MANAGED GOVERNMENT SECURITIES FUND
MANAGED CASH FUND
MANAGED TAX-FREE FUND
- --------------------------------------------------------------------------------
ANNUAL REPORT
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
Board of Directors
<S> <C>
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
</TABLE>
- --------------------------------------------------------------------------------
Officers
DAVID S. LEE Chairman of the Board
DANIEL PIERCE President
STEPHEN L. AKERS Vice President
K. SUE COTE Vice President
CAROL L. FRANKLIN Vice President
JERARD K. HARTMAN Vice President
KATHRYN L. QUIRK Vice President
THOMAS W. JOSEPH Vice President and Assistant Secretary
THOMAS F. McDONOUGH Vice President and Secretary
PAMELA A. McGRATH Vice President and Treasurer
2
<PAGE>
Dear Shareholder:
Operated exclusively for institutions and their clients, Scudder Fund, Inc.
provided competitive investment results in 1996. Scudder Fund, Inc. includes
three separate money market funds -- Managed Government Securities Fund, Managed
Cash Fund, and Managed Tax-Free Fund. Each Fund seeks to provide a high level of
income while preserving capital and maintaining liquidity.
All three funds seek to maintain a net asset value of $1.00, and have done so
since their inception. (There is no guarantee, of course, that each fund will
maintain stable net asset values.) The Managed Tax-Free Fund seeks to provide
income exempt from Federal income tax.
Total net assets for Managed Government Securities Fund, Managed Cash Fund and
Managed Tax-Free Fund were $625 million on December 31, 1996, compared to $560
million at the start of the year, which does not include the assets of Managed
Federal Securities Fund. Managed Federal Securities Fund ceased operations on
November 29, 1996. A table showing dividend payments and other financial
information for the twelve months ended December 31, 1996 is on page 16. This
table also shows dividend payments and financial information for each fund for
the five years ended December 31, 1996. In addition, please see the following
pages for audited financial statements for the year ended December 31, 1996, as
well as a list of each Fund's investments.
If you have any questions concerning any of these funds, please call toll free
(800) 854-8525 from any continental state.
/s/David S. Lee
David S. Lee
Chairman
3
<PAGE>
MANAGED GOVERNMENT SECURITIES FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MATURITY PRINCIPAL VALUE
DATE AMOUNT (NOTE 2a)
------- --------- ---------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS -- 7.1%
State Street Bank & Trust, dated 12/31/96 at 6.00%
(proceeds at maturity $1,976,659) collateralized
by $1,865,000 U.S. Treasury Bond, 7.125%, 2/15/23
(cost $1,976,000) (note 3) ................................. 1/2/97 $ 1,976,000 $ 1,976,000
-------------
U.S. AGENCY OBLIGATIONS -- 93.5%
Federal Home Loan Bank Discount Note ......................... 1/2/97 2,000,000 1,999,708
Federal Home Loan Mortgage Corp. Discount Note ............... 4/1/97 4,000,000 3,946,900
Federal Home Loan Mortgage Corp. Discount Note ............... 1/14/97 3,000,000 2,994,301
Federal Home Loan Mortgage Corp. Discount Note ............... 1/17/97 3,200,000 3,192,590
Federal Home Loan Mortgage Corp. Discount Note ............... 1/24/97 3,000,000 2,989,957
Federal National Mortgage Assn. Discount Note ................ 1/21/97 6,000,000 5,982,700
Federal National Mortgage Assn., 5.18% ....................... 3/14/97* 5,000,000 5,000,000
-------------
TOTAL U.S. AGENCY OBLIGATIONS (cost $26,106,156) ............................................... 26,106,156
-------------
TOTAL INVESTMENTS -- 100.6% (cost $28,082,156)** ............................................... 28,082,156
-------------
OTHER ASSETS AND LIABILITIES -- (0.6%)
Cash ........................................................................................... 706
Receivable for capital stock sold .............................................................. 10,417
Interest receivable and other assets ........................................................... 58,489
Dividend payable ............................................................................... (118,924)
Payable for capital stock redeemed ............................................................. (1,400)
Management fee payable (note 4) ................................................................ (18,770)
Accrued expenses (note 4) ...................................................................... (94,387)
-------------
(163,869)
-------------
NET ASSETS -- 100.0%
Applicable to 27,918,287 shares of $.001 par value Capital Stock outstanding;
3,000,000,000 shares authorized (note 7) .................................................... $ 27,918,287
=============
NET ASSET VALUE PER SHARE ...................................................................... $1.00
=====
</TABLE>
* Date of next interest rate change.
** Cost for federal income tax purposes.
See notes to financial statements.
4
<PAGE>
MANAGED CASH FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MATURITY PRINCIPAL VALUE
DATE AMOUNT (NOTE 2a)
-------- --------- ---------
<S> <C> <C> <C>
CERTIFICATES OF DEPOSIT -- 18.8%
Bank of America, Illinois, 5.70% ............................. 5/28/97 $ 5,000,000 $ 4,997,843
Bank of New York Co., Inc., 5.365% ........................... 6/10/97 7,000,000 7,000,000
Canadian Imperial, 5.37% ..................................... 1/10/97 15,000,000 15,000,000
Fifth Third Bank, 5.36% ...................................... 1/8/97 15,000,000 15,000,013
National Westminster Bank, PLC, 5.41% ........................ 1/21/97 15,000,000 15,000,246
Rabobank Nederland N.V., 5.56% ............................... 3/3/97 14,000,000 14,001,352
Societe Generale, 5.37% ...................................... 2/19/97 10,000,000 10,000,000
-------------
TOTAL CERTIFICATES OF DEPOSIT (cost $80,999,454) ............................................... 80,999,454
-------------
COMMERCIAL PAPER -- 63.6%
American Express Credit Corp. ................................ 1/23/97 15,000,000 14,951,142
Associates Corp. of North America ............................ 1/21/97 15,000,000 14,955,667
Barclays U.S. Funding Corp. .................................. 2/28/97 10,000,000 9,914,933
Beneficial Corp. ............................................. 4/1/97 10,000,000 9,866,250
Centric Funding Corp. ........................................ 2/10/97 10,000,000 9,940,667
Centric Funding Corp. ........................................ 2/18/97 5,000,000 4,963,600
Chevron Transport Corp. ...................................... 4/1/97 10,000,000 9,865,500
Ciesco, L.P. ................................................. 1/15/97 14,000,000 13,971,144
CIT Group Holdings, Inc. ..................................... 1/22/97 15,000,000 14,950,913
Commerzbank AG ............................................... 2/28/97 10,000,000 9,914,772
Corporate Asset Funding Co., Inc. ............................ 2/25/97 12,000,000 11,901,733
Deutsche Bank Financial, Inc. ................................ 3/4/97 12,000,000 11,891,093
Dresdner U.S. Finance, Inc. .................................. 1/2/97 14,000,000 13,997,814
Ford Motor Credit Corp. ...................................... 4/1/97 10,000,000 9,866,250
General Electric Capital Corp. ............................... 1/23/97 15,000,000 14,949,583
Household Finance Corp. ...................................... 1/15/97 10,000,000 9,978,456
J.P. Morgan & Co., Inc. ...................................... 1/8/97 14,000,000 13,985,354
New Center Asset Trust ....................................... 5/27/97 18,000,000 17,610,180
Pacificorp ................................................... 2/28/97 10,000,000 9,914,772
Prudential Funding Corp. ..................................... 1/9/97 15,000,000 14,982,267
Republic New York Corp. ...................................... 1/15/97 8,000,000 7,983,107
Texaco Inc. .................................................. 1/9/97 14,000,000 13,982,796
Virginia Electric & Power Co. ................................ 2/13/97 10,000,000 9,936,097
-------------
TOTAL COMMERCIAL PAPER (cost $274,274,090) ..................................................... 274,274,090
-------------
CORPORATE BOND -- 1.7%
General Electric Capital Corp., 7.625% ....................... 1/10/97 2,000,000 2,001,052
MMR Funding I (LOC Bayerische Vereinsbank), 5.84% ............ 1/2/97* 5,500,000 5,500,000
-------------
TOTAL CORPORATE BOND (cost $7,501,052) ......................................................... 7,501,052
-------------
</TABLE>
See notes to financial statements.
5
<PAGE>
MANAGED CASH FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MATURITY PRINCIPAL VALUE
DATE AMOUNT (NOTE 2a)
-------- --------- ---------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 8.7%
Student Loan Marketing Association, 5.39% .................... 1/14/97* $ 15,000,000 $ 15,000,000
Student Loan Marketing Association, 5.41% .................... 1/14/97* 22,400,000 22,396,073
-------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (cost $37,396,073) .................................... 37,396,073
-------------
REPURCHASE AGREEMENTS -- 12.9%
State Street Bank & Trust, dated 12/31/96 at 6.00%
(proceeds at maturity $55,637,540) collateralized
by $52,410,000 U.S. Treasury Bond, 7.125%, 2/15/23
(cost $55,619,000) ......................................... 1/2/97 55,619,000 55,619,000
-------------
TOTAL INVESTMENTS -- 105.7% (cost $455,789,669)** .............................................. 455,789,669
-------------
OTHER ASSETS AND LIABILITIES -- (5.7%)
Receivable for capital stock sold .............................................................. 5,614,903
Interest receivable and other assets ........................................................... 1,334,256
Dividend payable ............................................................................... (1,569,532)
Payable for capital stock redeemed ............................................................. (1,147,761)
Due to custodian ............................................................................... (28,399,017)
Management fee payable (note 4) ................................................................ (115,079)
Accrued expenses (note 4) ...................................................................... (209,164)
-------------
(24,491,394)
-------------
NET ASSETS -- 100.0%
Applicable to 431,298,275 shares of $.001 par value Capital Stock outstanding;
3,000,000,000 shares authorized (note 7) .................................................... $ 431,298,275
=============
NET ASSET VALUE PER SHARE ...................................................................... $1.00
=====
</TABLE>
* Date of next interest rate change.
** Cost for federal income tax purposes.
See notes to financial statements.
6
<PAGE>
MANAGED TAX-FREE FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
CREDIT PRINCIPAL VALUE
RATING* SHORT-TERM MUNICIPAL INVESTMENTS -- 100.7% AMOUNT (NOTE 2a)
- ------ --------- ---------
<S> <C> <C>
ARIZONA
MIG1 Pima County Industrial Development Authority, Series 1985, SFE
Technologies, VRDN, 4.5%, 12/1/05 ................................. $ 1,900,000 $ 1,900,000
A1+ Pima County, Industrial Development Authority, Tucson Electric
Power Co., Series 1982A, VRDN, 4.1%, 7/1/22 ....................... 1,800,000 1,800,000
-----------
TOTAL ARIZONA ................................................. 3,700,000
-----------
CALIFORNIA
A1+ Burbank Redevelopment Agency, Multifamily Housing Series 1985A,
VRDN, 3%, 11/1/10 ................................................. 5,100,000 5,100,000
SP1+ California State, GO, RAN, Series 1996, 4.5%, 6/30/97 ................ 2,000,000 2,007,805
MIG1+ California Statewide Community Development Authority, Northern
California Retired Officers, VRDN, 5%, 6/1/26 ..................... 1,300,000 1,300,000
A1 Corona Multi--Family Housing Revenue, Series 1985B, VRDN, 4.125%,
2/1/05 ............................................................ 2,000,000 2,000,000
SS&C Huntington Beach, Multi--Family Housing Revenue, River Meadows
Apartments, Series B, VRDN, 4.125%, 10/1/05 ....................... 6,800,000 6,800,000
SS&C Lancaster Household Bank Project, Antelope Pines Estate, Series 1984-A
VRDN, 3.55%, 11/1/04 .............................................. 3,000,000 3,000,000
A1+ Orange County, Sanitation District #1- 3, 5- 7&11, Series 1993, VRDN,
5%, 8/1/16 ........................................................ 900,000 900,000
SS&C San Marcos, Redevelopment Agency, Multi-Family Rental Housing
Series 1985 A, VRDN, 4.125%, 6/1/05 ............................... 6,900,000 6,900,000
-----------
TOTAL CALIFORNIA .............................................. 28,007,805
-----------
COLORADO
A1+ Colorado Health Facilities Authority, Composite Issue for Kaiser
Permanente, Series 1995A, VRDN, 4.15%, 8/1/15 ..................... 1,000,000 1,000,000
A1+ Regional Transportation, District of Colorado, Special Passenger Fare
Revenue, Series 1989A, VRDN, 4%, 6/1/99 ........................... 1,700,000 1,700,000
-----------
TOTAL COLORADO ................................................ 2,700,000
-----------
DISTRICT OF COLUMBIA
A1+ District of Columbia, General Fund Recovery, Series B-3, VRDN,
5.1%, 6/1/03 ...................................................... 2,000,000 2,000,000
MIG1 District of Columbia, GO, General Fund Recovery, Series B2,
VRDN, 5.1%, 6/1/03 ................................................ 300,000 300,000
MIG1 District of Columbia, GO, VRDN, Series A3, 5%, 10/1/07 ............... 1,000,000 1,000,000
-----------
TOTAL DISTRICT OF COLUMBIA .................................... 3,300,000
-----------
FLORIDA
MIG1 Broward County, Housing Finance Authority, Welleby Apartments
Project, VRDN, 4.25%, 12/1/06 ..................................... 1,000,000 1,000,000
A1+ Gainesville, Florida Utilities System, Series C, TECP, 3.6%, 1/6/97 .. 1,000,000 1,000,000
AAA Dade County Health Facilities Authority, Miami Children's Hospital,
VRDN, AMBAC Insured, 4%, 9/1/25 ................................... 1,200,000 1,200,000
A1+ Dade County, Water and Sewer System Revenue, Series 1994, VRDN,
FGIC Insured, 4%, 10/5/22 ......................................... 4,700,000 4,700,000
</TABLE>
See notes to financial statements.
7
<PAGE>
MANAGED TAX-FREE FUND (CONTINUED)
<TABLE>
<CAPTION>
CREDIT PRINCIPAL VALUE
RATING* AMOUNT (NOTE 2a)
- ------ --------- ---------
<S> <C> <C>
MIG1 Jacksonville Pollution Control Revenue, Florida Power and Light, TECP,
Series 1994, 3.55%, 2/20/97 ....................................... $ 1,300,000 $ 1,300,000
A1 Sarasota County, Public Hospital District, Sarasota Memorial Hospital,
TECP, Series 1993A, 3.7%, 2/18/97 ................................. 2,500,000 2,500,000
-----------
TOTAL FLORIDA ................................................. 11,700,000
-----------
GEORGIA
A1+ Turner County Industrial Development Revenue, Coats & Clark Inc.,
Series 1984, VRDN, 3.65%, 10/1/98 ................................. 1,600,000 1,600,000
-----------
IDAHO
MIG1 Idaho Health Facilities Authority Revenue, St. Lukes Regional Medical
Center Project, Series 1995, VRDN, 5.25%, 5/1/22 .................. 2,400,000 2,400,000
-----------
ILLINOIS
P1 Illinois Education Facilities Authority Pooled Financing Program, TECP,
3.55%, 2/20/97 .................................................... 3,500,000 3,500,000
MIG1 Illinois Educational Facilities Authority, University Pooled Finance
Program, VRDN, FGIC Insured, 4.25%, 12/1/05 ....................... 1,810,000 1,810,000
SS&C Pekin, Industrial Development Revenue Refunding Bonds, BOC Group,
Series 1992, VRDN, 4.15%, 9/1/12 .................................. 2,600,000 2,600,000
-----------
TOTAL ILLINOIS ................................................ 7,910,000
-----------
INDIANA
A1+ Sullivan Hoosier Energy Rural Electric Project, TECP, Series 1985L
3.45%, 2/12/97 .................................................... 2,000,000 2,000,000
A1+ Sullivan PCR, Hoosier Energy Rural Electric Project, TECP, 3.6%,
1/6/97 ............................................................ 2,000,000 2,000,000
-----------
TOTAL INDIANA ................................................. 4,000,000
-----------
IOWA
MIG1 Council Bluffs Pollution Control, VRDN, Iowa Illinois Gas & Electric
Company, Series 1995, 4.25%, 1/1/25 ............................... 1,000,000 1,000,000
-----------
KENTUCKY
MIG1 Mayfield, Multi-City Lease Revenue, Kentucky League of Cities Funding
Trust, VRDN, Series 1996, 4.3%, 7/1/26 ............................ 1,000,000 1,000,000
-----------
LOUISIANA
MIG1 Louisiana State Offshore Terminal Authority, Deepwater Port Revenue,
1st Stage, Series 1994, VRDN, 5%, 9/1/06 .......................... 100,000 100,000
-----------
MARYLAND
A1 Anne Arundel County, Baltimore Electric & Gas Company, TECP,
3.55%, 1/9/97 ..................................................... 3,020,000 3,020,000
-----------
MASSACHUSETTS
MIG1 Commonwealth of Massachusetts GO Note, Series A, 4.25%, 6/10/97 ...... 5,000,000 5,018,815
SP1 Massachusetts Bay Transportation Authority, Series B, 4.75%, 9/5/97 .. 1,000,000 1,005,204
A1+ Massachusetts Health & Educational Facilities Authority, Harvard
University, Series I, VRDN, 3.9%, 2/1/16 .......................... 3,215,000 3,215,000
MIG1 Massachusetts Industrial Finance Agency, Merritt Care Beverly
Enterprises, VRDN, 5%, 4/1/09 ..................................... 800,000 800,000
</TABLE>
See notes to financial statements.
8
<PAGE>
<TABLE>
<CAPTION>
CREDIT PRINCIPAL VALUE
RATING* AMOUNT (NOTE 2a)
- ------ --------- ---------
<S> <C> <C>
MIG1 Massachusetts Industrial Finance Agency, Resource Recovery, Ogden
Haverhill Project, VRDN, 3.9%, 12/1/06 ............................ $ 2,900,000 $ 2,900,000
P1 Massachusetts Water Resources Authority, TECP, Series 1994, 3.65%,
1/15/97 ........................................................... 1,000,000 1,000,000
-----------
TOTAL MASSACHUSETTS ........................................... 13,939,019
-----------
MISSISSIPPI
A1 Jackson County, Chevron USA Inc., Project, Pollution Control Revenue
Bonds, VRDN, 5%, 12/1/16 .......................................... 1,400,000 1,400,000
-----------
MISSOURI
MIG1 Missouri HEFA, Health Facilities Revenue, Sisters of Mercy, VRDN,
4.2%, 6/1/19 ...................................................... 1,100,000 1,100,000
MIG1 Missouri HEFA, Health Facilities Revenue, Sisters of Mercy, VRDN,
4.2%, 6/1/19 ...................................................... 1,000,000 1,000,000
SP1+ Missouri HEFA, School District, Advance Funding Notes, Series 1996 C,
Kansas City School District, 4.5%, 9/8/97 ......................... 1,000,000 1,003,959
P1 St. Louis Industrial Development Authority, Kirkwood Project, Series
1985, VRDN, 4.125%, 12/1/15 ....................................... 1,000,000 1,000,000
-----------
TOTAL MISSOURI ................................................ 4,103,959
-----------
NEBRASKA
P1 Nebraska Public Power District (all Districts), TECP, Series 1996,
3.5%, 1/28/97 ..................................................... 5,000,000 5,000,000
A1+ Omaha Public Power District, TECP, 3.6%, 1/28/97 ..................... 1,300,000 1,300,000
-----------
TOTAL NEBRASKA ................................................ 6,300,000
-----------
NEW HAMPSHIRE
A1+ New Hampshire Business Finance Authority, Connecticut Light & Power,
VRDN, 4.15%, 12/1/22 .............................................. 2,000,000 2,000,000
-----------
NEW JERSEY
A1+ New Jersey State Turnpike Authority, Series D, VRDN, 3.75%, 1/1/18 ... 1,900,000 1,900,000
-----------
NEW MEXICO
SS&C Belen Industrial Revenue Refunding Bond, United Desiccants Project,
VRDN, 4.3%, 4/1/00 ................................................ 1,000,000 1,000,000
P1 Farmington, Pollution Control Revenue, Arizona Public Service Co.,
Series 1994B, VRDN, 5%, 9/1/24 .................................... 1,300,000 1,300,000
-----------
TOTAL NEW MEXICO .............................................. 2,300,000
-----------
NEW YORK
MIG1 New York City Municipal Water Finance Authority, Series 1994G,
FGIC insured, VRDN, 5%, 6/15/24 ................................... 1,000,000 1,000,000
MIG1 New York City, Municipal Water Finance Authority, Series C, VRDN,
FGIC Insured, 5%, 6/15/23 ......................................... 1,000,000 1,000,000
MIG1 New York City, TAN, Series 1996A, 4.5%, 2/12/97 ...................... 1,875,000 1,876,888
P1 State of New York, TECP, Series Q, 3.55%, 1/14/97 .................... 2,500,000 2,500,000
-----------
TOTAL NEW YORK ................................................ 6,376,888
-----------
</TABLE>
See notes to financial statements.
9
<PAGE>
MANAGED TAX-FREE FUND (CONTINUED)
<TABLE>
<CAPTION>
CREDIT PRINCIPAL VALUE
RATING* AMOUNT (NOTE 2a)
- ------ --------- ---------
<S> <C> <C>
NORTH CAROLINA
A1+ North Carolina Municipal Power Agency #1, Catawaba Project, TECP,
Series 1996A, 3.55%, 2/20/97 ...................................... $ 2,000,000 $ 2,000,000
-----------
OHIO
MIG1 Cuyahoga County, Health & Education, University Hospital of
Cleveland, VRDN, 5%, 1/1/16 ....................................... 1,100,000 1,100,000
-----------
PENNSYLVANIA
MIG1 Delaware Valley, Finance Authority, Series 1985A, VRDN, 4.15%,
12/1/20 .......................................................... 1,600,000 1,600,000
SS&C Elk County, Industrial Development Authority, VRDN, 3.795%, 3/1/04 ... 750,000 750,000
A1+ Emmaus, General Authority, Local Government Revenue Pool
Program, Series 1989 G, VRDN, 4.15%, 3/1/24 ....................... 1,300,000 1,300,000
A1 Emmaus, General Authority, Local Government Revenue Pool Program,
1989 Series G-5, VRDN, 4.2%, 3/1/24 .............................. 2,000,000 2,000,000
A1+ Emmaus, General Authority, Local Government Revenue Pool Program,
1989 Series G-6, VRDN, 4.15%, 3/1/24 ............................. 1,900,000 1,900,000
MIG1 Philadelphia, TRAN, GO, 4.5%, 6/30/97 ................................ 1,000,000 1,002,606
SP1 Philadelphia, School District, TRAN, Series 1996-1997,
4.5%, 6/30/97 ..................................................... 3,000,000 3,007,122
-----------
TOTAL PENNSYLVANIA ............................................ 11,559,728
-----------
PUERTO RICO
MIG1 Puerto Rico Commonwealth, TRAN, Series 1996, 4%, 7/30/97 ............. 1,500,000 1,504,830
-----------
RHODE ISLAND
MIG1 Rhode Island State, TAN, 4.5%, 6/30/97 ............................... 3,000,000 3,015,369
-----------
TENNESSEE
MIG1 Clarksville, Public Building Authority, Pooled Financing, Series 1990,
VRDN, MBIA Insured, 4%, 7/1/13 .................................... 1,900,000 1,900,000
MIG1 Franklin, Industrial Development Revenue, Franklin Oaks Apartments,
VRDN, 4.25%, 12/1/07 .............................................. 2,000,000 2,000,000
-----------
TOTAL TENNESSEE ............................................... 3,900,000
-----------
TEXAS
MIG1 Harris County, TAN, Series 1996, 4.5%, 2/28/97 ....................... 1,000,000 1,001,149
A1+ Harris County, Toll Roads, Series 1994G, VRDN, 4%, 8/1/20 ............ 2,500,000 2,500,000
MIG1 Lone Star, Airport Improvement Authority, Series A5, VRDN, 4.95%,
12/1/14 ........................................................... 1,300,000 1,300,000
MIG1 Lone Star, Airport Improvement Authority, Series B2, VRDN,
4.95%, 12/1/14 .................................................... 1,600,000 1,600,000
MIG1 Lone Star, Airport Improvement Authority, Series 1984 B1, VRDN,
4.95%, 12/1/14 .................................................... 1,000,000 1,000,000
SS&C Montgomery Industrial Development Authority, Medical Manufacturing
Partners Project, Series 1987, VRDN, 4.1%, 8/1/17 ................. 3,640,000 3,640,000
MIG1 North Central Texas Health Facilities Development Corp., Presbyterian
Medical Center, VRDN, Series 1985 C, 4.95%, 12/1/15 ............... 1,900,000 1,900,000
A1+ San Antonio, Electric & Gas City Public Services, TECP, Series 1995A,
3.55%, 2/13/97 .................................................... 1,000,000 1,000,000
</TABLE>
See notes to financial statements.
10
<PAGE>
<TABLE>
<CAPTION>
CREDIT PRINCIPAL VALUE
RATING* AMOUNT (NOTE 2a)
- ------ --------- ---------
<S> <C> <C>
A1+ San Antonio, Water System Revenue, TECP, Series 1995, 3.6%, 2/7/97 ... $ 1,500,000 $ 1,500,000
SP1+ State of Texas TRAN, Series 1996, 4.75%, 8/29/97 ..................... 4,000,000 4,030,082
MIG1 Texas Association of School Boards, Certificates of Participation TAN,
Series 1996 FSA Insured, 4.75%, 8/29/97 ........................... 1,000,000 1,005,202
-----------
TOTAL TEXAS ................................................... 20,476,433
-----------
VERMONT
SS&C Vermont Industrial Development, Vermont Marble Company, Series 1984,
VRDN, 3.795%, 12/1/04 ............................................. 3,575,000 3,575,000
MIG1 Vermont Student Assistance Corporation, VRDN, 3.65%, 1/1/04 .......... 2,500,000 2,500,000
-----------
TOTAL VERMONT ................................................. 6,075,000
-----------
VIRGINIA
MIG1 Henrico County, Industrial Development Authority Revenue, Health
Facility Hermitage Project, VRDN, 5.1%, 5/1/24 .................... 400,000 400,000
A1+ Peninsula Port Authority, Coal Terminal Revenue, Dominio Terminal
Project, VRDN, 4.85%, 7/1/16 ...................................... 1,600,000 1,600,000
SS&C Peninsula Port Authority, Shell Oil, VRDN, 5%, 12/1/05 ............... 1,800,000 1,800,000
MIG1 Town of Louisa, Pollution Control Revenue, Virginia Electric
Power Company 1987 TECP, 3.8%, 1/14/97 ............................ 1,000,000 1,000,000
-----------
TOTAL VIRGINIA ................................................ 4,800,000
-----------
WASHINGTON
A1+ Washington Health Care Facilities Authority, Sisters of Providence, VRDN,
Series 1985 B, 5%, 10/1/05 ........................................ 1,590,000 1,590,000
A1+ Washington Public Power Supply Authority, Projects #1 & #3, Series 1993
A-3, VRDN, 3.95%, 7/1/18 ......................................... 1,895,000 1,895,000
-----------
TOTAL WASHINGTON .............................................. 3,485,000
-----------
TOTAL INVESTMENT PORTFOLIO -- 100.7% (cost $166,674,031) ............. 166,674,031
-----------
OTHER ASSETS AND LIABILITIES -- (0.7)%
Cash .......................................................................................... 74,550
Receivable for Investments sold ............................................................... 200,000
Receivable for capital stock sold ............................................................. 10,612
Interest receivable and other assets .......................................................... 1,137,650
Dividend payable .............................................................................. (379,040)
Payable for investments purchased ............................................................. (2,053,095)
Payable for capital stock redeemed ............................................................ (11,000)
Management fee payable (note 4) ............................................................... (51,144)
Accrued expenses (note 4) ..................................................................... (149,175)
-----------
(1,220,642)
-----------
</TABLE>
See notes to financial statements.
11
<PAGE>
MANAGED TAX-FREE FUND (CONTINUED)
<TABLE>
<CAPTION>
CREDIT VALUE
RATING* (NOTE 2a)
- ------ ---------
<S> <C>
NET ASSETS -- 100.0%
Applicable to 165,453,389 shares of $.001 par value Capital Stock outstanding;
1,000,000,000 shares authorized (note 7) ...................................................... $165,453,389
============
NET ASSET VALUE PER SHARE ..................................................................... $1.00
=====
</TABLE>
** Cost for federal income tax purposes.
* CREDIT RATINGS (UNAUDITED) SHOWN ARE EITHER BY MOODY'S INVESTORS SERVICE,
INC., STANDARD & POOR'S CORPORATION OR SCUDDER, STEVENS & CLARK
MOODY'S STANDARD &
POOR'S
P1 A1/A1+ Commercial paper of the highest quality.
MIG1 SP1/SP1+ Short-term tax-exempt instrument of the best quality
with strong protection.
VMIG1 Short-term tax-exempt variable rate demand instrument of
the best quality with strong protection.
ABBREVIATIONS USED IN THE STATEMENT:
TECP Tax Exempt Commercial Paper VRDN Variable Rate Demand Note
GO General Obligation RAN Revenue Anticipation Note
TAN Tax Anticipation Note TRAN Tax Revenue Anticipation Note
SS&C These securities are not rated by either Moody's or
Standard & Poor's. Scudder has determined that these
securities are of comparable quality to rated acceptable
notes on a cash flow basis and are of appropriate credit
for the standards required by the Fund's investment
objective.
See notes to financial statements.
12
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
MANAGED
GOVERNMENT MANAGED MANAGED
SECURITIES CASH TAX-FREE
FUND FUND FUND
---------- ------- --------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest Income $ 3,767,953 $ 20,334,389 $ 5,235,778
------------ ------------ -----------
EXPENSES (note 2c):
Management fee (note 4) 281,243 1,502,570 587,278
Shareholder services (notes 4, 5 and 6) 164,973 627,468 331,052
Directors' fees and expenses (note 4) 9,174 12,877 12,742
Custodian and accounting fees (note 4) 49,201 98,383 74,340
Professional services 6,196 39,394 20,298
Reports to shareholders 3,480 17,828 6,467
Registration fees 13,934 23,652 15,441
Miscellaneous 9,779 18,533 11,496
------------ ------------ -----------
Total expenses before reductions 537,980 2,340,705 1,059,114
Expense reductions (note 4) (150,102) (274,989) --
------------ ------------ -----------
Expenses, net 387,878 2,065,716 1,059,114
------------ ------------ -----------
NET INVESTMENT INCOME AND INCREASE IN NET
ASSETS FROM OPERATIONS $ 3,380,075 $ 18,268,673 $ 4,176,664
============ ============ ===========
</TABLE>
See notes to financial statements.
13
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31,
MANAGED GOVERNMENT
SECURITIES FUND
-------------------------------
1996 1995
------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income and increase
in net assets from operations ........ $ 3,380,075 $ 3,681,354
Dividends (notes 2b and 2d) ............. (3,380,075) (3,681,354)
------------- -------------
-- --
------------- -------------
CAPITAL STOCK TRANSACTIONS (note 7):
Proceeds from sale of shares ............ 475,466,734 229,035,361
Net asset value of shares issued in
reinvestment of dividends ............ 2,288,409 2,961,712
------------- -------------
477,755,143 231,997,073
Cost of shares redeemed ................. (499,812,580) (250,578,326)
------------- -------------
Increase (decrease) in net assets
from capital stock transactions ...... (22,057,437) (18,581,253)
------------- -------------
Total increase (decrease) in net assets .... (22,057,437) (18,581,253)
NET ASSETS:
Beginning of year .......................... 49,975,724 68,556,977
------------- -------------
End of year ................................ $ 27,918,287 $ 49,975,724
============= =============
See notes to financial statements.
14
<PAGE>
<TABLE>
<CAPTION>
MANAGED CASH FUND MANAGED CASH FUND
----------------------------------- ----------------------------------
1996 1995 1996 1995
---------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income and increase
in net assets from operations ........ $ 18,268,673 $ 20,682,893 $ 4,176,664 $ 4,313,224
Dividends (notes 2b and 2d) ............. (18,268,673) (20,682,893) (4,176,664) (4,313,224)
---------------- --------------- --------------- ---------------
-- -- -- --
---------------- --------------- --------------- ---------------
CAPITAL STOCK TRANSACTIONS (note 7):
Proceeds from sale of shares ............ 2,285,419,535 2,168,020,988 605,388,558 561,389,929
Net asset value of shares issued in
reinvestment of dividends ............ 10,791,498 11,385,987 2,369,718 2,171,918
---------------- --------------- --------------- ---------------
2,296,211,033 2,179,406,975 607,758,276 563,561,847
Cost of shares redeemed ................. (2,236,431,853) (2,174,994,810) (580,696,936) (549,766,530)
---------------- --------------- --------------- ---------------
Increase (decrease) in net assets
from capital stock transactions ...... 59,779,180 4,412,165 27,061,340 13,795,317
---------------- --------------- --------------- ---------------
Total increase (decrease) in net assets .... 59,779,180 4,412,165 27,061,340 13,795,317
NET ASSETS:
Beginning of year .......................... 371,519,095 367,106,930 138,392,049 124,596,732
---------------- --------------- --------------- ---------------
End of year ................................ $ 431,298,275 $ 371,519,095 $ 165,453,389 $ 138,392,049
================ =============== =============== ===============
</TABLE>
See notes to financial statements.
15
<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>
RATIO OF RATIO OF NET
OPERATING INVESTMENT
NET ASSET NET ASSET EXPENSES INCOME NET ASSETS
VALUE, AT NET VALUE,AT TO AVERAGE TO AVERAGE END OF
BEGINNING INVESTMENT DIVIDENDS END TOTAL DAILY DAILY PERIOD
PERIOD OF PERIOD INCOME PAID OF PERIOD RETURN NET ASSETS(a) NET ASSETS (MILLIONS)
- ---------------------- --------- ---------- --------- --------- ------ ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MANAGED GOVERNMENT
SECURITIES FUND
Year ended 12/31/96 ........ $ 1.00 $ .048 $ (.048) $ 1.00 4.91%* 0.55% 4.81% $28
Year ended 12/31/95 ........ 1.00 .054 (.054) 1.00 5.49* 0.55 5.36 50
Year ended 12/31/94 ........ 1.00 .037 (.037) 1.00 3.75* 0.55 3.61 69
Year ended 12/31/93 ........ 1.00 .026 (.026) 1.00 2.68* 0.55 2.65 92
Year ended 12/31/92 ........ 1.00 .035 (.035) 1.00 3.51* 0.55 3.39 151
MANAGED CASH FUND
Year ended 12/31/96 ........ 1.00 .049 (.049) 1.00 4.97* 0.55 4.86 431
Year ended 12/31/95 ........ 1.00 .054 (.054) 1.00 5.57* 0.55 5.45 372
Year ended 12/31/94 ........ 1.00 .038 (.038) 1.00 3.86* 0.55 3.84 367
Year ended 12/31/93 ........ 1.00 .028 (.028) 1.00 2.81* 0.55 2.78 324
Year ended 12/31/92 ........ 1.00 .037 (.037) 1.00 3.74* 0.55 3.76 305
MANAGED TAX-FREE FUND
Year ended 12/31/96 ........ 1.00 .028 (.028) 1.00 2.88 0.72 2.84 165
Year ended 12/31/95 ........ 1.00 .032 (.032) 1.00 3.30 0.79 3.25 138
Year ended 12/31/94 ........ 1.00 .023 (.023) 1.00 2.29 0.77 2.26 125
Year ended 12/31/93 ........ 1.00 .018 (.018) 1.00 1.85 0.78 1.83 107
Year ended 12/31/92 ........ 1.00 .025 (.025) 1.00 2.56 0.77 2.54 91
</TABLE>
(a) The annualized operating expense ratio including expenses reimbursed,
management fee and other expenses not imposed would have been, for the
Managed Government Securities Fund, and Managed Cash Fund, 0.77%, and 0.62%,
for the year ended December 31, 1996, respectively; 0.86%, and 0.68%, for
the year ended December 31, 1995, respectively; 0.84%, and 0.68%, for the
year ended December 31, 1994, respectively; 0.77%, and 0.66%, for the year
ended December 31, 1993, respectively; 0.76%, and 0.64%, for the year ended
December 31, 1992, respectively.
* Total returns are higher, for the periods indicated, due to the maintenance
of the Fund's expenses.
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
Scudder Fund, Inc. (the "Company") is an open-end diversified management
investment company which currently includes three active money market investment
portfolios: Managed Government Securities Fund, Managed Cash Fund, and Managed
Tax-Free Fund (collectively, the "Funds"). The Managed Federal Securities Fund
ceased operations on November 29, 1996.
2. SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies followed by the Company are:
(a) Security Valuation -- Each of the Funds values its investments using
the amortized cost method, which involves initially valuing an investment at its
cost and thereafter assuming a constant amortization to maturity of any premium
or discount. This method results in a value approximating market.
(b) Federal Income Taxes -- The Company's policy is to qualify each Fund
as a regulated investment company under Subchapter M of the Internal Revenue
Code and to distribute all taxable and tax-exempt income, including any realized
net capital gains, to shareholders. Therefore, no Federal income tax provision
is required.
(c) Allocation of Expenses -- Expenses not directly chargeable to a
specific 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 that day for payment on the first
business day of the following month.
(e) Other -- Investment transactions are recorded on trade dates. Interest
income, including the accretion or amortization of discount or premium, is
recorded on the accrual basis. Discounts or premiums on securities purchased are
accreted or amortized, respectively, on a straight line basis over the life of
the respective 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.
4. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The Company retains Scudder, Stevens & Clark, Inc. ("Scudder") as
investment manager for the Funds, pursuant to investment advisory agreements
between Scudder and the Company on behalf of each such Fund, for a management
fee payable each month, based upon the average daily value of each Fund's net
assets, at annual rates of 0.40% on the first $1.5 billion and 0.35% on any
amount in excess thereof. Scudder has agreed not to impose a portion of its
management fee until December 31, 1996, to the extent necessary so that expenses
of each of the Managed Government Securities Fund and the Managed Cash Fund do
not exceed 0.55%, of the average daily net assets of each Fund.
For the year ended December 31, 1996, Scudder did not impose fees
amounting to $150,102 and $274,989 on the Managed Government Securities Fund and
the Managed Cash Fund, respectively.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
Scudder Service Corporation ("SSC"), a subsidiary of Scudder, is the
Company's shareholder service, transfer and dividend disbursing agent. For the
year ended December 31, 1996, the amount charged to the Company by SSC
aggregated $23,477 for the Managed Government Securities Fund, $66,490 for the
Managed Cash Fund, and $23,477 for the Managed Tax-Free Fund, of which $2,292,
$5,556, and $2,292 respectively, remain unpaid at December 31, 1996.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of Scudder, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records for the Funds. For the year ended
December 31, 1996, the amount charged to the Funds by SFAC aggregated $30,000
for the Managed Government Securities Fund, $48,900 for the Managed Cash Fund,
and $39,965 for the Managed Tax-Free Fund, of which $2,500, $4,177, and $3,306,
respectively, remain unpaid at December 31, 1996.
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 Funds constituting the Company aggregated $205,224, an
applicable portion of which is included in accrued expenses of each such Fund.
5. SHAREHOLDER SERVICES
Each of the Funds has special arrangements with certain banks,
institutions and other persons under which they receive compensation from the
Funds and Scudder for performing shareholder servicing functions for their
customers who own shares in the Funds from time to time. For the year ended
December 31, 1996, payments by the Funds pursuant to these arrangements
aggregated $135,832 for the Managed Government Securities Fund, $536,533 for the
Managed Cash Fund and $301,843 for the Managed Tax-Free Fund.
6. 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 Fund 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 as
indicated in Note 5 above.
7. CAPITAL STOCK
At December 31, 1996, the Company had 10,000,000,000 shares of $.001 par
value capital stock authorized, of which 3,000,000,000 shares each have been
designated for the Managed Government Securities Fund and Managed Cash Fund and
1,000,000,000 shares have been designated for the Managed Tax-Free Fund. Net
paid in capital in excess of par value was $27,890,369, for the Managed
Government Securities Fund, $430,866,977 for the Managed Cash Fund and
$165,287,936 for the Managed Tax-Free Fund.
18
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
SCUDDER FUND, INC.
In our opinion, the accompanying statements of net assets 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
Managed Government Securities Fund, Managed Cash Fund and Managed Tax-Free Fund
(each a separate portfolio of Scudder Fund, Inc., hereafter referred to as the
"Fund") at December 31, 1996, the results of each of their operations for the
year then ended, the changes in each of their net assets for each of the two
years in the period then ended and the financial highlights for each of the five
years in the period then ended, 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 December 31, 1996 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
when confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
February 19, 1997
- --------------------------------------------------------------------------------
FEDERAL TAX STATUS OF 1996 DIVIDENDS (UNAUDITED)
The total amount of dividends declared in 1996 by each of the Government
Portfolio and Cash Portfolio of Scudder Fund, Inc. is taxable as ordinary
dividend income for Federal income tax purposes. None of this amount qualifies
for the dividends received deduction available to corporations.
All of the dividends from the Tax-Free Portfolio declared in 1996 are
exempt from Federal income tax. However, in accordance with the Internal Revenue
Code, you are required to report them on your 1996 Federal income tax return.
Although dividend income from the Tax-Free Portfolio is exempt from
Federal taxation, it may not be exempt from state or local taxation. You should
consult your tax advisor as to the state and local tax status of the dividends
you received.
- --------------------------------------------------------------------------------
19
<PAGE>
Managed Government
Securities Fund
Managed Cash Fund
Managed Tax-Free Fund
345 Park Avenue, New York, New York 10154
(800) 854-8525
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 9242
Boston, Massachusetts 02205
Legal Counsel
Sullivan & Cromwell
New York, New York
-----------------
The Funds are neither insured nor guaranteed by the U.S. Government. Each Fund
intends to maintain a net asset value per share of $1.00 but there is no
assurance that it will be able to do so.
This report is for the information of the shareholders. Its use in connection
with any offering of the Company's shares is authorized only in case of a
concurrent or prior delivery of the Company's current prospectus.
MANAGED GOVERNMENT
SECURITIES FUND
MANAGED CASH FUND
MANAGED TAX-FREE FUND
ANNUAL REPORT
DECEMBER 31, 1996
