Shares of Scudder Tax Free Money Fund are not insured or guaranteed by the U.S.
Government. Scudder Tax Free Money Fund seeks to maintain a constant net asset
value of $1.00 per share, but there can be no assurance that the stable net
asset value will be maintained.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
Scudder
Tax Free
Money Fund
Semiannual Report
June 30, 1995
o A money market fund offering opportunities for tax-free income and
stability of principal from high-quality, short-term tax-exempt
securities.
o A pure no-load(TM) fund with no commissions to buy, sell, or exchange
shares.
<PAGE>
SCUDDER TAX FREE MONEY FUND
--------------------------------------------------------------------------------
TABLE OF CONTENTS
3 Letter from the Fund's President
4 Portfolio Management Discussion
Your Fund's portfolio management team
reviews the period's investing
strategies, financial markets, and
economic conditions
8 Investment Portfolio
Itemized list of your Fund's portfolio holdings
13 Financial Statements
16 Financial Highlights
17 Notes to Financial Statements
21 Officers and Trustees
22 Investment Products and Services
23 How to Contact Scudder
2
<PAGE>
LETTER FROM THE FUND'S PRESIDENT
--------------------------------------------------------------------------------
Dear Shareholders,
Stock and bond prices improved dramatically in the first half of this
year as concerns about inflationary economic growth all but disappeared. In
spite of this strong overall market performance, money funds consistently
attracted assets during the past six months as investors, uncertain about the
economic outlook, sought a relatively safe place for their short-term
investments. The total assets of all money funds rose to approximately $697
billion from approximately $619 billion at the end of December -- an increase of
more than 12% according to Money Fund Report, a service of IBC Financial
Publishing. Tax-exempt fund assets, however, grew only about 2%.
Although longer-term interest rates declined through the first half of
1995, short-term rates remained essentially flat, affording money market
investors relatively attractive levels of income. Not until July did the Federal
Reserve, responding to evidence of slowing economic growth, lower short-term
interest rates. If inflation and economic growth remain subdued, the possibility
exists for further short-term rate cuts in the months ahead. Declining rates,
while a welcome change for many businesses and consumers, are likely to
translate into lower yields for money fund investors. On the other hand, money
funds continue to offer rates that are generally more attractive than those
available from bank savings accounts and certificates of deposit, although
mutual funds are not insured or guaranteed by the U.S. government.
In times like these it is important to remember that while their yields
may fluctuate, money funds are designed to provide a relatively safe place for
your short-term investment needs. The Fund seeks to maintain a constant $1.00
share price, although there can be no assurance that this will be the case.
Scudder Tax Free Money Fund also offers the advantage of a federally tax-free
yield, which may translate into a higher yield than comparable taxable
investments, depending on your tax bracket. Please call a Scudder Investor
Relations representative at 1-800-225-2470 if you have any questions about your
Fund. Thank you for choosing Scudder Tax Free Money Fund to help meet your
investment needs.
Sincerely,
/s/David S. Lee
David S. Lee
President,
Scudder Tax Free Money Fund
3
<PAGE>
SCUDDER TAX FREE MONEY FUND
PORTFOLIO MANAGEMENT DISCUSSION
--------------------------------------------------------------------------------
Dear Shareholders,
Since January, investors have witnessed a slowing of the economy and a
decline in interest rates. The stock and bond markets welcomed this news and
produced strong returns. But because of their commitment to a stable share price
and the fact that their yields fluctuate with short-term rates, money funds
typically provide higher returns when interest rates are high.
Scudder Tax Free Money Fund maintained a constant share price of $1.00
throughout the period, as it has since its inception in 1979. The Fund's 7-day
net annualized yield was 3.47% at the close of the six-month period, which was
lower than its 4.14% 7-day net annualized yield six months earlier, but higher
than its 2.02% 7-day net annualized yield one year ago. Fortunately for tax-free
money fund investors, the distributions they receive are tax exempt in most
cases, enabling these funds to provide higher yields than comparable taxable
investments. Please see the chart below for an illustration of the yield you
would have had to earn from a comparable taxable investment to match the yield
of Scudder Tax Free Money Fund.
BAR GRAPH OMITTED
TITLE: Scudder Tax Free Money Fund's 7-Day Net Annualized Yield*
and Corresponding Taxable Equivalent Yields
CHART DATA:
STFMF's 7-Day Net Taxable-Equivalent Yield Taxable-Equivalent Yield
Annualized Yield at 36% Tax Bracket at 39.6% Tax Bracket
---------------- ----------------- --------------------
3.47% 5.42% 5.75%
* as of June 30, 1995
The Fund's total return, which reflects reinvested income distributions
of $0.016 per share, was 1.61% for the six-month period. By comparison, the
average tax-free money market fund produced a total return of 1.67% for the six
months, according to Lipper Analytical Services.
4
<PAGE>
PORTFOLIO MANAGEMENT DISCUSSION
--------------------------------------------------------------------------------
Investment Environment: Annual Peak in Supply
Amidst Falling Interest Rates
As interest rates rose throughout much of 1994, money market investors
were rewarded with relatively high levels of income. However, as economic growth
slowed in 1995, declining interest rates translated into somewhat lower money
market yields. In times such as these, it is important to remember that money
funds are designed to provide a stable share price, making them a relatively
safe place for short-term investment needs. Yields will continue to fluctuate
with prevailing interest rates.
Despite that fact that interest rates declined overall in the first
half of 1995, an unusual opportunity arose for Scudder Tax Free Money Fund
during the period. For eight weeks between mid-April and mid-June, the Fund
benefited from what is known in the mutual fund industry as an "inverted yield
curve." A yield curve illustrates the relationship between yields of securities
with short maturities and those with long maturities. Normally, longer
maturities provide higher yields to reward investors for taking additional risk.
After careful research and monitoring of municipal security prices we decided to
remain invested in shorter-maturity securities during that eight week period,
even though some economic indicators suggested that we extend maturities. And,
during those two months, 1- to 7-day money market securities actually produced
higher yields than securities with longer maturities. Scudder Tax Free Money
Fund investors reaped the benefits of higher yields than would have been
achieved had we extended maturities during those eight weeks.
LINE GRAPH OMITTED
TITLE: Yields of Money Market Securities
as of April 30, 1995
CHART DATA:
Daily 4.90
Weekly 4.75
30-day 4.10
60-day 4.10
6-month 4.10
1-year 4.25
CALLOUT NEXT TO CHART:
Money market securities with shorter maturities actually produced higher yields
than those with longer maturities during part of the semiannual period ended
June 30, 1995.
5
<PAGE>
SCUDDER TAX FREE MONEY FUND
--------------------------------------------------------------------------------
While yields of municipal securities are influenced by movements in
interest rates, supply and demand factors also play an important role. Each
year, the municipal marketplace experiences two distinct cycles. During the
summer, municipalities borrow money to build up their funds for the coming
year's expenses such as teachers' salaries. The supply of municipal securities
increases during this part of the cycle, and to attract investors, issuers
generally boost yields. In January, on the other hand, there is little issuance
of tax-exempt notes, decreasing the overall supply in the marketplace and
causing yields to fall.
This June, the supply of municipal securities was lower than in recent
years. In the past, supply was fueled in large part by refinancing activity as
interest rates fell. Once rates began to rise in 1994 and borrowing costs
increased for new debt, refinancing slowed. These relatively higher rates
existed for most of the past six months as well, accounting for fewer new
issues, and causing higher prices and lower yields in general for municipal
securities, including money market securities.
Portfolio Review
The Fund's basic strategy remained unchanged during the six-month
period. We emphasized credit quality to maintain a stable $1.00 share price and
took advantage of opportunities to provide competitive tax-free yields. In order
to capture higher yields during the period -- especially during the eight weeks
when shorter term securities provided relatively higher yields -- much of the
portfolio was invested in very short-term variable-rate demand notes and
commercial paper. Variable-rate demand notes pay interest at current market
levels and return their entire face value whenever redeemed, which affords the
Fund a great deal of stability.
In particular, the Fund benefited from its holdings of Orange County
Water District commercial paper. During the bankruptcy filing that took the
market by surprise last winter, Scudder Tax Free Money Fund owned no investments
in the Orange County investment pool. Since that time we have avoided direct
investments in the pool, but have carefully researched what we believe are
fundamentally sound opportunities that exist in Orange County. Segregated from
the county's investment pool, the water district commercial paper afforded the
Fund a handsome yield and was backed securely by letters of credit. These
letters of credit, which have become increasingly common in the municipal
6
<PAGE>
PORTFOLIO MANAGEMENT DISCUSSION
--------------------------------------------------------------------------------
market, are guarantees from banks to pay the principal and interest payments of
an issuer should the issuer default. In other words, if the residents of Orange
County failed to pay their water bills and forced the water district to default
on its loan, the bank that issued the letter of credit would resume payments to
shareholders. As always, Scudder's in-house staff of analysts carefully examines
securities such as these before they are purchased by the Fund to help ensure
that your principal is protected. We will continue to carefully research
additional opportunities as they arise.
The Fund's average maturity began the period at 48 days, and steadily
declined to as low as 30 days as interest rates at the short end of the money
market spectrum remained high. During the last month of the period, we began
lengthening the Fund's average maturity in response to the slowing economy and
the likelihood of a Federal Reserve reduction, ending the period at 46 days. The
shorter maturities provided a level of protection early in the period, while the
longer maturities will lock in relatively higher yields if interest rates
continue to fall.
Outlook
If the economy continues to slow and inflation remains under control,
we intend to favor longer-term municipal securities to help provide attractive
yields. The seasonal increase in new municipal issues should afford
opportunities to purchase longer maturities.
As always, our focus will remain on quality as we select short-term
money market investments to maintain Scudder Tax Free Money Fund's stable share
price. Scudder Tax Free Money Fund continues to offer a safe place for your
short-term investment needs and can play an important role in a well-balanced
portfolio of stocks, bonds, and stabilizing short-term investments.
Sincerely,
Your Portfolio Management Team
/s/K. Sue Cote /s/Donald C. Carleton
K. Sue Cote Donald C. Carleton
7
<PAGE>
<TABLE>
SCUDDER TAX FREE MONEY FUND
INVESTMENT PORTFOLIO as of June 30, 1995 (Unaudited)
------------------------------------------------------------------------------------------------------------------
<CAPTION>
Principal Credit Value
Amount ($) Rating (b) (Note A)
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
100.0% MUNICIPAL INVESTMENTS
ALABAMA Alabama State General Obligation, Series 1992,
5.25%, 9/1/95............................................ 4,000,000 AA 4,011,320
ALASKA Alaska Housing Finance Corp. General Mortgage
Revenue, Series 1991-A, Weekly Demand Note,
4.55%, 6/1/26*........................................... 10,000,000 A1+ 10,000,000
ARIZONA Apache County, AZ, Industrial Development Revenue
Tucson Electric Co. Springerville Project,
1985 Series A, Weekly Demand Note,
3.8%, 12/1/20*........................................... 6,500,000 A1+ 6,500,000
Maricopa County, AZ, Industrial Development
Authority, Royal Oaks Sun City Project, Weekly
Demand Note, 4.25%, 9/1/02*.............................. 300,000 MIG1 300,000
Pima County, AZ, Industrial Development Authority,
Tucson Electric Power Co., 1982 Series A, Weekly
Demand Note, 3.85%, 7/1/22*.............................. 7,100,000 MIG1 7,100,000
CALIFORNIA Contra Costa, CA, Transportation Authority,
Sales Tax Revenue , Series A, Weekly Demand Bond,
3.9%, 3/1/09* (c)........................................ 1,000,000 MIG1 1,000,000
Huntington Beach, CA, Multi-Family Housing,
River Meadows Apartments, Series B, Weekly
Demand Bond, 4.875%, 10/1/05*............................ 1,700,000 A1 1,700,000
Lancaster, CA, Willows Project, Green Meadows,
1985 Series A, Weekly Demand Note,
4.625%, 2/1/05* ......................................... 8,650,000 A1 8,650,000
Los Angeles County, CA, Tax and Revenue
Anticipation Note, 4.5%, 7/1/96.......................... 4,000,000 MIG1 4,026,800
Los Angeles County, CA, Tax and Revenue
Anticipation Note, Unified School District,
4.5%, 7/10/95............................................ 2,000,000 SP1+ 2,000,428
Los Angeles County, CA, Tax and Revenue
Anticipation Note, Local Educational Agencies
Pooled, 4.75%, 7/5/96.................................... 2,000,000 SP1+ 2,012,440
Orange County, CA, California Water District Public
Facilities Corp., Tax Exempt Commercial Paper:
4.1%, 8/17/95............................................ 1,000,000 P1 1,000,000
4.25%, 8/24/95........................................... 1,000,000 P1 1,000,000
3.6%, 8/25/95............................................ 3,100,000 P1 3,100,000
Riverside, CA, Multi-Family Housing Revenue:
Countrywood Apartments, 1985 Series D, Weekly
Demand Note, 4.625%, 5/1/05* ............................ 1,000,000 A1 1,000,000
Polk Apartments, Weekly Demand Note,
4.625%, 12/1/05*......................................... 2,000,000 A1 2,000,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
-------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Principal Credit Value ($)
Amount ($) Rating (b) (Note A)
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COLORADO Colorado Student Loan Obligation Bond Authority,
1990 Series C, Weekly Demand Note, 4.3%, 9/1/99*....... 1,500,000 MIG1 1,500,000
DISTRICT OF COLUMBIA District of Columbia, General Obligation,
Refunding Bonds:
Series A-1, Daily Demand Note, 4.4%, 10/1/07*.......... 1,000,000 A1+ 1,000,000
Series A-5, Daily Demand Note, 4.4%, 10/1/07*.......... 3,600,000 A1+ 3,600,000
Series A-6, Daily Demand Note, 4.4%, 10/1/07*.......... 600,000 A1+ 600,000
District of Columbia, Tax and Revenue Anticipation
Notes, 6.25%, 9/30/95.................................. 4,000,000 SP1 4,012,990
FLORIDA Broward County, FL, Housing Finance Authority,
Welleby Apartments Project, Weekly Demand Note,
4.05%, 12/1/06*........................................ 1,000,000 MIG1 1,000,000
Dade County, FL, Water and Sewer System Revenue
Bond, Series 1994, Weekly Demand Note,
4.2%, 10/5/22* (c) .................................... 2,000,000 A1+ 2,000,000
Putnam County, FL, Pollution Control Revenue,
Seminole Electric Cooperative Finance Corp.,
1984 Series H-2, Weekly Demand Note,
4.3%, 3/15/14* ........................................ 2,600,000 A1+ 2,600,000
GEORGIA Burke County, GA, Pollution Control Revenue,
Ogelthorpe Power, Weekly Demand Note,
4.15%, 1/1/19* (c)..................................... 5,500,000 A1+ 5,500,000
DeKalb Private Hospital Authority, Egleston
Children's Hospital at Emory University, 1994
Series B, Weekly Demand Note, 4.05%, 3/1/24* .......... 5,000,000 A1+ 5,000,000
Dekalb County, GA, Wood Brook Project, 1985
Series J, Weekly Demand Note, 4%, 8/1/07*.............. 3,000,000 MIG1 3,000,000
ILLINOIS Illinois Development Finance Authority, Molex Inc.
Project, Series 1985, Weekly Demand Note,
4.15%, 7/1/05* ........................................ 1,000,000 NR 1,000,000
Illinois Educational Facilities Authority, University
Pooled Finance Program, Weekly Demand Note,
4.45%, 12/1/05* (c).................................... 4,810,000 A2 4,810,000
Illinois Health Facilities Authority:
Highland Park Hospital, Revenue Bond, 1991 Series B,
Optional Put, 4%, 10/1/12 (c)........................ 3,000,000 AAA 3,000,000
Rush Presbyterian, St. Luke's Medical Center,
4.1%, 8/11/95........................................ 1,000,000 MIG1 1,000,000
Pekin, IL, Industrial Development Revenue Refunding
Bonds, BOC Group, Series 1992, Weekly
Demand Note, 4.15%, 9/1/12*............................ 5,000,000 NR 5,000,000
Skokie, IL, Fashion Square, Series 1984, Weekly
Demand Note, 4.5%, 12/1/14*............................ 2,000,000 NR 2,000,000
IOWA Iowa School Corporation Warrant Certificates:
1994 Series A, School Cash Anticipation Program,
4.25%, 7/17/95 (c).................................... 1,000,000 SP1+ 1,000,274
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
<TABLE>
SCUDDER TAX FREE MONEY FUND
------------------------------------------------------------------------------------------------------------------
<CAPTION>
Principal Credit Value
Amount ($) Rating (b) (Note A)
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Iowa School Cash Anticipation Program , Series A,
4.75%, 6/28/96............................................ 2,000,000 SP1+ 2,017,178
KENTUCKY Kentucky Development Finance Authority, Healthcare
System, Appalachian Regional Healthcare,
Series 1991, Weekly Demand Note, 4.1%, 9/1/06*.............. 1,300,000 MIG1 1,300,000
LOUISIANA Louisiana Public Facilities Authority, Sisters
of Charity, Series 1985, 4.15%, 8/15/95..................... 2,000,000 MIG1 2,000,000
Louisiana Recovery District, Sales Tax Revenue
Bonds, Series 1988, Daily Demand Notes,
4.35%, 7/1/97* (c).......................................... 2,000,000 A1+ 2,000,000
MARYLAND Ann Arundel County, MD, Maryland Port Facilities
Revenue, Baltimore Gas and Electric, Tax Exempt
Commercial Paper, 4.2%, 9/12/95............................. 2,120,000 A1 2,120,000
MASSACHUSETTS Massachusetts General Obligation, Dedicated
Income Tax, Series B, Daily Demand Note,
4.2%, 12/1/97* ............................................. 2,800,000 A1+ 2,800,000
Massachusetts, Consolidated Loan, General
Obligation, 1994 Series C, Fixed Rate Note,
5.5%, 11/1/95............................................... 2,000,000 A1 2,005,175
MINNESOTA Cottage Grove, MN, Minnesota Mining and
Manufacturing, Series 1982, Weekly Demand Note,
4.59%, 8/1/12* ............................................. 1,100,000 AAA 1,100,000
MISSOURI Missouri State Environmental, Improvement and
Energy Resource Authority, Union Electric Company,
1984 Series A, Optional Put, 4%, 6/1/14..................... 2,000,000 A1+ 2,000,000
Missouri State Health and Educational Facilities
Authority, Health Facilities Revenue, Sisters of
Mercy, Weekly Demand Note, 4%, 6/1/19*...................... 3,000,000 MIG1 3,000,000
St. Charles County, MO, Industrial Development
Authority, Multi-Family Housing, Sun River
Apartments, Weekly Demand Note, 3.8%, 12/1/07* ............. 3,200,000 MIG1 3,200,000
NEW JERSEY Salem County, NJ, Industrial Pollution Control
Authority, E.I. du Pont de Nemours and Co.,
Floating Rate Demand Note, 4%, 3/1/12*...................... 11,400,000 P1 11,400,000
NEW YORK New York City, NY, General Obligation,
Series 1994 H-3, Tax Exempt Commercial Paper:
4%, 9/20/95 (c)........................................... 2,000,000 MIG1 2,000,000
4%, 9/22/95............................................... 6,000,000 MIG1 6,000,000
NORTH DAKOTA Mercer County, ND, Pollution Control Revenue,
Cooperative Finance Corp., United Power,
Weekly Demand Note, 4.3%, 8/15/14*.......................... 3,150,000 A1+ 3,150,000
OHIO Hamilton County, OH, Economic Development
Revenue, Cincinnati Performing Arts Center,
Series 1995, Weekly Demand Note, 4.1%, 6/15/05*............. 1,000,000 NR 1,000,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
------------------------------------------------------------------------------------------------------------------
<CAPTION>
Principal Credit Value ($)
Amount ($) Rating (b) (Note A)
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
North Olmstead, OH, General Obligation,
Tax Anticipation Note:
4.55%, 7/20/95............................................ 2,000,000 NR 2,000,354
Series A, 4.67%, 6/20/96.................................. 4,000,000 NR 4,015,604
Stark County, OH, Sewer District Improvement Note,
1995 Series 1, 5%, 4/3/96 .................................. 1,000,000 NR 1,002,895
PENNSYLVANIA Allegheny County, PA, Industrial Development
Authority, Lenmar Realty Project, Weekly Demand
Note, 4.1%, 1/1/98*......................................... 750,000 MIG1 750,000
Bucks County, PA, Oxford Falls Plaza, Series 1984,
Weekly Demand Note, 4.75%, 10/1/14*......................... 9,000,000 MIG1 9,000,000
Elk County, PA, Industrial Development Authority,
Stackpole Corporation, Series 1989, Weekly
Demand Note, 4.48%, 3/1/04*................................. 1,000,000 NR 1,000,000
Emmaus, PA, General Authority, Local Government
Revenue Bond Pool Program, Weekly Demand Note:
1989 Series H, 4.2%, 3/1/24*.............................. 1,000,000 A1+ 1,000,000
1989 Series G, 4.2%, 3/1/24*.............................. 12,300,000 A1+ 12,300,000
Pennsylvania Higher Educational Facilities Authority,
Temple University:
Series 1984, Daily Demand Note, 4.35%, 10/1/09*........... 1,200,000 MIG1 1,200,000
Series 1995, 5%, 5/22/96.................................. 2,000,000 SP1+ 2,011,950
TENNESSEE Clarksville, TN, Public Building Authority Pooled
Financing, Series 1990, Weekly Demand Note,
4.15%, 7/1/13* (c).......................................... 2,000,000 MIG1 2,000,000
Franklin, TN, Industrial Development Revenue,
Franklin Oaks Apartments, Weekly Demand Note,
4%, 12/1/07* ............................................... 6,100,000 MIG1 6,100,000
TEXAS Camp County, TX, Industrial Development, Pollution
Control Revenue, Texas Oil & Gas Corp., Floating
Rate Demand Bond, 4.45%, 12/1/13*........................... 2,000,000 A1 2,000,000
Grapevine, TX, Industrial Development Corp.,
American Airlines, Series A-2, Daily Demand Note,
4.35%, 12/1/24* ............................................ 2,900,000 P1 2,900,000
Harris County, TX, Health Facilities Development
Corp., St. Luke's Episcopal Hospital, 1985
Series B, Daily Demand Note, 4.5%, 2/15/16*................. 3,000,000 A1+ 3,000,000
North Central Texas Health Facilities Development
Corp., Presbyterian Medical Center, Daily
Demand Note, Series C, 4.35%, 12/1/15*...................... 1,600,000 A1+ 1,600,000
San Antonio, TX:
Industrial Development Authority, River Center
Associates Project, Weekly Demand Note,
4.25%, 12/1/12*........................................... 4,800,000 NR 4,800,000
Water System Revenue, Tax Exempt Commercial
Paper, 4.2%, 8/18/95........................................ 1,000,000 A1+ 1,000,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
<TABLE>
SCUDDER TAX FREE MONEY FUND
-------------------------------------------------------------------------------------------------------------------
<CAPTION>
Principal Credit Value
Amount ($) Rating (b) (Note A)
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
State of Texas, Tax and Revenue Anticipation Notes,
Series 1994, 5%, 8/31/95.................................... 8,500,000 SP1+ 8,507,555
UTAH Intermountain Power Supply Agency, UT, Power
Supply Revenue, 1985 Series I, Prerefunded Bond,
8.7%, 7/1/99................................................ 1,715,000 AAA 1,740,725
Salt Lake City, UT, Pooled Hospital Financing
Program, Tax Exempt Commercial Paper:
4.15%, 8/24/95............................................ 1,000,000 A1 1,000,000
4.15%, 7/27/95............................................ 3,600,000 A1 3,600,000
Salt Lake City, UT, Pollution Control Revenue,
Service Station Holdings Project, Series 1994 B,
Daily Demand Note, 4.5%, 8/1/07*............................ 1,000,000 P1 1,000,000
WASHINGTON Washington General Obligation, Various Purpose,
Series B-2, Topstar Custodial Receipts, Weekly
Demand Note, 4.35%, 8/1/02*................................. 5,000,000 A1+ 5,000,000
Washington State Public Power Supply System,
Nuclear Project #1, 1993 Series 1A-1, Weekly
Demand Note, 4.2%, 7/1/17* ................................. 4,900,000 A1 4,900,000
WISCONSIN Wausau, WI, Pollution Control Revenue, Minnesota
Mining and Manufacturing, Floating Rate Demand
Note:
Series 1982, 4.59%, 8/1/17*............................... 2,300,000 AAA 2,300,000
Series 1983, 4.59%, 12/1/01*.............................. 900,000 AAA 900,000
Wisconsin Health Facilities Authority, Franciscan
Memorial Hospital, Weekly Demand Note,
4.4%, 1/1/16*............................................... 900,000 A1+ 900,000
-----------
TOTAL INVESTMENT PORTFOLIO - 100.0%
(Cost $237,645,688) (a)..................................... 237,645,688
===========
<FN>
(a) The cost for federal income tax purposes was $237,908,358. At June 30, 1995, net unrealized depreciation for all
securities was $262,670. This consisted of aggregate gross unrealized depreciation for all securities in which
there was an excess of tax cost over market value of $262,670.
(b) All of the securities held have been determined to be of appropriate credit quality as required by the Fund's
investment objectives. Credit ratings shown are assigned by either Standard & Poor's Ratings Group, Moody's
Investors Service, Inc. or Fitch Investors Service, Inc. Unrated securities (NR) have been determined to be of
comparable quality to rated eligible securities.
(c) Bond is insured by one of these companies: AMBAC, Capital Guaranty, FGIC, FSA, or MBIA.
* Floating rate and monthly, weekly, or daily demand notes are securities whose yields vary with a designated market
index or market rate, such as the coupon-equivalent of the Treasury Bill rate. Variable rate demand notes are
securities whose yields are periodically reset at levels that are generally comparable to tax-exempt commercial
paper. These securities are payable on demand within seven calendar days and normally incorporate an irrevocable
letter of credit or line of credit from a major bank. These notes are carried, for purposes of calculating average
weighted maturity, at the longer of the period remaining until the next rate change or to the extent of the demand
period.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
--------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------------------
JUNE 30, 1995 (UNAUDITED)
--------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at value (amortized cost $237,645,688)
(Note A)...................................................... $237,645,688
Receivables:
Investments sold.............................................. 160,000
Fund shares sold.............................................. 1,079,059
Interest...................................................... 1,759,512
Other assets..................................................... 6,533
------------
Total assets............................................... 240,650,792
LIABILITIES
Payables:
Due to custodian bank......................................... $ 888,294
Investments purchased......................................... 6,039,240
Fund shares redeemed ......................................... 776,895
Dividends..................................................... 52,331
Accrued management fee (Note B)............................... 97,053
Other accrued expenses (Note B)............................... 64,516
----------
Total liabilities ......................................... 7,918,329
------------
Net assets, at value ............................................ $232,732,463
============
NET ASSETS
Net assets consist of:
Accumulated net realized loss................................. $ (146,017)
Shares of beneficial interest................................. 2,325,607
Additional paid-in capital.................................... 230,552,873
------------
Net assets, at value ............................................ $232,732,463
============
NET ASSET VALUE, offering and redemption price per share
($232,732,463 / 232,560,693 outstanding shares of
beneficial interest, $.01 par value, unlimited number
of shares authorized)......................................... $1.00
=====
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
<TABLE>
SCUDDER TAX FREE MONEY FUND
----------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
----------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
----------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest.................................................. $4,800,811
Expenses:
Management fee (Note B)................................... $606,882
Services to shareholders (Note B)......................... 160,493
Custodian and accounting fees (Note B).................... 53,928
Trustees' fees (Note B)................................... 20,600
Reports to shareholders................................... 18,193
Legal..................................................... 6,960
Auditing.................................................. 22,847
State registration........................................ 30,265
Other..................................................... 9,162 929,330
-----------------------
Net investment income..................................... 3,871,481
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...... $3,871,481
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
--------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------------
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED
1995 DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS (UNAUDITED) 1994
--------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income............................ $ 3,871,481 $ 5,477,106
Net realized loss from investment
transactions.................................. -- (13,237)
------------- -------------
Net increase in net assets resulting from
operations.................................... 3,871,481 5,463,869
------------- -------------
Distributions to shareholders from net
investment income ($.016 and $.022 per
share, respectively).......................... (3,871,481) (5,477,106)
------------- -------------
Fund share transactions at net asset value of
$1.00 per share:
Shares sold...................................... 245,239,133 664,337,035
Shares issued to shareholders in
reinvestment of distributions................. 3,499,992 4,888,153
Shares redeemed.................................. (272,780,810) (634,890,811)
------------- -------------
Net increase (decrease) in net assets from
Fund share transactions ...................... (24,041,685) 34,334,377
------------- -------------
INCREASE (DECREASE) IN NET ASSETS................ (24,041,685) 34,321,140
Net assets at beginning of period................ 256,774,148 222,453,008
------------- -------------
NET ASSETS AT END OF PERIOD...................... $ 232,732,463 $ 256,774,148
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
<TABLE>
SCUDDER TAX FREE MONEY FUND
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding throughout each period and other
performance information derived from the financial statements.
<CAPTION>
Six Months
Ended Years Ended December 31,
June 30, 1995 ------------------------------------------------------------------------------
(Unaudited) 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
------------- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period............ $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net investment
income............ .016 .022 .018 .025 .041 .053 .057 .046 .040 .041 .045
Less distributions
from net
investment
income............ (.016) (.022) (.018) (.025) (.041) (.053) (.057) (.046) (.040) (.041) (.045)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of period..... $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN (%).... 1.61** 2.26 1.86 2.54 4.20 5.44 5.83 4.73 4.03 4.19 4.62
RATIOS AND
SUPPLEMENTAL DATA
Net assets, end of
period
($ millions)...... 233 257 222 267 279 303 279 358 390 383 265
Ratio of operating
expenses to
average daily
net assets (%).... .77* .77 .75 .73 .70 .72 .70 .67 .66 .63 .63
Ratio of net
investment
income to
average daily
net assets (%).... 3.22* 2.24 1.84 2.53 4.12 5.30 5.67 4.61 4.03 4.01 4.54
<FN>
* Annualized
** Not annualized
</FN>
</TABLE>
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
--------------------------------------------------------------------------------
A. SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------------------
Scudder Tax Free Money Fund (the "Fund") is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company. The
policies described below are followed consistently by the Fund in the
preparation of its financial statements in conformity with generally accepted
accounting principles.
SECURITY VALUATION. The Fund values all portfolio securities utilizing the
amortized cost method permitted in accordance with Rule 2a-7 under the
Investment Company Act of 1940, as amended, and pursuant to which the Fund must
adhere to certain conditions. Under this method, which does not take into
account unrealized securities gains or losses, an instrument is initially
valued at its cost and thereafter assumes a constant
accretion/amortization to maturity of any discount/premium.
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 income to its shareholders. The Fund accordingly
paid no federal income taxes and no provision for federal income taxes was
required.
As of December 31, 1994, the Fund had a net tax basis capital loss carryforward
of approximately $170,413, which may be applied against any realized net taxable
gains of each succeeding year until fully utilized or until December 31, 1995
($76,706), December 31, 1996 ($20,404), December 31, 2000 ($6,818), December
31, 2001 ($28,852), and December 31, 2002 ($37,633), the respective expiration
dates, whichever occurs first.
DISTRIBUTION OF INCOME AND GAINS. All of the net investment income of the Fund
is declared as a dividend to shareholders of record as of twelve o'clock noon
each business day and is paid to shareholders monthly. During any particular
year, net realized gains from investment transactions, in excess of available
capital loss carryforwards, would be taxable to the Fund if not distributed
and, therefore, will be distributed to shareholders. An additional distribution
may be made to the extent necessary to avoid the payment of a four percent
federal excise tax.
17
<PAGE>
SCUDDER TAX FREE MONEY FUND
--------------------------------------------------------------------------------
The Fund uses the specific identification method for determining realized gain
or loss on investments for both financial and federal income tax reporting
purposes.
OTHER. Investment transactions are accounted for on a trade date basis (which
in most cases is the same as the settlement date). Interest income is accrued
pro rata to maturity. All premiums and discounts are amortized/accreted for
both tax and financial reporting purposes.
B. RELATED PARTIES
--------------------------------------------------------------------------------
Under the Investment Management Agreement (the "Agreement") with Scudder,
Stevens & Clark, Inc. (the "Adviser"), the Adviser directs the investments of
the Fund in accordance with its investment objectives, policies, and
restrictions. The Adviser determines the securities, instruments, and other
contracts relating to investments to be purchased, sold or entered into by the
Fund. In addition to portfolio management services, the Adviser provides
certain administrative services in accordance with the Agreement. The
management fee payable under the Agreement is equal to an annual rate of 0.50%
on the first $500,000,000 of average daily net assets, and 0.48% of such net
assets in excess of $500,000,000, computed and accrued daily and payable
monthly. The Agreement provides that if the Fund's expenses, exclusive of
taxes, interest, and extraordinary expenses, exceed specified limits, such
excess, up to the amount of the management fee, will be paid by the Adviser.
For the six months ended June 30, 1995, the management fee pursuant to the
Agreement aggregated $606,882, which was equivalent to an annual effective rate
of 0.50% of the Fund's average daily net assets.
Scudder Service Corporation ("SSC"), a wholly-owned subsidiary of the Adviser,
is the transfer, dividend paying and shareholder service agent for the Fund.
For the six months ended June 30, 1995, the amount charged to the Fund by SSC
aggregated $126,315, of which $20,333 is unpaid at June 30, 1995.
Scudder Fund Accounting Corporation ("SFAC"), a wholly-owned subsidiary of
the Adviser, is responsible for determining the daily net asset value per share
and maintaining the portfolio and general accounting records of the Fund. For
the six months ended June 30, 1995, the amount charged to the Fund by SFAC
aggregated $23,241, of which $3,772 is unpaid at June 30, 1995.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
The Fund pays each Trustee not affiliated with the Adviser $4,000 annually
plus specified amounts for attended board and committee meetings. For the six
months ended June 30, 1995, Trustees' fees and expenses aggregated $20,600.
19
<PAGE>
PAGE 20 INTENTIONALLY LEFT BLANK
20
<PAGE>
OFFICERS AND TRUSTEES
--------------------------------------------------------------------------------
David S. Lee*
President and Trustee
E. Michael Brown*
Trustee
Dawn-Marie Driscoll
Trustee; Attorney and
Corporate Director
Peter B. Freeman
Trustee; Corporate Director and Trustee
George M. Lovejoy, Jr.
Trustee; President and Director, Fifty Associates
Juris Padegs*
Vice President and Trustee
Jean C. Tempel
Trustee; General Partner, TL Ventures
Donald C. Carleton*
Vice President
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
Vice President
Thomas F. McDonough*
Vice President and Secretary
Pamela A. McGrath*
Vice President and Treasurer
Edward J. O'Connell*
Vice President and Assistant Treasurer
Coleen Downs Dinneen*
Assistant Secretary
* Scudder, Stevens & Clark, Inc.
21
<PAGE>
INVESTMENT PRODUCTS AND SERVICES
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
The Scudder Family of Funds
-----------------------------------------------------------------------------------------------------------------
<S> <C>
Money Market Income
Scudder Cash Investment Trust Scudder Emerging Markets Income Fund
Scudder U.S. Treasury Money Fund Scudder GNMA Fund
Tax Free Money Market+ Scudder Income Fund
Scudder Tax Free Money Fund Scudder International Bond Fund
Scudder California Tax Free Money Fund* Scudder Short Term Bond Fund
Scudder New York Tax Free Money Fund* Scudder Short Term Global Income Fund
Tax Free+ Scudder Zero Coupon 2000 Fund
Scudder California Tax Free Fund* Growth
Scudder High Yield Tax Free Fund Scudder Capital Growth Fund
Scudder Limited Term Tax Free Fund Scudder Development Fund
Scudder Managed Municipal Bonds Scudder Global Fund
Scudder Massachusetts Limited Term Tax Free Fund* Scudder Global Small Company Fund
Scudder Massachusetts Tax Free Fund* Scudder Gold Fund
Scudder Medium Term Tax Free Fund Scudder Greater Europe Growth Fund
Scudder New York Tax Free Fund* Scudder International Fund
Scudder Ohio Tax Free Fund* Scudder Latin America Fund
Scudder Pennsylvania Tax Free Fund* Scudder Pacific Opportunities Fund
Growth and Income Scudder Quality Growth Fund
Scudder Balanced Fund Scudder Value Fund
Scudder Growth and Income Fund The Japan Fund
Retirement Plans and Tax-Advantaged Investments
-----------------------------------------------------------------------------------------------------------------
IRAs 403(b) Plans
Keogh Plans SEP-IRAs
Scudder Horizon Plan+++* (a variable annuity) Profit Sharing and Money Purchase
401(k) Plans Pension Plans
Closed-End Funds#
-----------------------------------------------------------------------------------------------------------------
The Argentina Fund, Inc. The Latin America Dollar Income Fund, Inc.
The Brazil Fund, Inc. Montgomery Street Income Securities, Inc.
The First Iberian Fund, Inc. Scudder New Asia Fund, Inc.
The Korea Fund, Inc. Scudder New Europe Fund, Inc.
Scudder World Income
Opportunities Fund, Inc.
Institutional Cash Management
-----------------------------------------------------------------------------------------------------------------
Scudder Institutional Fund, Inc.
Scudder Fund, Inc.
Scudder Treasurers Trust(TM)++
-----------------------------------------------------------------------------------------------------------------
For complete information on any of the above Scudder funds, including management fees and expenses, call or write
for a free prospectus. Read it carefully before you invest or send money. +A portion of the income from the
tax-free funds may be subject to federal, state, and local taxes. *Not available in all states. +++A no-load variable
annuity contract provided by Charter National Life Insurance Company and its affiliate, offered by Scudder's
insurance agencies, 1-800-225-2470. #These funds, advised by Scudder, Stevens & Clark, Inc. are traded on various
stock exchanges. ++For information on Scudder Treasurers Trust,(TM) an institutional cash management service that
utilizes certain portfolios of Scudder Fund, Inc. ($100,000 minimum), call 1-800-541-7703.
</TABLE>
22
<PAGE>
HOW TO CONTACT SCUDDER
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Account Service and Information
-------------------------------------------------------------------------------------------------------------
<S> <C>
For existing account service and transactions
SCUDDER INVESTOR RELATIONS
1-800-225-5163
For account updates, prices, yields,
exchanges, and redemptions
SCUDDER AUTOMATED INFORMATION LINE (SAIL)
1-800-343-2890
Investment Information
-------------------------------------------------------------------------------------------------------------
To receive information about the
Scudder funds, for additional
applications and prospectuses, or for
investment questions
SCUDDER INVESTOR RELATIONS
1-800-225-2470
For establishing 401(k) and 403(b) plans
SCUDDER DEFINED CONTRIBUTION SERVICES
1-800-323-6105
Please address all correspondence to
-------------------------------------------------------------------------------------------------------------
THE SCUDDER FUNDS
P.O. BOX 2291
BOSTON, MASSACHUSETTS
02107-2291
Or stop by a Scudder Funds Center
-------------------------------------------------------------------------------------------------------------
Many shareholders enjoy the personal, one-on-one service of the
Scudder Funds Centers. Check for a Funds Center near you--they can
be found in the following cities:
Boca Raton New York
Boston Portland, OR
Chicago San Diego
Cincinnati San Francisco
Los Angeles Scottsdale
-------------------------------------------------------------------------------------------------------------
For information on Scudder For information on Scudder
Treasurers Trust,(TM) an institutional Institutional Funds,* funds
cash management service for designed to meet the broad
corporations, non-profit investment management and
organizations and trusts that uses service needs of banks and
certain portfolios of Scudder Fund, other institutions, call
Inc.* ($100,000 minimum), call 1-800-854-8525.
1-800-541-7703.
-------------------------------------------------------------------------------------------------------------
</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.
23
<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 36 pure no load(TM) funds, including the first
international mutual fund offered to U.S. investors.
Over the years, Scudder's global investment perspective and dedication
to research and fundamental investment disciplines have helped us become one of
the largest and most respected investment managers in the world. Though times
have changed since our beginnings, we remain committed to our long-standing
principles: managing money with integrity and distinction; keeping the interests
of our clients first; providing access to investments and markets that may not
be easily available to individuals; and making investing as simple and
convenient as possible through friendly, comprehensive service.
