This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
Scudder
Value Fund
Semiannual Report
March 31, 1995
* For investors seeking long-term growth of capital through investment in
undervalued equity securities.
* A pure no-load(TM) fund with no commissions to buy, sell, or exchange
shares.
<PAGE>
SCUDDER VALUE FUND
CONTENTS
2 Highlights
3 Letter from the Fund's President
4 Performance Update
5 Portfolio Summary
6 Portfolio Management Discussion
9 Investment Portfolio
14 Financial Statements
17 Financial Highlights
18 Notes to Financial Statements
25 Officers and Trustees
26 Investment Products and Services
27 How to Contact Scudder
HIGHLIGHTS
* Investors bid stock prices higher in recent months amidst indications of
improving corporate profits, continued low inflation, and the likelihood of
more stable interest rates.
* Scudder Value Fund returned 6.25% during the semiannual period (October
1994 - March 1995), aided by strong stock performance in the technology,
healthcare, and financial sectors in the first three months of 1995.
* Scudder Value Fund's low average price/earnings ratio and reasonable growth
prospects relative to the unmanaged Standard & Poor's 500 Stock Price Index
indicate that holdings in the aggregate are reasonably priced.
(BAR CHART TITLE)
Price/Earnings Ratio
(Price times estimated 1995 earnings)
(BAR CHART DATA)
Scudder Value Fund 10.5
S&P 500 Index 16.7
2
<PAGE>
LETTER FROM THE FUND'S PRESIDENT
Dear Shareholders,
Improvement in U.S. stock prices in recent months reflects investors'
growing confidence in the business outlook. Inflation so far has been well
contained, in part due to the Federal Reserve's interest rate policy. The stock
market also has been aided by positive stock mutual fund subscriptions. The
unmanaged S&P 500 Index returned 9.74% in the three months ended March 31, 1995,
compared with a lackluster 1.32% recorded for all of 1994.
A key question looking ahead is whether the widely anticipated soft
landing of the economy can be achieved. Despite recent declines, interest rates
are still significantly higher than at this time last year and appear to be
slowing the rate of economic growth, as corporations face higher borrowing costs
and waning consumer demand. The investment markets seem to prefer this economic
"soft landing." On the other hand, slower growth is by no means assured, and
additional rate increases are not out of the question, given some lingering
inflationary concerns: Commodity prices continue to rise, factory production is
pushing the limits of capacity, and the dollar has fallen to record lows against
the Japanese yen and German mark. By choking off growth, further rate hikes
could make for a bumpier economic and investment ride.
Meanwhile, the corporate sector should continue to generate increasing
profits, even in an environment of slowing business activity, thanks to months
of debt reduction, improved efficiencies, and the accumulation of large cash
reserves. Scudder Value Fund's approach of investing in securities considered to
be undervalued and possessing the potential for strong earnings growth is
well-suited for this environment.
If you have questions about your Fund or your investments, please call
a Scudder Investor Relations representative at 1-800-225-2470. Page 27 provides
more information on how to contact Scudder. Thank you for choosing Scudder Value
Fund to help meet your investment needs.
Sincerely,
/s/ Daniel Pierce
Daniel Pierce
President,
Scudder Value Fund
3
<PAGE>
Scudder Value Fund
Performance Update as of March 31, 1995
-----------------------------------------------------------------
Growth of a $10,000 Investment
-----------------------------------------------------------------
Scudder Value Fund
----------------------------------------
Total Return
Period Growth -------------
Ended of Average
3/31/95 $10,000 Cumulative Annual
--------- ------- ---------- -------
1 Year $11,144 11.44% 11.44%
Life of
Fund* $12,070 20.70% 8.73%
S&P 500 Index
--------------------------------------
Total Return
Period Growth -------------
Ended of Average
3/31/95 $10,000 Cumulative Annual
--------- ------- ---------- -------
1 Year $11,557 15.57% 15.57%
Life of
Fund* $12,239 22.39% 9.43%
*The Fund commenced operations on December 31, 1992.
A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:
Scudder Value Fund
Year Amount
----------------------
12/92* 10000
3/93 10933
6/93 10900
9/93 11150
12/93 11160
3/94 10830
6/94 10804
9/94 11360
12/94 11344
3/95 12070
S&P 500 Index
Year Amount
----------------------
12/92* 10000
3/93 10437
6/93 10487
9/93 10758
12/93 11008
3/94 10591
6/94 10635
9/94 11155
12/94 11153
3/95 12239
The Standard & Poor's (S&P) 500 Index is an unmanaged
capitalization-weighted measure of 500 widely held common
stocks listed on the New York Stock Exchange, American Stock
Exchange, and Over-The-Counter market. Index returns assume
reinvestment of dividends and, unlike Fund returns, do not
reflect any fees or expenses.
-----------------------------------------------------------------
Returns and Per Share Information
-------------------------------------------------------------------
A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) and Index Total
Return (%) with the exact data points listed in the table
below.
Yearly periods ended March 31
----------------------------------
<TABLE>
<S> <C> <C> <C>
1993* 1994 1995
---------------------------
Net Asset Value... $13.12 $12.47 $13.64
Income Dividends.. $ -- $ .11 .12
Capital Gains
Distributions..... $ -- $ .43 .13
Fund Total
Return (%)........ 9.33 -.94 11.44
Index Total
Return (%)........ 4.37 1.48 15.57
</TABLE>
All performance is historical, assumes reinvestment of all dividends and
capital gains, and is not indicative of future results.
Investment return and principal value will fluctuate, so an investor's
shares, when redeemed, may be worth more or less than when purchased.
If the Adviser had not maintained the Fund's expenses, the average annual
total return for the one year and life of Fund would have been lower.
4
<PAGE>
Scudder Value Fund
Portfolio Summary as of March 31, 1995
---------------------------------------------------------------------------
Diversification
---------------------------------------------------------------------------
Equity Securities 88% We intend to use any near-term
Cash Equivalents 12% market setbacks to reduce the
---- Fund's cash position.
100%
====
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
--------------------------------------------------------------------------
Sectors (Excludes 12% Cash Equivalents)
--------------------------------------------------------------------------
Financial 20%
Energy 13% The financial, technology, and
Technology 11% healthcare sectors, among the
Health 10% Fund's largest, all contributed
Utilities 7% to recent performance.
Consumer Staples 7%
Durables 6%
Manufacturing 5%
Communications 4%
Other 17%
----
100%
====
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
--------------------------------------------------------------------------
Ten Largest Equity Holdings
--------------------------------------------------------------------------
1. Tele Denmark A/S
Telecommunication services
2. AMBAC Inc.
Insurer of municipal bonds
3. Intel Corp.
Semiconductor memory circuits
4. Kemper Corp.
Insurance and financial holding company
5. Destec Energy Inc.
Non-utility producer of cogeneration and coal gasification power
6. Cisco Systems, Inc.
Manufacturer of computer network products
7. Eli Lilly Co.
Leading pharmaceutical company
8. BioChem Pharma, Inc.
Research and development of therapeutic products
9. Student Loan Marketing Association
Student loan financing programs
10. Laidlaw Inc.
Waste management and transportation services
Intel's stock price has increased substantially since the Pentium
scare last fall.
For more complete details about the Fund's Investment Portfolio,
see page 9.
A monthly Investment Portfolio Summary is available upon request.
5
<PAGE>
PORTFOLIO MANAGEMENT DISCUSSION
Dear Shareholders,
In the December 31, 1994, quarterly report to shareholders, we noted that
the standoff between the positive influence of higher corporate profits and the
negative influence of higher interest rates was restraining the stock market.
Since that time, indications of economic weakness and continued low inflation
have lessened the threat of further short-term interest rate increases. With the
outlook for interest rates somewhat more secure, investors have bid up stock
prices based largely on corporate earnings, which have been improving for more
than a year. During the semiannual period ending March 31, Scudder Value Fund
provided a total return of 6.25%, due primarily to strong performance in the
first three months of 1995. The Fund's solid performance nevertheless lagged the
9.72% return of the unmanaged S&P 500 Index for the six months, primarily due to
the portfolio's foreign holdings and relatively high cash position. However,
taken as a group, the Fund's U.S. holdings significantly outpaced the S&P,
returning 12.42% on average for the six-month period. The Fund's overall return
compared well to the 6.00% return of the 554 funds composing the Lipper Growth
Fund Average.
Scudder Value Fund focuses on discount-priced stocks of companies with
encouraging earnings prospects. On occasion, our fundamental equity research and
proprietary modeling have prompted us to invest in such "growth" sectors as
technology and healthcare, which are generally shunned by many other
value-oriented funds. The Fund's technology holdings, which accounted for 11% of
the equity portfolio's assets on March 31, boosted performance during the
period, continuing a record of excellent returns since 1994. Intel, among the
Fund's top three holdings, is up over 50% since the Pentium performance scare of
last fall. Pentium sales are exceeding expectations, earnings estimates are
rising, and despite recent gains, the stock of this leading company is still
selling at a discount to the market. In the healthcare sector (10% of the equity
portfolio's assets on March 31), Baxter International and Eli Lilly provided
strong performance.
Financial stocks also provided positive contributions. The prices of these
stocks were aided in January when Federal Reserve Chairman Alan Greenspan
suggested that the Fed's monetary tightening may be at an end. Gains in the
financial sector were long overdue, the stocks having suffered throughout 1994's
rising interest rate environment. Early in 1995, we took the opportunity to sell
several stocks that had appreciated, effectively reducing the sector's relative
6
<PAGE>
weighting in the portfolio. Despite this reduction, however, we still believe
that many financial companies, notably insurance companies, offer significant
value to investors, given the group's very low price/earnings multiples and
projected earnings.
Performance Hindered by Foreign Stocks, Cash
Historically, a disciplined investment strategy of buying stocks at
discounts to current or future valuations has provided value funds with some
"insurance" to weather volatile or lackluster markets. On the other hand, this
relatively conservative strategy has meant that value funds typically
underperform in strong stock market rallies. This has been the case in recent
months. The Fund's performance also has been somewhat limited by two other
factors: a higher-than-average cash position and the generally poor performance
of select non-U.S. holdings.
As the investment landscape turned more bullish in early 1995, many
investors who had chosen to wait out 1994 on the sidelines returned to the
market. Scudder Value Fund received new subscriptions at a time when stock
prices were rising, typically a more difficult period in which to search for
undervalued investments. Currently, the Fund has 12% of portfolio assets in cash
equivalents. As we unearth new undervalued stocks, we plan to work this cash
position down until the Fund is near fully invested.
As we have mentioned before, our global research often uncovers what we
believe are extremely attractive values. In particular, the Fund has benefited
from investments in selected European companies. Last year, for example, the
Fund's best-performing stock was Nokia, the Finnish cellular telephone maker.
Nokia's stock doubled during the year before we sold it at our price target. In
recent months, however, many of the Fund's foreign holdings (22% of the
portfolio at the start of the period) produced relatively poor performance.
Despite recent returns, we continue to believe the Fund's foreign
holdings offer significant value. Given the added diversification and increased
investment opportunities that non-U.S. holdings bring to the Fund, it is likely
we will always have some exposure to foreign markets, although we remain
primarily a U.S. stock fund.
Other laggards among portfolio holdings were few during this generally
positive period. Cable TV stocks Rogers Communications and Tele-Communications
declined, as did automobile stocks Chrysler and Ford, and several of the Fund's
utility holdings.
7
<PAGE>
Outlook
Our 1995 outlook for the U.S. economy remains unchanged: slower growth in
GDP, a negligible uptick in inflation, reduced consumer spending, and strong
corporate profit growth. As the economic and investment landscape unfolds, we
will continue to invest in a diversified list of what we believe to be
undervalued stocks offering significant opportunity for price appreciation.
Sincerely,
Your Portfolio Management Team
/s/ Donald E. Hall /s/ William J. Wallace
Donald E. Hall William J. Wallace
8
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO as of March 31, 1995 (Unaudited)
---------------------------------------------------------------------------------------------------------
<CAPTION>
% of Principal Market
Portfolio Amount ($) Value ($)
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1.0% REPURCHASE AGREEMENT
-------------------------------------------------------------------------
440,000 Repurchase Agreement with State Street Bank
and Trust dated 3/31/95 at 5.8% to be
repurchased at $440,213 on 4/3/95,
collateralized by a $455,000 U.S. Treasury
Note, 4.625%, 2/29/96 (Cost $440,000)...... 440,000
---------
11.5% SHORT-TERM NOTES
-------------------------------------------------------------------------
5,000,000 Student Loan Marketing Association,
Discount Note, 6.2%, 4/3/95
(Cost $4,998,278)........................... 4,998,278
---------
1.2% CONVERTIBLE BONDS
-------------------------------------------------------------------------
COMMUNICATIONS 0.2%
Cellular Telephone 185,000 MTC Electronic Technologies Co., Ltd.,
8%, 7/31/03................................. 107,300
MEDIA 1.0%
Cable Television 1,250,000 Rogers Communications Inc., LYON, 5/20/13.... 418,750
---------
TOTAL CONVERTIBLE BONDS (Cost $676,772)...... 526,050
---------
0.6% CONVERTIBLE PREFERRED STOCKS
-------------------------------------------------------------------------
Shares
-------------------------------------------------------------------------
FINANCIAL
Other Financial Companies 12,200 California Federal Bank "A" Non-Cum. 7.75%
(Cost $253,627)............................. 254,675
---------
85.7% COMMON STOCKS
-------------------------------------------------------------------------
CONSUMER DISCRETIONARY 2.6%
Department & Chain Stores 2.0% 28,900 CML Group Inc. .............................. 256,487
10,000 J.C. Penney Co., Inc. ....................... 448,750
7,400 Limited Inc. ................................ 171,125
---------
876,362
---------
Restaurants 0.6% 39,600 Taco Cabana Inc.* ........................... 262,350
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
<TABLE>
SCUDDER VALUE FUND
---------------------------------------------------------------------------------------------------------
<CAPTION>
% of Market
Portfolio Shares Value ($)
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CONSUMER STAPLES 6.0%
Alcohol & Tobacco 2.6% 11,700 Philip Morris Companies Inc. ............... 763,425
61,200 RJR Nabisco Holdings Corp. ................. 359,550
---------
1,122,975
---------
Food & Beverage 1.7% 28,600 Sara Lee Corp. ............................. 747,175
---------
Package Goods/Cosmetics 1.7% 11,100 Colgate-Palmolive Co. ...................... 732,600
---------
HEALTH 8.8%
Hospital Management 1.1% 30,400 National Medical Enterprises* .............. 482,600
---------
Pharmaceuticals 7.7% 10,000 Astra AB "A" (Free)......................... 265,150
22,500 Baxter International Inc. .................. 736,875
50,100 BioChem Pharma, Inc.* ...................... 801,600
11,200 Eli Lilly Co. .............................. 819,000
4,600 Schering-Plough Corp. ...................... 342,125
10,400 SmithKline Beecham PLC (ADR) ............... 390,000
---------
3,354,750
---------
COMMUNICATIONS 3.3%
Telephone/Communications 6,400 American Telephone & Telegraph Co. ......... 331,200
42,100 Tele Danmark A/S "B" (ADR)* ................ 1,115,650
---------
1,446,850
---------
FINANCIAL 16.8%
Banks 4.9% 16,060 Banc One Corp. ............................. 457,710
16,000 Crestar Financial Corp. .................... 704,000
10,700 J.P. Morgan & Co., Inc. .................... 652,700
9,900 State Street Boston Corp. .................. 315,563
---------
2,129,973
---------
Insurance 7.2% 26,800 AMBAC Inc. ................................. 1,088,750
3,700 EXEL, Ltd. ................................. 163,263
26,000 Kemper Corp. ............................... 1,049,750
2,300 MBIA Inc. .................................. 144,613
33,300 PartnerRe Holdings Ltd. .................... 707,625
---------
3,154,001
---------
Other Financial Companies 3.7% 9,400 Federal National Mortgage Association....... 764,925
4,900 Great Western Financial Corp. .............. 91,875
22,200 Student Loan Marketing Association.......... 774,225
---------
1,631,025
---------
Real Estate 1.0% 13,900 Meditrust SBI (REIT)........................ 413,525
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
---------------------------------------------------------------------------------------------------------
<CAPTION>
% of Market
Portfolio Shares Value ($)
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MEDIA 2.1%
Cable Television 13,909 Rogers Communications Inc. "B"*............. 181,437
35,200 Tele-Communications Inc. "A"................ 739,200
---------
920,637
---------
SERVICE INDUSTRIES 3.6%
Environmental Services 2.7% 87,600 Laidlaw Inc. Class B........................ 766,500
14,400 WMX Technologies Inc. ...................... 396,000
---------
1,162,500
---------
Investment 0.9% 9,300 Dean Witter, Discover & Co. ................ 378,975
---------
DURABLES 5.3%
Aerospace 1.9% 3,749 Lockheed Corp. ............................. 198,228
8,800 United Technologies Corp. .................. 608,300
---------
806,528
---------
Automobiles 2.1% 8,000 Chrysler Corp. ............................. 335,000
9,600 Ford Motor Co. ............................. 259,200
8,400 Magna International, Inc. "A" .............. 320,250
---------
914,450
---------
Construction/Agricultural
Equipment 0.7% 7,400 PACCAR, Inc. ............................... 314,500
---------
Tires 0.6% 10,000 Cooper Tire & Rubber Co. ................... 283,750
---------
MANUFACTURING 4.7%
Chemicals 1.6% 18,100 Sigma-Aldrich Corp. ........................ 701,375
---------
Diversified Manufacturing 0.9% 27,000 Canadian Pacific Ltd. ...................... 402,863
---------
Electrical Products 1.1% 13,600 Philips NV (New York shares)................ 464,100
---------
Specialty Chemicals 1.1% 6,200 Betz Laboratories Inc. ..................... 271,250
12,400 Crompton & Knowles Corp. ................... 207,700
---------
478,950
---------
TECHNOLOGY 9.5%
Diverse Electronic Products 1.0% 7,600 Applied Materials, Inc.* ................... 418,950
---------
Electronic Components/
Distributors 0.3% 14,600 MicroAge Inc.* ............................. 140,525
---------
Electronic Data Processing 1.2% 11,100 AST Research Inc.* ......................... 176,212
4,300 International Business Machines Corp. ...... 352,063
---------
528,275
---------
Military Electronics 1.7% 16,300 E-Systems, Inc. ............................ 739,612
---------
Office/Plant Automation 2.0% 23,400 Cisco Systems, Inc.* ....................... 892,125
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
<TABLE>
SCUDDER VALUE FUND
---------------------------------------------------------------------------------------------------------
<CAPTION>
% of Market
Portfolio Shares Value ($)
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Semiconductors 3.3% 10,135 Advanced Micro Devices Inc.* .............. 343,323
12,700 Intel Corp. ............................... 1,077,913
----------
1,421,236
----------
ENERGY 11.2%
Engineering 1.7% 7,400 VA Technologie AG.......................... 746,990
----------
Oil & Gas Production 2.4% 9,600 Imperial Oil Ltd. ......................... 342,000
31,100 Union Texas Petroleum Holdings, Inc. ...... 715,300
----------
1,057,300
----------
Oil Companies 5.9% 5,300 Amoco Corp. ............................... 337,212
9,900 Exxon Corp. ............................... 660,825
23,100 Repsol SA (ADR)............................ 669,900
10,500 Total SA (ADR)............................. 315,000
31,000 YPF SA "D" (ADR)........................... 589,000
----------
2,571,937
----------
Oil/Gas Transmission 1.2% 17,300 El Paso Natural Gas Co. ................... 495,212
----------
METALS AND MINERALS 3.0%
Steel & Metals 29,500 Allegheny Ludlum Corp. .................... 615,812
12,200 Nucor Corp. ............................... 686,250
----------
1,302,062
----------
CONSTRUCTION 0.4%
Homebuilding 23,800 M/I Schottenstein Homes Inc.* ............. 160,650
----------
TRANSPORTATION 2.4%
Airlines 1.5% 10,200 AMR Corp.* ................................ 660,450
----------
Trucking 0.9% 14,600 Consolidated Freightways Inc.*............. 388,725
----------
UTILITIES 6.0%
Electric Utilities 96,600 Destec Energy Inc.*........................ 966,000
7,900 Empresa Nacional de Electricidad SA (ADR).. 334,762
27,000 PowerGen PLC (ADR)*........................ 327,375
25,200 Public Service Co. of New Mexico*.......... 315,000
31,100 TNP Enterprises Inc. ...................... 466,500
9,200 Unicom Corp. .............................. 218,500
----------
2,628,137
----------
Total Common Stocks
(Cost $36,024,271)........................ 37,335,000
----------
---------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO -- 100.0%
(Cost $42,392,948) (a).................... 43,554,003
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
INVESTMENT PORTFOLIO
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(a) The cost for federal income tax purposes was $42,384,192. At March 31, 1995,
net unrealized appreciation for all securities based on tax cost was
$1,169,811. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $2,890,304 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$1,720,493.
* Non-income producing security.
<TABLE>
At March 31, 1995, outstanding written call options were as follows (Note A):
<CAPTION>
NUMBER OF EXPIRATION STRIKE MARKET
CONTRACTS DATE PRICE VALUE ($)
-------------------------------------------------------
<S> <C> <C> <C> <C>
S&P 500 Index........ 100 Apr. 95 500 78,000
------
Total outstanding written options (Premiums received $41,478).............. 78,000
======
</TABLE>
<TABLE>
Transactions in written call options during the six months ended March 31, 1995 were:
<CAPTION>
PREMIUMS
NUMBER OF CONTRACTS RECEIVED ($)
-----------------------------------------
<S> <C> <C>
Outstanding at
September 30, 1994............ -- --
Contracts written............. 400 82,351
Contracts closed.............. (200) (25,649)
Contracts expired............. (100) (15,224)
-----------------------------------------
Outstanding at.................
March 31, 1995................ 100 41,478
=== ======
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
<TABLE>
SCUDDER VALUE FUND
FINANCIAL STATEMENTS
-----------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
-----------------------------------------------------------------------------------
MARCH 31, 1995 (UNAUDITED)
-----------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at market (identified cost $42,392,948)
(Note A)......................................... $43,554,003
Cash..................................................... 1,720
Receivables:
Investments sold................................. 870,412
Dividends and interest........................... 74,431
Fund shares sold................................. 45,918
Deferred organization expense (Note A)................... 29,331
-----------
Total assets............................. 44,575,815
LIABILITIES
Payables:
Fund shares redeemed............................. $12,925
Accrued management fee (Note C).................. 17,089
Other accrued expenses (Note C).................. 39,797
Written options, at market (premiums
received $41,478) (Note A)............... 78,000
-------
Total liabilities........................ 147,811
-----------
Net assets, at market value.............................. $44,428,004
===========
NET ASSETS
Net assets consist of:
Undistributed net investment income.............. $ 295,322
Unrealized appreciation (depreciation) on:
Investments.............................. 1,161,055
Options.................................. (36,522)
Accumulated net realized gain.................... 1,135,395
Shares of beneficial interest.................... 32,565
Additional paid-in capital....................... 41,840,189
-----------
Net assets, at market value.............................. $44,428,004
===========
NET ASSET VALUE, offering and redemption price per
share ($44,428,004 / 3,256,546 outstanding
shares of beneficial interest, $.01 par value,
unlimited number of shares authorized)........... $ 13.64
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
-----------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
SIX MONTHS ENDED MARCH 31, 1995 (UNAUDITED)
-----------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividends............................................... $ 369,626
Interest................................................ 154,314
----------
523,940
Expenses:
Management fee (Note C)................................. $ 69,087
Services to shareholders (Note C)....................... 58,721
Custodian and accounting fees (Note C).................. 26,551
Trustees' fees (Note C)................................. 15,800
Reports to shareholders................................. 14,482
Registration............................................ 14,376
Auditing................................................ 13,500
Legal................................................... 8,286
Amortization of organization expense (Note A)........... 4,454
Other................................................... 8,169 233,426
------------------------
Net investment income................................... 290,514
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT TRANSACTIONS
Net realized gain (loss) from:
Investments..................................... 1,352,720
Options......................................... (13,476) 1,339,244
----------
Net unrealized appreciation (depreciation) during
the period on:
Investments..................................... 833,902
Options......................................... (36,522) 797,380
------------------------
Net gain on investment transactions..................... 2,136,624
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.... $2,427,138
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
<TABLE>
SCUDDER VALUE FUND
------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
------------------------------------------------------------------------------------
<CAPTION>
SIX MONTHS
ENDED YEAR
MARCH 31, ENDED
1995 SEPTEMBER 30,
INCREASE (DECREASE) IN NET ASSETS (UNAUDITED) 1994
------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income................................ $ 290,514 $ 384,856
Net realized gain from investment
transactions..................................... 1,339,244 486,834
Net unrealized appreciation (depreciation) on
investment transactions during the period........ 797,380 (213,830)
----------- ------------
Net increase in net assets resulting from
operations....................................... 2,427,138 657,860
----------- ------------
Distributions to shareholders from:
Net investment income ($.12 and $.11
per share, respectively)......................... (309,372) (271,039)
----------- ------------
Net realized gains ($.13 and $.43
per share, respectively)......................... (336,274) (1,059,888)
----------- ------------
Fund share transactions:
Proceeds from shares sold............................ 12,422,679 17,585,449
Net asset value of shares issued to
shareholders in reinvestment of distributions.... 599,884 1,279,362
Cost of shares redeemed.............................. (5,474,732) (11,604,314)
----------- ------------
Net increase in net assets from Fund share
transactions..................................... 7,547,831 7,260,497
----------- ------------
Increase in net assets............................... 9,329,323 6,587,430
Net assets at beginning of period.................... 35,098,681 28,511,251
----------- ------------
NET ASSETS AT END OF PERIOD (including
undistributed net investment income of
$295,322 and $314,180, respectively)............. $44,428,004 $ 35,098,681
=========== ============
OTHER INFORMATION
INCREASE (DECREASE) IN FUND SHARES
Shares outstanding at beginning of period............ 2,683,720 2,131,497
----------- ------------
Shares sold.......................................... 942,667 1,354,224
Shares issued to shareholders in
reinvestment of distributions.................... 47,124 99,950
Shares redeemed...................................... (416,965) (901,951)
----------- ------------
Net increase in Fund shares.......................... 572,826 552,223
----------- ------------
Shares outstanding at end of period.................. 3,256,546 2,683,720
=========== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
------------------------------------------------------------------------------------------------------------------------
THE FOLLOWING TABLE INCLUDES SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD AND OTHER
PERFORMANCE INFORMATION DERIVED FROM THE FINANCIAL STATEMENTS.
<CAPTION>
FOR THE PERIOD
SIX MONTHS DECEMBER 31, 1992
ENDED YEAR ENDED (COMMENCEMENT
MARCH 31, 1995 SEPTEMBER 30, OF OPERATIONS) TO
(UNAUDITED) 1994 SEPTEMBER 30, 1993
-------------- ------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period.................................. $13.08 $13.38 $12.00
------ ------ ------
Income from investment operations:
Net investment income (a)..................................... .09 .13 .10
Net realized and unrealized gain on investments............... .72 .11 1.28
------ ------ ------
Total from investment operations...................................... .81 .24 1.38
------ ------ ------
Less distributions from:
Net investment income......................................... (.12) (.11) --
Net realized gains on investment transactions................. (.13) (.43) --
------ ------ ------
Total distributions................................................... (.25) (.54) --
------ ------ ------
Net asset value, end of period........................................ $13.64 $13.08 $13.38
====== ====== ======
TOTAL RETURN (%)...................................................... 6.25** 1.88 11.50**
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period ($ millions)................................ 44 35 29
Ratio of operating expenses, net to average daily net assets (%) (a).. 1.25* 1.25 1.25*
Ratio of net investment income to average daily net assets (%)........ 1.56* 1.16 1.56*
Portfolio turnover rate (%)........................................... 115.1* 74.6 60.8*
<FN>
(a) Reflects a per share amount of management fee and
other fees not imposed......................................... $ .02 $ .04 $ .06
Operating expense ratio including expenses
reimbursed, management fee and other expenses
not imposed (%)................................................ 1.58* 1.61 2.16*
* Annualized
** Not annualized
</FN>
</TABLE>
17
<PAGE>
SCUDDER VALUE FUND
NOTES TO FINANCIAL STATEMENTS (Unaudited)
--------------------------------------------------------------------------------
A. SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------------------
Scudder Value Fund (the "Fund") is a diversified series of Scudder Equity 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 policies described below are
followed consistently by the Fund in the preparation of its financial
statements in conformity with generally accepted accounting principles.
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 National Association of
Securities Dealers Automatic Quotation ("NASDAQ") System, 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 high or "inside" bid quotation.
Securities which are not quoted on the NASDAQ System but are traded in another
over-the-counter market are valued at the most recent sale price on such market.
If no sale occurred, the security is then valued at the calculated mean between
the most recent bid and asked quotations. If there are no such bid and asked
quotations, the most recent bid quotation shall be used.
Portfolio debt securities with remaining maturities greater than sixty days are
valued by pricing agents approved by the officers of the Fund, which quotations
reflect broker/dealer-supplied valuations and electronic data processing
techniques. If the pricing agents are unable to provide such quotations, the
most recent bid quotation supplied by a bona fide market maker shall be used.
Short-term investments having a 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.
OPTIONS. The Fund may write (sell) exchange-listed and over-the-counter call
and put options on securities and other financial instruments. When the Fund
writes a call, it gives the purchaser of the call option the right to buy the
underlying security at the price specified in the option (the "exercise price")
at any time during the
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
option period, generally ranging up to nine months. When the Fund writes a
put option, it gives the purchaser of the put option the right to sell the
underlying security to the Fund at the exercise price at any time during the
option period, generally ranging up to nine months.
If 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 option is exercised, a decision over which the Fund has no
control, the Fund must sell the underlying security to the option holder or
purchase the underlying security from the option holder at the exercise price.
Certain options, including options on indices will require cash settlement by
the Fund if the option is exercised. By writing a call option, the Fund
foregoes, in exchange for the premium less the commission ("net premium"), the
opportunity to profit during the option period from an increase in the market
value of the underlying security above the exercise price. By writing a put
option, the Fund, in exchange for the net premium received, accepts the risk of
a decline in the market value of the underlying security below the exercise
price.
The liability representing the Fund's obligation under an exchange traded
written call or put option is valued at the last sale price or, in the absence
of a sale, the mean between the closing bid and asked quotations or at the
most recent asked quotation if no bid and asked quotations are available.
Over-the-counter written options are valued at the most recent asked quotation.
In addition, the Fund may purchase, singly and in combination, call and put
options on securities and other financial instruments. Exchange traded purchased
options are valued at the last sales price or, in the absence of a sale, the
mean between the closing bid and asked quotations or at the most recent bid
quotation if no bid and asked quotations are available. Over-the-counter
purchased options are valued at the most recent bid quotation.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian,
receives delivery of the underlying securities, the amount of which at the time
of purchase and each subsequent business day is required to be maintained at
such a level that the market value, depending on the maturity of the repurchase
agreement and the underlying collateral, is equal to at least 100.5% of the
resale price.
19
<PAGE>
SCUDDER VALUE FUND
--------------------------------------------------------------------------------
FEDERAL INCOME TAXES. The Fund's policy is to comply with the requirements of
the Internal Revenue Code which are applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders. Accordingly,
the Fund paid no federal income taxes and no federal income tax provision was
required.
In addition, from November 1, 1993 through September 30, 1994, the Fund incurred
approximately $191,306 of net long-term capital losses which the Fund intends
to elect to defer and treat as arising in the fiscal year ended September 30,
1995.
DISTRIBUTION OF INCOME AND GAINS. Distributions of net investment income are
made annually. During any particular year net realized gains from investment
transactions, in excess of available capital loss carryforwards, would be
taxable to the Fund if not distributed and, therefore, will be
distributed to shareholders 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. The
differences primarily relate to deferral of certain losses for tax purposes. As
a result, net investment income (loss) and net realized gain (loss) on
investment transactions for a reporting period may differ significantly from
distributions during such period. Accordingly, the Fund may periodically
make reclassifications among certain of its capital accounts without impacting
the net asset value of the Fund.
The Fund uses the 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 the Fund in connection with its
organization and initial registration of shares 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 an accrual basis. Original
issue discounts are accreted for both tax and financial reporting purposes.
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
B. PURCHASES AND SALES OF SECURITIES
--------------------------------------------------------------------------------
During the six months ended March 31, 1995, purchases and sales of investment
securities (excluding short-term investments) aggregated $22,075,378 and
$18,888,655, respectively.
C. RELATED PARTIES
--------------------------------------------------------------------------------
Under the Fund's Investment Management Agreement (the "Agreement") with Scudder,
Stevens & Clark, Inc. (the "Adviser"), the Fund pays the Adviser a fee equal to
an annual rate of 0.70% of the Fund's average daily net assets, computed and
accrued daily and payable monthly. As manager of the assets of the Fund, the
Adviser directs the investments of the Fund in accordance with its investment
objectives, policies, and restrictions. The Adviser determines the securities,
instruments, and other contracts relating to investments to be purchased, sold
or entered into by the Fund. In addition to portfolio management services, the
Adviser provides certain administrative services in accordance with the
Agreement. The Agreement provides that if the Fund's expenses, exclusive of
taxes, interest, and extraordinary expenses, exceed specified limits, such
excess, up to the amount of the management fee, will be paid by the Adviser. In
addition, the Adviser has agreed not to impose all or a portion of its
management fee until January 31, 1996 in order to maintain the annualized
expenses of the Fund at not more than 1.25% of average daily net assets. For
the six months ended March 31, 1995, the Adviser did not impose a portion of
its management fee amounting to $62,213, and the amount imposed amounted to
$69,087.
Scudder Service Corporation ("SSC"), a wholly-owned subsidiary of the Adviser,
is the transfer, dividend paying and shareholder service agent for the Fund.
For the six months ended March 31, 1995, the amount charged to the Fund by
SSC aggregated $50,335 of which $9,487 is unpaid at March 31, 1995.
Effective October 24, 1994, Scudder Fund Accounting Corporation ("SFAC"), a
wholly-owned subsidiary of the Adviser, assumed responsibility for determining
the daily net asset value per share and maintaining the portfolio and
general accounting records of the Fund. For the six months ended March 31,
1995, the amount charged to the Fund by SFAC aggregated $16,613, of which
$3,125 is unpaid at March 31, 1995.
21
<PAGE>
SCUDDER VALUE FUND
--------------------------------------------------------------------------------
The Fund pays each of its Trustees not affiliated with the Adviser $4,000
annually, plus specified amounts for attended board and committee meetings. For
the six months ended March 31, 1995, Trustees' fees aggregated $15,800.
22
<PAGE>
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23
<PAGE>
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24
<PAGE>
OFFICERS AND TRUSTEES
Daniel Pierce*
President and Trustee
Paul Bancroft III
Trustee; Venture Capitalist; Consultant to Bessemer Securities Corporation
Thomas J. Devine
Trustee; Consultant
David S. Lee*
Vice President and Trustee
Douglas M. Loudon*
Vice President and Trustee
Wilson Nolen
Trustee; Consultant
Juris Padegs*
Vice President and Trustee
Gordon Shillinglaw
Trustee; Professor Emeritus of Accounting, Columbia University Graduate
School of Business
Robert G. Stone, Jr.
Trustee; Chairman of the Board and Director, Kirby Corporation
Robert W. Lear
Honorary Trustee; Executive-in-Residence, Columbia University Graduate
School of Business
Steven Aronoff*
Vice President
Jerard K. Hartman*
Vice President
Donald E. Hall*
Vice President
Thomas W. Joseph*
Vice President
Thomas F. McDonough*
Vice President, Secretary and Assistant Treasurer
Pamela A. McGrath*
Vice President and Treasurer
Edward J. O'Connell*
Vice President and Assistant Treasurer
Kathryn L. Quirk*
Vice President and Assistant Secretary
Coleen Downs Dinneen*
Assistant Secretary
*Scudder, Stevens & Clark, Inc.
25
<PAGE>
INVESTMENT PRODUCTS AND SERVICES
<TABLE>
<C> <C>
The Scudder Family of Funds
Money Market Income
Scudder Cash Investment Trust Scudder Emerging Markets Income Fund
Scudder U.S. Treasury Money Fund Scudder GNMA Fund
Tax Free Money Market+ Scudder Income Fund
Scudder Tax Free Money Fund Scudder International Bond Fund
Scudder California Tax Free Money Fund* Scudder Short Term Bond Fund
Scudder New York Tax Free Money Fund* Scudder Short Term Global Income Fund
Tax Free+ Scudder Zero Coupon 2000 Fund
Scudder California Tax Free Fund* Growth
Scudder High Yield Tax Free Fund Scudder Capital Growth Fund
Scudder Limited Term Tax Free Fund Scudder Development Fund
Scudder Managed Municipal Bonds Scudder Global Fund
Scudder Massachusetts Limited Term Tax Free Fund* Scudder Global Small Company Fund
Scudder Massachusetts Tax Free Fund* Scudder Gold Fund
Scudder Medium Term Tax Free Fund Scudder Greater Europe Growth Fund
Scudder New York Tax Free Fund* Scudder International Fund
Scudder Ohio Tax Free Fund* Scudder Latin America Fund
Scudder Pennsylvania Tax Free Fund* Scudder Pacific Opportunities Fund
Growth and Income Scudder Quality Growth Fund
Scudder Balanced Fund Scudder Value Fund
Scudder Growth and Income Fund The Japan Fund
Retirement Plans and Tax-Advantaged Investments
IRAs 403(b) Plans
Keogh Plans SEP-IRAs
Scudder Horizon Plan+++* (a variable annuity) Profit Sharing and Money Purchase
401(k) Plans Pension Plans
Closed-End Funds#
The Argentina Fund, Inc. The Latin America Dollar Income Fund, Inc.
The Brazil Fund, Inc. Montgomery Street Income Securities, Inc.
The First Iberian Fund, Inc. Scudder New Asia Fund, Inc.
The Korea Fund, Inc. Scudder New Europe Fund, Inc.
Scudder World Income
Opportunities Fund, Inc.
Institutional Cash Management
Scudder Institutional Fund, Inc.
Scudder Fund, Inc.
Scudder Treasurers Trust(TM)++
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. +A portion of the income from the tax-free funds may be
subject to federal, state, and local taxes. *Not available in all states. +++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, Stevens & Clark, Inc. are traded on various stock exchanges. ++For information on Scudder
Treasurers Trust,(TM) an institutional cash management service that utilizes certain portfolios of Scudder Fund, Inc.
($100,000 minimum), call 1-800-541-7703.
</TABLE>
26
<PAGE>
HOW TO CONTACT SCUDDER
<TABLE>
<C> <C>
Account Service and Information
For existing account service and transactions
SCUDDER INVESTOR RELATIONS
1-800-225-5163
For account updates, prices, yields,
exchanges, and redemptions SCUDDER
AUTOMATED INFORMATION LINE (SAIL)
1-800-343-2890
Investment Information
To receive information about the
Scudder funds, for additional
applications and prospectuses, or for
investment questions SCUDDER INVESTOR
RELATIONS 1-800-225-2470
For establishing 401(k) and 403(b) plans
SCUDDER DEFINED CONTRIBUTION SERVICES
1-800-323-6105
Please address all correspondence to
THE SCUDDER FUNDS
P.O. BOX 2291
BOSTON, MASSACHUSETTS
02107-2291
Or stop by a Scudder Funds Center
Many shareholders enjoy the personal,
one-on-one service of the Scudder Funds
Centers. Check for a Funds Center near
you--they can be found in the following
cities:
Boca Raton New York
Boston Portland, OR
Chicago San Diego
Cincinnati San Francisco
Los Angeles Scottsdale
For information on Scudder For information on Scudder
Treasurers Trust,(TM) an institutional Institutional Funds,* funds
cash management service for designed to meet the broad
corporations, non-profit investment management and
organizations and trusts that uses service needs of banks and
certain portfolios of Scudder Fund, other institutions, call
Inc.* ($100,000 minimum), call 1-800-854-8525.
1-800-541-7703.
Scudder Investor Relations and Scudder Funds Centers are services provided through Scudder Investor Services, Inc.,
Distributor.
* Contact Scudder Investor Services, Inc., Distributor, to receive a prospectus with more complete information, including
management fees and expenses. Please read it carefully before you invest or send money.
</TABLE>
27
<PAGE>
Celebrating 75 Years of Serving Investors
Established in 1919 by Theodore Scudder, Sidney Stevens, and F. Haven
Clark, Scudder, Stevens & Clark was the first independent investment counsel
firm in the United States. Since its birth, Scudder's pioneering spirit and
commitment to professional long-term investment management have helped shape the
investment industry. In 1928, we introduced the nation's first no-load mutual
fund. Today we offer 36 pure no load(TM) funds, including the first
international mutual fund offered to U.S. investors.
Over the years, Scudder's global investment perspective and dedication to
research and fundamental investment disciplines have helped us become one of the
largest and most respected investment managers in the world. Though times have
changed since our beginnings, we remain committed to our long-standing
principles: managing money with integrity and distinction; keeping the interests
of our clients first; providing access to investments and markets that may not
be easily available to individuals; and making investing as simple and
convenient as possible through friendly, comprehensive service.
