MANAGED INTERMEDIATE GOVERNMENT FUND
ANNUAL REPORT
DECEMBER 31, 1994
Managed Intermediate Government Fund
Performance Update
December 31, 1994
- -----------------------------------------------------------------
Growth of a $10,000 Investment
- -----------------------------------------------------------------
Managed Intermediate Government Fund
- ----------------------------------------
Total Return
Period Growth -------------
Ended of Average
12/31/94 $10,000 Cumulative Annual
- --------- ------- ---------- -------
1 Year $ 9,688 -3.12% -3.12%
Life of
Fund* $10,112 1.12% .61%
Lehman Brothers 1-3 Year
Government Index
- --------------------------------------
Total Return
Period Growth -------------
Ended of Average
12/31/94 $10,000 Cumulative Annual
- --------- ------- ---------- -------
1 Year $10,052 .52% .52%
Life of
Fund* $10,368 3.68% 2.09%
*The Fund commenced operations on March 1, 1993.
Index comparisons begin March 31, 1993.
A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:
Periods ended December 31
Managed Intermediate Government Fund
Year Amount
- ----------------------
3/31/93* 10000
6/93 10202
9/93 10340
12/93 10392
3/94 10134
6/94 10043
9/94 10091
12/94 10068
Lehman Brothers 1-3 Year
Government Index
Year Amount
- ----------------------
3/31/93* 10000
6/93 10111
9/93 10250
12/93 10315
3/94 10265
6/94 10265
9/94 10368
12/94 10368
The Lehman Brothers 1-3 Year Government Index is composed of agency
and treasury securities with maturities of 1-3 years. Both the Fund
and Index assume reinvestment of dividends. Index returns do not
reflect fees or expenses.
- -------------------------------------------------------------------
Returns and Per Share Information
- -------------------------------------------------------------------
A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) and Index Total
Return (%) with the exact data points listed in the table
below.
Yearly periods ended December 31
- ----------------------------------
<TABLE>
<S> <C> <C>
1993* 1994
---------------
Net Asset Value... $ 9.98 $ 9.18
Income Dividends.. $ .45 $ .49
Fund Total
Return (%)........ 4.37 -3.12
Index Total
Return (%)........ 3.15 .52
</TABLE>
Performance is historical and assumes reinvestment of all dividends and
capital gains and is not indicative of future results.
Total return and principal value will fluctuate, so that an investor's
shares when redeemed may be worth more or less than when purchased.
If the Manager had not maintained the Fund's expenses, the total return
would have been lower.
February 21, 1995
Dear Shareholder:
We are pleased to provide you with the Managed Intermediate Government
Fund's Annual Report which covers the Fund's performance and progress for
the year ended December 31, 1994.
The investment objective of the Fund is to provide investors with a
high level of current income and to keep the price of its shares more
stable than that of a long-term bond.
As of December 31, the Fund's 30-day net annualized yield was 6.03%.
The Fund's net asset value per share declined from $9.98 on December 31,
1993 to $9.18 on December 31, 1994. Assuming the reinvestment of the
dividends for the period totaling $0.49, the total return for the year
ended December 31, 1994 was -3.12%, compared to the -3.72% average return
for all Intermediate U.S. Government Funds and -1.65% average return of all
Short U.S. Government Funds for the same twelve-month period according to
Lipper Analytical Services, Inc., an independent analyst of investment
performance. However, it is important to note that the Fund, with its
emphasis on maintaining a relatively stable per share price, is managed in
a more conservative fashion than most Intermediate U.S. Government Funds.
Audited financial statements for the year ended December 31, 1994 and
a list of the Fund's investments as of that date are set forth on the
following pages.
If you have any questions concerning your Fund, please call toll free
(800) 5CU-MEMBER from any continental state. We will be glad to hear from
you at any time.
/s/David S. Lee
David S. Lee
Chairman
Portfolio Management Discussion
The past year was one of the most difficult in recent times for
fixed-income investors in the United States. In February, after five years
of accommodating monetary policy, the Federal Reserve began a series of
interest-rate increases designed to slow economic growth down to a more
sustainable pace.
Managed Intermediate Government Fund's performance in 1994 reflects a
year in which interest rates rose persistently across the maturity
spectrum. The Fund's share price declined $0.80, from $9.98 on December 31,
1993, to $9.18 at the end of the year. (When interest rates rise, bond
prices generally decline, since existing bonds are deemed less attractive
than newly issued, higher-yielding securities.) However, rising interest
rates also tend to result in higher coupons for fixed-income investments.
The Fund distributed a total of $0.49 per share in income during the year,
contributing to a 30-day net annualized yield of 6.03% on December 31,
1994, up from 5.39% a year earlier. Combined, price change plus
distributions provided a -3.12% total return for the year, compared with
0.52% for the unmanaged Lehman Brothers 1-3 Year Government Index and
- -4.26% for five-year U.S. Treasury notes.
Higher interest rates have had numerous effects on financial markets,
although mostly negative. One effect was the unwinding of financial
leverage in the United States. In the three years prior to 1994, investors
had borrowed at low short-term rates to invest in higher-yielding,
long-maturity bonds. Last year's increase in short-term rates made this
form of leverage largely unprofitable. In early December, for example, it
was revealed that Orange County--one of the wealthiest counties in the
United States--was going into bankruptcy due to the highly leveraged
investment strategy of its investment portfolio.
Throughout the first half of the year, we kept a large portion of the
Fund's holdings invested in mortgage-backed securities (approximately 80%).
Later in the year, in view of increasingly higher short-term interest
rates, we decreased the Fund's mortgage-backed holdings to approximately
31% in favor of short-term U.S. Government obligations. At the present
time, the Fund is constructed in a very conservative fashion. Looking ahead
a year, we believe the outlook for U.S. fixed-income securities is
positive. While it is never clear when the level of interest rates actually
begins to affect the U.S. economy, the Fed's actions should eventually
produce a slowdown. At that point, interest rates should begin to move
lower, providing appreciation potential for fixed-income securities.
As always, we encourage you to take a long-term perspective when
evaluating your Fund's performance.
/s/David H. Glen /s/Robert E. Pruyne
David H. Glen Robert E. Pruyne
Lead Portfolio Manager Portfolio Manager
<PAGE>
<TABLE>
MANAGED INTERMEDIATE GOVERNMENT FUND
INVESTMENT PORTFOLIO
DECEMBER 31, 1994
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
------------ -------------
<S> <C> <C>
REPURCHASE AGREEMENT -- 1.5%
State Street Bank and Trust Co. dated 12/30/94, at 5.25%, to be
repurchased on 1/3/95 (proceeds at maturity $338,197)
collateralized by $335,000 U.S. Treasury Notes, 9.5%,
11/15/95 (cost $338,000) (note 3) . . . . . . . . . . . . . . . $ 338,000 $ 338,000
-------------
SHORT-TERM NOTE -- 3.4%
Federal National Mortgage Association Discount Note
5.79%, due 1/20/95 (cost $747,708) . . . . . . . . . . . . . . 750,000 747,708
-------------
U.S. GOVERNMENT AGENCY PASS-THRUS -- 28.4%
Federal Home Loan Mortgage Corporation*
7%, with various maturities to 2/1/99 . . . . . . . . . . . . . 3,398,505 3,283,806
Federal National Mortgage Association*
9%, due 8/1/07 . . . . . . . . . . . . . . . . . . . . . . . . 2,956,775 2,998,347
-------------
TOTAL U.S. GOVERNMENT AGENCY PASS-THRUS (cost $6,471,428) . . . . . . 6,282,153
-------------
U.S. TREASURY OBLIGATIONS -- 66.7%
U.S. Treasury Note, 5.875%, 5/15/95 . . . . . . . . . . . . . . 3,000,000 2,993,430
U.S. Treasury Note, 4.125%, 5/31/95 . . . . . . . . . . . . . . 3,000,000 2,972,340
U.S. Treasury Note, 4.625%, 8/15/95 . . . . . . . . . . . . . . 3,000,000 2,957,820
U.S. Treasury Note, 5.125%, 11/15/95 . . . . . . . . . . . . . 3,000,000 2,948,910
U.S. Treasury Note, 4.625%, 2/29/96 . . . . . . . . . . . . . . 3,000,000 2,908,590
-------------
TOTAL U.S. TREASURY OBLIGATIONS (cost $14,799,844) . . . . . . . . . 14,781,090
-------------
TOTAL INVESTMENTS -- 100.0% (cost $22,356,980)** . . . . . . . . . . . . . . . . . . . $ 22,148,951
=============
<FN>
* The investments in mortgage-backed securities are interests in separate
pools of mortgages. All separate investments in each of these issues which
have similar coupon rates have been aggregated for presentation purposes.
Effective maturities of these investments may be shorter than stated
maturities due to prepayments.
** Cost for federal income tax purposes was $22,356,980. At December 31, 1994,
net unrealized depreciation for all securities based on tax cost was
$208,029. This consisted of aggregate gross unrealized appreciation for all
securities in which there was an excess of market value over tax cost of
$3,270 and unrealized depreciation for allsecurities in which there was an
excess of tax cost over market value of $211,299.
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
MANAGED INTERMEDIATE GOVERNMENT FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1994
<S> <C> <C>
ASSETS
Investments, at market (identified cost $22,356,980) (note 2) . . . . $ 22,148,951
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 545
Interest receivable . . . . . . . . . . . . . . . . . . . . . . . . . 196,639
Deferred organizational expenses (note 2) . . . . . . . . . . . . . . 38,724
-------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . 22,384,859
LIABILITIES
Dividend payable . . . . . . . . . . . . . . . . . . . . . . . . . . $ 90,320
Management fee payable (note 5) . . . . . . . . . . . . . . . . . . . 79,748
Accrued expenses (note 5) . . . . . . . . . . . . . . . . . . . . . . 36,028
----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . 206,096
-------------
Net assets, at market value . . . . . . . . . . . . . . . . . . . . . $ 22,178,763
=============
NET ASSETS
Net assets consist of:
Unrealized depreciation on investments . . . . . . . . . . . . . . $ (208,029)
Accumulated net realized loss . . . . . . . . . . . . . . . . . . (1,782,963)
Capital Stock ($.001 par value) . . . . . . . . . . . . . . . . . 2,416
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . 24,167,339
-------------
Net assets, at market value . . . . . . . . . . . . . . . . . . . . . $ 22,178,763
=============
NET ASSET VALUE, offering and redemption price per share
($22,178,763 -:-2,416,466 outstanding shares of
Capital Stock, $.001 par value, 100,000,000
shares authorized) . . . . . . . . . . . . . . . . . . . . . . . . $9.18
=====
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
MANAGED INTERMEDIATE GOVERNMENT FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
<S> <C> <C>
INVESTMENT INCOME
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,361,227
EXPENSES:
Management fee (note 5) . . . . . . . . . . . . . . . . . . . . . . . $ 79,747
Shareholders services (note 5 and 6) . . . . . . . . . . . . . . . . 34,969
Directors' fees and expenses (note 5) . . . . . . . . . . . . . . . . 19,403
Custodian and Accounting fees (note 5) . . . . . . . . . . . . . . . 32,094
Professional services . . . . . . . . . . . . . . . . . . . . . . . . 16,551
Reports to shareholders . . . . . . . . . . . . . . . . . . . . . . . 16,788
Amortization of organization expense (note 2) . . . . . . . . . . . . 12,235
Registration fees . . . . . . . . . . . . . . . . . . . . . . . . . . 7,811
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,203 220,801
---------- -----------
NET INVESTMENT INCOME . . . . . . . . . . . . . . . . . . . . . . . . 1,140,426
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized loss from investments . . . . . . . . . . . . . . . . . (1,787,223)
Net unrealized depreciation on investments during the period . . . . (150,339)
-----------
Net loss on investments . . . . . . . . . . . . . . . . . . . . . . . (1,937,562)
-----------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . $ (797,136)
===========
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
MANAGED INTERMEDIATE GOVERNMENT FUND
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
FOR THE PERIOD
MARCH 1, 1993
YEAR (COMMENCEMENT
ENDED OF OPERATIONS) TO
DECEMBER 31, DECEMBER 31,
1994 1993
-------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . $ 1,140,426 $ 512,106
Net realized gain (loss) on investments . . . . . . . . . . . . . . . (1,787,223) 4,260
Net unrealized depreciation on investments during the period . . . . (150,339) (57,690)
------------- -------------
Net increase (decrease) in net assets resulting from operations . . . (797,136) 458,676
------------- -------------
Dividends to shareholders from net investment income
($.49 and $.45 per share, respectively) . . . . . . . . . . . . . (1,140,426) (512,106)
------------- -------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from sale of shares . . . . . . . . . . . . . . . . . . . . 9,084,268 15,294,331
Net asset value of shares issued in investment of dividends . . . . . 514,707 15,550
------------- -------------
9,598,975 15,309,881
Cost of shares redeemed . . . . . . . . . . . . . . . . . . . . . . . (498,287) (241,814)
------------- -------------
Increase in net assets from Capital Stock transactions . . . . . . . 9,100,688 15,068,067
------------- -------------
Total increase in net assets . . . . . . . . . . . . . . . . . . . . 7,163,126 15,014,637
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . 15,015,637 1,000
------------- -------------
End of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 22,178,763 $ 15,015,637
============= =============
INCREASE (DECREASE) IN FUND SHARES:
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 911,210 1,526,724
Shares issued to shareholders in investment of dividends . . . . . . 54,256 1,551
------------- -------------
965,466 1,528,275
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . (53,264) (24,111)
------------- -------------
Net increase in Fund shares . . . . . . . . . . . . . . . . . . . . . 912,202 1,504,164
SHARES OUTSTANDING:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . 1,504,264 100
------------- -------------
End of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,416,466 1,504,264
============= =============
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
MANAGED INTERMEDIATE GOVERNMENT FUND
FINANCIAL HIGHLIGHTS
THE FOLLOWING TABLE INCLUDES SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT
THE PERIOD AND OTHER PERFORMANCE INFORMATION DERIVED FROM THE FINANCIAL
STATEMENTS.
<CAPTION>
FOR THE PERIOD
MARCH 1, 1993
YEAR (COMMENCEMENT
ENDED OF OPERATIONS
DECEMBER 31, TO DECEMBER 31,
1994 1993
------------- --------------
<S> <C> <C>
Net asset value, beginning of period . . . . . . . . . . . . . . . . . . . . $ 9.98 $ 10.00
-------- --------
Income from Investment Operations:
Net investment income (a) . . . . . . . . . . . . . . . . . . . . . . . . . . .49 .45
Net realized and unrealized loss on investments . . . . . . . . . . . . . . . (.80) (.02)
-------- --------
Total from investment operations . . . . . . . . . . . . . . . . . . . . . . (.31) .43
-------- --------
Less dividends from net investment income . . . . . . . . . . . . . . . . . . (.49) (.45)
-------- --------
Net asset value, end of period . . . . . . . . . . . . . . . . . . . . . . . $ 9.18 $ 9.98
======== ========
TOTAL RETURN (%) (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3.12) 4.37(b)
======== ========
RATIOS AND SUPPLEMENTARY DATA
Net assets, end of period ($ millions) . . . . . . . . . . . . . . . . . . . 22 15
Ratio of operating expenses, to average net assets (%) (a) . . . . . . . . . 1.01 .51(c)
Ratio of net investment income, to average net assets (%) . . . . . . . . . . 5.19 5.35(c)
Portfolio turnover rate (%) . . . . . . . . . . . . . . . . . . . . . . . . . 336.62 132.98(c)
<FN>
(a) Reflects a per share amount of expenses reimbursed by the
Manager of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -- $ .03
Reflects a per share amount of management fee and other fees
not imposed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ .03 $ .07
Operating expense ratio including expenses reimbursed,
management fee and other expenses not imposed (%). . . . . . . . . . . 1.34 1.69(c)
(b) Not annualized
(c) Annualized
(d) Total returns are higher due to maintenance of the Fund's expenses.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
Managed Intermediate Government Fund (the "Fund") is a portfolio of
Scudder Fund, Inc. (the "Company") which is an open-end diversified management
investment company.
2. SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies followed by the Fund are:
(a) Security Valuation--The value of securities is determined as of the
close of regular trading on the New York Stock Exchange. Securities are valued
utilizing primarily the latest bid prices or, if bid prices are not available,
on the basis of valuations based on a matrix system, both as furnished by a
reputable independent pricing service. Debt securities maturing in 60 days or
less are valued at amortized cost. All other securities and other assets for
which current market quotes are not readily available are valued at fair value
as determined in good faith by the Company's Board of Directors and in
accordance with procedures adopted by the Board of Directors.
(b) Federal Income Taxes--The Fund's policy is to qualify as a regulated
investment company under the Internal Revenue Code and to distribute all
taxable income, including any realized net capital gains, to shareholders.
Therefore, no Federal income tax provision is required. As of December 31,
1994, the Fund had a net tax basis capital loss carryforward of approximately
$1,787,000, which may be applied against any realized net taxable capital gains
of each succeeding year until fully utilized or until December 31, 2002,
whichever comes first.
(c) Allocation of Expenses--Expenses not directly chargeable to the Fund
are allocated primarily on the basis of relative net assets of the Company.
(d) Dividends--Dividends from net investment income are declared each
business day to shareholders of record on the previous business day for payment
on the first business day of the following month. 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. Therefore,
the Fund intends to distribute these amounts to shareholders. An additional
distribution may be made to the extent necessary to avoid the payment of a four
percent federal excise tax. The Fund uses the specific identification method
for determining realized gains or losses on investments for both financial and
federal income tax reporting purposes.
(e) Organization Costs--Costs incurred by the Fund in connection with its
organization and initial registration of shares have been deferred and are
being amortized on a straight-line basis over a five-year period.
(f) Other--Investment transactions are recorded on trade dates. Interest
income is recorded as earned and is adjusted for gains and losses on paydowns
on mortgage-backed securities. Distributions to shareholders are recorded on
the ex-dividend dates.
3. REPURCHASE AGREEMENTS
It is the Company's policy to obtain possession, through its custodian, of
the securities underlying each repurchase agreement to which it is a party,
either through physical delivery or book entry transfer in the Federal Reserve
System or Participants Trust Company. Payment by the Company in respect of a
repurchase agreement is authorized only when proper delivery of the underlying
securities is made to the Company's custodian. The Company's investment manager
values such underlying securities each business day using quotations obtained
from a reputable, independent source. If the Company's investment manager
determines that the value of such underlying securities (including accrued
interest thereon) does not at least equal the value of each repurchase
agreement (including accrued interest thereon) to which such securities are
subject, it will ask for additional securities to be delivered to the Company's
custodian. In connection with each repurchase agreement transaction, if the
seller defaults and the value of the collateral declines or if the seller
enters an insolvency proceeding, realization of the collateral by the Company
may be delayed or limited.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. PURCHASES AND SALES OF SECURITIES
During the year ended December 31, 1994, purchases and sales of
securities, which were exclusively U.S. Government securities, (excluding
short-term investments) aggregated $59,358,710 and $62,195,094, respectively.
5. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The Company retains Scudder, Stevens & Clark, Inc. ("Scudder") as
investment manager ("Manager") for the Fund, pursuant to an investment advisory
agreement between Scudder and the Company on behalf of the Fund, for a
management fee payable each month, based upon the average daily value of the
Fund's net assets, at an annual rate of 0.65%. For the year ended December 31,
1994, Scudder did not impose a portion of its fee amounting to $62,965, and the
portion imposed amounted to $79,747.
Under certain state regulations, if the total expenses of the Fund,
exclusive of taxes, interest, and extraordinary expenses exceed certain
limitations, the Company's investment adviser is required to reimburse the Fund
for such excess up to the amount of the management fee. During the year ended
December 31, 1994, no such reimbursement was required.
Scudder Service Corporation ("SSC"), a wholly-owned subsidiary of Scudder
is the Company's shareholder service, transfer and dividend disbursing agent.
For the year ended December 31, 1994, SSC did not impose any of its fees
amounting to $3,233.
Effective September 22, 1994, Scudder Fund Accounting Corporation
("SFAC"), a wholly-owned subsidiary of Scudder, assumed responsibility for
determining the daily net asset value per share and maintaining the portfolio
and general accounting records for the Fund. For the year ended December 31,
1994, the amount charged to the Fund by SFAC aggregated $3,322, of which $717
is unpaid. For the year ended December 31, 1994, SFAC did not impose fees
amounting to $6,990.
The Company has a compensation arrangement under which payment of
Directors' fees may be deferred. Interest is accrued (based on the rate of
return earned on the 90 day Treasury Bill as determined at the beginning of
each calendar quarter) on the deferred balances and is included in "Directors'
fees and expenses." The accumulated balance of deferred directors' fees and
interest thereon relating to the Fund constituting the Company aggregated
$7,625, an applicable portion of which is included in accrued expenses of the
Fund.
6. SHAREHOLDER SERVICES
The Fund has special arrangements with certain banks, institutions and
other persons under which they receive compensation from the Fund and Scudder
for performing shareholder servicing functions for their customers who own
shares in the Fund from time to time. For the year ended December 31, 1994,
payments by the Fund pursuant to these arrangements aggregated $30,065.
7. SHAREHOLDER SERVICE, ADMINISTRATION AND DISTRIBUTION PLAN
The Company has a Shareholder Service, Administration and Distribution
Plan adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940
under which participating organizations which enter into agreements with the
Company and Scudder may receive a fee of up to 0.25% on an annual basis from
each of the Company and Scudder. Such fee is calculated on the average daily
net assets of the company for which such participating organizations are
responsible. No payments have been made by the Company for shareholder service,
administration and distribution assistance under this plan other than indicated
in Note 6 above.
8. CAPITAL STOCK
At December 31, 1994, one holder of record of the Fund held approximately
50% of the outstanding shares.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
SCUDDER FUND, INC. -- MANAGED INTERMEDIATE GOVERNMENT 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 the Managed Intermediate
Government Fund (a portfolio of Scudder Fund, Inc., hereafter referred to as
the "Fund") at December 31, 1994, the results of its operations for the year
then ended, and the changes in its net assets and the financial highlights for
the year then ended and for the period March 1, 1993 (commencement of
operations) through December 31, 1993, 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 statement 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 presentation. We believe that our audits, which included confirmation
of securities at December 31, 1994 by correspondence with the custodian,
provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
February 21, 1995
- -------------------------------------------------------------------------------
FEDERAL TAX STATUS OF 1994 DIVIDENDS
The total amount of dividends declared in 1994 by the Managed Intermediate
Government Fund is taxable as ordinary dividend income for Federal income tax
purposes. None of this amount qualifies for the dividends received deduction
available to corporations.
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Board of Directors
DAVID S. LEE(1) Chairman of the Board; Managing Director,
Scudder, Stevens & Clark, Inc.
EDGAR R. FIEDLER(1) (2) (3) Vice President and Economic Counsellor, The
Conference Board; formerly Assistant
Secretary of the Treasury for Economic
Policy
PETER B. FREEMAN(2) (3) Corporate Director and Trustee
ROBERT W. LEAR(2) (3) Executive-in-Residence and Visiting
Professor, Columbia University Graduate
School of Business; Director or Trustee,
Various Organizations
DANIEL PIERCE(1) President; Chairman of the Board, Scudder,
Stevens & Clark, Inc.
(1)Member of Executive Committee
(2)Member of Nominating Committee
(3)Member of Audit Committee
Officers
DAVID S. LEE Chairman of the Board
DANIEL PIERCE President
THOMAS W. JOSEPH Vice President and Assistant Secretary
THOMAS F. McDONOUGH Vice President and Assistant Secretary
PAMELA A. McGRATH Vice President and Treasurer
IRENE McC. PELLICONI Secretary
Managed Intermediate Government Fund
345 Park Avenue, New York, New York 10154
(800) 5CU-MEMBER
Investment Manager
Scudder, Stevens & Clark, Inc.
345 Park Avenue
New York, New York 10154
Distributor
Scudder Investor Services, Inc.
Two International Place
Boston, Massachusetts 02110
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Fund Accounting Agent
Scudder Fund Accounting Corporation
Two International Place
Boston, Massachusetts 02110
Transfer Agent and
Dividend Disbursing Agent
Scudder Service Corporation
P.O. Box 2038
Boston, Massachusetts 02106
Legal Counsel
Sullivan & Cromwell
New York, New York
This report is for the information of the shareholders. Its use in
connection with any offering of the Fund's shares is authorized only in
case of a concurrent or prior delivery of the Fund's current prospectus.
MANAGED INTERMEDIATE
GOVERNMENT FUND
ANNUAL REPORT
DECEMBER 31, 1994
