Scudder
Tax Free
Money Fund
Annual Report
December 31, 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.
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.
71-6-26
MIS71A
<PAGE>
SCUDDER TAX FREE MONEY FUND
TABLE OF CONTENTS
3 Letter from the Fund's President
4 Portfolio Management Discussion
Your portfolio management team reviews the period's investing
strategies, financial markets, and economic conditions
7 Investment Portfolio
Itemized list of portfolio holdings
13 Financial Statements
16 Financial Highlights
17 Notes to Financial Statements
20 Report of Independent Accountants
21 Tax Information
21 Officers and Trustees
22 Investment Products and Services
23 How to Contact Scudder
2
<PAGE>
LETTER FROM THE FUND'S PRESIDENT
Dear Shareholders,
U.S. stock and bond markets surged in 1995. Stocks increased
dramatically as interest rates dropped and corporate profits grew.
Bond prices rose significantly--the third-best 12-month total return on
record--in response to falling interest rates and a favorable outlook
for inflation.
Money market funds generally provided attractive returns in 1995,
despite falling interest rates that resulted in lower yields. Money funds
consistently attracted assets, ending the year at approximately $775 billion in
total assets, up from approximately $619 billion at the end of 1994, according
to Money Fund Report, a service of IBC Financial Publishing.
Continued interest in money market investments stemmed partly from the
fact that investors seeking the low relative risk of money funds compared with
stocks and bonds found yields that were generally more attractive than those
available from bank savings accounts and certificates of deposit (although the
funds are not insured or guaranteed by the U.S. government). In addition, money
funds provided yields well above the rate of inflation, which now stands at
about 2%. We expect this situation to continue, due to our outlook for the same
or a lower rate of inflation in 1996.
While yields will continue to fluctuate with prevailing interest rates,
Scudder Tax Free Money Fund is designed to provide a relatively safe place for
your short-term investment needs, with income free from federal taxes. This tax
free status may translate into a higher yield than comparable taxable
investments. The Fund seeks to maintain a constant $1.00 share price (although
this cannot be guaranteed), and has done so since its inception in 1979. 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,
While falling interest rates typically provide a disadvantageous
environment for money market funds, Scudder Tax Free Money Fund posted a
competitive 4.01% 7-day net annualized federally tax free yield as of December
31, 1995. By comparison, a taxable investment would have had to provide a yield
of 6.27% or 6.64% for the 36% and 39.6% tax brackets, respectively, in order to
match Scudder Tax Free Money Fund's yield.
The Fund's total return, which reflects reinvested income distributions of
$0.03 per share, was 3.27% for the 12-month period. By comparison, the average
tax free money fund tracked by Lipper Analytical Services returned 3.31%.
The Economic Year in Review
Interest rate declines were the main concern of money fund managers in
1995. The Federal Reserve lowered short-term interest rates in July and again in
December, prompting yield declines in most money funds. By contrast, Scudder Tax
Free Money Fund provided a somewhat higher 7-day net annualized yield of 4.14%
on December 31, 1994, with tax-equivalent yields of 6.59% and 6.99% for
shareholders in the 36% and 39.6% tax brackets, respectively.*
Money fund managers have some means of counteracting the effects of a
declining interest-rate environment, including the adjustment of a fund's
average maturity. Normally, longer maturities provide higher yields to reward
investors for taking additional risk. Scudder Tax Free Money Fund's average
maturity at the end of the 12-month period was 49 days. Earlier in the year,
when interest rates at the short end of the money market spectrum were
relatively high, the Fund's average maturity was as low as 30 days. The longer
maturity allowed the Fund to "lock in" higher yields while still providing the
Fund the flexibility to invest in shorter-term instruments should it prove
advantageous. In fact, during much of the last six months of the Fund's fiscal
year, intermediate-maturity instruments provided higher yields than longer-term
instruments.
* For the 1-, 5-, and 10-year periods ended December 31, 1995, the Fund's
average annual return was 3.27%, 2.82%, and 3.83%, respectively.
4
<PAGE>
PORTFOLIO MANAGEMENT DISCUSSION
The aftermath of Orange County's bankruptcy filing last winter
negatively affected prices throughout the California municipal market during the
early part of the year. Scudder Tax Free Money Fund owned no investments in the
Orange County investment pool during that critical time but carefully invested
in what we believed were fundamentally sound money market opportunities in
Orange County and other parts of California. These investments, such as Orange
County water district commercial paper, provided the Fund with some attractive
yields during the early part of the fiscal year. Currently, 12.4% of Fund assets
is invested in California issues. Of course, Scudder's team of analysts
carefully examines any security before it is purchased by the Fund.
Sector and State Breakdown
Much of the Fund--34% at the end of December--was invested in pollution
control and industrial development paper during the period. These types of money
market securities are issued by governmental agencies for corporate projects
that promote regional economic development. The securities are repaid with the
revenue that these projects generate.
State general obligation notes comprised an additional 13% of the
Fund's assets at the close of the 12-month period. General obligation notes are
backed by a state's full faith and credit, including the ability to levy taxes.
Throughout the fiscal year, Scudder Tax Free Money Fund was
geographically diversified, closing the year with investments from more than 25
states. We focused on high-quality securities--those rated in the top tiers by
Moody's Investors Service, Standard & Poor's, or Fitch.
5
<PAGE>
SCUDDER TAX FREE MONEY FUND
Outlook
Scudder Tax Free Money Fund is anticipating an economy moving at a slow
pace accompanied by little or no inflation, which will prompt us to continue to
lean toward longer-term money market securities where appropriate. Quality
investments should continue to help provide a stable share price, with the added
benefit of federally tax-free distributions. Given these characteristics, we
believe Scudder Tax Free Money Fund remains an appropriate place for your
short-term investment needs, and can play an important role in your investment
plan.
Please call Scudder Investor Relations at 1-800-225-2470 if you have any
questions about the Fund. Thank you for choosing Scudder Tax Free Money Fund to
help meet your investment needs.
Sincerely,
Your Portfolio Management Team
/s/K. Sue Cote /s/Donald C. Carleton
K. Sue Cote Donald C. Carleton
Scudder Tax Free Money Fund:
A Team Approach to Investing
Scudder Tax Free Money Fund is managed by a team of Scudder investment
professionals who each play an important role in the Fund's management process.
Team members work together to develop investment strategies and select
securities for the Fund. They are supported by Scudder's large staff of
economists, research analysts, traders, and other investment specialists who
work in our offices across the United States and abroad. Scudder believes its
team approach benefits Fund investors by bringing together many disciplines and
leveraging Scudder's extensive resources.
Lead Portfolio Manager K. Sue Cote, who joined Scudder in 1983, assumed
responsibility for the Fund's investment strategy and operations in 1986 and has
over 10 years of experience in short-term tax free investing. Donald C.
Carleton, Portfolio Manager, has worked on the Fund since 1986 and has 26 years
of experience in tax free investing.
6
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO as of December 31, 1995
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Unaudited
-------------------------------------
Principal Credit Value ($)
Amount ($) Rating (b) (Note A)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------------
100.0% MUNICIPAL INVESTMENTS
----------------------------------------------------------------------------------------------------------
ALABAMA Phenix City, AL, Industrial Development Bond, Mead
Coated Board Project, Daily Demand Note, 6.1%,
10/1/25* .............................................. 300,000 A1 300,000
ALASKA Alaska Housing Finance Corp., General Mortgage
Revenue, Series 1991-A, Weekly Demand Note,
5.3%, 6/1/26* ......................................... 10,000,000 A1+ 10,000,000
ARIZONA Apache County, AZ, Industrial Development Revenue
Tuscan Electric Co. Springerville Project, 1985
Series A, Weekly Demand Note, 5%, 12/1/20* ............ 6,500,000 A1+ 6,500,000
Maricopa County, AZ, Industrial Development
Authority, Royal Oaks Sun City Project, Weekly
Demand Note, 5.25%, 9/1/02* ........................... 300,000 MIG1 300,000
Pima County, AZ, Industrial Development Authority,
Tucson Electric Power Co., 1982 Series A, Weekly
Demand Note, 5.1%, 7/1/22* ............................ 7,100,000 MIG1 7,100,000
CALIFORNIA California Community College Finance Authority,
Pooled Tax and Revenue Anticipation Notes,
Series B, 5%, 8/30/96 ................................. 1,000,000 SP1+ 1,003,163
California State Revenue Anticipation Warrants,
Series C, 5.75%, 4/25/96 .............................. 5,000,000 MIG1 5,028,992
Huntington Beach, CA, Multi-Family Housing Revenue,
River Meadows Apartments, Series B, Weekly
Demand Bonds, 5.23%, 10/1/05* ......................... 1,700,000 SS&C 1,700,000
Lancaster, CA, Multi-Family Housing, Willows Project,
Green Meadows Apartments, 1985 Series A, Weekly
Demand Bonds, 5.375%, 2/1/05* ......................... 8,650,000 SS&C 8,650,000
Los Angeles County, CA, Tax and Revenue
Anticipation Note:
4.5%, 7/1/96 .......................................... 3,000,000 MIG1 3,010,050
Local Educational Agencies Pooled, 4.75%,
7/5/96 .............................................. 2,000,000 SP1+ 2,006,339
Orange County, CA, California Water District Public
Facilities Corp., Tax Exempt Commercial Paper,
3.85%, 2/27/96 ........................................ 3,100,000 P1 3,100,000
Riverside, CA, Multi-Family Housing Revenue:
Countrywood Apartments, Series 1985-D,
Weekly Demand Notes, 5.375%, 5/1/05* .................. 1,000,000 SS&C 1,000,000
Polk Apartments, Weekly Demand Note, 5.625%,
12/1/05* .............................................. 2,000,000 A1 2,000,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
<TABLE>
SCUDDER TAX FREE MONEY FUND
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Unaudited
-------------------------------------
Principal Credit Value ($)
Amount ($) Rating (b) (Note A)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
South Coast Local Education Agencies, CA, Pooled
Tax and Revenue Anticipation Note Program, 5%,
8/14/96 .......................................... 2,000,000 SP1+ 2,005,907
COLORADO Colorado Housing Finance Authority , Central Park,
Coventry Village & Greenwood Point, Series 1985,
Weekly Demand Note, 5.15%, 5/1/97* ............... 1,100,000 A1 1,100,000
Colorado State Tax and Revenue Anticipation Notes,
Series A, 4.5%, 6/27/96 .......................... 5,000,000 SP1+ 5,019,899
Colorado Student Loan Obligation Bond Authority, 1990
Series C, Weekly Demand Note, 5.35%, 9/1/99* ..... 1,500,000 MIG1 1,500,000
DISTRICT OF COLUMBIA District of Columbia, General Obligation:
General Fund Recovery, Series B, Daily
Demand Note, 6%, 6/1/03* ....................... 3,000,000 MIG1 3,000,000
Refunding Bonds:
Series A-2, Daily Demand Note, 6%, 10/1/07* .... 300,000 MIG1 300,000
Series A-5, Daily Demand Note, 6%, 10/1/07* .... 4,800,000 MIG1 4,800,000
FLORIDA Broward County, FL, Housing Finance Authority,
Welleby Apartments Project, Weekly Demand
Note, 5.35%, 12/1/06* ............................ 1,000,000 MIG1 1,000,000
Dade County, FL, Water and Sewer System Revenue
Bond, Series 1994, Weekly Demand Note,
4.9%, 10/5/22 (c)* ............................... 1,000,000 A1+ 1,000,000
Putnam County, FL, Pollution Control Revenue,
Seminole Electric Cooperative Finance Corp., 1984
Series H-2, Weekly Demand Note, 4.65%, 3/15/14* ... 2,600,000 A1+ 2,600,000
GEORGIA Burke County, GA, Pollution Control Revenue,
Ogelthorpe Power, Vogtle Project, Series 1994-A,
Weekly Demand Note, 5.05%, 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, 5.05%, 3/1/24* ....................... 5,000,000 A1+ 5,000,000
Georgia Municipal Gas Authority, Tax Exempt
Commercial Paper, 3.65%, 2/26/96 .................. 4,400,000 VMIG1 4,400,000
Hapeville, GA, Industrial Development Bond, Hapeville
Hotel, Daily Demand Bond, 6%, 11/1/15* ............ 1,000,000 A1+ 1,000,000
ILLINOIS Illinois Development Finance Authority, Molex Inc.
Project, Series 1985, Weekly Demand Note, 5.15%,
7/1/05* ........................................... 1,000,000 SS&C 1,000,000
Illinois Educational Facilities Authority, University
Pooled Finance Program, Weekly Demand Note,
5.95%, 12/1/05 (c)* ............................... 4,710,000 MIG1 4,710,000
Illinois Health Facilities Authority:
Highland Park Hospital, Revenue Bond,
1991 Series B, Optional Put, 4%, 10/1/12 (c) .... 3,000,000 VMIG1 3,000,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Unaudited
-------------------------------------
Principal Credit Value ($)
Amount ($) Rating (b) (Note A)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
St. Luke's Medical Center, Tax Exempt Commercial
Paper, 3.8%, 2/13/96 ...................................... 1,000,000 MIG1 1,000,000
Pekin, IL, Industrial Development Revenue Refunding
Bonds, BOC Group, Series 1992, Weekly Demand
Note, 5.15%, 9/1/12* ...................................... 5,000,000 SS&C 5,000,000
Skokie, IL, Fashion Square, Series 1984, Weekly
Demand Note, 5.5%, 12/1/14* ............................... 2,000,000 SS&C 2,000,000
State of Illinois, Series 1995, Revenue Anticipation
Certificates, 4.5%, 6/10/96 ............................... 2,000,000 MIG1 2,010,300
INDIANA Purdue University, Indiana Student Fee Revenue,
Series 1995 L, Weekly Demand Note, 5%, 7/1/20* ............ 2,000,000 MIG1 2,000,000
IOWA Iowa School Corporation Warrant Certificates, Iowa
School Cash Anticipation Program, Series A,
4.75%, 6/28/96 (c)* ....................................... 2,000,000 SP1+ 2,008,471
KENTUCKY Kentucky Development Finance Authority, Healthcare
System, Appalachian Regional Health Care,
Series 1991, Weekly Demand Note, 5.25%, 9/1/06* ........... 1,200,000 MIG1 1,200,000
LOUISIANA Louisiana Public Facilities Authority, Sisters of Charity,
Series 1993, Tax Exempt Commercial Paper, 3.8%,
1/11/96 ................................................... 1,000,000 A1+ 1,000,000
MAINE State of Maine, Tax Anticipation Notes, 4.5%, 6/28/96 ....... 4,000,000 SP1+ 4,014,153
MARYLAND Anne Arundel County, MD, Baltimore Gas and Electric,
Tax Exempt Commercial Paper, 3.6%, 3/8/96 ................. 3,420,000 MIG1 3,420,000
MINNESOTA Cottage Grove, MN, Minnesota Mining and
Manufacturing, Series 1982, Weekly Demand Note,
5.31%, 8/1/12* ............................................ 1,100,000 A1+ 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, 5.1%, 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, 5.15%,
12/1/07* ................................................. 3,200,000 MIG1 3,200,000
NEW JERSEY Salem County, NJ, Industrial Pollution Control
Financing Authority, E.I. du Pont de Nemours and
Co., Floating Rate Demand Note, 3.75%, 3/1/12* ........... 11,400,000 P1 11,400,000
NEW YORK New York City, NY, Municipal Water Finance Authority,
Series C, Daily Demand Note, 5.9%, 6/15/23 (c)* .......... 1,400,000 VMIG1 1,400,000
New York City, NY, Revenue Anticipation Notes,
4.75%, 6/28/96 ........................................... 1,000,000 SP1 1,003,808
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
<TABLE>
SCUDDER TAX FREE MONEY FUND
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Unaudited
-------------------------------------
Principal Credit Value ($)
Amount ($) Rating (b) (Note A)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
New York City, NY, Tax Anticipation Notes, Series A,
4.5%, 2/15/96 .......................................... 5,000,000 SP1+ 5,004,009
NORTH DAKOTA Mercer County, ND, Pollution Control Revenue,
Cooperative Finance Corp., United Power, Weekly
Demand Note, 4.65%, 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, 5.2%, 6/15/05* ........ 900,000 SS&C 900,000
Montgomery, OH, Miami Valley Hospital, Series C,
Tax Exempt Commercial Paper, 3.7%, 3/20/96 ............. 2,000,000 MIG1 2,000,000
North Olmsted, OH, Limited Taxation, General
Obligation, Bond Anticipation Note, Series A, 4.67%,
6/20/96 ................................................ 4,000,000 SS&C 4,007,516
Stark County, OH, Sewer District Improvement Note,
1995 Series 1, 5%, 4/3/96 .............................. 1,000,000 SS&C 1,000,971
PENNSYLVANIA Allegheny County, PA, Industrial Development
Authority, Lenmar Realty Project, Weekly Demand
Note, 5.25%, 1/1/98* ................................... 450,000 MIG1 450,000
Bucks County, PA, Oxford Falls Plaza, Series 1984,
Weekly Demand Note, 5.23%, 10/1/14* .................... 9,100,000 MIG1 9,100,000
Elk County , PA, Industrial Development Authority,
Stackpole Corporation, Series 1989, Weekly
Demand Note, 4.01%, 3/1/04* ............................ 1,000,000 SS&C 1,000,000
Emmaus, PA, General Authority, Local Government
Revenue Bond Pool Program:
1989 Series G, Weekly Demand Note, 5.05%,
3/1/24* ............................................ 2,500,000 A1+ 2,500,000
1989 Series G, Weekly Demand Note, 5.1%,
3/1/24* ............................................ 3,700,000 A1 3,700,000
1989 Series G-5, Weekly Demand Note, 5.15%,
3/1/24* ............................................ 4,000,000 A1 4,000,000
1989 Series H, Weekly Demand Note, 5.05%,
3/1/24* ............................................ 800,000 A1+ 800,000
Pennsylvania Higher Education Facilities Authority,
Temple University, Series 1995, 5%, 5/22/96 ............ 2,000,000 SP1+ 2,005,205
Philadelphia , PA, School District, Tax and Revenue
Anticipation Notes, 4.5%, 6/28/96 ...................... 3,000,000 MIG1 3,007,780
TENNESSEE Clarksville, TN, Public Building Authority Pooled
Financing, Series 1990, Weekly Demand Note,
5.05%, 7/1/13 (c)* ..................................... 2,000,000 MIG1 2,000,000
Franklin, TN, Industrial Development Revenue,
Franklin Oaks Apartments, Weekly Demand
Note, 4.85%, 12/1/07* .................................. 6,100,000 MIG1 6,100,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Unaudited
-------------------------------------
Principal Credit Value ($)
Amount ($) Rating (b) (Note A)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TEXAS Camp County, TX, Industrial Development, Pollution
Control Revenue, Texas Oil & Gas Corp., Floating
Rate Demand Bond, 5.35%, 12/1/13* ...................... 2,000,000 A1 2,000,000
San Antonio, TX, Electric and Gas City Public Services,
Series 1995 A, Tax Exempt Commercial Paper:
3.8%, 2/14/96 ........................................ 2,000,000 A1+ 2,000,000
3.45%, 3/14/96 ....................................... 1,000,000 A1+ 1,000,000
San Antonio, TX, Industrial Development Authority,
River Center Associates Project, Weekly Demand
Note, 5.25%, 12/1/12* .................................. 6,500,000 SS&C 6,500,000
State of Texas, Tax and Revenue Anticipation Notes,
4.75%, 8/30/96 ......................................... 6,000,000 SP1+ 6,026,881
UTAH Salt Lake City, UT, Pollution Control Revenue, British
Petroleum Station Project, Series 1994 B, Daily
Demand Note, 6%, 8/1/07* ............................... 800,000 P1 800,000
Salt Lake City, UT, Pooled Hospital Financing
Program, Tax Exempt Commercial Paper:
3.9%, 2/12/96 ........................................ 1,000,000 A1 1,000,000
3.85%, 2/13/96 ....................................... 3,600,000 A1 3,600,000
State of Utah, General Obligation, Unlimited Tax
Bonds, 5.75%, 7/1/96 ................................... 1,000,000 AAA 1,009,435
VIRGINIA Chesterfield County, VA, Virginia Electric Power
Company, Series 1987 B, Tax Exempt Commercial
Paper, 3.55%, 3/20/96 .................................. 2,000,000 A1 2,000,000
York County, VA, Pollution Control Revenue, Virginia
Electric Power Company, Series 1985, Tax Exempt
Commercial Paper, 3.6%, 3/8/96 ......................... 1,400,000 MIG1 1,400,000
WASHINGTON Washington General Obligation, Various Purpose,
Series B-2, Topstar Custodial Receipts, Weekly
Demand Note, 5.05%, 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, 4.95%, 7/1/17* ............................ 4,900,000 A1 4,900,000
WISCONSIN Wisconsin Wausau, WI, Pollution Control Revenue, Minnesota
Mining and Manufacturing, Floating Rate Demand
Note:
Series 1982, 5.31%, 8/1/17* .......................... 2,300,000 A1+ 2,300,000
Series 1983, 5.31%, 12/1/01* ......................... 900,000 SS&C 900,000
Wisconsin Health Facilities Authority, Franciscan
Memorial Hospital, Weekly Demand Note, 5.5%,
1/1/16* ................................................ 900,000 A1+ 900,000
-----------
TOTAL INVESTMENT PORTFOLIO - 100.0%
(Cost $237,452,879) (a) ................................ 237,452,879
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
SCUDDER TAX FREE MONEY FUND
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(a) The cost for federal income tax purposes was $237,870,519. At December
31, 1995, net unrealized depreciation for all securities based on tax
cost was $417,640. This consisted of aggregate gross unrealized
depreciation for all securities in which there was an excess of tax
cost over market value of $417,640.
(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) and securities rated
by Scudder (SS&C) have been determined to be of comparable quality to
rated eligible securities.
(c) Bond is insured by one of these companies: Capital Guaranty, FGIC, 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.
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
- ---------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- -------------------------------------------------------------------------------------------
<CAPTION>
DECEMBER 31, 1995
- -------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at value (amortized cost $237,452,879)
(Note A) .................................................... $237,452,879
Receivables:
Investments sold ............................................ 3,000,000
Fund shares sold ............................................ 2,953,578
Interest .................................................... 1,930,213
Other assets 6,533
------------
Total assets .............................................. 245,343,203
LIABILITIES
Payables:
Due to custodian bank ....................................... $ 894,648
Investments purchased ....................................... 4,046,073
Fund shares redeemed ....................................... 1,052,258
Dividends ................................................... 61,124
Accrued management fee (Note B) ............................. 98,222
Other accrued expenses (Note B) ............................. 103,118
----------
Total liabilities ......................................... 6,255,443
------------
Net assets, at value .......................................... $239,087,760
============
NET ASSETS
Net assets consist of:
Accumulated net realized loss ............................... $ (171,773)
Shares of beneficial interest ............................... 2,389,169
Additional paid-in capital .................................. 236,870,364
------------
Net assets, at value .......................................... $239,087,760
============
NET ASSET VALUE, offering and redemption price per share
($239,087,760 [division symbol] 238,916,914 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
- ----------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
- ----------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest ..................................... 9,496,547
Expenses:
Management fee (Note B) ...................... $1,197,027
Services to shareholders (Note B) ............ 322,189
Custodian and accounting fees (Note B) ....... 95,015
Trustees' fees (Note B) ...................... 34,888
Auditing ..................................... 51,845
State registration ........................... 40,157
Reports to shareholders ...................... 34,701
Legal ........................................ 8,905
Other ........................................ 17,383 1,802,110
------------------------
Net investment income ........................ 7,694,437
----------
NET REALIZED LOSS ON INVESTMENT TRANSACTIONS
Net realized loss from investments ........... (915)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS ................................... $7,693,522
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------
INCREASE (DECREASE) IN NET ASSETS 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ........................ $ 7,694,437 $ 5,477,106
Net realized loss from investment
transactions ............................... (915) (13,237)
------------ ------------
Net increase in net assets resulting from
operations ................................. 7,693,522 5,463,869
------------ ------------
Distributions to shareholders from net
investment income ($.032 and $.022 per
share, respectively) ....................... (7,694,437) (5,477,106)
------------ ------------
Fund share transactions at net asset value of
$1.00 per share:
Shares sold .................................. 502,020,783 664,337,035
Shares issued to shareholders in
reinvestment of distributions .............. 6,965,743 4,888,153
Shares redeemed .............................. (526,671,999) (634,890,811)
------------ ------------
Net increase (decrease) in net assets from
Fund share transactions .................... (17,685,473) 34,334,377
------------ ------------
INCREASE (DECREASE) IN NET ASSETS ............ (17,686,388) 34,321,140
Net assets at beginning of period ............ 256,774,148 222,453,008
------------ ------------
NET ASSETS AT END OF PERIOD .................. $239,087,760 $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>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
-----------------------------------------------------------------------------
<S> <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
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net investment income ......... .032 .022 .018 .025 .041 .053 .057 .046 .040 .041
Less distributions
from net investment
income ...................... (.032) (.022) (.018) (.025) (.041) (.053) (.057) (.046) (.040) (.041)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of period ............... $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN (%) .............. 3.27 2.26 1.86 2.54 4.20 5.44 5.83 4.73 4.03 4.19
RATIOS AND
SUPPLEMENTAL DATA
Net assets, end of
period ($ millions) ......... 239 257 222 267 279 303 279 358 390 383
Ratio of operating
expenses to
average daily
net assets (%) .............. .75 .77 .75 .73 .70 .72 .70 .67 .66 .63
Ratio of net investment
income to average daily
net assets (%) .............. 3.21 2.24 1.84 2.53 4.12 5.30 5.67 4.61 4.03 4.01
</TABLE>
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
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, 1995, the Fund had a net tax basis capital loss carryforward
of approximately $172,000, which may be applied against any realized net
taxable gains of each succeeding year until fully utilized or until, December
31, 1996 ($20,000), December 31, 2000 ($7,000), December 31, 2001 ($29,000),
and December 31, 2002 ($38,000), December 31, 2003 ($78,000), 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 year ended
December 31, 1995, the management fee pursuant to the Agreement
aggregated $1,197,027, which was equivalent to an annual effective
rate of .50% 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. For the year ended December 31, 1995, the amount
charged to the Fund by SSC aggregated $242,700, of which $19,217 is
unpaid at December 31, 1995.
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 year ended December 31, 1995, the amount charged
to the Fund by SFAC aggregated $46,012, of which $3,795 is unpaid at
December 31, 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 year
ended December 31, 1995, Trustees' fees and expenses aggregated $34,888.
<PAGE>
SCUDDER TAX FREE MONEY FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- -------------------------------------------------------------------------------
TO THE TRUSTEES AND SHAREHOLDERS OF THE SCUDDER TAX FREE MONEY FUND:
We have audited the accompanying statement of assets and liabilities of Scudder
Tax Free Money Fund, including the investment portfolio, as of December 31,
1995, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the ten years in the
period then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1995 by correspondence with the custodian and brokers.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Scudder Tax Free Money Fund as of December 31, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the ten years in the period then ended, in conformity with generally accepted
accounting principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
January 29, 1996
20
<PAGE>
TAX INFORMATION
By now shareholders should have received their year-end statement and tax
information letter from the Fund.
Of the dividends paid by the Scudder Tax Free Money Fund from net investment
income for the taxable year ended December 31, 1995, 100% were exempt interest
dividends which are tax exempt for purposes of regular federal income tax, and
for purposes of the federal alternative minimum tax.
Please consult a tax adviser if you have questions about federal or state income
tax laws, or on how to prepare your tax returns. If you have specific questions
about your Scudder Fund account, please call a Scudder Investor Relations
Representative at 1-800-225-5163.
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
K. Sue Cote*
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
The Scudder Family of Funds
<TABLE>
<S> <C>
-----------------------------------------------------------------------------------------------------------------
Money Market Income
Scudder Cash Investment Trust Scudder Emerging Markets Income Fund
Scudder U.S. Treasury Money Fund Scudder Global Bond Fund
Tax Free Money Market+ Scudder GNMA Fund
Scudder Tax Free Money Fund Scudder Income Fund
Scudder California Tax Free Money Fund* Scudder International Bond Fund
Scudder New York Tax Free Money Fund* Scudder Short Term Bond Fund
Tax Free+ Scudder Zero Coupon 2000 Fund
Scudder California Tax Free Fund* Growth
Scudder High Yield Tax Free Fund Scudder Capital Growth Fund
Scudder Limited Term Tax Free Fund Scudder Development Fund
Scudder Managed Municipal Bonds Scudder 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 Small Company Value Fund
Scudder Growth and Income Fund Scudder Value Fund
The Japan Fund
Retirement Plans and Tax-Advantaged Investments
-----------------------------------------------------------------------------------------------------------------
IRAs 403(b) Plans
Keogh Plans SEP-IRAs
Scudder Horizon Plan+++* (a variable annuity) Profit Sharing and Money Purchase
401(k) Plans Pension Plans
Closed-End Funds#
-----------------------------------------------------------------------------------------------------------------
The Argentina Fund, Inc. The Latin America Dollar Income Fund, Inc.
The Brazil Fund, Inc. Montgomery Street Income Securities, Inc.
The First Iberian Fund, Inc. Scudder New Asia Fund, Inc.
The Korea Fund, Inc. Scudder New Europe Fund, Inc.
Scudder World Income
Opportunities Fund, Inc.
Institutional Cash Management
-----------------------------------------------------------------------------------------------------------------
Scudder Institutional Fund, Inc. Scudder Treasurers Trust(TM)++
Scudder Fund, Inc.
-----------------------------------------------------------------------------------------------------------------
</TABLE>
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.
22
<PAGE>
HOW TO CONTACT SCUDDER
<TABLE>
<S> <C>
Account Service and Information
-------------------------------------------------------------------------------------------------------------
For existing account service and transactions
SCUDDER INVESTOR RELATIONS
1-800-225-5163
For personalized information about your
Scudder accounts; exchanges and
redemptions; or information on any
Scudder fund
SCUDDER AUTOMATED INFORMATION LINE (SAIL)
1-800-343-2890
Investment Information
-------------------------------------------------------------------------------------------------------------
To receive information about the Scudder funds, for additional
applications and prospectuses, or for investment questions
SCUDDER INVESTOR RELATIONS
1-800-225-2470
For establishing 401(k) and 403(b) plans
SCUDDER DEFINED CONTRIBUTION SERVICES
1-800-323-6105
Please address all correspondence to
-------------------------------------------------------------------------------------------------------------
THE SCUDDER FUNDS
P.O. BOX 2291
BOSTON, MASSACHUSETTS
02107-2291
Or stop by a Scudder Funds Center
-------------------------------------------------------------------------------------------------------------
Many shareholders enjoy the personal,
one-on-one service of the Scudder Funds
Centers. Check for a Funds Center near
you--they can be found in the following
cities:
Boca Raton New York
Boston Portland, OR
Chicago San Diego
Cincinnati San Francisco
Los Angeles Scottsdale
- -------------------------------------------------------------------------------------------------------------
For information on Scudder For information on Scudder
Treasurers Trust,(TM) Institutional Funds,* funds
an institutional cash designed to meet the broad
management service for investment management and
corporations, non-profit service needs of banks and
organizations and trusts that uses other institutions, call
certain portfolios of Scudder 1-800-854-8525.
Fund, Inc.* ($100,000 minimum), call
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 37 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.
