Scudder
Large Company
Value Fund
Semiannual Report
March 31, 1998
Pure No-Load(TM) Funds
A fund which seeks to maximize long-term capital appreciation through a
value-driven investment program.
A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
SCUDDER (logo)
<PAGE>
Scudder Large Company Value Fund
- --------------------------------------------------------------------------------
Date of Inception: 4/5/67 Total Net Assets as of Ticker Symbol: SCDUX
3/31/98: $2.45 billion
- --------------------------------------------------------------------------------
o Scudder Large Company Value Fund benefited from a continued rise in
large-capitalization stock prices, with the Fund returning 11.58% for the
six-month period ended March 31, 1998.
o The Fund's exposure to financial stocks continued to boost overall returns
during the period, whereas disappointing results from some cyclical and
energy-related holdings tempered performance.
o Given the dramatic rise in the prices of financial stocks over the last three
years, the Fund's holdings in this area have been de-emphasized in favor of
communications companies and utilities.
Table of Contents
4 Letter from the Fund's President 18 Financial Highlights
4 Performance Update 19 Notes to Financial Statements
5 Portfolio Summary 22 Shareholder Meeting Results
6 Portfolio Management Discussion 24 Officers and Trustees
9 Glossary of Investment Terms 25 Investment Products and Services
10 Investment Portfolio 26 Scudder Solutions
15 Financial Statements
2 - Scudder Large Company Value Fund
<PAGE>
Letter from the Fund's President
Dear Shareholders,
As we began Scudder Large Company Value Fund's six-month fiscal period last
fall, the environment was clouded by the Asian financial crisis and a market
correction in October. Concerns eased by the beginning of 1998, as the
anticipated flood of cheap imports from Asia and sharply lower corporate
earnings for U.S. corporations failed to appear. Meanwhile, the U.S. economy
remains healthy and things are looking up in many foreign markets, especially
Europe.
While valuations of U.S. stocks are relatively high from our standpoint, we
think that many opportunities remain for long-term investors. On the following
pages, portfolio managers Kathleen Millard and Lois Roman discuss some of the
opportunities they see in managing Scudder Large Company Value Fund, as well as
the investment environment over the six-month fiscal period.
At the beginning of 1998, the Fund's investment adviser changed its name to
Scudder Kemper Investments, Inc. from Scudder, Stevens & Clark, Inc., reflecting
the acquisition of a majority interest in Scudder by Zurich Insurance Company,
and the combining of Scudder's business with that of Zurich Kemper Investments,
Inc. We think this combination is very positive, and will provide your Fund's
manager with expanded resources in managing the Fund.
For those of you who are interested in new Scudder products, we recently
introduced three new industry sector funds that comprise the Choice Series:
Scudder Financial Services Fund, Scudder Health Care Fund, and Scudder
Technology Fund. In addition, April 6th marked the debut of our latest entrant
in the growth and income category, Scudder Real Estate Investment Fund. For
further information on any of these new funds, please call 1-800-225-2470.
Thank you for your continued investment in Scudder Large Company Value
Fund. If you have any questions about your account, please call Scudder Investor
Relations at the toll-free number above, or visit our Web site at
http://funds.scudder.com.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder Large Company Value Fund
3 - Scudder Large Company Value Fund
<PAGE>
PERFORMANCE UPDATE as of March 31, 1998
- ----------------------------------------------------------------
Fund Index Comparisons
- ----------------------------------------------------------------
Total Return
Period Growth --------------
Ended of Average
3/31/98 $10,000 Cumulative Annual
- --------------------------------------------
Scudder Large Company Value Fund
- ---------------------------------------------
1 Year $ 14,257 42.57% 42.57%
5 year $ 23,751 137.51% 18.89%
10 Year $ 48,717 387.17% 17.16%
- ---------------------------------------------
S&P 500 Index
- ---------------------------------------------
1 Year $ 14,802 48.02% 48.02%
5 Year $ 27,470 174.70% 22.38%
10 Year $ 56,677 466.77% 18.93%
- ---------------------------------------------
- -----------------------------------------------------------------
Growth of a $10,000 Investment
- -----------------------------------------------------------------
A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:
SCUDDER LARGE COMPANY VALUE FUND
Year Amount
- ----------------------
88 $10,000
89 $13,369
90 $14,020
91 $15,303
92 $17,869
93 $20,512
94 $21,452
95 $21,890
96 $29,308
97 $34,170
98 $48,717
S&P 500 INDEX
Year Amount
- ----------------------
88 $10,000
89 $11,813
90 $14,090
91 $16,119
92 $17,902
93 $20,632
94 $20,935
95 $24,192
96 $31,956
97 $38,290
98 $56,677
Yearly periods ended March 31
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>
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
------------------------------------------------------------------------------------------------
NET ASSET VALUE... $ 18.75 $ 18.14 $ 17.74 $ 19.43 $ 20.88 $ 19.42 $ 19.06 $ 21.74 $ 22.68 $ 29.98
INCOME DIVIDENDS.. $ .07 $ .16 $ .37 $ .22 $ .10 $ -- $ -- $ .08 $ .16 $ .24
CAPITAL GAINS
DISTRIBUTIONS..... $ .79 $ 1.45 $ 1.35 $ .98 $ 1.25 $ 2.62 $ .73 $ 3.50 $ 2.48 $ 1.86
FUND TOTAL
RETURN (%)........ 33.69 4.87 9.15 16.76 14.79 4.58 2.04 33.88 16.59 42.57
INDEX TOTAL
RETURN (%)........ 18.12 19.23 14.37 11.03 15.22 1.48 15.57 32.10 19.83 48.02
</TABLE>
On February 1, 1997, the Fund adopted its current name. Prior to that date,
the Fund was known as the Scudder Capital Growth Fund. 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 - Scudder Large Company Value Fund
<PAGE>
PORTFOLIO SUMMARY as of March 31, 1998
- ---------------------------------------------------------------------------
Diversification
- ---------------------------------------------------------------------------
Equity Securities 98%
Cash Equivalents 2%
- --------------------------------------
100%
- --------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
Management pursues a fully
invested approach to selecting
large-cap stocks with value
characteristics.
- --------------------------------------------------------------------------
Sectors
(Excludes 2% Cash Equivalents)
- --------------------------------------------------------------------------
Financial 26%
Energy 10%
Consumer Staples 10%
Communications 8%
Utilities 8%
Manufacturing 7%
Health 6%
Durables 6%
Technology 6%
Other 13%
- --------------------------------------
100%
- --------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
The Fund's stock-by-stock
selection approach is the primary
determinant of the portfolio's
sector weights.
- --------------------------------------------------------------------------
Ten Largest Equity Holdings
(24% of Portfolio)
- --------------------------------------------------------------------------
1. CHASE MANHATTAN CORP.
Commercial banking
2. TRAVELERS GROUPS, INC.
Provider of diversified financial services
3. BELL ATLANTIC CORP.
Telecommunication services
4. AT&T
Telecommunication services and business systems
5. BANKAMERICA CORP.
Commercial banking in California
6. INTERNATIONAL BUSINESS MACHINES CORP.
Principal manufacturer and servicer of business
and computing machines
7. EXXON CORP.
International oil & gas company
8. UNILEVER NV
Producer of packaged consumer goods
9. TEXTRON, INC.
Manufacturer of products for aerospace and
commercial use
10. BANKBOSTON CORP.
Commercial banking
Many of the Fund's top holdings
benefited from the continuing
consolidation in the financial
industry.
- -----------------------------------------------------------------------------
For more complete details about the Fund's investment portfolio,
see page 10. A monthly Investment Portfolio Summary and quarterly Portfolio
Holdings are available upon request.
5 - Scudder Large Company Value Fund
<PAGE>
Portfolio Management Discussion
For this six-month report, we asked Kathleen T. Millard and Lois Friedman Roman,
portfolio managers of Scudder Large Company Value Fund, to discuss the market
environment and their current investment strategy for the Fund.
Q: How did the Fund perform during the six months ended March 31, 1998?
A: The Fund provided an 11.58% return for the six-month period -- an attractive
return for a half year's performance. However, the Fund failed to keep pace with
its unmanaged benchmarks. For the period, the Russell 1000 Value Index gained
16.65% and the S&P 500 Index returned 17.23%. The Fund's relative
underperformance is due in part to the poor performance of cyclical and
energy-related stocks, and an underweighting of high p/e growth stocks, which
outperformed during this period.
We've held a roughly 10% weighting in the energy sector as a counterbalance to
the Fund's large interest rate sensitive holdings. The dramatic decline in the
price of oil -- nearly 50% since the 1996-97 winter -- combined with an
unseasonably warm winter, resulted in disappointing returns for many of the
Fund's energy-related holdings. We continue to believe the energy sector will
add value over time, particularly in tempering overall portfolio risk. The
Fund's underperformance can also be attributed to an underweighting in utilities
in the fourth quarter of 1997 relative to the Russell 1000 Value Index, and a
significant underweighting in "growth" stocks such as pharmaceuticals, which
were among the strongest performers in the fourth quarter.
We would like to outperform our benchmarks during every reporting period, as we
did during the Fund's 1997 fiscal year, when we beat both indices. However, we
are more interested in outperforming over the long term. The Fund has a good
record in this area, as it has outperformed the majority of its peers for the
three years ended March 31, 1998, with an annualized return of 30.56%, versus
27.03% for the 529 growth funds tracked by Lipper Analytical Services for the
same period.
Q: What worked well during the period?
A: A large exposure to financial stocks -- 26% of assets at the end of March --
continued to provide strong returns for the Fund. Consolidation among regional
banks has led to greater operating efficiencies and higher stock prices for
holdings such as BankBoston, BankAmerica, and NationsBank. Rising markets and
strong investor interest also benefited financial companies such as J.P. Morgan
and Travelers Group.
Q: The Fund's exposure to communications and utilities companies increased
during the period. What did you find attractive about these sectors?
A: First, we'd like to stress that additions to the Fund typically are made on a
stock-by-stock basis. We use a quantitative model plus input from our staff of
research analysts to select stocks based on relative valuation, fundamental
research, and portfolio risk considerations. If a sector constitutes a greater
weighting in the portfolio, it's usually because we identified several
attractive stocks within that sector. However, sometimes we make decisions based
on portfolio risk considerations that involve entire sectors.
6 - Scudder Large Company Value Fund
<PAGE>
In the case of communications and utilities companies, we increased the
portfolio's exposure in these areas because we believed the mix of interest rate
sensitive stocks was leaning too heavily toward financials. Of the interest rate
sensitive group, financial stocks are currently the most expensive and the most
dependent on the favorable environment resulting from rising bond prices over
the past three years. A flight to quality from Asian markets, combined with a
noninflationary growth picture in the United States, fueled a dramatic rise in
U.S. bond prices during the period. So great was the demand for
dollar-denominated bonds that by January, the yield of the benchmark 30-year
U.S. Treasury bond had declined to a three-decade low of 5.69%. By the end of
March, we believed the likelihood of a bond market correction was greater than
the prospects for further declines in interest rates. Also, given their
prolonged rise, financial stocks have become more vulnerable from a valuation
standpoint. By emphasizing more defensive issues such as utilities in the
interest rate sensitive segment, we believe the Fund is better positioned to
weather a possible correction in the financial sector.
Q: What were some of the recent purchases within the communications and
utilities sectors?
A: In communications, we added to existing holdings such as Bell Atlantic,
BellSouth, and AT&T. These stocks and others in the sector have been driven into
"value" territory as a result of increased competition within the communications
market. Industry deregulation has enabled competitive local exchange carriers,
for example, to use wireless and fiber-optic technologies to compete with local
phone companies.
In the utilities sector, we increased existing holdings in American Electric
Power, Duke Energy, PG&E, and Pacific Enterprises, and also added two new
stocks: CINergy Corp. and Wisconsin Energy. The regulation of electric utilities
changed significantly a couple of years ago, allowing competing utilities to
enter a market and use existing physical networks to deliver power to homes and
businesses for the first time. Investors felt the competition would reduce
profitability throughout the industry and sold stocks indiscriminately. Many
companies had their debt downgraded during this time. As it turns out,
competition has not been as quick -- nor as detrimental -- as investors thought.
However, the threat of increased competition prompted major operators to attempt
to consolidate their control over the generation, transmission, and distribution
of electric power. Improving management strategies and further consolidation in
the utility industry should lead to higher stock prices in the future.
Q: What other changes were made to the portfolio during the period?
A: The Fund's investment in HMOs increased with the purchase of United
Healthcare Corp. The company owns comprehensive managed care services such as
HMOs, and provides unbundled health care management and cost-containment
services. United Healthcare has become more visibly shareholder friendly, with
restructuring, cost-cutting, and share repurchase efforts underway. After
languishing in 1997, its stock gained more than 40% in the first quarter of
1998.
7 - Scudder Large Company Value Fund
<PAGE>
Q: What is your outlook?
A: We believe the next big move for value investors is into cyclical stocks. The
question is when. The Asian financial crisis has increased the vulnerability of
companies reporting earnings that fail to meet expectations. And while it is
tempting to invest in stocks that have been tarred with the Asian brush, at the
time of this writing we are still avoiding industries where incremental supply
and demand is determined in Asia. Meanwhile, the overall U.S. market keeps
setting records. In the coming months we intend to stick with our disciplined
investment strategy as a way to unearth stocks of large companies that have
temporarily stumbled but seem to offer the potential for attractive long-term
gains.
8 - Scudder Large Company Value Fund
<PAGE>
Glossary of Investment Terms
FUNDAMENTAL RESEARCH Analysis of companies based on the projected
impact of management, products, sales, and
earnings on balance sheets and income
statements. Distinct from technical analysis,
which evaluates the attractiveness of a stock
based on historical price and trading volume
movements, rather than the financial results
of the underlying company.
CYCLICAL STOCKS Stocks of companies whose earnings fluctuate
with the business cycle. Cyclical industries
include steel, cement, paper, machinery, and
autos.
GROWTH STOCK Stock of a company that has displayed greater
than average earnings growth and is expected
to continue to increase profits rapidly going
forward. Stocks of such companies usually
trade at a higher price relative to earnings
(higher p/e) and exhibit greater price
volatility.
MARKET CAPITALIZATION The value of a company's outstanding shares
of common stock, determined by multiplying
the number of shares outstanding by the share
price (Shares x Price = Market
Capitalization). The universe of publicly
traded companies is frequently divided into
large-, mid-, and small-capitalizations.
OVER/UNDER WEIGHTING Refers to the allocation of assets -- usually
by sector, industry, or country -- within a
portfolio relative to the benchmark index
(i.e., the Russell 1000 Value Index), or an
investment universe.
PRICE/EARNINGS RATIO (P/E) A widely used gauge of a stock's valuation
(also "earnings multiple") that indicates what investors are paying for
a company's earnings on a per-share basis.
Typically based on a company's projected
earnings for the next 12 months, a higher
"earnings multiple" indicates a
higher-than-expected growth rate and the
potential for greater price fluctuations.
VALUE STOCK A company whose stock price does not fully
reflect its intrinsic value, as indicated by
price/earnings ratio, price/book value ratio,
dividend yield, or some other valuation
measure, relative to its industry or the
market overall. Value stocks tend to display
less price volatility and may carry higher
dividend yields.
(Sources: Scudder Kemper Investments Inc.; Barron's Dictionary of Finance and
Investment Terms)
9 - Scudder Large Company Value Fund
<PAGE>
Investment Portfolio as of March 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements 1.9%
- ------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 3/31/98 at 5.85%,
to be repurchased at $45,627,413 on 4/1/98, collateralized by a $44,593,000 -------------
U.S. Treasury Bill, 6%, 10/15/99 (Cost $45,620,000) .................................. 45,620,000 45,620,000
-------------
Shares
- ------------------------------------------------------------------------------------------------------------------------------
Common Stocks 98.1%
- ------------------------------------------------------------------------------------------------------------------------------
Consumer Discretionary 3.5%
Department & Chain Stores 2.7%
Costco Companies, Inc. ................................................................. 601,200 32,089,050
Dayton Hudson Corp. .................................................................... 385,500 33,924,000
-------------
66,013,050
-------------
Hotels & Casinos 0.8%
Circus Circus Enterprises Inc. ......................................................... 994,900 20,892,900
-------------
Consumer Staples 9.5%
Alcohol & Tobacco 2.7%
Philip Morris Companies, Inc. .......................................................... 1,157,400 48,249,113
Universal Corp. ........................................................................ 418,800 18,453,375
-------------
66,702,488
-------------
Consumer Electronic & Photographic Products 1.8%
Whirlpool Corp. ........................................................................ 658,800 45,168,975
-------------
Food & Beverage 3.5%
H.J. Heinz Co. ......................................................................... 593,300 34,633,888
Unilever NV (New York shares) .......................................................... 745,100 51,132,488
-------------
85,766,376
-------------
Textiles 1.5%
VF Corporation ......................................................................... 705,000 37,056,563
-------------
Health 6.3%
Health Industry Services 1.9%
Humana Inc. ............................................................................ 1,195,600 29,665,825
United Healthcare Corp. ................................................................ 275,400 17,832,150
-------------
47,497,975
-------------
Hospital Management 1.9%
Tenet Healthcare Corp. ................................................................. 1,311,000 47,605,688
-------------
Medical Supply & Specialty 0.4%
St. Jude Medical, Inc. ................................................................. 312,000 10,432,500
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 - Scudder Large Company Value Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Pharmaceuticals 2.1%
American Home Products Corp. ........................................................... 368,300 35,126,612
Bristol-Myers Squibb Co. ............................................................... 150,900 15,740,756
-------------
50,867,368
-------------
Communications 8.2%
Telephone/Communications
AT&T. .................................................................................. 941,700 61,799,062
Bell Atlantic Corp. .................................................................... 623,000 63,857,500
BellSouth Corp. ........................................................................ 609,500 41,179,344
GTE Corp. .............................................................................. 597,100 35,751,363
-------------
202,587,269
-------------
Financial 25.3%
Banks 13.7%
Banc One Corp. ......................................................................... 434,390 27,475,167
BankAmerica Corp. ...................................................................... 729,700 60,291,462
BankBoston Corp. ....................................................................... 443,500 48,895,875
Chase Manhattan Corp. .................................................................. 545,000 73,506,875
First Chicago NBD Corp. ................................................................ 220,200 19,405,125
First Union Corp. ...................................................................... 358,000 20,316,500
J.P. Morgan & Co., Inc. ................................................................ 187,400 25,170,163
KeyCorp ................................................................................ 913,800 34,553,063
NationsBank Corp. ...................................................................... 385,900 28,146,581
-------------
337,760,811
-------------
Insurance 6.1%
Allstate Corp. ......................................................................... 518,600 47,678,787
Chubb Corp. ............................................................................ 235,000 18,418,125
Cigna Corp. ............................................................................ 125,500 25,727,500
EXEL Ltd. (ADR) ........................................................................ 346,100 26,822,750
General Re Corp. ....................................................................... 142,700 31,483,188
-------------
150,130,350
-------------
Other Financial Companies 5.5%
American Express Corp. ................................................................. 487,000 44,712,687
Federal National Mortgage Association .................................................. 396,700 25,091,275
Travelers Group, Inc. .................................................................. 1,074,699 64,481,940
-------------
134,285,902
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 - Scudder Large Company Value Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Media 1.4%
Advertising 0.7%
WPP Group PLC (ADR) .................................................................... 276,100 16,013,800
-------------
Broadcasting & Entertainment 0.7%
Viacom Inc. "B" ........................................................................ 329,700 17,721,375
-------------
Cable Television 0.0%
Tele-Communications Inc. "A"* .......................................................... 10,773 334,973
-------------
Service Industries 2.1%
Environmental Services 0.9%
Browning Ferris Industries ............................................................. 691,500 22,560,187
-------------
Investment 1.2%
Merrill Lynch & Co., Inc. .............................................................. 348,800 28,950,400
-------------
Durables 6.4%
Aerospace 1.1%
United Technologies Corp. .............................................................. 286,900 26,484,456
-------------
Automobiles 3.4%
Eaton Corp. ............................................................................ 437,100 41,606,456
Ford Motor Co. ......................................................................... 491,600 31,861,825
General Motors Corp. ................................................................... 162,300 10,945,106
-------------
84,413,387
-------------
Leasing Companies 0.1%
Ryder System, Inc. ..................................................................... 59,300 2,253,400
-------------
Tires 1.8%
Goodyear Tire & Rubber Co. ............................................................. 581,500 44,048,625
-------------
Manufacturing 6.5%
Chemicals 1.9%
Dow Chemical Co. ....................................................................... 344,100 33,463,725
E.I. du Pont de Nemours & Co. .......................................................... 185,000 12,580,000
-------------
46,043,725
-------------
Containers & Paper 0.8%
Sonoco Products Co. .................................................................... 497,800 19,943,113
-------------
Diversified Manufacturing 2.0%
Textron, Inc. .......................................................................... 661,000 50,897,000
-------------
Hand Tools 0.5%
Black & Decker Corp. ................................................................... 224,000 11,886,000
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 - Scudder Large Company Value Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Specialty Chemicals 1.3%
Witco Corp. ............................................................................ 786,700 30,976,313
-------------
Technology 5.8%
Diverse Electronic Products 1.8%
Harris Corp. ........................................................................... 842,200 43,899,675
-------------
EDP Peripherals 0.7%
Seagate Technology, Inc. ............................................................... 713,900 18,025,975
-------------
Electronic Components/Distributors 0.4%
Arrow Electronics, Inc.* ............................................................... 399,900 10,822,294
-------------
Electronic Data Processing 2.4%
International Business Machines Corp. .................................................. 567,800 58,980,225
-------------
Military Electronics 0.5%
General Dynamics Corp. ................................................................. 125,600 10,817,300
-------------
Energy 9.7%
Oil & Gas Production 2.4%
Coastal Corp. .......................................................................... 523,400 34,086,425
Royal Dutch Petroleum Co. .............................................................. 140,000 7,923,451
Royal Dutch Petroleum Co. (New York shares) ............................................ 284,800 16,180,200
-------------
58,190,076
-------------
Oil Companies 7.3%
Atlantic Richfield Co. ................................................................. 311,700 24,507,412
British Petroleum PLC (ADR) ............................................................ 187,800 16,162,537
Chevron Corp. .......................................................................... 168,800 13,556,750
Exxon Corp. ............................................................................ 799,400 54,059,425
Mobil Corp. ............................................................................ 453,200 34,726,450
Texaco Inc. ............................................................................ 639,800 38,547,950
-------------
181,560,524
-------------
Metals & Minerals 0.2%
Steel & Metals
Freeport McMoRan Copper & Gold, Inc. "A" ............................................... 248,600 4,645,712
-------------
Construction 3.2%
Building Materials 0.5%
Vulcan Materials Co. ................................................................... 117,800 12,899,100
-------------
Building Products 1.1%
Armstrong World Industries, Inc. ....................................................... 314,700 27,241,219
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 - Scudder Large Company Value Fund
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Forest Products 1.6%
Weyerhaeuser Co. ....................................................................... 660,400 37,312,600
-------------
Transportation 2.5%
Railroads 1.7%
CSX Corp. .............................................................................. 282,700 16,820,650
Canadian National Railway .............................................................. 380,700 24,486,332
-------------
41,306,982
-------------
Trucking 0.8%
CNF Transportation, Inc. ............................................................... 542,900 19,510,469
-------------
Utilities 7.5%
Electric Utilities 6.5%
American Electric Power Co. ............................................................ 480,100 24,125,025
CINergy Corp. .......................................................................... 433,600 16,043,200
Duke Energy Corp. ...................................................................... 684,500 40,770,531
FPL Group, Inc. ........................................................................ 470,100 30,203,925
Pacific Gas & Electric Corp. ........................................................... 1,057,700 34,904,100
Wisconsin Energy Corp. ................................................................. 470,300 14,432,331
-------------
160,479,112
-------------
Natural Gas Distribution 1.0%
Pacific Enterprises .................................................................... 586,600 23,940,613
- ------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $1,566,862,754) 2,414,926,845
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $1,612,482,754) (a) 2,460,546,845
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
(a) The cost for federal income tax purposes was $1,612,535,169. At March 31,
1998, net unrealized appreciation for all securities based on tax cost was
$848,011,676. This consisted of aggregate gross unrealized appreciation
for all securities in which there was an excess of market value over tax
cost of $853,061,561 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$5,049,885.
The accompanying notes are an integral part of the financial statements.
14 - Scudder Large Company Value Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of March 31, 1998 (Unaudited)
<TABLE>
<S> <C>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
Investments, at market (identified cost $1,612,482,754) ............. $2,460,546,845
Cash ................................................................ 169
Dividends and interest receivable ................................... 3,236,183
Receivable on Fund shares sold ...................................... 1,617,887
Receivable on foreign taxes recoverable ............................. 12,397
Other assets ........................................................ 28,164
----------------
Total assets ........................................................ 2,465,441,645
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased ................................... 9,569,614
Payable for Fund shares redeemed .................................... 2,934,651
Accrued management fee .............................................. 1,310,043
Other payables and accrued expenses ................................. 538,448
----------------
Total liabilities ................................................... 14,352,756
--------------------------------------------------------------------------------------------
Net assets, at market value $2,451,088,889
--------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Undistributed net investment income ................................. 17,890,121
Unrealized appreciation on investments .............................. 848,064,091
Accumulated net realized gain ....................................... 71,539,897
Paid-in capital ..................................................... 1,513,594,780
--------------------------------------------------------------------------------------------
Net assets, at market value $2,451,088,889
--------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($2,451,088,889 / 81,766,060 outstanding shares of beneficial ----------------
interest, $.01 par value, unlimited number of shares authorized) . $29.98
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 - Scudder Large Company Value Fund
<PAGE>
Statement of Operations
six months ended March 31, 1998 (Unaudited)
<TABLE>
<S> <C>
Investment Income
- ------------------------------------------------------------------------------------------------------------------------------
Income:
Dividends (net of foreign taxes withheld of $109,709) ............... $ 22,477,588
Interest ............................................................ 966,685
-----------------
23,444,273
Expenses:
Management fee ...................................................... 7,094,365
Services to shareholders ............................................ 2,298,884
Trustees' fees and expenses ......................................... 22,199
Custodian and accounting fees ....................................... 139,783
Reports to shareholders ............................................. 146,853
Auditing ............................................................ 23,001
Legal ............................................................... 17,442
Registration fees ................................................... 98,784
Other ............................................................... 24,800
-----------------
9,866,111
---------------------------------------------------------------------------------------------
Net investment income 13,578,162
---------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments ......................................................... 102,805,066
-----------------
Net unrealized appreciation (depreciation) during the period on:
Investments ......................................................... 135,662,837
---------------------------------------------------------------------------------------------
Net gain on investment transactions 238,467,903
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 252,046,065
---------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 - Scudder Large Company Value Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months
Ended Year
March 31, Ended
1998 September 30,
Increase (Decrease) in Net Assets (Unaudited) 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ................................... $ 13,578,162 $ 28,697,289
Net realized gain from investment transactions .......... 102,805,066 134,428,197
Net unrealized appreciation on investment transactions
during the period .................................... 135,662,837 519,790,788
---------------- -----------------
Net increase in net assets resulting from operations .... 252,046,065 682,916,274
---------------- -----------------
Distributions to shareholders from:
Net investment income ................................... (18,248,388) (11,553,936)
---------------- -----------------
Net realized gains on investment transactions ........... (141,425,012) (179,180,946)
---------------- -----------------
Fund share transactions:
Proceeds from shares sold ............................... 215,441,851 255,862,093
Net asset value of shares issued to shareholders in
reinvestment of distributions ........................ 152,377,727 182,941,443
Cost of shares redeemed ................................. (221,836,492) (369,711,587)
---------------- -----------------
Net increase in net assets from Fund share transactions . 145,983,086 69,091,949
---------------- -----------------
Increase in net assets .................................. 238,355,751 561,273,341
Net assets at beginning of period ....................... 2,212,733,138 1,651,459,797
Net assets at end of period (including undistributed
net investment income of $17,890,121 and ---------------- -----------------
$22,560,347, respectively) ........................... $2,451,088,889 $2,212,733,138
---------------- -----------------
Other Information
- -------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period ............... 76,343,193 72,934,700
---------------- -----------------
Shares sold ............................................. 7,585,016 10,356,988
Shares issued to shareholders in reinvestment of
distributions ........................................ 5,700,626 8,148,839
Shares redeemed ......................................... (7,862,775) (15,097,334)
---------------- -----------------
Net increase in Fund shares ............................. 5,422,867 3,408,493
---------------- -----------------
Shares outstanding at end of period ..................... 81,766,060 76,343,193
---------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17 - Scudder Large Company Value Fund
<PAGE>
Financial Highlights
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
Six Months
Ended
March 31,
1998(a) Years Ended September 30,
(Unaudited) 1997(a)+ 1996 1995 1994 1993(c) 1992 1991 1990 1989 1988
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning -------------------------------------------------------------------------------------------------------
of period ............... $28.98 $22.64 $22.92 $19.54 $23.06 $19.12 $19.30 $14.77 $22.30 $16.10 $20.41
-------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income
(loss) .................. .17 .38 .36 .13 (.02) .06 .12 .20 .30(b) .21 .09
Net realized and
unrealized gain
(loss) on investment
transactions ............ 2.93 8.60 2.94 3.98 (.88) 5.23 .90 6.05 (6.22) 6.61 (1.82)
Total from investment -------------------------------------------------------------------------------------------------------
operations .............. 3.10 8.98 3.30 4.11 (.90) 5.29 1.02 6.25 (5.92) 6.82 (1.73)
-------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income ...... (.24) (.16) (.08) -- -- (.10) (.22) (.37) (.16) (.07) (.20)
Net realized gains on
investment transactions . (1.86) (2.48) (3.50) (.73) (2.62) (1.25) (.98) (1.35) (1.45) (.55) (2.38)
-------------------------------------------------------------------------------------------------------
Total distributions ........ (2.10) (2.64) (3.58) (.73) (2.62) (1.35) (1.20) (1.72) (1.61) (.62) (2.58)
-------------------------------------------------------------------------------------------------------
Net asset value, end of -------------------------------------------------------------------------------------------------------
period .................. $29.98 $28.98 $22.64 $22.92 $19.54 $23.06 $19.12 $19.30 $14.77 $22.30 $16.10
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return (%) ........... 11.58** 43.06 15.94 21.96 (4.72) 28.83 5.61 45.85 (28.20) 44.05 (5.61)
Ratios and Supplemental Data
Net assets, end of period
($ millions) ............ 2,451 2,213 1,651 1,492 1,338 1,387 1,054 1,058 712 1,013 491
Ratio of operating
expenses to
average daily net
assets (%) .............. .90* .93 .92 .98 .97 .96 .98 1.04 .94 .88 .95
Ratio of net investment
income (loss) to average
daily net assets (%) .... 1.24* 1.51 1.62 .62 (.12) .22 .57 1.24 1.56 1.22 .63
Portfolio turnover rate (%) 40.21* 43.02 150.7 153.6 75.8 92.2 92.4 93.2 87.9 55.7 48.5
Average commission rate
paid (d) ................ $.0578 $.0562 $.0533 $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) Net investment income per share includes nonrecurring dividend income
amounting to $.14 per share.
(c) Effective October 1, 1992, the Fund discontinued using equalization
accounting.
(d) Average commission rate paid per share of common and preferred stocks is
calculated for fiscal years ending on or after September 30, 1996.
+ On February 1, 1997, the Fund adopted its current name. Prior to that
date, the Fund was known as the Scudder Capital Growth Fund.
* Annualized
** Not annualized
18 - Scudder Large Company Value Fund
<PAGE>
Notes to Financial Statements (Unaudited)
A. Significant Accounting Policies
Scudder Large Company Value Fund (formerly 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 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 most recent 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 other than money market securities 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. Money market
instruments purchased with an original maturity of sixty days or less are valued
at amortized cost. All other securities are valued at their fair value as
determined in good faith by the Valuation Committee of the Board of Directors.
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, is equal to at least 100.5% of the repurchase price.
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code of 1986, as amended, which are applicable to regulated
investment companies and to distribute all of its taxable income to its
shareholders. Accordingly, 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 the deferral of certain losses for tax purposes. As a
result, net investment income (loss) and net realized gain (loss) on investment
19 - Scudder Large Company Value Fund
<PAGE>
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.
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, 1998, purchases and sales of investment
securities (excluding short-term investments) aggregated $443,730,664 and
$445,020,102, respectively.
C. Related Parties
Effective December 31, 1997, Scudder, Stevens & Clark, Inc. ("Scudder") and The
Zurich Insurance Company ("Zurich"), an international insurance and financial
services organization, formed a new global investment organization by combining
Scudder's business with that of Zurich's subsidiary, Zurich Kemper Investments,
Inc. As a result of the transaction, Scudder changed its name to Scudder Kemper
Investments, Inc. ("Scudder Kemper" or the "Adviser"). The transaction between
Scudder and Zurich resulted in the termination of the Fund's Investment
Management Agreement with Scudder. However, a new Investment Management
Agreement (the "Management Agreement") between the Fund and Scudder Kemper was
approved by the Fund's Board of Trustees and by the Fund's Shareholders. The
Management Agreement, which is effective December 31, 1997, is the same in all
material respects as the corresponding previous Investment Management Agreement,
except that Scudder Kemper is the new investment adviser to the Fund.
Under the Management Agreement with Scudder Kemper, the Fund has agreed 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, 0.60% of the next $500,000,000 of such net assets and 0.55% of such
net assets in excess of $1,500,000,000, 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 Management Agreement. For the six
months ended March 31, 1998, the fees pursuant to these agreements amounted to
$7,094,365 which was equivalent to an annual effective rate of .65% of the
Fund's average daily net assets.
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 $1,257,264 charged to the Fund by SSC for the six
months ended March 31, 1998, of which $212,682 is unpaid at March 31, 1998.
20 - Scudder Large Company Value Fund
<PAGE>
Scudder Trust Company ("STC"), a subsidiary of the Adviser, provides
recordkeeping and other services in connection with certain retirement and
employee benefit plans invested in the Fund. For the six months ended March 31,
1998, the amount charged to the Fund by STC aggregated $884,854, of which
$153,157 is unpaid at March 31, 1998.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records of the Fund. For the six months
ended March 31, 1998, the amount charged to the Fund by SFAC aggregated $85,670,
of which $14,745 is unpaid at March 31, 1998.
The Fund is one of several Scudder Funds (the "Underlying Funds") in which the
Scudder Pathway Series Portfolios (the "Portfolios") invest. In accordance with
the Special Servicing Agreement entered into by the Adviser, the Portfolios, the
Underlying Funds, SSC, SFAC, STC, and Scudder Investor Services, Inc., expenses
from the operation of the Portfolios are borne by the Underlying Funds based on
each Underlying Fund's proportionate share of assets owned by the Portfolios. No
Underlying Funds will be charged expenses that exceed the estimated savings to
each respective Underlying Fund. These estimated savings result from the
elimination of separate shareholder accounts which either currently are or have
potential to be invested in the Underlying Funds. At March 31, 1998, the Special
Servicing Agreement expense charged to the Fund amounted to $3,734.
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, 1998, Trustees' fees and expenses aggregated
$22,199.
21 - Scudder Large Company Value Fund
<PAGE>
Shareholder Meeting Results
A Special Meeting of Shareholders (the "Meeting") of Scudder Large Company Value
Fund (the "Fund") was held on October 27, 1997, at the office of Scudder Kemper
Investments, Inc. (formerly Scudder, Stevens & Clark, Inc.), 345 Park Avenue (at
51st Street), New York, New York 10154. At the Meeting, as adjourned and
reconvened, the following matters were voted upon by the shareholders (the
resulting votes for each matter are presented below). With regard to certain
proposals, it was recommended that the Meeting be reconvened in order to provide
shareholders with an additional opportunity to return their proxies. The date of
the reconvened meeting at which the matters were decided is noted after the
proposed matter.
1. To elect Trustees.
Number of Votes:
----------------
Trustee For Withheld
------- --- --------
Paul Bancroft III 38,085,081 1,786,033
Sheryle J. Bolton 38,105,435 1,765,679
William T. Burgin 38,107,768 1,763,345
Thomas J. Devine 38,067,804 1,803,309
Keith R. Fox 38,119,861 1,751,253
William H. Luers 38,075,827 1,795,287
Wilson Nolen 38,066,239 1,804,874
Daniel Pierce 38,083,758 1,787,356
Kathryn L. Quirk 38,038,271 1,832,842
2. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
37,089,819 1,627,272 1,154,022 0
3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise. (Approved on December 2, 1997.)
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
45,797,505 3,595,547 2,212,122 59,837
22 - Scudder Large Company Value Fund
<PAGE>
4. To approve certain amendments to the Declaration of Trust. Sufficient
proxies had not been received by December 2, 1997 to approve the
amendments to the Declaration of Trust. Management has determined not to
continue to seek shareholder approval for this item.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
46,189,325 3,144,356 2,331,331 0
5. To approve the revision of certain fundamental investment policies.
<TABLE>
<CAPTION>
Number of Votes:
----------------
Broker
Fundamental Policies For Against Abstain Non-Votes*
-------------------- --- ------- ------- ----------
<S> <C> <C> <C> <C>
5.1 Diversification 34,005,343 2,454,013 1,960,455 1,451,302
5.2 Borrowing 33,835,774 2,622,719 1,961,318 1,451,302
5.3 Senior securities 33,982,067 2,478,081 1,959,663 1,451,302
5.4 Concentration 33,968,745 2,492,434 1,958,632 1,451,302
5.5 Underwriting of securities 34,002,167 2,454,125 1,963,520 1,451,302
5.6 Investment in real estate 33,982,290 2,222,307 2,215,214 1,451,302
5.7 Purchase of physical commodities 33,949,335 2,253,051 2,217,425 1,451,302
5.8 Lending 33,988,413 2,219,997 2,211,401 1,451,302
</TABLE>
6. To ratify the selection of Coopers & Lybrand L.L.P. as the Fund's independent
accountants.
Number of Votes:
----------------
For Against Abstain
--- ------- -------
37,758,458 721,353 1,391,302
* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary power
to vote on a particular matter.
23 - Scudder Large Company Value Fund
<PAGE>
Officers and Trustees
Daniel Pierce*
President and Trustee
Paul Bancroft III
Trustee; Venture Capitalist and
Consultant
Sheryle J. Bolton
Trustee; Chief Executive Officer,
Scientific Learning Corporation
William T. Burgin
Trustee; General Partner, Bessemer
Venture Partners
Thomas J. Devine
Trustee; Consultant
Keith R. Fox
Trustee; President, Exeter Capital
Management Corporation
William H. Luers
Trustee; President, The
Metropolitan Museum of Art
Wilson Nolen
Trustee; Consultant
Kathryn L. Quirk*
Trustee, Vice President and
Assistant Secretary
Robert W. Lear
Honorary Trustee;
Executive-in-Residence, Visiting
Professor, Columbia University
Graduate School of Business
Robert G. Stone, Jr.
Honorary Trustee; Chairman
Emeritus 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
Treasurer
John R. Hebble*
Assistant Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
24 - Scudder Large Company Value Fund
<PAGE>
Investment Products and Services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series --
Premium Shares*
Managed Shares*
Scudder Government Money Market Series --
Managed Shares*
Tax Free Money Market+
- ----------------------
Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series--
Managed Shares*
Scudder California Tax Free Money Fund**
Scudder New York Tax Free Money Fund**
Tax Free+
- ---------
Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund**
Scudder Massachusetts Limited Term Tax Free Fund**
Scudder Massachusetts Tax Free Fund**
Scudder New York Tax Free Fund**
Scudder Ohio Tax Free Fund**
Scudder Pennsylvania Tax Free Fund**
U.S. Income
- -----------
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder High Yield Bond Fund
Global Income
- -------------
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
Asset Allocation
- ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
U.S. Growth and Income
- ----------------------
Scudder Balanced Fund
Scudder Growth and Income Fund
Scudder S&P 500 Index Fund
Scudder Real Estate Investment Fund
U.S. Growth
- -----------
Value
Scudder Large Company Value Fund
Scudder Value Fund***
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund***
Scudder Large Company Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Growth
- -------------
Worldwide
Scudder Global Fund
Scudder International Growth and Income Fund
Scudder International Fund
Scudder Global Discovery Fund***
Scudder Emerging Markets Growth Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund, Inc.
Industry Sector Funds
- ---------------------
Choice Series
Scudder Financial Services Fund
Scudder Health Care Fund
Scudder Technology Fund
Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
Retirement Programs
- -------------------
Traditional IRA
Roth IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan**+++ +++
(a variable annuity)
Education Accounts
- ------------------
Education IRA
UGMA/UTMA
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder Global High Income Fund, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder Spain and Portugal Fund, Inc.
For complete information on any of the above Scudder funds, including management
fees and expenses, call or write for a free prospectus. Read it carefully before
you invest or send money. +++Funds within categories are listed in order from
expected least risk to most risk. Certain Scudder funds may not be available for
purchase or exchange. +A portion of the income from the tax-free funds may be
subject to federal, state, and local taxes. *A class of shares of the Fund.
**Not available in all states. ***Only the Scudder Shares of the Fund are part
of the Scudder Family of Funds. +++ +++A no-load variable annuity contract
provided by Charter National Life Insurance Company and its affiliate, offered
by Scudder's insurance agencies, 1-800-225-2470. #These funds, advised by
Scudder Kemper Investments, Inc., are traded on the New York Stock Exchange and,
in some cases, on various other stock exchanges.
25 - Scudder Large Company Value Fund
<PAGE>
Scudder Solutions
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Investment Plan QuickBuy
A convenient investment program in which money is Lets you purchase Scudder fund shares
electronically debited from your bank account monthly to electronically, avoiding potential mailing delays;
regularly purchase fund shares and "dollar cost average" money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from a previously designated bank
fewer when it's higher, which can reduce your average account.
purchase price over time.
Automatic Dividend Transfer Payroll Deduction and Direct Deposit
The most timely, reliable, and convenient way to Have all or part of your paycheck -- even government
purchase shares -- use distributions from one Scudder checks -- invested in up to four Scudder funds at
fund to purchase shares in another, automatically one time.
(accounts with identical registrations or the same
social security or tax identification number).
Dollar cost averaging involves continuous investment in securities regardless of price
fluctuations and does not assure a profit or protect against loss in declining markets.
Investors should consider their ability to continue such a plan through periods of low price
levels.
Around-the-clock electronic account service and information, including some transactions:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- http://funds.scudder.com
1-800-343-2890
Scudder Electronic Account Services: Offering
Personalized account information, the ability to account information and transactions, interactive
exchange or redeem shares, and information on other worksheets, prospectuses and applications for all
Scudder funds and services via touchtone telephone. Scudder funds, plus your current asset allocation,
whenever you need them. Scudder's Site also
provides news about Scudder funds, retirement
planning information, and more.
Retirees and those who depend on investment proceeds for living expenses can enjoy these convenient,
timely, and reliable automated withdrawal programs:
- ------------------------------------------------------------------------------------------------------------------------------
Automatic Withdrawal Plan QuickSell
You designate the bank account, determine the schedule Provides speedy access to your money by
(as frequently as once a month) and amount of the electronically crediting your redemption proceeds
redemptions, and Scudder does the rest. to the bank account you previously designated.
Distributions Direct
Automatically deposits your fund distributions into the
bank account you designate within three business days
after each distribution is paid.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
26 - Scudder Large Company Value Fund
<PAGE>
Mutual Funds and More -- Brokerage and Guidance Services:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Brokerage Services Scudder Portfolio Builder
Offers you access to a world of investments, A free service designed to help suggest ways investors like
including stocks, corporate bonds, Treasuries, plus you can diversify your portfolio among domestic and global,
over 8,000 mutual funds from at least 150 mutual as well as equity, fixed-income, and money market funds,
fund companies. And Scudder Fund Folio(SM) provides using Scudder funds.
investors with access to a marketplace of more than
500 no-load funds from well-known companies--with no Personal Counsel from Scudder(SM)
transaction fees or commissions. Scudder
shareholders can take advantage of a Scudder Developed for investors who prefer the benefits of no-load
Brokerage account already reserved for them, with Scudder funds but want ongoing professional assistance in
no minimum investment. For information about managing a portfolio. Personal Counsel(SM) is a highly
Scudder Brokerage Services, call 1-800-700-0820. customized, fee-based asset management service for
individuals investing $100,000 or more.
Fund Folio funds held less than six months will be charged a fee for redemptions. You can buy
shares directly from the fund itself or its principal underwriter or distributor without
paying this fee. Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061.
Member SIPC.
Personal Counsel From Scudder(SM) and Personal Counsel(SM) are service marks of and represent a
program offered by Scudder Investor Services, Inc., Adviser.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
Additional Information on How to Contact Scudder:
- ------------------------------------------------------------------------------------------------------------------------------
For existing account services and transactions Please address all written correspondence to
Scudder Investor Relations -- 1-800-225-5163 The Scudder Funds
P.O. Box 2291
For establishing 401(k) and 403(b) plans Boston, Massachusetts
Scudder Defined Contribution Services -- 02107-2291
1-800-323-6105
Or Stop by a Scudder Investor Center
For information about The Scudder Funds, including Many shareholders enjoy the personal, one-on-one service of
additional applications and prospectuses, or for the Scudder Investor Centers. Check for an Investor Center near
answers to investment questions you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470 Boca Raton Chicago San Francisco
[email protected] Boston New York
</TABLE>
27 - Scudder Large Company Value Fund
<PAGE>
About the Fund's Adviser
Scudder Kemper Investments, Inc., is one of the largest and most experienced
investment management oganizations worldwide, managing more than $200 billion in
assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts. It is one of the ten largest mutual fund companies in the
U.S.
Scudder Kemper Investments has a rich heritage of innovation, integrity, and
client-focused service. In 1997, Scudder, Stevens & Clark, Inc., founded 79
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Group. As a result, Zurich's subsidiary, Zurich Kemper Investments,
Inc., with 50 years of mutual fund and investment management experience, was
combined with Scudder. Headquartered in New York, Scudder Kemper Investments
offers a full range of investment counsel and asset management capabilities,
based on a combination of proprietary research and disciplined, long-term
investment strategies. With its global investment resources and perspective,
the firm seeks opportunities in markets throughout the world to meet the needs
of investors.
Scudder Kemper Investments, Inc., the global asset management firm, is a member
of the Zurich Group. The Zurich Group is an internationally recognized leader in
financial services, including property/casualty and life insurance, reinsurance,
and asset management.
This information must be preceded or accompanied by a
current prospectus.
Portfolio changes should not be considered recommendations
for action by individual investors.
SCUDDER
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