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, 1996
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 portfolio management team reviews the period's investing
strategies, financial markets, and economic conditions
8 Investment Portfolio
Itemized list of portfolio holdings
14 Financial Statements
17 Financial Highlights
18 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,
No matter what type of investor you are or where you think the
financial markets are headed, money market funds form an important part of a
well-balanced portfolio by providing a convenient parking place for cash
savings. Tax-free money market funds offer the added bonus of providing income
free from regular federal income taxes. Depending on your tax bracket, your
return from Scudder Tax Free Money Fund may be substantially higher than the
after-tax return you would earn from a comparable taxable investment.
The markets both elated and frustrated investors during the first six
months of 1996. In an environment of rising interest rates and falling prices on
fixed-income securities, stock funds experienced strong inflows at the expense
of bond funds. Aggressive stock funds took center stage during much of the
period, despite greatly increased equity volatility. Money market funds
continued to provide a relatively stable haven for those uncomfortable with the
uncertain economic and market environment, and produced modest gains during the
first six months of 1996. The average tax-free money market fund returned 1.44%
for the period according to Lipper Analytical Services, compared with 1.62% over
the prior six months. In addition, money funds experienced strong inflows during
the semiannual period, with assets reaching more than $828 billion, according to
IBC's Money Fund Report.
Looking ahead, we expect the economy to remain slow and steady for the
remainder of the year, with interest rates remaining at or above their current
level. Regardless of the economic environment, Scudder Tax Free Money Fund will
seek to maintain its $1.00 share price and income free from federal taxes.
Should you have any questions about your investment, please call a Scudder
Investor Relations representative at 1-800-225-2470. 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,
The key to maintaining investor confidence in a money market fund is
providing price stability and a competitive yield. Investing in high-quality,
short-term municipal securities helps Scudder Tax Free Money Fund pursue both
objectives, with the added benefit of federally tax-free income. At the close of
the Fund's six month fiscal period, its 7-day net annualized yield was 2.81%. To
match the Fund's yield during the same 7-day time period, a taxable fund would
have had to yield 4.33% or 4.59% for the 36% and 39.6% tax brackets,
respectively. The Fund's total return for the six months was 1.41%, compared
with the 1.44% return of the 135 tax-free money funds tracked by Lipper
Analytical Services.
Elements Affecting Money Fund Yields
Interest rate fluctuations, supply and demand, average maturity, and
stock and bond market performance are all factors that money fund managers
analyze when investing in money market securities. Each element contributes to
the performance of a fund in a unique way.
Interest Rates. Declining interest rates generally translate into lower
yields for money fund investors, as cash received from maturing investments must
be reinvested at lower rates. Rising interest rates, on the other hand, help
boost money fund yields. During the first half of this year, interest rates
remained relatively flat on money market securities, and ended the period at
less than they were one year ago.
Supply and Demand. The supply of municipal issues varies greatly during
the course of a year. In particular, municipalities generally borrow money
during the summer to build up their funds for the coming year's expenses. This
money is eventually paid back with tax revenues. The supply of municipal
securities increases during this part of the cycle, unlike winter when supply is
scarce.
Earlier this summer, we structured the fund's investments to maintain
share price stability while at the same time allowing flexibility to take
advantage of the imminent supply of tax-free issues. Additional stability was
gained by investing in variable rate demand notes, which pay interest at current
4
<PAGE>
market levels and return their entire face value when redeemed. Since these
securities are very short term, however, their yields are relatively low. To
counterbalance these lower yields as much as possible, we added
intermediate-term commercial paper to the portfolio. In mid- to late summer, we
expect to find opportunities to increase the Fund's yield as the excess supply
impacts our marketplace.
Average Maturity. Yield is also affected by the average length to
maturity of the securities in a fund's portfolio. Longer maturities tend to
provide higher yields to reward investors for taking additional risk, while
shorter maturities provide safety and liquidity. In preparation for the
municipal supply season, we shortened Scudder Tax Free Money Fund's average
maturity to 38 days from 49 days six months earlier. While the shorter maturity
will help provide funds for high-yielding new municipal issues as they become
available, it has taken a toll on the fund's yield in recent months, as
illustrated by the following chart. Scudder Tax Free Money Fund was not alone in
adopting this strategy, as the maturity of the average municipal fund dropped
from 43 to 40 days between April 29 and June 3rd according to IBC's Money Fund
Report.
THE PRINTED DOCUMENT CONTAINS A LINE CHART HERE
LINE CHART TITLE: Your Fund's Yield Compared
with Short-Term Interest Rates*
LINE CHART DATA:
Tax Equivalent
Fund Yield Interest Rate Yield for 28% tax
bracket
Dec. 31 4.01 5.19 5.57
Jan. 31 2.77 14.96 3.85
Feb. 29 2.75 4.99 3.82
Mar. 30 2.76 5.18 3.93
Apr. 30 3.15 5.16 4.38
May 30 2.90 5.19 4.03
Jun. 30 2.81 5.19 3.85
* The Fund yield shown is the 7-day net annualized SEC yield. Interest rates
are represented by the 3-month Treasury bill rate. If your tax bracket was
higher than the 28% tax bracket shown, the tax equivalent yield would have
been higher.
5
<PAGE>
Other Markets. Stock and bond market performance can have an effect on money
funds, as investors tend to flock toward money funds when other markets
experience volatility. The stock market saw strong inflows during the first six
months of 1996, as investors' confidence was heightened after a strong 1995.
However, rising interest rates caused many bond funds to provide negative
returns. Those seeking a safe haven chose money funds, whose assets rose to $828
billion during the week ended June 25, from $775 billion six months earlier.
Such inflows will help money funds absorb the supply of new issues this summer.
If inflows are too strong, though, pressure can mount to invest extra cash
quickly, and can sometimes force a fund to buy securities whose relative value
is low. In this regard, Scudder Tax Free Money Fund's manageable size aids
careful selection of quality issues.
Regulation 2a-7: Security for Shareholders
When the price of a small number of relatively obscure money market
funds threatened to fall below $1.00 in 1994, the Securities and Exchange
Commission further heightened the quality regulations for taxable money funds.
Designed to promote safety and liquidity, these new regulations will also apply
to tax-free money funds as of October 3, 1996. We would like to take this
opportunity to make it clear that the nature of Scudder Tax Free Money Fund has
always been conservative and focused on high quality, and the new regulation
will not change the Fund's structure in any discernible way. We remain committed
to providing a portfolio of high-quality, short-term investments in order to
maintain the Fund's stable share price.
Outlook
We expect economic growth to slow down in the second half of the year,
prompting us to lengthen the Fund's average maturity modestly going forward. We
will continue to purchase only high-quality investments to provide a stable
share price, with the added benefit of federally tax-free distributions. We
believe Scudder Tax Free Money Fund remains an appropriate place for your
short-term investment needs.
6
<PAGE>
Should you have any questions about the Fund or your investments,
please call a Scudder Investor Relations representative at 1-800-225-2470. Thank
you for choosing Scudder Tax Free Money Fund to help meet your investment needs.
Sincerely,
Your Portfolio Management Team
/s/K. Sue Cote /s/Donald C. Carleton
K. Sue Cote Donald C. Carleton
7
<PAGE>
SCUDDER TAX FREE MONEY FUND
<TABLE>
INVESTMENT PORTFOLIO as of June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<CAPTION>
Principal Credit Value($)
Amount($) Rating(b) (Note A)
- ------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
100.0% MUNICIPAL INVESTMENTS
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ALABAMA Montgomery, AL, Pollution Control and Solid
Waste, General Electric Co. Project, Series 1990
3.45%, 10/23/96 .............................................. 850,000 A1+ 850,000
ALASKA Alaska Housing Finance Corp., General Mortgage
Revenue, Series 1991 A, Weekly Demand Note,
3.4%, 6/1/26* ................................................ 10,000,000 A1+ 10,000,000
Valdez Alaska Marine Terminal, Arco Transportation,
Alaska Inc. Project, Series 1994 A, Tax Exempt
Commercial Paper, 3.6%, 11/12/96 ............................. 1,200,000 MIG1 1,200,000
ARIZONA Apache County, AZ, Industrial Development Revenue
Tuscan Electric Co. Springerville Project, 1985
Series A, Weekly Demand Note, 3.3%, 12/1/20* ................. 1,500,000 A1+ 1,500,000
Maricopa County, AZ, Public Service Palo Verde
Project, Series 1994 B, Daily Demand Note, 3.4%,
5/1/29* ...................................................... 2,100,000 A1+ 2,100,000
Maricopa County, AZ, Industrial Development
Authority, Royal Oaks Sun City Project, Weekly
Demand Note, 3.5%, 9/1/02* ................................... 300,000 MIG1 300,000
Pima County, AZ, Industrial Development Authority,
Tucson Electric Power Co., 1982 Series A, Weekly
Demand Note, 3.35%, 7/1/22* .................................. 2,100,000 A1+ 2,100,000
CALIFORNIA California Community College Finance Authority,
Pooled Tax and Revenue Anticipation Notes,
Series B, 5%, 8/30/96 ........................................ 1,000,000 SP1+ 1,000,789
Huntington Beach, CA, Multi-Family Housing Revenue,
River Meadows Apartments, Series B, Weekly
Demand Bonds, 3.575%, 10/1/05* ............................... 1,700,000 SS&C 1,700,000
Lancaster, CA, Willows Project Series 1985A, Green
Willows Multi-Family Housing, Weekly Demand Bonds,
3.425%, 2/1/05* .............................................. 8,650,000 SS&C 8,650,000
Los Angeles, CA, Unified School District, Tax and
Revenue Anticipation Notes, Series 1995, 4.5%,
7/3/96 ....................................................... 1,000,000 SP1+ 1,000,030
Los Angeles County, CA, Tax And Revenue
Anticipation Notes:
4.5%, 7/1/96 ................................................ 6,000,000 SP1 6,000,000
4.5%, 6/30/97 ............................................... 3,000,000 MIG1 3,018,720
Local Educational Agencies Pooled, 4.75%, 7/5/96 ............ 2,000,000 SP1+ 2,000,136
Riverside, CA, Multi-Family Housing Revenue, Polk
Apartments, Weekly Demand Note, 3.425%,
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>
South Coast, CA, Local Education Agencies, Pooled
Tax and Revenue Anticipation Note Program, 5%,
8/14/96 ...................................................... 2,000,000 SP1+ 2,001,150
Riverside, CA, Multi-Family Housing Revenue,
Countrywood Apartments, Series 1985 D, Weekly
Demand Bonds 3.425%, 5/1/05* ................................. 1,000,000 SS&C 1,000,000
COLORADO Colorado Housing Finance Authority, Central Park,
Coventry Village & Greenwood Point, Series 1985,
Weekly Demand Note, 3.35%, 5/1/97* ........................... 1,100,000 A1 1,100,000
Northglenn, CO, Industrial Development Revenue,
Castle Gardens Retirement, Series 1988, Weekly
Demand Note 3.45%, 1/1/09* ................................... 1,400,000 MIG1 1,400,000
DISTRICT OF COLUMBIA District of Columbia, General Obligation, General
Fund Recovery, Series B, Daily Demand Note,
3.75%, 6/1/03* ............................................... 1,000,000 MIG1 1,000,000
FLORIDA Broward County, FL, Housing Finance Authority,
Welleby Apartments Project, Weekly Demand Note,
3.45%, 12/1/06* .............................................. 1,000,000 MIG1 1,000,000
Gainsville, FL, Utilities System, Series C, Tax Exempt
Commercial Paper, 3.6%, 11/6/96 .............................. 1,600,000 A1+ 1,600,000
Jacksonville, FL, Pollution Control Revenue, Florida
Power and Light, Series 1994, Tax Exempt
Commercial Paper, 3.6%, 10/10/96 ............................. 1,000,000 MIG1 1,000,000
Putnam County, FL, Pollution Control Revenue,
Seminole Electric Cooperative Finance Corp., 1984
Series H-2, Weekly Demand Note, 3.15%, 3/15/14* .............. 2,550,000 A1+ 2,550,000
GEORGIA DeKalb Private Hospital Authority, Egleston Children's
Hospital at Emory University, 1994 Series B, Weekly
Demand Note, 3.3%, 3/1/24* ................................... 5,000,000 A1+ 5,000,000
Georgia Municipal Gas Authority Revenues Southern
Portfolio I, Project C, Tax Exempt Commercial
Paper, 3.65%, 10/22/96 ....................................... 4,400,000 MIG1 4,400,000
IDAHO Idaho State Tax Anticipation Notes, Series 1996,
4.5%, 6/30/97 ................................................ 3,000,000 MIG1 3,017,220
ILLINOIS Illinois Development Finance Authority, Molex Inc.
Project, Series 1985, Weekly Demand Note,
3.4%, 7/1/05* ................................................ 1,000,000 SS&C 1,000,000
Illinois Educational Facilities Authority, University
Pooled Finance Program, Weekly Demand Note,
3.45%, 12/1/05 (c)* .......................................... 2,000,000 MIG1 2,000,000
Illinois Health Facilities Authority Rush Presbyterian
St. Lukes Medical Center:
3.15%, Tax Exempt Commercial Paper, 8/9/96 .................. 1,000,000 MIG1 1,000,000
</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>
Series 1989 A, Tax Exempt Commercial Paper,
3.45%, 8/23/96 .............................................. 2,500,000 A1+ 2,500,000
Pekin, IL, Industrial Development Revenue Refunding
Bonds, BOC Group, Series 1992, Weekly Demand
Note, 3.4%, 9/1/12* .......................................... 5,000,000 SS&C 5,000,000
Skokie, IL, Skokie Fashion Series 1984, Weekly
Demand Note, 3.8%, 12/1/14* .................................. 2,000,000 MIG1 2,000,000
INDIANA Hoosier Energy Rural Electric Project, Sullivan Indiana,
Series 1985 L, Tax Exempt Commercial Paper
3.4%, 9/12/96 ................................................ 400,000 A1+ 400,000
Hoosier Energy Rural Electric Project, Sullivan
Indiana, Series 1985 L, Tax Exempt Commercial
Paper, 3.55%, 10/21/96 ....................................... 400,000 A1+ 400,000
Trustees of Purdue University Student Fee Revenue
Bonds, Series H, Weekly Demand Note,
3.3%, 7/1/17* ................................................ 2,700,000 A1+ 2,700,000
KENTUCKY Kentucky Development Finance Authority, Healthcare
System, Appalachian Regional Health Care, Series
1991, Weekly Demand Note, 3.55%, 9/1/06* ..................... 1,700,000 MIG1 1,700,000
MARYLAND Ann Arundel County, MD, Baltimore Electric And
Gas Co., Tax Exempt Commercial Paper,
3.7%, 8/23/96 ................................................ 3,600,000 A1 3,600,000
MASSACHUSETTS Massachusetts State Health and Educational Facilities
Authority, Harvard University, Series L, Tax Exempt
Commercial Paper, 3.1%, 8/6/96 ............................... 1,300,000 A1+ 1,300,000
MICHIGAN Michigan State General Obligation, Unlimited Tax
Notes, 4%, 9/30/96 ........................................... 5,000,000 SP1+ 5,010,069
University of Michigan Regents Medical Service Plan,
Revenue Bonds, Series 1995A, Daily Demand Note,
3.55%, 12/1/27* .............................................. 1,500,000 MIG1 1,500,000
MINNESOTA Cottage Grove, MN, Minnesota Mining and
Manufacturing, Series 1982, Weekly Demand
Note, 3.75%, 8/1/12* ......................................... 1,100,000 A1+ 1,100,000
Rochester, MN, Health Care Facility Mayo Foundation,
Mayo Medical Center, Series 1992C, Tax Exempt
Commercial Paper, 3.5%, 10/9/96 .............................. 1,300,000 A1+ 1,300,000
MISSISSIPPI Perry County, MS, Pollution Control Revenue,
Leaf River Forest Products, Daily Demand Note,
3.55%, 3/1/02* ............................................... 4,000,000 P1 4,000,000
MISSOURI Missouri State Health and Educational Facilities
Authority, Health Facilities Revenue, Sisters
of Mercy, Weekly Demand Note, 3.35%, 6/1/19* ................. 3,000,000 MIG1 3,000,000
</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>
St. Charles County, MO, Industrial Development
Authority, Multi-Family Housing, Sun River
Apartments, Weekly Demand Note, 3.4%, 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, 3.65%, 3/1/12* ............... 11,400,000 P1 11,400,000
NEW MEXICO Albuquerque, NM, Gross Receipts/Lodger's Tax,
Series 1991 A, Weekly Demand Note,
3.4%, 7/1/22* ................................................ 1,000,000 A1+ 1,000,000
NORTH DAKOTA Mercer County, ND, Pollution Control Revenue,
Cooperative Finance Corp., United Power, Weekly
Demand Note, 3.15%, 8/15/14* ................................. 3,150,000 A1 3,150,000
OHIO Cincinnati, OH, School District Tax Anticipation Note,
Series 1996 A, 6%, 12/1/98* .................................. 2,530,000 A 2,531,685
Hamilton County, OH, Economic Development
Revenue, Cincinnati Performing Arts Center, Series
1995, Weekly Demand Note, 3.4%, 6/15/05* ..................... 700,000 SS&C 700,000
Hamilton Health Systems, Franciscan Sisters of the
Poor Health Systems, Series A, Daily Demand Note,
3.75%, 3/1/17* ............................................... 100,000 MIG1 100,000
North Olmstead, OH, General Obligation Bond
Anticipation Notes, Series 1996, 4.6%, 12/19/96 .............. 5,000,000 SS&C 5,011,400
Stark County, OH, Sewer District Improvement Notes,
3.9%, 10/1/96 ................................................ 1,425,000 SS&C 1,426,404
Toledo, OH, General Obligation Limited Notes,
Series 1996, 4.25%, 10/15/96 ................................. 5,000,000 SS&C 5,006,962
OREGON Oregon General Obligation Veterans Welfare,
Series 1973E, Weekly Demand Note,
3.35%, 12/1/16 ............................................... 1,600,000 MIG1 1,600,000
PENNSYLVANIA Allegheny County, PA, Industrial Development
Authority, Lenmar Realty Project, Weekly Demand
Note, 3.55%, 1/1/98* ......................................... 90,000 MIG1 90,000
Bucks County, PA, Oxford Falls Plaza, Series 1984,
Weekly Demand Note, 3.7%, 10/1/14* ........................... 9,100,000 MIG1 9,100,000
Elk County, PA, Industrial Development Authority,
Stackpole Corporation, Series 1989, Weekly
Demand Note, 4.21%, 3/1/04* .................................. 1,000,000 SS&C 1,000,000
Emmaus, PA, General Authority, Local Government
Revenue Bond Pool Program:
Series 1989 G, Weekly Demand Note,
3.35%, 3/1/24* .............................................. 2,500,000 A1+ 2,500,000
Series 1989 G, Weekly Demand Note,
3.35%, 3/1/24* .............................................. 3,700,000 A1+ 3,700,000
</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>
Series 1989 G-5, Weekly Demand Note,
3.4%, 3/1/24* ............................................... 4,000,000 A1+ 4,000,000
Series 1989 H, Weekly Demand Note,
3.35%, 3/1/24* .............................................. 200,000 A1+ 200,000
Philadelphia, PA, General Obligation, 4.5%, 6/30/97 ........... 2,000,000 MIG1 2,010,480
SOUTH CAROLINA Berkley County, SC, General Obligation, Series 1993,
6.7%, 5/1/97 (c) ............................................. 780,000 AAA 797,988
TENNESSEE Franklin, TN, Industrial Development Revenue,
Franklin Oaks Apartments, Weekly Demand Note,
3.5%, 12/1/07* ............................................... 6,100,000 MIG1 6,100,000
Metropolitan Nashville Airport Authority, Special
Facilities Revenue, American Airlines Project,
Series B, Daily Demand 3.65%, 10/1/12* ....................... 3,000,000 A1+ 3,000,000
TEXAS Board of Regents University of Texas System
University Fund, Series 1994 A, Tax Exempt
Commercial Paper, 3.35%, 9/12/96 ............................. 3,000,000 MIG1 3,000,000
Camp County, TX, Industrial Development, Pollution
Control Revenue, Texas Oil & Gas Corp., Floating
Rate Demand Bond, 3.3%, 12/1/13* ............................. 2,000,000 A1 2,000,000
Grapevine, TX, Industrial Development Authority Corp.
American Airlines, Daily Demand Notes:
Series A1, 3.65%, 12/1/24* ................................... 1,000,000 P1 1,000,000
Series B1, 3.65%, 12/1/24* ................................... 1,500,000 P1 1,500,000
Gulf Coast Waste Disposal Authority, Texas Exxon
Project, Tax Exempt Commercial Paper,
3.3%, 7/8/96 ................................................. 2,000,000 MIG1 2,000,000
Lone Star, TX, Airport Improvement, Authority:
Series A2, Daily Demand Note, 3.65%, 12/1/14* ................ 1,000,000 MIG1 1,000,000
Series A5, Daily Demand Note, 3.65%, 12/1/14* ................ 1,300,000 MIG1 1,300,000
Lubbock, TX, Health Facilities Development Corp.,
St. Joseph Health System, 1985 Series A, Daily
Demand Note 3.55%, 7/1/13* ................................... 1,100,000 MIG1 1,100,000
San Antonio, TX, Electric and Gas, City Public Services,
Series 1995A, Tax Exempt Commercial Paper:
3.1%, 10/24/96 .............................................. 2,000,000 A1+ 2,000,000
3.05%, 10/25/96 ............................................. 2,000,000 A1+ 2,000,000
San Antonio, TX, Industrial Development Authority,
River Center Associates Project, Weekly Demand
Note, 3.55%, 12/1/12* ........................................ 6,500,000 A1 6,500,000
State of Texas, Tax and Revenue Anticipation Notes,
4.75%, 8/30/96 ............................................... 7,000,000 SP1+ 7,009,918
UTAH Salt Lake City, UT, Pooled Hospital Finances, Tax
Exempt Commercial Paper, 3.15%, 7/12/96 ...................... 3,600,000 A1+ 3,600,000
State of Utah, General Obligation, Unlimited Tax
Bonds, 5.75%, 7/1/96 ......................................... 1,000,000 AAA 1,000,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
- ---
12
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Principal Credit Value($)
Amount($) Rating(b) (Note A)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
VIRGINIA Peninsula Port Authority, VA, Shell Oil, Daily Demand
Note, 3.55%, 12/1/05* ........................................ 400,000 SS&C 400,000
York County, VA, Pollution Control Revenue, Virginia
Electric Power Company, Series 1985, Tax Exempt
Commercial Paper, 3.6%, 9/19/96 .............................. 1,400,000 MIGI 1,400,000
WASHINGTON Washington General Obligation, Various Purpose,
Series B2, Topstar Custodial Receipts, Weekly
Demand Note, 3.35%, 8/1/02* .................................. 5,000,000 A1+ 5,000,000
Washington Health Care Facilities Authority:
Sisters of Providence, 1985 Series B, Daily Demand
Note, 3.55%, 10/1/05* ....................................... 800,000 A1+ 800,000
Variable Rate, Sisters of Providence, Series 1985E,
Daily Demand Note, 3.55%, 10/1/05* .......................... 2,100,000 A1+ 2,100,000
Washington State Public Power Supply System,
Nuclear Project -1, 1993 Series 1A-1, Weekly
Demand Note, 3.3%, 7/1/17* ................................... 2,300,000 A1 2,300,000
WISCONSIN Milwaukee, WI, Promissory Notes, General Obligation,
Unlimited Notes, Series 1996 B6, 3.8%, 2/15/97 ............... 2,000,000 AA+ 2,007,927
Wausau, WI, Pollution Control Revenue, Minnesota
Mining and Manufacturing, Floating Rate
Demand Note:
Series 1982, 3.75%, 8/1/17* ................................. 2,300,000 A1+ 2,300,000
Series 1983, 3.75%, 12/1/01* ................................ 900,000 SS&C 900,000
WYOMING Uinta County, WY, Pollution Control Revenue,
Chevron U.S.A. Project, Series 1993,
3.5%, 8/15/20* ............................................... 700,000 P1 700,000
-----------
TOTAL INVESTMENT PORTFOLIO - 100.0%
(Cost $228,540,878) (a) ...................................... 228,540,878
===========
- ------------------------------------------------------------------------------------------------------------------------------
<FN>
(a) The cost for federal income tax purposes was $228,958,518. At June 30,
1996, 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.
Securities rated by Scudder (SS&C) have been determined to be of
comparable quality to rated eligible securities.
(c) Bond is insured by this company: FGIC.
* 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.
---
13
<PAGE>
SCUDDER TAX FREE MONEY FUND
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at value (amortized cost $228,540,878)
(Note A) ................................. $228,540,878
Receivables:
Investments sold ......................... 200,000
Fund shares sold ......................... 999,362
Interest ................................. 1,851,763
Other assets .................................. 6,532
Total assets ........................ 231,598,535
------------
LIABILITIES
Payables:
Due to custodian bank .................... $1,051,656
Investments purchased .................... 8,046,420
Fund shares redeemed ..................... 1,481,271
Dividends ................................ 42,025
Accrued management fee (Note B) .......... 90,647
Other accrued expenses (Note B) .......... 81,286
----------
Total liabilities ................... 10,793,305
------------
Net assets, at value .......................... $220,805,230
============
NET ASSETS
Net assets consist of:
Accumulated net realized loss ............ $ (172,053)
Shares of beneficial interest ............ 2,206,347
Additional paid-in capital ............... 218,770,936
------------
Net assets, at value .......................... $220,805,230
============
NET ASSET VALUE, offering and redemption price
per share ($220,805,230 [divided by]
220,634,655 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.
- ----
14
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest .................................... $4,102,920
Expenses
Management fee (Note B) ..................... $576,142
Services to shareholders (Note B) ........... 136,839
Custodian and accounting fees (Note B) ...... 43,962
Trustees' fees (Note B) ..................... 18,999
Auditing .................................... 19,277
State registration .......................... 25,364
Reports to shareholders ..................... 17,549
Legal ....................................... 3,579
Other ....................................... 5,966 847,677
---------------------
Net investment income ....................... 3,255,243
----------
NET REALIZED LOSS ON INVESTMENT TRANSACTIONS
Net realized loss from investments .......... (280)
NET INCREASE IN NET ASSETS RESULTING ----------
FROM OPERATIONS ............................ $3,254,963
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
----
15
<PAGE>
SCUDDER TAX FREE MONEY FUND
- --------------------------------------------------------------------------------
<TABLE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED
1996 DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS (UNAUDITED) 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ....................... $ 3,255,243 $ 7,694,437
Net realized loss from investment
transactions ............................. (280) (915)
------------- -------------
Net increase in net assets resulting
from operations .......................... 3,254,963 7,693,522
------------- -------------
Distributions to shareholders from net
investment income ($.014 and $.032
per share, respectively) ................. (3,255,243) (7,694,437)
------------- -------------
Fund share transactions at net asset
value of $1.00 per share:
Shares sold ................................ 270,726,884 502,020,783
Shares issued to shareholders in
reinvestment of distributions ........... 2,951,255 6,965,743
Shares redeemed ............................ (291,960,389) (526,671,999)
------------- -------------
Net decrease in net assets from
Fund share transactions ................. (18,282,250) (17,685,473)
------------- -------------
DECREASE IN NET ASSETS (18,282,530) (17,686,388)
Net assets at beginning of period .......... 239,087,760 256,774,148
------------- -------------
NET ASSETS AT END OF PERIOD ................ $ 220,805,230 $ 239,087,760
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
- ----
16
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
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, 1996 ---------------------------------------------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
----------- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period ............. $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 ............. .014 .032 .022 .018 .025 .041 .053 .057 .046 .040 .041
Less distributions
from net
investment income .. (.014) (.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 $1.000
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN (%) 1.41** 3.27 2.26 1.86 2.54 4.20 5.44 5.83 4.73 4.03 4.19
RATIOS AND
SUPPLEMENTAL DATA
Net assets, end
of period
($ millions) ....... 221 239 257 222 267 279 303 279 358 390 383
Ratio of operating
expenses to
average daily
net assets (%) ..... .74* .75 .77 .75 .73 .70 .72 .70 .67 .66 .63
Ratio of net
investment income
to average daily
net assets (%) ..... 2.83* 3.21 2.24 1.84 2.53 4.12 5.30 5.67 4.61 4.03 4.01
<FN>
* Annualized
** Not annualized
</FN>
</TABLE>
----
17
<PAGE>
SCUDDER TAX FREE MONEY FUND
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 Fund's financial statements are prepared in accordance with
generally accepted accounting principles which require the use of
management estimates. The policies described below are followed
consistently by the Fund in the preparation of its financial
statements.
SECURITY VALUATION. 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
- ----
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
distribution may be made to the extent necessary to avoid the payment of a
four percent federal excise tax.
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, 1996, the management fee pursuant to the Agreement aggregated $576,142,
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
six months ended June 30, 1996, the amount charged to the Fund by SSC aggregated
$113,988 of which $18,713 is unpaid at June 30, 1996.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records of the Fund. For the six months
ended June 30, 1996, the amount charged
----
19
<PAGE>
SCUDDER TAX FREE MONEY FUND
- --------------------------------------------------------------------------------
to the Fund by SFAC aggregated $22,639, of which $7,459 is unpaid
at June 30, 1996.
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, 1996, Trustees' fees
and expenses aggregated $18,999.
- ----
20
<PAGE>
OFFICERS AND TRUSTEES
David S. Lee*
President and Trustee
E. Michael Brown*
Trustee
Dawn-Marie Driscoll
Trustee; Executive Fellow, Center for Business Ethics; President,
Driscoll Associates
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
<TABLE>
<CAPTION>
The Scudder Family of Funds
-----------------------------------------------------------------------------------------------------------------
<C> <C>
Money Market Income
Scudder Cash Investment Trust Scudder Emerging Markets Income Fund
Scudder U.S. Treasury Money Fund Scudder Global Bond Fund
Tax Free Money Market+ Scudder GNMA Fund
Scudder Tax Free Money Fund Scudder High Yield Bond Fund
Scudder California Tax Free Money Fund* Scudder Income Fund
Scudder New York Tax Free Money Fund* Scudder International Bond Fund
Tax Free+ Scudder Short Term Bond Fund
Scudder California Tax Free Fund* Scudder Zero Coupon 2000 Fund
Scudder High Yield Tax Free Fund Growth
Scudder Limited Term Tax Free Fund Scudder Capital Growth Fund
Scudder Managed Municipal Bonds Scudder Development Fund
Scudder Massachusetts Limited Term Tax Free Fund* Scudder Emerging Markets Growth Fund
Scudder Massachusetts Tax Free Fund* Scudder Global Fund
Scudder Medium Term Tax Free Fund Scudder Global Discovery Fund
Scudder New York Tax Free Fund* Scudder Gold Fund
Scudder Ohio Tax Free Fund* Scudder Greater Europe Growth Fund
Scudder Pennsylvania Tax Free Fund* Scudder International Fund
Growth and Income Scudder Latin America Fund
Scudder Balanced Fund Scudder Micro Cap Fund
Scudder Growth and Income Fund Scudder Pacific Opportunities Fund
Scudder Quality Growth Fund
Scudder Small Company Value Fund
Scudder Value Fund
The Japan Fund
Retirement Plans and Tax-Advantaged Investments
-----------------------------------------------------------------------------------------------------------------
IRAs 403(b) Plans
Keogh Plans SEP-IRAs
Scudder Horizon Plan+++* (a variable annuity) Profit Sharing and Money Purchase
401(k) Plans Pension Plans
Closed-End Funds#
-----------------------------------------------------------------------------------------------------------------
The Argentina Fund, Inc. The Latin America Dollar Income Fund, Inc.
The Brazil Fund, Inc. Montgomery Street Income Securities, Inc.
The First Iberian Fund, Inc. Scudder New Asia Fund, Inc.
The Korea Fund, Inc. Scudder New Europe Fund, Inc.
Scudder World Income
Opportunities Fund, Inc.
Institutional Cash Management
-----------------------------------------------------------------------------------------------------------------
Scudder Institutional Fund, Inc. Scudder Treasurers Trust(TM)++
Scudder Fund, Inc.
-----------------------------------------------------------------------------------------------------------------
For complete information on any of the above Scudder funds, including
management fees and expenses, call or write for a free prospectus. Read it
carefully before you invest or send money. +A portion of the income from the
tax-free funds may be subject to federal, state, and local taxes. *Not
available in all states. +++A no-load variable annuity contract provided by
Charter National Life Insurance Company and its affiliate, offered by
Scudder's insurance agencies, 1-800-225-2470. #These funds, advised by
Scudder, Stevens & Clark, Inc. are traded on various stock exchanges. ++For
information on Scudder Treasurers Trust,(TM) an institutional cash
management service that utilizes certain portfolios of Scudder Fund, Inc.
($100,000 minimum), call 1-800-541-7703.
</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 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
Visit the Scudder World Wide Web Site at:
-------------------------------------------------------------------------------------------------------------
http://funds.scudder.com
Or stop by a Scudder Funds Center
-------------------------------------------------------------------------------------------------------------
Many shareholders enjoy the personal, one-on-one service of the
Scudder Funds Centers. Check for a Funds Center near you--they can
be found in the following cities:
Boca Raton New York
Boston Portland, OR
Chicago San Diego
Cincinnati San Francisco
Los Angeles Scottsdale
-------------------------------------------------------------------------------------------------------------
For information on Scudder For information on Scudder
Treasurers Trust,(TM)an institutional Institutional Funds,* funds
cash management service for designed to meet the broad
corporations, non-profit investment management and
organizations and trusts that uses service needs of banks and
certain portfolios of Scudder Fund, other institutions, call
Inc.* ($100,000 minimum), call 1-800-854-8525.
1-800-541-7703.
-------------------------------------------------------------------------------------------------------------
Scudder Investor Relations and Scudder Funds Centers are services provided
through Scudder Investor Services, Inc., Distributor.
* Contact Scudder Investor Services, Inc., Distributor, to receive a
prospectus with more complete information, including management fees and
expenses. Please read it carefully before you invest or send money.
</TABLE>
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 40 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.
