Scudder
Zero Coupon
2000 Fund
Semiannual Report
June 30, 1998
Pure No-Load(TM) Funds
For investors who seek as high an investment return over a selected period as is
consistent with investment in U.S. government securities and the minimization of
reinvestment risk.
A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
SCUDDER (logo)
<PAGE>
Scudder Zero Coupon 2000 Fund
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Date of Inception: 2/4/86 Total Net Assets as of Ticker Symbol: SGZTX
6/30/98: $18.8 million
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o For its most recent semiannual period ended June 30, 1998, Scudder Zero Coupon
2000 Fund posted a 2.84% total return. As of June 30, the Fund provided a 30-day
net annualized SEC yield of 4.55%.
o Short-term Treasury security prices moved within a limited range during the
six months ended June 30, 1998, as the Federal Reserve made known its concerns
over tight labor markets and the possible resurgence of inflationary pressures.
Table of Contents
3 Letter from the Fund's President 12 Financial Highlights
4 Performance Update 13 Notes to Financial Statements
5 Portfolio Management Discussion 16 Officers and Trustees
7 Glossary of Investment Terms 17 Investment Products and Services
8 Investment Portfolio 18 Scudder Solutions
9 Financial Statements
2 - Scudder Zero Coupon 2000 Fund
<PAGE>
Letter from the Fund's President
Dear Shareholders,
We are pleased to report to you on Scudder Zero Coupon 2000 Fund's
performance over its most recent semiannual period ended June 30, 1998. The Fund
posted a 2.84% total return for the period, as shorter maturity Treasury
securities traded in a narrow range. Given Scudder Zero Coupon 2000 Fund's
relatively short time to maturity, the Fund's managers continue to seek as high
an investment return over a selected period as is consistent with the
minimization of investment risk. For more information on the Fund's investment
strategy, results, and outlook, please read the portfolio management discussion
beginning on page 5.
For those of you interested in our newest Scudder offerings, we would like
to take this opportunity to highlight two upcoming additions to our
international category, both of which are scheduled to begin operations on
September 1st. Scudder International Growth Fund will seek long-term capital
appreciation by investing primarily in the equity securities of foreign
companies with high earnings growth potential, and Scudder International Value
Fund will seek long-term capital appreciation by investing primarily in
undervalued foreign equity securities. These two funds make Scudder among the
first in the industry to offer funds that pursue long-term growth of capital
internationally in both the growth and value styles of investing. Please see
page 17 for more information on Scudder products and services.
If you have any questions regarding Scudder Zero Coupon 2000 Fund or any
other Scudder fund, please do not hesitate to call Investor Relations at
1-800-225-2470. Or visit Scudder's Web site at http://funds.scudder.com.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder Zero Coupon 2000 Fund
3 - Scudder Zero Coupon 2000 Fund
<PAGE>
Performance Update as of June 30, 1998
- ----------------------------------------------------------------
Fund Index Comparisons
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Total Return
- ----------------------------------------
Period Growth
Ended of Average
6/30/98 $10,000 Cumulative Annual
- ----------------------------------------
Scudder Zero Coupon 2000 Fund
- ----------------------------------------
1 Year $10,745 7.45% 7.45%
5 Year $12,455 24.55% 4.49%
10 Year $24,004 140.04% 9.15%
- ----------------------------------------
LB Government/Corporate Bond Index
- ----------------------------------------
1 Year $11,129 11.29% 11.29%
5 Year $13,944 39.44% 6.87%
10 Year $23,885 138.85% 9.09%
- ----------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- ----------------------------------------------------------------
A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:
Yearly periods ended June 30
SCUDDER ZERO COUPON 2000 FUND
Year Amount
- -------------
'88 10000
'89 11235
'90 12033
'91 13261
'92 15137
'93 17129
'94 16880
'95 19036
'96 19921
'97 21463
'98 23885
LB Government/Corporate Bond Index
Year Amount
- --------------
'88 10000
'89 12113
'90 12370
'91 13413
'92 15770
'93 19272
'94 18362
'95 20549
'96 21046
'97 22340
'98 24005
The unmanaged Lehman Brothers (LB) Government/Corporate Bond Index is composed
of U.S. government treasury and agency securities, corporate and Yankee bonds.
Index returns assume reinvestment of dividends and, unlike Fund returns, do not
reflect any fees or expenses.
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RETURNS AND PER SHARE INFORMATION
- -----------------------------------------------------------------
A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) and Index
Total Return (%) with the exact points listed in the
table below.
Yearly periods ended June 30
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------
NET ASSET VALUE... $ 12.63 $ 12.29 $ 12.46 $ 13.62 $ 13.99 $ 11.30 $ 11.99 $ 11.64 $ 11.61 $ 11.75
INCOME DIVIDENDS.. $ .63 $ .52 $ .85 $ .98 $ .91 $ .80 $ .60 $ .65 $ .73 $ .71
CAPITAL GAINS
DISTRIBUTIONS..... $ -- $ .11 $ -- $ .03 $ 1.46 $ 1.38 $ -- $ -- $ -- $ --
FUND TOTAL
RETURN (%)........ 21.12 2.13 8.43 17.57 22.21 -4.72 11.91 2.41 6.15 7.45
INDEX TOTAL
RETURN (%)........ 12.34 7.10 10.20 14.15 13.16 -1.46 12.76 4.66 7.74 11.29
</TABLE>
All performance is historical, assumes reinvestment of all dividends and capital
gains, and is not indicative of future results. Investment return and principal
value will fluctuate, so an investor's shares, when redeemed, may be worth more
or less than when purchased. If the Adviser had not temporarily capped expenses,
the total returns for the Fund would have been lower.
4 - Scudder Zero Coupon 2000 Fund
<PAGE>
Portfolio Management Discussion
Dear Shareholders,
Though the Federal Reserve made no move to increase short-term interest rates
during the six months ended June 30, 1998, the Fed made clear its bias towards
credit tightening during the period. Nevertheless, short-term Treasury
securities traded within a narrow range and interest rates stayed at low levels.
In keeping with this interest rate environment, Scudder Zero Coupon 2000 Fund
posted a 2.84% total return for its most recent semiannual period ended June 30,
1998. In addition, the Fund provided a 30-day net annualized SEC yield of 4.55%
as of June 30, 1998. The Fund's total return of 2.84% for the six-month period
reflects a $0.13 decline in the Fund's net asset value to $11.75, offset by
$0.46 per share in income distributions. The unmanaged Lehman Brothers
Government/Corporate Bond Index's return during the same period was 4.17%. The
difference in return between the Fund and its comparative index mirrors the
Fund's ever-shortening average maturity.
Scudder Zero Coupon 2000 Fund seeks to provide investors with as high an
investment return over a selected period as is consistent with investments in
government securities and the minimization of reinvestment risk, but with the
additional advantages of professional management, diversification, and
liquidity. The Fund invests in high-quality zero-coupon bonds that pay no
current income but, similar to savings bonds, are issued at substantial
discounts to their value at maturity. When held to maturity, a zero-coupon
bond's entire return comes from the difference between its issue price and its
par value.
Portfolio Review
In managing Scudder Zero Coupon 2000 Fund we attempt to maximize the value of
your investment on the December 2000 maturity date. Since zero coupon bonds such
as those held by the Fund lack the cushion of regular interest payments, the
Fund can be more volatile than other fixed-income investments of comparable
maturity. Because some shareholders may need to redeem Fund shares before the
maturity date, we try to limit share price volatility where possible while at
the same time seeking a higher return than other fixed-income investments.
As the Fund approaches its 2000 maturity, we are gradually shortening the
duration of the Fund, keeping over 90% of the bonds in the Fund's portfolio
within two months of the target date, and over 99% within one year of the date.
For the same reason, we are keeping the Fund's duration in a neutral stance in
terms of its permissible range: As of June 30, 1998, the Fund's duration was 2.5
years, in the middle of its allowable range of 1.5 years to 3.5 years. (Duration
gives relative weight to both interest and principal payments and has replaced
maturity as the standard measure of interest rate sensitivity among professional
investors. Generally the shorter the duration, the less sensitive a portfolio
will be to changes in interest rates.)
A Wary Federal Reserve
The Federal Reserve kept short-term interest rates from declining by making
known its concerns about tight labor markets and the possible resurgence of wage
inflationary pressures. Although the stock market experienced volatility during
5 - Scudder Zero Coupon 2000 Fund
<PAGE>
the second quarter of the year, the Fed also was reportedly concerned about
unwarranted speculation in the U.S. stock market. We believe the Fed's posture
of being more inclined to raise short-term interest rates than to lower them
will make it difficult for shorter-maturity Treasury rates to move lower in the
near term, limiting the potential for the Fund's share price to appreciate.
As we approach Scudder Zero Coupon 2000 Fund's target year, we will monitor
events influencing the bond market closely and adjust the Fund's duration and
maturity structure accordingly. We will continue to attempt to maximize the
Fund's net asset value on its maturity date.
Sincerely,
Your Portfolio Management Team
/s/Timothy G. Raney /s/Stephen A. Wohler
Timothy G. Raney Stephen A. Wohler
6 - Scudder Zero Coupon 2000 Fund
<PAGE>
Glossary of Investment Terms
INFLATION An overall increase in the prices of goods
and services, as happens when business and
consumer spending increases relative to the
supply of goods available in the marketplace
-- in other words, when too much money is
chasing too few goods. High inflation has a
negative impact on the prices of fixed-income
securities.
30-DAY SEC YIELD The standard yield reference for bond funds
since the SEC required all bond funds to
quote yields based on a prescribed formula.
This yield calculation reflects the 30-day
average of the net annualized income earnings
capability of every holding in a given fund's
portfolio, assuming each is held to maturity.
TOTAL RETURN The most common yardstick to measure the
performance of a fund. Total return --
annualized or compound -- is based on a
combination of capital return plus income and
capital gain distributions, if any, expressed
as a percentage gain or loss in value.
TREASURIES Negotiable debt obligations of the U.S.
government, secured by its full faith and
credit, and issued at various schedules and
maturities.
ZERO COUPON BOND A bond that makes no periodic interest
payments but instead is sold at a deep
discount from its face value. The buyer of
such a bond receives the rate of return by
the gradual appreciation of the security,
which is redeemed at face value on a
specified maturity date.
(Sources: Scudder Kemper Investments, Inc.; Barron's Dictionary of Finance and
Investment Terms)
7 - Scudder Zero Coupon 2000 Fund
<PAGE>
Investment Portfolio as of June 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Government Securities 100.0%
- ------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Note, 5%, 1/31/1999 ......................................................... 100,000 99,734
U.S. Treasury Separate Trading Registered Interest and Principal, 2/15/2001 (5.48%*) ...... 10,350,000 8,979,867
U.S. Treasury Separate Trading Registered Interest and Principal, 11/15/2000 (5.49%*) ..... 10,224,000 8,990,270
U.S. Treasury Separate Trading Registered Interest and Principal, 11/15/2001 (5.50%*) ..... 763,000 635,419
- ------------------------------------------------------------------------------------------------------------------------------
Total U.S. Government Securities (Cost $18,158,867) 18,705,290
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $18,158,867) (a) 18,705,290
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The cost for federal income tax purposes was $18,158,867. At June 30,
1998, unrealized appreciation based on tax cost consisted entirely of
aggregated gross unrealized appreciation of $546,423.
* Bond equivalent yield to maturity; not a coupon rate.
The accompanying notes are an integral part of the financial statements.
8 - Scudder Zero Coupon 2000 Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of June 30, 1998 (Unaudited)
<TABLE>
<S> <C>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
Investments, at market (identified cost $18,158,867) ................. $ 18,705,290
Cash ................................................................. 93,382
Interest receivable .................................................. 2,085
Receivable for Fund shares sold ...................................... 15,566
Other assets ......................................................... 288
----------------
Total assets ......................................................... 18,816,611
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Payable for Fund Shares redeemed ..................................... 3,541
Other payables and accrued expenses .................................. 24,987
----------------
Total liabilities .................................................... 28,528
--------------------------------------------------------------------------------------------
Net assets, at market value $ 18,788,083
--------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Undistributed net investment income .................................. 507,526
Unrealized appreciation on investments ............................... 546,423
Accumulated net realized loss ........................................ (1,242,334)
Paid-in capital ...................................................... 18,976,468
--------------------------------------------------------------------------------------------
Net assets, at market value $ 18,788,083
--------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share ($18,788,083/
1,598,631 outstanding shares of beneficial interest, $.01 par value, ----------------
unlimited number of shares authorized) ............................ $11.75
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9 - Scudder Zero Coupon 2000 Fund
<PAGE>
Statement of Operations
six months ended June 30, 1998 (Unaudited)
<TABLE>
<S> <C>
Investment Income
- ----------------------------------------------------------------------------------------------------------------------------
Interest ............................................................. $ 615,567
----------------
Expenses:
Management fee ....................................................... 58,057
Services to shareholders ............................................. 46,498
Custodian and accounting fees ........................................ 21,073
Trustees' fees and expenses .......................................... 19,465
Auditing ............................................................. 14,098
Reports to shareholders .............................................. 9,444
Registration fees .................................................... 6,946
Legal ................................................................ 7,405
Other ................................................................ 2,269
----------------
Total expenses before reductions ..................................... 185,255
Expense reductions ................................................... (88,473)
----------------
Expenses, net ........................................................ 96,782
--------------------------------------------------------------------------------------------
Net investment income 518,785
--------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ----------------------------------------------------------------------------------------------------------------------------
Net realized gain from investments ................................... 88,530
Net unrealized depreciation on investments during the period ......... (56,064)
--------------------------------------------------------------------------------------------
Net gain on investment transactions 32,466
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 551,251
--------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 - Scudder Zero Coupon 2000 Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months
Ended
June 30, Year Ended
1998 December 31,
Increase (Decrease) in Net Assets (Unaudited) 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ................................ $ 518,785 $ 1,172,267
Net realized gain (loss) from investments ............ 88,530 161,395
Net unrealized appreciation (depreciation) on
investments during the period ..................... (56,064) 1,997
---------------- ----------------
Net increase in net assets resulting from operations . 551,251 1,335,659
---------------- ----------------
Distributions to shareholders from net investment
income ............................................ (745,333) (1,127,761)
---------------- ----------------
Fund share transactions:
Proceeds from shares sold ............................ 2,507,474 3,450,490
Net asset value of shares issued to shareholders in
reinvestment of distributions ..................... 730,732 1,105,633
Cost of shares redeemed .............................. (4,710,013) (9,750,463)
---------------- ----------------
Net decrease in net assets from Fund share
transactions ...................................... (1,471,807) (5,194,340)
---------------- ----------------
Decrease in net assets ............................... (1,665,889) (4,986,442)
Net assets at beginning of period .................... 20,453,972 25,440,414
Net assets at end of period (including undistributed
net investment income of $507,526 and $734,074, ---------------- ----------------
respectively) ..................................... $ 18,788,083 $ 20,453,972
---------------- ----------------
Other Information
- ----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period ............ 1,721,605 2,161,757
---------------- ----------------
Shares sold ......................................... 210,772 290,883
Shares issued to shareholders in reinvestment of
distributions ..................................... 63,212 96,147
Shares redeemed ...................................... (396,958) (827,182)
---------------- ----------------
Net decrease in Fund shares .......................... (122,974) (440,152)
---------------- ----------------
Shares outstanding at end of period .................. 1,598,631 1,721,605
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 - Scudder Zero Coupon 2000 Fund
<PAGE>
Financial Highlights
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1998(a) Years Ended December 31,
(Unaudited) 1997(a) 1996(a) 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------
Net asset value, beginning of period ........... $11.88 $ 11.77 $ 12.38 $ 10.95 $ 12.85 $ 12.55
------------------------------------------------------------------------
Income from investment operations:
Net investment income .......................... .31 .63 .64 .65 .59 .79
Net realized and unrealized gain (loss) on
investments .................................. .02 .11 (.57) 1.40 (1.59) 1.23
------------------------------------------------------------------------
Total from investment operations ............... .33 .74 .07 2.05 (1.00) 2.02
------------------------------------------------------------------------
Less distributions:
From net investment income ..................... (.46) (.63) (.68) (.62) (.31) (.83)
From net realized gains on investments ......... -- -- -- -- (.59) (.89)
------------------------------------------------------------------------
Total distributions ............................ (.46) (.63) (.68) (.62) (.90) (1.72)
------------------------------------------------------------------------
------------------------------------------------------------------------
Net asset value, end of period ................. $11.75 $ 11.88 $ 11.77 $ 12.38 $ 10.95 $ 12.85
- ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) (b) ........................... 2.84** 6.53 .65 19.08 (7.92) 16.00
Ratios and Supplemental Data
Net assets, end of period ($ millions) ......... 18.8 20 25 29 25 31
Ratio of operating expenses, net to average
daily net assets (%) ......................... 1.00* 1.00 1.00 1.00 1.00 1.00
Ratio of operating expenses before expense
reductions, to average daily net assets (%) .. 1.91* 1.76 1.45 1.48 1.47 1.28
Ratio of net investment income to average daily
net assets (%) ............................... 5.36* 5.44 5.42 5.59 5.23 5.29
Portfolio turnover rate (%) .................... 6.93* 5.74 85.2 86.6 89.3 101.6
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) Total returns would have been lower had certain expenses not been reduced.
* Annualized
** Not annualized
12 - Scudder Zero Coupon 2000 Fund
<PAGE>
Notes to Financial Statements (Unaudited)
A. Significant Accounting Policies
Scudder Zero Coupon 2000 Fund (the "Fund") is organized as a diversified series
of Scudder Funds Trust (the "Trust"), a Massachusetts business trust registered
under the Investment Company Act of 1940, as amended, as an open-end management
investment company. The Fund primarily invests in U.S. Government zero coupon
securities. At least 50% of the Fund's net assets will be invested in zero
coupon securities maturing within two years of the Fund's target maturity date.
It is expected that the Fund will be liquidated in December of the year 2000.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
Security Valuation. Portfolio debt securities purchased with an original
maturity greater than sixty days are valued by pricing agents approved by the
Officers of the Fund, which prices reflect broker/dealer-supplied valuations and
electronic data processing techniques. If the pricing agents are unable to
provide such quotations, the most recent bid quotation supplied by a bona fide
market maker shall be used. Money market instruments having an original maturity
of sixty days or less are valued at amortized cost. All other securities are
valued at their fair value as determined in good faith by the Valuation
Committee of the Board of Trustees.
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code, as amended, which are applicable to regulated
investment companies and to distribute all of its taxable income to its
shareholders. Accordingly, the Fund paid no federal income taxes and no
provision for federal income taxes was required.
At December 31, 1997, the Fund had a net tax basis capital loss carryforward of
approximately $1,275,000 which may be applied against any realized net taxable
capital gains of each succeeding year until fully utilized or until December 31,
2002 ($723,000), December 31, 2003 ($178,000), and December 31, 2004 ($374,000),
the respective expiration dates.
Distribution of Income and Gains. Distributions of net investment income are
made annually. During any particular year, net realized gains from investment
transactions, in excess of available capital loss carryforwards, would be
taxable to the Fund if not distributed and, therefore, will be distributed to
shareholders. An additional distribution may be made to the extent necessary to
avoid the payment of a four percent federal excise tax.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. These
differences primarily relate to investments in certain securities sold at a
loss. As a result, net investment income (loss) and net realized gain (loss) on
investment transactions for a reporting period may differ significantly from
distributions during such period. Accordingly, the Fund may periodically make
reclassifications among certain of its capital accounts without impacting the
net asset value of the Fund.
The Fund uses the specific identification method for determining realized gain
or loss on investments for both financial and federal income tax reporting
purposes.
Other. Investment security transactions are accounted for on a trade date basis.
Interest income is generally recorded on the accrual basis under the amortized
cost method whereby the Fund adjusts the cost of each investment assuming a
constant
13 - Scudder Zero Coupon 2000 Fund
<PAGE>
accretion to maturity of any discount. All original issue discounts are accreted
for both tax and financial reporting purposes. Distributions to shareholders are
recorded on the ex-dividend date.
B. Purchases and Sales of Securities
During the six months ended June 30, 1998, purchases and sales of investment
securities (excluding short-term investments) aggregated $671,071 and
$2,954,794, respectively.
C. Related Parties
Under the Investment Management Agreement (the "Agreement") with Scudder Kemper
Investments, Inc. (the "Adviser"), the Adviser directs the investments of the
Fund in accordance with its investment objectives, policies and restrictions.
The Adviser determines the securities, instruments and other contracts relating
to investments to be purchased, sold or entered into by the Fund. In addition to
portfolio management services, the Adviser provides certain administrative
services in accordance with the Agreement. The management fee payable under the
Agreement is equal to an annual rate of approximately 0.60% of the average daily
net assets of the Fund computed and accrued daily and payable monthly. In
addition, the Adviser has agreed to maintain the annualized expenses of the Fund
at not more than 1.00% of average daily net assets until April 30, 1999. For the
six months ended June 30, 1998, the fee pursuant to the Agreement amounted to
$58,057, all of which was not imposed.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend disbursing and shareholder service agent for the Fund. For
the six months ended June 30, 1998, the amount charged to the Fund by SSC
aggregated $28,066, of which $16,365 was not imposed, and $14,340 is unpaid at
June 30, 1998.
Scudder Trust Company ("STC"), a subsidiary of the Adviser, provides
recordkeeping and other services in connection with certain retirement and
employee benefit plans for the Fund. For the six months ended June 30, 1998, the
amount charged to the Fund by STC aggregated $5,677, of which $3,310 was not
imposed, and $961 is unpaid at June 30, 1998.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records of the Fund. For the six months
ended June 30, 1998, the amount charged to the Fund by SFAC aggregated $18,422,
of which $10,741 was not imposed, and $3,125 is unpaid at June 30, 1998.
The Fund pays each Trustee not affiliated with the Adviser an annual retainer
divided equally among the series of the Trust, plus specified amounts for
attended board and committee meetings. For the six months ended June 30, 1998,
Trustees' fees and expenses aggregated $19,465.
14 - Scudder Zero Coupon 2000 Fund
<PAGE>
This Page
intentionally
left blank.
15 - Scudder Zero Coupon 2000 Fund
<PAGE>
Officers and Trustees
Daniel Pierce*
President and Trustee
Henry P. Becton, Jr.
Trustee; President and General
Manager, WGBH Educational
Foundation
Dawn-Marie Driscoll
Trustee; President, Driscoll
Associates; Executive Fellow,
Center for Business Ethics,
Bentley College
Peter B. Freeman
Trustee; Corporate Director
George M. Lovejoy, Jr.
Trustee; President and Director,
Fifty Associates
Wesley W. Marple, Jr.
Trustee; Professor of Business
Administration, Northeastern
University
Kathryn L. Quirk*
Trustee, Vice President and
Assistant Secretary
Jean C. Tempel
Trustee; Managing Partner,
Technology Equity Partners
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
Vice President
Stephen A. Wohler*
Vice President
Thomas F. McDonough*
Vice President, Secretary and
Treasurer
John R. Hebble*
Assistant Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
16 - Scudder Zero Coupon 2000 Fund
<PAGE>
Investment Products and Services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series --
Premium Shares*
Managed Shares*
Scudder Government Money Market Series --
Managed Shares*
Tax Free Money Market+
- ----------------------
Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series--
Managed Shares*
Scudder California Tax Free Money Fund**
Scudder New York Tax Free Money Fund**
Tax Free+
- ---------
Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund**
Scudder Massachusetts Limited Term Tax Free Fund**
Scudder Massachusetts Tax Free Fund**
Scudder New York Tax Free Fund**
Scudder Ohio Tax Free Fund**
Scudder Pennsylvania Tax Free Fund**
U.S. Income
- -----------
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder High Yield Bond Fund
Global Income
- -------------
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
Asset Allocation
- ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
U.S. Growth and Income
- ----------------------
Scudder Balanced Fund
Scudder Dividend & Growth Fund
Scudder Growth and Income Fund
Scudder S&P 500 Index Fund
Scudder Real Estate Investment Fund
U.S. Growth
- -----------
Value
Scudder Large Company Value Fund
Scudder Value Fund***
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund***
Scudder Large Company Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Equity
- -------------
Worldwide
Scudder Global Fund
Scudder International Value Fund
Scudder International Growth and Income Fund
Scudder International Fund++
Scudder International Growth Fund
Scudder Global Discovery Fund***
Scudder Emerging Markets Growth Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund, Inc.
Industry Sector Funds
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Choice Series
Scudder Financial Services Fund
Scudder Health Care Fund
Scudder Technology Fund
Retirement Programs and Education Accounts
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Retirement Programs
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Traditional IRA
Roth IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan**+++ +++
(a variable annuity)
Education Accounts
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Education IRA
UGMA/UTMA
Closed-End Funds#
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The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder Global High Income Fund, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder Spain and Portugal Fund, Inc.
For complete information on any of the above Scudder funds, including management
fees and expenses, call or write for a free prospectus. Read it carefully before
you invest or send money. +++Funds within categories are listed in order from
expected least risk to most risk. Certain Scudder funds may not be available for
purchase or exchange. +A portion of the income from the tax-free funds may be
subject to federal, state, and local taxes. *A class of shares of the Fund.
**Not available in all states. ***Only the Scudder Shares of the Fund are part
of the Scudder Family of Funds. ++Only the International Shares of the Fund are
part of the Scudder Family of Funds. +++ +++A no-load variable annuity contract
provided by Charter National Life Insurance Company and its affiliate, offered
by Scudder's insurance agencies, 1-800-225-2470. #These funds, advised by
Scudder Kemper Investments, Inc., are traded on the New York Stock Exchange and,
in some cases, on various other stock exchanges.
17 - Scudder Zero Coupon 2000 Fund
<PAGE>
Scudder Solutions
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
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<S> <C> <C>
Automatic Investment Plan QuickBuy
A convenient investment program in which money is Lets you purchase Scudder fund shares
electronically debited from your bank account monthly to electronically, avoiding potential mailing delays;
regularly purchase fund shares and "dollar cost average" money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from a previously designated bank
fewer when it's higher, which can reduce your average account.
purchase price over time.*
Automatic Dividend Transfer Payroll Deduction and Direct Deposit
The most timely, reliable, and convenient way to Have all or part of your paycheck -- even government
purchase shares -- use distributions from one Scudder checks -- invested in up to four Scudder funds at
fund to purchase shares in another, automatically one time.
(accounts with identical registrations or the same
social security or tax identification number).
* Dollar cost averaging involves continuous investment in securities regardless
of price fluctuations and does not assure a profit or protect against loss
in declining markets. Investors should consider their ability to continue
such a plan through periods of low price levels.
Around-the-clock electronic account service and information, including some transactions:
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Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- http://funds.scudder.com
1-800-343-2890
Scudder Electronic Account Services: Offering
Personalized account information, the ability to account information and transactions, interactive
exchange or redeem shares, and information on other worksheets, prospectuses and applications for all
Scudder funds and services via touchtone telephone. Scudder funds, plus your current asset allocation,
whenever you need them. Scudder's Site also
provides news about Scudder funds, retirement
planning information, and more.
Retirees and those who depend on investment proceeds for living expenses can enjoy these convenient,
timely, and reliable automated withdrawal programs:
- ------------------------------------------------------------------------------------------------------------------------------
Automatic Withdrawal Plan QuickSell
You designate the bank account, determine the schedule Provides speedy access to your money by
(as frequently as once a month) and amount of the electronically crediting your redemption proceeds
redemptions, and Scudder does the rest. to the bank account you previously designated.
Distributions Direct
Automatically deposits your fund distributions into the
bank account you designate within three business days
after each distribution is paid.
For more information about these services, call a Scudder representative at 1-800-225-5163
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18 - Scudder Zero Coupon 2000 Fund
<PAGE>
Mutual Funds and More -- Brokerage and Guidance Services:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Brokerage Services Scudder Portfolio Builder
Offers you access to a world of investments, A free service designed to help suggest ways investors like
including stocks, corporate bonds, Treasuries, plus you can diversify your portfolio among domestic and global,
over 8,000 mutual funds from at least 150 mutual as well as equity, fixed-income, and money market funds,
fund companies. And Scudder Fund Folio(SM) provides using Scudder funds.
investors with access to a marketplace of more than
500 no-load funds from well-known companies--with no Personal Counsel from Scudder(SM)
transaction fees or commissions. Scudder
shareholders can take advantage of a Scudder Developed for investors who prefer the benefits of no-load
Brokerage account already reserved for them, with funds but want ongoing professional assistance in
no minimum investment. For information about managing a portfolio. Personal Counsel(SM) is a highly
Scudder Brokerage Services, call 1-800-700-0820. customized, fee-based asset management service for
individuals investing $100,000 or more.
Fund Folio funds held less than six months will be charged a fee for redemptions. You can buy
shares directly from the fund itself or its principal underwriter or distributor without
paying this fee. Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061.
Member SIPC.
Personal Counsel From Scudder(SM) and Personal Counsel(SM) are service marks of and represent a
program offered by Scudder Investor Services, Inc., Adviser.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
Additional Information on How to Contact Scudder:
- ------------------------------------------------------------------------------------------------------------------------------
For existing account services and transactions Please address all written correspondence to
Scudder Investor Relations -- 1-800-225-5163 The Scudder Funds
P.O. Box 2291
For establishing 401(k) and 403(b) plans Boston, Massachusetts
Scudder Defined Contribution Services -- 02107-2291
1-800-323-6105
Or Stop by a Scudder Investor Center
For information about The Scudder Funds, including Many shareholders enjoy the personal, one-on-one service of
additional applications and prospectuses, or for the Scudder Investor Centers. Check for an Investor Center near
answers to investment questions you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470 Boca Raton Chicago San Francisco
[email protected] Boston New York
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19 - Scudder Zero Coupon 2000 Fund
<PAGE>
About the Fund's Adviser
Scudder Kemper Investments, Inc., is one of the largest and most experienced
investment management oganizations worldwide, managing more than $200 billion in
assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts. It is one of the ten largest mutual fund companies in the
U.S.
Scudder Kemper Investments has a rich heritage of innovation, integrity, and
client-focused service. In 1997, Scudder, Stevens & Clark, Inc., founded 79
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Group. As a result, Zurich's subsidiary, Zurich Kemper Investments,
Inc., with 50 years of mutual fund and investment management experience, was
combined with Scudder. Headquartered in New York, Scudder Kemper Investments
offers a full range of investment counsel and asset management capabilities,
based on a combination of proprietary research and disciplined, long-term
investment strategies. With its global investment resources and perspective,
the firm seeks opportunities in markets throughout the world to meet the needs
of investors.
Scudder Kemper Investments, Inc., the global asset management firm, is a member
of the Zurich Group. The Zurich Group is an internationally recognized leader in
financial services, including property/casualty and life insurance, reinsurance,
and asset management.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
SCUDDER
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