Scudder
Tax Free
Money Fund
Annual Report
December 31, 1998
Pure No-Load(TM) Funds
A money market fund offering opportunities for income exempt from regular
federal income tax and stability of principal from high-quality, short-term
municipal securities.
A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
SCUDDER (logo)
<PAGE>
Scudder Tax Free Money Fund
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Date of Inception: 1/9/80 Total Net Assets as of Ticker Symbol: STFXX
12/31/98: $248.84 million
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o Scudder Tax Free Money Fund provided a total return of 2.92% for its most
recent fiscal year ended December 31, 1998, while the Fund's 30-day net
annualized yield at the end of December was 2.64%.
o To match the Fund's 2.64% 30-day yield as of December 31, investors in the 36%
and 39.6% tax brackets would have had to earn 4.13% and 4.37%, respectively,
from a comparable taxable investment.
o The Fund invests in a varied mix of short-term tax-exempt securities,
including tax-exempt commercial paper and variable-rate demand notes.
Table of Contents
3 Letter from the Fund's President 21 Report of Independent Accountants
4 Portfolio Management Discussion 22 Tax Information
7 Glossary of Investment Terms 23 Shareholder Meeting Results
9 Investment Portfolio 24 Officers and Trustees
15 Financial Statements 25 Investment Products and Services
18 Financial Highlights 26 Scudder Solutions
19 Notes to Financial Statements
2 - Scudder Tax Free Money Fund
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Letter from the Fund's President
Dear Shareholders,
The U.S. economy and financial markets displayed remarkable resiliency amid
1998's stormy global financial environment. Prices of U.S. equities as measured
by the Dow Jones Industrial Average and the S&P 500 Index rose 16.10% and
28.60%, respectively, during the year just passed, although the path upward was
an irregular one. Treasury bond prices also rose as investors sought a safe
haven, and their yields declined to a 30-year low.
Scudder Tax Free Money Fund offered investors an additional refuge during
1998's volatile times, which witnessed a Russian currency devaluation, more
economic troubles for Asia and South America, the near collapse of the Long Term
Capital Management hedge fund, and gyrating U.S. financial markets. Through its
investments in short-maturity, high-quality instruments, your Fund seeks
competitive income free from federal taxes and a stable $1.00 share price, no
matter what the market conditions. On December 31, 1998, Scudder Tax Free Money
Fund offered investors a 30-day net annualized yield of 2.64%, equivalent to
4.13% and 4.37%, respectively, for investors in the 36% and 39.6% federal tax
brackets. For the 12-month period ended December 31, the Fund provided a 2.92%
total return. Please read the Portfolio Management Discussion beginning on page
4 for additional information concerning your Fund's investment environment,
strategy, and outlook.
For those of you who are interested in new Scudder products, we recently
introduced the Scudder Tax Managed Growth Fund, investing in medium- to
large-sized U.S. companies, and Scudder Tax Managed Small Company Fund, which
invests in small U.S. companies. Using a combination of quantitative and
fundamental research, the funds will focus on companies with strong earnings
growth, reasonable valuations, and favorable risk profiles. Both funds strive to
maximize after-tax returns by systematically taking into account the tax
implications of portfolio transactions and seeking to offset capital gains by
realizing losses when appropriate. Please see pages 25 through 27 for more
information on Scudder products and services.
As always, please call a Scudder Investor Information representative at
1-800-225-2470 if you have questions about your Fund. Page 27 provides more
information on how to contact Scudder. Thank you for choosing Scudder Tax Free
Money Fund to help meet your investment needs.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder Tax Free Money Fund
3 - Scudder Tax Free Money Fund
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Portfolio Management Discussion
Dear Shareholders,
Amid outbreaks of turbulence in financial markets around the world, Scudder Tax
Free Money Fund provided shareholders with a stable $1.00 share price and a
competitive tax-free yield during the Fund's most recent annual period ended
December 31, 1998. The Fund's 30-day net annualized yield was 2.64% as of
December 31. 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 4.13% and
4.37%, respectively, from a comparable taxable investment. For the 12-month
period ended December 31, 1998, the Fund provided a 2.92% total return, equaling
the average return of similar money market funds during the same period as
tracked by Lipper Analytical Services, Inc.
In Search of a Safe Haven
In the summer and fall of 1998, many investors sought safe havens in the
form of U.S. Treasury bonds and money market funds as a series of dramatic
financial crises rocked the global markets. In the international capital
markets, the most troublesome developments were Russia's short-term debt default
and ruble devaluation, Japan's continuing banking crisis and recession, the run
on Brazil's currency reserves (despite an IMF stabilization package), and the
near collapse of the Long Term Capital Management hedge fund. The Federal
Reserve lowered short-term interest rates by one-quarter of a percentage point
three times between September and November -- taking the unexpected step of
adjusting interest rates between Federal Open Market Committee meetings -- in an
attempt to restore order to worldwide financial markets. Though the Fed had
reportedly changed to a "neutral" stance on interest rate adjustments by late in
1998, the more than 60 interest rate reductions by central banks around the
world during this period seemed to ease fears of rampant deflation and gave
encouragement to U. S. equity investors.
A Healthy Economy
Tightens Supply
The robust state of the U.S. economy has given many municipalities and state
agencies (typical issuers of tax-free money market securities) the incentive and
the ability -- with their healthier balance sheets -- to borrow longer-term at
attractive rates rather than through the money markets. This was the major
reason for a significant shortage of supply of tax-exempt money market
securities during the Fund's most recent fiscal year. We therefore shortened the
Fund's average maturity slightly during the period because we felt that money
market yields at the longer end of our acceptable maturity range did not offer
attractive value. The Fund's average maturity stood at 26 days as of December
31, 1998, versus 28 days at the start of the period.
4 - Scudder Tax Free Money Fund
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A Diversified Mix
As always, your Fund's portfolio consists of a diversified mix of short-term
tax-exempt securities, including tax-exempt commercial paper and variable-rate
demand notes. Variable-rate demand notes are securities with floating rates that
are adjusted weekly or daily to capture current yields and preserve liquidity.
Because of their attractive characteristics, they continue to comprise a
significant portion (63%) of the portfolio. Tax-exempt commercial paper, the
Fund's second largest holding at 34%, boosts stability by allowing the Fund to
lock in relatively attractive rates over a period of one to three months.
Economic Slowdown in 1999?
Shrinking corporate profit margins, a widening trade deficit, pressure on the
dollar, and troubles in the emerging markets could dampen U.S. economic growth
during the coming months. We do not doubt, however, the power of consumer and
investor confidence to overcome adversity, as has been shown throughout the
current economic expansion.
With the Federal Reserve "on hold" at present, we will pursue a cautious
strategy, and will lengthen the Fund's average maturity only when we are
adequately compensated for taking on additional risk. In addition, the Fund will
carefully select among the range of maturities it can invest in, choosing
short-term tax-exempt securities that we feel represent the best value.
5 - Scudder Tax Free Money Fund
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The Fund's management team will continue to collect and analyze economic data
and carefully monitor the investment climate as we position the Fund for high
current income free from federal taxes plus price stability and liquidity. We
believe that a prudently managed money market fund such as Scudder Tax Free
Money Fund can be a valuable part of a balanced investment portfolio.
Sincerely,
Your Portfolio Management Team
/s/Frank J. Rachwalski, Jr. /s/Jerri I. Cohen
Frank J. Rachwalski, Jr. Jerri I. Cohen
Scudder Tax Free
Money Fund:
A Team Approach to Investing
Scudder Tax Free Money Fund is managed by a team of Scudder Kemper
Investments, Inc. (the "Adviser") professionals, each of whom plays an
important role in the Fund's management process. Team members work together to
develop investment strategies and select securities for the Fund's portfolio.
They are supported by the Adviser's large staff of economists, research
analysts, traders, and other investment specialists who work in our offices
across the United States and abroad. We believe our team approach benefits
Fund investors by bringing together many disciplines and leveraging our
extensive resources.
Frank J. Rachwalski, Jr., Lead Portfolio Manager, joined the Adviser in 1973
and has over 21 years' experience in short-term fixed income investing and
research. Mr. Rachwalski assumed responsibility for the Fund's investment
strategy and operations in 1998.
Jerri I. Cohen, Portfolio Manager since 1998, joined the Adviser in 1981 and
has over 16 years' experience in tax-exempt money market fund investing.
6 - Scudder Tax Free Money Fund
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Glossary of Investment Terms
COMMERCIAL PAPER Short-term obligations with maturities ranging from
2 to 270 days, and issued by banks, corporations,
and other borrowers to investors with temporarily
idle cash. These instruments are unsecured and
usually discounted, although some are
interest-bearing, and offer a high level of safety
and liquidity.
DURATION A measure of the portfolio's sensitivity to changes
in interest rates. If an investment portfolio has a
duration of 4.9 years and interest rates decline by
about 1% from present levels, the value of the
portfolio would rise by about 4.9%, and vice versa.
GDP Gross domestic product is a commonly referenced
measure of the health of the U.S. economy, and refers
to the market value of the goods and services
produced by labor and property in the United States.
Too strong economic growth can lead to accelerating
inflation; weak growth can lead to a recession.
INFLATION An overall increase in the prices of goods and
services, as happens when business and consumer
spending increases relative to the supply of goods
available in the marketplace -- in other words, when
too much money is chasing too few goods. High
inflation has a negative impact on the prices of
fixed-income securities.
LIQUIDITY A characteristic of an investment or an asset
referring to the ease of convertibility into cash
within a reasonably short period of time.
MATURITY Reaching the date at which a debt instrument is due
and payable. A bond due to mature on January 1, 2010
will return the bondholder's principal and final
interest payment when it reaches maturity on that
date.
MONEY MARKET Market for short-term debt instruments, including
banker's acceptances, commercial paper, negotiable
certificates of deposit, repurchase agreements, and
Treasury bills. Money market instruments are traded
through dealers, money center banks, and the Open
Market Trading Desk at the New York Federal Reserve
Bank. All of these instruments have a high level of
safety and liquidity.
MUNICIPAL BOND An interest-bearing debt security issued by a
state or local government entity.
7 - Scudder Tax Free Money Fund
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TAXABLE EQUIVALENT YIELD The level of yield a fully taxable instrument
would have to provide to equal that of a
tax-free municipal bond on an after-tax basis.
TOTAL RETURN The most common yardstick to measure the
performance of a fund. Total return -- annualized or
compound -- is based on a combination of share price
changes plus income and capital gain distributions,
if any, expressed as a percentage gain or loss in
value.
VARIABLE RATE DEMAND A note representing borrowings (usually from a
NOTE commercial bank) that is payable on demand and that
bears interest tied to a money market rate, usually
the bank's prime rate. The rate on the note is
adjusted upward or downward each time the base rate
changes.
YIELD The dividends or interest paid on a security,
expressed as a percentage of the security's current
price.
(Sources: Scudder Kemper Investments, Inc.; Barron's Dictionary of
Finance and Investment Terms)
8 - Scudder Tax Free Money Fund
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Investment Portfolio as of December 31, 1998
<TABLE>
<CAPTION>
Credit
Principal Rating (b) Market
Amount ($) (Unaudited) Value ($)
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<S> <C> <C> <C>
Municipal Investments 100.0%
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Alaska
Alaska Housing Finance Corp., General Mortgage Revenue, Series 1991-A, Weekly
Demand Note, 4%, 6/1/2026* ................................................... 5,000,000 A1+ 5,000,000
Arizona
Apache County, AZ, Industrial Development Revenue, Tuscan Electric Co.,
Springerville Project:
Series 1983 B, Weekly Demand Note, 4.15%, 12/15/2018* ....................... 2,500,000 A1+ 2,500,000
Series 1985 A, Weekly Demand Note, 4.1%, 12/1/2020* ......................... 1,500,000 A1+ 1,500,000
California
Los Angeles, CA, Regional Airport Improvement Lease, Series 1985, Daily Demand
Note, 4.85%, 12/1/2025* ...................................................... 2,600,000 A1+ 2,600,000
Colorado
Colorado Plate River Power Authority, Tax Exempt Commercial Paper, 3.05%,
3/10/1999 .................................................................... 2,500,000 AA 2,500,000
Colorado Student Loan Revenue Authority, Series 1990, Weekly Demand Note, AMT,
3.95%, 9/1/2024* ............................................................. 2,700,000 MIG1 2,700,000
Delaware
New Castle County, DE, Pollution Control Revenue, Weekly Demand Note, 4.0%,
10/1/2008* ................................................................... 2,340,000 MIG1 2,340,000
District of Columbia
District of Columbia, General Obligation:
General Fund Recovery, Series 1991 B, Daily Demand Note, 5.0%, 6/1/2003* ..... 2,000,000 A1+ 2,000,000
Refunding Bonds, Series A2, Daily Demand Note, 5.2%, 10/1/2007* .............. 1,600,000 A1+ 1,600,000
Florida
Dade County, FL:
Health Facilities Authority, Miami Childrens Hospital, Weekly Demand Note,
3.4%, 9/1/2025 (c)* ......................................................... 1,700,000 AAA 1,700,000
Water and Sewer System Revenue, Series 1994, Weekly Demand Note, 3.4%,
10/5/2022 (c)* .............................................................. 2,600,000 A1+ 2,600,000
Hillsborough County, FL, Pollution Control Revenue, Daily Demand Note, AMT,
5.2%, 11/1/2020* ............................................................. 4,800,000 A1+ 4,800,000
Jacksonville, FL, Electric Authority, Tax Exempt Commercial Paper, 3.1%,
3/11/1999 .................................................................... 3,000,000 A1+ 3,000,000
Orange County, FL, Health Facilities Authority Revenue, Presbyterian Retirement,
Weekly Demand Note, 4.1%, 11/1/2028* ......................................... 3,000,000 A1+ 3,000,000
Putnam County, FL, Pollution Control Revenue, Seminole Electric Cooperative
Finance Corp., 1984 Series H-2, Weekly Demand Note, 4.05%, 3/15/2014* ........ 1,640,000 A1+ 1,640,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
9 - Scudder Tax Free Money Fund
<PAGE>
<TABLE>
<CAPTION>
Credit
Principal Rating (b) Market
Amount ($) (Unaudited) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sarasota County, FL, Public Hospital, Tax Exempt Commercial Paper, 3.1%,
2/18/1999 .................................................................... 3,000,000 A1+ 3,000,000
Sunshine State, FL, Government Finance Commission, Tax Exempt Commercial Paper:
Series 1986, 3.15%, 2/16/1999 (c) ............................................ 2,000,000 MIG1 2,000,000
Series 1986, 3.1%, 2/17/1999 (c) ............................................. 3,000,000 MIG1 3,000,000
Series 1986, 3.1%, 3/9/1999 (c) .............................................. 3,500,000 MIG1 3,500,000
Georgia
Gainsville Redevelopment Authority, Weekly Demand Note, 4.1%, 1/1/2023* ........ 2,000,000 A1+ 2,000,000
State of Georgia, Municipal Electric Authority:
Series 1985A, Tax Exempt Commercial Paper, 3.45%, 1/13/1999 .................. 2,400,000 A1+ 2,400,000
Series 1985A, Tax Exempt Commercial Paper, 3.1%, 2/22/1999 ................... 3,000,000 A1+ 3,000,000
Series 1985B, Tax Exempt Commercial Paper, 3.1%, 3/8/1999 .................... 4,000,000 A1+ 4,000,000
Illinois
Illinois Development Finance Authority:
Molex Inc. Project, Series 1985, Weekly Demand Note, 4.1%, 7/1/2005* ......... 1,000,000 A1 1,000,000
Pollution Control Revenue, Weekly Demand Note, AMT, Series 1997B, 4.15%,
4/1/2032 (c)* ............................................................... 1,700,000 AAA 1,700,000
Illinois Educational Facilities Authority:
National College of Education, Weekly Demand Note, 3.95%, 5/1/2019* .......... 2,200,000 A1+ 2,200,000
University Pooled Finance Program:
Tax Exempt Commercial Paper, 3.15%, 2/9/1999 ................................ 2,500,000 A1+ 2,500,000
Tax Exempt Commercial Paper, 3.1%, 3/10/1999 ................................ 3,500,000 A1+ 3,500,000
Weekly Demand Note, 4.1%, 12/1/2005 (c)* .................................... 2,165,000 MIG1 2,165,000
Illinois Health Facilities Authority, Victory Memorial Hospital, Tax Exempt
Commercial Paper, Series B, 3.5%, 1/11/1999 .................................. 2,450,000 A1+ 2,450,000
Indiana
Fort Wayne, IN, Hospital Authority, Parkview Memorial Hospital Project, Weekly
Demand Note, 3.9%, 1/1/2016* ................................................. 2,400,000 MIG1 2,400,000
Indiana Health Facilities Financing Authority, Community Mental Health Facility,
Weekly Demand Note, 3.95%, 11/1/2020* ........................................ 3,965,000 A1+ 3,965,000
Jasper County, IN, Pollution Control Revenue, Northern Indiana Public Service
Co., Series 1988 C, Tax Exempt Commercial Paper, 3.3%, 1/20/1999 ............. 1,400,000 A1 1,400,000
Kentucky
Mason County, KY, East Kentucky Power Cooperative, Pollution Control Revenue,
Weekly Demand Note, 4.05%, 10/15/2014* ....................................... 3,000,000 A1+ 3,000,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 - Scudder Tax Free Money Fund
<PAGE>
<TABLE>
<CAPTION>
Credit
Principal Rating (b) Market
Amount ($) (Unaudited) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mayfield, KY, Multi-City Lease Revenue, Kentucky League of Cities Funding Trust,
Weekly Demand Note, Series 1996, 4.1%, 7/1/2026* ............................. 1,400,000 A1 1,400,000
Pendleton County, KY, Series 1989, Tax Exempt Commercial Paper, 3.2%,
1/19/1999 .................................................................... 5,000,000 A1+ 5,000,000
Louisiana
Louisiana Public Facilities Authority, Series 1997D, Tax Exempt Commercial
Paper, 3.1%, 2/23/1999 ....................................................... 4,100,000 A1+ 4,100,000
Louisiana State Offshore Terminal Port Authority, Revenue Series 1992, Daily
Demand Note, 5.1%, 9/1/2008* ................................................. 1,900,000 A1+ 1,900,000
State of Louisiana, Series 1997 D, Tax Exempt Commercial Paper, 3.15%,
3/12/1999 .................................................................... 3,900,000 A1+ 3,900,000
Maine
Maine Educational Loan Marketing Corporation, Student Loan Revenue, AMT,
Series 1997 A1, Weekly Demand Note, 3.95%, 5/1/2032 (c)* ..................... 2,000,000 A1+ 2,000,000
Maryland
Maryland Health & Higher Educational Facilities Authority, Weekly Demand Note,
Series 1985 A, 3.95%, 4/1/2035* .............................................. 4,000,000 MIG1 4,000,000
Michigan
Michigan State Strategic Fund, Hope Network Project, Series A, Weekly Demand
Note, 4.1%, 9/1/2023* ........................................................ 4,185,000 A1 4,185,000
University of Michigan, Hospital Revenue, Series 1992 A, Daily Demand Note,
5.15%, 12/1/2019* ............................................................ 4,400,000 MIG1 4,400,000
Wayne Charter County, MI, Airport Revenue, Detroit Metropolitan County,
Series 1996 B, Weekly Demand Note, AMT, 3.95%, 12/1/2016* .................... 2,815,000 MIG1 2,815,000
Minnesota
Cottage Grove, MN, Minnesota Mining and Manufacturing, Series 1982, Weekly
Demand Note, 4.05%, 8/1/2012* ................................................ 1,100,000 AAA 1,100,000
Mississippi
Clairborne County, MS, Series 1985G-2, Tax Exempt Commercial Paper, 3.25%,
1/11/1999 .................................................................... 2,300,000 A1+ 2,300,000
Missouri
Independence Water Utility Revenue, Series 1986, Tax Exempt Commercial Paper,
3.2%, 1/13/1999 .............................................................. 3,700,000 MIG1 3,700,000
St. Louis, MO, Airport Revenue Municipal Securities Trust Receipts, Weekly
Demand Note, AMT, Series SGA 71, 4.18%, 7/1/2022 (c)* ........................ 3,000,000 A1+ 3,000,000
Nebraska
Omaha, NE, Public Power District, Tax Exempt Commercial Paper, 3.25%,
1/20/1999 .................................................................... 3,150,000 A1+ 3,150,000
Nevada
Las Vegas, NV, Valley Water District, Tax Exempt Commercial Paper, Series A,
3.1%, 2/18/1999 .............................................................. 3,000,000 NR 3,000,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 - Scudder Tax Free Money Fund
<PAGE>
<TABLE>
<CAPTION>
Credit
Principal Rating (b) Market
Amount ($) (Unaudited) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
New Jersey
Salem County, NJ, Industrial Pollution Control Financing Authority, E.I. du
Pont de Nemours and Co., Floating Rate Demand Note, 3.40%, 3/1/2012* ......... 11,400,000 A1+ 11,400,000
New Mexico
Albuquerque, NM, Gross Receipts/Lodgers Tax, Series 1991, Weekly Demand Note,
3.95%, 7/1/2022* ............................................................. 1,000,000 A1+ 1,000,000
New York
Nassau County, NY, Tax Anticipation Notes:
Series A, 3.5%, 3/30/1999 .................................................... 2,200,000 NR 2,202,390
Series B, 3.5%, 8/18/1999 .................................................... 4,300,000 NR 4,311,529
Series C, 3.5%, 12/22/1999 ................................................... 1,300,000 NR 1,304,893
New York City Municipal Water Finance Authority:
Series 1994 G, Daily Demand Note, 5.10%, 6/15/2024 (c)* ...................... 1,000,000 MIG1 1,000,000
Tax Exempt Commercial Paper, Series 5, Lot A, 3.3%, 1/21/1999 ................ 2,000,000 A1+ 2,000,000
New York, General Obligation, Tax Exempt Commercial Paper, Series V, 3.1%,
3/9/1999 ..................................................................... 3,500,000 A1 3,500,000
North Dakota
Mercer County, ND, Pollution Control Revenue, Cooperative Finance Corp., United
Power, Weekly Demand Note, 4.05%, 8/15/2014* ................................. 2,950,000 A1 2,950,000
Oklahoma
Oklahoma Development Financing Authority Revenue, AMT, Weekly Demand Note,
4.15%, 6/1/2018* ............................................................. 3,200,000 A1+ 3,200,000
Pennsylvania
Bucks County, PA, Oxford Falls Plaza Project, Weekly Demand Note, 3.75%,
10/1/2014* ................................................................... 9,100,000 SKI 9,100,000
Delaware Valley Finance Authority, Weekly Demand Note, 3.90%, 8/1/2016* ........ 5,000,000 A1+ 5,000,000
Elk County, PA, Industrial Development Authority, Series 1989, Floating Rate
Demand Note, 3.875%, 3/1/2004* ............................................... 1,000,000 A1 1,000,000
Pennsylvania Higher Education Assistance Agency:
Student Loan Revenue, Series 1997 A, Weekly Demand Note, AMT, 4.25%,
3/1/2027* ................................................................... 2,000,000 A1+ 2,000,000
University Of Pennsylvania Health Services, Series B, Weekly Demand Note,
4.05%, 1/1/2026* ............................................................ 5,500,000 A1+ 5,500,000
Tennessee
Clarksville, TN, Public Building Authority, Pooled Financings, Series 1994,
Weekly Demand Note, 4.05%,6/1/2024* .......................................... 4,000,000 A1+ 4,000,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 - Scudder Tax Free Money Fund
<PAGE>
<TABLE>
<CAPTION>
Credit
Principal Rating (b) Market
Amount ($) (Unaudited) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Texas
Brazos River Authority, TX, Pollution Control Revenue, Series 1996 B, Daily
Demand Note, AMT, 5.3%, 6/1/2030 (c)* ........................................ 4,000,000 A1+ 4,000,000
Calhoun County, TX, Tax Exempt Commercial Paper, AMT, 3.05%, 2/23/1999 ......... 2,900,000 MIG1 2,900,000
Camp County, TX, Industrial Development Pollution Control Revenue Bonds (Texas
Oil & Gas Corp.) Floating Rate Demand Bond, 4.1%, 12/1/2013* ................. 2,000,000 A1 2,000,000
Harris County, TX, Health Facilities Sisters of Charity, Tax Exempt Commercial
Paper, Series 1997 A, 3.1%, 2/17/1999* ....................................... 3,800,000 A1+ 3,800,000
Panhandle-Plains, TX, Higher Education Authority, Student Loan Revenue:
AMT, Series 1997 Y, Weekly Demand Note, 3.95%, 10/1/2002* .................... 2,500,000 MIG1 2,500,000
Series 1997 Y, Weekly Demand Note, AMT, 3.95%, 6/1/2025* ..................... 1,900,000 MIG1 1,900,000
San Antonio, TX, Electric and Gas, SG #79, Series 1996, Weekly Demand Note,
4.1%, 2/1/2018 (c)* .......................................................... 2,000,000 A1+ 2,000,000
San Antonio, TX, Water System Revenue, Tax Exempt Commercial Paper, Series 1995,
3.1%, 2/17/1999 .............................................................. 3,000,000 A1 3,000,000
San Antonio, TX, Industrial Development Authority, River Center Associates
Project, Weekly Demand Note, 4.05%, 12/1/2012* ............................... 3,100,000 SKI 3,100,000
San Antonio, TX, Electric & Gas Public Services, Weekly Demand Note, 4.15%,
2/1/2020* .................................................................... 2,000,000 A1 2,000,000
Texas Municipal Power Agency, Tax Exempt Commercial Paper:
3.05%, 2/16/1999 ............................................................. 3,000,000 A1 3,000,000
3.05%, 3/11/1999 ............................................................. 3,000,000 A1 3,000,000
Utah
Utah Board of Regents, Student Loan Revenue, Series 1988, Weekly Demand Note,
AMT, 4.0%, 11/1/2013 (c)* .................................................... 2,500,000 MIG1 2,500,000
Virginia
Virginia Port Authority Facility, Municipal Trust Receipts, SG 111, Series 1997,
Weekly Demand Note, AMT, 4.13%, 7/1/2024 (c)* ................................ 2,605,000 A1+ 2,605,000
Wisconsin
Wausau, WI, Pollution Control Revenue, Minnesota Mining and Manufacturing,
Weekly Demand Note:
Series 1982, 4.05%, 8/1/2017* ............................................... 2,300,000 A1+ 2,300,000
Series 1983, 4.05%, 12/1/2001* .............................................. 900,000 AAA 900,000
Whitewater, WI, Industrial Development MacLean Fogg Project, Weekly Demand
Note, 4.05%, 12/1/2009* ...................................................... 1,000,000 MIG1 1,000,000
Wisconsin State Health Care Facilities Authority, Francisan Memorial Hospital,
Series 1985 A-1, Weekly Demand Note, 4.0%, 1/1/2016* ......................... 5,000,000 A1+ 5,000,000
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $245,583,812) (a) 245,583,812
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 - Scudder Tax Free Money Fund
<PAGE>
- --------------------------------------------------------------------------------
(a) The cost for federal income tax purposes was $245,583,812.
(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 Kemper Investments, Inc. (SKI) and
unrated securities (NR) 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.
14 - Scudder Tax Free Money Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of December 31, 1998
<TABLE>
<S> <C> <C>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
Investments, at value (amortized cost $245,583,812) .................. $ 245,583,812
Cash ................................................................. 1,084,704
Receivable for Fund shares sold ...................................... 4,093,598
Interest receivable .................................................. 1,128,472
Other assets ......................................................... 8,161
----------------
Total assets ......................................................... 251,898,747
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Payable for Fund shares redeemed ..................................... 2,846,650
Dividends payable .................................................... 42,756
Accrued management fee ............................................... 121,867
Other payables and accrued expenses .................................. 49,186
----------------
Total liabilities .................................................... 3,060,459
-------------------------------------------------------------------------------------------
Net assets, at value $ 248,838,288
-------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Accumulated net realized loss ........................................ (702,940)
Paid-in capital ...................................................... 249,541,228
-------------------------------------------------------------------------------------------
Net assets, at value $ 248,838,288
-------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($248,838,288 / 248,667,568 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.
15 - Scudder Tax Free Money Fund
<PAGE>
Statement of Operations
year ended December 31, 1998
<TABLE>
<S> <C> <C>
Investment Income
- ----------------------------------------------------------------------------------------------------------------------------
Interest ............................................................. $ 9,075,116
----------------
Expenses:
Management fee ....................................................... 1,284,548
Services to shareholders ............................................. 280,553
Custodian and accounting fees ........................................ 85,557
Trustees' fees and expenses .......................................... 36,733
Reports to shareholders .............................................. 26,385
Auditing ............................................................. 42,405
Registration fees .................................................... 53,116
Legal ................................................................ 5,382
Other ................................................................ 24,140
----------------
Total expenses before reductions ..................................... 1,838,819
Expense reductions ................................................... (167,229)
----------------
Expenses, net ........................................................ 1,671,590
-------------------------------------------------------------------------------------------
Net investment income 7,403,526
-------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ----------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Net realized loss from investments (3,898)
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 7,399,628
-------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 - Scudder Tax Free Money Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Years Ended December 31,
Increase (Decrease) in Net Assets 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ............................................. $ 7,403,526 $ 6,849,299
Net realized loss from investment transactions .................... (3,898) (2,932)
---------------- ----------------
Net increase in net assets resulting from operations .............. 7,399,628 6,846,367
---------------- ----------------
Distributions to shareholders from net investment
income .......................................................... (7,401,457) (6,849,299)
---------------- ----------------
Fund share transactions at net asset value of $1.00 per share:
Shares sold ....................................................... 1,093,015,777 815,443,293
Shares issued to shareholders in reinvestment of
distributions ................................................... 6,769,820 6,236,249
Shares redeemed ................................................... (1,134,001,313) (758,866,018)
---------------- ----------------
Net increase (decrease) in net assets from Fund share
transactions .................................................... (34,215,716) 62,813,524
---------------- ----------------
Increase (decrease) in net assets ................................. (34,217,545) 62,810,592
Net assets at beginning of period ................................. 283,055,833 220,245,241
---------------- ----------------
Net assets at end of period ....................................... $ 248,838,288 $ 283,055,833
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17 - 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>
Years Ended December 31,
1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------
Net asset value, beginning of period ................................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------------------------------------------------------------
Net investment income ................................................ .029 .031 .029 .032 .022
Less distributions from net investment income (a) .................... (.029) (.031) (.029) (.032) (.022)
------------------------------------------------------------
Net asset value, end of period ....................................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return (%) ..................................................... 2.92(b) 3.10(b) 2.91(b) 3.27 2.26
Ratios and Supplemental Data
Net assets, end of period ($ millions) ............................... 249 283 220 239 257
Ratio of operating expenses net, to average daily net assets (%) ..... .65 .65 .70 .75 .77
Ratio of operating expenses before expense reductions to average
daily net assets ................................................... .71 .76 .75 .75 .77
Ratio of net investment income to average daily net assets (%) ....... 2.87 3.06 2.86 3.21 2.24
</TABLE>
(a) Net realized capital gains (losses) were less than 6/10 of 1 cent per share.
(b) Total returns may have been lower had certain expenses not been reduced.
18 - 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, as amended, 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, 1998, the Fund had a net tax basis capital loss carryforward
of approximately $703,000, 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), December 31, 2002 ($38,000), December 31,
2003 ($78,000), December 31, 2004 ($544,000), December 31, 2005 ($3,000) and
December 31, 2006 ($4,000) 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 Kemper
Investments, 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 these agreements. 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
19 - Scudder Tax Free Money Fund
<PAGE>
and payable monthly. The Adviser has agreed to maintain the annualized expenses
of the Fund at not more than 0.65% of average daily net assets until February
28, 1999. For the year ended December 31, 1998, the Adviser did not impose a
portion of its fee, amounting to $167,229, and the portion imposed amounted to
$1,117,319, equivalent to an annual effective rate of 0.43% of the Fund's
average daily net assets.
Effective September 7, 1998, Zurich Insurance Company ("Zurich"), majority owner
of the Adviser, entered into an agreement with B.A.T Industries p.l.c. ("B.A.T")
pursuant to which the financial services businesses of B.A.T were combined with
Zurich's businesses to form a new global insurance and financial services
company known as Zurich Financial Services. Upon consummation of the
transaction, the Fund's Agreement with the Adviser was deemed to have been
assigned and, therefore, terminated. In December 1998, the Board of Trustees and
the shareholders of the Fund approved a new investment management agreement with
the Adviser, which is substantially identical to the former Agreement, except
for the dates of execution, termination, and breakpoints in the fee structure.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
year ended December 31, 1998, the amount charged to the Fund by SSC aggregated
$201,755, of which $15,635 is unpaid at December 31, 1998.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records of the Fund. For the year ended
December 31, 1998, the amount charged to the Fund by SFAC aggregated $46,090, of
which $3,764 is unpaid at December 31, 1998.
The Fund pays each Trustee not affiliated with the Adviser an annual retainer,
plus specified amounts for attended board and committee meetings. For the year
ended December 31, 1998, Trustees' fees and expenses aggregated $36,733.
D. Line of Credit
The Fund and several Scudder Funds ("The Participants") share in a $850 million
revolving credit facility for temporary or emergency purposes, including the
meeting of redemption requests that otherwise might require the untimely
disposition of securities. The Participants are charged an annual commitment fee
which is allocated among each of the Participants. Interest is calculated based
on the market rates at the time of the borrowing. The Fund may borrow up to a
maximum of 33 percent of its net assets under the agreement.
20 - Scudder Tax Free Money Fund
<PAGE>
Report of Independent Accountants
To the Trustees and Shareholders of the Scudder Tax Free Money Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Scudder Tax Free Money Fund (the
"Fund") at December 31, 1998, the results of its operations for the year then
ended and the changes in its net assets for each of the two years in the period
then ended, and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1998 by correspondence with the custodian, provide a reasonable
basis for the opinion expressed above.
Boston, Massachusetts PricewaterhouseCoopers LLP
February 9, 1999
21 - Scudder Tax Free Money Fund
<PAGE>
Tax Information
Of the dividends paid by the Scudder Tax Free Money Fund from net investment
income for the taxable year ended December 31, 1998, 100% were exempt interest
dividends which are tax exempt for purposes of regular federal income tax, and
for purposes of the federal alternative minimum tax.
Please consult a tax adviser if you have questions about federal or state income
tax laws, or on how to prepare your tax returns. If you have specific questions
about your account, please call 1-800-SCUDDER.
22 - Scudder Tax Free Money Fund
<PAGE>
Shareholder Meeting Results
A Special Meeting of Shareholders (the "Meeting") of Scudder Tax Free Money Fund
(the "Fund") was held on December 15, 1998, at the office of Scudder Kemper
Investments, Inc., Two International Place, Boston, Massachusetts 02110. At the
Meeting the following matters were voted upon by the shareholders (the resulting
votes for each matter are presented below).
1. To approve a new Investment Management Agreement for the Fund with Scudder
Kemper Investments, Inc.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
132,670,575 5,487,784 3,650,874 0
2. To approve the revision of the Fund's fundamental lending policy.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
128,923,436 7,589,447 5,242,666 53,684
- --------------------------------------------------------------------------------
* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary power
to vote on a particular matter.
23 - Scudder Tax Free Money Fund
<PAGE>
Officers and Trustees
Daniel Pierce*
President and Trustee
Henry P. Becton, Jr.
Trustee; President and General
Manager, WGBH Educational
Foundation
Dawn-Marie Driscoll
Trustee; President, Driscoll
Associates; Executive Fellow,
Center for Business Ethics,
Bentley College
Peter B. Freeman
Trustee; Corporate Director
George M. Lovejoy, Jr.
Trustee; President and Director,
Fifty Associates
Wesley W. Marple, Jr.
Trustee; Professor of Business
Administration, Northeastern
University
Kathryn L. Quirk*
Trustee, Vice President and
Assistant Secretary
Jean C. Tempel*
Trustee; Managing Partner,
Technology Equity Partners
K. Sue Cote*
Vice President
Thomas W. Joseph*
Vice President
Ann M. McCreary*
Vice President
Thomas F. McDonough*
Vice President and Secretary
John R. Hebble*
Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
24 - 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--
Prime Reserve Shares*
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 Corporate Bond 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 Dividend & Growth Fund
Scudder Growth and Income Fund
Scudder S&P 500 Index Fund
Scudder Real Estate Investment Fund
U.S. Growth
- -----------
Value
Scudder Large Company Value Fund
Scudder Value Fund***
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund***
Scudder Large Company Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Equity
- -------------
Worldwide
Scudder Global Fund
Scudder International Value Fund
Scudder International Growth and Income Fund
Scudder International Fund++
Scudder International Growth Fund
Scudder Global Discovery Fund***
Scudder Emerging Markets Growth Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund, Inc.
Industry Sector Funds
- ---------------------
Choice Series
Scudder Financial Services Fund
Scudder Health Care Fund
Scudder Technology Fund
Preferred Series
- ----------------
Scudder Tax Managed Growth Fund
Scudder Tax Managed Small
Company Fund
Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
Retirement Programs
- -------------------
Traditional IRA
Roth IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan**+++ +++
(a variable annuity)
Education Accounts
- ------------------
Education IRA
UGMA/UTMA
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder Global High Income Fund, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder Spain and Portugal Fund, Inc.
For complete information on any of the above Scudder funds, including management
fees and expenses, call or write for a free prospectus. Read it carefully before
you invest or send money. +++Funds within categories are listed in order from
expected least risk to most risk. Certain Scudder funds may not be available for
purchase or exchange. +A portion of the income from the tax-free funds may be
subject to federal, state, and local taxes. *A class of shares of the Fund.
**Not available in all states. ***Only the Scudder Shares of the Fund are part
of the Scudder Family of Funds. ++Only the International Shares of the Fund are
part of the Scudder Family of Funds. +++ +++A no-load variable annuity contract
provided by Charter National Life Insurance Company and its affiliate, offered
by Scudder's insurance agencies, 1-800-225-2470. #These funds, advised by
Scudder Kemper Investments, Inc., are traded on the New York Stock Exchange and,
in some cases, on various other stock exchanges.
25 - Scudder 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 money is Lets you purchase Scudder fund shares
electronically debited from your bank account monthly to electronically, avoiding potential mailing delays;
regularly purchase fund shares and "dollar cost average" money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from a previously designated bank
fewer when it's higher, which can reduce your average account.
purchase price over time.*
Automatic Dividend Transfer Payroll Deduction and Direct Deposit
The most timely, reliable, and convenient way to Have all or part of your paycheck -- even government
purchase shares -- use distributions from one Scudder checks -- invested in up to four Scudder funds at
fund to purchase shares in another, automatically one time.
(accounts with identical registrations or the same
social security or tax identification number).
* Dollar cost averaging involves continuous investment in securities regardless of price
fluctuations and does not assure a profit or protect against loss in declining markets.
Investors should consider their ability to continue such a plan through periods of low price
levels.
Around-the-clock electronic account service and information, including some transactions:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- www.scudder.com
1-800-343-2890
Personal Investment Organizer: Offering
Personalized account information, the ability to account information and transactions, interactive
exchange or redeem shares, and information on other worksheets, prospectuses and applications for all
Scudder funds and services via touchtone telephone. Scudder funds, plus your current asset allocation,
whenever you need them. Scudder's Site also
provides news about Scudder funds, retirement
planning information, and more.
Retirees and those who depend on investment proceeds for living expenses can enjoy these convenient,
timely, and reliable automated withdrawal programs:
- ------------------------------------------------------------------------------------------------------------------------------
Automatic Withdrawal Plan QuickSell
You designate the bank account, determine the schedule Provides speedy access to your money by
(as frequently as once a month) and amount of the electronically crediting your redemption proceeds
redemptions, and Scudder does the rest. to the bank account you previously designated.
Distributions Direct
Automatically deposits your fund distributions into the
bank account you designate within three business days
after each distribution is paid.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
26 - Scudder 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 8,000 mutual funds from at least 150 mutual as well as equity, fixed-income, and money market funds,
fund companies. And Scudder Fund Folio(SM) provides using Scudder funds.
investors with access to a marketplace of more than
800 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 funds but want ongoing professional assistance in
no minimum investment. For information about managing a portfolio. Personal Counsel(SM) is a highly
Scudder Brokerage Services, call 1-800-700-0820. customized, fee-based asset management service for
individuals investing $100,000 or more.
Fund Folio funds held less than six months will be charged a fee for redemptions. You can buy
shares directly from the fund itself or its principal underwriter or distributor without
paying this fee. Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061.
Member SIPC.
Personal Counsel From Scudder(SM) and Personal Counsel(SM) are service marks of and represent a
program offered by Scudder Investor Services, Inc., Adviser.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
Additional Information on How to Contact Scudder:
- ------------------------------------------------------------------------------------------------------------------------------
For existing account services and transactions Please address all written correspondence to
Scudder Investor Relations -- 1-800-225-5163 The Scudder Funds
P.O. Box 2291
For establishing 401(k) and 403(b) plans Boston, Massachusetts
Scudder Defined Contribution Services -- 02107-2291
1-800-323-6105
Or Stop by a Scudder Investor Center
For information about The Scudder Funds, including Many shareholders enjoy the personal, one-on-one service of
additional applications and prospectuses, or for the Scudder Investor Centers. Check for an Investor Center near
answers to investment questions you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470 Boca Raton Chicago San Francisco
[email protected] Boston New York
</TABLE>
27 - Scudder Tax Free Money Fund
<PAGE>
About the Fund's Adviser
Scudder Kemper Investments, Inc., is one of the largest and most experienced
investment management oganizations worldwide, managing more than $230 billion in
assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts.
Scudder Kemper Investments has a rich heritage of innovation, integrity, and
client-focused service. In 1997, Scudder, Stevens & Clark, Inc., founded 79
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Group. As a result, Zurich's subsidiary, Zurich Kemper Investments,
Inc., with 50 years of mutual fund and investment management experience, was
combined with Scudder. Headquartered in New York, Scudder Kemper Investments
offers a full range of investment counsel and asset management capabilities,
based on a combination of proprietary research and disciplined, long-term
investment strategies. With its global investment resources and perspective,
the firm seeks opportunities in markets throughout the world to meet the needs
of investors.
Scudder Kemper Investments, Inc., the global asset management firm, is a member
of the Zurich Group. The Zurich Group is an internationally recognized leader in
financial services, including property/casualty and life insurance, reinsurance,
and asset management.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
SCUDDER
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