Filed with the Securities and Exchange Commission on July 30, 1999
File No. 2-67219
File No. 811-3043
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
-----
Post-Effective Amendment No. 26
-----
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 28
-----
Scudder U.S. Treasury Money Fund
--------------------------------
(Exact Name of Registrant as Specified in Charter)
Two International Place, Boston, MA 02110-4103
----------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (6l7) 295-1000
--------------
John Millette
Scudder Kemper Investments, Inc.
Two International Place, Boston, MA 02110
-----------------------------------------
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
/___/ Immediately upon filing pursuant to paragraph (b)
/___/ 60 days after filing pursuant to paragraph (a) (1)
/___/ 75 days after filing pursuant to paragraph (a) (2)
/___/ On __________________ pursuant to paragraph (b)
/ X / On October 1, 1999 pursuant to paragraph (a) (1)
/___/ On __________________ pursuant to paragraph (a) (2) of Rule 485.
If appropriate, check the following box:
/___/ This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
SCUDDER
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Money Market
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Money Market Funds
Scudder Tax Free Money Fund
Fund #000
Scudder U.S. Treasury
Money Fund Fund #000
Scudder Cash Investment Trust
Fund #000
Scudder Money Market Series
Premium Shares
Prime Reserve Shares
Fund #000
Prospectus
October 1, 1999
As with all mutual funds, the Securities and Exchange Commission (SEC) does not
approve or disapprove these shares or determine whether the information in this
prospectus is truthful or complete. It is a criminal offense for anyone to
inform you otherwise.
<PAGE>
Scudder Money Funds
How the funds work
2 Tax Free Money Fund
6 U.S. Treasury Money Fund
10 Cash Investment Trust
14 Money Market Series
18 Other Policies and Risks
19 Who Manages and Oversees the Funds
22 Financial Highlights
How to invest in the funds
28 How to Buy Shares
29 How to Exchange or Sell Shares
30 Policies You Should Know About
35 Understanding Distributions and Taxes
<PAGE>
How the funds work
These funds are money funds, meaning that they seek to maintain a stable $1.00
share price in order to preserve the value of your investment.
Taken as a group, they represent a spectrum of approaches to money fund
investing, from an emphasis on yield to an emphasis on even higher credit
quality than money fund regulations require. Two funds invest for income that is
free from certain income taxes.
Remember that mutual funds are investments, not bank deposits. They're not
insured or guaranteed by the FDIC or any other organization. Their $1.00 share
prices aren't guaranteed, so be aware that you could lose money.
You can access all Scudder fund prospectuses online at: www.scudder.com
<PAGE>
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ticker symbol | XXXXX fund number | 000
Scudder Tax Free Money Fund
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Investment Approach
The fund seeks to provide income exempt from regular federal income tax and
stability of principal through investments in municipal securities. It does this
by investing at least 80% of net assets in short-term municipal securities. The
income from these securities is free from regular federal income tax and from
alternative minimum tax (AMT). The fund may buy many types of municipal
securities, but all must meet the standards for money market fund investments
(see sidebar).
Working in conjunction with a credit analyst, the portfolio managers screen
potential securities and develop a list of those that the fund may buy. The
managers then decide which securities on this list to buy, looking for
attractive yield and weighing considerations such as credit quality, economic
outlooks, and possible interest rate movements. The managers may adjust the
fund's exposure to interest rate risk, typically seeking to take advantage of
possible rises in interest rates and to preserve yield when interest rates
appear likely to fall.
THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPH.
- --------------------------------------------------------------------------------
MONEY FUND RULES
To be called a money market fund, a mutual fund must operate within strict
federal rules. Designed to help maintain a stable share price, these rules limit
money funds to particular types of securities and strategies. Some of the rules:
o individual securities must have remaining maturities of no more than 397
days
o the dollar-weighted average maturity of the fund's hold ings cannot exceed
90 days
o all securities must be in the top two credit grades for short-term
securities
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2 | Scudder Tax Free Money Fund
<PAGE>
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[ICON] This fund may make sense for investors who are in a moderate to
high tax bracket and who are looking for the income, liquidity,
and stability that a money fund is designed to offer.
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Main Risks to Investors
There are several risk factors that could reduce the yield you get from the fund
or make it perform less well than other investments. Although the fund seeks to
preserve the value of your investment at $1.00 per share, you could lose money
by investing in the fund.
As with most money market funds, the most important factor is market interest
rates. The fund's yield tends to reflect current interest rates, which means
that when these rates fall, the fund's yield generally falls as well.
A second factor is credit quality. If a portfolio security declines in credit
quality or goes into default, it could hurt the fund's performance. To the
extent that the fund emphasizes certain geographic regions or sectors of the
municipal market, the fund increases its exposure to any factors affecting these
regions or sectors.
Because the fund may invest up to 20% of net assets in securities whose
dividends are subject to AMT, a portion of the fund's income may be taxable for
some investors.
Other factors that could affect performance include:
o the managers could be wrong in their analysis of interest rate trends,
credit quality, or other matters
o securities that rely on outside insurers to raise their credit quality
could fall in price or go into default if the financial condition of the
insurer deteriorates
o political or legal actions could change the way the fund's dividends are
taxed
Scudder Tax Free Money Fund | 3
<PAGE>
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[ICON] While a fund's past performance isn't necessarily a sign of how
it will do in the future, it can be valuable for an investor to
know. This page looks at fund performance two different ways:
year by year and over time.
- --------------------------------------------------------------------------------
The Fund's Track Record
The bar chart shows how the fund's total returns have varied from year to year,
which may give some idea of risk. Below the chart is a table showing how the
fund's returns over different periods average out. All figures on this page
assume reinvestment of dividends and distributions.
- --------------------------------------------------------------------------------
Annual Total Returns (%) as of 12/31 each year
- --------------------------------------------------------------------------------
THE ORIGINAL DOCUMENT CONTAINS A BAR CHART HERE
BAR CHART DATA:
00.00 -00.00 00.00 00.00 00.00 00.00 00.00 00.00 00.00 00.00
`89 `90 `91 `92 `93 `94 `95 `96 `97 `98
- --------------------------------------------------------------------------------
1999 Total Return as of June 30: 0.00%
Best Quarter: 0.00%, Q0 `90 Worst Quarter: -0.00%, Q0 `90
- --------------------------------------------------------------------------------
Average Annual Total Returns (%) as of 12/31/98
- --------------------------------------------------------------------------------
1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------
0.00 0.00 0.00
- --------------------------------------------------------------------------------
To find out the fund's current seven-day yield, call 1-800-SCUDDER.
4 | Scudder Tax Free Money Fund
<PAGE>
How Much Investors Pay
Because this is a no-load fund, it doesn't charge you any shareholder fees. The
fund does have annual operating expenses, and as a shareholder you pay them
indirectly.
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Fee Table
- --------------------------------------------------------------------------------
Shareholder Fees (paid directly from your investment)
- --------------------------------------------------------------------------------
Sales Charges/Redemption Fees None
- --------------------------------------------------------------------------------
Annual Operating Expenses (deducted from fund assets)
- --------------------------------------------------------------------------------
Management Fee 0.00%
- --------------------------------------------------------------------------------
Distribution (12b-1) Fee None
- --------------------------------------------------------------------------------
Other Expenses* 0.00%
- --------------------------------------------------------------------------------
Total Annual Operating Expenses 0.00%
- --------------------------------------------------------------------------------
Expense Reimbursement 0.00%
- --------------------------------------------------------------------------------
Net Annual Operating Expenses** 0.00%
- --------------------------------------------------------------------------------
* Includes costs of shareholder servicing, custody, accounting services, and
similar expenses, which may vary with fund size and other factors.
** By contract, expenses are capped at 0.00% through 00/00/00.
- --------------------------------------------------------------------------------
Expense Example
- --------------------------------------------------------------------------------
Based on the costs above (including one year of capped expenses), this example
is designed to help you compare this fund's expenses to those of other funds.
The example assumes you invested $10,000, earned 5% annual returns, reinvested
all dividends and distributions, and sold your shares at the end of each period.
Remember that this is only an example, and that actual expenses will be
different.
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
$000 $0,000 $0,000 $0,000
- --------------------------------------------------------------------------------
Scudder Tax Free Money Fund | 5
<PAGE>
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ticker symbol | XXXXX fund number | 000
Scudder U.S. Treasury Money Fund
- --------------------------------------------------------------------------------
Investment Approach
The fund seeks to provide safety, liquidity income that is consistent with
safety, liquidity, and stability of shareholders' capital. It does this by
investing at least 80% of total assets in short-term U.S. Treasury securities or
in repurchase agreements backed by these securities. While the fund may place up
to 20% of total assets in other types of investments, it can only invest in
short-term securities that are guaranteed by the U.S. government.
Income from Treasuries is free from state and local income taxes, and for most
fund shareholders the bulk of the earnings the fund distributes will be free
from these taxes as well (though not from federal income tax).
Working in conjunction with a credit analyst, the portfolio managers screen
potential securities and develop a list of those that the fund may buy. The
managers then decide which securities on this list to buy, looking for
attractive yield and weighing considerations such as economic outlooks and
possible interest rate movements. The managers may adjust the fund's exposure to
interest rate risk, typically seeking to take advantage of possible rises in
interest rates and to preserve yield when interest rates appear likely to fall.
THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPH.
- --------------------------------------------------------------------------------
MONEY FUND RULES
To be called a money market fund, a mutual fund must operate within strict
federal rules. Designed to help maintain a stable share price, these rules limit
money funds to particular types of securities and strategies. Some of the rules:
o individual securities must have remaining maturities of no more than 397
days
o the dollar-weighted average maturity of the fund's hold ings cannot exceed
90 days
o all securities must be in the top two credit grades for short-term
securities
6 | Scudder U.S. Treasury Money Fund
<PAGE>
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[ICON] Investors whose primary concerns are quality and liquidity may
want to consider this fund.
- --------------------------------------------------------------------------------
Main Risks to Investors
There are several risk factors that could reduce the yield you get from the fund
or make it perform less well than other investments. Although the fund seeks to
preserve the value of your investment at $1.00 per share, you could lose money
by investing in the fund.
As with most money market funds, the most important factor is market interest
rates. The fund's yield tends to reflect current interest rates, which means
that when these rates fall, the fund's yield generally falls as well.
Because of the fund's high credit standards, its yield may be lower than the
yields of money funds that don't limit their investments to
government-guaranteed securities.
Other factors that could affect performance include:
o the managers could be wrong in their analysis of interest rate trends or
other matters
o the counterparty to a repurchase agreement or other transaction could
default on its obligations
o political or legal actions could change the way the fund's dividends are
taxed, particularly in certain states or localities
Scudder U.S. Treasury Money Fund | 7
<PAGE>
- --------------------------------------------------------------------------------
[ICON] While a fund's past performance isn't necessarily a sign of how
it will do in the future, it can be valuable for an investor to
know. This page looks at fund performance two different ways:
year by year and over time.
- --------------------------------------------------------------------------------
The Fund's Track Record
The bar chart shows how the fund's total returns have varied from year to year,
which may give some idea of risk. Below the chart is a table showing how the
fund's returns over different periods average out. All figures on this page
assume reinvestment of dividends and distributions.
- --------------------------------------------------------------------------------
Annual Total Returns (%) as of 12/31 each year
- --------------------------------------------------------------------------------
THE ORIGINAL DOCUMENT CONTAINS A BAR CHART HERE
BAR CHART DATA:
00.00 -00.00 00.00 00.00 00.00 00.00 00.00 00.00 00.00 00.00
`89 `90 `91 `92 `93 `94 `95 `96 `97 `98
- --------------------------------------------------------------------------------
1999 Total Return as of June 30: 0.00%
Best Quarter: 0.00%, Q0 `90 Worst Quarter: -0.00%, Q0 `90
- --------------------------------------------------------------------------------
Average Annual Total Returns (%) as of 12/31/98
- --------------------------------------------------------------------------------
1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------
0.00 0.00 0.00
- --------------------------------------------------------------------------------
To find out the fund's current seven-day yield, call 1-800-SCUDDER.
8 | Scudder U.S. Treasury Money Fund
<PAGE>
How Much Investors Pay
Because this is a no-load fund, it doesn't charge you any shareholder fees. The
fund does have annual operating expenses, and as a shareholder you pay them
indirectly.
- --------------------------------------------------------------------------------
Fee Table
- --------------------------------------------------------------------------------
Shareholder Fees (paid directly from your investment)
- --------------------------------------------------------------------------------
Sales Charges/Redemption Fees None
- --------------------------------------------------------------------------------
Annual Operating Expenses (deducted from fund assets)
- --------------------------------------------------------------------------------
Management Fee 0.00%
- --------------------------------------------------------------------------------
Distribution (12b-1) Fee None
- --------------------------------------------------------------------------------
Other Expenses* 0.00%
- --------------------------------------------------------------------------------
Total Annual Operating Expenses 0.00%
- --------------------------------------------------------------------------------
Expense Reimbursement 0.00%
- --------------------------------------------------------------------------------
Net Annual Operating Expenses** 0.00%
- --------------------------------------------------------------------------------
* Includes costs of shareholder servicing, custody, accounting services, and
similar expenses, which may vary with fund size and other factors.
** By contract, expenses are capped at 0.00% through 00/00/00.
- --------------------------------------------------------------------------------
Expense Example
- --------------------------------------------------------------------------------
Based on the costs above (including one year of capped expenses), this example
is designed to help you compare this fund's expenses to those of other funds.
The example assumes you invested $10,000, earned 5% annual returns, reinvested
all dividends and distributions, and sold your shares at the end of each period.
Remember that this is only an example, and that actual expenses will be
different.
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
$000 $0,000 $0,000 $0,000
- --------------------------------------------------------------------------------
Scudder U.S. Treasury Money Fund | 9
<PAGE>
- --------------------------------------------------------------------------------
ticker symbol XXXXX fund number 000
Scudder Cash Investment Trust
- --------------------------------------------------------------------------------
Investment Approach
The fund seeks to maintain stability of capital and, consistent therewith, to
maintain liquidity of capital and to provide current income. It does this by
investing exclusively in short-term securities that are denominated in U.S.
dollars.
The fund may buy securities from many types of issuers, including the U.S.
government, banks, corporations, and municipalities. However, everything the
fund buys must meet the standards for money market fund investments (see
sidebar).
Working in conjunction with a credit analyst, the portfolio managers screen
potential securities and develop a list of those that the fund may buy. The
managers then decide which securities on this list to buy, looking for
attractive yield and weighing considerations such as credit quality, economic
outlooks, and possible interest rate movements. The managers may adjust the
fund's exposure to interest rate risk, typically seeking to take advantage of
possible rises in interest rates and to preserve yield when interest rates
appear likely to fall.
THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING TWO PARAGRAPHS.
- --------------------------------------------------------------------------------
MONEY FUND RULES
To be called a money market fund, a mutual fund must operate within strict
federal rules. Designed to help maintain a stable share price, these rules limit
money funds to particular types of securities and strategies. Some of the rules:
o individual securities must have remaining maturities of no more than 397
days
o the dollar-weighted average maturity of the fund's hold ings cannot exceed
90 days
o all securities must be in the top two credit grades for short-term
securities
10 | Scudder Cash Investment Trust
<PAGE>
- --------------------------------------------------------------------------------
[ICON] This fund, a broadly diversified money fund with an equal
emphasis on credit quality and yield, could serve investors who
want a versatile money fund that's well suited to a range of
purposes.
- --------------------------------------------------------------------------------
Main Risks to Investors
There are several risk factors that could reduce the yield you get from the fund
or make it perform less well than other investments. Although the fund seeks to
preserve the value of your investment at $1.00 per share, you could lose money
by investing in the fund.
As with most money market funds, the most important factor is market interest
rates. The fund's yield tends to reflect current interest rates, which means
that when these rates fall, the fund's yield generally falls as well.
A second factor is credit quality. If a portfolio security declines in credit
quality or goes into default, it could hurt the fund's performance. To the
extent that the fund emphasizes certain sectors of the short-term securities
market, the fund increases its exposure to any factors affecting these sectors.
Other factors that could affect performance include:
o the managers could be wrong in their analysis of interest rate trends,
credit quality, or other matters
o securities that rely on outside insurers to raise their credit quality
could fall in price or go into default if the financial condition of the
insurer deteriorates
Scudder Cash Investment Trust | 11
<PAGE>
- --------------------------------------------------------------------------------
[ICON] While a fund's past performance isn't necessarily a sign of how
it will do in the future, it can be valuable for an investor to
know. This page looks at fund performance two different ways:
year by year and over time.
- --------------------------------------------------------------------------------
The Fund's Track Record
The bar chart shows how the fund's total returns have varied from year to
year, which may give some idea of risk. Below the chart is a table showing how
the fund's returns over different periods average out. All figures on this page
assume reinvestment of dividends and distributions.
- --------------------------------------------------------------------------------
Annual Total Returns (%) as of 12/31 each year
- --------------------------------------------------------------------------------
THE ORIGINAL DOCUMENT CONTAINS A BAR CHART HERE
BAR CHART DATA:
00.00 -00.00 00.00 00.00 00.00 00.00 00.00 00.00 00.00 00.00
`89 `90 `91 `92 `93 `94 `95 `96 `97 `98
- --------------------------------------------------------------------------------
1999 Total Return as of June 30: 0.00%
Best Quarter: 0.00%, Q0 `90 Worst Quarter: -0.00%, Q0 `90
- --------------------------------------------------------------------------------
Average Annual Total Returns (%) as of 12/31/98
- --------------------------------------------------------------------------------
1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------
0.00 0.00 0.00
- --------------------------------------------------------------------------------
To find out the fund's current seven-day yield, call 1-800-SCUDDER.
12 | Scudder Cash Investment Trust
<PAGE>
How Much Investors Pay
Because this is a no-load fund, it doesn't charge you any shareholder fees. The
fund does have annual operating expenses, and as a shareholder you pay them
indirectly.
- --------------------------------------------------------------------------------
Fee Table
- --------------------------------------------------------------------------------
Shareholder Fees (paid directly from your investment)
- --------------------------------------------------------------------------------
Sales Charges/Redemption Fees None
- --------------------------------------------------------------------------------
Annual Operating Expenses (deducted from fund assets)
- --------------------------------------------------------------------------------
Management Fee 0.00%
- --------------------------------------------------------------------------------
Distribution (12b-1) Fee None
- --------------------------------------------------------------------------------
Other Expenses* 0.00%
- --------------------------------------------------------------------------------
Total Annual Operating Expenses 0.00%
- --------------------------------------------------------------------------------
Expense Reimbursement 0.00%
- --------------------------------------------------------------------------------
Net Annual Operating Expenses** 0.00%
- --------------------------------------------------------------------------------
* Includes costs of shareholder servicing, custody, accounting services, and
similar expenses, which may vary with fund size and other factors.
** By contract, expenses are capped at 0.00% through 00/00/00.
- --------------------------------------------------------------------------------
Expense Example
- --------------------------------------------------------------------------------
Based on the costs above (including one year of capped expenses), this example
is designed to help you compare this fund's expenses to those of other funds.
The example assumes you invested $10,000, earned 5% annual returns, reinvested
all dividends and distributions, and sold your shares at the end of each period.
Remember that this is only an example, and that actual expenses will be
different.
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
$000 $0,000 $0,000 $0,000
- --------------------------------------------------------------------------------
Scudder Cash Investment Trust | 13
<PAGE>
- --------------------------------------------------------------------------------
ticker symbols Premium Shares | XXXXX fund number | 000
Prime Reserve Shares | XXXXX
Scudder Money Market Series
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Investment Approach
The fund seeks as high a level of current income as is consistent with
liquidity, preservation of capital, and the fund's investment policies. It does
this by investing exclusively in short-term securities that are denominated in
U.S. dollars, as well as repurchase agreements that are backed by these
securities.
The fund may buy securities from many types of issuers, including the U.S.
government, banks (both U.S. and foreign), corporations, and municipalities. The
fund may invest more than 25% of total assets in bank obligations. However,
everything the fund buys must meet the standards for money market fund
investments (see sidebar).
Working in conjunction with a credit analyst, the portfolio managers screen
potential securities and develop a list of those that the fund may buy. The
managers then decide which securities on this list to buy, looking for
attractive yield and weighing considerations such as credit quality, economic
outlooks, and possible interest rate movements. The managers may adjust the
fund's exposure to interest rate risk, typically seeking to take advantage of
possible rises in interest rates and to preserve yield when interest rates
appear likely to fall.
THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPH.
- --------------------------------------------------------------------------------
MONEY FUND RULES
To be called a money market fund, a mutual fund must operate within strict
federal rules. Designed to help maintain a stable share price, these rules limit
money funds to particular types of securities and strategies. Some of the rules:
o individual securities must have remaining maturities of no more than 397
days
o the dollar-weighted average maturity of the fund's hold ings cannot exceed
90 days
o all securities must be in the top two credit grades for short-term
securities
14 | Scudder Money Market Series
<PAGE>
- --------------------------------------------------------------------------------
[ICON] With its higher investment minimums and reduced transaction
features, this fund may be appropriate for investors interested
in a longer-term cash investment.
- --------------------------------------------------------------------------------
Main Risks to Investors
There are several risk factors that could reduce the yield you get from the fund
or make it perform less well than other investments. Although the fund seeks to
preserve the value of your investment at $1.00 per share, you could lose money
by investing in the fund.
As with most money market funds, the most important factor is market interest
rates. The fund's yield tends to reflect current interest rates, which means
that when these rates fall, the fund's yield generally falls as well.
A second factor is credit quality. If a portfolio security declines in credit
quality or goes into default, it could hurt the fund's performance. To the
extent that the fund emphasizes certain sectors of the short-term securities
market, the fund increases its exposure to any factors affecting these sectors.
Securities from foreign banks may have greater credit risk than comparable U.S.
securities, for reasons ranging from political and economic uncertainties to
less stringent banking regulations.
Other factors that could affect performance include:
o the managers could be wrong in their analysis of interest rate trends,
credit quality, or other matters
o the counterparty to a repurchase agreement or other transaction could
default on its obligations
o securities that rely on outside insurers to raise their credit quality
could fall in price or go into default if the financial condition of the
insurer deteriorates
Scudder Money Market Series | 15
<PAGE>
- --------------------------------------------------------------------------------
[ICON] While a fund's past performance isn't necessarily a sign of how
it will do in the future, it can be valuable for an investor to
know. This page looks at fund performance two different ways:
year by year and over time.
- --------------------------------------------------------------------------------
The Fund's Track Record
The bar chart shows how the total returns for the fund's Premium Shares have
varied from year to year, which may give some idea of risk. Below the chart is a
table showing how returns over different periods average out. All figures on
this page assume reinvestment of dividends and distributions. (Because Prime
Reserve Shares are new, they did not have a full calendar year of performance to
report as of the date of this prospectus.)
- --------------------------------------------------------------------------------
Annual Total Returns (%) as of 12/31 each year
- --------------------------------------------------------------------------------
THE ORIGINAL DOCUMENT CONTAINS A BAR CHART HERE
BAR CHART DATA:
00.00 -00.00 00.00 00.00 00.00 00.00 00.00 00.00 00.00 00.00
`89 `90 `91 `92 `93 `94 `95 `96 `97 `98
- --------------------------------------------------------------------------------
1999 Total Return as of June 30: 0.00%
Best Quarter: 0.00%, Q0 `90 Worst Quarter: -0.00%, Q0 `90
- --------------------------------------------------------------------------------
Average Annual Total Returns (%) as of 12/31/98
- --------------------------------------------------------------------------------
1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------
0.00 0.00 0.00
- --------------------------------------------------------------------------------
To find out the fund's current seven-day yield, call 1-800-SCUDDER.
16 | Scudder Money Market Series
<PAGE>
How Much Investors Pay
Because this is a no-load fund, it doesn't charge you any shareholder fees. The
fund does have annual operating expenses, and as a shareholder you pay them
indirectly.
- --------------------------------------------------------------------------------
Prime
Premium Reserve
Fee Table Shares Shares
- --------------------------------------------------------------------------------
Shareholder Fees (paid directly from your investment)
- --------------------------------------------------------------------------------
Sales Charges/Redemption Fees None None
- --------------------------------------------------------------------------------
Annual Operating Expenses (deducted from fund assets)
- --------------------------------------------------------------------------------
Management Fee 0.00% 0.00%
- --------------------------------------------------------------------------------
Distribution (12b-1) Fee None None
- --------------------------------------------------------------------------------
Other Expenses* 0.00% 0.00%
------------------------------------------
- --------------------------------------------------------------------------------
Total Annual Operating Expenses 0.00% 0.00%
- --------------------------------------------------------------------------------
Expense Reimbursement 0.00% 0.00%
- --------------------------------------------------------------------------------
Net Annual Operating Expenses** 0.00% 0.00%
* Includes costs of shareholder servicing, custody, accounting services, and
similar expenses, which may vary with fund size and other factors.
** By contract, expenses are capped at o.oo% through 00/00/00.
- --------------------------------------------------------------------------------
Expense Example
- --------------------------------------------------------------------------------
Based on the costs above (including one year of capped expenses), this example
is designed to help you compare the expenses of the fund's Premium Shares and
Prime Reserve Shares to those of other funds. The example assumes you invested
$10,000, earned 5% annual returns, reinvested all dividends and distributions,
and sold your shares at the end of each period. Remember that this is only an
example, and that actual expenses will be different.
Share Class 1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Premium $000 $0,000 $0,000 $0,000
- --------------------------------------------------------------------------------
Prime Reserve $000 $0,000 $0,000 $0,000
- --------------------------------------------------------------------------------
Scudder Money Market Series | 17
<PAGE>
Other Policies and Risks
While the fund-by-fund sections on the previous pages describe the main points
of each fund's strategy and risks, there are a few other issues to know about:
o Although major changes tend to be rare, a fund's Board of Directors could
change that fund's investment goal and other policies without seeking
shareholder approval.
o As a temporary measure, Scudder Tax Free Money Fund could shift up to 100% of
assets into defensive investments such as taxable money market securities.
This could help prevent losses, but would mean that the fund was not pursuing
its goal.
o Scudder Kemper measures credit quality at the time it buys securities, using
independent ratings or, for unrated securities, its own credit analysis. When
ratings don't agree, a fund may use the higher rating. If a security's credit
quality falls, the security will usually be sold unless the adviser or the
Board of Directors believes this would not be in the shareholders' best
interests.
Year 2000 readiness
Like all mutual funds, these funds could be affected by the inability of some
computer systems to recognize the year 2000. Scudder Kemper has a year 2000
readiness program designed to address this problem, and is also researching the
readiness of suppliers and business partners as well as issuers of securities
the funds own. Still, there's some risk that the year 2000 problem could
materially affect a fund's operations (such as its ability to calculate net
asset value and process purchases and redemptions), its investments, or
securities markets in general.
THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING THREE PARAGRAPHS.
- --------------------------------------------------------------------------------
FOR MORE INFORMATION
This prospectus doesn't tell you about every policy or risk of investing in the
funds.
If you want more information on a fund's allowable securities and investment
practices and the characteristics and risks of each one, you may want to request
a copy of the SAI (the back cover has information on how to do this).
18 | Other Policies and Risks
<PAGE>
- --------------------------------------------------------------------------------
[ICON] Scudder Kemper, the company with overall responsibility for
managing the funds, takes a team approach to asset management.
- --------------------------------------------------------------------------------
Who Manages and Oversees the Funds
The investment adviser
The investment adviser for these funds is Scudder Kemper Investments, Inc.,
located at 345 Park Avenue, New York, NY 10154-0010. Scudder Kemper has more
than 70 years of experience managing mutual funds, and currently has more than
$xxx billion in assets under management.
Each fund is managed by a team of investment professionals, who individually
represent different areas of expertise and who together develop investment
strategies and make buy and sell decisions. Supporting the fund managers are
Scudder Kemper's many economists, research analysts, traders, and other
investment specialists, located in offices across the United States and around
the world.
As payment for serving as investment adviser, Scudder Kemper receives a
management fee from each fund. Below are the actual rates paid by each fund for
the 12 months through the most recent fiscal year end, as a percentage of its
average daily net assets:
Fund Name Fee Paid
- --------------------------------------------------------------------------------
Scudder Tax Free Money Fund 0.00%
- --------------------------------------------------------------------------------
Scudder U.S. Treasury Money Fund 0.00%
- --------------------------------------------------------------------------------
Scudder Cash Investment Trust 0.00%
- --------------------------------------------------------------------------------
Scudder Money Market Series, Premium Shares 0.00%
- --------------------------------------------------------------------------------
Scudder Money Market Series, Prime Reserve Shares 0.00%
- --------------------------------------------------------------------------------
Who Manages and Oversees the Funds | 19
<PAGE>
The portfolio managers
Below are the people who handle the day-to-day management of each fund in this
prospectus.
Scudder Tax Free Money Fund
Frank J. Rachwalski
Lead Portfolio Manager
o Began investment career in 1973
o Joined the adviser in 1973
o Joined the fund team in [YEAR]
Jerri I. Cohen
o Began investment career in 1981
o Joined the adviser in 1981
o Joined the fund team in [YEAR]
Scudder U.S. Treasury Money Fund
Frank J. Rachwalski
Lead Portfolio Manager
o Began investment career in 1973
o Joined the adviser in 1973
o Joined the fund team in [YEAR]
Dean Meddaugh
o Began investment career in [YEAR]
o Joined the adviser in [YEAR]
o Joined the fund team in [YEAR]
Christopher Proctor
o Began investment career in [YEAR]
o Joined the adviser in [YEAR]
o Joined the fund team in [YEAR]
Scudder Cash Investment Trust
Scudder Money Market Series
Frank J. Rachwalski
Lead Portfolio Manager
o Began investment career in 1973
o Joined the adviser in 1973
o Joined the fund team in [YEAR]
Dean Meddaugh
o Began investment career in [YEAR]
o Joined the adviser in [YEAR]
o Joined the fund team in [YEAR]
20 | Who Manages and Oversees the Funds
<PAGE>
The directors
A mutual fund's Board of Directors is responsible for the general oversight of
the fund's business. The individuals below serve concurrently as the directors
for all funds in this prospectus. The majority of these directors are not
affiliated with Scudder Kemper. The independent directors have primary
responsibility for assuring that each fund is managed in the best interests of
its shareholders.
Who Manages and Oversees the Funds | 21
<PAGE>
Financial Highlights
These tables are designed to help you understand each fund's financial
performance in recent years. The figures in the first part of each table are for
a single share. The total return figures represent the percentage that an
investor in a particular fund would have earned (or lost), assuming all
dividends and distributions were reinvested. This information has been audited
by PricewaterhouseCoopers LLP, whose report, along with each fund's financial
statements, is included in that fund's annual report (see "Shareholder reports"
on the back cover).
Scudder Tax Free Money Fund
Years ended March 31, 1998 1997(a)
- --------------------------------------------------------------------------------
Per-share data ($)
- --------------------------------------------------------------------------------
Net asset value, beginning of period 00.00 00.00
- --------------------------------------------------------------------------------
Income from investment operations
- --------------------------------------------------------------------------------
Net investment income 00.00 00.00
- --------------------------------------------------------------------------------
Net gains or losses on securities
(both realized and unrealized) (00.00) 00.00
----------------------------------------
- --------------------------------------------------------------------------------
Total from investment operations 00.00 00.00
- --------------------------------------------------------------------------------
Less Distributions
- --------------------------------------------------------------------------------
Dividends from net investment income 00.00 (00.00)
- --------------------------------------------------------------------------------
Distributions from capital gains 00.00 00.00
- --------------------------------------------------------------------------------
Returns of capital 00.00 00.00
- --------------------------------------------------------------------------------
Total distributions 00.00 00.00
----------------------------------------
- --------------------------------------------------------------------------------
Net asset value, end of period 00.00 00.00
----------------------------------------
- --------------------------------------------------------------------------------
Total Return (%) 00.00 00.00
- --------------------------------------------------------------------------------
Ratios/supplemental data (%)
- --------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.00 0.00
- --------------------------------------------------------------------------------
Ratio of net income to average net assets 00.00 00.00
- --------------------------------------------------------------------------------
Portfolio turnover rate 000.00 000.00
- --------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 000,000 000,000
- --------------------------------------------------------------------------------
22 | Financial Highlights
<PAGE>
Scudder U.S. Treasury Money Fund
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Years ended March 31, 1998^1 1997 1996 1995 1994 1993
- --------------------------------------------------------------------------------------------------------
Per-share data ($)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period 00.00 00.00 00.00 00.00 00.00 00.00
-------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Income from investment operations
- --------------------------------------------------------------------------------------------------------
Net investment income 00.00 00.00 00.00 00.00 00.00 00.00
- --------------------------------------------------------------------------------------------------------
Net gains or losses on securities
(both realized and unrealized) (00.00) 00.00 00.00 00.00 00.00 00.00
--------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Total from investment operations 00.00 00.00 00.00 00.00 00.00 00.00
- --------------------------------------------------------------------------------------------------------
Less Distributions
- --------------------------------------------------------------------------------------------------------
Dividends from net investment income 00.00 (00.00) 00.00 00.00 00.00 00.00
- --------------------------------------------------------------------------------------------------------
Distributions from capital gains 00.00 00.00 00.00 00.00 00.00 00.00
- --------------------------------------------------------------------------------------------------------
Returns of capital 00.00 00.00 00.00 00.00 00.00 00.00
--------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Total distributions 00.00 00.00 00.00 00.00 00.00 00.00
--------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Net asset value, end of period 00.00 00.00 00.00 00.00 00.00 00.00
--------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Total Return (%) 00.00 00.00 00.00 00.00 00.00 00.00
- --------------------------------------------------------------------------------------------------------
Ratios/supplemental data (%)
- --------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.00 0.00 0.00 0.00 0.00 0.00
- --------------------------------------------------------------------------------------------------------
Ratio of net income to average net assets 00.00 00.00 00.00 00.00 00.00 00.00
- --------------------------------------------------------------------------------------------------------
Portfolio turnover rate 000.00 000.00 000.00 000.00 000.00 000.00
- --------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 000,000 000,000 000,000 000,000 000,000 000,000
- --------------------------------------------------------------------------------------------------------
</TABLE>
Financial Highlights | 23
<PAGE>
Scudder Cash Investment Trust
Years ended February 28, 1998 1997(a)
- --------------------------------------------------------------------------------
Per-share data ($)
- --------------------------------------------------------------------------------
Net asset value, beginning of period 00.00 00.00
- --------------------------------------------------------------------------------
Income from investment operations
- --------------------------------------------------------------------------------
Net investment income 00.00 00.00
- --------------------------------------------------------------------------------
Net gains or losses on securities
(both realized and unrealized) (00.00) 00.00
----------------------------------------
- --------------------------------------------------------------------------------
Total from investment operations 00.00 00.00
- --------------------------------------------------------------------------------
Less Distributions
- --------------------------------------------------------------------------------
Dividends from net investment income 00.00 (00.00)
- --------------------------------------------------------------------------------
Distributions from capital gains 00.00 00.00
- --------------------------------------------------------------------------------
Returns of capital 00.00 00.00
- --------------------------------------------------------------------------------
Total distributions 00.00 00.00
----------------------------------------
- --------------------------------------------------------------------------------
Net asset value, end of period 00.00 00.00
----------------------------------------
- --------------------------------------------------------------------------------
Total Return (%) 00.00 00.00
- --------------------------------------------------------------------------------
Ratios/supplemental data (%)
- --------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.00 0.00
- --------------------------------------------------------------------------------
Ratio of net income to average net assets 00.00 00.00
- --------------------------------------------------------------------------------
Portfolio turnover rate 000.00 000.00
- --------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 000,000 000,000
- --------------------------------------------------------------------------------
24 | Financial Highlights
<PAGE>
Scudder Money Market Series Premium Shares
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Years ended December 31 1998^1 1997 1996 1995 1994 1993
- --------------------------------------------------------------------------------------------------------
Per-share data ($)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period 00.00 00.00 00.00 00.00 00.00 00.00
-------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Income from investment operations
- --------------------------------------------------------------------------------------------------------
Net investment income 00.00 00.00 00.00 00.00 00.00 00.00
- --------------------------------------------------------------------------------------------------------
Net gains or losses on securities
(both realized and unrealized) (00.00) 00.00 00.00 00.00 00.00 00.00
--------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Total from investment operations 00.00 00.00 00.00 00.00 00.00 00.00
- --------------------------------------------------------------------------------------------------------
Less Distributions
- --------------------------------------------------------------------------------------------------------
Dividends from net investment income 00.00 (00.00) 00.00 00.00 00.00 00.00
- --------------------------------------------------------------------------------------------------------
Distributions from capital gains 00.00 00.00 00.00 00.00 00.00 00.00
- --------------------------------------------------------------------------------------------------------
Returns of capital 00.00 00.00 00.00 00.00 00.00 00.00
--------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Total distributions 00.00 00.00 00.00 00.00 00.00 00.00
--------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Net asset value, end of period 00.00 00.00 00.00 00.00 00.00 00.00
--------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Total Return (%) 00.00 00.00 00.00 00.00 00.00 00.00
- --------------------------------------------------------------------------------------------------------
Ratios/supplemental data (%)
- --------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.00 0.00 0.00 0.00 0.00 0.00
- --------------------------------------------------------------------------------------------------------
Ratio of net income to average net assets 00.00 00.00 00.00 00.00 00.00 00.00
- --------------------------------------------------------------------------------------------------------
Portfolio turnover rate 000.00 000.00 000.00 000.00 000.00 000.00
- --------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 000,000 000,000 000,000 000,000 000,000 000,000
- --------------------------------------------------------------------------------------------------------
</TABLE>
1 Lorem ipsum dolor sit amet, consectetuer adipiscing elit, sed diam nonummy
nibh euismod tincidunt ut laoreet dolore magna.
2 Lorem ipsum dolor sit amet, consectetuer adipiscing elit, sed diam nonummy
nibh euismod tincidunt ut laoreet dolore magna aliquam erat volutpat.
Financial Highlights | 25
<PAGE>
Scudder Money Market Series Prime Reserve Shares
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Years ended December 31, 1998^1 1997 1996 1995 1994 1993
- --------------------------------------------------------------------------------------------------------
Per-share data ($)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period 00.00 00.00 00.00 00.00 00.00 00.00
-------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Income from investment operations
- --------------------------------------------------------------------------------------------------------
Net investment income 00.00 00.00 00.00 00.00 00.00 00.00
- --------------------------------------------------------------------------------------------------------
Net gains or losses on securities
(both realized and unrealized) (00.00) 00.00 00.00 00.00 00.00 00.00
--------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Total from investment operations 00.00 00.00 00.00 00.00 00.00 00.00
- --------------------------------------------------------------------------------------------------------
Less Distributions
- --------------------------------------------------------------------------------------------------------
Dividends from net investment income 00.00 (00.00) 00.00 00.00 00.00 00.00
- --------------------------------------------------------------------------------------------------------
Distributions from capital gains 00.00 00.00 00.00 00.00 00.00 00.00
- --------------------------------------------------------------------------------------------------------
Returns of capital 00.00 00.00 00.00 00.00 00.00 00.00
--------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Total distributions 00.00 00.00 00.00 00.00 00.00 00.00
--------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Net asset value, end of period 00.00 00.00 00.00 00.00 00.00 00.00
--------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Total Return (%) 00.00 00.00 00.00 00.00 00.00 00.00
- --------------------------------------------------------------------------------------------------------
Ratios/supplemental data (%)
- --------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.00 0.00 0.00 0.00 0.00 0.00
- --------------------------------------------------------------------------------------------------------
Ratio of net income to average net assets 00.00 00.00 00.00 00.00 00.00 00.00
- --------------------------------------------------------------------------------------------------------
Portfolio turnover rate 000.00 000.00 000.00 000.00 000.00 000.00
- --------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 000,000 000,000 000,000 000,000 000,000 000,000
- --------------------------------------------------------------------------------------------------------
</TABLE>
1 Lorem ipsum dolor sit amet, consectetuer adipiscing elit, sed diam nonummy
nibh euismod tincidunt ut laoreet dolore magna.
2 Lorem ipsum dolor sit amet, consectetuer adipiscing elit, sed diam nonummy
nibh euismod tincidunt ut laoreet dolore magna aliquam erat volutpat.
26 | Financial Highlights
<PAGE>
How to invest in the funds
The following pages tell you how to invest in these funds and what to expect as
a shareholder. If you're investing directly with Scudder, all of this
information applies to you.
If you're investing through a "third party provider" -- for example, a workplace
retirement plan, financial supermarket, or financial advisor -- your provider
may have its own policies or instructions, and you should follow those.
<PAGE>
How to Buy Shares
Use these instructions to invest directly with Scudder. Make out your check to
"The Scudder Funds."
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
First investment Additional investments
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Money Market Series: Money Market Series:
$10,000 or more for Prime $1,000 or more for either
Reserve Shares; $25,000 or share class
more for Premium Shares
All other funds:
All other funds: $100 or more; $50 or more
$2,500 or more; $1,000 or for IRAs or when using an
more for IRAs* Automatic Investment Plan
- ------------------------------------------------------------------------------------------------
By mail o Fill out and sign an o Send a check and a Scudder
or express application investment slip to us at the
(see below) appropriate address below
o Send it to us at the
appropriate address, along o If you don't have an investment
with an investment check slip, simply include a letter
with your name, account number,
the full name of the fund, and
your investment instructions
- ------------------------------------------------------------------------------------------------
By wire o Call 1-800-SCUDDER o Call 1-800-SCUDDER for
for instructions instructions
- ------------------------------------------------------------------------------------------------
By phone -- o Call 1-800-SCUDDER for
instructions
- ------------------------------------------------------------------------------------------------
With an -- o To set up regular investments
automatic from a bank checking account,
investment call 1-800-SCUDDER
plan
- ------------------------------------------------------------------------------------------------
Using QuickBuy -- o Call 1-800-SCUDDER
- ------------------------------------------------------------------------------------------------
</TABLE>
* Scudder Tax Free Money Fund is not appropriate for IRAs.
- --------------------------------------------------------------------------------
[ICON] Regular mail:
The Scudder Funds, PO Box 2291, Boston, MA 02107-2291
Express, registered or certified mail:
The Scudder Funds, 66 Brooks Drive, Braintree, MA 02184-3839
Fax number: 1-800-SCUDDER (for exchanging and selling only)
- --------------------------------------------------------------------------------
28 | How to Buy Shares
<PAGE>
How to Exchange or Sell Shares
Use these instructions to exchange or sell shares in an account opened directly
with Scudder.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Exchanging into another fund Selling shares
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
To open a new account: Some transactions, including
same mimimum as for a most for over $100,000, can
new investment only be ordered in writing;
if you're in doubt, see page 00
For exchanges between
existing accounts:
Money Market Series:
$1,000 or more for either
share class
All other funds:
$100 or more
- ------------------------------------------------------------------------------------------------------------
By phone o Call 1-800-SCUDDER for o Call 1-800-SCUDDER for
or wire instructions instructions
- ------------------------------------------------------------------------------------------------------------
Using SAIL(TM) o Call 1-800-343-2890 and o Call 1-800-343-2890 and
follow the instructions follow the instructions
- ------------------------------------------------------------------------------------------------------------
By mail, express, or fax Write a letter that includes: Write a letter that includes:
(see previous page)
o the fund, class, and account o the fund, class, and account
number you're exchanging number from which you want
out of to sell shares
o the dollar amount or number o the dollar amount or number
of shares you want to of shares you want to sell
exchange
o your name(s), signature(s),
o the name and class of the and address, as they appear
fund you want to exchange on your account
into
o a daytime telephone number
o your name(s), signature(s),
and address, as they appear
on your account
o a daytime telephone number
- ------------------------------------------------------------------------------------------------------------
With an -- o To set up regular cash payments
automatic from a Scudder fund account,
withdrawal call 1-800-SCUDDER
plan
- ------------------------------------------------------------------------------------------------------------
Using QuickSell -- o Call 1-800-SCUDDER
- ------------------------------------------------------------------------------------------------------------
Using -- o On Limited Term and
Checkwriting Money Funds only; call
1-800-SCUDDER
- ------------------------------------------------------------------------------------------------------------
</TABLE>
How to Exchange or Sell Shares | 29
<PAGE>
- --------------------------------------------------------------------------------
[ICON] Questions? You can speak to a Scudder representative between 8
a.m. and 8 p.m. eastern time on any fund business day by calling
1-800-SCUDDER.
- --------------------------------------------------------------------------------
Policies You Should Know About
Along with the instructions on the previous pages, the policies below may affect
you as a shareholder. Some of this information, such as the section on dividends
and taxes, applies to all investors, including those investing through
investment providers.
If you are investing through an investment provider, check the materials you got
from them. As a general rule, you should follow the information in those
materials wherever it contradicts the information given here. Please note that
an investment provider may charge its own fees.
Policies about transactions
The funds are open for business whenever the New York Stock Exchange is open.
Each fund calculates its share price every business day, as of the close of
regular trading on the Exchange (typically 4 p.m. eastern time, but sometimes
earlier, as in the case of scheduled half-day trading or unscheduled suspensions
of trading). Except for Scudder Money Market Series, each fund also calculates
its share price as of 12:00 noon on business days.
You can place an order to buy or sell shares at any time. Once your order is
received by Scudder Service Corporation, and they have determined that it is a
"good order," it will be processed at the next share price calculated.
Because orders placed through investment providers must be forwarded to Scudder
Service Corporation before they can be processed, you'll need to allow extra
time. A representative of your investment provider should be able to tell you
when your order will be processed.
30 | Policies You Should Know About
<PAGE>
- --------------------------------------------------------------------------------
[ICON] The Scudder Web site can be a valuable resource for shareholders
with Internet access. Go to www.scudder.com to get up-to-date
information, review balances or even place orders for exchanges.
- --------------------------------------------------------------------------------
Ordinarily, your investment will start to accrue dividends the next business day
after your purchase is processed. However, with all funds except for Scudder
Money Market Series, wire transactions that arrive by 12:00 noon eastern time
will receive that day's dividend.
When selling shares, you'll generally receive the dividend for the day on which
your shares were sold. If you ask us to, we can sell shares in any fund except
Scudder Money Market Series and wire you the proceeds on the same day, as long
as we receive your request before 12:00 noon. However, you won't receive that
day's dividend.
SAIL(TM), the Scudder Automated Information Line, is available 24 hours a day by
calling 1-800-343-2890. You can use SAIL to get information on Scudder funds
generally and on accounts held directly at Scudder. You can also use it to make
exchanges and sell shares.
QuickBuy and QuickSell let you set up a link between a Scudder account and a
bank account. Once this link is in place, you can move money between the two
with a phone call. You'll need to make sure your bank has Automated Clearing
House (ACH) services. To set up QuickBuy or QuickSell on a new account, see the
account application; to add it to an existing account, call 1-800-SCUDDER.
Checkwriting lets you sell fund shares by writing a check. Your investment keeps
earning dividends until your check clears. Please note that you should not write
checks for less than $1,000 with Scudder Money Market Series or less than $100
with all other funds. Note as well that we can't honor any check larger than
your balance at the time the check is presented to us, or any check for more
than $5,000,000. It's not a good idea to close out an account using a check
because the account balance could change between the time you write the check
and the time it is processed.
Policies You Should Know About | 31
<PAGE>
When you call us to sell shares, we may record the call, ask you for certain
information, or take other steps designed to prevent fraudulent orders. It's
important to understand that as long as we take reasonable steps to ensure that
an order appears genuine, we are not responsible for any losses that may occur.
When you ask us to send or receive a wire, please note that while we don't
charge a fee to receive wires, we will deduct a $5 fee from all wires sent from
us to your bank. Your bank may charge its own fees for handling wires. The funds
can only accept wires of $100 or more.
Exchanges among Scudder funds are an option for shareholders who bought their
shares directly from Scudder and for many other investors as well. Exchanges are
a shareholder privilege, not a right: we may reject any exchange order,
particularly when there appears to be a pattern of "market timing" or other
frequent purchases and sales. We may also reject purchase orders, for these or
other reasons.
When you want to sell more than $100,000 worth of shares, you'll usually need to
place your order in writing and include a signature guarantee. The only
exception is if you want money wired to a bank account that is already on file
with us; in that case, you don't need a signature guarantee. Also, you don't
need a signature guarantee for an exchange, although we may require one in
certain other circumstances.
A signature guarantee is simply a certification of your signature -- a valuable
safeguard against fraud. You can get a signature guarantee from most brokers and
most banks, savings institutions, and credit unions. Note that you can't get a
signature guarantee from a notary public.
32 | Policies You Should Know About
<PAGE>
- --------------------------------------------------------------------------------
[ICON] If you ever have difficulty placing an order by phone or fax, you
can always send us your order in writing.
- --------------------------------------------------------------------------------
Money from shares you sell is normally sent out within one business day of when
your order is processed (not when it is received), although it could be delayed
for up to seven days. There are also two circumstances when it could be longer:
when you are selling shares you bought recently by check and that check hasn't
cleared yet (maximum delay: 15 days) or when unusual circumstances prompt the
SEC to allow further delays.
How the funds calculate share price
For each fund and share class in this prospectus, the share price is the net
asset value per share, or NAV. To calculate NAV for each fund and share class,
the funds use the following equation:
Total assets - total liabilities
---------------------------------- = NAV
Total Number of shares outstanding
In valuing securities, we typically use the amortized cost method (the method
used by most money market funds).
Policies You Should Know About | 33
<PAGE>
Other rights we reserve
You should be aware that we may do any of the following:
o withhold 31% of your distributions as federal income tax if you have been
notified by the IRS that you are subject to backup withholding, or if you
fail to provide us with a correct taxpayer ID number or certification that
you are exempt from backup withholding
o with Scudder Money Market Series, close your account and send you the
proceeds if your balance falls below the minimum for your share class, which
is $7,500 for Prime Reserve Shares and $20,000 for Premium Shares; in either
case, we will give you 60 days' notice so you can either increase your
balance or close your account (these policies don't apply to retirement
accounts, to investors with $100,000 or more in Scudder fund shares, or in
any case where a fall in share price created the low balance)
o with all other funds, charge you $10 a year if your account balance falls
below $2,500, and close your account and send you the proceeds if your
balance falls below $1,000; the notification and exemption policies are the
same as in the bullet above
o reject a new account application if you don't provide a correct Social
Security or other tax ID number; if the account has already been opened, we
may give you 30 days' notice to provide the correct number
o change, add, or withdraw various services, fees, and account policies (for
example, we may change or terminate the exchange privilege at any time)
34 | Policies You Should Know About
<PAGE>
- --------------------------------------------------------------------------------
[ICON] Because each shareholder's tax situation is unique, it's always a
good idea to ask your tax professional about the tax consequences
of your investments, including any state and local tax
consequences.
- --------------------------------------------------------------------------------
Understanding Distributions and Taxes
By law, a mutual fund is required to pass through to its shareholders virtually
all of its net earnings. A fund can earn money in two ways: by receiving
interest, dividends or other income from securities it holds, and by selling
securities for more than it paid for them. (A fund's earnings are separate from
any gains or losses stemming from your own purchase of shares.) A fund may not
always pay a distribution for a given period.
The funds intend to declare income dividends daily, and pay them monthly. The
funds don't expect to make short- or long-term capital gains distributions,
although if they did make any they would do so in December.
You can choose how to receive your dividends and distributions. You can have
them all automatically reinvested in fund shares or all sent to you by check.
Tell us your preference on your application. If you don't indicate a preference,
your dividends and distributions will all be reinvested. For retirement plans,
reinvestment is the only option.
The tax status of the fund earnings you receive, and your own fund transactions,
generally depends on which fund you are in and which type of transaction is
involved. The following tables show the usual tax status of transactions in fund
shares as well as that of any taxable distributions from the funds:
Generally taxed at ordinary income rates
- --------------------------------------------------------------------------------
o short-term capital gains from selling fund shares
- --------------------------------------------------------------------------------
o taxable income dividends you receive from a fund
- --------------------------------------------------------------------------------
o short-term capital gains distributions you receive from a fund
- --------------------------------------------------------------------------------
Generally taxed at capital gains rates
- --------------------------------------------------------------------------------
o long-term capital gains from selling fund shares
- --------------------------------------------------------------------------------
o long-term capital gains distributions you receive from a fund
- --------------------------------------------------------------------------------
Understanding Distributions and Taxes | 35
<PAGE>
For most shareholders, dividends from Scudder Tax Free Money Fund are generally
free from federal income tax, and dividends from Scudder U.S. Treasury Money
Fund are generally free from state and local income tax. However, there are a
few exceptions:
o a portion of a fund's dividends may be taxable as ordinary income if it
came from investments in taxable securities or as the result of short-term
capital gains
o with Scudder Tax Free Money Fund, because the fund can invest up to 20% of
assets in securities whose income is subject to the federal alternative
minimum tax (AMT), you may owe taxes on a portion of your dividends if you
are among those investors who must pay AMT
o with Scudder U.S. Treasury Money Fund, shareholders who live in certain
states and localities may not be eligible for the tax exemptions that
shareholders in most locations are
As noted earlier, the funds don't expect to make short- or long-term capital
gains distributions. Also, because each fund seeks to maintain a stable share
price, you are unlikely to have a capital gain or loss when you sell fund
shares.
Each fund will send you detailed tax information every January. These statements
tell you the amount and the tax category of any dividends or distributions you
received. They also have certain details on your purchases and sales of shares.
The tax status of dividends and distributions is the same whether you reinvest
them or not. Dividends or distributions declared in the last quarter of a given
year are taxed in that year, even though you may not receive the money until the
following January.
36 | Understanding Distributions and Taxes
<PAGE>
Notes
<PAGE>
To Get More Information
Shareholder reports -- These include commentary from each fund's management team
about recent market conditions and the effects of a fund's strategies on its
performance. For each fund, they also have detailed performance figures, a list
of everything the fund owns, and the fund's financial statements. Shareholders
get these reports automatically. To reduce costs, we mail one copy per
household. For more copies, call 1-800-SCUDDER.
Statement of Additional Information (SAI) -- This tells you more about each
fund's features and policies, including additional risk information. The SAI is
incorporated by reference into this document (meaning that it's legally part of
this prospectus).
If you'd like to ask for copies of these documents, or if you're a shareholder
and have questions, please contact Scudder or the SEC (see below). Materials you
get from Scudder are free; those from the SEC involve a copying fee. If you
like, you can look over these materials in person at the SEC's Public Reference
Room in Washington, DC.
Scudder Funds SEC
PO Box 2291 450 Fifth Street, N.W.
Boston, MA 02107-2291 Washington, DC 20549-6009
1-800-SCUDDER 1-800-SEC-0330
www.scudder.com www.sec.gov
Fund Name SEC File #
- --------------------------------------------------------------------------------
Scudder Tax Free Money Fund 000-0000
- --------------------------------------------------------------------------------
Scudder U.S. Treasury Money Fund 000-0000
- --------------------------------------------------------------------------------
Scudder Cash Investment Trust 000-0000
- --------------------------------------------------------------------------------
Scudder Money Market Series 000-0000
- --------------------------------------------------------------------------------
<PAGE>
SCUDDER CASH INVESTMENT TRUST
A No-load (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 High Quality, Short-Term Securities.
and
SCUDDER U.S. TREASURY MONEY FUND
A No-load (No Sales Charges) Money Market Fund Seeking 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.
and
SCUDDER TAX FREE MONEY FUND
A No-Load (No Sales Charges) Money Market Fund
Seeking to Provide Income Exempt from Regular Federal Income
Tax and Stability of Principal.
The Fund Seeks to Achieve Its Objective by Investing in
Municipal Securities.
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
October 1, 1999
- --------------------------------------------------------------------------------
This combined Statement of Additional Information is not a prospectus
and should be read in conjunction with the combined prospectus of Scudder Cash
Investment Trust, Scudder U.S. Treasury Money Fund, Scudder Tax Free Money Fund
and Scudder Money Market Series -- Scudder Prime Reserve Money Market Shares and
Scudder Premium Money Market Shares dated October 1, 1999, 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.
The Annual Reports to Shareholders for Scudder Cash Investment Trust,
Scudder U.S. Treasury Money Fund and Scudder Tax Free Money Fund dated May 31,
1999, are incorporated by reference and is hereby deemed to be part of this
Statement of Additional Information.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
THE FUNDS'INVESTMENT OBJECTIVES AND POLICIES........................................................................1
General Investment Objectives and Policies.................................................................1
Scudder Cash Investment Trust..............................................................................1
Scudder U.S. Treasury Money Fund...........................................................................3
Scudder Tax Free Money Fund................................................................................4
Specialized Investment Techniques of the Funds.............................................................9
Trustees'Power to Change Objectives and Policies..........................................................13
Investment Restrictions...................................................................................13
Master/feeder structure...................................................................................15
PURCHASES..........................................................................................................16
Additional Information About Opening an Account...........................................................16
Minimum balances..........................................................................................16
Checks....................................................................................................16
Wire Transfer of Federal Funds............................................................................17
Additional Information About Making Subsequent Investments by QuickBuy....................................17
Share Price...............................................................................................17
Share Certificates........................................................................................18
Other Information.........................................................................................18
EXCHANGES AND REDEMPTIONS..........................................................................................18
Exchanges.................................................................................................18
Redemption by Telephone...................................................................................19
Redemption By QuickSell...................................................................................20
Redemption by Mail or Fax.................................................................................20
Redemption by Checkwriting................................................................................21
Other Information.........................................................................................21
FEATURES AND SERVICES OFFERED BY THE FUNDS.........................................................................21
The No-Load Concept.......................................................................................21
Internet access...........................................................................................22
Dividends and Capital Gains Distribution Options..........................................................22
Scudder Investor Centers..................................................................................23
Reports to Shareholders...................................................................................23
Transaction Summaries.....................................................................................23
THE SCUDDER FAMILY OF FUNDS........................................................................................23
SPECIAL PLAN ACCOUNTS..............................................................................................26
Scudder Retirement Plans: Profit-Sharing and Money Purchase Pension Plans for Corporations
and Self-Employed Individuals..........................................................................26
Scudder 401(k): Cash or Deferred Profit-Sharing Plan for Corporations and Self-Employed Individuals.....27
Scudder IRA: Individual Retirement Account...............................................................27
Scudder Roth IRA: Individual Retirement Account..........................................................28
Scudder 403(b) Plan.......................................................................................28
Automatic Withdrawal Plan.................................................................................28
Group or Salary Deduction Plan............................................................................29
Automatic Investment Plan.................................................................................29
Uniform Transfers/Gifts to Minors Act.....................................................................29
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS..........................................................................29
i
<PAGE>
TABLE OF CONTENTS (continued)
Page
PERFORMANCE INFORMATION............................................................................................31
Yield.....................................................................................................31
Effective Yield...........................................................................................31
Tax-Equivalent Yield -- Scudder Tax Free Money Fund.......................................................31
Average Annual Total Return...............................................................................32
Cumulative Total Return...................................................................................32
Total Return..............................................................................................33
Comparison of Fund Performance............................................................................33
ORGANIZATION OF THE FUNDS..........................................................................................34
INVESTMENT ADVISER.................................................................................................35
Personal Investments by Employees of the Adviser..........................................................39
TRUSTEES AND OFFICERS..............................................................................................39
REMUNERATION.......................................................................................................41
Responsibilities of the Board -- Board and Committee Meetings.........................................41
Compensation of Officers and Trustees.....................................................................41
DISTRIBUTOR........................................................................................................42
TAXES ..........................................................................................................43
PORTFOLIO TRANSACTIONS.............................................................................................46
Brokerage Commissions.....................................................................................46
NET ASSET VALUE....................................................................................................47
ADDITIONAL INFORMATION.............................................................................................47
Experts...................................................................................................47
Shareholder Indemnification...............................................................................48
Other Information.........................................................................................48
FINANCIAL STATEMENTS...............................................................................................49
Scudder Cash Investment Trust.............................................................................49
Scudder U.S. Treasury Money Fund..........................................................................49
Scudder Tax Free Money Fund...............................................................................49
APPENDIX
Ratings of Municipal Obligations
Commercial Paper Ratings
</TABLE>
ii
<PAGE>
THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES
Scudder Cash Investment Trust is sometimes referred to herein as
"SCIT." Scudder U.S. Treasury Money Fund is sometimes referred to herein as
"Treasury Fund." Scudder Tax Free Money Fund is sometimes referred to herein as
STFMF. SCIT, Treasury Fund and STFMF are sometimes jointly referred to herein as
the "Funds" or "Scudder Money Market Funds."
General Investment Objectives and Policies
Descriptions in this Statement of Additional Information of a
particular investment practice or technique in which a Fund may engage or a
financial instrument which a Fund may purchase (such as options, forward foreign
currency contracts, etc.) are meant to describe the spectrum of investments that
Scudder Kemper Investments, Inc. ("the Adviser"), in its discretion, might, but
is not required to, use in managing each Fund's portfolio assets. The Adviser
may, in its discretion, at any time employ such practice, technique or
instrument for one or more funds but not for all funds advised by it.
Furthermore, it is possible that certain types of financial instruments or
investment techniques described herein may not be available, permissible,
economically feasible or effective for their intended purposes in all markets.
Certain practices, techniques, or instruments may not be principal activities of
a Fund, but, to the extent employed, could from time to time have a material
impact on a Fund's performance.
Scudder Cash Investment Trust
Scudder Cash Investment Trust is a no-load, open-end, diversified
management investment company. SCIT's investment objectives are to maintain
stability of capital and, consistent therewith, to maintain 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 Fund's objectives of maintaining the stability and liquidity
of capital. There is no assurance that SCIT's investment objectives will be
achieved. Unless otherwise stated, the investment objectives and policies of
SCIT are nonfundamental and 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 securities consisting of 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; when-issued securities; asset-backed securities, including
certificates, participations and notes; 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
Corporation ("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
<PAGE>
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 the Adviser, such securities possess creditworthiness comparable to
those rated securities in which the Fund may invest.
For purposes of determining the percentage of the Fund's total assets
invested in securities of issuers having their principal business activities in
a particular industry, asset backed securities will be classified separately,
based on the nature of the underlying assets, according to the following
categories: captive auto, diversified, retail and consumer loans, captive
equipment and business, business trade receivables, nuclear fuel and capital and
mortgage lending.
Foreign Securities. Supranational entities are international organizations
designated or supported by governmental entities to promote economic
reconstruction or development and international banking institutions 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.
2
<PAGE>
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 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.
Scudder U.S. Treasury Money Fund
Scudder U.S. Treasury Money Fund is a no-load, 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 seeks to achieve its objective by investing in short-term U.S.
Government securities and repurchase agreements. 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 so that it may be 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. 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 the U.S. Treasury obligations. At least 80% of the Fund's
total 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
3
<PAGE>
the Fund may invest are U.S. dollar-denominated. 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 in illiquid 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.
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.
For purposes of determining the percentage of the fund's total assets
invested in securities of issuers having their principal business activities in
a particular industry, asset backed securities will be classified separately,
based on the nature of the underlying assets, according to the following
categories: captive auto, diversified, retail and consumer loans, captive
equipment and business, business trade receivables, nuclear fuel and capital and
mortgage lending.
Scudder Tax Free Money Fund
Scudder Tax Free Money Fund, a diversified open-end management
investment company, seeks to provide income exempt from regular federal income
tax and stability of principal through investments in municipal securities. All
of the Fund's investments are high quality, have a remaining maturity of 397
calendar days or less and have minimal credit risk as determined by the Adviser.
The dollar-weighted average maturity of the Fund's portfolio is 90 days or less.
The Fund seeks to maintain a constant net asset value of $1.00 per
share, although in extreme circumstances this may not be possible. A small
portion of the income may be subject to regular federal, alternative minimum,
state and local income taxes.
All of the Fund's municipal securities must meet certain quality
criteria at the time of purchase. Generally, the Fund may purchase only
securities which are rated, or issued by an issuer rated, within the two highest
quality rating categories of two or more of the following rating agencies:
Moody's (Aaa and Aa, MIG 1 and MIG 2, and P1 and P-2), S&P (AAA and AA, SP1+ and
SP1, A1+ and A1 and A-2) and Fitch (AAA and AA, F1 and F2). Where only one
rating agency has rated a security (or its issuer), the Fund generally may
purchase that security as long as the rating falls within the categories
described above. Where a security (or its issuer) is unrated, the Fund may
purchase that security if, in the judgment of the Adviser, it is comparable in
quality to securities described above. All of the securities in which the Fund
may invest are dollar-denominated and must meet credit standards applied by the
Adviser pursuant to procedures established by the Trustees. Should an issue of
municipal securities cease to be rated or if its rating is reduced below the
minimum required for purchase by the Fund, the Adviser will dispose of any such
security unless the Trustees of the Fund determine that such disposal would not
be in the best interests of the Fund.
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.
Municipal securities in which the Fund may invest include municipal
notes, short-term municipal bonds, variable rate demand instruments and
tax-exempt commercial paper. Municipal notes are generally used to provide for
short-term capital needs and generally have maturities of one year or less.
Examples include tax anticipation and revenue anticipation notes, which are
generally issued in anticipation of various seasonal revenues, bond anticipation
notes, and construction loan notes. Short-term municipal bonds may include
general obligation bonds, which are secured by the issuer's pledge of its faith,
credit and taxing power for payment of principal and interest, and revenue
bonds, which are generally paid from the revenues of a particular facility or a
specific excise tax or other source. Examples of taxable
4
<PAGE>
investments in which the Fund may invest include obligations of corporate
issuers, U.S. Treasury obligations, U.S. Government obligations, money market
instruments and repurchase agreements.
The Fund may invest more than 25% of its assets in industrial
development or other private activity bonds, subject to the Fund's fundamental
investment policies, and also subject to the Fund's 20% of net assets limitation
on investing in securities whose investment income is subject to the alternative
minimum tax ("AMT" bonds) and the Fund's current intention not to invest in
municipal securities whose investment income is subject to regular federal
income tax. For purposes of the Fund's investment limitation regarding
concentration of investments in any one industry, industrial development or
other private activity bonds ultimately payable by companies within the same
industry will be considered as if they were issued by issuers in the same
industry. The Fund's distributions from interest on AMT bonds may be taxable
depending upon an investor's particular situation.
It is a fundamental policy, which may not be changed without a vote of
shareholders, that at least 80% of the Fund's net assets will normally be
invested in short-term municipal securities.
Under normal market conditions the Fund expects to invest 100% of its
portfolio securities in municipal securities. The Fund may, on a temporary
basis, hold and invest up to 20% of its assets in cash and cash equivalents and
in temporary investments of taxable securities with remaining maturities of 397
calendar days or less. For temporary defensive purposes the Fund may invest more
than 20% in such investments or may otherwise vary from its investment policies
during periods when the Adviser determines that it is advisable to do so because
of conditions in the securities markets or other economic or political
conditions. It is impossible to accurately predict how long such alternative
strategies may be utilized. In 1998, all the Fund's dividends were 100%
federally tax-exempt. The Fund may also invest in stand-by commitments and other
puts, repurchase agreements, participation interests and when-issued or forward
delivery securities.
Municipal Securities. Municipal Securities are issued by or on behalf of states,
territories and possessions of the United States 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."
1. Municipal Notes. 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.
Tax anticipation notes are sold to finance working capital needs of
municipalities. They are generally payable from specific tax revenues expected
to be received at a future date. Revenue anticipation notes are issued in
expectation of receipt of other types of revenue such as Federal revenues
available under the Federal Revenue Sharing Program. Tax anticipation notes and
revenue anticipation notes are generally issued in anticipation of various
seasonal revenues such as income, sales, use, and business taxes. Bond
anticipation notes are sold to provide interim financing. These notes are
generally issued in anticipation of long-term financing in the market. In most
cases, these monies provide for the repayment of the notes. Construction loan
notes are sold to provide construction financing. After the projects are
successfully completed and accepted, many projects receive permanent financing
through the Federal Housing Administration under "Fannie Mae" (the Federal
National Mortgage Association) or "Ginnie Mae" (the Government National Mortgage
Association). There are, of course, a number of other types of notes issued for
different purposes and secured differently from those described above.
2. Municipal Bonds. 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.
Issuers of General Obligation Bonds include states, counties, cities,
towns and regional districts. The proceeds of these obligations are used to fund
a wide range of public projects including the construction or improvement of
schools, highways and roads, water and sewer systems and a variety of other
public purposes. The basic security of General Obligation Bonds is the issuer's
pledge of its full faith, credit and taxing power for the payment of principal
and
5
<PAGE>
interest. The taxes that can be levied for the payment of debt service may be
limited or unlimited as to rate or amount or special assessments.
The principal security for a Revenue Bond is generally the net revenues
derived from a particular facility or group of facilities or, in some cases,
from the proceeds of a special excise or other specific revenue source. Revenue
Bonds have been issued to fund a wide variety of capital projects including:
electric, gas, water and sewer systems; highways, bridges and tunnels; port and
airport facilities; colleges and universities; and hospitals. Although the
principal security behind these bonds varies widely, many provide additional
security in the form of a debt service reserve fund whose monies may also be
used to make principal and interest payments on the issuer's obligations.
Housing finance authorities have a wide range of security including partially or
fully insured, rent subsidized and/or collateralized mortgages, and/or the net
revenues from housing or other public projects. In addition to a debt service
reserve fund, some authorities provide further security in the form of a state's
ability (without obligation) to make up deficiencies in the debt service reserve
fund. Lease rental revenue bonds issued by a state or local authority for
capital projects are secured by annual lease rental payments from the state or
locality to the authority sufficient to cover debt service on the authority's
obligations.
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. STFMF may invest more than 25% of its assets in industrial
development or other private activity bonds, subject to the Fund's fundamental
investment policies, and also subject to the Fund's current intention not to
invest in municipal securities whose investment income is taxable or AMT bonds.
For the purposes of the Fund's investment limitation regarding concentration of
investments in any one industry, industrial development or other private
activity bonds ultimately payable by companies within the same industry will be
considered as if they were issued by issuers in the same industry.
3. Municipal Lease Obligations and Participation Interests. A
municipal lease obligation may take the form of a lease,
installment purchase contract or conditional sales contract
which is issued by a state or local government and authorities
to acquire land, equipment and facilities. Income from such
obligations is generally exempt from state and local taxes in
the state of issuance. Municipal lease obligations frequently
involve special risks not normally associated with general
obligations or revenue bonds. Leases and installment purchase
or conditional sale contracts (which normally provide for
title in the leased asset to pass eventually to the
governmental issuer) have evolved as a means for governmental
issuers to acquire property and equipment without meeting the
constitutional and statutory requirements for the issuance of
debt. The debt issuance limitations are deemed to be
inapplicable because of the inclusion in many leases or
contracts of "non-appropriation" clauses that relieve the
governmental issuer of any obligation to make future payments
under the lease or contract unless money is appropriated for
such purpose by the appropriate legislative body on a yearly
or other periodic basis. In addition, such leases or contracts
may be subject to the temporary abatement of payments in the
event the issuer is prevented from maintaining occupancy of
the leased premises or utilizing the leased equipment.
Although the obligations may be secured by the leased
equipment or facilities, the disposition of the property in
the event of nonappropriation or foreclosure might prove
difficult, time consuming and costly, and result in a delay in
recovery or the failure to fully recover the Fund's original
investment.
Participation interests represent undivided interests in municipal
leases, installment purchase contracts, conditional sales contracts or other
instruments. These are typically issued by a trust or other entity which has
received an assignment of the payments to be made by the state or political
subdivision under such leases or contracts.
Certain municipal lease obligations and participation interests may be
deemed illiquid for the purpose of the Fund's limitation on investments in
illiquid securities. Other municipal lease obligations and participation
interests acquired by the Fund may be determined by the Adviser to be liquid
securities for the purpose of such limitation. In determining the liquidity of
municipal lease obligations and participation interests, the Adviser will
consider a variety of factors including: (1) the willingness of dealers to bid
for the security; (2) the number of dealers willing to purchase or sell the
obligation and the number of other potential buyers; (3) the frequency of trades
or quotes for the obligation; and
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(4) the nature of the marketplace in which the security trades. In addition, the
Adviser will consider factors unique to particular lease obligations and
participation interests affecting the marketability thereof. These include the
general creditworthiness of the issuer, the importance to the issuer of the
property covered by the lease and the likelihood that the marketability of the
obligation will be maintained throughout the time the obligation is held by the
Fund.
The Fund may purchase participation interests in municipal lease
obligations held by a commercial bank or other financial institution. Such
participations provide the Fund with the right to a pro rata undivided interest
in the underlying municipal lease obligations. In addition, such participations
generally provide the Fund with the right to demand payment, on not more than
seven days' notice, of all or any part of the Fund's participation interest in
the underlying municipal lease obligation, plus accrued interest. The Fund will
only invest in such participations if, in the opinion of bond counsel, counsel
for the issuers of such participations or counsel selected by the Adviser, the
interest from such participations is exempt from regular federal income tax and
state income tax, if applicable.
4. Other Municipal Securities. There is, in addition, a variety
of hybrid and special types of municipal securities as well as
numerous differences in the security of municipal securities
both within and between the two principal classifications
above.
The Fund may purchase variable rate demand instruments that are
tax-exempt municipal obligations providing for a periodic adjustment in the
interest rate paid on the instrument according to changes in interest rates
generally. These instruments also permit the Fund to demand payment of the
unpaid principal balance plus accrued interest upon a specified number of days'
notice to the issuer or its agent. The demand feature may be backed by a bank
letter of credit or guarantee issued with respect to such instrument. The Fund
intends to exercise the demand only (1) upon a default under the terms of the
municipal obligation, (2) as needed to provide liquidity to the Fund, or (3) to
maintain a high quality investment portfolio or (4) to maximize the Fund's
yield. A bank that issues a repurchase commitment may receive a fee from the
Fund for this arrangement. The issuer of a variable rate demand instrument may
have a corresponding right to prepay in its discretion the outstanding principal
of the instrument plus accrued interest upon notice comparable to that required
for the holder to demand payment.
The variable rate demand instruments that the Fund may purchase are
payable on demand on not more than seven calendar days' notice. The terms of the
instruments provide that interest rates are adjustable at intervals ranging from
daily up to six months, and the adjustments are based upon the current interest
rate environment as provided in the respective instruments. The Fund will
determine the variable rate demand instruments that they will purchase in
accordance with procedures approved by the Trustees to minimize credit risks.
The Adviser may determine that an unrated variable rate demand instrument meets
the Fund's quality criteria by reason of being backed by a letter of credit or
guarantee issued by a bank that meets the quality criteria for the Fund. Thus,
either the credit of the issuer of the municipal obligation or the guarantor
bank or both will meet the quality standards of the Fund. The Adviser will
reevaluate each unrated variable rate demand instrument held by the Fund on a
quarterly basis to determine that it continues to meet the Fund's quality
criteria.
The interest rate of the underlying variable rate demand instruments
may change with changes in interest rates generally, but the variable rate
nature of these instruments should decrease changes in value due to interest
rate fluctuations. Accordingly, as interest rates decrease or increase, the
potential for capital gain and the risk of capital loss on the disposition of
portfolio securities are less than would be the case with a comparable portfolio
of fixed income securities. The Fund may purchase variable rate demand
instruments on which stated minimum or maximum rates, or maximum rates set by
state law, limit the degree to which interest on such variable rate demand
instruments may fluctuate; to the extent it does, increases or decreases in
value of such variable rate demand notes may be somewhat greater than would be
the case without such limits. Because the adjustment of interest rates on the
variable rate demand instruments is made in relation to movements of the
applicable rate adjustment index, the variable rate demand instruments are not
comparable to long-term fixed interest rate securities. Accordingly, interest
rates on the variable rate demand instruments may be higher or lower than
current market rates for fixed rate obligations of comparable quality with
similar final maturities.
The maturity of the variable rate demand instruments held by the Fund
will ordinarily be deemed to be the longer of (1) the notice period required
before the Fund is entitled to receive payment of the principal amount of the
instrument or (2) the period remaining until the instrument's next interest rate
adjustment.
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5. General Considerations. An entire issue of Municipal
Securities may be purchased by one or a small number of
institutional investors such as the Fund. Thus, the issue may
not be said to be publicly offered. Unlike securities which
must be registered under the Securities Act of 1933, as
amended (the "1933 Act") prior to offer and sale unless an
exemption from such registration is available, municipal
securities which are not publicly offered may nevertheless be
readily marketable. A secondary market exists for municipal
securities which were not publicly offered initially.
Securities purchased for the Fund are subject to the limitations on
holdings of securities which are not readily marketable contained in the Fund's
investment restrictions. The Adviser determines whether a municipal security is
readily marketable based on whether it may be sold in a reasonable time
consistent with the customs of the municipal markets (usually seven days) at a
price (or interest rate) which accurately reflects its value. The Adviser
believes that the quality standards applicable to the Fund's investments enhance
marketability. In addition, Stand-by Commitments and demand obligations also
enhance marketability.
For the purpose of the Fund's investment restrictions, the
identification of the "issuer" of municipal securities which are not General
Obligation Bonds is made by the Adviser on the basis of the characteristics of
the obligation as described above, the most significant of which is the source
of funds for the payment of principal of and interest on such obligations.
The Fund expects that it will not invest more than 25% of its total
assets in municipal securities whose issuers are located in the same state or
more than 25% of its total assets in municipal securities the security of which
is derived from any one of the following categories: hospitals and health
facilities; turnpikes and toll roads; ports and airports; or colleges and
universities. The Fund may invest more than 25% of its total assets in municipal
securities of one or more of the following types: public housing authorities;
general obligations of states and localities; lease rental obligations of states
and local authorities; state and local housing finance authorities; municipal
utilities systems; bonds that are secured or backed by the Treasury or other
U.S. Government guaranteed securities; or industrial development and pollution
control bonds. There could be economic, business or political developments,
which might affect all municipal securities of a similar type. However, the Fund
believes that the most important consideration affecting risk is the quality of
particular issues of municipal securities rather than factors affecting all, or
broad classes of, municipal securities.
Stand-by Commitments. The Fund may engage in Stand-by Commitments. STFMF has
received an order from the SEC which will enable it to improve its portfolio
liquidity by making available same-day settlements on portfolio sales (and thus
facilitate the same-day payments of redemption proceeds in federal funds)
through the acquisition of "Stand-by Commitments." A Stand-by Commitment is a
right acquired by a Fund, when it purchases a municipal security from a broker,
dealer or other financial institution ("seller"), to sell up to the same
principal amount of such securities back to the seller, at that Fund's option,
at a specified price. Stand-by Commitments are also known as "puts." STFMF's,
investment policies permit the acquisition of Stand-by Commitments solely to
facilitate portfolio liquidity. The acquisition of or the power to exercise a
Stand-by Commitment will not affect the valuation or maturity of STFMF's
underlying portfolio, which will be valued in accordance with the order of the
SEC. The exercise by a Fund of a Stand-by Commitment is subject to the ability
of the other party to fulfill its contractual commitment.
Stand-by Commitments acquired by the Fund will have the following
features: (1) they will be in writing and will be physically held by a Fund's
custodian; (2) a Fund's rights to exercise them will be unconditional and
unqualified; (3) they will be entered into only with sellers which in the
Adviser's opinion present a minimal risk of default; (4) although Stand-by
Commitments will not be transferable, municipal securities purchased subject to
such commitments may be sold to a third party at any time, even though the
commitment is outstanding; and (5) their exercise price will be (i) a Fund's
acquisition cost (excluding the cost, if any, of the Stand-by Commitment) of the
municipal securities which are subject to the commitment (excluding any accrued
interest which a Fund paid on their acquisition), less any amortized market
premium or plus any amortized market or original issue discount during the
period a Fund owned the securities, plus (ii) all interest accrued on the
securities since the last interest payment date. Since STFMF will value
municipal securities on an amortized cost basis, the amount receivable upon
exercise of a Stand-by Commitment will be substantially the same as the value
assigned by that Fund to the underlying securities. Moreover, while there is
little risk of an event occurring which would make amortized cost valuation of
its portfolio securities inappropriate, if such condition developed, the
securities may, in the discretion of the Trustees, be valued on the basis of
available market information and held to maturity. The Fund expects to refrain
from exercising a Stand-by Commitment in the event that the amount receivable
upon exercise of the Stand-by Commitment is significantly greater than the then
current market value of the underlying municipal securities in order to avoid
imposing a loss on a seller and thus jeopardizing the Fund's business
relationship with that seller.
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The Fund expects that Stand-by Commitments generally will be available
without the payment of any direct or indirect consideration. However, if
necessary or advisable, the Fund will pay for Stand-by Commitments, either
separately in cash or by paying a higher price for portfolio securities which
are acquired subject to the commitments. As a matter of policy, the total amount
"paid" by the Fund in either manner for outstanding Stand-by Commitments will
not exceed 1/2 of 1% of the value of total assets of the Fund calculated
immediately after any Stand-by Commitment is acquired.
It is difficult to evaluate the likelihood of use or the potential
benefit of a Stand-by Commitment. Therefore, it is expected that the Fund's
Trustees will determine that Stand-by Commitments ordinarily have a "fair value"
of zero, regardless of whether any direct or indirect consideration was paid.
When the Fund has paid for a Stand-by Commitment, its cost will be reflected as
unrealized depreciation for the period during which the commitment is held. In
addition, for purposes of complying with the condition of the SEC's amortized
cost Rule that the dollar-weighted average maturity of its portfolio shall not
exceed 90 days, the maturity of a portfolio security of STFMF shall not be
considered shortened or otherwise affected by any Stand-by Commitment to which
such security is subject.
Management of the Fund understands that the Internal Revenue Service
(the "Service") has issued a favorable revenue ruling to the effect that, under
specified circumstances, a registered investment company will be the owner of
tax-exempt municipal obligations acquired subject to a put option. The Service
has also issued private letter rulings to certain taxpayers (which do not serve
as precedent for other taxpayers) to the effect that tax-exempt interest
received by a regulated investment company with respect to such obligations will
be tax-exempt in the hands of the company and may be distributed to its
shareholders as exempt-interest dividends. The Service has subsequently
announced that it will not ordinarily issue advance ruling letters as to the
identity of the true owner of property in cases involving the sale of securities
or participation interests therein if the purchaser has the right to cause the
security, or the participation interest therein, to be purchased by either the
seller or a third party. The Fund intends to take the position that it owns any
municipal obligations acquired subject to a Stand-by Commitment and that
tax-exempt interest earned with respect to such municipal obligations will be
tax-exempt in its hands. There is no assurance that the Service will agree with
such position in any particular case. There is no assurance that Stand-by
Commitments will be available to the Fund nor has the Fund assumed that such
commitments would continue to be available under all market conditions.
Third Party Puts. These long-term fixed rate bonds coupled with puts may present
the same tax issues as are associated with Stand-by Commitments discussed above.
As with any Stand-by Commitments acquired by the Fund, the Fund intends to take
the position that it is the owner of any municipal obligation acquired subject
to a third-party put, and that tax-exempt interest earned with respect to such
municipal obligations will be tax-exempt in its hands. There is no assurance
that the Service will agree with such position in any particular case.
Additionally, the federal income tax treatment of certain other aspects of these
investments, including the treatment of tender fees and swap payments, in
relation to various regulated investment company tax provisions is unclear.
However, the Adviser intends to manage the Fund's portfolio in a manner designed
to minimize any adverse impact from these investments.
Participation Interests. STFMF may purchase from banks participation interests
in all or part of specific holdings of municipal securities. Each participation
is backed by an irrevocable letter of credit or guarantee of the selling bank
that the Adviser has determined meets the prescribed quality standards of the
Fund. Thus, even if the credit of the issuer of the municipal security does not
meet the quality standards of STFMF, the credit of the selling bank will. STFMF
has the right to sell the participation back to the bank after seven days'
notice for the full principal amount of the Fund's interest in the municipal
security plus accrued interest, but only (1) as required to provide liquidity to
the Fund, (2) to maintain a high quality investment portfolio or (3) upon a
default under the terms of the municipal security. The selling bank may receive
a fee from STFMF in connection with the arrangement. STFMF will not purchase
participation interests unless it receives an opinion of counsel or a ruling of
the Internal Revenue Service satisfactory to the Trustees of the Fund that
interest earned by the Fund on municipal obligations in which it holds
participation interests is exempt from federal income tax. An opinion of counsel
is not binding on the Service and there is no assurance that the Service will
agree with any opinion of counsel.
Specialized Investment Techniques of the Funds
Floating and Variable Rate Instruments. Certain of the obligations that each
Fund may purchase have a floating or variable rate of interest. Such obligations
bear interest at rates that are not fixed, but which vary with changes in
specified market rates or indices, such as the Prime Rate, and at specified
intervals.
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Municipal Obligations. Municipal obligations, which are debt obligations issued
by or on behalf of states, cities, municipalities and other public authorities,
and may be general obligation, revenue, or industrial development bonds, include
municipal bonds, municipal notes and municipal commercial paper.
Each Fund's investments in municipal notes will be limited to notes
that are rated at the date of purchase "MIG 1" or "MIG 2" (or "VMIG 1" or "VMIG
2" in the case of an issue having a variable rate demand feature) by Moody's,
"SP-1" or "SP-1+" by S&P or "F-1" or "F-1+" by Fitch.
Municipal commercial paper is a debt obligation with a stated maturity
of 270 days or less that is issued to finance seasonal working capital needs or
as short-term financing in anticipation of longer-term debt. Each Fund may
invest in municipal commercial paper that is rated at the date of purchase "P-1"
or "P-2" by Moody's, "A-1" or "A-2" or "A-" by S&P or "F-1" by Fitch. If a
municipal obligation is not rated, each Fund may purchase the obligation if, in
the opinion of the Adviser, it is of investment quality comparable to other
rated investments that are permitted in each Fund.
Letters of Credit. Municipal obligations, including certificates of
participation, commercial paper and other short-term obligations may be backed
by an irrevocable letter of credit of a bank which assumes the obligation for
payment of principal and interest in the event of default by the issuer. Only
banks which, in the opinion of the adviser, are of investment quality comparable
to other permitted investments of each Fund may be used for letter of credit
backed investments.
Securities with Put Rights. Each Fund may enter into put transactions with
respect to obligations held in its portfolio with broker/dealers pursuant to a
rule under the Investment Company Act of 1940, as amended (the "1940 Act"), and
with commercial banks.
The right of each Fund to exercise a put is unconditional and
unqualified. A put is not transferable by the Funds, although each Fund may sell
the underlying securities to a third party at any time. If necessary and
advisable, each Fund may pay for certain puts either separately in cash or by
paying a higher price for portfolio securities that are acquired subject to such
a put (thus reducing the yield to maturity otherwise available for the same
securities). Each Fund expects, however, that puts generally will be available
without the payment of any direct or indirect consideration.
Each Fund may enter into puts only with banks or broker/dealers that,
in the opinion of the Adviser, present minimal credit risks. The ability of each
Fund to exercise a put will depend on the ability of the bank or broker/dealer
to pay for the underlying securities at the time the put is exercised. In the
event that a bank or broker/dealer should default on its obligation to
repurchase an underlying security, the Funds, might be unable to recover all or
a portion of any loss sustained from having to sell the security elsewhere.
Each Fund intends to enter into puts solely to maintain liquidity and
does not intend to exercise its rights thereunder for trading purposes. The puts
will only be for periods of substantially less than the life of the underlying
security. The acquisition of a put will not affect the valuation by the Funds of
the underlying security. The actual put will be valued at zero in determining
net asset value of each Fund. Where the Funds pay directly or indirectly for a
put, its cost will be reflected in realized gain or loss when the put is
exercised or expires. If the value of the underlying security increases the
potential for unrealized or realized gain is reduced by the cost of the put. The
maturity of a municipal obligation purchased by each Fund will not be considered
shortened by any put to which such obligation is subject.
Third Party Puts. The Funds may also purchase long-term fixed rate bonds that
have been coupled with an option granted by a third party financial institution
allowing the Funds at specified intervals (not exceeding 397 calendar days) to
tender (or "put") the bonds to the institution and receive the face value
thereof (plus accrued interest). These third party puts are available in several
different forms, may be represented by custodial receipts or trust certificates
and may be combined with other features such as interest rate swaps. The Funds
receive a short-term rate of interest (which is periodically reset), and the
interest rate differential between that rate and the fixed rate on the bond is
retained by the financial institution. The financial institution granting the
option does not provide credit enhancement, and in the event that there is a
default in the payment of principal or interest, or downgrading of a bond to
below investment grade, or a loss of the bond's tax-exempt status, the put
option will terminate automatically, the risk to the Funds will be that of
holding such a long-term bond and the dollar-weighted average maturity of each
Fund's portfolio would be adversely affected.
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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. 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 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
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 short-term 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 during such period. 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
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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 the 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 the Funds will
purchase such securities with the purpose of actually acquiring them unless a
sale appears desirable for investment reasons. At the time a Fund makes the
commitment to purchase securities on a when-issued or forward delivery basis, it
will record the transaction and reflect the value of the security in determining
its respective net asset values. None of the Funds believes that their net asset
value or income will be adversely affected by their purchase of securities on a
when-issued or forward delivery basis. Each 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.
Each Fund will not 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 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 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
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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 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.
Borrowing. As a matter of fundamental policy, each Fund will not borrow money,
except as permitted under the 1940 Act, and as interpreted or modified by
regulatory authority having jurisdiction, from time to time. While the Trustees
do not currently intend to borrow for investment leverage purposes, if such a
strategy were implemented in the future it would increase the Funds' volatility
and the risk of loss in a declining market. Borrowing by the each Fund will
involve special risk considerations. Although the principal of each Fund's
borrowings will be fixed, each Fund's assets may change in value during the time
a borrowing is outstanding, thus increasing exposure to capital risk.
Trustees' Power to Change Objectives and Policies
The objectives and policies of the Funds described above may be
changed, unless expressly stated to the contrary, by their respective Trustees
without a vote of their shareholders.
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 will not:
1. borrow money, except as permitted under the 1940 Act, as
amended, and as interpreted or modified by regulatory
authority having jurisdiction, from time to time;
2. issue senior securities, except as permitted under the 1940
Act, as amended, and as interpreted or modified by regulatory
authority having jurisdiction, from time to time;
3. concentrate its investments in a particular industry, as that
term is used in the 1940 Act, as amended, and as interpreted
or modified by regulatory authority having jurisdiction, from
time to time ( except SCIT reserves the freedom of action to
concentrate its investments in instruments issued by domestic
banks);
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4. engage in the business of underwriting securities issued by
others, except to the extent that the Fund may be deemed to be
an underwriter in connection with the disposition of portfolio
securities;
5. purchase or sell real estate, which term does not include
securities of companies which deal in real estate or mortgages
or investments secured by real estate or interests therein,
except 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;
6. purchase physical commodities or contracts relating to
physical commodities; or
7. make loans except as permitted under the 1940 Act, as amended,
and as interpreted or modified by regulatory authority having
jurisdiction, from time to time.
In addition, although not a matter of fundamental policy, SCIT does not
currently intend to:
1. borrow money in an amount greater than 5% of its total assets,
except for temporary or emergency purposes;
2. lend portfolio securities in an amount greater than 5% of its
total assets.
As a matter of fundamental policy Treasury Fund may not:
1. borrow money, except as permitted under the 1940 Act, as
amended, and as interpreted or modified by regulatory
authority having jurisdiction, from time to time;
2. issue senior securities, except as permitted under the 1940
Act, as amended, and as interpreted or modified by regulatory
authority having jurisdiction, from time to time;
3. concentrate its investments in a particular industry, as that
term is used in the 1940 Act, as amended, and as interpreted
or modified by regulatory authority having jurisdiction, from
time to time;
4. engage in the business of underwriting securities issued by
others, except to the extent that the Fund may be deemed to be
an underwriter in connection with the disposition of portfolio
securities;
5. purchase or sell real estate, which term does not include
securities of companies which deal in real estate or mortgages
or investments secured by real estate or interests therein,
except 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;
6. purchase physical commodities or contracts relating to
physical commodities; or
7. make loans except as permitted under the 1940 Act, as amended,
and as interpreted or modified by regulatory authority having
jurisdiction, from time to time.
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
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:
1. borrow money in an amount greater than 5% of its total assets,
except for temporary or emergency purposes;
2. lend portfolio securities in an amount greater than 5% of its
total assets.
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As a matter of fundamental policy, Scudder Tax Free Money may not:
1. borrow money, except as permitted under the Investment Company
Act of 1940, as amended, and as interpreted or modified by
regulatory authority having jurisdiction, from time to time;
2. issue senior securities, except as permitted under the
Investment Company Act of 1940, as amended, and as interpreted
or modified by regulatory authority having jurisdiction, from
time to time;
3. concentrate its investments in a particular industry, as that
term is used in the Investment Company Act of 1940, as
amended, and as interpreted or modified by regulatory
authority having jurisdiction, from time to time;
4. engage in the business of underwriting securities issued by
others, except to the extent that the Fund may be deemed to be
an underwriter in connection with the disposition of portfolio
securities;
5. purchase or sell real estate, which term does not include
securities of companies which deal in real estate or mortgages
or investments secured by real estate or interests therein,
except 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;
6. purchase physical commodities or contracts relating to
physical commodities;
7. make loans except as permitted under the Investment Company
Act of 1940, as amended, and as interpreted or modified by
regulatory authority having jurisdiction, from time to time.
In addition, as a matter of fundamental policy, Scudder Tax Free Money
Fund will:
1. have at least 80% of its net assets invested in short-term
municipal securities during periods of normal market
conditions.
As a matter of non-fundamental policy, Scudder Tax Free Money Fund may
not:
1. borrow money in an amount greater than 5% of its total assets,
except for temporary or emergency purposes; and
2. lend portfolio securities in an amount greater than 5% of its
total assets.
Master/feeder structure
The Board of Trustees of each Fund has the discretion to retain the
current distribution arrangement for the Funds while investing in a master fund
in a master/feeder structure as described below.
A master/feeder fund structure is one in which a fund (a "feeder
fund"), instead of investing directly in a portfolio of securities, invests most
or all of its investment assets in a separate registered investment company (the
"master fund") with substantially the same investment objective and policies as
the feeder fund. Such a structure permits the pooling of assets of two or more
feeder funds, preserving separate identities or distribution channels at the
feeder fund level. Based on the premise that certain of the expenses of
operating an investment portfolio are relatively fixed, a larger investment
portfolio may eventually achieve a lower ratio of operating expenses to average
net assets. An existing investment company is able to convert to a feeder fund
by selling all of its investments, which involves brokerage and other
transaction costs and realization of a taxable gain or loss, or by contributing
its assets to the master fund and avoiding transaction costs and, if proper
procedures are followed, the realization of taxable gain or loss.
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PURCHASES
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.
The minimum initial purchase amount is less than $2,500 under certain
special plan accounts.
Minimum balances
Shareholders should maintain a share balance worth at least $2,500
($1,000 for fiduciary accounts such as IRAs, and custodial accounts such as
Uniform Gift to Minor Act, and Uniform Trust to Minor Act accounts), which
amount may be changed by the Board of Trustees A shareholder may open an account
with at least $1,000 ($500 for fiduciary/custodial accounts), if an automatic
investment plan (AIP) of $100/month ($50/month for fiduciary/custodial accounts)
is established. Scudder group retirement plans and certain other accounts have
similar or lower minimum share balance requirements.
The Fund reserves the right, following 60 days' written notice to
applicable shareholders, to:
o assess an annual $10 per Fund charge (with the Fee to be paid
to the Fund) for any non-fiduciary/non-custodial account
without an automatic investment plan (AIP) in place and a
balance of less than $2,500; and
o redeem all shares in Fund accounts below $1,000 where a
reduction in value has occurred due to a redemption, exchange
or transfer 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. Shareholders with a combined household
account balance in any of the Scudder Funds of $100,000 or more, as well as
group retirement and certain other accounts will not be subject to a fee or
automatic redemption.
Fiduciary (e.g., IRA or Roth IRA) and custodial accounts (e.g., UGMA or
UTMA) with balances below $100 are subject to automatic redemption following 60
days' written notice to applicable shareholders.
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
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<PAGE>
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
(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 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 the close of regular trading on the
Exchange, normally 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 a QuickBuy Enrollment Form. After sending in an enrollment form
shareholders should allow 15 days for this service to be available.
The Fund employs 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 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 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
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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
The Funds have authorized certain members of the NASD other than the
Distributor to accept purchase and redemption orders for the Funds' shares.
Those brokers may also designate other parties to accept purchase and redemption
orders on each Fund's behalf. Orders for purchase or redemption will be deemed
to have been received by a Fund when such brokers or their authorized designees
accept the orders. Subject to the terms of the contract between a Fund and the
broker, ordinarily orders will be priced at that Fund's net asset value next
computed after acceptance by such brokers or their authorized designees.
Further, if purchases or redemptions of a Fund's shares are arranged and
settlement is made at an investor's election through any other authorized NASD
member, that member may, at its discretion, charge a fee for that service. The
Board of Trustees and the Distributor, also the Funds' principal underwriter,
each has the right to limit the amount of purchases of each Fund by, and to
refuse to sell to, any person. The Trustees and the Distributor may suspend or
terminate the offering of shares of a 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 Funds reserve 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 a Fund with a tax identification number during the
30-day notice period.
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
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.
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.
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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
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 or classes thereof. 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
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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.
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. 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 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.
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The requirements for IRA redemptions are different from those for
regular accounts. For more information call 1-800-225-5163.
Redemption by Checkwriting
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
Street Bank and Trust Company reserve the right at any time to suspend or
terminate the Checkwriting 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. None of the Funds impose 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 Checkwriting, 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.
FEATURES AND SERVICES OFFERED BY THE FUNDS
The No-Load Concept
Investors are encouraged to be aware of the full ramifications of
mutual fund fee structures, and of how Scudder distinguishes its Scudder Family
of 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.
21
<PAGE>
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
National Association of Securities Dealers' Conduct Rules, 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 funds in the Scudder Family of Funds do not pay any asset-based
sales charges or service fees, Scudder uses the phrase no-load to distinguish
Scudder funds and classes 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.
Internet access
World Wide Web Site -- The address of the Scudder Funds site is
http://www.scudder.com. The site offers guidance on global investing and
developing strategies to help meet financial goals and provides access to the
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.
Account Access -- The Adviser 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.
The Adviser'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.
Dividends and Capital Gains 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 received by the Transfer Agent at least five days prior to a
dividend record date. Shareholders also may change their dividend option either
by calling 1-800-SCUDDER or by sending written instructions to the Transfer
Agent. Please include your account number with your written request. See
"Purchases" in the Funds' prospectuses for the address.
Reinvestment is usually made at the closing net asset value determined
on the business 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 a Fund.
Investors may also have dividends and distributions automatically
deposited in 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 the 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.
Investors choosing to participate in Scudder's Automatic Withdrawal
Plan must reinvest any dividends or capital gains. For most retirement plan
accounts, the reinvestment of dividends and capital gains is also required.
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<PAGE>
Scudder Investor Centers
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 "The Scudder Funds" at the
address listed under "Purchases" in the prospectuses.
Reports to Shareholders
The Trust issues shareholders unaudited semiannual financial statements
and annual financial statements audited by independent accountants, including a
list of investments held and statements of assets and liabilities, operations,
changes in net assets and financial highlights. The Trust presently intends to
distribute to shareholders informal quarterly reports during the intervening
quarters, containing a statement of the investments of the Funds.
Transaction Summaries
Annual summaries of all transactions in each Fund account are available
to shareholders. The summaries may be obtained by calling 1-800-SCUDDER.
THE SCUDDER FAMILY OF FUNDS
(See "Investment products and services" in the Funds' combined prospectus.)
The Scudder Family of Funds is America's first family of mutual funds
and the nation's oldest family of no-load mutual funds; a list of Scudder's
funds follows.
MONEY MARKET
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series+
Scudder Government Money Market Series+
TAX FREE MONEY MARKET
Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series+
Scudder California Tax Free Money Fund*
Scudder New York Tax Free Money Fund*
- -----------------------------
+ The institutional class of shares is not part of the Scudder Family of
Funds.
* These funds are not available for sale in all states. For information,
contact Scudder Investor Services, Inc.
23
<PAGE>
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 GNMA Fund
Scudder Income Fund
Scudder Corporate Bond Fund
Scudder High Yield Bond Fund.
GLOBAL INCOME
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
ASSET ALLOCATION
Scudder Pathway Series: Conservative Portfolio
Scudder Pathway Series: Balanced Portfolio
Scudder Pathway Series: Growth Portfolio
Scudder Pathway Series: International Portfolio
- -----------------------------
* These funds are not available for sale in all states. For information,
contact Scudder Investor Services, Inc.
24
<PAGE>
U.S. GROWTH AND INCOME
Scudder Balanced Fund
Scudder Dividend & Growth Fund
Scudder Growth and Income Fund
Scudder Select 500 Fund
Scudder 500 Index Fund
Scudder Real Estate Investment Fund
U.S. GROWTH
Value
Scudder Large Company Value Fund
Scudder Value Fund**
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund**
Scudder Large Company Growth Fund
Scudder Select 1000 Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
GLOBAL EQUITY
Worldwide
Scudder Global Fund
Scudder International Value Fund
Scudder International Growth and Income Fund
Scudder International Fund***
Scudder International Growth Fund
Scudder Global Discovery Fund**
- -----------------------------
** Only the Scudder Shares are part of the Scudder Family of Funds.
*** Only the International Shares are part of the Scudder Family of Funds.
25
<PAGE>
Scudder Emerging Markets Growth Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund, Inc.
INDUSTRY SECTOR FUNDS
Choice Series
Scudder Financial Services Fund
Scudder Health Care Fund
Scudder Technology Fund
SCUDDER PREFERRED SERIES
Scudder Tax Managed Growth Fund
Scudder Tax Managed Small Company Fund
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.
SPECIAL PLAN ACCOUNTS
Detailed information on any Scudder investment plan, including the
applicable charges, minimum investment requirements and disclosures made
pursuant to Internal Revenue Service requirements, may be obtained by contacting
Scudder Investor Services, Inc., Two International Place, Boston, Massachusetts
02110-4103 or by calling toll free, 1-800-SCUDDER. The discussions of the plans
below describe only certain aspects of the federal income tax treatment of the
plan. The state tax treatment may be different and may vary from state to state.
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 IRAs other than those offered by the Fund's
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
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<PAGE>
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 as to form.
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, even if only one spouse
has 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.)
Value of IRA at Age 65
Assuming $2,000 Deductible Annual Contribution
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Starting
Age of Annual Rate of Return
------------------------------------------------------------------------------
Contributions 5% 10% 15%
- -----------------------------------------------------------------------------------------------------------
<S> <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.)
27
<PAGE>
Value of a Non-IRA Account at
Age 65 Assuming $1,380 Annual Contributions
(post tax, $2,000 pretax) and a 31% Tax Bracket
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Starting
Age of Annual Rate of Return
------------------------------------------------------------------------------
Contributions 5% 10% 15%
- -----------------------------------------------------------------------------------------------------------
<S> <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 Roth IRA: Individual Retirement Account
Shares of the Funds may be purchased as the underlying investment for a
Roth Individual Retirement Account which meets the requirements of Section 408A
of the Internal Revenue Code.
A single individual earning below $95,000 can contribute up to $2,000
per year to a Roth IRA. The maximum contribution amount diminishes and gradually
falls to zero for single filers with adjusted gross incomes ranging from $95,000
to $110,000. Married couples earning less than $150,000 combined, and filing
jointly, can contribute a full $4,000 per year ($2,000 per IRA). The maximum
contribution amount for married couples filing jointly phases out from $150,000
to $160,000.
An eligible individual can contribute money to a traditional IRA and a
Roth IRA as long as the total contribution to all IRAs does not exceed $2,000.
No tax deduction is allowed under Section 219 of the Internal Revenue Code for
contributions to a Roth IRA. Contributions to a Roth IRA may be made even after
the individual for whom the account is maintained has attained age 70 1/2.
All income and capital gains derived from Roth IRA investments are
reinvested and compounded tax-free. Such tax-free compounding can lead to
substantial retirement savings. No distributions are required to be taken prior
to the death of the original account holder. If a Roth IRA has been established
for a minimum of five years, distributions can be taken tax-free after reaching
age 59 1/2, for a first-time home purchase ($10,000 maximum, one-time use) or
upon death or disability. All other distributions of earnings from a Roth IRA
are taxable and subject to a 10% tax penalty unless an exception applies.
Exceptions to the 10% penalty include: disability, certain medical expenses, the
purchase of health insurance for an unemployed individual and education
expenses.
An individual with an income of less than $100,000 (who is not married
filing separately) can roll his or her existing IRA into a Roth IRA. However,
the individual must pay taxes on the taxable amount in his or her traditional
IRA. Individuals who complete the rollover in 1998 will be allowed to spread the
tax payments over a four-year period. After 1998, all taxes on such a rollover
will have to be paid in the tax year in which the rollover is made.
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
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
28
<PAGE>
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). Any such requests must be
received by the applicable 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 shareholder, the Trust or its agent on written notice, and
will be terminated when all shares of the Fund under the Plan have been
liquidated or upon receipt by the applicable 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 AND CAPITAL GAINS DISTRIBUTIONS
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
29
<PAGE>
determination of the net asset value at twelve o'clock noon after the purchase
and redemption of shares. Any losses may be included in the daily dividend for
such 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. All the investment income of STFMF 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.
Distributions of realized capital gains, if any, are paid in November
or December of STFMF's taxable year, although the Fund may make an additional
distribution within three months of the Fund's fiscal year end of December 31.
STFMF expects to follow the practice of distributing all net realized capital
gains to shareholders and expects to distribute realized capital gains at least
annually. However, if any realized capital gains are retained by STFMF for
reinvestment and federal income taxes are paid thereon by the Fund, the Fund
will elect to treat such capital gains as having been distributed to
shareholders; as a result, shareholders would be able to claim their share of
the taxes paid by the Fund on such gains as a credit against their individual
federal income tax liability.
30
<PAGE>
Each Fund does not anticipate realizing any long-term capital gains.
PERFORMANCE INFORMATION
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:
Yield
For SCIT, Treasury Fund and STFMF, 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. For SCIT and
Treasury Fund, the yields for the seven-day period ended June 30, 1998 were
4.81% and 4.91% respectively. 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, 1998 would have been 4.58%. 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,
1998 would have been 4.36%. For STFMF, the yield for the seven-day period ended
December 31, 1998 was 2.94%. If STFMF'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 December 31, 1998 would have been 2.89%.
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, 1998 was
4.92% for SCIT and 5.03% 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, 1998 would have been 4.69%. 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, 1998 would have been 4.48%. The effective yield for STFMF for the
seven-day period ended December 31, 1998 was 2.99%. If STFMF'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 December 31, 1998 would have
been 2.94%.
Tax-Equivalent Yield -- Scudder Tax Free Money Fund
For STFMF, the tax-equivalent yield is the net annualized taxable yield
needed to produce a specified tax-exempt yield at a given tax rate based on a
specified 7-day period assuming a reinvestment of all dividends paid during such
period. Tax-equivalent yield is calculated by dividing that portion of the
Fund's yield (as computed in the yield description above) which is tax-exempt by
one minus a stated income tax rate and adding the product to that portion, if
any, of the yield of the Fund that is not tax-exempt. Thus, taxpayers with
effective federal income tax rates of 36% and 39.6% would need to earn a taxable
yield of 4.13% and 4.37% respectively, to receive after-tax income equal to the
2.64% 30-day tax-free yield of Scudder Tax Free Money Fund on December 31, 1998.
Yield, effective yield and tax-equivalent yield are historical, show
the performance of a hypothetical investment and are not intended to indicate
future performance. Yield, effective yield and, tax-equivalent yield will vary
based on changes in market conditions and the level of the Fund's expenses.
In connection with communicating its performance to current or
prospective shareholders, the Fund also may compare these figures to the
performance of other mutual funds tracked by mutual fund rating services or to
other unmanaged indices which may assume reinvestment of dividends but generally
do not reflect deductions for administrative and management costs.
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From time to time, in marketing pieces and other fund literature, the
Fund's yield and performance over time may be compared to the performance of
broad groups of comparable mutual funds, bank money market deposit accounts and
fixed-rate insured certificates of deposit (CDs), or unmanaged indices of
securities that are comparable to money market funds in their terms and intent,
such as Treasury bills, bankers' acceptances, negotiable order of withdrawal
accounts, and money market certificates. Most bank CDs differ from money market
funds in several ways: the interest rate is fixed for the term of the CD, there
are interest penalties for early withdrawal of the deposit, and the deposit
principal is insured by the FDIC.
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.
Average Annual Total Return for periods ended May 31, 1999
One Five Ten
Year Years Years
---- ----- -----
SCIT* % % %
Treasury Fund** % % %
STFMF*** % % %
* 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 May 31, 1999, 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 May 31,1999 would
have been lower.
*** If the Adviser had not absorbed a portion of STFMF expenses and had
imposed a full management fee, the average annual total return for the
one year, five year and ten year periods ended May 31, 1999, would have
been lower.
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):
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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 May 31, 1999
One Five Ten
Year Years Years
---- ----- -----
SCIT* % % %
Treasury Fund** % % %
STFMFF*** % % %
* 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 May 31, 1999, 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 May 31, 1999, would
have been lower.
*** If the Adviser had not absorbed a portion of STFMF's expenses and had
imposed a full management fee, the cumulative total return for the one
year, five year and ten year periods ended May 31, 1999, would have
been lower.
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.
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
In connection with communicating its performance to current or
prospective shareholders, the 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.
From time to time, in advertising and marketing literature, this Fund's
performance may be compared to the performance of broad groups of mutual funds
with similar investment goals, as tracked by independent organizations.
From time to time, in marketing and other Fund literature, Trustees and
officers of the Fund, the Fund's portfolio manager, 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
Fund. 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 Fund may be advertised as an investment choice in Scudder's college
planning program.
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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 Fund. The
description may include a "risk/return spectrum" which compares the Fund 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 Fund 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
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.
Evaluation of Fund performance or other relevant statistical
information made by independent sources may also be used in advertisements
concerning the Fund, including reprints of, or selections from, editorials or
articles about this Fund.
ORGANIZATION OF THE FUNDS
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. Scudder Tax Free Money Fund is a Massachusetts business
trust established under a Declaration of Trust dated October 5, 1979, as
amended. 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 the
Funds' prospectus. The Trustees of the Funds have the authority to issue more
than one series of shares, but have no present intention to do so. If more than
one series of shares were issued and a series were unable to meet its
obligations, the remaining series might have to assume the unsatisfied
obligations of that series.
Each Fund's activities are supervised by a Board of Trustees. Each 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 agreement. 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.
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<PAGE>
The Trustees of Treasury Fund and STFMF, in their discretion, may
authorize the division of shares of each of their respective Funds (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 change the method of distribution of shares of the Funds.
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
Scudder Kemper Investments, Inc., an investment counsel firm, acts as
investment adviser to each Fund. This organization, the predecessor of which is
Scudder, Stevens & Clark, Inc., is one of the most experienced investment
counsel firms in the U.S. 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 available in the U.S. investing internationally in securities of
issuers in several foreign countries. The predecessor firm reorganized from a
partnership to a corporation on June 28, 1985. On June 26, 1997, Scudder,
Stevens & Clark, Inc. ("Scudder") entered into an agreement with Zurich
Insurance Company ("Zurich") pursuant to which Scudder and Zurich agreed to form
an alliance. On December 31, 1997, Zurich acquired a majority interest in
Scudder, and Zurich Kemper Investments, Inc., a Zurich subsidiary, became part
of Scudder. Scudder's name has been changed to Scudder Kemper Investments, Inc.
Founded in 1872, Zurich is a multinational, public corporation
organized under the laws of Switzerland. Its home office is located at
Mythenquai 2, 8002 Zurich, Switzerland. Historically, Zurich's earnings have
resulted from its operations as an insurer as well as from its ownership of its
subsidiaries and affiliated companies (the "Zurich Insurance Group"). Zurich and
the Zurich Insurance Group provide an extensive range of insurance products and
services and have branch offices and subsidiaries in more than 40 countries
throughout the world.
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, Value
Equity Trust, Scudder Fund, Inc., Scudder Funds Trust, Global/International
Fund, Inc., Scudder Global High Income Fund, Inc., Scudder GNMA Fund, Scudder
Portfolio Trust, Scudder International Fund, Inc., 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,
The Argentina Fund, Inc., The Brazil Fund, Inc., The Korea Fund, Inc. and The
Japan 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 the Adviser and AMA Solutions, Inc., a
subsidiary of the American Medical Association (the "AMA"), dated May 9, 1997,
the Adviser 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 the Adviser with respect to assets invested by AMA members in
Scudder funds in connection with the AMA InvestmentLink(SM) Program. The
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<PAGE>
Adviser 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 InvestmentLink(SM) Program will be a customer of the
Adviser (or of a subsidiary thereof) and not the AMA or AMA Solutions, Inc. AMA
InvestmentLink(SM) 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. In this work, the Adviser
utilizes certain reports and statistics from a variety of sources, including
brokers and dealers who may execute portfolio transactions for the Fund and for
clients of the Adviser, but conclusions are based primarily on investigations
and critical analyses by its own research specialists.
Certain investments may be appropriate for more than one of the Funds
and also for 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.
On September 7, 1998, the businesses of Zurich (including Zurich's 70%
interest in Scudder Kemper) and the financial services businesses of B.A.T
Industries p.l.c. ("B.A.T") were combined to form a new global insurance and
financial services company known as Zurich Financial Services Group. By way of a
dual holding company structure, former Zurich shareholders initially owned
approximately 57% of Zurich Financial Services Group, with the balance initially
owned by former B.A.T shareholders.
Upon consummation of this transaction, each Fund's existing investment
management agreement with Scudder Kemper was deemed to have been assigned and,
therefore, terminated. The Board approved new investment management agreements
(the "Agreements") with Scudder Kemper, which are substantially identical to the
former investment management agreements, except for the dates of execution and
termination. These agreements became effective September 7, 1998, upon the
termination of the then current investment management agreements, and were
approved at a shareholder meeting held on December 15, 1998.
The Agreements dated September 7, 1998 were last approved by the
Trustees of the Funds on August 10, 1998. The Agreements will continue in effect
until September 30, 1999 and from year to year thereafter only if their
continuance is approved annually by the vote of a majority of those Trustees who
are not parties to such Agreements 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 a vote of the Trust's Trustees or of a majority of the
outstanding voting securities of the respective Fund. The Agreements may be
terminated at any time without payment of penalty by either party on sixty days'
written notice, and automatically terminate in the event of their assignment.
Under each Agreement, the Adviser regularly provides a Fund with
continuing investment management for the Fund's portfolio consistent with the
Fund's investment objectives, policies and restrictions set forth, 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 Trust's Declaration of Trust and By-Laws, and 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 Trust may from
time to time establish. The Adviser also advises and assists the officers of the
Trust 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 Trust.
Under each Agreement, the Adviser also renders significant
administrative services (not otherwise provided by third parties) necessary for
a Fund's operations as an open-end investment company including, but not limited
to,
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<PAGE>
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 a Fund (such as a 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 a Fund's federal, state and local tax returns;
preparing and filing a 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
a Fund under applicable federal and state securities laws; maintaining or
causing to be maintained for a Fund all books, record and reports to the extent
not otherwise maintained by a third party; assisting in establishing accounting
policies of a Fund; assisting in the resolution of accounting and legal issues;
establishing and monitoring a Fund's operating budget; processing the payment of
a Fund's bills; assisting a Fund in, and otherwise arranging for, the payment of
distributions and dividends, and otherwise assisting a Fund in the conduct of
its business, subject to the direction and control of the Trustees.
The Adviser pays the compensation and expenses of all affiliated
Trustees and executive employees of the Trust and makes available, without
expense to the Funds, the services of such Trustees, officers and employees as
may duly be elected Trustees, officers or employees of a Fund, subject to their
individual consent to serve and to any limitations imposed by law, and provides
the Funds' office space and facilities.
Under the Investment Management Agreement between SCIT and the Adviser,
the Fund agrees to pay the Adviser a fee equal to an annual rate of 0.50% of the
first $250,000,000 of the Fund's average daily net assets, 0.45% of the next
$250,000,000 of such net assets, 0.40% of the next $500,000,000 of such net
assets and 0.35% of such net assets in excess of $1,000,000,000 computed and
accrued daily. 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. 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 addition, the Adviser has agreed to maintain the annualized
expenses of the Fund at not more than 0.85% of average daily net assets until
September 30, 1999. For the fiscal years ended June 30, 1997, 1998 and 1999 the
investment advisory fee was $5,944,464, $5,260,517 and ______, respectively, and
the fees not imposed in 1997, 1998 and 1999 amounted to $2,420, $_________
respectively.
Under the Investment Management Agreement between Treasury Fund and the
Adviser, the Fund agrees to pay the Adviser a fee equal to an annual rate of
0.50% of its average daily net assets computed and accrued daily and payable
monthly. 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. 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 September 30, 1999, and during such period to maintain the
annualized expenses of the Fund at not more than 0.65% of average daily net
assets.
For the fiscal years ended June 30, 1997, 1998 and 1999, the investment
advisory fee was $2,095,848, $1,995,553, and $________ respectively and the fees
not imposed amounted to $1,202,181, $1,378,392 and _________, respectively. For
the fiscal year ended June 30, 1999, $_________ of Treasury Fund's investment
advisory fee was unpaid at June 30, 1999.
Under the Investment Management Agreement between STFMF and the
Adviser, the Fund agrees to pay the Adviser a fee equal to an annual rate of
0.50% of the first $500 million of the Fund's average daily net assets and 0.48%
of such net assets over $500 million, 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. 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 Agreement. In addition, the Adviser has agreed
to maintain the annualized expenses of the Fund at not more than 0.65% of
average daily net assets until September 30, 1999. For the fiscal years ended
December 31, 1996, 1997 and 1998 the investment advisory fee was $1,134,327,
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<PAGE>
$1,120,092, and $1,284,548, respectively and the fees not imposed amounted to
$103,572, $238,094 and $167,229, respectively.
Under the Agreements, the Funds are responsible for all their 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 Funds 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. The Funds may arrange to have third parties assume all or part of
the expense of sale, underwriting and distribution of shares of the Funds. Each
Fund is also responsible for its 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.
The expense ratios for SCIT for the fiscal years ended June 30, 1996,
1997 and 1998 were 0.83%, 0.86% and 0.85%, respectively. The ratios of expenses
to annual investment income for SCIT for the same years were 14.75%, 15.63% and
15.00%, respectively. The expense ratios for Treasury Fund for the fiscal years
ended June 30, 1996, 1997 and 1998 were 0.65%, 0.65% and 0.65%, respectively.
The ratios of expenses to annual investment income for the same periods were
11.94%, 12.65% and 12.10%, respectively. The expense ratios for STFMF for the
fiscal years ended December 31, 1996, 1997 and 1998 were 0.70%, 0.65% and 0.65%,
respectively. The ratios of expenses to annual investment income for STFMF for
the same years were 19.71%, 17.53% and 18.41%, 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 identifies the Adviser as the exclusive licensee of the
rights to use and sublicense the names "Scudder," "Scudder Kemper Investments,
Inc." and "Scudder, Stevens & Clark, Inc." (together, the "Scudder Marks").
Under this license, the Trust, with respect to the Fund, has the non-exclusive
right to use and sublicense the Scudder name and marks as part of its name, and
to use the Scudder Marks in the Trust's investment products and services.
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 SCIT and
Treasury Fund. Willkie, Farr & Gallagher acts as general counsel for STFMF.
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.
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.
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.
The Adviser may serve as adviser to other funds with investment
objectives and policies similar to those of the Funds that may have different
distribution arrangements or expenses, which may affect performance.
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.
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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
<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 (65)*#@ President and Trustee Managing Director of Vice President, Director and
Scudder Kemper Assistant Treasurer
Investments, Inc.
Henry P. Becton, Jr. (55)# Trustee President and General --
WGBH Manager, WGBH Educational
125 Western Avenue Foundation
Allston, MA 02134
Dawn-Marie Driscoll (52)# Trustee Executive Fellow, Center --
4909 SW 9th Place for Business Ethics;
Cape Coral, FL 33914 President, Driscoll
Associates (consulting
firm)
Peter B. Freeman (66)# Trustee Corporate Director and --
100 Alumni Avenue Trustee
Providence, RI 02906
George M. Lovejoy, Jr. (69)# Trustee President and Director, --
50 Congress Street, Ste. 43 Fifty Associates (real
Boston, MA 02109 estate corporation)
Dr. Wesley W. Marple, Jr. (67) Trustee Professor of Business --
Northeastern University Administration,
360 Huntington Avenue Northeastern University
Boston, MA 02115
Kathryn L. Quirk (46)*#+ Trustee, Vice Managing Director of --
President and Scudder Kemper
Assistant Secretary Investments, Inc.
Jean C. Tempel (56) Trustee Venture Partner, Internet --
10 Post Office Square Capital Corporation
Suite 1325
Boston, MA 02109-4603
39
<PAGE>
Principal Occupation** Position with Underwriter,
Name, Age and Address Position with Fund and Affiliations Scudder Investor Services, Inc.
- --------------------- ------------------ ------------------------ -------------------------------
Thomas W. Joseph (60)@ Vice President Senior Vice President of Vice President, Treasurer and
Scudder, Kemper Assistant Clerk
Investments, Inc.
Ann M. McCreary(42)+ Vice President Managing Director of --
Scudder Kemper
Investments, Inc.
Frank J. Rachwalski, Jr. (54)++ Vice President Managing Director of --
Scudder Kemper
Investments, Inc.
John R. Hebble (40)@ Treasurer Senior Vice President of --
Scudder Kemper
Investments, Inc.
Caroline Pearson (37)@ Assistant Secretary Senior Vice President of Clerk
Scudder Kemper
Investments, Inc.;
Associate, Dechert Price &
Rhoads (law firm) 1989 to
1997.
</TABLE>
* Mr. Pierce and Ms. Quirk are considered by the Funds and their 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, Lovejoy and Pierce and Ms. Quirk are members of the
Executive Committee for Scudder Cash Investment Trust. Messrs. Lovejoy
and Pierce and Mses. Driscoll and Quirk are members of the Executive
Committee for the Scudder U.S. Treasury Money Fund. Messrs. Freeman,
Lovejoy and Pierce and Ms. Quirk are members of the Executive Committee
for Scudder Tax Free Money Fund. The Executive Committee 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: 222 South Riverside Plaza, Chicago, IL
As of August 31, 1999, all Trustees and officers as a group owned
beneficially (as that term is defined under Section 13(d) of the Securities
Exchange Act of 1934) 15,000,579 shares, or 1.31%, of the shares of Scudder Cash
Investment Trust outstanding on such date.
As of August 31, 1999, all Trustees and officers 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 Scudder U.S. Treasury Money
Fund outstanding on such date.
As of August 31, 1999, all Trustees and officers as a group owned
beneficially (as the term is defined in Section 13 (d) of the Securities
exchange Act of 1934) less than 1% of the Tax Free Money Fund outstanding on
such date.
Certain accounts for which the Adviser acts as investment adviser owned
14,093,473 shares in the aggregate, or 5.12% of the outstanding shares of the
Tax Free Money Fund on August 31, 1999. The Adviser may be deemed to be the
beneficial owner of such shares but disclaims any beneficial ownership in such
shares.
40
<PAGE>
As of August 31, 1999, 1999, 52,179,947 shares in the aggregate, 18.95%
of the outstanding shares of the Tax Free Money Fund, were held in the name of
Scudder Trust Company, Disbursement Account, c/o Laurie Clifford, 5 Industrial
Way, Salem, NH, 03079 who may be deemed to be the beneficial owner of certain of
these shares, but disclaims any beneficial ownership therein.
To the best of each Fund's knowledge as of August 31, 1999, no person
owned of record or beneficially more than 5% of the Fund's outstanding shares,
except as stated above.
The Trustees and officers of each Fund also serve in similar capacities
with respect to 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 Scudder Kemper Investments, Inc. 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 designed to ensure 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 the Independent Trustees serve on each Fund's respective Committee
on Independent Trustees, which nominates Independent Trustees and considers
other related matters, and the respective 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.
Compensation of Officers and Trustees
The Independent Trustees receive the following compensation from each
of SCIT, STFMF and Treasury Fund: an annual trustee's fee of $7,200 for SCIT and
$4,800 for STFMF and Treasury Fund; a fee of $150 for attendance at each Board
Meeting, Audit Committee Meeting or other meeting held for the purposes of
considering arrangements between the Trust on behalf of each Fund and the
Adviser or any affiliate of the Adviser; $150 for Audit Committee and Contract
Meetings and $75 for all other committee meetings; and reimbursement of expenses
incurred for travel to and from Board Meetings. The Independent Trustee who
serves as lead or liaison Trustee receives an additional annual retainer fee of
$500 from each Fund. No additional compensation is paid to any Independent
Trustee for travel time to meetings, attendance at directors' educational
seminars or conferences, service on industry or association committees,
participation as speakers at directors' conferences or service on special
trustee task forces or subcommittees. Independent Trustees do not receive any
employee benefits such as pension or retirement benefits or health insurance.
Notwithstanding the schedule of fees, the Independent Trustees have in the past
and may in the future waive a portion of their compensation.
The Independent Trustees of the Fund also serve as Independent Trustees
of certain other Scudder Funds, which enables them to address investment and
operational issues that are common to many of the Funds in a cost-efficient and
effective manner. During 1998, the Independent Trustees participated in 26
meetings of the Fund's board or board committees, which were held on 21
different days during the year. The Independent Trustees also serve in the same
capacity for other funds managed by the Adviser. These funds differ broadly in
type and complexity and in some cases have substantially different Trustee fee
schedules. The following table shows the aggregate compensation received by each
Independent Trustee during 1998 from the Trusts and from all of the Scudder
funds as a group.
41
<PAGE>
<TABLE>
<CAPTION>
Scudder U.S.
Scudder Cash Scudder Tax Treasury
Name Investment Trust Free Money Fund Money Fund All Scudder Funds
- ---- ---------------- --------------- ---------- -----------------
<S> <C> <C> <C> <C>
Henry P. Becton, Jr.,
Trustee $7,823 $6,023 $6,023 $135,000 (28 funds)
Dawn-Marie Driscoll,
Trustee $8,249 $6,449 $6,449 $145,000 (28 funds)
Peter B. Freeman,
Trustee $8,062 $6,070 $6,070 $172,425 (46 funds)
George M. Lovejoy, Jr.,
Trustee $7,823 $6,023 $6,023 $148,600 (29 funds)
Dr. Wesley W. Marple, Jr.,
Trustee $7,823 $6,023 $6,023 $135,000 (28 funds)
Jean C. Temple, Trustee
$7,833 $6,033 $6,033 $135,000 (29 funds)
</TABLE>
Members of each Board of Trustees who are employees of the Adviser or
its affiliates receive no direct compensation from either Fund, although they
are compensated as employees of the Adviser, or its affiliates, as a result of
which they may be deemed to participate in fees paid by each Fund.
DISTRIBUTOR
Each Fund has an underwriting agreement with Scudder Investor Services,
Inc., Two International Place, Boston, MA 02110 (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 the 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.
Each Fund's underwriting agreement dated September 7, 1998 will remain
in effect until September 30, 1999 and from year to year only if its continuance
is approved annually by a majority of the respective 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. Each Fund 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 the Funds for transmission to
shareholders, for which the Funds pay printing expenses), expenses, other than
filing fees, of qualification of the respective Fund's shares in various states,
including registering each Fund as a dealer, and all other expenses in
connection with the offer and sale of shares which are not specifically
allocated to the Funds. Each Fund's underwriting agreement was approved by the
respective Fund's Trustees on August 9, 1999.
Under the underwriting agreements, each 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 each 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 each 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
42
<PAGE>
computer terminals used by both the Fund and the Distributor. Although each Fund
does not currently have a 12b-1 Plan and shareholder approval would be required
in order to adopt one, each Fund will also pay those fees and expenses permitted
to be paid or assumed by the Fund pursuant to a 12b-1 Plan, if any, adopted by
each Fund, notwithstanding any other provision to the contrary in the
underwriting agreement and each 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 each 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 each Fund, unless a 12b-1 Plan is in effect which provides that the
Fund shall bear some or all of such expenses.
TAXES
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. 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 percent 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.
If for any taxable year a Fund does not qualify for the special federal
income tax treatment afforded regulated investment companies, all of its taxable
income will be subject to federal income tax at regular corporate rates (without
any deduction for distributions to its shareholders). In such event, dividend
distributions would be taxable to shareholders to the extent of the Fund's
earnings and profits, and would be eligible for the dividends received deduction
in the case of corporate shareholders.
Each Fund is 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, and all ordinary income and capital gains for prior years that
were not previously distributed.
Investment company taxable income generally is made up of dividends,
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 a Fund. Presently, each
Fund has no capital loss carryforwards.
If any net realized long-term capital gains in excess of net realized
short-term capital losses are retained by each Fund for reinvestment, requiring
federal income taxes to be paid thereon by the Fund, each Fund intends to elect
to treat such capital gains as having been distributed to shareholders. As a
result, each shareholder will report such capital gains as long-term capital
gains, will be able to claim a proportionate share of federal income taxes paid
by each Fund on such gains as a credit against the shareholder's federal income
tax liability, and will be entitled to increase the adjusted tax basis of the
shareholder's Fund shares by the difference between such reported gains and the
shareholder's tax credit.
Distributions of investment company taxable income are taxable to
shareholders as ordinary income.
Dividends from domestic corporations are not expected to comprise a
substantial part of each Fund's gross income. If any such dividends constitute a
portion of the Fund's gross income, a portion of the income distributions of the
Fund may be eligible for the 70% deduction for dividends received by
corporations. Shareholders will be informed of the portion of dividends which so
qualify. The dividends-received deduction is reduced to the extent the shares of
a Fund with respect to which the dividends are received are treated as
debt-financed under federal income tax law and is eliminated if either those
shares or the shares of a Fund are deemed to have been held by the Fund or the
shareholders, as the case may be, for less than 46 days during the 90-day period
beginning 45 days before the shares become ex-dividend.
43
<PAGE>
Properly designated distributions of the excess of net long-term
capital gain over net short-term capital loss are taxable to shareholders as
long-term capital gains, regardless of the length of time the shares of a Fund
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 gain during such six-month period.
The Tax Free Money Fund intends to qualify under the Code to pay
"exempt-interest dividends" to its shareholders. The Fund will be so qualified
if, at the close of each quarter of its taxable year, at least 50% of the value
of its total assets consists of securities on which the interest payments are
exempt from federal income tax. To the extent that dividends distributed by the
Fund to its shareholders are derived from interest income exempt from federal
income tax and are designated as "exempt-interest dividends" by the Fund, they
will be excludable from the gross incomes of the shareholders for federal income
tax purposes. "Exempt-interest dividends," however, must be taken into account
by shareholders in determining whether their total incomes are large enough to
result in taxation of up to 85 percent of their social security benefits and
certain railroad retirement benefits. It should also be noted that tax-exempt
interest on private activity bonds in which the Fund may invest generally is
treated as a tax preference item for purposes of the alternative minimum tax for
corporate and individual shareholders. The Fund will inform shareholders
annually as to the portion of the distributions from the Fund which constituted
"exempt-interest dividends."
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 will be deemed
to have been received by shareholders on December 31, if paid during 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.
An individual may make a deductible IRA contribution of up to $2,000
or, if less, the amount of the individual's earned income for any taxable year
only if (i) neither the individual nor his or her spouse (unless filing separate
returns) is an active participant in an employer's retirement plan, or (ii) the
individual (and his or her 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 (up to
$2,000 per individual for married couples if only one spouse has earned income)
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.
Distributions by a Fund result in a reduction in the net asset value of
the Fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution would nevertheless be taxable to the
shareholder as ordinary income or capital gain as described above, even though,
from an investment standpoint, it may constitute a partial return of capital. In
particular, investors should consider the tax implications of buying shares just
prior to a distribution. The price of shares purchased at that time includes the
amount of the forthcoming distribution. Those purchasing just prior to a
distribution will then receive a partial return of capital upon the
distribution, which will nevertheless be taxable to them.
Over-the-counter options on debt securities written or purchased by
each Fund will be subject to tax under Section 1234 of the Code. In general, no
loss will be recognized by a Fund upon payment of a premium in connection with
the purchase of a put or call option. The character of any gain or loss
recognized (i.e. long-term or short-term) will generally depend, in the case of
a lapse or sale of the option, on a Fund's holding period for the option, and in
the case of the exercise of a put option, on a Fund's holding period for the
underlying property. The purchase of a put option may
44
<PAGE>
constitute a short sale for federal income tax purposes, causing an adjustment
in the holding period of any stock in a Fund's portfolio similar to the stocks
on which the index is based. If a Fund writes an option, no gain is recognized
upon its receipt of a premium. If the option lapses or is closed out, any gain
or loss is treated as short-term capital gain or loss. If a call option is
exercised, the character of the gain or loss depends on the holding period of
the underlying stock.
Many futures and forward contracts entered into by each Fund and listed
nonequity options written or purchased by each Fund (including options on debt
securities, options on futures contracts, options on securities indices and
options on currencies), will be governed by Section 1256 of the Code. Absent a
tax election to the contrary, gain or loss attributable to the lapse, exercise
or closing out of any such position generally will be treated as 60% long-term
and 40% short-term, and on the last trading day of each Fund's fiscal year, all
outstanding Section 1256 positions will be marked to market (i.e., treated as if
such positions were closed out at their closing price on such day), with any
resulting gain or loss recognized as 60% long-term and 40% short-term.
Notwithstanding any of the foregoing, each Fund may recognize gain (but
not loss) from a constructive sale of certain "appreciated financial positions"
if the Fund enters into a short sale, offsetting notional principal contract,
futures or forward contract transaction with respect to the appreciated position
or substantially identical property. Appreciated financial positions subject to
this constructive sale treatment are interests (including options, futures and
forward contracts and short sales) in stock, partnership interests, certain
actively traded trust instruments and certain debt instruments. Constructive
sale treatment of appreciated financial positions does not apply to certain
transactions closed in the 90-day period ending with the 30th day after the
close of a Fund's taxable year, if certain conditions are met.
Similarly, if a Fund enters into a short sale of property that becomes
substantially worthless, the Fund will recognize gain at that time as though it
had closed the short sale. Future regulations regulatories may apply similar
treatment to other transactions with respect to property that becomes
substantially worthless.
Investments by a Fund in zero coupon or other original issue discount
securities (other than tax-exempt securities) will result in income to the Fund
equal to a portion of the excess of the face value of the securities over their
issue price (the "original issue discount") each year that the securities are
held, even though the Fund receives no cash interest payments. This income is
included in determining the amount of income which a Fund must distribute to
maintain its status as a regulated investment company and to avoid the payment
of federal income tax and the 4% excise tax.
Gain derived by a Fund from the disposition of any market discount
bonds (i.e., bonds purchased other than at original issue, where the face value
of the bonds exceeds their purchase price), including tax-exempt market discount
bonds, held by the Fund will be taxed as ordinary income to the extent of the
accrued market discount on the bonds, unless the Fund elects to include the
market discount in income as it accrues.
Under the Code, a shareholder may not deduct that portion of interest
on indebtedness incurred or continue to purchase or carry shares of an
investment company paying exempt interest dividends (such as those of the Tax
Free Money Fund) which bears the same ratio to the total of such interest as the
exempt-interest dividends bear to the total dividends (excluding net capital
gain dividends) received by the shareholder. In addition, under rules issued by
the Internal Revenue Service for determining when borrowed funds are considered
to be used to purchase or carry particular assets, the purchase of shares may be
considered to have been made with borrowed funds even though the borrowed funds
are not directly traceable to such purchase.
Each Fund will be required to report to the IRS all distributions of
investment company taxable income, capital gains and (should the Fund fail to
maintain a constant net asset value) 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 investment company taxable income and capital gains and
proceeds from the redemption or exchange of the shares of a regulated investment
company 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 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.
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<PAGE>
Shareholders of each Fund may be subject to state and local taxes on
distributions received from a Fund and on redemptions of a Fund's shares. In
many states, Fund distributions which are derived from interest on certain U.S.
Government obligations are exempt from taxation. Shareholders are advised to
consult their own tax advisers with respect to the particular tax consequences
to them of an investment in a Fund. Persons who may be "substantial users" (or
"related persons" of substantial users) of facilities financed by industrial
development bonds should consult their tax advisers before purchasing shares of
the Tax Free Money Fund. The term "substantial user" generally includes any
"non-exempt person" who regularly uses in his or her trade or business a part of
a facility financed by industrial development bonds. Generally, an individual
will not be a "related person" of a substantial user under the Code unless the
person or his or her immediate family owns directly or indirectly in the
aggregate more than a 50% equity interest in the substantial user.
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 each 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 him or her, 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 statement of additional information
in light of their particular tax situations.
PORTFOLIO TRANSACTIONS
Brokerage Commissions
Allocation of brokerage is supervised by the Adviser.
The primary objective of the Adviser in placing orders for the purchase
and sale of securities for a Fund is to obtain the most favorable net results,
taking into account such factors as price, commission where applicable, 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 a Fund to reported commissions paid by others.
The Adviser routinely reviews commission rates, execution and settlement
services performed and makes internal and external comparisons.
The Funds' purchases and sales of fixed-income securities are generally
placed by the Adviser with primary market makers for these securities on a net
basis, without any brokerage commission being paid by a Fund. Trading does,
however, involve transaction costs. Transactions with dealers serving as primary
market makers reflect the spread between the bid and asked prices. Purchases of
underwritten issues may be made, which will include an underwriting fee paid to
the underwriter.
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
broker/dealers who supply brokerage and research services to the Adviser or a
Fund. The term "research services" includes advice as to the value of
securities; the advisability of investing in, purchasing or selling securities;
the availability of securities or purchasers or sellers of securities; and
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, if applicable, for a
Fund to pay a brokerage commission in excess of that which another broker might
charge for executing the same transaction on account of execution services and
the receipt of research services. The Adviser has negotiated arrangements, which
are not applicable to most fixed-income transactions, with certain
broker/dealers pursuant to which a broker/dealer will provide research services,
to the Adviser or a Fund in exchange for the direction by the Adviser of
brokerage transactions to the broker/dealer. These arrangements regarding
receipt of research services generally apply to equity security transactions.
The Adviser will not place orders with a broker/dealer on the basis that the
broker/dealer has or has not sold shares of a Fund. 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 elsewhere.
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<PAGE>
To the maximum extent feasible, it is expected that the Adviser will
place orders for portfolio transactions through the Distributor, which is a
corporation registered as a broker/dealer and a subsidiary of the Adviser; the
Distributor will place orders on behalf of the Funds with issuers, underwriters
or other brokers and dealers. The Distributor will not receive any commission,
fee or other remuneration from the Funds for this service.
Although certain research services from broker/dealers may be useful to
a Fund and to the Adviser, it is the opinion of the Adviser that such
information only supplements 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 a Fund, and not all such information is used by the Adviser
in connection with a Fund. Conversely, such information provided to the Adviser
by broker/dealers through whom other clients of the Adviser effect securities
transactions may be useful to the Adviser in providing services to a Fund.
The Trustees review, from time to time, whether the recapture for the
benefit of the Funds of some portion of the brokerage commissions or similar
fees paid by the Funds on portfolio transactions is legally permissible and
advisable.
NET ASSET VALUE
The net asset value per share of each Fund is determined by Scudder
Fund Accounting Corporation twice daily 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. The Exchange normally is closed on the following national holidays: New
Year's Day, Dr. Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas, and on
the preceding Friday or subsequent Monday when one of these holidays falls on a
Saturday or Sunday, respectively. Net asset value per share is determined by
dividing the total assets of each Fund, less all of its liabilities, by the
total number of shares of each Fund outstanding. The valuation of each Fund's
portfolio securities is based upon their amortized cost which does not take into
account unrealized securities gains or losses. This method involves initially
valuing an instrument at its cost and thereafter amortizing to maturity any
discount or premium, regardless of the impact of fluctuating interest rates on
the market value of the instrument. While this method provides certainty in
valuation, it may result in periods during which value, as determined by
amortized cost, is higher or lower than the price each Fund would receive if it
sold the instrument. During periods of declining interest rates, the quoted
yield on shares of each Fund may tend to be higher than a like computation made
by a fund with identical investments utilizing a method of valuation based upon
market prices and estimates of market prices for all of its portfolio
instruments. Thus, if the use of amortized cost by each Fund resulted in a lower
aggregate portfolio value on a particular day, a prospective investor in each
Fund would be able to obtain a somewhat higher yield if he purchased shares of
each Fund on that day than would result from investment in a fund utilizing
solely market values, and existing investors in each Fund would receive less
investment income. The converse would apply in a period of rising interest
rates. Other securities and assets for which market quotations are not readily
available are valued in good faith at fair value using methods determined by the
Trustees and applied on a consistent basis. 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. The Trustees review the valuation of each
Fund's securities through receipt of regular reports from the Adviser at each
regular Trustees' meeting. Determinations of net asset value 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 the Funds' 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 PricewaterhouseCoopers LLP, One Post Office Square,
Boston, Massachusetts 02109, independent accountants, and given on the authority
of that firm as experts in accounting and auditing. PricewaterhouseCoopers LLP
is responsible for performing annual audits of the financial statements and
financial highlights of each Fund in accordance with generally accepted auditing
standards and the preparation of federal tax returns.
47
<PAGE>
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.
Other Information
Dechert Price & Rhoads acts as general counsel for SCIT and Treasury
Fund. Willkie, Farr & Gallagher acts as general counsel for STFMF.
SCIT and Treasury Fund each have a fiscal year end of June 30. The
fiscal year end for STFMF is December 31 .
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 Tax Free Money Fund is
811235-10-0.
The CUSIP number of Scudder U.S. Treasury Money Fund
is 81123P-10-6.
The name "Scudder Cash Investment Trust" is the designation of the Fund
for the time being under a Declaration of Trust dated December 12, 1975, the
name "Scudder U.S. Treasury Money Fund" is the designation of the Fund for the
time being under a Declaration of Trust dated April 4, 1980 and the name
"Scudder Tax Free Money Fund" is the designation of the Fund for the time being
under a Declaration of Trust dated December 9,1987, 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 $1 billion, plus holding
and transaction charges for this service. For the fiscal years ended June 30,
1998 and 1997, SFAC charged SCIT aggregate fees of -$________ and $105,874. For
the fiscal year ended June 30, 1999, the amount charged to SCIT by SFAC
aggregated $_______, of which $_________ was unpaid at June 30, 1999. For the
fiscal years ended June 30, 1998 and 1997, SFAC charged Treasury Fund aggregate
fees of $_________ and $50,134. For the year ended June 30, 1999, the amount
charged to Treasury Fund by SFAC aggregated $_____, of which $_____ was unpaid
at June 30, 1999. For the fiscal years ended December 31, 1998 and 1997, SFAC
charged STFMF aggregate fees of $_________ and $44,913. For the year ended
December 31, 1999, the amount charged to STFMF by SFAC aggregated $_________, of
which $_________ was unpaid at December 31, 1999.
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, 1998 and 1997,
Service Corporation charged SCIT aggregate fees of $_________ and $2,907,025.
For the year
48
<PAGE>
ended June 30, 1999, the amount charged to SCIT aggregated $_______, of which
$_________was unpaid at June 30, 1999. For the fiscal years ended June 30, 1998
and 1997, Service Corporation charged Treasury Fund aggregate fees of
$____________ and $710,792. For the year ended June 30, 1999, the amount charged
to Treasury Fund by SSC aggregated $________, of which $_________was unpaid at
June 30, 1999. For the fiscal years ended December 31, 1998 and 1997, Service
Corporation charged STFMF an aggregate fee of $_________ and $204,129. For the
fiscal year ended December 31, 1999, Service Corporation charged STFMF aggregate
fees of $________, of which $_________was unpaid at December 31, 1999.
The Funds, or the Adviser (including any affiliate of the Adviser), or
both, may pay unaffiliated third parties for providing recordkeeping and other
administrative services with respect to accounts of participants in retirement
plans or other beneficial owners of Fund shares whose interests are generally
held in an omnibus account.
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,
1998 and 1997, Scudder Trust Company's fees amounted to $__________ and
$1,699,834 for SCIT and $______ and $525,821 for Treasury Fund. For the year
ended June 30, 1999, the amount charged to SCIT by STC aggregated $_________, of
which $_______was unpaid at June 30, 1999. For the year ended June 30, 1999, the
amount charged Treasury Fund by STC aggregated $________, of which $_________
was unpaid at June 30, 1999.
This Statement of Additional Information contains the information of
Scudder Cash Investment Trust, Scudder Tax Free Money Fund and Scudder U.S.
Treasury Money Fund. Each Fund, through its combined 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.
The Funds' combined 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.
FINANCIAL STATEMENTS
Scudder Cash Investment Trust
The financial statements, including the investment portfolio, of
Scudder Cash Investment Trust, together with the Financial Highlights and notes
to financial statements in the Semiannual Report to the Shareholders of the Fund
dated December 31, 1998, are incorporated herein by reference 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 Financial Highlights and
notes to financial statements in the Semiannual Report to the Shareholders of
the Fund dated December 31, 1998, are incorporated herein by reference and are
hereby deemed to be a part of this combined Statement of Additional Information.
Scudder Tax Free Money Fund
The financial statements, including the investment portfolio, of
Scudder Tax Free Money Fund, together with the Report of Independent
Accountants, Financial Highlights and notes to financial statements in the
Annual Report to the Shareholders of the Fund dated December 31, 1998, are
incorporated herein by reference and are hereby deemed to be a part of this
combined Statement of Additional Information.
49
<PAGE>
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
giving security to principal and interest inadequate and potentially unreliable
over any period of time.
<PAGE>
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.
<PAGE>
PART C. OTHER INFORMATION
Item 23. Exhibits.
-------- ---------
<TABLE>
<S> <C> <C> <C>
(a) (1) Amended and Restated Declaration of Trust dated November 3, 1987, as amended
February 12, 1991.
(Incorporated by reference to Post-Effective Amendment No. 20 to the
Registration Statement.)
(2) Amendment to the Amended and Restated Declaration of Trust dated November
13, 1990.
(Incorporated by reference to Post-Effective Amendment No. 23 to the
Registration Statement.)
(3) Amendment to the Amended and Restated Declaration of Trust dated February
12, 1991.
(Incorporated by reference to Post-Effective Amendment No. 23 to the
Registration Statement.)
(b) (1) By-Laws amended as of September 14, 1981.
(Incorporated by reference to Post-Effective Amendment No. 20 to the
Registration Statement.)
(2) Amendment to the By-Laws dated August 13, 1991.
(Incorporated by reference to Post-Effective Amendment No. 20 to the
Registration Statement.)
(3) Amendment to the By-Laws dated November 12, 1991.
(Incorporated by reference to Post-Effective Amendment No. 20 to the
Registration Statement.)
(c) Inapplicable.
(d) Investment Management Agreement between the Registrant and Scudder Kemper
Investments, Inc. dated September 7, 1998.
(Incorporated by reference to Post-Effective Amendment No. 23 to the
Registration Statement.)
(e) Underwriting Agreement between the Registrant and Scudder Investor Services,
Inc. dated September 7, 1998.
(Incorporated by reference to Post-Effective Amendment No. 23 to the
Registration Statement.)
(f) Inapplicable.
(g) (1) Custodian Contract with State Street Bank and Trust Company dated May 21,
1980.
(Incorporated by reference to Post-Effective amendment No. 20 to the
Registration Statement.)
(2) Amendment to the Custodian Contract with State Street Bank and Trust Company
dated August 9, 1988.
(Incorporated by reference to Post-Effective amendment No. 20 to the
Registration Statement.)
1
<PAGE>
(3) Amendment to the Custodian Contract with Sate Street Bank and Trust Company
dated November 10, 1988.
(Incorporated by reference to Post-Effective Amendment No. 31 to the
Registration Statement.)
(4) Amendment to the Custodian Contract with Sate Street Bank and Trust Company
dated November 13, 1990.
(Incorporated by reference to Post-Effective Amendment No. 20 to the
Registration Statement.)
(5) Fee schedule for Exhibit (g)(1).
(Incorporated by reference to Post-Effective Amendment No. 23 to the
Registration Statement.)
(h) (1) Transfer Agency and Service Agreement with Scudder Service Corporation dated
October 2, 1989.
(Incorporated by reference to Post-Effective Amendment No. 20 to the
Registration Statement.)
(2) Fee schedule for Exhibit (h)(1).
(Incorporated by reference to Post-Effective Amendment No. 23 to the
Registration Statement.)
(3) COMPASS Service Agreement with Scudder Trust Company dated October 1, 1995.
(Incorporated by reference to Post-Effective Amendment No. 19 to the
Registration Statement.)
(4) Fee schedule for Exhibit (h)(3).
(Incorporated by reference to Post-Effective Amendment No. 23 to the
Registration Statement.)
(5) Fund Accounting Services Agreement between the Registrant and Scudder
Financial Accounting Corporation dated August 1, 1994.
(Incorporated by reference to Post-Effective Amendment No. 18 to the
Registration Statement.)
(i) Consent of Legal Counsel.
(To be filed by Amendment.)
(j) Consent of Independent Accountants.
(To be filed by Amendment.)
(k) Inapplicable.
(l) Inapplicable.
(m) Inapplicable.
(n) Article 6 Financial Data Schedules.
(To be filed by Amendment.)
(o) Inapplicable.
</TABLE>
2
<PAGE>
Item 24. Persons Controlled by or under Common Control with Fund.
- -------- --------------------------------------------------------
None
Item 25. Indemnification.
- -------- ----------------
A policy of insurance covering Scudder Kemper Investments,
Inc., its subsidiaries including Scudder Investor Services,
Inc., and all of the registered investment companies advised
by Scudder Kemper Investments, Inc. insures the Registrant's
trustees and officers and others against liability arising by
reason of an alleged breach of duty caused by any negligent
act, error or accidental omission in the scope of their
duties.
Article IV, Sections 4.1 - 4.3 of the Registrant's Declaration
of Trust provide as follows:
Section 4.1. No Personal Liability of Shareholders, Trustees,
Etc. No Shareholder shall be subject to any personal liability
whatsoever to any Person in connection with Trust Property or
the acts, obligations or affairs of the Trust. No Trustee,
officer, employee or agent of the Trust shall be subject to
any personal liability whatsoever to any Person, other than to
the Trust or its Shareholders, in connection with Trust
Property or the affairs of the Trust, save only that arising
from bad faith, willful misfeasance, gross negligence or
reckless disregard of his duties with respect to such Person;
and all such Persons shall look solely to the Trust Property
for satisfaction of claims of any nature arising in connection
with the affairs of the Trust. If any Shareholder, Trustee,
officer, employee, or agent, as such, of the Trust, is made a
party to any suit or proceeding to enforce any such liability
of the Trust, he shall not, on account thereof, be held to any
personal liability. The Trust shall indemnify and hold each
Shareholder harmless from and against all claims and
liabilities, to which such Shareholder may become subject by
reason of his being or having been a Shareholder, and shall
reimburse such Shareholder for all legal and other expenses
reasonably incurred by him in connection with any such claim
or liability. The indemnification and reimbursement required
by the preceding sentence shall be made only out of the assets
of the one or more Series of which the Shareholder who is
entitled to indemnification or reimbursement was a Shareholder
at the time the act or event occurred which gave rise to the
claim against or liability of said Shareholder. The rights
accruing to a Shareholder under this Section 4.1 shall not
impair any other right to which such Shareholder may be
lawfully entitled, nor shall anything herein contained
restrict the right of the Trust to indemnify or reimburse a
Shareholder in any appropriate situation even though not
specifically provided herein.
Section 4.2. Non-Liability of Trustees, Etc. No Trustee,
officer, employee or agent of the Trust shall be liable to the
Trust, its Shareholders, or to any Shareholder, Trustee,
officer, employee, or agent thereof for any action or failure
to act (including without limitation the failure to compel in
any way any former or acting Trustee to redress any breach of
trust) except for his own bad faith, willful misfeasance,
gross negligence or reckless disregard of the duties involved
in the conduct of his office.
Section 4.3. Mandatory Indemnification. (a) Subject to the
exceptions and limitations contained in paragraph (b) below:
(i) every person who is, or has been, a Trustee or officer of
the Trust shall be indemnified by the Trust to the fullest extent
permitted by law against all liability and against all expenses
reasonably incurred or paid by him in connection with any claim,
action, suit or proceeding in which he becomes involved as a party or
otherwise by virtue of his being or having been a Trustee or officer
and against amounts paid or incurred by him in the settlement thereof;
3
<PAGE>
(ii) the words "claim," "action," "suit," or "proceeding"
shall apply to all claims, actions, suits or proceedings (civil,
criminal, administrative or other, including appeals), actual or
threatened; and the words "liability" and "expenses" shall include,
without limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a
Trustee or officer:
(i) against any liability to the Trust, a Series thereof, or
the Shareholders by reason of a final adjudication by a court or other
body before which a proceeding was brought that he engaged in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office;
(ii) with respect to any matter as to which he shall have been
finally adjudicated not to have acted in good faith in the reasonable
belief that his action was in the best interest of the Trust;
(iii) in the event of a settlement or other disposition not
involving a final adjudication as provided in paragraph (b)(i) or
(b)(ii) resulting in a payment by a Trustee or officer, unless there
has been a determination that such Trustee or officer did not engage in
willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office:
(A) by the court or other body approving the
settlement or other disposition; or
(B) based upon a review of readily available facts
(as opposed to a full trial-type inquiry) by (x) vote of a
majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then
in office act on the matter) or (y) written opinion of
independent legal counsel.
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be
severable, shall not affect any other rights to which any
Trustee or officer may now or hereafter be entitled, shall
continue as to a person who has ceased to be such Trustee or
officer and shall insure to the benefit of the heirs,
executors, administrators and assigns of such a person.
Nothing contained herein shall affect any rights to
indemnification to which personnel of the Trust other than
Trustees and officers may be entitled by contract or otherwise
under law.
(d) Expenses of preparation and presentation of a defense to any
claim, action, suit or proceeding of the character described
in paragraph (a) of this Section 4.3 may be advanced by the
Trust prior to final disposition thereof upon receipt of an
undertaking by or on behalf of the recipient to repay such
amount if it is ultimately determined that he is not entitled
to indemnification under this Section 4.3, provided that
either:
(i) such undertaking is secured by a surety bond or some other
appropriate security provided by the recipient, or the Trust shall be insured
against losses arising out of any such advances; or
(ii) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees act on the matter) or an
independent legal counsel in a written opinion shall determine, based upon a
review of readily available facts (as opposed to a full trial-type inquiry),
that there is reason to believe that the recipient ultimately will be found
entitled to indemnification.
As used in this Section 4.3, a "Disinterested Trustee" is one who is
not (i) an "Interested Person" of the Trust (including anyone who has been
exempted from being an "Interested Person" by any rule, regulation or order of
the Commission), or (ii) involved in the claim, action, suit or proceeding.
4
<PAGE>
Item 26. Business or Other Connections of Investment Adviser.
- -------- ----------------------------------------------------
Scudder Kemper Investments, Inc. has stockholders and
employees who are denominated officers but do not as such have
corporation-wide responsibilities. Such persons are not
considered officers for the purpose of this Item 26.
<TABLE>
<CAPTION>
Business and Other Connections of Board
Name of Directors of Registrant's Adviser
---- ------------------------------------
<S> <C>
Stephen R. Beckwith Treasurer and Chief Financial Officer, Scudder Kemper Investments, Inc.**
Vice President and Treasurer, Scudder Fund Accounting Corporation*
Director, Scudder Stevens & Clark Corporation**
Director and Chairman, Scudder Defined Contribution Services, Inc.**
Director and President, Scudder Capital Asset Corporation**
Director and President, Scudder Capital Stock Corporation**
Director and President, Scudder Capital Planning Corporation**
Director and President, SS&C Investment Corporation**
Director and President, SIS Investment Corporation**
Director and President, SRV Investment Corporation**
Lynn S. Birdsong Director and Vice President, Scudder Kemper Investments, Inc.**
Director, Scudder, Stevens & Clark (Luxembourg) S.A.#
William H. Bolinder Director, Scudder Kemper Investments, Inc.**
Member Group Executive Board, Zurich Financial Services, Inc. ##
Chairman, Zurich-American Insurance Company o
Laurence W. Cheng Director, Scudder Kemper Investments, Inc.**
Member, Corporate Executive Board, Zurich Insurance Company of Switzerland ##
Director, ZKI Holding Corporation xx
Gunther Gose Director, Scudder Kemper Investments, Inc.**
CFO, Member Group Executive Board, Zurich Financial Services, Inc. ##
CEO/Branch Offices, Zurich Life Insurance Company ##
Rolf Huppi Director, Chairman of the Board, Scudder Kemper Investments, Inc.**
Member, Corporate Executive Board, Zurich Insurance Company of Switzerland##
Director, Chairman of the Board, Zurich Holding Company of America o
Director, ZKI Holding Corporation xx
Kathryn L. Quirk Chief Legal Officer, Chief Compliance Officer and Secretary, Scudder Kemper
Investments, Inc.**
Director, Senior Vice President & Assistant Clerk, Scudder Investor Services, Inc.*
Director, Vice President & Secretary, Scudder Fund Accounting Corporation*
Director, Vice President & Secretary, Scudder Realty Holdings Corporation*
Director & Assistant Clerk, Scudder Service Corporation*
Director, SFA, Inc.*
Vice President, Director & Assistant Secretary, Scudder Precious Metals, Inc.***
Director, Scudder, Stevens & Clark Japan, Inc.***
Director, Vice President and Secretary, Scudder, Stevens & Clark of Canada, Ltd.***
Director, Vice President and Secretary, Scudder Canada Investor Services Limited***
Director, Vice President and Secretary, Scudder Realty Advisers, Inc. x
Director and Secretary, Scudder, Stevens & Clark Corporation**
Director and Secretary, Scudder, Stevens & Clark Overseas Corporation oo
5
<PAGE>
Director and Secretary, SFA, Inc.*
Director, Vice President and Secretary, Scudder Defined Contribution Services, Inc.**
Director, Vice President and Secretary, Scudder Capital Asset Corporation**
Director, Vice President and Secretary, Scudder Capital Stock Corporation**
Director, Vice President and Secretary, Scudder Capital Planning Corporation**
Director, Vice President and Secretary, SS&C Investment Corporation**
Director, Vice President and Secretary, SIS Investment Corporation**
Director, Vice President and Secretary, SRV Investment Corporation**
Director, Vice President and Secretary, Scudder Financial Services, Inc.*
Director, Korea Bond Fund Management Co., Ltd.+
Cornelia M. Small Director and Vice President, Scudder Kemper Investments, Inc.**
Edmond D. Villani Director, President and Chief Executive Officer, Scudder Kemper Investments, Inc.**
Director, Scudder, Stevens & Clark Japan, Inc.###
President and Director, Scudder, Stevens & Clark Overseas Corporation oo
President and Director, Scudder, Stevens & Clark Corporation**
Director, Scudder Realty Advisors, Inc.x
Director, IBJ Global Investment Management S.A. Luxembourg, Grand-Duchy of Luxembourg
* Two International Place, Boston, MA
x 333 South Hope Street, Los Angeles, CA
** 345 Park Avenue, New York, NY
# Societe Anonyme, 47, Boulevard Royal, L-2449 Luxembourg, R.C. Luxembourg B 34.564
*** Toronto, Ontario, Canada
xxx Grand Cayman, Cayman Islands, British West Indies
oo 20-5, Ichibancho, Chiyoda-ku, Tokyo, Japan
### 1-7, Kojimachi, Chiyoda-ku, Tokyo, Japan
xx 222 S. Riverside, Chicago, IL
o Zurich Towers, 1400 American Ln., Schaumburg, IL
+ P.O. Box 309, Upland House, S. Church St., Grand Cayman, British West Indies
## Mythenquai-2, P.O. Box CH-8022, Zurich, Switzerland
</TABLE>
Item 27. Principal Underwriters.
- -------- -----------------------
(a)
Scudder Investor Services, Inc. acts as principal underwriter of the
Registrant's shares and also acts as principal underwriter for other
funds managed by Scudder Kemper Investments, Inc.
(b)
The Underwriter has employees who are denominated officers of an
operational area. Such persons do not have corporation-wide
responsibilities and are not considered officers for the purpose of
this Item 27.
6
<PAGE>
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Position and Offices with Positions and
Business Address Scudder Investor Services, Inc. Offices with Registrant
---------------- ------------------------------- -----------------------
<S> <C> <C> <C>
Lynn S. Birdsong Senior Vice President None
345 Park Avenue
New York, NY 10154
Mary Elizabeth Beams Vice President None
Two International Place
Boston, MA 02110
Mark S. Casady Director, President and Assistant None
Two International Place Treasurer
Boston, MA 02110
Linda Coughlin Director and Senior Vice President None
Two International Place
Boston, MA 02110
Richard W. Desmond Vice President None
345 Park Avenue
New York, NY 10154
Paul J. Elmlinger Senior Vice President and Assistant None
345 Park Avenue Clerk
New York, NY 10154
Philip S. Fortuna Vice President None
101 California Street
San Francisco, CA 94111
William F. Glavin Vice President None
Two International Place
Boston, MA 02110
Margaret D. Hadzima Assistant Treasurer None
Two International Place
Boston, MA 02110
John R. Hebble Assistant Treasurer Treasurer
Two International Place
Boston, MA 02110
Thomas W. Joseph Director, Vice President, Treasurer Vice President
Two International Place and Assistant Clerk
Boston, MA 02110
7
<PAGE>
Name and Principal Position and Offices with Positions and
Business Address Scudder Investor Services, Inc. Offices with Registrant
---------------- ------------------------------- -----------------------
James J. McGovern Chief Financial Officer None
345 Park Avenue
New York, NY 10154
None
Lorie C. O'Malley Vice President
Two International Place
Boston, MA 02110
Caroline Pearson Clerk Assistant Secretary
Two International Place
Boston, MA 02110
Kathryn L. Quirk Director, Senior Vice President, Chief Trustee, Vice President
345 Park Avenue Legal Officer and Assistant Clerk and Assistant Secretary
New York, NY 10154
Robert A. Rudell Director and Vice President None
Two International Place
Boston, MA 02110
William M. Thomas Vice President None
Two International Place
Boston, MA 02110
Benjamin Thorndike Vice President None
Two International Place
Boston, MA 02110
Sydney S. Tucker Vice President None
Two International Place
Boston, MA 02110
Linda J. Wondrack Vice President and Chief Compliance None
Two International Place Officer
Boston, MA 02110
</TABLE>
(c)
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Net Underwriting Compensation on
Name of Principal Discounts and Redemptions Brokerage Other
Underwriter Commissions and Repurchases Commissions Compensation
----------- ----------- --------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Scudder Investor None None None None
Services, Inc.
</TABLE>
8
<PAGE>
Item 28. Location of Accounts and Records.
- -------- ---------------------------------
Certain accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 Act and the Rules
promulgated thereunder are maintained by Scudder Kemper
Investments Inc., Two International Place, Boston, MA
02110-4103. Records relating to the duties of the Registrant's
custodian are maintained by State Street Bank and Trust
Company, Heritage Drive, North Quincy, Massachusetts. Records
relating to the duties of the Registrant's transfer agent are
maintained by Scudder Service Corporation, Two International
Place, Boston, Massachusetts.
Item 29. Management Services.
- -------- --------------------
Inapplicable.
Item 30. Undertakings.
- -------- -------------
Inapplicable.
9
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(a) under the Securities Act of 1933 and has duly caused this amendment
to its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized in the City of Boston and the Commonwealth of
Massachusetts, on the 29th of July, 1999.
SCUDDER U.S. TREASURY MONEY FUND
By /s/Lynn S. Birdsong
-----------------------------
Lynn S. Birdsong*
President (Principal Executive Officer)
and Trustee
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/Lynn S. Birdsong
- ---------------------------------------
Lynn S. Birdsong* President and Trustee July 29, 1999
/s/Henry P. Becton, Jr.
- ---------------------------------------
Henry P. Becton, Jr.* Trustee July 29, 1999
/s/Dawn-Marie Driscoll
- ---------------------------------------
Dawn-Marie Driscoll* Trustee July 29, 1999
/s/Peter B. Freeman
- ---------------------------------------
Peter B. Freeman* Trustee July 29, 1999
/s/George M. Lovejoy, Jr.
- ---------------------------------------
George M. Lovejoy, Jr.* Trustee July 29, 1999
/s/Wesley W. Marple, Jr.
- ---------------------------------------
Wesley W. Marple, Jr. * Trustee July 29, 1999
/s/Kathryn L. Quirk
- ---------------------------------------
Kathryn L. Quirk* Trustee, Vice President, and July 29, 1999
Assistant Secretary
/s/Jean C. Tempel
- ---------------------------------------
Jean C. Tempel* Trustee July 29, 1999
/s/John R. Hebble
- ---------------------------------------
John R. Hebble Treasurer July 29, 1999
</TABLE>
*By: /s/Caroline Pearson
--------------------------------------
Caroline Pearson
Attorney-in-fact pursuant to the powers
of attorney for Lynn S. Birdsong, Henry
P. Becton, Dawn-Marie Driscoll, Peter B.
Freeman, George M. Lovejoy, Jr., Wesley
W. Marple, Jr., Kathryn L. Quirk, and
Jean C. Tempel contained in this
Post-Effective amendment to the
Registration Statement.
<PAGE>
POWER OF ATTORNEY
-----------------
SCUDDER CASH INVESTMENT TRUST
SCUDDER FUNDS TRUST
SCUDDER GNMA FUND
INVESTMENT TRUST
SCUDDER PORTFOLIO TRUST
SCUDDER U.S. TREASURY MONEY FUND
Pursuant to the requirements of the Securities Act of 1933, this Power
of Attorney has been signed below by the following persons in the capacities and
on the dates indicated. By so signing, the undersigned in his/her capacity as
trustee or officer, or both, as the case may be of the Registrant, does hereby
appoint Caroline Pearson, Kathryn L. Quirk, John Millette and Sheldon A. Jones
and each of them, severally, or if more than one acts, a majority of them, his
true and lawful attorney and agent to execute in his name, place and stead (in
such capacity) any and all amendments to the Registration Statement and any
post-effective amendments thereto and all instruments necessary or desirable in
connection therewith, to attest the seal of the Registrant thereon and to file
the same with the Securities and Exchange Commission. Each of said attorneys and
agents shall have power to act with or without the other and have full power and
authority to do and perform in the name and on behalf of the undersigned, in any
and all capacities, every act whatsoever necessary or advisable to be done in
the premises as fully and to all intents and purposes as the undersigned might
or could do in person, hereby ratifying and approving the act of said attorneys
and agents and each of them.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/Lynn S. Birdsong
- ---------------------------------------
Lynn S. Birdsong Trustee and President
</TABLE>
8
<PAGE>
POWER OF ATTORNEY
-----------------
SCUDDER CASH INVESTMENT TRUST
SCUDDER FUNDS TRUST
SCUDDER GNMA FUND
INVESTMENT TRUST
SCUDDER PORTFOLIO TRUST
SCUDDER U.S. TREASURY MONEY FUND
Pursuant to the requirements of the Securities Act of 1933, this Power
of Attorney has been signed below by the following persons in the capacities and
on the dates indicated. By so signing, the undersigned in his/her capacity as
trustee or officer, or both, as the case may be of the Registrant, does hereby
appoint Caroline Pearson, Kathryn L. Quirk, John Millette and Sheldon A. Jones
and each of them, severally, or if more than one acts, a majority of them, his
true and lawful attorney and agent to execute in his name, place and stead (in
such capacity) any and all amendments to the Registration Statement and any
post-effective amendments thereto and all instruments necessary or desirable in
connection therewith, to attest the seal of the Registrant thereon and to file
the same with the Securities and Exchange Commission. Each of said attorneys and
agents shall have power to act with or without the other and have full power and
authority to do and perform in the name and on behalf of the undersigned, in any
and all capacities, every act whatsoever necessary or advisable to be done in
the premises as fully and to all intents and purposes as the undersigned might
or could do in person, hereby ratifying and approving the act of said attorneys
and agents and each of them.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/Henry P. Becton, Jr. 7/3/99
- ---------------------------------------
Henry P. Becton, Jr. Trustee
</TABLE>
<PAGE>
POWER OF ATTORNEY
-----------------
SCUDDER CASH INVESTMENT TRUST
SCUDDER FUNDS TRUST
SCUDDER GNMA FUND
INVESTMENT TRUST
SCUDDER PORTFOLIO TRUST
SCUDDER U.S. TREASURY MONEY FUND
Pursuant to the requirements of the Securities Act of 1933, this Power
of Attorney has been signed below by the following persons in the capacities and
on the dates indicated. By so signing, the undersigned in his/her capacity as
trustee or officer, or both, as the case may be of the Registrant, does hereby
appoint Caroline Pearson, Kathryn L. Quirk, John Millette and Sheldon A. Jones
and each of them, severally, or if more than one acts, a majority of them, his
true and lawful attorney and agent to execute in his name, place and stead (in
such capacity) any and all amendments to the Registration Statement and any
post-effective amendments thereto and all instruments necessary or desirable in
connection therewith, to attest the seal of the Registrant thereon and to file
the same with the Securities and Exchange Commission. Each of said attorneys and
agents shall have power to act with or without the other and have full power and
authority to do and perform in the name and on behalf of the undersigned, in any
and all capacities, every act whatsoever necessary or advisable to be done in
the premises as fully and to all intents and purposes as the undersigned might
or could do in person, hereby ratifying and approving the act of said attorneys
and agents and each of them.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/Dawn Marie Driscoll 6/26/99
- ---------------------------------------
Dawn-Marie Driscoll Trustee
</TABLE>
2
<PAGE>
POWER OF ATTORNEY
-----------------
SCUDDER CASH INVESTMENT TRUST
SCUDDER FUNDS TRUST
SCUDDER GNMA FUND
INVESTMENT TRUST
SCUDDER PORTFOLIO TRUST
SCUDDER U.S. TREASURY MONEY FUND
Pursuant to the requirements of the Securities Act of 1933, this Power
of Attorney has been signed below by the following persons in the capacities and
on the dates indicated. By so signing, the undersigned in his/her capacity as
trustee or officer, or both, as the case may be of the Registrant, does hereby
appoint Caroline Pearson, Kathryn L. Quirk, John Millette and Sheldon A. Jones
and each of them, severally, or if more than one acts, a majority of them, his
true and lawful attorney and agent to execute in his name, place and stead (in
such capacity) any and all amendments to the Registration Statement and any
post-effective amendments thereto and all instruments necessary or desirable in
connection therewith, to attest the seal of the Registrant thereon and to file
the same with the Securities and Exchange Commission. Each of said attorneys and
agents shall have power to act with or without the other and have full power and
authority to do and perform in the name and on behalf of the undersigned, in any
and all capacities, every act whatsoever necessary or advisable to be done in
the premises as fully and to all intents and purposes as the undersigned might
or could do in person, hereby ratifying and approving the act of said attorneys
and agents and each of them.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/Peter B. Freeman 6/30/99
- ---------------------------------------
Peter B. Freeman Trustee
</TABLE>
3
<PAGE>
POWER OF ATTORNEY
-----------------
SCUDDER CASH INVESTMENT TRUST
SCUDDER FUNDS TRUST
SCUDDER GNMA FUND
INVESTMENT TRUST
SCUDDER PORTFOLIO TRUST
SCUDDER U.S. TREASURY MONEY FUND
Pursuant to the requirements of the Securities Act of 1933, this Power
of Attorney has been signed below by the following persons in the capacities and
on the dates indicated. By so signing, the undersigned in his/her capacity as
trustee or officer, or both, as the case may be of the Registrant, does hereby
appoint Caroline Pearson, Kathryn L. Quirk, John Millette and Sheldon A. Jones
and each of them, severally, or if more than one acts, a majority of them, his
true and lawful attorney and agent to execute in his name, place and stead (in
such capacity) any and all amendments to the Registration Statement and any
post-effective amendments thereto and all instruments necessary or desirable in
connection therewith, to attest the seal of the Registrant thereon and to file
the same with the Securities and Exchange Commission. Each of said attorneys and
agents shall have power to act with or without the other and have full power and
authority to do and perform in the name and on behalf of the undersigned, in any
and all capacities, every act whatsoever necessary or advisable to be done in
the premises as fully and to all intents and purposes as the undersigned might
or could do in person, hereby ratifying and approving the act of said attorneys
and agents and each of them.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/George M. Lovejoy, Jr. 6/29/99
- ---------------------------------------
George M. Lovejoy, Jr. Trustee
</TABLE>
4
<PAGE>
POWER OF ATTORNEY
-----------------
SCUDDER CASH INVESTMENT TRUST
SCUDDER FUNDS TRUST
SCUDDER GNMA FUND
INVESTMENT TRUST
SCUDDER PORTFOLIO TRUST
SCUDDER U.S. TREASURY MONEY FUND
Pursuant to the requirements of the Securities Act of 1933, this Power
of Attorney has been signed below by the following persons in the capacities and
on the dates indicated. By so signing, the undersigned in his/her capacity as
trustee or officer, or both, as the case may be of the Registrant, does hereby
appoint Caroline Pearson, Kathryn L. Quirk, John Millette and Sheldon A. Jones
and each of them, severally, or if more than one acts, a majority of them, his
true and lawful attorney and agent to execute in his name, place and stead (in
such capacity) any and all amendments to the Registration Statement and any
post-effective amendments thereto and all instruments necessary or desirable in
connection therewith, to attest the seal of the Registrant thereon and to file
the same with the Securities and Exchange Commission. Each of said attorneys and
agents shall have power to act with or without the other and have full power and
authority to do and perform in the name and on behalf of the undersigned, in any
and all capacities, every act whatsoever necessary or advisable to be done in
the premises as fully and to all intents and purposes as the undersigned might
or could do in person, hereby ratifying and approving the act of said attorneys
and agents and each of them.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/Wesley W. Marple, Jr. 6/26/99
- ---------------------------------------
Wesley W. Marple, Jr. Trustee
</TABLE>
5
<PAGE>
POWER OF ATTORNEY
-----------------
SCUDDER CASH INVESTMENT TRUST
SCUDDER FUNDS TRUST
SCUDDER GNMA FUND
INVESTMENT TRUST
SCUDDER PORTFOLIO TRUST
SCUDDER U.S. TREASURY MONEY FUND
Pursuant to the requirements of the Securities Act of 1933, this Power
of Attorney has been signed below by the following persons in the capacities and
on the dates indicated. By so signing, the undersigned in his/her capacity as
trustee or officer, or both, as the case may be of the Registrant, does hereby
appoint Caroline Pearson, John Millette and Sheldon A. Jones and each of them,
severally, or if more than one acts, a majority of them, his true and lawful
attorney and agent to execute in his name, place and stead (in such capacity)
any and all amendments to the Registration Statement and any post-effective
amendments thereto and all instruments necessary or desirable in connection
therewith, to attest the seal of the Registrant thereon and to file the same
with the Securities and Exchange Commission. Each of said attorneys and agents
shall have power to act with or without the other and have full power and
authority to do and perform in the name and on behalf of the undersigned, in any
and all capacities, every act whatsoever necessary or advisable to be done in
the premises as fully and to all intents and purposes as the undersigned might
or could do in person, hereby ratifying and approving the act of said attorneys
and agents and each of them.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/Kathryn L. Quirk
- ---------------------------------------
Kathryn L. Quirk Trustee
</TABLE>
6
<PAGE>
POWER OF ATTORNEY
-----------------
SCUDDER CASH INVESTMENT TRUST
SCUDDER FUNDS TRUST
SCUDDER GNMA FUND
INVESTMENT TRUST
SCUDDER PORTFOLIO TRUST
SCUDDER U.S. TREASURY MONEY FUND
Pursuant to the requirements of the Securities Act of 1933, this Power
of Attorney has been signed below by the following persons in the capacities and
on the dates indicated. By so signing, the undersigned in his/her capacity as
trustee or officer, or both, as the case may be of the Registrant, does hereby
appoint Caroline Pearson, Kathryn L. Quirk, John Millette and Sheldon A. Jones
and each of them, severally, or if more than one acts, a majority of them, his
true and lawful attorney and agent to execute in his name, place and stead (in
such capacity) any and all amendments to the Registration Statement and any
post-effective amendments thereto and all instruments necessary or desirable in
connection therewith, to attest the seal of the Registrant thereon and to file
the same with the Securities and Exchange Commission. Each of said attorneys and
agents shall have power to act with or without the other and have full power and
authority to do and perform in the name and on behalf of the undersigned, in any
and all capacities, every act whatsoever necessary or advisable to be done in
the premises as fully and to all intents and purposes as the undersigned might
or could do in person, hereby ratifying and approving the act of said attorneys
and agents and each of them.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/Jean C. Tempel June 29, 1999
- ---------------------------------------
Jean C. Tempel Trustee
</TABLE>
7
<PAGE>
File No. 2-67219
File No. 811-3043
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM N-1A
POST-EFFECTIVE AMENDMENT NO. 26
TO REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AND
AMENDMENT NO. 28
TO REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
SCUDDER U.S. TREASURY MONEY FUND
1
<PAGE>
SCUDDER U.S. TREASURY MONEY FUND
EXHIBIT INDEX
2
