Scudder
Capital Growth
Fund
Semiannual Report
March 31, 1996
o A fund designed to maximize long-term capital growth through a diversified
portfolio of growth-oriented common stocks.
o A pure no-load(TM) fund with no commissions to buy, sell, or exchange
shares.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
<PAGE>
SCUDDER CAPITAL GROWTH FUND
CONTENTS
2 In Brief
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
IN BRIEF
o For the six months ended March 31, 1996, Scudder Capital Growth Fund
provided a total return of 11.34%, roughly in keeping with the performance
of the unmanaged S&P 500 Index and well ahead of the average growth fund
tracked by Lipper Analytical Services.
o Performance over the 12 months ended March 31, 1996 was very favorable as
well, with the Fund providing a total return of 33.88%.
o Early in the period the Fund cut its technology exposure to 7% from 25% in
view of the significant rise in prices in that sector, a move that helped
Fund performance.
o The exposure to economically-sensitive stocks was increased to
approximately 40% of the equity portfolio at the end of the period.
o In light of increased market volatility, the Fund has been scaling back
exposure to groups whose stock prices have performed well, such as consumer
staples and healthcare, in favor of areas that appear undervalued relative
to future prospects, such as paper, retailer, and durable goods stocks.
2
<PAGE>
LETTER FROM THE FUND"S PRESIDENT
Dear Shareholders,
We are pleased to present this semiannual report for Scudder Capital Growth
Fund, covering the six months ended March 31, 1996. For the period, Capital
Growth Fund provided a strong total return of 11.34%, well above the return for
the average of the 630 growth funds tracked by Lipper Analytical Services. The
Fund's total return of 33.88% for the 12 months through March is also gratifying
to report. Assets now stand at more than $1.6 billion, representing nearly
85,000 shareholders.
While U.S. stock prices have been on the rise for most of the past year and
a half, the market has recently shown signs of becoming more volatile. Investors
have been responding daily to uncertain and even conflicting indicators of where
the United States is in its economic cycle. We believe that Scudder Capital
Growth Fund, with its systematic approach to investing, is well-suited to taking
advantage of the opportunities presented by such an environment. Moreover, while
a modest correction would not be unusual after an extended period of gains such
as the market recently experienced, the long-term outlook for investors here and
around the world remains positive.
Finally, we would like to take this opportunity to note a recent addition
to our family of funds: Scudder Emerging Markets Growth Fund. The Fund, which
became available to investors on May 8, seeks to provide long-term growth of
capital by investing primarily in the stock markets of such developing regions
as the Pacific Rim, Latin America and Eastern Europe. For more information on
Scudder Emerging Markets Growth Fund and other Scudder products and services,
please see page 26.
Thank you for your continued confidence and investment in Scudder Capital
Growth Fund. Please do not hesitate to contact us at 1-800-225-2470 with any
questions about your account.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder Capital Growth Fund
3
<PAGE>
SCUDDER CAPITAL GROWTH FUND
PERFORMANCE UPDATE as of March 31, 1996
- -----------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- -----------------------------------------------------------------
SCUDDER CAPITAL GROWTH FUND
- ----------------------------------------
Total Return
Period Growth --------------
Ended of Average
3/31/96 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $13,388 33.88% 33.88%
5 Year $19,151 91.51% 13.88%
10 Year $32,982 229.82% 12.68%
S&P 500 INDEX
- --------------------------------------
Total Return
Period Growth --------------
Ended of Average
3/31/96 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $13,210 32.10% 32.10%
5 Year $19,822 98.22% 14.65%
10 Year $36,970 269.70% 13.96%
A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:
YEARLY PERIODS ENDED MARCH 31
Scudder Capital Growth Fund
Year Amount
- ----------------------
'86 $10,000
'87 $11,908
'88 $11,254
'89 $15,045
'90 $15,778
'91 $17,222
'92 $20,109
'93 $23,083
'94 $24,142
'95 $24,635
'96 $32,982
S&P 500 Index
Year Amount
- ----------------------
'86 $10,000
'87 $12,620
'88 $11,569
'89 $13,668
'90 $16,302
'91 $18,652
'92 $20,711
'93 $23,865
'94 $24,217
'95 $27,987
'96 $36,970
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> <C> <C> <C> <C> <C> <C> <C>
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
--------------------------------------------------------------------------------
NET ASSET VALUE... $18.47 $14.82 $18.75 $18.14 $17.74 $19.43 $20.88 $19.42 $19.06 $21.74
INCOME DIVIDENDS.. $ .23 $ .20 $ .07 $ .16 $ .37 $ .22 $ .10 $ -- $ -- $ .08
CAPITAL GAINS
DISTRIBUTIONS..... $ 2.46 $ 2.14 $ .79 $ 1.45 $ 1.35 $ .98 $ 1.25 $ 2.62 $ .73 $ 3.50
FUND TOTAL
RETURN (%)........ 19.08 -5.50 33.69 4.87 9.15 16.76 14.79 4.58 2.04 33.88
INDEX TOTAL
RETURN (%)........ 26.20 -8.34 18.12 19.23 14.37 11.03 15.22 1.48 15.57 32.10
</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.
4
<PAGE>
PORTFOLIO SUMMARY as of March 31, 1996
- ---------------------------------------------------------------------------
DIVERSIFICATION
- ---------------------------------------------------------------------------
Equity Securities 99% The Fund is essentially fully
Cash Equivalents 1% invested in stocks, primarily
---- domestic, that meet our
100% criteria.
====
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
SECTORS (Excludes 1% Cash Equivalents)
- --------------------------------------------------------------------------
Financial 20%
Consumer Staples 12% While the Fund's focus has
Manufacturing 12% shifted towards stocks of
Energy 9% cyclical companies, the single
Health 9% largest sector concentration
Durables 7% is in the interest-rate-
Technology 7% sensitive financial group.
Consumer Discretionary 6%
Communications 5%
Other 13%
----
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. EXXON CORP.
International energy company
2. PHILIP MORRIS COMPANIES INC.
Tobacco, food products and brewing
3. AMERICAN TELEPHONE & TELEGRAPH CO.
Telecommunication services and business systems
4. DOW CHEMICAL CO.
Chemical producer
5. PERKIN-ELMER CORP.
Manufacturer of analytical instruments and life-science systems
for industrial applications
6. AMERICAN HOME PRODUCTS CORP.
Major U.S. diversified pharmaceutical company
7. BANKAMERICA CORP.
Commercial banking in California
8. SMITHKLINE BEECHAM PLC
Multinational pharmaceutical and healthcare products company
9. BRITISH PETROLEUM PLC
Petroleum company
10. J.C. PENNEY CO., INC.
Discount department stores and mail order
Stock selection is based on valuation, upside earnings potential,
and our fundamental research.
- -----------------------------------------------------------------------
For more complete details about the Fund's Investment Portfolio,
see page 9.
A monthly Investment Portfolio Summary and quarterly Portfolio Holdings
are available upon request.
5
<PAGE>
SCUDDER CAPITAL GROWTH FUND
PORTFOLIO MANAGEMENT DISCUSSION
Dear Shareholders,
For the six months ended March 31, 1996, Scudder Capital Growth Fund
provided a total return of 11.34%, roughly in keeping with the 11.71%
performance of its benchmark index, the unmanaged S&P 500, and well ahead of the
average of the 630 growth funds tracked by Lipper Analytical Services, which
returned 7.92% for the period. Performance over the 12 months through March 31,
1996 was favorable as well. The Fund's total return of 33.88% was in excess of
the returns for both the broad stock market and the Lipper peer group average,
which were 32.10% and 28.31%, respectively. Moreover, these competitive results
have been generated even as portfolio volatility has been reduced (as measured
by standard deviation).
Investors have been heartened for most of the past six months by a benign
outlook for growth, inflation, and interest rates. The period was one of
generally rising U.S. stock prices, with short-term market fluctuations that
stayed basically within a relatively narrow range. Recently, however, the market
has begun to display a higher degree of volatility in response to conflicting
economic signals. As the period drew to a close, market leadership shifted
towards cyclical groups -- such as retailing, manufacturing, and durables --
that should respond positively to a stronger economy.
Focus on Individual Stock Selection
Throughout the period, Scudder Capital Growth Fund continued to apply a
disciplined approach to the selection of individual stocks. Stock selection has
been based principally on three criteria: relative valuation, an assessment of
"normal" earnings, and the recommendations of our analysts based on fundamental
research. By purchasing stocks at reasonable valuations, we seek to reduce
portfolio volatility. Improving earnings are highly correlated with strong stock
price performance, and are most frequently experienced with companies whose
earnings are running below their normal level (based on historical data adjusted
for unusual events). Attractive valuation and below-normal current earnings are
just the starting point, however, as our analysts evaluate each prospective
portfolio holding on the basis of their own research regarding the company's
prospects, management and many other factors.
We believe the Fund's strong relative performance over the last six months
is evidence of the effectiveness of our systematic and thorough approach. A
recent example of our stock selection process is the purchase of Whirlpool Corp.
6
<PAGE>
PORTFOLIO MANAGEMENT DISCUSSION
(consumer durables). At the time of purchase, Whirlpool was trading at $55, well
below its historical high. More important, its price-earnings ratio (a common
gauge of stock valuation) was approximately 12 times normal earnings, versus an
average valuation for the overall market of roughly 19 times normal earnings. In
addition, our analysis of the company's earnings history revealed considerable
potential for improvement. Current earnings were running at $2.80 per share,
well below their normal level. Finally, our analysts' independent research
quantified the market concerns that had driven the stock to a discounted
valuation; this resulted in a positive rating for Whirlpool and confirmed our
view of its attractiveness as an investment. An example on the sell side is Eli
Lilly (pharmaceuticals), which we eliminated from the portfolio at $64. It was
trading at a significant premium to the market based on what we felt were
higher-than-normal current earnings, and had recently received a lukewarm rating
from our analysts.
Increased Weighting of Cyclicals
Early in the period we cut our technology exposure to 7% from 25% in view
of extremely high prices, a move that helped Fund performance as that group
plummeted late in 1995. In broad terms, despite our move to underweight
technology, the biggest portfolio shift has been in the direction of such
cyclical sectors, i.e. those highly responsive to the strength of the overall
economy. Cyclical issues had reached approximately 40% of the equity portfolio
at the end of the period, while interest-rate-sensitive stocks -- mostly
financials and utilities -- were 24% of the Fund's equity portfolio. Defensive
(or non-cyclical) sectors such as consumer staples and healthcare were at 21%,
with an additional 9% position in energy-related issues.
More narrowly, our largest exposure to a single sector at the end of March
was in the interest-rate-sensitive financial sector, at 20% of the equity
portfolio. Many financial stocks still have favorable valuations and are
beneficiaries of what has been for the most part a benign interest rate climate.
Within this sector, we have focused on insurance companies at the expense of
banks, as insurance companies appear to be more favorably valued and to have
more upside earnings potential.
7
<PAGE>
Scudder Capital Growth Fund
Outlook and Strategy
Market levels that are high by historical standards combined with
uncertainty as to the direction of interest rates and corporate earnings have
resulted in increased market volatility. Stock selection is more critical than
ever, as price movements within the same sector are less unified than they have
been during most of the recent bull market. There is also a greater premium on
timely action to take advantage of the opportunities presented by wide price
swings taking place over a compressed interval. To illustrate, in just the first
three months of 1996, IBM traded in a range of $87 to $125 per share.
We are trimming stocks where valuations are high and where our analysis
reveals a less favorable outlook. In particular, we have been scaling back
exposure to some defensive groups such as consumer staples and healthcare. The
prices of these stocks remain high after having been bid up in early 1996, when
investors anticipated economic weakness. By contrast, some cyclical issues
currently reflect recession level valuations -- for example, many stocks in the
paper group. Similarly, retailers' earnings are well below their normal levels
and their stocks have underperformed until very recently, making this another
area for increased focus. The durable goods area is also attractively valued
relative to both the group's historical parameters and the current overall
market. While we are still underweight in technology, valuations have become
more reasonable and we are on the lookout for opportunities to rebuild our
position in that sector.
Scudder Capital Growth Fund remains appropriate for investors seeking
long-term growth of their capital. While market fluctuation will always be a
part of investing, we will continue to apply a disciplined approach to investing
that is designed to reduce portfolio volatility. We feel that the Fund's
emphasis on buying stocks at attractive valuations supported by Scudder's
research should hold Fund shareholders in good stead in the current climate.
Sincerely,
Your Portfolio Management Team
/s/Kathleen T. Millard /s/Lois R. Friedman
Kathleen T. Millard Lois R. Friedman
8
<PAGE>
INVESTMENT PORTFOLIO as of March 31, 1996 (Unaudited)
<TABLE>
<CAPTION>
% of Principal Market
Portfolio Amount ($) Value ($)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
0.7% REPURCHASE AGREEMENT
11,812,000 Repurchase Agreement with Donaldson,
Lufkin & Jenrette dated 3/29/96 at 5.35%
to be repurchased at $11,817,266 on 4/1/96,
collateralized by a $11,650,000 U.S. Treasury
Note, 5.75%, 10/31/97 (Cost $11,812,000)....... 11,812,000
----------
1.1% CONVERTIBLE BOND
SERVICE INDUSTRIES
Miscellaneous Commercial
Services 33,300,000 ADT Operations Inc. LYON, 7/6/10
(Cost $13,842,294)............................ 17,399,250
----------
0.3% PREFERRED STOCKS
<CAPTION>
Shares
-----------------------------------------------------------------------
<S> <C> <C> <C>
FINANCIAL
Banks 40,000 First Nationwide Bank, non-cum. 11.5%
(Cost $4,040,000) (b)......................... 4,500,000
----------
97.9% COMMON STOCKS
CONSUMER DISCRETIONARY 6.2%
Apparel & Shoe 1.1% 520,300 Liz Claiborne Inc.............................. 17,820,275
Department & ----------
Chain Stores 4.2% 531,600 J.C. Penney Co., Inc........................... 26,447,100
222,300 Melville Corp.................................. 7,975,013
594,900 Rite Aid Corp.................................. 18,367,538
314,000 Sears, Roebuck & Co............................ 15,307,500
----------
68,097,151
----------
Specialty Retail 0.9% 549,600 Toys "R" Us Inc.*.............................. 14,839,200
CONSUMER STAPLES 12.2% ----------
Alcohol & Tobacco 4.4% 242,300 Anheuser Busch Companies, Inc.................. 16,324,963
432,000 Philip Morris Companies Inc.................... 37,908,000
595,000 RJR Nabisco Holdings Corp...................... 17,998,750
----------
72,231,713
Consumer Electronic & ----------
Photographic Products 2.2% 213,900 Eastman Kodak Co............................... 15,186,900
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
SCUDDER CAPITAL GROWTH FUND
<TABLE>
<CAPTION>
% of Market
Portfolio Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
366,100 Whirlpool Corp.......................... 20,227,025
-----------
35,413,925
-----------
Food & Beverage 4.6% 606,600 Dole Food Co............................ 23,354,100
9,692 Earthgrains Co.*........................ 289,549
252,700 General Mills, Inc...................... 14,751,363
417,300 Kroger Co.*............................. 16,900,650
557,800 Quaker Oats Co.......................... 18,616,575
-----------
73,912,237
-----------
Package Goods/Cosmetics 1.0% 217,300 Kimberly-Clark Corp..................... 16,188,850
HEALTH 8.7% -----------
Health Industry Services 1.2% 743,500 Bergen Brunswig Corp. "A"............... 19,423,938
Medical Supply & -----------
Specialty 2.0% 335,700 Bausch & Lomb, Inc...................... 12,420,900
242,500 Becton, Dickinson & Co.................. 19,854,688
-----------
32,275,588
-----------
Pharmaceuticals 5.5% 254,100 American Home Products Corp............. 27,538,088
394,100 Baxter International Inc................ 17,833,025
280,000 Sandoz Ltd. AG (ADR).................... 16,397,500
523,000 SmithKline Beecham PLC (ADR)............ 26,934,500
-----------
88,703,113
COMMUNICATIONS 4.6% -----------
Telephone/Communications 534,800 American Telephone & Telegraph Co....... 32,756,500
266,800 Bell Atlantic Corp...................... 16,474,900
833,000 MCI Communications Corp................. 25,198,250
-----------
74,429,650
FINANCIAL 19.5% -----------
Banks 6.6% 354,800 BankAmerica Corp........................ 27,497,000
345,100 Chemical Banking Corp................... 24,329,550
214,100 Citicorp................................ 17,128,000
587,600 H.F. Ahmanson & Co...................... 14,249,300
285,300 NationsBank Corp........................ 22,859,663
-----------
106,063,513
-----------
Insurance 7.6% 235,800 Aetna Life & Casualty Co................ 17,802,900
498,100 Allstate Corp........................... 20,982,463
177,900 American International Group, Inc....... 16,655,888
219,900 Cigna Corp.............................. 25,123,575
313,600 EXEL, Ltd............................... 21,638,400
271,600 MBIA Inc................................ 20,370,000
-----------
122,573,226
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
INVESTMENT PORTFOLIO
<TABLE>
<CAPTION>
% of Market
Portfolio Shares Value ($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Other Financial
Companies 4.3% 450,700 American Express Credit Corp. .............. 22,253,313
522,900 Federal National Mortgage Association ...... 16,667,438
167,900 Student Loan Marketing Association ......... 12,844,350
281,300 Travelers Group, Inc. ...................... 18,565,800
----------
70,330,901
----------
Real Estate 1.0% 770,000 Nationwide Health Properties Inc. (REIT).... 16,170,000
MEDIA 1.4% ----------
Print Media
559,200 Times Mirror Co. "A" ....................... 22,018,500
----------
SERVICE INDUSTRIES 1.6%
Environmental Services 548,400 WMX Technologies Inc. ...................... 17,411,700
556,300 Wheelabrator Technologies Inc. ............. 9,248,488
----------
26,660,188
DURABLES 7.2% ----------
Aerospace 2.9% 207,200 Lockheed Martin Corp. ...................... 15,721,300
792,000 Rohr Industries, Inc.* ..................... 14,256,000
147,300 United Technologies Corp. .................. 16,534,425
----------
46,511,725
----------
Automobiles 3.5% 276,800 Dana Corp. ................................. 9,238,200
143,000 Eaton Corp. ................................ 8,615,750
489,000 Ford Motor Co. ............................. 16,809,375
419,700 General Motors Corp. ....................... 22,349,025
----------
57,012,350
----------
Tires 0.8% 236,200 Goodyear Tire & Rubber Co. ................. 12,046,200
MANUFACTURING 11.4% ----------
Chemicals 5.5% 255,700 B.F. Goodrich Co., Inc. .................... 20,328,150
351,700 Dow Chemical Co. ........................... 30,553,938
390,500 Mead Corp. ................................. 21,087,000
418,400 Praxair Inc. ............................... 16,683,700
----------
88,652,788
----------
Diversified Manufacturing 4.2% 386,700 Canadian Pacific Ltd. ...................... 7,734,000
450,000 Dresser Industries Inc. .................... 13,725,000
307,900 General Electric Co. ....................... 23,977,713
30,000 Minnesota Mining & Manufacturing Co. ....... 1,946,250
261,800 Textron, Inc. .............................. 20,944,000
----------
68,326,963
----------
Machinery/Components/
Controls 0.8% 319,300 Ingersoll-Rand Co. ......................... 13,011,475
----------
Office Equipment/Supplies 0.9% 112,700 Xerox Corp. ................................ 14,143,850
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
SCUDDER CAPITAL GROWTH FUND
<TABLE>
<CAPTION>
% of Market
Portfolio Shares Value ($)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TECHNOLOGY 7.1%
Diverse Electronic Products 1.5% 391,900 Harris Corp.................................. 24,248,813
-------------
Electronic Data Processing 2.0% 295,500 Digital Equipment Corp.*...................... 16,289,438
163,200 Hewlett-Packard Co............................ 15,340,800
-------------
31,630,238
-------------
Military Electronics 1.0% 316,000 Raytheon Co................................... 16,195,000
-------------
Precision Instruments 2.6% 528,300 Perkin-Elmer Corp............................. 28,594,238
578,900 Silicon Valley Group Inc.*.................... 14,110,688
-------------
42,704,926
-------------
ENERGY 8.9%
Oil Companies 358,100 Amoco Corp................................... 25,872,725
252,200 British Petroleum PLC (ADR).................. 26,796,250
496,100 Exxon Corp................................... 40,494,163
182,400 Mobil Corp................................... 21,135,600
322,800 Repsol SA (ADR).............................. 12,064,650
121,500 Royal Dutch Petroleum Co. (New York shares).. 17,161,875
-------------
143,525,263
-------------
METALS & MINERALS 1.1%
Steel & Metals 279,200 Aluminum Co. of America...................... 17,484,900
CONSTRUCTION 1.5% -------------
533,500 Weyerhaeuser Co.............................. 24,607,688
Forest Products -------------
TRANSPORTATION 2.5%
Airlines 1.0% 179,300 AMR Corp.*................................... 16,047,337
-------------
Railroads 1.5% 474,500 Canadian National Railway Co................. 8,185,125
219,500 Consolidated Rail Corp....................... 15,721,688
-------------
23,906,813
-------------
UTILITIES 4.0%
Electric Utilities 280,000 FPL Group, Inc............................... 12,670,000
333,300 PacifiCorp................................... 6,957,638
1,023,800 PowerGen PLC................................. 8,336,612
533,000 Public Service Co. of New Mexico*............ 9,927,125
593,300 Southern Company............................. 14,165,038
316,100 Texas Utilities Co., Inc..................... 13,078,638
-------------
65,135,051
-------------
TOTAL COMMON STOCKS
(Cost $1,400,680,106)...................... 1,582,343,348
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO - 100.0%
(Cost $1,430,374,400) (a)................... 1,616,054,598
=============
</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 $1,432,236,775. At March 31,
1996, net unrealized appreciation for all securities based on tax cost was
$183,817,823. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $193,156,721 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$9,338,898.
(b) Security valued in good faith by the Valuation Committee of the Board of
Trustees. The cost of this security at March 31, 1996 aggregated
$4,040,000. See Note A of the Notes to Financial Statements.
* Non-income producing security.
Transactions in written call options during the six months ended March 31,
1996 were as follows:
<TABLE>
<CAPTION>
PREMIUMS
NUMBER OF CONTRACTS RECEIVED ($)
-----------------------------------------------
<S> <C> <C>
Outstanding at
September 30, 1995 ........... 6,000 9,993,236
Contracts closed ............. (6,000) (9,993,236)
-----------------------------------------------
Outstanding at
March 31, 1996 ................... - -
====== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
SCUDDER CAPITAL GROWTH FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
March 31, 1996 (Unaudited)
- -------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments, at market (identified cost $1,430,374,400)
(Note A)............................................... $1,616,054,598
Cash 733
Receivables:
Investments sold........................................ 25,063,495
Dividends and interest.................................. 3,323,226
Fund shares sold........................................ 2,126,954
Foreign taxes recoverable............................... 21,852
Other assets................................................ 6,146
--------------
Total assets.................................... 1,646,597,004
LIABILITIES
Payables:
Investments purchased................................ $ 19,049,538
Fund shares redeemed................................. 9,370,938
Accrued management fee (Note C)...................... 896,733
Other accrued expenses (Note C)...................... 392,080
--------------
Total liabilities................................. 29,709,289
--------------
Net assets, at market value.............................. $1,616,887,715
NET ASSETS ==============
Net assets consist of:
Undistributed net investment income.................. $ 6,444,417
Unrealized appreciation (depreciation) on:
Investments........................................ 185,680,198
Foreign currency related transactions (20)
Accumulated net realized gain........................ 110,440,008
Shares of beneficial interest........................ 743,712
Additional paid-in capital........................... 1,313,579,400
--------------
Net assets, at market value.............................. $1,616,887,715
NET ASSET VALUE, offering and redemption price per ==============
share ($1,616,887,715 + 74,371,152 outstanding
shares of beneficial interest, $.01 par value,
unlimited number of shares authorized)............... $ 21.74
==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
<TABLE>
SIX MONTHS ENDED MARCH 31, 1996 (UNAUDITED)
- -------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividends (net of foreign taxes withheld of $59,566)....... $ 6,891,893
Interest................................................... 1,949,137
-----------
18,841,030
Expenses:
Management fee (Note C).................................... $ 5,184,756
Services to shareholders (Note C).......................... 1,468,956
Custodian and accounting fees (Note C)..................... 212,779
Trustees' fees and expenses (Note C)....................... 20,282
Reports to shareholders.................................... 243,661
Auditing................................................... 24,550
State registration......................................... 25,455
Legal...................................................... 7,928
Other...................................................... 21,511 7,209,878
----------------------------
Net investment income...................................... 11,631,152
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT TRANSACTIONS
Net realized gain (loss) from:
Investments........................................ 111,929,869
Options............................................ 140,316
Foreign currency related transactions.............. (22,416) 112,047,769
------------
Net unrealized appreciation during the period on:
Investments........................................ 41,553,020
Written Options.................................... 1,719,264
Foreign currency related transactions.............. 19,570 43,291,854
----------------------------
Net gain on investment transactions........................ 155,339,623
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....... $166,970,775
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
SCUDDER CAPITAL GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
MARCH 31, YEAR ENDED
1996 SEPTEMBER 30,
INCREASE (DECREASE) IN NET ASSETS (UNAUDITED) 1995
- ----------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS:
Net investment income.............................. $ 11,631,152 $ 8,448,247
Net realized gain from investment transactions..... 112,047,769 232,953,105
Net unrealized appreciation on investment
transactions during the period............. 43,291,854 32,843,602
-------------- --------------
Net increase in net assets resulting from
operations................................. 166,970,775 274,244,954
-------------- --------------
Distributions to shareholders from:
Net investment income ($.08 per share)..... (5,186,735) -
Net realized gains ($3.50 and $.73 -------------- --------------
per share, respectively)................... (226,928,336) (48,924,819)
-------------- --------------
Fund share transactions:
Proceeds from shares sold.......................... 126,243,473 198,066,318
Net asset value of shares issued to
shareholders in reinvestment of
distributions.............................. 222,385,560 47,065,999
Cost of shares redeemed............................ (158,266,386) (317,084,600)
Net increase (decrease) in net assets from -------------- --------------
Fund share transactions.................... 190,362,647 (71,952,283)
-------------- --------------
INCREASE IN NET ASSETS............................. 125,218,351 153,367,852
Net assets at beginning of period.................. 1,491,669,364 1,338,301,512
-------------- --------------
NET ASSETS AT END OF PERIOD (including
undistributed net investment income of
$6,444,417 in 1996)........................ $1,616,887,715 $1,491,669,364
============== ==============
OTHER INFORMATION
INCREASE (DECREASE) IN FUND SHARES
Shares outstanding at beginning of period.......... 65,078,938 68,475,991
-------------- --------------
Shares sold........................................ 5,734,238 9,981,199
Shares issued to shareholders in reinvestment
of distributions........................... 10,795,415 2,577,547
Shares redeemed.................................... (7,237,439) (15,955,799)
-------------- --------------
Net increase (decrease) in Fund shares............. 9,292,214 (3,397,053)
-------------- --------------
Shares outstanding at end of period................ 74,371,152 65,078,938
============== ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
FINANCIAL HIGHLIGHTS
THE FOLLOWING TABLE INCLUDES SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT
EACH PERIOD AND OTHER PERFORMANCE INFORMATION DERIVED FROM THE FINANCIAL
STATEMENTS.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MARCH 31, YEARS ENDED SEPTEMBER 30,
1996 -------------------------------------------------------------------------------------
(UNAUDITED) 1995 1994 1993(b) 1992 1991 1990 1989 1988 1987 1986
---------------- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period................. $22.92 $19.54 $23.06 $19.12 $19.30 $14.77 $22.30 $16.10 $20.41 $17.17 $15.35
Income from investment ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
operations:
Net investment
income (loss)......... .17 .13 (.02) .06 .12 .20 .30(a) .21 .09 .16 .26
Net realized and
unrealized gain (loss)
on investment
transactions.......... 2.23 3.98 (.88) 5.23 .90 6.05 (6.22) 6.61 (1.82) 5.77 3.67
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations............ 2.40 4.11 (.90) 5.29 1.02 6.25 (5.92) 6.82 (1.73) 5.93 3.93
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Less distributions from:
Net investment
income.................. (.08) - - (.10) (.22) (.37) (.16) (.07) (.20) (.23) (.23)
Net realized gains
on investment
transactions............ (3.50) (.73) (2.62) (1.25) (.98) (1.35) (1.45) (.55) (2.38) (2.46) (1.88)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions........ (3.58) (.73) (2.62) (1.35) (1.20) (1.72) (1.61) (.62) (2.58) (2.69) (2.11)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of period............. $21.74 $22.92 $19.54 $23.06 $19.12 $19.30 $14.77 $22.30 $16.10 $20.41 $17.17
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN (%)........... 11.34** 21.96 (4.72) 28.83 5.61 45.85 (28.20) 44.05 (5.61) 39.03 28.46
RATIOS AND
SUPPLEMENTAL DATA
Net assets, end of
period ($ millions)...... 1,617 1,492 1,338 1,387 1,054 1,058 712 1,013 491 583 414
Ratio of operating
expenses to average
net assets (%)............ .92* .98 .97 .96 .98 1.04 .94 .88 .95 .88 .84
Ratio of net
investment income
(loss) to average
net assets (%)............ 1.49* .62 (.12) .22 .57 1.24 1.56 1.22 .63 .86 1.50
Portfolio turnover
rate (%).................. 162.27* 153.6 75.8 92.2 92.4 93.2 87.9 55.7 48.5 58.2 55.8
Average commission rate
paid (c)................. $.0479 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
</TABLE>
(a) Net investment income per share includes nonrecurring dividend income
amounting to $.14 per share.
(b) Effective October 1, 1992, the Fund discontinued using equalization
accounting.
(c) Average commission rate paid per share is calculated for fiscal years
beginning on or after September 1, 1995.
* Annualized
* * Not annualized
17
<PAGE>
SCUDDER CAPITAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (Unaudited)
A. SIGNIFICANT ACCOUNTING POLICIES
Scudder Capital Growth 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 Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
SECURITY VALUATION. Portfolio 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. A security valued in good
faith by the Valuation Committee of the Board of Trustees at fair value amounted
to $4,500,000 (0.28% of net assets) and has been noted in the investment
portfolio as of March 31, 1996.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 Fund purchased put options and wrote call options on other financial
instruments 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.
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 price 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
19
<PAGE>
SCUDDER CAPITAL GROWTH FUND
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.
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.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency exchange
contract (forward contract) is a commitment to purchase or sell a foreign
currency at the settlement date at a negotiated rate. During the period, the
Fund utilized forward contracts as a hedge in connection with portfolio
purchases and sales of securities denominated in foreign currencies.
Forward contracts are valued at the prevailing forward exchange rate of the
underlying currencies and unrealized gain/loss is recorded daily. Forward
contracts having the same settlement date and broker are offset and any gain
(loss) is realized on the date of offset; otherwise, gain (loss) is realized on
settlement date. Realized and unrealized gains and losses which represent the
difference between the value of the forward contract to buy and the forward
contract to sell are included in net realized and unrealized gain (loss) from
foreign currency related transactions.
Certain risks may arise upon entering into forward contracts from the potential
inability of counterparties to meet the terms of their contracts. Additionally,
when utilizing forward contracts to hedge, the Fund gives up the opportunity to
profit from favorable exchange rate movements during the term of the contract.
FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency transactions are translated into U.S. dollars
on the following basis:
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(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 Fund does 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. 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.
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. Earnings
and profits distributed to shareholders on redemption of Fund shares ("tax
equalization") may be utilized by the Fund, to the extent permissible, as part
of the Fund's dividends paid deduction on its federal tax return.
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 foreign denominated investments, investments in options, and
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
21
<PAGE>
SCUDDER CAPITAL GROWTH FUND
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.
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 and market discounts are accreted for both tax and financial
reporting purposes.
B. PURCHASES AND SALES OF SECURITIES
- --------------------------------------------------------------------------------
During the six months ended March 31, 1996, purchases and sales of investment
securities (excluding short-term investments) aggregated $1,238,326,943 and
$1,252,474,445, respectively.
C. RELATED PARTIES
- --------------------------------------------------------------------------------
Under the Fund's Investment Management Agreement (the "Agreement") with Scudder,
Stevens & Clark, Inc. (the "Adviser"), the Fund agrees to pay to the Adviser a
fee equal to an annual rate of approximately 0.75% of the first $500,000,000 of
average daily net assets, 0.65% of the next $500,000,000 of such net assets and
0.60% of such net assets in excess of $1,000,000,000, 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 also 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. For the six
months ended March 31, 1996, the fee pursuant to the Agreement amounted to
$5,184,756 which was equivalent to an annual effective rate of 0.66% of the
Fund's average daily net assets.
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. Included
in services to shareholders is $1,305,564 charged to the Fund by SSC for the six
months ended March 31, 1996, of which $223,939 is unpaid at March 31, 1996.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records of the Fund. For the six months
ended March 31, 1996, the amount charged to the Fund by SFAC aggregated $80,935,
of which $13,354 is unpaid at March 31, 1996.
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, 1996, Trustees' fees and expenses aggregated
$20,282.
23
<PAGE>
(This page intentionally left blank.)
24
<PAGE>
OFFICERS AND TRUSTEES
Daniel Pierce*
President and Trustee
Paul Bancroft III
Trustee; Venture Capitalist and Consultant
Sheryle J. Bolton
Trustee; Consultant
Thomas J. Devine
Trustee; Consultant
Keith R. Fox
Trustee; President, Exeter Capital Management Corporation
David S. Lee*
Vice President and Trustee
Douglas M. Loudon*
Vice President and Trustee
Dr. Wilson Nolen
Trustee; Consultant
Juris Padegs*
Vice President and Trustee
Dr. Gordon Shillinglaw
Trustee; Professor Emeritus of Accounting, Columbia University Graduate
School of Business
Robert W. Lear
Honorary Trustee; Executive-in-Residence, Visiting Professor,
Columbia University Graduate School of Business
Robert G. Stone, Jr.
Honorary Trustee; Chairman of the Board and Director, Kirby Corporation
Donald E. Hall*
Vice President
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
Vice President
Kathleen T. Millard*
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>
<TABLE>
<CAPTION>
The Scudder Family of Funds
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Money Market Income
Scudder Cash Investment Trust Scudder Emerging Markets Income Fund
Scudder U.S. Treasury Money Fund Scudder Global Bond Fund
Tax Free Money Market+ Scudder GNMA Fund
Scudder Tax Free Money Fund Scudder Income Fund
Scudder California Tax Free Money Fund* Scudder International Bond Fund
Scudder New York Tax Free Money Fund* Scudder Short Term Bond 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 Emerging Markets Growth Fund
Scudder Massachusetts Limited Term Tax Free Fund* Scudder Global Fund
Scudder Massachusetts Tax Free Fund* Scudder Global Discovery Fund
Scudder Medium Term Tax Free Fund Scudder Gold Fund
Scudder New York Tax Free Fund* Scudder Greater Europe Growth Fund
Scudder Ohio Tax Free Fund* Scudder International Fund
Scudder Pennsylvania Tax Free Fund* Scudder Latin America Fund
Growth and Income Scudder Pacific Opportunities Fund
Scudder Balanced Fund Scudder Quality Growth Fund
Scudder Growth and Income Fund Scudder Small Company Value Fund
Scudder Value 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 Treasurers Trust(TM)++
Scudder 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. +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.
26
<PAGE>
Account Service and Information
- --------------------------------------------------------------------------------------------------------------
For existing account service and transactions
SCUDDER INVESTOR RELATIONS
1-800-225-5163
For personalized information about your
Scudder accounts; exchanges and
redemptions; or information on any
Scudder fund 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 Treasurer's Trust(TM), an institutional cash
management service for corporations, non-profit organizations and trusts that
uses certain portfolios of Scudder Fund, Inc.,* ($100,000 minimum), call
1-800-541-7703.
For information on Scudder Institutional Funds,* funds designed to meet the
broad investment management and service needs of banks and other institutions,
call 1-800-854-8525.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
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.
27
<PAGE>
Celebrating Over 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 38 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.
