SCUDDER SECURITIES TRUST, N-30D, 1999-01-26

SCUDDER SECURITIES TRUST
N-30D, 1999-01-26

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Scudder
Choice Series:

Scudder Financial
Services Fund

Scudder
Health Care Fund

Scudder
Technology Fund

Semiannual Report
November 30, 1998

Pure No-Load(TM) Funds

Three pure no-load(TM) funds which each seek long-term growth of capital by
investing primarily in common stocks and other equity securities of companies in
a group of related industries.

SCUDDER (logo)

<PAGE>

Scudder Choice Series

<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------
<S> <C> <C>
Scudder Financial Services Fund Date of Inception: 11/3/97 Ticker Symbol: SCFSX

Scudder Health Care Fund Date of Inception: 3/2/98 Ticker Symbol: SCHLX

Scudder Technology Fund Date of Inception: 3/2/98 Ticker Symbol: SCUTX
- - --------------------------------------------------------------------------------------
</TABLE>

o Scudder Financial Services Fund provided a total return of 12.73% for the
twelve-month period ended November 30, 1998. Financial services stocks
experienced significant volatility during the period, rallying strongly through
the first half of the year before falling sharply in the market correction of
the late summer.

o Scudder Health Care Fund returned 4.92% in the period beginning with the
Fund's inception on March 2, 1998, and ending November 30, 1998. Health care
stocks, particularly large-cap pharmaceuticals, benefited from strong earnings,
consolidation, and noncyclical revenue streams.

o Scudder Technology Fund posted a total return of 13.00% for the period
beginning with the Fund's inception on March 2, 1998, and ending on November 30,
1998. The Fund's holdings within the large-cap universe were its strongest
performers, while smaller stocks in the portfolio generally underperformed.

<TABLE>
<CAPTION>
Table of Contents

3 Letter from the Series' Scudder Health Care Fund 26 Financial Statements
President
9 Portfolio Management 34 Notes to Financial
Scudder Financial Services Fund Discussion Statements

4 Portfolio Management 12 Performance Update 40 Officers and Trustees
Discussion
13 Portfolio Summary 41 Investment Products
7 Performance Update and Services
21 Investment Portfolio
8 Portfolio Summary 42 Scudder Solutions
32 Financial Highlights
19 Investment Portfolio
Scudder Technology Fund
31 Financial Highlights
14 Portfolio Management
Discussion

17 Performance Update

18 Portfolio Summary

23 Investment Portfolio

33 Financial Highlights

</TABLE>

2 - Scudder Choice Series

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Letter from the Series' President

Dear Shareholders,

Scudder is pleased to present the combined annual report for Scudder Choice
Series, which includes Scudder Financial Services Fund, Scudder Health Care
Fund, and Scudder Technology Fund. Throughout 1998, financial markets around the
world experienced significant volatility as investors evaluated the effects of a
series of economic crises that called into question the health of the global
economy. Although sector funds can often experience greater share price
fluctuations in periods such as this, they also provide investors with exposure
to fast-growing, dynamic industries. For those who are able to withstand
short-term volatility, Scudder Choice Series offers three options for investors
seeking an aggressive component for a diversified portfolio. For more
information about each Fund's performance, investment strategy, portfolio
strategy, and outlook, please see the portfolio management discussions that
begin on page 4.

For those of you who are interested in new Scudder products, we recently
introduced the Scudder Tax Managed Growth Fund, investing in stocks of medium-
to large-sized U.S. companies, and Scudder Tax Managed Small Company Fund,
investing in stocks of small U.S. companies. Using a combination of quantitative
and fundamental research, the funds focus on companies with strong earnings
growth, reasonable valuations, and favorable risk profiles. Both funds strive to
maximize after tax returns by systematically taking into account the tax
implications of portfolio transactions and seeking to offset capital gains by
realizing losses when appropriate.

Thank you for your continued investment in Scudder Choice Series. If you
have any questions about your investment, please call Scudder Investor
Information at 1-800-225-2470, or visit our Web site at www.scudder.com.

Sincerely,

/s/Daniel Pierce

Daniel Pierce
President,
Scudder Choice Series

3 - Scudder Choice Series

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Portfolio Management Discussion

Scudder Financial Services Fund

In the following interview, Co-Lead Portfolio Managers Thaddeus Paluszek and
Peter Taylor discuss Scudder Financial Services Fund's strategy and the market
environment for the twelve-month period ended November 30, 1998.

Q: How was the Fund affected by the global economic turmoil of 1998?

A: Although the financial sector was hit particularly hard by the rapidly
shifting sentiment that marked the latter half of the reporting period, the
investment backdrop remained highly favorable through the early part of the
year. Financial stocks continued a three-year runup that was based on
strengthening fundamentals, a booming U.S. economy, low interest rates, and
expanding earnings multiples. In addition, frantic consolidation activity among
high profile companies continued with mergers between NationsBank and
BankAmerica, BANC ONE and First Chicago, and Travelers and Citicorp.

During the second half of the calendar year, market psychology turned decidedly
negative when the positive factors were overwhelmed by crises both here and
abroad. Although growth in the United States remained strong, the meltdown in
the emerging markets sparked fears that banks' exposure to potentially bad loans
from shaky foreign borrowers would have a negative impact on earnings.
Similarly, the bailout of the hedge fund Long Term Capital Management raised
questions about the derivatives exposure of U.S. financial institutions. The
widespread fears of a possible global recession that followed had a significant
impact on the banking sector, which tends to underperform when the economy is
weak. In late September and October, large-cap financial stocks rebounded
following three interest rate cuts by the Federal Reserve but did not fully
recover the losses they suffered during the crises.

Q: How did the Fund perform in this environment?

A: The Fund posted a total return of 12.73%, which trailed the 14.66% return of
the unmanaged S&P Financial Index. This divergence can be explained in part by
our exposure to small cap stocks. The index is composed entirely of large caps,
which tended to outperform their smaller counterparts across all sectors
throughout 1998. We seek to add diversification, however, by investing in
smaller companies that often have higher growth potential. Although in
short-term periods this may cause the Fund to lag, we feel that over the
long-term, this strategy will lead to strong risk-adjusted returns.

Q: What is the Fund's investment strategy?

A: We employ a research driven approach that uses bottom up analysis to identify
companies with strong balance sheets, distinct competitive advantages, and
positive catalysts for earnings growth. In selecting Fund holdings, we pay
strict attention to the valuation measures that we believe will facilitate
long-term outperformance, such as attractive price-to-earnings and price-to-book
ratios, improving earnings trends, and a favorable franchise and business mix.
We're particularly interested in companies that have undergone important changes
that have not yet been recognized by the marketplace. The strategy also

4 - Scudder Choice Series

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incorporates strong risk control measures, such as broad diversification within
the financial sector.

Q: How did you apply this strategy during the recent period?

A: In order to cope with the recent volatility, we emphasized risk management by
underweighting sectors that tend to have rapidly fluctuating earnings in favor
of the insurance, and consumer and mortgage finance sectors. Corporate earnings
in the brokerage and bank subsectors tend to be highly sensitive to the
movements of the financial markets, because a significant portion of their
revenues is often generated by their investment banking and trading operations.
Additionally, the earnings growth of the banking sector is highly correlated to
the direction of the economy, since slower growth usually leads to lower demand
for loans. As a result, a correct evaluation of a stock's fundamental traits can
be rendered meaningless by factors not specific to the individual company, such
as a crisis overseas. Seeking to mitigate volatility, we underweighted the
banking and brokerage sectors in favor of domestic-oriented, undervalued
companies with diversified franchises and the ability to post strong earnings in
most environments. The insurance sector provided fertile ground for uncovering
such stocks in this period. Insurance companies tend to have a low level of
international exposure, strong earnings growth, and a degree of independence
from fluctuations in the economy. We continue to be optimistic on the prospects
for bond insurers MBIA and AMBAC, as well as Hartford Life and Nationwide
Financial Services, a significant player in retirement and tax planning
services. We also overweighted the consumer and mortgage finance area,
maintaining our large holdings in Fannie Mae and Freddie Mac. Both of these
companies are in our opinion, well managed, steadily growing businesses that
benefited from a highly favorable interest rate environment.

Q: What are some other holdings that illustrate your strategy?

A: Our position in American Express reflects the company's strong fundamentals.
In addition to showing high single-digit revenue growth and increased market
share in its major businesses, the firm has a significant franchise value and
has demonstrated a strong shareholder orientation with a large share buyback. A
liquid large-cap stock, American Express outperformed the benchmark for the
period. Northern Trust is another high-quality company that we find attractive,
since its well-diversified operation is strongly based on the pension fund and
private banking businesses within the United States, which are both somewhat
sheltered from turbulence in the global economy.

Q: What is the outlook for the financial sector?

A: We believe it is reasonable to expect further instability in the year ahead.
Although market volatility may present a short-term challenge to investors, it
can also create significant opportunities to capitalize on the success of
companies that are adapting to a changing environment. Many companies that have
been involved in mergers, for example, have gained the ability to increase
earnings even in a slowing economy. While merger and acquisition activity has
received the most attention, the most recent manifestation of the consolidation

5 - Scudder Choice Series

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trend has been the increasing number of joint ventures between financial
companies. AMBAC and MBIA, for instance, have joined forces to strengthen their
businesses overseas, and both stand to benefit as a result.

Going forward, we will remain vigilant for further cautionary signals in the
economic outlook, and will monitor the Fund's holdings for any signs of
fundamental weakness. If the economic outlook turns negative, we will consider
increasing our concentration in defensive stocks that have the ability to
maintain predictable earnings growth in unfavorable conditions. In addition, we
will be alert for opportunities to pick up strong companies at reasonable
valuations. Although investing in a sector fund can pose greater inherent risks,
our approach is designed to benefit long-term investors who seek to gain
meaningful exposure to this fast-growing industry.

6 - Scudder Choice Series

<PAGE>

Performance Update as of November 30, 1998
Scudder Financial Services Fund

- - ----------------------
Fund Index Comparisons
- - ----------------------
Total Return
- - ---------------------------------------------------
Period Ended Growth of Average
11/30/98 $10,000 Cumulative Annual
- - ---------------------------------------------------
Scudder Financial Services Fund
- - ---------------------------------------------------
1 Year $ 11,273 12.73% 12.73%
- - ---------------------------------------------------
Life of Fund* $ 11,489 14.89% 13.80%
- - ---------------------------------------------------
Russell 1000 Index
- - ---------------------------------------------------
1 Year $ 11,511 15.11% 15.11%
- - ---------------------------------------------------
Life of Fund* $ 11,511 15.11% 15.11%
- - ---------------------------------------------------
S&P Financial Index
- - ---------------------------------------------------
1 Year $ 11,466 14.66% 14.66%
- - ---------------------------------------------------
Life of Fund* $ 11,466 14.66% 14.66%
- - ---------------------------------------------------
* The Fund commenced operations on November 3,
1997. Index comparisons begin November 30, 1997.

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Growth of a $10,000 Investment
- - ------------------------------

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CHART DATA:

Russell 1000 Index Scudder Financial Services Fund S&P Financial Index
------------------ ------------------------------- -------------------

11/97* 10000 10000 10000
1/98 10147 10323 10500
3/98 11493 11839 11796
5/98 11398 11650 11702
7/98 11341 12035 12195
9/98 10208 9561 9574
11/98 11511 11273 11466

The Russell 1000 Index is an unmanaged capitalization-weighted measure of
approximately 1000 small U.S. stocks. Index returns assume reinvestment of
dividends and, unlike Fund returns, do not reflect any fees or expenses. The
Standard and Poor's (S&P) Financial Index is a capitalization-weighted price
only index representing 11 financial groups and 72 financial companies. Index
returns assume reinvestment of dividends and, unlike Fund returns, do not
reflect any fees or expenses.

- - ---------------------------------
Returns and Per Share Information
- - ---------------------------------

Yearly Periods Ended November 30

THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
ILLUSTRATING THE FUND TOTAL RETURN (%) AND
INDEX TOTAL RETURN (%)

CHART DATA:
1997** 1998
- - --------------------------------------------------------
Net Asset Value $ 12.23 $ 13.76
- - --------------------------------------------------------
Income Dividends $ -- $ .03
- - --------------------------------------------------------
Capital Gains Distributions $ -- $ --
- - --------------------------------------------------------
Fund Total Return (%) 1.92 12.73
- - --------------------------------------------------------
Index Total Return (%) 1.83 15.11
- - --------------------------------------------------------

Performance is historical and assumes reinvestment of all dividends and capital
gains and is not indicative of future results. Total 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 maintained the Fund's expenses,
the total return for the one year and life of Fund periods would have been
lower.

**For the period from November 3, 1997 to November 30, 1997.

7 - Scudder Choice Series
<PAGE>

Portfolio Summary as of November 30, 1998
Scudder Financial Services Fund

- - ----------------
Asset Allocation
- - ----------------

A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.

Equity Holdings 98%
Cash Equivalents 2%
---------------------------------------------
100%
---------------------------------------------

Fund management seeks to stay as close to fully invested as
possible.

- - ------------------------------
Diversification
(Excludes 2% Cash Equivalents)
- - ------------------------------

A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.

Banks 40%
Insurance 37%
Other Financial Companies 13%
Consumer Finance 9%
EDP Services 1%
---------------------------------------------
100%
---------------------------------------------

The Fund's heavy weighting in the insurance sector is
designed to limit the impact of fluctuations in the economy
and the broader market.

- - ---------------------------
Ten Largest Equity Holdings
(42% of Portfolio)
- - ---------------------------

1. BankAmerica Corp.
Provider of retail banking services
2. Fannie Mae
Insurer and holder of mortgage loans
3. BANC ONE CORP.
Consumer and commercial bank
4. First Union Corp.
Commercial banking
5. American International Group, Inc.
Major international insurance holding
company
6. Chase Manhattan Corp.
Commercial banking
7. Citigroup Inc.
Provider of financial services
8. Wells Fargo Co.
Provider of banking, insurance and
consumer finance
9. Allstate Corp.
Automobile, homeowners and life
insurance company
10. Fremont General Corp.
Insurance and financial services

Top holdings include attractively valued companies with
strong balance sheets, distinct competitive advantages, and
positive catalysts for earnings growth.

For more complete details about the Fund's investment portfolio, see page 19. A
quarterly Fund Summary and Portfolio Holdings are available upon request.

8 - Scudder Choice Series

<PAGE>

Portfolio Management Discussion

Scudder Health Care Fund

In the following interview, Lead Portfolio Manager James E. Fenger discusses
Scudder Health Care Fund's strategy and the market environment for the period
since the Fund began operations on March 2, 1998.

Q: How has Scudder Health Care Fund performed compared to its unmanaged
benchmarks, the S&P 500 Index and the Russell 2000 Index, for the reporting
period?

A: The Fund returned 4.92%, beating the -13.11% return of the Russell 2000, but
trailing the 12.33% return of the S&P 500. Large capitalization health care
stocks posted solid returns, but our significant exposure to small
capitalization stocks, especially during the initial part of the reporting
period, hurt our relative performance to the S&P 500. Health care stocks
benefited from several positive trends specific to the industry; namely, stable
earnings growth, consolidation, and strong underlying growth in the
pharmaceuticals sector. In posting solid returns, health care stocks displayed
less volatility than the overall market since consumers need to buy
health-related products and services regardless of the state of the economy. In
an environment where recession fears and overseas economic turmoil were making
headlines, the noncyclical nature of health stocks was a critical factor in
their relative performance.

Q: What is your investment strategy?

A: We seek to achieve long-term growth by investing in reasonably valued,
high-quality companies that are engaged in the development, production, or
distribution of products or services related to the treatment or prevention of
medical illnesses. In particular, we look for companies whose earnings stand to
increase significantly from sales of innovative new products or services. The
Fund strives to minimize risk by diversifying among a wide variety of industries
and limiting the size of individual investments in very small companies. The
strength of the cash flow and balance sheets of prospective holdings is also a
primary consideration.

Q: How did you control risk in the portfolio?

A: Given the high level of stock market volatility that characterized this
period, we felt that it was appropriate to reduce the Fund's exposure to
smaller, more risky companies that are not showing current profitability. To
fulfill this objective, we trimmed our holdings in small-cap stocks (those with
market capitalizations of $3 billion or less) from 30% of assets on May 31,
1998, to 14.2% on November 30, 1998. Additionally, we reduced the number of
holdings in the portfolio to focus on the stocks where we held the highest level
of conviction. In the process, we increased our weighting in large caps (those
with market capitalization of $10 billion or more) from 45% on May 31 to almost
60% on November 30. This decision proved to be a positive factor in Fund
performance, since the returns of liquid large-cap stocks generally outpaced
those of smaller stocks in this period. Although we are still optimistic on the
outlook for selected small cap stocks in the health care sector, we believe that
a conservative positioning is prudent in this environment.

Toward the end of the reported period and beyond, we observed signs of improved

9 - Scudder Choice Series

<PAGE>

performance among selected smaller capitalization stocks in the biotechnology
and medical device industries. Examples held in the Fund's portfolio include
Immunex and VISX. Immunex is a leading biotechnology company that launched
Embrel, a breakthrough technology for the treatment of rheumatoid arthritis.
VISX is a pioneer in the use of lasers for refractive correction of the eye.

Q: What are some of the Fund's investment themes and specific holdings?

A: Of the many growth-related themes specific to the health care industry, the
one that we have taken advantage of most is the continued strength of the U.S.
pharmaceutical market. This sector has been extremely productive in bringing to
market new drugs that address a wide variety of diseases and illnesses. Direct
advertising has boosted consumer interest in these products, and a more
efficient FDA approval process has allowed many companies to accelerate the
introduction of drugs that have been in trials. These positive developments have
led us to take large positions in well-known, fast-growing drug companies such
as Schering Plough, Warner Lambert, and Pfizer. We are also optimistic on the
outlook for mid-cap drug companies such as Forest Labs, whose new product for
depression has gained meaningful market share, and stands to have a positive
impact on the company's earnings. We are finding additional opportunities to
capitalize on growth in the pharmaceuticals subsector by investing in retailing
stocks, such as Rite Aid, and companies that stand to benefit from the trend
toward outsourcing, such as Quintiles. Going forward, we anticipate that the
pharmaceutical industry will continue to generate strong growth.

Q: How has the Fund benefited from industry consolidation?

A: The Fund has been able to capitalize on this theme both in the U.S. and
overseas. During the six-month reporting period, two of our medical device
holdings, Arterial Vascular and Sofamor Danek, were taken over by Medtronic. We
plan to hold on to what is now a larger position in Medtronic, a producer of
devices used in cardiovascular surgery and neurology, since the acquisitions
should strengthen their competitive position and provide a boost to their new
product cycle. Cardinal Health is another company whose role as a "consolidator"
should lead to increased profit growth. A distributor of medical products,
Cardinal is seeking to branch out into manufacturing. By acquiring Allegiance,
which is both a distributor and a manufacturer of hospital supplies, we believe
that Cardinal has established a stronger position within the industry.

Overseas, we have benefited from the cross-country mergers of Zeneca and Astra,
and Hoescht and Rhone Poulenc. Feeling that significant opportunities for
consolidation in Europe still exist, we held 8.1% of the Fund's assets in
foreign pharmaceutical companies as of November 30.

Q: What holdings didn't perform as well?

A: As mentioned earlier, we sold some of our positions in smaller companies
where the fundamental outlook was deteriorating, consistent with our objective
of concentrating in stocks with the most reliable earnings. ESC Medical, an
Israeli manufacturer of devices used in cosmetic surgery, announced an earnings
shortfall, and HealthSouth, which operates surgical outpatient and

10 - Scudder Choice Series

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rehabilitation centers, is suffering from slower growth and a negative pricing
trend in the industry. In both cases, we sold these holdings based on changes in
their earnings outlook.

Q: What is your outlook for the health care sector?

A: We are highly optimistic on the long-term prospects of health care stocks for
a number of reasons. Demographic trends are favorable in the U.S., Europe, and
Japan, where the average age of the population is moving steadily higher, and an
increasing percentage of gross domestic product is being spent on health care
products on a global basis. Within the United States, we feel that growing
cooperation between companies involved in research, marketing, and distribution
will ultimately lead to synergies that will benefit the entire industry.
Continued consolidation among companies in various subsectors of the health care
industry also represents an attractive long-term investment opportunity. In
addition, an explosion in new technologies and the dramatic scientific
breakthroughs in genomics (the study of genes) has led to a broader range of
treatments and the design of more specific, effective drugs. We believe that the
growth of this discipline has the potential to boost revenues in the health care
industry the same way the invention of the microchip has propelled growth in the
computer industry. Looking ahead, these powerful, growth-oriented themes may
provide a degree of insulation from the ongoing turbulence in the global
economy.

11 - Scudder Choice Series

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Performance Update as of November 30, 1998
Scudder Health Care Fund

- - ----------------------
Fund Index Comparisons
- - ----------------------
Total Return
- - ---------------------------------------------------
Growth of
Period Ended 11/30/98 $10,000 Cumulative
- - ---------------------------------------------------
Scudder Health Care Fund
- - ---------------------------------------------------
Life of Fund* $ 10,492 4.92%
- - ---------------------------------------------------
S&P 500 Index
- - ---------------------------------------------------
Life of Fund* $ 11,233 12.33%
- - ---------------------------------------------------
Russell 2000 Index
- - ---------------------------------------------------
Life of Fund* $ 8,689 -13.11%
- - ---------------------------------------------------
* The Fund commenced operations on March 2, 1998.

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Growth of a $10,000 Investment
- - ------------------------------

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CHART DATA:

S&P 500 Index Scudder Health Care Fund Russell 2000 Index
------------- ------------------------ ------------------

3/2/98 10000 10000 10000
3/98 10512 10342 10412
4/98 10619 10442 10470
5/98 10436 10067 9905
6/98 10860 10425 9926
7/98 10744 10308 9122
8/98 9192 8667 7351
9/98 9779 9642 7926
10/98 10574 9908 8249
11/98 11233 10492 8689

The Standard and Poor's (S&P) 500 Index is an unmanaged capitalization-weighted
measure of 500 widely held common stocks listed on the New York Stock Exchange,
American Stock Exchange, and Nasdaq Stock Market. Index returns assume
reinvestment of dividends and, unlike Fund returns, do not reflect any fees or
expenses. The Russell 2000 Index is an unmanaged capitalization-weighted measure
of approximately 2000 small U.S. stocks. Index returns assume reinvestment of
dividends and, unlike Fund returns, do not reflect any fees or expenses.

- - ---------------------------------
Returns and Per Share Information
- - ---------------------------------

Period ended November 30

THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
ILLUSTRATING THE FUND TOTAL RETURN (%) AND
INDEX TOTAL RETURN (%)

CHART DATA:
1998*
- - -----------------------------------------------
Net Asset Value $ 12.59
- - -----------------------------------------------
Income Dividends $ --
- - -----------------------------------------------
Capital Gains Distributions $ --
- - -----------------------------------------------
Fund Total Return (%) 4.92
- - -----------------------------------------------
Index Total Return (%) 12.33
- - -----------------------------------------------

12 - Scudder Choice Series
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Portfolio Summary as of November 30, 1998
Scudder Health Care Fund

- - ----------------
Asset Allocation
- - ----------------

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points in the table below.

Equity Holdings 92%
Cash Equivalents 8%
---------------------------------------------
100%
---------------------------------------------

The Fund retained a modest cash position during the period.

- - ------------------------------
Diversification
(Excludes 8% Cash Equivalents)
- - ------------------------------

A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.

Pharmaceuticals 55%
Medical Supply & Specialty 18%
Health Industry Services 13%
Biotechnology 7%
Insurance 3%
Other 4%
---------------------------------------------
100%
---------------------------------------------

Continued strong earnings growth and positive long-term
themes have led Fund management to overweight the
pharmaceuticals sector.

- - ---------------------------
Ten Largest Equity Holdings
(44% of Portfolio)
- - ---------------------------

1. Schering Plough Corp.
Maker of pharmaceutical and consumer
products
2. Warner-Lambert Co.
Maker of drugs, toiletries and food
products
3. Pfizer, Inc.
Leading international pharmaceutical
company
4. Sofamor Danek Group, Inc.
Manufacturer of surgery products and
biomaterials
5. Abbott Laboratories
Health care products
6. American Home Products Corp.
Major diversified pharmaceutical
company
7. Bristol-Myers Squibb Co.
Diversified pharmaceutical and
consumer products company
8. Eli Lilly & Co.
Leading pharmaceutical company
9. Cardinal Health, Inc.
Distributor of pharmaceutical products
and services
10. Quintiles Transnational Corp.
Provider of contract research services

Turbulence in the broader market prompted us to concentrate
our holdings in liquid large-cap stocks on which we hold a
high level of conviction.

For more complete details about the Fund's investment portfolio, see page 21. A
quarterly Fund Summary and Portfolio Holdings are available upon request.

13 - Scudder Choice Series

<PAGE>

Portfolio Management Discussion

Scudder Technology Fund

In the following interview, Lead Portfolio Manager J. Brooks Dougherty discusses
Scudder Technology Fund's strategy and the market environment for the period
since the Fund began operations on March 2, 1998.

Q: How were technology stocks affected by the various global crises during the
reporting period?

A: The sector was hit fairly hard during the crisis, causing the prices of even
the highest quality stocks to fall sharply. In an environment where investors
were becoming increasingly risk-averse, the high price-to-earnings ratios of
technology stocks proved to be a significant liability. In addition, the global
nature of the largest companies in the sector made them particularly vulnerable
to the financial crises overseas. As the economic slowdown in Asia worsened and
eventually spread to other emerging markets, corporations began to consider
cutbacks in their capital spending budgets. For many U.S. tech firms, this meant
slower sales, higher inventories, and reduced earnings estimates. In this phase,
the larger macroeconomic issues overwhelmed company-specific fundamentals,
reducing valuations to relatively attractive levels. In the rebound that
followed in October and November, technology stocks were able to retrace their
losses and break into new highs in a remarkably short eight-week period.
Although nerve-wracking for individual investors, the volatility presented
opportunities for the Fund to establish positions in quality companies whose
stock prices we felt had been battered unjustifiably.

Q: How did the Fund perform in this environment?

A: The Fund posted a 13.0% return for the reporting period, which compared
favorably to a -13.11% return for the Russell 2000 Index and a -7.23% for the
Russell 2000 Technology Index. The strong relative performance reflects our
significant weighting in large-cap tech names, which generally outperformed
their risker small-cap counterparts in 1998.

Q: What is the Fund's investment strategy?

A: The objective of the Fund is to generate long term growth, and to stay as
close to fully invested in equities as possible. The Fund invests in six key
areas of the technology sector -- semiconductors, software, hardware,
network/telecommunications, services, and the Internet. We generally strive to
maintain our subsector weightings between one-half and double that of the
benchmark index, and will make adjustments based on our outlook for each
individual sector. We also seek to control risk by limiting small cap holdings
to less than 25% of the Fund's total net assets. Although smaller stocks can
offer above-average return potential, their potential lack of liquidity will
often have a negative effect on the execution price of a large trade. We will
therefore invest selectively in small companies where growth is well above
average, the valuation is attractive, and our conviction level is high.

14 - Scudder Choice Series

<PAGE>

Q: Of the six sectors you mentioned, on which ones have you been the most
optimistic?

A: Our search for companies with optimal combinations of strong fundamentals and
reasonable valuations have led us to the semiconductor sector, where we have
significantly increased our weighting throughout the period. Operating in a
cyclical industry, chip makers have been under extreme pressure for much of the
calendar year due to global overcapacity and slowing demand for personal
computers. Now that the widespread conviction has emerged that the slump has
passed its nadir, we have seen strong performance from our position in the
industry bellwether, Intel. Although its stock price fell sharply during the
correction, the company has demonstrated an ongoing ability to cut costs,
maintain high margins, and execute its business plan with precision. For
example, in the transition to the new Pentium II line, Intel has differentiated
itself by fielding a series of processors at various price points to compete
with the large number of firms seeking to sell similar products at lower prices.
As a result, the company has been able to withstand effectively the downturn,
and has positioned itself for stronger earnings in the quarters ahead.

The Internet is another subsector where we are finding reasons for optimism.
While `Net stocks are often panned as a group by critics, we have invested 4-6%
of Fund assets in companies with strong growth rates and dominant franchises.
Yahoo!, for instance, has grown earnings at a stellar rate, and has used a
first-rate marketing plan to post solid profits in an industry where many
players are operating at a loss. America Online has achieved strong earnings
growth by increasing its membership levels to 14 million subscribers, and using
its marketing muscle to expand revenues generated from advertising. AOL now has
a leadership position in nine countries worldwide, making it the only internet
stock that boasts a global franchise.

Q: What are some other stocks that have attracted your attention?

A: Cisco Systems has been a stock that has done quite well for us, and we
continue to be optimistic on its prospects because of its role as the leading
provider of networking equipment in the world. A company that is gaining share
in every segment of its market, Cisco builds the infrastructure that telephone
companies require as they race to add bandwidth. In its role as a leader of the
new networking paradigm, we believe Cisco is positioned to exploit the
tremendous opportunities that continue to unfold in the communications area.

Although we have reduced the Fund's weighting in software stocks, we feel that
Oracle holds a great deal of promise after rebounding strongly from a disastrous
1997. Earnings met or exceeded expectations for the first three quarters of 1998
as management refocused the sales force to prepare for the transition to a new
set of products, particularly enterprise resource planning (ERP) software.

15 - Scudder Choice Series

<PAGE>

Oracle has taken advantage of consolidation in the market for database products,
and has emerged as the leading provider to its corporate customers.

Q: What is your outlook for the technology sector?

A: While we are finding reasons for optimism regarding a number of specific
companies, we are cautious on the prospects for the industry as a whole. At the
close of the reporting period, the sector was richly valued by historical
standards, and the rally staged by the broader market appeared to be based more
on sentiment and liquidity factors than earnings. Although the sector's
fundamentals are strong and our long-term expectations for positive earnings
growth remain intact, we believe that caution may be warranted in the near-term.
Many technology companies earn a significant portion of their revenues overseas,
where the economic outlook is murky. Another, more critical, issue is the
uncertainty surrounding the Year 2000 problem. With the date fast approaching,
it is still unclear how corporations will deploy their information technology
budgets to address this issue. If a spending slowdown materializes, as many
industry analysts are expecting, it could have a negative effect on the earnings
of technology stocks throughout 1999. Although these two factors could dampen
stock price performance in the months ahead, we are confident that in the
long-term, the technology sector will continue to be a source of dynamic growth
and innovation.

16 - Scudder Choice Series

<PAGE>

Performance Update as of November 30, 1998
Scudder Technology Fund

- - ----------------------
Fund Index Comparisons
- - ----------------------
Total Return
- - ---------------------------------------------------
Growth of
Period Ended 11/30/98 $10,000 Cumulative
- - ---------------------------------------------------
Scudder Technology Fund
- - ---------------------------------------------------
Life of Fund* $ 11,300 13.00%
- - ---------------------------------------------------
Russell 2000 Index
- - ---------------------------------------------------
Life of Fund* $ 8,689 -13.11%
- - ---------------------------------------------------
Russell 2000 Technology Fund
- - ---------------------------------------------------
Life of Fund* $ 9,277 -7.23%
- - ---------------------------------------------------
* The Fund commenced operations on March 2, 1998.

- - ------------------------------
Growth of a $10,000 Investment
- - ------------------------------

THE PRINTED DOCUMENT CONTAINS A LINE CHART HERE

CHART DATA:

Russell 2000 Index Scudder Technology Fund Russell 2000 Technology Index
------------------ ----------------------- -----------------------------

3/2/98 10000 10000 10000
3/98 10412 10575 10127
4/98 10470 10842 10451
5/98 9905 10058 9413
6/98 9926 11058 9620
7/98 9122 10692 8697
8/98 7351 8567 6719
9/98 7926 9667 7650
10/98 8249 10150 8243
11/98 8689 11300 9277

The Russell 2000 Index is an unmanaged capitalization-weighted measure of
approximately 2000 small U.S. stocks. Index returns assume reinvestment of
dividends and, unlike Fund returns, do not reflect any fees or expenses. The
Russell 2000 Technology Index is a capitalization-weighted index of companies
that serve the electronics and computer industries or that manufacture products
based on the latest applied science. Index returns assume reinvestment of
dividends and, unlike Fund returns, do not reflect any fees or expenses.

- - ---------------------------------
Returns and Per Share Information
- - ---------------------------------

Period ended November 30

THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
ILLUSTRATING THE FUND TOTAL RETURN (%) AND
INDEX TOTAL RETURN (%)

CHART DATA:

1998*
- - ----------------------------------------------
Net Asset Value 13.56
- - ----------------------------------------------
Income Dividends --
- - ----------------------------------------------
Capital Gains Distributions --
- - ----------------------------------------------
Fund Total Return (%) 13.00
- - ----------------------------------------------
Index Total Return (%) -13.11
- - ----------------------------------------------

17 - Scudder Choice Series
<PAGE>

Portfolio Summary as of November 30, 1998
Scudder Technology Fund

- - ----------------
Asset Allocation
- - ----------------

A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.

Equity Holdings 86%
Cash Equivalents 14%
---------------------------------------------
100%
---------------------------------------------

The Fund's cash balance increased moderately during the
reporting period.

- - -------------------------------
Diversification
(Excludes 14% Cash Equivalents)
- - -------------------------------

A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.

Computer Software 21%
Electronic Data Processing 15%
Semiconductors 12%
Telecommunications Equipment 10%
Office/Plant Automation 9%
EDP Services 8%
EDP Peripherals 6%
Miscellaneous Commercial Services 6%
Diverse Electronics Products 3%
Other 10%
---------------------------------------------
100%
---------------------------------------------

Fund holdings are widely diversified among the various
subsectors of the technology industry.

- - ---------------------------
Ten Largest Equity Holdings
(34% of Portfolio)
- - ---------------------------

1. Intel Corp.
Semiconductor memory circuits
2. Cisco Systems, Inc.
Manufacturer of computer network
products
3. Sun Microsystems, Inc.
Producer of high-performance
workstations, servers and networking
software
4. America Online, Inc.
Provider of online computer services
5. Ascend Communications, Inc.
Developer and producer of a variety of
high-speed wide area network access
products
6. Microsoft Corp.
Computer operating systems software
7. International Business Machines Corp.
Principal manufacturer and servicer of
business and computing machines
8. Lucent Technologies Inc.
Producer of public and private
networks, communication systems and
software, telecommunication systems
9. Dell Computer Corp.
Developer and manufacturer of IBM
compatible personal computers
10. Computer Associates International, Inc.
Designer and producer of standardized
software for various business
applications

Top holdings reflect management's outlook for the growth
potential in the communications and networking areas.

For more complete details about the Fund's investment portfolio, see page 23. A
quarterly Fund Summary and Portfolio Holdings are available upon request.

18 - Scudder Choice Series

<PAGE>

Investment Portfolio as of November 30, 1998 (Unaudited)

Scudder Financial Services Fund
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- - ------------------------------------------------------------------------------------------------------------------------------
Cash Equivalents 2.4%
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreement with State Street Bank and Trust Company dated 11/30/1998 at 5.15%,
to be repurchased at $894,128 on 12/1/1998, collateralized by a $880,000 U.S. Treasury ----------
Note, 6.375%, 1/15/2000 (Cost $894,000) ................................................ 894,000 894,000
----------
Shares
- - ------------------------------------------------------------------------------------------------------------------------------
Common Stocks 97.6%
- - ------------------------------------------------------------------------------------------------------------------------------
Banks 38.6%
BANC ONE CORP. ........................................................................... 34,562 1,773,463
BankAmerica Corp. ........................................................................ 36,934 2,407,635
BankBoston Corp. ......................................................................... 15,200 632,700
Chase Manhattan Corp. .................................................................... 24,400 1,547,875
First Security Corp. ..................................................................... 17,950 361,244
First Tennessee National Corp. ........................................................... 13,000 435,500
First Union Corp. ........................................................................ 27,280 1,657,260
Imperial Bancorp* ........................................................................ 12,400 192,200
KeyCorp .................................................................................. 11,000 337,563
Mellon Bank Corp. ........................................................................ 11,000 692,313
National City Corp. ...................................................................... 7,800 524,550
North Fork Bancorporation, Inc. .......................................................... 14,100 296,981
Northern Trust Corp. ..................................................................... 10,900 880,175
Silicon Valley Bancshares* ............................................................... 8,000 200,000
US Bancorp ............................................................................... 18,600 684,713
Wells Fargo Co. .......................................................................... 33,500 1,206,000
Zions Bancorp ............................................................................ 10,800 545,400
----------
14,375,572
----------
Insurance 36.1%
Ambac Financial Group, Inc. .............................................................. 13,700 835,700
Aegon NV (ADR) ........................................................................... 6,400 678,400
Allstate Corp. ........................................................................... 27,900 1,136,925
American International Group, Inc. ....................................................... 17,400 1,635,600
Cigna Corp. .............................................................................. 10,300 801,469
Conseco, Inc. ............................................................................ 9,600 318,000
ESG Re Ltd ............................................................................... 27,400 489,775
EXEL Ltd. ................................................................................ 14,811 1,112,676
</TABLE>

The accompanying notes are an integral part of the financial statements.

19 - Scudder Choice Series
<PAGE>

<TABLE>
<CAPTION>
Market
Shares Value ($)
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Fremont General Corp. .................................................................... 22,100 1,113,287
Hartford Life, Inc. "A" .................................................................. 15,300 838,631
MBIA, Inc. ............................................................................... 12,300 796,425
Nationwide Financial Services, Inc. "A" .................................................. 21,600 1,039,500
PMI Group, Inc. .......................................................................... 11,600 634,375
Scottish Annuity & Life Holdings, Ltd.* .................................................. 5,000 63,125
Stirling Cooke Brown Holdings Limited .................................................... 32,800 582,200
Travelers Property & Casualty Insurance Co. "A" .......................................... 14,900 513,119
UNUM Corp. ............................................................................... 15,300 824,288
----------
13,413,495
----------
Consumer Finance 8.9%
American Express Company ................................................................. 9,200 920,575
Associates First Capital Corp. ........................................................... 12,900 1,004,587
Citigroup Inc. ........................................................................... 28,300 1,420,306
----------
3,345,468
----------
Other Financial Companies 13.1%
CIT Group, Inc. .......................................................................... 11,200 314,300
Charter One Financial, Inc. .............................................................. 12,600 374,062
Freddie Mac .............................................................................. 13,000 786,500
Fannie Mae ............................................................................... 25,500 1,855,125
Federated Investors, Inc. "B" ............................................................ 26,900 452,256
Household International, Inc. ............................................................ 19,400 759,025
Merrill Lynch & Co., Inc. ................................................................ 4,200 315,000
----------
4,856,268
----------
EDP Services 0.9%
First Data Corp. ......................................................................... 11,800 314,912
- - ------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $34,168,750) 36,305,715
- - ------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $35,062,750) (a) 37,199,715
- - ------------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Non-income producing security.

(a) The cost for federal income tax purposes was $35,062,750. At November 30,
1998, net unrealized appreciation for all securities based on tax cost was
$2,136,965. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $3,524,803 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$1,387,838.

During the six months ended November 30, 1998, purchases and sales of
investment securities (excluding short-term investments) aggregated
$5,457,935 and $3,608,288, respectively.

The accompanying notes are an integral part of the financial statements.

20 - Scudder Choice Series
<PAGE>

Investment Portfolio as of November 30, 1998 (Unaudited)

Scudder Health Care Fund
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- - ------------------------------------------------------------------------------------------------------------------------------
Short-Term Notes 7.6%
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Federal Home Loan Bank, 5.22%**, 12/1/1998 (Cost $3,554,000) ............................. 3,554,000 3,554,000
----------

Shares
- - ------------------------------------------------------------------------------------------------------------------------------
Common Stocks 92.4%
- - ------------------------------------------------------------------------------------------------------------------------------
Department & Chain Stores 1.0%
Rite Aid Corp. ........................................................................... 9,900 459,113
----------
Biotechnology 6.7%
Alkermes, Inc.* .......................................................................... 21,300 391,388
BioChem Pharma, Inc.* .................................................................... 18,100 441,188
Biogen Inc.* ............................................................................. 3,100 235,213
Centocor Inc.* ........................................................................... 10,500 425,250
Genentech, Inc.* ......................................................................... 8,700 609,544
Immunex Corp.* ........................................................................... 3,300 304,013
Ligand Pharmaceuticals "B"* .............................................................. 40,300 400,481
MedImmune, Inc.* ......................................................................... 4,800 321,000
----------
3,128,077
----------
Health Industry Services 12.1%
Cardinal Health, Inc. .................................................................... 19,200 1,317,600
First Health Group Corp.* ................................................................ 19,800 315,563
IDX Systems Corp.* ....................................................................... 7,500 307,969
IMS Health Inc. .......................................................................... 13,400 889,425
McKesson Corp. (New) ..................................................................... 6,900 491,194
PAREXEL International Corp.* ............................................................. 20,700 539,494
Quintiles Transnational Corp.* ........................................................... 25,900 1,291,763
United Healthcare Corp. .................................................................. 10,300 464,788
----------
5,617,796
----------
Hospital Management 1.3%
Universal Health Services, Inc.* ......................................................... 11,300 605,963
----------
Medical Supply & Specialty 16.8%
Arterial Vascular Engineering, Inc.* ..................................................... 26,100 1,275,638
ArthroCare Corp.* ........................................................................ 10,300 160,294
Becton, Dickinson & Co. .................................................................. 28,900 1,228,250
Biomet Inc. .............................................................................. 16,100 615,825
Cyberonics, Inc.* ........................................................................ 25,400 276,225
STERIS Corp.* ............................................................................ 24,400 654,225
</TABLE>

The accompanying notes are an integral part of the financial statements.

21 - Scudder Choice Series
<PAGE>

<TABLE>
<CAPTION>
Market
Shares Value ($)
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Sofamor Danek Group, Inc.* ............................................................... 20,700 2,314,519
Stryker Corp. ............................................................................ 19,500 823,875
VISX Inc.* ............................................................................... 6,300 459,113
----------
7,807,964
----------
Pharmaceuticals 51.0%
Abbott Laboratories ...................................................................... 48,200 2,313,600
Allergan, Inc. ........................................................................... 14,800 900,950
Altana AG ................................................................................ 2,900 201,775
ALZA Corp. "A"* .......................................................................... 8,000 418,000
American Home Products Corp. ............................................................. 38,500 2,050,125
Baxter International Inc. ................................................................ 19,600 1,245,825
Bristol-Myers Squibb Co. ................................................................. 14,900 1,826,181
Elan Corp. PLC (ADR)* .................................................................... 10,800 735,750
Eli Lilly & Co. .......................................................................... 14,800 1,327,375
Forest Laboratories, Inc.* ............................................................... 23,800 1,109,675
Glaxo Wellcome PLC (ADR) ................................................................. 17,400 1,104,900
Novartis AG (ADR) ........................................................................ 9,600 890,400
Pfizer, Inc. ............................................................................. 22,700 2,533,888
Schering-Plough Corp. .................................................................... 25,900 2,755,105
SmithKline Beecham PLC (ADR) ............................................................. 10,100 615,469
Takeda Chemical Industries, Ltd. ......................................................... 12,000 404,467
Warner-Lambert Co. ....................................................................... 36,400 2,748,200
Zeneca Group PLC (ADR) ................................................................... 14,100 593,081
----------
23,774,766
----------
Insurance 2.7%
Cigna Corp. .............................................................................. 16,000 1,245,000
----------
Computer Software 0.8%
QuadraMed Corp.* ......................................................................... 16,700 400,800
- - ------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $37,189,753) 43,039,479
- - ------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $40,743,753) (a) 46,593,479
- - ------------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Non-income producing security.

** Annualized yield at time of purchase; not a coupon rate.

(a) The cost for federal income tax purposes was $40,743,753. At November 30,
1998, net unrealized appreciation for all securities based on tax cost was
$5,849,726. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $6,397,617 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$547,891.

During the six months ended November 30, 1998, purchases and sales of
investment securities (excluding short-term investments) aggregated
$31,121,696 and $30,658,969, respectively.

The accompanying notes are an integral part of the financial statements.

22 - Scudder Choice Series
<PAGE>

Investment Portfolio as of November 30, 1998 (Unaudited)

Scudder Technology Fund
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- - ------------------------------------------------------------------------------------------------------------------------------
Short Term Notes 14.0%
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Federal Home Loan Bank, 5.22%**, 12/1/1998 (Cost $6,916,000) ............................. 6,916,000 6,916,000
----------

Shares
- - ------------------------------------------------------------------------------------------------------------------------------
Common Stocks 86.0%
- - ------------------------------------------------------------------------------------------------------------------------------
Recreational Products 1.1%
Electronic Arts Inc.* .................................................................... 13,100 551,838
----------
Health Industry Services 1.0%
IDX Systems Corp.* ....................................................................... 10,900 447,581
----------
Telephone/Communications 2.4%
Bell Atlantic Corp. ...................................................................... 6,300 350,438
BellSouth Corp. .......................................................................... 9,800 855,050
----------
1,205,488
----------
Broadcasting & Entertainment 0.7%
Broadcast.com Inc.* ...................................................................... 5,000 330,000
----------
EDP Services 6.5%
America Online Inc.* ..................................................................... 20,200 1,768,763
Computer Horizons Corp.* ................................................................. 17,500 393,750
Keane, Inc.* ............................................................................. 17,900 514,625
Sapient Corp.* ........................................................................... 12,000 555,000
----------
3,232,138
----------
Miscellaneous Commercial Services 5.4%
Metzler Group, Inc.* ..................................................................... 14,500 601,750
Modis Professional Services, Inc.* ....................................................... 65,500 781,906
Sabre Group Holdings Inc.* ............................................................... 6,200 246,063
Whittman-Hart, Inc.* ..................................................................... 48,100 1,061,206
----------
2,690,925
----------
Telecommunications Equipment 9.0%
Ascend Communications, Inc.* ............................................................. 30,600 1,719,338
Lucent Technologies Inc. ................................................................. 17,500 1,506,094
Nokia AB Oy "A" (ADR) .................................................................... 5,500 539,000
Tellabs, Inc.* ........................................................................... 13,000 702,813
----------
4,467,245
----------
</TABLE>

The accompanying notes are an integral part of the financial statements.

23 - Scudder Choice Series
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Electrical Products 1.0%
FORE Systems, Inc.* ...................................................................... 34,000 514,250
----------
Office Equipment/Supplies 0.9%
Xerox Corp. .............................................................................. 4,000 430,000
----------
Computer Software 17.9%
Advent Software, Inc.* ................................................................... 7,600 290,693
Check Point Software Technologies Ltd.* .................................................. 27,800 901,763
Computer Associates International, Inc. .................................................. 27,200 1,203,600
J.D. Edwards & Co.* ...................................................................... 19,000 660,250
Microsoft Corp.* ......................................................................... 13,500 1,647,000
Oracle Systems Corp.* .................................................................... 28,500 976,125
Parametric Technology Corp.* ............................................................. 60,800 1,033,600
Reynolds and Reynolds Company ............................................................ 22,600 477,425
Xylan Corp.* ............................................................................. 56,000 1,015,000
Yahoo! Inc.* ............................................................................. 3,500 672,000
----------
8,877,456
----------
Diverse Electronic Products 2.9%
KLA Tencor Corp.* ........................................................................ 9,800 333,813
Motorola Inc. ............................................................................ 8,500 527,000
Solectron Corp.* ......................................................................... 8,400 555,975
----------
1,416,788
----------
EDP Peripherals 4.8%
EMC Corp.* ............................................................................... 16,000 1,160,000
Network Appliance, Inc.* ................................................................. 9,500 713,688
Seagate Technology, Inc.* ................................................................ 17,900 528,050
----------
2,401,738
----------
Electronic Components/Distributors 1.9%
Altera Corp.* ............................................................................ 14,200 696,688
Broadcom Corp. ........................................................................... 3,000 267,938
----------
964,626
----------
Electronic Data Processing 12.5%
Compaq Computer Corp. .................................................................... 14,400 468,000
Dell Computer Corp.* ..................................................................... 20,400 1,240,575
Hewlett-Packard Co. ...................................................................... 14,400 903,600
</TABLE>

The accompanying notes are an integral part of the financial statements.

24 - Scudder Choice Series
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
International Business Machines Corp. .................................................... 9,400 1,551,000
Sun Microsystems, Inc.* .................................................................. 27,400 2,029,313
----------
6,192,488
----------
Office/Plant Automation 7.6%
3Com Corp.* .............................................................................. 28,500 1,102,594
Cisco Systems, Inc.* ..................................................................... 29,150 2,197,181
Mercury Computer Systems, Inc.* .......................................................... 20,100 447,225
----------
3,747,000
----------
Semiconductors 10.4%
Intel Corp. .............................................................................. 20,500 2,206,313
Linear Technology Corp. .................................................................. 3,000 210,188
Micron Technology Inc. ................................................................... 18,200 751,888
QLogic Corp.* ............................................................................ 4,200 431,025
Texas Instruments Inc. ................................................................... 3,800 290,225
Vitesse Semiconductor Corp.* ............................................................. 16,200 577,125
Xilinx Inc.* ............................................................................. 14,400 730,800
----------
5,197,564
- - ------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $34,292,229) 42,667,125
- - ------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $41,208,229) (a) 49,583,125
- - ------------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Non-income producing security

** Annualized yield at time of purchase; not a coupon rate.

(a) The cost for federal income tax purposes was $41,274,360. At November 30,
1998, net unrealized appreciation for all securities based on tax cost was
$8,308,765. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $10,074,060 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$1,765,295.

During the six months ended November 30, 1998, purchases and
sales of investment securities (excluding short-term investments)
aggregated $27,335,139 and $23,164,604, respectively.

At November 30, 1998, outstanding written options were as follows:
<TABLE>
<CAPTION>
Number of Expiration Strike Market
Call Options Contracts Date Price Value($)
- - ------------ -------------------------------------------------------------
<S> <C> <C> <C> <C>
Computer Associates International, Inc. 190 5/23/1999 55 55,813
Hewlett-Packard Co. 100 5/23/1999 70 36,250
International Business Machines Corp. 65 4/18/1999 190 28,437
Ascend Communications, Inc. 200 3/21/1999 65 92,500
---------
Total outstanding written options (Premiums received $137,924) ................................ 213,000
=========
</TABLE>

The accompanying notes are an integral part of the financial statements.

25 - Scudder Choice Series
<PAGE>

Financial Statements

Statement of Assets and Liabilities

as of November 30, 1998 (Unaudited)

<TABLE>
<CAPTION>
Scudder
Financial Scudder Health Scudder
Services Fund Care Fund Technology Fund
Assets
- - ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investments, at market (for identified cost, see
accompanying investment portfolios) .............. $ 37,199,715 $ 46,593,479 $ 49,583,125
Cash ............................................... 94 800 113
Receivable for investments sold .................... 187,365 -- --
Receivable for Fund shares sold .................... 17,434 64,484 172,314
Dividends and interest receivable .................. 31,933 22,793 3,588
Foreign taxes recoverable .......................... -- 3,617 --
Deferred organization expenses ..................... 8,535 11,082 8,643
---------------- ---------------- ----------------
Total assets ....................................... 37,445,076 46,696,255 49,767,783

Liabilities
- - ----------------------------------------------------------------------------------------------------------------------------
Payable for Fund shares redeemed ................... 53,134 48,909 66,919
Written options, at market value (premiums received
$137,924) ........................................ -- -- 213,000
Accrued management fee ............................. 9,024 98,022 19,095
Other payables and accrued expenses ................ 284,097 290,415 297,476
---------------- ---------------- ----------------
Total liabilities .................................. 346,255 437,346 596,490
---------------- ---------------- ----------------
Net assets, at market value $ 37,098,821 $ 46,258,909 $ 49,171,293
---------------- ---------------- ----------------

Net Assets
- - ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Undistributed net investment income and accumulated
net investment (loss) ............................ 31,054 (208,931) (238,661)
Unrealized appreciation (depreciation) on:
Investment securities ............................ 2,136,965 5,849,726 8,374,896
Written options .................................. -- -- (75,076)
Foreign currency related transactions ............ -- 84 --
Accumulated net realized gain (loss) ............... 248,695 (3,888,567) (3,121,722)
Paid-in capital .................................... 34,682,107 44,506,597 44,231,856
---------------- ---------------- ----------------
Net assets, at market value $ 37,098,821 $ 46,258,909 $ 49,171,293
---------------- ---------------- ----------------

Net Asset Value
- - ----------------------------------------------------------------------------------------------------------------------------

Net Asset Value, offering and redemption price per ---------------- ---------------- ----------------
share $13.76 $12.59 $13.56
---------------- ---------------- ----------------
(outstanding shares of beneficial interest, $.01
par value, unlimited number of shares
authorized) ...................................... 2,696,864 3,674,425 3,626,982
</TABLE>

The accompanying notes are an integral part of the financial statements.

26 - Scudder Choice Series
<PAGE>

Statement of Operations

for the six months ended November 30, 1998 (Unaudited)

<TABLE>
<CAPTION>
Scudder
Financial Scudder Health Scudder
Services Fund Care Fund Technology Fund
Investment Income (Loss)
- - ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income:
Dividends .......................................... $ 261,622 $ 120,955 $ 14,411
Interest ........................................... 22,534 45,064 111,002
---------------- ---------------- ----------------
284,156 166,019 125,413
Less foreign taxes withheld ........................ (489) (1,700) --
---------------- ---------------- ----------------
283,667 164,319 125,413
Expenses:
Management fee ..................................... 133,757 181,293 176,836
Services to shareholders ........................... 114,414 155,676 173,290
Custodian and accounting fees ...................... 22,174 25,508 21,903
Trustees' fees and expenses ........................ 37,235 33,138 33,138
Auditing ........................................... 10,610 10,160 10,986
Registration fees .................................. 28,661 26,577 25,686
Reports to shareholders ............................ 12,931 18,172 12,542
Legal .............................................. 4,789 3,036 6,292
Amortization of organization expense ............... 1,087 1,573 2,805
Other .............................................. 4,819 1,388 3,654
---------------- ---------------- ----------------
Total expenses before reductions ................... 370,477 456,521 467,132
Expense reductions ................................. (102,962) (83,271) (103,058)
---------------- ---------------- ----------------
Expenses, net ...................................... 267,515 373,250 364,074
---------------- ---------------- ----------------
Net investment income (loss) 16,152 (208,931) (238,661)
---------------- ---------------- ----------------

Realized and unrealized gain (loss) on investment transactions
- - ----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments ...................................... 105,231 (3,863,241) (2,071,852)
Foreign currency related transactions ............ -- 674 --
---------------- ---------------- ----------------
105,231 (3,862,567) (2,071,852)
---------------- ---------------- ----------------
Net unrealized appreciation (depreciation)
during the period on:
Investments ...................................... (1,604,886) 5,786,849 7,372,245
Foreign currency related transactions ............ -- 118 --
Written options .................................. -- -- (75,076)
---------------- ---------------- ----------------
(1,604,886) 5,786,967 7,297,169
---------------- ---------------- ----------------
Net gain (loss) on investment transactions (1,499,655) 1,924,400 5,225,317
---------------- ---------------- ----------------

Net increase (decrease) in net assets resulting from ---------------- ---------------- ----------------
operations $ (1,483,503) $ 1,715,469 $ 4,986,656
---------------- ---------------- ----------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

27 - Scudder Choice Series
<PAGE>

Statement of Changes in Net Assets

Scudder Financial Services Fund

<TABLE>
<CAPTION>
For the Period
For the Six November 3, 1997
Months Ended (commencement of
November 30, operations) to
Increase (Decrease) in Net Assets 1998 (Unaudited) May 31, 1998
- - ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income (loss) ........................ $ 16,152 $ 38,617
Net realized gain (loss) from investment
transactions ...................................... 105,231 143,464
Net unrealized appreciation (depreciation) on
investment transactions during the period ......... (1,604,886) 3,741,851
---------------- ----------------
Net increase (decrease) in net assets resulting from
operations ........................................ (1,483,503) 3,923,932
---------------- ----------------
Distributions to shareholders from:
Net investment income ............................... -- (41,350)
---------------- ----------------
Fund share transactions:
Proceeds from shares sold ........................... 7,949,006 35,640,825
Net asset value of shares issued to shareholders in
reinvestment of distributions ..................... -- 40,371
Cost of shares redeemed ............................. (6,337,060) (2,656,047)
Redemption fees ..................................... 43,909 17,538
---------------- ----------------
Net increase (decrease) in net assets from Fund share
transactions ...................................... 1,655,855 33,042,687
---------------- ----------------
Increase (decrease) in net assets ................... 172,352 36,925,269
Net assets at beginning of period ................... 36,926,469 1,200
Net assets at end of period (Includes undistributed
net investment income of $31,054 and $14,902, ---------------- ----------------
respectively) ..................................... $ 37,098,821 $ 36,926,469
---------------- ----------------

Other Information
- - ----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period ........... 2,597,296 100
---------------- ----------------
Shares sold ......................................... 582,816 2,789,515
Shares issued to shareholders in reinvestment of
distributions ..................................... -- 3,199
Shares redeemed ..................................... (483,248) (195,518)
---------------- ----------------
Net increase (decrease) in Fund shares .............. 99,568 2,597,196
---------------- ----------------
Shares outstanding at end of period ................. 2,696,864 2,597,296
---------------- ----------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

28 - Scudder Choice Series
<PAGE>

Statement of Changes in Net Assets

Scudder Health Care Fund

<TABLE>
<CAPTION>
For the Period
For the Six March 2, 1998
Months Ended (commencement of
November 30, operations) to
Increase (Decrease) in Net Assets 1998 (Unaudited) May 31, 1998
- - ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income (loss) ........................ $ (208,931) $ (37,119)
Net realized gain (loss) from investment
transactions ...................................... (3,862,567) (23,791)
Net unrealized appreciation (depreciation) on
investment transactions during the period ......... 5,786,967 62,843
---------------- ----------------
Net increase (decrease) in net assets resulting from
operations ........................................ 1,715,469 1,933
---------------- ----------------
Distributions to shareholders from:
Net investment income ............................... -- --
---------------- ----------------
Fund share transactions:
Proceeds from shares sold ........................... 9,094,675 42,821,776
Net asset value of shares issued to shareholders in
reinvestment of distributions ..................... -- --
Cost of shares redeemed ............................. (5,514,069) (1,910,103)
Redemption fees ..................................... 38,961 9,067
---------------- ----------------
Net increase (decrease) in net assets from Fund share
transactions ...................................... 3,619,567 40,920,740
---------------- ----------------
Increase (decrease) in net assets ................... 5,335,036 40,922,673
Net assets at beginning of period ................... 40,923,873 1,200
---------------- ----------------
Net assets at end of period (includes accumulated net
investment loss of $208,931 at November 30,
1998) ............................................. $ 46,258,909 $ 40,923,873
---------------- ----------------
Other Information
- - ----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period ........... 3,387,150 100
---------------- ----------------
Shares sold ......................................... 752,807 3,543,239
Shares issued to shareholders in reinvestment of
distributions ..................................... -- --
Shares redeemed ..................................... (465,532) (156,189)
---------------- ----------------
Net increase (decrease) in Fund shares .............. 287,275 3,387,050
---------------- ----------------
Shares outstanding at end of period ................. 3,674,425 3,387,150
---------------- ----------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

29 - Scudder Choice Series
<PAGE>

Statement of Changes in Net Assets

Scudder Technology Fund

<TABLE>
<CAPTION>
For the Period
For the Six March 2, 1998
Months Ended (commencement of
November 30, operations) to
Increase (Decrease) in Net Assets 1998 (Unaudited) May 31, 1998
- - ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income (loss) ........................ $ (238,661) $ (74,055)
Net realized gain (loss) from investment
transactions ...................................... (2,071,852) (1,049,870)
Net unrealized appreciation (depreciation) on
investment transactions during the period ......... 7,297,169 1,002,651
---------------- ----------------
Net increase (decrease) in net assets resulting from
operations ........................................ 4,986,656 (121,274)
---------------- ----------------
Distributions to shareholders from:
Net investment income ............................... -- --
---------------- ----------------
Fund share transactions:
Proceeds from shares sold ........................... 12,964,903 38,714,812
Net asset value of shares issued to shareholders in
reinvestment of distributions ..................... -- --
Cost of shares redeemed ............................. (5,983,796) (1,441,830)
Redemption fees ..................................... 44,186 6,436
---------------- ----------------
Net increase (decrease) in net assets from Fund share
transactions ...................................... 7,025,293 37,279,418
---------------- ----------------
Increase (decrease) in net assets ................... 12,011,949 37,158,144
Net assets at beginning of period ................... 37,159,344 1,200
---------------- ----------------
Net assets at end of period (includes accumulated net
investment loss of $238,661 at November 30,
1998) ............................................. $ 49,171,293 $ 37,159,344
---------------- ----------------

Other Information
- - ----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period ........... 3,078,971 100
---------------- ----------------
Shares sold ......................................... 1,040,069 3,194,723
Shares issued to shareholders in reinvestment of
distributions ..................................... -- --
Shares redeemed ..................................... (492,058) (115,852)
---------------- ----------------
Net increase (decrease) in Fund shares .............. 548,011 3,078,871
---------------- ----------------
Shares outstanding at end of period ................. 3,626,982 3,078,971
---------------- ----------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

30 - Scudder Choice Series
<PAGE>

Financial Highlights

Scudder Financial Services Fund

The following table includes selected data for a share outstanding (a)
throughout the period and other performance information derived from the
financial statements.

<TABLE>
<CAPTION>
For the Period
For the Six November 3, 1997
Months Ended (commencement of
November 30, 1998 operations) to
(Unaudited) May 31, 1998
- - ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
---------- ----------
Net asset value, beginning of period .................................................... $14.22 $12.00
---------- ----------
Income (loss) from investment operations:
Net investment income (loss) ............................................................ .01 .02
Net realized and unrealized gain (loss) on investments .................................. (.49) 2.22
---------- ----------
Total from investment operations ........................................................ (.48) 2.24
---------- ----------
Less distributions from net investment income ........................................... -- (.03)
Redemption fees ......................................................................... .02 .01
---------- ----------
Net asset value, end of period .......................................................... $13.76 $14.22
- - ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) (b) (c) ................................................................ (3.23)** 18.73**
Ratios and Supplemental Data
Net assets, end of period ($ millions) .................................................. 37 37
Ratio of operating expenses, net, to average daily net assets (%) ....................... 1.50* 1.50*
Ratio of operating expenses before expense reductions, to average daily net
assets (%) ........................................................................... 2.08* 2.59*
Ratio of net investment income to average daily net assets (%) .......................... .09* .25*
Portfolio turnover rate (%) ............................................................. 20.7* 25.0*
</TABLE>

(a) Based on monthly average shares outstanding during the period.

(b) Total return would have been lower had certain expenses not been reduced.

(c) Total return does not reflect the effect to the shareholder of the 1%
redemption fee on shares held less than one year.

* Annualized

** Not annualized

31 - Scudder Choice Series
<PAGE>

Financial Highlights

Scudder Health Care Fund

The following table includes selected data for a share outstanding (a)
throughout the period and other performance information derived from the
financial statements.

<TABLE>
<CAPTION>
For the Period
For the Six March 2, 1998
Months Ended (commencementof
November 30, 1998 operations) to
(Unaudited) May 31, 1998
- - ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
---------- ----------
Net asset value, beginning of period .................................................... $12.08 $12.00
---------- ----------
Income (loss) from investment operations:
Net investment income (loss) ............................................................ (.06) (.01)
Net realized and unrealized gain (loss) on investments .................................. .56 .09
---------- ----------
Total from investment operations ........................................................ .50 .08
---------- ----------
Redemption fees ......................................................................... .01 --***
---------- ----------
Net asset value, end of period .......................................................... $12.59 $12.08
- - ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) (b) (c) ................................................................ 4.22** .67**
Ratios and Supplemental Data
Net assets, end of period ($ millions) .................................................. 46 41
Ratio of operating expenses, net, to average daily net assets (%) ....................... 1.75* 1.75*
Ratio of operating expenses before expense reductions, to average daily net
assets (%) ........................................................................... 2.14* 3.68*
Ratio of net investment income to average daily net assets (%) .......................... (.98)* (.40)*
Portfolio turnover rate (%) ............................................................. 150.1* 68.3*
</TABLE>

(a) Based on monthly average shares outstanding during the period.

(b) Total return would have been lower had certain expenses not been reduced.

(c) Total return does not reflect the effect to the shareholder of the 1%
redemption fee on shares held less than one year.

* Annualized

** Not annualized

*** Amount is less than one half of $.01.

32 - Scudder Choice Series
<PAGE>

Financial Highlights

Scudder Technology Fund

The following table includes selected data for a share outstanding (a)
throughout the period and other performance information derived from the
financial statements.

<TABLE>
<CAPTION>
For the Period
For the Six March 2, 1998
Months Ended (commencement of
November 30, 1998 operations) to
(Unaudited) May 31, 1998
- - ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
---------- ----------
Net asset value, beginning of period .................................................... $12.07 $12.00
---------- ----------
Income (loss) from investment operations:
Net investment income (loss) ............................................................ (.07) (.03)
Net realized and unrealized gain (loss) on investments .................................. 1.55 .10
---------- ----------
Total from investment operations ........................................................ 1.48 .07
---------- ----------
Redemption fees ......................................................................... .01 --***
---------- ----------
Net asset value, end of period .......................................................... $13.56 $12.07
- - ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) (b) (c) ................................................................ 12.34* .58**
Ratios and Supplemental Data
Net assets, end of period ($ millions) .................................................. 49 37
Ratio of operating expenses, net, to average daily net assets (%) ....................... 1.75* 1.75*
Ratio of operating expenses before expense reductions, to average daily net
assets (%) ........................................................................... 2.25* 3.69*
Ratio of net investment income to average daily net assets (%) .......................... (1.15)* (.87)*
Portfolio turnover rate (%) ............................................................. 124.9* 136.5*
</TABLE>

(a) Based on monthly average shares outstanding during the period.

(b) Total return would have been lower had certain expenses not been reduced.

(c) Total return does not reflect the effect to the shareholder of the 1%
redemption fee on shares held less than one year.

* Annualized

** Not annualized

*** Amount is less than one half of $.01.

33 - Scudder Choice Series

<PAGE>
Notes to Financial Statements (Unaudited)

A. Significant Accounting Policies

Scudder Financial Services Fund, Scudder Health Care Fund and Scudder Technology
Fund (the "Funds") is each a non-diversified series of Scudder Securities Trust
(the "Trust"). The Trust is organized as a Massachusetts business trust and is
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company.

The Funds' financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed by each Fund in the preparation of its
financial statements.

Security Valuation. Portfolio securities which are traded on U.S. or foreign
stock exchanges are valued at the most recent sale price reported on the
exchange on which the security is traded most extensively. If no sale occurred,
the security is then valued at the calculated mean between the most recent bid
and asked quotations. If there are no such bid and asked quotations, the most
recent bid quotation is used. Securities quoted on the Nasdaq Stock Market, Inc.
("Nasdaq"), for which there have been sales, are valued at the most recent sale
price reported on such system. If there are no such sales, the value is the most
recent bid quotation. Securities which are not quoted on Nasdaq but are traded
in another over-the-counter market are valued at the most recent sale price on
such market. If no sale occurred, the security is then valued at the calculated
mean between the most recent bid and asked quotations. If there are no such bid
and asked quotations the most recent bid quotation shall be used. Money market
instruments purchased with an original maturity of sixty days or less are valued
at amortized cost.

All other securities are valued at their fair value as determined in good faith
by the Valuation Committee of the Board of Trustees.

Repurchase Agreements. Each Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian,
receives delivery of the underlying securities, the amount of which at the time
of purchase and each subsequent business day is required to be maintained at
such a level that the market value, is equal to at least the repurchase price.

Options. An option contract is a contract in which the writer of the option
grants the buyer of the option the right to purchase from (call option), or sell
to (put option), the writer a designated instrument at a specified price within
a specified period of time. Certain options, including options on indices, will
require cash settlement by the Fund if the option is exercised. During the
period, the Technology Fund wrote call options on securities as a hedge against
potential adverse price movements in the value of portfolio assets.

If the Fund writes an option and the option expires unexercised, the Fund will
realize income, in the form of a capital gain, to the extent of the amount
received for the option (the "premium"). If the Fund elects to close out the
option it would recognize a gain or loss based on the difference between the
cost of closing the option and the initial premium received. If the Fund
purchased an option and allows the option to expire it would realize a loss to
the extent of the premium paid. If the Fund elects to close out the option it
would recognize a gain or loss equal to the difference between the cost of
acquiring the option and the amount realized upon the sale of the option.

The gain or loss recognized by the Fund upon the exercise of a written call or
purchased put option is adjusted for the amount of option premium. If a written
put or purchased call option is exercised, the Fund's cost basis of the acquired
security or currency would be the exercise price adjusted for the amount of the
option premium.

34 - Scudder Choice Series
<PAGE>

The liability representing the Fund's obligation under an exchange traded
written option or investment in a purchased option is valued at the last sale
price or, in the absence of a sale, the mean between the closing bid and asked
price or at the most recent asked price (bid for purchased options) if no bid
and asked prices are available. Over-the-counter written or purchased options
are valued using dealer supplied quotations.

When the Fund writes a covered call option, the Fund foregoes, in exchange for
the premium, the opportunity to profit during the option period from an increase
in the market value of the underlying security or currency above the exercise
price. When the Fund writes a put option it accepts the risk of a decline in the
market value of the underlying security or currency below the exercise price.
Over-the-counter options have the risk of the potential inability of
counterparties to meet the terms of their contracts. The Fund's maximum exposure
to purchased options is limited to the premium initially paid. In addition,
certain risks may arise upon entering into option contracts including the risk
that an illiquid secondary market will limit the Fund's ability to close out an
option contract prior to the expiration date and, that a change in the value of
the option contract may not correlate exactly with changes in the value of the
securities or currencies hedged.

Foreign Currency Translations. The books and records of the Funds are maintained
in U.S. dollars. Foreign currency transactions are translated into U.S. dollars
on the following basis:

(i) market value of investment securities, other assets and other
liabilities at the daily rates of exchange, and

(ii) purchases and sales of investment securities, dividend and interest
income and certain expenses at the rates of exchange prevailing on the
respective dates of such transactions.

The Funds do not isolate that portion of gains and losses on investments which
is due to changes in foreign exchange rates from that which is due to changes in
market prices of the investments. Such fluctuations are included with the net
realized and unrealized gains and losses from investments.

Net realized and unrealized gain (loss) from foreign currency related
transactions includes gains and losses between trade and settlement dates on
securities transactions, gains and losses arising from the sales of foreign
currency, and gains and losses between the ex and payment dates on dividends,
interest, and foreign withholding taxes.

Federal Income Taxes. It is each Fund's policy to comply with the requirements
of the Internal Revenue Code of 1986, as amended, which are applicable to
regulated investment companies, and to distribute all of its taxable income to
its shareholders. Accordingly, Scudder Financial Services Fund paid no federal
income taxes and no federal income tax provision was required. From March 2,
1998 (commencement of operations) through May 31, 1998, Scudder Health Care Fund
and Scudder Technology Fund incurred approximately $7,000 and $973,000 of net
realized capital losses, respectively. As permitted by tax regulations, Scudder
Health Care Fund and Scudder Technology Fund intend to elect to defer these
losses and treat them as arising in the fiscal year ending May 31, 1999.

Redemption Fees. In general, shares of each Fund may be redeemed at net asset
value. However, upon the redemption or exchange of shares held by shareholders
for less than one year, a fee of 1% of the current net asset value of the shares
will be assessed and retained by the Fund for the benefit of the remaining
shareholders. The redemption fee is accounted for as an addition to paid-in
capital.

Distribution of Income and Gains. Distributions of net investment income for
each Fund, if any, are made annually. During any particular year net realized
gains from investment transactions, in excess of available capital loss
carryforwards, would be taxable

35 - Scudder Choice Series
<PAGE>

to the applicable Fund if not distributed and, therefore, will be distributed to
shareholders annually. 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. 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, a Fund may periodically make reclassifications among
certain of its capital accounts without impacting the net asset value of the
Fund.

Each Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and Federal income tax reporting purposes.

Organization Costs. Costs incurred by each Fund in connection with their
organization have been deferred and are being amortized on a straight-line basis
over a five-year period.

Other. Investment security transactions are accounted for on a trade-date basis.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis.

B. Purchases and Sales of Securities

Transactions in written options for the six months ended November 30, 1998 are
summarized for the Scudder Technology Fund as follows:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------
Over-the-Counter Options
----------------------------------------------------------
Computer International
Associates Business Ascend
International, Hewlett- Machines Communications,
Inc. Packard Co. Corp. Inc. Premiums
---------------------------------------------------------- --------------
<S> <C> <C> <C> <C> <C>
Beginning
of Period..... -- -- -- -- $ --
Written......... 190 100 65 200 137,924
Closed.......... -- -- -- -- --
Exercised....... -- -- -- -- --
Expired......... -- -- -- -- --
--------- --------- --------- ----------- -----------
End of
Period........ 190 100 65 200 $ 137,924
========= ========= ========= =========== ===========
--------------------------------------------------------------------------
</TABLE>

36 - Scudder Choice Series
<PAGE>

C. Related Parties

Under the Management Agreement with Scudder Kemper Investments, Inc. ("Scudder
Kemper" or "the Adviser"), each Fund pays the Adviser a fee equal to an annual
rate of 0.75% for Scudder Financial Services Fund, 0.85% for Scudder Health Care
Fund and 0.85% for Scudder Technology Fund, based on the applicable Funds'
average daily net assets, computed and accrued daily and payable monthly. The
Adviser directs the investments of each Fund in accordance with its investment
objective, policies, and restrictions. The Adviser determines the securities,
instruments and other contracts relating to investments to be purchased, sold or
entered into by each Fund. In addition to portfolio management services, the
Adviser provides certain administrative services in accordance with each
Management Agreement. In addition, the Adviser has agreed not to impose all or a
portion of each Fund's management fee until September 30, 1999 in order to
maintain the annualized expenses of each of Scudder Financial Services Fund,
Scudder Health Care Fund and Scudder Technology Fund at no more than 1.50%,
1.75% and 1.75%, respectively, of the average daily net assets of each Fund. For
the six months ended November 30, 1998, the Adviser did not impose a portion of
its management fee for Scudder Financial Services Fund, Scudder Health Care Fund
and Scudder Technology Fund, which amounted to $102,962, $83,271 and $103,058,
respectively, and the amount imposed aggregated $30,795, $98,022 and $73,778,
respectively, of which $9,024, $98,022 and $19,095 is unpaid.

On September 7, 1998, Zurich Insurance Company ("Zurich"), majority owner of the
adviser, entered into an agreement with B.A.T Industries p.l.c. ("B.A.T")
pursuant to which the financial services businesses of B.A.T were combined with
Zurich's businesses to form a new global insurance and financial services
company known as Zurich Financial Services. Upon consummation of the
transaction, each Fund's Management Agreement with Scudder Kemper was deemed to
have been assigned and, therefore, terminated. The Board of Trustees of the
Funds has approved a new investment management agreement for each Fund with
Scudder Kemper, which is substantially identical to the former Management
Agreement, except for the dates of execution and termination. The Board of
Trustees of the Funds has obtained approval of the new investment management
agreements from each Fund's shareholders.

Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for each Fund. For the
six months ended November 30, 1998, SSC imposed its fee for Scudder Financial
Services Fund, Scudder Health Care Fund and Scudder Technology Fund aggregating
$91,638, $142,872 and $145,563, respectively, all of which is unpaid.

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 each Fund. For the six months
ended November 30, 1998, SFAC imposed its fee for Scudder Financial Services
Fund, Scudder Health Care Fund and Scudder Technology Fund, aggregating $18,750,
$18,750 and $18,750, respectively, all of which is unpaid.

The Funds pay each Trustee not affiliated with the Adviser an annual retainer
plus specified amounts for attended board and committee meetings. For the six
months ended November 30, 1998 the Trustees' fees and expenses for Scudder
Financial Services Fund, Scudder Health Care Fund and Scudder Technology Fund
aggregated $37,235, $33,138 and $33,138, respectively, all of which is unpaid.

37 - Scudder Choice Series

<PAGE>

This Page
intentionally
left blank.

38 - Scudder Choice Series

<PAGE>

This Page
intentionally
left blank.

39 - Scudder Choice Series

<PAGE>
Officers and Trustees

Daniel Pierce*
President and Trustee

Paul Bancroft III
Trustee; Venture Capitalist and
Consultant

Sheryle J. Bolton
Trustee; Consultant

William T. Burgin
Trustee; General Partner,
Bessemer Venture Partners

Thomas J. Devine
Trustee; Consultant

Keith R. Fox
Trustee; President, Exeter Capital
Management Corporation

William H. Luers
Trustee; President, The
Metropolitan Museum of Art

Wilson Nolen
Trustee; Consultant

Kathryn L. Quirk*
Trustee, Vice President and
Assistant Secretary

Joan Spero
Trustee; President, Doris Duke
Charitable Foundation

Robert G. Stone, Jr.
Honorary Trustee; Chairman of
the Board and Director, Kirby
Corporation

Edmund R. Swanberg*
Honorary Trustee

Peter Chin*
Vice President

J. Brooks Doherty*
Vice President

James M. Eysenbach*
Vice President

James E. Fenger*
Vice President

Philip S. Fortuna*
Vice President

Thomas W. Joseph*
Vice President

Ann M. McCreary*
Vice President

Roy C. McKay*
Vice President

Thaddeus Paluszek*
Vice President

Kimberly A. Purvis*
Vice President

Peter Taylor*
Vice President

Thomas F. McDonough*
Vice President and Secretary

Richard W. Desmond*
Assistant Secretary

John R. Hebble*
Treasurer

Caroline Pearson*
Assistant Secretary

*Scudder Kemper Investments, Inc.

40 - Scudder Choice Series

<PAGE>
Investment Products and Services

The Scudder Family of Funds+++
- - --------------------------------------------------------------------------------
Money Market
- - ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series--
Prime Reserve Shares*
Premium Shares*
Managed Shares*
Scudder Government Money Market Series--
Managed Shares*

Tax Free Money Market+
- - ----------------------
Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series--
Managed Shares*
Scudder California Tax Free Money Fund**
Scudder New York Tax Free Money Fund**

Tax Free+
- - ---------
Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund**
Scudder Massachusetts Limited Term Tax Free Fund**
Scudder Massachusetts Tax Free Fund**
Scudder New York Tax Free Fund**
Scudder Ohio Tax Free Fund**
Scudder Pennsylvania Tax Free Fund**

U.S. Income
- - -----------
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder Corporate Bond Fund
Scudder High Yield Bond Fund

Global Income
- - -------------
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund

Asset Allocation
- - ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio

U.S. Growth and Income
- - ----------------------
Scudder Balanced Fund
Scudder Dividend & Growth Fund
Scudder Growth and Income Fund
Scudder S&P 500 Index Fund
Scudder Real Estate Investment Fund

U.S. Growth
- - -----------
Value
Scudder Large Company Value Fund
Scudder Value Fund***
Scudder Small Company Value Fund
Scudder Micro Cap Fund

Growth
Scudder Classic Growth Fund***
Scudder Large Company Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund

Global Equity
- - -------------
Worldwide
Scudder Global Fund
Scudder International Value Fund
Scudder International Growth and Income Fund
Scudder International Fund++
Scudder International Growth Fund
Scudder Global Discovery Fund***
Scudder Emerging Markets Growth Fund
Scudder Gold Fund

Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund, Inc.

Industry Sector Funds
- - ---------------------
Choice Series
Scudder Financial Services Fund
Scudder Health Care Fund
Scudder Technology Fund

Preferred Series
- - ----------------
Scudder Tax Managed Growth Fund
Scudder Tax Managed Small
Company Fund

Retirement Programs and Education Accounts
- - --------------------------------------------------------------------------------

Retirement Programs
- - -------------------
Traditional IRA
Roth IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan**+++ +++
(a variable annuity)

Education Accounts
- - ------------------
Education IRA
UGMA/UTMA

Closed-End Funds#
- - --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder Global High Income Fund, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder Spain and Portugal Fund, Inc.

For complete information on any of the above Scudder funds, including management
fees and expenses, call or write for a free prospectus. Read it carefully before
you invest or send money. +++Funds within categories are listed in order from
expected least risk to most risk. Certain Scudder funds may not be available for
purchase or exchange. +A portion of the income from the tax-free funds may be
subject to federal, state, and local taxes. *A class of shares of the Fund.
**Not available in all states. ***Only the Scudder Shares of the Fund are part
of the Scudder Family of Funds. ++Only the International Shares of the Fund are
part of the Scudder Family of Funds. +++ +++A no-load variable annuity contract
provided by Charter National Life Insurance Company and its affiliate, offered
by Scudder's insurance agencies, 1-800-225-2470. #These funds, advised by
Scudder Kemper Investments, Inc., are traded on the New York Stock Exchange and,
in some cases, on various other stock exchanges.

41 - Scudder Choice Series

<PAGE>

Scudder Solutions
<TABLE>
<CAPTION>

Convenient ways to invest, quickly and reliably:
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Investment Plan QuickBuy

A convenient investment program in which money is Lets you purchase Scudder fund shares
electronically debited from your bank account monthly to electronically, avoiding potential mailing delays;
regularly purchase fund shares and "dollar cost average" money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from a previously designated bank
fewer when it's higher, which can reduce your average account.
purchase price over time.*

Automatic Dividend Transfer Payroll Deduction and Direct Deposit

The most timely, reliable, and convenient way to Have all or part of your paycheck -- even government
purchase shares -- use distributions from one Scudder checks -- invested in up to four Scudder funds at
fund to purchase shares in another, automatically one time.
(accounts with identical registrations or the same
social security or tax identification number).

* Dollar cost averaging involves continuous investment in securities regardless of price
fluctuations and does not assure a profit or protect against loss in declining markets.
Investors should consider their ability to continue such a plan through periods of low price
levels.

Around-the-clock electronic account service and information, including some transactions:
- - ------------------------------------------------------------------------------------------------------------------------------
Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- www.scudder.com
1-800-343-2890
Personal Investment Organizer: Offering
Personalized account information, the ability to account information and transactions, interactive
exchange or redeem shares, and information on other worksheets, prospectuses and applications for all
Scudder funds and services via touchtone telephone. Scudder funds, plus your current asset allocation,
whenever you need them. Scudder's Site also
provides news about Scudder funds, retirement
planning information, and more.

Retirees and those who depend on investment proceeds for living expenses can enjoy these convenient,
timely, and reliable automated withdrawal programs:
- - ------------------------------------------------------------------------------------------------------------------------------
Automatic Withdrawal Plan QuickSell

You designate the bank account, determine the schedule Provides speedy access to your money by
(as frequently as once a month) and amount of the electronically crediting your redemption proceeds
redemptions, and Scudder does the rest. to the bank account you previously designated.

Distributions Direct

Automatically deposits your fund distributions into the
bank account you designate within three business days
after each distribution is paid.

42 - Scudder Choice Series
<PAGE>

Mutual Funds and More -- Brokerage and Guidance Services:
- - ------------------------------------------------------------------------------------------------------------------------------
Scudder Brokerage Services Scudder Portfolio Builder

Offers you access to a world of investments, A free service designed to help suggest ways investors like
including stocks, corporate bonds, Treasuries, plus you can diversify your portfolio among domestic and global,
over 8,000 mutual funds from at least 150 mutual as well as equity, fixed-income, and money market funds,
fund companies. And Scudder Fund Folio(SM) provides using Scudder funds.
investors with access to a marketplace of more than
800 no-load funds from well-known companies--with no Personal Counsel from Scudder(SM)
transaction fees or commissions. Scudder
shareholders can take advantage of a Scudder Developed for investors who prefer the benefits of no-load
Brokerage account already reserved for them, with funds but want ongoing professional assistance in
no minimum investment. For information about managing a portfolio. Personal Counsel(SM) is a highly
Scudder Brokerage Services, call 1-800-700-0820. customized, fee-based asset management service for
individuals investing $100,000 or more.

Fund Folio funds held less than six months will be charged a fee for redemptions. You can buy
shares directly from the fund itself or its principal underwriter or distributor without
paying this fee. Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061.
Member SIPC.

Personal Counsel From Scudder(SM) and Personal Counsel(SM) are service marks of and represent a
program offered by Scudder Investor Services, Inc., Adviser.

For more information about these services, call a Scudder representative at 1-800-225-5163
- - ------------------------------------------------------------------------------------------------------------------------------
Additional Information on How to Contact Scudder:
- - ------------------------------------------------------------------------------------------------------------------------------
For existing account services and transactions Please address all written correspondence to
Scudder Investor Relations -- 1-800-225-5163 The Scudder Funds
P.O. Box 2291
For establishing 401(k) and 403(b) plans Boston, Massachusetts
Scudder Defined Contribution Services -- 02107-2291
1-800-323-6105
Or Stop by a Scudder Investor Center

For information about The Scudder Funds, including Many shareholders enjoy the personal, one-on-one service of
additional applications and prospectuses, or for the Scudder Investor Centers. Check for an Investor Center near
answers to investment questions you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470 Boca Raton Chicago San Francisco
[email protected] Boston New York

</TABLE>

43 - Scudder Choice Series
<PAGE>
About the Fund's Adviser

Scudder Kemper Investments, Inc., is one of the largest and most experienced
investment management oganizations worldwide, managing more than $230 billion in
assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts.

Scudder Kemper Investments has a rich heritage of innovation, integrity, and
client-focused service. In 1997, Scudder, Stevens & Clark, Inc., founded 79
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Group. As a result, Zurich's subsidiary, Zurich Kemper Investments,
Inc., with 50 years of mutual fund and investment management experience, was
combined with Scudder. Headquartered in New York, Scudder Kemper Investments
offers a full range of investment counsel and asset management capabilities,
based on a combination of proprietary research and disciplined, long-term
investment strategies. With its global investment resources and perspective,
the firm seeks opportunities in markets throughout the world to meet the needs
of investors.

Scudder Kemper Investments, Inc., the global asset management firm, is a member
of the Zurich Group. The Zurich Group is an internationally recognized leader in
financial services, including property/casualty and life insurance, reinsurance,
and asset management.

This information must be preceded or accompanied by a current prospectus.

Portfolio changes should not be considered recommendations for action by
individual investors.

SCUDDER

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