Filed with the Securities and Exchange Commission on August 14, 1998
File No. 2-55166
File No. 811-2613
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. 32
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and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 22
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Scudder Cash Investment Trust
-----------------------------
(Exact Name of Registrant as Specified in Charter)
Two International Place, Boston, MA 02110-4103
----------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (617) 295-2567
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Thomas F. McDonough
Scudder Kemper Investments, Inc.
Two International Place, Boston, MA 02110
-----------------------------------------
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
immediately upon filing pursuant to paragraph (b)
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on November 1, 1997 pursuant to paragraph (b)
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60 days after filing pursuant to paragraph (a)(i)
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X on October 15, 1998 pursuant to paragraph (a)(i)
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75 days after filing pursuant to paragraph (a)(ii)
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on pursuant to paragraph (a)(ii) of Rule 485.
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<PAGE>
SCUDDER CASH INVESTMENT TRUST
CROSS-REFERENCE SHEET
Items Required By Form N-1A
---------------------------
PART A
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<TABLE>
<S> <C> <C>
<CAPTION>
Item No. Item Caption Prospectus Caption
-------- ------------ ------------------
1. Cover Page COVER PAGE
2. Synopsis EXPENSE INFORMATION
3. Condensed Financial FINANCIAL HIGHLIGHTS
Information
4. General Description of INVESTMENT OBJECTIVE AND POLICIES
Registrant WHY INVEST IN THE FUND?
ADDITIONAL INFORMATION ABOUT POLICIES AND INVESTMENTS
FUND ORGANIZATION
5. Management of the Fund A MESSAGE FROM SCUDDER'S CHAIRMAN
FUND ORGANIZATION--Investment adviser, Transfer agent
SHAREHOLDER BENEFITS--A team approach to investing
TRUSTEES AND OFFICERS
5A. Management Discussion of NOT APPLICABLE
Fund Performance
6. Capital Stock and Securities DISTRIBUTION AND PERFORMANCE INFORMATION--Dividends and capital
gains distributions
FUND ORGANIZATION
SHAREHOLDER BENEFITS--SAIL(TM)--(Scudder Automated Information Line),
Dividend reinvestment plan, T.D.D. service for the hearing
impaired
HOW TO CONTACT SCUDDER
7. Purchase of Securities FUND ORGANIZATION--Underwriter
Being Offered TRANSACTION INFORMATION--Purchasing shares
PURCHASES
SHAREHOLDER BENEFITS--Dividend reinvestment plan
SCUDDER TAX-ADVANTAGED RETIREMENT PLANS
INVESTMENT PRODUCTS AND SERVICES
8. Redemption or Repurchase TRANSACTION INFORMATION--Redeeming shares
EXCHANGES AND REDEMPTIONS
9. Pending Legal Proceedings NOT APPLICABLE
Cross Reference - Page 1
<PAGE>
PART B
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Caption in Statement of
Item No. Item Caption Additional Information
-------- ------------ ----------------------
10. Cover Page COVER PAGE
11. Table of Contents TABLE OF CONTENTS
12. General Information and History ORGANIZATION OF THE FUNDS
13. Investment Objectives and THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES
Policies
14. Management of the Fund TRUSTEES AND OFFICERS
REMUNERATION
15. Control Persons and Principal TRUSTEES AND OFFICERS
Holders of Securities
16. Investment Advisory and Other INVESTMENT ADVISER
Services ADDITIONAL INFORMATION--Experts, Other Information
17. Brokerage Allocation and Other PORTFOLIO TRANSACTIONS
Practices
18. Capital Stock and Other ORGANIZATION OF THE FUNDS
Securities
19. Purchase, Redemption and PURCHASES
Pricing of Securities Being EXCHANGES AND REDEMPTIONS
Offered FEATURES AND SERVICES OFFERED BY THE FUND-- Dividend and Capital
Gain Distribution Options
SPECIAL PLAN ACCOUNTS
DIVIDENDS
NET ASSET VALUE
20. Tax Status DIVIDENDS
TAXES
21. Underwriters DISTRIBUTOR
22. Calculation of Performance Data PERFORMANCE INFORMATION
23. Financial Statements FINANCIAL STATEMENTS
</TABLE>
Cross Reference - Page 2
<PAGE>
Scudder Cash Investment Trust offered herein is an open-end management
investment company. Scudder Prime Reserve Money Market Shares and Scudder
Premium Money Market Shares also offered herein, are both classes of shares of
Scudder Money Market Series, a portfolio of Scudder Fund, Inc., an open-end
management investment company.
This combined prospectus sets forth concisely the information about Scudder Cash
Investment Trust and Scudder Prime Reserve Money Market Shares and Scudder
Premium Money Market Shares that a prospective investor should know before
investing. Please retain it for future reference.
Shares of the Funds are not insured or guaranteed by the U.S. Government. Each
Fund seeks to maintain a constant net asset value of $1.00 per share, but there
can be no assurance that the stable net asset value will be maintained.
If you require more detailed information, a Statement of Additional Information
dated November 1, 1998, for Scudder Cash Investment Trust, October 15, 1998, for
Scudder Prime Reserve Money Market Shares and May 1, 1998, for Scudder Premium
Money Market Shares, as amended from time to time, may be obtained without
charge by writing Scudder Investor Services, Inc., Two International Place,
Boston, MA 02110-4103 or calling 1-800-225-2470. The Statements, which are
incorporated by reference into this prospectus, have been filed with the
Securities and Exchange Commission and are available along with other related
materials on the SEC's Internet Web Site (http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Contents--see page 11.
NOT FDIC-INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
Scudder Cash
Investment Trust
- ---------------------------------
October 15, 1998
Scudder Money Market Series --
Scudder Prime Reserve Money
Market Shares
- ---------------------------------
October 15, 1998
Scudder Money Market Series --
Scudder Premium Money
Market Shares
- ---------------------------------
May 1, 1998
These pure no-load(TM) (no sales charges) money market mutual funds seek to
provide monthly income while maintaining liquidity and stability of capital.
<PAGE>
Expense information
Scudder Cash Investment Trust
How to compare a Scudder Family of Funds pure no-load(TM) fund
This information is designed to help you understand the various costs and
expenses of investing in Scudder Cash Investment Trust ("the Fund"). By
reviewing this table and those in other mutual funds' prospectuses, you can
compare the Fund's fees and expenses with those of other funds. With Scudder's
pure no-load(TM) funds, you pay no commissions to purchase or redeem shares, or
to exchange from one Fund to another. As a result, all of your investment goes
to work for you.
TO BE UPDATED
1) Shareholder transaction expenses: Expenses charged directly to your
individual account in the Fund for various transactions.
Sales commissions to purchase shares (sales load) NONE
Commissions to reinvest dividends NONE
Redemption fees NONE*
Fees to exchange shares NONE
2) Annual Fund operating expenses: Expenses paid by the Fund before it
distributes its net investment income, expressed as a percentage of the
Fund's average daily net assets for the fiscal year ended June 30, 1997.
Investment management fee (after waiver) ____%***
12b-1 fees NONE
Other expenses ____%
-----
Total operating expenses (after waiver) ____%***
=====
Example
Based on the level of total Fund operating expenses listed above, the total
expenses relating to a $1,000 investment, assuming a 5% annual return and
redemption at the end of each period, are listed below. Investors do not pay
these expenses directly; they are paid by the Fund before it distributes its net
investment income to shareholders. (As noted above, the Fund has no redemption
fees of any kind.)
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$-- $-- $-- $--
See "Fund organization--Investment adviser" for further information about the
investment management fee. This example assumes reinvestment of all dividends
and distributions and that the percentage amounts listed under "Annual Fund
operating expenses" remain the same each year. This example should not be
considered a representation of past or future expenses or return. Actual Fund
expenses and return vary from year to year and may be higher or lower than those
shown.
* You may redeem by writing or calling the Fund or by Write-A-Check. If you
wish to receive your redemption proceeds via wire, there is a $5 wire
service fee. For additional information, please refer to "Transaction
information--Redeeming shares."
** Until __________, the Adviser has agreed to waive all or a portion of its
investment management fee payable by the Fund to the extent necessary so
that the total annualized expenses of the Fund do not exceed 0.85% of the
average daily net assets of the Fund. This expense information has been
restated to reflect current fees. Actual annualized Fund expenses for the
fiscal year ended June 30, 1998 were: investment management fee ____%,
other expenses ____% and total operating expenses ____%.
2
<PAGE>
Expense information
Scudder Prime Reserve Money Market Shares
How to compare a Scudder Family of Funds pure no-load(TM) fund
This information is designed to help you understand the various costs and
expenses of investing in Scudder Prime Reserve Money Market Shares (the "Prime
Shares") a class of Scudder Money Market Series (the "Fund")*. By reviewing this
table and those in other mutual funds' prospectuses, you can compare the fees
and expenses with those of other funds. With Scudder's pure no-load(TM) funds,
you pay no commissions to purchase or redeem shares, or to exchange from one
fund to another. As a result, all of your investment goes to work for you.
TO BE UPDATED
1) Shareholder transaction expenses: Expenses charged directly to your
individual account in the Fund for various transactions.
Sales commissions to purchase shares (sales load) NONE
Commissions to reinvest dividends NONE
Redemption fees NONE**
Fees to exchange shares NONE
2) Annual operating expenses: Estimated expenses paid by the Fund before it
distributes its net investment income, expressed as a percentage of the
Fund's average daily net assets for the initial fiscal period ending
December 31, 1998.
Investment management fee (after waiver) ____%***
12b-1 fees NONE
Other expenses ____%
-----
Total operating expenses (after waiver) ____%***
=====
Example
Based on the estimated level of total operating expenses listed above, the total
expenses relating to a $1,000 investment, assuming a 5% annual return and
redemption at the end of each period, are listed below. Investors do not pay
these expenses directly; they are paid by the Fund before it distributes its net
investment income to shareholders. (As noted above, the Fund has no redemption
fees of any kind.)
1 Year 3 Years
------ -------
$-- $--
See "Fund organization--Investment adviser" for further information about the
investment management fee. This example assumes reinvestment of all dividends
and distributions and that the percentage amounts listed under "Annual operating
expenses" remain the same each year. This example should not be considered a
representation of past or future expenses or return. Actual expenses and return
vary from year to year and may be higher or lower than those shown.
* The information set forth on this page relates only to the Fund's Scudder
Premium Money Market Shares. The Fund also offers two other classes of
shares, Scudder Money Market Managed Shares and Scudder Money Market
Institutional Shares, which may have different fees and expenses (which may
affect performance), have different minimum investment requirements and are
entitled to different services. Information about these other classes may
be obtained by contacting Scudder Investor Services, Inc., Two
International Place, Boston, MA 02110-4103 or calling 1-800-225-2470.
** You may redeem by writing or calling the Fund or by Write-A-Check. If you
wish to receive your redemption proceeds via wire, there is a $5 wire
service fee. For additional information, please refer to "Transaction
information--Redeeming shares."
*** Until April 30, 1999 the Adviser has agreed to waive a portion of its
investment management fee. (See the "Investment Adviser" section of this
prospectus for more information.) If the Adviser had not agreed to waive a
portion of the investment management fee, the investment management fee
would be ____% and it is estimated that the total operating expenses for
the Shares would be ____% for the year ending December 31, 1998.
3
<PAGE>
Expense information
Scudder Premium Money Market Shares
How to compare a Scudder Family of Funds pure no-load(TM) fund This information
is designed to help you understand the various costs and expenses of investing
in Scudder Premium Money Market Shares (the "Premium Shares") a class of Scudder
Money Market Series (the "Fund")*. By reviewing this table and those in other
mutual funds' prospectuses, you can compare the fees and expenses with those of
other funds. With Scudder's pure no-load(TM) funds, you pay no commissions to
purchase or redeem shares, or to exchange from one fund to another. As a result,
all of your investment goes to work for you.
TO BE UPDATED
1) Shareholder transaction expenses: Expenses charged directly to your
individual account in the Fund for various transactions.
Sales commissions to purchase shares (sales load) NONE
Commissions to reinvest dividends NONE
Redemption fees NONE**
Fees to exchange shares NONE
2) Annual operating expenses: Estimated expenses paid by the Fund before it
distributes its net investment income, expressed as a percentage of the
Fund's average daily net assets for the initial fiscal period ending
December 31, 1998.
Investment management fee (after waiver) _____%***
12b-1 fees NONE
Other expenses _____%
------
Total operating expenses (after waiver) _____%***
======
Example
Based on the estimated level of total operating expenses listed above, the
total expenses relating to a $1,000 investment, assuming a 5% annual return and
redemption at the end of each period, are listed below. Investors do not pay
these expenses directly; they are paid by the Fund before it distributes its
net investment income to shareholders. (As noted above, the Fund has no
redemption fees of any kind.)
1 Year 3 Years
------ -------
$---- $----
See "Fund organization--Investment adviser" for further information about the
investment management fee. This example assumes reinvestment of all dividends
and distributions and that the percentage amounts listed under "Annual operating
expenses" remain the same each year. This example should not be considered a
representation of past or future expenses or return. Actual expenses and return
vary from year to year and may be higher or lower than those shown.
* The information set forth on this page relates only to the Fund's Scudder
Premium Money Market Shares. The Fund also offers three other classes of
shares, Scudder Prime Reserve Money Market Shares, Scudder Money Market
Managed Shares and Scudder Money Market Institutional Shares, which may
have different fees and expenses (which may affect performance), have
different minimum investment requirements and are entitled to different
services. Information about these other classes may be obtained by
contacting Scudder Investor Services, Inc., Two International Place,
Boston, MA 02110-4103 or calling 1-800-225-2470.
** You may redeem by writing or calling the Fund or by Write-A-Check. If you
wish to receive your redemption proceeds via wire, there is a $5 wire
service fee. For additional information, please refer to "Transaction
information--Redeeming shares."
*** Until April 30, 1999 the Adviser has agreed to waive a portion of its
investment management fee. (See the "Investment Adviser" section of this
prospectus for more information.) If the Adviser had not agreed to waive a
portion of the investment management fee, the investment management fee
would be ____% and it is estimated that the total operating expenses for
the Shares would be ____% for the year ending December 31, 1998.
4
<PAGE>
Financial highlights
Scudder Cash Investment Trust
The following table includes selected data for a share outstanding throughout
each year and other performance information derived from the audited financial
statements.
If you would like more detailed information concerning the Fund's performance, a
complete portfolio listing and audited financial statements are available in the
Fund's Annual Report dated June 30, 1998 and may be obtained without charge by
writing or calling Scudder Investor Services, Inc.
TO BE UPDATED
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Years Ended June 30,
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of
period $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
Net investment income .046 .048 .048 .027 .027 .047 .069 .080 .082 .064
Distributions from net investment (.046) (.048) (.048) (.027) (.027) (.047) (.069) (.080) (.082) (.064)
income and net realized capital
gains
Net asset value, end of period $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
Total Return (%) 4.73 4.89 4.90 2.77 2.75 4.76 7.13 8.23 8.49 6.59
Ratios and Supplemental Data
Net assets, end of period ($ 1,431 1,387 1,520 1,430 1,119 1,361 1,736 1,644 1,563 1,370
millions)
Ratio of operating expenses, net .86 .83 .78 .82 .78 .70 .66 .67 .66 .68
to
average daily net assets (%)
Ratio of operating expenses before .86 .83 .78 .82 .78 .70 .66 .67 .66 .68
expense reduction, to average
daily
net assets (%)
Ratio of net investment income 4.63 4.79 4.84 2.78 2.72 4.58 6.91 7.93 8.21 6.44
to average daily net assets (%)
</TABLE>
5
<PAGE>
Financial highlights
Scudder Premium Money Market Shares
The following table includes selected data for a share of the Premium Money
Market Shares class outstanding throughout the period and other performance
information derived from the audited financial statements.
If you would like more detailed information concerning Fund performance, audited
financial statements are available in the Annual Report dated December 31, 1997
which may be obtained without charge by writing or calling Scudder Investor
Services, Inc.
TO BE UPDATED
<TABLE>
<CAPTION>
<S> <C>
For the Period
July 7, 1997
(commencement
of sale of
Premium Shares)
to June 30, 1998
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $_____
Net investment income _____
Distributions from net investment income _____
Net asset value, end of period $_____
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
Total Return (%) (a) _____
Ratios and Supplemental Data
Net assets, end of period ($ millions) _____
Ratio of operating expenses, net to average daily net assets (%) _____
Ratio of operating expenses before expense reductions, to average daily net _____
assets (%)
Ratio of net investment income to average daily net assets (%) _____
(a) Total return is higher due to the maintenance of Fund expenses.
* Annualized
** Not annualized
</TABLE>
6
<PAGE>
A message from the President
Scudder Kemper Investments, Inc., investment adviser to the Scudder Family of
Funds, is one of the largest and most experienced investment management
organizations worldwide, managing more than $200 billion in assets globally for
mutual fund investors, retirement and pension plans, institutional and corporate
clients, and private family and individual accounts. It is one of the ten
largest mutual fund companies in the U.S.
We offered America's first no-load mutual fund in 1928, and today the Scudder
Family of Funds includes over 50 no-load mutual fund portfolios or classes of
shares. We also manage the mutual funds in a special program for the American
Association of Retired Persons, as well as the fund options available through
Scudder Horizon Plan, a tax-advantaged variable annuity. We also advise The
Japan Fund, and numerous other open- and closed-end funds that invest in this
country and other countries around the world.
The Scudder Family of Funds is designed to make investing easy and less costly.
It includes money market, tax free, income and growth funds as well as IRAs,
401(k)s, Keoghs and other retirement plans.
Services available to shareholders include toll-free access to professional
representatives, easy exchange among the Scudder Family of Funds, shareholder
reports, informative newsletters and the walk-in convenience of Scudder Investor
Centers.
Funds or fund classes in the Scudder Family of Funds are offered without
commissions to purchase or redeem shares or to exchange from one fund to
another. There are no 12b-1 fees either, which many other funds now charge to
support their marketing efforts. All of your investment goes to work for you. We
look forward to welcoming you as a shareholder.
/s/Edmond Villani
The Funds
Investment objectives
o two money market mutual funds seeking to provide monthly income while
maintaining liquidity and stability of capital
Investment characteristics of the Funds
o goal of stable $1.00 share price
o fluctuating yield
o dividends declared daily and paid monthly
o Scudder Cash Investment Trust
minimum initial investment: $2,500
o Scudder Prime Reserve Money Market Shares
minimum initial investment: $10,000
o Scudder Premium Money Market Shares
minimum initial investment: $25,000
Contents
Introduction 8
Scudder Cash Investment Trust 8
Scudder Prime Reserve Money Market Shares
and Scudder Premium Money Market
Shares 9
Why invest in the Funds? 10
Additional information about common
policies, investments and investment
restrictions 11
Additional investments 12
Distribution and performance information 14
Fund organization 15
Transaction information 19
Shareholder benefits 24
Purchases 26
Exchanges and redemptions 27
Trustees and Officers of Scudder Cash Investment
Trust 29
Directors and Officers of Scudder
Fund, Inc. 30
Investment products and services 31
How to contact Scudder 32
7
<PAGE>
Introduction
Scudder Cash Investment Trust and Scudder Money Market Series (each a "Fund,"
collectively the "Funds"), are money market mutual funds advised by Scudder
Kemper Investments, Inc. (the "Adviser"). The Funds have similar objectives and
policies, but different features including different initial investment
requirements. Scudder Money Market Series is a diversified series of Scudder
Fund, Inc. (the "Corporation"). The prospectuses for Scudder Cash Investment
Trust, and two classes of shares of Scudder Money Market Series; Prime Reserve
Shares and Premium Shares are presented together so you can understand their
important differences and decide which Fund is most suitable for your investment
needs.
Except as otherwise indicated, each Fund's investment objectives and policies
are not fundamental and may be changed without a vote of shareholders. If there
is a change in investment objectives, shareholders should consider whether the
Fund remains an appropriate investment in light of their current financial
position and needs. There can be no assurance that each Fund's objectives will
be met.
Scudder Cash Investment Trust
Investment objective
The investment objective of Scudder Cash Investment Trust (the "Trust"), a
diversified, open-end management investment company, is to seek to maintain
stability of capital and, consistent therewith, to maintain liquidity of capital
and to provide current income. The Fund seeks to achieve its objective by
investing in money market securities. The Fund seeks to maintain a constant net
asset value of $1.00 per share. It declares dividends daily and pays them out
monthly.
Investments
The Fund purchases U.S. dollar-denominated securities with remaining maturities
of 397 calendar days or less, except in the case of U.S. Government securities,
which may have remaining maturities of 762 calendar days or less. The
dollar-weighted average maturity of the Fund's portfolio will vary with money
market conditions, but is always 90 days or less. All securities in the Fund's
portfolio must meet credit quality standards pursuant to procedures established
by the Trustees. Generally, the Fund may purchase only securities which are
rated, or issued by a company with comparable securities rated, the two highest
short-term rating categories of one or more of the following rating agencies:
Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Corporation
("S&P") and Fitch Investors Service, Inc. ("Fitch"). If a security is unrated,
the Fund may purchase the security if, in the opinion of the Adviser, the credit
quality of the security is deemed equivalent to the rated securities mentioned
above.
The Fund may invest in short-term securities consisting of: obligations issued
or guaranteed by the U.S. Government, its agencies or instrumentalities;
obligations of supranational organizations such as the International Bank for
Reconstruction and Development (the World Bank); obligations of domestic banks
and foreign branches of domestic banks, including bankers' acceptances,
certificates of deposit, deposit notes and time deposits; and obligations of
savings and loan institutions.
The Fund may also invest in: instruments whose credit has been enhanced by banks
(letters of credit), insurance companies (surety bonds) or other corporate
entities (corporate guarantees); corporate obligations, including commercial
paper, notes, bonds, loans and loan participations; securities with variable or
floating interest rates; when-issued securities; asset-backed securities,
including certificates, participations and notes; municipal securities,
including notes, bonds and participation interests, either taxable or tax free;
and illiquid securities.
8
<PAGE>
In addition, the Fund may invest in repurchase agreements and securities with
put features.
As a means of earning income for periods as short as overnight, the Fund may
enter into repurchase agreements with selected banks and broker/dealers. Under a
repurchase agreement, the Fund acquires securities, subject to the seller's
agreement to repurchase those securities at a specified time and price. If the
seller under a repurchase agreement becomes insolvent, the Fund's right to
dispose of the securities might be restricted, or the value of the securities
may decline before the Fund is able to dispose of them. In the event of the
commencement of bankruptcy or insolvency proceedings with respect to the seller
of the securities before repurchase under a repurchase agreement, the Fund may
encounter delay and incur costs, including a decline in the value of the
securities, before being able to sell the securities.
Each of the above referenced eligible investments and investment practices have
certain risks associated with them. For a more complete description, please
refer to the Funds' combined Statement of Additional Information.
Scudder Prime Reserve Money Market Shares and Scudder Premium Money Market
Shares
Investment objectives
Scudder Prime Reserve Money Market Shares and Scudder Premium Money Market
Shares are both classes of shares of Scudder Money Market Series, a diversified
series of Scudder Fund, Inc. (the "Corporation"), an open-end management
investment company, seeks to provide investors with as high a level of current
income as is consistent with its investment policies and with preservation of
capital and liquidity.
The Fund invests exclusively in a broad range of short-term money market
instruments that have remaining maturities of not more than 397 calendar days
and certain repurchase agreements. These money market securities consist of
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities, taxable and tax-exempt municipal obligations, corporate and
bank obligations, certificates of deposit, bankers' acceptances and variable
amount master demand notes.
The Fund will maintain a dollar-weighted average maturity of 90 days or less in
an effort to maintain a constant net asset value of $1.00 per share, but there
is no assurance that it will be able to do so.
Investments
The bank obligations in which the Fund may invest include negotiable
certificates of deposit, bankers' acceptances, fixed time deposits or other
short-term bank obligations. Generally, the Fund may not invest less than 25% of
the current value of its total assets in bank obligations (including bank
obligations subject to repurchase agreements). The Fund limits its investments
in U.S. bank obligations to banks (including foreign branches, the obligations
of which are guaranteed by the U.S. parent) that have at least $1 billion in
total assets at the time of investment. "U.S. banks" include commercial banks
that are members of the Federal Reserve System or are examined by the
Comptroller of the Currency or whose deposits are insured by the Federal Deposit
Insurance Corporation. In addition, the Fund may invest in obligations of
savings banks and savings and loan associations insured by the Federal Deposit
Insurance Corporation that have total assets in excess of $1 billion at the time
of the investment. The Fund may invest in U.S. dollar-denominated obligations of
foreign banks subject to the following conditions: the foreign banks (based upon
their most recent annual financial statements) at the time of investment (i)
must have more than U.S. $10 billion, or the equivalent in other currencies, in
9
<PAGE>
total assets; (ii) are among the 100 largest banks in the world as determined on
the basis of assets; and (iii) have branches or agencies in the U.S.; the
obligations must be, in the opinion of the Adviser, of an investment quality
comparable to obligations of U.S. banks in which the Fund may invest. Such
investments may involve greater risks than those affecting U.S. banks or
Canadian affiliates of U.S. banks. In addition, foreign banks are not subject to
examination by any U.S. Government agency or instrumentality.
Fixed time deposits may be withdrawn on demand by the investor, but may be
subject to early withdrawal penalties that vary with market conditions and the
remaining maturity of the obligations.
Generally, the commercial paper purchased by the Fund consists of direct
obligations of domestic corporate issuers, including bank holding companies,
whose obligations, at the time of investment, are (i) rated "P-1" by Moody's,
"A-1" or higher by S&P or "F-1" by Fitch, (ii) issued or guaranteed as to
principal and interest by issuers having an existing debt security rating of
"Aa" or higher by Moody's or "AA" or higher by S&P or Fitch, or (iii) securities
that, if not rated, are of comparable investment quality as determined by the
Adviser in accordance with procedures adopted by the Corporation's Board of
Directors.
The Fund may invest in non-convertible corporate debt securities such as notes,
bonds and debentures that are rated "Aa" or higher by Moody's or "AA" or higher
by S&P or Fitch, and variable amount master demand notes. A variable amount
master demand note differs from ordinary commercial paper in that it is issued
pursuant to a written agreement between the issuer and the holder. Its amount
may from time to time be increased by the holder (subject to an agreed maximum)
or decreased by the holder or the issuer and is payable on demand. The rate of
interest varies pursuant to an agreed-upon formula. Generally, master demand
notes are not rated by a rating agency. However, the Fund may invest in a master
demand note that, if not rated, is in the opinion of the Adviser of investment
quality comparable to rated securities in which the Fund may invest.
All of the securities in which the Fund will invest must meet credit standards
applied by the Adviser pursuant to procedures established by the Corporation's
Board of Directors. Should an issue of securities cease to be rated or if its
rating is reduced below the minimum required for purchase by the Fund, the
Adviser will dispose of any such security, as soon as practicable, unless the
Directors determine that such disposal would not be in the best interests of the
Fund.
In addition, the Fund may invest in variable or floating rate obligations,
obligations backed by bank letters of credit, when-issued securities and
securities with put features.
Each of the above-referenced eligible investments and investment practices have
certain risks associated with them. For a more complete description, please
refer to the Fund's combined Statement of Additional Information.
Why invest in the Funds?
A money market mutual fund can be an appropriate component of virtually any type
of investment program. The money market funds described in this prospectus, may
each be a good choice for investors who want their assets to grow in a stable
investment, those who want to keep their "nest egg" safe and handy, or those who
are simply looking to "park" their investment capital for a limited period.
Money market funds may be appropriate for investors desiring monthly income, yet
who are also concerned about the stability of their investment principal. This
conservative fund option seeks to maintain a stable $1.00 share price though
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investment in a diversified pool of very short-term, high quality money market
securities.
Another important feature of money market funds is daily liquidity. For these
Scudder money market Funds, investors can gain access to their cash in different
ways; for example, by toll-free telephone redemption or through a convenient, no
fee check writing option. Further, investors can receive their monthly income by
check or have those dividends invested automatically, without charge, in
additional shares of the same fund, which will help build up their account over
time.
To help meet various cash management needs, investors are provided with a choice
of money funds, one of which has multiple classes from which to choose:
Scudder Cash Investment Trust:
This Fund is designed as a highly flexible and convenient vehicle for cash
investments. The minimum initial investment in this Fund is only $2,500 per
account. This Fund, which can serve as a starting point for building a
well-diversified investment portfolio, provides investors with maximum
flexibility, through low checkwriting minimums and a low account balance
requirement.
Scudder Prime Reserve Money Market Shares:
This investment choice is designed more as a savings vehicle, particularly as
a complement to bank savings accounts and other bank products. The minimum
initial investment in Shares of this Fund is $10,000 per account. By requiring
a larger account balance than a typical money fund, Scudder Prime Reserve
Money Market Shares strives to reduce the impact of transaction and various
fixed costs on overall expenses, leading to an expected higher return for
shareholders.
Scudder Premium Money Market Shares:
Scudder Premium Money Market Shares are designed for shareholders who have the
resources to maintain higher account balances and, in return, be rewarded with
potentially above average money fund income. The minimum initial investment
required in Shares of this Fund is $25,000 per account. With this $25,000
minimum, it is anticipated that Premium Money Market Shares will normally
offer a higher yield than Scudder Cash Investment Trust or the Prime Reserve
Money Market Shares.
Additional information about common policies, investments and
investment restrictions
Each Fund has certain investment restrictions which are designed to reduce each
Fund's investment risk. Fundamental investment restrictions may not be changed
without a vote of shareholders; non-fundamental investment restrictions may be
changed by a vote of the Board of Directors or Trustees as applicable. A
complete description of these and other policies and restrictions is contained
under "Investment Restrictions" in the Funds' combined Statement of Additional
Information.
As a matter of fundamental policy, each Fund may not borrow money, except as
permitted under Federal law. Further, as a matter of non-fundamental policy,
each Fund may not borrow money in an amount greater than 5% of total assets,
except for temporary or emergency purposes.
As a matter of fundamental policy, each Fund may not make loans except through
the lending of portfolio securities, the purchase of debt securities or
interests in indebtedness or through repurchase agreements. Each Fund has
adopted a non-fundamental policy restricting the lending of portfolio securities
to no more than 5% of total assets.
As permitted under the current federal rule regulating money market funds, the
high quality securities in which each Fund invests are divided into "first tier"
and "second tier" securities. First tier securities are those securities
generally rated in the highest short-term category by at least two rating
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agencies (or one, if only one rating agency has rated the security). Securities
which are generally rated in the two highest categories by at least two rating
agencies (or one, if only one rating agency has rated the security) and which do
not qualify as first tier securities are second tier securities. The Adviser may
determine, pursuant to procedures approved by the Corporation's or Trust's
respective Board of Directors or Trustees, that an unrated security is
equivalent to a first tier or second tier security. The Funds will not invest
more than 5% of their total assets in securities issued by a single issuer. The
Funds will not invest more than 5% of their total assets in second tier
securities or the greater of 1% of total assets or $1 million in second tier
securities of a single issuer.
Repurchase agreements
As a means of earning income for periods as short as overnight, each Fund may
enter into repurchase agreements with selected banks and broker/dealers. Under a
repurchase agreement, each Fund acquires securities, subject to the seller's
agreement to repurchase those securities at a specified time and price. If the
seller under a repurchase agreement becomes insolvent, each Fund's right to
dispose of the securities might be restricted, or the value of the securities
may decline before each Fund is able to dispose of them. In the event of the
commencement of bankruptcy or insolvency proceedings with respect to the seller
of the securities before repurchase under a repurchase agreement, each Fund may
encounter delay and incur costs, including a decline in the value of the
securities, before being able to sell the securities.
When-issued securities
Each Fund may purchase securities on a when-issued basis, in which case delivery
and payment normally take place within 45 days after the date of the commitment
to purchase. Each Fund will only make commitments to purchase securities on a
when-issued basis with the intention of actually acquiring the securities, but
may sell them before the settlement date if it is deemed advisable. When-issued
securities are subject to market fluctuation and no income accrues to the
purchaser prior to issuance. The purchase price and the interest rate that will
be received on debt securities are fixed at the time the purchaser enters into
the commitment. Purchasing a security on a when-issued basis can involve a risk
that the market price at the time of delivery may be lower than the agreed upon
purchase price, in which case there could be an unrealized loss at the time of
delivery.
Additional investments
Obligations of U.S. Government agencies and instrumentalities
Obligations of U.S. Government agencies and instrumentalities are debt
securities issued or guaranteed by U.S. Government-sponsored enterprises and
federal agencies. Some of such obligations are supported by (a) the full faith
and credit of the U.S. Treasury (such as Government National Mortgage
Association participation certificates), (b) the limited authority of the issuer
to borrow from the U.S. Treasury (such as securities of the Federal Home Loan
Bank), (c) the authority of the U.S. Government to purchase certain obligations
of the issuer (such as securities of the Federal National Mortgage Association)
or (d) only the credit of the issuer. In the case of obligations not backed by
the full faith and credit of the U.S. Government, the investor must look
principally to the agency issuing or guaranteeing the obligation for ultimate
repayment, which agency may be privately owned. The Fund will invest in
obligations of U.S. Government agencies and instrumentalities only when the
Adviser is satisfied that the credit risk with respect to the issuer is minimal.
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Floating and variable rate instruments
Certain of the obligations that the Fund may purchase have a floating or
variable rate of interest. Such obligations bear interest at rates that are not
fixed, but which vary with changes in specified market rates or indices, such as
the Prime Rate, and at specified intervals.
Municipal obligations
Municipal obligations, which are debt obligations issued by or on behalf of
states, cities, municipalities and other public authorities, and may be general
obligation, revenue, or industrial development bonds, include municipal bonds,
municipal notes and municipal commercial paper.
The Fund's investments in municipal bonds are limited to bonds that are rated at
the date of purchase "Aa" or better by Moody's or "AA" or higher by S&P or
Fitch.
The Fund's investments in municipal notes will be limited to notes that are
rated at the date of purchase "MIG 1" or "MIG 2" (or "VMIG 1" or "VMIG 2" in the
case of an issue having a variable rate demand feature) by Moody's, "SP-1" or
"SP-1+" by S&P or "F-1" or "F-1+" by Fitch.
Municipal commercial paper is a debt obligation with a stated maturity of 270
days or less that is issued to finance seasonal working capital needs or as
short-term financing in anticipation of longer-term debt. The Fund may invest in
municipal commercial paper that is rated at the date of purchase "P-1" or "P-2"
by Moody's, "A-1" or "A-2" or "A-1+" by S&P or "F-1" by Fitch. If a municipal
obligation is not rated, the Fund may purchase the obligation if, in the opinion
of the Adviser, it is of investment quality comparable to other rated
investments that are permitted in the Fund.
Commercial paper
Commercial paper represents short-term unsecured promissory notes issued in
bearer form by bank holding companies, corporations and finance companies. The
Fund may invest in commercial paper that is rated Prime-1 by Moody's or A-1 by
S&P or, if not rated by Moody's or S&P, is issued by companies having an
outstanding debt issue rated Aaa or Aa by Moody's or AAA or AA by S&P.
Letters of credit
Municipal obligations, including certificates of participation, commercial paper
and other short-term obligations may be backed by an irrevocable letter of
credit of a bank which assumes the obligation for payment of principal and
interest in the event of default by the issuer. Only banks which, in the opinion
of the Adviser, are of investment quality comparable to other permitted
investments of the Fund may be used for letter of credit backed investments.
Securities with put rights
The Funds may enter into put transactions with respect to obligations held in
its portfolio with broker/dealers pursuant to a rule under the Investment
Company Act of 1940, as amended (the "1940 Act"), and with commercial banks.
The right of the Funds to exercise a put is unconditional and unqualified. A put
is not transferable by the Funds, although the Funds may sell the underlying
securities to a third party at any time. If necessary and advisable, the Funds
may pay for certain puts either separately in cash or by paying a higher price
for portfolio securities that are acquired subject to such a put (thus reducing
the yield to maturity otherwise available for the same securities). The Funds
expect, however, that puts generally will be available without the payment of
any direct or indirect consideration.
The Funds may enter into puts only with banks or broker/dealers that, in the
opinion of the Adviser, present minimal credit risks. The ability of the Funds
to exercise a put will depend on the ability of the bank or broker/dealer to pay
for the underlying securities at the time the put is exercised. In the event
that a bank or broker/dealer should default on its obligation to repurchase an
underlying security, the Funds might be unable to recover all or a portion of
any loss sustained from having to sell the security elsewhere.
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Each Fund intends to enter into puts solely to maintain liquidity and does not
intend to exercise its rights thereunder for trading purposes. The puts will
only be for periods of substantially less than the life of the underlying
security. The acquisition of a put will not affect the valuation by the Funds of
the underlying security. The actual put will be valued at zero in determining
net asset value of the Funds. Where the Funds pays directly or indirectly for a
put, its cost will be reflected as an unrealized loss for the period during
which the put is held by the Funds and will be reflected in realized gain or
loss when the put is exercised or expires. If the value of the underlying
security increases, the potential for unrealized or realized gain is reduced by
the cost of the put. The maturity of a municipal obligation purchased by the
Funds will not be considered shortened by any put to which such obligation is
subject.
Third party puts
The Funds may also purchase long-term fixed rate bonds that have been coupled
with an option granted by a third party financial institution allowing the Funds
at specified intervals, not exceeding 397 calendar days, to tender (or "put")
the bonds to the institution and receive the face value thereof (plus accrued
interest). These third party puts are available in several different forms, may
be represented by custodial receipts or trust certificates and may be combined
with other feature such as interest rate swaps. The Funds receive a short-term
rate of interest (which is periodically reset), and the interest rate
differential between that rate and the fixed rate on the bond is retained by the
financial institution. The financial institution granting the option does not
provide credit enhancement, and in the event that there is a default in the
payment of principal or interest, or downgrading of a bond to below investment
grade, or a loss of the bond's tax-exempt status, the put option will terminate
automatically, the risk to the Funds will be that of holding such a long-term
bond and the dollar-weighted average maturity of the Funds would be adversely
affected.
Distribution and performance information
Dividends and capital gains distributions
The Funds' dividends are declared daily and distributed monthly to shareholders.
The Funds may take into account capital gains and losses (other than long-term
capital gains) in their daily dividend declaration. The Funds may make
additional distributions for tax purposes, if necessary. Any dividends or
capital gains distributions declared in October, November or December with a
record date in such a month and paid during the following January will be
treated by shareholders for federal income tax purposes as if received on
December 31 of the calendar year declared. According to preference, shareholders
may receive distributions in cash or have them reinvested in additional Scudder
Cash Investment Trust shares, Scudder Prime Reserve Money Market Shares or
Scudder Premium Money Market Shares, as the case may be. If an investment is in
the form of a retirement plan, all dividends and capital gains distributions
must be reinvested into the shareholder's account. Dividends ordinarily will
vary from one class of Scudder Money Market Series to another.
Generally, dividends from net investment income are taxable to shareholders as
ordinary income whether received in cash or additional shares.
Long-term capital gains distributions, if any, are taxable as long-term capital
gains, regardless of the length of time shareholders have owned their shares.
Short-term capital gains and any other taxable income distributions are taxable
as ordinary income. It is not expected that dividends will qualify for the
dividends-received deduction for corporations.
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Each Fund sends detailed tax information to shareholders about the amount and
type of its distributions by January 31 of the following year.
Performance information
From time to time, quotations of the performance of Scudder Cash Investment
Trust, Scudder Prime Reserve Money Market Shares and Scudder Premium Money
Market Shares may be included in advertisements, sales literature or shareholder
reports. Performance information is computed separately for each class of
Scudder Money Market Series in accordance with formulae prescribed by the
Securities and Exchange Commission. Performance figures will vary in part
because of the different expense structure of Scudder Money Market Series'
different classes of shares. All performance figures are historical, show the
performance of a hypothetical investment and are not intended to indicate future
performance.
The "yield" of Scudder Cash Investment Trust, Scudder Prime Reserve Money Market
Shares and Scudder Premium Money Market Shares refers to income generated by an
investment over a specified seven-day period. Yield is expressed as an
annualized percentage. The "effective yield" of Scudder Cash Investment Trust,
Scudder Prime Reserve Money Market Shares or Scudder Premium Money Market Shares
is expressed similarly but, when annualized, the income earned by an investment
is assumed to be reinvested and will reflect the effects of compounding. "Total
return" is the change in value of an investment in Scudder Cash Investment
Trust, Scudder Prime Reserve Money Market Shares or Scudder Premium Money Market
Shares for a specified period. The "average annual total return" is the average
annual compound rate of return of an investment in Scudder Cash Investment
Trust, Scudder Prime Reserve Money Market Shares or Scudder Premium Money Market
Shares assuming the investment has been held for one year, five years and ten
years as of a stated ending date. (If a Fund has not been in operation for at
least a year or for a period of less than ten years, only the life of the Fund
will be used.) "Cumulative total return" represents the cumulative change in
value of an investment in Scudder Cash Investment Trust, Scudder Prime Reserve
Money Market Shares or Scudder Premium Money Market Shares for various periods.
All types of total return calculations assume that all dividends and capital
gains distributions during the period were reinvested in shares of Scudder Cash
Investment Trust, Scudder Prime Reserve Money Market Shares or Scudder Premium
Money Market Shares, as applicable.
Performance will vary based upon, among other things, changes in market
conditions and the level of a Fund's expenses, as well as particular class
expenses in the case of Scudder Prime Reserve Money Market Shares or Scudder
Premium Money Market Shares.
Fund organization
The prospectuses of Scudder Cash Investment Trust, and the Scudder Prime Reserve
Money Market Shares and Scudder Premium Money Market Shares classes of Scudder
Money Market Series are combined in this prospectus. Each Fund offers only its
own shares, yet it is possible that one might become liable for a misstatement
regarding the other. Each Corporation's or Trust's respective Board of Trustees
or Directors have considered this and approved the use of a combined prospectus.
Scudder Cash Investment Trust is a diversified, open-end management investment
company registered under the 1940 Act. The Fund was organized as a Massachusetts
business trust in December 1975.
The Fund's activities are supervised by its Board of Trustees. Shareholders have
one vote for each share held on matters on which they are entitled to vote. The
Fund is not required to and has no current intention of holding annual
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shareholder meetings, although special meetings may be called for purposes such
as electing or removing Trustees, changing fundamental investment policies or
approving an investment management agreement. Shareholders will be assisted in
communicating with other shareholders in connection with removing a Trustee as
if Section 16(c) of the 1940 Act were applicable.
Scudder Prime Reserve Money Market Shares and Scudder Premium Money Market
Shares share a common investment portfolio known as Scudder Money Market Series,
a diversified series of Scudder Fund, Inc., an open-end management investment
company registered under the 1940 Act. The Corporation was formed in June 1982
as a Maryland corporation.
The Corporation's activities are supervised by its Board of Directors. The Board
of Directors, under applicable laws of the State of Maryland, in addition to
supervising the actions of the Corporation's Adviser and Distributor, as set
forth below, decides upon matters of general policy.
The Corporation has adopted a plan pursuant to Rule 18f-3 (the "Plan") under the
1940 Act to permit the Corporation to establish a multiple class distribution
system for all of its Funds.
Under the Plan, shares of each class represent an equal pro rata interest in the
Fund and, generally, shall have identical voting, dividend, liquidation, and
other rights, preferences, powers, restrictions, limitations, qualifications and
terms and conditions, except that: (1) each class shall have a different
designation; (2) each class of shares shall bear its own "class expenses;" (3)
each class shall have exclusive voting rights on any matter submitted to
shareholders that relates to its administrative services, shareholder services
or distribution arrangements; (4) each class shall have separate voting rights
on any matter submitted to shareholders in which the interests of one class
differ from the interests of any other class; (5) each class may have separate
and distinct exchange privileges; (6) each class may have different conversion
features, and (7) each class may have separate account size requirements.
Expenses currently designated as "Class Expenses" by the Corporation's Board of
Directors under the Plan include, for example, transfer agent fees attributable
to a specific class, and certain securities registration fees.
In addition to the Scudder Prime Reserve Money Market Shares and Scudder Premium
Money Market Shares classes offered herein, the Scudder Money Market Series
offers two other classes of shares, Scudder Managed Shares and Scudder
Institutional Shares, which may have different fees and expenses (which may
affect performance), may have different minimum investment requirements and are
entitled to different services. Additional information about these other classes
of shares of the Fund may be obtained by contacting Scudder Investor Services,
Inc.
Each share of the Scudder Prime Reserve Money Market Shares and Scudder Premium
Money Market Shares shall be entitled to one vote (or fraction thereof in
respect of a fractional share) on matters that such shares (or class of shares)
shall be entitled to vote. Shareholders of the Fund shall vote together on any
matter, except to the extent otherwise required by the 1940 Act, or when the
Board of Directors of the Corporation has determined that the matter affects
only the interests of shareholders of one or more classes of the Fund, in which
case only the shareholders of such class or classes of the Fund shall be
entitled to vote thereon. Any matter shall be deemed to have been effectively
acted upon with respect to the Fund if acted upon as provided in Rule 18f-2
under the 1940 Act, or any successor rule, and in the Corporation's Articles of
Incorporation.
The Corporation is not required to and has no current intention of holding
annual shareholder meetings, although meetings may be called for purposes such
as electing or removing Directors, changing fundamental investment policies or
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approving an investment advisory agreement. Shareholders will be assisted in
communicating with other shareholders in connection with removing a Director as
if Section 16(c) of the 1940 Act were applicable.
Investment adviser
The Funds retain the investment management firm of Scudder Kemper Investments,
Inc., a Delaware corporation formerly known as Scudder, Stevens & Clark, Inc.
("Scudder"), to manage their daily investment and business affairs subject to
the policies established by the Board of Trustees (for the Scudder Cash
Investment Trust) and Directors (for the Scudder Prime Reserve Money Market
Shares and Scudder Premium Money Market Shares). The Trustees and Directors have
overall responsibility for the management of the Funds under Massachusetts and
Maryland law, respectively.
Scudder and Zurich Insurance Company ("Zurich"), an international insurance and
financial services organization, have formed a new global investment
organization by combining Scudder with Zurich's subsidiary, Zurich Kemper
Investments, Inc. As a result of the transaction, Zurich owns approximately 70%
of the Adviser, with the balance owned by the Adviser's officers and employees.
Scudder Cash Investment Trust. The Adviser received an investment advisory fee
for its services which totaled _____% of Scudder Cash Investment Trust's average
daily net assets during the fiscal year ended June 30, 1998. The fee is
graduated so that increases in the Fund's net assets may result in a lower
average fee rate and decreases in the Fund's net assets may result in a higher
average fee rate.
Scudder Cash Investment Trust's fee is payable monthly, provided that the Fund
will make such interim payments as may be requested by the Adviser not to exceed
75% of the amount of the fee then accrued on the books of the Fund and unpaid.
Until __________, 1998, the Adviser has agreed to waive all or a portion of its
investment management fee payable by the Fund to the extent necessary so that
the total annualized expenses of the Fund do not exceed ____% of the average
daily net assets.
All of the Fund's expenses are paid out of gross investment income. Shareholders
pay no direct charges or fees for investment or administrative services.
Scudder Prime Reserve Money Market Fund and Scudder Premium Money Market Shares.
Pursuant to its Investment Advisory Agreement (the "Agreement") with the
Corporation on behalf of the Scudder Money Market Series, the Adviser regularly
provides the Funds with investment research, advice and supervision and
continuously furnishes an investment program for the Funds, consistent with its
Funds' investment objectives and policies. Each Agreement further provides that
the Adviser will pay the compensation and certain expenses of all officers and
certain employees of the Corporation and make available to each Fund such of the
Adviser's directors, officers and employees as are reasonably necessary for the
Funds' operations or as may be duly elected officers or directors of the
Corporation. Under each Agreement, the Adviser pays the Funds' office rent and
will provide investment advisory research and statistical facilities and all
clerical services relating to research, statistical and investment work. The
Adviser, including the Adviser's employees who serve the Funds, may render
investment advice, management and other services to others.
Each Fund will bear all expenses not specifically assumed by the Adviser under
the terms of its Agreement, including, among others, the fee payable to the
Adviser as investment adviser, the fees of the Directors who are not "affiliated
persons" (as defined in the 1940 Act) of the Adviser, the expenses of all
Directors or Trustees as applicable and the fees and out-of-pocket expenses of
the Corporation's or Trust's as applicable Custodian and Transfer Agent. For a
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more complete description of the expenses to be borne by each Fund, see
"Investment Adviser" and "Distributor" in the Funds' Statement of Additional
Information.
The Adviser receives a management fee at an annual rate equal to 0.25% of the
average daily net assets of the Scudder Money Market Series. Management fees are
computed daily and paid monthly. The Adviser has agreed to waive 0.05% of its
management fee from Scudder Money Market Series until April 30, 1999 for Prime
Reserve Money Market Shares and Premium Money Market Shares. In addition, from
time to time, the Adviser may voluntarily waive certain additional expenses of
the Fund. The level of this voluntary waiver is in the Adviser's discretion and
is in addition to the Adviser's agreement to waive a portion of its investment
management fee.
Scudder Cash Investment Trust and Scudder Money Market Series. Under the
Investment Management Agreement with the Adviser, each Fund is responsible for
all of its expenses, including fees and expenses incurred in connection with
membership in investment company organizations; fees and expenses of the Fund's
accounting agent; brokers' commissions; legal, auditing and accounting expenses;
taxes and governmental fees; the fees and expenses of the transfer agent; the
expenses of and the fees for registering or qualifying securities for sale; the
fees and expenses of Directors or Trustees, as applicable, officers and
employees of the Corporation or Trust who are not affiliated with the Adviser;
the cost of printing and distributing reports and notices to shareholders; and
the fees and disbursements of custodians.
All of each Fund's expenses are paid out of gross investment income.
Shareholders pay no direct charges or fees for investment or administrative
services.
Like other mutual funds and financial and business organizations worldwide, the
Funds could be adversely affected if computer systems on which the Funds rely,
which primarily include those used by the Adviser, its affiliates or other
service providers, are unable to correctly process date-related information on
and after January 1, 2000. This risk is commonly called the Year 2000 Issue.
Failure to successfully address the Year 2000 Issue could result in
interruptions to and other material adverse effects on the Funds' business and
operations. The Adviser has commenced a review of the Year 2000 Issue as it may
affect the Funds and is taking steps it believes are reasonably designed to
address the Year 2000 Issue, although there can be no assurances that these
steps will be sufficient. In addition, there can be no assurances that the Year
2000 Issue will not have an adverse effect on the companies whose securities are
held by the Funds or on global markets or economies generally.
Transfer agent
Scudder Service Corporation, P.O. Box 2291, Boston, Massachusetts 02107-2291, a
subsidiary of the Adviser, is the transfer, shareholder servicing and
dividend-paying agent for the Funds.
Underwriter
Scudder Investor Services, Inc., a subsidiary of the Adviser, is the principal
underwriter for Scudder Cash Investment Trust and Scudder Fund, Inc. Scudder
Investor Services, Inc. confirms, as agent, all purchases of shares of the
Funds. Scudder Investor Relations is a telephone information service provided by
Scudder Investor Services, Inc.
Fund accounting agent
Scudder Fund Accounting Corporation, a subsidiary of the Adviser, is responsible
for determining the daily net asset value per share and maintaining the general
accounting records of the Funds.
Custodian
State Street Bank and Trust Company is the Funds' custodian.
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Scudder Kemper Investments, Inc., is located at
Two International Place, Boston, Massachusetts.
Like other mutual funds and financial and business organizations worldwide, a
Fund could be adversely affected if computer systems on which a Fund relies,
which primarily include those used by the Adviser, its affiliates or other
service providers, are unable to correctly process date-related information on
and after January 1, 2000. This risk is commonly called the Year 2000 Issue.
Failure to successfully address the Year 2000 Issue could result in
interruptions to and other material adverse effects on a Fund's business and
operations. The Adviser has commenced a review of the Year 2000 Issue as it may
affect a Fund and is taking steps it believes are reasonably designed to address
the Year 2000 Issue, although there can be no assurances that these steps will
be sufficient. In addition, there can be no assurances that the Year 2000 Issue
will not have an adverse effect on the companies whose securities are held by a
Fund or on global markets or economies generally.
Transaction information
Purchasing shares
Purchases are executed at the next calculated net asset value per share after
the Funds' transfer agent receives the purchase request in good order. Purchases
are made in full and fractional shares. (See "Share price.")
Minimum initial investment:
Scudder Cash Investment Trust:
$2,500; IRAs $1,000
Scudder Prime Reserve Money Market Shares: $10,000; IRAs $10,000
Scudder Premium Money Market Shares: $25,000; IRAs $25,000
By check. If you purchase shares with a check that does not clear, your purchase
will be canceled and you will be subject to any losses or fees incurred in the
transaction. Checks must be drawn on or payable through a U.S. bank. If you
purchase shares by check and redeem them within seven business days of purchase,
a Fund may hold redemption proceeds until the purchase check has cleared. If you
purchase shares by federal funds wire, you may avoid this delay. Redemption
requests by telephone or by "Write-A-Check" prior to the expiration of the
seven-day period will not be accepted.
By wire. To open a new account by wire, first call Scudder at 1-800-225-5163 to
obtain an account number. A representative will instruct you to send a
completed, signed application to the transfer agent. Accounts cannot be opened
without a completed, signed application and a Scudder fund account number.
Contact your bank to arrange a wire transfer to:
The Scudder Funds
State Street Bank and Trust Company
Boston, MA 02101
ABA Number 011000028
DDA Account 9903-5552
Your wire instructions must also include:
- -- the name of the fund and class (if applicable) in which the money is to be
invested,
- -- the account number of the fund, and
- -- the name(s) of the account holder(s).
The account will be established once the application and money order are
received in good order.
You may also make additional investments of $100 or more for Scudder Cash
Investment Trust, and $1,000 or more for either Scudder Prime Reserve Money
Market Shares or Scudder Premium Money Market Shares to your existing account by
wire.
By "QuickBuy." If you elected "QuickBuy" for your account, you can call
toll-free to purchase shares. The money will be automatically transferred from
your predesignated bank checking account. Your bank must be a member of the
Automated Clearing House for you to use this service. If you did not elect
"QuickBuy," call 1-800-225-5163 for more information.
19
<PAGE>
To purchase additional shares, call 1-800-225-5163. Purchases may not be for
more than $250,000. Proceeds in the amount of your purchase will be transferred
from your bank checking account in two or three business days following your
call. For requests received by the close of regular trading on the Exchange,
shares will be purchased at the net asset value per share calculated at the
close of trading on the day of your call. "QuickBuy" requests received after the
close of regular trading on the Exchange will begin their processing and be
purchased at the net asset value calculated the following business day.
If you purchase shares by "QuickBuy" and redeem them within seven days of the
purchase, the Fund may hold the redemption proceeds for a period of up to seven
business days. If you purchase shares and there are insufficient funds in your
bank account, the purchase will be canceled and you will be subject to any
losses or fees incurred in the transaction. "QuickBuy" transactions are not
available for most retirement plan accounts. However, "QuickBuy" transactions
are available for Scudder IRA accounts.
By exchange. Scudder Cash Investment Trust, Scudder Prime Reserve Money Market
Shares and Scudder Premium Money Market Shares may be exchanged for shares of
other funds in the Scudder Family of Funds, unless otherwise determined by the
Trust's or Corporation's respective Board of Trustees or Directors. Your new
account will have the same registration and address as your existing account.
The exchange requirements for corporations, other organizations, trusts,
fiduciaries, agents, institutional investors and retirement plans may be
different from those for regular accounts. Minimum account requirements may be
different for other Scudder Funds. Please call 1-800-225-5163 for more
information, including information about the transfer of special account
features.
You can also make exchanges among your Scudder fund accounts on SAIL, the
Scudder Automated Information Line, by calling 1-800-343-2890.
Redeeming shares
Each Fund allows you to redeem shares (i.e., sell them back to the Fund) without
redemption fees.
By telephone. This is the quickest and easiest way to sell Fund shares. If you
provided your banking information on your application, you can call to request
that federal funds be sent to your authorized bank account. If you did not
include your banking information on your application, call 1-800-225-5163 for
more information.
Redemption proceeds will be wired to your bank unless otherwise requested. If
your bank cannot receive federal reserve wires, redemption proceeds will be
mailed to your bank. There will be a $5 charge for all wire redemptions.
You can also make redemptions from your Scudder fund account on SAIL by calling
1-800-343-2890.
If you open an account by wire, you cannot redeem shares by telephone until the
Fund's transfer agent has received your completed and signed application.
Telephone redemption is not available for shares held in Scudder IRA accounts
and most other Scudder retirement plan accounts.
In the event that you are unable to reach the Fund by telephone, you should
write to the Fund; see "How to contact Scudder" for the address.
By "QuickSell." If you elected "QuickSell" for your account, you can call
toll-free to redeem shares. The money will be automatically transferred to your
predesignated bank checking account. Your bank must be a member of the Automated
Clearing House for you to use this service. If you did not elect "QuickSell,"
call 1-800-225-5163 for more information.
20
<PAGE>
To redeem shares, call 1-800-225-5163. Redemptions must be for at least $250.
Proceeds in the amount of your redemption will be transferred to your bank
checking account in two or three business days following your call. For requests
received by the close of regular trading on the Exchange, shares will be
redeemed at the net asset value per share calculated at the close of trading on
the day of your call. "QuickSell" requests received after the close of regular
trading on the Exchange will begin their processing and be redeemed at the net
asset value calculated the following business day.
"QuickSell" transactions are not available for Scudder IRA accounts and most
other retirement plan accounts.
Signature guarantees. For your protection and to prevent fraudulent redemptions,
on written redemption requests in excess of $100,000 we require an original
signature and an original signature guarantee for each person in whose name the
account is registered. (The Funds reserve the right, however, to require a
signature guarantee for all redemptions.) You can obtain a signature guarantee
from most banks, credit unions or savings associations, or from broker/dealers,
municipal securities broker/dealers, government securities broker/dealers,
national securities exchanges, registered securities associations or clearing
agencies deemed eligible by the Securities and Exchange Commission. Signature
guarantees by notaries public are not acceptable. Redemption requirements for
corporations, other organizations, trusts, fiduciaries, agents, institutional
investors and retirement plans may be different from those for regular accounts.
For more information, please call 1-800-225-5163.
By "Write-A-Check." You may redeem shares by writing checks against your account
balance for at least $100 for Scudder Cash Investment Trust, and for at least
$1,000 for Scudder Prime Reserve Money Market Shares and Scudder Premium Money
Market Shares and no more than $5,000,000 for each Fund. Your Fund investments
will continue to earn dividends until your check is presented to a Fund for
payment.
Checks will be returned by the Funds' transfer agent if there are insufficient
shares to meet the withdrawal amount. You should not attempt to close an account
by check because the exact balance at the time the check clears will not be
known when the check is written.
Telephone transactions
Shareholders automatically receive the ability to exchange by telephone and the
right to redeem by telephone up to $100,000 to their address of record.
Shareholders also may, by telephone, request that redemption proceeds be sent to
a predesignated bank account. Each Fund uses procedures designed to give
reasonable assurance that telephone instructions are genuine, including
recording telephone calls, testing a caller's identity and sending written
confirmation of telephone transactions. If a Fund does not follow such
procedures, it may be liable for losses due to unauthorized or fraudulent
telephone instructions. Each Fund will not be liable for acting upon
instructions communicated by telephone that it reasonably believes to be
genuine.
Share price
Purchases and redemptions, including exchanges, are made at net asset value.
Scudder Fund Accounting Corporation determines net asset value per share as of
twelve o'clock noon for Scudder Cash Investment Trust only and, for both Funds
as of the close of regular trading on the Exchange, normally 4 p.m. eastern
time, on each day the Exchange is open for trading. Net asset value per share is
calculated by dividing the total value of net assets of Scudder Cash Investment
Trust, Scudder Prime Reserve Money Market Shares or Scudder Premium Money Market
Shares, less all liabilities attributable to such Fund or Class, as applicable,
by the total number of shares outstanding in such Fund or Class, as applicable.
In calculating the net asset value per share, Scudder Cash Investment Trust uses
the current market value of the securities. However, for securities with sixty
21
<PAGE>
days or less to maturity, Scudder Cash Investment Trust uses the amortized cost
value. Scudder Money Market Series uses the amortized cost value in calculating
the net asset value per share.
Processing time
Scudder Cash Investment Trust. Purchases made by wire and received by the Fund's
transfer agent before noon on any business day are executed at noon on that day
and begin earning income the same day. Those made by wire between noon and the
close of regular trading on the Exchange on any business day are executed at the
close of trading the same day and begin earning income the next business day.
Purchases made by check are executed on the day the check is received in good
order by the Fund's transfer agent and begin earning income on the next business
day. Redemption requests received in good order by the Fund's transfer agent
between noon and the close of regular trading on the Exchange are executed at
the net asset value calculated at the close of regular trading on that day and
will earn a dividend on the redeemed shares that day. If a redemption request is
received by noon, proceeds will normally be wired that day, if requested by the
shareholder, but no dividend will be earned on the redeemed shares on that day.
Scudder Prime Reserve Money Market Shares and Scudder Premium Money Market
Shares. Purchases made by wire and received by the Fund's transfer agent before
4:00 p.m. on any business day are executed at 4:00 p.m. on that day and begin
earning income the same day. Purchases made by check are executed on the day the
check is received in good order by the Fund's transfer agent and begin earning
income on the next business day. Redemption requests received in good order by
the Fund's transfer agent by the close of regular trading, normally 4:00 p.m.
eastern time, are executed at the net asset value calculated at the close on
that day. If requested by the shareholder, proceeds can be wired that day, but
no dividend will be earned on the redeemed shares that day. All other redemption
requests will be processed on the day received and will earn a dividend on the
redeemed shares that day; however, the proceeds will be distributed on the next
business day.
If you wish to make a purchase of $500,000 or more for either of the above
Funds, you should notify Scudder Investor Relations by calling 1-800-225-5163.
Each Fund will normally send redemption proceeds within one business day
following the redemption request, but may take up to seven business days (or
longer in the case of shares recently purchased by check).
Purchase restrictions
Scudder Cash Investment Trust, Scudder Fund, Inc., the classes of Shares of
Scudder Money Market Series and Scudder Investor Services, Inc. each reserves
the right to reject purchases of shares (including exchanges) for any reason.
Tax identification number
Be sure to complete the Tax Identification Number section of the application
when you open an account. Federal tax law requires a Fund to withhold 31% of
taxable dividends and capital gains distributions from accounts (other than
those of certain exempt payees) without a correct certified Social Security or
tax identification number and certain other certified information or upon
notification from the IRS or a broker that withholding is required. Each Fund
reserves the right to reject new account applications without a correct
certified Social Security or tax identification number. Each Fund also reserves
the right, following 30 days' notice, to redeem all shares in accounts without a
correct certified Social Security or tax identification number. A shareholder
may avoid involuntary redemption by providing a Fund with a tax identification
number during the 30-day notice period.
Minimum balances for Scudder Cash Investment Trust
Shareholders should maintain a share balance worth at least $2,500, which amount
may be changed by the Board of Trustees. Scudder retirement plans have similar
22
<PAGE>
or lower minimum share balance requirements. A shareholder may open an account
with at least $1,000, if an automatic investment plan of $100/month is
established.
Shareholders who maintain a non-fiduciary account balance of less than $2,500 in
the Fund, without establishing an automatic investment plan, may be assessed an
annual $10.00 per fund charge with the fee to be paid to the Fund. The $10.00
charge will not apply to shareholders with a combined household account balance
in any of the Scudder Funds of $25,000 or more. The Fund reserves the right,
following 60 days' written notice to shareholders, to redeem all shares in
accounts below $250, including accounts of new investors, where a reduction in
value has occurred due to a redemption or exchange out of the account. The Fund
will mail the proceeds of the redeemed account to the shareholder. Reductions in
value that result solely from market activity will not trigger an involuntary
redemption. Retirement accounts and certain other accounts will not be assessed
the $10.00 charge or be subject to automatic liquidation. Please refer to
"Exchanges and Redemptions--Other information" in the Fund's Statement of
Additional Information for more information.
Minimum balances for Scudder Prime Reserve Money Market Shares
Initial minimum investment in the Prime Reserve Shares is $10,000. Shareholders
should maintain a share balance worth at least $7,500 (which minimum amount may
be changed by the Board of Directors). Account balances will be reviewed
periodically and shareholders with accounts below $7,500 will receive 60 days'
notice, after which, if the balance is not increased to the required level, the
Adviser reserves the right to redeem all shares and close the account and send
the proceeds to the shareholder's address of record.
Accounts with balances below $2,500, which is the minimum balance required for
Scudder Cash Investment Trust, will be automatically liquidated and the check
sent to the shareholder's address of record.
The Adviser reserves the right to redeem all shares and close the account and
send the proceeds to the shareholder's address of record. Reductions in value
that result solely from market activity will not trigger an involuntary
redemption.
Please refer to "Exchanges and Redemptions-- Other Information" in the Fund's
combined Statement of Additional Information for more information.
Minimum balances for Scudder Premium Money Market Shares
Initial minimum investment in the Fund is $25,000. Shareholders should maintain
a share balance worth at least $15,000 (which minimum amount may be changed by
the Board of Directors).
Shareholders whose account balance falls below $15,000 for at least 30 days will
be given 60 days' notice to bring the account back up to $15,000 or more. Where
a reduction in value has occurred due to a redemption or exchange out of the
account and the account balance is not increased in 60 days, the Adviser
reserves the right to redeem all shares and close the account and send the
proceeds to the shareholder's address of record.
Please refer to "Exchanges and Redemptions-- Other Information" in the Fund's
combined Statement of Additional Information for more information.
Third party transactions
If purchases and redemptions of Fund shares are arranged and settlement is made
at an investor's election through a member of the National Association of
Securities Dealers, Inc., other than Scudder Investor Services, Inc., that
23
<PAGE>
member may, at its discretion, charge a fee for that service.
Shareholder benefits
Experienced professional management
Scudder Kemper Investments, Inc., one of the nation's most experienced
investment management firms, actively manages your fund investment. Professional
management is an important advantage for investors who do not have the time or
expertise to invest directly in individual securities.
A team approach to investing
Each Fund is managed by a team of investment professionals who each play an
important role in the Fund's management process. Team members work together to
develop investment strategies and select securities for each Fund's portfolio.
They are supported by the Adviser's large staff of economists, research
analysts, traders, and other investment specialists who work in the Adviser's
offices across the United States and abroad. We believe our team approach
benefits Fund investors by bringing together many disciplines and leveraging our
extensive resources.
Lead Portfolio Manager Frank J. Rachwalski, Jr. assumed responsibility for
setting each Fund's investment strategy and for overseeing each Fund's
day-to-day management in January, 1998. Mr. Rachwalski has been responsible for
the trading and portfolio management of money market funds since 1974.
John W. Stuebe, Portfolio Manager for both Funds, has been a fixed income trader
for money market securities since 1979. Mr. Stuebe currently specializes in and
trades for the taxable, non-government money market funds.
SAIL(TM)--Scudder Automated Information Line
For personalized account information including fund prices, yields and account
balances, to perform transactions in existing Scudder fund accounts, or to
obtain information on any Scudder fund, shareholders can call Scudder's
Automated Information Line (SAIL) at 1-800-343-2890, 24 hours a day. During
periods of extreme economic or market changes, or other conditions, it may be
difficult for you to effect telephone transactions in your account. In such an
event you should write to the Fund; please see "How to contact Scudder" for the
address.
Investment flexibility
Scudder offers toll-free telephone exchange between funds at current net asset
value. You can move your investments among money market, income, growth,
tax-free and growth and income funds with a simple toll-free call or, if you
prefer, by sending your instructions through the mail or by fax. (The exchange
privilege may not be available for certain Scudder funds or classes thereof. For
more information, please call 1-800-225-5163.) Telephone and fax redemptions and
exchanges are subject to termination and their terms are subject to change at
any time by the Fund or the transfer agent. In some cases, the transfer agent or
Scudder Investor Services, Inc. may impose additional conditions on telephone
transactions.
Personal CounselSM -- A Managed Fund Portfolio Program
If you would like to receive direct guidance and management of your overall
mutual fund portfolio to help you pursue your investment goals, you may be
interested in Personal Counsel from Scudder. Personal Counsel, a program of
Scudder Investor Services, Inc., a registered investment adviser and a
subsidiary of Scudder Kemper Investments, Inc., combines the benefits of a
customized portfolio of no-load mutual funds with ongoing portfolio monitoring
and individualized service, for an annual fee of generally 1.25% or less of
assets. In addition, it draws upon the Adviser's more than 75-year heritage of
providing investment counsel to large corporate and private clients. If you have
24
<PAGE>
$100,000 or more to invest initially and would like more information about
Personal Counsel, please call 1-800-700-0183.
Dividend reinvestment plan
You may have dividends and distributions automatically reinvested in additional
Fund shares. Please call 1-800-225-5163 to request this feature.
Shareholder statements
You will receive a detailed statement summarizing account activity, including
dividend and capital gain reinvestment, purchases and redemptions. All of your
statements should be retained to help you keep track of account activity and the
cost of shares for tax purposes.
Shareholder reports
In addition to account statements, you receive periodic shareholder reports
highlighting relevant information, including investment results and a review of
portfolio changes.
To reduce the volume of mail you receive, only one copy of most Fund reports,
such as the Funds' Annual Report, may be mailed to your household (same surname,
same address). Please call 1-800-225-5163 if you wish to receive additional
shareholder reports.
Newsletters
Four times a year, Scudder sends you Perspectives, an informative newsletter
covering economic and investment developments, service enhancements and other
topics of interest to Scudder fund investors.
Scudder Investor Centers
As a convenience to shareholders who like to conduct business in person, Scudder
Investor Services, Inc. maintains Investor Centers in Boca Raton, Boston,
Chicago, New York and San Francisco.
T.D.D. service for the hearing impaired
Scudder's full range of investor information and shareholder services is
available to hearing impaired investors through a toll-free T.D.D. (Telephone
Device for the Deaf) service. If you have access to a T.D.D., call
1-800-543-7916 for investment information or specific account questions and
transactions.
25
<PAGE>
Purchases
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Opening
an account Minimum initial investment:
Scudder Cash Investment Trust: $2,500; IRAs $1,000
Scudder Prime Reserve Money Market Shares: $10,000; IRAs $10,000
Scudder Premium Money Market Shares: $25,000; IRAs $25,000
Group retirement plans (401(k), 403(b), etc.) have similar or lower minimums.
See appropriate plan literature.
Make checks o By Mail Send your completed and signed application and check
payable to "The or fax
Scudder Funds."
by regular mail to: or by express, registered,
or certified mail to:
The Scudder Funds The Scudder Funds
P.O. Box 2291 66 Brooks Drive
Boston, MA 02107-2291 Braintree, MA 02184
o By Wire Please see Transaction information--Purchasing shares-- By
wire for details, including the ABA wire transfer number. Then call
1-800-225-5163 for instructions.
o In Person Visit one of our Investor Centers to complete your application with the
help of a Scudder representative. Investor Center locations are listed
under Shareholder benefits.
Purchasing
additional shares Minimum additional investment:
Scudder Cash Investment Trust: $100; IRAs $50
Scudder Prime Reserve Money Market Shares: $1,000; IRAs $100
Scudder Premium Money Market Shares: $1,000; IRAs $100
Group retirement plans (401(k), 403(b), etc.) have similar or lower minimums.
See appropriate plan literature.
Make checks o By Mail Send a check with a Scudder investment slip, or with a letter of
payable to "The instruction including your account number and the complete Fund name and
Scudder Funds." class name (if applicable), to the appropriate address listed above.
o By Wire Please see Transaction information--Purchasing shares-- By
wire for details, including the ABA wire transfer number.
o In Person Visit one of our Investor Centers to make an additional investment in your Scudder fund
account. Investor Center locations are listed under Shareholder benefits.
o By Telephone Please see Transaction information--Purchasing shares-- By QuickBuy for more details.
o By Automatic You may arrange to make investments on a egular basis through automatic
Investment Plan deductions from your bank checking account. Please call 1-800-225-5163 for
($50 minimum) more information and an enrollment form.
26
<PAGE>
Exchanges and redemptions
Exchanging
shares Minimum investments:
Scudder Cash Investment Trust: $2,500 to establish a new account;
$100 to exchange among existing accounts
Scudder Prime Reserve Money Market Shares: $10,000 to establish a new account;
$1,000 to exchange among existing accounts
Scudder Premium Money Market Shares: $25,000 to establish a new account;
$1,000 to exchange among existing accounts
For informa- o By Telephone To speak with a service representative, call 1-800-225-5163 from
tion on 8 a.m. to 8 p.m. eastern time or to access SAIL(TM), Scudder's Automated
exchanging to Information Line, call 1-800-343-2890 (24 hours a day).
other Scudder
Funds, see
"Transaction
information--
By exchange."
o By Mail Print or type your instructions and include:
or Fax
- Scudder Cash Investment Trust, Scudder Prime Reserve
Money Market Shares or Scudder Premium Money Market
Shares and the account number you are exchanging from;
- your name(s) and address as they appear on your
account;
- the dollar amount or number of shares you wish to
exchange;
- the name of the Fund (and class, if applicable) you are
exchanging into;
- your signature(s) as it appears on your account; and
- a daytime telephone number.
Send your instructions by regular mail to: or by express, registered, or by fax to:
or certified mail to:
The Scudder Funds The Scudder Funds 1-800-821-6234
P.O. Box 2291 66 Brooks Drive
Boston, MA 02107-2291 Braintree, MA 02184
Redeeming shares o By Telephone To speak with a service representative, call 1-800-225-5163 from 8 a.m. to 8
p.m. eastern time or to access SAIL(TM), Scudder's Automated Information Line,
call 1-800-343-2890 (24 hours a day). You may have redemption proceeds sent to
your predesignated bank account, or redemption proceeds of up to $100,000
sent to your address of record.
o By "Write- You may redeem shares by writing checks against your account balance as often
A-Check" as you like for at least $100 for Scudder Cash Investment Trust and at least
$1,000 for Scudder Prime Reserve Money Market Shares and Scudder Premium Money
Markets Shares and no more than $5,000,00 for each fund.
o By Mail Send your instructions for redemption to the appropriate address or fax number
or Fax above and include:
- Scudder Cash Investment Trust, Scudder Prime Reserve Money Market Shares
or Scudder Premium Money Market Shares and the and account number you
are redeeming from;
- your name(s) and address as they appear on your account; - the dollar
amount or number of shares you wish to redeem; - your signature(s) as it
appears on your account; and - a daytime telephone number.
A signature guarantee is required for redemptions over $100,000.
See Transaction information--Redeeming shares.
o By Automatic You may arrange to receive automatic cash payments periodically. Call
Withdrawal Plan 1-800-225-5163 for more information and an enrollment form.
</TABLE>
27
<PAGE>
Scudder tax-advantaged retirement plans
Scudder offers a variety of tax-advantaged retirement plans for individuals,
businesses and non-profit organizations. These flexible plans are designed for
use with the Scudder Family of Funds (except Scudder tax-free funds, which are
inappropriate for such plans). Scudder Funds offer a broad range of investment
objectives and can be used to seek almost any investment goal. Using Scudder's
retirement plans can help shareholders save on current taxes while building
their retirement savings.
o Scudder No-Fee IRAs. These retirement plans allow a maximum annual
contribution of up to $2,000 per person for anyone with earned income (up
to $2,000 per individual for married couples filing jointly, even if only
one spouse has earned income). Many people can deduct all or part of their
contributions from their taxable income, and all investment earnings accrue
on a tax-deferred basis. The Scudder No-Fee IRA charges you no annual
custodial fee.
o Scudder Roth No-Fee IRAs. Similar to the traditional IRA in many respects,
these retirement plans provide a unique opportunity for qualifying
individuals to accumulate investment earnings tax free. Unlike a
traditional IRA, with a Roth IRA, if you meet the distribution
requirements, you can withdraw your money without paying any taxes on the
earnings. No tax deduction is allowed for contributions to a Roth IRA. The
Scudder Roth IRA charges you no annual custodial fee.
o 401(k) Plans. 401(k) plans allow employers and employees to make
tax-deductible retirement contributions. Scudder offers a full service
program that includes recordkeeping, prototype plan, employee
communications and trustee services, as well as investment options.
o Profit Sharing and Money Purchase Pension Plans. These plans allow
corporations, partnerships and people who are self-employed to make annual,
tax-deductible contributions of up to $30,000 for each person covered by
the plans. Plans may be adopted individually or paired to maximize
contributions. These are sometimes known as Keogh plans.
o 403(b) Plans. Retirement plans for tax-exempt organizations and school
systems to which employers and employees may both contribute.
o SEP-IRAs. Easily administered retirement plans for small businesses and
self-employed individuals. The maximum annual contribution to SEP-IRA
accounts is adjusted each year for inflation. The Scudder SEP-IRA charges
you no annual custodial fee.
o Scudder Horizon Plan. A no-load variable annuity that lets you build assets
by deferring taxes on your investment earnings. You can start with $2,500
or more.
Scudder Trust Company (an affiliate of the Adviser) is Trustee or Custodian for
some of these plans and is paid an annual fee for some of the above retirement
plans. For information about establishing a Scudder No-Fee IRA, SEP-IRA, Profit
Sharing Plan, Money Purchase Pension Plan or a Scudder Horizon Plan, please call
1-800-225-2470. For information about 401(k)s or 403(b)s please call
1-800-323-6105. To effect transactions in existing IRA, SEP-IRA and most Profit
Sharing or Pension Plan accounts, call 1-800-225-5163.
The variable annuity contract is provided by Charter National Life Insurance
Company (in New York State, Intramerica Life Insurance Company [S 1802]). The
contract is offered by Scudder Insurance Agency, Inc. (in New York State, Nevada
and Montana, Scudder Insurance Agency of New York, Inc.). CNL, Inc. is the
Principal Underwriter. Scudder Horizon Plan is not available in all states.
Scudder Investor Relations is a service provided through Scudder Investor
Services, Inc., Distributor.
28
<PAGE>
Trustees and Officers of Scudder Cash Investment Trust
Daniel Pierce*
President and Trustee
Henry P. Becton, Jr.
Trustee; President and
General Manager, WGBH
Educational Foundation
Dawn-Marie Driscoll
Trustee; Executive Fellow, Center for Business Ethics; President,
Driscoll Associates
Peter B. Freeman
Trustee; Corporate
Director and Trustee
George M. Lovejoy, Jr.
Trustee; President and
Director, Fifty Associates
Wesley W. Marple, Jr.
Trustee
Kathryn L. Quirk*
Trustee, Vice President and Assistant Secretary
Jean C. Tempel
Trustee; Managing Partner, Technology
Equity Partners
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
Vice President
Frank J. Rachwalski, Jr.*
Vice President
David Wines*
Vice President
Thomas F. McDonough*
Vice President and Secretary
John R. Hebble*
Treasurer
James DiBiase*
Assistant Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
29
<PAGE>
Directors and Officers of Scudder Fund, Inc.
Daniel Pierce*
President
Dr. Rosita P. Chang
Director; Professor of Finance, University of Rhode Island
Dr. J. D. Hammond
Director; Dean, Smeal College of Business Administration, Pennsylvania
State University
Richard M. Hunt
Director; University Marshal and
Senior Lecturer, Harvard University
Edgar R. Fiedler
Director; Vice President and Economic Counsellor, The Conference Board, Inc.
Peter B. Freeman
Director; Corporate Director and Trustee
Thomas W. Joseph*
Vice President and Assistant Secretary
Thomas F. McDonough*
Vice President and Secretary
Jerard K. Hartman*
Vice President
Kathryn L. Quirk*
Vice President
Frank J. Rachwalski, Jr.*
Vice President
David B. Wines*
Vice President
John R. Hebble*
Treasurer
James DiBiase*
Assistant Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
30
<PAGE>
Investment products and services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series--
Prime Reserve Shares
Premium Shares*
Managed Shares*
Scudder Government Money Market Series--
Managed Shares*
Tax Free Money Market+
- ----------------------
Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series--
Managed Shares*
Scudder California Tax Free Money Fund**
Scudder New York Tax Free Money Fund**
Tax Free+
- ---------
Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund**
Scudder Massachusetts Limited Term Tax Free Fund**
Scudder Massachusetts Tax Free Fund**
Scudder New York Tax Free Fund**
Scudder Ohio Tax Free Fund**
Scudder Pennsylvania Tax Free Fund**
U.S. Income
- -----------
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder High Yield Bond Fund
Global Income
- -------------
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
Asset Allocation
- ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
U.S. Growth and Income
- ----------------------
Scudder Balanced Fund
Scudder Dividend & Growth Fund
Scudder Growth and Income Fund
Scudder S&P 500 Index Fund
Scudder Real Estate Investment Fund
U.S. Growth
- -----------
Value
Scudder Large Company Value Fund
Scudder Value Fund***
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund***
Scudder Large Company Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Equity
- -------------
Worldwide
Scudder Global Fund
Scudder International Value Fund
Scudder International Growth and Income Fund
Scudder International Fund++
Scudder International Growth Fund
Scudder Global Discovery Fund***
Scudder Emerging Markets Growth Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund, Inc.
Industry Sector Funds
- ---------------------
Choice Series
Scudder Financial Services Fund
Scudder Health Care Fund
Scudder Technology Fund
Preferred Series
- ----------------
Scudder Tax Managed Growth Fund
Scudder Tax Managed Small Company Fund
Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
Retirement Programs
- -------------------
Traditional IRA
Roth IRA
SEP-IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan **+++ +++
(a variable annuity)
Education Accounts
- ------------------
Education IRA
UGMA/UTMA
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder Global High Income Fund, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder Spain and Portugal Fund, Inc.
For complete information on any of the above Scudder funds, including management
fees and expenses, call or write for a free prospectus. Read it carefully before
you invest or send money. +++Funds within categories are listed in order from
expected least risk to most risk. Certain Scudder funds or classes thereof may
not be available for purchase or exchange. +A portion of the income from the
tax-free funds may be subject to federal, state, and local taxes. *A class of
shares of the Fund. **Not available in all states. ***Only the Scudder Shares of
the Fund are part of the Scudder Family of Funds. ++Only the International
Shares of the Fund are part of the Scudder Family of Funds. +++ +++A no-load
variable annuity contract provided by Charter National Life Insurance Company
and its affiliate, offered by Scudder's insurance agencies, 1-800-225-2470.
#These funds, advised by Scudder Kemper Investments, Inc., are traded on the New
York Stock Exchange and, in some cases, on various foreign stock exchanges.
31
<PAGE>
<TABLE>
<CAPTION>
How to contact Scudder
Account Service and Information:
<S> <C>
For existing account service and transactions
Scudder Investor Relations -- 1-800-225-5163
For 24 hour account information, fund information, exchanges, and an
overview of all the services available to you
Scudder Electronic Account Services -- http://funds.scudder.com
For personalized information about your Scudder accounts, exchanges and redemptions
Scudder Automated Information Line (SAIL) -- 1-800-343-2890
Investment Information:
For information about the Scudder funds, including additional
applications and prospectuses, or for answers to investment questions
Scudder Investor Relations -- 1-800-225-2470
[email protected]
Scudder's World Wide Web Site -- http://funds.scudder.com
For establishing 401(k) and 403(b) plans
Scudder Defined Contribution Services -- 1-800-323-6105
Scudder Brokerage Services:
To receive information about this discount brokerage service and to obtain an application
Scudder Brokerage Services* -- 1-800-700-0820
Personal Counsel(SM) -- A Managed Fund Portfolio Program:
To receive information about this mutual fund portfolio guidance and management program
Personal Counsel from Scudder -- 1-800-700-0183
Please address all correspondence to:
The Scudder Funds
P.O. Box 2291
Boston, Massachusetts
02107-2291
Or Stop by a Scudder Investor Center:
Many shareholders enjoy the personal, one-on-one service of the Scudder
Investor Centers. Check for an Investor Center near you--they can be
found in the following cities:
Boca Raton Chicago San Francisco
Boston New York
Scudder Investor Relations and Scudder Investor Centers are services provided
through Scudder Investor Services, Inc., Distributor.
</TABLE>
* Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA
02061--Member NASD/SIPC.
32
<PAGE>
SCUDDER CASH INVESTMENT TRUST
A Pure No-load(TM) (No Sales Charges) Mutual Fund Seeking to
Maintain the Stability of Capital and, consistent therewith,
to Maintain the Liquidity of Capital and to Provide Current Income.
The Fund Seeks to Achieve Its Objective by
Investing in Money Market Securities.
and
SCUDDER U.S. TREASURY MONEY FUND
A Pure No-load(TM) (No Sales Charges) Money Market Fund
Seeking Safety, Liquidity and Stability of Capital and,
consistent therewith, Current Income.
The Fund Seeks to Achieve Its Objective by Investing in
Short-Term U.S. Government Securities.
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
October 15, 1998
- --------------------------------------------------------------------------------
This combined Statement of Additional Information is not a prospectus and should
be read in conjunction with the prospectuses of Scudder Cash Investment Trust
and Scudder U.S. Treasury Money Fund each dated October 15, 1998, as may be
amended from time to time, copies of which may be obtained without charge by
writing to Scudder Investor Services, Inc., Two International Place, Boston,
Massachusetts 02110-4103.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
<CAPTION>
PAGE
THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES........................................................................1
General Investment Objectives and Policies of Scudder Cash Investment Trust.................................1
General Investment Objectives and Policies of Scudder U.S. Treasury Money Fund..............................3
Specialized Investment Techniques of the Funds..............................................................3
Investment Restrictions.....................................................................................6
PURCHASES.......................................................................................................... 8
Additional Information About Opening an Account........................................................... 8
Checks.................................................................................................... 8
Wire Transfer of Federal Funds............................................................................ 8
Additional Information About Making Subsequent Investments by QuickBuy.................................... 9
Share Price............................................................................................... 9
Share Certificates........................................................................................ 9
Other Information......................................................................................... 9
EXCHANGES AND REDEMPTIONS......................................................................................... 10
Exchanges................................................................................................ 10
Redemption by Telephone.................................................................................. 11
Redemption By QuickSell.................................................................................. 12
Redemption by Mail or Fax................................................................................ 12
Redemption by Write-a-Check.............................................................................. 12
Other Information........................................................................................ 13
FEATURES AND SERVICES OFFERED BY THE FUNDS........................................................................ 14
The Pure No-Load(TM) Concept............................................................................. 14
Internet Access.......................................................................................... 14
Dividend and Capital Gain Distribution Options........................................................... 15
Scudder Investor Centers................................................................................. 16
Diversification.......................................................................................... 16
Reports to Shareholders.................................................................................. 16
Transaction Summaries.................................................................................... 16
THE SCUDDER FAMILY OF FUNDS....................................................................................... 16
SPECIAL PLAN ACCOUNTS............................................................................................. 21
Scudder Retirement Plans: Profit-Sharing and Money Purchase Pension Plans for Corporations and
Self-Employed Individuals........................................................................... 21
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...................................................................................... 23
Automatic Withdrawal Plan................................................................................ 23
Group or Salary Deduction Plan............................................................................24
DIVIDENDS......................................................................................................... 25
PERFORMANCE INFORMATION........................................................................................... 26
Yield.................................................................................................... 26
Effective Yield.......................................................................................... 26
Average Annual Total Return.............................................................................. 26
Cumulative Total Return.................................................................................. 27
Total Return............................................................................................. 28
Comparison of Fund Performance........................................................................... 28
Taking a Global Approach..................................................................................31
Scudder's 30% Solution....................................................................................32
i
<PAGE>
TABLE OF CONTENTS (continued)
ORGANIZATION OF THE FUNDS..........................................................................................32
INVESTMENT ADVISER..................................................................................................33
Scudder Cash Investment Trust..............................................................................34
Scudder U.S. Treasury Money Fund...........................................................................35
SCIT and Treasury Fund.....................................................................................37
Personal Investments by Employees of the Adviser...........................................................37
TRUSTEES AND OFFICERS...............................................................................................37
Scudder Cash Investment Trust and Scudder U.S. Treasury Money Fund........................................37
REMUNERATION........................................................................................................39
Responsibilities of the Board -- Board and Committee Meetings............................................. 39
Compensation of Officers and Trustees......................................................................40
DISTRIBUTOR.........................................................................................................41
Scudder Cash Investment Trust............................................................................. 41
Scudder U.S. Treasury Money Fund.......................................................................... 41
TAXES...............................................................................................................42
PORTFOLIO TRANSACTIONS..............................................................................................44
Brokerage Commissions......................................................................................44
NET ASSET VALUE.....................................................................................................44
ADDITIONAL INFORMATION..............................................................................................45
Experts....................................................................................................45
Shareholder Indemnification................................................................................45
Other Information..........................................................................................45
FINANCIAL STATEMENTS................................................................................................46
Scudder Cash Investment Trust..............................................................................46
Scudder U.S. Treasury Money Fund...........................................................................46
APPENDIX
Ratings of Municipal Obligations
Commercial Paper Ratings
</TABLE>
ii
<PAGE>
THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES
(See "Investment objectives and policies" and
"Additional information about policies and
investments" in each Fund's prospectus.)
Scudder Cash Investment Trust sometimes is referred to herein as
"SCIT." Scudder U.S. Treasury Money Fund sometimes is referred to herein as
"Treasury Fund." SCIT and Treasury Fund sometimes are jointly referred to herein
as the "Funds" or "Scudder Money Market Funds."
General Investment Objectives and Policies of Scudder Cash Investment Trust
Scudder Cash Investment Trust is a pure no-load(TM), open-end,
diversified management investment company. SCIT's investment objectives are 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. SCIT's management seeks to improve investment income
by keeping money at work in what it considers to be the most attractive
short-term debt investments consistent with the objectives of maintaining the
stability and liquidity of capital. There is no assurance that SCIT's investment
objectives will be achieved. The investment objectives and policies of SCIT
stated under this caption may be changed by the Trustees without a vote of a
majority of the outstanding voting securities of the Fund, as that term is
defined below in "Investment Restrictions." All of the securities in which SCIT
may invest are U.S. dollar-denominated. Shares of the Fund are not insured or
guaranteed by an agency of the U.S. Government.
SCIT may invest in short-term obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities; obligations of supranational
organizations such as those listed below; obligations of domestic banks and
foreign branches of domestic banks, including bankers' acceptances, certificates
of deposit, deposit notes and time deposits; and obligations of savings and loan
institutions.
SCIT may also invest in: instruments whose credit has been enhanced by
banks (letters of credit), insurance companies (surety bonds) or other corporate
entities (corporate guarantees); corporate obligations and obligations of
trusts, finance companies and other entities, including commercial paper, notes,
bonds, loans and loan participations; securities with variable or floating
interest rates; asset-backed securities, including certificates, participations
and notes; and municipal securities, including notes, bonds and participation
interests, either taxable or tax free; and illiquid or restricted securities.
Securities and instruments in which the Fund may invest may be issued by the
U.S. Government, its agencies and instrumentalities, corporations, trusts,
banks, finance companies and other business entities.
In addition, SCIT may invest in repurchase agreements and securities
with put features. Obligations which are subject to repurchase agreements will
be limited to those of the type and quality described below. The Fund may also
hold cash.
Investments in municipal securities will be limited to those which are
rated at the time of purchase by Moody's Investors Service, Inc. ("Moody's")
within its two highest rating categories for municipal obligations -- Aaa and
Aa, or within Moody's short-term municipal obligations top rating categories of
MIG 1 and MIG 2 -- or are rated at the time of purchase by Standard & Poor's
("S&P") within S&P's two highest rating categories for municipal obligations
AAA/AA and SP-1+/SP-1 or are rated at the time of purchase by Fitch Investors
Service, Inc. ("Fitch") within Fitch's two highest rating categories for
municipal obligations -- AAA/AA or within Fitch's highest short term rating
categories of F-1 and F-2, all in such proportions as management will determine.
SCIT also may invest in securities rated within the two highest rating
categories by only one of those rating agencies if no other rating agency has
rated the security. In some cases, short-term municipal obligations are rated
using the same categories as are used for corporate obligations. In addition,
unrated municipal securities will be considered as being within the foregoing
quality ratings if the issuer, or other equal or junior municipal securities of
the same issuer, has a rating within the foregoing ratings of Moody's, S&P or
Fitch. SCIT may also invest in municipal securities which are unrated if, in the
opinion of Scudder, Stevens & Clark, Inc. (the "Adviser"), such securities
possess creditworthiness comparable to those rated securities in which the Fund
may invest.
Foreign Securities. Supranational entities are international
organizations designated or supported by governmental entities to promote
<PAGE>
economic reconstruction or development and international banking institutions
and related government agencies. Examples include the International Bank for
Reconstruction and Development (the World Bank), the European Coal and Steel
Community, The Asian Development Bank and the InterAmerican Development Bank.
Obligations of supranational entities are backed by the guarantee of one or more
foreign governmental parties which sponsor the entity.
Municipal Securities. Municipal Securities are issued by or on behalf
of states, territories and possessions of the U.S. and their political
subdivisions, agencies and instrumentalities to obtain funds for various public
purposes. The interest on these obligations is generally exempt from federal
income tax in the hands of most investors, except for the possible applicability
of the alternative minimum tax. The two principal classifications of municipal
securities are "Notes" and "Bonds." Municipal Notes are generally used to
provide for short-term capital needs and generally have maturities of one year
or less. Municipal Notes include: Tax Anticipation Notes; Revenue Anticipation
Notes; Bond Anticipation Notes; and Construction Loan Notes. Municipal Bonds,
which meet longer term capital needs and generally have maturities of more than
one year when issued, have two principal classifications: "General Obligation"
Bonds and "Revenue" Bonds.
Industrial Development and Pollution Control Bonds (which are types of
private activity bonds), although nominally issued by municipal authorities, are
generally not secured by the taxing power of the municipality but are secured by
the revenues of the authority derived from payments by the industrial user.
Under Federal tax legislation, certain types of Industrial Development Bonds and
Pollution Control Bonds may no longer be issued on a tax-exempt basis, although
previously-issued bonds of these types and certain refundings of such bonds are
not affected.
Bank and Savings and Loan Obligations. These obligations include
negotiable certificates of deposit, bankers' acceptances, deposit notes, fixed
time deposits or other short-term bank obligations. Certificates of deposit are
negotiable certificates evidencing the obligations of a bank to repay funds
deposited with it for a specified period of time. SCIT may invest in
certificates of deposit of large domestic banks (i.e., banks which at the time
of their most recent annual financial statements show total assets in excess of
$1 billion), and of smaller banks as described below. The Fund does not invest
in certificates of deposit of foreign banks. Although the Fund recognizes that
the size of a bank is important, this fact alone is not necessarily indicative
of its creditworthiness. Investment in certificates of deposit issued by foreign
branches of domestic banks involves investment risks that are different in some
respects from those associated with investment in certificates of deposit issued
by domestic branches of domestic banks, including the possible imposition of
withholding taxes on interest income, the possible adoption of foreign
governmental restrictions which might adversely affect the payment of principal
and interest on such certificates of deposit, or other adverse political or
economic developments. In addition, it might be more difficult to obtain and
enforce a judgment against a foreign branch of a domestic bank.
SCIT may also invest in certificates of deposit issued by banks and
savings and loan institutions which had, at the time of their most recent annual
financial statements, total assets of less than $1 billion, provided that (i)
the principal amounts of such certificates of deposit are insured by an agency
of the U.S. Government, (ii) at no time will the Fund hold more than $100,000
principal amount of certificates of deposit of any one such bank, and (iii) at
the time of acquisition, no more than 10% of the Fund's assets (taken at current
value) are invested in certificates of deposit of such banks having total assets
not in excess of $1 billion.
Banker's acceptances are credit instruments evidencing the obligations
of a bank to pay a draft drawn on it by a customer. These instruments reflect
the obligation both of the bank and of the drawer to pay the face amount of the
instrument upon maturity.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate. Time
deposits which may be held by SCIT will not benefit from insurance from the Bank
Insurance Fund or the Savings Association Insurance Fund administered by the
Federal Deposit Insurance Corporation. 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 obligation. Fixed
time deposits subject to withdrawal penalties maturing in more than seven
calendar days are subject to the Fund's limitation on investments in illiquid
securities.
Eurodollar Obligations. Eurodollar bank obligations are
dollar-denominated certificates of deposit and time deposits issued outside the
2
<PAGE>
U.S. capital markets by foreign branches of U.S. banks and U.S. branches of
foreign banks. Eurodollar obligations are subject to the same risks that pertain
to domestic issues, notably credit risk, market risk and liquidity risk.
Additionally, Eurodollar obligations are subject to certain sovereign risks.
Commercial Paper. Commercial paper consists of short-term, unsecured
promissory notes issued to finance short-term credit needs. The commercial paper
purchased by SCIT will consist only of direct obligations issued by domestic and
foreign entities. The other corporate obligations in which the Fund may invest
consist of high quality short term bonds and notes (including variable amount
master demand notes) issued by domestic and foreign corporations, including
banks.
Participation Interests. SCIT may purchase from financial institutions
participation interests in securities in which the Fund may invest. A
participation interest gives the Fund an undivided interest in the security in
the proportion that the Fund's participation interest bears to the principal
amount of the security. These instruments may have fixed, floating or variable
interest rates, with remaining maturities of 397 days or less. If the
participation interest is unrated, or has been given a rating below that which
is permissible for purchase by the Fund, the participation interest will be
backed by an irrevocable letter of credit or guarantee of a bank, or the payment
obligation otherwise will be collateralized by U.S. Government securities, or,
in the case of unrated participation interest, determined by the Adviser to be
of comparable quality to those instruments in which the Fund may invest. For
certain participation interests, the Fund will have the right to demand payment,
on not more than seven days' notice, for all or any part of the Fund's
participation interests in the security, plus accrued interest. As to these
instruments, the Fund intends to exercise its right to demand payment only upon
a default under the terms of the security.
Asset-backed securities. Asset backed securities may include pools of
mortgages, loans, receivables or other assets. Payment of principal and interest
may be largely dependent upon the cash flows generated by the assets backing the
securities.
General Investment Objectives and Policies of Scudder U.S. Treasury Money Fund
Scudder U.S. Treasury Money Fund is a pure no-load(TM), open-end,
diversified management investment company. Treasury Fund's investment objectives
are 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 and declares dividends daily. There can be no assurance
that the Fund's objectives will be met.
The Fund provides investors with current income and stability of
capital through a portfolio consisting primarily of short-term U.S. Treasury
obligations and similar investments. The Fund is a "fixed-price" fund; that is,
it seeks to maintain a constant share price of $1.00, although under certain
circumstances this may not be possible. The Fund's price stability makes it
suitable for investors who are seeking current income and who are unwilling to
accept stock or bond market risk. The Fund is also designed to minimize credit
risk. It invests exclusively in short-term securities unconditionally guaranteed
by the U.S. Government (as to payment of both principal and interest) and
repurchase agreements backed fully by U.S. Treasury obligations. At least 80% of
the Fund's assets will be invested in either U.S. Treasury securities or in
repurchase agreements collateralized by U.S. Treasury obligations. All of the
securities in which the Fund may invest are U.S. dollar-denominated. The Fund
may also invest in when-issued securities and illiquid or restricted securities.
Specialized Investment Techniques of the Funds
Maintenance of $1.00 Net Asset Value and Credit Quality. Pursuant to a
Rule of the Securities and Exchange Commission (the "SEC"), each Fund effects
sales, redemptions and repurchases at the net asset value per share, normally
$1.00, rounded to the nearest whole cent. In fulfillment of their
responsibilities under that Rule, the Trustees of each Fund have approved
policies established by the Funds' Adviser reasonably calculated to prevent each
Fund's net asset value per share, as so rounded, from deviating from $1.00
except under unusual or extraordinary circumstances and the Trustees of each
Fund will periodically review the Adviser's operations under such policies at
regularly scheduled Trustees' meetings. Those policies include a weekly
monitoring by the Adviser of unrealized gains and losses in each Fund's
portfolio, and when necessary, in an effort to avoid deviation, taking
corrective action, such as adjusting the maturity of the portfolio, or, if
possible, realizing gains or losses to offset in part unrealized losses or
gains. The result of those policies may be that the yield on shares of each Fund
will be lower than would be the case if the policies were not in effect. Such
3
<PAGE>
policies also provide for certain action to be taken with respect to portfolio
securities which experience a downgrade in rating or suffer a default.
Securities eligible for investment by the Funds are those securities
which are generally rated (or issued by an issuer with comparable securities
rated) in the highest rating category by at least two rating services (or by one
rating service, if no other rating agency has issued a rating with respect to
that security). These securities are known as "first tier securities."
Securities generally rated (or issued by an issuer with comparable securities
rated) in the top two categories by at least two rating agencies (or one, if
only one rating agency has rated the security) which do not qualify as first
tier securities are known as "second tier securities." To ensure diversity of a
Fund's investments, as a matter of non-fundamental policy, each Fund will not
invest more than 5% of its total assets in the securities of a single issuer,
other than the U.S. Government. Each Fund may, however, invest more than 5% of
its total assets in the first tier securities of a single issuer for a period of
up to three business days after purchase, although a Fund may not make more than
one such investment at any time. Each Fund may not invest more than 5% of its
total assets in securities which were second tier securities when acquired by
the Fund. Further, each Fund may not invest more than the greater of (1) 1% of
its total assets, or (2) one million dollars, in the securities of a single
issuer which were second tier securities when acquired by the Fund.
Portfolio Maturity. The assets of each Fund consist entirely of cash
items and investments having a stated maturity date of 397 calendar days or less
(except in the case of Government securities, 762 calendar days) from date of
purchase (including investment in repurchase agreements, in which case maturity
is measured by the repurchase date, without respect to the maturity of the
obligation). The term "Government securities," as used herein, means securities
issued or guaranteed as to principal or interest by the U.S. Government, its
agencies or instrumentalities. The portfolio of each Fund will be managed so
that the average maturity of all instruments (on a dollar-weighted basis) will
be 90 days or less. The average maturity of the two portfolios will vary
according to the management's appraisal of money market conditions. Each Fund
will invest only in securities determined by or under the direction of the
Trustees to be of high quality with minimal credit risks.
Portfolio Turnover. The Funds may sell portfolio securities to take
advantage of investment opportunities arising from changing market levels or
yield relationships. Although such transactions involve additional costs in the
form of spreads, they will be undertaken in an effort to improve a Fund's
overall investment return, consistent with its objectives.
U.S. Government Securities. U.S. Government Securities are securities
issued or guaranteed by the U.S. Treasury, by federal agencies, or by
instrumentalities established or sponsored by the U.S. Government. Obligations
issued by the U.S. Treasury are backed by the full faith and credit of the U.S.
Government. They include Treasury bills, notes and bonds, which differ in their
interest rates, maturities and times of issuance. Obligations guaranteed by the
U.S. Treasury include Government National Mortgage Association participation
certificates. Obligations of a federal agency or U.S. Government instrumentality
may be supported in various ways, including the limited authority of the issuer
to borrow from the U.S. Treasury, such as securities of the Federal Home Loan
Bank; the discretionary authority of the U.S. Government to purchase obligations
of the agency or instrumentality, such as Federal National Mortgage Association
bonds; or the credit only of the issuing agency or instrumentality, such as
Student Loan Marketing Association. In the case of obligations not backed by the
full faith and credit of the U.S. Government, the Fund must look principally to
the agency issuing or guaranteeing the obligations for ultimate repayment, which
agency may be privately owned. These securities may bear fixed, floating or
variable rates of interest. Interest may fluctuate based on generally recognized
reference rates or the relationship of rates.
When-issued and Forward Delivery Securities. Government securities are
frequently offered on a "when-issued" or "forward delivery" basis. When so
offered, the price, which is generally expressed in yield terms, is fixed at the
time the commitment to purchase is made, but delivery and payment for the
when-issued or forward delivery securities take place at a later date normally
within 45 days after the date of the commitment to purchase. During the period
between purchase and settlement, no payment is made by the Funds to the issuer
and no interest accrues to the Funds. To the extent that assets of the Funds are
not invested prior to the settlement of a purchase of securities, the Funds will
earn no income; however, it is intended that both Funds will be fully invested
to the extent practicable and subject to the policies stated herein. When-issued
or forward delivery purchases are negotiated directly with the other party and
are not traded on an exchange. While when-issued or forward delivery securities
may be sold prior to the settlement date, it is intended that both Funds will
purchase such securities with the purpose of actually acquiring them unless a
sale appears desirable for investment reasons. At the time SCIT and Treasury
Fund make the commitment to purchase securities on a when-issued or forward
4
<PAGE>
delivery basis, they will record the transaction and reflect the value of the
security in determining their respective net asset values. Neither Fund believes
that its net asset value or income will be adversely affected by its purchase of
securities on a when-issued or forward delivery basis. SCIT and Treasury Fund
will establish a segregated account in which to maintain cash or liquid assets
equal in value to commitments for when-issued or forward delivery securities.
Such segregated securities either will mature or, if necessary, be sold on or
before the settlement date. Neither SCIT nor Treasury Fund will enter into such
transactions for leverage purposes.
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.
Illiquid and Restricted 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", 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 which are "not readily marketable" 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
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"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 each Fund's Board of Trustees. 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).
The conclusions and investment decisions of the Adviser with respect to
each Fund are based primarily on the analyses of its own research specialists.
While these specialists have the major responsibility for doing research on debt
securities, they receive the support of the Adviser's general economics
department for studies on interest rate trends and of the Adviser's stock
research analysts for consultation on the qualitative aspects of credit analysis
which enable the Adviser to establish its own credit ratings for issuers of
senior securities. The Adviser believes it is important to have this combination
of specialized skills available for developing the proper investment strategies
for the Funds. The Adviser subscribes to leading bond information services and
receives directly published reports and statistical compilations of the issuers
themselves, as well as analyses from brokers and dealers who may execute
portfolio transactions for the Adviser's clients. However, the Adviser regards
this information and material as an adjunct to its own research activities.
Investment Restrictions
Unless specified to the contrary, the following restrictions may not be
changed without the approval of a majority of the outstanding voting securities
of the Fund involved which, under the 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 a 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 a 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.
In addition, as a matter of fundamental policy, the Fund will not:
1. borrow money, 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;
2. issue senior securities, 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;
3. concentrate its investments in a particular industry, as that
term is used in the Investment Company Act of 1940, as amended,
and as interpreted or modified by regulatory authority having
jurisdiction, from time to time (except that Scudder Cash
Investment Trust reserves the freedom of action to concentrate
its investments in instruments issued by domestic banks);
4. 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 ;
5. 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;
6. purchase physical commodities or contracts relating to physical
commodities; or
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7. make loans to other persons, except (i) loans of portfolio
securities, and (ii) to the extent that entry into repurchase
agreements and the purchase of debt instruments in indebtedness
in accordance with the Fund's investment objective and policies
may be deemed to be loans.
In addition, although not a matter of fundamental policy, SCIT does not
currently intend to:
1. borrow money in an amount greater than 5% of its total assets,
except (i) for temporary or emergency purposes;
2. lend portfolio securities in an amount greater than 5% of its
total assets .
As a matter of fundamental policy, unless and to the extent permitted
by an exemptive order of the SEC, Treasury Fund may not:
1. borrow money, 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;
2. issue senior securities, 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;
3. concentrate its investments in a particular industry, as that
term is used in the Investment Company Act of 1940, as amended,
and as interpreted or modified by regulatory authority having
jurisdiction, from time to time (except that Scudder Cash
Investment Trust reserves the freedom of action to concentrate
its investments in instruments issued by domestic banks);
4. 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 ;
5. 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;
6. purchase physical commodities or contracts relating to physical
commodities; or
7. make loans to other persons, except (i) loans of portfolio
securities, and (ii) to the extent that entry into repurchase
agreements and the purchase of debt instruments in indebtedness
in accordance with the Fund's investment objective and policies
may be deemed to be loans.
Treasury Fund has undertaken that if the Fund obtains an exemptive
order of the SEC which would permit the taking of action in contravention of any
policy which may not be changed without a shareholder vote, the Fund will not
take such action unless either (i) the applicable exemptive order permits the
taking of such action without a shareholder vote or (ii) the staff of the SEC
has issued to the Fund a "no action" or interpretive letter to the effect that
the Fund may proceed without a shareholder vote.
Although not a matter of fundamental policy Treasury Fund may not:
1. borrow money in an amount greater than 5% of its total assets,
except (i) for temporary or emergency purposes;
2. lend portfolio securities in an amount greater than 5% of its
total assets .
Master/feeder structure
The Board of Trustees has the discretion to retain the current
distribution arrangement for the Fund while investing in a master fund in a
master/feeder structure as described below.
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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.
PURCHASES
(See "Purchases" and "Transaction information" in each
Fund's prospectus.)
Additional Information About Opening an Account
Clients having a regular investment counsel account with the Adviser or
its affiliates and members of their immediate families, officers and employees
of the Adviser or of any affiliated organization and their immediate families,
members of the National Association of Securities Dealers, Inc. ("NASD") and
banks may, if they prefer, subscribe initially for at least $2,500 of Fund
shares through Scudder Investor Services, Inc. (the "Distributor") by letter,
fax, TWX or telephone.
Shareholders of other Scudder funds who have submitted an account
application and have a certified tax identification number, clients having a
regular investment counsel account with Scudder or its affiliates and members of
their immediate families, officers and employees of the Adviser or of any
affiliated organization and their immediate families, members of the NASD and
banks may open an account by wire. These investors must call 1-800-225-5163 to
get an account number. During the call the investor will be asked to indicate
the Fund name, amount to be wired ($2,500 minimum), name of bank or trust
company from which the wire will be sent, the exact registration of the new
account, the tax identification number or Social Security number, address and
telephone number. The investor must then call the bank to arrange a wire
transfer to The Scudder Funds, Boston, MA 02110, ABA Number 011000028, Account
Number: 9903-5552. The investor must give the Scudder fund name, account name
and the new account number. Finally, the investor must send the completed and
signed application to the Fund promptly.
Checks
A certified check is not necessary, but checks are only accepted
subject to collection at full face value in U.S. funds and must be drawn on or
payable through a United States bank.
If shares of a Fund are purchased with a check which proves to be
uncollectible, that Fund reserves the right to cancel the purchase immediately
and the purchaser will be responsible for any loss incurred by that Fund or the
principal underwriter by reason of such cancellation. If the purchaser is a
shareholder, such Fund will have the authority, as agent of the shareholder, to
redeem shares in the account in order to reimburse the Fund or the principal
underwriter for the loss incurred. Investors whose orders have been canceled may
be prohibited from or restricted in placing future orders in any of the Scudder
funds.
Wire Transfer of Federal Funds
To purchase shares of a Fund and obtain the same day's dividend you
must have your bank forward federal funds by wire transfer and provide the
required account information so as to be available to a Fund prior to twelve
o'clock noon eastern time on that day. If you wish to make a purchase of
$500,000 or more, you should notify the Fund's transfer agent, Scudder Service
Corporation (the "Transfer Agent") of such a purchase by calling 1-800-225-5163.
If either the federal funds or the account information is received after twelve
o'clock noon eastern time, but both the funds and the information are made
available before the close of regular trading on the New York Stock Exchange
(the "Exchange") (normally 4 p.m. eastern time) on any business day, shares will
be purchased at net asset value determined on that day but will not receive the
dividend; in such cases, dividends commence on the next business day.
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The bank sending an investor's federal funds by bank wire may charge
for the service. Presently, each Fund pays a fee for receipt by State Street
Bank and Trust Company (the "Custodian") of "wired funds," but the right to
charge investors for this service is reserved.
Boston banks are closed on certain holidays although the Exchange may
be open. These holidays include Martin Luther King Jr., Day (the 3rd Monday in
January), Columbus Day (the 2nd Monday in October) and Veterans' Day (November
11). Investors are not able to purchase shares by wiring federal funds on such
holidays because the Custodian is not open to receive such federal funds on
behalf of either Fund.
Additional Information About Making Subsequent Investments by QuickBuy
Shareholders, whose predesignated bank account of record is a member of
the Automated Clearing House Network (ACH) and who have elected to participate
in the QuickBuy program, may purchase shares of the Fund by telephone. Through
this service shareholders may purchase up to $250,000. To purchase shares by
QuickBuy, shareholders should call before 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 an QuickBuy 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.
Share Price
Purchases made by check will be filled without sales charge at the
close of regular trading on the Exchange on the day the check is received by the
Transfer Agent in good order. Net asset value of each Fund normally is computed
twice a day, as of twelve o'clock noon and the close of regular trading on the
Exchange on each day when the Exchange is open for trading.
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 either
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.
Other Information
The Funds have authorized certain members of the NASD other than the
Distributor to accept purchase and redemption orders for the Funds' shares.
Those brokers may also designate other parties to accept purchase and redemption
orders on each Fund's behalf. Orders for purchase or redemption will be deemed
to have been received by a Fund when such brokers or their authorized designees
accept the orders. Subject to the terms of the contract between a Fund and the
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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 Trustees 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 Trustees and the Distributor may suspend or terminate the
offering of shares of a Fund at any time for any reason.
The "Tax Identification Number" section of the application must be
completed when opening an account. Applications and purchase orders without a
correct certified tax identification number and certain other certified
information (e.g. from exempt investors a certification of exempt status) will
be returned to the investor.
The minimum initial purchase amount is less than $2,500 under certain
special plan accounts.
The Funds may issue shares at net asset value in connection with any
merger or consolidation with, or acquisition of the assets of, any investment
company (or series thereof) or personal holding company, subject to the
requirements of the 1940 Act.
EXCHANGES AND REDEMPTIONS
(See "Exchanges and redemptions" and "Transaction information" in
each Fund's prospectus.)
Exchanges
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 into a new fund account must be for a minimum of $2,500. 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 $100 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 each Fund's prospectus.
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Exchange orders received before the close of regular trading on the
Exchange on any business day ordinarily will be executed at the respective net
asset values determined on that day. Exchange orders received after the close of
regular trading on the Exchange will be executed on the following business day.
Investors may also request, at no extra charge, to have exchanges
automatically executed on a predetermined schedule from one Scudder fund to an
existing account in another Scudder fund, at current net asset value, through
Scudder's Automatic Exchange Program. Exchanges must be for a minimum of $50.
Shareholders may add this free feature over the telephone or in writing.
Automatic Exchanges will continue until the shareholder requests by telephone or
in writing to have the feature removed, or until the originating account is
depleted. The Trusts and the Transfer Agent each reserve 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 Trusts 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 Trusts do not follow such
procedures, they may be liable for losses due to unauthorized or fraudulent
telephone instructions. The Trusts will not be liable for acting upon
instructions communicated by telephone that they reasonably believe to be
genuine. The Trusts 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. 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. There will be a $5
charge for all wire redemptions.
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 have elected to participate in
the QuickSell program may sell shares of a Fund by telephone. To sell shares by
QuickSell, shareholders should call before 4 p.m. eastern time. Redemptions must
be for at least $250. Proceeds in the amount of your redemption will be
transferred to your bank checking account in two or three business days
following your call. For requests received by the close of regular trading on
the Exchange, shares will be redeemed at the net asset value per share
calculated at the close of trading on the day of your call. QuickSell requests
received after the close of regular trading on the Exchange will begin their
processing and be redeemed at the net asset value calculated the following
business day. QuickSell transactions are not available for Scudder IRA accounts
and most other retirement plan accounts.
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 the 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 a 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 they reasonably
believe 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 each
Fund's prospectus.
In order to ensure proper authorization before redeeming shares, the
Transfer Agent may request additional documents such as, but not restricted to,
stock powers, trust instruments, certificates of death, appointments as
executor, certificates of corporate authority and waivers of tax (required in
some states when settling estates).
It is suggested that shareholders holding share certificates or shares
registered in other than individual names contact the Transfer Agent prior to
any redemptions to ensure that all necessary documents accompany the request.
When shares are held in the name of a corporation, trust, fiduciary, agent,
attorney or partnership, the Transfer Agent requires, in addition to the stock
power, certified evidence of authority to sign. These procedures are for the
protection of shareholders and should be followed to ensure prompt payment.
Redemption requests must not be conditional as to date or price of the
redemption. Proceeds of a redemption will be sent within five days after receipt
by the Transfer Agent of a request for redemption that complies with the above
requirements. Delays of more than seven business days of payment for shares
tendered for repurchase or redemption may result, but only until the purchase
check has cleared.
The requirements for IRA redemptions are different from those for
regular accounts. For more information call 1-800-225-5163.
Redemption by Write-a-Check
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 $100 and not more than $5 million. By using the
checks, the shareholder will receive daily dividend credit on his or her shares
until the check has cleared the banking system. Investors who purchased shares
by check may write checks against those shares only after they have been on a
Fund's book for seven business days. Shareholders who use this service may also
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use other redemption procedures. No shareholder may write checks against
certificated shares. The Funds pay the bank charges for this service. However,
each Fund will review the cost of operation periodically and reserve the right
to determine if direct charges to the persons who avail themselves of this
service would be appropriate. Each Fund, Scudder Service Corporation and State
Street Bank and Trust Company reserve the right at any time to suspend or
terminate the "Write-a-Check" procedure.
Other Information
If a shareholder redeems all shares in the account, the shareholder
will receive, in addition to the net asset value thereof, all declared but
unpaid dividends thereon. Neither Fund imposes a redemption or repurchase
charge, although a wire charge may be applicable for redemption proceeds wired
to an investor's bank account. Redemptions of shares, including redemptions
undertaken to effect an exchange for shares of another Scudder fund or
portfolio, and including exchanges and redemptions by Write-a-Check, may result
in tax consequences (gain or loss) to the shareholder and the proceeds of such
redemptions may be subject to backup withholding (see "TAXES").
Shareholders who wish to redeem shares from Special Plan Accounts
should contact the employer, trustee or custodian of the Plan for the
requirements.
The determination of net asset value may be suspended at times and a
shareholder's right to redeem shares and to receive payment may be suspended at
times during which (a) during which the Exchange is closed, other than customary
weekend and holiday closings, (b) during which trading on the Exchange is
restricted for any reason, (c) during which an emergency exists as a result of
which disposal by a Fund of securities owned by it is not reasonably practicable
or it is not reasonably practicable for a Fund fairly to determine the value of
its net assets, or (d) during which the SEC by order permits suspension of the
right of redemption or a postponement of the date of payment or of redemption;
provided that applicable rules and regulations of the SEC (or any succeeding
governmental authority) shall govern as to whether the conditions prescribed in
(b), (c) or (d) exist.
Shareholders should maintain a share balance worth at least $2,500
($1,000 for IRAs, Uniform Gift to Minor Act, and Uniform Trust to Minor Act
accounts), which amount may be changed by each Fund's Board of Trustees. Scudder
retirement plans have similar or lower minimum balance requirements. A
shareholder may open an account with at least $1,000 ($500 for an UGMA, UTMA,
IRA and other retirement accounts), if an automatic investment plan (AIP) of
$100/month ($50/month for an UGMA, UTMA, IRA and other retirement accounts) is
established.
SCIT reserves the right, with regard to those investors who maintain a
non-fiduciary account balance of less than $2,500 in the Fund, without
establishing an AIP, to assess an annual $10.00 per fund account charge with the
fee to be reinvested in the Fund. SCIT also reserves the right to waive this
fee. The $10.00 charge will not apply to accounts of shareholders with a
combined household account balance in any of the Scudder Funds of $25,000 or
more. The Fund also reserves the right, following 60 days' written notice to
shareholders, to redeem all shares in accounts with a value below $250,
including accounts of new investors, where a reduction in value has occurred due
to a redemption or exchange out of the account. The Fund will mail the proceeds
of the redeemed account to the shareholder at the address of record. Reductions
in value that result solely from market activity will not trigger an involuntary
redemption. UGMA, UTMA, IRA and other retirement accounts will not be assessed
the $10.00 charge or be subject to automatic liquidation.
Treasury Fund shareholders who maintain a non-fiduciary account balance
of less than $2,500 in the Fund, without establishing an AIP, will be assessed
an annual $10.00 per fund charge with the fee to be reinvested in the Fund. The
$10.00 charge will not apply to shareholders with a combined household account
balance in any of the Scudder Funds of $25,000 or more. The Fund reserves the
right, following 60 days' written notice to shareholders, to redeem all shares
in accounts below $250, including accounts of new investors, where a reduction
in value has occurred due to a redemption or exchange out of the account. The
Fund will mail the proceeds of the redeemed account to the shareholder at the
address of record. Reductions in value that result solely from market activity
will not trigger an involuntary redemption. UGMA, UTMA, IRA and other retirement
accounts will not be assessed the $10.00 charge or be subject to automatic
liquidation.
13
<PAGE>
FEATURES AND SERVICES OFFERED BY THE FUNDS
(See "Shareholder benefits" in each Fund's prospectus.)
The Pure No-Load(TM) Concept
Investors are encouraged to be aware of the full ramifications of
mutual fund fee structures, and of how Scudder distinguishes its funds from the
vast majority of mutual funds available today. The primary distinction is
between load and no-load funds.
Load funds generally are defined as mutual funds that charge a fee for
the sale and distribution of fund shares. There are three types of loads:
front-end loads, back-end loads, and asset-based 12b-1 fees. 12b-1 fees are
distribution-related fees charged against fund assets and are distinct from
service fees, which are charged for personal services and/or maintenance of
shareholder accounts. Asset-based sales charges and service fees are typically
paid pursuant to distribution plans adopted under 12b-1 under the 1940 Act.
A front-end load is a sales charge, which can be as high as 8.50% of
the amount invested. A back-end load is a contingent deferred sales charge,
which can be as high as 8.50% of either the amount invested or redeemed. The
maximum front-end or back-end load varies, and depends upon whether or not a
fund also charges a 12b-1 fee and/or a service fee or offers investors various
sales-related services such as dividend reinvestment. The maximum charge for a
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 NASD
Rules of Fair Practice, a mutual fund can call itself a "no-load" fund only if
the 12b-1 fee and/or service fee does not exceed 0.25% of a fund's average
annual net assets.
Because Scudder funds do not pay any asset-based sales charges or
service fees, Scudder developed and trademarked the phrase pure no-load(TM) to
distinguish Scudder funds from other no-load mutual funds. Scudder pioneered the
no-load concept when it created the nation's first no-load fund in 1928, and
later developed the nation's first family of no-load mutual funds.
The following chart shows the potential long-term advantage of
investing $10,000 in a Scudder pure no-load fund over investing the same amount
in a load fund that collects an 8.50% front-end load, a load fund that collects
only a 0.75% 12b-1 and/or service fee, and a no-load fund charging only a 0.25%
12b-1 and/or service fee. The hypothetical figures in the chart show the value
of an account assuming a constant 10% rate of return over the time periods
indicated and reinvestment of dividends and distributions.
<TABLE>
<S> <C> <C> <C> <C>
<CAPTION>
======================== ---------------------- ---------------------- ---------------------- ======================
YEARS ScudderPure No-Load(TM) 8.50% Load Fund Load Fund with 0.75% No-Load Fund with
Fund 12b-1 Fee 0.25% 12b-1 Fee
======================== ---------------------- ---------------------- ---------------------- ======================
10 $ 25,937 $ 23,733 $ 24,222 $ 25,354
======================== ---------------------- ---------------------- ---------------------- ======================
15 41,772 38,222 37,698 40,371
======================== ====================== ====================== ====================== ======================
20 67,275 61,557 58,672 64,282
======================== ====================== ====================== ====================== ======================
</TABLE>
Investors are encouraged to review the fee tables on page 2 of each
Fund's prospectus for more specific information about the rates at which
management fees and other expenses are assessed.
Internet Access
World Wide Web Site -- The address of the Scudder Funds site is
http://funds.scudder.com. The site offers guidance on global investing and
14
<PAGE>
developing strategies to help meet financial goals and provides access to the
Scudder investor relations department via e-mail. The site also enables users to
access or view fund prospectuses and profiles with links between summary
information in Profiles and details in the Prospectus. Users can fill out new
account forms on-line, order free software, and request literature on funds.
The site is designed for interactivity, simplicity and maneuverability.
A section entitled "Planning Resources" provides information on asset
allocation, tuition, and retirement planning to users who fill out interactive
"worksheets." Investors can easily establish a "Personal Page," that presents
price information, updated daily, on funds they're interested in following. The
"Personal Page" also offers easy navigation to other parts of the site. Fund
performance data from both Scudder and Lipper Analytical Services, Inc. are
available on the site. Also offered on the site is a news feature, which
provides timely and topical material on the Scudder Funds.
Scudder has communicated with shareholders and other interested parties
on Prodigy since 1988 and has participated since 1994 in GALT's Networth
"financial marketplace" site on the Internet. The firm made Scudder Funds
information available on America Online in early 1996.
Account Access -- Scudder is among the first mutual fund families to allow
shareholders to manage their fund accounts through the World Wide Web. Scudder
Fund shareholders can view a snapshot of current holdings, review account
activity and move assets between Scudder Fund accounts.
Scudder's personal portfolio capabilities -- known as SEAS (Scudder
Electronic Account Services) -- are accessible only by current Scudder Fund
shareholders who have set up a Personal Page on Scudder's Web site. Using a
secure Web browser, shareholders sign on to their account with their Social
Security number and their SAIL password. As an additional security measure,
users can change their current password or disable access to their portfolio
through the World Wide Web.
An Account Activity option reveals a financial history of transactions
for an account, with trade dates, type and amount of transaction, share price
and number of shares traded. For users who wish to trade shares between Scudder
Funds, the Fund Exchange option provides a step-by-step procedure to exchange
shares among existing fund accounts or to new Scudder Fund accounts.
A Call MeTM feature enables users to speak with a Scudder Investor
Relations telephone representative while viewing their account on the Web site.
In order to use the Call MeTM feature, an individual must have two phone lines
and enter on the screen the phone number that is not being used to connect to
the Internet. They are connected to the next available Scudder Investor
Relations representative from 8 a.m. to 8 p.m. eastern time.
Dividend and Capital Gain Distribution Options
Investors have freedom to choose whether to receive cash or to reinvest
any dividends from net investment income or distributions from realized capital
gains in additional shares of a Fund. A change of instructions for the method of
payment must be given to the Transfer Agent at least five days prior to a
dividend record date. Shareholders may change their dividend option either by
calling 1-800-225-5163 or by sending written instructions to the Transfer Agent.
See "How to contact Scudder" in each Fund's prospectus for the address. Please
include your account number with your written request.
Reinvestment is usually made on the 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 the relevant Fund.
Investors may also have dividends and distributions automatically
deposited to 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 a 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.
15
<PAGE>
Scudder Investor Centers
Investors may visit any of the Centers maintained by Scudder Investor
Services, Inc. The Centers are designed to provide individuals with services
during any business day. Investors may pick up literature or obtain assistance
with opening an account, adding monies or special options to existing accounts,
making exchanges within the Scudder Family of Funds, redeeming shares or opening
retirement plans. Checks should not be mailed to the Centers but should be
mailed to "The Scudder Funds" at the address listed under "How to contact
Scudder" in the Funds' prospectuses.
Diversification
Your investment represents an interest in a large, diversified
portfolio of carefully selected securities. Diversification helps protect you
against the risks associated with concentrating in fewer securities or in a
specific market sector.
Reports to Shareholders
Each Fund issues to their respective shareholders semiannual financial
statements (audited annually by independent accountants), including a list of
investments held and statements of assets and liabilities, operations, changes
in net assets, and financial highlights for each Fund.
Transaction Summaries
Annual summaries of all transactions in each Fund account are available
to shareholders. The summaries may be obtained by calling 1-800-225-5163.
THE SCUDDER FAMILY OF FUNDS
(See "Investment products and services" in the [Fund's/Funds']
[prospectus/prospectuses].)
The Scudder Family of Funds is America's first family of mutual funds
and the nation's oldest family of no-load mutual funds. To assist investors in
choosing a Scudder fund, descriptions of the Scudder funds' objectives follow.
MONEY MARKET
Scudder U.S. Treasury Money Fund seeks to provide safety, liquidity and
stability of capital and, consistent therewith, to provide current
income. The Fund seeks to maintain a constant net asset value of $1.00
per share, although in certain circumstances this may not be possible,
and declares dividends daily.
Scudder Cash Investment Trust ("SCIT") seeks to maintain the stability
of capital and, consistent therewith, to maintain the liquidity of
capital and to provide current income. SCIT seeks to maintain a
constant net asset value of $1.00 per share, although in certain
circumstances this may not be possible, and declares dividends daily.
Scudder Money Market Series seeks to provide investors with as high a
level of current income as is consistent with its investment polices
and with preservation of capital and liquidity. The Fund seeks to
maintain a constant net asset value of $1.00 per share, but there is no
assurance that it will be able to do so. The institutional class of
shares of this Fund is not within the Scudder Family of Funds.
Scudder Government Money Market Series seeks to provide investors with
as high a level of current income as is consistent with its investment
polices and with preservation of capital and liquidity. The Fund seeks
to maintain a constant net asset value of $1.00 per share, but there is
no assurance that it will be able to do so. The institutional class of
shares of this Fund is not within the Scudder Family of Funds.
16
<PAGE>
TAX FREE MONEY MARKET
Scudder Tax Free Money Fund ("STFMF") seeks to provide income exempt
from regular federal income tax and stability of principal through
investments primarily in municipal securities. STFMF seeks to maintain
a constant net asset value of $1.00 per share, although in extreme
circumstances this may not be possible.
Scudder Tax Free Money Market Series seeks to provide investors with as
high a level of current income that cannot be subjected to federal
income tax by reason of federal law as is consistent with its
investment policies and with preservation of capital and liquidity. The
Fund seeks to maintain a constant net asset value of $1.00 per share,
but there is no assurance that it will be able to do so. The
institutional class of shares of this Fund is not within the Scudder
Family of Funds.
Scudder California Tax Free Money Fund* seeks stability of capital and
the maintenance of a constant net asset value of $1.00 per share while
providing California taxpayers income exempt from both California State
personal and regular federal income taxes. The Fund is a professionally
managed portfolio of high quality, short-term California municipal
securities. There can be no assurance that the stable net asset value
will be maintained.
Scudder New York Tax Free Money Fund* seeks stability of capital and
the maintenance of a constant net asset value of $1.00 per share, while
providing New York taxpayers income exempt from New York State and New
York City personal income taxes and regular federal income tax. There
can be no assurance that the stable net asset value will be maintained.
TAX FREE
Scudder Limited Term Tax Free Fund seeks to provide as high a level of
income exempt from regular federal income tax as is consistent with a
high degree of principal stability.
Scudder Medium Term Tax Free Fund seeks to provide a high level of
income free from regular federal income taxes and to limit principal
fluctuation. The Fund will invest primarily in high-grade,
intermediate-term bonds.
Scudder Managed Municipal Bonds seeks to provide income exempt from
regular federal income tax primarily through investments in high-grade,
long-term municipal securities.
Scudder High Yield Tax Free Fund seeks to provide a high level of
interest income, exempt from regular federal income tax, from an
actively managed portfolio consisting primarily of investment-grade
municipal securities.
Scudder California Tax Free Fund* seeks to provide California taxpayers
with income exempt from both California State personal income and
regular federal income tax. The Fund is a professionally managed
portfolio consisting primarily of California municipal securities.
Scudder Massachusetts Limited Term Tax Free Fund* seeks to provide
Massachusetts taxpayers with as high a level of income exempt from
Massachusetts personal income tax and regular federal income tax, as is
consistent with a high degree of price stability, through a
professionally managed portfolio consisting primarily of
investment-grade municipal securities.
Scudder Massachusetts Tax Free Fund* seeks to provide Massachusetts
taxpayers with income exempt from both Massachusetts personal income
tax and regular federal income tax. The Fund is a professionally
managed portfolio consisting primarily of investment-grade municipal
securities.
- --------
* These funds are not available for sale in all states. For information,
contact Scudder Investor Services, Inc.
17
<PAGE>
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 a high level of income
consistent with a high degree of principal stability by investing
primarily in high quality short-term bonds.
Scudder Zero Coupon 2000 Fund seeks to provide as high an investment
return over a selected period as is consistent with investment in U.S.
Government securities and the minimization of reinvestment risk.
Scudder GNMA Fund seeks to provide high current income primarily from
U.S. Government guaranteed mortgage-backed (Ginnie Mae) securities.
Scudder Income Fund seeks a high level of income, consistent with the
prudent investment of capital, through a flexible investment program
emphasizing high-grade bonds.
Scudder High Yield Bond Fund seeks a high level of current income and,
secondarily, capital appreciation through investment primarily in below
investment-grade domestic debt securities.
GLOBAL INCOME
Scudder Global Bond Fund seeks to provide total return with an emphasis
on current income by investing primarily in high-grade bonds
denominated in foreign currencies and the U.S. dollar. As a secondary
objective, the Fund will seek capital appreciation.
Scudder International Bond Fund seeks to provide income primarily by
investing in a managed portfolio of high-grade international bonds. As
a secondary objective, the Fund seeks protection and possible
enhancement of principal value by actively managing currency, bond
market and maturity exposure and by security selection.
Scudder Emerging Markets Income Fund seeks to provide high current
income and, secondarily, long-term capital appreciation through
investments primarily in high-yielding debt securities issued by
governments and corporations in emerging markets.
ASSET ALLOCATION
Scudder Pathway Series: Conservative Portfolio seeks primarily current
income and secondarily long-term growth of capital. In pursuing these
objectives, the Portfolio, under normal market conditions, will invest
substantially in a select mix of Scudder bond mutual funds, but will
have some exposure to Scudder equity mutual funds.
Scudder Pathway Series: Balanced Portfolio seeks to provide investors
with a balance of growth and income by investing in a select mix of
Scudder money market, bond and equity mutual funds.
- --------
* These funds are not available for sale in all states. For information,
contact Scudder Investor Services, Inc.
18
<PAGE>
Scudder Pathway Series: Growth Portfolio seeks to provide investors
with long-term growth of capital. In pursuing this objective, the
Portfolio will, under normal market conditions, invest predominantly in
a select mix of Scudder equity mutual funds designed to provide
long-term growth.
Scudder Pathway Series: International Portfolio seeks maximum total
return for investors. Total return consists of any capital appreciation
plus dividend income and interest. To achieve this objective, the
Portfolio invests in a select mix of established international and
global Scudder funds.
U.S. GROWTH AND INCOME
Scudder Balanced Fund seeks a balance of growth and income from a
diversified portfolio of equity and fixed-income securities. The Fund
also seeks long-term preservation of capital through a quality-oriented
approach that is designed to reduce risk.
Scudder Dividend & Growth Fund seeks high current income and long-term
growth of capital through investment in income paying equity
securities.
Scudder Growth and Income Fund seeks long-term growth of capital,
current income, and growth of income.
Scudder S&P 500 Index Fund seeks to provide investment results that,
before expenses, correspond to the total return of common stocks
publicly traded in the United States, as represented by the Standard &
Poor's 500 Composite Stock Price Index.
Scudder Real Estate Investment Fund seeks long-term capital growth and
current income by investing primarily in equity securities of companies
in the real estate industry.
U.S. GROWTH
Value
Scudder Large Company Value Fund seeks to maximize long-term capital
appreciation through a value-driven investment program.
Scudder Value Fund** seeks long-term growth of capital through
investment in undervalued equity securities.
Scudder Small Company Value Fund invests for long-term growth of
capital by seeking out undervalued stocks of small U.S. companies.
Scudder Micro Cap Fund seeks long-term growth of capital by investing
primarily in a diversified portfolio of U.S. micro-capitalization
("micro-cap") common stocks.
Growth
Scudder Classic Growth Fund** seeks to provide long-term growth of
capital with reduced share price volatility compared to other growth
mutual funds.
Scudder Large Company Growth Fund seeks to provide long-term growth of
capital through investment primarily in the equity securities of
seasoned, financially strong U.S. growth companies.
Scudder Development Fund seeks long-term growth of capital by investing
primarily in securities of small and medium-size growth companies.
- --------
* These funds are not available for sale in all states. For information,
contact Scudder Investor Services, Inc.
19
<PAGE>
Scudder 21st Century Growth Fund seeks long-term growth of capital by
investing primarily in the securities of emerging growth companies
poised to be leaders in the 21st century.
SCUDDER CHOICE SERIES
Scudder Financial Services Fund seeks long-term growth of capital
primarily through investment in equity securities of financial services
companies.
Scudder Health Care Fund seeks long-term growth of capital primarily
through investment in securities of companies that are engaged in the
development, production or distribution of products or services related
to the treatment or prevention of diseases and other medical problems.
Scudder Technology Fund seeks long-term growth of capital primarily
through investment in securities of companies engaged in the
development, production or distribution of technology-related products
or services.
SCUDDER PREFERRED SERIES
Scudder Tax Managed Fund seeks long-term growth of capital on an
after-tax basis by investing primarily in established, medium- to
large-sized U.S. companies with leading competitive positions.
Scudder Tax Managed Small Company Fund seeks long-term growth of
capital on an after-tax basis through investment primarily in
undervalued stocks of small U.S. companies.
GLOBAL EQUITY
Worldwide
Scudder Global Fund seeks long-term growth of capital through a
diversified portfolio of marketable securities, primarily equity
securities, including common stocks, preferred stocks and debt
securities convertible into common stocks.
Scudder International Value Fund seeks long-term capital appreciation
through investment primarily in undervalued foreign equity securities.
Scudder International Growth and Income Fund seeks long-term growth of
capital and current income primarily from foreign equity securities.
Scudder International Fund*** seeks long-term growth of capital
primarily through a diversified portfolio of marketable foreign equity
securities.
Scudder International Growth Fund seeks long-term capital appreciation
through investment primarily in the equity securities of foreign
companies with high growth potential.
Scudder Global Discovery Fund** seeks above-average capital
appreciation over the long term by investing primarily in the equity
securities of small companies located throughout the world.
Scudder Emerging Markets Growth Fund seeks long-term growth of capital
primarily through equity investment in emerging markets around the
globe.
Scudder Gold Fund seeks maximum return (principal change and income)
consistent with investing in a portfolio of gold-related equity
securities and gold.
- --------
** 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>
Regional
Scudder Greater Europe Growth Fund seeks long-term growth of capital
through investments primarily in the equity securities of European
companies.
Scudder Pacific Opportunities Fund seeks long-term growth of capital
through investment primarily in the equity securities of Pacific Basin
companies, excluding Japan.
Scudder Latin America Fund seeks to provide long-term capital
appreciation through investment primarily in the securities of Latin
American issuers.
The Japan Fund, Inc. seeks long-term capital appreciation by investing
primarily in equity securities (including American Depository
Receipts) of Japanese companies.
The net asset values of most Scudder funds can be found daily in the
"Mutual Funds" section of The Wall Street Journal under "Scudder Funds," and in
other leading newspapers throughout the country. Investors will notice the net
asset value and offering price are the same, reflecting the fact that no sales
commission or "load" is charged on the sale of shares of the Scudder funds. The
latest seven-day yields for the money-market funds can be found every Monday and
Thursday in the "Money-Market Funds" section of The Wall Street Journal. This
information also may be obtained by calling the Scudder Automated Information
Line (SAIL) at 1-800-343-2890.
The Scudder Family of Funds offers many conveniences and services,
including: active professional investment management; broad and diversified
investment portfolios; pure no-load funds with no commissions to purchase or
redeem shares or Rule 12b-1 distribution fees; individual attention from a
service representative of Scudder Investor Relations; and easy telephone
exchanges into other Scudder funds. Certain Scudder funds or classes thereof may
not be available for purchase or exchange. For more information, please call
1-800-225-5163.
SPECIAL PLAN ACCOUNTS
(See "Scudder tax-advantaged retirement plans," "Purchases--By
Automatic Investment Plan" and "Exchanges and redemptions--By
Automatic Withdrawal Plan" in the Fund's prospectus.)
Detailed information on any Scudder investment plan, including the
applicable charges, minimum investment requirements and disclosures made
pursuant to Internal Revenue Service (the "IRS") requirements, may be obtained
by contacting Scudder Investor Services, Inc., Two International Place, Boston,
Massachusetts 02110-4103 or by calling toll free, 1-800-225-2470. The
discussions of the plans below describe only certain aspects of the federal
income tax treatment of the plan. The state tax treatment may be different and
may vary from state to state. It is advisable for an investor considering the
funding of the investment plans described below to consult with an attorney or
other investment or tax adviser with respect to the suitability requirements and
tax aspects thereof.
Shares of the Fund may also be a permitted investment under profit
sharing and pension plans and IRAs other than those offered by the Fund's
distributor depending on the provisions of the relevant plan or IRA.
None of the plans assures a profit or guarantees protection against
depreciation, especially in declining markets.
Scudder Retirement Plans: Profit-Sharing and Money Purchase
Pension Plans for Corporations and Self-Employed Individuals
Shares of the Fund may be purchased as the investment medium under a
plan in the form of a Scudder Profit-Sharing Plan (including a version of the
Plan which includes a cash-or-deferred feature) or a Scudder Money Purchase
Pension Plan (jointly referred to as the Scudder Retirement Plans) adopted by a
corporation, a self-employed individual or a group of self-employed individuals
(including sole proprietorships and partnerships), or other qualifying
organization. Each of these forms was approved by the IRS as a prototype. The
IRS's approval of an employer's plan under Section 401(a) of the Internal
Revenue Code will be greatly facilitated if it is in such approved form. Under
certain circumstances, the IRS will assume that a plan, adopted in this form,
21
<PAGE>
after special notice to any employees, meets the requirements of Section 401(a)
of the Internal Revenue Code as to form.
Scudder 401(k): Cash or Deferred Profit-Sharing Plan
for Corporations and Self-Employed Individuals
Shares of the Fund may be purchased as the investment medium under a
plan in the form of a Scudder 401(k) Plan adopted by a corporation, a
self-employed individual or a group of self-employed individuals (including sole
proprietors and partnerships), or other qualifying organization. This plan has
been approved as a prototype by the IRS.
Scudder IRA: Individual Retirement Account
Shares of the Fund may be purchased as the underlying investment for an
Individual Retirement Account which meets the requirements of Section 408(a) of
the Internal Revenue Code.
A single individual who is not an active participant in an
employer-maintained retirement plan, a simplified employee pension plan, or a
tax-deferred annuity program (a "qualified plan"), and a married individual who
is not an active participant in a qualified plan and whose spouse is also not an
active participant in a qualified plan, are eligible to make tax deductible
contributions of up to $2,000 to an IRA prior to the year such individual
attains age 70 1/2. In addition, certain individuals who are active participants
in qualified plans (or who have spouses who are active participants) are also
eligible to make tax-deductible contributions to an IRA; the annual amount, if
any, of the contribution which such an individual will be eligible to deduct
will be determined by the amount of his, her, or their adjusted gross income for
the year. Whenever the adjusted gross income limitation prohibits an individual
from contributing what would otherwise be the maximum tax-deductible
contribution he or she could make, the individual will be eligible to contribute
the difference to an IRA in the form of nondeductible contributions.
An eligible individual may contribute as much as $2,000 of qualified
income (earned income or, under certain circumstances, alimony) to an IRA each
year (up to $2,000 per individual for married couples if only one spouse has
earned income). All income and capital gains derived from IRA investments are
reinvested and compound tax-deferred until distributed. Such tax-deferred
compounding can lead to substantial retirement savings.
The table below shows how much individuals would accumulate in a fully
tax-deductible IRA by age 65 (before any distributions) if they contribute
$2,000 at the beginning of each year, assuming average annual returns of 5, 10,
and 15%. (At withdrawal, accumulations in this table will be taxable.)
Value of IRA at Age 65
Assuming $2,000 Deductible Annual Contribution
<TABLE>
<S> <C> <C> <C> <C>
<CAPTION>
- ---------------------------- ------------------------- -------------------------- -------------------------
Starting
Age of Annual Rate of Return
------------------------------------------------------------------------------
Contributions 5% 10% 15%
- ---------------------------- ------------------------- -------------------------- -------------------------
25 $253,680 $973,704 $4,091,908
35 139,522 361,887 999,914
45 69,439 126,005 235,620
55 26,414 35,062 46,699
</TABLE>
This next table shows how much individuals would accumulate in non-IRA
accounts by age 65 if they start with $2,000 in pretax earned income at the
beginning of each year (which is $1,380 after taxes are paid), assuming average
annual returns of 5, 10 and 15%. (At withdrawal, a portion of the accumulation
in this table will be taxable.)
22
<PAGE>
Value of a Non-IRA Account at
Age 65 Assuming $1,380 Annual Contributions
(post tax, $2,000 pretax) and a 31% Tax Bracket
<TABLE>
<S> <C> <C> <C> <C>
<CAPTION>
- ---------------------------- ------------------------- -------------------------- -------------------------
Starting
Age of Annual Rate of Return
------------------------------------------------------------------------------
Contributions 5% 10% 15%
- ---------------------------- ------------------------- -------------------------- -------------------------
25 $119,318 $287,021 $741,431
35 73,094 136,868 267,697
45 40,166 59,821 90,764
55 16,709 20,286 24,681
</TABLE>
Scudder Roth IRA: Individual Retirement Account
Shares of the Fund may be purchased as the underlying investment for a
Roth Individual Retirement Account which meets the requirements of Section 408A
of the Internal Revenue Code.
A single individual earning below $95,000 can contribute up to $2,000
per year to a Roth IRA. The maximum contribution amount diminishes and gradually
falls to zero for single filers with adjusted gross incomes ranging from $95,000
to $110,000. Married couples earning less than $150,000 combined, and filing
jointly, can contribute a full $4,000 per year ($2,000 per IRA). The maximum
contribution amount for married couples filing jointly phases out from $150,000
to $160,000.
An eligible individual can contribute money to a traditional IRA and a
Roth IRA as long as the total contribution to all IRAs does not exceed $2,000.
No tax deduction is allowed under Section 219 of the Internal Revenue Code for
contributions to a Roth IRA. Contributions to a Roth IRA may be made even after
the individual for whom the account is maintained has attained age 70 1/2.
All income and capital gains derived from Roth IRA investments are
reinvested and compounded tax-free. Such tax-free compounding can lead to
substantial retirement savings. No distributions are required to be taken prior
to the death of the original account holder. If a Roth IRA has been established
for a minimum of five years, distributions can be taken tax-free after reaching
age 59 1/2, for a first-time home purchase ($10,000 maximum, one-time use) or
upon death or disability. All other distributions of earnings from a Roth IRA
are taxable and subject to a 10% tax penalty unless an exception applies.
Exceptions to the 10% penalty include: disability, excess medical expenses, the
purchase of health insurance for an unemployed individual and education
expenses.
An individual with an income of less than $100,000 (who is not married
filing separately) can roll his or her existing IRA into a Roth IRA. However,
the individual must pay taxes on the taxable amount in his or her traditional
IRA. Individuals who complete the rollover in 1998 will be allowed to spread the
tax payments over a four-year period. After 1998, all taxes on such a rollover
will have to be paid in the tax year in which the rollover is made.
Scudder 403(b) Plan
Shares of the 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
23
<PAGE>
withdrawal payments. Since the withdrawals are in amounts selected by the
investor and have no relationship to yield or income, payments received cannot
be considered as yield or income on the investment and the resulting
liquidations may deplete or possibly extinguish the initial investment and any
reinvested dividends and capital gains distributions. Requests for increases in
withdrawal amounts or to change the payee must be submitted in writing, signed
exactly as the account is registered, and contain signature guarantee(s) as
described under "Transaction information--Redeeming shares--Signature
guarantees" in the Fund's prospectus. Any such requests must be received by the
Fund's transfer agent ten days prior to the date of the first automatic
withdrawal. An Automatic Withdrawal Plan may be terminated at any time by the
shareholder, the [Trust, 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 [Trust, 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 [Trust, Corporation] and its agents reserve the right to establish
a maintenance charge in the future depending on the services required by the
investor.
The [Trust, 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.
Automatic Investment Plan
Shareholders may arrange to make periodic investments through automatic
deductions from checking accounts by completing the appropriate form and
providing the necessary documentation to establish this service. The minimum
investment is $50.
The Automatic Investment Plan involves an investment strategy called
dollar cost averaging. Dollar cost averaging is a method of investing whereby a
specific dollar amount is invested at regular intervals. By investing the same
dollar amount each period, when shares are priced low the investor will purchase
more shares than when the share price is higher. Over a period of time this
investment approach may allow the investor to reduce the average price of the
shares purchased. However, this investment approach does not assure a profit or
protect against loss. This type of regular investment program may be suitable
for various investment goals such as, but not limited to, college planning or
saving for a home.
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 [Trust, 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
(See "Distribution and performance information
-- Dividends and capital gains
distributions" in each Fund's prospectus.)
The net income of each Fund is determined as of the close of regular
trading on the Exchange, usually 4 p.m. eastern time on each day the Exchange is
open for trading.
All the net investment income and all net realized short-term capital
gains and net realized short and long-term capital losses of SCIT so determined
normally will be declared as a dividend to shareholders of record as of
determination of the net asset value at 12:00 noon after the purchase and
redemption of shares. Any losses may be included in the daily dividend for such
number of days as is deemed appropriate in order to avoid a disproportionate
impact on holders of shares of beneficial interest of the Fund on any one day on
which a dividend is declared. All the net investment income and all realized
capital gains and losses on securities held for one year or less (short-term
capital gain/loss) of Treasury Fund so determined normally will be declared as a
dividend to shareholders of record as of determination of the net asset value at
twelve o'clock noon after the purchase and redemption of shares. Shares
purchased as of the determination of net asset value made as of the regular
close of the Exchange will not participate in that day's dividend; in such cases
dividends commence on the next business day. Checks will be mailed to
shareholders electing to take dividends in cash, and confirmations will be
mailed to shareholders electing to invest dividends in additional shares for the
month's dividends within four business days after the dividend is calculated.
Dividends will be invested at the net asset value per share, normally $l.00,
determined as of the close of regular trading on the Exchange on the last
business day of each month.
Dividends are declared daily on each day on which the Exchange is open
for business. The dividends for a business day immediately preceding a weekend
or holiday will normally include an amount equal to the net income for the
subsequent days on which dividends are not declared. However, no daily dividend
will include any amount of net investment income in respect of a subsequent
semiannual accounting period.
Net investment income (from the time of the immediately preceding
determination thereof) consists of all interest income accrued on the portfolio
assets of a Fund, less all actual and accrued expenses. Interest income included
in the daily computation of net investment income is comprised of original issue
discount earned on discount paper accrued to the date of maturity as well as
accrued interest. Expenses of each Fund, including the management fee payable to
the Adviser, are accrued each day.
Normally, each Fund will have a positive net investment income at the
time of each determination thereof. Net investment income may be negative if an
unexpected liability must be accrued or a loss realized. If the net investment
income of a Fund determined at any time is a negative amount, the net asset
value per share will be reduced below $l.00 unless one or more of the following
steps are taken: the Trustees have the authority (1) to reduce the number of
shares in each shareholder's account, (2) to offset each shareholder's pro rata
portion of negative net investment income from the shareholder's accrued
dividend account or from future dividends, or (3) to combine these methods in
order to seek to maintain the net asset value per share at $1.00. Each Fund may
endeavor to restore the net asset value per share to $l.00 by not declaring
dividends from net investment income on subsequent days until restoration, with
the result that the net asset value per share will increase to the extent of
positive net investment income which is not declared as a dividend.
Because the net investment income of each Fund is declared as a
dividend each time the net investment income of the Fund is determined, the net
asset value per share of each Fund (i.e., the fair value of the net assets of
the Fund divided by the number of shares of the Fund outstanding) will remain at
$l.00 per share immediately after each such determination and dividend
declaration, unless (i) there are unusual or extended fluctuations in short-term
interest rates or other factors, such as unfavorable changes in the
creditworthiness of issuers affecting the value of securities in the Fund's
portfolio, or (ii) net income is a negative amount.
Should a Fund incur or anticipate any unusual or unexpected significant
expense or loss which would affect disproportionately that Fund's income for a
particular period, the Trustees would at that time consider whether to adhere to
the dividend policy described above or to revise it in the light of the then
25
<PAGE>
prevailing circumstances in order to ameliorate to the extent possible the
disproportionate effect of such expense, loss or depreciation on then existing
shareholders. Such expenses or losses may nevertheless result in a shareholder's
receiving no dividends for the period during which the shares are held and in
receiving upon redemption a price per share lower than that which was paid.
Neither Fund anticipates realizing any long-term capital gains.
PERFORMANCE INFORMATION
(See "Distribution and performance information -- Performance
information" in each Fund's prospectus.)
From time to time, quotations of each Fund's performance may be
included in advertisements, sales literature or reports to shareholders or
prospective investors. These performance figures may be calculated in the
following manner:
TO BE UPDATED
Yield
Yield is the net annualized yield based on a specified 7 calendar days
calculated at simple interest rates. Yield is calculated by determining the net
change, exclusive of capital changes, in the value of a hypothetical
pre-existing account having a balance of one share at the beginning of the
period, and dividing the difference by the value of the account at the beginning
of the base period to obtain the base period return. The yield is annualized by
multiplying the base period return by 365/7. The yield figure is stated to the
nearest hundredth of one percent. The yield for the seven-day period ended June
30, 1998 was ____% for SCIT and ____% for Treasury Fund. If Treasury Fund's
Adviser had not absorbed a portion of the Fund's expenses and had imposed a full
management fee, the Fund's yield for the seven-day period ended June 30, 1998
would have been ____%.
Effective Yield
Effective yield is the net annualized yield for a specified 7 calendar
days assuming a reinvestment of the income or compounding. Effective yield is
calculated by the same method as yield except the effective yield figure 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 yield for the seven-day period ended June 30, 1998 was
____% for SCIT and ____% for Treasury Fund. If SCIT's Adviser had not absorbed a
portion of the Fund's expenses and had imposed a full management fee, the Fund's
yield for the seven-day period ended June 30, 1998 would have be ____%. If
Treasury Fund's Adviser had not absorbed a portion of the Fund's expenses and
had imposed a full management fee, the Fund's yield for the seven-day period
ended June 30, 1998 would have been ____%.
Quotations of each Fund's performance are based on historical earnings
and are not intended to indicate future performance. An investor's shares when
redeemed may be worth more or less than their original cost. Performance of the
Fund will vary based on changes in market conditions and the level of each
Fund's expenses.
Average Annual Total Return
Average annual total return is the average annual compound rate of
return for the periods of one year, five years and ten years, all ended on the
last day of a recent calendar quarter. 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 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):
26
<PAGE>
T = (ERV/P)1/n - 1
Where:
P = a hypothetical initial investment of $1,000
T = Average Annual Total Return
n = number of years
ERV = ending redeemable value: ERV is the
value, at the end of the applicable
period, of a hypothetical $1,000
investment made at the beginning of
the applicable period.
TO BE UPDATED
Average Annual Total Return for periods ended June 30, 1998
One Five Ten
Year Years Years
SCIT* ____% ____% ____%
Treasury Fund** ____% ____% ____%
* If the Adviser had not absorbed a portion of SCIT expenses and had imposed
a full management fee, the average annual total return for the one year,
five year and ten year periods ended June 30, 1998, would have been lower.
** If the Adviser had not absorbed a portion of Treasury Fund expenses and had
imposed a full management fee, the average annual total return for the one
year, five year and ten year periods ended June 30, 1998, would have been
approximately ____%, ____% and ____%.
27
<PAGE>
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 the change 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 by finding the
cumulative rates of return of a hypothetical investment over such periods,
according to the following formula (cumulative total return is then expressed as
a percentage):
C = (ERV/P)-1
Where:
C = Cumulative Total Return
P = a hypothetical initial investment of $1,000
ERV = ending redeemable value: ERV is the
value, at the end of the applicable
period, of a hypothetical $1,000
investment made at the beginning of the
applicable period.
Cumulative Total Return for periods ended June 30, 1998
One Five Ten
Year Years Years
SCIT* ____% ____% ____%
Treasury Fund** ____% ____% ____%
* If the Adviser had not absorbed a portion of SCIT's expenses and had
imposed a full management fee, the cumulative total return for the one
year, five year and ten year periods ended June 30, 1998, would have been
lower.
** If the Adviser had not absorbed a portion of Treasury Fund's expenses and
had imposed a full management fee, the cumulative total return for the one
year, five year and ten year periods ended June 30, 1998, would have been
approximately ____%, ____% and ____%.
Total Return
Total return is the rate of return on an investment for a specified
period of time calculated in the manner as cumulative total return.
Quotations of the Funds' performance are historical, show the
performance of a hypothetical investment and are not intended to indicate future
performance. Average annual total return, cumulative total return and yield for
a Fund will vary based on changes in market conditions and the level of each
Fund's expenses. An investor's shares when redeemed may be worth more or less
than their original cost.
Investors should be aware that the principal of each Fund is not
insured.
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, the Wilshire Real Estate Securities
Index and statistics published by the Small Business Administration.
Because some or all each Fund's investments are denominated in foreign
currencies, the strength or weakness of the U.S. dollar as against these
currencies may account for part the Fund's investment performance. Historical
information on the value of the dollar versus foreign currencies may be used
from time to time in advertisements concerning the Funds. Such historical
information is not indicative of future fluctuations in the value of the U.S.
dollar against these currencies. In addition, marketing materials may cite
country and economic statistics and historical stock market performance for any
of the countries in which either Fund invests, including, but not limited to,
the following: population growth, gross domestic product, inflation rate,
average stock market price-earnings ratios and the total value of stock markets.
Sources for such statistics may include official publications of various foreign
governments and exchanges.
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. In addition, a Fund's performance may also be
compared to the performance of broad groups of comparable mutual funds.
Unmanaged indices with which a Fund's performance may be compared include, but
are not limited to, the following:
The Europe/Australia/Far East (EAFE) Index
International Finance Corporation's Latin America Investable Total Return Index
Morgan Stanley Capital International World Index
J.P. Morgan Global Traded Bond Index
Salomon Brothers World Government Bond Index
Nasdaq Composite Index
Wilshire 5000 Stock Index
28
<PAGE>
From time to time, in marketing and other Fund literature,
(Trustees)(Directors) and officers of the Funds, the Funds' portfolio manager,
or members of the portfolio management team may be depicted and quoted to give
prospective and current shareholders a better sense of the outlook and approach
of those who manage the Funds. In addition, the amount of assets that the
Adviser has under management in various geographical areas may be quoted in
advertising and marketing materials.
The Funds may be advertised as an investment choice in Scudder's
college planning program. The description may contain illustrations of projected
future college costs based on assumed rates of inflation and examples of
hypothetical fund performance, calculated as described above.
Statistical and other information, as provided by the Social Security
Administration, may be used in marketing materials pertaining to retirement
planning in order to estimate future payouts of social security benefits.
Estimates may be used on demographic and economic data.
Marketing and other Fund literature may include a description of the
potential risks and rewards associated with an investment in the Funds. The
description may include a "risk/return spectrum" which compares the Funds to
other Scudder funds or broad categories of funds, such as money market, bond or
equity funds, in terms of potential risks and returns. Money market funds are
designed to maintain a constant $1.00 share price and have a fluctuating yield.
Share price, yield and total return of a bond fund will fluctuate. The share
price and return of an equity fund also will fluctuate. The description may also
compare the Funds to bank products, such as certificates of deposit. Unlike
mutual funds, certificates of deposit are insured up to $100,000 by the U.S.
government and offer a fixed rate of return.
Because bank products guarantee the principal value of an investment
and money market funds seek stability of principal, these investments are
considered to be less risky than investments in either bond or equity funds,
which may involve the loss of principal. However, all long-term investments,
including investments in bank products, may be subject to inflation risk, which
is the risk of erosion of the value of an investment as prices increase over a
long time period. The risks/returns associated with an investment in bond or
equity funds depend upon many factors. For bond funds these factors include, but
are not limited to, a fund's overall investment objective, the average portfolio
maturity, credit quality of the securities held, and interest rate movements.
For equity funds, factors include a fund's overall investment objective, the
types of equity securities held and the financial position of the issuers of the
securities. The risks/returns associated with an investment in international
bond or equity funds also will depend upon currency exchange rate fluctuation.
A risk/return spectrum generally will position the various investment
categories in the following order: bank products, money market funds, bond funds
and equity funds. Shorter-term bond funds generally are considered less risky
and offer the potential for less return than longer-term bond funds. The same is
true of domestic bond funds relative to international bond funds, and bond funds
that purchase higher quality securities relative to bond funds that purchase
lower quality securities. Growth and income equity funds are generally
considered to be less risky and offer the potential for less return than growth
funds. In addition, international equity funds usually are considered more risky
than domestic equity funds but generally offer the potential for greater return.
Risk/return spectrums also may depict funds that invest in both
domestic and foreign securities or a combination of bond and equity securities.
Evaluation of Fund performance or other relevant statistical
information made by independent sources may also be used in advertisements
concerning the Funds, including reprints of, or selections from, editorials or
articles about these Funds. Sources for Fund performance information and
articles about the Funds include the following:
American Association of Individual Investors' Journal, a monthly publication of
the AAII that includes articles on investment analysis techniques.
Asian Wall Street Journal, a weekly Asian newspaper that often reviews U.S.
mutual funds investing internationally.
Banxquote, an on-line source of national averages for leading money market and
bank CD interest rates, published on a weekly basis by Masterfund, Inc. of
Wilmington, Delaware.
29
<PAGE>
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.
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.
30
<PAGE>
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.
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.
Taking a Global Approach
Many U.S. investors limit their holdings to U.S. securities because
they assume that international or global investing is too risky. While there are
risks connected with investing overseas, it's important to remember that no
investment -- even in blue-chip domestic securities -- is entirely risk free.
Looking outside U.S. borders, an investor today can find opportunities that
mirror domestic investments -- everything from large, stable multinational
companies to start-ups in emerging markets. To determine the level of risk with
which you are comfortable, and the potential for reward you're seeking over the
long term, you need to review the type of investment, the world markets, and
your time horizon.
The U.S. is unusual in that it has a very broad economy that is well
represented in the stock market. However, many countries around the world are
not only undergoing a revolution in how their economies operate, but also in
terms of the role their stock markets play in financing activities. There is
vibrant change throughout the global economy and all of this represents
potential investment opportunity.
31
<PAGE>
Investing beyond the United States can open this world of opportunity,
due partly to the dramatic shift in the balance of world markets. In 1970, the
United States alone accounted for two-thirds of the value of the world's stock
markets. Now, the situation is reversed -- only 35% of global stock market
capitalization resides here. There are companies in Southeast Asia that are
starting to dominate regional activity; there are companies in Europe that are
expanding outside of their traditional markets and taking advantage of faster
growth in Asia and Latin America; other companies throughout the world are
getting out from under state control and restructuring; developing countries
continue to open their doors to foreign investment.
Stocks in many foreign markets can be attractively priced. The global
stock markets do not move in lock step. When the valuations in one market rise,
there are other markets that are less expensive. There is also volatility within
markets in that some sectors may be more expensive while others are depressed in
valuation. A wider set of opportunities can help make it possible to find the
best values available.
International or global investing offers diversification because the
investment is not limited to a single country or economy. In fact, many experts
agree that investment strategies that include both U.S. and non-U.S.
investments strike the best balance between risk and reward.
Scudder's 30% Solution
The 30 Percent Solution -- A Global Guide for Investors Seeking Better
Performance With Reduced Portfolio Risk is a booklet, created by Scudder, to
convey its vision about the new global investment dynamic. This dynamic is a
result of the profound and ongoing changes in the global economy and the
financial markets. The booklet explains how Scudder believes an equity
investment portfolio with up to 30% in international holdings and 70% in
domestic holdings can improve long-term performance while simultaneously helping
to reduce overall risk.
ORGANIZATION OF THE FUNDS
(See "Fund organization" in each Fund's
prospectus.)
Scudder Cash Investment Trust is a Massachusetts business trust
established under a Declaration of Trust dated December 12, 1975. Treasury Fund
is a Massachusetts business trust established under a Declaration of Trust dated
April 4, 1980. On February 12, 1991, the Board of Trustees of Treasury Fund
approved the change in name from Scudder Government Money Fund to Scudder U.S.
Treasury Money Fund. Each Fund's authorized capital consists of an unlimited
number of shares of beneficial interest, par value $.01 per share, all of which
are one class and have equal rights as to voting, dividends and liquidation.
Shareholders have one vote for each share held. All shares issued and
outstanding will be fully paid and non-assessable by the Funds, and redeemable
as described in this combined Statement of Additional Information and in each
Fund's prospectus. The Trustees of both Funds have the authority to issue more
than one series of shares, but have no present intention to do so.
The Trustees of Treasury Fund, in their discretion, may authorize the
division of shares of the Fund (or shares of a series) into different classes,
permitting shares of different classes to be distributed by different methods.
Although shareholders of different classes would have an interest in the same
portfolio of assets, shareholders of different classes may bear different
expenses in connection with different methods of distribution. The Trustees have
no present intention of taking the action necessary to effect the division of
shares into separate classes, nor of changing the method of distribution of
shares of Treasury Fund.
Each Fund has a Declaration of Trust which provides that obligations of
the Fund involved are not binding upon the Trustees individually but only upon
the property of that Fund, that the Trustees and officers will not be liable for
errors of judgment or mistakes of fact or law, and that the Fund involved will
indemnify its Trustees and officers against liabilities and expenses incurred in
connection with litigation in which they may be involved because of their
offices with the Fund involved except if it is determined in the manner provided
in the Declarations of Trust that they have not acted in good faith in the
reasonable belief that their actions were in the best interests of the Fund
involved. However, nothing in the Declarations of Trust protects or indemnifies
a Trustee or officer against any liability to which he or she would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his or her office.
32
<PAGE>
INVESTMENT ADVISER
(See "Fund organization -- Investment adviser" in each
Fund's prospectus.)
Scudder Kemper Investments, Inc. (the "Adviser"), an investment counsel
firm, acts as investment adviser to the Fund. This organization, the predecessor
of which is Scudder, Stevens & Clark, Inc., is one of the most experienced
investment counsel firms in the U. S. It was established as a partnership in
1919 and pioneered the practice of providing investment counsel to individual
clients on a fee basis. In 1928 it introduced the first no-load mutual fund to
the public. In 1953 the Adviser introduced Scudder International Fund, Inc., the
first mutual fund available in the U.S. investing internationally in securities
of issuers in several foreign countries. The predecessor firm reorganized from a
partnership to a corporation on June 28, 1985. On June 26, 1997, Scudder,
Stevens & Clark, Inc. ("Scudder") entered into an agreement with Zurich
Insurance Company ("Zurich") pursuant to which Scudder and Zurich agreed to form
an alliance. On December 31, 1997, Zurich acquired a majority interest in
Scudder, and Zurich Kemper Investments, Inc., a Zurich subsidiary, became part
of Scudder. Scudder's name has been changed to Scudder Kemper Investments, Inc.
Founded in 1872, Zurich is a multinational, public corporation
organized under the laws of Switzerland. Its home office is located at
Mythenquai 2, 8002 Zurich, Switzerland. Historically, Zurich's earnings have
resulted from its operations as an insurer as well as from its ownership of its
subsidiaries and affiliated companies (the "Zurich Insurance Group"). Zurich and
the Zurich Insurance Group provide an extensive range of insurance products and
services and have branch offices and subsidiaries in more than 40 countries
throughout the world.
The principal source of the Adviser's income is professional fees
received from providing continuous investment advice, and the firm derives no
income from brokerage or underwriting of securities. Today, it provides
investment counsel for many individuals and institutions, including insurance
companies, colleges, industrial corporations, and financial and banking
organizations. In addition, it manages Montgomery Street Income Securities,
Inc., Scudder California Tax Free Trust, Scudder Cash Investment Trust, Value
Equity Trust, Scudder Fund, Inc., Scudder Funds Trust, Global/International
Fund, Inc., Scudder Global High Income Fund, Inc., 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 Scudder, Stevens & Clark, Inc. 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
continuous studies of the factors that affect the position of various
industries, companies and individual securities. The Adviser receives published
reports and statistical compilations from issuers and other sources, as well as
analyses from brokers and dealers who may execute portfolio transactions for the
Adviser's clients. However, the Adviser regards this information and material as
an adjunct to its own research activities. In selecting the securities in which
33
<PAGE>
the Fund may invest, the conclusions and investment decisions of the Adviser
with respect to the Fund are based primarily on the analyses of its own research
department.
Certain investments may be appropriate for both SCIT and Treasury Fund
as well as other clients advised by the Adviser. Investment decisions for the
Funds 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 the Funds. Purchase and sales orders for each
Fund may be combined with those of other clients of the Adviser in the interest
of achieving the most favorable net results to the Funds.
Scudder has entered into an agreement with Zurich Insurance Company
("Zurich"), an international insurance and financial services organization,
pursuant to which Scudder will form a new global investment organization by
combining with Zurich's subsidiary, Zurich Kemper Investments, Inc., and change
its name to Scudder Kemper Investments, Inc. After the transaction is completed,
Zurich will own approximately 70% of the new organization with the balance owned
by the new organization's officers and employees.
Consummation of the transaction is subject to a number of
contingencies, including regulatory approvals. The transaction is expected to
close in the fourth quarter of 1997. Upon consummation of the transaction the
investment management agreement with Scudder, Stevens & Clark, Inc., will
terminate. The Trustees have approved an investment management agreement with
Scudder Kemper Investments, Inc. which is substantially identical to the current
investment management agreement to become effective upon the termination of the
current investment management agreement.
The Adviser may serve as adviser to other funds with investment
objectives and policies similar to those of the Funds that may have different
distribution arrangements or expenses, which may affect performance.
Scudder Cash Investment Trust
The Investment Advisory Agreement between SCIT and the Adviser (the
"Agreement"), dated November 12, 1985, will remain in effect until September 30,
1998 and will continue in effect from year to year thereafter only if its
continuance is approved annually by the vote of a majority of those Trustees who
are not parties to such Agreement or "interested persons" of the Adviser or SCIT
cast in person at a meeting called for the purpose of voting on such approval
and either by vote of a majority of the Trustees or a majority of the
outstanding voting securities of SCIT. The Agreement was last approved by the
Trustees (including a majority of the Trustees who are not such "interested
persons") on August 12, 1997 and by the shareholders of the Fund on November 3,
1987. The Agreement may be terminated at any time without payment of penalty by
either party on sixty days' written notice, and automatically terminates in the
event of its assignment.
Under the Agreement, the Adviser regularly provides SCIT investment
management of the assets of the Fund in accordance with the investment
objectives, policies and restrictions set forth, and determines what securities
shall be purchased for SCIT, what securities shall be held or sold by SCIT, and
what portion of SCIT's assets shall be held uninvested, subject always to the
provisions of SCIT's Declaration of Trust and By-Laws, and of the 1940 Act and
to SCIT's investment objectives, policies and restrictions, and subject further
to such policies and instructions as the Trustees of SCIT may from time to time
establish. The Adviser also advises and assists the officers of SCIT in taking
such steps as are necessary or appropriate to carry out the decisions of its
Trustees and the appropriate committees of the Trustees regarding the conduct of
the business of SCIT.
The Adviser furnishes the Trust's Board of Trustees periodic reports on
the investment performance of the Fund and on the performance of its obligations
regarding this agreement as well as additional reports and information as the
Trust's officers or Board of Trustees shall reasonably request.
34
<PAGE>
The Adviser furnishes for the use of the Fund office space and
facilities in the United States as the Fund may require for its reasonable
needs, and also renders significant administrative services (not otherwise
provided by third parties) necessary for the Fund's operations as an open-end
investment company including, but not limited to, preparing reports and notices
to the Trustees and shareholders; supervising, negotiating contractual
arrangements with, to the extent appropriate, and monitoring various third-party
service providers to the Fund (such as the 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 the Fund's federal, state and local tax returns; preparing and filing the
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 the Fund under applicable
federal and state securities laws; maintaining or causing to be maintained for
the Fund all books, record and reports to the extent not otherwise maintained by
a third party; assisting in establishing accounting policies of the Fund;
assisting in the resolution of accounting and legal issues; establishing and
monitoring the Fund's operating budget; processing the payment of the Fund's
bills; assisting the Fund in, and otherwise arranging for, the payment of
distributions and dividends, and otherwise assisting the Fund in the conduct of
its business, subject to the direction and control of the Trustees.
The Agreement also provides that the Fund is granted a nonexclusive
right and sublicense to use the "Scudder" name and mark as part of the Trust's
name, and the Scudder Marks in connection with the Corporation's investment
product and services.
The Adviser pays the compensation and expenses of all affiliated
Trustees and executive employees of SCIT and makes available, without expense to
the Fund, the services of such Trustees, officers and employees as may duly be
elected Trustees, officers or employees of the Fund, subject to their individual
consent to serve and to any limitations imposed by law, and pays the Fund's
office rent and provides investment advisory, research and statistical
facilities and all clerical services relating to research, statistical and
investment work. For these services SCIT pays a monthly fee at an annual rate of
0.50 of 1% of the first $250 million of the Fund's average daily net assets,
0.45 of 1% on the next $250 million of such net assets, 0.40 of 1% of the next
$500 million of such net assets and 0.35 of 1% on such net assets in excess of
$1 billion.
Until October 31, 1998, the Adviser and certain of its subsidiaries
have agreed to waive all or portions of their fees payable by the Fund to the
extent necessary so that the total annualized expenses of the Fund do not exceed
0.85% of average daily net assets of the Fund.
For the fiscal years ended June 30, 1996 , 1997 and 1998 the investment
advisory fee was $5,898,959 , $5,944,464 and $__________, respectively.
The 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 the 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 Trust, the Fund or its 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 the Fund shall be deemed, when acting within the
scope of his or her employment by the Fund, to be acting in such employment
solely for the Fund and not as an agent of Scudder.
Scudder U.S. Treasury Money Fund
The Investment Management Agreement between Treasury Fund and the
Adviser (the "Agreement") was last approved by the Trustees on August 12, 1997
and by the shareholders on November 13, 1990. The Agreement is dated November
14, 1990 and will continue in effect until September 30, 1998 and from year to
year thereafter only if its continuance is approved annually by the vote of a
majority of those Trustees who are not parties to such Agreement or interested
persons of the Adviser or the Fund, cast in person at a meeting called for the
purpose of voting on such approval, and either by vote of a majority of the
Trustees or of the outstanding voting securities of the Fund. The Agreement may
be terminated at any time without payment of penalty by either party on sixty
days' written notice, and automatically terminates in the event of its
assignment.
35
<PAGE>
Under the Agreement, the Adviser regularly provides Treasury Fund with
continuing investment management for the Fund's portfolio consistent with the
Fund's investment objectives, policies and restrictions and determines what
securities shall be purchased for the portfolio of the Fund, what portfolio
securities shall be held or sold by the Fund, and what portion of the Fund's
assets shall be held uninvested, subject always to the provisions of the Fund's
Declaration of Trust and By-Laws, of the 1940 Act and the Code and to the Fund's
investment objectives, policies and restrictions, and subject, further, to such
policies and instructions as the Trustees of the Fund may from time to time
establish. The Adviser also advises and assists the officers of the Fund in
taking such steps as are necessary or appropriate to carry out the decisions of
its Trustees and the appropriate committees of the Trustees regarding the
conduct of the business of the Fund.
Under the Agreement, the Adviser also renders significant
administrative services (not otherwise provided by third parties) necessary for
Treasury Fund's operations as an open-end investment company including, but not
limited to, preparing reports and notices to the Trustees and shareholders;
supervising, negotiating contractual arrangements with, and monitoring various
third-party service providers to the Fund (such as the 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 the Fund's federal, state and local tax returns; preparing and filing the
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 the Fund under applicable
federal and state securities laws; maintaining the Fund's books and records to
the extent not otherwise maintained by a third party; assisting in establishing
accounting policies of the Fund; assisting in the resolution of accounting and
legal issues; establishing and monitoring the Fund's operating budget;
processing the payment of the Fund's bills; assisting the Fund in, and otherwise
arranging for, the payment of distributions and dividends and otherwise
assisting the Fund in the conduct of its business, subject to the direction and
control of the Trustees.
The Adviser pays the compensation and expenses of all Trustees,
officers and executive employees of Treasury Fund (except those of attending
Board and committee meetings outside New York, New York or Boston,
Massachusetts) who are affiliated persons of the Adviser and makes available,
without expense to Treasury Fund, the services of the directors, officers and
employees of the Adviser as may duly be elected officers of Treasury Fund,
subject to their individual consent to serve and to any limitations imposed by
law and provides the Fund's office space and facilities.
For these services, Treasury Fund pays the Adviser a fee equal to 0.50
of 1% of the Fund's average daily net assets. The fee is payable monthly,
provided the Fund will make such interim payments as may be requested by the
Adviser not to exceed 75% of the amount of the fee then accrued on the books of
the Fund and unpaid. For the fiscal years ended June 30, 1996 , 1997 and 1998
the investment advisory fee imposed was $890,672 , $893,667, and $________,
respectively and the fees not imposed amounted to $1,077,479 , $1,202,181 and
$_________, respectively.
The Adviser has agreed until October 31, 1998 not to impose all or a
portion of its investment management fee and take other action, to the extent
necessary, to maintain the annualized expenses of Treasury Fund at not more than
0.65% of average daily net assets. The Adviser retains the ability to be repaid
by the Treasury Fund if expenses fall below the specified limit prior to the end
of the fiscal year. These expense limitation arrangements can decrease the
Treasury Fund's expenses and improve its performance.
Under the Agreement, Treasury Fund is responsible for all its other
expenses, including fees and expenses incurred in connection with membership in
investment company organizations; brokers' commissions; payments for portfolio
pricing services to a pricing agent, if any; legal, auditing and accounting
expenses; taxes and governmental fees; the fees and expenses of the Transfer
Agent; the cost of preparing share certificates or any other expenses, including
expenses of issuance, sale, redemption or repurchase of shares of beneficial
interest; the expenses of and fees for registering or qualifying securities for
sale; the fees and expenses of Trustees, officers and employees of the Fund who
are not affiliated with the Adviser; the cost of printing and distributing
reports and notices to shareholders; and the fees and disbursements of
custodians. Treasury Fund may arrange to have third parties assume all or part
of the expense of sale, underwriting and distribution of shares of the Fund.
(See "DISTRIBUTOR" for expenses paid by Scudder Investor Services, Inc.)
Treasury Fund is also responsible for expenses of shareholder meetings and
expenses incurred in connection with litigation, proceedings and claims and the
legal obligation it may have to indemnify its officers and Trustees with respect
thereto.
36
<PAGE>
SCIT and Treasury Fund
The expense ratios for SCIT for the fiscal years ended June 30, 1996,
1997 and 1998 were 0.83% , 0.86% and ____%, respectively. The ratios of expenses
to annual investment income for SCIT for the same years were 14.75%, 15.63% and
_____%, respectively. The expense ratios for Treasury Fund for the fiscal years
ended June 30, 1996 , 1997 and 1998 were 0.65%, 0.65% and ____%, respectively.
The ratios of expenses to annual investment income for the same periods were
11.94% , 12.65% and _____%, respectively. If reimbursement is required, it will
be made as promptly as practicable after the end of a Fund's fiscal year.
However, no fee payment will be made to the Adviser during any fiscal year which
will cause year-to-date expenses to exceed the cumulative pro rata expense
limitation at the time of such payment.
Each Agreement also provides a Fund may use any name derived from the
name "Scudder, Stevens & Clark" only as long as the Agreement or any extension,
renewal or amendment thereof remains in effect.
In reviewing the terms of the Agreements and in discussions with the
Adviser concerning the Agreements, Trustees of each Fund who are not "interested
persons" of the Fund or the Adviser are represented by independent counsel at
that Fund's expense. Dechert Price & Rhoads acts as general counsel for each
Fund.
Each Agreement provides that the Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by a Fund in
connection with matters to which the Agreements relate, except a loss resulting
from willful misfeasance, bad faith or gross negligence on the part of the
Adviser in the performance of its duties or from reckless disregard by the
Adviser of its obligations and duties under the Agreement.
Officers and employees of the Adviser from time to time may have
transactions with various banks, including the Funds' custodian bank. It is the
Adviser's opinion that the terms and conditions of those transactions were not
influenced by existing or potential custodial or other Fund relationships.
None of the Trustees or officers of a Fund may have dealings with that
Fund as principals in the purchase or sale of securities, except as individual
subscribers to or holders of shares of the Fund.
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.
TRUSTEES AND OFFICERS
Scudder Cash Investment Trust and Scudder U.S. Treasury Money Fund
<TABLE>
<S> <C> <C> <C>
<CAPTION>
Position with
Underwriter,
Name, Date of Birth Position with Principal Occupation** Scudder Investor
and Address Fund and Affiliations Services, Inc.
- ----------- ----------- --------------------- --------------
Daniel Pierce (3/18/34)*@ President and Trustee Managing Director of Vice President, Director and
Scudder Kemper Assistant Treasurer
Investments, Inc.
37
<PAGE>
Position with
Underwriter,
Name, Date of Birth Position with Principal Occupation** Scudder Investor
and Address Fund and Affiliations Services, Inc.
- ----------- ----------- --------------------- --------------
Henry P. Becton, Jr. Trustee President and General --
(10/16/43)#WGBH125 Western Manager, WGBH Educational
AvenueAllston, MA 02134 Foundation
Dawn-Marie Driscoll Trustee Executive Fellow, Center --
(11/5/46)5760 Flamingo DriveCape for Business Ethics;
Coral, FL 33904 President, Driscoll
Associates
Peter B. Freeman (8/4/32)100 Trustee Corporate Director and --
Alumni AvenueProvidence, RI 02906 Trustee
George M. Lovejoy, Jr. Trustee President and Director, --
(4/15/30)#160 Federal Fifty Associates
StreetBoston, MA 02110
Dr. Wesley W. Marple, Jr. Trustee Professor of Business --
(2/22/32)Northeastern Administration,
University360 Huntington Northeastern University
AvenueBoston, MA 02115
Kathryn L. Quirk (12/3/52)+ Trustee, Vice Managing Director of --
President and Scudder Kemper
Assistant Secretary Investments, Inc.
Jean C. Tempel (3/24/43) Trustee Managing Partner, --
Technology Equity Partners
Jerard K. Hartman (3/1/33)+ Vice President Managing Director of --
Scudder Kemper
Investments, Inc.
Thomas W. Joseph (4/22/39)@ Vice President Principal of Scudder, Vice President, Director,
Stevens & Clark, Inc. Treasurer & Assistant Clerk
Thomas F. McDonough (1/20/47)@ Vice President and Principal of Scudder Clerk
Secretary Kemper Investments, Inc.
Frank J. Rachwalski, Jr. Vice President Managing Director of --
(3/26/45) +++ Scudder Kemper
Investments, Inc.
David Wines (4/8/56)++ Vice President Principal of Scudder --
Kemper Investments, Inc.
John R. Hebble (6/27/58)@ Treasurer Senior Vice President of --
Scudder Kemper
Investments, Inc.
38
<PAGE>
Position with
Underwriter,
Name, Date of Birth Position with Principal Occupation** Scudder Investor
and Address Fund and Affiliations Services, Inc.
- ----------- ----------- --------------------- --------------
James DiBiase (___)@ Assistant Treasurer Senior Vice President of --
Scudder Kemper
Investments, Inc.
Caroline Pearson (4/1/62)@ Assistant Secretary Senior Vice President of --
Scudder Kemper
Investments, Inc.;
Associate, Dechert Price
& Rhoads (law firm) 1989
to 1997.
</TABLE>
* Mr. Pierce and Ms. Quirk are considered by the Funds and their counsel
to be Trustees who are "interested persons" of the Adviser of the Fund,
within the meaning of the 1940 Act, as amended.
** Unless otherwise stated, all officers and Trustees have been associated
with their respective companies for more than five years, but not
necessarily in the same capacity.
# Messrs. Becton, Lovejoy and Pierce and Ms. Quirk are members of the
Executive Committee for Scudder Cash Investment Trust and Messrs. Lovejoy
and Pierce and Mses. Driscoll and Quirk for the Scudder U.S. Treasury
MoneyFund, which has the power to declare dividends from ordinary income
and distributions of realized capital gains to the same extent as the Board
is so empowered.
@ Address: Two International Place, Boston, Massachusetts 02110
+ Address: 345 Park Avenue, New York, New York 10154
++ Address: 333 South Hope Street, 37th floor, Los Angeles, CA 90071
+++ Address: 222 South Riverside Plaza, Chicago, IL
As of September 30, 1998 all Trustees and officers of SCIT as a group
owned beneficially (as that term is defined under Section 13(d) of the
Securities Exchange Act of 1934) less than 1% of the shares of the Fund
outstanding on such date.
To the best of SCIT's knowledge as of September 30, 1998 no person owned
beneficially more than 5% of SCIT's outstanding shares.
The Trustees and officers of the Fund also serve in similar capacities
with other Scudder Funds.
To the best of the Trust's knowledge, as of September 30, 1997, all
Trustees and officers of the Treasury Fund as a group owned beneficially (as
that term is defined under Section 13(d) of the Securities Exchange Act of 1934)
less than 1% of the shares of the Fund outstanding on such date.
To the best of the Trust's knowledge, as of September 30, 1997, no
person owned beneficially more than 5% of the Fund's outstanding shares.
The Trustees and officers of Treasury Fund also serve in similar
capacities with other Scudder Funds.
REMUNERATION
Responsibilities of the Board -- Board and Committee Meetings
Each Fund's Board of Directors is responsible for the general oversight
of each Fund's business. A majority of each Board's members are not affiliated
with Scudder Kemper Investments, Inc. These "Independent Trustees" have primary
responsibility for assuring that each Fund is managed in the best interests of
its shareholders.
The Board of Directors for each Fund 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 Trustees 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
39
<PAGE>
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
Trustees.
All the Independent Trustees serve on each Fund's respective Committee
on Independent Trustees, which nominates Independent Trustees and considers
other related matters, and the respective Audit Committee, which selects each
Fund's independent public accountants and reviews accounting policies and
controls. In addition, Independent Trustees 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 Trustees
The Independent Trustees receive the following compensation from each
of SCIT and Treasury Fund: an annual trustee's fee of $7,200 for SCIT and $4,800
for Treasury Fund; 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 Trust on behalf of each Fund and the Adviser or any
affiliate of the Adviser; $150 for Audit Committee and Contract Meetings and $50
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 Trustee 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 Trustees do not
receive any employee benefits such as pension or retirement benefits or health
insurance. Notwithstanding the schedule of fees, the Independent Trustees have
in the past and may in the future waive a portion of their compensation.
The Independent Trustees also serve in the same capacity for other
funds managed by the Adviser. These funds differ broadly in type and complexity
and in some cases have substantially different Trustee fee schedules. The
following table shows the aggregate compensation received by each Independent
Trustee during 1997 from each Trust and from all of the Scudder funds as a
group.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
<CAPTION>
Scudder Cash Scudder U.S.
Name Investment Trust Treasury Money Fund All Scudder Funds
Paid by Paid by Paid by Paid by Paid by Paid by
the Trust the Adviser the Trust the Adviser the Trust the Adviser
Henry P. Becton, Jr., $9,650 $700 $1,050 $0 $114,554 $9,500
====== ==== ====== == ======== ====
Trustee
Dawn-Marie Driscoll, $9,850 $700 $8,650 $700 $107,722 $8,800
====== ==== ====== ==== ======== =====
Trustee
Peter B. Freeman, $9,471 $700 $3,550 $700 $139,011 $14,625
====== ==== ====== ==== ======== =====
Trustee
George M. Lovejoy, Jr., $9,650 $700 $8,450 $700 $139,113 $10,700
====== ==== ====== ==== ======== ======
Trustee
Dr. Wesley W. Marple, $1,500 $0 $1,050 $0 $121,129 $10,100
====== == ====== == ======== =======
Jr., Trustee
Jean C. Temple, Trustee $1,500 $0 $8,650 $700 $122,504 $10,100
====== == ====== ==== ======== =====
</TABLE>
Members of each Board of Trustees who are employees of the Adviser or
its affiliates receive no direct compensation from the Trust, 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 .
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<PAGE>
DISTRIBUTOR
Both Funds have an underwriting agreement with Scudder Investor
Services, Inc. (the "Distributor"), a Massachusetts corporation, which is a
wholly-owned subsidiary of the Adviser, a Delaware corporation.
As agent, the Distributor currently offers shares of both Funds on a
continual basis to investors in all states in which the Funds may from time to
time be registered or where permitted by applicable law. The underwriting
agreement provides that the Distributor accept orders for shares at net asset
value as no sales commission or load is charged the investor. The Distributor
has made no firm commitment to acquire shares of either Fund.
Scudder Cash Investment Trust
SCIT's underwriting agreement dated July 20, 1976 will remain in effect
until September 30, 1998 and from year to year only if its continuance is
approved annually by a majority of the Board of Trustees who are not parties to
such agreement or "interested persons" of any such party and either by vote of a
majority of the Trustees or a majority of the outstanding voting securities of
the Fund. SCIT has agreed to pay all expenses in connection with registration of
its shares with the SEC and auditing and filing fees in connection with
registration of its shares under the various state "blue-sky" laws and to assume
the cost of preparation of prospectuses and other expenses. The Distributor pays
all expenses of printing prospectuses used in offering shares (other than
prospectuses used by SCIT for transmission to shareholders, for which the Fund
pays printing expenses), expenses, other than filing fees, of qualification of
SCIT's shares in various states, including registering SCIT as a dealer, and all
other expenses in connection with the offer and sale of shares which are not
specifically allocated to the Funds. The underwriting agreement was last
approved by the Trustees on August 12, 1998.
Scudder U.S. Treasury Money Fund
Treasury Fund's underwriting agreement dated September 10, 1985 will
remain in effect until September 30, 1998 and from year to year thereafter only
if its continuance is approved annually by a majority of the members of the
Board of Trustees 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 Trustees or a
majority of the outstanding voting securities of Treasury Fund.
The underwriting agreement was last approved by the Trustees on August 12, 1998.
Under the principal underwriting agreement, Treasury Fund 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 Treasury Fund as
a broker or dealer; the fees and expenses of preparing, printing and mailing
prospectuses, notices, proxy statements, reports or other communications
(including newsletters) to shareholders of Treasury Fund; the cost of printing
and mailing confirmations of purchases of shares and the prospectuses
accompanying such confirmations; any issuance taxes or any initial transfer
taxes; a portion of shareholder toll-free telephone charges and expenses of
customer 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 Treasury Fund and the Distributor.
Although Treasury Fund does not currently have a 12b-1 Plan and shareholder
approval would be required in order to adopt one, Treasury Fund will also pay
those fees and expenses permitted to be paid or assumed by Treasury Fund
pursuant to a 12b-1 Plan, if any, adopted by Treasury Fund, notwithstanding any
other provision to the contrary in the underwriting agreement and Treasury Fund
or a third party will pay those fees and expenses not specifically allocated to
the Distributor in the underwriting agreement.
The Distributor will pay for printing and distributing prospectuses or
reports prepared for its use in connection with the offering of the shares to
the public and preparing, printing and mailing any other literature or
advertising in connection with the offering of shares of Treasury Fund to the
public. The Distributor will pay all fees and expenses in connection with its
qualification and registration as a broker or dealer under federal and state
laws, a portion of the cost of toll-free telephone service and expenses of
customer service representatives, a portion of the cost of computer terminals,
and of any activity which is primarily intended to result in the sale of shares
issued by the Fund, unless a 12b-1 Plan is in effect which provides that the
Fund shall bear some or all of such expenses.
41
<PAGE>
TAXES
(See "Transaction information -- Tax identification number" and
"Distribution and performance information -- Dividends and capital gains
distributions" in each Fund's prospectus.)
Each Fund has elected to be treated as a regulated investment company
under Subchapter M of the Code, or a predecessor statute and has qualified as
such since its inception. Each Fund intends to continue to qualify for such
treatment. Such qualification does not involve governmental supervision or
management of investment practices or policy.
A regulated investment company qualifying under Subchapter M of the
Code is required to distribute to its shareholders at least 90% of its
investment company taxable income (including net short-term capital gain) and
generally is not subject to federal income tax to the extent that it distributes
annually its investment company taxable income and net realized capital gains in
the manner required under the Code. Each Fund intends to distribute, at least
annually, all of its investment company taxable income and net realized capital
gains.
The Funds are subject to a 4% nondeductible excise tax on amounts
required to be but not distributed under a prescribed formula. The formula
requires payment to shareholders during a calendar year of distributions
representing at least 98% of a Fund's ordinary income for the calendar year, at
least 98% of the excess of its capital gains over capital losses (adjusted for
certain ordinary losses) realized during the one-year period ending October 31
during such year (although investment companies with taxable years ending on
November 30 or December 31 may make an irrevocable election to measure the
required capital gain distribution using their actual taxable year), and all
ordinary income and capital gains for prior years that were not previously
distributed.
Investment company taxable income generally includes interest and net
short-term capital gains in excess of net long-term capital losses, less
expenses. Net realized capital gains for a fiscal year are computed by taking
into account any capital loss carryforward of the Funds.
Distributions of investment company taxable income are taxable to
shareholders as ordinary income.
Since no portion of the Funds' income is comprised of dividends from
domestic corporations, none of the income distributions of the Funds is eligible
for the deduction for dividends received by corporations.
Properly designated distributions of the excess of net long-term
capital gain over net short-term capital loss that are designated as capital
gain dividends are taxable to shareholders as long-term capital gain, regardless
of the length of time the shares of the Fund involved have been held by such
shareholders. Such distributions are not eligible for the dividends-received
deduction. Any loss realized upon the redemption of shares held at the time of
redemption for six months or less will be treated as a long-term capital loss to
the extent of any amounts treated as distributions of long-term capital gains
during such six-month period.
Distributions of investment company taxable income and net realized
capital gains will be taxable as described above, whether received in shares or
in cash. Shareholders electing to receive distributions in the form of
additional shares will have a cost basis for federal income tax purposes in each
share so received equal to the net asset value of a share on the reinvestment
date.
All distributions of investment company taxable income and net realized
capital gain, whether received in shares or in cash, must be reported by each
shareholder on his or her federal income tax return. Dividends declared in
October, November or December with a record date in such a month are deemed to
have been received by shareholders on December 31 if paid in January of the
following year. Redemptions of shares, including exchanges for shares of another
Scudder fund, may result in tax consequences (gain or loss) to the shareholder
and are also subject to these reporting requirements.
A portion of the difference between the issue price of zero coupon
securities and their face value ("original issue discount") is considered to be
income to a Fund each year, even though a Fund will not receive cash interest
payments from these securities. This original issue discount imputed income will
comprise a part of the investment company taxable income of the Funds which must
42
<PAGE>
be distributed to shareholders in order to maintain the qualification of the
Funds as regulated investment companies and to avoid federal income tax at the
level of the Funds. In the event that a Fund acquires a debt instrument at a
market discount, it is possible that a portion of any gain recognized on the
disposition of such instrument may be treated as ordinary income.
A qualifying individual may make a deductible IRA contribution of up to
$2,000 or, if less, the amount of the individual's earned income (up to $2,000
per individual for married couples if only one spouse has earned income) for any
taxable year only if (i) neither the individual nor a spouse (unless filing
separate returns) is an active participant in an employer's retirement plan, or
(ii) the individual (and a spouse, if applicable) has an adjusted gross income
below a certain level ($40,050 for married individuals filing a joint return,
with a phase-out of the deduction for adjusted gross income between $40,050 and
$50,000; $25,050 for a single individual, with a phase-out for adjusted gross
income between $25,050 and $35,000). However, an individual not permitted to
make a deductible contribution to an IRA for any such taxable year may
nonetheless make nondeductible contributions up to $2,000 to an IRA for that
year. There are special rules for determining how withdrawals are to be taxed if
an IRA contains both deductible and nondeductible amounts. In general, a
proportionate amount of each withdrawal will be deemed to be made from
nondeductible contributions; amounts treated as a return of nondeductible
contributions will not be taxable. Also, annual contributions may be made to a
spousal IRA even if the spouse has earnings in a given year if the spouse elects
to be treated as having no earnings (for IRA contribution purposes) for the
year.
The Funds will be required to report to the IRS all distributions of
taxable income and capital gains as well as gross proceeds from the redemption
or exchange of Fund shares, except in the case of certain exempt shareholders.
Under the backup withholding provisions of Section 3406 of the Code,
distributions of taxable income and capital gains (and proceeds from the
redemption or exchange of the shares of a regulated investment company if the
funds fail to maintain a constant $1.00 NAV per share) may be subject to
withholding of federal income tax at the rate of 31% in the case of non-exempt
shareholders who fail to furnish the investment company with their taxpayer
identification numbers and with required certifications regarding their status
under the federal income tax law. Withholding may also be required if a Fund is
notified by the IRS or a broker that the taxpayer identification number
furnished by the shareholder is incorrect or that the shareholder has previously
failed to report interest or dividend income. If the withholding provisions are
applicable, any such distributions and proceeds, whether taken in cash or
reinvested in additional shares, will be reduced by the amounts required to be
withheld.
Shareholders of the Funds may be subject to state and local taxes on
distributions received from the Funds and on redemptions of the Funds' shares.
Under the laws of certain states, distributions of investment company taxable
income are taxable to shareholders as dividends, even though a portion of such
distributions may be derived from interest on U.S. Government obligations which,
if received directly by such shareholders, would be exempt from state income
tax.
Each distribution is accompanied by a brief explanation of the form and
character of the distribution. In January of each year, the Funds issue to each
shareholder a statement of the federal income tax status of all distributions.
Each Fund is organized as a Massachusetts business trust and, provided
that it qualifies as a regulated investment company for federal income tax
purposes, is not liable for any income or franchise tax in the Commonwealth of
Massachusetts.
The foregoing discussion of U.S. federal income tax law relates solely
to the application of that law to U.S. persons, i.e., U.S. citizens and
residents and U.S. corporations, partnerships, trusts and estates. Each
shareholder who is not a U.S. person should consider the U.S. and foreign tax
consequences of ownership of shares of a Fund, including the possibility that
such a shareholder may be subject to a U.S. withholding tax at a rate of 30% (or
at a lower rate under an applicable income tax treaty) on amounts constituting
ordinary income received by the shareholder, where such amounts are treated as
income from U.S. sources under the Code.
Shareholders should consult their tax advisers about the application of
the provisions of tax law described in this combined Statement of Additional
Information in light of their particular tax situations.
43
<PAGE>
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 a 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 a Fund to reported commissions paid by others.
The Adviser reviews on a routine basis commission rates, execution and
settlement services performed, making internal and external comparisons.
The Funds' purchases and sales of portfolio 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 a Fund. Trading does,
however, involve transaction costs. Transactions with dealers serving as primary
market makers reflect the spread between the bid and ask 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 research, market and statistical information to a
Fund. The term "research, market and statistical information" 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 for a 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, market or statistical information. The Adviser will not place
orders with broker/dealers on the basis that the broker/dealer has or has not
sold shares of a 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 Funds with issuers, underwriters
or other brokers and dealers. The Distributor will not receive any commission,
fee or other remuneration from the Funds for this service.
Although certain research, market and statistical information from
broker/dealers may be useful to a 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 a Fund, and not all such information is used by
the Adviser in connection with a 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 a
Fund.
The Trustees review from time to time whether the recapture for the
benefit of a Fund of some portion of the brokerage commissions or similar fees
paid by a Fund on portfolio transactions is legally permissible and advisable.
NET ASSET VALUE
The net asset value per share of each Fund is computed twice daily as
of twelve o'clock noon and the close of regular trading on the Exchange,
normally 4 p.m. eastern time, on each day when the Exchange is open for trading.
The Exchange is normally closed on the following national holidays: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving, and Christmas. Net asset value is determined by dividing the total
assets of a Fund, less all of its liabilities, by the total number of shares of
44
<PAGE>
that Fund outstanding. The Funds use the penny-rounding method of security
valuation as permitted under Rule 2a-7 under the 1940 Act. Under this method,
portfolio securities for which market quotations are readily available and which
have remaining maturities of more than 60 days from the date of valuation are
valued at market. Short-term securities purchased with remaining maturities of
60 days or less shall be valued by the amortized cost method; if acquired with
remaining maturities of 61 days or more, the cost thereof for purposes of
valuation is deemed to be the value on the 61st day prior to maturity. Other
securities are appraised at fair value as determined in good faith by or on
behalf of the Trustees of each Fund. 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. Determinations of net asset value per
share for each Fund 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 each Fund's
prospectus and the Financial Statements incorporated by reference in this
Statement of Additional Information have been so included or incorporated by
reference in reliance on the report of PricewaterhouseCoopers LLP, One Post
Office Square, Boston, Massachusetts 02109, independent accountants, and given
on the authority of that firm as experts in accounting and auditing. Effective
July 1, 1998, Coopers & Lybrand L.L.P. and Price Waterhouse LLP merged to become
PricewaterhouseCoopers LLP. PricewaterhouseCoopers LLP is responsible for
performing annual audits of the financial statements and financial highlights of
the Funds in accordance with generally accepted auditing standards and the
preparation of federal tax returns.
Shareholder Indemnification
The Funds are organizations of the type commonly known as a
"Massachusetts business trust." Under Massachusetts law, shareholders of such a
trust may, under certain circumstances, be held personally liable as partners
for the obligations of that trust. The Declarations of Trust of each Fund
contain an express disclaimer of shareholder liability in connection with the
Funds' property or the acts, obligations or affairs of the Funds. The
Declarations of Trust also provide for indemnification out of the Funds'
property of any shareholder held personally liable for the claims and
liabilities to which a shareholder may become subject by reason of being or
having been a shareholder. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is limited to circumstances in which a
Fund itself would be unable to meet its obligations.
Other Information
Both Funds have a fiscal year ending on June 30.
Portfolio securities of each Fund are held separately, pursuant to
separate custodian agreements, by State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02101 as custodian.
The CUSIP number of Scudder Cash Investment Trust is 811118-10-8.
The CUSIP number of Scudder U.S. Treasury Money Fund is 81123P-10-6.
"Scudder Cash Investment Trust" is the designation of the Trustees for
the time being under a Declaration of Trust dated December 12, 1975, and the
name "Scudder U.S. Treasury Money Fund" is the designation of the Trustees for
the time being under a Declaration of Trust dated April 4, 1980, each as amended
from time to time, and all persons dealing with a Fund must look solely to the
property of that Fund for the enforcement of any claims against that Fund as
neither the Trustees, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of a Fund. Upon the initial
purchase of shares, the shareholder agrees to be bound by a Fund's Declaration
of Trust, as amended from time to time. No series is liable for the obligations
of any other series. The Declaration of Trust of each Fund is on file at the
Massachusetts Secretary of State's Office in Boston, Massachusetts.
45
<PAGE>
TO BE UPDATED
Scudder Fund Accounting Corporation (SFAC), Two International Place,
Boston, Massachusetts, 02110-4103, a subsidiary of the Adviser, computes the
Funds' net asset value. Each Fund pays SFAC an annual fee equal to 0.02% of the
first $150 million of average daily net assets, 0.006% of such assets in excess
of $150 million, 0.0035% of such assets in excess of $1 billion, plus holding
and transaction charges for this service. For the fiscal years ended June 30,
1998, 1997 and 1996 , SFAC charged SCIT aggregate fees of $_______, $105,874 and
$104,207 . For the fiscal years ended June 30, 1998, 1997 and 1996 , SFAC
charged Treasury Fund aggregate fees of $________, $50,134 and $49,647.
Scudder Service Corporation ("Service Corporation"), P.O. Box 2291,
Boston, Massachusetts 02107-2291, a subsidiary of the Adviser, is the transfer
and dividend disbursing agent for both funds. Service Corporation also serves as
shareholder service agent for the Funds and provides subaccounting and
recordkeeping services for shareholder accounts in certain retirement and
employee benefit plans. The Funds each pay Service Corporation an annual fee of
$31.50 for each regular account and $34.50 for each retirement account
maintained for a participant. For the fiscal years ended June 30, 1998, 1997 and
1996 , Service Corporation charged SCIT aggregate fees of $________, $2,907,025
and $2,884,988. For the fiscal years ended June 30, 1998, 1997 and 1996 ,
Service Corporation charged Treasury Fund aggregate fees of $_________, $710,792
and $682,565 .
The Funds, or the Adviser (including any affiliate of the Adviser), or
both, may pay unaffiliated third parties for providing recordkeeping and other
administrative services with respect to accounts of participants in retirement
plans or other beneficial owners of Fund shares whose interests are held in an
omnibus account.
Scudder Trust Company, Two International Place, Boston, MA 02110-4103,
an affiliate of the Adviser provides services for certain retirement plan
accounts. The Funds each pay Scudder Trust Company an annual fee of $34.50 for
each account maintained for a participant. For the fiscal years ended June 30,
1998, 1997 and 1996, Scudder Trust Company's fees amounted to $__________,
$1,699,834 and $1,431,726 for SCIT and $__________, $525,821 and $447,05 for
Treasury Fund.
This Statement of Additional Information contains the information of
both Scudder Cash Investment Trust and Scudder U.S. Treasury Money Fund. Each
Fund, through its individual prospectus, offers only its own shares, yet it is
possible that one Fund might become liable for a misstatement regarding the
other Fund. The Trustees of each Fund have considered this, and have approved
the use of this Statement of Additional Information.
Each Fund's prospectus and this combined Statement of Additional
Information omit certain information contained in the Registration Statements
which the Funds have filed with the SEC under the Securities Act of 1933 and
reference is hereby made to the Registration Statements for further information
with respect to the Funds and the securities offered hereby. These Registration
Statements are available for inspection by the public at the offices of the SEC
in Washington, D.C.
FINANCIAL STATEMENTS
Scudder Cash Investment Trust
The financial statements, including the investment portfolio, of
Scudder Cash Investment Trust, together with the Report of Independent
Accountants, Financial Highlights and notes to financial statements are
incorporated by reference and attached hereto on pages 6 through 17, inclusive,
in the Annual Report to the Shareholders of the Fund dated June 30, 1997, and
are hereby deemed to be a part of this combined Statement of Additional
Information.
Scudder U.S. Treasury Money Fund
The financial statements, including the investment portfolio, of
Scudder U.S. Treasury Money Fund, together with the Report of Independent
Accountants, Financial Highlights and notes to financial statements are
incorporated by reference and attached hereto on pages __ through ___,
inclusive, in the Annual Report to the Shareholders of the Fund dated June 30,
1998, and are hereby deemed to be a part of this combined Statement of
Additional Information.
46
<PAGE>
APPENDIX
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Ratings of Municipal Obligations
The six highest ratings of Moody's for municipal bonds are Aaa, Aa, A,
Baa, Ba and B. Bonds rated Aaa are judged by Moody's to be of the best quality.
Bonds rated Aa are judged to be of high quality by all standards. Together with
the Aaa group, they comprise what are generally known as high-quality bonds.
Moody's states that Aa bonds are rated lower than the best bonds because margins
of protection or other elements make long-term risks appear somewhat larger than
for Aaa municipal bonds. Municipal bonds which are rated A by Moody's possess
many favorable investment attributes and are considered "upper medium grade
obligations." Factors giving security to principal and interest of A rated
municipal bonds are considered adequate, but elements may be present which
suggest a susceptibility to impairment sometime in the future. Securities rated
Baa are considered medium grade, with factors giving security to principal and
interest adequate at present but may be unreliable over any period of time. Such
bonds have speculative elements as well as investment-grade characteristics.
Securities rated Ba or below by Moody's are considered below investment grade,
with factors giving security to principal and interest inadequate and
potentially unreliable over any period of time. Such securities are commonly
referred to as "junk" bonds and as such they carry a high margin of risk.
Moody's ratings for municipal notes and other short-term loans are
designated Moody's Investment Grade (MIG). This distinction is in recognition of
the differences between short-term and long-term credit risk. Loans bearing the
designation MIG1 are of the best quality, enjoying strong protection by
establishing cash flows of funds for their servicing or by established and
broad-based access to the market for refinancing, or both. Loans bearing the
designation MIG2 are of high quality, with margins of protection ample although
not as large as in the preceding group.
The six highest ratings of S&P for municipal bonds are AAA (Prime), AA
(High-grade), A (Good-grade), BBB (Investment-grade) and BB and B (Below
investment-grade). Bonds rated AAA have the highest rating assigned by S&P to a
municipal obligation. Capacity to pay interest and repay principal is extremely
strong. Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in a small degree. Bonds
rated A have a strong capacity to pay principal and interest, although they are
somewhat more susceptible to the adverse effects of changes in circumstances and
economic conditions. Bonds rated BBB have an adequate capacity to pay principal
and interest. Adverse economic conditions or changing circumstances are likely
to lead to a weakened capacity to pay interest and repay principal for bonds of
this category than for bonds of higher rated categories. Securities rated BB or
below by S&P are considered below investment grade, with factors giving security
to principal and interest inadequate and potentially unreliable over any period
of time. Such securities are commonly referred to as "junk" bonds and as such
they carry a high margin of risk.
S&P's top ratings for municipal notes issued after July 29, 1984 are
SP-1 and SP-2. The designation SP-1 indicates a very strong capacity to pay
principal and interest. A "+" is added for those issues determined to possess
overwhelming safety characteristics. An "SP-2" designation indicates a
satisfactory capacity to pay principal and interest.
The six highest ratings of Fitch for municipal bonds are AAA, AA, A,
BBB, BB and B. 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 `f-1+.' 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,
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<PAGE>
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. Securities
rated BB or below by Fitch are considered below investment grade, with factors
giving security to principal and interest inadequate and potentially unreliable
over any period of time. Such securities are commonly referred to as "junk"
bonds and as such they carry a high margin of risk.
Commercial Paper Ratings
Commercial paper rated A-1 or better by S&P has the following
characteristics: liquidity ratios are adequate to meet cash requirements;
long-term senior debt is rated "A" or better, although in some cases "BBB"
credits may be allowed; the issuer has access to at least two additional
channels of borrowing; and basic earnings and cash flow have an upward trend
with allowance made for unusual circumstances. Typically, the issuer's industry
is well established and the issuer has a strong position within the industry.
The reliability and quality of management are unquestioned.
The rating Prime-1 is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigning ratings are the
following: (1) evaluation of the management of the issuer; (2) economic
evaluation of the issuer's industry or industries and an appraisal of
speculative-type risks which may be inherent in certain areas; (3) evaluation of
the issuer's products in relation to competition and customer acceptance; (4)
liquidity; (5) amount and quality of long-term debt; (6) trend of earnings over
a period of ten years; (7) financial strength of a parent company and the
relationship which exists with the issuer; and (8) recognition by the management
of obligations which may be present or may arise as a result of public interest
questions and preparations to meet such obligations.
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+.
Relative strength or weakness of the above factors determine how the
issuer's commercial paper is rated within the above categories.
<PAGE>
[insert SFI SAI here, if applicable]
<PAGE>
SCUDDER CASH INVESTMENT TRUST
PART C. OTHER INFORMATION
<TABLE>
<S> <C>
<CAPTION>
Item 24. Financial Statements and Exhibits
- -------- ---------------------------------
a. Financial Statements:
Included in Part A of this Registration Statement:
Financial Highlights for the ten fiscal years ended June 30, 1998, to be filed
by amendment.
Included in Part B of this Registration Statement:
Investment Portfolio as of June 30, 1998, to be filed by amendment.
Statement of Assets and Liabilities as of June 30, 1998, to be filed by
amendment.
Statement of Operations for the fiscal year ended June 30, 1998, to be filed
by amendment.
Statements of Changes in Net Assets for the two fiscal years ended June 30,
1997, to be filed by amendment.
Financial Highlights for the ten fiscal years ended June 30, 1998, to be filed
by amendment.
Notes to Financial Statements, to be filed by amendment.
Report of Independent Accountants, to be filed by amendment.
Statements, schedules and historical information other than those listed above have
been omitted since they are either not applicable or are not required.
b. Exhibits:
All references are to the Registrant's Registration Statement on Form N-1A filed with
the Securities and Exchange Commission on December 12, 1975. File Nos. 2-5516 &
811-2613 (the "Registration Statement").
1. Amended and Restated Declaration of Trust dated November 3, 1987
(Incorporated by reference to Post-Effective Amendment No. 31 to the
Registration Statement.)
2. (a)(1) By-Laws amended as of June 30, 1979.
(Incorporated by reference to Post-Effective Amendment No. 31 to the
Registration Statement.)
(a)(2) Amendment to the By-Laws dated August 13, 1991.
(Incorporated by reference to Post-Effective Amendment No. 31 to the
Registration Statement.)
(a)(3) Amendment to the By-Laws dated November 12, 1991.
(Incorporated by reference to Post-Effective Amendment No. 31 to the
Registration Statement.)
3. Inapplicable.
Part C - Page 1
<PAGE>
4. Specimen certificate representing shares of beneficial interest of $.01 par
value.
(Incorporated by reference to Post-Effective Amendment No. 31 to the
Registration Statement.)
5. Investment Advisory Agreement with Scudder, Stevens & Clark Ltd. dated
November 12, 1985.
(Incorporated by reference to Post-Effective Amendment No. 31 to the
Registration Statement.)
(a)(1) Investment Advisory Agreement between the Registrant on behalf of
Scudder Cash Investment Trust and Scudder Kemper Investments dated
December 31, 1997 is filed herein.
6. Underwriting Agreement with Scudder Investor Services, Inc. (formerly
Scudder Fund Distributors, Inc.) dated July 20, 1976.
(Incorporated by reference to Post-Effective Amendment No. 31 to the
Registration Statement.)
7. Inapplicable.
8. (a)(1) Custodian Contract with State Street Bank and Trust Company dated
March 19, 1980.
(Incorporated by reference to Post-Effective Amendment No. 31 to the
Registration Statement.)
(a)(2) Amendment to the Custodian Contract with State Street Bank and Trust
Company dated August 11, 1987.
(Incorporated by reference to Post-Effective Amendment No. 31 to the
Registration Statement.)
(a)(3) Amendment to the Custodian Contract with State Street Bank and Trust
Company dated August 9, 1988.
(Incorporated by reference to Post-Effective Amendment No. 31 to the
Registration Statement.)
(a)(4) Fee schedule for Exhibit 8(a)(l).
(Incorporated by reference to Post-Effective Amendment No. 31 to the
Registration Statement.)
(a)(5) Amendment to the Custodian Contract with State Street Bank and Trust
Company dated November 13, 1990.
(Incorporated by reference to Post-Effective Amendment No. 31 to the
Registration Statement.)
(a)(6) Fee schedule for Exhibit 8(a)(1).
(Incorporated by reference to Exhibit 8(a)(6) to Post-Effective
Amendment No. 29 to the Registration Statement.)
(b)(1) Subcustodian Agreement between State Street Bank and Trust Company
and The Bank of New York, London office, dated March 27, 1979 and
Fee Schedule.
(Incorporated by reference to Post-Effective Amendment No. 31 to the
Registration Statement.)
Part C - Page 2
<PAGE>
9. (a)(1) Transfer Agency and Service Agreement with
Scudder Service Corporation dated October 2, 1989.
(Incorporated by reference to Post-Effective Amendment No. 31 to the
Registration Statement.)
(a)(2) Fee schedule for Exhibit 9(a)(1).
(Incorporated by reference to Post-Effective Amendment No. 31 to the
Registration Statement.)
(a)(3) Fee schedule for Exhibit 9(a)(1).
(Incorporated by reference to Post-Effective Amendment No. 31 to the
Registration Statement.)
(a)(4) Form of revised fee schedule dated October 1, 1996 for Exhibit
9(a)(1).
(Incorporated by reference to Post-Effective Amendment No. 31 to the
Registration Statement.)
(b)(1) COMPASS Service Agreement with Scudder Trust Company dated January
1, 1990 is filed herein.
(b)(2) Fee schedule for Exhibit 9(b)(1).
(Incorporated by reference to Post-Effective Amendment No. 31 to the
Registration Statement.)
(b)(3) Shareholder Services Agreement with Charles Schwab & Co., Inc. dated
June 1, 1990.
(Incorporated by reference to Post-Effective Amendment No. 31 to the
Registration Statement.)
(b)(4) COMPASS Service Agreement with Scudder Trust Company dated October
1, 1995.
(Incorporated by reference to Post-Effective Amendment No. 31 to the
Registration Statement.)
(b)(5) Form of revised fee schedule dated October 1, 1996 for Exhibit
9(b)(4).
(Incorporated by reference to Post-Effective Amendment No. 31 to the
Registration Statement.)
(c) Inapplicable.
(d) Fund Accounting Services Agreement between the Registrant and
Scudder Financial Accounting Corporation dated August 1, 1994.
(Incorporated by reference to Exhibit 9(d) to Post-Effective
Amendment No. 29 to the Registration Statement.)
10. Inapplicable.
11. Consent of Independent Accountants to be filed by amendment.
12. Inapplicable.
13. Inapplicable.
Part C - Page 3
<PAGE>
14. (a) Scudder Flexi-Plan for Corporations and Self-Employed Individuals.
(Incorporated by reference to Post-Effective Amendment No. 31 to the
Registration Statement.)
(b) Scudder Individual Retirement Plan.
(Incorporated by reference to Post-Effective Amendment No. 31 to the
Registration Statement.)
(c) Scudder Funds 403(b) Plan.
(Incorporated by reference to Post-Effective Amendment No. 31 to the
Registration Statement.)
(d) Scudder Employer-Select 403(b) Plan.
(Incorporated by reference to Post-Effective Amendment No. 31 to the
Registration Statement.)
(e) Scudder Cash or Deferred Profit Sharing Plan under Section 401(k).
(Incorporated by reference to Post-Effective Amendment No. 31 to the
Registration Statement.)
15. Inapplicable.
16. Schedule for Computation of Performance Quotation.
(Incorporated by reference to Post-Effective Amendment No. 31 to the
Registration Statement.)
17. Financial Data Schedule to be filed by amendment.
18. Inapplicable.
19. Power of Attorney filed as part of Post-Effective Amendment No. 25 to the
Registration Statement filed on August 28, 1991 is filed herein and
Post-Effective Amendment No. 31 to this Registration Statement.
Item 25. Persons Controlled by or under Common Control with Registrant
- -------- -------------------------------------------------------------
None
Item 26. Number of Holders of Securities (as of July 31, 1998).
- -------- ------------------------------------------------------
(1) (2)
Title of Class Number of Record Shareholders
-------------- -----------------------------
Shares of beneficial interest
par value $.01 per share 137,172
</TABLE>
Item 27. Indemnification.
- -------- ----------------
A policy of insurance covering Scudder Kemper Investments,
Inc., its affiliates including Scudder Investor Services,
Inc., and all of the registered investment companies advised
by Scudder Kemper Investments, Inc., insures the Registrant's
directors and officers and others against liability arising by
reason of an alleged breach of duty caused by any negligent
act, error or accidental omission in the scope of their
duties.
Article IV of Registrant's Declaration of Trust states as
follows:
Part C - Page 4
<PAGE>
<TABLE>
<S> <C>
Section 4.1. No Personal Liability of Shareholders, Trustees, Etc.
------------------------------------------------------------------
</TABLE>
No Shareholder shall be subject to any personal liability
whatsoever to any Person in connection with Trust Property or
the acts, obligations or affairs of the Trust. No Trustee,
officer, employee or agent of the Trust shall be subject to
any personal liability whatsoever to any Person, other than to
the Trust or its Shareholders, in connection with Trust
Property or the affairs of the Trust, save only that arising
from bad faith, willful misfeasance, gross negligence or
reckless disregard of his duties with respect to such Person;
and all such Persons shall look solely to the Trust Property
for satisfaction of claims of any nature arising in connection
with the affairs of the Trust. If any Shareholder, Trustee,
officer, employee, or agent, as such, of the Trust, is made a
party to any suit or proceeding to enforce any such liability
of the Trust, he shall not, on account thereof, be held to any
personal liability. The Trust shall indemnify and hold each
Shareholder harmless from and against all claims and
liabilities, to which such Shareholder may become subject by
reason of his being or having been a Shareholder, and shall
reimburse such Shareholder for all legal and other expenses
reasonably incurred by him in connection with any such claim
or liability. The indemnification and reimbursement required
by the preceding sentence shall be made only out of the assets
of the one or more Series of which the Shareholder who is
entitled to indemnification or reimbursement was a Shareholder
at the time the act or event occurred which gave rise to the
claim against or liability of said Shareholder. The rights
accruing to a Shareholder under this Section 4.1 shall not
impair any other right to which such Shareholder may be
lawfully entitled, nor shall anything herein contained
restrict the right of the Trust to indemnify or reimburse a
Shareholder in any appropriate situation even though not
specifically provided herein.
Section 4.2. Non-Liability of Trustees, Etc.
------------ -------------------------------
No Trustee, officer, employee or agent of the Trust shall be
liable to the Trust, its Shareholders, or to any Shareholder,
Trustee, officer, employee, or agent thereof for any action or
failure to act (including without limitation the failure to
compel in any way any former or acting Trustee to redress any
breach of trust) except for his own bad faith, willful
misfeasance, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
Section 4.3. Mandatory Indemnification.
------------ --------------------------
(a) Subject to the exceptions and limitations contained
in paragraph (b) below:
(i) every person who is, or has been, a Trustee
or officer of the Trust shall be indemnified
by the Trust to the fullest extent permitted
by law against all liability and against all
expenses reasonably incurred or paid by him
in connection with any claim, action, suit
or proceeding in which he becomes involved
as a party or otherwise by virtue of his
being or having been a Trustee or officer
and against amounts paid or incurred by him
in the settlement thereof;
(ii) the words "claim," "action," "suit," or
"proceeding" shall apply to all claims,
actions, suits or proceedings (civil,
criminal, administrative, or other,
including appeals), actual or threatened;
and the words "liability" and "expenses"
shall include, without limitation,
attorneys' fees, costs, judgments, amounts
paid in settlement, fines, penalties and
other liabilities.
(b) No indemnification shall be provided hereunder to a
Trustee or officer:
(i) any liability to the Trust, a Series thereof, or the
Shareholders by reason of a final adjudication by a
court or any other body before which a proceeding was
brought that he engaged in willful misfeasance, bad
faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office;
Part C - Page 5
<PAGE>
(ii) with respect to any matter as to which he shall have
been finally adjudicated not to have acted in good
faith in the reasonable belief that his action was in
the best interest of the Trust;
(iii) in the event of a settlement or other disposition not
involving a final adjudication as provided in
paragraph (b)(i) or (b)(ii) resulting in a payment by
a Trustee or officer, unless there has been a
determination that such Trustee or officer did not
engage in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties
involved in the conduct of his office:
(A) by the court or other body approving the
settlement or other disposition; or
(B) based upon a review of readily available
facts (as opposed to a full trial-type
inquiry) by (x) vote of a majority of the
Disinterested Trustees acting on the matter
(provided that a majority of the
Disinterested Trustees then in office act on
the matter) or (y) written opinion of
independent legal counsel.
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be
severable, shall not affect any other rights to which any
Trustee or officer may now or hereafter be entitled, shall
continue as to a person who has ceased to be such Trustee or
officer and shall inure to the benefit of the heirs,
executors, administrators and assigns of such a person.
Nothing contained herein shall affect any rights to
indemnification to which personnel of the Trust other than
Trustees and officers may be entitled by contract or otherwise
under law.
(d) Expenses of preparation and presentation of a defense to any
claim, action, suit or proceeding of the character described
in paragraph (a) of this Section 4.3 may be advanced by the
Trust prior to final disposition thereof upon receipt of an
undertaking by or on behalf of the recipient, to repay such
amount if it is ultimately determined that he is not entitled
to indemnification under this Section 4.3, provided that
either:
(i) such undertaking is secured by a surety bond or some
other appropriate security provided by the recipient,
or the Trust shall be insured against losses arising
out of any such advances; or
(ii) a majority of the Disinterested Trustees acting on
the matter (providing that a majority of the
Disinterested Trustees act on the matter) or an
independent legal counsel in a written opinion shall
determine, based upon a review of readily available
facts (as opposed to a full trial-type inquiry), that
there is reason to believe that the recipient
ultimately will be found entitled to indemnification.
As used in this Section 4.3, a "Disinterested Trustee" is one
who is not (i) an Interested Person of the Trust (including
anyone who has been exempted from being an Interested Person
by any rule, regulation or order of the Commission, or (ii)
involved in the claim, action, suit or proceeding.
Item 28. Business or Other Connections of Investment Adviser
- -------- ---------------------------------------------------
Scudder Kemper Investments, Inc. has stockholders and
employees who are denominated officers but do not as such have
corporation-wide responsibilities. Such persons are not
considered officers for the purpose of this Item 28.
<TABLE>
<S> <C>
<CAPTION>
Business and Other Connections of Board
Name of Directors of Registrant's Adviser
---- ------------------------------------
Stephen R. Beckwith Treasurer and Chief Financial Officer, Scudder Kemper Investments, Inc.**
Vice President and Treasurer, Scudder Fund Accounting Corporation*
Part C - Page 6
<PAGE>
Director, Scudder Stevens & Clark Corporation**
Director and Chairman, Scudder Defined Contribution Services, Inc.**
Director and President, Scudder Capital Asset Corporation**
Director and President, Scudder Capital Stock Corporation**
Director and President, Scudder Capital Planning Corporation**
Director and President, SS&C Investment Corporation**
Director and President, SIS Investment Corporation**
Director and President, SRV Investment Corporation**
Lynn S. Birdsong Director and Vice President, Scudder Kemper Investments, Inc.**
Director, Scudder, Stevens & Clark (Luxembourg) S.A.#
Laurence W. Cheng Director, Scudder Kemper Investments, Inc.**
Member, Corporate Executive Board, Zurich Insurance Company of Switzerland##
Director, ZKI Holding Corporation xx
Steven Gluckstern Director, Scudder Kemper Investments, Inc.**
Member, Corporate Executive Board, Zurich Insurance Company of Switzerland##
Director, Zurich Holding Company of America o
Rolf Huppi Director, Chairman of the Board, Scudder Kemper Investments, Inc.**
Member, Corporate Executive Board, Zurich Insurance Company of Switzerland##
Director, Chairman of the Board, Zurich Holding Company of Americao
Director, ZKI Holding Corporation xx
Kathryn L. Quirk Director, Chief Legal Officer, Chief Compliance Officer and Secretary, Scudder Kemper
Investments, Inc.**
Director, Senior Vice President & Assistant Clerk, Scudder Investor Services, Inc.*
Director, Vice President & Secretary, Scudder Fund Accounting Corporation*
Director, Vice President & Secretary, Scudder Realty Holdings Corporation*
Director & Assistant Clerk, Scudder Service Corporation*
Director, SFA, Inc.*
Vice President, Director & Assistant Secretary, Scudder Precious Metals, Inc.***
Director, Scudder, Stevens & Clark Japan, Inc.***
Director, Vice President and Secretary, Scudder, Stevens & Clark of Canada, Ltd.***
Director, Vice President and Secretary, Scudder Canada Investor Services Limited***
Director, Vice President and Secretary, Scudder Realty Advisers, Inc. x
Director and Secretary, Scudder, Stevens & Clark Corporation**
Director and Secretary, Scudder, Stevens & Clark Overseas Corporation oo
Director and Secretary, SFA, Inc.*
Director, Vice President and Secretary, Scudder Defined Contribution Services, Inc.**
Director, Vice President and Secretary, Scudder Capital Asset Corporation**
Director, Vice President and Secretary, Scudder Capital Stock Corporation**
Director, Vice President and Secretary, Scudder Capital Planning Corporation**
Director, Vice President and Secretary, SS&C Investment Corporation**
Director, Vice President and Secretary, SIS Investment Corporation**
Director, Vice President and Secretary, SRV Investment Corporation**
Director, Vice President and Secretary, Scudder Brokerage Services, Inc.*
Director, Korea Bond Fund Management Co., Ltd.+
Markus Rohrbasser Director, Scudder Kemper Investments, Inc.**
Member Corporate Executive Board, Zurich Insurance Company of Switzerland##
President, Director, Chairman of the Board, ZKI Holding Corporation xx
Cornelia M. Small Vice President, Scudder Kemper Investments, Inc.**
Part C - Page 7
<PAGE>
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 Corporationoo
President and Director, Scudder, Stevens & Clark Corporation**
Director, Scudder Realty Advisors, Inc.x
Director, IBJ Global Investment Management S.A. Luxembourg, Grand-Duchy of Luxembourg
* Two International Place, Boston, MA
x 333 South Hope Street, Los Angeles, CA
** 345 Park Avenue, New York, NY
# Societe Anonyme, 47, Boulevard Royal, L-2449 Luxembourg, R.C. Luxembourg B 34.564
*** Toronto, Ontario, Canada
oo 20-5, Ichibancho, Chiyoda-ku, Tokyo, Japan
### 1-7, Kojimachi, Chiyoda-ku, Tokyo, Japan
xx 222 S. Riverside, Chicago, IL
o Zurich Towers, 1400 American Ln., Schaumburg, IL
+ P.O. Box 309, Upland House, S. Church St., Grand Cayman, British West Indies
## Mythenquai-2, P.O. Box CH-8022, Zurich, Switzerland
</TABLE>
Item 29. Principal Underwriters.
- -------- -----------------------
(a)
Scudder Investor Services, Inc. acts as principal underwriter of the
Registrant's shares and also acts as principal underwriter for other
funds managed by Scudder Kemper Investments, Inc.
(b)
The Underwriter has employees who are denominated officers of an
operational area. Such persons do not have corporation-wide
responsibilities and are not considered officers for the purpose of
this Item 29.
<TABLE>
<S> <C> <C> <C>
<CAPTION>
(1) (2) (3)
Name and Principal Position and Offices with Positions and
Business Address Scudder Investor Services, Inc. Offices with Registrant
---------------- ------------------------------- -----------------------
William S. Baughman Vice President None
Two International Place
Boston, MA 02110
Lynn S. Birdsong Senior Vice President None
345 Park Avenue
New York, NY 10154
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
Part C - Page 8
<PAGE>
Name and Principal Position and Offices with Positions and
Business Address Scudder Investor Services, Inc. Offices with Registrant
---------------- ------------------------------- -----------------------
Richard W. Desmond Vice President None
345 Park Avenue
New York, NY 10154
Paul J. Elmlinger Senior Vice President and Assistant None
345 Park Avenue Clerk
New York, NY 10154
Philip S. Fortuna Vice President None
101 California Street
San Francisco, CA 94111
William F. Glavin Vice President None
Two International Place
Boston, MA 02110
Margaret D. Hadzima Assistant Treasurer None
Two International Place
Boston, MA 02110
Thomas W. Joseph Director, Vice President, Treasurer Vice President and
Two International Place and Assistant Clerk Assistant Secretary
Boston, MA 02110
Thomas F. McDonough Clerk Vice President and
Two International Place Secretary
Boston, MA 02110
Daniel Pierce Director, Vice President President
Two International Place and Assistant Treasurer
Boston, MA 02110
Kathryn L. Quirk Director, Senior Vice President and Vice President
345 Park Avenue Assistant Clerk
New York, NY 10154
Robert A. Rudell Vice President None
Two International Place
Boston, MA 02110
William M. Thomas Vice President None
Two International Place
Boston, MA 02110
Benjamin Thorndike Vice President None
Two International Place
Boston, MA 02110
Part C - Page 9
<PAGE>
Name and Principal Position and Offices with Positions and
Business Address Scudder Investor Services, Inc. Offices with Registrant
---------------- ------------------------------- -----------------------
Sydney S. Tucker Vice President None
Two International Place
Boston, MA 02110
Linda J. Wondrack Vice President None
Two International Place
Boston, MA 02110
(c)
(1) (2) (3) (4) (5)
Net Underwriting Compensation on
Name of Principal Discounts and Redemptions Brokerage Other
Underwriter Commissions and Repurchases Commissions Compensation
----------- ----------- --------------- ----------- ------------
Scudder Investor None None None None
Services, Inc.
</TABLE>
Item 30. Location of Accounts and Records.
- -------- ---------------------------------
Certain accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 Act and the Rules
promulgated thereunder are maintained by Scudder, Stevens &
Clark, Inc., Two International Place, Boston, MA 02110.
Records relating to the duties of the Registrant's custodian
are maintained by State Street Bank and Trust Company,
Heritage Drive, North Quincy, Massachusetts.
Item 31. Management Services.
- -------- --------------------
Inapplicable.
Item 32. Undertakings.
- -------- -------------
Inapplicable.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this amendment to its Registration
Statement pursuant to Rule 485(a) under the Securities Act of 1933 and has duly
caused this amendment to its Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Boston, and the
Commonwealth of Massachusetts, on the 13th day of August, 1998.
SCUDDER CASH INVESTMENT TRUST
By /s/Thomas F. McDonough
----------------------
Thomas F. McDonough, Vice President and
Secretary
Pursuant to the requirements of the Securities Act of 1933, this
amendment to its Registration Statement has been signed below by the following
persons in the capabilities and on the dates indicated.
<TABLE>
<S> <C> <C>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
/s/Daniel Pierce
- --------------------------------------
Daniel Pierce* President (Principal Executive August 13, 1998
Officer) and Trustee
/s/Henry P. Becton, Jr.
- --------------------------------------
Henry P. Becton, Jr.* Trustee August 13, 1998
/s/Dawn-Marie Driscoll
- --------------------------------------
Dawn-Marie Driscoll* Trustee August 13, 1998
/s/Peter B. Freeman
- --------------------------------------
Peter B. Freeman* Trustee August 13, 1998
/s/George M. Lovejoy, Jr.
- --------------------------------------
George M. Lovejoy, Jr.* Trustee August 13, 1998
/s/Welsey W. Marple, Jr.
- --------------------------------------
Welsey W. Marple, Jr.* Trustee August 13, 1998
/s/Jean C. Tempel
- --------------------------------------
Jean C. Tempel* Trustee August 13, 1998
/s/Kathryn L. Quirk
- --------------------------------------
Kathryn L. Quirk* Trustee, Vice President and August 13, 1998
Assistant Secretary
- --------------------------------------
John R. Hebble Treasurer (Principal Financial August __, 1998
Officer)
</TABLE>
*By: /s/Thomas F. McDonough
----------------------
Thomas F. McDonough,
Attorney-in-fact pursuant to power of attorney included with
the signature page of Post-Effective Amendment No. 25 to the
Registration Statement filed August 28, 1991, Post-Effective
Amendment No. 31 to the Registration Statement filed
October 29, 1997.
<PAGE>
File No. 2-55166
File No. 811-2613
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM N-1A
POST-EFFECTIVE AMENDMENT NO. 32
TO REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AND
AMENDMENT NO. 22
TO REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
SCUDDER CASH INVESTMENT TRUST
<PAGE>
SCUDDER CASH INVESTMENT TRUST
EXHIBIT INDEX
Exhibit 5(a)(1)
Scudder Cash Investment Trust
Two International Place
Boston, Massachusetts 02110
December 31, 1997
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Scudder Cash Investment Trust
Ladies and Gentlemen:
Scudder Cash Investment Trust (the "Trust") has been established as a
Massachusetts business trust to engage in the business of an investment company.
Pursuant to the Trust's Declaration of Trust, as amended from time-to-time (the
"Declaration"), the Board of Trustees may divide the Trust's shares of
beneficial interest, par value $.01 per share, (the "Shares") into separate
series, or funds. Series may be abolished and dissolved, and additional series
established, from time to time by action of the Trustees.
The Trust has selected you to act as the sole investment manager of the
Trust and to provide certain other services, as more fully set forth below, and
you have indicated that you are willing to act as such investment manager and to
perform such services under the terms and conditions hereinafter set forth.
Accordingly, the Trust agrees with you as follows:
1. Delivery of Documents. The Trust engages in the business of investing
and reinvesting the assets of the Trust in the manner and in accordance with the
investment objectives, policies and restrictions specified in the currently
effective Prospectus (the "Prospectus") and Statement of Additional Information
(the "SAI") included in the Trust's Registration Statement on Form N-1A, as
amended from time to time, (the "Registration Statement") filed by the Trust
under the Investment Company Act of 1940, as amended, (the "1940 Act") and the
Securities Act of 1933, as amended. Copies of the documents referred to in the
preceding sentence have been furnished to you by the Trust. The Trust has also
furnished you with copies properly certified or authenticated of each of the
following additional documents related to the Trust:
(a) The Declaration dated November 3, 1987, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof (the "By-Laws").
(c) Resolutions of the Trustees of the Trust and the shareholders of the Trust
selecting you as investment manager and approving the form of this
Agreement.
<PAGE>
The Trust will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements, if any, to the
foregoing, including the Prospectus, the SAI and the Registration Statement.
2. Sublicense to Use the Scudder Trademarks. As exclusive licensee of the
rights to use and sublicense the use of the "Scudder," "Scudder Kemper
Investments, Inc." and "Scudder, Stevens & Clark, Inc." trademarks (together,
the "Scudder Marks"), you hereby grant the Trust a nonexclusive right and
sublicense to use (i) the "Scudder" name and mark as part of the Trust's name
(the "Trust Name"), and (ii) the Scudder Marks in connection with the Trust's
investment products and services, in each case only for so long as this
Agreement, any other investment management agreement between you and the Trust,
or any extension, renewal or amendment hereof or thereof remains in effect, and
only for so long as you are a licensee of the Scudder Marks, provided however,
that you agree to use your best efforts to maintain your license to use and
sublicense the Scudder Marks. The Trust agrees that it shall have no right to
sublicense or assign rights to use the Scudder Marks, shall acquire no interest
in the Scudder Marks other than the rights granted herein, that all of the
Trust's uses of the Scudder Marks shall inure to the benefit of Scudder Trust
Company as owner and licensor of the Scudder Marks (the "Trademark Owner"), and
that the Trust shall not challenge the validity of the Scudder Marks or the
Trademark Owner's ownership thereof. The Trust further agrees that all services
and products it offers in connection with the Scudder Marks shall meet
commercially reasonable standards of quality, as may be determined by you or the
Trademark Owner from time to time, provided that you acknowledge that the
services and products the Trust rendered during the one-year period preceding
the date of this Agreement are acceptable. At your reasonable request, the Trust
shall cooperate with you and the Trademark Owner and shall execute and deliver
any and all documents necessary to maintain and protect (including but not
limited to in connection with any trademark infringement action) the Scudder
Marks and/or enter the Trust as a registered user thereof. At such time as this
Agreement or any other investment management agreement shall no longer be in
effect between you (or your successor) and the Trust, or you no longer are a
licensee of the Scudder Marks, the Trust shall (to the extent that, and as soon
as, it lawfully can) cease to use the Trust Name or any other name indicating
that it is advised by, managed by or otherwise connected with you (or any
organization which shall have succeeded to your business as investment manager)
or the Trademark Owner. In no event shall the Trust use the Scudder Marks or any
other name or mark confusingly similar thereto (including, but not limited to,
any name or mark that includes the name "Scudder") if this Agreement or any
other investment advisory agreement between you (or your successor) and the
Trust is terminated.
3. Portfolio Management Services. As manager of the assets of the Trust,
you shall provide continuing investment management of the assets of the Trust in
accordance with the investment objectives, policies and restrictions set forth
in the Prospectus and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended, (the "Code") relating to regulated
investment companies and all rules and regulations thereunder; and all other
applicable federal and state laws and regulations of which you have knowledge;
subject always to policies and instructions adopted by the Trust's Board of
Trustees. In connection therewith, you shall use reasonable efforts to manage
the Trust so that it will qualify as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder. The Trust shall have
the benefit of the investment analysis and research, the review of current
economic conditions and trends and the consideration of long-range investment
policy generally available to your investment advisory clients. In managing the
Trust in accordance with the requirements set forth in this section 3, you shall
be entitled to receive and act upon advice of counsel to the Trust or counsel to
you. You shall also make available to the Trust promptly upon request all of the
Trust's investment records and ledgers as are necessary to assist the Trust in
complying with the requirements of the 1940 Act and other applicable laws. To
the extent required by law, you shall furnish to regulatory authorities having
the requisite authority any information or reports in connection with the
services provided pursuant to this
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Agreement which may be requested in order to ascertain whether the operations of
the Trust are being conducted in a manner consistent with applicable laws and
regulations.
You shall determine the securities, instruments, investments, currencies,
repurchase agreements, futures, options and other contracts relating to
investments to be purchased, sold or entered into by the Trust and place orders
with broker-dealers, foreign currency dealers, futures commission merchants or
others pursuant to your determinations and all in accordance with Trust policies
as expressed in the Registration Statement. You shall determine what portion of
the Trust's portfolio shall be invested in securities and other assets and what
portion, if any, should be held uninvested.
You shall furnish to the Trust's Board of Trustees periodic reports on the
investment performance of the Trust and on the performance of your obligations
pursuant to this Agreement, and you shall supply such additional reports and
information as the Trust's officers or Board of Trustees shall reasonably
request.
4. Administrative Services. In addition to the portfolio management
services specified above in section 3, you shall furnish at your expense for the
use of the Trust such office space and facilities in the United States as the
Trust may require for its reasonable needs, and you (or one or more of your
affiliates designated by you) shall render to the Trust administrative services
necessary for operating as an open-end investment company and not provided by
persons not parties to this Agreement including, but not limited to, preparing
reports to and meeting materials for the Trust's Board of Trustees and reports
and notices to Trust shareholders; supervising, negotiating contractual
arrangements with, to the extent appropriate, and monitoring the performance of,
accounting agents, custodians, depositories, transfer agents and pricing agents,
accountants, attorneys, printers, underwriters, brokers and dealers, insurers
and other persons in any capacity deemed to be necessary or desirable to Trust
operations; preparing and making filings with the Securities and Exchange
Commission (the "SEC") and other regulatory and self-regulatory organizations,
including, but not limited to, preliminary and definitive proxy materials,
post-effective amendments to the Registration Statement, semi-annual reports on
Form N-SAR and notices pursuant to Rule 24f-2 under the 1940 Act; overseeing the
tabulation of proxies by the Trust's transfer agent; assisting in the
preparation and filing of the Trust's federal, state and local tax returns;
preparing and filing the Trust's federal excise tax return pursuant to Section
4982 of the Code; providing assistance with investor and public relations
matters; monitoring the valuation of portfolio securities and the calculation of
net asset value; monitoring the registration of Shares of the Trust under
applicable federal and state securities laws; maintaining or causing to be
maintained for the Trust all books, records and reports and any other
information required under the 1940 Act, to the extent that such books, records
and reports and other information are not maintained by the Trust's custodian or
other agents of the Trust; assisting in establishing the accounting policies of
the Trust; assisting in the resolution of accounting issues that may arise with
respect to the Trust's operations and consulting with the Trust's independent
accountants, legal counsel and the Trust's other agents as necessary in
connection therewith; establishing and monitoring the Trust's operating expense
budgets; reviewing the Trust's bills; processing the payment of bills that have
been approved by an authorized person; assisting the Trust in determining the
amount of dividends and distributions available to be paid by the Trust to its
shareholders, preparing and arranging for the printing of dividend notices to
shareholders, and providing the transfer and dividend paying agent, the
custodian, and the accounting agent with such information as is required for
such parties to effect the payment of dividends and distributions; and otherwise
assisting the Trust as it may reasonably request in the conduct of the Trust's
business, subject to the direction and control of the Trust's Board of Trustees.
Nothing in this Agreement shall be deemed to shift to you or to diminish the
obligations of any agent of the Trust or any other person not a party to this
Agreement which is obligated to provide services to the Trust.
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5. Allocation of Charges and Expenses. Except as otherwise specifically
provided in this section 5, you shall pay the compensation and expenses of all
Trustees, officers and executive employees of the Trust (including the Trust's
share of payroll taxes) who are affiliated persons of you, and you shall make
available, without expense to the Trust, the services of such of your directors,
officers and employees as may duly be elected officers of the Trust, subject to
their individual consent to serve and to any limitations imposed by law. You
shall provide at your expense the portfolio management services described in
section 3 hereof and the administrative services described in section 4 hereof.
You shall not be required to pay any expenses of the Trust other than those
specifically allocated to you in this section 5. In particular, but without
limiting the generality of the foregoing, you shall not be responsible, except
to the extent of the reasonable compensation of such of the Trust's Trustees and
officers as are directors, officers or employees of you whose services may be
involved, for the following expenses of the Trust: organization expenses of the
Trust (including out-of-pocket expenses, but not including your overhead or
employee costs); fees payable to you and to any other Trust advisors or
consultants; legal expenses; auditing and accounting expenses; maintenance of
books and records which are required to be maintained by the Trust's custodian
or other agents of the Trust; telephone, telex, facsimile, postage and other
communications expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Trust in connection with membership in investment company trade
organizations; fees and expenses of the Trust's accounting agent, custodians,
subcustodians, transfer agents, dividend disbursing agents and registrars;
payment for portfolio pricing or valuation services to pricing agents,
accountants, bankers and other specialists, if any; expenses of preparing share
certificates and, except as provided below in this section 5, other expenses in
connection with the issuance, offering, distribution, sale, redemption or
repurchase of securities issued by the Trust; expenses relating to investor and
public relations; expenses and fees of registering or qualifying Shares of the
Trust for sale; interest charges, bond premiums and other insurance expense;
freight, insurance and other charges in connection with the shipment of the
Trust's portfolio securities; the compensation and all expenses (specifically
including travel expenses relating to Trust business) of Trustees, officers and
employees of the Trust who are not affiliated persons of you; brokerage
commissions or other costs of acquiring or disposing of any portfolio securities
of the Trust; expenses of printing and distributing reports, notices and
dividends to shareholders; expenses of printing and mailing Prospectuses and
SAIs of the Trust and supplements thereto; costs of stationery; any litigation
expenses; indemnification of Trustees and officers of the Trust; costs of
shareholders' and other meetings; and travel expenses (or an appropriate portion
thereof) of Trustees and officers of the Trust who are directors, officers or
employees of you to the extent that such expenses relate to attendance at
meetings of the Board of Trustees of the Trust or any committees thereof or
advisors thereto held outside of Boston, Massachusetts or New York, New York.
You shall not be required to pay expenses of any activity which is
primarily intended to result in sales of Shares of the Trust if and to the
extent that (i) such expenses are required to be borne by a principal
underwriter which acts as the distributor of the Trust's Shares pursuant to an
underwriting agreement which provides that the underwriter shall assume some or
all of such expenses, or (ii) the Trust shall have adopted a plan in conformity
with Rule 12b-1 under the 1940 Act providing that the Trust (or some other
party) shall assume some or all of such expenses. You shall be required to pay
such of the foregoing sales expenses as are not required to be paid by the
principal underwriter pursuant to the underwriting agreement or are not
permitted to be paid by the Trust (or some other party) pursuant to such a plan.
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6. Management Fee. For all services to be rendered, payments to be made and
costs to be assumed by you as provided in sections 3, 4 and 5 hereof, the Trust
shall pay you in United States Dollars on the last day of each month the unpaid
balance of a fee equal to the excess of 1/12 of 0.50 of 1 percent of the average
daily net assets as defined below of the Fund for such month; provided that, for
any calendar month during which the average of such values exceeds $250 million,
the fee payable for that month based on the portion of the average of such
values in excess of $250 million shall be 1/12 of 0.45 of 1 percent of such
portion; and provided that, for any calendar month during which the average of
such values exceeds $500 million, the fee payable for that month based on the
portion of the average of such values in excess of $500 million shall be 1/12 of
0.40 of 1 percent of such portion; and provided that, for any calendar month
during which the average of such values exceeds $1 billion, the fee payable for
that month based on the portion of the average of such values in excess of $1
billion shall be 1/12 of 0.35 of 1 percent of such portion over any compensation
waived by you from time to time (as more fully described below). You shall be
entitled to receive during any month such interim payments of your fee hereunder
as you shall request, provided that no such payment shall exceed 75 percent of
the amount of your fee then accrued on the books of the Trust and unpaid.
The "average daily net assets" of the Trust shall mean the average of the
values placed on the Trust's net assets as of 4:00 p.m. (New York time) on each
day on which the net asset value of the Trust is determined consistent with the
provisions of Rule 22c-1 under the 1940 Act or, if the Trust lawfully determines
the value of its net assets as of some other time on each business day, as of
such time. The value of the net assets of the Trust shall always be determined
pursuant to the applicable provisions of the Declaration and the Registration
Statement. If the determination of net asset value does not take place for any
particular day, then for the purposes of this section 6, the value of the net
assets of the Trust as last determined shall be deemed to be the value of its
net assets as of 4:00 p.m. (New York time), or as of such other time as the
value of the net assets of the Trust's portfolio may be lawfully determined on
that day. If the Trust determines the value of the net assets of its portfolio
more than once on any day, then the last such determination thereof on that day
shall be deemed to be the sole determination thereof on that day for the
purposes of this section 6.
You may waive all or a portion of your fees provided for hereunder and such
waiver shall be treated as a reduction in purchase price of your services. You
shall be contractually bound hereunder by the terms of any publicly announced
waiver of your fee, or any limitation of the Trust's expenses, as if such waiver
or limitation were fully set forth herein.
7. Avoidance of Inconsistent Position; Services Not Exclusive. In
connection with purchases or sales of portfolio securities and other investments
for the account of the Trust, neither you nor any of your directors, officers or
employees shall act as a principal or agent or receive any commission. You or
your agent shall arrange for the placing of all orders for the purchase and sale
of portfolio securities and other investments for the Trust's account with
brokers or dealers selected by you in accordance with Trust policies as
expressed in the Registration Statement. If any occasion should arise in which
you give any advice to clients of yours concerning the Shares of the Trust, you
shall act solely as investment counsel for such clients and not in any way on
behalf of the Trust.
Your services to the Trust pursuant to this Agreement are not to be deemed
to be exclusive and it is understood that you may render investment advice,
management and services to others. In acting under this Agreement, you shall be
an independent contractor and not an agent of the Trust. Whenever the Trust and
one or more other accounts or investment companies advised by the Manager have
available funds for investment, investments suitable and appropriate for each
shall be allocated in accordance with procedures
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believed by the Manager to be equitable to each entity. Similarly, opportunities
to sell securities shall be allocated in a manner believed by the Manager to be
equitable. The Trust recognizes that in some cases this procedure may adversely
affect the size of the position that may be acquired or disposed of for the
Trust.
8. Limitation of Liability of Manager. As an inducement to your undertaking
to render services pursuant to this Agreement, the Trust agrees that you shall
not be liable under this Agreement for any error of judgment or mistake of law
or for any loss suffered by the Trust in connection with the matters to which
this Agreement relates, provided that nothing in this Agreement shall be deemed
to protect or purport to protect you against any liability to the Trust or its
shareholders to which you would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of your duties, or
by reason of your reckless disregard of your obligations and duties hereunder.
Any person, even though also employed by you, who may be or become an employee
of and paid by the Trust shall be deemed, when acting within the scope of his or
her employment by the Trust, to be acting in such employment solely for the
Trust and not as your employee or agent.
9. Duration and Termination of This Agreement. This Agreement shall remain
in force until September 30, 1998, and continue in force from year to year
thereafter, but only so long as such continuance is specifically approved at
least annually (a) by the vote of a majority of the Trustees who are not parties
to this Agreement or interested persons of any party to this Agreement, cast in
person at a meeting called for the purpose of voting on such approval, and (b)
by the Trustees of the Trust, or by the vote of a majority of the outstanding
voting securities of the Trust. The aforesaid requirement that continuance of
this Agreement be "specifically approved at least annually" shall be construed
in a manner consistent with the 1940 Act and the rules and regulations
thereunder and any applicable SEC exemptive order therefrom.
This Agreement may be terminated with respect to the Trust at any time,
without the payment of any penalty, by the vote of a majority of the outstanding
voting securities of the Trust or by the Trust's Board of Trustees on 60 days'
written notice to you, or by you on 60 days' written notice to the Trust. This
Agreement shall terminate automatically in the event of its assignment.
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Agreement shall be
effective until approved in a manner consistent with the 1940 Act and rules and
regulations thereunder and any applicable SEC exemptive order therefrom.
11. Limitation of Liability for Claims. The Declaration, a copy of which,
together with all amendments thereto, is on file in the Office of the Secretary
of the Commonwealth of Massachusetts, provides that the name "Scudder Cash
Investment Trust" refers to the Trustees under the Declaration collectively as
Trustees and not as individuals or personally, and that no shareholder of the
Trust, or Trustee, officer, employee or agent of the Trust, shall be subject to
claims against or obligations of the Trust to any extent whatsoever, but that
the Trust estate only shall be liable.
You are hereby expressly put on notice of the limitation of liability as
set forth in the Declaration and you agree that the obligations assumed by the
Trust pursuant to this Agreement shall be limited in all cases to the Trust and
its assets, and you shall not seek satisfaction of any such obligation from the
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shareholders or any shareholder of the Trust or any other series of the Trust,
or from any Trustee, officer, employee or agent of the Trust. You understand
that the rights and obligations of each series, under the Declaration are
separate and distinct from those of any and all other series.
12. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
In interpreting the provisions of this Agreement, the definitions contained
in Section 2(a) of the 1940 Act (particularly the definitions of "affiliated
person," "assignment" and "majority of the outstanding voting securities"), as
from time to time amended, shall be applied, subject, however, to such
exemptions as may be granted by the SEC by any rule, regulation or order.
This Agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts, provided that nothing herein shall be construed
in a manner inconsistent with the 1940 Act, or in a manner which would cause the
Trust to fail to comply with the requirements of Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or management
agreements entered into between you and the Trust.
If you are in agreement with the foregoing, please execute the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding contract
effective as of the date of this Agreement.
Yours very truly,
Scudder Cash Investment Trust
By: /s/Daniel Pierce
--------------------
President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/Stephen R. Beckwith
-----------------------
Managing Director
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