-EXEMPT PORTFOLIO
Investments at January 31, 1998 (unaudited)
(Value in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(a)Variable Rate Demand Securities Value
<S> <C>
ARKANSAS
-----------------------------------------------------------
Little River City
4.05% $ 2,500
CALIFORNIA
-----------------------------------------------------------
Los Angeles
Harbor Improvement Corp.
3.70% 6,000
DISTRICT OF COLUMBIA
-----------------------------------------------------------
General Obligation
3.60% 13,520
GEORGIA
-----------------------------------------------------------
Laurens County Development Authority
Solid Waste Disposal Revenue
3.65% 5,000
ILLINOIS
-----------------------------------------------------------
Alsip
Industrial Development Revenue
3.60% 3,750
-----------------------------------------------------------
Development Finance Authority
Adventist Health System
3.76% 7,000
Grecian Delight Foods Project
3.85% 8,300
Mattoon Precision Manufacturing Project
4.00% 7,500
-----------------------------------------------------------
Rockford
Industrial Project Revenue
3.70% 4,000
-----------------------------------------------------------
Student Assistance Commission
3.65% 4,800
INDIANA
-----------------------------------------------------------
Ossian
Economic Development Revenue
3.70% 3,200
KANSAS
-----------------------------------------------------------
Kansas City
Pollution Control Revenue
3.70% 17,835
KENTUCKY
-----------------------------------------------------------
Boone County
Pollution Control Revenue
3.85% 8,000
-----------------------------------------------------------
Shelbyville
Industrial Building Revenue
4.00% 3,715
</TABLE>
<TABLE>
<CAPTION>
Value
<S> <C>
LOUISIANA
-----------------------------------------------------------
Lafayette
Industrial Economic Development Authority
3.65% $ 5,000
-----------------------------------------------------------
Public Facilities Authority
3.90% 7,700
MICHIGAN
-----------------------------------------------------------
Strategic Fund Limited Obligation Revenue
3.70% 5,500
MINNESOTA
-----------------------------------------------------------
Owatonna
Hospital Revenue
3.60% 6,805
NEVADA
-----------------------------------------------------------
Department of Business and Industry
3.75% 5,000
NEW YORK
-----------------------------------------------------------
New York City
General Obligation
4.00% 13,300
NORTH CAROLINA
-----------------------------------------------------------
City of Winston-Salem
3.70% 4,000
OHIO
-----------------------------------------------------------
Butler County
Industrial Development Revenue
3.65% 4,280
-----------------------------------------------------------
Medina County
Health Care Facilities Revenue
3.55% 3,000
PENNSYLVANIA
-----------------------------------------------------------
Delaware County
Redevelopment Authority
3.95% 8,000
-----------------------------------------------------------
Emmaus
General Authority Revenue
3.60% 9,900
-----------------------------------------------------------
Lehigh County
Industrial Development Authority
3.85% 4,900
SOUTH CAROLINA
-----------------------------------------------------------
Richland County
Hospital Revenue
3.90% 5,655
</TABLE>
<PAGE> 7
Cash Equivalent Fund 7
- --------------------------------------------------------------------------------
TAX-EXEMPT PORTFOLIO
Investments at January 31, 1998 (unaudited)
(Value in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
<S> <C>
TENNESSEE
- -----------------------------------------------------------
Coffee County
Industrial Board Inc.
3.70% $ 4,000
TEXAS
- -----------------------------------------------------------
Brazos River Authority
4.00% 3,000
VERMONT
- -----------------------------------------------------------
Economic Development Authority
4.00% 5,000
WASHINGTON
- -----------------------------------------------------------
Port Angeles
Industrial Development Corp.
4.00% 3,900
- -----------------------------------------------------------
Port of Vancouver
4.00% 5,000
- -----------------------------------------------------------
TOTAL VARIABLE RATE
DEMAND SECURITIES--41.9%
(average maturity: 7 days) 199,060
- -----------------------------------------------------------
OTHER SECURITIES
ALASKA
- -----------------------------------------------------------
Valdez
Marine Terminal Revenue
3.85% - 3.90%, 2/13/98 - 3/10/98 9,500
ARIZONA
- -----------------------------------------------------------
Salt River Project
Agricultural Improvement and Power District
3.80%, 3/11/98 - 3/19/98 13,100
COLORADO
- -----------------------------------------------------------
Platte River Power Authority
3.80%, 2/11/98 - 2/19/98 11,400
DISTRICT OF COLUMBIA
- -----------------------------------------------------------
Supplemental Student Loan Revenue
3.93%, 7/1/98 4,001
FLORIDA
- -----------------------------------------------------------
Jacksonville
Electric Authority
3.60% - 3.85%, 2/12/98 - 5/14/98 19,100
- -----------------------------------------------------------
Orange County
Governmental Regional Financing
3.80%, 2/19/98 4,000
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Value
<S> <C>
Orlando
Capital Improvement Revenue
3.80%, 3/6/98 $ 2,900
- -----------------------------------------------------------
Sarasota County
Public Hospital District
3.80%, 2/13/98 2,150
GEORGIA
- -----------------------------------------------------------
Municipal Electric Authority
3.80% - 3.85%, 2/12/98 - 3/10/98 11,400
ILLINOIS
- -----------------------------------------------------------
Education Facilities Authority
3.80%, 3/17/98 7,150
INDIANA
- -----------------------------------------------------------
Jasper County
Pollution Control Revenue
3.80%, 2/23/98 12,000
- -----------------------------------------------------------
Mount Vernon
Pollution Control and Solid Waste Disposal
Revenue
3.80%, 2/13/98 9,000
- -----------------------------------------------------------
Sullivan
Pollution Control Revenue
3.80% - 3.85%, 2/19/98 - 2/20/98 4,815
KANSAS
- -----------------------------------------------------------
Burlington
Pollution Control Revenue
3.80%, 3/19/98 5,500
KENTUCKY
- -----------------------------------------------------------
Danville
Multi-City Lease Revenue
3.90%, 2/6/98 - 3/10/98 14,000
- -----------------------------------------------------------
Pendleton County
Multi-County Lease Revenue
3.80%, 2/12/98 3,600
MARYLAND
- -----------------------------------------------------------
Anne Arundel County
Port Facilities Revenue
3.85% - 3.90%, 3/19/98 - 3/25/98 9,180
MISSISSIPPI
- -----------------------------------------------------------
Claiborne County
Pollution Control Revenue
3.80%, 2/12/98 8,825
MISSOURI
- -----------------------------------------------------------
Independence Water Utility Revenue
3.50% - 3.80%, 2/9/98 - 3/18/98 9,100
</TABLE>
<PAGE> 8
Cash Equivalent Fund 8
- --------------------------------------------------------------------------------
TAX-EXEMPT PORTFOLIO
Investments at January 31, 1998 (unaudited)
(Value in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
<S> <C>
NEW YORK
- -----------------------------------------------------------
Nassau County
Revenue Anticipation Notes
3.85%, 4/10/98 $ 5,504
- -----------------------------------------------------------
New York City
Municipal Water Finance Authority
3.80%, 3/11/98 - 3/20/98 9,000
NEW JERSEY
- -----------------------------------------------------------
Transportation Authority
3.60%, 5/13/98 5,000
NORTH CAROLINA
- -----------------------------------------------------------
Eastern Municipal Power Agency
3.75%, 3/12/98 5,300
- -----------------------------------------------------------
Municipal Power Agency
3.70% - 3.80%, 2/10/98 - 2/19/98 14,000
OHIO
- -----------------------------------------------------------
Air Quality Development Authority
3.75%, 3/6/98 2,800
- -----------------------------------------------------------
Water Development Authority
3.80% - 3.85%, 2/13/98 - 3/19/98 2,300
PENNSYLVANIA
- -----------------------------------------------------------
Philadelphia
Gas Works Revenue
3.80%, 2/24/98 2,600
TEXAS
- -----------------------------------------------------------
Austin
Combined Utility System
3.80%, 3/17/98 4,000
- -----------------------------------------------------------
Dallas
Area Rapid Transit
3.80%, 3/24/98 5,000
- -----------------------------------------------------------
Houston
Water and Sewer System
3.80%, 2/11/98 - 3/12/98 16,000
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Value
<S> <C>
Lower Colorado River
3.80%, 3/24/98 $ 4,000
- -----------------------------------------------------------
Municipal Power Agency
3.80%, 2/12/98 - 2/26/98 16,900
- -----------------------------------------------------------
Port Development Corporation
4.10%, 3/10/98 4,250
- -----------------------------------------------------------
San Antonio
Electric and Gas Systems
3.80%, 2/11/98 - 3/12/98 11,500
UTAH
- -----------------------------------------------------------
Intermountain Power Agency
3.75%, 3/25/98 5,400
VIRGINIA
- -----------------------------------------------------------
Chesterfield County
Industrial Development Authority
3.90%, 3/10/98 4,000
- -----------------------------------------------------------
Louisa County
Industrial Development Authority
3.90%, 2/9/98 2,000
- -----------------------------------------------------------
TOTAL OTHER
SECURITIES--59.1%
(average maturity: 35 days) 280,275
- -----------------------------------------------------------
TOTAL INVESTMENTS--101.0%
(average maturity: 23 days) 479,335
- -----------------------------------------------------------
LIABILITIES, LESS
OTHER ASSETS--(1.0)% (4,810)
- -----------------------------------------------------------
NET ASSETS--100% $474,525
- -----------------------------------------------------------
</TABLE>
<PAGE> 9
Cash Equivalent Fund 9
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIOS OF INVESTMENTS
Interest rates represent annualized yield to date of maturity, except for
variable rate securities described in Note (a). For each security, cost (for
financial reporting and federal income tax purposes) and carrying value are the
same. Likewise, carrying value approximates principal amount.
(a) Variable rate securities. The rates shown are the current rates at January
31, 1998. The dates shown represent the demand date or the next interest rate
change date. Securities in the Tax-Exempt Portfolio shown without a date are
payable within five business days and are backed by credit support agreements
from banks or insurance institutions.
(b) Illiquid securities. At January 31, 1998, the value of illiquid securities
in the Money Market Portfolio was $30,000,000, which represented 3.1% of net
assets.
(c) Repurchase agreements are fully collateralized by U.S. government
securities. All collateral is held at the Fund's custodian bank, Investors
Fiduciary Trust Company, or at subcustodian banks, as indicated. The collateral
is monitored daily by the Fund so that its market value exceeds the carrying
value of the repurchase agreement.
See accompanying Notes to Financial Statements.
<PAGE> 10
Cash Equivalent Fund 10
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
January 31, 1998 (unaudited)
(in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY GOVERNMENT
MARKET SECURITIES TAX-EXEMPT
ASSETS PORTFOLIO PORTFOLIO PORTFOLIO
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investments, at amortized cost:
Short-term securities $784,078 193,507 479,335
- -------------------------------------------------------------------------------------------------------
Repurchase agreements 190,000 242,000 --
- -------------------------------------------------------------------------------------------------------
Cash 2,652 4,968 --
- -------------------------------------------------------------------------------------------------------
Interest receivable 4,522 3,037 3,017
- -------------------------------------------------------------------------------------------------------
Total assets 981,252 443,512 482,352
- -------------------------------------------------------------------------------------------------------
LIABILITIES AND NET ASSETS
- -------------------------------------------------------------------------------------------------------
Cash overdraft -- -- 6,568
- -------------------------------------------------------------------------------------------------------
Payable for:
Dividends 2,205 998 681
- -------------------------------------------------------------------------------------------------------
Management fee 200 74 52
- -------------------------------------------------------------------------------------------------------
Distribution services fee 288 145 129
- -------------------------------------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 400 62 142
- -------------------------------------------------------------------------------------------------------
Trustees' fees and other 811 174 255
- -------------------------------------------------------------------------------------------------------
Total liabilities 3,904 1,453 7,827
- -------------------------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $977,348 442,059 474,525
- -------------------------------------------------------------------------------------------------------
THE PRICING OF SHARES
- -------------------------------------------------------------------------------------------------------
Shares outstanding 977,348 442,059 474,525
- -------------------------------------------------------------------------------------------------------
Net asset value and redemption price per share $1.00 1.00 1.00
- -------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 11
Cash Equivalent Fund 11
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
Six months ended January 31, 1998 (unaudited)
(in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY GOVERNMENT
MARKET SECURITIES TAX-EXEMPT
PORTFOLIO PORTFOLIO PORTFOLIO
-----------------------------------------
<S> <C> <C> <C>
INTEREST INCOME $28,493 12,234 8,739
- -------------------------------------------------------------------------------------------------------
EXPENSES:
Management fee 990 432 506
- -------------------------------------------------------------------------------------------------------
Distribution services fee 1,851 807 748
- -------------------------------------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 1,499 518 211
- -------------------------------------------------------------------------------------------------------
Reports to shareholders 40 16 21
- -------------------------------------------------------------------------------------------------------
Registration costs 74 20 37
- -------------------------------------------------------------------------------------------------------
Professional fees 24 10 10
- -------------------------------------------------------------------------------------------------------
Trustees' fees and other 50 30 10
- -------------------------------------------------------------------------------------------------------
Total expenses 4,528 1,833 1,543
- -------------------------------------------------------------------------------------------------------
Net investment income $23,965 10,401 7,196
- -------------------------------------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
Six months ended January 31, 1998 (unaudited) and year ended July 31, 1997
(in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET GOVERNMENT SECURITIES TAX-EXEMPT
PORTFOLIO PORTFOLIO PORTFOLIO
-----------------------------------------------------------------------------
1998 1997 1998 1997 1998 1997
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS, DIVIDENDS AND
CAPITAL SHARE ACTIVITY
Net investment income $ 23,965 68,545 10,401 34,785 7,196 18,954
- -----------------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from net
investment income (23,965) (68,545) (10,401) (34,785) (7,196) (18,954)
- -----------------------------------------------------------------------------------------------------------------------------
Capital share transactions (dollar amounts
and number of shares are the same):
Shares sold 1,991,662 5,384,970 1,756,840 3,223,496 678,781 2,237,435
- -----------------------------------------------------------------------------------------------------------------------------
Shares issued in reinvestment of dividends 23,748 66,935 10,178 33,510 7,067 18,560
- -----------------------------------------------------------------------------------------------------------------------------
2,015,410 5,451,905 1,767,018 3,257,006 685,848 2,255,995
Shares redeemed (2,008,578) (7,255,984) (1,728,996) (4,447,097) (656,262) (2,742,620)
- -----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from capital share
transactions and total increase (decrease) in
net assets 6,832 (1,804,079) 38,022 (1,190,091) 29,586 (486,625)
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 970,516 2,774,595 404,037 1,594,128 444,939 931,564
- -----------------------------------------------------------------------------------------------------------------------------
End of period $ 977,348 970,516 442,059 404,037 474,525 444,939
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 12
Cash Equivalent Fund 12
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. DESCRIPTION OF THE FUND
Cash Equivalent Fund (the Fund) is an open-end management investment company
organized as a business trust under the laws of Massachusetts currently offering
three series of shares (Portfolios). The Money Market Portfolio invests
primarily in short-term high quality obligations of major banks and
corporations. The Government Securities Portfolio invests exclusively in
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities and repurchase agreements thereon. The Tax-Exempt Portfolio
invests in short-term high quality municipal securities.
2. SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT VALUATION
Investments are stated at amortized cost, which approximates market value. In
the event that a deviation of 1/2 of 1% or more exists between a Portfolio's
$1.00 per share net asset value, calculated at amortized cost, and the net asset
value calculated by reference to market-based values, or if there is any other
deviation that the Board of Trustees believes would result in a material
dilution to shareholders or purchasers, the Board of Trustees will promptly
consider what action should be initiated.
INVESTMENT TRANSACTIONS AND INTEREST INCOME
Investment transactions are accounted for on the trade date (date the order to
buy or sell is executed). Interest income is recorded on the accrual basis and
includes amortization of premium and discount on investments.
EXPENSES
Expenses arising in connection with a Portfolio are allocated to that Portfolio.
Other Fund expenses are allocated among the Portfolios in proportion to their
relative net assets.
FUND SHARE VALUATION AND DIVIDENDS TO SHAREHOLDERS
Fund shares are sold and redeemed on a continuous basis at net asset value. On
each day that the New York Stock Exchange is open for trading, each Portfolio
determines its net asset value per share (NAV) by dividing the total value of
the Portfolio's investments and other assets, less liabilities, by the number of
Portfolio shares outstanding. The NAV is determined at 11:00 a.m., 1:00 p.m. and
3:00 p.m. Chicago time for the Money Market and Government Securities Portfolios
and at 11:00 a.m. and 3:00 p.m. Chicago time for the Tax-Exempt Portfolio. Each
Portfolio declares a daily dividend, equal to its net investment income for that
day, payable monthly. Net investment income consists of all interest income plus
(minus) all realized gains (losses) on portfolio securities, minus all expenses
of the Portfolio.
FEDERAL INCOME TAXES
Each Portfolio has complied with the special provisions of the Internal Revenue
Code available to investment companies for the six months ended January 31,
1998.
3. TRANSACTIONS WITH AFFILIATES
INVESTMENT MANAGER COMBINATION
Effective December 31, 1997, Zurich Insurance Company, the parent of Zurich
Kemper Investments, Inc. (ZKI), acquired a majority interest in Scudder, Stevens
& Clark, Inc. (Scudder), another major investment manager. As a result of this
transaction, the operations of ZKI were combined with Scudder to form a new
global investment organization named Scudder Kemper Investments, Inc. (Scudder
Kemper). The transaction resulted in the termination of the Fund's investment
management agreement with ZKI, however, a new investment management agreement
between the Fund and Scudder Kemper was approved by the Fund's Board of Trustees
and by the Fund's Shareholders. The new management agreement, which was
effective
<PAGE> 13
Cash Equivalent Fund 13
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1997, is the same in all material respects as the previous
management agreement, except that Scudder Kemper is the new investment adviser
to the Fund. In addition, the names of the Fund's principal underwriter and
shareholder service agent were changed to Kemper Distributors, Inc. (KDI) and
Kemper Service Company (KSvC), respectively.
MANAGEMENT AGREEMENT
The Fund has a management agreement with Scudder Kemper and pays a management
fee for the Money Market and Government Securities Portfolios at an annual rate
of .22% of the first $500 million of combined average daily net assets of those
Portfolios declining to .15% of combined average daily net assets in excess of
$3 billion. The Tax-Exempt Portfolio pays a management fee at an annual rate of
.22% of the first $500 million of average daily net assets of such Portfolio
declining to .15% of average daily net assets in excess of $3 billion. During
the six months ended January 31, 1998, the Fund incurred management fees of
$1,928,000.
DISTRIBUTION AGREEMENT
The Fund also has an administration, shareholder services and distribution
agreement with KDI. For its services as primary distributor, the Fund pays KDI
an annual fee of .38% of average daily net assets for the Money Market and
Government Securities Portfolios and .33% of average daily net assets for the
Tax-Exempt Portfolio. For the six months ended January 31, 1998, the Fund
incurred distribution fees of $3,406,000. KDI has related service agreements
with various firms to provide cash management and other services for Fund
shareholders. Under these agreements, KDI pays such firms based on the average
daily net assets of those accounts that they maintain and service at an annual
rate ranging from .15% to .40% for the Money Market and Government Securities
Portfolios, and from .15% to .33% for the Tax-Exempt Portfolio. During the six
months ended January 31, 1998, KDI paid fees of $3,260,000 to various firms
pursuant to the related service agreements.
SHAREHOLDER SERVICES AGREEMENT
Pursuant to a services agreement with the Fund's transfer agent, Kemper Service
Company (KSvC) is the shareholder service agent of the Fund. Under the
agreement, KSvC received shareholder services fees of $1,473,000 for the six
months ended January 31, 1998.
OFFICERS AND TRUSTEES
Certain officers or trustees of the Fund are also officers or directors of
Scudder Kemper. During the six months ended January 31, 1998, the Fund made no
payments to its officers and incurred trustees' fees of $36,000 to independent
trustees.
<PAGE> 14
Cash Equivalent Fund 14
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JANUARY 31, 1998 YEAR ENDED JULY 31,
MONEY MARKET PORTFOLIO (UNAUDITED) 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $1.00 1.00 1.00 1.00 1.00
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income and dividends declared .03 .05 .05 .05 .03
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.00 1.00 1.00 1.00 1.00
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 2.47% 4.78 4.94 4.95 2.82
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Expenses .92% .93 .89 .87 .88
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income 4.88% 4.64 4.86 4.84 2.78
- -------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $977,348 970,516 2,774,595 3,593,294 3,387,245
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Note:
The Money Market Portfolio's total return for the year ended July 31, 1995
includes the effect of a capital contribution from the investment manager.
Without the capital contribution, the total return would have been 4.28%.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JANUARY 31, 1998 YEAR ENDED JULY 31,
GOVERNMENT SECURITIES PORTFOLIO (UNAUDITED) 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $1.00 1.00 1.00 1.00 1.00
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income and dividends declared .03 .05 .05 .05 .03
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.00 1.00 1.00 1.00 1.00
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 2.45% 4.85 5.00 4.96 2.82
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Expenses .85% .83 .79 .81 .81
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income 4.84% 4.73 4.90 4.87 2.72
- -------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $442,059 404,037 1,594,128 1,785,098 1,538,011
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JANUARY 31, 1998 YEAR ENDED JULY 31,
TAX-EXEMPT PORTFOLIO (UNAUDITED) 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $1.00 1.00 1.00 1.00 1.00
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income and dividends declared .02 .03 .03 .03 .02
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.00 1.00 1.00 1.00 1.00
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 1.59% 3.03 3.11 3.21 2.05
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Expenses .67% .71 .70 .68 .68
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income 3.14% 2.97 3.08 3.15 2.02
- -------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $474,525 444,939 931,564 1,109,861 1,136,901
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 15
Cash Equivalent Fund 15
- --------------------------------------------------------------------------------
SPECIAL SHAREHOLDERS' MEETING
On December 3, 1997, a special shareholders' meeting was held and adjourned as
necessary. Cash Equivalent Fund shareholders were asked to vote on six separate
issues: election of nine members to the Board of Trustees, ratification of Ernst
& Young LLP as independent auditors, approval of new investment management
agreement with Scudder Kemper Investments, Inc., approval of new rule 12b-1
distribution plan, approval of changes in investment policies and approval of an
amendment to the Agreement and Declaration of Trust. The results are as follows:
ITEM 1: ELECTION OF THE BOARD OF TRUSTEES
<TABLE>
<CAPTION>
FOR WITHHELD
- ----------------------------------------------------
<S> <C> <C>
DAVID W. BELIN 1,130,515,645 13,033,541
LEWIS A. BURNHAM 1,132,400,332 11,148,853
DONALD L. DUNAWAY 1,133,156,189 10,392,996
ROBERT B. HOFFMAN 1,132,065,556 11,483,629
DONALD R. JONES 1,132,730,502 10,818,684
SHIRLEY D. PETERSON 1,132,374,568 11,174,617
DANIEL PIERCE 1,132,738,488 10,810,697
WILLIAM P. SOMMERS 1,133,263,791 10,285,395
EDMOND D. VILLANI 1,132,797,297 10,751,888
</TABLE>
ITEM 2: SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS FOR THE FUND
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
- -------------------------------------
<S> <C> <C>
1,128,683,209 5,068,969 9,797,008
</TABLE>
ITEM 3: NEW INVESTMENT MANAGEMENT AGREEMENT
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
- ------------------------------------
<S> <C> <C>
GOVERNMENT SECURITIES PORTFOLIO
579,526,650 5,707,549 6,736,338
MONEY MARKET PORTFOLIO
580,103,616 14,819,962 8,960,587
</TABLE>
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
- ------------------------------------
<S> <C> <C>
TAX-EXEMPT PORTFOLIO
191,504,508 4,543,391 3,953,698
</TABLE>
ITEM 4: NEW RULE 12B-1 DISTRIBUTION PLAN
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
- -------------------------------------
<S> <C> <C>
GOVERNMENT SECURITIES PORTFOLIO
572,103,136 10,633,491 9,233,911
MONEY MARKET PORTFOLIO
571,115,365 21,951,650 10,817,150
TAX-EXEMPT PORTFOLIO
185,587,184 9,185,651 5,228,763
</TABLE>
ITEM 5: APPROVE CHANGES IN INVESTMENT POLICIES
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
- -------------------------------------
<S> <C> <C>
GOVERNMENT SECURITIES PORTFOLIO
139,060,384 6,237,086 10,803,402
MONEY MARKET PORTFOLIO
251,648,705 18,920,145 11,234,897
TAX-EXEMPT PORTFOLIO
232,399,243 8,252,828 7,549,705
</TABLE>
ITEM 6: APPROVE AN AMENDMENT TO THE AGREEMENT AND DECLARATION OF TRUST
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
- ------------------------------------
<S> <C> <C>
GOVERNMENT SECURITIES PORTFOLIO
139,509,023 6,130,082 10,461,767
MONEY MARKET PORTFOLIO
254,300,017 16,753,982 10,749,748
TAX-EXEMPT PORTFOLIO
225,481,880 14,559,001 8,160,895
</TABLE>
<PAGE> 16
Cash Equivalent
Fund
Semiannual Report
January 31, 1998
INVESTMENT MANAGER
Scudder Kemper Investments, Inc.
PRINCIPAL UNDERWRITER
Kemper Distributors, Inc.
222 South Riverside Plaza
Chicago, IL 60606
This report is not to be distributed unless preceded or
accompanied by a prospectus.
CEF-3 1045100 2/98 (LOGO)printed on recycled paper
