N-30D 1 smf.htm Zurich Scudder Investments

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Scudder Money Funds

Scudder Money Market Fund

Scudder Government Money Fund

Scudder Tax-Exempt Money Fund

Semiannual Report

January 31, 2003



Contents


<Click Here> Performance Summary

<Click Here> Economic Overview

<Click Here> Portfolio Management Review

<Click Here> Portfolio Summary

<Click Here> Investment Portfolio

<Click Here> Financial Statements

<Click Here> Financial Highlights

<Click Here> Notes to Financial Statements

<Click Here> Account Management Resources

<Click Here> Privacy Statement

Ticker Symbol

CUSIP Number

Scudder Money Market Fund

KMMXX

81118M-100

Scudder Government Money Fund

KEGXX

81118M-209

Scudder Tax-Exempt Money Fund

KXMXX

81118M-308


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 Bank Securities Inc., Deutsche Asset Management Investment Services Ltd., Deutsche Bank Trust Company Americas and Scudder Trust Company.

This report must be preceded or accompanied by a prospectus.

Please see the fund's prospectus for more complete information, including a complete description of the fund's investment policies. To obtain a prospectus, download one from scudder.com, talk to your financial representative or call Shareholder Services at (800) 621-1048. The prospectus contains more complete information, including management fees and expenses. Please read it carefully before you invest or send money.

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 January 31, 2003


Scudder Money Market Fund

Yield Comparison

[] Fund Yield

[] First Tier Money Fund Average
smf_g10k40

Weekly 7-Day Average Yield


Scudder Money Market Fund is compared to the First Tier Money Fund Average which consists of all non-institutional taxable money market funds investing in only first tier (highest rating) securities tracked by iMoneyNet, Inc. Returns are historical and do not guarantee future results. Fund yields fluctuate.

7-day average yield is the annualized net investment income per share for the period shown. Gains or losses are not included.

Lipper Ranking

Period

Rank

Number of Funds Tracked

Percentile Ranking

6-Month

26

of

406

7

1-Year

32

of

392

9

3-Year

31

of

338

9

5-Year

27

of

266

10

10-Year

19

of

150

13


Lipper, Inc. rankings are based upon changes in net asset value with all dividends reinvested for the periods indicated as of 1/31/2003. Rankings are historical and do not guarantee future performance. The fund is compared to the Lipper Money Market Instrument 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.

Please call (800) 621-1048 for the fund's most up-to-date performance.



Scudder Government Money Fund

Yield Comparison

[] Fund Yield

[] Government Money Fund Average
smf_g10k30

Weekly 7-Day Average Yield


Scudder Government Money Fund is compared to the Government Money Fund Average which consists of all non-institutional government money market funds tracked by iMoneyNet, Inc. Returns are historical and do not guarantee future results. Fund yields fluctuate.

7-day average yield is the annualized net investment income per share for the period shown. Gains or losses are not included.

Lipper Ranking

Period

Rank

Number of Funds Tracked

Percentile Ranking

6-Month

7

of

132

6

1-Year

13

of

132

10

3-Year

9

of

120

8

5-Year

9

of

93

9

10-Year

6

of

67

8


Lipper, Inc. rankings are based upon changes in net asset value with all dividends reinvested for the periods indicated as of 1/31/2003. 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.

Please call (800) 621-1048 for the fund's most up-to-date performance.



Scudder Tax-Exempt Money Fund

Yield Comparison

[] Fund Yield

[] Tax-Free Money Fund Average
smf_g10k20

Weekly 7-Day Average Yield


Scudder Tax-Exempt Money Fund is compared to the Tax-Free Money Fund Average which consists of all non-institutional tax-free money market funds tracked by iMoneyNet, Inc. Returns are historical and do not guarantee future results. Fund yields fluctuate. Income from Scudder Tax-Exempt Money Fund may be subject to state and local taxes and the alternative minimum tax.

7-day average yield is the annualized net investment income per share for the period shown. Gains or losses are not included.

Lipper Ranking

Period

Rank

Number of Funds Tracked

Percentile Ranking

6-Month

12

of

131

10

1-Year

16

of

131

13

3-Year

9

of

118

8

5-Year

7

of

104

7

10-Year

8

of

77

11


Lipper, Inc. rankings are based upon changes in net asset value with all dividends reinvested for the periods indicated as of 1/31/2003. 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.

Please call (800) 621-1048 for the fund's most up-to-date performance.


Economic Overview


Dear Shareholder:

We've come a long way since the economy boomed in the late 1990s, contracted in 2001, then started recovering in 2002. To understand where we are, it's helpful to retrace how we got here.

During the boom of the late 1990s, companies invested large sums of money in equipment to produce goods, and they hired more and more employees at higher salaries. Individuals bought goods and services at a robust pace. And stock prices skyrocketed.

Then the "technology bubble" - the fervor for technology stocks - burst, and stock prices tumbled. Consumers, feeling poorer, bought fewer goods. And when demand for their goods slowed, companies slashed capital investment (in equipment, new factories, etc.) and cut jobs. This caused the economy to slow down.

The government stepped in quickly with lower interest rates and tax cuts. This made it easier for consumers to keep spending money, especially on high-price items such as new homes and cars. And when consumers spent money, businesses were able to continue manufacturing more goods - and maintain profits.

Today, we see signs that the economy continues to recover. In the coming months, we believe businesses will likely respond to improving profits and the fading of corporate accounting scandals by picking up the rate of hiring and investing. And consumer spending is likely to be sustained by improving labor markets, solid income growth, low interest rates and tax cuts.

But the next step is not expected to be another boom. Businesses and consumers may be spending money, but they're doing so more cautiously than they have in the past. That's because they're intent on repairing their balance sheets and budgets after the last boom.

As a result, we expect the economy to continue to grow at a modest pace, with a more typical level of growth achieved in the second half of 2003 and 2004. But it's important to note that this outlook assumes that geopolitical uncertainty - fears of a drawn-out war in Iraq, tensions with North Korea, terrorism worldwide - will not result in any major crises. That doesn't mean that war has to be averted in the Middle East for our economy to stay on track; it just means that we assume no major shocks - such as significant terrorist strikes, a drawn-out military conflict or a spike in oil prices - will occur.



Economic Guideposts Data as of 1/31/03

[] 2 years ago
[] 1 year ago
[] 6 months ago
[] Now
smf_guideposts80

Inflation Rate (a)

US Unemployment Rate (b)

Federal Funds Rate (c)

Industrial Production (d)

Growth Rate of Personal Income (e)

(a) The year-over-year percentage change in US consumer prices.
(b) The percentage of adults out of work and looking for a job.
(c) The interest rate banks charge each other for overnight loans.
(d) Year-over-year percentage change.
(e) Growth rate of individual income from all sources.
Source: Deutsche Asset Management

If such shocks are avoided, we believe the economic recovery should solidify and have a positive effect on the financial markets.

We expect the stock market to improve as businesses begin to make money again. But, even after the price declines of the past three years, stocks are still not cheap, so we expect returns to be lower than they were in the 1980s and 1990s. Over the long haul, we expect equity returns to beat Treasuries by a smaller margin than we saw in recent decades.

As for the fixed-income market, we believe that interest rates and rates of return on all financial assets will be much lower than in the past few decades. That's because the US is likely to remain in an environment of price stability (i.e., low inflation) similar to the late 1950s and early 1960s.

Deutsche Asset Management

The sources, opinions and forecasts expressed are those of the economic advisors of Deutsche Asset Management as of February 15, 2003, and may not actually come to pass.


Portfolio Management Review


In the following interview, Portfolio Managers Christine Haddad and Joseph Benevento discuss the market environment and the team's approach to managing Scudder Money Funds during the six-month period ended January 31, 2003, and offer an outlook for the months ahead.

Federal Reserve Board action

The US economy in the period was marked by slow growth, tame core inflation1 and rising unemployment. This combination allowed the Federal Reserve to maintain its low interest rate policy for much of the calendar year. The targeted federal funds rate2 remained unchanged until November 6, when the Federal Reserve Board cut the targeted federal funds rate by 50 basis points to 1.25%. This surprisingly aggressive move indicated to investors that the economy - which Fed chairman Alan Greenspan said was in a "soft spot" - had the support it needed to improve.

1 Core inflation is inflation measured without taking into account price changes in the volatile food and energy sectors.

Market overview

Bonds provided investors with strong returns for the period. The Lehman Brothers Aggregate Bond Index, a popular proxy for the broad bond market, gained 5.05%3 for the year. In comparison, the Standard & Poor's index (S&P 500) lost 5.26%.3 (Past performance is no guarantee of future results.)

2 The federal funds rate is the interest rate banks charge each other for overnight loans and is a closely watched indicator of US Federal Reserve Board monetary policy.
3 The Lehman Brothers Aggregate Bond Index is an unmanaged index representing domestic taxable investment-grade bonds, with index components for government and corporate securities, mortgage pass-through securities and asset-backed securities with average maturities of 1 year or more. The S&P 500 index is an unmanaged group of stocks generally representative of the US stock market.

In this environment, the short end of the money market yield curve held steady, while longer-term yields fell substantially, thus flattening the yield curve. As the financial markets assigned a high probability to an interest rate cut, the money market yield curve became inverted at some points during October. In November, as positive economic data moved investors out of bonds and into stocks, the money market yield curve became positively sloped and continued to steepen, offering attractive buying opportunities. In December and January, the yield curve flattened substantially, as a result of much weaker than expected December retail sales. Additionally, the US employment situation remained weak with an unexpected drop in December payrolls.

Performance and strategy

Scudder Money Market Fund

By staying disciplined to the purchase of high-quality instruments and actively adjusting sector allocation and the duration of the portfolio as market conditions changed, we were able to produce competitive yields in Scudder Money Market Fund for the period. However, overall marketplace yields declined, primarily reflecting the ripple effect of the Federal Reserve Board's 11 interest rate cuts in 2001 and its 50-basis-point (i.e., one-half of a percentage point) interest rate cut on November 6, 2002. For the six-month period ended January 31, 2003, the fund returned 0.68%. In light of the uncertainty in the financial markets and in the US economy, we maintained an aggressive average weighted maturity, generally in the 65- to 70-day range, for most of the period. Toward the end of the third calendar quarter when the yield curve flattened and the large percentage of overnight holdings became vulnerable to potential interest rate cuts by the Federal Reserve Board, we began replacing these shorter-term holdings with purchases at the intermediate portion of the money market yield curve. Throughout the period, our preference for high-credit-quality issuers in the portfolio did not change.

Scudder Government Money Fund

We were able to produce competitive yields in Scudder Government Money Fund for the period. In light of the uncertainty in the financial markets and in the US economy, we maintained an aggressive average weighted maturity, generally in the 65- to 70-day range, for most of the period. Toward the end of the third calendar quarter when the yield curve flattened and the large percentage of shorter-term holdings became vulnerable to potential interest rate cuts by the Federal Reserve Board, we adjusted our strategy to include purchases of securities in the middle of the Treasury yield curve, as well as callable agency securities. For the six-month period ended January 31, 2003, the fund returned 0.67%.

Scudder Tax-Exempt Money Fund

Municipal market yields declined in spite of steady cash flow into the municipal markets and an increase in municipal issuance. The municipal money market yield curve inverted late in the third quarter. In November and December, the yield curve then steepened again, returning to what is considered a normal curve. Municipal credit quality was affected during the period as municipalities across the country experienced declining revenue sources and an increase in their "fixed" costs, such as Medicaid, education and prisons. There were several significant downgrades during the year, including that of California. As a result of widespread budget shortfalls, we saw a sharp increase in the need for short-term cash flow issuance. For example, California issued $12 billion during the third quarter alone. The increased issuance of short-term notes did not result in significant upward pressure on one-year rates, however, as this rise in supply was offset by strong demand.

For the six-month period ended January 31, 2003, the fund returned 0.54%. We adjusted Scudder Tax-Exempt Money Fund's weighted average maturity to prepare for seasonal events and supply/demand phenomena. As of January 31, 2003, the fund's weighted average maturity was 33 days. In light of the uncertainty in the financial markets and in the US economy, we tried to keep the fund's weighted average maturity on the shorter side by overweighting floating-rate notes during the period. The fund was also able to participate in the California issuance sale, making purchases at attractive yield levels.

Outlook

The US economy no longer appears in danger of dipping back into recession, although corporations have yet to join consumers in the recovery. As expected, the Federal Reserve Board left rates unchanged at its January meeting. However, the war with Iraq, North Korea's renewal of its nuclear program and the ongoing softness in the US dollar threaten to keep markets on edge in the early months of 2003.

As a result, we expect the Federal Reserve Board to remain vigilant and to continue to do what it can to move the economy forward. While Chairman Alan Greenspan had said he does not think the November rate cut is going to be inflationary, as soon as the Federal Reserve Board sees heightened signs of inflation, the interest rate reductions will be over. It should also be remembered that because changes in monetary policy typically take at least six months to affect the economy, it will be a while before we know how effective the November action will be in moving the economy forward. With the Federal Reserve Board having assumed a neutral bias at its November meeting, we think short-term interest rates should remain relatively stable well into 2003. We further believe that fiscal stimulus by the US government in the form of tax cuts, particularly the potential elimination of taxation on dividends, will play as crucial a role as the Federal Reserve Board in spurring economic growth.

We do expect the money market yield curve to steepen in the near future (i.e., for six- to 12-month yields to become more attractive). We are thus prepared to cautiously extend the average maturity of the fund at the appropriate time. We intend to maintain our conservative investment strategies and choose securities from only the highest-quality issuers. We will also seek to provide high current income consistent with liquidity and capital preservation.

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 January 31, 2003


Scudder Money Market Fund

Portfolio Composition

1/31/03

7/31/02


Commercial Paper
50%
45%
Certificates of Deposit and Bank Notes
23%
32%
Short-Term Notes
16%
8%
Repurchase Agreements
8%
15%
Miscellaneous Investments
3%
-

100%
100%

Weighted Average Maturity*



Scudder Money Market Fund
66 days

First Tier Money Fund Average
51 days


Scudder Government Money Fund

Portfolio Composition

1/31/03

7/31/02


Short-Term Notes
74%
66%
Repurchase Agreements
25%
33%
US Government Guaranteed
1%
1%

100%
100%

Weighted Average Maturity*



Scudder Government Money Fund
72 days

Government Money Fund Average
53 days


Scudder Tax-Exempt Money Fund

Portfolio Composition

1/31/03

7/31/02


Municipal Investments
100%
100%

Weighted Average Maturity*



Scudder Tax-Exempt Money Fund
33 days

Tax-Free Money Fund Average
39 days


* The Funds are compared to their respective iMoneyNet category: the First Tier Money Fund Average consists of all non-institutional taxable money market funds investing in only first tier (highest rating) securities; Government Money Fund Average includes all non-institutional government money market funds; Tax-Free Money Fund Average consists of all non-institutional tax-free money market funds. Weighted average maturity is as of 1/31/2003.
Portfolio composition is subject to change.

Investment Portfolio as of January 31, 2003 (Unaudited)


Scudder Money Market Fund

Principal Amount ($)

Value ($)



Commercial Paper 49.8%

American Honda Finance Corp., 1.391%*, 9/5/2003
50,000,000
50,000,000
Asset Portfolio Funding, 1.31%**, 3/20/2003
148,531,000
148,276,971
Associates Corp. of North America, 1.47%*, 6/26/2003
65,000,000
65,000,000
Associates Corp. Of North America, 1.48%*, 6/15/2003
25,000,000
25,000,000
Canadian Imperial Bank Of Commerce, 1.333%*, 7/2/2003
75,000,000
74,982,829
Cc (USA) Inc., 1.36%*, 9/15/2003
60,000,000
59,996,305
CIT Group Holdings, Inc., 1.31%**, 3/21/2003
75,000,000
74,869,000
CIT Group Holdings, Inc., 1.84%*, 4/7/2003
10,000,000
10,007,889
CIT Group Holdings, Inc., 7.375%, 3/17/2003
7,730,000
7,783,500
Credit Suisse First Boston, 1.35%, 2/18/2003
100,000,000
100,000,000
Delaware Funding Corp., 1.26%**, 2/27/2003
121,169,000
121,058,736
Enterprise Funding Corp., 1.27%**, 2/12/2003
25,000,000
24,990,299
Falcon Asset Securitization Corp., 1.36%**, 2/5/2003
100,000,000
99,984,889
General Electric Capital Corp., 1.34%*, 5/28/2003
25,000,000
25,001,564
General Electric Capital Corp., 1.35%**, 2/3/2003
150,000,000
149,988,750
General Electric Capital Corp., 1.4%*, 11/20/2003
10,000,000
10,004,753
General Electric Capital Corp., 1.45%*, 10/22/2003
15,000,000
15,007,269
General Electric Capital Corp., 1.494%*, 11/20/2003
15,000,000
15,007,799
Goldman Sachs Group, Inc., 1.39%*, 4/3/2003
25,000,000
25,000,000
Goldman Sachs Group, Inc., 1.39%*, 5/8/2003
100,000,000
100,000,000
Goldman Sachs Group, Inc., 1.909%*, 2/5/2004
30,000,000
30,000,088
Jupiter Securitization Corp., 1.26%**, 2/24/2003
50,000,000
49,959,750
Lake Constance Funding LLC, 1.3%**, 2/12/2003
55,000,000
54,978,153
Links Finance LLC, 1.31%**, 4/4/2003
45,000,000
44,898,475
Pennine Funding LLC, 1.31%**, 4/9/2003
79,000,000
78,807,394
Pennine Funding LLC, 1.32%**, 6/20/2003
45,000,000
44,770,650
Prefco Discount Capital, 1.27%**, 2/18/2003
200,000,000
199,880,056
Quincy Capital Corp., 1.27%**, 2/13/2003
24,442,000
24,431,653
RWE AG, 1.3%**, 4/22/2003
20,000,000
19,942,222
Salomon Smith Barney, 1.54%*, 12/19/2003
65,000,000
65,104,381
Scaldis Capital LLC, 1.31%**, 7/14/2003
35,000,000
34,792,401
Scaldis Capital LLC, 1.36%**, 3/3/2003
10,574,000
10,562,016
Scaldis Capital LLC, 1.36%**, 6/13/2003
35,000,000
34,825,467
Scaldis Capital LLC, 1.38%**, 5/7/2003
29,301,000
29,194,296
Sheffield Receivables Corp., 1.26%**, 2/25/2003
50,000,000
49,958,000
Sheffield Receivables Corp., 1.29%**, 2/5/2003
35,000,000
34,994,983
Sheffield Receivables Corp., 1.29%**, 2/21/2003
75,000,000
74,946,250
Verizon Global Funding, 1.47%*, 4/14/2003
50,000,000
49,998,824
Wal-Mart Stores, 1.25%**, 2/4/2003
10,000,000
9,998,958
Windmill Funding Corp., 1.26%**, 3/7/2003
63,900,000
63,823,959
Total Commercial Paper (Cost $2,207,828,529)

2,207,828,529

Certificates of Deposit and Bank Notes 23.4%

Bank Of Nova Scotia, 2.97%, 3/31/2003
15,000,000
15,018,072
BNP Paribas, 1.35%, 7/7/2003
75,000,000
75,000,000
Canadian Imperial Bank Of Commerce, 1.35%, 6/13/2003
50,000,000
50,000,000
Danske Bank A/S, 2.46%, 6/11/2003
40,000,000
40,028,101
HSBC Bank USA, 1.35%, 6/18/2003
50,000,000
50,000,000
ING Bank NV, 1.36%, 2/19/2003
50,000,000
50,000,000
KBC Bank 2.09%, 2.09%, 3/27/2003
50,000,000
50,000,000
Landesbank Hessen-Thurin, 1.4%, 1/29/2004
50,000,000
50,000,000
Landesbank Baden Wuertemberg, 2.41%, 6/16/2003
15,000,000
15,008,752
National Australia Bank, 2.59%, 5/23/2003
35,000,000
35,034,424
Nordea Bank Finland PLC, 1.324%*, 9/10/2003
75,000,000
74,986,331
Nordeutsche Landesbank, 1.26%*, 6/30/2003
85,000,000
84,984,291
Nordeutsche Landesbank, 1.905%, 4/25/2003
25,000,000
25,000,284
Societe Generale, 2.105%, 2/14/2003
40,000,000
40,000,055
Swedbank, 1.322%, 9/26/2003
50,000,000
49,996,750
Unicredito Italiano, 1.35%, 3/18/2003
35,000,000
35,000,000
US Bank N.A., 2.25%, 2/28/2003
100,000,000
100,000,000
Wells Fargo Bank, 1.27%, 2/20/2003
50,000,000
50,000,515
Westdeutsche Landesbank, 1.341%**, 6/13/2003
50,000,000
49,754,132
Westdeutsche Landesbank, 1.38%*, 1/28/2004
30,000,000
30,000,000
Westdeutsche Landesbank, 1.385%, 5/19/2003
50,000,000
50,000,738
Westdeutsche Landesbank, 2.585%, 5/28/2003
20,000,000
20,022,188
Total Certificates of Deposit and Bank Notes (Cost $1,039,834,633)

1,039,834,633


Short-Term Notes 16.3%

Federal Farm Credit, 1.275%*, 12/15/2004
50,000,000
49,986,080
Federal Farm Credit, 1.375%*, 1/17/2006
25,000,000
25,000,000
Federal Home Loan Bank, 1.213%*, 3/24/2003
75,000,000
74,994,780
Federal Home Loan Bank, 1.58%, 12/9/2003
150,000,000
150,000,000
Federal Home Loan Bank, 1.6%, 1/16/2004
48,850,000
48,850,000
Federal Home Loan Bank, 1.75%, 11/7/2003
10,000,000
10,000,000
Federal Home Loan Mortgage Corp., 1.28%**, 2/27/2003
100,000,000
99,907,556
Federal Home Loan Mortgage Corp., 1.6%*, 2/6/2004
30,000,000
30,000,000
Federal Home Loan Mortgage Corp., 1.61%*, 2/6/2004
50,000,000
50,000,000
Federal National Mortgage Association, 1.27%**, 2/7/2003
15,000,000
14,996,825
Federal National Mortgage Association, 1.55%, 2/3/2004
15,000,000
14,997,191
Federal National Mortgage Association, 1.57%, 1/16/2004
40,000,000
40,000,000
Federal National Mortgage Association, 1.6%, 12/24/2003
30,000,000
30,000,000
Federal National Mortgage Association, 1.665%**, 3/26/2003
20,000,000
19,950,975
Federal National Mortgage Association, 1.75%, 12/8/2003
65,000,000
65,000,000
Total Short-Term Notes (Cost $723,683,407)

723,683,407


Repurchase Agreements (b) 7.8%

Goldman Sachs & Co., dated 1/31/2003, to be repurchased at $255,028,475 on 2/3/2003, 1.34%
255,000,000
255,000,000
JP Morgan Securities Inc., dated 1/31/2003, to be repurchased at $89,009,938 on 2/3/2003, 1.34%
89,000,000
89,000,000
Total Repurchase Agreements (Cost $344,000,000)

344,000,000


Miscellaneous Investments 2.7%

Aim Liquid Asset Portfolio - I, 1.33%*
100,000,000
100,000,000
Texas State Veteran's Hospital, 1.34%*, 12/1/2029
20,000,000
20,000,000
Total Miscellaneous Investments (Cost $120,000,000)

120,000,000

Total Investment Portfolio - 100.0% (Cost $4,435,346,569) (a)

4,435,346,569


* 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, 2003.
** Annualized yield at the time of purchase; not a coupon rate.
(a) The cost for federal income tax purposes was $4,435,346,569.
(b) Repurchase agreements are fully collateralized by US Treasury or Government agency securities.

The accompanying notes are an integral part of the financial statements.



Scudder Government Money Fund

Principal Amount ($)

Value ($)



Short-Term Notes 73.4%

Federal Farm Credit Bank, 1.28%*, 12/15/2004
50,000,000
49,986,080
Federal Farm Credit Bank, 1.282%*, 12/27/2005
15,000,000
15,000,000
Federal Farm Credit Bank, 1.375%*, 1/17/2006
15,000,000
15,000,000
Federal Home Loan Bank, 1.213%*, 3/24/2003
10,000,000
9,999,304
Federal Home Loan Bank, 1.23%*, 2/3/2003
15,000,000
14,999,964
Federal Home Loan Bank, 1.23%*, 2/26/2003
15,000,000
14,999,626
Federal Home Loan Bank, 1.239%*, 2/14/2003
20,000,000
19,999,794
Federal Home Loan Bank, 1.248%*, 3/6/2003
25,000,000
24,998,827
Federal Home Loan Bank, 1.59%, 12/9/2003
25,000,000
24,997,975
Federal Home Loan Bank, 1.6%, 1/16/2004
25,000,000
25,000,000
Federal Home Loan Bank, 1.75%, 11/7/2003
5,000,000
5,000,000
Federal Home Loan Bank, 2.25%, 2/12/2003
10,000,000
10,000,000
Federal Home Loan Mortgage Corp., 1.28%**, 2/27/2003
25,000,000
24,976,889
Federal Home Loan Mortgage Corp., 1.61%, 2/6/2004
11,625,000
11,625,000
Federal National Mortgage Association, 1.27%**, 2/7/2003
25,000,000
24,994,708
Federal National Mortgage Association, 1.57%, 1/16/2004
40,000,000
40,000,000
Federal National Mortgage Association, 1.665%**, 3/26/2003
15,000,000
14,963,231
Federal National Mortgage Association, 1.75%, 12/8/2003
5,000,000
5,000,000
Federal National Mortgage Association, 4.625%, 5/15/2003
10,000,000
10,067,105
Federal National Mortgage Association, 5.75%, 4/15/2003
12,000,000
12,108,233
Federal National Mortgage Association, 6.125%, 5/19/2003
5,000,000
5,056,398
US Export Import Bank-Hainan Airlines, Series 2000-1, 1.277%*, 6/21/2004
7,675,407
7,675,407
US Export Import Bank-Hainan Airlines, Series 2000-2, 1.3%*, 12/21/2004
8,850,466
8,850,466
US Export Import Bank-Hainan Airlines, Series 2001-1, 1.82%*, 12/15/2007
9,374,015
9,374,019
US Export Import Bank-Hainan Airlines, Series 2001-2, 1.41%*, 12/15/2007
4,687,008
4,687,008
US Export Import Bank-Hainan Airlines, Series 2001-3, 1.42%*, 12/15/2007
4,687,008
4,687,008
Total Short-Term Notes (Cost $414,047,042)

414,047,042


US Government Guaranteed 1.4%

Totem Ocean Trailer, 1.29%*, 12/18/2014 (Cost $7,648,000)
7,648,000

7,648,000

Repurchase Agreements (b) 25.2%

Goldman Sachs & Co., dated 1/31/2003, to be repurchased at $37,004,132 on 2/3/2003, 1.34%
37,000,000
37,000,000
JP Morgan Inc., dated 1/31/2003, to be repurchased at $99,011,055 on 2/3/2003, 1.34%
99,000,000
99,000,000
State Street Bank Trust Co., dated 1/31/2003, to be repurchased at $6,108,646 on 2/3/2003, 1.27%
6,108,000
6,108,000
Total Repurchase Agreements (Cost $142,108,000)

142,108,000

Total Investment Portfolio - 100.0% (Cost $563,803,042) (a)

563,803,042


* 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, 2003.
** Annualized yield at the time of purchase; not a coupon rate.
(a) The cost for federal income tax purposes was $536,803,042.
(b) Repurchase agreements are fully collateralized by US Treasury or Government agency securities.

The accompanying notes are an integral part of the financial statements.



Scudder Tax-Exempt Money Fund

Principal Amount ($)

Value ($)



Municipal Investments 100.0%

Alabama 2.6%
Birmingham, Special Care Facilities Financing Authority, Ascension Health Project, 1.15%*, 11/15/2039
16,900,000
16,900,000
Arizona 0.9%
Salt River, Agricultural Improvement and Power District, 1.15%, 4/11/2003
4,000,000
4,000,000
Salt River, Agricultural Improvement and Power District, 1.05%, 2/11/2003
2,000,000
2,000,000
California 3.2%
Los Angeles, Airport Revenue, 1.34%*, 12/1/2025 (c)
100,000
100,000
Revenue Anticipation Notes, Series G, 1.28%*, 6/20/2003
5,500,000
5,500,000
Revenue Anticipation Notes, 1.34%*, 6/20/2003
10,000,000
10,000,000
Revenue Anticipation Notes, Series F, 1.34%*, 6/20/2003
1,500,000
1,500,000
State Department of Water Resources, 1.8%, 3/13/2003
4,400,000
4,400,000
Colorado 5.1%
Health Facilities Authority Revenue, 1.21%*, 6/1/2021 (c)
1,435,000
1,435,000
Regional Transitional District, Series C, 1.10%, 3/31/2003
3,000,000
3,000,000
State General Fund Revenue, Tax and Revenue Anticipation Notes, 2.5%, 6/27/2003
20,000,000
20,099,607
State General Fund Revenue, Tax And Revenue Anticipation Notes, Series A, 3.00%, 6/27/2003
9,100,000
9,156,724
Delaware 1.0%
State Economic Development, 1.15%*, 12/1/2015
6,960,000
6,960,000
District of Columbia 1.4%
General Obligation, Series D, 1.15%*, 6/1/2029 (b)
400,000
400,000
Multimodal, Series A, 1.20%*, 6/1/2015 (b)
1,165,000
1,165,000
Multimodal-Medlantic, Series C, 1.35%*, 8/15/2038 (b)
450,000
450,000
The Washington Home, Inc., 1.20*, 8/1/2029 (b)
7,250,000
7,250,000
Florida 8.1%
Broward County, Industrial Development Revenue, AMT, 1.45%*, 8/2/2026
1,805,000
1,805,000
Capital Travel Agency Revenue, Series B, 1.15%*, 10/1/2033 (c)
5,500,000
5,500,000
Highlands County, Health Facilities, Series A, 1.15%*, 11/15/2032 (c)
8,000,000
8,000,000
Jacksonville, Electric Authority, 1.1%, 2/13/2003
10,000,000
10,000,000
Miami-Dade County, Industrial Development Revenue, Gulliver Schools Project, 1.20%*, 9/1/2029
2,910,000
2,910,000
Orange County, Presbyterian Retirement Community, 1.20%*, 11/1/2028 (b)
11,685,000
11,685,000
Pasco County, School District, 1.10%*, 8/1/2026 (b)
400,000
400,000
Palm Beach County, Health Facilities, 1.30%*, 12/1/2031 (c)
600,000
600,000
Sarasota County, Health Facilities Authority, 1.20%*, 12/1/2023 (c)
3,800,000
3,800,000
University Of Northern Florida, 1.25%*, 11/1/2024 (c)
5,215,000
5,215,000
University Of Northern Florida, 1.25%*, 11/1/2030 (c)
3,970,000
3,970,000
Georgia 6.1%
Cartersville, Industrial Development Authority Revenue, Underground Atlanta Project, 1.35%*, 12/1/2018 (c)
3,600,000
3,600,000
Cobb County, Development Authority, Educational Facilities Revenue, Mt. Paran Christian School Inc. Project, AMT, 1.15%*, 7/1/2022 (c)
5,200,000
5,200,000
Gainesville, Redevelopment Authority, Educational Facilities Revenue, 1.15%*, 7/1/2024 (c)
5,000,000
5,000,000
General Revenue Service, 1.10%*, 2/3/2003
5,000,000
5,000,000
Monroe County, Development Authority Pollution Control Revenue, 1.30%*, 1/1/2020 (b)
500,000
500,000
Municipal Electric Authority of Georgia, 1.00%*, 1/1/2022 (b)
10,900,000
10,900,000
Municipal Electric Authority of Georgia, 1.15%*, 1/1/2026 (b)
3,000,000
3,000,000
Willacoochie, Pollution Control Revenue, Langborad, Inc. Project, AMT, 1.25%*, 5/1/2021 (c)
7,000,000
7,000,000
Idaho 0.3%
Power County, Individual Development, 1.25%*, 4/1/2014 (c)
2,000,000
2,000,000
Illinois 14.1%
Chicago, Airport Revenue, O'Hare International Airport Revenue, Series A, 1.17%*, 1/1/2018 (c)
6,700,000
6,700,000
Chicago, 1.23%*, 6/1/2005
7,000,000
7,000,000
Chicago, De La Salle Institute Project, 1.23%*, 4/1/2027 (c)
2,915,000
2,915,000
Chicago, General Obligation, Series B, 1.15%*, 1/1/2037 (c)
4,200,000
4,200,000
Chicago, Industrial Development Revenue, AMT, 1.40%*, 8/1/2012
2,745,000
2,745,000
Chicago, Sales Tax Revenue, 1.15%*, 1/1/2034 (c)
10,000,000
10,000,000
Cicero, Harris Steel Company Project, AMT, 1.40%*, 5/1/2011 (c)
2,170,000
2,170,000
Cook County, Industrial Development Revenue, AMT, 1.23%*, 7/1/2020 (c)
2,700,000
2,700,000
Development Finance Authority, Edison Co. Project, 1.10%*, 3/1/2009 (c)
3,100,000
3,100,000
Development Finance Authority, Grecian Delight Foods Project, AMT, 1.23%*, 8/1/2019 (c)
6,500,000
6,500,000
Development Finance Authority, Home Run Inn Frozen Foods Project, AMT, 1.25%*, 4/1/2020 (c)
5,690,000
5,690,000
Development Finance Authority, Jewish Federation Project, 1.15%*, 9/1/2024 (c)
1,890,000
1,890,000
Development Finance Authority, Mc Productions Llc, AMT, 1.40%*, 10/1/2017 (c)
3,505,000
3,505,000
Development Finance Authority, Museum Of Contemporary Art Project, 1.20%*, 2/1/2029 (c)
4,000,000
4,000,000
Development Finance Authority, Whitting Corp. Project, AMT, 1.40%*, 6/1/2015 (c)
3,600,000
3,600,000
Educational Facilities Authority Revenue, 1.05, 4/7/2003
5,000,000
5,000,000
Franklin Park, Industrial Development Revenue, Maclean Fogg Co. Project, AMT, 1.35%*, 2/1/2007 (c)
5,000,000
5,000,000
Health Facilities Authority Revenue, 1.15%*, 11/15/2025 (c)
1,300,000
1,300,000
Hillside, Economic Development Revenue, AMT, 1.35%*, 5/1/2011 (c)
4,920,000
4,920,000
Mundelein-Maclean, Industrial Development Revenue, AMT, 1.35%*, 1/1/2015 (c)
6,500,000
6,500,000
Woodbridge, Industrial Development Revenue, AMT, 1.40%*, 12/1/2016 (c)
4,310,000
4,310,000
Indiana 1.8%
Development Finance Authority, Industrial Development Revenue, Enterprise Center III Project, AMT, 1.33%*, 6/1/2022 (c)
4,500,000
4,500,000
Health Facilities Revenue, Ascension Health, Series B, 1.15%*, 11/15/2039
1,875,000
1,875,000
Indiana Bond Bank, Series A, 2.00, 1/27/2004 (b)
5,500,000
5,548,242
Kentucky 4.2%
Jeffersontown, Lease Program Revenue, 1.19%*, 3/1/2030 (c)
5,075,000
5,075,000
Lexington-Fayette County, Christian Academy Project, 1.30%*, 9/1/2020 (c)
7,885,000
7,885,000
Pendleton County, Multi-City Lease Revenue, 1.35%, 2/11/2003
15,000,000
15,000,000
Maine 0.7%
State Housing Authority, Series E-2, AMT, 1.65%*, 11/15/2031
4,900,000
4,900,000
Massachusetts 2.1%
Marblehead, Town Notes, 2.25, 8/21/2003 (b)
8,000,000
8,038,654
Marblehead, Town Notes, 2.35, 8/21/2003 (b)
6,000,000
6,032,270
Mississippi 0.8%
Jackson County, Economic Development Corporate Revenue, 1.25%*, 12/1/2020 (b)
5,040,000
5,040,000
Missouri 1.8%
St. Louis, Air Cargo Facility Revenue, AMT, 1.30%*, 3/1/2030 (c)
5,000,000
5,000,000
State Health & Education Facilities Authority, Health Facilities Revenue, 1.10%*, 12/1/2015 (c)
6,742,000
6,742,000
State Health & Education Facilities Authority, Educational Facilities Revenue, 1.30%*, 11/1/2032 (c)
100,000
100,000
Nevada 1.7%
Department Of Commerce, AMT, 1.30%*, 1/1/2009 (c)
4,900,000
4,900,000
Las Vegas, Water District, 1.24%*, 6/1/2024 (b)
6,000,000
6,000,000
New Hampshire 0.1%
Higher Education Facilities Authority, 1.15%*, 8/1/2031 (c)
900,000
900,000
New Jersey 2.6%
Economic Development Authority, Thermal Energy Facilities Revenue, 1.10%*, 9/1/2031 (b)
500,000
500,000
Transportation Revenue, 3.00%, 6/12/2003
17,000,000
17,098,646
New Mexico 0.5%
Belen, Industrial Development Revenue, AMT, 1.40%*, 2/1/2027 (c)
3,460,000
3,460,000
New York 1.7%
Buffalo, General Obligation Notes, 2.50%, 6/27/2003
4,000,000
4,015,438
New York City, Municipal Water Finance, Series 1, 1.10%, 2/12/2003
5,000,000
5,000,000
New York City, Revenue Notes, 2.50%, 4/11/2003
2,500,000
2,507,116
Ohio 8.2%
Athens County, Port Authority Housing Project, 1.18%*, 6/1/2032 (c)
5,955,000
5,955,000
Cuyahoga Community College, District General Receipts, Series B, 1.20%*, 12/1/2032 (b)
4,000,000
4,000,000
Hamilton, Electric Revenue, Series A, 1.13%*, 10/15/2023 (b)
18,100,000
18,100,000
Higher Education Facilities Authority, 1.30%*, 9/1/2020 (c)
7,490,000
7,490,000
Lorain, Port Authority, AMT, 1.40%*, 12/1/2019 (c)
3,300,000
3,300,000
Portage County, Industrial Development Revenue, AMT, 1.32%*, 7/1/2018 (c)
2,115,000
2,115,000
Water Development Authority, 1.15%*, 2/10/2003
13,435,000
13,435,000
Oklahoma 0.9%
Blaine County, Individual Development Authority, 1.25%*, 11/1/2018 (b)
1,500,000
1,500,000
Payne County, Economic Development Authority Student Housing Revenue, 1.18%*, 6/1/2032 (b)
4,500,000
4,500,000
Oregon 1.0%
Hermiston, Electric System Revenue, 1.25%*, 9/1/2005 (c)
6,495,000
6,495,000
Pennsylvania 5.4%
Allentown, Hospital Authority, Series B, 1.20%*, 7/1/2023 (c)
6,550,000
6,550,000
Dauphin County, General Authority Education And Health Loan Program, 1.20%*, 11/1/2017 (c)
8,365,000
8,365,000
Delaware, Valley Regional Finance Authority, Local Governement Revenue, 1.15%*, 8/1/2016 (c)
1,000,000
1,000,000
East Hempfield, Industrial Development Revenue, 1.20%*, 6/1/2025 (c)
4,000,000
4,000,000
Economic Development Authority, Amtrak Project, Series B, 1.20%*, 11/1/2041 (c)
1,000,000
1,000,000
Emmaus, General Authority Revenue Loan Program, 1.15%*, 3/1/2030 (c)
13,000,000
13,000,000
Higher Education Assistance Agency, Student Loan Revenue, Series A, 1.25%*, 3/1/2027 (c)
1,000,000
1,000,000
Lehigh County, General Purpose Authority Revenue, 1.30%*, 7/1/2028 (b)
300,000
300,000
Manheim, General Obligation, 1.15%*, 6/1/2016 (b)
1,000,000
1,000,000
South Carolina 0.6%
Economic Development Authority, Hospital Facilities Revenue, Sisters of Charity, 1.17%*, 11/1/2032
4,000,000
4,000,000
Tennessee 2.3%
Blount County, Public Building Authority, 1.15%*, 6/1/2024 (b)
4,045,000
4,045,000
Blount County, Public Building Authority, 1.35%*, 6/1/2028 (b)
3,800,000
3,800,000
Blount County, Public Building Authority, 1.35%*, 6/1/2032 (b)
1,000,000
1,000,000
Clarksville, Public Building Authority Revenue, 1.30%*, 7/1/2031 (c)
1,980,000
1,980,000
Memphis, Township Government, 1.35%, 2/13/2003
4,000,000
4,000,000
Montgomery County, General Obligation, 1.30%*, 4/1/2032
600,000
600,000
Texas 15.5%
Austin, Utility System, 1.30%, 2/13/2003
5,500,000
5,500,000
Bexar County, Health Facilities Development Corporate Revenue, 1.15%*, 8/15/2030 (c)
7,400,000
7,400,000
Gulf Coast Waste Disposal Authority, Environmental Facilities Revenue, 1.30%*, 9/1/2022 (c)
2,000,000
2,000,000
Harris County, Series A-1, 1.0%, 2/3/2003
7,500,000
7,500,000
Houston, Tax & Revenue Anticipation Notes, Series A-1, 3.00%, 6/30/2003
16,000,000
16,089,321
Municipal Power Agency, 1.05%, 4/1/2003
5,000,000
5,000,000
Municipal Power Agency, 1.05%, 3/4/2003
13,500,000
13,500,000
Small Business Industrial Development Revenue, 1.25%*, 7/1/2026 (c)
22,260,000
22,260,000
Tax & Revenue Anticipation Notes, 2.75%, 8/29/2003
19,000,000
19,146,378
Texas University Revenue, 1.25%*, 8/15/2022 (b)
4,600,000
4,600,000
Utah 0.9%
Housing Corp., Single Family Mortgage Revenue, 1.30%*, 7/1/2031 (b)
2,830,000
2,830,000
Housing Corp., Single Family Mortgage Revenue, 1.30%*, 1/1/2034 (b)
3,000,000
3,000,000
Vermont 0.9%
Student Assistance Corp., Student Loan Revenue, 1.40%*, 1/1/2004 (c)
5,800,000
5,800,000
Washington 2.8%
City Of Tacoma, General Obligation, 1.30%, 3/10/2003
5,000,000
5,000,000
Port Of Anacortes, 1.35%, 2/6/2003
10,490,000
10,490,000
King County, Sewer Revenue, 1.20%*, 1/1/2032 (c)
3,300,000
3,300,000
Wisconsin 0.7%
Manitowoc, Industrial Development Revenue, AMT, 1.40%*, 5/1/2015 (c)
2,550,000
2,550,000
Oak Creek, Pollution Control Revenue, Wisconsin Electric Power Co. Project, 1.35%*, 8/1/2016
2,000,000
2,000,000
Total Investment Portfolio - 100.0% (Cost $664,759,396) (a)

664,759,396


* 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, 2003.
(a) The cost for federal income tax purposes was $664,759,396.
(b) Bond is insured by one of these companies:
AMBAC
AMBAC Assurance Corp.

Capital Guaranty
FGIC
Financial Guaranty Insurance Company
FHA
Federal Housing Administration
FSA
Financial Security Assurance
MBIA
Municipal Bond Investors Assurance

(c) Security incorporates a letter of credit of line of credit from a major bank.
AMT - Subject to alternate minimum tax.

The accompanying notes are an integral part of the financial statements.


Financial Statements


Statement of Assets and Liabilities as of January 31, 2003 (Unaudited)

Assets

Money Market Fund

Government Money Fund

Tax-Exempt Money Fund

Investments in securities, at amortized cost
$ 4,091,346,569 $ 421,695,042 $ 664,759,396
Repurchase agreements, at amortized cost
344,000,000 142,108,000 -
Cash
463 157 3,472
Receivable for investments sold
- - 260,000
Interest receivable
8,794,503 938,315 1,931,455
Receivable for Fund shares sold
3,909,434 1,258,722 5,437,655
Other assets
97,036 - 23,470
Total assets
4,448,148,005 566,000,236 672,415,448
Liabilities
Notes payable
9,700,000 - -
Interest payable
505 - -
Dividends payable
826,216 103,796 109,702
Payable for Fund shares redeemed
5,057,556 10,040 25,927
Accrued management fee
951,100 120,575 144,508
Other accrued expenses and payables
1,532,223 113,517 130,391
Total liabilities
18,067,600 347,928 410,528
Net assets, at value

$ 4,430,080,405

$ 565,652,308

$ 672,004,920

Net Assets
Net assets consist of:
Undistributed net investment income
186,263 12,255 40,330
Accumulated net realized gain (loss)
(189,034) (5,589) (20,939)
Paid-in capital
4,430,083,176 565,645,642 671,985,529
Net assets, at value

$ 4,430,080,405

$ 565,652,308

$ 672,004,920

Shares outstanding
4,430,043,558 565,642,606 671,985,964
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.



Statement of Operations for the six months ended January 31, 2003 (Unaudited)

Investment Income

Money Market Fund

Government Money Fund

Tax-Exempt Money Fund

Income:
Interest
$ 41,444,001 $ 5,058,843 $ 4,911,195
Expenses:
Management fee
6,276,294 787,879 901,638
Services to shareholders
2,608,249 234,392 281,025
Custodian fees
196,492 25,103 18,491
Auditing
114,472 7,929 8,268
Legal
121,337 1,412 8,995
Trustees' fees and expenses
52,562 13,476 20,048
Reports to shareholders
84,314 24,249 15,085
Registration fees
110,477 22,072 18,094
Interest expense
2,451 - -
Other
183,476 16,211 17,543
Total expenses, before expense reductions
9,750,124 1,132,723 1,289,187
Expense reductions
(19,748) (4,246) (4,969)
Total expenses, after expense reductions
9,730,376 1,128,477 1,284,218
Net investment income

31,713,625

3,930,366

3,626,977

Net realized gain (loss) on investment transactions
1,501 (5,589) 17,269
Net increase (decrease) in net assets resulting from operations

$ 31,715,126

$ 3,924,777

$ 3,644,246


The accompanying notes are an integral part of the financial statements.



Statement of Changes in Net Assets - Money Market Fund

Increase (Decrease) in Net Assets

Six Months Ended January 31, 2003 (Unaudited)

Year Ended July 31, 2002

Operations:
Net investment income
$ 31,713,625 $ 108,797,967
Net realized gain (loss) on investment transactions
1,501 113,973
Net increase (decrease) in net assets resulting from operations
31,715,126 108,911,940
Distributions to shareholders from net investment income
(31,863,280) (108,805,542)
Fund share transactions:
Proceeds from shares sold
1,825,283,645 5,051,609,173
Reinvestment of distributions
31,442,882 107,651,864
Cost of shares redeemed
(2,404,732,656) (5,967,845,178)
Net increase (decrease) in net assets from Fund share transactions
(548,006,129) (808,584,141)
Increase (decrease) in net assets
(548,154,283) (808,477,743)
Net assets at beginning of period
4,978,234,688 5,786,712,431
Net assets at end of period (including undistributed net investment income of $186,263 and $335,918, respectively)

$ 4,430,080,405

$ 4,978,234,688


The accompanying notes are an integral part of the financial statements.



Statement of Changes in Net Assets - Government Money Fund

Increase (Decrease) in Net Assets

Six Months Ended January 31, 2003 (Unaudited)

Year Ended July 31, 2002

Operations:
Net investment income
$ 3,930,366 $ 13,776,880
Net realized gain (loss) on investment transactions
(5,589) 17,388
Net increase (decrease) in net assets resulting from operations
3,924,777 13,794,268
Distributions to shareholders from net investment income
(3,937,053) (13,776,111)
Fund share transactions:
Proceeds from shares sold
176,179,284 458,226,478
Reinvestment of distributions
3,848,118 13,595,260
Cost of shares redeemed
(228,109,138) (609,515,556)
Net increase (decrease) in net assets from Fund share transactions
(48,081,736) (137,693,818)
Increase (decrease) in net assets
(48,094,012) (137,675,661)
Net assets at beginning of period
613,746,320 751,421,981
Net assets at end of period (including undistributed net investment income of $12,255 and $18,942, respectively)

$ 565,652,308

$ 613,746,320


The accompanying notes are an integral part of the financial statements.



Statement of Changes in Net Assets - Tax-Exempt Money Fund

Increase (Decrease) in Net Assets

Six Months Ended January 31, 2003 (Unaudited)

Year Ended July 31, 2002

Operations:
Net investment income
$ 3,626,977 $ 10,323,068
Net realized gain (loss) on investment transactions
17,269 -
Net increase (decrease) in net assets resulting from operations
3,644,246 10,323,068
Distributions to shareholders from net investment income
(3,626,847) (10,323,032)
Fund share transactions:
Proceeds from shares sold
247,115,775 527,613,507
Reinvestment of distributions
3,560,060 10,276,820
Cost of shares redeemed
(265,610,552) (596,320,653)
Net increase (decrease) in net assets from Fund share transactions
(14,934,717) (58,430,326)
Increase (decrease) in net assets
(14,917,318) (58,430,290)
Net assets at beginning of period
686,922,238 745,352,528
Net assets at end of period (including undistributed net investment income of $40,330 and $40,200, respectively)

$ 672,004,920

$ 686,922,238



The accompanying notes are an integral part of the financial statements.


Financial Highlights


Scudder Money Market Fund

Years Ended July 31,

2003d

2002

2001

2000

1999

1998

Selected Per Share Data
Net asset value, beginning of period

$ 1.00

$ 1.00

$ 1.00

$ 1.00

$ 1.00

$ 1.00

Net investment income
.007 .02 .05 .06 .05 .05
Distributions from net investment income
(.007) (.02) (.05) (.06) (.05) (.05)
Net asset value, end of period

$ 1.00

$ 1.00

$ 1.00

$ 1.00

$ 1.00

$ 1.00

Total Return (%)
.68** 2.01 5.54a,b 5.78 4.89 5.38
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ in millions)
4,430 4,978 5,787 5,104 5,110 4,539
Ratio of expenses before expense reductions (%)
.41* .44 .42c .44 .46 .48
Ratio of expenses after expense reductions (%)
.41* .44 .41c .44 .46 .48
Ratio of net investment income (%)
1.34* 2.01 5.38 5.61 4.78 5.24

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 in fiscal 2001 before and after expense reductions were 0.41% and 0.41%, respectively.
d For the six months ended January 31, 2003 (Unaudited).
* Annualized
** Not annualized

Scudder Government Money Fund

Years Ended July 31,

2003c

2002

2001

2000

1999

1998

Selected Per Share Data
Net asset value, beginning of period

$ 1.00

$ 1.00

$ 1.00

$ 1.00

$ 1.00

$ 1.00

Net investment income
.007 .02 .05 .05 .05 .05
Distributions from net investment income
(.007) (.02) (.05) (.05) (.05) (.05)
Net asset value, end of period

$ 1.00

$ 1.00

$ 1.00

$ 1.00

$ 1.00

$ 1.00

Total Return (%)
.67** 1.96 5.44a 5.59 4.78 5.33
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ in millions)
566 614 751 668 712 687
Ratio of expenses before expense reductions (%)
.38* .43 .41b .44 .43 .43
Ratio of expenses after expense reductions (%)
.38* .43 .40b .43 .43 .43
Ratio of net investment income (%)
1.33* 1.98 5.27 5.43 4.67 5.20

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 in fiscal 2001 before and after expense reductions were 0.40% and 0.40%, respectively.
c For the six months ended January 31, 2003 (Unaudited).
* Annualized
** Not annualized

Scudder Tax-Exempt Money Fund

Years Ended July 31,

2003c

2002

2001

2000

1999

1998

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
.005 .01 .03 .04 .03 .03
Distributions from net investment income
(.005) (.01) (.03) (.04) (.03) (.03)
Net asset value, end of period

$ 1.00

$ 1.00

$ 1.00

$ 1.00

$ 1.00

$ 1.00

Total Return (%)
.54** 1.43 3.50a 3.58 2.97 3.46
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ in millions)
672 687 745 745 796 816
Ratio of expenses before expense reductions (%)
.38* .38 .36b .39 .36 .36
Ratio of expenses after expense reductions (%)
.38* .38 .35b .39 .36 .36
Ratio of net investment income (%)
1.07* 1.43 3.44 3.51 2.93 3.39

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 in fiscal 2001 before and after expense reductions were 0.35% and 0.35%, respectively.
c For the six months ended January 31, 2003 (Unaudited).
* Annualized
** Not annualized

Notes to Financial Statements (Unaudited)


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 ("Funds"). Scudder Money Market Fund invests exclusively in high quality short-term securities, as well as repurchase agreements that are backed by these securities. Scudder Government Money Fund invests exclusively in obligations issued or guaranteed by the US Government or its agencies and repurchase agreements thereon. Scudder Tax-Exempt Money Fund invests in short-term high quality municipal securities.

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 their custodian or sub-custodian bank, receive 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.

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, 2002, the Scudder Money Market Fund and the Scudder Tax-Exempt Money Fund had net tax basis capital loss carryforwards of approximately $191,000 and $38,200, respectively, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or July 31, 2008 ($3,000), July 31, 2009 ($108,000), and July 31, 2010 ($80,000), the respective expiration dates for the Scudder Money Market Fund, and July 31, 2003 ($38,100) and July 31, 2009 ($100), the respective expiration dates for the Scudder Tax-Exempt Money Fund, whichever occurs first.

Distribution of Income and Gains. All of the net investment income of each Fund is declared as a daily dividend and is distributed to shareholders monthly. For the purpose of the daily dividend, net investment income includes all realized gains (losses) on portfolio securities.

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, 2002 except for undistributed ordinary income of:

Scudder Money Market Fund
$ 1,623,798
Scudder Government Money Fund
$ 175,047

There were no significant book-to-tax differences for the Scudder Tax-Exempt Money Fund at July 31, 2002 except for undistributed tax-exempt income of $172,848.

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.

Other. Investment transactions are accounted for on the trade date. Interest income is recorded on the accrual basis. Realized gains and losses from investment transactions are recorded on an identified cost basis. All discounts and premiums are accreted/amortized for both tax and financial reporting purposes.

B. Related Parties

Management Agreement. Under the Management Agreement, 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 and 0.25% of such net assets in excess of $800,000,000, computed and accrued daily and payable monthly. Accordingly, for the six months ended January 31, 2003, 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 ($)

Effective Rate (%)

Scudder Money Market Fund
6,276,294

.27

Scudder Government Money Fund
787,879

.27

Scudder Tax-Exempt Money Fund
901,638

.27


Service Provider Fees. Scudder Investments Service Company ("SISC"), an affiliate of the Advisor, is the transfer, dividend-paying and shareholder service agent of the Trust. Effective January 16, 2003, 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. For the six months ended January 31, 2003, SISC received shareholder service fees as follows:

Fund

Total Aggregated ($)

Unpaid at January 31, 2003 ($)

Scudder Money Market Fund
2,408,290 1,210,538
Scudder Government Money Fund
234,392 70,025
Scudder Tax-Exempt Money Fund
230,843 108,072

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 Off-Set Arrangements

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, 2003, the Funds' custodian and transfer agent fees were reduced as follows:

Fund

Custodian Fee ($)

Transfer Agent Fee ($)

Scudder Money Market Fund
7,053 12,695
Scudder Government Money Fund
12 4,234
Scudder Tax-Exempt Money Fund
316 4,653

D. Line of Credit

The Funds and several other affiliated funds (the "Participants") share in a $1.3 billion revolving credit facility administered by J.P. Morgan Chase Bank for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Participants are charged an annual commitment fee which is allocated, pro rata based upon net assets, among each of the Participants. Interest is calculated at the Federal Fund Rate plus 0.5 percent. Each Fund may borrow up to a maximum of 33 percent of its net assets under the agreement.

E. Share Transactions

The following tables summarize share and dollar activity in the Funds:

Scudder Money Market Fund

Six Months Ended January 31, 2003

Year Ended
July 31, 2002


Shares

Dollars

Shares

Dollars

Shares sold
Class A
1,825,283,647 $ 1,825,283,645 5,051,605,620 $ 5,051,609,173
Shares issued to shareholders in reinvestment of distributions
Class A
31,442,882 $ 31,442,882 107,651,864 $ 107,651,864
Shares redeemed
Class A
(2,404,731,014) $(2,404,732,656) (5,967,845,370) $ (5,967,845,178)
Net increase (decrease) from capital share transactions

$ (548,006,129) $ (808,584,141)

Scudder Government Money Fund

Six Months Ended January 31, 2003

Year Ended
July 31, 2002


Shares

Dollars

Shares

Dollars

Shares sold
Class A
176,179,284 $ 176,179,284 458,226,478 $ 458,226,478
Shares issued to shareholders in reinvestment of distributions
Class A
3,848,118 $ 3,848,118 13,595,260 $ 13,595,260
Shares redeemed
Class A
(228,109,137) $ (228,109,138) (609,515,556) $ (609,515,556)
Net increase (decrease) from capital share transactions
Class A
$ (48,081,736) $ (137,693,818)

Scudder Tax-Exempt Money Fund

Six Months Ended January 31, 2003

Year Ended
July 31, 2002


Shares

Dollars

Shares

Dollars

Shares sold

247,115,746 $ 247,115,775 527,613,511 $ 527,613,507
Shares issued to shareholders in reinvestment of distributions

3,560,060 $ 3,560,060 10,276,820 $ 10,276,820
Shares redeemed

(265,610,556) $ (265,610,552) (596,320,653) $ (596,320,653)
Net increase (decrease) from capital share transactions

$ (14,934,717) $ (58,430,326)


Account Management Resources


Legal Counsel

Vedder, Price, Kaufman & Kammholz

222 North LaSalle Street
Chicago, IL 60601

Shareholder Service Agent

Scudder Investments Service Company

P.O. Box 219151
Kansas City, MO 64121-9151

Custodian and Transfer Agent

State Street Bank and Trust Company

225 Franklin Street
Boston, MA 02110

Independent Auditors

Ernst & Young LLP

200 Clarendon Street
Boston, MA 02116



Privacy Statement


This privacy statement is issued by Scudder Distributors, Inc., Scudder Financial Services, Inc., Scudder Investor Services, Inc., Scudder Trust Company and the Scudder Funds.

We consider privacy fundamental to our client relationships and adhere to the policies and practices described below to protect current and former clients' information.

We never sell customer lists or individual client information. Internal policies are in place to protect confidentiality, while allowing client needs to be served. Only individuals who need to do so in carrying out their job responsibilities may access client information. We maintain physical, electronic and procedural safeguards that comply with federal standards to protect confidentiality. These safeguards extend to all forms of interaction with us, including the Internet.

In the normal course of business, clients give us nonpublic personal information on applications and other forms, on our Web sites, and through transactions with us or our affiliates. To be able to serve our clients, information is shared with affiliates and other companies. Specifically, we disclose client information to parties that perform various services for us, such as transfer agents, custodians, and broker-dealers. Limited information also may be shared with affiliates, with companies with which we have joint marketing agreements, or with other parties as required by law. Any organization receiving client information may only use it for the purpose designated by the entities listed above.

Questions on this policy may be sent to:

Scudder Investments
Attention: Correspondence - Chicago
P.O. Box 219415
Kansas City, MO 64121-9415

July 2002

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