Scudder
Institutional Shares
Scudder Money Market Series
Scudder Tax Free Money Market Series
Scudder Government Money Market Series
222 South Riverside Plaza, Chicago, Illinois 60606
(800) 537-3177
Investment Manager
Scudder Kemper Investments, Inc.
222 South Riverside Plaza
Chicago, Illinois 60606
Distributor
Kemper Distributors, Inc.
222 South Riverside Plaza
Chicago, Illinois 60606
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Fund Accounting Agent
Scudder Fund Accounting Corporation
Two International Place
Boston, Massachusetts 02110
Transfer Agent and
Dividend Disbursing Agent
Scudder Service Corporation
c/o Institutional Funds Client Services
222 South Riverside Plaza
Chicago, Illinois 60606
Legal Counsel
Dechert Price & Rhoads
Boston, Massachusetts 02109
-----------------
Scudder Institutional Shares are not insured or guaranteed by the U.S.
Government. The Fund seeks to maintain a constant net asset value of $1.00
per share, but there can be no assurance that the stable net asset value
will be maintained.
This report is for the information of the shareholders. Its use
in connection with any offering of the Company's shares is
authorized only in case of a concurrent or prior delivery of
the Company's current prospectus.
Scudder
Institutional Shares
Scudder Money
Market Series
Scudder Tax Free Money
Market Series
Scudder Government
Money Market Series
Annual Report
December 31, 1998
<PAGE>
<TABLE>
<CAPTION>
Board of Directors
<S> <C>
DANIEL PIERCE* President; Managing Director, Scudder Kemper Investments, Inc.
DR. ROSITA P. CHANG(2)(3) Professor of Finance, University of Rhode Island
EDGAR R. FIEDLER(1)(2)(3) Senior Fellow and Economic Counsellor, The Conference Board, Inc.
PETER B. FREEMAN(1)(2)(3) Corporate Director and Trustee
DR. J.D. HAMMOND(2)(3) Dean, Smeal College of Business Administration
RICHARD M. HUNT(2)(3) University Marshal and Senior Lecturer, Harvard University
(1)Member of Executive Committee
(2)Member of Nominating Committee
(3)Member of Audit Committee
- --------------------------------------------------------------------------------
Officers
ANN M. McCREARY* Vice President
KATHRYN L. QUIRK* Vice President
FRANK J. RACHWALSKI, JR.* Vice President
THOMAS W. JOSEPH* Vice President and Assistant Secretary
THOMAS F. McDONOUGH* Vice President and Secretary
JOHN R. HEBBLE* Treasurer
CAROLINE PEARSON* Assistant Secretary
</TABLE>
*Scudder Kemper Investments, Inc.
2
<PAGE>
Dear Shareholder:
Scudder Institutional Shares is a class of shares in three different money
market mutual fund portfolios: Scudder Money Market Series, Scudder Tax Free
Money Market Series, and Scudder Government Money Market Series. Each of these
money market portfolios seeks to provide a high level of current income while
preserving capital and maintaining liquidity.
All three Portfolios seek to maintain a net asset value of $1.00, and have
done so since their inception. (There is no guarantee, of course, that each will
maintain stable net asset values.)
Please see the following pages for financial statements as of December 31,
1998, as well as a list of each Portfolio's investments.
If you have questions concerning any series of Scudder Institutional
Shares, please call 1-800-854-8525 from any continental state.
/s/Daniel Pierce
Daniel Pierce
President
3
<PAGE>
Scudder Institutional Shares/Money Market Series
Investment Portfolio
December 31, 1998
<TABLE>
<CAPTION>
Principal
Amount ($) Value ($)
==============================================================================================================================
<S> <C> <C>
Repurchase Agreements 1.6%
- ------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreement with State Street Bank and Trust Company dated 12/31/1998 at
4.85%, to be repurchased at $35,837,302 on 1/4/1999, collateralized by a -------------
$35,320,000 U.S. Treasury Note, 7.5%, 10/31/1999 (Cost $35,818,000) ................... 35,818,000 35,818,000
-------------
Commercial Paper 60.9%
- ------------------------------------------------------------------------------------------------------------------------------
Abbey National North America, 5.16%, 2/9/1999 ........................................... 50,000,000 49,715,083
Ace Overseas Corp., 5.16%, 2/1/1999 ..................................................... 39,000,000 38,822,008
Ace Overseas Corp., 4.91%, 4/19/1999 .................................................... 20,000,000 19,707,200
American Honda Finance Corp., 5.30%, 1/28/1999* ......................................... 25,000,000 25,000,000
Amsterdam Funding Corp., 4.88%, 1/14/1999 ............................................... 50,628,000 50,532,018
Banque National de Paris, 4.72%, 1/13/1999 .............................................. 15,335,000 15,308,931
Baxter International, Inc., 5.26%, 1/26/1999 ............................................ 19,000,000 18,928,090
Baxter International, Inc., 5.22%, 2/16/1999 ............................................ 30,000,000 29,796,833
Caterpillar Financial Services Ltd., 4.99%, 1/29/1999 ................................... 20,000,000 19,919,889
Coca-Cola Enterprises, Inc., 5.10%, 3/26/1999 ........................................... 50,000,000 49,405,000
Commonwealth Bank of Australia, 4.72%, 1/13/1999 ........................................ 30,000,000 29,949,000
Countrywide Home Loans, Inc., 5.28%, 1/21/1999 .......................................... 25,000,000 24,923,194
CSW Credit, Inc., 5.06%, 2/22/1999 ...................................................... 31,005,000 30,775,701
Falcon Asset Securitization Corp., 5.46%, 2/8/1999 ...................................... 25,000,000 24,858,292
General Electric Capital Corp., 4.97%, 2/18/1999 ........................................ 25,000,000 24,832,000
Halifax PLC, 4.94%, 1/6/1999 ............................................................ 20,000,000 19,983,556
Household Finance Corp., 5.28%, 1/11/1999 ............................................... 30,000,000 29,951,667
Household International, 5.04%, 1/26/1999 ............................................... 30,000,000 29,891,250
Huntington National Bank, 5.214%, 2/2/1999* ............................................. 25,000,000 24,993,827
International Securitization Corp., 5.11%, 1/19/1999 .................................... 30,000,000 29,919,300
Intrepid Funding Master Trust, 5.04%, 2/9/1999 .......................................... 20,000,000 19,888,633
Merrill Lynch & Co., 4.78%, 1/14/1999 ................................................... 20,000,000 19,962,878
Merrill Lynch & Co., 5.0%, 2/10/1999 .................................................... 30,000,000 29,830,000
Monsanto Co., 4.55%, 1/8/1999 ........................................................... 25,000,000 24,974,771
Mont Blanc Capital Corp., 4.93%, 1/19/1999 .............................................. 50,000,000 49,870,250
Monte Rosa Capital Corp., 4.97%, 1/21/1999 .............................................. 50,000,000 49,855,556
Morgan Stanley Dean Witter Discover Co., 4.98%, 1/22/1999 ............................... 25,000,000 24,924,167
Morgan Stanley Dean Witter Discover Co., 5.06%, 2/11/1999 ............................... 15,000,000 14,912,021
National Bank of New York City, 5.03%, 2/3/1999 ......................................... 30,000,000 29,858,100
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Scudder Institutional Shares/Money Market Series
<TABLE>
<CAPTION>
Principal
Amount ($) Value ($)
==============================================================================================================================
<S> <C> <C>
National Rural Utilities Cooperative Finance Corp., 5.0%, 2/19/1999 ..................... 30,000,000 29,792,975
Nordbanken North America, Inc., 5.34%, 2/8/1999 ......................................... 50,000,000 49,722,917
PacifiCorp, 4.62%, 1/11/1999 ............................................................ 20,000,000 19,971,778
PacifiCorp, 5.03%, 2/11/1999 ............................................................ 25,000,000 24,854,222
Petroleo Brasileiro S.A., 4.54%, 1/8/1999 ............................................... 30,000,000 29,969,783
Prudential Funding Corp., 4.82%, 1/15/1999 .............................................. 25,000,000 24,949,931
Sheffield Receivables Corp., 5.05%, 1/20/1999 ........................................... 40,000,000 39,888,111
Sigma Finance, 5.24%, 1/29/1999 ......................................................... 25,000,000 24,895,000
Sony Capital Corp., 4.81%, 1/13/1999 .................................................... 10,000,000 9,982,667
Special Purpose Accounts Receivable Cooperative Corp., 5.15%, 4/15/1999 ................. 45,000,000 44,334,400
Svenska Handelsbanken, 5.44%, 1/4/1999 .................................................. 50,000,000 49,969,792
Thunder Bay Funding Inc., 5.16%, 1/26/1999 .............................................. 20,000,000 19,925,694
Toyota Motor Credit Corp., 4.47%, 1/8/1999 .............................................. 23,200,000 23,176,993
WCP Funding Inc., 4.96%, 1/27/1999 ...................................................... 50,000,000 49,814,750
Windmill Funding Corp., 5.09%, 1/29/1999 ................................................ 32,000,000 31,869,333
Wood Street Funding Corp., 5.22%, 2/10/1999 ............................................. 25,000,000 24,852,222
- ------------------------------------------------------------------------------------------------------------------------------
Total Commercial Paper (Cost $1,349,259,783) 1,349,259,783
- ------------------------------------------------------------------------------------------------------------------------------
Certificates of Deposit 11.7%
- ------------------------------------------------------------------------------------------------------------------------------
American Honda Finance Corp., 5.524%, 1/14/1999* ........................................ 15,500,000 15,499,435
BankBoston, 5.282%, 2/16/1999 ........................................................... 25,000,000 24,984,687
Bankers Trust Co., 4.82%, 2/15/1999* .................................................... 15,000,000 14,996,320
Dresdner Bank, 7.0%, 1/4/1999 ........................................................... 38,000,000 38,000,000
FCC National Bank, Bank Note, 5.1%, 1/28/1999 ........................................... 25,000,000 25,000,000
FCC National Bank, 4.8%, 1/1/1999* ...................................................... 15,000,000 14,995,738
Goldman Sachs Group, 5.48%, 1/5/1999* ................................................... 40,000,000 40,000,000
Huntington National Bank, 5.625%, 1/12/1999 ............................................. 15,000,000 15,000,252
IBM Credit Corp., 5.4%, 1/27/1999 ....................................................... 30,000,000 29,997,991
Svenska Handelsbanken, Bank Note, 5.5%, 1/2/1999* ....................................... 40,000,000 39,988,515
- ------------------------------------------------------------------------------------------------------------------------------
Total Certificates of Deposit (Cost $258,462,938) 258,462,938
- ------------------------------------------------------------------------------------------------------------------------------
Short-Term and Medium-Term Notes 25.8%
- ------------------------------------------------------------------------------------------------------------------------------
American Honda Finance Corp., 5.604%, 1/26/1999* ........................................ 20,000,000 19,999,205
BankBoston, 4.889%, 1/1/1999* ........................................................... 25,000,000 25,000,000
Bankers Trust Co., 4.86%, 1/1/1999* ..................................................... 16,000,000 15,998,675
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Scudder Institutional Shares/Money Market Series
<TABLE>
<CAPTION>
Principal Value ($)
Amount ($) (Note A)
==============================================================================================================================
<S> <C> <C>
Bankers Trust Co., 4.85%, 1/1/1999* ..................................................... 15,000,000 14,998,016
Countrywide Home Loan, 5.624%, 1/24/1999* ............................................... 30,000,000 30,000,000
Countrywide Home Loan, Medium Term Note, 5.598%, 1/15/1999* ............................. 20,000,000 20,000,000
Federal National Mortgage Association Discount Note, 6.0%, 1/4/1999 ..................... 24,810,000 24,797,595
First Union National Bank, 5.42%, 2/16/1999* ............................................ 30,000,000 30,000,000
Goldman Sachs Group, 5.25%, 3/26/1999* .................................................. 15,000,000 15,000,000
Household Finance Corp., 5.189%, 3/9/1999* .............................................. 25,000,000 25,000,000
Lehman Brothers Holdings, Medium Term Note, 5.61%, 1/20/1999* ........................... 25,000,000 25,000,000
Lehman Brothers Holding Co., 4.91%, 2/8/1999* ........................................... 35,000,000 34,999,104
Merrill Lynch & Co., Medium Term Note, 5.494%, 1/14/1999* ............................... 30,000,000 30,000,000
MMR Funding I, Weekly Demand Note, 5.57%, 1/7/1999* ..................................... 5,500,000 5,500,000
NationsBank Carolinas, 4.83%, 1/21/1999* ................................................ 40,000,000 39,991,355
Northern Trust Co., 5.45%, 1/8/1999* .................................................... 50,000,000 49,979,452
Sigma Finance Inc., 4.88%, 1/25/1999* ................................................... 25,000,000 25,000,000
Toronto-Dominion Bank, 5.414%, 1/13/1999* ............................................... 50,000,000 49,975,728
Transamerica Finance Corp., Medium Term Note, 5.45%, 1/21/1999* ......................... 50,000,000 50,000,000
Wachovia Corp., 5.44%, 1/21/1999* ....................................................... 40,000,000 39,994,665
- ------------------------------------------------------------------------------------------------------------------------------
Total Short-Term and Medium-Term Notes (Cost $571,233,795) 571,233,795
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $2,214,774,516) (a) 2,214,774,516
- ------------------------------------------------------------------------------------------------------------------------------
(a) Cost for federal income tax purposes is $2,214,774,516.
* Floating rate security; date shown is next interest rate change.
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Scudder Institutional Shares/Tax Free Money Market Series
Investment Portfolio
December 31, 1998
<TABLE>
<CAPTION>
Credit
Principal Rating (b)
Amount ($) (Unaudited) Value ($)
==============================================================================================================================
<S> <C> <C> <C>
Short-Term Municipal Investments 100.0%
- ------------------------------------------------------------------------------------------------------------------------------
Alaska
Alaska Housing Finance Corp., General Mortgage Revenue, Series 1991-A,
Weekly Demand Note, 4.0%, 6/1/2026 .......................................... 3,000,000 A1+ 3,000,000
Arizona
Maricopa County, AZ, Pollution Control Revenue:
Arizona Public Service Corporation, Series F, Daily Demand Note, 5.0%,
5/1/2029 .................................................................... 1,000,000 P1 1,000,000
Series 1994 A, Variable Rate, 5.1%, 5/1/2029 ................................ 1,700,000 A1+ 1,700,000
Pima County, AZ, Industrial Development Authority, Series 1985, SFE
Technologies, Weekly Demand Note, 4.5%, 12/1/2005 ........................... 1,100,000 VMIG1 1,100,000
Colorado
Cherry Creek, CO, South Metropolitan District #1, Weekly Demand Note,
3.95%, 6/1/2006 ............................................................. 4,550,000 A1+ 4,550,000
Platte River Power Authority Co., TECP, 3.05%, 3/10/1999 ...................... 2,000,000 A1 2,000,000
Smith Creek, CO, Metropolitan District, Water Utility Revenue Bond,
Variable Rate, 4.05%, 10/1/2035 ............................................. 5,000,000 A1+ 5,000,000
District of Columbia
District of Columbia, General Obligation, Refunding Bonds:
Series A1, Daily Demand Note, 5.2%, 10/1/2007 ............................... 3,900,000 VMIG1 3,900,000
Series A5, Daily Demand Note, 5.2%, 10/1/2007 ............................... 3,700,000 VMIG1 3,700,000
Series A6, Daily Demand Note, 5.2%, 10/1/2007 ............................... 3,000,000 VMIG1 3,000,000
Florida
Alachua County, FL, Health Facility Authority, Shands Teaching Hospital,
Series 1996 B, Variable Weekly, 4.0%, 12/1/2026 (c) ......................... 3,800,000 A1+ 3,800,000
Dade County, FL, Health Facilities Authority, Miami Children's Hospital,
Weekly Demand Note, 3.4%, 9/1/2025 (c) ...................................... 3,000,000 AAA 3,000,000
Dade County, FL, Water and Sewer System Revenue Bonds, Series 1994, Weekly
Demand Note, 3.4%, 10/5/2022 ................................................ 5,500,000 A1+ 5,500,000
Jacksonville, FL, Florida Power & Light, Series 1994, TECP, 3.25%,
1/20/1999 ................................................................... 2,000,000 A1+ 2,000,000
Jacksonville, FL, Electric Authority, TECP, Series C1, 3.45%, 1/13/1999 ....... 2,500,000 A1+ 2,500,000
Sarasota County, FL, Public Hospital District, Sarasota Memorial Hospital,
TECP, Series 1985 C, 3.1%, 2/18/1999 ........................................ 3,900,000 A1+ 3,900,000
Sunshine State, FL, Government Finance Commission, TECP, Series 1986, 3.15%,
2/16/1999 ................................................................... 2,500,000 VMIG1 2,500,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Scudder Institutional Shares/Tax Free Money Market Series
<TABLE>
<CAPTION>
Credit
Principal Rating (b)
Amount ($) (Unaudited) Value ($)
==============================================================================================================================
<S> <C> <C> <C>
University of Northern Florida Capital Improvement Revenue, Weekly Demand
Note, Series 1994, 4.0%, 11/1/2024 .......................................... 2,000,000 VMIG1 2,000,000
Georgia
Fulton County, GA, Pollution Control Revenue, General Motors Project 1985,
Variable Weekly, 3.75%, 12/1/2001 ........................................... 1,580,000 VMIG1 1,580,000
Gainsville Redevelopment Authority, Riverside Military Academy Project,
Weekly Demand Note, 4.1%, 1/1/2023 .......................................... 2,000,000 AA2 2,000,000
State of Georgia, Municipal Electric Authority, Project 1, Series 1985B,
TECP, 3.1%, 3/8/1999 ........................................................ 3,500,000 A1+ 3,500,000
Illinois
Chicago-O'Hare International Airport, IL, General Airport Second Lien,
Series A, Weekly Demand Note, 4.0%, 1/1/2015 ................................ 1,500,000 A1+ 1,500,000
Chicago, IL, O'Hare International Airport Revenue Bonds, American Airlines
Project, Series 1983 D, 5.0%, 12/1/2017 ..................................... 2,000,000 P1 2,000,000
Cook County, IL, Weekly Demand Note, 4.1%, 12/1/2001 .......................... 3,000,000 A1+ 3,000,000
Illinois Development Finance Authority Pollution Control Revenue, Illinois
Power Co. Project, Series 1993 A, TECP, 4.25%, 11/1/2028 .................... 4,000,000 A1+ 4,000,000
Illinois Educational Facilities Authority, University Pooled Finance
Program, Weekly Demand Note, 4.1%, 12/1/2005 (c) ............................ 1,725,000 VMIG1 1,725,000
Illinois Health Facilities Authority, Rush Presbytarian St. Luke's Medical
Center, Series 1989A, TECP, 3.05%, 3/18/1999 ................................ 4,500,000 A1+ 4,500,000
Indiana
Sullivan, IN, National Rural Utilities Cooperative, Hoosier Energy, TECP,
Series 85L-2, 3.05%, 2/19/1999 .............................................. 2,700,000 A1+ 2,700,000
Kansas
City of Burlington, KS, National Rural Utilities Cooperative Finance Corp.,
Series 85C-2, TECP, 3.1%, 3/5/1999 .......................................... 4,000,000 A1+ 4,000,000
Kentucky
Danville, KY, Multi-City Lease Revenue, TECP:
3.1%, 2/19/1999 ............................................................. 4,125,000 A1 4,125,000
3.25%, 1/13/1999 ............................................................ 3,000,000 A1 3,000,000
Mason County, KY, East Kentucky Power Cooperative, Pollution Control
Revenue, Weekly Demand Note, Series 1984 B-1, 4.05%, 10/15/2014 ............. 4,145,000 A1+ 4,145,000
Mayfield, KY, Multi-City Lease Revenue, Kentucky League of Cities Funding
Trust, Weekly Demand Note, Series 1996, 4.1%, 7/1/2026 ...................... 2,000,000 VMIG1 2,000,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Scudder Institutional Shares/Tax Free Money Market Series
<TABLE>
<CAPTION>
Credit
Principal Rating (b)
Amount ($) (Unaudited) Value ($)
==============================================================================================================================
<S> <C> <C> <C>
Pendleton County, KY, Multi-County Lease Revenue Bonds, Series 1989, TECP,
3.2%, 1/19/1999 ............................................................. 5,000,000 A1+ 5,000,000
Louisiana
Louisiana Public Facilities Authority:
Hospital Revenue, Willis Knighton Medical Center, Weekly Demand Note,
4.0%, 9/1/2025 ............................................................. 3,000,000 VMIG1 3,000,000
School Healthcare System, TECP, Series 1997D, 3.1%, 2/23/1999 ............... 5,500,000 A1+ 5,500,000
Maryland
Anne Arundel County, MD, Baltimore Gas & Electric Company, TECP, 3.1%,
2/22/1999 ................................................................... 3,500,000 MIG1 3,500,000
Michigan
Michigan Strategic Fund, Dow Chemical Co., Pollution Control Revenue, TECP,
Series 1986, 3.1%, 2/17/1999 ................................................ 4,000,000 P1 4,000,000
University of Michigan Hospital Revenue, Series A, Daily Demand Note,
5.15%, 12/1/2019 ............................................................ 1,400,000 VMIG1 1,400,000
Missouri
City of Columbia, MO, Special Obligation, Insurance Reserve Bonds, Weekly
Demand Note, 3.95%, 6/1/2008 ................................................ 2,700,000 VMIG1 2,700,000
St. Louis, MO, Industrial Development Authority, Kirkwood Project,
Series 1985, 4.125%, 12/1/2015 .............................................. 1,000,000 P1 1,000,000
Nevada
Las Vegas, Valley Water District, NV, TECP, Series A, 3.1%, 2/18/1999 ......... 5,500,000 P1 5,500,000
New Mexico
Albuquerque, NM, Gross Receipts/Lodgers Tax, Series 1991 A, Weekly Demand
Note, 3.95%, 7/1/2022 ....................................................... 2,000,000 A1+ 2,000,000
New York
Nassau County, NY, Tax Anticipation Notes:
Series 1998 A, 3.5%, 3/30/1999 .............................................. 2,100,000 SP1 2,102,282
Series 1998 B, 3.5%, 8/18/1999 .............................................. 4,300,000 SP1 4,311,529
Series 1998 C, 3.5%, 12/22/1999 ............................................. 1,300,000 SP1 1,304,893
New York, General Obligation, TECP, Series V, 3.1%, 3/9/1999 .................. 3,500,000 A1 3,500,000
New York City Municipal Water Finance Authority:
TECP, Series 5, Lot A, 3.3%, 1/21/1999 ...................................... 2,000,000 A1+ 2,000,000
VRDN, Water & Sewer System Revenues, Series 1995, 5.2%, 6/15/2025 ........... 7,000,000 VMIG1 7,000,000
New York City, NY, General Obligation, Series 1993 B, 5.0%, 10/1/2020 ......... 3,800,000 A1+ 3,800,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Scudder Institutional Shares/Tax Free Money Market Series
<TABLE>
<CAPTION>
Credit
Principal Rating (b)
Amount ($) (Unaudited) Value ($)
==============================================================================================================================
<S> <C> <C> <C>
New York, NY, General Obligation, VRDN, Series 1994 A-10, 5.0%, 8/1/2016 ...... 2,000,000 A1+ 2,000,000
North Carolina
North Carolina Healthcare Commission, Pooled Finance, Series 1985, Weekly
Demand Note, 4.0%, 12/1/2025 (c) ............................................ 7,800,000 A1+ 7,800,000
Oregon
Oregon General Obligation, Series 1973-G, Weekly Demand Note, 4.1%,
12/1/2018 ................................................................... 1,900,000 VMIG1 1,900,000
Pennsylvania
Delaware Valley, PA, Regional Finance Authority, Weekly Demand Note,
Series 1985 A, 3.9%, 12/1/2020 .............................................. 1,600,000 VMIG1 1,600,000
Elk County, PA, Industrial Development Authority, Stockpole Corp., VRDN,
3.875%, 3/1/2004 ............................................................ 1,750,000 A1 1,750,000
Pennsylvania State Higher Educational Facilities Authority, University Of
Pennsylvania Health Services, Series B, Weekly Demand Note, 4.05%,
1/1/2026 .................................................................... 5,000,000 A1+ 5,000,000
Schuylkill County, PA, Resource Recovery Revenue, Gilberton Power Project,
Variable Weekly, 3.95%, 12/1/2002 ........................................... 5,000,000 A1+ 5,000,000
South Carolina
South Carolina Public Service Authority, TECP, 3.1%, 2/17/1999 ................ 4,500,000 A1+ 4,500,000
South Carolina Public Service Authority Revenue, TECP, 3.25%, 1/20/1999 ....... 3,000,000 A1+ 3,000,000
South Carolina Public Service Authority Revenue, Weekly Demand Note,
Series 1995, 4.1%, 1/1/2023 (c) ............................................. 2,000,000 A1+ 2,000,000
Tennessee
City of Clarksville, TN, Public Building Authority Pooled Financing:
Series 1990, Weekly Demand Note, 3.85%, 7/1/2013 (c) ........................ 2,350,000 VMIG1 2,350,000
Series 1994,Weekly Demand Note, 4.05%, 6/1/2024 ............................. 4,000,000 A1+ 4,000,000
Texas
Brazos Harbor, TX, Industrial Development Corp., TECP, 3.25%, 1/14/1999 ....... 3,000,000 P1 3,000,000
City of San Antonio, TX, Industrial Development River Center Associates
Project, Weekly Demand Note, 4.05%, 12/1/2012 ............................... 2,700,000 SKI 2,700,000
Houston, TX, Water and Sewer System, TECP, 3.4%, 1/13/1999 .................... 5,000,000 A1 5,000,000
Port Development Corp., TX, Marine Terminal Refunding Revenue, Stolt
Terminals, Series 1989, Weekly Demand Note, 3.95%, 1/15/2014 ................ 1,500,000 A1+ 1,500,000
San Antonio, TX, Electric & Gas Municipal Securities Trust Receipts,
Variable Rate Note, 4.15%, 2/1/2020 ......................................... 4,700,000 A1+ 4,700,000
State of Texas, General Obligation, Veterans Housing Assistance Refunding
Bonds, Series 1995, Weekly Demand Note, 3.85%, 12/1/2016 .................... 2,345,000 A1+ 2,345,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Scudder Institutional Shares/Tax Free Money Market Series
<TABLE>
<CAPTION>
Credit
Principal Rating (b)
Amount ($) (Unaudited) Value ($)
==============================================================================================================================
<S> <C> <C> <C>
Vermont
Vermont Industrial Development Authority Mount Snow, Limited Series 1904,
VRDN, 3.875%, 4/1/1999 ...................................................... 225,000 A1 225,000
Vermont Industrial Development, Vermont Marble Company, Series 1984, VRDN,
3.875%, 12/1/2004 ........................................................... 2,840,000 A1 2,840,000
Vermont Student Assistance Corporation, Student Loan Revenues, VRDN,
Series 1985, 3.4%, 1/1/2004 ................................................. 4,615,000 VMIG1 4,615,000
Washington
Washington Public Power Supply System, Nuclear Project #1, Series 93 1A-1,
Weekly Demand Note, 4.0%, 7/1/2017 .......................................... 4,560,000 A1 4,560,000
Washington, Various Purpose General Obligation, Series 1996 B, Weekly
Demand Note, 4.05%, 6/1/2020 ................................................ 2,400,000 A1+ 2,400,000
Wisconsin
Wausau, WI, Pollution Control Revenue (Minnesota Mining and Manufacturing),
Series 1982, Floating Rate Demand Note, 4.05%, 8/1/2017 ..................... 500,000 AAA 500,000
Wisconsin Health & Educational Facilities Authority Revenue, Wheaton
Franciscan Services, Weekly Demand Note, 4.05%, 8/15/2016 ................... 3,500,000 A1+ 3,500,000
Wisconsin Health Care Facilities Authority, Franciscan Health Care, Series
1985-A1, Weekly Demand Note, 4.0%, 1/1/2016 ................................. 5,000,000 A1+ 5,000,000
Wisconsin State Health Facilities Authority, Franciscan Memorial Hospital,
Weekly Demand Note, 4.0%, 1/1/2016 .......................................... 3,500,000 A1+ 3,500,000
Wyoming
Gillette, WY, Pollution Control Revenue, Pacificorp, TECP, 3.1%, 2/11/1999 .... 3,700,000 A1+ 3,700,000
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $246,528,704) (a) 246,528,704
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Cost for federal income tax purposes was $246,528,704.
(b) Credit ratings (unaudited) shown are either by Moody's Investors Service,
Inc., Standard & Poor's Corporation or Scudder Kemper Investments, Inc.
(SKI).
Moody's Standard & Poor's
P1 A1/A1+ Commercial paper of the highest quality.
MIG1
MIG2 SP1/SP1+ Short-term tax-exempt instrument of the best
quality with strong protection.
VMIG1 Short-term tax-exempt variable rate demand
instrument of the best quality with strong
protection.
(c) Bond is insured by one of these companies: AMBAC, FGIC, FSA or MBIA.
Abbreviations used in the statement:
TECP Tax Exempt Commercial Paper VRDN Variable Rate Demand Note
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
Scudder Institutional Shares/Government Money Market Series
Investment Portfolio
December 31, 1998
<TABLE>
<CAPTION>
Principal
Amount ($) Value ($)
==============================================================================================================================
<S> <C> <C>
Repurchase Agreement 0.3%
- ------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreement with State Street Bank and Trust Company dated 12/31/1998
at 4.85%, to be repurchased at $412,222 on 1/4/1999, collateralized by a ------------
$410,000 U.S. Treasury Note, 5.75%, 11/15/2000 (Cost $412,000) ....................... 412,000 412,000
------------
U.S. Government Agency Obligations 99.7%
- ------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Bank, 4.84%, 1/20/1999 ............................................... 1,460,000 1,456,087
Federal Home Loan Bank, 4.86%, 1/22/1999 ............................................... 1,200,000 1,196,444
Federal Home Loan Bank, 5.0%, 1/6/1999* ................................................ 10,000,000 9,997,129
Federal Home Loan Bank, 4.96%, 3/3/1999 ................................................ 8,000,000 7,932,222
Federal Home Loan Bank, Medium Term Note, 4.96%, 10/27/1999 ............................ 5,000,000 5,000,000
Federal Home Loan Bank, Medium Term Note, 4.99%, 10/29/1999 ............................ 5,000,000 5,000,000
Federal Home Loan Bank, Variable Weekly, 4.99%, 1/5/1999* .............................. 5,000,000 4,999,624
Federal Home Loan Mortgage Corp., 4.5%, 1/4/1999 ....................................... 1,500,000 1,499,250
Federal Home Loan Mortgage Corp., 4.15%, 1/8/1999 ...................................... 2,500,000 2,497,696
Federal Home Loan Mortgage Corp., 4.84%, 1/14/1999 ..................................... 2,150,000 2,145,963
Federal Home Loan Mortgage Corp., 4.79%, 1/25/1999 ..................................... 4,000,000 3,986,747
Federal Home Loan Mortgage Corp., 4.83%, 2/2/1999 ...................................... 4,000,000 3,982,364
Federal Home Loan Mortgage Corp., 4.93%, 2/11/1999 ..................................... 3,000,000 2,982,848
Federal Home Loan Mortgage Corp., 5.04%, 2/11/1999 ..................................... 3,607,000 3,585,926
Federal Home Loan Mortgage Corp., 5.08%, 2/23/1999 ..................................... 4,000,000 3,969,731
Federal Home Loan Mortgage Corp., 4.97%, 3/11/1999 ..................................... 3,000,000 2,971,307
Federal Home Loan Mortgage Corp., 4.94%, 3/15/1999 ..................................... 3,300,000 3,266,809
Federal Home Loan Mortgage Corp., 4.99%, 3/19/1999 ..................................... 2,000,000 1,978,611
Federal Home Loan Mortgage Corp., 4.91%, 4/1/1999 ...................................... 2,982,000 2,945,471
Federal National Mortgage Association, 4.70%, 1/5/1999* ................................ 5,000,000 4,990,591
Federal National Mortgage Association, 4.97%, 1/19/1999 ................................ 4,000,000 3,989,540
Federal National Mortgage Association, 4.86%, 1/20/1999 ................................ 1,278,000 1,274,560
Federal National Mortgage Association, 4.91%, 1/22/1999 ................................ 3,000,000 2,991,022
Federal National Mortgage Association, 4.87%, 1/26/1999 ................................ 5,682,000 5,662,094
Federal National Mortgage Association, 4.97%, 2/10/1999 ................................ 4,000,000 3,977,489
Federal National Mortgage Association, 4.88%, 2/17/1999 ................................ 2,500,000 2,483,844
Federal National Mortgage Association, 4.89%, 2/19/1999 ................................ 3,577,000 3,552,851
Federal National Mortgage Association, 5.01%, 2/25/1999 ................................ 7,071,000 7,016,273
Federal National Mortgage Association, 4.96%, 3/2/1999 ................................. 2,240,000 2,221,333
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
<TABLE>
<CAPTION>
Principal
Amount ($) Value ($)
==============================================================================================================================
<S> <C> <C>
Federal National Mortgage Association, 5.07%, 3/6/1999* ................................ 3,000,000 2,996,954
Federal National Mortgage Association, 4.97%, 3/8/1999 ................................. 3,000,000 2,972,500
Federal National Mortgage Association, 4.85%, 3/9/1999 ................................. 5,000,000 4,954,635
Federal National Mortgage Association, 4.98%, 3/12/1999 ................................ 2,209,000 2,187,524
- ------------------------------------------------------------------------------------------------------------------------------
Total U.S. Government Agency Obligations (Cost $122,665,439) 122,665,439
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $123,077,439) (a) 123,077,439
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Cost for federal income tax purposes was $123,077,439.
* Floating rate security; date shown is next interest rate change.
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
Scudder Institutional Shares
Financial Statements
Statement of Assets and Liabilities
as of December 31, 1998
<TABLE>
<CAPTION>
Tax Free Government
Money Money Money
Assets Market Series Market Series Market Series
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investments, at value (for cost, see accompanying lists of
investment portfolios) ................................................. $2,214,774,516 $ 246,528,704 $ 123,077,439
Cash ..................................................................... 3,066,972 69,929 524
Receivable for Fund shares sold .......................................... 696,072 -- --
Receivable for investments sold .......................................... -- 300,000 --
Interest receivable ...................................................... 5,512,091 1,015,482 254,934
Other assets ............................................................. 49,394 32,817 46,137
--------------- ---------------- ---------------
Total assets ............................................................. 2,224,099,045 247,946,932 123,379,034
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Notes payable ............................................................ -- 1,400,000 --
Dividends payable ........................................................ 9,762,456 609,516 508,153
Accrued management fee ................................................... 225,236 23,406 10,975
Other payables and accrued expenses ...................................... 273,638 154,354 136,160
--------------- ---------------- ---------------
Total liabilities ........................................................ 10,261,330 2,187,276 655,288
- -------------------------------------------------------------------------- --------------- ---------------- ---------------
Net assets, at value $2,213,837,715 $ 245,759,656 $ 122,723,746
- -------------------------------------------------------------------------- --------------- ---------------- ---------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Managed Shares:
Net assets applicable to shares outstanding ............................ $ 327,535,036 $ 125,185,339 $ 32,754,014
Shares outstanding of capital stock, $.001 par value, 800,000,000,
500,000,000, and 1,500,000,000 shares authorized, respectively ....... 327,535,036 125,185,339 32,754,014
Net Asset Value, offering and redemption price per share (net assets / --------------- ---------------- ---------------
shares outstanding) .................................................. $1.00 $1.00 $1.00
--------------- ---------------- ---------------
Institutional Shares:
Net assets applicable to shares outstanding ............................ $1,066,389,829 $ 120,574,317 $ 89,969,732
Shares outstanding of capital stock, $.001 par value, 1,775,000,000,
500,000,000, and 1,500,000,000 shares authorized, respectively ....... 1,066,389,829 120,574,317 89,969,732
Net Asset Value, offering and redemption price per share (net assets / --------------- ---------------- ---------------
shares outstanding) .................................................. $1.00 $1.00 $1.00
--------------- ---------------- ---------------
Premium Money Market Shares:
Net assets applicable to shares outstanding ............................ $ 807,576,425
Shares outstanding of capital stock, $.001 par value, 1,180,000,000
shares authorized .................................................... 807,576,425
Net Asset Value, offering and redemption price per share (net assets / ---------------
shares outstanding) .................................................. $1.00
---------------
Prime Reserve Money Market Shares:
Net assets applicable to shares outstanding ............................ $ 12,336,425
Shares outstanding of capital stock, $.001 par value, 1,000,000,000
shares authorized .................................................... 12,336,425
Net Asset Value, offering and redemption price per share (net assets / ---------------
shares outstanding) .................................................. $1.00
---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
Scudder Institutional Shares
Financial Statements
Statement of Operations
year ended December 31, 1998
<TABLE>
<CAPTION>
Tax Free Government
Money Money Money
Investment Income Market Series Market Series Market Series
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest ............................................................ $ 92,336,668 $ 8,588,899 $ 5,677,848
---------------- ---------------- ----------------
Expenses:
Management fee ...................................................... 4,150,657 617,012 262,038
Shareholder services ................................................ 971,137 244,402 132,960
Directors' fees and expenses ........................................ 23,321 20,732 17,185
Custodian and accounting fees ....................................... 207,509 48,843 58,336
Reports to shareholders ............................................. 80,212 23,780 18,650
Auditing ............................................................ 21,692 20,702 20,324
Legal ............................................................... 20,048 16,920 4,489
Registration fees ................................................... 418,959 46,056 23,395
Interest expense .................................................... -- 49,489 --
Other ............................................................... 10,874 4,758 49,801
---------------- ---------------- ----------------
Total expenses before reductions .................................... 5,904,409 1,092,694 587,178
Expense reductions .................................................. (1,846,622) (246,650) (157,381)
---------------- ---------------- ----------------
Expenses, net ....................................................... 4,057,787 846,044 429,797
------------------------------------------------------------------- ---------------- ---------------- ----------------
Net investment income 88,278,881 7,742,855 5,248,051
------------------------------------------------------------------- ---------------- ---------------- ----------------
------------------------------------------------------------------- ---------------- ---------------- ----------------
Net increase (decrease) in net assets resulting from operations $ 88,278,881 $ 7,742,855 $ 5,248,051
------------------------------------------------------------------- ---------------- ---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
Scudder Institutional Shares
Financial Statements
Statements of Changes to Net Assets
Money Market Series
<TABLE>
<CAPTION>
Years Ended December 31,
Increase (Decrease) in Net Assets 1998 1997
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ......................................... $ 88,278,881 $ 29,622,141
---------------- ----------------
Distributions to shareholders from:
Net investment income (Managed Shares) ........................ (18,908,573) (16,811,273)
---------------- ----------------
Net investment income (Institutional Shares) .................. (38,347,244) (8,101,246)
---------------- ----------------
Net investment income (Premium Money Market Shares) ........... (30,962,225) (4,709,622)
---------------- ----------------
Net investment income (Prime Reserve Money Market Shares) ..... (60,839) --
---------------- ----------------
Fund share transactions:
Managed Shares:
Proceeds from shares sold ..................................... 1,521,267,560 1,604,556,971
Net asset value of shares issued to shareholders in
reinvestment of distributions ............................... 5,506,361 7,105,515
Cost of shares redeemed ....................................... (1,568,154,523) (1,674,045,123)
---------------- ----------------
Net increase (decrease) in net assets from Fund share
transactions ................................................ (41,380,602) (62,382,637)
---------------- ----------------
Institutional Shares:
Proceeds from shares sold ..................................... 5,884,096,724 697,521,385
Net asset value of shares issued to shareholders in
reinvestment of distributions ............................... 14,372,769 1,796,954
Cost of shares redeemed ....................................... (5,169,903,810) (361,494,193)
---------------- ----------------
Net increase (decrease) in net assets from Fund share
transactions ................................................ 728,565,683 337,824,146
---------------- ----------------
Premium Money Market Shares:
Proceeds from shares sold ..................................... 2,381,877,957 612,133,352
Net asset value of shares issued to shareholders in
reinvestment of distributions ............................... 24,053,642 2,900,558
Cost of shares redeemed ....................................... (1,933,144,105) (280,244,979)
---------------- ----------------
Net increase (decrease) in net assets from Fund share
transactions ................................................ 472,787,494 334,788,931
---------------- ----------------
Prime Reserve Money Market Shares:
Proceeds from shares sold ..................................... 15,004,074 --
Net asset value of shares issued to shareholders in
reinvestment of distributions ............................... 17,985 --
Cost of shares redeemed ....................................... (2,685,634) --
---------------- ----------------
Net increase (decrease) in net assets from Fund share
transactions ................................................ 12,336,425 --
---------------- ----------------
Increase (decrease) in net assets ............................. 1,172,309,000 610,230,440
Net assets at beginning of period ............................. 1,041,528,715 431,298,275
---------------- ----------------
Net assets at end of period ................................... $2,213,837,715 $1,041,528,715
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
Scudder Institutional Shares
Financial Statements
Statements of Changes to Net Assets
Tax Free Money Market Series
<TABLE>
<CAPTION>
Years Ended December 31,
Increase (Decrease) in Net Assets 1998 1997
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ........................................ $ 7,742,855 $ 4,112,832
---------------- ----------------
Distributions to shareholders from:
Net investment income (Managed Shares) ....................... (4,113,198) (2,806,394)
---------------- ----------------
Net investment income (Institutional Shares) ................. (3,629,657) (1,306,438)
---------------- ----------------
Fund share transactions:
Managed Shares:
Proceeds from shares sold .................................... 337,100,112 378,820,759
Net asset value of shares issued to shareholders in
reinvestment of distributions .............................. 441,218 640,423
Cost of shares redeemed ...................................... (388,875,661) (368,394,901)
---------------- ----------------
Net increase (decrease) in net assets from Fund share
transactions ............................................... (51,334,331) 11,066,281
---------------- ----------------
Institutional Shares:
Proceeds from shares sold .................................... 302,744,886 159,246,687
Net asset value of shares issued to shareholders in
reinvestment of distributions .............................. 282,144 30,480
Cost of shares redeemed ...................................... (276,158,077) (65,571,803)
---------------- ----------------
Net increase (decrease) in net assets from Fund share
transactions ............................................... 26,868,953 93,705,364
---------------- ----------------
Increase (decrease) in net assets ............................ (24,465,378) 104,771,645
Net assets at beginning of period ............................ 270,225,034 165,453,389
---------------- ----------------
Net assets at end of period .................................. $245,759,656 $270,225,034
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
Scudder Institutional Shares
Financial Statements
Statements of Changes to Net Assets
Government Money Market Series
<TABLE>
<CAPTION>
Years Ended December 31,
Increase (Decrease) in Net Assets 1998 1997
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ....................................... $ 5,248,051 $ 3,094,903
---------------- ----------------
Distributions to shareholders from:
Net investment income (Managed Shares) ...................... (1,674,220) (1,921,752)
---------------- ----------------
Net investment income (Institutional Shares) ................ (3,573,831) (1,173,151)
---------------- ----------------
Fund share transactions:
Managed Shares:
Proceeds from shares sold ................................... 196,423,665 204,615,796
Net asset value of shares issued to shareholders in
reinvestment of distributions ............................. 441,038 426,890
Cost of shares redeemed ..................................... (193,549,766) (203,521,896)
---------------- ----------------
Net increase (decrease) in net assets from Fund share
transactions .............................................. 3,314,937 1,520,790
---------------- ----------------
Institutional Shares:
Proceeds from shares sold ................................... 147,948,753 115,334,278
Net asset value of shares issued to shareholders in
reinvestment of distributions ............................. 8,814 449
Cost of shares redeemed ..................................... (112,418,897) (60,903,665)
---------------- ----------------
Net increase (decrease) in net assets from Fund share
transactions .............................................. 35,538,670 54,431,062
---------------- ----------------
Increase (decrease) in net assets ........................... 38,853,607 55,951,852
Net assets at beginning of period ........................... 83,870,139 27,918,287
---------------- ----------------
Net assets at end of period ................................. $122,723,746 $ 83,870,139
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
Scudder Institutional Shares/Money Market Series
Financial Highlights
The following table includes selected data for a share of the Managed Shares
class outstanding throughout each period and other performance information
derived from the financial statements.
Managed Shares (b)
<TABLE>
<CAPTION>
Years Ended December 31,
1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------------
Net asset value, beginning of period ......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-----------------------------------------------------------
Net investment income ........................................ .052 .051 .049 .054 .038
Distributions from net investment income ..................... (.052) (.051) (.049) (.054) (.038)
-----------------------------------------------------------
Net asset value, end of period ............................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-----------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) (a) ......................................... 5.33 5.21 4.97 5.57 3.86
Ratios and Supplemental Data
Net assets, end of period ($ millions) ....................... 328 369 431 372 367
Ratio of operating expenses, net to average daily net
assets (%) ................................................. .38 .49 .55 .55 .55
Ratio of operating expenses before expense reductions to
average daily net assets (%) ............................... .48 .59 .62 .68 .68
Ratio of net investment income to average daily net
assets (%) ................................................. 5.20 5.00 4.86 5.45 3.84
</TABLE>
(a) Total returns are higher due to maintenance of the Fund's expenses.
(b) Effective July 7, 1997, Scudder Money Market Series (formerly known as the
Managed Cash Fund) was divided into four classes, of which Scudder Money
Market Managed Shares is one. Shares of the Fund outstanding on such date
were redesignated as the Managed Shares of the Fund. The data set forth
above for the periods prior to July 17, 1997, reflects the investment
performance of the Fund prior to such redesignation.
19
<PAGE>
Scudder Institutional Shares/Money Market Series
The following table includes selected data for a share of the Institutional
Shares class outstanding throughout each period and other performance
information derived from the financial statements.
Institutional Shares
<TABLE>
<CAPTION>
For the Period
August 4, 1997
(commencement of
sale of
Institutional
Year Ended Shares) to
December 31, 1998 December 31, 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
-----------------------------------
Net asset value, beginning of period .................................................. $1.000 $1.000
-----------------------------------
Net investment income ................................................................. .054 .022
Distributions from net investment income .............................................. (.054) (.022)
-----------------------------------
Net asset value, end of period ........................................................ $1.000 $1.000
-----------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) (a) .................................................................. 5.52 2.25**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ................................................ 1,066 338
Ratio of operating expenses, net to average daily net assets (%) ...................... .18 .26*
Ratio of operating expenses before expense reductions, to average daily net
assets (%) .......................................................................... .29 .31*
Ratio of net investment income to average daily net assets (%) ........................ 5.34 5.39*
</TABLE>
(a) Total return is higher due to maintenance of the Fund's expenses.
* Annualized
** Not annualized
20
<PAGE>
Scudder Institutional Shares/Money Market Series
The following table includes selected data for a share of the Premium Money
Market Shares class outstanding throughout each period and other performance
information derived from the financial statements.
Premium Money Market Shares
<TABLE>
<CAPTION>
For the Period
July 7, 1997
(commencement of
sale of Premium
Year Ended Shares) to
December 31, 1998 December 31, 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
----------------------------------
Net asset value, beginning of period ................................................... $1.000 $1.000
----------------------------------
Net investment income .................................................................. .053 .026
Distributions from net investment income ............................................... (.053) (.026)
----------------------------------
Net asset value, end of period ......................................................... $1.000 $1.000
----------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) (a) ................................................................... 5.46 2.62**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ................................................. 808 335
Ratio of operating expenses, net to average daily net assets (%) ....................... .24 .38*
Ratio of operating expenses before expense reductions, to average daily net
assets (%) ........................................................................... .35 .43*
Ratio of net investment income to average daily net assets (%) ......................... 5.31 5.50*
</TABLE>
(a) Total return is higher due to maintenance of the Fund's expenses.
* Annualized
** Not annualized
21
<PAGE>
Scudder Institutional Shares/Money Market Series
The following table includes selected data for a share of the Prime Reserve
Money Market Shares class outstanding throughout each period and other
performance information derived from the financial statements.
Prime Reserve Money Market Shares
<TABLE>
<CAPTION>
For the Period
October 15, 1998
(commencement of
sale of Prime
Reserve Shares)
to December 31,
1998
- -----------------------------------------------------------------------------------------------------------------
<S> <C>
------------------
Net asset value, beginning of period ...................................................... $1.000
------------------
Net investment income ..................................................................... .011
Distributions from net investment income .................................................. (.011)
------------------
Net asset value, end of period ............................................................ $1.000
------------------
- -----------------------------------------------------------------------------------------------------------------
Total Return (%) (a) ...................................................................... 1.06**
Ratios and Supplemental Data
Net assets, end of period ($ millions) .................................................... 12
Ratio of operating expenses, net to average daily net assets (%) .......................... .31*
Ratio of operating expenses before expense reductions, to average daily
net assets (%) .......................................................................... .45*
Ratio of net investment income to average daily net assets (%) ............................ 4.95*
</TABLE>
(a) Total return is higher due to maintenance of the Fund's expenses.
* Annualized
** Not annualized
22
<PAGE>
Scudder Institutional Shares/Tax Free Money Market Series
Financial Highlights
The following table includes selected data for a share of the Managed Shares
class outstanding throughout each period and other performance information
derived from the financial statements.
Managed Shares (b)
<TABLE>
<CAPTION>
Years Ended December 31,
1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------------
Net asset value, beginning of period .......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-----------------------------------------------------------
Net investment income ......................................... .031 .030 .028 .032 .023
Distributions from net investment income and net realized
capital gains ............................................... (.031) (.030) (.028) (.032) (.023)
-----------------------------------------------------------
Net asset value, end of period ................................ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-----------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) .............................................. 3.10(a) 3.07(a) 2.88 3.30 2.29
Ratios and Supplemental Data
Net assets, end of period ($ millions) ........................ 125 177 165 138 125
Ratio of operating expenses, net to average daily net
assets (%) .................................................. .41 .65 .72 .79 .77
Ratio of operating expenses before expense reductions to
average daily net assets (%) ................................ .51 .74 .72 .79 .77
Ratio of net investment income to average daily net
assets (%) .................................................. 3.07 2.99 2.84 3.25 2.26
</TABLE>
(a) Total return is higher due to maintenance of the Fund's expenses.
(b) Effective July 7, 1997, Scudder Tax Free Money Market Series (formerly
known as Managed Tax-Free Fund) was divided into two classes, of which
Scudder Tax Free Money Market Managed Shares is one. Shares of the Fund
outstanding on such date were redesignated as the Managed Shares of the
Fund. The data set forth above for the periods prior to July 17, 1997,
reflects the investment performance of the Fund prior to such
redesignation.
23
<PAGE>
Scudder Institutional Shares/Tax Free Money Market Series
The following table includes selected data for a share of the Institutional
Shares class outstanding throughout each period and other performance
information derived from the financial statements.
Institutional Shares
<TABLE>
<CAPTION>
For the Period
August 4, 1997
(commencement of
sale of
Institutional
Year Ended Shares) to
December 31, 1998 December 31, 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
-------------------------------------
Net asset value, beginning of period ............................................... $1.000 $1.000
-------------------------------------
Net investment income .............................................................. .032 0.014
Distributions from net income ...................................................... (.032) (0.014)
-------------------------------------
Net asset value, end of period ..................................................... $1.000 $1.000
-------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) (a) ............................................................... 3.26 1.40**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ............................................. 121 94
Ratio of operating expenses, net to average daily net assets (%) ................... .26 .37*
Ratio of operating expenses before expense reductions, to average
daily net assets (%) ............................................................. .36 .46*
Ratio of net investment income to average daily net assets (%) ..................... 3.21 3.36*
</TABLE>
(a) Total return is higher due to maintenance of the Fund's expenses.
* Annualized
** Not annualized
24
<PAGE>
Scudder Institutional Shares/Government Money Market Series
Financial Highlights
The following table includes selected data for a share of the Managed Shares
class outstanding throughout each period and other performance information
derived from the financial statements.
Managed Shares (b)
<TABLE>
<CAPTION>
Years Ended December 31,
1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------
Net asset value, beginning of period .......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------------------------------------------------------------
Net investment income ......................................... .048 .049 .048 .054 .037
Distributions from net investment income ...................... (.048) (.049) (.048) (.054) (.037)
------------------------------------------------------------
Net asset value, end of period ................................ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) (a) .......................................... 4.89 5.02 4.91 5.49 3.75
Ratios and Supplemental Data
Net assets, end of period ($ millions) ........................ 33 29 28 50 69
Ratio of operating expenses, net to average daily net
assets (%) .................................................. .62 .55 .55 .55 .55
Ratio of operating expenses before expense reductions, to
average daily net assets (%) ................................ .77 .84 .77 .86 .84
Ratio of net investment income to average daily net
assets (%) .................................................. 4.82 4.93 4.81 5.36 3.61
</TABLE>
(a) Total return is higher due to maintenance of the Fund's expenses.
(b) Effective July 7, 1997, Scudder Government Money Market Series (formerly
known as the Managed Government Securities Fund) was divided into two
classes, of which Scudder Goverment Money Market Managed Shares is one.
Shares of the Fund outstanding on such date were redesignated as the
Managed Shares of the Fund. The data set forth above for the periods prior
to July 17, 1997, reflects the investment performance of the Fund prior to
such redesignation.
25
<PAGE>
Scudder Institutional Shares/Government Money Market Series
The following table includes selected data for a share of the Institutional
Shares class outstanding throughout the period and other performance information
derived from the financial statements.
Institutional Shares
<TABLE>
<CAPTION>
For the Period
August 4, 1997
(commencement of
sale of
Institutional
Year Ended Shares) to
December 31, 1998 December 31, 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
-----------------------------------
Net asset value, beginning of period ................................................. $1.000 $1.000
-----------------------------------
Net investment income ................................................................ .051 .022
Distributions from net investment income ............................................. (.051) (.022)
-----------------------------------
Net asset value, end of period ....................................................... $1.000 $1.000
-----------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) (a) ................................................................. 5.23 2.17**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ............................................... 90 54
Ratio of operating expenses, net to average daily net assets (%) ..................... .31 .31*
Ratio of operating expenses before expense reductions, to average
daily net assets (%) ............................................................... .46 .46*
Ratio of net investment income to average daily net assets (%) ....................... 5.10 5.21*
</TABLE>
(a) Total return is higher due to maintenance of the Fund's expenses.
* Annualized
** Not annualized
26
<PAGE>
Scudder Institutional Shares
Notes to Financial Statements
A. Significant Accounting Policies
Scudder Fund, Inc. (the "Company") is an open-end diversified management
investment company comprised of three diversified money market portfolios:
Scudder Money Market Series (formerly known as Managed Cash Fund), Scudder Tax
Free Money Market Series (formerly known as Managed Tax Free Fund), and Scudder
Government Money Market Series (formerly known as Managed Government Securities
Fund) (collectively, the "Funds"). Scudder Tax Free Money Market Series and
Scudder Government Money Market Series each offers two classes of shares,
Institutional Class and Managed Class and Scudder Money Market Series offers
four classes of shares, Institutional Class, Managed Class, Premium Money Market
Class, and Prime Reserve Money Market Class.
Security Valuation. Each of the Funds values its investments using the amortized
cost method, which involves initially valuing an investment at its cost and
thereafter assuming a constant amortization to maturity of any premium or
discount. This method results in a value approximating market.
Federal Income Taxes. The Company's policy is to qualify each Fund as a
regulated investment company under Subchapter M of the Internal Revenue Code, as
amended, and to distribute all taxable and tax-exempt income, including any
realized net capital gains, to shareholders. Therefore, no Federal income tax
provision is required.
As of December 31, 1998, the Scudder Tax Free Money Market Series Portfolio had
a net tax basis capital loss carryforward of approximately $340,000 which may be
applied against any realized net taxable gains of each succeeding year until
fully utilized or until December 31, 2002 ($26,000), December 31, 2003
($16,000), December 31, 2004 ($282,000) and December 31, 2005 ($16,000), the
respective expiration dates, whichever occurs first. In addition, as of December
31, 1998, the Scudder Government Money Market Series Fund had a net tax basis
capital loss carryforward of approximately $10,000 which may be applied against
any realized net taxable gains of each succeeding year until fully utilized or
until December 31, 2004 ($8,700) and December 31, 2005 ($1,300), the respective
expiration dates, whichever occurs first.
Dividends. Dividends from net investment income are declared each business day
to shareholders of record that day for payment on the first business day of the
following month.
Repurchase Agreements. The Company may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian,
receives delivery of the underlying securities, the amount of which at the time
of purchase and each subsequent business day is required to be maintained at
such a level that the market value is equal to at least the repurchase price.
Other. Investment transactions are recorded on trade dates. Interest income,
including the accretion or amortization of discount or premium, is recorded on
the accrual basis. Discounts or premiums on securities purchased are accreted or
amortized, respectively, on a straight line basis over the life of the
respective securities. Distributions to shareholders are recorded on the
ex-dividend dates.
B. Related Parties
Under the Investment Management Agreements (the "Management Agreement") with
Scudder Kemper Investments, Inc. ("Scudder Kemper" or the "Adviser"), the
Adviser directs the investments of each Fund in accordance with its investment
objectives, policies, and restrictions. The Adviser determines the securities,
instruments, and other contracts relating to
27
<PAGE>
investments to be purchased, sold, or entered into by each Fund. The Adviser
receives an investment management fee at an annual rate of 0.25% of average
daily net assets for each Fund. Also, the Adviser has agreed to waive a portion
of its investment management fee for each of the series. In the Money Market
Series, this waiver varied so that during the period the investment management
fee ranged from .09% to .20%. In the Tax Free Money Market Series and Government
Money Market Series, the fee was waived to the extent necessary so that the
total annualized investment management fee of the Fund does not exceed .15% and
.10%, respectively.
For the year ended December 31, 1998, the Adviser did not impose fees of
$1,846,622, $246,650, and $157,381 and did impose fees of $2,304,035, $370,362,
and $104,657 for the Money Market Series, the Tax Free Money Market Series and
the Government Money Market Series, respectively.
On September 7, 1998, Zurich Insurance Company ("Zurich"), majority owner of the
Adviser, entered into an agreement with B.A.T Industries p.l.c. ("B.A.T")
pursuant to which the financial services businesses of B.A.T were combined with
Zurich's businesses to form a new global insurance and financial services
company known as Zurich Financial Services. Upon consummation of the
transaction, the Funds' Management Agreement with Scudder Kemper was deemed to
have been assigned and, therefore, terminated. In December 1998, the Board of
Directors and the shareholders of the Fund approved a new investment management
agreement with Scudder Kemper, which is substantially identical to the former
Management Agreement, except for the dates of execution and termination.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend-paying and shareholder service agent for the Funds. Each
class of each Fund has entered into a Transfer Agency and Service Agreement with
SSC. SSC receives account fees that vary according to the account size and type
of account of the shareholders of the respective classes. For the year ended
December 31, 1998 the following amounts were charged:
<TABLE>
<CAPTION>
Tax Free Government Money
Money Market Money Market Market
Series Series Series
<S> <C> <C> <C>
Managed Class $ 244,534 $ 24,022 $ 43,998
Institutional Class 20,571 15,000 15,000
Premium Class 273,356 -- --
Prime Reserve Class 749 -- --
---------- ---------- ----------
$ 539,210 $ 39,022 $ 58,998
========== ========== ==========
</TABLE>
Each of the Funds has special arrangements with certain banks, institutions and
other persons under which they receive compensation from the Funds and the
Adviser for performing shareholder servicing functions for their customers who
own shares in the Funds. The Adviser has agreed to reimburse each Fund for
amounts payable by the Scudder Managed Class, such that the fees in basis points
paid by the class will be no greater than the total transfer agent fee payable
to SSC. For the year ended December 31, 1998, the Adviser's reimbursement
payable aggregated $234,051 for the Money Market Series, $186,935 for the Tax
Free Money Market Series, and $21,817 for the Government Money Market Series.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records for the Funds. For the year ended
December 31,
28
<PAGE>
1998, the amount charged to the Funds by SFAC aggregated $189,715 for the Money
Market Series, $44,002 for the Tax Free Money Market Series, and $36,129 for the
Government Money Market Series, of which $23,946, $4,358, and $2,848,
respectively, remain unpaid at December 31, 1998.
The Company has a compensation arrangement under which payment of directors'
fees may be deferred. Interest is accrued (based on the rate of return earned on
the 90 day Treasury Bill as determined at the beginning of each calendar
quarter) on the deferred balances and is included in "Directors' fees and
expenses." The accumulated balance of deferred directors' fees and interest
thereon relating to the Funds constituting the Company aggregated $243,692 for
the period ended December 31, 1998, an applicable portion of which is included
in accrued expenses of each such Fund.
Other. Printing and postage expenses related to preparing and distributing
material such as shareholder reports, prospectuses and proxy materials to
current shareholders are charged to each class based on number of shareholder
accounts. For the year ended December 31, 1998, the following amounts were paid:
<TABLE>
<CAPTION>
Tax Free Government Money
Money Market Money Market Market
Series Series Series
<S> <C> <C> <C>
Managed Class $ 29,625 $ 10,447 $ 9,747
Institutional Class 4,871 13,333 8,903
Premium Class 44,466 -- --
Prime Reserve Class 1,250 -- --
---------- ---------- ----------
$ 80,212 $ 23,780 $ 18,650
========== ========== ==========
</TABLE>
C. Lines of Credit
The Company and several other Scudder Funds (the "Participants") share in a $850
million revolving credit facility for temporary or emergency purposes, including
the meeting of redemption requests that otherwise might require the untimely
disposition of securities. The Participants are charged an annual commitment fee
which is allocated among each of the Participants. Interest is calculated based
on the market rates at the time of the borrowing. Each Fund may borrow up to a
maximum of 33 percent of its net assets under the agreement. In addition, each
Fund had available an uncommitted line of credit. During the year ended December
31, 1998, the Tax Free Money Market Series periodically borrowed amounts from a
bank and the weighted average outstanding daily balance of bank loans (based on
the average number of days the loans were outstanding) was approximately $2.1
million, with a weighted average interest rate of 5.98%. Interest expense for
the period ended December 31, 1998, was $49,489.
29
<PAGE>
Report of Independent Accountants
To the Board of Directors and Shareholders of Scudder Fund, Inc.
In our opinion, the accompanying statements of assets and liabilities, including
the investment portfolios, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Money Market Series, Tax Free Money
Market Series and Government Money Market Series (each a separate portfolio of
Scudder Fund, Inc., hereafter referred to as the "Fund") at December 31, 1998,
and the results of each of their operations, the changes in each of their net
assets, and the financial highlights for each of the periods indicated, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1998 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 12, 1999
30
<PAGE>
Tax Information (Unaudited)
The total amount of dividends declared in 1998 by each of the Government Money
Market Series and Money Market Series of Scudder Fund, Inc. are taxable as
ordinary dividend income for Federal income tax purposes. None of this amount
qualifies for the dividends received deduction available to corporations.
All of the dividends from the Tax Free Money Market Series of Scudder Fund, Inc.
declared in 1998 are exempt from Federal income tax. Although dividend income
from the Tax Free Money Market Series is exempt from Federal taxation, it may
not be exempt from state or local taxation. You should consult your tax advisor
as to the state and local tax status of the dividends you received.
31
<PAGE>
Stockholder Meeting Results
Money Market Series
A Special Meeting of Stockholders (the "Meeting") of Scudder Money Market Series
of Scudder Institutional Shares (the "Fund") was held on December 15, 1998, at
the office of Scudder Kemper Investments, Inc., Two International Place, Boston,
Massachusetts 02110. At the Meeting the following matters were voted upon by the
stockholders (the resulting votes for each matter are presented below).
1. To approve a new Investment Management Agreement for the Fund with Scudder
Kemper Investments, Inc.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
1,214,909,534 12,901,927 18,579,912 0
2. To approve the revision of the Fund's fundamental lending policy.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
1,184,567,392 24,984,647 36,839,334 0
- --------------------------------------------------------------------------------
* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary power
to vote on a particular matter.
32
<PAGE>
Stockholder Meeting Results
Tax Free Money Market Series
A Special Meeting of Stockholders (the "Meeting") of Scudder Tax Free Money
Market Series of Scudder Institutional Shares (the "Fund") was held on December
15, 1998, at the office of Scudder Kemper Investments, Inc., Two International
Place, Boston, Massachusetts 02110. At the Meeting the following matters were
voted upon by the stockholders (the resulting votes for each matter are
presented below).
1. To approve a new Investment Management Agreement for the Fund with Scudder
Kemper Investments, Inc.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
232,918,524 139,295 208,897 0
2. To approve the revision of the Fund's fundamental lending policy.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
232,918,524 139,295 208,897 0
- --------------------------------------------------------------------------------
* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary power
to vote on a particular matter.
33
<PAGE>
Stockholder Meeting Results
Government Money Market Series
A Special Meeting of Stockholders (the "Meeting") of Scudder Government Money
Market Series of Scudder Institutional Shares (the "Fund") was held on December
15, 1998, at the office of Scudder Kemper Investments, Inc., Two International
Place, Boston, Massachusetts 02110. At the Meeting the following matters were
voted upon by the stockholders (the resulting votes for each matter are
presented below).
1. To approve a new Investment Management Agreement for the Fund with Scudder
Kemper Investments, Inc.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
123,164,790 8,416 204,522 0
2. To approve the revision of the Fund's fundamental lending policy.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
123,099,790 73,416 204,522 0
- --------------------------------------------------------------------------------
* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary power
to vote on a particular matter.
34
<PAGE>
This Page
Intentionally
Left Blank
35
<PAGE>
About the Fund's Adviser
Scudder Kemper Investments, Inc., is one of the largest and most experienced
investment management organizations worldwide, managing more than $230 billion
in assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts.
Scudder Kemper Investments has a rich heritage of innovation, integrity, and
client-focused service. In 1997, Scudder, Stevens & Clark, Inc., founded 79
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Group. As a result, Zurich's subsidiary, Zurich Kemper Investments,
Inc., with 50 years of mutual fund and investment management experience, was
combined with Scudder. Headquartered in New York, Scudder Kemper Investments
offers a full range of investment counsel and asset management capabilities,
based on a combination of proprietary research and disciplined, long-term
investment strategies. With its global investment resources and perspective, the
firm seeks opportunities in markets throughout the world to meet the needs of
investors.
Scudder Kemper Investments, Inc., the global asset management firm, is a member
of the Zurich Group. The Zurich Group is an internationally recognized leader in
financial services, including property/casualty and life insurance, reinsurance,
and asset management.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
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