UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM N-CSRS
Investment Company Act file number 811-3495
SCUDDER MONEY MARKET TRUST
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(Exact Name of Registrant as Specified in Charter)
345 Park Avenue, New York, NY 10154
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (617) 295-2663
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Salvatore Schiavone
Two International Place
Boston, Massachusetts 02110
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(Name and Address of Agent for Service)
Date of fiscal year end: 5/31
Date of reporting period: 11/30/2004
ITEM 1. REPORT TO STOCKHOLDERS
Scudder Money Market Series
Prime Reserve SharesPremium Shares |
| |
| Semiannual Report to Shareholders |
| November 30, 2004 |
|
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 Geoffrey Gibbs and other members of the fund's investment team discuss the market environment and the team's approach to managing the fund during the six-month period ended November 30, 2004.
Q: Will you discuss the market environment for the fund during the most recent six-month period?
A: Back in April, the "nonfarm payroll" figure had surprised everyone with the government reporting that the economy had created more than 300,000 new jobs in March. With this news, fixed-income markets experienced a dramatic turnaround, with one-year LIBOR rates (the worldwide benchmark rate for money markets) spiking from 1.35% to 1.85% in anticipation of a potential short-term interest rate increase by the US Federal Reserve (the Fed) as early as August.1 The April and May jobs reports were also strong, and the Fed stated that it would begin to raise interest rates in the near future. The Fed was signaling its concerns over a possible resurgence in inflation, and hinted it might soon raise short-term rates to try to restrain the economy from growing too fast and possibly reigniting inflation. (The Fed had been keeping short-term interest rates low to help spur renewed economic growth.) In anticipation of a change in the Fed's stance, we reduced average maturity to reduce interest rate risk in the fund's portfolio; the longer the fund's average maturity, the more interest rate risk.
1 LIBOR, or the London Interbank Offered Rate, is the most widely used benchmark or reference rate for short-term interest rates. LIBOR is the rate of interest at which banks borrow funds from other banks, in large volume, in the international market.
The markets reacted swiftly to the Fed's new signals, with one-year money market rates rising to 2.5%. Investors were anticipating that the federal funds rate would eventually rise to 2.25% in four to five increments by year end. As the Fed's June meeting drew closer, we continued to reduce the fund's average maturity, purchasing only shorter-term issues, as the market began to anticipate additional Fed rate hikes. When the Fed finally raised the federal funds rate by 25 basis points in late June, it stated that it would conduct its credit-tightening program at a "measured" pace. As the market began to stabilize, market participants were more comfortable taking on some additional risk, and resumed purchasing longer-term issues.
As we moved into the third quarter, US economic momentum hit a "soft patch" as consumer purchasing slackened, job creation dipped, oil prices rose to $45 per barrel and Iraq's security situation seemed to deteriorate. In reaction, investors began to question whether the number of Fed rate increases that previously had been factored in by market participants would actually occur, and one-year money market rates dipped. Meanwhile, the Fed raised short-term rates in increments of 25 basis points at its August and September meetings. In October, the market rallied — and yields declined — upon news of September's disappointing nonfarm payroll report. Debt prices then faltered and yields moved up as oil prices rose as high as $56 per barrel (i.e., the market viewed a weaker economy as a buying opportunity, and then reacted negatively to the possibility of oil prices spurring renewed inflation). On November 10th the Fed raised short-term interest rates another 25 basis points, and a very strong October jobs report induced another market sell-off, sending longer-term money market rates higher, at least for the time being. The questions weighing on the market as the period ended were whether higher oil prices would eventually slow the US economy, and what effect this might have on Fed actions over the next 12 months.
Money market yield curve 5/31/04 versus 11/30/04 |
 |
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: Bloomberg, L.P.
Q: How did the fund perform over the most recent semiannual period?
A: For the period, the fund registered favorable performance and achieved its stated objectives of providing maximum current income while maintaining stability of capital.
Q: In light of market conditions during the period, what has been the strategy for the fund?
A: In the second quarter, one-year money market rates rose sharply in response to concerns that the Fed would raise short-term interest rates aggressively over the next 12 to 24 months. Our strategy was to substantially decrease the fund's average maturity to reduce risk, limiting our purchases to three-month maturity issues and shorter. At the close of the period, the fund's weighted average maturity was approximately 27 days.
Performance is historical and does not guarantee future results. Current performance may be lower or higher than the performance data quoted.
Prime Reserve Class S Shares Yields |
| 7-day current yield | 7-day compounded effective yield |
May 31, 2004* | 0.75% | 0.75% |
November 30, 2004* | 1.69% | 1.70% |
*The investment advisor has agreed to waive fees/reimburse expenses. Without such fee waivers/expense reimbursements the 7-day current yield would have been 1.55% and 0.60% and the 7-day compounded effective yield would have been 1.56% and 0.60% as of November 30, 2004 and May 31, 2004, respectively.
Premium Class S Shares Yields |
| 7-day current yield | 7-day compounded effective yield |
May 31, 2004* | .92% | .92% |
November 30, 2004* | 1.90% | 1.92% |
*The investment advisor has agreed to waive fees/reimburse expenses. Without such fee waivers/expense reimbursements the 7-day current yield would have been 1.77% and 0.77% and the 7-day compounded effective yield would have been 1.78% and 0.77% as of November 30, 2004 and May 31, 2004, respectively.
Yields are historical, will fluctuate and do not guarantee future performance. The 7-day current yield refers to the income paid by the portfolio over a 7-day period expressed as an annual percentage rate of the fund's shares outstanding. The 7-day compounded effective yield is the annualized yield based on the most recent 7 days of interest earnings with all income reinvested. For the most current yield information, please visit our web sites: myScudder.com or aarp.scudder.com.
During this period, we increased the fund's allocation in floating-rate securities. The interest rate of floating-rate securities adjusts periodically based on indices such as LIBOR and the federal funds rate. Because the interest rates of these instruments adjust as market conditions change, they provide flexibility in an uncertain interest-rate environment. Our decision to increase our allocation in this sector helped performance during the period.
Q: What detracted from performance during the period?
A: As we moved into the third quarter and one-year rates rose, we waited to extend maturity until we were certain that those rates had peaked. We preferred to err on the side of caution, and missed the recent top of the one-year money market rate at 2.5%. Given the dramatic turns in economic data thus far this year, we felt it was prudent to keep maturity shorter — and forgo some additional yield — when the direction of the market had been so uncertain.
Q: Will you describe your management philosophy?
A: We continue our insistence on the highest credit quality within the fund. We also plan to maintain our conservative investment strategies and standards. We continue to apply a careful approach to investing on behalf of the fund and to seek competitive yield for our shareholders.
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.
Information About Your Fund's Expenses |
|
As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees and other Fund expenses. Examples of transaction costs include sales charges (loads), redemption fees and account maintenance fees, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. In the most recent six-month period, the Prime Reserve Class AARP, Prime Reserve Class S, Premium Class AARP and Premium Class S shares of the Fund limited these expenses; had they not done so, expenses would have been higher. The tables are based on an investment of $1,000 made at the beginning of the six-month period ended November 30, 2004.
The tables illustrate your Fund's expenses in two ways:
Actual Fund Return. This helps you estimate the actual dollar amount of ongoing expenses (but not transaction costs) paid on a $1,000 investment in the Fund using the Fund's actual return during the period. To estimate the expenses you paid over the period, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the "Expenses Paid per $1,000" line under the share class you hold.
Hypothetical 5% Fund Return. This helps you to compare your Fund's ongoing expenses (but not transaction costs) with those of other mutual funds using the Fund's actual expense ratio and a hypothetical rate of return of 5% per year before expenses. Examples using a 5% hypothetical fund return may be found in the shareholder reports of other mutual funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.
Please note that the expenses shown in these tables are meant to highlight your ongoing expenses only and do not reflect any transaction costs. The "Expenses Paid per $1,000" line of the tables is useful in comparing ongoing expenses only and will not help you determine the relative total expense of owning different funds. If these transaction costs had been included, your costs would have been higher.
Expenses and Value of a $1,000 Investment
for the six months ended November 30, 2004 |
Actual Fund Return | Prime Reserve | Premium Reserve |
Class AARP | Class S | Class AARP | Class S |
Beginning Account Value 6/1/04 | $ 1,000.00 | $ 1,000.00 | $ 1,000.00 | $ 1,000.00 |
Ending Account Value 11/30/04 | $ 1,006.30 | $ 1,005.80 | $ 1,006.80 | $ 1,006.70 |
Expenses Paid per $1,000* | $ 1.36 | $ 1.99 | $ .87 | $ 1.00 |
Hypothetical 5% Fund Return | Prime Reserve | Premium Reserve |
Class AARP | Class S | Class AARP | Class S |
Beginning Account Value 6/1/04 | $ 1,000.00 | $ 1,000.00 | $ 1,000.00 | $ 1,000.00 |
Ending Account Value 11/30/04 | $ 1,023.71 | $ 1,023.09 | $ 1,024.20 | $ 1,024.00 |
Expenses Paid per $1,000* | $ 1.37 | $ 2.00 | $ .88 | $ 1.01 |
* Expenses are equal to the Fund's annualized expense ratio for each share class, multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by 365.
Annualized Expense Ratios | Prime Reserve | Premium Reserve |
Class AARP | Class S | Class AARP | Class S |
Scudder Money Market Series | .27% | .39% | .17% | .20% |
For more information, please refer to the Fund's prospectus.
Portfolio Summary November 30, 2004 |
|
Portfolio Composition | 11/30/04 | 5/31/04 |
|
Commercial Paper | 28% | 26% |
Floating Rate Notes | 26% | 36% |
Certificates of Deposit and Bank Notes | 18% | 17% |
Time Deposits | 13% | 7% |
US Government Sponsored Agencies+ | 5% | 2% |
Repurchase Agreements | 4% | 2% |
Promissory Notes | 3% | 5% |
Asset Backed | 1% | 1% |
Short-Term Notes | 1% | — |
Funding Agreements | 1% | — |
Municipal Investments | — | 1% |
Government National Mortgage | — | 2% |
US Government Backed | — | 1% |
| 100% | 100% |
Weighted Average Maturity | | |
Scudder Money Market Series | 27 days | 50 days |
First Tier Retail Money Fund Average* | 41 days | 51 days |
+ Not backed by the full faith and credit of the US Government
* Category includes only non-government retail funds that also are not holding any second tier securities. Portfolio Holdings of First Tier funds include US Treasury, US Other, Repos, Time Deposits, Domestic Bank Obligations, Foreign Bank Obligations, First Tier CP, Floating Rate Notes and Asset Backed Commercial Paper.
Portfolio composition is subject to change. For more complete details about the Funds' holdings, see page 11. A quarterly Fact Sheet is available upon request. Information concerning portfolio holdings of the Fund as of month end will be posted to scudder.com on the 15th of the following month. Please see the Account Management Resources section for contact information.
Following the Fund's fiscal first and third quarter-end, a complete portfolio holdings listing is filed with the SEC on Form N-Q. The form will be available on the SEC's Web site at www.sec.gov, and it also may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the SEC's Public Reference Room may be obtained by calling (800) SEC-0330.
Investment Portfolio as of November 30, 2004 (Unaudited) |  |  |
|
| Principal Amount ($) | Value ($) |
| |
Certificates of Deposit and Bank Notes 17.9% |
ABN AMRO Bank NV: | | |
1.26%, 12/14/2004 | 50,000,000 | 49,997,472 |
1.93%, 3/3/2005 | 38,000,000 | 38,000,000 |
Bank of America NA, 1.75%, 12/16/2004 | 59,500,000 | 59,500,000 |
Barclays Bank PLC, 1.92%, 3/7/2005 | 50,000,000 | 50,000,000 |
Calyon: | | |
1.14%, 12/31/2004 | 40,000,000 | 40,000,000 |
1.21%, 12/23/2004 | 50,000,000 | 50,000,000 |
Depfa Bank PLC: | | |
1.92%, 3/3/2005 | 50,000,000 | 50,000,000 |
2.26%, 1/24/2005 | 35,000,000 | 35,000,000 |
Dexia Banque Belgique, 2.03%, 12/14/2004 | 50,000,000 | 50,000,000 |
HBOS Treasury Services PLC: | | |
1.76%, 2/9/2005 | 30,000,000 | 30,000,578 |
1.93%, 3/3/2005 | 100,000,000 | 100,000,000 |
2.06%, 1/26/2005 | 55,000,000 | 55,000,000 |
ING Bank NV, 2.04%, 12/14/2004 | 150,000,000 | 150,000,000 |
Natexis Banque Populaires, 2.06%, 2/2/2005 | 160,000,000 | 160,000,000 |
Northern Rock PLC, 2.26%, 2/17/2005 | 50,000,000 | 50,000,000 |
Royal Bank Canada: | | |
1.205%, 3/14/2005 | 97,100,000 | 96,892,861 |
1.21%, 3/14/2005 | 94,100,000 | 93,900,580 |
Societe Generale: | | |
1.185%, 1/4/2005 | 25,000,000 | 25,000,000 |
1.85%, 2/17/2005 | 75,000,000 | 74,995,155 |
2.04%, 2/2/2005 | 20,000,000 | 19,999,450 |
Toronto Dominion Bank: | | |
2.27%, 3/9/2005 | 65,000,000 | 65,000,000 |
2.51%, 5/27/2005 | 100,000,000 | 100,002,427 |
UniCredito Italiano SpA: | | |
1.75%, 12/7/2004 | 50,000,000 | 50,000,000 |
2.0%, 1/10/2005 | 125,000,000 | 125,000,000 |
US Bank NA, 1.2%, 3/28/2005 | 35,000,000 | 34,914,646 |
Wells Fargo Bank NA, 2.03%, 12/16/2004 | 50,000,000 | 49,999,359 |
Westpac Banking Corp., 2.03%, 12/8/2004 | 50,000,000 | 50,000,097 |
Total Certificates of Deposit and Bank Notes (Cost $1,753,202,625) | 1,753,202,625 |
Commercial Paper 27.8% |
Barclays US Funding LLC, 2.26%**, 2/14/2005 | 76,000,000 | 75,643,750 |
British Transco Capital, Inc.: | | |
1.92%**, 12/10/2004 | 32,000,000 | 31,984,640 |
2.23%**, 2/7/2005 | 40,000,000 | 39,832,267 |
Caisse Nationale Des Caisses D'Epargne et Prevoyan, 1.99%**, 1/19/2005 | 40,000,000 | 39,892,200 |
Cancara Asset Securitization LLC: | | |
1.75%**, 12/1/2004 | 31,646,000 | 31,646,000 |
1.75%**, 12/2/2004 | 47,958,000 | 47,955,669 |
CC (USA), Inc., 2.01%**, 1/10/2005 | 39,500,000 | 39,411,783 |
Charta LLC, 2.08%**, 12/1/2004 | 100,000,000 | 100,000,000 |
CIT Group, Inc.: | | |
1.89%**, 2/7/2005 | 50,000,000 | 49,545,667 |
1.9%**, 1/18/2005 | 35,000,000 | 34,911,333 |
1.91%**, 2/22/2005 | 35,000,000 | 34,846,681 |
1.97%**, 3/21/2005 | 30,000,000 | 29,820,333 |
2.38%**, 4/4/2005 | 20,000,000 | 19,837,422 |
2.38%**, 4/5/2005 | 20,000,000 | 19,834,722 |
Citigroup Global Markets Holdings, Inc., 2.11%**, 12/17/2004 | 200,000,000 | 199,816,000 |
Compass Securitization LLC, 2.05%**, 12/14/2004 | 31,715,000 | 31,691,522 |
CRC Funding LLC, 2.27%**, 2/7/2005 | 70,000,000 | 69,701,178 |
Credit Suisse First Boston (USA), Inc., 2.07%**, 1/25/2005 | 25,000,000 | 24,921,319 |
Dorada Finance, Inc.: | | |
1.99%**, 1/14/2005 | 55,000,000 | 54,866,228 |
2.01%**, 1/10/2005 | 25,000,000 | 24,944,167 |
Edison Asset Security LLC, 2.06%**, 12/1/2004 | 120,000,000 | 120,000,000 |
General Electric Capital Corp., 1.77%**, 1/3/2005 | 65,000,000 | 64,894,537 |
General Electric Capital Services, Inc., 2.06%**, 12/1/2004 | 50,000,000 | 50,000,000 |
General Electric Co., 2.06%**, 12/1/2004 | 50,000,000 | 50,000,000 |
Giro Funding US Corp.: | | |
1.4%**, 12/15/2004 | 50,000,000 | 49,959,944 |
2.23%**, 12/29/2004 | 50,000,000 | 49,913,278 |
Grampian Funding Ltd.: | | |
2.01%**, 1/21/2005 | 80,000,000 | 79,773,333 |
2.24%**, 2/14/2005 | 35,000,000 | 34,837,396 |
Irish Life and Permanent PLC: | | |
1.75%**, 2/7/2005 | 100,000,000 | 99,669,444 |
2.46%**, 5/16/2005 | 46,000,000 | 45,484,570 |
Jupiter Securitization Corp., 1.98%**, 1/5/2005 | 29,971,000 | 29,913,306 |
K2 (USA) LLC, 1.88%**, 2/18/2005 | 50,000,000 | 49,794,820 |
KBC Financial Products International Ltd., 1.86%**, 2/10/2005 | 45,000,000 | 44,835,812 |
Lake Constance Funding LLC: | | |
1.74%**, 12/1/2004 | 38,000,000 | 38,000,000 |
2.04%**, 12/3/2004 | 32,000,000 | 31,996,373 |
2.05%**, 12/7/2004 | 44,000,000 | 43,984,967 |
Liberty Street Funding Corp.: | | |
2.03%**, 12/3/2004 | 50,000,000 | 49,994,361 |
2.04%**, 12/13/2004 | 65,316,000 | 65,271,585 |
2.04%**, 12/14/2004 | 75,153,000 | 75,097,637 |
2.07%**, 12/15/2004 | 25,885,000 | 25,864,163 |
Northern Rock PLC, 1.75%**, 12/1/2004 | 25,000,000 | 25,000,000 |
RWE AG, 1.83%**, 2/8/2005 | 30,000,000 | 29,895,350 |
Santander Central Hispano Finance (Delaware), Inc., 2.01%**, 1/19/2005 | 125,000,000 | 124,659,722 |
Scaldis Capital LLC: | | |
1.75%**, 12/2/2004 | 28,299,000 | 28,297,624 |
2.05%**, 12/15/2004 | 50,000,000 | 49,960,139 |
2.06%**, 1/24/2005 | 50,272,000 | 50,117,414 |
2.24%**, 2/15/2005 | 34,453,000 | 34,290,803 |
2.26%**, 2/16/2005 | 25,000,000 | 24,879,687 |
Sheffield Receivables Corp., 2.07%**, 12/1/2004 | 36,010,000 | 36,010,000 |
Siemens Capital Co. LLC, 2.04%**, 12/7/2004 | 50,000,000 | 49,983,000 |
Spintab Swedmortgage, 1.75%, 12/2/2004 | 75,000,000 | 74,996,365 |
Tulip Funding Corp.: | | |
1.74%**, 12/1/2004 | 28,340,000 | 28,340,000 |
2.09%**, 12/17/2004 | 21,404,000 | 21,384,118 |
WestPac Capital Corp., 1.99%**, 1/19/2005 | 40,000,000 | 39,891,655 |
Total Commercial Paper (Cost $2,718,094,284) | 2,718,094,284 |
|
Floating Rate Notes* 26.7% |
Abbey National Treasury Services PLC, 1.991%, 12/8/2004 | 100,000,000 | 99,999,421 |
American Express Centurion Bank, 1.99%, 9/1/2005 | 50,000,000 | 50,014,252 |
American Express Credit Corp., 2.1%, 10/5/2005 | 95,000,000 | 95,092,196 |
American Honda Finance Corp.: | | |
144A, 2.029%, 1/20/2005 | 35,000,000 | 35,000,000 |
144A, 2.16%, 5/6/2005 | 30,000,000 | 30,000,000 |
Associates Corp. of North America, 2.05%, 6/27/2005 | 40,000,000 | 40,000,000 |
Bank of America NA, 2.1%, 12/9/2004 | 240,000,000 | 240,000,000 |
Beta Finance, Inc.: | | |
144A, 2.035%, 4/15/2005 | 88,000,000 | 87,991,863 |
2.201%, 11/23/2005 | 45,000,000 | 45,022,100 |
Canadian Imperial Bank of Commerce, 2.16%, 10/14/2005 | 120,000,000 | 120,080,714 |
CIT Group, Inc., 1.87%, 12/1/2004 | 50,000,000 | 50,000,000 |
Depfa Bank PLC, 1.86%, 9/15/2005 | 92,000,000 | 91,996,505 |
General Electric Capital Corp.: | | |
2.005%, 3/15/2005 | 25,000,000 | 25,011,647 |
2.263%, 5/12/2005 | 15,000,000 | 15,010,088 |
2.33%, 3/21/2005 | 12,500,000 | 12,509,171 |
HBOS Treasury Services PLC: | | |
1.924%, 3/14/2005 | 50,000,000 | 50,015,022 |
2.17%, 7/29/2005 | 41,250,000 | 41,267,621 |
International Business Machines Corp., 2.071%, 12/8/2005 | 50,000,000 | 50,000,000 |
Lehman Brothers Holdings, Inc., 2.263%, 12/23/2005 | 100,000,000 | 100,126,762 |
Links Finance LLC, 144A, 2.12%, 1/18/2005 | 45,000,000 | 45,002,646 |
Merrill Lynch & Co., Inc.: | | |
2.039%, 4/4/2005 | 60,000,000 | 60,000,000 |
2.373%, 1/13/2005 | 55,000,000 | 55,023,416 |
2.43%, 2/3/2005 | 25,000,000 | 25,013,227 |
Morgan Stanley: | | |
1.892%, 7/1/2005 | 20,000,000 | 20,002,024 |
2.13%, 1/5/2005 | 30,000,000 | 30,000,000 |
2.13%, 2/18/2005 | 100,000,000 | 100,000,000 |
2.13%, 3/25/2005 | 80,000,000 | 80,000,000 |
2.143%, 5/24/2005 | 100,000,000 | 100,000,000 |
2.143%, 7/1/2005 | 20,000,000 | 20,009,192 |
Natexis Banque Populaires: | | |
2.128%, 12/10/2004 | 30,000,000 | 30,000,000 |
2.138%, 12/13/2004 | 35,000,000 | 34,999,710 |
National City Bank of Cleveland, 2.085%, 5/24/2005 | 70,000,000 | 70,000,000 |
National City Bank of Indiana, 2.125%, 1/13/2005 | 40,000,000 | 40,003,047 |
Pfizer, Inc., 144A, 2.02%, 10/7/2005 | 70,000,000 | 70,000,000 |
Rabobank Nederland NV, 2.09%, 3/2/2005 | 35,000,000 | 35,001,703 |
Royal Bank of Scotland PLC, 2.11%, 9/29/2005 | 65,000,000 | 64,976,906 |
Societe Generale: | | |
1.983%, 12/6/2004 | 90,000,000 | 89,999,657 |
2.022%, 12/10/2004 | 120,000,000 | 119,998,956 |
2.08%, 2/25/2005 | 40,000,000 | 39,999,888 |
SunTrust Bank NA, 2.08%, 4/1/2005 | 110,000,000 | 110,003,628 |
Tango Finance Corp., 144A, 2.1%, 1/20/2005 | 20,000,000 | 19,999,725 |
US Bank NA, 1.974%, 1/4/2005 | 30,000,000 | 29,998,980 |
Westpac Banking Corp., 1.79%, 9/9/2005 | 40,000,000 | 39,990,729 |
Total Floating Rate Notes (Cost $2,609,160,796) | 2,609,160,796 |
|
US Government Sponsored Agencies 4.6% |
Federal Home Loan Mortgage Corp.: | | |
1.64%**, 12/1/2004 | 50,000,000 | 50,000,000 |
1.64%**, 12/6/2004 | 35,000,000 | 34,992,028 |
2.0%*, 10/7/2005 | 100,000,000 | 100,000,000 |
Federal National Mortgage Association: | | |
1.467%*, 2/14/2005 | 40,000,000 | 40,000,000 |
1.64%, 1/4/2005 | 90,000,000 | 90,000,000 |
1.74%*, 12/9/2005 | 50,000,000 | 49,968,935 |
1.85%**, 2/16/2005 | 80,000,000 | 79,685,155 |
Total US Government Sponsored Agencies (Cost $444,646,118) | 444,646,118 |
|
Asset Backed 0.6% |
Granite Mortgage PLC, "1A1", Series 2004-1, 2.12%*, 12/20/2004 | 4,995,781 | 4,995,781 |
Nissan Auto Receivables Owner Trust, "A1", Series 2004-B, 1.64%, 7/15/2005 | 9,807,736 | 9,807,736 |
Permanent Financing PLC, "1A", Series 4, 2.04%*, 3/10/2005 | 45,000,000 | 45,000,000 |
Total Asset Backed (Cost $59,803,517) | 59,803,517 |
|
Municipal Investment 0.1% |
Maryland, Health & Higher Educational Facilities Authority Revenue, Adventist, Series B, 2.2%***, 1/1/2035
(Cost $13,000,000) | 13,000,000 | 13,000,000 |
|
Funding Agreement 0.6% |
New York Life Insurance Co., 2.0%*, 9/20/2005
(Cost $60,000,000) | 60,000,000 | 60,000,000 |
|
Promissory Notes 3.5% |
Goldman Sachs Group, Inc.: | | |
2.15%*, 5/26/2005 | 225,000,000 | 225,000,000 |
2.15%*, 8/10/2005 | 117,000,000 | 117,000,000 |
Total Promissory Notes (Cost $342,000,000) | 342,000,000 |
Short-Term Notes 1.4% |
Bear Stearns & Co., Inc., 2.21%*, 3/31/2005 | 110,000,000 | 110,000,000 |
General Electric Capital Corp., 2.3%*, 2/3/2005 | 25,000,000 | 25,003,018 |
Total Short-Term Notes (Cost $135,003,018) | 135,003,018 |
|
Time Deposits 12.8% |
Barclays Bank PLC, 2.0%, 12/1/2004 | 290,000,000 | 290,000,000 |
Citibank NA, 1.98%, 12/1/2004 | 100,000,000 | 100,000,000 |
Canadian Imperial Bank of Commerce, 2.0%, 12/1/2004 | 164,089,726 | 164,089,726 |
Fifth Third Bank, 2.03%, 12/1/2004 | 300,000,000 | 300,000,000 |
Keybank NA, 2.0%, 12/1/2004 | 200,000,000 | 200,000,000 |
State Street Bank and Trust Co., 2.0%, 12/1/2004 | 200,000,000 | 200,000,000 |
Total Time Deposits (Cost $1,254,089,726) | 1,254,089,726 |
|
Repurchase Agreements 4.1% |
Bank of America, 2.06%, dated 11/30/2004, to be repurchased at $46,002,632 on 12/01/2004 (b) | 46,000,000 | 46,000,000 |
Credit Suisse First Boston Corp., 1.97%, dated 11/30/2004, to be repurchased at $32,202,958 on 12/01/2004 (c) | 32,201,196 | 32,201,196 |
JPMorgan Chase, Inc., 2.11%, dated 11/30/2004, to be repurchased at $243,526,672 on 12/01/2004 (d) | 243,512,399 | 243,512,399 |
State Street Bank and Trust Co., 1.94%, dated 11/30/2004, to be repurchased at $78,023,204 on 12/01/2004 (e) | 78,019,000 | 78,019,000 |
Total Repurchase Agreements (Cost $399,732,595) | 399,732,595 |
| % of Net Assets | Value ($) |
| |
Total Investment Portfolio (Cost $9,788,732,679) (a) | 100.1 | 9,788,732,679 |
Other Assets and Liabilities, Net | (0.1) | (7,373,174) |
Net Assets | 100.0 | 9,781,359,505 |
* Floating rate notes are securities whose yields vary with a designated market index or market rate, such as the coupon-equivalent of the US Treasury bill rate. These securities are shown at their current rate as of November 30, 2004.
** Annualized yield at time of purchase; not a coupon rate.
*** 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, 2004.
(a) Cost for federal income tax purposes was $9,788,732,679.
(b) Collateralized by $46,103,129 Federal National Mortgage Association., 5.5%, maturing on 5/1/2034 with a value of $46,920,000.
(c) Collateralized by $58,260,000 US Treasury Strips Security, Zero Coupon, maturing on 11/15/2016 with a value of $32,846,990.
(d) Collateralized by:
Principal Amount ($) | | Security | Rate (%) | | Maturity Date | Collateral Value ($) |
|
152,672,161 | | Federal Home Loan Mortgage Corp. | 4.00-5.50 | | 2/15/2017- 11/15/2029 | 152,170,913 |
96,130,967 | | Federal National Mortgage Association | 4.00-5.82 | | 1/25/2027- 3/25/2031 | 96,212,477 |
Total Collateral Value | 248,383,390 |
(e) Collateralized by $79,085,000 Federal Home Loan Mortgage Corp., 2.875%, maturing on 9/15/2005 with a value of $79,583,394.
The accompanying notes are an integral part of the financial statements.
Statement of Assets and Liabilities as of November 30, 2004 (Unaudited) |
Assets |
Investments in securities, at amortized cost | $ 9,788,732,679 |
Cash | 88 |
Interest receivable | 14,674,179 |
Receivable for investments sold | 4,433,149 |
Other assets | 154,186 |
Total assets | 9,807,994,281 |
Liabilities |
Payable for investments purchased | 20,010,103 |
Dividends payable | 3,223,791 |
Payable for Fund shares redeemed | 986,655 |
Accrued management fee | 969,446 |
Other accrued expenses and payables | 1,444,781 |
Total liabilities | 26,634,776 |
Net assets, at value | $ 9,781,359,505 |
Net Assets |
Net assets consist of: Accumulated distributions in excess of net investment income | (43,530) |
Accumulated net realized gain (loss) | (262,368) |
Paid-in capital | 9,781,665,403 |
Net assets, at value | $ 9,781,359,505 |
The accompanying notes are an integral part of the financial statements.
Statement of Assets and Liabilities as of November 30, 2004 (Unaudited) (continued) |
Net Asset Value |
Prime Reserve Class AARP Net Asset Value, offering and redemption price per share ($78,792,239 ÷ 78,867,176 outstanding shares of beneficial interest, $.001 par value, unlimited number of shares authorized) | $ 1.00 |
Prime Reserve Class S Net Asset Value, offering and redemption price per share ($35,704,474 ÷ 35,708,356 outstanding shares of beneficial interest, $.001 par value, unlimited number of shares authorized) | $ 1.00 |
Premium Class AARP Net Asset Value, offering and redemption price per share ($159,545,684 ÷ 159,529,924 outstanding shares of beneficial interest, $.001 par value, unlimited number of shares authorized) | $ 1.00 |
Premium Class S Net Asset Value, offering and redemption price per share ($492,343,400 ÷ 492,472,081 outstanding shares of beneficial interest, $.001 par value, unlimited number of shares authorized) | $ 1.00 |
Managed Shares Net Asset Value, offering and redemption price per share ($431,527,521 ÷ 431,678,787 outstanding shares of beneficial interest, $.001 par value, unlimited number of shares authorized) | $ 1.00 |
Institutional Shares Net Asset Value, offering and redemption price per share ($8,583,446,187 ÷ 8,583,582,990 outstanding shares of beneficial interest, $.001 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, 2004 (Unaudited) |
Investment Income |
Income: Interest | $ 82,751,954 |
Expenses: Management fee | 13,480,052 |
Services to shareholders | 812,341 |
Custodian and accounting fees | 670,064 |
Auditing | 21,777 |
Legal | 83,571 |
Reports to shareholders | 45,083 |
Registration fees | 47,996 |
Trustees' fees and expenses | 129,665 |
Other | 18,612 |
Total expenses, before expense reductions | 15,309,161 |
Expense reductions | (7,773,555) |
Total expenses, after expense reductions | 7,535,606 |
Net investment income | 75,216,348 |
Net realized gain (loss) on investment transactions | (16,998) |
Net increase (decrease) in net assets resulting from operations | $ 75,199,350 |
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,
2004
(Unaudited) | Year Ended
May 31,
2004 |
Operations: Net investment income | $ 75,216,348 | $ 104,384,067 |
Net realized gain (loss) on investment transactions | (16,998) | 535,752 |
Net increase (decrease) in net assets resulting from operations | 75,199,350 | 104,919,819 |
Distributions to shareholders from: Net investment income: Prime Reserve Class AARP | (519,026) | (669,344) |
Prime Reserve Class S | (214,171) | (278,808) |
Premium Class AARP | (1,094,084) | (1,413,592) |
Premium Class S | (3,408,216) | (4,746,867) |
Managed Shares | (3,074,261) | (4,560,599) |
Institutional Shares | (67,014,951) | (92,674,603) |
Fund share transactions: Proceeds from shares sold | 52,300,343,426 | 89,485,332,033 |
Reinvestment of distributions | 51,610,363 | 62,873,069 |
Cost of shares redeemed | (52,468,093,618) | (90,506,115,135) |
Net increase (decrease) in net assets from Fund share transactions | (116,139,829) | (957,910,033) |
Increase (decrease) in net assets | (116,265,188) | (957,334,027) |
Net assets at beginning of period | 9,897,624,693 | 10,854,958,720 |
Net assets at end of period (including accumulated distributions in excess of and undistributed net investment income of $43,530 and $64,831, respectively) | $ 9,781,359,505 | $ 9,897,624,693 |
The accompanying notes are an integral part of the financial statements.
Prime Reserve Class AARP |
Years Ended May 31, | 2004a | 2004 | 2003 | 2002 | 2001b |
Selected Per Share Data |
Net asset value, beginning of period | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 |
Net investment income | .006 | .007 | .011 | .023 | .044 |
Distributions from net investment income | (.006) | (.007) | (.011) | (.023) | (.044) |
Net asset value, end of period | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 |
Total Return (%)c | .63** | .67 | 1.14 | 2.28 | 4.53d** |
Ratios to Average Net Assets and Supplemental Data |
Net assets, end of period ($ millions) | 79 | 86 | 119 | 146 | 217 |
Ratio of expenses before expense reductions (%) | .41* | .63 | .65 | .65 | .66* |
Ratio of expenses after expense reductions (%) | .27* | .47 | .50 | .50 | .50* |
Ratio of net investment income (%) | 1.26* | .67 | 1.09 | 2.34 | 5.60* |
a For the six months ended November 30, 2004 (Unaudited). b For the period from August 11, 2000 (commencement of operations of Prime Reserve Class AARP shares) to May 31, 2001. c Total returns would have been lower had certain expenses not been reduced. d Total return for the period ending May 31, 2001 includes the effect of a voluntary capital contribution from the Advisor; without this contribution the total return would have been lower. * Annualized ** Not annualized |
|
Prime Reserve Class S |
Years Ended May 31, | 2004a | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per Share Data |
Net asset value, beginning of period | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 |
Net investment income | .006 | .007 | .011 | .023 | .057 | .052 |
Distributions from net investment income | (.006) | (.007) | (.011) | (.023) | (.057) | (.052) |
Net asset value, end of period | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 |
Total Return (%)b | .58** | .66 | 1.14 | 2.29 | 5.82c | 5.30 |
Ratios to Average Net Assets and Supplemental Data |
Net assets, end of period ($ millions) | 36 | 38 | 48 | 49 | 55 | 46 |
Ratio of expenses before expense reductions (%) | .54* | .64 | .65 | .65 | .64 | .74d |
Ratio of expenses after expense reductions (%) | .39* | .49 | .50 | .50 | .46 | .59d |
Ratio of net investment income (%) | 1.14* | .65 | 1.09 | 2.34 | 5.74 | 5.18 |
a For the six months ended November 30, 2004 (Unaudited). b Total returns would have been lower had certain expenses not been reduced. c Total return for the period ending May 31, 2001 includes the effect of a voluntary capital contribution from the Advisor; without this contribution the total return would have been lower. d The ratios of operating expenses excluding costs incurred in connection with a fund complex reorganization before and after expense reductions were .74% and .59%, respectively. * Annualized ** Not annualized |
|
Premium Class AARP |
Years Ended May 31, | 2004a | 2004 | 2003 | 2002 | 2001b |
Selected Per Share Data |
Net asset value, beginning of period | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 |
Net investment income | .007 | .008 | .013 | .024 | .037 |
Distributions from net investment income | (.007) | (.008) | (.013) | (.024) | (.037) |
Net asset value, end of period | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 |
Total Return (%)c | .68** | .81 | 1.29 | 2.44 | 3.75d** |
Ratios to Average Net Assets and Supplemental Data |
Net assets, end of period ($ millions) | 160 | 164 | 186 | 188 | 185 |
Ratio of expenses before expense reductions (%) | .32* | .49 | .50 | .50 | .51* |
Ratio of expenses after expense reductions (%) | .17* | .33 | .35 | .35 | .35* |
Ratio of net investment income (%) | 1.36* | .81 | 1.24 | 2.49 | 5.62* |
a For the six months ended November 30, 2004 (Unaudited). b For the period from October 2, 2000 (commencement of operations of Premium Class AARP shares) to May 31, 2001. c Total returns would have been lower had certain expenses not been reduced. d Total return for the period ending May 31, 2001 includes the effect of a voluntary capital contribution from the Advisor; without this contribution the total return would have been lower. * Annualized ** Not annualized |
|
Premium Class S |
Years Ended May 31, | 2004a | 2004 | 2003 | 2002 | 2001 | 2000 |
Selected Per Share Data |
Net asset value, beginning of period | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 |
Net investment income | .007 | .008 | .013 | .024 | .059 | .055 |
Distributions from net investment income | (.007) | (.008) | (.013) | (.024) | (.059) | (.055) |
Net asset value, end of period | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 |
Total Return (%)b | .67** | .81 | 1.29 | 2.44 | 6.06c | 5.68 |
Ratios to Average Net Assets and Supplemental Data |
Net assets, end of period ($ millions) | 492 | 512 | 653 | 826 | 1,004 | 1,067 |
Ratio of expenses before expense reductions (%) | .34* | .49 | .50 | .50 | .48 | .35d |
Ratio of expenses after expense reductions (%) | .20* | .33 | .35 | .35 | .32 | .20d |
Ratio of net investment income (%) | 1.33* | .81 | 1.24 | 2.49 | 5.88 | 5.56 |
a For the six months ended November 30, 2004 (Unaudited). b Total returns would have been lower had certain expenses not been reduced. c Total return for the period ending May 31, 2001 includes the effect of a voluntary capital contribution from the Advisor; without this contribution the total return would have been lower. d The ratios of operating expenses excluding costs incurred in connection with a fund complex reorganization before and after expense reductions were .35% and .20%, respectively. * Annualized ** Not annualized |
Notes to Financial Statements (Unaudited) |
|
A. Significant Accounting Policies
Scudder Money Market Series (the "Fund") is the diversified investment portfolio of Scudder Money Market Trust (the "Trust") which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company organized as a Massachusetts business trust.
The Fund offers multiple classes of shares which provide investors with different purchase options: Prime Reserve Class AARP, Prime Reserve Class S, Premium Class AARP, Premium Class S, Managed Shares and Institutional Shares. Shares of Class AARP are designed for members of AARP. Prime Reserve Class S and Premium Class S shares of the Fund are generally not available to new investors. Certain detailed information for Managed Shares and Institutional Shares is provided separately and is available upon request. After December 31, 2004, Prime Reserve and Premium Class S shares will no longer be available to new investors except under certain circumstances. For a complete list of investors that may continue to purchase Class S shares after December 31, 2004, please refer to the Fund's Statement of Additional Information.
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 all classes of shares, except that each class bears certain expenses unique to that class such as services to shareholders and certain other class-specific expenses. Differences in class-level expenses may result in payment of different per share dividends by class. 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.
Repurchase Agreements. The Fund may enter into repurchase agreements with certain banks and broker/dealers whereby the Fund, through its custodian or sub-custodian bank, receives delivery of the underlying securities, the amount of which at the time of purchase and each subsequent business day is required to be maintained at such a level that the value is equal to at least the principal amount of the repurchase price plus accrued interest. The custodian bank holds the collateral in a separate account until the agreement matures. If the value of the securities falls below the principal amount of the repurchase agreement plus accrued interest, the financial institution deposits additional collateral by the following business day. If the financial institution either fails to deposit the required additional collateral or fails to repurchase the securities as agreed, the Fund has the right to sell the securities and recover any resulting loss from the financial institution. If the financial institution enters into bankruptcy, the Fund's claims on the collateral may be subject to legal proceedings.
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 income to its shareholders. Accordingly, the Fund paid no federal income taxes and no federal income tax provision was required.
At May 31, 2004, the Fund had a net tax basis capital loss carryforward of approximately $245,000, which may be applied against any realized net taxable gains of each succeeding year until fully utilized or until May 31, 2010, the expiration date, whichever occurs first.
Distribution of Income and Gains. 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.
The tax character of current year distributions will be determined at the end of the fiscal year.
Other. Investment transactions are accounted for on the 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 discounts and premiums are accreted/amortized 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"), an indirect, wholly owned subsidiary of Deutsche Bank AG, 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 0.25% of average daily net assets for the Fund, computed and accrued daily and payable monthly. For the period June 1, 2004 through July 31, 2004, the Advisor agreed to voluntarily waive 0.15% of its management fee and for the period August 1, 2004 through November 30, 2004, the Advisor agreed to voluntarily waive 0.14% of its investment management fee for the Fund. Accordingly, for the six months ended November 30, 2004, the Advisor waived a portion of its management fees pursuant to the Management Agreement aggregating $7,743,019 and the amount charged aggregated $5,737,033, which was equivalent to an annualized effective rate of 0.11% of the Fund's average daily net assets.
Effective October 1, 2003 through September 30, 2005, the Advisor has contractually agreed to waive all or a portion of its management fee and reimburse or pay certain operating expenses of the Fund to the extent necessary to maintain the operating expenses of each class at 0.50%, 0.50%, 0.50%, 0.50%, 0.20% and 0.15% of average daily net assets for Prime Reserve Class AARP, Prime Reserve Class S, Premium Class AARP, Premium Class S, Managed Shares and Institutional Shares, respectively (excluding certain expenses such as trustee and trustee counsel fees, extraordinary expenses, taxes, brokerage and interest).
In addition, for the six months ended November 30, 2004, the Advisor has agreed to reimburse the Fund $27,854, which represents a portion of the fee savings expected to be realized by the Advisor related to the outsourcing by the Advisor of certain administrative services to an unaffiliated service provider.
Service Provider Fees. Scudder Service Corporation ("SSC"), a subsidiary of the Advisor, is the transfer, shareholder service agent and dividend-paying agent for the Fund. Pursuant to a sub-transfer agency agreement between SSC and DST Systems, Inc. ("DST"), SSC has delegated certain transfer agent and dividend-paying agent functions to DST. The costs and expenses of such delegation are borne by SSC, not by the Fund. For the six months ended November 30, 2004, the amounts charged to the Fund by SSC were as follows:
Services to Shareholders | Total Aggregated | Unpaid at November 30, 2004 |
Prime Reserve Class AARP | $ 67,140 | $ 48,582 |
Prime Reserve Class S | 38,404 | 27,668 |
Premium Class AARP | 49,767 | 34,670 |
Premium Class S | 103,578 | 73,169 |
Managed Shares | 28,182 | 18,362 |
Institutional Shares | 20,720 | 13,357 |
| $ 307,791 | $ 215,808 |
Scudder Fund Accounting Corporation ("SFAC"), an affiliate of the Advisor, is responsible for computing the daily net asset value per share and maintaining the portfolio and general accounting records of the Fund. SFAC has retained State Street Bank and Trust Company to provide certain administrative, fund accounting and record-keeping services to the Fund. For the six months ended November 30, 2004, the amount charged to the Fund by SFAC for accounting services aggregated $344,836, all of which is unpaid at November 30, 2004.
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 affiliate, AARP Services, Inc., monitors and oversees the AARP Investment Program from Scudder Investments, but does not act as an investment advisor or recommend specific mutual funds. DeIM 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 Prime and Premium AARP Class 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 DeIM. The fee rates, which decrease as the aggregate net assets of the AARP classes become larger, are as follows: 0.07% of the first $6 billion in net assets, 0.06% for the next $10 billion and 0.05% 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, 2004, the custody fee was reduced by $2,682 for custodian credits earned.
D. Line of Credit
The Fund and several other 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, that otherwise might require the untimely disposition of securities. The Participants are charged an annual commitment fee which is allocated, 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 share and dollar activity in the Fund:
| Six Months Ended
November 30, 2004 | Year Ended
May 31, 2004 |
| Shares | Dollars | Shares | Dollars |
Shares sold |
Prime Reserve Class AARP | 9,132,599 | $ 9,132,599 | 25,567,901 | $ 25,593,687 |
Prime Reserve Class S | 6,230,768 | 6,230,768 | 16,607,555 | 16,607,555 |
Premium Class AARP | 37,113,649 | 37,113,648 | 106,428,595 | 106,428,595 |
Premium Class S | 124,136,507 | 124,136,507 | 330,040,352 | 330,040,352 |
Managed | 502,445,835 | 502,445,835 | 1,210,224,788 | 1,210,272,887 |
Institutional | 51,621,284,067 | 51,621,284,069 | 87,796,243,090 | 87,796,388,957 |
| | $ 52,300,343,426 | | $ 89,485,332,033 |
Shares issued to shareholders in reinvestment of distributions |
Prime Reserve Class AARP | 488,086 | $ 488,086 | 627,259 | $ 627,259 |
Prime Reserve Class S | 208,622 | 208,622 | 277,342 | 277,342 |
Premium Class AARP | 1,029,723 | 1,029,723 | 1,323,988 | 1,323,988 |
Premium Class S | 3,071,337 | 3,071,337 | 4,295,332 | 4,295,332 |
Managed | 643,566 | 643,566 | 1,041,789 | 1,041,789 |
Institutional | 46,169,029 | 46,169,029 | 55,307,359 | 55,307,359 |
| | $ 51,610,363 | | $ 62,873,069 |
Shares redeemed |
Prime Reserve Class AARP | (16,903,719) | $ (16,903,719) | (59,453,732) | $ (59,507,681) |
Prime Reserve Class S | (9,214,620) | (9,214,620) | (26,152,761) | (26,152,761) |
Premium Class AARP | (42,359,900) | (42,359,900) | (130,160,612) | (130,160,612) |
Premium Class S | (147,072,661) | (147,168,162) | (475,405,005) | (475,405,005) |
Managed | (522,873,735) | (522,873,735) | (1,347,708,980) | (1,347,708,980) |
Institutional | (51,729,573,482) | (51,729,573,482) | (88,467,180,096) | (88,467,180,096) |
| | $ (52,468,093,618) | | $ (90,506,115,135) |
Net increase (decrease) |
Prime Reserve Class AARP | (7,283,034) | $ (7,283,034) | (33,258,572) | $ (33,286,735) |
Prime Reserve Class S | (2,775,230) | (2,775,230) | (9,267,864) | (9,267,864) |
Premium Class AARP | (4,216,528) | (4,216,529) | (22,408,029) | (22,408,029) |
Premium Class S | (19,864,817) | (19,960,318) | (141,069,321) | (141,069,321) |
Managed | (19,784,334) | (19,784,334) | (136,442,403) | (136,394,304) |
Institutional | (62,120,386) | (62,120,384) | (615,629,647) | (615,483,780) |
| | $ (116,139,829) | | $ (957,910,033) |
F. Regulatory Matters and Litigation
Since at least July 2003, federal, state and industry regulators have been conducting ongoing inquiries and investigations ("inquiries") into the mutual fund industry, and have requested information from numerous mutual fund companies, including Scudder Investments. It is not possible to determine what the outcome of these inquiries will be or what the effect, if any, would be on the funds or their advisors. Publicity about mutual fund practices arising from these industry-wide inquiries serves as the general basis of a number of private lawsuits against the Scudder funds. These lawsuits, which previously have been reported in the press, involve purported class action and derivative lawsuits, making various allegations and naming as defendants various persons, including certain Scudder funds, the funds' investment advisors and their affiliates, certain individuals, including in some cases fund Trustees/Directors, officers, and other parties. Each Scudder fund's investment advisor has agreed to indemnify the applicable Scudder funds in connection with these lawsuits, or other lawsuits or regulatory actions that may be filed making allegations similar to these lawsuits regarding market timing, revenue sharing, fund valuation or other subjects arising from or related to the pending inquiries. Based on currently available information, the funds' investment advisors believe the likelihood that the pending lawsuits will have a material adverse financial impact on a Scudder fund is remote and such actions are not likely to materially affect their ability to perform under their investment management agreements with the Scudder funds.
Account Management Resources |
|
| AARP Investment Program Shareholders | Scudder Class S Shareholders |
Automated Information Lines | Easy-Access Line (800) 631-4636 | SAILTM (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 and information about how the fund voted proxies related to its portfolio securities during the 12-month period ended June 30 is available 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 of the fund's policies and procedures without charge, upon request, 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 |
| Prime Reserve Shares
Class AARP | Prime Reserve Shares
Class S |
Nasdaq Symbol | APSXX | SCRXX |
Fund Number | 109 | 309 |
| Premium Shares Class AARP | Premium Shares Class S |
Nasdaq Symbol | SMMXX | SPMXX |
Fund Number | 102 | 402 |
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 and state 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. With respect to accounts that are jointly held, an opt-out request 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
September 2004
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not Applicable
ITEM 6. SCHEDULE OF INVESTMENTS
Not Applicable
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT
INVESTMENT COMPANY AND AFFILIATED PURCHASERS
Not Applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Committee on Independent Trustees/Directors selects and nominates
Independent Trustees/Directors. Fund shareholders may also submit nominees that
will be considered by the committee when a Board vacancy occurs. Submissions
should be mailed to: c/o Dawn-Marie Driscoll, PO Box 100176, Cape Coral, FL
33910.
ITEM 10. 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) There have been no changes in the registrant's internal control over
financial reporting that occurred during the registrant's last half-year (the
registrant's second fiscal half-year in the case of the annual report) that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal controls over financial reporting.
ITEM 11. 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 Money Market Series
By: /s/Julian Sluyters
-------------------------------
Julian Sluyters
Chief Executive Officer
Date: January 31, 2005
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 Money Market Series
By: /s/Julian Sluyters
-------------------------------
Julian Sluyters
Chief Executive Officer
Date: January 31, 2005
By: /s/Paul Schubert
-------------------------------
Paul Schubert
Chief Financial Officer
Date: January 31, 2005
