<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, 1999.
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
The close of 1998 witnessed heightened consumer confidence bolstered by good
news on many fronts. December retail sales were up 0.9 %, housing was up over
10% for the year, auto sales were strong and the Dow, the S&P 500 and NASDAQ all
ended the year up, after some earlier corrections. Low unemployment and solid
earnings complete the setting. Among some other factors influencing the Federal
Reserve's stance on monetary policy are the delicate financial and economic
concerns facing Asia and Brazil, potential for some global economic slowdown and
barely discernible inflation. In this context, money market funds such as Cash
Equivalent Fund should offer the opportunity for attractive yields and continue
to be an excellent place to invest your money.
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 Rachwalski
Frank Rachwalski
Vice President and Portfolio Manager
February 23, 1999
Frank Rachwalski is a Managing Director of Scudder Kemper Investments, Inc. and
Vice President and Lead 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, 1999, the fund's three portfolios had
the following net annualized yields:
The Money Market Portfolio had a net annualized yield of 4.56%.
The Government Securities Portfolio had a net annualized yield of 4.42%.
The Tax-Exempt Portfolio had a net annualized yield of 2.75% and a
tax-equivalent yield of 4.37 %.
NOTES
Like all money funds, an investment in the fund is not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other government agency.
Although the fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the fund.
Each portfolio's net annualized yield for the six month period ended January 31,
1999, 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. Performance and yields are historical
and do not guarantee future results; yields 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, 1999 (unaudited)
(Value in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Corporate Obligations Value
<S> <C>
- ---------------------------------------------------------
BANKING--12.0%
- ---------------------------------------------------------
Abbey National North America
4.92%, 4/6/99 $ 14,870
- ---------------------------------------------------------
ABN-AMRO North America Finance Inc.
4.92%, 3/30/99 9,923
- ---------------------------------------------------------
Bayerische Hypo-Und Vereinsbank AG
4.91%, 4/6/99 24,784
- ---------------------------------------------------------
Commonwealth Bank of Australia
4.91%, 4/7/99 9,912
- ---------------------------------------------------------
Deutsche Bank Financial Inc.
4.88%, 3/9/99 14,927
- ---------------------------------------------------------
UBS Finance Inc.
4.86%, 3/8/99 24,883
- ---------------------------------------------------------
Wells Fargo & Co.
5.18%, 3/12/99 24,861
- ---------------------------------------------------------
124,160
BUSINESS LOANS--18.8%
- ---------------------------------------------------------
Asset Portfolio Funding Corp.
4.87%, 3/18/99 14,909
- ---------------------------------------------------------
Asset Securitization Cooperative Corp.
4.88%, 3/3/99 24,899
- ---------------------------------------------------------
Ciesco L.P.
5.34%, 2/9/99 24,971
- ---------------------------------------------------------
Enterprise Capital Funding Corp.
4.91%, 2/26/99 19,932
- ---------------------------------------------------------
Fairway Finance Corp.
5.53%, 2/16/99 24,943
- ---------------------------------------------------------
Falcon Asset Securitization Corp.
5.42%, 2/8/99 14,984
- ---------------------------------------------------------
Lexington Parker Capital Co.
5.45%, 3/17/99 14,902
- ---------------------------------------------------------
Preferred Receivables Funding Corp.
4.91%, 3/1/99 9,962
- ---------------------------------------------------------
Quincy Capital Corp.
4.86% - 5.45%, 2/5/99 - 3/9/99 29,897
- ---------------------------------------------------------
Receivables Capital Corp.
5.33%, 2/1/99 5,000
- ---------------------------------------------------------
Special Purpose Accounts Receivable
Cooperative
4.91%, 3/24/99 9,931
- ---------------------------------------------------------
194,330
<CAPTION>
Value
<S> <C>
- ---------------------------------------------------------
CAPITAL AND EQUIPMENT LENDING--7.2%
- ---------------------------------------------------------
Ace Overseas Corp.
4.96%, 4/8/99 $ 9,910
- ---------------------------------------------------------
(a)American Honda Finance Corp.
4.98%, 2/16/99 - 2/24/99 14,999
- ---------------------------------------------------------
Beta Finance, Inc.
5.37%, 2/19/99 14,960
- ---------------------------------------------------------
(a)Caterpillar Financial Services Corp.
5.33%, 2/16/99 10,000
- ---------------------------------------------------------
(a)John Deere Capital Corp.
5.25%, 2/9/99 10,000
- ---------------------------------------------------------
Moat Funding, LLC
5.27%, 3/22/99 14,894
- ---------------------------------------------------------
74,763
CAPTIVE BUSINESS LENDING--4.4%
- ---------------------------------------------------------
California Pollution Control Financing
Authority
4.90%, 4/9/99 20,000
- ---------------------------------------------------------
(a)FINOVA Capital Corp.
5.29%, 3/11/99 10,000
- ---------------------------------------------------------
Oakland - Alameda County Coliseum, California
4.90%, 3/9/99 15,000
- ---------------------------------------------------------
45,000
CONSUMER LENDING--5.3%
- ---------------------------------------------------------
(a)Countrywide Home Loans
5.22%, 4/27/99 10,000
- ---------------------------------------------------------
(a)(b)GMAC Mortgage Corporation of
Pennsylvania
5.22%, 2/1/99 10,000
- ---------------------------------------------------------
(a)Household Finance Corp.
4.84%, 2/26/99 9,999
- ---------------------------------------------------------
Sears Roebuck Acceptance Corp.
5.33%, 2/12/99 14,976
- ---------------------------------------------------------
(a)Transamerica Finance Corp.
5.22%, 4/22/99 10,000
- ---------------------------------------------------------
54,975
CONSUMER PRODUCTS AND SERVICES--1.4%
- ---------------------------------------------------------
Coca-Cola Enterprises, Inc.
5.33%, 2/23/99 14,952
- ---------------------------------------------------------
</TABLE>
<PAGE> 3
CASH EQUIVALENT FUND 3
- --------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
Investments at January 31, 1999 (unaudited)
(Value in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
<S> <C>
- ---------------------------------------------------------
DIVERSIFIED FINANCE--9.6%
- ---------------------------------------------------------
Alpine Securitization Corp.
4.92%, 2/16/99 $ 9,980
- ---------------------------------------------------------
Amsterdam Funding Corp.
4.90%, 4/9/99 9,910
- ---------------------------------------------------------
Associates Corp. of North America
4.88%, 3/4/99 9,958
- ---------------------------------------------------------
Commercial Credit Co.
5.21%, 2/16/99 14,968
- ---------------------------------------------------------
CXC, Inc.
4.88%, 3/23/99 9,933
- ---------------------------------------------------------
Heller Financial, Inc.
5.50%, 3/17/99 9,934
- ---------------------------------------------------------
Norwest Financial Corp.
5.33%, 3/1/99 14,939
- ---------------------------------------------------------
Thunder Bay Funding, Inc.
4.88%, 4/1/99 9,921
- ---------------------------------------------------------
Windmill Funding Corp.
4.91%, 3/11/99 9,949
- ---------------------------------------------------------
99,492
FINANCIAL SERVICES--4.9%
- ---------------------------------------------------------
(a)Bear Stearns Cos., Inc.
5.69%, 2/8/99 10,000
- ---------------------------------------------------------
(a)CS First Boston, Inc.
4.86%, 2/1/99 9,999
- ---------------------------------------------------------
(a)Goldman Sachs Group, L.P.
5.05%, 2/8/99 10,000
- ---------------------------------------------------------
(a)Lehman Brothers Holdings, Inc.
5.01%, 2/22/99 10,000
- ---------------------------------------------------------
(a)Merrill Lynch & Co., Inc.
4.94%, 2/22/99 10,000
- ---------------------------------------------------------
49,999
MANUFACTURING/INDUSTRIAL--1.0%
- ---------------------------------------------------------
(a)Xerox Capital Europe, PLC
5.14%, 2/22/99 9,998
- ---------------------------------------------------------
<CAPTION>
Value
<S> <C>
- ---------------------------------------------------------
UTILITIES--6.8%
- ---------------------------------------------------------
Ameritech Corp.
4.82%, 2/3/99 $ 24,993
- ---------------------------------------------------------
Brazos River Authority, Texas
5.20% - 5.30%, 2/26/99 - 3/12/99 20,000
- ---------------------------------------------------------
Frontier Corp.
4.96%, 3/11/99 24,870
- ---------------------------------------------------------
69,863
- ---------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS--71.4%
(average maturity: 35 days) 737,532
- ---------------------------------------------------------
BANK OBLIGATIONS
CERTIFICATES OF DEPOSIT AND BANK NOTES--U.S. BANKS--12.6%
- ---------------------------------------------------------
(a)Amex Centurian Bank
4.95%, 2/16/99 10,000
- ---------------------------------------------------------
(a)Bankers Trust Co.
4.83%, 2/1/99 9,998
- ---------------------------------------------------------
(a)FCC National Bank
4.80%, 2/1/99 9,998
- ---------------------------------------------------------
(a)First Union National Bank
5.42%, 2/16/99 10,000
- ---------------------------------------------------------
Fleet National Bank, N.A.
4.92%, 4/15/99 15,000
- ---------------------------------------------------------
(a)Key Bank, N.A.
4.89%, 2/26/99 9,997
- ---------------------------------------------------------
(a)J.P. Morgan & Co., Inc.
4.94%, 2/8/99 9,997
- ---------------------------------------------------------
MBNA America Bank, N.A.
5.25%, 3/26/99 25,000
- ---------------------------------------------------------
(a)Northern Trust Corp.
4.93%, 2/8/99 9,996
- ---------------------------------------------------------
(a)U.S. Bank, N.A.
4.93%, 2/17/99 9,998
- ---------------------------------------------------------
(a)Wachovia Bank, N.A.
4.84%, 2/19/99 10,000
- ---------------------------------------------------------
129,984
</TABLE>
<PAGE> 4
CASH EQUIVALENT FUND 4
- --------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
Investments at January 31, 1999 (unaudited)
(Value in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
<S> <C>
- ---------------------------------------------------------
CERTIFICATES OF DEPOSIT--FOREIGN BANKS--5.3%
- ---------------------------------------------------------
(a)Abbey National, N.A.
4.82%, 4/20/99 $ 9,995
- ---------------------------------------------------------
Canadian Imperial Bank of Commerce
5.15%, 3/25/99 9,997
- ---------------------------------------------------------
(a)National Bank of Canada
5.00%, 2/5/99 10,000
- ---------------------------------------------------------
(a)Svenska Handelsbanken
4.96%, 2/2/99 14,997
- ---------------------------------------------------------
Toronto Dominion Bank
5.13%, 3/8/99 10,000
- ---------------------------------------------------------
54,989
- ---------------------------------------------------------
TOTAL BANK OBLIGATIONS--17.9%
(average maturity: 29 days) 184,973
- ---------------------------------------------------------
(C)REPURCHASE AGREEMENTS
(Dated 1/99, collateralized by Federal Home
Loan Mortgage Corporation and Federal
National Mortgage Association securities)
- ---------------------------------------------------------
CS First Boston, Inc.
(held at The Chase Manhattan Bank)
4.80%, 3/2/99 25,000
- ---------------------------------------------------------
Salomon Brothers, Inc.
(held at The Bank of New York)
4.80%, 3/17/99 25,000
- ---------------------------------------------------------
<CAPTION>
Value
<S> <C>
- ---------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS--4.9%
(average maturity: 40 days) $ 50,000
- ---------------------------------------------------------
U.S. GOVERNMENT AGENCY NOTE--1.9%
(average maturity: 4 days)
(a)Student Loan Marketing Association
4.81%, 2/2/99 19,997
- ---------------------------------------------------------
TOTAL INVESTMENTS--96.1%
(average maturity: 33 days) 992,502
- ---------------------------------------------------------
CASH AND OTHER ASSETS,
LESS LIABILITIES--3.9% 40,220
- ---------------------------------------------------------
NET ASSETS--100% $1,032,722
- ---------------------------------------------------------
</TABLE>
See accompanying Notes to Portfolios of Investments.
<PAGE> 5
CASH EQUIVALENT FUND 5
- --------------------------------------------------------------------------------
GOVERNMENT SECURITIES PORTFOLIO
Investments at January 31, 1999 (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
5.18%, 4/15/99 $ 3,732
KA Leasing, Ltd.
5.19%, 2/15/99 6,178
Kuwait Investment Authority
5.03%, 2/15/99 5,013
- -----------------------------------------------------------
Federal Home Loan Bank
(a) 5.03%, 10/29/99 15,000
5.04%, 3/3/99 15,644
- -----------------------------------------------------------
Federal Home Loan Mortgage Corp.
5.01% - 5.16%, 2/4/99 - 3/26/99 100,616
- -----------------------------------------------------------
Federal National Mortgage Association
(a) 4.44%, 2/2/99 13,983
4.80% - 5.15%, 2/19/99 - 4/9/99 64,643
- -----------------------------------------------------------
(a)Overseas Private Investment Corp.
Omolon
4.91% - 4.99%, 2/2/99 - 4/15/99 12,033
- -----------------------------------------------------------
(a)Student Loan Marketing Association
4.72%, 2/2/99 43,951
- -----------------------------------------------------------
TOTAL SHORT-TERM NOTES--59.5%
(average maturity: 37 days) 280,793
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
(c)REPURCHASE AGREEMENTS Value
<S> <C>
(Dated 1/99, collateralized by Federal Home Loan
Mortgage Corporation, Federal National Mortgage
Association and Government National Mortgage
Association securities)
- -----------------------------------------------------------
Bear, Stearns Cos., Inc.
(held at The Bank of New York)
4.85% - 5.20%, 2/10/99 - 4/7/99 $ 67,000
- -----------------------------------------------------------
Chase Securities, Inc.
(held at The Chase Manhattan Bank)
4.85% - 4.86%, 2/17/99 - 3/2/99 28,000
- -----------------------------------------------------------
Goldman, Sachs Group, L.P.
(held at The Bank of New York)
4.80%, 2/24/99 30,000
- -----------------------------------------------------------
Morgan Stanley, Dean Witter & Co.
(held at The Bank of New York)
4.90%, 2/2/99 5,000
- -----------------------------------------------------------
Salomon Smith Barney Holdings, Inc.
(held at The Bank of New York)
4.80% - 4.92%, 2/3/99 - 3/9/99 50,000
- -----------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS--38.2%
(average maturity: 35 days) 180,000
- -----------------------------------------------------------
TOTAL INVESTMENTS--97.7%
(average maturity: 36 days) 460,793
- -----------------------------------------------------------
CASH AND OTHER ASSETS, LESS LIABILITIES--2.3% 10,704
- -----------------------------------------------------------
NET ASSETS--100% $471,497
- -----------------------------------------------------------
</TABLE>
See accompanying Notes to Portfolios of Investments.
<PAGE> 6
CASH EQUIVALENT FUND 6
- --------------------------------------------------------------------------------
TAX-EXEMPT PORTFOLIO
Investments at January 31, 1999 (unaudited)
(Value in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(a)Variable Rate Demand Securities Value
<S> <C>
ALASKA
- -----------------------------------------------------------
Valdez
Marine Terminal Revenue
3.15% $ 3,600
CALIFORNIA
- -----------------------------------------------------------
Los Angeles
Harbor Improvement Corp.
3.10% 6,900
Regional Airports Improvement Corp.
3.25% 5,400
COLORADO
- -----------------------------------------------------------
Smith Creek
Metropolitan District
2.75% 3,000
DISTRICT OF COLUMBIA
- -----------------------------------------------------------
General Obligation
3.64% 17,898
FLORIDA
- -----------------------------------------------------------
Dade County
Water and Sewer System Revenue
2.65% 5,900
- -----------------------------------------------------------
Hillsborough County
Industrial Development Authority
3.30% 5,000
- -----------------------------------------------------------
Orange County
Health Facilities Authority
2.75% 4,000
GEORGIA
- -----------------------------------------------------------
Gainesville--Riverside
Redevelopment Authority
2.75% 4,000
- -----------------------------------------------------------
Laurens County
Development Revenue
2.85% 5,000
ILLINOIS
- -----------------------------------------------------------
Alsip
Industrial Development Revenue
2.85% 3,750
- -----------------------------------------------------------
Development Finance Authority
Adventist Health System
2.80% 7,000
Grecian Delight Foods Project
2.90% 8,300
Pollution Control Revenue
2.70% 4,300
- -----------------------------------------------------------
<CAPTION>
Value
<S> <C>
Education Facility Authority
2.70% $ 4,100
- -----------------------------------------------------------
Rockford
Industrial Project Revenue
2.90% 4,000
- -----------------------------------------------------------
Student Assistance Commission
2.80% 4,800
INDIANA
- -----------------------------------------------------------
Health Facility Financing Authority
2.70% 6,900
- -----------------------------------------------------------
Ossian
Economic Development Revenue
2.80% 3,200
KANSAS
- -----------------------------------------------------------
Kansas City
Pollution Control Revenue
2.80% 17,835
KENTUCKY
- -----------------------------------------------------------
Boone County
Pollution Control Revenue
3.20% 8,000
- -----------------------------------------------------------
Mason County
Pollution Control Revenue
2.80% 5,000
LOUISIANA
- -----------------------------------------------------------
Jefferson Parish Hospital Service District
2.75% 3,425
MARYLAND
- -----------------------------------------------------------
Health and Higher Education Facilities Authority
2.80% 4,900
MICHIGAN
- -----------------------------------------------------------
Strategic Fund Limited Obligation Revenue
Continental Aluminum Project
2.90% 4,200
MINNESOTA
- -----------------------------------------------------------
Owatonna
Hospital Revenue
3.05% 5,420
MISSOURI
- -----------------------------------------------------------
Kansas City
Industrial Development Authority
2.75% 3,000
NEVADA
- -----------------------------------------------------------
Department of Business and Industry
2.85% 4,300
</TABLE>
<PAGE> 7
CASH EQUIVALENT FUND 7
- --------------------------------------------------------------------------------
TAX-EXEMPT PORTFOLIO
Investments at January 31, 1999 (unaudited)
(Value in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
<S> <C>
NEW YORK
- -----------------------------------------------------------
Long Island
Power Authority
3.20% $ 2,000
- -----------------------------------------------------------
New York City
General Obligation
3.30% 2,000
NORTH CAROLINA
- -----------------------------------------------------------
Wake County
Pollution Control Financing Authority Revenue
2.70% 3,000
- -----------------------------------------------------------
Winston-Salem
Multi-Family Housing
2.95% 4,000
OHIO
- -----------------------------------------------------------
Butler County
Industrial Development Revenue
2.90% 2,305
- -----------------------------------------------------------
Medina County
Health Care Facilities Revenue
2.80% 3,000
OKLAHOMA
- -----------------------------------------------------------
Development Finance Authority Revenue
2.90% 3,200
PENNSYLVANIA
- -----------------------------------------------------------
Delaware Valley
Regional Finance Authority
2.70% 7,500
- -----------------------------------------------------------
Emmaus
General Authority Revenue
2.70% 9,900
- -----------------------------------------------------------
Higher Education Facilities Authority
2.80% 7,500
- -----------------------------------------------------------
Lehigh County
Industrial Development Authority
3.20% 4,800
- -----------------------------------------------------------
Schuylkill County
Industrial Development Authority
2.70% 1,700
TENNESSEE
- -----------------------------------------------------------
Coffee County
Eagle--Picher Hillsdale Tool Project
3.00% 4,000
<CAPTION>
Value
<S> <C>
TEXAS
- -----------------------------------------------------------
Brazos River Authority
Pollution Control Revenue
3.30% $ 11,900
- -----------------------------------------------------------
Harris County
Baytank Houston Inc. Project
2.65% 4,000
St. Luke's Episcopal Hospital Revenue
3.25% 9,400
Sisters of Charity
2.85% 2,500
VIRGINIA
- -----------------------------------------------------------
Albemarle County
Industrial Development Authority
2.75% 4,000
WASHINGTON
- -----------------------------------------------------------
Port of Vancouver
2.80% 5,000
WISCONSIN
- -----------------------------------------------------------
Health and Educational Facilities Authority
2.70% 6,500
- -----------------------------------------------------------
TOTAL VARIABLE RATE
DEMAND SECURITIES--64.9%
(average maturity: 6 days) 261,333
- -----------------------------------------------------------
OTHER SECURITIES
ALASKA
- -----------------------------------------------------------
Valdez
Marine Terminal Revenue
3.10%, 2/22/99 2,600
ARIZONA
- -----------------------------------------------------------
Salt River Project
Agricultural Improvement and Power District
3.10%, 3/8/99 7,700
COLORADO
- -----------------------------------------------------------
Platte River Power Authority
3.05%, 3/10/99 3,000
FLORIDA
- -----------------------------------------------------------
Jacksonville
Electric Authority
3.10%, 3/11/99 7,900
- -----------------------------------------------------------
Orlando
Capital Improvement Revenue
3.10%, 2/17/99 2,600
- -----------------------------------------------------------
</TABLE>
<PAGE> 8
CASH EQUIVALENT FUND 8
- --------------------------------------------------------------------------------
TAX-EXEMPT PORTFOLIO
Investments at January 31, 1999 (unaudited)
(Value in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
<S> <C>
Sunshine State
Governmental Financing Commission
3.10%, 3/9/99 $ 3,500
GEORGIA
- -----------------------------------------------------------
Municipal Electric Authority
3.10%, 2/12/99 - 3/8/99 8,000
ILLINOIS
- -----------------------------------------------------------
Education Facilities Authority
3.10%, 2/9/99 - 3/11/99 8,500
- -----------------------------------------------------------
Health Facilities Authority
3.05%, 5/13/99 4,000
INDIANA
- -----------------------------------------------------------
Jasper County
Pollution Control Revenue
3.10%, 2/18/99 8,000
- -----------------------------------------------------------
Sullivan
Pollution Control Revenue
3.10%, 3/5/99 5,200
KANSAS
- -----------------------------------------------------------
Burlington
Pollution Control Revenue
3.10%, 3/5/99 4,800
KENTUCKY
- -----------------------------------------------------------
Danville
Multi-City Lease Revenue
3.05%, 2/10/99 4,800
LOUISIANA
- -----------------------------------------------------------
Industrial District of West Baton Rouge
Pollution Control Revenue
3.15%, 3/9/99 3,500
MARYLAND
- -----------------------------------------------------------
Anne Arundel County
Port Facilities Revenue
3.10%, 2/17/99 4,380
NEBRASKA
- -----------------------------------------------------------
Omaha
Public Power District
3.10%, 2/17/99 4,000
NEW YORK
- -----------------------------------------------------------
Nassau County
General Obligation
3.05% - 3.10%, 3/30/99 - 12/22/99 8,918
- -----------------------------------------------------------
<CAPTION>
Value
<S> <C>
New York City
Municipal Water Finance Authority
2.90%, 2/16/99 $ 2,000
SOUTH CAROLINA
- -----------------------------------------------------------
Public Services Authority
3.15%, 2/16/99 3,000
TEXAS
- -----------------------------------------------------------
Brazoria County
Brazos River Harbor Navigation District
3.00%, 3/10/99 5,540
- -----------------------------------------------------------
Calhoun County
Navigation Industrial Development Authority
3.05%, 2/23/99 3,000
- -----------------------------------------------------------
Houston
Water and Sewer System
3.15%, 3/11/99 4,000
- -----------------------------------------------------------
Municipal Power Agency
3.10%, 2/23/99 - 3/11/99 10,500
- -----------------------------------------------------------
San Antonio City
Water System
3.05% - 3.10%, 2/18/99 - 2/12/99 10,000
VIRGINIA
- -----------------------------------------------------------
Chesterfield County
Industrial Development Authority
3.10%, 2/11/99 - 2/18/99 9,200
- -----------------------------------------------------------
Louisa County
Industrial Development Authority
2.90%, 3/24/99 2,000
- -----------------------------------------------------------
TOTAL OTHER SECURITIES--34.9%
(average maturity: 40 days) 140,638
- -----------------------------------------------------------
TOTAL INVESTMENTS--99.8%
(average maturity: 18 days) 401,971
- -----------------------------------------------------------
CASH AND OTHER ASSETS,
LESS LIABILITIES--.2% 857
- -----------------------------------------------------------
NET ASSETS--100% $402,828
- -----------------------------------------------------------
</TABLE>
See accompanying Notes to Portfolios of Investments.
<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, 1999. 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, 1999, the aggregate value of illiquid
securities was $10,000,000 in the Money Market Portfolio, which represented 9.7%
of net assets.
(c) Repurchase agreements are fully collateralized by U.S. Government or U.S.
Government agency 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 funds 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, 1999 (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 $ 942,502 280,793 401,971
- --------------------------------------------------------------------------------------------------------
Repurchase agreements 50,000 180,000 --
- --------------------------------------------------------------------------------------------------------
Cash 41,463 10,747 118
- --------------------------------------------------------------------------------------------------------
Interest receivable 2,094 1,319 1,587
- --------------------------------------------------------------------------------------------------------
Total assets 1,036,059 472,859 403,676
- --------------------------------------------------------------------------------------------------------
LIABILITIES AND NET ASSETS
- --------------------------------------------------------------------------------------------------------
Payable for:
Dividends 1,908 838 412
- --------------------------------------------------------------------------------------------------------
Management fee 205 92 39
- --------------------------------------------------------------------------------------------------------
Distribution services fee 297 140 101
- --------------------------------------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 458 126 139
- --------------------------------------------------------------------------------------------------------
Trustees' fees and other 469 166 157
- --------------------------------------------------------------------------------------------------------
Total liabilities 3,337 1,362 848
- --------------------------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $1,032,722 471,497 402,828
- --------------------------------------------------------------------------------------------------------
THE PRICING OF SHARES
- --------------------------------------------------------------------------------------------------------
Shares outstanding 1,032,722 471,497 402,828
- --------------------------------------------------------------------------------------------------------
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, 1999 (unaudited)
(in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY GOVERNMENT
MARKET SECURITIES TAX-EXEMPT
PORTFOLIO PORTFOLIO PORTFOLIO
-----------------------------------------
<S> <C> <C> <C>
INTEREST INCOME $25,663 11,781 6,312
- -------------------------------------------------------------------------------------------------------
EXPENSES:
Management fee 824 445 395
- -------------------------------------------------------------------------------------------------------
Distribution services fee 1,774 845 609
- -------------------------------------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 1,199 428 128
- -------------------------------------------------------------------------------------------------------
Reports to shareholders 287 114 32
- -------------------------------------------------------------------------------------------------------
Professional fees 29 16 14
- -------------------------------------------------------------------------------------------------------
Trustees' fees and other 84 34 17
- -------------------------------------------------------------------------------------------------------
Total expenses 4,197 1,882 1,195
- -------------------------------------------------------------------------------------------------------
Net investment income $21,466 9,899 5,117
- -------------------------------------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
Six months ended January 31, 1999 (unaudited) and year ended July 31, 1998
(in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET GOVERNMENT SECURITIES TAX-EXEMPT
PORTFOLIO PORTFOLIO PORTFOLIO
-----------------------------------------------------------------------------
1999 1998 1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS, DIVIDENDS AND CAPITAL SHARE
ACTIVITY
Net investment income $ 21,466 44,830 9,899 19,873 5,117 13,242
- -----------------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from net
investment income (21,466) (44,830) (9,899) (19,873) (5,117) (13,242)
- -----------------------------------------------------------------------------------------------------------------------------
Capital share transactions (dollar amounts
and number of shares are the same):
Shares sold 2,538,415 3,846,037 892,012 3,401,622 594,869 1,244,764
- -----------------------------------------------------------------------------------------------------------------------------
Shares issued in reinvestment of dividends 21,188 44,898 9,814 19,761 5,117 13,241
- -----------------------------------------------------------------------------------------------------------------------------
2,559,603 3,890,935 901,826 3,421,383 599,986 1,258,005
Shares redeemed (2,378,473) (4,009,859) (822,190) (3,433,559) (530,585) (1,369,517)
- -----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from capital share
transactions and total increase (decrease) in
net assets 181,130 (118,924) 79,636 (12,176) 69,401 (111,512)
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 851,592 970,516 391,861 404,037 333,427 444,939
- -----------------------------------------------------------------------------------------------------------------------------
End of period $ 1,032,722 851,592 471,497 391,861 402,828 333,427
- -----------------------------------------------------------------------------------------------------------------------------
</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's policy is to comply with the requirements of the Internal
Revenue Code, as amended, which are applicable to regulated investment
companies, and to distribute all of its income to its shareholders. Accordingly,
each portfolio paid no federal income taxes and no federal income tax provision
was required.
- --------------------------------------------------------------------------------
3. TRANSACTIONS WITH AFFILIATES
MANAGEMENT AGREEMENT
The fund has a management agreement with Scudder Kemper Investments, Inc.
(Scudder Kemper) and pays a monthly investment management fee for the Money
Market and Government Securities Portfolios of 1/12 of the 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 monthly investment management fee of
1/12 of the annual rate of .22% of the first $500 million of average daily net
assets of such portfolio declining
<PAGE> 13
CASH EQUIVALENT FUND 13
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
to .15% of average daily net assets in excess of $3 billion. During the six
months ended January 31, 1999, the fund incurred management fees of $1,664,000.
ZURICH/B.A.T MERGER
On September 7, 1998, Zurich Insurance Company (Zurich), majority owner of
Scudder Kemper, 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 investment management agreement with Scudder Kemper was
deemed to have been assigned and, therefore, terminated. The Board of Trustees
of the fund has approved a new investment management agreement with Scudder
Kemper, which is substantially identical to the former investment management
agreement, except for the dates of execution and termination. Shareholders
approved the new investment management agreement through a proxy solicitation
that concluded in mid-December.
DISTRIBUTION AGREEMENT
The fund also has an administration, shareholder services and distribution
agreement with Kemper Distributors, Inc. (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 pursuant to separate Rule 12b-1
plans for these portfolios. For the six months ended January 31, 1999, the fund
incurred distribution fees of $3,228,000. 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.
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 $1,345,000 for the six
months ended January 31, 1999.
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, 1999, the fund made no
payments to its officers and incurred trustees' fees of $39,000 to independent
trustees.
<PAGE> 14
CASH EQUIVALENT FUND 14
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
SIX MONTHS ENDED ------------------------------------------------
JANUARY 31, 1999 1998 1997 1996 1995
MONEY MARKET PORTFOLIO (UNAUDITED)
- --------------------------------------------------------------------------------------------------------------------------------
<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 .02 .05 .05 .05 .05
- --------------------------------------------------------------------------------------------------------------------------------
Less dividends declared .02 .05 .05 .05 .05
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.00 1.00 1.00 1.00 1.00
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 2.32% 4.93 4.78 4.94 4.95
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Expenses .89% .91 .93 .89 .87
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income 4.56% 4.83 4.64 4.86 4.84
- --------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $1,032,722 851,592 970,516 2,774,595 3,593,294
- --------------------------------------------------------------------------------------------------------------------------------
</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>
YEAR ENDED JULY 31,
SIX MONTHS ENDED -----------------------------------------------
JANUARY 31, 1999 1998 1997 1996 1995
GOVERNMENT SECURITIES PORTFOLIO (UNAUDITED)
- -------------------------------------------------------------------------------------------------------------------------------
<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 .02 .05 .05 .05 .05
- -------------------------------------------------------------------------------------------------------------------------------
Less dividends declared .02 .05 .05 .05 .05
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.00 1.00 1.00 1.00 1.00
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 2.25% 4.89 4.85 5.00 4.96
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Expenses .84% .85 .83 .79 .81
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income 4.41% 4.79 4.73 4.90 4.87
- -------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $471,497 391,861 404,037 1,594,128 1,785,098
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 15
CASH EQUIVALENT FUND 15
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
SIX MONTHS ENDED ----------------------------------------------
JANUARY 31, 1999 1998 1997 1996 1995
TAX-EXEMPT PORTFOLIO (UNAUDITED)
- -------------------------------------------------------------------------------------------------------------------------------
<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 .01 .03 .03 .03 .03
- -------------------------------------------------------------------------------------------------------------------------------
Less dividends declared .01 .03 .03 .03 .03
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.00 1.00 1.00 1.00 1.00
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 1.40% 3.13 3.03 3.11 3.21
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Expenses .64% .66 .71 .70 .68
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income 2.75% 3.09 2.97 3.08 3.15
- -------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $402,828 333,427 444,939 931,564 1,109,861
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 16
CASH EQUIVALENT
FUND
SEMIANNUAL REPORT
January 31, 1999
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 1070260 3/99 [LOGO] printed on recycled paper
