Scudder
U.S. Treasury Money
Fund
Semiannual Report
December 31, 1995
o A money market fund investing in short-term U.S. government securities. For
investors seeking current income plus liquidity and stability of capital.
o A pure no-load(TM) fund with no commissions to buy, sell, or exchange
shares.
Shares of Scudder U.S. Treasury Money Fund are not insured or guaranteed by the
U.S. government. The Fund seeks to maintain a constant net asset value of $1.00
per share, but there can be no assurance that the stable net asset value will be
maintained.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
59-6-26
MIS59S
<PAGE>
SCUDDER U.S. TREASURY MONEY FUND
TABLE OF CONTENTS
3 Letter from the Fund's President
4 Portfolio Management Discussion
Your portfolio management team reviews the period's investing
strategies, financial markets, and economic conditions
6 Investment Portfolio
Itemized list of portfolio holdings
8 Financial Statements
11 Financial Highlights
12 Notes to Financial Statements
15 Tax Information
17 Officers and Trustees
18 Investment Products and Services
19 How to Contact Scudder
2
<PAGE>
LETTER FROM THE FUND'S PRESIDENT
Dear Shareholders,
U.S. stock and bond markets surged in 1995. Stocks climbed dramatically
as interest rates dropped and corporate profits grew. Bond prices rose
significantly -- the third best 12-month total return on record -- in response
to falling interest rates and a favorable outlook for inflation.
Money market funds generally provided attractive returns during the
semiannual period, despite falling interest rates that resulted in lower yields.
As of December 31, 1995, for example, government money funds on average posted a
7-day yield of 4.95%. By comparison, Scudder U.S. Treasury Money Fund's 7-day
net annualized yield was 4.89% as of December 31, 1995. Money funds consistently
attracted assets, ending the year at approximately $775 billion in total assets,
up from approximately $697 billion six months ago (source: IBC's Money Fund
Report).
Continued interest in money market investments stemmed partly from the
fact that investors seeking the lower risk of money funds compared with stocks
and bonds found yields that were generally more attractive than those available
from bank savings accounts and certificates of deposit (although the funds are
not insured or guaranteed by the U.S. government). In addition, money funds
provide solid real (inflation-adjusted) returns currently well above the rate of
inflation, which now stands at about 2%. We expect this situation to continue
given our outlook for the same or a lower rate of inflation in 1996.
While yields will continue to fluctuate with prevailing interest rates,
Scudder U.S. Treasury Money Fund is designed to provide a relatively safe place
for your short-term investment needs. The Fund seeks to maintain a constant
$1.00 share price (although this cannot be guaranteed), and has done so since
its inception in 1980. Please call a Scudder Investor Relations representative
at 1-800-225-2470 if you have any questions. Thank you for choosing Scudder U.S.
Treasury Money Fund to help meet your investment needs.
Sincerely,
/s/David S. Lee
David S. Lee
President,
Scudder U.S. Treasury Money Fund
3
<PAGE>
SCUDDER U.S. TREASURY MONEY FUND
PORTFOLIO MANAGEMENT DISCUSSION
Dear Shareholders,
Scudder U.S. Treasury Money Fund posted a competitive 4.89% 7-day net
annualized yield at the close of the semiannual period ended December 31, 1995.
The Fund provided investors with $0.025 per share in income distributions,
contributing to a 2.56% total return for the period. The Fund continues to focus
on the highest-quality money market investments available -- short-term U.S.
Treasury securities -- which are backed by the full faith and credit of the U.S.
government.
Challenges in a Falling
Interest Rate Environment
Money fund managers have limited means available to help preserve yields in
a declining interest-rate environment. The principal technique for doing so is
the manipulation of a fund's average maturity. When interest rates fall, cash
received from maturing investments generally must be reinvested at lower rates,
causing yields of money market funds to decline. With the economy continuing to
slow, the Federal Reserve may lower interest rates further. In view of this
outlook, we extended the fund's average maturity during the period to lock in
current, higher yields offered by money market investments. Scudder U.S.
Treasury Money Fund's average maturity was 59 days at the close of the six-month
fiscal period -- just slightly shorter than the 60-day average maturity limit
for money funds receiving a highest-quality rating from Standard & Poor's. By
comparison, the Fund's average maturity was 55 days as of June 30, 1995. We
intend to keep the Fund's average maturity as close to its 60-day maximum as is
necessary to capture higher yields.
Portfolio Review
In keeping with its objective, a major portion of the Fund (70%) is
invested in U.S. Treasury securities. These securities provide the Fund with an
extra measure of safety, due to their U.S. government backing. Furthermore, the
income generated by these securities is exempt from both state and local income
taxes.
The Fund invested approximately 30% of its assets in repurchase agreements
at the end of the period. These short-term loans typically provide yield
advantages over money market instruments with comparable maturities. In fact,
4
<PAGE>
during much of the period, overnight repurchase agreements posted higher yields
than money-market securities with longer maturities. This situation ran counter
to typical yield differentials between short- and longer-term money market
instruments, and is known in the industry as an "inverted yield curve." While it
is tempting to consider investing even more heavily in these types of
very-short-term instruments for their attractive return potential, we remain
cautious about doing so. If short-term interest rates decline further, we expect
the inverted yield curve to reverse itself. In that event, long-term Treasury
money market securities provide higher yields and help us lock in more
attractive returns.
Looking Ahead
With the economy moving at its current slow pace and inflation under
control, Scudder U.S. Treasury Money Fund should continue to lean toward
longer-term money market securities. Meanwhile, quality investments should help
provide a stable share price. Given these characteristics, we believe Scudder
U.S. Treasury Money Fund remains an appropriate place for your short-term
investment needs and can play an important role in your investment plan. Please
call Scudder Investor Relations at 1-800-225-2470 if you have any questions
about your Fund.
Sincerely,
Your Portfolio Management Team
/s/Stephen L. Akers /s/Robert T. Neff
Stephen L. Akers Robert T. Neff
/s/Debra A. Hanson /s/K. Sue Cote
Debra A. Hanson K. Sue Cote
5
<PAGE>
SCUDDER U.S. TREASURY MONEY FUND
INVESTMENT PORTFOLIO AS OF DECEMBER 31, 1995 (UNAUDITED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Principal Value ($)
Portfolio Amount ($) (Note A)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
----------------------------------------------------------------------------------------
30.0% REPURCHASE AGREEMENTS
----------------------------------------------------------------------------------------
41,000,000 Repurchase Agreement with Donaldson, Lufkin
& Jenrette Securities Corp. dated 12/29/95
at 5.85%, to be repurchased at $41,026,650
on 1/2/96, collateralized by a $36,733,000
U.S. Treasury Note, 7.625%, 2/15/07 . . . . . . . . . . . . . 41,000,000
37,000,000 Repurchase Agreement with J.P. Morgan and Co.
dated 12/26/95 at 5.7%, to be repurchased
at $37,082,017 on 1/9/96, collateralized
by a $33,142,000 U.S. Treasury Note,
7.875%, 8/15/01 . . . . . . . . . . . . . . . . . . . . . . . 37,000,000
4,976,000 Repurchase Agreement with State Street
Bank and Trust Company dated 12/29/95
at 5.75%, to be repurchased at $4,979,179
on 1/2/96, collateralized by a $4,980,000
U.S. Treasury Note, 7.625%, 4/30/96 . . . . . . . . . . . . . 4,976,000
35,000,000 Repurchase Agreement with U.B.S. Securities
dated 12/27/95 at 5.55%, to be repurchased
at $35,037,771 on 1/3/96, collateralized by
a $30,845,000 U.S. Treasury Note,
7.875%, 11/15/04. . . . . . . . . . . . . . . . . . . . . . . 35,000,000
------------
TOTAL REPURCHASE AGREEMENTS
(Cost $117,976,000) . . . . . . . . . . . . . . . . . . . . . 117,976,000
------------
----------------------------------------------------------------------------------------
70.0% U.S. TREASURY OBLIGATIONS
----------------------------------------------------------------------------------------
10,000,000 U.S. Treasury Bill, 5.16%, 1/4/96 . . . . . . . . . . . . . . . 9,994,269
10,000,000 U.S. Treasury Bill, 5.23%, 1/11/96. . . . . . . . . . . . . . . 9,984,040
15,000,000 U.S. Treasury Bill, 5.12%, 1/18/96. . . . . . . . . . . . . . . 14,961,711
15,000,000 U.S. Treasury Bill, 5.15%, 2/1/96 . . . . . . . . . . . . . . . 14,931,661
20,000,000 U.S. Treasury Bill, 5.19%, 2/8/96 . . . . . . . . . . . . . . . 19,888,114
15,000,000 U.S. Treasury Bill, 5.05%, 2/15/96. . . . . . . . . . . . . . . 14,903,738
15,000,000 U.S. Treasury Bill, 4.66%, 2/22/96. . . . . . . . . . . . . . . 14,897,692
10,000,000 U.S. Treasury Bill, 4.50%, 2/29/96. . . . . . . . . . . . . . . 9,925,541
15,000,000 U.S. Treasury Bill, 4.78%, 3/7/96 . . . . . . . . . . . . . . . 14,867,850
16,000,000 U.S. Treasury Bill, 4.84%, 3/14/96. . . . . . . . . . . . . . . 15,842,240
13,000,000 U.S. Treasury Bill, 4.81%, 3/21/96. . . . . . . . . . . . . . . 12,860,770
10,000,000 U.S. Treasury Bill, 4.88%, 3/28/96. . . . . . . . . . . . . . . 9,882,000
13,000,000 U.S. Treasury Bill, 4.93%, 4/4/96 . . . . . . . . . . . . . . . 12,833,080
15,000,000 U.S. Treasury Bill, 4.91%, 4/11/96. . . . . . . . . . . . . . . 14,794,200
15,000,000 U.S. Treasury Bill, 4.90%, 4/18/96. . . . . . . . . . . . . . . 14,780,700
15,000,000 U.S. Treasury Bill, 4.89%, 4/25/96. . . . . . . . . . . . . . . 14,767,200
10,000,000 U.S. Treasury Bill, 4.97%, 5/2/96 . . . . . . . . . . . . . . . 9,833,000
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
6
<PAGE>
INVESTMENT PORTFOLIO
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Value ($)
Amount ($) (Note A)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
15,000,000 U.S. Treasury Bill, 4.98%, 5/9/96 . . . . . . . . . . . . . . . . 14,734,950
8,000,000 U.S. Treasury Bill, 4.99%, 5/16/96. . . . . . . . . . . . . . . . 7,850,880
8,000,000 U.S. Treasury Bill, 4.99%, 5/30/96. . . . . . . . . . . . . . . . 7,836,080
10,000,000 U.S. Treasury Bill, 5.00%, 6/13/96. . . . . . . . . . . . . . . . 9,775,900
5,000,000 U.S. Treasury Bill, 5.02%, 6/20/96. . . . . . . . . . . . . . . . 4,882,900
-----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $274,835,095) . . . . . . . . . . . . . . . . . . . . . .275,028,516
-----------
- ---------------------------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO -- 100.0%
(Cost $392,811,095) (a). . . . . . . . . . . . . . . . . . . . .393,004,516
-----------
-----------
</TABLE>
(a) The cost for federal income tax purposes was $392,811,095. At
December 31, 1995, net unrealized appreciation for all securities
based on tax cost was $193,421. This consisted of aggregate gross
unrealized appreciation for all securities in which there was an
excess of market value over tax cost of $196,930 and aggregate gross
unrealized depreciation for all securities in which there was an
excess of tax cost over market value of $3,509.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
7
<PAGE>
SCUDDER U.S. TREASURY MONEY FUND
FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments, at value (including repurchase agreements
of $117,976,000) (identified cost $392,811,095)
(Note A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 393,004,516
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,296,181
Receivables:
Fund shares sold. . . . . . . . . . . . . . . . . . . . . . . . . 3,845,764
Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84,501
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,792
-----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . 398,233,754
LIABILITIES
Payables:
Fund shares redeemed. . . . . . . . . . . . . . . . . . . . . . . $ 3,285,440
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89,397
Accrued management fee (Note B) . . . . . . . . . . . . . . . . . 52,214
Other accrued expenses (Note B) . . . . . . . . . . . . . . . . . 241,838
-----------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . 3,668,889
-------------
Net assets, at value . . . . . . . . . . . . . . . . . . . . . . . . . $ 394,564,865
-------------
-------------
NET ASSETS
Net assets consist of:
Net unrealized appreciation on investments. . . . . . . . . . . . $ 193,421
Shares of beneficial interest . . . . . . . . . . . . . . . . . . 3,943,714
Additional paid-in capital. . . . . . . . . . . . . . . . . . . . 390,427,730
-------------
Net assets, at value . . . . . . . . . . . . . . . . . . . . . . . . . $ 394,564,865
-------------
-------------
Net asset value, offering and redemption price per share
($394,564,865 DIVIDED BY 394,371,444 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.
8
<PAGE>
FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED DECEMBER 31, 1995 (UNAUDITED)
- -------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest . . . . . . . . . . . . . . . . . . $ 11,123,860
Expenses:
Management fee (Note B). . . . . . . . . . . $ 971,129
Services to shareholders (Note B). . . . . . 638,791
Custodian and accounting fees (Note B) . . . 51,055
Trustees' fees (Note B). . . . . . . . . . . 10,740
Reports to shareholders. . . . . . . . . . . 40,389
State registration . . . . . . . . . . . . . 27,618
Auditing . . . . . . . . . . . . . . . . . . 16,647
Legal. . . . . . . . . . . . . . . . . . . . 10,061
Other. . . . . . . . . . . . . . . . . . . . 11,039
--------------
Total expenses before reductions . . . . . . 1,777,469
Expense reductions (Note B). . . . . . . . . (505,486)
Expenses, net. . . . . . . . . . . . . . . . --------------- 1,271,983
-----------
Net investment income. . . . . . . . . . . . 9,851,877
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net unrealized appreciation on investments
during the period. . . . . . . . . . 68,732
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 9,920,609
-----------
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
9
<PAGE>
SCUDDER U.S. TREASURY MONEY FUND
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
DECEMBER 31, YEAR ENDED
1995 JUNE 30,
INCREASE (DECREASE) IN NET ASSETS (UNAUDITED) 1995
- ----------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income . . . . . . . . . . . . . . . $ 9,851,877 $ 17,568,420
Net realized gain from investment
transactions . . . . . . . . . . . . . . . . . . -- 20,664
Net unrealized appreciation on
investments during the period. . . . . . . . . . 68,732 420,699
------------ ------------
Net increase in net assets resulting from
operations . . . . . . . . . . . . . . . . . . . 9,920,609 18,009,783
------------ ------------
Distributions to shareholders:
From net investment income ($.025 and $.046
per share, respectively) . . . . . . . . . . . . (9,851,877) (17,568,420)
------------ ------------
From net realized gains from investment
transactions . . . . . . . . . . . . . . . . . . -- (20,664)
------------ ------------
Fund share transactions at net asset value of
$1.00 per share:
Shares sold . . . . . . . . . . . . . . . . . . . . 303,284,144 647,745,827
Shares issued to shareholders in
reinvestment of distributions. . . . . . . . . . 9,224,174 15,894,921
Shares redeemed . . . . . . . . . . . . . . . . . . (301,489,417) (663,250,580)
------------ ------------
Net increase in net assets from
Fund share transactions. . . . . . . . . . . . . 11,018,901 390,168
------------ ------------
INCREASE IN NET ASSETS. . . . . . . . . . . . . . . 11,087,633 810,867
Net assets at beginning of period . . . . . . . . . 383,477,232 382,666,365
------------ ------------
NET ASSETS AT END OF PERIOD . . . . . . . . . . . . $394,564,865 $383,477,232
------------ ------------
------------ ------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
10
<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
DECEMBER 31, YEARS ENDED JUNE 30,
1995 -----------------------------------------------------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period. . . . . . . . $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net investment
income . . . . . . .025 .046 .027 .027 .044 .065 .075 .074 .055 .050 .064
Less distributions
from net investment
income and net
realized gains on
investment
transactions (b) . (.025) (.046) (.027) (.027) (.044) (.065) (.075) (.074) (.055) (.050) (.064)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
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 $1.000
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Return (%) . . . 2.56** 4.70 2.74 2.74 4.48 6.71 7.74 7.66 5.69 5.13 6.63
Ratios and
Supplemental Data
Net assets, end
of period
($ millions) . . . . 395 383 383 305 299 272 198 167 154 143 156
Ratio of operating
expenses, to
average daily net
assets (%) (a) . . . .65* .65 .65 .65 .65 .82 .98 1.01 1.04 .92 .91
Ratio of net
investment
income to
average daily
net assets (%) . . . 5.05* 4.61 2.75 2.69 4.31 6.37 7.46 7.41 5.54 4.95 6.39
(a) Operating
expense ratio,
including
management
fee not imposed
by the adviser (%) . .91* .90 .90 .85 .85 .91 -- -- -- -- --
</TABLE>
(b) Net realized capital gains were less than 6/10 of 1 CENTS per share.
* Annualized
** Not annualized
11
<PAGE>
SCUDDER U.S. TREASURY MONEY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
A. SIGNIFICANT ACCOUNTING POLICIES
- -------------------------------------------------------------------------------
Scudder U.S. Treasury Money Fund (the "Fund") is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company. The policies
described below are followed consistently by the Fund in the preparation of its
financial statements in conformity with generally accepted accounting
principles.
SECURITY VALUATION. Portfolio securities which have remaining maturities of
sixty days or less are valued by the amortized cost method permitted in
accordance with Rule 2a-7 under the Investment Company Act of 1940. Portfolio
securities for which market quotations are readily available and which have
remaining maturities of sixty-one days or more from the date of valuation are
valued at the calculated mean between the over-the-counter bid and asked prices,
using quotations supplied by independent registered broker/dealers. On the
sixtieth day prior to maturity and thereafter until maturity, securities
originally purchased with more than sixty days remaining to maturity are valued
at amortized cost calculated daily, based upon the market valuation of the
securities on the sixty-first day prior to maturity. Other securities are
appraised at fair value as determined in good faith by or on behalf of the
Trustees of the Fund. Repurchase agreements are valued at identified cost which,
when combined with accrued interest receivable, approximates market.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian,
receives delivery of the underlying securities, the amount of which at the time
of purchase and each subsequent business day is required to be maintained at
such a level that the market value, depending on the maturity of the repurchase
agreement and the underlying collateral, is equal to at least 100.5% of the
resale price.
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 taxable income to its shareholders. The
Fund accordingly paid no federal income taxes and no provision for federal
income taxes was required.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
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
on 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 identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.
OTHER. Investment security transactions are accounted for on a trade-date basis
(which in most instances, 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 "Management Agreement") with
Scudder, Stevens & Clark, Inc. (the "Adviser"), the Fund agrees to pay the
Adviser a fee equal to an annual rate of 0.50% of its average daily net assets
computed and accrued daily and payable monthly. As manager of the assets of
the Fund, 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 Management Agreement. The Agreement also 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 not to impose all or a
portion of its management fee until October 31, 1996, and during such period to
maintain the annualized expenses of the Fund at not more than 0.65% of average
daily net assets. Accordingly, for the six months ended December 31, 1995, the
Adviser did not impose a portion of its fees amounting to $505,486, and the
portion imposed amounted to $465,643, of which $52,214 is unpaid at December 31,
1995.
13
<PAGE>
SCUDDER U.S. TREASURY FUND
- -------------------------------------------------------------------------------
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 December 31, 1995, the amount charged to the Fund by SSC
aggregated $548,337, of which $158,069 is unpaid at December 31, 1995.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser,
is responsible for determining the daily net asset value per share and
maintaining the portfolio and general accounting records of the Fund. For the
six months ended December 31, 1995, the amount charged to the Fund by SFAC
aggregated $24,516, of which $4,085 is unpaid at December 31, 1995.
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 December 31, 1995, Trustees' fees and expenses aggregated $10,740.
14
<PAGE>
TAX INFORMATION
By now shareholders to whom year-end tax reporting is required by the IRS should
have received their Form 1099-DIV and tax information letter from the Fund.
For corporate shareholders no amount of the income dividends paid by the Fund
qualified for the dividends received deduction.
In many states the amount of net investment income dividends you received which
are derived from direct obligations of the U.S. Government is exempt from your
state income taxes. Of the Fund's 1994 dividends from net investment income,
66.2% was derived from direct obligations of the U.S. Government.
Please consult a tax adviser if you have questions about federal or state income
tax laws, or on how to prepare your tax returns. If you have specific questions
about your Scudder Fund account, please call a Scudder Investor Relations
Representative at 1-800-225-5163.
15
<PAGE>
OFFICERS AND TRUSTEES
David S. Lee*
President and Trustee
E. Michael Brown*
Trustee
Dawn-Marie Driscoll
Trustee; Attorney and Corporate Director
George M. Lovejoy, Jr.
Trustee; President and Director, Fifty Associates
Jean C. Tempel
Trustee; General Partner,
TL Ventures
Stephen L. Akers*
Vice President
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
Vice President
Dudley H. Ladd*
Vice President
Thomas F. McDonough*
Vice President and Secretary
Pamela A. McGrath*
Vice President and Treasurer
Robert T. Neff*
Vice President
Edward J. O'Connell*
Vice President and Assistant Treasurer
Coleen Downs Dinneen*
Assistant Secretary
*Scudder, Stevens & Clark, Inc.
16
<PAGE>
INVESTMENT PRODUCTS AND SERVICES
<TABLE>
<CAPTION>
The Scudder Family of Funds
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
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Money Market Income
Scudder Cash Investment Trust Scudder Emerging Markets Income Fund
Scudder U.S. Treasury Money Fund Scudder Global Bond Fund
Tax Free Money Market+ Scudder GNMA Fund
Scudder Tax Free Money Fund Scudder Income Fund
Scudder California Tax Free Money Fund* Scudder International Bond Fund
Scudder New York Tax Free Money Fund* Scudder Short Term Bond Fund
Tax Free+ Scudder Zero Coupon 2000 Fund
Scudder California Tax Free Fund* Growth
Scudder High Yield Tax Free Fund Scudder Capital Growth Fund
Scudder Limited Term Tax Free Fund Scudder Development Fund
Scudder Managed Municipal Bonds Scudder Global Fund
Scudder Massachusetts Limited Term Tax Free Fund* Scudder Global Small Company Fund
Scudder Massachusetts Tax Free Fund* Scudder Gold Fund
Scudder Medium Term Tax Free Fund Scudder Greater Europe Growth Fund
Scudder New York Tax Free Fund* Scudder International Fund
Scudder Ohio Tax Free Fund* Scudder Latin America Fund
Scudder Pennsylvania Tax Free Fund* Scudder Pacific Opportunities Fund
Growth and Income Scudder Quality Growth Fund
Scudder Balanced Fund Scudder Small Company Value Fund
Scudder Growth and Income Fund Scudder Value Fund
The Japan Fund
Retirement Plans and Tax-Advantaged Investments
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IRAs 403(b) Plans
Keogh Plans SEP-IRAs
Scudder Horizon Plan+++* (a variable annuity) Profit Sharing and Money Purchase
401(k) Plans Pension Plans
Closed-End Funds#
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The Argentina Fund, Inc. The Latin America Dollar Income Fund, Inc.
The Brazil Fund, Inc. Montgomery Street Income Securities, Inc.
The First Iberian Fund, Inc. Scudder New Asia Fund, Inc.
The Korea Fund, Inc. Scudder New Europe Fund, Inc.
Scudder World Income
Opportunities Fund, Inc.
Institutional Cash Management
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Scudder Institutional Fund, Inc. Scudder Treasurers Trust(TM)++
Scudder Fund, Inc.
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For complete information on any of the above Scudder funds, including management fees and expenses, call or write
for a free prospectus. Read it carefully before you invest or send money. +A portion of the income from the tax-free
funds may be subject to federal, state, and local taxes. *Not available in all states. +++A no-load variable annuity
contract provided by Charter National Life Insurance Company and its affiliate, offered by Scudder's insurance agencies,
1-800-225-2470. #These funds, advised by Scudder, Stevens & Clark, Inc. are traded on various stock exchanges. ++For
information on Scudder Treasurers Trust,(TM) an institutional cash management service that utilizes certain portfolios
of Scudder Fund, Inc. ($100,000 minimum), call 1-800-541-7703.
17
<PAGE>
HOW TO CONTACT SCUDDER
Account Service and Information
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For existing account service and transactions
SCUDDER INVESTOR RELATIONS
1-800-225-5163
For personalized information about your
Scudder accounts; exchanges and
redemptions; or information on any
Scudder fund SCUDDER AUTOMATED
INFORMATION LINE (SAIL) 1-800-343-2890
Investment Information
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To receive information about the
Scudder funds, for additional
applications and prospectuses, or for
investment questions SCUDDER INVESTOR
RELATIONS 1-800-225-2470
For establishing 401(k) and 403(b) plans
SCUDDER DEFINED CONTRIBUTION SERVICES
1-800-323-6105
Please address all correspondence to
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THE SCUDDER FUNDS
P.O. BOX 2291
BOSTON, MASSACHUSETTS
02107-2291
Or stop by a Scudder Funds Center
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Many shareholders enjoy the personal, one-on-one service of the
Scudder Funds Centers. Check for a Funds Center near you--they can
be found in the following cities:
Boca Raton New York
Boston Portland, OR
Chicago San Diego
Cincinnati San Francisco
Los Angeles Scottsdale
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For information on Scudder For information on Scudder
Treasurers Trust,(TM) an institutional Institutional Funds,* funds
cash management service for designed to meet the broad
corporations, non-profit investment management and
organizations and trusts that uses service needs of banks and
certain portfolios of Scudder Fund, other institutions, call
Inc.* ($100,000 minimum), call 1-800-854-8525.
1-800-541-7703.
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</TABLE>
Scudder Investor Relations and Scudder Funds Centers are services provided
through Scudder Investor Services, Inc., Distributor.
* Contact Scudder Investor Services, Inc., Distributor, to receive a
prospectus with more complete information, including management fees and
expenses. Please read it carefully before you invest or send money.
18
<PAGE>
Celebrating Over 75 Years of Serving Investors
Established in 1919 by Theodore Scudder, Sidney Stevens, and F. Haven
Clark, Scudder, Stevens & Clark was the first independent investment counsel
firm in the United States. Since its birth, Scudder's pioneering spirit and
commitment to professional long-term investment management have helped shape the
investment industry. In 1928, we introduced the nation's first no-load mutual
fund. Today we offer 37 pure no load(TM) funds, including the first
international mutual fund offered to U.S. investors.
Over the years, Scudder's global investment perspective and dedication to
research and fundamental investment disciplines have helped us become one of the
largest and most respected investment managers in the world. Though times have
changed since our beginnings, we remain committed to our long-standing
principles: managing money with integrity and distinction; keeping the interests
of our clients first; providing access to investments and markets that may not
be easily available to individuals; and making investing as simple and
convenient as possible through friendly, comprehensive service.
