This prospectus sets forth concisely the information about Scudder U.S. Treasury
Money Fund, an open-end management investment company, that a prospective
investor should know before investing. Please retain it for future reference.
Shares of Scudder U.S. Treasury Money Fund are not insured or guaranteed by the
U.S. Government. Scudder U.S. Treasury Money Fund seeks to maintain a constant
net asset value of $1.00 per share but there can be no assurance that the stable
net asset value will be maintained.
If you require more detailed information, a Statement of Additional Information
dated November 1, 1997, as amended from time to time, may be obtained without
charge by writing Scudder Investor Services, Inc., Two International Place,
Boston, MA 02110-4103 or calling 1-800-225-2470. The Statement, which is
incorporated by reference into this prospectus, has been filed with the
Securities and Exchange Commission and is available along with other related
materials on the SEC's Internet Web site (http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Contents--see page 4.
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
Scudder
U.S. Treasury Money Fund
Prospectus
November 1, 1997
A pure no-load(TM) (no sales charges) money market fund seeking safety,
liquidity and stability of capital and, consistent therewith, current income.
The Fund seeks to achieve its objective by investing in short-term U.S.
Government securities and repurchase agreements.
<PAGE>
Expense information
How to compare a Scudder pure no-load(TM) fund
This information is designed to help you understand the various costs and
expenses of investing in Scudder U.S. Treasury Money Fund (the "Fund"). By
reviewing this table and those in other mutual funds' prospectuses, you can
compare the Fund's fees and expenses with those of other funds. With Scudder's
pure no-load(TM) funds, you pay no commissions to purchase or redeem shares, or
to exchange from one fund to another. As a result, all of your investment goes
to work for you.
1) Shareholder transaction expenses: Expenses charged directly to your
individual account in the Fund for various transactions.
Sales commissions to purchase shares (sales load) NONE
Commissions to reinvest dividends NONE
Redemption fees NONE*
Fees to exchange shares NONE
2) Annual Fund operating expenses: Expenses paid by the Fund before it
distributes its net investment income, expressed as a percentage of the
Fund's average daily net assets for the fiscal year ended June 30, 1997.
Investment management fee (after waiver) 0.21%
12b-1 fees NONE
Other expenses 0.44%
----
Total Fund operating expenses (after waiver) 0.65%**
====
Example
Based on the level of total Fund operating expenses listed above, the total
expenses relating to a $1,000 investment, assuming a 5% annual return and
redemption at the end of each period, are listed below. Investors do not pay
these expenses directly; they are paid by the Fund before it distributes its net
investment income to shareholders. (As noted above, the Fund has no redemption
fees of any kind.)
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$7 $21 $36 $81
See "Fund organization--Investment adviser" for further information about the
investment management fee. This example assumes reinvestment of all dividends
and distributions and that the percentage amounts listed under "Annual Fund
operating expenses" remain the same each year. This example should not be
considered a representation of past or future expenses or return. Actual Fund
expenses and return vary from year to year and may be higher or lower than those
shown.
* You may redeem by writing or calling the Fund or by Write-A-Check. If you
wish to receive your redemption proceeds via wire, there is a $5 wire
service fee. For additional information, please refer to "Transaction
information--Redeeming shares."
** Until October 31, 1998, the Adviser has agreed to waive all or a portion of
its investment management fee payable by the Fund to the extent necessary so
that the total annualized expenses of the Fund do not exceed 0.65% of the
average daily net assets. If the Adviser had not agreed to do so, Fund
operating expenses would have been: investment management fee .50%, other
expenses .44% and total operating expenses .94% for the fiscal year ended
June 30, 1997.
2
<PAGE>
Financial highlights
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the audited financial
statements.
If you would like more detailed information concerning the Fund's performance,
a complete portfolio listing and audited financial statements are available in
the Fund's Annual Report dated June 30, 1997 and may be obtained without
charge by writing or calling Scudder Investor Services, Inc.
<TABLE>
<CAPTION>
Years Ended June 30,
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning ----------------------------------------------------------------------
of period .............. $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
----------------------------------------------------------------------
Net investment income .... .045 .048 .046 .027 .027 .044 .065 .075 .074 .055
Less distributions from net
investment income and net
realized gains on
investment transactions (a) (.045) (.048) (.046) (.027) (.027) (.044) (.065) (.075) (.074) (.055)
Net asset value, end of ----------------------------------------------------------------------
period ................. $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
------------------------------------------------------------------------------------------------------
Total Return (%) ......... 4.58 4.91 4.70 2.74 2.74 4.48 6.71 7.74 7.66 5.69
Ratios and Supplemental Data
Net assets, end of period
($ millions) ........... 399 396 383 383 305 299 272 198 167 154
Ratio of operating expenses,
net to daily net average
assets (%) ............. .65 .65 .65 .65 .65 .65 .82 .98 1.01 1.04
Ratio of operating expenses
before expense reductions,
to average daily
net assets (%) ........ .94 .92 .90 .90 .85 .85 .91 .98 1.01 1.04
Ratio of net investment
income to average net
assets (%) ............. 4.49 4.80 4.61 2.75 2.69 4.31 6.37 7.46 7.41 5.54
</TABLE>
(a) Net realized capital gains were less than 6/10 of 1 cents per share.
3
<PAGE>
A message from Scudder's chairman
Scudder, Stevens & Clark, Inc., investment adviser to the Scudder Family of
Funds, was founded in 1919. We offered America's first no-load mutual fund in
1928. Today, we manage in excess of $125 billion for many private accounts and
over 50 mutual fund portfolios. We manage the mutual funds in a special program
for the American Association of Retired Persons, as well as the fund options
available through Scudder Horizon Plan, a tax-advantaged variable annuity. We
also advise The Japan Fund and nine closed-end funds that invest in countries
around the world.
The Scudder Family of Funds is designed to make investing easy and less costly.
It includes money market, tax free, income and growth funds as well as IRAs,
401(k)s, Keoghs and other retirement plans.
Services available to all shareholders include toll-free access to the
professional service representatives of Scudder Investor Relations, easy
exchange among funds, shareholder reports, informative newsletters and the
walk-in convenience of Scudder Investor Centers.
All Scudder mutual funds are pure no-load(TM). This means you pay no commissions
to purchase or redeem your shares or to exchange from one fund to another. There
are no "12b-1" fees either, which many other funds now charge to support their
marketing efforts. All of your investment goes to work for you. We look forward
to welcoming you as a shareholder.
/s/Daniel Pierce
Scudder U.S. Treasury Money Fund
Investment objective
o safety, liquidity and stability of capital and, consistent therewith,
current income
o seeks to achieve its objective by investing in short-term U.S. Government
securities and repurchase agreements
Investment characteristics
o stable share price
o fluctuating yield
o daily liquidity and free check writing
o dividends declared daily and paid monthly
Contents
Investment objective and policies 5
Why invest in the Fund? 6
Additional information about policies
and investments 6
Distribution and performance information 7
Fund organization 7
Transaction information 9
Shareholder benefits 12
Purchases 15
Exchanges and redemptions 16
Investment products and services 18
How to contact Scudder 19
4
<PAGE>
Investment objective and
policies
Investment objective
Scudder U.S. Treasury Money Fund (the "Fund"), a diversified, open-end
management investment company, seeks to provide safety, liquidity and stability
of capital and, consistent therewith, to provide current income. The Fund seeks
to achieve its objective by investing in short-term U.S. Government securities
and repurchase agreements. The Fund also seeks to maintain a constant net asset
value of $1.00 and declares dividends daily.
Except as otherwise indicated, the Fund's investment objective and policies are
not fundamental and may be changed without a vote of shareholders. If there is a
change in investment objective, shareholders should consider whether the Fund
remains an appropriate investment in light of their then current financial
position and needs. There can be no assurance that the Fund's objective will be
met.
Investment characteristics
The Fund seeks to provide investors with current income and stability of capital
through a portfolio consisting primarily of short-term U.S. Treasury obligations
and similar investments. The Fund is a "fixed price" fund; that is, it seeks to
maintain a constant share price of $1.00, although under certain circumstances
this may not be possible. This price stability makes the Fund suitable for
investors who are seeking current income and who are unwilling to accept stock
or bond market risk.
The Fund is also designed to minimize credit risk. It invests exclusively in
short-term securities unconditionally guaranteed by the U.S. Government (as to
payment of both principal and interest) and repurchase agreements backed fully
by U.S. Treasury securities.
The Fund invests in U.S. Government securities whose interest is specifically
exempted from state and local income taxes under federal law; the interest is
not exempt from federal income tax. Most, but not all, states allow this
tax-exempt character of the Fund's income to pass through to its shareholders,
so that distributions from the Fund to the extent derived from interest that is
exempt from state and local income taxes, are exempt from such taxes when earned
by a shareholder of the Fund. Shareholders should, however, contact their own
tax advisers regarding the possible exclusion for state and local income tax
purposes of the portion of distributions received from the Fund which is
attributable to interest from U.S. Government securities. Income earned by the
Fund from U.S. Treasury-backed repurchase agreements generally is not exempt
from state and local tax.
Investments
The Fund invests without limitation in short-term securities consisting of U.S.
Treasury notes, bonds, bills and in other securities issued or guaranteed by the
U.S. Government and thus backed by the full faith and credit of the United
States. The Fund may invest its assets, when conditions are appropriate, in
repurchase agreements, but only if they are fully collateralized by U.S.
Treasury obligations. At least 80% of the Fund's assets will be invested in
either U.S. Treasury securities or in repurchase agreements collateralized by
U.S. Treasury obligations. All of the securities in which the Fund may invest
are U.S. dollar-denominated. The Fund's investments in U.S. Government
obligations provide a high degree of safety and liquidity. Amendments have been
proposed to the federal rules regulating quality, maturity and diversification
requirements of money market funds, like the Fund. If the amendments are adopted
the Fund intends to comply with such new requirements. The Fund may also invest
in when-issued securities, whose market value may involve an unrealized gain or
loss prior to settlement. In addition the Fund may invest, to a limited extent,
in illiquid or restricted securities.
5
<PAGE>
The Fund's investments in U.S. Government securities may have maturities of up
to 762 calendar days; all other portfolio securities will have maturities of up
to 397 calendar days. The dollar-weighted average maturity of the Fund's
portfolio investments varies with money market conditions, but is always 90 days
or less. As a money market fund with a short-term maturity, the Fund's income
fluctuates with changes in interest rates but its price is expected to remain
fixed at $1.00 per share.
Why invest in the Fund?
The Fund can be appropriate for investors who are concerned about stability of
principal. If investors are just starting out and want their assets to grow in a
stable investment, if they want to keep their nest egg safe and handy, or if
they are simply looking to "park" their investment capital for a short time, a
government money market fund may be a good choice. One appealing characteristic
of a money market fund is that it seeks to maintain a stable share price. Thus,
not only should investors have the value of their initial investment maintained,
they ordinarily will have earnings on that investment, plus earnings on those
earnings, if dividends are reinvested.
Another important feature of the Fund is daily liquidity. Investors can gain
access to their cash by toll-free telephone redemption or with our convenient
check writing option. Shareholders may write checks of at least $100.
The Fund is appropriate for investors who are seeking a high degree of credit
safety. U.S. Treasury bills, notes and bonds and other securities backed by the
full faith and credit of the U.S. Government are considered to be of the highest
quality and among the safest investments to own. Income derived from these
securities is exempt from state and local taxes in many regions of the country.
In addition, the Fund offers all the benefits of the Scudder Family of Funds.
Scudder, Stevens & Clark, Inc. manages a diverse family of pure no-load(TM)
funds and provides a wide range of services to help investors meet their
investment needs. Please refer to "Investment products and services" for
additional information.
Additional information about policies and investments
Investment restrictions
The Fund has adopted certain fundamental policies which may not be changed
without a vote of shareholders and which are designed to reduce the Fund's
investment risk. The Fund may not borrow money except as a temporary measure for
extraordinary or emergency purposes and may not make loans except through the
lending of portfolio securities, the purchase of debt obligations or through
repurchase agreements.
A complete description of these and other policies and restrictions is contained
under "Investment Restrictions" in the Fund's Statement of Additional
Information.
Repurchase agreements
As a means of earning income for periods as short as overnight, the Fund may
enter into repurchase agreements with selected banks and broker/ dealers. Under
a repurchase agreement, the Fund acquires securities, subject to the seller's
agreement to repurchase those securities at a specified time and price. If the
seller under a repurchase agreement becomes insolvent, the Fund's right to
dispose of the securities may be restricted, or the value of the securities may
decline before the Fund is able to dispose of them. In the event of the
commencement of bankruptcy or insolvency proceedings with respect to the seller
of the securities before repurchase under a repurchase agreement, the Fund may
encounter delay and incur costs, including a decline in the value of the
securities, before being able to sell the securities.
6
<PAGE>
When-issued securities
The Fund may purchase securities on a when-issued or forward delivery basis, for
payment and delivery at a later date. The price and yield are generally fixed on
the date of commitment to purchase. During the period between purchase and
settlement, no interest accrues to the Fund. At the time of settlement, the
market value of the security may be more or less than the purchase price.
Distribution and performance information
Dividends and capital gains distributions
The Fund's dividends from net investment income are declared daily and
distributed monthly. The Fund takes into account realized gains and losses on
securities held for one year or less (short-term capital gain/loss) in its daily
dividend. The Fund generally intends to distribute any net realized long-term
capital gains after utilization of capital loss carryforwards, if any, in
November or December to prevent application of federal excise tax, although an
additional distribution may be made, if necessary. Any dividends or capital
gains distributions declared in October, November or December with a record date
in such a month and paid during the following January will be treated by
shareholders for federal income tax purposes as if received on December 31 of
the calendar year declared. According to preference, shareholders may receive
distributions in cash or have them reinvested in additional shares of the Fund.
If an investment is in the form of a retirement plan, all dividends and capital
gains distributions must be reinvested into the shareholder's account.
Dividends from net investment income are taxable to shareholders as ordinary
income whether received in cash or additional shares.
Long-term capital gains distributions, if any, are taxable as long-term capital
gains regardless of the length of time shareholders have owned their shares.
Short-term capital gains and any other taxable income distributions are taxable
as ordinary income. It is not expected that dividends will qualify for the
dividends-received deduction for corporations.
The Fund sends detailed tax information to shareholders about the amount and
type of its distributions by January 31 of the following year.
Performance information
From time to time, quotations of the Fund's performance may be included in
advertisements, sales literature or shareholder reports. All performance figures
are historical, show the performance of a hypothetical investment and are not
intended to indicate future performance. The "yield" of the Fund refers to
income generated by an investment in the Fund over a specified seven-day period.
Yield is expressed as an annualized percentage. The "effective yield" of the
Fund is expressed similarly but, when annualized, the income earned by an
investment in the Fund is assumed to be reinvested and will reflect the effects
of compounding. "Total return" is the change in value of an investment in the
Fund for a specified period. The "average annual total return" of the Fund is
the average annual compound rate of return of an investment in the Fund assuming
the investment has been held for one year, five years and ten years as of a
stated ending date. "Cumulative total return" represents the cumulative change
in value of an investment in the Fund for various periods. All types of total
return calculations assume that all dividends and capital gains distributions
during the period were reinvested in shares of the Fund. Performance will vary
based upon, among other things, changes in market conditions and the level of
the Fund's expenses.
Fund organization
Scudder U.S. Treasury Money Fund is a diversified, open-end management
investment company registered under the Investment Company Act of 1940 (the
"1940" Act). The Fund was organized as a Massachusetts business trust in April
7
<PAGE>
1980. The Fund changed its name from Scudder Government Money Fund on March 1,
1991.
The Fund's activities are supervised by its Board of Trustees. Shareholders have
one vote for each share held on matters on which they are entitled to vote. The
Fund is not required to and has no current intention of holding annual
shareholder meetings, although special meetings may be called for purposes such
as electing or removing Trustees, changing fundamental investment policies or
approving an investment management contract. Shareholders will be assisted in
communicating with other shareholders in connection with removing a Trustee as
if Section 16(c) of the 1940 Act were applicable.
Investment adviser
The Fund retains the investment management firm of Scudder, Stevens & Clark,
Inc., a Delaware corporation, to manage the Fund's daily investment and business
affairs subject to the policies established by the Board of Trustees. The
Trustees have overall responsibility for the management of the Fund under
Massachusetts law.
For the fiscal year ended June 30, 1997, Scudder, Stevens & Clark, Inc. (the
"Adviser") received an investment management fee of 0.21% of the Fund's average
daily net assets on an annual basis.
The fee is payable monthly, provided that the Fund will make such interim
payments as may be requested by the Adviser not to exceed 75% of the amount of
the fee then accrued on the books of the Fund and unpaid.
Until October 31, 1998, the Fund's Adviser has agreed to continue to maintain
the total annualized expenses of the Fund at 0.65% of average daily net assets
of the Fund.
All of the Fund's expenses are paid out of gross investment income. Shareholders
pay no direct charges or fees for investment or administrative services.
Scudder, Stevens & Clark, Inc., is located at Two International Place, Boston,
Massachusetts.
Scudder has entered into an agreement with Zurich Insurance Company ("Zurich"),
an international insurance and financial services organization, pursuant to
which Scudder will form a new global investment organization by combining with
Zurich's subsidiary, Zurich Kemper Investments, Inc., and change its name to
Scudder Kemper Investments, Inc. After the transaction is completed, Zurich will
own approximately 70% of the new organization with the balance owned by the new
organization's officers and employees.
Consummation of the transaction is subject to a number of contingencies,
including regulatory approvals. The transaction is expected to close in the
fourth quarter of 1997. Upon consummation of the transaction the investment
management agreement with Scudder, Stevens & Clark, Inc., will terminate. The
Trustees have approved an investment management agreement with Scudder Kemper
Investments, Inc. which is substantially identical to the current investment
management agreement to become effective upon the termination of the current
investment management agreement.
Transfer agent
Scudder Service Corporation, P.O. Box 2291, Boston, Massachusetts 02107-2291, a
subsidiary of the Adviser, is the transfer, shareholder servicing and
dividend-paying agent for the Fund.
Underwriter
Scudder Investor Services, Inc., a subsidiary of the Adviser, is the Fund's
principal underwriter. Scudder Investor Services, Inc. confirms, as agent, all
purchases of shares of the Fund. Scudder Investor Relations is a telephone
information service provided by Scudder Investor Services, Inc.
Fund accounting agent
Scudder Fund Accounting Corporation, a subsidiary of the Adviser, is responsible
for determining the daily net asset value per share and maintaining the general
8
<PAGE>
accounting records of the Fund.
Custodian
State Street Bank and Trust Company is the Fund's custodian.
Transaction information
Purchasing shares
Purchases are executed at the next calculated net asset value per share after
the Fund's transfer agent receives the purchase request in good order. Purchases
are made in full and fractional shares. (See "Share price.")
By check. If you purchase shares with a check that does not clear, your purchase
will be canceled and you will be subject to any losses or fees incurred in the
transaction. Checks must be drawn on or payable through a U.S. bank. If you
purchase shares by check and redeem them within seven business days of purchase,
the Fund may hold redemption proceeds until the purchase check has cleared. If
you purchase shares by federal funds wire, you may avoid this delay. Redemption
requests by telephone or by "Write-A-Check" prior to the expiration of the
seven-day period will not be accepted.
By wire. To open a new account by wire, first call Scudder at 1-800-225-5163 to
obtain an account number. A representative will instruct you to send a
completed, signed application to the transfer agent. Accounts cannot be opened
without a completed, signed application and a Scudder fund account number.
Contact your bank to arrange a wire transfer to:
The Scudder Funds
State Street Bank and Trust Company
Boston, MA 02101
ABA Number 011000028
DDA Account 9903-5552
Your wire instructions must also include:
- -- the name of the fund in which the money is to be invested,
- -- the account number of the fund, and
- -- the name(s) of the account holder(s).
The account will be established once the application and money order are
received in good order.
You may also make additional investments of $100 or more to your existing
account by wire.
By exchange. The Fund may be exchanged for shares of other funds in the Scudder
Family of Funds unless otherwise determined by the Board of Trustees. Your new
account will have the same registration and address as your existing account.
The exchange requirements for corporations, other organizations, trusts,
fiduciaries, agents, institutional investors and retirement plans may be
different from those for regular accounts. Please call 1-800-225-5163 for more
information, including information about the transfer of special account
features.
You can also make exchanges among your Scudder fund accounts on SAIL, the
Scudder Automated Information Line, by calling 1-800-343-2890.
By "QuickBuy." If you elected "QuickBuy" for your account, you can call
toll-free to purchase shares. The money will be automatically transferred from
your predesignated bank checking account. Your bank must be a member of the
Automated Clearing House for you to use this service. If you did not elect
"QuickBuy," call 1-800-225-5163 for more information.
To purchase additional shares, call 1-800-225-5163. Purchases may not be for
more than $250,000. Proceeds in the amount of your purchase will be transferred
from your bank checking account in two or three business days following your
call. For requests received by the close of regular trading on the Exchange,
shares will be purchased at the net asset value per share calculated at the
close of trading on the day of your call. "QuickBuy" requests received after the
close of regular trading on the Exchange will begin their processing and be
9
<PAGE>
purchased at the net asset value calculated the following business day.
If you purchase shares by "QuickBuy" and redeem them within seven days of the
purchase, the Fund may hold the redemption proceeds for a period of up to seven
business days. If you purchase shares and there are insufficient funds in your
bank account, the purchase will be canceled and you will be subject to any
losses or fees incurred in the transaction. "QuickBuy" transactions are not
available for most retirement plan accounts. However, "QuickBuy" transactions
are available for Scudder IRA accounts.
Redeeming shares
The Fund allows you to redeem shares (i.e., sell them back to the Fund) without
redemption fees.
By telephone. This is the quickest and easiest way to sell Fund shares. If you
provided your banking information on your application, you can call to request
that federal funds be sent to your authorized bank account. If you did not
include your banking information on your application, call 1-800-225-5163 for
more information.
Redemption proceeds will be wired to your bank unless otherwise requested. If
your bank cannot receive federal reserve wires, redemption proceeds will be
mailed to your bank. There will be a $5 charge for all wire redemptions.
You can also make redemptions from your Scudder fund account on SAIL by calling
1-800-343-2890.
If you open an account by wire, you cannot redeem shares by telephone until the
Fund's transfer agent has received your completed and signed application.
Telephone redemption is not available for shares held in Scudder IRA accounts
and most other Scudder retirement plan accounts.
In the event that you are unable to reach the Fund by telephone, you should
write to the Fund; see "How to contact Scudder" for the address.
By "QuickSell." If you elected "QuickSell" for your account, you can call
toll-free to redeem shares. The money will be automatically transferred to your
predesignated bank checking account. Your bank must be a member of the Automated
Clearing House for you to use this service. If you did not elect "QuickSell,"
call 1-800-225-5163 for more information.
To redeem shares, call 1-800-225-5163. Redemptions must be for at least $250.
Proceeds in the amount of your redemption will be transferred to your bank
checking account in two or three business days following your call. For requests
received by the close of regular trading on the Exchange, shares will be
redeemed at the net asset value per share calculated at the close of trading on
the day of your call. "QuickSell" requests received after the close of regular
trading on the Exchange will begin their processing and be redeemed at the net
asset value calculated the following business day.
"QuickSell" transactions are not available for Scudder IRA accounts and most
other retirement plan accounts.
Signature guarantees. For your protection and to prevent fraudulent redemptions,
on written redemption requests in excess of $100,000 we require an original
signature and an original signature guarantee for each person in whose name the
account is registered. (The Fund reserves the right, however, to require a
signature guarantee for all redemptions.) You can obtain a signature guarantee
from most banks, credit unions or savings associations, or from broker/dealers,
municipal securities broker/dealers, government securities broker/dealers,
national securities exchanges, registered securities associations or clearing
agencies deemed eligible by the Securities and Exchange Commission. Signature
guarantees by notaries public are not acceptable. Redemption requirements for
corporations, other organizations, trusts, fiduciaries, agents, institutional
investors and retirement plans may be different from those for regular accounts.
10
<PAGE>
For more information, please call 1-800-225-5163.
By "Write-A-Check." You may redeem shares by writing checks against your account
balance for at least $100. Your Fund investments will continue to earn dividends
until your check is presented to the Fund for payment.
Checks will be returned by the Fund's transfer agent if there are insufficient
shares to meet the withdrawal amount. You should not attempt to close an account
by check because the exact balance at the time the check clears will not be
known when the check is written.
Telephone transactions
Shareholders automatically receive the ability to exchange by telephone and the
right to redeem by telephone up to $100,000 to their address of record.
Shareholders also may, by telephone, request that redemption proceeds be sent to
a predesignated bank account. The Fund uses procedures designed to give
reasonable assurance that telephone instructions are genuine, including
recording telephone calls, testing a caller's identity and sending written
confirmation of telephone transactions. If the Fund does not follow such
procedures, it may be liable for losses due to unauthorized or fraudulent
telephone instructions. The Fund will not be liable for acting upon instructions
communicated by telephone that it reasonably believes to be genuine.
Share Price
Purchases and redemptions, including exchanges, are made at net asset value.
Scudder Fund Accounting Corporation determines net asset value per share as of
twelve o'clock noon and as of the close of regular trading on the New York Stock
Exchange (the "Exchange"), normally 4 p.m. eastern time, on each day the
Exchange is open for trading. Net asset value per share is calculated by
dividing the value of total Fund assets, less all liabilities, by the total
number of shares outstanding. In calculating the net asset value per share, the
Fund uses the current market value of the securities. However, for securities
with sixty days or less to maturity, the Fund uses the amortized cost value.
Processing time
Purchases made by wire and received by the Fund's transfer agent before noon on
any business day are executed at noon on that day and begin earning income the
same day. Those made by wire between noon and the close of regular trading on
the Exchange on any business day are executed at the close of trading the same
day and begin earning income the next business day. Purchases made by check are
executed on the day the check is received in good order by the Fund's transfer
agent and begin earning income on the next business day. Redemption requests
received in good order by the Fund's transfer agent between noon and the close
of regular trading on the Exchange are executed at the net asset value
calculated at the close of regular trading on that day and will earn a dividend
on the redeemed shares that day. If a redemption request is received by noon,
proceeds will normally be wired that day, if requested by the shareholder, but
no dividend will be earned on the redeemed shares on that day.
If you wish to make a purchase of $500,000 or more, you should notify Scudder
Investor Relations by calling 1-800-225-5163.
The Fund will normally send redemption proceeds within one business day
following the redemption request, but may take up to seven business days (or
longer in the case of shares recently purchased by check).
Purchase restrictions
The Fund and Scudder Investor Services, Inc. each reserves the right to reject
purchases of Fund shares (including exchanges) for any reason.
Tax identification number
Be sure to complete the Tax Identification Number section of the Fund's
application when you open an account. Federal tax law requires the Fund to
withhold 31% of taxable dividends and capital gains distributions from accounts
(other than those of certain exempt payees) without a correct certified Social
11
<PAGE>
Security or tax identification number and certain other certified information or
upon notification from the IRS or a broker that withholding is required. The
Fund reserves the right to reject new account applications without a correct
certified Social Security or tax identification number. The Fund also reserves
the right, following 30 days' notice, to redeem all shares in accounts without a
correct certified Social Security or tax identification number. A shareholder
may avoid involuntary redemption by providing the Fund with a tax identification
number during the 30-day notice period.
Minimum balances
Shareholders should maintain a share balance worth at least $2,500, which amount
may be changed by the Board of Trustees. Scudder retirement plans and certain
other accounts have similar or lower minimum share balance requirements. A
shareholder may open an account with at least $1,000, if an automatic investment
plan of $100/month is established.
Shareholders who maintain a non-fiduciary account balance of less than $2,500 in
the Fund, without establishing an automatic investment plan, will be assessed an
annual $10.00 per fund charge with the fee to be paid to the Fund. The $10.00
charge will not apply to shareholders with a combined household account balance
in any of the Scudder Funds of $25,000 or more. The Fund reserves the right,
following 60 days' written notice to shareholders, to redeem all shares in
accounts below $250, including accounts of new investors, where a reduction in
value has occurred due to a redemption or exchange out of the account. The Fund
will mail the proceeds of the redeemed account to the shareholder. Reductions in
value that result solely from market activity will not trigger an involuntary
redemption. Retirement accounts and certain other accounts will not be assessed
the $10.00 charge or be subject to automatic liquidation. Please refer to
"Exchanges and Redemptions--Other Information" in the Fund's Statement of
Additional Information for more information.
Third party transactions
If purchases and redemptions of Fund shares are arranged and settlement is made
at an investor's election through a member of the National Association of
Securities Dealers, Inc., other than Scudder Investor Services, Inc., that
member may, at its discretion, charge a fee for that service.
Shareholder benefits
Experienced professional management
Scudder, Stevens & Clark, Inc., one of the nation's most experienced investment
management firms, actively manages your Scudder fund investment. Professional
management is an important advantage for investors who do not have the time or
expertise to invest directly in individual securities.
A team approach to investing
Scudder U.S. Treasury Money Fund is managed by a team of Scudder investment
professionals who each play an important role in the Fund's management process.
Team members work together to develop investment strategies and select
securities for the Fund's portfolio. They are supported by Scudder's large staff
of economists, research analysts, traders and other investment specialists.
Scudder believes its team approach benefits Fund investors by bringing together
many disciplines and leveraging Scudder's extensive resources.
Lead Portfolio Manager David B. Wines assumed responsibility for the Fund's
day-to-day management in 1996. Mr. Wines focuses on overall investment strategy
and has over 14 years of experience as a portfolio manager in the securities
business, including 8 years in the mutual fund business. Debra A. Hanson,
Portfolio Manager, who joined the team in 1995, develops and executes investment
strategy for the Fund. Ms. Hanson joined Scudder in 1983 and has over 14 years'
12
<PAGE>
experience trading and managing fixed-income portfolios. K. Sue Cote, Portfolio
Manager, joined Scudder in 1983 and has 14 years' experience working with
short-term fixed-income investments.
SAIL(TM)--Scudder Automated Information Line
For personalized account information including fund prices, yields and account
balances, to perform transactions in existing Scudder fund accounts, or to
obtain information on any Scudder fund, shareholders can call Scudder's
Automated Information Line (SAIL) at 1-800-343-2890, 24 hours a day. During
periods of extreme economic or market changes, or other conditions, it may be
difficult for you to effect telephone transactions in your account. In such an
event you should write to the Fund; please see "How to contact Scudder" for the
address.
Investment flexibility
Scudder offers toll-free telephone exchange between funds at current net asset
value. You can move your investments among money market, income, growth,
tax-free and growth and income funds with a simple toll-free call or, if you
prefer, by sending your instructions through the mail or by fax. (The exchange
privilege may not be available for certain Scudder funds. For more information,
please call 1-800-225-5163.) Telephone and fax redemptions and exchanges are
subject to termination and their terms are subject to change at any time by the
Fund or the transfer agent. In some cases, the transfer agent or Scudder
Investor Services, Inc. may impose additional conditions on telephone
transactions.
Personal CounselSM -- A Managed Fund Portfolio Program
If you would like to receive direct guidance and management of your overall
mutual fund portfolio to help you pursue your investment goals, you may be
interested in Personal Counsel from Scudder. Personal Counsel, a program of
Scudder Investor Services, Inc., a registered investment adviser and a
subsidiary of Scudder, Stevens & Clark, Inc., combines the benefits of a
customized portfolio of pure no-load Scudder Funds with ongoing portfolio
monitoring and individualized service, for an annual fee of generally 1% or less
of assets (with a $1,000 minimum). In addition, it draws upon Scudder's more
than 75-year heritage of providing investment counsel to large corporate and
private clients. If you have $100,000 or more to invest initially and would like
more information about Personal Counsel, please call 1-800-700-0183.
Dividend reinvestment plan
You may have dividends and distributions automatically reinvested in additional
Fund shares. Please call 1-800-225-5163 to request this feature.
Shareholder statements
You receive a detailed account statement every time you purchase or redeem
shares. All of your statements should be retained to help you keep track of
account activity and the cost of shares for tax purposes.
Shareholder reports
In addition to account statements, you receive periodic shareholder reports
highlighting relevant information, including investment results and a review of
portfolio changes.
To reduce the volume of mail you receive, only one copy of most Fund reports,
such as the Fund's Annual Report, may be mailed to your household (same surname,
same address). Please call 1-800-225-5163 if you wish to receive additional
shareholder reports.
Newsletters
Four times a year, Scudder sends you Perspectives, an informative newsletter
covering economic and investment developments, service enhancements and other
topics of interest to Scudder fund investors.
13
<PAGE>
Scudder Investor Centers
As a convenience to shareholders who like to conduct business in person, Scudder
Investor Services, Inc. maintains Investor Centers in Boca Raton, Boston,
Chicago, New York and San Francisco.
T.D.D. service for the hearing impaired
Scudder's full range of investor information and shareholder services is
available to hearing impaired investors through a toll-free T.D.D. (Telephone
Device for the Deaf) service. If you have access to a T.D.D., call
1-800-543-7916 for investment information or specific account questions and
transactions.
14
<PAGE>
Purchases
<TABLE>
<CAPTION>
Purchases
<S> <C>
Opening Minimum initial investment: $2,500; IRAs $1,000
an account Group retirement plans (401(k), 403(b), etc.) have similar or lower minimums.
See appropriate plan literature.
Make checks o By Mail Send your completed and signed application and check
payable to "The
Scudder Funds."
by regular mail to: or by express, registered,
or certified mail to:
The Scudder Funds Scudder Shareholder Service
P.O. Box 2291 Center
Boston, MA 42 Longwater Drive
02107-2291 Norwell, MA
02061-1612
o By Wire Please see Transaction information--Purchasing shares-- By
wire for details, including the ABA wire transfer number. Then call
1-800-225-5163 for instructions.
o In Person Visit one of our Investor Centers to complete your application with the
help of a Scudder representative. Investor Center locations are listed
under Shareholder benefits.
-----------------------------------------------------------------------------------------------------------------------
Purchasing Minimum additional investment: $100; IRAs $50
additional shares Group retirement plans (401(k), 403(b), etc.) have similar or lower minimums.
See appropriate plan literature.
Make checks o By Mail Send a check with a Scudder investment slip, or with a letter of
payable to "The instruction including your account number and the
Scudder Funds." complete Fund name, to the appropriate address listed above.
o By Wire Please see Transaction information--Purchasing shares-- By
wire for details, including the ABA wire transfer number.
o In Person Visit one of our Investor Centers to make an additional
investment in your Scudder fund account. Investor Center locations
are listed under Shareholder benefits.
o By Telephone Please see Transaction information--Purchasing shares--
By QuickBuy for more details.
o By Automatic You may arrange to make investments on a regular basis through automatic
Investment Plan deductions from your bank checking account. Please call 1-800-225-5163
($50 minimum) for more information and an enrollment form.
15
<PAGE>
Exchanges and redemptions
Exchanging shares Minimum investments: $2,500 to establish a new account;
$100 to exchange among existing accounts
o By Telephone To speak with a service representative, call 1-800-225-5163 from
8 a.m. to 8 p.m. eastern time or to access SAIL(TM), Scudder's Automated
Information Line, call 1-800-343-2890 (24 hours a day).
o By Mail Print or type your instructions and include:
or Fax - the name of the Fund and the account number you are exchanging from;
- your name(s) and address as they appear on your account;
- the dollar amount or number of shares you wish to exchange;
- the name of the Fund you are exchanging into;
- your signature(s) as it appears on your account; and
- a daytime telephone number.
Send your instructions
by regular mail to: or by express, registered, or by fax to:
or certified mail to:
The Scudder Funds Scudder Shareholder 1-800-821-6234
P.O. Box 2291 Service Center
Boston, MA 02107-2291 42 Longwater Drive
Norwell, MA
02061-1612
-----------------------------------------------------------------------------------------------------------------------
Redeeming shares o By Telephone To speak with a service representative, call 1-800-225-5163 from 8 a.m. to 8 p.m.
eastern time or to access SAIL(TM), Scudder's Automated Information Line, call
1-800-343-2890 (24 hours a day). You may have redemption proceeds sent to your
predesignated bank account, or redemption proceeds of up to $100,000 sent to your
address of record.
o By "Write- You may redeem shares by writing checks against your account balance as often as
A-Check" you like for at least $100, but not more than $5,000,000.
o By Mail Send your instructions for redemption to the appropriate address or fax number
or Fax above and include:
- the name of the Fund and account number you are redeeming from;
- your name(s) and address as they appear on your account;
- the dollar amount or number of shares you wish to redeem;
- your signature(s) as it appears on your account; and
- a daytime telephone number.
A signature guarantee is required for redemptions over $100,000. See Transaction
information--Redeeming shares.
o By Automatic You may arrange to receive automatic cash payments periodically. Call
Withdrawal 1-800-225-5163 for more information and an enrollment form.
Plan
</TABLE>
16
<PAGE>
Scudder tax-advantaged retirement plans
Scudder offers a variety of tax-advantaged retirement plans for individuals,
businesses and non-profit organizations. These flexible plans are designed for
use with the Scudder Family of Funds (except Scudder tax-free funds, which are
inappropriate for such plans). Scudder Funds offer a broad range of investment
objectives and can be used to seek almost any investment goal. Using Scudder's
retirement plans can help shareholders save on current taxes while building
their retirement savings.
o Scudder No-Fee IRAs. These retirement plans allow a maximum annual
contribution of up to $2,000 per person for anyone with earned income (up
to $2,000 per individual for married couples if only one spouse has earned
income). Many people can deduct all or part of their contributions from
their taxable income, and all investment earnings accrue on a tax-deferred
basis. The Scudder No-Fee IRA charges you no annual custodial fee.
o 401(k) Plans. 401(k) plans allow employers and employees to make
tax-deductible retirement contributions. Scudder offers a full service
program that includes recordkeeping, prototype plan, employee
communications and trustee services, as well as investment options.
o Profit Sharing and Money Purchase Pension Plans. These plans allow
corporations, partnerships and people who are self-employed to make annual,
tax-deductible contributions of up to $30,000 for each person covered by
the plans. Plans may be adopted individually or paired to maximize
contributions. These are sometimes known as Keogh plans. The Scudder Keogh
charges you no annual custodial fee.
o 403(b) Plans. Retirement plans for tax-exempt organizations and school
systems to which employers and employees may both contribute.
o SEP-IRAs. Easily administered retirement plans for small businesses and
self-employed individuals. The maximum annual contribution to SEP-IRA
accounts is adjusted each year for inflation. The Scudder SEP-IRA charges
you no annual custodial fee.
o Scudder Horizon Plan. A no-load variable annuity that lets you build assets
by deferring taxes on your investment earnings. You can start with $2,500
or more.
Scudder Trust Company (an affiliate of the Adviser) is Trustee or Custodian for
some of these plans and is paid an annual fee for some of the above retirement
plans. For information about establishing a Scudder No-Fee IRA, SEP-IRA, Profit
Sharing Plan, Money Purchase Pension Plan or a Scudder Horizon Plan, please call
1-800-225-2470. For information about 401(k)s or 403(b)s please call
1-800-323-6105. To effect transactions in existing IRA, SEP-IRA, Profit Sharing
or Pension Plan accounts, call 1-800-225-5163.
The variable annuity contract is provided by Charter National Life Insurance
Company (in New York State, Intramerica Life Insurance Company [S 1802]). The
contract is offered by Scudder Insurance Agency, Inc. (in New York State, Nevada
and Montana, Scudder Insurance Agency of New York, Inc.). CNL, Inc. is the
Principal Underwriter. Scudder Horizon Plan is not available in all states.
Scudder Investor Relations is a service provided through Scudder Investor
Services, Inc., Distributor.
17
<PAGE>
Investment products and services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series --
Premium Shares*
Managed Shares*
Scudder Government Money Market Series --
Managed Shares*
Tax Free Money Market+
- ----------------------
Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series--
Managed Shares*
Scudder California Tax Free Money Fund**
Scudder New York Tax Free Money Fund**
Tax Free+
- ---------
Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund**
Scudder Massachusetts Limited Term Tax Free Fund**
Scudder Massachusetts Tax Free Fund**
Scudder New York Tax Free Fund**
Scudder Ohio Tax Free Fund**
Scudder Pennsylvania Tax Free Fund**
U.S. Income
- -----------
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder High Yield Bond Fund
Global Income
- -------------
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
Asset Allocation
- ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
U.S. Growth and Income
- ----------------------
Scudder Balanced Fund
Scudder Growth and Income Fund
Scudder S&P 500 Index Fund
U.S. Growth
- -----------
Value
Scudder Large Company Value Fund
Scudder Value Fund
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund
Scudder Large Company Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Growth
- -------------
Worldwide
Scudder Global Fund
Scudder International Growth and Income Fund
Scudder International Fund
Scudder Global Discovery Fund
Scudder Emerging Markets Growth Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund, Inc.
Retirement Programs
IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan **+++ +++
(a variable annuity)
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
The Latin America Dollar Income Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder Spain and Portugal Fund, Inc.
Scudder World Income Opportunities
Fund, Inc.
For complete information on any of the above Scudder funds, including management
fees and expenses, call or write for a free prospectus. Read it carefully before
you invest or send money. +++Funds within categories are listed in order from
expected least risk to most risk. +A portion of the income from the tax-free
funds may be subject to federal, state, and local taxes. *A class of shares of
the Fund. **Not available in all states. +++ +++A no-load variable annuity
contract provided by Charter National Life Insurance Company and its affiliate,
offered by Scudder's insurance agencies, 1-800-225-2470. #These funds, advised
by Scudder, Stevens & Clark, Inc., are traded on various stock exchanges.
18
<PAGE>
<TABLE>
<CAPTION>
How to contact Scudder
Account Service and Information:
<S> <C>
For existing account service and transactions
Scudder Investor Relations -- 1-800-225-5163
For 24 hour account information, fund information, exchanges, and an
overview of all the services available to you
Scudder Electronic Account Services -- http://funds.scudder.com
For personalized information about your Scudder accounts, exchanges and redemptions
Scudder Automated Information Line (SAIL) -- 1-800-343-2890
Investment Information:
For information about the Scudder funds, including additional
applications and prospectuses, or for answers to investment questions
Scudder Investor Relations -- 1-800-225-2470
[email protected]
Scudder's World Wide Web Site -- http://funds.scudder.com
For establishing 401(k) and 403(b) plans
Scudder Defined Contribution Services -- 1-800-323-6105
Scudder Brokerage Services:
To receive information about this discount brokerage service and to obtain an application
Scudder Brokerage Services* -- 1-800-700-0820
Personal Counsel(SM) -- A Managed Fund Portfolio Program:
To receive information about this mutual fund portfolio guidance and management program
Personal Counsel from Scudder -- 1-800-700-0183
Please address all correspondence to:
The Scudder Funds
P.O. Box 2291
Boston, Massachusetts
02107-2291
Or Stop by a Scudder Investor Center:
Many shareholders enjoy the personal, one-on-one service of the Scudder
Investor Centers. Check for an Investor Center near you--they can be
found in the following cities:
Boca Raton Chicago San Francisco
Boston New York
Scudder Investor Relations and Scudder Investor Centers are services provided
through Scudder Investor Services, Inc., Distributor.
</TABLE>
* Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA
02061--Member NASD/SIPC.
19
<PAGE>
SCUDDER CASH INVESTMENT TRUST
A Pure No-load(TM) (No Sales Charges) Mutual Fund Seeking to
Maintain the Stability of Capital and, consistent therewith,
to Maintain the Liquidity of Capital and to Provide Current Income.
The Fund Seeks to Achieve Its Objective by
Investing in Money Market Securities.
and
SCUDDER U.S. TREASURY MONEY FUND
A Pure No-load(TM) (No Sales Charges) Money Market Fund Seeking Safety,
Liquidity and Stability of Capital and, consistent therewith, Current Income.
The Fund Seeks to Achieve Its Objective by Investing in
Short-Term U.S. Government Securities.
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
November 1, 1997
- --------------------------------------------------------------------------------
This combined Statement of Additional Information is not a prospectus
and should be read in conjunction with the prospectuses of Scudder Cash
Investment Trust and Scudder U.S. Treasury Money Fund each dated November 1,
1997, as may be amended from time to time, copies of which may be obtained
without charge by writing to Scudder Investor Services, Inc., Two International
Place, Boston, Massachusetts 02110-4103.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES........................................................................1
General Investment Objectives and Policies of Scudder Cash Investment Trust.................................1
General Investment Objectives and Policies of Scudder U.S. Treasury Money Fund..............................3
Specialized Investment Techniques of the Funds..............................................................4
Investment Restrictions.....................................................................................6
PURCHASES...........................................................................................................10
Additional Information About Opening an Account............................................................10
Checks.....................................................................................................10
Wire Transfer of Federal Funds.............................................................................11
Additional Information About Making Subsequent Investments by QuickBuy.....................................11
Share Price................................................................................................11
Share Certificates.........................................................................................12
Other Information..........................................................................................12
EXCHANGES AND REDEMPTIONS...........................................................................................12
Exchanges..................................................................................................12
Redemption by Telephone....................................................................................13
Redemption By QuickSell....................................................................................14
Redemption by Mail or Fax..................................................................................14
Redemption by Write-a-Check................................................................................15
Other Information..........................................................................................15
FEATURES AND SERVICES OFFERED BY THE FUNDS..........................................................................16
The Pure No-Load(TM) Concept...............................................................................16
Internet Access............................................................................................17
Dividend and Capital Gain Distribution Options.............................................................18
Scudder Investor Centers...................................................................................18
Diversification............................................................................................18
Reports to Shareholders....................................................................................18
Transaction Summaries......................................................................................18
THE SCUDDER FAMILY OF FUNDS.........................................................................................18
SPECIAL PLAN ACCOUNTS...............................................................................................23
Scudder Retirement Plans: Profit-Sharing and Money Purchase Pension Plans for Corporations and
Self-Employed Individuals.............................................................................23
Scudder 401(k): Cash or Deferred Profit-Sharing Plan for Corporations and Self-Employed Individuals........23
Scudder IRA: Individual Retirement Account................................................................23
Scudder 403(b) Plan........................................................................................24
Automatic Withdrawal Plan..................................................................................24
Group or Salary Deduction Plan.............................................................................25
Automatic Investment Plan..................................................................................25
Uniform Transfers/Gifts to Minors Act......................................................................25
DIVIDENDS...........................................................................................................26
PERFORMANCE INFORMATION.............................................................................................27
Yield......................................................................................................27
Effective Yield............................................................................................27
Average Annual Total Return................................................................................27
Cumulative Total Return....................................................................................28
Total Return...............................................................................................29
Comparison of Fund Performance.............................................................................29
ORGANIZATION OF THE FUNDS...........................................................................................32
INVESTMENT ADVISER..................................................................................................33
Scudder Cash Investment Trust..............................................................................34
Scudder U.S. Treasury Money Fund...........................................................................35
SCIT and Treasury Fund.....................................................................................36
Personal Investments by Employees of the Adviser...........................................................37
<PAGE>
TABLE OF CONTENTS (cont'd)
Page
TRUSTEES AND OFFICERS...............................................................................................37
Scudder Cash Investment Trust..............................................................................37
Scudder U.S. Treasury Money Fund...........................................................................39
REMUNERATION........................................................................................................40
Responsibilities of the Board--Board and Committee Meetings................................................40
Compensation of Officers and Trustees......................................................................40
DISTRIBUTOR.........................................................................................................41
Scudder Cash Investment Trust..............................................................................41
Scudder U.S. Treasury Money Fund...........................................................................42
TAXES...............................................................................................................42
PORTFOLIO TRANSACTIONS..............................................................................................44
NET ASSET VALUE.....................................................................................................45
ADDITIONAL INFORMATION..............................................................................................45
Experts....................................................................................................45
Shareholder Indemnification................................................................................46
Other Information..........................................................................................46
FINANCIAL STATEMENTS................................................................................................47
Scudder Cash Investment Trust..............................................................................47
Scudder U.S. Treasury Money Fund...........................................................................47
APPENDIX
Ratings of Municipal Obligations
Commercial Paper Ratings
</TABLE>
ii
<PAGE>
THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES
(See "Investment objectives and policies" and
"Additional information about policies and
investments" in each Fund's prospectus.)
Scudder Cash Investment Trust sometimes is referred to herein as
"SCIT." Scudder U.S. Treasury Money Fund sometimes is referred to herein as
"Treasury Fund." SCIT and Treasury Fund sometimes are jointly referred to herein
as the "Funds" or "Scudder Money Market Funds."
General Investment Objectives and Policies of Scudder Cash Investment Trust
Scudder Cash Investment Trust is a pure no-load(TM), open-end,
diversified management investment company. SCIT's investment objectives are to
maintain the stability of capital and, consistent therewith, to maintain the
liquidity of capital and to provide current income. SCIT seeks to maintain a
constant net asset value of $1.00 per share, although in certain circumstances
this may not be possible. SCIT's management seeks to improve investment income
by keeping money at work in what it considers to be the most attractive
short-term debt investments consistent with the objectives of maintaining the
stability and liquidity of capital. There is no assurance that SCIT's investment
objectives will be achieved. The investment objectives and policies of SCIT
stated under this caption may be changed by the Trustees without a vote of a
majority of the outstanding voting securities of the Fund, as that term is
defined below in "Investment Restrictions." All of the securities in which SCIT
may invest are U.S. dollar-denominated. Shares of the Fund are not insured or
guaranteed by an agency of the U.S. Government.
SCIT may invest in short-term obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities; obligations of supranational
organizations such as those listed below; obligations of domestic banks and
foreign branches of domestic banks, including bankers' acceptances, certificates
of deposit, deposit notes and time deposits; and obligations of savings and loan
institutions.
SCIT may also invest in: instruments whose credit has been enhanced by
banks (letters of credit), insurance companies (surety bonds) or other corporate
entities (corporate guarantees); corporate obligations and obligations of
trusts, finance companies and other entities, including commercial paper, notes,
bonds, loans and loan participations; securities with variable or floating
interest rates; asset-backed securities, including certificates, participations
and notes; and municipal securities, including notes, bonds and participation
interests, either taxable or tax free; and illiquid or restricted securities.
Securities and instruments in which the Fund may invest may be issued by the
U.S. Government, its agencies and instrumentalities, corporations, trusts,
banks, finance companies and other business entities.
In addition, SCIT may invest in repurchase agreements and securities
with put features. Obligations which are subject to repurchase agreements will
be limited to those of the type and quality described below. The Fund may also
hold cash.
Investments in municipal securities will be limited to those which are
rated at the time of purchase by Moody's Investors Service, Inc. ("Moody's")
within its two highest rating categories for municipal obligations--Aaa and Aa,
or within Moody's short-term municipal obligations top rating categories of MIG
1 and MIG 2--or are rated at the time of purchase by Standard & Poor's ("S&P")
within S&P's two highest rating categories for municipal obligations AAA/AA and
SP-1+/SP-1 or are rated at the time of purchase by Fitch Investors Service, Inc.
("Fitch") within Fitch's two highest rating categories for municipal
obligations-- AAA/AA or within Fitch's highest short term rating categories of
F-1 and F-2, all in such proportions as management will determine. SCIT also may
invest in securities rated within the two highest rating categories by only one
of those rating agencies if no other rating agency has rated the security. In
some cases, short-term municipal obligations are rated using the same categories
as are used for corporate obligations. In addition, unrated municipal securities
will be considered as being within the foregoing quality ratings if the issuer,
or other equal or junior municipal securities of the same issuer, has a rating
within the foregoing ratings of Moody's, S&P or Fitch. SCIT may also invest in
municipal securities which are unrated if, in the opinion of Scudder, Stevens &
Clark, Inc. (the "Adviser"), such securities possess creditworthiness comparable
to those rated securities in which the Fund may invest.
Foreign Securities. Supranational entities are international
organizations designated or supported by governmental entities to promote
economic reconstruction or development and international banking institutions
<PAGE>
and related government agencies. Examples include the International Bank for
Reconstruction and Development (the World Bank), the European Coal and Steel
Community, The Asian Development Bank and the InterAmerican Development Bank.
Obligations of supranational entities are backed by the guarantee of one or more
foreign governmental parties which sponsor the entity.
Municipal Securities. Municipal Securities are issued by or on behalf
of states, territories and possessions of the U.S. and their political
subdivisions, agencies and instrumentalities to obtain funds for various public
purposes. The interest on these obligations is generally exempt from federal
income tax in the hands of most investors, except for the possible applicability
of the alternative minimum tax. The two principal classifications of municipal
securities are "Notes" and "Bonds." Municipal Notes are generally used to
provide for short-term capital needs and generally have maturities of one year
or less. Municipal Notes include: Tax Anticipation Notes; Revenue Anticipation
Notes; Bond Anticipation Notes; and Construction Loan Notes. Municipal Bonds,
which meet longer term capital needs and generally have maturities of more than
one year when issued, have two principal classifications: "General Obligation"
Bonds and "Revenue" Bonds.
Industrial Development and Pollution Control Bonds (which are types of
private activity bonds), although nominally issued by municipal authorities, are
generally not secured by the taxing power of the municipality but are secured by
the revenues of the authority derived from payments by the industrial user.
Under Federal tax legislation, certain types of Industrial Development Bonds and
Pollution Control Bonds may no longer be issued on a tax-exempt basis, although
previously-issued bonds of these types and certain refundings of such bonds are
not affected.
Bank and Savings and Loan Obligations. These obligations include
negotiable certificates of deposit, bankers' acceptances, deposit notes, fixed
time deposits or other short-term bank obligations. Certificates of deposit are
negotiable certificates evidencing the obligations of a bank to repay funds
deposited with it for a specified period of time. SCIT may invest in
certificates of deposit of large domestic banks (i.e., banks which at the time
of their most recent annual financial statements show total assets in excess of
$1 billion), and of smaller banks as described below. The Fund does not invest
in certificates of deposit of foreign banks. Although the Fund recognizes that
the size of a bank is important, this fact alone is not necessarily indicative
of its creditworthiness. Investment in certificates of deposit issued by foreign
branches of domestic banks involves investment risks that are different in some
respects from those associated with investment in certificates of deposit issued
by domestic branches of domestic banks, including the possible imposition of
withholding taxes on interest income, the possible adoption of foreign
governmental restrictions which might adversely affect the payment of principal
and interest on such certificates of deposit, or other adverse political or
economic developments. In addition, it might be more difficult to obtain and
enforce a judgment against a foreign branch of a domestic bank.
SCIT may also invest in certificates of deposit issued by banks and
savings and loan institutions which had, at the time of their most recent annual
financial statements, total assets of less than $1 billion, provided that (i)
the principal amounts of such certificates of deposit are insured by an agency
of the U.S. Government, (ii) at no time will the Fund hold more than $100,000
principal amount of certificates of deposit of any one such bank, and (iii) at
the time of acquisition, no more than 10% of the Fund's assets (taken at current
value) are invested in certificates of deposit of such banks having total assets
not in excess of $1 billion.
Banker's acceptances are credit instruments evidencing the obligations
of a bank to pay a draft drawn on it by a customer. These instruments reflect
the obligation both of the bank and of the drawer to pay the face amount of the
instrument upon maturity.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate. Time
deposits which may be held by SCIT will not benefit from insurance from the Bank
Insurance Fund or the Savings Association Insurance Fund administered by the
Federal Deposit Insurance Corporation. Fixed time deposits may be withdrawn on
demand by the investor, but may be subject to early withdrawal penalties that
vary with market conditions and the remaining maturity of the obligation. Fixed
time deposits subject to withdrawal penalties maturing in more than seven
calendar days are subject to the Fund's limitation on investments in illiquid
securities.
Eurodollar Obligations. Eurodollar bank obligations are
dollar-denominated certificates of deposit and time deposits issued outside the
U.S. capital markets by foreign branches of U.S. banks and U.S. branches of
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foreign banks. Eurodollar obligations are subject to the same risks that pertain
to domestic issues, notably credit risk, market risk and liquidity risk.
Additionally, Eurodollar obligations are subject to certain sovereign risks.
Commercial Paper. Commercial paper consists of short-term, unsecured
promissory notes issued to finance short-term credit needs. The commercial paper
purchased by SCIT will consist only of direct obligations issued by domestic and
foreign entities. The other corporate obligations in which the Fund may invest
consist of high quality short term bonds and notes (including variable amount
master demand notes) issued by domestic and foreign corporations, including
banks.
Participation Interests. SCIT may purchase from financial institutions
participation interests in securities in which the Fund may invest. A
participation interest gives the Fund an undivided interest in the security in
the proportion that the Fund's participation interest bears to the principal
amount of the security. These instruments may have fixed, floating or variable
interest rates, with remaining maturities of 397 days or less. If the
participation interest is unrated, or has been given a rating below that which
is permissible for purchase by the Fund, the participation interest will be
backed by an irrevocable letter of credit or guarantee of a bank, or the payment
obligation otherwise will be collateralized by U.S. Government securities, or,
in the case of unrated participation interest, determined by the Adviser to be
of comparable quality to those instruments in which the Fund may invest. For
certain participation interests, the Fund will have the right to demand payment,
on not more than seven days' notice, for all or any part of the Fund's
participation interests in the security, plus accrued interest. As to these
instruments, the Fund intends to exercise its right to demand payment only upon
a default under the terms of the security.
Asset-backed securities. Asset backed securities may include pools of
mortgages, loans, receivables or other assets. Payment of principal and interest
may be largely dependent upon the cash flows generated by the assets backing the
securities.
General Investment Objectives and Policies of Scudder U.S. Treasury Money Fund
Scudder U.S. Treasury Money Fund is a pure no-load(TM), open-end,
diversified management investment company. Treasury Fund's investment objectives
are to provide safety, liquidity and stability of capital, and consistent
therewith, to provide current income. The Fund seeks to maintain a constant net
asset value of $1.00 and declares dividends daily. There can be no assurance
that the Fund's objectives will be met.
The Fund provides investors with current income and stability of
capital through a portfolio consisting primarily of short-term U.S. Treasury
obligations and similar investments. The Fund is a "fixed-price" fund; that is,
it seeks to maintain a constant share price of $1.00, although under certain
circumstances this may not be possible. The Fund's price stability makes it
suitable for investors who are seeking current income and who are unwilling to
accept stock or bond market risk. The Fund is also designed to minimize credit
risk. It invests exclusively in short-term securities unconditionally guaranteed
by the U.S. Government (as to payment of both principal and interest) and
repurchase agreements backed fully by U.S. Treasury obligations. At least 80% of
the Fund's assets will be invested in either U.S. Treasury securities or in
repurchase agreements collateralized by U.S. Treasury obligations. All of the
securities in which the Fund may invest are U.S. dollar-denominated. The Fund
may also invest in when-issued securities and illiquid or restricted securities.
Specialized Investment Techniques of the Funds
Maintenance of $1.00 Net Asset Value and Credit Quality. Pursuant to a
Rule of the Securities and Exchange Commission (the "SEC"), each Fund effects
sales, redemptions and repurchases at the net asset value per share, normally
$1.00, rounded to the nearest whole cent. In fulfillment of their
responsibilities under that Rule, the Trustees of each Fund have approved
policies established by the Funds' Adviser reasonably calculated to prevent each
Fund's net asset value per share, as so rounded, from deviating from $1.00
except under unusual or extraordinary circumstances and the Trustees of each
Fund will periodically review the Adviser's operations under such policies at
regularly scheduled Trustees' meetings. Those policies include a weekly
monitoring by the Adviser of unrealized gains and losses in each Fund's
portfolio, and when necessary, in an effort to avoid deviation, taking
corrective action, such as adjusting the maturity of the portfolio, or, if
possible, realizing gains or losses to offset in part unrealized losses or
gains. The result of those policies may be that the yield on shares of each Fund
will be lower than would be the case if the policies were not in effect. Such
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<PAGE>
policies also provide for certain action to be taken with respect to portfolio
securities which experience a downgrade in rating or suffer a default.
Securities eligible for investment by the Funds are those securities
which are generally rated (or issued by an issuer with comparable securities
rated) in the highest rating category by at least two rating services (or by one
rating service, if no other rating agency has issued a rating with respect to
that security). These securities are known as "first tier securities."
Securities generally rated (or issued by an issuer with comparable securities
rated) in the top two categories by at least two rating agencies (or one, if
only one rating agency has rated the security) which do not qualify as first
tier securities are known as "second tier securities." To ensure diversity of a
Fund's investments, as a matter of non-fundamental policy, each Fund will not
invest more than 5% of its total assets in the securities of a single issuer,
other than the U.S. Government. Each Fund may, however, invest more than 5% of
its total assets in the first tier securities of a single issuer for a period of
up to three business days after purchase, although a Fund may not make more than
one such investment at any time. Each Fund may not invest more than 5% of its
total assets in securities which were second tier securities when acquired by
the Fund. Further, each Fund may not invest more than the greater of (1) 1% of
its total assets, or (2) one million dollars, in the securities of a single
issuer which were second tier securities when acquired by the Fund.
Portfolio Maturity. The assets of each Fund consist entirely of cash
items and investments having a stated maturity date of 397 calendar days or less
(except in the case of Government securities, 762 calendar days) from date of
purchase (including investment in repurchase agreements, in which case maturity
is measured by the repurchase date, without respect to the maturity of the
obligation). The term "Government securities," as used herein, means securities
issued or guaranteed as to principal or interest by the U.S. Government, its
agencies or instrumentalities. The portfolio of each Fund will be managed so
that the average maturity of all instruments (on a dollar-weighted basis) will
be 90 days or less. The average maturity of the two portfolios will vary
according to the management's appraisal of money market conditions. Each Fund
will invest only in securities determined by or under the direction of the
Trustees to be of high quality with minimal credit risks.
Portfolio Turnover. The Funds may sell portfolio securities to take
advantage of investment opportunities arising from changing market levels or
yield relationships. Although such transactions involve additional costs in the
form of spreads, they will be undertaken in an effort to improve a Fund's
overall investment return, consistent with its objectives.
U.S. Government Securities. U.S. Government Securities are securities
issued or guaranteed by the U.S. Treasury, by federal agencies, or by
instrumentalities established or sponsored by the U.S. Government. Obligations
issued by the U.S. Treasury are backed by the full faith and credit of the U.S.
Government. They include Treasury bills, notes and bonds, which differ in their
interest rates, maturities and times of issuance. Obligations guaranteed by the
U.S. Treasury include Government National Mortgage Association participation
certificates. Obligations of a federal agency or U.S. Government instrumentality
may be supported in various ways, including the limited authority of the issuer
to borrow from the U.S. Treasury, such as securities of the Federal Home Loan
Bank; the discretionary authority of the U.S. Government to purchase obligations
of the agency or instrumentality, such as Federal National Mortgage Association
bonds; or the credit only of the issuing agency or instrumentality, such as
Student Loan Marketing Association. In the case of obligations not backed by the
full faith and credit of the U.S. Government, the Fund must look principally to
the agency issuing or guaranteeing the obligations for ultimate repayment, which
agency may be privately owned. These securities may bear fixed, floating or
variable rates of interest. Interest may fluctuate based on generally recognized
reference rates or the relationship of rates.
When-issued and Forward Delivery Securities. Government securities are
frequently offered on a "when-issued" or "forward delivery" basis. When so
offered, the price, which is generally expressed in yield terms, is fixed at the
time the commitment to purchase is made, but delivery and payment for the
when-issued or forward delivery securities take place at a later date normally
within 45 days after the date of the commitment to purchase. During the period
between purchase and settlement, no payment is made by the Funds to the issuer
and no interest accrues to the Funds. To the extent that assets of the Funds are
not invested prior to the settlement of a purchase of securities, the Funds will
earn no income; however, it is intended that both Funds will be fully invested
to the extent practicable and subject to the policies stated herein. When-issued
or forward delivery purchases are negotiated directly with the other party and
are not traded on an exchange. While when-issued or forward delivery securities
may be sold prior to the settlement date, it is intended that both Funds will
4
<PAGE>
purchase such securities with the purpose of actually acquiring them unless a
sale appears desirable for investment reasons. At the time SCIT and Treasury
Fund make the commitment to purchase securities on a when-issued or forward
delivery basis, they will record the transaction and reflect the value of the
security in determining their respective net asset values. Neither Fund believes
that its net asset value or income will be adversely affected by its purchase of
securities on a when-issued or forward delivery basis. SCIT and Treasury Fund
will establish a segregated account in which to maintain cash or liquid assets
equal in value to commitments for when-issued or forward delivery securities.
Such segregated securities either will mature or, if necessary, be sold on or
before the settlement date. Neither SCIT nor Treasury Fund will enter into such
transactions for leverage purposes.
Repurchase Agreements. Each Fund may enter into repurchase agreements
with any member bank of the Federal Reserve System or any broker/dealer which is
recognized as a reporting government securities dealer if the creditworthiness
of the bank or broker/dealer has been determined by the Adviser to be at least
as high as that of other obligations the Funds may purchase or to be at least
equal to that of issuers of commercial paper rated within the two highest
ratings categories assigned by Moody's, S&P or Fitch.
A repurchase agreement provides a means for a Fund to earn income on
funds for periods as short as overnight. It is an arrangement under which the
purchaser (i.e., a Fund) acquires a security ("Obligation") and the seller
agrees, at the time of sale, to repurchase the Obligation at a specified time
and price. Securities subject to a repurchase agreement are held in a segregated
account and, as described in more detail below, the value of such securities is
kept at least equal to the repurchase price on a daily basis. The repurchase
price may be higher than the purchase price, the difference being income to a
Fund, or the purchase and repurchase prices may be the same, with interest at a
stated rate due to a Fund together with the repurchase price upon repurchase. In
either case, the income to a Fund is unrelated to the interest rate on the
Obligation itself. Obligations will be held by the custodian or in the Federal
Reserve Book Entry System.
For purposes of the Investment Company Act of 1940, as amended (the
"1940 Act"), a repurchase agreement is deemed to be a loan from a Fund to the
seller of the Obligation subject to the repurchase agreement and is therefore
subject to each Fund's investment restriction applicable to loans. It is not
clear whether a court would consider the Obligation purchased by a Fund subject
to a repurchase agreement as being owned by that Fund or as being collateral for
a loan by that Fund to the seller. In the event of the commencement of
bankruptcy or insolvency proceedings with respect to the seller of the
Obligation before repurchase of the Obligation under a repurchase agreement, a
Fund may encounter delay and incur costs before being able to sell the security.
Delays may involve loss of interest or decline in price of the Obligation. If
the court characterizes the transaction as a loan and a Fund has not perfected a
security interest in the Obligation, that Fund may be required to return the
Obligation to the seller's estate and be treated as an unsecured creditor of the
seller. As an unsecured creditor, a Fund would be at risk of losing some or all
of the principal and income involved in the transaction. As with any unsecured
debt Obligation purchased for a Fund, the Adviser seeks to minimize the risk of
loss through repurchase agreements by analyzing the creditworthiness of the
obligor, in this case the seller of the Obligation. Apart from the risk of
bankruptcy or insolvency proceedings, there is also the risk that the seller may
fail to repurchase the Obligation, in which case a Fund may incur a loss if the
proceeds to that Fund of the sale to a third party are less than the repurchase
price. However, if the market value (including interest) of the Obligation
subject to the repurchase agreement becomes less than the repurchase price
(including interest), a Fund will direct the seller of the Obligation to deliver
additional securities so that the market value (including interest) of all
securities subject to the repurchase agreement will equal or exceed the
repurchase price.
Illiquid and Restricted Securities. Each Fund may occasionally purchase
securities other than in the open market. While such purchases may often offer
attractive opportunities for investment not otherwise available on the open
market, the securities so purchased are often "restricted securities", i.e.,
securities which cannot be sold to the public without registration under the
Securities Act of 1933 or the availability of an exemption from registration
(such as Rules 144 or 144A), or which are "not readily marketable" because they
are subject to other legal or contractual delays in or restrictions on resale.
Generally speaking, restricted securities may be sold only to qualified
institutional buyers, or in a privately negotiated transaction to a limited
number of purchasers, or in limited quantities after they have been held for a
specified period of time and other conditions are met pursuant to an exemption
from registration, or in a public offering for which a registration statement is
in effect under the Securities Act of 1933. Each Fund may be deemed to be an
"underwriter" for purposes of the Securities Act of 1933 when selling restricted
securities to the public, and in such event each Fund may be liable to
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purchasers of such securities if the registration statement prepared by the
issuer, or the prospectus forming a part of it, is materially inaccurate or
misleading.
The Adviser will monitor the liquidity of such restricted securities
subject to the supervision of each Fund's Board of Trustees. In reaching
liquidity decisions, the Adviser will consider the following factors: (1) the
frequency of trades and quotes for the security, (2) the number of dealers
wishing to purchase or sell the security and the number of their potential
purchasers, (3) dealer undertakings to make a market in the security; and (4)
the nature of the security and the nature of the marketplace trades (i.e. the
time needed to dispose of the security, the method of soliciting offers and the
mechanics of the transfer).
The conclusions and investment decisions of the Adviser with respect to
each Fund are based primarily on the analyses of its own research specialists.
While these specialists have the major responsibility for doing research on debt
securities, they receive the support of the Adviser's general economics
department for studies on interest rate trends and of the Adviser's stock
research analysts for consultation on the qualitative aspects of credit analysis
which enable the Adviser to establish its own credit ratings for issuers of
senior securities. The Adviser believes it is important to have this combination
of specialized skills available for developing the proper investment strategies
for the Funds. The Adviser subscribes to leading bond information services and
receives directly published reports and statistical compilations of the issuers
themselves, as well as analyses from brokers and dealers who may execute
portfolio transactions for the Adviser's clients. However, the Adviser regards
this information and material as an adjunct to its own research activities.
Investment Restrictions
Unless specified to the contrary, the following restrictions may not be
changed without the approval of a majority of the outstanding voting securities
of the Fund involved which, under the 1940 Act and the rules thereunder and as
used in this Statement of Additional Information, means the lesser of (1) 67% or
more of the voting securities present at a meeting, if the holders of more than
50% of the outstanding voting securities of the Fund are present or represented
by proxy; or (2) more than 50% of the outstanding voting securities of a Fund.
Any investment restrictions herein which involve a maximum percentage of
securities or assets shall not be considered to be violated unless an excess
over the percentage occurs immediately after, and is caused by, an acquisition
or encumbrance of securities or assets of, or borrowings by, a Fund.
As a matter of fundamental policy, SCIT may not:
1. borrow money, except as a temporary measure for extraordinary
or emergency purposes or except in connection with reverse
repurchase agreements; provided that the Fund maintains asset
coverage of 300% for all borrowings;
2. act as an underwriter of securities issued by others, except
to the extent that it may be deemed an underwriter in
connection with the disposition of portfolio securities of the
Fund;
3. make loans to other persons, except loans of portfolio
securities and except to the extent that the purchase of debt
obligations in accordance with its investment objective and
policies and the entry into repurchase agreements may be
deemed to be loans;
4. Issue senior securities, except as appropriate to evidence
indebtedness which it is permitted to incur, and except for
shares of the separate classes or series of the Trust,
provided that collateral arrangements with respect to
currency-related contracts, futures contracts, options or
other permitted investments, including deposits of initial and
variation margin, are not considered to be the issuance of
senior securities for purposes of this restriction;
5. with respect to 75% of the Fund's total assets, purchase more
than 10% of the voting securities of any one issuer or invest
more than 5% of the value of the total assets of the Fund in
the securities of any one issuer (except for investments in
obligations issued or guaranteed by the U.S. Government or its
agencies or instrumentalities, cash and cash equivalents and
securities of other investment companies), provided that the
amount of the total assets of the Fund that may be invested in
the securities of any one issuer will, instead, be limited in
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accordance with federal law, regulation and regulatory
interpretation applicable to money market funds, as amended
from time to time;
6. purchase or sell real estate (except that the Fund may invest
in (i) securities of companies which deal in real estate or
mortgages, and (ii) securities secured by real estate or
interests therein);
7. purchase any securities which would cause more than 25% of the
market value of its total assets at the time of such purchase
to be invested in the securities of one or more issuers having
their principal business activities in the same industry,
provided that there is no limitation with respect to
investments in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, or in
certificates of deposit or bankers' acceptances.
In addition, although not a matter of fundamental policy, SCIT may not:
(a) borrow money in excess of 5% of its total assets (taken at
market value) except for temporary or emergency purposes,
borrow other than from banks or in connection with reverse
repurchase agreements;
(b) purchase or sell interests in oil, gas or other mineral
leases, or exploration or development programs (although they
may invest in securities of issuers which own or invest in
such interests);
(c) pledge, mortgage or hypothecate its assets, except that, to
secure borrowings permitted by Investment Restriction (1), it
may pledge securities having a market value at the time of
pledge not exceeding 15% of the cost of the Fund's total
assets;
(d) purchase or sell any put or call options or any combination
thereof, not including warrants;
(e) purchase restricted securities (for these purposes restricted
security means a security with a legal or contractual
restriction on resale in the principal market in which the
security is traded), including repurchase agreements maturing
in more than seven days and securities which are not readily
marketable if as a result more than 10% of SCIT's net assets
(valued at market at purchase) would be invested in such
securities;
(f) purchase securities if, as a result thereof, more than 5% of
the value of SCIT's net assets would be invested in restricted
securities;
(g) invest in the securities of other investment companies, except
by purchase in the open market when no commission or profit to
a sponsor or dealer results from such purchase other than the
customary broker's commission, or except when such purchase,
though not made on the open market, is part of a plan of
merger or consolidation;
(h) purchase or sell real estate limited partnership interests;
(i) invest more than 5% of its total assets in the securities of
any one issuer or subject to puts from any one issuer, except
U.S. Government securities, provided that the Fund may invest
more than 5% of its total assets in first tier securities of
any one issuer for a period of up to three business days or,
in unrated securities that have been determined to be of
comparable quality by the Fund's Adviser;
(j) invest more than 5% of its total assets in second tier
securities, or in unrated securities determined by the Adviser
to be of comparable quality;
(k) invest more than the greater of $1,000,000 or 1% of total
assets in second tier securities of any one issuer;
(l) invest more than 10% of its total assets in securities subject
to an unconditional put issued by any one institution;
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(m) borrow money, including reverse repurchase agreements, in
excess of 5% of its total assets (taken at market value)
except for temporary or emergency purposes, or borrow other
than from banks;
(n) make loans unless all loans of portfolio securities are fully
collateralized and marked to market daily;
(o) purchase securities on margin or make short sales, unless, by
virtue of its ownership of other securities, it has the right
to obtain securities equivalent in kind and amount to the
securities sold and, if the right is conditional, the sale is
made upon the same conditions, except in connection with
arbitrage transactions and except that the Fund may obtain
such short-term credits as may be necessary for the clearance
of purchases and sales of securities;
(p) purchase or retain securities of an issuer any of whose
officers, directors, trustees or security holders is an
officer or director of the Trust or a member, officer,
director or trustee of the investment adviser of the Fund if
one or more of such individuals owns beneficially more than
one-half of one percent (1/2%) of the outstanding shares or
securities or both (taken at market value) of such issuer and
such individuals owning more than one-half of one percent
(1/2%) of such shares or securities together own beneficially
more than 5% of such shares or securities or both;
(q) invest more than 10% of its total assets in securities which
are not readily marketable, the disposition of which is
restricted under Federal securities laws or in repurchase
agreements not terminable within 7 days provided that the fund
will not invest more than 5% of its total assets in restricted
securities;
(r) purchase securities of any issuer with a record of less than
three years continuous operation, including predecessors,
except obligations issued or guaranteed by the U.S. Government
or its agencies, if such purchase would cause the Fund's
investments in all such issuers to exceed 5% of the Fund's
total assets taken at market value.
As a matter of fundamental policy, unless and to the extent permitted
by an exemptive order of the SEC, Treasury Fund may not:
1. borrow money, except as a temporary measure for extraordinary
or emergency purposes or except in connection with reverse
repurchase agreements, provided that the Fund maintains asset
coverage of 300% for all borrowings;
2. purchase or sell real estate (except that the Fund may invest
in (i) securities of companies which deal in real estate or
mortgages, and (ii) securities secured by real estate or
interests therein, and that the Fund reserves freedom of
action to hold and to sell real estate acquired as a result of
the Fund's ownership of securities); or purchase or sell
physical commodities or contracts relating to physical
commodities;
3. act as an underwriter of securities issued by others, except
to the extent that it may be deemed an underwriter in
connection with the disposition of portfolio securities of the
Fund;
4. make loans to other persons, except (a) loans of portfolio
securities, and (b) to the extent the entry into repurchase
agreements and the purchase of debt securities in accordance
with its investment objective and investment policies may be
deemed to be loans; or
5. issue senior securities, except as appropriate to evidence
indebtedness which it is permitted to incur, and except for
shares of the separate classes or series of the Trust,
provided that collateral arrangements with respect to
currency-related contracts, futures contracts, options or
other permitted investments, including deposits of initial and
variation margin, are not considered to be the issuance of
senior securities for purposes of this restriction.
Treasury Fund has undertaken that if the Fund obtains an exemptive
order of the SEC which would permit the taking of action in contravention of any
policy which may not be changed without a shareholder vote, the Fund will not
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take such action unless either (i) the applicable exemptive order permits the
taking of such action without a shareholder vote or (ii) the staff of the SEC
has issued to the Fund a "no action" or interpretive letter to the effect that
the Fund may proceed without a shareholder vote.
Although not a matter of fundamental policy Treasury Fund may not:
(a) purchase or retain securities of any open-end investment
company, or securities of closed-end investment companies
except by purchase in the open market where no commission or
profit to a sponsor or dealer results from such purchases, or
except when such purchase, though not made in the open market,
is part of a plan of merger, consolidation, reorganization or
acquisition of assets; in any event the Fund may not purchase
more than 3% of the outstanding voting securities of another
investment company, may not invest more than 5% of its assets
in another investment company, and may not invest more than
10% of its assets in other investment companies;
(b) pledge, mortgage or hypothecate its assets in excess, together
with permitted borrowings, of 1/3 of its total assets;
(c) purchase or retain securities of an issuer any of whose
officers, directors, trustees or security holders is an
officer, director or trustee of the Fund or a member, officer,
director or trustee of the investment adviser of the Fund if
one or more of such individuals owns beneficially more than
one-half of one percent (1/2%) of the outstanding shares or
securities or both (taken at market value) of such issuer and
such individuals owning more than one-half of one percent
(1/2%) of such shares or securities together own beneficially
more than 5% of such shares or securities or both;
(d) purchase securities on margin or make short sales, unless, by
virtue of its ownership of other securities, it has the right
to obtain securities equivalent in kind and amount to the
securities sold and, if the right is conditional, the sale is
made upon the same conditions, except that the Fund may obtain
such short-term credits as may be necessary for the clearance
of purchases and sales of securities;
(e) invest more than 10% of its net assets in securities which are
not readily marketable, the disposition of which is restricted
under Federal securities laws, or in repurchase agreements not
terminable within 7 days, and the Fund will not invest more
than 10% of its total assets in restricted securities;
(f) purchase securities of any issuer with a record of less than
three years continuous operations, including predecessors,
except U.S. Government securities and obligations issued or
guaranteed by any foreign government or its agencies or
instrumentalities, if such purchase would cause the
investments of the Fund in all such issuers to exceed 5% of
the total assets of the Fund taken at market value;
(g) purchase more than 10% of the voting securities of any one
issuer, except securities issued by the U.S. Government, its
agencies or instrumentalities;
(h) invest in oil, gas or other mineral leases, or exploration or
development programs (although it may invest in issuers which
own or invest in such interests);
(i) borrow money, including reverse repurchase agreements, in
excess of 5% of its total assets (taken at market value)
except for temporary or emergency purposes, or borrow other
than from banks;
(j) purchase or sell any put or call options or any combination
thereof;
(k) purchase or sell real estate limited partnership interests;
(l) invest more than 5% of its total assets in the securities of
any one issuer or subject to puts from any one issuer, except
U.S. Government securities, provided that the Fund may invest
more than 5% of its total assets in first tier securities of
any one issuer for a period of up to three business days or,
in unrated securities that have been determined to be of
comparable quality by the Fund's Adviser;
9
<PAGE>
(m) invest more than 5% of its total assets in second tier
securities, or in unrated securities determined by the Adviser
to be of comparable quality;
(n) invest more than the greater of $1,000,000 or 1% of total
assets in second tier securities of any one issuer;
(o) invest more than 10% of its total assets in securities subject
to an unconditional put issued by any one institution; or
(p) make loans unless all loans of portfolio securities are fully
collateralized and marked to market daily.
PURCHASES
(See "Purchases" and "Transaction information" in each Fund's prospectus.)
Additional Information About Opening an Account
Clients having a regular investment counsel account with the Adviser or
its affiliates and members of their immediate families, officers and employees
of the Adviser or of any affiliated organization and their immediate families,
members of the National Association of Securities Dealers, Inc. ("NASD") and
banks may, if they prefer, subscribe initially for at least $2,500 of Fund
shares through Scudder Investor Services, Inc. (the "Distributor") by letter,
fax, TWX or telephone.
Shareholders of other Scudder funds who have submitted an account
application and have a certified tax identification number, clients having a
regular investment counsel account with Scudder or its affiliates and members of
their immediate families, officers and employees of the Adviser or of any
affiliated organization and their immediate families, members of the NASD and
banks may open an account by wire. These investors must call 1-800-225-5163 to
get an account number. During the call the investor will be asked to indicate
the Fund name, amount to be wired ($2,500 minimum), name of bank or trust
company from which the wire will be sent, the exact registration of the new
account, the tax identification number or Social Security number, address and
telephone number. The investor must then call the bank to arrange a wire
transfer to The Scudder Funds, Boston, MA 02110, ABA Number 011000028, Account
Number: 9903-5552. The investor must give the Scudder fund name, account name
and the new account number. Finally, the investor must send the completed and
signed application to the Fund promptly.
Checks
A certified check is not necessary, but checks are only accepted
subject to collection at full face value in U.S. funds and must be drawn on or
payable through a United States bank.
If shares of a Fund are purchased with a check which proves to be
uncollectible, that Fund reserves the right to cancel the purchase immediately
and the purchaser will be responsible for any loss incurred by that Fund or the
principal underwriter by reason of such cancellation. If the purchaser is a
shareholder, such Fund will have the authority, as agent of the shareholder, to
redeem shares in the account in order to reimburse the Fund or the principal
underwriter for the loss incurred. Investors whose orders have been canceled may
be prohibited from or restricted in placing future orders in any of the Scudder
funds.
Wire Transfer of Federal Funds
To purchase shares of a Fund and obtain the same day's dividend you
must have your bank forward federal funds by wire transfer and provide the
required account information so as to be available to a Fund prior to twelve
o'clock noon eastern time on that day. If you wish to make a purchase of
$500,000 or more, you should notify the Fund's transfer agent, Scudder Service
Corporation (the "Transfer Agent") of such a purchase by calling 1-800-225-5163.
If either the federal funds or the account information is received after twelve
o'clock noon eastern time, but both the funds and the information are made
available before the close of regular trading on the New York Stock Exchange
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<PAGE>
(the "Exchange") (normally 4 p.m. eastern time) on any business day, shares will
be purchased at net asset value determined on that day but will not receive the
dividend; in such cases, dividends commence on the next business day.
The bank sending an investor's federal funds by bank wire may charge
for the service. Presently, each Fund pays a fee for receipt by State Street
Bank and Trust Company (the "Custodian") of "wired funds," but the right to
charge investors for this service is reserved.
Boston banks are closed on certain holidays although the Exchange may
be open. These holidays include Martin Luther King Jr., Day (the 3rd Monday in
January), Columbus Day (the 2nd Monday in October) and Veterans' Day (November
11). Investors are not able to purchase shares by wiring federal funds on such
holidays because the Custodian is not open to receive such federal funds on
behalf of either Fund.
Additional Information About Making Subsequent Investments by QuickBuy
Shareholders, whose predesignated bank account of record is a member of
the Automated Clearing House Network (ACH) and who have elected to participate
in the QuickBuy program, may purchase shares of the Fund by telephone. Through
this service shareholders may purchase up to $250,000. To purchase shares by
QuickBuy, shareholders should call before 4 p.m. eastern time. Proceeds in the
amount of your purchase will be transferred from your bank checking account two
or three business days following your call. For requests received by the close
of regular trading on the Exchange, shares will be purchased at the net asset
value per share calculated at the close of trading on the day of your call.
QuickBuy requests received after the close of regular trading on the Exchange
will begin their processing and be purchased at the net asset value calculated
the following business day. If you purchase shares by QuickBuy and redeem them
within seven days of the purchase, the Fund may hold the redemption proceeds for
a period of up to seven business days. If you purchase shares and there are
insufficient funds in your bank account the purchase will be canceled and you
will be subject to any losses or fees incurred in the transaction. QuickBuy
transactions are not available for most retirement plan accounts. However,
QuickBuy transactions are available for Scudder IRA accounts.
In order to request purchases by QuickBuy, shareholders must have
completed and returned to the Transfer Agent the application, including the
designation of a bank account from which the purchase payment will be debited.
New investors wishing to establish QuickBuy may so indicate on the application.
Existing shareholders who wish to add QuickBuy to their account may do so by
completing an QuickBuy Enrollment Form. After sending in an enrollment form
shareholders should allow for 15 days for this service to be available.
The Funds employ procedures, including recording telephone calls,
testing a caller's identity, and sending written confirmation of telephone
transactions, designed to give reasonable assurance that instructions
communicated by telephone are genuine, and to discourage fraud. To the extent
that a Fund does not follow such procedures, it may be liable for losses due to
unauthorized or fraudulent telephone instructions. The Funds will not be liable
for acting upon instructions communicated by telephone that it reasonably
believes to be genuine.
Share Price
Purchases made by check will be filled without sales charge at the
close of regular trading on the Exchange on the day the check is received by the
Transfer Agent in good order. Net asset value of each Fund normally is computed
twice a day, as of twelve o'clock noon and the close of regular trading on the
Exchange on each day when the Exchange is open for trading.
Share Certificates
Due to the desire of each Fund's management to afford ease of
redemption, certificates will not be issued to indicate ownership in either
Fund. Share certificates now in a shareholder's possession may be sent to the
Transfer Agent for cancellation and credit to such shareholder's account.
Shareholders who prefer may hold the certificates in their possession until they
wish to exchange or redeem such shares.
Other Information
If purchases and redemptions of shares of either Fund are arranged and
settlement is made at the investor's election through a member of the NASD,
other than Scudder Investor Services, Inc., that member may, at its discretion,
11
<PAGE>
charge a fee for that service. The Trustees of each Fund and Scudder Investor
Services, Inc., the Funds' principal underwriter, each has the right to limit,
for any reason, the amount of purchases and to refuse to sell to any person. The
Board of Trustees of each Fund and Scudder Investor Services, Inc. may suspend
or terminate the offering of shares of their respective Fund at any time for any
reason.
The "Tax Identification Number" section of the application must be
completed when opening an account. Applications and purchase orders without a
correct certified tax identification number and certain other certified
information (e.g. from exempt investors a certification of exempt status) will
be returned to the investor.
The minimum initial purchase amount is less than $2,500 under certain
special plan accounts.
The Funds may issue shares at net asset value in connection with any
merger or consolidation with, or acquisition of the assets of, any investment
company (or series thereof) or personal holding company, subject to the
requirements of the 1940 Act.
EXCHANGES AND REDEMPTIONS
(See "Exchanges and redemptions" and
"Transaction information" in each Fund's prospectus.)
Exchanges
Exchanges are comprised of a redemption from one Scudder fund and a
purchase into another Scudder fund. The purchase side of the exchange either may
be an additional investment into an existing account or may involve opening a
new account in the other fund. When an exchange involves a new account, the new
account will be established with the same registration, tax identification
number, address, telephone redemption option, "Scudder Automated Information
Line" (SAIL(TM)) transaction authorization and dividend option as the existing
account. Other features will not carry over automatically to the new account.
Exchanges into a new fund account must be for a minimum of $2,500. When an
exchange represents an additional investment into an existing account, the
account receiving the exchange proceeds must have identical registration, tax
identification number, address, and account options/features as the account of
origin. Exchanges into an existing account must be for $100 or more. If the
account receiving the exchange proceeds is to be different in any respect, the
exchange request must be in writing and must contain an original signature
guarantee as described under "Transaction information--Redeeming
shares--Signature guarantees" in each Fund's prospectus.
Exchange orders received before the close of regular trading on the
Exchange on any business day ordinarily will be executed at the respective net
asset values determined on that day. Exchange orders received after the close of
regular trading on the Exchange will be executed on the following business day.
Investors may also request, at no extra charge, to have exchanges
automatically executed on a predetermined schedule from one Scudder fund to an
existing account in another Scudder fund, at current net asset value, through
Scudder's Automatic Exchange Program. Exchanges must be for a minimum of $50.
Shareholders may add this free feature over the telephone or in writing.
Automatic Exchanges will continue until the shareholder requests by telephone or
in writing to have the feature removed, or until the originating account is
depleted. The Trusts and the Transfer Agent each reserve the right to suspend or
terminate the privilege of the Automatic Exchange Program at any time.
There is no charge to the shareholder for any exchange described above.
An exchange into another Scudder fund is a redemption of shares, and therefore
may result in tax consequences (gain or loss) to the shareholder, and the
proceeds of such an exchange may be subject to backup withholding. (See
"TAXES.")
Investors currently receive the exchange privilege, including exchange
by telephone, automatically without having to elect it. The Trusts employ
procedures, including recording telephone calls, testing a caller's identity,
and sending written confirmation of telephone transactions, designed to give
reasonable assurance that instructions communicated by telephone are genuine,
and to discourage fraud. To the extent that the Trusts do not follow such
procedures, they may be liable for losses due to unauthorized or fraudulent
telephone instructions. The Trusts will not be liable for acting upon
12
<PAGE>
instructions communicated by telephone that they reasonably believe to be
genuine. The Trusts and the Transfer Agent each reserve the right to suspend or
terminate the privilege of exchanging by telephone or fax at any time.
The Scudder funds into which investors may make an exchange are listed
under "THE SCUDDER FAMILY OF FUNDS" herein. Before making an exchange,
shareholders should obtain from the Distributor a prospectus of the Scudder fund
into which the exchange is being contemplated. The exchange privilege may not be
available for certain Scudder funds. For more information, please call
1-800-225-5163.
Scudder retirement plans may have different exchange requirements.
Please refer to appropriate plan literature.
Redemption by Telephone
In order to request redemptions by telephone, shareholders must have
completed and returned to the Transfer Agent the application, including the
designation of a bank account to which the redemption proceeds are to be sent.
Shareholders currently receive the right to redeem up to $100,000 to their
address of record automatically, without having to elect it. Shareholders may
also request to have the proceeds mailed or wired to their pre-designated bank
account.
(a) NEW INVESTORS wishing to establish telephone redemption to a
pre-designated bank account must complete the appropriate
section on the application.
(b) EXISTING SHAREHOLDERS (except those who are Scudder IRA,
Scudder Pension and Profit-Sharing, Scudder 401(k) and Scudder
403(b) Planholders) who wish to establish telephone redemption
to a pre-designated bank account or who want to change the
bank account previously designated to receive redemption
payments should either return a Telephone Redemption Option
Form (available upon request) or send a letter identifying the
account and specifying the exact information to be changed.
The letter must be signed exactly as the shareholder's name(s)
appears on the account. A signature and a signature guarantee
are required for each person in whose name the account is
registered.
Telephone redemption is not available with respect to shares
represented by share certificates or shares held in certain retirement accounts.
If a request for redemption to a shareholder's bank account is made by
telephone or fax, payment will be by Federal Reserve bank wire to the bank
account designated on the application, unless a request is made that the
redemption check be mailed to the designated bank account. There will be a $5
charge for all wire redemptions.
Note: Investors designating a savings bank to receive their telephone
redemption proceeds are advised that if the savings bank is not a participant in
the Federal Reserve System, redemption proceeds must be wired through a
commercial bank which is a correspondent of the savings bank. As this may delay
receipt by the shareholder's account, it is suggested that investors wishing to
use a savings bank discuss wire procedures with their bank and submit any
special wire transfer information with the telephone redemption authorization.
If appropriate wire information is not supplied, redemption proceeds will be
mailed to the designated bank.
The Funds employ procedures, including recording telephone calls,
testing a caller's identity, and sending written confirmation of telephone
transactions, designed to give reasonable assurance that instructions
communicated by telephone are genuine, and to discourage fraud. To the extent
that the Funds do not follow such procedures, they may be liable for losses due
to unauthorized or fraudulent telephone instructions. The Funds will not be
liable for acting upon instructions communicated by telephone that they
reasonably believe to be genuine.
Redemption requests by telephone (technically a repurchase by agreement
between the Fund and the shareholder) of shares purchased by check will not be
accepted until the purchase check has cleared which may take up to seven
business days.
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<PAGE>
Redemption By QuickSell
Shareholders, whose predesignated bank account of record is a member of
the Automated Clearing House Network (ACH) and have elected to participate in
the QuickSell program may sell shares of a Fund by telephone. To sell shares by
QuickSell, shareholders should call before 4 p.m. eastern time. Redemptions must
be for at least $250. Proceeds in the amount of your redemption will be
transferred to your bank checking account in two or three business days
following your call. For requests received by the close of regular trading on
the Exchange, shares will be redeemed at the net asset value per share
calculated at the close of trading on the day of your call. QuickSell requests
received after the close of regular trading on the Exchange will begin their
processing and be redeemed at the net asset value calculated the following
business day. QuickSell transactions are not available for Scudder IRA accounts
and most other retirement plan accounts.
In order to request redemptions by QuickSell, shareholders must have
completed and returned to the Transfer Agent the application, including the
designation of a bank account to which the redemption proceeds will be credited.
New investors wishing to establish QuickSell may so indicate on the application.
Existing shareholders who wish to add QuickSell to their account may do so by
completing a QuickSell Enrollment Form. After sending in an enrollment form,
shareholders should allow for 15 days for this service to be available.
The Funds employ procedures, including recording telephone calls,
testing a caller's identity, and sending written confirmation of telephone
transactions, designed to give reasonable assurance that instructions
communicated by telephone are genuine, and to discourage fraud. To the extent
that a Fund does not follow such procedures, it may be liable for losses due to
unauthorized or fraudulent telephone instructions. The Funds will not be liable
for acting upon instructions communicated by telephone that they reasonably
believe to be genuine.
Redemption by Mail or Fax
Any existing share certificates representing shares being redeemed must
accompany a request for redemption and be duly endorsed or accompanied by a
proper stock assignment form with signatures guaranteed as explained in each
Fund's prospectus.
In order to ensure proper authorization before redeeming shares, the
Transfer Agent may request additional documents such as, but not restricted to,
stock powers, trust instruments, certificates of death, appointments as
executor, certificates of corporate authority and waivers of tax (required in
some states when settling estates).
It is suggested that shareholders holding share certificates or shares
registered in other than individual names contact the Transfer Agent prior to
any redemptions to ensure that all necessary documents accompany the request.
When shares are held in the name of a corporation, trust, fiduciary, agent,
attorney or partnership, the Transfer Agent requires, in addition to the stock
power, certified evidence of authority to sign. These procedures are for the
protection of shareholders and should be followed to ensure prompt payment.
Redemption requests must not be conditional as to date or price of the
redemption. Proceeds of a redemption will be sent within five days after receipt
by the Transfer Agent of a request for redemption that complies with the above
requirements. Delays of more than seven business days of payment for shares
tendered for repurchase or redemption may result, but only until the purchase
check has cleared.
The requirements for IRA redemptions are different from those for
regular accounts. For more information call 1-800-225-5163.
Redemption by Write-a-Check
All new investors and existing shareholders who apply to State Street
Bank and Trust Company for checks may use them to pay any person, provided that
each check is for at least $100 and not more than $5 million. By using the
checks, the shareholder will receive daily dividend credit on his or her shares
until the check has cleared the banking system. Investors who purchased shares
by check may write checks against those shares only after they have been on a
Fund's book for seven business days. Shareholders who use this service may also
use other redemption procedures. No shareholder may write checks against
certificated shares. The Funds pay the bank charges for this service. However,
each Fund will review the cost of operation periodically and reserve the right
to determine if direct charges to the persons who avail themselves of this
service would be appropriate. Each Fund, Scudder Service Corporation and State
14
<PAGE>
Street Bank and Trust Company reserve the right at any time to suspend or
terminate the "Write-a-Check" procedure.
Other Information
If a shareholder redeems all shares in the account, the shareholder
will receive, in addition to the net asset value thereof, all declared but
unpaid dividends thereon. Neither Fund imposes a redemption or repurchase
charge, although a wire charge may be applicable for redemption proceeds wired
to an investor's bank account. Redemptions of shares, including redemptions
undertaken to effect an exchange for shares of another Scudder fund or
portfolio, and including exchanges and redemptions by Write-a-Check, may result
in tax consequences (gain or loss) to the shareholder and the proceeds of such
redemptions may be subject to backup withholding (see "TAXES").
Shareholders who wish to redeem shares from Special Plan Accounts
should contact the employer, trustee or custodian of the Plan for the
requirements.
The determination of net asset value may be suspended at times and a
shareholder's right to redeem shares and to receive payment may be suspended at
times during which (a) during which the Exchange is closed, other than customary
weekend and holiday closings, (b) during which trading on the Exchange is
restricted for any reason, (c) during which an emergency exists as a result of
which disposal by a Fund of securities owned by it is not reasonably practicable
or it is not reasonably practicable for a Fund fairly to determine the value of
its net assets, or (d) during which the SEC by order permits suspension of the
right of redemption or a postponement of the date of payment or of redemption;
provided that applicable rules and regulations of the SEC (or any succeeding
governmental authority) shall govern as to whether the conditions prescribed in
(b), (c) or (d) exist.
Shareholders should maintain a share balance worth at least $2,500
($1,000 for IRAs, Uniform Gift to Minor Act, and Uniform Trust to Minor Act
accounts), which amount may be changed by each Fund's Board of Trustees. Scudder
retirement plans have similar or lower minimum balance requirements. A
shareholder may open an account with at least $1,000 ($500 for an UGMA, UTMA,
IRA and other retirement accounts), if an automatic investment plan (AIP) of
$100/month ($50/month for an UGMA, UTMA, IRA and other retirement accounts) is
established.
SCIT reserves the right, with regard to those investors who maintain a
non-fiduciary account balance of less than $2,500 in the Fund, without
establishing an AIP, to assess an annual $10.00 per fund account charge with the
fee to be reinvested in the Fund. SCIT also reserves the right to waive this
fee. The $10.00 charge will not apply to accounts of shareholders with a
combined household account balance in any of the Scudder Funds of $25,000 or
more. The Fund also reserves the right, following 60 days' written notice to
shareholders, to redeem all shares in accounts with a value below $250,
including accounts of new investors, where a reduction in value has occurred due
to a redemption or exchange out of the account. The Fund will mail the proceeds
of the redeemed account to the shareholder at the address of record. Reductions
in value that result solely from market activity will not trigger an involuntary
redemption. UGMA, UTMA, IRA and other retirement accounts will not be assessed
the $10.00 charge or be subject to automatic liquidation.
Treasury Fund shareholders who maintain a non-fiduciary account balance
of less than $2,500 in the Fund, without establishing an AIP, will be assessed
an annual $10.00 per fund charge with the fee to be reinvested in the Fund. The
$10.00 charge will not apply to shareholders with a combined household account
balance in any of the Scudder Funds of $25,000 or more. The Fund reserves the
right, following 60 days' written notice to shareholders, to redeem all shares
in accounts below $250, including accounts of new investors, where a reduction
in value has occurred due to a redemption or exchange out of the account. The
Fund will mail the proceeds of the redeemed account to the shareholder at the
address of record. Reductions in value that result solely from market activity
will not trigger an involuntary redemption. UGMA, UTMA, IRA and other retirement
accounts will not be assessed the $10.00 charge or be subject to automatic
liquidation.
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FEATURES AND SERVICES OFFERED BY THE FUNDS
(See "Shareholder benefits" in each Fund's prospectus.)
The Pure No-Load(TM) Concept
Investors are encouraged to be aware of the full ramifications of
mutual fund fee structures, and of how Scudder distinguishes its funds from the
vast majority of mutual funds available today. The primary distinction is
between load and no-load funds.
Load funds generally are defined as mutual funds that charge a fee for
the sale and distribution of fund shares. There are three types of loads:
front-end loads, back-end loads, and asset-based 12b-1 fees. 12b-1 fees are
distribution-related fees charged against fund assets and are distinct from
service fees, which are charged for personal services and/or maintenance of
shareholder accounts. Asset-based sales charges and service fees are typically
paid pursuant to distribution plans adopted under 12b-1 under the 1940 Act.
A front-end load is a sales charge, which can be as high as 8.50% of
the amount invested. A back-end load is a contingent deferred sales charge,
which can be as high as 8.50% of either the amount invested or redeemed. The
maximum front-end or back-end load varies, and depends upon whether or not a
fund also charges a 12b-1 fee and/or a service fee or offers investors various
sales-related services such as dividend reinvestment. The maximum charge for a
12b-1 fee is 0.75% of a fund's average annual net assets, and the maximum charge
for a service fee is 0.25% of a fund's average annual net assets.
A no-load fund does not charge a front-end or back-end load, but can
charge a small 12b-1 fee and/or service fee against fund assets. Under the NASD
Rules of Fair Practice, a mutual fund can call itself a "no-load" fund only if
the 12b-1 fee and/or service fee does not exceed 0.25% of a fund's average
annual net assets.
Because Scudder funds do not pay any asset-based sales charges or
service fees, Scudder developed and trademarked the phrase pure no-load(TM) to
distinguish Scudder funds from other no-load mutual funds. Scudder pioneered the
no-load concept when it created the nation's first no-load fund in 1928, and
later developed the nation's first family of no-load mutual funds.
The following chart shows the potential long-term advantage of
investing $10,000 in a Scudder pure no-load fund over investing the same amount
in a load fund that collects an 8.50% front-end load, a load fund that collects
only a 0.75% 12b-1 and/or service fee, and a no-load fund charging only a 0.25%
12b-1 and/or service fee. The hypothetical figures in the chart show the value
of an account assuming a constant 10% rate of return over the time periods
indicated and reinvestment of dividends and distributions.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Scudder No-Load Fund with
Pure No-Load(TM) Load Fund with 0.25% 12b-1
YEARS Fund 8.50% Load Fund 0.75% 12b-1 Fee Fee
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
10 $ 25,937 $ 23,733 $ 24,222 $ 25,354
- -------------------------------------------------------------------------------------------------------------------
15 41,772 38,222 37,698 40,371
- -------------------------------------------------------------------------------------------------------------------
20 67,275 61,557 58,672 64,282
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Investors are encouraged to review the fee tables on page 2 of each
Fund's prospectus for more specific information about the rates at which
management fees and other expenses are assessed.
Internet Access
World Wide Web Site -- The address of the Scudder Funds site is
http://funds.scudder.com. The site offers guidance on global investing and
developing strategies to help meet financial goals and provides access to the
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<PAGE>
Scudder investor relations department via e-mail. The site also enables users to
access or view fund prospectuses and profiles with links between summary
information in Profiles and details in the Prospectus. Users can fill out new
account forms on-line, order free software, and request literature on funds.
The site is designed for interactivity, simplicity and maneuverability.
A section entitled "Planning Resources" provides information on asset
allocation, tuition, and retirement planning to users who fill out interactive
"worksheets." Investors can easily establish a "Personal Page," that presents
price information, updated daily, on funds they're interested in following. The
"Personal Page" also offers easy navigation to other parts of the site. Fund
performance data from both Scudder and Lipper Analytical Services, Inc. are
available on the site. Also offered on the site is a news feature, which
provides timely and topical material on the Scudder Funds.
Scudder has communicated with shareholders and other interested parties
on Prodigy since 1988 and has participated since 1994 in GALT's Networth
"financial marketplace" site on the Internet. The firm made Scudder Funds
information available on America Online in early 1996.
Account Access -- Scudder is among the first mutual fund families to allow
shareholders to manage their fund accounts through the World Wide Web. Scudder
Fund shareholders can view a snapshot of current holdings, review account
activity and move assets between Scudder Fund accounts.
Scudder's personal portfolio capabilities -- known as SEAS (Scudder
Electronic Account Services) -- are accessible only by current Scudder Fund
shareholders who have set up a Personal Page on Scudder's Web site. Using a
secure Web browser, shareholders sign on to their account with their Social
Security number and their SAIL password. As an additional security measure,
users can change their current password or disable access to their portfolio
through the World Wide Web.
An Account Activity option reveals a financial history of transactions
for an account, with trade dates, type and amount of transaction, share price
and number of shares traded. For users who wish to trade shares between Scudder
Funds, the Fund Exchange option provides a step-by-step procedure to exchange
shares among existing fund accounts or to new Scudder Fund accounts.
A Call MeTM feature enables users to speak with a Scudder Investor
Relations telephone representative while viewing their account on the Web site.
In order to use the Call MeTM feature, an individual must have two phone lines
and enter on the screen the phone number that is not being used to connect to
the Internet. They are connected to the next available Scudder Investor
Relations representative from 8 a.m. to 8 p.m. eastern time.
Dividend and Capital Gain Distribution Options
Investors have freedom to choose whether to receive cash or to reinvest
any dividends from net investment income or distributions from realized capital
gains in additional shares of a Fund. A change of instructions for the method of
payment must be given to the Transfer Agent at least five days prior to a
dividend record date. Shareholders may change their dividend option either by
calling 1-800-225-5163 or by sending written instructions to the Transfer Agent.
See "How to contact Scudder" in each Fund's prospectus for the address. Please
include your account number with your written request.
Reinvestment is usually made on the day following the record date.
Investors may leave standing instructions with the Transfer Agent designating
their option for either reinvestment or cash distribution of any income
dividends or capital gains distributions. If no election is made, dividends and
distributions will be invested in additional shares of the relevant Fund.
Investors may also have dividends and distributions automatically
deposited to their predesignated bank account through Scudder's
DistributionsDirect Program. Shareholders who elect to participate in the
DistributionsDirect Program, and whose predesignated checking account of record
is with a member bank of the Automated Clearing House Network (ACH) can have
income and capital gain distributions automatically deposited to their personal
bank account usually within three business days after a Fund pays its
distribution. A DistributionsDirect request form can be obtained by calling
1-800-225-5163. Confirmation statements will be mailed to shareholders as
notification that distributions have been deposited.
17
<PAGE>
Scudder Investor Centers
Investors may visit any of the Centers maintained by Scudder Investor
Services, Inc. The Centers are designed to provide individuals with services
during any business day. Investors may pick up literature or obtain assistance
with opening an account, adding monies or special options to existing accounts,
making exchanges within the Scudder Family of Funds, redeeming shares or opening
retirement plans. Checks should not be mailed to the Centers but should be
mailed to "The Scudder Funds" at the address listed under "How to contact
Scudder" in the Funds' prospectuses.
Diversification
Your investment represents an interest in a large, diversified
portfolio of carefully selected securities. Diversification helps protect you
against the risks associated with concentrating in fewer securities or in a
specific market sector.
Reports to Shareholders
Each Fund issues to their respective shareholders semiannual financial
statements (audited annually by independent accountants), including a list of
investments held and statements of assets and liabilities, operations, changes
in net assets, and financial highlights for each Fund.
Transaction Summaries
Annual summaries of all transactions in each Fund account are available
to shareholders. The summaries may be obtained by calling 1-800-225-5163.
THE SCUDDER FAMILY OF FUNDS
(See "Investment products and services" in the Funds' prospectuses.)
The Scudder Family of Funds is America's first family of mutual funds
and the nation's oldest family of no-load mutual funds. To assist investors in
choosing a Scudder fund, descriptions of the Scudder funds' objectives follow.
MONEY MARKET
Scudder U.S. Treasury Money Fund seeks to provide safety, liquidity and
stability of capital and, consistent therewith, to provide current
income. The Fund seeks to maintain a constant net asset value of $1.00
per share, although in certain circumstances this may not be possible,
and declares dividends daily.
Scudder Cash Investment Trust ("SCIT") seeks to maintain the stability
of capital and, consistent therewith, to maintain the liquidity of
capital and to provide current income. SCIT seeks to maintain a
constant net asset value of $1.00 per share, although in certain
circumstances this may not be possible, and declares dividends daily.
Scudder Money Market Series seeks to provide investors with as high a
level of current income as is consistent with its investment polices
and with preservation of capital and liquidity. The Fund seeks to
maintain a constant net asset value of $1.00 per share, but there is no
assurance that it will be able to do so. The institutional class of
shares of this Fund is not within the Scudder Family of Funds.
Scudder Government Money Market Series seeks to provide investors with
as high a level of current income as is consistent with its investment
polices and with preservation of capital and liquidity. The Fund seeks
to maintain a constant net asset value of $1.00 per share, but there is
no assurance that it will be able to do so. The institutional class of
shares of this Fund is not within the Scudder Family of Funds.
18
<PAGE>
TAX FREE MONEY MARKET
Scudder Tax Free Money Fund ("STFMF") seeks to provide income exempt
from regular federal income tax and stability of principal through
investments primarily in municipal securities. STFMF seeks to maintain
a constant net asset value of $1.00 per share, although in extreme
circumstances this may not be possible.
Scudder Tax Free Money Market Series seeks to provide investors with as
high a level of current income that cannot be subjected to federal
income tax by reason of federal law as is consistent with its
investment policies and with preservation of capital and liquidity. The
Fund seeks to maintain a constant net asset value of $1.00 per share,
but there is no assurance that it will be able to do so. The
institutional class of shares of this Fund is not within the Scudder
Family of Funds.
Scudder California Tax Free Money Fund* seeks stability of capital and
the maintenance of a constant net asset value of $1.00 per share while
providing California taxpayers income exempt from both California State
personal and regular federal income taxes. The Fund is a professionally
managed portfolio of high quality, short-term California municipal
securities. There can be no assurance that the stable net asset value
will be maintained.
Scudder New York Tax Free Money Fund* seeks stability of capital and
the maintenance of a constant net while providing New York taxpayers
income exempt from New York State and New York City personal income
taxes and regular federal income tax. There can be no assurance that
the stable net asset value will be maintained.
TAX FREE
Scudder Limited Term Tax Free Fund seeks to provide as high a level of
income exempt from regular federal income tax as is consistent with a
high degree of principal stability.
Scudder Medium Term Tax Free Fund seeks to provide a high level of
income free from regular federal income taxes and to limit principal
fluctuation. The Fund will invest primarily in high-grade,
intermediate-term bonds.
Scudder Managed Municipal Bonds seeks to provide income exempt from
regular federal income tax primarily through investments in high-grade,
long-term municipal securities.
Scudder High Yield Tax Free Fund seeks to provide a high level of
interest income, exempt from regular federal income tax, from an
actively managed portfolio consisting primarily of investment-grade
municipal securities.
Scudder California Tax Free Fund* seeks to provide California taxpayers
with income exempt from both California State personal income and
regular federal income tax. The Fund is a professionally managed
portfolio consisting primarily of California municipal securities.
Scudder Massachusetts Limited Term Tax Free Fund* seeks to provide
Massachusetts taxpayers with as high a level of income exempt from
Massachusetts personal income tax and regular federal income tax, as is
consistent with a high degree of price stability, through a
professionally managed portfolio consisting primarily of
investment-grade municipal securities.
Scudder Massachusetts Tax Free Fund* seeks to provide Massachusetts
taxpayers with income exempt from both Massachusetts personal income
tax and regular federal income tax. The Fund is a professionally
managed portfolio consisting primarily of investment-grade municipal
securities.
- ----------------
* These funds are not available for sale in all states. For information,
contact Scudder Investor Services, Inc.
19
<PAGE>
Scudder New York Tax Free Fund* seeks to provide New York taxpayers
with income exempt from New York State and New York City personal
income taxes and regular federal income tax. The Fund is a
professionally managed portfolio consisting primarily of New York
municipal securities.
Scudder Ohio Tax Free Fund* seeks to provide Ohio taxpayers with income
exempt from both Ohio personal income tax and regular federal income
tax. The Fund is a professionally managed portfolio consisting
primarily of investment-grade municipal securities.
Scudder Pennsylvania Tax Free Fund* seeks to provide Pennsylvania
taxpayers with income exempt from both Pennsylvania personal income tax
and regular federal income tax. The Fund is a professionally managed
portfolio consisting primarily of investment-grade municipal
securities.
U.S. INCOME
Scudder Short Term Bond Fund seeks to provide a high level of income
consistent with a high degree of principal stability by investing
primarily in high quality short-term bonds.
Scudder Zero Coupon 2000 Fund seeks to provide as high an investment
return over a selected period as is consistent with investment in U.S.
Government securities and the minimization of reinvestment risk.
Scudder GNMA Fund seeks to provide high current income primarily from
U.S. Government guaranteed mortgage-backed (Ginnie Mae) securities.
Scudder Income Fund seeks a high level of income, consistent with the
prudent investment of capital, through a flexible investment program
emphasizing high-grade bonds.
Scudder High Yield Bond Fund seeks a high level of current income and,
secondarily, capital appreciation through investment primarily in below
investment-grade domestic debt securities.
GLOBAL INCOME
Scudder Global Bond Fund seeks to provide total return with an emphasis
on current income by investing primarily in high-grade bonds
denominated in foreign currencies and the U.S. dollar. As a secondary
objective, the Fund will seek capital appreciation.
Scudder International Bond Fund seeks to provide income primarily by
investing in a managed portfolio of high-grade international bonds. As
a secondary objective, the Fund seeks protection and possible
enhancement of principal value by actively managing currency, bond
market and maturity exposure and by security selection.
Scudder Emerging Markets Income Fund seeks to provide high current
income and, secondarily, long-term capital appreciation through
investments primarily in high-yielding debt securities issued by
governments and corporations in emerging markets.
ASSET ALLOCATION
Scudder Pathway Series: Conservative Portfolio seeks primarily current
income and secondarily long-term growth of capital. In pursuing these
objectives, the Portfolio, under normal market conditions, will invest
substantially in a select mix of Scudder bond mutual funds, but will
have some exposure to Scudder equity mutual funds.
Scudder Pathway Series: Balanced Portfolio seeks to provide investors
with a balance of growth and income by investing in a select mix of
Scudder money market, bond and equity mutual funds.
- ----------------
* These funds are not available for sale in all states. For information,
contact Scudder Investor Services, Inc.
20
<PAGE>
Scudder Pathway Series: Growth Portfolio seeks to provide investors
with long-term growth of capital. In pursuing this objective, the
Portfolio will, under normal market conditions, invest predominantly in
a select mix of Scudder equity mutual funds designed to provide
long-term growth.
Scudder Pathway Series: International Portfolio seeks maximum total
return for investors. Total return consists of any capital appreciation
plus dividend income and interest. To achieve this objective, the
Portfolio invests in a select mix of established international and
global Scudder funds.
U.S. GROWTH AND INCOME
Scudder Balanced Fund seeks a balance of growth and income from a
diversified portfolio of equity and fixed-income securities. The Fund
also seeks long-term preservation of capital through a quality-oriented
approach that is designed to reduce risk.
Scudder Growth and Income Fund seeks long-term growth of capital,
current income, and growth of income.
Scudder S&P 500 Index Fund seeks to provide investment results that,
before expenses, correspond to the total return of common stocks
publicly traded in the United States, as represented by the Standard &
Poor's 500 Composite Stock Price Index.
U.S. GROWTH
Value
Scudder Large Company Value Fund seeks to maximize long-term capital
appreciation through a value-driven investment program.
Scudder Value Fund seeks long-term growth of capital through investment
in undervalued equity securities.
Scudder Small Company Value Fund invests for long-term growth of
capital by seeking out undervalued stocks of small U.S. companies.
Scudder Micro Cap Fund seeks long-term growth of capital by investing
primarily in a diversified portfolio of U.S. micro-capitalization
("micro-cap") common stocks.
Growth
Scudder Classic Growth Fund seeks to provide long-term growth of
capital and to keep the value of its shares more stable than other
growth mutual funds.
Scudder Large Company Growth Fund seeks to provide long-term growth of
capital through investment primarily in the equity securities of
seasoned, financially strong U.S. growth companies.
Scudder Development Fund seeks long-term growth of capital by investing
primarily in securities of small and medium-size growth companies.
Scudder 21st Century Growth Fund seeks long-term growth of capital by
investing primarily in the securities of emerging growth companies
poised to be leaders in the 21st century.
21
<PAGE>
GLOBAL GROWTH
Worldwide
Scudder Global Fund seeks long-term growth of capital through a
diversified portfolio of marketable securities, primarily equity
securities, including common stocks, preferred stocks and debt
securities convertible into common stocks.
Scudder International Growth and Income Fund seeks long-term growth of
capital and current income primarily from foreign equity securities.
Scudder International Fund seeks long-term growth of capital primarily
through a diversified portfolio of marketable foreign equity
securities.
Scudder Global Discovery Fund seeks above-average capital appreciation
over the long term by investing primarily in the equity securities of
small companies located throughout the world.
Scudder Emerging Markets Growth Fund seeks long-term growth of capital
primarily through equity investment in emerging markets around the
globe.
Scudder Gold Fund seeks maximum return (principal change and income)
consistent with investing in a portfolio of gold-related equity
securities and gold.
Regional
Scudder Greater Europe Growth Fund seeks long-term growth of capital
through investments primarily in the equity securities of European
companies.
Scudder Pacific Opportunities Fund seeks long-term growth of capital
through investment primarily in the equity securities of Pacific Basin
companies, excluding Japan.
Scudder Latin America Fund seeks to provide long-term capital
appreciation through investment primarily in the securities of Latin
American issuers.
The Japan Fund, Inc. seeks long-term capital appreciation by investing
primarily in equity securities (including American Depository Receipts)
of Japanese companies.
The net asset values of most Scudder funds can be found daily in the
"Mutual Funds" section of The Wall Street Journal under "Scudder Funds," and in
other leading newspapers throughout the country. Investors will notice the net
asset value and offering price are the same, reflecting the fact that no sales
commission or "load" is charged on the sale of shares of the Scudder funds. The
latest seven-day yields for the money-market funds can be found every Monday and
Thursday in the "Money-Market Funds" section of The Wall Street Journal. This
information also may be obtained by calling the Scudder Automated Information
Line (SAIL) at 1-800-343-2890.
The Scudder Family of Funds offers many conveniences and services,
including: active professional investment management; broad and diversified
investment portfolios; pure no-load funds with no commissions to purchase or
redeem shares or Rule 12b-1 distribution fees; individual attention from a
service representative of Scudder Investor Relations; and easy telephone
exchanges into other Scudder funds. Certain Scudder funds may not be available
for purchase or exchange. For more information, please call 1-800-225-5163.
22
<PAGE>
SPECIAL PLAN ACCOUNTS
(See "Scudder tax-advantaged retirement plans," "Purchases--By
Automatic Investment Plan" and "Exchanges and redemptions--By
Automatic Withdrawal Plan" in each Fund's prospectus.)
Detailed information on any Scudder investment plan, including the
applicable charges, minimum investment requirements and disclosures made
pursuant to Internal Revenue Service (the "IRS") requirements, may be obtained
by contacting Scudder Investor Services, Inc., Two International Place, Boston,
Massachusetts 02110-4103 or by calling toll free, 1-800-225-2470. It is
advisable for an investor considering the funding of the investment plans
described below to consult with an attorney or other investment or tax adviser
with respect to the suitability requirements and tax aspects thereof.
Shares of the Funds may also be a permitted investment under profit
sharing and pension plans and IRA's other than those offered by the Funds'
distributor depending on the provisions of the relevant plan or IRA.
None of the plans assures a profit or guarantees protection against
depreciation, especially in declining markets.
Scudder Retirement Plans: Profit-Sharing and Money Purchase
Pension Plans for Corporations and Self-Employed Individuals
Shares of the Funds may be purchased as the investment medium under a
plan in the form of a Scudder Profit-Sharing Plan (including a version of the
Plan which includes a cash-or-deferred feature) or a Scudder Money Purchase
Pension Plan (jointly referred to as the Scudder Retirement Plans) adopted by a
corporation, a self-employed individual or a group of self-employed individuals
(including sole proprietorships and partnerships), or other qualifying
organization. Each of these forms was approved by the IRS as a prototype. The
IRS's approval of an employer's plan under Section 401(a) of the Internal
Revenue Code will be greatly facilitated if it is in such approved form. Under
certain circumstances, the IRS will assume that a plan, adopted in this form,
after special notice to any employees, meets the requirements of Section 401(a)
of the Internal Revenue Code.
Scudder 401(k): Cash or Deferred Profit-Sharing Plan
for Corporations and Self-Employed Individuals
Shares of the Funds may be purchased as the investment medium under a
plan in the form of a Scudder 401(k) Plan adopted by a corporation, a
self-employed individual or a group of self-employed individuals (including sole
proprietors and partnerships), or other qualifying organization. This plan has
been approved as a prototype by the IRS.
Scudder IRA: Individual Retirement Account
Shares of the Funds may be purchased as the underlying investment for
an Individual Retirement Account which meets the requirements of Section 408(a)
of the Internal Revenue Code.
A single individual who is not an active participant in an
employer-maintained retirement plan, a simplified employee pension plan, or a
tax-deferred annuity program (a "qualified plan"), and a married individual who
is not an active participant in a qualified plan and whose spouse is also not an
active participant in a qualified plan, are eligible to make tax deductible
contributions of up to $2,000 to an IRA prior to the year such individual
attains age 70 1/2. In addition, certain individuals who are active participants
in qualified plans (or who have spouses who are active participants) are also
eligible to make tax-deductible contributions to an IRA; the annual amount, if
any, of the contribution which such an individual will be eligible to deduct
will be determined by the amount of his, her, or their adjusted gross income for
the year. Whenever the adjusted gross income limitation prohibits an individual
from contributing what would otherwise be the maximum tax-deductible
contribution he or she could make, the individual will be eligible to contribute
the difference to an IRA in the form of nondeductible contributions.
An eligible individual may contribute as much as $2,000 of qualified
income (earned income or, under certain circumstances, alimony) to an IRA each
year (up to $2,000 per individual for married couples if only one spouse has
23
<PAGE>
earned income). All income and capital gains derived from IRA investments are
reinvested and compound tax-deferred until distributed. Such tax-deferred
compounding can lead to substantial retirement savings.
The table below shows how much individuals would accumulate in a fully
tax-deductible IRA by age 65 (before any distributions) if they contribute
$2,000 at the beginning of each year, assuming average annual returns of 5, 10,
and 15%. (At withdrawal, accumulations in this table will be taxable.)
<TABLE>
<CAPTION>
Value of IRA at Age 65
Assuming $2,000 Deductible Annual Contribution
- -----------------------------------------------------------------------------------------------------------
Starting Annual Rate of Return
Age of ------------------------------------------------------------------------------
Contributions 5% 10% 15%
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
25 $253,680 $973,704 $4,091,908
35 139,522 361,887 999,914
45 69,439 126,005 235,620
55 26,414 35,062 46,699
</TABLE>
This next table shows how much individuals would accumulate in non-IRA
accounts by age 65 if they start with $2,000 in pretax earned income at the
beginning of each year (which is $1,380 after taxes are paid), assuming average
annual returns of 5, 10 and 15%. (At withdrawal, a portion of the accumulation
in this table will be taxable.)
<TABLE>
<CAPTION>
Value of a Non-IRA Account at
Age 65 Assuming $1,380 Annual Contributions
(post tax, $2,000 pretax) and a 31% Tax Bracket
- -----------------------------------------------------------------------------------------------------------
Starting Annual Rate of Return
Age of ------------------------------------------------------------------------------
Contributions 5% 10% 15%
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
25 $119,318 $287,021 $741,431
35 73,094 136,868 267,697
45 40,166 59,821 90,764
55 16,709 20,286 24,681
</TABLE>
Scudder 403(b) Plan
Shares of the Funds may also be purchased as the underlying investment
for tax sheltered annuity plans under the provisions of Section 403(b)(7) of the
Internal Revenue Code. In general, employees of tax-exempt organizations
described in Section 501(c)(3) of the Internal Revenue Code (such as hospitals,
churches, religious, scientific, or literary organizations and educational
institutions) or a public school system are eligible to participate in a 403(b)
plan.
Automatic Withdrawal Plan
Non-retirement plan shareholders may establish an Automatic Withdrawal
Plan to receive monthly, quarterly or periodic redemptions from his or her
account for any designated amount of $50 or more. Shareholders may designate on
which day they want the automatic withdrawal to be processed. The check amounts
may be based on the redemption of a fixed dollar amount, fixed share amount,
percent of account value or declining balance. The Plan provides for income
dividends and capital gains distributions, if any, to be reinvested in
additional shares. Shares are then liquidated as necessary to provide for
withdrawal payments. Since the withdrawals are in amounts selected by the
investor and have no relationship to yield or income, payments received cannot
be considered as yield or income on the investment and the resulting
liquidations may deplete or possibly extinguish the initial investment and any
reinvested dividends and capital gains distributions. Requests for increases in
withdrawal amounts or to change the payee must be submitted in writing, signed
exactly as the account is registered, and contain signature guarantee(s) as
described under "Transaction information--Redeeming shares--Signature
guarantees" in each Fund's prospectus. Any such requests must be received by the
Funds' transfer agent ten days prior to the date of the first automatic
withdrawal. An Automatic Withdrawal Plan may be terminated at any time by the
24
<PAGE>
shareholder, the respective Trust, or its agent on written notice, and will be
terminated when all shares of a Fund under the Plan have been liquidated or upon
receipt by the respective Trust of notice of death of the shareholder.
An Automatic Withdrawal Plan request form can be obtained by calling
1-800-225-5163.
Group or Salary Deduction Plan
An investor may join a Group or Salary Deduction Plan where
satisfactory arrangements have been made with Scudder Investor Services, Inc.
for forwarding regular investments through a single source. The minimum annual
investment is $240 per investor which may be made in monthly, quarterly,
semiannual or annual payments. The minimum monthly deposit per investor is $20.
Except for trustees or custodian fees for certain retirement plans, at present
there is no separate charge for maintaining group or salary deduction plans;
however, each Trust and its agents reserve the right to establish a maintenance
charge in the future depending on the services required by the investor.
Each Trust reserves the right, after notice has been given to the
shareholder, to redeem and close a shareholder's account in the event that the
shareholder ceases participating in the group plan prior to investment of $1,000
per individual or in the event of a redemption which occurs prior to the
accumulation of that amount or which reduces the account value to less than
$1,000 and the account value is not increased to $1,000 within a reasonable time
after notification. An investor in a plan who has not purchased shares for six
months shall be presumed to have stopped making payments under the plan.
Automatic Investment Plan
Shareholders may arrange to make periodic investments through automatic
deductions from checking accounts by completing the appropriate form and
providing the necessary documentation to establish this service. The minimum
investment is $50.
The Automatic Investment Plan involves an investment strategy called
dollar cost averaging. Dollar cost averaging is a method of investing whereby a
specific dollar amount is invested at regular intervals. By investing the same
dollar amount each period, when shares are priced low the investor will purchase
more shares than when the share price is higher. Over a period of time this
investment approach may allow the investor to reduce the average price of the
shares purchased. However, this investment approach does not assure a profit or
protect against loss. This type of regular investment program may be suitable
for various investment goals such as, but not limited to, college planning or
saving for a home.
Uniform Transfers/Gifts to Minors Act
Grandparents, parents or other donors may set up custodian accounts for
minors. The minimum initial investment is $1,000 unless the donor agrees to
continue to make regular share purchases for the account through Scudder's
Automatic Investment Plan (AIP). In this case, the minimum initial investment is
$500.
Each Trust reserves the right, after notice has been given to the
shareholder and custodian, to redeem and close a shareholder's account in the
event that regular investments to the account cease before the $1,000 minimum is
reached.
DIVIDENDS
(See "Distribution and performance
information--Dividends and capital gains
distributions" in each Fund's prospectus.)
The net income of each Fund is determined as of the close of regular
trading on the Exchange, usually 4 p.m. eastern time on each day the Exchange is
open for trading.
All the net investment income and all net realized short-term capital
gains and net realized short and long-term capital losses of SCIT so determined
normally will be declared as a dividend to shareholders of record as of
determination of the net asset value at 12:00 noon after the purchase and
redemption of shares. Any losses may be included in the daily dividend for such
25
<PAGE>
number of days as is deemed appropriate in order to avoid a disproportionate
impact on holders of shares of beneficial interest of the Fund on any one day on
which a dividend is declared. All the net investment income and all realized
capital gains and losses on securities held for one year or less (short-term
capital gain/loss) of Treasury Fund so determined normally will be declared as a
dividend to shareholders of record as of determination of the net asset value at
twelve o'clock noon after the purchase and redemption of shares. Shares
purchased as of the determination of net asset value made as of the regular
close of the Exchange will not participate in that day's dividend; in such cases
dividends commence on the next business day. Checks will be mailed to
shareholders electing to take dividends in cash, and confirmations will be
mailed to shareholders electing to invest dividends in additional shares for the
month's dividends within four business days after the dividend is calculated.
Dividends will be invested at the net asset value per share, normally $l.00,
determined as of the close of regular trading on the Exchange on the last
business day of each month.
Dividends are declared daily on each day on which the Exchange is open
for business. The dividends for a business day immediately preceding a weekend
or holiday will normally include an amount equal to the net income for the
subsequent days on which dividends are not declared. However, no daily dividend
will include any amount of net investment income in respect of a subsequent
semiannual accounting period.
Net investment income (from the time of the immediately preceding
determination thereof) consists of all interest income accrued on the portfolio
assets of a Fund, less all actual and accrued expenses. Interest income included
in the daily computation of net investment income is comprised of original issue
discount earned on discount paper accrued to the date of maturity as well as
accrued interest. Expenses of each Fund, including the management fee payable to
the Adviser, are accrued each day.
Normally, each Fund will have a positive net investment income at the
time of each determination thereof. Net investment income may be negative if an
unexpected liability must be accrued or a loss realized. If the net investment
income of a Fund determined at any time is a negative amount, the net asset
value per share will be reduced below $l.00 unless one or more of the following
steps are taken: the Trustees have the authority (1) to reduce the number of
shares in each shareholder's account, (2) to offset each shareholder's pro rata
portion of negative net investment income from the shareholder's accrued
dividend account or from future dividends, or (3) to combine these methods in
order to seek to maintain the net asset value per share at $1.00. Each Fund may
endeavor to restore the net asset value per share to $l.00 by not declaring
dividends from net investment income on subsequent days until restoration, with
the result that the net asset value per share will increase to the extent of
positive net investment income which is not declared as a dividend.
Because the net investment income of each Fund is declared as a
dividend each time the net investment income of the Fund is determined, the net
asset value per share of each Fund (i.e., the fair value of the net assets of
the Fund divided by the number of shares of the Fund outstanding) will remain at
$l.00 per share immediately after each such determination and dividend
declaration, unless (i) there are unusual or extended fluctuations in short-term
interest rates or other factors, such as unfavorable changes in the
creditworthiness of issuers affecting the value of securities in the Fund's
portfolio, or (ii) net income is a negative amount.
Should a Fund incur or anticipate any unusual or unexpected significant
expense or loss which would affect disproportionately that Fund's income for a
particular period, the Trustees would at that time consider whether to adhere to
the dividend policy described above or to revise it in the light of the then
prevailing circumstances in order to ameliorate to the extent possible the
disproportionate effect of such expense, loss or depreciation on then existing
shareholders. Such expenses or losses may nevertheless result in a shareholder's
receiving no dividends for the period during which the shares are held and in
receiving upon redemption a price per share lower than that which was paid.
Neither Fund anticipates realizing any long-term capital gains.
PERFORMANCE INFORMATION
(See "Distribution and performance information--Performance
information" in each Fund's prospectus.)
From time to time, quotations of each Fund's performance may be
included in advertisements, sales literature or reports to shareholders or
prospective investors. These performance figures may be calculated in the
following manner:
26
<PAGE>
Yield
Yield is the net annualized yield based on a specified 7 calendar days
calculated at simple interest rates. Yield is calculated by determining the net
change, exclusive of capital changes, in the value of a hypothetical
pre-existing account having a balance of one share at the beginning of the
period, and dividing the difference by the value of the account at the beginning
of the base period to obtain the base period return. The yield is annualized by
multiplying the base period return by 365/7. The yield figure is stated to the
nearest hundredth of one percent. The yield for the seven-day period ended June
30, 1997 was 4.75% for SCIT and 4.50% for Treasury Fund. If Treasury Fund's
Adviser had not absorbed a portion of the Fund's expenses and had imposed a full
management fee, the Fund's yield for the seven-day period ended June 30, 1997
would have been 4.15%.
Effective Yield
Effective yield is the net annualized yield for a specified 7 calendar
days assuming a reinvestment of the income or compounding. Effective yield is
calculated by the same method as yield except the effective yield figure is
compounded by adding 1, raising the sum to a power equal to 365 divided by 7,
and subtracting 1 from the result, according to the following formula:
Effective yield = [(Base Period Return + 1)^365/7] - 1.
The effective yield for the seven-day period ended June 30, 1997 was
4.86% for SCIT and 4.60% for Treasury Fund. If SCIT's Adviser had not absorbed a
portion of the Fund's expenses and had imposed a full management fee, the Fund's
yield for the seven-day period ended June 30, 1997 would have been 4.60%. If
Treasury Fund's Adviser had not absorbed a portion of the Fund's expenses and
had imposed a full management fee, the Fund's yield for the seven-day period
ended June 30, 1997 would have been 4.25%.
Quotations of each Fund's performance are based on historical earnings
and are not intended to indicate future performance. An investor's shares when
redeemed may be worth more or less than their original cost. Performance of the
Fund will vary based on changes in market conditions and the level of each
Fund's expenses.
Average Annual Total Return
Average annual total return is the average annual compound rate of
return for the periods of one year, five years and ten years, all ended on the
last day of a recent calendar quarter. Average annual total return quotations
reflect changes in the price of a Fund's shares, if any, and assume that all
dividends and capital gains distributions during the respective periods were
reinvested in Fund shares. Average annual total return is calculated by finding
the average annual compound rates of return of a hypothetical investment over
such periods, according to the following formula (average annual total return is
then expressed as a percentage):
T = (ERV/P)1/n - 1
Where:
P = a hypothetical initial investment of $1,000
T = Average Annual Total Return
n = number of years
ERV = ending redeemable value: ERV is the value,
at the end of the applicable period, of a
hypothetical $1,000 investment made at the
beginning of the applicable period.
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Average Annual Total Return for periods ended June 30, 1997
One Five Ten
Year Years Years
---- ----- -----
SCIT* 4.73% 4.00% 5.51%
Treasury Fund** 4.58% 3.93% 5.18%
* If the Adviser had not absorbed a portion of SCIT expenses and
had imposed a full management fee, the average annual total
return for the one year, five year and ten year periods ended
June 30, 1997, would have been lower.
** If the Adviser had not absorbed a portion of Treasury Fund
expenses and had imposed a full management fee, the average
annual total return for the one year, five year and ten year
periods ended June 30, 1997, would have been approximately
4.29%, 3.68% and 5.02%.
Cumulative Total Return
Cumulative Total Return is the cumulative rate of return on a
hypothetical initial investment of $1,000 for a specified period. Cumulative
total return quotations reflect the change in the price of a Fund's shares and
assume that all dividends and capital gains distributions during the period were
reinvested in Fund shares. Cumulative total return is calculated by finding the
cumulative rates of return of a hypothetical investment over such periods,
according to the following formula (cumulative total return is then expressed as
a percentage):
C = (ERV/P)-1
Where:
C = Cumulative Total Return
P = a hypothetical initial investment of $1,000
ERV = ending redeemable value: ERV is the value,
at the end of the applicable period, of a
hypothetical $1,000 investment made at the
beginning of the applicable period.
Cumulative Total Return for periods ended June 30, 1997
One Five Ten
Year Years Years
---- ----- -----
SCIT* 4.73% 21.69% 70.94%
Treasury Fund** 4.58% 21.25% 65.73%
* If the Adviser had not absorbed a portion of SCIT's expenses
and had imposed a full management fee, the cumulative total
return for the one year, five year and ten year periods ended
June 30, 1997, would have been lower.
** If the Adviser had not absorbed a portion of Treasury Fund's
expenses and had imposed a full management fee, the cumulative
total return for the one year, five year and ten year periods
ended June 30, 1997, would have been approximately 4.23%,
20.90% and 65.08%.
Total Return
Total return is the rate of return on an investment for a specified
period of time calculated in the manner as cumulative total return.
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Quotations of the Funds' performance are historical, show the
performance of a hypothetical investment and are not intended to indicate future
performance. Average annual total return, cumulative total return and yield for
a Fund will vary based on changes in market conditions and the level of each
Fund's expenses. An investor's shares when redeemed may be worth more or less
than their original cost.
Investors should be aware that the principal of each Fund is not
insured.
Comparison of Fund Performance
A comparison of the quoted non-standard performance offered for various
investments is valid only if performance is calculated in the same manner. Since
there are different methods of calculating performance, investors should
consider the effects of the methods used to calculate performance when comparing
performance of a Fund with performance quoted with respect to other investment
companies or types of investments.
In connection with communicating its performance to current or
prospective shareholders, a Fund also may compare these figures to the
performance of unmanaged indices which may assume reinvestment of dividends or
interest but generally do not reflect deductions for administrative and
management costs. Examples include, but are not limited to the Dow Jones
Industrial Average, the Consumer Price Index, Standard & Poor's 500 Composite
Stock Price Index (S&P 500), the Nasdaq OTC Composite Index, the Nasdaq
Industrials Index, the Russell 2000 Index, and statistics published by the Small
Business Administration.
From time to time, in advertising and marketing literature, a Fund's
performance may be compared to the performance of broad groups of mutual funds
with similar investment goals, as tracked by independent organizations such as,
Investment Company Data, Inc. ("ICD"), Lipper Analytical Services, Inc.
("Lipper"), CDA Investment Technologies, Inc. ("CDA"), Morningstar, Inc., Value
Line Mutual Fund Survey and other independent organizations. When these
organizations' tracking results are used, a Fund will be compared to the
appropriate fund category, that is, by fund objective and portfolio holdings, or
to the appropriate volatility grouping, where volatility is a measure of a
fund's risk. For instance, a Scudder growth fund will be compared to funds in
the growth fund category; a Scudder income fund will be compared to funds in the
income fund category; and so on. Scudder funds (except for money market funds)
may also be compared to funds with similar volatility, as measured statistically
by independent organizations.
From time to time, in marketing and other Fund literature, Trustees and
officers of the Funds, the Funds' portfolio managers, or members of the
portfolio management team may be depicted and quoted to give prospective and
current shareholders a better sense of the outlook and approach of those who
manage the Funds. In addition, the amount of assets that the Adviser has under
management in various geographical areas may be quoted in advertising and
marketing materials.
The Funds may be advertised as an investment choice in Scudder's
college planning program. The description may contain illustrations of projected
future college costs based on assumed rates of inflation and examples of
hypothetical fund performance, calculated as described above.
Statistical and other information, as provided by the Social Security
Administration, may be used in marketing materials pertaining to retirement
planning in order to estimate future payouts of social security benefits.
Estimates may be used on demographic and economic data.
Marketing and other Fund literature may include a description of the
potential risks and rewards associated with an investment in the Funds. The
description may include a "risk/return spectrum" which compares the Funds to
other Scudder funds or broad categories of funds, such as money market, bond or
equity funds, in terms of potential risks and returns. Money market funds are
designed to maintain a constant $1.00 share price and have a fluctuating yield.
Share price, yield and total return of a bond fund will fluctuate. The share
price and return of an equity fund also will fluctuate. The description may also
compare the Funds to bank products, such as certificates of deposit. Unlike
mutual funds, certificates of deposit are insured up to $100,000 by the U.S.
government and offer a fixed rate of return.
Because bank products guarantee the principal value of an investment
and money market funds seek stability of principal, these investments are
considered to be less risky than investments in either bond or equity funds,
which may involve the loss of principal. However, all long-term investments,
including investments in bank products, may be subject to inflation risk, which
is the risk of erosion of the value of an investment as prices increase over a
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<PAGE>
long time period. The risks/returns associated with an investment in bond or
equity funds depend upon many factors. For bond funds these factors include, but
are not limited to, a fund's overall investment objective, the average portfolio
maturity, credit quality of the securities held, and interest rate movements.
For equity funds, factors include a fund's overall investment objective, the
types of equity securities held and the financial position of the issuers of the
securities. The risks/returns associated with an investment in international
bond or equity funds also will depend upon currency exchange rate fluctuation.
A risk/return spectrum generally will position the various investment
categories in the following order: bank products, money market funds, bond funds
and equity funds. Shorter-term bond funds generally are considered less risky
and offer the potential for less return than longer-term bond funds. The same is
true of domestic bond funds relative to international bond funds, and bond funds
that purchase higher quality securities relative to bond funds that purchase
lower quality securities. Growth and income equity funds are generally
considered to be less risky and offer the potential for less return than growth
funds. In addition, international equity funds usually are considered more risky
than domestic equity funds but generally offer the potential for greater return.
Risk/return spectrums also may depict funds that invest in both
domestic and foreign securities or a combination of bond and equity securities.
Evaluation of Fund performance or other relevant statistical
information made by independent sources may also be used in advertisements
concerning the Funds, including reprints of, or selections from, editorials or
articles about these Funds. Sources for Fund performance information and
articles about the Funds include the following:
American Association of Individual Investors' Journal, a monthly publication of
the AAII that includes articles on investment analysis techniques.
Asian Wall Street Journal, a weekly Asian newspaper that often reviews U.S.
mutual funds investing internationally.
Banxquote, an on-line source of national averages for leading money market and
bank CD interest rates, published on a weekly basis by Masterfund, Inc. of
Wilmington, Delaware.
Barron's, a Dow Jones and Company, Inc. business and financial weekly that
periodically reviews mutual fund performance data.
Business Week, a national business weekly that periodically reports the
performance rankings and ratings of a variety of mutual funds investing abroad.
CDA Investment Technologies, Inc., an organization which provides performance
and ranking information through examining the dollar results of hypothetical
mutual fund investments and comparing these results against appropriate market
indices.
Consumer Digest, a monthly business/financial magazine that includes a "Money
Watch" section featuring financial news.
Financial Times, Europe's business newspaper, which features from time to time
articles on international or country-specific funds.
Financial World, a general business/financial magazine that includes a "Market
Watch" department reporting on activities in the mutual fund industry.
Forbes, a national business publication that from time to time reports the
performance of specific investment companies in the mutual fund industry.
Fortune, a national business publication that periodically rates the performance
of a variety of mutual funds.
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<PAGE>
The Frank Russell Company, a West-Coast investment management firm that
periodically evaluates international stock markets and compares foreign equity
market performance to U.S. stock market performance.
Global Investor, a European publication that periodically reviews the
performance of U.S. mutual funds investing internationally.
IBC Money Fund Report, a weekly publication of IBC Financial Data, Inc.,
reporting on the performance of the nation's money market funds, summarizing
money market fund activity and including certain averages as performance
benchmarks, specifically "IBC's Money Fund Average," and "IBC's Government Money
Fund Average."
Ibbotson Associates, Inc., a company specializing in investment research and
data.
Investment Company Data, Inc., an independent organization which provides
performance ranking information for broad classes of mutual funds.
Investor's Business Daily, a daily newspaper that features financial, economic,
and business news.
Kiplinger's Personal Finance Magazine, a monthly investment advisory publication
that periodically features the performance of a variety of securities.
Lipper Analytical Services, Inc.'s Mutual Fund Performance Analysis, a weekly
publication of industry-wide mutual fund averages by type of fund.
Money, a monthly magazine that from time to time features both specific funds
and the mutual fund industry as a whole.
Morgan Stanley International, an integrated investment banking firm that
compiles statistical information.
Mutual Fund Values, a biweekly Morningstar, Inc. publication that provides
ratings of mutual funds based on fund performance, risk and portfolio
characteristics.
The New York Times, a nationally distributed newspaper which regularly covers
financial news.
The No-Load Fund Investor, a monthly newsletter, published by Sheldon Jacobs,
that includes mutual fund performance data and recommendations for the mutual
fund investor.
No-Load Fund*X, a monthly newsletter, published by DAL Investment Company, Inc.,
that reports on mutual fund performance, rates funds and discusses investment
strategies for the mutual fund investor.
Personal Investing News, a monthly news publication that often reports on
investment opportunities and market conditions.
Personal Investor, a monthly investment advisory publication that includes a
"Mutual Funds Outlook" section reporting on mutual fund performance measures,
yields, indices and portfolio holdings.
SmartMoney, a national personal finance magazine published monthly by Dow Jones
and Company, Inc. and The Hearst Corporation. Focus is placed on ideas for
investing, spending and saving.
Success, a monthly magazine targeted to the world of entrepreneurs and growing
business, often featuring mutual fund performance data.
United Mutual Fund Selector, a semi-monthly investment newsletter, published by
Babson United Investment Advisors, that includes mutual fund performance data
and reviews of mutual fund portfolios and investment strategies.
USA Today, a leading national daily newspaper.
U.S. News and World Report, a national news weekly that periodically reports
mutual fund performance data.
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<PAGE>
Value Line Mutual Fund Survey, an independent organization that provides
biweekly performance and other information on mutual funds.
The Wall Street Journal, a Dow Jones and Company, Inc. newspaper which regularly
covers financial news.
Wiesenberger Investment Companies Services, an annual compendium of information
about mutual funds and other investment companies, including comparative data on
funds' backgrounds, management policies, salient features, management results,
income and dividend records and price ranges.
Working Woman, a monthly publication that features a "Financial Workshop"
section reporting on the mutual fund/financial industry.
Worth, a national publication issued 10 times per year by Capital Publishing
Company, a subsidiary of Fidelity Investments. Focus is placed on personal
financial journalism.
ORGANIZATION OF THE FUNDS
(See "Fund organization" in each Fund's prospectus.)
Scudder Cash Investment Trust is a Massachusetts business trust
established under a Declaration of Trust dated December 12, 1975. Treasury Fund
is a Massachusetts business trust established under a Declaration of Trust dated
April 4, 1980. On February 12, 1991, the Board of Trustees of Treasury Fund
approved the change in name from Scudder Government Money Fund to Scudder U.S.
Treasury Money Fund. Each Fund's authorized capital consists of an unlimited
number of shares of beneficial interest, par value $.01 per share, all of which
are one class and have equal rights as to voting, dividends and liquidation.
Shareholders have one vote for each share held. All shares issued and
outstanding will be fully paid and non-assessable by the Funds, and redeemable
as described in this combined Statement of Additional Information and in each
Fund's prospectus. The Trustees of both Funds have the authority to issue more
than one series of shares, but have no present intention to do so.
The Trustees of Treasury Fund, in their discretion, may authorize the
division of shares of the Fund (or shares of a series) into different classes,
permitting shares of different classes to be distributed by different methods.
Although shareholders of different classes would have an interest in the same
portfolio of assets, shareholders of different classes may bear different
expenses in connection with different methods of distribution. The Trustees have
no present intention of taking the action necessary to effect the division of
shares into separate classes, nor of changing the method of distribution of
shares of Treasury Fund.
Each Fund has a Declaration of Trust which provides that obligations of
the Fund involved are not binding upon the Trustees individually but only upon
the property of that Fund, that the Trustees and officers will not be liable for
errors of judgment or mistakes of fact or law, and that the Fund involved will
indemnify its Trustees and officers against liabilities and expenses incurred in
connection with litigation in which they may be involved because of their
offices with the Fund involved except if it is determined in the manner provided
in the Declarations of Trust that they have not acted in good faith in the
reasonable belief that their actions were in the best interests of the Fund
involved. However, nothing in the Declarations of Trust protects or indemnifies
a Trustee or officer against any liability to which he or she would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his or her office.
INVESTMENT ADVISER
(See "Fund organization--Investment adviser" in each Fund's prospectus.)
Scudder, Stevens & Clark, Inc., an investment counsel firm, acts as
investment adviser to the Funds. This organization is one of the most
experienced investment management firms in the United States. It was established
as a partnership in 1919 and pioneered the practice of providing investment
counsel to individual clients on a fee basis. In 1928, it introduced the first
no-load mutual fund to the public. In 1953, the Adviser introduced Scudder
International Fund, Inc., the first mutual fund registered with the SEC in the
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United States investing internationally in several foreign countries. The firm
reorganized from a partnership to a corporation on June 28, 1985.
The principal source of the Adviser's income is professional fees
received from providing continuous investment advice, and the firm derives no
income from brokerage or underwriting of securities. Today, it provides
investment counsel for many individuals and institutions, including insurance
companies, colleges, industrial corporations, and financial and banking
organizations. In addition, it manages Montgomery Street Income Securities,
Inc., Scudder California Tax Free Trust, Scudder Cash Investment Trust, Scudder
Equity Trust, Scudder Fund, Inc., Scudder Funds Trust, Scudder Global Fund,
Inc., Scudder GNMA Fund, Scudder Portfolio Trust, Scudder Institutional Fund,
Inc., Scudder International Fund, Inc., Scudder Investment Trust, Scudder
Municipal Trust, Scudder Mutual Funds, Inc., Scudder New Asia Fund, Inc.,
Scudder New Europe Fund, Inc., Scudder Pathway Series, Scudder Securities Trust,
Scudder State Tax Free Trust, Scudder Tax Free Money Fund, Scudder Tax Free
Trust, Scudder U.S. Treasury Money Fund, Scudder Variable Life Investment Fund,
Scudder World Income Opportunities Fund, Inc., The Argentina Fund, Inc., The
Brazil Fund, Inc., The Korea Fund, Inc., The Japan Fund, Inc., The Latin America
Dollar Income Fund, Inc. and Scudder Spain and Portugal Fund, Inc. Some of the
foregoing companies or trusts have two or more series.
The Adviser also provides investment advisory services to the mutual
funds which comprise the AARP Investment Program from Scudder. The AARP
Investment Program from Scudder has assets over $13 billion and includes the
AARP Growth Trust, AARP Income Trust, AARP Tax Free Income Trust, AARP Managed
Investment Portfolios Trust and AARP Cash Investment Funds.
Pursuant to an Agreement between Scudder, Stevens & Clark, Inc. and
AMA Solutions, Inc., a subsidiary of the American Medical Association (the
"AMA"), dated May 9, 1997, Scudder has agreed, subject to applicable state
regulations, to pay AMA Solutions, Inc. royalties in an amount equal to 5% of
the management fee received by Scudder with respect to assets invested by AMA
members in Scudder funds in connection with the AMA InvestmentLinkSM Program.
Scudder will also pay AMA Solutions, Inc. a general monthly fee, currently in
the amount of $833. The AMA and AMA Solutions, Inc. are not engaged in the
business of providing investment advice and neither is registered as an
investment adviser or broker/dealer under federal securities laws. Any person
who participates in the AMA InvestmentLinkSM Program will be a customer of
Scudder (or of a subsidiary thereof) and not the AMA or AMA Solutions, Inc. AMA
InvestmentLinkSM is a service mark of AMA Solutions, Inc.
The Adviser maintains a large research department, which conducts
continuous studies of the factors that affect the position of various
industries, companies and individual securities. The Adviser receives published
reports and statistical compilations from issuers and other sources, as well as
analyses from brokers and dealers who may execute portfolio transactions for the
Adviser's clients. However, the Adviser regards this information and material as
an adjunct to its own research activities. In selecting the securities in which
the Fund may invest, the conclusions and investment decisions of the Adviser
with respect to the Fund are based primarily on the analyses of its own research
department.
Certain investments may be appropriate for both SCIT and Treasury Fund
as well as other clients advised by the Adviser. Investment decisions for the
Funds and other clients are made with a view to achieving their respective
investment objectives and after consideration of such factors as their current
holdings, availability of cash for investment and the size of their investments
generally. Frequently, a particular security may be bought or sold for only one
client or in different amounts and at different times for more than one but less
than all clients. Likewise, a particular security may be bought for one or more
clients when one or more other clients are selling the security. In addition,
purchases or sales of the same security may be made for two or more clients on
the same day. In such event, such transactions will be allocated among the
clients in a manner believed by the Adviser to be equitable to each. In some
cases, this procedure could have an adverse effect on the price or amount of the
securities purchased or sold by the Funds. Purchase and sales orders for each
Fund may be combined with those of other clients of the Adviser in the interest
of achieving the most favorable net results to the Funds.
Scudder has entered into an agreement with Zurich Insurance Company
("Zurich"), an international insurance and financial services organization,
pursuant to which Scudder will form a new global investment organization by
combining with Zurich's subsidiary, Zurich Kemper Investments, Inc., and change
its name to Scudder Kemper Investments, Inc. After the transaction is completed,
Zurich will own approximately 70% of the new organization with the balance owned
by the new organization's officers and employees.
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Consummation of the transaction is subject to a number of
contingencies, including regulatory approvals. The transaction is expected to
close in the fourth quarter of 1997. Upon consummation of the transaction the
investment management agreement with Scudder, Stevens & Clark, Inc., will
terminate. The Trustees have approved an investment management agreement with
Scudder Kemper Investments, Inc. which is substantially identical to the current
investment management agreement to become effective upon the termination of the
current investment management agreement.
Scudder Cash Investment Trust
The Investment Advisory Agreement between SCIT and the Adviser (the
"Agreement"), dated November 12, 1985, will remain in effect until September 30,
1998 and will continue in effect from year to year thereafter only if its
continuance is approved annually by the vote of a majority of those Trustees who
are not parties to such Agreement or "interested persons" of the Adviser or SCIT
cast in person at a meeting called for the purpose of voting on such approval
and either by vote of a majority of the Trustees or a majority of the
outstanding voting securities of SCIT. The Agreement was last approved by the
Trustees (including a majority of the Trustees who are not such "interested
persons") on August 12, 1997 and by the shareholders of the Fund on November 3,
1987. The Agreement may be terminated at any time without payment of penalty by
either party on sixty days' written notice, and automatically terminates in the
event of its assignment.
Under the Agreement, the Adviser regularly provides SCIT investment
management of the assets of the Fund in accordance with the investment
objectives, policies and restrictions set forth, and determines what securities
shall be purchased for SCIT, what securities shall be held or sold by SCIT, and
what portion of SCIT's assets shall be held uninvested, subject always to the
provisions of SCIT's Declaration of Trust and By-Laws, and of the 1940 Act and
to SCIT's investment objectives, policies and restrictions, and subject further
to such policies and instructions as the Trustees of SCIT may from time to time
establish. The Adviser also advises and assists the officers of SCIT in taking
such steps as are necessary or appropriate to carry out the decisions of its
Trustees and the appropriate committees of the Trustees regarding the conduct of
the business of SCIT.
The Adviser furnishes the Trust's Board of Trustees periodic reports on
the investment performance of the Fund and on the performance of its obligations
regarding this agreement as well as additional reports and information as the
Trust's officers or Board of Trustees shall reasonably request.
The Adviser furnishes for the use of the Fund office space and
facilities in the United States as the Fund may require for its reasonable
needs, and also renders significant administrative services (not otherwise
provided by third parties) necessary for the Fund's operations as an open-end
investment company including, but not limited to, preparing reports and notices
to the Trustees and shareholders; supervising, negotiating contractual
arrangements with, to the extent appropriate, and monitoring various third-party
service providers to the Fund (such as the Fund's transfer agent, pricing
agents, custodian, accountants and others); preparing and making filings with
the SEC and other regulatory agencies; assisting in the preparation and filing
of the Fund's federal, state and local tax returns; preparing and filing the
Fund's federal excise tax returns; assisting with investor and public relations
matters; monitoring the valuation of securities and the calculation of net asset
value; monitoring the registration of shares of the Fund under applicable
federal and state securities laws; maintaining or causing to be maintained for
the Fund all books, record and reports to the extent not otherwise maintained by
a third party; assisting in establishing accounting policies of the Fund;
assisting in the resolution of accounting and legal issues; establishing and
monitoring the Fund's operating budget; processing the payment of the Fund's
bills; assisting the Fund in, and otherwise arranging for, the payment of
distributions and dividends, and otherwise assisting the Fund in the conduct of
its business, subject to the direction and control of the Trustees.
The Agreement also provides that the Fund is granted a nonexclusive
right and sublicense to use the "Scudder" name and mark as part of the Trust's
name, and the Scudder Marks in connection with the Corporation's investment
product and services.
The Adviser pays the compensation and expenses of all affiliated
Trustees and executive employees of SCIT and makes available, without expense to
the Fund, the services of such Trustees, officers and employees as may duly be
elected Trustees, officers or employees of the Fund, subject to their individual
consent to serve and to any limitations imposed by law, and pays the Fund's
office rent and provides investment advisory, research and statistical
facilities and all clerical services relating to research, statistical and
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investment work. For these services SCIT pays a monthly fee at an annual rate of
0.50 of 1% of the first $250 million of the Fund's average daily net assets,
0.45 of 1% on the next $250 million of such net assets, 0.40 of 1% of the next
$500 million of such net assets and 0.35 of 1% on such net assets in excess of
$1 billion.
Until October 31, 1998, the Adviser and certain of its subsidiaries
have agreed to waive all or portions of their fees payable by the Fund to the
extent necessary so that the total annualized expenses of the Fund do not exceed
0.85% of average daily net assets of the Fund.
For the fiscal years ended June 30, 1995, 1996 and 1997 the investment
advisory fee was $6,372,462, $5,898,959 and $5,944,464, respectively.
The Agreement also provides that the Adviser shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the Fund in
connection with matters to which the Agreement relates, provided that nothing in
the agreement shall be deemed to protect or purport to protect against any
liability to the Trust, the Fund or its shareholders to which it would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of the duties, or by reason of reckless disregard of the
obligations and duties hereunder.
Any person, even though also employed by Scudder, who may be or become
an employee of and paid by the Fund shall be deemed, when acting within the
scope of his or her employment by the Fund, to be acting in such employment
solely for the Fund and not as an agent of Scudder.
Scudder U.S. Treasury Money Fund
The Investment Management Agreement between Treasury Fund and the
Adviser (the "Agreement") was last approved by the Trustees on August 12, 1997
and by the shareholders on November 13, 1990. The Agreement is dated November
14, 1990 and will continue in effect until September 30, 1998 and from year to
year thereafter only if its continuance is approved annually by the vote of a
majority of those Trustees who are not parties to such Agreement or interested
persons of the Adviser or the Fund, cast in person at a meeting called for the
purpose of voting on such approval, and either by vote of a majority of the
Trustees or of the outstanding voting securities of the Fund. The Agreement may
be terminated at any time without payment of penalty by either party on sixty
days' written notice, and automatically terminates in the event of its
assignment.
Under the Agreement, the Adviser regularly provides Treasury Fund with
continuing investment management for the Fund's portfolio consistent with the
Fund's investment objectives, policies and restrictions and determines what
securities shall be purchased for the portfolio of the Fund, what portfolio
securities shall be held or sold by the Fund, and what portion of the Fund's
assets shall be held uninvested, subject always to the provisions of the Fund's
Declaration of Trust and By-Laws, of the 1940 Act and the Code and to the Fund's
investment objectives, policies and restrictions, and subject, further, to such
policies and instructions as the Trustees of the Fund may from time to time
establish. The Adviser also advises and assists the officers of the Fund in
taking such steps as are necessary or appropriate to carry out the decisions of
its Trustees and the appropriate committees of the Trustees regarding the
conduct of the business of the Fund.
Under the Agreement, the Adviser also renders significant
administrative services (not otherwise provided by third parties) necessary for
Treasury Fund's operations as an open-end investment company including, but not
limited to, preparing reports and notices to the Trustees and shareholders;
supervising, negotiating contractual arrangements with, and monitoring various
third-party service providers to the Fund (such as the Fund's transfer agent,
pricing agents, custodian, accountants and others); preparing and making filings
with the SEC and other regulatory agencies; assisting in the preparation and
filing the Fund's federal, state and local tax returns; preparing and filing the
Fund's federal excise tax returns; assisting with investor and public relations
matters; monitoring the valuation of securities and the calculation of net asset
value; monitoring the registration of shares of the Fund under applicable
federal and state securities laws; maintaining the Fund's books and records to
the extent not otherwise maintained by a third party; assisting in establishing
accounting policies of the Fund; assisting in the resolution of accounting and
legal issues; establishing and monitoring the Fund's operating budget;
processing the payment of the Fund's bills; assisting the Fund in, and otherwise
arranging for, the payment of distributions and dividends and otherwise
assisting the Fund in the conduct of its business, subject to the direction and
control of the Trustees.
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The Adviser pays the compensation and expenses of all Trustees,
officers and executive employees of Treasury Fund (except those of attending
Board and committee meetings outside New York, New York or Boston,
Massachusetts) who are affiliated persons of the Adviser and makes available,
without expense to Treasury Fund, the services of the directors, officers and
employees of the Adviser as may duly be elected officers of Treasury Fund,
subject to their individual consent to serve and to any limitations imposed by
law and provides the Fund's office space and facilities.
For these services, Treasury Fund pays the Adviser a fee equal to 0.50
of 1% of the Fund's average daily net assets. The fee is payable monthly,
provided the Fund will make such interim payments as may be requested by the
Adviser not to exceed 75% of the amount of the fee then accrued on the books of
the Fund and unpaid. For the fiscal years ended June 30, 1995, 1996 and 1997 the
investment advisory fee imposed was $939,421, $890,672 and $893,667,
respectively and the fees not imposed amounted to $967,383, $1,077,479 and
$1,202,181, respectively.
The Adviser has agreed until October 31, 1998 not to impose all or a
portion of its investment management fee and take other action, to the extent
necessary, to maintain the annualized expenses of Treasury Fund at not more than
0.65% of average daily net assets. The Adviser retains the ability to be repaid
by the Treasury Fund if expenses fall below the specified limit prior to the end
of the fiscal year. These expense limitation arrangements can decrease the
Treasury Fund's expenses and improve its performance.
Under the Agreement, Treasury Fund is responsible for all its other
expenses, including fees and expenses incurred in connection with membership in
investment company organizations; brokers' commissions; payments for portfolio
pricing services to a pricing agent, if any; legal, auditing and accounting
expenses; taxes and governmental fees; the fees and expenses of the Transfer
Agent; the cost of preparing share certificates or any other expenses, including
expenses of issuance, sale, redemption or repurchase of shares of beneficial
interest; the expenses of and fees for registering or qualifying securities for
sale; the fees and expenses of Trustees, officers and employees of the Fund who
are not affiliated with the Adviser; the cost of printing and distributing
reports and notices to shareholders; and the fees and disbursements of
custodians. Treasury Fund may arrange to have third parties assume all or part
of the expense of sale, underwriting and distribution of shares of the Fund.
(See "DISTRIBUTOR" for expenses paid by Scudder Investor Services, Inc.)
Treasury Fund is also responsible for expenses of shareholder meetings and
expenses incurred in connection with litigation, proceedings and claims and the
legal obligation it may have to indemnify its officers and Trustees with respect
thereto.
SCIT and Treasury Fund
The expense ratios for SCIT for the fiscal years ended June 30, 1995,
1996, and 1997 were 0.78%, 0.83% and 0.86%, respectively. The ratios of expenses
to annual investment income for SCIT for the same years were 13.89%, 14.75%, and
15.63%, respectively. The expense ratios for Treasury Fund for the fiscal years
ended June 30, 1995, 1996 and 1997 were 0.65%, 0.65% and 0.65%, respectively.
The ratios of expenses to annual investment income for the same periods were
12.36%, 11.94% and 12.65%, respectively. If reimbursement is required, it will
be made as promptly as practicable after the end of a Fund's fiscal year.
However, no fee payment will be made to the Adviser during any fiscal year which
will cause year-to-date expenses to exceed the cumulative pro rata expense
limitation at the time of such payment.
Each Agreement also provides a Fund may use any name derived from the
name "Scudder, Stevens & Clark" only as long as the Agreement or any extension,
renewal or amendment thereof remains in effect.
In reviewing the terms of the Agreements and in discussions with the
Adviser concerning the Agreements, Trustees of each Fund who are not "interested
persons" of the Fund or the Adviser are represented by independent counsel at
that Fund's expense. Dechert Price & Rhoads acts as general counsel for each
Fund.
Each Agreement provides that the Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by a Fund in
connection with matters to which the Agreements relate, except a loss resulting
from willful misfeasance, bad faith or gross negligence on the part of the
Adviser in the performance of its duties or from reckless disregard by the
Adviser of its obligations and duties under the Agreement.
36
<PAGE>
Officers and employees of the Adviser from time to time may have
transactions with various banks, including the Funds' custodian bank. It is the
Adviser's opinion that the terms and conditions of those transactions were not
influenced by existing or potential custodial or other Fund relationships.
None of the Trustees or officers of a Fund may have dealings with that
Fund as principals in the purchase or sale of securities, except as individual
subscribers to or holders of shares of the Fund.
Personal Investments by Employees of the Adviser
Employees of the Adviser are permitted to make personal securities
transactions, subject to requirements and restrictions set forth in the
Adviser's Code of Ethics. The Code of Ethics contains provisions and
requirements designed to identify and address certain conflicts of interest
between personal investment activities and the interests of investment advisory
clients such as the Funds. Among other things, the Code of Ethics, which
generally complies with standards recommended by the Investment Company
Institute's Advisory Group on Personal Investing, prohibits certain types of
transactions absent prior approval, imposes time periods during which personal
transactions may not be made in certain securities, and requires the submission
of duplicate broker confirmations and monthly reporting of securities
transactions. Additional restrictions apply to portfolio managers, traders,
research analysts and others involved in the investment advisory process.
Exceptions to these and other provisions of the Code of Ethics may be granted in
particular circumstances after review by appropriate personnel.
TRUSTEES AND OFFICERS
Scudder Cash Investment Trust
<TABLE>
<CAPTION>
Principal Occupation** Position with Underwriter,
Name, Age and Address Position with Fund and Affiliations Scudder Investor Services, Inc.
- --------------------- ------------------ ------------------------ -------------------------------
<S> <C> <C> <C>
Daniel Pierce (63)*@ President and Trustee Chairman of the Board and Vice President, Director and
Managing Director of Assistant Treasurer
Scudder, Stevens & Clark,
Inc.
Henry P. Becton, Jr. (53)# Trustee President and General --
WGBH Manager, WGBH Educational
125 Western Avenue Foundation
Allston, MA 02134
Dawn-Marie Driscoll (50) Trustee Executive Fellow, Center --
5760 Flamingo Drive for Business Ethics;
Cape Coral, FL 33904 President, Driscoll
Associates
Peter B. Freeman (65) Trustee Corporate Director and --
100 Alumni Avenue Trustee
Providence, RI 02906
George M. Lovejoy, Jr. (67)# Trustee President and Director, --
160 Federal Street Fifty Associates
Boston, MA 02110
Dr. Wesley W. Marple, Jr. (65) Trustee Professor of Business --
Northeastern University Administration,
360 Huntington Avenue Northeastern University
Boston, MA 02115
37
<PAGE>
Principal Occupation** Position with Underwriter,
Name, Age and Address Position with Fund and Affiliations Scudder Investor Services, Inc.
- --------------------- ------------------ ------------------------ -------------------------------
Jean C. Tempel (54) Trustee Managing Partner, --
Technology Equity Partners
Jerard K. Hartman (64)+ Vice President Managing Director of --
Scudder, Stevens & Clark,
Inc.
Thomas W. Joseph (58)@ Vice President Principal of Scudder, Vice President, Director,
Stevens & Clark, Inc. Treasurer & Assistant Clerk
Thomas F. McDonough (50)@ Vice President and Principal of Scudder, Clerk
Secretary Stevens & Clark, Inc.
Pamela A. McGrath (43)@ Vice President and Managing Director of --
Treasurer Scudder, Stevens & Clark,
Inc.
Edward J. O'Connell (52)+ Vice President and Principal of Scudder, Assistant Treasurer
Assistant Treasurer Stevens and Clark, Inc.
David Wines (41)++ Vice President Principal of Scudder, --
Stevens & Clark, Inc.
</TABLE>
* Messrs. Findlay and Pierce are considered by the Fund and its counsel
to be Trustees who are "interested persons" of the Adviser of the Fund,
within the meaning of the 1940 Act, as amended.
** Unless otherwise stated, all officers and Trustees have been associated
with their respective companies for more than five years, but not
necessarily in the same capacity.
# Messrs. Becton, Lee and Lovejoy are members of the Executive Committee,
which has the power to declare dividends from ordinary income and
distributions of realized capital gains to the same extent as the Board
is so empowered.
@ Address: Two International Place, Boston, Massachusetts 02110
+ Address: 345 Park Avenue, New York, New York 10154
++ Address: 333 South Hope Street, 37th floor, Los Angeles, CA 90071
As of September 30, 1997 all Trustees and officers of SCIT as a group
owned beneficially (as that term is defined under Section 13(d) of the
Securities Exchange Act of 1934) less than 1% of the shares of the Fund
outstanding on such date.
To the best of SCIT's knowledge as of September 30, 1997 no person
owned beneficially more than 5% of SCIT's outstanding shares.
The Trustees and officers of the Fund also serve in similar capacities
with other Scudder Funds.
Scudder U.S. Treasury Money Fund
<TABLE>
<CAPTION>
Principal Occupation** Position with Underwriter,
Name, Age and Address Position with Fund and Affiliations Scudder Investor Services, Inc.
- --------------------- ------------------ ------------------------ -------------------------------
<S> <C> <C> <C>
David S. Lee (63)*#@ President and Trustee Managing Director of President, Assistant Treasurer
Scudder, Stevens & Clark, and Director
Inc.
E. Michael Brown (57)*@ Trustee Managing Director of Assistant Treasurer
Scudder, Stevens & Clark,
Inc.
38
<PAGE>
Principal Occupation** Position with Underwriter,
Name, Age and Address Position with Fund and Affiliations Scudder Investor Services, Inc.
- --------------------- ------------------ ------------------------ -------------------------------
Dawn-Marie Driscoll (50)# Trustee Executive Fellow, Center --
Driscoll Associates for Business Ethics;
4909 SW 9th Place President, Driscoll
Cape Coral, FL 33914 Associates
Peter B. Freeman (65) Trustee Corporate Director and --
100 Alumni Avenue Trustee
Providence, RI 02906
George M. Lovejoy, Jr. (67)# Trustee President and Director, --
50 Congress Street, Suite 543 Fifty Associates
Boston, MA 02110
Jean C. Tempel (54) Trustee General Partner, TL --
Ten Post Office Square Ventures
Suite 1325
Boston, MA 02109-4603
Jerard K. Hartman (64)+ Vice President Managing Director of --
Scudder, Stevens & Clark,
Inc.
Thomas W. Joseph (58)@ Vice President Principal of Scudder, Vice President, Director,
Stevens & Clark, Inc. Treasurer & Assistant Clerk
David B. Wines (41)++ Vice President Principal of Scudder, --
Stevens & Clark, Inc.
Thomas F. McDonough (50)@ Vice President and Principal of Scudder, Clerk
Secretary Stevens & Clark, Inc.
Pamela A. McGrath (44)@ Vice President and Managing Director of --
Treasurer Scudder, Stevens & Clark,
Inc.
Edward J. O'Connell (52)+ Vice President and Principal of Scudder, Assistant Treasurer
Assistant Treasurer Stevens & Clark, Inc.
</TABLE>
* Messrs. Brown and Lee are considered by the Fund and its counsel to be
Trustees who are "interested persons" of the Adviser of the Fund,
within the meaning of the 1940 Act.
** Unless otherwise stated, all officers and Trustees have been associated
with their respective companies for more than five years but not
necessarily in the same capacity.
# Messrs. Lee and Lovejoy and Ms. Driscoll are members of the Executive
Committee, which has the power to declare dividends from ordinary
income and distributions of realized capital gains to the same extent
as the Board is so empowered.
@ Address: Two International Place, Boston, Massachusetts 02110
+ Address: 345 Park Avenue, New York, New York 10154
++ Address: 333 South Hope Street, 37th floor, Los Angeles, CA 90071
To the best of the Trust's knowledge, as of September 30, 1997, all
Trustees and officers of the Treasury Fund as a group owned beneficially (as
that term is defined under Section 13(d) of the Securities Exchange Act of 1934)
less than 1% of the shares of the Fund outstanding on such date.
39
<PAGE>
To the best of the Trust's knowledge, as of September 30, 1997, no
person owned beneficially more than 5% of the Fund's outstanding shares.
The Trustees and officers of Treasury Fund also serve in similar
capacities with other Scudder Funds.
REMUNERATION
Responsibilities of the Board--Board and Committee Meetings
Each Fund's Board of Trustees is responsible for the general oversight
of each Fund's business. A majority of each Board's members are not affiliated
with the Adviser. These "Independent Trustees" have primary responsibility for
assuring that each Fund is managed in the best interests of its shareholders.
The Board of Trustees for each Fund meets at least quarterly to review
the investment performance of each Fund and other operational matters, including
policies and procedures designated to assure compliance with various regulatory
requirements. At least annually, the Independent Trustees review the fees paid
to the Adviser and its affiliates for investment advisory services and other
administrative and shareholder services. In this regard, they evaluate, among
other things, each Fund's investment performance, the quality and efficiency of
the various other services provided, costs incurred by the Adviser and its
affiliates, and comparative information regarding fees and expenses of
competitive funds. They are assisted in this process by each Fund's independent
public accountants and by independent legal counsel selected by the Independent
Trustees.
All of the Independent Trustees serve on the Committee on Independent
Trustees, which nominates Independent Trustees and considers other related
matters, and the Audit Committee, which selects each Fund's independent public
accountants and reviews accounting policies and controls. In addition,
Independent Trustees from time to time have established and served on task
forces and subcommittees focusing on particular matters such as investment,
accounting and shareholder service issues.
The Independent Trustees for SCIT met nineteen times during 1996,
including Board and Committee meetings and meetings to review the Fund's
contractual arrangements as described above.
The Independent Trustees for Treasury Fund met nineteen times during
1996, including Board and Committee meetings and meetings to review the Fund's
contractual arrangements as described above.
Compensation of Officers and Trustees
The Independent Trustees receive the following compensation from each
Fund: as of July 1, 1997 a revised annual trustee's fee of $4,800; a revised fee
of $200 for attendance at each Board meeting, audit committee meeting, or other
meeting held for the purposes of considering arrangements between each Fund and
the Adviser or any affiliate of the Adviser; $100 for any other committee
meeting (although in some cases the Independent Trustees have waived committee
meeting fees); and reimbursement of expenses incurred for travel to and from
Board Meetings. No additional compensation is paid to any Independent Trustee
for travel time to meetings, attendance at trustees' educational seminars or
conferences, service on industry or association committees, participation as
speakers at trustees' conferences, service on special trustee task forces or
subcommittees or service as lead or liaison trustee. Independent Trustees do not
receive any employee benefits such as pension, retirement or health insurance.
For the year ended June 30, 1997, such fees aggregated $38,301 for SCIT and
$31,125 for Treasury Fund.
The Independent Trustees also serve in the same capacity for other
funds managed by the Adviser. These funds differ broadly in type an complexity
and in some cases have substantially different Trustee fee schedules. The
following table shows the aggregate compensation received by each Independent
Trustee during 1996 from each Trust and from all of Scudder funds as a group.
40
<PAGE>
<TABLE>
<CAPTION>
Scudder Cash Scudder U.S. Treasury
Name Investment Trust Money Fund All Scudder Funds
---- ---------------- ---------- -----------------
<S> <C> <C> <C>
Henry P. Becton, Jr.,** $8,900 -- $91,012 (16 funds)
Trustee
Dawn-Marie Driscoll, $9,500 $9,500 $103,000 (16 funds)
Trustee
Peter B. Freeman,* $9,500 -- $131,734 (33 funds)
Trustee
George M. Lovejoy, Jr., $9,500 $9,500 $124,512 (13 funds)
Trustee
Dr. Wesley W. Marple, Jr.#** -- -- $106,812 (16 funds)
Jean C. Tempel,# -- $9,200 $102,895 (16 funds)
Trustee
</TABLE>
* Mr. Freeman became a Trustee of Treasury Fund on July 1, 1997.
# Ms. Tempel and Dr. Marple became Trustees of the Investment Trust on
October 24, 1997.
** Mr. Becton and Dr. Marple become Trustees of the Treasury Fund on
October 24, 1997.
Members of the Board of Trustees who are employees of Scudder or its
affiliates receive no direct compensation from the Trust, although they are
compensated as employees of Scudder, or its affiliates, as a result of which
they may be deemed to participate in fees paid by each Fund.
DISTRIBUTOR
Both Funds have an underwriting agreement with Scudder Investor
Services, Inc. (the "Distributor"), a Massachusetts corporation, which is a
wholly-owned subsidiary of the Adviser, a Delaware corporation.
As agent, the Distributor currently offers shares of both Funds on a
continual basis to investors in all states in which the Funds may from time to
time be registered or where permitted by applicable law. The underwriting
agreement provides that the Distributor accept orders for shares at net asset
value as no sales commission or load is charged the investor. The Distributor
has made no firm commitment to acquire shares of either Fund.
Scudder Cash Investment Trust
SCIT's underwriting agreement dated July 20, 1976 will remain in effect
until September 30, 1998 and from year to year only if its continuance is
approved annually by a majority of the Board of Trustees who are not parties to
such agreement or "interested persons" of any such party and either by vote of a
majority of the Trustees or a majority of the outstanding voting securities of
the Fund. SCIT has agreed to pay all expenses in connection with registration of
its shares with the SEC and auditing and filing fees in connection with
registration of its shares under the various state "blue-sky" laws and to assume
the cost of preparation of prospectuses and other expenses. The Distributor pays
all expenses of printing prospectuses used in offering shares (other than
prospectuses used by SCIT for transmission to shareholders, for which the Fund
pays printing expenses), expenses, other than filing fees, of qualification of
SCIT's shares in various states, including registering SCIT as a dealer, and all
other expenses in connection with the offer and sale of shares which are not
specifically allocated to the Funds. The underwriting agreement was last
approved by the Trustees on August 12, 1997.
Scudder U.S. Treasury Money Fund
Treasury Fund's underwriting agreement dated September 10, 1985 will
remain in effect until September 30, 1998 and from year to year thereafter only
if its continuance is approved annually by a majority of the members of the
41
<PAGE>
Board of Trustees who are not parties to such agreement or "interested persons"
of any such party and either by vote of a majority of the Board of Trustees or a
majority of the outstanding voting securities of Treasury Fund. The underwriting
agreement was last approved by the Trustees on August 12, 1997.
Under the principal underwriting agreement, Treasury Fund is
responsible for: the payment of all fees and expenses in connection with the
preparation and filing with the SEC of its registration statement and prospectus
and any amendments and supplements thereto; the registration and qualification
of shares for sale in the various states, including registering Treasury Fund as
a broker or dealer; the fees and expenses of preparing, printing and mailing
prospectuses, notices, proxy statements, reports or other communications
(including newsletters) to shareholders of Treasury Fund; the cost of printing
and mailing confirmations of purchases of shares and the prospectuses
accompanying such confirmations; any issuance taxes or any initial transfer
taxes; a portion of shareholder toll-free telephone charges and expenses of
customer service representatives; the cost of wiring funds for share purchases
and redemptions (unless paid by the shareholder who initiates the transaction);
the cost of printing and postage of business reply envelopes; and a portion of
the cost of computer terminals used by both Treasury Fund and the Distributor.
Although Treasury Fund does not currently have a 12b-1 Plan and shareholder
approval would be required in order to adopt one, Treasury Fund will also pay
those fees and expenses permitted to be paid or assumed by Treasury Fund
pursuant to a 12b-1 Plan, if any, adopted by Treasury Fund, notwithstanding any
other provision to the contrary in the underwriting agreement and Treasury Fund
or a third party will pay those fees and expenses not specifically allocated to
the Distributor in the underwriting agreement.
The Distributor will pay for printing and distributing prospectuses or
reports prepared for its use in connection with the offering of the shares to
the public and preparing, printing and mailing any other literature or
advertising in connection with the offering of shares of Treasury Fund to the
public. The Distributor will pay all fees and expenses in connection with its
qualification and registration as a broker or dealer under federal and state
laws, a portion of the cost of toll-free telephone service and expenses of
customer service representatives, a portion of the cost of computer terminals,
and of any activity which is primarily intended to result in the sale of shares
issued by the Fund, unless a 12b-1 Plan is in effect which provides that the
Fund shall bear some or all of such expenses.
TAXES
(See "Transaction information--Tax identification
number" and "Distribution and performance information--Dividends
and capital gains distributions" in each Fund's prospectus.)
Each Fund has elected to be treated as a regulated investment company
under Subchapter M of the Code, or a predecessor statute and has qualified as
such since its inception. Each Fund intends to continue to qualify for such
treatment. Such qualification does not involve governmental supervision or
management of investment practices or policy.
A regulated investment company qualifying under Subchapter M of the
Code is required to distribute to its shareholders at least 90% of its
investment company taxable income (including net short-term capital gain) and
generally is not subject to federal income tax to the extent that it distributes
annually its investment company taxable income and net realized capital gains in
the manner required under the Code. Each Fund intends to distribute, at least
annually, all of its investment company taxable income and net realized capital
gains.
The Funds are subject to a 4% nondeductible excise tax on amounts
required to be but not distributed under a prescribed formula. The formula
requires payment to shareholders during a calendar year of distributions
representing at least 98% of a Fund's ordinary income for the calendar year, at
least 98% of the excess of its capital gains over capital losses (adjusted for
certain ordinary losses) realized during the one-year period ending October 31
during such year (although investment companies with taxable years ending on
November 30 or December 31 may make an irrevocable election to measure the
required capital gain distribution using their actual taxable year), and all
ordinary income and capital gains for prior years that were not previously
distributed.
Investment company taxable income generally includes interest and net
short-term capital gains in excess of net long-term capital losses, less
expenses. Net realized capital gains for a fiscal year are computed by taking
into account any capital loss carryforward of the Funds.
42
<PAGE>
Distributions of investment company taxable income are taxable to
shareholders as ordinary income.
Since no portion of the Funds' income is comprised of dividends from
domestic corporations, none of the income distributions of the Funds is eligible
for the deduction for dividends received by corporations.
Properly designated distributions of the excess of net long-term
capital gain over net short-term capital loss that are designated as capital
gain dividends are taxable to shareholders as long-term capital gain, regardless
of the length of time the shares of the Fund involved have been held by such
shareholders. Such distributions are not eligible for the dividends-received
deduction. Any loss realized upon the redemption of shares held at the time of
redemption for six months or less will be treated as a long-term capital loss to
the extent of any amounts treated as distributions of long-term capital gains
during such six-month period.
Distributions of investment company taxable income and net realized
capital gains will be taxable as described above, whether received in shares or
in cash. Shareholders electing to receive distributions in the form of
additional shares will have a cost basis for federal income tax purposes in each
share so received equal to the net asset value of a share on the reinvestment
date.
All distributions of investment company taxable income and net realized
capital gain, whether received in shares or in cash, must be reported by each
shareholder on his or her federal income tax return. Dividends declared in
October, November or December with a record date in such a month are deemed to
have been received by shareholders on December 31 if paid in January of the
following year. Redemptions of shares, including exchanges for shares of another
Scudder fund, may result in tax consequences (gain or loss) to the shareholder
and are also subject to these reporting requirements.
A portion of the difference between the issue price of zero coupon
securities and their face value ("original issue discount") is considered to be
income to a Fund each year, even though a Fund will not receive cash interest
payments from these securities. This original issue discount imputed income will
comprise a part of the investment company taxable income of the Funds which must
be distributed to shareholders in order to maintain the qualification of the
Funds as regulated investment companies and to avoid federal income tax at the
level of the Funds. In the event that a Fund acquires a debt instrument at a
market discount, it is possible that a portion of any gain recognized on the
disposition of such instrument may be treated as ordinary income.
A qualifying individual may make a deductible IRA contribution of up to
$2,000 or, if less, the amount of the individual's earned income (up to $2,000
per individual for married couples if only one spouse has earned income) for any
taxable year only if (i) neither the individual nor a spouse (unless filing
separate returns) is an active participant in an employer's retirement plan, or
(ii) the individual (and a spouse, if applicable) has an adjusted gross income
below a certain level ($40,050 for married individuals filing a joint return,
with a phase-out of the deduction for adjusted gross income between $40,050 and
$50,000; $25,050 for a single individual, with a phase-out for adjusted gross
income between $25,050 and $35,000). However, an individual not permitted to
make a deductible contribution to an IRA for any such taxable year may
nonetheless make nondeductible contributions up to $2,000 to an IRA for that
year. There are special rules for determining how withdrawals are to be taxed if
an IRA contains both deductible and nondeductible amounts. In general, a
proportionate amount of each withdrawal will be deemed to be made from
nondeductible contributions; amounts treated as a return of nondeductible
contributions will not be taxable. Also, annual contributions may be made to a
spousal IRA even if the spouse has earnings in a given year if the spouse elects
to be treated as having no earnings (for IRA contribution purposes) for the
year.
The Funds will be required to report to the IRS all distributions of
taxable income and capital gains as well as gross proceeds from the redemption
or exchange of Fund shares, except in the case of certain exempt shareholders.
Under the backup withholding provisions of Section 3406 of the Code,
distributions of taxable income and capital gains (and proceeds from the
redemption or exchange of the shares of a regulated investment company if the
funds fail to maintain a constant $1.00 NAV per share) may be subject to
withholding of federal income tax at the rate of 31% in the case of non-exempt
shareholders who fail to furnish the investment company with their taxpayer
identification numbers and with required certifications regarding their status
under the federal income tax law. Withholding may also be required if a Fund is
notified by the IRS or a broker that the taxpayer identification number
furnished by the shareholder is incorrect or that the shareholder has previously
failed to report interest or dividend income. If the withholding provisions are
43
<PAGE>
applicable, any such distributions and proceeds, whether taken in cash or
reinvested in additional shares, will be reduced by the amounts required to be
withheld.
Shareholders of the Funds may be subject to state and local taxes on
distributions received from the Funds and on redemptions of the Funds' shares.
Under the laws of certain states, distributions of investment company taxable
income are taxable to shareholders as dividends, even though a portion of such
distributions may be derived from interest on U.S. Government obligations which,
if received directly by such shareholders, would be exempt from state income
tax.
Each distribution is accompanied by a brief explanation of the form and
character of the distribution. In January of each year, the Funds issue to each
shareholder a statement of the federal income tax status of all distributions.
Each Fund is organized as a Massachusetts business trust and, provided
that it qualifies as a regulated investment company for federal income tax
purposes, is not liable for any income or franchise tax in the Commonwealth of
Massachusetts.
The foregoing discussion of U.S. federal income tax law relates solely
to the application of that law to U.S. persons, i.e., U.S. citizens and
residents and U.S. corporations, partnerships, trusts and estates. Each
shareholder who is not a U.S. person should consider the U.S. and foreign tax
consequences of ownership of shares of a Fund, including the possibility that
such a shareholder may be subject to a U.S. withholding tax at a rate of 30% (or
at a lower rate under an applicable income tax treaty) on amounts constituting
ordinary income received by the shareholder, where such amounts are treated as
income from U.S. sources under the Code.
Shareholders should consult their tax advisers about the application of
the provisions of tax law described in this combined Statement of Additional
Information in light of their particular tax situations.
PORTFOLIO TRANSACTIONS
To the maximum extent feasible, the Adviser places orders for portfolio
transactions for the Funds through the Distributor, which in turn places orders
on behalf of the Funds with other brokers and dealers. The Distributor will
receive no commissions, fees or other remuneration for this service. Allocation
of brokerage is supervised by the Adviser.
A Fund's purchases and sales of portfolio securities are generally
placed by the Adviser with the issuer or a primary market maker for these
securities on a net basis, without any brokerage commission being paid by the
Funds. Trading does, however, involve transaction costs. Transactions with
dealers serving as primary market makers reflect the spread between the bid and
asked prices. Transaction costs may also include fees paid to third parties for
information as to potential purchasers or sellers of securities but only if a
Fund would obtain the most favorable net results, including such fee, on a
particular transaction. Purchases of underwritten issues may be made which will
include an underwriting fee paid to the underwriter. To date, no brokerage
commissions have been paid.
The primary objective of the Adviser in placing orders for the purchase
and sale of securities for the Funds' portfolios is to obtain the most favorable
net results taking into account such factors as price, commission (negotiable in
the case of national securities exchange transactions), if any, size of order,
difficulty of execution and skill required of the executing broker/dealer. The
Adviser seeks to evaluate the overall reasonableness of brokerage commissions
paid (to the extent applicable) through the familiarity of the Distributor with
commissions charged on comparable transactions, as well as by comparing
commissions paid by the Funds to reported commissions paid by others. The
Adviser reviews on a routine basis commission rates, execution and settlement
services performed, making internal and external comparisons.
When it can be done consistently with the policy of obtaining the most
favorable net results, it is the Adviser's practice to place such orders with
brokers and dealers, who supply research, market and statistical information to
the Adviser. The term "research, market and statistical information" includes
advice as to the value of securities, the advisability of investing in,
purchasing or selling securities; and the availability of securities or
purchasers or sellers of securities; and furnishing analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and the performance of accounts. The Adviser is authorized
when placing portfolio transactions for the Funds to pay a brokerage commission
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(to the extent applicable) in excess of that which another broker might have
charged for effecting the same transaction solely on account of the receipt of
research, market or statistical information. The Adviser does not place orders
with brokers or dealers on the basis that a broker or dealer has or has not sold
shares of the Funds. In effecting transactions in over-the-counter securities,
orders are placed with the principal market-makers for the security being traded
unless, after exercising care, it appears that more favorable results are
available otherwise.
Although certain research, market and statistical information from
brokers and dealers can be useful to the Funds and to the Adviser, it is the
opinion of the management of the Funds that such information is only
supplementary to the Adviser's own research effort, since the information must
still be analyzed, weighed, and reviewed by the Adviser's staff. Such
information may be useful to the Adviser in providing services to clients other
than the Funds, and not all such information is used by the Adviser in
connection with the Funds. Conversely, such information provided to the Adviser
by brokers and dealers through whom other clients of the Adviser effect
securities transactions may be useful to the Adviser in providing services to
the Funds.
The Trustees of each Fund review from time to time whether the
recapture for the benefit of each Fund of some portion of the brokerage
commissions or similar fees paid by each Fund on portfolio transactions is
legally permissible and advisable. To date, no such recapture has been effected.
NET ASSET VALUE
The net asset value per share of each Fund is computed twice daily as
of twelve o'clock noon and the close of regular trading on the Exchange,
normally 4 p.m. eastern time, on each day when the Exchange is open for trading.
The Exchange is normally closed on the following national holidays: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving, and Christmas. Net asset value is determined by dividing the total
assets of a Fund, less all of its liabilities, by the total number of shares of
that Fund outstanding. The Funds use the penny-rounding method of security
valuation as permitted under Rule 2a-7 under the 1940 Act. Under this method,
portfolio securities for which market quotations are readily available and which
have remaining maturities of more than 60 days from the date of valuation are
valued at market. Short-term securities purchased with remaining maturities of
60 days or less shall be valued by the amortized cost method; if acquired with
remaining maturities of 61 days or more, the cost thereof for purposes of
valuation is deemed to be the value on the 61st day prior to maturity. Other
securities are appraised at fair value as determined in good faith by or on
behalf of the Trustees of each Fund. For example, securities with remaining
maturities of more than 60 days for which market quotations are not readily
available are valued on the basis of market quotations for securities of
comparable maturity, quality and type. Determinations of net asset value per
share for each Fund made other than as of the close of the Exchange may employ
adjustments for changes in interest rates and other market factors.
ADDITIONAL INFORMATION
Experts
The financial highlights of each Fund included in each Fund's
prospectus and the Financial Statements incorporated by reference in this
Statement of Additional Information have been so included or incorporated by
reference in reliance on the report of Coopers & Lybrand L.L.P., One Post Office
Square, Boston, Massachusetts 02109, independent accountants, and given on the
authority of that firm as experts in accounting and auditing.
Shareholder Indemnification
The Funds are organizations of the type commonly known as a
"Massachusetts business trust." Under Massachusetts law, shareholders of such a
trust may, under certain circumstances, be held personally liable as partners
for the obligations of that trust. The Declarations of Trust of each Fund
contain an express disclaimer of shareholder liability in connection with the
Funds' property or the acts, obligations or affairs of the Funds. The
Declarations of Trust also provide for indemnification out of the Funds'
property of any shareholder held personally liable for the claims and
liabilities to which a shareholder may become subject by reason of being or
having been a shareholder. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is limited to circumstances in which a
Fund itself would be unable to meet its obligations.
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Other Information
Both Funds have a fiscal year ending on June 30.
Portfolio securities of each Fund are held separately, pursuant to
separate custodian agreements, by State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02101 as custodian.
The CUSIP number of Scudder Cash Investment Trust is 811118-10-8.
The CUSIP number of Scudder U.S. Treasury Money Fund is 81123P-10-6.
"Scudder Cash Investment Trust" is the designation of the Trustees for
the time being under a Declaration of Trust dated December 12, 1975, and the
name "Scudder U.S. Treasury Money Fund" is the designation of the Trustees for
the time being under a Declaration of Trust dated April 4, 1980, each as amended
from time to time, and all persons dealing with a Fund must look solely to the
property of that Fund for the enforcement of any claims against that Fund as
neither the Trustees, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of a Fund. Upon the initial
purchase of shares, the shareholder agrees to be bound by a Fund's Declaration
of Trust, as amended from time to time. No series is liable for the obligations
of any other series. The Declaration of Trust of each Fund is on file at the
Massachusetts Secretary of State's Office in Boston, Massachusetts.
Scudder Fund Accounting Corporation (SFAC), Two International Place,
Boston, Massachusetts, 02110-4103, a subsidiary of the Adviser, computes the
Funds' net asset value. Each Fund pays SFAC an annual fee equal to 0.02% of the
first $150 million of average daily net assets, 0.006% of such assets in excess
of $150 million, 0.0035% of such assets in excess of $1 billion, plus holding
and transaction charges for this service. For the fiscal years ended June 30,
1997, 1996 and 1995, SFAC charged SCIT aggregate fees of $105,874, of which
$8,818 was unpaid on June 30, 1997, $104,207 and $99,328. For the fiscal years
ended June 30, 1997, 1996 and 1995, SFAC charged Treasury Fund aggregate fees of
$ 50,134, $ 49,647 and $45,175.
Scudder Service Corporation ("Service Corporation"), P.O. Box 2291,
Boston, Massachusetts 02107-2291, a subsidiary of the Adviser, is the transfer
and dividend disbursing agent for both funds. Service Corporation also serves as
shareholder service agent for the Funds and provides subaccounting and
recordkeeping services for shareholder accounts in certain retirement and
employee benefit plans. The Funds each pay Service Corporation an annual fee of
$31.50 for each regular account and $34.50 for each retirement account
maintained for a participant. For the fiscal years ended June 30, 1997, 1996 and
1995, Service Corporation charged SCIT aggregate fees of $2,907,025, of which
$225,977 was unpaid on June 30, 1997, $2,884,988, and $4,218,266. For the fiscal
years ended June 30, 1997, 1996 and 1995, Service Corporation charged Treasury
Fund aggregate fees of $710,792, $682,565 and $988,611.
Scudder Trust Company, Two International Place, Boston, MA 02110-4103,
an affiliate of the Adviser provides services for certain retirement plan
accounts. The Funds each pay Scudder Trust Company an annual fee of $34.50 for
each account maintained for a participant. For the fiscal years ended June 30,
1997 and 1996, Scudder Trust Company's fees amounted to $1,699,834 of which
$155,350 was unpaid June 30, 1997 and $1,431,726 for SCIT and $525,821 and
$447,05 for Treasury Fund.
This Statement of Additional Information contains the information of
both Scudder Cash Investment Trust and Scudder U.S. Treasury Money Fund. Each
Fund, through its individual prospectus, offers only its own shares, yet it is
possible that one Fund might become liable for a misstatement regarding the
other Fund. The Trustees of each Fund have considered this, and have approved
the use of this Statement of Additional Information.
Each Fund's prospectus and this combined Statement of Additional
Information omit certain information contained in the Registration Statements
which the Funds have filed with the SEC under the Securities Act of 1933 and
reference is hereby made to the Registration Statements for further information
with respect to the Funds and the securities offered hereby. These Registration
Statements are available for inspection by the public at the offices of the SEC
in Washington, D.C.
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FINANCIAL STATEMENTS
Scudder Cash Investment Trust
The financial statements, including the investment portfolio, of
Scudder Cash Investment Trust, together with the Report of Independent
Accountants, Financial Highlights and notes to financial statements are
incorporated by reference and attached hereto on pages 6 through 17, inclusive,
in the Annual Report to the Shareholders of the Fund dated June 30, 1997, and
are hereby deemed to be a part of this combined Statement of Additional
Information.
Scudder U.S. Treasury Money Fund
The financial statements, including the investment portfolio, of
Scudder U.S. Treasury Money Fund, together with the Report of Independent
Accountants, Financial Highlights and notes to financial statements are
incorporated by reference and attached hereto on pages 8 through 17, inclusive,
in the Annual Report to the Shareholders of the Fund dated June 30, 1997, and
are hereby deemed to be a part of this combined Statement of Additional
Information.
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APPENDIX
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Ratings of Municipal Obligations
The six highest ratings of Moody's for municipal bonds are Aaa, Aa, A,
Baa, Ba and B. Bonds rated Aaa are judged by Moody's to be of the best quality.
Bonds rated Aa are judged to be of high quality by all standards. Together with
the Aaa group, they comprise what are generally known as high-quality bonds.
Moody's states that Aa bonds are rated lower than the best bonds because margins
of protection or other elements make long-term risks appear somewhat larger than
for Aaa municipal bonds. Municipal bonds which are rated A by Moody's possess
many favorable investment attributes and are considered "upper medium grade
obligations." Factors giving security to principal and interest of A rated
municipal bonds are considered adequate, but elements may be present which
suggest a susceptibility to impairment sometime in the future. Securities rated
Baa are considered medium grade, with factors giving security to principal and
interest adequate at present but may be unreliable over any period of time. Such
bonds have speculative elements as well as investment-grade characteristics.
Securities rated Ba or below by Moody's are considered below investment grade,
with factors giving security to principal and interest inadequate and
potentially unreliable over any period of time. Such securities are commonly
referred to as "junk" bonds and as such they carry a high margin of risk.
Moody's ratings for municipal notes and other short-term loans are
designated Moody's Investment Grade (MIG). This distinction is in recognition of
the differences between short-term and long-term credit risk. Loans bearing the
designation MIG1 are of the best quality, enjoying strong protection by
establishing cash flows of funds for their servicing or by established and
broad-based access to the market for refinancing, or both. Loans bearing the
designation MIG2 are of high quality, with margins of protection ample although
not as large as in the preceding group.
The six highest ratings of S&P for municipal bonds are AAA (Prime), AA
(High-grade), A (Good-grade), BBB (Investment-grade) and BB and B (Below
investment-grade). Bonds rated AAA have the highest rating assigned by S&P to a
municipal obligation. Capacity to pay interest and repay principal is extremely
strong. Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in a small degree. Bonds
rated A have a strong capacity to pay principal and interest, although they are
somewhat more susceptible to the adverse effects of changes in circumstances and
economic conditions. Bonds rated BBB have an adequate capacity to pay principal
and interest. Adverse economic conditions or changing circumstances are likely
to lead to a weakened capacity to pay interest and repay principal for bonds of
this category than for bonds of higher rated categories. Securities rated BB or
below by S&P are considered below investment grade, with factors giving security
to principal and interest inadequate and potentially unreliable over any period
of time. Such securities are commonly referred to as "junk" bonds and as such
they carry a high margin of risk.
S&P's top ratings for municipal notes issued after July 29, 1984 are
SP-1 and SP-2. The designation SP-1 indicates a very strong capacity to pay
principal and interest. A "+" is added for those issues determined to possess
overwhelming safety characteristics. An "SP-2" designation indicates a
satisfactory capacity to pay principal and interest.
The six highest ratings of Fitch for municipal bonds are AAA, AA, A,
BBB, BB and B. Bonds rated AAA are considered to be investment-grade and of the
highest credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events. Bonds rated AA are considered to be investment grade and of
very high credit quality. The obligor's ability to pay interest and repay
principal is very strong, although not quite as strong as bonds rated 'AAA.'
Because bonds rated in the 'AAA' and 'AA' categories are not significantly
vulnerable to foreseeable future developments, short-term debt of these issuers
is generally rated 'f-1+.' Bonds rated A are considered to be investment grade
and of high credit quality. The obligor's ability to pay interest and repay
principal is considered to be strong, but may be more vulnerable to adverse
changes in economic conditions and circumstances than bonds with higher rates.
Bonds rated BBB are considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse effects on these bonds, and therefore
impair timely payment. The likelihood that the ratings of these bonds will fall
below investment grade is higher than for bonds with greater ratings. Securities
rated BB or below by Fitch are considered below investment grade, with factors
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giving security to principal and interest inadequate and potentially unreliable
over any period of time. Such securities are commonly referred to as "junk"
bonds and as such they carry a high margin of risk.
Commercial Paper Ratings
Commercial paper rated A-1 or better by S&P has the following
characteristics: liquidity ratios are adequate to meet cash requirements;
long-term senior debt is rated "A" or better, although in some cases "BBB"
credits may be allowed; the issuer has access to at least two additional
channels of borrowing; and basic earnings and cash flow have an upward trend
with allowance made for unusual circumstances. Typically, the issuer's industry
is well established and the issuer has a strong position within the industry.
The reliability and quality of management are unquestioned.
The rating Prime-1 is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigning ratings are the
following: (1) evaluation of the management of the issuer; (2) economic
evaluation of the issuer's industry or industries and an appraisal of
speculative-type risks which may be inherent in certain areas; (3) evaluation of
the issuer's products in relation to competition and customer acceptance; (4)
liquidity; (5) amount and quality of long-term debt; (6) trend of earnings over
a period of ten years; (7) financial strength of a parent company and the
relationship which exists with the issuer; and (8) recognition by the management
of obligations which may be present or may arise as a result of public interest
questions and preparations to meet such obligations.
The rating F-1+ is the highest rating assigned by Fitch. Among the
factors considered by Fitch in assigning this rating are: (1) the issuer's
liquidity; (2) its standing in the industry; (3) the size of its debt; (4) its
ability to service its debt; (5) its profitability; (6) its return on equity;
(7) its alternative sources of financing; and (8) its ability to access the
capital markets. Analysis of the relative strength or weakness of these factors
and others determines whether an issuer's commercial paper is rated F-1+.
Relative strength or weakness of the above factors determine how the
issuer's commercial paper is rated within the above categories.
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