Filed electronically with the Securities and Exchange Commission
on August 14, 1998
File No. 2-78122
File No. 811-3495
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
------
Post-Effective Amendment No. 28
------
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT No. 24
------
Scudder Fund, Inc.
------------------------------------------------
(Exact name of Registrant as Specified in Charter)
345 Park Avenue, New York, NY 10154
-------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (617) 295-3033
Thomas F. McDonough
Scudder Kemper Investments, Inc.
Two International Place, Boston MA 02110
----------------------------------------------
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
immediately upon filing pursuant to paragraph (b),
--------
on May 1, 1998 pursuant to paragraph (b),
--------
60 days after filing pursuant to paragraph (a)(1),
--------
X on October 15, 1998 pursuant to paragraph (a)(1)
--------
75 days after filing pursuant to paragraph (a)(2)
--------
on _______________ pursuant to paragraph (a)(2) of Rule 485.
--------
<PAGE>
SCUDDER FUND, INC.
SCUDDER MONEY MARKET SERIES
SCUDDER PRIME RESERVE SHARES
CROSS-REFERENCE SHEET
Items Required By Form N-1A
---------------------------
PART A
- ------
<TABLE>
<CAPTION>
Item No. Item Caption Prospectus Caption
-------- ------------ ------------------
<S> <C> <C>
1. Cover Page COVER PAGE
2. Synopsis EXPENSE INFORMATION
3. Condensed Financial FINANCIAL HIGHLIGHTS
Information DISTRIBUTION AND PERFORMANCE INFORMATION
4. General Description of INVESTMENT OBJECTIVE AND POLICIES
Registrant SCUDDER CASH INVESTMENT TRUST
WHY INVEST IN THE FUNDS?
SCUDDER PREMIUM MONEY MARKET SHARES AND
SCUDDER PRIME RESERVE MONEY MARKET
SHARES
ADDITIONAL INFORMATION ABOUT POLICIES AND
INVESTMENTS
FUND ORGANIZATION
5. Management of the Fund FINANCIAL HIGHLIGHTS
A MESSAGE FROM SCUDDER'S PRESIDENT
FUND ORGANIZATION--Investment adviser, Transfer agent
SHAREHOLDER BENEFITS--A team approach to investing
DIRECTORS AND OFFICERS
5A. Management's Discussion of NOT APPLICABLE
Fund Performance
6. Capital Stock and Other DISTRIBUTION AND PERFORMANCE INFORMATION--
Securities Dividends and capital gains distributions
FUND ORGANIZATION
TRANSACTION INFORMATION
SHAREHOLDER BENEFITS--SAIL(TM)--Scudder Automated
Information Line, Dividend reinvestment plan, T.D.D.
service for the hearingimpaired
HOW TO CONTACT SCUDDER
7. Purchase of Securities Being PURCHASES
Offered FUND ORGANIZATION--Underwriter
TRANSACTION INFORMATION--Purchasing shares, Share
price, Processing time, Minimum balances, Third party
transactions
SHAREHOLDER BENEFITS--Dividend reinvestment plan
SCUDDER TAX-ADVANTAGED RETIREMENT PLANS
INVESTMENT PRODUCTS AND SERVICES
Cross Reference - Page 1
<PAGE>
8. Redemption or Repurchase EXCHANGES AND REDEMPTIONS
TRANSACTION INFORMATION--Redeeming shares, Tax identification
number, Minimum balances
9. Pending Legal Proceedings NOT APPLICABLE
Cross Reference - Page 2
<PAGE>
SCUDDER PRIME RESERVE SHARES
(continued)
PART B
- ------
Caption in Statement of
Item No. Item Caption Additional Information
-------- ------------ ----------------------
10. Cover Page COVER PAGE
11. Table of Contents TABLE OF CONTENTS
12. General Information and History ORGANIZATION OF THE FUNDS
13. Investment Objectives and THE FUND'S INVESTMENT OBJECTIVE AND POLICIES
Policies PORTFOLIO TRANSACTIONS--Brokerage Commissions,
Portfolio Turnover
14. Management of the Fund INVESTMENT ADVISER
DIRECTORS AND OFFICERS
REMUNERATION
15. Control Persons and Principal DIRECTORS AND OFFICERS
Holders of Securities
16. Investment Advisory and Other INVESTMENT ADVISER
Services DISTRIBUTOR
ADDITIONAL INFORMATION--Experts, Other Information
17. Brokerage Allocation PORTFOLIO TRANSACTIONS--Brokerage Commissions, Portfolio Turnover
and Other Practices
18. Capital Stock and Other ORGANIZATION OF THE FUNDS
Securities DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
19. Purchase, Redemption and PURCHASES
Pricing of Securities Being EXCHANGES AND REDEMPTIONS
Offered FEATURES AND SERVICES OFFERED BY THE FUND--
Dividend and Capital Gain Distribution Options
SPECIAL PLAN ACCOUNTS
NET ASSET VALUE
20. Tax Status DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
TAXES
21. Underwriters DISTRIBUTOR
22. Calculation of PERFORMANCE INFORMATION
Performance Data
23. Financial Statements FINANCIAL STATEMENTS
Cross Reference - Page 3
<PAGE>
SCUDDER FUND, INC.
SCUDDER MONEY MARKET SERIES
SCUDDER PREMIUM MONEY MARKET SHARES
CROSS-REFERENCE SHEET
Items Required By Form N-1A
---------------------------
PART A
- ------
Item No. Item Caption Prospectus Caption
-------- ------------ ------------------
1. Cover Page COVER PAGE
2. Synopsis EXPENSE INFORMATION
3. Condensed Financial FINANCIAL HIGHLIGHTS
Information DISTRIBUTION AND PERFORMANCE INFORMATION
4. General Description of INVESTMENT OBJECTIVE AND POLICIES
Registrant WHY INVEST IN SCUDDER PREMIUM MONEY MARKET SHARES OF THE FUND?
ADDITIONAL INFORMATION ABOUT POLICIES AND INVESTMENTS
FUND ORGANIZATION
5. Management of the Fund FINANCIAL HIGHLIGHTS
A MESSAGE FROM SCUDDER'S PRESIDENT
FUND ORGANIZATION--Investment adviser, Transfer agent
SHAREHOLDER BENEFITS--A team approach to investing
DIRECTORS AND OFFICERS
5A. Management's Discussion of NOT APPLICABLE
Fund Performance
6. Capital Stock and Other DISTRIBUTION AND PERFORMANCE INFORMATION--Dividends and capital
Securities gains distributions
FUND ORGANIZATION
TRANSACTION INFORMATION
SHAREHOLDER BENEFITS--SAIL(TM)--Scudder Automated
Information Line, Dividend reinvestment plan, T.D.D.
service for the hearing impaired
HOW TO CONTACT SCUDDER
7. Purchase of Securities Being PURCHASES
Offered FUND ORGANIZATION--Underwriter
TRANSACTION INFORMATION--Purchasing shares, Share
price, Processing time, Minimum balances, Third party
transactions
SHAREHOLDER BENEFITS--Dividend reinvestment plan
SCUDDER TAX-ADVANTAGED RETIREMENT PLANS
INVESTMENT PRODUCTS AND SERVICES
8. Redemption or Repurchase EXCHANGES AND REDEMPTIONS
TRANSACTION INFORMATION--Redeeming shares, Tax
identification number, Minimum balances
9. Pending Legal Proceedings NOT APPLICABLE
Cross Reference - Page 4
<PAGE>
SCUDDER PREMIUM MONEY MARKET SHARES
(continued)
PART B
- ------
Caption in Statement of
Item No. Item Caption Additional Information
-------- ------------ ----------------------
10. Cover Page COVER PAGE
11. Table of Contents TABLE OF CONTENTS
12. General Information and History ORGANIZATION OF THE FUNDS
13. Investment Objectives and THE FUND'S INVESTMENT OBJECTIVE AND POLICIES
Policies PORTFOLIO TRANSACTIONS--Brokerage Commissions,
Portfolio Turnover
14. Management of the Fund INVESTMENT ADVISER
DIRECTORS AND OFFICERS
REMUNERATION
15. Control Persons and Principal DIRECTORS AND OFFICERS
Holders of Securities
16. Investment Advisory and INVESTMENT ADVISER
Other Services DISTRIBUTOR
ADDITIONAL INFORMATION--Experts, Other Information
17. Brokerage Allocation PORTFOLIO TRANSACTIONS--Brokerage Commissions, Portfolio Turnover
and Other Practices
18. Capital Stock and Other ORGANIZATION OF THE FUNDS
Securities DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
19. Purchase, Redemption and PURCHASES
Pricing of Securities Being EXCHANGES AND REDEMPTIONS
Offered FEATURES AND SERVICES OFFERED BY THE FUND--
Dividend and Capital Gain Distribution Options
SPECIAL PLAN ACCOUNTS
NET ASSET VALUE
20. Tax Status DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
TAXES
21. Underwriters DISTRIBUTOR
22. Calculation of PERFORMANCE INFORMATION
Performance Data
23. Financial Statements FINANCIAL STATEMENTS
Cross Reference - Page 5
<PAGE>
SCUDDER FUND, INC.
SCUDDER MANAGED SHARES
SCUDDER MONEY MARKET SERIES
SCUDDER TAX FREE MONEY MARKET SERIES
SCUDDER GOVERNMENT MONEY MARKET SERIES
CROSS-REFERENCE SHEET
Items Required By Form N-1A
---------------------------
PART A
- ------
Item No. Item Caption Prospectus Caption
-------- ------------ ------------------
1. Cover Page COVER PAGE
2. Synopsis EXPENSE INFORMATION
3. Condensed Financial FINANCIAL HIGHLIGHTS
Information DISTRIBUTION AND PERFORMANCE INFORMATION
4. General Description of INVESTMENT OBJECTIVE AND POLICIES
Registrant WHY INVEST IN MANAGED SHARES?
ADDITIONAL INFORMATION ABOUT POLICIES AND
INVESTMENTS
FUND ORGANIZATION
5. Management of the Fund FINANCIAL HIGHLIGHTS
A MESSAGE FROM SCUDDER'S PRESIDENT
FUND ORGANIZATION--Investment adviser, Transfer agent
SHAREHOLDER BENEFITS--A team approach to investing
DIRECTORS AND OFFICERS
5A. Management's Discussion of NOT APPLICABLE
Fund Performance
6. Capital Stock and Other DISTRIBUTION AND PERFORMANCE INFORMATION--
Securities Dividends and capital gains distributions
FUND ORGANIZATION
TRANSACTION INFORMATION
SHAREHOLDER BENEFITS--SAIL(TM)--Scudder Automated
Information Line, Dividend reinvestment plan
HOW TO CONTACT SCUDDER
7. Purchase of Securities Being PURCHASES
Offered FUND ORGANIZATION--Underwriter
TRANSACTION INFORMATION--Purchasing shares, Share
price, Processing time, Minimum balances, Third party
transactions
SHAREHOLDER BENEFITS--Dividend reinvestment plan
SCUDDER TAX-ADVANTAGED RETIREMENT PLANS
INVESTMENT PRODUCTS AND SERVICES
8. Redemption or Repurchase EXCHANGES AND REDEMPTIONS
TRANSACTION INFORMATION--Redeeming shares, Tax
identification number, Minimum balances
9. Pending Legal Proceedings NOT APPLICABLE
Cross Reference - Page 6
<PAGE>
SCUDDER MANAGED SHARES
(continued)
PART B
- ------
Caption in Statement of
Item No. Item Caption Additional Information
-------- ------------ ----------------------
10. Cover Page COVER PAGE
11. Table of Contents TABLE OF CONTENTS
12. General Information and History ORGANIZATION OF THE FUNDS
13. Investment Objectives and THE FUND'S INVESTMENT OBJECTIVE AND POLICIES
Policies PORTFOLIO TRANSACTIONS--Brokerage Commissions,
Portfolio Turnover
14. Management of the Fund INVESTMENT ADVISER
DIRECTORS AND OFFICERS
REMUNERATION
15. Control Persons and Principal DIRECTORS AND OFFICERS
Holders of Securities
16. Investment Advisory and Other INVESTMENT ADVISER
Services DISTRIBUTOR
ADDITIONAL INFORMATION--Experts, Other Information
17. Brokerage Allocation PORTFOLIO TRANSACTIONS--Brokerage Commissions,
and Other Practices Portfolio Turnover
18. Capital Stock and Other ORGANIZATION OF THE FUNDS
Securities DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
19. Purchase, Redemption and PURCHASES
Pricing of Securities Being EXCHANGES AND REDEMPTIONS
Offered FEATURES AND SERVICES OFFERED BY THE FUND--
Dividend and Capital Gain Distribution Options
SPECIAL PLAN ACCOUNTS
NET ASSET VALUE
20. Tax Status DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
TAXES
21. Underwriters DISTRIBUTOR
22. Calculation of PERFORMANCE INFORMATION
Performance Data
23. Financial Statements FINANCIAL STATEMENTS
Cross Reference - Page 7
<PAGE>
SCUDDER FUND, INC.
SCUDDER INSTITUTIONAL SHARES
SCUDDER MONEY MARKET SERIES
SCUDDER TAX FREE MONEY MARKET SERIES
SCUDDER GOVERNMENT MONEY MARKET SERIES
CROSS-REFERENCE SHEET
Items Required By Form N-1A
---------------------------
PART A
- ------
Item No. Item Caption Prospectus Caption
-------- ------------ ------------------
1. Cover Page COVER PAGE
2. Synopsis EXPENSE INFORMATION
3. Condensed Financial FINANCIAL HIGHLIGHTS
Information DISTRIBUTION AND PERFORMANCE INFORMATION
4. General Description of INVESTMENT OBJECTIVE AND POLICIES
Registrant WHY INVEST IN INSTITUTIONAL SHARES?
ADDITIONAL INFORMATION ABOUT POLICIES AND INVESTMENTS
FUND ORGANIZATION
5. Management of the Fund FINANCIAL HIGHLIGHTS
A MESSAGE FROM SCUDDER'S PRESIDENT
FUND ORGANIZATION--Investment adviser, Transfer agent
SHAREHOLDER BENEFITS--A team approach to investing
DIRECTORS AND OFFICERS
5A. Management's Discussion of NOT APPLICABLE
Fund Performance
6. Capital Stock and Other DISTRIBUTION AND PERFORMANCE INFORMATION--
Securities Dividends and capital gains distributions
FUND ORGANIZATION
TRANSACTION INFORMATION
SHAREHOLDER BENEFITS--Dividend reinvestment plan
HOW TO CONTACT SCUDDER
7. Purchase of Securities Being PURCHASES AND REDEMPTIONS
Offered FUND ORGANIZATION--Underwriter
TRANSACTION INFORMATION--Purchasing shares, Share
price, Minimum balances, Third party transactions
SHAREHOLDER BENEFITS--Dividend reinvestment plan
8. Redemption or Repurchase PURCHASES AND REDEMPTIONS
TRANSACTION INFORMATION--Redeeming shares, Tax
identification number, Minimum balances
9. Pending Legal Proceedings NOT APPLICABLE
Cross Reference - Page 8
<PAGE>
SCUDDER INSTITUTIONAL SHARES
(continued)
PART B
- ------
Caption in Statement of
Item No. Item Caption Additional Information
-------- ------------ ----------------------
10. Cover Page COVER PAGE
11. Table of Contents TABLE OF CONTENTS
12. General Information and History ORGANIZATION OF THE FUNDS
13. Investment Objectives and THE FUND'S INVESTMENT OBJECTIVE AND POLICIES
Policies PORTFOLIO TRANSACTIONS--Brokerage Commissions,
Portfolio Turnover
14. Management of the Fund INVESTMENT ADVISER
DIRECTORS AND OFFICERS
REMUNERATION
15. Control Persons and Principal DIRECTORS AND OFFICERS
Holders of Securities
16. Investment Advisory and Other INVESTMENT ADVISER
Services DISTRIBUTOR
ADDITIONAL INFORMATION--Experts, Other Information
17. Brokerage Allocation PORTFOLIO TRANSACTIONS--Brokerage Commissions,
and Other Practices Portfolio Turnover
18. Capital Stock and Other ORGANIZATION OF THE FUNDS
Securities DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
19. Purchase, Redemption and PURCHASES
Pricing of Securities Being EXCHANGES AND REDEMPTIONS
Offered FEATURES AND SERVICES OFFERED BY THE FUND--
Dividend and Capital Gain Distribution Options
SPECIAL PLAN ACCOUNTS
NET ASSET VALUE
20. Tax Status DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
TAXES
21. Underwriters DISTRIBUTOR
22. Calculation of PERFORMANCE INFORMATION
Performance Data
23. Financial Statements FINANCIAL STATEMENTS
</TABLE>
Cross Reference - Page 9
<PAGE>
Scudder Cash Investment Trust offered herein is an open-end management
investment company. Scudder Prime Reserve Money Market Shares and Scudder
Premium Money Market Shares also offered herein, are both classes of shares of
Scudder Money Market Series, a portfolio of Scudder Fund, Inc., an open-end
management investment company.
This combined prospectus sets forth concisely the information about Scudder Cash
Investment Trust and Scudder Prime Reserve Money Market Shares and Scudder
Premium Money Market Shares that a prospective investor should know before
investing. Please retain it for future reference.
Shares of the Funds are not insured or guaranteed by the U.S. Government. Each
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.
If you require more detailed information, a Statement of Additional Information
dated November 1, 1998, for Scudder Cash Investment Trust, October 15, 1998, for
Scudder Prime Reserve Money Market Shares and May 1, 1998, for Scudder Premium
Money Market Shares, as amended from time to time, may be obtained without
charge by writing Scudder Investor Services, Inc., Two International Place,
Boston, MA 02110-4103 or calling 1-800-225-2470. The Statements, which are
incorporated by reference into this prospectus, have been filed with the
Securities and Exchange Commission and are available along with other related
materials on the SEC's Internet Web Site (http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Contents--see page 11.
NOT FDIC-INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
Scudder Cash
Investment Trust
- ---------------------------------
October 15, 1998
Scudder Money Market Series --
Scudder Prime Reserve Money
Market Shares
- ---------------------------------
October 15, 1998
Scudder Money Market Series --
Scudder Premium Money
Market Shares
- ---------------------------------
May 1, 1998
These pure no-load(TM) (no sales charges) money market mutual funds seek to
provide monthly income while maintaining liquidity and stability of capital.
<PAGE>
Expense information
Scudder Cash Investment Trust
How to compare a Scudder Family of Funds pure no-load(TM) fund This information
is designed to help you understand the various costs and expenses of investing
in Scudder Cash Investment Trust ("the Fund"). By reviewing this table and those
in other mutual funds' prospectuses, you can compare the Fund's fees and
expenses with those of other funds. With Scudder's pure no-load(TM) funds, you
pay no commissions to purchase or redeem shares, or to exchange from one Fund to
another. As a result, all of your investment goes to work for you.
TO BE UPDATED
1) Shareholder transaction expenses: Expenses charged directly to your
individual account in the Fund for various transactions.
Sales commissions to purchase shares (sales load) NONE
Commissions to reinvest dividends NONE
Redemption fees NONE*
Fees to exchange shares NONE
2) Annual Fund operating expenses: Expenses paid by the Fund before it
distributes its net investment income, expressed as a percentage of the
Fund's average daily net assets for the fiscal year ended June 30, 1997.
Investment management fee (after waiver) ____%***
12b-1 fees NONE
Other expenses ____%
-----
Total operating expenses (after waiver) ____%***
=====
Example
Based on the level of total Fund operating expenses listed above, the total
expenses relating to a $1,000 investment, assuming a 5% annual return and
redemption at the end of each period, are listed below. Investors do not pay
these expenses directly; they are paid by the Fund before it distributes its net
investment income to shareholders. (As noted above, the Fund has no redemption
fees of any kind.)
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$-- $-- $-- $--
See "Fund organization--Investment adviser" for further information about the
investment management fee. This example assumes reinvestment of all dividends
and distributions and that the percentage amounts listed under "Annual Fund
operating expenses" remain the same each year. This example should not be
considered a representation of past or future expenses or return. Actual Fund
expenses and return vary from year to year and may be higher or lower than those
shown.
* You may redeem by writing or calling the Fund or by Write-A-Check. If you
wish to receive your redemption proceeds via wire, there is a $5 wire
service fee. For additional information, please refer to "Transaction
information--Redeeming shares."
** Until __________, the Adviser has agreed to waive all or a portion of its
investment management fee payable by the Fund to the extent necessary so
that the total annualized expenses of the Fund do not exceed 0.85% of the
average daily net assets of the Fund. This expense information has been
restated to reflect current fees. Actual annualized Fund expenses for the
fiscal year ended June 30, 1998 were: investment management fee ____%,
other expenses ____% and total operating expenses ____%.
2
<PAGE>
Expense information
Scudder Prime Reserve Money Market Shares
How to compare a Scudder Family of Funds pure no-load(TM) fund This information
is designed to help you understand the various costs and expenses of investing
in Scudder Prime Reserve Money Market Shares (the "Prime Shares") a class of
Scudder Money Market Series (the "Fund")*. By reviewing this table and those in
other mutual funds' prospectuses, you can compare the fees and expenses with
those of other funds. With Scudder's pure no-load(TM) funds, you pay no
commissions to purchase or redeem shares, or to exchange from one fund to
another. As a result, all of your investment goes to work for you.
TO BE UPDATED
1) Shareholder transaction expenses: Expenses charged directly to your
individual account in the Fund for various transactions.
Sales commissions to purchase shares (sales load) NONE
Commissions to reinvest dividends NONE
Redemption fees NONE**
Fees to exchange shares NONE
2) Annual operating expenses: Estimated expenses paid by the Fund before it
distributes its net investment income, expressed as a percentage of the
Fund's average daily net assets for the initial fiscal period ending
December 31, 1998.
Investment management fee (after waiver) ____%***
12b-1 fees NONE
Other expenses ____%
-----
Total operating expenses (after waiver) ____%***
=====
Example
Based on the estimated level of total operating expenses listed above, the total
expenses relating to a $1,000 investment, assuming a 5% annual return and
redemption at the end of each period, are listed below. Investors do not pay
these expenses directly; they are paid by the Fund before it distributes its net
investment income to shareholders. (As noted above, the Fund has no redemption
fees of any kind.)
1 Year 3 Years
------ -------
$-- $--
See "Fund organization--Investment adviser" for further information about the
investment management fee. This example assumes reinvestment of all dividends
and distributions and that the percentage amounts listed under "Annual operating
expenses" remain the same each year. This example should not be considered a
representation of past or future expenses or return. Actual expenses and return
vary from year to year and may be higher or lower than those shown.
* The information set forth on this page relates only to the Fund's Scudder
Premium Money Market Shares. The Fund also offers two other classes of
shares, Scudder Money Market Managed Shares and Scudder Money Market
Institutional Shares, which may have different fees and expenses (which may
affect performance), have different minimum investment requirements and are
entitled to different services. Information about these other classes may
be obtained by contacting Scudder Investor Services, Inc., Two
International Place, Boston, MA 02110-4103 or calling 1-800-225-2470.
** You may redeem by writing or calling the Fund or by Write-A-Check. If you
wish to receive your redemption proceeds via wire, there is a $5 wire
service fee. For additional information, please refer to "Transaction
information--Redeeming shares."
*** Until April 30, 1999 the Adviser has agreed to waive a portion of its
investment management fee. (See the "Investment Adviser" section of this
prospectus for more information.) If the Adviser had not agreed to waive a
portion of the investment management fee, the investment management fee
would be ____% and it is estimated that the total operating expenses for
the Shares would be ____% for the year ending December 31, 1998.
3
<PAGE>
Expense information
Scudder Premium Money Market Shares
How to compare a Scudder Family of Funds pure no-load(TM) fund This information
is designed to help you understand the various costs and expenses of investing
in Scudder Premium Money Market Shares (the "Premium Shares") a class of Scudder
Money Market Series (the "Fund")*. By reviewing this table and those in other
mutual funds' prospectuses, you can compare the fees and expenses with those of
other funds. With Scudder's pure no-load(TM) funds, you pay no commissions to
purchase or redeem shares, or to exchange from one fund to another. As a result,
all of your investment goes to work for you.
TO BE UPDATED
1) Shareholder transaction expenses: Expenses charged directly to your
individual account in the Fund for various transactions.
Sales commissions to purchase shares (sales load) NONE
Commissions to reinvest dividends NONE
Redemption fees NONE**
Fees to exchange shares NONE
2) Annual operating expenses: Estimated expenses paid by the Fund before it
distributes its net investment income, expressed as a percentage of the
Fund's average daily net assets for the initial fiscal period ending
December 31, 1998.
Investment management fee (after waiver) _____%***
12b-1 fees NONE
Other expenses _____%
------
Total operating expenses (after waiver) _____%***
======
Example
Based on the estimated level of total operating expenses listed above, the
total expenses relating to a $1,000 investment, assuming a 5% annual return and
redemption at the end of each period, are listed below. Investors do not pay
these expenses directly; they are paid by the Fund before it distributes its
net investment income to shareholders. (As noted above, the Fund has no
redemption fees of any kind.)
1 Year 3 Years
------ -------
$---- $----
See "Fund organization--Investment adviser" for further information about the
investment management fee. This example assumes reinvestment of all dividends
and distributions and that the percentage amounts listed under "Annual operating
expenses" remain the same each year. This example should not be considered a
representation of past or future expenses or return. Actual expenses and return
vary from year to year and may be higher or lower than those shown.
* The information set forth on this page relates only to the Fund's Scudder
Premium Money Market Shares. The Fund also offers three other classes of
shares, Scudder Prime Reserve Money Market Shares, Scudder Money Market
Managed Shares and Scudder Money Market Institutional Shares, which may
have different fees and expenses (which may affect performance), have
different minimum investment requirements and are entitled to different
services. Information about these other classes may be obtained by
contacting Scudder Investor Services, Inc., Two International Place,
Boston, MA 02110-4103 or calling 1-800-225-2470.
** You may redeem by writing or calling the Fund or by Write-A-Check. If you
wish to receive your redemption proceeds via wire, there is a $5 wire
service fee. For additional information, please refer to "Transaction
information--Redeeming shares."
*** Until April 30, 1999 the Adviser has agreed to waive a portion of its
investment management fee. (See the "Investment Adviser" section of this
prospectus for more information.) If the Adviser had not agreed to waive a
portion of the investment management fee, the investment management fee
would be ____% and it is estimated that the total operating expenses for
the Shares would be ____% for the year ending December 31, 1998.
4
<PAGE>
Financial highlights
Scudder Cash Investment Trust
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the audited financial
statements. If you would like more detailed information concerning the Fund's
performance, a complete portfolio listing and audited financial statements are
available in the Fund's Annual Report dated June 30, 1998 and may be obtained
without charge by writing or calling Scudder Investor Services, Inc.
TO BE UPDATED
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Years Ended June 30,
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
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 .046 .048 .048 .027 .027 .047 .069 .080 .082 .064
Distributions from net investment (.046) (.048) (.048) (.027) (.027) (.047) (.069) (.080) (.082) (.064)
income and net realized capital
gains
Net asset value, end of period $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
Total Return (%) 4.73 4.89 4.90 2.77 2.75 4.76 7.13 8.23 8.49 6.59
Ratios and Supplemental Data
Net assets, end of period ($ 1,431 1,387 1,520 1,430 1,119 1,361 1,736 1,644 1,563 1,370
millions)
Ratio of operating expenses, net .86 .83 .78 .82 .78 .70 .66 .67 .66 .68
to
average daily net assets (%)
Ratio of operating expenses before .86 .83 .78 .82 .78 .70 .66 .67 .66 .68
expense reduction, to average
daily
net assets (%)
Ratio of net investment income 4.63 4.79 4.84 2.78 2.72 4.58 6.91 7.93 8.21 6.44
to average daily net assets (%)
</TABLE>
5
<PAGE>
Financial highlights
Scudder Premium Money Market Shares
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 audited financial statements. If you would like
more detailed information concerning Fund performance, audited financial
statements are available in the Annual Report dated December 31, 1997 which may
be obtained without charge by writing or calling Scudder Investor Services, Inc.
TO BE UPDATED
<TABLE>
<CAPTION>
<S> <C>
For the Period
July 7, 1997
(commencement
of sale of
Premium Shares)
to June 30, 1998
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $_____
Net investment income _____
Distributions from net investment income _____
Net asset value, end of period $_____
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
Total Return (%) (a) _____
Ratios and Supplemental Data
Net assets, end of period ($ millions) _____
Ratio of operating expenses, net to average daily net assets (%) _____
Ratio of operating expenses before expense reductions, to average daily net _____
assets (%)
Ratio of net investment income to average daily net assets (%) _____
(a) Total return is higher due to the maintenance of Fund expenses.
* Annualized
** Not annualized
</TABLE>
6
<PAGE>
A message from the President
Scudder Kemper Investments, Inc., investment adviser to the Scudder Family of
Funds, 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, and private family and individual accounts. It is one of the ten
largest mutual fund companies in the U.S.
We offered America's first no-load mutual fund in 1928, and today the Scudder
Family of Funds includes over 50 no-load mutual fund portfolios or classes of
shares. We also manage the mutual funds in a special program for the American
Association of Retired Persons, as well as the fund options available through
Scudder Horizon Plan, a tax-advantaged variable annuity. We also advise The
Japan Fund, and numerous other open- and closed-end funds that invest in this
country and other countries around the world.
The Scudder Family of Funds is designed to make investing easy and less costly.
It includes money market, tax free, income and growth funds as well as IRAs,
401(k)s, Keoghs and other retirement plans.
Services available to shareholders include toll-free access to professional
representatives, easy exchange among the Scudder Family of Funds, shareholder
reports, informative newsletters and the walk-in convenience of Scudder Investor
Centers.
Funds or fund classes in the Scudder Family of Funds are offered without
commissions to purchase or redeem shares or to exchange from one fund to
another. There are no 12b-1 fees either, which many other funds now charge to
support their marketing efforts. All of your investment goes to work for you. We
look forward to welcoming you as a shareholder.
/s/Edmond Villani
The Funds
Investment objectives
o two money market mutual funds seeking to provide monthly income while
maintaining liquidity and stability of capital
Investment characteristics of the Funds
o goal of stable $1.00 share price
o fluctuating yield
o dividends declared daily and paid monthly
o Scudder Cash Investment Trust
o minimum initial investment: $2,500
o Scudder Prime Reserve Money Market Shares
o minimum initial investment: $10,000
o Scudder Premium Money Market Shares
o minimum initial investment: $25,000
Contents
Introduction 8
Scudder Cash Investment Trust 8
Scudder Prime Reserve Money Market Shares
and Scudder Premium Money Market
Shares 9
Why invest in the Funds? 10
Additional information about common
policies, investments and investment
restrictions 11
Additional investments 12
Distribution and performance information 14
Fund organization 15
Transaction information 19
Shareholder benefits 24
Purchases 26
Exchanges and redemptions 27
Trustees and Officers of Scudder Cash Investment
Trust 29
Directors and Officers of Scudder
Fund, Inc. 30
Investment products and services 31
How to contact Scudder 32
7
<PAGE>
Introduction
Scudder Cash Investment Trust and Scudder Money Market Series (each a "Fund,"
collectively the "Funds"), are money market mutual funds advised by Scudder
Kemper Investments, Inc. (the "Adviser"). The Funds have similar objectives and
policies, but different features including different initial investment
requirements. Scudder Money Market Series is a diversified series of Scudder
Fund, Inc. (the "Corporation"). The prospectuses for Scudder Cash Investment
Trust, and two classes of shares of Scudder Money Market Series; Prime Reserve
Shares and Premium Shares are presented together so you can understand their
important differences and decide which Fund is most suitable for your investment
needs.
Except as otherwise indicated, each Fund's investment objectives and policies
are not fundamental and may be changed without a vote of shareholders. If there
is a change in investment objectives, shareholders should consider whether the
Fund remains an appropriate investment in light of their current financial
position and needs. There can be no assurance that each Fund's objectives will
be met.
Scudder Cash Investment Trust
Investment objective
The investment objective of Scudder Cash Investment Trust (the "Trust"), a
diversified, open-end management investment company, is to seek to maintain
stability of capital and, consistent therewith, to maintain liquidity of capital
and to provide current income. The Fund seeks to achieve its objective by
investing in money market securities. The Fund seeks to maintain a constant net
asset value of $1.00 per share. It declares dividends daily and pays them out
monthly.
Investments
The Fund purchases U.S. dollar-denominated securities with remaining maturities
of 397 calendar days or less, except in the case of U.S. Government securities,
which may have remaining maturities of 762 calendar days or less. The
dollar-weighted average maturity of the Fund's portfolio will vary with money
market conditions, but is always 90 days or less. All securities in the Fund's
portfolio must meet credit quality standards pursuant to procedures established
by the Trustees. Generally, the Fund may purchase only securities which are
rated, or issued by a company with comparable securities rated, the two highest
short-term rating categories of one or more of the following rating agencies:
Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Corporation
("S&P") and Fitch Investors Service, Inc. ("Fitch"). If a security is unrated,
the Fund may purchase the security if, in the opinion of the Adviser, the credit
quality of the security is deemed equivalent to the rated securities mentioned
above.
The Fund may invest in short-term securities consisting of: obligations issued
or guaranteed by the U.S. Government, its agencies or instrumentalities;
obligations of supranational organizations such as the International Bank for
Reconstruction and Development (the World Bank); obligations of domestic banks
and foreign branches of domestic banks, including bankers' acceptances,
certificates of deposit, deposit notes and time deposits; and obligations of
savings and loan institutions.
The Fund may also invest in: instruments whose credit has been enhanced by banks
(letters of credit), insurance companies (surety bonds) or other corporate
entities (corporate guarantees); corporate obligations, including commercial
paper, notes, bonds, loans and loan participations; securities with variable or
floating interest rates; when-issued securities; asset-backed securities,
including certificates, participations and notes; municipal securities,
including notes, bonds and participation interests, either taxable or tax free;
and illiquid securities.
8
<PAGE>
In addition, the Fund may invest in repurchase agreements and securities with
put features.
As a means of earning income for periods as short as overnight, the Fund may
enter into repurchase agreements with selected banks and broker/dealers. Under a
repurchase agreement, the Fund acquires securities, subject to the seller's
agreement to repurchase those securities at a specified time and price. If the
seller under a repurchase agreement becomes insolvent, the Fund's right to
dispose of the securities might be restricted, or the value of the securities
may decline before the Fund is able to dispose of them. In the event of the
commencement of bankruptcy or insolvency proceedings with respect to the seller
of the securities before repurchase under a repurchase agreement, the Fund may
encounter delay and incur costs, including a decline in the value of the
securities, before being able to sell the securities.
Each of the above referenced eligible investments and investment practices have
certain risks associated with them. For a more complete description, please
refer to the Funds' combined Statement of Additional Information.
Scudder Prime Reserve Money Market Shares and Scudder Premium Money Market
Shares
Investment objectives
Scudder Prime Reserve Money Market Shares and Scudder Premium Money Market
Shares are both classes of shares of Scudder Money Market Series, a diversified
series of Scudder Fund, Inc. (the "Corporation"), an open-end management
investment company, seeks to provide investors with as high a level of current
income as is consistent with its investment policies and with preservation of
capital and liquidity.
The Fund invests exclusively in a broad range of short-term money market
instruments that have remaining maturities of not more than 397 calendar days
and certain repurchase agreements. These money market securities consist of
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities, taxable and tax-exempt municipal obligations, corporate and
bank obligations, certificates of deposit, bankers' acceptances and variable
amount master demand notes.
The Fund will maintain a dollar-weighted average maturity of 90 days or less in
an effort to maintain a constant net asset value of $1.00 per share, but there
is no assurance that it will be able to do so.
Investments
The bank obligations in which the Fund may invest include negotiable
certificates of deposit, bankers' acceptances, fixed time deposits or other
short-term bank obligations. Generally, the Fund may not invest less than 25% of
the current value of its total assets in bank obligations (including bank
obligations subject to repurchase agreements). The Fund limits its investments
in U.S. bank obligations to banks (including foreign branches, the obligations
of which are guaranteed by the U.S. parent) that have at least $1 billion in
total assets at the time of investment. "U.S. banks" include commercial banks
that are members of the Federal Reserve System or are examined by the
Comptroller of the Currency or whose deposits are insured by the Federal Deposit
Insurance Corporation. In addition, the Fund may invest in obligations of
savings banks and savings and loan associations insured by the Federal Deposit
Insurance Corporation that have total assets in excess of $1 billion at the time
of the investment. The Fund may invest in U.S. dollar-denominated obligations of
foreign banks subject to the following conditions: the foreign banks (based upon
their most recent annual financial statements) at the time of investment (i)
must have more than U.S. $10 billion, or the equivalent in other currencies, in
9
<PAGE>
total assets; (ii) are among the 100 largest banks in the world as determined on
the basis of assets; and (iii) have branches or agencies in the U.S.; the
obligations must be, in the opinion of the Adviser, of an investment quality
comparable to obligations of U.S. banks in which the Fund may invest. Such
investments may involve greater risks than those affecting U.S. banks or
Canadian affiliates of U.S. banks. In addition, foreign banks are not subject to
examination by any U.S. Government agency or instrumentality.
Fixed time deposits may be withdrawn on demand by the investor, but may be
subject to early withdrawal penalties that vary with market conditions and the
remaining maturity of the obligations.
Generally, the commercial paper purchased by the Fund consists of direct
obligations of domestic corporate issuers, including bank holding companies,
whose obligations, at the time of investment, are (i) rated "P-1" by Moody's,
"A-1" or higher by S&P or "F-1" by Fitch, (ii) issued or guaranteed as to
principal and interest by issuers having an existing debt security rating of
"Aa" or higher by Moody's or "AA" or higher by S&P or Fitch, or (iii) securities
that, if not rated, are of comparable investment quality as determined by the
Adviser in accordance with procedures adopted by the Corporation's Board of
Directors.
The Fund may invest in non-convertible corporate debt securities such as notes,
bonds and debentures that are rated "Aa" or higher by Moody's or "AA" or higher
by S&P or Fitch, and variable amount master demand notes. A variable amount
master demand note differs from ordinary commercial paper in that it is issued
pursuant to a written agreement between the issuer and the holder. Its amount
may from time to time be increased by the holder (subject to an agreed maximum)
or decreased by the holder or the issuer and is payable on demand. The rate of
interest varies pursuant to an agreed-upon formula. Generally, master demand
notes are not rated by a rating agency. However, the Fund may invest in a master
demand note that, if not rated, is in the opinion of the Adviser of investment
quality comparable to rated securities in which the Fund may invest.
All of the securities in which the Fund will invest must meet credit standards
applied by the Adviser pursuant to procedures established by the Corporation's
Board of Directors. Should an issue of securities cease to be rated or if its
rating is reduced below the minimum required for purchase by the Fund, the
Adviser will dispose of any such security, as soon as practicable, unless the
Directors determine that such disposal would not be in the best interests of the
Fund.
In addition, the Fund may invest in variable or floating rate obligations,
obligations backed by bank letters of credit, when-issued securities and
securities with put features.
Each of the above-referenced eligible investments and investment practices have
certain risks associated with them. For a more complete description, please
refer to the Fund's combined Statement of Additional Information.
Why invest in the Funds?
A money market mutual fund can be an appropriate component of virtually any type
of investment program. The money market funds described in this prospectus, may
each be a good choice for investors who want their assets to grow in a stable
investment, those who want to keep their "nest egg" safe and handy, or those who
are simply looking to "park" their investment capital for a limited period.
Money market funds may be appropriate for investors desiring monthly income, yet
who are also concerned about the stability of their investment principal. This
conservative fund option seeks to maintain a stable $1.00 share price though
10
<PAGE>
investment in a diversified pool of very short-term, high quality money market
securities.
Another important feature of money market funds is daily liquidity. For these
Scudder money market Funds, investors can gain access to their cash in different
ways; for example, by toll-free telephone redemption or through a convenient, no
fee check writing option. Further, investors can receive their monthly income by
check or have those dividends invested automatically, without charge, in
additional shares of the same fund, which will help build up their account over
time.
To help meet various cash management needs, investors are provided with a choice
of money funds, one of which has multiple classes from which to choose:
Scudder Cash Investment Trust:
This Fund is designed as a highly flexible and convenient vehicle for cash
investments. The minimum initial investment in this Fund is only $2,500 per
account. This Fund, which can serve as a starting point for building a
well-diversified investment portfolio, provides investors with maximum
flexibility, through low checkwriting minimums and a low account balance
requirement.
Scudder Prime Reserve Money Market Shares:
This investment choice is designed more as a savings vehicle, particularly as
a complement to bank savings accounts and other bank products. The minimum
initial investment in Shares of this Fund is $10,000 per account. By requiring
a larger account balance than a typical money fund, Scudder Prime Reserve
Money Market Shares strives to reduce the impact of transaction and various
fixed costs on overall expenses, leading to an expected higher return for
shareholders.
Scudder Premium Money Market Shares:
Scudder Premium Money Market Shares are designed for shareholders who have the
resources to maintain higher account balances and, in return, be rewarded with
potentially above average money fund income. The minimum initial investment
required in Shares of this Fund is $25,000 per account. With this $25,000
minimum, it is anticipated that Premium Money Market Shares will normally
offer a higher yield than Scudder Cash Investment Trust or the Prime Reserve
Money Market Shares.
Additional information about common policies, investments and
investment restrictions
Each Fund has certain investment restrictions which are designed to reduce each
Fund's investment risk. Fundamental investment restrictions may not be changed
without a vote of shareholders; non-fundamental investment restrictions may be
changed by a vote of the Board of Directors or Trustees as applicable. A
complete description of these and other policies and restrictions is contained
under "Investment Restrictions" in the Funds' combined Statement of Additional
Information.
As a matter of fundamental policy, each Fund may not borrow money, except as
permitted under Federal law. Further, as a matter of non-fundamental policy,
each Fund may not borrow money in an amount greater than 5% of total assets,
except for temporary or emergency purposes.
As a matter of fundamental policy, each Fund may not make loans except through
the lending of portfolio securities, the purchase of debt securities or
interests in indebtedness or through repurchase agreements. Each Fund has
adopted a non-fundamental policy restricting the lending of portfolio securities
to no more than 5% of total assets.
As permitted under the current federal rule regulating money market funds, the
high quality securities in which each Fund invests are divided into "first tier"
and "second tier" securities. First tier securities are those securities
generally rated in the highest short-term category by at least two rating
11
<PAGE>
agencies (or one, if only one rating agency has rated the security). Securities
which are generally rated in the two highest categories by at least two rating
agencies (or one, if only one rating agency has rated the security) and which do
not qualify as first tier securities are second tier securities. The Adviser may
determine, pursuant to procedures approved by the Corporation's or Trust's
respective Board of Directors or Trustees, that an unrated security is
equivalent to a first tier or second tier security. The Funds will not invest
more than 5% of their total assets in securities issued by a single issuer. The
Funds will not invest more than 5% of their total assets in second tier
securities or the greater of 1% of total assets or $1 million in second tier
securities of a single issuer.
Repurchase agreements
As a means of earning income for periods as short as overnight, each Fund may
enter into repurchase agreements with selected banks and broker/dealers. Under a
repurchase agreement, each Fund acquires securities, subject to the seller's
agreement to repurchase those securities at a specified time and price. If the
seller under a repurchase agreement becomes insolvent, each Fund's right to
dispose of the securities might be restricted, or the value of the securities
may decline before each Fund is able to dispose of them. In the event of the
commencement of bankruptcy or insolvency proceedings with respect to the seller
of the securities before repurchase under a repurchase agreement, each Fund may
encounter delay and incur costs, including a decline in the value of the
securities, before being able to sell the securities.
When-issued securities
Each Fund may purchase securities on a when-issued basis, in which case delivery
and payment normally take place within 45 days after the date of the commitment
to purchase. Each Fund will only make commitments to purchase securities on a
when-issued basis with the intention of actually acquiring the securities, but
may sell them before the settlement date if it is deemed advisable. When-issued
securities are subject to market fluctuation and no income accrues to the
purchaser prior to issuance. The purchase price and the interest rate that will
be received on debt securities are fixed at the time the purchaser enters into
the commitment. Purchasing a security on a when-issued basis can involve a risk
that the market price at the time of delivery may be lower than the agreed upon
purchase price, in which case there could be an unrealized loss at the time of
delivery.
Additional investments
Obligations of U.S. Government agencies and instrumentalities
Obligations of U.S. Government agencies and instrumentalities are debt
securities issued or guaranteed by U.S. Government-sponsored enterprises and
federal agencies. Some of such obligations are supported by (a) the full faith
and credit of the U.S. Treasury (such as Government National Mortgage
Association participation certificates), (b) the limited authority of the issuer
to borrow from the U.S. Treasury (such as securities of the Federal Home Loan
Bank), (c) the authority of the U.S. Government to purchase certain obligations
of the issuer (such as securities of the Federal National Mortgage Association)
or (d) only the credit of the issuer. In the case of obligations not backed by
the full faith and credit of the U.S. Government, the investor must look
principally to the agency issuing or guaranteeing the obligation for ultimate
repayment, which agency may be privately owned. The Fund will invest in
obligations of U.S. Government agencies and instrumentalities only when the
Adviser is satisfied that the credit risk with respect to the issuer is minimal.
12
<PAGE>
Floating and variable rate instruments
Certain of the obligations that the Fund may purchase have a floating or
variable rate of interest. Such obligations bear interest at rates that are not
fixed, but which vary with changes in specified market rates or indices, such as
the Prime Rate, and at specified intervals.
Municipal obligations
Municipal obligations, which are debt obligations issued by or on behalf of
states, cities, municipalities and other public authorities, and may be general
obligation, revenue, or industrial development bonds, include municipal bonds,
municipal notes and municipal commercial paper.
The Fund's investments in municipal bonds are limited to bonds that are rated at
the date of purchase "Aa" or better by Moody's or "AA" or higher by S&P or
Fitch.
The Fund's investments in municipal notes will be limited to notes that are
rated at the date of purchase "MIG 1" or "MIG 2" (or "VMIG 1" or "VMIG 2" in the
case of an issue having a variable rate demand feature) by Moody's, "SP-1" or
"SP-1+" by S&P or "F-1" or "F-1+" by Fitch.
Municipal commercial paper is a debt obligation with a stated maturity of 270
days or less that is issued to finance seasonal working capital needs or as
short-term financing in anticipation of longer-term debt. The Fund may invest in
municipal commercial paper that is rated at the date of purchase "P-1" or "P-2"
by Moody's, "A-1" or "A-2" or "A-1+" by S&P or "F-1" by Fitch. If a municipal
obligation is not rated, the Fund may purchase the obligation if, in the opinion
of the Adviser, it is of investment quality comparable to other rated
investments that are permitted in the Fund.
Commercial paper
Commercial paper represents short-term unsecured promissory notes issued in
bearer form by bank holding companies, corporations and finance companies. The
Fund may invest in commercial paper that is rated Prime-1 by Moody's or A-1 by
S&P or, if not rated by Moody's or S&P, is issued by companies having an
outstanding debt issue rated Aaa or Aa by Moody's or AAA or AA by S&P.
Letters of credit
Municipal obligations, including certificates of participation, commercial paper
and other short-term obligations may be backed by an irrevocable letter of
credit of a bank which assumes the obligation for payment of principal and
interest in the event of default by the issuer. Only banks which, in the opinion
of the Adviser, are of investment quality comparable to other permitted
investments of the Fund may be used for letter of credit backed investments.
Securities with put rights
The Funds may enter into put transactions with respect to obligations held in
its portfolio with broker/dealers pursuant to a rule under the Investment
Company Act of 1940, as amended (the "1940 Act"), and with commercial banks.
The right of the Funds to exercise a put is unconditional and unqualified. A put
is not transferable by the Funds, although the Funds may sell the underlying
securities to a third party at any time. If necessary and advisable, the Funds
may pay for certain puts either separately in cash or by paying a higher price
for portfolio securities that are acquired subject to such a put (thus reducing
the yield to maturity otherwise available for the same securities). The Funds
expect, however, that puts generally will be available without the payment of
any direct or indirect consideration.
The Funds may enter into puts only with banks or broker/dealers that, in the
opinion of the Adviser, present minimal credit risks. The ability of the Funds
to exercise a put will depend on the ability of the bank or broker/dealer to pay
for the underlying securities at the time the put is exercised. In the event
that a bank or broker/dealer should default on its obligation to repurchase an
underlying security, the Funds might be unable to recover all or a portion of
any loss sustained from having to sell the security elsewhere.
13
<PAGE>
Each Fund intends to enter into puts solely to maintain liquidity and does not
intend to exercise its rights thereunder for trading purposes. The puts will
only be for periods of substantially less than the life of the underlying
security. The acquisition of a put will not affect the valuation by the Funds of
the underlying security. The actual put will be valued at zero in determining
net asset value of the Funds. Where the Funds pays directly or indirectly for a
put, its cost will be reflected as an unrealized loss for the period during
which the put is held by the Funds and will be reflected in realized gain or
loss when the put is exercised or expires. If the value of the underlying
security increases, the potential for unrealized or realized gain is reduced by
the cost of the put. The maturity of a municipal obligation purchased by the
Funds will not be considered shortened by any put to which such obligation is
subject.
Third party puts
The Funds may also purchase long-term fixed rate bonds that have been coupled
with an option granted by a third party financial institution allowing the Funds
at specified intervals, not exceeding 397 calendar days, to tender (or "put")
the bonds to the institution and receive the face value thereof (plus accrued
interest). These third party puts are available in several different forms, may
be represented by custodial receipts or trust certificates and may be combined
with other feature such as interest rate swaps. The Funds receive a short-term
rate of interest (which is periodically reset), and the interest rate
differential between that rate and the fixed rate on the bond is retained by the
financial institution. The financial institution granting the option does not
provide credit enhancement, and in the event that there is a default in the
payment of principal or interest, or downgrading of a bond to below investment
grade, or a loss of the bond's tax-exempt status, the put option will terminate
automatically, the risk to the Funds will be that of holding such a long-term
bond and the dollar-weighted average maturity of the Funds would be adversely
affected.
Distribution and performance information
Dividends and capital gains distributions
The Funds' dividends are declared daily and distributed monthly to shareholders.
The Funds may take into account capital gains and losses (other than long-term
capital gains) in their daily dividend declaration. The Funds may make
additional distributions for tax purposes, if necessary. Any dividends or
capital gains distributions declared in October, November or December with a
record date in such a month and paid during the following January will be
treated by shareholders for federal income tax purposes as if received on
December 31 of the calendar year declared. According to preference, shareholders
may receive distributions in cash or have them reinvested in additional Scudder
Cash Investment Trust shares, Scudder Prime Reserve Money Market Shares or
Scudder Premium Money Market Shares, as the case may be. If an investment is in
the form of a retirement plan, all dividends and capital gains distributions
must be reinvested into the shareholder's account. Dividends ordinarily will
vary from one class of Scudder Money Market Series to another.
Generally, dividends from net investment income are taxable to shareholders as
ordinary income whether received in cash or additional shares.
Long-term capital gains distributions, if any, are taxable as long-term capital
gains, regardless of the length of time shareholders have owned their shares.
Short-term capital gains and any other taxable income distributions are taxable
as ordinary income. It is not expected that dividends will qualify for the
dividends-received deduction for corporations.
14
<PAGE>
Each Fund sends detailed tax information to shareholders about the amount and
type of its distributions by January 31 of the following year.
Performance information
From time to time, quotations of the performance of Scudder Cash Investment
Trust, Scudder Prime Reserve Money Market Shares and Scudder Premium Money
Market Shares may be included in advertisements, sales literature or shareholder
reports. Performance information is computed separately for each class of
Scudder Money Market Series in accordance with formulae prescribed by the
Securities and Exchange Commission. Performance figures will vary in part
because of the different expense structure of Scudder Money Market Series'
different classes of shares. All performance figures are historical, show the
performance of a hypothetical investment and are not intended to indicate future
performance.
The "yield" of Scudder Cash Investment Trust, Scudder Prime Reserve Money Market
Shares and Scudder Premium Money Market Shares refers to income generated by an
investment over a specified seven-day period. Yield is expressed as an
annualized percentage. The "effective yield" of Scudder Cash Investment Trust,
Scudder Prime Reserve Money Market Shares or Scudder Premium Money Market Shares
is expressed similarly but, when annualized, the income earned by an investment
is assumed to be reinvested and will reflect the effects of compounding. "Total
return" is the change in value of an investment in Scudder Cash Investment
Trust, Scudder Prime Reserve Money Market Shares or Scudder Premium Money Market
Shares for a specified period. The "average annual total return" is the average
annual compound rate of return of an investment in Scudder Cash Investment
Trust, Scudder Prime Reserve Money Market Shares or Scudder Premium Money Market
Shares assuming the investment has been held for one year, five years and ten
years as of a stated ending date. (If a Fund has not been in operation for at
least a year or for a period of less than ten years, only the life of the Fund
will be used.) "Cumulative total return" represents the cumulative change in
value of an investment in Scudder Cash Investment Trust, Scudder Prime Reserve
Money Market Shares or Scudder Premium Money Market Shares for various periods.
All types of total return calculations assume that all dividends and capital
gains distributions during the period were reinvested in shares of Scudder Cash
Investment Trust, Scudder Prime Reserve Money Market Shares or Scudder Premium
Money Market Shares, as applicable.
Performance will vary based upon, among other things, changes in market
conditions and the level of a Fund's expenses, as well as particular class
expenses in the case of Scudder Prime Reserve Money Market Shares or Scudder
Premium Money Market Shares.
Fund organization
The prospectuses of Scudder Cash Investment Trust, and the Scudder Prime Reserve
Money Market Shares and Scudder Premium Money Market Shares classes of Scudder
Money Market Series are combined in this prospectus. Each Fund offers only its
own shares, yet it is possible that one might become liable for a misstatement
regarding the other. Each Corporation's or Trust's respective Board of Trustees
or Directors have considered this and approved the use of a combined prospectus.
Scudder Cash Investment Trust is a diversified, open-end management investment
company registered under the 1940 Act. The Fund was organized as a Massachusetts
business trust in December 1975.
The Fund's activities are supervised by its Board of Trustees. Shareholders have
one vote for each share held on matters on which they are entitled to vote. The
Fund is not required to and has no current intention of holding annual
15
<PAGE>
shareholder meetings, although special meetings may be called for purposes such
as electing or removing Trustees, changing fundamental investment policies or
approving an investment management agreement. Shareholders will be assisted in
communicating with other shareholders in connection with removing a Trustee as
if Section 16(c) of the 1940 Act were applicable.
Scudder Prime Reserve Money Market Shares and Scudder Premium Money Market
Shares share a common investment portfolio known as Scudder Money Market Series,
a diversified series of Scudder Fund, Inc., an open-end management investment
company registered under the 1940 Act. The Corporation was formed in June 1982
as a Maryland corporation.
The Corporation's activities are supervised by its Board of Directors. The Board
of Directors, under applicable laws of the State of Maryland, in addition to
supervising the actions of the Corporation's Adviser and Distributor, as set
forth below, decides upon matters of general policy.
The Corporation has adopted a plan pursuant to Rule 18f-3 (the "Plan") under the
1940 Act to permit the Corporation to establish a multiple class distribution
system for all of its Funds.
Under the Plan, shares of each class represent an equal pro rata interest in the
Fund and, generally, shall have identical voting, dividend, liquidation, and
other rights, preferences, powers, restrictions, limitations, qualifications and
terms and conditions, except that: (1) each class shall have a different
designation; (2) each class of shares shall bear its own "class expenses;" (3)
each class shall have exclusive voting rights on any matter submitted to
shareholders that relates to its administrative services, shareholder services
or distribution arrangements; (4) each class shall have separate voting rights
on any matter submitted to shareholders in which the interests of one class
differ from the interests of any other class; (5) each class may have separate
and distinct exchange privileges; (6) each class may have different conversion
features, and (7) each class may have separate account size requirements.
Expenses currently designated as "Class Expenses" by the Corporation's Board of
Directors under the Plan include, for example, transfer agent fees attributable
to a specific class, and certain securities registration fees.
In addition to the Scudder Prime Reserve Money Market Shares and Scudder Premium
Money Market Shares classes offered herein, the Scudder Money Market Series
offers two other classes of shares, Scudder Managed Shares and Scudder
Institutional Shares, which may have different fees and expenses (which may
affect performance), may have different minimum investment requirements and are
entitled to different services. Additional information about these other classes
of shares of the Fund may be obtained by contacting Scudder Investor Services,
Inc.
Each share of the Scudder Prime Reserve Money Market Shares and Scudder Premium
Money Market Shares shall be entitled to one vote (or fraction thereof in
respect of a fractional share) on matters that such shares (or class of shares)
shall be entitled to vote. Shareholders of the Fund shall vote together on any
matter, except to the extent otherwise required by the 1940 Act, or when the
Board of Directors of the Corporation has determined that the matter affects
only the interests of shareholders of one or more classes of the Fund, in which
case only the shareholders of such class or classes of the Fund shall be
entitled to vote thereon. Any matter shall be deemed to have been effectively
acted upon with respect to the Fund if acted upon as provided in Rule 18f-2
under the 1940 Act, or any successor rule, and in the Corporation's Articles of
Incorporation.
The Corporation is not required to and has no current intention of holding
annual shareholder meetings, although meetings may be called for purposes such
as electing or removing Directors, changing fundamental investment policies or
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approving an investment advisory agreement. Shareholders will be assisted in
communicating with other shareholders in connection with removing a Director as
if Section 16(c) of the 1940 Act were applicable.
Investment adviser
The Funds retain the investment management firm of Scudder Kemper Investments,
Inc., a Delaware corporation formerly known as Scudder, Stevens & Clark, Inc.
("Scudder"), to manage their daily investment and business affairs subject to
the policies established by the Board of Trustees (for the Scudder Cash
Investment Trust) and Directors (for the Scudder Prime Reserve Money Market
Shares and Scudder Premium Money Market Shares). The Trustees and Directors have
overall responsibility for the management of the Funds under Massachusetts and
Maryland law, respectively.
Scudder and Zurich Insurance Company ("Zurich"), an international insurance and
financial services organization, have formed a new global investment
organization by combining Scudder with Zurich's subsidiary, Zurich Kemper
Investments, Inc. As a result of the transaction, Zurich owns approximately 70%
of the Adviser, with the balance owned by the Adviser's officers and employees.
Scudder Cash Investment Trust. The Adviser received an investment advisory fee
for its services which totaled _____% of Scudder Cash Investment Trust's average
daily net assets during the fiscal year ended June 30, 1998. The fee is
graduated so that increases in the Fund's net assets may result in a lower
average fee rate and decreases in the Fund's net assets may result in a higher
average fee rate.
Scudder Cash Investment Trust's fee is payable monthly, provided that the Fund
will make such interim payments as may be requested by the Adviser not to exceed
75% of the amount of the fee then accrued on the books of the Fund and unpaid.
Until __________, 1998, the Adviser has agreed to waive all or a portion of its
investment management fee payable by the Fund to the extent necessary so that
the total annualized expenses of the Fund do not exceed ____% of the average
daily net assets.
All of the Fund's expenses are paid out of gross investment income. Shareholders
pay no direct charges or fees for investment or administrative services.
Scudder Prime Reserve Money Market Fund and Scudder Premium Money Market Shares.
Pursuant to its Investment Advisory Agreement (the "Agreement") with the
Corporation on behalf of the Scudder Money Market Series, the Adviser regularly
provides the Funds with investment research, advice and supervision and
continuously furnishes an investment program for the Funds, consistent with its
Funds' investment objectives and policies. Each Agreement further provides that
the Adviser will pay the compensation and certain expenses of all officers and
certain employees of the Corporation and make available to each Fund such of the
Adviser's directors, officers and employees as are reasonably necessary for the
Funds' operations or as may be duly elected officers or directors of the
Corporation. Under each Agreement, the Adviser pays the Funds' office rent and
will provide investment advisory research and statistical facilities and all
clerical services relating to research, statistical and investment work. The
Adviser, including the Adviser's employees who serve the Funds, may render
investment advice, management and other services to others.
Each Fund will bear all expenses not specifically assumed by the Adviser under
the terms of its Agreement, including, among others, the fee payable to the
Adviser as investment adviser, the fees of the Directors who are not "affiliated
persons" (as defined in the 1940 Act) of the Adviser, the expenses of all
Directors or Trustees as applicable and the fees and out-of-pocket expenses of
the Corporation's or Trust's as applicable Custodian and Transfer Agent. For a
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more complete description of the expenses to be borne by each Fund, see
"Investment Adviser" and "Distributor" in the Funds' Statement of Additional
Information.
The Adviser receives a management fee at an annual rate equal to 0.25% of the
average daily net assets of the Scudder Money Market Series. Management fees are
computed daily and paid monthly. The Adviser has agreed to waive 0.05% of its
management fee from Scudder Money Market Series until April 30, 1999 for Prime
Reserve Money Market Shares and Premium Money Market Shares. In addition, from
time to time, the Adviser may voluntarily waive certain additional expenses of
the Fund. The level of this voluntary waiver is in the Adviser's discretion and
is in addition to the Adviser's agreement to waive a portion of its investment
management fee.
Scudder Cash Investment Trust and Scudder Money Market Series. Under the
Investment Management Agreement with the Adviser, each Fund is responsible for
all of its expenses, including fees and expenses incurred in connection with
membership in investment company organizations; fees and expenses of the Fund's
accounting agent; brokers' commissions; legal, auditing and accounting expenses;
taxes and governmental fees; the fees and expenses of the transfer agent; the
expenses of and the fees for registering or qualifying securities for sale; the
fees and expenses of Directors or Trustees, as applicable, officers and
employees of the Corporation or Trust who are not affiliated with the Adviser;
the cost of printing and distributing reports and notices to shareholders; and
the fees and disbursements of custodians.
All of each Fund's expenses are paid out of gross investment income.
Shareholders pay no direct charges or fees for investment or administrative
services.
Like other mutual funds and financial and business organizations worldwide, the
Funds could be adversely affected if computer systems on which the Funds rely,
which primarily include those used by the Adviser, its affiliates or other
service providers, are unable to correctly process date-related information on
and after January 1, 2000. This risk is commonly called the Year 2000 Issue.
Failure to successfully address the Year 2000 Issue could result in
interruptions to and other material adverse effects on the Funds' business and
operations. The Adviser has commenced a review of the Year 2000 Issue as it may
affect the Funds and is taking steps it believes are reasonably designed to
address the Year 2000 Issue, although there can be no assurances that these
steps will be sufficient. In addition, there can be no assurances that the Year
2000 Issue will not have an adverse effect on the companies whose securities are
held by the Funds or on global markets or economies generally.
Transfer agent
Scudder Service Corporation, P.O. Box 2291, Boston, Massachusetts 02107-2291, a
subsidiary of the Adviser, is the transfer, shareholder servicing and
dividend-paying agent for the Funds.
Underwriter
Scudder Investor Services, Inc., a subsidiary of the Adviser, is the principal
underwriter for Scudder Cash Investment Trust and Scudder Fund, Inc. Scudder
Investor Services, Inc. confirms, as agent, all purchases of shares of the
Funds. Scudder Investor Relations is a telephone information service provided by
Scudder Investor Services, Inc.
Fund accounting agent
Scudder Fund Accounting Corporation, a subsidiary of the Adviser, is responsible
for determining the daily net asset value per share and maintaining the general
accounting records of the Funds.
Custodian
State Street Bank and Trust Company is the Funds' custodian.
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Scudder Kemper Investments, Inc., is located at
Two International Place, Boston, Massachusetts.
Like other mutual funds and financial and business organizations worldwide, a
Fund could be adversely affected if computer systems on which a Fund relies,
which primarily include those used by the Adviser, its affiliates or other
service providers, are unable to correctly process date-related information on
and after January 1, 2000. This risk is commonly called the Year 2000 Issue.
Failure to successfully address the Year 2000 Issue could result in
interruptions to and other material adverse effects on a Fund's business and
operations. The Adviser has commenced a review of the Year 2000 Issue as it may
affect a Fund and is taking steps it believes are reasonably designed to address
the Year 2000 Issue, although there can be no assurances that these steps will
be sufficient. In addition, there can be no assurances that the Year 2000 Issue
will not have an adverse effect on the companies whose securities are held by a
Fund or on global markets or economies generally.
Transaction information
Purchasing shares
Purchases are executed at the next calculated net asset value per share after
the Funds' transfer agent receives the purchase request in good order. Purchases
are made in full and fractional shares. (See "Share price.")
Minimum initial investment:
Scudder Cash Investment Trust:
$2,500; IRAs $1,000
Scudder Prime Reserve Money Market Shares: $10,000; IRAs $10,000
Scudder Premium Money Market Shares: $25,000; IRAs $25,000
By check. If you purchase shares with a check that does not clear, your purchase
will be canceled and you will be subject to any losses or fees incurred in the
transaction. Checks must be drawn on or payable through a U.S. bank. If you
purchase shares by check and redeem them within seven business days of purchase,
a Fund may hold redemption proceeds until the purchase check has cleared. If you
purchase shares by federal funds wire, you may avoid this delay. Redemption
requests by telephone or by "Write-A-Check" prior to the expiration of the
seven-day period will not be accepted.
By wire. To open a new account by wire, first call Scudder at 1-800-225-5163 to
obtain an account number. A representative will instruct you to send a
completed, signed application to the transfer agent. Accounts cannot be opened
without a completed, signed application and a Scudder fund account number.
Contact your bank to arrange a wire transfer to:
The Scudder Funds
State Street Bank and Trust Company
Boston, MA 02101
ABA Number 011000028
DDA Account 9903-5552
Your wire instructions must also include:
- -- the name of the fund and class (if applicable) in which the money is to be
invested, -- the account number of the fund, and -- the name(s) of the account
holder(s).
The account will be established once the application and money order are
received in good order.
You may also make additional investments of $100 or more for Scudder Cash
Investment Trust, and $1,000 or more for either Scudder Prime Reserve Money
Market Shares or Scudder Premium Money Market Shares to your existing account by
wire.
By "QuickBuy." If you elected "QuickBuy" for your account, you can call
toll-free to purchase shares. The money will be automatically transferred from
your predesignated bank checking account. Your bank must be a member of the
Automated Clearing House for you to use this service. If you did not elect
"QuickBuy," call 1-800-225-5163 for more information.
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<PAGE>
To purchase additional shares, call 1-800-225-5163. Purchases may not be for
more than $250,000. Proceeds in the amount of your purchase will be transferred
from your bank checking account in two or three business days following your
call. For requests received by the close of regular trading on the Exchange,
shares will be purchased at the net asset value per share calculated at the
close of trading on the day of your call. "QuickBuy" requests received after the
close of regular trading on the Exchange will begin their processing and be
purchased at the net asset value calculated the following business day.
If you purchase shares by "QuickBuy" and redeem them within seven days of the
purchase, the Fund may hold the redemption proceeds for a period of up to seven
business days. If you purchase shares and there are insufficient funds in your
bank account, the purchase will be canceled and you will be subject to any
losses or fees incurred in the transaction. "QuickBuy" transactions are not
available for most retirement plan accounts. However, "QuickBuy" transactions
are available for Scudder IRA accounts.
By exchange. Scudder Cash Investment Trust, Scudder Prime Reserve Money Market
Shares and Scudder Premium Money Market Shares may be exchanged for shares of
other funds in the Scudder Family of Funds, unless otherwise determined by the
Trust's or Corporation's respective Board of Trustees or Directors. Your new
account will have the same registration and address as your existing account.
The exchange requirements for corporations, other organizations, trusts,
fiduciaries, agents, institutional investors and retirement plans may be
different from those for regular accounts. Minimum account requirements may be
different for other Scudder Funds. Please call 1-800-225-5163 for more
information, including information about the transfer of special account
features.
You can also make exchanges among your Scudder fund accounts on SAIL, the
Scudder Automated Information Line, by calling 1-800-343-2890.
Redeeming shares
Each Fund allows you to redeem shares (i.e., sell them back to the Fund) without
redemption fees.
By telephone. This is the quickest and easiest way to sell Fund shares. If you
provided your banking information on your application, you can call to request
that federal funds be sent to your authorized bank account. If you did not
include your banking information on your application, call 1-800-225-5163 for
more information.
Redemption proceeds will be wired to your bank unless otherwise requested. If
your bank cannot receive federal reserve wires, redemption proceeds will be
mailed to your bank. There will be a $5 charge for all wire redemptions.
You can also make redemptions from your Scudder fund account on SAIL by calling
1-800-343-2890.
If you open an account by wire, you cannot redeem shares by telephone until the
Fund's transfer agent has received your completed and signed application.
Telephone redemption is not available for shares held in Scudder IRA accounts
and most other Scudder retirement plan accounts.
In the event that you are unable to reach the Fund by telephone, you should
write to the Fund; see "How to contact Scudder" for the address.
By "QuickSell." If you elected "QuickSell" for your account, you can call
toll-free to redeem shares. The money will be automatically transferred to your
predesignated bank checking account. Your bank must be a member of the Automated
Clearing House for you to use this service. If you did not elect "QuickSell,"
call 1-800-225-5163 for more information.
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<PAGE>
To redeem shares, call 1-800-225-5163. Redemptions must be for at least $250.
Proceeds in the amount of your redemption will be transferred to your bank
checking account in two or three business days following your call. For requests
received by the close of regular trading on the Exchange, shares will be
redeemed at the net asset value per share calculated at the close of trading on
the day of your call. "QuickSell" requests received after the close of regular
trading on the Exchange will begin their processing and be redeemed at the net
asset value calculated the following business day.
"QuickSell" transactions are not available for Scudder IRA accounts and most
other retirement plan accounts.
Signature guarantees. For your protection and to prevent fraudulent redemptions,
on written redemption requests in excess of $100,000 we require an original
signature and an original signature guarantee for each person in whose name the
account is registered. (The Funds reserve the right, however, to require a
signature guarantee for all redemptions.) You can obtain a signature guarantee
from most banks, credit unions or savings associations, or from broker/dealers,
municipal securities broker/dealers, government securities broker/dealers,
national securities exchanges, registered securities associations or clearing
agencies deemed eligible by the Securities and Exchange Commission. Signature
guarantees by notaries public are not acceptable. Redemption requirements for
corporations, other organizations, trusts, fiduciaries, agents, institutional
investors and retirement plans may be different from those for regular accounts.
For more information, please call 1-800-225-5163.
By "Write-A-Check." You may redeem shares by writing checks against your account
balance for at least $100 for Scudder Cash Investment Trust, and for at least
$1,000 for Scudder Prime Reserve Money Market Shares and Scudder Premium Money
Market Shares and no more than $5,000,000 for each Fund. Your Fund investments
will continue to earn dividends until your check is presented to a Fund for
payment.
Checks will be returned by the Funds' transfer agent if there are insufficient
shares to meet the withdrawal amount. You should not attempt to close an account
by check because the exact balance at the time the check clears will not be
known when the check is written.
Telephone transactions
Shareholders automatically receive the ability to exchange by telephone and the
right to redeem by telephone up to $100,000 to their address of record.
Shareholders also may, by telephone, request that redemption proceeds be sent to
a predesignated bank account. Each Fund uses procedures designed to give
reasonable assurance that telephone instructions are genuine, including
recording telephone calls, testing a caller's identity and sending written
confirmation of telephone transactions. If a Fund does not follow such
procedures, it may be liable for losses due to unauthorized or fraudulent
telephone instructions. Each Fund will not be liable for acting upon
instructions communicated by telephone that it reasonably believes to be
genuine.
Share price
Purchases and redemptions, including exchanges, are made at net asset value.
Scudder Fund Accounting Corporation determines net asset value per share as of
twelve o'clock noon for Scudder Cash Investment Trust only and, for both Funds
as of the close of regular trading on the Exchange, normally 4 p.m. eastern
time, on each day the Exchange is open for trading. Net asset value per share is
calculated by dividing the total value of net assets of Scudder Cash Investment
Trust, Scudder Prime Reserve Money Market Shares or Scudder Premium Money Market
Shares, less all liabilities attributable to such Fund or Class, as applicable,
by the total number of shares outstanding in such Fund or Class, as applicable.
In calculating the net asset value per share, Scudder Cash Investment Trust uses
the current market value of the securities. However, for securities with sixty
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days or less to maturity, Scudder Cash Investment Trust uses the amortized cost
value. Scudder Money Market Series uses the amortized cost value in calculating
the net asset value per share.
Processing time
Scudder Cash Investment Trust. Purchases made by wire and received by the Fund's
transfer agent before noon on any business day are executed at noon on that day
and begin earning income the same day. Those made by wire between noon and the
close of regular trading on the Exchange on any business day are executed at the
close of trading the same day and begin earning income the next business day.
Purchases made by check are executed on the day the check is received in good
order by the Fund's transfer agent and begin earning income on the next business
day. Redemption requests received in good order by the Fund's transfer agent
between noon and the close of regular trading on the Exchange are executed at
the net asset value calculated at the close of regular trading on that day and
will earn a dividend on the redeemed shares that day. If a redemption request is
received by noon, proceeds will normally be wired that day, if requested by the
shareholder, but no dividend will be earned on the redeemed shares on that day.
Scudder Prime Reserve Money Market Shares and Scudder Premium Money Market
Shares. Purchases made by wire and received by the Fund's transfer agent before
4:00 p.m. on any business day are executed at 4:00 p.m. on that day and begin
earning income the same day. Purchases made by check are executed on the day the
check is received in good order by the Fund's transfer agent and begin earning
income on the next business day. Redemption requests received in good order by
the Fund's transfer agent by the close of regular trading, normally 4:00 p.m.
eastern time, are executed at the net asset value calculated at the close on
that day. If requested by the shareholder, proceeds can be wired that day, but
no dividend will be earned on the redeemed shares that day. All other redemption
requests will be processed on the day received and will earn a dividend on the
redeemed shares that day; however, the proceeds will be distributed on the next
business day.
If you wish to make a purchase of $500,000 or more for either of the above
Funds, you should notify Scudder Investor Relations by calling 1-800-225-5163.
Each Fund will normally send redemption proceeds within one business day
following the redemption request, but may take up to seven business days (or
longer in the case of shares recently purchased by check).
Purchase restrictions
Scudder Cash Investment Trust, Scudder Fund, Inc., the classes of Shares of
Scudder Money Market Series and Scudder Investor Services, Inc. each reserves
the right to reject purchases of shares (including exchanges) for any reason.
Tax identification number
Be sure to complete the Tax Identification Number section of the application
when you open an account. Federal tax law requires a Fund to withhold 31% of
taxable dividends and capital gains distributions from accounts (other than
those of certain exempt payees) without a correct certified Social Security or
tax identification number and certain other certified information or upon
notification from the IRS or a broker that withholding is required. Each Fund
reserves the right to reject new account applications without a correct
certified Social Security or tax identification number. Each Fund also reserves
the right, following 30 days' notice, to redeem all shares in accounts without a
correct certified Social Security or tax identification number. A shareholder
may avoid involuntary redemption by providing a Fund with a tax identification
number during the 30-day notice period.
Minimum balances for Scudder Cash Investment Trust
Shareholders should maintain a share balance worth at least $2,500, which amount
may be changed by the Board of Trustees. Scudder retirement plans have similar
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or lower minimum share balance requirements. A shareholder may open an account
with at least $1,000, if an automatic investment plan of $100/month is
established.
Shareholders who maintain a non-fiduciary account balance of less than $2,500 in
the Fund, without establishing an automatic investment plan, may be assessed an
annual $10.00 per fund charge with the fee to be paid to the Fund. The $10.00
charge will not apply to shareholders with a combined household account balance
in any of the Scudder Funds of $25,000 or more. The Fund reserves the right,
following 60 days' written notice to shareholders, to redeem all shares in
accounts below $250, including accounts of new investors, where a reduction in
value has occurred due to a redemption or exchange out of the account. The Fund
will mail the proceeds of the redeemed account to the shareholder. Reductions in
value that result solely from market activity will not trigger an involuntary
redemption. Retirement accounts and certain other accounts will not be assessed
the $10.00 charge or be subject to automatic liquidation. Please refer to
"Exchanges and Redemptions--Other information" in the Fund's Statement of
Additional Information for more information.
Minimum balances for Scudder Prime Reserve Money Market Shares
Initial minimum investment in the Prime Reserve Shares is $10,000. Shareholders
should maintain a share balance worth at least $7,500 (which minimum amount may
be changed by the Board of Directors). Account balances will be reviewed
periodically and shareholders with accounts below $7,500 will receive 60 days'
notice, after which, if the balance is not increased to the required level, the
Adviser reserves the right to redeem all shares and close the account and send
the proceeds to the shareholder's address of record.
Accounts with balances below $2,500, which is the minimum balance required for
Scudder Cash Investment Trust, will be automatically liquidated and the check
sent to the shareholder's address of record.
The Adviser reserves the right to redeem all shares and close the account and
send the proceeds to the shareholder's address of record. Reductions in value
that result solely from market activity will not trigger an involuntary
redemption.
Please refer to "Exchanges and Redemptions-- Other Information" in the Fund's
combined Statement of Additional Information for more information.
Minimum balances for Scudder Premium Money Market Shares
Initial minimum investment in the Fund is $25,000. Shareholders should maintain
a share balance worth at least $15,000 (which minimum amount may be changed by
the Board of Directors).
Shareholders whose account balance falls below $15,000 for at least 30 days will
be given 60 days' notice to bring the account back up to $15,000 or more. Where
a reduction in value has occurred due to a redemption or exchange out of the
account and the account balance is not increased in 60 days, the Adviser
reserves the right to redeem all shares and close the account and send the
proceeds to the shareholder's address of record.
Please refer to "Exchanges and Redemptions-- Other Information" in the Fund's
combined Statement of Additional Information for more information.
Third party transactions
If purchases and redemptions of Fund shares are arranged and settlement is made
at an investor's election through a member of the National Association of
Securities Dealers, Inc., other than Scudder Investor Services, Inc., that
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member may, at its discretion, charge a fee for that service.
Shareholder benefits
Experienced professional management
Scudder Kemper Investments, Inc., one of the nation's most experienced
investment management firms, actively manages your fund investment. Professional
management is an important advantage for investors who do not have the time or
expertise to invest directly in individual securities.
A team approach to investing
Each Fund is managed by a team of investment professionals who each play an
important role in the Fund's management process. Team members work together to
develop investment strategies and select securities for each Fund's portfolio.
They are supported by the Adviser's large staff of economists, research
analysts, traders, and other investment specialists who work in the Adviser's
offices across the United States and abroad. We believe our team approach
benefits Fund investors by bringing together many disciplines and leveraging our
extensive resources.
Lead Portfolio Manager Frank J. Rachwalski, Jr. assumed responsibility for
setting each Fund's investment strategy and for overseeing each Fund's
day-to-day management in January, 1998. Mr. Rachwalski has been responsible for
the trading and portfolio management of money market funds since 1974.
John W. Stuebe, Portfolio Manager for both Funds, has been a fixed income trader
for money market securities since 1979. Mr. Stuebe currently specializes in and
trades for the taxable, non-government money market funds.
SAIL(TM)--Scudder Automated Information Line
For personalized account information including fund prices, yields and account
balances, to perform transactions in existing Scudder fund accounts, or to
obtain information on any Scudder fund, shareholders can call Scudder's
Automated Information Line (SAIL) at 1-800-343-2890, 24 hours a day. During
periods of extreme economic or market changes, or other conditions, it may be
difficult for you to effect telephone transactions in your account. In such an
event you should write to the Fund; please see "How to contact Scudder" for the
address.
Investment flexibility
Scudder offers toll-free telephone exchange between funds at current net asset
value. You can move your investments among money market, income, growth,
tax-free and growth and income funds with a simple toll-free call or, if you
prefer, by sending your instructions through the mail or by fax. (The exchange
privilege may not be available for certain Scudder funds or classes thereof. For
more information, please call 1-800-225-5163.) Telephone and fax redemptions and
exchanges are subject to termination and their terms are subject to change at
any time by the Fund or the transfer agent. In some cases, the transfer agent or
Scudder Investor Services, Inc. may impose additional conditions on telephone
transactions.
Personal CounselSM -- A Managed Fund Portfolio Program
If you would like to receive direct guidance and management of your overall
mutual fund portfolio to help you pursue your investment goals, you may be
interested in Personal Counsel from Scudder. Personal Counsel, a program of
Scudder Investor Services, Inc., a registered investment adviser and a
subsidiary of Scudder Kemper Investments, Inc., combines the benefits of a
customized portfolio of no-load mutual funds with ongoing portfolio monitoring
and individualized service, for an annual fee of generally 1.25% or less of
assets. In addition, it draws upon the Adviser's more than 75-year heritage of
providing investment counsel to large corporate and private clients. If you have
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$100,000 or more to invest initially and would like more information about
Personal Counsel, please call 1-800-700-0183.
Dividend reinvestment plan
You may have dividends and distributions automatically reinvested in additional
Fund shares. Please call 1-800-225-5163 to request this feature.
Shareholder statements
You will receive a detailed statement summarizing account activity, including
dividend and capital gain reinvestment, purchases and redemptions. All of your
statements should be retained to help you keep track of account activity and the
cost of shares for tax purposes.
Shareholder reports
In addition to account statements, you receive periodic shareholder reports
highlighting relevant information, including investment results and a review of
portfolio changes.
To reduce the volume of mail you receive, only one copy of most Fund reports,
such as the Funds' Annual Report, may be mailed to your household (same surname,
same address). Please call 1-800-225-5163 if you wish to receive additional
shareholder reports.
Newsletters
Four times a year, Scudder sends you Perspectives, an informative newsletter
covering economic and investment developments, service enhancements and other
topics of interest to Scudder fund investors.
Scudder Investor Centers
As a convenience to shareholders who like to conduct business in person, Scudder
Investor Services, Inc. maintains Investor Centers in Boca Raton, Boston,
Chicago, New York and San Francisco.
T.D.D. service for the hearing impaired
Scudder's full range of investor information and shareholder services is
available to hearing impaired investors through a toll-free T.D.D. (Telephone
Device for the Deaf) service. If you have access to a T.D.D., call
1-800-543-7916 for investment information or specific account questions and
transactions.
25
<PAGE>
Purchases
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Opening
an account Minimum initial investment:
Scudder Cash Investment Trust: $2,500; IRAs $1,000
Scudder Prime Reserve Money Market Shares: $10,000; IRAs $10,000
Scudder Premium Money Market Shares: $25,000; IRAs $25,000
Group retirement plans (401(k), 403(b), etc.) have similar or lower minimums.
See appropriate plan literature.
Make checks o By Mail Send your completed and signed application and check
payable to "The
Scudder Funds."
by regular mail to: or by express, registered,
or certified mail to:
The Scudder Funds The Scudder Funds
P.O. Box 2291 66 Brooks Drive
Boston, MA 02107-2291 Braintree, MA 02184
o By Wire Please see Transaction information--Purchasing shares-- By
wire for details, including the ABA wire transfer number. Then call
1-800-225-5163 for instructions.
o In Person Visit one of our Investor Centers to complete your application with the
help of a Scudder representative. Investor Center locations are listed
under Shareholder benefits.
Purchasing
additional shares Minimum additional investment:
Scudder Cash Investment Trust: $100; IRAs $50
Scudder Prime Reserve Money Market Shares: $1,000; IRAs $100
Scudder Premium Money Market Shares: $1,000; IRAs $100
Group retirement plans (401(k), 403(b), etc.) have similar or lower minimums.
See appropriate plan literature.
Make checks o By Mail Send a check with a Scudder investment slip, or with a letter of
payable to "The instruction including your account number and the complete Fund name and
Scudder Funds." class name (if applicable), to the appropriate address listed above.
o By Wire Please see Transaction information--Purchasing shares-- By
wire for details, including the ABA wire transfer number.
o In Person Visit one of our Investor Centers to make an additional investment in your Scudder fund
account. Investor Center locations are listed under Shareholder benefits.
o By Telephone Please see Transaction information--Purchasing shares-- By QuickBuy for more details.
o By Automatic You may arrange to make investments on a egular basis through automatic
Investment Plan deductions from your bank checking account. Please call 1-800-225-5163 for
($50 minimum) more information and an enrollment form.
26
<PAGE>
Exchanges and redemptions
Exchanging
shares Minimum investments:
Scudder Cash Investment Trust: $2,500 to establish a new account;
$100 to exchange among existing accounts
Scudder Prime Reserve Money Market Shares: $10,000 to establish a new account;
$1,000 to exchange among existing accounts
Scudder Premium Money Market Shares: $25,000 to establish a new account;
$1,000 to exchange among existing accounts
For informa- o By Telephone To speak with a service representative, call 1-800-225-5163 from
tion on 8 a.m. to 8 p.m. eastern time or to access SAIL(TM), Scudder's Automated
exchanging to Information Line, call 1-800-343-2890 (24 hours a day).
other Scudder
Funds, see
"Transaction
information--
By exchange."
o By Mail Print or type your or Fax instructions and include:
- Scudder Cash Investment Trust, Scudder Prime Reserve
Money Market Shares or Scudder Premium Money Market
Shares and the account number you are exchanging from;
- your name(s) and address as they appear on your
account;
- the dollar amount or number of shares you wish to
exchange;
- the name of the Fund (and class, if applicable) you are
exchanging into;
- your signature(s) as it appears on your account; and
- a daytime telephone number.
Send your instructions by regular mail to: or by express, registered, or by fax to:
or certified mail to:
The Scudder Funds The Scudder Funds 1-800-821-6234
P.O. Box 2291 66 Brooks Drive
Boston, MA 02107-2291 Braintree, MA 02184
Redeeming shares o By Telephone To speak with a service representative, call 1-800-225-5163 from 8 a.m. to 8
p.m. eastern time or to access SAIL(TM), Scudder's Automated Information Line,
call 1-800-343-2890 (24 hours a day). You may have redemption proceeds sent to
your predesignated bank account, or redemption proceeds of up to $100,000
sent to your address of record.
o By "Write- You may redeem shares by writing checks against your account balance as often
A-Check" as you like for at least $100 for Scudder Cash Investment Trust and at least
$1,000 for Scudder Prime Reserve Money Market Shares and Scudder Premium Money
Markets Shares and no more than $5,000,00 for each fund.
o By Mail Send your instructions for redemption to the appropriate address or fax number
or Fax above and include:
- Scudder Cash Investment Trust, Scudder Prime Reserve Money Market Shares
or Scudder Premium Money Market Shares and the and account number you
are redeeming from;
- your name(s) and address as they appear on your account; - the dollar
amount or number of shares you wish to redeem; - your signature(s) as it
appears on your account; and - a daytime telephone number.
A signature guarantee is required for redemptions over $100,000.
See Transaction information--Redeeming shares.
o By Automatic You may arrange to receive automatic cash payments periodically. Call
Withdrawal Plan 1-800-225-5163 for more information and an enrollment form.
</TABLE>
27
<PAGE>
Scudder tax-advantaged retirement plans
Scudder offers a variety of tax-advantaged retirement plans for individuals,
businesses and non-profit organizations. These flexible plans are designed for
use with the Scudder Family of Funds (except Scudder tax-free funds, which are
inappropriate for such plans). Scudder Funds offer a broad range of investment
objectives and can be used to seek almost any investment goal. Using Scudder's
retirement plans can help shareholders save on current taxes while building
their retirement savings.
o Scudder No-Fee IRAs. These retirement plans allow a maximum annual
contribution of up to $2,000 per person for anyone with earned income (up
to $2,000 per individual for married couples filing jointly, even if only
one spouse has earned income). Many people can deduct all or part of their
contributions from their taxable income, and all investment earnings accrue
on a tax-deferred basis. The Scudder No-Fee IRA charges you no annual
custodial fee.
o Scudder Roth No-Fee IRAs. Similar to the traditional IRA in many respects,
these retirement plans provide a unique opportunity for qualifying
individuals to accumulate investment earnings tax free. Unlike a
traditional IRA, with a Roth IRA, if you meet the distribution
requirements, you can withdraw your money without paying any taxes on the
earnings. No tax deduction is allowed for contributions to a Roth IRA. The
Scudder Roth IRA charges you no annual custodial fee.
o 401(k) Plans. 401(k) plans allow employers and employees to make
tax-deductible retirement contributions. Scudder offers a full service
program that includes recordkeeping, prototype plan, employee
communications and trustee services, as well as investment options.
o Profit Sharing and Money Purchase Pension Plans. These plans allow
corporations, partnerships and people who are self-employed to make annual,
tax-deductible contributions of up to $30,000 for each person covered by
the plans. Plans may be adopted individually or paired to maximize
contributions. These are sometimes known as Keogh plans.
o 403(b) Plans. Retirement plans for tax-exempt organizations and school
systems to which employers and employees may both contribute.
o SEP-IRAs. Easily administered retirement plans for small businesses and
self-employed individuals. The maximum annual contribution to SEP-IRA
accounts is adjusted each year for inflation. The Scudder SEP-IRA charges
you no annual custodial fee.
o Scudder Horizon Plan. A no-load variable annuity that lets you build assets
by deferring taxes on your investment earnings. You can start with $2,500
or more.
Scudder Trust Company (an affiliate of the Adviser) is Trustee or Custodian for
some of these plans and is paid an annual fee for some of the above retirement
plans. For information about establishing a Scudder No-Fee IRA, SEP-IRA, Profit
Sharing Plan, Money Purchase Pension Plan or a Scudder Horizon Plan, please call
1-800-225-2470. For information about 401(k)s or 403(b)s please call
1-800-323-6105. To effect transactions in existing IRA, SEP-IRA and most Profit
Sharing or Pension Plan accounts, call 1-800-225-5163.
The variable annuity contract is provided by Charter National Life Insurance
Company (in New York State, Intramerica Life Insurance Company [S 1802]). The
contract is offered by Scudder Insurance Agency, Inc. (in New York State, Nevada
and Montana, Scudder Insurance Agency of New York, Inc.). CNL, Inc. is the
Principal Underwriter. Scudder Horizon Plan is not available in all states.
Scudder Investor Relations is a service provided through Scudder Investor
Services, Inc., Distributor.
28
<PAGE>
Trustees and Officers of Scudder Cash Investment Trust
Daniel Pierce*
President and Trustee
Henry P. Becton, Jr.
Trustee; President and
General Manager, WGBH
Educational Foundation
Dawn-Marie Driscoll
Trustee; Executive Fellow, Center for Business Ethics; President,
Driscoll Associates
Peter B. Freeman
Trustee; Corporate
Director and Trustee
George M. Lovejoy, Jr.
Trustee; President and
Director, Fifty Associates
Wesley W. Marple, Jr.
Trustee
Kathryn L. Quirk*
Trustee, Vice President and Assistant Secretary
Jean C. Tempel
Trustee; Managing Partner, Technology
Equity Partners
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
Vice President
Frank J. Rachwalski, Jr.*
Vice President
David Wines*
Vice President
Thomas F. McDonough*
Vice President and Secretary
John R. Hebble*
Treasurer
James DiBiase*
Assistant Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
29
<PAGE>
Directors and Officers of Scudder Fund, Inc.
Daniel Pierce*
President
Dr. Rosita P. Chang
Director; Professor of Finance, University of Rhode Island
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
Edgar R. Fiedler
Director; Vice President and Economic Counsellor, The Conference Board, Inc.
Peter B. Freeman
Director; Corporate Director and Trustee
Thomas W. Joseph*
Vice President and Assistant Secretary
Thomas F. McDonough*
Vice President and Secretary
Jerard K. Hartman*
Vice President
Kathryn L. Quirk*
Vice President
Frank J. Rachwalski, Jr.*
Vice President
David B. Wines*
Vice President
John R. Hebble*
Treasurer
James DiBiase*
Assistant Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
30
<PAGE>
Investment products and services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series--
Prime Reserve Shares
Premium Shares*
Managed Shares*
Scudder Government Money Market Series--
Managed Shares*
Tax Free Money Market+
- ----------------------
Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series--
Managed Shares*
Scudder California Tax Free Money Fund**
Scudder New York Tax Free Money Fund**
Tax Free+
- ---------
Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund**
Scudder Massachusetts Limited Term Tax Free Fund**
Scudder Massachusetts Tax Free Fund**
Scudder New York Tax Free Fund**
Scudder Ohio Tax Free Fund**
Scudder Pennsylvania Tax Free Fund**
U.S. Income
- -----------
Scudder Short Term Bond Fund
Scudder 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
Preferred Series
- ----------------
Scudder Tax Managed Growth Fund
Scudder Tax Managed Small Company Fund
Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
Retirement Programs
- -------------------
Traditional IRA
Roth IRA
SEP-IRA
Keogh Plan
401(k), 403(b) Plans
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 or classes thereof may
not be available for purchase or exchange. +A portion of the income from the
tax-free funds may be subject to federal, state, and local taxes. *A class of
shares of the Fund. **Not available in all states. ***Only the Scudder Shares of
the Fund are part of the Scudder Family of Funds. ++Only the International
Shares of the Fund are part of the Scudder Family of Funds. +++ +++A no-load
variable annuity contract provided by Charter National Life Insurance Company
and its affiliate, offered by Scudder's insurance agencies, 1-800-225-2470.
#These funds, advised by Scudder Kemper Investments, Inc., are traded on the New
York Stock Exchange and, in some cases, on various foreign stock exchanges.
31
<PAGE>
<TABLE>
<CAPTION>
How to contact Scudder
Account Service and Information:
<S> <C>
For existing account service and transactions
Scudder Investor Relations -- 1-800-225-5163
For 24 hour account information, fund information, exchanges, and an
overview of all the services available to you
Scudder Electronic Account Services -- http://funds.scudder.com
For personalized information about your Scudder accounts, exchanges and redemptions
Scudder Automated Information Line (SAIL) -- 1-800-343-2890
Investment Information:
For information about the Scudder funds, including additional
applications and prospectuses, or for answers to investment questions
Scudder Investor Relations -- 1-800-225-2470
[email protected]
Scudder's World Wide Web Site -- http://funds.scudder.com
For establishing 401(k) and 403(b) plans
Scudder Defined Contribution Services -- 1-800-323-6105
Scudder Brokerage Services:
To receive information about this discount brokerage service and to obtain an application
Scudder Brokerage Services* -- 1-800-700-0820
Personal Counsel(SM) -- A Managed Fund Portfolio Program:
To receive information about this mutual fund portfolio guidance and management program
Personal Counsel from Scudder -- 1-800-700-0183
Please address all correspondence to:
The Scudder Funds
P.O. Box 2291
Boston, Massachusetts
02107-2291
Or Stop by a Scudder Investor Center:
Many shareholders enjoy the personal, one-on-one service of the Scudder
Investor Centers. Check for an Investor Center near you--they can be
found in the following cities:
Boca Raton Chicago San Francisco
Boston New York
Scudder Investor Relations and Scudder Investor Centers are services provided
through Scudder Investor Services, Inc., Distributor.
</TABLE>
* Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA
02061--Member NASD/SIPC.
32
<PAGE>
SCUDDER FUND, INC.
Two International Place
Boston, MA 02110-4103
1-800-553-6360
Scudder Fund, Inc. is a professionally managed, open-end,
diversified management investment company comprised of three diversified
money market investment portfolios.
SCUDDER MONEY MARKET SERIES
SCUDDER TAX FREE MONEY MARKET SERIES
SCUDDER GOVERNMENT MONEY MARKET SERIES
Mutual fund portfolios, each seeking to provide high money-market income with
preservation of capital and liquidity through investments in different
types of instruments.
- --------------------------------------------------------------------------------
Statement of Additional Information
May 1, 1998
As Revised October 15, 1998
- --------------------------------------------------------------------------------
This combined Statement of Additional Information is not a prospectus
and should be read in conjunction with the applicable prospectuses of Scudder
Fund, Inc. dated May 1, 1998 as revised October 15, 1998, as may be amended from
time to time, a copy of which may be obtained without charge by writing to
Scudder Investor Services, Inc., Two International Place, Boston, Massachusetts
02110-4103.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
<CAPTION>
Page
THE FUNDS AND THEIR OBJECTIVES.......................................................................................1
General Investment Objectives and Policies..................................................................1
Master/feeder structure.....................................................................................1
Cash Fund...................................................................................................1
Tax Free Fund...............................................................................................3
Government Fund.............................................................................................4
Investment Restrictions.....................................................................................4
ADDITIONAL PERMITTED INVESTMENT ACTIVITIES...........................................................................5
PURCHASING SHARES................................................................................................... 7
Wire Transfer of Federal Funds............................................................................. 7
Additional Information About Making Subsequent Investments by QuickBuy..................................... 8
Share Certificates......................................................................................... 8
EXCHANGES AND REDEMPTIONS........................................................................................... 8
Exchanges.................................................................................................. 9
Redemption by Telephone................................................................................... 10
Redemption By QuickSell................................................................................... 10
Redemption by Mail or Fax................................................................................. 11
Redemption by Write-a-Check............................................................................... 11
FEATURES AND SERVICES OFFERED BY THE FUNDS......................................................................... 12
The Pure No-Load(TM) Concept.............................................................................. 12
Dividend and Capital Gain Distribution Options............................................................ 13
Scudder Investor Centers.................................................................................. 14
Reports to Shareholders................................................................................... 14
Diversification........................................................................................... 14
Transaction Summaries..................................................................................... 14
Internet access........................................................................................... 14
THE SCUDDER FAMILY OF FUNDS........................................................................................ 15
SPECIAL PLAN ACCOUNTS.............................................................................................. 20
Scudder Retirement Plans: Profit-Sharing and Money Purchase Pension Plans
for Corporations and Self-Employed Individuals..................................................... 20
Scudder IRA: Individual Retirement Account............................................................... 20
Scudder Roth IRA: Individual Retirement Account.......................................................... 21
Scudder 403(b) Plan....................................................................................... 22
Automatic Withdrawal Plan................................................................................. 22
Group or Salary Deduction Plan............................................................................ 22
Uniform Transfers/Gifts to Minors Act..................................................................... 23
DIVIDENDS.......................................................................................................... 23
PERFORMANCE INFORMATION............................................................................................ 23
Yield..................................................................................................... 23
Effective Yield........................................................................................... 24
Average Annual Total Return............................................................................... 24
Cumulative Total Return................................................................................... 25
Total Return.............................................................................................. 26
Tax-Equivalent Yield...................................................................................... 26
Comparison of Fund Performance............................................................................ 26
THE PROGRAM........................................................................................................ 29
ORGANIZATION OF THE FUNDS.......................................................................................... 30
INVESTMENT ADVISER................................................................................................. 31
Personal Investments by Employees of the Adviser.......................................................... 32
</TABLE>
i
<PAGE>
TABLE OF CONTENTS (continued)
<TABLE>
<S> <C>
<CAPTION>
DISTRIBUTOR........................................................................................................ 33
DIRECTORS AND OFFICERS............................................................................................. 33
REMUNERATION....................................................................................................... 35
Responsibilities of the Board -- Board and Committee Meetings............................................ 35
Compensation of Officers and Directors.................................................................... 36
TAXES.............................................................................................................. 37
PORTFOLIO TRANSACTIONS............................................................................................. 39
NET ASSET VALUE.................................................................................................... 39
ADDITIONAL INFORMATION............................................................................................. 40
Experts................................................................................................... 40
Other Information......................................................................................... 40
FINANCIAL STATEMENTS............................................................................................... 42
APPENDIX
</TABLE>
ii
<PAGE>
THE FUNDS AND THEIR OBJECTIVES
(See "Investment objectives and policies" and "Additional information about
policies and investments" in the Funds' Prospectuses)
General Investment Objectives and Policies
Scudder Money Market Series ("Cash Fund"), Scudder Tax Free Money
Market Series ("Tax Free Fund") and Scudder Government Money Market Series
("Government Fund") (collectively, the "Funds") are the three diversified
investment portfolios comprising Scudder Fund, Inc. (the "Corporation"), a
professionally managed open-end, diversified management investment company. Each
Fund seeks to provide investors with as high a level of current income as is
consistent with its investment objectives and policies and with preservation of
capital and liquidity. In addition, the Tax Free Fund also seeks to provide
current income that is exempt from federal income taxes. There can be no
assurance that any of the Funds will achieve its investment objectives.
Each of the Funds offers classes of shares as follows: Scudder Money
Market Series offers Premium Money Market Shares, Prime Reserve Money Market
Shares, Managed Shares and Institutional Shares; Scudder Tax Free Money Market
Series offers Managed Shares and Institutional Shares; and Scudder Government
Money Market Series offers Managed Shares and Institutional Shares.
Securities in which the Funds invest may not yield as high a level of
current income as securities of lower quality and longer maturities which
generally have less liquidity and greater market risk. Each Fund will maintain a
dollar-weighted average maturity of 90 days or less in an effort to maintain a
constant net asset value of $1.00 per share, but there is no assurance that each
will be able to do so.
Except as otherwise indicated, each Fund's investment objectives and
policies are not fundamental and may be changed without a vote of shareholders.
The Funds' investment adviser is Scudder Kemper Investments, Inc. (the
"Adviser"), a leading provider of U.S. and international investment management
services for clients throughout the world. See "Investment Adviser."
Master/feeder structure
The Board of Directors has the discretion to retain the current
distribution arrangement for each Fund while investing in a master fund in a
master/feeder fund structure as described below.
A master/feeder fund structure is one in which a fund (a "feeder
fund"), instead of investing directly in a portfolio of securities, invests most
or all of its investment assets in a separate registered investment company (the
"master fund") with substantially the same investment objective and policies as
the feeder fund. Such a structure permits the pooling of assets of two or more
feeder funds, preserving separate identities or distribution channels at the
feeder fund level. Based on the premise that certain of the expenses of
operating an investment portfolio are relatively fixed, a larger investment
portfolio may eventually achieve a lower ratio of operating expenses to average
net assets. An existing investment company is able to convert to a feeder fund
by selling all of its investments, which involves brokerage and other
transaction costs and realization of a taxable gain or loss, or by contributing
its assets to the master fund and avoiding transaction costs and, if proper
procedures are followed, the realization of taxable gain or loss.
Cash Fund
The Cash Fund seeks to provide investors with as high a level of
current income as is consistent with its investment policies and with
preservation of capital and liquidity. The Fund invests exclusively in a broad
range of short-term money market instruments that have remaining maturities of
not more than 397 calendar days and certain repurchase agreements. These
securities consist of obligations issued or guaranteed by the U.S. Government or
its agencies or instrumentalities, taxable and tax-exempt municipal obligations,
corporate and bank obligations, certificates of deposit ("CD's"), bankers'
acceptances and variable amount master demand notes.
The bank obligations in which the Fund may invest include negotiable
certificates of deposit, bankers' acceptances, fixed time deposits or other
short-term bank obligations. The Fund limits its investments in U.S. bank
<PAGE>
obligations to obligations of U.S. banks (including foreign branches, the
obligations of which are guaranteed by the U.S. parent) that have at least $1
billion in total assets at the time of investment. "U.S. banks" include
commercial banks that are members of the Federal Reserve System or are examined
by the Comptroller of the Currency or whose deposits are insured by the Federal
Deposit Insurance Corporation. In addition, the Fund may invest in obligations
of savings banks and savings and loan associations insured by the Federal
Deposit Insurance Corporation that have total assets in excess of $1 billion at
the time of the investment. The Fund may invest in U.S. dollar-denominated
obligations of foreign banks subject to the following conditions: foreign banks
(based upon their most recent annual financial statements) at the time of
investment (i) have more than U.S. $10 billion, or the equivalent in other
currencies, in total assets; (ii) are among the 100 largest banks in the world
as determined on the basis of assets; and (iii) have branches or agencies in the
U.S.; and (iv) are obligations which, in the opinion of the Adviser, are of an
investment quality comparable to obligations of U.S. banks in which the Fund may
invest.
Fixed time deposits may be withdrawn on demand by the investor, but may
be subject to early withdrawal penalties that vary with market conditions and
the remaining maturity of the obligations. The Fund is limited by its
nonfundamental policy to the amount of its total assets that may be in
investments that are not illiquid including fixed time deposits subject to
withdrawal penalties maturing in more than seven calendar days.
The Fund may invest in U.S. dollar-denominated certificates of deposit
and promissory notes issued by Canadian affiliates of U.S. banks under
circumstances where the instruments are guaranteed as to principal and interest
by the U.S. bank. While foreign obligations generally involve greater risks than
those of domestic obligations, such as risks relating to liquidity,
marketability, foreign taxation, nationalization and exchange controls,
generally the Adviser believes that these risks are substantially less in the
case of instruments issued by Canadian affiliates that are guaranteed by U.S.
banks than in the case of other foreign money market instruments.
There is no limitation on the amount of the Fund's assets that may be
invested in obligations of foreign banks that meet the conditions set forth
above. Such investments may involve greater risks than those affecting U.S.
banks or Canadian affiliates of U.S. banks. In addition, foreign banks are not
subject to examination by any U.S. Government agency or instrumentality.
Except for obligations of foreign banks and foreign branches of U.S.
banks, the Fund will not invest in the securities of foreign issuers. Generally,
the Fund may not invest less than 25% of the current value of its total assets
in bank obligations (including bank obligations subject to repurchase
agreements).
Generally, the commercial paper purchased by the Fund is limited to
direct obligations of domestic corporate issuers, including bank holding
companies, which obligations, at the time of investment, are (i) rated "P-1" by
Moody's Investors Service, Inc. ("Moody's"), "A-1" or better by Standard &
Poor's Corporation ("S&P") or "F-1" by Fitch Investors Service, Inc. ("Fitch"),
(ii) issued or guaranteed as to principal and interest by issuers having an
existing debt security rating of "Aa" or better by Moody's or "AA" or better by
S&P or Fitch, or (iii) securities that, if not rated, are of comparable
investment quality as determined by the Adviser in accordance with procedures
adopted by the Corporation's Board of Directors.
The Fund may invest in non-convertible corporate debt securities such
as notes, bonds and debentures that have remaining maturities of not more than
397 calendar days and that are rated "Aa" or better by Moody's or "AA" or better
by S&P or Fitch, and variable amount master demand notes. A variable amount
master demand note differs from ordinary commercial paper in that it is issued
pursuant to a written agreement between the issuer and the holder. Its amount
may from time to time be increased by the holder (subject to an agreed maximum)
or decreased by the holder or the issuer and is payable on demand. The rate of
interest varies pursuant to an agreed-upon formula. Generally, master demand
notes are not rated by a rating agency. However, the Fund may invest in a master
demand note that, if not rated, is in the opinion of the Adviser of an
investment quality comparable to rated securities in which the Fund may invest.
The Adviser monitors the issuers of such master demand notes on a daily basis.
Transfer of such notes is usually restricted by the issuer, and there is no
secondary trading market for such notes. The Fund may not invest in a master
demand note if, as a result, more than 10% of the value of its total net assets
would be invested in such notes.
Municipal obligations, which are debt obligations issued by or on
behalf of states, cities, municipalities and other public authorities, and may
be general obligation, revenue, or industrial development bonds, include
municipal bonds, municipal notes and municipal commercial paper.
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The Fund's investments in municipal bonds are limited to bonds that are
rated at the date of purchase "Aa" or better by Moody's or "AA" or better by S&P
or Fitch.
The Fund's investments in municipal notes will be limited to notes that
are rated at the date of purchase "MIG 1" or "MIG 2" (or "VMIG 1" or "VMIG 2" in
the case of an issue having a variable rate demand feature) by Moody's, "SP-1"
or "SP-1+" by S&P or "F-1" or "F-1+" by Fitch.
Municipal commercial paper is a debt obligation with a stated maturity
of 270 days or less that is issued to finance seasonal working capital needs or
as short-term financing in anticipation of longer-term debt. The Fund may invest
in municipal commercial paper that is rated at the date of purchase "P-1" or
"P-2" by Moody's, "A-1" or "A-2" or "A-1+" by S&P or "F-1" by Fitch. If a
municipal obligation is not rated, the Fund may purchase the obligation if, in
the opinion of the Adviser, it is of investment quality comparable to other
rated investments that are permitted in the Fund.
All of the securities in which the Fund will invest must meet credit
standards applied by the Adviser pursuant to procedures established by the Board
of Directors. Should an issue of securities cease to be rated or if its rating
is reduced below the minimum required for purchase by the Fund, the Adviser will
dispose of any such security, as soon as practicable, unless the Directors of
the Corporation determine that such disposal would not be in the best interests
of the Fund.
In addition, the Fund may invest in variable or floating rate
obligations, obligations backed by bank letters of credit, when-issued
securities and securities with put features.
Tax Free Fund
The Tax Free Fund seeks to provide investors with as high a level of
current income that cannot be subjected to federal income tax by reason of
federal law as is consistent with its investment policies and with preservation
of capital and liquidity. The Fund invests primarily in high-quality municipal
obligations the interest on which is exempt from federal income taxes and that
have remaining maturities of not more than 397 calendar days. Opinions relating
to the exemption of interest on municipal obligations from federal income tax
are rendered by bond counsel to the municipal issuer. The Fund may also invest
in certain taxable obligations on a temporary defensive basis, as described
below.
Municipal obligations, which are debt obligations issued by or on
behalf of states, cities, municipalities and other public authorities, and may
be general obligation, revenue, or industrial development bonds, include
municipal bonds, municipal notes and municipal commercial paper.
The Fund's investments in municipal bonds are limited to bonds that are
rated at the date of purchase "Aa" or better by Moody's or "AA" or better by S&P
or Fitch.
The Fund's investments in municipal notes will be limited to notes that
are rated at the date of purchase "MIG 1" or "MIG 2" (or "VMIG 1" or "VMIG 2" in
the case of an issue having a variable rate demand feature) by Moody's, "SP-1"
or "SP-1+" by S&P or "F-1" or "F-1+" by Fitch.
Municipal commercial paper is a debt obligation with a stated maturity
of 270 days or less that is issued to finance seasonal working capital needs or
as short-term financing in anticipation of longer-term debt. The Fund may invest
in municipal commercial paper that is rated at the date of purchase "P-1" or
"P-2" by Moody's, "A-1" or "A-2" or "A-1+" by S&P or "F-1" by Fitch.
If a municipal obligation is not rated, the Fund may purchase the
obligation if, in the opinion of the Adviser, it is of investment quality
comparable to other rated investments that are permitted in the Fund. From time
to time the Fund may invest 25% or more of the current value of its total assets
in municipal obligations that are related in such a way that an economic,
business or political development or change affecting one such obligation would
also affect the other obligations. For example, certain municipal obligations
accrue interest that is paid from revenues of similar types of projects; other
municipal obligations have issuers located in the same state.
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The floating and variable rate municipal obligations that the Fund may
purchase include certificates of participation in such obligations purchased
from banks. A certificate of participation gives the Fund an undivided interest
in the underlying municipal obligations, usually private activity bonds, in the
proportion that the Fund's interest bears to the total principal amount of such
municipal obligations. Certain of such certificates of participation may carry a
demand feature that would permit the holder to tender them back to the issuer
prior to maturity. The Fund may invest in certificates of participation even if
the underlying municipal obligations carry stated maturities in excess of one
year, if compliance with certain conditions contained in a rule of the
Securities and Exchange Commission (the "SEC") is met. The income received on
certificates of participation constitutes interest from tax-exempt obligations.
The Fund may, pending the investment of proceeds of sales of shares or
proceeds from sales of portfolio securities or in anticipation of redemptions,
or to maintain a "defensive" posture when, in the opinion of the Adviser, it is
advisable to do so because of market conditions, elect to invest temporarily up
to 20% of the current value of its total assets in cash reserves or taxable
securities.
The taxable market is a broader and more liquid market with a greater
number of investors, issuers and market makers than the market for municipal
obligations. The more limited marketability of municipal obligations may make it
difficult in certain circumstances to dispose of large investments
advantageously. In addition, certain municipal obligations might lose tax-exempt
status in the event of a change in the tax laws.
All of the securities in which the Fund will invest must meet credit
standards applied by the Adviser pursuant to procedures established by the Board
of Directors. Should an issue of securities cease to be rated or if its rating
is reduced below the minimum required for purchase by the Fund, the Adviser will
dispose of any such security, as soon as practicable, unless the Directors of
the Corporation determine that such disposal would not be in the best interests
of the Fund.
In addition, the Fund may enter into repurchase agreements, and invest
in variable or floating rate obligations, obligations backed by bank letters of
credit, when-issued securities and securities with put features. The Fund
intends to take the position that it is the owner of any municipal obligation
acquired with a put feature, and that tax-exempt interest earned with respect to
such municipal obligations will be tax-exempt in its hands. There is no
assurance that the Internal Revenue Service will agree with such position in any
particular case. Additionally, the federal income tax treatment of certain other
aspects of these investments, including the treatment of tender fees and swap
payments, in relation to various regulated investment company tax provisions is
unclear.
Government Fund
The Government Fund seeks to provide investors with as high a level of
current income as is consistent with its investment policies and with
preservation of capital and liquidity. The Fund invests exclusively in
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities that have remaining maturities of not more than 397 calendar
days and certain repurchase agreements.
In addition, the Fund may invest in variable or floating rate
obligations, when-issued securities and securities with put features.
Investment Restrictions
Unless specified to the contrary, the following restrictions may not be
changed without the approval of a majority of the outstanding voting securities
of the Fund involved which, under the Investment Company Act of 1940 (the "1940
Act") and the rules thereunder and as used in this Statement of Additional
Information, means the lesser of (1) 67% or more of the voting securities
present at such meeting, if the holders of more than 50% of the outstanding
voting securities of the Fund are present or represented by proxy, or (2) more
than 50% of the outstanding voting securities of the Fund.
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<PAGE>
Under ordinary market conditions, the Fund will maintain at least 80%
of the value of its total assets in obligations that are exempt from federal
taxes and are not subject to the alternative minimum tax. The foregoing
constitutes a fundamental policy that cannot be changed without the approval of
a majority of the outstanding shares of the Fund.
Any investment restrictions herein which involve a maximum percentage
of securities or assets shall not be considered to be violated unless an excess
over the percentage occurs immediately after and is caused by an acquisition or
encumbrance of securities or assets of, or borrowings by, a Fund.
Each Fund has elected to be classified as a diversified series of an
open-end investment company.
In addition, as a matter of fundamental policy, each Fund may not:
(1) borrow money, except as permitted under the 1940 Act, as
amended, and as interpreted or modified by regulatory
authority having jurisdiction, from time to time;
(2) issue senior securities, except as permitted under the 1940
Act, as amended, and as interpreted or modified by regulatory
authority having jurisdiction, from time to time;
(3) engage in the business of underwriting securities issued by
others, except to the extent that the Fund may be deemed to be
an underwriter in connection with the disposition of portfolio
securities;
(4) purchase or sell real estate, which term does not include
securities of companies which deal in real estate or mortgages
or investments secured by real estate or interests therein,
except that the Fund reserves freedom of action to hold and to
sell real estate acquired as a result of the Fund's ownership
of securities;
(5) purchase physical commodities or contracts relating to
physical commodities;
(6) make loans to other persons, except (i) loans of portfolio
securities, and (ii) to the extent that entry into repurchase
agreements and the purchase of debt instruments or interests
in indebtedness in accordance with the Fund's objective and
policies may be deemed to be loans; or
(7) concentrate its investments in a particular industry, as that
term is used in the 1940 Act, as amended, and as interpreted
or modified by regulatory authority having jurisdiction, from
time to time.
As a matter of nonfundamental policy, each Fund currently does not intend to:
(1) borrow money in an amount greater than 5% of its total assets,
except for temporary or emergency purposes; or
(2) lend portfolio securities in an amount greater than 5% of its
total assets.
ADDITIONAL PERMITTED INVESTMENT ACTIVITIES
(See "Additional information about policies and investments" in the
Funds' Prospectuses)
Municipal Notes. The Tax Free Fund and the Cash Fund may invest in
municipal notes. Municipal notes include, but are not limited to, tax
anticipation notes ("TANs"), bond anticipation notes ("BANs"), revenue
anticipation notes ("RANs"), construction loan notes and project notes.
Municipal notes generally have maturities at the time of issuance of three years
or less. Notes sold as interim financing in anticipation of collection of taxes,
a bond sale or receipt of other revenues are usually general obligations of the
issuer. Project notes are issued by local housing authorities to finance urban
renewal and public housing projects and are secured by the full faith and credit
of the U.S. Government.
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<PAGE>
TANs An uncertainty in a municipal issuer's capacity to raise taxes as
a result of such things as a decline in its tax base or a rise in
delinquencies could adversely affect the issuer's ability to meet its
obligations on outstanding TANs. Furthermore, some municipal issuers
mix various tax proceeds into a general fund that is used to meet
obligations other than those of the outstanding TANs. Use of such a
general fund to meet various obligations could affect the likelihood of
making the issuer's payments on TANs.
BANs The ability of a municipal issuer to meet its obligations on its
BANs is primarily dependent on the issuer's adequate access to the
longer term municipal bond market and the likelihood that the proceeds
of such bond sales will be used by the issuers to pay the principal of,
and interest on, BANs.
RANs A decline in the receipt of certain revenues, such as anticipated
revenues from another level of government, could adversely affect an
issuer's ability to meet its obligations on outstanding RANs. In
addition, the possibility that the revenues would, when received, be
used to meet other obligations could affect the ability of the issuer
to pay the principal of, and interest on, RANs.
Loans of Portfolio Securities. Each Fund may lend securities from its
portfolio to brokers, dealers and financial institutions if cash or cash
equivalent collateral, including letters of credit, marked-to-market daily and
equal to at least 100% of the current market value of the securities loaned
(including accrued interest and dividends thereon) plus the interest payable to
the Fund with respect to the loan is maintained by the borrower with the Fund in
a segregated account. In determining whether to lend a security to a particular
broker, dealer or financial institution, the Adviser will consider all relevant
facts and circumstances, including the creditworthiness of the broker, dealer or
financial institution. The Funds will not enter into any security lending
arrangement having a duration of longer than one year. Securities that a Fund
may receive as collateral will not become part of that Fund at the time of the
loan. In the event of a default by the borrower, such Fund will, if permitted by
law, dispose of the collateral except for such part thereof that is a security
in which such Fund is permitted to invest. During the time securities are on
loan, the borrower will pay the Fund any accrued income on those securities, and
the Fund may invest the cash collateral and earn additional income or receive an
agreed upon fee from a borrower that has delivered cash equivalent collateral.
No Fund will lend securities having a value that exceeds 5% of the current value
of its total assets. Loans of securities by a Fund will be subject to
termination at the Fund's or the borrower's option. Each Fund may pay reasonable
administrative and custodial fees in connection with a securities loan and may
pay a negotiated portion of the interest or fee earned with respect to the
collateral to the borrower or the placing broker. Borrowers and placing brokers
may not be affiliated, directly or indirectly, with the Corporation or the
Adviser.
Industry Concentration. To the extent the Cash Fund's investments are
concentrated in the banking industry, the Cash Fund will have correspondingly
greater exposure to the risk factors which are characteristic of such
investments. Sustained increases in interest rates can adversely affect the
availability or liquidity and cost of capital funds for a bank's lending
activities, and a deterioration in general economic conditions could increase
the exposure to credit losses. In addition, the value of the investment return
on the Cash Fund's shares could be affected by economic or regulatory
developments in or related to the banking industry, and the effects of
competition within the banking industry as well as with other types of financial
institutions.
The foregoing policies and activities of the Funds are not fundamental
and may be changed by the Board of Directors of the Corporation without the
approval of shareholders.
Illiquid Securities. The Funds may occasionally purchase securities
other than in the open market. While such purchases may often offer attractive
opportunities for investment not otherwise available on the open market, the
securities so purchased are often "restricted securities" or "not readily
marketable," i.e., securities which cannot be sold to the public without
registration under the Securities Act of 1933 or the availability of an
exemption from registration (such as Rules 144 or 144A) or because they are
subject to other legal or contractual delays in or restrictions on resale.
Generally speaking, restricted securities may be sold only to qualified
institutional buyers, or in a privately negotiated transaction to a limited
number of purchasers, or in limited quantities after they have been held for a
specified period of time and other conditions are met pursuant to an exemption
from registration, or in a public offering for which a registration statement is
in effect under the Securities Act of 1933. The Funds may be deemed to be an
"underwriter" for purposes of the Securities Act of 1933 when selling restricted
securities to the public, and in such
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<PAGE>
event the Funds may be liable to purchasers of such securities if the
registration statement prepared by the issuer, or the prospectus forming a part
of it, is materially inaccurate or misleading.
The Adviser will monitor the liquidity of such restricted securities
subject to the supervision of the Board of Directors. In reaching liquidity
decisions, the Adviser will consider the following factors: (1) the frequency of
trades and quotes for the security (2). the number of dealers wishing to
purchase or sell the security and the number of their potential purchasers, (3)
dealer undertakings to make a market in the security; and (4) the nature of the
security and the nature of the marketplace trades (i.e. the time needed to
dispose of the security, the method of soliciting offers and the mechanics of
the transfer.)
PURCHASING SHARES
(See "Transaction information -- Purchasing shares" in the Funds' Prospectuses)
Each Fund has specific minimum initial investment requirements for each
class of shares. The Prime Reserve Shares has a minimum initial investment of
$10,000 and a minimum subsequent investment of $1,000. The Premium Shares
require a $25,000 minimum initial investment and a minimum subsequent investment
of $1,000. The Managed Shares require a $100,000 minimum initial investment and
a minimum subsequent investment of $1,000. The Institutional Shares require a
$1,000,000 minimum investment and have no minimum subsequent investment. The
minimum investment requirements may be waived or lowered for investments
effected through banks and other institutions that have entered into special
arrangements with the Funds and for investments effected on a group basis by
certain other entities and their employees, such as pursuant to a payroll
deduction plan and for investments made in an Individual Retirement Account
offered by the Funds. Investment minimums may also be waived for Directors and
officers of the Corporation. The Funds, Scudder Investor Services, Inc. and
Scudder Financial Intermediary Services Group each reserves the right to reject
any purchase order. All funds will be invested in full and fractional shares.
Wire Transfer of Federal Funds
Orders for shares of a Fund will become effective when an investor's
bank wire order or check is converted into federal funds (monies credited to the
account of State Street Bank and Trust Company (the "Custodian") with its
registered Federal Reserve Bank). If payment is transmitted by the Federal
Reserve Wire System, the order will become effective upon receipt. Orders will
be executed at 4:00 p.m. for the Cash Fund and the Government Fund (eastern
time) and at 2:00 p.m. for the Tax Free Fund on the same day if a bank wire or
check is converted to federal funds or a federal funds' wire is received by 4:00
p.m. or 2:00 p.m., respectively. In addition, if investors known to the Funds
notify the Funds by 4:00 p.m. for the Cash Fund and the Government Fund and by
2:00 p.m. for the Tax Free Fund that they intend to wire federal funds to
purchase shares of any Fund on any business day and if monies are received in
time to be invested, orders will be executed at the net asset value per share
determined at 4:00 p.m. for the Cash Fund and the Government Fund and at 2:00
p.m. for the Tax Free Fund the same day. Wire transmissions may, however, be
subject to delays of several hours, in which event the effectiveness of the
order will be delayed. Payments by a bank wire other than the Federal Reserve
Wire System may take longer to be converted into federal funds. When payment for
shares is by check drawn on any member of the Federal Reserve System, federal
funds normally become available to the Funds on the business day after the check
is deposited.
Shares of any Fund may be purchased by writing or calling the Transfer
Agent. Orders for shares of a particular class of a Fund will be executed at the
net asset value per share of such class next determined after an order has
become effective.
Checks drawn on a non-member bank or a foreign bank may take
substantially longer to be converted into federal funds and, accordingly, may
delay the execution of an order. Checks must be payable in U.S. dollars and will
be accepted subject to collection at full face value.
By investing in a Fund, a shareholder appoints the Transfer Agent to
establish an open account to which all shares purchased will be credited,
together with any dividends and capital gains distributions that are paid in
additional shares. See "Distribution and performance information--dividends and
capital gains distributions" in the Funds' Prospectuses.
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Additional Information About Making Subsequent Investments by QuickBuy
Shareholders, whose predesignated bank account of record is a member of
the Automated Clearing House Network (ACH) and who have elected to participate
in the QuickBuy program, may purchase shares of the Fund by telephone. Through
this service shareholders may purchase up to $250,000. To purchase shares by
QuickBuy, shareholders should call before the close of regular trading on the
Exchange, normally 4 p.m. eastern time. Proceeds in the amount of your purchase
will be transferred from your bank checking account two or three business days
following your call. For requests received by the close of regular trading on
the Exchange, shares will be purchased at the net asset value per share
calculated at the close of trading on the day of your call. QuickBuy requests
received after the close of regular trading on the Exchange will begin their
processing and be purchased at the net asset value calculated the following
business day. If you purchase shares by QuickBuy and redeem them within seven
days of the purchase, the Fund may hold the redemption proceeds for a period of
up to seven business days. If you purchase shares and there are insufficient
funds in your bank account the purchase will be canceled and you will be subject
to any losses or fees incurred in the transaction. QuickBuy transactions are not
available for most retirement plan accounts. However, QuickBuy transactions are
available for Scudder IRA accounts.
In order to request purchases by QuickBuy, shareholders must have
completed and returned to the Transfer Agent the application, including the
designation of a bank account from which the purchase payment will be debited.
New investors wishing to establish QuickBuy may so indicate on the application.
Existing shareholders who wish to add QuickBuy to their account may do so by
completing a QuickBuy Enrollment Form. After sending in an enrollment form
shareholders should allow for 15 days for this service to be available.
Each Fund employs procedures, including recording telephone calls,
testing a caller's identity, and sending written confirmation of telephone
transactions, designed to give reasonable assurance that instructions
communicated by telephone are genuine, and to discourage fraud. To the extent
that each Fund does not follow such procedures, it may be liable for losses due
to unauthorized or fraudulent telephone instructions. Each Fund will not be
liable for acting upon instructions communicated by telephone that it reasonably
believes to be genuine.
Share Certificates
Due to the desire of each Fund's management to afford ease of
redemption, certificates will not be issued to indicate ownership in any Fund.
Share certificates now in a shareholder's possession may be sent to the Transfer
Agent for cancellation and credit to such shareholder's account. Shareholders
who prefer may hold the certificates in their possession until they wish to
exchange or redeem such shares.
The Funds have authorized certain members of the NASD other than the
Distributor to accept purchase and redemption orders for the Funds' shares.
Those brokers may also designate other parties to accept purchase and redemption
orders on each Fund's behalf. Orders for purchase or redemption will be deemed
to have been received by a Fund when such brokers or their authorized designees
accept the orders. Subject to the terms of the contract between a Fund and the
broker, ordinarily orders will be priced at that Fund's net asset value next
computed after acceptance by such brokers or their authorized designees.
Further, if purchases or redemptions of a Fund's shares are arranged and
settlement is made at an investor's election through any other authorized NASD
member, that member may, at its discretion, charge a fee for that service. The
Board of Directors and the Distributor, also the Funds' principal underwriter,
each has the right to limit the amount of purchases by, and to refuse to sell
to, any person. The Directors and the Distributor may suspend or terminate the
offering of shares of a Fund at any time for any reason.
EXCHANGES AND REDEMPTIONS
(See "Transaction Information -- Exchanges and Redemptions" in
the Funds' Prospectuses)
Payment of redemption proceeds may be made in securities. The
Corporation may suspend the right of redemption with respect to any Fund during
any period when (i) trading on the Exchange is restricted or the Exchange is
closed, other than customary weekend and holiday closings, (ii) the SEC has by
order permitted such suspension or (iii) an emergency, as defined by rules of
the SEC, exists making disposal of portfolio securities or determination of the
value of the net assets of that Fund not reasonably practicable.
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A shareholder's Fund account remains open for up to one year following
complete redemption and all costs during the period will be borne by the
Corporation. This permits an investor to resume investments.
Exchanges
The following information regarding exchanges applies only to Prime
Reserve Shares and Premium Shares and each Fund's class of Managed Shares. The
exchange privileges listed below do not apply to the Institutional Shares.
Exchanges are comprised of a redemption from one Scudder fund and a
purchase into another Scudder fund. The purchase side of the exchange either may
be an additional investment into an existing account or may involve opening a
new account in the other fund. When an exchange involves a new account, the new
account will be established with the same registration, tax identification
number, address, telephone redemption option, "Scudder Automated Information
Line" (SAIL(TM)) transaction authorization and dividend option as the existing
account. Other features will not carry over automatically to the new account.
Exchanges to a new fund account must be for a minimum of $10,000 for Prime
Reserve Shares, $25,000 for Premium Shares and $100,000 for Managed Shares.
Exchanges into other Scudder Funds may have lower minimum exchange requirements.
When an exchange represents an additional investment into an existing account,
the account receiving the exchange proceeds must have identical registration,
tax identification number, address, and account options/features as the account
of origin. Exchanges into an existing account must be for $1,000 or more. If the
account receiving the exchange proceeds is to be different in any respect, the
exchange request must be in writing and must contain an original signature
guarantee as described under "Transaction information--Redeeming
shares--Signature guarantees" in the Funds' prospectuses.
Exchange orders received before the close of regular trading on the
Exchange on any business day ordinarily will be executed at the respective net
asset values determined on that day. Exchange orders received after the close of
regular trading on the Exchange will be executed on the following business day.
Investors may also request, at no extra charge, to have exchanges
automatically executed on a predetermined schedule from one Scudder fund to an
existing account in another Scudder fund, at current net asset value, through
Scudder's Automatic Exchange Program. Exchanges must be for a minimum of $50.
Shareholders may add this free feature over the telephone or in writing.
Automatic Exchanges will continue until the shareholder requests by telephone or
in writing to have the feature removed, or until the originating account is
depleted. The Funds and the Transfer Agent each reserves the right to suspend or
terminate the privilege of the Automatic Exchange Program at any time.
There is no charge to the shareholder for any exchange described above.
An exchange into another Scudder fund is a redemption of shares, and therefore
may result in tax consequences (gain or loss) to the shareholder, and the
proceeds of such an exchange may be subject to backup withholding. (See
"TAXES.")
Investors currently receive the exchange privilege, including exchange
by telephone, automatically without having to elect it. The Funds employ
procedures, including recording telephone calls, testing a caller's identity,
and sending written confirmation of telephone transactions, designed to give
reasonable assurance that instructions communicated by telephone are genuine,
and to discourage fraud. To the extent that the Funds do not follow such
procedures, they may be liable for losses due to unauthorized or fraudulent
telephone instructions. The Funds will not be liable for acting upon
instructions communicated by telephone that they reasonably believe to be
genuine. The Funds and the Transfer Agent each reserve the right to suspend or
terminate the privilege of exchanging by telephone or fax at any time.
The Scudder funds into which investors may make an exchange are listed
under "THE SCUDDER FAMILY OF FUNDS" herein. Before making an exchange,
shareholders should obtain from the Distributor a prospectus of the Scudder fund
into which the exchange is being contemplated. The exchange privilege may not be
available for certain Scudder funds or classes thereof. For more information,
please call 1-800-225-5163.
Scudder retirement plans may have different exchange requirements.
Please refer to appropriate plan literature.
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Redemption by Telephone
In order to request redemptions by telephone, shareholders must have
completed and returned to the Transfer Agent the application, including the
designation of a bank account to which the redemption proceeds are to be sent.
Shareholders currently receive the right to redeem up to $100,000 to their
address of record automatically, without having to elect it. Shareholders may
also request to have the proceeds mailed or wired to their pre-designated bank
account.
(a) NEW INVESTORS wishing to establish telephone redemption to a
pre-designated bank account must complete the appropriate
section on the application.
(b) EXISTING SHAREHOLDERS (except those who are Scudder IRA,
Scudder Pension and Profit-Sharing, Scudder 401(k) and Scudder
403(b) Planholders) who wish to establish telephone redemption
to a pre-designated bank account or who want to change the
bank account previously designated to receive redemption
payments should either return a Telephone Redemption Option
Form (available upon request) or send a letter identifying the
account and specifying the exact information to be changed.
The letter must be signed exactly as the shareholder's name(s)
appears on the account. A signature and a signature guarantee
are required for each person in whose name the account is
registered.
Telephone redemption is not available with respect to shares
represented by share certificates or shares held in certain retirement accounts.
If a request for redemption to a shareholder's bank account is made by
telephone or fax, payment will be by Federal Reserve bank wire to the bank
account designated on the application, unless a request is made that the
redemption check be mailed to the designated bank account. The Prime Reserve and
the Premium Shares have a $5 charge for wire redemptions. The Managed Shares
have a $5 charge for wire redemptions unless it is for an amount of $1,000 or
greater or it is a sweep account. The Institutional Shares do not charge a wire
fee.
Note: Investors designating a savings bank to receive their telephone
redemption proceeds are advised that if the savings bank is not a participant in
the Federal Reserve System, redemption proceeds must be wired through a
commercial bank which is a correspondent of the savings bank. As this may delay
receipt by the shareholder's account, it is suggested that investors wishing to
use a savings bank discuss wire procedures with their bank and submit any
special wire transfer information with the telephone redemption authorization.
If appropriate wire information is not supplied, redemption proceeds will be
mailed to the designated bank.
The Funds employ procedures, including recording telephone calls,
testing a caller's identity, and sending written confirmation of telephone
transactions, designed to give reasonable assurance that instructions
communicated by telephone are genuine, and to discourage fraud. To the extent
that the Funds do not follow such procedures, they may be liable for losses due
to unauthorized or fraudulent telephone instructions. The Funds will not be
liable for acting upon instructions communicated by telephone that they
reasonably believe to be genuine.
Redemption requests by telephone (technically a repurchase by agreement
between the Fund and the shareholder) of shares purchased by check will not be
accepted until the purchase check has cleared which may take up to seven
business days.
Redemption By QuickSell
Shareholders, whose predesignated bank account of record is a member of
the Automated Clearing House Network (ACH) and who have elected to participate
in the QuickSell program may sell shares of the Fund by telephone. To sell
shares by QuickSell, shareholders should call before the close of regular
trading on the Exchange, normally 4 p.m. eastern time. Redemptions must be for
at least $250. Proceeds in the amount of your redemption will be transferred to
your bank checking account two or three business days following your call. For
requests received by the close of regular trading on the Exchange, normally 4
p.m. eastern time, shares will be redeemed at the net asset value per share
calculated at the close of trading on the day of your call. QuickSell requests
received after the close of regular trading on the Exchange will begin their
processing and be redeemed at the net asset value calculated the
10
<PAGE>
following business day. QuickSell transactions are not available for Scudder IRA
accounts and most other retirement plan accounts.
In order to request redemptions by QuickSell, shareholders must have
completed and returned to the Transfer Agent the application, including the
designation of a bank account from which the purchase payment will be debited.
New investors wishing to establish QuickSell may so indicate on the application.
Existing shareholders who wish to add QuickSell to their account may do so by
completing an QuickSell Enrollment Form. After sending in an enrollment form,
shareholders should allow for 15 days for this service to be available.
The Fund employs procedures, including recording telephone calls,
testing a caller's identity, and sending written confirmation of telephone
transactions, designed to give reasonable assurance that instructions
communicated by telephone are genuine, and to discourage fraud. To the extent
that the Fund does not follow such procedures, it may be liable for losses due
to unauthorized or fraudulent telephone instructions. The Fund will not be
liable for acting upon instructions communicated by telephone that it reasonably
believes to be genuine.
Redemption by Mail or Fax
Any existing share certificates representing shares being redeemed must
accompany a request for redemption and be duly endorsed or accompanied by a
proper stock assignment form with signatures guaranteed as explained in the
Funds' prospectuses.
In order to ensure proper authorization before redeeming shares, the
Transfer Agent may request additional documents such as, but not restricted to,
stock powers, trust instruments, certificates of death, appointments as
executor, certificates of corporate authority and waivers of tax (required in
some states when settling estates).
It is suggested that shareholders holding share certificates or shares
registered in other than individual names contact the Transfer Agent prior to
any redemptions to ensure that all necessary documents accompany the request.
When shares are held in the name of a corporation, trust, fiduciary, agent,
attorney or partnership, the Transfer Agent requires, in addition to the stock
power, certified evidence of authority to sign. These procedures are for the
protection of shareholders and should be followed to ensure prompt payment.
Redemption requests must not be conditional as to date or price of the
redemption. Proceeds of a redemption will be sent within five days after receipt
by the Transfer Agent of a request for redemption that complies with the above
requirements. Delays of more than seven business days of payment for shares
tendered for repurchase or redemption may result, but only until the purchase
check has cleared.
The requirements for IRA redemptions are different from those for
regular accounts. For more information call 1-800-225-5163.
Redemption by Write-a-Check
The following information regarding Redemption by Write-a-Check applies
only to Prime Reserve Shares and Premium Shares and each Fund's class of Managed
Shares. Redemption by Write-a-Check does not apply to the Institutional Shares.
All new investors and existing shareholders who apply to State Street
Bank and Trust Company for checks may use them to pay any person, provided that
each check is for at least $1,000 and not more than $5 million. By using the
checks, the shareholder will receive daily dividend credit on his or her shares
until the check has cleared the banking system. Investors who purchased shares
by check may write checks against those shares only after they have been on a
Fund's book for seven business days. Shareholders who use this service may also
use other redemption procedures. No shareholder may write checks against
certificated shares. The Funds pay the bank charges for this service. However,
each Fund will review the cost of operation periodically and reserve the right
to determine if direct charges to the persons who avail themselves of this
service would be appropriate. Each Fund, Scudder Service Corporation and State
Street Bank and Trust Company reserve the right at any time to suspend or
terminate the "Write-a-Check" procedure.
11
<PAGE>
Minimum balances for Scudder Prime Reserve Money Market Shares
Initial minimum investment in the Prime Reserve Shares is $10,000.
Shareholders should maintain a share balance worth at least $7,500 (which
minimum amount may be changed by the Board of Directors). Account balances will
be reviewed periodically and shareholders with accounts below $7,500 will
receive 60 days' notice, after which, if the balance is not increased to the
required level, the Adviser reserves the right to redeem all shares and close
the account and send the proceeds to the shareholder's address of record.
Reductions in value that result solely from market activity will not trigger an
involuntary redemption.
Accounts with balances below $2,500, which is the minimum balance
required for Scudder Cash Investment Trust, will be automatically liquidated and
the check sent to the shareholder's address of record.
Please refer to "Exchanges and Redemptions -- Other Information" in the
Fund's combined Statement of Additional Information for more information.
Minimum balances for Scudder Premium Money Market Shares
Initial minimum investment in the Fund is $25,000. Shareholders should
maintain a share balance worth at least $15,000 (which minimum amount may be
changed by the Board of Directors).
Shareholders whose account balance falls below $15,000 for at least 30
days will be given 60 days' notice to bring the account back up to $15,000 or
more. Where a reduction in value has occurred due to a redemption or exchange
out of the account and the account balance is not increased in 60 days, the
Adviser reserves the right to redeem all shares and close the account and send
the proceeds to the shareholder's address of record. Reductions in value that
result solely from market activity will not trigger an involuntary redemption.
Please refer to "Exchanges and Redemptions -- Other Information" in the
Fund's combined Statement of Additional Information for more information.
FEATURES AND SERVICES OFFERED BY THE FUNDS
(See "Shareholder benefits" in the Funds' prospectuses.)
The Pure No-Load(TM) Concept
Investors are encouraged to be aware of the full ramifications of
mutual fund fee structures, and of how Scudder distinguishes its funds from the
vast majority of mutual funds available today. The primary distinction is
between load and no-load funds.
Load funds generally are defined as mutual funds that charge a fee for
the sale and distribution of fund shares. There are three types of loads:
front-end loads, back-end loads, and asset-based 12b-1 fees. 12b-1 fees are
distribution-related fees charged against fund assets and are distinct from
service fees, which are charged for personal services and/or maintenance of
shareholder accounts. Asset-based sales charges and service fees are typically
paid pursuant to distribution plans adopted under 12b-1 under the 1940 Act.
A front-end load is a sales charge, which can be as high as 8.50% of
the amount invested. A back-end load is a contingent deferred sales charge,
which can be as high as 8.50% of either the amount invested or redeemed. The
maximum front-end or back-end load varies, and depends upon whether or not a
fund also charges a 12b-1 fee and/or a service fee or offers investors various
sales-related services such as dividend reinvestment. The maximum charge for a
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<PAGE>
12b-1 fee is 0.75% of a fund's average annual net assets, and the maximum charge
for a service fee is 0.25% of a fund's average annual net assets.
A no-load fund does not charge a front-end or back-end load, but can
charge a small 12b-1 fee and/or service fee against fund assets. Under the
National Association of Securities Dealers Rules of Fair Practice, a mutual fund
can call itself a "no-load" fund only if the 12b-1 fee and/or service fee does
not exceed 0.25% of a fund's average annual net assets.
Because Scudder funds do not pay any asset-based sales charges or
service fees, Scudder developed and trademarked the phrase pure no-load(TM) to
distinguish Scudder funds from other no-load mutual funds. Scudder pioneered the
no-load concept when it created the nation's first no-load fund in 1928, and
later developed the nation's first family of no-load mutual funds.
The following chart shows the potential long-term advantage of
investing $10,000 in a Scudder pure no-load fund over investing the same amount
in a load fund that collects an 8.50% front-end load, a load fund that collects
only a 0.75% 12b-1 and/or service fee, and a no-load fund charging only a 0.25%
12b-1 and/or service fee. The hypothetical figures in the chart show the value
of an account assuming a constant 10% rate of return over the time periods
indicated and reinvestment of dividends and distributions.
<TABLE>
<S> <C> <C> <C> <C> <C>
<CAPTION>
====================================================================================================================
Scudder
YEARS Pure No-Load(TM) 8.50% Load Fund Load Fund with 0.75% No-Load Fund with
Fund 12b-1 Fee 0.25% 12b-1 Fee
- --------------------------------------------------------------------------------------------------------------------
10 $25,937 $23,733 $24,222 $25,354
- --------------------------------------------------------------------------------------------------------------------
15 41,772 38,222 37,698 40,371
- --------------------------------------------------------------------------------------------------------------------
20 67,275 61,557 58,672 64,282
====================================================================================================================
</TABLE>
Investors are encouraged to review the fee tables of each Fund's
respective prospectus for more specific information about the rates at which
management fees and other expenses are assessed.
Dividend and Capital Gain Distribution Options
Investors have freedom to choose whether to receive cash or to reinvest
any dividends from net investment income, or distributions from realized capital
gains in additional shares of the same class of the Fund. A change of
instructions for the method of payment must be received by the Fund's transfer
agent at least 5 days prior to a dividend record date. Shareholders for Prime
Reserve Shares and Premium and Managed Classes of Shares may change their
dividend option by calling 1-800-225-5163 and 1-800-537-3177 for Institutional
Class of Shares or for all classes by sending written instructions to the
Transfer Agent. Please include your account number with your written request.
See "How to contact Scudder" in the prospectus for the address.
Reinvestment is usually made at the closing net asset value determined
on the business day following the record date. Investors may leave standing
instructions with the Transfer Agent designating their option for either
reinvestment or cash distributions of any income dividends or capital gains
distributions. If no election is made, dividends and distributions will be
invested in additional shares of the same class of the relevant Fund.
Investors may also have dividends and distributions automatically
deposited in their predesignated bank account through Scudder's
DistributionsDirect Program. Shareholders who elect to participate in the
DistributionsDirect Program, and whose predesignated checking account of record
is with a member bank of the Automated Clearing House Network (ACH) can have
income and capital gains distributions automatically deposited to their personal
bank account usually within three business days after a Fund pays its
distribution. A DistributionsDirect request form can be obtained by calling
1-800-225-5163.
13
<PAGE>
Scudder Investor Centers
Investors may visit any of the Investor Centers maintained by the
Distributor. The Centers are designed to provide individuals with services
during any business day. Investors may pick up literature or obtain assistance
with opening an account, adding monies or special options to existing accounts,
making exchanges within the Scudder Family of Funds, redeeming shares or opening
retirement plans. Checks should not be mailed to the Centers but should be
mailed to "The Scudder Funds" at the address listed under "How to contact
Scudder" in the Funds' prospectuses.
Reports to Shareholders
All three Funds issue to their respective shareholders annual and
semiannual financial statements (audited annually by independent accountants),
including a list of investments held and statements of assets and liabilities,
operations, changes in net assets and financial highlights for that Fund, as the
case may be.
Diversification
A shareholder's investment represents an interest in a large,
diversified portfolio of carefully selected securities. Diversification may
protect investors against the possible risks associated with concentrating in
fewer securities.
Transaction Summaries
Annual summaries of all transactions in each Fund account are available
to shareholders. The summaries may be obtained by calling 1-800-225-5163 for
Prime Reserve, Premium and Managed Classes of Shares and 1-800-537-3177 for
Institutional Class of Shares.
Internet access
World Wide Web Site -- The address of the Scudder Funds site is
http://funds.scudder.com. The site offers guidance on global investing and
developing strategies to help meet financial goals and provides access to the
Scudder investor relations department via e-mail. The site also enables users to
access or view fund prospectuses and profiles with links between summary
information in Profiles and details in the Prospectus. Users can fill out new
account forms on-line, order free software, and request literature on funds.
The site is designed for interactivity, simplicity and maneuverability.
A section entitled "Planning Resources" provides information on asset
allocation, tuition, and retirement planning to users who fill out interactive
"worksheets." Investors can easily establish a "Personal Page," that presents
price information, updated daily, on funds they're interested in following. The
"Personal Page" also offers easy navigation to other parts of the site. Fund
performance data from both Scudder and Lipper Analytical Services, Inc. are
available on the site. Also offered on the site is a news feature, which
provides timely and topical material on the Scudder Funds.
Scudder has communicated with shareholders and other interested parties
on Prodigy since 1988 and has participated since 1994 in GALT's Networth
"financial marketplace" site on the Internet. The firm made Scudder Funds
information available on America Online in early 1996.
Account Access -- Scudder is among the first mutual fund families to allow
shareholders to manage their fund accounts through the World Wide Web. Scudder
Fund shareholders can view a snapshot of current holdings, review account
activity and move assets between Scudder Fund accounts.
Scudder's personal portfolio capabilities -- known as SEAS (Scudder
Electronic Account Services) -- are accessible only by current Scudder Fund
shareholders who have set up a Personal Page on Scudder's Web site. Using a
secure Web browser, shareholders sign on to their account with their Social
Security number and their SAIL password. As an additional security measure,
users can change their current password or disable access to their portfolio
through the World Wide Web.
14
<PAGE>
An Account Activity option reveals a financial history of transactions
for an account, with trade dates, type and amount of transaction, share price
and number of shares traded. For users who wish to trade shares between Scudder
Funds, the Fund Exchange option provides a step-by-step procedure to exchange
shares among existing fund accounts or to new Scudder Fund accounts.
A Call MeTM feature enables users to speak with a Scudder Investor
Relations telephone representative while viewing their account on the Web site.
In order to use the Call MeTM feature, an individual must have two phone lines
and enter on the screen the phone number that is not being used to connect to
the Internet. They are connected to the next available Scudder Investor
Relations representative from 8 a.m. to 8 p.m. eastern time.
THE SCUDDER FAMILY OF FUNDS
(See "Investment products and services" in the [Fund's/Funds']
[prospectus/prospectuses].)
The Scudder Family of Funds is America's first family of mutual funds
and the nation's oldest family of no-load mutual funds. To assist investors in
choosing a Scudder fund, descriptions of the Scudder funds' objectives follow.
MONEY MARKET
Scudder U.S. Treasury Money Fund seeks to provide safety, liquidity and
stability of capital and, consistent therewith, to provide current
income. The Fund seeks to maintain a constant net asset value of $1.00
per share, although in certain circumstances this may not be possible,
and declares dividends daily.
Scudder Cash Investment Trust ("SCIT") seeks to maintain the stability
of capital and, consistent therewith, to maintain the liquidity of
capital and to provide current income. SCIT seeks to maintain a
constant net asset value of $1.00 per share, although in certain
circumstances this may not be possible, and declares dividends daily.
Scudder Money Market Series seeks to provide investors with as high a
level of current income as is consistent with its investment polices
and with preservation of capital and liquidity. The Fund seeks to
maintain a constant net asset value of $1.00 per share, but there is no
assurance that it will be able to do so. The institutional class of
shares of this Fund is not within the Scudder Family of Funds.
Scudder Government Money Market Series seeks to provide investors with
as high a level of current income as is consistent with its investment
polices and with preservation of capital and liquidity. The Fund seeks
to maintain a constant net asset value of $1.00 per share, but there is
no assurance that it will be able to do so. The institutional class of
shares of this Fund is not within the Scudder Family of Funds.
TAX FREE MONEY MARKET
Scudder Tax Free Money Fund ("STFMF") seeks to provide income exempt
from regular federal income tax and stability of principal through
investments primarily in municipal securities. STFMF seeks to maintain
a constant net asset value of $1.00 per share, although in extreme
circumstances this may not be possible.
Scudder Tax Free Money Market Series seeks to provide investors with as
high a level of current income that cannot be subjected to federal
income tax by reason of federal law as is consistent with its
investment policies and with preservation of capital and liquidity. The
Fund seeks to maintain a constant net asset value of $1.00 per share,
but there is no assurance that it will be able to do so. The
institutional class of shares of this Fund is not within the Scudder
Family of Funds.
15
<PAGE>
Scudder California Tax Free Money Fund* seeks stability of capital and
the maintenance of a constant net asset value of $1.00 per share while
providing California taxpayers income exempt from both California State
personal and regular federal income taxes. The Fund is a professionally
managed portfolio of high quality, short-term California municipal
securities. There can be no assurance that the stable net asset value
will be maintained.
Scudder New York Tax Free Money Fund* seeks stability of capital and
the maintenance of a constant net asset value of $1.00 per share, while
providing New York taxpayers income exempt from New York State and New
York City personal income taxes and regular federal income tax. There
can be no assurance that the stable net asset value will be maintained.
TAX FREE
Scudder Limited Term Tax Free Fund seeks to provide as high a level of
income exempt from regular federal income tax as is consistent with a
high degree of principal stability.
Scudder Medium Term Tax Free Fund seeks to provide a high level of
income free from regular federal income taxes and to limit principal
fluctuation. The Fund will invest primarily in high-grade,
intermediate-term bonds.
Scudder Managed Municipal Bonds seeks to provide income exempt from
regular federal income tax primarily through investments in high-grade,
long-term municipal securities.
Scudder High Yield Tax Free Fund seeks to provide a high level of
interest income, exempt from regular federal income tax, from an
actively managed portfolio consisting primarily of investment-grade
municipal securities.
Scudder California Tax Free Fund* seeks to provide California taxpayers
with income exempt from both California State personal income and
regular federal income tax. The Fund is a professionally managed
portfolio consisting primarily of California municipal securities.
Scudder Massachusetts Limited Term Tax Free Fund* seeks to provide
Massachusetts taxpayers with as high a level of income exempt from
Massachusetts personal income tax and regular federal income tax, as is
consistent with a high degree of price stability, through a
professionally managed portfolio consisting primarily of
investment-grade municipal securities.
Scudder Massachusetts Tax Free Fund* seeks to provide Massachusetts
taxpayers with income exempt from both Massachusetts personal income
tax and regular federal income tax. The Fund is a professionally
managed portfolio consisting primarily of investment-grade municipal
securities.
Scudder New York Tax Free Fund* seeks to provide New York taxpayers
with income exempt from New York State and New York City personal
income taxes and regular federal income tax. The Fund is a
professionally managed portfolio consisting primarily of New York
municipal securities.
Scudder Ohio Tax Free Fund* seeks to provide Ohio taxpayers with income
exempt from both Ohio personal income tax and regular federal income
tax. The Fund is a professionally managed portfolio consisting
primarily of investment-grade municipal securities.
Scudder Pennsylvania Tax Free Fund* seeks to provide Pennsylvania
taxpayers with income exempt from both Pennsylvania personal income tax
and regular federal income tax. The Fund is a professionally managed
portfolio consisting primarily of investment-grade municipal
securities.
- --------
* These funds are not available for sale in all states. For information,
contact Scudder Investor Services, Inc.
16
<PAGE>
U.S. INCOME
Scudder Short Term Bond Fund seeks to provide a high level of income
consistent with a high degree of principal stability by investing
primarily in high quality short-term bonds.
Scudder Zero Coupon 2000 Fund seeks to provide as high an investment
return over a selected period as is consistent with investment in U.S.
Government securities and the minimization of reinvestment risk.
Scudder GNMA Fund seeks to provide high current income primarily from
U.S. Government guaranteed mortgage-backed (Ginnie Mae) securities.
Scudder Income Fund seeks a high level of income, consistent with the
prudent investment of capital, through a flexible investment program
emphasizing high-grade bonds.
Scudder High Yield Bond Fund seeks a high level of current income and,
secondarily, capital appreciation through investment primarily in below
investment-grade domestic debt securities.
GLOBAL INCOME
Scudder Global Bond Fund seeks to provide total return with an emphasis
on current income by investing primarily in high-grade bonds
denominated in foreign currencies and the U.S. dollar. As a secondary
objective, the Fund will seek capital appreciation.
Scudder International Bond Fund seeks to provide income primarily by
investing in a managed portfolio of high-grade international bonds. As
a secondary objective, the Fund seeks protection and possible
enhancement of principal value by actively managing currency, bond
market and maturity exposure and by security selection.
Scudder Emerging Markets Income Fund seeks to provide high current
income and, secondarily, long-term capital appreciation through
investments primarily in high-yielding debt securities issued by
governments and corporations in emerging markets.
ASSET ALLOCATION
Scudder Pathway Series: Conservative Portfolio seeks primarily current
income and secondarily long-term growth of capital. In pursuing these
objectives, the Portfolio, under normal market conditions, will invest
substantially in a select mix of Scudder bond mutual funds, but will
have some exposure to Scudder equity mutual funds.
Scudder Pathway Series: Balanced Portfolio seeks to provide investors
with a balance of growth and income by investing in a select mix of
Scudder money market, bond and equity mutual funds.
Scudder Pathway Series: Growth Portfolio seeks to provide investors
with long-term growth of capital. In pursuing this objective, the
Portfolio will, under normal market conditions, invest predominantly in
a select mix of Scudder equity mutual funds designed to provide
long-term growth.
Scudder Pathway Series: International Portfolio seeks maximum total
return for investors. Total return consists of any capital appreciation
plus dividend income and interest. To achieve this objective, the
Portfolio invests in a select mix of established international and
global Scudder funds.
U.S. GROWTH AND INCOME
Scudder Balanced Fund seeks a balance of growth and income from a
diversified portfolio of equity and fixed-income securities. The Fund
also seeks long-term preservation of capital through a quality-oriented
approach that is designed to reduce risk.
17
<PAGE>
Scudder Dividend & Growth Fund seeks high current income and long-term
growth of capital through investment in income paying equity
securities.
Scudder Growth and Income Fund seeks long-term growth of capital,
current income, and growth of income.
Scudder S&P 500 Index Fund seeks to provide investment results that,
before expenses, correspond to the total return of common stocks
publicly traded in the United States, as represented by the Standard &
Poor's 500 Composite Stock Price Index.
Scudder Real Estate Investment Fund seeks long-term capital growth and
current income by investing primarily in equity securities of companies
in the real estate industry.
U.S. GROWTH
Value
Scudder Large Company Value Fund seeks to maximize long-term capital
appreciation through a value-driven investment program.
Scudder Value Fund** seeks long-term growth of capital through
investment in undervalued equity securities.
Scudder Small Company Value Fund invests for long-term growth of
capital by seeking out undervalued stocks of small U.S. companies.
Scudder Micro Cap Fund seeks long-term growth of capital by investing
primarily in a diversified portfolio of U.S. micro-capitalization
("micro-cap") common stocks.
Growth
Scudder Classic Growth Fund** seeks to provide long-term growth of
capital with reduced share price volatility compared to other growth
mutual funds.
Scudder Large Company Growth Fund seeks to provide long-term growth of
capital through investment primarily in the equity securities of
seasoned, financially strong U.S. growth companies.
Scudder Development Fund seeks long-term growth of capital by investing
primarily in securities of small and medium-size growth companies.
Scudder 21st Century Growth Fund seeks long-term growth of capital by
investing primarily in the securities of emerging growth companies
poised to be leaders in the 21st century.
SCUDDER CHOICE SERIES
Scudder Financial Services Fund seeks long-term growth of capital
primarily through investment in equity securities of financial services
companies.
Scudder Health Care Fund seeks long-term growth of capital primarily
through investment in securities of companies that are engaged in the
development, production or distribution of products or services related
to the treatment or prevention of diseases and other medical problems.
Scudder Technology Fund seeks long-term growth of capital primarily
through investment in securities of companies engaged in the
development, production or distribution of technology-related products
or services.
- --------
** Only the Scudder Shares are part of the Scudder Family of Funds.
18
<PAGE>
SCUDDER PREFERRED SERIES
Scudder Tax Managed Fund seeks long-term growth of capital on an
after-tax basis by investing primarily in established, medium- to
large-sized U.S. companies with leading competitive positions.
Scudder Tax Managed Small Company Fund seeks long-term growth of
capital on an after-tax basis through investment primarily in
undervalued stocks of small U.S. companies.
GLOBAL EQUITY
Worldwide
Scudder Global Fund seeks long-term growth of capital through a
diversified portfolio of marketable securities, primarily equity
securities, including common stocks, preferred stocks and debt
securities convertible into common stocks.
Scudder International Value Fund seeks long-term capital appreciation
through investment primarily in undervalued foreign equity securities.
Scudder International Growth and Income Fund seeks long-term growth of
capital and current income primarily from foreign equity securities.
Scudder International Fund*** seeks long-term growth of capital
primarily through a diversified portfolio of marketable foreign equity
securities.
Scudder International Growth Fund seeks long-term capital appreciation
through investment primarily in the equity securities of foreign
companies with high growth potential.
Scudder Global Discovery Fund** seeks above-average capital
appreciation over the long term by investing primarily in the equity
securities of small companies located throughout the world.
Scudder Emerging Markets Growth Fund seeks long-term growth of capital
primarily through equity investment in emerging markets around the
globe.
Scudder Gold Fund seeks maximum return (principal change and income)
consistent with investing in a portfolio of gold-related equity
securities and gold.
Regional
Scudder Greater Europe Growth Fund seeks long-term growth of capital
through investments primarily in the equity securities of European
companies.
Scudder Pacific Opportunities Fund seeks long-term growth of capital
through investment primarily in the equity securities of Pacific Basin
companies, excluding Japan.
Scudder Latin America Fund seeks to provide long-term capital
appreciation through investment primarily in the securities of Latin
American issuers.
The Japan Fund, Inc. seeks long-term capital appreciation by investing
primarily in equity securities (including American Depository Receipts)
of Japanese companies.
The net asset values of most Scudder funds can be found daily in the
"Mutual Funds" section of The Wall Street Journal under "Scudder Funds," and in
other leading newspapers throughout the country. Investors will notice
- --------
** Only the Scudder Shares are part of the Scudder Family of Funds.
*** Only the International Shares are part of the Scudder Family of Funds.
19
<PAGE>
the net asset value and offering price are the same, reflecting the fact that no
sales commission or "load" is charged on the sale of shares of the Scudder
funds. The latest seven-day yields for the money-market funds can be found every
Monday and Thursday in the "Money-Market Funds" section of The Wall Street
Journal. This information also may be obtained by calling the Scudder Automated
Information Line (SAIL) at 1-800-343-2890.
The Scudder Family of Funds offers many conveniences and services,
including: active professional investment management; broad and diversified
investment portfolios; pure no-load funds with no commissions to purchase or
redeem shares or Rule 12b-1 distribution fees; individual attention from a
service representative of Scudder Investor Relations; and easy telephone
exchanges into other Scudder funds. Certain Scudder funds or classes thereof may
not be available for purchase or exchange. For more information, please call
1-800-225-5163.
SPECIAL PLAN ACCOUNTS
(See "Scudder tax-advantaged retirement plans," "Purchases -- By
Automatic Investment Plan" and "Exchanges and redemptions -- By
Automatic Withdrawal Plan" in the Funds' prospectuses.)
The following information regarding Special Plan Accounts applies only
to Prime Reserve Shares and Premium Shares and each Fund's class of Managed
Shares. Special Plan Accounts do not apply to the Institutional Shares.
Detailed information on any Scudder investment plan, including the
applicable charges, minimum investment requirements and disclosures made
pursuant to Internal Revenue Service (the "IRS") requirements, may be obtained
by contacting Scudder Investor Services, Inc., Two International Place, Boston,
Massachusetts 02110-4103 or by calling toll free, 1-800-225-2470. The
discussions of the plans below describe only certain aspects of the federal
income tax treatment of the plans. The state tax treatment may be different and
may vary from state to state. It is advisable for an investor considering the
funding of the investment plans described below to consult with an attorney or
other investment or tax adviser with respect to the suitability requirements and
tax aspects thereof.
Shares of the Funds may also be a permitted investment under profit
sharing and pension plans and IRA's other than those offered by the Fund's
distributor depending on the provisions of the relevant plan or IRA.
None of the plans assures a profit or guarantees protection against
depreciation, especially in declining markets.
Scudder Retirement Plans: Profit-Sharing and Money Purchase
Pension Plans for Corporations and Self-Employed Individuals
Shares of the Funds may be purchased as the investment medium under a
plan in the form of a Scudder Profit-Sharing Plan (including a version of the
Plan which includes a cash-or-deferred feature) or a Scudder Money Purchase
Pension Plan (jointly referred to as the Scudder Retirement Plans) adopted by a
corporation, a self-employed individual or a group of self-employed individuals
(including sole proprietorships and partnerships), or other qualifying
organization. Each of these forms was approved by the IRS as a prototype. The
IRS's approval of an employer's plan under Section 401(a) of the Internal
Revenue Code will be greatly facilitated if it is in such approved form. Under
certain circumstances, the IRS will assume that a plan, adopted in this form,
after special notice to any employees, meets the requirements of Section 401(a)
of the Internal Revenue Code as to form.
Scudder IRA: Individual Retirement Account
Shares of the Funds may be purchased as the underlying investment for
an Individual Retirement Account which meets the requirements of Section 408(a)
of the Internal Revenue Code.
A single individual who is not an active participant in an
employer-maintained retirement plan, a simplified employee pension plan, or a
tax-deferred annuity program (a "qualified plan"), and a married individual who
is not an active participant in a qualified plan and whose spouse is also not an
active participant in a qualified plan, are eligible to make tax deductible
contributions of up to $2,000 to an IRA prior to the year such individual
attains age 70 1/2. In addition, certain individuals who are active participants
in qualified plans (or who have spouses who are active
20
<PAGE>
participants) are also eligible to make tax-deductible contributions to an IRA;
the annual amount, if any, of the contribution which such an individual will be
eligible to deduct will be determined by the amount of his, her, or their
adjusted gross income for the year. Whenever the adjusted gross income
limitation prohibits an individual from contributing what would otherwise be the
maximum tax-deductible contribution he or she could make, the individual will be
eligible to contribute the difference to an IRA in the form of nondeductible
contributions.
An eligible individual may contribute as much as $2,000 of qualified
income (earned income or, under certain circumstances, alimony) to an IRA each
year (up to $2,000 per individual for married couples if only one spouse has
earned income). All income and capital gains derived from IRA investments are
reinvested and compound tax-deferred until distributed. Such tax-deferred
compounding can lead to substantial retirement savings.
The table below shows how much individuals would accumulate in a fully
tax-deductible IRA by age 65 (before any distributions) if they contribute
$2,000 at the beginning of each year, assuming average annual returns of 5, 10,
and 15%. (At withdrawal, accumulations in this table will be taxable.)
Value of IRA at Age 65
Assuming $2,000 Deductible Annual Contribution
<TABLE>
<S> <C> <C> <C> <C>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Starting Annual Rate of Return
Age of ------------------------------------------------------------------------------
Contributions 5% 10% 15%
- -----------------------------------------------------------------------------------------------------------
25 $253,680 $973,704 $4,091,908
35 139,522 361,887 999,914
45 69,439 126,005 235,620
55 26,414 35,062 46,699
</TABLE>
This next table shows how much individuals would accumulate in non-IRA
accounts by age 65 if they start with $2,000 in pretax earned income at the
beginning of each year (which is $1,380 after taxes are paid), assuming average
annual returns of 5, 10 and 15%. (At withdrawal, a portion of the accumulation
in this table will be taxable.)
Value of a Non-IRA Account at
Age 65 Assuming $1,380 Annual Contributions
(post tax, $2,000 pretax) and a 31% Tax Bracket
<TABLE>
<S> <C> <C> <C> <C>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Starting Annual Rate of Return
Age of ------------------------------------------------------------------------------
Contributions 5% 10% 15%
- -----------------------------------------------------------------------------------------------------------
25 $119,318 $287,021 $741,431
35 73,094 136,868 267,697
45 40,166 59,821 90,764
55 16,709 20,286 24,681
</TABLE>
Scudder Roth IRA: Individual Retirement Account
Shares of the Funds may be purchased as the underlying investment for a
Roth individual Retirement Account which meets the requirements of Section 408A
of the Internal Revenue Code.
A single individual earning below $95,000 can contribute up to $2,000
per year to a Roth IRA. The maximum contribution amount diminishes and gradually
falls to zero for single filers with adjusted gross incomes ranging from $95,000
to $110,000. Married couples earning less than $150,000 combined, and filing
jointly, can contribute a full $4,000 per year ($2,000 per IRA). The maximum
contribution amount for married couples filing jointly phases out from $150,000
to $160,000.
An eligible individual can contribute money to a traditional IRA and a
Roth IRA as long as the total contribution to all IRAs does not exceed $2,000.
No tax deduction is allowed under Section 219 of the Internal
21
<PAGE>
Revenue Code for contributions to a Roth IRA. Contributions to a Roth IRA may be
made even after the individual for whom the account is maintained has attained
age 70 1/2.
All income and capital gains derived from Roth IRA investments are
reinvested and compounded tax-free. Such tax-free compounding can lead to
substantial retirement savings. No distributions are required to be taken prior
to the death of the original account holder. If a Roth IRA has been established
for a minimum of five years, distributions can be taken tax-free after reaching
age 59 1/2, for a first-time home purchase ($10,000 maximum, one-time use) or
upon death or disability. All other distributions of earnings from a Roth IRA
are taxable and subject to a 10% tax penalty unless an exception applies.
Exceptions to the 10% penalty include: disability, excess medical expenses, the
purchase of health insurance for an unemployed individual and education
expenses.
An individual with an income of less than $100,000 (who is not married
filing separately) can roll his or her existing IRA into a Roth IRA. However,
the individual must pay taxes on the taxable amount in his or her traditional
IRA. Individuals who complete the rollover in 1998 will be allowed to spread the
tax payments over a four-year period. After 1998, all taxes on such a rollover
will have to be paid in the tax year in which the rollover is made.
Scudder 403(b) Plan
Shares of the Funds may also be purchased as the underlying investment
for tax sheltered annuity plans under the provisions of Section 403(b)(7) of the
Internal Revenue Code. In general, employees of tax-exempt organizations
described in Section 501(c)(3) of the Internal Revenue Code (such as hospitals,
churches, religious, scientific, or literary organizations and educational
institutions) or a public school system are eligible to participate in a 403(b)
plan.
Automatic Withdrawal Plan
Non-retirement plan shareholders may establish an Automatic Withdrawal
Plan to receive monthly, quarterly or periodic redemptions from his or her
account for any designated amount of $50 or more. Shareholders may designate
which day they want the automatic withdrawal to be processed. The check amounts
may be based on the redemption of a fixed dollar amount, fixed share amount,
percent of account value or declining balance. The Plan provides for income
dividends and capital gains distributions, if any, to be reinvested in
additional shares. Shares are then liquidated as necessary to provide for
withdrawal payments. Since the withdrawals are in amounts selected by the
investor and have no relationship to yield or income, payments received cannot
be considered as yield or income on the investment and the resulting
liquidations may deplete or possibly extinguish the initial investment and any
reinvested dividends and capital gains distributions. Requests for increases in
withdrawal amounts or to change the payee must be submitted in writing, signed
exactly as the account is registered, and contain signature guarantee(s) as
described under "Transaction information--Redeeming shares--Signature
guarantees" in the Funds' prospectuses. Any such requests must be received by
the Transfer Agent ten days prior to the date of the first automatic withdrawal.
An Automatic Withdrawal Plan may be terminated at any time by the shareholder,
the Corporation or its agent on written notice, and will be terminated when all
shares of the Funds under the Plan have been liquidated or upon receipt by the
Corporation of notice of death of the shareholder.
An Automatic Withdrawal Plan request form can be obtained by calling
1-800-225-5163.
Group or Salary Deduction Plan
An investor may join a Group or Salary Deduction Plan where
satisfactory arrangements have been made with Scudder Investor Services, Inc.
for forwarding regular investments through a single source. The minimum annual
investment is $240 per investor which may be made in monthly, quarterly,
semiannual or annual payments. The minimum monthly deposit per investor is $20.
Except for trustees or custodian fees for certain retirement plans, at present
there is no separate charge for maintaining group or salary deduction plans;
however, the Corporation and its agents reserve the right to establish a
maintenance charge in the future depending on the services required by the
investor.
The Corporation reserves the right, after notice has been given to the
shareholder, to redeem and close a shareholder's account in the event that the
shareholder ceases participating in the group plan prior to investment of $1,000
per individual or in the event of a redemption which occurs prior to the
accumulation of that amount or which
22
<PAGE>
reduces the account value to less than $1,000 and the account value is not
increased to $1,000 within a reasonable time after notification. An investor in
a plan who has not purchased shares for six months shall be presumed to have
stopped making payments under the plan.
Uniform Transfers/Gifts to Minors Act
Grandparents, parents or other donors may set up custodian accounts for
minors. The minimum initial investment is $1,000 unless the donor agrees to
continue to make regular share purchases for the account through Scudder's
Automatic Investment Plan (AIP). In this case, the minimum initial investment is
$500.
The Corporation reserves the right, after notice has been given to the
shareholder and Custodian, to redeem and close a shareholder's account in the
event that regular investments to the account cease before the $1,000 minimum is
reached.
DIVIDENDS
(See"Distribution and performance information -- Dividends and capital
gains distributions" in the Funds' Prospectuses)
The Corporation declares dividends on the outstanding shares of each
Fund from each Fund's net investment income at the close of each business day to
shareholders of record at 2:00 p.m. for the Tax Free Fund and 4:00 p.m. for the
Cash Fund and Government Fund on the day of declaration. Realized capital gains
and losses (other than long-term capital gains) may be taken into account in
determining the daily distribution. Shares purchased will begin earning
dividends on the day the purchase order is executed and shares redeemed will
earn dividends through the previous day. Net investment income for a Saturday,
Sunday or holiday will be declared as a dividend on the previous business day to
shareholders of record at 2:00 p.m. for the Tax Free Fund and 4:00 p.m. for the
Cash Fund and Government Fund on that day.
Investment income for a Fund includes, among other things, interest
income and accretion of market and original issue discount and amortization of
premium.
Dividends declared in and attributable to the preceding month will be
paid on the first business day of each month. Net realized capital gains, after
utilization of capital loss carryforwards, if any, will be distributed annually,
although an additional distribution may be necessary to prevent the application
of a federal excise tax. Dividends and distributions will be invested in
additional shares of the same class of the Fund at net asset value and credited
to the shareholder's account on the payment date or, at the shareholder's
election, paid in cash. Dividend checks and Statements of Account will be mailed
approximately two business days after the payment date. Each Fund forwards to
the Custodian the monies for dividends to be paid in cash on the payment date.
Shareholders who redeem all their shares prior to a dividend payment
will receive, in addition to the redemption proceeds, dividends declared but
unpaid. Shareholders who redeem only a portion of their shares will be entitled
to all dividends declared but unpaid on such shares on the next dividend payment
date.
PERFORMANCE INFORMATION
(See "Distribution and performance information -- Performance
information" in the Funds' Prospectuses)
From time to time, quotations of each Fund's performance may be
included in advertisements, sales literature or reports to shareholders or
prospective investors. Performance information will be calculated separately for
each class of a Fund's shares. Because each class of shares is subject to
different expenses, the net yield of each class of a particular Fund for the
same period may differ. Performance information enumerated below is based on the
following periods: Institutional Class of Shares from July 7, 1997 through
December 31, 1997, Managed Class of Shares from December 31, 1996 through
December 31, 1997 , Premium Class of Shares from August 4, 1997 through December
31, 1997 and Prime Reserve Class of Shares from . These performance figures may
be calculated in the following manner:
23
<PAGE>
Yield
The Corporation makes available various yield quotations with respect
to shares of the Funds. The annualized yield for each of the following Funds for
the seven-day period ended December 31, 1997 for the Institutional Shares were
5.66% for the Money Market, 3.74% for the Tax Free Fund and 5.48% for the
Government Fund; for the Managed Shares were 5.45% for the Money Market Fund,
3.65% for the Tax Free Fund and 5.07% for the Government Fund; and 5.50% for the
Premium Money Market Shares. Each Fund's yield may fluctuate daily and does not
provide a basis for determining future yields. The foregoing yields were
computed separately for each class of each Fund by determining the net change in
value, exclusive of capital changes, of a hypothetical account having a balance
of one share at the beginning of the period, dividing the net change in value by
the value of the account at the beginning of the base period to obtain the base
period return, and multiplying the base period return by 365/7, with the
resulting yield figure carried to the nearest hundredth of one percent. The net
change in value of an account consists of the value of additional shares
purchased with dividends from the original share plus dividends declared on both
the original share and any such additional shares (not including realized gains
or losses and unrealized appreciation or depreciation) less applicable expenses,
including the management fee payable to the Adviser.
Current yield for each Fund will fluctuate from time to time, unlike
bank deposits or other investments that pay a fixed yield for a stated period of
time, and do not provide a basis for determining future yields. Yield is a
function of portfolio quality, composition, maturity and market conditions as
well as expenses allocated to such Funds. Yield information may be useful in
reviewing the performance of a Fund and for providing a basis for comparison
with investment alternatives. The yield of a Fund, however, may not be
comparable to investment alternatives because of differences in the foregoing
variables and differences in the methods used to value portfolio securities and
compute expenses.
Effective Yield
The effective yield for the Funds is calculated in a similar fashion to
yield, except that the seven-day period return is compounded by adding 1,
raising the sum to a power equal to 365 divided by 7, and subtracting 1 from the
result, according to the following formula:
EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1)^365/7] - 1
The effective yields (i.e., on a compound basis, assuming the daily
reinvestment of dividends) for each of the following Funds for the seven-day
period ended December 31, 1997 for the Institutional Shares were 5.66% for the
Money Market, 3.74% for the Tax Free Fund and 5.48% for the Government Fund; for
the Managed Shares were 5.45% for the Money Market Fund, 3.65% for the Tax Free
Fund and 5.07% for the Government Fund; and 5.50% for the Premium Money Market
Shares.
Average Annual Total Return
Average annual total return is the average annual compound rate of
return for periods of one year, five years, and ten years and the life of a
Fund, where applicable, all ended on the last day of a recent calendar quarter
and is calculated separately for each class of each Fund. Average annual total
return quotations reflect changes in the price of a Fund's shares, if any, and
assume that all dividends and capital gains distributions during the respective
periods were reinvested in the same class of Fund shares. Average annual total
return is calculated by finding the average annual compound rates of return of a
hypothetical investment over such periods, according to the following formula
(average annual total return is then expressed as a percentage):
T = (ERV/P)^1/n - 1
Where:
P = a hypothetical initial investment of $1,000.
T = Average Annual Total Return.
N = number of years.
ERV = ending redeemable value: ERV is the
value, at the end of the applicable
period, of a hypothetical $1,000
investment made at the beginning of the
applicable period.
24
<PAGE>
Average Annual Total Return for periods ended December 31, 1997
<TABLE>
<S> <C> <C> <C> <C>
Since One Five Ten
Inception* Year** Years** Years**
---------- ------ ------- -------
Institutional Class of Shares
Scudder Money Market Series 2.25% N/A N/A N/A
Scudder Tax Free Money Market Series 1.40% N/A N/A N/A
Scudder Government Money Market Series 2.17% N/A N/A N/A
Managed Class of Shares
Scudder Money Market Series N/A 5.21% 4.48% 5.61%
Scudder Tax Free Money Market Series N/A 3.07% 2.67% 3.64%
Scudder Government Money Market Series N/A 5.02% 4.37% 5.45%
Premium Class of Shares 2.62% N/A N/A N/A
</TABLE>
* The Institutional Class of each Fund and the Premium Class of Cash Fund
commenced operations on July 7, 1997, and August 4, 1997, respectively.
** Since the inception date of the Institutional Class of each Fund and
the Premium Class of Cash Fund, no shares of either class were
outstanding during the relevant time periods.
Cumulative Total Return
Cumulative total return is the cumulative rate of return on a
hypothetical initial investment of $1,000 for a specified period. Cumulative
total return quotations reflect changes in the price of a Fund's shares and
assume that all dividends and capital gains distributions during the period were
reinvested in Fund shares. Cumulative total return is calculated separately for
each class of shares of a Fund by finding the cumulative rates of return of a
hypothetical investment over such periods, according to the following formula
(cumulative total return is then expressed as a percentage):
C = (ERV/P) - 1
Where:
C = Cumulative Total Return.
P = a hypothetical initial investment of $1,000.
ERV = ending redeemable value: ERV is the value,
at the end of the applicable period, of a
hypothetical $1,000 investment made at the
beginning of the applicable period.
Cumulative Total Return for periods ended December 31, 1997
<TABLE>
<S> <C> <C> <C> <C>
<CAPTION>
Since One Five Ten
Inception* Year** Years** Years**
---------- ------ ------- -------
Institutional Class of Shares
Money Market Fund 2.25% N/A N/A N/A
Tax Free Fund 1.40% N/A N/A N/A
Government Fund 2.17% N/A N/A N/A
Managed Class of Shares
Money Market Fund N/A 5.21% 24.50% 72.67%
Tax Free Fund N/A 3.07% 14.10% 43.00%
Government Fund N/A 5.02% 23.83% 70.07%
Premium Money Market Shares 2.62% N/A N/A N/A
</TABLE>
* The Institutional Class of each Fund and the Premium Class of Cash Fund
commenced operations on July 7, 1997, and August 4, 1997, respectively.
25
<PAGE>
** Since the inception date of the Institutional Class of each Fund and
the Premium Class of Cash Fund, no shares of either class were
outstanding during the relevant time periods.
Total Return
Total return is the rate of return on an investment for a specified
period of time calculated in the same manner as cumulative total return.
Tax-Equivalent Yield
For the Scudder Tax Free Money Market Series, Tax-Equivalent Yield is
the net annualized taxable yield needed to produce a specified tax-exempt yield
at a given tax rate based on a specified 30 day (or one month) period assuming
semiannual compounding of income. Tax-equivalent yield is calculated separately
for each class of shares of a Fund by dividing that portion of the Fund's yield
(as computed in the yield description above) which is tax-exempt by one minus a
stated income tax rate and adding the product to that portion, if any, of the
yield of the Fund that is not tax-exempt. Thus, taxpayers with a federal tax
rate of 39.6% would need to earn a taxable yield of 6.08% to receive after-tax
income equal to the 3.67% tax-free yield of Institutional Class of Shares for
Scudder Tax Free Money Market Series for the 7-day period ended December 31,
1997.
Comparison of Fund Performance
A comparison of the quoted non-standard performance offered for various
investments is valid only if performance is calculated in the same manner. Since
there are different methods of calculating performance, investors should
consider the effects of the methods used to calculate performance when comparing
performance of a Fund with performance quoted with respect to other investment
companies or types of investments.
In connection with communicating its performance to current or
prospective shareholders, a Fund also may compare these figures to the
performance of unmanaged indices which may assume reinvestment of dividends or
interest but generally do not reflect deductions for administrative and
management costs. Examples include, but are not limited to the Dow Jones
Industrial Average, the Consumer Price Index, Standard & Poor's 500 Composite
Stock Price Index (S&P 500), the Nasdaq OTC Composite Index, the Nasdaq
Industrials Index, the Russell 2000 Index, and statistics published by the Small
Business Administration.
From time to time, in advertising and marketing literature, a Fund's
performance may be compared to the performance of broad groups of mutual funds
with similar investment goals, as tracked by independent organizations such as,
Investment Company Data, Inc. ("ICD"), Lipper Analytical Services, Inc.
("Lipper"), CDA Investment Technologies, Inc. ("CDA"), Morningstar, Inc., Value
Line Mutual Fund Survey and other independent organizations. When these
organizations' tracking results are used, a Fund will be compared to the
appropriate fund category, that is, by fund objective and portfolio holdings, or
to the appropriate volatility grouping, where volatility is a measure of a
fund's risk. For instance, a Scudder growth fund will be compared to funds in
the growth fund category; a Scudder income fund will be compared to funds in the
income fund category; and so on. Scudder funds (except for money market funds)
may also be compared to funds with similar volatility, as measured statistically
by independent organizations.
From time to time, in marketing and other Fund literature, Directors
and officers of the Corporation, the Funds' portfolio manager, or members of the
portfolio management team may be depicted and quoted to give prospective and
current shareholders a better sense of the outlook and approach of those who
manage the Funds. In addition, the amount of assets that the Adviser has under
management in various geographical areas may be quoted in advertising and
marketing materials.
The Funds may be advertised as an investment choice in Scudder's
college planning program. The description may contain illustrations of projected
future college costs based on assumed rates of inflation and examples of
hypothetical fund performance, calculated as described above.
26
<PAGE>
Statistical and other information, as provided by the Social Security
Administration, may be used in marketing materials pertaining to retirement
planning in order to estimate future payouts of social security benefits.
Estimates may be used on demographic and economic data.
Marketing and other Fund literature may include a description of the
potential risks and rewards associated with an investment in the Funds. The
description may include a "risk/return spectrum" which compares the Funds to
other Scudder funds or broad categories of funds, such as money market, bond or
equity funds, in terms of potential risks and returns. Money market funds are
designed to maintain a constant $1.00 share price and have a fluctuating yield.
Share price, yield and total return of a bond fund will fluctuate. The share
price and return of an equity fund also will fluctuate. The description may also
compare the Funds to bank products, such as certificates of deposit. Unlike
mutual funds, certificates of deposit are insured up to $100,000 by the U.S.
government and offer a fixed rate of return.
Because bank products guarantee the principal value of an investment
and money market funds seek stability of principal, these investments are
considered to be less risky than investments in either bond or equity funds,
which may involve the loss of principal. However, all long-term investments,
including investments in bank products, may be subject to inflation risk, which
is the risk of erosion of the value of an investment as prices increase over a
long time period. The risks/returns associated with an investment in bond or
equity funds depend upon many factors. For bond funds these factors include, but
are not limited to, a fund's overall investment objective, the average portfolio
maturity, credit quality of the securities held, and interest rate movements.
For equity funds, factors include a fund's overall investment objective, the
types of equity securities held and the financial position of the issuers of the
securities. The risks/returns associated with an investment in international
bond or equity funds also will depend upon currency exchange rate fluctuation.
A risk/return spectrum generally will position the various investment
categories in the following order: bank products, money market funds, bond funds
and equity funds. Shorter-term bond funds generally are considered less risky
and offer the potential for less return than longer-term bond funds. The same is
true of domestic bond funds relative to international bond funds, and bond funds
that purchase higher quality securities relative to bond funds that purchase
lower quality securities. Growth and income equity funds are generally
considered to be less risky and offer the potential for less return than growth
funds. In addition, international equity funds usually are considered more risky
than domestic equity funds but generally offer the potential for greater return.
Risk/return spectrums also may depict funds that invest in both
domestic and foreign securities or a combination of bond and equity securities.
Evaluation of Fund performance or other relevant statistical
information made by independent sources may also be used in advertisements
concerning the Funds, including reprints of, or selections from, editorials or
articles about these Funds. Sources for Fund performance information and
articles about the Funds include the following:
American Association of Individual Investors' Journal, a monthly publication of
the AAII that includes articles on investment analysis techniques.
Asian Wall Street Journal, a weekly Asian newspaper that often reviews U.S.
mutual funds investing internationally.
Banxquote, an on-line source of national averages for leading money market and
bank CD interest rates, published on a weekly basis by Masterfund, Inc. of
Wilmington, Delaware.
Barron's, a Dow Jones and Company, Inc. business and financial weekly that
periodically reviews mutual fund performance data.
Business Week, a national business weekly that periodically reports the
performance rankings and ratings of a variety of mutual funds investing abroad.
CDA Investment Technologies, Inc., an organization which provides performance
and ranking information through examining the dollar results of hypothetical
mutual fund investments and comparing these results against appropriate market
indices.
27
<PAGE>
Consumer Digest, a monthly business/financial magazine that includes a "Money
Watch" section featuring financial news.
Financial Times, Europe's business newspaper, which features from time to time
articles on international or country-specific funds.
Financial World, a general business/financial magazine that includes a "Market
Watch" department reporting on activities in the mutual fund industry.
Forbes, a national business publication that from time to time reports the
performance of specific investment companies in the mutual fund industry.
Fortune, a national business publication that periodically rates the performance
of a variety of mutual funds.
The Frank Russell Company, a West-Coast investment management firm that
periodically evaluates international stock markets and compares foreign equity
market performance to U.S. stock market performance.
Global Investor, a European publication that periodically reviews the
performance of U.S. mutual funds investing internationally.
IBC Money Fund Report, a weekly publication of IBC Financial Data, Inc.,
reporting on the performance of the nation's money market funds, summarizing
money market fund activity and including certain averages as performance
benchmarks, specifically "IBC's Money Fund Average," and "IBC's Government Money
Fund Average."
Ibbotson Associates, Inc., a company specializing in investment research and
data.
Investment Company Data, Inc., an independent organization which provides
performance ranking information for broad classes of mutual funds.
Investor's Business Daily, a daily newspaper that features financial, economic,
and business news.
Kiplinger's Personal Finance Magazine, a monthly investment advisory publication
that periodically features the performance of a variety of securities.
Lipper Analytical Services, Inc.'s Mutual Fund Performance Analysis, a weekly
publication of industry-wide mutual fund averages by type of fund.
Money, a monthly magazine that from time to time features both specific funds
and the mutual fund industry as a whole.
Morgan Stanley International, an integrated investment banking firm that
compiles statistical information.
Mutual Fund Values, a biweekly Morningstar, Inc. publication that provides
ratings of mutual funds based on fund performance, risk and portfolio
characteristics.
The New York Times, a nationally distributed newspaper which regularly covers
financial news.
The No-Load Fund Investor, a monthly newsletter, published by Sheldon Jacobs,
that includes mutual fund performance data and recommendations for the mutual
fund investor.
No-Load Fund*X, a monthly newsletter, published by DAL Investment Company, Inc.,
that reports on mutual fund performance, rates funds and discusses investment
strategies for the mutual fund investor.
Personal Investing News, a monthly news publication that often reports on
investment opportunities and market conditions.
28
<PAGE>
Personal Investor, a monthly investment advisory publication that includes a
"Mutual Funds Outlook" section reporting on mutual fund performance measures,
yields, indices and portfolio holdings.
SmartMoney, a national personal finance magazine published monthly by Dow Jones
and Company, Inc. and The Hearst Corporation. Focus is placed on ideas for
investing, spending and saving.
Success, a monthly magazine targeted to the world of entrepreneurs and growing
business, often featuring mutual fund performance data.
United Mutual Fund Selector, a semi-monthly investment newsletter, published by
Babson United Investment Advisors, that includes mutual fund performance data
and reviews of mutual fund portfolios and investment strategies.
USA Today, a leading national daily newspaper.
U.S. News and World Report, a national news weekly that periodically reports
mutual fund performance data.
Value Line Mutual Fund Survey, an independent organization that provides
biweekly performance and other information on mutual funds.
The Wall Street Journal, a Dow Jones and Company, Inc. newspaper which regularly
covers financial news.
Wiesenberger Investment Companies Services, an annual compendium of information
about mutual funds and other investment companies, including comparative data on
funds' backgrounds, management policies, salient features, management results,
income and dividend records and price ranges.
Working Woman, a monthly publication that features a "Financial Workshop"
section reporting on the mutual fund/financial industry.
Worth, a national publication issued 10 times per year by Capital Publishing
Company, a subsidiary of Fidelity Investments. Focus is placed on personal
financial journalism.
THE PROGRAM
Scudder Treasurers Trust(TM) (the "Program") is a corporate and
institutional cash investment program with respect to the Funds. The Program is
designed especially for treasurers and financial officers of small and
middle-sized corporations and financial institutions. The Funds reduce
substantially the costs and inconvenience of direct investment in individual
securities. They help reduce risk by diversifying investments across a broad
range of securities. They also provide flexibility since shares can be redeemed
from or exchanged between any of the Funds at no extra cost with the exception
of the Institutional Shares which are not exchangeable.
The Funds seek to provide busy executives with assistance in the
professional management of their cash reserves. These executives frequently
engage experts (meaning experienced professionals) for services requiring
specialized knowledge and expertise. The investment of liquid assets is one such
service. Each of the Funds has a different objective and offers full-time
professional reserve asset management, which is frequently not available from
traditional cash management providers. The Program can help institutional cash
managers take advantage of today's investment opportunities and techniques to
improve the performance of their liquid assets.
The Funds allow small and middle-sized businesses and other
institutions to take advantage of the investment management services of the
Adviser. The Adviser's investment counsel clients include corporations,
foundations, institutions, insurance companies, endowments, trusts, retirement
plans and individuals.
The Funds also anticipate lower expense ratios than those of money
market mutual funds designed for individual investors because the Funds' average
account balances are normally higher than those of the average money market
fund. The Program also offers special services designed for the convenience of
corporate and institutional treasurers.
29
<PAGE>
Each of the Funds seeks to provide the combination of price stability,
liquidity and current income that treasurers often require for liquid assets
such as operating reserves.
ORGANIZATION OF THE FUNDS
(See "Fund organization" in the Funds' Prospectuses)
The Corporation was formed on June 18, 1982 under the laws of the State
of Maryland. The authorized capital stock of the Corporation consists of
10,000,000,000 shares having a par value of $.001 per share. The Company's
Articles of Incorporation authorize the Board of Directors to classify or
reclassify any unissued shares of capital stock. Pursuant to that authority, the
Board of Directors has created twenty-eight classes which are not currently
offered but which may be in the future.
Pursuant to authority expressly granted by of the Charter of the
Corporation, the Board of Directors has reclassified one billion (1,000,000,000)
shares of authorized and issued Capital Stock previously classified as Premium
Money Market Shares as Scudder Prime Reserve Money Market Shares. Prior to the
reclassification, two billion (2,000,000,000) shares of Capital Stock were
classified as shares of Scudder Prime Reserve Money Market Shares. After the
reclassification, one billion (1,000,000,000) shares of Capital Stock are
classified as shares of the Scudder Prime Reserve Money Market Shares and one
billion (1,000,000,000) shares of Capital Stock are classified as shares of
Scudder Prime Reserve Money Market Shares, and designated and classified nine
hundred seventy-five million (975,000,000) shares of the authorized but unissued
shares of the Managed Federal Securities Fund of the Corporation Capital Stock
into the Institutional Sub-Class of the Scudder Money Market Series of the
Corporation's Capital Stock.
The Board of Directors has subdivided Scudder Money Market Series,
Scudder Tax Free Money Market Series and Scudder Government Money Market Series
(the "Funds") into classes. In addition, with respect to Scudder Tax Free Money
Market Series and Scudder Government Money Market Series, there is one
additional class of Capital Stock, to be referred to for all purposes as
"Institutional Shares," and with respect to Scudder Money Market Series, three
additional classes of Capital Stock, to be referred to for all purposes as
"Institutional Shares" and the "Premium Money Market Shares" or "Premium
Shares," and "Prime Reserve Money Market Shares."
After giving effect to the above classifications of Capital Stock, with
respect to these three Funds, the Corporation shall have, in addition to the
three billion four hundred million (3,400,000,000) shares of Capital Stock
previously classified as set forth in the Charter, four billion five hundred
seventy-five million (4,575,000,000) shares of its authorized Capital Stock
classified as the Scudder Money Market Series, which is further classified into
eight hundred million (800,000,000) Managed Shares, one billion seven hundred
seventy-five million (1,775,000,000) Institutional Shares, one billion
(1,000,000,000) Premium Money Market Shares and one billion (1,000,000,000)
Prime Reserve Money Market Shares; one billion (1,000,000,000) shares of Capital
Stock classified as the Scudder Tax Free Money Market Series, which is further
classified into five hundred million (500,000,000) Managed Shares and five
hundred million (500,000,000) Institutional Shares; and three billion
(3,000,000,000) shares of Capital Stock classified as and the Scudder Government
Money Market Series, which is further classified into one billion five hundred
million (1,500,000,000) Managed Shares and one billion five hundred million
(1,500,000,000) Institutional Shares.
Each share of each class of a Fund shall be entitled to one vote (or
fraction thereof in respect of a fractional share) on matters that such shares
(or class of shares) shall be entitled to vote. Shareholders of each Fund shall
vote together on any matter, except to the extent otherwise required by the 1940
Act, or when the Board of Directors of the Corporation has determined that the
matter affects only the interest of shareholders of one or more classes of a
Fund, in which case only the shareholders of such class or classes of that Fund
shall be entitled to vote thereon. Any matter shall be deemed to have been
effectively acted upon with respect to a Fund if acted upon as provided in Rule
18f-2 under the 1940 Act, or any successor rule, and in the Corporation's
Articles of Incorporation. As used in the Prospectuses and in this Statement of
Additional Information, the term "majority", when referring to the approvals to
be obtained from shareholders in connection with general matters affecting the
Funds and all additional portfolios (e.g., election of directors), means the
vote of the lesser of (i) 67% of the Corporation's shares represented at a
meeting if the holders of more than 50% of the outstanding shares are present in
person or by proxy, or (ii) more than 50% of the Corporation's outstanding
shares. The term "majority", when referring to the approvals to be obtained from
shareholders in connection with matters affecting a single Fund, class or any
other single portfolio (e.g., annual approval of investment management
contracts), means the vote of the lesser of (i) 67% of the shares of the
portfolio represented at a meeting if the holders of more than 50% of the
outstanding shares of the class or portfolio are present
30
<PAGE>
in person or by proxy, or (ii) more than 50% of the outstanding shares of the
portfolio. Shareholders are entitled to one vote for each full share held and
fractional votes for fractional shares held.
Each share of a Fund of the Corporation represents an equal
proportionate interest in that Fund with each other share of the same Fund and
is entitled to such dividends and distributions out of the income earned on the
assets belonging to that Fund as are declared in the discretion of the
Corporation's Board of Directors. In the event of the liquidation or dissolution
of the Corporation, shares of a Fund are entitled to receive the assets
attributable to that Fund that are available for distribution, and a
proportionate distribution, based upon the relative net assets of the Funds, of
any general assets not attributable to a Fund that are available for
distribution.
Shareholders are not entitled to any preemptive rights. All shares,
when issued, will be fully paid and non-assessable by the Corporation.
INVESTMENT ADVISER
(See "Fund organization -- Investment adviser" in the Funds' Prospectuses)
Scudder Kemper Investments, Inc. (the "Adviser"), an investment counsel
firm, acts as investment adviser to the Fund. This organization, the predecessor
of which is Scudder, Stevens & Clark, Inc., is one of the most experienced
investment counsel firms in the U. S. It was established as a partnership in
1919 and pioneered the practice of providing investment counsel to individual
clients on a fee basis. In 1928 it introduced the first no-load mutual fund to
the public. In 1953 the Adviser introduced Scudder International Fund, Inc., the
first mutual fund available in the U.S. investing internationally in securities
of issuers in several foreign countries. The predecessor firm reorganized from a
partnership to a corporation on June 28, 1985. On June 26, 1997, Scudder,
Stevens & Clark, Inc. ("Scudder") entered into an agreement with Zurich
Insurance Company ("Zurich") pursuant to which Scudder and Zurich agreed to form
an alliance. On December 31, 1997, Zurich acquired a majority interest in
Scudder, and Zurich Kemper Investments, Inc., a Zurich subsidiary, became part
of Scudder. Scudder's name has been changed to Scudder Kemper Investments, Inc.
Founded in 1872, Zurich is a multinational, public corporation
organized under the laws of Switzerland. Its home office is located at
Mythenquai 2, 8002 Zurich, Switzerland. Historically, Zurich's earnings have
resulted from its operations as an insurer as well as from its ownership of its
subsidiaries and affiliated companies (the "Zurich Insurance Group"). Zurich and
the Zurich Insurance Group provide an extensive range of insurance products and
services and have branch offices and subsidiaries in more than 40 countries
throughout the world. As of December 31, 1997, the Adviser and its affiliates
had in excess of $200 billion under their supervision, approximately two-thirds
of which was invested in fixed-income securities.
The Adviser maintains a research department with more than 50
professionals, which conducts continuous studies of the factors that affect
various industries, companies and individual securities in the U.S. as well as
abroad. In this work the Adviser utilizes reports, statistics and other
investment information from a wide variety of sources, including brokers and
dealers who may execute portfolio transactions for the Funds and for other
clients of the Adviser. Investment decisions, however, are based primarily on
investigations and critical analyses by the Adviser's own research specialists
and portfolio managers.
The Adviser may give advice and take action with respect to any of its
other clients, which may differ from advice given or from the time or nature of
action taken with respect to a Fund. If these clients and such Fund are
simultaneously buying or selling a security with a limited market, the price may
be adversely affected. In addition, the Adviser may, on behalf of other clients,
furnish financial advice or be involved in tender offers or merger proposals
relating to companies in which such Fund invests. The best interests of any Fund
may or may not be consistent with the achievement of the objectives of the other
persons for whom the Adviser is providing advice or for whom they are acting.
Where a possible conflict is apparent, the Adviser will follow whatever course
of action is in its judgment in the best interests of the Fund. The Adviser may
consult independent third persons in reaching its decision.
Subject to policy established by the Corporation's Board of Directors,
which has overall responsibility for the business and affairs of each Fund, the
Adviser manages the operations of each Fund. In addition to providing advisory
services, the Adviser furnishes office space and certain facilities and
personnel required for conducting the business of
31
<PAGE>
the Funds and the Adviser pays the compensation of the Corporation's officers,
directors and employees affiliated with the Adviser or its affiliates. Although
the Adviser currently pays the compensation, as well as certain expenses, of all
officers and employees of the Corporation who are affiliated with the Adviser or
its affiliates, the terms of the Investment Management Agreements ("Agreements")
state that the Adviser is not obligated to pay the compensation and expenses of
the Corporation's clerical employees other than those providing advisory
services. The Adviser, however, has represented to the Corporation's Board of
Directors that its current intention is to continue to pay such compensation and
expenses.
For the period January 1, 1997 until July 7, 1997, the Adviser received
a 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. Until July 7, 1997, the Adviser had agreed to waive a portion of its
investment management fee for each of the Cash Fund and Government Fund to the
extent necessary so that the total annualized expenses of each Fund do not
exceed 0.55% of average daily net assets. Effective July 7, 1997, the Adviser
receives a management fee at an annual rate of 0.25% of average daily net assets
for each Fund. For the period beginning July 7, 1997 and extending to April 30,
1999 there is a management fee waiver for the Cash Fund, Tax Free Fund and
Government Fund of 0.05%, 0.10% and 0.15%, respectively. Management fees are
computed daily and paid monthly.
In addition, from time to time, the Adviser may voluntarily absorb
certain additional expenses of Scudder Money Market Series. The level of this
voluntary absorption shall be in the Adviser's discretion and is in addition to
the Adviser's agreement to waive a portion of its investment management fee.
For the Corporation's fiscal 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.
For the Corporation's fiscal year ended December 31, 1996, management
fees paid to the Adviser were $1,227,581 for the Cash Fund, $587,278 for the Tax
Free Fund and $131,141 for the Government Fund. Had the Adviser not waived
$274,989 of its management fee for the Cash Fund and $150,102 of its management
fee for the Government Fund, the total fee paid by each Fund in 1996 would have
been $1,502,570 and $281,243, respectively.
For the Corporation's fiscal year ended December 31, 1995, management
fees paid to the Adviser were $1,045,111 for the Cash Fund, $530,696 for the Tax
Free Fund and $62,892 for the Government Fund. Had the Adviser not waived
$474,280 of its management fee for the Cash Fund and of $211,734 its management
fee for the Government Fund, the total fee paid by each such Fund in 1995 would
have been $1,519,391 and $274,626, respectively.
Each Agreement provides that the relevant Fund pay all of its expenses
that are not specifically assumed by the Adviser. (Expenses attributable to a
specific class of each Fund will be charged against the assets of that class of
the Fund, other expenses of the Corporation will be allocated among the Funds in
a manner which may, but need not, be proportionately in relation to the net
assets of each Fund.) Expenses payable by each of the Funds include, but are not
limited to, organizational expenses; clerical salaries; brokerage and other
expenses of executing portfolio transactions; legal, auditing or accounting
expenses; trade association dues; taxes or governmental fees; the fees and
expenses of the transfer agent of the Fund; the cost of preparing share
certificates or any other expenses, including clerical expenses of issue,
redemption or repurchase of shares of the Fund; the expenses and fees for
registering and qualifying securities for sale; the fees of Directors of the
Corporation who are not employees or affiliates of the Adviser or its
affiliates; travel expenses of all officers, directors and employees; insurance
premiums; the cost of preparing and distributing reports and notices to
shareholders; and the fees or disbursements of custodians of the Fund's assets.
Each Agreement will continue in effect from year to year provided such
continuance is approved annually (i) by the holders of a majority of the
respective Fund's outstanding voting securities or by the Corporation's Board of
Directors and (ii) by a majority of the Directors of the Corporation who are not
parties to the investment management contract or "interested persons" (as
defined in the 1940 Act) of any such party. Each of the Agreements may be
terminated on 60 days' written notice by either party and will terminate
automatically if assigned.
32
<PAGE>
Personal Investments by Employees of the Adviser
Employees of the Adviser are permitted to make personal securities
transactions, subject to requirements and restrictions set forth in the
Adviser's Code of Ethics. The Code of Ethics contains provisions and
requirements designed to identify and address certain conflicts of interest
between personal investment activities and the interests of investment advisory
clients such as the Funds. Among other things, the Code of Ethics, which
generally complies with standards recommended by the Investment Company
Institute's Advisory Group on Personal Investing, prohibits certain types of
transactions absent prior approval, imposes time periods during which personal
transactions may not be made in certain securities, and requires the submission
of duplicate broker confirmations and monthly reporting of securities
transactions. Additional restrictions apply to portfolio managers, traders,
research analysts and others involved in the investment advisory process.
Exceptions to these and other provisions of the Code of Ethics may be granted in
particular circumstances after review by appropriate personnel.
DISTRIBUTOR
(See "Fund organization -- Distributor" in the Funds' Prospectuses)
Pursuant to a contract with the Corporation, Scudder Investor Services,
Inc., a subsidiary of the Adviser, serves as the Corporation's principal
underwriter in connection with a continuous offering of shares of the
Corporation. The Distributor may enter into agreements with other broker/dealers
for the distribution of Fund shares. The Distributor receives no remuneration
for its services as principal underwriter and is not obligated to sell any
specific amount of Fund shares. As principal underwriter, it accepts purchase
orders for shares of each Fund. In addition, the Underwriting Agreement
obligates the Distributor to pay certain expenses in connection with the
offering of the shares of each Fund. After the Prospectuses and periodic reports
have been prepared, set in type and mailed to shareholders, the Distributor will
pay for the printing and distribution of copies thereof used in connection with
the offering to prospective investors. The Distributor will also pay for
supplemental sales literature and advertising costs. The Distributor may enter
into agreements with other broker dealers for the distribution of fund shares.
DIRECTORS AND OFFICERS
The principal occupations of the Directors and executive officers of
the Corporation for the past five years are listed below.
<TABLE>
<S> <C> <C> <C>
<CAPTION>
Position with
Underwriter,
Name, Date of Birth Position with Scudder Investor
and Address Corporation Principal Occupation* Services, Inc.
- ----------- ----------- --------------------- --------------
Daniel Pierce (3/18/34)+ # President Managing Director of Scudder Vice President,
Kemper Investments, Inc. Director and Assistant
Treasurer
Dr. Rosita P. Chang Trustee Professor of Finance, --
(10/23/54) University of Rhode Island
PACAP Research Center
College of Business
Administration
University of Rhode Island
7 Lippitt Road
Kingston, RI 02881-0802
Dr. J. D. Hammond (11/14/33) Trustee Dean, Smeal College of --
801 Business Administration Business Administration,
Bldg. Pennsylvania State University
Pennsylvania State University
University Park, PA 16802
33
<PAGE>
Position with
Underwriter,
Name, Date of Birth Position with Scudder Investor
and Address Corporation Principal Occupation* Services, Inc.
- ----------- ----------- --------------------- --------------
Edgar R. Fiedler (4/21/29)# Director Senior Fellow and Economic --
50023 Brogden Counsellor, The Conference
Chapel Hill, NC 27514 Board, Inc.
Peter B. Freeman (8/4/32) Director Corporate Director and --
100 Alumni Avenue Trustee
Providence, RI 02906
Richard M. Hunt (10/16/26) Director University Marshal and
University Marshal's Office Senior Lecturer, Harvard
Wadsworth House University
1341 Massachusetts Avenue
Harvard University
Cambridge, MA 02138
Jerard K. Hartman (3/1/33) Vice President Retired; former Managing --
15 Althea Lane Director of Scudder Kemper
Larchmont, NY 10538 Investments, Inc.
Thomas W. Joseph (4/22/39)+ Vice President and Senior Vice President of Vice President,
Assistant Secretary Scudder Kemper Investments, Director, Treasurer
Inc. and Assistant Clerk
Thomas F. McDonough Vice President, Senior Vice President of Assistant Clerk
(1/20/47)+ Treasurer and Scudder Kemper Investments,
Secretary Inc.
Frank J. Rachwalski, Vice President Managing Director of Scudder --
Jr.(3/26/45)+++ Kemper Investments, Inc.
John R. Hebble (6/27/58)+ Assistant Treasurer Senior Vice President of --
Scudder Kemper Investments,
Inc.
Caroline Pearson (4/1/62)+ Assistant Secretary Senior Vice President of --
Scudder Kemper Investments,
Inc.; Associate, Dechert
Price & Rhoads (law firm)
1989 to 1997
David B. Wines (4/8/56)++++ Vice President Senior Vice President of --
Scudder Kemper Investments,
Inc.
Kathryn L. Quirk (12/3/52)++ Vice President Managing Director of Scudder Senior Vice President,
Kemper Investments, Inc. Director and Clerk
</TABLE>
34
<PAGE>
* All the Directors and Officers have been associated with their
respective companies for more than five years, but not necessarily in
the same capacity.
# Messrs. Pierce and Fiedler are members of the Executive Committee.
+ Address: Two International Place, Boston, Massachusetts
++ Address: 345 Park Avenue, New York, New York
+++ Address: 222 South Riverside Plaza, Chicago, Illinois
++++ Address: 333 South Hope Street, 37th Floor, Los Angeles, California
Directors of the Corporation not affiliated with the Adviser receive
from the Corporation an annual fee and a fee for each Board of Directors and
Board Committee meeting attended and are reimbursed for all out-of-pocket
expenses relating to attendance at such meetings. Directors who are affiliated
with the Adviser do not receive compensation from the Corporation, but the
Corporation may reimburse such Directors for all out-of-pocket expenses relating
to attendance at meetings.
As of March 31, 1998, the Directors and Officers of the Company, as a
group, owned less than 1% of the outstanding shares of the Portfolio as of the
commencement of operations.
Certain accounts for which the Adviser acts as investment adviser owned
189,946,316 shares in the aggregate, or 24.67% of the outstanding shares of
Scudder Money Market Series on March 31,1998. The Adviser may be deemed to be
the beneficial owner of such shares but disclaims any beneficial ownership in
such shares.
Certain accounts for which the Adviser acts as investment adviser owned
117,920,280 shares in the aggregate, or 50.36% of the outstanding shares of
Scudder Tax Free Money Market Series on March 31,1998. The Adviser may be deemed
to be the beneficial owner of such shares but disclaims any beneficial ownership
in such shares.
Certain accounts for which the Adviser acts as investment adviser owned
12,762,216 shares in the aggregate, or 13.44% of the outstanding shares of
Scudder Government Money Market Series on March 31,1998. The Adviser may be
deemed to be the beneficial owner of such shares but disclaims any beneficial
ownership in such shares.
As of March 31, 1998, the following shareholders held of record more
than five percent of such Fund:
Scudder Money Market Series. Chemical Bank, Jericho, NY 10017-2014 and
State Street Bank & Trust Co., North Quincy, MA 02171-1753, held of record
8.95%, and 6.33% respectively, of the outstanding shares of the Scudder Money
Market Series.
Scudder Tax Free Money Market Series. Chemical Bank, Jericho, NY
10017-2014, Cudd & Co., New York, NY 10036, State Street Bank & Trust Co., North
Quincy, MA 02171-1753 and Citibank, Long Island City, NY 11120, held of record
26.06%, 7.87%, 7.09% and 5.83%, respectively, of the outstanding shares of the
Scudder Tax Free Money Market Series.
Scudder Government Money Market Series. Citibank, N.A., New York, NY
11120 and Cudd & Co., New York, NY 10036, held of record 16.47% and 12.21%,
respectively, of the outstanding shares of the Scudder Government Money Market
Series.
As of March 31, 1998 no other persons, to the knowledge of management,
owned of record or beneficially more than 5% of the outstanding shares of any
Fund. To the extent that any of the above institutions is the beneficial owner
of more than 25% of the outstanding shares of the Corporation or a Fund, it may
be deemed to be a "control" person of the Corporation of such Fund for purpose
of the 1940 Act.
REMUNERATION
Responsibilities of the Board -- Board and Committee Meetings
The Board of Directors is responsible for the general oversight of each
Fund's business. A majority of the Board's members are not affiliated with
Scudder Kemper Investments, Inc. These "Independent Directors" have primary
responsibility for assuring that each Fund is managed in the best interests of
its shareholders.
35
<PAGE>
The Board of Directors meets at least quarterly to review the
investment performance of each Fund and other operational matters, including
policies and procedures designed to ensure compliance with various regulatory
requirements. At least annually, the Independent Directors review the fees paid
to the Adviser and its affiliates for investment advisory services and other
administrative and shareholder services. In this regard, they evaluate, among
other things, each Fund's investment performance, the quality and efficiency of
the various other services provided, costs incurred by the Adviser and its
affiliates and comparative information regarding fees and expenses of
competitive funds. They are assisted in this process by each Fund's independent
public accountants and by independent legal counsel selected by the Independent
Directors.
All the Independent Directors serve on the Committee on Independent
Directors, which nominates Independent Directors and considers other related
matters, and the Audit Committee, which selects each Fund's independent public
accountants and reviews accounting policies and controls. In addition,
Independent Directors from time to time have established and served on task
forces and subcommittees focusing on particular matters such as investment,
accounting and shareholder service issues.
Compensation of Officers and Directors
The Independent Directors receive the following compensation from the
Funds of Scudder Fund, Inc.: an annual Director's fee of $1,500; a fee of $150
for attendance at each board meeting, audit committee meeting or other meeting
held for the purposes of considering arrangements between the Corporation on
behalf of each Fund and the Adviser or any affiliate of the Adviser; $150 for
all other committee meetings; and reimbursement of expenses incurred for travel
to and from Board Meetings. No additional compensation is paid to any
Independent Director for travel time to meetings, attendance at directors'
educational seminars or conferences, service on industry or association
committees, participation as speakers at directors' conferences or service on
special trustee task forces or subcommittees. Independent Directors do not
receive any employee benefits such as pension or retirement benefits or health
insurance. Notwithstanding the schedule of fees, the Independent Directors have
in the past and may in the future waive a portion of their compensation.
The Independent Directors also serve in the same capacity for other
funds managed by the Adviser. These funds differ broadly in type and complexity
and in some cases have substantially different Trustee fee schedules. The
following table shows the aggregate compensation received by each Independent
Trustee during 1997 from the Trust and from all of the Scudder funds as a group.
<TABLE>
<S> <C> <C> <C> <C> <C>
<CAPTION>
Scudder Fund, Inc. * All Scudder Funds
-------------------- -----------------
Paid by the Paid by the Paid by the Paid by the
Name Corporation Adviser(1) Funds Adviser(1)
---- ----------- ---------- ----- ----------
Dr. Rosita P. Chang, $926 $0 $31, 946 $4,200 (21 funds)
Director+
Edgar R. Fiedler, $18,883 $900 $276,975 $11,850 (34 funds)
Director**
Peter B. Freeman, $7,700 $1,350 $137,011 $14,625 (42 funds)
Director
Dr. J.D. Hammond, $926 $0 $35,626 $4,900 (21 funds)
Director+
Robert W. Lear, $6,175 $900 $14,121 $1,650 (7 funds)
Director***
</TABLE>
(1) The Adviser paid the compensation to Directors for meetings
associated with the Adviser's alliance with Zurich Insurance
Company. See "Investment Adviser" for additional information.
36
<PAGE>
* Scudder Fund, Inc. consists of the Cash Fund, Tax Free Fund and
Government Fund.
** Mr. Fiedler received $207,395 through a deferred compensation program.
As of December 31, 1997, Mr. Fiedler had a total of $224,106 accrued in
a deferred compensation program for serving on the Board of Directors
of the Company. In addition, as of December 31, 1997, Mr. Fiedler had a
total of $211,577 accrued in a deferred compensation program for
serving on the Board of Directors of Scudder Institutional Fund, Inc.
*** Mr. Lear retired from the Board of Directors of the Corporation on
October 23, 1997.
+ Ms. Chang and Mr. Hammond became Directors on October 23, 1997, and
therefore did not participate in meetings associated with the Adviser's
alliance with Zurich Insurance Company.
Members of the Board of Directors who are employees of the Adviser or
its affiliates receive no direct compensation from the Corporation, although
they are compensated as employees of the Adviser, or its affiliates, as a result
of which they may be deemed to participate in fees paid by each Fund.
TAXES
(See "Distribution and Performance Information -- Taxes"
in the Funds' Prospectuses)
The Prospectuses for each class of shares of the Funds describe
generally the tax treatment of distributions by the Corporation. This section of
the Statement includes additional information concerning federal taxes.
Qualification by each Fund as a regulated investment company under the
Internal Revenue Code of 1986 (the "Code") requires, among other things, that
(a) at least 90% of the Fund's annual gross income, without offset for losses
from the sale or other disposition of securities, be derived from interest,
payments with respect to securities loans, dividends and gains from the sale or
other disposition of securities or options thereon; or other income derived with
respect to its business of investing in stock securities or currencies (b) the
Fund diversify its holdings so that, at the end of each quarter of the taxable
year, (i) at least 50% of the market value of the Fund's assets is represented
by cash, Government securities, securities of other regulated investment
companies and other securities limited in respect of any one issuer to an amount
not greater than 5% of the Fund's assets and 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of the Fund's
assets is invested in the securities of any one issuer (other than U.S.
government securities or securities of other regulated investment companies), or
of two or more issuers which the taxpayer controls and which are determined to
be engaged in the same or similar trade or business. As a regulated investment
company, each Fund generally will not be subject to federal income tax on its
net investment income and net capital gains distributed to its shareholders,
provided that it distributes to its stockholders at least 90% of its net taxable
investment income (including net short-term capital gain) and at least 90% of
the excess of its tax exempt interest income over attributable expenses earned
in each year. Investment income of a Fund includes, among other things,
accretion of market and original issue discount, even though the Fund will not
receive current payments on discount obligations.
A 4% nondeductible excise tax will be imposed on a Fund (except the Tax
Free Fund to the extent of its tax-exempt income) to the extent it does not meet
certain minimum distribution requirements by the end of each calendar year. For
this purpose, any income or gain retained by a Fund that is subject to tax will
be considered to have been distributed by year-end. In addition, dividends
including "exempt-interest dividends," declared in October, November or December
payable to shareholders of record on a specified date in such a month and paid
in the following January will be treated as having been paid by each Fund and
received by shareholders on December 31 of the calendar year in which the
dividend was declared. Each Fund intends that it will timely distribute
substantially all of its net investment income and net capital gains and, thus,
expects not to be subject to the excise tax.
Any gain or loss realized upon a sale or redemption of shares of a Fund
by an individual shareholder who is not a dealer in securities may be eligible
for reduced capital gains rates, depending on the shareholder's holding period
for the shares. However, any loss realized by a shareholder upon the sale or
redemption of shares of a Fund held for six months or less is treated as
long-term capital loss to the extent of any long-term capital gain distribution
received by the shareholder. Any loss realized by a shareholder upon the sale or
redemption of shares of the Tax Free Fund held for six months or less is
disallowed to the extent of any "exempt-interest" dividends received by the
shareholder. Any loss
37
<PAGE>
realized on a sale or exchange of shares of a Fund will be disallowed to the
extent shares of such Fund are re-acquired within the 61-day period beginning 30
days before and ending 30 days after the shares are disposed of.
Dividends paid out of a Fund's investment company taxable income (which
includes, among other items, dividends, interest and net excess of net long-term
capital losses) will be taxable to a shareholder as ordinary income. Because no
portion of a Fund's income is expected to consist of dividends paid by U. S.
corporations, no portion of the dividends paid by a Fund is expected to be
eligible for the corporate dividends-received deduction. Distributions of net
capital gains (the excess of net long-term capital gains over net short-term
capital losses), if any, designated as capital gain dividends are taxable to
individuals at a maximum 20% or 28% capital gains rate (depending on the Fund's
holding period for the assets giving rise to the gain), regardless of how long
the shareholder has held the Fund's shares, and are not eligible for the
dividends-received deduction. Shareholders receiving distributions in the form
of additional shares, rather than cash, generally will have a cost basis in each
such share equal to the net asset value of a share of the Fund on the
reinvestment date. Shareholders will be notified annually as to the U.S. federal
tax status of distributions, and shareholders receiving distributions in the
form of additional shares will receive a report as to the net asset value of
those shares.
The Tax Free Fund intends to qualify under the Code to pay
"exempt-interest dividends" to its shareholders. The Fund will be so qualified
if, at the close of each quarter of its taxable year, at least 50% of the value
of its total assets consists of securities on which the interest payments are
exempt from federal income tax. To the extent that dividends distributed by the
Fund to its shareholders are derived from interest income exempt from federal
income tax and are designated as "exempt-interest dividends" by the Fund, they
will be excludable from the gross incomes of the shareholders for federal income
tax purposes. "Exempt-interest dividends," however, must be taken into account
by shareholders in determining whether their total incomes are large enough to
result in taxation of up to 85 percent of their social security benefits and
certain railroad retirement benefits. It should also be noted that tax-exempt
interest on private activity bonds in which the Portfolio may invest generally
is treated as a tax preference item for purposes of the alternative minimum tax
for corporate and individual shareholders. The Fund will inform shareholders
annually as to the portion of the distributions from the Fund which constituted
"exempt-interest dividends."
Investments by a Fund in zero coupon or other original issue discount
(other than tax-exempt securities) securities will result in income to the Fund
equal to a portion of the excess of the face value of the securities over their
issue price (the "original issue discount") each year that the securities are
held, even though the Fund receives no cash interest payments. This income is
included in determining the amount of income which a Fund must distribute to
maintain its status as a regulated investment company and to avoid the payment
of federal income tax and the 4% excise tax.
Gain derived by a Fund from the disposition of any market discount
bonds (i.e., bonds purchased other than at original issue, where the face value
of the bonds exceeds their purchase price), including tax-exempt market discount
bonds, held by the Fund will be taxed as ordinary income to the extent of the
accrued market discount on the bonds, unless the Fund elects to include the
market discount in income as it accrues.
Under the Code, a shareholder may not deduct that portion of interest
on indebtedness incurred or continue to purchase or carry shares of an
investment company paying exempt interest dividends (such as those of the Tax
Free Fund) which bears the same ratio to the total of such interest as the
exempt-interest dividends bear to the total dividends (excluding net capital
gain dividends) received by the shareholder. In addition, under rules issued by
the Internal Revenue Service for determining when borrowed funds are considered
to be used to purchase or carry particular assets, the purchase of shares may be
considered to have been made with borrowed funds even though the borrowed funds
are not directly traceable to such purchase.
Each Fund may be required to withhold U.S. federal income tax at the
rate of 31% of all taxable distributions (other than redemption proceeds,
provided the Fund maintains a constant net asset value per share) payable to
shareholders who fail to provide the Fund with their correct taxpayer
identification number or to make required certifications, or who have been
notified by the Internal Revenue Service that they are subject to backup
withholding. Corporate shareholders and certain other shareholders specified in
the Code generally are exempt from such backup withholding. Backup withholding
is not an additional tax. Any amounts withheld may be credited against the
shareholder's U.S. federal income tax liability.
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<PAGE>
The tax consequences to a foreign shareholder of an investment in a
Fund may be different from those described herein. Foreign shareholders are
advised to consult their own tax advisers with respect to the particular tax
consequences to them of an investment in a Fund.
Fund shareholders may be subject to state and local taxes on their Fund
distributions, including distributions from the Tax Free Fund. In many states,
Fund distributions which are derived from interest on certain U.S. Government
obligations are exempt from taxation. Shareholders are advised to consult their
own tax advisers with respect to the particular tax consequences to them of an
investment in a Fund. Persons who may be "substantial users" (or "related
persons" of substantial users) of facilities financed by industrial development
bonds should consult their tax advisers before purchasing shares of the Tax Free
Fund. The term "substantial user" generally includes any "non-exempt person" who
regularly uses in his or her trade or business a part of a facility financed by
industrial development bonds. Generally, an individual will not be a "related
person" of a substantial user under the Code unless the person or his or her
immediate family owns directly or indirectly in the aggregate more than a 50%
equity interest in the substantial user.
PORTFOLIO TRANSACTIONS
Subject to the supervision of the Board of Directors, the Adviser is
primarily responsible for the investment decisions of each of the Funds and the
placing of such Funds' portfolio transactions. In placing orders, it is the
policy of the Adviser to obtain the most favorable net results, taking into
account such factors as price, size of order, difficulty of execution and skill
required of the executing broker. While the Adviser will generally seek
reasonably competitive spreads or commissions, the Funds will not necessarily be
paying the lowest spread or commission available.
To the maximum extent feasible, the Adviser places orders for portfolio
transactions for the Funds through the Distributor, which in turn places orders
on behalf of the Funds. The Distributor receives no commissions, fees or other
remuneration from the Funds for this service. Allocation of portfolio
transactions by the Distributor is supervised by the Adviser.
The Funds' purchases and sales of portfolio securities are generally
placed by the Adviser with the issuer or a primary market maker for these
securities on a net basis, without any brokerage commissions being paid by the
Funds. Trading, however, does involve transaction costs. Transactions with
dealers serving as primary market makers reflect the spread between the bid and
asked prices. Transaction costs may also include fees paid to third parties for
information as to potential purchasers or sellers of securities but only for the
purpose of seeking for the Funds the most favorable net results, including such
fees, on a particular transaction. Purchases of underwritten issues may be made,
which will include an underwriting fee paid to the underwriter. During the
Corporation's last three fiscal years, the Funds paid no brokerage commissions.
Research and Statistical Information. When it can be done consistently
with the policy of obtaining the most favorable net results, it is the Adviser's
practice to place orders with brokers and dealers who supply market quotations
to the fund accounting agent of the Funds for valuation purposes, or who supply
research, market and statistical information to the Adviser. Except for
implementing the policy stated above, there is no intention on the part of the
Adviser to place portfolio transactions with particular brokers or dealers or
groups thereof, and the Adviser does not place orders with brokers or dealers on
the basis that such broker or dealer has or has not sold shares of the Funds.
Although such research, market and statistical information is useful to the
Adviser, it is the Adviser's opinion that such information is only supplementary
to their own research efforts, since the information must still be analyzed,
weighed and reviewed by the staff of the Adviser. Information so received will
be in addition to, and not in lieu of, the services required to be performed by
the Adviser under the investment advisory agreements with the Funds, and the
expenses of the Adviser will not necessarily be reduced as a result of the
receipt of such information. Such information may be useful to the Adviser in
providing services to clients other than the Funds, and not all such information
is used by the Adviser in connection with the Funds.
NET ASSET VALUE
Net asset value per share for each class of each Fund is determined by
Scudder Fund Accounting Corporation, a subsidiary of the Adviser, on each day
the Exchange is open for trading. The net asset value
39
<PAGE>
per share of the Cash Fund and the Government Fund is determined at 4:00 p.m.,
and at 2:00 p.m. for the Tax Free Fund. The net asset value per share of each
class is computed by dividing the value of the total assets attributable to a
specific class, less all liabilities attributable to those shares, by the total
number of outstanding shares of that class. The Exchange is closed on Saturdays,
Sundays, and on New Year's Day, Dr. Martin Luther King, Jr. Day, Presidents' Day
(the third Monday in February), Good Friday, Memorial Day (the last Monday in
May), Independence Day, Labor Day (the first Monday in September), Thanksgiving
Day and Christmas Day (collectively, the "Holidays"). When any Holiday falls on
a Saturday, the Exchange is closed the preceding Friday, and when any Holiday
falls on a Sunday, the Exchange is closed the following Monday. Although the
Corporation intends to declare dividends with respect to each of its Funds on
all other days, including Columbus Day (the second Monday in October) and
Veterans' Day, no redemptions will be made on these three bank holidays nor on
any of the Holidays.
As indicated under "Transaction information--Share price" in the
Prospectuses, each Fund uses the amortized cost method to determine the value of
its portfolio securities pursuant to Rule 2a-7 under the 1940 Act. The amortized
cost method involves valuing a security at its cost and amortizing any discount
or premium over the period until maturity, regardless of the impact of
fluctuating interest rates on the market value of the security. While this
method provides certainty in valuation, it may result in periods during which
the value, as determined by amortized cost, is higher or lower than the price
that the Fund would receive if the security were sold. During these periods the
yield to a shareholder may differ somewhat from that which could be obtained
from a similar fund that uses a method of valuation based upon market prices.
Thus, during periods of declining interest rates, if the use of the amortized
cost method resulted in a lower value of a Fund's portfolio on a particular day,
a prospective investor in that Fund would be able to obtain a somewhat higher
yield than would result from investment in a fund using solely market values,
and existing Fund shareholders would receive correspondingly less income. The
converse would apply during periods of rising interest rates.
Rule 2a-7 provides that in order to value its portfolio using the
amortized cost method, each Fund must maintain a dollar-weighted average
portfolio maturity of 90 days or less, purchase securities having remaining
maturities (as defined in Rule 2a-7) of no more than 397 calendar days and
invest only in securities determined by the Board of Directors to be of high
quality with minimal credit risks. The maturity of an instrument is generally
deemed to be the period remaining until the date when the principal amount
thereof is due or the date on which the instrument is to be redeemed. However,
Rule 2a-7 provides that the maturity of an instrument may be deemed shorter in
the case of certain instruments, including certain variable and floating rate
instruments subject to demand features. Pursuant to Rule 2a-7, the Board is
required to establish procedures designed to stabilize, to the extent reasonably
possible, such Fund's price per share as computed for the purpose of sales and
redemptions at $1.00. Such procedures include review of the Fund's portfolio
holdings by the Board of Directors, at such intervals as it may deem
appropriate, to determine whether the Fund's net asset value calculated by using
available market quotations deviates from $1.00 per share based on amortized
cost. The extent of any deviation will be examined by the Board of Directors. If
such deviation exceeds 1/2 of 1%, the Board will promptly consider what action,
if any, will be initiated. In the event the Board determines that a deviation
exists that may result in material dilution or other unfair results to investors
or existing shareholders, the Board will take such corrective action as it
regards as appropriate, including the redemption of shares in kind, the sale of
portfolio instruments prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity, withholding dividends or establishing a net
asset value per share by using available market quotations.
ADDITIONAL INFORMATION
Experts
The financial highlights of each Fund included in the Institutional
Shares, the Premium Shares and the Managed Shares Prospectuses and the Financial
Statements incorporated by reference in this Statement of Additional Information
have been audited by PricewaterhouseCoopers LLP, 1177 Avenue of the Americas,
New York, New York 10036, independent accountants, and are included in the
Prospectuses and this Statement of Additional Information in reliance upon the
accompanying report of said firm, which reports are given upon their authority
as experts in accounting and auditing.
Other Information
<TABLE>
<S> <C>
<CAPTION>
The CUSIP number of the Scudder Premium Money Market Shares is 811149871
The CUSIP number of the Scudder Institutional Money Market Shares is 811149863
40
<PAGE>
The CUSIP number of the Scudder Managed Money Market Shares is 811149202
The CUSIP number of the Scudder Prime Reserve Money Market Shares is
---------
The CUSIP number of the Scudder Managed Tax Free Money Market Shares is 811149301
The CUSIP number of the Scudder Institutional Tax Free Money Market Shares is 811149855
The CUSIP number of the Scudder Managed Government Money Market Shares is 811149103
The CUSIP number of the Scudder Institutional Government Money Market Shares is 811149848
Each Fund has a fiscal year end of December 31.
The law firm of Dechert Price & Rhoads is counsel to the Funds.
</TABLE>
Information enumerated below is provided at the Fund level since each
Fund consisted of one class of shares (which class was redesignated as the
Managed Shares Class) on December 31, 1997.
TO BE UPDATED
Scudder Fund Accounting Corporation ("SFAC"), Two International Place,
Boston, Massachusetts 02110-4103, a subsidiary of the Adviser, computes net
asset value for the Funds. Each Fund pays SFAC an annual fee equal to 0.0200% of
the first $150 million of average daily net assets, 0.0060% of such assets in
excess of $150 million and 0.0035% of such assets in excess of $1 billion, plus
holding and transaction charges for this service. 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 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. For the year ended December
31, 1996, the amount charged to the Funds by SFAC aggregated $30,000 for the
Government Fund, $48,900 for the Cash Fund, and $39,965 for the Tax Free Fund,
of which $2,500, $4,177, and $3,306, respectively.
TO BE UPDATED
Scudder Service Corporation (the "Service Corporation"), P.O. Box 2291,
Boston, Massachusetts 02107-2291, a subsidiary of the Adviser, is the transfer,
dividend-paying and shareholder service agent for the Corporation and as such
performs the customary services of a transfer agent and dividend disbursing
agent. These services include, but are not limited to: (i) receiving for
acceptance in proper form orders for the purchase or redemption of Fund shares
and promptly effecting such orders; (ii) recording purchases of Fund shares and,
if requested, issuing stock certificates; (iii) reinvesting dividends and
distributions in additional shares or transmitting payments therefor; (iv)
receiving for acceptance in proper form transfer requests and effecting such
transfers; (v) responding to shareholder inquiries and correspondence regarding
shareholder account status; (vi) reporting abandoned property to the various
states; and (vii) recording and monitoring daily the issuance in each state of
shares of each Fund of the Corporation. The Service Corporation applies monthly
activity fees for servicing shareholder accounts of $220,000. Effective October
1, 1995 the minimum monthly charge to any Fund shall be the pro rata portion of
the annual fee, determined by dividing such aggregate fee by the number of Funds
of the Corporation and series of Institutional Fund. When a Fund's monthly
activity charges do not equal or exceed the minimum monthly charge, the minimum
will be charged. For the year ended December 31, 1996, the amount charged to the
Corporation by Scudder Service Corporation aggregated $23,477 for the Government
Fund, $66,490 for the Cash Fund, and $23,477 for the Tax Free Fund, of which
$2,292, $5,556, and $2,292, respectively, remained unpaid at December 31, 1997.
For the year ended December 31, 1997 the following amounts were charged:
Tax Free Government
Money Market Money Market Money 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
======== ======== ========
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<PAGE>
The Directors of the Corporation have considered the appropriateness of
using this combined Statement of Additional Information for the Funds. There is
a possibility that a Fund might become liable for any misstatement, inaccuracy,
or incomplete disclosure in this Statement of Additional Information concerning
the other Fund.
The Funds' Prospectuses and this Statement of Additional Information
omit certain information contained in the Registration Statement and its
amendments which the Corporation has filed with the SEC under the Securities Act
of 1933 and reference is hereby made to the Registration Statement for further
information with respect to the Corporation and the securities offered hereby.
The Registration Statement and its amendments are available for inspection by
the public at the SEC in Washington, D.C.
FINANCIAL STATEMENTS
The financial statements, including the investment portfolios of the
Corporation, together with the Report of Independent Accountants, Financial
Highlights and notes to financial statements in the Annual Reports to the
Shareholders of the Funds dated December 31, 1997 are incorporated herein by
reference and are hereby deemed to be a part of this Statement of Additional
Information.
Effective July 7, 1997, the Corporation's Board of Directors approved a
name change of the Funds from Managed Cash Fund, Managed Tax-Free Fund and
Managed Government Securities Fund to Scudder Money Market Series, Scudder Tax
Free Money Market Series and Scudder Government Money Market Series,
respectively. In addition, the Board of Directors subdivided Scudder Money
Market Series, Scudder Tax Free Money Market Series and Scudder Government Money
Market Series into classes. Shares of each Fund outstanding as of July 7, 1997
have been redesignated as shares of the Managed Class of the respective Fund.
Furthermore, with respect to the Scudder Tax Free Money Market Series and
Scudder Government Money Market Series one additional class was created of
"Institutional Shares," with respect to the Scudder Money Market Series two
additional classes were created, the "Institutional Shares" and the "Premium
Money Market Shares."
42
<PAGE>
APPENDIX
The following is a description of the ratings given by Moody's, S&P and
Fitch to corporate and municipal bonds, corporate and municipal commercial paper
and municipal notes.
Corporate and Municipal Bonds
Moody's: The four highest ratings for corporate and municipal bonds are
"Aaa," "Aa," "A" and "Baa". Bonds rated "Aaa" are judged to be of the "best
quality" and carry the smallest degree of investment risk. Bonds rated "Aa" are
of "high quality by all standards," but margins of protection or other elements
make long-term risks appear somewhat greater than "Aaa" rated bonds. Bonds rated
"A" possess many favorable investment attributes and are considered to be upper
medium grade obligations. Bonds rated "Baa" are considered to be medium grade
obligations, neither highly protected nor poorly secured. Moody's applies
numerical modifiers 1, 2 and 3 in each rating category from "Aa" through "Baa"
in its rating system. The modifier 1 indicates that the security ranks in the
higher end of the category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end.
S&P: The four highest ratings for corporate and municipal bonds are
"AAA," "AA," "A" and "BBB". Bonds rated "AAA" have the highest ratings assigned
by S&P and have an extremely strong capacity to pay interest and repay
principal. Bonds rated "AA" have a "very strong capacity to pay interest and
repay principal" and differ "from the higher rated issues only in small degree".
Bonds rated "A" have a "strong capacity" to pay interest and repay principal,
but are "somewhat more susceptible to" adverse effects of changes in economic
conditions or other circumstances than bonds in higher rated categories. Bonds
rated "BBB" are regarded as having an "adequate capacity" to pay interest and
repay principal, but changes in economic conditions or other circumstances are
more likely to lead a "weakened capacity" to make such payments. The ratings
from "AA" to "BBB" may be modified by the addition of a plus or minus sign to
show relative standing within the category.
Fitch: The four highest ratings of Fitch for corporate and municipal
bonds are "AAA," "AA," "A" and "BBB". Bonds rated "AAA" are considered to be
investment-grade and of the highest credit quality. The obligor has an
exceptionally strong ability to pay interest and repay principal, which is
unlikely to be affected by reasonably foreseeable events. Bonds rated "AA" are
considered to be investment grade and of very high credit quality. The obligor's
ability to pay interest and repay principal is very strong, although not quite
as strong as bonds rated "AAA". Because bonds rated in the "AAA" and "AA"
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated "F1+". Bonds rated "A" are
considered to be investment grade and of high credit quality. The obligor's
ability to pay interest and repay principal is considered to be strong, but may
be more vulnerable to adverse changes in economic conditions and circumstances
than bonds with higher rates. Bonds rated "BBB" are considered to be investment
grade and of satisfactory credit quality. The obligor's ability to pay interest
and repay principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have adverse effects
on these bonds, and therefore impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is higher than for bonds
with greater ratings.
Corporate and Municipal Commercial Paper
Moody's: The highest rating for corporate and municipal commercial
paper is "P-1" (Prime-1). Issuers rated "P-1" have a "superior ability for
repayment of senior short-term obligations".
S&P: The "A-1" rating for corporate and municipal commercial paper
indicates that the "degree of safety regarding timely payment is strong".
Commercial paper with "overwhelming safety characteristics" will be rated
"A-1+".
Fitch: The rating "F-1" is the highest rating assigned by Fitch. Among
the factors considered by Fitch in assigning this rating are: (1) the issuer's
liquidity; (2) its standing in the industry; (3) the size of its debt; (4) its
ability to service its debt; (5) its profitability; (6) its return on equity;
(7) its alternative sources of financing; and (8) its ability to access the
capital markets. Analysis of the relative strength or weakness of these factors
and others determines whether an issuer's commercial paper is rated "F-1".
<PAGE>
Municipal Notes
Moody's: The highest ratings for state and municipal short-term
obligations are "MIG 1," "MIG 2," and "MIG 3" (or "VMIG 1," "VMIG 2" and "VMIG
3" in the case of an issue having a variable rate demand feature). Notes rated
"MIG 1" or "VMIG 1" are judged to be of the "best quality". Notes rated "MIG 2"
or "VMIG 2" are of "high quality," with margins or protection "ample although
not as large as in the preceding group". Notes rated "MIG 3" or "VMIG 3" are of
"favorable quality," with all security elements accounted for but lacking the
strength of the preceding grades.
S&P: The "SP-1" rating reflects a "very strong or strong capacity to
pay principal and interest". Notes issued with "overwhelming safety
characteristics" will be rated "SP-1+". The "SP-2" rating reflects a
"satisfactory capacity" to pay principal and interest.
Fitch: The highest ratings for state and municipal short-term
obligations are "F-1+," "F-1," and "F-2".
<PAGE>
SCUDDER FUND, INC.
PART C. - OTHER INFORMATION
<TABLE>
<CAPTION>
Item 24. Financial Statements and Exhibits
- -------- ---------------------------------
<S> <C> <C> <C>
a. Financial Statements
Included in Part A of this Registration Statement for the Managed Shares
For Scudder Money Market Series
For Scudder Tax Free Money Market Series
For Scudder Government Money Market Series
Financial Highlights for the ten fiscal years ended December 31, 1997.
(Incorporated by reference to Post-Effective Amendment No. 27 to the Registration
Statement.)
Included in Part A of this Registration Statement for the Institutional Shares
For Scudder Money Market Series
For Scudder Tax Free Money Market Series
For Scudder Government Money Market Series
Financial Highlights for the period August 4, 1997 (commencement of sale of
Institutional shares.)
(Incorporated by reference to Post-Effective Amendment No. 27 to the Registration
Statement.)
Included in Part A of this Registration Statement for the Premium Shares
For Scudder Money Market Series
Financial Highlights for the period August 4, 1997 (commencement of sale of
Premium shares) to December 31, 1997.
(Incorporated by reference to Post-Effective Amendment No. 27 to the Registration
Statement.)
Included in Part A of this Registration Statement for the Prime Reserve Shares
For Scudder Money Market Series
Financial Highlights
(Incorporated by reference to Post-Effective Amendment No. 27 to the Registration
Statement.)
Included in Part B of this Registration Statement
For Scudder Money Market Series
For Scudder Tax Free Money Market Series
For Scudder Government Money Market Series
Statement of Net Assets as of December 31, 1997.
Statement of Operations for the fiscal year ended December 31, 1997.
Part C - Page 1
<PAGE>
Statements of Changes in Net Assets for the two fiscal years ended December 31,
1996 and 1997
Financial Highlights for the five fiscal years ended December 31, 1997.
Notes to Financial Statements
Report of Independent Accountants
(Incorporated by reference to Post-Effective Amendment No. 27 to the Registration
Statement.)
b. Exhibits
1. (a) Articles of Incorporation dated June 16, 1982.
(Incorporated by reference to Post-Effective Amendment No. 21 to this
Registration Statement.)
(b) Articles Supplementary dated April 28, 1987.
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
(c) Articles of Merger dated April 28, 1987.
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
(d) Articles Supplementary dated February 20, 1991.
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
(e) Articles of Transfer dated December 27, 1991.
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
(f) Articles Supplementary dated February 7, 1992.
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
(g) Articles of Amendment dated October 14, 1992.
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
(h) Articles Supplementary for Managed Intermediate Government Fund dated
January 18, 1993.
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
(i) Articles Supplementary dated April 24, 1995.
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
(j) Articles Supplementary dated January 25, 1996.
(Incorporated by reference to Exhibit 1(h) to Post-Effective Amendment
No. 21 to this Registration Statement.)
(k) Articles of Amendment dated June 12, 1997.
(Incorporated by reference to Exhibit 1(i) to Post-Effective Amendment
No. 24 to this Registration Statement.)
Part C - Page 2
<PAGE>
(l) Articles Supplementary dated June 12, 1997.
(Incorporated by reference to Exhibit 1(j) to Post-Effective Amendment
No. 24 to this Registration Statement.)
(m) Articles Supplementary dated August 11, 1998 are filed herein.
2. (a) By-laws as amended through October 24, 1991.
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
(b) By-laws as amended through July 20, 1995.
(Incorporated by reference to Post-Effective Amendment No. 21 to this
Registration Statement.)
(c) By-laws as amended through October 24, 1996.
(Incorporated by reference to Post-Effective Amendment No. 22 to this
Registration Statement.)
3. Not applicable.
4. Form of stock certificate.
(Incorporated by reference to Exhibit 4 to Pre-Effective Amendment No. 1
to this Registration Statement filed September 28, 1982 and to Post-Effective
Amendment No. 7 to this Registration Statement filed March 3, 1988.)
5. (a)(1) Investment Advisory Agreement on behalf of Managed Government Securities
Fund dated May 1, 1989.
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
(a)(2) Investment Advisory Agreement on behalf of Managed Cash Fund dated May 1,
1989.
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
(a)(3) Investment Advisory Agreement on behalf of Managed Tax-Free Fund dated May
1, 1989.
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
(a)(4) Form of Investment Advisory Agreement on behalf of Managed Federal
Securities Fund dated May 1, 1991.
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
(a)(5) Investment Advisory Agreement on behalf of Managed Intermediate Government
Fund dated January 18, 1993.
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
(a)(6) Investment Advisory Agreement on behalf of Scudder Money Market Series
(Formerly Known As Managed Cash Fund) dated July 7, 1997.
(Incorporated by reference to Exhibit 5(a)(ix) to Post-Effective Amendment
No. 24 to this Registration Statement.)
Part C - Page 3
<PAGE>
(a)(7) Investment Advisory Agreement on behalf of Scudder Tax Free Money Market
Series (Formerly Known As Managed Tax Free Fund) dated July 7, 1997.
(Incorporated by reference to Exhibit 5(a)(x) to Post-Effective Amendment
No. 24 to this Registration Statement.)
(a)(8) Investment Advisory Agreement on behalf of Scudder Government Money
Market Series (Formerly Known As Managed Government Securities Fund)
dated July 7, 1997.
(Incorporated by reference to Exhibit 5(a)(xi) to Post-Effective Amendment
No. 24 to this Registration Statement.)
(a)(9) Investment Advisory Agreement between the Registrant on behalf of Scudder
Money Market Series (Formerly Known As Managed Cash Fund) and Scudder Kemper
Investments dated December 31, 1997.
(Incorporated by reference to Post-Effective Amendment No. 26 to this
Registration Statement.)
(a)(10) Investment Advisory Agreement between the Registrant on behalf of Scudder
Tax Free Money Market Series (Formerly Known As Managed Tax Free Fund) and
Scudder Kemper Investments dated December 31, 1997.
(Incorporated by reference to Post-Effective Amendment No. 26 to this
Registration Statement.)
(a)(11) Investment Advisory Agreement between the Registrant on behalf of Scudder
Government Money Market Series (Formerly Known As Managed Government
Securities Fund) Scudder Kemper Investments dated December 31, 1997.
(Incorporated by reference to Post-Effective Amendment No. 26 to this
Registration Statement.)
6. (a) Underwriting Agreement dated January 18, 1989 (with form of Dealer
Contract Exhibit).
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
(b) Underwriting Agreement dated July 7, 1997 between the Registrant and
Scudder Investor Services.
(Incorporated by reference to Exhibit 6(c) to Post-Effective Amendment No.
24 to this Registration Statement.)
(c) Underwriting Agreement dated May 6, 1998 between the Registrant and
Scudder Investor Services is filed herein.
7. Not Applicable.
8. (a) Form of Custodian Agreement.
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
(b) Transfer Agency Agreement dated January 1, 1990.
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
Part C- Page 4
<PAGE>
(b)(1) Fee schedule for Exhibit 8(b).
(Incorporated by reference to Post-Effective Amendment No. 21 to this
Registration Statement.)
(b)(2) Scudder Service Corporation Fee Information for Services Provided under
Transfer Agency and Service Agreement dated July 7, 1997.
(Incorporated by reference to Post-Effective Amendment No. 24 to this
Registration Statement.)
(c)(1) Custodian Agreement with State Street London Limited dated November 13, 1985.
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
(c)(2) Sub-Custodian Arrangement with Bankers Trust (August 1986). (Incorporated by
reference to Post-Effective Amendment No. 25 to this Registration Statement.)
(c)(3) Sub-Custodian Agreement with Bankers Trust Company (August 15, 1989).
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
(c)(4) Sub-Custodian Agreement with Irving Trust Company as amended February 6,
1990.
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
(c)(5) Fee Schedule for Exhibit 8(a).
(Incorporated by reference to Exhibit 8(c)(v) to Post-Effective Amendment
No. 20 filed on April 28, 1995.)
9. (b)(1) Fund Accounting Services Agreement between the Registrant, on behalf of
Managed Cash Fund, and Scudder Fund Accounting Corporation dated
August 1, 1994.
(Incorporated by reference to Post-Effective Amendment No. 20 filed on April
28, 1995.)
(b)(2) Fund Accounting Services Agreement between the Registrant, on behalf of
Managed Federal Securities Fund, and Scudder Fund Accounting
Corporation dated August 1, 1994.
(Incorporated by reference to Post-Effective Amendment No. 20 filed on
April 28, 1995.)
(b)(3) Fund Accounting Services Agreement between the Registrant, on behalf of
Managed Government Securities Fund, and Scudder Fund Accounting
Corporation dated August 1, 1994.
(Incorporated by reference to Post-Effective Amendment No. 20 filed on
April 28, 1995.)
(b)(4) Fund Accounting Services Agreement between the Registrant, on behalf of
Managed Tax-Free Fund, and Scudder Fund Accounting Corporation dated
August 18, 1994.
(Incorporated by reference to Post-Effective Amendment No. 20 filed on
April 28, 1995.)
Part C - Page 5
<PAGE>
(b)(5) Fund Accounting Services Agreement between the Registrant, on behalf of
Managed Intermediate Government Fund, and Scudder Fund Accounting
Corporation dated September 22, 1994.
(Incorporated by reference to Post-Amendment No. 20 filed on April 28,
1995.)
(b)(6) Fund Accounting Fee Schedule between the Registrant and Scudder Fund
Accounting Corp. dated July 7, 1997.
(Incorporated by reference to Post-Effective Amendment No. 24 to this
Registration Statement).
10. Inapplicable.
11. Inapplicable.
12. Inapplicable.
13. Inapplicable
14. (a) Individual Retirement Account Prototype.
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
(b) Self-Employed Individuals Retirement Plan Prototype.
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
(c) Scudder Roth IRA Custodian Disclosure Statement and Plan Agreement.
(Incorporated by reference to Post-Effective Amendment No. 26 to this
Registration Statement.)
15. Inapplicable.
16. (a) Schedules for Computations of Performance Quotations.
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
(b) Schedules for Computations of Performance Quotations.
(Incorporated by reference to
Exhibit 16(c) to Post-Effective
Amendment No. 20 to this
Registration Statement filed on
April 28, 1995.)
17. Inapplicable.
18. Plan pursuant to Rule 18f-3.
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
</TABLE>
Power of attorney for Dr. Rosita Chang, Dr. J.D. Hammond, Richard M. Hunt, Edgar
R. Fiedler, Daniel Pierce and Peter B. Freeman are (Incorporated by reference to
Post-Effective Amendment No. 25 to this Registration Statement.)
Item 25. Persons Controlled by or under Common Control with Registrant.
- -------- --------------------------------------------------------------
No person is controlled by or under common control with the
Registrant.
Part C - Page 6
<PAGE>
Item 26. Number of Holders of Securities.
- -------- --------------------------------
Set forth below is a table showing the number of record
holders of each class of securities of Scudder Fund, Inc. as
of July 24, 1998.
<TABLE>
<CAPTION>
(1) (2)
Title of Class Number of Record Shareholders
-------------- -----------------------------
<S> <C>
Scudder Money Market Series:
Premium Money Market Shares 4,999
Managed Money Market Shares 1,003
Institutional Money Market Shares 113
Scudder Tax Free Money Market Series:
Tax Free Managed Shares 95
Tax Free Institutional Shares 12
Scudder Government Money Market Series:
Government Managed Shares 195
Government Institutional Shares 7
</TABLE>
Item 27. Indemnification.
- -------- ----------------
As permitted by Sections 17(h) and 17(i) of the Investment
Company Act of 1940, as amended (the "1940 Act"), pursuant to
Article IV of the Registrant's By-Laws (filed as Exhibit No. 2
to the Registration Statement), officers, directors, employees
and representatives of the Funds may be indemnified against
certain liabilities in connection with the Funds, and pursuant
to Section 12 of the Underwriting Agreement dated May 6, 1998
(filed as Exhibit No. 6(c) to the Registration Statement),
Scudder Investor Services, Inc. (formerly "Scudder Fund
Distributors, Inc."), as principal underwriter of the
Registrant, may be indemnified against certain liabilities
that it may incur. Said Article IV of the By-Laws and Section
12 of the Underwriting Agreement are hereby incorporated by
reference in their entirety.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "Act"), may be
permitted to directors, officers and controlling persons of
the Registrant and the principal underwriter pursuant to the
foregoing provisions or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of
expenses incurred or paid by a director, officer, or
controlling person of the Registrant and the principal
underwriter in connection with the successful defense of any
action, suit or proceeding) is asserted against the Registrant
by such director, officer or controlling person or the
principal underwriter in connection with the shares being
registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issue.
Item 28. Business or Other Connections of Investment Adviser
- -------- ---------------------------------------------------
Scudder Kemper Investments, Inc. has stockholders and
employees who are denominated officers but do not as such have
corporation-wide responsibilities. Such persons are not
considered officers for the purpose of this Item 28.
Part C - Page 7
<PAGE>
<TABLE>
<CAPTION>
Business and Other Connections of Board
Name of Directors of Registrant's Adviser
---- ---------------------------------------
<S> <C>
Stephen R. Beckwith Treasurer and Chief Financial Officer, Scudder Kemper Investments, Inc.**
Vice President and Treasurer, Scudder Fund Accounting Corporation*
Director, Scudder Stevens & Clark Corporation**
Director and Chairman, Scudder Defined Contribution Services, Inc.**
Director and President, Scudder Capital Asset Corporation**
Director and President, Scudder Capital Stock Corporation**
Director and President, Scudder Capital Planning Corporation**
Director and President, SS&C Investment Corporation**
Director and President, SIS Investment Corporation**
Director and President, SRV Investment Corporation**
Lynn S. Birdsong Director and Vice President, Scudder Kemper Investments, Inc.**
Director, Scudder, Stevens & Clark (Luxembourg) S.A.#
Laurence W. Cheng Director, Scudder Kemper Investments, Inc.**
Member, Corporate Executive Board, Zurich Insurance Company of Switzerland##
Director, ZKI Holding Corporation xx
Steven Gluckstern Director, Scudder Kemper Investments, Inc.**
Member, Corporate Executive Board, Zurich Insurance Company of Switzerland##
Director, Zurich Holding Company of America o
Rolf Huppi Director, Chairman of the Board, Scudder Kemper Investments, Inc.**
Member, Corporate Executive Board, Zurich Insurance Company of Switzerland##
Director, Chairman of the Board, Zurich Holding Company of America o
Director, ZKI Holding Corporation xx
Kathryn L. Quirk Director, Chief Legal Officer, Chief Compliance Officer and Secretary, Scudder Kemper
Investments, Inc.**
Director, Senior Vice President & Assistant Clerk, Scudder Investor Services, Inc.*
Director, Vice President & Secretary, Scudder Fund Accounting Corporation*
Director, Vice President & Secretary, Scudder Realty Holdings Corporation*
Director & Assistant Clerk, Scudder Service Corporation*
Director, SFA, Inc.*
Vice President, Director & Assistant Secretary, Scudder Precious Metals, Inc.***
Director, Scudder, Stevens & Clark Japan, Inc.***
Director, Vice President and Secretary, Scudder, Stevens & Clark of Canada, Ltd.***
Director, Vice President and Secretary, Scudder Canada Investor Services Limited***
Director, Vice President and Secretary, Scudder Realty Advisers, Inc. x
Director and Secretary, Scudder, Stevens & Clark Corporation**
Director and Secretary, Scudder, Stevens & Clark Overseas Corporation oo
Director and Secretary, SFA, Inc.*
Director, Vice President and Secretary, Scudder Defined Contribution Services, Inc.**
Director, Vice President and Secretary, Scudder Capital Asset Corporation**
Director, Vice President and Secretary, Scudder Capital Stock Corporation**
Director, Vice President and Secretary, Scudder Capital Planning Corporation**
Director, Vice President and Secretary, SS&C Investment Corporation**
Director, Vice President and Secretary, SIS Investment Corporation**
Director, Vice President and Secretary, SRV Investment Corporation**
Director, Vice President and Secretary, Scudder Brokerage Services, Inc.*
Director, Korea Bond Fund Management Co., Ltd.+
Part C - Page 8
<PAGE>
Markus Rohrbasser Director, Scudder Kemper Investments, Inc.**
Member Corporate Executive Board, Zurich Insurance Company of Switzerland##
President, Director, Chairman of the Board, ZKI Holding Corporation xx
Cornelia M. Small Vice President, Scudder Kemper Investments, Inc.**
Edmond D. Villani Director, President and Chief Executive Officer, Scudder Kemper Investments, Inc.**
Director, Scudder, Stevens & Clark Japan, Inc.###
President and Director, Scudder, Stevens & Clark Overseas Corporation oo
President and Director, Scudder, Stevens & Clark Corporation**
Director, Scudder Realty Advisors, Inc.x
Director, IBJ Global Investment Management S.A. Luxembourg, Grand-Duchy of
Luxembourg
* Two International Place, Boston, MA
x 333 South Hope Street, Los Angeles, CA
** 345 Park Avenue, New York, NY
# Societe Anonyme, 47, Boulevard Royal, L-2449 Luxembourg, R.C. Luxembourg B 34.564
*** Toronto, Ontario, Canada
xxx Grand Cayman, Cayman Islands, British West Indies
oo 20-5, Ichibancho, Chiyoda-ku, Tokyo, Japan
### 1-7, Kojimachi, Chiyoda-ku, Tokyo, Japan
xx 222 S. Riverside, Chicago, IL
o Zurich Towers, 1400 American Ln., Schaumburg, IL
+ P.O. Box 309, Upland House, S. Church St., Grand Cayman, British West Indies
## Mythenquai-2, P.O. Box CH-8022, Zurich, Switzerland
</TABLE>
Item 29. Principal Underwriters.
- -------- -----------------------
(a)
Scudder Investor Services, Inc. acts as principal underwriter of the
Registrant's shares and also acts as principal underwriter for other
funds managed by Scudder Kemper Investments, Inc.
(b)
The Underwriter has employees who are denominated officers of an
operational area. Such persons do not have corporation-wide
responsibilities and are not considered officers for the purpose of
this Item 29.
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Position and Offices with Positions and
Business Address Scudder Investor Services, Inc. Offices with Registrant
---------------- ------------------------------- -----------------------
<S> <C> <C>
William S. Baughman Vice President None
Two International Place
Boston, MA 02110
Lynn S. Birdsong Senior Vice President None
345 Park Avenue
New York, NY 10154
Part C - Page 9
<PAGE>
Name and Principal Position and Offices with Positions and
Business Address Scudder Investor Services, Inc. Offices with Registrant
---------------- ------------------------------- -----------------------
Mary Elizabeth Beams Vice President None
Two International Place
Boston, MA 02110
Mark S. Casady Director, President and Assistant None
Two International Place Treasurer
Boston, MA 02110
Linda Coughlin Director and Senior Vice President None
Two International Place
Boston, MA 02110
Richard W. Desmond Vice President None
345 Park Avenue
New York, NY 10154
Paul J. Elmlinger Senior Vice President and Assistant None
345 Park Avenue Clerk
New York, NY 10154
Philip S. Fortuna Vice President None
101 California Street
San Francisco, CA 94111
William F. Glavin Vice President None
Two International Place
Boston, MA 02110
Margaret D. Hadzima Assistant Treasurer None
Two International Place
Boston, MA 02110
Thomas W. Joseph Director, Vice President, Treasurer Vice President and
Two International Place and Assistant Clerk Assistant Secretary
Boston, MA 02110
Thomas F. McDonough Clerk Vice President and
Two International Place Secretary
Boston, MA 02110
Daniel Pierce Director, Vice President President
Two International Place and Assistant Treasurer
Boston, MA 02110
Kathryn L. Quirk Director, Senior Vice President and Vice President
345 Park Avenue Assistant Clerk
New York, NY 10154
Part C - Page 10
<PAGE>
Name and Principal Position and Offices with Positions and
Business Address Scudder Investor Services, Inc. Offices with Registrant
---------------- ------------------------------- -----------------------
Robert A. Rudell Vice President None
Two International Place
Boston, MA 02110
William M. Thomas Vice President None
Two International Place
Boston, MA 02110
Benjamin Thorndike Vice President None
Two International Place
Boston, MA 02110
Sydney S. Tucker Vice President None
Two International Place
Boston, MA 02110
Linda J. Wondrack Vice President None
Two International Place
Boston, MA 02110
</TABLE>
(c)
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Net Underwriting Compensation on
Name of Principal Discounts and Redemptions Brokerage Other
Underwriter Commissions and Repurchases Commissions Compensation
----------- ----------- --------------- ----------- ------------
<S> <C> <C> <C> <C>
Scudder Investor None None None None
Services, Inc.
</TABLE>
Item 30. Location of Accounts and Records.
- -------- ---------------------------------
Certain accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 Act and the Rules
thereunder are maintained at the offices of the Custodian, the
Transfer Agent, the Distributor or the Registrant. Documents
required by paragraphs (b)(4), (5), (6), (7), (9), (10), and
(11) and (f) of Rule 31a-1 (the "Rule"), will be kept at the
offices of the Registrant, 345 Park Avenue, New York, New
York; certain documents required to be kept under paragraphs
(b)(1) and (b)(2)(iv) of the Rule will be kept at the offices
of Scudder Service Corporation, Two International Place,
Boston, Massachusetts 02110-4103; documents required to be
kept under paragraph (d) of the Rule will be kept at the
offices of Scudder Investor Services, Inc., Two International
Place, Boston, Massachusetts 02110-4103; and the remaining
accounts, books and other documents required by the Rule will
be kept at State Street Bank and Trust Company, 1776 Heritage
Drive, North Quincy, Massachusetts 02171.
Item 31. Management Services.
- -------- --------------------
Inapplicable.
Item 32. Undertakings.
- -------- -------------
Inapplicable.
Part C - Page 11
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(a) under the Securities Act of 1933 and has duly
caused this Amendment to the Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Boston, and the
Commonwealth of Massachusetts, on the 13th day of August, 1998.
SCUDDER FUND, INC.
By /s/Thomas F. McDonough
----------------------
Thomas F. McDonough
Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to its Registration Statement has been signed below by
the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/Dr. Rosita Chang
- ------------------------------------------
Dr. Rosita Chang* Director August 13, 1998
/s/Dr. J.D. Hammond
- ------------------------------------------
Dr. J.D. Hammond* Director August 13, 1998
/s/Richard M. Hunt
- ------------------------------------------
Richard M. Hunt* Director August 13, 1998
/s/Edgar R. Fiedler
- ------------------------------------------
Edgar R. Fiedler* Director August 13, 1998
/s/Peter B. Freeman
- ------------------------------------------
Peter B. Freeman* Director August 13, 1998
/s/Daniel Pierce
- ------------------------------------------
Daniel Pierce* President (Principal Executive Officer) August 13, 1998
- ------------------------------------------
John R. Hebble Treasurer (Principal Financial Officer) August ___, 1998
</TABLE>
*By: /s/Thomas F. McDonough
----------------------
Thomas F. McDonough**
** Attorney-in-fact pursuant to a power of attorney
contained in the signature page of Post Effective
Amendment No. 25.
1
<PAGE>
File No. 2-78122
File No. 811-3495
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM N-1A
POST-EFFECTIVE AMENDMENT NO. 28
TO REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AND
AMENDMENT NO. 24
TO REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
SCUDDER FUND, INC.
<PAGE>
SCUDDER FUND, INC.
EXHIBIT INDEX
Exhibit 1(m)
Exhibit 6(c)
SCUDDER FUND, INC.
ARTICLES SUPPLEMENTARY
Scudder Fund, Inc., a Maryland corporation registered as an open-end
management investment company under the Investment Company of 1940, as amended
(which is hereinafter called the "Corporation), hereby certifies to the State
Department of Assessments and Taxation of Maryland that:
FIRST: Pursuant to the authority expressly vested in the Board of
Directors of the Corporation by Article V of the Charter of the Corporation, the
Board of Directors has duly (i) designated and classified one billion
(1,000,000,000) shares of the authorized but unissued shares of the Premium
Money Market Sub-Class of the Scudder Money Market Series of the Corporation's
Capital Stock into a new sub-class of the Scudder Money Market Series of the
Corporation's Capital Stock, such sub-class to be referred to for all purposes
as "Prime Reserve Money Market Shares" ("Prime Reserve Sub-Class") and (ii)
designated and classified nine hundred seventy-five million (975,000,000) shares
of the authorized but unissued shares of the Managed Federal Securities Fund of
the Corporation Capital Stock into the Institutional Sub-Class of the Scudder
Money Market Series of the Corporation's Capital Stock.
(1) Immediately prior to the filing of these Articles Supplementary,
the Corporation had authority to issue eleven billion (11,000,000,000) shares of
Capital Stock, $0.001 par value per share, three billion six hundred million
(3,600,000,000) of such shares being designated as the Scudder Money Market
Series, which is further classified into eight hundred million (800,000,000)
Managed Shares, eight hundred million (800,000,000) Institutional Shares and two
billion (2,000,000,000) Premium Money Market Shares; one billion (1,000,000,000)
of such shares being designated as the Scudder Tax Free Money Market Series,
which is further classified into five hundred million (500,000,000) Managed
Shares and five hundred million (500,000,000) Institutional Shares; three
billion (3,000,000,000) of such shares being designated as the Scudder
Government Money Market Series, which is further classified into one billion
five hundred million (1,500,000,000) Managed Shares and one billion five hundred
million (1,500,000,000) Institutional Shares; one billion (1,000,000,000) of
such shares being designated as the Managed Federal Securities Fund; and one
hundred million (100,000,000) of such shares being designated to each of the
following (all of such classes being collectively referred to herein as the "One
Hundred Million Classes"): the Managed Intermediate Government Fund, the Managed
Municipal Income Fund, the Managed New York Municipal Income Fund, the Managed
Total Return Fund, the Managed Cash Plus Fund, the Managed Global Equity Fund,
the Managed Emerging Markets Equity Fund, the Managed International Equity Fund,
the Managed Global Small Company Equity Fund, the Managed Latin America Equity
Fund, the Managed Japanese Equity Fund, the Managed Pacific Basin Equity Fund,
the Managed Growth and Income Fund, the Managed Quality Growth Fund, the Managed
Value Equity Fund, the Managed Small Company Equity Fund, the Managed Defensive
Limited Volatility Bond Fund, the Managed Intermediate Limited Volatility Bond
Fund, the Managed Active Value Bond Fund, the Managed Long Duration Bond Fund,
the Managed Mortgage Investment Fund, the Managed Global Bond Fund, the Managed
International Bond Fund and the Managed Emerging Markets Fixed Income Fund. The
aggregate
<PAGE>
par value of all of such shares is eleven million dollars ($11,000,000).
(2) Immediately after the filing of these Articles Supplementary, the
Corporation will continue to have the authority to issue eleven billion
(11,000,000,000) shares of Capital Stock, $0.001 par value per share, four
billion five hundred seventy-five million (4,575,000,000) of such shares being
designated as the Scudder Money Market Series, which will be further classified
into eight hundred million (800,000,000) Managed Shares, one billion seven
hundred seventy-five million (1,775,000,000) Institutional Shares, one billion
(1,000,000,000) Premium Money Market Shares and one billion (1,000,000,000)
Prime Reserve Money Market Shares; one billion (1,000,000,000) of such shares
being designated as the Scudder Tax Free Money Market Series, which is further
classified into five hundred million (500,000,000) Managed Shares and five
hundred million (500,000,000) Institutional Shares; three billion
(3,000,000,000) of such shares being designated as the Scudder Government Money
Market Series, which is further classified into one billion five hundred million
(1,500,000,000) Managed Shares and one billion five hundred million
(1,500,000,000) Institutional Shares; twenty-five million (25,000,000) of such
shares being designated as the Managed Federal Securities Fund; and two billion
four hundred million (2,400,000,000) of such shares being designated as the One
Hundred Million Classes. The aggregate par value of all of such shares is eleven
million dollars ($11,000,000).
SECOND: The authorized but unissued shares of capital stock of the
Prime Reserve Sub-Class shall be subject to the same provisions as the
Institutional Sub-Class and the Premium Money Market Sub-Class of the Scudder
Money Market Series, and the Institutional Sub-Class of the Scudder Tax Free
Money Market Series and the Scudder Government Money Market Series (each such
sub-class being referred to as a "Sub-Class" and collectively as the
"Sub-Classes" and each such series being referred to as a "Class" and
collectively as the "Classes"), which provisions are as follows:
(1) All such Sub-Classes of a particular Class of capital stock shall
represent the same interest in the Corporation and have, except as provided to
the contrary in these Articles Supplementary or in any subsequently filed
charter document, identical voting, dividend, liquidation, and other rights,
terms and conditions with any other shares of capital stock of that Class;
provided however, that notwithstanding anything in the Charter of the
Corporation to the contrary, shares of the various Sub-Classes of that Class
shall be subject to such differing front-end sales loads, contingent deferred
sales charges, 12b-1 administrative or service fees, and other administrative,
recordkeeping, or service fees, each as may be established from time to time by
the Board of Directors in accordance with the Investment Company Act of 1940, as
amended, and any rules or regulations promulgated thereunder (the "1940 Act")
and applicable rules and regulations of the National Association of Securities
Dealers, Inc. (the "NASD") and as shall be set forth in the applicable
prospectus for the shares; and provided further that expenses related solely to
a particular Sub-Class of a Class of capital stock (including, without
limitation, distribution expenses under a Rule 12b-1 administrative or service
plan and administrative expenses under an administration or service agreement,
plan or other arrangement, however designated) shall be borne solely by such
Sub-Class and shall be appropriately reflected (in the manner determined by the
Board of Directors) in the net asset value, dividends, distribution and
liquidation rights of the shares of the Sub-Class in question.
2
<PAGE>
(2) The assets belonging to each particular Class or Sub-Class shall be
charged with all expenses, costs, charges and reserves attributable to that
Class or Sub-Class, and any general liabilities, expenses, costs, charges or
reserves of the Corporation that are not readily identifiable as pertaining to
any particular Class or Sub-Class, shall be allocated and charged by or under
the supervision of the Board of Directors to and among any one or more of the
Class or Sub-Class established and designated from time to time in such manner
and on such basis as the Board of Directors, in its sole discretion, deems fair
and equitable, and each allocation of liabilities, expenses, costs, charges and
reserves by or under the supervision of the Board of Directors shall be
conclusive and binding for all purposes.
(3) On each matter submitted to a vote of the stockholders, including
without limitation, the provisions of any distribution plan adopted by the Board
of Directors pursuant to Rule 12b-1 under the 1940 Act, each holder of a share
shall be entitled to one vote for each such share standing in his name on the
books of the Corporation irrespective of the Class or Sub-Class thereof, and all
Shares of all Classes or Sub-Classes shall vote as a single class ("Single Class
Voting); provided, however, that (A) as to any matter with respect to which a
separate vote of any Class or Sub-Class is required or permitted by the 1940 Act
or would be required under the Maryland General Corporation Law, such
requirements as to a separate vote by that Class or Sub-Class, as applicable,
shall apply in lieu of Single Class Voting as described above; (B) in the event
that the separate vote requirements referred to in (A) above apply with respect
to one or more Classes or Sub-Classes, then the Shares of all other Classes or
Sub-Classes shall vote as a single Class, unless such Shares are not required to
be voted under clause (C) of this paragraph or otherwise under law; and (C) as
to any matter which does not materially affect the interest of a particular
Class or Sub-Class, only the holders of Shares of the one or more affected
Classes or Sub-Classes, as applicable, shall be entitled to vote. To the extent
inconsistent with previously existing provisions of the Charter of the
Corporation, the provisions of this paragraph (3) shall control.
(4) Shares of a Sub-Class shall be automatically converted into shares
of another Sub-Class at such time as shall be set forth in the applicable
prospectus for such Class as amended from time to time, and shall be in
accordance with any applicable provisions of the 1940 Act, and in the event no
such provision is set forth in the prospectus, shall not be so convertible.
THIRD: Except as otherwise provided by the express provisions of these
Articles Supplementary, nothing herein shall limit, by inference or otherwise,
the discretionary right of the Board of Directors of the Corporation to classify
and reclassify and issue any unissued shares of any series or class of the
Corporation's Capital Stock and to fix or alter all terms thereof to the full
extent provided by the Charter of the Corporation.
FOURTH: The Board of Directors of the Corporation, at a meeting duly
called and held, duly authorized and adopted resolutions designating and
classifying the Scudder Money Market Series of the Corporation's Capital Stock
and the Managed Federal Securities Fund of the Corporation's Capital Stock, as
set forth in these Articles Supplementary.
IN WITNESS WHEREOF, Scudder Fund, Inc. has caused these Articles
Supplementary
3
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to be signed and acknowledged in its name and on its behalf by its President and
attested to by its Secretary on this____ day of ____________, 1998; and its
President acknowledges that these Articles Supplementary are the act of Scudder
Fund, Inc., and he further acknowledges that, as to all matters or facts set
forth herein which are required to be verified under oath, such matters and
facts are true in all material respects to the best of his knowledge,
information and belief, and that this statement is made under the penalties for
perjury.
ATTEST: SCUDDER FUND, INC.
/s/Thomas F. McDonough By: /s/Daniel Pierce (SEAL)
- ---------------------- ----------------
Thomas F. McDonough, Secretary Daniel Pierce, President
4
SCUDDER FUND, INC.
345 Park Avenue
New York, New York 10154
Date: May 6, 1998
Scudder Investor Services, Inc.
Two International Place
Boston, Massachusetts 02110
Underwriting Agreement
----------------------
Dear Ladies and Gentlemen:
Scudder Fund, Inc. (hereinafter called the "Fund") is a corporation
organized under the laws of Maryland and is engaged in the business of an
investment company. The authorized capital of the Fund consists of shares of
common stock, par value $0.001 per share ("Shares"), currently divided into
three active series (each a "series") each of which is currently divided into
two or more sub-classes (as described in the registration statement referred to
below). Shares may be divided into additional series or classes of the Fund. The
Fund has selected you to act as principal underwriter (as such term is defined
in Section 2(a)(29) of the Investment Company Act of 1940, as amended (the "1940
Act")) of the Shares and you are willing to act as such principal underwriter
and to perform the duties and functions of underwriter in the manner and on the
terms and conditions hereinafter set forth. Accordingly, the Fund hereby agrees
with you as follows:
<PAGE>
1. Delivery of Documents. The Fund has furnished you with copies properly
certified or authenticated of each of the following:
(a) Articles of Incorporation of the Fund, dated September 2, 1982, as
amended or supplemented to date.
(b) By-Laws of the Fund as in effect on the date hereof.
(c) Resolutions of the Board of Directors of the Fund selecting you as
principal underwriter for each series and approving this form of
Agreement.
The Fund will furnish you from time to time with copies, properly certified
or authenticated, of all amendments of or supplements to the foregoing, if any.
The Fund will furnish you promptly with properly certified or authenticated
copies of any registration statement filed by it with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, (the "1933
Act") or the 1940 Act, together with any financial statements and exhibits
included therein, and all amendments or supplements thereto hereafter filed.
2. Registration and Sale of Additional Shares. The Fund will from time to
time use its best efforts to register under the 1933 Act such number of Shares
not already so registered as you may reasonably be expected to sell on
2
<PAGE>
behalf of the Fund. You and the Fund will cooperate in taking such action as may
be necessary from time to time to qualify Shares so registered for sale by you
or the Fund in any states mutually agreeable to you and the Fund, and to
maintain such qualification. This Agreement relates to the issue and sale of
Shares that are duly authorized and registered and available for sale by the
Fund, including redeemed or repurchased Shares if and to the extent that they
may be legally sold and if, but only if, the Fund sees fit to sell them.
3. Sale of Shares. Subject to the provisions of paragraphs 5 and 7 hereof
and to such minimum purchase requirements as may from time to time be currently
indicated in the Fund's prospectus or statement of additional information, you
are authorized to sell as agent on behalf of the Fund Shares authorized for
issue and registered under the 1933 Act. You may also purchase as principal
Shares for resale to the public. Such sales will be made by you on behalf of the
Fund by accepting unconditional orders to purchase Shares placed with you by
investors and such purchases will be made by you only after acceptance by you of
such orders. The sales price to the public of Shares shall be the public
offering price as defined in paragraph 6 hereof. The Fund acknowledges that SIS
may appoint financial service firms ("Firms") as its agents to provide
3
<PAGE>
distribution services hereunder to investors. The Firms shall provide such
office space and equipment, telephone facilities, personnel, advertising and
promotion as is necessary or beneficial for providing information and
distribution services to existing and potential clients of the Firms. Such Firms
shall at all times be deemed to be retained by SIS and not the Fund. SIS will
require each Firm to conform to the provisions hereof and the Registration
Statement at the time in effect with respect to the net asset value of the
Fund's shares.
4. Solicitation of Orders. You will use your best efforts (but only in
states in which you may lawfully do so) to obtain from investors unconditional
orders for Shares authorized for issue by the Fund and registered under the 1933
Act, provided that you may in your discretion refuse to accept orders for Shares
from any particular applicant.
5. Sale of Shares by the Fund. Unless you are otherwise notified by the
Fund, any right granted to you to accept orders for Shares or to make sales on
behalf of the Fund or to purchase Shares for resale will not apply to (i) Shares
issued in connection with the merger or consolidation of any other investment
company with the Fund or its acquisition, by purchase or otherwise, of all or
substantially all of the assets of any investment company or substantially all
the outstanding shares of any such
4
<PAGE>
company, and (ii) to Shares that may be offered by the Fund to shareholders of
the Fund by virtue of their being such shareholders.
6. Public Offering Price. All Shares sold to investors by you will be sold
at the public offering price. The public offering price for all accepted
subscriptions will be the net asset value per Share, determined, in the manner
provided in the Fund's registration statements for the applicable series as from
time to time in effect under the 1933 Act and the 1940 Act, next after the order
is accepted by you.
7. Suspension of Sales. If and whenever the determination of net asset
value is suspended and until such suspension is terminated, no further orders
for Shares shall be accepted by you except unconditional orders placed with you
before you had knowledge of the suspension. In addition, the Fund reserves the
right to suspend sales and your authority to accept orders for Shares on behalf
of the Fund if, in the judgment of a majority of the Board of Directors or a
majority of the Executive Committee of such Board, if such body exists, it is in
the best interests of the Fund to do so, such suspension to continue for such
period as may be determined by such majority; and in that event, no Shares will
be sold by you on behalf of the Fund while such suspension remains in effect
except for Shares
5
<PAGE>
necessary to cover unconditional orders accepted by you before you had knowledge
of the suspension.
8. Portfolio Securities. Portfolio securities of each series of the Fund
may be bought or sold by or through you and you may participate directly or
indirectly in brokerage commissions or "spread" in respect to transactions in
portfolio securities of any series of the Fund; provided, however, that all sums
of money received by you as a result of such purchases and sales or as a result
of such participation must, after reimbursement of your actual expenses in
connection with such activity, be paid over by you to or for the benefit of the
Fund.
9. Expenses. (a) The Fund will pay (or will enter into arrangements
providing that others than you will pay) all fees and expenses:
(1) in connection with the preparation, setting in type and filing of any
registration statement (including a prospectus and statement of
additional information) under the 1933 Act or the 1940 Act, or both,
and any amendments or supplements thereto that may be made from time
to time;
(2) in connection with the registration and qualification of Shares for
sale in the various jurisdictions in which the Fund shall determine it
6
<PAGE>
advisable to qualify such Shares for sale (including registering the
Fund as a broker or dealer or any officer of the Fund or other person
as agent or salesman of the Fund in any such jurisdictions);
(3) of preparing, setting in type, printing and mailing any notice, proxy
statement, report, prospectus or other communication to shareholders
of the Fund in their capacity as such;
(4) of preparing, setting in type, printing and mailing prospectuses
annually, and any supplements thereto, to existing shareholders;
(5) in connection with the issue and transfer of Shares resulting from the
acceptance by you of orders to purchase Shares placed with you by
investors, including the expenses of printing and mailing
confirmations of such purchase orders and the expenses of printing and
mailing a prospectus included with the confirmation of such orders;
(6) of any issue taxes or any initial transfer taxes;
(7) of WATS (or equivalent) telephone lines other than the portion
allocated to you in this paragraph 9;
(8) of wiring funds in payment of Share purchases or in satisfaction of
redemption or repurchase requests, unless such expenses are paid for
by
7
<PAGE>
the investor or shareholder who initiates the transaction;
(9) of the cost of printing and postage of business reply envelopes sent
to Fund shareholders;
(10) of one or more CRT terminals connected with the computer facilities of
the transfer agent other than the portion allocated to you in this
paragraph 9;
(11) permitted to be paid or assumed by the Fund pursuant to a plan ("12b-1
Plan"), if any, adopted by the Fund in conformity with the
requirements of Rule 12b-1 under the 1940 Act ("Rule 12b-1") or any
successor rule, notwithstanding any other provision to the contrary
herein;
(12) of the expense of setting in type, printing and postage of the
periodic newsletter to shareholders other than the portion allocated
to you in this paragraph 9; and
(13) of the salaries and overhead of persons employed by you as shareholder
representatives other than the portion allocated to you in this
paragraph 9.
b) You shall pay or arrange for the payment of all fees and expenses:
8
<PAGE>
(1) of printing and distributing any prospectuses or reports prepared for
your use in connection with the offering of Shares to the public;
(2) of preparing, setting in type, printing and mailing any other
literature used by you in connection with the offering of Shares to
the public;
(3) of advertising in connection with the offering of Shares to the
public;
(4) incurred in connection with your registration as a broker or dealer or
the registration or qualification of your officers, directors, agents
or representatives under Federal and state laws;
(5) of that portion of WATS (or equivalent) telephone lines, allocated to
you on the basis of use by investors (but not shareholders) who
request information or prospectuses;
(6) of that portion of the expenses of setting in type, printing and
postage of the periodic newsletter to shareholders attributable to
promotional material included in such newsletter at your request
concerning investment companies other than the Fund or concerning the
Fund to the extent you are required to assume the expense thereof
pursuant to paragraph 9(b)(8), except such
9
<PAGE>
material which is limited to information, such as listings of other
investment companies and their investment objectives, given in
connection with the exchange privilege as from time to time described
in the Fund's prospectus;
(7) of that portion of the salaries and overhead of persons employed by
you as shareholder representatives attributable to the time spent by
such persons in responding to requests from investors, but not
shareholders, for information about the Fund;
(8) of any activity which is primarily intended to result in the sale of
Shares, unless a 12b-1 Plan shall be in effect which provides that the
Fund shall bear some or all of such expenses, in which case the Fund
shall bear such expenses in accordance with such Plan; and
(9) of that portion of one or more CRT terminals connected with the
computer facilities of the transfer agent attributable to your use of
such terminal(s) to gain access to such of the transfer agent's
records as also serve as your records.
Expenses which are to be allocated between you and the Fund shall be
allocated pursuant to reasonable procedures or formulae mutually agreed upon
from time to time, which
10
<PAGE>
procedures or formulae shall to the extent practicable reflect studies of
relevant empirical data.
10. Conformity with Law. You agree that in selling Shares you will duly
conform in all respects with the laws of the United States and any state in
which Shares may be offered for sale by you pursuant to this Agreement and to
the rules and regulations of the National Association of Securities Dealers,
Inc., of which you are a member.
11. Independent Contractor. You shall be an independent contractor and
neither you nor any of your officers or employees is or shall be an employee of
the Fund in the performance of your duties hereunder. You shall be responsible
for your own conduct and the employment, control and conduct of your agents and
employees and for injury to such agents or employees or to others through your
agents or employees. You assume full responsibility for your agents and
employees under applicable statutes and agree to pay all employee taxes
thereunder.
12. Indemnification. You agree to indemnify and hold harmless the Fund and
each of its directors and officers and each person, if any, who controls the
Fund within the meaning of Section 15 of the 1933 Act, against any and all
losses, claims, damages, liabilities or litigation (including legal and other
expenses) to which the Fund or such directors, officers, or controlling person
may become
11
<PAGE>
subject under such Act, under any other statute, at common law or otherwise,
arising out of the acquisition of any Shares by any person which (i) may be
based upon any wrongful act by you or any of your employees, representatives or
agents, or (ii) may be based upon any untrue statement or alleged untrue
statement of a material fact contained in a registration statement (including a
prospectus or statement of additional information) covering Shares or any
amendment thereof or supplement thereto or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statement therein not misleading if such statement or omission was made in
reliance upon information furnished to the Fund by you, or (iii) may be incurred
or arise by reason of your acting as the Fund's agent instead of purchasing and
reselling Shares as principal in distributing the Shares to the public,
provided, however, that in no case (i) is your indemnity in favor of a director
or officer or any other person deemed to protect such director or officer or
other person against any liability to which any such person would otherwise be
subject by reason of willful misfeasance, bad faith, or gross negligence in the
performance of his duties or by reason of his reckless disregard of obligations
and duties under this Agreement or (ii) are you to be liable under your
indemnity agreement contained in this paragraph
12
<PAGE>
with respect to any claim made against the Fund or any person indemnified unless
the Fund or such person, as the case may be, shall have notified you in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claims shall have been served upon the Fund or
upon such person (or after the Fund or such person shall have received notice of
such service on any designated agent), but failure to notify you of any such
claim shall not relieve you from any liability which you may have to the Fund or
any person against whom such action is brought otherwise than on account of your
indemnity agreement contained in this paragraph. You shall be entitled to
participate, at your own expense, in the defense, or, if you so elect, to assume
the defense of any suit brought to enforce any such liability, but if you elect
to assume the defense, such defense shall be conducted by counsel chosen by you
and satisfactory to the Fund, to its officers and directors, or to any
controlling person or persons, defendant or defendants in the suit. In the event
that you elect to assume the defense of any such suit and retain such counsel,
the Fund, such officers and directors or controlling person or persons,
defendant or defendants in the suit shall bear the fees and expenses of any
additional counsel retained by them, but, in case you do not elect to assume the
defense of any such suit, you will reimburse the
13
<PAGE>
Fund, such officers and directors or controlling person or persons, defendant or
defendants in such suit for the reasonable fees and expenses of any counsel
retained by them. You agree promptly to notify the Fund of the commencement of
any litigation or proceedings against it in connection with the issue and sale
of any Shares.
The Fund agrees to indemnify and hold harmless you and each of your
directors and officers and each person, if any, who controls you within the
meaning of Section 15 of the 1933 Act, against any and all losses, claims,
damages, liabilities or litigation (including legal and other expenses) to which
you or such directors, officers or controlling person may become subject under
such Act, under any other statute, at common law or otherwise, arising out of
the acquisition of any Shares by any person which (i) may be based upon any
wrongful act by the Fund or any of its employees or representatives, or (ii) may
be based upon any untrue statement or alleged untrue statement of a material
fact contained in a registration statement (including a prospectus or statement
of additional information) covering Shares or any amendment thereof or
supplement thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading if such statement or omission was made in reliance upon
information furnished to
14
<PAGE>
you by the Fund; provided, however, that in no case (i) is the Fund's indemnity
in favor of a director or officer or any other person deemed to protect such
director or officer or other person against any liability to which any such
person would otherwise be subject by reason of willful misfeasance, bad faith,
or gross negligence in the performance of his duties or by reason of his
reckless disregard of obligations and duties under this Agreement or (ii) is the
Fund to be liable under its indemnity agreement contained in this paragraph with
respect to any claims made against you or any such director, officer or
controlling person unless you or such director, officer or controlling person,
as the case may be, shall have notified the Fund in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon you or upon such director,
officer or controlling person (or after you or such director, officer or
controlling person shall have received notice of such service on any designated
agent), but failure to notify the Fund of any such claim shall not relieve it
from any liability which it may have to the person against whom such action is
brought otherwise than on account of its indemnity agreement contained in this
paragraph. The Fund will be entitled to participate at its own expense in the
defense, or, if it so elects, to assume the defense of any
15
<PAGE>
suit brought to enforce any such liability, but if the Fund elects to assume the
defense, such defense shall be conducted by counsel chosen by it and
satisfactory to you, your directors, officers, or controlling person or persons,
defendant or defendants in the suit. In the event that the Fund elects to assume
the defense of any such suit and retain such counsel, you, your directors,
officers or controlling person or persons, defendant or defendants in the suit,
shall bear the fees and expenses of any additional counsel retained by them,
but, in case the Fund does not elect to assume the defense of any such suit, it
will reimburse you or such directors, officers or controlling person or persons,
defendant or defendants in the suit, for the reasonable fees and expenses of any
counsel retained by them. The Fund agrees promptly to notify you of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of any Shares.
13. Authorized Representations. The Fund is not authorized to give any
information or to make any representations on behalf of you other than the
information and representations contained in a registration statement (including
a prospectus or statement of additional information) covering Shares, as such
registration statement
16
<PAGE>
and prospectus may be amended or supplemented from time to time.
You are not authorized to give any information or to make any
representations on behalf of the Fund or in connection with the sale of Shares
other than the information and representations contained in a registration
statement (including a prospectus or statement of additional information)
covering Shares, as such registration statement may be amended or supplemented
from time to time. No person other than you is authorized to act as principal
underwriter (as such term is defined in the 1940 Act) for the Fund.
14. Duration and Termination of this Agreement. This Agreement shall become
effective upon the date first written above and will remain in effect until July
31, 1998 and from year to year thereafter, but only so long as such continuance
is specifically approved at least annually by the vote of a majority of the
directors who are not interested persons of you or of the Fund, cast in person
at a meeting called for the purpose of voting on such approval, and by vote of
the Board of Directors or of a majority of the outstanding voting securities of
the Fund. This Agreement may, on 60 days' written notice, be terminated at any
time without the payment of any penalty, by the Board of Directors of the Fund,
by a vote of a majority of the outstanding voting securities of the Fund, or by
you. This
17
<PAGE>
Agreement will automatically terminate in the event of its assignment. In
interpreting the provisions of this paragraph 14, the definitions contained in
Section 2(a) of the 1940 Act (particularly the definitions of "interested
person", "assignment" and "majority of the outstanding voting securities"), as
modified by any applicable order of the Securities and Exchange Commission,
shall be applied.
15. Amendment of this Agreement. No provisions of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. If the Fund should at any time deem it
necessary or advisable in the best interests of the Fund that any amendment of
this Agreement be made in order to comply with the recommendations or
requirements of the Securities and Exchange Commission or other governmental
authority or to obtain any advantage under state or federal tax laws and should
notify you of the form of such amendment, and the reasons therefor, and if you
should decline to assent to such amendment, the Fund may terminate this
Agreement forthwith. If you should at any time request that a change be made in
the Fund's Articles of Incorporation or By-laws or in its methods of doing
business, in order to comply with any requirements of federal law or regulations
of the
18
<PAGE>
Securities and Exchange Commission or of a national securities association of
which you are or may be a member relating to the sale of shares of the Fund, and
the Fund should not make such necessary change within a reasonable time, you may
terminate this Agreement forthwith.
16. Termination of Prior Agreements. This Agreement upon its effectiveness
terminates and supersedes all prior underwriting contracts between the parties.
17. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Fund, whereupon this letter shall become a binding contract.
Very truly yours,
SCUDDER FUND, INC.
By: /s/Daniel Pierce
----------------
Title: President
19
<PAGE>
The foregoing agreement is hereby accepted as of the foregoing date
thereof.
SCUDDER INVESTOR SERVICES, INC.
By: /s/Mark S. Casady
-----------------
Title: President
20
