Scudder
Institutional Shares
Scudder Money Market Series
Scudder Tax Free Money Market Series
Scudder Government Money Market Series
345 Park Avenue, New York, New York 10154
(800) 854-8525
Investment Manager
Scudder Kemper Investments, 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
Dechert Price & Rhoads
Boston, Massachusetts 02109
-----------------
Scudder Institutional 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 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.
Scudder
Institutional Shares
Scudder Money
Market Series
Scudder Tax Free Money
Market Series
Scudder Government
Money Market Series
Annual Report
December 31, 1997
<PAGE>
<TABLE>
<CAPTION>
Board of Directors
<S> <C>
DR. ROSITA P. CHANG Director; Professor of Finance, University of Rhode Island
EDGAR R. FIEDLER(1) (2) (3) Director; Senior Fellow and Economic Counsellor, The Conference
Board, Inc.
PETER B. FREEMAN(2) (3) Director; Corporate Director and Trustee
DR. J. D. HAMMOND Director; Dean, Smeal College of Business Administration,
Pennsylvania State University
RICHARD M. HUNT Director; University Marshal and Senior Lecturer, Harvard University
DANIEL PIERCE(1) President
(1)Member of Executive Committee
(2)Member of Nominating Committee
(3)Member of Audit Committee
- --------------------------------------------------------------------------------
Officers
DANIEL PIERCE President
K. SUE COTE Vice President
JERARD K. HARTMAN Vice President
THOMAS W. JOSEPH Vice President and Assistant Secretary
THOMAS F. McDONOUGH Vice President and Secretary
KATHRYN L. QUIRK Vice President
DAVID B. WINES Vice President
</TABLE>
2
<PAGE>
Dear Shareholder:
Scudder Institutional Shares is a class of shares in three different money
market mutual fund portfolios: Scudder Money Market Series, Scudder Government
Money Market Series, and Scudder Tax Free Money Market Series. Each of these
money market portfolios seeks to provide a high level of current income while
preserving capital and maintaining liquidity.
All three portfolios seek to maintain a net asset value of $1.00, and have
done so since their inception. (There is no guarantee, of course, that each will
maintain stable net asset values.)
Please see the following pages for financial statements as of December 31,
1997, as well as a list of each portfolio's investments.
If you have questions concerning any series of Scudder Institutional
Shares, please call toll free (800) 854-8525 from any continental state.
/s/Daniel Pierce
Daniel Pierce
Chairman
3
<PAGE>
Scudder Institutional Shares/Money Market Series
Investment Portfolio
December 31, 1997
<TABLE>
<CAPTION>
Principal Value ($)
Amount ($) (Note A)
- ------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreements 21.6%
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreement with Donaldson, Lufkin & Jenrette dated 12/31/97 at 6.5%,
to be repurchased at $100,036,111 on 1/2/98, collateralized by a $50,000,000
U.S. Treasury Note, 6.75%, 5/31/99 and a $48,878,000 U.S. Treasury Note,
6.25%, 3/31/99 ........................................................................ 100,000,000 100,000,000
Repurchase Agreement with Salomon Brothers dated 12/31/97 at 6.7%, to be
repurchased at $75,027,917 on 1/2/98, collateralized by $79,830,000 U.S.
Treasury Bills, 10/15/98 .............................................................. 75,000,000 75,000,000
Repurchase Agreement with State Street Bank and Trust Company dated 12/31/97
at 6%, to be repurchased at $49,586,523 on 1/2/98, collateralized by a
$39,610,000 U.S. Treasury Bond, 8.125%, 8/15/19 ....................................... 49,570,000 49,570,000
- ------------------------------------------------------------------------------------------------------------------------------
Total Repurchase Agreements (Cost $224,570,000) 224,570,000
- ------------------------------------------------------------------------------------------------------------------------------
Commercial Paper 42.0%
- ------------------------------------------------------------------------------------------------------------------------------
AVCO Financial, 1/14/98 ................................................................. 10,000,000 9,980,139
American General Finance Corp., 5.812%, 3/18/98 ......................................... 40,000,000 40,000,000
Associates Corp NA, 3/24/98 ............................................................. 40,000,000 39,482,489
Bank of Montreal, 1/22/98 ............................................................... 30,000,000 29,903,663
Bank of Nova Scotia, 2/3/98 ............................................................. 25,000,000 24,872,469
Bankers Trust, 5.97%, 8/28/98 ........................................................... 10,000,000 9,998,436
Barclay's Bank PLC BA, 2/9/98 ........................................................... 8,000,000 7,952,247
Bell Atlantic Financial Services, 1/27/98 ............................................... 40,000,000 39,831,000
Ciesco, L.P., 2/23/98 ................................................................... 20,000,000 19,833,639
Corporate Asset Fund, 1/14/98 ........................................................... 20,000,000 19,959,700
Dai Ichi Kangyo Bank, 1/27/98 ........................................................... 10,000,000 9,959,700
Dai Ichi Kangyo NY Bank, 1/28/98 ........................................................ 19,000,000 18,919,060
FCAR Owner Trust I, 1/5/98 .............................................................. 20,000,000 19,987,511
Ford Credit Receivables, 1/27/98 ........................................................ 10,000,000 9,960,206
Ford Motor Credit Co.,1/6/98 ............................................................ 10,000,000 9,992,194
General Electric Capital Corp., 4/15/98 ................................................. 20,000,000 19,673,556
General Electric Capital, 1/8/98 ........................................................ 20,000,000 19,978,611
New Center Asset Trust, 2/18/98 ......................................................... 10,000,000 9,924,000
New Center Asset Trust, 2/25/98 ......................................................... 20,000,000 19,830,722
Prudential Funding, 3/26/98 ............................................................. 20,000,000 19,741,933
Public Service Co. of Colorado, 1/15/98 ................................................. 8,000,000 7,982,329
Republic of New York, 1/6/98 ............................................................ 20,000,000 19,984,618
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Scudder Institutional Shares/Money Market Series
<TABLE>
<CAPTION>
Principal Value ($)
Amount ($) (Note A)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Royal Bank Canada, 2/11/98 ............................................................. 8,900,000 8,844,150
- ------------------------------------------------------------------------------------------------------------------------------
Total Commercial Paper (Cost $436,592,372) 436,592,372
- ------------------------------------------------------------------------------------------------------------------------------
Certificates of Deposit 22.4%
- ------------------------------------------------------------------------------------------------------------------------------
Bank of America, 5.95%, 10/22/98 ........................................................ 10,000,000 9,996,151
Bank of Nova Scotia, 5.793%, 10/1/98 .................................................... 10,000,000 9,994,453
Bank of Nova Scotia, 5.715%, 10/30/98 ................................................... 10,000,000 9,991,384
Bankers Trust Company, 6.24%, 4/2/98 .................................................... 4,500,000 4,503,400
Banque National de Paris, 5.89%, 9/10/98 ................................................ 15,000,000 14,999,537
Banque National de Paris, 5.9%, 10/21/98 ................................................ 15,000,000 15,009,692
Canadian Imperial, 5.81%, 3/11/98 ....................................................... 25,000,000 25,001,889
Daichi Kangyo Bank, 5.78%, 1/27/98 ...................................................... 10,000,000 10,000,563
First National Bank of Boston, 5.61%, 1/5/98 ............................................ 25,000,000 25,000,000
Lasalle National Bank, 5.91%, 8/12/98 ................................................... 10,000,000 10,001,169
Morgan Guaranty Trust Co., 5.87%, 8/6/98 ................................................ 20,000,000 19,998,644
National Westminster Bank, 5.855%, 8/7/98 ............................................... 20,000,000 19,997,143
Societe Generale, 5.75%, 1/5/98 ......................................................... 20,000,000 19,999,754
Societe Generale, 5.8%, 1/29/98 ......................................................... 19,000,000 19,000,000
Societe Generale, 5.91%, 9/4/98 ......................................................... 10,000,000 9,998,396
Sumitomo Bank Ltd., 5.63%, 1/8/98 ....................................................... 9,000,000 9,000,017
- ------------------------------------------------------------------------------------------------------------------------------
Total Certificates of Deposit (Cost $232,492,192) 232,492,192
- ------------------------------------------------------------------------------------------------------------------------------
U. S. Government Agency Obligations 1.4%
- ------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assoc., 5.51%, 3/14/98*
(Cost $14,981,673) .................................................................... 15,000,000 14,981,673
Short-Term Notes 12.6%
- ------------------------------------------------------------------------------------------------------------------------------
American Express Centurion Bank, 5.6419%, 1/24/98* ...................................... 10,000,000 10,000,000
Bank of America NT&SA, 5.87%, 1/5/98 .................................................... 15,000,000 15,000,317
Bank One, Columbus, N.A., 5.50%, 1/6/98* ................................................ 20,000,000 19,995,660
Bankers Trust Co. Medium Term Note, 5.71%, 1/1/98* ...................................... 25,000,000 24,999,389
First National Bank of Maryland, 5.95%, 10/22/98 ........................................ 14,850,000 14,857,587
IBM Credit Corp, 5.9%, 2/15/98 .......................................................... 10,000,000 10,022,812
Lockheed Martin Corp., 6.625%, 6/15/98 .................................................. 8,000,000 8,025,859
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Scudder Institutional Shares/Money Market Series
<TABLE>
<CAPTION>
Principal Value ($)
Amount ($) (Note A)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MMR Funding I, 5.18%, 1/1/98* ........................................................... 5,500,000 5,500,000
Student Loan Marketing Assoc., 5.619%, 1/6/98* .......................................... 22,400,000 22,398,187
- ------------------------------------------------------------------------------------------------------------------------------
Total Short-Term Notes (Cost $130,799,811) 130,799,811
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $1,039,436,048) (a) 1,039,436,048
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Cost for federal income tax purposes is $1,039,436,048.
* Floating rate security; date shown is next interest rate change.
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Scudder Institutional Shares/Tax Free Money Market Series
Investment Portfolio
December 31, 1997
<TABLE>
<CAPTION>
Credit
Principal Rating (b) Value ($)
Amount ($) (Unaudited) (Note A)
- ------------------------------------------------------------------------------------------------------------------------------
Short-Term Municipal Investments 100.0%
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alabama
Stevenson, AL, Industrial Development Board, Daily Demand Note, 5%, 11/1/16 .... 1,000,000 A1+ 1,000,000
Alaska
Alaska Housing Finance Corp., General Mortgage Revenue, Series 1991-A, Weekly
Demand Note, 3.8%, 6/1/26 .................................................... 3,000,000 A1+ 3,000,000
Valdez, AK, Marine Terminal Revenue, ARCO Transportation Alaska, Inc. Project,
Series 1994, TECP, 3.75%, 2/17/98 ............................................ 2,000,000 MIG1 2,000,000
Valdez, AK, Marine Terminal Revenue, Exxon Pipeline Project B, Daily Demand
Note, 5%, 12/1/33 ............................................................ 2,700,000 A1+ 2,700,000
Valdez, AK, Marine Terminal Revenue, Series 1993 A, Daily Demand Note, 5%,
12/1/33 ...................................................................... 4,500,000 A1+ 4,500,000
Arizona
Apache County, AZ, Industrial Development Revenue Tuscan Electric Co.,
Springerville Project, Series 1985 A, Weekly Demand Note, 3.75%, 12/1/20 ..... 500,000 A1+ 500,000
Maricopa County, AZ, Pollution Control Authority, Daily Demand Note,
4.8%, 5/1/29 ................................................................. 800,000 A1+ 800,000
Maricopa County, AZ, Pollution Control Authority, Palos Verde Project, Series
1985 F, TECP, 3.8%, 1/20/98 .................................................. 2,100,000 A1 2,100,000
Pima County Industrial Development Authority, Series 1985, SFE Technologies,
Weekly Demand Note, 4.65%, 12/1/05 ........................................... 1,500,000 VMIG1 1,500,000
Pinal County, AZ, Pollution Control Revenue, Magma Copper, Series 1984, Daily
Demand Note, 4.95%, 12/1/09 .................................................. 2,600,000 A1+ 2,600,000
Scottsdale, AZ, Industrial Development Authority, Hospital Revenue, Scottsdale
Hospital, Weekly Demand Note, 3.65%, 9/1/22 .................................. 3,000,000 A1+ 3,000,000
California
City of Riverside, CA, Countrywood Apartments, Multi-Family Revenue,
Series 1985 D, Weekly Demand Bonds, 4.25%, 11/1/30 ........................... 1,500,000 A1 1,500,000
Corona Multi-Family Housing Revenue, Weekly Demand Note, 4.25%, 2/1/05 ......... 1,900,000 A1 1,900,000
Huntington Beach, CA, Multi-Family Housing Revenue, River Meadows Apartments,
Series B, Weekly Demand Bonds, 3.8%, 12/1/05 ................................. 4,800,000 A1+ 4,800,000
Kern County, CA, Board of Education, Tax and Revenue Anticipation Notes,
Series 1998, 4.5%, 7/7/98 ................................................... 2,000,000 SP1+ 2,006,077
Los Angeles County, CA, Tax and Revenue Anticipation Notes, Series
1997 A, 4.5%, 6/30/98 ........................................................ 9,000,000 SP1+ 9,032,538
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Scudder Institutional Shares/Tax Free Money Market Series
<TABLE>
<CAPTION>
Credit
Principal Rating (b) Value ($)
Amount ($) (Unaudited) (Note A)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
San Marcos, CA, Redevelopment Agency, Multi-Family Rental Housing Agency,
Weekly Demand Bonds, 4.25%, 6/1/05 ........................................... 1,900,000 A1 1,900,000
Colorado
Clear Creek County, CO, Colorado Counties Financing Program, Series 1988,
Weekly Demand Note, 3.65%, 6/1/98 ............................................ 60,000 A1+ 60,000
Moffat County, Colorado Pollution Control, Pacific Projects, Daily Demand Note,
5.1%, 5/1/13 ................................................................. 2,650,000 VMIG1 2,650,000
Connecticut
Hartford Redevelopment Agency, Underwood Towers Project, Weekly Demand Note,
3.95%, 6/1/20 ................................................................ 2,000,000 A1+ 2,000,000
District Of Columbia
District of Columbia, General Obligation, Series B1, Daily Demand Note, 4.99%,
6/1/03 ....................................................................... 9,500,000 A1+ 9,500,000
District of Columbia, Transportation Authority, 4.5%, 9/30/98 .................. 1,500,000 SP1+ 1,506,770
Florida
Dade County, FL, Water and Sewer System Revenue, Series 1994, Weekly Demand
Note, 3.65%, 10/5/22 ......................................................... 2,000,000 A1+ 2,000,000
Jacksonville, FL, Pollution Control Authority, Floriod Power and Light, TECP,
3.65%, 2/11/98 ............................................................... 2,000,000 A1 2,000,000
Pinellas, FL, Educational Facilities Authority, Refunding Pooled Loan,
Series 1985, TECP, 3.75%, 2/23/98 ............................................ 2,000,000 A1 2,000,000
University of Northern Florida Capital Improvement Revenue, Weekly Demand Note,
4.2%, 11/1/24 ................................................................ 2,000,000 VMIG1 2,000,000
Georgia
Burke County, GA, Development Authority, Pollution Control Georgia Power,
Series 1995-2, Weekly Demand Note, 4.8%, 4/1/25 .............................. 6,700,000 VMIG1 6,700,000
Burke County, GA, Development Authority, Pollution Control Revenue, Weekly
Demand Bonds, 3.65%, 1/1/16 .................................................. 1,200,000 A1+ 1,200,000
Burke County, GA, Pollution Control Revenue, Ogelthorpe Power, Vogtle Project,
Series 1994-A, Weekly Demand Note, 3.65%, 1/1/19 ............................. 1,000,000 A1+ 1,000,000
DeKalb Private Hospital Authority, Egleston Children's Hospital at Emory
University, 1994 Series B, Weekly Demand Note, 3.7%, 3/1/24 .................. 1,400,000 A1+ 1,400,000
Georgia Pooled Hospitals Equipment Loan Program, Series 1991, Daily
Demand Note, 4.95%, 3/1/01 ................................................... 1,748,000 A1+ 1,748,000
Turner County, GA, Industrial Development Revenue Coats & Clark Inc.
Series 1984, VRDN, 4.1%, 10/1/98 ............................................. 800,000 A1+ 800,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Scudder Institutional Shares/Tax Free Money Market Series
<TABLE>
<CAPTION>
Credit
Principal Rating (b) Value ($)
Amount ($) (Unaudited) (Note A)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Idaho
Idaho Health Facilities Authority Revenue, St. Lukes Regional Medical Center
Project, Series 1995, Daily Demand Note, 5.1%, 5/1/22 ........................ 3,820,000 VMIG1 3,820,000
Idaho Tax Anticipation Notes, Series 1997, 4.625%, 6/30/98 ..................... 1,000,000 MIG1 1,003,715
Illinois
Chicago, Illinois O'Hare International Airport, General Airport Second Lien,
Series A, Weekly Demand Note, 3.7%, 1/1/15 ................................... 1,500,000 A1+ 1,500,000
Illinois Educational Facilities, Pooled Financing Program, TECP, 3.75%,
2/25/98 ...................................................................... 2,500,000 A1+ 2,500,000
Illinois Educational Facilities Authority, University Pooled Finance Program,
Weekly Demand Note, 3.8%, 12/1/05 ............................................ 1,770,000 VMIG1 1,770,000
Illinois Health Facilities Authority, Rush Presbyterian St. Lukes Hospital,
Series 1989 A, TECP, 3.75%, 3/23/98 .......................................... 1,500,000 A1+ 1,500,000
Indiana
Indiana Bond Bank, Advance Funding Notes, Series 1997 A-2, 4.25%, 1/21/98 ...... 1,000,000 MIG1 1,000,291
Iowa
Iowa Schools, Cash Anticipation Program, Series 1997 A, 4.5%, 6/26/98 .......... 2,000,000 SP1+ 2,005,798
Kansas
Burlington, KS, Power and Light Pollution Control Revenue, TECP, 3.75%,
3/3/98 ....................................................................... 2,000,000 A1 2,000,000
Kentucky
Mayfield, KY, Multi-City Lease Revenue Kentucky League of Cities Funding Trust,
Weekly Demand Note, Series 1996, 3.9%, 7/1/26 ................................ 2,000,000 VMIG1 2,000,000
Louisiana
Louisiana Public Facilities Authority Hospital Revenue, Willis Knighton Medical
Center, Weekly Demand Note, 3.7%, 9/1/25 ..................................... 3,000,000 VMIG1 3,000,000
West Baton Rouge, Louisiana Industrial District #3, Series 1987, TECP, 3.8%,
1/21/98 ...................................................................... 1,400,000 P1 1,400,000
Massachusetts
Massachusetts Bay Transportation Authority, Series 1997 B, 4.5%, 9/4/98 ........ 2,000,000 MIG2 2,008,169
Massachusetts Health & Educational Facilities Authority, Series D, Weekly
Demand Note, 5%, 1/1/35 ...................................................... 6,800,000 A1+ 6,800,000
Minnesota
Southern Minnesota Municipal Power Agency, Power Supply System, TECP,
Series B, 3.7%, 3/11/98 ...................................................... 800,000 P1 800,000
Missouri
Columbia, MO, Special Obligation, Weekly Demand Note, 3.7%, 6/1/08 ............. 2,700,000 VMIG1 2,700,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Scudder Institutional Shares/Tax Free Money Market Series
<TABLE>
<CAPTION>
Credit
Principal Rating (b) Value ($)
Amount ($) (Unaudited) (Note A)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Missouri Health & Educational Facilities Authority, VRDN, 5%, 9/1/30 ........... 5,000,000 VMIG1 5,000,000
St. Louis County, MO, Industrial Development Authority, Kirkwood Project,
Series 1985, Weekly Demand Note, 4.275%, 12/1/15 ............................. 1,000,000 P1 1,000,000
Montana
Montana State, Tax and Revenue Anticipation Notes, Series 1997 C, 4.5%,
6/30/98 ...................................................................... 1,500,000 SP1+ 1,504,897
Nebraska
Nebraska Public Power District (All Districts), Series 1996, TECP, 3.7%,
3/10/98 ...................................................................... 2,060,000 P1 2,060,000
New Mexico
Albuquerque, NM, Gross Receipts/Lodgers Tax, Series 1991, Weekly Demand Note,
3.7%, 7/1/22 ................................................................. 2,000,000 A1+ 2,000,000
Belen Industrial Revenue Refunding Bond, United Desiccants Project, Weekly
Demand Note, 4%, 4/1/00 ...................................................... 700,000 SK 700,000
New York
Municipal Assistance Corp for New York City, Series K1, Weekly Demand Note,
3.55%, 7/1/08 ................................................................ 1,000,000 A1+ 1,000,000
New York City, NY, General Obligation Unlimited, Daily Demand Note, 5%,
8/15/05 ...................................................................... 7,100,000 A1+ 7,100,000
New York City, NY, Municipal Water Finance Authority, Series C, Daily Demand
Note, 5.1%, 6/15/23 .......................................................... 5,000,000 VMIG1 5,000,000
New York State Energy Research & Development Authority, Pollution Control
Revenue, Orange & Rockland Utilities Project, Weekly Demand Note, 3.55%,
8/1/15 ....................................................................... 1,000,000 VMIG1 1,000,000
Suffolk County, NY, TAN, 4.25%, 8/13/98 ........................................ 8,000,000 SP1+ 8,030,240
North Carolina
North Carolina Medical Care Common Hospital Revenues, Series 1985, Weekly
Demand Note, 3.75%, 12/1/25 .................................................. 8,100,000 A1+ 8,100,000
North Dakota
Grand Forks, ND, Hospital Facilities Revenue, Daily Demand Note, 5.1%,
12/1/16 ...................................................................... 2,400,000 VMIG1 2,400,000
Ohio
Cuyahoga County, OH, Health & Education, University Hospital of Cleveland,
Daily Demand Note, 5.2%, 1/1/16 .............................................. 3,800,000 VMIG1 3,800,000
Ohio State, Air Quality Development Authority Revenue Cincinnati Gas and
Electric, Daily Demand Note, 5%, 9/1/30 ...................................... 2,400,000 A1+ 2,400,000
Ohio State University Revenue, General Receipts Bonds, Weekly Variable Rate
Demand Bond, Series 1986 B, 4.05%, 12/1/06 ................................... 2,900,000 A1+ 2,900,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Scudder Institutional Shares/Tax Free Money Market Series
<TABLE>
<CAPTION>
Credit
Principal Rating (b) Value ($)
Amount ($) (Unaudited) (Note A)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Oregon
Oregon General Obligation, Series 1973-G, Weekly Demand Note, 3.65%, 12/1/18 ... 1,900,000 VMIG1 1,900,000
Pennsylvania
Delaware Valley, PA, Regional Finance Authority, Weekly Demand Note, 3.65%,
12/1/20 ...................................................................... 1,600,000 VMIG1 1,600,000
Elk County Pennsylvania Industrial Development Authority, Series 1989, VRDN,
4.415%, 3/1/04 ............................................................... 1,750,000 SK 1,750,000
Emmaus, PA, General Authority Local Government, Revenue Bond Pool Program,
Weekly Demand Note, 3.8%, 3/1/24 ............................................. 1,000,000 A1+ 1,000,000
Philadelphia, PA, Tax and Revenue Anticipation Note, Series 1997A, 4.5%,
6/30/98 ...................................................................... 2,000,000 MIG1 2,004,741
Philadelphia, PA, School District, Tax and Revenue Anticipation Notes,
Series 1993A, 4.5%, 7/1/98 ................................................... 2,000,000 SK 2,005,939
Temple University of the Commonwealth, PA, Higher Education, Series 1997,
4.75%, 5/18/98 ............................................................... 2,000,000 SP1+ 2,006,135
South Carolina
South Carolina Public Service Authority Revenue, Weekly Demand Note, 4.25%,
1/1/23 ....................................................................... 2,000,000 A1+ 2,000,000
Tennessee
Clarksville, TN, Public Building Authority Pooled Financing, Series 1990,
Weekly Demand Note, 3.65%, 7/1/13 ............................................ 2,585,000 VMIG1 2,585,000
Franklin, TN, Industrial Development Revenue, Franklin Oaks Apartments, Weekly
Demand Note, Series 1985, 4.15%, 12/15/21 .................................... 5,500,000 VMIG1 5,500,000
Metropolitan Nashville Airport Authority, TN, Special Facilities Revenue,
American Airlines, Variable Rate Demand Note, 5%, 10/1/12 .................... 1,500,000 A1+ 1,500,000
Texas
Austin, TX, Utility Systems Revenue, TECP, 3.75%, 3/24/98 ...................... 3,000,000 A1+ 3,000,000
Grapevine, TX, Industrial Development Authority Corp., Series B1, Daily Demand
Note, 5%, 12/1/24 ............................................................ 600,000 P1 600,000
Harris County, TX, Health Facilities Authority, St. Lukes, Daily Demand Note,
5%, 2/15/27 .................................................................. 10,000,000 A1+ 10,000,000
Harris County, TX, Pollution Control Revenue (Exxon Project) 1984 Series A,
Daily Demand Note, 5%, 3/1/24 ................................................ 1,900,000 A1+ 1,900,000
Harris County, TX, Tax Anticipation Note, Series 1997, 4.25%, 2/27/98 .......... 1,000,000 MIG1 1,000,808
Lone Star, TX, Airport Improvement Authority, Daily Demand Note, Series
1995 A-3, 5%, 12/1/14 ........................................................ 1,300,000 VMIG1 1,300,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
Scudder Institutional Shares/Tax Free Money Market Series
<TABLE>
<CAPTION>
Credit
Principal Rating (b) Value ($)
Amount ($) (Unaudited) (Note A)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Port Development Corp., TX, Marine Terminal Refunding Revenue, Stolt Terminals,
Series 1989, Weekly Demand Note, 3.7%, 1/15/14 ............................... 1,500,000 A+ 1,500,000
San Antonio, TX, Electric & Gas City Public Services, TECP, 3.75%, 1/14/98 ..... 1,500,000 P1 1,499,929
San Antonio, TX, Electric & Gas Public Services, Variable Rate Note, 3.8%,
2/1/20 ....................................................................... 2,700,000 A1+ 2,700,000
San Antonio, TX, Industrial Development Authority, River Center Associates
Project, Weekly Demand Note, 4.25%, 12/1/12 .................................. 2,800,000 SK 2,800,000
State of Texas, General Obligation, Veterans Housing Assistance Refunding
Bonds, Series 1995, Weekly Demand Note, 3.65%, 12/1/16 ....................... 2,400,000 A1+ 2,400,000
State of Texas, Tax and Revenue Anticipation Note, Series 1998A, 4.75%,
8/31/98 ...................................................................... 10,000,000 MIG1 10,063,440
Texas State Water Development Board, Weekly Demand Note, 4.9%, 3/1/15 .......... 7,900,000 A1+ 7,900,000
Utah
Intermountain Power Agency, Power Supply Revenue Bonds, Series 1985F, TECP,
3.7%, 2/11/98 ................................................................ 1,700,000 A1+ 1,700,000
Salt Lake City, UT, Pollution Control Revenue, British Petroleum Station
Project, Series 1994 B, Daily Demand Note, 4.9%, 8/1/07 ...................... 4,000,000 P1 4,000,000
State of Utah, General Obligation, Highway, TECP, Series 1997 B, 3.75%,
2/4/98 ....................................................................... 2,000,000 A1+ 2,000,000
Vermont
Vermont Industrial Development Authority, Mount Snow, Limited Series 1904,
VRDN, 4.415%, 4/1/99 ......................................................... 435,000 SK 435,000
Vermont Industrial Development, Vermont Marble Company, Series 1984, VRDN,
4.415%, 12/1/04 .............................................................. 3,575,000 SK 3,575,000
Vermont Student Assistance Corporation, Student Loan Revenue, VRDN, 3.8%,
1/1/04 ....................................................................... 4,915,000 VMIG1 4,915,000
Washington
State of Washington Various Purpose General Obligation, Series 1996 B, Weekly
Demand Note, 3.6%, 6/1/20 .................................................... 2,400,000 A1+ 2,400,000
Washington Healthcare Facilities Authority Revenue, Fred Hutchinson Cancer
Center, Variable Rate Demand Note, Series 1996, 5.1%, 1/1/23 ................. 7,800,000 VMIG1 7,800,000
Washington Motor Vehicle Fuel Tax, General Obligation, Series 1996, 5%,
7/1/98 ....................................................................... 1,000,000 SK 1,005,610
Washington Public Power Supply System, Projects #1 and #3, Refunding Revenue,
Series 1993-1A1, Weekly Demand Note, 3.75%, 7/1/18 ........................... 1,475,000 VMIG1 1,475,000
Washington State Public Power Supply System, Nuclear Project #1, 1993
Series 1A-1, Weekly Demand Note, 3.65%, 7/1/17 ............................... 4,700,000 A1 4,700,000
Wisconsin
Wausau, WI, Pollution Control Revenue, Minnesota Mining and Manufacturing,
Series 1982, Weekly Demand Notes, 4.428%, 8/1/17 ............................. 500,000 AAA 500,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
Scudder Institutional Shares/Tax Free Money Market Series
<TABLE>
<CAPTION>
Credit
Principal Rating (b) Value ($)
Amount ($) (Unaudited) (Note A)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Wyoming
Uinta County, WY, Pollution Control, Chevron Series 1992, Series Demand Note,
5%, 12/1/22 .................................................................. 4,500,000 VMIG1 4,500,000
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $280,728,097) (a) 280,728,097
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Cost for federal income tax purposes was $280,728,097.
(b) Credit ratings (unaudited) shown are either by Moody's Investors Service,
Inc., Standard & Poor's Corporation or Scudder Kemper
Moody's Standard & Poor's
P1 A1/A1+ Commercial paper of the highest quality.
MIG1
MIG2 SP1/SP1+ Short-term tax-exempt instrument of the
best quality with strong protection.
VMIG1 Short-term tax-exempt variable rate demand
instrument of the best quality with
strong protection.
Abbreviations used in the statement:
TECP Tax Exempt Commercial Paper VRDN Variable Rate Demand Note
GO General Obligation RAN Revenue Anticipation Note
TAN Tax Anticipation Note TRAN Tax Revenue Anticipation Note
SK These securities are not rated by either Moody's or Standard & Poor's.
Scudder Kemper has determined that these securities are of comparable
quality to rated acceptable notes on a cash flow basis and are of
appropriate credit for the standards required by the Fund's investment
objective.
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
Scudder Insitutional Shares/Government Money Market Series
Investment Portfolio
December 31, 1997
<TABLE>
<CAPTION>
Principal Value ($)
Amount ($) (Note A)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements 9.6%
- ------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreement with State Street Bank and Trust Company dated 12/31/97 at 6%,
to be repurchased at $8,073,690 on 1/2/98, collateralized by a $8,245,000 U.S. ------------
Treasury Note, 5.625%, 12/31/99 (Cost $8,071,000) ..................................... 8,071,000 8,071,000
------------
U.S. Government Agency Obligations 90.4%
- ------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Bank, Discount Note, 1/7/98 ........................................... 5,000,000 4,995,507
Federal Home Loan Bank, Discount Note, 1/14/98 .......................................... 2,000,000 1,996,078
Federal Home Loan Bank, Discount Note, 2/11/98 .......................................... 5,000,000 4,967,940
Federal Home Loan Bank, Discount Note, 3/6/98 ........................................... 4,000,000 3,961,316
Federal Home Loan Bank, Discount Note, 3/16/98 .......................................... 2,000,000 1,978,047
Federal Home Loan Bank, Discount Note, 4/13/98 .......................................... 2,000,000 1,969,287
Federal Home Loan Bank, Discount Note, 5/1/98 ........................................... 2,000,000 1,963,933
Federal Home Loan Mortgage, Discount Note, 1/30/98 ...................................... 4,000,000 3,981,666
Federal Home Loan Mortgage, Discount Note, 2/6/98 ....................................... 4,000,000 3,978,119
Federal Home Loan Mortgage, Discount Note, 2/11/98 ...................................... 2,000,000 1,987,529
Federal Home Loan Mortgage, Discount Note, with various maturities to 2/27/98 ........... 5,000,000 4,959,902
Federal Home Loan Mortgage, Discount Note, 3/11/98 ...................................... 1,000,000 989,439
Federal National Mortgage Assoc., Discount Note, with various maturities to 8/10/98 ..... 33,985,000 33,483,615
Federal National Mortgage Assoc., 5.51%, 3/14/98* ....................................... 5,000,000 5,000,000
- ------------------------------------------------------------------------------------------------------------------------------
Total U.S. Government Agency Obligations (Cost $76,212,378) 76,212,378
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $84,283,378) (a) 84,283,378
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Cost for federal income tax purposes was $84,283,378.
* Floating rate security; date shown is next interest rate change.
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
Scudder Institutional Shares
Financial Statements
Statement of Assets and Liabilities
as of December 31, 1997
<TABLE>
<CAPTION>
Tax Free Government
Money Money Money
Assets Market Series Market Series Market Series
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investments, at value (for cost, see accompanying
lists of investment portfolios) ................ $1,039,436,048 $ 280,728,097 $ 84,283,378
Cash ............................................. 559,470 152,979 2,867
Receivable for Fund shares sold .................. 397,856 -- 2,419
Receivable for investments sold .................. -- 385,000 --
Interest receivable .............................. 6,032,437 1,642,523 14,934
Reimbursement due from Adviser ................... 84,364 51,279 17,786
Other assets ..................................... 44,566 31,271 46,401
---------------- ---------------- ----------------
Total assets ..................................... 1,046,554,741 282,991,149 84,367,785
Liabilities
- ---------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased ................ -- 12,030,240 --
Dividends payable ................................ 4,544,673 499,189 377,487
Accrued management fee ........................... 123,101 11,560 66,141
Other payables and accrued expenses .............. 358,252 225,126 54,018
---------------- ---------------- ----------------
Total liabilities ................................ 5,026,026 12,766,115 497,646
---------------------------------------------------- ---------------- ---------------- ----------------
Net assets, at value ............................. $1,041,528,715 $ 270,225,034 $ 83,870,139
---------------------------------------------------- ---------------- ---------------- ----------------
Net Asset Value
- ---------------------------------------------------------------------------------------------------------------------------
Managed Shares:
Net assets applicable to shares outstanding .... $ 368,915,638 $ 176,519,670 $ 29,439,077
Shares outstanding of capital stock, $.001 par
value, 800,000,000, 500,000,000, and
1,500,000,000 shares authorized .............. 368,915,638 176,519,670 29,439,077
Net Asset Value, offering and redemption price ---------------- ---------------- ----------------
per share (net assets / shares outstanding) .. $1.00 $1.00 $1.00
---------------- ---------------- ----------------
Institutional Shares:
Net assets applicable to shares outstanding .... $ 337,824,146 $ 93,705,364 $ 54,431,062
Shares outstanding of capital stock, $.001 par
value, 800,000,000, 500,000,000, and
1,500,000,000 shares authorized .............. 337,824,146 93,705,364 54,431,062
Net Asset Value, offering and redemption price ---------------- ---------------- ----------------
per share (net assets / shares outstanding) .. $1.00 $1.00 $1.00
---------------- ---------------- ----------------
Premium Money Market Shares:
Net assets applicable to shares outstanding .... $ 334,788,931
Shares outstanding of capital stock, $.001 par
value, 2,000,000,000 shares authorized ....... 334,788,931
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.
15
<PAGE>
Scudder Institutional Shares
Financial Statements
Statement of Operations
year ended December 31, 1997
<TABLE>
<CAPTION>
Tax Free Government
Money Money Money
Investment Income Market Series Market Series Market Series
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest ........................................... $ 31,972,083 $ 4,866,249 $ 3,380,968
---------------- ---------------- ----------------
Expenses:
Management fee ..................................... 1,676,376 406,470 141,462
Shareholder services ............................... 735,033 239,629 121,051
Directors' fees and expenses ....................... 14,498 14,465 10,463
Custodian and accounting fees ...................... 145,605 68,147 58,130
Reports to shareholders ............................ 47,389 11,016 7,312
Auditing ........................................... 23,642 20,615 27,915
Legal .............................................. 73,167 37,908 27,331
Registration fees .................................. 77,718 30,156 28,095
Other .............................................. 15,814 45,472 11,612
---------------- ---------------- ----------------
Total expenses before reductions ................... 2,809,242 873,878 433,371
Expense reductions ................................. (459,300) (120,461) (147,306)
---------------- ---------------- ----------------
Expenses, net ...................................... 2,349,942 753,417 286,065
----------------------------------------------------- ---------------- ---------------- ----------------
Net investment income 29,622,141 4,112,832 3,094,903
----------------------------------------------------- ---------------- ---------------- ----------------
----------------------------------------------------- ---------------- ---------------- ----------------
Net increase in net assets resulting from
operations $ 29,622,141 $ 4,112,832 $ 3,094,903
----------------------------------------------------- ---------------- ---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
Scudder Institutional Shares
Financial Statements
Statements of Changes to Net Assets
Money Market Series
<TABLE>
<CAPTION>
Years Ended December 31,
Increase (Decrease) in Net Assets 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ......................................... $ 29,622,141 $ 18,268,673
---------------- ----------------
Distributions to shareholders from:
Net investment income (Managed Shares) ........................ (16,811,273) (18,268,673)
---------------- ----------------
Net investment income (Institutional Shares) .................. (8,101,246) --
---------------- ----------------
Net investment income (Premium Money Market Shares) ........... (4,709,622) --
---------------- ----------------
Fund share transactions:
Managed Shares:
Proceeds from shares sold ..................................... 1,604,556,971 2,285,419,535
Net asset value of shares issued to shareholders in
reinvestment of distributions .............................. 7,105,515 10,791,498
Cost of shares redeemed ....................................... (1,674,045,123) (2,236,431,853)
---------------- ----------------
Net increase (decrease) in net assets from Fund share
transactions ............................................... (62,382,637) 59,779,180
---------------- ----------------
Institutional Shares*:
Proceeds from shares sold ..................................... 697,521,385 --
Net asset value of shares issued to shareholders in
reinvestment of distributions .............................. 1,796,954 --
Cost of shares redeemed ....................................... (361,494,193) --
---------------- ----------------
Net increase (decrease) in net assets from Fund share
transactions ............................................... 337,824,146 --
---------------- ----------------
Premium Money Market Shares**:
Proceeds from shares sold ..................................... 612,133,352 --
Net asset value of shares issued to shareholders in
reinvestment of distributions .............................. 2,900,558 --
Cost of shares redeemed ....................................... (280,244,979) --
---------------- ----------------
Net increase in net assets from Fund share transactions ....... 334,788,931 --
---------------- ----------------
Increase (decrease) in net assets ............................. 610,230,440 59,779,180
Net assets at beginning of period ............................. 431,298,275 371,519,095
---------------- ----------------
Net assets at end of period ................................... $1,041,528,715 $431,298,275
---------------- ----------------
</TABLE>
* For the period August 4, 1997 (commencement of sale of Institutional
Shares) to December 31, 1997.
** For the period July 7, 1997 (commencement of sale of Premium Money Market
Shares) to December 31, 1997.
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
Scudder Institutional Shares
Financial Statements
Statements of Changes to Net Assets
Tax Free Money Market Series
<TABLE>
<CAPTION>
Years Ended December 31,
Increase (Decrease) in Net Assets 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income .................................. $ 4,112,832 $ 4,176,664
--------------- ---------------
Distributions to shareholders from:
Net investment income (Managed Shares) ................. (2,806,394) (4,176,664)
--------------- ---------------
Net investment income (Institutional Shares) ........... (1,306,438) --
--------------- ---------------
Fund share transactions:
Managed Shares:
Proceeds from shares sold .............................. 378,820,759 605,388,558
Net asset value of shares issued to shareholders in
reinvestment of distributions ....................... 640,423 2,369,718
Cost of shares redeemed ................................ (368,394,901) (580,696,936)
--------------- ---------------
Net increase (decrease) in net assets from Fund share
transactions ........................................ 11,066,281 27,061,340
--------------- ---------------
Institutional Shares*:
Proceeds from shares sold .............................. 159,246,687 --
Net asset value of shares issued to shareholders in
reinvestment of distributions ....................... 30,480 --
Cost of shares redeemed ................................ (65,571,803) --
--------------- ---------------
Net increase (decrease) in net assets from Fund share
transactions ........................................ 93,705,364 --
--------------- ---------------
Increase (decrease) in net assets ...................... 104,771,645 27,061,340
Net assets at beginning of period ...................... 165,453,389 138,392,049
--------------- ---------------
Net assets at end of period ............................ $270,225,034 $165,453,389
--------------- ---------------
</TABLE>
* For the period August 4, 1997 (commencement of sale of Institutional
Shares) to December 31, 1997.
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
Scudder Institutional Shares
Financial Statements
Statements of Changes to Net Assets
Government Money Market Series
<TABLE>
<CAPTION>
Years Ended December 31,
Increase (Decrease) in Net Assets 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income .................................. $ 3,094,903 $ 3,380,075
--------------- ---------------
Distributions to shareholders from:
Net investment income (Managed Shares) ................. (1,921,752) (3,380,075)
--------------- ---------------
Net investment income (Institutional Shares) ........... (1,173,151) --
--------------- ---------------
Fund share transactions:
Managed Shares:
Proceeds from shares sold .............................. 204,615,796 475,466,734
Net asset value of shares issued to shareholders in
reinvestment of distributions ....................... 426,890 2,288,409
Cost of shares redeemed ................................ (203,521,896) (499,812,580)
--------------- ---------------
Net increase (decrease) in net assets from Fund share
transactions ........................................ 1,520,790 (22,057,437)
--------------- ---------------
Institutional Shares*:
Proceeds from shares sold .............................. 115,334,278 --
Net asset value of shares issued to shareholders in
reinvestment of distributions ....................... 449 --
Cost of shares redeemed ................................ (60,903,665) --
--------------- ---------------
Net increase (decrease) in net assets from Fund share
transactions ........................................ 54,431,062 --
--------------- ---------------
Increase (decrease) in net assets ...................... 55,951,852 (22,057,437)
Net assets at beginning of period ...................... 27,918,287 49,975,724
--------------- ---------------
Net assets at end of period ............................ $ 83,870,139 $ 27,918,287
--------------- ---------------
</TABLE>
* For the period August 4, 1997 (commencement of sale of Institutional
Shares) to December 31, 1997.
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
Scudder Institutional Shares/Money Market Series
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*
<TABLE>
<CAPTION>
Years Ended December 31,
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of ----------------------------------------------------------------------------------------
period .................... $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
----------------------------------------------------------------------------------------
Net investment income ........ .051 .049 .054 .038 .028 .037 .059 .076 .086 .070
Distributions from net
investment
income .................... (.051) (.049) (.054) (.038) (.028) (.037) (.059) (.076) (.086) (.070)
Net asset value, end of ----------------------------------------------------------------------------------------
period .................... $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
- -----------------------------------------------------------------------------------------------------------------------
Total Return (%) (a) ......... 5.21 4.97 5.57 3.86 2.81 3.74 6.07 7.92 8.93 7.21
Ratios and Supplemental Data
Net assets, end of period
($ millions) .............. 369 431 372 367 324 305 347 385 331 389
Ratio of operating expenses,
net to average daily net
assets (%) ................ .49 .55 .55 .55 .55 .55 .55 .67 .72 .65
Ratio of operating expenses
before expense reductions
to average daily net
assets (%) ................ .59 .62 .68 .68 .66 .64 .64 .70 .72 .65
Ratio of net investment income
to average daily net
assets (%) ................ 5.00 4.86 5.45 3.84 2.78 3.76 5.93 7.64 8.56 6.95
</TABLE>
(a) Total returns are higher due to maintenance of the Fund's expenses for the
years ended December 31, 1990 to December 31, 1997.
* 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.
20
<PAGE>
Scudder Institutional Shares/Money Market Series
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
Institutional
Shares) to
December 31, 1997
- ------------------------------------------------------------------------------------------------------------
<S> <C>
---------------
Net asset value, beginning of period ............................................. $1.000
---------------
Net investment income ............................................................ .022
Distributions from net investment income ......................................... (.022)
---------------
Net asset value, end of period ................................................... $1.000
- ------------------------------------------------------------------------------------------------------------
Total Return (%) (a) ............................................................. 2.25**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ........................................... 338
Ratio of operating expenses, net to average daily net assets (%) ................. .26*
Ratio of operating expenses before expense reductions, to average daily net
assets (%) .................................................................... .31*
Ratio of net investment income to average daily net assets (%) ................... 5.39*
</TABLE>
(a) Total return is higher due to maintenance of the Fund's expenses.
* Annualized
** Not annualized
21
<PAGE>
Scudder Institutional Shares/Money Market Series
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
of sale of
Premium Shares) to
December 31, 1997
- ------------------------------------------------------------------------------------------------------------
<S> <C>
---------------
Net asset value, beginning of period ............................................. $1.000
---------------
Net investment income ............................................................ .026
Distributions from net investment income ......................................... (.026)
---------------
Net asset value, end of period ................................................... $1.000
- ------------------------------------------------------------------------------------------------------------
Total Return (%) (a) ............................................................. 2.62**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ........................................... 335
Ratio of operating expenses, net to average daily net assets (%) ................. .38*
Ratio of operating expenses before expense reductions, to average daily net
assets (%) .................................................................... .43*
Ratio of net investment income to average daily net assets (%) ................... 5.50*
</TABLE>
(a) Total return is higher due to the maintenance of Fund expenses.
* Annualized
** Not annualized
22
<PAGE>
Scudder Institutional Shares/Tax Free Money Market Series
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*
<TABLE>
<CAPTION>
Years Ended December 31,
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of ----------------------------------------------------------------------------------------------------
period ................... $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
----------------------------------------------------------------------------------------------------
Net investment income ....... .030 .028 .032 .023 .018 .025 .042 .053 .057 .049
Distributions from net
investment income
and net realized
capital gains ............ (.030) (.028) (.032) (.023) (.018) (.025) (.042) (.053) (.057) (.049)
Net asset value, ----------------------------------------------------------------------------------------------------
end of period ............ $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return (%) ............ 3.07(a) 2.88 3.30 2.29 1.85 2.56 4.20 5.47 5.91 4.98
Ratios and Supplemental Data
Net assets, end of period
($ millions) ............. 177 165 138 125 107 91 107 135 137 261
Ratio of operating expenses,
net to average daily
net assets (%) ........... .65 .72 .79 .77 .78 .77 .75 .77 .76 .60
Ratio of operating expenses
before expense reductions
to average daily net
assets (%) ............... .74 .72 .79 .77 .78 .77 .75 .77 .76 .60
Ratio of net investment
income to average
daily net assets (%) ..... 2.99 2.84 3.25 2.26 1.83 2.54 4.14 5.33 5.72 4.85
</TABLE>
(a) Total return is higher due to the maintenance of the Fund's expenses.
* Effective July 7, 1997, Scudder Tax Free Money Market Series (formerly
known as Managed Tax-Free Fund) was divided into two classes, of which
Scudder Tax Free 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.
23
<PAGE>
Scudder Insitutional Shares/Tax Free Money Market Series
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
Institutional
Shares) to
December 31, 1997
- ------------------------------------------------------------------------------------------------------------
<S> <C>
---------------
Net asset value, beginning of period ............................................ $1.000
---------------
Net investment income ........................................................... 0.014
Distributions from net income ................................................... (0.014)
---------------
Net asset value, end of period .................................................. $1.000
- ------------------------------------------------------------------------------------------------------------
Total Return (%) (a) ............................................................ 1.40**
Ratios and Supplemental Data
Net assets, end of period ($ millions) .......................................... 94
Ratio of operating expenses, net to average daily net assets (%) ................ .37*
Ratio of operating expenses before expense reductions, to average daily net
assets (%) ................................................................... .46*
Ratio of net investment income to average daily net assets (%) .................. 3.36*
</TABLE>
(a) Total return is higher due to maintenance of the Fund's expenses.
* Annualized
** Not annualized
24
<PAGE>
Scudder Institutional Shares/Government Money Market Series
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*
<TABLE>
<CAPTION>
Years Ended December 31,
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of ----------------------------------------------------------------------------------------
period ................... $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
----------------------------------------------------------------------------------------
Net investment income ....... .049 .048 .054 .037 .026 .035 .056 .075 .084 .069
Distributions from net
investment
income ................... (.049) (.048) (.054) (.037) (.026) (.035) (.056) (.075) (.084) (.069)
Net asset value, end of ----------------------------------------------------------------------------------------
period ................... $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
- ----------------------------------------------------------------------------------------------------------------------
Total Return (%) (a) ........ 5.02 4.91 5.49 3.75 2.68 3.51 5.65 7.73 8.81 7.13
Ratios and Supplemental Data
Net assets, end of period
($ millions) ............. 29 28 50 69 92 151 87 82 64 409
Ratio of operating expenses,
net to average daily net
assets (%) ............... .55 .55 .55 .55 .55 .55 .55 .73 .75 .69
Ratio of operating expenses
before expense reductions,
to average daily net
assets (%) ............... .84 .77 .86 .84 .77 .76 .80 .80 .80 .69
Ratio of net investment
income to average daily
net assets (%) ........... 4.93 4.81 5.36 3.61 2.65 3.39 5.54 7.48 8.42 6.83
</TABLE>
(a) Total returns are higher, for the periods indicated, due to maintenance of
the Fund's expenses, except for the year ended December 31, 1988.
* Effective July 7, 1997, Scudder Government Money Market Series (formerly
known as the Managed Government Securities Fund) was divided into two
classes, of which Scudder Government 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.
25
<PAGE>
Scudder Institutional Shares/Government Money Market Series
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
Institutional
Shares) to
December 31, 1997
- ------------------------------------------------------------------------------------------------------------
<S> <C>
---------------
Net asset value, beginning of period ............................................ $1.000
---------------
Net investment income ........................................................... .022
Distributions from net investment income ........................................ (.022)
---------------
Net asset value, end of period .................................................. $1.000
- ------------------------------------------------------------------------------------------------------------
Total Return (%) (a) ............................................................ 2.17**
Ratios and Supplemental Data
Net assets, end of period ($ millions) .......................................... 54
Ratio of operating expenses, net to average daily net assets (%) ................ .31*
Ratio of operating expenses before expense reductions, to average daily net
assets (%) ................................................................... .46*
Ratio of net investment income to average daily net assets (%) .................. 5.21*
</TABLE>
(a) Total return is higher due to maintenance of the Fund's expenses.
* Annualized
** Not annualized
26
<PAGE>
Scudder Institutional Shares
Notes to Financial Statements
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"). The Board of Directors of the Company has
approved a multi-class system for each Fund effective July 7, 1997, such that
Scudder Tax Free Money Market Series and Scudder Government Money Market Series
may offer two classes of shares, Institutional Class and Managed Class and
Scudder Money Market Series may offer three classes of shares, Institutional
Class, Managed Class and Premium Money Market Class.
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.
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, 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
Effective December 31, 1997, Scudder, Stevens & Clark, Inc. ("Scudder") and The
Zurich Insurance Company ("Zurich"), an international insurance and financial
services organization, formed a new global investment organization by combining
Scudder's business with that of Zurich's subsidiary, Zurich Kemper Investments,
Inc. As a result of the transaction, Scudder changed its name to Scudder Kemper
Investments, Inc. ("Scudder Kemper" or the "Adviser"). The transaction between
Scudder and Zurich resulted in the termination of the Company's Investment
Management Agreement with Scudder. However, a new Investment Management
Agreement (the "Management Agreement") between the Company and Scudder Kemper
was approved by the Company's Board of Directors and by the Company's
Shareholders. The Management Agreement, which is effective December 31, 1997, is
the same in all material respects as the corresponding previous Investment
Management Agreement, except that Scudder Kemper is the new investment adviser
to the Company.
27
<PAGE>
The Company retains Scudder Kemper as investment manager for the Funds, pursuant
to investment advisory agreements between Scudder Kemper and the Company on
behalf of each such Fund. For the period January 1, 1997 through July 7, 1997,
the Adviser received an investment management fee from each Fund at an annual
rate of 0.40% for the first $1.5 billion of average daily net assets and 0.35%
of such assets in excess of $1.5 billion. Through July 7, 1997, the Adviser
agreed to waive a portion of its investment management fee for each of the Money
Market Series and the Government Money Market Series to the extent necessary so
that annualized expenses of each Fund would not exceed 0.55% of average daily
net assets. Effective July 7, 1997, the Adviser receives an investment
management fee at an annual rate of 0.25% of average daily net assets for each
Fund. For the period July 7, 1997 to December 31, 1997, the Adviser has agreed
to waive a portion of its investment management fee for each of the Money Market
Series, Tax Free Money Market Series, and Government Money Market Series to the
extent necessary so that the total annualized investment management fee of each
Fund does not exceed 0.20%, 0.15%, and 0.10%, respectively.
For the year ended December 31, 1997, the Adviser did not impose fees of
$374,936, $69,182, and $129,520 and did impose fees of $1,301,440, $337,288, and
$11,942, of which $123,101, $11,560, and $66,141, remain unpaid, for the Money
Market Series, Tax Free Money Market Series, and Government Money Market Series,
respectively.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend-paying and shareholder service agent for the Funds. Each
class of the Funds has entered into a Transfer Agency and Service Agreement with
SSC. SSC receives account fees that vary according to the account size and type
of account of the shareholders of the respective classes. For the year ended
December 31, 1997 the following amounts were charged:
Government
Money Market Tax Free Money
Money Market Money Market Market
Series Series Series
Managed Class $ 192,796 $ 32,322 $ 43,655
Institutional Class 23,214 23,214 23,214
Premium Class 60,124 -- --
---------- ---------- ----------
$ 276,134 $ 55,536 $ 66,869
========== ========== ==========
Each of the Funds has special arrangements with certain banks, institutions and
other persons under which they receive compensation from the Funds and the
Adviser for performing shareholder servicing functions for their customers who
own shares in the Funds. Effective July 7, 1997, the Adviser has agreed to
reimburse the Funds 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 period July 7, 1997 to December
31, 1997, the Adviser's reimbursement payable aggregated $84,364 for the Money
Market Series, $51,279 for the Tax Free Money Market Series, and $17,786 for the
Government Money Market Series.
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 Funds. For the year ended
December 31, 1997, the amount charged to the Funds by SFAC aggregated $109,482
for the Money Market Series, $56,782 for the Tax Free
28
<PAGE>
Money Market Series, and $51,695 for the Government Money Market Series, of
which $12,144, $5,092, and $2,677, respectively, remain unpaid at December 31,
1997.
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 $224,106, an
applicable portion of which is included in accrued expenses of each such 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 year ended December 31, 1997, the following amounts were paid:
<TABLE>
<CAPTION>
Money Market Tax Free Government Money
Series Money Market Market
Series Series
<S> <C> <C> <C>
Managed Class $ 26,866 $ 4,782 $ 4,782
Institutional Class 7,749 2,530 2,530
Premium Class 14,880 -- --
---------- ---------- ----------
$ 49,495 $ 7,312 $ 7,312
========== ========== ==========
</TABLE>
29
<PAGE>
Report of Independent Accountants
To the Board of Directors and Shareholders of Scudder Fund, Inc.
In our opinion, the accompanying statements of assets and liabilities, including
the investment portfolios, 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 Government Money Market Series,
Money Market Series and Tax Free Money Market Series (each a separate portfolio
of Scudder Fund, Inc., hereafter referred to as the "Fund") at December 31,
1997, 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 ten 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, 1997 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
Boston, Massachusetts
February 23, 1998
30
<PAGE>
Tax Information (Unaudited)
The total amount of dividends declared in 1997 by each of the Government Money
Market Series Portfolio and Money Market Series Portfolio of Scudder Fund, Inc.
are 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 Money Market Series Portfolio declared in
1997 are exempt from Federal income tax. However, in accordance with the
Internal Revenue Code, you are required to report them on your 1997 Federal
income tax return.
Although dividend income from the Tax Free Money Market Series 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.
31
<PAGE>
Stockholder Meeting Results
Money Market Series
A Special Meeting of Stockholders (the "Meeting") of the Scudder Money Market
Series of Scudder Institutional Shares (the "Fund") was held on October 23,
1997, at the offices of Scudder Kemper Investments, Inc. (formerly Scudder,
Stevens & Clark, Inc.), 25th Floor, 345 Park Avenue (at 51st Street), New York,
New York 10154. The following matters were voted upon by the stockholders (the
resulting votes for each matter are presented below).
1. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
315,119,454 0 0 0
2. To elect Directors.
Number of Votes:
----------------
Director For Withheld
-------- --- --------
Dr. Rosita P. Chang 315,119,454 0
Edgar R. Fiedler 315,119,454 0
Peter B. Freeman 315,119,454 0
Dr. J. D. Hammond 315,119,454 0
Richard M. Hunt 315,119,454 0
3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
282,519,764 32,599,690 0 0
32
<PAGE>
4. To approve the revision of certain fundamental investment policies.
<TABLE>
<CAPTION>
Number of Votes:
----------------
Fundamental Policies For Against Abstain Broker Non-Votes*
-------------------- --- ------- ------- -----------------
<S> <C> <C> <C> <C>
4.1 Diversification 282,519,764 32,599,690 0 0
4.2 Borrowing 282,519,764 32,599,690 0 0
4.3 Senior securities 282,519,764 32,599,690 0 0
4.4 Concentration 282,519,764 32,599,690 0 0
4.5 Underwriting of securities 282,519,764 32,599,690 0 0
4.6 Investment in real estate 282,519,764 32,599,690 0 0
4.7 Purchase of physical commodities 282,519,764 32,599,690 0 0
4.8 Loans 282,519,764 32,599,690 0 0
4.9 Equity or convertible securities 282,519,764 32,599,690 0 0
4.10 Exercising control or management 282,519,764 32,599,690 0 0
4.11 Restricted securities 282,519,764 32,599,690 0 0
4.12 10% of total assets in illiquid 282,519,764 32,599,690 0 0
securities
4.13 Purchase on margin or short sales 282,519,764 32,599,690 0 0
4.14 Puts, calls, warrants, or options 282,519,764 32,599,690 0 0
4.15 Pledging or mortgaging assets 282,519,764 32,599,690 0 0
</TABLE>
5. To ratify the selection of Price Waterhouse LLP as the Fund's independent
accountants.
Number of Votes:
----------------
For Against Abstain
--- ------- -------
315,119,454 0 0
* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary power
to vote on a particular matter.
33
<PAGE>
Stockholder Meeting Results
Tax Free Money Market Series
A Special Meeting of Stockholders (the "Meeting") of the Scudder Tax Free Money
Market Series of Scudder Institutional Shares (the "Fund") was held on October
23, 1997, at the offices of Scudder Kemper Investments, Inc. (formerly Scudder,
Stevens & Clark, Inc.), 25th Floor, 345 Park Avenue (at 51st Street), New York,
New York 10154. The following matters were voted upon by the stockholders (the
resulting votes for each matter are presented below).
1. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
90,044,677 0 0 0
2. To elect Directors.
Number of Votes:
----------------
Director For Withheld
-------- --- --------
Dr. Rosita P. Chang 90,044,677 0
Edgar R. Fiedler 90,044,677 0
Peter B. Freeman 90,044,677 0
Dr. J. D. Hammond 90,044,677 0
Richard M. Hunt 90,044,677 0
3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
90,044,677 0 0 0
34
<PAGE>
4. To approve the revision of certain fundamental investment policies.
<TABLE>
<CAPTION>
Number of Votes:
----------------
Fundamental Policies For Against Abstain Broker Non-Votes*
-------------------- --- ------- ------- -----------------
<S> <C> <C> <C> <C>
4.1 Diversification 90,044,677 0 0 0
4.2 Borrowing 90,044,677 0 0 0
4.3 Senior securities 90,044,677 0 0 0
4.4 Concentration 90,044,677 0 0 0
4.5 Underwriting of securities 90,044,677 0 0 0
4.6 Investment in real estate 90,044,677 0 0 0
4.7 Purchase of physical commodities 90,044,677 0 0 0
4.8 Loans 90,044,677 0 0 0
4.9 Equity or convertible securities 90,044,677 0 0 0
4.10 Exercising control or management 90,044,677 0 0 0
4.11 Restricted securities 90,044,677 0 0 0
4.12 10% of total assets in illiquid 90,044,677 0 0 0
securities
4.13 Purchase on margin or short sales 90,044,677 0 0 0
4.14 Puts, calls, warrants, or options 90,044,677 0 0 0
4.15 Pledging or mortgaging assets 90,044,677 0 0 0
</TABLE>
5. To ratify the selection of Price Waterhouse LLP as the Fund's independent
accountants.
Number of Votes:
----------------
For Against Abstain
--- ------- -------
90,044,677 0 0
* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary power
to vote on a particular matter.
35
<PAGE>
Stockholder Meeting Results
Government Money Market Series
A Special Meeting of Stockholders (the "Meeting") of the Scudder Government
Money Market Series of Scudder Institutional Shares (the "Fund") was held on
October 23, 1997, at the offices of Scudder Kemper Investments, Inc. (formerly
Scudder, Stevens & Clark, Inc.), 25th Floor, 345 Park Avenue (at 51st Street),
New York, New York 10154. The following matters were voted upon by the
stockholders (the resulting votes for each matter are presented below).
1. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
51,788,981 0 0 0
2. To elect Directors.
Number of Votes:
----------------
Director For Withheld
-------- --- --------
Dr. Rosita P. Chang 51,788,981 0
Edgar R. Fiedler 51,788,981 0
Peter B. Freeman 51,788,981 0
Dr. J. D. Hammond 51,788,981 0
Richard M. Hunt 51,788,981 0
3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
51,788,981 0 0 0
36
<PAGE>
4. To approve the revision of certain fundamental investment policies.
<TABLE>
<CAPTION>
Number of Votes:
----------------
Fundamental Policies For Against Abstain Broker Non-Votes*
-------------------- --- ------- ------- -----------------
<S> <C> <C> <C> <C>
4.1 Diversification 51,788,981 0 0 0
4.2 Borrowing 51,788,981 0 0 0
4.3 Senior securities 51,788,981 0 0 0
4.4 Concentration 51,788,981 0 0 0
4.5 Underwriting of securities 51,788,981 0 0 0
4.6 Investment in real estate 51,788,981 0 0 0
4.7 Purchase of physical commodities 51,788,981 0 0 0
4.8 Loans 51,788,981 0 0 0
4.9 Equity or convertible securities 51,788,981 0 0 0
4.10 Exercising control or management 51,788,981 0 0 0
4.11 Restricted securities 51,788,981 0 0 0
4.12 10% of total assets in illiquid 51,788,981 0 0 0
securities
4.13 Purchase on margin or short sales 51,788,981 0 0 0
4.14 Puts, calls, warrants, or options 51,788,981 0 0 0
4.15 Pledging or mortgaging assets 51,788,981 0 0 0
</TABLE>
5. To ratify the selection of Price Waterhouse LLP as the Fund's independent
accountants.
Number of Votes:
----------------
For Against Abstain
--- ------- -------
51,788,981 0 0
* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary power
to vote on a particular matter.
37
<PAGE>
This Page
Intentionally
Left Blank
38
<PAGE>
<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
U.S.
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.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
SCUDDER (logo)
