Scudder
U.S. Treasury
Money Fund
Semiannual Report
December 31, 1997
Pure No-Load(TM) Funds
A money market fund investing in short-term U.S. government securities and
repurchase agreements. For investors seeking current income plus safety,
liquidity and stability of capital.
A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
SCUDDER (logo)
<PAGE>
Scudder U.S. Treasury Money Fund
- --------------------------------------------------------------------------------
Date of Inception: 11/23/81 Total Net Assets as of Ticker Symbol: SCGXX
12/31/97: $412.4 million
- --------------------------------------------------------------------------------
o Scudder U.S. Treasury Money Fund provided total returns of 2.37% for the six
months ended December 31, 1997, and 4.67% for the year.
o The Fund's 30-day net annualized yield at the end of December 1997 was 4.72%.
o As inflation fears cooled and it became apparent that the Fed would maintain
its hands-off policy on interest rates, we gradually extended the Fund's average
maturity.
Table of Contents
2 Letter from the Fund's President 12 Notes to Financial Statements
4 Portfolio Management Discussion 14 Shareholder Meeting Results
7 Investment Portfolio 16 Officers and Trustees
8 Financial Statements 17 Investment Products and Services
11 Financial Highlights 18 Scudder Solutions
2 - Scudder U.S. Treasury Money Fund
<PAGE>
Letter from the Fund's President
Dear Shareholders,
The U.S. economy -- buoyed by moderate growth, strong employment, low
inflation and healthy corporate profits -- continued to enjoy strong performance
over the first six months of Scudder U.S. Treasury Money Fund's 1998 fiscal
year. In fact, the U.S. economy can now lay claim to one of the longest
expansions on record -- 6 1/2 years -- a growth trend which we believe shows no
sign of ending soon.
Throughout the period, stocks were on an upward climb, thanks to strong
positive fundamentals in the U.S. economy. On the fixed-income front, markets
benefited from several positive forces, including declining inflation, lower
federal deficits and a strong dollar.
Although inflation remains under control, there is still a chance that the
Federal Reserve Board could raise interest rates in the coming months, which
would quickly affect market returns. This conclusion is based on the belief that
the Federal Reserve Board could view the tight labor market as a potential
inflation danger (unemployment levels are at a 25-year low) and that the
economy's underlying strength may lead to even stronger growth.
If such a scenario comes to pass, we believe you can rest assured that your
Fund offers a safe haven from market volatility. Your Fund seeks to maintain a
stable $1.00 share price -- no matter what the market conditions -- through
investment in short-maturity and high-quality money market securities.
Our long-term outlook for inflation, interest rates and the fixed-income
markets remains positive overall, based on a number of structural trends,
including global deregulation and the impact of technology on the manufacture
and distribution of products and services. We invite you to review the Fund
manager's commentary in the attached report. The following pages contain
important information about the Fund's investment activity over the past six
months, as well as the manager's outlook for the coming year.
Finally, it should be noted that, as of January 1, 1998, your Fund has a
new management team, Frank J. Rachwalski, Jr. and John W. Stuebe. We are pleased
that they are bringing their extensive knowledge and experience to the Fund.
Thank you for choosing Scudder U.S. Treasury Money Fund to help meet your
investment needs. If you should have any questions regarding your investment, or
any of the Scudder Funds, please do not hesitate to call Investor Relations at
1-800-225-2470, or visit our Web site at http://funds.scudder.com.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder U.S. Treasury Money Fund
3 - Scudder U.S. Treasury Money Fund
<PAGE>
Portfolio Management Discussion
Dear Shareholders,
Fueled by a near-perfect economic environment, the broader U.S. stock market
continued its record run during the first six months of your Fund's 1998 fiscal
year, experiencing only short-lived setbacks along the way.
Encouraged, too, by relatively stable interest rates and low inflation -- and
undoubtedly heartened by the declining government budget deficit, which is
currently at a 20-year low -- bonds ended the year with solid, though not
stellar, performance.
The stock market's fresh gains -- which come on top of significant increases in
1995 and 1996 -- leave many investors wary of what might come next. Uncertainty
in the bond market in the months ahead remains a given as well, as investors
keep a close watch on inflation and the Federal Reserve Board's actions.
During this period of record growth -- and uncertainty in the fixed-income
markets -- your Fund's investments in short-term, high quality securities
provided a balance to more aggressive stock and bond holdings. Scudder U.S.
Treasury Money Fund maintained its $1.00 share price throughout the period and
was able to provide a positive total return of 2.37% for the six months ended
December 31, 1997, and a total return of 4.67% for the year. The Fund's 30-day
net annualized yield at the end of December was 4.72%.
Average Maturity Gradually
Extended To Capture
Higher Yields
During the course of the year, we kept a watchful eye on the Federal Reserve
Board, in anticipation of further interest rate hikes. (The Fed raised the
federal funds rate -- a key short-term interest rate -- in March, but left rates
untouched for the remainder of the year). As inflation fears cooled and it
became apparent that the Fed would maintain its hands-off policy on interest
rates, we gradually extended the Fund's average maturity.
Shorter maturities are generally sought for the stability and liquidity they can
provide -- the primary goals of Scudder U.S. Treasury Money Fund. Yet, in a
relatively stable interest rate environment, we seek out longer maturities,
which tend to offer higher yields in exchange for slightly higher risk. In
contrast, when we expect interest rates to rise, we typically shorten the
portfolio's average maturity, so that issues coming due can be reinvested at
higher rates.
Early in 1997, Scudder elected to discontinue having your Fund rated by
independent agencies such as Standard & Poor's Corporation. In the past, the
Fund sought and achieved the highest rating (AAAm), in part by restricting the
average maturity of the portfolio.
Your Fund now has the ability to extend to an average maturity of 90 days and
take advantage of the slightly higher yields on longer-maturity money market
instruments. Previously, when seeking a AAAm rating by Standard & Poor's, the
4 - Scudder U.S. Treasury Money Fund
<PAGE>
Fund had to limit the average maturity of its holdings to 60 days.
In early July (the beginning of the Fund's fiscal year), the Fund's average
maturity stood at 53 days. We gradually extended the average maturity of the
portfolio to between 75 and 85 days -- it remained within that range for much of
the third and fourth quarters. We did, however, pull back slightly on the Fund's
average maturity at year-end -- not for any economic reason, but rather to
maintain liquidity. This, of course, was a seasonal consideration -- we
anticipated heavier than normal cash flows out of the Fund, as investors
withdrew money for holiday shopping, tax payments or credit card bills.
We have subsequently returned the Fund's average maturity closer to the upper
limits of its maturity range. Of course, the Fund's average maturity remains in
line with its objective of price stability and liquidity.
A Flexible Portfolio
As always, your Fund's portfolio consists of a varied mix of U.S. government
securities, including Treasury notes and bills, as well as repurchase agreements
backed by U.S. Treasury obligations.
Repurchase agreements often offer higher yields than Treasury securities. Unlike
Treasury securities, however, repurchase agreements may increase the tax
liability for our shareholders. While dividends derived from Treasury securities
may be exempt from state and local taxes, income earned on repurchase agreements
is taxable at the state and local level.
At the end of June, we maintained a fairly small position in repurchase
agreements (less than 6% of Fund assets) to minimize taxes. Throughout much of
last year, however, yields of Treasury securities trailed those of repurchase
agreements -- creating a drag on Fund performance. To boost the Fund's yield, we
gradually increased our weighting in repurchase agreements beginning in the
third quarter. At the end of December, repurchase agreements accounted for 35%
of the portfolio.
Uncertain Investment
Climate Ahead
Looking ahead, we believe that interest rates are likely to remain flat, as the
economy continues on its slow, steady, non-inflationary growth path. While this
scenario is extremely positive for the long term, it is unlikely that 1998 will
see a repeat of the last three years' outstanding stock market performance.
Consensus estimates call for a modest 2.5% growth in gross domestic product. The
meltdown in many smaller Asian economies and growing problems in Japan may hold
back growth in the U.S. to that level. Weaker markets for exports and
competition from cheaper foreign goods sold in devalued currencies will provide
a head wind in the near term. In fact, Southeast Asia's problems may reverberate
throughout the world for some time, bringing volatility to both the stock and
bond markets.
5 - Scudder U.S. Treasury Money Fund
<PAGE>
Another potential bump in the road to lower interest rates -- and continued bond
market strength -- are growing problems among Japanese banks that may cause them
to sell sizable amounts of their massive U.S.
bond portfolios.
In an uncertain investment climate such as this, your Fund offers the safety and
stability of short-term, high quality money market instruments. We continue to
believe in the value of owning a money market fund, like Scudder U.S. Treasury
Money Fund, as part of a well-diversified portfolio.
Sincerely,
Your Portfolio Management Team
/s/David B. Wines /s/Debra A. Hanson
David B. Wines Debra A. Hanson
/s/K. Sue Cote
K. Sue Cote
6 - Scudder U.S. Treasury Money Fund
<PAGE>
Investment Portfolio as of December 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreements 35.0%
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 12/31/97 at 6.5%,
to be repurchased at $60,021,666 on 1/2/98, collateralized by a $58,925,000
U.S. Treasury Bond, 6.625%, 4/30/02 ................................................... 60,000,000 60,000,000
Repurchase Agreement with Salomon Brothers dated 12/31/97 at 6.7%, to be
repurchased at $60,022,334 on 1/2/98, collateralized by a $63,870,000
U.S. Treasury Bill, 10/15/98 .......................................................... 60,000,000 60,000,000
Repurchase Agreement with State Street Bank and Trust Company dated 12/31/97
at 6%, to be repurchased at $21,852,282 on 1/2/98, collateralized by a
$20,305,000 U.S. Treasury Bond, 7.875%, 11/15/07 ...................................... 21,845,000 21,845,000
- ------------------------------------------------------------------------------------------------------------------------------
Total Repurchase Agreements (Cost $141,845,000) 141,845,000
- ------------------------------------------------------------------------------------------------------------------------------
U. S. Treasury Obligations 65.0%
- ------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bill, 1/8/98 .............................................................. 15,000,000 14,983,337
U.S. Treasury Bill, 1/15/98 ............................................................. 30,000,000 29,937,882
U.S. Treasury Bill, 1/22/98 ............................................................. 30,000,000 29,908,681
U.S. Treasury Bill, 2/5/98 .............................................................. 15,000,000 14,925,728
U.S. Treasury Bill, 2/12/98 ............................................................. 10,000,000 9,941,632
U.S. Treasury Bill, 2/19/98 ............................................................. 15,000,000 14,891,557
U.S. Treasury Bill, 2/26/98 ............................................................. 30,000,000 29,760,319
U.S. Treasury Bill, 3/5/98 .............................................................. 10,000,000 9,911,100
U.S. Treasury Bill, 4/23/98 ............................................................. 20,000,000 19,680,000
U.S. Treasury Bill, 7/23/98 ............................................................. 10,000,000 9,706,000
U.S. Treasury Note, 5.125%, 3/31/98 ..................................................... 20,000,000 19,984,400
U.S. Treasury Note, 6.125%, 3/31/98 ..................................................... 10,000,000 10,015,600
U.S. Treasury Note, 5.875%, 4/30/98 ..................................................... 5,000,000 5,006,250
U.S. Treasury Note, 5.125%, 6/30/98 ..................................................... 10,000,000 9,985,900
U.S. Treasury Note, 5.25%, 7/31/98 ...................................................... 15,000,000 14,974,200
U.S. Treasury Note, 4.75%, 8/31/98 ...................................................... 15,000,000 14,915,550
U.S. Treasury Note, 4.75%, 9/30/98 ...................................................... 5,000,000 4,968,750
- ------------------------------------------------------------------------------------------------------------------------------
Total U.S. Treasury Obligations (Cost $263,482,269) 263,496,886
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $405,327,269) (a) 405,341,886
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The cost for federal income tax purposes was $405,327,269. At December 31,
1997, net unrealized appreciation for all securities based on tax cost was
$14,617. This consisted of aggregate gross unrealized appreciation for all
securities in which there was an excess of market value over tax cost of
$42,030 and aggregate gross unrealized depreciation for all securities in
which there was an excess of tax cost over market value of $27,413.
The accompanying notes are an integral part of the financial statements.
7 - Scudder U.S. Treasury Money Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of December 31, 1997 (Unaudited)
<TABLE>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investments, at market (including repurchase agreements of
$141,845,000) (cost $405,327,269) ................................... $ 405,341,886
Cash ................................................................... 1,073,840
Receivable on Fund shares sold ......................................... 8,008,355
Interest receivable .................................................... 1,128,064
Other assets ........................................................... 8,364
----------------
Total assets ........................................................... 415,560,509
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Payable for Fund shares redeemed ....................................... 2,697,774
Dividends payable ...................................................... 137,949
Accrued management fee ................................................. 64,194
Other payables and accrued expenses .................................... 252,977
----------------
Total liabilities ...................................................... 3,152,894
--------------------------------------------------------------------------------------------
Net assets, at value ................................................... $ 412,407,615
--------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Net unrealized appreciation on investments ............................. 14,617
Paid-in capital ........................................................ 412,392,998
--------------------------------------------------------------------------------------------
Net assets, at value $ 412,407,615
--------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($412,407,615 / 412,391,026 outstanding shares of beneficial ----------------
interest, $.01 par value, unlimited number of shares authorized) .... $1.00
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8 - Scudder U.S. Treasury Money Fund
<PAGE>
Statement of Operations
six months ended December 31, 1997 (Unaudited)
<TABLE>
Investment Income
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Interest ............................................................... $ 10,807,689
-----------------
Expenses:
Management fee ......................................................... 1,020,384
Services to shareholders ............................................... 759,184
Custodian and accounting fees .......................................... 55,752
Trustees' fees and expenses ............................................ 16,744
Reports to shareholders ................................................ 46,184
Registration fees ...................................................... 28,937
Auditing ............................................................... 16,744
Legal .................................................................. 9,568
Other .................................................................. 14,404
-----------------
Total expenses before reductions ....................................... 1,967,901
Expense reductions ..................................................... (641,401)
-----------------
Expenses, net .......................................................... 1,326,500
---------------------------------------------------------------------------------------------
Net investment income 9,481,189
---------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments during the period .............. 15,357
Net unrealized appreciation (depreciation) on investments
during the period ................................................... (12,219)
---------------------------------------------------------------------------------------------
Net gain (loss) on investments 3,138
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 9,484,327
---------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9 - Scudder U.S. Treasury Money Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months
Ended
December 31, Year Ended
1997 June 30,
Increase (Decrease) in Net Assets (Unaudited) 1997
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ..................................... $ 9,481,189 $ 18,799,612
Net realized gain from investment transactions ............ 15,357 --
Net unrealized appreciation (depreciation) on
investments during the period .......................... (12,219) 38,151
---------------- ---------------
Net increase in net assets resulting from operations ...... 9,484,327 18,837,763
Distributions to shareholders:
From net investment income ................................ (9,481,189) (18,799,612)
---------------- ---------------
From net realized gains from investment transactions ...... (15,357) (2,458)
---------------- ---------------
Fund share transactions at net asset value
of $1.00 per share:
Shares sold ............................................... 456,060,994 846,157,354
Shares issued to shareholders in reinvestment
distributions .......................................... 8,594,577 16,784,285
Shares redeemed ........................................... (450,832,791) (860,582,122)
---------------- ---------------
Net increase in net assets from Fund share transactions ... 13,822,780 2,359,517
---------------- ---------------
Increase in net assets .................................... 13,810,561 2,395,210
Net assets at beginning of period ......................... 398,597,054 396,201,844
---------------- ---------------
Net assets at end of period ............................... $ 412,407,615 $ 398,597,054
---------------- ---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 - Scudder U.S. Treasury Money Fund
<PAGE>
Financial Highlights
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
Six Months
Ended
December 31,
1997 Years Ended June 30,
(Unaudited) 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of ---------------------------------------------------------------------------------------------------
period ................... $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
---------------------------------------------------------------------------------------------------
Net investment income ....... .023 .045 .048 .046 .027 .027 .044 .065 .075 .074 .055
Less distributions from net
investment income and
net realized gains
on investment
transactions (a) ......... (.023) (.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 $1.000
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return (%) ............ 2.37** 4.58 4.91 4.70 2.74 2.74 4.48 6.71 7.74 7.66 5.69
Ratios and Supplemental Data
Net assets, end of period
($ millions) ............. 412 399 396 383 383 305 299 272 198 167 154
Ratio of operating expenses,
net to average daily net
assets (%) ............... .65* .65 .65 .65 .65 .65 .65 .82 .98 1.01 1.04
Ratio of operating expenses
before expense reductions,
to average daily net
assets (%) ............... .96* .94 .92 .90 .90 .85 .85 .91 .98 1.01 1.04
Ratio of net investment
income to average
daily net assets (%) ..... 4.65* 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.
* Annualized
** Not annualized
11 - Scudder U.S. Treasury Money Fund
<PAGE>
Notes to Financial Statements (Unaudited)
A. Significant Accounting Policies
Scudder U.S. Treasury Money Fund (the "Fund") is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
Security Valuation. Money market instruments purchased with original maturities
of sixty days or less are valued by the amortized cost method permitted in
accordance with Rule 2a-7 under the Investment Company Act of 1940. Debt
securities for which market quotations are readily available and which have
original maturities of sixty-one days or more from the date of valuation are
valued at market. Other securities are appraised at fair value as determined in
good faith by or on behalf of the Trustees of the Fund. Repurchase agreements
are valued at cost which, when combined with accrued interest receivable,
approximates market.
Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian,
receives delivery of the underlying securities, the amount of which at the time
of purchase and each subsequent business day is required to be maintained at
such a level that the market value, depending on the maturity of the repurchase
agreement, is equal to at least 100.5% of the repurchase price.
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code of 1986, as amended, which are applicable to regulated
investment companies and to distribute all of its taxable income to its
shareholders. The Fund accordingly paid no federal income taxes and no provision
for federal income taxes was required.
Distribution of Income and Gains. All of the net investment income of the Fund
is declared as a dividend to shareholders of record as of twelve o'clock noon on
each business day and is paid to shareholders monthly. During any particular
year, net realized gains from investment transactions, in excess of available
capital loss carryforwards, would be taxable to the Fund if not distributed and,
therefore, will be distributed to shareholders. An additional distribution may
be made to the extent necessary to avoid the payment of a four percent federal
excise tax.
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.
Other. Investment security transactions are accounted for on a trade-date basis
(which in most instances, is the same as the settlement date). Interest income
is accrued pro rata to maturity. All premiums and discounts are
amortized/accreted for both tax and financial reporting purposes.
12 - Scudder U.S. Treasury Money Fund
<PAGE>
B. Related Parties
Effective December 31, 1997, Scudder, Stevens & Clark, Inc. ("Scudder") and The
Zurich Insurance Company ("Zurich"), an international insurance and financial
services organization, formed a new global investment organization by combining
Scudder's business with that of Zurich's subsidiary, Zurich Kemper Investments,
Inc. As a result of the transaction, Scudder changed its name to Scudder Kemper
Investments, Inc. ("Scudder Kemper" or the "Adviser"). The transaction between
Scudder and Zurich resulted in the termination of the Fund's Investment
Management Agreement with Scudder. However, a new Investment Management
Agreement (the "Management Agreement") between the Fund and Scudder Kemper was
approved by the Fund's Board of Trustees and by the Fund's Shareholders. The
Management Agreement, which is effective December 31, 1997, is the same in all
material respects as the corresponding previous Investment Management Agreement,
except that Scudder Kemper is the new investment adviser to the Fund.
Under the Management Agreement with Scudder Kemper, the Fund agrees to pay the
Adviser a fee equal to an annual rate of 0.50% of its average daily net assets
computed and accrued daily and payable monthly. As manager of the assets of the
Fund, the Adviser directs the investments of the Fund in accordance with its
investment objectives, policies, and restrictions. The Adviser determines the
securities, instruments, and other contracts relating to investments to be
purchased, sold or entered into by the Fund. In addition to portfolio management
services, the Adviser provides certain administrative services in accordance
with the Management Agreement. The Adviser has agreed not to impose all or a
portion of its management fee until October 31, 1998, and during such period to
maintain the annualized expenses of the Fund at not more than 0.65% of average
daily net assets. Accordingly, for the six months ended December 31, 1997, the
Adviser did not impose a portion of its fees amounting to $641,401, and the
portion imposed amounted to $378,983.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
six months ended December 31, 1997, the amount charged to the Fund by SSC
aggregated $353,266, of which $57,068 is unpaid at December 31, 1997.
Scudder Trust Company ("STC"), a subsidiary of the Adviser, provides
recordkeeping and other services in connection with certain retirement and
employee benefit plans invested in the Fund. For the six months ended December
31, 1997, the amount charged to the Fund by STC aggregated $293,303, of which
$50,894 is unpaid at December 31, 1997.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records of the Fund. For the six months
ended December 31, 1997, the amount charged to the Fund by SFAC aggregated
$24,865, of which $4,158 is unpaid at December 31, 1997.
The Fund pays each Trustee not affiliated with the Adviser an annual retainer
plus specified amounts for attended board and committee meetings. For the six
months ended December 31, 1997, Trustees' fees aggregated $16,744.
13 - Scudder U.S. Treasury Money Fund
<PAGE>
Shareholder Meeting Results
A Special Meeting of Shareholders (the "Meeting") of Scudder U.S. Treasury Money
Fund (the "Fund") was held on October 24, 1997, at the office of Scudder Kemper
Investments, Inc. (formerly Scudder, Stevens & Clark, Inc.), Two International
Place, Boston, Massachusetts 02110. At the Meeting, as adjourned and reconvened,
the following matters were voted upon by the shareholders (the resulting votes
for each matter are presented below). With regard to certain proposals, it was
recommended that the Meeting be reconvened in order to provide shareholders with
an additional opportunity to return their proxies. The date of the reconvened
meeting at which the matters were decided is noted after the proposed matter.
1. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
185,121,475 13,145,641 8,381,041 0
2. To elect Trustees.
<TABLE>
<CAPTION>
Number of Votes:
----------------
Trustee For Withheld
------- --- --------
<S> <C> <C>
Henry P. Becton, Jr. 196,129,126 10,519,031
Dawn-Marie Driscoll 196,106,762 10,541,394
Peter B. Freeman 196,066,230 10,581,927
George M. Lovejoy, Jr. 196,233,918 10,424,239
Dr. Wesley W. Marple, Jr. 196,185,648 10,462,509
Daniel Pierce 196,063,077 10,585,080
Kathryn L. Quirk 195,786,753 10,861,404
Jean C. Tempel 196,156,788 10,491,369
</TABLE>
3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise. (Approved on December 2, 1997.)
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
213,594,042 29,362,598 15,157,990 610,257
14 - Scudder U.S. Treasury Money Fund
<PAGE>
4. To approve certain amendments to the Declaration of Trust. Sufficient
proxies had not been received by December 2, 1997 to approve the
amendments to the Declaration of Trust. Management has determined not to
continue to seek shareholder approval for this item.
Number of Votes:
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
220,900,548 22,974,105 14,850,235 0
5. To approve the revision of certain fundamental investment policies.
<TABLE>
<CAPTION>
Number of Votes:
----------------
Broker
Fundamental Policies For Against Abstain Non-Votes*
-------------------- --- ------- ------- ----------
<S> <C> <C> <C> <C>
5.1 Diversification 171,344,086 20,409,917 14,894,154 0
5.2 Borrowing 170,764,911 20,989,092 14,894,154 0
5.3 Senior securities 171,171,869 20,582,134 14,894,154 0
5.4 Concentration 171,116,239 20,637,764 14,894,154 0
5.5 Underwriting of securities 170,978,235 16,662,091 19,007,831 0
5.6 Investment in real estate 170,948,239 16,703,632 18,996,286 0
5.7 Purchase of physical
commodities 170,617,638 16,857,341 19,119,178 0
5.8 Lending 170,908,393 16,644,325 19,095,439 0
</TABLE>
6. To ratify the selection of Coopers & Lybrand L.L.P. as the Fund's independent
accountants.
Number of Votes:
----------------
For Against Abstain
--- ------- -------
190,434,315 4,188,931 12,024,911
* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary power
to vote on a particular matter.
15 - Scudder U.S. Treasury Money Fund
<PAGE>
Officers and Trustees
Daniel Pierce*
President and Trustee
Henry P. Becton, Jr.
Trustee
Dawn-Marie Driscoll
Trustee; Attorney and Corporate
Director
Peter B. Freeman
Trustee; Corporate Director and
Trustee
George M. Lovejoy, Jr.
Trustee; President and Director,
Fifty Associates
Wesley W. Marple, Jr.
Trustee
Kathryn L. Quirk*
Trustee, Vice President and
Assistant Secretary
Jean C. Tempel
Trustee; General Partner,
TL Ventures
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
Vice President
David B. Wines*
Vice President
Thomas F. McDonough*
Vice President and Secretary
Edward J. O'Connell*
Vice President and Assistant
Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
16 - Scudder U.S. Treasury Money Fund
<PAGE>
Investment Products and Services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series --
Premium Shares*
Managed Shares*
Scudder Government Money Market Series --
Managed Shares*
Tax Free Money Market+
- ----------------------
Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series--
Managed Shares*
Scudder California Tax Free Money Fund**
Scudder New York Tax Free Money Fund**
Tax Free+
- ---------
Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund**
Scudder Massachusetts Limited Term Tax Free Fund**
Scudder Massachusetts Tax Free Fund**
Scudder New York Tax Free Fund**
Scudder Ohio Tax Free Fund**
Scudder Pennsylvania Tax Free Fund**
U.S. Income
- -----------
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder High Yield Bond Fund
Global Income
- -------------
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
Asset Allocation
- ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
U.S. Growth and Income
- ----------------------
Scudder Balanced Fund
Scudder Growth and Income Fund
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
- -------------------
Traditional IRA
Roth IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan**+++ +++
(a variable annuity)
Education Accounts
- ------------------
Education IRA
UGMA/UTMA
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder Global High Income Fund, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder Spain and Portugal Fund, Inc.
For complete information on any of the above Scudder funds, including
management fees and expenses, call or write for a free prospectus. Read it
carefully before you invest or send money. +++Funds within categories are listed
in order from expected least risk to most risk. Certain Scudder funds may not be
available for purchase or exchange. +A portion of the income from the tax-free
funds may be subject to federal, state, and local taxes. *A class of shares of
the Fund. **Not available in all states. +++ +++A no-load variable annuity
contract provided by Charter National Life Insurance Company and its affiliate,
offered by Scudder's insurance agencies, 1-800-225-2470. #These funds, advised
by Scudder Kemper Investments, Inc., are traded on the New York Stock Exchange
and, in some cases, on various other stock exchanges.
17 - Scudder U.S. Treasury Money Fund
<PAGE>
Scudder Solutions
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Investment Plan QuickBuy
A convenient investment program in which money is Lets you purchase Scudder fund shares
electronically debited from your bank account monthly to electronically, avoiding potential mailing delays;
regularly purchase fund shares and "dollar cost average" money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from a previously designated bank
fewer when it's higher, which can reduce your average account.
purchase price over time.
Automatic Dividend Transfer Payroll Deduction and Direct Deposit
The most timely, reliable, and convenient way to Have all or part of your paycheck -- even government
purchase shares -- use distributions from one Scudder checks -- invested in up to four Scudder funds at
fund to purchase shares in another, automatically one time.
(accounts with identical registrations or the same
social security or tax identification number).
Dollar cost averaging involves continuous investment in securities regardless of price
fluctuations and does not assure a profit or protect against loss in declining markets.
Investors should consider their ability to continue such a plan through periods of low price
levels.
Around-the-clock electronic account service and information, including some transactions:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- http://funds.scudder.com
1-800-343-2890
Scudder Electronic Account Services: Offering
Personalized account information, the ability to account information and transactions, interactive
exchange or redeem shares, and information on other worksheets, prospectuses and applications for all
Scudder funds and services via touchtone telephone. Scudder funds, plus your current asset allocation,
whenever you need them. Scudder's Site also
provides news about Scudder funds, retirement
planning information, and more.
Retirees and those who depend on investment proceeds for living expenses can enjoy these convenient,
timely, and reliable automated withdrawal programs:
- ------------------------------------------------------------------------------------------------------------------------------
Automatic Withdrawal Plan QuickSell
You designate the bank account, determine the schedule Provides speedy access to your money by
(as frequently as once a month) and amount of the electronically crediting your redemption proceeds
redemptions, and Scudder does the rest. to the bank account you previously designated.
DistributionsDirect
Automatically deposits your fund distributions into the
bank account you designate within three business days
after each distribution is paid.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
18 - Scudder U.S. Treasury Money Fund
<PAGE>
Mutual Funds and More -- Brokerage and Guidance Services:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Brokerage Services Scudder Portfolio Builder
Offers you access to a world of investments, A free service designed to help suggest ways investors like
including stocks, corporate bonds, Treasuries, plus you can diversify your portfolio among domestic and global,
over 6,000 mutual funds from at least 150 mutual as well as equity, fixed-income, and money market funds,
fund companies. And Scudder Fund Folio(SM) provides using Scudder funds.
investors with access to a marketplace of more than
500 no-load funds from well-known companies--with no Personal Counsel from Scudder(SM)
transaction fees or commissions. Scudder
shareholders can take advantage of a Scudder Developed for investors who prefer the benefits of no-load
Brokerage account already reserved for them, with Scudder funds but want ongoing professional assistance in
no minimum investment. For information about managing a portfolio. Personal Counsel(SM) is a highly
Scudder Brokerage Services, call 1-800-700-0820. customized, fee-based asset management service for
individuals investing $100,000 or more.
Fund Folio funds held less than six months will be charged a fee for redemptions. You can buy
shares directly from the fund itself or its principal underwriter or distributor without
paying this fee. Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061.
Member SIPC.
Personal Counsel From Scudder(SM) and Personal Counsel(SM) are service marks of and represent a
program offered by Scudder Investor Services, Inc., Adviser.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
Additional Information on How to Contact Scudder:
- ------------------------------------------------------------------------------------------------------------------------------
For existing account services and transactions Please address all written correspondence to
Scudder Investor Relations -- 1-800-225-5163 The Scudder Funds
P.O. Box 2291
For establishing 401(k) and 403(b) plans Boston, Massachusetts
Scudder Defined Contribution Services -- 02107-2291
1-800-323-6105
Or Stop by a Scudder Investor Center
For information about The Scudder Funds, including Many shareholders enjoy the personal, one-on-one service of
additional applications and prospectuses, or for the Scudder Investor Centers. Check for an Investor Center near
answers to investment questions you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470 Boca Raton Chicago San Francisco
[email protected] Boston New York
</TABLE>
19 - Scudder U.S. Treasury Money Fund
<PAGE>
About the Fund's Adviser
Scudder Kemper Investments, Inc., is one of the largest and most experienced
investment management oganizations worldwide, managing more than $200 billion in
assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts. It is one of the ten largest mutual fund companies in the
U.S.
Scudder Kemper Investments has a rich heritage of innovation, integrity, and
client-focused service. In 1997, Scudder, Stevens & Clark, Inc., founded 79
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Group. As a result, Zurich's subsidiary, Zurich Kemper Investments,
Inc., with 50 years of mutual fund and investment management experience, was
combined with Scudder. Headquartered in New York, Scudder Kemper Investments
offers a full range of investment counsel and asset management capabilities,
based on a combination of proprietary research and disciplined, long-term
investment strategies. With its global investment resources and perspective,
the firm seeks opportunities in markets throughout the world to meet the needs
of investors.
Scudder Kemper Investments, Inc., the global asset management firm, is a member
of the Zurich Group. The Zurich Group is an internationally recognized leader in
financial services, including property/casualty and life insurance, reinsurance,
and asset management.
This information must be preceded or accompanied by a
current prospectus.
Portfolio changes should not be considered recommendations
for action by individual investors.
SCUDDER
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