UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM N-CSR
Investment Company Act file number 811-2959
SCUDDER TAX FREE MONEY FUND
---------------------------
(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) 295-2663
--------------
Salvatore Schiavone
Two International Place
Boston, Massachusetts 02110
---------------------------------------
(Name and Address of Agent for Service)
Date of fiscal year end: 5/31
Date of reporting period: 11/30/03
ITEM 1. REPORT TO STOCKHOLDERS
[Scudder Investments logo]
Scudder Tax-Free
Money Fund
|
| |
| Semiannual Report to Shareholders |
| November 30, 2003 |
|
This report must be preceded or accompanied by a prospectus. To obtain a prospectus for any of our funds, refer to the Account Management Resources information provided in the back of this booklet. We advise you to consider the fund's objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other important information about the fund. Please read the prospectus carefully before you invest.
An investment in this fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund. Please read this fund's prospectus for specific details regarding its risk profile.
Scudder Investments is part of Deutsche Asset Management, which is the marketing name in the US for the asset management activities of Deutsche Bank AG, Deutsche Investment Management Americas Inc., Deutsche Asset Management Inc., Deutsche Asset Management Investment Services Ltd., Deutsche Bank Trust Company Americas and Scudder Trust Company.
Fund shares are not FDIC-insured and are not deposits or other obligations of, or guaranteed by, any bank. Fund shares involve investment risk, including possible loss of principal.
Portfolio Management Review |
|
In the following interview, Lead Portfolio Manager Joseph Benevento and other members of the fund's investment team discuss the market environment and investment strategy for the fund's most recent semiannual period ended November 30, 2003.
Q: How did the fund perform over its most recent semiannual period?
A: Over the six-month period ended November 30, 2003, Scudder Tax-Free Money Fund's seven-day yield declined from 0.67% on May 31, 2003 to 0.45%, reflecting the Federal Open Market Committee (FOMC) decision to reduce the federal funds rate by another 0.25 percentage points on June 25, 2003. For the semiannual period ended November 30, Class S shares of the fund returned 0.18%. (This fund offers a variety of share classes. Please see the Financial Highlights beginning on page 17 for the performance of other share classes and more complete performance information. All performance is historical and does not guarantee future results. Current performance may be lower or higher than the performance data quoted. Please visit our Web sites for the product's most recent month-end performance: myScudder.com for S shares and aarp.scudder.com for AARP shares. The yield quotation more closely reflects the current earnings of the money market fund than the total return quotation. Yields fluctuate and are not guaranteed.)
Q: How would you describe the economic environment over the fund's most recent six-month period?
A: At the start of the period, amid disappointing manufacturing reports and declining consumer confidence - underscoring a gloomy employment picture - most market forecasters predicted that the Fed would reduce short-term interest rates by one half of a percentage point at its meetings in late June. Given that the federal funds rate was already at its lowest level since 1961, we thought that a 0.25 percentage point cut was more likely, and that is what occurred at the June 25 meeting. In the months following the Fed move, employment statistics turned more positive, manufacturing reports began to improve, and consumer confidence rose as the fiscal stimulus initiated by the Bush administration earlier in 2003 began to have an effect.
Q: What was the market environment for short-term municipal securities?
A: During the fund's semiannual period, the supply of short-term municipal paper increased sharply due to sluggish economic growth at the start of the period and a slowdown in individual state and local government tax collection. The state of California topped the list, issuing $12 billion of revenue anticipation warrants. California expects to issue additional notes during the third quarter of 2004 to fund its continuing cash flow needs. In August, $7.4 billion in Texas tax and revenue anticipation notes came to market, a $1.7 billion net addition to overall supply. Increased supply and heavy dealer inventory during the period put pressure on the municipal note market, driving yields of one-year notes substantially higher. As a result, the municipal money market yield curve1 shifted from an inverted to a positive slope (i.e., yields increasing proportionately with length of time to maturity), signaling investors' preference for shorter maturities.
1 Yield curve - a graph showing the term structure of interest rates by plotting the yields of all debt instruments (e.g., money market securities) of the same quality with maturities ranging from the shortest to the longest appropriate maturities. A steepening yield curve means that the current trend is for yields to become higher as the maturities of money market instruments lengthen. For example, a one-year security would have a higher yield than a money market instrument with a six-month maturity.Money market yield curve 5/31/03 versus 11/30/03 (7-day yield) |
 |
Length of Maturity (in months) |
This chart is not intended to represent the yield of any Scudder fund. Past performance is no guarantee of future results.
Source: Deutsche Investment Management Americas Inc.
Q: What was the fund's strategy in light of these events?
A: Over the reporting period, the fund targeted a neutral average maturity as compared with similar funds. Currently the fund is positioned with an average maturity of approximately 40-45 days, with 70% of portfolio assets in floating-rate securities and 30% in fixed-rate instruments. As always, we have actively adjusted the fund's maturity to prepare for seasonal events such as April tax-time redemptions and supply/demand imbalances in the market, including months of increased issuance such as June and July.
During the period, the fund also took advantage of the increases in issuance by participating in high-quality, liquid municipal note sales at attractive yield levels. These included the above-mentioned Texas tax and revenue anticipation notes as well as state of Illinois general obligation notes. As a result of falling revenues, rising
Fund's Class S Shares Yields |
| 7-day average yield* | 7-day compounded effective yield** |
May 31, 2003
| 0.67%
| 0.67%
|
November 30, 2003
| 0.45%
| 0.45%
|
* The 7-day annualized yield is the annualized yield based on the most recent 7 days of interest earnings without reinvestment of income.** The 7-day compounded effective yield is the annualized yield based on the most recent 7 days of interest earnings with all income reinvested.Yields will fluctuate and are not guaranteed.
expenditures and government inaction, the state of California was downgraded by all three of the major rating services. The fund continues to avoid exposure to the state and its related credits, with the exception of instruments guaranteed by letters of credit or insurance. Our neutral positioning has helped the fund navigate a volatile environment for interest rates amid unfolding state and local government budgetary troubles.
Over the six-month period, we continued to focus on the highest-quality investments while seeking competitive yields across the municipal money market investment spectrum. In particular, we emphasized essential-services revenue issues and what is known as enhanced paper, i.e., securities guaranteed by a third party such as a bank or insurance company. In the coming months, we will continue our insistence on the highest credit quality. We will also continue to rebalance the fund's portfolio based on cash flows, asset growth and supply and demand.
The views expressed in this report reflect those of the portfolio managers only through the end of the period of the report as stated on the cover. The managers' views are subject to change at any time based on market and other conditions and should not be construed as a recommendation.
Investment Portfolio as of November 30, 2003 (Unaudited) | |
|
| Principal Amount ($) | Value ($) |
|
|
Municipal Investments 100.0% |
Arizona 0.7%
|
Phoenix Industrial Development Authority, Multi-Family Housing Revenue, AMT, Series A, 1.15%*, 10/15/2030
| 1,780,000
| 1,780,000 |
Arkansas 0.9%
|
Pocahontas, MacLean, AMT, 1.25%*, 5/1/2015
| 2,300,000
| 2,300,000 |
California 7.9%
|
Alameda County, Series 410, 1.15%*, 9/1/2021 (b)
| 3,890,000
| 3,890,000
|
California, Public Housing Revenue, Housing Finance Agency, AMT, Series PT-843, 1.24%*, 11/1/2005 (c)
| 1,570,000
| 1,570,000
|
California State University, 1.03%, 2/6/2004 (c)
| 1,000,000
| 1,000,000
|
California State, Revenue, Series A-3, 2.0%, 6/23/2004 (c)
| 4,000,000
| 4,020,757
|
General Obligation, Series 819-D, 1.2%*, 2/1/2028 (b)
| 4,368,500
| 4,368,500
|
General Obligation, Series C-1, 1.1%*, 5/1/2033 (c)
| 1,200,000
| 1,200,000
|
Los Angeles Regional Airports Improvement Corp., Lease Revenue, 1.06%*, 12/1/2025 (c)
| 816,100
| 816,100
|
Los Angeles Regional Airports Improvement Corp., Los Angles International Airport, AMT, 1.11%*, 12/1/2025 (c)
| 1,000,000
| 1,000,000
|
Revenue Anticipation Notes, Series A, 2.0%, 6/30/2004 (c)
| 1,800,000
| 1,812,441
|
| 19,677,798 |
Colorado 4.2%
|
Denver, City & County, Airport Revenue, AMT, 1.21%*, 11/15/2009 (b)
| 2,490,000
| 2,490,000
|
Denver, City & County, Economic Development Revenue, Western Stock Show Project, 1.25%*, 7/1/2029 (c)
| 1,055,000
| 1,055,000
|
Denver, City & County, Special Facilities Airport Revenue, 1.75%, 6/25/2004
| 2,000,000
| 2,009,749
|
Health Facilities Authority Revenue, Frasier Meadows Manor Project, 1.13%*, 6/1/2021 (c)
| 2,275,000
| 2,275,000
|
Traer Creek, Metropolitan District Revenue, 1.14%*, 10/1/2021 (c)
| 2,500,000
| 2,500,000
|
| 10,329,749 |
Delaware 2.1%
|
Delaware State, Economic and Development Authority Revenue, Winterthur Museum Project, 1.16%*, 9/1/2012 (c)
| 5,200,000
| 5,200,000 |
District of Columbia 0.0%
|
General Obligation, Series D, 1.12%*, 6/1/2029 (b)
| 100,000
| 100,000 |
Florida 6.2%
|
Capital Treasury Agency Revenue, Seminole Tribe Resort, Series B, 1.12%*, 10/1/2033 (c)
| 2,150,000
| 2,150,000
|
Housing Finance Corporate Multifamily Revenue, Victoria Park, 1.1%*, 10/15/2032
| 2,300,000
| 2,300,000
|
Indian River Country, Hospital Revenue, 1.2%*, 10/1/2015 (c)
| 300,000
| 300,000
|
Jacksonville, Capital Project Revenue, Series 1, 1.08%*, 10/1/2017 (b)
| 900,000
| 900,000
|
Jacksonville, Electric Authority Revenue, Series C, 1.1%*, 10/1/2030
| 400,000
| 400,000
|
Jacksonville, Health Facilities Authority, Hospital Revenue, Series A, 1.1%*, 8/15/2033 (c)
| 2,175,000
| 2,175,000
|
Miami-Dade County, Industrial Development Authority Revenue, Gulliver Schools Project, 1.15%*, 9/1/2029 (c)
| 2,130,000
| 2,130,000
|
Orange County, Health Facilities Authority Revenue, Presbyterian Retirement Project, 1.15%*, 11/1/2028 (c)
| 5,025,000
| 5,025,000
|
| 15,380,000 |
Georgia 3.2%
|
Columbus Housing Authority Revenue, Universal Foundation, 1.1%*, 11/1/2017 (c)
| 1,350,000
| 1,350,000
|
Rockdale County, Hospital Authority Revenue, 1.1%*, 10/1/2027 (c)
| 4,505,000
| 4,505,000
|
Willacoochie, Development Authority, Pollution Control Revenue, AMT, 1.2%*, 5/1/2021 (c)
| 2,000,000
| 2,000,000
|
| 7,855,000 |
Idaho 1.2%
|
Powers County, Industrial Development Revenue, AMT, 1.21%*, 4/1/2014 (c)
| 3,000,000
| 3,000,000 |
Illinois 12.9%
|
Chicago, De Le Salle Project, 1.19%*, 4/1/2027 (c)
| 1,810,000
| 1,810,000
|
Chicago, Public Improvements Revenue, 1.11%*, 1/1/2037 (b)
| 7,200,000
| 7,200,000
|
Development Finance Authority, Chicago Symphony Orchestra, 1.1%*, 12/1/2028 (c)
| 1,300,000
| 1,300,000
|
Development Finance Authority, Katlaw Tretam & Co. Project, AMT, 1.18%*, 8/1/2027 (c)
| 1,700,000
| 1,700,000
|
Development Finance Authority, Museum of Contemporary Art Project, 1.15%*, 2/1/2029 (c)
| 2,000,000
| 2,000,000
|
Development Finance Authority, Organization Bank Project, 1.25%*, 12/1/2020 (c)
| 1,700,000
| 1,700,000
|
General Obligation, 2.0%, 1/15/2004
| 9,000,000
| 9,011,486
|
Illinois Educational Facilities, Elmhurst College, 1.15%*, 3/1/2033 (c)
| 1,700,000
| 1,700,000
|
Illinois State Sales Tax Revenue, 1.17%*, 6/15/2023
| 4,520,000
| 4,520,000
|
Vernon Hills, Industrial Development Revenue, Northwestern Tool & Die Project, 1.25%*, 4/1/2025 (c)
| 1,025,000
| 1,025,000
|
| 31,966,486 |
Indiana 2.3%
|
Crawfordville, AMT, 1.25%*, 6/1/2007 (c)
| 1,300,000
| 1,300,000
|
Indiana Bank Revenue, Advanced Funding Program, Series A, 2.0%, 1/27/2004 (b)
| 2,000,000
| 2,002,778
|
Indiana Transportation Finance Authority, Highway Revenue, 1.17%*, 6/1/2018 (b)
| 2,310,000
| 2,310,000
|
| 5,612,778 |
Iowa 0.3%
|
Higher Education Authority Revenue, Private College St. Ambrose, 1.1%*, 4/1/2033 (c)
| 700,000
| 700,000 |
Kentucky 3.0%
|
Economic Development Authority, Health Facilities Revenue, Easter Seal Society Project, 1.25%*, 11/1/2030 (c)
| 1,805,000
| 1,805,000
|
Lexington-Fayette Urban County, Industrial Development Revenue, YMCA Central Kentucky Inc. Project, 1.25%*, 7/1/2019 (c)
| 1,595,000
| 1,595,000
|
Pendleton County Lease Revenue, 1.0%, 1/9/2004
| 4,000,000
| 4,000,000
|
| 7,400,000 |
Louisiana 0.4%
|
Offshore Terminal Authority, Deepwater Port Revenue, Loop, Inc., Series A, 1.1%*, 9/1/2014 (c)
| 1,000,000
| 1,000,000 |
Maine 0.6%
|
Government Obligation, 1.75%, 6/30/2004
| 1,575,000
| 1,583,590 |
Michigan 7.9%
|
ABN AMRO Munitops Certificates, Series 2003-3, 1.15%*, 1/1/2011 (b)
| 7,300,000
| 7,300,000
|
Detroit Water Supply Systems, Series B24, 1.2%*, 7/1/2026 (b)
| 4,400,000
| 4,400,000
|
Eastern Michigan University Revenue, 1.1%*, 6/1/2027 (b)
| 600,000
| 600,000
|
Grand Valley, Michigan State University Revenue, Series B, 1.11%*, 6/1/2027 (b)
| 3,235,000
| 3,235,000
|
Michigan State, Strategic Funding, Obligation Revenue, Detroit Symphony Project, Series B, 1.1%*, 6/1/2031 (c)
| 250,000
| 250,000
|
Municipal Securities Trust Certificates, Series 9054, 1.18%*, 4/20/2011
| 1,325,000
| 1,325,000
|
Oakland County, Economic Development Corp., Acme Manufacturing Co. Project, AMT, 1.3%*, 11/1/2023 (c)
| 200,000
| 200,000
|
Oakland County, Economic Development Corp., Limited Obligation Revenue, Lyon Gear & Machine, Inc. Project, AMT, 1.35%*, 5/1/2012 (c)
| 305,000
| 305,000
|
Strategic Fund, Limited Obligation Revenue, Lake Shore Inc. Project, AMT, 1.35%*, 11/1/2019 (c)
| 1,920,000
| 1,920,000
|
| 19,535,000 |
Minnesota 0.1%
|
School District General Obligation, 1.2%*, 2/1/2015 (b)
| 200,000
| 200,000 |
Missouri 0.8%
|
Development & Finance Board, St. Louis Air, Cargo Facilities Revenue, AMT, 1.19%*, 3/1/2030 (c)
| 2,000,000
| 2,000,000 |
New Hampshire 1.6%
|
Business Finance Authority, Waste Management of NH Inc. Project, AMT, 1.21%*, 9/1/2012 (c)
| 4,000,000
| 4,000,000 |
New Jersey 1.9%
|
Salem County, Industrial Pollution Control Financing Authority Revenue, E.I. Du Pont de Nemours and Co., 1.0%*, 3/1/2012
| 4,600,000
| 4,600,000 |
New Mexico 0.7%
|
Farmington, Pollution Control Revenue, Public Service Co., Series B, 1.1%*, 9/1/2024 (c)
| 1,650,000
| 1,650,000 |
New York 4.0%
|
Metropolitan Transportation Authority Revenue, 1.14%*, 5/15/2010 (b)
| 2,300,000
| 2,300,000
|
Municipal Securities Trust Certificates, Series 2002-202, 1.12%*, 10/21/2010 (b)
| 1,000,000
| 1,000,000
|
New York City, Revenue, Series A, 2.0%, 4/15/2004
| 3,000,000
| 3,011,747
|
New York City Transitional Finance Authority Revenue, Series 2, 2.0%, 2/19/2004
| 3,000,000
| 3,005,848
|
New York City Transitional Finance Authority Revenue, Series 3, 1.12%*, 11/1/2022
| 600,000
| 600,000
|
| 9,917,595 |
Ohio 1.0%
|
Higher Educational Facilities Authority Revenue, Series A, 1.2%*, 9/1/2020 (c)
| 770,000
| 770,000
|
Higher Educational Facilities Authority Revenue, Series B, 1.2%*, 9/1/2020 (c)
| 1,320,000
| 1,320,000
|
University of Toledo Ohio, General Receipts Bonds, 1.1%*, 6/1/2032 (b)
| 295,000
| 295,000
|
| 2,385,000 |
Oklahoma 0.8%
|
Payne County, Economic Development Authority Student Housing Revenue, 1.13%*, 6/1/2032 (b)
| 1,995,000
| 1,995,000 |
Pennsylvania 6.0%
|
Dallastown, Area School District, General Obligation, 1.15%*, 2/1/2018 (b)
| 4,000,000
| 4,000,000
|
Dauphin County, General Authority Revenue, 1.18%*, 11/1/2017 (b)
| 4,785,000
| 4,785,000
|
General Obligation Bond, Series A15, 1.2%*, 1/1/2017 (b)
| 1,650,000
| 1,650,000
|
Higher Education Assistance Agency, Student Loan Revenue, AMT, Series A, 1.14%*, 3/1/2027 (b)
| 2,000,000
| 2,000,000
|
Pennsylvania State Higher Educational Facilities, Carnegie Mellon University Series D, 1.1%*, 11/1/2030
| 1,150,000
| 1,150,000
|
Public School Building Authority, Parkland School District, Series D, 1.15%*, 3/1/2019 (b)
| 1,355,000
| 1,355,000
|
| 14,940,000 |
Puerto Rico 0.1%
|
Puerto Rico Commonwealth, Highway and Transportation Authority, 1.09%*, 1/1/2009
| 300,000
| 300,000 |
South Carolina 0.8%
|
Marlboro County, Industrial Development Revenue, Reliance Trading Corp. Project, AMT, 1.18%*, 5/1/2017 (c)
| 1,900,000
| 1,900,000 |
Tennessee 2.7%
|
Memphis, Baptist Memorial Hospital, 1.1%, 12/18/2003
| 5,000,000
| 5,000,000
|
Montgomery County, Public Building Authority, 1.11%*, 4/1/2032 (c)
| 325,000
| 325,000
|
Shelby County, General Obligation, 2.0%, 6/30/2004
| 1,500,000
| 1,509,029
|
| 6,834,029 |
Texas 19.9%
|
Brazos River Authority, Pollution Control Revenue, AMT, 1.21%*, 5/1/2033 (c)
| 2,500,000
| 2,500,000
|
Carrollton County, Independent School District, 5.5%, 2/15/2004
| 1,895,000
| 1,912,288
|
Houston, Independent School District Maintenance, 0.95%, 1/15/2004
| 7,000,000
| 7,000,000
|
Houston, Independent School District Maintenance, 5.0%, 7/15/2004 (b)
| 2,745,000
| 2,814,697
|
Lower Colorado River Authority Revenue, 1.2%*,
5/15/2017 (b)
| 7,770,000
| 7,770,000
|
Mesquite, TX, School District GO, Independent School District, 8/15/2025, 1.09%*, 8/15/2025
| 3,900,000
| 3,900,000
|
San Antonio, Electric & Gas Revenue, 1.15%*, 2/1/2018
| 2,000,000
| 2,000,000
|
San Antonio, Electric Revenue, 1.16%*, 8/1/2012
| 1,320,000
| 1,320,000
|
Texas, State GO, 2.0%, 8/31/2004
| 8,650,000
| 8,706,598
|
Texas, State GO, Student Loan & Gas Revenue, 2/1/2009, AMT, 0.95%*, 2/1/2009
| 2,000,000
| 2,000,000
|
University of Texas, Revenue, 0.95%, 1/13/2004
| 7,500,000
| 7,500,000
|
Waco, Industrial Development Corp., Economic Development Revenue, Patriot Homes of Texas Project, AMT, 1.35%*, 6/1/2014 (c)
| 1,900,000
| 1,900,000
|
| 49,323,583 |
Utah 2.0%
|
Salt Lake City, Tax and Revenue, 1.5%, 12/30/2003
| 3,000,000
| 3,001,558
|
Utah, Electric Revenue, 0.94%, 12/15/2003
| 2,000,000
| 2,000,000
|
| 5,001,558 |
Washington 2.0%
|
Tacoma City, General Ogligation, 0.94%, 12/4/2003
| 5,000,000
| 5,000,000 |
West Virginia 0.4%
|
Randolph County, Industrial Development Revenue, Allegheny Wood Products Project, AMT, 1.35%*,
12/1/2007 (c)
| 1,100,000
| 1,100,000 |
Wisconsin 1.4%
|
Racine, Solid Waste Disposal Revenue, Republic Services Inc. Project, AMT, 1.2%*, 8/1/2037 (c)
| 2,500,000
| 2,500,000
|
Whitewater, Industrial Development Authority, MacLean Fogg Project, AMT, 1.2%*, 12/1/2009 (c)
| 1,000,000
| 1,000,000
|
| 3,500,000 |
Total Investment Portfolio - 100.0% (Cost $248,067,166) (a)
| 248,067,166 |
* Variable rate demand notes are securities whose interest rates are reset periodically at market levels. These securities are often payable on demand and are shown at their current rates as of November 30, 2003.(a) The cost for federal income tax purposes was $248,067,166.(b) Bond is insured by one of these companies:AMBAC
| AMBAC Assurance Corp.
|
| Capital Guaranty
|
FGIC
| Financial Guaranty Insurance Company
|
FHA
| Federal Housing Administration
|
FSA
| Financial Security Assurance
|
MBIA
| Municipal Bond Investors Assurance
|
At November 30, 2003, insurance concentration greater than 10% of the total Investment Portfolio was with MBIA (10%).
(c) Security incorporates a letter of credit or line of credit from a major bank.AMT: Subject to alternative minimum taxThe accompanying notes are an integral part of the financial statements.
Statement of Assets and Liabilities as of November 30, 2003 (Unaudited) |
Assets
|
Investments in securities, at value (cost $248,067,166)
| $ 248,067,166 |
Cash
| 195,966 |
Receivable for investments sold
| 490,092 |
Interest receivable
| 673,047 |
Total assets
| 249,426,271 |
Liabilities
|
Dividends payable
| 9,898 |
Payable for Fund shares redeemed
| 64,092 |
Accrued management fee
| 101,770 |
Other accrued expenses and payables
| 30,571 |
Total liabilities
| 206,331 |
Net assets, at value
| $ 249,219,940 |
Net Assets
|
Net assets consist of:
Undistributed net investment income
| 134,358 |
Accumulated net realized gain (loss)
| (877,339) |
Paid-in capital
| 249,962,921 |
Net assets, at value
| $ 249,219,940 |
Net Asset Value
|
Class AARP
Net Asset Value, offering and redemption price per share ($65,697,301 / 65,761,022 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized)
| $ 1.00 |
Class S
Net Asset Value, offering and redemption price per share ($183,522,639 / 183,336,162 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized)
| $ 1.00 |
The accompanying notes are an integral part of the financial statements.
Statement of Operations for the six months ended November 30, 2003 (Unaudited) |
Investment Income
|
Income:
Interest
| $ 1,338,962 |
Expenses:
Management fee
| 661,127 |
Administrative fee
| 198,409 |
Trustees' fees and expenses
| 4,538 |
Other
| 1,386 |
Total expenses, before expense reductions
| 865,460 |
Expense reductions
| (70) |
Total expenses, after expense reductions
| 865,390 |
Net investment income
| 473,572 |
Net increase (decrease) in net assets resulting from operations
| $ 473,572 |
The accompanying notes are an integral part of the financial statements.
Statement of Changes in Net Assets |
Increase (Decrease) in Net Assets
| Six Months Ended November 30, 2003 (Unaudited) | Year Ended May 31, 2003 |
Operations:
Net investment income
| $ 473,572 | $ 2,201,304 |
Net realized gain (loss) on investment transactions
| - | 3,183 |
Net increase (decrease) in net assets resulting from operations
| 473,572 | 2,204,487 |
Distributions to shareholders from:
Net investment income:
Class AARP
| (121,192) | (531,417) |
Class S
| (351,983) | (1,668,202) |
Fund share transactions:
Proceeds from shares sold
| 44,785,680 | 204,391,403 |
Reinvestment of distributions
| 418,182 | 1,947,069 |
Cost of shares redeemed
| (75,006,869) | (262,092,295) |
Net increase (decrease) in net assets from Fund share transactions
| (29,803,007) | (55,753,823) |
Increase (decrease) in net assets
| (29,802,610) | (55,748,955) |
Net assets at beginning of period
| 279,022,550 | 334,771,505 |
Net assets at end of period (including undistributed net investment income of $134,358 and $133,961, respectively)
| $ 249,219,940 | $ 279,022,550 |
The accompanying notes are an integral part of the financial statements.
Class AARP |
Years Ended May 31, | 2003a | 2003 | 2002 | 2001b |
Selected Per Share Data
|
Net asset value, beginning of period
| $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 |
Income from investment operations:
Net investment income
| .002 | .007 | .014 | .024 |
Less distributions from:
Net investment income
| (.002) | (.007) | (.014) | (.024) |
Net asset value, end of period
| $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 |
Total Return (%)
| .18** | .74 | 1.39 | 2.50** |
Ratios to Average Net Assets and Supplemental Data
|
Net assets, end of period ($ millions)
| 66 | 69 | 76 | 83 |
Ratio of expenses (%)
| .65* | .65 | .65 | .65* |
Ratio of net investment income (%)
| .36* | .74 | 1.39 | 3.28* |
a For the six months ended November 30, 2003 (Unaudited).
bFor the period from September 11, 2000 (commencement of sales of Class AARP shares) to May 31, 2001.
* Annualized
** Not annualized
|
Class S |
Years Ended May 31, | 2003a | 2003 | 2002 | 2001 | 2000 | 1999b | 1998c |
Selected Per Share Data
|
Net asset value, beginning of period
| $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 |
Income from investment operations:
Net investment income
| .002 | .007 | .014 | .034 | .030 | .010 | .029 |
Less distributions from:
Net investment income
| (.002) | (.007) | (.014) | (.034) | (.030) | (.010) | (.029) |
Net asset value, end of period
| $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 |
Total Return (%)
| .18** | .74 | 1.39 | 3.43d | 3.09d | 1.03d** | 2.92d |
Ratios to Average Net Assets and Supplemental Data
|
Net assets, end of period ($ millions)
| 184 | 210 | 259 | 262 | 267 | 257 | 249 |
Ratio of expenses before expense reductions (%)
| .65* | .65 | .65 | .67 | .75e | .75* | .71 |
Ratio of expenses after expense reductions (%)
| .65* | .65 | .65 | .65 | .66e | .65* | .65 |
Ratio of net investment income (%)
| .36* | .74 | 1.39 | 3.39 | 3.04 | 2.46* | 2.87 |
a For the six months ended November 30, 2003 (Unaudited).
b For the five months ended May 31, 1999. On August 10, 1998, the Fund changed its fiscal year end from December 31 to May 31.
c Year ended December 31.
d Total returns would have been lower had certain expenses not been reduced.
e The ratios of operating expenses excluding costs incurred in connection with a fund complex reorganization in fiscal 2000 before and after expense reductions were .73% and .65%, respectively.
* Annualized
** Not annualized
|
Notes to Financial Statements (Unaudited) |
|
A. Significant Accounting Policies
Scudder Tax-Free Money Fund (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end, diversified management investment company organized as a Massachusetts business trust.
The Fund offers multiple classes of shares. Shares of Class AARP are designed for members of AARP. Class S shares of the Fund are generally not available to new investors.
Investment income, realized and unrealized gains and losses and certain fund-level expenses and expense reductions, if any, are borne pro rata on the basis of relative net assets by the holders of both classes of shares, except that both classes bear certain expenses unique to that share class such as administrative fees. All shares of the Fund have equal rights with respect to voting subject to class-specific arrangements.
The Fund's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America which require the use of management estimates. Actual results could differ from those estimates. The policies described below are followed consistently by the Fund in the preparation of its financial statements.
Security Valuation. Portfolio securities are valued utilizing the amortized cost method permitted in accordance with Rule 2a-7 under the 1940 Act and certain conditions therein. Under this method, which does not take into account unrealized capital gains or losses on securities, an instrument is initially valued at its cost and thereafter assumes a constant accretion/amortization to maturity of any discount or premium.
Federal Income Taxes. The Fund's policy is to comply with the requirements of the Internal Revenue Code, as amended, which are applicable to regulated investment companies, and to distribute all of its taxable and tax-exempt income to its shareholders. Accordingly, the Fund paid no federal income taxes and no federal income tax provision was required.
At May 31, 2003, the Fund had a net tax basis capital loss carryforward of approximately $878,000, which may be applied against any realized net taxable gains of each succeeding year until fully utilized or until May 31, 2004 ($550,000), May 31, 2005 ($221,000) and May 31, 2006 ($107,000), the respective expiration dates, whichever occurs first.
Distribution of Income and Gains. All of the net investment income of the Fund is declared as a daily dividend and is distributed to shareholders monthly. Net realized gains from investment transactions, in excess of available capital loss carryforwards, would be taxable to the Fund if not distributed, and, therefore, will be distributed to shareholders at least annually.
Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to paid-in capital. Temporary book and tax basis differences will reverse in a subsequent period.
At May 31, 2003, the Fund's components of distributable earnings (accumulated losses) on a tax-basis were as follows:
Undistributed tax-exempt income*
| $ 150,641 |
Capital loss carryforwards
| $ (878,000) |
In addition, the tax character of distributions paid to shareholders by the Fund is summarized as follows:
| Years ended December 31,
|
| 2003
| 2002
|
Distributions from tax-exempt income*
| $ 2,199,619 | $ 4,713,482 |
* For tax purposes short-term capital gains distributions are considered ordinary income distributions.The tax character of current year distributions, if any, will be determined at the end of current fiscal year.
Other. Investment transactions are accounted for on trade date. Interest income is recorded on the accrual basis. Realized gains and losses from investment transactions are recorded on an identified cost basis. All premiums and discounts are amortized/accreted for both tax and financial reporting purposes.
B. Related Parties
Management Agreement. Under the Management Agreement with Deutsche Investment Management Americas Inc. ("DeIM" or the "Advisor"), the Advisor directs the investments of the Fund in accordance with its investment objectives, policies and restrictions. The Advisor determines the securities, instruments and other contracts relating to investments to be purchased, sold or entered into by the Fund. In addition to portfolio management services, the Advisor provides certain administrative services in accordance with the Management Agreement. The management fee payable under the Management Agreement is equal to an annual rate of 0.50% of the first $500,000,000 of the Fund's average daily net assets and 0.48% of such net assets in excess of $500,000,000, computed and accrued daily and payable monthly. Accordingly, for the six months ended November 30, 2003, the fee pursuant to the Management Agreement was equivalent to an annualized effective rate of 0.50% of the Fund's average daily net assets.
Administrative Fee. Under the Administrative Agreement (the "Administrative Agreement"), the Advisor provides or pays others to provide substantially all of the administrative services required by the Fund (other than those provided by the Advisor under its Management Agreement with the Fund, as described above) in exchange for the payment by each class of the Fund of an administrative services fee (the "Administrative Fee") of 0.15% of the average daily net assets of each class, computed and accrued daily and payable monthly.
For the six months ended November 30, 2003, the Administrative Fee was as follows:
Administrative Fee | Total Aggregated | Unpaid at November 30, 2003 |
Class AARP
| $ 50,800 | $ 7,893 |
Class S
| 147,609 | 21,948 |
| $ 198,409 | $ 29,841 |
The Administrative Agreement between the Advisor and the Fund had been scheduled to terminate effective September 30, 2003. The Advisor and the Fund have agreed to temporarily continue the Administrative Agreement pending completion of a review by the Fund's Independent Trustees of the Fund's shareholder servicing and related arrangements. In addition, effective October 1, 2003 through September 30, 2005, the Advisor has agreed to contractually waive all or a portion of its management fee and/or Administrative Fee and reimburse or pay certain operating expenses of the Fund to the extent necessary to maintain the operating expenses of each class at 0.80% of average daily net assets (excluding certain expenses such as extraordinary expenses, taxes, brokerage, interest and trustee and trustee counsel fees). In addition, for the period October 1, 2003 through November 30, 2003, the Advisor voluntarily agreed to waive a portion of its Administrative Fee on Class S shares of the Fund to the extent necessary to maintain the operating expenses of Class S at 0.69% of average daily net assets (excluding certain expenses such as extraordinary expenses, taxes, brokerage, interest, trustee and trustee counsel fees).
Trustees' Fees and Expenses. The Fund pays each Trustee not affiliated with the Advisor retainer fees plus specified amounts for attended board and committee meetings.
Other Related Parties. AARP through its affiliates monitors and approves the AARP Investment Program from the Advisor. The Advisor has agreed to pay a fee to AARP and/or its affiliates in return for the use of the AARP trademark and services relating to investments by AARP members in Class AARP shares of the Fund. This fee is calculated on a daily basis as a percentage of the combined net assets of the AARP classes of all funds managed by the Advisor. The fee rates, which decrease as the aggregate net assets of the AARP classes become larger, are as follows: 0.07% for the first $6,000,000,000 of net assets, 0.06% for the next $10,000,000,000 of such net assets and 0.05% of such net assets thereafter. These amounts are used for the general purposes of AARP and its members.
C. Expense Off-Set Arrangement
The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances were used to reduce a portion of the Fund's custodian expenses. During the six months ended November 30, 2003, pursuant to the Administrative Agreement, the Administrative Fee was reduced by $70 for custodian credits earned.
D. Line of Credit
The Fund and several affiliated funds (the "Participants") share in a $1.25 billion revolving credit facility administered by J.P. Morgan Chase Bank for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Participants are charged an annual commitment fee which is allocated, pro rata based upon net assets, among each of the Participants. Interest is calculated at the Federal Funds Rate plus 0.5 percent. The Fund may borrow up to a maximum of 33 percent of its net assets under the agreement.
E. Share Transactions
The following table summarizes shares and dollar activity in the Fund:
| Six Months Ended
November 30, 2003 | Year Ended
May 31, 2003 |
| Shares | Dollars | Shares | Dollars |
Shares sold
|
Class AARP
| 5,418,864 | $ 5,418,864 | 13,363,615 | $ 13,363,615 |
Class S
| 39,366,816 | 39,366,816 | 191,027,788 | 191,027,788 |
| | $ 44,785,680 | | $ 204,391,403 |
Shares issued to shareholders in reinvestment of distributions
|
Class AARP
| 102,207 | $ 102,207 | 442,429 | $ 442,429 |
Class S
| 315,975 | 315,975 | 1,504,640 | 1,504,640 |
| | $ 418,182 | | $ 1,947,069 |
Shares redeemed
|
Class AARP
| (9,117,747) | $ (9,117,747) | (20,291,817) | $ (20,291,817) |
Class S
| (65,889,122) | (65,889,122) | (241,800,478) | (241,800,478) |
| | $ (75,006,869) | | $ (262,092,295) |
Net increase (decrease)
|
Class AARP
| (3,596,676) | $ (3,596,676) | (6,485,773) | $ (6,485,773) |
Class S
| (26,206,331) | (26,206,331) | (49,268,050) | (49,268,050) |
| | $ (29,803,007) | | $ (55,753,823) |
Growth Funds
Scudder 21st Century Growth Fund Scudder Aggressive Growth Fund Scudder Blue Chip Fund Scudder Capital Growth Fund Scudder Development Fund Scudder Dynamic Growth Fund Scudder Flag Investors
Communications Fund Scudder Gold & Precious Metals Fund Scudder Global Biotechnology Fund Scudder Growth Fund Scudder Health Care Fund Scudder Large Company Growth Fund Scudder Micro Cap Fund Scudder Mid Cap Fund Scudder Small Cap Fund Scudder Strategic Growth Fund Scudder Technology Fund Scudder Technology Innovation Fund Scudder Top 50 US Fund Value Funds
Scudder Contrarian Fund Scudder-Dreman Financial Services Fund Scudder-Dreman High Return Equity Fund Scudder-Dreman Small Cap Value Fund Scudder Flag Investors Equity
Partners Fund Scudder Growth and Income Fund Scudder Large Company Value Fund Scudder-RREEF Real Estate Securities Fund Scudder Small Company Stock Fund Scudder Small Company Value Fund Scudder Tax Advantaged Dividend Fund Multicategory/Asset Allocation Funds
Scudder Balanced Fund Scudder Flag Investors Value Builder Fund Scudder Focus Value+Growth Fund Scudder Lifecycle Mid Range Fund Scudder Lifecycle Long Range Fund Scudder Lifecycle Short Range Fund Scudder Pathway Conservative Portfolio Scudder Pathway Growth Portfolio Scudder Pathway Moderate Portfolio Scudder Target 2013 Fund Scudder Total Return Fund International/Global Funds
Scudder Emerging Markets Growth Fund Scudder Emerging Markets Income Fund Scudder European Equity Fund Scudder Global Fund Scudder Global Bond Fund Scudder Global Discovery Fund Scudder Greater Europe Growth Fund Scudder International Fund Scudder International Equity Fund Scudder International Select Equity Fund Scudder Japanese Equity Fund Scudder Latin America Fund Scudder New Europe Fund Scudder Pacific Opportunities Fund Income Funds
Scudder Cash Reserves Fund Scudder Fixed Income Fund Scudder GNMA Fund Scudder High Income Plus Fund Scudder High Income Fund Scudder High Income Opportunity Fund Scudder Income Fund Scudder PreservationPlus Fund Scudder PreservationPlus Income Fund Scudder Short Duration Fund (formerly Scudder Short-Term Fixed Income Fund) Scudder Short-Term Bond Fund Scudder Strategic Income Fund Scudder US Government Securities Fund |
Scudder Funds (continued) |
Tax-Free Income Funds
Scudder California Tax-Free Income Fund Scudder Florida Tax-Free Income Fund Scudder High Yield Tax-Free Fund Scudder Intermediate Tax/AMT Free Fund (formerly Scudder Medium Term Tax-Free Fund) Scudder Managed Municipal Bond Fund Scudder Massachusetts Tax-Free Fund Scudder Municipal Bond Fund Scudder New York Tax-Free Income Fund Scudder Short-Term Municipal Bond Fund Index-Related Funds
Scudder EAFE ® Equity Index Fund Scudder Equity 500 Index Fund Scudder S&P 500 Index Fund Scudder S&P 500 Stock Fund Scudder Select 500 Fund Scudder US Bond Index Fund Money Market
A large number of money market funds are available through Scudder Investments.
|
Retirement Programs and Education Accounts |
Retirement Programs
Traditional IRA Roth IRA SEP-IRA Inherited IRA Keogh Plan 401(k), 403(b) Plans Variable Annuities Education Accounts
Coverdell Education Savings Account UGMA/UTMA IRA for Minors |
Closed-End Funds |
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 High Income Trust Scudder Intermediate Government Trust Scudder Multi-Market Income Trust Scudder Municipal Income Trust Scudder RREEF Real Estate Fund, Inc. Scudder RREEF Real Estate Fund II, Inc. Scudder Strategic Income Trust Scudder Strategic Municipal Income Trust The Central Europe and Russia Fund, Inc. (formerly The Central European Equity Fund, Inc.) The Germany Fund, Inc. The New Germany Fund, Inc. |
Not all funds are available in all share classes.
Scudder open-end funds are offered by prospectus only. For more complete information on any fund or variable annuity registered in your state, including information about a fund's objectives, strategies, risks, advisory fees, distribution charges, and other expenses, please order a free prospectus. Read the prospectus before investing in any fund to ensure the fund is appropriate for your goals and risk tolerance.
A money market mutual fund investment is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although a money market mutual fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in such a fund.
The products described should not be considered a solicitation to buy or an offer to sell a security to any person in any jurisdiction where such offer, solicitation, purchase, or sale would be unlawful under the securities laws of such jurisdiction.
Account Management Resources |
|
| AARP Investment Program Shareholders | Scudder Class S Shareholders |
Automated Information Lines | Easy-Access Line (800) 631-4636 | SAIL™ (800) 343-2890 |
| Personalized account information, the ability to exchange or redeem shares, and information on other Scudder funds and services via touchtone telephone.
|
Web Sites | aarp.scudder.com | myScudder.com |
| View your account transactions and balances, trade shares, monitor your asset allocation, and change your address, 24 hours a day.
Obtain prospectuses and applications, blank forms, interactive worksheets, news about Scudder funds, subscription to fund updates by e-mail, retirement planning information, and more.
|
For More Information | (800) 253-2277 To speak with an AARP Investment Program service representative
| (800) SCUDDER To speak with a Scudder service representative.
|
Written Correspondence | AARP Investment Program from Scudder Investments PO Box 219735
Kansas City, MO 64121-9735
| Scudder Investments PO Box 219669
Kansas City, MO 64121-9669
|
Proxy Voting | A description of the fund's policies and procedures for voting proxies for portfolio securities can be found on our Web sites - aarp.scudder.com or myScudder.com (type "proxy voting" in the search field) - or on the SEC's Web site - www.sec.gov. To obtain a written copy without charge, call your service representative.
|
Principal Underwriter | If you have questions, comments or complaints, contact:
Scudder Distributors, Inc. 222 South Riverside Plaza
Chicago, IL 60606-5808
(800) 621-1148
|
| Class AARP | Class S |
Nasdaq Symbol | AFRXX
| STFXX
|
Fund Number | 171
| 071
|
This privacy statement is issued by Deutsche Investment Management Americas Inc., Deutsche Asset Management, Inc., Scudder Distributors, Inc., Scudder Investor Services, Inc., Scudder Trust Company and the Scudder Funds.
We never sell customer lists or individual client information. We consider privacy fundamental to our client relationships and adhere to the policies and practices described below to protect current and former clients' information. Internal policies are in place to protect confidentiality, while allowing client needs to be served. Only individuals who need to do so in carrying out their job responsibilities may access client information. We maintain physical, electronic and procedural safeguards that comply with federal standards to protect confidentiality. These safeguards extend to all forms of interaction with us, including the Internet.
In the normal course of business, clients give us nonpublic personal information on applications and other forms, on our websites, and through transactions with us or our affiliates. Examples of the nonpublic personal information collected are name, address, Social Security number and transaction and balance information. To be able to serve our clients, certain of this client information is shared with affiliated and nonaffiliated third party service providers such as transfer agents, custodians, and broker-dealers to assist us in processing transactions and servicing your account with us. In addition, we may disclose all of the information we collect to companies that perform marketing services on our behalf or to other financial institutions with which we have joint marketing agreements. The organizations described above that receive client information may only use it for the purpose designated by the Scudder Companies listed above.
We may also disclose nonpublic personal information about you to other parties as required or permitted by law. For example, we are required or we may provide information to government entities or regulatory bodies in response to requests for information or subpoenas, to private litigants in certain circumstances, to law enforcement authorities, or any time we believe it necessary to protect the firm.
For AARP shareholders only: Certain investors in the AARP Investment Program are advised that limited nonpublic personal information is shared with AARP and its subsidiary AARP Services Inc. (ASI). This includes an investor's status as a current or former Program participant, name, address, and type of account maintained (i.e. IRA or non-IRA). This information must be shared so that ASI can provide quality control services, such as monitoring satisfaction with the Program. However, AARP and ASI may also use this information for other purposes such as member research, and may share this information with other AARP providers to inform members of AARP benefits and services. Shareholders residing in states with certain state specific privacy restrictions are excluded from this information sharing. All other shareholders may instruct us in writing not to share information regarding themselves or joint account holders with AARP or ASI for any purposes unrelated to the AARP Investment Program. Investors may do so by filling out and returning the enclosed "opt-out" form. With respect to accounts that are jointly held, an opt-out form received from any of the joint account holders will be applied to the entire account.
Questions on this policy may be sent to:
For Class AARP:
AARP Investment Program, Attention: Correspondence,
P.O. Box 219735, Kansas City, MO 64121-9735
For Class S:
Scudder Investments, Attention: Correspondence,
P.O. Box 219669, Kansas City, MO 64121-9669
August 2003
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not currently applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not currently applicable.
ITEM 5. [RESERVED]
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) The Chief Executive and Financial Officers concluded that the Registrant's
Disclosure Controls and Procedures are effective based on the evaluation of the
Disclosure Controls and Procedures as of a date within 90 days of the filing
date of this report.
(b) During the filing period of the report, management identified issues
relating to the overall fund expense payment and accrual process. Management
discussed these matters with the Registrant's Audit Committee and auditors,
instituted additional procedures to enhance its internal controls and will
continue to develop additional controls and redesign work flow to strengthen the
overall control environment associated with the processing and recording of fund
expenses.
ITEM 10. EXHIBITS.
(a)(1) Certification pursuant to Rule 30a-2(a) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as
Exhibit 99.CERT.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as
Exhibit 99.906CERT.
Form N-CSR Item F
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: Scudder Tax Free Money Fund
By: /s/Richard T. Hale
---------------------------
Richard T. Hale
Chief Executive Officer
Date: January 16, 2004
---------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Registrant: Scudder Tax Free Money Fund
By: /s/Richard T. Hale
---------------------------
Richard T. Hale
Chief Executive Officer
Date: January 16, 2004
---------------------------
By: /s/Charles A. Rizzo
---------------------------
Charles A. Rizzo
Chief Financial Officer
Date: January 16, 2004
---------------------------
