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As Filed with the Securities and Exchange Commission on August 2, 2006
Securities Act File No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 x
Pre-Effective Amendment No. ¨
Post-Effective Amendment No. ¨
CASH ACCOUNT TRUST
(Exact Name of Registrant as Specified in Charter)
222 South Riverside Plaza
Chicago, Illinois 60606
(Address of Principal Executive Offices) (Zip Code)
617-295-2572
(Registrant’s Area Code and Telephone Number)
John Millette, Secretary
Cash Account Trust
Two International Place
Boston, Massachusetts 02110
(Name and Address of Agent for Service)
With copies to:
David A. Sturms, Esq.
Vedder, Price, Kaufman & Kammholz, P.C.
222 North LaSalle Street
Chicago, Illinois 60601
Approximate date of proposed public offering: As soon as practicable after the effective date of this Registration Statement.
TITLE OF SECURITIES BEING REGISTERED: Shares of Beneficial Interest (no par value) of the Registrant.
No filing fee is required because an indefinite number of shares have previously been registered pursuant to Rule 24f-2 under the Investment Company Act of 1940.
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
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Questions & Answers
DWS Government & Agency Money Fund
DWS Money Funds
Government & Agency Securities Portfolio
Investors Cash Trust
Q&A
Q What is happening?
A Deutsche Asset Management (or “DeAM” as defined on page [14] in the enclosed Prospectus/Proxy Statement) has initiated a program to reorganize and restructure the money market funds within the DWS fund family.
Q What issue am I being asked to vote on?
A You are being asked to vote on the merger of your fund into the Government & Agency Securities Portfolio series of Cash Account Trust (“CAT Government Fund”). Your fund and CAT Government Fund have substantially similar investment objectives and policies.
After carefully reviewing the proposal, your fund’s Board has determined that this action is in the best interest of your fund. The Board unanimously recommends that you vote for the proposal.
Q Why has this proposal been made for my fund?
A The proposal to merge your fund into CAT Government Fund is part of a program initiated by DeAM to provide a more streamlined selection of money market investment options. The program seeks to eliminate redundancies within the DWS money market funds and to focus DeAM’s investment resources on a core set of money market funds that best meet investor needs. DeAM believes that the merger will eliminate product
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Q&A continued
redundancies, maximize portfolio size wherever possible, and create the possibility for higher yielding funds with potentially lower expenses.
Q Will I have to pay taxes as a result of the merger?
A The merger is expected to be a tax-free reorganization for federal income tax purposes, and will not take place unless special tax counsel provides an opinion to that effect. Because each fund seeks to maintain a net asset value of $1.00 per share, you are unlikely to have a capital gain or loss if you redeem or exchange your shares before or after the merger. Nevertheless, you may wish to consult a tax advisor for more information on your own tax situation.
Q Will I own the same number of shares after the merger?
A Yes. You will receive shares equal in number to the shares owned as of the merger date.
Q Will my fund pay for the proxy solicitation and legal costs associated with this solicitation?
A No. DeAM will bear these costs.
Q When would the merger take place?
A If approved, the merger would occur on or about [October 30], 2006 or as soon as reasonably practicable after shareholder approval is obtained. Shortly after completion of the merger, shareholders whose accounts are affected by the merger will receive a confirmation statement reflecting their new account number and the number of shares owned.
Q How can I vote?
A You can vote in any one of four ways:
n | Through the Internet by going to the website listed on your proxy card(s); |
n | By telephone, with a toll-free call to the number listed on your proxy card(s); |
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Q&A continued
n | By mail, by sending the enclosed proxy card(s), signed and dated, to us in the enclosed envelope; or |
n | In person, by attending the special meeting. |
We encourage you to vote over the Internet or by telephone, following the instructions that appear on your proxy card(s). Whichever method you choose, please take the time to read the full text of the Prospectus/Proxy Statement before you vote.
Q If I send my proxy in now as requested, can I change my vote later?
A You may revoke your proxy at any time before it is voted by: (1) sending a written revocation to the Secretary of your Fund as explained in the proxy statement; or (2) forwarding a later-dated proxy that is received by your Fund at or prior to the special meeting; or (3) attending the special meeting and voting in person. Even if you plan to attend the special meeting, we ask that you return the enclosed proxy card. This will help us ensure that an adequate number of shares are present for the special meeting of your Fund to be held.
Q Will I be able to continue to track my fund’s performance on the Internet or through the voice response system (InvestorACCESS)?
A Yes. You will be able to continue to track your fund’s performance before the merger through both these means.
Q Whom should I call for additional information about this Prospectus/Proxy Statement?
A Please call Computershare Fund Services, Inc. your fund’s proxy solicitor, at (866) 774-4940.
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DWS GOVERNMENT & AGENCY MONEY FUND
DWS MONEY FUNDS
GOVERNMENT & AGENCY SECURITIES PORTFOLIO
INVESTORS CASH TRUST
A Message from the Funds’ President
[mailing date], 2006
Dear Shareholders:
I am writing to you to ask for your vote on an important matter that affects your investment in the DWS Government & Agency Money Fund series of DWS Money Funds (“DWS Government Fund”) and the Government & Agency Securities Portfolio series of Investors Cash Trust (“ICT Government Fund”), as applicable. While you are, of course, welcome to join us at the joint special shareholders’ meeting, most shareholders cast their vote by filling out and signing the enclosed proxy card, or by voting by telephone or through the Internet.
We are asking for your vote on the following matters, as applicable:
Proposal for DWS Government Fund: | Approval of a proposed merger of DWS Government Fund into the Government & Agency Securities Portfolio series of Cash Account Trust (“CAT Government Fund”). In this merger, your shares of DWS Government Fund would be exchanged, on a tax-free basis for federal income tax purposes, for shares of a newly-created class of CAT Government Fund equal in number to the DWS Government Fund shares held by you. | |
Proposal for ICT Government Fund: | Approval of a proposed merger of ICT Government Fund into CAT Government Fund. In this merger, your shares of ICT Government Fund would be exchanged, on a tax-free basis for federal income tax purposes, for shares of a newly-created class of CAT Government Fund equal in number to the ICT Government Fund shares held by you. |
Each proposed merger is part of a program initiated by Deutsche Asset Management (or “DeAM” as defined on page [14] of the enclosed Prospectus/Proxy Statement) to reorganize and restructure the money market funds in the DWS family of funds. The program is designed to enable DeAM to: (1) eliminate redundancies within the DWS money market funds by reorganizing and combining certain funds; and (2) focus its investment resources on a core set of money market funds that best meet investor needs.
DeAM believes that the mergers offer shareholders:
• | A similar investment opportunity in a larger fund with the opportunity to achieve greater economies of scale and a lower expense ratio; and |
• | A portfolio with the possibility of higher yields generated through more efficient execution and greater stability of assets. |
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The Trustees of your Fund have determined that the proposed merger of your Fund into CAT Government Fund is in the best interests of the Fund. If approved by shareholders, the Board expects that the merger of your Fund will take effect during the [fourth] calendar quarter of 2006.
Included in this booklet is information about the upcoming joint special shareholders’ meeting:
• | A Notice of a Joint Special Meeting of Shareholders, which summarizes the matter for which you are being asked to provide voting instructions; and |
• | A Prospectus/Proxy Statement, which provides detailed information on CAT Government Fund and the specific proposals being considered at the joint special shareholders’ meeting and why the proposals are being made. |
Although we would like very much to have each shareholder attend the meeting, we realize this may not be possible. Whether or not you plan to be present, we need your vote. We urge you to review the enclosed materials thoroughly. Once you’ve determined how you would like your interests to be represented, please promptly complete, sign, date and return the enclosed proxy card, vote by telephone or record your voting instructions on the Internet. A postage-paid envelope is enclosed for mailing, and telephone and Internet voting instructions are listed at the top of your proxy card. You may receive more than one proxy card. If so, please vote each one.
I’m sure that you, like most people, lead a busy life and are tempted to put this proxy aside for another day. Please don’t. Your prompt return of the enclosed proxy card (or your voting by telephone or through the Internet) may save the necessity and expense of further solicitations.
Your vote is important to us. We appreciate the time and consideration I am sure you will give to this important matter. If you have questions about the proposal, please call Computershare Fund Services, Inc., your fund’s proxy solicitor, at (866) 774-4940 or contact your financial advisor. Thank you for your continued support of DWS Scudder Investments.
Sincerely yours,
Michael Clark
President
DWS Money Funds
Investors Cash Trust
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DWS GOVERNMENT & AGENCY MONEY FUND DWS MONEY FUNDS
GOVERNMENT & AGENCY SECURITIES PORTFOLIO INVESTORS CASH TRUST
NOTICE OF A JOINT SPECIAL MEETING OF SHAREHOLDERS
This is the formal agenda for your Fund’s special shareholder meeting. It tells you what matter will be voted on and the time and place of the special meeting, in the event you choose to attend in person.
To the Shareholders of the DWS Government & Agency Money Fund series of DWS Money Funds (“DWS Government Fund”) and the Government & Agency Securities Portfolio series of Investors Cash Trust (“ICT Government Fund”):
A Joint Special Meeting of Shareholders of DWS Government Fund and ICT Government Fund will be held October 12, 2006 at [9:00 a.m.] Eastern time, at the offices of Deutsche Investment Management Americas Inc., 345 Park Avenue, 27th Floor, New York, New York 10154 (the “Meeting”), to consider the following (the “Proposals”):
Proposal for DWS Government Fund: | Approving an Agreement and Plan of Reorganization and the transactions it contemplates, including the transfer of all of the assets of DWS Government Fund to the Government & Agency Securities Portfolio series of Cash Account Trust (“CAT Government Fund”), in exchange for shares of CAT Government Fund and the assumption by CAT Government Fund of all liabilities of DWS Government Fund, and the distribution of such shares, on a tax-free basis for federal income tax purposes, to the shareholders of DWS Government Fund in complete liquidation and termination of DWS Government Fund. | |
Proposal for ICT Government Fund: | Approving an Agreement and Plan of Reorganization and the transactions it contemplates, including the transfer of all of the assets of ICT Government Fund to the Government & Agency Securities Portfolio series of Cash Account Trust (“CAT Government Fund”), in exchange for shares of CAT Government Fund and the assumption by CAT Government Fund of all liabilities of ICT Government Fund, and the distribution of such shares, on a tax-free basis for federal income tax purposes, to the shareholders of ICT Government Fund in complete liquidation and termination of ICT Government Fund. |
The persons named as proxies will vote in their discretion on any other business that may properly come before the Meeting or any adjournments or postponements thereof.
Holders of record of shares of DWS Government Fund and ICT Government Fund at the close of business on August 14, 2006 and August 3, 2006, respectively, are entitled to vote with respect to the Proposal for their Fund at the Meeting and at any adjournments or postponements thereof.
In the event that the necessary quorum to transact business or the vote required to approve the merger of your Fund is not obtained at the Meeting, the persons named as
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proxies may propose one or more adjournments of the Meeting with respect to your Fund in accordance with applicable law to permit such further solicitation of proxies as may be deemed necessary or advisable.
By order of the Trustees
John Millette
Secretary
[mailing date], 2006
WE URGE YOU TO MARK, SIGN, DATE AND MAIL THE ENCLOSED PROXY CARD(S) IN THE POSTAGE-PAID ENVELOPE PROVIDED OR TO RECORD YOUR VOTING INSTRUCTIONS BY TELEPHONE OR THROUGH THE INTERNET SO THAT YOU WILL BE REPRESENTED AT THE MEETING.
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INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance to you and avoid the time and expense involved in validating your vote if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party signing should conform exactly to the name shown in the registration on the proxy card.
3. All Other Accounts: The capacity of the individual signing the proxy card should be indicated unless it is reflected in the form of registration. For example:
Registration | Valid Signature | |
Corporate Accounts: | ||
(1) ABC Corp. | ABC Corp. John Doe, Treasurer | |
(2) ABC Corp. | John Doe, Treasurer | |
(3) ABC Corp. c/o John Doe, Treasurer | John Doe | |
(4) ABC Corp. Profit Sharing Plan | John Doe, Trustee | |
Partnership Accounts | ||
(1) The XYZ Partnership | Jane B. Smith, Partner | |
(2) Smith and Jones, Limited Partnership | Jane B. Smith, General Partner | |
Trust Accounts | ||
(1) ABC Trust Account | Jane B. Doe, Trustee | |
(2) Jane B. Doe, Trustee u/t/d 12/28/78 | Jane B. Doe | |
Custodial or Estate Accounts | ||
(1) John B. Smith, Cust. f/b/o John B. Smith Jr. UGMA/UTMA | John B. Smith | |
(2) Estate of John B. Smith | John B. Smith, Jr., Executor |
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IMPORTANT INFORMATION
FOR SHAREHOLDERS OF
DWS MONEY FUNDS—DWS GOVERNMENT & AGENCY MONEY FUND AND INVESTORS CASH TRUST—GOVERNMENT & AGENCY SECURITIES PORTFOLIO
This document contains a combined Prospectus/Proxy Statement and a proxy card. A proxy card is, in essence, a ballot. When you vote your proxy, it tells us how to vote on your behalf on an important issue relating to your fund. If you complete and sign the proxy card (or tell us how you want to vote by voting by telephone or through the Internet), we’ll vote it exactly as you tell us. If you simply sign the proxy card, we’ll vote it in accordance with the Trustees’ recommendation on the proposal applicable to your Fund.
We urge you to review the Prospectus/Proxy Statement carefully, and either fill out your proxy card and return it to us by mail, vote by telephone or record your voting instructions through the Internet. You may receive more than one proxy card since several shareholder meetings are being held as part of the broader restructuring program of the DWS fund family. If so, please vote each one. Your prompt return of the enclosed proxy card (or your voting by telephone or through the Internet) may save the necessity and expense of further solicitations.
We want to know how you would like to vote and welcome your comments. Please take a few minutes to read these materials and return your proxy card to us. If you have any questions, please call Computershare Fund Services, Inc., your fund’s proxy solicitor, at the special toll-free number we have set up for you (866-774-4940) or contact your financial advisor.
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PROSPECTUS/PROXY STATEMENT
[effective date], 2006
Acquisition of the assets of: | By and in exchange for shares of: | |
DWS Government & Agency Money Fund a series of DWS Money Funds | Government & Agency Securities Portfolio a series of Cash Account Trust | |
222 S. Riverside Plaza | 222 S. Riverside Plaza | |
Chicago, IL 60606 | Chicago, IL 60606 | |
(312)537-7000 | (312)537-7000 | |
Acquisition of the assets of: | By and in exchange for shares of: | |
Government & Agency Securities Portfolio a series of Investors Cash Trust | Government & Agency Securities Portfolio a series of Cash Account Trust | |
222 S. Riverside Plaza | 222 S. Riverside Plaza | |
Chicago, IL 60606 | Chicago, IL 60606 | |
(312)537-7000 | (312)537-7000 |
This Prospectus/Proxy Statement is being furnished in connection with the proposed merger of (a) the DWS Government & Agency Money Fund series of DWS Money Funds (“DWS Government Fund”) into the Government & Agency Securities Portfolio series of Cash Account Trust (“CAT Government Fund”), and (b) the Government & Agency Securities Portfolio series of Investors Cash Trust (“ICT Government Fund”) into CAT Government Fund. DWS Government Fund, ICT Government Fund and CAT Government Fund are referred to herein collectively as the “Funds,” and each is referred to herein individually as a “Fund.” DWS Government Fund and ICT Government Fund are also referred to herein collectively as the “Acquired Funds,” and each is referred to herein individually as an “Acquired Fund.”
The Trustees of each Acquired Fund are recommending that shareholders approve the transactions contemplated by the Agreements and Plans of Reorganization (as described below in Part IV and the form of which is attached hereto as Exhibit A), which we refer to as the merger of your Fund into CAT Government Fund.
As a result of the mergers, each shareholder of the Acquired Funds will receive shares of CAT Government Fund equal in number to such shareholder’s Acquired Fund shares as of the Valuation Time (as defined below on page [19]). Shareholders of each Acquired Fund will vote separately on the merger of their Fund into CAT Government Fund, with each merger being separate and distinct from the other. Neither merger is contingent upon the completion of the merger of the other Fund into CAT Government Fund.
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CAT Government Fund is comprised of eight classes of shares, including three new share classes, which were created to facilitate the mergers. Shareholders of the Acquired Funds will hold shares with a net asset value of $1.00 per share of the following newly created classes of CAT Government Fund after the mergers:
Acquired Fund/Class | CAT Government Fund Class | |
DWS Government Fund | DWS Government & Agency Money Fund shares | |
ICT Government Fund—DWS Government Cash Institutional Shares | DWS Government Cash Institutional Shares | |
ICT Government Fund—Service Shares | DWS Government Cash Institutional Shares | |
ICT Government Fund—Government Cash Managed Shares | Government Cash Managed Shares |
Proposal | ||||
Fund | Approval of Proposed Merger | Approval of Proposed Merger | ||
DWS Government Fund | ü | |||
ICT Government Fund | ü |
This Prospectus/Proxy Statement is being mailed on or about [ ], 2006. It explains concisely what you should know before voting on the matters described herein or investing in CAT Government Fund, a diversified series of Cash Account Trust, an open-end management investment company. Please read it carefully and keep it for future reference.
The securities offered by this Prospectus/Proxy Statement have not been approved or disapproved by the Securities and Exchange Commission (the “SEC”), nor has the SEC passed upon the accuracy or adequacy of this Prospectus/Proxy Statement. Any representation to the contrary is a criminal offense.
The following documents have been filed with SEC and are incorporated into this Prospectus/Proxy Statement by reference:
(i) | the prospectuses of CAT Government Fund dated [August 1], 2006, as supplemented from time to time, for DWS Government & Agency Money Fund shares, DWS Government Cash Institutional Shares and Government Cash Managed Shares (each a “CAT Government Fund Prospectus”), copies of which are included with this Prospectus/Proxy Statement; |
(ii) | the prospectus of DWS Government Fund dated December 1, 2005, as supplemented from time to time; |
(iii) | the prospectuses of ICT Government Fund dated [August 1], 2006, as supplemented from time to time, for Service Shares, DWS Government Cash Institutional Shares and Government Cash Managed Shares; |
(iv) | the statement of additional information of DWS Government Fund dated December 1, 2005, as supplemented from time to time; |
(v) | the statement of additional information of ICT Government Fund dated [August 1], 2006, as supplemented from time to time, for Service Shares and |
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the combined statement of additional information of ICT Government Fund dated [August 1], 2006, as supplemented from time to time, for DWS Government Cash Institutional Shares and Government Cash Managed Shares; |
(vi) | the statement of additional information relating to the proposed mergers, dated [ ], 2006 (the “Merger SAI”); and |
(vii) | the audited financial statements and related report of the Independent Registered Public Accounting Firm for DWS Government Fund contained in the Annual Report for the fiscal year ended July 31, 2005, and the unaudited financial statements contained in the Semi-annual Report for the six-month period ended January 31, 2006. |
(viii) | the audited financial statements and related report of the Independent Registered Public Accounting Firm for ICT Government Fund contained in the Annual Reports for Service Shares, DWS Government Cash Institutional Shares and Government Cash Managed Shares for the fiscal year ended March 31, 2006. |
There is no financial information available for the three classes of CAT Government Fund created to facilitate the mergers as of the date of this Prospectus/Proxy Statement. Such classes will commence operation as of the effective date of the mergers.
Shareholders may obtain free copies of the foregoing documents for a Fund, request other information about a Fund, or make shareholder inquiries, by contacting their financial advisor or by calling the corresponding Fund at 1-800-621-1048 (for DWS Government & Agency Money Fund shares); 1-800-231-8568 (for Service Shares) and 1-800-537-3177 (for DWS Government Cash Institutional Shares and Government Cash Managed Shares).
Shares of CAT Government Fund are not bank deposits nor are they guaranteed or insured by the Federal Deposit Insurance Corporation, or any other government agency, and involve risk, including the possible loss of the principal amount invested. There can be no assurance that the Fund will be able to maintain a stable net asset value of $1.00 per share.
This document is designed to give you the information you need to vote on the merger of your Fund. Much of the information is required disclosure under rules of the SEC; some of it is technical. If there is anything you don’t understand, please contact Computershare Fund Services, your Fund’s proxy solicitor, at (866) 774-4940, or contact your financial advisor.
The Funds are subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and in accordance therewith file reports and other information with the SEC. You may review and copy information about the Funds, including each Fund’s prospectus(es) and statement(s) of additional information, at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. You may call the SEC at 1-800-SEC-0330 for information about the operation of the public reference room. You may obtain copies of this information, with payment of a duplication fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the Public Reference Branch, Office of Consumer Affairs and Information Services, Securities and Exchange Commission, Washington, D.C. 20549-0102. You may also access reports and other information about the Funds on the EDGAR database on the SEC’s Internet site at http://www.sec.gov.
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The responses to the questions that follow provide an overview of key points typically of concern to shareholders considering a proposed merger between mutual funds. These responses are qualified in their entirety by the remainder of this Prospectus/Proxy Statement, which you should read carefully because it contains additional information and further details regarding the proposed merger of your Fund.
1. | What is being proposed? |
The Trustees of each Acquired Fund are recommending that shareholders approve the transactions contemplated by the Agreements and Plans of Reorganization (as described below in Part IV and the form of which is attached hereto as Exhibit A), which we refer to as the “merger” of your Fund into CAT Government Fund.
If the merger is approved by shareholders of an Acquired Fund, all of the assets of the Acquired Fund will be transferred to CAT Government Fund solely in exchange for the issuance and delivery to the Acquired Fund of the class or classes of shares of CAT Government Fund identified in the Agreement and Plan of Reorganization (“Merger Shares”) equal in number to the outstanding shares of the Acquired Fund and for the assumption by CAT Government Fund of all liabilities of the Acquired Fund. Immediately following the transfer, the Merger Shares received by the Acquired Funds will be distributed pro rata, on a tax-free basis for federal income tax purposes, to shareholders of record.
2. | What will happen to my shares as a result of the merger? |
CAT Government Fund is comprised of eight classes of shares, including three new share classes, which were created to facilitate the mergers. Acquired Fund shareholders will hold shares of the following newly-created classes of CAT Government Fund after the mergers:
Acquired Fund/Class | CAT Government Fund Class | |
DWS Government Fund | DWS Government & Agency Money Fund shares (“CAT Money Fund Shares”) | |
ICT Government Fund—DWS Government Cash Institutional Shares (“ICT Institutional Shares”) | DWS Government Cash Institutional Shares (“CAT Institutional Shares”) | |
ICT Government Fund—Service Shares (“ICT Service Shares”) | CAT Institutional Shares | |
ICT Government Fund—Government Cash Managed Shares (“ICT Managed Shares”) | Government Cash Managed Shares (“CAT Managed Shares”) |
3. | Why is the merger being proposed and why have the Trustees of my Fund recommended that I approve the merger? |
The proposed mergers are part of a program initiated by Deutsche Asset Management (or “DeAM” as defined below on p. [14]) to reorganize and restructure the money market funds in the DWS family of funds. The program is designed to enable
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DeAM to: (1) eliminate redundancies within the DWS money market funds by reorganizing and combining certain funds; and (2) focus its investment resources on a core set of money market funds that best meet investor needs.
DeAM believes that the mergers offer shareholders:
• | A similar investment opportunity in a larger fund with the opportunity to achieve greater economies of scale and a lower expense ratio; and |
• | A portfolio with the possibility of higher yields generated through more efficient execution and greater stability of assets. |
In determining whether to recommend that shareholders of the Acquired Funds approve the merger of their Fund into CAT Government Fund, the Trustees of each Fund considered, among others, the following factors:
• | That the investment objectives, policies, restrictions and strategies of the Acquired Funds are similar to the investment objective, policies, restrictions and strategies of CAT Government Fund; |
• | That shareholders of the Acquired Funds may benefit from a lower total fund operating expense ratio; |
• | That Deutsche Investment Management Americas Inc. (“DeIM”), the investment adviser to CAT Government Fund, has agreed to cap the total operating expense ratios of each class of Merger Shares for at least three years following the mergers at levels equal to or lower than the current total operating expense ratios or current expense cap of the class of Acquired Fund shares for which they will be exchanged; and |
• | That DeAM agreed to pay all costs associated with the mergers. |
The Trustees of your Fund concluded with respect to the proposed merger of your Fund into CAT Government Fund that: (1) the merger is in the best interests of the Fund, and (2) the interests of the existing shareholders of the Fund will not be diluted as a result of the merger. Accordingly, the Trustees of your Fund unanimously recommend that shareholders approve the Agreement and Plan of Reorganization (as defined below) and the merger as contemplated thereby.
4. | How do the investment goals, policies and restrictions of the Funds compare? |
The investment objective, policies and restrictions for each Acquired Fund and CAT Government Fund are substantially similar. DWS Government Fund seeks maximum current income to the extent consistent with stability of principal. ICT Government Fund and CAT Government Fund seek to provide maximum current income consistent with stability of capital. Each Fund seeks to maintain a stable net asset value of $1.00 per share pursuant to Rule 2a-7. Each Fund pursues its objective by investing exclusively in securities of the U.S. government and its agencies and instrumentalities.
As of April 30, 2006, the weighted average maturity for DWS Government Fund, ICT Government Fund and CAT Government Fund was days, days and days, respectively.
A complete list of each Fund’s portfolio holdings is posted on www.dws-scudder.com as of the month-end on or after the last day of the following month. This posted information generally remains accessible at least until the date on which a Fund files its
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Form N-CSR or N-Q with the SEC for the period that includes the date as of which the posted information is current. In addition, each Fund’s top ten holdings and other information about the Fund is posted on www.dws-scudder.com as of the calendar quarter-end on or after the 15th day following quarter-end. Each Fund’s statement of additional information includes a description of the Fund’s policies and procedures with respect to the disclosure of the Fund’s portfolio holdings.
5. | How do the management fees and expense ratios of the Funds compare, and what are they estimated to be following the mergers? |
The following table compares the annual management fee schedules of the Funds. Because DeIM has agreed to reduce its management fee for CAT Government Fund if the merger with ICT Government Fund is approved, the table reflects the management fee that shareholders of CAT Government Fund will pay assuming the merger with ICT Government Fund is consummated. The management fee for CAT Government Fund may be higher than shown if only the merger with DWS Government Fund is consummated; however, DWS Government Fund shareholders will still benefit from a lower management fee.
DWS Government Fund(1) | ICT Government Fund | CAT Government Fund | ||||||||
Combined Average Daily | Management Fee | Average Daily | Management Fee | Average Daily | Management Fee | |||||
First $215 million | 0.500% | All | 0.150% | All | 0.150% | |||||
Next $335 million | 0.375% | |||||||||
Next $250 million | 0.300% | |||||||||
Next $800 million | 0.250% | |||||||||
Next $800 million | 0.240% | |||||||||
Next $800 million | 0.230% | |||||||||
Amount over $3.2 billion | 0.220% |
(1) | The management fee for each series of DWS Money Funds, including DWS Government Fund, is computed based on the combined average daily net assets of all series of DWS Money Funds and allocated to such series based upon the relative net assets of each series. |
(2) | If the merger with ICT Government Fund is approved, DeIM has agreed to reduce its management fee such that after allocation of the fee to each series of Cash Account Trust the amount payable by CAT Government Fund is limited to 0.150% of the average daily net assets of CAT Government Fund. If the merger with ICT Government Fund is not approved, the annual management fee schedule for CAT Government Fund will be 0.22% of the first $500 million of combined average daily net assets of each series of Cash Account Trust, 0.20% of the next $500 million of combined assets, 0.175% of the next $1 billion of combined assets, 0.16% of the next $1 billion of combined assets and 0.15% of combined assets over $3 billion. The management fee will be allocated to CAT Government Fund based upon the relative net assets of CAT Government Fund. |
The following table summarizes the expenses that each Fund incurred during the year ended January 31, 2006, and the estimated annual expense ratios of the newly created classes of CAT Government Fund. The Funds are no-load funds, meaning no sales charges or other shareholder fees are paid directly from your investment. However, the Funds do have annual operating expenses, and as a shareholder you pay them indirectly. See the Annual Fund Operating Expenses table below for more information on these expenses.
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As shown below, the mergers are expected to result in the same or lower management fee ratio and a lower total expense ratio for shareholders of each Acquired Fund. However, there can be no assurance that the merger of your Fund will result in expense savings.
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
Management Fee | Distribution/ Service (12b-1) Fee | Other Expenses(1) | Total Annual Fund Operating Expenses | Less Expense Waiver/ Reimbursements | Net Annual Fund Operating Expenses | |||||||||||||
DWS Government Fund | 0.26% | None | 0.11% | 0.44% | — | (2) | 0.44% | |||||||||||
ICT Government Fund | ||||||||||||||||||
ICT Service Shares | 0.15 | % | None | 0.11 | % | 0.26 | % | 0.01 | %(3) | 0.25 | % | |||||||
ICT Institutional Shares | 0.15 | % | None | 0.08 | % | 0.23 | % | — | 0.23 | % | ||||||||
ICT Managed Shares | 0.15 | % | 0.15 | % | 0.18 | % | 0.43 | % | — | 0.46 | % | |||||||
CAT Government Fund | ||||||||||||||||||
CAT Money Fund Shares(4) | 0.15 | %(5) | None | 0.13 | % | 0.28 | % | — | (6) | 0.28 | % | |||||||
CAT Institutional Shares(4) | 0.15 | %(5) | None | 0.05 | % | 0.20 | % | — | (6) | 0.20 | % | |||||||
CAT Managed Shares(4) | 0.15 | %(5) | 0.15 | % | 0.13 | % | 0.43 | % | — | (6) | 0.43 | % |
(1) | Includes costs of shareholder services, custody and similar expenses, which may vary with Fund size and other factors. |
(2) | Through November 30, 2008, DeIM has contractually agreed to waive all or a portion of its management fee and/or reimburse or pay operating expenses of DWS Government Fund to the extent necessary to maintain DWS Government Fund’s total operating expenses at 0.45%, excluding certain expenses such as extraordinary expenses, taxes, brokerage, interest, and trustee and trustee counsel fees. |
(3) | Through July 31, 2007, DeIM has contractually agreed to waive all or a portion of its management fee and/or reimburse or pay operating expenses of ICT Service Shares to the extent necessary to maintain ICT Service Shares’ total operating expenses at 0.25%, excluding certain expenses such as extraordinary expenses, taxes, brokerage, interest, and trustee and trustee counsel fees. |
(4) | The Annual Fund Operating Expenses are estimated since no CAT Money Fund Shares, CAT Institutional Shares and CAT Managed Shares were issued as of CAT Government Fund’s fiscal year end. |
(5) | Reflects the management fee reduction that will be effective upon consummation of the merger of ICT Government Fund into CAT Government Fund. If the merger with ICT Government Fund is approved, DeIM has agreed to reduce its management fee such that after allocation of the fee to each series of Cash Account Trust the amount payable by CAT Government Fund is limited to 0.150% of the average daily net assets of CAT Government Fund. If the merger with ICT Government Fund is not approved, the annual management fee schedule for CAT Government Fund will be 0.22% of the first $500 million of combined average daily net assets of each series of Cash Account Trust, 0.20% of the next $500 million of combined assets, 0.175% of the next $1 billion of combined assets, 0.16% of the next $1 billion of combined assets and 0.15% of combined assets over $3 billion. The management fee will be allocated to CAT Government Fund based upon the relative net assets of CAT Government Fund. If only the merger with DWS Government Fund is approved, based on pro forma asset size, the management fee for CAT Government Fund is expected to be [0.16%] of the average daily net assets of the combined fund. |
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(6) | Contingent upon effectuation of the merger, through , 2009, DeIM has contractually agreed to waive all or a portion of its management fee and/or reimburse or pay operating expenses of the combined fund to the extent necessary to maintain the combined fund’s total operating expenses at an annual rate of 0.45%, 0.24% and 0.46% for CAT Money Fund Shares, CAT Institutional Shares and CAT Managed Shares, respectively, excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest. |
The tables are provided to help you understand your share of the operating expenses that each Fund incurs and that DeAM expects the combined fund to incur in the first year following the mergers.
Examples
The following examples translate the expenses shown in the preceding table into dollar amounts. By doing this, you can more easily compare the costs of investing in the Funds. The examples make certain assumptions. They assume that you invest $10,000 in a Fund for the time periods shown and reinvest all dividends and distributions. They also assume a 5% return on your investment each year, that a Fund’s operating expenses remain the same. The examples are hypothetical; your actual costs and returns may be higher or lower.
1 Year | 3 Years | 5 Years | 10 Years | |||||||||
DWS Government Fund | $ | $ | $ | $ | ||||||||
ICT Government Fund | ||||||||||||
ICT Service Shares | $ | $ | $ | $ | ||||||||
ICT Institutional Shares | $ | $ | $ | $ | ||||||||
ICT Managed Shares | $ | $ | $ | $ | ||||||||
CAT Government Fund | ||||||||||||
CAT Money Fund Shares | $ | $ | $ | $ | ||||||||
CAT Institutional Shares | $ | $ | $ | $ | ||||||||
CAT Managed Shares | $ | $ | $ | $ |
(1) | [Includes one year of capped expenses in the “1 Year” period and three years of capped expenses in the “3 Years,” “5 Years,” and “10 Years” periods.] |
6. | What are the federal income tax consequences of the proposed merger? |
For federal income tax purposes, no gain or loss is expected to be recognized by an Acquired Fund or its shareholders as a direct result of the merger into CAT Government Fund. For a discussion of taxes that you may incur indirectly as a result of the merger of your Fund (e.g., due to differences in net investment income), please see “Information about the Proposed Mergers—Federal Income Tax Consequences” below.
7. | Are the dividend policies of the Funds the same? |
Each Fund declares dividends representing substantially all net income daily and pays distributions monthly. The cutoff time for wire transfer purchases to receive that day’s dividend is 4:00 p.m. Eastern time for CAT Government Fund and ICT
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Government Fund. DWS Government Fund has a 2:00 p.m. cutoff time to receive same day dividends. The cut-off time for CAT Government Fund will apply following the mergers.
8. | Do the procedures for purchasing, redeeming and exchanging shares of the Funds differ? |
No. The procedures for purchasing and redeeming shares of a particular class of each Fund, and for exchanging shares, if applicable, of a particular class of each Fund for shares of other DWS funds, are substantially similar.
Orders received by the Funds are effected only on days when the New York Stock Exchange (“NYSE”) is open for trading. Purchases and redemptions of shares of each Fund are made at the Fund’s net asset value (“NAV”) per share. DWS Government Fund calculates its share price three times every business day, first at 12 p.m. Eastern time, then at 2 p.m. Eastern time and again as of the close of regular trading on the NYSE (typically 4 p.m. Eastern time, but sometimes earlier, as in the case of scheduled half-day trading or unscheduled suspensions of trading). ICT Government Fund and CAT Government Fund calculate their share price three times every business day, first at 2 p.m. Eastern time then at 4 p.m. Eastern time and again at 5 p.m. Eastern time. The NAV calculation times for CAT Government Fund will apply following the mergers. You can place an order to buy or sell shares at any time. The NAV of each Fund is calculated by dividing the value of total assets of the Fund, minus all liabilities, by the total number of the outstanding shares. Each Fund seeks to maintain a stable $1.00 share price.
For more information on each Fund’s purchase, redemption and exchange policies, see the Fund’s applicable prospectus(es).
9. | How will I be notified of the outcome of the merger of my Fund? |
If the proposed merger involving your Fund is approved by shareholders, you will receive confirmation after the merger is completed, indicating your new account number and the number of shares you are receiving, which will be equal to the number of shares you own. Otherwise, you will be notified in the next shareholder report of your Fund.
10. | Will the number of shares I own change? |
No. You will receive shares equal in number to the shares owned as of the merger date.
11. | What percentage of shareholders’ votes is required to approve each merger? |
Approval of each merger will require the affirmative vote of shareholders of the applicable Acquired Fund entitled to vote more than fifty percent (50%) of the votes entitled to be cast on the matter at the Meeting.
The Trustees of your Fund believe that the proposed merger of your Fund is in the best interests of the Fund. Accordingly, the Trustees unanimously recommend that shareholders vote FOR approval of the proposed merger of their Fund.
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II. INVESTMENT STRATEGIES AND RISK FACTORS
What are the main investment strategies and related risks of CAT Government Fund, and how do they compare with those of my Fund?
Investment Strategies. The investment objective, policies and restrictions for DWS Government Fund, ICT Government Fund and CAT Government Fund are substantially similar. DWS Government Fund seeks maximum current income to the extent consistent with stability of principal. ICT Government Fund and CAT Government Fund seek to provide maximum current income consistent with stability of capital. Each Fund seeks to maintain a stable net asset value of $1.00 per share pursuant to Rule 2a-7.
Each Fund pursues its goal by investing exclusively in short-term securities that are issued or guaranteed by the U.S. Government or its agencies or instrumentalities, and repurchase agreements backed by obligations of such securities.
While the Funds’ advisor gives priority to earning income and maintaining the value of each Fund’s principal at $1.00 per share, all money market instruments, including U.S. Government obligations, can change in value when interest rates change or an issuer’s creditworthiness changes.
Each Fund may invest in floating and variable rate instruments (obligations that do not bear interest at fixed rates). Each Fund maintains a dollar-weighted average maturity of 90 days or less. Each Fund’s securities are denominated in U.S. dollars. DWS Government Fund and ICT Government Fund’s securities have remaining maturities of 397 days (about 13 months) or less at the time of purchase while CAT Government Fund’s securities have remaining maturities of 12 months or less at the time of purchase. Each Fund also may invest in securities that have features that reduce their maturities to 397 days or less or 12 months or less, respectively, at the time of purchase. Each Fund is managed in accordance with Rule 2a-7 under the 1940 Act.
Each Fund may invest up to 10% of its total assets in other money market mutual funds in accordance with applicable regulations.
Working in consultation with a credit team, the portfolio screens potential securities and develop a list of those that the Funds may buy. The managers, looking for attractive yield and weighing considerations such as credit quality, economic outlooks and possible interest rate movements, then decide which securities on this list to buy. The managers may adjust each Fund’s exposure to interest rate risk, typically seeking to take advantage of possible rises in interest rates and to preserve yield when interest rates appear likely to fall.
DeAM believes that CAT Government Fund should provide a comparable investment opportunity for shareholders of each Acquired Fund.
For a more detailed description of the investment techniques used by each Fund, please see the applicable Fund’s prospectus(es) and SAI(s).
Primary Risks. As with any investment, you may lose money by investing in CAT Government Fund. There are several risk factors summarized below that could reduce
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the yield from CAT Government Fund or make it perform less well than other investments. The risks of an investment in CAT Government Fund are the same as the risks of an investment in your current Fund. More detailed descriptions of the risks associated with an investment in CAT Government Fund can be found in the current prospectuses and statements of additional information of CAT Government Fund.
Interest Rate Risk. Money market instruments, like all debt securities, face the risk that the securities will decline in value because of changes in interest rates. Generally, investments subject to interest rate risk will decrease in value when interest rates rise and increase in value when interest rates decline. To minimize such price fluctuations, CAT Government Fund limits the dollar-weighted average maturity of the securities held by CAT Government Fund to 90 days or less. Generally, the price of short-term investments fluctuates less than longer-term bonds. Income earned on floating or variable rate securities may vary as interest rates decrease or increase. Because of CAT Government Fund’s high credit standards, its yield may be lower than the yields of money funds that do not invest primarily in U.S. Government and agency securities.
Credit Risk. If a portfolio security declines in credit quality or goes into default, it could hurt CAT Government Fund’s performance. Additionally, some securities issued by U.S. Government agencies or instrumentalities are supported only by the credit of that agency or instrumentality. There is no guarantee that the U.S. Government will provide support to such agencies or instrumentalities and such securities may involve risk of loss of principal and interest. Other securities are backed by the full faith and credit of the U.S. Government.
Market Risk. Although individual securities may outperform their market, the entire market may decline as a result of rising interest rates, regulatory developments or deteriorating economic conditions.
Security Selection Risk. While CAT Government Fund invests in short-term securities, which by their nature are relatively stable investments, the risk remains that the securities in which CAT Government Fund invests will not perform as expected. This could cause CAT Government Fund’s returns to lag behind those of similar money market funds.
Repurchase Agreement Risk. A repurchase agreement exposes the CAT Government Fund to the risk that the party that sells the securities may default on its obligation to repurchase them. In this circumstance, CAT Government Fund can lose money because:
• | it cannot sell the securities at the agreed-upon time and price; or |
• | the securities lose value before they can be sold. |
CAT Government Fund seeks to reduce this risk by monitoring the creditworthiness of the sellers with whom it enters into repurchase agreements. CAT Government Fund also monitors the value of the securities to ensure that they are at least equal to the total amount of the repurchase obligations, including interest and accrued interest.
An investment in CAT Government Fund is not insured or guaranteed by the FDIC or any other government agency. Although CAT Government Fund seeks to preserve the value of an investment at $1.00 per share, this share price isn’t guaranteed and you could lose money by investing in CAT Government Fund.
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Performance Information. The following information provides some indication of the risks of investing in the Funds. The bar charts show year-to-year changes in the performance of CAT Premier Money Market Shares, DWS Government Fund shares and ICT Service Shares. The table following the charts compares each Fund’s performance. Because the newly created classes of CAT Government Fund will not commence operations until the effective date of the mergers, the performance figures shown for CAT Government Fund reflect the historical performance of CAT Government Fund’s Premier Money Market Shares. The newly created classes of CAT Government Fund would be expected to have substantially similar gross annual returns (before the effect of expenses) as CAT Premier Money Market Shares, as the shares will be invested in the same portfolio of securities, and the returns of the classes net of expenses would be expected to differ primarily due to the different expenses of the classes.
Calendar Year Total Returns (%)
CAT Government Fund—CAT Premier Money Market Shares
Annual Total Returns (%) as of 12/31 each year
2006 total return as of June 30: 1.84%
For the periods included in the bar chart:
Best Quarter: 1.24%, Q1 2001 Worst Quarter: 0.02%, Q4 2003
DWS Government Fund
Annual Total Returns (%) as of 12/31 each year
2006 total return as of June 30: 2.14%
For the periods included in the bar chart:
Best Quarter: 1.58%, Q3 2000 Worst Quarter: 0.16%, Q1 2004
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ICT Government Fund—ICT Service Shares
Annual Total Returns (%) as of 12/31 each year
2006 total return as of June 30: 2.24%
For the periods included in the bar chart:
Best Quarter: 1.62%, Q4 2000 Worst Quarter: 0.21%, Q1 2004
Average Annual Total Returns
(for periods ended December 31, 2005)
Past 1 year | Past 5 years | Past 10 years/ Since Inception | |||||||
CAT Government Fund | |||||||||
CAT Premier Money Market Shares | 2.28 | % | 1.39 | % | 1.99 | %(1) | |||
DWS Government Fund | 2.85 | % | 1.96 | % | 3.63 | % | |||
ICT Government Fund | |||||||||
ICT Service Shares | 3.06 | % | 2.15 | % | 3.80 | % | |||
ICT Institutional Shares | 3.09 | % | 2.20 | % | 2.93 | %(2) | |||
ICT Managed Shares | 2.85 | % | 1.95 | % | 2.67 | %(2) |
(1) | Inception date for CAT Premier Money Market Shares was March 1, 2000. |
(2) | Inception date for ICT Institutional Shares and ICT Managed Shares was November 17, 1999. |
As of December 31, 2005, DWS Government Fund’s 7-day yield was 3.87%, ICT Government Fund’s 7-day yield was 3.32% for ICT Service Shares, 4.07% for ICT Institutional Shares and 4.06% for ICT Managed Shares and CAT Government Fund’s 7-day yield was 3.32% for CAT Premier Money Market Shares. The 7-day yield, which is often referred to as the “current yield,” is the income generated by a fund over a seven-day period. This amount is then annualized, which means that we assume a fund generates the same income every week for a year. The “total return” of a fund is the change in the value of an investment in the fund over a given period. Average annual returns are calculated by averaging the year-by-year returns of a fund over a given period.
Current performance information may be higher or lower than the performance data quoted above. For more recent performance information or to learn the current 7-day yield of the Funds, call your financial advisor or 1-800-621-1048 or visit the Funds’ website at www.dws-scudder.com.
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III. OTHER COMPARISONS BETWEEN THE FUNDS
Advisor and Portfolio Managers. DeIM is the investment advisor for each Fund. Under the supervision of the Board of Trustees of each trust, DeIM, with headquarters at 345 Park Avenue, New York, New York 10154, makes each Fund’s investment decisions, buys and sells securities for each Fund and conducts research that leads to these purchase and sale decisions. DeIM is also responsible for selecting brokers and dealers and for negotiating brokerage commissions and dealer charges. DeIM is part of DeAM and an indirect wholly-owned subsidiary of Deutsche Bank AG. DeAM, or Deutsche Asset Management, is the marketing name in the United States for the asset management activities of, among others, Deutsche Bank AG, DeIM, Deutsche Asset Management, Inc., Deutsche Bank Trust Company Americas and DWS Trust Company. Deutsche Bank AG is a major global banking institution that is engaged in a wide range of financial services, including investment management, mutual fund, retail, private and commercial banking, investment banking and insurance.
A group of investment professionals is responsible for the day-to-day management of each Fund. These investment professionals have a broad range of experience in managing money market funds.
Distribution and Service Fees. Pursuant to separate but substantially identical underwriting agreements, DWS Scudder Distributors, Inc. (“DWS-SDI”), 222 South Riverside Plaza, Chicago, Illinois 60606, an affiliate of the DeIM, is the principal underwriter, distributor and administrator for shares of each Fund and acts as agent of the Funds in the continuous sale of their shares.
CAT Government Fund has adopted a service plan on behalf of the CAT Managed Shares in accordance with Rule 12b-1 under the 1940 Act that is substantially the same as the Rule 12b-1 service plan currently in effect for ICT Managed Shares. Plans under Rule 12b-1 allow a fund to pay distribution and/or service fees for the sale and distribution of its shares. Because these fees are paid out of a fund’s assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than other types of investments.
Pursuant to a Shareholder Services Agreement with CAT Government Fund, which is substantially the same as the Shareholder Services Agreement with ICT Government Fund, DWS-SDI will receive a service fee of up to 0.15% of average daily net assets per year with respect to CAT Managed Shares. DWS-SDI will use the fee to compensate financial services firms for providing personal services and maintaining accounts for their customers that hold CAT Managed Shares, and may retain any portion of the fee not paid to such firms to compensate itself for administrative functions performed for such shares. All amounts are payable monthly and are based on the average daily net assets of the Fund attributable to CAT Government Fund.
Trustees and Officers. The Trustees overseeing DWS Government Fund, a series of DWS Money Funds, and ICT Government Fund, a series of Investors Cash Trust, are the same as those who oversee CAT Government Fund, a series of Cash Account Trust. The Trustees are Shirley D. Peterson (Chair), John W. Ballantine, Donald L. Dunaway, James R. Edgar, Paul K. Freeman, Robert B. Hoffman, William McClayton and Robert H. Wadsworth.
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The officers of DWS Government Fund and ICT Government Fund are the same as those of CAT Government Fund. The Officers are Michael Clark, President, Philip J. Collora, Vice President and Assistant Secretary, Paul H. Schubert, Chief Financial Officer and Treasurer, John Millette, Secretary, Patricia DeFilippis, Assistant Secretary, Elisa D. Metzger, Assistant Secretary, Caroline Pearson, Assistant Secretary, Scott M. McHugh, Assistant Treasurer, Kathleen Sullivan D’Eramo, Assistant Treasurer, John Robbins, Anti-Money Laundering Compliance Officer and Philip Gallo, Chief Compliance Officer.
Independent Registered Public Accounting Firm. Each Fund’s independent registered public accounting firm is Ernst & Young LLP.
Charter Documents. DWS Government Fund is a series of DWS Money Funds, a Massachusetts business trust governed by Massachusetts law. ICT Government Fund is a series of Investors Cash Trust, a Massachusetts business trust governed by Massachusetts law. CAT Government Fund is a series of Cash Account Trust, a Massachusetts business trust governed by Massachusetts law. DWS Government Fund is governed by an Amended and Restated Agreement and Declaration of Trust dated January 20, 1998, as amended from time to time. ICT Government Fund is governed by an Amended and Restated Agreement and Declaration of Trust dated March 9, 1990, as amended from time to time. CAT Government Fund is governed by an Amended and Restated Agreement and Declaration of Trust dated March 17, 1990, as amended from time to time. Each Declaration of Trust is referred to herein as a “Charter Document”. The Charter Documents are substantially identical to one another. Additional information about each Charter Document is provided below.
Shares. Under each Fund’s Charter Document, shares of the Fund do not entitle the holder thereof to any conversion, exchange, preemption or appraisal rights. Shares of each Fund do entitle the holder to any dividends or distributions declared by the Board Members of the Fund, and if a Fund were liquidated, shareholders of that Fund would receive a proportionate share of the net assets of the Fund. Each Fund has the right to redeem, at the then current net asset value, the shares of any shareholder whose account does not exceed a minimum balance.
Shareholder Meetings and Voting Rights. The Charter Document of each Fund does not require that annual meetings of shareholders be held, but meetings of the shareholders shall be called for the purpose of electing Board Members when required by the Charter Document or to comply with the 1940 Act. The Board Members or such other person or persons as may be specified in the By-Laws of each Fund may call a shareholder meeting if requested in writing by the holders of at least 25% (or at least 10%, if the purpose of the meeting is to vote to remove a Trustee) of the outstanding shares entitled to vote at such meeting. Shares of each Fund entitle their holders to one vote per share, with fractional shares voting proportionally; however, a separate vote will be taken by each Fund or class thereof on matters affecting the Fund or class only, as determined by the Board Members, or when the 1940 Act so requires. For example, a change in a fundamental investment policy for a Fund would be voted upon only by shareholders of that Fund, and adoption of a distribution plan relating to a particular class and requiring shareholder approval would be voted upon only by shareholders of that class. Any Trustee of the Funds may be removed by vote or written consent of fifty percent (50%) of the votes entitled to be cast on the matter. Trustee vacancies may be filled by a majority of the Board Members then in office through written appointment, unless a shareholder vote is required by the 1940 Act. Shares of both Funds have
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noncumulative voting rights with respect to the election of Board Members. Each Fund (or any class) may be terminated by a written instrument signed by a majority of its Board Members, or by the affirmative vote of the holders of fifty percent (50%) of the shares of the Fund (or class) outstanding and entitled to vote. Sale, conveyance, or transfer of any assets of the Funds to another trust, partnership, association or corporation organized under the laws of any state of the United States requires the affirmative vote of the shareholders entitled to vote more than fifty percent (50%) of the votes entitled to be cast on the matter. Quorum for a shareholder meeting of any Fund is the presence in person or by proxy of 30% of the shares entitled to vote.
Shareholder Liability. Under Massachusetts law, shareholders of a Massachusetts business trust could, under certain circumstances, be held personally liable for the acts or obligations of a fund. The Charter Document governing each Fund, however, disclaims shareholder liability in connection with the Fund’s property or the acts and obligations of the Fund. Moreover, each Fund’s Charter Document provides for indemnification out of the property of the Fund for all loss and expense of any shareholder held personally liable by reason of being a shareholder of the Fund, and, provides that the Fund may be covered by insurance that the Board Members consider necessary or appropriate.
Amendment of Charter Document. The Charter Document of each Fund may be amended at any time by an instrument in writing signed by a majority of the then Board Members when authorized to do so by vote of shareholders holding more than fifty percent (50%) of the shares of each series entitled to vote. Each Charter Document may also be amended by the Board Members without shareholder consent if the purpose of the amendment is to change the name of the Trust or to supply any omission, cure any ambiguity, or cure, correct or supplement any provision which is deficient or inconsistent with the 1940 Act or the requirements of the Internal Revenue Code of 1986, as amended.
The foregoing a general summary of certain provisions of the Charter Documents governing DWS Money Funds, Investors Cash Trust and Cash Account Trust and is not a complete description of provisions contained in those sources. Shareholders should refer to the provisions of those documents and state law directly for a more thorough description.
IV. INFORMATION ABOUT THE PROPOSED MERGERS
General. The shareholders of each Acquired Fund are being asked to approve a merger between their Fund and CAT Government Fund pursuant to separate Agreements and Plans of Reorganization between each Acquired Fund and CAT Government Fund (the “Agreements”). The form of the Agreements is attached to this Prospectus/Proxy Statement as Exhibit A.
Each merger is structured as a transfer of all of the assets of the Acquired Fund to CAT Government Fund in exchange for the assumption by CAT Government Fund of all liabilities of the Acquired Fund and for the issuance and delivery to the Acquired Fund of Merger Shares equal in number to the outstanding shares of the Acquired Fund as of the Valuation Time.
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After receipt of the Merger Shares, each Acquired Fund will distribute the Merger Shares to its shareholders, in proportion to their existing shareholdings, in complete liquidation of such Acquired Fund, and the legal existence of each Acquired Fund will be terminated. Each shareholder of each Acquired Fund will receive Merger Shares equal in number to the shareholder’s Acquired Fund shares at the Valuation Time.
Each Acquired Fund and CAT Government Fund have substantially similar investment objectives, policies, restrictions and strategies. Because of the similarities in the portfolios of each Fund and the short-term characteristics of the portfolio securities, the Acquired Funds do not expect to dispose of securities prior to the merger, except in the ordinary course.
The Trustees of your Fund have voted unanimously to approve the Agreement for your Fund and the proposed merger and to recommend that shareholders also approve the merger. With respect to each merger, the actions contemplated by the Agreements and the related matters described therein will be consummated only if approved by the affirmative vote of shareholders of the Acquired Fund entitled to vote more than fifty percent (50%) of the votes entitled to be cast on the matter.
In the event that a merger does not receive the required shareholder approval, that Fund will continue to be managed as a separate Fund in accordance with its current investment objective and policies, and the Trustees of the Fund may consider such alternatives as may be in the best interests of the Fund. Each merger is separate and distinct from the other and is not contingent upon completion of the other merger.
Background and Trustees’ Considerations Relating to the Proposed Mergers. DeAM first discussed the mergers with the Trustees in December 2005 as a part of an ongoing program initiated by DeAM to restructure its mutual fund lineup. The proposed mergers are designed to enable DeAM to: (1) eliminate redundancies within the DWS money market funds by reorganizing and combining certain funds; and (2) focus its investment resources on a core set of money market funds that best meet investor needs.
DeAM believes that the mergers offer shareholders:
• | A similar investment opportunity in a larger fund with the opportunity to achieve greater economies of scale and a lower expense ratio; and |
• | A portfolio with the possibility of higher yields generated through more efficient execution and greater stability of assets. |
The Trustees conducted a thorough review of the potential implications of each merger. They were assisted in this review by their independent legal counsel. The Trustees met on several occasions to review and discuss the mergers, both among themselves and with representatives of DeAM. In the course of their review, the Trustees requested and received substantial information.
On May 10, 2006, the Trustees of each Acquired Fund, all of whom are not “interested persons” (as defined by the 1940 Act) (“Disinterested Trustees”), approved the terms of each merger and recommend that each merger be approved by shareholders.
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In determining to recommend that the shareholders of each Acquired Fund approve its merger, the Trustees considered, among others, the factors described below:
• | The Trustees noted that the estimated operating expense ratios of CAT Money Fund Shares, CAT Institutional Shares and CAT Managed Shares of the combined fund are lower than the expense ratios of shares of DWS Government Fund, ICT Service Shares, ICT Institutional Shares and ICT Managed Shares. The Trustees also considered DeIM’s commitment to cap the operating expenses of the combined fund’s CAT Money Fund Shares, CAT Institutional Shares and CAT Managed Shares for at least three years at a level equal to the current operating expenses or current expense cap of shares of DWS Government Fund, ICT Institutional Shares and ICT Managed Shares, respectively. The Trustees noted the possible economies of scale that might be realized by DeAM in connection with the mergers. |
• | The Trustees considered that the mergers would not result in the dilution of shareholder interests and that the terms and conditions of the Agreements were fair and reasonable. |
• | The Trustees noted that the investment objective, policies, restrictions and strategies of each Acquired Fund are similar to the investment objective, policies, restrictions and strategies of CAT Government Fund and that the securities in each Acquired Fund’s portfolio were compatible with the securities in CAT Government Fund’s portfolio. The Trustees also considered that the mergers would permit the shareholders of the Acquired Funds to pursue similar investment goals in a larger fund. |
• | The Trustees noted that the services available to shareholders of CAT Government Fund were substantially similar to those available to shareholders of the Acquired Funds. |
• | The Trustees noted that DeAM would bear all expenses associated with the mergers. |
• | The Trustees noted that DeAM believes the combined fund would be more likely to attract additional assets than the Acquired Funds and enjoy any related economies of scale. |
• | The Trustees noted that DeIM has agreed to indemnify CAT Government Fund against certain liabilities Cash Account Trust may incur in connection with any litigation or regulatory action related to possible improper market timing or possible improper marketing and sales activity in Cash Account Trust (see Section VI) so that the likelihood that the combined fund would suffer any loss is considered by fund management to be remote. |
• | The Trustees noted that DeIM has agreed to indemnify the Disinterested Trustees of each Acquired Fund against certain liabilities that such Disinterested Trustees may incur by reason of having served as a Trustee of an Acquired Fund. |
Based on all of the foregoing, the Trustees of each Acquired Fund concluded that the participation of the Fund in the proposed merger with CAT Government Fund would be in the best interests of the Fund and would not dilute the interests of existing shareholders. The Trustees of each Acquired Fund unanimously recommend that shareholders of each Acquired Fund approve the merger of their Fund.
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Agreements and Plans of Reorganization. The proposed mergers will be governed by the Agreements, the form of which is attached as Exhibit A. Each Agreement provides that CAT Government Fund will acquire all of the assets of the Acquired Fund solely in exchange for the assumption by CAT Government Fund of all liabilities of the Acquired Fund and for the issuance of Merger Shares equal in number to the shares of the Acquired Fund outstanding as of the Valuation Time. The Merger Shares will be issued on the next full business day (the “Exchange Date”) following the time as of which the Funds’ assets and liabilities are valued for the merger (4:00 p.m. Eastern time, on [October 27], 2006, or such other date and time as may be agreed upon by the parties (the “Valuation Time”)). The following discussion of the Agreements is qualified in its entirety by the full text of each Agreement.
Each Acquired Fund will transfer all of its assets to CAT Government Fund, and in exchange, CAT Government Fund will assume all liabilities of the Acquired Funds and deliver to each Acquired Fund Merger Shares equal in number to the shares of the Acquired Fund outstanding as of the Valuation Time. Immediately following the transfer of assets on the Exchange Date, each Acquired Fund will distribute pro rata to its shareholders of record as of the Valuation Time the Merger Shares received by the Acquired Fund, as follows: (1) shareholders of DWS Government Fund will receive CAT Money Fund Shares; (2) shareholders of ICT Service Shares will receive CAT Institutional Shares; (3) shareholders of ICT Institutional Shares will receive CAT Institutional Shares; and (4) shareholders of ICT Managed Shares will receive CAT Managed Shares. As a result of each proposed merger, each shareholder of the Acquired Funds will receive Merger Shares of the class indicated above equal in number to the Acquired Fund shares surrendered by the shareholder. This distribution will be accomplished by the establishment of accounts on the share records of CAT Government Fund in the name of such Acquired Fund shareholders, each account representing the respective number of Merger Shares of each class due to the respective shareholder. New certificates for Merger Shares will not be issued.
The Trustees of each Fund have determined that the interests of their respective Fund’s shareholders will not be diluted as a result of the transactions contemplated by the Agreements, and the Trustees of each Fund have determined that the proposed merger of their Fund is in the Fund’s best interests.
The consummation of each merger is subject to the conditions set forth in the Agreements. An Agreement may be terminated and a merger abandoned (i) by mutual consent of the parties, (ii) by any party to the Agreement if the merger shall not be consummated by [December 29], 2006, (iii) if any condition set forth in the Agreement has not been fulfilled and has not been waived by the party entitled to its benefits, or (iv) if the net asset value per share of either party to the Agreement calculated using market values deviates by more than 0.3 of 1% from its net asset value per share calculated using amortized cost.
If shareholders of each Acquired Fund approve the merger of their Fund, CAT Government Fund has agreed to identify in writing prior to the Exchange Date any assets of the Acquired Fund that it does not wish to acquire because they are not consistent with the current investment strategy of CAT Government Fund, and the Acquired Fund agrees to dispose of such assets prior to the Exchange Date. CAT Government Fund also agrees to identify in writing prior to the Exchange Date any assets that it would like the Acquired Fund to purchase, consistent with CAT Government Fund’s investment
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objective, policies, restrictions and strategies, and the Acquired Fund agrees to purchase such assets with the cash proceeds from the disposition of assets identified by CAT Government Fund. DeIM has represented that it does not expect CAT Government Fund to identify any such assets in either Acquired Fund.
The fees and expenses for each merger and related transactions are estimated to be [$ ] and [$ ] in connection with DWS Government Fund and ICT Government Fund, respectively. All fees and expenses, including legal and accounting expenses, portfolio transfer taxes (if any) and any other expenses incurred in connection with the consummation of each merger and related transactions contemplated by the Agreements, will be borne by DeAM.
Description of the Merger Shares. Merger Shares will be issued to shareholders of each Acquired Fund in accordance with the Agreements as described above. The Merger Shares represent new share classes, which are being created to facilitate the mergers. Each new share class has substantially the same characteristics as its predecessor class. Your Merger Shares will be treated as having been purchased on the date you purchased your Acquired Fund shares and for the price you originally paid. For more information on the characteristics of each class of Merger Shares, please see the CAT Government Fund Prospectuses, copies of which were mailed with this Prospectus/Proxy Statement.
Federal Income Tax Consequences. As a condition to each Fund’s obligation to consummate the reorganization, each Fund will receive a tax opinion from Willkie Farr & Gallagher LLP (which opinion would be based on certain factual representations and certain customary assumptions), to the effect that, on the basis of the existing provisions of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), current administrative rules and court decisions, for federal income tax purposes:
• | The acquisition by CAT Government Fund of all of the assets of each Acquired Fund solely in exchange for Merger Shares and the assumption by CAT Government Fund of all of the liabilities of each Acquired Fund, followed by the distribution by such Acquired Fund to its shareholders of Merger Shares in complete liquidation of such Acquired Fund, all pursuant to the Agreements, constitutes a reorganization within the meaning of Section 368(a) of the Code, and the Acquired Funds and CAT Government Fund will each be a “party to a reorganization” within the meaning of Section 368(b) of the Code. |
• | Under Section 361 of the Code, each Acquired Fund will not recognize gain or loss upon the transfer of its assets to CAT Government Fund in exchange for Merger Shares and the assumption of each Acquired Fund’s liabilities by CAT Government Fund, and such Acquired Fund will not recognize gain or loss upon the distribution to its shareholders of the Merger Shares in liquidation of such Acquired Fund. |
• | Under Section 354 of the Code, shareholders of each Acquired Fund will not recognize gain or loss on the receipt of Merger Shares solely in exchange for such Acquired Fund shares. |
• | Under Section 358 of the Code, the aggregate basis of the Merger Shares received by each shareholder of the Acquired Funds will be the same as the aggregate basis of the Acquired Fund shares exchanged therefore. |
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• | Under Section 1223(1) of the Code, the holding period of the Merger Shares received by each Acquired Fund shareholder will include the holding period of such Acquired Fund shares exchanged therefore, provided that such Acquired Fund shareholder held such Acquired Fund shares at the time of the reorganization as a capital asset. |
• | Under Section 1032 of the Code, CAT Government Fund will not recognize gain or loss upon the receipt of assets of the Acquired Funds in exchange for Merger Shares and the assumption by CAT Government Fund of all of the liabilities of the Acquired Funds. |
• | Under Section 362(b) of the Code, the basis of the assets of each Acquired Fund transferred to CAT Government Fund in the reorganization will be the same in the hands of CAT Government Fund as the basis of such assets in the hands of each Acquired Fund immediately prior to the transfer. |
• | Under Section 1223(2) of the Code, the holding periods of the assets of each Acquired Fund transferred to CAT Government Fund in the reorganization in the hands of CAT Government Fund will include the periods during which such assets were held by each Acquired Fund. |
• | CAT Government Fund will succeed to and take into account the items of the Acquired Funds described in Section 381(c) of the Code, subject to the conditions and limitations specified in Sections 381,382, 383 and 384 of the Code and the regulations thereunder. |
Each Fund intends to declare dividends daily and distribute dividends from its investment company taxable income (computed without regard to any deduction for dividends paid) and net realized capital gains after utilization of capital loss carryforwards, if any, monthly. An additional distribution may be made if necessary. Shareholders of each Fund can have their dividends and distributions automatically invested in additional shares of the same Fund, or a different fund in the same family of funds, at net asset value and credited to the shareholder’s account on the payment date or, at the shareholder’s election, sent to the shareholder by check. If an investment is in the form of a retirement plan, all dividends and capital gains distributions must be reinvested in the shareholder’s account. If the Agreements are approved by an Acquired Fund’s shareholders, [such Fund will pay its shareholders a distribution of all undistributed net investment company taxable income (computed without regard to any deduction for dividends paid) and undistributed realized net capital gains (after reduction by any capital loss carry-forwards, if any) immediately prior to the Closing (as defined in the Agreements).]
While as noted above, shareholders are not expected to recognize any gain or loss upon the exchange of their shares in each merger, differences in net investment income and net realized capital gains [may result in future taxable distributions to shareholders arising indirectly from the merger.]
This description of the federal income tax consequences of each merger is made without regard to the particular facts and circumstances of any shareholder. Shareholders are urged to consult their own tax advisors as to the specific consequences to them of their merger, including the applicability and effect of state, local, non-U.S. and other tax laws.
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Capitalization. The following table sets forth the capitalization of each Fund as of April 30, 2006, and of CAT Government Fund on a pro forma combined basis, giving effect to the proposed merger as of that date.(1) The net asset value of all shares of each Fund as of April 30, 2006 was $1.00.
DWS Government Fund | ICT Government Fund | CAT Government Fund | Pro Forma Adjustments | Pro Forma Combined (assuming consummation of DWS Government Fund merger) | Pro Forma Combined (assuming consummation of ICT Government Fund merger) | Pro Forma Combined (assuming consummation of both mergers | ||||||||||||||||||||||
Net Assets | ||||||||||||||||||||||||||||
Shares of DWS Government Fund | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | |||||||
ICT Service Shares | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | |||||||
ICT Institutional Shares | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | |||||||
ICT Managed Shares | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | |||||||
CAT Money Fund Shares | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | |||||||
CAT Institutional Shares | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | |||||||
CAT Managed Shares | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | |||||||
Other Classes of CAT Government Fund | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | |||||||
Total Net Assets | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | $ | [ | ] | |||||||
Shares Outstanding | ||||||||||||||||||||||||||||
DWS Government Fund shares | ||||||||||||||||||||||||||||
ICT Service Shares | ||||||||||||||||||||||||||||
ICT Institutional Shares | ||||||||||||||||||||||||||||
ICT Managed Shares | ||||||||||||||||||||||||||||
CAT Money Fund Shares | ||||||||||||||||||||||||||||
CAT Institutional Shares | ||||||||||||||||||||||||||||
CAT Managed Shares | ||||||||||||||||||||||||||||
Other Classes of CAT Government Fund |
(1) | Assumes the merger had been consummated on April 30, 2006, and is for information purposes only. No assurance can be given as to how many shares of CAT Government Fund will be received by the shareholders of each Acquired Fund on the date the merger takes place, and the foregoing should not be relied upon to reflect the number of shares of CAT Government Fund that actually will be received on or after such date. |
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Unaudited pro forma combined financial statements of CAT Government Fund as of April 30, 2006, and for the twelve-month period then ended, are included in the Merger SAI. Because the Agreements provide that CAT Government Fund will be the surviving Fund following the mergers and because CAT Government Fund’s investment objective, policies, restrictions and strategies will remain unchanged, the pro forma combined financial statements reflect the transfer of the assets and liabilities of each Acquired Fund to CAT Government Fund as contemplated by the Agreements.
The Trustees of each Acquired Fund unanimously recommend approval of the merger by shareholders of the Fund.
V. INFORMATION ABOUT VOTING AND THE SHAREHOLDER MEETING
General. This Prospectus/Proxy Statement is being furnished in connection with the proposed mergers of (a) DWS Government Fund into CAT Government Fund and (b) ICT Government Fund into CAT Government Fund, and the solicitation of proxies by and on behalf of the Trustees of DWS Money Funds and Investors Cash Trust for use at the Joint Special Meeting of shareholders of the Acquired Funds. The Meeting is to be held on October 12, 2006, at [9:00 a.m.] Eastern time at the offices of DeIM, 345 Park Avenue, 27th Floor, New York, New York 10154, or at such later time as is made necessary by adjournment. The Notice of the Joint Special Meeting, the combined Prospectus/Proxy Statement and the enclosed form of proxy are being mailed to shareholders on or about [ ], 2006.
As of August 14, 2006, DWS Government Fund had the following shares outstanding:
Number of Shares |
[Number of Shares] |
As of August 3, 2006, ICT Government Fund had the following shares outstanding:
Share Class | Number of Shares | |
Service Shares | [Number of Shares] | |
DWS Government Cash Institutional Shares | [Number of Shares] | |
Government Cash Managed Shares | [Number of Shares] |
Only shareholders of record on August 14, 2006 for DWS Government Fund and August 3, 2006 for ICT Government Fund will be entitled to notice of and to vote at the Meeting. With respect to each proposal, each share is entitled to one vote, with fractional shares voting proportionally.
The Trustees of each Acquired Fund know of no matters other than those set forth herein to be brought before the Meeting. If, however, any other matters properly come before the Meeting, it is the Trustees’ intention that proxies will be voted on such matters in accordance with the judgment of the persons named in the enclosed form of proxy.
Required Vote. Proxies are being solicited from each Acquired Fund’s shareholders by the Trustees of each Acquired Fund for the Meeting. Unless revoked, all
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valid proxies will be voted in accordance with the specification thereon or, in the absence of specification, FOR approval of the applicable Agreement. With respect to each proposal, the transactions contemplated by the Agreements will be consummated only if approved by the affirmative vote of shareholders of the applicable Acquired Fund entitled to vote more than fifty percent (50%) of the votes entitled to be cast on the matter at the Meeting.
Record Date, Quorum and Method of Tabulation. Shareholders of record at the close of business on August 14, 2006 for DWS Government Fund and August 3, 2006 for ICT Government Fund (the “Record Date”) will be entitled to vote with respect to their merger at the Meeting or any adjournment thereof. The holders of 30% of the shares of each Acquired Fund outstanding at the close of business on the Record Date present in person or represented by proxy will constitute a quorum with respect to that Acquired Fund for the Meeting.
Votes cast by proxy or in person at the Meeting will be counted by persons appointed by the Acquired Funds as tellers for the Meeting. The tellers will count the total number of votes cast “for” approval of the proposal for purposes of determining whether sufficient affirmative votes have been cast. The tellers will count shares represented by proxies that reflect abstentions and “broker non-votes” (i.e., shares held by brokers or nominees as to which (i) instructions have not been received from the beneficial owners or the persons entitled to vote, and (ii) the broker or nominee does not have the discretionary voting power on a particular matter) as shares that are present and entitled to vote on the matter for purposes of determining the presence of a quorum. Abstentions and broker non-votes will therefore have the effect of a negative vote on the proposal.
Share Ownership. As of August 3, 2006, the officers and Trustees of each Fund as a group beneficially owned less than 1% of the outstanding shares of each Fund. To the best of the knowledge of DWS Government Fund, the following shareholders owned of record or beneficially 5% or more of the outstanding shares of DWS Government Fund as of such date:
Shareholder Name and Address | Percentage Owned | |
To the best of the knowledge of ICT Government Fund, the following shareholders owned of record or beneficially 5% or more of the outstanding shares of any class of ICT Government Fund as of August 3, 2006:
Class | Shareholder Name and | Percentage Owned | ||
To the best of the knowledge of CAT Government Fund, the following shareholders owned of record or beneficially 5% or more of the outstanding shares of any class of CAT Government Fund as of August 3, 2006:
Class | Shareholder Name and | Percentage Owned | ||
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Solicitation of Proxies. In addition to soliciting proxies by mail, certain officers and representatives of the Acquired Funds, officers and employees of DeIM and certain financial services firms and their representatives, who will receive no extra compensation for their services, may solicit proxies by telephone, telegram or personally.
All properly executed proxies received in time for the Meeting will be voted as specified in the proxy or, if no specification is made, in favor of the proposal.
The presence at any shareholders’ meeting, in person or by proxy, of the holders of at least 30% of the outstanding shares of an Acquired Fund shall be necessary and sufficient to constitute a quorum for the transaction of business for that Fund. In the event that the necessary quorum to transact business or the vote required to approve the proposal is not obtained at the Meeting, the persons named as proxies may propose one or more adjournments of the Meeting in accordance with applicable law to permit further solicitation of proxies. For purposes of determining the presence of a quorum for transacting business at the Meeting, abstentions and broker “non-votes” will be treated as shares that are present but which have not been voted, and thus will have the effect of a “no” vote. Broker non-votes are proxies received from brokers or nominees when the broker or nominee has neither received instructions from the beneficial owner or other persons entitled to vote nor has discretionary power to vote on a particular matter. Accordingly, shareholders are urged to forward their voting instructions promptly.
Computershare Fund Services, Inc. (“Computershare”) has been engaged to assist in the solicitation of proxies, at an estimated cost of $ and $ for DWS Government Fund and ICT Government Fund, respectively. As the Meeting date approaches, certain shareholders of the Acquired Funds may receive a telephone call from a representative of Computershare if their votes have not yet been received. Authorization to permit Computershare to execute proxies may be obtained by telephonic or electronically transmitted instructions from shareholders of the Acquired Funds. Proxies that are obtained telephonically or through the Internet will be recorded in accordance with the procedures described below. The Trustees believe that these procedures are reasonably designed to ensure that both the identity of the shareholder casting the vote and the voting instructions of the shareholder are accurately determined.
In all cases where a telephonic proxy is solicited, the Computershare representative is required to ask for each shareholder’s full name and address, or the zip code, or both, and to confirm that the shareholder has received the proxy materials in the mail. If the shareholder is a corporation or other entity, the Computershare representative is required to ask for the person’s title and confirmation that the person is authorized to direct the voting of the shares. If the information solicited agrees with the information provided to Computershare, then the Computershare representative has the responsibility to explain the process, read the proposal on the proxy card, and ask for the shareholder’s instructions on the proposal. Although the Computershare representative is permitted to answer questions about the process, he or she is not permitted to recommend to the shareholder how to vote, other than to read any recommendation set forth in the Prospectus/Proxy Statement. Computershare will record the shareholder’s instructions on the card. Within 72 hours, the shareholder will be sent a letter or mailgram to confirm his or her vote and asking the shareholder to call Computershare immediately if his or her instructions are not correctly reflected in the confirmation.
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Please see the instructions on your proxy card for telephone touch-tone voting and Internet voting. Shareholders will have an opportunity to review their voting instructions and make any necessary changes before submitting their voting instructions and terminating their telephone call or Internet link. Shareholders who vote via the Internet, in addition to confirming their voting instructions prior to submission, will also receive an e-mail confirming their instructions upon request.
If a shareholder wishes to participate in the Meeting, but does not wish to give a proxy by telephone or electronically, the shareholder may still submit the proxy card originally sent with the Prospectus/Proxy Statement or attend in person. Should shareholders require additional information regarding the proxy or replacement proxy card, they may contact Computershare toll-free at (866) 774-4940. Any proxy given by a shareholder is revocable until voted at the Meeting.
Persons holding shares as nominees will, upon request, be reimbursed for their reasonable expenses in soliciting instructions from their principals. The cost of preparing, printing and mailing the enclosed proxy card and Prospectus/Proxy Statement, and all other costs incurred in connection with the solicitation of proxies for the Acquired Funds, including any additional solicitation made by letter, telephone or telegraph, will be paid by DeAM.
Revocation of Proxies. Proxies, including proxies given by telephone or over the Internet, may be revoked at any time before they are voted either (i) by a written revocation received by the Secretary of the applicable Acquired Fund at Two International Place, Boston, MA 02110, (ii) by properly submitting a later-dated proxy that is received by the Acquired Fund at or prior to the Meeting or (iii) by attending the Meeting and voting in person. Merely attending the Meeting without voting, however, will not revoke a previously submitted proxy.
Adjournment. If sufficient votes in favor of the proposal set forth in the Notice of the Joint Special Meeting are not received by the time scheduled for the Meeting, the persons named as proxies may propose adjournments of the Meeting for a reasonable period of time to permit further solicitation of proxies.
VI. REGULATORY AND LITIGATION MATTERS
Market timing related regulatory and litigation matters
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 DWS Scudder. The DWS funds’ advisors have been cooperating in connection with these inquiries and are in discussions with the regulators concerning proposed settlements. Publicity about mutual fund practices arising from these industrywide inquiries serves as the general basis of a number of private lawsuits against the DWS 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 DWS funds, the funds’ investment advisors and their affiliates, and certain individuals, including in some cases fund Trustees/Directors, officers, and other parties. Each DWS fund’s investment advisor has agreed to indemnify the
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applicable DWS 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. It is not possible to determine with certainty what the outcome of these inquiries will be or what the effect, if any, would be on the funds or their advisors.
With respect to the lawsuits, 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 DWS fund is remote and such actions are not likely to materially affect their ability to perform under their investment management agreements with the DWS funds.
With respect to the regulatory matters, Deutsche Asset Management (“DeAM”) has advised the funds as follows:
DeAM expects to reach final agreements with regulators in 2006 regarding allegations of improper trading in the DWS funds. DeAM expects that it will reach settlement agreements with the Securities and Exchange Commission, the New York Attorney General and the Illinois Secretary of State providing for payment of disgorgement, penalties, and investor education contributions totaling approximately $134 million. Approximately $127 million of this amount would be distributed to shareholders of the affected DWS funds in accordance with a distribution plan to be developed by an independent distribution consultant. DeAM does not believe that any of the DWS funds will be named as respondents or defendants in any proceedings. The funds’ investment advisors do not believe these amounts will have a material adverse financial impact on them or materially affect their ability to perform under their investment management agreements with the DWS funds. The above-described amounts are not material to Deutsche Bank, and they have already been reserved.
Based on the settlement discussions thus far, DeAM believes that it will be able to reach a settlement with the regulators on a basis that is generally consistent with settlements reached by other advisors, taking into account the particular facts and circumstances of market timing at DeAM and at the legacy Scudder and Kemper organizations prior to their acquisition by DeAM in April 2002. Among the terms of the expected settled orders, DeAM would be subject to certain undertakings regarding the conduct of its business in the future, including maintaining existing management fee reductions for certain funds for a period of five years. DeAM expects that these settlements would resolve regulatory allegations that it violated certain provisions of federal and state securities laws (i) by entering into trading arrangements that permitted certain investors to engage in market timing in certain DWS funds and (ii) by failing more generally to take adequate measures to prevent market timing in the DWS funds, primarily during the 1999-2001 period. With respect to the trading arrangements, DeAM expects that the settlement documents will include allegations related to one legacy DeAM arrangement, as well as three legacy Scudder and six legacy Kemper arrangements. All of these trading arrangements originated in businesses that existed prior to the current DeAM organization, which came together in April 2002 as a result of the various mergers of the legacy Scudder, Kemper and Deutsche fund groups, and all of the arrangements were terminated prior to the start of the regulatory investigations that began in the summer of 2003. No current DeAM employee approved the trading arrangements.
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There is no certainty that the final settlement documents will contain the foregoing terms and conditions. The independent Trustees/Directors of the DWS funds have carefully monitored these regulatory investigations with the assistance of independent legal counsel and independent economic consultants. Additional information announced by DeAM regarding the terms of the expected settlements will be made available at www.dws-scudder.com/regulatory_settlements, which will also disclose the terms of any final settlement agreements once they are announced.
Other regulatory matters
DeAM is also engaged in settlement discussions with the Enforcement Staffs of the SEC and the NASD regarding DeAM’s practices during 2001-2003 with respect to directing brokerage commissions for portfolio transactions by certain DWS funds to broker-dealers that sold shares in the DWS funds and provided enhanced marketing and distribution for shares in the DWS funds. In addition, DWS Scudder Distributors, Inc. is in settlement discussions with the Enforcement Staff of the NASD regarding DWS Scudder Distributors’ payment of non-cash compensation to associated persons of NASD member firms, as well as DWS Scudder Distributors’ procedures regarding non-cash compensation regarding entertainment provided to such associated persons. Additional information announced by DeAM regarding the terms of the expected settlements will be made available at www.dws-scudder.com/regulatory_settlements, which will also disclose the terms of any final settlement agreements once they are announced.
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EXHIBIT A
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the “Agreement”) is made as of this [ ] day of , 2006, by and among Cash Account Trust (the “Acquiring Trust”), a Massachusetts business trust, on behalf of Government & Agency Securities Portfolio (the “Acquiring Fund”), a series of the Acquiring Trust; [DWS Money Funds]/[Investors Cash Trust] (the “Acquired Trust” and, together with the Acquiring Trust, each a “Trust” and collectively the “Trusts”), a Massachusetts business trust, on behalf of [DWS Government & Agency Money Fund]/[Government & Agency Securities Portfolio] (the “Acquired Fund” and, together with the Acquiring Fund, each a “Fund” and collectively the “Funds”); and Deutsche Investment Management Americas Inc. (“DeIM”), investment adviser to the Funds (for purposes of section 10.2 of the Agreement only). The principal place of business of the Acquiring Trust and the Acquired Trust is 222 South Riverside Plaza, Chicago, Illinois 60606.
This Agreement is intended to be and is adopted as a plan of reorganization and liquidation within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). The reorganization will consist of the transfer of all of the assets of the Acquired Fund to the Acquiring Fund in exchange solely for [DWS Government & Agency Money Fund]/[DWS Government Cash Institutional and Government Cash Managed] voting shares of beneficial interest ($0.01 par value) of the Acquiring Fund (the “Acquiring Fund Shares”), the assumption by the Acquiring Fund of all of the liabilities of the Acquired Fund and the distribution of the Acquiring Fund Shares to the shareholders of the Acquired Fund in complete liquidation of the Acquired Fund as provided herein, all upon the terms and conditions hereinafter set forth in this Agreement (the “Reorganization”).
NOW, THEREFORE, in consideration of the premises and of the covenants and agreements hereinafter set forth, the parties hereto covenant and agree as follows:
1. | Transfer of Assets of the Acquired Fund to the Acquiring Fund in Consideration for Acquiring Fund Shares, the Assumption of All Acquired Fund Liabilities and the Liquidation of the Acquired Fund |
1.1 [For DWS Money Funds—DWS Government & Agency Money Fund] Subject to the terms and conditions herein set forth and on the basis of the representations and warranties contained herein, the Acquired Fund agrees to transfer to the Acquiring Fund all of the Acquired Fund’s assets as set forth in section 1.2, and the Acquiring Fund agrees in consideration therefor (i) to deliver to the Acquired Fund that number of full and fractional DWS Government & Agency Money Fund Acquiring Fund Shares equal in number to shares of the Acquired Fund outstanding as of the Valuation Time as defined in Section 2.1; and (ii) to assume all of the liabilities of the Acquired Fund, including, but not limited to, any deferred compensation to the Acquired Trust Board members. All Acquiring Fund Shares delivered to the Acquired Fund shall be delivered at net asset value without a sales load, commission or other similar fee being imposed. Such transactions shall take place on the Closing Date as defined in section 3.1 (the “Closing”).
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1.1 [For Investors Cash Trust—Government & Agency Securities Portfolio] Subject to the terms and conditions herein set forth and on the basis of the representations and warranties contained herein, the Acquired Fund agrees to transfer to the Acquiring Fund all of the Acquired Fund’s assets as set forth in section 1.2, and the Acquiring Fund agrees in consideration therefor (i) to deliver to the Acquired Fund that number of full and fractional DWS Government Cash Institutional Acquiring Fund Shares equal in number to the Service and DWS Government Cash Institutional Shares of the Acquired Fund outstanding as of the Valuation Time as defined in Section 2.1; (ii) to deliver to the Acquired Fund that number of full and fractional Government Cash Managed Acquiring Fund Shares equal in number to Government Cash Managed Shares of the Acquired Fund outstanding as of the Valuation Time as defined in Section 2.1; and (iii) to assume all of the liabilities of the Acquired Fund, including, but not limited to, any deferred compensation to the Acquired Trust Board members. All Acquiring Fund Shares delivered to the Acquired Fund shall be delivered at net asset value without a sales load, commission or other similar fee being imposed. Such transactions shall take place on the Closing Date as defined in section 3.1 (the “Closing”).
1.2 The assets of the Acquired Fund to be acquired by the Acquiring Fund (the “Assets”) shall consist of all assets, including, without limitation, all cash, cash equivalents, securities, commodities and futures interests and dividends or interest or other receivables that are owned by the Acquired Fund and any deferred or prepaid expenses shown on the unaudited statement of assets and liabilities of the Acquired Fund prepared as of the effective time of the Closing in accordance with accounting principles generally accepted in the United States of America (“GAAP”) applied consistently with those of the Acquired Fund’s most recent audited statement of assets and liabilities. The Assets shall constitute at least 90% of the fair market value of the net assets, and at least 70% of the fair market value of the gross assets, held by the Acquired Fund immediately before the Closing (excluding for these purposes assets used to pay the dividends and other distributions paid pursuant to section 1.4).
1.3 The Acquired Fund will endeavor, to the extent practicable, to discharge all of its liabilities and obligations that are accrued prior to the Closing Date as defined in section 3.1.
1.4 On or as soon as practicable prior to the Closing Date as defined in section 3.1, the Acquired Fund will declare and pay to its shareholders of record one or more dividends and/or other distributions so that it will have distributed substantially all of its investment company taxable income (computed without regard to any deduction for dividends paid) and realized net capital gain, if any, for the current taxable year through the Closing Date.
1.5 [For DWS Money Funds—DWS Government & Agency Money Fund] Immediately after the transfer of Assets provided for in section 1.1, the Acquired Fund will distribute to the Acquired Fund’s shareholders of record (the “Acquired Fund Shareholders”), determined as of the Valuation Time (as defined in section 2.1), on a pro rata basis, the Acquiring Fund Shares received by the Acquired Fund pursuant to section 1.1 and will completely liquidate. Such distribution and liquidation will be accomplished by the transfer of the Acquiring Fund Shares then credited to the account of the Acquired Fund on the books of the Acquiring Fund to open accounts on the share records of the Acquiring Fund in the names of the Acquired Fund Shareholders. The Acquiring Fund shall have no obligation to inquire as to the validity, propriety or
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correctness of such records, but shall assume that such transaction is valid, proper and correct. The number of Acquiring Fund Shares to be so credited to the Acquired Fund Shareholders shall be equal in number of the Acquired Fund shares owned by such shareholders as of the Valuation Time. All issued and outstanding shares of the Acquired Fund will simultaneously be cancelled on the books of the Acquired Fund, although share certificates representing interests in shares of the Acquired Fund, if any, will represent a number of Acquiring Fund Shares after the Closing Date as determined in accordance with section 2.3. The Acquiring Fund will not issue certificates representing Acquiring Fund Shares.
1.5 [For Investors Cash Trust—Government & Agency Securities Portfolio] Immediately after the transfer of Assets provided for in section 1.1, the Acquired Fund will distribute to the Acquired Fund’s shareholders of record (the “Acquired Fund Shareholders”) with respect to (i) Service Shares and DWS Government Cash Institutional Shares, determined as of the Valuation Time (as defined in section 2.1), on a pro rata basis within that class, the DWS Government Cash Institutional Acquiring Fund Shares received by the Acquired Fund pursuant to section 1.1 and (ii) Government Cash Managed Shares determined as of the Valuation Time (as defined in section 2.1), on a pro rata basis within that class, the Government Cash Managed Acquiring Fund Shares received by the Acquired Fund pursuant to section 1.1. The Acquired Fund will then completely liquidate. Such distribution and liquidation will be accomplished with respect to each class of the Acquired Fund by the transfer of the Acquiring Fund Shares then credited to the account of the Acquired Fund on the books of the Acquiring Fund to open accounts on the share records of the Acquiring Fund in the names of the Acquired Fund Shareholders. The Acquiring Fund shall have no obligation to inquire as to the validity, propriety or correctness of such records, but shall assume that such transaction is valid, proper and correct. The number of DWS Government Cash Institutional Acquiring Fund Shares to be so credited to the Service and DWS Government Cash Institutional Acquired Fund Shareholders shall be equal in number of the Service and DWS Government Cash Institutional shares owned by such shareholders as of the Valuation Time. The number of Government Cash Managed Acquiring Fund Shares to be so credited to the Government Cash Managed Shares Acquired Fund Shareholders shall be equal in number of the Government Cash Managed Shares owned by such shareholders as of the Valuation Time. All issued and outstanding shares of the Acquired Fund will simultaneously be cancelled on the books of the Acquired Fund, although share certificates representing interests in Service, DWS Government Cash Institutional and Government Cash Managed Shares of the Acquired Fund, if any, will represent a number of Acquiring Fund Shares after the Closing Date as determined in accordance with section 2.3. The Acquiring Fund will not issue certificates representing Acquiring Fund Shares.
1.6 Ownership of Acquiring Fund Shares will be shown on the books of the Acquiring Fund. Shares of the Acquiring Fund will be issued in the manner described in the Acquiring Fund’s then-current prospectus and statement of additional information.
1.7 Any reporting responsibility of the Acquired Fund including, without limitation, the responsibility for filing of regulatory reports, tax returns, or other documents with the Securities and Exchange Commission (the “Commission”), any state securities commission, and any federal, state or local tax authorities or any other relevant regulatory authority, is and shall remain the responsibility of the Acquired Fund.
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1.8 All books and records of the Acquired Fund, including all books and records required to be maintained under the Investment Company Act of 1940, as amended (the “1940 Act”), and the rules and regulations thereunder, shall be available to the Acquiring Fund from and after the Closing Date and shall be turned over to the Acquiring Fund as soon as practicable following the Closing Date.
2. | Valuation |
2.1 The value of the Assets and liabilities of the Acquired Trust shall be computed as of the close of regular trading on The New York Stock Exchange, Inc. (the “NYSE”) on the business day immediately preceding the Closing Date, as defined in section 3.1 (the “Valuation Time”) after the declaration and payment of any dividends and/or other distributions on that date, using the valuation procedures adopted by the Acquiring Trust’s Board of Trustees copies of which have been delivered to the Acquired Fund.
2.2 Acquired Fund Shareholders shall be entitled to receive, with respect to each full and fractional share of the Acquired Fund held by such shareholder, a full and fractional Acquiring Fund Share.
2.3 All computations of value hereunder shall be made by or under the direction of each Fund’s respective accounting agent, if applicable, in accordance with its regular practice and the requirements of Rule 2a-7 of the 1940 Act and shall be subject to confirmation by each Fund’s respective Independent Registered Public Accounting Firm upon the reasonable request of the other Fund.
3. | Closing and Closing Date |
3.1 The Closing of the transactions contemplated by this Agreement shall be [October 30], 2006, or such later date as the parties may agree in writing (the “Closing Date”). All acts taking place at the Closing shall be deemed to take place simultaneously as of 9:00 a.m., Eastern time, on the Closing Date, unless otherwise agreed to by the parties. The Closing shall be held at the offices of counsel to the Acquiring Fund, or at such other place and time as the parties may agree.
3.2 The Acquired Fund shall deliver to the Acquiring Fund on the Closing Date a schedule of Assets.
3.3 State Street Bank and Trust Company (“State Street”), custodian for the Acquired Fund, shall deliver at the Closing a certificate of an authorized officer stating that (a) the Assets shall have been delivered in proper form to State Street, custodian for the Acquiring Fund, prior to or on the Closing Date and (b) all necessary taxes in connection with the delivery of the Assets, including all applicable federal and state stock transfer stamps, if any, have been paid or provision for payment has been made. The Acquired Fund’s portfolio securities represented by a certificate or other written instrument shall be presented by the custodian for the Acquired Fund to the custodian for the Acquiring Fund for examination no later than five business days preceding the Closing Date and transferred and delivered by the Acquired Fund as of the Closing Date by the Acquired Fund for the account of Acquiring Fund duly endorsed in proper form for transfer in such condition as to constitute good delivery thereof. The Acquired Fund’s portfolio securities and instruments deposited with a securities depository, as
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defined in Rule 17f-4 under the 1940 Act, shall be delivered as of the Closing Date by book entry in accordance with the customary practices of such depositories and the custodian for the Acquiring Fund. The cash to be transferred by the Acquired Fund shall be delivered by wire transfer of federal funds on the Closing Date.
3.4 DWS Scudder Investment Service Company (“DWS-SISC”), as transfer agent for the Acquired Fund, on behalf of the Acquired Fund, shall deliver at the Closing a certificate of an authorized officer stating that its records contain the names and addresses of the Acquired Fund Shareholders and the number and percentage ownership (to three decimal places) of outstanding [Acquired Fund shares]/[DWS Government Cash Institutional and Government Cash Managed Acquired Fund shares] owned by each such shareholder immediately prior to the Closing. The Acquiring Fund shall issue and deliver a confirmation evidencing the Acquiring Fund Shares to be credited on the Closing Date to the Acquired Fund or provide evidence satisfactory to the Acquired Fund that such Acquiring Fund Shares have been credited to the Acquired Fund’s account on the books of the Acquiring Fund. At the Closing, each party shall deliver to the other such bills of sale, checks, assignments, share certificates, if any, receipts or other documents as such other party or its counsel may reasonably request to effect the transactions contemplated by this Agreement.
3.5 In the event that immediately prior to the Valuation Time (a) the NYSE or another primary trading market for portfolio securities of the Acquiring Fund or the Acquired Fund shall be closed to trading or trading thereupon shall be restricted, or (b) trading or the reporting of trading on such Exchange or elsewhere shall be disrupted so that, in the judgment of the Board members of either party to this Agreement, accurate appraisal of the value of the net assets of the Acquiring Fund or the Acquired Fund is impracticable, the Closing Date shall be postponed until the first business day after the day when trading shall have been fully resumed and reporting shall have been restored.
3.6 The liabilities of the Acquired Fund shall include all of the Acquired Fund’s liabilities, debts, obligations, and duties of whatever kind or nature, whether absolute, accrued, contingent, or otherwise, whether or not arising in the ordinary course of business, whether or not determinable at the Closing Date, and whether or not specifically referred to in this Agreement, including but not limited to, any deferred compensation to the Acquired Fund’s Board members.
4. | Representations and Warranties |
4.1 The Acquired Trust, on behalf of the Acquired Fund, represents and warrants to the Acquiring Fund as follows:
(a) The Acquired Trust is a voluntary association with transferable shares commonly referred to as a Massachusetts business trust duly organized and validly existing under the laws of The Commonwealth of Massachusetts with power under the Acquired Trust’s Declaration of Trust, as amended, to own all of its properties and assets and to carry on its business as it is now being conducted and, subject to approval of shareholders of the Acquired Fund, to carry out the Agreement. The Acquired Fund is a separate series of the Acquired Trust duly designated in accordance with the applicable provisions of the Acquired Trust’s Declaration of Trust. The Acquired Trust and Acquired Fund are qualified to do business in all
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jurisdictions in which they are required to be so qualified, except jurisdictions in which the failure to so qualify would not have a material adverse effect on the Acquired Trust or Acquired Fund. The Acquired Fund has all material federal, state and local authorizations necessary to own all of the properties and assets and to carry on its business as now being conducted, except authorizations which the failure to so obtain would not have a material adverse effect on the Acquired Fund;
(b) The Acquired Trust is registered with the Commission as an open-end management investment company under the 1940 Act, and such registration is in full force and effect and the Acquired Fund is in compliance in all material respects with the 1940 Act and the rules and regulations thereunder;
(c) No consent, approval, authorization, or order of any court or governmental authority is required for the consummation by the Acquired Fund of the transactions contemplated herein, except such as have been obtained under the Securities Act of 1933, as amended (the “1933 Act”), the Securities Exchange Act of 1934, as amended (the “1934 Act”), and the 1940 Act and such as may be required by state securities laws;
(d) The Acquired Trust is not, and the execution, delivery and performance of this Agreement by the Acquired Trust will not result (i) in violation of Massachusetts law or of the Acquired Trust’s Declaration of Trust, as amended, or By-Laws, (ii) in a violation or breach of, or constitute a default under, any material agreement, indenture, instrument, contract, lease or other undertaking to which the Acquired Fund is a party or by which it is bound, and the execution, delivery and performance of this Agreement by the Acquired Fund will not result in the acceleration of any obligation, or the imposition of any penalty, under any agreement, indenture, instrument, contract, lease, judgment or decree to which the Acquired Fund is a party or by which it is bound, or (iii) in the creation or imposition of any lien, charge or encumbrance on any property or assets of the Acquired Fund;
(e) Other than as disclosed on a schedule provided by the Acquired Fund, no material litigation or administrative proceeding or investigation of or before any court or governmental body is presently pending or to its knowledge threatened against the Acquired Fund or any properties or assets held by it. The Acquired Fund knows of no facts which might form the basis for the institution of such proceedings which would materially and adversely affect its business, other than as disclosed in the foregoing schedule, and is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body which materially and adversely affects its business or its ability to consummate the transactions herein contemplated;
(f) The Statements of Assets and Liabilities, Operations, and Changes in Net Assets, the Financial Highlights, and the Investment Portfolio of the Acquired Fund at and for the fiscal year ended [July 31, 2006/March 31, 2006], have been audited by Ernst & Young LLP, Independent Registered Public Accounting Firm, and are in accordance with GAAP consistently applied, and such statements (a copy of each of which has been furnished to the Acquiring Fund) present fairly, in all material respects, the financial position of the Acquired Fund as of such date in accordance with GAAP and there are no known contingent liabilities of the Acquired Fund required to be reflected on a balance sheet (including the notes thereto) in accordance with GAAP as of such date not disclosed therein;
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(g) Since [July 31, 2006/March 31, 2006], there has not been any material adverse change in the Acquired Fund’s financial condition, assets, liabilities or business other than changes occurring in the ordinary course of business, or any incurrence by the Acquired Fund of indebtedness maturing more than one year from the date such indebtedness was incurred except as otherwise disclosed to and accepted in writing by the Acquiring Fund. For purposes of this subsection (g), a decline in net asset value per share of the Acquired Fund due to declines in market values of securities in the Acquired Fund’s portfolio, the discharge of Acquired Fund liabilities, or the redemption of Acquired Fund shares by Acquired Fund Shareholders shall not constitute a material adverse change;
(h) At the date hereof and at the Closing Date, all federal and other tax returns and reports of the Acquired Fund required by law to have been filed by such dates (including any extensions) shall have been filed and are or will be correct in all material respects, and all federal and other taxes shown as due or required to be shown as due on said returns and reports shall have been paid or provision shall have been made for the payment thereof, and, to the best of the Acquired Fund’s knowledge, no such return is currently under audit and no assessment has been asserted with respect to such returns;
(i) For each taxable year of its operation (including the taxable year ending on the Closing Date), the Acquired Fund has met the requirements of Subchapter M of the Code for qualification as a regulated investment company and has elected to be treated as such, has been eligible to and has computed its federal income tax under Section 852 of the Code, and will have distributed all of its investment company taxable income and net capital gain (as defined in the Code) that has accrued through the Closing Date;
(j) All issued and outstanding shares of the Acquired Fund (i) have been offered and sold in every state and the District of Columbia in compliance in all material respects with applicable registration requirements of the 1933 Act and state securities laws, (ii) are, and on the Closing Date will be, duly and validly issued and outstanding, fully paid and non-assessable and not subject to preemptive or dissenter’s rights (recognizing that, under Massachusetts law, Acquired Fund Shareholders, under certain circumstances, could be held personally liable for obligations of the Acquired Fund), and (iii) will be held at the time of the Closing by the persons and in the amounts set forth in the records of DWS-SISC, as provided in section 3.4. The Acquired Fund does not have outstanding any options, warrants or other rights to subscribe for or purchase any of the Acquired Fund shares, nor is there outstanding any security convertible into any of the Acquired Fund shares;
(k) At the Closing Date, the Acquired Fund will have good and marketable title to the Acquired Fund’s assets to be transferred to the Acquiring Fund pursuant to section 1.2 and full right, power, and authority to sell, assign, transfer and deliver such assets hereunder free of any liens or other encumbrances, except those liens or encumbrances as to which the Acquiring Fund has received notice at or prior to the Closing, and upon delivery and payment for such assets, the Acquiring Fund will acquire good and marketable title thereto, subject to no restrictions on the full transfer thereof, including such restrictions as might arise under the 1933 Act and the 1940 Act, except those restrictions as to which the Acquiring Fund has received notice and necessary documentation at or prior to the Closing;
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(l) The execution, delivery and performance of this Agreement will have been duly authorized prior to the Closing Date by all necessary action on the part of the Board members of the Acquired Trust (including the determinations required by Rule 17a-8(a) under the 1940 Act), and, subject to the approval of the Acquired Fund Shareholders, this Agreement constitutes a valid and binding obligation of the Acquired Trust, on behalf of the Acquired Fund, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws relating to or affecting creditors’ rights and to general equity principles;
(m) The information to be furnished by the Acquired Fund for use in applications for orders, registration statements or proxy materials or for use in any other document filed or to be filed with any federal, state or local regulatory authority (including the NASD), which may be necessary in connection with the transactions contemplated hereby, shall be accurate and complete in all material respects and shall comply in all material respects with federal securities and other laws and regulations applicable thereto;
(n) The current prospectus and statement of additional information of the Acquired Fund conform in all material respects to the applicable requirements of the 1933 Act and the 1940 Act and the rules and regulations of the Commission thereunder and do not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not materially misleading; and
(o) The Registration Statement referred to in section 5.7, insofar as it relates to the Acquired Fund, will, on the effective date of the Registration Statement and on the Closing Date, (i) comply in all material respects with the provisions and regulations of the 1933 Act, the 1934 Act and the 1940 Act, as applicable, and (ii) not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which such statements are made, not materially misleading; provided, however, that the representations and warranties in this section shall not apply to statements in or omissions from the Registration Statement made in reliance upon and in conformity with information that was furnished or should have been furnished by the Acquiring Fund for use therein.
4.2 The Acquiring Trust, on behalf of the Acquiring Fund, represents and warrants to the Acquired Fund as follows:
(a) The Acquiring Trust is a voluntary association with transferable shares commonly referred to as a Massachusetts business trust duly organized and validly existing under the laws of The Commonwealth of Massachusetts with power under the Acquiring Trust’s Declaration of Trust, as amended, to own all of its properties and assets and to carry on its business as it is now being conducted and to carry out the Agreement. The Acquiring Fund is a separate series of the Acquiring Trust duly designated in accordance with the applicable provisions of the Acquiring Trust’s Declaration of Trust. The Acquiring Trust and Acquiring Fund are qualified to do business in all jurisdictions in which they are required to be so qualified, except jurisdictions in which the failure to so qualify would not have a material adverse effect on the Acquiring Trust or Acquiring Fund. The Acquiring Fund has all material federal, state and local authorizations necessary to own all of the
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properties and assets and to carry on its business as now being conducted, except authorizations which the failure to so obtain would not have a material adverse effect on the Acquiring Fund;
(b) The Acquiring Trust is registered with the Commission as an open-end management investment company under the 1940 Act, and such registration is in full force and effect and the Acquiring Fund is in compliance in all material respects with the 1940 Act and the rules and regulations thereunder;
(c) No consent, approval, authorization, or order of any court or governmental authority is required for the consummation by the Acquiring Fund of the transactions contemplated herein, except such as have been obtained under the 1933 Act, the 1934 Act and the 1940 Act and such as may be required by state securities laws;
(d) The Acquiring Trust is not, and the execution, delivery and performance of this Agreement by the Acquiring Trust will not result (i) in violation of Massachusetts law or of the Acquiring Trust’s Declaration of Trust, as amended, or By-Laws, (ii) in a violation or breach of, or constitute a default under, any material agreement, indenture, instrument, contract, lease or other undertaking known to counsel to which the Acquiring Fund is a party or by which it is bound, and the execution, delivery and performance of this Agreement by the Acquiring Fund will not result in the acceleration of any obligation, or the imposition of any penalty, under any agreement, indenture, instrument, contract, lease, judgment or decree to which the Acquiring Fund is a party or by which it is bound, or (iii) in the creation or imposition of any lien, charge or encumbrance on any property or assets of the Acquiring Fund;
(e) Other than as disclosed on a schedule provided by the Acquiring Fund, no material litigation or administrative proceeding or investigation of or before any court or governmental body is presently pending or to its knowledge threatened against the Acquiring Fund or any properties or assets held by it. The Acquiring Fund knows of no facts which might form the basis for the institution of such proceedings which would materially and adversely affect its business, other than as disclosed in the foregoing schedule, and is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body which materially and adversely affects its business or its ability to consummate the transactions herein contemplated;
(f) The Statements of Assets and Liabilities, Operations, and Changes in Net Assets, the Financial Highlights, and the Investment Portfolio of the Acquiring Fund at and for the fiscal year ended April 30, 2006, have been audited by Ernst & Young LLP, Independent Registered Public Accounting Firm, and are in accordance with GAAP consistently applied, and such statements (a copy of each of which has been furnished to the Acquired Fund) present fairly, in all material respects, the financial position of the Acquiring Fund as of such date in accordance with GAAP, and there are no known contingent liabilities of the Acquiring Fund required to be reflected on a balance sheet (including the notes thereto) in accordance with GAAP as of such date not disclosed therein;
(g) Since April 30, 2006, there has not been any material adverse change in the Acquiring Fund’s financial condition, assets, liabilities or business other than changes occurring in the ordinary course of business, or any incurrence by the Acquiring Fund of indebtedness maturing more than one year from the date such
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indebtedness was incurred except as otherwise disclosed to and accepted in writing by the Acquired Fund. For purposes of this subsection (g), a decline in net asset value per share of the Acquiring Fund due to declines in market values of securities in the Acquiring Fund’s portfolio, the discharge of Acquiring Fund liabilities, or the redemption of Acquiring Fund shares by Acquiring Fund shareholders shall not constitute a material adverse change;
(h) At the date hereof and at the Closing Date, all federal and other tax returns and reports of the Acquiring Fund required by law to have been filed by such dates (including any extensions) shall have been filed and are or will be correct in all material respects, and all federal and other taxes shown as due or required to be shown as due on said returns and reports shall have been paid or provision shall have been made for the payment thereof, and, to the best of the Acquiring Fund’s knowledge, no such return is currently under audit and no assessment has been asserted with respect to such returns;
(i) For each taxable year of its operation, the Acquiring Fund has met the requirements of Subchapter M of the Code for qualification as a regulated investment company and has elected to be treated as such, has been eligible to and has computed its federal income tax under Section 852 of the Code, and will do so for the taxable year including the Closing Date;
(j) All issued and outstanding shares of the Acquiring Fund (i) have been offered and sold in every state and the District of Columbia in compliance in all material respects with applicable registration requirements of the 1933 Act and state securities laws and (ii) are, and on the Closing Date will be, duly and validly issued and outstanding, fully paid and non-assessable, and not subject to preemptive or dissenter’s rights (recognizing that, under Massachusetts law, Acquiring Fund shareholders, under certain circumstances, could be held personally liable for the obligations of the Acquiring Fund). The Acquiring Fund does not have outstanding any options, warrants or other rights to subscribe for or purchase any of the Acquiring Fund shares, nor is there outstanding any security convertible into any of the Acquiring Fund shares;
(k) The Acquiring Fund Shares to be issued and delivered to the Acquired Fund, for the account of the Acquired Fund Shareholders, pursuant to the terms of this Agreement, will at the Closing Date have been duly authorized and, when so issued and delivered, will be duly and validly issued and outstanding Acquiring Fund Shares, and will be fully paid and non-assessable (recognizing that, under Massachusetts law, Acquiring Fund shareholders, under certain circumstances, could be held personally liable for the obligations of the Acquiring Fund);
(l) At the Closing Date, the Acquiring Fund will have good and marketable title to the Acquiring Fund’s assets, free of any liens or other encumbrances, except those liens or encumbrances as to which the Acquired Fund has received notice at or prior to the Closing;
(m) The execution, delivery and performance of this Agreement will have been duly authorized prior to the Closing Date by all necessary action on the part of the Board members of the Acquiring Trust (including the determinations required by Rule 17a-8(a) under the 1940 Act) and this Agreement will constitute a valid and binding obligation of the Acquiring Trust, on behalf of the Acquiring Fund, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws relating to or affecting creditors’ rights and to general equity principles;
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(n) The information to be furnished by the Acquiring Fund for use in applications for orders, registration statements or proxy materials or for use in any other document filed or to be filed with any federal, state or local regulatory authority (including the NASD), which may be necessary in connection with the transactions contemplated hereby, shall be accurate and complete in all material respects and shall comply in all material respects with federal securities and other laws and regulations applicable thereto;
(o) The current prospectus and statement of additional information of the Acquiring Fund conform in all material respects to the applicable requirements of the 1933 Act and the 1940 Act and the rules and regulations of the Commission thereunder and do not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not materially misleading;
(p) The Registration Statement, only insofar as it relates to the Acquiring Fund, will, on the effective date of the Registration Statement and on the Closing Date, (i) comply in all material respects with the provisions and regulations of the 1933 Act, the 1934 Act, and the 1940 Act and (ii) not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which such statements were made, not materially misleading; provided, however, that the representations and warranties in this section shall not apply to statements in or omissions from the Registration Statement made in reliance upon and in conformity with information that was furnished or should have been furnished by the Acquired Fund for use therein; and
(q) The Acquiring Fund agrees to use all reasonable efforts to obtain the approvals and authorizations required by the 1933 Act, the 1940 Act and such of the state securities laws as may be necessary in order to continue its operations after the Closing Date.
5. | Covenants of the Acquiring Fund and the Acquired Fund |
5.1 The Acquiring Fund and the Acquired Fund each covenants to operate its business in the ordinary course between the date hereof and the Closing Date, it being understood that (a) such ordinary course of business will include (i) the declaration and payment of customary dividends and other distributions and (ii) such changes as are contemplated by the Funds’ normal operations; and (b) each Fund shall retain exclusive control of the composition of its portfolio until the Closing Date. No party shall take any action that would, or reasonably would be expected to, result in any of its representations and warranties set forth in this Agreement being or becoming untrue in any material respect.
5.2 Upon reasonable notice, the Acquiring Trust’s officers and agents shall have reasonable access to the Acquired Fund’s books and records necessary to maintain current knowledge of the Acquired Fund and to ensure that the representations and warranties made by the Acquired Fund are accurate.
5.3 The Acquired Fund covenants to call a meeting of the Acquired Fund Shareholders entitled to vote thereon to consider and act upon this Agreement and to take all other reasonable action necessary to obtain approval of the transactions contemplated herein. Such meeting shall be scheduled for no later than [December 7], 2006.
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5.4 The Acquired Fund covenants that the Acquiring Fund Shares to be issued hereunder are not being acquired for the purpose of making any distribution thereof other than in accordance with the terms of this Agreement.
5.5 The Acquired Fund covenants that it will assist the Acquiring Fund in obtaining such information as the Acquiring Fund reasonably requests concerning the beneficial ownership of the Acquired Fund shares.
5.6 Subject to the provisions of this Agreement, the Acquiring Fund and the Acquired Fund will each take, or cause to be taken, all actions, and do or cause to be done, all things reasonably necessary, proper, and/or advisable to consummate and make effective the transactions contemplated by this Agreement.
5.7 Each Fund covenants to prepare in compliance with the 1933 Act, the 1934 Act and the 1940 Act the Registration Statement on Form N-14 (the “Registration Statement”) in connection with the meeting of the Acquired Fund Shareholders to consider approval of this Agreement and the transactions contemplated herein. The Acquiring Trust will file the Registration Statement, including a proxy statement, with the Commission. The Acquired Fund will provide the Acquiring Fund with information reasonably necessary for the preparation of a prospectus, which will include a proxy statement, all to be included in the Registration Statement, in compliance in all material respects with the 1933 Act, the 1934 Act and the 1940 Act.
5.8 The Acquired Fund covenants that it will, from time to time, as and when reasonably requested by the Acquiring Fund, execute and deliver or cause to be executed and delivered all such assignments and other instruments, and will take or cause to be taken such further action as the Acquiring Fund may reasonably deem necessary or desirable in order to vest in and confirm the Acquiring Fund’s title to and possession of all the assets and otherwise to carry out the intent and purpose of this Agreement.
5.9 The Acquiring Fund covenants to use all reasonable efforts to obtain the approvals and authorizations required by the 1933 Act and 1940 Act, and such of the state securities laws as it deems appropriate in order to continue its operations after the Closing Date and to consummate the transactions contemplated herein; provided, however, that the Acquiring Fund may take such actions it reasonably deems advisable after the Closing Date as circumstances change.
5.10 The Acquiring Fund covenants that it will, from time to time, as and when reasonably requested by the Acquired Fund, execute and deliver or cause to be executed and delivered all such assignments, assumption agreements, releases, and other instruments, and will take or cause to be taken such further action, as the Acquired Fund may reasonably deem necessary or desirable in order to (i) vest and confirm to the Acquired Fund title to and possession of all Acquiring Fund Shares to be transferred to the Acquired Fund pursuant to this Agreement and (ii) assume the liabilities from the Acquired Fund.
5.11 As soon as reasonably practicable after the Closing, the Acquired Fund shall make a liquidating distribution to its shareholders consisting of the Acquiring Fund Shares received at the Closing.
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5.12 The Acquiring Fund and the Acquired Fund shall each use its reasonable best efforts to fulfill or obtain the fulfillment of the conditions precedent to effect the transactions contemplated by this Agreement as promptly as practicable.
5.13 The intention of the parties is that the transaction will qualify as a reorganization within the meaning of Section 368(a) of the Code. Neither the Trusts, the Acquiring Fund nor the Acquired Fund shall take any action, or cause any action to be taken (including, without limitation, the filing of any tax return) that is inconsistent with such treatment or results in the failure of the transaction to qualify as a reorganization within the meaning of Section 368(a) of the Code. At or prior to the Closing Date, the Trusts, the Acquiring Fund and the Acquired Fund will take such action, or cause such action to be taken, as is reasonably necessary to enable Willkie Farr & Gallagher LLP to render the tax opinion contemplated herein in section 8.5.
5.14 At or immediately prior to the Closing, the Acquired Fund will declare and pay to its shareholders a dividend or other distribution in an amount large enough so that it will have distributed substantially all (and in any event not less than 98%) of its investment company taxable income (computed without regard to any deduction for dividends paid) and realized net capital gain, if any, for the current taxable year through the Closing Date.
5.15 The Acquiring Fund agrees to identify in writing prior to the Closing Date any assets of the Acquired Fund that it does not wish to acquire because they are not consistent with the current investment strategy of the Acquiring Fund, and the Acquired Fund agrees to dispose of such assets prior to the Closing Date. The Acquiring Fund agrees to identify in writing prior to the Closing Date any assets that it would like the Acquired Fund to purchase, consistent with the Acquiring Fund’s investment objective, policies, restrictions and strategies, and the Acquired Fund agrees to purchase such assets with the cash proceeds from the disposition of assets pursuant to the Acquiring Fund’s investment objective, policies, restrictions and strategies prior to the Closing Date.
6. | Conditions Precedent to Obligations of the Acquired Fund |
The obligations of the Acquired Fund to consummate the transactions provided for herein shall be subject, at its election, to the performance by the Acquiring Fund of all the obligations to be performed by it hereunder on or before the Closing Date, and, in addition thereto, the following further conditions:
6.1 All representations and warranties of the Acquiring Trust, on behalf of the Acquiring Fund, contained in this Agreement shall be true and correct in all material respects as of the date hereof and, except as they may be affected by the transactions contemplated by this Agreement, as of the Closing Date, with the same force and effect as if made on and as of the Closing Date; and there shall be (i) no pending or threatened litigation brought by any person (other than the Acquired Fund, its adviser or any of their affiliates) against the Acquiring Fund or its investment adviser(s), Board members or officers arising out of this Agreement and (ii) no facts known to the Acquiring Fund which the Acquiring Fund reasonably believes might result in such litigation.
6.2 The Acquiring Fund shall have delivered to the Acquired Fund on the Closing Date a certificate executed in its name by the Acquiring Trust’s President, Treasurer or a
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Vice President, in a form reasonably satisfactory to the Acquired Trust, on behalf of the Acquired Fund, and dated as of the Closing Date, to the effect that the representations and warranties of the Acquiring Fund made in this Agreement are true and correct on and as of the Closing Date, except as they may be affected by the transactions contemplated by this Agreement, and as to such other matters as the Acquired Fund shall reasonably request.
6.3 The Acquired Fund shall have received on the Closing Date an opinion of Vedder, Price, Kaufman & Kammholz, P.C., in a form reasonably satisfactory to the Acquired Fund, and dated as of the Closing Date, to the effect that:
(a) the Acquiring Trust has been formed and is validly existing as a business trust under the laws of The Commonwealth of Massachusetts;
(b) the Acquiring Fund has the power to carry on its business as presently conducted in accordance with the description thereof in the Acquiring Fund’s registration statement under the 1940 Act;
(c) the Agreement has been duly authorized, executed and delivered by the Acquiring Trust, on behalf of the Acquiring Fund, and constitutes a valid and legally binding obligation of the Acquiring Trust, on behalf of the Acquiring Fund, enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and laws of general applicability relating to or affecting creditors’ rights and to general equity principles;
(d) the execution and delivery of the Agreement did not, and the issuance of Acquiring Fund Shares pursuant to the Agreement will not, violate the Acquiring Trust’s Declaration of Trust, as amended, or By-laws; and
(e) to the knowledge of such counsel, and without any independent investigation, (i) other than as disclosed on the schedule provided by the Acquiring Fund pursuant to section 4.2 of the Agreement, the Acquiring Fund is not subject to any litigation or other proceedings that might have a materially adverse effect on the operations of the Acquiring Fund, (ii) the Acquiring Fund is duly registered as a series of an investment company with the Commission and no stop order suspending the effectiveness of the registration has been issued under the 1933 Act and no stop order of suspension or revocation of registration pursuant to Section 8(e) of the 1940 Act has been issued; and (iii) all regulatory consents, authorizations, approvals or filings required to be obtained or made by the Acquiring Fund under the federal laws of the United States or the laws of The Commonwealth of Massachusetts for the issuance of Acquiring Fund Shares, pursuant to the Agreement have been obtained or made.
The delivery of such opinion is conditioned upon receipt by Vedder, Price, Kaufman & Kammholz, P.C. of customary representations it shall reasonably request of each of the Acquiring Trust and the Acquired Trust.
6.4 The Acquiring Fund shall have performed all of the covenants and complied with all of the provisions required by this Agreement to be performed or complied with by the Acquiring Fund on or before the Closing Date.
[6.5] [For Investors Cash Trust—Government & Agency Securities Portfolio] The Acquiring Trust shall have amended its Investment Management Agreement dated
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April 5, 2002 such that the monthly fee payable to DeIM by the Acquiring Trust shall be reduced to the extent necessary in order that the amount payable by the Acquiring Fund, after allocation of the fee to the Acquiring Fund, is limited to 1/12 of 0.15 of 1 percent of the average daily net assets attributable to Acquiring Fund for the month, with the effect of such fee reduction being applied only to the Acquiring Fund and not to the other series of the Acquiring Trust.
[6.5]/[6.6] The Acquiring Trust shall have entered into an expense cap agreement with DeIM limiting the expenses of [DWS Government & Agency Money Fund shares of the Acquiring Fund to 0.45%]/[DWS Government Cash Institutional and Government Cash Managed shares of the Acquiring Fund to 0.24% and 0.46%, respectively], excluding certain other expenses, for the period commencing [ ], 2006 and ending [ ], 2009, in a form reasonably satisfactory to the Acquired Fund.
[6.6]/[6.7] The Acquiring Fund’s net asset value per share calculated using market values shall not deviate by more than 0.5 of 1% from the net asset value per share calculated using amortized cost during the period from the date hereof through the Closing Date.
7. | Conditions Precedent to Obligations of the Acquiring Fund |
The obligations of the Acquiring Fund to consummate the transactions provided for herein shall be subject, at its election, to the performance by the Acquired Fund of all of the obligations to be performed by it hereunder on or before the Closing Date and, in addition thereto, the following further conditions:
7.1 All representations and warranties of the Acquired Trust, on behalf of the Acquired Fund, contained in this Agreement shall be true and correct in all material respects as of the date hereof and, except as they may be affected by the transactions contemplated by this Agreement, as of the Closing Date, with the same force and effect as if made on and as of the Closing Date; and there shall be (i) no pending or threatened litigation brought by any person (other than the Acquiring Fund, its adviser or any of their affiliates) against the Acquired Fund or its investment adviser(s), Board members or officers arising out of this Agreement and (ii) no facts known to the Acquired Fund which the Acquired Fund reasonably believes might result in such litigation.
7.2 The Acquired Fund shall have delivered to the Acquiring Fund a statement of the Acquired Fund’s assets and liabilities as of the Closing Date, certified by the Treasurer of the Acquired Trust.
7.3 The Acquired Fund shall have delivered to the Acquiring Fund on the Closing Date a certificate executed in its name by the Acquired Trust’s President, Treasurer or a Vice President, in a form reasonably satisfactory to the Acquiring Trust, on behalf of the Acquiring Fund, and dated as of the Closing Date, to the effect that the representations and warranties of the Acquired Trust with respect to the Acquired Fund made in this Agreement are true and correct on and as of the Closing Date, except as they may be affected by the transactions contemplated by this Agreement, and as to such other matters as the Acquiring Fund shall reasonably request.
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7.4 The Acquiring Fund shall have received on the Closing Date an opinion of Vedder, Price, Kaufman & Kammholz, P.C., in a form reasonably satisfactory to the Acquiring Fund, and dated as of the Closing Date, to the effect that:
(a) the Acquired Trust has been formed and is validly existing as a business trust under the laws of the Commonwealth of Massachusetts;
(b) the Acquired Fund has the power to carry on its business as presently conducted in accordance with the description thereof in the Acquired Trust’s registration statement under the 1940 Act;
(c) the Agreement has been duly authorized, executed and delivered by the Acquired Trust, on behalf of the Acquired Fund, and constitutes a valid and legally binding obligation of the Acquired Trust, on behalf of the Acquired Fund, enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and laws of general applicability relating to or affecting creditors’ rights and to general equity principles;
(d) the execution and delivery of the Agreement did not, and the exchange of the Acquired Fund’s assets for Acquiring Fund Shares pursuant to the Agreement will not, violate the Acquired Trust’s Declaration of Trust, as amended, or By-laws; and
(e) to the knowledge of such counsel, and without any independent investigation, (i) other than as disclosed on the schedule provided by the Acquired Fund pursuant to section 4.1 of the Agreement, the Acquired Fund is not subject to any litigation or other proceedings that might have a materially adverse effect on the operations of the Acquired Fund, (ii) the Acquired Fund is duly registered as a series of an investment company with the Commission and no stop order suspending the effectiveness of the registration has been issued under the 1933 Act and no stop order of suspension or revocation of registration pursuant to Section 8(e) of the 1940 Act has been issued; and (iii) all regulatory consents, authorizations, approvals or filings required to be obtained or made by the Acquired Fund under the federal laws of the United States or the laws of The Commonwealth of Massachusetts for the exchange of the Acquired Fund’s assets for Acquiring Fund Shares, pursuant to the Agreement have been obtained or made.
The delivery of such opinion is conditioned upon receipt by Vedder, Price, Kaufman & Kammholz, P.C. of customary representations it shall reasonably request of each of the Acquiring Trust and the Acquired Trust.
7.5 The Acquired Fund shall have performed all of the covenants and complied with all of the provisions required by this Agreement to be performed or complied with by the Acquired Fund on or before the Closing Date.
7.6 The Acquired Fund’s net asset value per share calculated using market values shall not deviate by more than 0.5 of 1% from the net asset value per share calculated using amortized cost during the period from the date hereof through the Closing Date.
8. | Further Conditions Precedent to Obligations of the Acquiring Fund and the Acquired Fund |
If any of the conditions set forth below have not been met on or before the Closing Date with respect to the Acquired Fund or the Acquiring Fund, the other party to this
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Agreement shall, at its option, not be required to consummate the transactions contemplated by this Agreement:
8.1 This Agreement and the transactions contemplated herein shall have been approved by the requisite vote of the holders of the outstanding shares of the Acquired Fund in accordance with the provisions of the Acquired Trust’s Declaration of Trust, as amended, and By-Laws, applicable Massachusetts law and the 1940 Act, and certified copies of the resolutions evidencing such approval shall have been delivered to the Acquiring Fund. Notwithstanding anything herein to the contrary, neither the Acquiring Fund nor the Acquired Fund may waive the conditions set forth in this section 8.1.
8.2 On the Closing Date, no action, suit or other proceeding shall be pending or to its knowledge threatened before any court or governmental agency in which it is sought to restrain or prohibit, or obtain material damages or other relief in connection with, this Agreement or the transactions contemplated herein.
8.3 All consents of other parties and all other consents, orders and permits of federal, state and local regulatory authorities deemed necessary by the Acquiring Fund or the Acquired Fund to permit consummation, in all material respects, of the transactions contemplated hereby shall have been obtained, except where failure to obtain any such consent, order or permit would not involve a risk of a material adverse effect on the assets or properties of the Acquiring Fund or the Acquired Fund, provided that either party hereto may for itself waive any of such conditions.
8.4 The Registration Statement shall have become effective under the 1933 Act and no stop orders suspending the effectiveness thereof shall have been issued and, to the best knowledge of the parties hereto, no investigation or proceeding for that purpose shall have been instituted or be pending, threatened or contemplated under the 1933 Act.
8.5 The parties shall have received an opinion of Willkie Farr & Gallagher LLP addressed to each of the Acquiring Fund and the Acquired Fund, in a form reasonably satisfactory to each such party to this Agreement, substantially to the effect that, based upon certain facts, assumptions and representations of the parties, for federal income tax purposes: (i) the acquisition by Acquiring Fund of all of the assets of Acquired Fund solely in exchange for Acquiring Fund Shares and the assumption by Acquiring Fund of all of the liabilities of Acquired Fund, followed by the distribution by Acquired Fund to its shareholders of Acquiring Fund Shares in complete liquidation of Acquired Fund, all pursuant to the Agreement, constitutes a reorganization within the meaning of Section 368(a) of the Code, and Acquiring Fund and Acquired Fund will each be a “party to a reorganization” within the meaning of Section 368(b) of the Code; (ii) under Section 361 of the Code, Acquired Fund will not recognize gain or loss upon the transfer of its assets to Acquiring Fund in exchange for Acquiring Fund Shares and the assumption of the Acquired Fund liabilities by Acquiring Fund, and Acquired Fund will not recognize gain or loss upon the distribution to its shareholders of the Acquiring Fund Shares in liquidation of Acquired Fund; (iii) under Section 354 of the Code, shareholders of Acquired Fund will not recognize gain or loss on the receipt of Acquiring Fund Shares solely in exchange for Acquired Fund shares; (iv) under Section 358 of the Code, the aggregate basis of the Acquiring Fund Shares received by each shareholder of Acquired Fund will be the same as the aggregate basis of Acquired
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Fund shares exchanged therefor; (v) under Section 1223(1) of the Code, the holding period of the Acquiring Fund Shares received by each Acquired Fund shareholder will include the holding period of Acquired Fund shares exchanged therefor, provided that the Acquired Fund shareholder held the Acquired Fund shares at the time of the reorganization as a capital asset; (vi) under Section 1032 of the Code, Acquiring Fund will not recognize gain or loss upon the receipt of assets of Acquired Fund in exchange for Acquiring Fund Shares and the assumption by Acquiring Fund of all of the liabilities of Acquired Fund; (vii) under Section 362(b) of the Code, the basis of the assets of Acquired Fund transferred to Acquiring Fund in the reorganization will be the same in the hands of Acquiring Fund as the basis of such assets in the hands of Acquired Fund immediately prior to the transfer; (viii) under Section 1223(2) of the Code, the holding periods of the assets of Acquired Fund transferred to Acquiring Fund in the reorganization in the hands of Acquiring Fund will include the periods during which such assets were held by Acquired Fund; and (ix) Acquiring Fund will succeed to and take into account the items of the Acquired Fund described in Section 381(c) of the Code, subject to the conditions and limitations specified in Sections 381,382, 383 and 384 of the Code and the regulations thereunder. The delivery of such opinion is conditioned upon receipt by Willkie Farr & Gallagher of representations it shall request of each of the Acquiring Trust and Acquired Trust. Notwithstanding anything herein to the contrary, neither the Acquiring Fund nor the Acquired Fund may waive the condition set forth in this Section 8.5.
9. | Indemnification |
9.1 The Acquiring Fund agrees to indemnify and hold harmless the Acquired Fund and each of the Acquired Trust’s Board members and officers from and against any and all losses, claims, damages, liabilities or expenses (including, without limitation, the payment of reasonable legal fees and reasonable costs of investigation) to which jointly and severally, the Acquired Trust or any of its Board members or officers may become subject, insofar as any such loss, claim, damage, liability or expense (or actions with respect thereto) arises out of or is based on any breach by the Acquiring Fund of any of its representations, warranties, covenants or agreements set forth in this Agreement.
9.2 The Acquired Fund agrees to indemnify and hold harmless the Acquiring Fund and each of the Acquiring Trust’s Board members and officers from and against any and all losses, claims, damages, liabilities or expenses (including, without limitation, the payment of reasonable legal fees and reasonable costs of investigation) to which jointly and severally, the Acquiring Trust or any of its Board members or officers may become subject, insofar as any such loss, claim, damage, liability or expense (or actions with respect thereto) arises out of or is based on any breach by the Acquired Fund of any of its representations, warranties, covenants or agreements set forth in this Agreement.
10. | Fees and Expenses |
10.1 Each of the Acquiring Trust, on behalf of the Acquiring Fund, and the Acquired Trust, on behalf of the Acquired Fund, represents and warrants to the other that it has no obligations to pay any brokers or finders fees in connection with the transactions provided for herein.
10.2 DeIM will bear all the expenses associated with the Reorganization, including any transaction costs payable by the Acquired Fund in connection with sales of certain of its assets, as designated by the Acquiring Fund, in anticipation of the Reorganization.
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11. | Entire Agreement |
The Acquiring Fund and the Acquired Fund agree that neither party has made any representation, warranty or covenant not set forth herein and that this Agreement constitutes the entire agreement between the parties.
12. | Termination |
This Agreement may be terminated and the transactions contemplated hereby may be abandoned (i) by mutual agreement of the parties, or (ii) by either party if the Closing shall not have occurred on or before [December 29], 2006, unless such date is extended by mutual agreement of the parties, (iii) by either party if the other party shall have materially breached its obligations under this Agreement or made a material and intentional misrepresentation herein or in connection herewith, or (iv) if the net asset value per share of either party calculated using market values deviates by more than 0.3 of 1% from its net asset value per share calculated using amortized cost. In the event of any such termination, this Agreement shall become void and there shall be no liability hereunder on the part of any party or their respective Board members or officers, except for any such material breach or intentional misrepresentation, as to each of which all remedies at law or in equity of the party adversely affected shall survive.
13. | Amendments |
This Agreement may be amended, modified or supplemented in such manner as may be mutually agreed upon in writing by any authorized officer of the Acquired Fund and any authorized officer of the Acquiring Fund; provided, however, that following the meeting of the Acquired Fund Shareholders called by the Acquired Fund pursuant to section 5.3 of this Agreement, no such amendment may have the effect of changing the provisions for determining the number of the Acquiring Fund Shares to be issued to the Acquired Fund Shareholders under this Agreement to the detriment of such shareholders without their further approval.
14. | Notices |
Any notice, report, statement or demand required or permitted by any provisions of this Agreement shall be in writing and shall be deemed duly given if delivered by hand (including by Federal Express or similar express courier) or transmitted by facsimile or three days after being mailed by prepaid registered or certified mail, return receipt requested, addressed to the Acquired Fund or Acquiring Fund, as applicable, with a copy to Vedder, Price, Kaufman & Kammholz, P.C., 222 North LaSalle Street, Chicago, Illinois 60601, Attention: David A. Sturms, Esq., or to any other address that the Acquired Fund or the Acquiring Fund shall have last designated by notice to the other party.
15. | Headings; Counterparts; Assignment; Limitation of Liability |
15.1 The Article and section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
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15.2 This Agreement may be executed in any number of counterparts, each of which shall be deemed an original.
15.3 This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns, but no assignment or transfer hereof or of any rights or obligations hereunder shall be made by any party without the written consent of the other party. Nothing herein expressed or implied is intended or shall be construed to confer upon or give any person, firm or corporation, other than the parties hereto and the shareholders of the Acquiring Fund and the Acquired Fund and their respective successors and assigns, any rights or remedies under or by reason of this Agreement.
15.4 References in this Agreement to each Trust mean and refer to the Board members of each Trust from time to time serving under its Declaration of Trust on file with the Secretary of State of The Commonwealth of Massachusetts, as the same may be amended from time to time, pursuant to which each Trust conducts its business. It is expressly agreed that the obligations of each Trust hereunder shall not be binding upon any of the Board members, shareholders, nominees, officers, agents, or employees of the Trusts or the Funds personally, but bind only the respective property of the Funds, as provided in each Trust’s Declaration of Trust. Moreover, no series of either Trust other than the Funds shall be responsible for the obligations of the Trusts hereunder, and all persons shall look only to the assets of the Funds to satisfy the obligations of the Trusts hereunder. The execution and the delivery of this Agreement have been authorized by each Trust’s Board members, on behalf of the applicable Fund, and this Agreement has been signed by authorized officers of each Fund acting as such, and neither such authorization by such Board members, nor such execution and delivery by such officers, shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the respective property of the Funds, as provided in each Trust’s Declaration of Trust.
Notwithstanding anything to the contrary contained in this Agreement, the obligations, agreements, representations and warranties with respect to each Fund shall constitute the obligations, agreements, representations and warranties of that Fund only (the “Obligated Fund”), and in no event shall any other series of the Trusts or the assets of any such series be held liable with respect to the breach or other default by the Obligated Fund of its obligations, agreements, representations and warranties as set forth herein.
15.5 This Agreement shall be governed by, and construed and enforced in accordance with, the laws of The Commonwealth of Massachusetts, without regard to its principles of conflicts of laws.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed by an authorized officer and its seal to be affixed thereto and attested by its Secretary or Assistant Secretary.
Attest: | [DWS MONEY FUNDS, on behalf of DWS Government & Agency Money Fund]/[INVESTORS CASH TRUST, on behalf of Government & Agency Securities Portfolio] | |
John Millette, Secretary | By: Its: | |
Attest: | CASH ACCOUNT TRUST, on behalf of Government & Agency Securities Portfolio | |
John Millette, Secretary | By: Its: | |
AGREED TO AND ACKNOWLEDGED ONLY WITH RESPECT TO SECTION 10.2 HERETO DEUTSCHE INVESTMENT MANAGEMENT AMERICAS INC. | ||
By: Its: |
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I. | 4 | |||
II. | 10 | |||
III. | 14 | |||
IV. | 16 | |||
V. | 23 | |||
VI. | 26 | |||
Appendix A Form of Agreement and Plan of Reorganization | A-1 |
Proxy card enclosed.
For more information, please call your Fund’s proxy solicitor,
Computershare Fund Services, Inc., at (866) 774-4940.
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DWS MONEY FUNDS DWS GOVERNMENT & AGENCY MONEY FUND PROXY FOR THE JOINT SPECIAL MEETING OF SHAREHOLDERS 345 Park Avenue, 27th Floor, New York, New York 10154 | PROXY CARD | |||
PO Box 9132 | [4:00 p.m.], Eastern time, on October 12, 2006 | |||
Hingham, MA 02043-9132 |
The undersigned hereby appoint(s) Philip J. Collora, Patricia DeFilippis, John Millette and Caroline Pearson, and each of them, with full power of substitution, as proxy or proxies of the undersigned to vote all shares of the Fund that the undersigned is entitled in any capacity to vote at the above-stated Joint Special Meeting of Shareholders, and at any and all adjournments or postponements therof (the “Special Meeting”), on the matter set forth in the Notice of Joint Special Meeting of Shareholders and on this Proxy Card, and, in their discretion, upon all matters incident to the conduct of the Special Meeting and upon such other matters as may properly be brought before the Special Meeting. This proxy revokes all prior proxies given by the undersigned.
All properly executed proxies will be voted as directed. If no instructions are indicated on a properly executed proxy, the proxy will be voted FOR approval of the Proposal. All ABSTAIN votes will be counted in determining the existence of a quorum at the Special Meeting. Receipt of the Notice of Joint Special Meeting and the related Proxy Statement/Prospectus is hereby acknowledged.
VOTE VIA THE INTERNET: https://vote.proxy-direct.com | ||||
VOTE VIA THE TELEPHONE: [ ] | ||||
999 9999 9999 999 | ||||
Note: Joint owners should EACH sign. Please sign EXACTLY as your name(s) appears on this proxy card. When signing as attorney, trustee, executor, administrator, guardian or corporate officer, please give your FULL title as such. | ||||
| ||||
Signature(s) (Title(s), if applicable) | ||||
| ||||
Date |
VOTING OPTIONS
Read your proxy statement and have it at hand when voting.
VOTE ON THE INTERNET Log on to: https://vote.proxy-direct.com Follow the on-screen instructions available 24 hours | VOTE BY PHONE Call [ ] Follow the recorded instructions available 24 hours | VOTE BY MAIL Vote, sign and date this Proxy Card and return in the postage-paid envelope | VOTE IN PERSON Attend Shareholder Meeting 345 Park Avenue, 27th Floor New York, NY 10154 on October 12, 2006 |
If you vote on the Internet or by telephone, you need not return this proxy card.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES WITH RESPECT TO YOUR FUND. THE FOLLOWING MATTER IS PROPOSED BY YOUR FUND. THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE PROPOSAL.
TO VOTE, MARK A BLOCK BELOW IN BLUE OR BLACK INK. Example: n
VOTE ON PROPOSAL:
FOR | AGAINST | ABSTAIN | ||||||
1. | Approving an Agreement and Plan of Reorganization and the transactions it contemplates, including the transfer of all of the assets of the DWS Government & Agency Money Fund series of DWS Money Funds (“DWS Government Fund”) to the Government & Agency Securities Portfolio series of Cash Account Trust (“CAT Government Fund”), in exchange for shares of CAT Government Fund and the assumption by CAT Government Fund of all liabilities of DWS Government Fund, and the distribution of such shares, on a tax-free basis for federal income tax purposes, to the shareholders of DWS Government Fund in complete liquidation and termination of DWS Government Fund | ¨ | ¨ | ¨ | ||||
The appointed proxies will vote on any other business as may properly come before the Special Meeting. |
UNLESS VOTING BY TELEPHONE OR INTERNET, PLEASE SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. NO POSTAGE REQUIRED.
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INVESTORS CASH TRUST GOVERNMENT & AGENCY SECURITIES PORTFOLIO PROXY FOR THE JOINT SPECIAL MEETING OF SHAREHOLDERS 345 Park Avenue, 27th Floor, New York, New York 10154 | PROXY CARD | |||
PO Box 9132 | [4:00 p.m.], Eastern time, on October 12, 2006 | |||
Hingham, MA 02043-9132 |
The undersigned hereby appoint(s) Philip J. Collora, Patricia DeFilippis, John Millette and Caroline Pearson, and each of them, with full power of substitution, as proxy or proxies of the undersigned to vote all shares of the Fund that the undersigned is entitled in any capacity to vote at the above-stated Joint Special Meeting of Shareholders, and at any and all adjournments or postponements therof (the “Special Meeting”), on the matter set forth in the Notice of Joint Special Meeting of Shareholders and on this Proxy Card, and, in their discretion, upon all matters incident to the conduct of the Special Meeting and upon such other matters as may properly be brought before the Special Meeting. This proxy revokes all prior proxies given by the undersigned.
All properly executed proxies will be voted as directed. If no instructions are indicated on a properly executed proxy, the proxy will be voted FOR approval of the Proposal. All ABSTAIN votes will be counted in determining the existence of a quorum at the Special Meeting. Receipt of the Notice of Joint Special Meeting and the related Proxy Statement/Prospectus is hereby acknowledged.
VOTE VIA THE INTERNET: https://vote.proxy-direct.com | ||||
VOTE VIA THE TELEPHONE: [ ] | ||||
999 9999 9999 999 | ||||
Note: Joint owners should EACH sign. Please sign EXACTLY as your name(s) appears on this proxy card. When signing as attorney, trustee, executor, administrator, guardian or corporate officer, please give your FULL title as such. | ||||
| ||||
Signature(s) (Title(s), if applicable) | ||||
| ||||
Date |
VOTING OPTIONS
Read your proxy statement and have it at hand when voting.
VOTE ON THE INTERNET Log on to: https://vote.proxy-direct.com Follow the on-screen instructions available 24 hours | VOTE BY PHONE [ ] Follow the recorded instructions available 24 hours | VOTE BY MAIL Vote, sign and date this Proxy Card and return in the postage-paid envelope | VOTE IN PERSON Attend Shareholder Meeting 345 Park Avenue, 27th Floor New York, NY 10154 on October 12, 2006 |
If you vote on the Internet or by telephone, you need not return this proxy card.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES WITH RESPECT TO YOUR FUND. THE FOLLOWING MATTER IS PROPOSED BY YOUR FUND. THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE PROPOSAL.
TO VOTE, MARK A BLOCK BELOW IN BLUE OR BLACK INK. Example: n
VOTE ON PROPOSAL:
FOR | AGAINST | ABSTAIN | ||||||
1. | Approving an Agreement and Plan of Reorganization and the transactions it contemplates, including the transfer of all of the assets of the Government & Agency Securities Portfolio series of Investors Cash Trust (“ICT Government Fund”) to the Government & Agency Securities Portfolio series of Cash Account Trust (“CAT Government Fund”), in exchange for shares of CAT Government Fund and the assumption by CAT Government Fund of all liabilities of ICT Government Fund, and the distribution of such shares, on a tax-free basis for federal income tax purposes, to the shareholders of ICT Government Fund in complete liquidation and termination of ICT Government Fund. | ¨ | ¨ | ¨ | ||||
The appointed proxies will vote on any other business as may properly come before the Special Meeting. |
UNLESS VOTING BY TELEPHONE OR INTERNET, PLEASE SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. NO POSTAGE REQUIRED.
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CASH ACCOUNT TRUST – GOVERNMENT & AGENCY SECURITIES PORTFOLIO
PROSPECTUS FOR DWS GOVERNMENT & AGENCY MONEY FUND
DATED AUGUST 1, 2006
TO COME
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CASH ACCOUNT TRUST – GOVERNMENT & AGENCY SECURITIES PORTFOLIO
PROSPECTUS FOR DWS GOVERNMENT CASH INSTITUTIONAL SHARES
DATED AUGUST 1, 2006
TO COME
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CASH ACCOUNT TRUST – GOVERNMENT & AGENCY SECURITIES PORTFOLIO
PROSPECTUS FOR GOVERNMENT CASH MANAGED SHARES
DATED AUGUST 1, 2006
TO COME
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SUPPLEMENT TO THE CURRENTLY EFFECTIVE PROSPECTUS
OF EACH OF THE LISTED FUNDS:
DWS Dreman Financial Services Fund
Investors Cash Trust:
Government & Agency Securities Portfolio
DWS Government & Agency Money Fund
DWS Tax-Exempt Money Fund
Deutsche Investment Management Americas Inc., the advisor of the above-noted funds (the “Advisor”), is proposing the following mergers as part of the Advisor’s initiative to restructure and streamline the family of DWS funds. In the chart below the Acquired Funds on the left are proposed to be merged into the Acquiring Funds on the right.
Acquired Funds | Acquiring Funds | |
DWS Dreman Financial Services Fund | DWS Dreman High Return Equity Fund | |
Investors Cash Trust: Government & Agency Securities Portfolio | Cash Account Trust: Government & Agency Securities Portfolio | |
DWS Government & Agency Money Fund | Cash Account Trust: Government & Agency Securities Portfolio | |
DWS Tax-Exempt Money Fund | Cash Account Trust: Tax-Exempt Portfolio |
Completion of each merger is subject to a number of conditions, including final approval by each Fund’s Board and approval by shareholders of the Acquired Fund at a shareholder meeting expected to be held on or about October 12, 2006. Prior to the shareholder meeting, shareholders of each Acquired Fund will receive (i) a Proxy Statement/Prospectus describing in detail the proposed merger and the Board’s considerations in recommending that shareholders approve the merger, (ii) a proxy card(s) and instructions on how to submit your vote, and (iii) a Prospectus for the applicable Acquiring Fund.
Please Retain This Supplement for Future Reference
[Logo] DWS SCUDDER Deutsche Bank Group |
May 12, 2006
Table of Contents
MAY 1, 2006
SUPPLEMENT TO THE CURRENTLY EFFECTIVE PROSPECTUS OF EACH OF THE LISTED FUNDS
DWS High Income Fund
DWS High Income Plus Fund
The following information supplements or replaces similar disclosure in each of the following funds’ currently effective prospectuses:
A complete list of each fund’s portfolio holdings is posted on www.dws-scudder.com as of each calendar quarter-end on or after the last day of the following month. This posted information generally remains accessible at least until the date on which a fund files its Form N-CSR or N-Q with the Securities and Exchange Commission for the period that includes the date as of which the posted information is current. Each fund’s Statement of Additional Information includes a description of a fund’s policies and procedures with respect to the disclosure of a fund’s portfolio holdings.
The following information supplements or replaces similar disclosure in each of the following funds’ currently effective prospectuses:
DWS California Tax Free Income Fund | DWS Inflation Protected Plus Fund | DWS Short Duration Fund | ||
DWS Core Fixed Income Fund | DWS Intermediate Tax/AMT Free Fund | DWS Short Duration Plus Fund | ||
DWS Emerging Markets Fixed Income Fund | DWS Managed Municipal Bond Fund | DWS Short-Term Municipal Bond Fund | ||
DWS Global Bond Fund | DWS Massachusetts Tax-Free Fund | DWS Strategic Income Fund | ||
DWS GNMA Fund | DWS New York Tax-Free Income Fund | DWS U.S. Government Securities Fund | ||
DWS High Yield Tax Free Fund |
A complete list of each fund’s portfolio holdings is posted on www.dws-scudder.com as of the month-end on or after the last day of the following month. This posted information generally remains accessible at least until the date on which a fund files its Form N-CSR or N-Q with the Securities and Exchange Commission for the period that includes the date as of which the posted information is current. Each fund’s Statement of Additional Information includes a description of a fund’s policies and procedures with respect to the disclosure of a fund’s portfolio holdings.
ONE GLOBAL FORCE. ONE FOCUS. YOU. [DWS SCUDDER Logo]
Deutsche Bank Group
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The following information supplements or replaces similar disclosure in each of the following funds’ currently effective prospectuses:
DWS Balanced Fund | DWS Gold & Precious Metals Fund | DWS Money Market Series | ||
DWS Blue Chip Fund | DWS Government & Agency Money Fund | DWS Money Market Fund | ||
DWS Capital Growth Fund | DWS Growth & Income Fund | DWS Pacific Opportunities Equity Fund | ||
DWS Cash Investment Trust | DWS Growth Allocation Fund | DWS Small Cap Core Fund | ||
DWS Commodity Securities Fund | DWS Growth Plus Allocation Fund | DWS Small Cap Growth Fund | ||
DWS Conservative Allocation Fund | DWS Health Care Fund | DWS Small Cap Value Fund | ||
DWS Dreman Concentrated Value Fund | DWS International Equity Fund | DWS Target 2006 Fund | ||
DWS Dreman Financial Services Fund | DWS International Fund | DWS Target 2008 Fund | ||
DWS Dreman High Return Equity Fund | DWS International Select Equity Fund | DWS Target 2010 Fund | ||
DWS Dreman Mid Cap Value Fund | DWS Japan Equity Fund | DWS Target 2011 Fund | ||
DWS Dreman Small Cap Value Fund | DWS Large Cap Value Fund | DWS Target 2012 Fund | ||
DWS Emerging Markets Equity Fund | DWS Large Company Growth Fund | DWS Target 2013 Fund | ||
DWS Enhanced S&P 500 Index Fund | DWS Latin America Equity Fund | DWS Target 2014 Fund | ||
DWS Equity Income Fund | DWS Lifecycle Long Range Fund | DWS Tax-Exempt Money Fund | ||
DWS Equity Partners Fund | DWS Micro Cap Fund | DWS Tax Free Money Fund | ||
DWS Europe Equity Fund | DWS Mid Cap Growth Fund | DWS U.S. Treasury Money Fund | ||
DWS Global Opportunities Fund | DWS Moderate Allocation Fund | DWS Technology Fund | ||
DWS Global Thematic Fund | DWS Value Builder Fund |
A complete list of each fund’s portfolio holdings is posted on www.dws-scudder.com as of the month-end on or after the last day of the following month. This posted information generally remains accessible at least until the date on which a fund files its Form N-CSR or N-Q with the Securities and Exchange Commission for the period that includes the date as of which the posted information is current. In addition, each fund’s top ten holdings and other information about each fund is posted on www.dws-scudder.com as of the calendar quarter-end on or after the 15th day following quarter-end. Each fund’s Statement of Additional Information includes a description of a fund’s policies and procedures with respect to the disclosure of a fund’s portfolio holdings.
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Please Retain This Supplement for Future Reference
May 1, 2006
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SCUDDER
INVESTMENTS
Supplement to the currently effective prospectuses of each of the funds listed below:
Scudder Blue Chip Fund
Scudder California Tax-Free Income Fund
Scudder Capital Growth Fund
Scudder Cash Investment Trust
Scudder Commodity Securities Fund
Scudder-Dreman Concentrated Value Fund
Scudder-Dreman Financial Services Fund
Scudder-Dreman High Return Equity Fund
Scudder-Dreman Mid Cap Value Fund
Scudder-Dreman Small Cap Value Fund
Scudder EAFE(R) Equity Index Fund
Scudder Emerging Markets Fund
Scudder Emerging Markets Income Fund
Scudder Equity 500 Index Fund
Scudder Fixed Income Fund
Scudder Flag Investors Communications Fund, Inc.
Scudder Flag Investors Equity Partners Fund, Inc.
Scudder Flag Investors Value Builder Fund, Inc.
Scudder Global Bond Fund
Scudder Global Discovery Fund
Scudder Global Fund
Scudder GNMA Fund
Scudder Gold and Precious Metals Fund
Scudder Government & Agency Money Fund
Scudder Greater Europe Fund
Scudder Growth and Income Fund
Scudder Health Care Fund
Scudder High Income Fund
Scudder High Income Plus Fund
Scudder High Yield Tax Free Fund
Scudder Income Fund
Scudder Inflation Protected Plus Fund
Scudder Intermediate Tax/AMT Free Fund
Scudder International Equity Fund
Scudder International Fund
Scudder International Select Equity Fund
Scudder Japanese Equity Fund
Scudder Large Cap Value Fund
Scudder Large Company Growth Fund
Scudder Latin America Fund
Scudder Lifecycle Long Range Fund
Scudder Limited Duration Plus Fund
Scudder Managed Municipal Bond Fund
Scudder Massachusetts Tax-Free Fund
Scudder Micro Cap Fund
Scudder Mid Cap Growth Fund
Scudder Money Market Fund
Scudder Money Market Series
Scudder New York Tax-Free Income Fund
Scudder Pacific Opportunities Fund
Scudder Pathway Series: Conservative Portfolio
Scudder Pathway Series: Growth Plus Portfolio
Scudder Pathway Series: Growth Portfolio
Scudder Pathway Series: Moderate Portfolio
Scudder Retirement Fund — Series VI
Scudder Retirement Fund — Series VII
Scudder RREEF Real Estate Securities Fund
Scudder S&P 500 Index Fund
Scudder Select 500 Fund
Scudder Short Duration Fund
Scudder Short-Term Bond Fund
Scudder Short-Term Municipal Bond Fund
Scudder Small Cap Growth Fund
Scudder Small Company Stock Fund
Scudder Small Company Value Fund
Scudder Strategic Income Fund
Scudder Target 2010 Fund
Scudder Target 2011 Fund
Scudder Target 2012 Fund
Scudder Target 2013 Fund
Scudder Target 2014 Fund
Scudder Tax Advantaged Dividend Fund
Scudder Tax Free Money Fund
Scudder Tax-Exempt Money Fund
Scudder Technology Fund
Scudder Total Return Fund
Scudder U.S. Bond Index Fund
Scudder U.S. Government Securities Fund
Scudder U.S. Treasury Money Fund
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Market Timing Related Regulatory and Litigation Matters
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. The Funds’ advisors have been cooperating in connection with these inquiries and are in discussions with the regulators concerning proposed settlements. 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, and 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. It is not possible to determine with certainty what the outcome of these inquiries will be or what the effect, if any, would be on the Funds or their advisors.
With respect to the lawsuits, 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.
With respect to the regulatory matters, Deutsche Asset Management (“DeAM”) has advised the Funds as follows:
DeAM expects to reach final agreements with regulators early in 2006 regarding allegations of improper trading in the Scudder Funds. DeAM expects that it will reach settlement agreements with the Securities and Exchange Commission (the “SEC”), the New York Attorney General and the Illinois Secretary of State providing for payment of disgorgement, penalties, and investor education contributions totaling approximately $134 million. Approximately $127 million of this amount would be distributed to shareholders of the affected Scudder Funds in accordance with a distribution plan to be developed by an independent distribution consultant. DeAM does not believe that any of the Scudder Funds will be named as respondents or defendants in any proceedings. The Funds’ investment advisors do not believe these amounts will have a material adverse financial impact on them or materially affect their ability to perform under their investment management agreements with the Scudder Funds. The above-described amounts are not material to Deutsche Bank, and they have already been reserved.
Based on the settlement discussions thus far, DeAM believes that it will be able to reach a settlement with the regulators on a basis that is generally consistent with settlements reached by other advisors, taking into account the particular facts and circumstances of market timing at DeAM and at the legacy Scudder and Kemper organizations prior to their acquisition by DeAM in April 2002. Among the terms of the expected settled orders, DeAM would be subject to certain undertakings regarding the conduct of its business in the future, including maintaining existing management fee reductions for certain funds for a period of five years. DeAM expects that these settlements would resolve regulatory allegations that it violated certain provisions of federal and state securities laws (i) by entering into trading arrangements that permitted certain investors to engage in market timing in certain Scudder Funds and (ii) by failing more generally to take adequate measures to prevent market timing in the Scudder Funds, primarily during the 1999-2001 period. With respect to the trading arrangements, DeAM expects that the settlement documents will include allegations related to one legacy DeAM arrangement, as well as three legacy Scudder and six legacy Kemper arrangements. All of these trading arrangements originated in businesses that existed prior to the current DeAM organization, which came together in April 2002 as a result of the various mergers of the legacy Scudder, Kemper and Deutsche Fund groups, and all of the arrangements were terminated prior to the start of the regulatory investigations that began in the summer of 2003. No current DeAM employee approved the trading arrangements.
There is no certainty that the final settlement documents will contain the foregoing terms and conditions. The independent trustees of the Scudder Funds have carefully monitored these regulatory investigations with the assistance of independent legal counsel and independent economic consultants. Additional information announced by DeAM regarding the terms of the expected settlements will be made available at scudder.com/regulatory settlements, which will also disclose the terms of any final settlement agreements once they are announced.
Other Regulatory Matters
DeAM is also engaged in settlement discussions with the Enforcement Staffs of the SEC and the NASD regarding DeAM’s practices during 2001-2003 with respect to directing brokerage commissions for portfolio transactions by certain Scudder Funds to broker-dealers that sold shares in the Scudder Funds and provided enhanced marketing and distribution for shares in the Scudder Funds. In addition, on January 13, 2006, Scudder Distributors, Inc. received a Wells notice from the Enforcement Staff of the NASD regarding Scudder Distributors’ payment of non-cash compensation to associated persons of NASD member firms, as well as Scudder Distributors’ procedures regarding non-cash compensation regarding entertainment provided to such associated persons. Additional information announced by DeAM regarding the terms of the expected settlements will be made available at scudder.com/regulatory settlements, which will also disclose the terms of any final settlement agreements once they are announced.
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Please Retain This Supplement for Future Reference
January 27, 2006
SMF-3676
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SCUDDER INVESTMENTS
Supplement to the currently effective prospectuses of each of the funds listed below:
Effective February 6, 2006, Scudder Investments will change its name to DWS Scudder and the Scudder funds will be renamed DWS funds. The DWS Scudder name represents the alignment of Scudder with all of Deutsche Bank’s mutual fund operations around the globe as part of our continuing commitment to superior performance, innovative products and quality services. On February 6, 2006, the funds will be listed as part of the DWS fund family under the letter “D” in the mutual fund listing section of the newspapers. In addition, the Web site for all Scudder funds will change to www.dws-scudder.com.
The new fund names will be as follows:
Current Name | New Name, Effective February 6, 2006 | |
Scudder Blue Chip Fund | DWS Blue Chip Fund | |
Scudder California Tax-Free Income Fund | DWS California Tax-Free Income Fund | |
Scudder Capital Growth Fund | DWS Capital Growth Fund | |
Scudder Cash Investment Trust | DWS Cash Investment Trust | |
Scudder Commodity Securities Fund | DWS Commodity Securities Fund | |
Scudder Dreman Concentrated Value Fund | DWS Dreman Concentrated Value Fund | |
Scudder Dreman Financial Services Fund | DWS Dreman Financial Services Fund | |
Scudder Dreman High Return Equity Fund | DWS Dreman High Return Equity Fund | |
Scudder Dreman Mid Cap Value Fund | DWS Dreman Mid Cap Value Fund | |
Scudder Dreman Small Cap Value Fund | DWS Dreman Small Cap Value Fund | |
Scudder EAFE Equity Index Fund | DWS EAFE Equity Index Fund | |
Scudder Equity 500 Index Fund | DWS Equity 500 Index Fund | |
Scudder Emerging Markets Fund | DWS Emerging Markets Equity Fund | |
Scudder Emerging Markets Income Fund | DWS Emerging Markets Fixed Income Fund | |
Scudder Fixed Income Fund | DWS Core Fixed Income Fund | |
Scudder Flag Investors Communications Fund, Inc. | DWS Communications Fund | |
Scudder Flag Investors Equity Partners Fund, Inc. | DWS Equity Partners Fund | |
Scudder Flag Investors Value Builder Fund, Inc. | DWS Value Builder Fund | |
Scudder Global Bond Fund | DWS Global Bond Fund | |
Scudder Global Discovery Fund | DWS Global Opportunities Fund | |
Scudder Global Fund | DWS Global Thematic Fund | |
Scudder GNMA Fund | DWS GNMA Fund | |
Scudder Gold and Precious Metals Fund | DWS Gold & Precious Metals Fund | |
Scudder Greater Europe Fund | DWS Europe Equity Fund | |
Scudder Growth and Income Fund | DWS Growth & Income Fund | |
Scudder Government & Agency Money Fund | DWS Government & Agency Money Fund | |
Scudder Health Care Fund | DWS Health Care Fund | |
Scudder High Income Fund | DWS High Income Fund | |
Scudder High Income Plus Fund | DWS High Income Plus Fund | |
Scudder High Yield Tax Free Fund | DWS High Yield Tax Free Fund | |
Scudder Inflation Protected Plus Fund | DWS Inflation Protected Plus Fund | |
Scudder Income Fund | DWS Core Plus Income Fund | |
Scudder Intermediate Tax/AMT Free Fund | DWS Intermediate Tax/AMT Free Fund | |
Scudder International Fund | DWS International Fund | |
Scudder International Equity Fund | DWS International Equity Fund | |
Scudder International Select Equity Fund | DWS International Select Equity Fund | |
Scudder Japanese Equity Fund | DWS Japan Equity Fund | |
Scudder Large Cap Value Fund | DWS Large Cap Value Fund | |
Scudder Large Company Growth Fund | DWS Large Company Growth Fund | |
Scudder Latin America Fund | DWS Latin America Equity Fund | |
Scudder Lifecycle Long Range Fund | DWS Lifecycle Long Range Fund | |
Scudder Limited Duration Plus Fund | DWS Short Duration Plus Fund | |
Scudder Managed Municipal Bond Fund | DWS Managed Municipal Bond Fund | |
Scudder Massachusetts Tax-Free Fund | DWS Massachusetts Tax-Free Fund | |
Scudder Micro Cap Fund | DWS Micro Cap Fund |
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Current Name | New Name, Effective February 6, 2006 | |
Scudder Mid Cap Growth Fund | DWS Mid Cap Growth Fund | |
Scudder Money Market Fund | DWS Money Market Fund | |
Scudder Money Market Series | DWS Money Market Series | |
Scudder New York Tax-Free Income Fund | DWS New York Tax-Free Income Fund | |
Scudder Pacific Opportunities Fund | DWS Pacific Opportunities Equity Fund | |
Scudder Pathway Series: Conservative Portfolio | DWS Conservative Allocation Fund | |
Scudder Pathway Series: Growth Plus Portfolio | DWS Growth Plus Allocation Fund | |
Scudder Pathway Series: Growth Portfolio | DWS Growth Allocation Fund | |
Scudder Pathway Series: Moderate Portfolio | DWS Moderate Allocation Fund | |
Scudder Retirement Fund — Series VI | DWS Target 2006 Fund | |
Scudder Retirement Fund — Series VII | DWS Target 2008 Fund | |
Scudder RREEF Real Estate Securities Fund | DWS RREEF Real Estate Securities Fund | |
Scudder S&P 500 Index Fund | DWS S&P 500 Index Fund | |
Scudder Select 500 Fund | DWS Enhanced S&P 500 Index Fund | |
Scudder Short Duration Fund | DWS Short Duration Fund | |
Scudder Short Term Bond Fund | DWS Short Term Bond Fund | |
Scudder Short-Term Municipal Bond Fund | DWS Short-Term Municipal Bond Fund | |
Scudder Small Cap Growth Fund | DWS Small Cap Growth Fund | |
Scudder Small Company Stock Fund | DWS Small Cap Core Fund | |
Scudder Small Company Value Fund | DWS Small Cap Value Fund | |
Scudder Strategic Income Fund | DWS Strategic Income Fund | |
Scudder Target 2010 Fund | DWS Target 2010 Fund | |
Scudder Target 2011 Fund | DWS Target 2011 Fund | |
Scudder Target 2012 Fund | DWS Target 2012 Fund | |
Scudder Target 2013 Fund | DWS Target 2013 Fund | |
Scudder Target 2014 Fund | DWS Target 2014 Fund | |
Scudder Tax Advantaged Dividend Fund | DWS Equity Income Fund | |
Scudder Tax-Exempt Money Fund | DWS Tax-Exempt Money Fund | |
Scudder Tax Free Money Fund | DWS Tax Free Money Fund | |
Scudder Technology Fund | DWS Technology Fund | |
Scudder Total Return Fund | DWS Balanced Fund | |
Scudder U.S. Bond Index Fund | DWS U.S. Bond Index Fund | |
Scudder U.S. Government Securities Fund | DWS U.S. Government Securities Fund | |
Scudder U.S. Treasury Money Fund | DWS U.S. Treasury Money Fund |
Also effective February 6, 2006, the Scudder service providers to the funds will change their names. The new service provider names will be as follows:
Current Name | New Name, Effective February 6, 2006 | |
Scudder Distributors, Inc. | DWS Scudder Distributors, Inc. | |
Scudder Fund Accounting Corporation | DWS Scudder Fund Accounting Corporation | |
Scudder Investments Service Company | DWS Scudder Investments Service Company | |
Scudder Service Corporation | DWS Scudder Service Corporation | |
Scudder Trust Company | DWS Trust Company |
Scudder Total Return Fund only:
Effective February 6, 2006 and under the fund’s new name, DWS Balanced Fund, the following supplements the disclosure in the third paragraph of “The Fund’s Main Investment Strategy” section of the prospectuses:
The fund normally invests approximately 60% of its net assets in common stocks and other equity securities and approximately 40% of its net assets in fixed-income securities, including lower-quality debt securities. These percentages will fluctuate in response to changing market conditions, but the fund will at all times invest at least 25% of net assets in fixed-income senior securities.
Table of Contents
Please Retain This Supplement for Future Reference
December 31, 2005
SMF-3675
535429
Table of Contents
SCUDDER
INVESTMENTS
Scudder Money Funds
Prospectus
December 1, 2005
Scudder Money Market Fund
Scudder Government & Agency Money Fund
Scudder Tax-Exempt Money Fund
As with all mutual funds, the Securities and Exchange Commission (SEC) does not approve or disapprove these shares or determine whether the information in this prospectus is truthful or complete. It is a criminal offense for anyone to inform you otherwise.
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How the Funds Work | ||
4 | ||
10 | ||
15 | ||
21 | ||
22 | ||
25 | ||
How to Invest in the Funds | ||
29 | ||
31 | ||
32 | ||
40 |
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How the Funds Work
These funds are money funds, meaning that they seek to maintain a stable $1.00 share price to preserve the value of your investment.
Each fund takes its own approach to money market investing. Scudder Money Market Fund emphasizes yield through a more diverse universe of investments, while Scudder Government & Agency Money Fund emphasizes government securities. Scudder Tax-Exempt Money Fund invests for income that is free from federal income taxes.
Remember that money funds are investments, not bank deposits. They’re not insured or guaranteed by the FDIC or any other government agency. Their share prices aren’t guaranteed, so be aware that you could lose money by investing in them.
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ticker symbol | KMMXX | |
fund number | 6 |
The Fund’s Main Investment Strategy
The fund seeks maximum current income to the extent consistent with stability of principal. The fund pursues its goal by investing exclusively in high quality, short-term securities, as well as repurchase agreements that are backed by high quality securities.
While the fund’s advisor gives priority to earning income and maintaining the value of the fund’s principal at $1.00 per share, all money market instruments, including US government obligations, can change in value when interest rates change or an issuer’s creditworthiness changes.
The fund seeks to achieve its goal of current income by investing in high quality money market securities and maintains a dollar-weighted average maturity of 90 days or less. The fund is managed in accordance with Rule 2a-7 under the Investment Company Act of 1940 (“1940 Act”). The fund follows two policies designed to maintain a stable share price:
• | Fund securities are denominated in US dollars and generally have remaining maturities of 397 days (about 13 months) or less at the time of purchase. The fund may also invest in securities that have features that reduce their maturities to 397 days or less at the time of purchase. |
• | The fund buys US government debt obligations, money market instruments and other debt obligations that at the time of purchase: |
• | have received one of the two highest short-term ratings from two nationally recognized statistical rating organizations (NRSROs); |
• | have received one of the two highest short-term ratings from one NRSRO (if only one organization rates the security); |
• | are unrated, but are determined to be of comparable quality by the advisor; or |
• | have no short-term rating, but are rated in one of the top three highest long-term rating categories, and are determined to be of comparable quality by the advisor. |
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Principal investments
The fund may invest in high quality, short-term, US dollar denominated money market instruments paying a fixed, variable or floating interest rate. These include:
• | Debt obligations issued by US and foreign banks, financial institutions, corporations or other entities, including certificates of deposit, euro-time deposits, commercial paper (including asset-backed commercial paper) and notes. Securities that do not satisfy the maturity restrictions for a money fund may be specifically structured so that they are eligible investments for money funds. For example, some securities have features which have the effect of shortening the security’s maturity. |
• | US government securities that are issued or guaranteed by the US Treasury, or by agencies or instrumentalities of the US government. |
• | Repurchase agreements, which are agreements to buy securities at one price, with a simultaneous agreement to sell back the securities at a future date at an agreed-upon price. |
• | Asset-backed securities, which are generally participations in a pool of assets whose payment is derived from the payments generated by the underlying assets. Payments on the asset-backed security generally consist of interest and/or principal. |
The fund may invest more than 25% of its total assets in bank obligations. The fund may invest up to 10% of its total assets in other money market mutual funds in accordance with applicable regulations.
Working in consultation with the portfolio managers, the credit team screens potential securities and develops a list of those that the fund may buy. The managers, looking for attractive yield and weighing considerations such as credit quality, economic outlooks and possible interest rate movements, then decide which securities on this list to buy. The managers may adjust the fund’s exposure to interest rate risk, typically seeking to take advantage of possible rises in interest rates and to preserve yield when interest rates appear likely to fall.
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The Main Risks of Investing in the Fund
There are several risk factors that could reduce the yield you get from the fund or cause the fund’s performance to trail that of other investments.
Interest Rate Risk. Money market instruments, like all debt securities, face the risk that the securities will decline in value because of changes in interest rates. Generally, investments subject to interest rate risk will decrease in value when interest rates rise and increase in value when interest rates decline. To minimize such price fluctuations, the fund limits the dollar-weighted average maturity of the securities held by the fund to 90 days or less. Generally, the price of short-term investments fluctuates less than longer-term bonds. Income earned on floating or variable rate securities will vary as interest rates decrease or increase.
Credit Risk. A money market instrument’s credit quality depends on the issuer’s ability to pay interest on the security and repay the debt: the lower the credit rating, the greater the risk that the security’s issuer will default, or fail to meet its payment obligations. The credit risk of a security may also depend on the credit quality of any bank or financial institution that provides credit enhancement for it. To minimize credit risk, the fund only buys high quality securities with minimal credit risk. Also, the fund only buys securities with remaining maturities of 397 days (approximately 13 months) or less. This reduces the risk that the issuer’s creditworthiness will change, or that the issuer will default on the principal and interest payments of the obligation. Additionally, some securities issued by US government agencies or instrumentalities are supported only by the credit of that agency or instrumentality. There is no guarantee that the US government will provide support to such agencies or instrumentalities and such securities may involve risk of loss of principal and interest.
Market Risk. Although individual securities may outperform their market, the entire market may decline as a result of rising interest rates, regulatory developments or deteriorating economic conditions.
Security Selection Risk. While the fund invests in short-term securities, which by their nature are relatively stable investments, the risk remains that the securities in which the fund invests will not perform as expected. This could cause the fund’s returns to lag behind those of similar money market funds.
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Repurchase Agreement Risk. A repurchase agreement exposes the fund to the risk that the party that sells the securities may default on its obligation to repurchase them. In this circumstance, the fund can lose money because:
• | it cannot sell the securities at the agreed-upon time and price; or |
• | the securities lose value before they can be sold. |
The fund seeks to reduce this risk by monitoring the creditworthiness of the sellers with whom it enters into repurchase agreements. The fund also monitors the value of the securities to ensure that they are at least equal to the total amount of the repurchase obligations, including interest and accrued interest.
Concentration Risk. Because the fund may invest more than 25% of its total assets in bank obligations, it may be vulnerable to setbacks in that industry. Banks are highly dependent on short-term interest rates and can be adversely affected by downturns in the US and foreign economies or changes in banking regulations.
Prepayment Risk. When a bond issuer, such as an issuer of asset-backed securities, retains the right to pay off a high yielding bond before it comes due, the fund may have no choice but to reinvest the proceeds at lower interest rates. Thus, prepayment may reduce the fund’s income. It may also create a capital gains tax liability, because bond issuers usually pay a premium for the right to pay off bonds early.
An investment in the fund is not insured or guaranteed by the FDIC or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, this share price isn’t guaranteed and you could lose money by investing in the fund.
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The Fund’s Performance History
While a fund’s past performance isn’t necessarily a sign of how it will do in the future, it can be valuable for an investor to know.
The bar chart shows how the total returns for the fund have varied from year to year, which may give some idea of risk. The table shows how the fund’s returns over different periods average out. All figures on this page assume reinvestment of dividends and distributions. As always, past performance is no guarantee of future results.
As of December 31, 2004, the fund’s 7-day yield was 1.71%. To learn the current 7-day yield, investors may call 1-800-621-1048 or visit the Scudder Funds Web site at www.scudder.com.
The 7-day yield, which is often referred to as the “current yield,” is the income generated by the fund over a seven-day period. This amount is then annualized, which means that we assume the fund generates the same income every week for a year. The “total return” of the fund is the change in the value of an investment in the fund over a given period. Average annual returns are calculated by averaging the year-by-year returns of the fund over a given period.
Scudder Money Market Fund
Annual Total Returns (%) as of 12/31 each year
THE ORIGINAL DOCUMENT CONTAINS A BAR CHART HERE
BAR CHART DATA:
1995 | 5.67 | |
1996 | 5.23 | |
1997 | 5.36 | |
1998 | 5.27 | |
1999 | 4.97 | |
2000 | 6.26 | |
2001 | 3.91 | |
2002 | 1.49 | |
2003 | 0.81 | |
2004 | 0.96 |
2005 Total Return as of September 30: 1.94%
For the periods included in the bar chart:
Best Quarter: 1.60%, Q3 2000 | Worst Quarter: 0.17%, Q4 2003 |
Average Annual Total Returns (%) as of 12/31/2004
1 Year | 5 Years | 10 Years | ||||||
0.96 | 2.66 | 3.97 |
Total return for 2001 includes the effect of a voluntary capital contribution from the advisor. Without this contribution, the total returns would have been lower.
In addition, total returns for 2001 would have been lower if operating expenses hadn’t been reduced.
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How Much Investors Pay
This is a no-load fund. It has no sales charges or other shareholder fees. The fund does have annual operating expenses, and as a shareholder you pay them indirectly. The fee table describes the expenses you may pay if you buy and hold shares of this fund.
Fee Table
Shareholder Fees, paid directly from your investment | None | ||
Annual Operating Expenses, deducted from fund assets | |||
Management Fee(1) | 0.26 | % | |
Distribution/Service (12b-1) Fee | None | ||
Other Expenses(2) | 0.20 | ||
Total Annual Operating Expenses(3) | 0.46 |
(1) | Restated and estimated to reflect the consummation of a merger on June 13, 2005. |
(2) | Includes costs of shareholder services, custody and similar expenses, which may vary with fund size and other factors. |
(3) | Through November 30, 2008, the advisor has contractually agreed to waive all or a portion of its management fee and reimburse or pay operating expenses of the fund to the extent necessary to maintain the fund’s total annual operating expenses at 0.47%, excluding certain expenses such as extraordinary expenses, taxes, brokerage, interest, and trustee and trustee counsel fees. |
Based on the costs above, this example helps you compare the fund’s expenses to those of other mutual funds. This example assumes the expenses above remain the same. It also assumes that you invested $10,000, earned 5% annual returns, reinvested all dividends and distributions and sold your shares at the end of each period. This is only an example; actual expenses will be different.
1 Year | 3 Years | 5 Years | 10 Years | ||||||
$47 | $ | 148 | $ | 258 | $ | 579 |
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ticker symbol | KEGXX | |
fund number | 11 |
Scudder Government & Agency Money Fund
The Fund’s Main Investment Strategy
The fund seeks maximum current income to the extent consistent with stability of principal.
The fund pursues its goal by investing exclusively in:
• | short-term securities that are issued or guaranteed by the US government or its agencies or instrumentalities |
• | repurchase agreements backed by obligations of such securities |
While the fund’s advisor gives priority to earning income and maintaining the value of the fund’s principal at $1.00 per share, all money market instruments, including US government obligations, can change in value when interest rates change.
The securities the fund may buy range from US Treasury obligations which are backed by the full faith and credit of the US government, to securities of issuers such as the Federal Home Loan Bank that carry no government guarantees. The fund may invest in floating and variable rate instruments (obligations that do not bear interest at fixed rates). The fund maintains a dollar-weighted average maturity of 90 days or less. Fund securities are denominated in US dollars and have remaining maturities of 397 days (approximately 13 months) or less at the time of purchase. The fund may also invest in securities that have features that reduce their maturities to 397 days or less at the time of purchase. The fund is managed in accordance with Rule 2a-7 under the 1940 Act.
Principal investments
The fund primarily invests in the following types of investments:
• | US Treasury bills, notes, bonds and other obligations issued by the US government, its agencies and instrumentalities. |
• | Repurchase agreements for which the fund buys securities at one price with a simultaneous agreement to sell back the securities at a future date at an agreed-upon price. |
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The fund may invest up to 10% of its total assets in other money market mutual funds in accordance with applicable regulations.
Working in consultation with the portfolio managers, the credit team screens potential securities and develops a list of those that the fund may buy. The managers, looking for attractive yield and weighing considerations such as credit quality, economic outlooks and possible interest rate movements, then decide which securities on this list to buy. The managers may adjust the fund’s exposure to interest rate risk, typically seeking to take advantage of possible rises in interest rates and to preserve yield when interest rates appear likely to fall.
The Main Risks of Investing in the Fund
There are several risk factors that could reduce the yield you get from the fund or cause the fund’s performance to trail that of other investments.
Interest Rate Risk. Money market instruments, like all debt securities, face the risk that the securities will decline in value because of changes in interest rates. Generally, investments subject to interest rate risk will decrease in value when interest rates rise and increase in value when interest rates decline. To minimize such price fluctuations, the fund limits the dollar-weighted average maturity of the securities held by the fund to 90 days or less. Generally, the price of short-term investments fluctuates less than longer-term bonds. Income earned on floating or variable rate securities may vary as interest rates decrease or increase. Because of the fund’s high credit standards, its yield may be lower than the yields of money funds that do not invest primarily in US government and agency securities.
Credit Risk. If a portfolio security declines in credit quality or goes into default, it could hurt the fund’s performance. Additionally, some securities issued by US government agencies or instrumentalities are supported only by the credit of that agency or instrumentality. There is no guarantee that the US government will provide support to such agencies or instrumentalities and such securities may involve risk of loss of principal and interest. Other securities are backed by the full faith and credit of the US government.
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Market Risk. Although individual securities may outperform their market, the entire market may decline as a result of rising interest rates, regulatory developments or deteriorating economic conditions.
Security Selection Risk. While the fund invests in short-term securities, which by their nature are relatively stable investments, the risk remains that the securities in which the fund invests will not perform as expected. This could cause the fund’s returns to lag behind those of similar money market funds.
Repurchase Agreement Risk. A repurchase agreement exposes the fund to the risk that the party that sells the securities may default on its obligation to repurchase them. In this circumstance, the fund can lose money because:
• | it cannot sell the securities at the agreed-upon time and price; or |
• | the securities lose value before they can be sold. |
The fund seeks to reduce this risk by monitoring the creditworthiness of the sellers with whom it enters into repurchase agreements. The fund also monitors the value of the securities to ensure that they are at least equal to the total amount of the repurchase obligations, including interest and accrued interest.
An investment in the fund is not insured or guaranteed by the FDIC or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, this share price isn’t guaranteed and you could lose money by investing in the fund.
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The Fund’s Performance History
While a fund’s past performance isn’t necessarily a sign of how it will do in the future, it can be valuable for an investor to know.
The bar chart shows how the total returns for the fund have varied from year to year, which may give some idea of risk. The table shows how the fund’s returns over different periods average out. All figures on this page assume reinvestment of dividends and distributions. As always, past performance is no guarantee of future results.
As of December 31, 2004, the fund’s 7-day yield was 1.70%. To learn the current 7-day yield, investors may call 1-800-621-1048 or visit the Scudder Funds Web site at www.scudder.com.
The 7-day yield, which is often referred to as the “current yield,” is the income generated by the fund over a seven-day period. This amount is then annualized, which means that we assume the fund generates the same income every week for a year. The “total return” of the fund is the change in the value of an investment in the fund over a given period. Average annual returns are calculated by averaging the year-by-year returns of the fund over a given period.
Scudder Government & Agency Money Fund
Annual Total Returns (%) as of 12/31 each year
THE ORIGINAL DOCUMENT CONTAINS A BAR CHART HERE
BAR CHART DATA:
1995 | 5.71 | |
1996 | 5.21 | |
1997 | 5.32 | |
1998 | 5.18 | |
1999 | 4.80 | |
2000 | 6.15 | |
2001 | 3.85 | |
2002 | 1.47 | |
2003 | 0.76 | |
2004 | 0.92 |
2005 Total Return as of September 30: 1.93%
For the periods included in the bar chart:
Best Quarter: 1.58%, Q3 2000 | Worst Quarter: 0.16%, Q1 2004 |
Average Annual Total Returns (%) as of 12/31/2004
1 Year | 5 Years | 10 Years | ||||||
0.92 | 2.61 | 3.92 |
Total returns for 2001 would have been lower if operating expenses hadn’t been reduced.
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How Much Investors Pay
This is a no-load fund. It has no sales charges or other shareholder fees. The fund does have annual operating expenses, and as a shareholder you pay them indirectly. The fee table describes the expenses you may pay if you buy and hold shares of this fund.
Fee Table
Shareholder Fees, paid directly from your investment | None | ||
Annual Operating Expenses, deducted from fund assets | |||
Management Fee(1) | 0.26 | % | |
Distribution/Service (12b-1) Fee | None | ||
Other Expenses(2) | 0.21 | ||
Total Annual Operating Expenses | 0.47 | ||
Less Expense Waiver/Reimbursements | 0.02 | ||
Net Annual Fund Operating Expenses(3) | 0.45 |
(1) | Restated and estimated to reflect the consummation of a merger on June 13, 2005. |
(2) | Includes costs of shareholder services, custody and similar expenses, which may vary with fund size and other factors. |
(3) | Through November 30, 2008, the advisor has contractually agreed to waive all or a portion of its management fee and reimburse or pay operating expenses of the fund to the extent necessary to maintain the fund’s total annual operating expenses at 0.45%, excluding certain expenses such as extraordinary expenses, taxes, brokerage, interest, and trustee and trustee counsel fees. |
Based on the costs above (including one year of capped expenses in the “1 Year” period and three years of capped expenses in each of the “3 Years,” “5 Years” and “10 Years” periods), this example helps you compare the fund’s expenses to those of other mutual funds. This example assumes the expenses above remain the same. It also assumes that you invested $10,000, earned 5% annual returns, reinvested all dividends and distributions and sold your shares at the end of each period. This is only an example; actual expenses will be different.
1 Year | 3 Years | 5 Years | 10 Years | ||||||
$46 | $ | 144 | $ | 257 | $ | 585 |
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ticker symbol | KXMXX | |
fund number | 29 |
The Fund’s Main Investment Strategy
The fund seeks maximum current income that is exempt from federal income taxes to the extent consistent with stability of principal.
The fund pursues its goal by normally investing at least 80% of total assets in high quality, short-term municipal securities. The income from these securities is free from regular federal income tax and from alternative minimum tax (AMT).
This fund is designed for investors in a moderate to high tax bracket who are interested in federally tax-free income along with the liquidity and stability that a money fund is designed to offer.
While the fund’s advisor gives priority to earning income and maintaining the value of the fund’s principal at $1.00 per share, all money market instruments can change in value when interest rates change or an issuer’s creditworthiness changes.
The fund seeks to achieve its goal of current income by investing in high quality, short-term municipal obligations and maintains a dollar-weighted average maturity of 90 days or less. The fund is managed in accordance with Rule 2a-7 under the 1940 Act. The fund follows two policies designed to maintain a stable share price:
• | Fund securities are denominated in US dollars and generally have remaining maturities of 397 days (approximately 13 months) or less at the time of purchase. The fund may also invest in securities that have features that reduce their effective maturities to 397 days or less at the time of purchase; |
• | The fund buys short-term municipal obligations that at the time of purchase: |
• | have received one of the two highest short-term ratings from two nationally recognized statistical rating organizations (NRSROs); |
• | have received one of the two highest short-term ratings from one NRSRO (if only one organization rates the security); |
• | are unrated, but are determined to be of comparable quality by the advisor; or |
• | have no short-term rating, but are rated in one of the top two highest long-term rating categories, and are determined to be of comparable quality by the advisor. |
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Principal investments
The fund primarily invests in the following types of investments:
• | Municipal trust receipts (“MTRs”). MTRs are also sometimes called municipal asset-backed securities, synthetic short-term derivatives, floating rate trust certificates, or municipal securities trust receipts. MTRs are typically structured by a bank, broker-dealer or other financial institution by depositing municipal securities into a trust or partnership coupled with a conditional right to sell, or put, the holder’s interest in the underlying securities at par plus accrued interest to a financial institution. MTRs are generally issued as fixed or variable rate instruments. These trusts are structured so that the purchaser of the MTR is considered to be investing in the underlying municipal securities. This structure is intended to allow the tax-exempt status of interest generated by the underlying asset to pass through to the purchaser. The fund may invest up to 35% of its net assets in MTRs. |
• | General obligation notes and bonds, which an issuer backs with its full faith and credit. That means the government entity will repay the bond out of its general tax revenues. |
• | Revenue notes and bonds, which are payable from specific revenue sources. These are often tied to the public works project the bonds are financing, but are not generally backed by the issuer’s taxing power. |
• | Tax-exempt commercial paper, which is tax-exempt obligations of borrowers that generally mature in 270 days or less. |
• | Short-term municipal notes, such as tax anticipation notes, that are issued in anticipation of the receipt of tax revenues. |
• | Municipal obligations, backed by letters of credit (a document issued by a bank guaranteeing the issuer’s payments for a stated amount), general bank guarantees or municipal bond insurance. |
• | Floating rate bonds whose interest rates vary with changes in specified market rates or indexes. The fund may invest in high quality floating rate bonds with maturities of one year or more if it has the right to sell them back at their face value within 397 days of purchase. |
• | Private activity bonds, which are revenue bonds that finance non-governmental activities, such as private industry construction and industrial development bonds. The fund may invest more than 25% of its total assets in industrial development bonds. Note that the interest on these bonds may be subject to local, state and federal income taxes, including the AMT. |
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Working in consultation with the portfolio managers, the credit team screens potential securities and develops a list of those that the fund may buy. The managers, looking for attractive yield and weighing considerations such as credit quality, economic outlooks and possible interest rate movements, then decide which securities on this list to buy. The managers may adjust the fund’s exposure to interest rate risk, typically seeking to take advantage of possible rises in interest rates and to preserve yield when interest rates appear likely to fall.
The Main Risks of Investing in the Fund
There are several risk factors that could reduce the yield you get from the fund or cause the fund’s performance to trail that of other investments.
Interest Rate Risk. Money market instruments, like all debt securities, face the risk that the securities will decline in value because of changes in interest rates. Generally, investments subject to interest rate risk will decrease in value when interest rates rise and increase in value when interest rates decline. To minimize such price fluctuations, the fund limits the dollar-weighted average maturity of the securities held by the fund to 90 days or less. Generally, the price of short-term investments fluctuates less than longer-term bonds. Income earned on floating or variable rate securities will vary as interest rates decrease or increase.
Credit Risk. A money market instrument’s credit quality depends on the issuer’s ability to pay interest on the security and repay the debt: the lower the credit rating, the greater the risk that the security’s issuer will default, or fail to meet its payment obligations. For example, industrial development bonds are typically backed by revenues from a given facility and by the credit of a private company, but are not backed by the taxing power of a municipality. The credit risk of a security may also depend on the credit quality of any bank or financial institution that provides credit enhancement for it. To minimize credit risk, the fund only buys high quality securities with minimal credit risk. Also, the fund buys securities with remaining maturities of 397 days (approximately 13 months) or less. This reduces the risk that the issuer’s creditworthiness will change, or that the issuer will default on the principal and interest payments of the obligation.
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Market Risk. Although individual securities may outperform their market, the entire market may decline as a result of rising interest rates, regulatory developments or deteriorating economic conditions.
Security Selection Risk. While the fund invests in short-term securities, which by their nature are relatively stable investments, the risk remains that the securities in which the fund invests will not perform as expected. This could cause the fund’s returns to lag behind those of similar money market funds.
Municipal Trust Receipts Risk. The fund’s investment in MTRs is subject to similar risks as other investments in debt obligations, including interest rate risk, credit risk and security selection risk. Additionally, investments in MTRs raise certain tax issues that may not be presented by direct investments in municipal bonds. There is some risk that certain issues could be resolved in a manner that could adversely impact the performance of the fund.
Special Tax Features. Political or legal actions could change the tax-exempt status of the fund’s dividends. Also, to the extent that the fund invests in taxable securities, a portion of its income would be subject to regular federal income taxation.
Temporary Defensive Position. In response to adverse political, economic or market events, the fund may adopt a temporary defensive position in which it places more than 100% of the fund’s assets in high quality money market investments that are subject to Federal income tax. To the extent that the fund might do so, it may not meet its goal of a high level of current tax-free income.
An investment in the fund is not insured or guaranteed by the FDIC or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, this share price isn’t guaranteed and you could lose money by investing in the fund.
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The Fund’s Performance History
While a fund’s past performance isn’t necessarily a sign of how it will do in the future, it can be valuable for an investor to know.
The bar chart shows how the total returns for the fund have varied from year to year, which may give some idea of risk. The table shows how the fund’s returns over different periods average out. All figures on this page assume reinvestment of dividends and distributions. As always, past performance is no guarantee of future results.
As of December 31, 2004, the fund’s taxable equivalent yield was 1.47%. To learn the current yield, investors may call 1-800-621-1048 or visit the Scudder Funds Web site at www.scudder.com.
The taxable equivalent yield demonstrates the yield on a taxable investment necessary to produce an after-tax yield equal to a fund’s tax-free yield. Yield is the income generated by a fund over a seven-day period. This amount is then annualized, which means that we assume the fund generates the same income every week for a year. The “total return” of a fund is the change in the value of an investment in the fund over a given period. Average annual returns are calculated by averaging the year-by-year returns of the fund over a given period.
Scudder Tax-Exempt Money Fund
Annual Total Returns (%) as of 12/31 each year
THE ORIGINAL DOCUMENT CONTAINS A BAR CHART HERE
BAR CHART DATA:
1995 | 3.74 | |
1996 | 3.33 | |
1997 | 3.44 | |
1998 | 3.31 | |
1999 | 3.01 | |
2000 | 3.92 | |
2001 | 2.56 | |
2002 | 1.12 | |
2003 | 0.70 | |
2004 | 0.85 |
2005 Total Return as of September 30: 1.44%
For the periods included in the bar chart:
Best Quarter: 1.02%, Q4 2000 | Worst Quarter: 0.13%, Q3 2003 |
Average Annual Total Returns (%) as of 12/31/2004
1 Year | 5 Years | 10 Years | ||||||
0.85 | 1.82 | 2.59 |
Total returns for 2001 would have been lower if operating expenses hadn’t been reduced.
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How Much Investors Pay
This is a no-load fund. It has no sales charges or other shareholder fees. The fund does have annual operating expenses, and as a shareholder you pay them indirectly. The fee table describes the expenses you may pay if you buy and hold shares of this fund.
Fee Table
Shareholder Fees, paid directly from your investment | None | ||
Annual Operating Expenses, deducted from fund assets | |||
Management Fee(1) | 0.26 | % | |
Distribution/Service (12b-1) Fee | None | ||
Other Expenses(2) | 0.13 | ||
Total Annual Operating Expenses(3) | 0.39 |
(1) | Restated and estimated to reflect the consummation of a merger on June 13, 2005. |
(2) | Includes costs of shareholder services, custody and similar expenses, which may vary with fund size and other factors. |
(3) | Through November 30, 2008, the advisor has contractually agreed to waive all or a portion of its management fee and reimburse or pay operating expenses of the fund to the extent necessary to maintain the fund’s total annual operating expenses at 0.40%, excluding certain expenses such as extraordinary expenses, taxes, brokerage, interest, and trustee and trustee counsel fees. |
Based on the costs above, this example helps you compare the fund’s expenses to those of other mutual funds. This example assumes the expenses above remain the same. It also assumes that you invested $10,000, earned 5% annual returns, reinvested all dividends and distributions and sold your shares at the end of each period. This is only an example; actual expenses will be different.
1 Year | 3 Years | 5 Years | 10 Years | ||||||
$40 | $ | 125 | $ | 219 | $ | 493 |
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While the sections on the previous pages describe the main points of each fund’s strategy and risks, there are some other issues to know about:
• | Although major changes tend to be infrequent, each fund’s Board could change that fund’s investment goal without seeking shareholder approval. However, Scudder Tax-Exempt Money Fund’s policy of investing at least 80% of total assets in high quality, short-term municipal securities cannot be changed without shareholder approval. The Board will provide shareholders with at least 60 days’ notice prior to making any changes to Scudder Government & Agency Money Fund’s policy of investing exclusively in short-term securities that are issued or guaranteed by the US government or its agencies or instrumentalities and repurchase agreements backed by these securities. |
For more information
This prospectus doesn’t tell you about every policy or risk of investing in the funds.
If you want more information on a fund’s allowable securities and investment practices and the characteristics and risks of each one, you may want to request a copy of the Statement of Additional Information (the back cover tells you how to do this).
Keep in mind that there is no assurance that any mutual fund will achieve its goal.
Each fund’s complete portfolio holdings as of the end of each calendar month are posted on www.scudder.com ordinarily on the 15th day of the following calendar month, or the first business day thereafter. This posted information generally remains accessible at least until the fund files its Form N-CSR or N-Q with the Securities and Exchange Commission for the period that includes the date as of which the www.scudder.com information is current (expected to be not more than three months). Each fund’s Statement of Additional Information includes a description of each fund’s policies and procedures with respect to the disclosure of each fund’s portfolio holdings.
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Who Manages and Oversees the Funds
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. (“DeIM”), Deutsche Asset Management, Inc., Deutsche Bank Trust Company Americas and Scudder Trust Company.
Deutsche Asset Management is a global asset management organization that offers a wide range of investing expertise and resources, including hundreds of portfolio managers and analysts and an office network that reaches the world’s major investment centers. This well-resourced global investment platform brings together a wide variety of experience and investment insight across industries, regions, asset classes and investing styles.
DeIM is an indirect, wholly owned subsidiary of Deutsche Bank AG. Deutsche Bank AG is a major global banking institution that is engaged in a wide range of financial services, including investment management, mutual fund, retail, private and commercial banking, investment banking and insurance.
The investment advisor
DeIM, which is part of Deutsche Asset Management, is the investment advisor for each fund. Under the supervision of the Board of Trustees, DeIM, with headquarters at 345 Park Avenue, New York, NY 10154, makes each fund’s investment decisions, buys and sells securities for each fund and conducts research that leads to these purchase and sale decisions. DeIM has more than 80 years of experience managing mutual funds and provides a full range of investment advisory services to institutional and retail clients. DeIM is also responsible for selecting brokers and dealers and for negotiating brokerage commissions and dealer charges.
DeIM receives a management fee from each fund. Below are the actual rates paid by each fund for the most recent fiscal year, as a percentage of each fund’s average daily net assets:
Fund Name | Fee Paid | ||
Scudder Money Market Fund | 0.28 | % | |
Scudder Government & Agency Money Fund | 0.28 | % | |
Scudder Tax-Exempt Money Fund | 0.28 | % |
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Effective June 13, 2005, the funds pay a monthly investment management fee, based on the combined average daily net assets of each fund, computed and accrued daily and payable monthly, at (1)/12 of the annual rates shown below:
Combined Average Daily Net Assets | Fee Rate | ||
0 - $215 million | 0.500 | % | |
Next $335,000,000 | 0.375 | % | |
Next $250,000,000 | 0.300 | % | |
Next $800,000,000 | 0.250 | % | |
Next $800,000,000 | 0.240 | % | |
Next $800,000,000 | 0.230 | % | |
Over $3.2 billion | 0.220 | % |
The portfolio managers
A group of investment professionals is responsible for the day-to-day management of each fund. These investment professionals have a broad range of experience in managing money funds.
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Regulatory and litigation matters
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. The funds’ advisors have been cooperating in connection with these inquiries and are in discussions with these regulators concerning proposed settlements. 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, and 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. It is not possible to determine with certainty what the outcome of these inquiries will be or what the effect, if any, would be on the funds or their advisors. Based on currently available information, however, the funds’ investment advisors believe the likelihood that the pending lawsuits and any regulatory settlements 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.
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These tables are designed to help you understand each fund’s financial performance in recent years. The figures in the first part of each table are for a single share. The total return figures represent the percentage that an investor in a particular fund would have earned (or lost), assuming all dividends and distributions were reinvested. This information has been audited by Ernst & Young LLP, independent registered public accounting firm, whose report, along with each fund’s financial statements, is included in that fund’s annual report (see “Shareholder reports” on the back cover).
Scudder Money Market Fund
Years Ended July 31, | 2005 | 2004 | 2003 | 2002 | 2001 | |||||||||||||||
Selected Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||
Net investment income | .019 | .007 | .011 | .02 | .05 | |||||||||||||||
Distributions from net investment income | (.019 | ) | (.007 | ) | (.011 | ) | (.02 | ) | (.05 | ) | ||||||||||
Net asset value, end of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||
Total Return (%) | 1.95 | .71 | 1.11 | 2.01 | 5.54 | ^a,^b | ||||||||||||||
Ratios to Average Net Assets and Supplemental Data | ||||||||||||||||||||
Net assets, end of period ($ in millions) | 3,392 | 3,432 | 4,117 | 4,978 | 5,787 | |||||||||||||||
Ratio of expenses before expense reductions (%) | .48 | .43 | .43 | .44 | .42 | ^c | ||||||||||||||
Ratio of expenses after expense reductions (%) | .48 | .43 | .43 | .44 | .41 | ^c | ||||||||||||||
Ratio of net investment income (%) | 1.91 | .72 | 1.12 | 2.01 | 5.38 |
^a | Total return for the year ended July 31, 2001 includes the effect of a voluntary capital contribution from the Advisor. Without this contribution, the total return would have been lower. |
^b | Total return would have been lower had certain expenses not been reduced. |
^c | The ratios of operating expenses excluding costs incurred in connection with a fund complex reorganization before and after expense reductions were 0.41% and 0.41%, respectively. |
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Scudder Government & Agency Money Fund
Years Ended July 31, | 2005 | 2004 | 2003 | 2002 | 2001 | |||||||||||||||
Selected Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||
Net investment income | .019 | .007 | .011 | .02 | .05 | |||||||||||||||
Distributions from net investment income | (.019 | ) | (.007 | ) | (.011 | ) | (.02 | ) | (.05 | ) | ||||||||||
Net asset value, end of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||
Total Return (%) | 1.92 | .67 | 1.07 | 1.96 | 5.44 | ^a | ||||||||||||||
Ratios to Average Net Assets and Supplemental Data | ||||||||||||||||||||
Net assets, end of period ($ in millions) | 442 | 401 | 503 | 614 | 751 | |||||||||||||||
Ratio of expenses before expense reductions (%) | .49 | .45 | .43 | .43 | .41 | ^b | ||||||||||||||
Ratio of expenses after expense reductions (%) | .49 | .45 | .43 | .43 | .40 | ^b | ||||||||||||||
Ratio of net investment income (%) | 1.88 | .69 | 1.09 | 1.98 | 5.27 |
^a | Total return would have been lower had certain expenses not been reduced. |
^b | The ratios of operating expenses excluding costs incurred in connection with a fund complex reorganization before and after expense reductions were 0.40% and 0.40%, respectively. |
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Scudder Tax-Exempt Money Fund
Years Ended July 31, | 2005 | 2004 | 2003 | 2002 | 2001 | |||||||||||||||
Selected Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||
Net investment income | .015 | .006 | .009 | .01 | .03 | |||||||||||||||
Distributions from net investment income | (.015 | ) | (.006 | ) | (.009 | ) | (.01 | ) | (.03 | ) | ||||||||||
Net asset value, end of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||
Total Return (%) | 1.54 | .65 | .92 | 1.43 | 3.50 | ^a | ||||||||||||||
Ratios to Average Net Assets and Supplemental Data | ||||||||||||||||||||
Net assets, end of period ($ in millions) | 744 | 602 | 634 | 687 | 745 | |||||||||||||||
Ratio of expenses before expense reductions (%) | .41 | .41 | .39 | .38 | .36 | ^b | ||||||||||||||
Ratio of expenses after expense reductions (%) | .41 | .41 | .39 | .38 | .35 | ^b | ||||||||||||||
Ratio of net investment income (%) | 1.54 | .64 | .92 | 1.43 | 3.44 |
^a | Total return would have been lower had certain expenses not been reduced. |
^b | The ratios of operating expenses excluding costs incurred in connection with a fund complex reorganization before and after expense reductions were 0.35% and 0.35%, respectively. |
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How to Invest in the Funds
The following pages tell you how to invest in these funds and what to expect as a shareholder. If you’re investing directly with Scudder, all of this information applies to you.
If you’re investing through a “third party provider” — for example, a financial advisor or workplace retirement plan — your provider may have its own policies or instructions, and you should follow those.
Different terms also apply to investors who are using one of these funds as the core account for a Scudder MoneyPLUS Account^SM. Check your informational brochure or your account services guide.
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Initial Investment
$1,000 or more for regular accounts | ||
$500 or more for IRAs | ||
$10,000 or more for a Scudder MoneyPLUS Account(SM) | ||
$50 or more with an Automatic Investment Plan ($1,500 a month for a Scudder MoneyPLUS Account(SM) | ||
Make out your check to “Scudder Money Funds” | ||
By mail | • Fill out and sign an application | |
• Send the application and an investment check to: Scudder Investments, P.O. Box 219356, Kansas City, MO 64121-9356 | ||
By wire | • Call 1-800-621-1048 | |
• Fax your completed application to the representative, who will provide you with an account number | ||
• Have your bank wire your investment to: Scudder Money Funds, UMB Bank of Kansas City, N.A. ABA# 1010-0069-5 | ||
• You will also need to provide your name and account number, along with the name and routing number for the fund of your choice: | ||
• Scudder Money Market Fund: 98-0103-346-8 | ||
• Scudder Government & Agency Money Fund: 98-0116-259-4 | ||
• Scudder Tax-Exempt Money Fund: 98-0001-577-6 | ||
With an automatic investment plan | • For investing directly from your bank account, paycheck or government check | |
• Call 1-800-621-1048 to set up a plan or get instructions | ||
By exchange | • To invest in one of these funds by selling shares in another Scudder fund, call 1-800-621-1048 | |
On the Internet | • If you are a current Scudder shareholder, see the instructions at www.scudder.com | |
Through a financial advisor | • Contact your representative using the method that’s most convenient for you |
Scudder telephone representatives are available on business days from 8 a.m. to 5 p.m. Central time. Call toll-free 1-800-621-1048.
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Additional Investment
$50 or more for regular accounts | ||
$50 or more for IRAs | ||
$50 or more a month with an Automatic Investment Plan | ||
Make out your check to “Scudder Money Funds” | ||
By mail | • Send a check and a Scudder investment slip to: Scudder Investments, P.O. Box 219154, Kansas City, MO 64121-9154 | |
• No investment slip? Enclose a letter with your name, fund and account number and your investment instructions | ||
By wire | • Wire your investment using the wire instructions for initial investments on the previous page | |
By EZ-Transfer | • Call 1-800-621-1048 to make sure EZ-Transfer is set up on your account; if it is, you can request a transfer from your bank account of any amount between $50 and $250,000 | |
By ScudderACCESS | • Call 1-800-972-3060 and follow the instructions | |
With an automatic investment plan | • For investing directly from your bank account, paycheck or government check | |
• Call 1-800-621-1048 to set up a plan | ||
By exchange | • To invest in one of these funds by selling shares in another Scudder fund, call 1-800-621-1048 | |
On the Internet | • See the instructions at www.scudder.com | |
• Click on “Account Access” | ||
Through a financial advisor | • Contact your representative using the method that’s most convenient for you |
Sending an investment by express, registered or certified mail?
Use this address: Scudder Investments Service Company, 210 West 10th Street, Kansas City, MO 64105-1614
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Selling Shares
Some transactions, including most for over $100,000, can only be ordered in writing; for more information, see page 37 | ||
By check | • Write a check on your account for at least $500 | |
By phone | • Call 1-800-621-1048 for instructions; a check will be mailed to the address of record | |
By wire | • Call 1-800-621-1048 to make sure that wire transfer is set up on your account; if it is, you can request a wire to your bank account | |
By EZ-Transfer | • Call 1-800-621-1048 to make sure EZ-Transfer is set up on your account; if it is, you can request a transfer to your bank account of any amount between $50 and $250,000 | |
By exchange | • To sell shares in another Scudder fund and invest in one of these funds, call 1-800-621-1048 | |
By mail | • Write a letter that includes: | |
• the fund and account number from which you want to sell shares | ||
• the dollar amount you want to sell | ||
• your name(s), signature(s), and address, exactly as on your account | ||
• Send the letter to: Scudder Investments, P.O. Box 219557, Kansas City, MO 64121-9557 | ||
With an automatic exchange or withdrawal plan | • To set up regular exchanges or withdrawals among Scudder funds, call 1-800-621-1048 | |
In a Scudder MoneyPLUS Account(SM) | • To add unlimited checkwriting and a VISA(R) Check Card to your account, call 1-800-621-1048 (annual fee and some transaction fees apply) | |
On the Internet | • Follow the instructions at www.scudder.com | |
• Click on “Account Access” | ||
Through a financial advisor | • Contact your representative using the method that’s most convenient for you |
Scudder telephone representatives are available on business days from 8 a.m. to 5 p.m. Central time. Call toll-free 1-800-621-1048.
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Policies You Should Know About
Along with the instructions on the previous pages, the policies below may affect you as a shareholder. Some of this information, such as the section on dividends and taxes, applies to all investors, including those investing through investment providers.
If you are investing through a financial advisor or through a retirement plan, check the materials you received from them about how to buy and sell shares because particular financial advisors or other intermediaries may adopt policies, procedures or limitations that are separate from those described by the fund. Please note that a financial advisor may charge fees separate from those charged by a fund.
In order to reduce the amount of mail you receive and to help reduce fund expenses, we generally send a single copy of any shareholder report and prospectus to each household. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact your financial services firm or call 1-800-621-1048.
Policies about transactions
The funds are open for business each day the New York Stock Exchange (the “Exchange”) is open. Scudder Money Market Fund and Scudder Government & Agency Money Fund calculate their share price three times every business day, first at 12 p.m. Eastern time, then at 2 p.m. Eastern time and again as of the close of regular trading on the Exchange (typically 4 p.m. Eastern time, but sometimes earlier, as in the case of scheduled half-day trading or unscheduled suspensions of trading). Scudder Tax-Exempt Money Fund calculates its share price at 12 p.m. Eastern time and again as of the close of regular trading on the Exchange. As noted earlier, each fund seeks to maintain a stable $1.00 share price.
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To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account. What this means to you: When you open an account, we will ask for your name, address, date of birth and other information that will allow us to identify you. Some or all of this information will be used to verify the identity of all persons opening an account.
We might request additional information about you (which may include certain documents, such as articles of incorporation for companies) to help us verify your identity, and in some cases the information and/or documents may be required to conduct the verification. The information and documents will be used solely to verify your identity.
We will attempt to collect any missing required and requested information by contacting you or your financial intermediary. If we are unable to obtain this information within the time frames established by each fund then we may reject your application and order.
Each fund will not invest your purchase until all required and requested identification has been provided and your application has been submitted in “good order.” After we receive all the information, your application is deemed to be in good order and we accept your purchase, you will receive the net asset value per share next calculated. In addition, while we attempt to verify your identity, we may limit your ability to purchase or exchange fund shares.
If we are unable to verify your identity within time frames established by each fund, after a reasonable effort to do so, you will receive written notification.
The funds generally will not accept new account applications to establish an account with a non-US address (APO/FPO and US territories are acceptable) or for a non-resident alien.
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Because orders placed through investment providers must be forwarded to the transfer agent before they can be processed, you’ll need to allow extra time. A representative of your investment provider should be able to tell you approximately when your order will be processed. It is the responsibility of your financial representative to forward your order to the transfer agent in a timely manner.
Payments transmitted through the Federal Reserve Wire System are in federal funds. Check or wire orders made through other bank wire systems must be converted into federal funds, which generally may result in a one day delay in executing the order.
Wire transactions that arrive by 2 p.m. Eastern time (12 p.m. Eastern time for Scudder Tax-Exempt Money Fund) and can be identified as an investment in a fund will receive that day’s dividend. Wire transactions received between 2 p.m. (12 p.m. Eastern time for Scudder Tax-Exempt Money Fund) and 4 p.m. Eastern time will start to accrue dividends the next business day. Investments by check will be effective at 4 p.m. Eastern time on the business day following receipt and will earn dividends the following calendar day. Orders processed through dealers or other financial services firms via Fund/SERV will be effected at the 4 p.m. Eastern time net asset value effective on the trade date. These purchases will begin earning dividends the calendar day following the payment date.
When selling shares, you’ll generally receive the dividend for the day on which your shares were sold. If we receive a sell request before 12 p.m. Eastern time and the request calls for proceeds to be sent out by wire, we will normally wire you the proceeds on the same day. However, you won’t receive that day’s dividend.
ScudderACCESS, the Scudder automated telephone service, is available 24 hours a day by calling 1-800-972-3060. You can use ScudderACCESS to get information on Scudder funds generally and on accounts held directly at Scudder. You can also use it to make exchanges and to buy and sell shares.
THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS.
If you ever have difficulty placing an order by phone or Internet, you can send us your order in writing.
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EZ-Transfer lets you set up a link between a Scudder account and a bank account. Once this link is in place, you can move money between the two with a phone call or on the Internet at www.scudder.com. You’ll need to make sure your bank has Automated Clearing House (ACH) services. Transactions take two to three days to be completed, and there is a $50 minimum. To set up EZ-Transfer on a new account, see the account application, which can also be downloaded from our Web site; to add it to an existing account, call 1-800-621-1048.
If you are investing in these funds through a Scudder Money PLUS Account(SM), you have access to a number of different features and your policies and fees are different in some cases. For example, there is no minimum dollar amount on checks you write, and you can access your account using a VISA(R) Check Card (a debit card). For more information on the Scudder MoneyPLUS Account, its cash management features and its policies and fees, call 1-800-621-1048.
Each fund accepts Automated Clearing House (“ACH”) debit entries for accounts that have elected the checkwriting redemption privilege. Upon receipt of an ACH debit entry referencing your account number you authorize us to redeem fund shares in your account to pay the entry to the third party originating the debit. Your fund account statement will show all ACH debit entries in your account. In Case of Errors or Questions about Your Transactions or Pre-Authorized Transfers please telephone at 1-800-621-1048 or write (Scudder Investments, 222 South Riverside Plaza, Chicago, IL 60606-5808) the Shareholder Service Agent as soon as possible if you believe your statement reflects an improper charge or if you need more information about an ACH debit entry transaction. You must contact the Shareholder Service Agent within sixty (60) days of the fund sending you the first fund account statement on which an improper charge appears.
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Each fund accepts payment for shares only in US dollars by check, bank or federal funds wire transfer, or by electronic bank transfer. Please note that we cannot accept cash, money orders, traveler’s checks, starter checks, third party checks, checks issued by credit card companies or Internet-based companies or checks drawn on foreign banks.
Checkwriting enables you to sell fund shares by writing a check. Your investment keeps earning dividends until your check clears. Please note that you’ll be charged a $10 service fee when you write a check for less than $500. You’ll also be charged a $10 service fee when you write a check that’s larger than your available balance at the time the check is presented to us, and we will not be able to honor the check. We also cannot honor any check for more than $5,000,000, or any check written on an account on which there is a Power of Attorney. It’s not a good idea to close out an account using a check because the account balance could change between the time you write the check and the time it is processed.
Telephone and electronic transactions. Generally, you are automatically entitled to telephone transaction privileges but you may elect not to have them when you open your account or by contacting Shareholder Services at 1-800-621-1048 at a later date.
Since many transactions may be initiated by telephone or electronically, it’s important to understand that as long as we take reasonable steps to ensure that an order to purchase or redeem shares is genuine, such as recording calls or requesting personalized security codes or other information, we are not responsible for any losses that may occur as a result. For transactions conducted over the Internet, we recommend the use of a secure Internet browser. In addition, you should verify the accuracy of your confirmation statements immediately after you receive them.
THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS.
The Scudder Web site can be a valuable resource for shareholders with Internet access. To get up-to-date information, review balances or even place orders for exchanges, go to www.scudder.com.
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When you ask us to send or receive a wire, please note that while we don’t charge a fee to send or receive wires, it’s possible that your bank may do so. Wire transactions are generally completed within 24 hours. The funds can only send wires of $1,000 or more and accept wires of $50 or more.
Since money market funds hold short-term instruments and are intended to provide liquidity to shareholders, the Advisor does not monitor or limit short-term and excessive trading activity in the funds and, accordingly, the Board of each fund has not approved any policies and procedures designed to limit this activity. However, each fund reserves the right to and may reject or cancel a purchase or exchange order into a money market fund for any reason, including if, in the opinion of the Advisor, there appears to be a pattern of short-term and excessive trading by an investor in other Scudder funds.
We do not issue share certificates.
When you want to sell more than $100,000 worth of shares, or send the proceeds to a third party or a new address, you’ll usually need to place your order in writing and include a signature guarantee. However, if you want money wired to a bank account that is already on file with us, you don’t need a signature guarantee. Also, you don’t need a signature guarantee for an exchange, although we may require one in certain other circumstances.
A signature guarantee is simply a certification of your signature — a valuable safeguard against fraud. You can get a signature guarantee from an eligible guarantor institution, including commercial banks, savings and loans, trust companies, credit unions, member firms of a national stock exchange, or any member or participant of an approved signature guarantor program. Note that you can’t get a signature guarantee from a notary public and we must be provided with the original guarantee.
Selling shares of trust accounts and business or organization accounts may require additional documentation. Please contact your financial advisor for more information.
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Money from shares you sell is normally sent out within one business day of when your order is processed (not when it is received), although it could be delayed for up to seven days. There are also two circumstances when it could be longer: when you are selling shares you bought recently by check or EZ-Transfer and that check hasn’t cleared yet (maximum delay: 10 days) or when unusual circumstances prompt the SEC to allow further delays. Redemption payments may also be delayed when you are selling recently purchased shares or in the event of closing of the Federal Reserve Bank’s wire payment system.
You may obtain additional information about other ways to sell your shares by contacting your financial advisor.
How the funds calculate share price
The share price is the net asset value per share, or NAV. To calculate NAV, each fund uses the following equation:
TOTAL ASSETS - TOTAL LIABILITIES | = NAV | |||
TOTAL NUMBER OF SHARES OUTSTANDING |
The price at which you buy and sell shares is the NAV.
In valuing securities, we typically use amortized cost (the method used by most money market funds) to account for any premiums or discount above or below the face value of any securities each fund buys, and round the per share NAV to the nearest whole cent.
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Other rights we reserve
You should be aware that we may do any of the following:
• | withdraw or suspend the offering of shares at any time |
• | withhold a portion of your distributions as federal income tax if we have been notified by the IRS that you are subject to backup withholding or if you fail to provide us with a correct taxpayer ID number or certification that you are exempt from backup withholding |
• | reject a new account application if you don’t provide any required or requested identifying information, or for other reasons |
• | refuse, cancel or rescind any purchase or exchange order; freeze any account (meaning you will not be able to purchase or redeem fund shares in your account); suspend account services; and/or involuntarily redeem your account if we think that the account is being used for fraudulent or illegal purposes; one or more of these actions will be taken when, at our sole discretion, they are deemed to be in a fund’s best interest or when a fund is requested or compelled to do so by governmental authority or by applicable law |
• | close and liquidate your account if we are unable to verify your identity, or for other reasons; if we decide to close your account, your fund shares will be redeemed at the net asset value per share next calculated after we determine to close your account; you may be subject to gain or loss on the redemption of your fund shares and you may incur tax liability |
• | charge you $3 a month if your balance falls below $1,000 for the last 30 days (this policy doesn’t apply to most retirement accounts or if you have an automatic investment plan) |
• | pay you for shares you sell by “redeeming in kind,” that is, by giving you marketable securities (which typically will involve brokerage costs for you to liquidate) rather than cash; a fund generally won’t make a redemption in kind unless your requests over a 90-day period total more than $250,000 or 1% of the value of a fund’s net assets, whichever is less |
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• | change, add or withdraw various services, fees and account policies (for example, we may change or terminate the exchange privilege or adjust the fund’s investment minimum at any time) |
• | reject or limit purchases of shares for any reason without prior notice |
• | suspend or postpone redemptions as permitted pursuant to Section 22(e) of the Investment Company Act of 1940. Generally, those circumstances are when: 1) the New York Stock Exchange is closed other than customary weekend or holiday closings; 2) trading on the New York Stock Exchange is restricted; 3) an emergency exists which makes the disposal of securities owned by a portfolio or the fair determination of the value of a portfolio’s net assets not reasonably practicable; or 4) the SEC, by order, permits the suspension of the right of redemption. Redemption payments by wire may also be delayed in the event of a non routine closure of the Federal Reserve wire payment system. |
Understanding Distributions and Taxes
By law, a mutual fund is required to pass through to its shareholders virtually all of its net earnings. A fund can earn money in two ways: by receiving interest, dividends or other income from securities it holds and by selling securities for more than it paid for them. (A fund’s earnings are separate from any gains or losses stemming from your own purchase and sale of shares.) A fund may not always pay a distribution for a given period.
The funds’ income dividends are declared daily and paid monthly to shareholders. The taxable money funds may take into account capital gains and losses in their daily dividend declarations.
The funds may make additional distributions for tax purposes if necessary.
You can choose how to receive your dividends and distributions. You can have them all automatically reinvested in fund shares (at NAV), all deposited directly to your bank account or all sent to you by check, have one type reinvested and the other sent to you by check or have them invested in a different fund. Tell us your preference on your application. If you don’t indicate a preference, your dividends and distributions will all be reinvested.
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For federal income tax purposes, distributions of investment income (other than “tax-exempt dividends” for the Scudder Tax-Exempt Money Fund) are taxable as ordinary income. The funds do not expect to distribute gains taxable as capital gains or as qualified dividend income. Distributions are taxable whether you receive them in cash or reinvest them in additional shares. For retirement plans, reinvestment is the only option.
Because each fund seeks to maintain a stable share price, you are unlikely to have a capital gain or loss when you sell fund shares. For tax purposes, an exchange is the same as a sale.
For most shareholders, dividends from Scudder Tax-Exempt Money Fund are generally exempt from Federal income tax, and a portion of dividends from Scudder Government & Agency Money Fund are generally exempt from state and local income taxes. However, there are a few exceptions:
• | A portion of either fund’s dividends may be taxable as ordinary income if it came from investments in taxable securities, tax-exempt market discount bonds, or as the result of short-term capital gains |
• | With respect to Scudder Tax-Exempt Money Fund, because the fund can invest in securities whose income is subject to the federal alternative minimum tax (AMT), you may owe taxes on a portion of your dividends if you are among those investors who must pay AMT. In addition, if you receive social security or railroad retirement benefits, you should consult your tax advisor to determine what effect, if any, an investment in the Scudder Tax-Exempt Money Fund may have on the federal taxation of your benefits. |
You should consult your tax advisor for more information on your own tax situation, including possible foreign, state and local taxes.
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Your fund will send you detailed tax information every January. These statements tell you the amount and the tax category of any dividends or distributions you received. They also have certain details on your purchases and sales of shares. The tax status of dividends and distributions is the same whether you reinvest them or not. Dividends or distributions declared in the last quarter of a given year are taxed in that year, even though you may not receive the money until the following January.
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Notes |
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For More Information
Shareholder reports — These include commentary from each fund’s management team about recent market conditions and the effects of a fund’s strategies on its performance. They also have detailed performance figures, a list of everything each fund owns, and its financial statements. Shareholders get these reports automatically. For more copies, call 1-800-621-1048 or visit our Web site at www.scudder.com.
Statement of Additional Information (SAI) — This tells you more about each fund’s features and policies, including additional risk information. The SAI is incorporated by reference into this document (meaning that it’s legally part of this prospectus).
For a free copy of any of these documents or to request other information about a fund, call 1-800-621-1048. These documents and other information about each fund are available from the EDGAR Database on the SEC’s Internet site at www.sec.gov. If you like, you may obtain copies of this information, after paying a copying fee, by e-mailing a request to publicinfo@sec.gov or by writing the SEC at the address listed below. The SAI and shareholder reports are also available through the Scudder Web site at www.scudder.com. You can also review and copy these documents and other information about each fund, including the funds’ SAI, 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 1-202-942-8090.
Scudder Investments | SEC | |||
222 South Riverside Plaza Chicago, IL 60606-5808 www.scudder.com 1-800-621-1048 | Public Reference Section Washington, D.C. 20549-0102 www.sec.gov 1-202-942-8090 | |||
Distributor Scudder Distributors, Inc. 222 South Riverside Plaza Chicago, IL 60606-5808 | SEC File Numbers: | |||
Scudder Money Market Fund | 811-2527 | |||
SCUDDER INVESTMENTS | Scudder Government & Agency Money Fund | 811-2527 | ||
A Member of Deutsche Asset Management [LOGO] | Scudder Tax-Exempt Money Fund | 811-2527 |
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INVESTORS CASH TRUST – GOVERNMENT & AGENCY SECURITIES PORTFOLIO
PROSPECTUS FOR DWS GOVERNMENT CASH INSTITUTIONAL SHARES
DATED AUGUST 1, 2006
TO COME
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INVESTORS CASH TRUST – GOVERNMENT & AGENCY SECURITIES PORTFOLIO
PROSPECTUS FOR GOVERNMENT CASH MANAGED SHARES
DATED AUGUST 1, 2006
TO COME
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INVESTORS CASH TRUST – GOVERNMENT & AGENCY SECURITIES PORTFOLIO
PROSPECTUS FOR SERVICE SHARES
DATED AUGUST 1, 2006
TO COME
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STATEMENT OF ADDITIONAL INFORMATION
CASH ACCOUNT TRUST
GOVERNMENT & AGENCY SECURITIES PORTFOLIO
222 S. Riverside Plaza
Chicago, Illinois 60606
This statement of additional information is not a prospectus, but should be read in conjunction with the Prospectus/Proxy Statement dated , 2006 for the Joint Special Meeting of Shareholders of DWS Government & Agency Money Fund, a series of DWS Money Funds, and Government & Agency Securities Portfolio, a series of Investors Cash Trust (the “Acquired Funds”), to be held on October 12, 2006, into which this statement of additional information is hereby incorporated by reference. Copies of the Prospectus/Proxy Statement may be obtained at no charge by contacting DWS Scudder Distributors, Inc., 222 South Riverside Plaza, Chicago, Illinois 60606, (800) 621-1048 (for DWS Government & Agency Money Fund shares); 1-800-231-8568 (for Service Shares) and 1-800-537-3177 (for DWS Government Cash Institutional Shares and Government Cash Managed Shares), or from the firm from which this statement of additional information was obtained and are available along with other materials on the Securities and Exchange Commission’s Internet website (http://www.sec.gov). Unless otherwise indicated, capitalized terms used herein and not otherwise defined have the same meanings as are given to them in the Prospectus/Proxy Statement.
Further information about the Government & Agency Securities Portfolio series of Cash Account Trust (“CAT Government Fund”) is contained in the statements of additional information dated [August 1], 2006, as supplemented from time to time, for DWS Government & Agency Money Fund shares, DWS Government Cash Institutional Shares and Government Cash Managed Shares, which are attached to this statement of additional information. The audited financial statements and related independent registered public accounting firm’s report for CAT Government Fund contained in the Annual Report for the fiscal year ended April 30, 2006 are incorporated herein by reference insofar as they relate to the Fund’s participation in the mergers. No other parts of the Annual Report are incorporated by reference.
The unaudited pro forma financial statements, attached hereto, are intended to present the financial condition and related results of operations of CAT Government Fund and the Acquired Funds as if the mergers had been consummated on April 30, 2006, unless otherwise indicated.
Further information about the Acquired Funds is contained in each Fund’s statement[s] of additional information dated December 1, 2005 and [August 1], 2006, respectively, as supplemented from time to time.
The date of this statement of additional information is , 2006.
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PRO FORMAS
[TO COME]
(UNAUDITED)
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CASH ACCOUNT TRUST – GOVERNMENT & AGENCY SECURITIES PORTFOLIO
SAI FOR DWS GOVERNMENT & AGENCY MONEY FUND
DATED AUGUST 1, 2006
TO COME
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CASH ACCOUNT TRUST – GOVERNMENT & AGENCY SECURITIES PORTFOLIO
SAI FOR DWS GOVERNMENT CASH INSTITUTIONAL SHARES AND GOVERNMENT CASH
MANAGED SHARES
DATED AUGUST 1, 2006
TO COME
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Supplement to the currently effective Statement of Additional Information of each of the listed funds:
Cash Account Trust | DWS Global Thematic Fund | DWS Short Duration Plus Fund | ||
Government & Agency Securities | DWS GNMA Fund | DWS Short-Term Municipal Bond Fund | ||
Portfolio | DWS Gold & Precious Metals Fund | DWS Small Cap Core Fund | ||
Money Market Portfolio | DWS Government & Agency Money Fund | DWS Small Cap Growth Fund | ||
Tax-Exempt Portfolio | DWS Growth & Income Fund | DWS Small Cap Value Fund | ||
Cash Reserve Fund | DWS Growth Allocation Fund | DWS Strategic Income Fund | ||
Prime Series | DWS Growth Plus Allocation Fund | DWS Target 2006 Fund | ||
Tax-Free Series | DWS Health Care Fund | DWS Target 2008 Fund | ||
Treasury Series | DWS High Income Fund | DWS Target 2010 Fund | ||
Daily Assets Fund Institutional | DWS High Income Plus Fund | DWS Target 2011 Fund | ||
DWS Balanced Fund | DWS High Yield Tax Free Fund | DWS Target 2012 Fund | ||
DWS Blue Chip Fund | DWS Inflation Protected Plus Fund | DWS Target 2013 Fund | ||
DWS California Tax Free Income Fund | DWS Intermediate Tax/AMT Free Fund | DWS Target 2014 Fund | ||
DWS Capital Growth Fund | DWS International Equity Fund | DWS Tax Free Money Fund | ||
DWS Cash Investment Trust | DWS International Fund | DWS Tax-Exempt Money Fund | ||
DWS Commodity Securities Fund | DWS International Select Equity Fund | DWS Technology Fund | ||
DWS Conservative Allocation Fund | DWS Japan Equity Fund | DWS U.S. Government Securities Fund | ||
DWS Core Fixed Income Fund | DWS Large Cap Value Fund | DWS U.S. Treasury Money Fund | ||
DWS Dreman Concentrated Value Fund | DWS Large Company Growth Fund | DWS Value Builder Fund | ||
DWS Dreman Financial Services Fund | DWS Latin America Equity Fund | Investors Cash Trust | ||
DWS Dreman High Return Equity Fund | DWS Lifecycle Long Range Fund | Government & Agency Securities Portfolio | ||
DWS Dreman Mid Cap Value Fund | DWS Managed Municipal Bond Fund | Treasury Portfolio | ||
DWS Dreman Small Cap Value Fund | DWS Massachusetts Tax-Free Fund | Investors Municipal Cash Fund | ||
DWS Emerging Markets Equity Fund | DWS Micro Cap Fund | Investors Florida Municipal Cash Fund | ||
DWS Emerging Markets Fixed Income Fund | DWS Mid Cap Growth Fund | Investors Michigan Municipal Cash Fund | ||
DWS Enhanced S&P 500 Index Fund | DWS Moderate Allocation Fund | Investors New Jersey Municipal Cash Fund | ||
DWS Equity Income Fund | DWS Money Market Fund | Investors Pennsylvania Municipal Cash | ||
DWS Equity Partners Fund | DWS Money Market Series | Fund | ||
DWS Europe Equity Fund | DWS New York Tax-Free Income Fund | Tax-Exempt New York Money Market Fund | ||
DWS Global Bond Fund | DWS Pacific Opportunities Equity Fund | Tax Exempt California Money Market Fund | ||
DWS Global Opportunities Fund | DWS Short Duration Fund |
The following replaces similar disclosure in the “Portfolio Holdings Information” section of each of the above-referenced fund’s Statement of Additional Information:
In addition to the public disclosure of fund portfolio holdings through required Securities and Exchange Commission (“SEC”) quarterly filings, the fund may make its portfolio holdings information publicly available on the DWS Funds Web site as described in each fund’s prospectus. Each fund does not disseminate non-public information about portfolio holdings except in accordance with policies and procedures adopted by the fund.
Each fund’s procedures permit non-public portfolio holdings information to be shared with Deutsche Asset Management, Inc. and its affiliates (collectively “DeAM”), subadvisors, if any, custodians, independent registered public accounting firms, securities lending agents, financial printers, proxy voting firms and other service providers to a fund who require access to this information to fulfill their duties to a fund, subject to the requirements described below. This non-public information may also be disclosed to certain mutual fund analysts and rating and tracking agencies, to shareholders in connection with in-kind redemptions, or to other entities if a fund has a legitimate business purpose in providing the information, subject to the requirements described below.
ONE GLOBAL FORCE. ONE FOCUS. YOU. [DWS SCUDDER Logo]
Deutsche Bank Group
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Prior to any disclosure of a fund’s non-public portfolio holdings information to the foregoing types of entities or persons, a person authorized by a fund’s Trustees/Directors must make a good faith determination in light of the facts then known that a fund has a legitimate business purpose for providing the information, that the disclosure is in the best interest of a fund, and that the recipient assents or otherwise has a duty to keep the information confidential and to not trade based on the information received while the information remains non-public. No compensation is received by a fund or DeAM for disclosing non-public holdings information. Periodic reports regarding these procedures will be provided to a fund’s Trustees/Directors.
Portfolio holdings information distributed by the trading desks of DeAM or a subadvisor for the purpose of facilitating efficient trading of such securities and receipt of relevant research is not subject to the foregoing requirements. Non-public portfolio holding information does not include portfolio characteristics (other than holdings or subsets of holdings) about each fund and information derived therefrom, including, but not limited to, how each fund’s investments are divided among various sectors, industries, countries, value and growth stocks, bonds, currencies and cash, types of bonds, bond maturities, duration, bond coupons and bond credit quality ratings so long as a fund’s holdings could not be derived from such information.
Registered investment companies that are subadvised by DeAM may be subject to different portfolio holdings disclosure policies, and neither DeAM nor a fund’s Trustees/Directors exercise control over such policies. In addition, separate account clients of DeAM have access to their portfolio holdings and are not subject to a fund’s portfolio holdings disclosure policy. The portfolio holdings of some of the funds subadvised by DeAM and some of the separate accounts managed by DeAM may substantially overlap with the portfolio holdings of a fund.
DeAM also manages certain unregistered commingled trusts and creates model portfolios, the portfolio holdings of which may substantially overlap with the portfolio holdings of a fund. To the extent that investors in these commingled trusts or recipients of model portfolio holdings information may receive portfolio holdings information of their trust or of a model portfolio on a different basis from that on which fund portfolio holdings information is made public, DeAM has implemented procedures reasonably designed to encourage such investors and recipients to keep such information confidential, and to prevent those investors from trading on the basis of non-public holdings information.
There is no assurance that a fund’s policies and procedures with respect to the disclosure of portfolio holdings information will protect a fund from the potential misuse of portfolio holdings information by those in possession of that information.
Please Retain This Supplement for Future Reference
May 1, 2006
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Supplement to the currently effective statements of additional information of each of the funds listed below:
Effective February 6, 2006, Scudder Investments will change its name to DWS Scudder and the Scudder funds will be renamed DWS funds. The Trusts/Corporations that the funds are organized under will also be renamed DWS.
The new Trust/Corporation and fund names will be as follows:
Current Trust/Corporation Name / Current Fund Name | New Trust/Corporation Name / New Fund Name, effective February 6, | |
Global/International Fund, Inc. | DWS Global/International Fund, Inc. | |
Scudder Emerging Markets Income Fund | DWS Emerging Markets Fixed Income Fund | |
Scudder Global Bond Fund | DWS Global Bond Fund | |
Scudder Global Discovery Fund | DWS Global Opportunities Fund | |
Scudder Global Fund | DWS Global Thematic Fund | |
Investment Trust | DWS Investment Trust | |
Scudder Capital Growth Fund | DWS Capital Growth Fund | |
Scudder Growth and Income Fund | DWS Growth & Income Fund | |
Scudder Large Company Growth Fund | DWS Large Company Growth Fund | |
Scudder S&P 500 Index Fund | DWS S&P 500 Index Fund | |
Scudder Small Company Stock Fund | DWS Small Cap Core Fund | |
Scudder Advisor Funds | DWS Advisor Funds | |
Scudder International Equity Fund | DWS International Equity Fund | |
Scudder Limited-Duration Plus Fund | DWS Short Duration Plus Fund | |
Scudder Mid Cap Growth Fund | DWS Mid Cap Growth Fund | |
Scudder Small Cap Growth Fund | DWS Small Cap Growth Fund | |
Scudder Advisor Funds II | DWS Advisor Funds II | |
Scudder EAFE Equity Index Fund | DWS EAFE Equity Index Fund | |
Scudder U.S. Bond Index Fund | DWS U.S. Bond Index Fund | |
Scudder Advisor Funds III | DWS Advisor Funds III | |
Scudder Lifecycle Long Range Fund | DWS Lifecycle Long Range Fund | |
Scudder Blue Chip Fund | DWS Blue Chip Fund | |
Scudder Cash Investment Trust | DWS Cash Investment Trust | |
Scudder Equity Trust | DWS Equity Trust | |
Scudder-Dreman Financial Services Fund | DWS Dreman Financial Services Fund | |
Scudder Flag Investors Communications Fund, Inc. | DWS Communications Fund | |
Scudder Flag Investors Equity Partners Fund, Inc. | DWS Equity Partners Fund | |
Scudder Flag Investors Value Builder Fund, Inc. | DWS Value Builder Fund | |
Scudder Funds Trust | DWS Funds Trust | |
Scudder Short Term Bond Fund | DWS Short Term Bond Fund | |
Scudder High Income Series | DWS High Income Series | |
Scudder High Income Fund | DWS High Income Fund | |
Scudder Income Trust | DWS Income Trust | |
Scudder GNMA Fund | DWS GNMA Fund | |
Scudder Institutional Funds DWS Institutional Funds Scudder Equity 500 Index Fund DWS Equity 500 Index Fund Scudder International Equity Fund Institutional DWS International Equity Fund Institutional Scudder Commodity Securities Fund DWS Commodity Securities Fund Scudder Inflation Protected Plus Fund DWS Inflation Protected Plus Fund | ||
Scudder International Fund, Inc. | DWS International Fund, Inc. | |
Scudder Emerging Markets Fund | DWS Emerging Markets Equity Fund | |
Scudder Greater Europe Fund | DWS Europe Equity Fund | |
Scudder International Fund | DWS International Fund | |
Scudder Latin America Fund | DWS Latin America Equity Fund | |
Scudder Pacific Opportunities Fund | DWS Pacific Opportunities Equity Fund | |
Scudder Investors Funds, Inc. | DWS Investors Funds, Inc. | |
Scudder Japanese Equity Fund | DWS Japan Equity Fund |
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Scudder MG Investments Trust | DWS Investments Trust | |
Scudder Fixed Income Fund | DWS Core Fixed Income Fund | |
Scudder High Income Plus Fund | DWS High Income Plus Fund | |
Scudder International Select Equity Fund | DWS International Select Equity Fund | |
Scudder Micro Cap Fund | DWS Micro Cap Fund | |
Scudder Short Duration Fund | DWS Short Duration Fund | |
Scudder Short-Term Municipal Bond Fund | DWS Short-Term Municipal Bond Fund | |
Scudder Money Funds | DWS Money Funds | |
Scudder Government & Agency Money Fund | DWS Government & Agency Money Fund | |
Scudder Money Market Fund | DWS Money Market Fund | |
Scudder Tax-Exempt Money Fund | DWS Tax-Exempt Money Fund | |
Scudder Money Market Trust | DWS Money Market Trust | |
Scudder Money Market Series | DWS Money Market Series | |
Scudder Municipal Trust | DWS Municipal Trust | |
Scudder High Yield Tax Free Fund | DWS High Yield Tax Free Fund | |
Scudder Managed Municipal Bond Fund | DWS Managed Municipal Bond Fund | |
Scudder Mutual Funds, Inc. | DWS Mutual Funds, Inc. | |
Scudder Gold and Precious Metals Fund | DWS Gold & Precious Metals Fund | |
Scudder Pathway Series | DWS Allocation Series | |
Pathway Conservative Portfolio | DWS Conservative Allocation Fund | |
Pathway Growth Plus Portfolio | DWS Growth Plus Allocation Fund | |
Pathway Growth Portfolio | DWS Growth Allocation Fund | |
Pathway Moderate Portfolio | DWS Moderate Allocation Fund | |
Scudder Portfolio Trust | DWS Portfolio Trust | |
Scudder Income Fund | DWS Core Plus Income Fund | |
Scudder RREEF Securities Trust | DWS RREEF Securities Trust | |
Scudder RREEF Real Estate Securities Fund | DWS RREEF Real Estate Securities Fund | |
Scudder Securities Trust | DWS Securities Trust | |
Scudder Health Care Fund | DWS Health Care Fund | |
Scudder Small Company Value Fund | DWS Small Cap Value Fund | |
Scudder State Tax-Free Income Series | DWS State Tax-Free Income Series | |
Scudder California Tax-Free Income Fund | DWS California Tax-Free Income Fund | |
Scudder New York Tax-Free Income Fund | DWS New York Tax-Free Income Fund | |
Scudder State Tax-Free Trust | DWS State Tax Free Trust | |
Scudder Massachusetts Tax-Free Fund | DWS Massachusetts Tax-Free Fund | |
Scudder Strategic Income Fund | DWS Strategic Income Fund | |
Scudder Target Fund | DWS Target Fund | |
Scudder Retirement Fund Series – VI | DWS Target 2006 Fund | |
Scudder Retirement Fund Series – VII | DWS Target 2008 Fund | |
Scudder Target 2010 Fund | DWS Target 2010 Fund | |
Scudder Target 2011 Fund | DWS Target 2011 Fund | |
Scudder Target 2012 Fund | DWS Target 2012 Fund | |
Scudder Target 2013 Fund | DWS Target 2013 Fund | |
Scudder Target 2014 Fund | DWS Target 2014 Fund | |
Scudder Tax Free Money Fund | DWS Tax Free Money Fund | |
Scudder Tax Free Trust | DWS Tax Free Trust | |
Scudder Intermediate Tax/AMT Free Fund | DWS Intermediate Tax/AMT Free Fund | |
Scudder Technology Fund | DWS Technology Fund | |
Scudder Total Return Fund | DWS Balanced Fund | |
Scudder U.S. Government Securities Fund | DWS U.S. Government Securities Fund | |
Scudder U.S. Treasury Money Fund | DWS U.S. Treasury Money Fund | |
Scudder Value Series, Inc. | DWS Value Series, Inc. | |
Scudder Large Cap Value Fund DWS Large Cap Value Fund Scudder-Dreman Concentrated Value Fund DWS Dreman Concentrated Value Fund Scudder-Dreman High Return Equity Fund DWS Dreman High Return Equity Fund Scudder-Dreman Mid Cap Value Fund DWS Dreman Mid Cap Value Fund Scudder-Dreman Small Cap Value Fund DWS Dreman Small Cap Value Fund | ||
Value Equity Trust | DWS Value Equity Trust | |
Scudder Select 500 Fund | DWS Enhanced S&P 500 Index Fund | |
Scudder Tax Advantaged Dividend Fund | DWS Equity Income Fund |
Also effective February 6, 2006, the Scudder service providers to the funds will change their names. The new service provider names will be as follows:
Current Name | New Name, effective February 6, 2006 | |
Scudder Distributors, Inc. | DWS Scudder Distributors, Inc. | |
Scudder Fund Accounting Corporation | DWS Scudder Fund Accounting Corporation | |
Scudder Investments Service Company | DWS Scudder Investments Service Company | |
Scudder Service Corporation | DWS Scudder Service Corporation | |
Scudder Trust Company | DWS Trust Company |
Please Retain this Supplement for Future Reference
January 23, 2006
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Cash Account Trust: Government & Agency Securities Portfolio
Cash Account Trust: Money Market Portfolio
Cash Account Trust: Tax-Exempt Portfolio
Cash Management Fund Institutional
Cash Management Fund Investment
Cash Reserve Fund, Inc.: Prime Series
Cash Reserve Fund, Inc.: Tax-Free Series
Cash Reserve Fund, Inc.: Treasury Series
Cash Reserves Fund Institutional
Investors Cash Trust: Government & Agency Securities Portfolio
Investors Cash Trust: Treasury Portfolio
Investors Florida Municipal Cash Fund
Investors Michigan Municipal Cash Fund
Investors New Jersey Municipal Cash Fund
Investors Pennsylvania Municipal Cash Fund
Money Market Fund Investment
NY Tax Free Money Fund Investment
Scudder Blue Chip Fund
Scudder California Tax-Free Income Fund
Scudder Capital Growth Fund
Scudder Cash Investment Trust
Scudder Commodity Securities Fund
Scudder-Dreman Concentrated Value Fund
Scudder-Dreman Financial Services Fund
Scudder-Dreman High Return Equity Fund
Scudder-Dreman Mid Cap Value Fund
Scudder-Dreman Small Cap Value Fund
Scudder EAFE Equity Index Fund
Scudder Emerging Markets Fund
Scudder Emerging Markets Income Fund
Scudder Equity 500 Index Fund
Scudder Fixed Income Fund
Scudder Flag Investors Communications Fund
Scudder Flag Investors Equity Partners Fund
Scudder Flag Investors Value Builder Fund
Scudder Global Fund
Scudder Global Bond Fund
Scudder Global Discovery Fund
Scudder GNMA Fund
Scudder Gold and Precious Metals Fund
Scudder Government & Agency Money Fund
Scudder Greater Europe Fund
Scudder Growth and Income Fund
Scudder Health Care Fund
Scudder High Income Fund
Scudder High Income Plus Fund
Scudder High Yield Tax-Free Fund
Scudder Income Fund
Scudder Inflation Protected Plus Fund
Scudder Intermediate Tax/AMT Free Fund
Scudder International Fund
Scudder International Equity Fund
Scudder International Select Equity Fund
Scudder Japanese Equity Fund
Scudder Large Cap Value Fund
Scudder Large Company Growth Fund
Scudder Latin America Fund
Scudder Lifecycle Long Range Fund
Scudder Limited-Duration Plus Fund
Scudder Managed Municipal Bond Fund
Scudder Massachusetts Tax-Free Fund
Scudder Money Market Fund
Scudder Money Market Series
Scudder Micro Cap Fund
Scudder Mid Cap Growth Fund
Scudder New York Tax-Free Income Fund
Scudder Pacific Opportunities Fund
Scudder Pathway Series — Conservative Portfolio
Scudder Pathway Series — Growth Portfolio
Scudder Pathway Series — Growth Plus Portfolio
Scudder Pathway Series — Moderate Portfolio
Scudder Retirement Fund — Series VI
Scudder Retirement Fund — Series VII
Scudder RREEF Real Estate Securities Fund
Scudder S&P 500 Index Fund
Scudder Select 500 Fund
Scudder Short Duration Fund
Scudder Short-Term Bond Fund
Scudder Short-Term Municipal Bond Fund
Scudder Small Cap Growth Fund
Scudder Small Company Stock Fund
Table of Contents
Scudder Small Company Value Fund
Scudder Strategic Income Fund
Scudder Target 2010 Fund
Scudder Target 2011 Fund
Scudder Target 2012 Fund
Scudder Target 2013 Fund
Scudder Target 2014 Fund
Scudder Tax Advantaged Dividend Fund
Scudder Tax-Exempt Money Fund
Scudder Tax Free Money Fund
Scudder Technology Fund
Scudder Total Return Fund
Scudder U.S. Bond Index Fund
Scudder U.S. Government Securities Fund
Scudder U.S. Treasury Money Fund
Tax-Exempt California Money Market Fund
Tax-Exempt New York Money Market Fund
Tax Free Money Fund Investment
Treasury Money Fund
Treasury Money Fund Investment
Supplement to the currently effective Statements of Additional Information for the above listed Funds:
The following information supplements the disclosure in the “Purchase and Redemption of Shares” section of each Fund’s Statement of Additional Information:
The Fund has authorized one or more financial service institutions, including certain members of the NASD other than the Distributor (“financial institutions”), to accept purchase and redemption orders for the Fund’s shares. Such financial institutions may also designate other parties, including plan administrator intermediaries, to accept purchase and redemption orders on the Fund’s behalf. Orders for purchases or redemptions will be deemed to have been received by the Fund when such financial institutions or, if applicable, their authorized designees accept the orders. Subject to the terms of the contract between the Fund and the financial institution, ordinarily orders will be priced at the Fund’s net asset value next computed after acceptance by such financial institution or its authorized designees and accepted by the Fund. Further, if purchases or redemptions of the Fund’s shares are arranged and settlement is made at an investor’s election through any other authorized financial institution, that financial institution may, at its discretion, charge a fee for that service. The Board of Trustees/Directors and the Distributor, also the Fund’s principal underwriter, each has the right to limit the amount of purchases by, and to refuse to sell to, any person. The Trustees/Directors and the Distributor may suspend or terminate the offering of shares of the Fund at any time for any reason.
Please Retain This Supplement for Future Reference
January 4, 2006
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SCUDDER MONEY FUNDS
Scudder Money Market Fund
Scudder Government & Agency Money Fund
Scudder Tax-Exempt Money Fund
STATEMENT OF ADDITIONAL INFORMATION
December 1, 2005
This Statement of Additional Information is not a prospectus and should be read in conjunction with the prospectus for the Funds dated December 1, 2005, as amended from time to time, a copy of which may be obtained without charge by contacting Scudder Distributors, Inc., 222 South Riverside Plaza, Chicago, Illinois 60606, 1-800-621-1048, or from the firm from which this Statement of Additional Information was obtained.
The Annual Report to Shareholders of each Fund, dated July 31, 2005, accompanies this Statement of Additional Information. The financial statements contained therein, together with accompanying notes, are incorporated by reference and are hereby deemed to be part of this Statement of Additional Information.
This Statement of Additional Information is incorporated by reference into the prospectus.
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This combined Statement of Additional Information contains information about Scudder Money Market Fund (the “Money Market Fund”), Scudder Government & Agency Money Fund (the “Government & Agency Money Fund”) and Scudder Tax-Exempt Money Fund (the “Tax-Exempt Money Fund”) (individually, a “Fund” and collectively, the “Funds”) each a series of Scudder Money Funds (the “Trust”).
Except as otherwise indicated, each Fund’s investment objective and policies are not fundamental and may be changed without a vote of shareholders. There can be no assurance that a Fund’s objective will be met.
Each Fund has elected to be classified as a diversified series of an open-end management investment company.
A diversified fund may not, with respect to 75% of total assets, invest more than 5% of total assets in the securities of a single issuer or invest in more than 10% of the outstanding voting securities of such issuer.
As a matter of fundamental policy, each Fund may not:
(1) | Borrow money, except as permitted under the Investment Company Act of 1940, as amended (the “1940 Act”) and as interpreted or modified by regulatory authority having jurisdiction, from time to time; |
(2) | Issue senior securities, except as permitted under the 1940 Act and as interpreted or modified by regulatory authority having jurisdiction, from time to time; |
(3) | Concentrate its investments in a particular industry, as the term is used in the 1940 Act and as interpreted or modified by regulatory authority having jurisdiction, from time to time (Money Market Fund’s concentration in the banking industry is described on page 2); |
(4) | Engage in the business of underwriting securities issued by others, except to the extent that the Fund may be deemed to be an underwriter in connection with the disposition of portfolio securities; |
(5) | Purchase or sell real estate, which does not include securities of companies which deal in real estate or mortgages or investments secured by real estate or interests therein, except that the Fund reserves freedom of action to hold and to sell real estate acquired as a result of the Fund’s ownership of securities; |
(6) | Purchase physical commodities or contracts relating to physical commodities; |
(7) | Make loans except as permitted under the 1940 Act and as interpreted or modified by regulatory authority having jurisdiction, from time to time. |
A fundamental policy may not be changed without the approval of a majority of the outstanding voting securities of a Fund which, under the 1940 Act and the rules thereunder and as used in this Statement of Additional Information, means the lesser of (1) 67% or more of the voting securities present at such meeting, if the holders of more than 50% of the outstanding voting securities of a Fund are present or represented by proxy, or (2) more than 50% of the outstanding voting securities of a Fund.
With regard to investment restriction (3) above, for Money Market Fund, for purposes of determining the percentage of Money Market Fund’s total assets invested in securities of issuers having their principal business activities in a particular industry, asset-backed securities will be classified separately, based on standard classifications utilized by ratings agencies, currently consisting of the following: securities arbitrage programs, multi-seller programs, single-seller programs and special investment vehicles.
Government & Agency Money Fund and the Tax-Exempt Money Fund have no current intention of making loans as permitted in investment restriction (7) noted above.
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If a Fund adheres to a percentage restriction at the time of investment, a later increase or decrease in percentage beyond the specified limit resulting from a change in values or net assets will not be considered a violation. Tax-Exempt Money Fund may invest more than 25% of its total assets in industrial development bonds.
The following policies are non-fundamental, and may be changed or eliminated for a Fund by the Board of Trustees of the Trust without a vote of that Fund’s shareholders. Each Fund may not:
(1) | Borrow money in an amount greater than 5% of its total assets, except for temporary or emergency purposes; |
(2) | Lend portfolio securities in an amount greater than 5% of its total assets; |
(3) | Invest more than 10% of net assets in illiquid securities. |
(4) | (Money Market Fund and Government & Agency Money Fund only) Invest more than 10% of total assets in non-affiliated registered investment companies. |
Money Market Fund
Money Market Fund seeks maximum current income to the extent consistent with stability of principal. The Fund pursues its objective by investing exclusively in the following types of US Dollar denominated money market instruments that mature in no more than 397 days:
• | Obligations of, or guaranteed by, the US Government, its agencies or instrumentalities. |
• | Bank certificates of deposit, time deposits or bankers’ acceptances of US banks (including their foreign branches), Canadian chartered banks and foreign banks (including their US branches). |
• | Commercial paper obligations rated A-1 or A-2 by Standard & Poor’s Corporation (“S&P”) or Prime-1 or Prime-2 by Moody’s Investors Service, Inc. (“Moody’s”) or issued by companies with an unsecured debt issue outstanding currently rated Aa by Moody’s or AA by S&P or higher and investments in other corporate obligations such as publicly traded bonds, debentures and notes rated Aa by Moody’s or AA by S&P or higher. For a description of these ratings, see “Appendix — Ratings of Investments” herein. |
• | Repurchase agreements backed by obligations that are suitable for investment under the categories set forth above. Repurchase agreements are discussed below. |
To the extent Money Market Fund purchases Eurodollar certificates of deposit issued by London branches of US banks, or commercial paper issued by foreign entities, consideration will be given to their marketability, to possible restrictions on international currency transactions and to regulations imposed by the domicile country of the foreign issuer. Eurodollar certificates of deposit are not subject to the same regulatory requirements as certificates issued by US banks and associated income may be subject to the imposition of foreign taxes.
Money Market Fund may concentrate more than 25% of its assets in bank certificates of deposit or banker’s acceptances of US banks in accordance with its investment objective and policies. Accordingly, the Fund may be more adversely affected by changes in market or economic conditions and other circumstances affecting the banking industry than it would be if the Fund’s assets were not so concentrated. The Fund will not change this policy without a vote of shareholders.
Government & Agency Money Fund
Government & Agency Money Fund seeks maximum current income to the extent consistent with stability of principal. The Fund pursues its objective by investing exclusively in the following securities that mature in no more than 397 days:
• | US Treasury bills, notes, bonds and other obligations issued or guaranteed by the US Government, its agencies or instrumentalities. |
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• | Repurchase agreements of the obligations described above. |
Some securities issued by US Government agencies or instrumentalities are supported only by the credit of the agency or instrumentality, such as those issued by the Federal Home Loan Bank, and others are backed by the full faith and credit of the US Government. The US Government guarantee of the securities owned by the Fund, however, does not guarantee the net asset value of its shares, which the Fund seeks to maintain at $1.00 per share. Also, with respect to securities supported only by the credit of the issuing agency or instrumentality, there is no guarantee that the US Government will provide support to such agencies or instrumentalities and such securities may involve risk of loss of principal and interest.
Tax-Exempt Money Fund
Tax-Exempt Money Fund seeks maximum current income that is exempt from federal income taxes to the extent consistent with stability of principal. The Fund pursues its objective primarily through a professionally managed, diversified portfolio of short-term high quality tax-exempt municipal obligations.
Under normal market conditions, at least 80% of the Fund’s total assets will, as a fundamental policy, be invested in obligations issued by or on behalf of states, territories and possessions of the United States and the District of Columbia and their political subdivisions, agencies and instrumentalities, the income from which is exempt from regular federal income tax and from the federal Alternative Minimum Tax (AMT) (“Municipal Securities”). In compliance with the position of the staff of the Securities and Exchange Commission, the Fund does not consider “private activity” bonds as Municipal Securities for purposes of the 80% limitation. This is a fundamental policy so long as the staff maintains its position, after which it would become non-fundamental.
Dividends representing net interest income received by Tax-Exempt Money Fund on Municipal Securities will be exempt from regular federal income tax when distributed to the Fund’s shareholders. Such dividend income may be subject to state and local taxes. Because the Fund can invest up to 20% of its assets in securities whose income is subject to AMT, a shareholder who is subject to AMT may owe taxes on a portion of the Fund’s dividends. See “Taxes.” The Fund’s assets will generally consist of Municipal Securities, temporary investments as described below and cash. The Fund considers short-term Municipal Securities to be those that mature in no more than 397 days.
Tax-Exempt Money Fund will invest only in Municipal Securities which at the time of purchase:
• | are rated within the two highest ratings for Municipal Securities (Aaa or Aa) assigned by Moody’s, (AAA or AA) assigned by S&P, (AAA or AA) assigned by Fitch, or (AAA or AA) or any other nationally recognized statistical rating organization (“NRSRO”) as determined by the Securities and Exchange Commission are rated within the two highest ratings for Municipal Securities (Aaa or Aa) assigned by Moody’s or (AAA or AA) assigned by S&P; |
• | are guaranteed or insured by the US Government as to the payment of principal and interest; |
• | are fully collateralized by an escrow of US Government securities acceptable to the Fund’s investment advisor; |
• | have at the time of purchase a Moody’s short-term municipal securities rating of MIG-2 or higher or a municipal commercial paper rating of P-2 or higher, or S&P’s municipal commercial paper rating of A-2 or higher, or Fitch’s municipal commercial paper rating of F-2 or higher, or a rating within the two highest categories of any other NRSRO as determined by the Securities and Exchange Commission; |
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• | are unrated, if longer term Municipal Securities of that issuer are rated within the two highest rating categories by Moody’s, S&P, Fitch or any other NRSRO as determined by the Securities and Exchange Commission; are unrated, if longer term Municipal Securities of that issuer are rated within the two highest rating categories by Moody’s or S&P; or |
• | are determined to be at least equal in quality to one or more of the above ratings in the discretion of the Fund’s investment advisor. |
In seeking to achieve its investment objective, Tax-Exempt Money Fund may invest more than 25% of its assets in Municipal Securities that are industrial development bonds. Moreover, although the Fund does not currently intend to do so on a regular basis, it may invest more than 25% of its assets in Municipal Securities that are repayable out of revenue streams generated from economically related projects or facilities, if such investment is deemed necessary or appropriate by the Fund’s investment advisor. To the extent that the Fund’s assets are concentrated in Municipal Securities payable from revenues on economically related projects and facilities, the Fund will be subject to the risks presented by such projects to a greater extent than it would be if the Fund’s assets were not so concentrated.
From time to time, as a defensive measure or when acceptable short-term Municipal Securities are not available, Tax-Exempt Money Fund may invest in taxable “temporary investments” which include:
• | obligations of the US Government, its agencies or instrumentalities; |
• | debt securities rated within the two highest grades by Moody’s or S&P; |
• | commercial paper rated in the two highest grades by either of such rating services; |
• | certificates of deposit of domestic banks; and |
• | repurchase agreements backed by the obligations described above (repurchase agreements are discussed below). |
Interest income from temporary investments is taxable to shareholders as ordinary income. Although the Fund is permitted to invest in taxable securities, it is the Fund’s primary intention to generate income dividends that are not subject to federal income taxes. See “Taxes.” For a description of the ratings, see “Appendix — Ratings of Investments.”
A Fund will not purchase illiquid securities, including time deposits and repurchase agreements maturing in more than seven days, if, as a result thereof, more than 10% of such Fund’s net assets valued at the time of the transaction would be invested in such securities. If a Fund holds a material percentage of its assets in illiquid securities, there may be a question concerning the ability of such Fund to make payment within seven days of the date its shares are tendered for redemption. Securities and Exchange Commission (“SEC”) guidelines provide that the usual limit on aggregate holdings by a money market fund of illiquid assets is 10% of its net assets. Each Fund’s Advisor monitors holdings of illiquid securities on an ongoing basis and will take such action as it deems appropriate to help maintain adequate liquidity.
Master/Feeder Fund Structure. The Board of Trustees has the discretion to retain the current distribution arrangement for a Fund while investing in a master fund in a master/feeder fund structure as described below.
A master/feeder fund structure is one in which a fund (a “feeder fund”), instead of investing directly in a portfolio of securities, invests most or all of its investment assets in a separate registered investment company (the “master
fund”) with substantially the same investment objective and policies as the feeder fund. Such a structure permits the pooling of assets of two or more feeder funds, preserving separate identities or distribution channels at the feeder fund level. Based on the premise that certain of the expenses of operating an investment portfolio are relatively fixed, a larger investment portfolio may eventually achieve a lower ratio of operating expenses to average net assets.
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An existing investment company is able to convert to a feeder fund by selling all of its investments, which involves brokerage and other transaction costs and realization of a taxable gain or loss, or by contributing its assets to the master fund and avoiding transaction costs and, if proper procedures are followed, the realization of taxable gain or loss.
INVESTMENT POLICIES AND TECHNIQUES
Descriptions in this Statement of Additional Information of a particular investment practice or technique in which a Fund may engage are meant to describe the spectrum of investments that the Advisor in its discretion might, but is not required to, use in managing each Fund’s portfolio assets. The Advisor, may in its discretion at any time employ such practice, technique or instrument for one or more Funds but not for all funds advised by it. Furthermore, it is possible that certain types of financial instruments or investment techniques described herein may not be available, permissible, economically feasible or effective for their intended purposes in all markets. Certain practices, techniques or instruments may not be principal activities of the Funds, but, to the extent employed, could from time to time have a material impact on a Fund’s performance. It is possible that certain investment practices and techniques described below may not be permissible for a Fund based on its investment restrictions, as described herein, and in the Funds’ applicable prospectus.
Asset-Backed Securities. Asset-backed securities may include pools of mortgages (“mortgage-backed securities”), loans, receivables or other assets. Payment of principal and interest may be largely dependent upon the cash flows generated by the assets backing the securities. For purposes of determining the percentage of a fund’s total assets invested in securities of issuers having their principal business activities in a particular industry, asset-backed securities will be classified separately. Asset-backed securities present certain risks that are not presented by mortgage-backed securities. Primarily, these securities may not have the benefit of any security interest in the related assets. Credit card receivables are generally unsecured and the debtors are entitled to the protection of a number of state and federal consumer credit laws, many of which give such debtors the right to set off certain amounts owed on the credit cards, thereby reducing the balance due. There is the possibility that recoveries on repossessed collateral may not, in some cases, be available to support payments on these securities. Asset-backed securities are often backed by a pool of assets representing the obligations of a number of different parties. To lessen the effect of failures by obligors on underlying assets to make payments, the securities may contain elements of credit support which fall into two categories: (i) liquidity protection, and (ii) protection against losses resulting from ultimate default by an obligor on the underlying assets. Liquidity protection refers to the provision of advances, generally by the entity administering the pool of assets, to ensure that the receipt of payments on the underlying pool occurs in a timely fashion. Protection against losses results from payment of the insurance obligations on at least a portion of the assets in the pool. This protection may be provided through guarantees, policies or letters of credit obtained by the issuer or sponsor from third parties, through various means of structuring the transaction or through a combination of such approaches. A fund will not pay any additional or separate fees for credit support. The degree of credit support provided for each issue is generally based on historical information respecting the level of credit risk associated with the underlying assets. Delinquency or loss in excess of that anticipated or failure of the credit support could adversely affect the return on an investment in such a security. The availability of asset-backed securities may be affected by legislative or regulatory developments. It is possible that such developments may require the funds to dispose of any then existing holdings of such securities.
Bank and Savings and Loan Obligations. These obligations include negotiable certificates of deposit, bankers’ acceptances, deposit notes, fixed time deposits or other short-term bank obligations. Certificates of deposit are negotiable certificates evidencing the obligations of a bank to repay funds deposited with it for a specified period of time. A fund may invest in certificates of deposit of large domestic banks and their foreign branches, large US regulated subsidiaries of large foreign banks (i.e., banks which at the time of their most recent annual financial statements show total assets in excess of $1 billion), and of smaller banks as described below. Although a fund recognizes that the size of a bank is important, this fact alone is not necessarily indicative of its creditworthiness. Investment in certificates of deposit issued by foreign branches of domestic banks involves investment risks that are different in some respects from those associated with investment in certificates of deposit issued by domestic branches of domestic banks, including the possible imposition of withholding taxes on interest income, the possible adoption of foreign governmental restrictions which might adversely affect the payment of principal and interest on
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such certificates of deposit, or other adverse political or economic developments. In addition, it might be more difficult to obtain and enforce a judgment against a foreign branch of a domestic bank.
Borrowing. As a matter of fundamental policy, each Fund will not borrow money, except as permitted under the 1940 Act, and as interpreted or modified by regulatory authority having jurisdiction, from time to time. While the Trust’s Board of Trustees does not currently intend to borrow for investment leveraging purposes, if such a strategy were implemented in the future, it would increase the Funds’ volatility and the risk of loss in a declining market. Borrowing by a Fund will involve special risk considerations. Although the principal of a Fund’s borrowings will be fixed, a Fund’s assets may change in value during the time a borrowing is outstanding, thus increasing exposure to capital risk.
As a matter of non-fundamental policy, each Fund may not borrow money in an amount greater than 5% of total assets, except for temporary or emergency purposes.
Certificates of Deposit and Bankers’ Acceptances. Certificates of deposit are receipts issued by a depository institution in exchange for the deposit of funds. The issuer agrees to pay the amount deposited plus interest to the bearer of the receipt on the date specified on the certificate. The certificate usually can be traded in the secondary market prior to maturity. Bankers’ acceptances typically arise from short-term credit arrangements designed to enable businesses to obtain funds to finance commercial transactions. Generally, an acceptance is a time draft drawn on a bank by an exporter or an importer to obtain a stated amount of funds to pay for specific merchandise. The draft is then “accepted” by a bank that, in effect, unconditionally guarantees to pay the face value of the instrument on its maturity date. The acceptance may then be held by the accepting bank as an earning asset or it may be sold in the secondary market at the going rate of discount for a specific maturity. Although maturities for acceptances can be as long as 270 days, most acceptances have maturities of six months or less.
Banker’s acceptances are credit instruments evidencing the obligations of a bank to pay a draft drawn on it by a customer. These instruments reflect the obligation both of the bank and of the drawer to pay the face amount of the instrument upon maturity.
Time deposits are non-negotiable deposits maintained in a banking institution for a specified period of time at a stated interest rate. Time deposits which may be held by the fund will not benefit from insurance from the Bank Insurance Fund or the Savings Association Insurance Fund administered by the Federal Deposit Insurance Corporation. Fixed time deposits may be withdrawn on demand by the investor, but may be subject to early withdrawal penalties that vary with market conditions and the remaining maturity of the obligation. Fixed time deposits subject to withdrawal penalties maturing in more than seven calendar days are subject to the fund’s limitation on investments in illiquid securities.
Certificates of Participation. A fund may purchase high quality Certificates of Participation in trusts that hold Municipal Securities. A Certificate of Participation gives the fund an undivided interest in the Municipal Security in the proportion that the fund’s interest bears to the total principal amount of the Municipal Security. These Certificates of Participation may be variable rate or fixed rate. A Certificate of Participation may be backed by an irrevocable letter of credit or guarantee of a financial institution that satisfies rating agencies as to the credit quality of the Municipal Security supporting the payment of principal and interest on the Certificate of Participation. Payments of principal and interest would be dependent upon the underlying Municipal Security and may be guaranteed under a letter of credit to the extent of such credit. The quality rating by a rating service of an issue of Certificates of Participation is based primarily upon the rating of the Municipal Security held by the trust and the credit rating of the issuer of any letter of credit and of any other guarantor providing credit support to the issue. The fund’s Advisor considers these factors as well as others, such as any quality ratings issued by the rating services identified above, in reviewing the credit risk presented by a Certificate of Participation and in determining whether the Certificate of Participation is appropriate for investment by the fund. It is anticipated by the fund’s Advisor that, for most publicly offered Certificates of Participation, there will be a liquid secondary market or there may be demand features enabling the fund to readily sell its Certificates of Participation prior to maturity to the issuer or a third party. As to those instruments with demand features, the fund intends to exercise its right to demand payment from the issuer of the demand feature only upon a default under the terms of the Municipal Security, as needed to provide liquidity to meet redemptions, or to maintain a high quality investment portfolio.
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Commercial Paper. Subject to its investment objectives and policies, a fund may invest in commercial paper issued by major corporations under the Securities Act of 1933 in reliance on the exemption from registration afforded by Section 3(a)(3) thereof. Such commercial paper may be issued only to finance current transactions and must mature in nine months or less. Trading of such commercial paper is conducted primarily by institutional investors through investment dealers, and individual investor participation in the commercial paper market is very limited. A fund also may invest in commercial paper issued in reliance on the so-called “private placement” exemption from registration afforded by Section 4(2) of the Securities Act of 1933 (“Section 4(2) paper”). Section 4(2) paper is restricted as to disposition under the federal securities laws, and generally is sold to institutional investors such as the fund who agree that they are purchasing the paper for investment and not with a view to public distribution. Any resale by the purchaser must be in an exempt transaction. Section 4(2) paper normally is resold to other institutional investors like the fund through or with the assistance of the issuer or investment dealers who make a market in the Section 4(2) paper, thus providing liquidity. The Advisor considers the legally restricted but readily saleable Section 4(2) paper to be liquid; however, pursuant to procedures approved by the Trust’s Board, if a particular investment in Section 4(2) paper is not determined to be liquid, that investment will be included within the limitation of the fund on illiquid securities. The Advisor monitors the liquidity of its investments in Section 4(2) paper on a continuing basis.
Eurodollar Obligations. Eurodollar bank obligations are US dollar-denominated certificates of deposit and time deposits issued outside the US capital markets by foreign branches of US banks and US branches of foreign banks. Eurodollar obligations are subject to the same risks that pertain to domestic issues, notably credit risk, market risk and liquidity risk. Additionally, Eurodollar obligations are subject to certain sovereign risks.
Foreign Securities. Supranational entities are international organizations designated or supported by governmental entities to promote economic reconstruction or development and international banking institutions and related government agencies. Examples include the International Bank for Reconstruction and Development (the World Bank), the European Coal and Steel Community, The Asian Development Bank and the InterAmerican Development Bank. Obligations of supranational entities are backed by the guarantee of one or more foreign governmental parties which sponsor the entity. All of the securities in which the Fund may invest are US dollar-denominated.
Funding Agreements. Funding agreements are contracts issued by insurance companies that provide investors the right to receive a variable rate of interest and the full return of principal at maturity. Funding agreements also include a put option that allows a fund to terminate the agreement at a specified time to the insurance company prior to maturity. Funding agreements generally offer a higher yield than other variable securities with similar credit ratings. The primary risk of a funding agreement is the credit quality of the insurance company that issues it. Funding agreements are considered “illiquid” securities and will count towards a fund’s limit on investing in illiquid securities.
Illiquid Securities and Restricted Securities. A fund may purchase securities that are subject to legal or contractual restrictions on resale (“restricted securities”). Generally speaking, restricted securities may be sold (i) only to qualified institutional buyers; (ii) in a privately negotiated transaction to a limited number of purchasers; (iii) in limited quantities after they have been held for a specified period of time and other conditions are met pursuant to an exemption from registration; or (iv) in a public offering for which a registration statement is in effect under the Securities Act of 1933, as amended. Issuers of restricted securities may not be subject to the disclosure and other investor protection requirements that would be applicable if their securities were publicly traded.
Restricted securities are often illiquid, but they may also be liquid. For example, restricted securities that are eligible for resale under Rule 144A are often deemed to be liquid.
The Funds’ Board has approved guidelines for use by the Advisor in determining whether a security is liquid or illiquid. Among the factors the Advisor may consider in reaching liquidity decisions relating to Rule 144A securities are: (1) the frequency of trades and quotes for the security; (2) the number of dealers wishing to purchase or sell the security and the number of other potential purchasers; (3) dealer undertakings to make a market in the security; and (4) the nature of the security and the nature of the market for the security (i.e., the time needed to dispose of the security, the method of soliciting offers, and the mechanics of the transfer). Issuers of restricted securities may not be subject to the disclosure and other investor protection requirement that would be applicable if their securities
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were publicly traded. Where a registration statement is required for the resale of restricted securities, a fund may be required to bear all or part of the registration expenses. A fund may be deemed to be an “underwriter” for purposes of the Securities Act of 1933, as amended when selling restricted securities to the public and, in such event, a fund may be liable to purchasers of such securities if the registration statement prepared by the issuer is materially inaccurate or misleading.
A fund may also purchase securities that are not subject to legal or contractual restrictions on resale, but that are deemed illiquid. Such securities may be illiquid, for example, because there is a limited trading market for them.
A fund may be unable to sell a restricted or illiquid security. In addition, it may be more difficult to determine a market value for restricted or illiquid securities. Moreover, if adverse market conditions were to develop during the period between a fund’s decision to sell a restricted or illiquid security and the point at which a fund is permitted or able to sell such security, a fund might obtain a price less favorable than the price that prevailed when it decided to sell. This investment practice, therefore, could have the effect of increasing the level of illiquidity of a fund.
Industrial Development and Pollution Control Bonds. Industrial Development and Pollution Control Bonds (which are types of private activity bonds), although nominally issued by municipal authorities, are generally not secured by the taxing power of the municipality but are secured by the revenues of the authority derived from payments by the industrial user. Under federal tax legislation, certain types of Industrial Development Bonds and Pollution Control Bonds may no longer be issued on a tax-exempt basis, although previously issued bonds of these types and certain refundings of such bonds are not affected. For the purposes of a fund’s investment limitation regarding concentration of investments in any one industry, industrial development or other private activity bonds ultimately payable by companies within the same industry will be considered as if they were issued by issuers in the same industry.
Interfund Borrowing and Lending Program. The Trust, on behalf of each Fund, has received exemptive relief from the SEC, which permits the Funds to participate in an interfund lending program among certain investment companies advised by the Advisor. The interfund lending program allows the participating funds to borrow money from and loan money to each other for temporary or emergency purposes. The program is subject to a number of conditions designed to ensure fair and equitable treatment of all participating funds, including the following: (1) no fund may borrow money through the program unless it receives a more favorable interest rate than a rate approximating the lowest interest rate at which bank loans would be available to any of the participating funds under a loan agreement; and (2) no fund may lend money through the program unless it receives a more favorable return than that available from an investment in repurchase agreements and, to the extent applicable, money market cash sweep arrangements. In addition, a fund may participate in the program only if and to the extent that such participation is consistent with the fund’s investment objectives and policies (for instance, money market funds would normally participate only as lenders and tax exempt funds only as borrowers). Interfund loans and borrowings may extend overnight, but could have a maximum duration of seven days. Loans may be called on one day’s notice. A fund may have to borrow from a bank at a higher interest rate if an interfund loan is called or not renewed. Any delay in repayment to a lending fund could result in a lost investment opportunity or additional costs. The program is subject to the oversight and periodic review of the Boards of the participating funds. To the extent the Funds are actually engaged in borrowing through the interfund lending program, the Funds, as a matter of non-fundamental policy, may not borrow for other than temporary or emergency purposes (and not for leveraging).
Investment in Other Investment Companies. In accordance with applicable law, each Fund may invest its assets in other money market funds with comparable investment objectives. In general, a Fund may not (1) purchase more than 3% of any other money market fund’s voting stock; (2) invest more than 5% of its assets in any single money market fund; and (3) invest more than 10% of its assets in other money market funds unless permitted to exceed these limitations by an exemptive order of the Securities and Exchange Commission (the “SEC”). As a shareholder of another money market fund, a Fund would bear, along with other shareholders, its prorata portion of the other money market fund’s expenses, including advisory fees. These expenses would be in addition to the advisory and other expenses that Fund bears directly (and the Fund bears indirectly on a prorata basis) in connection with its own operations.
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Letters of Credit. Municipal obligations, including certificates of participation, commercial paper and other short-term obligations, may be backed by an irrevocable letter of credit of a bank which assumes the obligation for payment of principal and interest in the event of default by the issuer. Only banks which, in the opinion of the Advisor, are of investment quality comparable to other permitted investments of a fund may be used for letter of credit backed investments.
Maintenance of $1.00 Net Asset Value, Credit Quality and Portfolio Maturity. The Funds effect sales, redemptions and repurchases at the net asset value per share, normally $1.00. In fulfillment of their responsibilities under Rule 2a-7 of the 1940 Act, the Trust’s Board has approved policies established by the Funds’ Advisor reasonably calculated to prevent each fund’s net asset value per share from deviating from $1.00 except under unusual or extraordinary circumstances and the Trust’s Board will periodically review the Advisor’s operations under such policies at regularly scheduled Board meetings. Those policies include a weekly monitoring by the Advisor of unrealized gains and losses in each Fund’s portfolio, and when necessary, in an effort to avoid deviation, taking corrective action, such as adjusting the maturity of the portfolio, or, if possible, realizing gains or losses to offset in part unrealized losses or gains. The result of those policies may be that the yield on shares of a fund will be lower than would be the case if the policies were not in effect. Such policies also provide for certain action to be taken with respect to portfolio securities which experience a downgrade in rating or suffer a default.
Securities eligible for investment by a fund are those securities which are generally rated (or issued by an issuer with comparable securities rated) in the highest short-term rating category by at least two rating services (or by one rating service, if no other rating agency has issued a rating with respect to that security). These securities are known as “first tier securities.” Securities generally rated (or issued by an issuer with comparable securities rated) in the top two categories by at least two rating agencies (or one, if only one rating agency has rated the security) which do not qualify as first tier securities are known as “second tier securities.” Each fund will not invest more than 5% of its total assets in the securities of a single issuer, other than the US Government. A fund may, however, invest more than 5% of its total assets in the first tier securities of a single issuer for a period of up to three business days after purchase, although the fund may not make more than one such investment at any time during such period. A fund may not invest more than 5% of its total assets in securities which were second tier securities when acquired by the fund. Further, a fund may not invest more than the greater of (1) 1% of its total assets, or (2) one million dollars, in the securities of a single issuer which were second tier securities when acquired by the fund.
The assets of each fund consist entirely of cash items and investments having a stated maturity date of 397 calendar days or less from the date of purchase (including investment in repurchase agreements, in which case maturity is measured by the repurchase date, without respect to the maturity of the obligation). The portfolio of each Fund will be managed so that the average maturity of all instruments (on a dollar-weighted basis) will be 90 days or less. The average maturity of a fund will vary according to the management’s appraisal of money market conditions.
Municipal Lease Obligations and Participation Interests. Participation interests represent undivided interests in municipal leases, installment purchase contracts, conditional sales contracts or other instruments. These are typically issued by a trust or other entity which has received an assignment of the payments to be made by the state or political subdivision under such leases or contracts. They may be variable rate or fixed rate.
A fund may purchase from banks participation interests in all or part of specific holdings of municipal obligations, provided the participation interest is fully insured. Each participation is backed by an irrevocable letter of credit or guarantee of the selling bank that the Advisor has determined meets the prescribed quality standards of the fund. Therefore, either the credit of the issuer of the municipal obligation or the selling bank, or both, will meet the quality standards of the particular fund. A fund has the right to sell the participation back to the bank after seven days’ notice for the full principal amount of the fund’s interest in the municipal obligation plus accrued interest, but only (i) as required to provide liquidity to the fund, (ii) to maintain a high quality investment portfolio or (iii) upon a default under the terms of the municipal obligation. The selling bank will receive a fee from the fund in connection with the arrangement. A fund will not purchase participation interests unless in the opinion of bond counsel, counsel for the issuers of such participations or counsel selected by the Advisor, the interest from such participations is exempt from regular federal income tax and state income tax for the fund.
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A municipal lease obligation may take the form of a lease, installment purchase contract or conditional sales contract which is issued by a state or local government and authorities to acquire land, equipment and facilities. Income from such obligations is generally exempt from state and local taxes in the state of issuance. Municipal lease obligations frequently involve special risks not normally associated with general obligations or revenue bonds. Leases and installment purchase or conditional sale contracts (which normally provide for title in the leased asset to pass eventually to the governmental issuer) have evolved as a means for governmental issuers to acquire property and equipment without meeting the constitutional and statutory requirements for the issuance of debt. The debt issuance limitations are deemed to be inapplicable because of the inclusion in many leases or contracts of “non-appropriation” clauses that relieve the governmental issuer of any obligation to make future payments under the lease or contract unless money is appropriated for such purpose by the appropriate legislative body on a yearly or other periodic basis. In addition, such leases or contracts may be subject to the temporary abatement of payments in the event the issuer is prevented from maintaining occupancy of the leased premises or utilizing the leased equipment. Although the obligations may be secured by the leased equipment or facilities, the disposition of the property in the event of non appropriation or foreclosure might prove difficult, time consuming and costly, and result in a delay in recovery or the failure to fully recover the fund’s original investment.
Certain municipal lease obligations and participation interests may be deemed illiquid for the purpose of a fund’s limitation on investments in illiquid securities. Other municipal lease obligations and participation interests acquired by a fund may be determined by the Advisor to be liquid securities for the purpose of such limitation. In determining the liquidity of municipal lease obligations and participation interests, the Advisor will consider a variety of factors including: (1) the willingness of dealers to bid for the security; (2) the number of dealers willing to purchase or sell the obligation and the number of other potential buyers; (3) the frequency of trades or quotes for the obligation; and (4) the nature of the marketplace trades. In addition, the Advisor will consider factors unique to particular lease obligations and participation interests affecting the marketability thereof. These include the general creditworthiness of the issuer, the importance to the issuer of the property covered by the lease and the likelihood that the marketability of the obligation will be maintained throughout the time the obligation is held by a fund.
A fund may purchase participation interests in municipal lease obligations held by a commercial bank or other financial institution. Such participations provide a fund with the right to a pro rata undivided interest in the underlying municipal lease obligations. In addition, such participations generally provide the fund with the right to demand payment, on not more than seven days’ notice, of all or any part of such fund’s participation interest in the underlying municipal lease obligation, plus accrued interest.
Municipal Securities, such as industrial development bonds, are issued by or on behalf of public authorities to obtain funds for purposes including privately operated airports, housing, conventions, trade shows, ports, sports, parking or pollution control facilities or for facilities for water, gas, electricity or sewage and solid waste disposal. Such obligations, which may include lease arrangements, are included within the term Municipal Securities if the interest paid thereon qualifies as exempt from federal income tax. Other types of industrial development bonds, the proceeds of which are used for the construction, equipment, repair or improvement of privately operated industrial or commercial facilities, may constitute Municipal Securities, although current federal tax laws place substantial limitations on the size of such issues.
Municipal Securities which the funds may purchase include, without limitation, debt obligations issued to obtain funds for various public purposes, including the construction of a wide range of public facilities such as airports, bridges, highways, housing, hospitals, mass transportation, public utilities, schools, streets, and water and sewer works. Other public purposes for which Municipal Securities may be issued include refunding outstanding obligations, obtaining funds for general operating expenses and obtaining funds to loan to other public institutions and facilities.
Tax anticipation notes typically are sold to finance working capital needs of municipalities in anticipation of receiving property taxes on a future date. Bond anticipation notes are sold on an interim basis in anticipation of a municipality issuing a longer-term bond in the future. Revenue anticipation notes are issued in expectation of receipt of other types of revenue such as those available under the Federal Revenue Sharing Program. Construction loan notes are instruments insured by the Federal Housing Administration with permanent financing by Fannie Mae or “Ginnie Mae” (the Government National Mortgage Association) at the end of the project construction period.
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Pre-refunded municipal bonds are bonds which are not yet refundable, but for which securities have been placed in escrow to refund an original municipal bond issue when it becomes refundable. Tax-free commercial paper is an unsecured promissory obligation issued or guaranteed by a municipal issuer. A fund may purchase other Municipal Securities similar to the foregoing, which are or may become available, including securities issued to pre-refund other outstanding obligations of municipal issuers.
A fund will invest only in Municipal Securities that at the time of purchase: (a) are rated within the two highest-ratings for Municipal Securities assigned by Moody’s (Aaa or Aa) or assigned by S&P (AAA or AA); (b) are guaranteed or insured by the US Government as to the payment of principal and interest; (c) are fully collateralized by an escrow of US Government securities acceptable to the funds’ Advisor; (d) have at the time of purchase Moody’s short-term Municipal Securities rating of MIG-2 or higher or a municipal commercial paper rating of P-2 or higher, or S&P’s municipal commercial paper rating of A-2 or higher; (e) are unrated, if longer term Municipal Securities of that issuer are rated within the two highest rating categories by Moody’s or S&P; or (f) are determined to be at least equal in quality to one or more of the above ratings in the discretion of the fund’s Advisor. See “Appendix” for a more detailed discussion of the Moody’s and S&P ratings outlined above. In addition, the funds limit their investments to securities that meet the quality requirements of Rule 2a-7 under the 1940 Act. See “Net Asset Value.”
Dividends representing net interest income received by a fund on Municipal Securities will be exempt from federal income tax when distributed to the fund’s shareholders. Such dividend income may be subject to state and local taxes. The fund’s assets will consist of Municipal Securities, taxable temporary investments as described below and cash. A fund considers short-term Municipal Securities to be those that mature in 397 calendar days or less. Examples of Municipal Securities that are issued with original maturities of one year or less are short-term tax anticipation notes, bond anticipation notes, revenue anticipation notes, construction loan notes, pre-refunded municipal bonds, warrants and tax-free commercial paper.
Municipal Securities generally are classified as “general obligation” or “revenue” issues. General obligation bonds are secured by the issuer’s pledge of its full credit and taxing power for the payment of principal and interest. Revenue bonds are payable only from the revenues derived from a particular facility or class of facilities or, in some cases, from the proceeds of a special excise tax or other specific revenue source such as the user of the facility being financed. Industrial development bonds held by a fund are in most cases revenue bonds and generally are not payable from the unrestricted revenues of the issuer, and do not constitute the pledge of the credit of the issuer of such bonds. Among other types of instruments, a fund may purchase tax-exempt commercial paper, warrants and short-term municipal notes such as tax anticipation notes, bond anticipation notes, revenue anticipation notes, construction loan notes and other forms of short-term loans. Such notes are issued with a short-term maturity in anticipation of the receipt of tax payments, the proceeds of bond placements or other revenues. A fund may invest in short-term “private activity” bonds.
The Federal bankruptcy statutes relating to the adjustments of debts of political subdivisions and authorities of states of the United States provide that, in certain circumstances, such subdivisions or authorities may be authorized to initiate bankruptcy proceedings without prior notice to or consent of creditors, which proceedings could result in material adverse changes in the rights of holders of obligations issued by such subdivisions or authorities.
Litigation challenging the validity under state constitutions of present systems of financing public education has been initiated or adjudicated in a number of states and legislation has been introduced to effect changes in public school finances in some states. In other instances, there has been litigation challenging the issuance of pollution control revenue bonds or the validity of their issuance under state or Federal law that ultimately could affect the validity of those Municipal Securities or the tax-free nature of the interest thereon.
Municipal Trust Receipts. The Tax-Exempt Portfolio may invest up to 35% of its net assets in municipal trust receipts (“MTRs”). MTRs are also sometimes called municipal asset-backed securities, synthetic short-term derivatives, floating rate trust certificates, or municipal securities trust receipts. MTRs are typically structured by a bank, broker-dealer or other financial institution by depositing municipal securities into a trust or partnership, coupled with a conditional right to sell, or put, the holder’s interest in the underlying securities at par plus accrued interest to a financial institution. MTRs are generally issued as fixed or variable rate instruments. These trusts are
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structured so that the purchaser of the MTR would be considered to be investing in the underlying municipal securities. This structure is intended to allow the tax-exempt status of interest generated by the underlying asset to pass through to the purchaser. The Fund’s investment in MTRs is subject to similar risks as other investments in debt obligations, including interest rate risk, credit risk and security selection risk. Additionally, investments in MTRs raise certain tax issues that may not be presented by direct investments in municipal bonds. There is some risk that certain issues could be resolved in a manner that could adversely impact the performance of the Fund. The Funds expect to invest in MTRs for which a legal opinion has been given to the effect that the income from an MTR is tax exempt to the same extent as the underlying bond, although it is possible that the Internal Revenue Service (the “IRS”) will take a different position and there is a risk that the interest paid on such MTRs would be deemed taxable.
Repurchase Agreements. A fund may invest in repurchase agreements, which are instruments under which a fund acquires ownership of a security from a broker-dealer or bank that agrees to repurchase the security at a mutually agreed upon time and price (which price is higher than the purchase price), thereby determining the yield during a fund’s holding period. Maturity of the securities subject to repurchase may exceed one year. In the event of a bankruptcy or other default of a seller of a repurchase agreement, a fund might have expenses in enforcing its rights, and could experience losses, including a decline in the value of the underlying securities and loss of income.
A fund may enter into repurchase agreements with any member bank of the Federal Reserve System or any domestic broker/dealer which is recognized as a reporting Government securities dealer if the creditworthiness of the bank or broker/dealer has been determined by the Advisor to be at least as high as that of other obligations the fund may purchase or to be at least equal to that of issuers of commercial paper rated within the two highest grades assigned by Moody’s, S&P or Duff.
A repurchase agreement provides a means for a fund to earn taxable income on funds for periods as short as overnight. It is an arrangement under which the purchaser (i.e., the fund) “acquires a security (Obligation)” and the seller agrees, at the time of sale, to repurchase the Obligation at a specified time and price. Securities subject to a repurchase agreement are held in a segregated account and the value of such securities kept at least equal to the repurchase price on a daily basis. The repurchase price may be higher than the purchase price, the difference being income to the fund, or the purchase and repurchase prices may be the same, with interest at a stated rate due to the fund together with the repurchase price on the date of repurchase. In either case, the income to the fund (which is taxable) is unrelated to the interest rate on the Obligation itself. Obligations will be held by the custodian or in the Federal Reserve Book Entry system.
It is not clear whether a court would consider the Obligation purchased by a fund subject to a repurchase agreement as being owned by that fund or as being collateral for a loan by the fund to the seller. In the event of the commencement of bankruptcy or insolvency proceedings with respect to the seller of the Obligation before repurchase of the Obligation under a repurchase agreement, the fund may encounter delay and incur costs before being able to sell the security. Delays may involve loss of interest or decline in price of the Obligation. If the court characterized the transaction as a loan and the fund has not perfected an interest in the Obligation, the fund may be required to return the Obligation to the seller’s estate and be treated as an unsecured creditor of the seller. As an unsecured creditor, the fund is at risk of losing some or all of the principal and income involved in the transaction. As with any unsecured debt obligation purchased for the fund, the Advisor seeks to minimize the risk of loss through repurchase agreements by analyzing the creditworthiness of the obligor, in this case the seller of the Obligation. Apart from the risk of bankruptcy or insolvency proceedings, there is also the risk that the seller may fail to repurchase the Obligation, in which case the fund may incur a loss if the proceeds to the fund of the sale to a third party are less than the repurchase price. However, if the market value of the Obligation subject to the repurchase agreement becomes less than the repurchase price (including interest), the fund will direct the seller of the Obligation to deliver additional securities so that the market value of all securities subject to the repurchase agreement will equal or exceed the repurchase price. It is possible that the fund will be unsuccessful in seeking to enforce the seller’s contractual obligation to deliver additional securities.
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Securities Backed by Guarantees. A fund may invest in securities backed by guarantees from banks, insurance companies and other financial institutions. A money market fund’s ability to maintain a stable share price may depend upon such guarantees, which are not supported by federal deposit insurance. Consequently, changes in the credit quality of these institutions could have an adverse impact on securities they have guaranteed or backed, which could cause losses to a fund and affect its share price.
Stand-by Commitments. A stand-by commitment is a right acquired by a fund, when it purchases a municipal obligation from a broker, dealer or other financial institution (“seller”), to sell up to the same principal amount of such securities back to the seller, at the fund’s option, at a specified price. Stand-by commitments are also known as “puts.” The exercise by the fund of a stand-by commitment is subject to the ability of the other party to fulfill its contractual commitment.
Stand-by commitments acquired by a fund will have the following features: (1) they will be in writing and will be physically held by the fund’s custodian; (2) the fund’s right to exercise them will be unconditional and unqualified; (3) they will be entered into only with sellers which in the Advisor’s opinion present a minimal risk of default; (4) although stand-by commitments will not be transferable, municipal obligations purchased subject to such commitments may be sold to a third party at any time, even though the commitment is outstanding; and (5) their exercise price will be (i) the fund’s acquisition cost (excluding any accrued interest which the fund paid on their acquisition), less any amortized market premium or plus any amortized original issue discount during the period the fund owned the securities, plus (ii) all interest accrued on the securities since the last interest payment date.
A fund expects that stand-by commitments generally will be available without the payment of any direct or indirect consideration. However, if necessary or advisable, the fund will pay for stand-by commitments, either separately in cash or by paying a higher price for portfolio securities which are acquired subject to the commitments.
It is difficult to evaluate the likelihood of use or the potential benefit of a stand-by commitment. Therefore, it is expected that the Advisor will determine that stand-by commitments ordinarily have a “fair value” of zero, regardless of whether any direct or indirect consideration was paid. However, if the market price of the security subject to the stand-by commitment is less than the exercise price of the stand-by commitment, such security will ordinarily be valued at such exercise price. Where a fund has paid for a stand-by commitment, its cost will be reflected as unrealized depreciation for the period during which the commitment is held.
The Advisor understands that the Internal Revenue Service (the “Service”) has issued a favorable revenue ruling to the effect that, under specified circumstances, a registered investment company will be the owner of tax-exempt municipal obligations acquired subject to a put option. The Service has also issued private letter rulings to certain taxpayers (which do not serve as precedent for other taxpayers) to the effect that tax-exempt interest received by a regulated investment company with respect to such obligations will be tax-exempt in the hands of the company and may be distributed to its shareholders as exempt-interest dividends. The Service has subsequently announced that it will not ordinarily issue advance ruling letters as to the identity of the true owner of property in cases involving the sale of securities or participation interests therein if the purchaser has the right to cause the security, or the participation interest therein, to be purchased by either the seller or a third party. A fund intends to take the position that it owns any municipal obligations acquired subject to a Stand-by Commitment and that tax-exempt interest earned with respect to such municipal obligations will be tax-exempt in its hands. There is no assurance that the Service will agree with such position in any particular case.
Third Party Puts. A fund may purchase long-term fixed rate bonds that have been coupled with an option granted by a third party financial institution allowing the fund at specified intervals to tender (or “put”) the bonds to the institution and receive the face value thereof (plus accrued interest). These third party puts are available in several different forms, may be represented by custodial receipts or trust certificates and may be combined with other features such as interest rate swaps. The fund receives a short-term rate of interest (which is periodically reset), and the interest rate differential between that rate and the fixed rate on the bond is retained by the financial institution. The financial institution granting the option does not provide credit enhancement, and in the event that there is a default in the payment of principal or interest, or downgrading of a bond or a loss of the bond’s tax-exempt status, the put option will terminate automatically, the risk to the fund will be that of holding such a long-term bond and the weighted average maturity of the fund’s portfolio would be adversely affected.
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These bonds coupled with puts may present the same tax issues as are associated with Stand-By Commitments. As with any Stand-By Commitments acquired by a fund, the fund intends to take the position that it is the owner of any municipal obligation acquired subject to a third party put, and that tax-exempt interest earned with respect to such municipal obligations will be tax-exempt in its hands. There is no assurance that the Internal Revenue Service will agree with such position in any particular case. Additionally, the federal income tax treatment of certain other aspects of these investments, including the treatment of tender fees and swap payments, in relation to various regulated investment company tax provisions is unclear. However, the Advisor seeks to manage the fund’s portfolio in a manner designed to minimize any adverse impact from these investments.
US Government Securities. There are two broad categories of US Government-related debt instruments: (a) direct obligations of the US Treasury, and (b) securities issued or guaranteed by US Government agencies.
Examples of direct obligations of the US Treasury are Treasury Bills, Notes, Bonds and other debt securities issued by the US Treasury. These instruments are backed by the “full faith and credit” of the United States. They differ primarily in interest rates, the length of maturities and the dates of issuance. Treasury bills have original maturities of one year or less. Treasury notes have original maturities of one to ten years and Treasury bonds generally have original maturities of greater than ten years.
Some agency securities are backed by the full faith and credit of the United States (such as Maritime Administration Title XI Ship Financing Bonds and Agency for International Development Housing Guarantee Program Bonds) and others are backed only by the rights of the issuer to borrow from the US Treasury (such as Federal Home Loan Bank Bonds and Federal National Mortgage Association Bonds), while still others, such as the securities of the Federal Farm Credit Bank, are supported only by the credit of the issuer. With respect to securities supported only by the credit of the issuing agency or by an additional line of credit with the US Treasury, there is no guarantee that the US Government will provide support to such agencies and such securities may involve risk of loss of principal and interest.
US Government Securities may include “zero coupon” securities that have been stripped by the US Government of their unmatured interest coupons and collateralized obligations issued or guaranteed by a US Government agency or instrumentality.
Interest rates on US Government obligations may be fixed or variable. Interest rates on variable rate obligations are adjusted at regular intervals, at least annually, according to a formula reflecting then current specified standard rates, such as 91-day US Treasury bill rates. These adjustments generally tend to reduce fluctuations in the market value of the securities.
The government guarantee of the US Government Securities in the fund’s portfolio does not guarantee the net asset value of the shares of the fund. There are market risks inherent in all investments in securities and the value of an investment in the fund will fluctuate over time. Normally, the value of investments in US Government Securities varies inversely with changes in interest rates. For example, as interest rates rise the value of investments in US Government Securities will tend to decline, and as interest rates fall the value of the fund’s investments will tend to increase. In addition, the potential for appreciation in the event of a decline in interest rates may be limited or negated by increased principal prepayments with respect to certain Mortgage-Backed Securities, such as GNMA Certificates. Prepayments of high interest rate Mortgage-Backed Securities during times of declining interest rates will tend to lower the return of the fund and may even result in losses to the fund if some securities were acquired at a premium. Moreover, during periods of rising interest rates, prepayments of Mortgage-Backed Securities may decline, resulting in the extension of the fund’s average portfolio maturity. As a result, the fund’s return may experience greater volatility during periods of rising interest rates than under normal market conditions.
Variable Rate Securities. A fund may invest in Variable Rate Securities, instruments having rates of interest that are adjusted periodically or that “float” continuously according to formulae intended to minimize fluctuation in values of the instruments. The interest rate of Variable Rate Securities ordinarily is determined by reference to or is a percentage of an objective standard such as a bank’s prime rate, the 90-day US Treasury Bill rate, or the rate of return on commercial paper or bank certificates of deposit. Generally, the changes in the interest rate on Variable Rate Securities reduce the fluctuation in the market value of such securities. Accordingly, as interest rates decrease
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or increase, the potential for capital appreciation or depreciation is less than for fixed-rate obligations. Some Variable Rate Demand Securities (“Variable Rate Demand Securities”) have a demand feature entitling the purchaser to resell the securities at an amount approximately equal to amortized cost or the principal amount thereof plus accrued interest. As is the case for other Variable Rate Securities, the interest rate on Variable Rate Demand Securities varies according to some objective standard intended to minimize fluctuation in the values of the instruments. A fund determines the maturity of Variable Rate Securities in accordance with Rule 2a-7, which allows a fund to consider certain of such instruments as having maturities shorter than the maturity date on the face of the instrument.
When-Issued Securities. A fund may purchase and sell securities on a when-issued or delayed delivery basis. A when-issued or delayed delivery transaction arises when securities are bought or sold for future payment and delivery to secure what is considered to be an advantageous price and yield to the fund at the time it enters into the transaction. In determining the maturity of portfolio securities purchased on a when-issued or delayed delivery basis, the fund will consider them to have been purchased on the date when it committed itself to the purchase.
A security purchased on a when-issued basis, like all securities held by the fund, is subject to changes in market value based upon changes in the level of interest rates and investors’ perceptions of the creditworthiness of the issuer. Generally such securities will appreciate in value when interest rates decline and decrease in value when interest rates rise. Therefore if, in order to achieve higher interest income, the fund remains substantially fully invested at the same time that it has purchased securities on a when-issued basis, there will be a greater possibility that the market value of the fund’s assets will vary from $1.00 per share because the value of a when-issued security is subject to market fluctuation and no interest accrues to the purchaser prior to settlement of the transaction.
A fund will only make commitments to purchase Municipal Securities on a when-issued or delayed delivery basis with the intention of actually acquiring the securities, but the fund reserves the right to sell these securities before the settlement date if deemed advisable. The sale of these securities may result in the realization of gains that are not exempt from federal income tax.
Portfolio Holdings Information
Each Fund’s complete portfolio holdings as of the end of each calendar month are posted on www.scudder.com ordinarily on the 15th day of the following calendar month, or the first business day thereafter. This posted information generally remains accessible at least until a Fund files its Form N-CSR or N-Q with the Securities and Exchange Commission for the period that includes the date as of which the www.scudder.com information is current (expected to be at least three months). A Fund does not disseminate nonpublic information about portfolio holdings except in accordance with policies and procedures adopted by a Fund.
Each Fund’s procedures permit non-public portfolio holdings information to be shared with Deutsche Asset Management, Inc. and its affiliates (collectively “DeAM”), sub-advisers, if any, custodians, independent registered public accounting firms, securities lending agents, financial printers, proxy voting firms and other service providers to a Fund who require access to this information to fulfill their duties to a Fund, subject to the requirements described below. This non-public information may also be disclosed to certain mutual fund analysts and rating and tracking agencies, such as Lipper, to shareholders in connection with in-kind redemptions, or to other entities if a Fund has a legitimate business purpose in providing the information, subject to the requirements described below.
Prior to any disclosure of a Fund’s non-public portfolio holdings information to the foregoing types of entities or persons, a person authorized by a Fund’s Trustees must make a good faith determination in light of the facts then
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known that a Fund has a legitimate business purpose for providing the information, that the disclosure is in the best interest of a Fund, and that the recipient assents or otherwise has a duty to keep the information confidential and agrees not to disclose, trade or make any investment recommendation based on the information received. Periodic reports regarding these procedures will be provided to a Fund’s Trustees.
Registered investment companies that are sub-advised by DeAM may be subject to different portfolio holdings disclosure policies, and neither DeAM nor a Fund’s Trustees exercise control over such policies. In addition, separate account clients of DeAM have access to their portfolio holdings and are not subject to a Fund’s portfolio holdings disclosure policy. The portfolio holdings of some of the funds sub-advised by DeAM and some of the separate accounts managed by DeAM may substantially overlap with the portfolio holdings of a Fund.
DeAM also manages certain unregistered commingled trusts and creates model portfolios, the portfolio holdings of which may substantially overlap with the portfolio holdings of a Fund. To the extent that investors in these commingled trusts or recipients of model portfolio holdings information may receive portfolio holdings information of their trust or of a model portfolio on a different basis from that on which Fund portfolio holdings information is made public, DeAM has implemented procedures reasonably designed to encourage such investors and recipients to keep such information confidential, and to prevent those investors from trading on the basis of non-public holdings information.
There is no assurance that a Fund’s policies and procedures with respect to the disclosure of portfolio holdings information will protect a Fund from the potential misuse of portfolio holdings information by those in possession of that information.
Investment Advisor. On April 5, 2002, 100% of Scudder not including certain UK operations (known as Threadneedle Investments), was acquired by Deutsche Bank AG and changed its name to Deutsche Investment Management Americas Inc. (“DeIM” or the “Advisor”). DeIM, which is part of Deutsche Asset Management (“DeAM”), is the investment advisor for each Fund. Under the supervision of the Board of Trustees of the Trust, DeIM with headquarters at 345 Park Avenue, New York, New York 10154, makes each Fund’s investment decisions, buys and sells securities for the Funds and conducts research that leads to these purchase and sale decisions. The Advisor manages each Fund’s daily investment and business affairs subject to the policies established by each Trust’s Board of Trustees. DeIM and its predecessors have more than 80 years of experience managing mutual funds. DeIM provides a full range of investment advisory services to institutional and retail clients. The Funds’ Advisor is also responsible for selecting brokers and dealers and for negotiating brokerage commissions and dealer charges.
Deutsche Asset Management is the marketing name in the US for the asset management activities of Deutsche Bank AG, DeIM, Deutsche Asset Management Inc., Deutsche Bank Trust Company Americas and Scudder Trust Company. DeAM is a global asset management organization that offers a wide range of investing expertise and resources, including hundreds of portfolio managers and analysts and an office network that reaches the world’s major investment centers. This well-resourced global investment platform brings together a wide variety of experience and investment insight, across industries, regions, asset classes and investing styles. DeIM is an indirect, wholly owned subsidiary of Deutsche Bank AG. Deutsche Bank AG is a major global banking institution that is engaged in a wide range of financial services, including investment management, mutual fund, retail, private and commercial banking, investment banking and insurance.
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The Advisor manages each Fund’s daily investment and business affairs subject to the policies established by the Trust’s Board of Trustees. The Trustees have overall responsibility for the management of each Fund under Massachusetts law.
Pursuant to an investment management agreement with each Fund, the Advisor acts as each Fund’s investment advisor, manages its investments, administers its business affairs, furnishes office facilities and equipment, provides clerical and administrative services and permits its officers and employees to serve without compensation as trustees or officers of one or more Funds if elected to such positions. To the extent permissible by law, the Advisor may appoint certain of its affiliates as sub-advisors to perform certain of the Advisor’s duties.
The Advisor provides investment counsel for many individuals and institutions, including insurance companies, industrial corporations, and financial and banking organizations, as well as providing investment advice to open- and closed-end SEC registered funds.
In certain cases, the investments for a Fund are managed by the same individuals who manage one or more other mutual funds advised by the Advisor that have similar names, objectives and investment styles. You should be aware that a Fund is likely to differ from these other mutual funds in size, cash flow pattern and tax matters. Accordingly, the holdings and performance of a Fund can be expected to vary from those of these other mutual funds.
Certain investments may be appropriate for a Fund and also for other clients advised by the Advisor. Investment decisions for a Fund and other clients are made with a view to achieving their respective investment objectives and after consideration of such factors as their current holdings, availability of cash for investment and the size of their investments generally. Frequently, a particular security may be bought or sold for only one client or in different amounts and at different times for more than one but less than all clients. Likewise, a particular security may be bought for one or more clients when one or more other clients are selling the security. In addition, purchases or sales of the same security may be made for two or more clients on the same day. In such event, such transactions will be allocated among the clients in a manner believed by the Advisor to be equitable to each. In some cases, this procedure could have an adverse effect on the price or amount of the securities purchased or sold by a Fund. Purchase and sale orders for a Fund may be combined with those of other clients of the Advisor in the interest of achieving the most favorable net results to a Fund.
The present investment management agreement for each Fund (the “Agreement”) was approved by the Trustees on February 4, 2002 and became effective on April 5, 2002. The Agreement, last approved by the Trustees on September 23, 2005, will continue in effect until September 30, 2006, and continue from year to year thereafter only if its continuance is approved annually by the vote of a majority of those Trustees who are not parties to such Agreement or interested persons of the Advisor or the Trust (“Independent Trustees” or “Non-Interested Trustees”), cast in person at a meeting called for the purpose of voting on such approval, and either by a vote of the Trust’s Trustees or of a majority of the outstanding voting securities of each Fund.
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The Agreement may be terminated at any time without payment of penalty by either party on sixty days’ written notice and automatically terminate in the event of its assignment.
Under the Agreement, the Advisor regularly provides each Fund with continuing investment management for each Fund’s portfolio consistent with each Fund’s investment objective, policies and restrictions and determines what securities shall be purchased, held or sold and what portion of a Fund’s assets shall be held uninvested, subject to the Trust’s Declaration of Trust, By-Laws, the 1940 Act, the Internal Revenue Code of 1986, as amended (the “Code”) and to each Fund’s investment objective, policies and restrictions, and subject, further, to such policies and instructions as the Board of Trustees of the Trust may from time to time establish. The Advisor also advises and assists the officers of the Trust in taking such steps as are necessary or appropriate to carry out the decisions of its Trustees and the appropriate committees of the Trustees regarding the conduct of the business of each Fund.
From August 1, 2005 to June 12, 2005 the Trust, on behalf of the Funds, paid the Advisor an advisory fee at the annual rate of 0.50% of the first $215 million of the combined average daily net assets of each Fund, 0.375% of the next $335 million of combined net assets, 0.30% of the next $250 million of combined net assets and 0.25% of combined average daily net assets of each Fund over $800 million. The fee is payable monthly, provided that each Fund will make such interim payments as may be requested by the Advisor not to exceed 75% of the amount of the fee then accrued on the books of each Fund and unpaid.
Effective June 13, 2005, the Trust on behalf of the Funds, pays the Advisor an advisory fee at the annual rate of 0.50% of the first $215 million of the combined average daily net assets of each Fund, 0.375% of the next $335 million of combined net assets, 0.30% of the next $250 million of combined net assets, 0.25% of the next $800 million of combined assets, 0.24% of the next $800 million of combined net assets, 0.23% of the next $800 million of combined net assets, and 0.22% of combined average daily net assets of each Fund over $3.2 billion. The fee is payable monthly, provided that each Fund will make such interim payments as may be requested by the Advisor not to exceed 75% of the amount of the fee then accrued on the books of each Fund and unpaid.
The advisory fees paid by each Fund for its last three fiscal years are shown in the table below.
Fund | 2005 | 2004 | 2003 | ||||||
Money Market Fund | $ | 8,951,891 | $ | 10,186,555 | $ | 12,089,174 | |||
Government & Agency Money Fund | $ | 1,068,653 | $ | 1,209,944 | $ | 1,508,579 | |||
Tax-Exempt Money Fund | $ | 1,694,462 | $ | 1,654,412 | $ | 1,795,355 |
Under its investment management agreement a Fund is responsible for all of its other expenses including: organizational costs, fees and expenses incurred in connection with membership in investment company organizations; brokers’ commissions; legal, auditing and accounting expenses; insurance; taxes and governmental fees; the fees and expenses of the Transfer Agent; any other expenses of issue, sale, underwriting, distribution, redemption or repurchase of shares; the expenses of and the fees for registering or qualifying securities for sale; the fees and expenses of Trustees, officers and employees of a Fund who are not affiliated with the Advisor; the cost of printing and distributing reports and notices to shareholders; and the fees and disbursements of custodians. A Fund may arrange to have third parties assume all or part of the expenses of sale, underwriting and distribution of shares of the Fund. A Fund is also responsible for its expenses of shareholders’ meetings, the cost of responding to shareholders’ inquiries, and its expenses incurred in connection with litigation, proceedings and claims and the legal obligation it may have to indemnify its officers and Trustees of the Fund with respect thereto.
In reviewing the terms of the Agreement and in discussions with the Advisor concerning the Agreements, the Trustees of the Trust who are not “interested persons” of the Advisor are represented by independent counsel at the Funds’ expense.
The Agreement provides that the Advisor shall not be liable for any error of judgment or mistake of law or for any loss suffered by a Fund in connection with matters to which the Agreement relates, except a loss resulting from
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willful misfeasance, bad faith or gross negligence on the part of the Advisor in the performance of its duties or from reckless disregard by the Advisor of its obligations and duties under the Agreement.
Officers and employees of the Advisor from time to time may have transactions with various banks, including the Funds’ custodian bank. It is the Advisor’s opinion that the terms and conditions of those transactions which have occurred were not influenced by existing or potential custodial or other Fund relationships.
Board Considerations in Connection with the Annual Review of the Investment Management Agreement — Scudder Money Market Fund
The Board of Trustees, including the Independent Trustees, approved the renewal of your Fund’s investment management agreement (the “Agreement”) with Deutsche Investment Management Americas Inc. (“DeIM” or the “Advisor”) in September 2005. As part of its review process, the Board requested and evaluated all information it deemed reasonably necessary to evaluate the Agreement. Over the course of several months, the Contract Review Committee, in coordination with the Fixed-Income Oversight Committee and the Operations Committee of the Board, reviewed comprehensive materials received from the Advisor, independent third parties and independent counsel. The Board also received extensive information throughout the year regarding performance and operating results of the Fund. After their review of the information received, the Committees presented their findings and recommendations to the Independent Trustees as a group. The Independent Trustees then reviewed the Committees’ findings and recommendations and presented their recommendations to the full Board.
In connection with the contract review process, the various Committees and the Board considered the factors discussed below, among others. The Board also considered that the Advisor and its predecessors have managed the Fund since its inception, and the Board believes that a long-term relationship with a capable, conscientious adviser is in the best interests of the Fund. The Board considered, generally, that shareholders invested in the Fund, or approved the investment management agreement for the Fund, knowing that the Advisor managed the Fund and knowing the investment management fee schedule. In connection with recent and ongoing efforts by Deutsche Bank to restructure its U.S. mutual fund business, which resulted in turnover of senior management and other personnel of the Advisor, the Board considered Deutsche Bank’s commitment that it will devote to the Advisor and its affiliates all attention and resources that are necessary to provide the Fund with top-quality investment management and shareholder, administrative and product distribution services.
Nature, Quality and Extent of Services. The Board considered the nature, extent and quality of services provided under the Agreement, including portfolio management services and administrative services. The Board considered the experience and skills of senior management and investment personnel, the resources made available to such personnel, the ability of the Advisor to attract and retain high-quality personnel, and the organizational depth and stability of the Advisor. The Board reviewed the Fund’s gross and net performance over short-term and long-term periods and compared those returns to various agreed-upon peer group performance measures, focusing, for this purpose, primarily on gross performance. The Board considered whether investment results were consistent with the Fund’s investment objective and policies. The Board also noted that it has put a process into place of identifying “Focus Funds” (e.g., funds performing poorly relative to their peer group), and receives more frequent reporting and information from the Advisor regarding such funds, along with the Advisor’s remedial plans to address underperformance. The Board believes this process is an effective manner of addressing poorly performing funds at this time.
On the basis of this evaluation and the ongoing review of investment results by the Fixed-Income Oversight Committee, the Board concluded that the nature, quality and extent of services provided by the Advisor historically have been and continue to be satisfactory, and that the Fund’s gross performance over time was satisfactory.
Fees and Expenses. The Board considered the Fund’s management fee rate, operating expenses and total expense ratio, and compared management fees to a peer group and total expenses to a broader peer universe based on information and data supplied by Lipper Inc. (“Lipper”). For purposes of this comparison, the Board relied on historical data compiled by Lipper for the peer funds and the Advisor’s estimate of current expenses for the Fund. The Board noted that the Fund adopted a revised management fee schedule with additional breakpoints in connection with the acquisition of the assets and liabilities of Scudder YieldWise Money Fund in June 2005
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(the “YieldWise Merger”). The information provided to the Board showed that the Fund’s management fee rate (including the effects of the YieldWise Merger) was below the median of the peer group and that the Fund’s total expense ratio was below the median of the peer universe. The Board also considered the Fund’s management fee rate as compared to fees charged by the Advisor and certain of its affiliates for comparable mutual funds and for similarly managed institutional accounts. With respect to institutional accounts, the Board noted that (i) both the mix of services provided and the level of responsibility required under the Agreement were significantly greater as compared to the Advisor’s obligations for similarly managed institutional accounts; and (ii) the management fees of institutional accounts are less relevant to the Board’s consideration because they reflect significantly different competitive forces than those in the mutual fund marketplace. With respect to other comparable Scudder Funds, the Board considered differences in fund and fee structures among the various legacy organizations. The Board took into account the Advisor’s commitment to cap total expenses through November 30, 2008 in connection with the YieldWise Merger.
On the basis of the information provided, the Board concluded that management fees were reasonable and appropriate in light of the nature, quality and extent of services provided by the Advisor.
Profitability. The Board reviewed detailed information regarding revenues received by the Advisor under the Agreement. The Board considered the estimated costs and pre-tax profits realized by the Advisor from advising the Scudder Funds, as well as estimates of the pre-tax profits attributable to managing the Fund in particular. The Board also received information regarding the estimated enterprise-wide profitability of the Scudder organization with respect to all fund services in totality and by fund. The Board reviewed DeIM’s methodology in allocating its costs to the management of the Fund. Although the Board noted the inherently subjective nature of any allocation methodology, the Board received an attestation report from an accounting firm affirming that the allocation methods were consistently applied and were based upon practices commonly used in the investment management industry. Based on the information provided, the Board concluded that the pre-tax profits realized by DeIM in connection with the management of the Fund were not unreasonable.
Economies of Scale. The Board considered whether there are economies of scale with respect to the management of the Fund and whether the Fund benefits from any economies of scale. The Board considered whether the management fee schedule under the Agreement is reasonable in relation to the asset size of the Fund. The Board noted that the management fee schedule included six breakpoints, designed to share economies of scale with the shareholders. The Board concluded that the management fee schedule, together with expense caps, reflects an appropriate level of sharing of any economies of scale.
Other Benefits to DeIM and Its Affiliates. The Board also considered the character and amount of other incidental benefits received by DeIM and its affiliates, including fees received by the Advisor for administrative services provided to the Fund. The Board concluded that management fees were reasonable in light of these fallout benefits.
Regulatory Matters. The Board also considered information regarding ongoing inquiries of the Advisor regarding market timing, late trading and other matters by federal and state regulators and private lawsuits on related topics. Among other matters, the Board considered the Advisor’s commitment to indemnify the Scudder Funds against regulatory actions or lawsuits arising from such inquiries. The Board also considered management’s representation that such actions will not materially impact the Advisor’s ability to perform under the Agreement or materially impact the Fund.
Based on all of the information considered and the conclusions reached, the Board (including a majority of the Independent Trustees) determined that the terms of the Agreement continue to be fair and reasonable and that the continuation of the Agreement is in the best interests of the Fund. No single factor was determinative in the Board’s analysis.
Board Considerations in Connection with the Annual Review of the Investment Management Agreement — Scudder Government & Agency Money Fund
The Board of Trustees, including the Independent Trustees, approved the renewal of your Fund’s investment management agreement (the “Agreement”) with Deutsche Investment Management Americas Inc. (“DeIM” or the
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“Advisor”) in September 2005. As part of its review process, the Board requested and evaluated all information it deemed reasonably necessary to evaluate the Agreement. Over the course of several months, the Contract Review Committee, in coordination with the Fixed-Income Oversight Committee and the Operations Committee of the Board, reviewed comprehensive materials received from the Advisor, independent third parties and independent counsel. The Board also received extensive information throughout the year regarding performance and operating results of the Fund. After their review of the information received, the Committees presented their findings and recommendations to the Independent Trustees as a group. The Independent Trustees then reviewed the Committees’ findings and recommendations and presented their recommendations to the full Board.
In connection with the contract review process, the various Committees and the Board considered the factors discussed below, among others. The Board also considered that the Advisor and its predecessors have managed the Fund since its inception, and the Board believes that a long-term relationship with a capable, conscientious adviser is in the best interests of the Fund. The Board considered, generally, that shareholders invested in the Fund, or approved the investment management agreement for the Fund, knowing that the Advisor managed the Fund and knowing the investment management fee schedule. In connection with recent and ongoing efforts by Deutsche Bank to restructure its U.S. mutual fund business, which resulted in turnover of senior management and other personnel of the Advisor, the Board considered Deutsche Bank’s commitment that it will devote to the Advisor and its affiliates all attention and resources that are necessary to provide the Fund with top-quality investment management and shareholder, administrative and product distribution services.
Nature, Quality and Extent of Services. The Board considered the nature, extent and quality of services provided under the Agreement, including portfolio management services and administrative services. The Board considered the experience and skills of senior management and investment personnel, the resources made available to such personnel, the ability of the Advisor to attract and retain high-quality personnel, and the organizational depth and stability of the Advisor. The Board reviewed the Fund’s gross and net performance over short-term and long-term periods and compared those returns to various agreed-upon peer group performance measures, focusing, for this purpose, primarily on gross performance. The Board considered whether investment results were consistent with the Fund’s investment objective and policies. The Board also noted that it has put a process into place of identifying “Focus Funds” (e.g., funds performing poorly relative to their peer group), and receives more frequent reporting and information from the Advisor regarding such funds, along with the Advisor’s remedial plans to address underperformance. The Board believes this process is an effective manner of addressing poorly performing funds at this time.
On the basis of this evaluation and the ongoing review of investment results by the Fixed-Income Oversight Committee, the Board concluded that the nature, quality and extent of services provided by the Advisor historically have been and continue to be satisfactory, and that the Fund’s gross performance over time was satisfactory.
Fees and Expenses. The Board considered the Fund’s management fee rate, operating expenses and total expense ratio, and compared management fees to a peer group and total expenses to a broader peer universe based on information and data supplied by Lipper Inc. (“Lipper”). For purposes of this comparison, the Board relied on historical data compiled by Lipper for the peer funds and the Advisor’s estimate of current expenses for the Fund. The Board noted that the Fund adopted a revised management fee schedule with additional breakpoints in connection with the acquisition of the assets and liabilities of Scudder YieldWise Government & Agency Money Fund in June 2005 (the “YieldWise Merger”). The information provided to the Board showed that the Fund’s management fee rate (taking the YieldWise Merger into account) was below the median of the peer group and that the Fund’s total expense ratio was below the median of the peer universe. The Board also considered the Fund’s management fee rate as compared to fees charged by the Advisor and certain of its affiliates for comparable mutual funds. With respect to other comparable Scudder Funds, the Board considered differences in fund and fee structures among the various legacy organizations. The Board took into account the Advisor’s commitment to cap total expenses through November 30, 2008 in connection with the YieldWise Merger.
On the basis of the information provided, the Board concluded that management fees were reasonable and appropriate in light of the nature, quality and extent of services provided by the Advisor.
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Profitability. The Board reviewed detailed information regarding revenues received by the Advisor under the Agreement. The Board considered the estimated costs and pre-tax profits realized by the Advisor from advising the Scudder Funds, as well as estimates of the pre-tax profits attributable to managing the Fund in particular. The Board also received information regarding the estimated enterprise-wide profitability of the Scudder organization with respect to all fund services in totality and by fund. The Board reviewed DeIM’s methodology in allocating its costs to the management of the Fund. Although the Board noted the inherently subjective nature of any allocation methodology, the Board received an attestation report from an accounting firm affirming that the allocation methods were consistently applied and were based upon practices commonly used in the investment management industry. Based on the information provided, the Board concluded that the pre-tax profits realized by DeIM in connection with the management of the Fund were not unreasonable.
Economies of Scale. The Board considered whether there are economies of scale with respect to the management of the Fund and whether the Fund benefits from any economies of scale. The Board considered whether the management fee schedule under the Agreement is reasonable in relation to the asset size of the Fund. The Board noted that the management fee schedule included six breakpoints, designed to share economies of scale with the shareholders. The Board concluded that the management fee schedule, together with expense caps, reflects an appropriate level of sharing of any economies of scale.
Other Benefits to DeIM and Its Affiliates. The Board also considered the character and amount of other incidental benefits received by DeIM and its affiliates, including fees received by the Advisor for administrative services provided to the Fund. The Board concluded that management fees were reasonable in light of these fallout benefits.
Regulatory Matters. The Board also considered information regarding ongoing inquiries of the Advisor regarding market timing, late trading and other matters by federal and state regulators and private lawsuits on related topics. Among other matters, the Board considered the Advisor’s commitment to indemnify the Scudder Funds against regulatory actions or lawsuits arising from such inquiries. The Board also considered management’s representation that such actions will not materially impact the Advisor’s ability to perform under the Agreement or materially impact the Fund.
Based on all of the information considered and the conclusions reached, the Board (including a majority of the Independent Trustees) determined that the terms of the Agreement continue to be fair and reasonable and that the continuation of the Agreement is in the best interests of the Fund. No single factor was determinative in the Board’s analysis.
Board Considerations in Connection with the Annual Review of the Investment Management Agreement — Scudder Tax-Exempt Money Fund
The Board of Trustees, including the Independent Trustees, approved the renewal of your Fund’s investment management agreement (the “Agreement”) with Deutsche Investment Management Americas Inc. (“DeIM” or the “Advisor”) in September 2005. As part of its review process, the Board requested and evaluated all information it deemed reasonably necessary to evaluate the Agreement. Over the course of several months, the Contract Review Committee, in coordination with the Fixed-Income Oversight Committee and the Operations Committee of the Board, reviewed comprehensive materials received from the Advisor, independent third parties and independent counsel. The Board also received extensive information throughout the year regarding performance and operating results of the Fund. After their review of the information received, the Committees presented their findings and recommendations to the Independent Trustees as a group. The Independent Trustees then reviewed the Committees’ findings and recommendations and presented their recommendations to the full Board.
In connection with the contract review process, the various Committees and the Board considered the factors discussed below, among others. The Board also considered that the Advisor and its predecessors have managed the Fund since its inception, and the Board believes that a long-term relationship with a capable, conscientious adviser is in the best interests of the Fund. The Board considered, generally, that shareholders invested in the Fund, or approved the investment management agreement for the Fund, knowing that the Advisor managed the Fund and knowing the investment management fee schedule. In connection with recent and ongoing efforts by Deutsche Bank to restructure its U.S. mutual fund business, which resulted in turnover of senior management and other personnel of
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the Advisor, the Board considered Deutsche Bank’s commitment that it will devote to the Advisor and its affiliates all attention and resources that are necessary to provide the Fund with top-quality investment management and shareholder, administrative and product distribution services.
Nature, Quality and Extent of Services. The Board considered the nature, extent and quality of services provided under the Agreement, including portfolio management services and administrative services. The Board considered the experience and skills of senior management and investment personnel, the resources made available to such personnel, the ability of the Advisor to attract and retain high-quality personnel, and the organizational depth and stability of the Advisor. The Board reviewed the Fund’s gross and net performance over short-term and long-term periods and compared those returns to various agreed-upon peer group performance measures, focusing, for this purpose, primarily on gross performance. The Board considered whether investment results were consistent with the Fund’s investment objective and policies. The Board also noted that it has put a process into place of identifying “Focus Funds” (e.g., funds performing poorly relative to their peer group), and receives more frequent reporting and information from the Advisor regarding such funds, along with the Advisor’s remedial plans to address underperformance. The Board believes this process is an effective manner of addressing poorly performing funds at this time.
On the basis of this evaluation and the ongoing review of investment results by the Fixed-Income Oversight Committee, the Board concluded that the nature, quality and extent of services provided by the Advisor historically have been and continue to be satisfactory, and that the Fund’s gross performance over time was satisfactory.
Fees and Expenses. The Board considered the Fund’s management fee rate, operating expenses and total expense ratio, and compared management fees to a peer group and total expenses to a broader peer universe based on information and data supplied by Lipper Inc. (“Lipper”). For purposes of this comparison, the Board relied on historical data compiled by Lipper for the peer funds and the Advisor’s estimate of current expenses for the Fund. The Board noted that the Fund adopted a revised management fee schedule with additional breakpoints in connection with the acquisition of the assets and liabilities of Scudder YieldWise Municipal Money Fund in June 2005 (the “Yieldwise Merger”). The information provided to the Board showed that the Fund’s management fee rate (taking into account the effects of the YieldWise Merger) was below the median of the peer group and that the Fund’s total expense ratio was below the median of the peer universe. The Board also considered the Fund’s management fee rate as compared to fees charged by the Advisor and certain of its affiliates for comparable mutual funds. With respect to other comparable Scudder Funds, the Board considered differences in fund and fee structures among the various legacy organizations. The Board took into account the Advisor’s commitment to cap total expenses through November 30, 2008 in connection with the YieldWise Merger.
On the basis of the information provided, the Board concluded that management fees were reasonable and appropriate in light of the nature, quality and extent of services provided by the Advisor.
Profitability. The Board reviewed detailed information regarding revenues received by the Advisor under the Agreement. The Board considered the estimated costs and pre-tax profits realized by the Advisor from advising the Scudder Funds, as well as estimates of the pre-tax profits attributable to managing the Fund in particular. The Board also received information regarding the estimated enterprise-wide profitability of the Scudder organization with respect to all fund services in totality and by fund. The Board reviewed DeIM’s methodology in allocating its costs to the management of the Fund. Although the Board noted the inherently subjective nature of any allocation methodology, the Board received an attestation report from an accounting firm affirming that the allocation methods were consistently applied and were based upon practices commonly used in the investment management industry. Based on the information provided, the Board concluded that the pre-tax profits realized by DeIM in connection with the management of the Fund were not unreasonable.
Economies of Scale. The Board considered whether there are economies of scale with respect to the management of the Fund and whether the Fund benefits from any economies of scale. The Board considered whether the management fee schedule under the Agreement is reasonable in relation to the asset size of the Fund. The Board noted that the management fee schedule included six breakpoints, designed to share economies of scale with the shareholders. The Board concluded that the management fee schedule, together with expense caps, reflects an appropriate level of sharing of any economies of scale.
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Other Benefits to DeIM and Its Affiliates. The Board also considered the character and amount of other incidental benefits received by DeIM and its affiliates, including fees received by the Advisor for administrative services provided to the Fund. The Board concluded that management fees were reasonable in light of these fallout benefits.
Regulatory Matters. The Board also considered information regarding ongoing inquiries of the Advisor regarding market timing, late trading and other matters by federal and state regulators and private lawsuits on related topics. Among other matters, the Board considered the Advisor’s commitment to indemnify the Scudder Funds against regulatory actions or lawsuits arising from such inquiries. The Board also considered management’s representation that such actions will not materially impact the Advisor’s ability to perform under the Agreement or materially impact the Fund.
Based on all of the information considered and the conclusions reached, the Board (including a majority of the Independent Trustees) determined that the terms of the Agreement continue to be fair and reasonable and that the continuation of the Agreement is in the best interests of the Fund. No single factor was determinative in the Board’s analysis.
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Code of Ethics
The Funds, the Advisor and the Funds’ principal underwriter have each adopted codes of ethics under rule 17j-1 of the 1940 Act. Board members, officers of the Trust and employees of the Advisor and principal underwriter are permitted to make personal securities transactions, including transactions in securities that may be purchased or held by the Funds, subject to requirements and restrictions set forth in the applicable Code of Ethics. The Advisor’s Code of Ethics contains provisions and requirements designed to identify and address certain conflicts of interest between personal investment activities and the interests of the Funds. Among other things, the Advisor’s Code of Ethics prohibits certain types of transactions absent prior approval, imposes time periods during which personal transactions may not be made in certain securities, and requires the submission of duplicate broker confirmations and quarterly reporting of securities transactions. Additional restrictions apply to portfolio managers, traders, research analysts and others involved in the investment advisory process. Exceptions to these and other provisions of the Advisor’s Code of Ethics may be granted in particular circumstances after review by appropriate personnel.
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The Advisor is generally responsible for placing the orders for the purchase and sale of portfolio securities, including the allocation of brokerage.
The policy of the Advisor in placing orders for the purchase and sale of securities for the Funds is to seek best execution, taking into account such factors, among others, as price; commission (where applicable); the broker-dealer’s ability to ensure that securities will be delivered on settlement date; the willingness of the broker-dealer to commit its capital and purchase a thinly traded security for its own inventory; whether the broker-dealer specializes in block orders or large program trades; the broker-dealer’s knowledge of the market and the security; the broker-dealer’s ability to maintain confidentiality; the financial condition of the broker-dealer; and whether the broker-dealer has the infrastructure and operational capabilities to execute and settle the trade. The Advisor seeks to evaluate the overall reasonableness of brokerage commissions with commissions charged on comparable transactions and compares the brokerage commissions (if any) paid by the Funds to reported commissions paid by others. The Advisor routinely reviews commission rates, execution and settlement services performed and makes internal and external comparisons.
Commission rates on transactions in equity securities on US securities exchanges are subject to negotiation. Commission rates on transactions in equity securities on foreign securities exchanges are generally fixed. Purchases and sales of fixed-income securities and other over-the-counter securities are effected on a net basis, without the payment of brokerage commissions. Transactions in fixed income and other over-the-counter securities are generally placed by the Advisor with the principal market makers for these securities unless the Advisor reasonably believes more favorable results are available elsewhere. Transactions with dealers serving as market makers reflect the spread between the bid and asked prices. Purchases of underwritten issues will include an underwriting fee paid to the underwriter. Money market instruments are normally purchased in principal transactions directly from the issuer or from an underwriter or market maker.
It is likely that the broker-dealers selected based on the considerations described in this section will include firms that also sell shares of the Funds to their customers. However, the Advisor does not consider sales of shares of the Funds as a factor in the selection of broker-dealers to execute portfolio transactions for the Funds and, accordingly, has implemented policies and procedures reasonably designed to prevent its traders from considering sales of shares of a Fund as a factor in the selection of broker-dealers to execute portfolio transactions for a Fund.
The Advisor is permitted by Section 28(e) of the Securities Exchange Act of 1934, as amended (“1934 Act”), when placing portfolio transactions for a Fund, to cause the Fund to pay brokerage commissions in excess of that which another broker-dealer might charge for executing the same transaction in order to obtain research and brokerage services. The Advisor, however, does not as a matter of
policy execute transactions with broker-dealers for a Fund in order to obtain research from such broker-dealers that is prepared by third parties (i.e., “third party research”). However, the Advisor may from time to time, in reliance on Section 28(e) of the 1934 Act, obtain proprietary research prepared by the executing broker-dealer in connection with a transaction or transactions through that broker-dealer (i.e., “proprietary research”). Consistent with the Advisor’s policy regarding best execution, where more than one broker is believed to be capable of providing best execution for a particular trade, the Advisor may take into consideration the receipt of proprietary research in selecting the broker-dealer to execute the trade. Proprietary research provided by broker-dealers may include, but is not limited to, information on the economy, industries, groups of securities, individual companies, statistical information, accounting and tax law interpretations, political developments, legal developments affecting portfolio securities, technical market action, pricing and appraisal services, credit analysis, risk measurement analysis, performance analysis and measurement and analysis of corporate responsibility issues. Proprietary research is typically received in the form of written reports, telephone contacts and personal meetings with security analysts, but may also be provided in the form of access to various computer software and associated hardware, and meetings arranged with corporate and industry representatives.
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In reliance on Section 28(e) of the 1934 Act, the Advisor may also select broker-dealers and obtain from them brokerage services in the form of software and/or hardware that is used in connection with executing trades. Typically, this computer software and/or hardware is used by the Advisor to facilitate trading activity with those broker-dealers.
Proprietary research and brokerage services received from a broker-dealer chosen to execute a particular trade may be useful to the Advisor in providing services to clients other than a Fund making the trade, and not all such information is used by the Advisor in connection with such Fund. Conversely, such information provided to the Advisor by broker-dealers through which other clients of the Advisor effect securities transactions may be useful to the Advisor in providing services to a Fund.
The Advisor will monitor regulatory developments and market practice in the use of client commissions to obtain research and brokerage services, whether proprietary or third party.
Investment decisions for each Fund and for other investment accounts managed by the Advisor are made independently of each other in light of differing conditions. However, the same investment decision may be made for two or more of such accounts. In such cases, simultaneous transactions are inevitable. To the extent permitted by law, the Advisor may aggregate the securities to be sold or purchased for a Fund with those to be sold or purchased for other accounts in executing transactions. Purchases or sales are then averaged as to price and commission and allocated as to amount in a manner deemed equitable to each account. While in some cases this practice could have a detrimental effect on the price paid or received by, or on the size of the position obtained or disposed of for, a Fund, in other cases it is believed that the ability to engage in volume transactions will be beneficial to a Fund.
Deutsche Bank AG or one of its affiliates may act as a broker for a Fund and receive brokerage commissions or other transaction-related compensation from a Fund in the purchase and sale of securities, options or futures contracts when, in the judgment of the Advisor, and in accordance with procedures approved by the Funds’ Board, the affiliated broker will be able to obtain a price and execution at least as favorable as those obtained from other qualified brokers and if, in the transaction, the affiliated broker charges a Fund a rate consistent with that charged to comparable unaffiliated customers in similar transactions.
Money market instruments are normally purchased in principal transactions directly from the issuer or from an underwriter or market maker. There usually are no brokerage commissions paid by a Fund for such purchases. During the last three fiscal years each Fund paid no portfolio brokerage commissions. Purchases from underwriters will include a commission or concession paid by the issuer to the underwriter, and purchases from dealers serving as market makers will include the spread between the bid and asked prices.
Scudder Distributors, Inc. (SDI), 222 South Riverside Plaza, Chicago, Illinois 60606, an affiliate of the Advisor, is the principal underwriter for shares of the Funds and acts as agent of the Funds in the continuous sale of their shares. The Funds pay the cost for the prospectus and shareholder reports to be set in type and printed for existing shareholders, and SDI pays for the printing and distribution of copies thereof used in connection with the offering of shares to prospective investors. SDI also pays for supplementary sales literature and advertising costs. Terms of
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continuation, termination and assignment under the underwriting agreement are identical to those described above with regard to the investment management agreement, except that termination other than upon assignment requires six months notice and shares are voted in the aggregate and not by Fund whenever shareholders vote with respect to such agreement. SDI receives no compensation from the Funds as principal underwriter for the Funds shares and pays all expenses of distribution of the Funds shares.
Certain officers or trustees of the Trust are also directors or officers of the Advisor and SDI as indicated under “Officers and Trustees.”
Independent Registered Public Accounting Firm
The financial highlights of each Fund included in the Funds’ prospectus and the financial statements incorporated by reference in this Statement of Additional Information have been so included or incorporated by reference in reliance on the report of Ernst & Young LLP, 200 Clarendon Street, Boston, MA 02116, Independent Registered Public Accounting Firm, given on the authority of said firm as experts in auditing and accounting. Ernst & Young LLP audits the financial statements of the Funds and provides other audit, tax and related services. Shareholders will receive annual audited financial statements and semi-annual unaudited financial statements.
Vedder, Price, Kaufman & Kammholz, P.C., 222 North LaSalle Street, Chicago, Illinois 60601, serves as legal counsel to each Fund and the Independent Trustees.
Scudder Fund Accounting Corporation (“SFAC”), Two International Place, Boston, Massachusetts, 02110, a subsidiary of the Advisor, is responsible for determining the daily net asset value per share of the Funds and maintaining portfolio and general accounting records. Currently, SFAC receives no fee for its services to the Funds; however, subject to Board approval, at some time in the future, SFAC may seek payment for its services under this agreement.
Pursuant to an agreement among the Advisor, SFAC and State Street Bank and Trust Company (“SSB”) (the “Sub-Accounting and Sub-Administrator Agreement”), SFAC and the Advisor have delegated certain fund accounting functions to SSB under the fund accounting agreement. The costs and expenses of such delegation are borne by the Advisor and SFAC, not by the Funds.
Pursuant to a sub-administrator agreement between the Advisor and SSB, the Advisor has delegated certain administrative functions to SSB under the investment management agreement. The costs and expenses of such delegation are borne by the Advisor, not by the Funds.
Custodian, Transfer Agent and Shareholder Service Agent
State Street Bank and Trust Company (“SSB”), 225 Franklin Street, Boston, Massachusetts 02110, as custodian, has custody of all securities and cash of the Funds. State Street attends to the collection of principal and income, and payment for and collection of proceeds bought and sold by the Funds.
State Street also acts as transfer agent for the Funds. Pursuant to a services agreement with State Street, Scudder Investments Service Company (SISC), 210 W. 10th Street, Kansas City, Missouri 64105-1614, an affiliate of the Advisor, serves as “Shareholder Service Agent.” State Street receives as transfer agent, and pays to SISC annual account fees of a maximum of $10 per account, a $5 new account set up fee, an annual asset based fee of 0.05% of average daily net assets and out-of-pocket expense reimbursement.
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During the fiscal year ended July 31, 2005, shareholder service fees were remitted for Money Market Fund in the amount of $3,256,811, for Government & Agency Money Fund in the amount of $333,133 and for Tax-Exempt Money Fund in the amount of $416,977 to SISC as Shareholder Service Agent.
During the fiscal year ended July 31, 2004, shareholder service fees were remitted for Money Market Fund in the amount of $3,552,414, for Government & Agency Money Fund in the amount of $376,484, and for Tax-Exempt Money Fund in the amount of $409,599 to SISC as Shareholder Service Agent.
During the fiscal year ended July 31, 2003, shareholder service fees were remitted for Money Market Fund in the amount of $4,595,480, for Government & Agency Money Fund in the amount of $578,970, and for Tax-Exempt Money Fund in the amount of $468,723 to SISC as Shareholder Service Agent.
Pursuant to a sub-transfer agency agreement between SISC and DST Systems, Inc. (“DST”), SISC has delegated certain transfer agent and dividend paying agent functions to DST. The costs and expenses of such delegation are born by SISC, not by the Funds.
Custodian’s fee may be reduced by certain earnings credits in favor of each Fund.
PURCHASE AND REDEMPTION OF SHARES
Purchase of Shares
Shares of each Fund are sold at their net asset value next determined after an order and payment are received in the form described in the Funds’ prospectus. There is no sales charge. The minimum initial investment in any Fund is $1,000 ($500 for IRAs), $10,000 for a Scudder MoneyPLUS AccountSM and the minimum subsequent investment is $50, but such minimum amounts may be changed at any time. See the prospectus for certain exceptions to these minimums. The Funds may waive the minimum for purchases by trustees, directors, officers or employees of the Trust or the Advisor and its affiliates and the $3 monthly fee assessed on accounts below $1,000. Since each Fund will be investing in instruments that normally require immediate payment in federal funds (monies credited to a bank’s account with its regional Federal Reserve Bank), each Fund has adopted procedures for the convenience of its shareholders and to ensure that each Fund receives investable funds.
SDI may in its discretion compensate investment dealers or other financial services firms in connection with the sale of shares of a Fund with the following compensation schedule up to the following amounts:
Compensation Schedule (1) | ||||||
Amount of Shares Sold | As a Percentage of Net Asset Value | |||||
Tax-Exempt Money Fund | $ | 1 million to $15 million | 0.15 | % |
(1) | The Compensation Schedule applies to employer sponsored employee benefit plans using the OmniPlus subaccount record keeping system. The Compensation Schedule will be determined based on the value of the conversion assets. |
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Compensation Schedule (1) | ||||||
Amount of Shares Sold | As a Percentage of Net Asset Value | |||||
Money Market Fund and Government & Agency Money Fund | Up to $ | 15 million | 0.15 | % |
(1) | The Compensation Schedule applies to employer sponsored employee benefit plans using the OmniPlus subaccount record keeping system maintained by ADP, Inc. for Scudder-branded plans under an alliance with SDI and its affiliates. |
If shares of a Fund to be redeemed were purchased by check or through certain Automated Clearing House (“ACH”) transactions, the Fund may delay transmittal of redemption proceeds until it has determined that collected funds have been received for the purchase of such shares, which may be up to 10 days from receipt by the Fund of the purchase amount. Shareholders may not use expedited redemption procedures (wire transfer or Redemption Check) until the shares being redeemed have been owned for at least 10 days, and shareholders may not use such procedures to redeem shares held in certificated form. There is no delay when shares being redeemed were purchased by wiring Federal Funds.
Due to the desire of the Trust’s management to afford ease of redemption, certificates will not be issued to indicate ownership in the Funds. Share certificates now in a shareholder’s possession may be sent to the Transfer Agent for cancellation and credit to such shareholder’s account. Shareholders who currently hold certificates may hold the certificates in their possession until they wish to exchange or redeem such shares.
Orders for purchase of shares of a Fund received by wire transfer in the form of federal funds will be effected at the next determined net asset value. Shares purchased by wire will receive that day’s dividend if effected at or prior to the 2:00 p.m. Eastern time net asset value determination for Money Market Fund and Government & Agency Money Fund and at or prior to the 12:00 p.m. Eastern time net asset value determination for Tax-Exempt Money Fund, otherwise, dividends will begin to accrue for the next business day if effected at the 4:00 p.m. Eastern time net asset value determination. Orders processed through dealers or other financial services firms via Fund/SERV will be effected at the 4:00 p.m. Eastern time net asset value effective on the trade date. These purchases will begin earning dividends the calendar day following the payment date.
Orders for purchase accompanied by a check or other negotiable bank draft will be accepted and effected as of 4:00 p.m. Eastern time on the next business day following receipt and such shares will receive the dividend for the next calendar day following the day the purchase is effected. If an order is accompanied by a check drawn on a foreign bank, funds must normally be collected on such check before shares will be purchased.
If payment is wired in federal funds, the payment should be directed to Scudder Money Funds: UMB of Kansas City, N.A. (ABA #1010-0069-5) Scudder Money Market Fund: #98-0103-346-8, or Scudder Government & Agency Money Fund: 98-0116-259-4 or, Scudder Tax-Exempt Money Fund: 98-0001-577-6.
Redemption of Shares
General. Upon receipt by the Shareholder Service Agent of a request for redemption in proper form, shares will be redeemed by a Fund at the applicable net asset value as described in the Funds’ prospectus. If processed at 4:00 p.m. Eastern time, the shareholders will receive that day’s dividend. A shareholder may elect to use either the regular or expedited redemption procedures. Shareholders who redeem shares of a Fund will receive the net asset value of such shares and all declared but unpaid dividends on such shares.
The Funds may suspend the right of redemption or delay payment more than seven days (a) during any period when the New York Stock Exchange (“Exchange”) is closed other than customary weekend and holiday closings or during any period in which trading on the Exchange is restricted, (b) during any period when an emergency exists as a result of which (i) disposal of a Fund’s investments is not reasonably practicable, or (ii) it is not reasonably
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practicable for the Fund to determine the value of its net assets, or (c) for such other periods as the Securities and Exchange Commission may by order permit for the protection of the Funds’ shareholders.
In addition, the Money Market Fund may delay payments of redemptions in the event of a closing of the Federal Reserve Bank’s wire payment system until a reasonable time after the system reopens, but in any event the Fund may not delay payment more than seven days except under the circumstances discussed in the previous paragraph.
Although it is each Fund’s present policy to redeem in cash, if the Board of Trustees determines that a material adverse effect would be experienced by the remaining shareholders if payment were made wholly in cash, the Trust will pay the redemption price in part by a distribution of portfolio securities in lieu of cash, in conformity with the applicable rules of the Securities and Exchange Commission, taking such securities at the same value used to determine net asset value, and selecting the securities in such manner as the Board of Trustees may deem fair and equitable. If such a distribution occurs, shareholders receiving securities and selling them could receive less than the redemption value of such securities and in addition could incur certain transaction costs. Such a redemption would not be as liquid as a redemption entirely in cash. The Trust has elected to be governed by Rule 18f-1 under the 1940 Act pursuant to which the Trust is obligated to redeem shares of a Fund solely in cash up to the lesser of $250,000 or 1% of the net assets of the Fund during any 90-day period for any one shareholder of record.
Regular Redemptions. When shares are held for the account of a shareholder by the Trust’s transfer agent, the shareholder may redeem them by sending a written request with signatures guaranteed to Scudder Investments Service Company, P.O. Box 219557, Kansas City, Missouri 64121-9557. Redemption requests and a stock power must be endorsed by the account holder with signatures guaranteed by a commercial bank, trust company, savings and loan association, federal savings bank, member firm of a national securities exchange or other eligible financial institution. The redemption request and stock power must be signed exactly as the account is registered including any special capacity of the registered owner. Additional documentation may be requested, and a signature guarantee is normally required, from institutional and fiduciary account holders, such as corporations, custodians (e.g., under the Uniform Transfers to Minors Act), executors, administrators, trustees or guardians.
Redemption by Check/ACH Debit Disclosure. The Funds will accept Automated Clearing House (“ACH”) debit entries for accounts that have elected the checkwriting redemption privilege. An example of an ACH debit is a transaction in which you have given your insurance company, mortgage company, credit card company, utility company, health club, etc., the right to withdraw your monthly payment from your Fund account or the right to convert your mailed check into an ACH debit. Sometimes, you may give a merchant from whom you wish to purchase goods the right to convert your check to an ACH debit. You may also authorize a third party to initiate an individual payment in a specific amount from your account by providing your account information and authorization to such third party via the Internet or telephone. You authorize a Fund upon receipt of an ACH debit entry referencing your account number, to redeem Fund shares in your account to pay the entry to the third party originating the debit. A Fund will make the payment on the basis of the account number that you provide to your merchant and will not compare this account number with the name on the account. The Funds, the Funds’ transfer agent, the Shareholder Service Agent or any other person or system handling the transaction are not required to determine if there is a discrepancy between the name and the account number shown on the transfer instructions.
The payment of any ACH debit entry will be subject to sufficient funds being available in the designated account; a Fund will not be able to honor an ACH debit entry if sufficient funds are not available. ACH debit entry transactions to your Fund account should not be initiated or authorized by you in amounts exceeding the amount of Shares of a Fund then in the account and available for redemption. A Fund may refuse to honor ACH debit entry transactions whenever the right of redemption has been suspended or postponed, or whenever the account is otherwise impaired. Your Fund account statement will show any ACH debit entries in your account; you will not receive any other separate notice. (Merchants are permitted to convert your checks into ACH debits only with your prior consent.)
You may authorize payment of a specific amount to be made from your account directly by a Fund to third parties on a continuing periodic basis. To arrange for this service, you should contact the person or company you will be paying. Any preauthorized transfers will be subject to sufficient funds being available in the designated account. A preauthorized transfer will continue to be made from the account in the same amount and frequency as initially
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established until you terminate the preauthorized transfer instructions with the person or company whom you have been paying. If regular preauthorized payments may vary in amount, the person or company you are going to pay should tell you ten (10) days before each payment will be made and how much the payment will be. If you have told a Fund in advance to make regular payments out of your account, you may stop any of these payments by writing or calling the Shareholder Service Agent at the address and telephone number listed in the next paragraph in time for the Shareholder Service Agent to receive your request three (3) business days or more before the payment is scheduled to be made. If you call, a Fund may also require that you put your request in writing so that a Fund will receive it within 14 days after you call. If you order a Fund to stop one of these payments three (3) business days or more before the transfer is scheduled and a Fund does not do so, a Fund will be liable for your loss or damages but not in an amount exceeding the amount of the payment. A stop payment order will stop only the designated periodic payment. If you wish to terminate the periodic preauthorized transfers, you should do so with the person or company to whom you have been making payments.
In case of errors or questions about your ACH debit entry transactions please telephone (1-800-621-1048) or write (Scudder Investments, 222 South Riverside Plaza, Chicago, IL 60606-5808) the Shareholder Service Agent as soon as possible if you think your statement is wrong or shows an improper transfer or if you need more information about a transfer listed on the statement. Our business days are Monday through Friday except holidays. The Shareholder Service Agent must hear from you no later than 60 days after a Fund sent you the first Fund account statement on which the problem or error appeared. If you do not notify the Shareholder Service Agent within sixty (60) days after a Fund sends you the account statement, you may not get back any money you have lost, and you may not get back any additional money you lose after the sixty (60) days if a Fund or Shareholder Service Agent could have stopped someone from taking that money if you had notified the Shareholder Service Agent in time.
Tell us your name and account number. Describe the error or the transfer you are unsure about, and explain why you believe it is an error or why you need more information. Tell us the dollar amount of the suspected error. If you tell the Shareholder Service Agent orally, the Shareholder Service Agent may require that you send your complaint or questions in writing within ten (10) business days. The Shareholder Service Agent will determine whether an error occurred within ten (10) business days after it hears from you and will correct any error promptly. If the Shareholder Service Agent needs more time, however, it may take up to 45 days (90 days for certain types of transactions) to investigate your complaint or question. If the Shareholder Service Agent decides to do this, your account will be credited with escrowed Fund shares within ten (10) business days for the amount you think is in error so that you will have the use of the money during the time it takes the Shareholder Service Agent to complete its investigation. If the Shareholder Service Agent asks you to put your complaint or questions in writing and the Shareholder Service Agent does not receive it within ten (10) business days, your account may not be credited. The Shareholder Service Agent will tell you the results within three (3) business days after completing its investigation. If the Shareholder Service Agent determines that there was no error, the Shareholder Service Agent will send you a written explanation. You may ask for copies of documents that were used by the Shareholder Service Agent in the investigation.
In the event a Fund, the Funds’ named transfer agent or the Shareholder Service Agent does not complete a transfer from your account on time or in the correct amount according to the Funds’ agreement with you, a Fund may be liable for your losses or damages. A Fund will not be liable to you if (i) there are not sufficient funds available in your account, (ii) circumstances beyond our control (such as fire or flood or malfunction of equipment) prevent the transfer, (iii) you or another shareholder have supplied a merchant with incorrect account information, or (iv) a merchant has incorrectly formulated an ACH debit entry. In any case, a Fund’s liability shall not exceed the amount of the transfer in question.
A Fund, the Funds’ named transfer agent or the Shareholder Service Agent will disclose information to third parties about your account or the transfers you make: (1) where it is necessary for completing the transfers, (2) in order to verify the existence or condition of your account for a third party such as a credit bureau or a merchant, (3) in order to comply with government agencies or court orders or (4) if you have given a Fund written permission.
The acceptance and processing of ACH debit entry transactions is established solely for your convenience and each Fund reserves the right to suspend, terminate or modify your ability to redeem fund shares by ACH debit entry transactions at any time. ACH debit entry transactions are governed by the rules of the National Automated
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Clearing House Association (“NACHA”) Operating Rules and any local ACH operating rules then in effect, as well as Regulation E of the Federal Reserve Board.
Telephone Redemptions. If the proceeds of the redemption are $100,000 or less and the proceeds are payable to the shareholder of record at the address of record, normally a telephone request or a written request by any one account holder without a signature guarantee is sufficient for redemptions by individual or joint account holders, and trust, executor, guardian and custodian account holders, provided the trustee, executor guardian or custodian is named in the account registration. Other institutional account holders may exercise this special privilege of redeeming shares by telephone request or written request without signature guarantee subject to the same conditions as individual account holders and subject to the limitations on liability, provided that this privilege has been pre-authorized by the institutional account holder by written instruction to the Shareholder Service Agent with signatures guaranteed. Shares purchased by check or through certain ACH transactions may not be redeemed under this privilege of redeeming shares by telephone request until such shares have been owned for at least 10 days. This privilege of redeeming shares by telephone request or by written request without a signature guarantee may not be used to redeem shares held in certificate form and may not be used if the shareholder’s account has had an address change within 15 days of the redemption request. During periods when it is difficult to contact the Shareholder Service Agent by telephone, it may be difficult to use the telephone redemption privilege, although investors can still redeem by mail. Each Fund reserves the right to terminate or modify this privilege at any time.
Expedited Wire Transfer Redemptions. If the account holder has given authorization for expedited wire redemption to the account holder’s brokerage or bank account, shares can be redeemed and proceeds sent by a federal wire transfer to a single previously designated account. Requests received by the Shareholder Service Agent prior to 12:00 p.m. Eastern time and can be identified as an investment in a fund will result in shares being redeemed that day and normally the proceeds will be sent to the designated account that day. Once authorization is on file, the Shareholder Service Agent will honor requests by telephone at 1-800-621-1048 or in writing, subject to the limitations on liability. A Fund is not responsible for the efficiency of the federal wire system or the account holder’s financial services firm or bank. Each Fund currently does not charge the account holder for wire transfers. The account holder is responsible for any charges imposed by the account holder’s firm or bank. There is a $1,000 wire redemption minimum. To change the designated account to receive wire redemption proceeds, send a written request to the Shareholder Service Agent with signatures guaranteed as described above, or contact the firm through which shares of a Fund were purchased. Shares purchased by check or through certain ACH transactions may not be redeemed by wire transfer until the shares have been owned for at least 10 days. Account holders may not use this procedure to redeem shares held in certificate form. During periods when it is difficult to contact the Shareholder Service Agent by telephone, it may be difficult to use the expedited wire transfer redemption privilege. Each Fund reserves the right to terminate or modify this privilege at any time.
Redemptions by Draft. Upon request, shareholders will be provided with drafts to be drawn on a Fund (“Redemption Checks”). These Redemption Checks may be made payable to the order of any person for not more than $5 million. When a Redemption Check is presented for payment, a sufficient number of full and fractional shares in the shareholder’s account will be redeemed as of the next determined net asset value to cover the amount of the Redemption Check. This will enable the shareholder to continue earning dividends until a Fund receives the Redemption Check. A shareholder wishing to use this method of redemption must complete and file an Account Application which is available from each Fund or firms through which shares were purchased. Redemption Checks should not be used to close an account since the account normally includes accrued but unpaid dividends. Each Fund reserves the right to terminate or modify this privilege at any time. This privilege may not be available through some firms that distribute shares of each Fund. In addition, firms may impose minimum balance requirements in order to offer this feature. Firms may also impose fees to investors for this privilege or establish variations of minimum check amounts if approved by each Fund.
Unless one signer is authorized on the Account Application, Redemption Checks must be signed by all account holders. Any change in the signature authorization must be made by written notice to the Shareholder Service Agent. Shares purchased by check or through certain ACH transactions may not be redeemed by Redemption Check until the shares have been on a Fund’s books for at least 10 days. Shareholders may not use this procedure to redeem shares held in certificate form. Each Fund reserves the right to terminate or modify this privilege at any time.
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A Fund may refuse to honor Redemption Checks whenever the right of redemption has been suspended or postponed, or whenever the account is otherwise impaired. A $10 service fee will be charged when a Redemption Check is presented to redeem Fund shares in excess of the value of a Fund account or in an amount less than $500; when a Redemption Check is presented that would require redemption of shares that were purchased by check or certain ACH transactions within 10 days; or when “stop payment” of a Redemption Check is requested.
Use of Financial Services Firms. Investment dealers and other firms provide varying arrangements for their clients to purchase and redeem the Fund’s shares, including different minimum investments, and may assess transaction or other fees. Firms may arrange with their clients for other investment or administrative services. Such firms may independently establish and charge additional amounts to their clients for such services. Firms also may hold the Fund’s shares in nominee or street name as agent for and on behalf of their customers. In such instances, the Fund’s transfer agent will have no information with respect to or control over the accounts of specific shareholders. Such shareholders may obtain access to their accounts and information about their accounts only from their firm. Certain of these firms may receive compensation from the Fund through the Shareholder Service Agent for record-keeping and other expenses relating to these nominee accounts. In addition, certain privileges with respect to the purchase and redemption of shares or the reinvestment of dividends may not be available through such firms. Some firms may participate in a program allowing them access to their clients’ accounts for servicing, including, without limitation, transfers of registration and dividend payee changes, and may perform functions such as generation of confirmation statements and disbursement of cash dividends. Such firms, including affiliates of SDI, may receive compensation from the Fund through the Shareholder Service Agent for these services.
Special Features. Certain firms that offer Shares of a Fund also provide special redemption features through charge or debit cards and checks that redeem Fund Shares. Various firms have different charges for their services. Shareholders should obtain information from their firm with respect to any special redemption features, applicable charges, minimum balance requirements and special rules of the cash management program being offered.
Automatic Withdrawal Program. If you own $5,000 or more of a Fund’s shares you may provide for the payment from your account of any requested dollar amount to be paid to you or your designated payee monthly, quarterly, semi-annually or annually. The $5,000 minimum account size is not applicable to Individual Retirement Accounts. Dividend distributions will be automatically reinvested at net asset value. A sufficient number of full and fractional shares will be redeemed to make the designated payment. Depending upon the size of the payments requested, redemptions for the purpose of making such payments may reduce or even exhaust the account. Additionally, there is a $3/month charge if your account balance is below $1,000 for the last 30 days. The program may be amended on thirty days notice by the Fund and may be terminated at any time by the shareholder or the Funds. The minimum automatic withdrawal amount is $1,000 and the shareholder will be charged a $5.00 fee for each withdrawal.
Tax-Sheltered Retirement Programs. The Shareholder Service Agent provides retirement plan services and documents and can establish your account in any of the following types of retirement plans:
• | Individual Retirement Accounts (IRAs) with State Street as custodian. This includes Savings Incentive Match Plan for Employees of Small Employers (“SIMPLE”), IRA accounts and Simplified Employee Pension Plan (SEP) IRA accounts and prototype documents. |
• | 403(b) Custodial Accounts with State Street as custodian. This type of plan is available to employees of most non-profit organizations. |
• | Prototype money purchase pension and profit sharing plans may be adopted by employers. The maximum contribution per participant is the lesser of 25% of compensation or $30,000. |
Brochures describing the above plans as well as providing model defined benefit plans, target benefit plans, 457 plans, 401(k) plans, SIMPLE 401(k) plans and materials for establishing them are available from the Shareholder Service Agent upon request. The brochures for plans with State Street Bank and Trust as custodian describe the
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current fees payable to State Street Bank and Trust for its services as custodian. Investors should consult with their own tax advisers before establishing a retirement plan.
The following is intended to be a general summary of certain federal income tax consequences of investing in the Funds. It is not intended as a complete discussion of all such consequences, nor does it purport to deal with all categories of investors. Investors are therefore advised to consult with their tax advisors before making an investment in a Fund.
Each Fund has elected to be treated as a regulated investment company under Subchapter M of the Code, of the Internal Revenue Code of 1986, as amended (the “Code”). Each Fund intends to continue to so qualify in each taxable year as required under the Code in order to avoid payment of federal income tax at the Fund level. In order to qualify as a regulated investment company, each Fund must meet certain requirements regarding the source of its income and the diversification of its assets. Each Fund is required to distribute to its shareholders at least 90 percent of its taxable and tax-exempt net investment income (including net short-term capital gain) and generally is not subject to federal income tax to the extent that it distributes annually such net investment income and net realized capital gains in the manner required under the Code. Distributions of investment company taxable income are generally taxable to shareholders as ordinary income.
If for any taxable year a Fund does not qualify for the special federal income tax treatment afforded regulated investment companies, all of its taxable income will be subject to federal income tax at regular corporate rates (without any deduction for distributions to its shareholders).
Each Fund is subject to a 4% nondeductible excise tax on amounts required to be but not distributed under a prescribed formula. The formula requires payment to shareholders during a calendar year of distributions representing at least 98% of the Fund’s taxable ordinary income for the calendar year and at least 98% of the excess of its capital gains over capital losses realized during the one-year period ending October 31 (in most cases) of such year as well as amounts that were neither distributed nor taxed to the Fund during the prior calendar year. Although each Fund’s distribution policies should enable it to avoid excise tax liability, a Fund may retain (and be subject to income or excise tax on) a portion of its capital gain or other income if it appears to be in the interest of such Fund.
Subchapter M of the Code permits the character of tax-exempt interest distributed by a regulated investment company to flow-through as tax-exempt interest to its shareholders, provided that at least 50% of the value of the Fund’s assets at the end of each quarter of the taxable year is invested in state, municipal and other obligations the interest on which is excluded from gross income under Section 103(a) of the Code. The Fund intends to satisfy this 50% requirement in order to permit distributions of tax-exempt interest to be treated as such for federal income tax purposes in the hands of its shareholders. These distributions may be subject to the individual or corporate alternative minimum tax. Discount from certain stripped tax-exempt obligations or their coupons may be taxable.
Any loss realized upon the redemption of shares held for six months or less at the time of redemption will be treated as a long-term capital loss to the extent of any amounts treated as distributions of long-term capital gain during such six-month period. Furthermore, any loss from the sale or redemption of shares held six months or less generally will be disallowed to the extent that tax-exempt interest dividends were paid on such shares.
Under the backup withholding provisions of the Code, redemption proceeds as well as distributions may be subject to federal income tax withholding for certain shareholders, including those who fail to furnish a Fund with their taxpayer identification numbers and certifications as to their tax status.
Shareholders of a Fund may be subject to state and local taxes on distributions received from the Fund and on redemptions of a Fund’s shares. Any shareholder who is not a US Person (as such term is defined in the Code) should consider the US and foreign tax consequences of ownership of shares of a Fund, including the possibility that such a shareholder may be subject to the current US withholding tax rate on amounts constituting ordinary income received by him or her, where such amounts are treated as income from US sources under the Code.
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Interest on indebtedness incurred by shareholders to purchase or carry shares of a Fund will not be deductible for federal income tax purposes. Under rules used by the Internal Revenue Service (“IRS”) to determine when borrowed funds are used for the purpose of purchasing or carrying particular assets, the purchase of shares may be considered to have been made with borrowed funds even though the borrowed funds are not directly traceable to the purchase of shares.
Section 147(a) of the Code prohibits exemption from federal income taxation of interest on certain governmental obligations to persons who are “substantial users” (or persons related thereto) of facilities financed by such obligations. The Funds have not undertaken any investigation as to the users of the facilities financed by bonds in their portfolios.
Tax legislation in recent years has included several provisions that may affect the supply of, and the demand for, tax-exempt bonds, as well as the tax-exempt nature of interest paid thereon. It is not possible to predict with certainty the effect of these recent tax law changes upon the tax-exempt bond market, including the availability of obligations appropriate for investment, nor is it possible to predict any additional restrictions that may be enacted in the future.
Exempt-interest dividends are included as income for purposes of determining whether the amount of a shareholder’s total social security benefits and railroad retirement benefits are subject to tax.
Tax-Free versus Taxable Yield. With respect to Tax-Exempt Money Fund, you may want to determine which investment — tax-free or taxable — will provide you with a higher after-tax return. To determine the taxable equivalent yield, simply divide the yield from the tax-free investment by the sum of [1 minus your marginal tax rate]. The tables below are provided for your convenience in making this calculation for selected tax-free yields and taxable income levels. These yields are presented for purposes of illustration only and are not representative of any yield that Tax-Exempt Money Fund may generate. Both tables are based upon current law as to the 2005 federal tax rate schedules.
FEDERAL
Taxable Income Single | Effective State Rate | Effective Federal Rate | Federal Tax Bracket | Taxable Income Joint | Effective State Rate | Effective Federal Rate | Federal Tax Bracket | ||||||||||||||
$29,701 - $71,950 | 0.00 | % | 25.00 | % | 25.00 | % | $ | 59,401 - $119,950 | 0.00 | % | 25.00 | % | 25.00 | % | |||||||
$71,951 - $150,150 | 0.00 | % | 28.00 | % | 28.00 | % | $ | 119,951 - $182,800 | 0.00 | % | 28.00 | % | 28.00 | % | |||||||
$150,151 - $326,450 | 0.00 | % | 33.00 | % | 33.00 | % | $ | 182,801 - $326,450 | 0.00 | % | 33.00 | % | 33.00 | % | |||||||
over $326,450 | 0.00 | % | 35.00 | % | 35.00 | % | over $326,450 | 0.00 | % | 35.00 | % | 35.00 | % |
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If your combined federal and state effective tax rate in 2004 is:
10.00 | % | 15.00 | % | 25.00 | % | 28.00 | % | 33.00 | % | 35.00 | % |
To match these tax-free yields: | Your taxable investment would have to earn the following yield: | |||||||||||||||||
2.00% | 2.22 | % | 2.35 | % | 2.67 | % | 2.78 | % | 2.99 | % | 3.08 | % | ||||||
3.00% | 3.33 | % | 3.53 | % | 4.00 | % | 4.17 | % | 4.48 | % | 4.62 | % | ||||||
4.00% | 4.44 | % | 4.71 | % | 5.33 | % | 5.56 | % | 5.97 | % | 6.15 | % | ||||||
5.00% | 5.56 | % | 5.88 | % | 6.67 | % | 6.94 | % | 7.46 | % | 7.69 | % | ||||||
6.00% | 6.67 | % | 7.06 | % | 8.00 | % | 8.33 | % | 8.96 | % | 9.23 | % | ||||||
7.00% | 7.78 | % | 8.24 | % | 9.33 | % | 9.72 | % | 10.45 | % | 10.77 | % | ||||||
8.00% | 8.89 | % | 9.41 | % | 10.67 | % | 11.11 | % | 11.94 | % | 12.31 | % | ||||||
9.00% | 10.00 | % | 10.59 | % | 12.00 | % | 12.50 | % | 13.43 | % | 13.85 | % |
Please note:
1) | This chart does not take into consideration any local or city tax rates. |
2) | The effective state and federal tax rates are calculated using the highest marginal tax rate within the applicable tax bracket. |
3) | The combined effective tax rate reflects a deduction for state income taxes on the federal return. |
4) | Taxable income amounts represent taxable income as defined in the Internal Revenue Code |
The net asset value of shares of each Fund is calculated on each day the New York Stock Exchange (the “Exchange”) is open for trading. The Exchange is scheduled to be closed on the following holidays: New Year’s Day, Dr. Martin Luther King, Jr. Day, Presidents’ Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas, and on the preceding Friday or subsequent Monday when one of these holidays falls on a Saturday or Sunday, respectively.
Each Fund values its portfolio instruments at amortized cost, which does not take into account unrealized capital gains or losses. This involves initially valuing an instrument at its cost and thereafter assuming a constant amortization to maturity of any discount or premium, regardless of the impact of fluctuating interest rates on the market value of the instrument. While this method provides certainty in valuation, it may result in periods during which value, as determined by amortized cost, is higher or lower than the price a Fund would receive if it sold the instrument. Calculations are made to compare the value of a Fund’s investments valued at amortized cost with market values. Market valuations are obtained by using actual quotations provided by market makers, estimates of market value, or values obtained from yield data relating to classes of money market instruments published by reputable sources at the mean between the bid and asked prices for the instruments. If a deviation of 1/2 of 1% or more were to occur between the net asset value per share calculated by reference to market values and a Fund’s $1.00 per share net asset value, or if there were any other deviation that the Board of Trustees believed would result in a material dilution to shareholders or purchasers, the Board of Trustees would promptly consider what action, if any, should be initiated. If a Fund’s net asset value per share (computed using market values) declined, or were expected to decline, below $1.00 (computed using amortized cost), the Board of Trustees might temporarily reduce or suspend dividend payments in an effort to maintain the net asset value at $1.00 per share. As a result of such reduction or suspension of dividends or other action by the Board of Trustees, an investor would receive less income during a given period than if such a reduction or suspension had not taken place. Such action could result in investors receiving no dividend for the period during which they hold their shares and receiving, upon redemption, a price per share lower than that which they paid. On the other hand, if a Fund’s net asset value per share (computed using market values) were to increase, or were anticipated to increase above $1.00 (computed using amortized cost),
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the Board of Trustees might supplement dividends in an effort to maintain the net asset value at $1.00 per share. Redemption orders received in connection with the administration of checkwriting programs by certain dealers or other financial services firms prior to the determination of a Fund’s net asset value also may be processed on a confirmed basis in accordance with the procedures established by SDI.
The following table presents certain information regarding the Trustees and Officers of Scudder Money Funds as of December 1, 2005. Each individual’s year of birth is set forth in parentheses after his or her name. Unless otherwise noted, (i) each individual has engaged in the principal occupation(s) noted in the table for at least the most recent five years, although not necessarily in the same capacity, and (ii) unless otherwise noted, the address of each individual is c/o Deutsche Asset Management, 222 South Riverside Plaza, Chicago, Illinois 60606. Each Trustee’s term of office extends until the next shareholder’s meeting called for the purpose of electing such Trustee and until the election and qualification of a successor, or until such Trustee sooner dies, retires, resigns or is removed as provided in the governing documents of the Trust.
Independent Trustees
Name, Year of Birth , Position(s) Held with the Trust and Length of | Principal Occupation(s) During Past 5 Years and Other Directorships Held | Number of Funds in Fund Complex Overseen | ||
Shirley D. Petrson (1941) Chairperson since 2004, and Trustee, 1995-present | Retired; formerly, President, Hood College (1995-2000); prior thereto, Partner, Steptoe & Johnson (law firm); Commissioner, Internal Revenue Service; Assistant Attorney General (Tax), US Department of Justice. Directorships: Federal Mogul Corp. (supplier of automotive components and subsystems); AK Steel (steel production); Goodyear Tire & Rubber Co. (April 2004-present); Champion Enterprises, Inc. (manufactured home building); Wolverine World Wide, Inc. (designer, manufacturer and marketer of footwear) (April 2005-present); Trustee, Bryn Mawr College. Former Directorship: Bethlehem Steel Corp. | 71 | ||
John W. Ballantine (1946) Trustee, 1999-present | Retired; formerly, Executive Vice President and Chief Risk Management Officer, First Chicago NBD Corporation/The First National Bank of Chicago (1996-1998); Executive Vice President and Head of International Banking (1995-1996). Directorships: First Oak Brook Bancshares, Inc.; Oak Brook Bank; American Healthways, Inc. (provider of disease and care management services); Portland General Electric (utility company) | 71 | ||
Lewis A. Burnham (1933) Trustee, 1977-present | Retired; formerly, Director of Management Consulting, McNulty & Company; (1990-1998); prior thereto, Executive Vice President, Anchor Glass Container Corporation | 66 |
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Name, Year of Birth, Position(s) Held with the Trust and Length of Time | Principal Occupation(s) During Past 5 Years and Other Directorships Held | Number of Funds in Fund Complex Overseen | ||
Donald L. Dunaway (1937) Trustee, 1980-present | Retired; formerly, Executive Vice President, A. O. Smith Corporation (diversified manufacturer) (1963-1994) | 71 | ||
James R. Edgar (1946) Trustee, 1999-present | Distinguished Fellow, University of Illinois, Institute of Government and Public Affairs (1999-present); formerly, Governor, State of Illinois (1991-1999). Directorships: Kemper Insurance Companies; John B. Sanfilippo & Son, Inc. (processor/packager/marketer of nuts, snacks and candy products); Horizon Group Properties, Inc.; Youbet.com (online wagering platform); Alberto-Culver Company (manufactures, distributes and markets health and beauty care products) | 71 | ||
Paul K. Freeman (1950) Trustee, 2002-present | President, Cook Street Holdings (consulting); Senior Visiting Research Scholar, Graduate School of International Studies, University of Denver; Consultant, World Bank/Inter-American Development Bank; formerly, Project Leader, International Institute for Applied Systems Analysis (1998-2001); Chief Executive Officer, The Eric Group, Inc. (environmental insurance) (1986-1998) | 71 | ||
Robert B. Hoffman (1936) Trustee, 1981-present | Retired; formerly, Chairman, Harnischfeger Industries, Inc. (machinery for the mining and paper industries) (1999-2000); prior thereto, Vice Chairman and Chief Financial Officer, Monsanto Company (agricultural, pharmaceutical and nutritional/food products) (1994-1999). Directorship: RCP Advisors, LLC (a private equity investment advisory firm) | 71 | ||
William McClayton (1944) Trustee, 2004-present | Managing Director of Finance and Administration, DiamondCluster International, Inc. (global management consulting firm) (2001-present); formerly, Partner, Arthur Andersen LLP (1986-2001). Formerly: Trustee, Ravinia Festival; Board of Managers, YMCA of Metropolitan Chicago | 71 | ||
Robert H. Wadsworth (1940) Trustee, 2004-present | President, Robert H. Wadsworth Associates, Inc. (consulting firm) (1983 to present). Director, The European Equity Fund, Inc. (since 1986), The New Germany Fund, Inc. (since 1992), The Central Europe and Russia Fund, Inc. (since 1990). Formerly, Trustee of New York Board Scudder Funds; President and Trustee, Trust for Investment Managers (registered investment company) (1999-2002). President, Investment Company Administration, L.L.C. (1992*-2001); President, Treasurer and Director, First Fund Distributors, Inc. (June 1990-January 2002); Vice President, Professionally Managed Portfolios (May 1991-January 2002) and Advisors Series Trust (October 1996-January 2002) (registered investment companies) | 74 | ||
* Inception date of the corporation which was the predecessor to the L.L.C. | ||||
John G. Weithers (1933) Trustee, 1993-present | Retired; formerly, Chairman of the Board and Chief Executive Officer, Chicago Stock Exchange. Directorships: Federal Life Insurance Company; Chairman of the Members of the Corporation and Trustee, DePaul University; formerly, International Federation of Stock Exchanges; Records Management Systems | 66 |
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Interested Trustee and Officers(2)
Name, Year of Birth, Position(s) Held with the Trust and Length of Time | Principal Occupation(s) During Past 5 Years and Other Directorships Held | Number of Funds in Fund Complex Overseen | ||
William N. Shiebler(4) (1942) Trustee, 2004-present | Vice Chairman, Deutsche Asset Management (“DeAM”) and a member (1942) of the DeAM Global Executive Committee (since 2002); Vice Chairman of Putnam Investments, Inc. (1999); Director and Senior Managing Director of Putnam Investments, Inc. and President, Chief Executive Officer, and Director of Putnam Mutual Funds Inc. (1990-1999) | 120 | ||
Vincent J. Esposito(4) (1956) President, 2005-present | Managing Director(3), Deutsche Asset Management (since 2003); (1956) President and Chief Executive Officer of The Central Europe and Russia Fund, Inc., The European Equity Fund, Inc., The New Germany Fund, Inc. (since 2003) (registered investment companies); Vice Chairman and Director of The Brazil Fund, Inc. (2004-present); formerly, Managing Director, Putnam Investments (1991-2002) | n/a | ||
Philip J. Collora (1945) Vice President and Assistant Secretary, 1986-present | Director((3)), Deutsche Asset Management | n/a | ||
Paul H. Schubert(5) (1963) Chief Financial Officer, 2004-present Treasurer, 2005-present | Managing Director((3)), Deutsche Asset Management (since July 2004); formerly, Executive Director, Head of Mutual Fund Services and Treasurer for UBS Family of Funds (1998-2004); Vice President and Director of Mutual Fund Finance at UBS Global Asset Management (1994-1998) | n/a | ||
John Millette(5) (1962) Secretary, 2001-present | Director((3)), Deutsche Asset Management | n/a | ||
Patricia DeFilippis (4) (1963) Assistant Secretary, 2005-present | Vice President, Deutsche Asset Management (since June 2005); Counsel, New York Life Investment Management LLC (2003-2005); legal associate, Lord, Abbett & Co. LLC (1998-2003) | n/a | ||
Daniel O. Hirsch(6) (1954) Assistant Secretary, 2002-present | Consultant. Formerly, Managing Director, Deutsche Asset Management (2002-2005); formerly, Director, Deutsche Asset Management (1999-2002); Principal, BT Alex. Brown Incorporated (now Deutsche Bank Securities Inc.) (1998-1999); Assistant General Counsel, United States Securities and Exchange Commission (1993-1998); Director, Deutsche Global Funds Ltd. (2002-2004) | n/a | ||
Elisa D. Metzger(4) (1962) Assistant Secretary, 2005-present | Director(3), Deutsche Asset Management (since September 2005); Counsel, Morrison and Foerster LLP (1999-2005) | n/a | ||
Caroline Pearson(5) (1962) Assistant Secretary, 1998-present | Managing Director((3)), Deutsche Asset Management | n/a | ||
Scott M. McHugh(5) (1971) Assistant Treasurer, 2005-present | Director((3)), Deutsche Asset Management | n/a |
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Name, Year of Birth, Position(s) Held with the Trust and Length of Time Served(1) | Principal Occupation(s) During Past 5 Years and Other Directorships Held | Number of Funds in Fund Complex Overseen | ||
Kathleen Sullivan D’Eramo(5) (1957) Assistant Treasurer, 2003-present | Director((3)), Deutsche Asset Management | n/a | ||
John Robbins(4) (1966) Anti-Money Laundering Compliance Officer, 2005-present | Managing Director((3)), Deutsche Asset Management (since 2005); formerly, Chief Compliance Officer and Anti-Money Laundering Compliance Officer for GE Asset Management (1999-2005) | n/a | ||
Philip Gallo(4) (1962) Chief Compliance Officer, 2004-present | Managing Director((3)), Deutsche Asset Management (2003-present); formerly, Co-Head of Goldman Sachs Asset Management Legal (1994-2003) | n/a |
(1) | Length of time served represents the date that each Trustee was first elected to the common board of Trustees which oversees a number of investment companies, including the Funds, managed by the Advisor. For the officers of the Funds, length of time served represents the date that each officer was first elected to serve as an officer of any fund overseen by the aforementioned common board of Trustees. |
(2) | As a result of their respective positions held with the Advisor, these individuals are considered “interested persons” of the Advisor within the meaning of the 1940 Act. Interested persons receive no compensation from the Funds. |
(3) | Executive title, not a board directorship. |
(4) | Address: 345 Park Avenue, New York, New York 10154. |
(5) | Address: Two International Place, Boston, Massachusetts 02110. |
(6) | Address: One South Street, Baltimore, Maryland 21202. |
Officers’ Role with Principal Underwriter: Scudder Distributors, Inc.
Caroline Pearson: Secretary
Philip J. Collora: Assistant Secretary
Trustees’ Responsibilities. The officers of the Trust manage its day-to-day operations under the direction of the Trust’s Board of Trustees. The primary responsibility of the Board is to represent the interests of the shareholders of the Funds and to provide oversight of the management of the Funds. A majority of the Trust’s Board members are not “interested persons” of the Advisor.
The Board has adopted its own Governance Procedures and Guidelines and has established a number of committees, as described below. For each of the following Committees, the Board has adopted a written charter setting forth the Committees’ responsibilities.
Board Committees. The Board of Trustees oversees a number of investment companies managed by the Advisor. Information shown below represents meetings held on behalf of all such funds. The common Board has the following committees:
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Audit Committee: The Audit Committee, which consists entirely of Independent Trustees, makes recommendations regarding the selection of independent registered public accounting firms for the Fund, confers with the independent registered public accounting firm regarding the Fund’s financial statements, the results of audits and related matters, and performs such other tasks as the full Board deems necessary or appropriate. The Audit Committee receives annual representations from the independent registered public accounting firms as to their independence. The members of the Audit Committee are Donald L. Dunaway (Chair), Robert B. Hoffman, William McClayton and Lewis A. Burnham. The Audit Committee held eight meetings during calendar year 2004.
Nominating and Governance Committee: The Nominating and Governance Committee, which consists entirely of Independent Trustees, seeks and reviews candidates for consideration as nominees for membership on the Board and oversees the administration of the Fund’s Governance Procedures and Guidelines. The members of the Nominating and Governance Committee are Lewis A. Burnham, James R. Edgar, Shirley D. Peterson (Chair) and William McClayton. Shareholders wishing to submit the name of a candidate for consideration as a Board member by the Committee should submit their recommendation(s) and resume to the Secretary of the Trust. The Nominating and Governance Committee held six meetings during calendar year 2004.
Contract Review Committee: The Contract Review Committee, which consists entirely of Independent Trustees, oversees the annual contract review process. The members of the Contract Review Committee are Paul K. Freeman (Chair), John W. Ballantine, Donald L. Dunaway and Robert B. Hoffman. The Contract Review Committee was established in November, 2004 and therefore held no meetings during calendar year 2004.
Valuation Committee: The Valuation Committee reviews Valuation Procedures adopted by the Board, determines fair value of the Fund’s securities as needed in accordance with the Valuation Procedures and performs such other tasks as the full Board deems necessary. The members of the Valuation Committee are John W. Ballantine (Chair), William N. Shiebler, Donald L. Dunaway (alternate) and John G. Weithers (alternate). The Trust’s Valuation Committee held two meetings during calendar year 2004.
Equity Oversight Committee: The Equity Oversight Committee oversees investment activities of the Fund, such as investment performance and risk, expenses and services provided under the investment management agreement. The members of the Equity Oversight Committee are Robert B. Hoffman (Chair), John W. Ballantine, Robert H. Wadsworth and John G. Weithers. The Equity Oversight Committee held four meetings during calendar year 2004.
Operations Committee: The Operations Committee oversees the operations of the Fund, such as reviewing each Fund’s administrative fees and expenses, distribution arrangements, portfolio transaction policies, custody and transfer agency arrangements and shareholder services. Currently, the members of the Operations Committee are John W. Ballantine (Chair), Paul K. Freeman, Robert H. Wadsworth and John G. Weithers. The Operations Committee held six meetings during calendar year 2004.
Fixed-Income Oversight Committee: The Fixed-Income Oversight Committee oversees investment activities of the Funds, such as investment performance and risk, expenses and services provided under the investment management agreement. The members of the Fixed-Income Oversight Committee are Paul K. Freeman (Chair), Donald L. Dunaway and James R. Edgar. The Fixed-Income Oversight Committee held five meetings during calendar year 2004.
Remuneration. Each Independent Trustee receives a monthly retainer, paid on a quarterly basis, and an attendance fee, plus expenses, for each Board meeting and Committee meeting attended. The Trustees serve as board members of various other funds advised by the Advisor. The Advisor supervises the Fund’s investments, pays the compensation and expenses of its personnel who serve as Trustees and officers on behalf of the Fund and receives a management fee for its services.
The Board of Trustees of the Trust established a deferred compensation plan for the Independent Trustees (“Deferred Compensation Plan”). Under the Deferred Compensation Plan, the Independent Trustees may defer receipt of all, or a portion, of the
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compensation they earn for their services to the Fund, in lieu of receiving current payments of such compensation. Any deferred amount is treated as though an equivalent dollar amount has been invested in shares of one or more funds advised by the Advisor (“Shadow Shares”). Governor Edgar currently has elected to defer at least a portion of his fees. In addition, previously, Mr. Dunaway elected to defer fees that were payable, which are now included under the Deferred Compensation Plan. The equivalent Shadow Shares are reflected below in the table describing the Trustee’s share ownership.
Members of the Board of Trustees who are officers, directors, employees or stockholders of the Advisor or its affiliates receive no direct compensation from the Fund, although they are compensated as employees of the Advisor, or its affiliates, and as a result may be deemed to participate in fees paid by the Fund. The Independent Trustees are not entitled to benefits under any fund pension or retirement plan. The following table shows compensation received by each Trustee from the Fund and aggregate compensation from the fund complex during the calendar year 2004.
Name of Trustee | Compensation From Scudder Money Market Fund | Compensation From Scudder Government & Agency Money Fund | Compensation From Scudder Tax-Exempt Money Fund | Pension or Retirement Benefits Accrued as Part of Fund Expenses | Total Compensation Paid to Trustee from Fund Complex(4)(5) | ||||||||||
John W. Ballantine | $ | 8,146 | $ | 3,529 | $ | 3,834 | $ | 0 | $ | 194,195 | |||||
Lewis A. Burnham | $ | 9,504 | $ | 4,117 | $ | 4,549 | $ | 0 | $ | 217,840 | |||||
Donald L. Dunaway(1) | $ | 8,490 | $ | 4,039 | $ | 4,430 | $ | 0 | $ | 212,925 | |||||
James R. Edgar(2) | $ | 7,060 | $ | 3,360 | $ | 3,700 | $ | 0 | $ | 171,820 | |||||
Paul K. Freeman | $ | 7,830 | $ | 3,735 | $ | 4,095 | $ | 0 | $ | 190,635 | |||||
Robert B. Hoffman | $ | 8,206 | $ | 3,504 | $ | 3,909 | $ | 0 | $ | 185,550 | |||||
William McClayton((3)) | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||
Shirley D. Peterson((6)) | $ | 9,061 | $ | 4,315 | $ | 4,679 | $ | 0 | $ | 219,375 | |||||
Robert H. Wadsworth((7)) | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 171,000 | |||||
John G. Weithers | $ | 6,990 | $ | 3,340 | $ | 3,650 | $ | 0 | $ | 173,260 |
(1) | Does not include deferred fees. Pursuant to a Deferred Compensation Plan, as discussed above, Mr. Dunaway previously elected, in prior years, to defer fees. Deferred amounts are treated as though an equivalent dollar amount has been invested in Shadow Shares (as defined above) of funds managed by the |
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Advisor. Total deferred fees (including interest thereon and the return from the assumed investment in the funds managed by the Advisor) payable from the Trust to Mr. Dunaway are $18,760. |
(2) | Includes deferred fees. Pursuant to a Deferred Compensation Plan, as discussed above, deferred amounts are treated as though an equivalent dollar amount has been invested in Shadow Shares (as defined above) of funds managed by the Advisor in which compensation may be deferred by Governor Edgar. Total deferred fees (including interest thereon and the return from the assumed investment in the funds managed by the Advisor) payable from the Trust to Governor Edgar are $102,324. |
(3) | Mr. McClayton was appointed to the Chicago Board on December 30, 2004. |
(4) | For each Trustee, except Mr. Wadsworth, total compensation includes compensation for service on the boards of 31 trusts/corporations comprised of 85 funds/portfolios. Each Trustee, except Messrs. Wadsworth, Burnham and Weithers, currently serves on the boards of 22 trusts/corporations comprised of 71 funds/portfolios. Mr. Wadsworth currently serves on the boards of 24 DeAM trust/corporations comprised of 74 funds/portfolios. Messrs. Burnham and Weithers currently serve on the boards of 17 DeAM trust/corporations comprised of 66 funds/portfolios. |
(5) | Aggregate compensation reflects amounts paid to the Trustees for numerous special meetings of ad hoc committees of the Chicago Board in connection with the possible consolidation of the various Scudder Fund Boards. Such amounts totaled $10,170 for Mr. Burnham and Ms. Peterson. These meeting fees were borne by the Funds. In addition, the aggregate compensation reflects amounts paid to the Trustees for ad hoc committee meetings held with respect to legal and regulatory matters. These amounts totaled $11,865 for Messrs. Ballantine and Dunaway and $8,475 for Mr. Freeman and Ms. Peterson. These meeting fees were borne by the Advisor. |
(6) | Includes $27,470 in annual retainer fees received by Ms. Peterson as Chairperson of the Board. |
(7) | Mr. Wadsworth was appointed to the Chicago Board on December 30, 2004. He served as a member of the New York Board and the Germany Funds Board in 2004, for which he received the compensation indicated. |
Mr. Freeman, prior to his service as Independent Trustee of the Trust, served as a board member of certain funds in the Deutsche Bank complex (“DB Funds”). In connection with his resignation and the resignation of certain other board members as Trustees of the DB Funds on July 30, 2002 (the “Effective Date”), which was part of a restructuring of the boards overseeing the DB Funds, Deutsche Asset Management, Inc. (“DeAM”) agreed to recommend, and, if necessary obtain, directors and officers (“D&O”) liability insurance coverage for the prior board members, including Mr. Freeman, that is at least as equivalent in scope and amount to the D&O coverage provided to the prior board members for the six-year period following the Effective Date. In the event that D&O insurance coverage is not available in the commercial marketplace on commercially reasonable terms from a conventional third party insurer, DeAM reserved the right to provide substantially equivalent protection in the form of an indemnity or financial guarantee from an affiliate of DeAM. The D&O policy in effect prior to the Effective Date provided aggregate coverage of $25,000,000, subject to a $250,000 per claim deductible.
Trustee Fund Ownership. Under the Trust’s Governance Procedures and Guidelines, the Independent Trustees have established the expectation that within three years, an Independent Trustee will have invested an amount in those funds he or she oversees (which shall include amounts held under a deferred fee agreement that are valued based on “shadow shares” in such funds) in the aggregate equal to at least one times the amount of the annual retainer received from such funds, with investments allocated to at least one money market, fixed-income and equity fund portfolio, where such an investment is suitable for the particular Independent Trustee’s personal investment needs. Each interested Trustee is also encouraged to own an amount of shares (based upon their own individual judgment) of those funds that he or she oversees that is suitable for his or her own appropriate investment needs. The
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following tables set forth each Trustee’s share ownership of the Fund and all funds in the fund complex overseen by each Trustee as of December 31, 2004.
Name of Trustee | Dollar Range of Securities Owned in Money Market Fund | Dollar Range of Securities Owned in Government & Agency Money Fund | Dollar Range of | Aggregate Dollar Range | ||||
John W. Ballantine | None | None | None | Over $100,000 | ||||
Lewis A. Burnham | Over $100,000 | None | None | Over $100,000 | ||||
Donald L. Dunaway* | $1-$10,000 | None | $50,001-$100,000 | Over $100,000 | ||||
James R. Edgar* | None | None | None | Over $100,000 | ||||
Paul K. Freeman | None | None | None | $1 - $10,000** | ||||
Robert B. Hoffman | Over $100,000 | None | $1-$10,000 | Over $100,000 | ||||
William McClayton*** | $10,001-$50,000 | None | None | $10,001 - $50,000 | ||||
Shirley D. Peterson | Over $100,000 | None | None | Over $100,000 | ||||
William N. Shiebler | None | None | None | Over $100,000 | ||||
Robert H. Wadsworth*** | None | None | None | Over $100,000 | ||||
John G. Weithers | $1-$10,000 | None | None | Over $100,000 |
* | The dollar range of shares shown includes shadow shares of certain Scudder funds in which Mr. Dunaway and Governor Edgar are deemed to be invested pursuant to the Trust’s Deferred Compensation Plan as more fully described above under “Remuneration.” |
** | Mr. Freeman owned over $100,000 in other funds within the Scudder Fund Complex. |
*** | Newly appointed Trustees, as of December 30, 2004. |
As of November 11, 2005, all Trustees and Officers of the Fund as a group owned beneficially (as that term is defined is section 13(d) of the Securities Exchange Act of 1934) less than 1% of the outstanding securities of the Fund.
To the best of the Fund’s knowledge, as of November 11, 2005, no person owned of record or beneficially 5% or more of any class of the Fund’s outstanding shares.
Ownership in Securities of the Advisor and Related Companies
As reported to the Fund, the information in the following table reflects ownership by the Independent Trustees and their immediate family members of certain securities as of December 31, 2004. An immediate family member can be a spouse, children residing in the same household including step and adoptive children and any dependents. The securities represent ownership in an investment advisor or principal underwriter of the Fund and any persons (other than a registered investment company) directly or indirectly controlling, controlled by, or under common control with an investment advisor or principal underwriter of the Fund (including Deutsche Bank AG).
Independent Trustee | Owner and Relationship to Trustee | Company | Title of Class | Value of Securities on an Aggregate Basis | Percent of Class on an Aggregate Basis | |||||
John W. Ballantine | None | |||||||||
Lewis A. Burnham | None | |||||||||
Donald L. Dunaway | None | |||||||||
James R. Edgar | None | |||||||||
Paul K. Freeman | None | |||||||||
Robert B. Hoffman | None | |||||||||
William McClayton | None | |||||||||
Shirley D. Peterson | None | |||||||||
Robert H. Wadsworth | None | |||||||||
John G. Weithers | None |
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Agreement to Indemnify Independent Directors/Trustees for Certain Expenses. In connection with litigation or regulatory action related to possible improper market timing or other improper trading activity or possible improper marketing and sales activity in the Funds, each Fund’s investment advisor has agreed, subject to applicable law and regulation, to indemnify and hold harmless the applicable Funds against any and all loss, damage, liability and expense, arising from market timing or marketing and sales matters alleged in any enforcement actions brought by governmental authorities involving or potentially affecting the Funds or the investment advisor (“Enforcement Actions”) or that are the basis for private actions brought by shareholders of the Funds against the Funds, their directors and officers, the Funds’ investment advisor and/or certain other parties (“Private Litigation”), or any proceedings or actions that may be threatened or commenced in the future by any person (including governmental authorities), arising from or similar to the matters alleged in the Enforcement Actions or Private Litigation. In recognition of its undertaking to indemnify the applicable Funds and in light of the rebuttable presumption generally afforded to independent directors/trustees of investment companies that they have not engaged in disabling conduct, each Fund’s investment advisor has also agreed, subject to applicable law and regulation, to indemnify the applicable Funds’ Independent Trustees against certain liabilities the Independent Trustees may incur from the matters alleged in any Enforcement Actions or Private Litigation or arising from or similar to the matters alleged in the Enforcement Actions or Private Litigation, and advance expenses that may be incurred by the Independent Trustees in connection with any Enforcement Actions or Private Litigation. The applicable investment advisor is not, however, required to provide indemnification and advancement of expenses: (1) with respect to any proceeding or action with respect to which the applicable Fund’s Board determines that the Independent Trustee ultimately would not be entitled to indemnification or (2) for any liability of the Independent Trustee to the Funds or their shareholders to which the Independent Trustee would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the Independent Trustee’s duties as a director or trustee of the Funds as determined in a final adjudication in such action or proceeding. The estimated amount of any expenses that may be advanced to the Independent Trustees or indemnity that may be payable under the indemnity agreements is currently unknown. These agreements by each Fund’s investment advisor will survive the termination of the investment management agreements between the applicable investment advisor and the Funds.
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Organizational Description
Scudder Money Funds is an open-end, diversified, management investment company, organized as a business trust under the laws of Massachusetts on August 9, 1985. Effective April 14, 1997, the name of the Trust was changed from Kemper Money Funds to Zurich Money Funds. Effective April 8, 2002, the name of the Trust was changed from Zurich Money Funds to Scudder Money Funds. Also effective April 8, 2002, Zurich Money Market Fund was redesignated Scudder Money Market Fund, Zurich Government Money Fund was redesignated Scudder Government Money Fund and Zurich Tax-Free Money Fund was redesignated Scudder Tax-Exempt Money Fund. On May 1, 2004, Scudder Government Money Fund was redesignated Scudder Government & Agency Money Fund.
The Trust may issue an unlimited number of shares of beneficial interest, all having no par value, which may be divided by the Board of Trustees into classes of shares, subject to compliance with the Securities and Exchange Commission regulations permitting the creation of separate classes of shares. Currently, the Trust’s shares are not divided into classes.
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The Trustees have the authority to create additional Funds and to designate the relative rights and preferences as between the different Funds. The Trustees also may authorize the division of shares of a Fund into different classes, which may bear different expenses. All shares issued and outstanding are fully paid and non-assessable, transferable, have no pre-emptive or conversion rights and are redeemable as described in the SAI and in the Funds’ prospectus. Each share has equal rights with each other share of the same class of a Fund as to voting, dividends, exchanges, conversion features and liquidation. Shareholders are entitled to one vote for each full share held and fractional votes for fractional shares held. The Trustees may also terminate any Fund or class by notice to the shareholders without shareholder approval.
The Funds generally are not required to hold meetings of its shareholders. Under the Agreement and Declaration of Trust of the Trust (“Declaration of Trust”), however, shareholder meetings will be held in connection with the following matters: (a) the election or removal of trustees if a meeting is called for such purpose; (b) the adoption of any contract for which approval by shareholders is required by the 1940 Act; (c) any termination or reorganization of a Fund or a class to the extent and as provided in the Declaration of Trust; (d) certain material amendments of the Declaration of Trust (such as other than amendments changing the name of a Fund, supplying any omission, curing any ambiguity or curing, correcting or supplementing any defective or inconsistent provision thereof); and (e) such additional matters as may be required by law, the Declaration of Trust, the By-laws of a Fund, or any registration of a Fund with the SEC or as the trustees may consider necessary or desirable. Shareholders also vote upon changes in fundamental investment policies or restrictions.
The Declaration of Trust provides that obligations of the Trust are not binding upon the Trustees individually but only upon the property of the Trust, that the Trustees and officers will not be liable for errors of judgment or mistakes of fact or law, and that a Trust will indemnify its Trustees and officers against liabilities and expenses incurred in connection with litigation in which they may be involved because of their offices with a Trust except if it is determined in the manner provided in the Declaration of Trust that they have not acted in good faith in the reasonable belief that their actions were in the best interests of the Trust. However, nothing in the Declaration of Trust protects or indemnifies a Trustee or officer against any liability to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of their office.
Under Massachusetts law, shareholders of a Massachusetts business trust could, under certain circumstances, be held personally liable for obligations of a Fund. The Declaration of Trust, however, disclaims shareholder liability for acts or obligations of each Fund and requires that notice of such disclaimer be given in each agreement, obligation, or instrument entered into or executed by a
Fund or the Trust’s Trustees. Moreover, the Declaration of Trust provides for indemnification out of Fund property for all losses and expenses of any shareholder held personally liable for the obligations of a Fund and each Fund may be covered by insurance. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is considered by the Advisor remote and not material, since it is limited to circumstances in which a disclaimer is inoperative and such Fund itself is unable to meet its obligations.
If a series were unable to meet its obligations, the assets of all other series may in some circumstances be available to creditors for that purpose, in which case the assets of such other series could be used to meet liabilities which are not otherwise properly chargeable to them.
Each Trustee serves until the next meeting of shareholders, if any, called for the purpose of electing trustees and until the election and qualification of a successor or until such trustee sooner dies, resigns, retires or is removed.
Any Trustee may be removed for cause at any time by written instrument, signed by at least a majority of the number of Trustees prior to such removal, specifying the date upon which such removal shall become effective. Any Trustee may be removed with or without cause (i) by the vote of the shareholders entitled to vote more than fifty percent (50%) of the votes entitled to be cast on the matter voting together without regard to series or class at any meeting called for such purpose, or (ii) by a written consent filed with the custodian of the Trust’s portfolio securities and executed by the shareholder entitled to vote more than fifty percent (50%) of the votes entitled to be cast on the matter voting together without regard to series or class. Whenever ten or more shareholders of record who have been such for at least six months preceding the date of application, and who hold in the aggregate shares
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constituting at least one percent of the outstanding shares of the Trust, shall apply to the Trustees in writing, stating that they wish to communicate with other shareholders with a view to obtaining signatures to a request for a meeting to consider removal of a Trustee and accompanied by a form of communication and request that they wish to transmit, the Trustees will assist shareholder communications to the extent provided for in Section 16(c) under the 1940 Act.
The Fund has delegated proxy voting responsibilities to its investment advisor, subject to the Board’s general oversight. The Fund has delegated proxy voting to the Advisor with the direction that proxies should be voted consistent with the Fund’s best economic interests. The Advisor has adopted its own Proxy Voting Policies and Procedures (“Policies”), and Proxy Voting Guidelines (“Guidelines”) for this purpose. The Policies address, among other things, conflicts of interest that may arise between the interests of the Fund, and the interests of the Advisor and its affiliates, including the Fund’s principal underwriter. The Guidelines set forth the Advisor’s general position on various proposals, such as:
• | Shareholder Rights — The Advisor generally votes against proposals that restrict shareholder rights. |
• | Corporate Governance — The Advisor generally votes for confidential and cumulative voting and against supermajority voting requirements for charter and bylaw amendments. The Advisor generally votes for proposals to restrict a chief executive officer from serving on more than three outside boards of directors. The Advisor generally votes against proposals that require a company to appoint a Chairman who is an independent director. |
• | Anti-Takeover Matters — The Advisor generally votes for proposals that require shareholder ratification of poison pills or that request boards to redeem poison pills, and votes against the adoption of poison pills if they are submitted for shareholder ratification. The Advisor generally votes for fair price proposals. |
• | Compensation Matters — The Advisor generally votes for executive cash compensation proposals, unless they are unreasonably excessive. The Advisor generally votes against stock option plans that do not meet the Advisor’s criteria. |
• | Routine Matters — The Advisor generally votes for the ratification of auditors, procedural matters related to the annual meeting and changes in company name, and against bundled proposals and adjournment. |
The general provisions described above do not apply to investment companies. The Advisor generally votes proxies solicited by investment companies in accordance with the recommendations of an independent third party, except for proxies solicited by or with respect to investment companies for which the Advisor or an affiliate serves as investment advisor or principal underwriter (“affiliated investment companies”). The Advisor votes affiliated investment company proxies in the same proportion as the vote of the investment company’s other shareholders (sometimes called “mirror” or “echo” voting). Master fund proxies solicited from feeder funds are voted in accordance with applicable requirements of the Investment Company Act of 1940.
Although the Guidelines set forth the Advisor’s general voting positions on various proposals, the Advisor may, consistent with the Fund’s best interests, determine under some circumstances to vote contrary to those positions.
The Guidelines on a particular issue may or may not reflect the view of individual members of the Board or of a majority of the Board. In addition, the Guidelines may reflect a voting position that differs from the actual practices of the public companies within the Deutsche Bank organization or of the investment companies for which the Advisor or an affiliate serves as investment advisor or sponsor.
The Advisor may consider the views of a portfolio company’s management in deciding how to vote a proxy or in establishing general voting positions for the Guidelines, but management’s views are not determinative.
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As mentioned above, the Policies describe the way in which the Advisor resolves conflicts of interest. To resolve conflicts, the advisor, under normal circumstances, votes proxies in accordance with its Guidelines. If the Advisor departs from the Guidelines with respect to a particular proxy or if the Guidelines do not specifically address a certain proxy proposal, a proxy voting committee established by the advisor will vote the proxy. Before voting any such proxy, however, the Advisor’s conflicts review committee will conduct an investigation to determine whether any potential conflicts of interest exist in connection with the particular proxy proposal. If the conflicts review committee determines that the Advisor has a material conflict of interest, or certain individuals on the proxy voting committee should be recused from participating in a particular proxy vote, it will inform the proxy voting committee. If notified that the Advisor has a material conflict, or fewer than three voting members are eligible to participate in the proxy vote, typically the Advisor will engage an independent third party to vote the proxy or follow the proxy voting recommendations of an independent third party.
Under certain circumstances, the Advisor may not be able to vote proxies or the Advisor may find that the expected economic costs from voting outweigh the benefits associated with voting. For example, the Advisor may not vote proxies on certain foreign securities due to local restrictions or customs. The Advisor generally does not vote proxies on securities subject to share blocking restrictions.
A description of each Fund’s policies and procedures for voting proxies for portfolio securities and information about how each Fund voted proxies related to its portfolio securities during the 12-month period ended June 30 is available on our Web site — scudder.com (type “proxy voting” in the search field) — or on the SEC’s Web site — www.sec.gov. To obtain a written copy of a Fund’s policies and procedures without charge, upon request, call us toll free at (800) 621-1048.
The financial statements, including the investment portfolio, of each Fund, together with the Report of Independent Registered Public Accounting Firm, Financial Highlights and notes to financial statements in the Annual Report to the Shareholders of the Funds dated July 31, 2005, are incorporated herein by reference and are hereby deemed to be a part of this Statement of Additional Information.
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APPENDIX — RATINGS OF INVESTMENTS
COMMERCIAL PAPER RATINGS
A-1, A-2, Prime-1, Prime-2, Duff-1, Duff-2 and F-1, F-2 Commercial Paper Ratings Commercial paper rated by Standard & Poor’s Corporation has the following characteristics: Liquidity ratios are adequate to meet cash requirements. Long-term senior debt is rated “A” or better. The issuer has access to at least two additional channels of borrowing. Basic earnings and cash flow have an upward trend with allowance made for unusual circumstances. Typically, the issuer’s industry is well established and the issuer has a strong position within the industry. The reliability and quality of management are unquestioned. Relative strength or weakness of the above factors determine whether the issuer’s commercial paper is rated A-1, A-2 or A-3.
The ratings Prime-1 and Prime-2 are the two highest commercial paper ratings assigned by Moody’s Investors Service, Inc. Among the factors considered by it in assigning ratings are the following: (1) evaluation of the management of the issuer; (2) economic evaluation of the issuer’s industry or industries and an appraisal of speculative-type risks which may be inherent in certain areas; (3) evaluation of the issuer’s products in relation to competition and customer acceptance; (4) liquidity; (5) amount and quality of long-term debt; (6) trend of earnings over a period of ten years; (7) financial strength of a parent company and the relationships which exist with the issuer; and (8) recognition by the management of obligations which may be present or may arise as a result of public interest questions and preparations to meet such obligations. Relative strength or weakness of the above factors determines whether the issuer’s commercial paper is rated Prime-1, 2 or 3.
The rating Duff-1 is the highest commercial paper rating assigned by Duff & Phelps Inc. Paper rated Duff-1 is regarded as having very high certainty of timely payment with excellent liquidity factors that are supported by ample asset protection. Risk factors are minor. Paper rated Duff-2 is regarded as having good certainty of timely payment, good access to capital markets and sound liquidity factors and company fundamentals. Risk factors are small.
The ratings F-1 and F-2 are the highest commercial paper ratings assigned by Fitch Investors Services, Inc. Issues assigned a rating of F-1 are regarded as having the strongest degree of assurance for timely payment. Issues assigned a rating of F-2 have a satisfactory degree of assurance for timely payment, but the margin of safety is not as great as for issues assigned an F-1 rating.
MIG-1 and MIG-2 Municipal Notes
Moody’s ratings for state and municipal notes and other short-term loans will be designated Moody’s Investment Grade (MIG). This distinction is in recognition of the differences between short-term credit risk and long-term risk. Factors affecting the liquidity of the borrower are uppermost in importance in short-term borrowing, while various factors of the first importance in bond risk are of lesser importance in the short run. Loans designated MIG-1 are of the best quality, enjoying strong protection from established cash flows of funds for their servicing or from established and broad-based access to the market for refinancing, or both. Loans designated MIG-2 are of high quality, with margins of protection ample although not so large as in the preceding group.
STANDARD & POOR’S CORPORATION BOND RATINGS
AAA. This is the highest rating assigned by Standard & Poor’s Corporation to a debt obligation and indicates an extremely strong capacity to pay principal and interest.
AA. Bonds rated AA also qualify as high-quality debt obligations. Capacity to pay principal and interest is very strong, and in the majority of instances they differ from AAA issues only in small degree.
A. Bonds rated A have a strong capacity to pay principal and interest, although they are somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions.
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MOODY’S INVESTORS SERVICE, INC. BOND RATINGS
Aaa. Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as “gilt-edge.” Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.
Aa. Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high-grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities.
A. Bonds which are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future.
FITCH INVESTORS SERVICE, INC. BOND RATINGS
AAA. Highest credit quality. This rating denotes the lowest degree of credit risk.
AA. Very high credit quality. This rating denotes a very low expectation of credit risk.
DUFF & PHELP’S INC. BOND RATINGS
AAA. Highest credit quality. The risk factors are negligible, being only slightly more than for risk-free US Treasury debt.
AA. High credit quality. Protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions.
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INVESTORS CASH TRUST – GOVERNMENT & AGENCY SECURITIES PORTFOLIO
SAI FOR DWS GOVERNMENT CASH INSTITUTIONAL SHARES AND GOVERNMENT CASH
MANAGED SHARES
DATED AUGUST 1, 2006
TO COME
Table of Contents
INVESTORS CASH TRUST – GOVERNMENT & AGENCY SECURITIES PORTFOLIO
PROSPECTUS FOR SERVICE SHARES
DATED AUGUST 1, 2006
TO COME
Table of Contents
MARCH 31, 2006
Annual Report to Shareholders
Government & Agency Securities Portfolio
DWS Government Cash Institutional Shares Fund #144
(formerly Scudder Government Cash Institutional Shares)
Government Cash Managed Shares Fund #244
This report must be preceded or accompanied by a prospectus. To obtain a prospectus for any of our funds, visit dws-scudder.com. 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.
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Portfolio Management Review
In the following interview, Portfolio Manager Darlene Rasel discusses the market environment and the portfolio team’s approach to managing the Government & Agency Securities Portfolio during the portfolio’s most recent fiscal year ended March 31, 2006.
Q: Will you discuss the market environment for the portfolio during its most recent fiscal year?
A: Over the 12 months ended March 31, 2006, the US economy showed its resiliency, despite devastating hurricanes in the southern United States and continual increases in energy prices. Monthly job growth was the most important economic indicator for the money markets as the year began, but the market’s focus gradually shifted to a careful watch for signs of increasing inflation. Going forward, the markets will be watching closely for any changes in monetary policy from the new US Federal Reserve Board (the Fed) chairman Ben Bernanke.
During the period, the Fed continued its policy of increasing short-term interest rates in an attempt to undo the easing of monetary policy that occurred up until June 2004. The Fed raised the federal funds rate — the overnight rate charged by banks when they borrow money from each other, which guides other interest rates — to 4.75% in eight quarter- percentage-point increments over the 12-month period. Despite the increases in the federal funds rate, longer-term yields remained low for most of the period, creating a relatively flat yield curve.1 Throughout 2005 and early 2006, the Fed repeated its statements that additional rate increases might
Portfolio Performance
As of March 31, 2006
Performance is historical and does not guarantee future results. Current performance may be lower or higher than the performance data quoted. An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Although money market funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in them.
7-Day Current Yield | |||
DWS Government Cash Institutional Shares | 4.41 | % | |
Government Cash Managed Shares | 4.17 | % |
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.
Please call for the most current yield information.
be needed going forward to keep the risks to economic growth and price stability in balance.
1 | The yield curve is a graph with a left to right line that shows how high or low yields are, from the shortest to the longest maturities. Typically the line rises from left to right as investors who are willing to tie up their money for a longer period of time are rewarded with higher yields. |
At the end of March 2006, the one-year London Interbank Offered Rate (LIBOR), an industry standard for measuring one-year money market rates, stood at 5.25%, compared to 3.84% 12 months earlier. The premium level of LIBOR (which is set by the market) over the federal funds rate (which is fixed by the Fed) of 4.75% demonstrated the market’s concern that the Fed may raise short-term interest rates at least
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one to two more times in order to stave off any resurgence of inflation. At the same time, there is a sense within the market that 2006 will be a year of transition, that the Fed will probably discontinue its rate increases this year, and that investors will be looking to see how well Bernanke can fine-tune the economy by utilizing the Fed’s control over short-term rates.
Q: How did the portfolio perform over its most recent fiscal year?
A: We were able to produce a competitive yield in the Government & Agency Securities Portfolio by employing our conservative investment strategies and standards. (All performance is historical and does not guarantee future results. Yields fluctuate and are not guaranteed.) We continue our insistence on the highest credit quality within the portfolio. We also plan to maintain our conservative investment strategies and standards. We continue to apply a careful approach to investing on behalf of the portfolio and to seek competitive yield for our shareholders.
Q: In light of market conditions during the period, what has been your strategy for the portfolio?
A: During the portfolio’s most recent fiscal year, except for the period immediately following the past hurricane season when yields declined briefly, the Treasury yield curve was relatively flat, due in part to large-volume purchases of short-term Treasury instruments by foreign central banks. These purchases kept even the yields of six-month issues at relatively depressed levels. Because we would not be rewarded with higher yields by extending maturity, our goal for the Government & Agency Securities Portfolio was to keep weighted average maturity short, and then step up the yield of the portfolio at each Fed tightening. Going forward, we will continue to monitor economic and inflation indicators to determine when the Fed will end its credit tightening program.
Q: What detracted from performance during the period?
A: Following Hurricanes Katrina and Wilma there was concern that the US economy would falter and that the Fed might halt its series of federal funds rate increases — at least temporarily — so as not to further restrain growth. For this reason, we extended maturity slightly in early fall 2005. Instead of faltering, the economy continued to perform well, however, and the Fed kept raising rates. For this reason, our decision to briefly extend maturity detracted somewhat from the portfolio’s yield and total return during the period.
Darlene M. Rasel
Managing Director, Deutsche Asset Management
and Lead Portfolio Manager
A group of investment professionals is responsible for the day-to-day management of the portfolio. These professionals have a broad range of experience managing money market funds.
The views expressed in this report reflect those of the portfolio managers only through the end of the period stated above. The managers’ views are subject to change at any time based on market and other conditions and should not be construed as a recommendation.
DWS Scudder is part of Deutsche Asset Management, which is the marketing name in the US for the asset management activities of Deutsche Bank AG, Deutsche Bank Trust Company Americas, Deutsche Asset Management, Inc., Deutsche Investment Management Americas Inc. and DWS Trust Company.
NOT FDIC/NCUA INSURED NO BANK GUARANTEE MAY LOSE VALUE NOT A DEPOSIT NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
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Information About Your Portfolio’s Expenses
As an investor of the Portfolio, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees, distribution and service (12b-1) fees and other Portfolio 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 Portfolio and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. The tables are based on an investment of $1,000 made at the beginning of the six-month period ended March 31, 2006.
The tables illustrate your Portfolio’s expenses in two ways:
Actual Portfolio Return. This helps you estimate the actual dollar amount of ongoing expenses (but not transaction costs) paid on a $1,000 investment in the Portfolio using the Portfolio’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% Portfolio Return. This helps you to compare your Portfolio’s ongoing expenses (but not transaction costs) with those of other mutual funds using the Portfolio’s actual expense ratio and a hypothetical rate of return of 5% per year before expenses. Examples using a 5% hypothetical portfolio 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 March 31, 2006
Actual Portfolio Return | DWS Government Cash Institutional Shares | Government Cash Managed Shares | ||||
Beginning Account Value 10/1/05 | $ | 1,000.00 | $ | 1,000.00 | ||
Ending Account Value 3/31/06 | $ | 1,020.20 | $ | 1,019.10 | ||
Expenses Paid per $1,000* | $ | 1.21 | $ | 2.32 | ||
Hypothetical 5% Portfolio Return | DWS Government Cash Institutional Shares | Government Cash Managed Shares | ||||
Beginning Account Value 10/1/05 | $ | 1,000.00 | $ | 1,000.00 | ||
Ending Account Value 3/31/06 | $ | 1,023.73 | $ | 1,022.64 | ||
Expenses Paid per $1,000* | $ | 1.21 | $ | 2.32 |
* | Expenses are equal to the Portfolio’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 | |||
DWS Government Cash Institutional Shares | .24 | % | |
Government Cash Managed Shares | .46 | % |
For more information, please refer to the Portfolio’s prospectus.
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Portfolio Summary
Investors Cash Trust — Government & Agency Securities Portfolio
Asset Allocation | 3/31/06 | 3/31/05 | ||||
Agencies Not Backed by the Full Faith and Credit of the US Government | 12 | % | 45 | % | ||
Repurchase Agreements | 88 | % | 55 | % | ||
100 | % | 100 | % |
Weighted Average Maturity | 3/31/06 | 3/31/05 | ||
Investors Cash Trust — Government & Agency Securities Portfolio | 13 days | 28 days | ||
Government & Agencies Retail Money Fund Average* | 30 days | 29 days |
* | The Portfolio is compared to its respective iMoneyNet category: Government & Agencies Retail Money Fund Average consists of all non-institutional government money market funds. Category includes the most broadly based government retail funds. These funds can invest in US Treasuries, US Other, Repos, whether or not they are backed by US Treasuries and government-backed Floating Rate Notes. |
Asset allocation is subject to change. For more complete details about the Portfolio’s holdings, see pages 9-10. A quarterly Fact Sheet is available upon request. Information concerning portfolio holdings of the Portfolio as of month end will be posted to www.dws-scudder.com on or after the last day of the following month. In addition, the Portfolio’s top ten holdings and other information about the Portfolio is posted on www.dws-scudder.com as of the calendar quarter-end on or after the 15th day following quarter-end.
Portfolio of Investments at March 31, 2006
Government & Agency Securities Portfolio | Principal Amount ($) | Value ($) | ||
Agencies Not Backed by the Full Faith and Credit of the US Government 12.1% | ||||
Federal Home Loan Bank, 4.523%*, 6/2/2006 | 10,000,000 | 9,998,897 | ||
Federal Home Loan Mortgage Corp.: | ||||
3.83%, 6/20/2006 | 8,000,000 | 8,000,000 | ||
4.406%*, 7/6/2007 | 30,000,000 | 29,985,160 | ||
4.75%, 2/6/2007 | 4,000,000 | 4,000,000 | ||
4.92%, 2/28/2007 | 6,000,000 | 6,000,000 | ||
Federal National Mortgage Association: | ||||
4.0%, 8/8/2006 | 5,000,000 | 5,000,000 | ||
4.03%, 7/21/2006 | 5,000,000 | 5,000,000 | ||
Total Agencies Not Backed by the Full Faith and Credit of the US Government (Cost $67,984,057) | 67,984,057 | |||
Repurchase Agreements 87.5% | ||||
Bear Stearns & Co., Inc., 4.86%, dated 3/31/2006, to be repurchased at $100,040,500 on 4/3/2006 (a) | 100,000,000 | 100,000,000 | ||
BNP Paribas, 4.86%, dated 3/31/2006, to be repurchased at $99,040,095 on 4/3/2006 (b) | 99,000,000 | 99,000,000 | ||
Credit Suisse First Boston LLC, 4.54%, dated 2/1/2006, to be repurchased at $48,369,253 on 4/3/2006 (c) | 48,000,000 | 48,000,000 | ||
JPMorgan Securities, Inc., 4.83%, dated 3/31/2006, to be repurchased at $78,031,395 on | 78,000,000 | 78,000,000 | ||
Merrill Lynch & Co., Inc., 4.595%, dated 2/14/2006, to be repurchased at $55,407,168 on | 55,000,000 | 55,000,000 | ||
State Street Bank and Trust Co., 4.23%, dated 3/31/2006, to be repurchased at $85,030 on 4/3/2006 (f) | 85,000 | 85,000 | ||
The Goldman Sachs & Co., 4.54%, dated 1/31/2006, to be repurchased at $90,703,700 on | 90,000,000 | 90,000,000 | ||
The Goldman Sachs & Co., 4.81%, dated 3/27/2006, to be repurchased at $20,018,706 on | 20,000,000 | 20,000,000 | ||
Total Repurchase Agreements (Cost $490,085,000) | 490,085,000 |
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% of Net Assets | Value ($) | |||
Total Investment Portfolio (Cost $558,069,057)+ | 99.6 | 558,069,057 | ||
Other Assets and Liabilities, Net | 0.4 | 2,128,605 | ||
Net Assets | 100.0 | 560,197,662 |
* | 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 March 31, 2006. |
+ | The cost for federal income tax purposes was $558,069,057. |
(a) | Collateralized by: |
Principal Amount ($) | Security | Rate (%) | Maturity Date | Collateral Value ($) | ||||
44,929,438 | Federal Home Loan Mortgage Corp. | 5.0-5.5 | 10/25/2024-6/25/2031 | 43,902,852 | ||||
60,889,217 | Federal National Mortgage Association | 4.0-5.0 | 7/15/2017-8/15/2022 | 58,098,837 | ||||
Total Collateral Value | 102,001,689 |
(b) | Collateralized by: |
Principal Amount ($) | Security | Rate (%) | Maturity Date | Collateral Value ($) | ||||
94,764,939 | Federal National Mortgage Association | 3.584-5.335 | 9/1/2033-2/1/2036 | 94,279,350 | ||||
6,682,652 | Federal Home Loan Mortgage Corp. | 5.506 | 3/1/2036 | 6,700,650 | ||||
Total Collateral Value | 100,980,000 |
(c) | Collateralized by $49,458,374 Federal National Mortgage Association, 4.272-5.316%, with various maturities from 5/1/2032-3/1/2035 with a value of $48,960,184. |
(d) | Collateralized by $79,164,327 Federal National Mortgage Association, 6.0%, with various maturities from 1/1/2036-4/1/2036 with a value of $79,561,163. |
(e) | Collateralized by: |
Principal Amount ($) | Security | Rate (%) | Maturity Date | Collateral Value ($) | ||||
51,483,739 | Federal National Mortgage Association | 3.5-6.5 | 8/1/2009-3/1/2036 | 50,848,224 | ||||
6,184,474 | Federal Home Loan Mortgage Corp. | 4.5-5.5 | 4/1/2008-10/1/2034 | 5,253,669 | ||||
Total Collateral Value | 56,101,893 |
(f) | Collateralized by $95,000 Federal National Mortgage Association, 5.55%, maturing on 7/10/2028 with a value of $89,234. |
(g) | Collateralized by: |
Principal Amount ($) | Security | Rate (%) | Maturity Date | Collateral Value ($) | ||||
94,072,487 | Federal Home Loan Mortgage Corp. | 4.0-8.5 | 11/1/2007-3/1/2036 | 91,489,021 | ||||
9,721,679* | Federal Home Loan Mortgage Corp. | 7.0 | 8/1/2023 | 310,979 | ||||
Total Collateral Value | 91,800,000 |
* | Principal amount is shown at original face. |
(h) | Collateralized by $20,458,707 Federal Home Loan Mortgage Corp., with various coupon rates 5.5-6.5%, with various maturities from 9/1/2034-1/1/2035 with a value of $20,400,000. |
The accompanying notes are an integral part of the financial statements.
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Financial Statements
Statement of Assets and Liabilities — Government & Agency Securities Portfolio as of March 31, 2006
Assets | |||
Investments: | |||
Investments in securities, at amortized cost | $ | 67,984,057 | |
Repurchase agreements, at amortized cost | 490,085,000 | ||
Total Investments in securities, at amortized cost | 558,069,057 | ||
Cash | 886 | ||
Interest receivable | 2,268,943 | ||
Receivable for Portfolio shares sold | 811,700 | ||
Other assets | 43,933 | ||
Total assets | 561,194,519 | ||
Liabilities | |||
Dividends payable | 762,606 | ||
Payable for Portfolio shares redeemed | 4,464 | ||
Accrued management fee | 68,646 | ||
Other accrued expenses and payables | 161,141 | ||
Total liabilities | 996,857 | ||
Net assets, at value | $ | 560,197,662 | |
Net Assets | |||
Net assets consist of: | |||
Undistributed net investment income | 18,730 | ||
Paid-in capital | 560,178,932 | ||
Net assets, at value | $ | 560,197,662 | |
Net Asset Value | |||
Service Shares | |||
Net assets applicable to shares outstanding | $ | 220,869,902 | |
Shares outstanding of capital stock, $.01 par value, unlimited number of shares authorized | 220,865,251 | ||
Net Asset Value, offering and redemption price per share (net assets/shares outstanding) | $ | 1.00 | |
DWS Government Cash Institutional Shares | |||
Net assets applicable to shares outstanding | $ | 106,279,755 | |
Shares outstanding of capital stock, $.01 par value, unlimited number of shares authorized | 106,276,201 | ||
Net Asset Value, offering and redemption price per share (net assets/shares outstanding) | $ | 1.00 | |
Government Cash Managed Shares | |||
Net assets applicable to shares outstanding | $ | 233,048,005 | |
Shares outstanding of capital stock, $.01 par value, unlimited number of shares authorized | 233,044,796 | ||
Net Asset Value, offering and redemption price per share (net assets/shares outstanding) | $ | 1.00 |
The accompanying notes are an integral part of the financial statements.
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Statement of Operations for the year ended March 31, 2006
Investment Income | Government & Agency Securities Portfolio | |||
Income: | ||||
Interest | $ | 17,200,705 | ||
Expenses: | ||||
Management fee | 686,096 | |||
Services to shareholders | 232,557 | |||
Custodian fees | 21,614 | |||
Distribution service fees | 385,896 | |||
Auditing | 40,556 | |||
Legal | 19,673 | |||
Trustees’ fees and expenses | 42,986 | |||
Reports to shareholders | 37,207 | |||
Registration fees | 51,194 | |||
Other | 33,624 | |||
Total expenses, before expense reductions | 1,551,403 | |||
Expense reductions | (28,312 | ) | ||
Total expenses, after expense reductions | 1,523,091 | |||
Net investment income | 15,677,614 | |||
Realized and Unrealized Gain (Loss) from Investment Transactions | ||||
Net realized gain (loss) from investments | — | |||
Net increase (decrease) in net assets resulting from operations | $ | 15,677,614 |
The accompanying notes are an integral part of the financial statements.
Statement of Changes in Net Assets — Government & Agency Securities Portfolio
Increase (Decrease) in Net Assets | Years Ended March 31, | |||||||
2006 | 2005 | |||||||
Operations: | ||||||||
Net investment income | $ | 15,677,614 | $ | 7,268,568 | ||||
Net realized gain (loss) on investment transactions | — | 7,543 | ||||||
Net increase (decrease) in net assets resulting from operations | 15,677,614 | 7,276,111 | ||||||
Distributions to shareholders from: | ||||||||
Net investment income (Service Shares) | (6,675,761 | ) | (2,735,478 | ) | ||||
Net investment income (DWS Government Cash Institutional Shares) | (2,641,028 | ) | (1,724,926 | ) | ||||
Net investment income (Government Cash Managed Shares) | (6,360,825 | ) | (2,808,164 | ) | ||||
Portfolio share transactions: | ||||||||
Proceeds from shares sold | 1,419,728,633 | 1,117,499,491 | ||||||
Reinvestment of distributions | 9,358,777 | 3,483,589 | ||||||
Cost of shares redeemed | (1,387,771,697 | ) | (1,147,198,270 | ) | ||||
Net increase (decrease) in net assets from Portfolio share transactions | 41,315,713 | (26,215,190 | ) | |||||
Increase (decrease) in net assets | 41,315,713 | (26,207,647 | ) | |||||
Net assets at beginning of period | 518,881,949 | 545,089,596 | ||||||
Net assets at end of period (including undistributed net investment income of $18,730 and $18,730, respectively) | $ | 560,197,662 | $ | 518,881,949 |
The accompanying notes are an integral part of the financial statements.
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Financial Highlights
Government & Agency Securities Portfolio — DWS Government Cash Institutional Shares
Years Ended March 31, | 2006 | 2005 | 2004 | 2003 | 2002 | |||||||||||||||
Selected Per Share Data |
| |||||||||||||||||||
Net asset value, beginning of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||
Net investment income | .035 | .015 | .009 | .015 | .03 | |||||||||||||||
Distributions from net investment income | (.035 | ) | (.015 | ) | (.009 | ) | (.015 | ) | (.03 | ) | ||||||||||
Net asset value, end of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||
Total Return (%) | 3.59 | 1.55 | .95 | 1.52 | 3.06 | |||||||||||||||
Ratios to Average Net Assets and Supplemental Data | ||||||||||||||||||||
Net assets, end of period ($ millions) | 106 | 113 | 124 | 138 | 134 | |||||||||||||||
Ratio of expenses (%) | .23 | .20 | .20 | .20 | .19 | |||||||||||||||
Ratio of net investment income (%) | 3.53 | 1.53 | .95 | 1.51 | 3.01 |
Government & Agency Securities Portfolio — Government Cash Managed Shares
Years Ended March 31, | 2006 | 2005 | 2004 | 2003 | 2002 | |||||||||||||||
Selected Per Share Data |
| |||||||||||||||||||
Net asset value, beginning of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||
Net investment income | .033 | .013 | .007 | .013 | .03 | |||||||||||||||
Distributions from net investment income | (.033 | ) | (.013 | ) | (.007 | ) | (.013 | ) | (.03 | ) | ||||||||||
Net asset value, end of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||
Total Return (%) | 3.35 | 1.30 | .68 | 1.27 | 2.78 | |||||||||||||||
Ratios to Average Net Assets and Supplemental Data | ||||||||||||||||||||
Net assets, end of period ($ millions) | 233 | 195 | 175 | 79 | 55 | |||||||||||||||
Ratio of expenses (%) | .46 | .45 | .44 | .45 | .43 | |||||||||||||||
Ratio of net investment income (%) | 3.30 | 1.28 | .71 | 1.26 | 2.77 |
Notes to Financial Statements
1. Significant Accounting Policies
Investors Cash Trust (the “Trust”) 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
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Massachusetts business trust. The Trust offers two series of shares (Portfolios) — the Government & Agency Securities Portfolio and the Treasury Portfolio. The Government & Agency Securities Portfolio offers multiple classes of shares that include Service Shares, DWS Government Cash Institutional Shares and Government Cash Managed Shares. The Treasury Portfolio offers Service Shares and Premier Money Market Shares. Certain detailed financial information for the Service Shares of the Government & Agency Securities Portfolio is provided separately and is available upon request.
Investment income, realized and unrealized gains and losses, and certain portfolio-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 distribution service fees, shareholder service fees 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 Trust have equal rights with respect to voting subject to class-specific arrangements.
The Trust’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 Trust 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 Portfolio may enter into repurchase agreements with certain banks and broker/dealers whereby the Portfolio, 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 market 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 Portfolio has the right to sell the securities and recover any resulting loss from the financial institution. If the financial institution enters into bankruptcy, the Portfolio’s claims on the collateral may be subject to legal proceedings.
Federal Income Taxes. The Portfolio’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 Portfolio paid no federal income taxes and no federal income tax provision was required.
Distribution of Income. Net investment income of the Portfolio is declared as a daily dividend and is distributed to shareholders monthly.
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. There were no significant book-to-tax differences for the portfolios.
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At March 31, 2006, the Portfolio’s components of distributable earnings (accumulated losses) on a tax-basis were as follows:
Government & Agency Securities Portfolio | |||
Undistributed ordinary income* | $ | 796,284 | |
Capital loss carryforwards | $ | — |
In addition, the tax character of distributions paid to shareholders by the Portfolio is summarized as follows:
Years Ended March 31, | ||||||
2006 Government & Agency Securities Portfolio | 2005 Government & Agency Securities Portfolio | |||||
Distributions from ordinary income* | $ | 15,677,614 | $ | 7,268,568 |
* | For tax purposes short-term capital gains distributions are considered ordinary income distributions. |
Expenses. Expenses of the Trust arising in connection with each specific Portfolio are allocated to that Portfolio. Other Trust expenses which cannot be directly attributed to a Portfolio are apportioned among the Portfolios in the Trust.
Contingencies. In the normal course of business, the Trust may enter into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet been made. However, based on experience, the Trust expects the risk of loss to be remote.
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 discounts and premiums are accreted/amortized for both tax and financial reporting purposes.
2. 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 Trust 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 Trust. In addition to portfolio management services, the Advisor provides certain administrative services in accordance with the Management Agreement. The Trust pays a monthly investment management fee of 1/12 of the annual rate of 0.15% of average daily net assets.
Effective October 1, 2005 through September 30, 2006, the Advisor has contractually agreed to waive all or a portion of its management fee and reimburse or pay operating expenses of the Portfolio to the extent necessary to maintain the operating expenses of each class as follows:
Portfolio | Expense Limit* | ||
Government & Agency Securities Portfolio: | |||
Service Shares | .25 | % |
* | Certain expenses, such as reorganization, taxes, brokerage, interest expense and extraordinary expenses are excluded from the expense limitation. |
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Service Provider Fees. DWS Scudder Investments Service Company (“DWS-SISC”), an affiliate of the Advisor, is the transfer agent, dividend-paying agent and shareholder service agent of the Portfolio. Pursuant to a sub-transfer agency agreement between DWS-SISC and DST Systems, Inc. (“DST”), DWS-SISC has delegated certain transfer agent and dividend-paying agent functions to DST. DWS-SISC compensates DST out of the shareholder servicing fee it receives from the Portfolio. For the year ended March 31, 2006, the amount charged to the Service Shares, DWS Government Cash Institutional Shares and Government Cash Managed Shares of the Government & Agency Securities Portfolio by DWS-SISC aggregated as follows:
Services to Shareholders | Total Aggregated | Waived | Unpaid at March 31, 2006 | ||||||
Government & Agency Securities Portfolio: | |||||||||
Service Shares | $ | 9,007 | $ | 9,007 | $ | — | |||
DWS Government Cash Institutional Shares | 12,905 | — | 4,425 | ||||||
Government Cash Managed Shares | 189,980 | — | 48,269 |
Distribution Services Agreement. DWS Scudder Distributors, Inc., (“DWS-SDI”), a subsidiary of the Advisor, provides information and administrative services (“Service Fee”) to the Service Shares and Government Cash Managed Shares of the Government & Agency Securities Portfolio at an annual fee of 0.05% of average daily net assets for the Service Shares and up to 0.25% (currently 0.15%) of average daily net assets for the Managed Shares of the Government & Agency Securities Portfolio. For the year ended March 31, 2006, the Service Fee was as follows:
Service Fee | Total Aggregated | Waived | Unpaid at March 31, 2006 | Annual Effective Rate | ||||||||
Government & Agency Securities Portfolio: | ||||||||||||
Service Shares | $ | 95,064 | $ | 16,109 | $ | 11,858 | .04 | % | ||||
Managed Shares | 290,832 | — | 30,312 | .15 | % |
DWS-SDI has related service agreements with various firms to provide cash management and other services for Portfolio shareholders. DWS-SDI pays these firms at an annual rate of up to 0.15% of average daily net assets.
Typesetting and Filing Service Fees. Under an agreement with DeIM, DeIM is compensated for providing typesetting and certain regulatory filing services to the Portfolio. For the year ended March 31, 2006, the amounts charged to the Portfolio by DeIM included in reports to shareholders were as follows:
Total Aggregated | Unpaid at March 31, 2006 | |||||
Government & Agency Securities Portfolio | $ | 14,580 | $ | 4,020 |
Trustees’ Fees and Expenses. The Trust pays each Trustee not affiliated with the Advisor retainer fees plus specified amounts for attended board and committee meetings.
3. Expense Reductions
For the year ended March 31, 2006, the Advisor agreed to reimburse $3,027 for the Government & Agency Securities Portfolio, 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.
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In addition, the Portfolio has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances was used to reduce a portion of the Portfolio’s expenses. During the year ended March 31, 2006, the Government & Agency Securities Portfolio’s custodian fee was reduced by $169 under this arrangement.
4. Line of Credit
The Trust and several other affiliated funds (the “Participants”) share in a $1.1 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, based upon net assets, among each of the Participants. Interest is calculated at the Federal Funds Rate plus 0.5 percent. The Trust may borrow up to a maximum of 33 percent of its net assets under the agreement.
5. Share Transactions
The following table summarizes share and dollar activity in the Portfolio:
Government & Agency Securities Portfolio | Year Ended March 31, 2006 | Year Ended March 31, 2005 | ||||||||||||
Shares | Dollars | Shares | Dollars | |||||||||||
Shares sold |
| |||||||||||||
Service Shares | 284,212,295 | $ | 284,212,295 | 260,544,268 | $ | 260,544,268 | ||||||||
DWS Government Cash Institutional Shares | 560,170,265 | 560,170,265 | 348,854,440 | 348,854,440 | ||||||||||
Government Cash Managed Shares | 575,346,073 | 575,346,073 | 508,100,783 | 508,100,783 | ||||||||||
$ | 1,419,728,633 | $ | 1,117,499,491 | |||||||||||
Shares issued to shareholders in reinvestment of distributions | ||||||||||||||
Service Shares | 6,635,559 | $ | 6,635,559 | 2,712,247 | $ | 2,712,247 | ||||||||
DWS Government Cash Institutional Shares | 2,368,517 | 2,368,517 | 757,863 | 757,863 | ||||||||||
Government Cash Managed Shares | 354,701 | 354,701 | 13,479 | 13,479 | ||||||||||
$ | 9,358,777 | $ | 3,483,589 | |||||||||||
Shares redeemed | ||||||||||||||
Service Shares | (281,196,729 | ) | $ | (281,196,729 | ) | (298,826,412 | ) | $ | (298,826,412 | ) | ||||
DWS Government Cash Institutional Shares | (569,359,904 | ) | (569,359,904 | ) | (360,186,482 | ) | (360,186,482 | ) | ||||||
Government Cash Managed Shares | (537,215,064 | ) | (537,215,064 | ) | (488,185,376 | ) | (488,185,376 | ) | ||||||
$ | (1,387,771,697 | ) | $ | (1,147,198,270 | ) | |||||||||
Net increase (decrease) | ||||||||||||||
Service Shares | 9,651,125 | $ | 9,651,125 | (35,569,897 | ) | $ | (35,569,897 | ) | ||||||
DWS Government Cash Institutional Shares | (6,821,122 | ) | (6,821,122 | ) | (10,574,179 | ) | (10,574,179 | ) | ||||||
Government Cash Managed Shares | 38,485,710 | 38,485,710 | 19,928,886 | 19,928,886 | ||||||||||
$ | 41,315,713 | $ | (26,215,190 | ) |
6. Regulatory Matters and Litigation
Market Timing Related Regulatory and Litigation Matters. 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 DWS Scudder. The DWS funds’ advisors have been cooperating in connection with these inquiries and are in
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discussions with the regulators concerning proposed settlements. Publicity about mutual fund practices arising from these industry-wide inquiries serves as the general basis of a number of private lawsuits against the DWS 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 DWS funds, the funds’ investment advisors and their affiliates, and certain individuals, including in some cases fund Trustees/Directors, officers, and other parties. Each DWS fund’s investment advisor has agreed to indemnify the applicable DWS 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. It is not possible to determine with certainty what the outcome of these inquiries will be or what the effect, if any, would be on the funds or their advisors.
With respect to the lawsuits, 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 DWS fund is remote and such actions are not likely to materially affect their ability to perform under their investment management agreements with the DWS funds.
With respect to the regulatory matters, Deutsche Asset Management (“DeAM”) has advised the funds as follows:
DeAM expects to reach final agreements with regulators in 2006 regarding allegations of improper trading in the DWS funds. DeAM expects that it will reach settlement agreements with the Securities and Exchange Commission, the New York Attorney General and the Illinois Secretary of State providing for payment of disgorgement, penalties, and investor education contributions totaling approximately $134 million. Approximately $127 million of this amount would be distributed to shareholders of the affected DWS funds in accordance with a distribution plan to be developed by an independent distribution consultant. DeAM does not believe that any of the DWS funds will be named as respondents or defendants in any proceedings. The funds’ investment advisors do not believe these amounts will have a material adverse financial impact on them or materially affect their ability to perform under their investment management agreements with the DWS funds. The above-described amounts are not material to Deutsche Bank, and they have already been reserved.
Based on the settlement discussions thus far, DeAM believes that it will be able to reach a settlement with the regulators on a basis that is generally consistent with settlements reached by other advisors, taking into account the particular facts and circumstances of market timing at DeAM and at the legacy Scudder and Kemper organizations prior to their acquisition by DeAM in April 2002. Among the terms of the expected settled orders, DeAM would be subject to certain undertakings regarding the conduct of its business in the future, including maintaining existing management fee reductions for certain funds for a period of five years. DeAM expects that these settlements would resolve regulatory allegations that it violated certain provisions of federal and state securities laws (i) by entering into trading arrangements that permitted certain investors to engage in market timing in certain DWS funds and (ii) by failing more generally to take adequate measures to prevent market timing in the DWS funds, primarily during the 1999-2001 period. With respect to the trading arrangements, DeAM expects that the settlement documents will include allegations related to one legacy DeAM arrangement, as well as three legacy Scudder and six legacy Kemper arrangements. All of these trading arrangements originated in businesses that existed prior to the current DeAM organization, which came together in April 2002 as a result of the various mergers of the legacy Scudder, Kemper and Deutsche fund groups, and all of the arrangements were terminated prior to the start of the regulatory investigations that began in the summer of 2003. No current DeAM employee approved the trading arrangements.
There is no certainty that the final settlement documents will contain the foregoing terms and conditions.
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The independent Trustees/Directors of the DWS funds have carefully monitored these regulatory investigations with the assistance of independent legal counsel and independent economic consultants.
Other Regulatory Matters. DeAM is also engaged in settlement discussions with the Enforcement Staffs of the SEC and the NASD regarding DeAM’s practices during 2001-2003 with respect to directing brokerage commissions for portfolio transactions by certain DWS funds to broker-dealers that sold shares in the DWS funds and provided enhanced marketing and distribution for shares in the DWS funds. In addition, on January 13, 2006, DWS Scudder Distributors, Inc. received a Wells notice from the Enforcement Staff of the NASD regarding DWS Scudder Distributors’ payment of non-cash compensation to associated persons of NASD member firms, as well as DWS Scudder Distributors’ procedures regarding non-cash compensation regarding entertainment provided to such associated persons.
7. Fund Mergers
On May 10, 2006, the Board of the Fund approved, in principle, the merger of the Investors Cash Trust: Government & Agency Securities Portfolio (the “Acquired Fund”) into the Cash Account Trust: Government & Agency Securities Portfolio.
Completion of the merger is subject to a number of conditions, including final approval by each Fund’s Board and approval by shareholders of the Acquired Fund at the shareholder meeting expected to be held on or about October 12, 2006.
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Trustees of
Investors Cash Trust:
We have audited the accompanying statements of assets and liabilities, including the portfolio of investments, of the Government & Agency Securities Portfolio (the “Portfolio”), one of the portfolios constituting the Investors Cash Trust as of March 31, 2006, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Portfolio’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Portfolio’s internal control over financial
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reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstance, but not for the purpose of expressing an opinion on the effectiveness of the Portfolio’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principals used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of investments owned as of March 31, 2006, by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Government & Agency Securities Portfolio of the Investors Cash Trust at March 31, 2006, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Boston, Massachusetts
May 8, 2006
Tax Information
Please consult a tax advisor if you have questions about federal or state income tax laws, or on how to prepare your tax returns.
Other Information
Proxy Voting
A description of the Trust’s policies and procedures for voting proxies for portfolio securities and information about how the Trust voted proxies related to its portfolio securities during the 12-month period ended June 30 is available on our Web site — www.dws-scudder.com (click on “proxy voting” at the bottom of the page) — or on the SEC’s Web site — www.sec.gov. To obtain a written copy of the Trust’s policies and procedures without charge, upon request, call us toll free at 1-800-621-1048.
Portfolio of Investments
Following the Trust’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
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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 (202) 551-5850.
Regulatory and Litigation Matters
Additional information announced by Deutsche Asset Management regarding the terms of the expected settlements referred to in the Market Timing Related Regulatory and Litigation Matters and Other Regulatory Matters in the Notes to Financial Statements will be made available at www.dws-scudder.com/regulatory_settlements, which will also disclose the terms of any final settlement agreements once they are announced.
Trustees and Officers
The following table presents certain information regarding the Trustees and Officers of the Portfolio as of March 31, 2006. Each individual’s year of birth is set forth in parentheses after his or her name. Unless otherwise noted, (i) each individual has engaged in the principal occupation(s) noted in the table for at least the most recent five years, although not necessarily in the same capacity, and (ii) the address of each individual is c/o Deutsche Asset Management, 222 South Riverside Plaza, Chicago, Illinois 60606. Each Trustee’s term of office extends until the next shareholders’ meeting called for the purpose of electing Trustees and until the election and qualification of a successor, or until such Trustee sooner dies, retires, resigns or is removed as provided in the governing documents of the Portfolio.
Independent Trustees
Name, Year of Birth, | Principal Occupation(s) During Past 5 Years and Other Directorships Held | Number of Funds in Fund Complex Overseen | ||
Shirley D. Peterson (1941) Chairperson, 2004-present Trustee, 1995-present | Retired; formerly, President, Hood College (1995-2000); prior thereto, Partner, Steptoe & Johnson (law firm); Commissioner, Internal Revenue Service; Assistant Attorney General (Tax), US Department of Justice. Directorships: Federal Mogul Corp. (supplier of automotive components and subsystems); AK Steel (steel production); Goodyear Tire & Rubber Co. (April 2004-present) ; Champion Enterprises, Inc. (manufactured home building); Wolverine World Wide, Inc. (designer, manufacturer and marketer of footwear) (April 2005-present); Trustee, Bryn Mawr College. Former Directorship: Bethlehem Steel Corp. | 71 | ||
John W. Ballantine (1946) Trustee, 1999-present | Retired; formerly, Executive Vice President and Chief Risk Management Officer, First Chicago NBD Corporation/The First National Bank of Chicago (1996-1998); Executive Vice President and Head of International Banking (1995-1996). Directorships: First Oak Brook Bancshares, Inc.; Oak Brook Bank; Healthways, Inc. (provider of disease and care management services); Portland General Electric (utility company) | 71 | ||
Donald L. Dunaway (1937) Trustee, 1980-present | Retired; formerly, Executive Vice President, A.O. Smith Corporation (diversified manufacturer) (1963-1994) | 71 | ||
James R. Edgar (1946) Trustee, 1999-present | Distinguished Fellow, University of Illinois, Institute of Government and Public Affairs (1999-present); formerly, Governor, State of Illinois (1991-1999). Directorships: Kemper Insurance Companies; John B. Sanfilippo & Son, Inc. (processor/packager/marketer of nuts, snacks and candy products); Horizon Group Properties, Inc.; Youbet.com (online wagering platform); Alberto-Culver Company (manufactures, distributes and markets health and beauty care products) | 71 | ||
Paul K. Freeman (1950) Trustee, 2002-present | President, Cook Street Holdings (consulting); Senior Visiting Research Scholar, Graduate School of International Studies, University of Denver; Consultant, World Bank/Inter-American Development Bank; formerly, Project Leader, International Institute for Applied Systems Analysis (1998-2001); Chief Executive Officer, The Eric Group, Inc. (environmental insurance) (1986-1998) | 71 | ||
Robert B. Hoffman (1936) Trustee, 1981-present | Retired; formerly, Chairman, Harnischfeger Industries, Inc. (machinery for the mining and paper industries) (1999-2000); prior thereto, Vice Chairman and Chief Financial Officer, Monsanto Company (agricultural, pharmaceutical and nutritional/food products) (1994-1999). Directorships: RCP Advisors, LLC (a private equity investment advisory firm) | 71 | ||
William McClayton (1944) Trustee, 2004-present | Managing Director of Finance and Administration, DiamondCluster International, Inc. (global management consulting firm) (2001-present); formerly, Partner, Arthur Andersen LLP (1986-2001). Formerly: Trustee, Ravinia Festival; Board of Managers, YMCA of Metropolitan Chicago | 71 | ||
Robert H. Wadsworth (1940) Trustee, 2004-present | President, Robert H. Wadsworth & Associates, Inc. (consulting firm) (1983-present). Director, The European Equity Fund, Inc. (since 1986), The New Germany Fund, Inc. (since 1992), The Central Europe and Russia Fund, Inc. (since 1990). Formerly, Trustee of New York Board Scudder Funds; President and Trustee, Trust for Investment Managers (registered investment company) (1999-2002). President, Investment Company Administration, L.L.C. (1992*-2001); President, Treasurer and Director, First Fund Distributors, Inc. (June 1990-January 2002); Vice President, Professionally Managed Portfolios (May 1991-January 2002) and Advisors Series Trust (October 1996-January 2002) (registered investment companies) *Inception date of the corporation which was the predecessor to the L.L.C. | 74 |
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Officers2
Name, Year of Birth, | Principal Occupation(s) During Past 5 Years and Other Directorships Held | Number of Funds in Fund Complex Overseen | ||
Michael Colon4 (1969) President, 2006-present | Managing Director3 and Chief Operating Officer, Deutsche Asset Management (since March 2005); President, DWS Global High Income Fund, Inc. (since April 2006), DWS Global Commodities Stock Fund, Inc. (since April 2006), The Brazil Fund, Inc. (since April 2006), The Korea Fund, Inc. (since April 2006); Chief Operating Officer, Deutsche Bank Alex. Brown (2002-2005); Chief Operating Officer, US Equities Division of Deutsche Bank (2000-2002) | n/a | ||
Philip J. Collora (1945) Vice President and Assistant Secretary, 1986-present | Director3, Deutsche Asset Management | n/a | ||
Paul H. Schubert4 (1963) Chief Financial Officer, 2004-present Treasurer, 2005-present | Managing Director3, Deutsche Asset Management (since July 2004); formerly, Executive Director, Head of Mutual Fund Services and Treasurer for UBS Family of Funds (1998-2004); Vice President and Director of Mutual Fund Finance at UBS Global Asset Management (1994-1998) | n/a | ||
John Millette5 (1962) Secretary, 2001-present | Director3, Deutsche Asset Management | n/a | ||
Patricia DeFilippis4 (1963) Assistant Secretary, 2005-present | Vice President, Deutsche Asset Management (since June 2005); formerly, Counsel, New York Life Investment Management LLC (2003-2005); legal associate, Lord, Abbett & Co. LLC (1998-2003) | n/a | ||
Elisa D. Metzger4, (1962) Assistant Secretary 2005-present | Director3, Deutsche Asset Management (since September 2005); formerly, Counsel, Morrison and Foerster LLP (1999-2005) | n/a | ||
Caroline Pearson5 (1962) Assistant Secretary, 1998-present | Managing Director3, Deutsche Asset Management | n/a | ||
Scott M. McHugh5 (1971) Assistant Treasurer, 2005-present | Director3, Deutsche Asset Management | n/a | ||
Kathleen Sullivan D’Eramo5 (1957) Assistant Treasurer, 2003-present | Director3, Deutsche Asset Management | n/a | ||
John Robbins4 (1966) Anti-Money Laundering Compliance Officer, 2005-present | Managing Director3, Deutsche Asset Management (since 2005); formerly, Chief Compliance Officer and Anti-Money Laundering Compliance Officer for GE Asset Management (1999-2005) | n/a | ||
Philip Gallo4 (1962) Chief Compliance Officer, 2004-present | Managing Director3, Deutsche Asset Management (2003-present); formerly, Co-Head of Goldman Sachs Asset Management Legal (1994-2003) | n/a |
1 | Length of time served represents the date that each Trustee was first elected to the common board of Trustees which oversees a number of investment companies, including the fund, managed by the Advisor. For the Officers of the fund, the length of time served represents the date that each officer was first elected to serve as an officer of any fund overseen by the aforementioned common board of Trustees. |
2 | As a result of their respective positions held with the Advisor, these individuals are considered “interested persons” of the Advisor within the meaning of the 1940 Act. Interested persons receive no compensation from the fund. |
3 | Executive title, not a board directorship |
4 | Address: 345 Park Avenue, New York, New York 10154 |
5 | Address: Two International Place, Boston, Massachusetts 02110 |
The fund’s Statement of Additional Information (“SAI”) includes additional information about the Trustees. The SAI is available, without charge, upon request. If you would like to request a copy of the SAI, you may do so by calling the following toll-free number: 1-800-621-1048.
Principal Underwriter
DWS Scudder Distributors, Inc.
222 South Riverside Plaza
Chicago, IL 60606
Institutional Funds,
Client Services
Telephone: 800 537 3177
http://moneyfunds.deam-us.db.com
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Scudder Money Funds
Scudder Money Market Fund
Scudder Government & Agency Money Fund
Scudder Tax-Exempt Money Fund
Annual Report to Shareholders
July 31, 2005
2 | ||
5 | ||
6 | ||
8 | ||
10 | ||
22 | ||
27 | ||
28 | ||
33 | ||
33 | ||
34 | ||
37 |
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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 a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in them. 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.
Performance Summary July 31, 2005
Scudder Money Market Fund
All performance shown is historical and does not guarantee future results. Current performance may be higher or lower than the performance data quoted.
Yield Comparison
• | Fund Yield |
• | First Tier Retail Money Fund Average |
Weekly 7-Day Current Yield
2
Table of Contents
Yields are historical, will fluctuate and do not guarantee future performance. Please call (800) 621-1048 for the Fund’s most up-to-date performance.
Scudder Money Market Fund is compared to its respective iMoneyNet Category: First Tier Retail Money Fund Average — Category includes a widely-recognized composite of money market funds that invest in only first tier (highest rating) securities. Portfolio Holdings of First Tier funds include US Treasury, US Other, Repos, Time Deposits, Domestic Bank Obligations, Foreign Bank Obligations, First Tier Commercial Paper, Floating Rate Notes and Asset Backed Commercial Paper.
7-day current yield is the annualized net investment income per share for the period shown. Gains or losses are not included.
Lipper Ranking — Money Market Fund Category as of 7/31/05
Period | Rank | Number of Funds Tracked | Percentile Ranking | |||||
1-Year | 40 | of | 363 | 11 | ||||
3-Year | 33 | of | 344 | 10 | ||||
5-Year | 30 | of | 299 | 10 | ||||
10-Year | 21 | of | 184 | 11 |
Lipper Inc. rankings are based upon changes in net asset value with all dividends reinvested for the periods indicated as of 7/31/05. Rankings are historical and do not guarantee future performance. The fund is compared to the Lipper Money Market Fund category.
Source: Lipper Inc.
An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.
Scudder Government & Agency Money Fund
All performance shown is historical and does not guarantee future results. Current performance may be higher or lower than the performance data quoted.
Yield Comparison
• | Fund Yield |
• | Government & Agencies Retail Money Fund Average |
Weekly 7-Day Current Yield
Yields are historical, will fluctuate and do not guarantee future performance. Please call (800) 621-1048 for the Fund’s most up-to-date performance.
Scudder Government & Agency Money Fund is compared to its respective iMoney Net Category: Government & Agencies Retail Money Fund Average — Category includes the most broadly based of the government retail funds. These funds can invest in US Treasuries, US Other, Repos, whether or not they are backed by US Treasuries and government-backed Floating Rate Notes.
7-day current yield is the annualized net investment income per share for the period shown. Gains or losses are not included.
Lipper Ranking — Government Money Market Fund Category as of 7/31/05
Period | Rank | Number of Funds Tracked | Percentile Ranking | |||||
1-Year | 11 | of | 117 | 10 | ||||
3-Year | 8 | of | 106 | 8 | ||||
5-Year | 9 | of | 100 | 9 | ||||
10-Year | 6 | of | 73 | 9 |
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Lipper Inc. rankings are based upon changes in net asset value with all dividends reinvested for the periods indicated as of 7/31/05. Rankings are historical and do not guarantee future performance. The fund is compared to the Lipper Government Money Market Fund category.
Source: Lipper Inc.
An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.
Scudder Tax-Exempt Money Fund
All performance shown is historical and does not guarantee future results. Current performance may be higher or lower than the performance data quoted.
Yield Comparison
• | Fund Yield |
• | Tax-Free Retail Money Fund Average |
Weekly 7-Day Current Yield
Yields are historical, will fluctuate and do not guarantee future performance. Income may be subject to state and local taxes and the alternative minimum tax. Please call (800) 621-1048 for the Fund’s most up-to-date performance.
Scudder Tax-Exempt Money Fund is compared to its respective iMoneyNet category: Tax-Free Retail Money Fund Average — Category consists of all national tax-free and municipal retail funds. Portfolio Holdings of tax-free Funds include Rated and Unrated Demand Notes, Rated and Unrated General Market Notes; Commercial Paper; Put Bonds — 6 months and less; over 6 months; AMT Paper and Other Tax-Free Holdings.
7-day current yield is the annualized net investment income per share for the period shown. Gains or losses are not included.
Lipper Ranking — Tax-Exempt Money Market Fund Category as of 7/31/05
Period | Rank | Number of Funds Tracked | Percentile Ranking | |||||
1-Year | 7 | of | 120 | 6 | ||||
3-Year | 8 | of | 110 | 8 | ||||
5-Year | 9 | of | 101 | 7 | ||||
10-Year | 5 | of | 85 | 6 |
Lipper Inc. rankings are based upon changes in net asset value with all dividends reinvested for the periods indicated as of 7/31/05. Rankings are historical and do not guarantee future performance. The fund is compared to the Lipper Tax-Exempt Money Market Fund category.
Source: Lipper Inc.
An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.
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Information About Each Fund’s Expenses
As an investor, 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 each Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. The tables are based on an investment of $1,000 made at the beginning of the six-month period ended July 31, 2005.
The tables illustrate each 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 July 31, 2005
Actual Fund Return | Scudder Money Market Fund | Scudder Government & Agency Money Fund | Scudder Tax-Exempt Money Fund | ||||||
Beginning Account Value 2/1/05 | $ | 1,000.00 | $ | 1,000.00 | $ | 1,000.00 | |||
Ending Account Value 7/31/05 | $ | 1,012.50 | $ | 1,012.40 | $ | 1,009.60 | |||
Expenses Paid per $1,000* | $ | 2.25 | $ | 2.15 | $ | 1.99 | |||
Hypothetical 5% Fund Return | Scudder Money Market Fund | Scudder Government & Agency Money Fund | Scudder Tax-Exempt Money Fund | ||||||
Beginning Account Value 2/1/05 | $ | 1,000.00 | $ | 1,000.00 | $ | 1,000.00 | |||
Ending Account Value 7/31/05 | $ | 1,022.56 | $ | 1,022.66 | $ | 1,022.81 | |||
Expenses Paid per $1,000* | $ | 2.26 | $ | 2.16 | $ | 2.01 |
* | Expenses are equal to each Fund’s annualized expense ratio, 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 | |||
Scudder Money Market Fund | .45 | % | |
Scudder Government & Agency Money Fund | .43 | % | |
Scudder Tax-Exempt Money Fund | .40 | % |
For more information, please refer to the Funds’ prospectus.
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Scudder Money Funds: A Team Approach to Investing
Deutsche Investment Management Americas Inc. (“DeIM” or the “Advisor”), which is part of Deutsche Asset Management, is the investment advisor for Scudder Money Funds. DeIM has more than 80 years of experience managing mutual funds and provides a full range of investment advisory services to institutional and retail clients. DeIM is also responsible for selecting brokers and dealers and for negotiating brokerage commissions and dealer charges.
Deutsche Asset Management is a global asset management organization that offers a wide range of investing expertise and resources. This well-resourced global investment platform brings together a wide variety of experience and investment insight across industries, regions, asset classes and investing styles.
DeIM is an indirect, wholly owned subsidiary of Deutsche Bank AG. Deutsche Bank AG is a major global banking institution that is engaged in a wide range of financial services, including investment management, mutual funds, retail, private and commercial banking, investment banking and insurance.
Portfolio Management Team
A group of investment professionals is responsible for the day-to-day management of each fund. These investment professionals have a broad range of experience managing money market funds.
In the following interview, Portfolio Managers Christine C. Haddad and Joseph Benevento discuss the market environment and the portfolio team’s approach to managing Scudder Money Funds during the fund’s most recent fiscal year ended July 31, 2005.
Q: Will you discuss the market environment during the period?
A: In June 2004, following a substantial improvement in job creation and the economy in general, the Federal Reserve (the Fed) began to move away from an accommodative stance of low interest rates. The Fed’s policy was to raise short-term interest rates at a “measured pace” as it sought to prevent an acceleration in inflation, which would hurt the economic expansion. At the close of the fund’s fiscal year on July 31 the federal funds rate stood at 3.25%, up from 1.00% at the start of 2004.1
1 | Federal funds rate — the overnight rate charged by banks when they borrow money from each other. Set by the Federal Open Market Committee (FOMC), the fed funds rate is the most sensitive — and closely watched — indicator concerning the direction of short-term interest rates. The FOMC is a key committee within the US Federal Reserve System, and meets every six weeks to review Fed policy on short-term rates. Based on current Fed policy, the FOMC may choose to raise or lower the fed funds rate to either add liquidity to the economy or remove it. |
2 | 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. |
Throughout the period, the US economy maintained a steady 3.7% growth rate and added approximately 150,000 new jobs each month. During this time, the market’s focus gradually shifted from monitoring
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monthly job growth to a careful watch for signs of increased inflation. In February, oil prices, which had moderated toward the end of 2004, began to rise steadily and dramatically.
The one-year LIBOR rate stood at 4.16% at the close of the period.2 The LIBOR premium over the fed funds rate of 3.25% (LIBOR is set by the market while the fed funds rate is fixed by the Federal Reserve) represented the market’s concern that the Fed may have to continue raising short-term interest rates to keep inflation under control. The Fed has repeatedly stated that it will continue to raise rates to curb inflation, and that it believes the economy remains on a solid footing.
Q: How did the funds perform over the most recent annual period?
A: For the period, the funds registered favorable performance and achieved their stated objective of seeking maximum current income consistent with stability of principal (in the case of the Tax-Exempt Money Fund, to provide maximum current income that is exempt from regular federal taxes to the extent consistent with stability of principal).
Q: In light of market conditions during the period, what has been the strategy for Scudder Money Market Fund?
A: During the fiscal year, our strategy was to keep the portfolio’s average maturity relatively short in order to reduce risk, generally limiting our purchases to three-month maturity issues and shorter. (Shorter-term securities are generally less risky than longer-term securities, and are therefore potentially more attractive in a difficult environment.) From time to time, when the market offered more attractive yields at longer maturities, we added some longer-term issues. In addition, our decision to maintain a significant allocation in floating-rate securities — whose yields adjust to market rates — was helpful to performance during a period of rising interest rates. (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.) The remainder of the fund’s portfolio is invested in fixed-rate securities, certificates of deposit and repurchase agreements.3 During the period, we targeted an average maturity of 30 to 40 days for the fund. As of July 31, 2005, the fund’s weighted average maturity was 43 days.
3 | Repurchase Agreements (Repos) — an agreement between a seller and a buyer, usually of government securities, where the seller agrees to repurchase the securities at a given price and usually at a stated time. Repos are widely used money market instruments that serve as an interest bearing, short-term “parking place” for large sums of money. |
Q: What has been the strategy for Scudder Government & Agency Money Fund?
A: At present, investors are waiting out the Federal Reserve’s well-telegraphed series of interest rate hikes, and many of them have led a “flight to quality” into government money market securities. For this reason, Treasury bills and Agency securities have become more expensive, and we have increased the fund’s allocation in repurchase agreements. In addition, we have shortened the weighted average maturity of the fund as a precautionary measure in this rising rate environment. Going forward, we will continue to monitor economic and inflation indicators to determine the speed in which interest rates may rise. As of July 31, 2005, the fund’s weighted average maturity was 41 days.
Q: What has been the strategy for Scudder Tax-Exempt Money Fund?
A: During the period, we continued to focus on the highest-quality investments for the Tax-Exempt Money Fund while seeking competitive yields across the municipal investment spectrum. Over the period, we sought to balance stability of principal and competitive yield by shifting the fund’s weighted average maturity to a target range of 30 to 40 days. (At the close of the period ended July 31, 2005, the
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fund’s weighted average maturity was 31 days.) The portfolio also has a targeted allocation of 70% of assets in floating-rate securities and 30% in fixed-rate instruments. Our decision to maintain a significant floating-rate position helped performance during the period. The interest rate of floating-rate securities adjusts periodically based on indices such as the Bond Market Association Index of Variable Rate Demand Notes.4 Because the interest rates of these instruments adjust as market conditions change, they provide flexibility in an uncertain interest rate environment. In addition, 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.
Lastly, within its floating-rate position, the fund is maintaining a core allocation in municipal trust receipts (MTRs).5 MTRs, which are financing vehicles for longer-term bonds, offer slightly higher yields than conventional variable rate instruments. And as a holder of insured municipal credits, we are carefully monitoring the recent investigations of municipal credit insurer MBIA by securities regulators (a portion of the credits the fund holds are insured by MBIA). MBIA, the largest municipal securities insurance firm, has been the subject of inquiries over certain types of derivative securities trading it engaged in during 2002.
4 | The Bond Market Association Index of Variable Rate Demand Notes is a weekly high-grade market index comprising seven-day tax-exempt variable rate demand notes produced by Municipal Market Data Group. Actual issues are selected from Municipal Market Data’s database of more than 10,000 active issues. |
5 | Municipal trust receipts (MTRs) are typically structured by a bank, broker-dealer or other financial institution by depositing municipal securities into a trust or partnership coupled with a conditional right to sell, or put, the holder’s interest in the underlying securities at par plus accrued interest to a financial institution. These trusts are structured so that the purchaser of the MTR is considered to be investing in the underlying municipal securities. The structure is intended to allow the tax-exempt status of interest generated by the underlying asset to pass through to the purchaser. |
Q: What detracted from performance during the period?
A: In December, we kept additional cash on hand — as we do each year — to meet any tax-related redemptions as well as investors’ year-end liquidity needs. Because we kept a larger percentage of assets in overnight liquidity, this detracted somewhat from yield and total return.
Q: Will you describe your investment philosophy?
A: We continue our insistence on the highest credit quality within the funds. We also plan to maintain our conservative investment strategies and standards. We continue to apply a careful approach to investing on behalf of the funds 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.
Portfolio Summary July 31, 2005
Scudder Money Market Fund
Asset Allocation | 7/31/05 | 7/31/04 | ||||
Commercial Paper | 37 | % | 30 | % | ||
Short-Term Notes | 20 | % | 16 | % | ||
Certificates of Deposit and Bank Notes | 16 | % | 19 | % | ||
Repurchase Agreements | 12 | % | 13 | % | ||
US Government Sponsored Agencies+ | 7 | % | 14 | % | ||
Promissory Notes | 4 | % | 4 | % | ||
Master Notes | 2 | % | 3 | % | ||
Other Investments | 2 | % | 1 | % | ||
100 | % | 100 | % | |||
Weighted Average Maturity | ||||||
Scudder Money Market Fund | 43 days | 53 days | ||||
First Tier Retail Money Fund Average* | 38 days | 41 days |
+ | Not backed by the full faith and credit of the US Government |
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* | The Fund is compared to its respective iMoneyNet Category: First Tier Retail Money Fund Average — Category includes a widely-recognized composite of money market funds that invest in only first tier (highest rating) securities. Portfolio Holdings of First Tier funds include US Treasury, US Other, Repos, Time Deposits, Domestic Bank Obligations, Foreign Bank Obligations, First Tier Commercial Paper, Floating Rate Notes and Asset Backed Commercial Paper. |
Scudder Government & Agency Money Fund
Asset Allocation | 7/31/05 | 7/31/04 | ||||
Agencies Not Backed by the Full Faith and Credit of the US Government | 47 | % | 65 | % | ||
Repurchase Agreements | 48 | % | 29 | % | ||
Agencies Backed by the Full Faith and Credit of the US Government | 5 | % | 6 | % | ||
100 | % | 100 | % | |||
Weighted Average Maturity | ||||||
Scudder Government & Agency Money Fund | 41 days | 54 days | ||||
Government and Agencies Retail Money Fund Average** | 31 days | 38 days |
** | The Fund is compared to its respective iMoney Net Category: Government & Agencies Retail Money Fund Average — Category includes the most broadly based of the government retail funds. These funds can invest in US Treasuries, US Other, Repos, whether or not they are backed by US Treasuries and government-backed Floating Rate Notes. |
Scudder Tax-Exempt Money Fund
Asset Allocation | 7/31/05 | 7/31/04 | ||||
Municipal Investments | 100 | % | 100 | % | ||
Weighted Average Maturity | ||||||
Scudder Tax-Exempt Money Fund | 31 days | 26 days | ||||
National Tax-Free Retail Money Fund Average*** | 25 days | 32 days |
*** | The Fund is compared to its respective iMoneyNet category: National Tax-Free Retail Money Fund Average — Category consists of all national tax-free and municipal retail funds. Portfolio Holdings of tax-free Funds include Rated and Unrated Demand Notes, Rated and Unrated General Market Notes; Commercial Paper; Put Bonds — 6 months and less; over 6 months; AMT Paper and Other Tax-Free Holdings. |
Asset Allocation is subject to change. For more complete details about the Funds’ holdings, see pages 16-33. A quarterly Fact Sheet is available upon request.
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Information concerning portfolio holdings of each 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 each Fund’s fiscal first and third quarter-end, a complete portfolio holdings listing is filed with the SEC on Form N-Q. This 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 July 31, 2005
Scudder Money Market Fund | Principal Amount ($) | Value ($) | ||
Certificates of Deposit and Bank Notes 16.2% | ||||
Abbott Laboratories, 5.625%, 7/1/2006 | 10,000,000 | 10,144,984 | ||
Bank of America NA, 2.92%, 8/3/2005 | 25,000,000 | 25,000,000 | ||
Bank Tokyo-Mitsubishi, 3.29%, 8/8/2005 | 30,000,000 | 30,000,000 | ||
BNP Paribas: | ||||
3.02%, 8/22/2005 | 50,000,000 | 50,000,000 | ||
3.16%, 8/9/2005 | 12,000,000 | 11,999,988 | ||
Calyon, 3.27%, 3/6/2006 | 20,000,000 | 20,000,000 | ||
Credit Suisse First Boston, 3.3%, 8/9/2005 | 85,000,000 | 85,000,000 | ||
Depfa Bank PLC, 3.22%, 2/6/2006 | 20,000,000 | 20,000,000 | ||
HBOS Treasury Services PLC: | ||||
3.29%, 9/6/2005 | 25,000,000 | 25,000,000 | ||
3.8%, 7/10/2006 | 35,000,000 | 35,000,000 | ||
Societe Generale: | ||||
2.955%, 8/8/2005 | 14,000,000 | 14,000,014 | ||
3.265%, 3/3/2006 | 27,000,000 | 27,000,000 | ||
3.29%, 8/10/2005 | 100,000,000 | 100,000,000 | ||
Tango Finance Corp., 4.045%, 7/25/2006 | 25,000,000 | 24,998,774 | ||
Toronto Dominion Bank: | ||||
3.6%, 6/7/2006 | 25,000,000 | 25,000,000 | ||
3.75%, 5/16/2006 | 17,500,000 | 17,498,651 | ||
UniCredito Italiano SpA: | ||||
3.185%, 8/15/2005 | 25,000,000 | 25,000,000 | ||
3.73%, 4/12/2006 | 5,000,000 | 5,000,000 | ||
Total Certificates of Deposit and Bank Notes (Cost $550,642,411) | 550,642,411 | |||
Commercial Paper** 38.1% | ||||
Apreco LLC, 3.27%, 8/3/2005 | 64,600,000 | 64,588,264 | ||
Atlantis One Funding Corp.: | ||||
3.16%, 8/16/2005 | 70,827,000 | 70,733,745 | ||
3.25%, 9/9/2005 | 20,432,000 | 20,360,062 | ||
3.26%, 8/9/2005 | 60,000,000 | 59,956,533 | ||
3.26%, 9/9/2005 | 10,212,000 | 10,175,935 | ||
CC (USA), Inc., 3.6%, 11/1/2005 | 22,000,000 | 21,797,600 |
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Charta, LLC: | ||||
3.27%, 8/3/2005 | 100,000,000 | 99,981,833 | ||
3.46%, 9/20/2005 | 35,000,000 | 34,831,806 | ||
CIT Group, Inc., 2.91%, 8/8/2005 | 40,000,000 | 39,977,367 | ||
General Electric Co., 3.5%, 9/29/2005 | 100,000,000 | 99,426,389 | ||
Giro Funding US Corp.: | ||||
3.5%, 9/20/2005 | 50,000,000 | 49,756,944 | ||
3.58%, 10/20/2005 | 60,000,000 | 59,522,667 | ||
Jupiter Securitization Corp., 3.27%, 8/8/2005 | 16,892,000 | 16,881,259 | ||
Liberty Street Funding, 3.42%, 8/26/2005 | 25,000,000 | 24,940,625 | ||
Merrill Lynch & Co., Inc., 3.3%, 8/1/2005 | 65,000,000 | 65,000,000 | ||
National Rural Utilities CFC, 3.34%, 8/11/2005 | 25,000,000 | 24,976,806 | ||
Perry Global Funding LLC, Series A, 3.4%, 8/19/2005 | 50,000,000 | 49,915,000 | ||
Preferred Receivables Funding Corp.: | ||||
3.27%, 8/2/2005 | 51,243,000 | 51,238,346 | ||
3.27%, 8/9/2005 | 85,252,000 | 85,190,050 | ||
RWE AG, 2.92%, 8/8/2005 | 10,000,000 | 9,994,322 | ||
Scaldis Capital LLC: | ||||
3.28%, 8/8/2005 | 88,691,000 | 88,634,435 | ||
3.41%, 8/25/2005 | 50,000,000 | 49,886,333 | ||
Sheffield Receivables Corp., 3.27%, 8/9/2005 | 150,000,000 | 149,891,000 | ||
Tango Finance Corp., 3.14%, 8/4/2005 | 6,000,000 | 5,998,430 | ||
The Goldman Sachs Group, Inc., 3.185%, 3/3/2006 | 10,000,000 | 9,810,669 | ||
Windmill Funding Corp., 3.28%, 8/11/2005 | 30,000,000 | 29,972,667 | ||
Total Commercial Paper (Cost $1,293,439,087) | 1,293,439,087 | |||
Short-Term Notes* 20.1% | ||||
American Express Centurion Bank, 3.34%, 9/1/2005 | 20,000,000 | 20,000,645 | ||
American Express Credit Corp.: | ||||
3.19%, 8/9/2005 | 35,000,000 | 35,000,314 | ||
3.34%, 9/30/2005 | 6,000,000 | 6,000,355 | ||
American Honda Finance Corp., 144A, 3.38%, 9/19/2005 | 20,000,000 | 19,999,733 | ||
Beta Finance, Inc., 144A, 3.56%, 4/10/2006 | 25,000,000 | 25,005,687 | ||
Canadian Imperial Bank of Commerce, 1.92%, 10/14/2005 | 45,000,000 | 45,015,350 | ||
Credit Suisse First Boston, 3.38%, 9/9/2005 | 5,000,000 | 5,000,125 | ||
Depfa Bank PLC, 3.42%, 9/15/2005 | 25,000,000 | 25,000,000 | ||
General Electric Capital Corp., 3.67%, 9/23/2005 | 32,300,000 | 32,316,233 | ||
General Electric Co., 3.7%, 10/24/2005 | 5,000,000 | 5,000,609 | ||
Greenwich Capital Holdings, Inc.: | ||||
3.15%, 12/5/2005 | 75,000,000 | 75,000,000 | ||
3.31%, 11/14/2005 | 50,000,000 | 50,000,000 | ||
HSBC Finance Corp., 3.27%, 10/25/2005 | 50,000,000 | 50,000,000 | ||
International Business Machines Corp., 3.31%, 3/8/2006 | 3,000,000 | 2,999,756 | ||
Links Finance LLC, 3.385%, 5/22/2006 | 5,000,000 | 4,999,586 | ||
Merrill Lynch & Co., Inc.: | ||||
3.12%, 1/4/2006 | 25,000,000 | 25,000,000 |
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3.39%, 5/5/2006 | 6,000,000 | 6,003,667 | ||
3.471%, 3/17/2006 | 55,000,000 | 55,025,080 | ||
Morgan Stanley: | ||||
3.32%, 11/15/2005 | 28,000,000 | 28,000,000 | ||
3.37%, 11/7/2005 | 25,000,000 | 24,999,995 | ||
Pfizer, Inc., 144A, 3.3%, 10/7/2005 | 40,000,000 | 40,000,000 | ||
SunTrust Bank NA, 3.17%, 4/28/2006 | 100,000,000 | 100,000,000 | ||
Total Short-Term Notes (Cost $680,367,135) | 680,367,135 | |||
US Government Sponsored Agencies 6.9% | ||||
Federal Farm Credit Bank, 3.17%*, 1/17/2006 | 30,000,000 | 30,000,000 | ||
Federal Home Loan Bank, 3.309%*, 9/16/2005 | 30,000,000 | 29,998,944 | ||
Federal Home Loan Mortgage Corp., 3.51%*, 10/7/2005 | 90,000,000 | 90,000,000 | ||
Federal National Mortgage Association: | ||||
2.84%**, 8/3/2005 | 25,000,000 | 24,996,055 | ||
3.25%*, 12/9/2005 | 10,000,000 | 9,997,835 | ||
4.0%, 8/8/2006 | 50,000,000 | 50,000,000 | ||
Total US Government Sponsored Agencies (Cost $234,992,834) | 234,992,834 | |||
Asset Backed 1.2% | ||||
Permanent Financing PLC, “1A”, Series 8, 3.34%*, 6/10/2006 | 35,000,000 | 35,000,000 | ||
Volkswagen Auto Lease Trust, “A1”, Series 2005-A, 2.985%, 3/20/2006 | 5,006,373 | 5,006,373 | ||
Total Asset Backed (Cost $40,006,373) | 40,006,373 | |||
Master Notes 1.5% | ||||
Bear Stearns & Co., Inc., 3.463%*, 8/1/2005 (f) (Cost $50,000,000) | 50,000,000 | 50,000,000 | ||
Promissory Notes 4.1% | ||||
The Goldman Sachs Group, Inc.: | ||||
2.48%*, 10/7/2005 | 75,000,000 | 75,000,000 | ||
3.17%*, 2/16/2006 | 15,000,000 | 15,000,000 | ||
3.39%*, 8/10/2005 | 50,000,000 | 50,000,000 | ||
Total Promissory Notes (Cost $140,000,000) | 140,000,000 | |||
Guaranteed Investment Contracts 0.7% | ||||
New York Life Insurance Co., 3.514%*, 9/20/2005 (Cost $25,000,000) | 25,000,000 | 25,000,000 | ||
Repurchase Agreements 11.8% | ||||
BNP Paribas, 3.3%, dated 7/29/2005, to be repurchased at $100,027,500 on 8/1/2005 (b) | 100,000,000 | 100,000,000 | ||
JPMorgan Chase, Inc., 3.3%, dated 7/29/2005, to be repurchased at $95,026,125 on 8/1/2005 (c) | 95,000,000 | 95,000,000 | ||
Morgan Stanley & Co., Inc., 3.31%, dated 7/29/2005, to be repurchased at $202,055,718 on 8/1/2005 (d) | 202,000,000 | 202,000,000 | ||
State Street Bank and Trust Co., 3.14%, dated 7/29/2005, to be repurchased at $2,149,562 on 8/1/2005 (e) | 2,149,000 | 2,149,000 | ||
Total Repurchase Agreements (Cost $399,149,000) | 399,149,000 | |||
% of Net Assets | Value ($) | |||||
Total Investment Portfolio (Cost $3,413,596,840) (a) | 100.6 | 3,413,596,840 | ||||
Other Assets and Liabilities, Net | (0.6 | ) | (21,289,148 | ) | ||
Net Assets | 100.0 | 3,392,307,692 |
* | 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 July 31, 2005. |
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** | Annualized yield at time of purchase; not a coupon rate. |
(a) | The cost for federal income tax purposes was $3,413,596,840. |
(b) | Collateralized by: |
Principal Amount ($) | Security | Rate (%) | Maturity Date | Collateral Value ($) | ||||
11,360,000 | Federal Home Loan Bank | 3.875 | 8/22/2008 | 11,244,370 | ||||
36,626,000 | Federal Home Loan Mortgage Corp. | 2.875-6.875 | 9/18/2007-9/15/2010 | 40,985,688 | ||||
50,000,000 | Federal National Mortgage Association | 4.25 | 8/15/2010 | 49,770,780 | ||||
Total Collateral Value | 102,000,838 | |||||||
(c) | Collateralized by $95,035,000 Government National Mortgage Association, 5.5%, maturing on 7/15/2035 with a value of $96,904,192. |
(d) | Collateralized by: |
Principal Amount ($) | Security | Rate (%) | Maturity Date | Collateral Value ($) | ||||
84,120,935 | Federal Home Loan Mortgage Corp. | 4.0-7.0 | 5/1/2016-7/1/2035 | 85,871,581 | ||||
114,739,308 | Federal National Mortgage Association | 3.567-8.0 | 6/1/2018-8/1/2035 | 120,691,414 | ||||
Total Collateral Value | 206,562,995 | |||||||
(e) | Collateralized by $2,175,000 Federal Home Loan Mortgage Corp., 2.875%, maturing on 9/15/2005 with a value of $2,195,776. |
(f) | Reset date; not a maturity date. |
144A: Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.
The accompanying notes are an integral part of the financial statements.
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Scudder Government & Agency Money Fund | Principal Amount ($) | Value ($) | ||
Agencies Not Backed by the Full Faith and Credit of the US Government 47.3% | ||||
US Government Sponsored Agencies 41.5% | ||||
Federal Farm Credit Bank: | ||||
3.17%*, 1/17/2006 | 20,000,000 | 20,000,000 | ||
3.41%*, 12/27/2005 | 15,000,000 | 15,000,000 | ||
Federal Home Loan Bank: | ||||
3.25%, 7/21/2006 | 5,000,000 | 4,964,779 | ||
3.27%*, 9/12/2005 | 34,000,000 | 33,997,597 | ||
Federal Home Loan Mortgage Corp.: | ||||
2.5%, 3/28/2006 | 5,000,000 | 4,954,823 | ||
2.9%**, 8/9/2005 | 15,500,000 | 15,490,011 | ||
3.51%*, 10/7/2005 | 10,000,000 | 10,000,000 | ||
3.83%, 6/20/2006 | 7,500,000 | 7,500,000 | ||
Federal National Mortgage Association: | ||||
2.18%, 1/30/2006 | 3,225,000 | 3,198,510 | ||
2.84%**, 8/3/2005 | 3,000,000 | 2,999,527 | ||
2.98%**, 9/16/2005 | 2,542,000 | 2,532,321 | ||
3.075%**, 1/27/2006 | 3,000,000 | 2,954,131 | ||
3.22%*, 9/7/2006 | 25,000,000 | 24,979,530 | ||
3.28%**, 8/1/2005 | 30,000,000 | 30,000,000 | ||
4.0%, 8/8/2006 | 5,000,000 | 5,000,000 | ||
183,571,229 | ||||
US Government Agency Sponsored Pass-Throughs 5.8% | ||||
Federal National Mortgage Association: | ||||
3.12%**, 8/1/2005 | 9,000,000 | 9,000,000 | ||
3.26%**, 8/1/2005 | 10,000,000 | 10,000,000 | ||
4.03%, 7/21/2006 | 6,500,000 | 6,500,000 | ||
25,500,000 | ||||
Total Agencies Not Backed by the Full Faith and Credit of the US Government (Cost $209,071,229) | 209,071,229 | |||
Agencies Backed by the Full Faith and Credit of the US Government 5.0% | ||||
Government Guaranteed Securities | ||||
Hainan Airlines: | ||||
Series 2000-1, 3.41%*, 12/15/2007 | 9,966,939 | 9,966,940 | ||
Series 2000-2, 3.41%*, 12/15/2007 | 6,133,492 | 6,133,492 | ||
Series 2000-3, 3.41%*, 12/15/2007 | 6,133,501 | 6,133,501 | ||
Total Agencies Backed by the Full Faith and Credit of the US Government (Cost $22,233,933) | 22,233,933 | |||
Repurchase Agreements 47.4% | ||||
Bank of America Securities LLC, 3.28%, dated 7/7/2005, to be repurchased at $75,225,500 on 8/9/2005 (b) | 75,000,000 | 75,000,000 | ||
BNP Paribas, 3.32%, dated 7/29/2005, to be repurchased at $24,006,640 on 8/1/2005 (c) | 24,000,000 | 24,000,000 | ||
Citigroup Global Markets, Inc., 3.5%, dated 7/27/2005, to be repurchased at $10,060,278 on 9/27/2005 (d) | 10,000,000 | 10,000,000 | ||
Credit Suisse First Boston Corp., 3.28%, dated 7/6/2005, to be repurchased at $55,170,378 on 8/9/2005 (e) | 55,000,000 | 55,000,000 | ||
Goldman Sachs Co., Inc., 3.28%, dated 7/12/2005, to be repurchased at $45,114,800 on 8/9/2005 (f) | 45,000,000 | 45,000,000 | ||
State Street Bank and Trust Co., 3.1%, dated, 7/29/2005, to be repurchased at $794,205 on 8/1/2005 (g) | 794,000 | 794,000 | ||
Total Repurchase Agreements (Cost $209,794,000) | 209,794,000 | |||
% of Net Assets | Value ($) | |||
Total Investment Portfolio (Cost $441,099,162) (a) | 99.7 | 441,099,162 | ||
Other Assets and Liabilities, Net | 0.3 | 1,144,519 | ||
Net Assets | 100.0 | 442,243,681 |
* | 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 July 31, 2005. |
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** | Annualized yield at time of purchase; not a coupon rate. |
(a) | The cost for federal income tax purposes was $441,099,162. |
(b) | Collateralized by: |
Principal Amount ($) | Security | Rate (%) | Maturity Date | Collateral Value ($) | ||||
8,091,129 | Federal Home Loan Mortgage Corp. | 5.0-7.0 | 6/1/2032-5/1/2035 | 8,236,004 | ||||
66,802,303 | Federal National Mortgage Association | 4.72-7.0 | 12/1/2011-7/1/2035 | 67,939,101 | ||||
Total Collateral Value | 76,175,105 | |||||||
(c) | Collateralized by: |
Principal Amount ($) | Security | Rate (%) | Maturity Date | Collateral Value ($) | ||||
20,916,357 | Federal Home Loan Mortgage Corp. | 5.0 | 7/1/2020 | 15,136,678 | ||||
53,916,357 | Federal National Mortgage Association | 5.5 | 2/1/2035-8/1/2035 | 9,343,323 | ||||
Total Collateral Value | 24,480,000 | |||||||
(d) | Collateralized by $11,330,259 Federal Home Loan Mortgage Corp., 4.0%, maturing on 6/15/2033 with a value of $10,300,000. |
(e) | Collateralized by $55,868,635 Federal National Mortgage Association, with various coupon rates from 3.732-3.909% with various maturity dates of 8/1/2033-9/1/2034 with a value of $56,100,600. |
(f) | Collateralized by $47,032,000 US Treasury Note, 3.625%, maturing on 5/15/2013 with a value of $45,900,312. |
(g) | Collateralized by $725,000 Federal National Mortgage Association, 6.125%, maturing on 3/15/2012 with a value of $810,188. |
The accompanying notes are an integral part of the financial statements.
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Scudder Tax-Exempt Money Fund | Principal Amount ($) | Value ($) | ||
Municipal Bonds and Notes 101.0% | ||||
Arizona 1.2% | ||||
Arizona, Salt River Pima-Maricopa, Indian Community, 2.34%*, 10/1/2025, Bank of America NA (c) | 5,000,000 | 5,000,000 | ||
Arizona, School Facilities Board, Certificates of Participation, Series 735, 144A, 2.37%*, 3/1/2013 (b) | 3,695,000 | 3,695,000 | ||
8,695,000 | ||||
California 2.5% | ||||
California, Housing Finance Agency Revenue, Multi-Family Housing, Series C, AMT, 2.36%*, 2/1/2037 | 2,175,000 | 2,175,000 | ||
California, State General Obligation, Series PT-1555, 144A, 2.35%*, 10/1/2010 (b) | 4,945,000 | 4,945,000 | ||
Hayward, CA, Multi-Family Housing Revenue, Timbers Apartments, Series A, AMT, 2.32%*, 3/15/2033 | 2,600,000 | 2,600,000 | ||
Los Angeles County, CA, Tax & Revenue Anticipation Notes, Series A, 4.0%, 6/30/2006 | 6,000,000 | 6,077,889 | ||
Riverside, CA, Community College District, Series 913, 144A, 2.36%*, 2/1/2013 (b) | 3,000,000 | 3,000,000 | ||
18,797,889 | ||||
Colorado 5.0% | ||||
Adams & Weld Counties, CO, Brighton School District No. 27J, Series R-6514, 144A, 2.37%*, 12/1/2024 (b) | 8,525,000 | 8,525,000 | ||
Colorado, Educational & Cultural Facilities Authority Revenue, National Jewish Board Program, Series C-1, 2.33%*, 9/1/2035, US Bank NA (c) | 6,500,000 | 6,500,000 | ||
Colorado, Educational & Cultural Facilities Authority Revenue, Vail Mountain School Project, 2.43%*, 5/1/2033, KeyBank NA (c) | 3,200,000 | 3,200,000 | ||
Colorado, State Education Loan Program, Tax & Revenue Anticipation Notes, Series A, ETM, 3.5%, 8/9/2005 | 12,530,000 | 12,531,975 | ||
Larimer County, CO, School District No. R-1 Poudre, Series II-R-4535, 144A, 1.7%*, 12/15/2021 (b) | 2,820,000 | 2,820,000 | ||
Summit County, CO, School District No. RE1, Series R-6513, 144A, 2.37%*, 12/1/2023 (b) | 3,370,000 | 3,370,000 | ||
36,946,975 | ||||
Delaware 0.7% | ||||
Sussex County, DE, Industrial Development Revenue, Perdue Agrirecycle LLC Project, AMT, 2.4%*, 1/1/2013, SunTrust Bank (c) | 5,000,000 | 5,000,000 | ||
District of Columbia 2.6% | ||||
District of Columbia, Tax & Revenue Anticipation Notes, 3.5%, 9/30/2005 | 19,000,000 | 19,029,829 | ||
Florida 4.3% | ||||
Alachua County, FL, Health Facilities Authority Revenue, Shands Teaching Hospital, Series A, 2.33%*, 12/1/2032, SunTrust Bank (c) | 2,000,000 | 2,000,000 | ||
Broward County, FL, Housing Finance Authority, Multi-Family Housing Revenue, Series PT-703, 144A, 2.35%*, 9/1/2026 | 7,025,000 | 7,025,000 | ||
Broward County, FL, School Board Certificates of Participation, Series R-1056, 144A, 2.37%*, 7/1/2019 (b) | 4,180,000 | 4,180,000 | ||
Collier County, FL, School Board Certificates Participation, Series MT-147, 144A, 2.36%*, 2/15/2021 (b) | 4,000,000 | 4,000,000 | ||
Florida, Higher Educational Facilities Financing Authority Revenue, St. Thomas University Project, 2.33%*, 1/1/2019, SunTrust Bank (c) | 1,300,000 | 1,300,000 | ||
Gulf Breeze, FL, Municipal Bond Fund Revenue, Series A, 2.34%*, 3/31/2021, Bank of America NA (c) | 2,265,000 | 2,265,000 | ||
Miami-Dade County, FL, Industrial Development Authority Revenue, Gulliver Schools Project, 2.39%*, 9/1/2029, Bank of America NA (c) | 2,890,000 | 2,890,000 | ||
Orange County, FL, Health Facilities Authority Revenue, Presbyterian Retirement Project, 2.39%*, 11/1/2028, Bank of America NA (c) | 1,900,000 | 1,900,000 | ||
Orange County, FL, Housing Finance Authority, Multi-Family Revenue, Smokewood/Sun, Series A, 2.36%*, 12/1/2022 | 550,000 | 550,000 | ||
Pasco County, FL, School Board Certificates of Participation, 2.33%*, 8/1/2026 (b) | 150,000 | 150,000 | ||
Pinellas County, FL, Health Facilities Authority Revenue, Pooled Hospital Loan Program, 2.34%*, 12/1/2015 (b) | 1,800,000 | 1,800,000 | ||
Sarasota County, FL, Health Facility Authority Revenue, Bay Village Project, 2.39%*, 12/1/2023, Bank of America NA (c) | 4,200,000 | 4,200,000 | ||
32,260,000 | ||||
Georgia 2.9% | ||||
Atlanta, GA, Airport Revenue: | ||||
Series C-3, 2.33%*, 1/1/2030 (b) | 500,000 | 500,000 | ||
Series C-1, 2.34%*, 1/1/2030 (b) | 4,000,000 | 4,000,000 | ||
Burke County, GA, Development Authority Pollution Control Revenue, Oglethorpe Power Corp., 2.33%*, 1/1/2022 (b) | 2,785,000 | 2,785,000 | ||
Fulton County, GA, Development Authority Revenue, Shepherd Center, Inc. Project, 2.35%*, 9/1/2035, SunTrust Bank (c) | 4,300,000 | 4,300,000 | ||
Rockdale County, GA, Hospital Authority Revenue, Anticipation Certificates, 2.34%*, 10/1/2027, SunTrust Bank (c) | 4,410,000 | 4,410,000 | ||
Roswell, GA, Housing Authority, Multi-Family Revenue, Post Canyon Project, 2.35%*, 6/1/2025 | 5,400,000 | 5,400,000 | ||
21,395,000 | ||||
Hawaii 1.6% | ||||
ABN AMRO, Munitops Certificates Trust, Series 2004-16, 144A, 2.37%*, 7/1/2012 (b) | 3,200,000 | 3,200,000 | ||
Honolulu, HI, City & County, General Obligation, 2.5%, 8/16/2005 | 8,600,000 | 8,600,000 | ||
11,800,000 | ||||
Idaho 2.0% | ||||
Idaho, State Tax Anticipation Notes, 4.0%, 6/30/2006 | 7,500,000 | 7,590,637 | ||
Power County, ID, Industrial Development Authority, FMC Corp. Project, AMT, 2.39%*, 4/1/2014, Wachovia Bank NA (c) | 7,500,000 | 7,500,000 | ||
15,090,637 | ||||
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Illinois 8.3% | ||||
Chicago, IL, Revenue Bonds, De La Salle Institute Project, 2.45%*, 4/1/2027, Fifth Third Bank (c) | 3,470,000 | 3,470,000 | ||
Cicero, IL, Industrial Development Revenue, Harris Steel Co. Project, AMT, 2.5%*, 5/1/2011, American National Bank & Trust (c) | 1,450,000 | 1,450,000 | ||
Cook County, IL, Industrial Development Revenue, 128th Place Limited Partnership, AMT, 2.41%*, 7/1/2020, LaSalle Bank NA (c) | 2,400,000 | 2,400,000 | ||
Cook County, IL, Industrial Development Revenue, Devorahco LLC Project, Series A, AMT, 2.41%*, 12/1/2034, LaSalle Bank NA (c) | 2,000,000 | 2,000,000 | ||
Du Page County, IL, Benedictine University Building Project, 2.35%*, 7/1/2024, LaSalle Bank NA (c) | 5,430,000 | 5,430,000 | ||
Franklin Park, IL, Industrial Development Revenue, MacLean Fogg Co. Project, AMT, 2.4%*, 2/1/2007, Northern Trust Company (c) | 5,000,000 | 5,000,000 | ||
Hillside, IL, Economic Development Revenue, L&J Technologies Project, AMT, 2.4%*, 7/1/2024, Northern Trust Company (c) | 4,320,000 | 4,320,000 | ||
Illinois, Development Finance Authority Revenue, Regional Organization Bank of Illinois Project, 2.45%*, 12/1/2020, Bank One NA (c) | 2,400,000 | 2,400,000 | ||
Illinois, Development Finance Authority, Industrial Development Revenue, Tripp Partners Project, AMT, 2.5%*, 2/1/2013, Northern Trust Company (c) | 3,080,000 | 3,080,000 | ||
Illinois, Development Finance Authority, Industrial Project Revenue, Grecian Delight Foods Project, AMT, 2.41%*, 8/1/2019, LaSalle Bank NA (c) | 4,700,000 | 4,700,000 | ||
Illinois, Finance Authority Revenue, Northwestern Memorial Hospital, Series B-1, 2.33%*, 8/15/2038 | 300,000 | 300,000 | ||
Illinois, Finance Authority Revenue, Northwestern University, Series B, 2.32%*, 12/1/2034 | 1,000,000 | 1,000,000 | ||
Illinois, General Obligation, Series 1750, 144A, 2.37%*, 12/1/2010 (b) | 5,320,000 | 5,320,000 | ||
Illinois, General Obligation, Regional Transportation Authority, Merlots, Series A-24, 144A, 2.37%*, 7/1/2032 (b) | 2,165,000 | 2,165,000 | ||
Illinois, General Obligation, Star Certificates, Series 03-20, 144A, 2.37%*, 11/1/2019 (b) | 5,715,000 | 5,715,000 | ||
Lake Zurich, IL, Industrial Development Revenue, Screenco LLC/ScreenFlex Project, AMT, 2.41%*, 3/1/2018, LaSalle National Bank (c) | 1,725,000 | 1,725,000 | ||
Mundelein, IL, Industrial Development Revenue, MacLean Fogg Co. Project, AMT, 2.4%*, 1/1/2015, Northern Trust Company (c) | 6,500,000 | 6,500,000 | ||
Tinley Park, IL, Industrial Development Revenue, Harbor Tool Manufacturing, Inc., Project, AMT, 2.41%*, 7/1/2020, LaSalle Bank NA (c) | 1,170,000 | 1,170,000 | ||
Woodridge, IL, Du Page Will & Cook Counties, Industrial Development Revenue, Morey Realty Group, Inc. Project, AMT, 2.5%*, 12/1/2016, Bank One NA (c) | 3,970,000 | 3,970,000 | ||
62,115,000 | ||||
Indiana 3.8% | ||||
ABN AMRO, Munitops Certificates Trust, Series 2005-7, 144A, 2.38%*, 7/10/2013 (b) | 7,210,000 | 7,210,000 | ||
Indiana, Development Finance Authority, Industrial Development Revenue, Enterprise Center III Project, AMT, 2.41%*, 6/1/2022, LaSalle Bank NA (c) | 4,500,000 | 4,500,000 | ||
Indiana, Development Finance Authority, Industrial Development Revenue, Enterprise Center VI Project, AMT, 2.41%*, 6/1/2022, LaSalle Bank NA (c) | 4,900,000 | 4,900,000 | ||
Indiana, Health Facility Financing Authority, Hospital Revenue, Macon Trust, Series F, 144A, 2.37%*, 5/1/2035 (b) | 4,995,000 | 4,995,000 | ||
Indiana, State Development Finance Authority, Economic Development Revenue, Goodwill Industries Michiana Project, 2.4%*, 1/1/2027, National City Bank of Indiana (c) | 1,985,000 | 1,985,000 | ||
Indiana, State Development Finance Authority, Industrial Development Revenue, Enterprise Center IV Project, AMT, 2.41%*, 6/1/2022, LaSalle Bank NA (c) | 1,600,000 | 1,600,000 | ||
Indiana, State Educational Facilities Authority Revenue, St. Mary Woods Project, 2.35%*, 4/1/2024, Bank One NA (c) | 3,000,000 | 3,000,000 | ||
28,190,000 | ||||
Kentucky 6.9% | ||||
Boone County, KY, Pollution Control Revenue, Cincinnati Gas & Electric Co., Series A, 2.55%*, 8/1/2013, Credit Lyonnais (c) | 4,400,000 | 4,400,000 | ||
Jeffersontown, KY, Lease Program Revenue, Kentucky League of Cities Funding Trust, 2.59%*, 3/1/2030, US Bank NA (c) | 4,515,000 | 4,515,000 | ||
Kentucky, General Fund Revenue, Tax & Revenue Anticipation Notes, Series A, 4.0%, 6/28/2006 | 5,500,000 | 5,564,573 | ||
Lexington-Fayette Urban County, KY, Industrial Development Revenue, YMCA Central Kentucky, Inc. Project, 2.45%*, 7/1/2019, Bank One Kentucky NA (c) | 525,000 | 525,000 | ||
Pendleton, KY, County Lease: | ||||
2.85%, 8/5/2005 | 11,100,000 | 11,100,000 | ||
2.9%, 9/7/2005 | 25,000,000 | 25,000,000 | ||
51,104,573 | ||||
Louisiana 0.3% | ||||
Louisiana, State Offshore Terminal Authority, Deepwater Port Revenue, Loop LLC Project, Series A, 2.33%*, 9/1/2014, SunTrust Bank © | 2,400,000 | 2,400,000 | ||
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Maine 1.0% | ||||
Maine, State Tax Anticipation Notes, 4.0%, 6/30/2006 | 7,000,000 | 7,080,840 | ||
Massachusetts 0.9% | ||||
Massachusetts, State General Obligation, Series 05-7, 144A, 2.35%*, 8/1/2023 (b) | 6,700,000 | 6,700,000 | ||
Michigan 6.3% | ||||
Comstock Park, MI, Public Schools, Series R-2178, 144A, 2.37%*, 5/1/2025 (b) | 1,235,000 | 1,235,000 | ||
Detroit, MI, ABN AMRO Munitops Certificates Trust, Series 2003-3, 144A, 2.36%*, 1/1/2011 (b) | 24,000,000 | 24,000,000 | ||
Detroit, MI, City School District, Series PT-1844, 144A, 2.36%*, 5/1/2011 (b) | 1,060,000 | 1,060,000 | ||
Georgetown Township, MI, Economic Development Corp., Limited Obligation Revenue, Sunset Manor Inc. Project, 2.34%*, 11/1/2019, LaSalle Bank NA (c) | 5,815,000 | 5,815,000 | ||
Jackson County, MI, Economic Development Corp. Revenue, Spring Arbor College Project, 2.4%*, 12/1/2020, Comerica Bank (c) | 4,300,000 | 4,300,000 | ||
Michigan, General Obligation, 2.2%, 10/5/2005 | 2,100,000 | 2,100,000 | ||
Michigan, Municipal Securities Trust Certificates, Series 9054, 144A, 2.4%*, 4/20/2011 | 2,825,000 | 2,825,000 | ||
Michigan, Strategic Fund, Limited Obligation Revenue, Continental Aluminum Project, AMT, 2.5%*, 10/1/2015, Comerica Bank (c) | 4,900,000 | 4,900,000 | ||
Oakland County, MI, Economic Development Corp., Limited Obligation Revenue, Acme Manufacturing Co. Project, AMT, 2.5%*, 11/1/2023, JPMorgan Chase & Co. (c) | 690,000 | 690,000 | ||
46,925,000 | ||||
Missouri 0.3% | ||||
Missouri, Development Finance Board, Air Cargo Facility Revenue, St. Louis Airport, AMT, 2.4%*, 3/1/2030, American National Bank & Trust (c) | 2,500,000 | 2,500,000 | ||
Nebraska 0.3% | ||||
Nebraska, Investment Finance Authority, Single Family Housing Revenue, AMT, Series D, 2.42%*, 9/1/2034 | 2,497,500 | 2,497,500 | ||
Nevada 1.1% | ||||
Las Vegas Valley, NV, Water District, Series B-10, 144A, 2.37%*, 6/1/2024 (b) | 7,880,000 | 7,880,000 | ||
New Hampshire 0.3% | ||||
New Hampshire, State Business Finance Authority, Exempt Facilities Revenue, Waste Management of NH, Inc. Project, AMT, 2.39%*, 9/1/2012, Wachovia Bank NA (c) | 2,000,000 | 2,000,000 | ||
New Jersey 3.8% | ||||
New Jersey, Economic Development Authority Revenue, Series R-331, 144A, 2.38%*, 6/15/2012 (b) | 1,995,000 | 1,995,000 | ||
New Jersey, Economic Development Authority Revenue, First Mortgage Lions Gate Project, Series C, 2.35%*, 1/1/2020, Citizens Bank (c) | 7,500,000 | 7,500,000 | ||
New Jersey, Economic Development Authority, Dock Facility Revenue, Bayonne/IMTT Project, Series A, 2.29%*, 12/1/2027, SunTrust Bank (c) | 100,000 | 100,000 | ||
New Jersey, Economic Development Authority, Special Facility Revenue, Port Newark Container LLC, AMT, 2.38%*, 7/1/2030, Citibank NA (c) | 300,000 | 300,000 | ||
New Jersey, Sports & Exposition Authority State Contract, Series C, 2.29%*, 9/1/2024 (b) | 185,000 | 185,000 | ||
New Jersey, State Tax & Revenue Anticipation Notes, Series A, 4.0%, 6/23/2006 | 14,400,000 | 14,551,056 | ||
New Jersey, State Transportation Trust Fund Authority, Series PT-2488, 144A, 2.36%*, 12/15/2017 (b) | 2,800,000 | 2,800,000 | ||
Salem County, NJ, Industrial Pollution Control, Financing Authority Revenue, E.I. Du Pont, 2.5%*, 3/1/2012 | 900,000 | 900,000 | ||
28,331,056 | ||||
New Mexico 0.0% | ||||
Farmington, NM, Pollution Control Revenue, Arizona Public Service Co., Series C, AMT, 2.32%*, 9/1/2024, Barclays Bank PLC (c) | 100,000 | 100,000 | ||
New York 2.4% | ||||
City of Rochester, NY, General Obligation, 2.45%, 9/8/2005 | 6,000,000 | 6,000,000 | ||
New York, State Housing Finance Agency Revenue, Series E-39, AMT, 2.34%*, 11/15/2031 | 500,000 | 500,000 | ||
New York, State Housing Finance Agency Revenue, Multi-Family Housing, Series A, AMT, 2.36%*, 11/1/2028 (b) | 800,000 | 800,000 | ||
New York, State Thruway Authority, Personal Income Tax Revenue, Series PT-3027, 144A, 2.36%*, 3/15/2025 (b) | 6,415,000 | 6,415,000 | ||
New York, NY, Municipal Securities Trust Receipts, Series SG-109, 144A, 2.36%*, 6/1/2027 | 1,300,000 | 1,300,000 | ||
Niagara County, NY, Industrial Development Agency, Civic Facility Revenue, NYSARC, Inc. Opportunities Unlimited, Series A, 2.42%*, 9/1/2021, KeyBank NA (c) | 305,000 | 305,000 | ||
Oneida Indian Nation, NY, Revenue Bond, 2.34%*, 10/1/2032, Bank of America NA (c) | 215,000 | 215,000 | ||
Port Authority of New York & New Jersey, Special Obligation Revenue, Versatile Structure Obligation, Series 6, AMT, 2.32%*, 12/1/2017 | 2,000,000 | 2,000,000 | ||
17,535,000 | ||||
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North Carolina 0.4% | ||||
Moore County, NC, Industrial Facilities & Pollution Control Financing Authority Revenue, Klaussner Industries Project, AMT, 2.44%*, 5/1/2010, Wachovia Bank NA (c) | 3,100,000 | 3,100,000 | ||
Ohio 3.2% | ||||
Athens County, OH, Port Authority, Housing Revenue, University Housing for Ohio, Inc. Project, 2.4%*, 6/1/2032, Wachovia Bank NA (c) | 5,780,000 | 5,780,000 | ||
Cuyahoga County, OH, Hospital Revenue, Improvement Metrohealth System, 2.37%*, 2/1/2035, National City Bank (c) | 5,000,000 | 5,000,000 | ||
Cuyahoga, OH, Community College District, General Receipts, Series B, 2.37%*, 12/1/2032 (b) | 3,910,000 | 3,910,000 | ||
Lorain, OH, Port Authority Revenue, Port Development, Spitzer Project, AMT, 2.5%*, 12/1/2019, National City Bank (c) | 2,800,000 | 2,800,000 | ||
Ohio, State Higher Educational Facility Community Revenue, Pooled Program: | ||||
Series A, 2.4%*, 9/1/2020, Fifth Third Bank (c) | 1,000,000 | 1,000,000 | ||
Series C, 2.4%*, 9/1/2025, Fifth Third Bank (c) | 860,000 | 860,000 | ||
Ohio, State Water Development Authority Revenue, Series 1118, 144A, 2.36%*, 12/1/2019 | 2,590,000 | 2,590,000 | ||
Portage County, OH, Industrial Development Revenue, Allen Aircraft Products Project, AMT, 2.5%*, 7/1/2018, National City Bank (c) | 1,700,000 | 1,700,000 | ||
23,640,000 | ||||
Oklahoma 0.9% | ||||
Blaine County, OK, Industrial Development Authority Revenue, Seaboard Project, AMT, 2.4%*, 11/1/2018, SunTrust Bank (c) | 1,500,000 | 1,500,000 | ||
Payne County, OK, Economic Development Authority, Student Housing Revenue, OSUF Phase III Project, 2.36%*, 7/1/2032 (b) | 5,250,000 | 5,250,000 | ||
6,750,000 | ||||
Oregon 0.9% | ||||
Hermiston, OR, Electric System Revenue, Private Activities, Series A, 2.43%*, 10/1/2032, Bank of America NA (c) | 6,495,000 | 6,495,000 | ||
Pennsylvania 4.5% | ||||
Allentown, PA, Area Hospital Authority Revenue, Sacred Heart Hospital, Series B, 2.37%*, 7/1/2023, Wachovia Bank NA (c) | 1,740,000 | 1,740,000 | ||
Chester County, PA, Industrial Development Authority Revenue, Bentley Graphic, Inc. Project, AMT, 2.54%*, 12/1/2020, First Tennessee Bank (c) | 4,595,000 | 4,595,000 | ||
Dauphin County, PA, General Authority, Education & Health Loan Program, 2.38%*, 11/1/2017 (b) | 5,380,000 | 5,380,000 | ||
Manheim Township, PA, School District, 2.38%*, 6/1/2016 (b) | 3,990,000 | 3,990,000 | ||
Montgomery County, PA, Redevelopment Authority, Multi-Family Housing Revenue, Forge Gate Apartments Project, Series A, 2.32%*, 8/15/2031 | 110,000 | 110,000 | ||
Pennsylvania, Economic Development Financing Authority, Exempt Facilities Revenue, Amtrak Project, Series B, AMT, 2.4%*, 11/1/2041, Morgan Guaranty Trust (c) | 950,000 | 950,000 | ||
Pennsylvania, Economic Development Financing Authority, Solid Waste Disposal Revenue, Series MT-047, AMT, 144A, 2.4%*, 11/1/2021 | 2,870,000 | 2,870,000 | ||
Pennsylvania, State General Obligation, Series A-15, 144A, 2.37%*, 1/1/2017 (b) | 4,205,000 | 4,205,000 | ||
Pennsylvania, State Higher Educational Assistance Agency, Student Loan Revenue, Series A, AMT, 2.44%*, 3/1/2027 (b) | 4,545,000 | 4,545,000 | ||
Pennsylvania, State Higher Educational Facilities Authority Revenue, University Properties, Student Housing, Series A, 2.35%*, 8/1/2035, Citizens Bank (c) | 5,270,000 | 5,270,000 | ||
33,655,000 | ||||
Puerto Rico 0.2% | ||||
Commonwealth of Puerto Rico, General Obligation, Series 813-D, 144A, 2.33%*, 7/1/2020 (b) | 150,000 | 150,000 | ||
Puerto Rico, Industrial Tourist Educational, Medical & Environmental Central Facilities, Bristol-Myers Squibb Project, AMT, 2.33%*, 12/1/2030 | 1,700,000 | 1,700,000 | ||
1,850,000 | ||||
South Carolina 0.9% | ||||
Greenwood County, SC, Exempt Facility Industrial Revenue, Fuji Photo Film Project, AMT, 2.51%*, 9/1/2011 | 2,500,000 | 2,500,000 | ||
South Carolina, Educational Facilities Authority for Private Nonprofit Institutions, Coker College, 2.39%*, 6/1/2019, Wachovia Bank NA (c) | 4,455,000 | 4,455,000 | ||
6,955,000 | ||||
Tennessee 2.7% | ||||
Clarksville, TN, Public Building Authority Revenue, Pooled Financing Program: | ||||
2.34%*, 7/1/2031, Bank of America NA (c) | 3,700,000 | 3,700,000 |
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2.34%*, 1/1/2033, Bank of America NA (c) | 1,365,000 | 1,365,000 | ||
2.34%*, 7/1/2034, Bank of America NA (c) | 13,415,000 | 13,415,000 | ||
Montgomery County, TN, Public Building Authority, Pooled Financing Revenue, Tennessee County Loan Pool, 2.34%*, 7/1/2034, Bank of America NA (c) | 1,500,000 | 1,500,000 | ||
19,980,000 | ||||
Texas 21.5% | ||||
Aldine, TX, Independent School District, Series 827, 144A, 2.37%*, 1/1/2012 | 2,945,000 | 2,945,000 | ||
Austin, TX, Electric Utility Systems Revenue, Series R-1057, 144A, 2.37%*, 11/15/2021 (b) | 4,785,000 | 4,785,000 | ||
Austin, TX, Water & Waste Systems Revenue, Series B-27, 144A, 2.37%*, 11/15/2026 (b) | 5,260,000 | 5,260,000 | ||
Dallas, TX, Independent School District, Series 6038, 144A, 2.37%*, 8/15/2024 | 6,170,000 | 6,170,000 | ||
Galena Park, TX, Independent School District, Series SG-153, 144A, 2.37%*, 8/15/2023 | 6,700,000 | 6,700,000 | ||
Harris County, TX, General Obligation, 2.7%, 8/15/2005 | 10,000,000 | 10,000,000 | ||
Houston, TX, Airport System Revenue, Series SG-161, 144A, 2.37%*, 7/1/2032 (b) | 10,735,000 | 10,735,000 | ||
Houston, TX, General Obligation, Series 781, 144A, 2.37%*, 3/1/2009 (b) | 4,000,000 | 4,000,000 | ||
Houston, TX, Water & Sewer System Revenue, Municipal Trust Receipts, Series SG-120, 144A, 2.37%*, 12/1/2023 | 2,000,000 | 2,000,000 | ||
Houston, TX, Water & Sewer System Revenue, Star Certificates, Series 2003-14, 144A, 2.37%*, 6/1/2026 (b) | 1,100,000 | 1,100,000 | ||
Northside, TX, Independent School District, Series 758, 144A, 2.37%*, 2/15/2013 | 1,410,000 | 1,410,000 | ||
Northside, TX, Independent School District, School Building, 2.85%, 6/15/2035 | 5,000,000 | 5,000,000 | ||
San Antonio, TX, Electric & Gas Revenue, Series 1700, 144A, 2.38%*, 2/1/2010 | 6,570,000 | 6,570,000 | ||
Southwest Texas, Higher Education Authority, Inc, Southern Methodist University Project, Series B, 2.33%*, 10/1/2029, Landesbank Hessen-Thuringen (c) | 300,000 | 300,000 | ||
Texas, Lower Colorado River Authority: | ||||
2.5%, 8/5/2005 | 8,000,000 | 8,000,000 | ||
2.78%, 8/4/2005 | 13,500,000 | 13,500,000 | ||
Texas, Municipal Power Agency Revenue, Series L36J-D, 144A, 2.4%*, 9/1/2011 (b) | 14,000,000 | 14,000,000 | ||
Texas, State Tax & Revenue Anticipation Notes, 3.0%, 8/31/2005 | 32,400,000 | 32,430,175 | ||
Texas, University of Texas Revenue: | ||||
Series B-14, 144A, 2.37%*, 8/15/2022 | 4,590,000 | 4,590,000 | ||
2.62%*, 9/7/2005 | 9,500,000 | 9,500,000 | ||
Texas, Water Development Board Revenue, Series 2187, 144A, 2.35%*, 7/15/2008 | 10,905,000 | 10,905,000 | ||
159,900,175 | ||||
Utah 1.4% | ||||
Alpine, UT, General Obligation, School District: | ||||
Floater-PT-436, 144A, 2.37%*, 3/15/2007 | 2,270,000 | 2,270,000 | ||
Floater-PT-436, 144A, 2.37%*, 3/15/2009 | 4,125,000 | 4,125,000 | ||
Salt Lake County, UT, Pollution Control Revenue, Service Station Holdings Project, Series B, 2.32%*, 8/1/2007 | 200,000 | 200,000 | ||
Utah, Housing Finance Agency, Single Family Mortgage, Series E-1, AMT, 2.42%*, 7/1/2031 | 2,475,000 | 2,475,000 | ||
Weber County, UT, Hospital Revenue, IHC Health Services, Series A, 2.32%*, 2/15/2031 | 1,000,000 | 1,000,000 | ||
10,070,000 | ||||
Virginia 0.5% | ||||
Henrico County, VA, Economic Development Authority, Industrial Development Revenue, Colonial Mechanical Corp., AMT, 2.39%*, 8/1/2020, Wachovia Bank NA (c) | 4,000,000 | 4,000,000 | ||
Washington 4.4% | ||||
Grant County, WA, Public Utilities District Number 002, Electric Revenue, Series 780, 144A, 2.37%*, 1/1/2010 (b) | 6,125,000 | 6,125,000 | ||
King County, WA, General Obligation, Series 848, 144A, 2.37%*, 1/1/2013 (b) | 6,850,000 | 6,850,000 | ||
King County, WA, Public Hospital District No. 002, Series R-6036, 144A, 2.37%*, 12/1/2023 (b) | 1,275,000 | 1,275,000 | ||
Washington, State General Obligation: | ||||
Series A-11, 144A, 2.37%*, 6/1/2017 (b) | 5,680,000 | 5,680,000 | ||
Series R-3036, 144A, 2.37%*, 1/1/2023 (b) | 3,000,000 | 3,000,000 | ||
Washington, State Health Care Facilities Authority Revenue, Providence Services, Series A, 2.33%*, 12/1/2030 (b) | 2,950,000 | 2,950,000 | ||
Washington, State Housing Finance Commission, Multi-Family Revenue, Deer Run West Apartments Project, Series A, AMT, 2.43%*, 6/15/2037, Bank of America NA (c) | 5,200,000 | 5,200,000 |
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Washington, State Housing Finance Commission, Multi-Family Revenue, Park Vista Retirement Project, Series A, AMT, 2.38%*, 3/1/2041, Bank of America NA (c) | 1,700,000 | 1,700,000 | ||
32,780,000 | ||||
West Virginia 0.1% | ||||
Preston County, WV, Industrial Development Revenue, Allegheny Wood Products, Inc., AMT, 2.5%*, 12/1/2007, Bank One (c) | 400,000 | 400,000 | ||
Wisconsin 0.4% | ||||
Manitowoc, WI, Industrial Development Revenue, Kaysun Corp. Project, AMT, 2.5%*, 5/1/2015, Bank One (c) | 1,295,000 | 1,295,000 | ||
Pewaukee, WI, Industrial Development Revenue, Mixer System, Inc. Project, AMT, 2.5%*, 9/1/2020, Bank One (c) | 1,900,000 | 1,900,000 | ||
3,195,000 | ||||
Wyoming 0.1% | ||||
Platte County, WY, Pollution Control Revenue, Series B, 2.25%*, 7/1/2014, National Rural Utility Finance (c) | 850,000 | 850,000 | ||
Multi-State 0.4% | ||||
ABN AMRO, Munitops Certificates Trust, Series 2004-38, 144A, 2.37%*, 2/15/2011 | 3,000,000 | 3,000,000 | ||
% of Net Assets | Value ($) | |||||
Total Investment Portfolio (Cost $750,994,474) (a) | 101.0 | 750,994,474 | ||||
Other Assets and Liabilities, Net | (1.0 | ) | (7,273,922 | ) | ||
Net Assets | 100.0 | 743,720,552 |
* | 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 July 31, 2005. |
(a) | The cost for federal income tax purposes was $750,994,474. |
(b) | Bond is insured by one of these companies: |
Insurance Coverage | As a % of Total Investment Portfolio | |
MBIA Corp. | 9.8 | |
Financial Security Assurance Inc. | 8.4 | |
Ambac Financial Group | 4.7 | |
Financial Guaranty Insurance Company | 6.2 |
(c) | Security incorporates a letter of credit from a major bank. |
AMT: Subject to alternate minimum tax.
ETM: Escrow to maturity.
144A: Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.
The accompanying notes are an integral part of the financial statements.
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Statements of Assets and Liabilities as of July 31, 2005
Scudder Money Market Fund | Scudder Government & Agency Money Fund | Scudder Tax-Exempt Money Fund | |||||||||
Assets | |||||||||||
Investments: | |||||||||||
Investments in securities, at amortized cost | $ | 3,014,447,840 | $ | 231,305,162 | $ | 750,994,474 | |||||
Repurchase agreements, at amortized cost | 399,149,000 | 209,794,000 | — | ||||||||
Total investments in securities, at amortized cost | 3,413,596,840 | 441,099,162 | 750,994,474 | ||||||||
Cash | 17,486 | 970 | — | ||||||||
Receivable for investments sold | — | — | 7,940,000 | ||||||||
Interest receivable | 6,260,633 | 893,976 | 4,350,223 | ||||||||
Receivable for Fund shares sold | 7,368,773 | 756,198 | 596,141 | ||||||||
Other assets | 52,757 | 14,324 | 18,730 | ||||||||
Total assets | 3,427,296,489 | 442,764,630 | 763,899,568 | ||||||||
Liabilities | |||||||||||
Due to custodian bank | — | — | 11,706 | ||||||||
Dividends payable | 1,655,800 | 216,940 | 250,521 | ||||||||
Payable for investments purchased | 30,043,064 | — | 19,551,056 | ||||||||
Payable for Fund shares redeemed | 990,652 | — | — | ||||||||
Accrued management fee | 759,214 | 100,032 | 168,132 | ||||||||
Other accrued expenses and payables | 1,540,067 | 203,977 | 197,601 | ||||||||
Total liabilities | 34,988,797 | 520,949 | 20,179,016 | ||||||||
Net assets, at value | $ | 3,392,307,692 | $ | 442,243,681 | $ | 743,720,552 | |||||
Net Assets | |||||||||||
Net assets consist of: | |||||||||||
Undistributed net investment income | 100,180 | (133 | ) | 18,799 | |||||||
Accumulated net realized gain (loss) | — | (1,031 | ) | (5,418 | ) | ||||||
Paid-in capital | 3,392,207,512 | 442,244,845 | 743,707,171 | ||||||||
Net assets, at value | $ | 3,392,307,692 | $ | 442,243,681 | $ | 743,720,552 | |||||
Shares outstanding | 3,391,950,687 | 442,222,764 | 743,707,833 | ||||||||
Net asset value, offering and redemption price per share (Net asset value ÷ outstanding shares of beneficial interest, no par value, unlimited number of shares authorized) | $ | 1.00 | $ | 1.00 | $ | 1.00 | |||||
The accompanying notes are an integral part of the financial statements.
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Statements of Operations for the year ended July 31, 2005
Scudder Money Market Fund | Scudder Government & Agency Money Fund | Scudder Tax-Exempt Money Fund | ||||||||||
Investment Income | ||||||||||||
Income: | ||||||||||||
Interest | $ | 77,684,477 | $ | 9,192,292 | $ | 11,994,954 | ||||||
Expenses: | ||||||||||||
Management fee | 8,951,891 | 1,068,653 | 1,694,462 | |||||||||
Services to shareholders | 5,954,459 | 621,105 | 628,761 | |||||||||
Custodian fees | 184,753 | 18,869 | 25,738 | |||||||||
Auditing | 56,557 | 35,267 | 36,814 | |||||||||
Legal | 100,891 | 24,040 | 39,290 | |||||||||
Trustees’ fees and expenses | 96,279 | 37,951 | 42,375 | |||||||||
Reports to shareholders | 231,423 | 30,222 | 24,146 | |||||||||
Registration fees | 47,658 | 36,672 | 35,260 | |||||||||
Other | 177,585 | 20,203 | 31,653 | |||||||||
Total expenses, before expense reductions | 15,801,496 | 1,892,982 | 2,558,499 | |||||||||
Expense reductions | (30,761 | ) | (4,572 | ) | (6,730 | ) | ||||||
Total expenses, after expense reductions | 15,770,735 | 1,888,410 | 2,551,769 | |||||||||
Net investment income | 61,913,742 | 7,303,882 | 9,443,185 | |||||||||
Net realized gain (loss) on investment transactions | 25,138 | (179 | ) | 735 | ||||||||
Net increase from payments by affiliates | — | — | 251 | |||||||||
Net increase (decrease) in net assets resulting from operations | $ | 61,938,880 | $ | 7,303,703 | $ | 9,444,171 | ||||||
The accompanying notes are an integral part of the financial statements.
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Statement of Changes in Net Assets — Scudder Money Market Fund
Years Ended July 31, | ||||||||
2005 | 2004 | |||||||
Increase (Decrease) in Net Assets | ||||||||
Operations: | ||||||||
Net investment income | $ | 61,913,742 | $ | 27,086,723 | ||||
Net realized gain (loss) on investment transactions | 25,138 | 152,420 | ||||||
Net increase (decrease) in net assets resulting from operations | 61,938,880 | 27,239,143 | ||||||
Distributions to shareholders from net investment income | (62,715,860 | ) | (26,522,686 | ) | ||||
Fund share transactions: | ||||||||
Proceeds from shares sold | 2,044,805,653 | 2,741,794,941 | ||||||
Net assets acquired in tax-free reorganization | 280,280,767 | — | ||||||
Reinvestment of distributions | 60,454,544 | 25,772,392 | ||||||
Cost of shares redeemed | (2,424,311,653 | ) | (3,453,632,487 | ) | ||||
Net increase (decrease) in net assets from Fund share transactions | (38,770,689 | ) | (686,065,154 | ) | ||||
Increase (decrease) in net assets | (39,547,669 | ) | (685,348,697 | ) | ||||
Net assets at beginning of period | 3,431,855,361 | 4,117,204,058 | ||||||
Net assets at end of period (including undistributed net investment income of $100,180 and $889,872, respectively) | $ | 3,392,307,692 | $ | 3,431,855,361 | ||||
Other Information | ||||||||
Shares outstanding at beginning of period | 3,430,708,003 | 4,116,991,030 | ||||||
Shares sold | 2,044,805,665 | 2,741,795,251 | ||||||
Shares issued in tax-free reorganization | 280,294,179 | — | ||||||
Shares issued to shareholders in reinvestment of distributions | 60,454,544 | 25,772,392 | ||||||
Shares redeemed | (2,424,311,704 | ) | (3,453,850,670 | ) | ||||
Net increase (decrease) in Fund shares | (38,757,316 | ) | (686,283,027 | ) | ||||
Shares outstanding at end of period | 3,391,950,687 | 3,430,708,003 | ||||||
The accompanying notes are an integral part of the financial statements.
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Table of Contents
Statement of Changes in Net Assets — Scudder Government & Agency Money Fund
Years Ended July 31, | ||||||||
2005 | 2004 | |||||||
Increase (Decrease) in Net Assets | ||||||||
Operations: | ||||||||
Net investment income | $ | 7,303,882 | $ | 3,071,644 | ||||
Net realized gain (loss) on investment transactions | (179 | ) | 6,935 | |||||
Net increase (decrease) in net assets resulting from operations | 7,303,703 | 3,078,579 | ||||||
Distributions to shareholders from net investment income | (7,402,591 | ) | (2,984,910 | ) | ||||
Fund share transactions: | ||||||||
Proceeds from shares sold | 237,410,768 | 231,591,717 | ||||||
Net assets acquired in tax-free reorganization | 89,982,258 | — | ||||||
Reinvestment of distributions | 7,105,589 | 2,868,586 | ||||||
Cost of shares redeemed | (293,514,169 | ) | (336,269,376 | ) | ||||
Net increase (decrease) in net assets from Fund share transactions | 40,984,446 | (101,809,073 | ) | |||||
Increase (decrease) in net assets | 40,885,558 | (101,715,404 | ) | |||||
Net assets at beginning of period | 401,358,123 | 503,073,527 | ||||||
Net assets at end of period (including accumulated distributions in excess of net investment income and undistributed net investment income of $133 and $106,473, respectively) | $ | 442,243,681 | $ | 401,358,123 | ||||
Other Information | ||||||||
Shares outstanding at beginning of period | 401,231,203 | 503,058,649 | ||||||
Shares sold | 237,410,769 | 231,591,717 | ||||||
Shares issued in tax-free reorganization | 89,989,372 | — | ||||||
Shares issued to shareholders in reinvestment of distributions | 7,105,589 | 2,868,586 | ||||||
Shares redeemed | (293,514,169 | ) | (336,287,749 | ) | ||||
Net increase (decrease) in Fund shares | 40,991,561 | (101,827,446 | ) | |||||
Shares outstanding at end of period | 442,222,764 | 401,231,203 | ||||||
The accompanying notes are an integral part of the financial statements.
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Table of Contents
Statement of Changes in Net Assets — Scudder Tax-Exempt Money Fund
Years Ended July 31, | ||||||||
2005 | 2004 | |||||||
Increase (Decrease) in Net Assets | ||||||||
Operations: | ||||||||
Net investment income | $ | 9,443,185 | $ | 3,905,608 | ||||
Net realized gain (loss) on investment transactions | 735 | — | ||||||
Net increase from payments by affiliates | 251 | — | ||||||
Net increase (decrease) in net assets resulting from operations | 9,444,171 | 3,905,608 | ||||||
Distributions to shareholders from net investment income | (9,461,564 | ) | (3,919,418 | ) | ||||
Fund share transactions: | ||||||||
Proceeds from shares sold | 459,038,182 | 412,467,393 | ||||||
Net assets acquired in tax-free reorganization | 120,128,452 | — | ||||||
Reinvestment of distributions | 9,141,949 | 3,804,178 | ||||||
Cost of shares redeemed | (446,496,230 | ) | (448,490,983 | ) | ||||
Net increase (decrease) in net assets from Fund share transactions | 141,812,353 | (32,219,412 | ) | |||||
Increase (decrease) in net assets | 141,794,960 | (32,233,222 | ) | |||||
Net assets at beginning of period | 601,925,592 | 634,158,814 | ||||||
Net assets at end of period (including undistributed net investment income of $18,799 and $47,417, respectively) | $ | 743,720,552 | $ | 601,925,592 | ||||
Other Information | ||||||||
Shares outstanding at beginning of period | 601,878,580 | 634,098,052 | ||||||
Shares sold | 459,038,182 | 412,467,393 | ||||||
Shares issued in tax-free reorganization | 120,145,352 | — | ||||||
Shares issued to shareholders in reinvestment of distributions | 9,141,949 | 3,804,178 | ||||||
Shares redeemed | (446,496,230 | ) | (448,491,043 | ) | ||||
Net increase (decrease) in Fund shares | 141,829,253 | (32,219,472 | ) | |||||
Shares outstanding at end of period | 743,707,833 | 601,878,580 | ||||||
The accompanying notes are an integral part of the financial statements.
26
Table of Contents
Scudder Money Market Fund
Years Ended July 31, | 2005 | 2004 | 2003 | 2002 | 2001 | |||||||||||||||
Selected Per Share Data |
| |||||||||||||||||||
Net asset value, beginning of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||
Net investment income | .019 | .007 | .011 | .02 | .05 | |||||||||||||||
Distributions from net investment income | (.019 | ) | (.007 | ) | (.011 | ) | (.02 | ) | (.05 | ) | ||||||||||
Net asset value, end of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||
Total Return (%) | 1.95 | .71 | 1.11 | 2.01 | 5.54 | a,b | ||||||||||||||
Ratios to Average Net Assets and Supplemental Data | ||||||||||||||||||||
Net assets, end of period ($ in millions) | 3,392 | 3,432 | 4,117 | 4,978 | 5,787 | |||||||||||||||
Ratio of expenses before expense reductions (%) | .48 | .43 | .43 | .44 | .42 | c | ||||||||||||||
Ratio of expenses after expense reductions (%) | .48 | .43 | .43 | .44 | .41 | c | ||||||||||||||
Ratio of net investment income (%) | 1.91 | .72 | 1.12 | 2.01 | 5.38 |
a | Total return for the year ended July 31, 2001 includes the effect of a voluntary capital contribution from the Advisor. Without this contribution, the total return would have been lower. |
b | Total return would have been lower had certain expenses not been reduced. |
c | The ratios of operating expenses excluding costs incurred in connection with a fund complex reorganization before and after expense reductions were 0.41% and 0.41%, respectively. |
Scudder Government & Agency Money Fund
Years Ended July 31, | 2005 | 2004 | 2003 | 2002 | 2001 | |||||||||||||||
Selected Per Share Data |
| |||||||||||||||||||
Net asset value, beginning of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||
Net investment income | .019 | .007 | .011 | .02 | .05 | |||||||||||||||
Distributions from net investment income | (.019 | ) | (.007 | ) | (.011 | ) | (.02 | ) | (.05 | ) | ||||||||||
Net asset value, end of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||
Total Return (%) | 1.92 | .67 | 1.07 | 1.96 | 5.44 | a | ||||||||||||||
Ratios to Average Net Assets and Supplemental Data | ||||||||||||||||||||
Net assets, end of period ($ in millions) | 442 | 401 | 503 | 614 | 751 | |||||||||||||||
Ratio of expenses before expense reductions (%) | .49 | .45 | .43 | .43 | .41 | b | ||||||||||||||
Ratio of expenses after expense reductions (%) | .49 | .45 | .43 | .43 | .40 | b | ||||||||||||||
Ratio of net investment income (%) | 1.88 | .69 | 1.09 | 1.98 | 5.27 |
a | Total return would have been lower had certain expenses not been reduced. |
b | The ratios of operating expenses excluding costs incurred in connection with a fund complex reorganization before and after expense reductions were 0.40% and 0.40%, respectively. |
Scudder Tax-Exempt Money Fund
Years Ended July 31, | 2005 | 2004 | 2003 | 2002 | 2001 | |||||||||||||||
Selected Per Share Data |
| |||||||||||||||||||
Net asset value, beginning of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||
Net investment income | .015 | .006 | .009 | .01 | .03 | |||||||||||||||
Distributions from net investment income | (.015 | ) | (.006 | ) | (.009 | ) | (.01 | ) | (.03 | ) | ||||||||||
Net asset value, end of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||
Total Return (%) | 1.54 | .65 | .92 | 1.43 | 3.50 | a | ||||||||||||||
Ratios to Average Net Assets and Supplemental Data | ||||||||||||||||||||
Net assets, end of period ($ in millions) | 744 | 602 | 634 | 687 | 745 | |||||||||||||||
Ratio of expenses before expense reductions (%) | .41 | .41 | .39 | .38 | .36 | b | ||||||||||||||
Ratio of expenses after expense reductions (%) | .41 | .41 | .39 | .38 | .35 | b | ||||||||||||||
Ratio of net investment income (%) | 1.54 | .64 | .92 | 1.43 | 3.44 |
a | Total return would have been lower had certain expenses not been reduced. |
b | The ratios of operating expenses excluding costs incurred in connection with a fund complex reorganization before and after expense reductions were 0.35% and 0.35%, respectively. |
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A. Significant Accounting Policies
Scudder Money Funds (the “Trust”) 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 Trust offers three investment funds (the “Funds”). Each Fund takes its own approach to money market investing. Scudder Money Market Fund emphasizes yield through a more diverse universe of investments, while Scudder Government & Agency Money Fund emphasizes government securities. Scudder Tax-Exempt Money Fund invests for income that is free from federal income taxes.
The Funds’ 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 Funds in the preparation of their 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. Each 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 market 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. Each 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 Funds paid no federal income taxes and no federal income tax provisions were required.
At July 31, 2005, the Scudder Tax-Exempt Fund had a net tax basis capital loss carryforward of approximately $600 which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until July 31, 2013, the expiration date, whichever occurs first.
In addition, from November 1, 2004 through July 31, 2005, the Scudder Tax-Exempt Fund incurred approximately $5,000 of net realized capital losses. As permitted by tax regulations, the Fund intends to elect to defer these losses and treat them as arising in the fiscal year ended July 31, 2006.
At July 31, 2005, the Scudder Government & Agency Money Fund had a net tax basis capital loss carryforward of approximately $1,000 which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until July 31, 2012 ($25) and July 31, 2013 ($975), the respective expiration dates, whichever occurs first.
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In addition, from November 1, 2004 through July 31, 2005, the Scudder Government & Agency Money Fund incurred approximately $38 of net realized capital losses. As permitted by tax regulations, the Fund intends to elect to defer these losses and treat them as arising in the fiscal year ended July 31, 2006.
Distribution of Income. Net investment income of each Fund is declared as a daily dividend and is distributed to shareholders monthly.
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. There were no significant book-to-tax differences for the Funds.
At July 31, 2005, the Funds’ components of distributable earnings (accumulated losses) on a tax-basis were as follows:
Scudder Money Market Fund | Scudder Government & Agency Money Fund | Scudder Tax-Exempt Money Fund | |||||||||
Undistributed ordinary income* | $ | 1,797,912 | $ | 235,031 | $ | — | |||||
Undistributed tax-exempt income | — | — | 290,748 | ||||||||
Capital loss carryforwards | — | (1,000 | ) | (600 | ) |
In addition, the tax character of distributions paid to shareholders by each Fund is summarized as follows:
Fund | Years Ended July 31, | |||||
2005 | 2004 | |||||
Scudder Money Market Fund — from ordinary income* | $ | 62,715,860 | $ | 26,522,686 | ||
Scudder Government & Agency Money Fund — from ordinary income* | 7,402,591 | 2,984,910 | ||||
Scudder Tax-Exempt Money Fund — from tax-exempt income | 9,461,564 | 3,919,418 |
* | For tax purposes, short-term capital gains distributions are considered ordinary income distributions. |
Expenses. Expenses of the Trust arising in connection with each specific Fund are allocated to that Fund. Other Trust expenses which cannot be directly attributed to a Fund are apportioned among the Funds in the Trust.
Contingencies. In the normal course of business, the Funds may enter into contracts with service providers that contain general indemnification clauses. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet been made. However, based on experience, the Funds expect the risk of loss to be remote.
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 discounts and premiums are accreted/amortized for both tax and financial reporting purposes.
B. Related Parties
Management Agreement. Under the Management Agreement, Deutsche Investment Management Americas Inc.
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(“DeIM” or the “Advisor”) directs the investments of the Funds in accordance with their 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 Funds. In addition to portfolio management services, the Advisor provides certain administrative services in accordance with the Management Agreement.
From August 1, 2004 to June 12, 2005, the management fee was computed and accrued daily and payable monthly at the following rates:
First $215 million of the Fund’s average daily net assets | 0.500 | % | |
Next $335 million of such net assets | 0.375 | % | |
Next $250 million of such net assets | 0.300 | % | |
Over $800 million of such net assets | 0.250 | % |
Effective June 13, 2005, the new management fee was computed and accrued daily and payable monthly at the following rates:
First $215 million of the Fund’s average daily net assets | 0.500 | % | |
Next $335 million of such net assets | 0.375 | % | |
Next $250 million of such net assets | 0.300 | % | |
Next $800 million of such net assets | 0.250 | % | |
Next $800 million of such net assets | 0.240 | % | |
Next $800 million of such net assets | 0.230 | % | |
Over $3.2 billion of such net assets | 0.220 | % |
Accordingly, for the year ended July 31, 2005, the fee pursuant to the Management Agreement was equivalent to an annual effective rate of the Funds’ average daily net assets as follows:
Fund | Total Aggregated | Annual Effective Rate (%) | |||
Scudder Money Market Fund | $ | 8,951,891 | .28 | ||
Scudder Government & Agency Money Fund | 1,068,653 | .28 | |||
Scudder Tax-Exempt Money Fund | 1,694,462 | .28 |
Effective June 13, 2005 through November 30, 2008, the Advisor has contractually agreed to waive all or a portion of their management fees and reimburse or pay certain operating expenses of the Funds to the extent necessary to maintain the operating expenses of each Fund at 0.47%, 0.45% and 0.40% of average net assets for Scudder Money Market Fund, Scudder Government & Agency Money Fund and Scudder Tax-Exempt Money Fund, respectively (excluding certain expenses such as extraordinary expenses, taxes, brokerage, interest, trustee, and trustee counsel fees, and organizational and offering expenses).
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Service Provider Fees. Scudder Investments Service Company (“SISC”), an affiliate of the Advisor, is the transfer agent, dividend-paying agent and shareholder service agent of the Trust. Pursuant to a sub-transfer agency agreement between SISC and DST Systems, Inc. (“DST”), SISC has delegated certain transfer agent and dividend-paying agent functions to DST. SISC compensates DST out of the shareholder servicing fee it receives from the Funds. For the year ended July 31, 2005, the amounts charged to the Funds by SISC were as follows:
Fund | Total Aggregated | Unpaid at July 31, 2005 | ||||
Scudder Money Market Fund | $ | 3,256,811 | $ | 661,100 | ||
Scudder Government & Agency Money Fund | 333,133 | 72,704 | ||||
Scudder Tax-Exempt Money Fund | 416,977 | 85,574 |
Typesetting and Filing Service Fees. Under an agreement with DeIM, DeIM is compensated for providing typesetting and regulatory filing services to the Funds. For the six months ended July 31, 2005, the amount charged to the Funds by DeIM included in the reports to shareholders was as follows:
Fund | Total Aggregated | Unpaid at July 31, 2005 | ||||
Scudder Money Market Fund | $ | 7,325 | $ | 1,920 | ||
Scudder Government & Agency Money Fund | 7,325 | 1,920 | ||||
Scudder Tax-Exempt Money Fund | 7,325 | 1,920 |
Trustees’ Fees and Expenses. The Trust pays each Trustee not affiliated with the Advisor retainer fees plus specified amounts for attended board and committee meetings.
C. Expense Reductions
For the year ended July 31, 2005, the Advisor agreed to reimburse each Fund 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 in the following amounts:
Fund | Amount ($) | |
Scudder Money Market Fund | 30,073 | |
Scudder Government & Agency Money Fund | 4,175 | |
Scudder Tax-Exempt Money Fund | 6,449 |
Each Fund has entered into arrangements with its custodian and transfer agent whereby credits realized as a result of uninvested cash balances were used to reduce a portion of each Fund’s expenses. During the year ended July 31, 2005, no transfer agent credits were earned by the Funds. During the year ended July 31, 2005, the Funds’ custodian fees were reduced as follows:
Fund | Custodian Credits ($) | |
Scudder Money Market Fund | 688 | |
Scudder Government & Agency Money Fund | 397 | |
Scudder Tax-Exempt Money Fund | 281 |
D. Line of Credit
The Funds and several other affiliated funds (the “Participants”) share in a $1.1 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, based upon net assets, among each of the Participants. Interest is calculated at the Federal Funds Rate plus 0.5 percent. Each Fund may borrow up to a maximum of 33 percent of its net assets under the agreement.
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E. 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. The funds’ advisors have been cooperating in connection with these inquiries and are in discussions with these regulators concerning proposed settlements. 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, and 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. It is not possible to determine with certainty what the outcome of these inquiries will be or what the effect, if any, would be on the funds or their advisors. Based on currently available information, however, the funds’ investment advisors believe the likelihood that the pending lawsuits and any regulatory settlements 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.
F. Acquisition of Assets
On June 10, 2005, Scudder Money Market Fund (the “Fund”) acquired all of the net assets of Scudder YieldWise Money Fund pursuant to a plan of reorganization approved by the shareholders on May 26, 2005. The acquisition was accomplished by a tax-free exchange of 280,294,179 shares of Scudder YieldWise Money Fund for 280,294,179 shares of Scudder Money Market Fund outstanding on June 10, 2005. Scudder YieldWise Money Fund’s net assets at that date of $280,280,767 were combined with those of the Fund. The aggregate net assets of the Fund immediately before the acquisition were $3,153,788,648. The combined net assets of the Fund immediately following the acquisition were $3,434,069,415.
On June 10, 2005, Scudder Government & Agency Money Fund (the “Fund”) acquired all of the net assets of Scudder YieldWise Government & Agency Money Fund pursuant to a plan of reorganization approved by the shareholders on May 26, 2005. The acquisition was accomplished by a tax-free exchange of 89,989,372 shares of Scudder YieldWise Government & Agency Money Fund for 89,989,372 shares of Scudder Government & Agency Money Fund outstanding on June 10, 2005. Scudder YieldWise Government & Agency Money Fund’s net assets at that date of $89,982,258 were combined with those of the Fund. The aggregate net assets of the Fund immediately before the acquisition were $364,974,106. The combined net assets of the Fund immediately following the acquisition were $454,956,364.
On June 10, 2005, Scudder Tax-Exempt Money Fund (the “Fund”) acquired all of the net assets of Scudder YieldWise Municipal Money Fund pursuant to a plan of reorganization approved by the shareholders on May 26, 2005. The acquisition was accomplished by a tax-free exchange of 120,145,352 shares of Scudder YieldWise Municipal Money Fund for 120,145,352 shares of Scudder Tax-Exempt Money Fund outstanding on June 10, 2005. Scudder YieldWise Municipal Money Fund’s net assets at that date of $120,128,452 were combined with those of the Fund. The aggregate net assets of the Fund immediately before the acquisition were $591,488,017. The combined net assets of the Fund immediately following the acquisition were $711,616,469.
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G. Payments Made by Affiliates
During the year ended July 31, 2005, the Advisor reimbursed the Scudder Tax-Exempt Money Fund $251 for loss of income on a trade executed incorrectly.
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Trustees of Scudder Money Funds
We have audited the accompanying statements of assets and liabilities of Scudder Money Funds (the Trust), comprising Scudder Money Market Fund, Scudder Government & Agency Money Fund, and Scudder Tax-Exempt Money Fund (collectively, the Funds), including the portfolios of investments, as of July 31, 2005, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2005, by correspondence with the custodian and brokers or by other appropriate procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the Funds comprising Scudder Money Funds at July 31, 2005, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Boston, Massachusetts September 12, 2005 |
Of the dividends paid from net investment income for the Scudder Tax-Exempt Money Fund for the taxable year ended July 31, 2005, 100% are designated as exempt interest dividends for federal income tax purposes.
Please consult a tax advisor if you have questions about federal or state income tax laws, or on how to prepare your tax returns. If you have specific questions about your account, please call 1-800-621-1048.
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The following table presents certain information regarding the Trustees and Officers of the fund as of July 31, 2005. Each individual’s year of birth is set forth in parentheses after his or her name. Unless otherwise noted, (i) each individual has engaged in the principal occupation(s) noted in the table for at least the most recent five years, although not necessarily in the same capacity, and (ii) the address of each individual is c/o Deutsche Asset Management, 222 South Riverside Plaza, Chicago, Illinois 60606. Each Trustee’s term of office extends until the next shareholders’ meeting called for the purpose of electing Trustees and until the election and qualification of a successor, or until such Trustee sooner dies, retires, resigns or is removed as provided in the governing documents of the fund.
Independent Trustees
Name, Year of Birth, Position(s) Held with | Principal Occupation(s) During Past 5 Years and Other Directorships Held | Number of Funds in Fund Complex Overseen | ||
Shirley D. Peterson (1941)
Chairman, 2004-present
Trustee, 1995-present | Retired; formerly, President, Hood College (1995-2000); prior thereto, Partner, Steptoe & Johnson (law firm); Commissioner, Internal Revenue Service; Assistant Attorney General (Tax), US Department of Justice. Directorships: Federal Mogul Corp. (supplier of automotive components and subsystems); AK Steel (steel production); Goodyear Tire & Rubber Co. (April 2004-present) ; Champion Enterprises, Inc. (manufactured home building); Wolverine World Wide, Inc. (designer, manufacturer and marketer of footwear) (April 2005-present); Trustee, Bryn Mawr College. Former Directorship: Bethlehem Steel Corp. | 74 | ||
John W. Ballantine (1946)
Trustee, 1999-present | Retired; formerly, Executive Vice President and Chief Risk Management Officer, First Chicago NBD Corporation/The First National Bank of Chicago (1996-1998); Executive Vice President and Head of International Banking (1995-1996). Directorships: First Oak Brook Bancshares, Inc.; Oak Brook Bank; American Healthways, Inc. (provider of disease and care management services); Portland General Electric (utility company) | 74 | ||
Lewis A. Burnham (1933)
Trustee, 1977-present | Retired; formerly, Director of Management Consulting, McNulty & Company (1990-1998); prior thereto, Executive Vice President, Anchor Glass Container Corporation | 69 | ||
Donald L. Dunaway (1937)
Trustee, 1980-present
| Retired; formerly, Executive Vice President, A.O. Smith Corporation (diversified manufacturer) (1963-1994) | 74 | ||
James R. Edgar (1946)
Trustee, 1999-present | Distinguished Fellow, University of Illinois, Institute of Government and Public Affairs (1999-present); formerly, Governor, State of Illinois (1991-1999). Directorships: Kemper Insurance Companies; John B. Sanfilippo & Son, Inc. (processor/packager/marketer of nuts, snacks and candy products); Horizon Group Properties, Inc.; Youbet.com (online wagering platform); Alberto-Culver Company (manufactures, distributes and markets health and beauty care products) | 74 | ||
Paul K. Freeman (1950)
Trustee, 2002-present | President, Cook Street Holdings (consulting); Senior Visiting Research Scholar, Graduate School of International Studies, University of Denver; Consultant, World Bank/Inter-American Development Bank; formerly, Project Leader, International Institute for Applied Systems Analysis (1998-2001); Chief Executive Officer, The Eric Group, Inc. (environmental insurance) (1986-1998) | 74 | ||
Robert B. Hoffman (1936)
Trustee, 1981-present | Retired; formerly, Chairman, Harnischfeger Industries, Inc. (machinery for the mining and paper industries) (1999-2000); prior thereto, Vice Chairman and Chief Financial Officer, Monsanto Company (agricultural, pharmaceutical and nutritional/food products) (1994-1999). Directorships: RCP Advisors, LLC (a private equity investment advisory firm) | 74 | ||
William McClayton (1944)
Trustee, 2004-present | Managing Director of Finance and Administration, DiamondCluster International, Inc. (global management consulting firm) (2001-present); formerly, Partner, Arthur Andersen LLP (1986-2001). Formerly: Trustee, Ravinia Festival; Board of Managers, YMCA of Metropolitan Chicago | 74 |
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Robert H. Wadsworth (1940)
Trustee, 2004-present | President, Robert H. Wadsworth Associates, Inc. (consulting firm) (1983-present). Director, The Germany Fund, Inc. (since 1986), The New Germany Fund, Inc. (since 1992), The Central Europe and Russia Fund, Inc. (since 1990). Formerly, Trustee of New York Board Scudder Funds; President and Trustee, Trust for Investment Managers (registered investment company) (1999-2002). President, Investment Company Administration, L.L.C. (1992*-2001); President, Treasurer and Director, First Fund Distributors, Inc. (June 1990-January 2002); Vice President, Professionally Managed Portfolios (May 1991-January 2002) and Advisors Series Trust (October 1996-January 2002) (registered investment companies).
* Inception date of the corporation which was the predecessor to the L.L.C. | 77 | ||
John G. Weithers (1933)
Trustee, 1993-present | Retired; formerly, Chairman of the Board and Chief Executive Officer, Chicago Stock Exchange. Directorships: Federal Life Insurance Company; Chairman of the Members of the Corporation and Trustee, DePaul University; formerly, International Federation of Stock Exchanges; Records Management Systems | 69 |
Interested Trustee and Officers2
Name, Year of Birth, Position(s) Held with | Principal Occupation(s) During Past 5 Years and Other Directorships Held | Number of Funds in Fund Complex Overseen | ||
William N. Shiebler4 (1942)
Trustee, 2004-present | Vice Chairman, Deutsche Asset Management (“DeAM”) and a member of the DeAM Global Executive Committee (since 2002); Vice Chairman of Putnam Investments, Inc. (1999); Director and Senior Managing Director of Putnam Investments, Inc. and President, Chief Executive Officer, and Director of Putnam Mutual Funds Inc. (1990-1999) | 125 | ||
Julian F. Sluyters4 (1960)
President and Chief Executive Officer, 2004-present | Managing Director3, Deutsche Asset Management (since May 2004); President and Chief Executive Officer of The Germany Fund, Inc., The New Germany Fund, Inc., The Central Europe and Russia Fund, Inc., The Brazil Fund, Inc., The Korea Fund, Inc., Scudder Global High Income Fund, Inc. and Scudder New Asia Fund, Inc. (since May 2004); President and Chief Executive Officer, UBS Fund Services (2001-2003); Chief Administrative Officer (1998-2001) and Senior Vice President and Director of Mutual Fund Operations (1991-1998) UBS Global Asset Management | n/a | ||
Philip J. Collora (1945)
Vice President and Assistant Secretary, 1986-present | Director3, Deutsche Asset Management | n/a | ||
Kenneth Murphy5 (1963)
Vice President, 2002-present | Vice President, Deutsche Asset Management (2000-present); formerly, Director, John Hancock Signature Services (1992-2000) | n/a | ||
Paul H. Schubert4 (1963)
Chief Financial Officer, 2004-present Treasurer, since 2005 | Managing Director3, Deutsche Asset Management (since July 2004); formerly, Executive Director, Head of Mutual Fund Services and Treasurer for UBS Family of Funds at UBS Global Asset Management (1994-2004) | n/a | ||
John Millette5 (1962)
Secretary, 2001-present | Director3, Deutsche Asset Management | n/a | ||
Lisa Hertz4 (1970)
Assistant Secretary, 2003-present | Vice President, Deutsche Asset Management | n/a | ||
Daniel O. Hirsch6 (1954)
Assistant Secretary, 2002-present | Consultant. Formerly, Managing Director, Deutsche Asset Management (2002-2005); Director, Deutsche Asset Management (1999-2002), Principal, BT Alex. Brown Incorporated (now Deutsche Bank Securities Inc.) (1998-1999); Assistant General Counsel, United States Securities and Exchange Commission (1993-1998); Director, Deutsche Global Funds Ltd. (2002-2004) | n/a |
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Caroline Pearson5 (1962)
Assistant Secretary, 1998-present | Managing Director3, Deutsche Asset Management | n/a | ||
Scott M. McHugh5 (1971)
Assistant Treasurer, 2005-present | Director3, Deutsche Asset Management | n/a | ||
Kathleen Sullivan D’Eramo5 (1957)
Assistant Treasurer, 2003-present | Director3, Deutsche Asset Management | n/a | ||
Philip Gallo4 (1962)
Chief Compliance Officer, 2004-present | Managing Director3, Deutsche Asset Management (2003-present); formerly, Co-Head of Goldman Sachs Asset Management Legal (1994-2003) | n/a |
1 | Length of time served represents the date that each Trustee was first elected to the common board of Trustees which oversees a number of investment companies, including the fund, managed by the Advisor. For the Officers of the fund, the length of time served represents the date that each Officer was first elected to serve as an Officer of any fund overseen by the aforementioned common board of Trustees. |
2 | As a result of their respective positions held with the Advisor, these individuals are considered “interested persons” of the Advisor within the meaning of the 1940 Act. Interested persons receive no compensation from the fund. |
3 | Executive title, not a board directorship. |
4 | Address: 345 Park Avenue, New York, New York 10154 |
5 | Address: Two International Place, Boston, Massachusetts 02110 |
6 | Address: One South Street, Baltimore, Maryland 21202 |
The fund’s Statement of Additional Information (“SAI”) includes additional information about the Trustees. The SAI is available, without charge, upon request. If you would like to request a copy of the SAI, you may do so by calling the following toll-free number: 1-800-621-1048.
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Automated Information Lines | ScudderACCESS (800) 972-3060
Personalized account information, information on other Scudder funds and services via touchtone telephone and for Classes A, B, and C only, the ability to exchange or redeem shares. | |
Web Site | scudder.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) 621-1048
To speak with a Scudder service representative. | |
Written Correspondence | Scudder Investments
PO Box 219356 Kansas City, MO 64121-9356 | |
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 site — scudder.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 us toll free at (800) 621-1048. | |
Principal Underwriter | If you have questions, comments or complaints, contact:
Scudder Distributors, Inc.
222 South Riverside Plaza Chicago, IL 60606-5808
(800) 621-1148 |
Scudder Money Market Fund | Scudder Government & Agency Money Fund | Scudder Tax-Exempt Money Fund | ||||
Nasdaq Symbol | KMMXX | KEGXX | KXMXX | |||
CUSIP Number | 81118M-100 | 81118M-209 | 81118M-308 | |||
Fund Number | 6 | 11 | 29 |
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Table of Contents
ANNUAL REPORT TO SHAREHOLDERS
Cash Account Trust
April 30, 2006
Service Shares
Money Market Portfolio
Government & Agency Securities Portfolio
Tax-Exempt Portfolio
This report must be preceded or accompanied by a prospectus. To obtain a prospectus for any of our funds, visit www.dws-scudder.com. We advise you to consider the portfolio’s objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other important information about the portfolio. Please read the prospectus carefully before you invest.
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Portfolio Management Review
In the following interview, Portfolio Managers Geoffrey Gibbs, Darlene Rasel and Sonelius Kendrick-Smith discuss the market environment and the performance of Cash Account Trust — Service Shares during the 12-month period ended April 30, 2006.
Q: Will you discuss the market environment for the portfolio during its most recent fiscal year?
A: During the 12-month period ended April 30, 2006, the US economy showed its resiliency despite a devastating 2005 hurricane season and continual increases in energy and commodity prices. Monthly job growth was the most important economic indicator for the money markets as the period began, but the market’s focus gradually shifted to a careful watch for signs of increasing inflation. Going forward, the markets will be watching closely for any changes in monetary policy from new US Federal Reserve Board (the Fed) Chairman Ben Bernanke.
During the period, the Fed continued to increase short-term interest rates in an attempt to undo the easing of monetary policy that occurred up until June 2004. The Fed raised the federal funds rate — the overnight rate charged by banks when they borrow money from each other, which guides other interest rates — to 4.75% in eight quarter-percentage- point increments over the 12-month period. Despite the increases in the federal funds rate, longer-term yields remained low for most of the period, creating a relatively flat yield curve.1 Throughout 2005 and early 2006, the Fed repeated its statements that additional rate increases might be needed going forward to keep the risks to economic growth and price stability in balance.
1 | The yield curve is a graph with a horizontal line that shows how high or low yields are, from the shortest to the longest maturities. Typically, the line rises from left to right as investors who are willing to tie up their money for a longer period of time are rewarded with higher yields. |
Portfolio Performance
As of April 30, 2006
Performance is historical and does not guarantee future results. Current performance may be lower or higher than the performance data quoted.
An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in them.
7-Day Current Yield | |||
Money Market Portfolio — Service Shares | 3.82 | %* | |
Government & Agency Securities Portfolio — Service Shares | 3.82 | %* | |
Tax-Exempt Portfolio — Service Shares | 2.63 | %* | |
(Equivalent Taxable Yield) | 4.05 | %** |
Yields are historical, will fluctuate, and do not guarantee future performance. The 7-day current yield refers to the income paid by the portfolios over a 7-day period expressed as an annual percentage rate. For the most current yield information, visit our Web site at www.dws-scudder.com.
* | Performance reflects a partial fee waiver which improved results during this period. In addition, the Advisor has agreed to voluntarily waive expenses as necessary to maintain a minimum distribution yield. This waiver may be changed or terminated at any time without notice. Without the fee and expense waivers, the 7-day current yield of the Money Market Portfolio — Service Shares, the Government & Agency Securities Portfolio — Service Shares, and the Tax-Exempt Portfolio — Service Shares would have been 3.70%, 3.63% and 2.55%, respectively, as of April 30, 2006. |
** | The equivalent taxable yield allows you to compare with the performance of taxable money market funds. For the Tax-Exempt Portfolio, the equivalent taxable yield is based upon the marginal income tax rate of 35%. Income may be subject to local taxes and for some investors, the alternative minimum tax. |
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At the end of April 2006, the one-year London Interbank Offered Rate (LIBOR), an industry standard for measuring one-year money market rates, stood at 5.33%, compared with 3.68% 12 months earlier. The premium level of the LIBOR (which is set by the market) over the federal funds rate (which is fixed by the Fed) of 4.75% demonstrated the market’s concern that the Fed may raise short-term interest rates at least one to two more times in order to stave off any resurgence of inflation. At the same time, there is a sense within the market that 2006 may be a year of transition, that the Fed will probably discontinue its rate increases this year and that investors will be looking to see how well Bernanke can fine-tune the economy by utilizing the Fed’s control over short-term rates. The market consensus at the close of the period was that Bernanke had stumbled somewhat by confiding to a television reporter that he felt that his Congressional testimony (from which investors had concluded that the Fed would pause in raising rates) had been misinterpreted. The market will be hoping that the Fed can prevent undue volatility by making a smooth transition to the anticipated change in monetary policy over the course of 2006.
Q: How did the portfolio perform over its most recent fiscal year?
A: We were able to maintain a competitive yield in Cash Account Trust — Service Shares. (All performance is historical and does not guarantee future results. Yields fluctuate and are not guaranteed.)
Q: In light of market conditions during the period, what has been the strategy for the Money Market Portfolio?
A: During the period, our strategy was to keep the portfolio’s average maturity relatively short in order to help reduce risk, limiting our purchases, for the most part, to issues with maturities of three months or less. For the period, we maintained a significant allocation in floating-rate securities. The interest rate of floating rate securities adjusts periodically based on indices (such as the 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 maintain a significant allocation in this sector helped performance during the period.
Q: What has been the strategy for the Government & Agency Securities Portfolio?
A: During the portfolio’s most recent fiscal year, our strategy was to keep the portfolio’s average maturity relatively short in order to reduce risk, limiting our purchases for the most part to issues with maturities of three months or less, and to extend maturity opportunistically, as market conditions warranted. Going forward, we will continue to monitor economic and inflation indicators to determine when the Fed may end its credit tightening program.
Q: What has been the strategy for the Tax-Exempt Portfolio?
A: Over the period, we continued to focus on the highest-quality investments for the portfolio while seeking competitive yields across the municipal investment spectrum. We also maintained a cautious stance by targeting an average maturity similar to the Tax-Exempt Portfolio’s peers. In most years, during “tax season,” tax-free money fund investors withdraw substantial amounts of cash from the market to pay their tax bills. Last year, tax-related selling pressure extended for a longer period than usual as we saw substantial tax payment withdrawals in April and May 2005. (In contrast, tax-related selling of municipal money market securities was comparatively restrained through the first quarter of 2006.) As a result of these sales, floating-rate issuers were forced to raise their rates to attract new investors. Our strategy during the first two months of the portfolio’s most recent fiscal year was to increase the portfolio’s floating-rate position to take advantage of the increase in rates. Up until year-end 2005, this strategy worked well for the Tax-Exempt Portfolio, but in late 2005 the overweight position
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in floating-rate securities detracted slightly from returns.2 Late in the 12-month period, the portfolio once again benefited from its floating-rate position as we boosted our allocation there to take advantage of an increase in floating-rate interest coupons. The interest rate of floating-rate securities adjusts periodically based on indices such as the Bond Market Association Index of Variable Rate Demand Notes.3 Because the interest rates of these instruments adjust as market conditions change, they provide flexibility in an uncertain interest rate environment.
Q: What detracted from the portfolio’s performance during the period?
A: There was concern that the economy might pull back in response to Hurricanes Katrina and Wilma, and that the Fed might halt its series of federal funds rate increases — at least temporarily — so as not to further restrain growth. For this reason, we extended the portfolio’s maturity slightly in early fall 2005. Instead of faltering, the economy continued to perform well, however, and the Fed kept raising rates. For this reason, our decision to briefly extend maturity detracted somewhat from the portfolio’s yield and total return during the period.
Q: Will you describe your investment philosophy?
A: We continue our insistence on the highest credit quality within the portfolio. We also plan to maintain our conservative investment strategies and standards. We continue to apply a careful approach to investing on behalf of the portfolio and to seek competitive yield for our shareholders.
A group of investment professionals is responsible for the day-to-day management of the portfolio. These professionals have a broad range of experience managing money market funds.
2 | “Overweight” means the portfolio holds a higher weighting in a given sector or security than the benchmark. “Underweight” means the portfolio holds a lower weighting. |
3 | The Bond Market Association Index of Variable Rate Demand Notes is a weekly high-grade market index consisting of seven-day, tax-exempt, variable-rate demand notes produced by Municipal Market Data Group. Actual issues are selected from Municipal Market Data’s database of more than 10,000 active issues. Index returns assume reinvestment of dividends and, unlike fund returns, do not reflect any fees or expenses. It is not possible to invest directly in an index. |
The views expressed in this report reflect those of the portfolio managers only through the end of the period stated above. The managers’ views are subject to change at any time based on market and other conditions and should not be construed as a recommendation.
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Information About Each Portfolio’s Expenses
As an investor, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees, distribution and service (12b-1) fees and other Portfolio 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 each Portfolio 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 Portfolios limited these expenses; had they not done so, expenses would have been higher for the Service Shares. The tables are based on an investment of $1,000 made at the beginning of the six-month period ended April 30, 2006.
The tables illustrate your Portfolio’s expenses in two ways:
Actual Portfolio Return. This helps you estimate the actual dollar amount of ongoing expenses (but not transaction costs) paid on a $1,000 investment in the Portfolio using the Portfolio’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% Portfolio Return. This helps you to compare your Portfolio’s ongoing expenses (but not transaction costs) with those of other mutual funds using the Portfolio’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.
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Service Shares
Expenses and Value of a $1,000 Investment for the six months ended April 30, 2006
Actual Fund Return | Money Market Portfolio | Government & Agency Securities Portfolio | ||||
Beginning Account Value 11/1/05 | $ | 1,000.00 | $ | 1,000.00 | ||
Ending Account Value 4/30/06 | $ | 1,017.10 | $ | 1,017.00 | ||
Expenses Paid per $1,000* | $ | 5.00 | $ | 5.00 | ||
Hypothetical 5% Fund Return | Money Market Portfolio | Government & Agency Securities Portfolio | ||||
Beginning Account Value 11/1/05 | $ | 1,000.00 | $ | 1,000.00 | ||
Ending Account Value 4/30/06 | $ | 1,019.84 | $ | 1,019.84 | ||
Expenses Paid per $1,000* | $ | 5.01 | $ | 5.01 |
* | Expenses are equal to the Portfolio’s annualized expense ratio, 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 | Money Market Portfolio | Government & Agency Securities Portfolio | ||||
Service Shares | 1.00 | % | 1.00 | % |
For more information, please refer to each Portfolio’s prospectus.
Service Shares
Expenses and Value of a $1,000 Investment for the six months ended April 30, 2006
Actual Fund Return | Tax-Exempt Portfolio | ||
Beginning Account Value 11/1/05 | $ | 1,000.00 | |
Ending Account Value 4/30/06 | $ | 1,010.50 | |
Expenses Paid per $1,000* | $ | 5.03 |
Hypothetical 5% Fund Return | Tax-Exempt Portfolio | ||
Beginning Account Value 11/1/05 | $ | 1,000.00 | |
Ending Account Value 4/30/06 | $ | 1,019.79 | |
Expenses Paid per $1,000* | $ | 5.06 |
* | Expenses are equal to the Portfolio’s annualized expense ratio, 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 | Tax-Exempt Portfolio | ||
Service Shares | 1.01 | % |
For more information, please refer to each Portfolio’s prospectus.
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Portfolio Summary
Cash Account Trust — Money Market Portfolio
Asset Allocation | 4/30/06 | 4/30/05 | ||||
Short Term Notes | 30 | % | 11 | % | ||
Commercial Paper | 22 | % | 36 | % | ||
Certificates of Deposit and Bank Notes | 21 | % | 28 | % | ||
Time Deposits | 18 | % | 11 | % | ||
Promissory Notes | 4 | % | 4 | % | ||
Repurchase Agreements | 3 | % | 4 | % | ||
US Government Sponsored Agencies | 1 | % | 6 | % | ||
Funding Agreements | 1 | % | — | |||
100 | % | 100 | % | |||
Weighted Average Maturity | ||||||
Cash Account Trust — Money Market Portfolio | 35 days | 37 days | ||||
First Tier Retail Money Fund Average* | 39 days | 35 days |
* | The Portfolio is compared to its respective iMoneyNet Category: First Tier Retail Money Fund Average — Category includes a widely-recognized composite of money market funds that invest in only first tier (highest rating) securities. Portfolio Holdings of First Tier funds include US Treasury, US Other, Repos, Time Deposits, Domestic Bank Obligations, Foreign Bank Obligations, First Tier Commercial Paper, Floating Rate Notes and Asset Backed Commercial Paper. |
Cash Account Trust — Government & Agency Securities Portfolio
Asset Allocation | 4/30/06 | 4/30/05 | ||||
Repurchase Agreements | 78 | % | 50 | % | ||
Agencies Not Backed by the Full Faith and Credit of the US Government | 20 | % | 48 | % | ||
Agencies Backed by the Full Faith and Credit of the US Government | 2 | % | 2 | % | ||
100 | % | 100 | % | |||
Weighted Average Maturity | ||||||
Cash Account Trust — Government & Agency Securities Portfolio | 25 days | 29 days | ||||
US Government & Agencies Retail Money Fund Average** | 31 days | 31 days |
** | The Portfolio is compared to its respective iMoney Net Category: US Government & Agencies Retail Money Fund Average consists of all non-institutional government money market funds. Category includes the most broadly based of the government retail funds. These funds can invest in US Treasuries, US Other, Repos, whether or not they are backed by US Treasuries and government-backed Floating Rate Notes. |
Cash Account Trust — Tax-Exempt Portfolio
Asset Allocation (net of other assets and liabilities) | 4/30/06 | 4/30/05 | ||||
Municipal Investments | ||||||
Municipal Variable Rate Demand Notes | 75 | % | 73 | % | ||
Municipal Bonds and Notes | 25 | % | 27 | % | ||
100 | % | 100 | % | |||
Weighted Average Maturity | ||||||
Cash Account Trust — Tax-Exempt Portfolio | 17 days | 21 days | ||||
National Tax-Free Retail Money Fund Average*** | 23 days | 27 days |
*** | The Portfolio is compared to its respective iMoneyNet category: National Tax-Free Retail Money Fund Average — Category consists of all national tax-free and municipal retail funds. Portfolio Holdings of tax-free Funds include Rated and Unrated Demand Notes, Rated and Unrated General Market Notes; Commercial Paper; Put Bonds — 6 months and less; Put Bonds — over 6 months; AMT Paper and Other Tax-Free Holdings. |
Asset allocation and weighted average maturity are is subject to change. For more complete details about the Portfolios’ holdings, see pages 10-24. A quarterly Fact Sheet is available upon request. Information concerning portfolio holdings of the Portfolios as of month end will be posted to www.dws-scudder.com on or after the last day of the following month. In addition, the Portfolios’ top ten holdings and other information about the Portfolios is posted on www.dws-scudder.com as of the calendar quarter-end on or after the 15th day following quarter-end.
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Portfolio of Investments as of April 30, 2006
Money Market Portfolio | Principal Amount ($) | Value ($) | ||
Certificates of Deposit and Bank Notes 20.5% | ||||
Banco Bilbao Vizcaya Argentaria SA, 4.98%, 9/1/2006 | 6,000,000 | 5,999,246 | ||
Bank of Ireland, 4.01%, 7/14/2006 | 10,000,000 | 10,000,197 | ||
Bank of Novia Scotia, 4.8%, 5/10/2006 | 110,000,000 | 110,000,000 | ||
Bank of Tokyo-Mitsubishi-UFJ, Ltd.: | ||||
4.8%, 5/1/2006 | 21,000,000 | 21,000,000 | ||
4.8%, 5/10/2006 | 75,000,000 | 75,000,000 | ||
CC (USA), Inc., 3.805%, 6/22/2006 | 50,000,000 | 49,999,644 | ||
Fortis Bank NV SA, 4.83%, 5/8/2006 | 60,000,000 | 60,000,000 | ||
HBOS Treasury Services PLC: | ||||
4.0%, 7/18/2006 | 75,000,000 | 75,000,000 | ||
5.0%, 2/12/2007 | 60,000,000 | 60,000,000 | ||
5.305%, 4/19/2007 | 60,000,000 | 60,000,000 | ||
LaSalle Bank NA, 4.02%, 7/5/2006 | 75,000,000 | 75,000,000 | ||
Natexis Banque Populaires: | ||||
5.0%, 2/8/2007 | 40,000,000 | 40,000,000 | ||
5.0%, 2/9/2007 | 25,000,000 | 25,000,000 | ||
5.03%, 6/29/2006 | 49,600,000 | 49,600,000 | ||
Royal Bank of Canada: | ||||
4.05%, 7/24/2006 | 20,000,000 | 20,000,000 | ||
4.775%, 12/1/2006 | 125,000,000 | 125,003,546 | ||
Societe Generale: | ||||
4.795%, 5/10/2006 | 75,000,000 | 75,000,000 | ||
4.8%, 5/10/2006 | 90,000,000 | 90,000,000 | ||
5.305%, 5/2/2007 | 35,000,000 | 35,000,000 | ||
Toronto Dominion Bank, 3.815%, 6/16/2006 | 70,000,000 | 70,000,000 | ||
UniCredito Italiano SpA, 3.8%, 6/15/2006 | 190,000,000 | 190,000,000 | ||
Wells Fargo Bank, NA: | ||||
4.82%, 5/4/2006 | 42,500,000 | 42,500,000 | ||
4.87%, 5/10/2006 | 50,000,000 | 50,000,000 | ||
Total Certificates of Deposit and Bank Notes (Cost $1,414,102,633) | 1,414,102,633 | |||
Commercial Paper** 22.3% | ||||
Caisse Nationale des Caisses D’Epargne et Prevoyan, 4.635%, 7/31/2006 | 75,000,000 | 74,121,281 | ||
Cancara Asset Securitization LLC, 5.03%, 7/28/2006 | 55,711,000 | 55,026,002 | ||
Concentrate Manufacturing Co. of Ireland, 4.8%, 5/12/2006 | 23,300,000 | 23,265,827 | ||
Davis Square Funding VI Corp., 4.81%, 5/4/2006 | 25,000,000 | 24,989,979 | ||
Falcon Asset Securitization Corp., 4.78%, 5/1/2006 | 35,000,000 | 35,000,000 | ||
General Electric Capital Corp., 4.77%, 5/10/2006 | 180,000,000 | 179,785,350 | ||
General Electric Capital Services, Inc., 4.77%, 5/10/2006 | 35,000,000 | 34,958,263 | ||
Giro Funding US Corp.: | ||||
4.8%, 5/9/2006 | 25,000,000 | 24,973,333 | ||
4.8%, 5/10/2006 | 40,000,000 | 39,952,000 | ||
Grampian Funding Ltd.: | ||||
4.64%, 7/28/2006 | 75,000,000 | 74,149,333 | ||
5.03%, 10/25/2006 | 50,000,000 | 48,763,458 | ||
HSBC USA, Inc.: | ||||
4.77%, 5/8/2006 | 50,000,000 | 49,953,625 | ||
4.82%, 5/12/2006 | 25,000,000 | 24,963,181 | ||
KBC Financial Products International Ltd., 5.04%, 10/20/2006 | 30,000,000 | 29,277,600 | ||
Kitty Hawk Funding Corp., 4.78%, 5/1/2006 | 21,385,000 | 21,385,000 | ||
Lake Constance Funding LLC, 4.79%, 5/10/2006 | 54,000,000 | 53,935,335 | ||
Liberty Street Funding: | ||||
4.78%, 5/1/2006 | 40,000,000 | 40,000,000 | ||
4.78%, 5/10/2006 | 45,000,000 | 44,946,225 | ||
4.85%, 5/9/2006 | 27,000,000 | 26,970,900 | ||
Mane Funding Corp.: | ||||
4.85%, 5/16/2006 | 46,205,000 | 46,111,627 | ||
4.85%, 5/19/2006 | 40,000,000 | 39,903,000 | ||
Nieuw Amsterdam Receivables Corp., 4.79%, 5/5/2006 | 38,346,000 | 38,325,592 | ||
Perry Global Funding LLC, Series A, 4.88%, 5/18/2006 | 75,000,000 | 74,827,167 |
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Ranger Funding Co. LLC, 4.78%, 5/3/2006 | 41,531,000 | 41,519,971 | ||
Three Rivers Funding Corp., 4.84%, 5/12/2006 | 49,000,000 | 48,927,535 | ||
Toyota Motor Credit Corp., 4.78%, 5/2/2006 | 40,600,000 | 40,594,609 | ||
UBS Finance (DE) LLC, 4.77%, 5/10/2006 | 80,000,000 | 79,904,600 | ||
UniCredito Italiano (DE), Inc., 4.95%, 7/6/2006 | 30,000,000 | 29,727,750 | ||
Verizon Communications, Inc.: | ||||
4.94%, 5/23/2006 | 15,000,000 | 14,954,717 | ||
4.95%, 5/22/2006 | 60,000,000 | 59,826,750 | ||
4.98%, 5/24/2006 | 16,000,000 | 15,949,093 | ||
5.0%, 5/23/2006 | 50,000,000 | 49,847,222 | ||
5.0%, 5/24/2006 | 50,000,000 | 49,840,278 | ||
Total Commercial Paper (Cost $1,536,676,603) | 1,536,676,603 | |||
Short Term Notes* 29.7% | ||||
Alliance & Leicester PLC, 4.838%, 12/1/2006 | 50,000,000 | 50,000,000 | ||
American Honda Finance Corp.: | ||||
144A, 4.67%, 11/7/2006 | 110,000,000 | 110,000,000 | ||
4.895%, 6/22/2006 | 21,000,000 | 21,000,000 | ||
4.96%, 9/21/2006 | 65,500,000 | 65,513,787 | ||
Australia & New Zealand Banking Group Ltd., 4.93%, 6/23/2010 | 20,000,000 | 20,000,000 | ||
Bank of Ireland, 144A, 4.892%, 11/17/2006 | 100,000,000 | 100,000,000 | ||
Barclays Bank PLC, 4.774%, 4/4/2007 | 125,000,000 | 124,977,150 | ||
BMW US Capital LLC, 144A, 4.871%, 4/16/2007 | 20,000,000 | 20,000,000 | ||
BNP Paribas, 4.94%, 10/26/2026 | 35,000,000 | 35,000,000 | ||
Calyon, 4.757%, 7/5/2006 | 35,500,000 | 35,498,089 | ||
Canadian Imperial Bank of Commerce: | ||||
4.9%, 12/4/2006 | 17,000,000 | 17,007,450 | ||
4.981%, 4/13/2007 | 45,000,000 | 45,007,424 | ||
Cancara Asset Securitization LLC, 144A, 4.83%, 8/15/2006 | 40,000,000 | 39,997,643 | ||
CIT Group, Inc.: | ||||
4.948%, 2/15/2007 | 33,000,000 | 33,050,388 | ||
5.15%, 6/19/2006 | 50,000,000 | 50,014,673 | ||
Commonwealth Bank of Australia, 4.92%, 8/24/2006 | 30,000,000 | 30,000,000 | ||
Dexia Banque Belgique, 4.94%, 8/30/2006 | 30,000,000 | 29,998,019 | ||
Dorada Finance, Inc., 4.775%, 11/1/2006 | 30,000,000 | 29,998,488 | ||
Greenwich Capital Holdings: | ||||
4.788%, 10/2/2006 | 40,000,000 | 40,000,000 | ||
4.811%, 11/13/2006 | 40,000,000 | 40,000,000 | ||
4.889%, 8/21/2006 | 30,000,000 | 30,000,000 | ||
4.96%, 5/30/2006 | 50,000,000 | 50,000,000 | ||
HSBC Bank USA, NA, 4.72%, 5/4/2006 | 40,000,000 | 40,000,154 | ||
HSBC Finance Corp.: | ||||
4.827%, 2/6/2007 | 30,000,000 | 30,000,000 | ||
4.965%, 10/19/2006 | 30,000,000 | 30,013,181 | ||
HSBC USA, Inc., 4.881%, 12/15/2006 | 150,000,000 | 150,000,000 | ||
International Business Machine Corp., 4.838%, 12/8/2010 | 30,000,000 | 30,000,000 |
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Marshall & Ilsley Bank, 4.881%, 12/15/2006 | 35,000,000 | 35,000,000 | ||
Merrill Lynch & Co., Inc.: | ||||
4.881%, 9/15/2006 | 50,000,000 | 50,000,000 | ||
4.889%, 2/2/2007 | 30,000,000 | 30,000,000 | ||
4.925%, 2/27/2007 | 37,000,000 | 37,040,597 | ||
5.06%, 6/2/2006 | 35,000,000 | 35,004,382 | ||
5.125%, 2/27/2007 | 25,000,000 | 25,038,607 | ||
Morgan Stanley, 4.89%, 7/10/2006 | 80,000,000 | 80,000,000 | ||
Nordea Bank AB, 4.828%, 4/8/2011 | 30,000,000 | 30,000,000 | ||
Pfizer Investment Capital PLC, 4.861%, 12/15/2006 | 50,000,000 | 50,000,000 | ||
Skandinaviska Enskilda Banken: | ||||
4.838%, 2/9/2011 | 50,000,000 | 50,000,000 | ||
4.891%, 7/18/2006 | 25,000,000 | 25,000,000 | ||
The Bear Stearns Companies, Inc., 4.935%, 9/18/2006 | 140,000,000 | 140,000,000 | ||
The Goldman Sachs Group, Inc., 4.94%, 8/18/2006 | 34,070,000 | 34,089,818 | ||
UniCredito Italiano Bank (Ireland) PLC, 4.858%, 3/9/2007 | 42,000,000 | 42,000,000 | ||
UniCredito Italiano SpA, 4.807%, 9/8/2006 | 30,000,000 | 29,995,722 | ||
Wells Fargo Bank, NA, 4.78%, 8/7/2006 | 61,000,000 | 60,997,056 | ||
Total Short Term Notes (Cost $2,051,242,628) | 2,051,242,628 | |||
US Government Sponsored Agencies 1.0% | ||||
Federal Home Loan Bank: | ||||
2.3%, 6/16/2006 | 2,000,000 | 1,996,219 | ||
4.3%, 7/13/2006 | 10,000,000 | 10,000,000 | ||
Federal National Mortgage Association, 4.03%, 7/21/2006 | 53,700,000 | 53,700,000 | ||
Total US Government Sponsored Agencies (Cost $65,696,219) | 65,696,219 | |||
Asset Backed 0.5% | ||||
Permanent Financing PLC, “1A”, Series 8, 4.809%*, 6/10/2006 (Cost $35,000,000) | 35,000,000 | 35,000,000 | ||
Funding Agreements 0.7% | ||||
New York Life Insurance Co., 5.05%*, 9/19/2006 (Cost $50,000,000) | 50,000,000 | 50,000,000 | ||
Promissory Notes 4.3% | ||||
The Goldman Sachs Group, Inc.: | ||||
4.77%*, 11/13/2006 | 185,000,000 | 185,000,000 | ||
4.985%*, 6/30/2006 | 110,000,000 | 110,000,000 | ||
Total Promissory Notes (Cost $295,000,000) | 295,000,000 | |||
Time Deposits 18.5% | ||||
Bank of Tokyo-Mitsubishi-UFJ, Ltd., 4.83%, 5/1/2006 | 225,000,000 | 225,000,000 | ||
Danske Bank AS, 4.88%, 5/2/2006 | 300,000,000 | 300,000,000 | ||
Dexia Banque Belgique, 4.94%, 5/2/2006 | 200,000,000 | 200,000,000 | ||
ING Bank NV, 4.86%, 5/1/2006 | 225,000,000 | 225,000,000 | ||
Rabobank Nederland NV, 4.83%, 5/1/2006 | 300,000,000 | 300,000,000 | ||
Societe Generale, 4.83%, 5/1/2006 | 25,600,000 | 25,600,000 | ||
Total Time Deposits (Cost $1,275,600,000) | 1,275,600,000 | |||
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Repurchase Agreements 2.6% | ||||||
Banc of America Securities LLC, 4.79%, dated 4/7/2006, to be repurchased at $100,439,083 on 5/10/2006 (a) | 100,000,000 | 100,000,000 | ||||
BNP Paribas, 4.78%, dated 4/28/2006, to be repurchased at $79,031,468 on 5/1/2006 (b) | 79,000,000 | 79,000,000 | ||||
State Street Bank and Trust Co., 4.5%, dated 4/28/2006, to be repurchased at $322,121 on 5/1/2006 (c) | 322,000 | 322,000 | ||||
Total Repurchase Agreements (Cost $179,322,000) | 179,322,000 | |||||
% of Net Assets | Value ($) | |||||
Total Investment Portfolio (Cost $6,902,640,083)+ | 100.1 | 6,902,640,083 | ||||
Other Assets and Liabilities, Net | (0.1 | ) | (6,349,024 | ) | ||
Net Assets | 100.0 | 6,896,291,059 | ||||
* | 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 April 30, 2006. |
** | Annualized yield at the time of purchase; not a coupon rate. |
+ | Cost for federal income tax purposes was $6,902,640,083. |
(a) | Collateralized by: |
Principal Amount ($) | Security | Rate (%) | Maturity Date | Collateral Value ($) | ||||
80,766,036 | Federal National Mortgage Association | 5.0-5.5 | 4/1/2021-4/1/2036 | 79,033,867 | ||||
23,524,677 | Federal Home Loan Mortgage Corp. | 5.0-5.5 | 3/1/2019-10/1/2033 | 22,966,134 | ||||
Total Collateral Value | 102,000,001 | |||||||
(b) | Collateralized by $82,758,000 Federal Home Loan Mortgage Corp., 4.75%, maturing on 11/17/2015 with a value of $80,580,761. |
(c) | Collateralized by $350,000 Federal National Mortgage Association, 5.174%, maturing on 8/18/2035 with a value of $331,582. |
144A: Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.
The accompanying notes are an integral part of the financial statements.
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Portfolio of Investments as of April 30, 2006
Government & Agency Securities Portfolio | Principal Amount ($) | Value ($) | ||||
Agencies Not Backed by the Full Faith and Credit of the US Government 20.0% | ||||||
Federal Home Loan Bank: | ||||||
3.25%, 7/21/2006 | 32,700,000 | 32,647,294 | ||||
4.716%*, 6/2/2006 | 35,000,000 | 34,998,007 | ||||
4.819%*, 8/21/2006 | 100,000,000 | 99,981,727 | ||||
Federal Home Loan Mortgage Corp.: | ||||||
3.83%, 6/20/2006 | 58,000,000 | 58,000,000 | ||||
4.7%, 1/12/2007 | 20,000,000 | 20,000,000 | ||||
4.83%, 1/26/2007 | 25,000,000 | 25,000,000 | ||||
4.875%*, 7/6/2007 | 100,000,000 | 99,956,641 | ||||
5.325%, 5/3/2007 | 27,000,000 | 27,000,000 | ||||
Federal National Mortgage Association: | ||||||
4.03%, 7/21/2006 | 20,000,000 | 20,000,000 | ||||
4.72%*, 9/7/2006 | 80,000,000 | 79,978,980 | ||||
Total Agencies Not Backed by the Full Faith and Credit of the US Government (Cost $497,562,649) | 497,562,649 | |||||
Agencies Backed by the Full Faith and Credit of the US Government 2.2% | ||||||
Hainan Airlines: | ||||||
Series 2000-1, 4.91%*, 12/15/2007 | 15,612,258 | 15,612,258 | ||||
Series 2000-2, 4.91%*, 12/15/2007 | 18,885,355 | 18,885,355 | ||||
Series 2000-3, 4.91%*, 12/15/2007 | 19,261,968 | 19,261,968 | ||||
Total Agencies Backed by the Full Faith and Credit of the US Government (Cost $53,759,581) | 53,759,581 | |||||
Repurchase Agreements 78.6% | ||||||
Banc of America Securities LLC, 4.79%, dated 4/7/2006, to be repurchased at $351,536,792 on 5/10/2006 (a) | 350,000,000 | 350,000,000 | ||||
Bear Stearns & Co., Inc., 4.79%, dated 4/28/2006, to be repurchased at $300,119,750 on 5/1/2006 (b) | 300,000,000 | 300,000,000 | ||||
BNP Paribas, 4.78%, dated 4/28/2006, to be repurchased at $39,015,535 on 5/1/2006 (c) | 39,000,000 | 39,000,000 | ||||
Credit Suisse First Boston LLC, 4.78%, dated 4/7/2006, to be repurchased at $251,095,417 on 5/10/2006 (d) | 250,000,000 | 250,000,000 | ||||
Greenwich Capital Markets, Inc., 4.79%, dated 4/11/2006, to be repurchased at $225,898,125 on 5/11/2006 (e) | 225,000,000 | 225,000,000 | ||||
Morgan Stanley & Co., Inc., 4.78%, dated 4/6/2006, to be repurchased at $391,708,850 on 5/9/2006 (f) | 390,000,000 | 390,000,000 | ||||
State Street Bank and Trust Co., 4.50%, dated 4/28/2006, to be repurchased at $284,107 on 5/1/2006 (g) | 284,000 | 284,000 | ||||
The Goldman Sachs Co., Inc., 4.78%, dated 4/3/2006, to be repurchased at $401,965,111 on 5/10/2006 (h) | 400,000,000 | 400,000,000 | ||||
Total Repurchase Agreements (Cost $1,954,284,000) | 1,954,284,000 | |||||
% of Net Assets | Value ($) | |||||
Total Investment Portfolio (Cost $2,505,606,230)+ | 100.8 | 2,505,606,230 | ||||
Other Assets and Liabilities, Net | (0.8 | ) | (19,726,228 | ) | ||
Net Assets | 100.0 | 2,485,880,002 | ||||
* | Floating rate notes are securities whose interest rates 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 April 30, 2006. |
+ | The cost for federal income tax purposes was $2,505,606,230. |
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(a) Collateralized by:
Principal Amount ($) | Security | Rate (%) | Maturity Date | Collateral Value ($) | ||||
82,421,371 | Federal Home Loan Mortgage Corp. | 5.0-6.0 | 1/1/2033-4/1/2036 | 80,145,477 | ||||
283,213,943 | Federal National Mortgage Association | 4.5-7.0 | 3/1/2021-3/1/2036 | 276,854,523 | ||||
Total Collateral Value | 357,000,000 | |||||||
(b) Collateralized by:
Principal Amount ($) | Security | Rate (%) | Maturity Date | Collateral Value ($) | ||||
121,185,361 | Federal Home Loan Mortgage Corp. | 4.0-7.0 | 12/15/2017-4/15/2036 | 117,174,052 | ||||
4,042,206 | Federal Home Loan Mortgage Corp. — Principal Only | — | 8/15/2033-2/15/2035 | 1,913,505 | ||||
146,042,311 | Federal National Mortgage Association | 4.5-11.0 | 8/15/2008-1/25/2048 | 149,799,938 | ||||
4,002,762 | Federal National Mortgage Association — Principal Only | — | 1/25/2032-7/25/2034 | 2,223,027 | ||||
39,123,194 | Government National Mortgage Association | 4.35-6.5 | 10/20/2014-9/16/2038 | 34,890,363 | ||||
Total Collateral Value | 306,000,885 | |||||||
Principal Only (PO) bonds represent the “principal only” portion of payments on a pool of underlying mortgage or mortgage-backed securities.
(c) Collateralized by $40,062,000 Federal Home Loan Mortgage Corp., 5.125%, maturing on 4/18/2011 with a value of $39,780,909.
(d) Collateralized by:
Principal Amount ($) | Security | Rate (%) | Maturity Date | Collateral Value ($) | ||||
86,541,607 | Federal Home Loan Mortgage Corp. | 3.25-5.48 | 1/1/2031-3/1/2036 | 86,111,728 | ||||
173,055,434 | Federal National Mortgage Association | 4.5-6.12 | 4/1/2016-7/1/2035 | 168,888,583 | ||||
Total Collateral Value | 255,000,311 | |||||||
(e) Collateralized by:
Principal Amount ($) | Security | Rate (%) | Maturity Date | Collateral Value ($) | ||||
211,120,780 | Federal Home Loan Mortgage Corp. | 5.0-5.75 | 2/15/2020-7/15/2035 | 202,491,874 | ||||
28,234,372 | Government National Mortgage Association | 2.91-3.2 | 4/16/2019-8/16/2020 | 27,010,104 | ||||
Total Collateral Value | 229,501,978 | |||||||
(f) Collateralized by:
Principal Amount ($) | Security | Rate (%) | Maturity Date | Collateral Value ($) | ||||
31,336,968 | Federal Home Loan Mortgage Corp. | 4.76-5.17 | 4/1/2034-2/1/2036 | 30,014,228 | ||||
369,374,202 | Federal National Mortgage Association | 4.71-7.14 | 8/1/2033-8/1/2035 | 367,793,129 | ||||
Total Collateral Value | 397,807,357 | |||||||
(g) Collateralized by $310,000 Federal Home Loan Mortgage Corp., 5.0%, maturing on 3/27/2018 with a value of $290,625.
(h) Collateralized by:
Principal Amount ($) | Security | Rate (%) | Maturity Date | Collateral Value ($) | ||||
125,441,917 | Federal Home Loan Mortgage Corp. | 5.5-6.0 | 4/1/2026-4/1/2036 | 123,046,125 | ||||
293,315,699 | Federal National Mortgage Association | 5.0-6.0 | 2/1/2021-12/1/2034 | 284,953,876 | ||||
Total Collateral Value | 408,000,001 | |||||||
The accompanying notes are an integral part of the financial statements.
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Portfolio of Investments as of April 30, 2006
Tax-Exempt Portfolio | Principal Amount ($) | Value ($) | ||
Municipal Investments 99.1% | ||||
Alabama 0.6% | ||||
Alabama, Housing Finance Authority, Multi-Family Housing Revenue, Heatherbrooke Project, Series C, 3.84%*, 6/15/2026 | 1,700,000 | 1,700,000 | ||
Jefferson County, AL, Sewer Revenue, Capital Improvement Waste, Series A, 3.82%*, 2/1/2042 (a) | 3,000,000 | 3,000,000 | ||
4,700,000 | ||||
Arizona 3.8% | ||||
Apache County, AZ, Industrial Development Authority Revenue, Tucson Electric Power Co., Series 83C, 3.8%*, 12/15/2018, Bank of New York (b) | 1,000,000 | 1,000,000 | ||
Arizona, Salt River Project, Agricultural Improvement & Power Distribution Revenue, 3.23%, 5/5/2006 | 12,000,000 | 12,000,000 | ||
Arizona, School Facilities Board, Certificates of Participation, Series 735, 144A, 3.55%*, 3/1/2013 (a) | 10,955,000 | 10,955,000 | ||
Salt River, AZ, Agricultural Improvement & Power District, Series B, 3.15%, 5/2/2006 | 8,000,000 | 8,000,000 | ||
31,955,000 | ||||
California 2.6% | ||||
California, Golden State Tobacco Securitization Corp., Tobacco Settlement Revenue, Series R-411CE, 144A, 3.85%*, 6/1/2045 | 5,000,000 | 5,000,000 | ||
California, Housing Finance Agency Revenue, Multi-Family Housing, Series C, AMT, 3.9%*, 2/1/2037 | 2,600,000 | 2,600,000 | ||
California, State Department of Water Resources, Power Supply Revenue: | ||||
Series G-3, 3.8%*, 5/1/2016 (a) | 1,050,000 | 1,050,000 | ||
Series C-7, 3.8%*, 5/1/2022 (a) | 10,100,000 | 10,100,000 | ||
California, State General Obligation, Series PT-1555, 144A, 3.84%*, 10/1/2010 (a) | 100,000 | 100,000 | ||
California, Statewide Communities Development Authority, Multi-Family Revenue, Housing Village at Shaw Apartments, Series E, AMT, 3.88%*, 11/15/2035 | 1,000,000 | 1,000,000 | ||
Sacramento, CA, Housing Authority, Multi-Family Revenue, Phoenix Park II Apartments, Series F, AMT, 3.87%*, 10/1/2036, Citibank NA (b) | 2,170,000 | 2,170,000 | ||
22,020,000 | ||||
Colorado 3.0% | ||||
Adams & Weld Counties, CO, Brighton School District No. 27J, Series R-6514, 144A, 3.84%*, 12/1/2024 (a) | 1,400,000 | 1,400,000 | ||
Colorado, Educational & Cultural Facilities Authority Revenue, Vail Mountain School Project, 3.87%*, 5/1/2033, KeyBank NA (b) | 1,800,000 | 1,800,000 | ||
Colorado, Health Facilities Authority Revenue, Catholic Health, Series B-1, 3.8%*, 3/1/2023 | 2,800,000 | 2,800,000 | ||
Colorado, Health Facilities Authority Revenue, Frasier Meadows Manor Project, 3.81%*, 6/1/2021, Bank One NA (b) | 1,335,000 | 1,335,000 | ||
Colorado, Municipal Securities Trust Certificates, Series 2004-220-A, 144A, 3.92%*, 2/15/2023 (a) | 12,265,000 | 12,265,000 | ||
Denver, CO, City & County Economic Development Revenue, Western Stock Show Project, 3.9%*, 7/1/2029, Bank One Colorado NA (b) | 2,300,000 | 2,300,000 | ||
Denver, CO, City & County Special Facilities Airport Revenue, Worldport at DIA Project, Series A, AMT, 3.94%*, 12/1/2029, JPMorgan Chase Bank (b) | 3,380,000 | 3,380,000 | ||
25,280,000 | ||||
Delaware 0.6% | ||||
Sussex County, DE, Industrial Development Revenue, Perdue Agrirecycle LLC Project, AMT, 3.85%*, 1/1/2013, SunTrust Bank (b) | 5,000,000 | 5,000,000 |
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District of Columbia 0.9% | ||||
Washington D.C., Metropolitan Airport Authority System, Series C, AMT, 3.85%*, 10/1/2021 (a) | 7,690,000 | 7,690,000 | ||
Florida 9.5% | ||||
Broward County, FL, Housing Finance Authority, Multi-Family Housing Revenue, Series PT-703, 144A, 3.82%*, 9/1/2026 | 7,820,000 | 7,820,000 | ||
Broward County, FL, School Board Certificates of Participation, Series R-1056, 144A, 3.84%*, 7/1/2019 (a) | 2,660,000 | 2,660,000 | ||
Collier County, FL, School Board, Certificates of Participation, Series MT-147, 144A, 3.84%*, 2/15/2021 (a) | 1,195,000 | 1,195,000 | ||
Florida, Capital Trust Agency Revenue, Aero Miami FX Project-Air Cargo, AMT, 3.88%*, 8/1/2034, Bank One NA (b) | 5,235,000 | 5,235,000 | ||
Florida, Municipal Securities Trust Certificates, “A”, Series 7007, AMT, 144A, 3.88%*, 3/1/2040 (a) | 2,750,000 | 2,750,000 | ||
Florida, State Board of Public Education, Series I, 5.0%, 6/1/2006 | 2,250,000 | 2,254,021 | ||
Florida, Sunshine State Governmental Financing Commission Revenue, Lehman Convention 3/1/2000, 3.87%*, 7/1/2016 (a) | 430,000 | 430,000 | ||
Gulf Breeze, FL, Municipal Bond Fund Revenue, Series A, 3.81%*, 3/31/2021, Bank of America NA (b) | 5,575,000 | 5,575,000 | ||
Highlands County, FL, Health Facilities Authority Revenue, Hospital Adventist Health Systems, Series B, 3.8%*, 11/15/2009, SunTrust Bank (b) | 5,900,000 | 5,900,000 | ||
Jacksonville, FL, Economic Development Community Health Care Facilities Revenue, 3.79%*, 10/1/2015, SunTrust Bank (b) | 1,300,000 | 1,300,000 | ||
Jacksonville, FL, Electric Authority Revenue, Series 200-F, 3.35%, 6/19/2006 | 18,800,000 | 18,800,000 | ||
Jacksonville, FL, Health Facilities Authority, Hospital Revenue, Series A, 3.79%*, 8/15/2033, Bank of America NA (b) | 5,000,000 | 5,000,000 | ||
Miami-Dade County, FL, Industrial Development Authority Revenue, Gulliver Schools Project, 3.85%*, 9/1/2029, Bank of America NA (b) | 1,400,000 | 1,400,000 | ||
Miami-Dade County, FL, Industrial Development Authority Revenue, Palmer Trinity Private College Project, 3.87%*, 9/1/2035, KeyBank NA (b) | 2,175,000 | 2,175,000 | ||
Orange County, FL, Educational Facilities Authority Revenue, Rollins College Project, 3.79%*, 5/1/2031, Bank of America NA (b) | 2,040,000 | 2,040,000 | ||
Palm Beach County, FL, Community Foundation for Palm Beach Project Revenue, 3.82%*, 3/1/2034, Northern Trust Company (b) | 2,200,000 | 2,200,000 | ||
Pasco County, FL, School Board Certificates of Participation, 3.8%*, 8/1/2026 (a) | 2,400,000 | 2,400,000 | ||
Sarasota County, FL, Health Care Facility Authority Revenue, Jewish Housing, Series A, 3.82%*, 7/1/2035, Bank of America NA (b) | 4,100,000 | 4,100,000 | ||
Sarasota County, FL, Utility System Revenue, Series 852, 144A, 3.84%*, 4/1/2013 (a) | 3,990,000 | 3,990,000 | ||
Seminole County, FL, Industrial Development Authority Revenue, Masters Academy Project, 3.82%*, 11/1/2034, Allied Irish Bank PLC (b) | 2,500,000 | 2,500,000 | ||
79,724,021 | ||||
Georgia 1.2% | ||||
Atlanta, GA, Airport Revenue, Series C-1, 3.84%*, 1/1/2030 (a) | 1,000,000 | 1,000,000 | ||
Burke County, GA, Development Authority, Pollution Control Revenue, Oglethorpe Power Corp., 3.79%*, 1/1/2022 (a) | 150,000 | 150,000 | ||
Greene County, GA, Development Authority Sewage Facility Revenue, Carey Station WRF LLC Project, AMT, 3.85%*, 9/1/2024, Wachovia Bank NA (b) | 4,080,000 | 4,080,000 | ||
Macon-Bibb County, GA, Hospital Authority Revenue, Anticipation Certificates, Medical Center of Central Georgia, 3.8%*, 12/1/2018, SunTrust Bank (b) | 775,000 | 775,000 | ||
Rockdale County, GA, Hospital Authority Revenue, Anticipation Certificates, 3.79%*, 10/1/2027, SunTrust Bank (b) | 4,315,000 | 4,315,000 | ||
10,320,000 | ||||
Idaho 0.9% | ||||
Power County, ID, Industrial Development Authority, FMC Corp. Project, AMT, 3.85%*, 4/1/2014, Wachovia Bank NA (b) | 7,500,000 | 7,500,000 | ||
Illinois 7.3% | ||||
Chicago, IL, General Obligation, Series B-1, 3.81%*, 1/1/2034 (a) | 1,300,000 | 1,300,000 | ||
Chicago, IL, Multi-Family Housing Revenue, Series F3-D, AMT, 144A, 4.0%*, 7/15/2039 | 13,305,000 | 13,305,000 | ||
Chicago, IL, O’Hare International Airport Revenue, Series MT-049, AMT, 144A, 3.88%*, 1/1/2017 (a) | 1,995,000 | 1,995,000 | ||
Chicago, IL, Sales & Tax Revenue, Series SG-131, 144A, 3.84%*, 1/1/2027 (a) | 4,425,000 | 4,425,000 | ||
Cook County, IL, State General Obligation, Series B-11, 144A, 3.82%*, 11/15/2025 (a) | 3,540,000 | 3,540,000 | ||
Du Page County, IL, Benedictine University Building Project, 3.82%*, 7/1/2024, National City Bank Midwest (b) | 3,500,000 | 3,500,000 | ||
Illinois, Development Finance Authority Revenue, FXD Chicago Symphony Project, 3.82%*, 12/1/2033, Bank One NA (b) | 1,000,000 | 1,000,000 | ||
Illinois, Development Finance Authority Revenue, Museum of Contemporary Art Project, 3.83%*, 2/1/2029, Bank One NA (b) | 675,000 | 675,000 | ||
Illinois, Development Finance Authority, Industrial Development Revenue, Home Run Inn Frozen Foods, AMT, 3.95%*, 4/1/2020, Bank One NA (b) | 3,150,000 | 3,150,000 | ||
Illinois, Development Finance Authority, Industrial Development Revenue, Katlaw Tretam & Co. Project, AMT, 3.88%*, 8/1/2027, LaSalle Bank NA (b) | 2,760,000 | 2,760,000 |
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Illinois, Development Finance Authority, Multi-Family Revenue, Cypress Creek Project, AMT, 3.92%*, 6/1/2033, LaSalle Bank NA (b) | 7,420,000 | 7,420,000 | ||
Illinois, Educational Facilities Authority Revenue, 3.2%, 5/3/2006 | 7,000,000 | 7,000,000 | ||
Illinois, Municipal Securities Trust Certificates, Series 7006, 144A, 3.82%*, 1/1/2031 (a) | 6,245,000 | 6,245,000 | ||
Lake County, IL, Warren Township High School District No. 121 Gurnee, Series R-2157, 144A, 3.43%*, 3/1/2024 (a) | 3,485,000 | 3,485,000 | ||
Tinley Park, IL, Industrial Development Revenue, Harbor Tool Manufacturing, Inc., Project, AMT, 3.88%*, 7/1/2020, LaSalle Bank NA (b) | 1,225,000 | 1,225,000 | ||
61,025,000 | ||||
Indiana 3.4% | ||||
ABN AMRO, Munitops Certificates Trust, Series 2005-7, 144A, 3.85%*, 7/10/2013 (a) | 9,060,000 | 9,060,000 | ||
Columbia City, IN, Economic Development Revenue, Precision Plastics Project, AMT, 3.9%*, 11/30/2017, Northern Trust Company (b) | 1,700,000 | 1,700,000 | ||
Indiana, Health Facility Financing Authority Revenue, Ascension Health Credit Group, Series A-2, 2.72%*, 11/15/2036 | 6,500,000 | 6,500,000 | ||
Indiana, State Development Finance Authority, Industrial Development Revenue, Enterprise Center I Project, AMT, 3.88%*, 6/1/2022, LaSalle Bank NA (b) | 2,900,000 | 2,900,000 | ||
Indiana, State Development Finance Authority, Industrial Development Revenue, Enterprise Center II Project, AMT, 3.88%*, 6/1/2022, LaSalle Bank NA (b) | 2,000,000 | 2,000,000 | ||
Indiana, State Development Finance Authority, Industrial Development Revenue, Enterprise Center IV Project, AMT, 3.88%*, 6/1/2022, LaSalle Bank NA (b) | 1,000,000 | 1,000,000 | ||
Indiana, Transportation Finance Authority Highway Revenue, Series 853, 144A, 3.84%*, 6/1/2017 (a) | 1,800,000 | 1,800,000 | ||
Portage, IN, Economic Development Revenue, Breckenridge Apartments Project, AMT, 3.86%*, 5/1/2025, LaSalle National Bank (b) | 3,650,000 | 3,650,000 | ||
28,610,000 | ||||
Iowa 0.1% | ||||
Iowa, Finance Authority Hospital Facility Revenue, Iowa Health Systems, Series B, 3.82%*, 7/1/2015 (a) | 800,000 | 800,000 | ||
Kansas 0.3% | ||||
Kansas, State Development Finance Authority Hospital Revenue, Adventist Health, Sunbelt, Series C, 3.8%*, 11/15/2030, SunTrust Bank (b) | 2,500,000 | 2,500,000 | ||
Kentucky 4.4% | ||||
Boone County, KY, Pollution Control Revenue, Cincinnati Gas & Electric Co., Series A, 3.36%*, 8/1/2013, Calyon Bank (b) | 3,500,000 | 3,500,000 | ||
Breckinridge County, KY, Lease Program Revenue, Kentucky Association of Counties Leasing Trust, Series A, 3.81%*, 2/1/2032, US Bank NA (b) | 165,000 | 165,000 | ||
Pendleton, KY, Country Lease: | ||||
3.37%, 5/24/2006 | 21,000,000 | 21,000,000 | ||
3.44%, 5/3/2006 | 12,000,000 | 12,000,000 | ||
Shelby County, KY, Lease Revenue, Series A, 3.81%*, 9/1/2034, US Bank NA (b) | 100,000 | 100,000 | ||
36,765,000 | ||||
Louisiana 0.9% | ||||
Louisiana, State General Obligation, Series 1254, 144A, 3.42%*, 8/1/2013 (a) | 7,345,000 | 7,345,000 | ||
Maine 2.6% | ||||
Maine, State Bond Anticipation Notes, 4.0%, 6/22/2006 | 1,100,000 | 1,101,691 | ||
Maine, State Housing Authority Mortgage Purchase, Series G, AMT, 3.84%*, 11/15/2037 | 5,000,000 | 5,000,000 | ||
Maine, State Tax Anticipation Notes, 4.0%, 6/30/2006 | 16,000,000 | 16,033,293 | ||
22,134,984 | ||||
Maryland 0.8% | ||||
Gaithersburg, MD, Economic Development Revenue, Asbury Methodist Village, 3.82%*, 1/1/2034, KBC Bank NV (b) | 2,525,000 | 2,525,000 | ||
Montgomery County, MD, Economic Development Revenue, Howard Hughes Medical Facility, Series A, 3.82%*, 10/15/2020 | 4,000,000 | 4,000,000 | ||
6,525,000 | ||||
Massachusetts 1.8% | ||||
Massachusetts, Bay Transportation Authority Revenue, Series SG-156, 144A, 3.91%*, 7/1/2030 | 1,700,000 | 1,700,000 | ||
Massachusetts, Development Finance Agency, Industrial Development Revenue, North Shore YMCA Project, 3.86%*, 11/1/2022, KeyBank NA (b) | 40,000 | 40,000 | ||
Massachusetts, Municipal Securities Trust Certificates, Series 9062-A, 144A, 3.85%*, 6/19/2013 (a) | 13,225,000 | 13,225,000 | ||
14,965,000 | ||||
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Michigan 3.9% | ||||
Detroit, MI, ABN AMRO, Munitops Certificates Trust, Series 2003-3, 144A, 3.83%*, 1/1/2011 (a) | 3,000,000 | 3,000,000 | ||
Detroit, MI, City School District, Series PT-1844, 144A, 3.83%*, 5/1/2011 (a) | 100,000 | 100,000 | ||
Detroit, MI, Sewer Disposal Revenue, Series E, 3.0%*, 7/1/2031 (a) | 28,500,000 | 28,500,000 | ||
Michigan, University of Michigan Hospital Revenues: | ||||
Series A-2, 3.78%*, 12/1/2024 | 1,000,000 | 1,000,000 | ||
Series A, 3.78%*, 12/1/2027 | 260,000 | 260,000 | ||
Oakland County, MI, Economic Development Corp., Limited Obligation Revenue, Rochester College Project, 3.87%*, 8/1/2021, Bank One Michigan (b) | 100,000 | 100,000 | ||
32,960,000 | ||||
Missouri 1.0% | ||||
Missouri, Development Finance Board, Air Cargo Facility Revenue, St. Louis Airport, AMT, 3.88%*, 3/1/2030, American National Bank & Trust (b) | 8,000,000 | 8,000,000 | ||
Nevada 0.3% | ||||
Las Vegas Valley, NV, Water District, Series B-10, 144A, 3.82%*, 6/1/2024 (a) | 2,080,000 | 2,080,000 | ||
New Jersey 3.1% | ||||
New Jersey, Economic Development Authority Revenue, Series R-331, 144A, 3.83%*, 12/15/2015 (a) | 3,850,000 | 3,850,000 | ||
New Jersey, Economic Development Authority Revenue, Keystone Project, 3.43%, 6/1/2006 | 7,000,000 | 7,000,000 | ||
New Jersey, Economic Development Authority, Special Facility Revenue, Port Newark Container LLC, AMT, 3.83%*, 7/1/2030, Citibank NA (b) | 600,000 | 600,000 | ||
New Jersey, State Housing & Mortgage Finance Agency, Multi-Family Revenue, Series A, AMT, 3.8%*, 5/1/2028 (a) | 2,790,000 | 2,790,000 | ||
New Jersey, State Transportation Corp., Certificates of Participation, Series PA-785, 144A, 3.83%*, 9/15/2015 (a) | 4,265,000 | 4,265,000 | ||
New Jersey, State Transportation Trust Fund Authority Revenue: | ||||
Series PT-2488, 144A, 3.82%*, 12/15/2017 (a) | 6,200,00 | 6,200,000 | ||
Series PA-802, 144A, 3.83%*, 12/15/2009 (a) | 1,325,000 | 1,325,000 | ||
26,030,000 | ||||
New York 0.2% | ||||
New York City, NY, Transitional Finance Authority Revenue, NYC Recovery, Series 3-F, 3.8%*, 11/1/2022 | 1,900,000 | 1,900,000 | ||
North Carolina 0.8% | ||||
North Carolina, Capital Facilities Finance, 3.17%, 5/4/2006 | 2,475,000 | 2,475,000 | ||
North Carolina, Capital Facilities Finance Agency, Educational Facilities Revenue, Salem Academy & College Project, 3.82%*, 8/1/2030, Branch Banking & Trust (b) | 2,000,000 | 2,000,000 | ||
North Carolina, Medical Care Community Hospital Revenue, Southeastern Regional Medical Center, 3.82%*, 6/1/2037, Branch Banking & Trust (b) | 2,500,000 | 2,500,000 | ||
6,975,000 | ||||
Ohio 2.4% | ||||
Cuyahoga County, OH, Hospital Revenue, Improvement Metrohealth System, 3.82%*, 2/1/2035, National City Bank (b) | 4,975,000 | 4,975,000 | ||
Cuyahoga, OH, Community College District, General Receipts, Series B, 3.81%*, 12/1/2032 (a) | 3,700,000 | 3,700,000 | ||
Franklin County, OH, Hospital Revenue, Series R-55, 144A, 3.84%*, 6/1/2017 | 11,705,000 | 11,705,000 | ||
20,380,000 | ||||
Oklahoma 0.4% | ||||
Blaine County, OK, Industrial Development Authority Revenue, Seaboard Project, AMT, 3.85%*, 11/1/2018, SunTrust Bank (b) | 3,700,000 | 3,700,000 | ||
Oregon 1.6% | ||||
Oregon, State Department of Administrative Services, Certificates of Participation, Series PT-1679, 144A, 3.84%*, 11/1/2012 (a) | 4,125,000 | 4,125,000 | ||
Portland, OR, Sewer System Revenue, Series PT-2435, 144A, 3.84%*, 10/1/2023 (a) | 6,660,000 | 6,660,000 | ||
Salem, OR, Hospital Facility Authority Revenue, Capital Manor, Inc. Project, 3.85%*, 5/1/2034, Bank of America NA (b) | 2,470,000 | 2,470,000 | ||
13,255,000 | ||||
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Pennsylvania 3.9% | ||||
Allegheny County, PA, Hospital Development Authority Revenue, Health Care Dialysis Clinic, 3.8%*, 12/1/2019, Bank of America NA (b) | 850,000 | 850,000 | ||
Allentown, PA, Area Hospital Authority Revenue, Sacred Heart Hospital, Series B, 3.83%*, 7/1/2023, Wachovia Bank NA (b) | 3,355,000 | 3,355,000 | ||
Dallastown, PA, Area School District, 3.82%*, 2/1/2018 (a) | 2,865,000 | 2,865,000 | ||
Latrobe, PA, Industrial Development Authority Revenue, Greensburg Diocese, 3.85%*, 6/1/2033, Allied Irish Bank PLC (b) | 2,000,000 | 2,000,000 | ||
Luzerne County, PA, Industrial Development Authority Revenue, Pennsummit Tubular LLC, Series A, AMT, 3.9%*, 2/1/2021, Wachovia Bank NA (b) | 3,000,000 | 3,000,000 | ||
Montgomery County, PA, Industrial Development Authority, Pollution Control Revenue, Series B, AMT, 3.85%*, 10/1/2034, Wachovia Bank NA (b) | 4,600,000 | 4,600,000 | ||
Pennsylvania, State Higher Education Assistance Agency, Student Loan Revenue, Series A, AMT, 3.91%*, 3/1/2027 (a) | 5,700,000 | 5,700,000 | ||
Pennsylvania, State Higher Educational Facilities Authority, Hospital Revenue, Series MT-042, 144A, 3.86%*, 1/1/2024 | 10,525,000 | 10,525,000 | ||
32,895,000 | ||||
Rhode Island 0.2% | ||||
Narragansett, RI, Bay Commission, Waste Water System Revenue, Series K7-D, 144A, 3.9%*, 8/1/2035 (a) | 2,000,000 | 2,000,000 | ||
South Carolina 1.2% | ||||
South Carolina, Municipal Securities Trust Certificates, “A”, Series 2005-245, 144A, 3.92%*, 5/15/2024 (a) | 9,955,000 | 9,955,000 | ||
Tennessee 7.3% | ||||
Chattanooga, TN, Health Educational & Housing Facility Board Revenue, Catholic Health, Series C, 3.8%*, 5/1/2039 | 3,000,000 | 3,000,000 | ||
Clarksville, TN, Public Building Authority Revenue: | ||||
3.8%*, 7/1/2031, Bank of America NA (b) | 2,100,000 | 2,100,000 | ||
3.8%*, 1/1/2033, Bank of America NA (b) | 1,450,000 | 1,450,000 | ||
Marion County, TN, Industrial & Environmental Development Board, Valmont Industries, Inc. Project, AMT, 3.85%*, 6/1/2025, Wachovia Bank NA (b) | 8,500,000 | 8,500,000 | ||
Montgomery County, TN, Public Building Authority, Pooled Financing Revenue, Tennessee County Loan Pool, 3.8%*, 4/1/2032, Bank of America NA (b) | 2,600,000 | 2,600,000 | ||
Shelby County, TN, Tax Anticipation Notes, 4.0%, 6/30/2006 | 12,740,000 | 12,767,554 | ||
Tennessee, Tennergy Corp., Gas Revenue, Stars Certificates, Series 2006-001, 144A, 3.85%*, 5/1/2016 | 21,000,000 | 21,000,000 | ||
Tennessee, Tennergy Corp., Gas Revenue, Series 1258Q, 144A, 3.86%*, 11/1/2013 | 10,000,000 | 10,000,000 | ||
61,417,554 | ||||
Texas 20.5% | ||||
ABN AMRO, Munitops Certificates Trust, Series 2004-38, 144A, 3.85%*, 2/15/2011 | 4,005,000 | 4,005,000 | ||
Bexar County, TX, Health Facilities Development Corp. Revenue, Air Force Village, 3.79%*, 8/15/2030, Bank of America NA (b) | 2,000,000 | 2,000,000 | ||
Clear Creek, TX, Independent School District, Series 04, 144A, 3.82%*, 2/15/2029 (a) | 3,845,000 | 3,845,000 | ||
Frisco, TX, Independent School District, “A”, Series 2006, SGC-1, 144A, 3.84%*, 7/16/2030 | 2,965,000 | 2,965,000 | ||
Galena Park, TX, Independent School District, Series SG-153, 144A, 3.84%*, 8/15/2023 | 4,050,000 | 4,050,000 | ||
Harris County, TX, General Obligation: | ||||
3.4%, 5/4/2006 | 15,568,000 | 15,568,000 | ||
3.45%, 6/2/2006 | 14,700,000 | 14,700,000 | ||
Harris County, TX, Health Facilities Development Corp. Revenue, Texas Medical Center Project, 3.81%*, 9/1/2031 (a) | 1,150,000 | 1,150,000 | ||
Harris County, TX: | ||||
Series 1099, 144A, 3.84%*, 8/15/2009 (a) | 2,800,000 | 2,800,000 | ||
Series 1111, 144A, 3.84%*, 8/15/2009 (a) | 6,470,000 | 6,470,000 | ||
Hidalgo County, TX, General Obligation, Public Improvements, Series R-2148, 144A, 3.84%*, 8/15/2024 (a) | 7,355,000 | 7,355,000 | ||
Houston, TX, Airport System Revenue, Series SG-161, 144A, 3.84%*, 7/1/2032 (a) | 5,000,000 | 5,000,000 | ||
McAllen, TX, Independent School District, Municipal Securities Trust Receipts, Series 61-A, 144A, 3.84%*, 2/15/2030 | 3,000,000 | 3,000,000 | ||
Northside, TX, Independent School District, School Building, 2.85%*, 6/15/2035 | 8,000,000 | 8,000,000 | ||
San Antonio, TX, Electric & Gas Revenue: | ||||
3.28%, 5/15/2006 | 8,000,000 | 8,000,000 | ||
Series PT-1706, 144A, 3.85%*, 8/1/2012 | 6,860,000 | 6,860,000 |
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Texas, Lower Colorado River Authority, 3.45%, 5/25/2006 | 7,000,000 | 7,000,000 | ||
Texas, Municipal Securities Trust Certificates, “A”, Series 2005-235, 144A, 3.92%*, 4/5/2023 (a) | 5,760,000 | 5,760,000 | ||
Texas, Public Finance Auto, 3.4%, 5/1/2006 | 6,000,000 | 6,000,000 | ||
Texas, State General Obligation: | ||||
3.23%, 5/22/2006 | 3,500,000 | 3,500,000 | ||
3.53%, 6/7/2006 | 14,000,000 | 14,000,000 | ||
Texas, State Veterans Housing Assistance II, Series B, AMT, 3.86%*, 12/1/2034 | 5,000,000 | 5,000,000 | ||
Texas, University of Texas Permanent University Fund, Series R-7517, 144A, 3.84%*, 7/1/2020 | 5,155,000 | 5,155,000 | ||
Texas, University of Texas Revenues, 3.51%, 8/3/2006 | 21,500,000 | 21,500,000 | ||
Travis County, TX, Health Facilities Development Corp., Retirement Facility Revenue, Querencia Barton Creek, Series C, 3.8%*, 11/15/2035, LaSalle Bank NA (b) | 2,000,000 | 2,000,000 | ||
Wylie, TX, Independent School District, Series R-3004, 144A, 3.84%*, 8/15/2022 | 6,600,000 | 6,600,000 | ||
172,283,000 | ||||
Utah 0.2% | ||||
Alpine, UT, General Obligation, School District, Series PT-436, 144A, 3.84%*, 3/15/2007 | 595,000 | 595,000 | ||
Utah, State Housing Finance Agency, Single Family Mortgage, Series E-1, AMT, 3.92%*, 7/1/2031 | 850,000 | 850,000 | ||
1,445,000 | ||||
Vermont 0.9% | ||||
Vermont, Municipal Bond Bank, Series R, 144A, 3.84%*, 12/1/2021 (a) | 6,320,000 | 6,320,000 | ||
Vermont, State Student Assistance Corp., Student Loan Revenue, 3.3%*, 1/1/2008, State Street Bank & Trust Co. (b) | 1,500,000 | 1,500,000 | ||
7,820,000 | ||||
Virginia 0.9% | ||||
Alexandria, VA, Redevelopment & Multi-Family Housing Authority Revenue, Fairfield Village Square Project, Series A, AMT, 3.89%*, 1/15/2039 | 2,000,000 | 2,000,000 | ||
Henrico County, VA, Economic Development Authority, Industrial Development Revenue, Colonial Mechanical Corp., AMT, 3.85%*, 8/1/2020, Wachovia Bank NA (b) | 3,900,000 | 3,900,000 | ||
Winchester, VA, Industrial Development Authority, Residential Care Facility Revenue, Westminster Cantenbury, Series B, 3.82%*, 1/1/2010, Branch Banking & Trust (b) | 1,400,000 | 1,400,000 | ||
7,300,000 | ||||
Washington 5.2% | ||||
King County, WA, Public Hospital District No. 002, Series R-6036, 144A, 3.84%*, 12/1/2023 (a) | 3,980,000 | 3,980,000 | ||
Lewis County, WA, Public Utilities District Number 1, 144A, 3.84%*, 10/1/2023 (a) | 4,330,000 | 4,330,000 | ||
Seattle, WA, Housing Authority Revenue, Newholly Project, Phase III, AMT, 3.86%*, 12/1/2034, KeyBank NA (b) | 2,420,000 | 2,420,000 | ||
Seattle, WA, Water System Revenue, Series R-4006, 144A, 3.84%*, 9/1/2022 (a) | 4,950,000 | 4,950,000 | ||
Washington, Municipal Securities Trust Certificates, “A”, Series 2006-250, 144A, 3.85%*, 8/14/2015 (a) | 7,570,000 | 7,570,000 | ||
Washington, State General Obligation, Series A-11, 144A, 3.82%*, 6/1/2017 (a) | 2,740,000 | 2,740,000 | ||
Washington, State Health Care Facilities Authority Revenue, Seattle Cancer Care, 3.81%*, 3/1/2035, KeyBank NA (b) | 3,950,000 | 3,950,000 | ||
Washington, State Housing Finance Commission, Multi-Family Housing Revenue, Vintage Silverdale, Series A, AMT, 3.89%*, 9/15/2039 | 8,000,000 | 8,000,000 | ||
Washington, State Housing Finance Commission, Multi-Family Revenue, Cedar Ridge Retirement, Series A, AMT, 3.92%*, 10/1/2041, Wells Fargo Bank NA (b) | 1,000,000 | 1,000,000 | ||
Washington, State Housing Finance Commission, Multi-Family Revenue, Highland Park Apartments Project, Series A, AMT, 3.87%*, 7/15/2038, Bank of America NA (b) | 3,000,000 | 3,000,000 | ||
Washington, State Housing Finance Commission, Multi-Family Revenue, Park Vista Retirement Project, Series A, AMT, 3.95%*, 3/1/2041, Bank of America NA (b) | 1,550,000 | 1,550,000 | ||
43,490,000 | ||||
Wisconsin 0.4% | ||||
Whitewater, WI, Industrial Development Revenue, MacLean Fogg Co. Project, AMT, 3.85%*, 12/1/2009, Bank of America (b) | 3,000,000 | 3,000,000 |
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% of Net Assets | Value ($) | |||
Total Investment Portfolio (Cost $831,744,559)+ | 99.1 | 831,744,559 | ||
Other Assets and Liabilities, Net | 0.9 | 7,373,997 | ||
Net Assets | 100.0 | 839,118,556 | ||
* | 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 April 30, 2006. |
+ | The cost for federal income tax purposes was $831,744,559. |
(a) Bond is insured by one of these companies:
Insurance Coverage | As a % of Total Investment Portfolio | |
AMBAC Financial Group | 8.4 | |
Financial Guaranty Insurance Company | 7.5 | |
Financial Security Assurance, Inc. | 8.2 | |
MBIA Corporation | 7.6 |
(b) The security incorporates a letter of credit from a major bank.
144A: Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.
AMT: Subject to alternative minimum tax.
The accompanying notes are an integral part of the financial statements.
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Financial Statements
Statements of Assets and Liabilities as of April 30, 2006
Assets | Money Market Portfolio | Government & Agency Securities Portfolio | Tax-Exempt Portfolio | ||||||||
Investments: | |||||||||||
Investments in securities, at amortized cost | $ | 6,723,318,083 | $ | 551,322,230 | $ | 831,744,559 | |||||
Repurchase agreements, at amortized cost | 179,322,000 | 1,954,284,000 | — | ||||||||
Total investments in securities, at amortized cost | 6,902,640,083 | 2,505,606,230 | 831,744,559 | ||||||||
Cash | 958,677 | 430 | 318,723 | ||||||||
Receivable for investments sold | — | — | 2,895,000 | ||||||||
Interest receivable | 34,932,511 | 10,355,027 | 5,906,844 | ||||||||
Receivable for Portfolio shares sold | 909,458 | 379,787 | 86,267 | ||||||||
Other assets | 163,395 | 61,771 | 49,866 | ||||||||
Total assets | 6,939,604,124 | 2,516,403,245 | 841,001,259 | ||||||||
Liabilities | |||||||||||
Payable for investments purchased | 35,000,000 | 27,000,000 | — | ||||||||
Dividends payable | 1,600,233 | 508,660 | 1,394,731 | ||||||||
Payable for Portfolio shares redeemed | — | 326,357 | — | ||||||||
Accrued management fee | 856,889 | 294,445 | 122,830 | ||||||||
Other accrued expenses and payables | 5,855,943 | 2,393,781 | 365,142 | ||||||||
Total liabilities | 43,313,065 | 30,523,243 | 1,882,703 | ||||||||
Net assets, at value | $ | 6,896,291,059 | $ | 2,485,880,002 | $ | 839,118,556 | |||||
Net Assets | |||||||||||
Net assets consist of: | |||||||||||
Undistributed net investment income | 107,749 | 12,056 | 7,551 | ||||||||
Accumulated net realized gain (loss) | (771,325 | ) | (632 | ) | — | ||||||
Paid-in capital | 6,896,954,635 | 2,485,868,578 | 839,111,005 | ||||||||
Net assets, at value | $ | 6,896,291,059 | $ | 2,485,880,002 | $ | 839,118,556 | |||||
The accompanying notes are an integral part of the financial statements.
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Statements of Assets and Liabilities as of April 30, 2006 (continued)
Net Asset Value | Money Market Portfolio | Government & Agency Securities Portfolio | Tax-Exempt Portfolio | ||||||
Capital Assets Funds Shares | |||||||||
Net assets applicable to shares outstanding | $ | 775,275,437 | $ | 63,366,713 | $ | 30,458,277 | |||
Shares outstanding of capital stock, $.01 par value, unlimited number of shares authorized | 775,273,011 | 63,366,713 | 30,457,315 | ||||||
Net Asset Value, offering and redemption price per share (net assets/shares outstanding) | $ | 1.00 | $ | 1.00 | $ | 1.00 | |||
Capital Assets Funds Preferred Shares | |||||||||
Net assets applicable to shares outstanding | $ | 74,199 | $ | — | $ | — | |||
Shares outstanding of capital stock, $.01 par value, unlimited number of shares authorized | 74,199 | — | — | ||||||
Net Asset Value, offering and redemption price per share (net assets/shares outstanding) | $ | 1.00 | $ | — | $ | — | |||
Davidson Cash Equivalent Shares | |||||||||
Net assets applicable to shares outstanding | $ | 378,377,857 | $ | 225,085,892 | $ | 50,741,563 | |||
Shares outstanding of capital stock, $.01 par value, unlimited number of shares authorized | 378,377,100 | 225,085,919 | 50,738,387 | ||||||
Net Asset Value, offering and redemption price per share (net assets/shares outstanding) | $ | 1.00 | $ | 1.00 | $ | 1.00 | |||
Davidson Cash Equivalent Plus Shares | |||||||||
Net assets applicable to shares outstanding | $ | 149,803,373 | $ | 105,720,534 | $ | — | |||
Shares outstanding of capital stock, $.01 par value, unlimited number of shares authorized | 149,803,161 | 105,720,544 | — | ||||||
Net Asset Value, offering and redemption price per share (net assets/shares outstanding) | $ | 1.00 | $ | 1.00 | $ | — | |||
Institutional Shares* | |||||||||
Net assets applicable to shares outstanding | $ | 106,842,939 | $ | — | $ | 370,355,609 | |||
Shares outstanding of capital stock, $.01 par value, unlimited number of shares authorized | 106,839,864 | — | 370,371,394 | ||||||
Net Asset Value, offering and redemption price per share (net assets/shares outstanding) | $ | 1.00 | $ | — | $ | 1.00 | |||
Institutional Select Money Market Shares | |||||||||
Net assets applicable to shares outstanding | $ | 212 | $ | — | $ | — | |||
Shares outstanding of capital stock, $.01 par value, unlimited number of shares authorized | 211 | — | — | ||||||
Net Asset Value, offering and redemption price per share (net assets/shares outstanding) | $ | 1.00 | $ | — | $ | — | |||
* | Institutional Money Market Shares of the Money Market Portfolio and DWS Tax-Exempt Cash Institutional Shares of the Tax-Exempt Portfolio. |
The accompanying notes are an integral part of the financial statements.
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Statements of Assets and Liabilities as of April 30, 2006 (continued)
Money Market Portfolio | Government & Agency Securities Portfolio | Tax-Exempt Portfolio | |||||||
Tax-Exempt Cash Managed Shares | |||||||||
Net assets applicable to shares outstanding | $ | — | $ | — | $ | 247,517,035 | |||
Shares outstanding of capital stock, $.01 par value, unlimited number of shares authorized | — | — | 247,513,160 | ||||||
Net Asset Value, offering and redemption price per share (net assets/shares outstanding) | $ | — | $ | — | $ | 1.00 | |||
Premier Money Market Shares | |||||||||
Net assets applicable to shares outstanding | $ | 4,095,466,868 | $ | 2,046,379,928 | $ | 118,992,488 | |||
Shares outstanding of capital stock, $.01 par value, unlimited number of shares authorized | 4,095,331,352 | 2,046,367,027 | 118,990,343 | ||||||
Net Asset Value, offering and redemption price per share (net assets/shares outstanding) | $ | 1.00 | $ | 1.00 | $ | 1.00 | |||
Premium Reserve Money Market Shares | |||||||||
Net assets applicable to shares outstanding | $ | 508,694,986 | $ | — | $ | — | |||
Shares outstanding of capital stock, $.01 par value, unlimited number of shares authorized | 508,610,525 | — | — | ||||||
Net Asset Value, offering and redemption price per share (net assets/shares outstanding) | $ | 1.00 | $ | — | $ | — | |||
Service Shares | |||||||||
Net assets applicable to shares outstanding | $ | 881,755,188 | $ | 45,326,935 | $ | 21,053,584 | |||
Shares outstanding of capital stock, $.01 par value, unlimited number of shares authorized | 881,754,317 | 45,326,435 | 21,052,477 | ||||||
Net Asset Value, offering and redemption price per share (net assets/shares outstanding) | $ | 1.00 | $ | 1.00 | $ | 1.00 | |||
The accompanying notes are an integral part of the financial statements.
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Statements of Operations for the year ended April 30, 2006
Investment Income | Money Market Portfolio | Government & Agency Securities Portfolio | Tax-Exempt Portfolio | |||||||||
Income: | ||||||||||||
Interest | $ | 240,007,199 | $ | 89,337,595 | $ | 27,951,382 | ||||||
Expenses: | ||||||||||||
Management fee | 9,606,370 | 3,618,644 | 1,595,008 | |||||||||
Services to shareholders | 16,392,991 | 6,954,051 | 845,596 | |||||||||
Custodian fees | 263,890 | 70,408 | 38,720 | |||||||||
Distribution service fees | 30,029,963 | 11,478,235 | 1,733,241 | |||||||||
Auditing | 76,240 | 56,479 | 52,559 | |||||||||
Legal | 122,056 | 66,896 | 59,341 | |||||||||
Trustees’ fees and expenses | 96,746 | 74,373 | 46,668 | |||||||||
Reports to shareholders | 706,217 | 412,390 | 66,614 | |||||||||
Registration fees | 170,177 | 110,741 | 107,870 | |||||||||
Other | 209,252 | 89,456 | 61,850 | |||||||||
Total expenses, before expense reductions | 57,673,902 | 22,931,673 | 4,607,467 | |||||||||
Expense reductions | (1,058,410 | ) | (298,500 | ) | (54,395 | ) | ||||||
Total expenses, after expense reductions | 56,615,492 | 22,633,173 | 4,553,072 | |||||||||
Net investment income | 183,391,707 | 66,704,422 | 23,398,310 | |||||||||
Net realized gain (loss) on investment transactions | 14,178 | — | 34,225 | |||||||||
Net increase (decrease) in net assets resulting from operations | $ | 183,405,885 | $ | 66,704,422 | $ | 23,432,535 | ||||||
The accompanying notes are an integral part of the financial statements.
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Statement of Changes in Net Assets
Money Market Portfolio Years Ended April 30, | ||||||||
Increase (Decrease) in Net Assets | 2006 | 2005 | ||||||
Operations: | ||||||||
Net investment income | $ | 183,391,707 | $ | 39,605,387 | ||||
Net realized gain (loss) on investment transactions | 14,178 | 1,874 | ||||||
Net increase in net assets resulting from operations | 183,405,885 | 39,607,261 | ||||||
Distributions to shareholders from: | ||||||||
Net investment income: | ||||||||
Capital Assets Funds Shares | (19,916,031 | ) | — | |||||
Capital Assets Funds Preferred Shares | (300,099 | ) | — | |||||
Davidson Cash Equivalent Shares | (10,505,196 | ) | (2,426,184 | ) | ||||
Davidson Cash Equivalent Plus Shares | (4,264,968 | ) | (860,296 | ) | ||||
Institutional Money Market Shares | (3,401,909 | ) | (1,599,818 | ) | ||||
Institutional Select Money Market Shares | (10 | ) | (21 | ) | ||||
Premier Money Market Shares | (108,744,331 | ) | (30,622,657 | ) | ||||
Premium Reserve Money Market Shares | (13,272,109 | ) | (4,091,309 | ) | ||||
Service Shares | (22,987,054 | ) | (4,876 | ) | ||||
Portfolio share transactions: | ||||||||
Proceeds from shares sold | 8,313,486,956 | 3,693,493,597 | ||||||
Reinvestment of distributions | 180,071,658 | 38,220,516 | ||||||
Cost of shares redeemed | (5,805,806,430 | ) | (2,812,299,102 | ) | ||||
Net increase (decrease) in net assets from Fund share transactions | 2,687,752,184 | 919,415,011 | ||||||
Increase (decrease) in net assets | 2,687,766,362 | 919,417,111 | ||||||
Net assets at beginning of period | 4,208,524,697 | 3,289,107,586 | ||||||
Net assets at end of period (Including undistributed net investment income of $107,749 and $107,749, respectively) | $ | 6,896,291,059 | $ | 4,208,524,697 | ||||
The accompanying notes are an integral part of the financial statements.
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Statements of Changes in Net Assets
Government & Agency Years Ended April 30, | Tax-Exempt Portfolio Years Ended April 30, | |||||||||||||||
Increase (Decrease) in Net Assets | 2006 | 2005 | 2006 | 2005 | ||||||||||||
Operations: | ||||||||||||||||
Net investment income | $ | 66,704,422 | $ | 16,868,837 | $ | 23,398,310 | $ | 12,870,413 | ||||||||
Net realized gain (loss) on investment transactions | — | (632 | ) | 34,225 | (31,164 | ) | ||||||||||
Net increase from payments by affiliates and net gains realized on the disposal of investments in violation of restrictions | — | — | — | 5,041 | ||||||||||||
Net increase in net assets resulting from operations | 66,704,422 | 16,868,205 | 23,432,535 | 12,844,290 | ||||||||||||
Distributions to shareholders from: | ||||||||||||||||
Net investment income: | ||||||||||||||||
Capital Assets Funds Shares | (1,654,531 | ) | — | (457,433 | ) | — | ||||||||||
Davidson Cash Equivalent Shares | (6,684,876 | ) | (1,770,855 | ) | (934,315 | ) | (185,447 | ) | ||||||||
Davidson Cash Equivalent Plus Shares | (3,244,614 | ) | (664,293 | ) | — | — | ||||||||||
DWS Tax-Exempt Cash Institutional Shares | — | — | (10,631,006 | ) | (6,945,982 | ) | ||||||||||
Tax-Exempt Cash Managed Shares | — | — | (8,595,538 | ) | (5,201,247 | ) | ||||||||||
Premier Money Market Shares | (54,042,422 | ) | (14,432,125 | ) | (2,296,090 | ) | (778,626 | ) | ||||||||
Service Shares* | (1,077,978 | ) | (1,805 | ) | (482,612 | ) | — | |||||||||
Service Shares** | — | — | (216 | ) | (1,175 | ) | ||||||||||
Portfolio share transactions: | ||||||||||||||||
Proceeds from shares sold | 1,936,583,811 | 1,494,650,195 | 3,907,244,212 | 4,462,777,205 | ||||||||||||
Reinvestment of distributions | 66,303,607 | 16,753,829 | 8,001,297 | 3,220,556 | ||||||||||||
Cost of shares redeemed | (1,634,044,000 | ) | (949,893,541 | ) | (4,060,664,720 | ) | (4,403,612,919 | ) | ||||||||
Net increase (decrease) in net assets from Fund share transactions | 368,843,418 | 561,510,483 | (145,419,211 | ) | 62,384,842 | |||||||||||
Increase (decrease) in net assets | 368,843,419 | 561,509,610 | (145,383,886 | ) | 62,116,655 | |||||||||||
Net assets at beginning of period | 2,117,036,583 | 1,555,526,973 | 984,502,442 | 922,385,787 | ||||||||||||
Net assets at end of period (including undistributed net investment income of $12,056 and $12,056, respectively, for the Government & Agency Securities Portfolio and undistributed net investment income of $7,551 and $6,227, respectively, for the Tax-Exempt Portfolio) | $ | 2,485,880,002 | $ | 2,117,036,583 | $ | 839,118,556 | $ | 984,502,442 | ||||||||
* | Service Shares class of the Tax-Exempt Portfolio was known as Service Shares II. |
** | The Tax-Exempt Portfolio’s Service Shares liquidated on June 1, 2005. |
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Financial Highlights
Money Market Portfolio — Service Shares
Years Ended April 30, | 2006 | 2005 | 2004 | 2003 | 2002 | |||||||||||||||
Selected Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||
Net investment income | .029 | .008 | .0009 | .005 | .02 | |||||||||||||||
Less distributions from net investment income | (.029 | ) | (.008 | ) | (.0009 | ) | (.005 | ) | (.02 | ) | ||||||||||
Net asset value, end of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||
Total Return (%) | 2.97 | a | .82 | a | .10 | a | .53 | 2.02 | a | |||||||||||
Ratios to Average Net Assets and Supplemental Data | ||||||||||||||||||||
Net assets, end of period ($ millions) | 882 | .4 | 1 | 2 | 6,753 | |||||||||||||||
Ratio of expenses before expense reductions (%) | 1.08 | 1.07 | 1.05 | 1.20 | 1.18 | |||||||||||||||
Ratio of expenses after expense reductions (%) | 1.00 | 1.05 | 1.05 | 1.20 | 1.06 | |||||||||||||||
Ratio of net investment income (%) | 2.99 | .89 | .11 | .52 | 2.00 | |||||||||||||||
Government & Agency Securities Portfolio — Service Shares | ||||||||||||||||||||
Years Ended April 30, | 2006 | 2005 | 2004 | 2003 | 2002 | |||||||||||||||
Selected Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||
Net investment income | .029 | .006 | .0007 | .006 | .02 | |||||||||||||||
Less distributions from net investment income | (.029 | ) | (.006 | ) | (.0007 | ) | (.006 | ) | (.02 | ) | ||||||||||
Net asset value, end of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||
Total Return (%) | 2.95 | a | .64 | a | .07 | a | .57 | 1.91 | a | |||||||||||
Ratios to Average Net Assets and Supplemental Data | ||||||||||||||||||||
Net assets, end of period ($ millions) | 45 | .3 | .4 | 1 | 418 | |||||||||||||||
Ratio of expenses before expense reductions (%) | 1.06 | 1.32 | 1.31 | 1.07 | 1.05 | |||||||||||||||
Ratio of expenses after expense reductions (%) | 1.00 | 1.24 | 1.06 | 1.07 | 1.05 | |||||||||||||||
Ratio of net investment income (%) | 2.94 | .66 | .07 | .58 | 1.90 |
a | Total return would have been lower had certain expenses not been reduced. |
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Tax-Exempt Portfolio — Service Shares
Years Ended April 30, | 2006a | |||
Selected Per Share Data | ||||
Net asset value, beginning of period | $ | 1.00 | ||
Net investment income | .017 | |||
Less distributions from net investment income | (.017 | ) | ||
Net asset value, end of period | $ | 1.00 | ||
Total Return (%) | 1.75b | ** | ||
Ratios to Average Net Assets and Supplemental Data | ||||
Net assets, end of period ($ millions) | 21 | |||
Ratio of expenses before expense reductions (%) | 1.06 | * | ||
Ratio of expenses after expense reductions (%) | 1.00 | * | ||
Ratio of net investment income (%) | 1.77 | * |
a | For the period from May 18, 2005 (inception date) to April 30, 2006. |
b | Total return would have been lower had certain expenses not been reduced. |
* | Annualized |
** | Not annualized |
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Notes to Financial Statements
1. Significant Accounting Policies
Cash Account Trust (the “Trust”) 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 Trust offers three portfolios: Money Market Portfolio, Government & Agency Securities Portfolio and Tax-Exempt Portfolio (the “Portfolios”).
Money Market Portfolio offers nine classes of shares: Capital Assets Funds Shares (commencement of operations June 15, 2005), Capital Assets Funds Preferred Shares (commencement of operations June 23, 2005), Davidson Cash Equivalent Shares, Davidson Cash Equivalent Plus Shares, Institutional Money Market Shares, Institutional Select Money Market Shares, Premier Money Market Shares, Premium Reserve Money Market Shares and Service Shares.
Government & Agency Securities Portfolio offers five classes of shares: Capital Assets Funds Shares (commencement of operations June 15, 2005), Davidson Cash Equivalent Shares, Davidson Cash Equivalent Plus Shares, Premier Money Market Shares and Service Shares.
Tax-Exempt Portfolio offers six classes of shares: Capital Assets Funds Shares (commencement of operations June 15, 2005), Davidson Cash Equivalent Shares, DWS Tax-Exempt Cash Institutional Shares, Tax-Exempt Cash Managed Shares, Premier Money Market Shares and Service Shares. On May 18, 2005, Service Shares II commenced operations. Effective June 1, 2005, shares previously known as Service Shares were liquidated. On July 25, 2005, Service Shares II was renamed Service Shares.
The financial highlights for the Capital Assets Funds Shares, Davidson Cash Equivalent Shares and Premier Money Market Shares of each Portfolio, the Capital Assets Funds Preferred Shares, Davidson Cash Equivalent Plus Shares, Institutional Money Market Shares, Institutional Select Money Market Shares and Premium Reserve Money Market Shares of the Money Market Portfolio, the Davidson Cash Equivalent Plus Shares of the Government & Agency Securities Portfolio, the DWS Tax-Exempt Cash Institutional Shares, and Tax-Exempt Cash Managed Shares of the Tax-Exempt Portfolio are provided separately and are available upon request.
Each Portfolio’s investment income, realized and unrealized gains and losses, and certain Portfolio-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 of that Portfolio, except that each class bears certain expenses unique to that class such as distribution service fees, shareholder service fees 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 Trust have equal rights with respect to voting subject to class-specific arrangements.
Each Portfolio’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 Portfolios in the preparation of their 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.
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Repurchase Agreements. Each Portfolio may enter into repurchase agreements with certain banks and broker/dealers whereby the Portfolio, 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 custodial 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 Portfolios have the right to sell the securities and recover any resulting loss from the financial institution. If the financial institution enters into bankruptcy, the Portfolios’ claims on the collateral may be subject to legal proceedings.
Federal Income Taxes. Each Portfolio’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, each Portfolio paid no federal income taxes and no federal income tax provision was required.
During the year ended April 30, 2006, the Money Market Portfolio utilized approximately $35,300 of its capital loss carryforward. At April 30, 2006, the Money Market Portfolio had a net tax basis capital loss carryforward of approximately ($750,000) which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until April 30, 2010, the expiration date, whichever occurs first.
In addition, from November 1, 2005 through April 30, 2006, the Money Market Portfolio incurred approximately $22,000 of net realized capital losses. As permitted by tax regulations, the Portfolio intends to elect to defer these losses and treat them as arising in the fiscal year ended April 30, 2007.
At April 30, 2006, the Government & Agency Securities Portfolio had a net tax basis capital loss carryforward of approximately ($630) which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until April 30, 2013, the expiration date, whichever occurs first.
During the year ended April 30, 2006, the Tax-Exempt Portfolio utilized $34,000 of its capital loss carryforward. At April 30, 2006, the Tax-Exempt Portfolio had no tax basis loss carryforward.
Distribution of Income. Net investment income of each Portfolio is declared as a daily dividend and is distributed to shareholders monthly.
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. There were no significant book-to-tax differences for the Portfolios.
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At April 30, 2006, the Portfolios’ components of distributable earnings on a tax-basis are as follows:
Money Market Portfolio: | ||||
Undistributed ordinary income | $ | 1,733,558 | ||
Capital loss carryforwards | $ | (750,000 | ) | |
Government & Agency Securities Portfolio: | ||||
Undistributed ordinary income | $ | 529,959 | ||
Capital loss carryforwards | $ | (630 | ) | |
Tax-Exempt Portfolio: | ||||
Undistributed tax-exempt income | $ | 1,410,953 |
In addition, during the years ended April 30, 2006 and April 30, 2005, the tax character of distributions paid to shareholders by each Portfolio is summarized as follows:
Portfolio | 2006 | 2005 | ||||
Money Market Portfolio: | ||||||
Distributions from ordinary income | $ | 183,391,707 | $ | 39,605,161 | ||
Government & Agency Securities Portfolio: | ||||||
Distributions from ordinary income | $ | 66,704,421 | $ | 16,869,078 | ||
Tax-Exempt Portfolio: | ||||||
Distributions from tax-exempt income | $ | 23,397,210 | $ | 13,112,477 |
Expenses. Expenses of the Trust arising in connection with a specific Portfolio are allocated to that Portfolio. Other Trust expenses which cannot be directly attributed to a Portfolio are apportioned pro rata on the basis of relative net assets among the Portfolios in the Trust.
Contingencies. In the normal course of business, the Portfolios may enter into contracts with service providers that contain general indemnification clauses. The Portfolio’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Portfolio that have not yet been made. However, based on experience, the Portfolio expects the risk of loss to be remote.
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.
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2. Related Parties
Management Agreement. Under the Management Agreement, 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 Trust 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 each Portfolio. 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 1/12 of the annual rate of 0.22% of the first $500,000,000 of the Portfolios’ combined average daily net assets, 0.20% of the next $500,000,000 of such net assets, 0.175% of the next $1,000,000,000 of such net assets, 0.16% of the next $1,000,000,000 of such net assets and 0.15% of such net assets in excess of $3,000,000,000, computed and accrued daily and payable monthly. Accordingly, for the year ended April 30, 2006, the Portfolios incurred management fees equivalent to the following annualized effective rates of each Portfolio’s average daily net assets:
Portfolio | Annual Effective Rate (%) | |
Money Market Portfolio | .16 | |
Government & Agency Securities Portfolio | .16 | |
Tax-Exempt Portfolio | .16 |
The Advisor has contractually agreed to waive all or a portion of its management fee and reimburse or pay operating expenses at 1.00% of the Service Shares of the Money Market Portfolio and Government & Agency Securities Portfolio for the year ended April 30, 2006.
Effective May 13, 2005 through July 31, 2006, the Advisor has contractually agreed to waive all or a portion of its management fee and reimburse or pay operating expenses at 1.00% of the Service Shares of the Tax-Exempt Portfolio. Certain expenses such as taxes, brokerage and interest expense are excluded from the expense limitation.
The Advisor and certain of its subsidiaries also have agreed to maintain expenses of the Capital Assets Funds Shares and Davidson Cash Equivalent Shares of each Portfolio, the Capital Assets Funds Preferred Shares, Davidson Cash Equivalent Plus Shares, Institutional Money Market Shares and Institutional Select Money Market Shares of the Money Market Portfolio, the Davidson Cash Equivalent Plus Shares of the Government & Agency Securities Portfolio and the DWS Tax-Exempt Cash Institutional Shares and Tax-Exempt Cash Managed Shares of the Tax-Exempt Portfolio at certain rates for the year ended April 30, 2006. These rates are disclosed in the respective share classes’ annual reports that are provided separately and are available upon request.
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Service Provider Fees. DWS Scudder Investments Service Company (“DWS-SISC”), an affiliate of the Advisor, is the transfer, dividend-paying and shareholder service agent of the Trust. For the year ended April 30, 2006, the amounts charged to the Portfolios by DWS-SISC were as follows:
Portfolio | Total Aggregated | Waived | Unpaid at April 30, 2006 | ||||||
Money Market Portfolio: | |||||||||
Capital Assets Funds Shares | $ | 1,645,136 | $ | 137,364 | $ | 267,781 | |||
Capital Assets Funds Preferred Shares | 17,251 | 3,979 | — | ||||||
Davidson Cash Equivalent Shares | 982,436 | 178,917 | 137,066 | ||||||
Davidson Cash Equivalent Plus Shares | 260,656 | 19,031 | 44,519 | ||||||
Institutional Money Market Shares | 19,928 | — | 3,778 | ||||||
Premier Money Market Shares | 10,578,170 | — | 1,917,718 | ||||||
Premium Reserve Money Market Shares | 394,641 | — | 83,679 | ||||||
Service Shares | 2,152,121 | 592,686 | 257,186 | ||||||
Government & Agency Securities Portfolio: | |||||||||
Capital Assets Funds Shares | $ | 136,440 | $ | 16,860 | $ | 21,682 | |||
Davidson Cash Equivalent Shares | 695,187 | 198,211 | 86,915 | ||||||
Davidson Cash Equivalent Plus Shares | 204,139 | 27,522 | 34,878 | ||||||
Premier Money Market Shares | 5,785,109 | — | 1,018,259 | ||||||
Service Shares | 94,042 | 23,304 | 5,762 | ||||||
Portfolio | Total Aggregated | Waived | Unpaid at April 30, 2006 | ||||||
Tax-Exempt Portfolio: | |||||||||
Capital Assets Funds Shares | $ | 62,043 | $ | 9,058 | $ | 9,970 | |||
Davidson Cash Equivalent Shares | 63,419 | 19,805 | 9,091 | ||||||
DWS Tax-Exempt Cash Institutional Shares | 13,460 | — | 1,818 | ||||||
Tax-Exempt Cash Managed Shares | 283,034 | — | 47,947 | ||||||
Premier Money Market Shares | 342,764 | — | 56,253 | ||||||
Service Shares* | 70,964 | 17,233 | 7,578 |
* | For the period from May 18, 2005 (commencement of operations) to April 30, 2006. Formerly known as Service Shares II. |
Pursuant to a sub-transfer agency agreement between DWS-SISC and DST Systems, Inc. (“DST”), DWS-SISC has delegated certain transfer agent and dividend paying agent functions to DST. DWS-SISC compensates DST out of the shareholder servicing fee it receives from the Portfolios.
Distribution Service Agreement. The Trust has a distribution service agreement with DWS Scudder Distributors, Inc. (“DWS-SDI”), a subsidiary of the Advisor.
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For the year ended April 30, 2006, the Distribution Fee was as follows:
Portfolio | Distribution Fee | Unpaid at April 30, 2006 | Annual Effective Rate | Contractual Rate (Up To) | ||||||||
Money Market Portfolio: | ||||||||||||
Capital Assets Funds Shares | $ | 2,155,846 | $ | 208,098 | .33 | % | .33 | % | ||||
Capital Assets Funds Preferred Shares | 22,989 | — | .20 | % | .20 | % | ||||||
Davidson Cash Equivalent Shares | 1,052,332 | 94,381 | .30 | % | .30 | % | ||||||
Davidson Cash Equivalent Plus Shares | 334,638 | 32,224 | .25 | % | .25 | % | ||||||
Institutional Money Market Shares | 9,058 | 833 | .01 | % | .075 | % | ||||||
Premier Money Market Shares | 9,109,489 | 844,370 | .25 | % | .25 | % | ||||||
Service Shares | 4,474,109 | 447,564 | .60 | % | .60 | % | ||||||
Portfolio | Distribution Fee | Unpaid at April 30, 2006 | Annual Effective Rate | Contractual Rate (Up To) | ||||||||
Government & Agency Securities Portfolio: | ||||||||||||
Capital Assets Funds Shares | $ | 178,717 | $ | 17,106 | .33 | % | .33 | % | ||||
Davidson Cash Equivalent Shares | 681,079 | 56,897 | .30 | % | .30 | % | ||||||
Davidson Cash Equivalent Plus Shares | 260,503 | 22,355 | .25 | % | .25 | % | ||||||
Premier Money Market Shares | 4,617,354 | 424,943 | .25 | % | .25 | % | ||||||
Service Shares | 211,867 | 20,304 | .60 | % | .60 | % | ||||||
Tax-Exempt Portfolio: | ||||||||||||
Capital Assets Funds Shares | $ | 81,539 | $ | 8,334 | .33 | % | .33 | % | ||||
Davidson Cash Equivalent Shares | 139,168 | 13,056 | .30 | % | .30 | % | ||||||
Premier Money Market Shares | 310,748 | 27,187 | .25 | % | .25 | % | ||||||
Service Shares* | 163,943 | 11,425 | .60 | % | .60 | % |
* | For the period from May 18, 2005 (commencement of operations) to April 30, 2006. Formerly known as Service Shares II. |
In addition, DWS-SDI provides information and administrative services to the Capital Assets Funds Shares of each Portfolio, the Capital Assets Funds Preferred Shares of the Money Market Portfolio, the Davidson Cash Equivalent Shares of each Portfolio, the Davidson Cash Equivalent Plus Shares of the Money Market Portfolio and Government & Agency Securities Portfolio, the Premier Money Market Shares of each Portfolio, the Premium Reserve Money Market Shares and the Institutional Money Market Shares of the Money Market Portfolio and the DWS Tax-Exempt Cash Managed Shares of the Tax-Exempt Portfolio which pay DWS-SDI a fee (“Service Fee”). A portion of these fees may be paid pursuant to a Rule 12b-1 plan.
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For the year ended April 30, 2006, the Service Fee was as follows:
Portfolio | Service Fee | Unpaid at April 30, 2006 | Annual Effective Rate | Contractual Rate (up To) | ||||||||
Money Market Portfolio: | ||||||||||||
Capital Assets Funds Shares | $ | 1,639,059 | $ | 157,686 | .25 | % | .25 | % | ||||
Capital Assets Funds Preferred Shares | 11,495 | 6 | .10 | % | .10 | % | ||||||
Davidson Cash Equivalent Shares | 876,944 | 78,260 | .25 | % | .25 | % | ||||||
Davidson Cash Equivalent Plus Shares | 267,710 | 25,911 | .20 | % | .20 | % | ||||||
Institutional Money Market Shares | 9,265 | 820 | .01 | % | .075 | % | ||||||
Premier Money Market Shares | 9,113,242 | 832,697 | .25 | % | .25 | % | ||||||
Premium Reserve Money Market Shares | 953,787 | 103,559 | .25 | % | .25 | % | ||||||
Portfolio | Service Fee | Unpaid at April 30, 2006 | Annual Effective Rate | Contractual Rate (up To) | ||||||||
Government & Agency Securities Portfolio: | ||||||||||||
Capital Assets Funds Shares | $ | 135,392 | $ | 11,840 | .25 | % | .25 | % | ||||
Davidson Cash Equivalent Shares | 567,566 | 50,541 | .25 | % | .25 | % | ||||||
Davidson Cash Equivalent Plus Shares | 208,403 | 17,929 | .20 | % | .20 | % | ||||||
Premier Money Market Shares | 4,617,354 | 428,768 | .25 | % | .25 | % | ||||||
Tax-Exempt Portfolio: | ||||||||||||
Capital Assets Funds Shares | $ | 61,772 | $ | 6,185 | .25 | % | .25 | % | ||||
Davidson Cash Equivalent Shares | 115,973 | 10,722 | .25 | % | .25 | % | ||||||
Tax-Exempt Cash Managed Shares | 549,290 | 33,684 | .15 | % | .25 | % | ||||||
Premier Money Market Shares | 310,748 | 25,413 | .25 | % | .25 | % |
Typesetting and Filing Service Fees. Under an agreement with DeIM, the Advisor is compensated for providing typesetting and certain regulatory filing services to the Portfolio. For the year ended April 30, 2006, the amounts charged to the Portfolio by DeIM included in reports to shareholders were as follows:
Portfolio | Total Aggregated | Unpaid at April 30, 2006 | ||||
Money Market Portfolio | $ | 46,670 | $ | 15,400 | ||
Government & Agency Securities Portfolio | $ | 30,110 | $ | 12,280 | ||
Tax-Exempt Portfolio | $ | 27,290 | $ | 8,680 |
Trustees’ Fees and Expenses. The Trust pays each Trustee not affiliated with the Advisor retainer fees plus specified amounts for attended board and committee meetings.
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3. Expense Reductions
For the year ended April 30, 2006, the Advisor has agreed to reimburse the Trust the following amounts, which represent 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:
Portfolio | Amount ($) | |
Money Market Portfolio | 124,144 | |
Government & Agency Securities Portfolio | 32,177 | |
Tax-Exempt Portfolio | 5,929 |
In addition, the Trust has entered into arrangements with its custodian whereby credits realized as a result of uninvested cash balances were used to reduce a portion of each Portfolio’s expenses. During the year ended April 30, 2006, the Money Market Portfolio’s, Government & Agency Securities Portfolio’s and Tax-Exempt Portfolio’s custody fees were reduced as follows:
Portfolio | Amount ($) | |
Money Market Portfolio | 2,289 | |
Government & Agency Securities Portfolio | 426 | |
Tax-Exempt Portfolio | 2,370 |
4. Line of Credit
The Trust and several other affiliated funds (the “Participants”) share in a $750 million 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, based upon net assets, among each of the Participants. Interest is calculated at the Federal Funds Rate plus 0.5 percent. Each Portfolio may borrow up to a maximum of 33 percent of its net assets under the agreement.
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5. Share Transactions
The following table summarizes share and dollar activity in the Portfolios:
Year Ended April 30, 2006 | Year Ended April 30, 2005 | |||||||||||||
Money Market Portfolio | Shares | Dollars | Shares | Dollars | ||||||||||
Shares sold | ||||||||||||||
Capital Assets Funds Shares* | 1,412,944,127 | $ | 1,412,944,127 | — | $ | — | ||||||||
Capital Assets Funds Preferred Shares** | 835,462,891 | 835,462,891 | — | — | ||||||||||
Davidson Cash Equivalent Shares | 445,286,567 | 445,286,567 | 482,713,708 | *** | 482,713,708 | *** | ||||||||
Davidson Cash Equivalent Plus Shares | 301,619,048 | 301,619,048 | 175,333,419 | **** | 175,333,419 | **** | ||||||||
Institutional Money Market Shares | 374,803,822 | 374,803,822 | 284,068,975 | 284,068,975 | ||||||||||
Premier Money Market Shares | 2,405,152,436 | 2,405,152,436 | 2,099,220,930 | 2,099,220,930 | ||||||||||
Premium Reserve Money Market Shares | 796,824,800 | 796,824,800 | 649,802,859 | 649,802,859 | ||||||||||
Service Shares | 1,741,393,265 | 1,741,393,265 | 2,353,706 | 2,353,706 | ||||||||||
$ | 8,313,486,956 | $ | 3,693,493,597 | |||||||||||
Shares issued to shareholders in reinvestment of distributions | ||||||||||||||
Capital Assets Funds Shares* | 19,796,024 | $ | 19,796,024 | — | $ | — | ||||||||
Capital Assets Funds Preferred Shares** | 300,083 | 300,083 | — | — | ||||||||||
Davidson Cash Equivalent Shares | 10,443,501 | 10,443,501 | 2,408,404 | *** | 2,408,404 | *** | ||||||||
Davidson Cash Equivalent Plus Shares | 4,239,364 | 4,239,364 | 853,710 | **** | 853,710 | **** | ||||||||
Institutional Money Market Shares | 3,380,800 | 3,380,800 | 1,580,498 | 1,580,498 | ||||||||||
Institutional Select Money Market Shares | 4 | 4 | 21 | 21 | ||||||||||
Premier Money Market Shares | 108,063,865 | 108,063,865 | 30,412,821 | 30,412,821 | ||||||||||
Premium Reserve Money Market Shares | 11,047,966 | 11,047,966 | 2,960,491 | 2,960,491 | ||||||||||
Service Shares | 22,800,051 | 22,800,051 | 4,571 | 4,571 | ||||||||||
$ | 180,071,658 | $ | 38,220,516 | |||||||||||
Shares redeemed | ||||||||||||||
Capital Assets Funds Shares* | (657,467,140 | ) | $ | (657,467,140 | ) | — | $ | — | ||||||
Capital Assets Funds Preferred Shares** | (835,688,775 | ) | (835,688,775 | ) | — | — | ||||||||
Davidson Cash Equivalent Shares | (393,679,507 | ) | (393,679,507 | ) | (168,795,573 | )*** | (168,795,573 | )*** | ||||||
Davidson Cash Equivalent Plus Shares | (265,168,677 | ) | (265,168,677 | ) | (67,073,703 | )**** | (67,073,703 | )**** | ||||||
Institutional Money Market Shares | (345,994,072 | ) | (345,994,072 | ) | (316,541,585 | ) | (316,541,585 | ) | ||||||
Institutional Select Money Market Shares | (1,034 | ) | (1,034 | ) | — | — | ||||||||
Premier Money Market Shares | (1,798,662,107 | ) | (1,798,662,107 | ) | (1,673,996,930 | ) | (1,673,996,930 | ) | ||||||
Premium Reserve Money Market Shares | (626,271,242 | ) | (626,271,242 | ) | (582,814,600 | ) | (582,814,600 | ) | ||||||
Service Shares | (882,873,876 | ) | (882,873,876 | ) | (3,076,711 | ) | (3,076,711 | ) | ||||||
$ | (5,805,806,430 | ) | $ | (2,812,299,102 | ) | |||||||||
Net increase (decrease) | ||||||||||||||
Capital Assets Funds Shares* | 775,273,011 | $ | 775,273,011 | — | $ | — | ||||||||
Capital Assets Funds Preferred Shares** | 74,199 | 74,199 | — | — | ||||||||||
Davidson Cash Equivalent Shares | 62,050,561 | 62,050,561 | 316,326,539 | *** | 316,326,539 | *** | ||||||||
Davidson Cash Equivalent Plus Shares | 40,689,735 | 40,689,735 | 109,113,426 | **** | 109,113,426 | **** | ||||||||
Institutional Money Market Shares | 32,190,550 | 32,190,550 | (30,892,112 | ) | (30,892,112 | ) | ||||||||
Institutional Select Money Market Shares | (1,030 | ) | (1,030 | ) | 21 | 21 | ||||||||
Premier Money Market Shares | 714,554,194 | 714,554,194 | 455,636,821 | 455,636,821 | ||||||||||
Premium Reserve Money Market Shares | 181,601,524 | 181,601,524 | 69,948,750 | 69,948,750 | ||||||||||
Service Shares | 881,319,440 | 881,319,440 | (718,434 | ) | (718,434 | ) | ||||||||
$ | 2,687,752,184 | $ | 919,415,011 | |||||||||||
* | For the period from June 15, 2005 (commencement of operations) to April 30, 2006. |
** | For the period from June 23, 2005 (commencement of operations) to April 30, 2006. |
*** | For the period from September 27, 2004 (commencement of operations) to April 30, 2005. |
**** | For the period from September 28, 2004 (commencement of operations) to April 30, 2005. |
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Year Ended April 30, 2006 | Year Ended April 30, 2005 | |||||||||||||
Government & Agency Securities Portfolio | Shares | Dollars | Shares | Dollars | ||||||||||
Shares sold | ||||||||||||||
Capital Assets Funds Shares* | 240,916,597 | $ | 240,916,597 | — | $ | — | ||||||||
Davidson Cash Equivalent Shares | 271,620,870 | 271,620,870 | 356,890,282 | ** | 356,890,282 | ** | ||||||||
Davidson Cash Equivalent Plus Shares | 182,867,310 | 182,867,310 | 152,302,992 | *** | 152,302,992 | *** | ||||||||
Premier Money Market Shares | 936,044,275 | 936,044,275 | 985,131,618 | 985,131,617 | ||||||||||
Service Shares | 305,134,759 | 305,134,759 | 325,304 | 325,304 | ||||||||||
$ | 1,936,583,811 | $ | 1,494,650,195 | |||||||||||
Shares issued to shareholders in reinvestment of distributions | ||||||||||||||
Capital Assets Funds Shares* | 1,640,485 | $ | 1,640,485 | — | $ | — | ||||||||
Davidson Cash Equivalent Shares | 6,649,793 | 6,649,793 | 1,758,319 | ** | 1,758,319 | ** | ||||||||
Davidson Cash Equivalent Plus Shares | 3,225,879 | 3,225,879 | 659,273 | *** | 659,273 | *** | ||||||||
Premier Money Market Shares | 53,718,133 | 53,718,133 | 14,334,474 | 14,334,474 | ||||||||||
Service Shares | 1,069,317 | 1,069,317 | 1,763 | 1,763 | ||||||||||
$ | 66,303,607 | $ | 16,753,829 | |||||||||||
Shares redeemed | ||||||||||||||
Capital Assets Funds Shares* | (179,190,370 | ) | $ | (179,190,370 | ) | — | $ | — | ||||||
Davidson Cash Equivalent Shares | (284,453,031 | ) | (284,453,031 | ) | (127,380,314 | )** | (127,380,314 | )** | ||||||
Davidson Cash Equivalent Plus Shares | (166,052,810 | ) | (166,052,810 | ) | (67,282,100 | )*** | (67,282,100 | )*** | ||||||
Premier Money Market Shares | (743,126,033 | ) | (743,126,033 | ) | (754,831,386 | ) | (754,831,386 | ) | ||||||
Service Shares | (261,221,756 | ) | (261,221,756 | ) | (399,741 | ) | (399,741 | ) | ||||||
$ | (1,634,044,000 | ) | $ | (949,893,541 | ) | |||||||||
Net increase (decrease) | ||||||||||||||
Capital Assets Funds Shares* | 63,366,712 | $ | 63,366,712 | — | $ | — | ||||||||
Davidson Cash Equivalent Shares | (6,182,368 | ) | (6,182,368 | ) | 231,268,287 | ** | 231,268,287 | ** | ||||||
Davidson Cash Equivalent Plus Shares | 20,040,379 | 20,040,379 | 85,680,165 | *** | 85,680,165 | *** | ||||||||
Premier Money Market Shares | 246,636,375 | 246,636,375 | 244,634,706 | 244,634,705 | ||||||||||
Service Shares | 44,982,320 | 44,982,320 | (72,674 | ) | (72,674 | ) | ||||||||
$ | 368,843,418 | $ | 561,510,483 | |||||||||||
* | For the period from June 15, 2005 (commencement of operations) to April 30, 2006. |
** | For the period from September 27, 2004 (commencement of operations) to April 30, 2005. |
*** | For the period from October 4, 2004 (commencement of operations) to April 30, 2005. |
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Year Ended April 30, 2006 | Year Ended April 30, 2005 | |||||||||||||
Tax-Exempt Portfolio | Shares | Dollars | Shares | Dollars | ||||||||||
Shares sold | ||||||||||||||
Capital Assets Funds Shares* | 78,865,315 | $ | 78,865,315 | — | $ | — | ||||||||
Davidson Cash Equivalent Shares | 123,356,457 | 123,356,457 | 71,532,662 | ** | 71,532,662 | ** | ||||||||
DWS Tax-Exempt Cash Institutional Shares | 2,454,329,923 | 2,454,329,923 | 2,776,213,754 | 2,776,213,754 | ||||||||||
Tax-Exempt Cash Managed Shares | 671,513,645 | 671,513,645 | 1,171,502,649 | 1,171,503,395 | ||||||||||
Premier Money Market Shares | 351,027,086 | 351,027,086 | 443,434,434 | 443,434,434 | ||||||||||
Service Shares*** | — | — | 92,960 | 92,960 | ||||||||||
Service Shares**** | 228,151,786 | 228,151,786 | — | — | ||||||||||
$ | 3,907,244,212 | $ | 4,462,777,205 | |||||||||||
Shares issued to shareholders in reinvestment of distributions | ||||||||||||||
Capital Assets Funds Shares* | 452,753 | $ | 452,753 | — | $ | — | ||||||||
Davidson Cash Equivalent Shares | 928,287 | 928,287 | 183,681 | ** | 183,681 | ** | ||||||||
DWS Tax-Exempt Cash Institutional Shares | 3,832,160 | 3,832,160 | 2,252,835 | 2,252,835 | ||||||||||
Tax-Exempt Cash Managed Shares | 24,596 | 24,596 | 36,140 | 36,140 | ||||||||||
Premier Money Market Shares | 2,283,722 | 2,283,722 | 746,756 | 746,756 | ||||||||||
Service Shares*** | 216 | 216 | 1,144 | 1,144 | ||||||||||
Service Shares**** | 479,563 | 479,563 | — | — | ||||||||||
$ | 8,001,297 | $ | 3,220,556 | |||||||||||
Shares redeemed | ||||||||||||||
Capital Assets Funds Shares* | (48,860,753 | ) | $ | (48,860,753 | ) | — | $ | — | ||||||
Davidson Cash Equivalent Shares | (107,174,545 | ) | (107,174,545 | ) | (38,088,155 | )** | (38,088,155 | )** | ||||||
DWS Tax-Exempt Cash Institutional Shares | (2,500,358,225 | ) | (2,500,358,225 | ) | (2,696,864,747 | ) | (2,696,864,747 | ) | ||||||
Tax-Exempt Cash Managed Shares | (841,507,583 | ) | (841,507,583 | ) | (1,170,764,269 | ) | (1,170,764,269 | ) | ||||||
Premier Money Market Shares | (355,049,760 | ) | (355,049,760 | ) | (497,782,264 | ) | (497,782,264 | ) | ||||||
Service Shares*** | (134,982 | ) | (134,982 | ) | (113,484 | ) | (113,484 | ) | ||||||
Service Shares**** | (207,578,872 | ) | (207,578,872 | ) | — | — | ||||||||
$ | (4,060,664,720 | ) | $ | (4,403,612,919 | ) | |||||||||
Net increase (decrease) | ||||||||||||||
Capital Assets Funds Shares* | 30,457,315 | $ | 30,457,315 | — | $ | — | ||||||||
Davidson Cash Equivalent Shares | 17,110,199 | 17,110,199 | 33,628,188 | ** | 33,628,188 | ** | ||||||||
DWS Tax-Exempt Cash Institutional Shares | (42,196,142 | ) | (42,196,142 | ) | 81,601,842 | 81,601,842 | ||||||||
Tax-Exempt Cash Managed Shares | (169,969,342 | ) | (169,969,342 | ) | 774,520 | 775,266 | ||||||||
Premier Money Market Shares | (1,738,952 | ) | (1,738,952 | ) | (53,601,074 | ) | (53,601,074 | ) | ||||||
Service Shares*** | (134,766 | ) | (134,766 | ) | (19,380 | ) | (19,380 | ) | ||||||
Service Shares**** | 21,052,477 | 21,052,477 | — | — | ||||||||||
$ | (145,419,211 | ) | $ | 62,384,842 | ||||||||||
* | For the period from June 15, 2005 (commencement of operations) to April 30, 2006. |
** | For the period from September 28, 2004 (commencement of operations) to April 30, 2005. |
*** | Effective June 1, 2005, shares of the Service Shares were liquidated. |
**** | For the period from May 18, 2005 (commencement of operations) to April 30, 2006. Formerly known as Service Shares II. |
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6. Regulatory Matters and Litigation
Market Timing Related Regulatory and Litigation Matters. 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 DWS Scudder. The DWS funds’ advisors have been cooperating in connection with these inquiries and are in discussions with the regulators concerning proposed settlements. Publicity about mutual fund practices arising from these industry-wide inquiries serves as the general basis of a number of private lawsuits against the DWS 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 DWS funds, the funds’ investment advisors and their affiliates, and certain individuals, including in some cases fund Trustees/Directors, officers, and other parties. Each DWS fund’s investment advisor has agreed to indemnify the applicable DWS 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. It is not possible to determine with certainty what the outcome of these inquiries will be or what the effect, if any, would be on the funds or their advisors.
With respect to the lawsuits, 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 DWS fund is remote and such actions are not likely to materially affect their ability to perform under their investment management agreements with the DWS funds.
With respect to the regulatory matters, Deutsche Asset Management (“DeAM”) has advised the funds as follows:
DeAM expects to reach final agreements with regulators in 2006 regarding allegations of improper trading in the DWS funds. DeAM expects that it will reach settlement agreements with the Securities and Exchange Commission, the New York Attorney General and the Illinois Secretary of State providing for payment of disgorgement, penalties, and investor education contributions totaling approximately $134 million. Approximately $127 million of this amount would be distributed to shareholders of the affected DWS funds in accordance with a distribution plan to be developed by an independent distribution consultant. DeAM does not believe that any of the DWS funds will be named as respondents or defendants in any proceedings. The funds’ investment advisors do not believe these amounts will have a material adverse financial impact on them or materially affect their ability to perform under their investment management agreements with the DWS funds. The above-described amounts are not material to Deutsche Bank, and they have already been reserved.
Based on the settlement discussions thus far, DeAM believes that it will be able to reach a settlement with the regulators on a basis that is generally consistent with settlements reached by other advisors, taking into account the particular facts and circumstances of market timing at DeAM and at the legacy Scudder and Kemper organizations prior to their acquisition by DeAM in April 2002. Among the terms of the expected settled orders, DeAM would be subject to certain undertakings regarding the conduct of its business in the future, including maintaining existing management fee reductions for certain funds for
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a period of five years. DeAM expects that these settlements would resolve regulatory allegations that it violated certain provisions of federal and state securities laws (i) by entering into trading arrangements that permitted certain investors to engage in market timing in certain DWS funds and (ii) by failing more generally to take adequate measures to prevent market timing in the DWS funds, primarily during the 1999-2001 period. With respect to the trading arrangements, DeAM expects that the settlement documents will include allegations related to one legacy DeAM arrangement, as well as three legacy Scudder and six legacy Kemper arrangements. All of these trading arrangements originated in businesses that existed prior to the current DeAM organization, which came together in April 2002 as a result of the various mergers of the legacy Scudder, Kemper and Deutsche fund groups, and all of the arrangements were terminated prior to the start of the regulatory investigations that began in the summer of 2003. No current DeAM employee approved the trading arrangements.
There is no certainty that the final settlement documents will contain the foregoing terms and conditions. The independent Trustees/Directors of the DWS funds have carefully monitored these regulatory investigations with the assistance of independent legal counsel and independent economic consultants.
Other Regulatory Matters. DeAM is also engaged in settlement discussions with the Enforcement Staffs of the SEC and the NASD regarding DeAM’s practices during 2001-2003 with respect to directing brokerage commissions for portfolio transactions by certain DWS funds to broker-dealers that sold shares in the DWS funds and provided enhanced marketing and distribution for shares in the DWS funds. In addition, on January 13, 2006, DWS Scudder Distributors, Inc. received a Wells notice from the Enforcement Staff of the NASD regarding DWS Scudder Distributors’ payment of non-cash compensation to associated persons of NASD member firms, as well as DWS Scudder Distributors’ procedures regarding non-cash compensation regarding entertainment provided to such associated persons.
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Trustees of Cash Account Trust:
We have audited the accompanying statements of assets and liabilities, including the portfolio of investments, of Cash Account Trust (the “Trust”) (comprising the Money Market, Government & Agency Securities and Tax-Exempt Portfolios) (collectively, the “Portfolios”), as of April 30, 2006, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Trust’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Portfolios’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Portfolios’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of April 30, 2006, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the portfolios comprising Cash Account Trust at April 30, 2006, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
Boston, Massachusetts
June 12, 2006
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Tax Information (Unaudited)
For the Tax-Exempt Portfolio, of the dividends paid from net investment income for the taxable year ended April 30, 2006, 100% are designated as exempt interest dividends for federal income tax purposes.
Please consult a tax advisor if you have questions about federal or state income tax laws, or on how to prepare your tax returns. If you have specific questions about your account, please call 1-800-621-1048.
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Other Information
Proxy Voting
A description of the portfolio’s policies and procedures for voting proxies for portfolio securities and information about how the portfolio voted proxies related to its portfolio securities during the 12-month period ended June 30 is available on our Web site — www.dws-scudder.com (click on “proxy voting”at the bottom of the page) — or on the SEC’s Web site — www.sec.gov. To obtain a written copy of the portfolio’s policies and procedures without charge, upon request, call us toll free at 1-800-621-1048.
Portfolio of Investments
Following the portfolio’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 1-800-SEC-0330.
Regulatory and Litigation Matters
Additional information announced by Deutsche Asset Management regarding the terms of the expected settlements referred to in the Market Timing Related Regulatory and Litigation Matters and Other Regulatory Matters in the Notes to Financial Statements will be made available at www.dws-scudder.com/regulatory_settlements, which will also disclose the terms of any final settlement agreements once they are announced.
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Trustees and Officers
The following table presents certain information regarding the Trustees and Officers of the fund as of April 30, 2006. Each individual’s year of birth is set forth in parentheses after his or her name. Unless otherwise noted, (i) each individual has engaged in the principal occupation(s) noted in the table for at least the most recent five years, although not necessarily in the same capacity, and (ii) the address of each individual is c/o Deutsche Asset Management, 222 South Riverside Plaza, Chicago, Illinois 60606. Each Trustee’s term of office extends until the next shareholders’ meeting called for the purpose of electing Trustees and until the election and qualification of a successor, or until such Trustee sooner dies, retires, resigns or is removed as provided in the governing documents of the fund.
Independent Trustees
Name, Year of Birth, the Fund and Length of Time Served1 | Principal Occupation(s) During Past 5 Years and Other Directorships Held | Number of Funds in Fund Complex Overseen | ||
Shirley D. Peterson (1941) Chairperson, 2004-present Trustee, 1995-present | Retired; formerly, President, Hood College (1995-2000); prior thereto, Partner, Steptoe & Johnson (law firm); Commissioner, Internal Revenue Service; Assistant Attorney General (Tax), US Department of Justice. Directorships: Federal Mogul Corp. (supplier of automotive components and subsystems); AK Steel (steel production); Goodyear Tire & Rubber Co. (April 2004-present) ; Champion Enterprises, Inc. (manufactured home building); Wolverine World Wide, Inc. (designer, manufacturer and marketer of footwear) (April 2005-present); Trustee, Bryn Mawr College. Former Directorship: Bethlehem Steel Corp. | 71 | ||
John W. Ballantine (1946) Trustee, 1999-present | Retired; formerly, Executive Vice President and Chief Risk Management Officer, First Chicago NBD Corporation/The First National Bank of Chicago (1996-1998); Executive Vice President and Head of International Banking (1995-1996). Directorships: First Oak Brook Bancshares, Inc.; Oak Brook Bank; Healthways, Inc. (provider of disease and care management services); Portland General Electric (utility company) | 71 | ||
Donald L. Dunaway (1937) Trustee, 1980-present | Retired; formerly, Executive Vice President, A.O. Smith Corporation (diversified manufacturer) (1963-1994) | 71 | ||
James R. Edgar (1946) Trustee, 1999-present | Distinguished Fellow, University of Illinois, Institute of Government and Public Affairs (1999-present); formerly, Governor, State of Illinois (1991-1999). Directorships: Kemper Insurance Companies; John B. Sanfilippo & Son, Inc. (processor/packager/marketer of nuts, snacks and candy products); Horizon Group Properties, Inc.; Youbet.com (online wagering platform); Alberto-Culver Company (manufactures, distributes and markets health and beauty care products) | 71 | ||
Paul K. Freeman (1950) Trustee, 2002-present | President, Cook Street Holdings (consulting); Consultant, World Bank/Inter-American Development Bank; formerly, Project Leader, International Institute for Applied Systems Analysis (1998-2001); Chief Executive Officer, The Eric Group, Inc. (environmental insurance) (1986-1998) | 71 | ||
Robert B. Hoffman (1936) Trustee, 1981-present | Retired; formerly, Chairman, Harnischfeger Industries, Inc. (machinery for the mining and paper industries) (1999-2000); prior thereto, Vice Chairman and Chief Financial Officer, Monsanto Company (agricultural, pharmaceutical and nutritional/food products) (1994-1999). Directorships: RCP Advisors, LLC (a private equity investment advisory firm) | 71 | ||
William McClayton (1944) Trustee, 2004-present | Managing Director of Finance and Administration, DiamondCluster International, Inc. (global management consulting firm) (2001-present); formerly, Partner, Arthur Andersen LLP (1986-2001). Formerly: Trustee, Ravinia Festival; Board of Managers, YMCA of Metropolitan Chicago | 71 | ||
Robert H. Wadsworth (1940) Trustee, 2004-present | President, Robert H. Wadsworth & Associates, Inc. (consulting firm) (1983 to present). Director, The European Equity Fund, Inc. (since 1986), The New Germany Fund, Inc. (since 1992), The Central Europe and Russia Fund, Inc. (since 1990). Formerly, Trustee of New York Board DWS Funds; President and Trustee, Trust for Investment Managers (registered investment company) (1999-2002). President, Investment Company Administration, L.L.C. (1992*-2001); President, Treasurer and Director, First Fund Distributors, Inc. (June 1990-January 2002); Vice President, Professionally Managed Portfolios (May 1991-January 2002) and Advisors Series Trust (October 1996-January 2002) (registered investment companies) | 74 |
* | Inception date of the corporation which was the predecessor to the L.L.C. |
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Interested Officers2
Name, Year of Birth, Position(s) | Principal Occupation(s) During Past 5 Years and Other Directorships Held | Number of Funds in Fund Complex Overseen | ||
Michael Colon4 (1969) President, 2006-present | Managing Director3 and Chief Operating Officer, Deutsche Asset Management (since March 2005); President, DWS Global High Income Fund, Inc. (since April 2006), DWS Global Commodities Stock Fund, Inc. (since April 2006), The Brazil Fund, Inc. (since April 2006), The Korea Fund, Inc. (since April 2006); Chief Operating Officer, Deutsche Bank Alex. Brown (2002-2005); Chief Operating Officer, US Equities Division of Deutsche Bank (2000-2002) | n/a | ||
Philip J. Collora (1945) Vice President and Assistant Secretary, 1986-present | Director3, Deutsche Asset Management | n/a | ||
Paul H. Schubert4 (1963) Chief Financial Officer, 2004-present Treasurer, 2005-present | Managing Director3, Deutsche Asset Management (since July 2004); formerly, Executive Director, Head of Mutual Fund Services and Treasurer for UBS Family of Funds (1998-2004); Vice President and Director of Mutual Fund Finance at UBS Global Asset Management (1994-1998) | n/a | ||
John Millette5 (1962) Secretary, 2001-present | Director3, Deutsche Asset Management | n/a | ||
Patricia DeFilippis4 (1963) Assistant Secretary, 2005-present | Vice President, Deutsche Asset Management (since June 2005); formerly, Counsel, New York Life Investment Management LLC (2003-2005); legal associate, Lord, Abbett & Co. LLC (1998-2003) | n/a | ||
Elisa D. Metzger4, (1962) Assistant Secretary 2005-present | Director3, Deutsche Asset Management (since September 2005); formerly, Counsel, Morrison and Foerster LLP (1999-2005) | n/a | ||
Caroline Pearson5 (1962) Assistant Secretary, 1998-present | Managing Director3, Deutsche Asset Management | n/a | ||
Scott M. McHugh5 (1971) Assistant Treasurer, 2005-present | Director3, Deutsche Asset Management | n/a | ||
Kathleen Sullivan D’Eramo5 (1957) Assistant Treasurer, 2003-present | Director3, Deutsche Asset Management | n/a | ||
John Robbins4 (1966) Anti-Money Laundering Compliance Officer, 2005-present | Managing Director3, Deutsche Asset Management (since 2005); formerly, Chief Compliance Officer and Anti-Money Laundering Compliance Officer for GE Asset Management (1999-2005) | n/a | ||
Philip Gallo4 (1962) Chief Compliance Officer, 2004-present | Managing Director3, Deutsche Asset Management (2003-present); formerly, Co-Head of Goldman Sachs Asset Management Legal (1994-2003) | n/a |
1 | Length of time served represents the date that each Trustee was first elected to the common board of Trustees which oversees a number of investment companies, including the fund, managed by the Advisor. For the Officers of the fund, the length of time served represents the date that each officer was first elected to serve as an officer of any fund overseen by the aforementioned common board of Trustees. |
2 | As a result of their respective positions held with the Advisor, these individuals are considered “interested persons” of the Advisor within the meaning of the 1940 Act. Interested persons receive no compensation from the fund. |
3 | Executive title, not a board directorship. |
4 | Address: 345 Park Avenue, New York, New York 10154. |
5 | Address: Two International Place, Boston, Massachusetts 02110. |
The fund’s Statement of Additional Information (“SAI”) includes additional information about the Trustees. The SAI is available, without charge, upon request. If you would like to request a copy of the SAI, you may do so by calling the following toll-free number: 1-800-621-1048.
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Notes
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Notes
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Notes
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DWS Scudder is part of Deutsche Asset Management, which is the marketing name in the US for the asset management activities of Deutsche Bank AG, Deutsche Bank Trust Company Americas, Deutsche Asset Management, Inc., Deutsche Investment Management Americas Inc. and DWS Trust Company.
NOT FDIC/NCUA INSURED NO BANK GUARANTEE MAY LOSE VALUE NOT A DEPOSIT NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
Principal Underwriter
DWS Scudder Distributors, Inc.
222 S. Riverside Plaza
Chicago, IL 60606
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Investors Cash Trust
March 31, 2006
ANNUAL REPORT TO SHAREHOLDERS
Service Shares
Government & Agency Securities Portfolio
Treasury Portfolio
This report must be preceded or accompanied by a prospectus. To obtain a prospectus for any of our funds, visit www.dws-scudder.com. 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.
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Portfolio Management Review
In the following interview, Investors Cash Trust Portfolio Manager Darlene Rasel discusses the market environment and the portfolio team’s approach to managing the portfolios during its most recent fiscal year ended March 31, 2006.
Q: Will you discuss the market environment for the portfolios during its most recent fiscal year?
A: Over the 12 months ended March 31, 2006, the US economy showed its resiliency, despite devastating hurricanes in the southern United States and continual increases in energy prices. Monthly job growth was the most important economic indicator for the money markets as the year began, but the market’s focus gradually shifted to a careful watch for signs of increasing inflation. Going forward, the markets will be watching closely for any changes in monetary policy from the new US Federal Reserve Board (the Fed) chairman Ben Bernanke.
During the period, the Fed continued its policy of increasing short-term interest rates in an attempt to undo the easing of monetary policy that occurred up until June 2004. The Fed raised the federal funds rate — the overnight rate charged by banks when they borrow money from each other, which guides other interest rates — to 4.75% in eight quarter- percentage-point increments over the 12-month period. Despite the increases in the federal funds rate, longer-term yields remained low for most of the period, creating a relatively flat yield curve.1 Throughout 2005 and early 2006, the Fed repeated its statements that additional rate increases might be
Portfolio Performance
As of March 31, 2006
Performance is historical and does not guarantee future results. Current performance may be lower or higher than the performance data quoted. An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Although money market funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in them.
7-Day Current Yield* | |||
Government & Agency Securities Portfolio — Service Shares | 4.38 | % | |
Treasury Portfolio — Service Shares | 4.40 | % |
Yields are historical, will fluctuate, and do not guarantee future performance. The 7-day current yield refers to the income paid by the portfolios over a 7-day period expressed as an annual percentage rate.
* | Performance reflects a partial fee waiver which improved results during this period. Otherwise, the 7-day current yields of the Government & Agency Securities Portfolio — Service Shares would have been 4.38% and the Treasury Portfolio — Service Shares would have been 4.26% as of March 31, 2006. Please call for the most current yield information. |
needed going forward to keep the risks to economic growth and price stability in balance.
1 | The yield curve is a graph with a left to right line that shows how high or low yields are, from the shortest to the longest maturities. Typically the line rises from left to right as investors who are willing to tie up their money for a longer period of time are rewarded with higher yields. |
At the end of March 2006, the one-year London Interbank Offered Rate (LIBOR), an industry standard for measuring one-year money market rates, stood at 5.25%, compared to 3.84% 12 months earlier. The premium level of LIBOR (which is set by the market) over the federal funds rate (which is fixed by the Fed) of 4.75% demonstrated the market’s concern that the Fed may raise short-term interest rates at least
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one to two more times in order to stave off any resurgence of inflation. At the same time, there is a sense within the market that 2006 will be a year of transition, that the Fed will probably discontinue its rate increases this year, and that investors will be looking to see how well Bernanke can fine tune the economy by utilizing the Fed’s control over short-term rates.
Q: How did the portfolios perform over its most recent fiscal year?
A: We were able to produce a competitive yield in the Investors Cash Trust by employing our conservative investment strategies and standards. (All performance is historical and does not guarantee future results. Yields fluctuate and are not guaranteed.) We continue our insistence on the highest credit quality within the portfolios. We also plan to maintain our conservative investment strategies and standards. We continue to apply a careful approach to investing on behalf of the portfolios and to seek competitive yield for our shareholders.
Q: In light of market conditions during the period, what has been the strategy for the Treasury Portfolio and the Government & Agency Securities Portfolio?
A: During the portfolios’ most recent fiscal year, except for the period immediately following the past hurricane season when yields declined briefly, the Treasury yield curve was relatively flat, due in part to large-volume purchases of short-term Treasury instruments by foreign central banks. These purchases kept even the yields of six-month issues at relatively depressed levels. Because we would not be rewarded with higher yields by extending maturity, our strategy for the Treasury Portfolio was to limit our purchases to issues with maturities of three months or less, and extend maturity opportunistically, as market conditions warranted. For the Government & Agency Securities Portfolio, our goal was also to keep maturity short, and then step up the yield of the portfolio at each Fed tightening. Going forward, we will continue to monitor economic and inflation indicators to determine when the Fed will end its credit tightening program.
Q: What detracted from performance during the period?
A: Following Hurricanes Katrina and Wilma there was concern that the US economy would falter and that the Fed might halt its series of federal funds rate increases — at least temporarily — so as not to further restrain growth. For this reason, we extended maturity slightly in early fall 2005. Instead of faltering, the economy continued to perform well, however, and the Fed kept raising rates. For this reason, our decision to briefly extend maturity detracted somewhat from the portfolios’ yield and total return during the period.
Darlene M. Rasel
Managing Director, Deutsche Asset Management and Lead Portfolio Manager
A group of investment professionals is responsible for the day-to-day management of the portfolios. These professionals have a broad range of experience managing money market funds.
The views expressed in this report reflect those of the portfolio managers only through the end of the period stated above. The managers’ views are subject to change at any time based on market and other conditions and should not be construed as a recommendation.
DWS Scudder is part of Deutsche Asset Management, which is the marketing name in the US for the asset management activities of Deutsche Bank AG, Deutsche Bank Trust Company Americas, Deutsche Asset Management, Inc., Deutsche Investment Management Americas Inc. and DWS Trust Company.
NOT FDIC/NCUA INSURED NO BANK GUARANTEE MAY LOSE VALUE NOT A DEPOSIT NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
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Information About Each Portfolio’s Expenses
As an investor, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees, distribution and service (12b-1) fees and other Portfolio 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 each Portfolio and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. In the most recent six-month period, each Portfolio’s Service Shares 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 March 31, 2006.
The tables illustrate each Portfolio’s expenses in two ways:
Actual Portfolio Return. This helps you estimate the actual dollar amount of ongoing expenses (but not transaction costs) paid on a $1,000 investment in the Portfolio using the Portfolio’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% Portfolio Return. This helps you to compare your Portfolio’s ongoing expenses (but not transaction costs) with those of other mutual funds using the Portfolio’s actual expense ratio and a hypothetical rate of return of 5% per year before expenses. Examples using a 5% hypothetical portfolio 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.
Service Shares
Expenses and Value of a $1,000 Investment for the six months ended March 31, 2006
Actual Portfolio Return | Government & Agency Securities Portfolio | Treasury Portfolio | ||||
Beginning Account Value 10/1/05 | $ | 1,000.00 | $ | 1,000.00 | ||
Ending Account Value 3/31/06 | $ | 1,020.20 | $ | 1,019.80 | ||
Expenses Paid per $1,000* | $ | 1.26 | $ | 1.21 | ||
Hypothetical 5% Portfolio Return | Government & Agency Securities Portfolio | Treasury Portfolio | ||||
Beginning Account Value 10/1/05 | $ | 1,000.00 | $ | 1,000.00 | ||
Ending Account Value 3/31/06 | $ | 1,023.68 | $ | 1,023.73 | ||
Expenses Paid per $1,000* | $ | 1.26 | $ | 1.21 |
* | Expenses are equal to each Portfolio’s annualized expense ratio, 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 | |||
Government & Agency Securities Portfolio | .25 | % | |
Treasury Portfolio | .24 | % |
For more information, please refer to the Portfolios’ prospectus.
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Portfolio Summary
Investors Cash Trust — Government & Agency Securities Portfolio
Asset Allocation | 3/31/06 | 3/31/05 | ||||
Agencies Not Backed by the Full Faith and Credit of the US Government | 12 | % | 45 | % | ||
Repurchase Agreements | 88 | % | 55 | % | ||
100 | % | 100 | % | |||
Weighted Average Maturity | 3/31/06 | 3/31/05 | ||||
Investors Cash Trust — Government & Agency Securities Portfolio | 13 days | 28 days | ||||
Government & Agencies Retail Money Fund Average* | 30 days | 29 days |
Investors Cash Trust — Treasury Portfolio
Asset Allocation | 3/31/06 | 3/31/05 | ||||
US Treasury Obligations | 17 | % | 37 | % | ||
Repurchase Agreements | 83 | % | 63 | % | ||
100 | % | 100 | % | |||
Weighted Average Maturity | 3/31/06 | 3/31/05 | ||||
Investors Cash Trust — Treasury Portfolio | 16 days | 14 days | ||||
Treasury & Repo Retail Fund Average** | 16 days | 25 days |
* | The Portfolio is compared to its respective iMoneyNet category: Government & Agencies Retail Money Fund Average consists of all non-institutional government money market funds. Category includes the most broadly based government retail funds. These funds can invest in US Treasuries, US Other, Repos, whether or not they are backed by US Treasuries and government-backed Floating Rate Notes. |
** | The Portfolio is compared to its respective iMoneyNet category: Treasury & Repo Retail Fund Average includes only retail government Funds that hold US Treasuries and repurchase agreements backed by the US Treasury. |
Asset allocation is subject to change. For more complete details about the Portfolios’ holdings, see pages 8-10. A quarterly Fact Sheet is available upon request. Information concerning portfolio holdings of the Portfolio as of month end will be posted to www.dws-scudder.com on or after the last day of the following month. In addition, the Portfolios’ top ten holdings and other information about the Portfolios is posted on www.dws-scudder.com as of the calendar quarter-end on or after the 15th day following quarter-end.
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Portfolio of Investments as of March 31, 2006
Government & Agency Securities Portfolio | Principal Amount ($) | Value ($) | ||
Agencies Not Backed by the Full Faith and Credit of the US Government 12.1% | ||||
Federal Home Loan Bank, 4.523%*, 6/2/2006 | 10,000,000 | 9,998,897 | ||
Federal Home Loan Mortgage Corp.: | ||||
3.83%, 6/20/2006 | 8,000,000 | 8,000,000 | ||
4.406%*, 7/6/2007 | 30,000,000 | 29,985,160 | ||
4.75%, 2/6/2007 | 4,000,000 | 4,000,000 | ||
4.92%, 2/28/2007 | 6,000,000 | 6,000,000 | ||
Federal National Mortgage Association: | ||||
4.0%, 8/8/2006 | 5,000,000 | 5,000,000 | ||
4.03%, 7/21/2006 | 5,000,000 | 5,000,000 | ||
Total Agencies Not Backed by the Full Faith and Credit of the US Government (Cost $67,984,057) | 67,984,057 | |||
Repurchase Agreements 87.5% | ||||
Bear Stearns & Co., Inc., 4.86%, dated 3/31/2006, to be repurchased at $100,040,500 on 4/3/2006 (a) | 100,000,000 | 100,000,000 | ||
BNP Paribas, 4.86%, dated 3/31/2006, to be repurchased at $99,040,095 on 4/3/2006 (b) | 99,000,000 | 99,000,000 | ||
Credit Suisse First Boston LLC, 4.54%, dated 2/1/2006, to be repurchased at $48,369,253 on 4/3/2006 (c) | 48,000,000 | 48,000,000 | ||
JPMorgan Securities, Inc., 4.83%, dated 3/31/2006, to be repurchased at $78,031,395 on 4/3/2006 (d) | 78,000,000 | 78,000,000 | ||
Merrill Lynch & Co., Inc., 4.595%, dated 2/14/2006, to be repurchased at $55,407,168 on 4/13/2006 (e) | 55,000,000 | 55,000,000 | ||
State Street Bank and Trust Co., 4.23%, dated 3/31/2006, to be repurchased at $85,030 on 4/3/2006 (f) | 85,000 | 85,000 | ||
The Goldman Sachs & Co., 4.54%, dated 1/31/2006, to be repurchased at $90,703,700 on 4/3/2006 (g) | 90,000,000 | 90,000,000 | ||
The Goldman Sachs & Co., 4.81%, dated 3/27/2006, to be repurchased at $20,018,706 on 4/3/2006 (h) | 20,000,000 | 20,000,000 | ||
Total Repurchase Agreements (Cost $490,085,000) | 490,085,000 | |||
% of Net Assets | Value ($) | |||
Total Investment Portfolio (Cost $558,069,057)+ | 99.6 | 558,069,057 | ||
Other Assets and Liabilities, Net | 0.4 | 2,128,605 | ||
Net Assets | 100.0 | 560,197,662 |
* | 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 March 31, 2006. |
+ | The cost for federal income tax purposes was $558,069,057. |
(a) | Collateralized by: |
Principal Amount ($) | Security | Rate (%) | Maturity Date | Collateral Value ($) | ||||
44,929,438 | Federal Home Loan Mortgage Corp. | 5.0-5.5 | 10/25/2024-6/25/2031 | 43,902,852 | ||||
60,889,217 | Federal National Mortgage Association | 4.0-5.0 | 7/15/2017-8/15/2022 | 58,098,837 | ||||
Total Collateral Value | 102,001,689 | |||||||
(b) | Collateralized by: |
Principal Amount ($) | Security | Rate (%) | Maturity Date | Collateral Value ($) | ||||
94,764,939 | Federal National Mortgage Association | 3.584-5.335 | 9/1/2033-2/1/2036 | 94,279,350 | ||||
6,682,652 | Federal Home Loan Mortgage Corp. | 5.506 | 3/1/2036 | 6,700,650 | ||||
Total Collateral Value | 100,980,000 | |||||||
(c) | Collateralized by $49,458,374 Federal National Mortgage Association, 4.272-5.316%, with various maturities from 5/1/2032-3/1/2035 with a value of $48,960,184. |
(d) | Collateralized by $79,164,327 Federal National Mortgage Association, 6.0%, with various maturities from 1/1/2036-4/1/2036 with a value of $79,561,163. |
(e) | Collateralized by: |
Principal Amount ($) | Security | Rate (%) | Maturity Date | Collateral Value ($) | ||||
51,483,739 | Federal National Mortgage Association | 3.5-6.5 | 8/1/2009-3/1/2036 | 50,848,224 | ||||
6,184,474 | Federal Home Loan Mortgage Corp. | 4.5-5.5 | 4/1/2008-10/1/2034 | 5,253,669 | ||||
Total Collateral Value | 56,101,893 | |||||||
(f) | Collateralized by $95,000 Federal National Mortgage Association, 5.55%, maturing on 7/10/2028 with a value of $89,234. |
(g) | Collateralized by: |
Principal Amount ($) | Security | Rate (%) | Maturity Date | Collateral Value ($) | ||||
94,072,487 | Federal Home Loan Mortgage Corp. | 4.0-8.5 | 11/1/2007-3/1/2036 | 91,489,021 | ||||
9,721,679* | Federal Home Loan Mortgage Corp. | 7.0 | 8/1/2023 | 310,979 | ||||
Total Collateral Value | 91,800,000 | |||||||
* | Principal amount is shown at original face. |
(h) | Collateralized by $20,458,707 Federal Home Loan Mortgage Corp, with various coupon rates 5.5-6.5%, with various maturities from 9/1/2034-1/1/2035 with a value of $20,400,000. |
The accompanying notes are an integral part of the financial statements.
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Portfolio of Investments as of March 31, 2006
Treasury Portfolio | Principal Amount ($) | Value ($) | ||
US Treasury Obligations 16.6% | ||||
US Treasury Bills: | ||||
3.98%*, 4/20/2006 | 7,500,000 | 7,484,246 | ||
4.385%*, 8/3/2006 | 10,000,000 | 9,848,961 | ||
Total US Treasury Obligations (Cost $17,333,207) | 17,333,207 | |||
Repurchase Agreements 83.5% | ||||
BNP Paribas, 4.5%, dated 3/31/2006, to be repurchased at $21,007,875 on 4/3/2006 (a) | 21,000,000 | 21,000,000 | ||
Credit Suisse First Boston LLC, 4.54%, dated 3/31/2006, to be repurchased at $22,008,323 on 4/3/2006 (b) | 22,000,000 | 22,000,000 | ||
JPMorgan Securities, Inc., 4.53%, dated 3/31/2006, to be repurchased at $22,008,305 on 4/3/2006 (c) | 22,000,000 | 22,000,000 | ||
Merrill Lynch & Co., Inc., 4.45%, dated 3/31/2006, to be repurchased at $21,007,788 on 4/3/2006 (d) | 21,000,000 | 21,000,000 | ||
State Street Bank and Trust Co., 4.23%, dated 3/31/2006, to be repurchased at $1,256,443 on 4/3/2006 (e) | 1,256,000 | 1,256,000 | ||
Total Repurchase Agreements (Cost $87,256,000) | 87,256,000 | |||
% of Net Assets | Value ($) | ||||
Total Investment Portfolio (Cost $104,589,207)+ | 100.1 | 104,589,207 | |||
Other Assets and Liabilities, Net | (0.1 | ) | (118,202) | ||
Net Assets | 100.0 | 104,471,005 |
* | Annualized yield at time of purchase; not a coupon rate. |
+ | The cost for federal income tax purposes was $104,589,207. |
(a) | Collateralized by $16,864,000 US Treasury Inflation Index Note, 3.625%, maturing on 1/15/2008 with a value of $21,420,362. |
(b) | Collateralized by $35,090,000 US Treasury STRIPS, maturing on 5/15/2015 with a value of $22,442,863. |
(c) | Collateralized by $31,725,000 US Treasury STRIPS, maturing on 5/15/2013 with a value of $22,441,948. |
(d) | Collateralized by $37,180,000 US Treasury STRIPS, maturing on 5/15/2017 with a value of $21,420,142. |
(e) | Collateralized by $1,040,000 US Treasury Bond, 7.5% maturing on 11/15/2016 with a value of $1,283,804. |
STRIPS: Separate Trading of Registered Interest and Principal Securities.
The accompanying notes are an integral part of the financial statements.
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Financial Statements
Statement of Assets and Liabilities — Government & Agency Securities Portfolio as of March 31, 2006
Assets | |||
Investments: | |||
Investments in securities, at amortized cost | $ | 67,984,057 | |
Repurchase agreements, at amortized cost | 490,085,000 | ||
Total Investments in securities, at amortized cost | 558,069,057 | ||
Cash | 886 | ||
Interest receivable | 2,268,943 | ||
Receivable for Portfolio shares sold | 811,700 | ||
Other assets | 43,933 | ||
Total assets | 561,194,519 | ||
Liabilities | |||
Dividends payable | 762,606 | ||
Payable for Portfolio shares redeemed | 4,464 | ||
Accrued management fee | 68,646 | ||
Other accrued expenses and payables | 161,141 | ||
Total liabilities | 996,857 | ||
Net assets, at value | $ | 560,197,662 | |
Net Assets | |||
Net assets consist of: | |||
Undistributed net investment income | 18,730 | ||
Paid-in capital | 560,178,932 | ||
Net assets, at value | $ | 560,197,662 | |
Net Asset Value | |||
Service Shares | |||
Net assets applicable to shares outstanding | $ | 220,869,902 | |
Shares outstanding of capital stock, $.01 par value, unlimited number of shares authorized | 220,865,251 | ||
Net Asset Value, offering and redemption price per share (net assets/shares outstanding) | $ | 1.00 | |
DWS Government Cash Institutional Shares | |||
Net assets applicable to shares outstanding | $ | 106,279,755 | |
Shares outstanding of capital stock, $.01 par value, unlimited number of shares authorized | 106,276,201 | ||
Net Asset Value, offering and redemption price per share (net assets/shares outstanding) | $ | 1.00 | |
Government Cash Managed Shares | |||
Net assets applicable to shares outstanding | $ | 233,048,005 | |
Shares outstanding of capital stock, $.01 par value, unlimited number of shares authorized | 233,044,796 | ||
Net Asset Value, offering and redemption price per share (net assets/shares outstanding) | $ | 1.00 | |
The accompanying notes are an integral part of the financial statements.
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Statement of Assets and Liabilities — Treasury Portfolio as of March 31, 2006
Assets | ||||
Investments: | ||||
Investments in securities, at amortized cost | $ | 17,333,207 | ||
Repurchase agreements, at amortized cost | 87,256,000 | |||
Total Investments in securities, at amortized cost | 104,589,207 | |||
Cash | 425 | |||
Interest receivable | 10,905 | |||
Other assets | 16,009 | |||
Total assets | 104,616,546 | |||
Liabilities | ||||
Payable for Portfolio shares redeemed | 129 | |||
Accrued management fee | 6,174 | |||
Other accrued expenses and payables | 139,238 | |||
Total liabilities | 145,541 | |||
Net assets, at value | $ | 104,471,005 | ||
Net Assets | ||||
Net assets consist of: Undistributed net investment income | 23,677 | |||
Accumulated net realized gain (loss) | (16,859 | ) | ||
Paid-in capital | 104,464,187 | |||
Net assets, at value | $ | 104,471,005 | ||
Net Asset Value | ||||
Service Shares | ||||
Net assets applicable to shares outstanding | $ | 2,948,360 | ||
Shares outstanding of capital stock, $.01 par value, unlimited number of shares authorized | 2,947,960 | |||
Net Asset Value, offering and redemption price per share (net assets/shares outstanding) | $ | 1.00 | ||
Premier Money Market Shares | ||||
Net assets applicable to shares outstanding | $ | 101,522,645 | ||
Shares outstanding of capital stock, $.01 par value, unlimited number of shares authorized | 101,538,944 | |||
Net Asset Value, offering and redemption price per share (net assets/shares outstanding) | $ | 1.00 | ||
The accompanying notes are an integral part of the financial statements.
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Statements of Operations for the year ended March 31, 2006
Investment Income | Government & Agency Securities Portfolio | Treasury Portfolio | ||||||
Income: | ||||||||
Interest | $ | 17,200,705 | $ | 3,277,593 | ||||
Expenses: | ||||||||
Management fee | 686,096 | 129,210 | ||||||
Services to shareholders | 232,557 | 256,800 | ||||||
Custodian fees | 21,614 | 16,320 | ||||||
Distribution service fees | 385,896 | 407,345 | ||||||
Auditing | 40,556 | 38,382 | ||||||
Legal | 19,673 | 10,484 | ||||||
Trustees’ fees and expenses | 42,986 | 19,151 | ||||||
Reports to shareholders | 37,207 | 26,561 | ||||||
Registration fees | 51,194 | 29,818 | ||||||
Other | 33,624 | 14,593 | ||||||
Total expenses, before expense reductions | 1,551,403 | 948,664 | ||||||
Expense reductions | (28,312 | ) | (142,424 | ) | ||||
Total expenses, after expense reductions | 1,523,091 | 806,240 | ||||||
Net investment income | 15,677,614 | 2,471,353 | ||||||
Realized and Unrealized Gain (Loss) from Investment Transactions | ||||||||
Net realized gain (loss) from investments | — | (14,249 | ) | |||||
Net increase (decrease) in net assets resulting from operations | $ | 15,677,614 | $ | 2,457,104 | ||||
The accompanying notes are an integral part of the financial statements.
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Statement of Changes in Net Assets — Government & Agency Securities Portfolio
Years Ended March 31, | ||||||||
2006 | 2005 | |||||||
Increase (Decrease) in Net Assets | ||||||||
Operations: | ||||||||
Net investment income | $ | 15,677,614 | $ | 7,268,568 | ||||
Net realized gain (loss) on investment transactions | — | 7,543 | ||||||
Net increase (decrease) in net assets resulting from operations | 15,677,614 | 7,276,111 | ||||||
Distributions to shareholders from: | ||||||||
Net investment income (Service Shares) | (6,675,761 | ) | (2,735,478 | ) | ||||
Net investment income (DWS Government Cash Institutional Shares) | (2,641,028 | ) | (1,724,926 | ) | ||||
Net investment income (Government Cash Managed Shares) | (6,360,825 | ) | (2,808,164 | ) | ||||
Portfolio share transactions: | ||||||||
Proceeds from shares sold | 1,419,728,633 | 1,117,499,491 | ||||||
Reinvestment of distributions | 9,358,777 | 3,483,589 | ||||||
Cost of shares redeemed | (1,387,771,697 | ) | (1,147,198,270 | ) | ||||
Net increase (decrease) in net assets from Portfolio share transactions | 41,315,713 | (26,215,190 | ) | |||||
Increase (decrease) in net assets | 41,315,713 | (26,207,647 | ) | |||||
Net assets at beginning of period | 518,881,949 | 545,089,596 | ||||||
Net assets at end of period (including undistributed net investment income of $18,730 and $18,730, respectively) | $ | 560,197,662 | $ | 518,881,949 | ||||
The accompanying notes are an integral part of the financial statements.
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Statement of Changes in Net Assets — Treasury Portfolio
Years Ended March 31, | ||||||||
2006 | 2005 | |||||||
Increase (Decrease) in Net Assets | ||||||||
Operations: | ||||||||
Net investment income | $ | 2,471,353 | $ | 349,902 | ||||
Net realized gain (loss) on investment transactions | (14,249 | ) | (2,554 | ) | ||||
Net increase (decrease) in net assets resulting from operations | 2,457,104 | 347,348 | ||||||
Distributions to shareholders from: | ||||||||
Net investment income (Service Shares) | (180,954 | ) | (96,628 | ) | ||||
Net investment income (Premier Money Market Shares) | (2,290,399 | ) | (253,274 | ) | ||||
Portfolio share transactions: | ||||||||
Proceeds from shares sold | 325,769,423 | 92,686,228 | ||||||
Reinvestment of distributions | 2,414,012 | 349,894 | ||||||
Cost of shares redeemed | (261,033,412 | ) | (96,128,884 | ) | ||||
Net increase (decrease) in net assets from Portfolio share transactions | 67,150,023 | (3,092,762 | ) | |||||
Increase (decrease) in net assets | 67,135,774 | (3,095,316 | ) | |||||
Net assets at beginning of period | 37,335,231 | 40,430,547 | ||||||
Net assets at end of period (including undistributed net investment income of $23,677 and $23,677, respectively) | $ | 104,471,005 | $ | 37,335,231 | ||||
The accompanying notes are an integral part of the financial statements.
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Financial Highlights
Government & Agency Securities Portfolio — Service Shares
Years Ended March 31, | 2006 | 2005 | 2004 | 2003 | 2002 | |||||||||||||||
Selected Per Share Data |
| |||||||||||||||||||
Net asset value, beginning of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||
Net investment income | .035 | .015 | .009 | .015 | .03 | |||||||||||||||
Distributions from net investment income | (.035 | ) | (.015 | ) | (.009 | ) | (.015 | ) | (.03 | ) | ||||||||||
Net asset value, end of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||
Total Return (%)a | 3.56 | 1.50 | .90 | 1.47 | 2.99 | |||||||||||||||
Ratios to Average Net Assets and Supplemental Data | ||||||||||||||||||||
Net assets, end of period ($ millions) | 221 | 211 | 247 | 256 | 286 | |||||||||||||||
Ratio of expenses before expense reductions (%) | .26 | .26 | .26 | .26 | .28 | |||||||||||||||
Ratio of expenses after expense reductions (%) | .25 | .25 | .25 | .25 | .25 | |||||||||||||||
Ratio of net investment income (%) | 3.51 | 1.48 | .90 | 1.46 | 2.95 |
Treasury Portfolio — Service Shares
Years Ended March 31, | 2006 | 2005 | 2004 | 2003 | 2002 | |||||||||||||||
Selected Per Share Data |
| |||||||||||||||||||
Net asset value, beginning of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||
Net investment income | .034 | .014 | .008 | .014 | .03 | |||||||||||||||
Distributions from net investment income | (.034 | ) | (.014 | ) | (.008 | ) | (.014 | ) | (.03 | ) | ||||||||||
Net asset value, end of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||
Total Return (%)a | 3.48 | 1.43 | .84 | 1.41 | 2.75 | |||||||||||||||
Ratios to Average Net Assets and Supplemental Data | ||||||||||||||||||||
Net assets, end of period ($ millions) | 3 | 3 | 10 | 32 | 51 | |||||||||||||||
Ratio of expenses before expense reductions (%) | .42 | .55 | .53 | .34 | .32 | |||||||||||||||
Ratio of expenses after expense reductions (%) | .25 | .25 | .25 | .25 | .25 | |||||||||||||||
Ratio of net investment income (%) | 3.55b | 1.40 | .84 | 1.42 | 2.84 |
a | Total return would have been lower had certain expenses not been reduced. |
b | Due to the timing of the subscriptions and redemptions, the amount shown does not correspond to the total return during the year. |
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Notes to Financial Statements
1. Significant Accounting Policies
Investors Cash Trust (the “Trust”) 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 Trust offers two series of shares (Portfolios) — the Government & Agency Securities Portfolio and the Treasury Portfolio. The Government & Agency Securities Portfolio offers multiple classes of shares that include Service Shares, DWS Government Cash Institutional Shares and Government Cash Managed Shares. The Treasury Portfolio offers Service Shares and Premier Money Market Shares. Certain detailed financial information for the DWS Government Cash Institutional Shares and Government Cash Managed Shares of the Government & Agency Securities Portfolio and the Premier Money Market Shares of the Treasury Portfolio is provided separately and is available upon request.
Investment income, realized and unrealized gains and losses, and certain portfolio-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 distribution service fees, shareholder service fees 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 Trust have equal rights with respect to voting subject to class-specific arrangements.
The Trust’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 Trust 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 Portfolios may enter into repurchase agreements with certain banks and broker/dealers whereby the Portfolios, through its custodian or sub-custodian bank, receives delivery of
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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 market 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 Portfolios have the right to sell the securities and recover any resulting loss from the financial institution. If the financial institution enters into bankruptcy, the Portfolios’ claims on the collateral may be subject to legal proceedings.
Federal Income Taxes. The Portfolio’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 Portfolios paid no federal income taxes and no federal income tax provision was required.
At March 31, 2006, the Treasury Portfolio had a net tax basis capital loss carryforward of approximately $14,100 which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until March 31, 2012 ($100), March 31, 2013 ($2,100), March 31, 2014 ($11,900), the respective expiration dates, whichever occurs first.
In addition, from November 1, 2005 through March 31, 2006, the Treasury Portfolio incurred approximately $2,800 of net realized capital losses. As permitted by tax regulations, the Treasury Portfolio intends to elect to defer these losses and treat them as arising in the fiscal year ended March 31, 2007.
Distribution of Income. Net investment income of the Portfolios are declared as a daily dividend and is distributed to shareholders monthly.
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. There were no significant book-to-tax differences for the portfolios.
At March 31, 2006, the Portfolios’ components of distributable earnings (accumulated losses) on a tax-basis were as follows:
Government & Agency Securities Portfolio | Treasury Portfolio | ||||||
Undistributed ordinary income* | $ | 796,284 | $ | 25,116 | |||
Capital loss carryforwards | $ | — | $ | (14,100 | ) |
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In addition, the tax character of distributions paid to shareholders by the Portfolios is summarized as follows:
Years Ended March 31, | ||||||
2006 Government & Agency Securities Portfolio | 2005 Government & Agency Securities Portfolio | |||||
Distributions from ordinary income* | $ | 15,677,614 | $ | 7,268,568 | ||
Years Ended March 31, | ||||||
2006 Treasury Portfolio | 2005 Treasury Portfolio | |||||
Distributions from ordinary income* | $ | 2,471,353 | $ | 349,902 |
* | For tax purposes short-term capital gains distributions are considered ordinary income distributions. |
Expenses. Expenses of the Trust arising in connection with each specific Portfolio are allocated to that Portfolio. Other Trust expenses which cannot be directly attributed to a Portfolio are apportioned among the Portfolios in the Trust.
Contingencies. In the normal course of business, the Trust may enter into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet been made. However, based on experience, the Trust expects the risk of loss to be remote.
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 discounts and premiums are accreted/amortized for both tax and financial reporting purposes.
2. 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 Trust 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 Trust. In addition to portfolio management services, the Advisor provides certain administrative services in accordance with the Management Agreement. The Trust pays a monthly investment management fee of 1/12 of the annual rate of 0.15% of average daily net assets.
For the period April 1, 2005 through September 30, 2005, the Advisor has contractually agreed to waive all or a portion of its management fee and reimburse or pay operating expenses of the Trust to the extent necessary to maintain the operating expenses of each class as follows:
Portfolio | Expense Limit* | ||
Government & Agency Securities Portfolio: | |||
Service Shares | .25 | % | |
Treasury Portfolio: | |||
Service Shares | .25 | % | |
Premier Money Market Shares | 1.00 | % |
* | Certain expenses, such as reorganization, taxes, brokerage, interest expense and extraordinary expenses are excluded from the expense limitation. |
Effective October 1, 2005 through September 30, 2006, the Advisor has contractually agreed to waive all or a portion of its management fee and reimburse or pay operating expenses of the Trust to the extent necessary to maintain the operating expenses of each class as follows:
Portfolio | Expense Limit* | ||
Government & Agency Securities Portfolio: | |||
Service Shares | .250 | % | |
Treasury Portfolio: | |||
Service Shares | .250 | % | |
Premier Money Market Shares | .978 | % |
* | Certain expenses, such as reorganization, taxes, brokerage, interest expense and extraordinary expenses are excluded from the expense limitation. |
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Accordingly, for the year ended March 31, 2006, the Advisor waived $87,367 of its Management Fee for the Treasury Portfolio. The amount charged was equivalent to an annual effective rate of 0.05% of the Treasury Portfolio’s average daily net assets.
Service Provider Fees. DWS Scudder Investments Service Company (“DWS-SISC”), an affiliate of the Advisor, is the transfer agent, dividend-paying agent and shareholder service agent of the Portfolios. Pursuant to a sub-transfer agency agreement between DWS-SISC and DST Systems, Inc. (“DST”), DWS-SISC has delegated certain transfer agent and dividend-paying agent functions to DST. DWS-SISC compensates DST out of the shareholder servicing fee it receives from the Portfolios. For the year ended March 31, 2006, the amount charged to the Service Shares, DWS Government Cash Institutional Shares and Government Cash Managed Shares of the Government & Agency Securities Portfolio and Service Shares and Premier Money Market Shares of the Treasury Portfolio by DWS-SISC aggregated as follows:
Services to Shareholders | Total Aggregated | Waived | Unpaid at March 31, 2006 | ||||||
Government & Agency Securities Portfolio: | |||||||||
Service Shares | $ | 9,007 | $ | 9,007 | $ | — | |||
DWS Government Cash Institutional Shares | 12,905 | — | 4,425 | ||||||
Government Cash Managed Shares | 189,980 | — | 48,269 | ||||||
Treasury Portfolio: | |||||||||
Service Shares | $ | 935 | $ | 935 | $ | — | |||
Premier Money Market Shares | 238,343 | 46,441 | 46,184 |
Distribution Services Agreement. Under the Distribution Service Agreement, in accordance with Rule 12b-1 under the 1940 Act, DWS Scudder Distributors, Inc., (“DWS-SDI”), a subsidiary of the Advisor, receives a fee (“Distribution Fee”) of 0.25% of average daily net assets of the Premier Money Market Shares of the Treasury Portfolio. For the year ended March 31, 2006, the Distribution Fee was as follows:
Distribution Fee | Total Aggregated | Unpaid at March 31, 2006 | ||||
Treasury Portfolio: | ||||||
Premier Money Market Shares | $ | 202,374 | $ | 21,561 |
DWS-SDI provides information and administrative services (“Service Fee”) to the Service Shares and Managed Shares of the Government & Agency Securities Portfolio and the Service Shares and Premier Money Market Shares of the Treasury Portfolio at an annual fee of 0.05% of average daily net assets for the Service Shares and up to 0.25% (currently 0.15%) of average daily net assets for the Managed Shares of the Government & Agency Securities Portfolio and up to 0.25% of average daily net assets for the Premier Money Market Shares of the Treasury Portfolio. For the year ended March 31, 2006, the Service Fee was as follows:
Service Fee | Total Aggregated | Waived | Unpaid at March 31, 2006 | Annual Effective Rate | ||||||||
Government & Agency Securities Portfolio: | ||||||||||||
Service Shares | $ | 95,064 | $ | 16,109 | $ | 11,858 | .04 | % | ||||
Managed Shares | 290,832 | — | 30,312 | .15 | % | |||||||
Treasury Portfolio: | ||||||||||||
Service Shares | $ | 2,597 | $ | 2,597 | $ | — | .00 | % | ||||
Premier Money Market Shares | 202,374 | — | 21,383 | .25 | % |
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DWS-SDI has related service agreements with various firms to provide cash management and other services for Portfolio shareholders. DWS-SDI pays these firms at an annual rate of up to 0.15% of average daily net assets.
Typesetting and Filing Service Fees. Under an agreement with DeIM, DeIM is compensated for providing typesetting and certain regulatory filing services to the Portfolios. For the year ended March 31, 2006, the amounts charged to the Portfolios by DeIM included in the reports to shareholders were as follows:
Total Aggregated | Unpaid at March 31, 2006 | |||||
Government & Agency Securities Portfolio | $ | 14,580 | $ | 4,020 | ||
Treasury Portfolio | 11,190 | 3,900 |
Trustees’ Fees and Expenses. The Trust pays each Trustee not affiliated with the Advisor retainer fees plus specified amounts for attended board and committee meetings.
3. Expense Reductions
For the year ended March 31, 2006, the Advisor agreed to reimburse $3,027 and $5,071 for the Government & Agency Securities and Treasury Portfolios, respectively, 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.
In addition, the Portfolios have entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances was used to reduce a portion of the Portfolios’ expenses. During the year ended March 31, 2006, the Government & Agency Securities Portfolio’s custodian fee was reduced by $169 and the Treasury Portfolio’s custodian fee was reduced by $13 under this arrangement.
4. Line of Credit
The Trust and several other affiliated funds (the “Participants”) share in a $1.1 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, based upon net assets, among each of the Participants. Interest is calculated at the Federal Funds Rate plus 0.5 percent. The Trust may borrow up to a maximum of 33 percent of its net assets under the agreement.
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5. Share Transactions
The following table summarizes share and dollar activity in the Portfolios:
Year Ended March 31, 2006 | Year Ended March 31, 2005 | |||||||||||||
Government & Agency Securities Portfolio | Shares | Dollars | Shares | Dollars | ||||||||||
Shares sold |
| |||||||||||||
Service Shares | 284,212,295 | $ | 284,212,295 | 260,544,268 | $ | 260,544,268 | ||||||||
DWS Government Cash Institutional Shares | 560,170,265 | 560,170,265 | 348,854,440 | 348,854,440 | ||||||||||
Government Cash Managed Shares | 575,346,073 | 575,346,073 | 508,100,783 | 508,100,783 | ||||||||||
$1,419,728,633 | $1,117,499,491 | |||||||||||||
Shares issued to shareholders in reinvestment of distributions | ||||||||||||||
Service Shares | 6,635,559 | $ | 6,635,559 | 2,712,247 | $ | 2,712,247 | ||||||||
DWS Government Cash Institutional Shares | 2,368,517 | 2,368,517 | 757,863 | 757,863 | ||||||||||
Government Cash Managed Shares | 354,701 | 354,701 | 13,479 | 13,479 | ||||||||||
$9,358,777 | $3,483,589 | |||||||||||||
Shares redeemed | ||||||||||||||
Service Shares | (281,196,729 | ) | $ | (281,196,729 | ) | (298,826,412 | ) | $ | (298,826,412 | ) | ||||
DWS Government Cash Institutional Shares | (569,359,904 | ) | (569,359,904 | ) | (360,186,482 | ) | (360,186,482 | ) | ||||||
Government Cash Managed Shares | (537,215,064 | ) | (537,215,064 | ) | (488,185,376 | ) | (488,185,376 | ) | ||||||
$(1,387,771,697) | $(1,147,198,270) | |||||||||||||
Net increase (decrease) | ||||||||||||||
Service Shares | 9,651,125 | $ | 9,651,125 | (35,569,897 | ) | $ | (35,569,897 | ) | ||||||
DWS Government Cash Institutional Shares | (6,821,122 | ) | (6,821,122 | ) | (10,574,179 | ) | (10,574,179 | ) | ||||||
Government Cash Managed Shares | 38,485,710 | 38,485,710 | 19,928,886 | 19,928,886 | ||||||||||
$41,315,713 | $(26,215,190) | |||||||||||||
Year Ended March 31, 2006 | Year Ended March 31, 2005 | |||||||||||||
Treasury Portfolio | Shares | Dollars | Shares | Dollars | ||||||||||
Shares sold |
| |||||||||||||
Service Shares | 46,931,711 | $ | 46,931,711 | 11,055,463 | $ | 11,055,463 | ||||||||
Premier Money Market Shares | 278,837,712 | 278,837,712 | 81,630,765 | 81,630,765 | ||||||||||
$325,769,423 | $92,686,228 | |||||||||||||
Shares issued to shareholders in reinvestment of distributions | ||||||||||||||
Service Shares | 123,904 | $ | 123,904 | 96,559 | $ | 96,559 | ||||||||
Premier Money Market Shares | 2,290,108 | 2,290,108 | 253,335 | 253,335 | ||||||||||
$2,414,012 | $349,894 | |||||||||||||
Shares redeemed | ||||||||||||||
Service Shares | (47,409,014 | ) | $ | (47,409,014 | ) | (18,226,027 | ) | $ | (18,226,027 | ) | ||||
Premier Money Market Shares | (213,624,398 | ) | (213,624,398 | ) | (77,902,857 | ) | (77,902,857 | ) | ||||||
$(261,033,412) | $(96,128,884) | |||||||||||||
Net increase (decrease) | ||||||||||||||
Service Shares | (353,399 | ) | $ | (353,399 | ) | (7,074,005 | ) | $ | (7,074,005 | ) | ||||
Premier Money Market Shares | 67,503,422 | 67,503,422 | 3,981,243 | 3,981,243 | ||||||||||
$67,150,023 | $(3,092,762) | |||||||||||||
6. Regulatory Matters and Litigation
Market Timing Related Regulatory and Litigation Matters. 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 DWS Scudder. The DWS funds’ advisors have been cooperating in connection with these inquiries and are in discussions with the regulators concerning proposed settlements. Publicity about mutual fund practices
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arising from these industry-wide inquiries serves as the general basis of a number of private lawsuits against the DWS 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 DWS funds, the funds’ investment advisors and their affiliates, and certain individuals, including in some cases fund Trustees/Directors, officers, and other parties. Each DWS fund’s investment advisor has agreed to indemnify the applicable DWS 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. It is not possible to determine with certainty what the outcome of these inquiries will be or what the effect, if any, would be on the funds or their advisors.
With respect to the lawsuits, 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 DWS fund is remote and such actions are not likely to materially affect their ability to perform under their investment management agreements with the DWS funds.
With respect to the regulatory matters, Deutsche Asset Management (“DeAM”) has advised the funds as follows:
DeAM expects to reach final agreements with regulators in 2006 regarding allegations of improper trading in the DWS funds. DeAM expects that it will reach settlement agreements with the Securities and Exchange Commission, the New York Attorney General and the Illinois Secretary of State providing for payment of disgorgement, penalties, and investor education contributions totaling approximately $134 million. Approximately $127 million of this amount would be distributed to shareholders of the affected DWS funds in accordance with a distribution plan to be developed by an independent distribution consultant. DeAM does not believe that any of the DWS funds will be named as respondents or defendants in any proceedings. The funds’ investment advisors do not believe these amounts will have a material adverse financial impact on them or materially affect their ability to perform under their investment management agreements with the DWS funds. The above-described amounts are not material to Deutsche Bank, and they have already been reserved.
Based on the settlement discussions thus far, DeAM believes that it will be able to reach a settlement with the regulators on a basis that is generally consistent with settlements reached by other advisors, taking into account the particular facts and circumstances of market timing at DeAM and at the legacy Scudder and Kemper organizations prior to their acquisition by DeAM in April 2002. Among the terms of the expected settled orders, DeAM would be subject to certain undertakings regarding the conduct of its business in the future, including maintaining existing management fee reductions for certain funds for a period of five years. DeAM expects that these settlements would resolve regulatory allegations that it violated certain provisions of federal and state securities laws (i) by entering into trading arrangements that permitted certain investors to engage in market timing in certain DWS funds and (ii) by failing more generally to take adequate measures to prevent market timing in the DWS funds, primarily during the 1999-2001 period. With respect to the trading arrangements, DeAM expects that the settlement documents will include allegations related to one legacy DeAM arrangement, as well as three legacy Scudder and six legacy Kemper arrangements. All of these trading arrangements originated in businesses that existed prior to the current DeAM organization, which came together in April 2002 as a result of the various mergers of the legacy Scudder, Kemper and Deutsche fund groups, and all of the arrangements were terminated prior to the start of the regulatory investigations that began in the summer of 2003. No current DeAM employee approved the trading arrangements.
There is no certainty that the final settlement documents will contain the foregoing terms and conditions. The independent Trustees/Directors of the DWS funds have carefully monitored these regulatory investigations with the assistance of independent legal counsel and independent economic consultants.
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Other Regulatory Matters. DeAM is also engaged in settlement discussions with the Enforcement Staffs of the SEC and the NASD regarding DeAM’s practices during 2001-2003 with respect to directing brokerage commissions for portfolio transactions by certain DWS funds to broker-dealers that sold shares in the DWS funds and provided enhanced marketing and distribution for shares in the DWS funds. In addition, on January 13, 2006, DWS Scudder Distributors, Inc. received a Wells notice from the Enforcement Staff of the NASD regarding DWS Scudder Distributors’ payment of non-cash compensation to associated persons of NASD member firms, as well as DWS Scudder Distributors’ procedures regarding non-cash compensation regarding entertainment provided to such associated persons.
7. Fund Mergers
On May 10, 2006, the Board of the Fund approved, in principle, the merger of the Investors Cash Trust: Government & Agency Securities Portfolio (the “Acquired Fund”) into the Cash Account Trust: Government & Agency Securities Portfolio.
Completion of the merger is subject to a number of conditions, including final approval by each Fund’s Board and approval by shareholders of the Acquired Fund at the shareholder meeting expected to be held on or about October 12, 2006.
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Trustees of Investors Cash Trust:
We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of Investors Cash Trust (comprising the Government & Agency Securities Portfolio and the Treasury Portfolio) (collectively, the “Portfolios”), as of March 31, 2006, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Portfolios’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Portfolios’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for
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designing audit procedures that are appropriate in the circumstance, but not for the purpose of expressing an opinion on the effectiveness of the Portfolios’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principals used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of investments owned as of March 31, 2006, by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the portfolios constituting Investors Cash Trust at March 31, 2006, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Boston, Massachusetts
May 8, 2006
Tax Information
Please consult a tax advisor if you have questions about federal or state income tax laws, or on how to prepare your tax returns.
Other Information
Proxy Voting
A description of the Trust’s policies and procedures for voting proxies for portfolio securities and information about how the Trust voted proxies related to its portfolio securities during the 12-month period ended June 30 is available on our Web site — www.dws-scudder.com (click on “proxy voting”at the bottom of the page) — or on the SEC’s Web site — www.sec.gov. To obtain a written copy of the Trust’s policies and procedures without charge, upon request, call us toll free at 1-800-621-1048.
Portfolio of Investments
Following the Trust’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 (202) 551-5850.
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Regulatory and Litigation Matters
Additional information announced by Deutsche Asset Management regarding the terms of the expected settlements referred to in the Market Timing Related Regulatory and Litigation Matters and Other Regulatory Matters in the Notes to Financial Statements will be made available at www.dws-scudder.com/regulatory_settlements, which will also disclose the terms of any final settlement agreements once they are announced.
Trustees and Officers
The following table presents certain information regarding the Trustees and Officers of the Portfolio as of March 31, 2006. Each individual’s year of birth is set forth in parentheses after his or her name. Unless otherwise noted, (i) each individual has engaged in the principal occupation(s) noted in the table for at least the most recent five years, although not necessarily in the same capacity, and (ii) the address of each individual is c/o Deutsche Asset Management, 222 South Riverside Plaza, Chicago, Illinois 60606. Each Trustee’s term of office extends until the next shareholders’ meeting called for the purpose of electing Trustees and until the election and qualification of a successor, or until such Trustee sooner dies, retires, resigns or is removed as provided in the governing documents of the Portfolio.
Independent Trustees
Name, Year of Birth, Position(s) Held with | Principal Occupation(s) During Past 5 Years and Other Directorships Held | Number of Funds in Fund Complex Overseen | ||
Shirley D. Peterson (1941) Chairperson, 2004-present Trustee, 1995-present | Retired; formerly, President, Hood College (1995-2000); prior thereto, Partner, Steptoe & Johnson (law firm); Commissioner, Internal Revenue Service; Assistant Attorney General (Tax), US Department of Justice. Directorships: Federal Mogul Corp. (supplier of automotive components and subsystems); AK Steel (steel production); Goodyear Tire & Rubber Co. (April 2004-present) ; Champion Enterprises, Inc. (manufactured home building); Wolverine World Wide, Inc. (designer, manufacturer and marketer of footwear) (April 2005-present); Trustee, Bryn Mawr College. Former Directorship: Bethlehem Steel Corp. | 71 | ||
John W. Ballantine (1946) Trustee, 1999-present | Retired; formerly, Executive Vice President and Chief Risk Management Officer, First Chicago NBD Corporation/The First National Bank of Chicago (1996-1998); Executive Vice President and Head of International Banking (1995-1996). Directorships: First Oak Brook Bancshares, Inc.; Oak Brook Bank; Healthways, Inc. (provider of disease and care management services); Portland General Electric (utility company) | 71 | ||
Donald L. Dunaway (1937) Trustee, 1980-present | Retired; formerly, Executive Vice President, A.O. Smith Corporation (diversified manufacturer) (1963-1994) | 71 | ||
James R. Edgar (1946) Trustee, 1999-present | Distinguished Fellow, University of Illinois, Institute of Government and Public Affairs (1999-present); formerly, Governor, State of Illinois (1991-1999). Directorships: Kemper Insurance Companies; John B. Sanfilippo & Son, Inc. (processor/packager/marketer of nuts, snacks and candy products); Horizon Group Properties, Inc.; Youbet.com (online wagering platform); Alberto-Culver Company (manufactures, distributes and markets health and beauty care products) | 71 | ||
Paul K. Freeman (1950) Trustee, 2002-present | President, Cook Street Holdings (consulting); Senior Visiting Research Scholar, Graduate School of International Studies, University of Denver; Consultant, World Bank/Inter-American Development Bank; formerly, Project Leader, International Institute for Applied Systems Analysis (1998-2001); Chief Executive Officer, The Eric Group, Inc. (environmental insurance) (1986-1998) | 71 | ||
Robert B. Hoffman (1936) Trustee, 1981-present | Retired; formerly, Chairman, Harnischfeger Industries, Inc. (machinery for the mining and paper industries) (1999-2000); prior thereto, Vice Chairman and Chief Financial Officer, Monsanto Company (agricultural, pharmaceutical and nutritional/food products) (1994-1999). Directorships: RCP Advisors, LLC (a private equity investment advisory firm) | 71 | ||
William McClayton (1944) Trustee, 2004-present | Managing Director of Finance and Administration, DiamondCluster International, Inc. (global management consulting firm) (2001-present); formerly, Partner, Arthur Andersen LLP (1986-2001). Formerly: Trustee, Ravinia Festival; Board of Managers, YMCA of Metropolitan Chicago | 71 | ||
Robert H. Wadsworth (1940) Trustee, 2004-present | President, Robert H. Wadsworth & Associates, Inc. (consulting firm) (1983-present). Director, The European Equity Fund, Inc. (since 1986), The New Germany Fund, Inc. (since 1992), The Central Europe and Russia Fund, Inc. (since 1990). Formerly, Trustee of New York Board Scudder Funds; President and Trustee, Trust for Investment Managers (registered investment company) (1999-2002). President, Investment Company Administration, L.L.C. (1992*-2001); President, Treasurer and Director, First Fund Distributors, Inc. (June 1990-January 2002); Vice President, Professionally Managed Portfolios (May 1991-January 2002) and Advisors Series Trust (October 1996-January 2002) (registered investment companies)
* Inception date of the corporation which was the predecessor to the L.L.C. | 74 | ||
Officers2 | ||||
Name, Year of Birth, | Principal Occupation(s) During Past 5 Years and Other Directorships Held | Number of Funds in Fund Complex Overseen | ||
Michael Colon4 (1969) President, 2006-present | Managing Director3 and Chief Operating Officer, Deutsche Asset Management (since March 2005); President, DWS Global High Income Fund, Inc. (since April 2006), DWS Global Commodities Stock Fund, Inc. (since April 2006), The Brazil Fund, Inc. (since April 2006), The Korea Fund, Inc. (since April 2006); Chief Operating Officer, Deutsche Bank Alex. Brown (2002-2005); Chief Operating Officer, US Equities Division of Deutsche Bank (2000-2002) | n/a | ||
Philip J. Collora (1945) Vice President and Assistant Secretary, 1986-present | Director3, Deutsche Asset Management | n/a | ||
Paul H. Schubert4 (1963) Chief Financial Officer, 2004-present Treasurer, 2005-present | Managing Director3, Deutsche Asset Management (since July 2004); formerly, Executive Director, Head of Mutual Fund Services and Treasurer for UBS Family of Funds (1998-2004); Vice President and Director of Mutual Fund Finance at UBS Global Asset Management (1994-1998) | n/a | ||
John Millette5 (1962) Secretary, 2001-present | Director3, Deutsche Asset Management | n/a | ||
Patricia DeFilippis4 (1963) Assistant Secretary, 2005-present | Vice President, Deutsche Asset Management (since June 2005); formerly, Counsel, New York Life Investment Management LLC (2003-2005); legal associate, Lord, Abbett & Co. LLC (1998-2003) | n/a | ||
Elisa D. Metzger4, (1962) Assistant Secretary 2005-present | Director3, Deutsche Asset Management (since September 2005); formerly, Counsel, Morrison and Foerster LLP (1999-2005) | n/a | ||
Caroline Pearson5 (1962) Assistant Secretary, 1998-present | Managing Director3, Deutsche Asset Management | n/a | ||
Scott M. McHugh5 (1971) Assistant Treasurer, 2005-present | Director3, Deutsche Asset Management | n/a | ||
Kathleen Sullivan D’Eramo5 (1957) Assistant Treasurer, 2003-present | Director3, Deutsche Asset Management | n/a | ||
John Robbins4 (1966) Anti-Money Laundering Compliance Officer, 2005-present | Managing Director3, Deutsche Asset Management (since 2005); formerly, Chief Compliance Officer and Anti-Money Laundering Compliance Officer for GE Asset Management (1999-2005) | n/a | ||
Philip Gallo4 (1962) Chief Compliance Officer, 2004-present | Managing Director3, Deutsche Asset Management (2003-present); formerly, Co-Head of Goldman Sachs Asset Management Legal (1994-2003) | n/a |
1 | Length of time served represents the date that each Trustee was first elected to the common board of Trustees which oversees a number of investment companies, including the fund, managed by the Advisor. For the Officers of the fund, the length of time served represents the date that each officer was first elected to serve as an officer of any fund overseen by the aforementioned common board of Trustees. |
2 | As a result of their respective positions held with the Advisor, these individuals are considered “interested persons” of the Advisor within the meaning of the 1940 Act. Interested persons receive no compensation from the fund. |
3 | Executive title, not a board directorship |
4 | Address: 345 Park Avenue, New York, New York 10154 |
5 | Address: Two International Place, Boston, Massachusetts 02110 |
The fund’s Statement of Additional Information (“SAI”) includes additional information about the Trustees. The SAI is available, without charge, upon request. If you would like to request a copy of the SAI, you may do so by calling the following toll-free number: 1-800-621-1048.
23
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Notes
Principal Underwriter
DWS Scudder Distributors, Inc.
222 S. Riverside Plaza
Chicago, IL 60606
24
Table of Contents
JANUARY 31, 2006
Semiannual Report
to Shareholders
DWS Money Funds
(formerly Scudder Money Funds)
DWS Money Market Fund
(formerly Scudder Money Market Fund)
DWS Government & Agency Money Fund
(formerly Scudder Government & Agency Money Fund)
DWS Tax-Exempt Money Fund
(formerly Scudder Tax-Exempt Money Fund)
Page 1 of 36
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Contents
2 | ||
4 | ||
5 | ||
7 | ||
19 | ||
23 | ||
24 | ||
28 | ||
35 | ||
35 |
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 funds’ objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other important information about the funds. Please read the prospectus carefully before you invest.
An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in them. Please read the funds’ prospectus for specific details regarding its risk profile.
DWS Scudder is part of Deutsche Asset Management, which is the marketing name in the US for the asset management activities of Deutsche Bank AG, Deutsche Bank Trust Company Americas, Deutsche Asset Management, Inc., Deutsche Investment Management Americas Inc. and DWS Trust Company.
NOT FDIC/NCUA INSURED NO BANK GUARANTEE MAY LOSE VALUE NOT A DEPOSIT NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
Performance Summary January 31, 2006
DWS Money Market Fund
All performance shown is historical and does not guarantee future results. Current performance may be higher or lower than the performance data quoted.
Yield Comparison
¨ | Fund Yield |
¨ | First Tier Retail Money Fund Average |
Weekly 7-Day Current Yield
Page 2 of 36
Table of Contents
Yields are historical, will fluctuate and do not guarantee future performance. Please call (800) 621-1048 for the Fund’s most up-to-date performance.
DWS Money Market Fund is compared to its respective iMoneyNet Category: First Tier Retail Money Fund Average — Category includes a widely-recognized composite of money market funds that invest in only first tier (highest rating) securities. Portfolio Holdings of First Tier funds include US Treasury, US Other, Repos, Time Deposits, Domestic Bank Obligations, Foreign Bank Obligations, First Tier Commercial Paper, Floating Rate Notes and Asset Backed Commercial Paper.
7-day current yield is the annualized net investment income per share for the period shown. Gains or losses are not included.
Lipper Ranking — Money Market Fund Category as of 1/31/06
Period | Rank | Number of Funds Tracked | Percentile Ranking (%) | |||||
1-Year | 28 | of | 354 | 8 | ||||
3-Year | 35 | of | 338 | 11 | ||||
5-Year | 33 | of | 298 | 11 | ||||
10-Year | 21 | of | 189 | 9 |
Lipper Inc. rankings are based upon changes in net asset value with all dividends reinvested for the periods indicated as of 1/31/06. Rankings are historical and do not guarantee future performance. The fund is compared to the Lipper Money Market Fund category.
Source: Lipper Inc.
An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.
DWS Government & Agency Money Fund
All performance shown is historical and does not guarantee future results. Current performance may be higher or lower than the performance data quoted.
Yield Comparison
¨ | Fund Yield |
¨ | Government & Agencies Retail Money Fund Average |
Weekly 7-Day Current Yield
Yields are historical, will fluctuate and do not guarantee future performance. Please call (800) 621-1048 for the Fund’s most up-to-date performance.
DWS Government & Agency Money Fund is compared to its respective iMoney Net Category: Government & Agencies Retail Money Fund Average — Category includes the most broadly based of the government retail funds. These funds can invest in US Treasuries, US Other, Repos, whether or not they are backed by US Treasuries and government-backed Floating Rate Notes.
7-day current yield is the annualized net investment income per share for the period shown. Gains or losses are not included.
Lipper Ranking — US Government Money Market Fund Category as of 1/31/06
Period | Rank | Number of Funds Tracked | Percentile Ranking (%) | |||||
1-Year | 5 | of | 113 | 5 | ||||
3-Year | 7 | of | 105 | 7 | ||||
5-Year | 8 | of | 100 | 8 | ||||
10-Year | 6 | of | 74 | 7 |
Lipper Inc. rankings are based upon changes in net asset value with all dividends reinvested for the periods indicated as of 1/31/06. Rankings are historical and do
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not guarantee future performance. The fund is compared to the Lipper Government Money Market Fund category.
Source: Lipper Inc.
An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.
DWS Tax-Exempt Money Fund
All performance shown is historical and does not guarantee future results. Current performance may be higher or lower than the performance data quoted.
Yield Comparison
¨ | Fund Yield |
¨ | National Tax-Free Retail Money Fund Average |
Weekly 7-Day Current Yield
Yields are historical, will fluctuate and do not guarantee future performance. Income may be subject to state and local taxes and the alternative minimum tax. Please call (800) 621-1048 for the Fund’s most up-to-date performance.
DWS Tax-Exempt Money Fund is compared to its respective iMoneyNet category: National Tax-Free Retail Money Fund Average — Category consists of all national tax-free and municipal retail funds. Portfolio Holdings of tax-free Funds include Rated and Unrated Demand Notes, Rated and Unrated General Market Notes; Commercial Paper; Put Bonds — 6 months and less; over 6 months; AMT Paper and Other Tax-Free Holdings.
7-day current yield is the annualized net investment income per share for the period shown. Gains or losses are not included.
Lipper Ranking — Tax-Exempt Money Market Fund Category as of 1/31/06
Period | Rank | Number of Funds Tracked | Percentile Ranking (%) | |||||
1-Year | 5 | of | 112 | 5 | ||||
3-Year | 8 | of | 101 | 8 | ||||
5-Year | 9 | of | 93 | 10 | ||||
10-Year | 5 | of | 80 | 7 |
Lipper Inc. rankings are based upon changes in net asset value with all dividends reinvested for the periods indicated as of 1/31/06. Rankings are historical and do not guarantee future performance. The fund is compared to the Lipper Tax-Exempt Money Market Fund category.
Source: Lipper Inc.
An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.
Information About Each Fund’s Expenses
As an investor, 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 each Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. The tables are based on an investment of $1,000 made at the beginning of the six-month period ended January 31, 2006.
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The tables illustrate each 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 January 31, 2006
Actual Fund Return | DWS Money | DWS Government & Agency Money Fund | DWS Tax-Exempt Money Fund | ||||||
Beginning Account Value 8/1/05 | $ | 1,000.00 | $ | 1,000.00 | $ | 1,000.00 | |||
Ending Account Value 1/31/06 | $ | 1,017.80 | $ | 1,017.80 | $ | 1,012.30 | |||
Expenses Paid per $1,000* | $ | 2.24 | $ | 2.24 | $ | 1.88 | |||
Hypothetical 5% Fund Return | DWS Money | DWS Government & Agency | DWS Tax-Exempt Money Fund | ||||||
Beginning Account Value 8/1/05 | $ | 1,000.00 | $ | 1,000.00 | $ | 1,000.00 | |||
Ending Account Value 1/31/06 | $ | 1,022.99 | $ | 1,022.99 | $ | 1,023.34 | |||
Expenses Paid per $1,000* | $ | 2.24 | $ | 2.24 | $ | 1.89 |
* | 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 | |||
DWS Money Market Fund | .44 | % | |
DWS Government & Agency Money Fund | .44 | % | |
DWS Tax-Exempt Money Fund | .37 | % |
For more information, please refer to the Funds’ prospectus.
DWS Money Market Fund
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Asset Allocation | 1/31/06 | 7/31/05 | ||
Commercial Paper | 35% | 37% | ||
Short-Term Notes | 29% | 20% | ||
Certificates of Deposit and Bank Notes | 15% | 16% | ||
Repurchase Agreements | 13% | 12% | ||
Promissory Notes | 2% | 4% | ||
Master Notes | 2% | 2% | ||
US Government Sponsored Agencies+ | 2% | 7% | ||
Asset Backed | 1% | 1% | ||
Other Investments | 1% | 1% | ||
100% | 100% | |||
Weighted Average Maturity | ||||
DWS Money Market Fund | 44 days | 43 days | ||
First Tier Retail Money Fund Average* | 39 days | 38 days |
+ | Not backed by the full faith and credit of the US Government |
* | The Fund is compared to its respective iMoneyNet Category: First Tier Retail Money Fund Average — Category includes a widely-recognized composite of money market funds that invest in only first tier (highest rating) securities. Portfolio Holdings of First Tier funds include US Treasury, US Other, Repos, Time Deposits, Domestic Bank Obligations, Foreign Bank Obligations, First Tier Commercial Paper, Floating Rate Notes and Asset Backed Commercial Paper. |
DWS Government & Agency Money Fund
Asset Allocation | 1/31/06 | 7/31/05 | ||
Repurchase Agreements | 82% | 48% | ||
Agencies Not Backed by the Full Faith and Credit of the US Government | 14% | 47% | ||
Agencies Backed by the Full Faith and Credit of the US Government | 4% | 5% | ||
100% | 100% | |||
Weighted Average Maturity | ||||
DWS Government & Agency Money Fund | 33 days | 41 days | ||
Government and Agencies Retail Money Fund Average** | 32 days | 31 days |
** | The Fund is compared to its respective iMoney Net Category: Government & Agencies Retail Money Fund Average — Category includes the most broadly based of the government retail funds. These funds can invest in US Treasuries, US Other, Repos, whether or not they are backed by US Treasuries and government-backed Floating Rate Notes. |
DWS Tax-Exempt Money Fund
Asset Allocation | 1/31/06 | 7/31/05 | ||
Municipal Investments | 100% | 100% | ||
Weighted Average Maturity | ||||
DWS Tax-Exempt Money Fund | 24 days | 31 days | ||
National Tax-Free Retail Money Fund Average*** | 25 days | 25 days |
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*** | The Fund is compared to its respective iMoneyNet category: National Tax-Free Retail Money Fund Average — Category consists of all national tax-free and municipal retail funds. Portfolio Holdings of tax-free Funds include Rated and Unrated Demand Notes, Rated and Unrated General Market Notes; Commercial Paper; Put Bonds — 6 months and less; over 6 months; AMT Paper and Other Tax-Free Holdings. |
Asset Allocation is subject to change. For more complete details about the Funds’ holdings, see pages 11-28. A quarterly Fact Sheet is available upon request. Information concerning portfolio holdings of each Fund as of month end will be posted to www.dws-scudder.com on the 15th of the following month. Please see the Account Management Resources section for contact information.
Following each Fund’s fiscal first and third quarter-end, a complete portfolio holdings listing is filed with the SEC on Form N-Q. This 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 January 31, 2006 (Unaudited)
DWS Money Market Fund
Principal Amount ($) | Value ($) | |||
Certificates of Deposit and Bank Notes 14.9% | ||||
Abbott Laboratories, 5.625%, 7/1/2006 | 10,000,000 | 10,065,113 | ||
Banco Bilbao Vizcaya Argentaria SA: | ||||
4.77%, 11/20/2006 | 11,400,000 | 11,402,667 | ||
4.84%, 1/31/2007 | 10,000,000 | 9,996,628 | ||
Bank of America NA, 4.53%, 3/28/2006 | 30,000,000 | 30,000,000 | ||
Bank of Tokyo-Mitsubishi UFJ, Ltd., | ||||
4.28%, 2/10/2006 | 40,000,000 | 40,000,000 | ||
Calyon, 3.27%, 3/6/2006 | 20,000,000 | 20,000,000 | ||
Credit Agricole SA, 4.74%, 9/28/2006 | 30,000,000 | 30,000,000 | ||
Depfa Bank PLC, 3.22%, 2/6/2006 | 20,000,000 | 20,000,000 | ||
HBOS Treasury Services PLC, 3.8%, 7/10/2006 | 35,000,000 | 35,000,000 | ||
Natexis Banque Populaires, 4.31%, 2/1/2006 | 35,000,000 | 35,000,000 | ||
Norinchukin Bank, 4.56%, 3/23/2006 | 25,000,000 | 25,000,000 | ||
Societe Generale: | ||||
3.265%, 3/3/2006 | 27,000,000 | 27,000,000 | ||
4.25%, 9/6/2006 | 15,000,000 | 14,992,534 | ||
4.32%, 2/1/2006 | 35,000,000 | 35,000,000 | ||
4.705%, 9/19/2006 | 25,000,000 | 25,000,771 | ||
4.79%, 11/17/2006 | 25,000,000 | 25,009,380 | ||
Tango Finance Corp., 4.045%, 7/25/2006 | 25,000,000 | 24,999,404 | ||
Toronto Dominion Bank: | ||||
3.6%, 6/7/2006 | 25,000,000 | 25,000,000 | ||
3.75%, 5/16/2006 | 17,500,000 | 17,499,513 | ||
UniCredito Italiano SpA, 3.73%, 4/12/2006 | 5,000,000 | 5,000,000 | ||
Wal-Mart Stores, Inc., 5.45%, 8/1/2006 | 9,017,000 | 9,079,207 | ||
Wells Fargo Bank NA, 4.79%, 1/17/2007 | 20,000,000 | 20,007,188 | ||
Total Certificates of Deposit and Bank Notes (Cost $495,052,405) | 495,052,405 |
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Commercial Paper** 35.3% | ||||
Atlantis One Funding Corp.: | ||||
4.22%, 2/9/2006 | 50,000,000 | 49,953,111 | ||
4.255%, 2/16/2006 | 75,000,000 | 74,867,031 | ||
4.27%, 2/21/2006 | 15,000,000 | 14,964,417 | ||
Charta, LLC: | ||||
4.26%, 2/7/2006 | 50,000,000 | 49,964,500 | ||
4.31%, 2/1/2006 | 65,000,000 | 65,000,000 | ||
4.31%, 2/3/2006 | 35,000,000 | 34,991,619 | ||
DNB NOR Bank ASA, 4.64%, 8/1/2006 | 35,000,000 | 34,183,489 | ||
Falcon Asset Securitization Corp., 4.35%, 2/1/2006 | 25,000,000 | 25,000,000 | ||
General Electric Capital Corp., 4.48%, 2/1/2006 | 125,000,000 | 125,000,000 | ||
Giro Funding US Corp.: | ||||
4.25%, 2/8/2006 | 17,000,000 | 16,985,951 | ||
4.54%, 3/24/2006 | 50,000,000 | 49,678,417 | ||
Grampian Funding Ltd., 4.64%, 7/28/2006 | 52,000,000 | 50,813,707 | ||
Greyhawk Funding LLC, 4.205%, 2/1/2006 | 50,000,000 | 50,000,000 | ||
HSBC Finance Corp., 4.5%, 2/1/2006 | 146,779,000 | 146,779,000 | ||
K2 (USA) LLC, 4.64%, 7/31/2006 | 35,000,000 | 34,188,000 | ||
Mane Funding Corp.: | ||||
4.23%, 2/9/2006 | 40,607,000 | 40,568,829 | ||
4.5%, 3/24/2006 | 30,000,000 | 29,808,750 | ||
Perry Global Funding LLC: | ||||
Series A, 4.225%, 2/7/2006 | 25,000,000 | 24,982,396 | ||
Series A, 4.52%, 2/21/2006 | 100,000,000 | 99,748,889 | ||
Preferred Receivables Funding Corp., 4.22%, | ||||
2/10/2006 | 32,513,000 | 32,478,699 | ||
Sanofi-Aventis, 4.37%, 2/15/2006 | 35,000,000 | 34,940,519 | ||
The Goldman Sachs Group, Inc., 3.185%, 3/3/2006 | 10,000,000 | 9,973,458 | ||
Three Rivers Funding Corp., 4.31%, 2/3/2006 | 71,655,000 | 71,637,843 | ||
Verizon Global Funding Corp., 4.59%, 3/28/2006 | 11,000,000 | 10,922,863 | ||
Total Commercial Paper (Cost $1,177,431,488) | 1,177,431,488 | |||
Short-Term Notes* 29.1% | ||||
American Honda Finance Corp.: | ||||
4.16%, 4/10/2006 | 65,000,000 | 65,006,722 | ||
4.44%, 12/12/2006 | 55,000,000 | 55,000,000 | ||
4.58%, 10/10/2006 | 10,000,000 | 10,003,329 | ||
Beta Finance, Inc., 144A, 3.56%, 4/10/2006 | 25,000,000 | 25,001,535 | ||
BNP Paribas, 4.504%, 10/26/2006 | 15,000,000 | 15,000,000 | ||
Canadian Imperial Bank of Commerce, 4.53%, 2/15/2007 | 45,000,000 | 45,009,401 | ||
CIT Group, Inc.: | ||||
4.398%, 8/18/2006 | 18,500,000 | 18,504,093 | ||
4.702%, 4/19/2006 | 10,000,000 | 10,002,054 | ||
Credit Suisse: | ||||
4.489%, 9/26/2006 | 50,000,000 | 50,000,000 | ||
4.503%, 9/26/2006 | 50,000,000 | 50,000,000 | ||
Dorada Finance, Inc., 4.34%, 11/1/2006 | 125,000,000 | 124,990,651 | ||
General Electric Capital Corp., 3.95%, 5/12/2006 | 31,250,000 | 31,266,181 |
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HSBC Finance Corp., 4.41%, 2/6/2007 | 15,000,000 | 15,000,000 | ||
International Business Machine Corp., 4.33%, 3/8/2006 | 3,000,000 | 3,000,000 | ||
Links Finance LLC, 4.445%, 5/22/2006 | 5,000,000 | 4,999,845 | ||
Merrill Lynch & Co., Inc.: | ||||
4.35%, 9/15/2006 | 30,000,000 | 30,000,000 | ||
4.36%, 5/5/2006 | 6,000,000 | 6,001,231 | ||
4.42%, 2/2/2007 | 25,000,000 | 25,000,000 | ||
4.547%, 3/17/2006 | 55,000,000 | 55,004,840 | ||
Morgan Stanley, 4.52%, 7/10/2006 | 100,000,000 | 100,000,000 | ||
Pfizer Investment Capital PLC, 4.33%, 12/15/2006 | 50,000,000 | 50,000,000 | ||
SunTrust Bank, Atlanta, 4.19%, 4/28/2006 | 100,000,000 | 100,000,000 | ||
UniCredito Italiano SpA: | ||||
3.82%, 9/1/2006 | 20,000,000 | 19,994,952 | ||
4.48%, 10/4/2006 | 60,000,000 | 59,980,375 | ||
Total Short-Term Notes (Cost $968,765,209) | 968,765,209 | |||
Master Notes 1.5% | ||||
The Bear Stearns Companies, Inc., 4.65%*, 2/1/2006 (a) (Cost $50,000,000) | 50,000,000 | 50,000,000 | ||
US Government Sponsored Agencies 1.5% | ||||
Federal National Mortgage Association, 4.0%, 8/8/2006 (Cost $50,000,000) | 50,000,000 | 50,000,000 | ||
Guaranteed Investment Contracts 0.9% | ||||
New York Life Insurance Co., 4.57%*, 9/19/2006 (Cost $30,000,000) | 30,000,000 | 30,000,000 | ||
Asset Backed 1.1% | ||||
Permanent Financing PLC, “1A”, Series 8, 4.38%*, 6/12/2006 (Cost $35,000,000) | 35,000,000 | 35,000,000 | ||
Promissory Notes 2.1% | ||||
The Goldman Sachs Group, Inc.: | ||||
3.17%*, 2/16/2006 | 15,000,000 | 15,000,000 | ||
3.871%*, 6/23/2006 | 35,000,000 | 35,000,000 | ||
3.933%*, 6/23/2006 | 20,000,000 | 20,000,000 | ||
Total Promissory Notes (Cost $70,000,000) | 70,000,000 | |||
US Government Agency Sponsored Pass-Throughs 0.6% | ||||
Federal National Mortgage Association, 4.56%**, 10/2/2006 (Cost $21,322,840) | 22,000,000 | 21,322,840 | ||
Repurchase Agreements 13.1% | ||||
Morgan Stanley & Co., Inc., 4.45%, dated 1/31/2006, to be repurchased at $437,054,018 on 2/1/2006 (b) | 437,000,000 | 437,000,000 | ||
State Street Bank and Trust Co., 4.19%, dated 1/31/2006, to be repurchased at $435,051 on 2/1/2006 (c) | 435,000 | 435,000 | ||
Total Repurchase Agreements (Cost $437,435,000) | 437,435,000 |
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% of Net Assets | Value ($) | |||||
Total Investment Portfolio (Cost $3,335,006,942)+ | 100.1 | 3,335,006,942 | ||||
Other Assets and Liabilities, Net | (0.1 | ) | (3,815,466 | ) | ||
Net Assets | 100.0 | 3,331,191,476 |
* | 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 January 31, 2006. |
** | Annualized yield at time of purchase; not a coupon rate. |
+ | The cost for federal income tax purposes was $3,335,006,942. |
(a) | Reset date; not a maturity date |
(b) | Collateralized by: |
Principal Amount ($) | Security | Rate (%) | Maturity Date | Collateral Value ($) | ||||
192,186,224 | Federal National Mortgage Association | 4.574-4.72 | 10/1/2033-8/1/2035 | 192,373,177 | ||||
252,816,468 | Federal Home Loan Mortgage Corp. | 4.998-5.172 | 1/1/2035-2/1/2036 | 254,468,537 | ||||
Total Collateral Value | 446,841,714 |
(c) | Collateralized by $505,000 Federal Home Loan Mortgage Corp., 4.5%, maturing on 12/1/2020 with a value of $441,358. |
144A: Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.
The accompanying notes are an integral part of the financial statements.
DWS Government & Agency Money Fund
Principal Amount ($) | Value ($) | |||
Agencies Not Backed by the Full Faith and Credit of the US Government 15.3% | ||||
Federal Home Loan Bank: | ||||
2.5%, 3/15/2006 | 4,000,000 | 3,993,265 | ||
3.25%, 7/21/2006 | 5,000,000 | 4,983,086 | ||
Federal Home Loan Mortgage Corp.: | ||||
2.5%, 3/28/2006 | 5,000,000 | 4,989,604 | ||
3.83%, 6/20/2006 | 7,500,000 | 7,500,000 | ||
4.75%, 2/6/2007 | 4,000,000 | 4,000,000 | ||
4.92%, 2/28/2007 | 6,000,000 | 6,000,000 | ||
Federal National Mortgage Association: | ||||
4.0%, 8/8/2006 | 5,000,000 | 5,000,000 | ||
4.03%, 7/21/2006 | 6,500,000 | 6,500,000 | ||
4.21%*, 9/7/2006 | 25,000,000 | 24,988,899 | ||
Total Agencies Not Backed by the Full Faith and Credit of the US Government (Cost $67,954,854) | 67,954,854 | |||
Agencies Backed by the Full Faith and Credit of the US Government 4.8% | ||||
Government Guaranteed Securities | ||||
Hainan Airlines: | ||||
Series 2000-1, 4.491%*, 12/15/2007 | 9,489,247 | 9,489,247 |
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Series 2000-2, 4.491%*, 12/15/2007 | 5,839,535 | 5,839,535 | ||
Series 2000-3, 4.491%*, 12/15/2007 | 5,839,536 | 5,839,536 | ||
Total Agencies Backed by the Full Faith and Credit of the US Government (Cost $21,168,318) | 21,168,318 | |||
Repurchase Agreements 92.5% | ||||
Banc of America Securities LLC, 4.31%, dated 12/16/2005, to be repurchased at $65,404,661 on 2/6/2006 (a) | 65,000,000 | 65,000,000 | ||
Bear Stearns & Co., Inc., 4.47%, dated | ||||
1/31/2006, to be repurchased at | ||||
$80,009,933 on 2/1/2006 (b) | 80,000,000 | 80,000,000 | ||
BNP Paribas, 4.46%, dated 1/31/2006, to be repurchased at $39,004,832 on | ||||
2/1/2006 (c) | 39,000,000 | 39,000,000 | ||
Credit Suisse First Boston LLC, 4.54%, dated 1/31/2006, to be repurchased at $52,406,582 on 4/3/2006 (d) | 52,000,000 | 52,000,000 | ||
Merrill Lynch & Co., Inc., 4.25%, dated | ||||
11/10/2005, to be repurchased at | ||||
$50,560,764 on 2/13/2006 (e) | 50,000,000 | 50,000,000 | ||
Morgan Stanley & Co., Inc., 4.45%, dated 1/31/2006, to be repurchased at | ||||
$80,009,889 on 2/1/2006 (f) | 80,000,000 | 80,000,000 | ||
State Street Bank and Trust Co., 4.12%, dated 1/31/2006, to be repurchased at $198,023 on 2/1/2006 (g) | 198,000 | 198,000 | ||
The Goldman Sachs & Co., 4.54%, dated 1/31/2006, to be repurchased at | ||||
$45,351,850 on 4/3/2006 (h) | 45,000,000 | 45,000,000 | ||
Total Repurchase Agreements (Cost $411,198,000) | 411,198,000 |
% of Net Assets | Value ($) | |||||
Total Investment Portfolio (Cost $500,321,172)+ | 112.6 | 500,321,172 | ||||
Other Assets and Liabilities, Net | (12.6 | ) | (55,912,665 | ) | ||
Net Assets | 100.0 | 444,408,507 |
* | 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 January 31, 2006. |
+ | The cost for federal income tax purposes was $500,321,172. |
(a) | Collateralized by: |
Principal Amount ($) | Security | Rate (%) | Maturity Date | Collateral Value ($) | ||||
56,686,461 | Federal National Mortgage Association | 3.917-7.0 | 10/1/2020-1/1/2036 | 56,355,875 | ||||
8,835,858 | Federal Home Loan Mortgage Corp. | 5.0-6.5 | 6/1/2019- 2/1/2036 | 9,944,126 | ||||
Total Collateral Value | 66,300,001 |
(b) | Collateralized by: |
Principal Amount ($) | Security | Rate (%) | Maturity Date | Collateral Value ($) | ||||
2,315,000 | Federal National Mortgage Association | 4.0 | 5/25/2019 | 2,097,981 | ||||
30,157,000 | Federal Home Loan Mortgage Corp. | 4.5-5.5 | 10/15/2024-3/15/2035 | 34,509,247 | ||||
51,196,647 | Government National Mortgage Association | 4.0-5.37 | 6/16/2030-5/20/2035 | 44,997,216 | ||||
Total Collateral Value | 81,604,444 |
(c) | Collateralized by: |
Principal Amount ($) | Security | Rate (%) | Maturity Date | Collateral Value ($) | ||||
26,929,082 | Federal National Mortgage Association | 4.276-6.5 | 2/1/2019-12/1/2035 | 27,219,794 | ||||
12,617,079 | Federal Home Loan Mortgage Corp. | 4.75-5.691 | 9/1/2032- 4/1/2035 | 12,510,207 | ||||
Total Collateral Value | 39,730,001 |
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(d) | Collateralized by $53,267,335 Federal National Mortgage Association, with various coupon rates from 4.36-4.526% with various maturity dates of 7/1/2033-7/1/2042 with a value of $53,048,108. |
(e) | Collateralized by: |
Principal Amount ($) | Security | Rate (%) | Maturity Date | Collateral Value ($) | ||||
892,717 | Federal National Mortgage Association | 0.12 | 10/25/2035 | 835,180 | ||||
5,493,392 | Federal National Mortgage Association — Interest Only | 3.07 | 9/25/2032 | 5,541,424 | ||||
41,555,156 | Federal Home Loan Mortgage Corp. | .00-4.92 | 9/15/2017-8/15/2035 | 40,904,121 | ||||
4,600,000 | Federal Home Loan Mortgage Corp. — Principal Only | — | 1/15/2035 | 3,720,040 | ||||
Total Collateral Value | 51,000,765 |
(f) | Collateralized by $81,423,664 Federal Home Loan Mortgage Corp., 5.174%, maturing on 4/1/2035 with a value of $81,630,000. |
(g) | Collateralized by $210,000 Federal Home Loan Mortgage Corp., 4.25%, maturing on 7/15/2019 with a value of $206,850. |
(h) | Collateralized by $45,892,000 US Treasury Note, 4.375%, maturing on 12/15/2010 with a value of $45,900,216. |
The accompanying notes are an integral part of the financial statements.
DWS Tax-Exempt Money Fund
Principal Amount ($) | Value ($) | |||
Municipal Bonds and Notes 98.5% | ||||
Arizona 2.6% | ||||
Arizona, McAllister Academic Village LLC Revenue, Arizona State University Project, Series A, 3.03%*, 7/1/2045 (a) | 2,300,000 | 2,300,000 | ||
Arizona, Salt River Pima-Maricopa Indian Community, 3.02%*, 10/1/2025, Bank of America NA (b) | 3,430,000 | 3,430,000 | ||
Arizona, Salt River Project Agricultural Improvement, Series A: | ||||
2.98%, 2/2/2006 | 2,200,000 | 2,200,000 | ||
3.03%, 2/2/2006 | 5,800,000 | 5,800,000 | ||
Arizona, School Facilities Board, Certificates of Participation, Series 735, 144A, 3.06%*, 3/1/2013 (a) | 3,680,000 | 3,680,000 | ||
17,410,000 | ||||
California 2.5% | ||||
California, Housing Finance Agency Revenue, Home Mortgage, Series H, AMT, 3.07%*, 8/1/2033 (a) | 900,000 | 900,000 | ||
California, State General Obligation, Series PT-1555, 144A, 3.05%*, 10/1/2010 (a) | 500,000 | 500,000 | ||
Hayward, CA, Multi-Family Housing Revenue, Timbers Apartments, Series A, AMT, 3.03%*, 3/15/2033 | 600,000 | 600,000 | ||
Los Angeles County, CA, Tax & Revenue Anticipation Notes, Series A, 4.0%, 6/30/2006 | 6,000,000 | 6,034,851 | ||
Los Angeles, CA, Harbor Department Revenue, Series B, AMT, 5.25%, 11/1/2006 | 2,000,000 | 2,028,457 | ||
Riverside, CA, Community College District, Series 913, 144A, 3.05%*, 2/1/2013 (a) | 3,000,000 | 3,000,000 | ||
Sacramento County, CA, Housing Authority, Multi-Family Revenue, Sierra Sunrise Senior Apartments, Series D, AMT, 3.06%*, 7/1/2036, Citibank NA (b) | 1,700,000 | 1,700,000 | ||
San Francisco, CA, City & County, Public Utilities Commonwealth Clean Water Revenue, Series B-20, 144A, 3.05%*, 10/1/2022 (a) | 2,190,000 | 2,190,000 | ||
San Francisco, CA, City & County, Redevelopment Agency, Multi-Family Revenue, Derek Silva Community, Series D, AMT, 3.07%*, 12/1/2019, Citibank NA (b) | 100,000 | 100,000 | ||
17,053,308 | ||||
Colorado 3.6% | ||||
Adams & Weld Counties, CO, Brighton School District No. 27J, Series R-6514, 144A, 3.06%*, 12/1/2024 (a) | 8,505,000 | 8,505,000 | ||
Colorado, Educational & Cultural Facilities Authority Revenue, Bear Creek School Project, 3.04%*, 10/1/2032, US Bank NA (b) | 6,600,000 | 6,600,000 |
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Colorado, Educational & Cultural Facilities Authority Revenue, Vail Mountain School Project, 3.1%*, 5/1/2033, KeyBank NA (b) | 3,200,000 | 3,200,000 | ||
Larimer County, CO, School District No. R-1 Poudre, Series R-4535, 144A, 3.06%*, 12/15/2021 (a) | 2,805,000 | 2,805,000 | ||
Summit County, CO, School District No. RE1, Series R-6513, 144A, 3.06%*, 12/1/2023 (a) | 3,360,000 | 3,360,000 | ||
24,470,000 | ||||
Delaware 2.4% | ||||
Delaware, State Economic Development Authority Revenue, Winterthur Museum Project, 3.08%*, 9/1/2012, Wachovia Bank NA (b) | 5,200,000 | 5,200,000 | ||
Sussex County, DE, First Mortgage Revenue, Cadbury Lewes, Series C, 3.06%*, 1/1/2016, Citizens Bank of PA (b) | 6,000,000 | 6,000,000 | ||
Sussex County, DE, Industrial Development Revenue, Perdue Agrirecycle LLC Project, AMT, 3.08%*, 1/1/2013, SunTrust Bank (b) | 5,000,000 | 5,000,000 | ||
16,200,000 | ||||
Florida 4.3% | ||||
Brevard County, FL, Health Care Facilities Authority Revenue, Health First, Inc. Project, 3.08%*, 8/1/2014, SunTrust Bank (b) | 1,675,000 | 1,675,000 | ||
Broward County, FL, School Board Certificates of Participation, Series R-1056, 144A, 3.06%*, 7/1/2019 (a) | 3,170,000 | 3,170,000 | ||
Collier County, FL, School Board, Certificates of Participation, Series MT-147, 144A, 3.05%*, 2/15/2021 (a) | 3,800,000 | 3,800,000 | ||
Florida, State Department of Environmental Protection Preservation Revenue, Series R-3043, 144A, 3.06%*, 7/1/2023 (a) | 995,000 | 995,000 | ||
Gulf Breeze, FL, Municipal Bond Fund Revenue, Series A, 3.03%*, 3/31/2021, Bank of America NA (b) | 2,165,000 | 2,165,000 | ||
Highlands County, FL, Health Facilities Authority Revenue, Hospital Adventist Health Systems, Series B, 3.04%*, 11/15/2009, SunTrust Bank (b) | 6,600,000 | 6,600,000 | ||
Jacksonville, Florida, Electric Authority Revenue, Series B, 3.07%*, 10/1/2030 | 500,000 | 500,000 | ||
Miami-Dade County, FL, General Obligation, 3.15%, 4/5/2006 | 1,000,000 | 1,000,000 | ||
Miami-Dade County, FL, Industrial Development Authority Revenue, Gulliver Schools Project, 3.07%*, 9/1/2029, Bank of America NA (b) | 2,965,000 | 2,965,000 | ||
Miami-Dade County, FL, School Board Certificates of Participation, Series R-4022, 144A, 3.06%*, 8/1/2021 (a) | 890,000 | 890,000 | ||
Orange County, FL, Health Facilities Authority Revenue, Presbyterian Retirement Project, 3.07%*, 11/1/2028, Bank of America NA (b) | 1,865,000 | 1,865,000 | ||
Pinellas County, FL, Health Facilities Authority Revenue, Hospital Loan Program, 3.1%*, 12/1/2015 (a) | 400,000 | 400,000 | ||
Sarasota County, FL, Health Facility Authority Revenue, Bay Village Project, 3.07%*, 12/1/2023, Bank One America NA (b) | 3,400,000 | 3,400,000 | ||
29,425,000 | ||||
Georgia 1.7% | ||||
Atlanta, GA, Airport Revenue, Series C-1, 3.03%*, 1/1/2030 (a) | 4,000,000 | 4,000,000 | ||
Fulton County, GA, Development Authority Revenue, Shepherd Center, Inc. Project, 3.03%*, 9/1/2035, SunTrust Bank (b) | 1,300,000 | 1,300,000 | ||
La Grange, GA, Development Authority Revenue, La Grange College Project, 3.03%*, 6/1/2031, SunTrust Bank (b) | 1,370,000 | 1,370,000 | ||
Macon-Bibb County, GA, Hospital Authority Revenue, Anticipation Certificates, Medical Center of Central Georgia, 3.03%*, 8/1/2018, SunTrust Bank (b) | 600,000 | 600,000 | ||
Rockdale County, GA, Hospital Authority Revenue, Anticipation Certificates, 3.03%*, 10/1/2027, SunTrust Bank (b) | 4,315,000 | 4,315,000 | ||
11,585,000 | ||||
Hawaii 0.5% | ||||
ABN AMRO, Munitops Certificates Trust, Series 2004-16, 144A, 3.07%*, 7/1/2012 (a) | 3,200,000 | 3,200,000 | ||
Idaho 2.2% | ||||
Idaho, State Tax Anticipation Notes, 4.0%, 6/30/2006 | 7,500,000 | 7,540,555 | ||
Power County, ID, Industrial Development Authority, FMC Corp. Project, AMT, 3.08%*, 4/1/2014, Wachovia Bank NA (b) | 7,500,000 | 7,500,000 | ||
15,040,555 | ||||
Illinois 9.5% | ||||
Chicago, IL, De La Salle Institute Project, 3.12%*, 4/1/2027, Fifth Third Bank (b) | 3,470,000 | 3,470,000 | ||
Chicago, IL, Eclipse Funding Trust, Series 2006-0003 Solar Eclipse, 144A, 3.05%*, 1/1/2026 (a) | 3,130,000 | 3,130,000 | ||
Cicero, IL, Industrial Development Revenue, Harris Steel Co. Project, AMT, 3.13%*, 5/1/2011, American National Bank & Trust (b) | 1,450,000 | 1,450,000 | ||
Cook County, IL, Industrial Development Revenue, 128th Place Limited Partnership, AMT, 3.1%*, 7/1/2020, LaSalle Bank NA (b) | 2,250,000 | 2,250,000 | ||
Cook County, IL, Industrial Development Revenue, Devorahco LLC Project, Series A, AMT, 3.1%*, 12/1/2034, LaSalle Bank NA (b) | 2,000,000 | 2,000,000 | ||
Du Page County, IL, Benedictine University Building Project, 3.05%*, 7/1/2024, National City Bank (b) | 5,430,000 | 5,430,000 |
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Franklin Park, IL, Industrial Development Revenue, MacLean Fogg Co. Project, AMT, 3.15%*, 2/1/2007, Northern Trust Company (b) | 5,000,000 | 5,000,000 | ||
Hillside, IL, Economic Development Revenue, L&J Technologies Project, AMT, 3.15%*, 7/1/2024, Northern Trust Company (b) | 4,020,000 | 4,020,000 | ||
Illinois, Development Finance Authority, Industrial Development Revenue, Tripp Partners Project, AMT, 2.5%*, 2/1/2013, Northern Trust Company (b) | 2,780,000 | 2,780,000 | ||
Illinois, Development Finance Authority, Industrial Project Revenue, Grecian Delight Foods Project, AMT, 3.1%*, 8/1/2019, LaSalle Bank NA (b) | 4,700,000 | 4,700,000 | ||
Illinois, Development Finance Authority, Regional Organization Bank of Illinois Project, 3.14%*, 12/1/2020, Bank One NA (b) | 2,250,000 | 2,250,000 | ||
Illinois, Educational Facilities Authority Revenue, 3.2%, 5/3/2006 | 3,000,000 | 3,000,000 | ||
Illinois, General Obligation, Series 1750, 144A, 3.06%*, 12/1/2010 (a) | 5,300,000 | 5,300,000 | ||
Illinois, General Obligation, Star Certificates, Series 03-20, 144A, 3.06%*, 11/1/2019 (a) | 5,700,000 | 5,700,000 | ||
Lake County, IL, Warren Township High School District No. 121 Gurnee, Series R-2157, 144A, 3.06%*, 3/1/2024 (a) | 1,500,000 | 1,500,000 | ||
Lake Zurich, IL, Industrial Development Revenue, Screenco LLC/ScreenFlex Project, AMT, 3.1%*, 3/1/2018, LaSalle National Bank (b) | 1,725,000 | 1,725,000 | ||
Mundelein, IL, Industrial Development Revenue, MacLean Fogg Co. Project, AMT, 3.15%*, 1/1/2015, Northern Trust Company (b) | 6,500,000 | 6,500,000 | ||
Tinley Park, IL, Industrial Development Revenue, Harbor Tool Manufacturing, Inc., Project, AMT, 3.1%*, 7/1/2020, LaSalle Bank NA (b) | 1,170,000 | 1,170,000 | ||
Woodridge, IL, Du Page Will & Cook Counties, Industrial Development Revenue, Morey Realty Group, Inc. Project, AMT, 3.13%*, 12/1/2016, Bank One NA (b) | 3,700,000 | 3,700,000 | ||
65,075,000 | ||||
Indiana 5.6% | ||||
ABN AMRO, Munitops Certificates Trust: Series 2003-32, 144A, 3.07%*, 1/15/2012 (a) | 4,000,000 | 4,000,000 | ||
Series 2005-7, 144A, 3.07%*, 7/10/2013 (a) | 7,150,000 | 7,150,000 | ||
Indiana, Development Finance Authority, Industrial Development Revenue, Enterprise Center III Project, AMT, 3.1%*, 6/1/2022, LaSalle Bank NA (b) | 4,500,000 | 4,500,000 | ||
Indiana, Development Finance Authority, Industrial Development Revenue, Enterprise Center VI Project, AMT, 3.1%*, 6/1/2022, LaSalle Bank NA (b) | 4,900,000 | 4,900,000 | ||
Indiana, Health Facility Financing Authority, Hospital Revenue, Macon Trust, Series F, 144A, 3.06%*, 5/1/2035 (a) | 4,995,000 | 4,995,000 | ||
Indiana, State Development Finance Authority, Economic Development Revenue, Goodwill Industries Michiana Project, 3.1%*, 1/1/2027, National City Bank of Indiana (b) | 1,970,000 | 1,970,000 | ||
Indiana, State Development Finance Authority, Industrial Development Revenue, Enterprise Center IV Project, AMT, 3.1%*, 6/1/2022, LaSalle Bank NA (b) | 1,600,000 | 1,600,000 | ||
Indiana, State Development Finance Authority, Industrial Development Revenue, Enterprise Center V Project, AMT, 3.1%*, 6/1/2022, LaSalle Bank NA (b) | 4,000,000 | 4,000,000 | ||
Indiana, State Educational Facilities Authority Revenue, St. Mary Woods Project, 3.09%*, 4/1/2024, Bank One NA (b) | 3,000,000 | 3,000,000 | ||
Indianapolis, IN, Local Public Import Bond Bank, Macon Trust, Series P, 144A, AMT, 3.1%*, 1/1/2030 (a) | 2,120,000 | 2,120,000 | ||
38,235,000 | ||||
Kentucky 5.0% | ||||
Boone County, KY, Pollution Control Revenue, Cincinnati Gas & Electric Co., Series A, 3.2%*, 8/1/2013, Calyon Bank (b) | 4,400,000 | 4,400,000 | ||
Breckinridge County, KY, Lease Program Revenue, Kentucky Association of Counties Leasing Trust, Series A, 3.07%*, 2/1/2032, US Bank NA (b) | 1,000,000 | 1,000,000 | ||
Jeffersontown, KY, Lease Program Revenue, Kentucky League of Cities Funding Trust, 3.07%*, 3/1/2030, US Bank NA (b) | 3,720,000 | 3,720,000 | ||
Kentucky, Asset & Liability Commission Generated Fund, Tax & Revenue Anticipation Notes, Series A, 4.0%, 6/28/2006 | 5,500,000 | 5,528,677 | ||
Lexington-Fayette Urban County, KY, Industrial Development Revenue, YMCA Central Kentucky, Inc. Project, 3.09%*, 7/1/2019, Bank One Kentucky NA (b) | 475,000 | 475,000 | ||
Pendleton County, KY, General Obligation: | ||||
3.0%, 3/6/2006 | 9,000,000 | 9,000,000 | ||
3.1%, 2/7/2006 | 2,000,000 | 2,000,000 | ||
Pendleton County, KY, Multi-County Lease Revenue, Series 89, 3.13%, 2/7/2006 | 8,000,000 | 8,000,000 | ||
34,123,677 | ||||
Maine 1.0% | ||||
Maine, State Tax Anticipation Notes, 4.0%, 6/30/2006 | 7,000,000 | 7,036,171 | ||
Massachusetts 1.3% | ||||
Massachusetts, State Development Finance Agency, 3.0%, 2/2/2006 | 3,000,000 | 3,000,000 |
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Massachusetts, State Development Finance Agency Revenue, Bridgewell, Inc. Series A, 3.05%*, 6/1/2030, KeyBank NA (b) | 6,000,000 | 6,000,000 | ||
9,000,000 | ||||
Michigan 9.6% | ||||
ABN AMRO, Munitops Certificates Trust, 144A, Series 2003-3, 3.05%*, 1/1/2011 (a) | 24,600,000 | 24,600,000 | ||
Comstock Park, MI, Public Schools, Series R-2178, 144A, 3.06%*, 5/1/2025 (a) | 980,000 | 980,000 | ||
Detroit, MI, City School District, Series PT-1844, 144A, 3.05%*, 5/1/2011 (a) | 1,085,000 | 1,085,000 | ||
Detroit, MI, Sewer Disposal Revenue, Series E, 3.0%*, 7/1/2031 (a) | 15,500,000 | 15,500,000 | ||
Georgetown Township, MI, Economic Development Corp., Limited Obligation Revenue, Sunset Manor, Inc. Project, 3.03%*, 11/1/2019, LaSalle Bank NA (b) | 5,850,000 | 5,850,000 | ||
Jackson County, MI, Economic Development Corp. Revenue, Spring Arbor College Project, 3.08%*, 12/1/2020, Comerica Bank (b) | 4,300,000 | 4,300,000 | ||
Michigan, Municipal Securities Trust Certificates, Series 9054, 144A, 3.06%*, 4/20/2011 | 2,825,000 | 2,825,000 | ||
Michigan, State University Revenue, 3.12%, 4/6/2006 | 4,000,000 | 4,000,000 | ||
Michigan, Strategic Fund, Limited Obligation Revenue, Continental Aluminum Project, AMT, 3.19%*, 10/1/2015, Comerica Bank (b) | 4,900,000 | 4,900,000 | ||
Michigan, University of Michigan, Hospital Revenue: | ||||
Series A, 3.07%*, 12/1/2019 | 100,000 | 100,000 | ||
Series A-2, 3.07%*, 12/1/2024 | 600,000 | 600,000 | ||
Oakland County, MI, Economic Development Corp., Limited Obligation Revenue, Acme Manufacturing Co. Project, AMT, 3.19%*, 11/1/2023, JPMorgan Chase & Co. (b) | 630,000 | 630,000 | ||
65,370,000 | ||||
Missouri 0.4% | ||||
Missouri, Development Finance Board, Air Cargo Facility Revenue, St. Louis Airport, AMT, 3.1%*, 3/1/2030, American National Bank & Trust (b) | 2,500,000 | 2,500,000 | ||
Nebraska 0.4% | ||||
Nebraska, Investment Finance Authority, Single Family Housing Revenue, AMT, Series D, 3.1%*, 9/1/2034 | 2,472,500 | 2,472,500 | ||
Nevada 2.2% | ||||
Las Vegas Valley, NV, Water District, Series B-10, 144A, 3.06%*, 6/1/2024 (a) | 9,875,000 | 9,875,000 | ||
Nevada, State Department Commission, Industrial Development Revenue, Master Halco Project, Series A, AMT, 3.19%*, 12/1/2009, Wachovia Bank NA (b) | 4,900,000 | 4,900,000 | ||
14,775,000 | ||||
New Hampshire 0.3% | ||||
New Hampshire, State Business Finance Authority, Exempt Facilities Revenue, Waste Management of NH, Inc. Project, AMT, 3.08%*, 9/1/2012, Wachovia Bank NA (b) | 2,000,000 | 2,000,000 | ||
New Jersey 2.9% | ||||
New Jersey, Economic Development Authority Revenue, Series R-311, 144A, 3.08%*, 6/15/2012 (a) | 1,280,000 | 1,280,000 | ||
New Jersey, Environmental Infrastructure Trust, Encap Golf Holdings LLC Project, AMT, 3.03%*, 11/1/2025, Wachovia Bank NA (b) | 1,000,000 | 1,000,000 | ||
New Jersey, State Tax & Revenue Anticipation Notes, Series A, 4.0%, 6/23/2006 | 14,400,000 | 14,466,204 | ||
New Jersey, State Transportation Trust Fund Authority, Series PT-2488, 144A, 3.05%*, 12/15/2017 (a) | 2,860,000 | 2,860,000 | ||
19,606,204 | ||||
New York 1.3% | ||||
Long Island, NY, Power Authority, Electric System Revenue, Series D, 3.02%*, 12/1/2029 (a) | 300,000 | 300,000 | ||
New York, Metropolitan Transportation Authority Revenue, Series PA-1083, 144A, 3.05%*, 5/15/2010 (a) | 1,450,000 | 1,450,000 | ||
New York, State Housing Finance Agency Revenue, Multi-Family Housing, Series A, AMT, 3.05%*, 11/1/2028 (a) | 790,000 | 790,000 | ||
New York, State Thruway Authority, Personal Income Tax Revenue, Series PT-3027, 144A, 3.05%*, 3/15/2025 (a) | 4,000,000 | 4,000,000 | ||
New York, NY, General Obligation, Series 1010, 144A, 3.06%*, 8/1/2013 (a) | 995,000 | 995,000 | ||
New York, NY, Municipal Securities Trust Receipts, Series SG-109, 144A, 3.05%*, 6/1/2027 (a) | 1,300,000 | 1,300,000 | ||
8,835,000 | ||||
North Carolina 1.5% | ||||
Moore County, NC, Industrial Facilities & Pollution Control Finance Authority Revenue, Klaussner Industries Project, AMT, 3.13%*, 5/1/2010, Wachovia Bank NA (b) | 3,000,000 | 3,000,000 |
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North Carolina, Capital Finance Agency, Educational Facilities Revenue, Forsyth Country Day School, 3.05%*, 12/1/2031, Branch Banking & Trust (b) | 2,300,000 | 2,300,000 | ||
North Carolina, Medical Care Commission, Health Care Facilities Revenue, Ist Mortgage Pennybyrn, Project C, 3.03%*, 10/1/2035, Bank of America NA (b) | 4,000,000 | 4,000,000 | ||
North Carolina, Medical Care Community, Retirement Facilities Revenue, 1st Mortgage-United Methodist, Series B, 3.05%*, 10/1/2035, Branch Banking & Trust (b) | 1,000,000 | 1,000,000 | ||
10,300,000 | ||||
Ohio 4.7% | ||||
Athens County, OH, Port Authority, Housing Revenue, University Housing for Ohio, Inc. Project, 3.07%*, 6/1/2032, Wachovia Bank NA (b) | 4,000,000 | 4,000,000 | ||
Cuyahoga County, OH, Hospital Revenue, Improvement Metrohealth System, 3.07%*, 2/1/2035, National City Bank (b) | 4,975,000 | 4,975,000 | ||
Cuyahoga, OH, Community College District, General Receipts, Series B, 3.05%*, 12/1/2032 (a) | 3,815,000 | 3,815,000 | ||
Huron County, OH, Hospital Facilities Revenue, Fisher-Titus Medical Center, Series A, 3.04%*, 12/1/2027, National City Bank (b) | 3,000,000 | 3,000,000 | ||
Lorain, OH, Port Authority Revenue, Port Development, Spitzer Project, AMT, 3.35%*, 12/1/2019, National City Bank (b) | 2,670,000 | 2,670,000 | ||
Ohio, State Higher Educational Facility Community Revenue, Pooled Program: | ||||
Series A, 3.09%*, 9/1/2020, Fifth Third Bank (b) | 940,000 | 940,000 | ||
Series C, 3.09%*, 9/1/2025, Fifth Third Bank (b) | 810,000 | 810,000 | ||
Ohio, State Water Development Authority Revenue, Series 1118, 144A, 3.05%*, 12/1/2020 | 2,585,000 | 2,585,000 | ||
Portage County, OH, Industrial Development Revenue, Allen Aircraft Products Project, AMT, 3.2%*, 7/1/2018, National City Bank (b) | 1,595,000 | 1,595,000 | ||
Salem, OH, Hospital Revenue, Salem Community, 3.02%*, 9/1/2035, JPMorgan Chase Bank (b) | 7,800,000 | 7,800,000 | ||
32,190,000 | ||||
Oklahoma 1.0% | ||||
Blaine County, OK, Industrial Development Authority Revenue, Seaboard Project, AMT, 3.08%*, 11/1/2018, SunTrust Bank (b) | 1,500,000 | 1,500,000 | ||
Payne County, OK, Economic Development Authority, Student Housing Revenue, OSUF Phase III Project, 3.05%*, 7/1/2032 (a) | 5,250,000 | 5,250,000 | ||
6,750,000 | ||||
Pennsylvania 4.9% | ||||
Chester County, PA, Industrial Development Authority Revenue, Bentley Graphic, Inc. Project, AMT, 3.23%*, 12/1/2020, First Tennessee Bank (b) | 4,150,000 | 4,150,000 | ||
Dauphin County, PA, General Authority Revenue, Education & Health Loan Program, 3.07%*, 11/1/2017 (a) | 5,120,000 | 5,120,000 | ||
Manheim Township, PA, General Obligation, School District, 3.04%*, 6/1/2016 (a) | 3,820,000 | 3,820,000 | ||
Montgomery County, PA, Redevelopment Authority, Multi-Family Housing Revenue, Forge Gate Apartments Project, Series A, 3.01%*, 8/15/2031 | 100,000 | 100,000 | ||
Pennsylvania, Economic Development Financing Authority, Exempt Facilities Revenue, Amtrak Project, Series B, AMT, 3.1%*, 11/1/2041, Morgan Guaranty Trust (b) | 1,030,000 | 1,030,000 | ||
Pennsylvania, Economic Development Financing Authority, Solid Waste Disposal Revenue, Series MT-047, AMT, 144A, 3.09%*, 11/1/2021 | 2,700,000 | 2,700,000 | ||
Pennsylvania, State General Obligation, Series A-15, 144A, 3.06%*, 1/1/2017 (a) | 4,045,000 | 4,045,000 | ||
Pennsylvania, State Higher Education Assistance Agency, Student Loan Revenue, Series A, AMT, 3.08%*, 3/1/2027 (a) | 4,200,000 | 4,200,000 | ||
Pennsylvania, State Higher Educational Facilities Authority Revenue, Carnegie Mellon University, Series C, 3.05%*, 11/1/2029 | 1,370,000 | 1,370,000 | ||
Pennsylvania, State Higher Educational Facilities Authority Revenue, University Properties, Student Housing, Series A, 3.04%*, 8/1/2035, Citizens Bank (b) | 5,170,000 | 5,170,000 | ||
Philadelphia, PA, Hospitals & Higher Education Facilities Authority Revenue, Childrens Hospital of Philadelphia, Series A, 3.05%*, 2/15/2021 | 150,000 | 150,000 | ||
Red Lion, PA, General Obligation, Area School District, 3.02%*, 5/1/2024 (a) | 1,600,000 | 1,600,000 | ||
33,455,000 | ||||
Puerto Rico 0.0% | ||||
ABN AMRO, Munitops Certificates Trust, Series 2000-17, 144A, 3.02%*, 10/1/2008 | 100,000 | 100,000 | ||
South Carolina 1.0% | ||||
Greenwood County, SC, Exempt Facility Industrial Revenue, Fuji Photo Film Project, AMT, 3.2%*, 9/1/2011 | 2,500,000 | 2,500,000 | ||
South Carolina, Educational Facilities Authority for Private Nonprofit Institutions, Coker College, 3.08%*, 6/1/2019, Wachovia Bank NA (b) | 4,455,000 | 4,455,000 | ||
6,955,000 | ||||
Tennessee 0.6% | ||||
Chattanooga, TN, Health Educational & Housing Facility Board Revenue, Catholic Health, Series C, 3.04%*, 5/1/2039 | 3,000,000 | 3,000,000 |
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Montgomery County, TN, Public Building Authority, Pooled Financing Revenue, Tennessee County Loan Pool, 3.08%*, 7/1/2034, Bank of America NA (b) | 1,425,000 | 1,425,000 | ||
4,425,000 | ||||
Texas 19.3% | ||||
ABN AMRO, Munitops Certificates Trust, Series 2004-38, 144A, 3.07%*, 2/15/2011 | 3,000,000 | 3,000,000 | ||
Aldine, TX, Independent School District, Series 827, 144A, 3.06%*, 1/1/2012 | 2,935,000 | 2,935,000 | ||
Austin, TX, Electric Utility Systems Revenue, Series R-1057, 144A, 3.06%*, 11/15/2021 (a) | 4,775,000 | 4,775,000 | ||
Austin, TX, Water & Waste Systems Revenue, Series B-27, 144A, 3.06%*, 11/15/2026 (a) | 5,260,000 | 5,260,000 | ||
Dallas, TX, Independent School District, Series 6038, 144A, 3.06%*, 8/15/2024 | 6,155,000 | 6,155,000 | ||
Galena Park, TX, Independent School District, Series SG-153, 144A, 3.06%*, 8/15/2023 | 6,700,000 | 6,700,000 | ||
Harris County, TX, General Obligation: | ||||
3.05%, 3/3/2006 | 4,160,000 | 4,160,000 | ||
3.1%, 3/3/2006 | 580,000 | 580,000 | ||
Harris County, TX, Health Facilities Development Corp. Revenue, YMCA Greater Houston Area, 3.07%*, 7/1/2037, JPMorgan Chase Bank (b) | 1,390,000 | 1,390,000 | ||
Houston, TX, Airport System Revenue, Series SG-161, 144A, 3.06%*, 7/1/2032 (a) | 10,735,000 | 10,735,000 | ||
Houston, TX, General Obligation, Series 781, 144A, 3.06%*, 3/1/2012 (a) | 4,000,000 | 4,000,000 | ||
Houston, TX, Independent School District: | ||||
Series 05-18, 144A, 3.06%*, 8/15/2014 | 4,625,000 | 4,625,000 | ||
Series R-408, 144A, 3.06%*, 2/15/2029 | 4,000,000 | 4,000,000 | ||
Houston, TX, Utility System Revenue, 3.1%, 4/6/2006 | 8,000,000 | 8,000,000 | ||
Houston, TX, Water & Sewer System Revenue, Municipal Trust Receipts, Series SG-120, 144A, 3.06%*, 12/1/2023 | 2,000,000 | 2,000,000 | ||
Houston, TX, Water & Sewer Systems Revenue, Star Certificates, Series 2003-14, 144A, 3.06%*, 6/1/2026 (a) | 1,095,000 | 1,095,000 | ||
Northside, TX, Independent School District, Series 758, 144A, 3.06%*, 2/15/2013 | 3,410,000 | 3,410,000 | ||
Northside, TX, Independent School District, School Building, 2.85%*, 6/15/2035 | 5,000,000 | 5,000,000 | ||
San Antonio, TX, Electric & Gas Revenue, Series 1700, 144A, 3.07%*, 2/1/2010 | 6,550,000 | 6,550,000 | ||
Texas, Lower Colorado River Authority, 3.05%, 3/3/2006 | 6,500,000 | 6,500,000 | ||
Texas, Southwest Higher Education Authority, Inc., Southern Methodist University Project, Series B, 3.0%*, 10/1/2029, Landesbank Hessen-Thuringen (b) | 300,000 | 300,000 | ||
Texas, State Tax & Revenue Anticipation Notes, 4.5%, 8/31/2006 | 17,600,000 | 17,748,136 | ||
Texas, University of Texas Revenue: | ||||
3.05%, 3/1/2006 | 5,000,000 | 5,000,000 | ||
Series B-14, 144A, 3.06%*, 8/15/2022 | 4,590,000 | 4,590,000 | ||
Texas, Water Development Board Revenue, Series 2187, 144A, 3.04%*, 7/15/2021 | 10,860,000 | 10,860,000 | ||
Travis County, TX, Health Facilities Development Corp., Retirement Facility Revenue, Querencia Barton Creek, Series C, 3.04%*, 11/15/2035, LaSalle Bank NA (b) | 2,000,000 | 2,000,000 | ||
131,368,136 | ||||
Utah 1.3% | ||||
Alpine, UT, General Obligation, School District: Floater-PT-436, 144A, 3.06%*, 3/15/2007 | 2,270,000 | 2,270,000 | ||
Floater-PT-436, 144A, 3.06%*, 3/15/2009 | 4,125,000 | 4,125,000 | ||
Murray City, UT, Hospital Revenue, IHC Health Services, Inc., Series C, 3.07%*, 5/15/2036 | 100,000 | 100,000 | ||
Utah, Housing Finance Agency, Single Family Mortgage, Series E-1, AMT, 3.1%*, 7/1/2031 | 2,475,000 | 2,475,000 | ||
8,970,000 | ||||
Virginia 0.3% | ||||
Alexandria, VA, Redevelopment & Multi-Family Housing Authority Revenue, Fairfield Village Square Project, Series A, AMT, 3.08%*, 1/15/2039 | 2,000,000 | 2,000,000 | ||
Washington 3.4% | ||||
Grant County, WA, Public Utilities District Number 002, Electric Revenue, Series 780, 144A, 3.06%*, 1/1/2010 (a) | 6,125,000 | 6,125,000 | ||
King County, WA, Public Hospital District No. 002, Series R-6036, 144A, 3.06%*, 12/1/2023 (a) | 1,270,000 | 1,270,000 |
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Washington, Port Seattle Revenue, AMT, 3.09%*, 9/1/2035, Fortis Bank SA/NV (b) | 2,000,000 | 2,000,000 | ||
Washington, State General Obligation: | ||||
Series A-11, 144A, 3.06%*, 6/1/2017 (a) | 5,655,000 | 5,655,000 | ||
Series R-3036, 144A, 3.06%*, 1/1/2023 (a) | 2,990,000 | 2,990,000 | ||
Washington, State Housing Finance Commission, Multi-Family Revenue, Deer Run West Apartments Project, Series A, AMT, 3.11%*, 6/15/2037, Bank of America NA (b) | 5,200,000 | 5,200,000 | ||
23,240,000 | ||||
Wisconsin 1.2% | ||||
Manitowoc, WI, Industrial Development Revenue, Kaysun Corp. Project, AMT, 3.13%*, 5/1/2015, Bank One Wisconsin (b) | 1,080,000 | 1,080,000 | ||
Pewaukee, WI, Industrial Development Revenue, Mixer System, Inc. Project, AMT, 3.13%*, 9/1/2020, Bank One Wisconsin (b) | 1,900,000 | 1,900,000 | ||
Wisconsin, State Health & Educational Facilities Authority Revenue, Marshfield Clinic, Series B, 3.07%*, 1/15/2036, Marshall & Ilsley (b) | 5,000,000 | 5,000,000 | ||
7,980,000 |
% of Net Assets | Value ($) | |||
Total Investment Portfolio (Cost $671,145,551)+ | 98.5 | 671,145,551 | ||
Other Assets and Liabilities, Net | 1.5 | 10,325,339 | ||
Net Assets | 100.0 | 681,470,890 |
* | 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 January 31, 2006. |
+ | The cost for federal income tax purposes was $671,145,551. |
(a) | Bond is insured by one of these companies: |
Insurance Coverage | As a % of Total Investment Portfolio | |
Ambac Financial Group | 5.2 | |
Financial Guaranty Insurance Company | 6.3 | |
Financial Security Assurance Inc. | 9.2 | |
MBIA Corp. | 10.9 |
(b) | Security incorporates a letter of credit from a major bank. |
144A: Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.
AMT: Subject to alternative minimum tax.
The accompanying notes are an integral part of the financial statements.
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Statements of Assets and Liabilities as of January 31, 2006 (Unaudited)
Assets | DWS Money Market Fund | DWS Government & Agency Money Fund | DWS Tax-Exempt Money Fund | ||||||||
Investments: | |||||||||||
Investments in securities, at amortized cost | $ | 2,897,571,942 | $ | 89,123,172 | $ | 671,145,551 | |||||
Repurchase agreements, at amortized cost | 437,435,000 | 411,198,000 | — | ||||||||
Total investments in securities, at amortized cost | 3,335,006,942 | 500,321,172 | 671,145,551 | ||||||||
Cash | 536 | 493 | — | ||||||||
Receivable for investments sold | — | — | 7,400,347 | ||||||||
Interest receivable | 10,551,304 | 1,484,849 | 3,950,983 | ||||||||
Receivable for Fund shares sold | 15,840,922 | 1,722,581 | 2,040,719 | ||||||||
Other assets | 85,765 | 50,595 | 34,996 | ||||||||
Total assets | 3,361,485,469 | 503,579,690 | 684,572,596 | ||||||||
Liabilities | |||||||||||
Due to custodian bank | — | — | 78,208 | ||||||||
Dividends payable | 2,162,852 | 285,223 | 296,188 | ||||||||
Payable for investments purchased | 25,000,000 | 58,000,000 | 2,300,000 | ||||||||
Payable for Fund shares redeemed | 175,745 | 515,359 | — | ||||||||
Accrued management fee | 781,895 | 104,752 | 165,522 | ||||||||
Other accrued expenses and payables | 2,173,501 | 265,849 | 261,788 | ||||||||
Total liabilities | 30,293,993 | 59,171,183 | 3,101,706 | ||||||||
Net assets, at value | $ | 3,331,191,476 | $ | 444,408,507 | $ | 681,470,890 | |||||
Net Assets | |||||||||||
Net assets consist of: | |||||||||||
Undistributed net investment income | 97,204 | (6,490 | ) | 18,799 | |||||||
Accumulated net realized gain (loss) | — | (1,031 | ) | (6,816 | ) | ||||||
Paid-in capital | 3,331,094,272 | 444,416,028 | 681,458,907 | ||||||||
Net assets, at value | $ | 3,331,191,476 | $ | 444,408,507 | $ | 681,470,890 | |||||
Shares outstanding | 3,330,837,448 | 444,393,947 | 681,459,569 | ||||||||
Net asset value, offering and redemption price per share (Net asset value ÷ outstanding shares of beneficial interest, no par value, unlimited number of shares authorized) | $ | 1.00 | $ | 1.00 | $ | 1.00 |
The accompanying notes are an integral part of the financial statements.
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Statements of Operations for the six months ended January 31, 2006 (Unaudited)
Investment Income | DWS Money Market Fund | DWS Government & Agency Money Fund | DWS Tax-Exempt Money Fund | |||||||||
Income: | ||||||||||||
Interest | $ | 66,892,286 | $ | 8,752,316 | $ | 9,900,269 | ||||||
Expenses: | ||||||||||||
Management fee | 4,403,354 | 578,439 | 919,665 | |||||||||
Services to shareholders | 2,725,792 | 291,100 | 301,818 | |||||||||
Custodian fees | 63,724 | 8,767 | 13,349 | |||||||||
Auditing | 27,316 | 18,885 | 19,120 | |||||||||
Legal | 34,633 | 10,324 | 11,354 | |||||||||
Trustees’ fees and expenses | 50,251 | 26,403 | 24,666 | |||||||||
Reports to shareholders | 115,290 | 16,602 | 6,455 | |||||||||
Registration fees | 22,555 | 13,998 | 16,884 | |||||||||
Other | 86,823 | 15,260 | 20,137 | |||||||||
Total expenses before expense reductions | 7,529,738 | 979,778 | 1,333,448 | |||||||||
Expense reductions | (32,651 | ) | (6,905 | ) | (11,126 | ) | ||||||
Total expenses after expense reductions | 7,497,087 | 972,873 | 1,322,322 | |||||||||
Net investment income | 59,395,199 | 7,779,443 | 8,577,947 | |||||||||
Net realized gain (loss) on investment transactions | — | — | (1,398 | ) | ||||||||
Net increase (decrease) in net assets resulting from operations | $ | 59,395,199 | $ | 7,779,443 | $ | 8,576,549 |
Statement of Changes in Net Assets — DWS Money Market Fund
Increase (Decrease) in Net Assets | Six Months Ended January 31, 2006 (Unaudited) | Year Ended July 31, 2005 | ||||||
Operations: | ||||||||
Net investment income | $ | 59,395,199 | $ | 61,913,742 | ||||
Net realized gain (loss) on investment transactions | — | 25,138 | ||||||
Net increase (decrease) in net assets resulting from operations | 59,395,199 | 61,938,880 | ||||||
Distributions to shareholders from net investment income | (59,398,175 | ) | (62,715,860 | ) | ||||
Fund share transactions: | ||||||||
Proceeds from shares sold | 1,131,035,263 | 2,044,805,653 | ||||||
Net assets acquired in tax-free reorganization | — | 280,280,767 | ||||||
Reinvestment of distributions | 57,645,004 | 60,454,544 | ||||||
Cost of shares redeemed | (1,249,793,507 | ) | (2,424,311,653 | ) | ||||
Net increase (decrease) in net assets from Fund share transactions | (61,113,240 | ) | (38,770,689 | ) | ||||
Increase (decrease) in net assets | (61,116,216 | ) | (39,547,669 | ) | ||||
Net assets at beginning of period | 3,392,307,692 | 3,431,855,361 | ||||||
Net assets at end of period (including undistributed net investment income of $97,204 and $100,180, respectively) | $ | 3,331,191,476 | $ | 3,392,307,692 | ||||
Other Information | ||||||||
Shares outstanding at beginning of period | 3,391,950,687 | 3,430,708,003 | ||||||
Shares sold | 1,131,035,263 | 2,044,805,665 | ||||||
Shares issued in tax-free reorganization | — | 280,294,179 | ||||||
Shares issued to shareholders in reinvestment of distributions | 57,645,004 | 60,454,544 | ||||||
Shares redeemed | (1,249,793,506 | ) | (2,424,311,704 | ) | ||||
Net increase (decrease) in Fund shares | (61,113,239 | ) | (38,757,316 | ) | ||||
Shares outstanding at end of period | 3,330,837,448 | 3,391,950,687 |
The accompanying notes are an integral part of the financial statements.
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Statement of Changes in Net Assets —DWS Government & Agency Money Fund
Increase (Decrease) in Net Assets | Six Months Ended January 31, 2006 (Unaudited) | Year Ended July 31, 2005 | ||||||
Operations: | ||||||||
Net investment income | $ | 7,779,443 | $ | 7,303,882 | ||||
Net realized gain (loss) on investment transactions | — | (179 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 7,779,443 | 7,303,703 | ||||||
Distributions to shareholders from net investment income | (7,785,800 | ) | (7,402,591 | ) | ||||
Fund share transactions: | ||||||||
Proceeds from shares sold | 187,767,627 | 237,410,768 | ||||||
Net assets acquired in tax-free reorganization | — | 89,982,258 | ||||||
Reinvestment of distributions | 7,530,406 | 7,105,589 | ||||||
Cost of shares redeemed | (193,126,850 | ) | (293,514,169 | ) | ||||
Net increase (decrease) in net assets from Fund share transactions | 2,171,183 | 40,984,446 | ||||||
Increase (decrease) in net assets | 2,164,826 | 40,885,558 | ||||||
Net assets at beginning of period | 442,243,681 | 401,358,123 | ||||||
Net assets at end of period (including accumulated distributions in excess of net investment income of $6,490 and $133, respectively) | $ | 444,408,507 | $ | 442,243,681 | ||||
Other Information | ||||||||
Shares outstanding at beginning of period | 442,222,764 | 401,231,203 | ||||||
Shares sold | 187,767,627 | 237,410,769 | ||||||
Shares issued in tax-free reorganization | — | 89,989,372 | ||||||
Shares issued to shareholders in reinvestment of distributions | 7,530,406 | 7,105,589 | ||||||
Shares redeemed | (193,126,850 | ) | (293,514,169 | ) | ||||
Net increase (decrease) in Fund shares | 2,171,183 | 40,991,561 | ||||||
Shares outstanding at end of period | 444,393,947 | 442,222,764 |
The accompanying notes are an integral part of the financial statements.
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Statement of Changes in Net Assets — DWS Tax-Exempt Money Fund
Increase (Decrease) in Net Assets | Six Months Ended January 31, 2006 (Unaudited) | Year Ended July 31, 2005 | ||||||
Operations: | ||||||||
Net investment income | $ | 8,577,947 | $ | 9,443,185 | ||||
Net realized gain (loss) on investment transactions | (1,398 | ) | 735 | |||||
Net increase from payments by affiliates | — | 251 | ||||||
Net increase (decrease) in net assets resulting from operations | 8,576,549 | 9,444,171 | ||||||
Distributions to shareholders from net investment income | (8,577,947 | ) | (9,461,564 | ) | ||||
Fund share transactions: | ||||||||
Proceeds from shares sold | 234,156,454 | 459,038,182 | ||||||
Net assets acquired in tax-free reorganization | — | 120,128,452 | ||||||
Reinvestment of distributions | 8,377,390 | 9,141,949 | ||||||
Cost of shares redeemed | (304,782,108 | ) | (446,496,230 | ) | ||||
Net increase (decrease) in net assets from Fund share transactions | (62,248,264 | ) | 141,812,353 | |||||
Increase (decrease) in net assets | (62,249,662 | ) | 141,794,960 | |||||
Net assets at beginning of period | 743,720,552 | 601,925,592 | ||||||
Net assets at end of period (including undistributed net investment income of $18,799 and $18,799, respectively) | $ | 681,470,890 | $ | 743,720,552 | ||||
Other Information | ||||||||
Shares outstanding at beginning of period | 743,707,833 | 601,878,580 | ||||||
Shares sold | 234,156,454 | 459,038,182 | ||||||
Shares issued in tax-free reorganization | — | 120,145,352 | ||||||
Shares issued to shareholders in reinvestment of distributions | 8,377,390 | 9,141,949 | ||||||
Shares redeemed | (304,782,108 | ) | (446,496,230 | ) | ||||
Net increase (decrease) in Fund shares | (62,248,264 | ) | 141,829,253 | |||||
Shares outstanding at end of period | 681,459,569 | 743,707,833 |
The accompanying notes are an integral part of the financial statements.
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DWS Money Market Fund
Years Ended July 31, | 2006a | 2005 | 2004 | 2003 | 2002 | 2001 | ||||||||||||||||||
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 | .018 | .019 | .007 | .011 | .02 | .05 | ||||||||||||||||||
Distributions from net investment income | (.018 | ) | (.019 | ) | (.007 | ) | (.011 | ) | (.02 | ) | (.05 | ) | ||||||||||||
Net asset value, end of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||||
Total Return (%) | 1.78 | ** | 1.95 | .71 | 1.11 | 2.01 | 5.54b,c | |||||||||||||||||
Ratios to Average Net Assets and Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period ($ millions) | 3,331 | 3,392 | 3,432 | 4,117 | 4,978 | 5,787 | ||||||||||||||||||
Ratio of expenses before expense reductions (%) | .44 | * | .48 | .43 | .43 | .44 | .42d | |||||||||||||||||
Ratio of expenses after expense reductions (%) | .44 | * | .48 | .43 | .43 | .44 | .41d | |||||||||||||||||
Ratio of net investment income (%) | 3.51 | * | 1.91 | .72 | 1.12 | 2.01 | 5.38 |
a | For the six months ended January 31, 2006 (Unaudited). |
b | Total return for the year ended July 31, 2001 includes the effect of a voluntary capital contribution from the Advisor. Without this contribution, the total return would have been lower. |
c | Total return would have been lower had certain expenses not been reduced. |
d | The ratios of operating expenses excluding costs incurred in connection with a fund complex reorganization before and after expense reductions were 0.41% and 0.41%, respectively. |
* | Annualized |
** | Not annualized |
DWS Government & Agency Money Fund
Years Ended July 31, | 2006a | 2005 | 2004 | 2003 | 2002 | 2001 | ||||||||||||||||||
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 | .018 | .019 | .007 | .011 | .02 | .05 | ||||||||||||||||||
Distributions from net investment income | (.018 | ) | (.019 | ) | (.007 | ) | (.011 | ) | (.02 | ) | (.05 | ) | ||||||||||||
Net asset value, end of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||||
Total Return (%) | 1.78 | ** | 1.92 | .67 | 1.07 | 1.96 | 5.44b | |||||||||||||||||
Ratios to Average Net Assets and Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period ($ millions) | 444 | 442 | 401 | 503 | 614 | 751 | ||||||||||||||||||
Ratio of expenses before expense reductions (%) | .44 | * | .49 | .45 | .43 | .43 | .41c | |||||||||||||||||
Ratio of expenses after expense reductions (%) | .44 | * | .49 | .45 | .43 | .43 | .40c | |||||||||||||||||
Ratio of net investment income (%) | 3.49 | * | 1.88 | .69 | 1.09 | 1.98 | 5.27 |
a | For the six months ended January 31, 2006 (Unaudited). |
b | Total return would have been lower had certain expenses not been reduced. |
c | The ratios of operating expenses excluding costs incurred in connection with a fund complex reorganization before and after expense reductions were 0.40% and 0.40%, respectively. |
* | Annualized |
** | Not annualized |
DWS Tax-Exempt Money Fund
Years Ended July 31, | 2006a | 2005 | 2004 | 2003 | 2002 | 2001 | ||||||||||||||||||
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 | .012 | .015 | .006 | .009 | .01 | .03 | ||||||||||||||||||
Distributions from net investment income | (.012 | ) | (.015 | ) | (.006 | ) | (.009 | ) | (.01 | ) | (.03 | ) | ||||||||||||
Net asset value, end of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||||
Total Return (%) | 1.23 | ** | 1.54 | .65 | .92 | 1.43 | 3.50b | |||||||||||||||||
Ratios to Average Net Assets and Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period ($ millions) | 681 | 744 | 602 | 634 | 687 | 745 | ||||||||||||||||||
Ratio of expenses before expense reductions (%) | .37 | * | .41 | .41 | .39 | .38 | .36c | |||||||||||||||||
Ratio of expenses after expense reductions (%) | .37 | * | .41 | .41 | .39 | .38 | .35c | |||||||||||||||||
Ratio of net investment income (%) 2.43* | 1.54 | .64 | .92 | 1.43 | 3.44 |
a | For the six months ended January 31, 2006 (Unaudited). |
b | Total return would have been lower had certain expenses not been reduced. |
c | The ratios of operating expenses excluding costs incurred in connection with a fund complex reorganization before and after expense reductions were 0.35% and 0.35%, respectively. |
* | Annualized |
** | Not annualized |
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Notes to Financial Statements (Unaudited)
A. Significant Accounting Policies
DWS Money Funds (formerly Scudder Money Funds) (the “Trust”) 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 Trust offers three investment funds (the “Funds”). Each Fund takes its own approach to money market investing. DWS Money Market Fund (formerly Scudder Money Market Fund) emphasizes yield through a more diverse universe of investments, while DWS Government & Agency Money Fund (formerly Scudder Government and Agency Money Fund) emphasizes government securities. DWS Tax-Exempt Money Fund (formerly Scudder Tax-Exempt Money Fund) invests for income that is free from federal income taxes.
The Funds’ 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 Funds in the preparation of their 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. Each 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 market 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. Each 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 Funds paid no federal income taxes and no federal income tax provisions were required.
At July 31, 2005, the DWS Tax-Exempt Fund had a net tax basis capital loss carryforward of approximately $600 which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until July 31, 2013, the expiration date, whichever occurs first.
In addition, from November 1, 2004 through July 31, 2005, the DWS Tax-Exempt Fund incurred approximately $5,000 of net realized capital losses. As permitted by tax regulations, the Fund intends to elect to defer these losses and treat them as arising in the fiscal year ended July 31, 2006.
At July 31, 2005, the DWS Government & Agency Money Fund had a net tax basis capital loss carryforward of approximately $1,000 which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until July 31, 2012 ($25) and July 31, 2013 ($975), the respective expiration dates, whichever occurs first.
In addition, from November 1, 2004 through July 31, 2005, the DWS Government & Agency Money Fund incurred approximately $38 of net realized capital losses. As permitted by tax regulations, the Fund intends to elect to defer these losses and treat them as arising in the fiscal year ended July 31, 2006.
Distribution of Income. Net investment income of each Fund is declared as a daily dividend and is
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distributed to shareholders monthly.
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. There were no significant book-to-tax differences for the Funds.
The tax character of current year distributions will be determined at the end of the current fiscal year.
Expenses. Expenses of the Trust arising in connection with each specific Fund are allocated to that Fund. Other Trust expenses which cannot be directly attributed to a Fund are apportioned among the Funds in the Trust.
Contingencies. In the normal course of business, the Funds may enter into contracts with service providers that contain general indemnification clauses. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet been made. However, based on experience, the Funds expect the risk of loss to be remote.
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 discounts and premiums are accreted/amortized for both tax and financial reporting purposes.
B. Related Parties
Management Agreement. Under the Management Agreement, Deutsche Investment Management Americas Inc. (“DeIM” or the “Advisor”) directs the investments of the Funds in accordance with their 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 Funds. In addition to portfolio management services, the Advisor provides certain administrative services in accordance with the Management Agreement. Each Fund pays a monthly investment management fee of 1/12 of the annual rate of 0.50% of the first $215,000,000 of the Funds’ combined average daily net assets, 0.375% of the next $335,000,000 of such net assets, 0.30% of the next $250,000,000 of such net assets, 0.25% of the next $800,000,000 of such net assets, 0.24% of the next $800,000,000 of such net assets, 0.23% of the next $800,000,00 of such net assets and 0.22% of such net assets in excess of $3,200,000,000, computed and accrued daily and payable monthly.
Accordingly, for the six months ended January 31, 2006, the fee pursuant to the Management Agreement was equivalent to an annualized effective rate of the Funds’ average daily net assets as follows:
Fund | Total Aggregated | Annualized Effective Rate | ||||
DWS Money Market Fund | $ | 4,403,354 | .26 | % | ||
DWS Government & Agency Money Fund | 578,439 | .26 | % | |||
DWS Tax-Exempt Money Fund | 919,665 | .26 | % |
Effective June 13, 2005 through November 30, 2008, the Advisor has contractually agreed to waive all or a portion of their management fees and reimburse or pay certain operating expenses of the Funds to the extent necessary to maintain the operating expenses of each Fund at 0.47%, 0.45% and 0.40% of average net assets for DWS Money Market Fund, DWS Government & Agency Money Fund and DWS Tax-Exempt Money Fund, respectively (excluding certain expenses such as extraordinary expenses, taxes, brokerage, interest, trustee, and trustee counsel fees, and organizational and offering expenses).
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Service Provider Fees. DWS Scudder Investments Service Company (“DWS-SISC”), an affiliate of the Advisor, is the transfer agent, dividend-paying agent and shareholder service agent of the Trust. Pursuant to a sub-transfer agency agreement between DWS-SISC and DST Systems, Inc. (“DST”), DWS-SISC has delegated certain transfer agent and dividend-paying agent functions to DST. DWS-SISC compensates DST out of the shareholder servicing fee it receives from the Funds. For the six months ended January 31, 2006, the amounts charged to the Funds by DWS-SISC were as follows:
Fund | Total Aggregated | Unpaid at January 31, 2006 | ||||
DWS Money Market Fund | $ | 1,759,140 | $ | 816,999 | ||
DWS Government & Agency Money Fund | 185,136 | 73,586 | ||||
DWS Tax-Exempt Money Fund | 235,700 | 89,026 |
Typesetting and Filing Service Fees. Under an agreement with DeIM, the Advisor is compensated for providing typesetting and regulatory filing services to the Funds. For the six months ended January 31, 2006, the amount charged to the Funds by DeIM included in the reports to shareholders was as follows:
Fund | Total Aggregated | Unpaid at January 31, 2006 | ||||
DWS Money Market Fund | $ | 3,960 | $ | 2,240 | ||
DWS Government & Agency Money Fund | 3,960 | 2,240 | ||||
DWS Tax-Exempt Money Fund | 3,960 | 2,240 |
Trustees’ Fees and Expenses. The Trust pays each Trustee not affiliated with the Advisor retainer fees plus specified amounts for attended board and committee meetings.
C. Expense Reductions
For the six months ended January 31, 2006, the Advisor agreed to reimburse each Fund 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 in the following amounts:
Fund | Amount ($) | |
DWS Money Market Fund | 31,376 | |
DWS Government & Agency Money Fund | 6,814 | |
DWS Tax-Exempt Money Fund | 10,838 |
Each Fund has entered into arrangements with its custodian and transfer agent whereby credits realized as a result of uninvested cash balances were used to reduce a portion of each Fund’s expenses. During the six months ended January 31, 2006, no transfer agent credits were earned by the Funds. During the six months ended January 31, 2006, the Funds’ custodian fees were reduced as follows:
Fund | Custodian Credits ($) | |
DWS Money Market Fund | 1,275 | |
DWS Government & Agency Money Fund | 91 | |
DWS Tax-Exempt Money Fund | 288 |
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D. Line of Credit
The Funds and several other affiliated funds (the “Participants”) share in a $1.1 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, based upon net assets, among each of the Participants. Interest is calculated at the Federal Funds Rate plus 0.5 percent. Each Fund may borrow up to a maximum of 33 percent of its net assets under the agreement.
E. Regulatory Matters and Litigation
Market Timing Related Regulatory and Litigation Matters. 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 DWS Scudder. The DWS funds’ advisors have been cooperating in connection with these inquiries and are in discussions with the regulators concerning proposed settlements. Publicity about mutual fund practices arising from these industry-wide inquiries serves as the general basis of a number of private lawsuits against the DWS 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 DWS funds, the funds’ investment advisors and their affiliates, and certain individuals, including in some cases fund Trustees/Directors, officers, and other parties. Each DWS fund’s investment advisor has agreed to indemnify the applicable DWS 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. It is not possible to determine with certainty what the outcome of these inquiries will be or what the effect, if any, would be on the funds or their advisors.
With respect to the lawsuits, 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 DWS fund is remote and such actions are not likely to materially affect their ability to perform under their investment management agreements with the DWS funds.
With respect to the regulatory matters, Deutsche Asset Management (“DeAM”) has advised the funds as follows:
DeAM expects to reach final agreements with regulators early in 2006 regarding allegations of improper trading in the DWS funds. DeAM expects that it will reach settlement agreements with the Securities and Exchange Commission, the New York Attorney General and the Illinois Secretary of State providing for payment of disgorgement, penalties, and investor education contributions totaling approximately $134 million. Approximately $127 million of this amount would be distributed to shareholders of the affected DWS funds in accordance with a distribution plan to be developed by an independent distribution consultant. DeAM does not believe that any of the DWS funds will be named as respondents or defendants in any proceedings. The funds’ investment advisors do not believe these amounts will have a material adverse financial impact on them or materially affect their ability to perform under their investment management agreements with the DWS funds. The above-described amounts are not material to Deutsche Bank, and they have already been reserved.
Based on the settlement discussions thus far, DeAM believes that it will be able to reach a settlement with the regulators on a basis that is generally consistent with settlements reached by other advisors, taking into account the particular facts and circumstances of market timing at DeAM and at the legacy
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Scudder and Kemper organizations prior to their acquisition by DeAM in April 2002. Among the terms of the expected settled orders, DeAM would be subject to certain undertakings regarding the conduct of its business in the future, including maintaining existing management fee reductions for certain funds for a period of five years. DeAM expects that these settlements would resolve regulatory allegations that it violated certain provisions of federal and state securities laws (i) by entering into trading arrangements that permitted certain investors to engage in market timing in certain DWS funds and (ii) by failing more generally to take adequate measures to prevent market timing in the DWS funds, primarily during the 1999-2001 period. With respect to the trading arrangements, DeAM expects that the settlement documents will include allegations related to one legacy DeAM arrangement, as well as three legacy Scudder and six legacy Kemper arrangements. All of these trading arrangements originated in businesses that existed prior to the current DeAM organization, which came together in April 2002 as a result of the various mergers of the legacy Scudder, Kemper and Deutsche fund groups, and all of the arrangements were terminated prior to the start of the regulatory investigations that began in the summer of 2003. No current DeAM employee approved the trading arrangements.
There is no certainty that the final settlement documents will contain the foregoing terms and conditions. The independent Trustees/Directors of the DWS funds have carefully monitored these regulatory investigations with the assistance of independent legal counsel and independent economic consultants. Additional information announced by DeAM regarding the terms of the expected settlements will be made available at www.dws-scudder.com/regulatory_settlements, which will also disclose the terms of any final settlement agreements once they are announced.
Other Regulatory Matters. DeAM is also engaged in settlement discussions with the Enforcement Staffs of the SEC and the NASD regarding DeAM’s practices during 2001-2003 with respect to directing brokerage commissions for portfolio transactions by certain DWS funds to broker-dealers that sold shares in the DWS funds and provided enhanced marketing and distribution for shares in the DWS funds. In addition, on January 13, 2006, DWS Scudder Distributors, Inc. received a Wells notice from the Enforcement Staff of the NASD regarding DWS Scudder Distributors’ payment of non-cash compensation to associated persons of NASD member firms, as well as DWS Scudder Distributors’ procedures regarding non-cash compensation regarding entertainment provided to such associated persons. Additional information announced by DeAM regarding the terms of the expected settlements will be made available at www.dws-scudder.com/regulatory_settlements, which will also disclose the terms of any final settlement agreements once they are announced.
F. Subsequent Event
Effective February 6, 2006, Scudder Investments changed its name to DWS Scudder and Scudder funds were renamed DWS funds. The DWS Scudder name represents the alignment of Scudder with all of Deutsche Bank’s mutual fund operations around the globe. On February, 2006, the funds became part of the DWS family under the letter “D” in the mutual fund listing section of the newspapers. In addition, the Web site for all Scudder funds changed to www.dws-scudder.com.
Investment Management Agreement Approval
DWS Money Market Fund
The Board of Trustees, including the Independent Trustees, approved the renewal of your Fund’s investment management agreement (the “Agreement”) with Deutsche Investment Management Americas Inc. (“DeIM” or the “Advisor”) in September 2005. As part of its review process, the Board requested and evaluated all information it deemed reasonably necessary to evaluate the Agreement. Over
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the course of several months, the Contract Review Committee, in coordination with the Fixed-Income Oversight Committee and the Operations Committee of the Board, reviewed comprehensive materials received from the Advisor, independent third parties and independent counsel. The Board also received extensive information throughout the year regarding performance and operating results of the Fund. After their review of the information received, the Committees presented their findings and recommendations to the Independent Trustees as a group. The Independent Trustees then reviewed the Committees’ findings and recommendations and presented their recommendations to the full Board.
In connection with the contract review process, the various Committees and the Board considered the factors discussed below, among others. The Board also considered that the Advisor and its predecessors have managed the Fund since its inception, and the Board believes that a long-term relationship with a capable, conscientious advisor is in the best interests of the Fund. The Board considered, generally, that shareholders invested in the Fund, or approved the investment management agreement for the Fund, knowing that the Advisor managed the Fund and knowing the investment management fee schedule. In connection with recent and ongoing efforts by Deutsche Bank to restructure its US mutual fund business, which resulted in turnover of senior management and other personnel of the Advisor, the Board considered Deutsche Bank’s commitment that it will devote to the Advisor and its affiliates all attention and resources that are necessary to provide the Fund with top-quality investment management and shareholder, administrative and product distribution services.
Nature, Quality and Extent of Services. The Board considered the nature, extent and quality of services provided under the Agreement, including portfolio management services and administrative services. The Board considered the experience and skills of senior management and investment personnel, the resources made available to such personnel, the ability of the Advisor to attract and retain high-quality personnel, and the organizational depth and stability of the Advisor. The Board reviewed the Fund’s gross and net performance over short-term and long-term periods and compared those returns to various agreed-upon peer group performance measures, focusing, for this purpose, primarily on gross performance. The Board considered whether investment results were consistent with the Fund’s investment objective and policies. The Board also noted that it has put a process into place of identifying “Focus Funds” (e.g., funds performing poorly relative to their peer group), and receives more frequent reporting and information from the Advisor regarding such funds, along with the Advisor’s remedial plans to address underperformance. The Board believes this process is an effective manner of addressing poorly performing funds at this time.
On the basis of this evaluation and the ongoing review of investment results by the Fixed-Income Oversight Committee, the Board concluded that the nature, quality and extent of services provided by the Advisor historically have been and continue to be satisfactory, and that the Fund’s gross performance over time was satisfactory.
Fees and Expenses. The Board considered the Fund’s management fee rate, operating expenses and total expense ratio, and compared management fees to a peer group and total expenses to a broader peer universe based on information and data supplied by Lipper Inc. (“Lipper”). For purposes of this comparison, the Board relied on historical data compiled by Lipper for the peer funds and the Advisor’s estimate of current expenses for the Fund. The Board noted that the Fund adopted a revised management fee schedule with additional breakpoints in connection with the acquisition of the assets and liabilities of Scudder YieldWise Money Fund in June 2005 (the “YieldWise Merger”). The information provided to the Board showed that the Fund’s management fee rate (including the effects of the YieldWise Merger) was below the median of the peer group and that the Fund’s total expense ratio was below the median of the peer universe. The Board also considered the Fund’s management fee rate as compared to fees charged by the Advisor and certain of its affiliates for comparable mutual funds and for similarly managed institutional accounts. With respect to institutional accounts, the Board noted that (i) both the
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mix of services provided and the level of responsibility required under the Agreement were significantly greater as compared to the Advisor’s obligations for similarly managed institutional accounts; and (ii) the management fees of institutional accounts are less relevant to the Board’s consideration because they reflect significantly different competitive forces than those in the mutual fund marketplace. With respect to other comparable DWS Funds, the Board considered differences in fund and fee structures among the various legacy organizations. The Board took into account the Advisor’s commitment to cap total expenses through November 30, 2008 in connection with the YieldWise Merger.
On the basis of the information provided, the Board concluded that management fees were reasonable and appropriate in light of the nature, quality and extent of services provided by the Advisor.
Profitability. The Board reviewed detailed information regarding revenues received by the Advisor under the Agreement. The Board considered the estimated costs and pre-tax profits realized by the Advisor from advising the DWS Funds, as well as estimates of the pre-tax profits attributable to managing the Fund in particular. The Board also received information regarding the estimated enterprisewide profitability of the DWS organization with respect to all fund services in totality and by fund. The Board reviewed DeIM’s methodology in allocating its costs to the management of the Fund. Although the Board noted the inherently subjective nature of any allocation methodology, the Board received an attestation report from an accounting firm affirming that the allocation methods were consistently applied and were based upon practices commonly used in the investment management industry. Based on the information provided, the Board concluded that the pre-tax profits realized by DeIM in connection with the management of the Fund were not unreasonable.
Economies of Scale. The Board considered whether there are economies of scale with respect to the management of the Fund and whether the Fund benefits from any economies of scale. The Board considered whether the management fee schedule under the Agreement is reasonable in relation to the asset size of the Fund. The Board noted that the management fee schedule included six breakpoints, designed to share economies of scale with the shareholders. The Board concluded that the management fee schedule, together with expense caps, reflects an appropriate level of sharing of any economies of scale.
Other Benefits to DeIM and Its Affiliates. The Board also considered the character and amount of other incidental benefits received by DeIM and its affiliates, including fees received by the Advisor for administrative services provided to the Fund. The Board concluded that management fees were reasonable in light of these fallout benefits.
Regulatory Matters. The Board also considered information regarding ongoing inquiries of the Advisor regarding market timing, late trading and other matters by federal and state regulators and private lawsuits on related topics. Among other matters, the Board considered the Advisor’s commitment to indemnify the DWS Funds against regulatory actions or lawsuits arising from such inquiries. The Board also considered management’s representation that such actions will not materially impact the Advisor’s ability to perform under the Agreement or materially impact the Fund.
Based on all of the information considered and the conclusions reached, the Board (including a majority of the Independent Trustees) determined that the terms of the Agreement continue to be fair and reasonable and that the continuation of the Agreement is in the best interests of the Fund. No single factor was determinative in the Board’s analysis.
DWS Government & Agency Money Fund
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The Board of Trustees, including the Independent Trustees, approved the renewal of your Fund’s investment management agreement (the “Agreement”) with Deutsche Investment Management Americas Inc. (“DeIM” or the “Advisor”) in September 2005. As part of its review process, the Board requested and evaluated all information it deemed reasonably necessary to evaluate the Agreement. Over the course of several months, the Contract Review Committee, in coordination with the Fixed-Income Oversight Committee and the Operations Committee of the Board, reviewed comprehensive materials received from the Advisor, independent third parties and independent counsel. The Board also received extensive information throughout the year regarding performance and operating results of the Fund. After their review of the information received, the Committees presented their findings and recommendations to the Independent Trustees as a group. The Independent Trustees then reviewed the Committees’ findings and recommendations and presented their recommendations to the full Board.
In connection with the contract review process, the various Committees and the Board considered the factors discussed below, among others. The Board also considered that the Advisor and its predecessors have managed the Fund since its inception, and the Board believes that a long-term relationship with a capable, conscientious advisor is in the best interests of the Fund. The Board considered, generally, that shareholders invested in the Fund, or approved the investment management agreement for the Fund, knowing that the Advisor managed the Fund and knowing the investment management fee schedule. In connection with recent and ongoing efforts by Deutsche Bank to restructure its US mutual fund business, which resulted in turnover of senior management and other personnel of the Advisor, the Board considered Deutsche Bank’s commitment that it will devote to the Advisor and its affiliates all attention and resources that are necessary to provide the Fund with top-quality investment management and shareholder, administrative and product distribution services.
Nature, Quality and Extent of Services. The Board considered the nature, extent and quality of services provided under the Agreement, including portfolio management services and administrative services. The Board considered the experience and skills of senior management and investment personnel, the resources made available to such personnel, the ability of the Advisor to attract and retain high-quality personnel, and the organizational depth and stability of the Advisor. The Board reviewed the Fund’s gross and net performance over short-term and long-term periods and compared those returns to various agreed-upon peer group performance measures, focusing, for this purpose, primarily on gross performance. The Board considered whether investment results were consistent with the Fund’s investment objective and policies. The Board also noted that it has put a process into place of identifying “Focus Funds” (e.g., funds performing poorly relative to their peer group), and receives more frequent reporting and information from the Advisor regarding such funds, along with the Advisor’s remedial plans to address underperformance. The Board believes this process is an effective manner of addressing poorly performing funds at this time.
On the basis of this evaluation and the ongoing review of investment results by the Fixed-Income Oversight Committee, the Board concluded that the nature, quality and extent of services provided by the Advisor historically have been and continue to be satisfactory, and that the Fund’s gross performance over time was satisfactory.
Fees and Expenses. The Board considered the Fund’s management fee rate, operating expenses and total expense ratio, and compared management fees to a peer group and total expenses to a broader peer universe based on information and data supplied by Lipper Inc. (“Lipper”). For purposes of this comparison, the Board relied on historical data compiled by Lipper for the peer funds and the Advisor’s estimate of current expenses for the Fund. The Board noted that the Fund adopted a revised management fee schedule with additional breakpoints in connection with the acquisition of the assets and liabilities of Scudder YieldWise Government & Agency Money Fund in June 2005 (the “YieldWise Merger”). The information provided to the Board showed that the Fund’s management fee rate (taking the YieldWise
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Merger into account) was below the median of the peer group and that the Fund’s total expense ratio was below the median of the peer universe. The Board also considered the Fund’s management fee rate as compared to fees charged by the Advisor and certain of its affiliates for comparable mutual funds. With respect to other comparable DWS Funds, the Board considered differences in fund and fee structures among the various legacy organizations. The Board took into account the Advisor’s commitment to cap total expenses through November 30, 2008 in connection with the YieldWise Merger.
On the basis of the information provided, the Board concluded that management fees were reasonable and appropriate in light of the nature, quality and extent of services provided by the Advisor.
Profitability. The Board reviewed detailed information regarding revenues received by the Advisor under the Agreement. The Board considered the estimated costs and pre-tax profits realized by the Advisor from advising the DWS Funds, as well as estimates of the pre-tax profits attributable to managing the Fund in particular. The Board also received information regarding the estimated enterprisewide profitability of the DWS organization with respect to all fund services in totality and by fund. The Board reviewed DeIM’s methodology in allocating its costs to the management of the Fund. Although the Board noted the inherently subjective nature of any allocation methodology, the Board received an attestation report from an accounting firm affirming that the allocation methods were consistently applied and were based upon practices commonly used in the investment management industry. Based on the information provided, the Board concluded that the pre-tax profits realized by DeIM in connection with the management of the Fund were not unreasonable.
Economies of Scale. The Board considered whether there are economies of scale with respect to the management of the Fund and whether the Fund benefits from any economies of scale. The Board considered whether the management fee schedule under the Agreement is reasonable in relation to the asset size of the Fund. The Board noted that the management fee schedule included six breakpoints, designed to share economies of scale with the shareholders. The Board concluded that the management fee schedule, together with expense caps, reflects an appropriate level of sharing of any economies of scale.
Other Benefits to DeIM and Its Affiliates. The Board also considered the character and amount of other incidental benefits received by DeIM and its affiliates, including fees received by the Advisor for administrative services provided to the Fund. The Board concluded that management fees were reasonable in light of these fallout benefits.
Regulatory Matters. The Board also considered information regarding ongoing inquiries of the Advisor regarding market timing, late trading and other matters by federal and state regulators and private lawsuits on related topics. Among other matters, the Board considered the Advisor’s commitment to indemnify the DWS Funds against regulatory actions or lawsuits arising from such inquiries. The Board also considered management’s representation that such actions will not materially impact the Advisor’s ability to perform under the Agreement or materially impact the Fund.
Based on all of the information considered and the conclusions reached, the Board (including a majority of the Independent Trustees) determined that the terms of the Agreement continue to be fair and reasonable and that the continuation of the Agreement is in the best interests of the Fund. No single factor was determinative in the Board’s analysis.
DWS Tax-Exempt Money Fund
The Board of Trustees, including the Independent Trustees, approved the renewal of your Fund’s
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investment management agreement (the “Agreement”) with Deutsche Investment Management Americas Inc. (“DeIM” or the “Advisor”) in September 2005. As part of its review process, the Board requested and evaluated all information it deemed reasonably necessary to evaluate the Agreement. Over the course of several months, the Contract Review Committee, in coordination with the Fixed-Income Oversight Committee and the Operations Committee of the Board, reviewed comprehensive materials received from the Advisor, independent third parties and independent counsel. The Board also received extensive information throughout the year regarding performance and operating results of the Fund. After their review of the information received, the Committees presented their findings and recommendations to the Independent Trustees as a group. The Independent Trustees then reviewed the Committees’ findings and recommendations and presented their recommendations to the full Board.
In connection with the contract review process, the various Committees and the Board considered the factors discussed below, among others. The Board also considered that the Advisor and its predecessors have managed the Fund since its inception, and the Board believes that a long-term relationship with a capable, conscientious advisor is in the best interests of the Fund. The Board considered, generally, that shareholders invested in the Fund, or approved the investment management agreement for the Fund, knowing that the Advisor managed the Fund and knowing the investment management fee schedule. In connection with recent and ongoing efforts by Deutsche Bank to restructure its US mutual fund business, which resulted in turnover of senior management and other personnel of the Advisor, the Board considered Deutsche Bank’s commitment that it will devote to the Advisor and its affiliates all attention and resources that are necessary to provide the Fund with top-quality investment management and shareholder, administrative and product distribution services.
Nature, Quality and Extent of Services. The Board considered the nature, extent and quality of services provided under the Agreement, including portfolio management services and administrative services. The Board considered the experience and skills of senior management and investment personnel, the resources made available to such personnel, the ability of the Advisor to attract and retain high-quality personnel, and the organizational depth and stability of the Advisor. The Board reviewed the Fund’s gross and net performance over short-term and long-term periods and compared those returns to various agreed-upon peer group performance measures, focusing, for this purpose, primarily on gross performance. The Board considered whether investment results were consistent with the Fund’s investment objective and policies. The Board also noted that it has put a process into place of identifying “Focus Funds” (e.g., funds performing poorly relative to their peer group), and receives more frequent reporting and information from the Advisor regarding such funds, along with the Advisor’s remedial plans to address underperformance. The Board believes this process is an effective manner of addressing poorly performing funds at this time.
On the basis of this evaluation and the ongoing review of investment results by the Fixed-Income Oversight Committee, the Board concluded that the nature, quality and extent of services provided by the Advisor historically have been and continue to be satisfactory, and that the Fund’s gross performance over time was satisfactory.
Fees and Expenses. The Board considered the Fund’s management fee rate, operating expenses and total expense ratio, and compared management fees to a peer group and total expenses to a broader peer universe based on information and data supplied by Lipper Inc. (“Lipper”). For purposes of this comparison, the Board relied on historical data compiled by Lipper for the peer funds and the Advisor’s estimate of current expenses for the Fund. The Board noted that the Fund adopted a revised management fee schedule with additional breakpoints in connection with the acquisition of the assets and liabilities of Scudder YieldWise Municipal Money Fund in June 2005 (the “Yieldwise Merger”). The information provided to the Board showed that the Fund’s management fee rate (taking into account the effects of the YieldWise Merger) was below the median of the peer group and that the Fund’s total expense ratio was
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below the median of the peer universe. The Board also considered the Fund’s management fee rate as compared to fees charged by the Advisor and certain of its affiliates for comparable mutual funds. With respect to other comparable DWS Funds, the Board considered differences in fund and fee structures among the various legacy organizations. The Board took into account the Advisor’s commitment to cap total expenses through November 30, 2008 in connection with the YieldWise Merger.
On the basis of the information provided, the Board concluded that management fees were reasonable and appropriate in light of the nature, quality and extent of services provided by the Advisor.
Profitability. The Board reviewed detailed information regarding revenues received by the Advisor under the Agreement. The Board considered the estimated costs and pre-tax profits realized by the Advisor from advising the DWS Funds, as well as estimates of the pre-tax profits attributable to managing the Fund in particular. The Board also received information regarding the estimated enterprisewide profitability of the DWS organization with respect to all fund services in totality and by fund. The Board reviewed DeIM’s methodology in allocating its costs to the management of the Fund. Although the Board noted the inherently subjective nature of any allocation methodology, the Board received an attestation report from an accounting firm affirming that the allocation methods were consistently applied and were based upon practices commonly used in the investment management industry. Based on the information provided, the Board concluded that the pre-tax profits realized by DeIM in connection with the management of the Fund were not unreasonable.
Economies of Scale. The Board considered whether there are economies of scale with respect to the management of the Fund and whether the Fund benefits from any economies of scale. The Board considered whether the management fee schedule under the Agreement is reasonable in relation to the asset size of the Fund. The Board noted that the management fee schedule included six breakpoints, designed to share economies of scale with the shareholders. The Board concluded that the management fee schedule, together with expense caps, reflects an appropriate level of sharing of any economies of scale.
Other Benefits to DeIM and Its Affiliates. The Board also considered the character and amount of other incidental benefits received by DeIM and its affiliates, including fees received by the Advisor for administrative services provided to the Fund. The Board concluded that management fees were reasonable in light of these fallout benefits.
Regulatory Matters. The Board also considered information regarding ongoing inquiries of the Advisor regarding market timing, late trading and other matters by federal and state regulators and private lawsuits on related topics. Among other matters, the Board considered the Advisor’s commitment to indemnify the DWS Funds against regulatory actions or lawsuits arising from such inquiries. The Board also considered management’s representation that such actions will not materially impact the Advisor’s ability to perform under the Agreement or materially impact the Fund.
Based on all of the information considered and the conclusions reached, the Board (including a majority of the Independent Trustees) determined that the terms of the Agreement continue to be fair and reasonable and that the continuation of the Agreement is in the best interests of the Fund. No single factor was determinative in the Board’s analysis.
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Automated Information Lines | InvestorACCESS (800) 972-3060 | |
Personalized account information, information on other DWS funds and services via touchtone telephone and for Classes A, B, and C only, the ability to exchange or redeem shares. | ||
Web Site | www.dws-scudder.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 DWS funds, subscription to fund updates by e-mail, retirement planning information, and more. | ||
For More Information | (800) 621-1048
To speak with a DWS Scudder service representative. | |
Written Correspondence | DWS Scudder PO Box 219356 Kansas City, MO 64121-9356 | |
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 site — www.dws-scudder.com (click on “proxy voting” at the bottom of the page) — 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 us toll free at 1-800-621-1048. | |
Principal Underwriter | If you have questions, comments or complaints, contact:
DWS Scudder Distributors, Inc. 222 South Riverside Plaza Chicago, IL 60606-5808 (800) 621-1148 |
DWS Money | DWS Government & Agency Money Fund | DWS Tax-Exempt | ||||
Nasdaq Symbol | KMMXX | KEGXX | KXMXX | |||
CUSIP Number | 23339A 101 | 23339A 200 | 23339A 309 | |||
Fund Number | 6 | 11 | 29 |
This privacy statement is issued by DWS Scudder Distributors, Inc., Deutsche Investment Management Americas, Inc., Deutsche Asset Management, Inc., Investment Company Capital Corporation, DeAM Investor Services, Inc., DWS Trust Company and the DWS 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
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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 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.
Questions on this policy may be sent to:
DWS Scudder
Attention: Correspondence — Chicago
P.O. Box 219415
Kansas City, MO 64121-9415
February 2006
Notes
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CASH ACCOUNT TRUST
PART C – OTHER INFORMATION
Item 15. | Indemnification. |
Article VIII of the Registrant’s Amended and Restated Agreement and Declaration of Trust (Exhibit (1)(a) hereto, which is incorporated herein by reference) provides in effect that the Registrant will indemnify its officers and trustees under certain circumstances. However, in accordance with Section 17(h) and 17(i) of the Investment Company Act of 1940 and its own terms, said Article of the Amended and Restated Declaration of Trust does not protect any person against any liability to the Registrant or its shareholders to which such Trustee would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his or her office.
Each of the trustees who is not an “interested person” (as defined under the Investment Company Act of 1940) of Registrant (a “Non-interested Trustee”) has entered into an indemnification agreement with Registrant, which agreement provides that the Registrant shall indemnify the Non-interested Trustee against certain liabilities which such Trustee may incur while acting in the capacity as a trustee, officer or employee of the Registrant to the fullest extent permitted by law, now or in the future, and requires indemnification and advancement of expenses unless prohibited by law. The indemnification agreement cannot be altered without the consent of the Non-interested Trustee and is not affected by amendment of the Amended and Restated Agreement and Declaration of Trust. In addition, the indemnification agreement adopts certain presumptions and procedures which may make the process of indemnification and advancement of expenses more timely, efficient and certain. In accordance with Section 17(h) of the Investment Company Act of 1940, the indemnification agreement does not protect a Non-interested Trustee against any liability to the Registrant or its shareholders to which such Trustee would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his or her office.
The Registrant has purchased insurance policies insuring its officers and trustees against certain liabilities which such officers and trustees may incur while acting in such capacities and providing reimbursement to the Registrant for sums which it may be permitted or required to pay to its officers and trustees by way of indemnification against such liabilities, subject to certain deductibles.
On April 5, 2002, Zurich Scudder Investments, Inc. (“Scudder”), the investment adviser, now known as Deutsche Investment Management Americas Inc. (“DeIM”), was acquired by Deutsche Bank AG, not including certain U.K. Operations (the “Transaction”). In connection with the Trustees’ evaluation of the Transaction, Deutsche Bank agreed to indemnify, defend and hold harmless Registrant and the trustees who were not “interested persons” of Scudder, Deutsche Bank or Registrant (the “Independent Trustees”) for and against any liability and claims and expenses based upon or arising from, whether in whole or in part, or directly or indirectly, any untrue statement or alleged untrue statement of a material fact made to the Independent Trustees by Deutsche Bank in connection with the Independent Trustees’ consideration of the Transaction, or any omission or alleged omission of a material fact necessary in order to make statements made, in light of the circumstances under which they were made, not misleading.
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DeIM, the investment advisor, has agreed, subject to applicable law and regulation, to indemnify and hold harmless the Registrant against any loss, damage, liability and expense, including, without limitation, the advancement and payment, as incurred, of reasonable fees and expenses of counsel (including counsel to the Registrant and counsel to the Non-interested Trustees) and consultants, whether retained by the Registrant or the Non-interested Trustees, and other customary costs and expenses incurred by the Registrant in connection with any litigation or regulatory action related to possible improper market timing or other improper trading activity or possible improper marketing and sales activity in the Registrant (“Private Litigation and Enforcement Actions”). In the event that this indemnification is unavailable to the Registrant for any reason, then DeIM has agreed to contribute to the amount paid or payable by the Registrant as a result of any loss, damage, liability or expense in such proportion as is appropriate to reflect the relative fault of DeIM and the Registrant with respect to the matters which resulted in such loss, damage, liability or expense, as well as any other relevant equitable considerations; provided; however, if no final determination is made in such action or proceeding as to the relative fault of DeIM and the Registrant, then DeIM shall pay the entire amount of such loss, damage, liability or expense.
In recognition of its undertaking to indemnify the Registrant, DeIM has also agreed, subject to applicable law and regulation, to indemnify and hold harmless each of the Non-interested Trustees against any and all loss, damage, liability and expense, including without limitation the advancement and payment as incurred of reasonable fees and expenses of counsel and consultants, and other customary costs and expenses incurred by the Non-interested Trustees, arising from the Private Litigation and Enforcement, including without limitation:
1. | all reasonable legal and other expenses incurred by the Non-interested Trustees in connection with the Private Litigation and Enforcement Actions, and any actions that may be threatened or commenced in the future by any person (including any governmental authority), arising from or similar to the matters alleged in the Private Litigation and Enforcement Actions, including without limitation expenses related to the defense of, service as a witness in, or monitoring of such proceedings or actions; |
2. | all liabilities and expenses incurred by any Non-interested Trustee in connection with any judgment resulting from, or settlement of, any such proceeding, action or matter; |
3. | any loss or expense incurred by any Non-interested Trustee as a result of the denial of, or dispute about, any insurance claim under, or actual or purported rescission or termination of, any policy of insurance arranged by DeIM (or by a representative of DeIM acting as such, acting as a representative of the Registrant or of the Non-interested Trustee or acting otherwise) for the benefit of the Non-interested Trustee, to the extent that such denial, dispute or rescission is based in whole or in part upon any alleged misrepresentation made in the application for such policy or any other alleged improper conduct on the part of DeIM, any of its corporate affiliates, or any of their directors, officers or employees; |
4. | any loss or expense incurred by any Non-interested Trustee, whether or not such loss or expense is otherwise covered under the terms of a policy of insurance, but for which the Non-interested Trustee is unable to obtain advancement of expenses or indemnification under that policy of insurance, due to the exhaustion of policy limits which is due in whole or in part to DeIM or any affiliates thereof having received advancement of expenses or indemnification under that policy for or with respect to a matter which is the subject of the indemnification agreement; provided, however, the total amount which DeIM will be obligated to pay under this provision for all loss or expense, will not exceed the amount that DeIM and any of its affiliate actually receive under that policy or insurance for or with respect to a matter which is the subject of the indemnification agreement; and |
5. | all liabilities and expenses incurred by any Non-interested Trustee in connection with any proceeding or action to enforce his or her rights under the agreement, unless DeIM prevails on the merits of any such dispute in a final, nonappealable court order. |
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DeIM is not required to pay costs or expenses or provide indemnification to or for any individual Non-interested Trustee (i) with respect to any particular proceeding or action as to which the Board of the Registrant has determined that such Non-interested Trustee ultimately will not be entitled to indemnification with respect thereto, or (ii) for any liability of the Non-interested Trustee to the Registrant or its shareholders to which such Non-interested Trustee would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the Non-interested Trustee’s duties as a Trustee of the Registrant as determined in a final adjudication in such proceeding or action. In addition, to the extent that DeIM has paid costs or expenses under the agreement to any individual Non-interested Trustee with respect to a particular proceeding or action, and there is a final adjudication in such proceeding or action of the Non-interested Trustee’s liability to the Registrant or its shareholders by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the Non-interested Trustee’s duties as a Trustee of the Registrant, such Non-interested Trustee has undertaken to repay such costs or expenses to DeIM.
Item 16. | Exhibits. |
Exhibit 1 | (a) | Amended and Restated Agreement and Declaration of Trust. (Incorporated by reference to Post-Effective Amendment No. 5 to Registrant’s Registration Statement on Form N-1A.) | ||
(b) | Establishment and Designation of Classes of Shares of Beneficial Interest, $0.01 par value, with respect to Money Market Portfolio Retail, Premier, Institutional, and Service Shares. (Incorporated by reference to Post-Effective Amendment No. 10 to Registrant’s Registration Statement on Form N-1A.) | |||
(c) | Establishment and Designation of Classes of Shares of Beneficial Interest, $0.01 par value, with respect to Tax-Exempt Portfolio Scudder Managed and Scudder Institutional Shares. (Incorporated by reference to Post-Effective Amendment No. 17 to Registrant’s Registration Statement on Form N-1A.) | |||
(d) | Re-designation of Classes of Shares of Beneficial Interest and Establishment and Designation of Additional Class of Shares of Beneficial Interest, $0.01 par value, with respect to the Premier Money Market Shares, Institutional Money Market Shares and Premium Reserve Money Market Shares within the Money Market Portfolio, dated November 11, 1999. (Incorporated by reference to Post-Effective Amendment No. 18 to Registrant’s Registration Statement on Form N-1A.) | |||
(e) | Establishment and Designation of Classes of Shares of Beneficial Interest, $0.01 par value, with respect to the Premier Money Market Shares and Service Shares within the Government Securities Portfolio. (Incorporated by reference to Post-Effective Amendment No. 18 to Registrant’s Registration Statement on Form N-1A.) | |||
(f) | Amended and Restated Establishment and Designation of Additional Class of Shares of Beneficial Interest, $0.01 par value, with respect to the Premier Money Market Shares within the Tax-Exempt Portfolio. (Incorporated by reference to Post-Effective Amendment No. 18 to Registrant’s Registration Statement on Form N-1A.) | |||
(g) | Amended and Restated Establishment and Designation of Additional Class of Shares of Beneficial Interest, $0.01 par value, with respect to Institutional Select Money Market Shares within the Money Market Portfolio. (Incorporated by reference to Post-Effective Amendment No. 24 to Registrant’s Registration Statement on Form N-1A.) |
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(h) | Amended and Restated Establishment and Designation of Classes of Shares of Beneficial Interest, with respect to Davidson Cash Equivalent Shares - Money Market and Davidson Cash Equivalent Plus Shares - Money Market within the Money Market Portfolio. (Incorporated by reference to Post-Effective Amendment No. 30 to Registrant’s Registration Statement on Form N-1A.) | |||
(i) | Amended and Restated Establishment and Designation of Classes of Shares of Beneficial Interest, with respect to Davidson Cash Equivalent Shares - Government & Agency and Davidson Cash Equivalent Plus Shares - Government & Agency within the Government & Agency Securities Portfolio. (Incorporated by reference to Post-Effective Amendment No. 30 to Registrant’s Registration Statement on Form N-1A.) | |||
(j) | Amended and Restated Establishment and Designation of Classes of Shares of Beneficial Interest, with respect to Davidson Cash Equivalent Shares - Tax Exempt within the Tax-Exempt Portfolio. (Incorporated by reference to Post-Effective Amendment No. 30 to Registrant’s Registration Statement on Form N-1A.) | |||
(k) | Amended and Restated Establishment and Designation of Additional Class of Shares of Beneficial Interest, $0.01 par value, with respect to Capital Assets Funds Shares and Capital Assets Funds Preferred Shares within the Money Market Portfolio. (Incorporated by reference to Post-Effective Amendment No. 33 to Registrant’s Registration Statement on Form N-1A.) | |||
(l) | Amended and Restated Establishment and Designation of Additional Class of Shares of Beneficial Interest, $0.01 par value with respect to Capital Assets Funds Shares within the Government & Agency Securities Portfolio. (Incorporated by reference to Post-Effective Amendment No. 33 to Registrant’s Registration Statement on Form N-1A.) | |||
(m) | Amended and Restated Establishment and Designation of Additional Class of Shares of Beneficial Interest, $0.01 par value, with respect to Capital Assets Funds Shares and Service Shares II within Tax-Exempt Portfolio. (Incorporated by reference to Post-Effective Amendment No. 33 to Registrant’s Registration Statement on Form N-1A.) | |||
(n) | Amended and Restated Establishment and Designation of Classes of Shares of Beneficial Interest with respect to DWS Tax-Free Money Fund Class S, DWS Tax-Exempt Money Fund and Tax-Free Investment Class within the Tax-Exempt Portfolio. (To be Filed by Amendment). | |||
(o) | Amended and Restated Establishment and Designation of Classes of Shares of Beneficial Interest with respect to DWS Government & Agency Money Fund, DWS Government Cash Institutional Shares and Government Cash Managed Shares within the Government & Agency Securities Portfolio. (To be Filed by Amendment). | |||
Exhibit 2 | (a) | By-Laws. (Incorporated by reference to Post-Effective Amendment No. 5 to Registrant’s Registration Statement on Form N-1A.) | ||
(b) | Amendment to By-Laws dated November 29, 2000. (Incorporated by reference to Post-Effective Amendment No. 22 to Registrant’s Registration Statement on Form N-1A.) |
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(c) | Amendment to By-Laws dated November 19, 2003. (Incorporated by reference to Post-Effective Amendment No. 33 to Registrant’s Registration Statement on Form N-1A.) | |||
(d) | Amendment to By-Laws effective September 24, 2004. (Incorporated by reference to Post-Effective Amendment No. 33 to Registrant’s Registration Statement on Form N-1A.) | |||
(e) | Amendment to By-Laws effective __________. (To be filed by Amendment.) | |||
Exhibit 3 | Not Applicable. | |||
Exhibit 4 | Form of Agreement and Plan of Reorganization filed here in as Exhibit A to Part A of this Registration Statement on Form N-14. | |||
Exhibit 5 | See Exhibit 1 and Exhibit 10 | |||
Exhibit 6 | (a) | Investment Management Agreement between the Registrant and Deutsche Investment Management Americas Inc. dated April 5, 2002. (Incorporated by reference to Post-Effective Amendment No. 23 to the Registrant’s Registration Statement on Form N-1A.) | ||
(b) | First Amendment to Investment Management Agreement between the Registrant and Deutsche Investment Management Americas Inc. dated March 19, 2003. (Incorporated by reference to Post-Effective Amendment No. 26 to the Registrant’s Registration Statement on Form N-1A.) | |||
(c) | Investment Management Agreement between the Registrant, on behalf of Money Market Portfolio, Government & Agency Securities Portfolio and Tax-Exempt Portfolio and Deutsche Investment Management Americas Inc. dated _______, 2006. (To be Filed by Amendment). | |||
Exhibit 7 | (a) | Underwriting and Distribution Services Agreement between the Registrant and Scudder Distributors, Inc., dated April 5, 2002. (Incorporated by reference to Post Effective Amendment No. 23 to Registrant’s Registration Statement on Form N-1A.) | ||
(b) | Underwriting and Distribution Services Agreement between the Registrant and DWS Scudder Distributors, Inc., dated ____, 2006. (To be filed by Amendment) | |||
Exhibit 8 | Not Applicable. | |||
Exhibit 9 | (a) | Custodian Agreement between the Registrant and State Street Bank and Trust Company dated April 19, 1999. (Incorporated by reference to Post-Effective Amendment No. 13 to Registration’s Registration Statement on Form N-1A.) | ||
(b) | Amendment to Custodian Agreement between the Registrant and State Street Bank and Trust Company dated January 5, 2001. (Incorporated by reference to Post-Effective Amendment No. 22 to the Registrant’s Registration Statement on Form N-1A.) | |||
Exhibit 10 | (a) | Amended and Restated 12b-1 Plan between the Registrant, on behalf of Tax-Exempt Portfolio, and Kemper Distributors, Inc., dated August 1, 1998. (Incorporated by reference to Post-Effective Amendment No. 9 to the Registrant’s Registration Statement on Form N-1A.) |
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(b) | Amended and Restated 12b-1 Plan between the Registrant, on behalf of Government Securities Portfolio, and Kemper Distributors, Inc., dated August 1, 1998. (Incorporated by reference to Post-Effective Amendment No. 9 to the Registrant’s Registration Statement on Form N-1A.) | |||
(c) | Amended and Restated 12b-1 Plan between the Registrant, on behalf of Money Market Portfolio, and Kemper Distributors, Inc., dated August 1, 1998. (Incorporated by reference to Post-Effective Amendment No. 9 to the Registrant’s Registration Statement on Form N-1A.) | |||
(d) | 12b-1 Plan between the Registrant, on behalf of the Money Market Portfolio — Premier Money Market Shares, dated November 16, 1999. (Incorporated by reference to Post-Effective Amendment No. 18 to the Registrant’s Registration Statement on Form N-1A.) | |||
(e) | 12b-1 Plan between the Registrant, on behalf of the Government Securities Portfolio — Premier Money Market Shares, dated November 16, 1999. (Incorporated by reference to Post-Effective Amendment No. 18 to the Registrant’s Registration Statement on Form N-1A.) | |||
(f) | 12b-1 Plan between the Registrant, on behalf of the Tax-Exempt Portfolio — Premier Money Market Shares, dated November 16, 1999. (Incorporated by reference to Post-Effective Amendment No. 18 to the Registrant’s Registration Statement on Form N-1A.) | |||
(g) | Amended and Restated 12b-1 Plan between the Registrant, on behalf of the Money Market Portfolio — Service Shares, dated November 16, 1999. (Incorporated by reference to Post-Effective Amendment No. 23 to the Registrant’s Registration Statement on Form N-1A.) | |||
(h) | Amended and Restated 12b-1 Plan between the Registrant, on behalf of the Tax-Exempt Portfolio — Service Shares, dated November 16, 1999. (Incorporated by reference to Post-Effective Amendment No. 23 to the Registrant’s Registration Statement on Form N-1A.) | |||
(i) | 12b-1 Plan between the Registrant, on behalf of the Money Market Portfolio — Institutional Money Market Shares, dated July 1, 2001. (Incorporated by reference to Post-Effective Amendment No. 22 to the Registrant’s Registration Statement on Form N-1A.) | |||
(j) | 12b-1 Plan between the Registrant, on behalf of the Money Market Portfolio — Premium Reserve Money Market Shares, dated July 1, 2001. (Incorporated by reference to Post-Effective Amendment No. 22 to the Registrant’s Registration Statement on Form N-1A.) | |||
(k) | 12b-1 Plan between the Registrant, on behalf of the Tax-Exempt Portfolio — Tax-Exempt Cash Managed Shares, dated July 1, 2001. (Incorporated by reference to Post-Effective Amendment No. 22 to the Registrant’s Registration Statement on Form N-1A.) | |||
(l) | 12b-1 Plan between the Registrant, on behalf of the Money Market Portfolio — Davidson Cash Equivalent Shares, dated September 27, 2004. (Incorporated by reference to Post-Effective Amendment No. 30 to the Registrant’s Registration Statement on Form N-1A.) |
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(m) | 12b-1 Plan between the Registrant, on behalf of the Government & Agency Securities Portfolio — Davidson Cash Equivalent Shares, dated September 27, 2004. (Incorporated by reference to Post-Effective Amendment No. 30 to the Registrant’s Registration Statement on Form N-1A.) | |||
(n) | 12b-1 Plan between the Registrant, on behalf of the Tax-Exempt Portfolio — Davidson Cash Equivalent Shares, dated September 27, 2004. (Incorporated by reference to Post-Effective Amendment No. 30 to the Registrant’s Registration Statement on Form N-1A.) | |||
(o) | 12b-1 Plan between the Registrant, on behalf of the Money Market Portfolio — Davidson Cash Equivalent Plus Shares, dated September 27, 2004. (Incorporated by reference to Post-Effective Amendment No. 30 to the Registrant’s Registration Statement on Form N-1A.) | |||
(p) | 12b-1 Plan between the Registrant, on behalf of the Government & Agency Securities Portfolio — Davidson Cash Equivalent Plus Shares, dated September 27, 2004. (Incorporated by reference to Post-Effective Amendment No. 30 to the Registrant’s Registration Statement on Form N-1A.) | |||
(q) | 12b-1 Plan between the Registrant, on behalf of Money Market Portfolio — Capital Assets Funds Shares, dated May 12, 2005. (Incorporated by reference to Post-Effective Amendment No. 33 to the Registrant’s Registration Statement on Form N-1A.) | |||
(r) | 12b-1 Plan between the Registrant, on behalf of Government & Agency Securities Portfolio — Capital Assets Funds Shares, dated May 12, 2005. (Incorporated by reference to Post-Effective Amendment No. 33 to the Registrant’s Registration Statement on Form N-1A.) | |||
(s) | 12b-1 Plan between the Registrant, on behalf of Tax-Exempt Portfolio — Capital Assets Funds Shares, dated May 12, 2005. (Incorporated by reference to Post-Effective Amendment No. 33 to the Registrant’s Registration Statement on Form N-1A.) | |||
(t) | 12b-1 Plan between the Registrant, on behalf of Tax-Exempt Portfolio — Service II Shares, dated May 12, 2005. (Incorporated by reference to Post-Effective Amendment No. 33 to the Registrant’s Registration Statement on Form N-1A.) | |||
(u) | 12b-1 Plan between the Registrant on behalf of Money Market Portfolio — Capital Assets Funds Preferred Shares dated May 12, 2005. (Incorporated by reference to Post-Effective Amendment No. 33 to the Registrant’s Registration Statement on Form N-1A.) | |||
(v) | 12b-1 Plan between the Registrant, on behalf of Tax-Exempt Portfolio — Tax-Free Investment Class Shares dated ______, 2006. (To be Filed by Amendment). | |||
(w) | 12b-1 Plan between the Registrant, on behalf of Government & Agency Portfolio — Government Cash Managed Shares dated _______, 2006. (To Be Filed by Amendment). |
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(x) | Amended and Restated Multi-Distribution System Plan — Rule 18f-3 Plan, on behalf of the Money Market Series, dated November 17, 1998. (Incorporated by reference to Post-Effective Amendment No. 10 to the Registrant’s Registration Statement on Form N-1A.) | |||
(y) | Amended and Restated Multi-Distribution System Plan — Rule 18f-3 Plan, on behalf of the Tax-Exempt Portfolio, dated September 28, 1999. (Incorporated by reference to Post-Effective Amendment No. 15 to the Registrant’s Registration Statement on Form N-1A.) | |||
(z) | Amended and Restated Multi-Distribution System Plan — Rule 18f-3 Plan, on behalf of the Money Market Portfolio, dated November 16, 1999. (Incorporated by reference to Post-Effective Amendment No. 18 to the Registrant’s Registration Statement on Form N-1A.) | |||
(aa) | Amended and Restated Multi-Distribution System Plan — Rule 18f-3 Plan, on behalf of the Government Securities Portfolio, dated November 16, 1999. (Incorporated by reference to Post-Effective Amendment No. 18 to the Registrant’s Registration Statement on Form N-1A.) | |||
(bb) | Amended and Restated Multi-Distribution System Plan — Rule 18f-3 Plan, on behalf of the Tax-Exempt Portfolio, dated November 16, 1999. (Incorporated by reference to Post-Effective Amendment No. 18 to the Registrant’s Registration Statement on Form N-1A.) | |||
(cc) | Amended and Restated Multi-Distribution System Plan — Rule 18f-3 Plan, on behalf of the Money Market Portfolio, dated July 1, 2001. (Incorporated by reference to Post-Effective Amendment No. 23 to the Registrant’s Registration Statement on Form N-1A.) | |||
(dd) | Amended and Restated Multi-Distribution System Plan — Rule 18f-3 Plan, on behalf of the Tax-Exempt Portfolio, dated July 1, 2001. (Incorporated by reference to Post-Effective Amendment No. 23 to the Registrant’s Registration Statement on Form N-1A.) | |||
(ee) | Amended and Restated Multi-Distribution System Plan — Rule 18f-3 Plan, on behalf of the Money Market Portfolio, dated December 1, 2002. (Incorporated by reference to Post-Effective Amendment No. 24 to the Registrant’s Registration Statement on Form N-1A.) | |||
(ff) | Amended and Restated Multi-Distribution System Plan — Rule 18f-3 Plan, on behalf of the Government & Agency Securities Portfolio, dated September 27, 2004. (Incorporated by reference to Post-Effective Amendment No. 30 to the Registrant’s Registration Statement on Form N-1A.) | |||
(gg) | Amended and Restated Multi-Distribution System Plan — Rule 18f-3 Plan, on behalf of the Tax-Exempt Portfolio, dated September 27, 2004. (Incorporated by reference to Post-Effective Amendment No. 30 to the Registrant’s Registration Statement on Form N-1A.) | |||
(hh) | Amended and Restated Multi-Distribution System Plan — Rule 18f-3 Plan, on behalf of the Money Market Portfolio, dated September 27, 2004. (Incorporated by reference to Post-Effective Amendment No. 30 to the Registrant’s Registration Statement on Form N-1A.) |
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(ii) | Amended and Restated Multi-Distribution System Plan — Rule 18f-3 Plan, on behalf of the Money Market Portfolio, dated May 12, 2005. (Incorporated by reference to Post-Effective Amendment No. 33 to the Registrant’s Registration Statement on Form N-1A.) | |||
(jj) | Amended and Restated Multi-Distribution System Plan — Rule 18f-3 Plan, on behalf of the Government & Agency Securities Portfolio, dated May 12, 2005. (Incorporated by reference to Post-Effective Amendment No. 33 to the Registrant’s Registration Statement on Form N-1A.) | |||
(kk) | Amended and Restated Multi-Distribution System Plan — Rule 18f-3 Plan, on behalf of the Tax-Exempt Portfolio, dated May 12, 2005. (Incorporated by reference to Post-Effective Amendment No. 33 to the Registrant’s Registration Statement on Form N-1A.) | |||
(ll) | Amended and Restated Multi-Distribution System Plan — Rule 18f-3 Plan, on behalf of Tax-Exempt Portfolio, dated _______, 2006. (To be Filed by Amendment). | |||
(mm) | Amended and Restated Multi-Distribution System Plan — Rule 18f-3 Plan, on behalf of Government & Agency Securities Portfolio, dated _______, 2006. (To be Filed by Amendment). | |||
Exhibit 11 | Opinion and Consent of Vedder, Price, Kaufman & Kammholz, P.C., to be filed by amendment. | |||
Exhibit 12 | Form of Tax Opinion and Consent of Willkie Farr & Gallagher LLP to be filed by amendment. | |||
Exhibit 13 | (a) | Agency Agreement between the Registrant and Kemper Service Company, dated September 6, 1990. (Incorporated by reference to Post-Effective Amendment No. 5 to Registrant’s Registration Statement on Form N-1A.) | ||
(b) | Supplement, dated April 1, 1995, to Agency Agreement between the Registrant and Kemper Service Company. (Incorporated by reference to Post-Effective Amendment No. 6 to Registrant’s Registration Statement on Form N-1A.) | |||
(c) | Fund Accounting Services Agreement between the Registrant, on behalf of its series Money Market Postfolio, and Scudder Fund Accounting Corporation dated December 31, 1997. (Incorporated by reference to Post-Effective Amendment No. 8 to Registrant’s Registration Statement on Form N-1A.) | |||
(d) | Fund Accounting Services Agreement between the Registrant, on behalf of its series Government Securities Portfolio, and Scudder Fund Accounting Corporation dated December 31, 1997. (Incorporated by reference to Post-Effective Amendment No. 8 to Registrant’s Registration Statement on Form N-1A.) | |||
(e) | Fund Accounting Services Agreement between the Registrant, on behalf of its series Tax-Exempt Portfolio, and Scudder Fund Accounting Corporation, dated December 31, 1997. (Incorporated by reference to Post-Effective Amendment No. 8 to Registrant’s Registration Statement on Form N-1A.) | |||
(f) | First Amendment to Fund Accounting Services Agreements dated March 19, 2003. (Incorporated by reference to Post-Effective Amendment No. 26 to the Registrant’s Registration Statement on Form N-1A.) |
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(g) | Form of Administration, Shareholder Services and Distribution Agreement dated July 1998 between the Registrant, and Kemper Distributors, Inc. (Incorporated by reference to Post-Effective Amendment No. 8 to Registrant’s Registration Statement on Form N-1A.) | |||
(h) | Administration and Shareholder Services Agreement between the Registrant, on behalf of Money Market Portfolio — Retail Shares, and Kemper Distributors, Inc., dated January 15, 1999. (Incorporated by reference to Post-Effective Amendment No. 10 to Registrant’s Registration Statement on Form N-1A.) | |||
(i) | Administration and Shareholder Services Agreement between the Registrant, on behalf of Money Market Portfolio — Premier Shares, and Kemper Distributors, Inc., dated January 15, 1999. (Incorporated by reference to Post-Effective Amendment No. 10 to Registrant’s Registration Statement on Form N-1A.) | |||
(j) | Administration and Shareholder Services Agreement between the Registrant, on behalf of Money Market Portfolio — Institutional Shares, and Kemper Distributors, Inc., dated January 15, 1999. (Incorporated by reference to Post-Effective Amendment No. 10 to Registrant’s Registration Statement on Form N-1A.) | |||
(k) | Form of Administration and Shareholder Services Agreement between the Registrant, on behalf of the Tax-Exempt Portfolio Cash Managed Shares, and Kemper Distributors, Inc., dated September 1999. (Incorporated by reference to Post-Effective Amendment No. 16 to Registrant’s Registration Statement on Form N-1A.) | |||
(l) | Administration and Shareholder Services Agreement between the Registrant, on behalf of the Money Market Portfolio — Premier Money Market Shares, and Kemper Distributors, Inc., dated November 30, 1999. (Incorporated by reference to Post-Effective Amendment No. 18 to Registrant’s Registration Statement on Form N-1A.) | |||
(m) | Administration and Shareholder Services Agreement between the Registrant, on behalf of the Government Securities Portfolio — Premier Money Market Shares, and Kemper Distributors, Inc, dated November 30, 1999. (Incorporated by reference to Post-Effective Amendment No. 18 to Registrant’s Registration Statement on Form N-1A.) | |||
(n) | Administration and Shareholder Services Agreement between the Registrant, on behalf of the Tax-Exempt Portfolio — Premier Money Market Shares, and Kemper Distributors, Inc, dated November 30, 1999. (Incorporated by reference to Post-Effective Amendment No. 18 to Registrant’s Registration Statement on Form N-1A.) | |||
(o) | Shareholder Services Agreement between the Registrant, on behalf of Premium Reserve Money Market Shares and Institutional Money Market Shares of Money Market Portfolio and Tax-Exempt Cash Managed Shares of Tax-Exempt Portfolio, and Scudder Distributors, Inc., dated July 1, 2001. (Incorporated by reference to Post-Effective Amendment No. 22 to Registrant’s Registration Statement on Form N-1A.) | |||
(p) | Administration and Shareholder Services Agreement between the Registrant, on behalf of the Tax-Exempt Portfolio — Tax-Free Investment Class and DWS Scudder Distributors, Inc. dated ______, 2006. (To be Filed by Amendment). |
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(q) | Shareholder Services Agreement between the Registrant, on behalf of Government & Agency Portfolio — Government Cash Managed Shares and DWS Scudder Distributors, Inc. dated ______, 2006. (To be Filed by Amendment). | |||
(r) | Letters of Indemnity to the Scudder Funds dated September 10, 2004; and Letter of Indemnity to the Independent Directors/Trustees dated September 10, 2004. (Incorporated by reference to Post-Effective Amendment No. 35 to the Registrant’s Registration Statement on Form N-1A.) | |||
Exhibit 14 | Consents of Ernst & Young LLP, to be filed by amendment. | |||
Exhibit 15 | Not applicable. | |||
Exhibit 16 | Powers of Attorney, filed herein | |||
Exhibit 17 | Forms of Proxy are filed herein and appear in Part A of this Registration Statement. |
Item 17. | Undertakings. |
(1) The undersigned registrant agrees that prior to any public reoffering of the securities registered through the use of a prospectus which is a part of this registration statement by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c) of the Securities Act, the reoffering prospectus will contain the information called for by the applicable registration form for reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form.
(2) The undersigned registrant agrees that every prospectus that is filed under paragraph (1) above will be filed as a part of an amendment to the registration statement and will not be used until the amendment is effective, and that, in determining any liability under the 1933 Act, each post-effective amendment shall be deemed to be a new registration statement for the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering of them.
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SIGNATURES
As required by the Securities Act of 1933, this Registration Statement has been signed on behalf of the registrant, in the City of New York, and State of New York, on the 28TH day of July, 2006.
CASH ACCOUNT TRUST | ||
By: | /s/ Michael Clark | |
Michael Clark | ||
Chief Executive Officer |
As required by the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities on the 28TH day of July, 2006.
/s/ Michael Clark Michael Clark | Chief Executive Officer | |||
/s/ Paul Schubert Paul Schubert | Chief Financial Officer and Principal Accounting Officer | |||
Shirley D. Peterson* Shirley D. Peterson | Chairperson and Director | |||
John W. Ballantine* John W. Ballantine | Director | |||
Donald L. Dunaway* Donald L. Dunaway | Director | |||
James R. Edgar* James R. Edgar | Director | |||
Paul K. Freeman* Paul K. Freeman | Director | |||
Robert B. Hoffman* Robert B. Hoffman | Director | |||
William McClayton* William McClayton | Director | |||
Robert H. Wadsworth* Robert H. Wadsworth | Director |
*By | /s/ John Millette | |
John Millette** |
** | Attorney-in-fact pursuant to the powers of attorney filed herein. |
Table of Contents
INDEX OF EXHIBITS
EXHIBIT NUMBER | EXHIBIT TITLE | |
16 | Powers of Attorney |