Filed electronically with the Securities and Exchange
Commission on February 26, 1999
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. 30
--------
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT No. 26
-------
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) 295-1000
-------------
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 _______________ pursuant to paragraph (b),
--------
60 days after filing pursuant to paragraph (a)(1),
--------
X on May 1, 1999 pursuant to paragraph (a)(1)
--------
75 days after filing pursuant to paragraph (a)(2)
--------
on _______________ pursuant to paragraph (a)(2) of Rule 485.
--------
Part C - Page 1
<PAGE>
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.
Scudder Cash Investment Trust
Scudder U.S. Treasury Money Fund
Scudder Tax Free Money Fund
Scudder Money Market Series
Scudder Prime Reserve Money Market Shares
Scudder Premium Money Market Shares
Prospectus
May 1, 1999
Money market mutual funds seeking to provide monthly income while maintaining
liquidity and stability of capital
Mutual funds:
o are not FDIC-insured
o have no bank guarantees
o may lose value
No-Load/No Sales Charge
"The place to plan your retirement"
<PAGE>
Contents
Money Market Investing
Investment approach
ABOUT THE FUNDS
Scudder Cash Investment Trust
Scudder U.S. Treasury Money Fund
Scudder Tax Free Money Fund
Scudder Money Market Series
Scudder Prime Reserve Money Market Shares
Scudder Premium Money Market Shares
A message from the President
Investment adviser
Distributions
Taxes
Financial highlights
ABOUT YOUR INVESTMENT
Transaction information
Buying and selling shares
Purchases
Exchanges and redemptions
Investment products and services
Money Market Investing
Investment approach
The funds presented in this prospectus is a money market mutual fund that
seeks to provide investors with monthly income while maintaining liquidity and
stability of capital. Money market funds are conservative investments. Each
invests in a diversified pool of short-term, high quality securities in an
effort to maintain a stable net asset value of $1.00 per share. Each fund
distributes income, if any, to shareholders monthly, and shareholders can
purchase or redeem shares on a daily basis, in a variety of ways. Their yields
are most affected by short-term interest rates. These funds may be appropriate
for investors who want (i) stability of principal, (ii) some checkwriting
privileges, (iii) to invest for less than three years or (iv) to invest the cash
portion of their overall portfolio. Unless otherwise indicated, each fund's
investment objectives and strategies may be changed without a vote of
shareholders.
While the objectives and policies of these funds may be similar, they have
different features, including different initial investment requirements. These
funds are presented together so you can understand their important differences
and decide which fund and class, if applicable, is most suitable for your
investment needs.
Scudder Cash Investment Trust and Scudder U.S. Treasury Money Fund is each
designed to be a highly flexible and convenient vehicles for cash investments.
The minimum initial investment in these funds is only $2,500 per account. These
funds, which can serve as a starting point for building a well-diversified
investment portfolio, provide investors with maximum flexibility, through low
checkwriting minimums and a low account balance requirement.
2
<PAGE>
Scudder Tax Free Money Fund is designed for shareholders seeking federally
tax-exempt earnings on cash investments. The minimum initial investment in this
fund is only $2,500 per account. This fund attempts to provide investors with
income at today's tax-free money market rates while maintaining stability of
principal.
Scudder Prime Reserve Money Market Shares is designed more as a savings
vehicle, particularly as a complement to bank savings accounts and other bank
products. The minimum initial investment in this class is $10,000 per account.
By requiring a larger account balance than a typical money fund, this fund
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 is 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
in this class is $25,000 per account. With this minimum, it is anticipated that
this class of shares will normally offer a higher yield than the other funds or
class presented in this prospectus.
Scudder Cash Investment Trust
Investment objectives
The fund seeks to maintain stability of capital and,
consistent therewith, to maintain liquidity of capital to
provide current income.
Main investment strategy
The fund pursues its goal by investing exclusively in a
broad range of high quality, short-term securities that are
U.S. dollar-denominated. The fund maintains a
dollar-weighted average maturity of 90 days or less.
These high quality securities include:
o obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities,
o obligations of organizations such as the World Bank,
o certain corporate and bank obligations,
o instruments whose credit has been enhanced by banks,
insurance companies or other corporate entities,
o asset-backed securities,
o municipal securities and
o securities with variable or floating interest rates.
The fund generally invests only in securities with credit
ratings in the two highest short-term categories as
determined by one or more nationally recognized rating
services. The fund may also invest in unrated securities
that its portfolio managers believe to be of comparable
quality.
In selecting securities, the fund conducts thorough credit
analyses to identify what appear to be the safest
investments. From this group, the fund then selects
individual securities
3
<PAGE>
based on the portfolio managers' perception of monetary
conditions, the available supply of appropriate investments,
and the managers' projections for short-term interest rate
movements.
A security is typically sold if it ceases to be rated or its
rating is reduced below the minimum required for purchase by
the fund, unless the fund's Board determines that selling the
security would not be in the best interests of the fund.
Other investments
To a limited extent, the fund may, but is not required to, use
other investments and techniques that could affect fund
performance.
Risk management strategies
The fund manages credit risk by investing only in high quality
securities, whose issuers are considered unlikely to default,
based on their credit rating. The fund also diversifies its
assets across a broad range of industry sectors and issuers.
Main risks
As with most money market funds, the major factor affecting
this fund's performance is short-term interest rates. If
short-term interest rates fall, the fund's yield is also
likely to fall. Moreover, the portfolio managers' strategy or
choice of specific investments may not perform as expected.
This fund may have lower returns than other funds that invest
in lower-quality securities. It is also possible that
securities in the fund's portfolio could be downgraded in
credit rating or go into default.
Your investment in this fund is not insured or guaranteed by
the FDIC or any other government agency. Although the fund
strives to maintain a $1 share price, it is possible that you
could lose money by investing in the fund.
Past performance
The chart and table below provide some indication of the risks of investing in
the fund by illustrating how the fund has performed and comparing this
information to a broad measure of market performance. Of course, past
performance is not necessarily an indication of future performance.
Total returns for years ended December 31 [Bar Graphics To Be Inserted]
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
Total Return: __% __% __% __% __% __% __% __% __% __%
- --------------------------------------------------------------------------------------------------------
Year: 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
- --------------------------------------------------------------------------------------------------------
</TABLE>
For the periods included in the bar chart, the fund's highest return for a
calendar quarter was __% [(the _ quarter of 19__)], and the fund's lowest return
for a calendar quarter was __% [(the _ quarter of 19__)].
The fund's year-to-date total return as of 3/31/99 was ___%.
To obtain the fund's current 7-day yield please call 1-800-343-2890.
4
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Average annual total returns
- ---------------------------------------------------------------------------------------
For periods ended [Performance
December 31, 1998 Fund Index Name] [Performance Index Name]
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
One Year __% __% __%
- ---------------------------------------------------------------------------------------
Five Year __% __% __%
- ---------------------------------------------------------------------------------------
Ten Year __% __% __%
- ---------------------------------------------------------------------------------------
</TABLE>
Index returns assume reinvestment of dividends and, unlike fund returns, do not
reflect any fees or expenses.
Fee and expense information
This information is designed to help you understand the fees and expenses that
you may pay if you buy and hold shares of the fund.
- --------------------------------------------------------------------------------
Shareholder Fees: Fees paid directly from your investment.
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as % of NONE
offering price)
- --------------------------------------------------------------------------------
Maximum deferred sales charge (load) NONE
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on reinvested NONE
dividends/distributions
- --------------------------------------------------------------------------------
Redemption fee (as % of amount redeemed, if applicable) NONE*
- --------------------------------------------------------------------------------
Exchange fee NONE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Annual fund operating expenses (expenses that are deducted from fund assets):
- --------------------------------------------------------------------------------
Management fee %
- --------------------------------------------------------------------------------
Distribution (12b-1) fees NONE
- --------------------------------------------------------------------------------
Other expenses %
- --------------------------------------------------------------------------------
Total annual fund operating expenses %**
- --------------------------------------------------------------------------------
Expense reimbursement %
- --------------------------------------------------------------------------------
Net expenses %**
- --------------------------------------------------------------------------------
* You may redeem by writing or calling the Fund. 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:
Exchanges and Redemptions."
** Until _____________ total fund operating expenses are contractually
maintained at _______.
Example
This example is to help you compare the cost of investing in the fund with the
cost of investing in other mutual funds.
This example illustrates the impact of the above fees and expenses on an account
with an initial investment of $10,000, based on the expenses shown above. It
assumes a 5% annual return, the reinvestment of all dividends and distributions
and "annual fund operating expenses" remaining the same each year. The expenses
would be the same whether you sold your shares at the end of each period or
continued to hold them.
- --------------------------------------------------------------------------------
One Year $___
- --------------------------------------------------------------------------------
Three Years $___
- --------------------------------------------------------------------------------
Five Years $___
- --------------------------------------------------------------------------------
Ten Years $___
- --------------------------------------------------------------------------------
Actual fund expenses and return vary from year to year, and may be higher or
lower than those shown.
5
<PAGE>
Scudder U.S. Treasury Money Fund
Investment objectives
The fund seeks to provide safety, liquidity and stability of
capital and, consistent therewith, to provide current income.
Main investment strategies
The fund pursues its goal by investing exclusively in
short-term securities unconditionally guaranteed by the U.S.
Government (as to payment of principal and interest) and
repurchase agreements backed fully by U.S. Treasury
securities. At least 80% of the fund's assets are invested in
U.S. Treasury obligations and repurchase agreements
collateralized by U.S. Treasury securities. The interest
earned on U.S. Government securities in which the fund invests
(not repurchase agreements) is typically exempt from state and
local income taxes. (However, not all states allow this
tax-exempt character of the fund's income to pass through to
shareholders, so that distributions from the fund to the
extent derived from interest that is exempt from state and
local income taxes, are exempt from such taxes when earned by
a shareholder of the fund. Shareholders should consult their
own tax advisers.) The fund only invests in U.S.
dollar-denominated securities and it maintains a
dollar-weighted average maturity of 90 days or less.
The fund selects securities based on the portfolio managers'
perception of monetary conditions, the available supply of
appropriate investments, and the managers' projections for
short-term interest rate movements. In addition, the portfolio
managers attempt to increase income and manage risk by
investing in securities of varying maturities.
Other investments
To a limited extent, the fund may, but is not required to, use
other investments and techniques that could affect fund
performance.
Risk management strategies
The fund minimizes credit risk by investing exclusively in
short-term securities unconditionally guaranteed by the U.S.
Government and repurchase agreements backed fully by U.S.
Treasury securities.
Main risks
As with most money market funds, the major factor affecting
this fund's performance is short-term interest rates. If
short-term interest rates fall, the fund's yield is also
likely to fall. Moreover, the portfolio managers' strategy or
choice of specific investments may not perform as expected.
This fund may have lower returns than other funds that invest
in lower-quality securities.
Your investment in this fund is not insured or guaranteed by
the FDIC or any other government agency. Although the fund
strives to maintain a $1 share price, it is possible that you
could lose money by investing in the fund.
6
<PAGE>
Past performance
The chart and table below provide some indication of the risks of investing in
the fund by illustrating how the fund has performed and comparing this
information to a broad measure of market performance. Of course, past
performance is not necessarily an indication of future performance. Total
returns for years ended December 31 [Bar Graphics To Be Inserted]
<TABLE>
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total Return: __% __% __% __% __% __% __% __% __% __%
- --------------------------------------------------------------------------------------------------------
Year: 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
- --------------------------------------------------------------------------------------------------------
</TABLE>
For the periods included in the bar chart, the fund's highest return for a
calendar quarter was __% [(the _ quarter of 19__)], and the fund's lowest return
for a calendar quarter was __% [(the _ quarter of 19__)].
The fund's year-to-date total return as of 3/31/99 was ___%. To obtain the
fund's current 7-day yield please call 1-800-343-2890.
- --------------------------------------------------------------------------------
Average annual total returns
- --------------------------------------------------------------------------------
For periods ended [Performance
December 31, 1998 Fund Index Name] [Performance Index Name]
- --------------------------------------------------------------------------------
One Year __% __% __%
- --------------------------------------------------------------------------------
Five Year __% __% __%
- --------------------------------------------------------------------------------
Ten Year __% __% __%
- --------------------------------------------------------------------------------
Index returns assume reinvestment of dividends and, unlike fund returns, do not
reflect any fees or expenses.
Fee and expense information
This information is designed to help you understand the fees and expenses that
you may pay if you buy and hold shares of the fund.
- --------------------------------------------------------------------------------
Shareholder Fees: Fees paid directly from your investment.
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as % of NONE
offering price)
- --------------------------------------------------------------------------------
Maximum deferred sales charge (load) NONE
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on reinvested NONE
dividends/distributions
- --------------------------------------------------------------------------------
Redemption fee (as % of amount redeemed, if applicable) NONE*
- --------------------------------------------------------------------------------
Exchange fee NONE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Annual fund operating expenses (expenses that are deducted from fund assets):
- --------------------------------------------------------------------------------
Management fee %
- --------------------------------------------------------------------------------
Distribution (12b-1) fees NONE
- --------------------------------------------------------------------------------
Other expenses %
- --------------------------------------------------------------------------------
Total annual fund operating expenses %**
- --------------------------------------------------------------------------------
Expense reimbursement %
- --------------------------------------------------------------------------------
Net Expenses %**
- --------------------------------------------------------------------------------
* You may redeem by writing or calling the Fund. 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:
Exchanges and Redemptions."
** Until _____________ total fund operating expenses are contractually
maintained at _______.
7
<PAGE>
Example
This example is to help you compare the cost of investing in the fund with the
cost of investing in other mutual funds.
This example illustrates the impact of the above fees and expenses on an account
with an initial investment of $10,000, based on the expenses shown above. It
assumes a 5% annual return, the reinvestment of all dividends and distributions
and "annual fund operating expenses" remaining the same each year. The expenses
would be the same whether you sold your shares at the end of each period or
continued to hold them.
- --------------------------------------------------------------------------------
One Year $___
- --------------------------------------------------------------------------------
Three Years $___
- --------------------------------------------------------------------------------
Five Years $___
- --------------------------------------------------------------------------------
Ten Years $___
- --------------------------------------------------------------------------------
Actual fund expenses and return vary from year to year, and may be higher or
lower than those shown.
Scudder Tax Free Money Fund
Investment objectives
The fund seeks to provide income exempt from regular federal
income tax and stability of principal through investments in
municipal securities.
Main investment strategies
While the fund normally expects to be fully invested in
municipal securities, it is a policy of the fund, which may
not be changed without a vote of shareholders, to invest at
least 80% of its assets in short-term municipal securities.
The fund maintains an average dollar-weighted maturity of 90
days or less.
The municipal securities in which the fund may invest include
municipal notes, short-term municipal bonds, variable rate
demand instruments and tax-exempt commercial paper. The fund
also may invest more than 25% of its assets in industrial
development or other private activity bonds, and, on a
temporary basis, up to 20% in cash and cash equivalents and
certain short-term taxable securities.
The fund generally invests only in securities with credit
ratings in the two highest categories as determined by two or
more nationally recognized rating services. The fund may also
invest in unrated securities that its portfolio managers
believe to be of comparable quality.
In selecting securities, the fund conducts thorough credit
analyses to identify what appear to be the safest investments.
From this group, the fund then selects individual securities
based on the portfolio managers' perception of monetary
conditions, the available supply of appropriate investments,
and the managers' projections for short-term interest rate
movements.
8
<PAGE>
A security is typically sold if it ceases to be rated or its
rating is reduced below the minimum required for purchase by
the fund, unless the fund's Board determines that selling the
security would not be in the best interests of the fund.
Other investments
The fund may use other investments and techniques that could
affect fund performance.
Risk management strategies
The fund manages credit risk by investing only in high quality
securities, whose issuers are considered unlikely to default,
based on their credit rating. The fund also diversifies its
assets across a broad range of municipal securities.
As an extreme defensive measure, the fund may invest more than
20% of its assets in cash and cash equivalents and in
temporary investments of certain short-term taxable
securities.
Main Risks
As with most money market funds, the major factor affecting
this fund's performance is short-term interest rates. If
short-term interest rates fall, the fund's yield is also
likely to fall. Moreover, the portfolio managers' strategy or
choice of specific investments may not perform as expected.
This fund may have lower returns than other funds that invest
in lower-quality securities. It is also possible that
securities in the fund's portfolio could be downgraded in
credit rating or go into default.
To the extent that the fund invests in taxable securities, a
portion of its income would be taxable. The fund's other
investment strategies entail other risks.
Your investment in this fund is not insured or guaranteed by
the FDIC or any other government agency. Although the fund
strives to maintain a $1 share price, it is possible that you
could lose money by investing in the fund.
Past performance
The chart and table below provide some indication of the risks of investing in
the fund by illustrating how the fund has performed and comparing this
information to a broad measure of market performance. Of course, past
performance is not necessarily an indication of future performance.
Total returns for years ended December 31 [Bar Graphics To Be Inserted]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total Return: __% __% __% __% __% __% __% __% __% __%
- --------------------------------------------------------------------------------------------------------
Year: 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
- --------------------------------------------------------------------------------------------------------
</TABLE>
For the periods included in the bar chart, the fund's highest return for a
calendar quarter was __% [(the _ quarter of 19__)], and the fund's lowest return
for a calendar quarter was __% [(the _ quarter of 19__)].
The fund's year-to-date total return as of 3/31/99 was ___%.
To obtain the fund's current 7-day yield please call 1-800-343-2890.
9
<PAGE>
- --------------------------------------------------------------------------------
Average annual total returns
- --------------------------------------------------------------------------------
For periods ended [Performance [Performance Index
December 31, 1998 Fund Index Name] Name]
- --------------------------------------------------------------------------------
One Year __% __% __%
- --------------------------------------------------------------------------------
Five Year __% __% __%
- --------------------------------------------------------------------------------
Ten Year __% __% __%
- --------------------------------------------------------------------------------
Index returns assume reinvestment of dividends and, unlike fund returns, do not
reflect any fees or expenses.
Fee and expense information
This information is designed to help you understand the fees and expenses that
you may pay if you buy and hold shares of the fund.
- --------------------------------------------------------------------------------
Shareholder Fees: Fees paid directly from your investment.
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as % of NONE
offering price)
- --------------------------------------------------------------------------------
Maximum deferred sales charge (load) NONE
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on reinvested NONE
dividends/distributions
- --------------------------------------------------------------------------------
Redemption fee (as % of amount redeemed, if applicable) NONE*
- --------------------------------------------------------------------------------
Exchange fee NONE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Annual fund operating expenses (expenses that are deducted from fund assets):
- --------------------------------------------------------------------------------
Management fee x.xx%
- --------------------------------------------------------------------------------
Distribution (12b-1) fees NONE
- --------------------------------------------------------------------------------
Other expenses x.xx%
- --------------------------------------------------------------------------------
Total annual fund operating expenses x.xx%**
- --------------------------------------------------------------------------------
Expense Reimbursement x.xx%
- --------------------------------------------------------------------------------
Net Expenses 0.65%**
- --------------------------------------------------------------------------------
* You may redeem by writing or calling the Fund. 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:
Exchanges and Redemptions."
** Until _____________ total fund operating expenses are contractually
maintained at _______.
Example
This example is to help you compare the cost of investing in the fund with the
cost of investing in other mutual funds.
This example illustrates the impact of the above fees and expenses on an account
with an initial investment of $10,000, based on the expenses shown above. It
assumes a 5% annual return, the reinvestment of all dividends and distributions
and "annual fund operating expenses" remaining the same each year. The expenses
would be the same whether you sold your shares at the end of each period or
continued to hold them.
- --------------------------------------------------------------------------------
One Year $___
- --------------------------------------------------------------------------------
Three Years $___
- --------------------------------------------------------------------------------
Five Years $___
- --------------------------------------------------------------------------------
Ten Years $___
- --------------------------------------------------------------------------------
Actual fund expenses and return vary from year to year, and may be higher or
lower than those shown.
10
<PAGE>
Scudder Money Market Series
Scudder Prime Reserve Money Market Shares
Scudder Premium Money Market Shares
Investment objectives
The fund seeks as high a level of current income as is
consistent with its investment policies and with preservation
of capital and liquidity.
Main investment strategies
Scudder Premium Money Market Series and Scudder Prime Reserve
Money Market Shares are both classes of Scudder Money Market
Series. The fund pursues its goal by investing exclusively in
a broad range of short-term money market instruments and
certain repurchase agreements. The fund maintains an average
dollar-weighted maturity of 90 days or less.
These money market securities consist of:
o obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities,
o taxable and tax-exempt municipal obligations,
o corporate and bank obligations,
o certificates of deposit,
o bankers' acceptances and variable amount
o master demand notes.
The fund generally invests only in securities with credit
ratings in the two highest categories as determined by one or
more nationally recognized rating services. The fund may also
invest in unrated securities that its portfolio managers
believe to be of comparable quality. Generally, the fund may
not invest less than 25% of its total assets in bank
obligations (including bank obligations subject to repurchase
agreements) that meet certain criteria. The fund has the
option of investing in U.S. dollar-denominated obligations of
foreign banks, provided certain conditions are met and the
portfolio managers believe their investment quality is
comparable to obligations of U.S. banks in which the fund may
invest.
In selecting securities, the fund conducts thorough credit
analyses to identify what appear to be the safest investments.
From this group, the fund then selects individual securities
based on the portfolio managers' perception of monetary
conditions, the available supply of appropriate investments,
and the managers' projections for short-term interest rate
movements.
A security is typically sold if it ceases to be rated or its
rating is reduced below the minimum required for purchase by
the fund, unless the fund's Board determines that selling the
security would not be in the best interests of the fund.
11
<PAGE>
Other investments
The fund may use other investments and techniques that could
affect fund performance.
Risk management strategies
The fund manages credit risk by investing only in high quality
securities, whose issuers are considered unlikely to default,
based on their credit ratings. The fund also diversifies its
assets across a broad range of industry sectors and issuers.
Main risks As with most money market funds, the major factor
affecting this fund's performance is short-term interest
rates. If short-term interest rates fall, the fund's yield is
also likely to fall. Moreover, the portfolio managers'
strategy or choice of specific investments may not perform as
expected. This fund may have lower returns than other funds
that invest in lower-quality securities. It is also possible
that securities in the fund's portfolio could be downgraded in
credit rating or go into default.
To the extent that the fund invests in obligations of foreign
banks, these investments may involve greater risks than those
affecting U.S. banks. In addition, foreign banks are not
subject to examination by any U.S. Government agency or
instrumentality.
Your investment in this fund is not insured or guaranteed by
the FDIC or any other government agency. Although the fund
strives to maintain a $1 share price, it is possible that you
could lose money by investing in the fund.
Scudder Money Market Series
Scudder Prime Reserve Shares
Past performance
As this class of shares commenced operations on October 15, 1998, no past
performance data are available.
To obtain the fund's current 7-day yield please call 1-800-343-2890.
Fee and expense information
This information is designed to help you understand the estimated fees and
expenses that you may pay if you buy and hold shares of the fund.
- --------------------------------------------------------------------------------
Shareholder Fees: Fees paid directly from your investment.
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as % of NONE
offering price)
- --------------------------------------------------------------------------------
Maximum deferred sales charge (load) NONE
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on reinvested NONE
dividends/distributions
- --------------------------------------------------------------------------------
12
<PAGE>
- --------------------------------------------------------------------------------
Redemption fee (as % of amount redeemed, if applicable) NONE*
- --------------------------------------------------------------------------------
Exchange fee NONE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Annual fund operating expenses (expenses that are deducted from fund assets):
- --------------------------------------------------------------------------------
Management fee x.xx%
- --------------------------------------------------------------------------------
Distribution (12b-1) fees NONE
- --------------------------------------------------------------------------------
Other expenses x.xx%
- --------------------------------------------------------------------------------
Total annual fund operating expenses x.xx%**
- --------------------------------------------------------------------------------
Expense Reimbursement x.xx%
- --------------------------------------------------------------------------------
Net Expenses 0.65%**
- --------------------------------------------------------------------------------
* You may redeem by writing or calling the Fund. 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:
Exchanges and Redemptions."
** Until _____________ total fund operating expenses are contractually
maintained at _______.
Example
This example is to help you compare the cost of investing in the fund with the
cost of investing in other mutual funds.
This example illustrates the impact of the above fees and expenses on an account
with an initial investment of $10,000, based on the estimated expenses shown
above. It assumes a 5% annual return, the reinvestment of all dividends and
distributions and "annual fund operating expenses" remaining the same each year.
The expenses would be the same whether you sold your shares at the end of each
period or continued to hold them.
- --------------------------------------------------------------------------------
One Year $___
- --------------------------------------------------------------------------------
Three Years $___
- --------------------------------------------------------------------------------
Scudder Money Market Series
Scudder Premium Money Market Shares
Past performance
The chart and table below provide some indication of the risks of investing in
the fund by illustrating how the fund has performed and comparing this
information to a broad measure of market performance. Of course, past
performance is not necessarily an indication of future performance.
Total returns for years ended December 31 [Bar Graphics To Be Inserted]
- ---------------------------------------------------------
Total Return: __%
- ---------------------------------------------------------
Year: 1998
- ---------------------------------------------------------
For the period included in the bar chart, the fund's highest return for a
calendar quarter was __% [(the _ quarter of 19__)], and the fund's lowest return
for a calendar quarter was __% [(the _ quarter of 19__)].
The fund's year-to-date total return as of 3/31/99 was ___%.
To obtain the fund's current 7-day yield please call 1-800-343-2890.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Average annual total returns
- -----------------------------------------------------------------------------------------------
For periods ended
December 31, 1998 Fund [Performance Index Name] [Performance Index Name]
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
One Year __% __% __%
- -----------------------------------------------------------------------------------------------
Since Inception 7/7/97 __% __% __%
- -----------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
Index returns assume reinvestment of dividends and, unlike fund returns, do not
reflect any fees or expenses.
Fee and expense information
This information is designed to help you understand the fees and expenses that
you may pay if you buy and hold Premium shares of the fund.
- --------------------------------------------------------------------------------
Shareholder Fees: Fees paid directly from your investment.
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as % of NONE
offering price)
- --------------------------------------------------------------------------------
Maximum deferred sales charge (load) NONE
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on reinvested NONE
dividends/distributions
- --------------------------------------------------------------------------------
Redemption fee (as % of amount redeemed, if applicable) NONE*
- --------------------------------------------------------------------------------
Exchange fee NONE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Annual fund operating expenses (expenses that are deducted from fund assets):
- --------------------------------------------------------------------------------
Management fee %
- --------------------------------------------------------------------------------
Distribution (12b-1) fees NONE
- --------------------------------------------------------------------------------
Other expenses %
- --------------------------------------------------------------------------------
Total annual fund operating expenses %**
- --------------------------------------------------------------------------------
Expense reimbursement %
- --------------------------------------------------------------------------------
Net Expenses %**
- --------------------------------------------------------------------------------
* You may redeem by writing or calling the Fund. 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:
Exchanges and Redemptions."
** Until _____________ total fund operating expenses are contractually
maintained at _______.
Example
This example is to help you compare the cost of investing in the fund with the
cost of investing in other mutual funds.
This example illustrates the impact of the above fees and expenses on an account
with an initial investment of $10,000, based on the expenses shown above. It
assumes a 5% annual return, the reinvestment of all dividends and distributions
and "annual fund operating expenses" remaining the same each year. The expenses
would be the same whether you sold your shares at the end of each period or
continued to hold them.
- --------------------------------------------------------------------------------
One Year $___
- --------------------------------------------------------------------------------
Three Years $___
- --------------------------------------------------------------------------------
Five Years $___
- --------------------------------------------------------------------------------
Ten Years $___
- --------------------------------------------------------------------------------
Actual fund expenses and return vary from year to year, and may be higher or
lower than those shown
Financial highlights
The financial highlights table for each fund or class is intended to help you
understand financial performance for the periods indicated. Certain information
reflects financial results for a single fund or class share. The total return
figures represent the rate that an investor would have earned (or lost) on an
investment in a fund or class assuming reinvestment of all dividends and
distributions. This information has been audited by PricewaterhouseCoopers LLP
whose report, along with financial statements, is included in each fund's annual
report, which is available upon request by calling Scudder Investor Relations at
1-800-225-2470, or, for existing investors, call the Scudder Automated
Information Line (SAIL) at 1-800-343-2890.
14
<PAGE>
Scudder Cash Investment Trust
[INSERT TABLE]
Scudder U.S. Treasury Money Fund
[INSERT TABLE]
Scudder Tax Free Money Fund
[INSERT TABLE]
Scudder Prime Reserve Money Market Shares
As this class of shares commenced operations on October 15, 1998 no past
performance data are available.
Scudder Premium Money Market Shares
[INSERT TABLE]
15
<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 $280 billion in assets globally for
mutual fund investors, retirement and pension plans, institutional and corporate
clients, and private family and individual accounts.
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 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; IRAs, 401(k)s,
Keoghs and other retirement plans are also available.
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.
The Scudder Family of Funds is offered without commissions to purchase or redeem
shares or to exchange from one fund to another. There are no distribution
(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.
Investment adviser
The funds retain the investment management firm of Scudder Kemper Investments,
Inc., the ("Adviser") Two International Place, Boston, MA, to manage each fund's
daily investment and business affairs subject to the policies established by
each fund's Board. The Adviser actively manages each fund's investment.
Professional management can be an important advantage for investors who do not
have the time or expertise to invest directly in individual securities.
Scudder Cash Investment Trust
The Adviser agreed to maintain the annualized expenses of the fund at no more
than 0.85% of the average daily net assets of the fund until _______________. As
a result, the Adviser received an investment management fee of 0.32% of the
fund's average daily net assets on an annual basis for the fiscal year ended
June 30, 1998.
Scudder U.S. Treasury Money Fund
The Adviser agreed to maintain the annualized expenses of the fund at no more
than 0.65% of the average daily net assets of the fund until _______________. As
a result, the Adviser received an investment management fee of 0.15% of the
fund's average daily net assets on an annual basis for the fiscal year ended
June 30, 1998.
Scudder Tax Free Money Fund
The Adviser agreed to maintain the annualized expenses of the fund at no more
than 0.65% of the average daily net assets of the fund until _______________. As
a result, the Adviser received an investment management fee of 0.43% of the
fund's average daily net assets on an annual basis for the fiscal year ended
December 31, 1998.
16
<PAGE>
Scudder Money Market Series
Scudder Prime Reserve Money Market Shares
Scudder Premium Money Market Shares
The Adviser agreed to waive ____% of its management fee from Scudder Money
Market Series until ____. As a result, the Adviser received a management fee of
0.20% of the average daily net assets of the fund for the fiscal year end
December 31, 1998.
Portfolio management
Each fund is managed by a team of investment professionals who each plays an
important role in a fund's management process. Team members work together to
develop investment strategies and select securities for the 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. The Adviser believes its team
approach benefits fund investors by bringing together many disciplines and
leveraging its extensive resources.
The following investment professionals are associated with the funds as
indicated:
Scudder Cash Investment Trust
- --------------------------------------------------------------------------------
Name and Title Joined the Fund Responsibilities and Background
- --------------------------------------------------------------------------------
Frank J. Rachwalski, Jr. 1998 Joined the Adviser in 1973
Lead Manager and began his investment
career at that time. He has been
responsible for the trading and
portfolio management of money
market funds since 1974.
- --------------------------------------------------------------------------------
John W. Stuebe 1998 Joined the Adviser in 1979 as
Manager a and began his investment
career at that time. He
currently specializes in and
trades for taxable,
non-government money market
funds.
- --------------------------------------------------------------------------------
Scudder U.S. Treasury Money Market Fund
- --------------------------------------------------------------------------------
Name and Title Joined the Fund Responsibilities and Background
- --------------------------------------------------------------------------------
Frank J. Rachwalski, Jr. 1998 Joined the Adviser in 1973
Lead Manager and began his investment
career at that time. He has been
responsible for the trading and
portfolio management of money
market funds since 1974.
- --------------------------------------------------------------------------------
Mitchell W. Wilner
Manager
- --------------------------------------------------------------------------------
17
<PAGE>
Scudder Tax Free Money Fund
- --------------------------------------------------------------------------------
Name and Title Joined the Fund Responsibilities and Background
- --------------------------------------------------------------------------------
Frank J. Rachwalski, Jr. 1998 Joined the Adviser in 1973
Lead Manager and began his investment
career at that time. He has been
responsible for the trading and
portfolio management of money
market funds since 1974.
- --------------------------------------------------------------------------------
Jerri I. Cohen 1998 Joined the Adviser in 1981 as
Manager an accountant and began her
investment career in 1992.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Name and Title Joined the Fund Responsibilities and Background
- --------------------------------------------------------------------------------
Frank J. Rachwalski, Jr. 1998 Joined the Adviser in 1973
Lead Manager and began his investment
career at that time. He has been
responsible for the trading and
portfolio management of money
market funds since 1974.
- --------------------------------------------------------------------------------
John W. Stuebe 1998 Joined the Adviser in 1979 as
Manager a and began his investment
career at that time. He
currently specializes in and
trades for taxable,
non-government money market
funds.
- --------------------------------------------------------------------------------
Year 2000 readiness
Like other mutual funds and financial and business organizations worldwide, the
fund could be adversely affected if computer systems on which the 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. The 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 fund's business and
operations, such as problems with calculating net asset value and difficulties
in implementing the fund's purchase and redemption procedures. The Adviser has
commenced a review of the Year 2000 issue as it may affect the 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 issuers whose securities are held by the fund or on global
markets or economies generally.
Distributions
The fund's dividends are declared daily and distributed monthly to shareholders.
Any dividends or capital gains distributions declared in October, November or
December with a record date in such 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.
Dividends ordinarily will vary from one class of Scudder Money Market Series to
another.
A shareholder may choose to receive distributions in cash or have them
reinvested in additional shares of a fund. If an investment is in the form of a
retirement plan, all dividends and capital gains distributions must be
reinvested into the shareholders' account. Distributions are generally taxable
(except for Scudder Tax Free Money Fund), whether received in cash or
reinvested. Exchanges among funds are also taxable events.
Taxes
Generally, dividends from net investment income are taxable (except for Scudder
Tax Free Money Fund) to shareholders as ordinary income. Long-term capital gains
distributions, if any, are taxable to shareholders as
18
<PAGE>
long-term capital gains, regardless of the length of time shareholders have
owned shares. Short-term capital gains and any other taxable income
distributions are taxable as ordinary income. Distributions of tax-exempt
interest income from Scudder Tax-Free Money Fund are exempt from Federal income
tax.
Unless your investment is in a tax-deferred account, you may want to avoid
investing a large amount close to the date of a distribution because you may
receive part of your investment back as a taxable distribution. A sale or
exchange of shares is a taxable event and may result in a capital gain or loss,
which may be long-term or short-term, generally depending on how long you owned
the shares.
Each fund sends detailed tax information about the amount and type of its
distributions by January 31 of the following year.
Each fund may be required to withhold U.S. federal income tax at the rate of 31%
of all taxable distributions 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 IRS that they are subject to
backup withholding. Any such withheld amounts may be credited against the
shareholder's U.S. federal income tax liability. Shareholders may be subject to
state, local and foreign taxes on fund distributions and dispositions of fund
shares. You should consult your tax advisor regarding the particular
consequences of an investment in a fund.
About Your Investment
Transaction information
Share price
Scudder Fund Accounting Corporation determines the net asset value per share for
all funds as of the close of regular trading on the New York Stock Exchange,
normally 4 p.m. eastern time, on each day the New York Stock Exchange is open
for trading. For Scudder Cash Investment Trust, Scudder U.S. Treasury Money Fund
and Scudder Tax Free Money Fund, Scudder Fund Accounting Corporation also
determines net asset value per share as of noon, eastern time, on each day the
New York Stock Exchange is open for trading.
Net asset value per share is calculated by dividing the value of total fund
assets attributable to the applicable fund or class, less all liabilities,
attributable to that fund or class, by the total number of shares outstanding of
that fund or class. In calculating the net asset value per share, Scudder Cash
Investment Trust and Scudder U.S. Treasury Money Fund use the current market
value of the securities. However, for securities with sixty days or less to
maturity, Scudder Cash Investment Trust and Scudder U.S. Treasury Money Fund use
the amortized cost value. Scudder Money Market Series and Scudder Tax Free Money
Fund use the amortized cost value in calculating the net asset value per share.
Processing time
For Scudder Cash Investment Trust, Scudder U.S. Treasury Money Fund and Scudder
Tax Free Money Fund, purchases made by wire and received by the Funds' 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
Funds' transfer agent and begin earning income on the next business day.
Redemption requests received in good order by the Funds' 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.
19
<PAGE>
For Scudder Money Market Series, 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 you should notify the Funds'
transfer agent of such a purchase by calling 1-800-225-5163.
Signature guarantees
A signature guarantee is required when you sell more than $100,000 worth of
shares. You can obtain a guarantee from most brokerage houses and financial
institutions, although not from a notary public. The 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). For more information, please call 1-800-225-5163.
Purchase restrictions
Scudder Cash Investment Trust, Scudder U.S. Treasury Money Fund, Scudder Tax
Free Money Fund and Scudder Fund, Inc., on behalf of Scudder Money Market Series
and 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.
Minimum balances - Scudder U.S. Treasury Money Fund, Scudder Cash Investment
Trust and Scudder Tax Free Money Fund
Generally, shareholders who maintain a non-fiduciary account balance of less
than $2,500 in the fund and have not established an automatic investment plan
will be assessed, an annual $10.00 per fund charge; this fee is paid to the
fund. The fund reserves the right, following 60 days written notice to
shareholders, to redeem all shares in accounts that have a value below $1,000
where such a reduction in value has occurred due to a redemption, exchange or
transfer out of the account.
Minimum balances - Scudder Prime Reserve Money Market Shares
Initial minimum investment in these shares is $10,000. Shareholders should
maintain a share balance worth at least $7,500. Account balances will be
reviewed periodically and the Adviser reserves the right, following 60 days
written notice to shareholders, to redeem all shares in accounts that have a
value below $7,500 where such a reduction in value has occurred due to a
redemption, exchange or transfer out of the account.
Minimum balances - Scudder Premium Money Market Shares
Initial minimum investment in these shares is $25,000. Shareholders should
maintain a share balance worth at least $20,000. Account balances will be
reviewed periodically and the Adviser reserves the right, following 60 days
written notice to shareholders, to redeem all shares in accounts that have a
value below $20,000 where such a reduction in value has occurred due to a
redemption, exchange or transfer out of the account.
Write-a-check
You may redeem shares of Scudder Cash Investment Trust, Scudder U.S. Treasury
Money Fund and Scudder Tax Free Money Fund by writing checks against your
account for at least $100. You may redeem shares of Scudder Prime Reserve Money
Market Shares and Scudder Premium Money Market Shares by writing checks against
your account for at least $1,000.
20
<PAGE>
Third party transactions
If you buy and sell shares of the fund through a member of the National
Association of Securities Dealers, Inc. (other than Scudder Investor Services,
Inc.), that member may charge a fee for that service.
Buying and selling shares
Please refer to the following charts for information on how to buy and sell fund
shares. Additional information, including special investment features, may be
found in the Shareholder Services Guide. For information about No-Fee IRAs, Roth
IRAs and other retirement options, call Scudder Investor Relations at
1-800-225-2470. For information on establishing 401(k) and 403(b) plans, call
Scudder Defined Contribution Services at 1-800-323-6105.
Purchases
To open an account
Minimum initial investments:
Scudder Cash Investment Trust and Scudder U.S. Treasury Money Fund: $2,500;
IRAs: $1,000
Scudder Tax-Free Money Fund: $2,500
Scudder Prime Reserve Money Market Shares: $10,000; IRAs $10,000
Scudder Premium Money Market Shares: $25,000; IRAs $25,000
- --------------------------------------------------------------------------------
By Mail Send your completed and signed application and check
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 Braintree, MA 02184
02107-2291
- --------------------------------------------------------------------------------
By Wire Call 1-800-225-5163 for instructions.
- --------------------------------------------------------------------------------
In Person Visit one of our Investor Centers to complete your
application with the help of a Scudder representative. Investor
Centers are located in Boca Raton, Boston, Chicago, New York and
San Francisco.
- --------------------------------------------------------------------------------
To buy additional shares
Minimum additional investments:
Scudder Cash Investment Trust and Scudder U.S. Treasury Money Fund: $100;
IRAs: $50
Scudder Tax-Free Money Fund: $100
Scudder Prime Reserve Money Market Shares: $1,000; IRAs $1,000
Scudder Premium Money Market Shares: $1,000; IRAs $1,000
- --------------------------------------------------------------------------------
By Mail Send a check with a Scudder investment slip, or with a
letter of instruction including your account number and the
complete fund name, to the appropriate address listed above.
- --------------------------------------------------------------------------------
By Wire Call 1-800-225-5163 for instructions.
- --------------------------------------------------------------------------------
In Person Visit one of our Investor Centers to make an additional
investment in your Scudder fund account. Investor Center
locations are listed above.
- --------------------------------------------------------------------------------
By Telephone Call 1-800-225-5163 for instructions.
- --------------------------------------------------------------------------------
By Automatic You may arrange to make investments of $50 or more on a
Investment regular basis through automatic deductions from your bank
Plan checking account. Please call 1-800-225-5163 for more
information and an enrollment form.
- --------------------------------------------------------------------------------
21
<PAGE>
Exchanges and redemptions
To exchange shares
Minimum initial investments:
Scudder Cash Investment Trust, Scudder U.S. Treasury Money Fund; and Scudder Tax
Free Money Fund: $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
- --------------------------------------------------------------------------------
By Telephone To speak with a service representative, call
1-800-225-5163 from 8 a.m. to 8 p.m. eastern time. To
access SAIL(TM), The Scudder Automated Information Line,
call 1-800-343-2890 (24 hours a day).
- --------------------------------------------------------------------------------
By Mail or Fax Print or type your instructions and include:
- the name of the fund and class 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 you are exchanging into;
- your signature(s) as it appears on your account; and
- a daytime telephone number.
Send your instructions or by express, or by
by regular mail to: registered, or fax to:
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
- --------------------------------------------------------------------------------
To sell shares
- --------------------------------------------------------------------------------
By Telephone To speak with a service representative, call
1-800-225-5163 from 8 a.m. to 8 p.m. eastern time. To
access SAIL(TM), The Scudder 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.
- --------------------------------------------------------------------------------
By Mail or Fax Send your instructions for redemption to the appropriate
address or fax number above and include:
- the name of the fund and class 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.
- --------------------------------------------------------------------------------
By Write-a- You may redeem shares of Scudder Cash Investment Trust,
Check Scudder U.S. Treasury Money Fund and Scudder Tax Free
Money Fund by writing checks against your account balance
for at least $100, but not more than $5,000,000. You may
redeem shares of SPRMMS and SPMMS by writing checks
against your account for at least $1,000, but not more
than $5,000,000.
- --------------------------------------------------------------------------------
By Automatic You may arrange to receive automatic cash payments
Withdrawal Plan periodically. Call 1-800-225-5163 for more information
and an enrollment form.
- --------------------------------------------------------------------------------
22
<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 Corporate Bond 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
23
<PAGE>
Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
Retirement Programs
- -------------------
Traditional IRA
Roth IRA
SEP-IRA
Keogh Plan
401(k), 403(b) Plans
Variable Annuities
Scudder Horizon Plan **]]
Scudder Horizon Advantage **]]]
Education Accounts
- ------------------
Education IRA
UGMA/UTMA
Closed-end funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc. Scudder Global High Income Fund, Inc.
The Brazil Fund, Inc. Scudder New Asia Fund, Inc.
The Korea Fund, Inc. Scudder New Europe Fund, Inc.
Montgomery Street Income
Securities, 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.
]]] A no-load variable annuity contract issued by Glenbrook Life and Annuity
Company and underwritten by Allstate Financial Services, Inc., sold by
Scudder's insurance agencies, 1-800-225-2470.
# These funds, advised by Scudder Kemper Investments, Inc., are traded on
the New York Stock Exchange and, in some cases, on various other stock
exchanges.
24
<PAGE>
Additional information about the fund may be found in the Statement of
Additional Information, the Shareholder Service Guide and in shareholder
reports. The Statement of Additional Information contains more detailed
information on fund investments and operations. The Shareholder Service Guide
contains more detailed information about purchases and sales of fund shares. The
semiannual and annual shareholder reports contain a discussion of the market
conditions and the investment strategies that significantly affected the fund's
performance during the last fiscal year, as well as a listing of portfolio
holdings and financial statements. These and other fund documents may be
obtained without charge from the following sources:
- --------------------------------------------------------------------------------
By phone: In person:
- --------------------------------------------------------------------------------
Call Scudder Investor Relations Public Reference Room
at 1-800-225-2470 Securities and Exchange
Or Commission,
For existing Scudder investors, call Washington, D.C.
the Scudder Automated Information Line (Call 1-800-SEC-0330 for more
(SAIL) at 1-800-343-2890 (24 hours a day). information).
- --------------------------------------------------------------------------------
By mail: By internet:
- --------------------------------------------------------------------------------
Scudder Investor Services, Inc. http://www.sec.gov
Two International Place http://www.scudder.com
Boston, MA 02110-4103
Or
Public Reference Section,
Securities and Exchange
Commission,
Washington, D.C. 20549-6009
(a duplication fee is charged)
- --------------------------------------------------------------------------------
The Statement of Additional Information is incorporated by reference into this
prospectus (is legally a part of this prospectus).
Investment Company Act file number:
Printed with SOY INK Printed on recycled paper
25
<PAGE>
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.
Scudder Institutional Shares
Scudder Government Money Market Series
Scudder Money Market Series
Scudder Tax Free Money Market Series
Prospectus
May 1, 1999
Three funds seeking to provide high money market income with preservation of
capital and liquidity through investments in different types of instruments.
Mutual funds:
o are not FDIC-insured
o have no bank guarantees
o may lose value
No-Load/No Sales Charge
"The place to plan your retirement"
<PAGE>
CONTENTS
Money Market Investing
Investment approach
Main risks
ABOUT THE FUND
Scudder Government Money Market Series
Scudder Money Market Series
Scudder Tax Free Money Market Series
A message from the President
Investment adviser
Distributions
Financial highlights
ABOUT YOUR INVESTMENT
TRANSACTION INFORMATION
BUYING AND SELLING SHARES
PURCHASES
EXCHANGES AND REDEMPTIONS
INVESTMENT PRODUCTS AND SERVICES
DIRECTORS AND OFFICERS
2
<PAGE>
MONEY MARKET INVESTING
INVESTMENT APPROACH
Each 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. In addition, Scudder Tax Free Money Market Series seeks to provide
current income that is exempt from federal income taxes. Money market funds are
conservative investments. They invest in a diversified pool of short-term, high
quality securities in an effort to maintain a stable net asset value of $1.00
per share. The funds distribute income, if any, to shareholders monthly, and
shareholders can purchase or redeem shares on a daily basis, in a variety of
ways. Their yields are most affected by short-term interest rates. These funds
may be appropriate for investors who want (i) stability of principal, (ii) to
invest for less than three years or (iii) to invest the cash portion of their
overall portfolio. Except as otherwise indicated, each fund's investment
objectives and policies may be changed without a vote of shareholders.
The Institutional Shares class of each fund is designed for institutional and
individual investors who have the resources and ability to maintain higher
account balances and, in return, may be rewarded with above average money fund
income. The minimum initial investment in each fund's Institutional Shares class
is $1,000,000 per account. By requiring larger account balances, each fund
strives to reduce the impact of fixed recordkeeping and other costs on overall
expenses of this class of shares, leading to potentially higher returns for
Institutional Shares shareholders.
MAIN FACTORS
There are market and investment risks with any security. The value of an
investment in the funds will fluctuate over time and it is possible to lose
money invested in the funds.
As with most money market funds, the major factor affecting these funds'
performance is short-term interest rates. If short-term interest rates fall, the
funds' yield is also likely to fall.
The portfolio management team's skill in choosing appropriate investments for
the funds will determine in large part the funds' ability to achieve their
respective investment objectives. The portfolio managers' strategy or choice of
specific investments may not perform as expected. The funds may have lower
returns than other funds that invest in lower-quality securities. It is also
possible that securities in the funds' portfolios could be downgraded in credit
rating or go into default.
There is a possibility that the rising prices of goods and services may have the
effect of offsetting a fund's real return.
3
<PAGE>
Your investment in this fund is not insured or guaranteed by the FDIC or any
other government agency. Although the fund strives to maintain a $1 share price,
it is possible that you could lose money by investing in the fund.
4
<PAGE>
ABOUT THE FUNDS
SCUDDER MONEY MARKET SERIES
Investment objective
The fund seeks as high a level of current income as is consistent with its
investment policies and with preservation of capital and liquidity. Unless
otherwise indicated, the fund's investment objective and policies may be changed
without a vote of the shareholders.
Main investment strategies
The fund pursues its goal by investing exclusively in a broad range of
short-term money market instruments and certain repurchase agreements. The fund
maintains an average dollar-weighted maturity of 90 days or less.
These money market securities consist of:
o obligations issued or guaranteed by the U.S. Government or its agencies or
o instrumentalities,
o taxable and tax-exempt municipal obligations,
o corporate and bank obligations,
o certificates of deposit,
o bankers' acceptances and
o variable amount master demand notes.
The fund generally invests only in securities with credit ratings in the two
highest categories as determined by one or more nationally recognized rating
services. The fund may also invest in unrated securities that its portfolio
managers believe to be of comparable quality. Generally, the fund may not invest
less than 25% of its total assets in bank obligations (including bank
obligations subject to repurchase agreements) that meet certain criteria. In
addition, the fund has the option of investing in U.S. dollar-denominated
obligations of foreign banks, provided certain conditions are met and the
portfolio managers believe their investment quality is comparable to obligations
of U.S. banks in which the fund may invest.
In selecting securities, the fund conducts thorough credit analyses to identify
what appear to be the safest investments. From this group, the fund then selects
individual securities based on the portfolio managers' perception of monetary
conditions, the available supply of appropriate investments, and the managers'
projections for short-term interest rate movements.
5
<PAGE>
A security is typically sold if it ceases to be rated or its rating is reduced
below the minimum required for purchase by the fund, unless the fund's Board
determines that selling the security would not be in the best interests of the
fund.
Of course, there can be no guarantee that by following these investment
strategies, the fund will achieve its objective.
Other investments
To a more limited extent, the fund may, but is not required to, utilize other
investments and investment techniques that may impact fund performance,
including, but not limited to, options, futures and derivatives (financial
instruments that derive their values from other securities or commodities that
are based on indices).
Risk management strategies
The fund manages credit risk by investing only in high quality securities, whose
issuers are considered unlikely to default, based on their credit rating. The
fund also diversifies its assets across a broad range of industry sectors and
issuers.
For temporary defensive purposes, the fund may invest without limit in cash and
cash equivalents. In such a case, the fund would not be pursuing, and may not
achieve, its investment objective.
The fund may, but is not required to, use certain derivatives in an attempt to
manage risk. The use of derivatives could magnify losses.
Main risks
The fund's principal risks are associated with investing in the money market,
the investment manager's skill in managing the fund's portfolio, and inflation.
You will find a discussion of these risks under "Money Market Investing" at the
front of this prospectus.
A portion of the fund's assets may be invested outside the U.S. Foreign
investments, particularly investments in emerging markets, carry added risks due
to inadequate or inaccurate financial information about companies, potential
political disturbances and fluctuations in currency exchange rates. In addition,
foreign banks are not subject to examination by any U.S. Government agency or
instrumentality.
6
<PAGE>
Past performance
The chart and table below provide some indication of the risks of investing in
the fund by illustrating how the fund has performed and comparing this
information to a broad measure of market performance. Of course, past
performance is not necessarily an indication of future performance.
Total returns for years ended December 31 [Bar Graphics to be inserted]
For the period(s) included in the bar chart, the fund's highest return for a
calendar quarter was __% [(the _ quarter of 19__)], and the fund's lowest return
for a calendar quarter was __% [(the _ quarter of 19__)].
The fund's year-to-date total return as of 3/31/99 was __%.
Index returns assume reinvestment of dividends and, unlike fund returns, do not
reflect any fees or expenses.
7
<PAGE>
Fee and expense information
The following information is designed to help you understand the fees and
expenses that you may pay if you buy and hold shares of the fund.
- --------------------------------------------------------------------------------
Shareholder Fees: Fees paid directly from your investment.
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as % of NONE
offering price)
- --------------------------------------------------------------------------------
Maximum deferred sales charge (load) NONE
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on reinvested NONE
dividends/distribution
- --------------------------------------------------------------------------------
Redemption fee (as % of amount redeemed, if applicable) NONE*
- --------------------------------------------------------------------------------
Exchange fee NONE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Annual fund operating expenses (expenses that are deducted from fund assets):
- --------------------------------------------------------------------------------
Management fee x.xx%
- --------------------------------------------------------------------------------
Distribution (12b-1) fees NONE
- --------------------------------------------------------------------------------
Other expenses x.xx%
- --------------------------------------------------------------------------------
Total annual fund operating expenses x.xx%
- --------------------------------------------------------------------------------
*You may redeem by writing or calling the Fund. 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-
Exchanges or redemptions."
Example
This example is to help you compare the cost of investing in the fund with the
cost of investing in other mutual funds. This example illustrates the impact of
the above fees and expenses on an account with an initial investment of $10,000,
based on the expenses shown above. It assumes a 5% annual return, the
reinvestment of all dividends and distributions and "annual fund operating
expenses" remaining the same each year. The expenses would be the same whether
you sold your shares at the end of each period or continued to hold them.
- --------------------------------------------------------------------------------
One Year $ xx
- --------------------------------------------------------------------------------
Three Years $xxx
- --------------------------------------------------------------------------------
Five Years $xxx
- --------------------------------------------------------------------------------
Ten Years $xxx
- --------------------------------------------------------------------------------
Actual fund expenses and return vary from year to year, and may be higher or
lower than those shown.
8
<PAGE>
SCUDDER TAX FREE MONEY MARKET SERIES
Investment objective
The fund seeks as high a level of current income that cannot be subjected to
federal income taxes as is consistent with its investment policies and with
preservation of capital and liquidity. Unless otherwise indicated, the fund's
investment objective and policies may be changed without a vote of shareholders.
Main investment strategies
The fund pursues its goal by investing primarily in high-quality municipal
obligations the interest on which is exempt from federal income taxes. The fund
maintains an average dollar-weighted maturity of 90 days or less. Under normal
market conditions, the fund will maintain at least 80% of its total assets in
obligations that are exempt from federal income tax and are not subject to the
alternative minimum tax. (This policy may not be changed without the approval of
a majority of the outstanding shares of the fund.)
The fund generally invests only in securities with credit ratings in the two
highest categories as determined by one or more nationally recognized rating
services. The fund may also invest in unrated securities that its portfolio
managers believe to be of comparable quality. In addition, the fund has the
option of investing 25% or more of its total assets in municipal obligations
that are related in such a way that a development or change in one obligation
may also affect its other obligations.
In selecting securities, the fund conducts thorough credit analyses to identify
what appear to be the safest investments. From this group, the fund then selects
individual securities based on the portfolio managers' perception of monetary
conditions, the available supply of appropriate investments, and the managers'
projections for short-term interest rate movements.
A security is typically sold if it ceases to be rated or its rating is reduced
below the minimum required for purchase by the fund, unless the fund's Board
determines that selling the security would not be in the best interests of the
fund.
Of course, there can be no guarantee that by following these investment
strategies, the fund will achieve its objective.
Other investments
To a more limited extent, the fund may, but is not required to, utilize other
investments and investment techniques that may impact fund performance,
including, but not limited to, options, futures and derivatives (financial
instruments that derive their values from other securities or commodities that
are based on indices).
9
<PAGE>
Risk management strategies
The fund manages credit risk by investing only in high quality securities, whose
issuers are considered unlikely to default, based on their credit rating. The
fund also diversifies its assets across a broad range of municipal securities.
For temporary defensive purposes, the fund may invest without limit in cash and
cash equivalents. In such a case, the fund would not be pursuing, and may not
achieve, its investment objective.
The fund may, but is not required to, use certain derivatives in an attempt to
manage risk. The use of derivatives could magnify losses.
Main risks
The fund's principal risks are associated with investing in the money market,
the investment manager's skill in managing the fund's portfolio, and inflation.
You will find a discussion of these risks under "Money Market Investing" at the
front of this prospectus.
To the extent that the fund invested in taxable securities, a portion of its
income would be taxable. The fund's other investment strategies entail other
risks.
10
<PAGE>
Past performance
The chart and table below provide some indication of the risks of investing in
the fund by illustrating how the fund has performed and comparing this
information to a broad measure of market performance. Of course, past
performance is not necessarily an indication of future performance.
Total returns for years ended December 31 [Bar Graphics to be inserted]
For the period(s) included in the bar chart, the fund's highest return for a
calendar quarter was __% [(the _ quarter of 19__)], and the fund's lowest return
for a calendar quarter was __% [(the _ quarter of 19__)].
The fund's year-to-date total return as of 3/31/99 was __%.
Index returns assume reinvestment of dividends and, unlike fund returns, do not
reflect any fees or expenses.
11
<PAGE>
Fee and expense information
The following information is designed to help you understand the fees and
expenses that you may pay if you buy and hold shares of the fund.
- --------------------------------------------------------------------------------
Shareholder Fees: Fees paid directly from your investment.
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as % of NONE
offering price)
- --------------------------------------------------------------------------------
Maximum deferred sales charge (load) NONE
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on reinvested NONE
dividends/distribution
- --------------------------------------------------------------------------------
Redemption fee (as % of amount redeemed, if applicable) NONE*
- --------------------------------------------------------------------------------
Exchange fee NONE*
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Annual fund operating expenses (expenses that are deducted from fund assets):
- --------------------------------------------------------------------------------
Management fee x.xx%
- --------------------------------------------------------------------------------
Distribution (12b-1) fees NONE
- --------------------------------------------------------------------------------
Other expenses x.xx%
- --------------------------------------------------------------------------------
Total annual fund operating expenses x.xx%
- --------------------------------------------------------------------------------
*You may redeem by writing or calling the Fund. 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-
Exchanges or redemptions."
Example
This example is to help you compare the cost of investing in the fund with the
cost of investing in other mutual funds.
This example illustrates the impact of the above fees and expenses on an account
with an initial investment of $10,000, based on the expenses shown above. It
assumes a 5% annual return, the reinvestment of all dividends and distributions
and "annual fund operating expenses" remaining the same each year. The expenses
would be the same whether you sold your shares at the end of each period or
continued to hold them.
- --------------------------------------------------------------------------------
One Year $ xx
- --------------------------------------------------------------------------------
Three Years $xxx
- --------------------------------------------------------------------------------
Five Years $xxx
- --------------------------------------------------------------------------------
Ten Years $xxx
- --------------------------------------------------------------------------------
Actual fund expenses and return vary from year to year, and may be higher or
lower than those shown.
12
<PAGE>
SCUDDER GOVERNMENT MONEY MARKET SERIES
Investment objective
The fund seeks as high a level of current income as is consistent with its
investment policies and with preservation of capital and liquidity. Unless
otherwise indicated, the fund's investment objective and policies may be changed
without a vote of the shareholders.
Main investment strategies
The fund pursues its goal by investing exclusively in obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities and
certain repurchase agreements. The fund maintains an average dollar-weighted
maturity of 90 days or less.
The fund selects individual securities based on the portfolio managers'
perception of monetary conditions, the available supply of appropriate
investments, and the managers' projections for short-term interest rate
movements. In addition, the portfolio managers attempt to increase income and
manage risk by investing in securities of varying maturities.
Of course, there can be no guarantee that by following these investment
strategies, the fund will achieve its objective.
Risk management strategies
The fund manages credit risk by investing primarily in obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities.
For temporary defensive purposes, the fund may invest without limit in cash and
cash equivalents. In such a case, the fund would not be pursuing, and may not
achieve, its investment objective.
The fund may, but is not required to, use certain derivatives in an attempt to
manage risk. The use of derivatives could magnify losses.
Main risks
The fund's principal risks are associated with investing in the money market,
the investment manager's skill in managing the fund's portfolio, and inflation.
You will find a discussion of these risks under "Money Market Investing" at the
front of this prospectus.
13
<PAGE>
Past performance
The chart and table below provide some indication of the risks of investing in
the fund by illustrating how the fund has performed and comparing this
information to a broad measure of market performance. Of course, past
performance is not necessarily an indication of future performance.
Total returns for years ended December 31 [Bar Graphics to be inserted]
For the period(s) included in the bar chart, the fund's highest return for a
calendar quarter was __% [(the _ quarter of 19__)], and the fund's lowest return
for a calendar quarter was __% [(the _ quarter of 19__)].
The fund's year-to-date total return as of 3/31/99 was __%.
Index returns assume reinvestment of dividends and, unlike fund returns, do not
reflect any fees or expenses.
14
<PAGE>
Fee and expense information
This information is designed to help you understand the fees and expenses that
you may pay if you buy and hold Scudder shares of the fund.
- --------------------------------------------------------------------------------
Shareholder Fees: Fees paid directly from your investment.
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as % of NONE
offering price)
- --------------------------------------------------------------------------------
Maximum deferred sales charge (load) NONE
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on reinvested NONE
dividends/distribution
- --------------------------------------------------------------------------------
Redemption fee (as % of amount redeemed, if applicable) NONE*
- --------------------------------------------------------------------------------
Exchange fee NONE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Annual fund operating expenses (expenses that are deducted from fund assets):
- --------------------------------------------------------------------------------
Management fee x.xx%
- --------------------------------------------------------------------------------
Distribution (12b-1) fees NONE
- --------------------------------------------------------------------------------
Other expenses x.xx%
- --------------------------------------------------------------------------------
Total annual fund operating expenses x.xx%
- --------------------------------------------------------------------------------
*You may redeem by writing or calling the Fund. 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-
Exchanges or redemptions."
Example
This example is to help you compare the cost of investing in the fund with the
cost of investing in other mutual funds.
This example illustrates the impact of the above fees and expenses on an account
with an initial investment of $10,000, based on the expenses shown above. It
assumes a 5% annual return, the reinvestment of all dividends and distributions
and "annual fund operating expenses" remaining the same each year. The expenses
would be the same whether you sold your shares at the end of each period or
continued to hold them.
- --------------------------------------------------------------------------------
One Year $ xx
- --------------------------------------------------------------------------------
Three Years $xxx
- --------------------------------------------------------------------------------
Five Years $xxx
- --------------------------------------------------------------------------------
Ten Years $xxx
- --------------------------------------------------------------------------------
Actual fund expenses and return vary from year to year, and may be higher or
lower than those shown.
15
<PAGE>
Financial highlights
The financial highlights table is intended to help you understand the fund's
financial performance for the periods indicated. Certain information reflects
financial results for a single fund share. The total return figures represent
the rate that an investor would have earned (or lost) on an investment in the
fund assuming reinvestment of all dividends and distributions. This information
has been audited by PricewaterhouseCoopers LLP whose report, along with the
fund's financial statements, is included in the annual report, which is
available upon request by calling Scudder Investor Relations at 1-800-225-2470,
or, for existing investors, call the Scudder Automated Information Line (SAIL)
at 1-800-343-2890.
[INSERT TABLES]
16
<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 $280 billion in assets globally for
mutual fund investors, retirement and pension plans, institutional and corporate
clients, and private family and individual accounts. 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 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; IRAs, 401(k)s,
Keoghs and other retirement plans are also available.
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.
The Scudder Family of Funds is offered without commissions to purchase or redeem
shares or to exchange from one fund to another. There are no distribution
(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.
Investment adviser
For Scudder Government Money Market Series, for the fiscal year ended December
31, 1998, the Adviser received an investment management fee of x.xx% of the
fund's average daily net assets.
For Scudder Money Market Series, for the fiscal year ended December 31, 1998,
the Adviser received an investment management fee of x.xx% of the fund's average
daily net assets.
For Scudder Tax Free Money Market Series, for the fiscal year ended December 31,
1998, the Adviser received an investment management fee of x.xx% of the fund's
average daily net assets.
Portfolio management
The fund is managed by a team of investment professionals who each plays an
important role in the fund's management process. Team members work together to
develop investment strategies and select securities for the 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. The Adviser believes its
17
<PAGE>
team approach benefits fund investors by bringing together many disciplines and
leveraging its extensive resources. The following investment professionals are
associated with the funds as indicated:
- --------------------------------------------------------------------------------
Name and Title Joined Responsibilities and Background
the Funds
- --------------------------------------------------------------------------------
Frank J. Rachwalski, Jr. 19__ Mr. Rachwalski joined the
Lead Manager Adviser in 1973 as a money
market specialist. Mr.
Rachwalski has been responsible
for the trading and portfolio
management of money market
funds since 1974. He began his
investment career in 1973.
- --------------------------------------------------------------------------------
John W. Steube 19__ Mr. Steube joined the Adviser
Manager in 1979 as a fixed income
trader. Mr. Steube specializes
in taxable, non-government
money market funds. He began
his investment career in 1979.
- --------------------------------------------------------------------------------
Mitchell W. Wilner 19__ Mr. Wilner joined the Adviser
Manager in 1992 as a fixed income
research analyst. He began his
investment career in 1987.
- --------------------------------------------------------------------------------
Jerri I. Cohen 19__ Ms. Cohen joined the Adviser in
Manager 1981 as a money fund accounting
supervisor. Ms. Cohen has been
responsible for investing
tax-exempt money market funds
since 1992. She began her
investment career in 1981.
- --------------------------------------------------------------------------------
Year 2000 readiness
Like other mutual funds and financial and business organizations worldwide, the
fund could be adversely affected if computer systems on which the 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. The 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 fund's business and
operations, such as problems with calculating net asset value and difficulties
in implementing the fund's
18
<PAGE>
purchase and redemption procedures. The Adviser has commenced a review of the
Year 2000 issue as it may affect the 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
issuers whose securities are held by the fund or on global markets or economies
generally.
Distributions
Any dividends or capital gains distributions declared in October, November or
December with a record date in such month and paid during the following January
will be treated by you for federal income tax purposes as if received on
December 31 of the calendar year declared.
You may choose to receive distributions in cash or have them reinvested in
additional shares of a fund. Exchanges among funds are also taxable events.
Taxes
Generally, dividends from net investment income are taxable to you as ordinary
income. Long-term capital gains distributions, if any, are taxable to you
long-term capital gains, regardless of how long you have owned the shares.
Short-term capital gains and any other taxable income distributions are taxable
to you as ordinary income. A portion of dividends from ordinary income may
qualify for the dividends-received deduction for corporations.
Unless your investment is in a tax-deferred account, you may want to avoid
investing a large amount close to the date of a distribution because you may
receive part of your investment back as a taxable distribution.
A sale or exchange of your shares is a taxable event and may result in a capital
gain or loss which may be long-term or short-term, generally depending on how
long you owned the shares.
The fund sends you detailed tax information about the amount and type of its
distributions by January 31 of the following year.
The fund may be required to withhold U.S. federal income tax at the rate of 31%
of all taxable distributions payable to you if you fail to provide the fund with
your correct taxpayer identification number or to make required certifications,
or who have been notified by the IRS that they are subject to backup
withholding. Any such withheld amounts may be credited against the your U.S.
federal income tax liability.
19
<PAGE>
You may be subject to state, local and foreign taxes on fund distributions and
dispositions of fund shares. You should consult your tax advisor regarding the
particular consequences of an investment in the fund.
20
<PAGE>
About Your Investment
Transaction information
Share price
Scudder Fund Accounting Corporation determines the net asset value per share of
Scudder Tax Free Money Market Series as of 2 p.m. and, for Scudder Money Market
Series and Scudder Government Money Market Series as of the close of regular
trading on the New York Stock Exchange, normally 4 p.m. eastern time, on each
day the New York Stock Exchange is open for trading. Net asset value per share
is calculated by dividing the value of total fund assets attributable to the
applicable fund or class, less all liabilities, attributable to that fund or
class, by the total number of shares outstanding for that fund or class. Market
prices are used to determine the value of the fund's assets. If market prices
are not readily available for a security or if a security's price is not
considered to be market indicative, that security may be valued by another
method that the Board or its delegate believes accurately reflects fair value.
In those circumstances where a security's price is not considered to be market
indicative, the security's valuation may differ from an available market
quotation.
Processing time
All purchase and redemption requests received in good order at the fund's
transfer agent by the close of regular trading on the New York Stock Exchange
are executed at the net asset value per share calculated at the close of trading
that day. All other requests that are in good order will be executed the
following business day.
Signature guarantees
A signature guarantee is required when you sell more than $100,000 worth of
shares. You can obtain a guarantee from most brokerage houses and financial
institutions, although not from a notary public. The 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). For more information, please call 1-800-225-5163.
Purchase restrictions
Scudder Money Market Series, Scudder Tax Free Money Market Series, Scudder
Government Money Market Series and Scudder Investor Services, Inc. each reserves
the right to reject purchases of shares (including exchanges) for any reason.
Minimum balances
Generally, shareholders who maintain a non-fiduciary account balance of less
than $100,000 in the fund and have not established an automatic investment plan
will be assessed, an annual $10.00 per fund charge; this fee is paid to the
fund. The fund reserves the right, following 60 days written notice to
shareholders, to redeem all shares in accounts that have a value below $100,000
where such a reduction in value has occurred due to a redemption, exchange or
transfer out of the account.
21
<PAGE>
Third party transactions
If you buy and sell shares of the fund through a member of the National
Association of Securities Dealers, Inc. (other than Scudder Investor Services,
Inc.), that member may charge a fee for that service.
Buying and selling shares
Please refer to the following charts for information on how to buy and sell fund
shares. Additional information, including special investment features, may be
found in the Shareholder Services Guide. For information about No-Fee IRAs, Roth
IRAs and other retirement options, call Scudder Investor Relations at
1-800-225-2470. For information on establishing 401(k) and 403(b) plans, call
Scudder Defined Contribution Services at 1-800-323-6105.
Purchases
To open an account
Minimum initial investments:
Scudder Cash Investment Trust and Scudder U.S. Treasury Money Fund: $2,500;
IRAs: $1,000
Scudder Tax-Free Money Fund: $2,500
Scudder Prime Reserve Money Market Shares: $10,000; IRAs $10,000
Scudder Premium Money Market Shares: $25,000; IRAs $25,000
Scudder Money Market Series, Scudder Tax Free Money Market Series, and Scudder
Government Money Market Series: $100,000; IRAs $100,000
- --------------------------------------------------------------------------------
By Mail Send your completed and signed application and check
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 Braintree, MA 02184
02107-2291
- --------------------------------------------------------------------------------
By Wire Call 1-800-225-5163 for instructions.
- --------------------------------------------------------------------------------
In Person Visit one of our Investor Centers to complete your application
with the help of a Scudder representative. Investor Centers are
located in Boca Raton, Boston, Chicago, New York and San
Francisco.
- --------------------------------------------------------------------------------
To buy additional shares
Minimum additional investments:
Scudder Cash Investment Trust and Scudder U.S. Treasury Money Fund: $100;
IRAs: $50
Scudder Tax-Free Money Fund: $100
Scudder Prime Reserve Money Market Shares: $1,000; IRAs $1,000
Scudder Premium Money Market Shares: $1,000; IRAs $1,000
22
<PAGE>
- --------------------------------------------------------------------------------
By Mail Send a check with a Scudder investment slip, or with a
letter of instruction including your account number and the
complete fund name, to the appropriate address listed above.
- --------------------------------------------------------------------------------
By Wire Call 1-800-225-5163 for instructions.
- --------------------------------------------------------------------------------
In Person Visit one of our Investor Centers to make an additional
investment in your Scudder fund account. Investor Center
locations are listed above.
- --------------------------------------------------------------------------------
By Telephone Call 1-800-225-5163 for instructions.
- --------------------------------------------------------------------------------
By Automatic You may arrange to make investments of $50 or more on a
Investment regular basis through automatic deductions from your bank
Plan checking account. Please call 1-800-225-5163 for more
information and an enrollment form.
- --------------------------------------------------------------------------------
Exchanges and redemptions
To exchange shares
The minimum investments are $2,500 to establish a new account and $100 to
exchange among existing accounts.
Minimum initial investments:
Scudder Cash Investment Trust, Scudder U.S. Treasury Money Fund; and Scudder Tax
Free Money Fund: $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
- --------------------------------------------------------------------------------
By Telephone To speak with a service representative, call 1-800-225-5163
from 8 a.m. to 8 p.m. eastern time. To access SAIL(TM), The
Scudder Automated Information Line, call 1-800-343-2890 (24
hours a day).
- --------------------------------------------------------------------------------
By Mail Print or type your instructions and include:
or Fax - the name of the fund and class 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 you are exchanging into;
- your signature(s) as it appears on your account; and
- a daytime telephone number.
Send your instructions or by express, or by fax to:
by regular mail to: registered, 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
- --------------------------------------------------------------------------------
To sell shares
- --------------------------------------------------------------------------------
By Telephone To speak with a service representative, call
1-800-225-5163 from 8 a.m. to 8 p.m. eastern time. To
access SAILTM, The Scudder 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.
- --------------------------------------------------------------------------------
By Mail or Fax Send your instructions for redemption to the
appropriate address or fax number above and include:
- the name of the fund and class and account number
you are redeeming from;
- --------------------------------------------------------------------------------
23
<PAGE>
- --------------------------------------------------------------------------------
- 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.
- --------------------------------------------------------------------------------
By Automatic You may arrange to receive automatic cash payments
Withdrawal Plan periodically. Call 1-800-225-5163 for more information
and an enrollment form.
- --------------------------------------------------------------------------------
24
<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 Corporate Bond 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
25
<PAGE>
Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
Retirement Programs
- -------------------
Traditional IRA
Roth IRA
SEP-IRA
Keogh Plan
401(k), 403(b) Plans
Variable Annuities
Scudder Horizon Plan **]]
Scudder Horizon Advantage **]]]
Education Accounts
- ------------------
Education IRA
UGMA/UTMA
Closed-end funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc. Scudder Global High Income Fund, Inc.
The Brazil Fund, Inc. Scudder New Asia Fund, Inc.
The Korea Fund, Inc. Scudder New Europe Fund, Inc.
Montgomery Street Income
Securities, 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.
]]] A no-load variable annuity contract issued by Glenbrook Life and Annuity
Company and underwritten by Allstate Financial Services, Inc., sold by
Scudder's insurance agencies, 1-800-225-2470.
# These funds, advised by Scudder Kemper Investments, Inc., are traded on
the New York Stock Exchange and, in some cases, on various other stock
exchanges.
26
<PAGE>
Additional information about the fund may be found in the Statement of
Additional Information, the Shareholder Service Guide and in shareholder
reports. The Statement of Additional Information contains more detailed
information on fund investments and operations. The Shareholder Service Guide
contains more detailed information about purchases and sales of fund shares. The
semiannual and annual shareholder reports contain a discussion of the market
conditions and the investment strategies that significantly affected the fund's
performance during the last fiscal year, as well as a listing of portfolio
holdings and financial statements. These and other fund documents may be
obtained without charge from the following sources:
- --------------------------------------------------------------------------------
By phone: In person:
- --------------------------------------------------------------------------------
Call Scudder Investor Relations Public Reference Room
at 1-800-225-2470 Securities and Exchange
Or Commission,
For existing Scudder investors, call Washington, D.C.
the Scudder Automated Information Line (Call 1-800-SEC-0330 for more
(SAIL) at 1-800-343-2890 (24 hours a day). information).
- --------------------------------------------------------------------------------
By mail: By internet:
- --------------------------------------------------------------------------------
Scudder Investor Services, Inc. http://www.sec.gov
Two International Place http://www.scudder.com
Boston, MA 02110-4103
Or
Public Reference Section,
Securities and Exchange
Commission,
Washington, D.C. 20549-6009
(a duplication fee is charged)
- --------------------------------------------------------------------------------
The Statement of Additional Information is incorporated by reference into this
prospectus (is legally a part of this prospectus).
Investment Company Act file number:
Printed with SOY INK Printed on recycled paper
27
<PAGE>
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.
Scudder Managed Shares
Scudder Government Money Market Series
Scudder Money Market Series
Scudder Tax Free Money Market Series
Prospectus
May 1, 1999
These funds seek to provide high money market income with preservation of
capital and liquidity through investments in different types of instruments.
Mutual funds:
o are not FDIC-insured
o have no bank guarantees
o may lose value
No-Load/No Sales Charge
"The place to plan your retirement"
<PAGE>
CONTENTS
Money Market Investing
Investment approach
Main risks
ABOUT THE FUND
Scudder Government Money Market Series
Scudder Money Market Series
Scudder Tax Free Money Market Series
A message from the President
Investment adviser
Distributions
Financial highlights
ABOUT YOUR INVESTMENT
TRANSACTION INFORMATION
BUYING AND SELLING SHARES
PURCHASES
EXCHANGES AND REDEMPTIONS
INVESTMENT PRODUCTS AND SERVICES
DIRECTORS AND OFFICERS
2
<PAGE>
MONEY MARKET INVESTING
INVESTMENT APPROACH
Each 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. In addition, Scudder Tax Free Money Market Series seeks to provide
current income that is exempt from federal income taxes. Money market funds are
conservative investments. They invest in a diversified pool of short-term, high
quality securities in an effort to maintain a stable net asset value of $1.00
per share. The funds distribute income, if any, to shareholders monthly, and
shareholders can purchase or redeem shares on a daily basis, in a variety of
ways. Their yields are most affected by short-term interest rates. These funds
may be appropriate for investors who want (i) stability of principal, (ii) some
checkwriting privileges, (iii) to invest for less than three years or (iv) to
invest the cash portion of their overall portfolio. Except as otherwise
indicated, each fund's investment objectives and policies may be changed without
a vote of shareholders.
The Managed Shares class of each fund is designed for investors who have the
resources and ability to maintain higher account balances and, in return, may be
rewarded with above average money fund income. The minimum initial investment in
each fund's Managed Shares class is $100,000 per account. By requiring larger
account balances, each fund strives to reduce the impact of fixed recordkeeping
and other costs on overall expenses of this class of shares, leading to
potentially higher returns for Managed Shares shareholders.
MAIN RISKS
There are market and investment risks with any security. The value of an
investment in the funds will fluctuate over time and it is possible to lose
money invested in the funds.
As with most money market funds, the major factor affecting these funds'
performance is short-term interest rates. If short-term interest rates fall, the
funds' yield is also likely to fall.
The portfolio management team's skill in choosing appropriate investments for
the funds will determine in large part the funds' ability to achieve their
respective investment objectives. The portfolio managers' strategy or choice of
specific investments may not perform as expected. The funds may have lower
returns than other funds that invest in lower-quality securities. It is also
possible that securities in the funds' portfolios could be downgraded in credit
rating or go into default.
There is a possibility that the rising prices of goods and services may have the
effect of offsetting a fund's real return.
3
<PAGE>
Your investment in this fund is not insured or guaranteed by the FDIC or any
other government agency. Although the fund strives to maintain a $1 share price,
it is possible that you could lose money by investing in the fund.
4
<PAGE>
ABOUT THE FUNDS
SCUDDER MONEY MARKET SERIES
Investment objective
The fund seeks as high a level of current income as is consistent with its
investment policies and with preservation of capital and liquidity. Unless
otherwise indicated, the fund's investment objective and policies may be changed
without a vote of the shareholders.
Main investment strategies
The fund pursues its goal by investing exclusively in a broad range of
short-term money market instruments and certain repurchase agreements. The fund
maintains an average dollar-weighted maturity of 90 days or less.
These money market securities consist of:
o obligations issued or guaranteed by the U.S. Government or its agencies or
o instrumentalities,
o taxable and tax-exempt municipal obligations,
o corporate and bank obligations,
o certificates of deposit,
o bankers' acceptances and
o variable amount master demand notes.
The fund generally invests only in securities with credit ratings in the two
highest categories as determined by one or more nationally recognized rating
services. The fund may also invest in unrated securities that its portfolio
managers believe to be of comparable quality. Generally, the fund may not invest
less than 25% of its total assets in bank obligations (including bank
obligations subject to repurchase agreements) that meet certain criteria. In
addition, the fund has the option of investing in U.S. dollar-denominated
obligations of foreign banks, provided certain conditions are met and the
portfolio managers believe their investment quality is comparable to obligations
of U.S. banks in which the fund may invest.
In selecting securities, the fund conducts thorough credit analyses to identify
what appear to be the safest investments. From this group, the fund then selects
individual securities based on the portfolio managers' perception of monetary
conditions, the available supply of appropriate investments, and the managers'
projections for short-term interest rate movements.
5
<PAGE>
A security is typically sold if it ceases to be rated or its rating is reduced
below the minimum required for purchase by the fund, unless the fund's Board
determines that selling the security would not be in the best interests of the
fund.
Of course, there can be no guarantee that by following these investment
strategies, the fund will achieve its objective.
Other investments
To a more limited extent, the fund may, but is not required to, utilize other
investments and investment techniques that may impact fund performance,
including, but not limited to, options, futures and derivatives (financial
instruments that derive their values from other securities or commodities that
are based on indices).
Risk management strategies
The fund manages credit risk by investing only in high quality securities, whose
issuers are considered unlikely to default, based on their credit rating. The
fund also diversifies its assets across a broad range of industry sectors and
issuers.
For temporary defensive purposes, the fund may invest without limit in cash and
cash equivalents. In such a case, the fund would not be pursuing, and may not
achieve, its investment objective.
The fund may, but is not required to, use certain derivatives in an attempt to
manage risk. The use of derivatives could magnify losses.
Main risks
The fund's principal risks are associated with investing in the money market,
the investment manager's skill in managing the fund's portfolio, and inflation.
You will find a discussion of these risks under "Money Market Investing" at the
front of this prospectus.
A portion of the fund's assets may be invested outside the U.S. Foreign
investments, particularly investments in emerging markets, carry added risks due
to inadequate or inaccurate financial information about companies, potential
political disturbances and fluctuations in currency exchange rates. In addition,
foreign banks are not subject to examination by any U.S. Government agency or
instrumentality.
6
<PAGE>
Past performance
The chart and table below provide some indication of the risks of investing in
the fund by illustrating how the fund has performed and comparing this
information to a broad measure of market performance. Of course, past
performance is not necessarily an indication of future performance.
Total returns for years ended December 31 [Bar Graphics to be inserted]
For the period(s) included in the bar chart, the fund's highest return for a
calendar quarter was __% [(the _ quarter of 19__)], and the fund's lowest return
for a calendar quarter was __% [(the _ quarter of 19__)].
The fund's year-to-date total return as of 3/31/99 was __%.
Index returns assume reinvestment of dividends and, unlike fund returns, do not
reflect any fees or expenses.
7
<PAGE>
Fee and expense information
The following information is designed to help you understand the fees and
expenses that you may pay if you buy and hold shares of the fund.
- --------------------------------------------------------------------------------
Shareholder Fees: Fees paid directly from your investment.
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as % of NONE
offering price)
- --------------------------------------------------------------------------------
Maximum deferred sales charge (load) NONE
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on reinvested NONE
dividends/distribution
- --------------------------------------------------------------------------------
Redemption fee (as % of amount redeemed, if applicable) NONE*
- --------------------------------------------------------------------------------
Exchange fee NONE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Annual fund operating expenses (expenses that are deducted from fund assets):
- --------------------------------------------------------------------------------
Management fee x.xx%
- --------------------------------------------------------------------------------
Distribution (12b-1) fees NONE
- --------------------------------------------------------------------------------
Other expenses x.xx%
- --------------------------------------------------------------------------------
Total annual fund operating expenses x.xx%
- --------------------------------------------------------------------------------
*You may redeem by writing or calling the Fund. 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-
Exchanges or redemptions."
Example
This example is to help you compare the cost of investing in the fund with the
cost of investing in other mutual funds.
This example illustrates the impact of the above fees and expenses on an account
with an initial investment of $10,000, based on the expenses shown above. It
assumes a 5% annual return, the reinvestment of all dividends and distributions
and "annual fund operating expenses" remaining the same each year. The expenses
would be the same whether you sold your shares at the end of each period or
continued to hold them.
- --------------------------------------------------------------------------------
One Year $ xx
- --------------------------------------------------------------------------------
Three Years $xxx
- --------------------------------------------------------------------------------
Five Years $xxx
- --------------------------------------------------------------------------------
Ten Years $xxx
- --------------------------------------------------------------------------------
Actual fund expenses and return vary from year to year, and may be higher or
lower than those shown.
8
<PAGE>
SCUDDER TAX FREE MONEY MARKET SERIES
Investment objective
The fund seeks as high a level of current income that cannot be subjected to
federal income taxes as is consistent with its investment policies and with
preservation of capital and liquidity. Unless otherwise indicated, the fund's
investment objective and policies may be changed without a vote of shareholders.
Main investment strategies
The fund pursues its goal by investing primarily in high-quality municipal
obligations the interest on which is exempt from federal income taxes. The fund
maintains an average dollar-weighted maturity of 90 days or less. Under normal
market conditions, the fund will maintain at least 80% of its total assets in
obligations that are exempt from federal income tax and are not subject to the
alternative minimum tax. (This policy may not be changed without the approval of
a majority of the outstanding shares of the fund.)
The fund generally invests only in securities with credit ratings in the two
highest categories as determined by one or more nationally recognized rating
services. The fund may also invest in unrated securities that its portfolio
managers believe to be of comparable quality. In addition, the fund has the
option of investing 25% or more of its total assets in municipal obligations
that are related in such a way that a development or change in one obligation
may also affect its other obligations.
In selecting securities, the fund conducts thorough credit analyses to identify
what appear to be the safest investments. From this group, the fund then selects
individual securities based on the portfolio managers' perception of monetary
conditions, the available supply of appropriate investments, and the managers'
projections for short-term interest rate movements.
A security is typically sold if it ceases to be rated or its rating is reduced
below the minimum required for purchase by the fund, unless the fund's Board
determines that selling the security would not be in the best interests of the
fund.
Of course, there can be no guarantee that by following these investment
strategies, the fund will achieve its objective.
Other investments
To a more limited extent, the fund may, but is not required to, utilize other
investments and investment techniques that may impact fund performance,
including, but not limited to, options, futures and derivatives (financial
instruments that derive their values from other securities or commodities that
are based on indices).
9
<PAGE>
Risk management strategies
The fund manages credit risk by investing only in high quality securities, whose
issuers are considered unlikely to default, based on their credit rating. The
fund also diversifies its assets across a broad range of municipal securities.
For temporary defensive purposes, the fund may invest without limit in cash,
cash equivalents, or taxable securities. In such a case, the fund would not be
pursuing, and may not achieve, its investment objective.
The fund may, but is not required to, use certain derivatives in an attempt to
manage risk. The use of derivatives could magnify losses.
Main risks
The fund's principal risks are associated with investing in the money market,
the investment manager's skill in managing the fund's portfolio, and inflation.
You will find a discussion of these risks under "Money Market Investing" at the
front of this prospectus.
To the extent that the fund invested in taxable securities, a portion of its
income would be taxable. The fund's other investment strategies entail other
risks.
10
<PAGE>
Past performance
The chart and table below provide some indication of the risks of investing in
the fund by illustrating how the fund has performed and comparing this
information to a broad measure of market performance. Of course, past
performance is not necessarily an indication of future performance.
Total returns for years ended December 31 [Bar Graphics to be inserted]
For the period(s) included in the bar chart, the fund's highest return for a
calendar quarter was __% [(the _ quarter of 19__)], and the fund's lowest return
for a calendar quarter was __% [(the _ quarter of 19__)].
The fund's year-to-date total return as of 3/31/99 was __%.
Index returns assume reinvestment of dividends and, unlike fund returns, do not
reflect any fees or expenses.
11
<PAGE>
Fee and expense information
The following information is designed to help you understand the fees and
expenses that you may pay if you buy and hold shares of the fund.
- --------------------------------------------------------------------------------
Shareholder Fees: Fees paid directly from your investment.
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as % of
offering price) NONE
- --------------------------------------------------------------------------------
Maximum deferred sales charge (load) NONE
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on reinvested
dividends/distribution NONE
- --------------------------------------------------------------------------------
Redemption fee (as % of amount redeemed, if applicable) NONE*
- --------------------------------------------------------------------------------
Exchange fee NONE*
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Annual fund operating expenses (expenses that are deducted from fund assets):
- --------------------------------------------------------------------------------
Management fee x.xx%
- --------------------------------------------------------------------------------
Distribution (12b-1) fees NONE
- --------------------------------------------------------------------------------
Other expenses x.xx%
- --------------------------------------------------------------------------------
Total annual fund operating expenses x.xx%
- --------------------------------------------------------------------------------
*You may redeem by writing or calling the Fund. 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-
Exchanges or redemptions."
Example
This example is to help you compare the cost of investing in the fund with the
cost of investing in other mutual funds.
This example illustrates the impact of the above fees and expenses on an account
with an initial investment of $10,000, based on the expenses shown above. It
assumes a 5% annual return, the reinvestment of all dividends and distributions
and "annual fund operating expenses" remaining the same each year. The expenses
would be the same whether you sold your shares at the end of each period or
continued to hold them.
- --------------------------------------------------------------------------------
One Year $ xx
- --------------------------------------------------------------------------------
Three Years $xxx
- --------------------------------------------------------------------------------
Five Years $xxx
- --------------------------------------------------------------------------------
Ten Years $xxx
- --------------------------------------------------------------------------------
Actual fund expenses and return vary from year to year, and may be higher or
lower than those shown.
12
<PAGE>
SCUDDER GOVERNMENT MONEY MARKET SERIES
Investment objective
The fund seeks as high a level of current income as is consistent with its
investment policies and with preservation of capital and liquidity. Unless
otherwise indicated, the fund's investment objective and policies may be changed
without a vote of the shareholders.
Main investment strategies
The fund pursues its goal by investing exclusively in obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities and
certain repurchase agreements. The fund maintains an average dollar-weighted
maturity of 90 days or less.
The fund selects individual securities based on the portfolio managers'
perception of monetary conditions, the available supply of appropriate
investments, and the managers' projections for short-term interest rate
movements. In addition, the portfolio managers attempt to increase income and
manage risk by investing in securities of varying maturities.
Of course, there can be no guarantee that by following these investment
strategies, the fund will achieve its objective.
Other investments
To a more limited extent, the fund may, but is not required to, utilize other
investments and investment techniques that may impact fund performance,
including, but not limited to, options, futures and derivatives (financial
instruments that derive their values from other securities or commodities that
are based on indices).
Risk management strategies
The fund manages credit risk by investing primarily in obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities.
For temporary defensive purposes, the fund may invest up to 100% of assets in
cash, cash equivalents, or taxable securities. In such a case, the fund would
not be pursuing, and may not achieve, its investment objective.
The fund may, but is not required to, use certain derivatives in an attempt to
manage risk. The use of derivatives could magnify losses.
Main risks
The fund's principal risks are associated with investing in the money market,
the investment manager's skill in managing the fund's portfolio, and inflation.
You will find a discussion of these risks under "Money Market Investing" at the
front of this prospectus.
13
<PAGE>
To the extent that the fund invested in taxable securities, a portion of its
income would be taxable. The fund's other investment strategies entail other
risks.
14
<PAGE>
Past performance
The chart and table below provide some indication of the risks of investing in
the fund by illustrating how the fund has performed and comparing this
information to a broad measure of market performance. Of course, past
performance is not necessarily an indication of future performance.
Total returns for years ended December 31 [Bar Graphics to be inserted]
For the period(s) included in the bar chart, the fund's highest return for a
calendar quarter was __% [(the _ quarter of 19__)], and the fund's lowest return
for a calendar quarter was __% [(the _ quarter of 19__)].
The fund's year-to-date total return as of 3/31/99 was __%.
Index returns assume reinvestment of dividends and, unlike fund returns, do not
reflect any fees or expenses.
15
<PAGE>
Fee and expense information
This information is designed to help you understand the fees and expenses that
you may pay if you buy and hold Scudder shares of the fund.
- --------------------------------------------------------------------------------
Shareholder Fees: Fees paid directly from your investment.
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as % of NONE
offering price)
- --------------------------------------------------------------------------------
Maximum deferred sales charge (load) NONE
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on reinvested NONE
dividends/distribution
- --------------------------------------------------------------------------------
Redemption fee (as % of amount redeemed, if applicable) NONE*
- --------------------------------------------------------------------------------
Exchange fee NONE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Annual fund operating expenses (expenses that are deducted from fund assets):
- --------------------------------------------------------------------------------
Management fee x.xx%
- --------------------------------------------------------------------------------
Distribution (12b-1) fees NONE
- --------------------------------------------------------------------------------
Other expenses x.xx%
- --------------------------------------------------------------------------------
Total annual fund operating expenses x.xx%
- --------------------------------------------------------------------------------
*You may redeem by writing or calling the Fund. 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-
Exchanges or redemptions."
Example
This example is to help you compare the cost of investing in the fund with the
cost of investing in other mutual funds. This example illustrates the impact of
the above fees and expenses on an account with an initial investment of $10,000,
based on the expenses shown above. It assumes a 5% annual return, the
reinvestment of all dividends and distributions and "annual fund operating
expenses" remaining the same each year. The expenses would be the same whether
you sold your shares at the end of each period or continued to hold them.
- --------------------------------------------------------------------------------
One Year $ xx
- --------------------------------------------------------------------------------
Three Years $xxx
- --------------------------------------------------------------------------------
Five Years $xxx
- --------------------------------------------------------------------------------
Ten Years $xxx
- --------------------------------------------------------------------------------
Actual fund expenses and return vary from year to year, and may be higher or
lower than those shown.
16
<PAGE>
Financial highlights
The financial highlights table is intended to help you understand the fund's
financial performance for the periods indicated. Certain information reflects
financial results for a single fund share. The total return figures represent
the rate that an investor would have earned (or lost) on an investment in the
fund assuming reinvestment of all dividends and distributions. This information
has been audited by PricewaterhouseCoopers LLP whose report, along with the
fund's financial statements, is included in the annual report, which is
available upon request by calling Scudder Investor Relations at 1-800-225-2470,
or, for existing investors, call the Scudder Automated Information Line (SAIL)
at 1-800-343-2890.
[INSERT TABLES]
17
<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 $280 billion in assets globally for
mutual fund investors, retirement and pension plans, institutional and corporate
clients, and private family and individual accounts. 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 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;
IRAs, 401(k)s, Keoghs and other retirement plans are also available. 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. The Scudder Family of Funds is offered without commissions to purchase
or redeem shares or to exchange from one fund to another. There are no
distribution (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.
Investment adviser
The fund retains the investment management firm of Scudder Kemper Investments,
Inc., the ("Adviser"), Two International Place, Boston, MA, to manage the fund's
daily investment and business affairs subject to the policies established by the
Board of Trustees. The Adviser actively manages your investment in the fund.
Professional management can be an important advantage for investors who do not
have the time or expertise to invest directly in individual securities.
For Scudder Government Money Market Series, for the fiscal year ended December
31, 1998, the Adviser received an investment management fee of x.xx% of the
fund's average daily net assets.
For Scudder Money Market Series, for the fiscal year ended December 31, 1998,
the Adviser received an investment management fee of x.xx% of the fund's average
daily net assets.
For Scudder Tax Free Money Market Series, for the fiscal year ended December 31,
1998, the Adviser received an investment management fee of x.xx% of the fund's
average daily net assets.
18
<PAGE>
Portfolio management
The fund is managed by a team of investment professionals who each plays an
important role in the fund's management process. Team members work together to
develop investment strategies and select securities for the 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. The Adviser believes its team
approach benefits fund investors by bringing together many disciplines and
leveraging its extensive resources.
The following investment professionals are associated with the fund[s] as
indicated:
- --------------------------------------------------------------------------------
Name and Title Joined the Responsibilities and Background
Funds
- --------------------------------------------------------------------------------
Frank J. Rachwalski, Jr. 19__ Mr. Rachwalski joined the Adviser in
Lead Manager 1973 as a money market specialist.
Mr. Rachwalski has been responsible
for the trading and portfolio
management of money market funds
since 1974. He began his investment
career in 1973.
- --------------------------------------------------------------------------------
John W. Steube 19__ Mr. Steube joined the Adviser in
Manager 1979 as a fixed income trader. Mr.
Steube specializes in taxable,
nbon-government money market funds.
He began his investment career in
1979.
- --------------------------------------------------------------------------------
Mitchell W. Wilner 19__ Mr. Wilner joined the Adviser in 1992
Manager as a fixed income research analyst.
He began his investment career in
1987(?).
- --------------------------------------------------------------------------------
Jerri I. Cohen 19__ Ms. Cohen joined the Adviser in 1981
Manager as a money fund accounting
supervisor. Ms. Cohen has been
responsible for investing tax-exempt
money market funds since 1992. She
began her investment career in
1981(?).
- --------------------------------------------------------------------------------
19
<PAGE>
Year 2000 readiness
Like other mutual funds and financial and business organizations worldwide, the
fund could be adversely affected if computer systems on which the 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. The 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 fund's business and
operations, such as problems with calculating net asset value and difficulties
in implementing the fund's purchase and redemption procedures. The Adviser has
commenced a review of the Year 2000 issue as it may affect the 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 issuers whose securities are held by the fund or on global
markets or economies generally.
Distributions
Any dividends or capital gains distributions declared in October, November or
December with a record date in such month and paid during the following January
will be treated by you for federal income tax purposes as if received on
December 31 of the calendar year declared. You may choose to receive
distributions in cash or have them reinvested in additional shares of a fund.
Exchanges among funds are also taxable events.
Taxes
Generally, dividends from net investment income are taxable to you as ordinary
income. Long-term capital gains distributions, if any, are taxable to you
long-term capital gains, regardless of how long you have owned the shares.
Short-term capital gains and any other taxable income distributions are taxable
to you as ordinary income. A portion of dividends from ordinary income may
qualify for the dividends-received deduction for corporations.
Unless your investment is in a tax-deferred account, you may want to avoid
investing a large amount close to the date of a distribution because you may
receive part of your investment back as a taxable distribution.
A sale or exchange of your shares is a taxable event and may result in a capital
gain or loss which may be long-term or short-term, generally depending on how
long you owned the shares.
20
<PAGE>
The fund sends you detailed tax information about the amount and type of its
distributions by January 31 of the following year.
The fund may be required to withhold U.S. federal income tax at the rate of 31%
of all taxable distributions payable to you if you fail to provide the fund with
your correct taxpayer identification number or to make required certifications,
or who have been notified by the IRS that they are subject to backup
withholding. Any such withheld amounts may be credited against the your U.S.
federal income tax liability.
You may be subject to state, local and foreign taxes on fund distributions and
dispositions of fund shares. You should consult your tax advisor regarding the
particular consequences of an investment in the fund.
21
<PAGE>
About Your Investment
Transaction information
Share price
Scudder Fund Accounting Corporation determines the net asset value per share of
Scudder Tax Free Money Market Series as of 2 p.m. and, for Scudder Money Market
Series and Scudder Government Money Market Series as of the close of regular
trading on the New York Stock Exchange, normally 4 p.m. eastern time, on each
day the New York Stock Exchange is open for trading. Net asset value per share
is calculated by dividing the value of total fund assets attributable to the
applicable fund or class, less all liabilities, attributable to that fund or
class, by the total number of shares outstanding for that fund or class. Market
prices are used to determine the value of the fund's assets. If market prices
are not readily available for a security or if a security's price is not
considered to be market indicative, that security may be valued by another
method that the Board or its delegate believes accurately reflects fair value.
In those circumstances where a security's price is not considered to be market
indicative, the security's valuation may differ from an available market
quotation.
Processing time
All purchase and redemption requests received in good order at the fund's
transfer agent by the close of regular trading on the New York Stock Exchange
are executed at the net asset value per share calculated at the close of trading
that day. All other requests that are in good order will be executed the
following business day.
Signature guarantees
A signature guarantee is required when you sell more than $100,000 worth of
shares. You can obtain a guarantee from most brokerage houses and financial
institutions, although not from a notary public. The 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). For more information, please call 1-800-225-5163.
Purchase restrictions
Scudder Money Market Series, Scudder Tax Free Money Market Series, Scudder
Government Money Market Series and Scudder Investor Services, Inc. each reserves
the right to reject purchases of shares (including exchanges) for any reason.
Minimum balances
Generally, shareholders who maintain a non-fiduciary account balance of less
than $100,000 in the fund and have not established an automatic investment plan
will be assessed, an annual $10.00 per fund charge; this fee is paid to the
fund. The fund reserves the right, following 60 days written notice to
shareholders, to redeem all shares in accounts that have a value below $100,000
where such a reduction in value has occurred due to a redemption, exchange or
transfer out of the account.
22
<PAGE>
Third party transactions
If you buy and sell shares of the fund through a member of the National
Association of Securities Dealers, Inc. (other than Scudder Investor Services,
Inc.), that member may charge a fee for that service.
Buying and selling shares
Please refer to the following charts for information on how to buy and sell fund
shares. Additional information, including special investment features, may be
found in the Shareholder Services Guide. For information about No-Fee IRAs, Roth
IRAs and other retirement options, call Scudder Investor Relations at
1-800-225-2470. For information on establishing 401(k) and 403(b) plans, call
Scudder Defined Contribution Services at 1-800-323-6105.
Purchases
To open an account
Minimum initial investments:
Scudder Cash Investment Trust and Scudder U.S. Treasury Money Fund: $2,500;
IRAs: $1,000
Scudder Tax-Free Money Fund: $2,500
Scudder Prime Reserve Money Market Shares: $10,000; IRAs $10,000
Scudder Premium Money Market Shares: $25,000; IRAs $25,000
Scudder Money Market Series, Scudder Tax Free Money Market Series, and Scudder
Government Money Market Series: $100,000; IRAs $100,000
- --------------------------------------------------------------------------------
By Mail Send your completed and signed application and check
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 Braintree, MA 02184
02107-2291
- --------------------------------------------------------------------------------
By Wire Call 1-800-225-5163 for instructions.
- --------------------------------------------------------------------------------
In Person Visit one of our Investor Centers to complete your
application with the help of a Scudder representative. Investor
Centers are located in Boca Raton, Boston, Chicago, New York and
San Francisco.
- --------------------------------------------------------------------------------
To buy additional shares
Minimum additional investments:
Scudder Cash Investment Trust and Scudder U.S. Treasury Money Fund: $100;
IRAs: $50
Scudder Tax-Free Money Fund: $100
Scudder Prime Reserve Money Market Shares: $1,000; IRAs $1,000
Scudder Premium Money Market Shares: $1,000; IRAs $1,000
23
<PAGE>
- --------------------------------------------------------------------------------
By Mail Send a check with a Scudder investment slip, or with a
letter of instruction including your account number and the
complete fund name, to the appropriate address listed above.
- --------------------------------------------------------------------------------
By Wire Call 1-800-225-5163 for instructions.
- --------------------------------------------------------------------------------
In Person Visit one of our Investor Centers to make an additional investment
in your Scudder fund account. Investor Center locations are listed
above.
- --------------------------------------------------------------------------------
By Telephone Call 1-800-225-5163 for instructions.
- --------------------------------------------------------------------------------
By Automatic You may arrange to make investments of $50 or more on a regular
Investment basis through automatic deductions from your bank checking
Plan account. Please call 1-800-225-5163 for more information and an
enrollment form.
- --------------------------------------------------------------------------------
Exchanges and redemptions
To exchange shares
The minimum investments are $2,500 to establish a new account and $100 to
exchange among existing accounts.
Minimum initial investments:
Scudder Cash Investment Trust, Scudder U.S. Treasury Money Fund; and Scudder Tax
Free Money Fund: $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
- --------------------------------------------------------------------------------
By Telephone To speak with a service representative, call 1-800-225-5163 from 8
a.m. to 8 p.m. eastern time. To access SAIL(TM), The Scudder
Automated Information Line, call 1-800-343-2890 (24 hours a day).
- --------------------------------------------------------------------------------
By Mail Print or type your instructions and include:
or Fax - the name of the fund and class 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 you are exchanging into;
- your signature(s) as it appears on your account; and
- a daytime telephone number.
Send your instructions or by express, or by fax to:
by regular mail to: registered, 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
- --------------------------------------------------------------------------------
To sell shares
- --------------------------------------------------------------------------------
By Telephone To speak with a service representative, call
1-800-225-5163 from 8 a.m. to 8 p.m. eastern time. To access
SAIL(TM), The Scudder 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.
- --------------------------------------------------------------------------------
By Mail or Fax Send your instructions for redemption to the appropriate
address or fax number above and include:
- the name of the fund and class and account number you are
redeeming from;
24
<PAGE>
- --------------------------------------------------------------------------------
- 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.
- --------------------------------------------------------------------------------
By Automatic You may arrange to receive automatic cash payments
Withdrawal Plan periodically. Call 1-800-225-5163 for more information and
an enrollment form.
- --------------------------------------------------------------------------------
25
<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 Corporate Bond 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
26
<PAGE>
Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
Retirement Programs
- -------------------
Traditional IRA
Roth IRA
SEP-IRA
Keogh Plan
401(k), 403(b) Plans
Variable Annuities
Scudder Horizon Plan **]]
Scudder Horizon Advantage **]]]
Education Accounts
- ------------------
Education IRA
UGMA/UTMA
Closed-end funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc. Scudder Global High Income Fund, Inc.
The Brazil Fund, Inc. Scudder New Asia Fund, Inc.
The Korea Fund, Inc. Scudder New Europe Fund, Inc.
Montgomery Street Income
Securities, 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.
]]] A no-load variable annuity contract issued by Glenbrook Life and Annuity
Company and underwritten by Allstate Financial Services, Inc., sold by
Scudder's insurance agencies, 1-800-225-2470.
# These funds, advised by Scudder Kemper Investments, Inc., are traded on
the New York Stock Exchange and, in some cases, on various other stock
exchanges.
27
<PAGE>
Additional information about the fund may be found in the Statement of
Additional Information, the Shareholder Service Guide and in shareholder
reports. The Statement of Additional Information contains more detailed
information on fund investments and operations. The Shareholder Service Guide
contains more detailed information about purchases and sales of fund shares. The
semiannual and annual shareholder reports contain a discussion of the market
conditions and the investment strategies that significantly affected the fund's
performance during the last fiscal year, as well as a listing of portfolio
holdings and financial statements. These and other fund documents may be
obtained without charge from the following sources:
- --------------------------------------------------------------------------------
By phone: In person:
- --------------------------------------------------------------------------------
Call Scudder Investor Relations Public Reference Room
at 1-800-225-2470 Securities and Exchange
Or Commission,
For existing Scudder investors, call Washington, D.C.
the Scudder Automated Information Line (Call 1-800-SEC-0330 for more
(SAIL) at 1-800-343-2890 (24 hours a day). information).
- --------------------------------------------------------------------------------
By mail: By internet:
- --------------------------------------------------------------------------------
Scudder Investor Services, Inc. http://www.sec.gov
Two International Place http://www.scudder.com
Boston, MA 02110-4103
Or
Public Reference Section,
Securities and Exchange
Commission,
Washington, D.C. 20549-6009
(a duplication fee is charged)
- --------------------------------------------------------------------------------
The Statement of Additional Information is incorporated by reference into this
prospectus (is legally a part of this prospectus).
Investment Company Act file number:
Printed with SOY INK Printed on recycled paper
28
<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 Prime Reserve Money Market Shares
Scudder Premium Money Market Shares
Scudder Institutional Shares
Scudder Managed Shares
May 1, 1999
SCUDDER TAX FREE MONEY MARKET SERIES --
Scudder Institutional Shares
Scudder Managed Shares
May 1, 1999
SCUDDER GOVERNMENT MONEY MARKET SERIES --
Scudder Institutional Shares
Scudder Managed Shares
May 1, 1999
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
- --------------------------------------------------------------------------------
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, 1999 and dated October 15, 1998 for Scudder Money Market
Series: Scudder Prime Reserve Money Market Shares and Scudder Premium Money
Market Shares, 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. The Annual Report to
Shareholders of Scudder Money Market Series, Scudder Tax Free Money Market
Series, and Scudder Government Money Market Series dated December 31, 1998, is
incorporated by reference into and is hereby deemed to be part of this Statement
of Additional Information.
<PAGE>
TABLE OF CONTENTS
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..............................................................6
Wire Transfer of Federal Funds...........................................7
Additional Information About Making Subsequent Investments by QuickBuy...7
Share Certificates.......................................................8
EXCHANGES AND REDEMPTIONS......................................................8
Exchanges................................................................8
Redemption by Telephone..................................................9
Redemption By QuickSell.................................................10
Redemption by Mail or Fax...............................................10
Redemption by Checkwriting..............................................11
FEATURES AND SERVICES OFFERED BY THE FUNDS....................................12
The No-Load Concept.....................................................12
Internet access.........................................................13
Dividends and Capital Gains Distribution Options........................13
Scudder Investor Centers................................................14
Reports to Shareholders.................................................14
Transaction Summaries..................................................14
THE SCUDDER FAMILY OF FUNDS...................................................14
SPECIAL PLAN ACCOUNTS.........................................................19
Scudder Retirement Plans: Profit-Sharing and Money Purchase Pension
Plans for Corporations and Self-Employed Individuals..................19
Scudder 401(k): Cash or Deferred Profit-Sharing Plan for
Corporations and Self-Employed Individuals............................19
Scudder IRA: Individual Retirement Account.............................20
Scudder Roth IRA: Individual Retirement Account........................20
Scudder 403(b) Plan.....................................................21
Automatic Withdrawal Plan...............................................21
Group or Salary Deduction Plan..........................................21
DIVIDENDS.....................................................................22
PERFORMANCE INFORMATION.......................................................22
Yield...................................................................23
Effective Yield.........................................................23
Average Annual Total Return.............................................23
Cumulative Total Return.................................................24
Total Return............................................................25
Tax-Equivalent Yield....................................................25
Comparison of Fund Performance..........................................25
THE PROGRAM...................................................................28
ORGANIZATION OF THE FUNDS.....................................................29
INVESTMENT ADVISER............................................................30
Personal Investments by Employees of the Adviser........................32
DISTRIBUTOR...................................................................33
i
<PAGE>
TABLE OF CONTENTS (continued)
Page
DIRECTORS AND OFFICERS........................................................34
REMUNERATION..................................................................36
Responsibilities of the Board -- Board and Committee Meetings..........36
Compensation of Officers and Directors..................................36
TAXES ........................................................................37
PORTFOLIO TRANSACTIONS........................................................39
NET ASSET VALUE...............................................................40
ADDITIONAL INFORMATION........................................................41
Experts.................................................................41
Other Information.......................................................41
FINANCIAL STATEMENTS..........................................................42
APPENDIX
Corporate and Municipal Bonds
Corporate and Municipal Commercial Paper
Municipal Notes
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, management investment company. Each 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. 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.
Each Fund's 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
obligations to banks (including foreign branches, the obligations of which are
guaranteed by the U.S. parent) that have
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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) 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 in 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. Governmental 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.
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.
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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.
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
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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 are
fundamental and 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.
Under ordinary market conditions, the Funds 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:
4
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(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.
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.
5
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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. Each Fund 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. Each Fund 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 event each Fund 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 require 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
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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.
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 a 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.
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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 a Fund does
not follow such procedures, it may be liable for losses due to unauthorized or
fraudulent telephone instructions. No Fund will 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.
Each Fund has 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.
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 Scudder
Prime Reserve Money Market Shares ("Prime Reserve Shares") and Scudder Premium
Money Market Shares ("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.
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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.
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
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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. 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 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 to which redemption proceeds will be credited. 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
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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 Checkwriting
The following information regarding Redemption by Checkwriting applies
only to Prime Reserve Shares and Premium Shares and each Fund's class of Managed
Shares. Redemption by Checkwriting 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 Checkwriting procedure.
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 30 days' notice, after which, if the balance is not increased to the
required level, the balance of the account will be automatically exchanged into
Scudder Cash Investment Trust, another money market fund which has a lower
minimum balance and may have a lower yield requirement and different expenses.
Once the balance of the account has been exchanged into Scudder Cash Investment
Trust, Prime Reserve checks are no longer valid and should be destroyed;
however, other services requested by shareholders (such as Automatic Investment
Plan) will be carried over and remain in effect.
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 this
combined Statement of Additional Information for more information.
Minimum balances for Scudder Premium Money Market Shares
The initial minimum investment requirement in the Fund is $25,000.
Shareholders should maintain a share balance worth at least $20,000 (which
minimum amount may be changed by the Board of Directors).
Shareholders whose account balance falls below $20,000 for at least 30
days will be given 60 days' notice to bring the account back up to $20,000 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 this
combined Statement of Additional Information for more information.
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FEATURES AND SERVICES OFFERED BY THE FUNDS
(See "Shareholder benefits" in the Funds' prospectuses.)
The No-Load Concept
Investors are encouraged to be aware of the full ramifications of mutual
fund fee structures, and of how Scudder distinguishes its Scudder Family of
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 Rule 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
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 Conduct Rules , 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 funds in the Scudder Family of Funds do not pay any asset-based
sales charges or service fees, Scudder developed and trademarked the phrase
No-Load 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 Family of Funds 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.
================================================================================
Scudder No-Load Fund
No-Load 8.50% Load Load Fund with with 0.25%
YEARS Fund Fund 0.75% 12b-1 Fee 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
================================================================================
Investors are encouraged to review the fee tables on page 2 of the Fund's
prospectus for more specific information about the rates at which management
fees and other expenses are assessed.
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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.
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 Me(TM) 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 Me(TM) 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.
Dividends and Capital Gains 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 a Fund. A change of instructions for the method of
payment must be received by the Transfer Agent at least five days prior to a
dividend record date. Shareholders also may change their dividend option either
by calling 1-800-225-5163 or by sending written instructions to the Transfer
Agent. Please include your account number with your written request. See "How to
contact Scudder" in the Funds' prospectuses 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 distribution of any income dividends or capital gains
distributions. If no election is made, dividends and distributions will be
invested in additional shares of a 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 gain distributions automatically deposited to their personal
bank account usually within three business days after the Fund pays its
distribution. A DistributionsDirect request form can be
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obtained by calling 1-800-225-5163. Confirmation statements will be mailed to
shareholders as notification that distributions have been deposited.
Investors choosing to participate in Scudder's Automatic Withdrawal Plan
must reinvest any dividends or capital gains. For most retirement plan accounts,
the reinvestment of dividends and capital gains is also required.
Scudder Investor Centers
Investors may visit any of the Investor Centers maintained by the
Distributor listed in the Funds' prospectuses. 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 prospectuses.
Reports to Shareholders
The Trust issues shareholders unaudited semiannual financial statements
and annual financial statements audited by independent accountants, including a
list of investments held and statements of assets and liabilities, operations,
changes in net assets and financial highlights. The Trust presently intends to
distribute to shareholders informal quarterly reports during the intervening
quarters, containing a statement of the investments of the Funds.
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.
THE SCUDDER FAMILY OF FUNDS
(See "Investment products and services" in the Funds' prospectus.)
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.
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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.
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.
- ----------
* These funds are not available for sale in all states. For information,
contact Scudder Investor Services, Inc.
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<PAGE>
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.
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 Corporate Bond Fund seeks a high level of current income through
investment primarily in investment-grade corporate debt securities.
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.
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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.
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 medium-size growth companies with the potential for
sustainable above-average earnings growth.
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.
- ----------
** Only the Scudder Shares are part of the Scudder Family of Funds.
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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.
INDUSTRY SECTOR FUNDS
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 International Shares are part of the Scudder Family of Funds.
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SCUDDER PREFERRED SERIES
Scudder Tax Managed Growth 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.
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 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; 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 Fund's prospectus.)
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 plan. 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 Fund may also be a permitted investment under profit sharing
and pension plans and IRAs 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 Fund 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 401(k): Cash or Deferred Profit-Sharing Plan
for Corporations and Self-Employed Individuals
Shares of the Fund may be purchased as the investment medium under a plan
in the form of a Scudder 401(k) Plan adopted by a corporation, a self-employed
individual or a group of self-employed individuals (including sole proprietors
and partnerships), or other qualifying organization. This plan has been approved
as a prototype by the IRS.
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Scudder IRA: Individual Retirement Account
Shares of the Fund may be purchased as the underlying investment for an
Individual Retirement Account ("IRA") 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 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
- --------------------------------------------------------------------------------
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
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
- --------------------------------------------------------------------------------
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
Scudder Roth IRA: Individual Retirement Account
Shares of the Fund may be purchased as the underlying investment for a
Roth Individual Retirement Account ("Roth IRA") which meets the requirements of
Section 408A of the Internal Revenue Code.
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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 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 qualified higher
education expenses.
An individual with an income of $100,000 or less (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 Fund 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 Fund's prospectus. Any such requests must be received by the
Fund's 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 Fund 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
21
<PAGE>
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 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 for each class of Scudder Money Market Series: Institutional Class of
Shares from December 31, 1997 through
22
<PAGE>
December 31, 1998, Managed Class of Shares from December 31, 1997 through
December 31, 1997, Premium Class of Shares from December 31, 1997 through June
30, 1998 and Prime Reserve Class of Shares from October 15, 1998 through
December 31, 1998. Performance information enumerated below is based on the
following periods for each class of Scudder Tax Free Money Market Series and
Scudder Government Money Market Series: Institutional Class of Shares from
December 31, 1997 through December 31, 1998, and Managed Class of Shares from
December 31, 1997 through December 31, 1998. These performance figures may be
calculated in the following manner:
Yield
The Corporation makes available various yield quotations with respect to
shares of the Funds. The annualized yield for the Money Market Fund, Tax Free
Fund and Government Fund for the seven-day period ended December 31, 1998 for
the Institutional Shares were x.xx%, x.xx% and x.xx%, respectively; and for the
Managed Shares were x.xx%, x.xx% and x.xx%, respectively. The annualized yield
for the Premium Money Market Shares of the Money Market Fund for the seven-day
period ended December 31, 1998 was x.xx%. 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 each Fund 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 the Money Market Fund, Tax Free Fund and the
Government Fund for the seven-day period ended December 31, 1998 for the
Institutional Shares were x.xx%, x.xx% and x.xx%, respectively; and for the
Managed Shares were x.xx%, x.xx% and x.xx%, respectively. The effective yield
for the Premium Money Market Shares of the Money Market Fund for the seven-day
period ended December 31, 1998 was x.xx%.
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):
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<PAGE>
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.
Average Annual Total Return for periods ended December 31, 1998
Since
Inception* One Year Five Years Ten Years
Institutional Class of Shares
Scudder Money Market Series x.xx% x.xx% N/A N/A
Scudder Tax Free Money Market
Series x.xx% x.xx% N/A N/A
Scudder Government Money
Market Series x.xx% x.xx% N/A N/A
Managed Class of Shares
Scudder Money Market Series x.xx% x.xx% x.xx% x.xx%
Scudder Tax Free Money Market
Series x.xx% x.xx% x.xx% x.xx%
Scudder Government Money
Market Series x.xx% x.xx% x.xx% x.xx%
Premium Class of Shares x.xx%** N/A N/A N/A
Prime Reserve Class of Shares x.xx% N/A N/A N/A
* The Institutional Class of each Fund and the Premium Class of Money Market
Series commenced operations on July 7, 1997, and August 4, 1997,
respectively. The Prime Reserve Class of Money Market Series commenced
operations on October 15, 1998.
** Average annual total returns for the Premium Class of Shares are for the
period ended June 30, 1998.
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, 1998
Since
Inception* One Year Five Years Ten Years
Institutional Class of Shares
Money Market Fund x.xx% x.xx% N/A N/A
Tax Free Fund x.xx% x.xx% N/A N/A
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Government Fund x.xx% x.xx% N/A N/A
Managed Class of Shares
Money Market Fund x.xx% x.xx% x.xx% x.xx%
Tax Free Fund x.xx% x.xx% x.xx% x.xx%
Government Fund x.xx% x.xx% x.xx% x.xx%
Premium Money Market Shares x.xx%** N/A N/A N/A
Prime Reserve Class of Shares x.xx% N/A N/A N/A
* The Institutional Class of each Fund and the Premium Class of Money Market
Series commenced operations on July 7, 1997, and August 4, 1997,
respectively. The Prime Reserve Class of Cash Fund commenced operations on
October 15, 1998.
** Cumulative total returns for the Premium Class of Shares are for the
period ended June 30, 1998.
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 x.xx% to receive after-tax
income equal to the x.xx% tax-free yield of Institutional Class of shares for
Scudder Tax Free Money Market Series for the 30 day period ended December 31,
1998.
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, a 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 a Fund. In addition, the amount
25
<PAGE>
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.
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.
26
<PAGE>
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.
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.
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<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.
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.
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<PAGE>
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 Premium Money Market Shares. After the
reclassification, one billion (1,000,000,000) shares of Capital Stock are
classified as shares of the Scudder Premium 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 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
29
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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.
The principal source of the Adviser's income is professional fees received
from providing continuous investment advice, and the firm derives no income from
brokerage or underwriting of securities. Today, it provides investment counsel
for many individuals and institutions, including insurance companies, colleges,
industrial corporations, and financial and banking organizations. In addition,
it manages Montgomery Street Income Securities, Inc., Scudder California Tax
Free Trust, Scudder Cash Investment Trust, Value Equity Trust, Scudder Fund,
Inc., Scudder Funds Trust, Global/International Fund, Inc., Scudder Global High
Income Fund, Scudder GNMA Fund, Scudder Portfolio Trust, Scudder Institutional
Fund, Inc., Scudder International Fund, Inc., Investment Trust, Scudder
Municipal Trust, Scudder Mutual Funds, Inc., Scudder New Asia Fund, Inc.,
Scudder New Europe Fund, Inc., Scudder Pathway Series, Scudder Securities Trust,
Scudder State Tax Free Trust, Scudder Tax Free Money Fund, Scudder Tax Free
Trust, Scudder U.S. Treasury Money Fund, Scudder Variable Life Investment Fund,
The Argentina Fund, Inc., The Brazil Fund, Inc., The Korea Fund, Inc., The Japan
Fund, Inc. and Scudder Spain and Portugal Fund, Inc. Some of the foregoing
companies or trusts have two or more series.
The Adviser also provides investment advisory services to the mutual funds
which comprise the AARP Investment Program from Scudder. The AARP Investment
Program from Scudder has assets over $13 billion and includes the AARP Growth
Trust, AARP Income Trust, AARP Tax Free Income Trust, AARP Managed Investment
Portfolios Trust and AARP Cash Investment Funds.
Pursuant to an Agreement between the Adviser and AMA Solutions, Inc., a
subsidiary of the American Medical Association (the "AMA"), dated May 9, 1997,
the Adviser has agreed, subject to applicable state regulations, to pay AMA
Solutions, Inc. royalties in an amount equal to 5% of the management fee
received by the Adviser with respect to assets invested by AMA members in
Scudder funds in connection with the AMA InvestmentLinkSM Program. The Adviser
will also pay AMA Solutions, Inc. a general monthly fee, currently in the amount
of $833. The AMA and AMA Solutions, Inc. are not engaged in the business of
providing investment advice and neither is registered as an investment adviser
or broker/dealer under federal securities laws. Any person who participates in
the AMA InvestmentLinkSM Program will be a customer of the Adviser (or of a
subsidiary thereof) and not the AMA or AMA Solutions, Inc. AMA InvestmentLinkSM
is a service mark of AMA Solutions, Inc.
The Adviser maintains a large research department, which conducts
continual studies of the factors that affect the position of various industries,
companies and individual securities. In this work, the Adviser utilizes certain
reports
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and statistics from a wide variety of sources, including brokers and dealers who
may execute portfolio transactions for the Fund and for clients of the Adviser,
but conclusions are based primarily on investigations and critical analyses by
its own research specialists.
Certain investments may be appropriate for a Fund and also for other
clients advised by the Adviser. Investment decisions for a Fund and other
clients are made with a view to achieving their respective investment objectives
and after consideration of such factors as their current holdings, availability
of cash for investment and the size of their investments generally. Frequently,
a particular security may be bought or sold for only one client or in different
amounts and at different times for more than one but less than all clients.
Likewise, a particular security may be bought for one or more clients when one
or more other clients are selling the security. In addition, purchases or sales
of the same security may be made for two or more clients on the same day. In
such event, such transactions will be allocated among the clients in a manner
believed by the Adviser to be equitable to each. In some cases, this procedure
could have an adverse effect on the price or amount of the securities purchased
or sold by a Fund. Purchase and sale orders for a Fund may be combined with
those of other clients of the Adviser in the interest of most favorable net
results to a Fund.
The continuance of the Investment Management Agreement dated July 7, 1997,
between each Fund and the Adviser, was last approved by the Directors on April
24, 1997. Because the transaction between Scudder and Zurich resulted in the
assignment of the Funds' investment management agreements with Scudder Kemper,
the agreements were deemed to be automatically terminated at the consummation of
the transaction. In anticipation of the transaction, however, new investment
management agreements between the Funds and the Adviser were approved by the
Directors on August 6, 1997. At the special meeting of the Funds' shareholders
held on October 27, 1997, the shareholders also approved the new investment
management agreements. The new investment management agreements (the
"Agreements") became effective as of December 31, 1997 and were in effect for an
initial term ending on September 30, 1998. The Agreements are in all material
respects on the same terms as the previous investment management agreements
which they supersede. The Agreements incorporate conforming changes which
promote consistency among all of the funds advised by the Adviser, and which
permit ease of administration.
The Agreements dated December 31, 1997 were last approved by the Directors
of the Corporation on August 6, 1998. The Agreements will continue in effect
until September 30, 1999 and from year to year thereafter only if their
continuance is approved annually by the vote of a majority of those Directors
who are not parties to such Agreements or interested persons of the Adviser or
the Corporation, cast in person at a meeting called for the purpose of voting on
such approval, and either by a vote of the Corporation's Directors or of a
majority of the outstanding voting securities of the respective Fund. The
Agreements may be terminated at any time without payment of penalty by either
party on sixty days' written notice, and automatically terminate in the event of
their reassignment.
On September 7, 1998, the businesses of Zurich (including Zurich's 70%
interest in Scudder Kemper) and the financial services businesses of B.A.T
Industries p.l.c. ("B.A.T") were combined to form a new global insurance and
financial services company known as Zurich Financial Services Group. By way of a
dual holding company structure, former Zurich shareholders initially owned
approximately 57% of Zurich Financial Services Group, with the balance initially
owned by former B.A.T shareholders.
Upon consummation of this transaction, each Fund's existing investment
management agreement with Scudder Kemper was deemed to have been assigned and,
therefore, terminated. The Board has approved new investment management
agreements with Scudder Kemper, which are substantially identical to the current
investment management agreements, except for the dates of execution and
termination. These agreements became effective upon the termination of the then
current investment management agreements and will be submitted for shareholder
approval at special meetings currently scheduled to take place in December 1998.
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 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.
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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 did 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, 1998, the Adviser did
not impose fees of $xxx,xxx, $xx,xxx, and $xxx,xxx and did impose fees of
$x,xxx,xxx, $xxx,xxx, and $xx,xxx, of which $xxx,xxx, $xx,xxx, and $xx,xxx,
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, 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 Funds' 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.
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
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<PAGE>
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.
The Corporation's underwriting agreement dated September 7, 1998, will
remain in effect until September 30, 1999, and from year to year thereafter only
if its continuance is approved annually by a majority of the members of the
Board of Directors who are not parties to such agreement or interested persons
of any such party and either by vote of a majority of the Board of Directors or
a majority of the outstanding voting securities of the Corporation. The
underwriting agreement was last approved by the Directors on August 12, 1998.
Under the principal underwriting agreement, the Corporation is responsible
for: the payment of all fees and expenses in connection with the preparation and
filing with the SEC of its registration statement and prospectus and any
amendments and supplements thereto; the registration and qualification of shares
for sale in the various states, including registering the Corporation as a
broker/dealer in various states as required; the fees and expenses of preparing,
printing and mailing prospectuses annually to existing shareholders (see below
for expenses relating to prospectuses paid by the Distributor), notices, proxy
statements, reports or other communications to shareholders of a Fund; the cost
of printing and mailing confirmations of purchases of shares and the
prospectuses accompanying such confirmations; any issuance taxes and/or any
initial transfer taxes; a portion of shareholder toll-free telephone charges and
expenses of shareholder service representatives; the cost of wiring funds for
share purchases and redemptions (unless paid by the shareholder who initiates
the transaction); the cost of printing and postage of business reply envelopes;
and a portion of the cost of computer terminals used by both the Corporation and
the Distributor.
The Distributor pays for printing and distributing prospectuses or reports
prepared for its use in connection with the offering of the Funds' shares to the
public and preparing, printing and mailing any other literature or advertising
in connection with the offering of shares of a Fund to the public. The
Distributor pays all fees and expenses in connection with its qualification and
registration as a broker/dealer under federal and state laws, a portion of the
cost of toll-free telephone service and expenses of shareholder service
representatives, a portion of the cost of computer terminals, and expenses of
any activity which is primarily intended to result in the sale of shares issued
by each Fund, unless a Rule 12b-1 plan is in effect which provides that each
Fund shall bear some or all of such expenses.
Note: Although the Corporation does not currently have a 12b-1 Plan and the
Directors have no current intention of adopting one, the Corporation will
also pay those fees and expenses permitted to be paid or assumed by the
Corporation pursuant to a 12b-1 Plan, if any, were adopted by the
Corporation, notwithstanding any other provision to the contrary in the
underwriting agreement.
As agent the Distributor currently offers shares of each Fund on a
continuous basis to investors in all states in which shares of each Fund may
from time to time be registered or where permitted by applicable law. The
underwriting agreement provides that the Distributor accepts orders for shares
at net asset value as no sales commission or load is charged to the investor.
The Distributor has made no firm commitment to acquire shares of either Fund.
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DIRECTORS AND OFFICERS
The principal occupations of the Directors and executive officers of the
Corporation for the past five years are listed below.
Position with
Underwriter,
Scudder Investor
Position with Principal Services,
Name, Age and Address Corporation Occupation* Inc.
- --------------------- ----------- ----------- ----------------
Daniel Pierce (65)+ # President Managing Director Vice President,
of Scudder Kemper Director and
Investments, Inc. Assistant
Treasurer
Dr. Rosita P. Chang Trustee Professor of --
(44) Finance, University
PACAP Research Center of Rhode Island
College of Business
Administration
University of Rhode
Island
7 Lippitt Road
Kingston, RI
02881-0802
Dr. J. D. Hammond (65) Trustee Dean, Smeal College --
801 Business of Business
Administration Bldg. Administration,
Pennsylvania State Pennsylvania State
University University
University Park, PA
16802
Edgar R. Fiedler (70)# Director Senior Fellow and --
50023 Brogden Economic
Chapel Hill, NC 27514 Counselor, The
Conference Board,
Inc.
Peter B. Freeman (67) Director Corporate Director --
100 Alumni Avenue and Trustee
Providence, RI 02906
Richard M. Hunt (72) Director University Marshal
University Marshal's and Senior
Office Lecturer, Harvard
Wadsworth House University
1341 Massachusetts
Avenue
Harvard University
Cambridge, MA 02138
Thomas W. Joseph Vice President Senior Vice Vice President,
(60)+ and Assistant President of Director,
Secretary Scudder Kemper Treasurer and
Investments, Inc. Assistant Clerk
Thomas F. McDonough Vice Senior Vice Assistant Clerk
(52)+ President and President of
Secretary Scudder Kemper
Investments, Inc.
Kathryn L. Quirk (46)++ Vice President Managing Director Senior Vice
of Scudder Kemper President,
Investments, Inc. Director and
Clerk
Frank J. Rachwalski, Vice President Managing Director --
Jr. of Scudder Kemper
(54)+++ Investments, Inc.
34
<PAGE>
Position with
Underwriter,
Scudder Investor
Position with Principal Services,
Name, Age and Address Corporation Occupation* Inc.
- --------------------- ----------- ----------- ----------------
Ann M. McCreary (42) Vice President Senior Vice --
President of
Scudder Kemper
Investments, Inc.
John R. Hebble (41)+ Treasurer Senior Vice --
President of
Scudder Kemper
Investments, Inc.
Caroline Pearson (37)+ Assistant Senior Vice --
Secretary President of
Scudder Kemper
Investments, Inc.;
Associate, Dechert
Price & Rhoads (law
firm) 1989 to 1997
* 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 April 1, 1999, 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
xxx,xxx,xxx shares in the aggregate, or xx.xx% of the outstanding shares of
Scudder Money Market Series (Scudder Managed Shares) on April 1, 1999. 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
xx,xxx,xxx shares in the aggregate, or x.xx% of the outstanding shares of
Scudder Money Market Series (Scudder Premium Money Market Shares) on April 1,
1999. 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
xx,xxx,xxx shares in the aggregate, or xx.xx% of the outstanding shares of
Scudder Tax Free Money Market Series (Scudder Managed Shares) on April 1, 1999.
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
xx,xxx,xxx shares in the aggregate, or xx,xx% of the outstanding shares of
Scudder Tax Free Money Market Series (Scudder Institutional Shares) on April 1,
1999. 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
xx,xxx,xxx shares in the aggregate, or xx.xx% of the outstanding shares of
Scudder Government Money Market Series (Scudder Institutional Shares) on
35
<PAGE>
April 1, 1999. The Adviser may be deemed to be the beneficial owner of such
shares but disclaims any beneficial ownership in such shares.
As of April 1, 1999, the following shareholders held of record more than
five percent of such Fund:
Scudder Money Market Series (Scudder Managed Shares).
Scudder Money Market Series (Scudder Institutional Shares)
Scudder Tax Free Money Market Series (Scudder Managed Shares)
Scudder Tax Free Money Market Series (Scudder Institutional Shares)
Scudder Government Money Market Series (Scudder Managed Shares)
Scudder Government Money Market Series (Scudder Institutional Shares)
As of April 1, 1999 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.
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.
36
<PAGE>
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 1998 from the Trust and from all of the Scudder funds as a group.
Scudder Fund, Inc.* All Scudder Funds
------------------- -----------------
Paid by Paid by
the Paid by the Paid by
Name Trust the Adviser(1) Funds the Adviser(1)
Dr. Rosita P.
Chang, Director $xxx $x $xx,xxx $x,xxx (21 funds)
Edgar R. Fiedler,
Director $xx,xxx $xxx $xxx,xxx** $xx,xxx (34 funds)
Peter B. Freeman,
Director $x,xxx $x,xxx $xxx,xxx $xx,xxx (42 funds)
Dr. J.D. Hammond,
Director $xxx $x $xx,xxx $x,xxx (22 funds)
Robert W. Lear,
Director*** $x,xxx $xxx $xx,xxx $x,xxx (7 funds)
(1) Meetings associated with the Adviser's alliance with Zurich
Insurance Company. See "Investment Adviser" for additional
information.
* Scudder Fund, Inc. consists of the Scudder Money Market Series, Scudder
Tax Free Money Market Series and Scudder Government Money Market Series.
** This amount includes $xxx,xxx paid by the liquidation of Scudder
Institutional Fund, Inc., $xx,xxx incurred in deferred compensation by
Scudder Fund, Inc., and $xx,xxx paid by the remaining Scudder Funds as
compensation for serving on the Boards of those Funds.
*** Mr. Lear retired from the Fund October 23, 1997.
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
Subchapter M of the Internal Revenue Code of 1986, as amended (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 and cash items (including
receivables), 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
37
<PAGE>
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 investment company taxable 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 income
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 generally will be
long- or short-term capital gain or loss, 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 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 generally will be long-
or short-term capital gain or loss. 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 shareholders as
long-term capital gains , 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
securities (other than tax-exempt 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
38
<PAGE>
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.
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
39
<PAGE>
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 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 and on the preceding Friday or subsequent Monday when one of these holidays
falls on a Saturday or Sunday, respectively. 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.
40
<PAGE>
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 so included or incorporated by reference in reliance on
the report of PricewaterhouseCoopers LLP, One Post Office Square, Boston,
Massachusetts 02109, independent accounts, and given on the authority of that
firm as experts in accounting and auditing. Effective July 1, 1998, Coopers &
Lybrand L.L.P. and Price Waterhouse LLP merged to become PricewaterhouseCoopers
LLP. PricewaterhouseCoopers LLP is responsible for performing annual audits of
the financial statements and financial highlights of each Fund in accordance
with generally accepted auditing standards and the preparation of federal tax
returns.
Other Information
The CUSIP number of the Scudder Premium Money Market Shares is 811149871
The CUSIP number of the Scudder Institutional Money Market Shares is
811149863
The CUSIP number of the Scudder Managed Money Market Shares is 811149202
The CUSIP number of the Scudder Prime Reserve Money Market Shares is
811149830
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 May 31.
The law firm of Dechert Price & Rhoads is counsel to the Funds.
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, 1998.
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, 1998, the amount charged to the Funds by SFAC aggregated $xxx,xxx for the
Money Market Series, $xx,xxx for the Tax Free Money Market Series and $xx,xxx
for the Government Money Market Series, of which $xx,xxx, $x,xxx and $x,xxx,
respectively, remain unpaid at December 31, 1998. For the year ended December
31, 1998, the amount charged to the Funds by SFAC aggregated $xx,xxx for the
Government Fund, $xx,xxx for the Cash Fund, and $xx,xxx for the Tax Free Fund,
of which $x,xxx, $x,xxx, and $x,xxx, respectively.
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
41
<PAGE>
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, 1997, the amount charged to the
Corporation by Scudder Service Corporation aggregated $xx,xxx for the Government
Fund, $xx,xxx for the Cash Fund, and $xx,xxx for the Tax Free Fund, of which
$x,xxx, $x,xxx, and $x,xxx, respectively, remained unpaid at December 31, 1998.
For the year ended December 31, 1998 the following amounts were charged:
Money Tax Free
Market Money Market Government Money
Series Series Market Series
------ ------ -------------
Managed Class $xxx,xxx $ xx,xxx $ xx,xxx
Institutional Class Xx,xxx Xx,xxx Xx,xxx
Premium Class Xx,xxx Xx,xxx Xx,xxx
$xx,xxx $ xx,xxx $ xx,xxx
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
another 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 , notes to financial statements in the Annual Reports to the
Shareholders of the Funds dated December 31, 1998, and the unaudited semiannual
report are incorporated herein by reference and are hereby deemed to be a part
of this Statement of Additional Information.
Effective November 13, 1998, the Corporation's Board of Directors approved
a change in the Funds' fiscal year end from December 31 to May 31.
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 23. Exhibits
- --------
<S> <C> <C>
(a) (a)(1) Articles of Incorporation dated June 16, 1982.
(Incorporated by reference to Post-Effective Amendment No. 21 to this
Registration Statement.)
(a)(2) Articles Supplementary dated April 28, 1987.
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
(a)(3) Articles of Merger dated April 28, 1987.
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
(a)(4) Articles Supplementary dated February 20, 1991.
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
(a)(5) Articles of Transfer dated December 27, 1991.
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
(a)(6) Articles Supplementary dated February 7, 1992.
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
(a)(7) Articles of Amendment dated October 14, 1992.
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
(a)(8) Articles Supplementary for Managed Intermediate Government Fund dated
January 18, 1993.
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
(a)(9) Articles Supplementary dated April 24, 1995.
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
(a)(10) Articles Supplementary dated January 25, 1996.
(Incorporated by reference to Exhibit 1(h) to Post-Effective Amendment
No. 21 to this Registration Statement.)
(a)(11) 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>
(a)(12) Articles Supplementary dated June 12, 1997.
(Incorporated by reference to Exhibit 1(j) to Post-Effective Amendment
No. 24 to this Registration Statement.)
(a)(13) Articles Supplementary dated August 11, 1998.
(Incorporated by reference to Post-Effective Amendment No. 28 to this
Registration Statement.)
(a)(14) Articles Supplementary dated February 12, 1999 are filed herein.
(b) (b)(1) By-laws as amended through October 24, 1996.
(Incorporated by reference to Post-Effective Amendment No. 22 to this
Registration Statement.)
(c) Not Applicable.
(d) (d)(1) Investment Management Agreement between the Registrant on behalf of Scudder
Money Market Series (Formerly Known As Managed Cash Fund) and Scudder Kemper
Investments, Inc. dated September 7, 1998 is filed herein.
(d)(2) Investment Management Agreement between the Registrant on behalf of Scudder
Tax Free Money Market and Scudder Kemper Investments, Inc. dated September
7, 1998 is filed herein.
(d)(3) Investment Management Agreement between the Registrant on behalf of Scudder
Government Money Market Series and Scudder Kemper Investments, Inc. dated
September 7, 1998 is filed herein.
(e) (e)(1) Underwriting Agreement dated September 7, 1998 between the Registrant and
Scudder Investor Services is filed herein.
(f) Not Applicable.
(g) (g)(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.)
(g)(2) Fee Schedule for Exhibit (g)(1).
(Incorporated by reference to Exhibit 8(c)(v) to Post-Effective Amendment
No. 20 filed on April 28, 1995.)
(g)(3) Sub-Custodian Agreement with Bankers Trust Company (August 15, 1989).
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
(g)(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.)
(h) (h)(1) Transfer Agency Agreement dated January 1, 1990.
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
Part C - Page 3
<PAGE>
(h)(2) Fee schedule for Exhibit 8(b).
(Incorporated by reference to Post-Effective Amendment No. 21 to this
Registration Statement.)
(h)(3) 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.)
(h)(4) 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).
(i) Not Applicable.
(j) Consent of Independent Accountants to be filed by amendment.
(k) Not Applicable.
(l) Not Applicable.
(m) Not Applicable.
(n) Financial Data Schedule to be filed by amendment.
(o) Multi-Distribution 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 24. Persons Controlled by or under Common Control with Registrant.
- -------- --------------------------------------------------------------
None
Item 25. 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
Part C - Page 4
<PAGE>
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 26. 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 26.
<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
Part C - Page 5
<PAGE>
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.+
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 27. 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>
Lynn S. Birdsong Senior Vice President None
345 Park Avenue
New York, NY 10154
Part C - Page 6
<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 7
<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>
<TABLE>
<CAPTION>
(c)
(1) (2) (3) (4) (5)
Net Underwriting Compensation on
Name of Principal Discounts and Redemptions Brokerage
Underwriter Commissions and Repurchases Commissions Other Compensation
----------- ----------- --------------- ----------- ------------------
<S> <C> <C> <C> <C>
Scudder Investor None None None None
Services, Inc.
</TABLE>
Item 28. 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 29. Management Services.
- -------- --------------------
Not Applicable.
Item 30 Undertakings.
- ------- -------------
Not Applicable.
Part C - Page 8
<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 its Registration
Statement pursuant to Rule 485(a) under the Securities Act of 1933 and has duly
caused this amendment to its Registration Statement to be signed on its behalf
by the undersigned, thereto duly authorized, in the City of Boston and the
Commonwealth of Massachusetts on the 1st day of March, 1999.
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
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/ Daniel Pierce
- --------------------------------------
Daniel Pierce* President (Principal Executive March 1, 1999
Officer)
/s/ Dr. Rosita Chang
- --------------------------------------
Dr. Rosita Chang* Director March 1, 1999
/s/ Dr. J.D. Hammond
- --------------------------------------
Dr. J.D. Hammond* Director March 1, 1999
/s/ Richard M. Hunt
- --------------------------------------
Richard M. Hunt* Director March 1, 1999
/s/ Edgar R. Fiedler
- --------------------------------------
Edgar R. Fiedler* Director March 1, 1999
/s/ Peter B. Freeman
- --------------------------------------
Peter B. Freeman* Director March 1, 1999
/s/ John R. Hebble
- --------------------------------------
John R. Hebble Treasurer (Principal Financial March 1, 1999
Officer)
</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.
<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. 30
TO REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AND
AMENDMENT NO. 26
TO REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
SCUDDER FUND, INC.
<PAGE>
SCUDDER FUND, INC.
EXHIBIT INDEX
(a)(14)
(d)(1)
(d)(2)
(d)(3)
(e)(1)
Exhibit (a)(14)
SCUDDER FUND, INC.
ARTICLES SUPPLEMENTARY
TO THE ARTICLES OF INCORPORATION
SCUDDER FUND, INC., a Maryland corporation (which is hereinafter called
the "Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: Pursuant to and in accordance with Section 2-105(c) of the
Maryland General Corporation Law, the aggregate number of shares of capital
stock that the Corporation, which is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended, has the
authority to issue is hereby increased to thirteen billion (13,000,000,000)
shares, with a par value of $0.001 per share, for an aggregate par value of
thirteen million dollars ($13,000,000).
(a) Immediately before the increase effected by these
Articles Supplementary, the total number of shares of
capital stock of all classes that the Corporation had
the authority to issue was eleven billion
(11,000,000,000) shares with a par value of $0.001
per share, for an aggregate par value of eleven
million dollars ($11,000,000).
(b) Immediately after the increase effected by these
Articles Supplementary, the total number of shares of
capital stock of all classes that the Corporation has
the authority to issue is thirteen billion
(13,000,000,000) shares, with a par value of $0.001
per share, for an aggregate par value of thirteen
million dollars ($13,000,000).
SECOND: 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 classified one billion (1,000,000,000) shares of the
capital stock of the Corporation resulting from the increase of authorized
capital stock effected by these Articles Supplementary as additional shares of
each of the Premium Money Market Shares class of the Scudder Money Market Series
of the Corporation's capital stock and the Institutional Shares class of the
Scudder Money Market Series of the Corporation's capital stock.
Immediately before the increase effected by these Articles
Supplementary, the Corporation had the authority to issue eleven billion
(11,000,000,000) shares of capital stock, $0.001 par value per share, of which
five billion seven hundred seventy-five million (5,775,000,000) of such shares
were designated as the Scudder Money Market Series, which is further classified
into eight hundred million (800,000,000) Managed Shares, two billion six hundred
fifteen million (2,615,000,000) Institutional Shares, one billion one hundred
eighty million (1,180,000,000) Premium Money Market Shares and one billion one
hundred eighty million (1,180,000,000) Prime Reserve Money Market Shares; one
billion (1,000,000,000) of such shares were 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 were
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
<PAGE>
million (1,500,000,000) Institutional Shares; twenty-five million (25,000,000)
of such shares were designated as the Managed Federal Securities Fund; and fifty
million (50,000,000) of such shares were designated to each of the following:
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 (all
of such classes being collectively referred to herein as the "Fifty Million
Classes").
Immediately after the increase effected by these Articles
Supplementary, the Corporation will have the authority to issue thirteen billion
(13,000,000,000) shares of capital stock, $0.001 par value per share, seven
billion seven hundred seventy-five million (7,775,000,000) 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, three billion six
hundred fifteen million (3,615,000,000) Institutional Shares, two billion one
hundred eighty million (2,180,000,000) Premium Money Market Shares and one
billion one hundred eighty million (1,180,000,000) 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 fifty million (50,000,000) of such shares being
designated to each of the Fifty Million Classes.
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 duly authorized and
adopted resolutions by unanimous written consent increasing the aggregate number
of shares of capital stock that the Corporation has authority to issue and
classifying the authorized capital stock of the Corporation, as set forth in
these Articles Supplementary.
IN WITNESS WHEREOF, Scudder Fund, Inc. has caused these Articles
Supplementary to be signed and acknowledged in its name and on its behalf by its
President and attested to by its Secretary on this 12th day of February, 1999;
and its President acknowledges that these Articles
2
<PAGE>
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
3
Exhibit (d)(1)
Scudder Fund, Inc.
345 Park Avenue
New York, New York 10154
September 7, 1998
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Scudder Money Market Series
Ladies and Gentlemen:
Scudder Fund, Inc. (the "Corporation") has been established as a
Maryland corporation to engage in the business of an investment company.
Pursuant to the Corporation's Articles of Incorporation, as amended from
time-to-time (the "Articles"), the Board of Directors has divided the
Corporation's shares of capital stock, par value $0.001 per share, (the
"Shares") into separate series, or funds, including Scudder Money Market Series
(the "Fund"). Series may be abolished and dissolved, and additional series
established, from time to time by action of the Directors.
The Corporation, on behalf of the Fund, has selected you to act as the
sole investment manager of the Fund and to provide certain other services, as
more fully set forth below, and you have indicated that you are willing to act
as such investment manager and to perform such services under the terms and
conditions hereinafter set forth. Accordingly, the Corporation on behalf of the
Fund agrees with you as follows:
1. Delivery of Documents. The Corporation engages in the business of
investing and reinvesting the assets of the Fund in the manner and in accordance
with the investment objectives, policies and restrictions specified in the
currently effective Prospectus (the "Prospectus") and Statement of Additional
Information (the "SAI") relating to the Fund included in the Corporation's
Registration Statement on Form N-1A, as amended from time to time, (the
"Registration Statement") filed by the Corporation under the Investment Company
Act of 1940, as amended, (the "1940 Act") and the Securities Act of 1933, as
amended. Copies of the documents referred to in the preceding sentence have been
furnished to you by the Corporation. The Corporation has also furnished you with
copies properly certified or authenticated of each of the following additional
documents related to the Corporation and the Fund:
(a) The Articles dated June 18, 1982, as amended to date.
(b) By-Laws of the Corporation as in effect on the date hereof (the "By-Laws").
(c) Resolutions of the Directors of the Corporation and the shareholders of the
Fund selecting you as investment manager and approving the form of this
Agreement.
<PAGE>
The Corporation will furnish you from time to time with copies,
properly certified or authenticated, of all amendments of or supplements, if
any, to the foregoing, including the Prospectus, the SAI and the Registration
Statement.
2. Sublicense to Use the Scudder Trademarks. As exclusive licensee of the
rights to use and sublicense the use of the "Scudder," "Scudder Kemper
Investments, Inc." and "Scudder, Stevens & Clark, Inc." trademarks (together,
the "Scudder Marks"), you hereby grant the Corporation a nonexclusive right and
sublicense to use (i) the "Scudder" name and mark as part of the Corporation's
name (the "Fund Name"), and (ii) the Scudder Marks in connection with the
Corporation's investment products and services, in each case only for so long as
this Agreement, any other investment management agreement between you (or any
organization which shall have succeeded to your business as investment manager
("your Successor")) and the Corporation, or any extension, renewal or amendment
hereof or thereof remains in effect, and only for so long as you are a licensee
of the Scudder Marks, provided however, that you agree to use your best efforts
to maintain your license to use and sublicense the Scudder Marks. The
Corporation agrees that it shall have no right to sublicense or assign rights to
use the Scudder Marks, shall acquire no interest in the Scudder Marks other than
the rights granted herein, that all of the Corporation's uses of the Scudder
Marks shall inure to the benefit of Scudder Trust Company as owner and licensor
of the Scudder Marks (the "Trademark Owner"), and that the Corporation shall not
challenge the validity of the Scudder Marks or the Trademark Owner's ownership
thereof. The Corporation further agrees that all services and products it offers
in connection with the Scudder Marks shall meet commercially reasonable
standards of quality, as may be determined by you or the Trademark Owner from
time to time, provided that you acknowledge that the services and products the
Corporation rendered during the one-year period preceding the date of this
Agreement are acceptable. At your reasonable request, the Corporation shall
cooperate with you and the Trademark Owner and shall execute and deliver any and
all documents necessary to maintain and protect (including but not limited to in
connection with any trademark infringement action) the Scudder Marks and/or
enter the Corporation as a registered user thereof. At such time as this
Agreement or any other investment management agreement shall no longer be in
effect between you (or your Successor) and the Corporation, or you no longer are
a licensee of the Scudder Marks, the Corporation shall (to the extent that, and
as soon as, it lawfully can) cease to use the Fund Name or any other name
indicating that it is advised by, managed by or otherwise connected with you (or
your Successor) or the Trademark Owner. In no event shall the Corporation use
the Scudder Marks or any other name or mark confusingly similar thereto
(including, but not limited to, any name or mark that includes the name
"Scudder") if this Agreement or any other investment advisory agreement between
you (or your Successor) and the Fund is terminated.
3. Portfolio Management Services. As manager of the assets of the Fund,
you shall provide continuing investment management of the assets of the Fund in
accordance with the investment objectives, policies and restrictions set forth
in the Prospectus and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended, (the "Code") relating to regulated
investment companies and all rules and regulations thereunder; and all other
applicable federal and state laws and regulations of which you have knowledge;
subject always to policies and instructions adopted by the Corporation's Board
of Directors. In connection therewith, you shall use reasonable efforts to
manage the Fund so that it will qualify as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder. The Fund shall have
the benefit of the investment analysis and research, the review of current
economic conditions and trends and the consideration of long-range investment
policy generally available to your investment advisory clients. In managing the
Fund in accordance with the requirements set forth in this section 3, you shall
be entitled to receive and act upon advice of counsel to the Corporation or
counsel to you. You shall also make available to the Corporation promptly upon
request all of the Fund's investment records and ledgers as are necessary to
assist the
2
<PAGE>
Corporation in complying with the requirements of the 1940 Act and other
applicable laws. To the extent required by law, you shall furnish to regulatory
authorities having the requisite authority any information or reports in
connection with the services provided pursuant to this Agreement which may be
requested in order to ascertain whether the operations of the Corporation are
being conducted in a manner consistent with applicable laws and regulations.
You shall determine the securities, instruments, investments,
currencies, repurchase agreements, futures, options and other contracts relating
to investments to be purchased, sold or entered into by the Fund and place
orders with broker-dealers, foreign currency dealers, futures commission
merchants or others pursuant to your determinations and all in accordance with
Fund policies as expressed in the Registration Statement. You shall determine
what portion of the Fund's portfolio shall be invested in securities and other
assets and what portion, if any, should be held uninvested.
You shall furnish to the Corporation's Board of Directors periodic
reports on the investment performance of the Fund and on the performance of your
obligations pursuant to this Agreement, and you shall supply such additional
reports and information as the Corporation's officers or Board of Directors
shall reasonably request.
4. Administrative Services. In addition to the portfolio management
services specified above in section 3, you shall furnish at your expense for the
use of the Fund such office space and facilities in the United States as the
Fund may require for its reasonable needs, and you (or one or more of your
affiliates designated by you) shall render to the Corporation administrative
services on behalf of the Fund necessary for operating as an open-end investment
company and not provided by persons not parties to this Agreement including, but
not limited to, preparing reports to and meeting materials for the Corporation's
Board of Directors and reports and notices to Fund shareholders; supervising,
negotiating contractual arrangements with, to the extent appropriate, and
monitoring the performance of, accounting agents, custodians, depositories,
transfer agents and pricing agents, accountants, attorneys, printers,
underwriters, brokers and dealers, insurers and other persons in any capacity
deemed to be necessary or desirable to Fund operations; preparing and making
filings with the Securities and Exchange Commission (the "SEC") and other
regulatory and self-regulatory organizations, including, but not limited to,
preliminary and definitive proxy materials, post-effective amendments to the
Registration Statement, semi-annual reports on Form N-SAR and notices pursuant
to Rule 24f-2 under the 1940 Act; overseeing the tabulation of proxies by the
Fund's transfer agent; assisting in the preparation and filing of the Fund's
federal, state and local tax returns; preparing and filing the Fund's federal
excise tax return pursuant to Section 4982 of the Code; providing assistance
with investor and public relations matters; monitoring the valuation of
portfolio securities and the calculation of net asset value; monitoring the
registration of Shares of the Fund under applicable federal and state securities
laws; maintaining or causing to be maintained for the Fund all books, records
and reports and any other information required under the 1940 Act, to the extent
that such books, records and reports and other information are not maintained by
the Fund's custodian or other agents of the Fund; assisting in establishing the
accounting policies of the Fund; assisting in the resolution of accounting
issues that may arise with respect to the Fund's operations and consulting with
the Fund's independent accountants, legal counsel and the Fund's other agents as
necessary in connection therewith; establishing and monitoring the Fund's
operating expense budgets; reviewing the Fund's bills; processing the payment of
bills that have been approved by an authorized person; assisting the Fund in
determining the amount of dividends and distributions available to be paid by
the Fund to its shareholders, preparing and arranging for the printing of
dividend notices to shareholders, and providing the transfer and dividend paying
agent, the custodian, and the accounting agent with such information as is
required for such parties to effect the payment of dividends and distributions;
and otherwise assisting the Corporation as it may reasonably request in the
conduct of the
3
<PAGE>
Fund's business, subject to the direction and control of the Corporation's Board
of Directors. Nothing in this Agreement shall be deemed to shift to you or to
diminish the obligations of any agent of the Fund or any other person not a
party to this Agreement which is obligated to provide services to the Fund.
5. Allocation of Charges and Expenses. Except as otherwise specifically
provided in this section 5, you shall pay the compensation and expenses of all
Directors, officers and executive employees of the Corporation (including the
Fund's share of payroll taxes) who are affiliated persons of you, and you shall
make available, without expense to the Fund, the services of such of your
directors, officers and employees as may duly be elected officers of the
Corporation, subject to their individual consent to serve and to any limitations
imposed by law. You shall provide at your expense the portfolio management
services described in section 3 hereof and the administrative services described
in section 4 hereof.
You shall not be required to pay any expenses of the Fund other than
those specifically allocated to you in this section 5. In particular, but
without limiting the generality of the foregoing, you shall not be responsible,
except to the extent of the reasonable compensation of such of the Fund's
Directors and officers as are directors, officers or employees of you whose
services may be involved, for the following expenses of the Fund: organization
expenses of the Fund (including out-of-pocket expenses, but not including your
overhead or employee costs); fees payable to you and to any other Fund advisors
or consultants; legal expenses; auditing and accounting expenses; maintenance of
books and records which are required to be maintained by the Fund's custodian or
other agents of the Corporation; telephone, telex, facsimile, postage and other
communications expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Fund in connection with membership in investment company trade
organizations; fees and expenses of the Fund's accounting agent, custodians,
subcustodians, transfer agents, dividend disbursing agents and registrars;
payment for portfolio pricing or valuation services to pricing agents,
accountants, bankers and other specialists, if any; expenses of preparing share
certificates and, except as provided below in this section 5, other expenses in
connection with the issuance, offering, distribution, sale, redemption or
repurchase of securities issued by the Fund; expenses relating to investor and
public relations; expenses and fees of registering or qualifying Shares of the
Fund for sale; interest charges, bond premiums and other insurance expense;
freight, insurance and other charges in connection with the shipment of the
Fund's portfolio securities; the compensation and all expenses (specifically
including travel expenses relating to Corporation business) of Directors,
officers and employees of the Corporation who are not affiliated persons of you;
brokerage commissions or other costs of acquiring or disposing of any portfolio
securities of the Fund; expenses of printing and distributing reports, notices
and dividends to shareholders; expenses of printing and mailing Prospectuses and
SAIs of the Fund and supplements thereto; costs of stationery; any litigation
expenses; indemnification of Directors and officers of the Corporation; costs of
shareholders' and other meetings; and travel expenses (or an appropriate portion
thereof) of Directors and officers of the Corporation who are directors,
officers or employees of you to the extent that such expenses relate to
attendance at meetings of the Board of Directors of the Corporation or any
committees thereof or advisors thereto held outside of Boston, Massachusetts or
New York, New York.
You shall not be required to pay expenses of any activity which is
primarily intended to result in sales of Shares of the Fund if and to the extent
that (i) such expenses are required to be borne by a principal underwriter which
acts as the distributor of the Fund's Shares pursuant to an underwriting
agreement which provides that the underwriter shall assume some or all of such
expenses, or (ii) the Corporation on behalf of the Fund shall have adopted a
plan in conformity with Rule 12b-1 under the 1940 Act providing that the Fund
(or some other party) shall assume some or all of such expenses. You shall be
required to pay such of the foregoing sales expenses as are not required to be
paid by the
4
<PAGE>
principal underwriter pursuant to the underwriting agreement or are not
permitted to be paid by the Fund (or some other party) pursuant to such a plan.
6. Management Fee. For all services to be rendered, payments to be made
and costs to be assumed by you as provided in sections 3, 4 and 5 hereof, the
Corporation on behalf of the Fund shall pay you in United States Dollars on the
last day of each month the unpaid balance of a fee equal to the excess of 1/12
of 0.25 of 1 percent of the average daily net assets as defined below of the
Fund for such month over any compensation waived by you from time to time (as
more fully described below). You shall be entitled to receive during any month
such interim payments of your fee hereunder as you shall request, provided that
no such payment shall exceed 75 percent of the amount of your fee then accrued
on the books of the Fund and unpaid.
The "average daily net assets" of the Fund shall mean the average of
the values placed on the Fund's net assets as of 4:00 p.m. (New York time) on
each day on which the net asset value of the Fund is determined consistent with
the provisions of Rule 22c-1 under the 1940 Act or, if the Fund lawfully
determines the value of its net assets as of some other time on each business
day, as of such time. The value of the net assets of the Fund shall always be
determined pursuant to the applicable provisions of the Articles and the
Registration Statement. If the determination of net asset value does not take
place for any particular day, then for the purposes of this section 6, the value
of the net assets of the Fund as last determined shall be deemed to be the value
of its net assets as of 4:00 p.m. (New York time), or as of such other time as
the value of the net assets of the Fund's portfolio may be lawfully determined
on that day. If the Fund determines the value of the net assets of its portfolio
more than once on any day, then the last such determination thereof on that day
shall be deemed to be the sole determination thereof on that day for the
purposes of this section 6.
You may waive all or a portion of your fees provided for hereunder and
such waiver shall be treated as a reduction in purchase price of your services.
You shall be contractually bound hereunder by the terms of any publicly
announced waiver of your fee, or any limitation of the Fund's expenses, as if
such waiver or limitation were fully set forth herein.
7. Avoidance of Inconsistent Position; Services Not Exclusive. In
connection with purchases or sales of portfolio securities and other investments
for the account of the Fund, neither you nor any of your directors, officers or
employees shall act as a principal or agent or receive any commission. You or
your agent shall arrange for the placing of all orders for the purchase and sale
of portfolio securities and other investments for the Fund's account with
brokers or dealers selected by you in accordance with Fund policies as expressed
in the Registration Statement. If any occasion should arise in which you give
any advice to clients of yours concerning the Shares of the Fund, you shall act
solely as investment counsel for such clients and not in any way on behalf of
the Fund.
Your services to the Fund pursuant to this Agreement are not to be
deemed to be exclusive and it is understood that you may render investment
advice, management and services to others. In acting under this Agreement, you
shall be an independent contractor and not an agent of the Corporation. Whenever
the Fund and one or more other accounts or investment companies advised by the
Manager have available funds for investment, investments suitable and
appropriate for each shall be allocated in accordance with procedures believed
by the Manager to be equitable to each entity. Similarly, opportunities to sell
securities shall be allocated in a manner believed by the Manager to be
equitable.
5
<PAGE>
The Fund recognizes that in some cases this procedure may adversely affect the
size of the position that may be acquired or disposed of for the Fund.
8. Limitation of Liability of Manager. As an inducement to your
undertaking to render services pursuant to this Agreement, the Corporation
agrees that you shall not be liable under this Agreement for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement relates, provided that nothing in this
Agreement shall be deemed to protect or purport to protect you against any
liability to the Corporation, the Fund or its shareholders to which you would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of your duties, or by reason of your reckless
disregard of your obligations and duties hereunder. Any person, even though also
employed by you, who may be or become an employee of and paid by the Fund shall
be deemed, when acting within the scope of his or her employment by the Fund, to
be acting in such employment solely for the Fund and not as your employee or
agent.
9. Duration and Termination of This Agreement. This Agreement shall
remain in force until September 30, 1999, and continue in force from year to
year thereafter, but only so long as such continuance is specifically approved
at least annually (a) by the vote of a majority of the Directors who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Directors of the Corporation, or by the vote of a majority of the
outstanding voting securities of the Fund. The aforesaid requirement that
continuance of this Agreement be "specifically approved at least annually" shall
be construed in a manner consistent with the 1940 Act and the rules and
regulations thereunder and any applicable SEC exemptive order therefrom.
This Agreement may be terminated with respect to the Fund at any time,
without the payment of any penalty, by the vote of a majority of the outstanding
voting securities of the Fund or by the Corporation's Board of Directors on 60
days' written notice to you, or by you on 60 days' written notice to the
Corporation. This Agreement shall terminate automatically in the event of its
assignment.
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Agreement shall be
effective until approved in a manner consistent with the 1940 Act and rules and
regulations thereunder and any applicable SEC exemptive order therefrom.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit 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.
In interpreting the provisions of this Agreement, the definitions
contained in Section 2(a) of the 1940 Act (particularly the definitions of
"affiliated person," "assignment" and "majority of the outstanding voting
securities"), as from time to time amended, shall be applied, subject, however,
to such exemptions as may be granted by the SEC by any rule, regulation or
order.
6
<PAGE>
This Agreement shall be construed in accordance with the laws of the
State of Maryland, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, or in a manner which would cause the Fund to
fail to comply with the requirements of Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or
management agreements entered into between you and the Corporation on behalf of
the Fund.
If you are in agreement with the foregoing, please execute the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Corporation, whereupon this letter shall become a binding
contract effective as of the date of this Agreement.
Yours very truly,
SCUDDER FUND, INC., on behalf of
Scudder Money Market Series
By: /s/Thomas F. McDonough
--------------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/Daniel Pierce
--------------------------------
Managing Director
7
Exhibit (d)(2)
Scudder Fund, Inc.
345 Park Avenue
New York, New York 10154
September 7, 1998
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Scudder Tax Free Money Market Series
Ladies and Gentlemen:
Scudder Fund, Inc. (the "Corporation") has been established as a
Maryland corporation to engage in the business of an investment company.
Pursuant to the Corporation's Articles of Incorporation, as amended from
time-to-time (the "Articles"), the Board of Directors has divided the
Corporation's shares of capital stock, par value $0.001 per share, (the
"Shares") into separate series, or funds, including Scudder Tax Free Money
Market Series (the "Fund"). Series may be abolished and dissolved, and
additional series established, from time to time by action of the Directors.
The Corporation, on behalf of the Fund, has selected you to act as the
sole investment manager of the Fund and to provide certain other services, as
more fully set forth below, and you have indicated that you are willing to act
as such investment manager and to perform such services under the terms and
conditions hereinafter set forth. Accordingly, the Corporation on behalf of the
Fund agrees with you as follows:
1. Delivery of Documents. The Corporation engages in the business of
investing and reinvesting the assets of the Fund in the manner and in accordance
with the investment objectives, policies and restrictions specified in the
currently effective Prospectus (the "Prospectus") and Statement of Additional
Information (the "SAI") relating to the Fund included in the Corporation's
Registration Statement on Form N-1A, as amended from time to time, (the
"Registration Statement") filed by the Corporation under the Investment Company
Act of 1940, as amended, (the "1940 Act") and the Securities Act of 1933, as
amended. Copies of the documents referred to in the preceding sentence have been
furnished to you by the Corporation. The Corporation has also furnished you with
copies properly certified or authenticated of each of the following additional
documents related to the Corporation and the Fund:
(a) The Articles dated June 18, 1982, as amended to date.
(b) By-Laws of the Corporation as in effect on the date hereof (the "By-Laws").
(c) Resolutions of the Directors of the Corporation and the shareholders of the
Fund selecting you as investment manager and approving the form of this
Agreement.
<PAGE>
The Corporation will furnish you from time to time with copies,
properly certified or authenticated, of all amendments of or supplements, if
any, to the foregoing, including the Prospectus, the SAI and the Registration
Statement.
2. Sublicense to Use the Scudder Trademarks. As exclusive licensee of
the rights to use and sublicense the use of the "Scudder," "Scudder Kemper
Investments, Inc." and "Scudder, Stevens & Clark, Inc." trademarks (together,
the "Scudder Marks"), you hereby grant the Corporation a nonexclusive right and
sublicense to use (i) the "Scudder" name and mark as part of the Corporation's
name (the "Fund Name"), and (ii) the Scudder Marks in connection with the
Corporation's investment products and services, in each case only for so long as
this Agreement, any other investment management agreement between you (or any
organization which shall have succeeded to your business as investment manager
("your Successor")) and the Corporation, or any extension, renewal or amendment
hereof or thereof remains in effect, and only for so long as you are a licensee
of the Scudder Marks, provided however, that you agree to use your best efforts
to maintain your license to use and sublicense the Scudder Marks. The
Corporation agrees that it shall have no right to sublicense or assign rights to
use the Scudder Marks, shall acquire no interest in the Scudder Marks other than
the rights granted herein, that all of the Corporation's uses of the Scudder
Marks shall inure to the benefit of Scudder Trust Company as owner and licensor
of the Scudder Marks (the "Trademark Owner"), and that the Corporation shall not
challenge the validity of the Scudder Marks or the Trademark Owner's ownership
thereof. The Corporation further agrees that all services and products it offers
in connection with the Scudder Marks shall meet commercially reasonable
standards of quality, as may be determined by you or the Trademark Owner from
time to time, provided that you acknowledge that the services and products the
Corporation rendered during the one-year period preceding the date of this
Agreement are acceptable. At your reasonable request, the Corporation shall
cooperate with you and the Trademark Owner and shall execute and deliver any and
all documents necessary to maintain and protect (including but not limited to in
connection with any trademark infringement action) the Scudder Marks and/or
enter the Corporation as a registered user thereof. At such time as this
Agreement or any other investment management agreement shall no longer be in
effect between you (or your Successor) and the Corporation, or you no longer are
a licensee of the Scudder Marks, the Corporation shall (to the extent that, and
as soon as, it lawfully can) cease to use the Fund Name or any other name
indicating that it is advised by, managed by or otherwise connected with you (or
your Successor) or the Trademark Owner. In no event shall the Corporation use
the Scudder Marks or any other name or mark confusingly similar thereto
(including, but not limited to, any name or mark that includes the name
"Scudder") if this Agreement or any other investment advisory agreement between
you (or your Successor) and the Fund is terminated.
3. Portfolio Management Services. As manager of the assets of the Fund,
you shall provide continuing investment management of the assets of the Fund in
accordance with the investment objectives, policies and restrictions set forth
in the Prospectus and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended, (the "Code") relating to regulated
investment companies and all rules and regulations thereunder; and all other
applicable federal and state laws and regulations of which you have knowledge;
subject always to policies and instructions adopted by the Corporation's Board
of Directors. In connection therewith, you shall use reasonable efforts to
manage the Fund so that it will qualify as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder. The Fund shall have
the benefit of the investment analysis and research, the review of current
economic conditions and trends and the consideration of long-range investment
policy generally available to your investment advisory clients. In managing the
Fund in accordance with the requirements set forth in this section 3, you shall
be entitled to receive and act upon advice of counsel to the Corporation or
counsel to you. You shall also make available to the Corporation promptly upon
request all of the Fund's investment records and ledgers as are necessary to
assist the
2
<PAGE>
Corporation in complying with the requirements of the 1940 Act and other
applicable laws. To the extent required by law, you shall furnish to regulatory
authorities having the requisite authority any information or reports in
connection with the services provided pursuant to this Agreement which may be
requested in order to ascertain whether the operations of the Corporation are
being conducted in a manner consistent with applicable laws and regulations.
You shall determine the securities, instruments, investments,
currencies, repurchase agreements, futures, options and other contracts relating
to investments to be purchased, sold or entered into by the Fund and place
orders with broker-dealers, foreign currency dealers, futures commission
merchants or others pursuant to your determinations and all in accordance with
Fund policies as expressed in the Registration Statement. You shall determine
what portion of the Fund's portfolio shall be invested in securities and other
assets and what portion, if any, should be held uninvested.
You shall furnish to the Corporation's Board of Directors periodic
reports on the investment performance of the Fund and on the performance of your
obligations pursuant to this Agreement, and you shall supply such additional
reports and information as the Corporation's officers or Board of Directors
shall reasonably request.
4. Administrative Services. In addition to the portfolio management
services specified above in section 3, you shall furnish at your expense for the
use of the Fund such office space and facilities in the United States as the
Fund may require for its reasonable needs, and you (or one or more of your
affiliates designated by you) shall render to the Corporation administrative
services on behalf of the Fund necessary for operating as an open-end investment
company and not provided by persons not parties to this Agreement including, but
not limited to, preparing reports to and meeting materials for the Corporation's
Board of Directors and reports and notices to Fund shareholders; supervising,
negotiating contractual arrangements with, to the extent appropriate, and
monitoring the performance of, accounting agents, custodians, depositories,
transfer agents and pricing agents, accountants, attorneys, printers,
underwriters, brokers and dealers, insurers and other persons in any capacity
deemed to be necessary or desirable to Fund operations; preparing and making
filings with the Securities and Exchange Commission (the "SEC") and other
regulatory and self-regulatory organizations, including, but not limited to,
preliminary and definitive proxy materials, post-effective amendments to the
Registration Statement, semi-annual reports on Form N-SAR and notices pursuant
to Rule 24f-2 under the 1940 Act; overseeing the tabulation of proxies by the
Fund's transfer agent; assisting in the preparation and filing of the Fund's
federal, state and local tax returns; preparing and filing the Fund's federal
excise tax return pursuant to Section 4982 of the Code; providing assistance
with investor and public relations matters; monitoring the valuation of
portfolio securities and the calculation of net asset value; monitoring the
registration of Shares of the Fund under applicable federal and state securities
laws; maintaining or causing to be maintained for the Fund all books, records
and reports and any other information required under the 1940 Act, to the extent
that such books, records and reports and other information are not maintained by
the Fund's custodian or other agents of the Fund; assisting in establishing the
accounting policies of the Fund; assisting in the resolution of accounting
issues that may arise with respect to the Fund's operations and consulting with
the Fund's independent accountants, legal counsel and the Fund's other agents as
necessary in connection therewith; establishing and monitoring the Fund's
operating expense budgets; reviewing the Fund's bills; processing the payment of
bills that have been approved by an authorized person; assisting the Fund in
determining the amount of dividends and distributions available to be paid by
the Fund to its shareholders, preparing and arranging for the printing of
dividend notices to shareholders, and providing the transfer and dividend paying
agent, the custodian, and the accounting agent with such information as is
required for such parties to effect the payment of dividends and distributions;
and otherwise assisting the Corporation as it may reasonably request in the
conduct of the
3
<PAGE>
Fund's business, subject to the direction and control of the Corporation's Board
of Directors. Nothing in this Agreement shall be deemed to shift to you or to
diminish the obligations of any agent of the Fund or any other person not a
party to this Agreement which is obligated to provide services to the Fund.
5. Allocation of Charges and Expenses. Except as otherwise specifically
provided in this section 5, you shall pay the compensation and expenses of all
Directors, officers and executive employees of the Corporation (including the
Fund's share of payroll taxes) who are affiliated persons of you, and you shall
make available, without expense to the Fund, the services of such of your
directors, officers and employees as may duly be elected officers of the
Corporation, subject to their individual consent to serve and to any limitations
imposed by law. You shall provide at your expense the portfolio management
services described in section 3 hereof and the administrative services described
in section 4 hereof.
You shall not be required to pay any expenses of the Fund other than
those specifically allocated to you in this section 5. In particular, but
without limiting the generality of the foregoing, you shall not be responsible,
except to the extent of the reasonable compensation of such of the Fund's
Directors and officers as are directors, officers or employees of you whose
services may be involved, for the following expenses of the Fund: organization
expenses of the Fund (including out-of-pocket expenses, but not including your
overhead or employee costs); fees payable to you and to any other Fund advisors
or consultants; legal expenses; auditing and accounting expenses; maintenance of
books and records which are required to be maintained by the Fund's custodian or
other agents of the Corporation; telephone, telex, facsimile, postage and other
communications expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Fund in connection with membership in investment company trade
organizations; fees and expenses of the Fund's accounting agent, custodians,
subcustodians, transfer agents, dividend disbursing agents and registrars;
payment for portfolio pricing or valuation services to pricing agents,
accountants, bankers and other specialists, if any; expenses of preparing share
certificates and, except as provided below in this section 5, other expenses in
connection with the issuance, offering, distribution, sale, redemption or
repurchase of securities issued by the Fund; expenses relating to investor and
public relations; expenses and fees of registering or qualifying Shares of the
Fund for sale; interest charges, bond premiums and other insurance expense;
freight, insurance and other charges in connection with the shipment of the
Fund's portfolio securities; the compensation and all expenses (specifically
including travel expenses relating to Corporation business) of Directors,
officers and employees of the Corporation who are not affiliated persons of you;
brokerage commissions or other costs of acquiring or disposing of any portfolio
securities of the Fund; expenses of printing and distributing reports, notices
and dividends to shareholders; expenses of printing and mailing Prospectuses and
SAIs of the Fund and supplements thereto; costs of stationery; any litigation
expenses; indemnification of Directors and officers of the Corporation; costs of
shareholders' and other meetings; and travel expenses (or an appropriate portion
thereof) of Directors and officers of the Corporation who are directors,
officers or employees of you to the extent that such expenses relate to
attendance at meetings of the Board of Directors of the Corporation or any
committees thereof or advisors thereto held outside of Boston, Massachusetts or
New York, New York.
You shall not be required to pay expenses of any activity which is
primarily intended to result in sales of Shares of the Fund if and to the extent
that (i) such expenses are required to be borne by a principal underwriter which
acts as the distributor of the Fund's Shares pursuant to an underwriting
agreement which provides that the underwriter shall assume some or all of such
expenses, or (ii) the Corporation on behalf of the Fund shall have adopted a
plan in conformity with Rule 12b-1 under the 1940 Act providing that the Fund
(or some other party) shall assume some or all of such expenses. You shall be
required to pay such of the foregoing sales expenses as are not required to be
paid by the
4
<PAGE>
principal underwriter pursuant to the underwriting agreement or are not
permitted to be paid by the Fund (or some other party) pursuant to such a plan.
6. Management Fee. For all services to be rendered, payments to be made
and costs to be assumed by you as provided in sections 3, 4 and 5 hereof, the
Corporation on behalf of the Fund shall pay you in United States Dollars on the
last day of each month the unpaid balance of a fee equal to the excess of 1/12
of 0.25 of 1 percent of the average daily net assets as defined below of the
Fund for such month over any compensation waived by you from time to time (as
more fully described below). You shall be entitled to receive during any month
such interim payments of your fee hereunder as you shall request, provided that
no such payment shall exceed 75 percent of the amount of your fee then accrued
on the books of the Fund and unpaid.
The "average daily net assets" of the Fund shall mean the average of
the values placed on the Fund's net assets as of 4:00 p.m. (New York time) on
each day on which the net asset value of the Fund is determined consistent with
the provisions of Rule 22c-1 under the 1940 Act or, if the Fund lawfully
determines the value of its net assets as of some other time on each business
day, as of such time. The value of the net assets of the Fund shall always be
determined pursuant to the applicable provisions of the Articles and the
Registration Statement. If the determination of net asset value does not take
place for any particular day, then for the purposes of this section 6, the value
of the net assets of the Fund as last determined shall be deemed to be the value
of its net assets as of 4:00 p.m. (New York time), or as of such other time as
the value of the net assets of the Fund's portfolio may be lawfully determined
on that day. If the Fund determines the value of the net assets of its portfolio
more than once on any day, then the last such determination thereof on that day
shall be deemed to be the sole determination thereof on that day for the
purposes of this section 6.
You may waive all or a portion of your fees provided for hereunder and
such waiver shall be treated as a reduction in purchase price of your services.
You shall be contractually bound hereunder by the terms of any publicly
announced waiver of your fee, or any limitation of the Fund's expenses, as if
such waiver or limitation were fully set forth herein.
7. Avoidance of Inconsistent Position; Services Not Exclusive. In
connection with purchases or sales of portfolio securities and other investments
for the account of the Fund, neither you nor any of your directors, officers or
employees shall act as a principal or agent or receive any commission. You or
your agent shall arrange for the placing of all orders for the purchase and sale
of portfolio securities and other investments for the Fund's account with
brokers or dealers selected by you in accordance with Fund policies as expressed
in the Registration Statement. If any occasion should arise in which you give
any advice to clients of yours concerning the Shares of the Fund, you shall act
solely as investment counsel for such clients and not in any way on behalf of
the Fund.
Your services to the Fund pursuant to this Agreement are not to be
deemed to be exclusive and it is understood that you may render investment
advice, management and services to others. In acting under this Agreement, you
shall be an independent contractor and not an agent of the Corporation. Whenever
the Fund and one or more other accounts or investment companies advised by the
Manager have available funds for investment, investments suitable and
appropriate for each shall be allocated in accordance with procedures believed
by the Manager to be equitable to each entity. Similarly, opportunities to sell
securities shall be allocated in a manner believed by the Manager to be
equitable.
5
<PAGE>
The Fund recognizes that in some cases this procedure may adversely affect the
size of the position that may be acquired or disposed of for the Fund.
8. Limitation of Liability of Manager. As an inducement to your
undertaking to render services pursuant to this Agreement, the Corporation
agrees that you shall not be liable under this Agreement for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement relates, provided that nothing in this
Agreement shall be deemed to protect or purport to protect you against any
liability to the Corporation, the Fund or its shareholders to which you would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of your duties, or by reason of your reckless
disregard of your obligations and duties hereunder. Any person, even though also
employed by you, who may be or become an employee of and paid by the Fund shall
be deemed, when acting within the scope of his or her employment by the Fund, to
be acting in such employment solely for the Fund and not as your employee or
agent.
9. Duration and Termination of This Agreement. This Agreement shall
remain in force until September 30, 1999, and continue in force from year to
year thereafter, but only so long as such continuance is specifically approved
at least annually (a) by the vote of a majority of the Directors who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Directors of the Corporation, or by the vote of a majority of the
outstanding voting securities of the Fund. The aforesaid requirement that
continuance of this Agreement be "specifically approved at least annually" shall
be construed in a manner consistent with the 1940 Act and the rules and
regulations thereunder and any applicable SEC exemptive order therefrom.
This Agreement may be terminated with respect to the Fund at any time,
without the payment of any penalty, by the vote of a majority of the outstanding
voting securities of the Fund or by the Corporation's Board of Directors on 60
days' written notice to you, or by you on 60 days' written notice to the
Corporation. This Agreement shall terminate automatically in the event of its
assignment.
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Agreement shall be
effective until approved in a manner consistent with the 1940 Act and rules and
regulations thereunder and any applicable SEC exemptive order therefrom.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit 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.
In interpreting the provisions of this Agreement, the definitions
contained in Section 2(a) of the 1940 Act (particularly the definitions of
"affiliated person," "assignment" and "majority of the outstanding voting
securities"), as from time to time amended, shall be applied, subject, however,
to such exemptions as may be granted by the SEC by any rule, regulation or
order.
6
<PAGE>
This Agreement shall be construed in accordance with the laws of the
State of Maryland, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, or in a manner which would cause the Fund to
fail to comply with the requirements of Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or
management agreements entered into between you and the Corporation on behalf of
the Fund.
If you are in agreement with the foregoing, please execute the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Corporation, whereupon this letter shall become a binding
contract effective as of the date of this Agreement.
Yours very truly,
SCUDDER FUND, INC., on behalf of
Scudder Tax Free Money Market Series
By: /s/Thomas F. McDonough
--------------------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/Daniel Pierce
--------------------------------------
Managing Director
7
Exhibit (d)(3)
Scudder Fund, Inc.
345 Park Avenue
New York, New York 10154
September 7, 1998
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Scudder Government Money Market Series
Ladies and Gentlemen:
Scudder Fund, Inc. (the "Corporation") has been established as a
Maryland corporation to engage in the business of an investment company.
Pursuant to the Corporation's Articles of Incorporation, as amended from
time-to-time (the "Articles"), the Board of Directors has divided the
Corporation's shares of capital stock, par value $0.001 per share, (the
"Shares") into separate series, or funds, including Scudder Government Money
Market Series (the "Fund"). Series may be abolished and dissolved, and
additional series established, from time to time by action of the Directors.
The Corporation, on behalf of the Fund, has selected you to act as the
sole investment manager of the Fund and to provide certain other services, as
more fully set forth below, and you have indicated that you are willing to act
as such investment manager and to perform such services under the terms and
conditions hereinafter set forth. Accordingly, the Corporation on behalf of the
Fund agrees with you as follows:
1. Delivery of Documents. The Corporation engages in the business of
investing and reinvesting the assets of the Fund in the manner and in accordance
with the investment objectives, policies and restrictions specified in the
currently effective Prospectus (the "Prospectus") and Statement of Additional
Information (the "SAI") relating to the Fund included in the Corporation's
Registration Statement on Form N-1A, as amended from time to time, (the
"Registration Statement") filed by the Corporation under the Investment Company
Act of 1940, as amended, (the "1940 Act") and the Securities Act of 1933, as
amended. Copies of the documents referred to in the preceding sentence have been
furnished to you by the Corporation. The Corporation has also furnished you with
copies properly certified or authenticated of each of the following additional
documents related to the Corporation and the Fund:
(a) The Articles dated June 18, 1982, as amended to date.
(b) By-Laws of the Corporation as in effect on the date hereof (the "By-Laws").
(c) Resolutions of the Directors of the Corporation and the shareholders of the
Fund selecting you as investment manager and approving the form of this
Agreement.
<PAGE>
The Corporation will furnish you from time to time with copies,
properly certified or authenticated, of all amendments of or supplements, if
any, to the foregoing, including the Prospectus, the SAI and the Registration
Statement.
2. Sublicense to Use the Scudder Trademarks. As exclusive licensee of the
rights to use and sublicense the use of the "Scudder," "Scudder Kemper
Investments, Inc." and "Scudder, Stevens & Clark, Inc." trademarks (together,
the "Scudder Marks"), you hereby grant the Corporation a nonexclusive right and
sublicense to use (i) the "Scudder" name and mark as part of the Corporation's
name (the "Fund Name"), and (ii) the Scudder Marks in connection with the
Corporation's investment products and services, in each case only for so long as
this Agreement, any other investment management agreement between you (or any
organization which shall have succeeded to your business as investment manager
("your Successor")) and the Corporation, or any extension, renewal or amendment
hereof or thereof remains in effect, and only for so long as you are a licensee
of the Scudder Marks, provided however, that you agree to use your best efforts
to maintain your license to use and sublicense the Scudder Marks. The
Corporation agrees that it shall have no right to sublicense or assign rights to
use the Scudder Marks, shall acquire no interest in the Scudder Marks other than
the rights granted herein, that all of the Corporation's uses of the Scudder
Marks shall inure to the benefit of Scudder Trust Company as owner and licensor
of the Scudder Marks (the "Trademark Owner"), and that the Corporation shall not
challenge the validity of the Scudder Marks or the Trademark Owner's ownership
thereof. The Corporation further agrees that all services and products it offers
in connection with the Scudder Marks shall meet commercially reasonable
standards of quality, as may be determined by you or the Trademark Owner from
time to time, provided that you acknowledge that the services and products the
Corporation rendered during the one-year period preceding the date of this
Agreement are acceptable. At your reasonable request, the Corporation shall
cooperate with you and the Trademark Owner and shall execute and deliver any and
all documents necessary to maintain and protect (including but not limited to in
connection with any trademark infringement action) the Scudder Marks and/or
enter the Corporation as a registered user thereof. At such time as this
Agreement or any other investment management agreement shall no longer be in
effect between you (or your Successor) and the Corporation, or you no longer are
a licensee of the Scudder Marks, the Corporation shall (to the extent that, and
as soon as, it lawfully can) cease to use the Fund Name or any other name
indicating that it is advised by, managed by or otherwise connected with you (or
your Successor) or the Trademark Owner. In no event shall the Corporation use
the Scudder Marks or any other name or mark confusingly similar thereto
(including, but not limited to, any name or mark that includes the name
"Scudder") if this Agreement or any other investment advisory agreement between
you (or your Successor) and the Fund is terminated.
3. Portfolio Management Services. As manager of the assets of the Fund,
you shall provide continuing investment management of the assets of the Fund in
accordance with the investment objectives, policies and restrictions set forth
in the Prospectus and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended, (the "Code") relating to regulated
investment companies and all rules and regulations thereunder; and all other
applicable federal and state laws and regulations of which you have knowledge;
subject always to policies and instructions adopted by the Corporation's Board
of Directors. In connection therewith, you shall use reasonable efforts to
manage the Fund so that it will qualify as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder. The Fund shall have
the benefit of the investment analysis and research, the review of current
economic conditions and trends and the consideration of long-range investment
policy generally available to your investment advisory clients. In managing the
Fund in accordance with the requirements set forth in this section 3, you shall
be entitled to receive and act upon advice of counsel to the Corporation or
counsel to you. You shall also make available to the Corporation promptly upon
request all of the Fund's investment records and ledgers as are necessary to
assist the
2
<PAGE>
Corporation in complying with the requirements of the 1940 Act and other
applicable laws. To the extent required by law, you shall furnish to regulatory
authorities having the requisite authority any information or reports in
connection with the services provided pursuant to this Agreement which may be
requested in order to ascertain whether the operations of the Corporation are
being conducted in a manner consistent with applicable laws and regulations.
You shall determine the securities, instruments, investments,
currencies, repurchase agreements, futures, options and other contracts relating
to investments to be purchased, sold or entered into by the Fund and place
orders with broker-dealers, foreign currency dealers, futures commission
merchants or others pursuant to your determinations and all in accordance with
Fund policies as expressed in the Registration Statement. You shall determine
what portion of the Fund's portfolio shall be invested in securities and other
assets and what portion, if any, should be held uninvested.
You shall furnish to the Corporation's Board of Directors periodic
reports on the investment performance of the Fund and on the performance of your
obligations pursuant to this Agreement, and you shall supply such additional
reports and information as the Corporation's officers or Board of Directors
shall reasonably request.
4. Administrative Services. In addition to the portfolio management
services specified above in section 3, you shall furnish at your expense for the
use of the Fund such office space and facilities in the United States as the
Fund may require for its reasonable needs, and you (or one or more of your
affiliates designated by you) shall render to the Corporation administrative
services on behalf of the Fund necessary for operating as an open-end investment
company and not provided by persons not parties to this Agreement including, but
not limited to, preparing reports to and meeting materials for the Corporation's
Board of Directors and reports and notices to Fund shareholders; supervising,
negotiating contractual arrangements with, to the extent appropriate, and
monitoring the performance of, accounting agents, custodians, depositories,
transfer agents and pricing agents, accountants, attorneys, printers,
underwriters, brokers and dealers, insurers and other persons in any capacity
deemed to be necessary or desirable to Fund operations; preparing and making
filings with the Securities and Exchange Commission (the "SEC") and other
regulatory and self-regulatory organizations, including, but not limited to,
preliminary and definitive proxy materials, post-effective amendments to the
Registration Statement, semi-annual reports on Form N-SAR and notices pursuant
to Rule 24f-2 under the 1940 Act; overseeing the tabulation of proxies by the
Fund's transfer agent; assisting in the preparation and filing of the Fund's
federal, state and local tax returns; preparing and filing the Fund's federal
excise tax return pursuant to Section 4982 of the Code; providing assistance
with investor and public relations matters; monitoring the valuation of
portfolio securities and the calculation of net asset value; monitoring the
registration of Shares of the Fund under applicable federal and state securities
laws; maintaining or causing to be maintained for the Fund all books, records
and reports and any other information required under the 1940 Act, to the extent
that such books, records and reports and other information are not maintained by
the Fund's custodian or other agents of the Fund; assisting in establishing the
accounting policies of the Fund; assisting in the resolution of accounting
issues that may arise with respect to the Fund's operations and consulting with
the Fund's independent accountants, legal counsel and the Fund's other agents as
necessary in connection therewith; establishing and monitoring the Fund's
operating expense budgets; reviewing the Fund's bills; processing the payment of
bills that have been approved by an authorized person; assisting the Fund in
determining the amount of dividends and distributions available to be paid by
the Fund to its shareholders, preparing and arranging for the printing of
dividend notices to shareholders, and providing the transfer and dividend paying
agent, the custodian, and the accounting agent with such information as is
required for such parties to effect the payment of dividends and distributions;
and otherwise assisting the Corporation as it may reasonably request in the
conduct of the
3
<PAGE>
Fund's business, subject to the direction and control of the Corporation's Board
of Directors. Nothing in this Agreement shall be deemed to shift to you or to
diminish the obligations of any agent of the Fund or any other person not a
party to this Agreement which is obligated to provide services to the Fund.
5. Allocation of Charges and Expenses. Except as otherwise specifically
provided in this section 5, you shall pay the compensation and expenses of all
Directors, officers and executive employees of the Corporation (including the
Fund's share of payroll taxes) who are affiliated persons of you, and you shall
make available, without expense to the Fund, the services of such of your
directors, officers and employees as may duly be elected officers of the
Corporation, subject to their individual consent to serve and to any limitations
imposed by law. You shall provide at your expense the portfolio management
services described in section 3 hereof and the administrative services described
in section 4 hereof.
You shall not be required to pay any expenses of the Fund other than
those specifically allocated to you in this section 5. In particular, but
without limiting the generality of the foregoing, you shall not be responsible,
except to the extent of the reasonable compensation of such of the Fund's
Directors and officers as are directors, officers or employees of you whose
services may be involved, for the following expenses of the Fund: organization
expenses of the Fund (including out-of-pocket expenses, but not including your
overhead or employee costs); fees payable to you and to any other Fund advisors
or consultants; legal expenses; auditing and accounting expenses; maintenance of
books and records which are required to be maintained by the Fund's custodian or
other agents of the Corporation; telephone, telex, facsimile, postage and other
communications expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Fund in connection with membership in investment company trade
organizations; fees and expenses of the Fund's accounting agent, custodians,
subcustodians, transfer agents, dividend disbursing agents and registrars;
payment for portfolio pricing or valuation services to pricing agents,
accountants, bankers and other specialists, if any; expenses of preparing share
certificates and, except as provided below in this section 5, other expenses in
connection with the issuance, offering, distribution, sale, redemption or
repurchase of securities issued by the Fund; expenses relating to investor and
public relations; expenses and fees of registering or qualifying Shares of the
Fund for sale; interest charges, bond premiums and other insurance expense;
freight, insurance and other charges in connection with the shipment of the
Fund's portfolio securities; the compensation and all expenses (specifically
including travel expenses relating to Corporation business) of Directors,
officers and employees of the Corporation who are not affiliated persons of you;
brokerage commissions or other costs of acquiring or disposing of any portfolio
securities of the Fund; expenses of printing and distributing reports, notices
and dividends to shareholders; expenses of printing and mailing Prospectuses and
SAIs of the Fund and supplements thereto; costs of stationery; any litigation
expenses; indemnification of Directors and officers of the Corporation; costs of
shareholders' and other meetings; and travel expenses (or an appropriate portion
thereof) of Directors and officers of the Corporation who are directors,
officers or employees of you to the extent that such expenses relate to
attendance at meetings of the Board of Directors of the Corporation or any
committees thereof or advisors thereto held outside of Boston, Massachusetts or
New York, New York.
You shall not be required to pay expenses of any activity which is
primarily intended to result in sales of Shares of the Fund if and to the extent
that (i) such expenses are required to be borne by a principal underwriter which
acts as the distributor of the Fund's Shares pursuant to an underwriting
agreement which provides that the underwriter shall assume some or all of such
expenses, or (ii) the Corporation on behalf of the Fund shall have adopted a
plan in conformity with Rule 12b-1 under the 1940 Act providing that the Fund
(or some other party) shall assume some or all of such expenses. You shall be
required to pay such of the foregoing sales expenses as are not required to be
paid by the
4
<PAGE>
principal underwriter pursuant to the underwriting agreement or are not
permitted to be paid by the Fund (or some other party) pursuant to such a plan.
6. Management Fee. For all services to be rendered, payments to be made
and costs to be assumed by you as provided in sections 3, 4 and 5 hereof, the
Corporation on behalf of the Fund shall pay you in United States Dollars on the
last day of each month the unpaid balance of a fee equal to the excess of 1/12
of 0.25 of 1 percent of the average daily net assets as defined below of the
Fund for such month over any compensation waived by you from time to time (as
more fully described below). You shall be entitled to receive during any month
such interim payments of your fee hereunder as you shall request, provided that
no such payment shall exceed 75 percent of the amount of your fee then accrued
on the books of the Fund and unpaid.
The "average daily net assets" of the Fund shall mean the average of
the values placed on the Fund's net assets as of 4:00 p.m. (New York time) on
each day on which the net asset value of the Fund is determined consistent with
the provisions of Rule 22c-1 under the 1940 Act or, if the Fund lawfully
determines the value of its net assets as of some other time on each business
day, as of such time. The value of the net assets of the Fund shall always be
determined pursuant to the applicable provisions of the Articles and the
Registration Statement. If the determination of net asset value does not take
place for any particular day, then for the purposes of this section 6, the value
of the net assets of the Fund as last determined shall be deemed to be the value
of its net assets as of 4:00 p.m. (New York time), or as of such other time as
the value of the net assets of the Fund's portfolio may be lawfully determined
on that day. If the Fund determines the value of the net assets of its portfolio
more than once on any day, then the last such determination thereof on that day
shall be deemed to be the sole determination thereof on that day for the
purposes of this section 6.
You may waive all or a portion of your fees provided for hereunder and
such waiver shall be treated as a reduction in purchase price of your services.
You shall be contractually bound hereunder by the terms of any publicly
announced waiver of your fee, or any limitation of the Fund's expenses, as if
such waiver or limitation were fully set forth herein.
7. Avoidance of Inconsistent Position; Services Not Exclusive. In
connection with purchases or sales of portfolio securities and other investments
for the account of the Fund, neither you nor any of your directors, officers or
employees shall act as a principal or agent or receive any commission. You or
your agent shall arrange for the placing of all orders for the purchase and sale
of portfolio securities and other investments for the Fund's account with
brokers or dealers selected by you in accordance with Fund policies as expressed
in the Registration Statement. If any occasion should arise in which you give
any advice to clients of yours concerning the Shares of the Fund, you shall act
solely as investment counsel for such clients and not in any way on behalf of
the Fund.
Your services to the Fund pursuant to this Agreement are not to be
deemed to be exclusive and it is understood that you may render investment
advice, management and services to others. In acting under this Agreement, you
shall be an independent contractor and not an agent of the Corporation. Whenever
the Fund and one or more other accounts or investment companies advised by the
Manager have available funds for investment, investments suitable and
appropriate for each shall be allocated in accordance with procedures believed
by the Manager to be equitable to each entity. Similarly, opportunities to sell
securities shall be allocated in a manner believed by the Manager to be
equitable.
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<PAGE>
The Fund recognizes that in some cases this procedure may adversely affect the
size of the position that may be acquired or disposed of for the Fund.
8. Limitation of Liability of Manager. As an inducement to your
undertaking to render services pursuant to this Agreement, the Corporation
agrees that you shall not be liable under this Agreement for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement relates, provided that nothing in this
Agreement shall be deemed to protect or purport to protect you against any
liability to the Corporation, the Fund or its shareholders to which you would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of your duties, or by reason of your reckless
disregard of your obligations and duties hereunder. Any person, even though also
employed by you, who may be or become an employee of and paid by the Fund shall
be deemed, when acting within the scope of his or her employment by the Fund, to
be acting in such employment solely for the Fund and not as your employee or
agent.
9. Duration and Termination of This Agreement. This Agreement shall
remain in force until September 30, 1999, and continue in force from year to
year thereafter, but only so long as such continuance is specifically approved
at least annually (a) by the vote of a majority of the Directors who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Directors of the Corporation, or by the vote of a majority of the
outstanding voting securities of the Fund. The aforesaid requirement that
continuance of this Agreement be "specifically approved at least annually" shall
be construed in a manner consistent with the 1940 Act and the rules and
regulations thereunder and any applicable SEC exemptive order therefrom.
This Agreement may be terminated with respect to the Fund at any time,
without the payment of any penalty, by the vote of a majority of the outstanding
voting securities of the Fund or by the Corporation's Board of Directors on 60
days' written notice to you, or by you on 60 days' written notice to the
Corporation. This Agreement shall terminate automatically in the event of its
assignment.
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Agreement shall be
effective until approved in a manner consistent with the 1940 Act and rules and
regulations thereunder and any applicable SEC exemptive order therefrom.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit 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.
In interpreting the provisions of this Agreement, the definitions
contained in Section 2(a) of the 1940 Act (particularly the definitions of
"affiliated person," "assignment" and "majority of the outstanding voting
securities"), as from time to time amended, shall be applied, subject, however,
to such exemptions as may be granted by the SEC by any rule, regulation or
order.
6
<PAGE>
This Agreement shall be construed in accordance with the laws of the
State of Maryland, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, or in a manner which would cause the Fund to
fail to comply with the requirements of Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or
management agreements entered into between you and the Corporation on behalf of
the Fund.
If you are in agreement with the foregoing, please execute the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Corporation, whereupon this letter shall become a binding
contract effective as of the date of this Agreement.
Yours very truly,
SCUDDER FUND, INC., on behalf of
Scudder Government Money Market Series
By: /s/Thomas F. McDonough
-----------------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/Daniel Pierce
-----------------------------------
Managing Director
7
Exhibit (e)(1)
SCUDDER FUND, INC.
345 Park Avenue
New York, New York 10154
Date: September 7, 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:
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.
<PAGE>
(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 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
2
<PAGE>
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 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 company, and
3
<PAGE>
(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 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
4
<PAGE>
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 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;
5
<PAGE>
(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 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:
(1) of printing and distributing any prospectuses or reports prepared
for your use in connection with the offering of Shares to the
public;
6
<PAGE>
(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 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;
7
<PAGE>
(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 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
8
<PAGE>
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 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
9
<PAGE>
paragraph 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
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
10
<PAGE>
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
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
11
<PAGE>
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 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 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
12
<PAGE>
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 September 30, 1999 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 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
13
<PAGE>
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 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.
14
<PAGE>
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/ Thomas F. McDonough
--------------------------------------------
Thomas F. McDonough, Vice President
The foregoing agreement is hereby accepted as of the foregoing date
thereof.
SCUDDER INVESTOR SERVICES, INC.
By: /s/ Daniel Pierce
--------------------------------------------
Daniel Pierce, President
15
