Scudder
Tax Free
Money Fund
Semiannual Report
June 30, 1997
Pure No-Load(TM) Funds
A money market fund offering opportunities for tax-free income and stability of
principal from high-quality, short-term tax-exempt securities.
A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
SCUDDER (logo)
<PAGE>
Table of Contents
2 In Brief
3 Letter from the Fund's President
4 Portfolio Management Discussion
6 Investment Portfolio
12 Financial Statements
15 Financial Highlights
16 Notes to Financial Statements
20 Officers and Trustees
21 Investment Products and Services
22 Scudder Solutions
In Brief
o Scudder Tax Free Money Fund's 30-day net annualized yield at the end of June
was 3.16%. To match the Fund's yield during the same 30-day time frame,
investors in the 36% and 39.6% tax brackets would have had to earn 4.94% and
5.23%, respectively, from a comparable taxable investment.
o Given the strong economic data that emerged early in the first quarter of
1997, our strategy has been to moderate potential market volatility and focus on
maintaining a stable $1.00 share price while providing a competitive money
market yield. At the end of June, the Fund's average maturity stood at 46 days.
2 - Scudder Tax Free Money Fund
<PAGE>
Letter From the Fund's President
Dear Shareholders,
Throughout the first half of Scudder Tax Free Money Fund's 1997 fiscal
year, inflation remained dormant, yet investors responded to strong economic
growth as if higher prices were just around the corner. At the end of March, the
Federal Reserve engineered a small increase in short-term interest rates. The
anticipation of this event in the financial markets affected all types of
fixed-income investments. However, those most sensitive to changes in the level
of interest rates -- longer-maturity bonds -- were the hardest hit.
In contrast, your Fund's focus on the shortest-maturity and highest-quality
securities enabled it to maintain the $1.00 share price that is one of its
primary objectives while providing competitive money market income free from
regular federal income taxes during the period.
To keep you abreast of developments within the Scudder family of funds, we
would like to take this opportunity tell you about a newcomer to Scudder's
mutual fund lineup: Scudder International Growth and Income Fund. The Fund
employs a yield-oriented approach to international investing and seeks to
provide long-term growth of capital plus current income. Investors who desire
international exposure but who wish to take a more conservative approach may
appreciate the Fund's emphasis on the dividend paying stocks of well-established
companies outside the United States. For a complete listing of Scudder's mutual
fund offerings, see page 21.
Despite near-term uncertainty in the financial markets, we believe the
global economic landscape provides an excellent long-term backdrop for
fixed-income investors. In the report that follows, your fund's managers discuss
the events of the past six months as well as their outlook for the remainder of
the year. Thank you for choosing Scudder Tax Free Money Fund to help meet your
investment needs. Please do not hesitate to call Investor Relations at
1-800-225-2470 with any questions, or visit our Web site at
http://funds.scudder.com.
Sincerely,
/s/David S. Lee
David S. Lee
President,
Scudder Tax Free Money Fund
3 - Scudder Tax Free Money Fund
<PAGE>
Portfolio Management Discussion
Dear Shareholders,
During the first half of your Fund's 1997 fiscal year, investors continued to
grapple with an interesting paradox: growth without inflation. As the economy
completed its sixth year of uninterrupted growth, economists and other market
pundits strained to see rising prices behind each new release of positive
economic data. But inflation was nowhere in sight.
Economic activity heated up in earnest in late 1996 and went on to deliver 5.9%
GDP growth in the first quarter of 1997. Unemployment dropped to its lowest
level since 1973, and investors widely anticipated March's increase in the
federal funds rate. After much interim volatility, fixed-income investments
rallied in the remaining weeks through June 30, as data began to suggest that
growth in the second quarter would be slower.
Your Fund's investments in ultra short-term, high-quality municipal securities
acted as a buffer during this period of uncertainty. Scudder Tax Free Money Fund
maintained its $1.00 share price throughout the period and, as interest rates
edged higher, was able to provide a higher level of income, contributing to a
positive total return of 1.50% for the period. The Fund's 30-day net annualized
yield at the end of June was 3.16%. To match the Fund's yield during the same
30-day time frame, investors in the 36% and 39.6% tax brackets would have had to
earn 4.94% and 5.23%, respectively, from a comparable taxable investment.
Maturity Management Adds Value
Few tools are as important to the management of a money-market portfolio as its
average maturity. Shorter maturities are generally sought for their safety and
liquidity -- the primary goals of Scudder Tax Free Money Fund. Longer maturities
tend to provide higher yields to reward investors for taking additional risk.
The Fund's average maturity was approximately 41 days in January. Given the
strong economic data that emerged early in the first quarter of 1997, our
strategy was to moderate potential market volatility and to look for
opportunities to buy various short-term securities when we believed they offered
good value. At the end of June, the Fund's average maturity stood at 46 days.
A Balanced Portfolio
Your fund's portfolio is structured with a combination of commercial paper,
municipal notes, and variable-rate demand notes. Commercial paper allows us to
lock in relatively attractive rates over a period of one to three months.
Variable-rate notes (VRDNs) have a distinctly different appeal. Since their
yields fluctuate with the prevailing level of interest rates, VRDNs have enabled
the portfolio to participate in each incremental rise in rates during the
period. VRDNs also add a considerable amount of price stability. Since these
securities are held at par, their coupons -- not their prices -- fluctuate along
with the level of short-term interest rates.
4 - Scudder Tax Free Money Fund
<PAGE>
A Cautionary Outlook
By the end of June, a host of crucial economic reports had suggested inflation
now is less of a threat than many predicted. The six-year-old expansion may very
well wind down, paving the way for lower interest rates and a sustained bond
market rally. Importantly, profit expectations may be overly optimistic, given
that many companies are unable to raise prices. The Fed continues to patiently
monitor economic indicators.
The timing of an economic downturn is difficult to predict, however. For now,
growth is strong and reported profits continue to exceed expectations. Although
the Fed left interest rates unchanged at its May 20 and July 2 meetings, it may
find sufficient reason to raise rates later this year. Given this uncertain
outlook for investors in fixed-income instruments, we believe Scudder Tax Free
Money Fund will likely have another chance to demonstrate the value of owning a
short-term investment vehicle as part of a well-diversified portfolio. Going
forward, we will continue to look for opportunities to add value with securities
ranging in maturity from one day to one year, while striving to meet your goals
of price stability and liquidity.
Sincerely,
Your Portfolio Management Team
/s/K. Sue Cote /s/Donald C. Carleton
K. Sue Cote Donald C. Carleton
/s/Rebecca L. Wilson
Rebecca L. Wilson
5 - Scudder Tax Free Money Fund
<PAGE>
Investment Portfolio as of June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Principal Credit Value ($)
Amount ($) Rating (b) (Note A)
- ------------------------------------------------------------------------------------------------------------------------------
Municipal Investments 100.0%
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alaska
Alaska Housing Finance Corp., General Mortgage Revenue, Series 1991-A, Weekly
Demand Note, 4.2%, 6/1/26* ................................................... 10,000,000 A1+ 10,000,000
Valdez, AK, Marine Term Revenue, Series 1993 A, Variable Rate, 4%, 12/1/33* .... 1,300,000 A1+ 1,300,000
Valdez, AK, Marine Terminal, ARCO Transportation Alaska Inc. Project,
Series 1994 A, Tax Exempt Commercial Paper, 3.6%, 10/21/97 ................... 1,200,000 MIG1 1,200,000
Arizona
Apache County Industrial Development Revenue, Tuscan Electric Co.,
Springerville Project:
Series 1983 B, Weekly Demand Note, 4.2%, 12/15/18* .......................... 2,500,000 A1+ 2,500,000
Series 1985 A, Weekly Demand Note, 4.15%, 12/1/20* .......................... 1,500,000 A1+ 1,500,000
Maricopa County, AZ, Industrial Development Authority, Royal Oaks Sun City
Project, Weekly Demand Note, 4.1%, 9/1/02* ................................... 200,000 MIG1 200,000
Maricopa County, AZ, Pollution Control Revenue:
Series 1985 D, Tax Exempt Commercial Paper, 3.55%, 8/20/97 ................... 2,000,000 A1 2,000,000
Series 1985 F, Tax Exempt Commercial Paper, 3.5%, 7/15/97 .................... 2,000,000 A1 2,000,000
Pima County, AZ, Industrial Development Authority, Tucson Electric Power Co.,
Series 1992 A, Weekly Demand Note, 4.2%, 7/1/22* ............................. 2,100,000 A1+ 2,100,000
Pima County, AZ, Industrial Revenue Authority, Series 1990, Daily Demand Note,
4.2%, 5/1/25* ................................................................ 4,000,000 MIG1 4,000,000
Salt River, AZ, Agricultural Improvement District, Tax Exempt Commercial Paper,
3.6%, 10/21/97 ............................................................... 3,000,000 A1+ 3,000,000
California
City of Riverside, CA, Countrywood Apartments, Multi-Family Revenue, Series
1985 D, Weekly Demand Bonds, 4.25%, 5/1/05* .................................. 1,000,000 SS&C 1,000,000
Huntington Beach, CA, Multi-Family Housing Revenue, River Meadows Apartments,
Series B, Weekly Demand Bonds, 4%, 10/1/05* .................................. 1,700,000 SS&C 1,700,000
Los Angeles County, CA, Tax and Revenue Anticipation Notes, Series 1997 A, 4.5%,
6/30/98 ...................................................................... 3,000,000 SP1+ 3,018,720
Riverside, CA, Multi-Family Housing Revenue, Polk Apartments, Weekly Demand
Note, 4.125%, 12/1/23* ....................................................... 2,000,000 A1 2,000,000
San Marcos, CA, Redevelopment Agency, Multi-Family Rental Housing Agency,
Series 1985, Weekly Demand Note, 4.25%, 6/1/05* .............................. 5,000,000 SS&C 5,000,000
Colorado
Northglenn, CO, Industrial Development Revenue, 4.125%, 1/1/09* ................ 1,400,000 MIG1 1,400,000
Regional Transportation District Colorado Special Passenger Fair Revenue Bond,
Series 1989 A, Daily Demand Note, 4.15%, 6/1/99* ............................. 1,700,000 A1+ 1,700,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
6 - Scudder Tax Free Money Fund
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Value ($)
Amount ($) Rating (b) (Note A)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
District Of Columbia
District of Columbia, General Obligation:
General Fund Recovery, Series 1991 B, Daily Demand Note, 4.1%, 6/1/03* ....... 2,000,000 MIG1 2,000,000
Series B1, Daily Demand Note, 4.1%, 6/1/03* .................................. 1,600,000 A1+ 1,600,000
Florida
Broward County, FL, Housing Finance Authority, Welleby Apartments Project,
Weekly Demand Note, 4.15%, 12/1/06* .......................................... 1,000,000 SS&C 1,000,000
City of Gainesville, FL, Utilities System, Tax Exempt Commercial Paper:
3.65%, 9/11/97 ............................................................... 1,391,000 A1+ 1,391,000
3.6%, 10/21/97 ............................................................... 1,043,000 A1+ 1,043,000
3.75%, 11/13/97 .............................................................. 2,000,000 A1+ 2,000,000
Dade County, FL, Water and Sewer System Revenue, Series 1994, Weekly Demand
Note, 4.15%, 10/5/22 (c)* .................................................... 2,000,000 A1+ 2,000,000
Putnam County, FL, Pollution Control Revenue, Seminole Electric Cooperative
Finance Corp., 1984 Series H-2, Weekly Demand Note, 4.2%, 3/15/14* ........... 2,500,000 A1+ 2,500,000
Georgia
DeKalb Private Hospital Authority, Egleston Children's Hospital at Emory
University,Series 1994 B, Weekly Demand Note, 4.2%, 3/1/24* .................. 5,000,000 A1+ 5,000,000
Idaho
Idaho State Tax Anticipation Notes, Series 1997, 4.625%, 6/30/98 ............... 1,500,000 MIG1 1,510,725
Illinois
Illinois Development Finance Authority:
Molex Inc. Project, Series 1985, Weekly Demand Note, 4.2%, 7/1/05* ........... 1,000,000 SS&C 1,000,000
Pollution Control Revenue, Weekly Demand Note, 4.4%, 4/1/32 (c)* ............. 1,700,000 AAA 1,700,000
Illinois Educational Facilities Authority, University Pooled Finance Program,
Weekly Demand Note, 4.15%, 12/1/05 (c)* ....................................... 2,275,000 MIG1 2,275,000
Illinois Rush Presbyterian Hospital, Series 1989 A, Tax Exempt Commercial
Paper, 3.4%, 7/24/97 .......................................................... 2,500,000 A1+ 2,500,000
Pekin, IL, Industrial Development Revenue Refunding Bonds, BOC Group, Series
1992, Weekly Demand Note, 4.2%, 9/1/12* ....................................... 5,000,000 SS&C 5,000,000
Skokie, IL, Skokie Fashion Square Weekly Demand Note, Series 1984, 4.25%,
12/1/14* ..................................................................... 2,000,000 MIG1 2,000,000
Indiana
Hoosier Energy Rural Electric Project, Sullivan, IN, Series 1985 L, Tax Exempt
Commercial Paper, 3.6%, 10/21/97 ............................................. 400,000 A1+ 400,000
Indianapolis, Indiana, Local Public Improvement Bond Bank Notes, Series 1996 H:
4.125%, 7/10/97 .............................................................. 500,000 SP1+ 500,072
</TABLE>
The accompanying notes are an integral part of the financial statements.
7 - Scudder Tax Free Money Fund
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Value ($)
Amount ($) Rating (b) (Note A)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
4.125%, 7/10/97 .............................................................. 2,000,000 SP1+ 2,000,287
Iowa
Iowa Schools Cash Anticipation Program, Series 1997 A, 4.5%, 6/26/98 ........... 2,000,000 SP1+ 2,013,292
Kentucky
Kentucky Development Finance Authority, Healthcare System, Appalachian Regional
Health Care, Series 1991, Weekly Demand Note, 4.3%, 9/1/06* .................. 1,600,000 MIG1 1,600,000
Mayfield, KY, Multi-City Lease Revenue Kentucky League of Cities Funding Trust,
Weekly Demand Note, Series 1996, 4.3%, 7/1/26* ............................... 1,400,000 MIG1 1,400,000
Maryland
Anne Arundel County, MD, Baltimore Electric & Gas Company, Tax Exempt
Commercial Paper, 3.85%, 9/12/97 ............................................. 3,600,000 A1 3,600,000
Massachusetts
Massachusetts Bay Transportation Authority Notes, MA, Series B, 4.75%, 9/5/97* . 1,000,000 SP1 1,001,391
Michigan
Wayne Charter County, MI, Airport Revenue, Detroit Metropolitan County,
Series 1996 B, Weekly Demand Note, 4.2%, 12/1/16* ............................ 3,000,000 MIG1 3,000,000
Minnesota
Cottage Grove, MN, Minnesota Mining and Manufacturing, Series 1982,
Weekly Demand Note, 4.5%, 8/1/12* ............................................ 1,100,000 AAA 1,100,000
Minnesota Municipal Power Agency, Tax Exempt Commercial Paper, 3.9%, 7/18/97 ... 2,000,000 P1 2,000,000
Missouri
Missouri HEFA School District Advance Funding Notes, Series 1996 C, Kansas City
School District, 4.5%, 9/8/97 ................................................ 2,000,000 SP1+ 2,002,185
Missouri State Health and Educational Facilities Authority, Health Facilities
Revenue, Sisters of Mercy, Weekly Demand Note, 4.15%, 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, 4.1%, 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, 3.8%, 3/1/12* ......... 11,400,000 P1 11,400,000
New Mexico
Albuquerque, NM, Gross Receipts/Lodgers Tax, Series 1991, Weekly Demand Note,
4.2%, 7/1/22* ................................................................ 1,000,000 A1+ 1,000,000
New York
New York City Health and Hospital Corporation Revenue, Series 1997 A, Weekly
Demand Note, 4.1%, 2/15/26* .................................................. 1,500,000 MIG1 1,500,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
8 - Scudder Tax Free Money Fund
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Value ($)
Amount ($) Rating (b) (Note A)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
North Dakota
Grand Forks, ND, Hospital Facilities Revenue, Daily Demand Note, 4.15%,
12/1/16* ..................................................................... 1,700,000 MIG1 1,700,000
Mercer County, ND, Pollution Control Revenue, Cooperative Finance Corp.,
United Power, Weekly Demand Note, 4.2%, 8/15/14* ............................. 3,050,000 A1 3,050,000
Ohio
Hamilton County, OH, Franciscan Sisters of the Poor Health System, Series A,
Daily Demand Note, 4.15%, 3/1/17* ............................................ 800,000 MIG1 800,000
Pennsylvania
Bucks County, PA, Oxford Falls Plaza, Series 1984, Weekly Demand Note,
4.375%, 10/1/14* ............................................................. 9,100,000 MIG1 9,100,000
Delaware County, PA, Airport Facilities Revenue, United Parcel Service, Daily
Demand Note, 4%, 12/1/15* .................................................... 3,000,000 AAA 3,000,000
Elk County, PA, Industrial Development Authority, Series 1989, Weekly
Demand Note, 4.42%, 3/1/04* .................................................. 1,000,000 SS&C 1,000,000
Emmaus, PA, General Authority Local Government, Revenue Bond Pool Program:
Weekly Demand Note, 4.2%, 3/1/24* ............................................ 2,500,000 A1+ 2,500,000
Series 1989 G, Weekly Demand Note, 4.2%, 3/1/24* ............................. 3,700,000 A1+ 3,700,000
Erie County, PA, Tax Anticipation Notes, Series 1997, 4.25%, 12/31/97 .......... 5,000,000 MIG1 5,000,000
Lancaster, PA, Multi-Family Revenue, Series 1985, Weekly Demand Note, 4.25%,
2/1/05* ...................................................................... 3,650,000 A1 3,650,000
Pennsylvania Higher Education Assistance Agency, Student Loan Revenue,
Series 1997 A, Weekly Demand Note, 4.25%, 3/1/27* ............................ 2,000,000 MIG1 2,000,000
Philadelphia, PA, School District Tax and Revenue Anticipation Notes, Series
1993 A, 4.5%, 7/1/98 (c) ..................................................... 1,000,000 AAA 1,005,824
Temple University of the Commonwealth, PA, Higher Education, Series 1997,
4.75%, 5/18/98 (c) ........................................................... 2,000,000 SP1+ 2,014,374
Puerto Rico
Puerto Rico Commonwealth, Tax and Revenue Anticipation Notes, Series 1996 A,
4%, 7/30/97 .................................................................. 2,000,000 MIG1 2,000,889
South Carolina
Orangeburg County, SC, Solid Waste Disposal Facilities Revenue, Series 1994,
Daily Demand Note, 4.15%, 11/1/24* ........................................... 100,000 MIG1 100,000
South Carolina Jobs-Economic Development Authority, Franciscan Sisters of the
Poor, St. Francis Hospital, Variable Rate Daily Demand Note, 4.1%, 7/1/22* ... 985,000 MIG1 985,000
South Carolina Public Service Authority, Revenue Promissory Notes, Tax Exempt
Commercial Paper, 3.4%, 7/18/97 .............................................. 3,500,000 P1 3,500,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
9 - Scudder Tax Free Money Fund
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Value ($)
Amount ($) Rating (b) (Note A)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tennessee
Franklin, TN, Industrial Development Revenue, Franklin Oaks Apartments, Weekly
Demand Note, Series 1985, 4.15%, 12/1/21* .................................... 6,100,000 MIG1 6,100,000
Texas
Austin, TX, Utility Systems, Series 1996, Tax Exempt Commercial Paper, 3.65%,
8/26/97 ...................................................................... 1,000,000 A1+ 1,000,000
Board of Regents, University of Texas, System University Fund, Tax Exempt
Commercial Paper, 3.7%, 8/11/97 .............................................. 3,000,000 A1+ 3,000,000
Brazos, TX, Harbor Institutional Project, Series 1986, Tax Exempt Commercial
Paper, 3.4%, 8/7/97 .......................................................... 600,000 A1 600,000
Camp County, TX, Industrial Development, Pollution Control Revenue, Texas Oil &
Gas Corp., Floating Rate Demand Bond, 4.3%, 12/1/13* ......................... 2,000,000 A1 2,000,000
Dallas, TX, Area Transit, Tax Exempt Commercial Paper, 3.5%, 7/10/97 ........... 1,000,000 A1+ 1,000,000
Harris County Children's Hospital, Series 1996, Weekly Demand Note, 4.05%,
8/1/20* ...................................................................... 1,000,000 A1+ 1,000,000
Panhandle-Plains, TX, Higher Education Authority, Student Loan Revenue,
4.25%, 6/1/25 ................................................................ 1,900,000 MIG1 1,900,000
San Antonio, TX, Electric & Gas City Public Services, Tax Exempt Commercial
Paper, 3.6%, 10/9/97 ......................................................... 3,000,000 A1+ 3,000,000
San Antonio, TX, Industrial Development Authority, River Center Associates
Project, Weekly Demand Note, 4.25%, 12/1/12* ................................. 3,400,000 SS&C 3,400,000
State of Texas Tax and Revenue Anticipation Notes Series 1996, 4.75%, 8/29/97 .. 1,000,000 MIG1 1,001,279
State of Texas, General Obligation, Veterans Housing Assistance Refunding
Bonds, Series 1995, Weekly Demand Note, 4.15%, 12/1/16* ...................... 1,000,000 A1+ 1,000,000
Texas Tax and Revenue Anticipation Notes, Series 1996, 4.75%, 8/29/97 .......... 8,000,000 SP1+ 8,013,677
Utah
Intermountain Power Agency, UT, Series 1985 F, Tax Exempt Commercial Paper,
3.5%, 7/29/97 ................................................................ 1,700,000 MIG1 1,700,000
Salt Lake City, UT, Tax Exempt Commercial Paper, 3.7%,11/13/97 ................. 2,000,000 A1+ 2,000,000
Utah Board of Regents, Student Loan Revenue Series 1988, Weekly Demand Note,
4.25%, 11/1/13 (c)* .......................................................... 2,500,000 MIG1 2,500,000
Washington
Student Loan Finance Association, WA, Series 1988 A, Weekly Demand Note, 4.2%,
1/1/04* ...................................................................... 2,000,000 MIG1 2,000,000
Washington Motor Vehicle Fuel Tax, Series 1996, 5%, 7/1/98 ..................... 2,000,000 AA 2,022,882
Washington State Public Power Supply System, Nuclear Project #2, Series 1993 B,
4.3%, 7/1/98 (c) ............................................................. 2,000,000 AAA 2,007,359
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 - Scudder Tax Free Money FundD
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Value ($)
Amount ($) Rating (b) (Note A)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Wisconsin
Milwaukee County, WI, Series 1992 A, 4.8%, 9/1/97 .............................. 2,000,000 A1 2,003,083
Wausau, WI, Pollution Control Revenue, Minnesota Mining and Manufacturing,
Floating Rate Demand Note:
Series 1982, 4.5%, 8/1/17 (c)* ............................................. 2,300,000 AAA 2,300,000
Series 1983, 4.5%, 12/1/01* ................................................ 900,000 AAA 900,000
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $216,410,039) (a) 216,410,039
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The cost for federal income tax purposes was $216,410,039.
(b) All of the securities held have been determined by the Adviser 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 by the
Adviser to be of comparable quality to rated eligible securities.
(c) Bond is insured by one of these companies: AMBAC, FGIC, FSA or MBIA.
* Floating rate and monthly, weekly, or daily demand notes are securities
whose yields vary with a designated market index or market rate, such as
the coupon-equivalent of the Treasury Bill rate. Variable rate demand
notes are securities whose yields are periodically reset at levels that
are generally comparable to tax-exempt commercial paper. These securities
are payable on demand within seven calendar days and normally incorporate
an irrevocable letter of credit or line of credit from a major bank. These
notes are carried, for purposes of calculating average weighted maturity,
at the longer of the period remaining until the next rate change or to the
extent of the demand period.
The accompanying notes are an integral part of the financial statements.
11 - Scudder Tax Free Money Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Assets
--------------------------------------------------------------------------------------------------------------------
<S> <C>
Investments, at value (amortized cost $216,410,039) ........................ $ 216,410,039
Cash ....................................................................... 8,776,109
Receivable for investments sold ............................................ 15,000
Receivable for Fund shares sold ............................................ 3,126,488
Interest receivable ........................................................ 1,664,613
Other assets ............................................................... 10,945
--------------
Total assets ............................................................... 230,003,194
Liabilities
--------------------------------------------------------------------------------------------------------------------
Payable for investments purchased .......................................... 4,529,445
Payable for Fund shares redeemed ........................................... 2,072,991
Dividends payable .......................................................... 41,501
Accrued management fee ..................................................... 60,651
Other payables and accrued expenses ........................................ 83,587
--------------
Total liabilities .......................................................... 6,788,175
---------------------------------------------------------------------------------------------
Net assets, at value $ 223,215,019
---------------------------------------------------------------------------------------------
Net Assets
--------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Accumulated net realized loss .............................................. (699,042)
Paid-in capital ............................................................ 223,914,061
---------------------------------------------------------------------------------------------
Net assets, at value $ 223,215,019
---------------------------------------------------------------------------------------------
Net Asset Value
--------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share ($223,215,019 /
223,043,627 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.
12 - Scudder Tax Free Money Fund
<PAGE>
Statement of Operations
six months ended June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Investment Income
--------------------------------------------------------------------------------------------------------------------
<S> <C>
Interest ............................................................. $ 4,021,658
--------------
Expenses:
Management fee ....................................................... 550,364
Services to shareholders ............................................. 143,541
Custodian and accounting fees ........................................ 43,568
Trustees' fees ....................................................... 17,695
Reports to shareholders .............................................. 27,136
Auditing ............................................................. 20,617
Registration fees .................................................... 25,250
Legal ................................................................ 12,087
Other ................................................................ 9,948
--------------
Total expenses before reductions ..................................... 850,206
Expense reductions ................................................... (134,733)
--------------
Expenses, net ........................................................ 715,473
-----------------------------------------------------------------------------------------
Net investment income 3,306,185
-----------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
--------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Net realized loss from investments (2,932)
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 3,303,253
-----------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 - Scudder Tax Free Money Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months
Ended
June 30, Year Ended
1997 December 31,
Increase (Decrease) in Net Assets (Unaudited) 1996
------------------------------------------------------------------------------------------------------------------
Operations:
<S> <C> <C>
Net investment income .................................... $ 3,306,185 $ 6,491,913
Net realized gain (loss) from investment transactions .... (2,932) 3,478
------------- -------------
Net increase in net assets resulting from operations ..... 3,303,253 6,495,391
------------- -------------
Distributions to shareholders from net investment income . (3,306,185) (6,491,913)
------------- -------------
Fund share transactions at net asset value of $1.00 per share:
Shares sold .............................................. 364,826,066 544,612,524
Shares issued to shareholders in reinvestment of
distributions............................................. 3,014,004 5,875,747
Shares redeemed .......................................... (364,867,360) (569,334,268)
------------- -------------
Net increase (decrease) in net assets from Fund share
transactions.............................................. 2,972,710 (18,845,997)
------------- -------------
Increase (decrease) in net assets ........................ 2,969,778 (18,842,519)
Net assets at beginning of period ........................ 220,245,241 239,087,760
------------- -------------
Net assets at end of period .............................. $223,215,019 $220,245,241
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 - Scudder Tax Free Money Fund
<PAGE>
Financial Highlights
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
Six Months
Ended
June 30,
1997 Years Ended December 31,
(Unaudited) 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
---------------------------------------------------------------------------------------------------------------------------
<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 ....... .015 .029 .032 .022 .018 .025 .041 .053 .057 .046 .040
Less distributions from net
investment income ......... (.015) (.029) (.032) (.022) (.018) (.025) (.041) (.053) (.057) (.046) (.040)
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 $1.000
---------------------------------------------------------------------------------------------------------------------------
Total Return (%) ............ 1.50** 2.91 3.27 2.26 1.86 2.54 4.20 5.44 5.83 4.73 4.03
Ratios and Supplemental Data
Net assets, end of period
($ millions) .............. 223 220 239 257 222 267 279 303 279 358 390
Ratio of operating expenses
net, to average daily net
assets (%) ................ .65* .70 .75 .77 .75 .73 .70 .72 .70 .67 .66
Ratio of operating expenses
before expense reductions
to average daily net
assets .................... .77* .75 .75 .77 .75 .73 .70 .72 .70 .67 .66
Ratio of net investment
income to average daily
net assets (%) ............ 3.00* 2.86 3.21 2.24 1.84 2.53 4.12 5.30 5.67 4.61 4.03
</TABLE>
* Annualized
** Not annualized
15 - Scudder Tax Free Money Fund
<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 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, 1996, the Fund had a net tax basis capital loss carryforward
of approximately $696,000, which may be applied against any realized net taxable
gains of each succeeding year until fully utilized or until, December 31, 2000
($7,000), December 31, 2001 ($29,000), and December 31, 2002 ($38,000), December
31, 2003 ($78,000), December 31, 2004 ($544,000), 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.
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
16 - Scudder Tax Free Money Fund
<PAGE>
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. The Adviser
has agreed to maintain the annualized expenses of the Fund at not more than .65%
of average daily net assets until April 30, 1998. For the six months ended June
30, 1997, the Adviser imposed fees amounting to $415,631, which was equivalent
to an annual effective rate of .38% of the Fund's average daily net assets. The
Adviser did not impose fees amounting to $134,733.
On June 26, 1997, the Adviser entered into an agreement with The Zurich
Insurance Company ("Zurich"), an international insurance and financial services
organization, pursuant to which Zurich will acquire a majority interest in the
Adviser, and the Adviser will form a new global investment organization by
combining with Zurich's subsidiary, Zurich Kemper Investments, Inc. and change
its name to Scudder Kemper Investments, Inc. Subject to the receipt of the
required regulatory and shareholder approvals, the transaction is expected to
close in the fourth quarter of 1997.
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, 1997, the amount charged to the Fund by SSC aggregated
$102,550, of which $16,923 is unpaid at June 30, 1997.
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, 1997, the amount charged to the Fund by SFAC aggregated $22,332,
of which $3,696 is unpaid at June 30, 1997.
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, 1997, Trustees' fees and expenses aggregated $17,695.
17 - Scudder Tax Free Money Fund
<PAGE>
This Page
intentionally
left blank.
18 - Scudder Tax Free Money Fund
<PAGE>
This Page
intentionally
left blank.
19 - Scudder Tax Free Money Fund
<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
Kathryn L. Quirk*
Vice President and Trustee
Jean C. Tempel
Trustee; Managing Partner,
Technology Equity Partners
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
*Scudder, Stevens & Clark, Inc.
20 - Scudder Tax Free Money Fund
<PAGE>
Investment Products and Services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series --
Premium Shares*
Managed Shares*
Scudder Government Money Market Series --
Managed Shares*
Tax Free Money Market+
- ----------------------
Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series--
Managed Shares*
Scudder California Tax Free Money Fund**
Scudder New York Tax Free Money Fund**
Tax Free+
- ---------
Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund**
Scudder Massachusetts Limited Term Tax Free Fund**
Scudder Massachusetts Tax Free Fund**
Scudder New York Tax Free Fund**
Scudder Ohio Tax Free Fund**
Scudder Pennsylvania Tax Free Fund**
U.S. Income
- -----------
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder High Yield Bond Fund
Global Income
- -------------
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
Asset Allocation
- ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
U.S. Growth and Income
- ----------------------
Scudder Balanced Fund
Scudder Growth and Income Fund
U.S. Growth
- -----------
Value
Scudder Large Company Value Fund
Scudder Value Fund
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund
Scudder Large Company Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Growth
- -------------
Worldwide
Scudder Global Fund
Scudder International Growth and Income Fund
Scudder International Fund
Scudder Global Discovery Fund
Scudder Emerging Markets Growth Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund, Inc.
Retirement Programs
- -------------------
IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan**+++ +++
(a variable annuity)
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
The Latin America Dollar Income Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder Spain and Portugal Fund, Inc.
Scudder World Income Opportunities
Fund, Inc.
For complete information on any of the above Scudder funds, including management
fees and expenses, call or write for a free prospectus. Read it carefully before
you invest or send money. +++Funds within categories are listed in order from
expected least risk to most risk. +A portion of the income from the tax-free
funds may be subject to federal, state, and local taxes. *A class of shares of
the Fund. **Not available in all states. +++ +++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.
21 - Scudder Tax Free Money Fund
<PAGE>
Scudder Solutions
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Investment Plan QuickBuy
A convenient investment program in which you designate Lets you purchase Scudder fund shares
the purchase details and the bank account, and money is electronically, avoiding potential mailing delays;
electronically debited from that account monthly to designate a bank account and the transaction
regularly purchase fund shares and "dollar cost average" details, and money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from that account.
fewer when it's higher, which can reduce your average
purchase price over time.
Automatic Dividend Transfer Payroll Deduction and Direct Deposit
The most timely, reliable, and convenient way to Have all or part of your paycheck -- even government
purchase shares -- use distributions from one Scudder checks -- invested in up to four Scudder funds at
fund to purchase shares in another, automatically one time.
(accounts with identical registrations or the same
social security or tax identification number).
Dollar cost averaging involves continuous investment in securities regardless of price
fluctuations and does not assure a profit or protect against loss in declining markets.
Investors should consider their ability to continue such a plan through periods of low price
levels.
Around-the-clock electronic account service and information, including some transactions:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- http://funds.scudder.com
1-800-343-2890
Scudder Electronic Account Services: Offering
Personalized account information, the ability to account information and transactions, interactive
exchange or redeem shares, and information on other worksheets, prospectuses and applications for all
Scudder funds and services via touchtone telephone. Scudder funds, plus your current asset allocation,
whenever you need them. Scudder's Site also
provides news about Scudder funds, retirement
planning information, and more.
Retirees and those who depend on investment proceeds for living expenses can enjoy these convenient,
timely, and reliable automated withdrawal programs:
- ------------------------------------------------------------------------------------------------------------------------------
Automatic Withdrawal Plan QuickSell
You designate the bank account, determine the schedule Provides speedy access to your money by
(as frequently as once a month) and amount of the electronically crediting your redemption proceeds
redemptions, and Scudder does the rest. to the bank account you designate.
DistributionsDirect
Automatically deposits your fund distributions into the
bank account you designate within three business days
after each distribution is paid.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
22 - Scudder Tax Free Money Fund
<PAGE>
Mutual Funds and More -- Brokerage and Guidance Services:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Brokerage Services Scudder Portfolio Builder
Offers you access to a world of investments, A free service designed to help suggest ways investors like
including stocks, corporate bonds, Treasuries, plus you can diversify your portfolio among domestic and global,
over 6,000 mutual funds from at least 150 mutual as well as equity, fixed-income, and money market funds,
fund companies. And Scudder Fund Folio(SM) provides using Scudder funds.
investors with access to a marketplace of more than
500 no-load funds from well-known companies--with no Personal Counsel from Scudder(SM)
transaction fees or commissions. Scudder
shareholders can take advantage of a Scudder Developed for investors who prefer the benefits of no-load
Brokerage account already reserved for them, with Scudder funds but want ongoing professional assistance in
no minimum investment. For information about managing a portfolio. Personal Counsel(SM) is a highly
Scudder Brokerage Services, call 1-800-700-0820. customized, fee-based asset management service for
individuals investing $100,000 or more.
Fund Folio funds held less than six months will be charged a fee for redemptions. You can buy
shares directly from the fund itself or its principal underwriter or distributor without
paying this fee. Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061.
Member SIPC.
Personal Counsel From Scudder(SM) and Personal Counsel(SM) are service marks of and represent a
program offered by Scudder Investor Services, Inc., Adviser.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
Additional Information on How to Contact Scudder:
- ------------------------------------------------------------------------------------------------------------------------------
For existing account services and transactions Please address all written correspondence to
Scudder Investor Relations -- 1-800-225-5163 The Scudder Funds
P.O. Box 2291
For establishing 401(k) and 403(b) plans Boston, Massachusetts
Scudder Defined Contribution Services -- 02107-2291
1-800-323-6105
Or Stop by a Scudder Investor Center
For information about The Scudder Funds, including Many shareholders enjoy the personal, one-on-one service of
additional applications and prospectuses, or for the Scudder Investor Centers. Check for an Investor Center near
answers to investment questions you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470 Boca Raton Chicago San Francisco
[email protected] Boston New York
- ------------------------------------------------------------------------------------------------------------------------------
New From Scudder: Scudder International Growth and Income Fund
Scudder International Growth and Income Fund takes a yield-oriented approach to investing in international equities. The
Fund seeks to provide long-term growth of capital plus current income. Investors who desire international exposure but
who wish to take a more conservative approach may appreciate the Fund's emphasis on the dividend paying stocks of
well-established companies outside the United States.
- ------------------------------------------------------------------------------------------------------------------------------
The share price of Scudder International Growth and Income Fund will fluctuate. International investing involves special
risks including currency fluctuation and political instability. Contact Scudder Investor Services, Inc., Distributor,
for a prospectus which contains more complete information, including management fees and other expenses. Please read it
carefully before you invest or send money.
</TABLE>
23 - Scudder Tax Free Money Fund
<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 over 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.
This information must be preceded or accompanied by a
current prospectus.
Portfolio changes should not be considered recommendations
for action by individual investors.
SCUDDER
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