Scudder
Premium Money
Market Shares
Semiannual Report
June 30, 1998
Pure No-Load(TM) Funds
A pure no-load(TM) (no sales charges) mutual fund portfolio seeking to provide
high money market income with preservation of capital and liquidity.
(Scudder Premium Money Market Shares is properly known as Scudder Money Market
Series -- Premium Shares.)
SCUDDER (logo)
<PAGE>
Scudder Premium Money Market Shares
- --------------------------------------------------------------------------------
Date of Inception: 7/7/97 Total Net Assets as of Ticker Symbol: SPMXX
6/30/98: $507 million
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o Scudder Premium Money Market Shares (the "Fund") provided a total return of
2.68% for the six months, which placed it in the top 5% of similar money market
funds.
o The Fund's 30-day net annualized yield at the end of June was 5.37%.
o Despite the stability of interest rates, the Fund's average maturity was
gradually shortened toward the end of the period, in anticipation of rate hikes
in the near future given the continuing strength of the U.S. economy.
Table of Contents
3 Letter from the Series' President 15 Financial Highlights
4 Portfolio Management Discussion 18 Notes to Financial Statements
7 Glossary of Investment Terms 20 Officers and Directors
9 Investment Portfolio 21 Investment Products and Services
12 Financial Statements 22 Scudder Solutions
2 - Scudder Premium Money Market Shares
<PAGE>
Letter from the Series' President
Dear Shareholders,
We are pleased to present the semiannual report for Scudder Premium Money
Market Shares for the six-month period ended June 30, 1998.
During the period covered by this report, the U.S. economy enjoyed ongoing
strength, including a still-climbing stock market, a strong dollar, high
consumer confidence, and low unemployment. Earlier this year the Federal Reserve
worried that the U.S. economy was growing too rapidly, but so far the Fed has
left rates unchanged. Bond prices generally rose during the period and the
30-year Treasury bond yield declined to a new low.
Money market funds generally provided attractive returns during the period
for those investors seeking a stable share price and an interest-paying
alternative to cash. For its most recent semiannual period ended June 30, 1998,
the Fund provided a positive total return of 2.68%. Its 30-day net annualized
yield at the end of June was 5.37%. For more detail on the events of the past
six months and the managers' outlook for the months ahead, please turn to the
discussion beginning on page 4.
For those of you interested in new Scudder products and services, we would
like to take this opportunity to highlight two upcoming additions to our
international category, both of which are scheduled to begin operations on
September 1st. Scudder International Growth Fund will seek long-term capital
appreciation by investing primarily in the equity securities of non-U.S.
companies with high growth potential, and Scudder International Value Fund will
seek long-term capital appreciation by investing primarily in undervalued
foreign equity securities. For further information on these new funds, please
call 1-800-225-2470.
Thank you for choosing Scudder Premium Money Market Shares to help meet
your investment needs. If you should have any questions regarding your
investment, or any of the Scudder Funds, please do not hesitate to call us at
the number above, or visit our Web site at http://funds.scudder.com.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder Money Market Series
3 - Scudder Premium Money Market Shares
<PAGE>
Portfolio Management Discussion
Dear Shareholders,
The U.S. economy continued its lengthy run of prosperity for the first half of
1998, although toward the end of the period there was some evidence that perhaps
the trend was beginning to weaken. During the period, the Fund's investments in
short-term, high quality securities provided a balance to more aggressive stock
and bond holdings. Scudder Premium Money Market Shares (the "Fund") provided a
positive total return of 2.68% for the six months ended June 30, 1998. This
performance compared with the 2.42% average return of taxable money funds
tracked by Lipper Analytical Services for the same period, placing the Fund in
the top 5% of 309 similar funds. The Fund's 30-day net annualized yield at the
end of June was 5.37%.
U.S. Economy
Continues Strong
For the first half of the Fund's fiscal year, the domestic economy was
encouraged by a number of positive fundamentals that bolstered the overall
investment environment. Consumer confidence was high and employment strong, with
many new jobs being created during the period. We experienced two back-to-back
quarters of strong GDP growth in the fourth quarter of 1997 and the first
quarter of 1998. Although the numbers for the most recent quarter ended June 30
are likely to be weaker, we anticipate that growth will be slightly higher again
during the second half of 1998.
The record run in the U.S. stock market, which has now extended over seven
years, showed signs of abating in early 1998, as high valuations and
decelerating corporate profit growth began to be felt. Overseas, Asia's troubles
became more visible, particularly in the world's second-largest economy, Japan,
which is now officially in recession. Concerns over Asia, combined with slowing
profit growth in the United States and high valuations for U.S. equities, seem
to be prompting renewed interest in the relative safety and more reliable
returns of domestic fixed income securities. Bond prices have generally been
rising and the benchmark 30-year Treasury bond yield (which moves in the
opposite direction to bond prices) declined to a new low. U.S. government issues
have been particularly strong lately, due to a lack of supply in the Treasury
market -- a result of the robust economy allowing the government to pay down
some of its debt.
Average Maturity Shortened in
Anticipation of Rising Rates
During the course of the semiannual period, we kept a watchful eye on the
Federal Reserve Board, particularly in early 1998, when the possibility of rate
increases seemed likely in view of Fed concerns over the rapidly growing
domestic economy. The strength of the U.S. dollar, however, has eliminated any
need for the Fed to tighten the money supply so far. Short-term interest rates
have now been anchored below 5.5% for over a year and a half, with the last
major change occurring in February of 1997. In this stable environment, we took
4 - Scudder Premium Money Market Shares
<PAGE>
advantage of smaller movements in the market, such as those occasioned by tax
periods and quarter ends.
During the early months of 1998, once inflation fears had cooled and it seemed
likely that the Fed would continue to keep rates stable for a while, we extended
maturities in the portfolio. Longer maturities offer the ability to lock in
yields when interest rates appear relatively high and unlikely to rise, in
exchange for slightly higher risk. The average maturity of the Fund's holdings
was 68 days at the end of January. However, as the period progressed and the
continued stability of monetary policy seemed less assured, we took a more
defensive position, gradually reducing the average maturity to 34 days as of
June 30th. Issues with shorter maturities are beneficial in the event of
interest rate hikes, because principal comes due earlier and may be reinvested
at the higher prevailing rates.
Continued Focus on
Commercial Paper
Over the period, the portfolio was invested in a diversified mix of high-quality
money market instruments, including commercial paper, certificates of deposit
issued by major banks, U.S. government securities, and short-term obligations
from highly rated companies. The portfolio is fully invested in first tier debt
instruments only, which has been true of the Fund historically.
We continued to be overweighted in commercial paper in the portfolio because it
tends to offer some of the highest money market yields available. Commercial
paper is also likely to boost stability by allowing us to lock in relatively
attractive rates over a period of one to three months. At the end of June,
commercial paper accounted for 60% of the portfolio. This increase in commercial
paper came at the expense of repurchase agreements, of which none were held as
of the end of the period.
Outlook for Increased
Volatility Ahead
It is likely that the domestic economy will continue to be strong for the near
term, as it is still supported by a number of positive fundamentals. During the
most recent quarter, we saw the earliest signals suggesting that this strength
may begin to wane in the future, possibly owing to the Asian crisis finally
impacting the United States. However, we do anticipate a continuation of healthy
economic growth for the second half of the year.
Our strategy going forward is to continue monitoring the economic environment,
watch the Fed closely for any indication of a change in monetary policy, and
keep the average maturity of the portfolio defensively short. As this already
prolonged economic boom for the U.S. economy continues, it leaves us wondering
what might happen next and when. This uncertainty has created an outlook that
supports shortening the Fund's maturity, as we believe a rise in rates is most
likely the next event.
5 - Scudder Premium Money Market Shares
<PAGE>
In the months ahead, the Fund's management team will continue to collect
economic data and carefully monitor the investment climate, as it positions your
Fund for high money market income with preservation of capital and liquidity. In
an uncertain investment environment such as this, Scudder Premium Money Market
Shares offers the safety and stability of short-term, high-quality money market
instruments. We continue to believe in the value of owning a money market fund
as part of a well-diversified portfolio.
Sincerely,
Your Portfolio Management Team
/s/Frank J. Rachwalski, Jr. /s/John W. Stuebe
Frank J. Rachwalski, Jr. John W. Stuebe
6 - Scudder Premium Money Market Shares
<PAGE>
Glossary of Investment Terms
CERTIFICATE OF DEPOSIT A debt instrument issued by a bank that
usually pays interest. Maturities range from
a few weeks to several years, and interest
rates are set by competitive forces in the
marketplace.
COMMERCIAL PAPER Short-term obligations with maturities
ranging from 2 to 270 days, and issued by
banks, corporations, and other borrowers to
investors with temporarily idle cash. These
instruments are unsecured and usually
discounted, although some are
interest-bearing, and offer a high level of
safety and liquidity.
GDP 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. Too strong
economic growth can lead to accelerating
inflation; weak growth can lead to a
recession.
INFLATION An overall increase in the prices of goods
and services, as happens when business and
consumer spending increases relative to the
supply of goods available in the marketplace
-- in other words, when too much money is
chasing too few goods. High inflation has a
negative impact on the prices of fixed-income
securities.
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 The date on 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.
Money market instruments are traded through
dealers, money center banks, and the Open
Market Trading Desk at the New York Federal
Reserve Bank. All of these instruments have a
high level of safety and liquidity.
7 - Scudder Premium Money Market Shares
<PAGE>
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.
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)
8 - Scudder Premium Money Market Shares
<PAGE>
Investment Portfolio as of June 30, 1998 (Unaudited)
Money Market Series
<TABLE>
<CAPTION>
Principal Value ($)
Amount ($) (Note A)
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<S> <C> <C>
Commercial Paper 60.1%
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American Honda Finance Corp., Floating Rate Note, 5.632%, 5/14/1999* .................... 15,500,000 15,498,654
American Honda Finance Corp., Floating Rate Note, 5.668%, 5/26/1999* .................... 20,000,000 19,998,197
Apex Funding Corp., 7/31/1998 ........................................................... 40,000,000 39,812,333
Banner Receivables Corp., 7/9/1998 ...................................................... 15,831,000 15,811,123
Banner Receivables Corp., 7/22/1998 ..................................................... 10,000,000 9,967,217
Broadway Capital Corp., 8/17/1998 ....................................................... 38,942,000 38,654,749
Broadway Capital Corp., 8/24/1998 ....................................................... 16,850,000 16,704,922
Countrywide Home Loans Corp., 7/16/1998 ................................................. 20,000,000 19,953,750
CSW Credit Inc., 7/14/1998 .............................................................. 21,975,000 21,931,197
Deutsche Bank Finance Corp., 7/10/1998 .................................................. 20,000,000 19,972,400
Dresdnerus Finance Corp., 7/2/1998 ...................................................... 50,000,000 49,992,333
Frontier Corp., 7/2/1998 ................................................................ 40,000,000 39,993,811
Gotham Funding Corp., 7/21/1998 ......................................................... 30,000,000 29,906,333
Gotham Funding Corp., 7/24/1998 ......................................................... 10,000,000 9,963,519
GTE Corp., 5.53%, 7/10/1998 ............................................................. 17,000,000 16,976,455
GTE Corp., 7/13/1998 .................................................................... 28,000,000 27,947,827
Lehman Brothers Holdings, 7/15/1998 ..................................................... 20,000,000 19,956,911
Madison Funding Corp., 7/13/1998 ........................................................ 18,000,000 17,966,400
Madison Funding Corp., 7/15/1998 ........................................................ 10,000,000 9,978,144
Merrill Lynch & Co., 8/26/1998 .......................................................... 10,000,000 9,914,133
Morgan Stanley, 5.616%, 11/13/1998 ...................................................... 25,000,000 25,000,000
Nomura Holding America Corp., 7/8/1998 .................................................. 25,000,000 24,972,340
Nomura Holding America Corp., 7/17/1998 ................................................. 15,000,000 14,962,400
Prudential Funding Corp., 7/10/1998 ..................................................... 40,000,000 39,946,000
Ranger Funding Corp., 7/7/1998 .......................................................... 15,000,000 14,985,875
Salomon Smith Barney Holdings Corp., 7/6/1998 ........................................... 35,000,000 34,973,118
Salomon Smith Barney Holdings Corp., 7/17/1998 .......................................... 14,000,000 13,965,778
Sanwa Business Credit Corp., 7/9/1998 ................................................... 15,000,000 14,981,267
Sanwa Business Credit Corp., 7/9/1998 ................................................... 15,000,000 14,981,233
Sanwa Business Credit Corp., 7/13/1998 .................................................. 20,000,000 19,962,667
Thunder Bay Funding Corp., 7/13/1998 .................................................... 15,000,000 14,972,200
</TABLE>
The accompanying notes are an integral part of the financial statements.
9 - Scudder Premium Money Market Shares
<PAGE>
<TABLE>
<CAPTION>
Principal Value ($)
Amount ($) (Note A)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Thunder Bay Funding Corp., 7/16/1998 .................................................... 25,000,000 24,941,667
Windmill Funding Corp., 7/17/1998 ....................................................... 20,000,000 19,950,400
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Total Commercial Paper (Cost $729,495,353) 729,495,353
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Certificates Of Deposit 22.3%
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Bank of America, 5.95%, 10/22/1998 ...................................................... 10,000,000 9,998,521
Bank of Nova Scotia, 5.793%, 10/1/1998 .................................................. 10,000,000 9,998,131
Bank of Nova Scotia, 5.715%, 10/30/1998 ................................................. 10,000,000 9,996,548
Bankers Trust Co., 5.97%, 8/28/1998 ..................................................... 10,000,000 9,999,620
Bankers Trust Co., Floating Rate Note, 5.57%, 5/14/1999* ................................ 15,000,000 14,991,230
Banque National de Paris YCD, 5.89%, 9/10/1998 .......................................... 15,000,000 14,999,870
Banque National de Paris, 5.9%, 10/21/1998 .............................................. 15,000,000 15,003,705
FCC National Bank, Bank Note, 5.55%, 7/20/1998 .......................................... 30,000,000 30,000,000
FCC National Bank, Floating Coupon Rate, 5.55%, 6/1/1999* ............................... 15,000,000 14,990,545
First National Bank of Maryland, 5.95%, 10/22/1998 ...................................... 14,850,000 14,852,916
Huntington National Bank, 5.625%, 1/12/1999 ............................................. 15,000,000 15,004,470
IBM Credit Corp., 5.4%, 1/27/1999 ....................................................... 30,000,000 29,983,775
Lasalle National Bank, 5.91%, 8/12/1998 ................................................. 10,000,000 10,000,220
Morgan Guaranty Trust Co., 5.87%, 8/6/1998 .............................................. 20,000,000 19,999,775
Societe Generale YCD, 5.91%, 9/4/1998 ................................................... 10,000,000 9,999,576
Svenska Handelsbanken, Bank Note, 5.536%, 6/2/1999* ..................................... 40,000,000 39,974,612
- ------------------------------------------------------------------------------------------------------------------------------
Total Certificates Of Deposit (Cost $269,793,514) 269,793,514
- ------------------------------------------------------------------------------------------------------------------------------
Short-Term Notes 17.6%
- ------------------------------------------------------------------------------------------------------------------------------
Bankers Trust Co., Floating Rate Note, 5.61%, 3/19/1999* ................................ 16,000,000 15,995,510
Bankers Trust Co., Floating Rate Note, 5.6%, 4/30/1999* ................................. 15,000,000 14,994,947
Chrysler Financial Corp., Medium Term Note, 6.24%, 11/2/1998 ............................ 10,000,000 10,019,710
Federal National Mortgage Association, 5.35%, Floating Rate Note, 12/14/1998* ........... 15,000,000 14,991,232
Goldman Sachs & Co., Floating Rate, 5.69%, 3/26/1999* ................................... 15,000,000 15,000,000
Household Finance Corp., Floating Rate Note, 5.637%, 3/9/1999* .......................... 25,000,000 25,000,000
IBM Credit Corp., Medium Term Note, 6.12%, 12/15/1998 ................................... 10,000,000 10,010,947
Lehman Brothers Holdings, Medium Term Note, 5.71%, 3/22/1999 ............................ 25,000,000 25,000,000
Merrill Lynch & Co., Medium Term Note, 5.61%, 4/14/1999 ................................. 30,000,000 30,000,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 - Scudder Premium Money Market Shares
<PAGE>
<TABLE>
<CAPTION>
Principal Value ($)
Amount ($) (Note A)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MMR Funding I, Variable Weekly, 5.63%, 9/1/2010* ........................................ 5,500,000 5,500,000
Sigma Finance Corp., Floating Rate Note, 5.63%, 4/27/1999* .............................. 25,000,000 25,000,000
Student Loan Marketing Assoc. YCD, 5.32%, 11/10/1998* ................................... 22,400,000 22,399,236
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Total Short-Term Notes (Cost $213,911,582) 213,911,582
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Total Investment Portfolio -- 100.0% (Cost $1,213,200,449) (a) 1,213,200,449
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Cost for federal income tax purposes is $1,213,200,449.
* Floating rate security; date shown is next interest rate change.
The accompanying notes are an integral part of the financial statements.
11 - Scudder Premium Money Market Shares
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of June 30, 1998 (Unaudited)
<TABLE>
<S> <C>
Assets
- ------------------------------------------------------------------------------------------------------------------------------
Investments, at value (cost $1,213,200,449) ............................. $1,213,200,449
Receivable for Fund shares sold ......................................... 87,096
Interest receivable ..................................................... 8,537,012
Reimbursement due from Adviser .......................................... 48,472
Other assets ............................................................ 43,316
-----------------
Total assets ............................................................ 1,221,916,345
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------
Dividends payable ....................................................... 5,571,448
Accrued management fee .................................................. 220,527
Other payables and accrued expenses ..................................... 588,362
-----------------
Total liabilities ....................................................... 6,380,337
----------------------------------------------------------------------------------------------
Net assets, at value $1,215,536,008
----------------------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------------------------------------
Managed Shares:
Net assets applicable to shares outstanding ........................... $ 323,034,844
Shares outstanding of capital stock, $.001 par value, 800,000,000
shares authorized ................................................... 323,034,844
Net Asset Value, offering and redemption price per share -----------------
(net assets / shares outstanding) .................................... $1.00
-----------------
Institutional Shares:
Net assets applicable to shares outstanding ........................... $ 385,457,449
Shares outstanding of capital stock, $.001 par value, 800,000,000
shares authorized ................................................... 385,457,449
Net Asset Value, offering and redemption price per share -----------------
(net assets / shares outstanding) .................................... $1.00
-----------------
Premium Money Market Shares:
Net assets applicable to shares outstanding ........................... $ 507,043,715
Shares outstanding of capital stock, $.001 par value, 2,000,000,000
shares authorized ................................................... 507,043,715
Net Asset Value, offering and redemption price per share -----------------
(net assets / shares outstanding) .................................... $1.00
-----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 - Scudder Premium Money Market Shares
<PAGE>
Statement of Operations
six months ended June 30, 1998 (Unaudited)
<TABLE>
<S> <C>
Investment Income
- -----------------------------------------------------------------------------------------------------------------------------
Interest ............................................................. $ 34,860,276
----------------
Expenses:
Management fee ....................................................... 1,536,264
Shareholders services ................................................ 529,485
Directors' fees and expenses ......................................... 10,605
Custodian and accounting fees ........................................ 123,307
Reports to shareholders .............................................. 29,479
Auditing ............................................................. 14,258
Legal ................................................................ 684
Registration fees .................................................... 266,340
Other ................................................................ (123,299)
----------------
Total expenses before reductions ..................................... 2,387,123
Expense reductions ................................................... (421,267)
----------------
Expenses, net ........................................................ 1,965,856
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Net investment income 32,894,420
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 32,894,420
-------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 - Scudder Premium Money Market Shares
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months
Ended
June 30, Year Ended
1998 December 31,
Increase (Decrease) in Net Assets (Unaudited) 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ................................ $ 32,894,420 $ 29,622,141
---------------- ----------------
Distributions to shareholders from:
Net investment income (Managed Shares) ............... (9,577,375) (16,811,273)
---------------- ----------------
Net investment income (Institutional Shares) ......... (11,162,862) (8,101,246)
---------------- ----------------
Net investment income (Premium Money Market Shares) .. (12,154,183) (4,709,622)
---------------- ----------------
Fund share transactions:
Managed Shares:
Proceeds from shares sold ............................ 830,044,840 1,604,556,971
Net asset value of shares issued to shareholders in
reinvestment of distributions ..................... 2,985,867 7,105,515
Cost of shares redeemed .............................. (878,908,528) (1,674,045,123)
---------------- ----------------
Net increase (decrease) in net assets from Fund share
transactions ...................................... (45,877,821) (62,382,637)
---------------- ----------------
Institutional Shares:
Proceeds from shares sold ............................ 618,828,034 697,521,385
Net asset value of shares issued to shareholders in
reinvestment of distributions ..................... 3,414,793 1,796,954
Cost of shares redeemed .............................. (574,610,951) (361,494,193)
---------------- ----------------
Net increase (decrease) in net assets from Fund share
transactions ...................................... 47,631,876 337,824,146
---------------- ----------------
Premium Money Market Shares:
Proceeds from shares sold ............................ 939,043,211 612,133,352
Net asset value of shares issued to shareholders in
reinvestment of distributions ..................... 9,138,266 2,900,558
Cost of shares redeemed .............................. (775,928,239) (280,244,979)
---------------- ----------------
Net increase (decrease) in net assets from Fund
share transactions ................................ 172,253,238 334,788,931
---------------- ----------------
Increase (decrease) in net assets .................... 174,007,293 610,230,440
Net assets at beginning of period .................... 1,041,528,715 431,298,275
---------------- ----------------
Net assets at end of period .......................... $1,215,536,008 $1,041,528,715
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 - Scudder Premium Money Market Shares
<PAGE>
Financial Highlights
The following table includes selected data for a share of the Managed Shares
class outstanding throughout each period and other performance information
derived from the financial statements.
Managed Shares (b)
<TABLE>
<CAPTION>
Six Months
Ended
June 30, 1998 Years Ended December 31,
(Unaudited) 1997 1996 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------
<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 ............................ .026 .051 .049 .054 .038 .028
Distributions from net investment income ......... (.026) (.051) (.049) (.054) (.038) (.028)
-------------------------------------------------------------------------
Net asset value, end of period ................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) (a) ............................. 2.63** 5.21 4.97 5.57 3.86 2.81
Ratios and Supplemental Data
Net assets, end of period ($ millions) ........... 323 369 431 372 367 324
Ratio of operating expenses, net to average
daily net assets (%) ........................... .42* .49 .55 .55 .55 .55
Ratio of operating expenses before expense
reductions to average daily net assets (%) ..... .47* .59 .62 .68 .68 .66
Ratio of net investment income to average daily
net assets (%) ................................. 5.25* 5.00 4.86 5.45 3.84 2.78
</TABLE>
(a) Total returns are higher due to maintenance of the Fund's expenses.
(b) Effective July 7, 1997, Scudder Money Market Series (formerly known as the
Managed Cash Fund) was divided into three classes, of which Scudder Money
Market Managed Shares is one. Shares of the Fund outstanding on such date
were redesignated as the Managed Shares of the Fund. The data set forth
above reflects the investment performance of the Fund prior to such
redesignation.
* Annualized
** Not annualized
15 - Scudder Premium Money Market Shares
<PAGE>
The following table includes selected data for a share of the Institutional
Shares class outstanding throughout the period and other performance information
derived from the financial statements.
Institutional Shares
<TABLE>
<CAPTION>
For the Period
August 4, 1997
(commencement
of sale of
Six Months Institutional
Ended Shares) to
June 30, 1998 December 31,
(Unaudited) 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
--------------------------------
Net asset value, beginning of period .................................................... $1.000 $1.000
--------------------------------
Net investment income ................................................................... .027 .022
Distributions from net investment income ................................................ (.027) (.022)
--------------------------------
Net asset value, end of period .......................................................... $1.000 $1.000
--------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) (a) .................................................................... 2.72** 2.25**
Ratios and Supplemental Data
Net assets, end of period ($ millions) .................................................. 385 338
Ratio of operating expenses, net to average daily net assets (%) ........................ .25* .26*
Ratio of operating expenses before expense reductions, to average daily net assets (%) .. .30* .31*
Ratio of net investment income to average daily net assets (%) .......................... 5.42* 5.39*
</TABLE>
(a) Total return is higher due to maintenance of the Fund's expenses.
* Annualized
** Not annualized
16 - Scudder Premium Money Market Shares
<PAGE>
The following table includes selected data for a share of the Premium Money
Market Shares class outstanding throughout the period and other performance
information derived from the financial statements.
Premium Money Market Shares
<TABLE>
<CAPTION>
For the Period
July 7, 1997
(commencement
Six Months of sale of
Ended Premium Shares)
June 30, 1998 to December 31,
(Unaudited) 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
--------------------------------
Net asset value, beginning of period ..................................................... $1.000 $1.000
--------------------------------
Net investment income .................................................................... .027 .026
Distributions from net investment income ................................................. (.027) (.026)
--------------------------------
Net asset value, end of period ........................................................... $1.000 $1.000
--------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) (a) ..................................................................... 2.68** 2.62**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ................................................... 507 335
Ratio of operating expenses, net to average daily net assets (%) ......................... .31* .38*
Ratio of operating expenses before expense reductions, to average daily net assets (%) ... .36* .43*
Ratio of net investment income to average daily net assets (%) ........................... 5.36* 5.50*
</TABLE>
(a) Total return is higher due to maintenance of the Fund's expenses.
* Annualized
** Not annualized
17 - Scudder Premium Money Market Shares
<PAGE>
Notes to Financial Statements (Unaudited)
A. Significant Accounting Policies
Scudder Fund, Inc. (the "Company") is an open-end diversified management
investment company comprised of three diversified money market portfolios:
Scudder Money Market Series (formerly known as Managed Cash Fund), Scudder Tax
Free Money Market Series (formerly known as Managed Tax Free Fund), and Scudder
Government Money Market Series (formerly known as Managed Government Securities
Fund) (collectively, the "Funds"). Scudder Tax Free Money Market Series and
Scudder Government Money Market Series offer two classes of shares,
Institutional Class and Managed Class and Scudder Money Market Series offers
three classes of shares, Institutional Class, Managed Class and Premium Money
Market Class.
Security Valuation. The Fund 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.
Federal Income Taxes. The Company's policy is to qualify the Fund as a regulated
investment company under Subchapter M of the Internal Revenue Code, as amended,
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.
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.
Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian,
receives delivery of the underlying securities, the amount of which at the time
of purchase and each subsequent business day is required to be maintained at
such a level that the market value, depending on the maturity of the repurchase
agreement, is equal to at least 100.5% of the repurchase price.
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.
B. Related Parties
Under the Investment Management Agreement (the "Management 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. The Adviser receives an investment management fee
at an annual rate of 0.25% of average daily net assets for the Fund. Also, the
Adviser has agreed to waive a portion of its investment management fee to the
extent necessary so that the total annualized investment management fee of the
Fund does not exceed 0.05%. For the six months ended June 30, 1998, the Adviser
did not impose fees of $337,266 and did impose fees of $1,198,998.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend-paying and shareholder service agent for the Fund. Each class
of the Fund has entered into a Transfer Agency and Service Agreement with SSC.
SSC receives account
18 - Scudder Premium Money Market Shares
<PAGE>
fees that vary according to the account size and type of account of the
shareholders of the respective classes. For the six months ended June 30, 1998
the following amounts were charged:
Managed Class $ 149,649
Institutional Class 7,500
Premium Class 95,542
----------
$ 252,691
==========
The Fund has special arrangements with certain banks, institutions and other
persons under which they receive compensation from the Fund and the Adviser for
performing shareholder servicing functions for their customers who own shares in
the Fund. The Adviser has agreed to reimburse the Fund for amounts payable by
the Scudder Managed Class Shares, such that the fees in basis points paid by the
class will be no greater than the total transfer agent fee payable to SSC. For
the six months ended June 30, 1998, the Adviser's reimbursement payable
aggregated $272,006.
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 for the Fund. For the six months
ended June 30, 1998, the amount charged to the Fund by SFAC aggregated $75,139,
of which $26,271 remains unpaid at June 30, 1998.
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 aggregated $234,885, an applicable portion of which
is included in accrued expenses of the Fund.
Other. Printing and postage expenses related to preparing and distributing
material such as shareholder reports, prospectuses and proxy materials to
current shareholders are charged to each class based on number of shareholder
accounts. For the six months ended June 30, 1998, the following amounts were
paid:
Managed Class $ 2,108
Institutional Class 2,707
Premium Class 3,479
----------
$ 8,294
==========
19 - Scudder Premium Money Market Shares
<PAGE>
Officers and Directors
Daniel Pierce*
President
Dr. Rosita P. Chang
Director; Professor of Finance,
University of Rhode Island
Edgar R. Fiedler
Director; Senior Fellow and
Economic Counsellor, The
Conference Board, Inc.
Peter B. Freeman
Director; Corporate Director and
Trustee
Dr. J. D. Hammond
Director; Dean, Smeal College of
Business Administration
Richard M. Hunt
Director; University Marshal
and Senior Lecturer, Harvard
University
Jerard K. Hartman*
Vice President
Kathryn L. Quirk*
Vice President
Frank J. Rachwalski, Jr.*
Vice President
David B. Wines*
Vice President
Thomas W. Joseph*
Vice President and Assistant
Secretary
Thomas F. McDonough*
Vice President, Secretary and
Treasurer
John R. Hebble*
Assistant Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
20 - Scudder Premium Money Market Shares
<PAGE>
Investment Products and Services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series --
Premium Shares*
Managed Shares*
Scudder Government Money Market Series --
Managed Shares*
Tax Free Money Market+
- ----------------------
Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series--
Managed Shares*
Scudder California Tax Free Money Fund**
Scudder New York Tax Free Money Fund**
Tax Free+
- ---------
Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund**
Scudder Massachusetts Limited Term Tax Free Fund**
Scudder Massachusetts Tax Free Fund**
Scudder New York Tax Free Fund**
Scudder Ohio Tax Free Fund**
Scudder Pennsylvania Tax Free Fund**
U.S. Income
- -----------
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder High Yield Bond Fund
Global Income
- -------------
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
Asset Allocation
- ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
U.S. Growth and Income
- ----------------------
Scudder Balanced Fund
Scudder Dividend & Growth Fund
Scudder Growth and Income 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 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
Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
Retirement Programs
- -------------------
Traditional IRA
Roth IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan**+++ +++
(a variable annuity)
Education Accounts
- ------------------
Education IRA
UGMA/UTMA
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder Global High Income Fund, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder Spain and Portugal Fund, Inc.
For complete information on any of the above Scudder funds, including management
fees and expenses, call or write for a free prospectus. Read it carefully before
you invest or send money. +++Funds within categories are listed in order from
expected least risk to most risk. Certain Scudder funds may not be available for
purchase or exchange. +A portion of the income from the tax-free funds may be
subject to federal, state, and local taxes. *A class of shares of the Fund.
**Not available in all states. ***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. #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.
21 - Scudder Premium Money Market Shares
<PAGE>
Scudder Solutions
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Investment Plan QuickBuy
A convenient investment program in which money is Lets you purchase Scudder fund shares
electronically debited from your bank account monthly to electronically, avoiding potential mailing delays;
regularly purchase fund shares and "dollar cost average" money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from a previously designated bank
fewer when it's higher, which can reduce your average account.
purchase price over time.*
Automatic Dividend Transfer Payroll Deduction and Direct Deposit
The most timely, reliable, and convenient way to Have all or part of your paycheck -- even government
purchase shares -- use distributions from one Scudder checks -- invested in up to four Scudder funds at
fund to purchase shares in another, automatically one time.
(accounts with identical registrations or the same
social security or tax identification number).
* Dollar cost averaging involves continuous investment in securities regardless of price
fluctuations and does not assure a profit or protect against loss in declining markets.
Investors should consider their ability to continue such a plan through periods of low price
levels.
Around-the-clock electronic account service and information, including some transactions:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- http://funds.scudder.com
1-800-343-2890
Scudder Electronic Account Services: Offering
Personalized account information, the ability to account information and transactions, interactive
exchange or redeem shares, and information on other worksheets, prospectuses and applications for all
Scudder funds and services via touchtone telephone. Scudder funds, plus your current asset allocation,
whenever you need them. Scudder's Site also
provides news about Scudder funds, retirement
planning information, and more.
Retirees and those who depend on investment proceeds for living expenses can enjoy these convenient,
timely, and reliable automated withdrawal programs:
- ------------------------------------------------------------------------------------------------------------------------------
Automatic Withdrawal Plan QuickSell
You designate the bank account, determine the schedule Provides speedy access to your money by
(as frequently as once a month) and amount of the electronically crediting your redemption proceeds
redemptions, and Scudder does the rest. to the bank account you previously designated.
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
- ------------------------------------------------------------------------------------------------------------------------------
22 - Scudder Premium Money Market Shares
<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
500 no-load funds from well-known companies--with no Personal Counsel from Scudder(SM)
transaction fees or commissions. Scudder
shareholders can take advantage of a Scudder Developed for investors who prefer the benefits of no-load
Brokerage account already reserved for them, with funds but want ongoing professional assistance in
no minimum investment. For information about managing a portfolio. Personal Counsel(SM) is a highly
Scudder Brokerage Services, call 1-800-700-0820. customized, fee-based asset management service for
individuals investing $100,000 or more.
Fund Folio funds held less than six months will be charged a fee for redemptions. You can buy
shares directly from the fund itself or its principal underwriter or distributor without
paying this fee. Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061.
Member SIPC.
Personal Counsel From Scudder(SM) and Personal Counsel(SM) are service marks of and represent a
program offered by Scudder Investor Services, Inc., Adviser.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
Additional Information on How to Contact Scudder:
- ------------------------------------------------------------------------------------------------------------------------------
For existing account services and transactions Please address all written correspondence to
Scudder Investor Relations -- 1-800-225-5163 The Scudder Funds
P.O. Box 2291
For establishing 401(k) and 403(b) plans Boston, Massachusetts
Scudder Defined Contribution Services -- 02107-2291
1-800-323-6105
Or Stop by a Scudder Investor Center
For information about The Scudder Funds, including Many shareholders enjoy the personal, one-on-one service of
additional applications and prospectuses, or for the Scudder Investor Centers. Check for an Investor Center near
answers to investment questions you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470 Boca Raton Chicago San Francisco
[email protected] Boston New York
</TABLE>
23 - Scudder Premium Money Market Shares
<PAGE>
About the Fund's Adviser
Scudder Kemper Investments, Inc., is one of the largest and most experienced
investment management organizations worldwide, managing more than $200 billion
in assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts. It is one of the ten largest mutual fund companies in the
United States.
Scudder Kemper Investments has a rich heritage of innovation, integrity, and
client-focused service. In 1997, Scudder, Stevens & Clark, Inc., founded 79
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Group. As a result, Zurich's subsidiary, Zurich Kemper Investments,
Inc., with 50 years of mutual fund and investment management experience, was
combined with Scudder. Headquartered in New York, Scudder Kemper Investments
offers a full range of investment counsel and asset management capabilities,
based on a combination of proprietary research and disciplined, long-term
investment strategies. With its global investment resources and perspective, the
firm seeks opportunities in markets throughout the world to meet the needs of
investors.
Scudder Kemper Investments, Inc., the global asset management firm, is a member
of the Zurich Group. The Zurich Group is an internationally recognized leader in
financial services, including property/casualty and life insurance, reinsurance,
and asset management.
Premium Money Market Shares are not insured or guaranteed by the U.S.
Government. The Fund seeks to maintain a constant net asset value of $1.00 per
share, but there can be no assurance that the stable net asset value will be
maintained.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
SCUDDER
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