Filed electronically with the Securities and Exchange
Commission on April 30, 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. 31
------
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT No. 27
-----
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
--------------
Caroline Pearson
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),
--------
X On May 1, 1999 pursuant to paragraph (b),
--------
60 days after filing pursuant to paragraph (a)(1),
--------
On _____________ 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>
These funds are managed to provide high money market income with preservation of
capital and liquidity through investments in different types of instruments.
No-load/No Sales Charges
Mutual funds:
o are not FDIC-insured
o have no bank guarantees
o may lose value
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
[GRAPHIC OMITTED]
Institutional
Shares
Scudder Money Market
Series (403)
Scudder Tax Free Money
Market Series (405)
Scudder Government Money
Market Series (404)
Prospectus
May 1, 1999
<PAGE>
Contents
1 Money Market Investing
- --------------------------------------------------------------------------------
1 About the Funds
- --------------------------------------------------------------------------------
1 Scudder Money Market Series
5 Scudder Tax Free Money Market Series
9 Scudder Government Money Market Series
12 Financial highlights
15 A message from the President
16 Investment adviser
18 Distributions
18 Taxes
20 About Your Investment
- --------------------------------------------------------------------------------
20 Transaction information
24 Buying and selling shares
25 Purchases
25 Redemptions
<PAGE>
Money Market Investing
Each fund is managed 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 is managed to
provide current income that is exempt from federal income taxes. Money market
funds are conservative investments. They invest in diversified pools 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. The funds' yields are most affected by short-term interest
rates. These funds may be appropriate for corporate treasurers, financial
institutions, state and local governments, and non-profit organizations that
have significant cash management needs.
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
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.
1
<PAGE>
The fund focuses its investments in first tier securities (securities generally
rated in the highest short-term category by at least two 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's portfolio managers conduct 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, floating and variable rate instruments
(obligations that do not bear interest at fixed rates) and third party puts
(certain fixed rate bonds that have been coupled with an option granted by a
third party financial institution to tender the bonds at their face value).
Risk management strategies
The fund manages credit risk by investing primarily 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.
2
<PAGE>
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.
An investment in the fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the fund seeks to
preserve the value of your investment at $1.00 per share, it is possible to lose
money by investing in the fund.
Past performance
The chart and table below provide some indication of the risks of investing in
the Institutional Shares class of the fund by illustrating how the Institutional
Shares class has performed. Of course, past performance is not necessarily an
indication of future performance.
[The following information was represented by a bar graph in the printed
materials.]
Total return for year ended December 31
1998 ...............5.52%
For the period included in the bar chart, Institutional Shares' highest return
for a calendar quarter was 1.40% (the third quarter of 1998), and Institutional
Shares' lowest return for a calendar quarter was 1.31% (the fourth quarter of
1998).
The Institutional Shares' year-to-date total return as of March 31, 1999 was
1.21%.
To obtain the current 7-day yield, please call 1-800-537-1988 or visit our
website at institutionalfunds.scudder.com.
Average annual total returns
For periods ended
December 31, 1998 Fund
- --------------------------------------------------------------------------------
One Year 5.52%
Since inception (8/4/97) 5.54%
- --------------------------------------------------------------------------------
3
<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 Institutional Shares of the
Scudder Money Market Series.
- --------------------------------------------------------------------------------
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 0.25%
- --------------------------------------------------------------------------------
Distribution (12b-1) fees NONE
- --------------------------------------------------------------------------------
Other expenses 0.04%
- --------------------------------------------------------------------------------
Total annual fund operating expenses 0.29%*
- --------------------------------------------------------------------------------
Expense waiver 0.05%*
- --------------------------------------------------------------------------------
Net expenses 0.24%*
- --------------------------------------------------------------------------------
* The Adviser has contractually agreed to waive 0.05% of its management fee
through April 30, 2000. In addition, from time to time, the Adviser may
voluntarily waive an additional portion of its management fee. The level of
this voluntary waiver is in the Adviser's discretion and is in addition to
the Adviser's agreement to waive a portion of its investment management
fee.
Example
This example is to help you compare the cost of investing in Institutional
Shares of 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 "Total annual fund operating expenses" remaining the same for each year
except the first year. The first year of your investment will take into account
the fund's "Net expenses" as shown above. The expenses would be the same whether
you sold your shares at the end of each period or continued to hold them. Actual
expenses and return vary from year to year, and may be higher or lower than
those shown.
- --------------------------------------------------------------------------------
One Year $ 25
- --------------------------------------------------------------------------------
Three Years $ 88
- --------------------------------------------------------------------------------
Five Years $ 158
- --------------------------------------------------------------------------------
Ten Years $ 363
- --------------------------------------------------------------------------------
4
<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 tax by reason of federal law 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 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 focuses its investments in first tier securities (securities generally
rated in the highest short-term category by at least two 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 an economic, business or
political development or change in one obligation may also affect the fund's
other obligations. The fund may also invest in excess of 25% of its assets in
industrial development bonds.
In selecting high quality securities, the portfolio managers conduct 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.
5
<PAGE>
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, floating and variable rate instruments
(obligations that do not bear interest at fixed rates) and third party puts
(certain fixed rate bonds that have been coupled with an option granted by a
third party financial institution to tender the bonds at their face value).
Risk management strategies
The fund manages credit risk by investing primarily 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 up to 20% of the current
value of its total 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.
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.
The municipal securities market is narrower and less liquid, with fewer
investors, issuers and market makers, than the taxable securities market. The
more limited marketability of municipal securities may make it more difficult in
certain circumstances to dispose of large investments advantageously. In
addition, certain municipal securities might lose tax-exempt status in the event
of a change in the applicable tax laws.
Industrial development bonds may involve more risk than general obligation bonds
because they are generally secured by the revenues of the facility being
financed rather than the taxing power of the municipality.
To the extent that the fund invests in taxable securities, a portion of its
income would be taxable.
An investment in the fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the fund seeks to
preserve the value of your investment at $1.00 per share, it is possible to 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 Institutional Shares class of the fund by illustrating how the Institutional
Shares class has performed. Of course, past performance is not necessarily an
indication of future performance.
[The following information was represented by a bar graph in the printed
materials.]
Total return for year ended December 31
1998 ...............3.26%
For the period included in the bar chart, Institutional Shares' highest return
for a calendar quarter was 0.87% (the second quarter of 1998), and Institutional
Shares' lowest return for a calendar quarter was 0.77% (the fourth quarter of
1998).
Institutional Shares' year-to-date total return as of March 31, 1999 was 0.65%.
To obtain the current 7-day yield, please call 1-800-537-1988 or visit our
website at institutionalfunds.scudder.com.
Average annual total returns
For periods ended
December 31, 1998 Fund
- --------------------------------------------------------------------------------
One Year 3.26%
Since inception (8/4/97) 3.32%
- --------------------------------------------------------------------------------
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 Institutional Shares of the
Scudder Tax Free Money Market Series.
- --------------------------------------------------------------------------------
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 0.25%
- --------------------------------------------------------------------------------
Distribution (12b-1) fees NONE
- --------------------------------------------------------------------------------
Other expenses 0.11%
- --------------------------------------------------------------------------------
Total annual fund operating expenses 0.36%*
- --------------------------------------------------------------------------------
Expense waiver 0.10%*
- --------------------------------------------------------------------------------
Net expenses 0.26%*
- --------------------------------------------------------------------------------
* The Adviser has contractually agreed to waive 0.10% of its management fee
through April 30, 2000.
Example
This example is to help you compare the cost of investing in Institutional
Shares of 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 "Total annual fund operating expenses" remaining the same for each year
except the first year. The first year of your investment will take into account
the fund's "Net expenses" as shown above. The expenses would be the same whether
you sold your shares at the end of each period or continued to hold them. Actual
expenses and return vary from year to year, and may be higher or lower than
those shown.
- --------------------------------------------------------------------------------
One Year $ 27
- --------------------------------------------------------------------------------
Three Years $ 106
- --------------------------------------------------------------------------------
Five Years $ 192
- --------------------------------------------------------------------------------
Ten Years $ 446
- --------------------------------------------------------------------------------
8
<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.
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, floating and variable rate instruments
(obligations that do not bear interest at fixed rates) and third party puts
(certain fixed rate bonds that have been coupled with an option granted by a
third party financial institution to tender the bonds at their face value).
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.
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.
9
<PAGE>
An investment in the fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the fund seeks to
preserve the value of your investment at $1.00 per share, it is possible to lose
money by investing in the fund.
Past performance
The chart and table below provide some indication of the risks of investing in
the Institutional Shares class of the fund by illustrating how the Institutional
Shares class has performed. Of course, past performance is not necessarily an
indication of future performance.
[The following information was represented by a bar graph in the printed
materials.]
Total return for year ended December 31
1998 ...............5.23%
For the periods included in the bar chart, Institutional Shares' highest return
for a calendar quarter was 1.31% (the third quarter of 1998), and Institutional
Shares' lowest return for a calendar quarter was 1.23% (the fourth quarter of
1998).
Institutional Shares' year-to-date total return as of March 31, 1999 was 1.15%.
To obtain the current 7-day yield, please call 1-800-537-1988 or visit our
website at institutionalfunds.scudder.com.
Average annual total returns
For periods ended
December 31, 1998 Fund
- --------------------------------------------------------------------------------
One Year 5.23%
Since inception (8/4/97) 5.28%
- --------------------------------------------------------------------------------
10
<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 Institutional Shares of the
Scudder Government Money Market Series.
- --------------------------------------------------------------------------------
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 0.25%
- --------------------------------------------------------------------------------
Distribution (12b-1) fees NONE
- --------------------------------------------------------------------------------
Other expenses 0.21%
- --------------------------------------------------------------------------------
Total annual fund operating expenses 0.46%*
- --------------------------------------------------------------------------------
Expense waiver 0.15%*
- --------------------------------------------------------------------------------
Net expenses 0.31%*
- --------------------------------------------------------------------------------
* The Adviser has contractually agreed to waive 0.15% of its management fee
through April 30, 2000.
Example
This example is to help you compare the cost of investing in Institutional
Shares of 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 "Total annual fund operating expenses" remaining the same for each year
except the first year. The first year of your investment will take into account
the fund's "Net expenses" as shown above. The expenses would be the same whether
you sold your shares at the end of each period or continued to hold them. Actual
expenses and return vary from year to year, and may be higher or lower than
those shown.
- --------------------------------------------------------------------------------
One Year $ 32
- --------------------------------------------------------------------------------
Three Years $ 132
- --------------------------------------------------------------------------------
Five Years $ 243
- --------------------------------------------------------------------------------
Ten Years $ 565
- --------------------------------------------------------------------------------
11
<PAGE>
Financial highlights
The financial highlights tables are intended to help you understand each fund's
Institutional Shares' financial performance for the periods indicated. Certain
information reflects financial results for a single class share. The total
return figures represent the rate that an investor would have earned (or lost)
on an investment in the Institutional Shares of a fund assuming reinvestment of
all dividends and distributions. This information has been audited by
PricewaterhouseCoopers LLP whose report, along with each fund's financial
statements, is included in each annual report, which is available upon request
by calling Institutional Funds Client Services at 1-800-537-3177.
Scudder Money Market Series
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
For the
Period
August 4,
1997
(commencement
of
sale of
Institutional
Year Ended Shares) to
December 31, December 31,
1998 1997
- -----------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period .................. $1.000 $1.000
Net investment income ................................. .054 .022
Distributions from net investment income .............. (.054) (.022)
Net asset value, end of period ........................ $1.000 $1.000
- -----------------------------------------------------------------------------------
Total Return (%) (a) .................................. 5.52 2.25**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ................ 1,066 338
Ratio of operating expenses, net to average daily
net assets (%) ...................................... .18 .26*
Ratio of operating expenses before expense reductions,
to average daily net assets (%) ..................... .29 .31*
Ratio of net investment income to average daily
net assets (%) ...................................... 5.34 5.39*
</TABLE>
(a) Total return is higher due to maintenance of the fund's expenses.
* Annualized
** Not annualized
- --------------------------------------------------------------------------------
12
<PAGE>
Scudder Tax Free Money Market Series
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
For the
Period
August 4,
1997
(commencement
of
sale of
Institutional
Year Ended Shares) to
December 31, December 31,
1998 1997
- ------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period .................. $1.000 $1.000
Net investment income ................................. .032 0.014
Distributions from net income ......................... (.032) (0.014)
Net asset value, end of period ........................ 1.000 1.000
- ------------------------------------------------------------------------------------
Total Return (%) (a) .................................. 3.26 1.40**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ................ 121 94
Ratio of operating expenses, net to average daily
net assets (%) ...................................... .26 .37*
Ratio of operating expenses before expense
reductions, to average daily net assets (%) ......... .36 .46*
Ratio of net investment income to average daily
net assets (%) ...................................... 3.21 3.36*
</TABLE>
(a) Total return is higher due to maintenance of the fund's expenses.
* Annualized
** Not annualized
- --------------------------------------------------------------------------------
13
<PAGE>
Scudder Government Money Market Series
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
For the
Period
August 4,
1997
(commencement
of
sale of
Institutional
Year Ended Shares) to
December 31, December 31,
1998 1997
- ------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period .................. 1.000 1.000
Net investment income ................................. .051 .022
Distributions from net investment income .............. (.051) (.022)
Net asset value, end of period ........................ 1.000 1.000
- -----------------------------------------------------------------------------------
Total Return (%) (a) .................................. 5.23 2.17**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ................ 90 54
Ratio of operating expenses, net to average daily
net assets (%) ...................................... .31 .31*
Ratio of operating expenses before expense
reductions, to average daily net assets (%) ......... .46 .46*
Ratio of net investment income to average daily
net assets (%) ...................................... 5.10 5.21*
</TABLE>
(a) Total return is higher due to maintenance of the fund's expenses.
* Annualized
** Not annualized
- --------------------------------------------------------------------------------
14
<PAGE>
A message from the President
[PHOTO]
Edmond D. Villani, President
and CEO, Scudder Kemper
Investments, Inc.
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 helped pioneer money market investing back in 1974. Today, money funds are
not just a sideline, they're one of our areas of focus. Our experienced money
market team currently manages over $20 billion. This makes Scudder Kemper one of
the largest money fund managers in the country.
Millions of shareholders have come to rely on Scudder Kemper Investments'
prudent money management philosophy. Our track record of delivering competitive
yields and maximum stability has covered more that 20 years of interest rate
volatility. We look forward to welcoming you as a shareholder.
/s/ Edmond D. Villani
15
<PAGE>
Investment adviser
Each fund retains the investment management firm of Scudder Kemper Investments,
Inc., the ("Adviser"), Two International Place, Boston, MA, to manage its daily
investment and business affairs subject to the policies established by the Board
of Directors. The Adviser actively manages your investment in a fund.
Professional management can be an important advantage for investors who do not
have the time or expertise to invest directly in individual securities.
Scudder Money Market Series
The Adviser has contractually agreed to waive 0.05% of its investment management
fee through April 30, 2000. In addition, from time to time, the Adviser may
voluntarily waive an additional portion of its management fee. As a result, the
Adviser received an investment management fee of 0.14% of the fund's average
daily net assets on an annual basis for the fiscal year ended December 31, 1998.
Scudder Tax Free Money Market Series
The Adviser has contractually agreed to waive 0.10% of its investment management
fee through April 30, 2000. 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 December 31, 1998.
Scudder Government Money Market Series
The Adviser has contractually agreed to waive 0.15% of its investment management
fee through April 30, 2000. As a result, the Adviser received an investment
management fee of 0.10% of the fund's average daily net assets on an annual
basis for the fiscal year ended December 31, 1998.
Portfolio management
Each fund is managed by a team of investment professionals, each of whom plays
an important role in the fund's management process. Team members work together
to develop investment strategies and select securities for a 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.
16
<PAGE>
The following investment professionals are associated with each fund, as
indicated:
Scudder Money Market Series
Name and Title Joined the Responsibilities and Background
Fund
- --------------------------------------------------------------------------------
Frank J. Rachwalski, Jr. 1998 Joined the Adviser in 1973 and began his
Lead Manager investment career at that time. He has
been responsible for the trading and
portfolio management of money market
funds since 1974.
Dean Meddaugh 1999 Joined the Adviser in 1996 as a money
Manager market trader, and in 1998 became a
money market manager. He began his
investment career in 1994 as an
accountant for an unaffiliated
investment management firm.
- --------------------------------------------------------------------------------
Scudder Tax Free Money Market Series
Name and Title Joined the Responsibilities and Background
Fund
- --------------------------------------------------------------------------------
Frank J. Rachwalski, Jr. 1998 Joined the Adviser in 1973 and began his
Lead Manager 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 an
Manager accountant and began her investment
career in 1992 as a money market trader.
- --------------------------------------------------------------------------------
Scudder Government Money Market Series
Name and Title Joined the Responsibilities and Background
Fund
- --------------------------------------------------------------------------------
Frank J. Rachwalski, Jr. 1998 Joined the Adviser in 1973 and began his
Lead Manager investment career at that time. He has
been responsible for the trading and
portfolio management of money market
funds since 1974.
Geoffrey Gibbs 1999 Joined the Adviser in 1996 as a trader
Manager for money market funds and began his
investment career in 1994.
- --------------------------------------------------------------------------------
17
<PAGE>
Year 2000 readiness
Like other mutual funds and financial and business organizations worldwide, the
funds could be adversely affected if computer systems on which the funds rely,
which primarily include those used by the Adviser, its affiliates or other
service providers, are unable to correctly process date-related information on
and after January 1, 2000. 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 funds' business and
operations, such as problems with calculating net asset value and difficulties
in implementing the funds' purchase and redemption procedures. The Adviser has
commenced a review of the Year 2000 issue as it may affect the funds, and is
taking steps it believes are reasonably designed to address the Year 2000 issue,
although there can be no assurances that these steps will be sufficient. In
addition, there can be no assurances that the Year 2000 issue will not have an
adverse effect on the issuers whose securities are held by a fund or on global
markets or economies generally.
Distributions
The funds' 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.
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,
whether received in cash or reinvested.
Taxes
Generally, dividends from net investment income are taxable to shareholders as
ordinary income. Long-term capital gains distributions, if any, are taxable to
shareholders as long-term capital gains, regardless of how long shareholders
have owned the 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 Market Series are expected to be
exempt from federal income taxation, except for the possible applicability of
the alternative minimum tax. Scudder Tax Free Money Market Series may invest a
limited portion of its assets in securities that do not generate tax-exempt
income.
18
<PAGE>
Unless your investment is in a tax-deferred account, you may want to avoid
investing a large amount shortly before 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.
Each fund sends you 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 the fund.
19
<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 class, less all liabilities attributable
to that class, by the total number of shares outstanding for that class. In
calculating the net asset value per share, each fund uses the amortized cost
value.
Processing time
Orders for shares of a fund will be executed at the net asset value per share
next determined after an order has become effective. (See "Share Price").
Orders for shares of a fund will become effective when an investor's bank wire
order or check is received by State Street Bank and Trust Company (the
"Custodian") or when a check is converted into federal funds. Orders will be
executed at 4:00 p.m. (eastern time) 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.
(2:00 p.m. for Scudder Tax Free Money Market Series). In addition, if investors
known to a fund notify the fund by 4:00 p.m. (2:00 p.m. for Scudder Tax Free
Money Market Series) that they intend to wire federal funds to purchase shares
of a 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.
at the close of regular trading on the New York Stock Exchange (the "Exchange")
on each day the Exchange is open for trading, and at 2:00 p.m. for Scudder Tax
Free Money Market Series. Wire transmissions may, however, be subject to delays
of several hours, in which event the effectiveness of the order will be delayed.
Payments transmitted by a bank wire other than the Federal Reserve Wire System
may take longer to be converted into federal funds.
20
<PAGE>
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 or limit purchases of shares for any reason.
Minimum balances
Initial minimum investment in these shares is $1,000,000. Shareholders should
maintain a share balance worth at least $1,000,000. 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 $1,000,000 for at least 30 days where such a reduction in value has
occurred due to a redemption, exchange or transfer out of the account.
The minimum investment requirements may be waived or lowered for investments
effected through banks and other institutions that have entered into special
arrangements with Scudder Fund, Inc. (the "Corporation") on behalf of a fund 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 Corporation on behalf of a
fund. Investment minimums may also be waived for Directors and Officers of the
Corporation.
Initial purchase by wire
1. Shareholders may open an account by calling toll-free from any continental
state: 1-800-537-3177. Give the fund(s) and class(es) to be invested in,
name(s) in which the account is to be registered, address, Social Security
or taxpayer identification number, dividend payment election, amount to be
wired, name of the wiring bank and name and telephone number of the person
to be contacted in connection with the order. An account number will then
be assigned.
2. Instruct the wiring bank to transmit the specified amount to:
State Street Bank and Trust Company
Boston, Massachusetts
ABA Number 011000028
DDA#9902-810-2
Attention: [Name of fund(s) and class(es)]
Account (name(s) in which registered)
Account Number (as assigned by telephone) and amount invested
in each fund
21
<PAGE>
3. Complete a Purchase Application. Indicate the services to be used. A
completed Purchase Application must be received by Scudder Service
Corporation (the "Transfer Agent") before the Expedited Redemption can be
used. Mail the Purchase Application to:
Scudder Service Corporation
c/o Kemper Service Company
222 South Riverside Plaza, 26th Floor
Attn: Institutional Funds Client Services
Chicago, IL 60606
Additional purchases by wire
Instruct the wiring bank to transmit the specified amount to the Custodian with
the information stated above.
Initial purchase by mail
1. Complete a Purchase Application. Indicate the services to be used.
2. Mail the Purchase Application and check payable to "The Scudder Funds" to
the Transfer Agent at the address set forth above.
Additional purchases by mail
1. Make a check payable to the fund whose shares are to be purchased. Write
the shareholder's fund account number on the check.
2. Mail the check to the Transfer Agent at the address set forth above.
Redeeming shares
Upon receipt by the Transfer Agent of a redemption request in proper form,
shares of any fund will be redeemed at their next determined net asset value.
(See "Share Price.") For the shareholder's convenience, Scudder Fund, Inc. has
established several different redemption procedures.
Payment of redemption proceeds may be made in securities, subject to regulation
by some state securities commissions. The Corporation may suspend the right of
redemption 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 the funds not reasonably
practicable.
A shareholder's account in a fund remains open for up to one year following
complete redemption, and all costs during the period will be borne by that fund.
The Corporation also reserves the right, following 30 days' notice to
shareholders, to redeem all shares in accounts without certified correct Social
Security or taxpayer identification numbers. A shareholder may
22
<PAGE>
avoid involuntary redemption by providing Scudder Fund, Inc. with a correct
taxpayer identification number during the 30-day notice period.
Redemption by mail
1. Write a letter of instruction. Indicate the dollar amount or number of
shares to be redeemed. Refer to the shareholder's fund account number and
give Social Security or taxpayer identification number (where applicable).
2. Sign the letter in exactly the same way the account is registered. If there
is more than one owner of the shares, all must sign.
3. If shares to be redeemed have a value of $100,000 or more, the signature(s)
must be guaranteed by a commercial bank that is a member of the Federal
Deposit Insurance Corporation, a trust company, a member firm of a domestic
stock exchange or a foreign branch of any of the foregoing. In addition,
signatures may be guaranteed by other Eligible Guarantor Institutions,
i.e., other banks, other brokers and dealers, municipal securities brokers
and dealers, government securities brokers and dealers, credit unions,
national securities exchanges, registered securities associations, clearing
agencies and savings associations. The Transfer Agent, however, may reject
redemption instructions if the guarantor is neither a member of nor a
participant in a signature guarantee program (currently known as
"STAMPsm"). Signature guarantees by notaries public are not acceptable.
Further documentation, such as copies of corporate resolutions and
instruments of authority, may be requested from corporations,
administrators, executors, personal representatives, trustees or custodians
to evidence the authority of the person or entity making the redemption
request.
4. Mail the letter to the Transfer Agent at the address set forth under
"Purchasing shares."
Checks for redemption proceeds will normally be mailed the day following receipt
of the request in proper form, although the Corporation reserves the right to
take up to seven days. Unless other instructions are given in proper form, a
check for the proceeds of a redemption will be sent to the shareholder's address
of record. The Custodian may benefit from the use of redemption proceeds until
the check issued to a redeeming shareholder for such proceeds has cleared.
When proceeds of a redemption are to be paid to someone other than the
shareholder, either by wire or check, the signature(s) on the letter of
instruction must be guaranteed regardless of the amount of the redemption.
23
<PAGE>
Redemption by Expedited Redemption Service
If Expedited Redemption Service has been elected on the Purchase Application on
file with the Transfer Agent, redemption of shares may be requested by
telephoning the Transfer Agent on any day the Corporation and the Custodian are
open for business.
No redemption of shares purchased by check will be permitted pursuant to the
Expedited Redemption Service until seven business days after those shares have
been credited to the shareholder's account.
1. Telephone the request to the Transfer Agent by calling toll-free from any
continental state: 1-800-537-3177, or
2. Fax your request to 1-800-537-9960, or
3. Mail the request to the Transfer Agent at the address set forth above.
Proceeds of Expedited Redemptions will be wired to the shareholder's bank
indicated in the Purchase Application. If an Expedited Redemption request for
the funds is received by the Transfer Agent by 12:00 noon (eastern time) on a
day the Corporation and the Custodian are open for business, the redemption
proceeds will be transmitted to the shareholder's bank that same day. Such
expedited redemption requests received after 12:00 noon and prior to 4:00 p.m.
(eastern time) will be honored the same day if such redemption can be
accomplished in time to meet the Federal Reserve Wire System schedules. In the
case of investments in a fund that have been effected through banks and other
institutions that have entered into special arrangements with the Corporation,
the full amount of the redemption proceeds will be transmitted by wire.
Third party transactions
If you buy and sell shares of a 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.
24
<PAGE>
Purchases
To open an account
The minimum initial investment for Institutional Shares of Scudder Money Market
Series, Scudder Tax Free Money Market Series, and Scudder Government Money
Market Series is $1,000,000.
- --------------------------------------------------------------------------------
By Mail Send your completed and signed application and check
by regular, express, Scudder Service Corporation
registered, or c/o Kemper Service Company
certified mail to: Institutional Funds Client Services
222 South Riverside Plaza, 26th Fl.
Chicago, IL 60606
- --------------------------------------------------------------------------------
By Wire Call 1-800-537-3177 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
There is no minimum additional investment for Institutional Shares of Scudder
Money Market Series, Scudder Tax Free Money Market Series, and/or Scudder
Government Money Market Series.
- --------------------------------------------------------------------------------
By Mail Send a check with a letter of instruction including your account
number and the complete fund and class name, to the appropriate
address listed above.
- --------------------------------------------------------------------------------
By Wire Call 1-800-537-3177 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.
- --------------------------------------------------------------------------------
Redemptions
- --------------------------------------------------------------------------------
By Telephone To speak with a service representative, call 1-800-537-3177
from 8:30 a.m. to 6 p.m. eastern time. 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 Send your instructions for redemption to the appropriate address
or Fax above, or fax to 1-800-537-9960 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.
A representative will call to confirm your request before
processing.
- --------------------------------------------------------------------------------
25
<PAGE>
Additional information about the funds may be found in the Statement of
Additional Information and in shareholder reports. Shareholder inquiries may be
made by calling the toll-free number listed below. The Statement of Additional
Information contains more detailed information on fund investments and
operations. The semiannual and annual shareholder reports contain a listing of
portfolio holdings and financial statements. These and other fund documents may
be obtained without charge from the following sources:
- --------------------------------------------------------------------------------
By Telephone Call Institutional Funds Client Services at 1-800-537-3177
- --------------------------------------------------------------------------------
By Mail Scudder Kemper Investments, Inc.
222 S. Riverside Plaza, 26th Floor
Attn: Institutional Funds Client Services
Chicago, IL 60606
or
Public Reference Section Securities and Exchange Commission,
Washington, D.C. 20549-6009
(a duplication fee is charged)
- --------------------------------------------------------------------------------
By Fax 1-800-537-9960
- --------------------------------------------------------------------------------
In Person Public Reference Room
Securities and Exchange Commission,
Washington, D.C.
(Call 1-800-SEC-0330
for more information.)
- --------------------------------------------------------------------------------
By Internet http://www.sec.gov
http://institutionalfunds.scudder.com
e-mail address: [email protected]
- --------------------------------------------------------------------------------
The Statement of Additional Information is incorporated by reference into this
prospectus (is legally a part of this prospectus).
Investment Company Act file number: 811-3495
[SOY INK LOGO] PRINTED WITH [RECYCLE LOGO] Printed on recycled paper
SOY INK
SIS-1
PRC403599
<PAGE>
These funds are managed to provide high money market income with preservation of
capital and liquidity through investments in different types of instruments.
No-load/No Sales Charges
Mutual funds:
o are not FDIC-insured
o have no bank guarantees
o may lose value
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
[GRAPHIC OMITTED]
Managed Shares
Scudder Money Market
Series (023)
Scudder Tax Free Money
Market Series (025)
Scudder Government
Money Market Series (024)
Prospectus
May 1, 1999
<PAGE>
Contents
1 Money Market Investing
- --------------------------------------------------------------------------------
1 About the Funds
- --------------------------------------------------------------------------------
1 Scudder Money Market Series
5 Scudder Tax Free Money Market Series
9 Scudder Government Money Market Series
12 Financial highlights
15 A message from the President
16 Investment adviser
18 Distributions
18 Taxes
20 About Your Investment
- --------------------------------------------------------------------------------
20 Transaction information
21 Buying and selling shares
22 Purchases
23 Exchanges and redemptions
24 Investment products and services
<PAGE>
Money Market Investing
Each fund is managed 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 is managed to
provide current income that is exempt from federal income taxes. Money market
funds are conservative investments. They invest in diversified pools 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. The funds' 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.
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
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 focuses its investments in first tier securities (securities generally
rated in the highest short-term category by at least two nationally recognized
rating services). The fund may also invest in
1
<PAGE>
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's portfolio managers conduct 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, floating and variable rate instruments
(obligations that do not bear interest at fixed rates) and third party puts
(certain fixed rate bonds that have been coupled with an option granted by a
third party financial institution to tender the bonds at their face value).
Risk management strategies
The fund manages credit risk by investing primarily 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.
2
<PAGE>
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.
An investment in the fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the fund seeks to
preserve the value of your investment at $1.00 per share, it is possible to lose
money by investing in the fund.
Past performance
The chart and table below provide some indication of the risks of investing in
the Managed Shares class of the fund by illustrating how the Managed Shares
class has performed. Of course, past performance is not necessarily an
indication of future performance.
Total returns for years ended December 31
[The following information was represented by a bar graph in the printed
materials.]
1989 .............8.93%
1990 .............7.92%
1991 .............6.07%
1992 .............3.74%
1993 .............2.81%
1994 .............3.86%
1995 .............5.57%
1996 .............4.97%
1997 .............5.21%
1998 .............5.33%
For the periods included in the bar chart, Managed Shares' highest return for a
calendar quarter was 2.31% (the second quarter of 1989), and Managed Shares'
lowest return for a calendar quarter was 0.69% (the second quarter of 1993).
Managed Shares' year-to-date total return as of March 31, 1999 was 1.19%.
To obtain the current 7-day yield, please call 1-800-553-6360.
Average annual total returns
For periods ended
December 31, 1998 Fund
- --------------------------------------------------------------------------------
One Year 5.33%
Five Year 4.99%
Ten Year 5.43%
- --------------------------------------------------------------------------------
3
<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 Managed 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 0.25%
- --------------------------------------------------------------------------------
Distribution (12b-1) fees NONE
- --------------------------------------------------------------------------------
Other expenses 0.23%
- --------------------------------------------------------------------------------
Total annual fund operating expenses 0.48%**
- --------------------------------------------------------------------------------
Expense waiver 0.05%**
- --------------------------------------------------------------------------------
Net expenses 0.43%**
- --------------------------------------------------------------------------------
* 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 "About Your Investment --
Exchanges and redemptions."
** The Adviser has contractually agreed to waive 0.05% of its management fee
through April 30, 2000. In addition, from time to time, the Adviser may
voluntarily waive an additional portion of its management fee.
Example
This example is to help you compare the cost of investing in Managed Shares of
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 "Total annual fund operating expenses" remaining the same for each year
except the first year. The first year of your investment will take into account
the fund's "Net expenses" as shown above. The expenses would be the same whether
you sold your shares at the end of each period or continued to hold them. Actual
expenses and return vary from year to year, and may be higher or lower than
those shown.
- --------------------------------------------------------------------------------
One Year $ 44
- --------------------------------------------------------------------------------
Three Years $ 149
- --------------------------------------------------------------------------------
Five Years $ 264
- --------------------------------------------------------------------------------
Ten Years $ 599
- --------------------------------------------------------------------------------
4
<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 tax by reason of federal law 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 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 focuses its investments in first tier securities (securities generally
rated in the highest short-term category by at least two 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 an economic, business or
political development or change in one obligation may also affect the fund's
other obligations. The fund may also invest in excess of 25% of its assets in
industrial development bonds.
In selecting high quality securities, the portfolio managers conduct 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.
5
<PAGE>
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, floating and variable rate instruments
(obligations that do not bear interest at fixed rates) and third party puts
(certain fixed rate bonds that have been coupled with an option granted by a
third party financial institution to tender the bonds at their face value).
Risk management strategies
The fund manages credit risk by investing primarily 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 up to 20% of the current
value of its total 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.
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.
The municipal securities market is narrower and less liquid, with fewer
investors, issuers and market makers, than the taxable securities market. The
more limited marketability of municipal securities may make it more difficult in
certain circumstances to dispose of large investments advantageously. In
addition, certain municipal securities might lose tax-exempt status in the event
of a change in the applicable tax laws.
Industrial development bonds may involve more risk than general obligation bonds
because they are generally secured by the revenues of the facility being
financed rather than the taxing power of the municipality.
To the extent that the fund invests in taxable securities, a portion of its
income would be taxable.
An investment in the fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the fund seeks to
preserve the value of your investment at $1.00 per share, it is possible to 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 Managed Shares class of the fund by illustrating how the Managed Shares
class has performed. Of course, past performance is not necessarily an
indication of future performance.
Total returns for years ended December 31
[The following information was represented by a bar graph in the printed
materials.]
1989 .............5.91%
1990 .............5.47%
1991 .............4.20%
1992 .............2.56%
1993 .............1.85%
1994 .............2.29%
1995 .............3.30%
1996 .............2.88%
1997 .............3.07%
1998 .............3.10%
For the periods included in the bar chart, Managed Shares' highest return for a
calendar quarter was 1.58% (the second quarter of 1989), and Managed Shares'
lowest return for a calendar quarter was 0.43% (the first quarter of 1994).
Managed Shares' year-to-date total return as of March 31, 1999 was 0.61%.
To obtain the current 7-day yield, please call 1-800-553-6360.
Average annual total returns
For periods ended
December 31, 1998 Fund
- --------------------------------------------------------------------------------
One Year 3.10%
Five Year 2.93%
Ten Year 3.45%
- --------------------------------------------------------------------------------
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 Managed 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 0.25%
- --------------------------------------------------------------------------------
Distribution (12b-1) fees NONE
- --------------------------------------------------------------------------------
Other expenses 0.26%
- --------------------------------------------------------------------------------
Total annual fund operating expenses 0.51%**
- --------------------------------------------------------------------------------
Expense waiver 0.10%**
- --------------------------------------------------------------------------------
Net expenses 0.41%**
- --------------------------------------------------------------------------------
* 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 "About Your Investment --
Exchanges and redemptions."
** The Adviser has contractually agreed to waive 0.10% of its management fee
through April 30, 2000.
Example
This example is to help you compare the cost of investing in Managed Shares of
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 "Total annual fund operating expenses" remaining the same for each year
except the first year. The first year of your investment will take into account
the fund's "Net expenses" as shown above. The expenses would be the same whether
you sold your shares at the end of each period or continued to hold them. Actual
expenses and return vary from year to year, and may be higher or lower than
those shown.
- --------------------------------------------------------------------------------
One Year $ 42
- --------------------------------------------------------------------------------
Three Years $ 153
- --------------------------------------------------------------------------------
Five Years $ 275
- --------------------------------------------------------------------------------
Ten Years $ 631
- --------------------------------------------------------------------------------
8
<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.
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, floating and variable rate instruments
(obligations that do not bear interest at fixed rates) and third party puts
(certain fixed rate bonds that have been coupled with an option granted by a
third party financial institution to tender the bonds at their face value).
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.
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.
9
<PAGE>
An investment in the fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the fund seeks to
preserve the value of your investment at $1.00 per share, it is possible to lose
money by investing in the fund.
Past performance
The chart and table below provide some indication of the risks of investing in
the Managed Shares class of the fund by illustrating how the Managed Shares
class has performed. Of course, past performance is not necessarily an
indication of future performance.
Total returns for years ended December 31
[The following information was represented by a bar graph in the printed
materials.]
1989 .............8.81%
1990 .............7.73%
1991 .............5.65%
1992 .............3.51%
1993 .............2.68%
1994 .............3.75%
1995 .............5.49%
1996 .............4.91%
1997 .............5.02%
1998 .............4.89%
For the periods included in the bar chart, Managed Shares' highest return for a
calendar quarter was 2.27% (the second quarter of 1989), and Managed Shares'
lowest return for a calendar quarter was 0.65% (the second quarter of 1993).
Managed Shares' year-to-date total return as of March 31, 1999 was 1.11%.
To obtain the current 7-day yield, please call 1-800-553-6360.
Average annual total returns
For periods ended
December 31, 1998 Fund
- --------------------------------------------------------------------------------
One Year 4.89%
Five Year 4.81%
Ten Year 5.23%
- --------------------------------------------------------------------------------
10
<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 Managed 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 0.25%
- --------------------------------------------------------------------------------
Distribution (12b-1) fees NONE
- --------------------------------------------------------------------------------
Other expenses 0.52%
- --------------------------------------------------------------------------------
Total annual fund operating expenses 0.77%**
- --------------------------------------------------------------------------------
Expense waiver 0.15%**
- --------------------------------------------------------------------------------
Net expenses 0.62%**
- --------------------------------------------------------------------------------
* 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 "About Your Investment --
Exchanges and redemptions."
** The Adviser has contractually agreed to waive 0.15% of its management fee
through April 30, 2000.
Example
This example is to help you compare the cost of investing in Managed Shares of
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 "Total annual fund operating expenses" remaining the same for each year
except the first year. The first year of your investment will take into account
the fund's "Net expenses" as shown above. The expenses would be the same whether
you sold your shares at the end of each period or continued to hold them. Actual
expenses and return vary from year to year, and may be higher or lower than
those shown.
- --------------------------------------------------------------------------------
One Year $ 63
- --------------------------------------------------------------------------------
Three Years $ 231
- --------------------------------------------------------------------------------
Five Years $ 413
- --------------------------------------------------------------------------------
Ten Years $ 940
- --------------------------------------------------------------------------------
11
<PAGE>
Financial highlights
The financial highlights tables are intended to help you understand each fund's
Managed Shares' financial performance for the periods indicated. Certain
information reflects financial results for a single class share. The total
return figures represent the rate that an investor would have earned (or lost)
on an investment in the Managed Shares of a fund 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 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.
Scudder Money Market Series
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Years Ended December 31,
Managed Shares (b) 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period ............................ $1.000 $1.000 $1.000 $1.000 $1.000
Net investment income ............... .052 .051 .049 .054 .038
Distributions from net
investment income ................. (.052) (.051) (.049) (.054) (.038)
Net asset value, end of period ...... $1.000 $1.000 $1.000 $1.000 $1.000
- -----------------------------------------------------------------------------------------------------
Total Return (%) (a) ................ 5.33 5.21 4.97 5.57 3.86
Ratios and Supplemental Data
Net assets, end of period
($ millions) ...................... 328 369 431 372 367
Ratio of operating expenses, net
to average daily net assets (%) ... .38 .49 .55 .55 .55
Ratio of operating expenses
before expense reductions to
average daily net assets (%) ...... .48 .59 .62 .68 .68
Ratio of net investment income
to average daily net assets (%) ... 5.20 5.00 4.86 5.45 3.84
</TABLE>
(a) Total returns are higher due to maintenance of the fund's expenses.
(b) Effective July 7, 1997, Scudder Money Market Series (formerly known as the
Managed Cash Fund) was divided into four classes, of which Scudder Money
Market Managed Shares is one. Shares of the fund outstanding on such date
were redesignated as the Managed Shares of the fund. The data set forth
above for the periods prior to July 17, 1997, reflects the investment
performance of the fund prior to such redesignation.
- --------------------------------------------------------------------------------
12
<PAGE>
Scudder Tax Free Money Market Series
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Years Ended December 31,
Managed Shares (b) 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period ............................ $1.000 $1.000 $1.000 $1.000 $1.000
Net investment income ............... .031 .030 .028 .032 .023
Distributions from net
investment income and net
realized capital gains ............ (.031) (.030) (.028) (.032) (.023)
Net asset value, end of period ...... $1.000 $1.000 $1.000 $1.000 $1.000
- -----------------------------------------------------------------------------------------------------
Total Return (%) .................... 3.10(a) 3.07(a) 2.88 3.30 2.29
Ratios and Supplemental Data
Net assets, end of period
($ millions) ...................... 125 177 165 138 125
Ratio of operating expenses, net
to average daily net assets (%) ... .41 .65 .72 .79 .77
Ratio of operating expenses
before expense reductions to
average daily net assets (%) ...... .51 .74 .72 .79 .77
Ratio of net investment income
to average daily net assets (%) ... 3.07 2.99 2.84 3.25 2.26
</TABLE>
(a) Total return is higher due to maintenance of the fund's expenses.
(b) Effective July 7, 1997, Scudder Tax Free Money Market Series (formerly
known as Managed Tax-Free Fund) was divided into two classes, of which
Scudder Tax Free Money Market Managed Shares is one. Shares of the fund
outstanding on such date were redesignated as the Managed Shares of the
fund. The data set forth above for the periods prior to July 17, 1997,
reflects the investment performance of the fund prior to such
redesignation.
- --------------------------------------------------------------------------------
13
<PAGE>
Scudder Government Money Market Series
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Years Ended December 31,
Managed Shares (b) 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period ............................ $1.000 $1.000 $1.000 $1.000 $1.000
Net investment income ............... .048 .049 .048 .054 .037
Distributions from net
investment income ................. (.048) (.049) (.048) (.054) (.037)
Net asset value, end of period ...... $1.000 $1.000 $1.000 $1.000 $1.000
- -----------------------------------------------------------------------------------------------------
Total Return (%) (a) ................ 4.89 5.02 4.91 5.49 3.75
Ratios and Supplemental Data
Net assets, end of period
($ millions) ...................... 33 29 28 50 69
Ratio of operating expenses, net
to average daily net assets (%) ... .62 .55 .55 .55 .55
Ratio of operating expenses
before expense reductions, to
average daily net assets (%) ...... .77 .84 .77 .86 .84
Ratio of net investment income
to average daily net assets (%) ... 4.82 4.93 4.81 5.36 3.61
</TABLE>
(a) Total return is higher due to maintenance of the fund's expenses.
(b) Effective July 7, 1997, Scudder Government Money Market Series (formerly
known as the Managed Government Securities Fund) was divided into two
classes, of which Scudder Government Money Market Managed Shares is one.
Shares of the fund outstanding on such date were redesignated as the
Managed Shares of the fund. The data set forth above for the periods prior
to July 17, 1997, reflects the investment performance of the fund prior to
such redesignation.
14
<PAGE>
A message from the President
[PHOTO]
Edmond D. Villani, President
and CEO, Scudder Kemper
Investments, Inc.
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.
Funds or fund classes in the Scudder Family of Funds are offered without
commissions to purchase or redeem shares or to exchange from one fund to
another. There are no 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.
/s/ Edmond D. Villani
15
<PAGE>
Investment adviser
Each fund retains the investment management firm of Scudder Kemper Investments,
Inc., the ("Adviser"), Two International Place, Boston, MA, to manage its daily
investment and business affairs subject to the policies established by the Board
of Directors. The Adviser actively manages your investment in a fund.
Professional management can be an important advantage for investors who do not
have the time or expertise to invest directly in individual securities.
Scudder Money Market Series
The Adviser has contractually agreed to waive 0.05% of its investment management
fee through April 30, 2000. In addition, from time to time, the Adviser may
voluntarily waive an additional portion of its management fee. 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 December 31, 1998.
Scudder Tax Free Money Market Series
The Adviser has contractually agreed to waive 0.10% of its investment management
fee through April 30, 2000. 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 December 31, 1998.
Scudder Government Money Market Series
The Adviser has contractually agreed to waive 0.15% of its investment management
fee through April 30, 2000. As a result, the Adviser received an investment
management fee of 0.10% of the fund's average daily net assets on an annual
basis for the fiscal year ended December 31, 1998.
Portfolio management
Each fund is managed by a team of investment professionals, each of whom plays
an important role in the fund's management process. Team members work together
to develop investment strategies and select securities for a 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.
16
<PAGE>
The following investment professionals are associated with each fund, as
indicated:
Scudder Money Market Series
Joined the
Name and Title Fund Responsibilities and Background
- --------------------------------------------------------------------------------
Frank J. Rachwalski, Jr. 1998 Joined the Adviser in 1973 and began
Lead Manager his investment career at that time. He
has been responsible for the trading
and portfolio management of money
market funds since 1974.
Dean Meddaugh 1999 Joined the Adviser in 1996 as a money
Manager market trader, and in 1998 became a
money market manager. He began his
investment career in 1994 as an
accountant for an unaffiliated
investment management firm.
- --------------------------------------------------------------------------------
Scudder Tax Free Money Market Series
Joined the
Name and Title Fund Responsibilities and Background
- --------------------------------------------------------------------------------
Frank J. Rachwalski, Jr. 1998 Joined the Adviser in 1973 and began his
Lead Manager 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 an
Manager accountant and began her investment
career in 1992 as a money market trader.
- --------------------------------------------------------------------------------
Scudder Government Money Market Series
Joined the
Name and Title Fund Responsibilities and Background
- --------------------------------------------------------------------------------
Frank J. Rachwalski, Jr. 1998 Joined the Adviser in 1973 and began his
Lead Manager investment career at that time. He has
been responsible for the trading and
portfolio management of money market
funds since 1974.
Geoffrey Gibbs 1999 Joined the Adviser in 1996 as a trader
Manager for money market funds and began his
investment career in 1994.
- --------------------------------------------------------------------------------
17
<PAGE>
Year 2000 readiness
Like other mutual funds and financial and business organizations worldwide, the
funds could be adversely affected if computer systems on which the funds rely,
which primarily include those used by the Adviser, its affiliates or other
service providers, are unable to correctly process date-related information on
and after January 1, 2000. 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 funds' business and
operations, such as problems with calculating net asset value and difficulties
in implementing the funds' purchase and redemption procedures. The Adviser has
commenced a review of the Year 2000 issue as it may affect the funds and is
taking steps it believes are reasonably designed to address the Year 2000 issue,
although there can be no assurances that these steps will be sufficient. In
addition, there can be no assurances that the Year 2000 issue will not have an
adverse effect on the issuers whose securities are held by a fund or on global
markets or economies generally.
Distributions
The funds' 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.
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,
whether received in cash or reinvested. Exchanges among funds are also taxable
events.
Taxes
Generally, dividends from net investment income are taxable to shareholders as
ordinary income. Long-term capital gains distributions, if any, are taxable to
shareholders as long-term capital gains, regardless of how long shareholders
have owned the 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 Market Series are expected to be
exempt from federal income taxation, except for the possible applicability of
the alternative minimum tax. Scudder Tax Free Money Market Series may invest a
limited portion of its assets in securities that do not generate tax-exempt
income.
18
<PAGE>
Unless your investment is in a tax-deferred account, you may want to avoid
investing a large amount shortly before 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.
Each fund sends you 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 the fund.
19
<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 class, less all liabilities attributable
to that class, by the total number of shares outstanding for that class. In
calculating the net asset value per share, each fund uses the amortized cost
value.
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
(2:00 p.m. for Scudder Tax Free Money Market Series) will be executed at the
next determined net asset value. 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 1-800-553-6360.
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 or limit purchases of shares (including exchanges) for any
reason.
Minimum balances
Initial minimum investment in these shares is $100,000. Shareholders should
maintain a share balance worth at least $100,000. 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 $100,000 for at least 30 days where such a reduction in value has
occurred due to a redemption, exchange or transfer out of the account.
20
<PAGE>
Checkwriting
You may redeem shares by writing checks against your account balance for at
least $1,000. Your fund investments will continue to earn dividends until your
check is presented to the particular fund for payment.
Checks will be returned by the funds' transfer agent if there are insufficient
shares to meet the withdrawal amount. You should not attempt to close an account
by check because the exact balance at the time the check clears will not be
known when the check is written.
Third party transactions
If you buy and sell shares of a 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.
21
<PAGE>
Purchases
To open an account
The minimum initial investment for Managed Shares of Scudder Money Market
Series, Scudder Tax Free Money Market Series, and Scudder Government Money
Market Series is $100,000, and $100,000 for IRAs.
- --------------------------------------------------------------------------------
By Mail Send your completed and signed application and check
by regular mail to: The Scudder Funds
P.O. Box 2291
Boston, MA 02107-2291
or by express, registered, The Scudder Funds
or certified mail to: 66 Brooks Drive
Braintree, MA 02184
- --------------------------------------------------------------------------------
By Wire Call 1-800-553-6360 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
The minimum additional investment for Managed Shares of Scudder Money Market
Series, Scudder Tax Free Money Market Series, and/or Scudder Government Money
Market Series is $1,000, and $100 for IRAs.
- --------------------------------------------------------------------------------
By Mail Send a check with a Scudder investment slip, or with a
letter of instruction including your account number and
the complete fund and class name, to the appropriate
address listed above.
- --------------------------------------------------------------------------------
By Wire Call 1-800-553-6360 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 1-800-343-2890 for instructions.
- --------------------------------------------------------------------------------
By Automatic You may arrange to make investments of $50 or more on a
Investment Plan regular basis through automatic deductions from your bank
checking account. Please call 1-800-553-6360 for more
information and an enrollment form.
- --------------------------------------------------------------------------------
22
<PAGE>
Exchanges and redemptions
To exchange shares
The minimum investments are $100,000 to establish a new account and $1,000 to
exchange among existing accounts.
- --------------------------------------------------------------------------------
By Telephone To speak with a service representative, call 1-800-553-6360
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 The Scudder Funds
by regular mail to: P.O. Box 2291
Boston, MA 02107-2291
or by express, registered, The Scudder Funds
or certified mail to: 66 Brooks Drive
Braintree, MA 02184
or by fax to: 1-800-821-6234
- --------------------------------------------------------------------------------
To sell shares
- --------------------------------------------------------------------------------
By Telephone To speak with a service representative, call 1-800-553-6360
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 Checkwriting You may redeem shares by writing checks against your account
balance as often as you like for at least $1,000, but not
more than $5,000,000.
- --------------------------------------------------------------------------------
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 Automatic You may arrange to receive automatic cash payments
Withdrawal periodically. Call 1-800-225-5163 for more information and an
Plan enrollment form.
- --------------------------------------------------------------------------------
23
<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 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 Select 500 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 Select 1000 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
24
<PAGE>
Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
Retirement Programs Education Accounts
- ------------------- ------------------
Traditional IRA Education IRA
Roth IRA UGMA/UTMA
SEP-IRA
Keogh Plan
401(k), 403(b) Plans
Variable Annuities
Scudder Horizon Plan**[[
Scudder Horizon Advantage**[[[
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder Global High Income Fund, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
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.
25
<PAGE>
Additional information about the funds may be found in the Statement of
Additional Information, the Shareholder Services Guide and in shareholder
reports. Shareholder inquiries may be made by calling the toll-free number
listed below. The Statement of Additional Information contains more detailed
information on fund investments and operations. The Shareholder Services 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 Telephone Call Scudder Investor Relations at 1-800-225-2470
or
For existing Scudder investors, call the Scudder Automated
Information Line (SAIL) at 1-800-343-2890 (24 hours a day).
- --------------------------------------------------------------------------------
By Mail Scudder Investor Services, Inc.
Two International Place Boston, MA 02110-4103
or
Public Reference Section Securities and Exchange Commission,
Washington, D.C. 20549-6009
(a duplication fee is charged)
- --------------------------------------------------------------------------------
In Person Public Reference Room
Securities and Exchange Commission,
Washington, D.C.
(Call 1-800-SEC-0330
for more information.)
- --------------------------------------------------------------------------------
By Internet http://www.sec.gov
http://www.scudder.com
- --------------------------------------------------------------------------------
The Statement of Additional Information is incorporated by reference into this
prospectus (is legally a part of this prospectus).
Investment Company Act file number: 811-3495
[SOY INK LOGO] PRINTED WITH [RECYCLE LOGO] Printed on recycled paper
SOY INK
320-2-59
PRC023599
<PAGE>
Money market mutual funds managed to provide monthly income while maintaining
liquidity and stability of capital.
No-Load/No Sales Charge
Mutual funds:
o are not FDIC-insured
o have no bank guarantees
o may lose value
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
[GRAPHIC OMITTED]
Scudder Cash Investment
Trust (065)
Scudder U.S. Treasury
Money Fund (059)
Scudder Tax Free Money
Fund (071)
Scudder Money Market
Series
o Prime Reserve Money Market
Shares (309)
o Premium Money Market
Shares (402)
Prospectus
May 1, 1999
<PAGE>
Contents
1 Money Market Investing
- --------------------------------------------------------------------------------
1 About the Funds
- --------------------------------------------------------------------------------
1 Scudder Cash Investment Trust
Minimum initial investment: $2,500
5 Scudder U.S. Treasury Money Fund
Minimum initial investment: $2,500
8 Scudder Tax Free Money Fund
Minimum initial investment: $2,500
12 Scudder Money Market Series
Prime Reserve Money Market Shares
Minimum initial investment: $10,000
Premium Money Market Shares
Minimum initial investment: $25,000
18 Financial highlights
23 A message from the President
24 Investment adviser
27 Distributions
27 Taxes
28 About Your Investment
- --------------------------------------------------------------------------------
28 Transaction information
30 Buying and selling shares
30 Purchases
32 Exchanges and redemptions
34 Investment products and services
36 Trustees and Officers
37 Directors and Officers
<PAGE>
Money Market Investing
The funds presented in this prospectus are each money market mutual funds that
are managed to provide investors with monthly income while maintaining liquidity
and stability of capital. Money market funds are conservative investments. Each
fund 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. The funds'
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.
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 that you can understand their important
differences and decide which fund and class, if applicable, is most suitable for
your investment needs.
About the Funds
Scudder Cash Investment Trust
Investment objectives
The fund seeks to maintain stability of capital and, consistent therewith, to
maintain liquidity of capital and to provide current income.
Unless otherwise indicated, the fund's investment objectives and policies may be
changed without a vote of shareholders.
Main investment strategies
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,
1
<PAGE>
o asset-backed securities and
o municipal securities.
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's portfolio managers conduct 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 objectives.
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, floating and variable rate instruments
(obligations that do not bear interest at fixed rates) and third party puts
(certain fixed rate bonds that have been coupled with an option granted by a
third party financial institution to tender the bonds at their face value).
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.
2
<PAGE>
An investment in the fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the fund seeks to
preserve the value of your investment at $1.00 per share, it is possible to 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 from year to year. Of
course, past performance is not necessarily an indication of future performance.
Total returns for years ended December 31
[The following information was represented by a bar graph in the printed
materials.]
1989 .............8.86%
1990 .............7.84%
1991 .............5.96%
1992 .............3.51%
1993 .............2.58%
1994 .............3.70%
1995 .............5.25%
1996 .............4.70%
1997 .............4.85%
1998 .............4.83%
For the periods included in the bar chart, the fund's highest return for a
calendar quarter was 2.30% (the second quarter of 1989), and the fund's lowest
return for a calendar quarter was 0.62% (the second quarter of 1993).
The fund's year-to-date total return as of 3/31/99 was 1.04%.
To obtain the current 7-day yield please call 1-800-343-2890.
Average annual total returns
For periods ended
December 31, 1998 Fund
- --------------------------------------------------------------------------------
One Year 4.83%
Five Years 4.66%
Ten Years 5.19%
- --------------------------------------------------------------------------------
3
<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 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/distributions 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 0.42%**
- --------------------------------------------------------------------------------
Distribution (12b-1) fees NONE
- --------------------------------------------------------------------------------
Other expenses 0.53%
- --------------------------------------------------------------------------------
Total annual fund operating expenses 0.95%**
- --------------------------------------------------------------------------------
* 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 "About Your Investment --
Exchanges and redemptions."
** Through September 30, 1999, total fund operating expenses are
contractually maintained by the Adviser at 0.85%.
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 "Total 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. Actual fund expenses and return vary from year
to year, and may be higher or lower than those shown.
- --------------------------------------------------------------------------------
One Year $ 97
- --------------------------------------------------------------------------------
Three Years $ 303
- --------------------------------------------------------------------------------
Five Years $ 525
- --------------------------------------------------------------------------------
Ten Years $ 1,166
- --------------------------------------------------------------------------------
4
<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.
Unless otherwise indicated, the fund's investment objectives and policies may be
changed without a vote of shareholders.
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 total 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. (Most, but 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.
Of course, there can be no guarantee that by following these investment
strategies, the fund will achieve its objectives.
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, floating and variable rate instruments
(obligations that do not bear interest at fixed rates) and third party puts
(certain fixed rate bonds that have been coupled with an option granted by a
third party financial institution to tender the bonds at their face value).
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.
5
<PAGE>
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.
An investment in the fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the fund seeks to
preserve the value of your investment at $1.00 per share, it is possible to 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 from year to year. Of
course, past performance is not necessarily an indication of future performance.
Total returns for years ended December 31
[The following information was represented by a bar graph in the printed
materials.]
1989 .............8.27%
1990 .............7.34%
1991 .............5.66%
1992 .............3.36%
1993 .............2.56%
1994 .............3.52%
1995 .............5.22%
1996 .............4.62%
1997 .............4.67%
1998 .............4.78%
For the periods included in the bar chart, the fund's highest return for a
calendar quarter was 2.14% (the second quarter of 1989), and the fund's lowest
return for a calendar quarter was 0.63% (the first quarter of 1993).
The fund's year-to-date total return as of 3/31/99 was 1.02%.
To obtain the current 7-day yield please call 1-800-343-2890.
6
<PAGE>
Average annual total returns
For periods ended
December 31, 1998 Fund
- --------------------------------------------------------------------------------
One Year 4.78%
Five Years 4.56%
Ten Years 4.99%
- --------------------------------------------------------------------------------
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 offering price) NONE
- --------------------------------------------------------------------------------
Maximum deferred sales charge (load) NONE
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on reinvested
dividends/distributions 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 0.50%**
- --------------------------------------------------------------------------------
Distribution (12b-1) fees NONE
- --------------------------------------------------------------------------------
Other expenses 0.50%
- --------------------------------------------------------------------------------
Total annual fund operating expenses 1.00%**
- --------------------------------------------------------------------------------
* 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 "About Your Investment --
Exchanges and redemptions."
** Through September 30, 1999 total fund operating expenses are contractually
maintained by the Adviser at 0.65%.
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 "Total 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. Actual fund expenses and return vary from year
to year, and may be higher or lower than those shown.
- --------------------------------------------------------------------------------
One Year $ 102
- --------------------------------------------------------------------------------
Three Years $ 318
- --------------------------------------------------------------------------------
Five Years $ 552
- --------------------------------------------------------------------------------
Ten Years $ 1,225
- --------------------------------------------------------------------------------
7
<PAGE>
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.
Unless otherwise indicated, the fund's investment objectives and policies may be
changed without a vote of shareholders.
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 net assets in short-term municipal
securities. (This policy may not be changed without the approval of a majority
of the outstanding shares of the fund.) In addition, the fund may not invest
more than 20% of its net assets in securities whose investment income is subject
to the alternative minimum tax. 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's portfolio managers conduct 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 objectives.
8
<PAGE>
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, floating and variable rate instruments
(obligations that do not bear interest at fixed rates) and third party puts
(certain fixed rate bonds that have been coupled with an option granted by a
third party financial institution to tender the bonds at their face value).
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. Industrial development bonds may involve more risk than
general obligation bonds because they are generally secured by the revenues of
the facility being financed rather than the taxing power of the municipality.
An investment in the fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the fund seeks to
preserve the value of your investment at $1.00 per share, it is possible to lose
money by investing in the fund.
9
<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 from year to year. Of
course, past performance is not necessarily an indication of future performance.
Total returns for years ended December 31
[The following information was represented by a bar graph in the printed
materials.]
1989 .............5.82%
1990 .............5.44%
1991 .............4.20%
1992 .............2.54%
1993 .............1.86%
1994 .............2.26%
1995 .............3.27%
1996 .............2.91%
1997 .............3.10%
1998 .............2.92%
For the periods included in the bar chart, the fund's highest return for a
calendar quarter was 1.52% (the second quarter of 1989), and the fund's lowest
return for a calendar quarter was 0.43% (the first quarter of 1994).
The fund's year-to-date total return as of 3/31/99 was 0.58%.
To obtain the current 7-day yield please call 1-800-343-2890.
Average annual total returns
For periods ended
December 31, 1998 Fund
- --------------------------------------------------------------------------------
One Year 2.92%
Five Years 2.89%
Ten Years 3.42%
- --------------------------------------------------------------------------------
10
<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 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/distributions 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 0.50%**
- --------------------------------------------------------------------------------
Distribution (12b-1) fees NONE
- --------------------------------------------------------------------------------
Other expenses 0.21%
- --------------------------------------------------------------------------------
Total annual fund operating expenses 0.71%**
- --------------------------------------------------------------------------------
* 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 "About Your Investment --
Exchanges and redemptions."
** Through September 30, 1999, total fund operating expenses are
contractually maintained by the Adviser at 0.65%.
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 "Total 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. Actual fund expenses and return vary from year
to year, and may be higher or lower than those shown.
- --------------------------------------------------------------------------------
One Year $ 73
- --------------------------------------------------------------------------------
Three Years $ 227
- --------------------------------------------------------------------------------
Five Years $ 395
- --------------------------------------------------------------------------------
Ten Years $ 883
- --------------------------------------------------------------------------------
11
<PAGE>
Scudder Money Market Series:
Prime Reserve Money Market Shares
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.
Unless otherwise indicated, the fund's investment objectives and policies may be
changed without a vote of shareholders.
Main investment strategies
Premium Money Market Shares and 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
o variable amount master demand notes.
The fund focuses its investments in first tier securities (securities generally
rated in the highest short-term category by at least two 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.
12
<PAGE>
In selecting securities, the fund's portfolio managers conduct 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 objectives.
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, floating and variable rate instruments
(obligations that do not bear interest at fixed rates) and third party puts
(certain fixed rate bonds that have been coupled with an option granted by a
third party financial institution to tender the bonds at their face value).
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 many 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.
An investment in the fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the fund seeks to
preserve the value of your investment at $1.00 per share, it is possible to lose
money by investing in the fund.
13
<PAGE>
Past performance
As the Prime Reserve Money Market Shares class of the fund commenced operations
on October 15, 1998, it did not have a full calendar year of performance to
report as of the date of this prospectus.
The chart and table below provide some indication of the risks of investing in
the fund by illustrating how Premium Money Market Shares class of the fund has
performed. Of course, past performance is not necessarily an indication of
future performance.
Total return for year ended December 31
[The following information was represented by a bar graph in the printed
materials.]
1998 .............5.46%
For the period included in the bar chart, Premium Money Market Shares' highest
return for a calendar quarter was 1.39% (the third quarter of 1998), and Premium
Money Market Shares' lowest return for a calendar quarter was 1.29% (the fourth
quarter of 1998).
Premium Money Market Shares' year-to-date total return as of 3/31/99 was 1.20%.
To obtain the current 7-day yield please call 1-800-343-2890.
Average annual total returns
For periods ended Premium Money Market
December 31, 1998 Shares
- --------------------------------------------------------------------------------
One Year 5.46%
Since Inception (7/7/97) 5.46%
- --------------------------------------------------------------------------------
14
<PAGE>
Prime Reserve Money Market Shares
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 Prime Reserve Money Market 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/distributions 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 0.25%**
- --------------------------------------------------------------------------------
Distribution (12b-1) fees NONE
- --------------------------------------------------------------------------------
Other expenses 0.20%
- --------------------------------------------------------------------------------
Total annual fund operating expenses 0.45%**
- --------------------------------------------------------------------------------
Expense reimbursement 0.05%
- --------------------------------------------------------------------------------
Net expenses 0.40%**
- --------------------------------------------------------------------------------
* 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 "About Your Investment --
Exchanges and redemptions."
** The inception date of the fund's Prime Reserve Money Market Shares is
10/15/98. Accordingly, "Other expenses" are estimated based on amounts
incurred by the fund during the fiscal year ended 12/31/98, prior to the
creation of Prime Reserve Money Market Shares. Through April 30, 2000, the
Adviser has contractually agreed to waive 0.05% of its management fee. In
addition, from time to time, the Adviser may voluntarily waive an
additional portion of its management fee.
Example
This example is to help you compare the cost of investing in Prime Reserve Money
Market Shares of 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 "Total annual fund operating expenses" remaining the same each
year except the first year. The first year of your investment will take into
account the fund's "Net expenses" as shown above. The expenses would be the same
whether you sold your shares at the end of each period or continued to hold
them. Actual fund expenses and return vary from year to year, and may be higher
or lower than those shown.
15
<PAGE>
- --------------------------------------------------------------------------------
One Year $ 41
- --------------------------------------------------------------------------------
Three Years $ 139
- --------------------------------------------------------------------------------
Five Years $ 247
- --------------------------------------------------------------------------------
Ten Years $ 562
- --------------------------------------------------------------------------------
Premium Money Market Shares
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 Money Market 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/distributions 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 0.25%**
- --------------------------------------------------------------------------------
Distribution (12b-1) fees NONE
- --------------------------------------------------------------------------------
Other expenses 0.10%
- --------------------------------------------------------------------------------
Total annual fund operating expenses 0.35%**
- --------------------------------------------------------------------------------
Expense reimbursement 0.05%
- --------------------------------------------------------------------------------
Net expenses 0.30%**
- --------------------------------------------------------------------------------
* 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 "About Your Investment --
Exchanges and redemptions."
** Through April 30, 2000, the Adviser has contractually agreed to waive
0.05% of its management fee. In addition, from time to time, the Adviser
may voluntarily waive an additional portion of its management fee.
16
<PAGE>
Example
This example is to help you compare the cost of investing in Premium Money
Market Shares of 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 "Total annual fund operating expenses" remaining the same for each year
except the first year. The first year of your investment will take into account
the fund's "Net expenses" as shown above. The expenses would be the same whether
you sold your shares at the end of each period or continued to hold them. Actual
fund expenses and return vary from year to year, and may be higher or lower than
those shown.
- --------------------------------------------------------------------------------
One Year $ 31
- --------------------------------------------------------------------------------
Three Years $ 107
- --------------------------------------------------------------------------------
Five Years $ 191
- --------------------------------------------------------------------------------
Ten Years $ 438
- --------------------------------------------------------------------------------
17
<PAGE>
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 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.
Scudder Cash Investment Trust
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Six Months
Ended
December
31, Years Ended June 30,
1998(a) 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period .................... $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
Net investment income ....... .023 .048 .046 .048 .048 .027
Less distributions
from net investment
income and net realized
capital gains (b) ......... (.023) (.048) (.046) (.048) (.048) (.027)
Net asset value, end
of period ................. $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
- ------------------------------------------------------------------------------------------------------------------------
Total Return (%) ............ 2.37**(c) 4.92(c) 4.73 4.89 4.90 2.77
Ratios and
Supplemental Data
Net assets, end of
period ($ millions) ....... 1,170 1,182 1,431 1,387 1,520 1,430
Ratio of operating
expenses, net to
average daily net
assets (%) ................ .85* .85 .86 .83 .78 .82
Ratio of operating
expenses before
expense reduction,
to average daily
net assets (%) ............ 1.01* .95 .86 .83 .78 .82
Ratio of net
investment income
to average daily net
assets (%) ................ 4.65* 4.82 4.63 4.79 4.84 2.78
</TABLE>
(a) Unaudited
(b) Net realized capital gains were less than 6/10 of $.01 per share.
(c) Total return would have been lower had certain expenses not been reduced.
* Annualized
** Not annualized
- --------------------------------------------------------------------------------
18
<PAGE>
Scudder U.S. Treasury Money Fund
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Six
Months
Ended
December
31, Years Ended June 30,
1998(a) 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period ................... $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
Net investment
income ................... .023 .047 .045 .048 .046 .027
Less distributions
from net investment
income and net
realized gains on
investment
transactions (b) ......... (.023) (.047) (.045) (.048) (.046) (.027)
Net asset value,
end of period ............ $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
- -----------------------------------------------------------------------------------------------------
Total Return (%) (c) ....... 2.33** 4.83 4.58 4.91 4.70 2.74
Ratios and
Supplemental Data
Net assets, end of
period ($ millions) ...... 419 389 399 396 383 383
Ratio of operating
expenses, net to
average daily net
assets (%) ............... .65* .65 .65 .65 .65 .65
Ratio of operating
expenses before
expense reductions, to
average daily net
assets (%) ............... 1.07* 1.00 .94 .92 .90 .90
Ratio of net investment
income to average
daily net assets (%) ..... 4.56* 4.72 4.49 4.80 4.61 2.75
</TABLE>
(a) Unaudited
(b) Net realized capital gains were less than 6/10 of 1(cent) per share.
(c) Total returns would have been lower had certain expenses not been reduced.
* Annualized
** Not annualized
- --------------------------------------------------------------------------------
19
<PAGE>
Scudder Tax Free Money Fund
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Years Ended December 31,
1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period ......................... $1.000 $1.000 $1.000 $1.000 $1.000
Net investment income ............ .029 .031 .029 .032 .022
Less distributions from net
investment income (a) .......... (.029) (.031) (.029) (.032) (.022)
Net asset value, end of period ... $1.000 $1.000 $1.000 $1.000 $1.000
- -----------------------------------------------------------------------------------------------------------
Total Return (%) ................. 2.92(b) 3.10(b) 2.91(b) 3.27 2.26
Ratios and Supplemental Data
Net assets, end of period
($ millions) ................... 249 283 220 239 257
Ratio of operating expenses net,
to average daily net
assets (%) ..................... .65 .65 .70 .75 .77
Ratio of operating expenses
before expense reductions to
average daily net assets ....... .71 .76 .75 .75 .77
Ratio of net investment income
to average daily net
assets (%) ..................... 2.87 3.06 2.86 3.21 2.24
</TABLE>
(a) Net realized capital gains (losses) were less than 6/10 of 1 cent per
share.
(b) Total returns may have been lower had certain expenses not been reduced.
- --------------------------------------------------------------------------------
20
<PAGE>
Scudder Money Market Series
Prime Reserve Money Market Shares
- --------------------------------------------------------------------------------
For the Period October 15,
1998 (commencement of sale
of Prime Reserve Money
Market Shares) to
December 31,
1998
- --------------------------------------------------------------------------------
Net asset value, beginning of period .............. $1.000
Net investment income ............................. .011
Distributions from net investment income .......... (.011)
Net asset value, end of period .................... $1.000
- --------------------------------------------------------------------------------
Total Return (%) (a) .............................. 1.06**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ............ 12
Ratio of operating expenses, net to average
daily net assets (%) ............................ .31*
Ratio of operating expenses before expense
reductions, to average daily net assets (%) ..... .45*
Ratio of net investment income to average
daily net assets (%) ............................ 4.95*
(a) Total return is higher due to maintenance of the fund's expenses.
* Annualized
** Not annualized
- --------------------------------------------------------------------------------
21
<PAGE>
Scudder Money Market Series
Premium Money Market Shares
- --------------------------------------------------------------------------------
For the Period
July 7, 1997
(commencement of
sale of Premium
Money Market
Year Ended Shares) to
December 31, December 31,
1998 1997
- --------------------------------------------------------------------------------
Net asset value, beginning of period ........... $1.000 $1.000
Net investment income .......................... .053 .026
Distributions from net investment income ....... (.053) (.026)
Net asset value, end of period ................. $1.000 $1.000
- --------------------------------------------------------------------------------
Total Return (%) (a) ........................... 5.46 2.62**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ......... 808 335
Ratio of operating expenses, net
to average daily net assets (%) ................ .24 .38*
Ratio of operating expenses before expense
reductions, to average daily net assets (%) .... .35 .43*
Ratio of net investment income to
average daily net assets (%) ................... 5.31 5.50*
(a) Total return is higher due to maintenance of the fund's expenses.
* Annualized
** Not annualized
- --------------------------------------------------------------------------------
22
<PAGE>
A message from the President
[PHOTO]
Edmond D. Villani, President
and CEO, Scudder Kemper
Investments, Inc.
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.
Funds or fund classes in the Scudder Family of Funds are offered without
commissions to purchase or redeem shares or to exchange from one fund to
another. There are no 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.
/s/ Edmond D. Villani
23
<PAGE>
Investment adviser
Each fund retains 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 has contractually agreed to maintain the annualized expenses of the
fund at no more than 0.85% of the average daily net assets of the fund through
September 30, 1999. 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 has contractually agreed to maintain the annualized expenses of the
fund at no more than 0.65% of the average daily net assets of the fund through
September 30, 1999. 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 has contractually agreed to maintain the annualized expenses of the
fund at no more than 0.65% of the average daily net assets of the fund through
September 30, 1999. 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.
Scudder Money Market Series:
Prime Reserve Money Market Shares
Premium Money Market Shares
The Adviser has contractually agreed to waive 0.05% of its management fee from
Scudder Money Market Series through April 30, 2000. In addition, from time to
time, the Adviser may voluntarily waive an additional portion of its management
fee. As a result, for Prime Reserve Money Market Shares, the Adviser received a
management fee of 0.11% of the average daily net assets of the fund for the
fiscal year ended December 31, 1998. For Premium Money Market Shares the Adviser
received a management fee of 0.14% of the average daily net assets on an annual
basis of the fund for the fiscal year ended
24
<PAGE>
December 31, 1998. The effective management fee rate differs for the two classes
based on the October 15, 1998 inception date of Prime Reserve Money Market
Shares.
Portfolio management
Each fund is managed by a team of investment professionals each of whom plays an
important role in a fund's management process. Team members work together to
develop investment strategies and select securities for a 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 each fund 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 as a
Lead Manager money market specialist and began
his investment career at that
time. He has been responsible for
the trading and portfolio
management of money market funds
since 1974.
Dean Meddaugh 1999 Joined the Adviser in 1996 as a
Manager money market trader, and in 1998
became a money market manager. He
began his investment career in
1994 as an accountant for an
unaffiliated investment
management firm.
- --------------------------------------------------------------------------------
25
<PAGE>
Scudder U.S. Treasury Money Fund
Name and Title Joined the Fund Responsibilities and Background
- --------------------------------------------------------------------------------
Frank J. Rachwalski, Jr. 1998 Joined the Adviser in 1973 as a
Lead Manager money market specialist and began
his investment career at that
time. He has been responsible for
the trading and portfolio
management of money market funds
since 1974.
Dean Meddaugh 1999 Joined the Adviser in 1996 as a
Manager money market trader, and in 1998
became a money market manager. He
began his investment career in
1994 as an accountant for an
unaffiliated investment
management firm.
- --------------------------------------------------------------------------------
Scudder Tax Free Money Fund
Name and Title Joined the Fund Responsibilities and Background
- --------------------------------------------------------------------------------
Frank J. Rachwalski, Jr. 1998 Joined the Adviser in 1973 as a
Lead Manager money market specialist 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 an
Manager accountant and began her
investment career in 1992 as a
money market trader.
- --------------------------------------------------------------------------------
Scudder Money Market Series
Name and Title Joined the Fund Responsibilities and Background
- --------------------------------------------------------------------------------
Frank J. Rachwalski, Jr. 1998 Joined the Adviser in 1973 as a
Lead Manager money market specialist and began
his investment career at that
time. He has been responsible for
the trading and portfolio
management of money market funds
since 1974.
Dean Meddaugh 1999 Joined the Adviser in 1996 as a
Manager money market trader, and in 1998
became a money market manager. He
began his investment career in
1994 as an accountant for an
unaffiliated investment
management firm.
- --------------------------------------------------------------------------------
26
<PAGE>
Year 2000 readiness
Like other mutual funds and financial and business organizations worldwide, the
funds could be adversely affected if computer systems on which a fund relies,
which primarily include those used by the Adviser, its affiliates or other
service providers, are unable to correctly process date-related information on
and after January 1, 2000. 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 funds' business and
operations, such as problems with calculating net asset value and difficulties
in implementing the funds' purchase and redemption procedures. The Adviser has
commenced a review of the Year 2000 issue as it may affect the funds and is
taking steps it believes are reasonably designed to address the Year 2000 issue,
although there can be no assurances that these steps will be sufficient. In
addition, there can be no assurances that the Year 2000 issue will not have an
adverse effect on the issuers whose securities are held by a fund or on global
markets or economies generally.
Distributions
The funds' 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,
whether received in cash or reinvested. Exchanges among funds are also taxable
events.
Taxes
Generally, dividends from net investment income are taxable to shareholders as
ordinary income. Long-term capital gains distributions, if any, are taxable to
shareholders as 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 expected to be exempt from
federal income taxation, except for the possible applicability of the
alternative minimum tax. Scudder Tax Free Money Fund may invest a limited
portion of its assets in securities that do not generate tax-exempt income.
27
<PAGE>
Unless your investment is in a tax-deferred account, you may want to avoid
investing a large amount shortly before 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, each fund uses
the amortized cost value.
28
<PAGE>
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. All
other purchase and redemption requests received in good order at each 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.
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 or limit 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 -- 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.
29
<PAGE>
Minimum balances -- 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.
Checkwriting
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 and no more than $5,000,000 for each fund. You may
redeem shares of Prime Reserve Money Market Shares and Premium Money Market
Shares by writing checks against your account for at least $1,000 and no more
than $5,000,000 for each class of shares of the fund.
Third party transactions
If you buy and sell shares of a 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:
o Scudder Cash Investment Trust and Scudder U.S. Treasury Money Fund:
$2,500; IRAs: $1,000
o Scudder Tax Free Money Fund: $2,500
o Prime Reserve Money Market Shares: $10,000; IRAs $10,000
o Premium Money Market Shares: $25,000; IRAs $25,000
30
<PAGE>
- --------------------------------------------------------------------------------
By Mail Send your completed and signed application and check
by regular mail to: The Scudder Funds
P.O. Box 2291
Boston, MA 02107-2291
or by express, registered, The Scudder Funds
or certified mail to: 66 Brooks Drive
Braintree, MA 02184
- --------------------------------------------------------------------------------
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:
o Scudder Cash Investment Trust and Scudder U.S. Treasury Money Fund: $100;
IRAs: $50
o Scudder Tax Free Money Fund: $100
o Prime Reserve Money Market Shares: $1,000; IRAs $1,000
o 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 Plan regular basis through automatic deductions from your bank
checking account. Please call 1-800-225-5163 for more
information and an enrollment form.
- --------------------------------------------------------------------------------
31
<PAGE>
Exchanges and redemptions
To exchange shares
Minimum initial investments:
o 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
o Prime Reserve Money Market Shares: $10,000 to establish a new account;
$1,000 to exchange among existing accounts
o 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 The Scudder Funds
by regular mail to: P.O. Box 2291
Boston, MA 02107-2291
or by express, registered, The Scudder Funds
or certified mail to: 66 Brooks Drive
Braintree, MA 02184
or by fax to: 1-800-821-6234
- --------------------------------------------------------------------------------
32
<PAGE>
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 Checkwriting 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 balance for at
least $100, but not more than $5,000,000. You may redeem
shares of Prime Reserve Money Market Shares and Premium Money
Market Shares 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.
- --------------------------------------------------------------------------------
33
<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 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 Select 500 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 Select 1000 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
34
<PAGE>
Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
Retirement Programs Education Accounts
- ------------------- ------------------
Traditional IRA Education IRA
Roth IRA UGMA/UTMA
SEP-IRA
Keogh Plan
401(k), 403(b) Plans
Variable Annuities
Scudder Horizon Plan**[[
Scudder Horizon Advantage**[[[
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder Global High Income Fund, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
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.
35
<PAGE>
Trustees and Officers of Scudder Cash Investment Trust, Scudder Tax Free Money
Fund and Scudder U.S. Treasury Money Fund
- --------------------------------------------------------------------------------
Daniel Pierce* Kathryn L. Quirk*
President and Trustee Trustee; Vice President
and Assistant Secretary
Henry P. Becton, Jr.
Trustee; President Jean C. Tempel
and General Manager, Trustee; Venture Partner, Internet
WGBH Educational Foundation Capital Corporation
Dawn-Marie Driscoll Thomas W. Joseph*
Trustee; President, Driscoll Vice President
Associates; Executive Fellow,
Center for Business Ethics, Ann M. McCreary*
Bentley College Vice President
Peter B. Freeman Frank J. Rachwalski, Jr.*
Trustee; Corporate Director Vice President
and Trustee
John R. Hebble*
George M. Lovejoy, Jr. Treasurer
Trustee; President and Director,
Fifty Associates Caroline Pearson*
Assistant Secretary
Wesley W. Marple, Jr.
Trustee; Professor of
Business Administration,
Northeastern University,
College of Business Administration
- -----------
* Scudder Kemper Investments, Inc.
36
<PAGE>
Directors and Officers of Scudder Fund Inc.
- --------------------------------------------------------------------------------
Daniel Pierce* Peter B. Freeman
President Director; Corporate Director
and Trustee
Dr. Rosita P. Chang
Director; Professor of Finance, Thomas W. Joseph*
University of Rhode Island Vice President and
Assistant Secretary
Dr. J.D. Hammond
Director; Dean, Smeal College of Ann M. McCreary*
Business Administration, Pennsylvania Vice President
State University
Kathryn L. Quirk*
Richard M. Hunt Vice President
Director; University Marshal and Senior
Lecturer, Harvard University Frank J. Rachwalski, Jr.*
Vice President
Edgar R. Fiedler
Director; Senior Fellow and Economic John R. Hebble*
Counsellor, The Conference Board, Inc. Treasurer
Caroline Pearson*
Assistant Secretary
- -----------
* Scudder Kemper Investments, Inc.
37
<PAGE>
Additional information about each fund may be found in the Statements of
Additional Information, the Shareholder Services Guide and in shareholder
reports. Shareholder inquiries may be made by calling the toll-free number
listed below. The Statements of Additional Information contain more detailed
information on fund investments and operations. The Shareholder Services 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 a 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 Telephone Call Scudder Investor Relations at 1-800-225-2470
or
For existing Scudder investors, call the Scudder Automated
Information Line (SAIL) at 1-800-343-2890 (24 hours a day).
- --------------------------------------------------------------------------------
By Mail Scudder Investor Services, Inc.
Two International Place
Boston, MA 02110-4103
or
Public Reference Section
Securities and Exchange Commission,
Washington, D.C. 20549-6009
(a duplication fee is charged)
- --------------------------------------------------------------------------------
In Person Public Reference Room
Securities and Exchange Commission,
Washington, D.C.
(Call 1-800-SEC-0330 for more information.)
- --------------------------------------------------------------------------------
By Internet http://www.sec.gov
http://www.scudder.com
- --------------------------------------------------------------------------------
The Statements of Additional Information are incorporated by reference into this
prospectus (are legally a part of this prospectus).
Investment Company Act file numbers
Scudder Cash Investment Trust 811-2613
Scudder U.S. Treasury Money Fund 811-3043
Scudder Tax Free Money Fund 811-2959
Scudder Fund, Inc. 811-3495
[SOY INK LOGO] PRINTED WITH [RECYCLE LOGO] Printed on recycled paper
SOY INK
MM-2-59
PRC065599
<PAGE>
SCUDDER FUND, INC.
Two International Place
Boston, MA 02110-4103
1-800-553-6360
Scudder Fund, Inc. is a professionally managed, open-end management
investment company comprised of three diversified money market investment
portfolios.
SCUDDER MONEY MARKET SERIES --
Prime Reserve Money Market Shares
Premium Money Market Shares
Institutional Shares
Managed Shares
May 1, 1999
SCUDDER TAX FREE MONEY MARKET SERIES --
Institutional Shares
Managed Shares
May 1, 1999
SCUDDER GOVERNMENT MONEY MARKET SERIES --
Institutional Shares
Managed Shares
May 1, 1999
Mutual fund portfolios, each managed 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, 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..................................................5
ADDITIONAL PERMITTED INVESTMENT ACTIVITIES.....................................6
PURCHASING SHARES..............................................................9
Wire Transfer of Federal Funds...........................................9
Additional Information About Making Subsequent Investments by
QuickBuy................................................................10
Share Certificates......................................................10
EXCHANGES AND REDEMPTIONS.....................................................11
Exchanges...............................................................11
Redemption by Telephone.................................................12
Redemption By QuickSell.................................................13
Redemption by Mail or Fax...............................................13
Redemption by Checkwriting..............................................13
FEATURES AND SERVICES OFFERED BY THE FUNDS....................................14
The No-Load Concept.....................................................14
Internet access.........................................................15
Dividends and Capital Gains Distribution Options........................16
Scudder Investor Centers................................................16
Reports to Shareholders.................................................16
Transaction Summaries...................................................17
THE SCUDDER FAMILY OF FUNDS...................................................17
SPECIAL PLAN ACCOUNTS.........................................................22
Scudder Retirement Plans: Profit-Sharing and Money Purchase
Pension Plans for Corporations and Self-Employed Individuals............22
Scudder 401(k): Cash or Deferred Profit-Sharing Plan for
Corporations and Self-Employed Individuals..............................22
Scudder IRA: Individual Retirement Account.............................22
Scudder Roth IRA: Individual Retirement Account........................23
Scudder 403(b) Plan.....................................................24
Automatic Withdrawal Plan...............................................24
Group or Salary Deduction Plan..........................................24
DIVIDENDS.....................................................................25
PERFORMANCE INFORMATION.......................................................25
Yield...................................................................25
Effective Yield.........................................................26
Average Annual Total Return.............................................26
Cumulative Total Return.................................................27
Tax-Equivalent Yield....................................................28
Comparison of Fund Performance..........................................28
THE PROGRAM...................................................................31
ORGANIZATION OF THE FUNDS.....................................................31
INVESTMENT ADVISER............................................................32
Personal Investments by Employees of the Adviser........................35
DISTRIBUTOR...................................................................35
DIRECTORS AND OFFICERS........................................................36
i
<PAGE>
TABLE OF CONTENTS (continued)
Page
REMUNERATION..................................................................39
Responsibilities of the Board -- Board and Committee Meetings...........39
Compensation of Officers and Directors..................................39
TAXES.........................................................................40
PORTFOLIO TRANSACTIONS........................................................42
Brokerage Commissions...................................................42
NET ASSET VALUE...............................................................43
ADDITIONAL INFORMATION........................................................43
Experts.................................................................43
Other Information.......................................................43
FINANCIAL STATEMENTS..........................................................44
APPENDIX
Corporate and Municipal Bonds
Corporate and Municipal Commercial Paper
Municipal Notes
ii
<PAGE>
THE FUNDS AND THEIR OBJECTIVES
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 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."
Descriptions in the Statement of Additional Information of a particular
investment practice or technique in which a Fund may engage, or a financial
instrument which a Fund may purchase, are meant to describe the spectrum of
investments that the Adviser, in its discretion, might, but is not required to,
use in managing a Fund's portfolio assets. The Adviser may, in its discretion,
at any time employ such practice, technique or instrument for one or more funds
but not for all funds advised by it. Furthermore, it is possible that certain
types of financial instruments or investment techniques described herein may not
be available, permissible, economically feasible or effective for their intended
purposes in all markets. Certain practices, techniques, or instruments may not
be principal activities of a Fund, but, to the extent employed, could from time
to time have a material impact on a Fund's performance.
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
<PAGE>
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 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 the obligations must be, in the
opinion of the Adviser, of an investment quality comparable to obligations of
U.S. banks in which the Fund may invest.
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 may not invest more than 10% of
the value of its total assets in illiquid securities 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.
2
<PAGE>
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 by the Fund.
For purposes of determining the percentage of the fund's total assets
invested in securities of issuers having their principal business activities in
a particular industry, asset backed securities will be classified separately,
based on the nature of the underlying assets, according to the following
categories: captive auto, diversified, retail and consumer loans, captive
equipment and business, business trade receivables, nuclear fuel and capital and
mortgage lending.
All of the securities in which the Fund will invest must meet credit,
quality and diversification 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
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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 Fund is currently authorized to invest without limit in second tier
securities. The Fund does not, however, currently intend to invest in such
securities.
The Fund may invest in variable or floating rate obligations. The floating
and variable rate municipal obligations that the Fund may purchase include
certificates of participation in such obligations purchased from banks. A
certificate of participation gives the Fund an undivided interest in the
underlying municipal obligations, usually private activity bonds, in the
proportion that the Fund's interest bears to the total principal amount of such
municipal obligations. Certain of such certificates of participation may carry a
demand feature that would permit the holder to tender them back to the issuer
prior to maturity. The Fund may invest in certificates of participation even if
the underlying municipal obligations carry stated maturities in excess of one
year, if compliance with certain conditions contained in a rule of the
Securities and Exchange Commission (the "SEC") is met. The income received on
certificates of participation constitutes interest from tax-exempt obligations.
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. 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,
quality and diversification 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
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.
All of the securities in which the Fund will invest must meet credit,
quality and diversification 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.
For purposes of determining the percentage of the fund's total assets
invested in securities of issuers having their principal business activities in
a particular industry, asset backed securities will be classified separately,
based on
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the nature of the underlying assets, according to the following categories:
captive auto, diversified, retail and consumer loans, captive equipment and
business, business trade receivables, nuclear fuel and capital and mortgage
lending.
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 Tax Free Fund will maintain at least
80% of the value of its total assets in obligations that are exempt from federal
taxes and are not subject to the alternative minimum tax. The foregoing
constitutes a fundamental policy that cannot be changed without the approval of
a majority of the outstanding shares of the Fund.
Any investment restrictions herein which involve a maximum percentage of
securities or assets shall not be considered to be violated unless an excess
over the percentage occurs immediately after and is caused by an acquisition or
encumbrance of securities or assets of, or borrowings by, a Fund.
Each Fund has elected to be classified as a diversified series of an
open-end investment company.
In addition, as a matter of fundamental policy, each Fund may not:
(1) borrow money, except as permitted under the 1940 Act, as amended,
and as interpreted or modified by regulatory authority having
jurisdiction, from time to time;
(2) issue senior securities, except as permitted under the 1940 Act, as
amended, and as interpreted or modified by regulatory authority
having jurisdiction, from time to time;
(3) engage in the business of underwriting securities issued by others,
except to the extent that the Fund may be deemed to be an
underwriter in connection with the disposition of portfolio
securities;
(4) purchase or sell real estate, which term does not include securities
of companies which deal in real estate or mortgages or investments
secured by real estate or interests therein, except that the Fund
reserves freedom of action to hold and to sell real estate acquired
as a result of the Fund's ownership of securities;
(5) purchase physical commodities or contracts relating to physical
commodities;
(6) make loans except as permitted under the Investment Company Act of
1940, as amended, and as interpreted or modified by regulatory
authority having jurisdiction, from time to time; 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.
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ADDITIONAL PERMITTED INVESTMENT ACTIVITIES
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.
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.
Investments in the Banking Industry. To the extent the Cash Fund invests 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.
Obligations of U.S. Government agencies and instrumentalities. Obligations of
U.S. Government agencies and instrumentalities are debt securities issued or
guaranteed by U.S. Government-sponsored enterprises and federal agencies. Some
of such obligations are supported by (a) the full faith and credit of the U.S.
Treasury (such as Government National Mortgage Association participation
certificates), (b) the limited authority of the issuer to borrow form the U.S.
Treasury (such as securities of the Federal Home Loan Bank), (c) the authority
of the U.S. Government to purchase certain obligations of the issuer (such as
securities of the Fannie Mae), or (d) only the credit of the issuer. In the case
of obligations not backed by the full faith and credit of the U.S. Government,
the investor must look principally to the agency issuing or guaranteeing the
obligation for ultimate repayment, which agency may be privately owned. The
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Funds will invest in obligations of U.S. Government agencies and
instrumentalities only when the Adviser is satisfied that the credit risk with
respect to the issuer is minimal.
Floating and Variable Rate Instruments. Certain of the obligations that each
Fund may purchase have a floating or variable rate of interest. Such obligations
bear interest at rates that are not fixed, but which vary with changes in
specified market rates or indices, such as the Prime Rate, and at specified
intervals.
Repurchase Agreements. Each Fund may enter into repurchase agreements with any
member bank of the Federal Reserve System or any broker/dealer which is
recognized as a reporting government securities dealer if the creditworthiness
of the bank or broker/dealer has been determined by the Adviser to be at least
as high as that of other obligations the Funds may purchase or to be at least
equal to that of issuers of commercial paper rated within the two highest
ratings categories assigned by Moody's, S&P or Fitch.
A repurchase agreement provides a means for a Fund to earn income on funds
for periods as short as overnight. It is an arrangement under which the
purchaser (i.e., a Fund) acquires a security ("Obligation") and the seller
agrees, at the time of sale, to repurchase the Obligation at a specified time
and price. Securities subject to a repurchase agreement are held in a segregated
account and, as described in more detail below, the value of such securities is
kept at least equal to the repurchase price on a daily basis. The repurchase
price may be higher than the purchase price, the difference being income to a
Fund, or the purchase and repurchase prices may be the same, with interest at a
stated rate due to a Fund together with the repurchase price upon repurchase. In
either case, the income to a Fund is unrelated to the interest rate on the
Obligation itself. Obligations will be held by the custodian or in the Federal
Reserve Book Entry System.
For purposes of the Investment Company Act of 1940, as amended (the "1940
Act"), a repurchase agreement is deemed to be a loan from a Fund to the seller
of the Obligation subject to the repurchase agreement and is therefore subject
to each Fund's investment restriction applicable to loans. It is not clear
whether a court would consider the Obligation purchased by a Fund subject to a
repurchase agreement as being owned by that Fund or as being collateral for a
loan by that Fund to the seller. In the event of the commencement of bankruptcy
or insolvency proceedings with respect to the seller of the Obligation before
repurchase of the Obligation under a repurchase agreement, a Fund may encounter
delay and incur costs before being able to sell the security. Delays may involve
loss of interest or decline in price of the Obligation. If the court
characterizes the transaction as a loan and a Fund has not perfected a security
interest in the Obligation, that Fund may be required to return the Obligation
to the seller's estate and be treated as an unsecured creditor of the seller. As
an unsecured creditor, a Fund would be at risk of losing some or all of the
principal and income involved in the transaction. As with any unsecured debt
Obligation purchased for a Fund, the Adviser seeks to minimize the risk of loss
through repurchase agreements by analyzing the creditworthiness of the obligor,
in this case the seller of the Obligation. Apart from the risk of bankruptcy or
insolvency proceedings, there is also the risk that the seller may fail to
repurchase the Obligation, in which case a Fund may incur a loss if the proceeds
to that Fund of the sale to a third party are less than the repurchase price.
However, if the market value (including interest) of the Obligation subject to
the repurchase agreement becomes less than the repurchase price (including
interest), a Fund will direct the seller of the Obligation to deliver additional
securities so that the market value (including interest) of all securities
subject to the repurchase agreement will equal or exceed the repurchase price.
Corporate Obligations. Investment in corporate debt obligations involves credit
and interest rate risk. The value of fixed-income investments will fluctuate
with changes in interest rates and bond market conditions, tending to rise as
interest rates decline and to decline as interest rates rise. Corporate debt
obligations generally offer less current yield than securities of lower quality,
but lower-quality securities generally have less liquidity, greater credit and
market risk, and as a result, more price volatility. Longer term bonds are,
however, generally more volatile than bonds with shorter maturities.
Municipal Obligations. Municipal obligations, which are debt obligations issued
by or on behalf of states, cities, municipalities and other public authorities,
territories, and possessions of the U.S., and their political subdivisions,
agencies, and instrumentalities, and the District of Columbia, may be general
obligation, revenue or industrial development bonds, include municipal bonds,
municipal notes and municipal commercial paper.
Scudder Money Market Series' and Scudder Tax Free Money Market Series'
investments in municipal bonds are limited to bonds that are rated at the date
of purchase "Aa" or higher by Moody's or "AA" or higher by S&P or Fitch.
The Funds' investments in municipal notes will be limited to notes that
are rated at the date of the purchase "MIG 1" of "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.
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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 Funds may invest
in municipal commercial paper that is rated at the date of purchase "P-1" or
"P-2" by Moody's, "A-1," "A-2," or "A-1+" by S&P or "F-1" by Fitch. If a
municipal obligation is not rated, a Fund may purchase the obligation if, in the
opinion of the Adviser, it is of investment quality comparable to other rated
investments that are permitted in the Fund.
Commercial Paper. Commercial paper represents short-term unsecured promissory
notes issued in bearer form by bank holding companies, corporations and finance
companies. Each Fund may invest in commercial paper that is rated "Prime-1" by
Moody's or "A-1" by S&P or, if not rated by Moody's or S&P, is issued by
companies having an outstanding debt issue rated Aaa or Aa by Moody's or AAA or
AA by S&P.
Letters of Credit. Municipal obligations, including certificates of
participation, commercial paper and other short-term obligations, may be backed
by an irrevocable letter of credit of a bank which assumes the obligation for
payment of principal and interest in the event of default by the issuer. Only
banks which, in the opinion of the Adviser, are of investment quality comparable
to other permitted investments of the Funds may be used for letter of credit
backed investments.
Securities with Put Rights. Each Fund may enter into put transactions with
respect to obligations held in its portfolio with broker/dealers pursuant to a
rule under the Investment Company Act of 1940 (the "1940 Act") , and with
commercial banks.
The right of a Fund to exercise a put is unconditional and unqualified. A
put is not transferable by a Fund, although the Fund may sell the underlying
securities to a third party at any time. If necessary and advisable, any Fund
may pay for certain puts either separately in cash or by paying a higher price
for portfolio securities that are acquired subject to such a put (thus reducing
the yield to maturity otherwise available for the same securities). The Funds
expect, however, that puts generally will be available without the payment of
any direct or indirect consideration.
Each Fund may enter into puts only with banks or broker/dealers that, in
the opinion of the Adviser, present minimal credit risks. The ability of a Fund
to exercise a put will depend on the ability of the bank or broker/dealer to pay
for the underlying securities at the time the put is exercised. In the event
that a bank or broker/dealer should default on its obligation to repurchase an
underlying security, a Fund might be unable to recover all or a portion of any
loss sustained from having to sell the security elsewhere.
Each Fund intends to enter into puts solely to maintain liquidity and does
not intend to exercise its rights thereunder for trading purposes. The puts will
only be for periods substantially less than the life of the underlying security.
The acquisition of a put will not affect the valuation by a Fund of the
underlying security. The actual put will be valued at zero in determining net
asset value of the Funds. Where a Fund pays directly or indirectly for a put,
its cost will be reflected as an unrealized loss for the period during which the
put is held by the Fund and will be reflected in realized capital gain or loss
when the put is exercised or expires. If the value of the underlying security
increases, the potential for unrealized gain or realized gain is reduced by the
cost of the put. The maturity of a municipal obligation purchased by a Fund will
not be considered shortened by any put to which such obligation is subject.
Third Party Puts. Each Fund may also purchase long-term fixed rate bonds that
have been coupled with an option granted by a third party financial institution
allowing a Fund at specified intervals (not exceeding 397 calendar days) to
tender (or "put") the bonds to the institution and receive the face value
thereof (plus accrued interest). These third party puts are available in several
different forms, may be represented by custodial receipts or trust certificates
and may be combined with other features such as interest rate swaps. Each Fund
receives a short-term rate of interest (which is periodically reset), and the
interest rate differential between that rate and the fixed rate on the bond is
retained by the financial institution. The financial institution granting the
option does not provide credit enhancement, and in the event that there is a
default in the payment of principal or interest, or downgrading of a bond to
below investment grade, or a loss of the bond's tax-exempt status, the put
option will terminate automatically, the risk to a Fund will be that of holding
such a long-term bond and the dollar-weighted average maturity of a Fund's
portfolio would be adversely affected.
These bonds coupled with puts may present the same tax issues as are
associated with Stand-by Commitments discussed above. As with any Stand-by
Commitments acquired by each Fund, each Fund intends to take the position that
it is the owner of any municipal obligation acquired subject to a third-party
put, 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
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
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company tax provisions is unclear. However, the Adviser intends to manage each
Fund's portfolio in a manner designed to minimize any adverse impact from these
investments.
When-Issued Securities. Each Fund may purchase securities on a "when-issued" or
"forward delivery" basis for payment and delivery at a later date. The price of
such securities, which is generally expressed in yield terms, is generally fixed
at the time the commitment to purchase is made, but delivery and payment for the
when-issued or forward delivery securities takes place at a later date. During
the period between purchase and settlement, no payment is made by the purchasing
Fund to the issuer and no interest on the when-issued or forward delivery
securities accrues to the Fund. To the extent that assets of each Fund are held
in cash pending the settlement of a purchase of securities, that Fund will earn
no income; however, it is each Fund's intention to be fully invested to the
extent practicable and subject to the policies stated above. While when-issued
or forward delivery securities may be sold prior to the settlement date, each
Fund intends to purchase such securities with the purpose of actually acquiring
them unless a sale appears desirable for investment reasons. At the time a Fund
makes the commitment to purchase a security on a when-issued or forward delivery
basis, it will record the transaction and reflect the value of the security in
determining its net asset value. At the time of settlement, the market value of
the when-issued or forward delivery securities may be more or less than the
purchase price. The Funds do not believe that its net asset value or income will
be adversely affected by its purchase of securities on a when-issued or forward
delivery basis.
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
Each Fund has specific minimum initial investment requirements for each
class of shares. Prime Reserve Money Market Shares require a minimum initial
investment of $10,000 and a minimum subsequent investment of $1,000. Premium
Money Market Shares require a $25,000 minimum initial investment and a minimum
subsequent investment of $1,000. Managed Shares require a $100,000 minimum
initial investment and a minimum subsequent investment of $1,000. Institutional
Shares require a $1,000,000 minimum investment and have no minimum subsequent
investment. The minimum investment requirements may be waived or lowered for
investments effected through banks and other institutions that have entered into
special arrangements with the Funds and for investments effected on a group
basis by certain other entities and their employees, such as pursuant to a
payroll deduction plan and for investments made in an Individual Retirement
Account offered by the Funds. Investment minimums may also be waived for
Directors and officers of the Corporation. The Funds, Scudder Investor Services,
Inc. and Scudder Financial Intermediary Services Group each reserves the right
to reject any purchase order. All funds will be invested in full and fractional
shares.
Wire Transfer of Federal Funds
Orders for shares of a Fund will become effective when an investor's bank
wire order or check is converted into federal funds (monies credited to the
account of State Street Bank and Trust Company (the "Custodian") with its
registered Federal Reserve Bank). If payment is transmitted by the Federal
Reserve Wire System, the order will become
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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 State Street
Bank and Trust Company (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.
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.
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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
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 Prime
Reserve Money Market Shares ("Prime Reserve Shares") and 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.
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
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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 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.
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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 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 a Fund does
not follow such procedures, it 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 it reasonably believes to be
genuine.
Redemption by Mail or Fax
Any existing share certificates representing shares being redeemed must
accompany a request for redemption and be duly endorsed or accompanied by a
proper stock assignment form with signatures guaranteed as explained in the
Funds' prospectuses.
In order to ensure proper authorization before redeeming shares, the
Transfer Agent may request additional documents such as, but not restricted to,
stock powers, trust instruments, certificates of death, appointments as
executor, certificates of corporate authority and waivers of tax (required in
some states when settling estates).
It is suggested that shareholders holding share certificates or shares
registered in other than individual names contact the Transfer Agent prior to
any redemptions to ensure that all necessary documents accompany the request.
When shares are held in the name of a corporation, trust, fiduciary, agent,
attorney or partnership, the Transfer Agent requires, in addition to the stock
power, certified evidence of authority to sign. These procedures are for the
protection of shareholders and should be followed to ensure prompt payment.
Redemption requests must not be conditional as to date or price of the
redemption. Proceeds of a redemption will be sent within five days after receipt
by the Transfer Agent of a request for redemption that complies with the above
requirements. Delays of more than seven business days of payment for shares
tendered for repurchase or redemption may result, but only until the purchase
check has cleared.
The requirements for IRA redemptions are different from those for regular
accounts. For more information call 1-800-225-5163.
Redemption by 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
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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 Institutional Shares of Scudder Money Market Series,
Scudder Tax Free Money Market Series, and Scudder Government Money Market Series
The initial minimum investment requirement in the Institutional Shares of
each Fund is $1,000,000. Shareholders should maintain a share balance worth at
least $1,000,000 (which minimum amount may be changed by the Board of
Directors).
Shareholders whose account balance falls below $1,000,000 for at least 30
days will be given 60 days' notice to bring the account back up to $1,000,000 or
more. Where a reduction in value has occurred due to a redemption 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.
Minimum balances for Managed Shares of Scudder Money Market Series, Scudder Tax
Free Money Market Series, and Scudder Government Money Market Series
The initial minimum investment requirement in the Managed Shares of each
Fund is $100,000. Shareholders should maintain a share balance worth at least
$100,000 (which minimum amount may be changed by the Board of Directors).
Shareholders whose account balance falls below $100,000 for at least 30
days will be given 60 days' notice to bring the account back up to $100,000 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.
Minimum balances for 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 for 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 .
FEATURES AND SERVICES OFFERED BY THE FUNDS
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
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maintenance of shareholder accounts. Asset-based sales charges and service fees
are typically paid pursuant to distribution plans adopted under 12b-1 under the
1940 Act.
A front-end load is a sales charge, which can be as high as 8.50% of the
amount invested. A back-end load is a contingent deferred sales charge, which
can be as high as 8.50% of either the amount invested or redeemed. The maximum
front-end or back-end load varies, and depends upon whether or not a fund also
charges a 12b-1 fee and/or a service fee or offers investors various
sales-related services such as dividend reinvestment. The maximum charge for a
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 and classes in the Scudder Family of Funds do not pay any
asset-based sales charges or service fees, Scudder uses the phrase no-load to
distinguish Scudder funds and classes from other no-load 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 pure no-load fund over investing the same
amount in a load fund that collects an 8.50% front-end load, a load fund that
collects only a 0.75% 12b-1 and/or service fee, and a no-load fund charging only
a 0.25% 12b-1 and/or service fee. The hypothetical figures in the chart show the
value of an account assuming a constant 10% rate of return over the time periods
indicated and reinvestment of dividends and distributions.
================================================================================
No-Load Fund
Scudder 8.50% Load Load Fund with with 0.25% 12b-1
Years No-Load Fund Fund 0.75% 12b-1 Fee 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
================================================================================
Internet access
World Wide Web Site -- The address of the Scudder Funds site is
http://www.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.
The Adviser 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.
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Account Access -- The Adviser 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.
The Adviser'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
"Purchases" 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 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 "Purchases" in the prospectus.
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,
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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
The Scudder Family of Funds is America's first family of mutual funds and
the nation's oldest family of no-load mutual funds. To assist investors in
choosing a Scudder fund, descriptions of the Scudder funds' objectives follow.
MONEY MARKET
Scudder U.S. Treasury Money Fund seeks to provide safety, liquidity and
stability of capital and, consistent therewith, to provide current income.
The Fund seeks to maintain a constant net asset value of $1.00 per share,
although in certain circumstances this may not be possible, and declares
dividends daily.
Scudder Cash Investment Trust ("SCIT") seeks to maintain the stability of
capital and, consistent therewith, to maintain the liquidity of capital
and to provide current income. SCIT seeks to maintain a constant net asset
value of $1.00 per share, although in certain circumstances this may not
be possible, and declares dividends daily.
Scudder Money Market Series+ seeks to provide investors with as high a
level of current income as is consistent with its investment polices and
with preservation of capital and liquidity. The Fund seeks to maintain a
constant net asset value of $1.00 per share, but there is no assurance
that it will be able to do so. The institutional class of shares of this
Fund is not within the Scudder Family of Funds.
Scudder Government Money Market Series+ seeks to provide investors with as
high a level of current income as is consistent with its investment
polices and with preservation of capital and liquidity. The Fund seeks to
maintain a constant net asset value of $1.00 per share, but there is no
assurance that it will be able to do so. The institutional class of shares
of this Fund is not within the Scudder Family of Funds.
TAX FREE MONEY MARKET
Scudder Tax Free Money Fund ("STFMF") seeks to provide income exempt from
regular federal income tax and stability of principal through investments
primarily in municipal securities. STFMF seeks to maintain a constant net
asset value of $1.00 per share, although in extreme circumstances this may
not be possible.
Scudder Tax Free Money Market Series+ seeks to provide investors with as
high a level of current income that cannot be subjected to federal income
tax by reason of federal law as is consistent with its investment policies
and with preservation of capital and liquidity. The Fund seeks to maintain
a constant net asset value of $1.00 per share, but there is no assurance
that it will be able to do so. The institutional class of shares of this
Fund is not within the Scudder Family of Funds.
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.
- ----------
+ The institutional class of shares is not part of the Scudder Family of
Funds.
* These funds are not available for sale in all states. For information,
contact Scudder Investor Services, Inc.
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Scudder New York Tax Free Money Fund* seeks stability of capital and the
maintenance of a constant net asset value of $1.00 per share, while
providing New York taxpayers income exempt from New York State and New
York City personal income taxes and regular federal income tax. There can
be no assurance that the stable net asset value will be maintained.
TAX FREE
Scudder Limited Term Tax Free Fund seeks to provide as high a level of
income exempt from regular federal income tax as is consistent with a high
degree of principal stability.
Scudder Medium Term Tax Free Fund seeks to provide a high level of income
free from regular federal income taxes and to limit principal fluctuation.
The Fund will invest primarily in high-grade, intermediate-term bonds.
Scudder Managed Municipal Bonds seeks to provide income exempt from
regular federal income tax primarily through investments in high-grade,
long-term municipal securities.
Scudder High Yield Tax Free Fund seeks to provide a high level of interest
income, exempt from regular federal income tax, from an actively managed
portfolio consisting primarily of investment-grade municipal securities.
Scudder California Tax Free Fund* seeks to provide California taxpayers
with income exempt from both California State personal income and regular
federal income tax. The Fund is a professionally managed portfolio
consisting primarily of California municipal securities.
Scudder Massachusetts Limited Term Tax Free Fund* seeks to provide
Massachusetts taxpayers with as high a level of income exempt from
Massachusetts personal income tax and regular federal income tax, as is
consistent with a high degree of price stability, through a professionally
managed portfolio consisting primarily of investment-grade municipal
securities.
Scudder Massachusetts Tax Free Fund* seeks to provide Massachusetts
taxpayers with income exempt from both Massachusetts personal income tax
and regular federal income tax. The Fund is a professionally managed
portfolio consisting primarily of investment-grade municipal securities.
Scudder New York Tax Free Fund* seeks to provide New York taxpayers with
income exempt from New York State and New York City personal income taxes
and regular federal income tax. The Fund is a professionally managed
portfolio consisting primarily of New York municipal securities.
Scudder Ohio Tax Free Fund* seeks to provide Ohio taxpayers with income
exempt from both Ohio personal income tax and regular federal income tax.
The Fund is a professionally managed portfolio consisting primarily of
investment-grade municipal securities.
Scudder Pennsylvania Tax Free Fund* seeks to provide Pennsylvania
taxpayers with income exempt from both Pennsylvania personal income tax
and regular federal income tax. The Fund is a professionally managed
portfolio consisting primarily of investment-grade municipal securities.
U.S. INCOME
Scudder Short Term Bond Fund seeks to provide high income while managing
its portfolio in a way that is consistent with maintaining a high degree
of stability of shareholders' capital. It does this by investing mainly in
bonds with short remaining maturities.
Scudder GNMA Fund seeks to provide high income. It does this by investing
mainly in "Ginnie Maes": mortgage-backed securities that are issued or
guaranteed by the Government National Mortgage Association
(GNMA).
- ----------
* These funds are not available for sale in all states. For information,
contact Scudder Investor Services, Inc.
18
<PAGE>
Scudder Income Fund seeks to provide high income while managing its
portfolio in a way that is consistent with the prudent investment of
shareholders' capital. It does this by using a flexible investment program
that emphasizes high-grade bonds.
Scudder Corporate Bond Fund seeks to provide high income. It does this by
investing mainly in corporate bonds.
Scudder High Yield Bond Fund seeks to provide high income and,
secondarily, capital appreciation . It does this by investing mainly in
lower rated, higher yielding corporate bonds, often called junk bonds.
GLOBAL INCOME
Scudder Global Bond Fund seeks to provide total return with an emphasis on
current income by investing primarily in high-grade bonds denominated in
foreign currencies and the U.S. dollar. As a secondary objective, the Fund
will seek capital appreciation.
Scudder International Bond Fund seeks to provide income primarily by
investing in a managed portfolio of high-grade international bonds. As a
secondary objective, the Fund seeks protection and possible enhancement of
principal value by actively managing currency, bond market and maturity
exposure and by security selection.
Scudder Emerging Markets Income Fund seeks to provide high current income
and, secondarily, long-term capital appreciation through investments
primarily in high-yielding debt securities issued by governments and
corporations in emerging markets.
ASSET ALLOCATION
Scudder Pathway Series: Conservative Portfolio seeks primarily current
income and secondarily long-term growth of capital. In pursuing these
objectives, the Portfolio, under normal market conditions, will invest
substantially in a select mix of Scudder bond mutual funds, but will have
some exposure to Scudder equity mutual funds.
Scudder Pathway Series: Balanced Portfolio seeks to provide investors with
a balance of growth and income by investing in a select mix of Scudder
money market, bond and equity mutual funds.
Scudder Pathway Series: Growth Portfolio seeks to provide investors with
long-term growth of capital. In pursuing this objective, the Portfolio
will, under normal market conditions, invest predominantly in a select mix
of Scudder equity mutual funds designed to provide long-term growth.
Scudder Pathway Series: International Portfolio seeks maximum total return
for investors. Total return consists of any capital appreciation plus
dividend income and interest. To achieve this objective, the Portfolio
invests in a select mix of established international and global Scudder
funds.
U.S. GROWTH AND INCOME
Scudder Balanced Fund seeks a balance of growth and income from a
diversified portfolio of equity and fixed-income securities. The Fund also
seeks long-term preservation of capital through a quality-oriented
investment 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 Select 500 Fund seeks to provide long-term growth and income
through investment in selected stocks of companies in the S&P 500 Index.
19
<PAGE>
Scudder 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 Select 1000 Growth Fund seeks to provide long-term growth of
capital through investment in selected stocks of companies in the Russell
1000 Growth Index.
Scudder Development Fund seeks long-term growth of capital by investing
primarily in medium-size 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.
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.
- ----------
** Only the Scudder Shares are part of the Scudder Family of Funds.
*** Only the International Shares are part of the Scudder Family of Funds.
20
<PAGE>
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.
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.
- ----------
** Only the Scudder Shares are part of the Scudder Family of Funds.
21
<PAGE>
The Scudder Family of Funds offers many conveniences and services,
including: active professional investment management; broad and diversified
investment portfolios; pure no-load funds with no commissions to purchase or
redeem shares or Rule 12b-1 distribution fees; individual attention from a
service representative of Scudder Investor .
SPECIAL PLAN ACCOUNTS
The information regarding Special Plan Accounts does not apply to
Institutional Shares of Scudder Money Market Series, Scudder Tax Free Money
Market Series, or Scudder Government Money Market Series.
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 each 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 each 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 each 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.
Scudder IRA: Individual Retirement Account
Shares of each 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
22
<PAGE>
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 each 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.
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.
23
<PAGE>
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 "About your investment -- Transaction information -- Signature
guarantees" in the Funds' prospectuses. 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 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.
24
<PAGE>
DIVIDENDS
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
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 Shares from
December 31, 1997 through December 31, 1998, Managed Shares from December 31,
1997 through December 31, 1998, Premium Money Market Shares from December 31,
1997 through December 31, 1998 and Prime Reserve Money Market 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 Shares
from December 31, 1997 through December 31, 1998, and Managed 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 each Fund. The annualized yield for the Cash Fund, Tax Free Fund and
Government Fund for the seven-day period ended December 31, 1998 for the
Institutional Shares was 5.13%, 3.39% and 4.88%, respectively; and for the
Managed Shares was 4.97%, 3.01% and 4.37%, respectively. The annualized yield
for the Premium Money Market Shares and Prime Reserve Money Market Shares of the
Cash Fund for the seven-day period ended December 31, 1998 was 5.08% and 4.96%,
respectively.
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.
25
<PAGE>
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 Cash Fund, Tax Free Fund and the Government
Fund for the seven-day period ended December 31, 1998 for the Institutional
Shares was 5.26%, 3.44% and 5.00%, respectively; and for the Managed Shares was
5.10%, 3.05% and 4.46%, respectively. The effective yield for the Premium Money
Market Shares and Prime Reserve Money Market Shares of the Cash Fund for the
seven-day period ended December 31, 1998 was 5.21% and 5.08%, respectively.
Average Annual Total Return
Average annual total return is the average annual compound rate of return
for periods of one year, five years, and ten years and the life of a Fund, where
applicable, all ended on the last day of a recent calendar quarter and is
calculated separately for each class of each Fund. Average annual total return
quotations reflect changes in the price of a Fund's shares, if any, and assume
that all dividends and capital gains distributions during the respective periods
were reinvested in the same class of Fund shares. Average annual total return is
calculated by finding the average annual compound rates of return of a
hypothetical investment over such periods, according to the following formula
(average annual total return is then expressed as a percentage):
T = (ERV/P)1/n - 1
Where:
T = Average Annual Total Return
P = a hypothetical initial investment of $1,000
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
<TABLE>
<CAPTION>
Since
Inception* One Year Five Years Ten Years
<S> <C> <C> <C> <C>
Institutional Shares
Scudder Money Market Series 5.54% 5.52% N/A N/A
Scudder Tax Free Money Market Series 3.32% 3.26% N/A N/A
Scudder Government Money Market Series 5.28% 5.23% N/A N/A
Managed Shares
Scudder Money Market Series - 5.33% 4.99% 5.43%
Scudder Tax Free Money Market Series - 3.10% 2.93% 3.45%
Scudder Government Money Market Series - 4.89% 4.81% 5.23%
Premium Money Market Shares 5.46% 5.46% N/A N/A
Prime Reserve Money Market Shares 1.06% N/A N/A N/A
</TABLE>
26
<PAGE>
* The Institutional Shares of Scudder Money Market Series, Scudder Tax Free
Money Market Series and Scudder Government Money Market Series commenced
operations on August 4, 1998.
The Premium Money Market shares of Scudder Money Market Series commenced
operations on July 7, 1997.
The Prime Reserve Money Market shares of Scudder Money Market Series
commenced operations on October 15, 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
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
<TABLE>
<CAPTION>
Since One Year Five Years Ten Years
Inception*
<S> <C> <C> <C> <C>
Institutional Shares
Scudder Money Market Series 7.89% 5.52% N/A N/A
Scudder Tax Free Money Market Series 4.71% 3.26% N/A N/A
Scudder Government Money Market Series 7.52% 5.23% N/A N/A
Managed Shares
Scudder Money Market Series -- 5.33% 27.54% 69.63%
Scudder Tax Free Money Market Series -- 3.10% 2.93% 40.44%
Scudder Government Money Market Series -- 4.89% 26.49% 66.50%
Premium Money Market Shares 8.22% 5.46% N/A N/A
Prime Reserve Money Market Shares 1.06% N/A N/A N/A
</TABLE>
* The Institutional Shares of Scudder Money Market Series, Scudder Tax Free
Money Market Series and Scudder Government Money Market Series commenced
operations on August 4, 1998.
The Premium Money Market shares of Scudder Money Market Series commenced
operations on July 7, 1997.
The Prime Reserve Money Market shares of Scudder Money Market Series
commenced operations on October 15, 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.
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<PAGE>
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 4.98% to receive after-tax
income equal to the 2.66% tax-free yield for Scudder Tax Free Money Market
Series Managed Shares for the 30 day period ended December 31, 1998, and would
need to earn a taxable yield of 5.61% to receive after-tax income equal to the
3.04% tax-free yield for Scudder Tax Free Money Market Series Institutional
Shares 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 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.
28
<PAGE>
Because bank products guarantee the principal value of an investment and
money market funds seek stability of principal, these investments are considered
to be less risky than investments in either bond or equity funds, which may
involve the loss of principal. However, all long-term investments, including
investments in bank products, may be subject to inflation risk, which is the
risk of erosion of the value of an investment as prices increase over a long
time period. The risks/returns associated with an investment in bond or equity
funds depend upon many factors. For bond funds these factors include, but are
not limited to, a fund's overall investment objective, the average portfolio
maturity, credit quality of the securities held, and interest rate movements.
For equity funds, factors include a fund's overall investment objective, the
types of equity securities held and the financial position of the issuers of the
securities. The risks/returns associated with an investment in international
bond or equity funds also will depend upon currency exchange rate fluctuation.
A risk/return spectrum generally will position the various investment
categories in the following order: bank products, money market funds, bond funds
and equity funds. Shorter-term bond funds generally are considered less risky
and offer the potential for less return than longer-term bond funds. The same is
true of domestic bond funds relative to international bond funds, and bond funds
that purchase higher quality securities relative to bond funds that purchase
lower quality securities. Growth and income equity funds are generally
considered to be less risky and offer the potential for less return than growth
funds. In addition, international equity funds usually are considered more risky
than domestic equity funds but generally offer the potential for greater return.
Risk/return spectrums also may depict funds that invest in both domestic
and foreign securities or a combination of bond and equity securities.
Evaluation of Fund performance or other relevant statistical information
made by independent sources may also be used in advertisements concerning the
Funds, including reprints of, or selections from, editorials or articles about
these Funds. Sources for Fund performance information and articles about the
Funds include the following:
American Association of Individual Investors' Journal, a monthly publication of
the AAII that includes articles on investment analysis techniques.
Asian Wall Street Journal, a weekly Asian newspaper that often reviews U.S.
mutual funds investing internationally.
Banxquote, an on-line source of national averages for leading money market and
bank CD interest rates, published on a weekly basis by Masterfund, Inc. of
Wilmington, Delaware.
Barron's, a Dow Jones and Company, Inc. business and financial weekly that
periodically reviews mutual fund performance data.
Business Week, a national business weekly that periodically reports the
performance rankings and ratings of a variety of mutual funds investing abroad.
CDA Investment Technologies, Inc., an organization which provides performance
and ranking information through examining the dollar results of hypothetical
mutual fund investments and comparing these results against appropriate market
indices.
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.
29
<PAGE>
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.
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.
30
<PAGE>
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.
ORGANIZATION OF THE FUNDS
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
13,000,000,000 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.
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. Each Fund has two classes of Capital Stock, to be
referred to for all purposes as "Managed Shares" and "Institutional Shares"; and
with respect to Scudder Money Market Series, two additional classes of Capital
Stock, to be referred to for all purposes as "Premium Money Market 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, seven billion seven
hundred seventy-five million (7,775,000,000) 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, three billion six
hundred fifteen million (3,615,000,000) Institutional Shares,
31
<PAGE>
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) 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
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
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,
32
<PAGE>
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 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 transaction between Scudder and Zurich resulted in the assignment of
each Funds' investment management agreements with Scudder Kemper, and 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.
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.
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<PAGE>
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 prior
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 were approved by shareholders on
December 15, 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.
Under the Investment Management Agreement between each Fund and the
Adviser (the "Agreement"), each Fund agrees to pay the Adviser a fee equal to a
rate of 1/12 of 0.25% of each Fund's average daily net assets , computed and
accrued daily and payable monthly. As manager of the assets of each Fund , the
Adviser directs the investments of each Fund in accordance with its investment
objectives, policies and restrictions. The Adviser determines the securities,
instruments and other contracts relating to investments to be purchased, sold or
entered into by each Fund. In addition to portfolio management services, the
Adviser provides certain administrative services in accordance with the
Management Agreement.
Under the Agreement, the Adviser regularly provides investment management
of the assets of each Fund in accordance with the investment objectives,
policies and restrictions set forth, and determines what securities shall be
purchased each Fund, what securities shall be held or sold by each Fund, and
what portion of each Fund's assets shall be held uninvested, subject always to
the provisions of each Fund's Articles of Incorporation and By-Laws, and of the
1940 Act and to each Fund's investment objectives, policies and restrictions,
and subject further to such policies and instructions as the Directors of each
Fund may from time to time establish. The Adviser also advises and assists the
officers of each Fund in taking such steps as are necessary or appropriate to
carry out the decisions of its Directors and the appropriate committees of the
Directors regarding the conduct of the business of each Fund.
The Adviser furnishes the Funds' Boards of Directors periodic reports on
the investment performance of each Fund and on the performance of its
obligations regarding this agreement as well as additional reports and
information as the Corporation's officers or Board of Directors shall reasonably
request.
The Adviser furnishes for the use of each Fund office space and facilities
in the United States as each Fund may require for its reasonable needs, and also
renders significant administrative services (not otherwise provided by third
parties) necessary for each Fund's operations as an open-end investment company
including, but not limited to, preparing reports and notices to the Directors
and shareholders; supervising, negotiating contractual arrangements with, to the
extent appropriate, and monitoring various third-party service providers to each
Fund (such as each Fund's Transfer Agent, pricing agents, custodian, accountants
and others); preparing and making filings with the SEC and other regulatory
agencies; assisting in the preparation and filing of each Fund's federal, state
and local tax returns; preparing and filing each Fund's federal excise tax
returns; assisting with investor and public relations matters; monitoring the
valuation of securities and the calculation of net asset value; monitoring the
registration of shares of each Fund under applicable federal and state
securities laws; maintaining or causing to be maintained for each Fund all
books, record and reports to the extent not otherwise maintained by a third
party; assisting in establishing accounting policies of each Fund; assisting in
the resolution of accounting and legal issues; establishing and monitoring each
Fund's operating budget; processing the payment of each Fund's bills; assisting
each Fund in, and otherwise arranging for, the payment of distributions and
dividends, and otherwise assisting each Fund in the conduct of its business,
subject to the direction and control of the Directors.
The Agreement also provides that each Fund is granted a nonexclusive right
and sublicense to use the "Scudder" name and mark as part of the Corporation's
name, and the Scudder Marks in connection with the Corporation's investment
product and services.
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<PAGE>
The Adviser pays the compensation and expenses of all affiliated Directors
and executive employees of each Fund and makes available, without expense to
each Fund, the services of such Directors, officers and employees as may duly be
elected Directors, officers or employees of the Fund, subject to their
individual consent to serve and to any limitations imposed by law, and pays each
Fund's office rent and provides investment advisory, research and statistical
facilities and all clerical services relating to research, statistical and
investment work.
For each Fund's fiscal year ended December 31, 1998, the Adviser did not
impose fees of $1,846,622, $246,650, and $157,381, respectively, and did impose
fees of $2,304,035, $370,362, and $104,657, respectively, for the Scudder Money
Market Series, Scudder Tax Free Money Market Series, and Scudder Government
Money Market Series, respectively.
For each Fund's fiscal year ended December 31, 1997, the Adviser did not
impose fees of $374,936, $69,182, and $129,520, respectively, and did impose
fees of $1,301,440, $337,288, and $11,942, respectively, of which $123,101,
$11,560, and $66,141, respectively, remained unpaid, for the Scudder Money
Market Series, Scudder Tax Free Money Market Series, and Scudder 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.
Each Agreement also provides that the Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by each Fund in
connection with matters to which the Agreement relates, provided that nothing in
the agreement shall be deemed to protect or purport to protect against any
liability to the Corporation, each Fund or each Fund's shareholders to which it
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of the duties, or by reason of reckless disregard
of the obligations and duties hereunder.
Any person, even though also employed by Scudder, who may be or become an
employee of and paid by each Fund shall be deemed, when acting within the scope
of his or her employment by each Fund, to be acting in such employment solely
for each Fund and not as an agent of Scudder.
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 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
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.
35
<PAGE>
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.
DIRECTORS AND OFFICERS
The principal occupations of the Directors and executive officers of the
Corporation for the past five years are listed below.
<TABLE>
<CAPTION>
Position with
Underwriter,
Position with Scudder Investor
Name, Age and Address Corporation Principal Occupation* Services, Inc.
- --------------------- ----------- --------------------- --------------
<S> <C> <C> <C>
Daniel Pierce (65)+ # President Managing Director of Scudder Vice President,
Kemper Investments, Inc. Director and Assistant
Treasurer
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
Position with
Underwriter,
Position with Scudder Investor
Name, Age and Address Corporation Principal Occupation* Services, Inc.
- --------------------- ----------- --------------------- --------------
<S> <C> <C> <C>
Dr. Rosita P. Chang (44) Director Professor of Finance, --
PACAP Research Center University of Rhode Island
College of Business
Administration
University of Rhode Island
7 Lippitt Road
Kingston, RI 02881-0802
Dr. J. D. Hammond (65) Director Dean, Smeal College of --
801 Business Administration Business Administration,
Bldg. Pennsylvania State University
Pennsylvania State University
University Park, PA 16802
Edgar R. Fiedler (70)# Director Senior Fellow and Economic --
50023 Brogden Counselor, The Conference
Chapel Hill, NC 27514 Board, Inc.
Peter B. Freeman (67) Director Corporate Director and --
100 Alumni Avenue Trustee
Providence, RI 02906
Richard M. Hunt (72) Director University Marshal and
University Marshal's Office Senior Lecturer, Harvard
Wadsworth House University
1341 Massachusetts Avenue
Harvard University
Cambridge, MA 02138
Thomas W. Joseph (60)+ Vice President and Senior Vice President of Vice President,
Assistant Secretary Scudder Kemper Investments, Director, Treasurer
Inc. and Assistant Clerk
Kathryn L. Quirk (46)++ Vice President Managing Director of Scudder Senior Vice President,
Kemper Investments, Inc. Director and Clerk
Frank J. Rachwalski, Jr. Vice President Managing Director of Scudder --
(54)+++ Kemper Investments, 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 Secretary Senior Vice President of Clerk
Scudder Kemper Investments,
Inc.; Associate, Dechert
Price & Rhoads (law firm)
1989 to 1997
</TABLE>
37
<PAGE>
* All the Directors and Officers have been associated with their
respective companies for more than five years, but not necessarily in
the same capacity.
# Messrs. Freeman 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 1,396,808 shares, or 1.03% of the shares of Scudder Tax Free Money Market
Series (Institutional Shares) as of the commencement of operations.
As of April 1, 1999 the Directors and Officers of the Company, as a group,
owned less than 1% of the outstanding shares of Scudder Money Market Series
(Prime Reserve and Premium Money Market Shares), Scudder Government Money Market
Series (Institutional and Managed Shares), and Scudder Tax Free Money Market
Series (Managed Shares) as of the commencement of operations.
Certain accounts for which the Adviser acts as investment adviser owned
159,514,726 shares in the aggregate, or 41.13% of the outstanding shares of
Scudder Money Market Series (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
98,413,404 shares in the aggregate, or 70.05% of the outstanding shares of
Scudder Tax Free Money Market Series (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
24,459,061 shares in the aggregate, or 17.96% of the outstanding shares of
Scudder Tax Free Money Market Series (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
10,198,686 shares in the aggregate, or 12.73% of the outstanding shares of
Scudder Government Money Market Series (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.
As of April 1, 1999, the following shareholders held of record more than
five percent of such Fund:
Scudder Money Market Series ( Managed Shares) Lucian T. Baldwin III; Hare
& Co., One Wall Street, New York, NY 10005; Wilmington Trust Company, Attn:
Mutual Funds, 1100 North Market Street, Wilmington, DE 19890; Turtle & Co.
Sweep, P.O. Box 9427, Boston, MA 02209; Chemical Bank, 1211 Avenue of the
Americas, New York, NY 10036; Citibank Private Banking, 1 Court Square, Long
Island City, NY 11120 held of record 7.46%, 17.73%, 10.57%, 20.82% 21.95% and
7.20%, respectively, of the outstanding shares of the Fund.
Scudder Money Market Series ( Institutional Shares) Bear Stearns
Securities Corp., 1 Metrotech Center N., Brooklyn, NY 11201; Fiduciary Trust Co.
(held in the nominees) ; Donaldson, Lufkin & Jenrette, 277 Park Avenue, New
York, NY 10172 held of record 7.70%, 26.31% and 15.40%, respectively, of the
outstanding shares of the Fund.
Scudder Tax Free Money Market Series (Managed Shares) Turtle & Co. Sweep,
P.O. Box 9427, Boston, MA 02209; Chase Manhattan Bank (Client Services) 1 Chase
Manhattan Plaza, New York, NY 10005; Hare & Co.,
38
<PAGE>
One Wall Street, New York, NY 10005 held of record 15.11%, 49.97% and 26.04%,
respectively, of the outstanding shares of the Fund.
Scudder Tax Free Money Market Series (Institutional Shares) Fiduciary
Trust Company (held in the nominees) of record 88.80% of the outstanding shares
of the Fund.
Scudder Government Money Market Series (Managed Shares) Chase Manhattan
Bank (Client Services), 1 Chase Manhattan Plaza, New York, NY 10005; Citibank
Private Banking, 1 Court Square, Long Island City, NY 11120 held of record
42.68% and 45.78%, respectively, of the outstanding shares of the Fund.
Scudder Government Money Market Series (Institutional Shares) Fiduciary
Trust Company (held in the nominees) of record 98.49% of the outstanding shares
of the Fund.
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 purposes
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.
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 Director fee schedules. The following
table shows the aggregate compensation received by each Independent Director
during 1998 from the Corporation and from all of the Scudder funds as a group.
In 1998, the Directors of each Fund met six times.
39
<PAGE>
<TABLE>
<CAPTION>
Name Scudder Fund, Inc.* All Scudder Funds
- ---- ------------------- -----------------
<S> <C> <C>
Dr. Rosita P. Chang, Director $8,900 $46,750 (27 funds)
Edgar R. Fiedler, Director ** $0 $59,005 (40 funds)
Peter B. Freeman, Director $8,900 $172,407 (49 funds)
Dr. J.D. Hammond, Director $8,900 $50,430 (27 funds)
Richard M. Hunt, Director $8,900 $51,265 (22 funds)
</TABLE>
* Scudder Fund, Inc. consists of Scudder Money Market Series, Scudder Tax
Free Money Market Series and Scudder Government Money Market Series.
** Mr. Fiedler received $19,335 through a deferred compensation program. As
of December 31, 1998, Mr. Fiedler had a total of $243,692 accrued in a
deferred compensation program for serving on the Board of Directors of the
Corporation .
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
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 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
40
<PAGE>
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 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.
41
<PAGE>
The tax consequences to a foreign shareholder of an investment in a Fund
may be different from those described herein. Foreign shareholders are advised
to consult their own tax advisers with respect to the particular tax
consequences to them of an investment in a Fund.
Fund shareholders may be subject to state and local taxes on their Fund
distributions, including distributions from the Tax Free Fund. In many states,
Fund distributions which are derived from interest on certain U.S. Government
obligations are exempt from taxation. Shareholders are advised to consult their
own tax advisers with respect to the particular tax consequences to them of an
investment in a Fund. Persons who may be "substantial users" (or "related
persons" of substantial users) of facilities financed by industrial development
bonds should consult their tax advisers before purchasing shares of the Tax Free
Fund. The term "substantial user" generally includes any "non-exempt person" who
regularly uses in his or her trade or business a part of a facility financed by
industrial development bonds. Generally, an individual will not be a "related
person" of a substantial user under the Code unless the person or his or her
immediate family owns directly or indirectly in the aggregate more than a 50%
equity interest in the substantial user.
PORTFOLIO TRANSACTIONS
Brokerage Commissions
Allocation of brokerage is supervised by the Adviser.
The primary objective of the Adviser in placing orders for the purchase
and sale of securities for the Fund is to obtain the most favorable net results,
taking into account such factors as price, commission where applicable, size of
order, difficulty of execution and skill required of the executing
broker/dealer. The Adviser seeks to evaluate the overall reasonableness of
brokerage commissions paid (to the extent applicable) through the familiarity of
the Distributor with commissions charged on comparable transactions , as well as
by comparing commissions paid by the Fund to reported commissions paid by
others. The Adviser routinely reviews commission rates, execution and settlement
services performed and makes internal and external comparisons.
The Fund's purchases and sales of fixed-income securities are generally
placed by the Adviser with primary market makers for these securities on a net
basis, without any brokerage commission being paid by the Fund. Trading does,
however, involve transaction costs. Transactions with dealers serving as primary
market makers reflect the spread between the bid and asked prices. Purchases of
underwritten issues may be made, which will include an underwriting fee paid to
the underwriter.
When it can be done consistently with the policy of obtaining the most
favorable net results, it is the Adviser's practice to place such orders with
broker/dealers who supply brokerage and research services to the Adviser or the
Fund. The term "research services" includes advice as to the value of
securities; the advisability of investing in, purchasing or selling securities;
the availability of securities or purchasers or sellers of securities; and
analyses and reports concerning issuers, industries, securities, economic
factors and trends, portfolio strategy and the performance of accounts. The
Adviser is authorized when placing portfolio transactions, if applicable, for
the Fund to pay a brokerage commission in excess of that which another broker
might charge for executing the same transaction on account of execution services
and the receipt of research services. The Adviser has negotiated arrangements,
which are not applicable to most fixed-income transactions, with certain
broker/dealers pursuant to which a broker/dealer will provide research services,
to the Adviser or the Fund in exchange for the direction by the Adviser of
brokerage transactions to the broker/dealer. These arrangements regarding
receipt of research services generally apply to equity security transactions.
The Adviser will not place orders with a broker/dealer on the basis that the
broker/dealer has or has not sold shares of the Fund. In effecting transactions
in over-the-counter securities, orders are placed with the principal market
makers for the security being traded unless, after exercising care, it appears
that more favorable results are available elsewhere.
To the maximum extent feasible, it is expected that the Adviser will place
orders for portfolio transactions through the Distributor, which is a
corporation registered as a broker/dealer and a subsidiary of the Adviser; the
Distributor will place orders on behalf of the Fund with issuers, underwriters
or other brokers and dealers. The Distributor will not receive any commission,
fee or other remuneration from the Fund for this service.
Although certain research services from broker/dealers may be useful to
the Fund and to the Adviser, it is the opinion of the Adviser that such
information only supplements the Adviser's own research effort since the
information must still be analyzed, weighed, and reviewed by the Adviser's
staff. Such information may be useful to the Adviser in providing services to
clients other than the Fund, and not all such information is used by the Adviser
in connection
42
<PAGE>
with the Fund. Conversely, such information provided to the Adviser by
broker/dealers through whom other clients of the Adviser effect securities
transactions may be useful to the Adviser in providing services to the Fund.
The Directors review, from time to time, whether the recapture for the
benefit of the Fund of some portion of the brokerage commissions or similar fees
paid by the Fund on portfolio transactions is legally permissible and advisable.
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 Exchange normally is closed on the following national holidays:
New Year's Day, Dr. Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas , and on
the preceding Friday or subsequent Monday when one of these holidays falls on a
Saturday or Sunday, respectively. 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 that class, by the total number of
outstanding shares of that class. The valuation of each Fund's portfolio
securities is based upon their amortized cost which does not take into account
unrealized securities gains or losses. This method involves initially valuing an
instrument at its cost and thereafter amortizing to maturity any discount or
premium , regardless of the impact of fluctuating interest rates on the market
value of the instrument. While this method provides certainty in valuation, it
may result in periods during which value, as determined by amortized cost, is
higher or lower than the price each Fund would receive if it sold the
instrument. During periods of declining interest rates, the quoted yield on
shares of each Fund may tend to be higher than a like computation made by a fund
with identical investments utilizing a method of valuation based upon market
prices and estimates of market prices for all of its portfolio instruments.
Thus, if the use of amortized cost by each Fund resulted in a lower aggregate
portfolio value on a particular day, a prospective investor in each Fund would
be able to obtain a somewhat higher yield if he purchased shares of each Fund on
that day than would result from investment in a fund utilizing solely market
values, and existing investors in each Fund would receive less investment
income. The converse would apply in a period of rising interest rates. Other
securities and assets for which market quotations are not readily available are
valued in good faith at fair value using methods determined by the Directors and
applied on a consistent basis. For example, securities with remaining maturities
of more than 60 days for which market quotations are not readily available are
valued on the basis of market quotations for securities of comparable maturity,
quality and type. The Directors review the valuation of each Fund's securities
through receipt of regular reports from the Adviser at each regular Directors'
meeting. Determinations of net asset value made other than as of the close of
the Exchange may employ adjustments for changes in interest rates and other
market factors.
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, independent accounts, and given on the
authority of that firm as experts in accounting and auditing.
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
43
<PAGE>
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 Scudder Money Market
Series, for the years ended December 31, 1998, 1997, and 1996, Scudder Fund
Accounting Corporation's fee amounted to $189,715, $56,782 and $66,490,
respectively, of which $23,946 was unpaid at December 31, 1998. For the Scudder
Government Money Market Series, for the years ended December 31, 1998, 1997, and
1996, Scudder Fund Accounting Corporation's fee amounted to $36,129, $109,482
and $23,477, respectively, of which $2,848 was unpaid at December 31, 1998. For
the Scudder Tax Free Money Market Series, for the years ended December 31, 1998,
1997, and 1996, Scudder Fund Accounting Corporation's fee amounted to $44,002,
$51,695 and $23,477, respectively, of which $4,358 was unpaid at December 31,
1998.
Scudder Service Corporation (the "Service Corporation"), P.O. Box 2291,
Boston, Massachusetts 02107-2291, a subsidiary of the Adviser, is the transfer,
dividend-paying and shareholder service agent for the Corporation and as such
performs the customary services of a Transfer Agent and dividend disbursing
agent. These services include, but are not limited to: (i) receiving for
acceptance in proper form orders for the purchase or redemption of Fund shares
and promptly effecting such orders; (ii) recording purchases of Fund shares and,
if requested, issuing stock certificates; (iii) reinvesting dividends and
distributions in additional shares or transmitting payments therefor; (iv)
receiving for acceptance in proper form transfer requests and effecting such
transfers; (v) responding to shareholder inquiries and correspondence regarding
shareholder account status; (vi) reporting abandoned property to the various
states; and (vii) recording and monitoring daily the issuance in each state of
shares of each Fund of the Corporation. The Service Corporation applies monthly
activity fees for servicing shareholder accounts of $220,000. Effective October
1, 1995 the minimum monthly charge to any Fund shall be the pro rata portion of
the annual fee, determined by dividing such aggregate fee by the number of Funds
of the Corporation and series of Institutional Fund. When a Fund's monthly
activity charges do not equal or exceed the minimum monthly charge, the minimum
will be charged.
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
Funds, 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.
44
<PAGE>
On November 13, 1998, the Corporation's Board of Directors approved a
change in the Funds' fiscal year end from December 31 to May 31, effective May
31, 1999.
45
<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.)
(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.)
Part C - Page 1
<PAGE>
(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.
(Incorporated by reference to Post-Effective Amendment No. 30 to this
Registration Statement.)
(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. (Incorporated by reference to
Post-Effective Amendment No. 30 to this Registration Statement.)
(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.
(Incorporated by reference to Post-Effective Amendment No. 30 to this
Registration Statement.)
(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.
(Incorporated by reference to Post-Effective Amendment No. 30 to this
Registration Statement.)
(e) (e)(1) Underwriting Agreement dated September 7, 1998 between the Registrant and
Scudder Investor Services.
(Incorporated by reference to Post-Effective Amendment No. 30 to this
Registration Statement.)
(f) Not Applicable.
(g) (g)(1) Custodian Agreement with State Street Bank and Trust Company 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 Post-Effective Amendment No. 20 to this
registration statement.)
(g)(3) Amendment to Custodian Agreement with State Street Bank and Trust Company
dated February 12, 1999 is filed herein.
(g)(4) Sub-Custodian Agreement with Bankers Trust Company (August 15, 1989).
(Incorporated by reference to Post-Effective Amendment No. 25 to this
Registration Statement.)
Part C - Page 2
<PAGE>
(g)(5) 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.)
(h)(2) Fee schedule for Exhibit h(1).
(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 Services Agreement between the Registrant, on behalf of
Managed Cash Fund and Scudder Fund Accounting Corporation dated August 1,
1994. (Incorporated by reference to Post-Effective Amendment No. 20 to this
Registration Statement.)
(h)(5) Fund Accounting Services Agreement between the Registrant, on behalf of
Managed Federal Securities Fund and Scudder Fund Accounting Corporation
dated August 1, 1994. (Incorporated by reference to Post-Effective Amendment
No. 20 to this Registration Statement.)
(h)(6) Fund Accounting Services Agreement between the Registrant, on behalf of
Managed Government Securities Fund and Scudder Fund Accounting Corporation
dated August 1, 1994. (Incorporated by reference to Post-Effective Amendment
No. 20 to this Registration Statement.)
(h)(7) Fund Accounting Services Agreement between the Registrant, on behalf of
Managed Tax-free Fund and Scudder Fund Accounting Corporation dated August
18, 1994. (Incorporated by reference to Post-Effective Amendment No. 20 to
this Registration Statement.)
(h)(8) Fund Accounting Services Agreement between the Registrant, on behalf of
Managed Intermediate Government Fund and Scudder Fund Accounting Corporation
dated September 22, 1994. (Incorporated by reference to Post-Effective
Amendment No. 20 to this Registration Statement.)
(h)(9) 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) Legal Cousent is filed herein.
(j) Consent of Independent Accountants is filed herein.
(k) Not Applicable.
(l) Not Applicable.
Part C - Page 3
<PAGE>
(m) Not Applicable.
(n) Financial Data Schedule is filed herein.
(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 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**
Part C - Page 4
<PAGE>
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.#
William H. Bolinder Director, Scudder Kemper Investments, Inc.**
Member Group Executive Board, Zurich Financial Services, Inc. ##
Chairman, Zurich-American Insurance Company o
Laurence W. Cheng Director, Scudder Kemper Investments, Inc.**
Member, Corporate Executive Board, Zurich Insurance Company of Switzerland ##
Director, ZKI Holding Corporation xx
Gunther Gose Director, Scudder Kemper Investments, Inc.**
CFO, Member Group Executive Board, Zurich Financial Services, Inc. ##
CEO/Branch Offices, Zurich Life Insurance Company ##
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 Chief Legal Officer, Chief Compliance Officer and Secretary, Scudder Kemper
Investments, Inc.**
Director, Senior Vice President & Assistant Clerk, Scudder Investor Services, Inc.*
Director, Vice President & Secretary, Scudder Fund Accounting Corporation*
Director, Vice President & Secretary, Scudder Realty Holdings Corporation*
Director & Assistant Clerk, Scudder Service Corporation*
Director, SFA, Inc.*
Vice President, Director & Assistant Secretary, Scudder Precious Metals, Inc.***
Director, Scudder, Stevens & Clark Japan, Inc.***
Director, Vice President and Secretary, Scudder, Stevens & Clark of Canada, Ltd.***
Director, Vice President and Secretary, Scudder Canada Investor Services Limited***
Director, Vice President and Secretary, Scudder Realty Advisers, Inc. x
Director and Secretary, Scudder, Stevens & Clark Corporation**
Director and Secretary, Scudder, Stevens & Clark Overseas Corporation oo
Director and Secretary, SFA, Inc.*
Director, Vice President and Secretary, Scudder Defined Contribution Services, Inc.**
Director, Vice President and Secretary, Scudder Capital Asset Corporation**
Director, Vice President and Secretary, Scudder Capital Stock Corporation**
Director, Vice President and Secretary, Scudder Capital Planning Corporation**
Director, Vice President and Secretary, SS&C Investment Corporation**
Director, Vice President and Secretary, SIS Investment Corporation**
Director, Vice President and Secretary, SRV Investment Corporation**
Director, Vice President and Secretary, Scudder Financial Services, Inc.*
Director, Korea Bond Fund Management Co., Ltd.+
Cornelia M. Small Director and 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**
Part C - Page 5
<PAGE>
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 27.
<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
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
Part C - Page 6
<PAGE>
Name and Principal Position and Offices with Positions and
Business Address Scudder Investor Services, Inc. Offices with Registrant
---------------- ------------------------------- -----------------------
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
John R. Hebble Assistant Treasurer Treasurer
Two International Place
Boston, MA 02110
Thomas W. Joseph Director, Vice President, Treasurer Vice President, Assistant
Two International Place and Assistant Clerk Secretary
Boston, MA 02110
James J. McGovern Chief Financial Officer None
345 Park Avenue
New York, NY 10154
Lorie C. O'Malley Vice President None
Two International Place
Boston, MA 02110
Caroline Pearson Clerk Assistant Secretary
Two International Place
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, Chief Vice President
345 Park Avenue Legal Officer and Assistant Clerk
New York, NY 10154
Robert A. Rudell Director and Vice President None
Two International Place
Boston, MA 02110
William M. Thomas Vice President None
Two International Place
Boston, MA 02110
Part C - Page 7
<PAGE>
Name and Principal Position and Offices with Positions and
Business Address Scudder Investor Services, Inc. Offices with Registrant
---------------- ------------------------------- -----------------------
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 and Chief Compliance None
Two International Place Officer
Boston, MA 02110
</TABLE>
(c)
<TABLE>
<CAPTION>
(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(b) 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 26th day of April, 1999.
SCUDDER FUND, INC.
By /s/ Daniel Pierce
---------------------------------
Daniel Pierce
President (Chief Executive Officer)
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/ Dr. Rosita Chang
- --------------------------------------
Dr. Rosita Chang* Director April 26, 1999
/s/ Dr. J.D. Hammond
- --------------------------------------
Dr. J.D. Hammond* Director April 26, 1999
/s/ Richard M. Hunt
- --------------------------------------
Richard M. Hunt* Director April 26, 1999
/s/ Edgar R. Fiedler
- --------------------------------------
Edgar R. Fiedler* Director April 26, 1999
/s/ Peter B. Freeman
- --------------------------------------
Peter B. Freeman* Director April 26, 1999
/s/ John R. Hebble
- --------------------------------------
John R. Hebble Treasurer (Principal Financial April 26, 1999
Officer)
</TABLE>
*By: /s/ Sheldon A. Jones
-----------------------------
Sheldon A. Jones
Dechert Price & Rhoads**
** 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. 31
TO REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AND
AMENDMENT NO. 27
TO REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
<PAGE>
SCUDDER FUND, INC.
EXHIBIT INDEX
(g)(3)
(i)
(j)
(n)
Exhibit (g)(3)
AMENDMENT TO CUSTODY CONTRACT
Amendment dated February 12, 1999 by and between State Street Bank and
Trust Company (the "Bank") and Scudder Fund, Inc. (the "Fund") to the custody
contract (the "Custody Contract") between the Bank and the Fund dated May 1,
1986, as amended.
WHEREAS the Bank serves as the custodian of the Fund's assets pursuant
to the Custody Contract;
WHEREAS the Fund may appoint one or more banks identified on Schedule A
attached hereto, as amended from time to time, to serve as an additional
custodian for the Fund (each, a "Repo Custodian") for the limited purpose of
engaging in tri-party repurchase agreement transactions ("Tri-party Repos");
WHEREAS the Fund may direct the Bank to make "free delivery" to one or
more Repo Custodians of cash or other assets maintained in custody by the Bank
for the Fund pursuant to the Custody Contract for purposes of engaging in
Tri-party Repos; and
WHEREAS the Bank and the Fund desire to amend the Custody Contract to
permit the Bank to make "free delivery" of cash and other assets of the Fund to
Repo Custodians from time to time;
NOW THEREFORE, the Bank and the Fund hereby agree to amended the
Custody Contract as follows:
1. Notwithstanding anything to the contrary in the Custody Contract, upon
receipt of Proper Instructions (as defined in the Custody Contract), the Bank
shall deliver cash and/or other assets of the Fund to any account identified on
Schedule A attached hereto, as amended from time to time, maintained for the
Fund by a Repo Custodian, which delivery may be made without contemporaneous
receipt by the Bank of cash or other assets in exchange therefor. Upon such
delivery of cash or other assets in accordance with such Proper Instructions,
the Bank shall have no further responsibility or obligation to the Fund as a
custodian of the Fund with respect to the cash or assets so delivered.
2. The Fund may amend Schedule A from time to time to add or delete a Repo
Custodian or change the identification of the account maintained by a Repo
Custodian for the Fund by delivering Special Instructions (as defined herein) to
the Bank. The term Special Instructions shall mean written instructions executed
by at least two officers of the Fund holding the office of Vice President or
higher. In all other respects, the Custody Contract shall remain in full force
and effect and the Bank and the Fund shall perform their respective obligations
in accordance with the terms thereof.
<PAGE>
EXECUTED to be effective as of the date set forth above.
SCUDDER FUND, INC.
By: /s/Thomas F. McDonough
------------------------------------
Thomas F. McDonough
Vice President
STATE STREET BANK AND TRUST COMPANY
By: /s/Ronald E. Logue
------------------------------------
Ronald E. Logue
Executive Vice President
2
Exhibit (i)
April 30, 1999
Scudder Fund, Inc.
345 Park Avenue
New York, New York 10154
Ladies and Gentlemen:
We have acted as special Maryland counsel to Scudder Fund, Inc. (the
"Company"), a corporation organized under the laws of the State of Maryland on
June 18, 1982. The Company is authorized to issue 13,000,000,000 shares of
capital stock, $0.001 par value per share (each a "Share" and collectively, the
"Shares"). The Shares have been classified into 28 series (each a "Series" and
collectively, the "Series"), including, among others, the Scudder Money Market
Series, consisting of 7,775,000,000 Shares; the Scudder Tax Free Money Market
Series, consisting of 1,000,000,000 Shares; and the Scudder Government Money
Market Series, consisting of 3,000,000,000 Shares.
The Scudder Money Market Series is further classified into four classes
of Shares as follows: 800,000,000 Managed Shares, 3,615,000,000 Institutional
Shares, 2,180,000,000 Premium Money Market Shares and 1,180,000,000 Prime
Reserve Money Market Shares.
The Scudder Tax Free Money Market Series is further classified into two
classes of Shares as follows: 500,000,000 Managed Shares and 500,000,000
Institutional Shares.
The Scudder Government Money Market Series is further classified into
two classes of Shares as follows: 1,500,000,000 Managed Shares and 1,500,000,000
Institutional Shares.
We understand that you are about to file with the Securities and
Exchange Commission, on Form N-1A, Post Effective Amendment No. 31 to the
Company's Registration Statement under the Securities Act of 1933, as amended
(the "Securities Act"), and Amendment No. 27 to The Company's Registration
Statement under the Investment Company Act of 1940, as amended (the "Investment
Company Act") (collectively, the "Registration Statement"), in connection with
the continuous offering on and after May 1, 1999 of (i) the Managed Shares
class, the Institutional Shares class, the Premium Money Market Shares class and
the Prime Reserve Money Market Shares class of the Scudder Money Market Series;
(ii) the Managed Shares class and the Institutional
<PAGE>
Scudder Fund, Inc.
April 30, 1999
Page 2
Shares class of the Scudder Tax Free Money Market Series and (iii) the Managed
Shares class and the Institutional Shares class of the Scudder Government Money
Market Series. We understand that our opinion is required to be filed as an
exhibit to the Registration Statement.
In rendering the opinions set forth below, we have examined originals
or copies, certified or otherwise identified to our satisfaction, of the
following documents:
(i) the Registration Statement;
(ii) the Charter and Bylaws of the Company;
(iii) a certificate of the Company regarding certain matters in
connection with this opinion (the "Certificate");
(iv) a certificate of the Maryland State Department of Assessments and
Taxation dated April 29, 1999 to the effect that the Company is duly
incorporated and existing under the laws of the State of Maryland and is in good
standing and duly authorized to transact business in the State of Maryland (the
"Good Standing Certificate"); and
(v) such other documents and matters as we have deemed necessary and
appropriate to render this opinion, subject to the limitations, assumptions, and
qualifications contained herein.
As to any facts or questions of fact material to the opinions expressed
herein, we have relied exclusively upon the aforesaid documents and
certificates, and representations and declarations of the officers or other
representatives of the Company. We have made no independent investigation
whatsoever as to such factual matters.
In reaching the opinions set forth below, we have assumed, without
independent investigation or inquiry, that:
(a) all documents submitted to us as originals are authentic; all
documents submitted to us as certified or photostatic copies conform to the
original documents; all signatures on all documents submitted to us for
examination are genuine; and all documents and public records reviewed are
accurate and complete;
(b) all representations, warranties, certifications and statements with
respect to matters of fact and other factual information (i) made by public
officers or (ii) made by officers or representatives of the Company, including
certifications made in the Certificate, are accurate, true, correct and complete
in all material respects;
(c) at no time prior to and including the date when all of the Shares
of the Scudder Money Market Series are issued will (i) the Company's Charter,
Bylaws or the existing corporate authorization to issue such Shares be amended,
repealed or revoked; (ii) the total number of the issued Shares exceed
13,000,000,000; (iii) the total number of the
<PAGE>
Scudder Fund, Inc.
April 30, 1999
Page 3
issued Shares of the Scudder Money Market Series exceed 7,775,000,000; (iv) the
total number of the issued Shares of the Managed Shares class of the Scudder
Money Market Series exceed 800,000,000; (v) the total number of the issued
Shares of the Institutional Shares class of the Scudder Money Market Series
exceed 3,615,000,000; (vi) the total number of the issued Shares of the Premium
Money Market Shares class of the Scudder Money Market Series exceed
2,180,000,000; or (vii) the total number of the issued Shares of the Prime
Reserve Money Market Shares class of the Scudder Money Market Series exceed
1,180,000,000;
(d) at no time prior to and including the date when all of the Shares
of the Scudder Tax Free Money Market Series are issued will (i) the Company's
Charter, Bylaws or the existing corporate authorization to issue such Shares be
amended, repealed or revoked; (ii) the total number of the issued Shares exceed
13,000,000,000; (iii) the total number of the issued Shares of the Scudder Tax
Free Money Market Series exceed 1,000,000,0000; (iv) the total number of the
issued Shares of the Managed Shares class of the Scudder Tax Free Money Market
Series exceed 500,000,000; or (v) the total number of the issued Shares of the
Institutional Shares class of the Scudder Tax Free Money Market Series exceed
500,000,000; and
(e) at no time prior to and including the date when all of the Shares
of the Scudder Government Money Market Series are issued will (i) the Company's
Charter, Bylaws or the existing corporate authorization to issue such Shares be
amended, repealed or revoked; (ii) the total number of the issued Shares exceed
13,000,000,000; (iii) the total number of the issued Shares of the Scudder
Government Money Market Series exceed 3,000,000,0000; (iv) the total number of
the issued Shares of the Managed Shares class of the Scudder Government Money
Market Series exceed 1,500,000,000; or (v) the total number of the issued Shares
of the Institutional Shares class of the Scudder Government Money Market Series
exceed 1,500,000,000.
Based on our review of the foregoing and subject to the assumptions and
qualifications set forth herein, it is our opinion that, as of the date of this
letter:
1. The Company is a corporation duly organized, validly existing and,
based solely on the Good Standing Certificate, in good standing under the laws
of the State of Maryland.
2. The issuance and sale of the Shares of each of the Managed Shares
class, the Institutional Shares class, the Premium Money Market Shares class and
the Prime Reserve Money Market Shares class of the Scudder Money Market Series ,
pursuant to the Registration Statement, has been duly and validly authorized by
all necessary corporate action on the part of the Company.
3. The issuance and sale of the Shares of each of the Managed Shares
class and the Institutional Shares class of the Scudder Tax Free Money Market
Series, pursuant to the Registration Statement, has been duly and validly
authorized by all necessary corporate action on the part of the Company.
<PAGE>
Scudder Fund, Inc.
April 30, 1999
Page 4
4. The issuance and sale of the Shares of each of the Managed Shares
class and the Institutional Shares class of the Scudder Government Money Market
Series, pursuant to the Registration Statement, has been duly and validly
authorized by all necessary corporate
action on the part of the Company.
5. The Shares of each of the Managed Shares class, the Institutional
Shares class, the Premium Money Market Shares class and the Prime Reserve Money
Market Shares class of the Scudder Money Market Series, when issued and sold by
the Company for cash consideration pursuant to and in the manner contemplated by
the Registration Statement, will be legally and validly issued, fully paid and
non-assessable.
6. The Shares of each of the Managed Shares class and the Institutional
Shares class of the Scudder Tax Free Money Market Series, when issued and sold
by the Company for cash consideration pursuant to and in the manner contemplated
by the Registration Statement, will be legally and validly issued, fully paid
and non-assessable.
7. The Shares of each of the Managed Shares class and the Institutional
Shares class of the Scudder Government Money Market Series, when issued and sold
by the Company for cash consideration pursuant to and in the manner contemplated
by the Registration Statement, will be legally and validly issued, fully paid
and non-assessable.
In addition to the qualifications set forth above, the opinions set
forth herein are also subject to the following qualifications:
We express no opinion as to compliance with the Securities Act, the
Investment Company Act or the securities laws of any state with respect to the
issuance of Shares of the Company. The opinions expressed herein concern only
the effect of the laws (excluding the principles of conflict of laws) of the
State of Maryland as currently in effect. We assume no obligation to supplement
this opinion if any applicable laws change after the date hereof, or if we
become aware of any facts that might change the opinions expressed herein after
the date hereof.
<PAGE>
Scudder Fund, Inc.
April 30, 1999
Page 5
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Act.
Sincerely yours,
/s/ Ober, Kaler, Grimes & Shriver,
a Professional Corporation
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference into the Prospectus and
Statement of Additional Information constituting the Post-Effective Amendment
No. 31 to the Registration Statement on Form N-1A (the "Registration Statement")
of Scudder Fund Inc., comprised of Scudder Money Market Series, of our report
dated February 12, 1999, on the financial statements and financial highlights
appearing in the December 31, 1998 Annual Report to the Shareholders of Scudder
Fund Inc., which is also incorporated by reference into the Registration
Statement. We further consent to the references to our Firm under the headings
"Financial Highlights," in the Prospectus and "Experts" in the Statement of
Additional Information.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 26, 1999
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the Scudder
Government Money Market Series Core Fund Annual Report for the fiscal year ended
12/31/98 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<SERIES>
<NUMBER> 2
<NAME> SCUDDER GOVERNMENT MONEY MARKET SERIES CORE FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 123,077,439
<INVESTMENTS-AT-VALUE> 123,077,439
<RECEIVABLES> 254,934
<ASSETS-OTHER> 46,661
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 123,379,034
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 655,288
<TOTAL-LIABILITIES> 655,288
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 122,723,746
<SHARES-COMMON-STOCK> 32,754,014
<SHARES-COMMON-PRIOR> 29,439,077
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 122,723,746
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5,677,848
<OTHER-INCOME> 0
<EXPENSES-NET> 429,797
<NET-INVESTMENT-INCOME> 5,248,051
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 5,248,051
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (5,248,051)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 196,423,665
<NUMBER-OF-SHARES-REDEEMED> (193,549,766)
<SHARES-REINVESTED> 441,038
<NET-CHANGE-IN-ASSETS> 3,314,937
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 262,038
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 587,178
<AVERAGE-NET-ASSETS> 34,749,233
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.048
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> (0.048)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.62
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the Scudder
Money Market Series Core Fund Annual Report for the fiscal year ended 12/31/98
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 22
<NAME> SCUDDER GOVERNMENT MONEY MARKET SERIES CORE FUND - A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 123,077,439
<INVESTMENTS-AT-VALUE> 123,077,439
<RECEIVABLES> 254,934
<ASSETS-OTHER> 46,661
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 123,379,034
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 655,288
<TOTAL-LIABILITIES> 655,288
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 122,723,746
<SHARES-COMMON-STOCK> 89,969,732
<SHARES-COMMON-PRIOR> 54,431,062
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 122,723,746
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5,677,848
<OTHER-INCOME> 0
<EXPENSES-NET> 429,797
<NET-INVESTMENT-INCOME> 5,248,051
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 5,248,051
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (5,248,051)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 147,948,753
<NUMBER-OF-SHARES-REDEEMED> (112,418,897)
<SHARES-REINVESTED> 8,814
<NET-CHANGE-IN-ASSETS> 35,538,670
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 262,038
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 587,178
<AVERAGE-NET-ASSETS> 70,065,941
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.051
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (0.051)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.31
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the Scudder
Money Market Series Core Fund Annual Report for the fiscal year ended 12/31/98
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 3
<NAME> SCUDDER MONEY MARKET SERIES CORE FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 2,214,774,516
<INVESTMENTS-AT-VALUE> 2,214,774,516
<RECEIVABLES> 6,208,163
<ASSETS-OTHER> 3,116,366
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,224,099,045
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 10,261,330
<TOTAL-LIABILITIES> 10,261,330
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,213,837,715
<SHARES-COMMON-STOCK> 327,535,036
<SHARES-COMMON-PRIOR> 368,915,638
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,213,837,715
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 92,336,668
<OTHER-INCOME> 0
<EXPENSES-NET> 4,057,787
<NET-INVESTMENT-INCOME> 88,278,881
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 88,278,881
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (88,278,881)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,521,267,560
<NUMBER-OF-SHARES-REDEEMED> (1,568,154,523)
<SHARES-REINVESTED> 5,506,361
<NET-CHANGE-IN-ASSETS> (41,380,602)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,150,657
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,904,409
<AVERAGE-NET-ASSETS> 363,409,536
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.052
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (0.052)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.38
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the Scudder
Money Market Series Core Fund Annual Report for the fiscal year ended 12/31/98
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 32
<NAME> SCUDDER MONEY MARKET SERIES CORE FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 2,214,774,516
<INVESTMENTS-AT-VALUE> 2,214,774,516
<RECEIVABLES> 6,208,163
<ASSETS-OTHER> 3,116,366
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,224,099,045
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 10,261,330
<TOTAL-LIABILITIES> 10,261,330
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,213,837,715
<SHARES-COMMON-STOCK> 1,066,389,829
<SHARES-COMMON-PRIOR> 337,824,146
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,213,837,715
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 92,336,668
<OTHER-INCOME> 0
<EXPENSES-NET> 4,057,787
<NET-INVESTMENT-INCOME> 88,278,881
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 88,278,881
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (88,278,881)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,884,096,724
<NUMBER-OF-SHARES-REDEEMED> (5,169,903,810)
<SHARES-REINVESTED> 14,372,769
<NET-CHANGE-IN-ASSETS> 728,565,683
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,150,657
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,904,409
<AVERAGE-NET-ASSETS> 718,322,416
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.054
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (0.054)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.18
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the Scudder
Money Market Series Core Fund Annual Report for the fiscal year ended 12/31/98
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 33
<NAME> SCUDDER MONEY MARKET SERIES CORE FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 2,214,774,516
<INVESTMENTS-AT-VALUE> 2,214,774,516
<RECEIVABLES> 6,208,163
<ASSETS-OTHER> 3,116,366
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,224,099,045
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 10,261,330
<TOTAL-LIABILITIES> 10,261,330
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,213,837,715
<SHARES-COMMON-STOCK> 807,576,425
<SHARES-COMMON-PRIOR> 334,788,931
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,213,837,715
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 92,336,668
<OTHER-INCOME> 0
<EXPENSES-NET> 4,057,787
<NET-INVESTMENT-INCOME> 88,278,881
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 88,278,881
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (88,278,881)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,381,877,957
<NUMBER-OF-SHARES-REDEEMED> (1,933,144,105)
<SHARES-REINVESTED> 24,053,642
<NET-CHANGE-IN-ASSETS> 472,787,494
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,150,657
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,904,409
<AVERAGE-NET-ASSETS> 583,168,349
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.053
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> (0.053)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.24
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the Scudder
Money Market Series Core Fund Annual Report for the fiscal year ended 12/31/98
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 34
<NAME> SCUDDER MONEY MARKET SERIES CORE FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 2,214,774,516
<INVESTMENTS-AT-VALUE> 2,214,774,516
<RECEIVABLES> 6,208,163
<ASSETS-OTHER> 3,116,366
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,224,099,045
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 10,261,330
<TOTAL-LIABILITIES> 10,261,330
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,213,837,715
<SHARES-COMMON-STOCK> 12,336,425
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,213,837,715
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 92,336,668
<OTHER-INCOME> 0
<EXPENSES-NET> 4,057,787
<NET-INVESTMENT-INCOME> 88,278,881
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 88,278,881
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (88,278,881)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 15,004,074
<NUMBER-OF-SHARES-REDEEMED> (2,685,634)
<SHARES-REINVESTED> 17,985
<NET-CHANGE-IN-ASSETS> 12,336,425
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,150,657
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,904,409
<AVERAGE-NET-ASSETS> 5,754,361
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.011
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> (0.011)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.31
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the Scudder
Tax Free Money Market Series Core Fund Annual Report for the fiscal year ended
12/31/98 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> SCUDDER TAX FREE MONEY MARKET SERIES CORE FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 246,528,704
<INVESTMENTS-AT-VALUE> 246,528,704
<RECEIVABLES> 1,315,482
<ASSETS-OTHER> 102,746
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 247,946,932
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,187,276
<TOTAL-LIABILITIES> 2,187,276
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 245,759,656
<SHARES-COMMON-STOCK> 125,185,339
<SHARES-COMMON-PRIOR> 176,519,670
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 245,759,656
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8,588,899
<OTHER-INCOME> 0
<EXPENSES-NET> 846,044
<NET-INVESTMENT-INCOME> 7,742,855
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 7,742,855
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (7,742,855)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 337,100,112
<NUMBER-OF-SHARES-REDEEMED> (388,875,661)
<SHARES-REINVESTED> 441,218
<NET-CHANGE-IN-ASSETS> (51,334,331)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 617,012
<INTEREST-EXPENSE> 49,489
<GROSS-EXPENSE> 1,092,694
<AVERAGE-NET-ASSETS> 133,889,204
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.031
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> (0.031)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.41
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the Scudder
Money Market Series Core Fund Annual Report for the fiscal year ended 12/31/98
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 12
<NAME> SCUDDER TAX FREE MONEY MARKET SERIES CORE FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 246,528,704
<INVESTMENTS-AT-VALUE> 246,528,704
<RECEIVABLES> 1,315,482
<ASSETS-OTHER> 102,746
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 247,946,932
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,187,276
<TOTAL-LIABILITIES> 2,187,276
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 245,759,656
<SHARES-COMMON-STOCK> 120,574,317
<SHARES-COMMON-PRIOR> 93,705,364
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 245,759,656
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8,588,899
<OTHER-INCOME> 0
<EXPENSES-NET> 846,044
<NET-INVESTMENT-INCOME> 7,742,855
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 7,742,855
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (7,742,855)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 302,744,886
<NUMBER-OF-SHARES-REDEEMED> (276,158,077)
<SHARES-REINVESTED> 282,144
<NET-CHANGE-IN-ASSETS> 26,868,953
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 617,012
<INTEREST-EXPENSE> 49,489
<GROSS-EXPENSE> 1,092,694
<AVERAGE-NET-ASSETS> 112,915,658
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.032
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (0.032)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.26
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
