Scudder
U.S. Treasury
Money Fund
Annual Report
May 31, 1999
No-Load Funds
A money market fund investing in short-term U.S. government securities and
repurchase agreements. For investors seeking current income plus safety,
liquidity and stability of capital.
A no-load fund with no commissions to buy, sell, or exchange shares.
SCUDDER
<PAGE>
Scudder U.S. Treasury Money Fund
- --------------------------------------------------------------------------------
Date of Inception: 11/23/81 Total Net Assets as of Ticker Symbol: SCGXX
5/31/99: $426.6 million
- --------------------------------------------------------------------------------
o Scudder U.S. Treasury Money Fund's fiscal year end has changed from June 30 to
May 31. For its abbreviated fiscal year that began on July 1, 1998, and ended
May 31, 1999, Scudder U.S. Treasury Money Fund maintained its $1.00 share price
and provided a 4.09% total return.
o The Fund's 30-day net annualized yield was 4.14% as of May 31, 1999.
o Over the period, we emphasized agency discount notes, which offer yields
roughly equivalent to repurchase agreements with superior liquidity.
Table of Contents
3 Letter from the Fund's President 12 Notes to Financial Statements
4 Portfolio Management Discussion 14 Report of Independent Accountants
6 Glossary of Investment Terms 16 Officers and Trustees
7 Investment Portfolio 17 Investment Products and Services
8 Financial Statements 18 Scudder Solutions
11 Financial Highlights
2 - Scudder U.S. Treasury Money Fund
<PAGE>
Letter from the Fund's President
Dear Shareholders,
We are pleased to report to you on Scudder U.S. Treasury Money Fund's
abbreviated fiscal year ended May 31, 1999. We have changed the Fund's fiscal
year end from June 30 to May 31 as part of a larger effort to create
efficiencies and reduce the costs of producing Scudder fund regulatory materials
such as fund reports and prospectuses. Going forward, you will receive regular
reports following the Fund's annual and semiannual periods ending in May and
November.
During a period of increased volatility for the financial markets, Scudder
U.S. Treasury Money Fund continued to seek a stable $1.00 share price and
competitive money market rates for its investors. On May 31, 1999, the Fund
offered a 30-day net annualized yield of 4.14%. Over its abbreviated fiscal year
that began July 1, 1998, and ended May 31, 1999, the Fund provided a total
return of 4.09%. A "flight to quality" during much of the period that spurred a
large number of investors to turn to money market instruments and tended to
depress short-term interest rates has subsided. This is indicated to us by the
spread between the Fed Funds rate and the 90-day Treasury bill rate: As wide as
one and a half percentage points in mid-October, the spread closed to a tenth of
a percentage point as of May 31. Please read the Portfolio Management Discussion
beginning on page 4 for additional information concerning your Fund's investment
environment, strategy, and outlook.
For those interested in new Scudder products, we are pleased to introduce
Scudder Select 500 Fund and Scudder Select 1000 Growth Fund. Both funds are
managed with the goal of pursuing long-term outperformance compared to their
benchmark indices, the S&P 500 Index and the Russell 1000 Growth Index,
respectively. For more information on either Select fund, please call us at the
number below.
Please call a Scudder Investor Information representative at 1-800-225-2470
if you have questions about your Fund. Page 19 provides more information on how
to contact Scudder. Thank you for choosing Scudder U.S. Treasury Money Fund to
help meet your investment needs.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder U.S. Treasury Money Fund
3 - Scudder U.S. Treasury Money Fund
<PAGE>
Portfolio Management Discussion
Dear Shareholders,
Through a period that included a massive "flight to quality," shifting interest
rate stances by the Federal Reserve, a rising but volatile U.S. stock market,
and a robust U.S. economy, Scudder U.S. Treasury Money Fund provided
shareholders with a stable $1.00 share price and a competitive yield. As of May
31, 1999, the Fund's 30-day net annualized yield was 4.14%. Over its abbreviated
fiscal year that began July 1, 1998, and ended May 31, 1999, the Fund provided a
total return of 4.09%. The Fund's 12-month total return of 4.51% outpaced the
4.36% return of similar money market funds during the same period as tracked by
Lipper Analytical Services, Inc.^1
The Markets Settle Down
Market turmoil hit a peak in the wake of the Russian currency devaluation late
last summer, followed by the near collapse of the Long Term Capital Management
hedge fund. Volatility in the U.S. stock market increased greatly while a
massive reallocation to U.S. Treasury bonds and money market instruments led to
significantly lower bond and money market yields. Though presidential
impeachment proceedings distracted the financial markets, the Federal Reserve's
three interest rate cuts during the third and fourth quarters of 1998 helped to
gradually restore market stability.
During this period, the U.S. economy continued to grow beyond all expectations,
with a dramatic 6% annualized increase in GDP for the fourth quarter of 1998 and
a strong start in 1999 that seemed to assure at least 4% GDP growth this year.
Reflecting a healthy economy and investor expectations for continued growth, the
Dow Jones average reached 10,560 by the close of the Fund's fiscal year. At the
same time, the Federal Reserve was preparing to nudge interest rates higher
(after the bond market had already done so) in an effort to head off
inflationary pressures. The credit concerns that drove so much investor activity
in late 1998 had gradually subsided.
A Conservative Strategy
Over the Fund's abbreviated fiscal year, we took a "neutral" stance, and
refrained from extending the Fund's average maturity because money market yields
at the longer end of our acceptable maturity range did not offer attractive
value. The Fund's strategy has been to wait until money market yields increased
sufficiently in order to make the additional risk of extending maturity
worthwhile. The average maturity of the Fund was 47 days as of May 31, 1999.
During the period, the Fund maintained investments in a diversified mix of U.S.
government securities, including repurchase agreements backed by U.S. Treasury
obligations, and agency securities issued or guaranteed by the U.S. Treasury.
Though repurchase agreements represented the majority position in the Fund, we
emphasized agency discount notes over the 11-month period ended May 31, 1999
because they offer yields roughly equivalent to repurchase agreements with
superior liquidity.
- ------------------------
^1 Lipper Analytical Services, Inc., is an independent analyst of investment
performance. Performance includes reinvestment of dividends and capital
gains. Past performance is no guarantee of future results.
4 - Scudder U.S. Treasury Money Fund
<PAGE>
Outlook
In light of recent increases in short-term interest rates -- including an
increase in the Federal Funds target rate following the close of the period -- a
long-predicted slowdown in U.S. economic activity seems more likely to occur in
1999. At the same time, we expect that inflation will remain restrained, which
should place an upper limit on short-term rate increases. Though we plan to
extend the Fund's average maturity when the market offers sufficient value, we
will maintain a cautious approach during the coming months. We will also monitor
the level of worldwide economic activity closely over the remainder of the year:
The United States has been the only significant engine of economic growth for
some time. If the incipient economic recovery in Asia and other parts of the
world gathers steam, we will watch for additional upward pressure on inflation
and short-term interest rates and adjust our strategy accordingly.
The Fund's management team will continue to collect and analyze economic data
and carefully monitor the investment climate as we position the Fund for high
current income, plus safety, liquidity, and stability of capital.
Sincerely,
Your Portfolio Management Team
/s/Frank J. Rachwalski, Jr. /s/Dean Meddaugh
Frank J. Rachwalski, Jr. Dean Meddaugh
- --------------------------------------------------------------------------------
Scudder U.S. Treasury
Money Fund:
A Team Approach to Investing
Scudder U.S. Treasury Money Fund is managed by a team of Scudder Kemper
Investments, Inc. (the "Adviser") professionals, each of whom plays an important
role in the Fund's management process. Team members work together to develop
investment strategies and select securities for the Fund's portfolio. They are
supported by the Adviser's large staff of economists, research analysts,
traders, and other investment specialists who work in our offices across the
United States and abroad. We believe our team approach benefits Fund investors
by bringing together many disciplines and leveraging our extensive resources.
Lead Portfolio Manager Frank J. Rachwalski joined the Adviser in 1973 as a money
market specialist within the fixed income group and assumed responsibility for
the Fund's day-to-day management and overall investment strategies on January 1,
1998. Mr. Rachwalski has been responsible for the trading and portfolio
management of money market funds since 1974.
Portfolio Manager Dean Meddaugh joined the Adviser in 1996 as a money market
manager. Mr. Meddaugh joined the team in 1999 and has six years of investment
industry experience.
- --------------------------------------------------------------------------------
5 - Scudder U.S. Treasury Money Fund
<PAGE>
Glossary of Investment Terms
GROSS DOMESTIC PRODUCT Gross domestic product is a commonly
referenced measure of the health of the U.S. economy,
and refers to the market value of the goods and
services produced by labor and property in the United
States. Overly strong economic growth can lead to
accelerating inflation; weak growth can lead to a
recession.
LIQUIDITY A characteristic of an investment or an asset
referring to the ease of convertibility into cash
within a reasonably short period of time.
MATURITY Reaching the date at which a debt instrument is due
and payable. A bond due to mature on January 1, 2010
will return the bondholder's principal and final
interest payment on that date.
MONEY MARKET Market for short-term debt instruments,
including banker's acceptances, commercial paper,
negotiable certificates of deposit, repurchase
agreements, and Treasury bills. All of these
instruments have a high level of safety and
liquidity.
REPURCHASE AGREEMENT Agreement between a seller and a buyer, usually of
("REPO") U.S. Government securities, whereby the seller
agrees to repurchase the securities at an
agreed-upon price and, usually, at a stated time.
TOTAL RETURN The most common yardstick to measure the
performance of a fund. Total return -- annualized or
compound -- is based on a combination of share price
changes plus income and capital gain distributions,
if any, expressed as a percentage gain or loss in
value.
TREASURIES Negotiable debt obligations of the U.S. government,
secured by its full faith and credit and issued at
various schedules and maturities. These include
Treasury bills, notes, and bonds. The income from
Treasury securities is exempt from state and local,
but not federal, taxes.
YIELD The dividends or interest paid on a security,
expressed as a percentage of the security's current
price.
(Sources: Scudder Kemper Investments, Inc.; Barron's Dictionary of Finance and
Investment Terms)
6 - Scudder U.S. Treasury Money Fund
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio as of May 31, 1999
Principal
Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements 52.8%
- -----------------------------------------------------------------------------------------------------------------------------
Repurchase Agreement with Lehman Brothers dated 5/28/1999 at 4.8%, to be repurchased
at $60,032,000 on 6/1/1999, collateralized by a $62,535,000 U.S. Treasury Note,
4.75%, 2/15/2004 ..................................................................... 60,000,000 60,000,000
Repurchase Agreement with Morgan Stanley dated 5/28/1999 at 4.77%, to be repurchased
at $20,010,600 on 6/1/1999, collateralized by a $15,370,000 U.S. Treasury Bond,
9%, 11/15/2018 ........................................................................ 20,000,000 20,000,000
Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 5/28/1999 at 4.8%, to be
repurchased at $62,033,067 on 6/1/1999, collateralized by a $62,684,000
U.S. Treasury Bond, 3.875%, 4/15/2029 ................................................. 62,000,000 62,000,000
Repurchase Agreement with State Street Bank and Trust Company dated 5/28/1999 at
4.8%, to be repurchased at $81,527,458 on 6/1/1999, collateralized by a $26,235,000
U.S. Treasury Bond, 7.875%, 2/15/2021 and a $44,200,000 U.S. Treasury Bond,
7.25%, 8/15/2022 ...................................................................... 81,484,000 81,484,000
- -----------------------------------------------------------------------------------------------------------------------------
Total Repurchase Agreements (Cost $223,484,000) 223,484,000
- -----------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Obligations 28.4%
- -----------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Note, 5.75%, 9/30/1999 .................................................... 50,000,000 50,156,312
U.S. Treasury Note, 6%, 10/15/1999 ...................................................... 70,000,000 70,312,738
- -----------------------------------------------------------------------------------------------------------------------------
Total U.S. Treasury Obligations (Cost $120,469,050) 120,469,050
- -----------------------------------------------------------------------------------------------------------------------------
U.S. Government Backed Securities 18.8%
- -----------------------------------------------------------------------------------------------------------------------------
Overseas Private Invest Corp.*, 4.85%, 4/2/2007 (Cost $79,500,000) ...................... 79,500,000 79,500,000
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $423,453,050) (a) 423,453,050
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The cost for federal income tax purposes was $423,453,050.
* Floating rate notes are securities whose yields vary with a designated
market index or market rate, such as the coupon-equivalent of the Treasury
bill rate. These securities are shown at their rate as of May 31, 1999.
The accompanying notes are an integral part of the financial statements.
7 - Scudder U.S. Treasury Money Fund
<PAGE>
<TABLE>
<CAPTION>
Financial Statements
Statement of Assets and Liabilities
as of May 31, 1999
<S> <C> <C>
Assets
- ---------------------------------------------------------------------------------------------------------------------
Investments, at market (including repurchase agreements of
$223,484,000) (amortized cost $423,453,050) ............... $ 423,453,050
Cash ......................................................... 401
Receivable for Fund shares sold .............................. 4,558,649
Interest receivable .......................................... 1,788,116
Other assets ................................................. 5,945
----------------
Total assets ................................................. 429,806,161
Liabilities
- ---------------------------------------------------------------------------------------------------------------------
Payable for Fund shares redeemed ............................. 2,796,249
Dividends payable ............................................ 52,241
Accrued management fee ....................................... 15,456
Other payables and accrued expenses .......................... 314,101
----------------
Total liabilities ............................................ 3,178,047
-----------------------------------------------------------------------------------
Net assets, at market $ 426,628,114
-----------------------------------------------------------------------------------
Net Assets
- ---------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Paid-in capital .............................................. 426,628,114
-----------------------------------------------------------------------------------
Net assets, at market $ 426,628,114
-----------------------------------------------------------------------------------
Net Asset Value
- ---------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($426,628,114 / 426,626,181 outstanding shares of beneficial ----------------
interest, $.01 par value, unlimited number of shares
authorized) .................................................. $1.00
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8 - Scudder U.S. Treasury Money Fund
<PAGE>
<TABLE>
<CAPTION>
Statements of Operations
Eleven
Investment Income Months
Ended
May 31, 1999 Year Ended
(Note D) June 30, 1998
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Income:
Interest .......................................... $ 19,134,934 $ 21,424,370
---------------- ----------------
Expenses:
Management fee .................................... 1,905,337 1,995,553
Services to shareholders .......................... 1,837,284 1,642,885
Custodian and accounting fees ..................... 68,425 104,671
Trustees' fees and expenses ....................... 26,380 37,030
Reports to shareholders ........................... 95,984 61,669
Registration fees ................................. 102,156 65,007
Auditing .......................................... 36,515 32,816
Legal ............................................. 16,798 17,000
Other ............................................. 21,085 14,359
---------------- ----------------
Total expenses before reductions .................. 4,109,964 3,970,990
Expense reductions ................................ (1,633,026) (1,378,392)
---------------- ----------------
Expenses, net ..................................... 2,476,938 2,592,598
----------------------------------------------------------------------------------------
Net investment income 16,657,996 18,831,772
----------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ---------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments during the
period ......................................... 14,161 15,357
Net unrealized appreciation (depreciation) on
investments during the period .................. (11,769) (15,067)
----------------------------------------------------------------------------------------
Net gain (loss) on investments 2,392 290
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations $ 16,660,388 $ 18,832,062
----------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9 - Scudder U.S. Treasury Money Fund
<PAGE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
Eleven Months
Ended
May 31, 1999 Years Ended June 30,
Increase (Decrease) in Net Assets (Note D) 1998 1997
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations:
Net investment income ........................... $ 16,657,996 $ 18,831,772 $ 18,799,612
Net realized gain (loss) from investments ....... 14,161 15,357 --
Net unrealized appreciation (depreciation) on
investments during the period ................ (11,769) (15,067) 38,151
---------------- ---------------- ----------------
Net increase (decrease) in net assets
resulting from operations .................... 16,660,388 18,832,062 18,837,763
---------------- ---------------- ----------------
Distributions to shareholders:
From net investment income ...................... (16,657,996) (18,831,772) (18,799,612)
---------------- ---------------- ----------------
From net realized gains from investment
transactions ................................. (14,161) (15,357) (2,458)
---------------- ---------------- ----------------
Fund share transactions at net asset value
of $1.00 per share:
Shares sold ..................................... 712,989,234 865,115,721 846,157,354
Net asset value of shares issued to
shareholders in reinvestment
of distributions ............................. 15,776,229 17,248,372 16,784,285
Shares redeemed ................................. (690,653,783) (892,417,877) (860,582,122)
---------------- ---------------- ----------------
Net increase (decrease) in net assets from
Fund share transactions ...................... 38,111,680 (10,053,784) 2,359,517
---------------- ---------------- ----------------
Increase (decrease) in net assets ............... 38,099,911 (10,068,851) 2,395,210
Net assets at beginning of period ............... 388,528,203 398,597,054 396,201,844
---------------- ---------------- ----------------
Net assets at end of period ..................... $ 426,628,114 $ 388,528,203 $ 398,597,054
---------------- ---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 - Scudder U.S. Treasury Money Fund
<PAGE>
Financial Highlights
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
Eleven Months
Ended May 31,
1999 Years Ended June 30,
(Note D) 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............. $1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------------------------------------------------------------------------
Net investment income ............................ .040 .047 .045 .048 .046 .027
Less distributions from net investment income
and net realized gains on investment
transactions (a) ............................... (.040) (.047) (.045) (.048) (.046) (.027)
-------------------------------------------------------------------------
Net asset value, end of period ................... $1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Total Return (%) (b) ............................. 4.09** 4.83 4.58 4.91 4.70 2.74
Ratios and Supplemental Data
Net assets, end of period ($ millions) ........... 427 389 399 396 383 383
Ratio of operating expenses, net to average
daily net assets (%) ........................... .65* .65 .65 .65 .65 .65
Ratio of operating expenses before expense
reductions, to average daily net assets (%) .... 1.08* 1.00 .94 .92 .90 .90
Ratio of net investment income to average daily
net assets (%) ................................. 4.37* 4.72 4.49 4.80 4.61 2.75
</TABLE>
(a) Net realized capital gains were less than 6/10 of 1(cent) per share.
(b) Total returns would have been lower had certain expenses not been reduced.
* Annualized
** Not annualized
11 - Scudder U.S. Treasury Money Fund
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Scudder U.S. Treasury Money Fund (the "Fund") is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
Security Valuation. The fund values all portfolio securities utilizing the
amortized cost method permitted in accordance with Rule 2a-7 under the
Investment Company Act of 1940, as amended, and pursuant to which the Fund must
adhere to certain conditions. Under this method, which does not take into
account unrealized securities gains or losses, an instrument is initially valued
at its cost and thereafter assumes a constant accretion/amortization to maturity
of any discount/premium.
Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian,
receives delivery of the underlying securities, the amount of which at the time
of purchase and each subsequent business day is required to be maintained at
such a level that the market value is equal to at least the repurchase price.
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code of 1986, as amended, which are applicable to regulated
investment companies and to distribute all of its taxable income to its
shareholders. The Fund accordingly paid no federal income taxes and no provision
for federal income taxes was required.
Distribution of Income and Gains. All of the net investment income of the Fund
is declared as a dividend to shareholders of record as of twelve o'clock noon on
each business day and is paid to shareholders monthly. During any particular
year, net realized gains from investment transactions, in excess of available
capital loss carryforwards, would be taxable to the Fund if not distributed and,
therefore, will be distributed to shareholders. An additional distribution may
be made to the extent necessary to avoid the payment of a four percent federal
excise tax. Distributions of net realized gains to shareholders are recorded on
the ex-dividend date.
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.
Other. Investment security transactions are accounted for on a trade-date basis
(which in most instances, is the same as the settlement date). Interest income
is accrued pro rata to maturity. All premiums and discounts are
amortized/accreted for both tax and financial reporting purposes.
B. Related Parties
Under the Management Agreement (the "Agreement") with Scudder Kemper
Investments, Inc. ("Scudder Kemper" or the "Adviser"), the Adviser directs the
investments of the Fund in accordance with its investment objectives, policies,
and restrictions. The Adviser determines the securities, instruments, and other
contracts relating to investments to be purchased, sold, or entered into by the
Fund. In addition to portfolio management services, the Adviser provides certain
administrative services in accordance with the Agreement. The management fee
payable under the Agreement is equal to an annual rate of 0.50% of its average
daily net assets computed and accrued daily and payable monthly. 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
12 - Scudder U.S. Treasury Money Fund
<PAGE>
the eleven months ended May 31, 1999, the Adviser did not impose a portion of
its fee amounting to $1,633,026, and the portion imposed amounted to $272,311.
For the year ended June 30, 1998, the Adviser did not impose a portion of its
fee amounting to $1,378,392, and the portion imposed amounted to $617,161.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
eleven months ended May 31, 1999, the amount charged to the Fund by SSC
aggregated $698,246, of which $61,561 is unpaid at May 31, 1999. For the year
ended June 30, 1998, the amount charged to the Fund by SSC aggregated $698,152.
Scudder Trust Company ("STC"), a subsidiary of the Adviser, provides
recordkeeping and other services in connection with certain retirement and
employee benefit plans invested in the Fund. For the eleven months ended May 31,
1999, the amount charged to the Fund by STC aggregated $940,821, of which
$95,768 is unpaid at May 31, 1999. For the year ended June 30, 1998, the amount
charged to the Fund by STC aggregated $730,475.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records of the Fund. For the eleven months
ended May 31, 1999, the amount charged to the Fund by SFAC aggregated $50,398,
of which $4,589 is unpaid at May 31, 1999. For the year ended June 30, 1998, the
amount charged to the Fund by SFAC aggregated $50,194.
The Fund pays each Trustee not affiliated with the Adviser an annual retainer
plus specified amounts for attended board and committee meetings. For the eleven
months ended May 31, 1999, Trustees' fees and expenses aggregated $26,380. For
the year ended June 30, 1998, the Trustees' fees and expenses aggregated
$37,030.
C. Line of Credit
The Fund and several Scudder Funds ("The Participants") share in a $850 million
revolving credit facility for temporary or emergency purposes, including the
meeting of redemption requests that otherwise might require the untimely
disposition of securities. The Participants are charged an annual commitment fee
which is allocated pro rata among each of the Participants. Interest is
calculated based on the market rates at the time of the borrowing. The Fund may
borrow up to a maximum of 33 percent of its net assets under the agreement.
D. Year End Change
On August 10, 1998, the Board of Trustees of the Trust changed the fiscal year
end of the Fund from June 30 to May 31.
13 - Scudder U.S. Treasury Money Fund
<PAGE>
Report of Independent Accountants
To the Board of Trustees and Shareholders of Scudder U.S. Treasury Money Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Scudder U.S. Treasury Money Fund
(the "Fund") at May 31, 1999, the results of its operations, the changes in its
net assets, and the financial highlights for the periods indicated therein, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at May 31, 1999 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
Boston, Massachusetts PricewaterhouseCoopers LLP
July 13, 1999
14 - Scudder U.S. Treasury Money Fund
<PAGE>
This Page
intentionally
left blank.
15 - Scudder U.S. Treasury Money Fund
<PAGE>
Officers and Trustees
Daniel Pierce*
President and Trustee
Henry P. Becton, Jr.
Trustee; President and Genera
Manager, WGBH Educational
Foundation
Dawn-Marie Driscoll
Trustee; President, Driscoll
Associates; Executive Fellow,
Center for Business Ethics,
Bentley College
Peter B. Freeman
Trustee; Corporate Director
George M. Lovejoy, Jr.
Trustee; President and Director,
Fifty Associates
Wesley W. Marple, Jr.
Trustee; Professor of Business
Administration, Northeastern
University
Kathryn L. Quirk*
Trustee, Vice President and
Assistant Secretary
Jean C. Tempel
Trustee; Venture Partner,
Venture Capital Group
Thomas W. Joseph*
Vice President
Ann M. McCreary*
Vice President
Frank J. Rachwalski, Jr.*
Vice President
John Millette*
Vice President and Secretary
John R. Hebble*
Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
16 - Scudder U.S. Treasury Money Fund
<PAGE>
Investment Products and Services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series --
Prime Reserve Shares*
Premium Shares*
Managed Shares*
Scudder Government Money Market Series --
Managed Shares*
Tax Free Money Market^+
- ----------------------
Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series --
Managed Shares*
Scudder California Tax Free Money Fund**
Scudder New York Tax Free Money Fund**
Tax Free^+
- ---------
Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund**
Scudder Massachusetts Limited Term Tax Free Fund**
Scudder Massachusetts Tax Free Fund**
Scudder New York Tax Free Fund**
Scudder Ohio Tax Free Fund**
Scudder Pennsylvania Tax Free Fund**
U.S. Income
- -----------
Scudder Short Term Bond Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder Corporate Bond Fund
Scudder High Yield Bond Fund
Global Income
- -------------
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
Asset Allocation
- ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
U.S. Growth and Income
- ----------------------
Scudder Balanced Fund
Scudder Dividend & Growth Fund
Scudder Growth and Income Fund
Scudder Select 500 Fund
Scudder S&P 500 Index Fund
Scudder Real Estate Investment Fund
U.S. Growth
- -----------
Value
Scudder Large Company Value Fund
Scudder Value Fund***
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund***
Scudder Large Company Growth Fund
Scudder 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***
Scudder Emerging Markets Growth Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund, Inc.
Industry Sector Funds
- ---------------------
Choice Series
Scudder Financial Services Fund
Scudder Health Care Fund
Scudder Technology Fund
Preferred Series
- ----------------
Scudder Tax Managed Growth Fund
Scudder Tax Managed Small
Company Fund
Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
Retirement Programs
- -------------------
Traditional IRA
Roth IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Variable Annuities
Scudder Horizon Plan**+++ +++
Scudder Horizon Advantage**+++ +++ +++
Education Accounts
- ------------------
Education IRA
UGMA/UTMA
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder Global High Income Fund, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
For complete information on any of the above Scudder funds, including management
fees and expenses, call or write for a free prospectus. Read it carefully before
you invest or send money. +++Funds within categories are listed in order from
expected least risk to most risk. Certain Scudder funds or classes thereof may
not be available for purchase or exchange. +A portion of the income from the
tax-free funds may be subject to federal, state, and local taxes. *A class of
shares of the Fund. **Not available in all states. ***Only the Scudder Shares of
the Fund are part of the Scudder Family of Funds. ++Only the International
Shares of the Fund are part of the Scudder Family of Funds. +++ +++A no-load
variable annuity contract provided by Charter National Life Insurance Company
and its affiliate, offered by Scudder's insurance agencies, 1-800-225-2470. +++
+++ +++A no-load variable annuity contract issued by Glenbrook Life and Annuity
Company and underwritten by Allstate Financial Services, Inc., sold by Scudder's
insurance agencies, 1-800-225-2470. #These funds, advised by Scudder Kemper
Investments, Inc., are traded on the New York Stock Exchange and, in some cases,
on various other stock exchanges.
17 - Scudder U.S. Treasury Money Fund
<PAGE>
Scudder Solutions
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Investment Plan QuickBuy
A convenient investment program in which money is Lets you purchase Scudder fund shares
electronically debited from your bank account monthly to electronically, avoiding potential mailing delays;
regularly purchase fund shares and "dollar cost average" money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from a previously designated bank
fewer when it's higher, which can reduce your average account.
purchase price over time.*
Automatic Dividend Transfer Payroll Deduction and Direct Deposit
The most timely, reliable, and convenient way to Have all or part of your paycheck -- even government
purchase shares -- use distributions from one Scudder checks -- invested in up to four Scudder funds at
fund to purchase shares in another, automatically one time.
(accounts with identical registrations or the same
social security or tax identification number).
* Dollar cost averaging involves continuous investment in securities regardless of price
fluctuations and does not assure a profit or protect against loss in declining markets.
Investors should consider their ability to continue such a plan through periods of low price
levels.
Around-the-clock electronic account service and information, including some transactions:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- www.scudder.com
1-800-343-2890
Personal Investment Organizer: Offering
Personalized account information, the ability to account information and transactions, interactive
exchange or redeem shares, and information on other worksheets, prospectuses and applications for all
Scudder funds and services via touchtone telephone. Scudder funds, plus your current asset allocation,
whenever you need them. Scudder's Site also
provides news about Scudder funds, retirement
planning information, and more.
Retirees and those who depend on investment proceeds for living expenses can enjoy these convenient,
timely, and reliable automated withdrawal programs:
- ------------------------------------------------------------------------------------------------------------------------------
Automatic Withdrawal Plan QuickSell
You designate the bank account, determine the schedule Provides speedy access to your money by
(as frequently as once a month) and amount of the electronically crediting your redemption proceeds
redemptions, and Scudder does the rest. to the bank account you previously designated.
Distributions Direct
Automatically deposits your fund distributions into the
bank account you designate within three business days
after each distribution is paid.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
18 - Scudder U.S. Treasury Money Fund
<PAGE>
Mutual Funds and More -- Brokerage and Guidance Services:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Brokerage Services Scudder Portfolio Builder
Offers you access to a world of investments, A free service designed to help suggest ways investors like
including stocks, corporate bonds, Treasuries, plus you can diversify your portfolio among domestic and global,
over 8,000 mutual funds from at least 150 mutual as well as equity, fixed-income, and money market funds,
fund companies. And Scudder Fund Folio(SM) provides using Scudder funds.
investors with access to a marketplace of more than
800 no-load funds from well-known companies--with no
transaction fees or commissions. Scudder
shareholders can take advantage of a Scudder
Brokerage account already reserved for them, with
no minimum investment. For information about
Scudder Brokerage Services, call 1-800-700-0820.
Fund Folio funds held less than six months will be charged a transaction fee. You can buy
shares directly from the fund itself or its principal underwriter or distributor without
paying this fee. Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061.
Member SIPC.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
Additional Information on How to Contact Scudder:
- ------------------------------------------------------------------------------------------------------------------------------
For existing account services and transactions Please address all written correspondence to
Scudder Investor Relations -- 1-800-225-5163 The Scudder Funds
P.O. Box 2291
For establishing 401(k) and 403(b) plans Boston, Massachusetts
Scudder Defined Contribution Services -- 02107-2291
1-800-323-6105
Or Stop by a Scudder Investor Center
For information about The Scudder Funds, including Many shareholders enjoy the personal, one-on-one service of
additional applications and prospectuses, or for the Scudder Investor Centers. Check for an Investor Center near
answers to investment questions you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470 Boca Raton Chicago San Francisco
[email protected] Boston New York
</TABLE>
19 - Scudder U.S. Treasury Money Fund
<PAGE>
About the Fund's Adviser
Scudder Kemper Investments, Inc., is one of the largest and most experienced
investment management oganizations worldwide, managing more than $280 billion in
assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts.
Scudder Kemper Investments has a rich heritage of innovation, integrity, and
client-focused service. In 1997, Scudder, Stevens & Clark, Inc., founded 80
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Financial Services Group. As a result, Zurich's subsidiary, Zurich
Kemper Investments, Inc., with 50 years of mutual fund and investment management
experience, was combined with Scudder. Headquartered in New York, Scudder Kemper
Investments offers a full range of investment counsel and asset management
capabilities, based on a combination of proprietary research and disciplined,
long-term investment strategies. With its global investment resources and
perspective, the firm seeks opportunities in markets throughout the world to
meet the needs of investors.
Scudder Kemper Investments, Inc., the global asset management firm, is a member
of the Zurich Financial Services Group. The Zurich Financial Services Group is
an internationally recognized leader in financial services, including
property/casualty and life insurance, reinsurance, and asset management.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
SCUDDER
