This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
Scudder
Managed
Municipal
Bonds
Semiannual Report
June 30, 1995
* Offers opportunity for tax-free income by investing primarily in
high-grade, long-term municipal securities.
* A pure no-load(TM) fund with no commissions to buy, sell, or exchange
shares.
<PAGE>
SCUDDER MANAGED MUNICIPAL BONDS
CONTENTS
2 In Brief
3 Letter from the Fund's President
4 Performance Update
5 Portfolio Summary
6 Portfolio Management Discussion
10 Investment Portfolio
20 Financial Statements
23 Financial Highlights
24 Notes to Financial Statements
29 Officers and Trustees
30 Investment Products and Services
31 How to Contact Scudder
IN BRIEF
* Scudder Managed Municipal Bonds posted a six-month total return of 8.76%
for the period ended June 30, 1995, as the municipal bond market recovered
from 1994's downturn.
* The Fund's 30-day net annualized SEC yield was 5.02% on June 30, 1995. For
investors in the top federal tax brackets of 36% and 39.6%, the Fund's
yield was equivalent to a 7.84% and 8.31% taxable yield, respectively.
BAR CHART OMITTED
TITLE: The Fund's 30-Day Net Annualized SEC Yield and
Taxable Equivalent Yields
as of June 30, 1995
CHART DATA:
----------------------------------------------------
The Fund's Taxable-Equivalent Taxable-Equivalent
30-Day Net Yield at 36% Tax Yield at 39.6%
Annualized Bracket Tax Bracket
SEC Yield
----------------------------------------------------
5.02% 7.84% 8.31%
----------------------------------------------------
* The Fund continues to outpace the average performance of similar funds over
numerous time periods, according to Lipper Analytical Services. Please see
page 6 for additional Lipper performance information.
2
<PAGE>
LETTER FROM THE FUND'S PRESIDENT
SCUDDER MANAGED MUNICIPAL BONDS
Dear Shareholders,
Bonds rallied strongly during the first half of 1995, more than erasing
last year's price declines. While municipal bonds enjoyed solid price
appreciation, they generally lagged taxable fixed-income performance. Statistics
from the Investment Company Institute, a mutual fund trade association, tell us
that nationwide sales of long-term municipal bond funds from January through May
1995 are just over half of what they were for the same period a year ago. Events
in Orange County, California, and Capitol Hill discussions of a 17% federal flat
tax have played a part in softening the demand for tax-exempt investments
relative to Treasuries. Nevertheless, the municipal bond market continues to
play a critical role in the development and maintenance of infrastructure and
social services in the United States, and as such remains an important component
of the overall bond market. The benefits of tax-free investing, moreover,
provide perennial appeal for investors in higher tax brackets.
We believe the recent overperformance of the Treasury market spells
opportunity for the municipal market. In the first few months of 1995,
Treasuries rallied strongly as U.S. and foreign investors pursued a "flight to
quality" in U.S. bonds following the financial crisis in Mexico. Meanwhile, the
U.S. dollar declined and the Japanese yen soared, prompting the Bank of Japan to
make large purchases of U.S. Treasury securities in an effort to bring the two
currencies into equilibrium. In the wake of this year's huge Treasury rally, we
are optimistic that the now small spread between Treasury and municipal yields
will result in heightened demand for municipal bonds.
Our philosophy in managing Scudder's tax-free funds remains unchanged as we
strive for attractive tax-free income and total returns with a strong
orientation toward value. If you have any questions about Scudder Managed
Municipal Bonds, please call Scudder Investor Relations at 1-800-225-2470. Thank
you for choosing Scudder Managed Municipal Bonds to help meet your investment
needs.
Sincerely,
/s/David S. Lee
David S. Lee
President,
Scudder Managed Municipal Bonds
3
<PAGE>
Scudder Managed Municipal Bonds
Performance Update as of June 30, 1995
- -----------------------------------------------------------------
Growth of a $10,000 Investment
- -----------------------------------------------------------------
Scudder Managed Municipal Bonds
- ----------------------------------------
Total Return
Period Growth -------------
Ended of Average
6/30/95 $10,000 Cumulative Annual
- --------- ------- ---------- -------
1 Year $10,809 8.09% 8.09%
5 Year $14,875 48.75% 8.27%
10 Year $23,260 132.60% 8.81%
Lehman Brothers Municipal Bond Index
- --------------------------------------
Total Return
Period Growth -------------
Ended of Average
6/30/95 $10,000 Cumulative Annual
- --------- ------- ---------- -------
1 Year $10,882 8.82% 8.82%
5 Year $14,870 48.70% 8.25%
10 Year $24,053 140.53% 9.17%
A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:
Yearly Periods ended June 30
Scudder Managed Municipal Bonds
Year Amount
- ----------------------
85 10000
86 11230
87 12075
88 13035
89 14847
90 15637
91 17065
92 19186
93 21692
94 21520
95 23260
Lehman Brothers Index
Year Amount
- --------------------
85 10000
86 11652
87 12656
88 13595
89 15144
90 16175
91 17633
92 19709
93 22066
94 22103
95 24053
Lehman Brothers Municipal Bond Index is an unmanaged market value
weighted measure of municipal bonds issued across the United States.
Index issues have a credit rating of at least Baa and a maturity of
at least two years. Index returns assume reinvestment of dividends
and, unlike Fund returns, do not reflect any fees or expenses.
- -----------------------------------------------------------------
Returns and Per Share Information
- -----------------------------------------------------------------
A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) and Index Total
Return (%) with the exact data points listed in the table
below.
Yearly Periods ended June 30
- ----------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
-------------------------------------------------------------------------------
Net Asset Value... $ 8.68 $ 8.43 $ 8.41 $ 8.82 $ 8.36 $ 8.47 $ 8.86 $ 9.17 $ 8.35 $ 8.52
Income Dividends.. $ .58 $ .62 $ .61 $ .60 $ .57 $ .54 $ .47 $ .50 $ .46 .48
Capital Gains
Distributions..... $ -- $ .30 $ .05 $ .12 $ .33 $ .09 $ .12 $ .29 $ .31 --
Fund Total
Return (%)........ 12.30 7.53 7.95 13.90 5.32 9.13 12.43 13.06 -.80 8.09
Index Total
Return (%)........ 16.52 8.63 7.42 11.39 6.81 9.01 11.77 11.96 .20 8.82
</TABLE>
All performance is historical and assumes reinvestment of all dividends and
capital gains and is not indicative of future results.
Investment return and principal value will fluctuate, so an investor's
shares, when redeemed, may be worth more or less than when purchased.
4
<PAGE>
Scudder Managed Municipal Bonds
Portfolio Summary as of June 30, 1995
- ---------------------------------------------------------------------------
Diversification
- ---------------------------------------------------------------------------
Electric Utility Revenue 27%
Core Cities/Lease 11%
Hospital/Health 8% Broad diversification among the
Other General Obligation/ Fund's holdings allows us to spread
Lease 8% portfolio risk over a large number
Higher Education 7% of geographic areas, bond sectors,
Water/Sewer Revenue 7% and maturities.
Housing Finance Authority 6%
Pollution Control/
Industrial Development 5%
State General Obligation 5%
Miscellaneous Municipal 16%
----
100%
====
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
Quality
- --------------------------------------------------------------------------
Short Term Notes 3%
AAA 49% Portfolio credit quality remains
AA 19% high, with 90% of Fund assets
A 19% rated A or better.
BBB 9%
Not Rated 1%
----
100%
====
Weighted average quality: AA
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
Effective Maturity
- --------------------------------------------------------------------------
Less than 1 year 5%
1 < 5 years 8% Bonds with effective maturities
5 < 10 years 23% between 10 and 20 years --
10 < 20 years 56% approximately 56% of the Fund's
Greater than 20 years 8% portfolio -- continue to offer
---- attractive value.
100%
====
Weighted average effective maturity: 11 years
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
For more complete details about the Fund's Investment Portfolio,
see page 10.
5
<PAGE>
SCUDDER MANAGED MUNICIPAL BONDS
PORTFOLIO MANAGEMENT DISCUSSION
Dear Shareholders,
Municipal bond performance took a turn for the better during the first half
of 1995 as inflation fears eased among market participants. Scudder Managed
Municipal Bonds fully participated in this price recovery, posting a total
return of 8.76% during the semiannual period ended June 30. The Fund's net asset
value rose 5.58% from $8.07 per share on December 31, 1994, to $8.52 on June 30,
1995. The Fund's total return also included reinvestment of income distributions
to shareholders totaling $0.251 per share. Scudder Managed Municipal Bonds
provided a 30-day net annualized SEC yield of 5.02% as of June 30, 1995,
equivalent to a 7.84% taxable yield for investors in the 36% federal income tax
bracket.
The Fund's solid response to the recent upturn in the market matches its
longer-term record. Though it slightly underperformed the Lipper average of
similar municipal bond funds during the most recent six months, Scudder Managed
Municipal Bonds has consistently outperformed this average over longer periods,
as shown in the chart below. Please turn to the Performance Update on page 4 for
more information on the Fund's long-term progress, including comparisons with
the unmanaged Lehman Brothers Municipal Bond Index.
Scudder Managed Municipal Bonds' Total Return
Versus the Average of Similar Funds
(Returns for periods ended June 30, 1995)
------------------------------------------------------------------------
Period Scudder Managed Lipper Average Number of Funds
Municipal Bonds Tracked
------------------------------------------------------------------------
6 months 8.76% 9.01% 230
------------------------------------------------------------------------
1 year 8.09 7.68 201
2 years 3.56 3.30 151
3 years 6.63 6.18 114
4 years 8.05 7.70 104
5 years 8.27 7.77 95
10 years 8.81 8.64 53
------------------------------------------------------------------------
Performance statistics compiled by Lipper Analytical Services, Inc.
Past performance is no guarantee of future results.
6
<PAGE>
Staging a Comeback
Following one of the worst years in history for fixed-income securities,
municipal money managers and other institutional investors put cash to work
during the first quarter of the year buying bonds they felt were significantly
oversold. The municipal bond market strengthened as interest rates declined from
their 1994 highs. The rally continued in April, May, and June, but at a slower
pace. Discount bonds performed particularly well, favored by investors because
of their greater upside potential versus par or premium bonds of equivalent
maturity.
BAR CHART OMITTED
TITLE: Supply of New
Municipal Issues:
(in billions)
CHART DATA:
1993 1994 1995
----------------------------------
$292 $163 $138*
*Estimated
As encouraging as the performance of tax free bonds was, it did not match
the return of Treasuries. Long-term Treasury bonds rose 10.25% in price during
the second quarter of 1995, while municipal bonds of similar maturity rose only
1.40%. Demand for municipals was held back by several factors, including the
outstanding performance of the stock market, continued reluctance to invest in
bonds due to the negative impact of 1994's interest rate increases, and concerns
over the Orange County, California, bankruptcy. An additional restraint on
municipal bond performance has been Congressional discussion of a low-rate flat
tax.
While lessened demand for municipals has been a hindrance, the decrease in
the supply of bonds continues to bolster their performance. New issue volume for
the first six months of 1995 was $70 billion, down 25% from the $93 billion of
new issues sold during the first half of 1994. With refinancing activity so
diminished, we expect the supply of tax-exempt bonds to remain relatively low in
the near term.
Portfolio Review
Our strategy during the most recent six-month period was to keep the Fund's
average effective maturity roughly in the middle of our permissible range. In
actuality, this required us to extend the Fund's maturity slightly from time to
time, because bonds the Fund already holds gradually shorten as they approach
their maturity dates. Our philosophy amid the current uncertainty over the
course of the U.S. economy is to buy municipal bonds based on careful credit
analysis and our estimation of a bond's relative value, rather than on the basis
of interest rate forecasts.
7
<PAGE>
Our long-term investment strategy has gone unchanged. In conjunction with
our primary goals of maximizing the Fund's yield while maintaining as much price
stability as possible, we continue to purchase high-grade, longer-term municipal
bonds. On June 30, bonds with effective maturities between 10 and 20 years
represented approximately 56% of the Fund's portfolio. Bonds in this maturity
range continue to offer attractive value--providing nearly as much yield as
bonds with longer (30-year) maturities but with less price volatility.
Diversification remains an important investment strategy for Scudder
Managed Municipal Bonds, allowing us to spread the portfolio's risk over a large
number of geographic areas, bond sectors, and maturities. The Fund held
securities issued in 29 states plus the District of Columbia as of June 30,
1995. In addition, Fund assets were distributed among electric utility revenue
bonds, lease rentals, hospital/healthcare bonds, general obligation bonds, and
several other categories.
Portfolio credit quality remains high, with approximately 71% of Fund
assets rated AAA, AA, or the equivalent. (Currently, the Fund holds two District
of Columbia bonds rated B because of a recent downgrading of District securities
by rating agencies. However, because these bonds are secured by the lease of a
U.S. government building, we remain comfortable in holding them.) Securities are
rated by Standard & Poor's Ratings Group, Moody's Investors Service, Fitch
Investors Service, or assigned an equivalent rating by Scudder. The Portfolio
Summary on page 5 provides more information about the Fund's holdings, including
credit quality, maturity, and sector representation.
Lastly, call protection remains a fundamental part of our investment
strategy. When long-term interest rates on municipal bonds are declining, as
they have been so far in 1995, we believe it is important to protect a
significant portion of the Fund's holdings from being called in by their issuers
before maturity. (Generally, a bond is called in by its issuer so that it can be
refinanced at a lower prevailing rate.) Our call-protection strategy provides a
more reliable income stream than would exist if the portfolio held significant
amounts of high-yielding bonds that could be called in before their stated
maturities.
8
<PAGE>
Our Outlook
We are optimistic about the municipal bond market's near-term prospects. If
the Federal Reserve continues to cut short-term interest rates, demand for
intermediate- and longer-term municipals should increase as investors search for
higher yields. Moreover, municipal bond yields are at historical highs relative
to Treasury bonds, underscoring the fact that municipals have not rallied to the
extent of their taxable counterparts. Recently, even institutions that pay no
taxes have been purchasing municipal bonds to take advantage of their price
appreciation potential. As always, Scudder Managed Municipal Bonds' strategy
reflects our ongoing commitment to seek high relative tax-free income and
competitive total returns for our investors. Sincerely,
Your Portfolio Management Team
/s/Donald C. Carleton /s/Philip G. Condon
Donald C. Carleton Philip G. Condon
9
<PAGE>
<PAGE>
<TABLE>
SCUDDER MANAGED MUNICIPAL BONDS
INVESTMENT PORTFOLIO as of June 30, 1995 (Unaudited)
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
Principal Credit Market
Amount ($) Rating (c) Value ($)
- ------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
------------------------------------------------------------------------------------------
3.4% SHORT-TERM MUNICIPAL INVESTMENTS
------------------------------------------------------------------------------------------
ARIZONA Maricopa County, AZ, Pollution Control Revenue,
Arizona Public Service Corporation, Series F,
Daily Demand Note, 4.5%, 5/1/29*.................... 1,000,000 P1 1,000,000
DISTRICT OF COLUMBIA District of Colombia, General Obligation
Refunding Bonds, Daily Demand Note:
Series A1, 4.4%, 10/1/07*......................... 1,000,000 A1+ 1,000,000
Series A2, 4.4%, 10/1/07*......................... 600,000 A1+ 600,000
Series A3, 4.4%, 10/1/07*......................... 4,400,000 A1+ 4,400,000
Series A4, 4.4%, 10/1/07*......................... 300,000 A1+ 300,000
Series A5, 4.4%, 10/1/07*......................... 2,900,000 A1+ 2,900,000
FLORIDA Halifax Hospital Medical Center, FL, Hospital
Revenue, Auction Reset Security, Series A,
4.3%, 10/1/19* (d).................................. 9,250,000 AAA 9,250,000
LOUISIANA West Baton Rouge Parish, LA, Industrial District #3,
Dow Chemical Company Project, Series B, Daily
Demand Note, 4.25%, 12/1/16*........................ 700,000 P1 700,000
TEXAS North Central, TX, Health Development Corp.,
Daily Demand Note:
Methodist Hospital, 4.5%, 10/1/15* (d)............ 3,900,000 A1 3,900,000
Presbyterian Medical Center, 4.35%, 12/1/15* (d).. 1,100,000 A1+ 1,100,000
----------
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(Cost $25,150,000).................................. 25,150,000
----------
------------------------------------------------------------------------------------------
96.6% LONG-TERM MUNICIPAL INVESTMENTS
------------------------------------------------------------------------------------------
ALASKA North Slope Borough, AK:
Capital Appreciation:
Series B, Zero Coupon, 6/30/04 (d)................ 15,000,000 AAA 9,084,750
Series B, Zero Coupon, 6/30/05 (d)................ 18,200,000 AAA 10,314,486
General Obligation:
Series B, Zero Coupon, 1/1/03 (d)................. 8,000,000 AAA 5,309,120
Series I, 6.6%, 6/30/96 (d)....................... 1,000,000 AAA 1,026,920
ARIZONA Maricopa County, AZ, School District #28, Kyrene
Elementary School, Series B, Zero Coupon,
1/1/06 (d).......................................... 4,905,000 AAA 2,704,323
Maricopa County, AZ, Unified School District #69,
Paradise Valley, Zero Coupon, 7/1/02 (d)............ 2,100,000 AAA 1,453,893
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
Principal Credit Market
Amount ($) Rating (c) Value ($)
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
ARKANSAS Arkansas Development Finance Authority, Single
Family Mortgage Revenue, Series B, 7.7%, 12/1/14...... 2,775,000 A 2,909,810
CALIFORNIA California General Obligation:
6.25%, 10/1/07 (d).................................... 4,000,000 AAA 4,286,640
6.25%, 4/1/08 (d) .................................... 5,000,000 AAA 5,321,050
6.6%, 2/1/09 (d)...................................... 15,600,000 AAA 17,007,120
California Housing Finance Agency, Multi-Unit Rental
Housing, Series A, 7.7%, 8/1/10....................... 1,000,000 A 1,090,050
California State Public Works Lease Board Revenue,
Department of Corrections, Del Norte/Imperial,
Series C, 4.875%, 12/1/06 (d)......................... 10,250,000 AAA 9,761,690
California Statewide Community Development
Corporation, Certificate of Participation, Lutheran
Homes, 5.5%, 11/15/08................................. 2,250,000 A 2,187,608
Foothill Eastern Transportation Corridor Agency, Toll
Road Revenue, Senior Lien, Series A, Zero Coupon:
1/1/09.............................................. 5,000,000 BBB 2,707,750
1/1/11.............................................. 4,000,000 BBB 2,121,760
1/1/12.............................................. 4,000,000 BBB 2,124,400
1/1/14.............................................. 6,250,000 BBB 3,328,375
1/1/15.............................................. 11,000,000 BBB 2,794,880
Los Angeles County, CA, Certificate of Participation,
Disney Parking Project:
Zero Coupon, 9/1/07................................. 4,030,000 A 1,841,226
Zero Coupon, 9/1/09................................. 5,425,000 A 2,149,548
Los Angeles County, CA, Public Works Financing
Authority, Capital Construction, 5%, 3/1/06........... 5,850,000 AA 5,574,933
Roseville, CA, Unified High School District,
General Obligation, Series B, Zero Coupon:
8/1/10 (d).......................................... 1,830,000 AAA 723,130
8/1/12 (d).......................................... 2,015,000 AAA 697,069
8/1/15 (d).......................................... 1,000,000 AAA 282,130
San Joaquin, CA, Certificate of Participation,
County Public Facilities Project, 5.5%, 11/15/13 (d).. 3,895,000 AAA 3,663,131
San Jose, CA, Redevelopment Agency, Merged Area
Redevelopment Project, Tax Allocation,
6%, 8/1/08 (d)........................................ 1,500,000 AAA 1,570,650
COLORADO Colorado Housing Finance Authority Revenue,
Series A:
8.1%, 10/1/05....................................... 2,030,000 AA 2,320,067
8.15%, 10/1/06...................................... 2,145,000 AA 2,446,137
8.25%, 10/1/10...................................... 1,940,000 AA 2,197,807
8.25%, 10/1/11...................................... 1,680,000 AA 1,895,880
8.25%, 10/1/12...................................... 1,945,000 AA 2,190,070
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
<TABLE>
SCUDDER MANAGED MUNICIPAL BONDS
<CAPTION>
Principal Credit Market
Amount ($) Rating (c) Value ($)
- ------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Colorado Housing Finance Authority Revenue,
Multi-Family Mortgage, Series A:
8.15%, 10/1/07.................................... 2,320,000 AA 2,642,758
8.2%, 10/1/08..................................... 2,510,000 AA 2,858,488
8.2%, 10/1/09..................................... 2,725,000 AA 3,091,295
Denver, CO, City and County Airport Revenue,
Prerefunded, 8.875%, 8/1/95 (e)..................... 1,200,000 BBB 1,214,172
CONNECTICUT Connecticut Development Authority, Airport Facilities,
Windsor Locks Hotel, Series A, 5.8%, 10/1/97........ 3,000,000 A 3,032,160
DISTRICT OF COLUMBIA District of Columbia, General Obligation:
Series A, 5.875%, 6/1/05 (d)........................ 3,300,000 AAA 3,370,686
Series B3, 5.3%, 6/1/05 (d)......................... 1,350,000 AAA 1,320,422
Series B3, 5.5%, 6/1/07 (d)......................... 1,000,000 AAA 974,380
Series B3, 5.5%, 6/1/08 (d)......................... 3,225,000 AAA 3,106,514
Series B, Zero Coupon, 6/1/03 (d)................... 2,000,000 AAA 1,297,400
District of Columbia, Certificate of Participation:
Series 1993, 6.875%, 1/1/03......................... 2,500,000 B 2,512,300
7.3%, 1/1/13........................................ 1,000,000 B 996,080
District of Columbia, Georgetown University,
Series A, 7.25%, 4/1/11............................. 2,965,000 A 3,127,186
FLORIDA Florida Housing Finance Revenue, Home Ownership
Mortgage Revenue, GNMA Backed, "A",
8.595%, 11/1/17..................................... 2,020,000 AAA 2,030,100
GEORGIA Burke County, GA, Development Authority, Pollution
Control Revenue, Ogelthorpe Power Corp., Vogtle
Project, 7.7%, 1/1/06 (d)........................... 11,000,000 AAA 12,930,500
Monroe County, GA, Development Authority,
Pollution Control Revenue, Ogelthorpe Power
Corporation, Scherer Project, 6.7%, 1/1/09.......... 3,255,000 A 3,510,843
Municipal Electric Authority of Georgia,
Power Revenue:
4th Crossover, Series X, Project #1,
6.5%, 1/1/12 (d)................................ 3,500,000 AAA 3,754,065
Series V, 6.5%, 1/1/12 (d)........................ 5,000,000 AAA 5,362,950
ILLINOIS Central Lake County, IL, Joint Action Water
System Revenue, Zero Coupon, 5/1/04 (d)............. 2,445,000 AAA 1,502,110
Chicago, IL, Motor Fuel Tax Revenue,
5.375%, 1/1/14 (d).................................. 5,000,000 AAA 4,622,050
Chicago, IL, General Obligation Lease, Board of
Education, Series A, 6.25%, 1/1/15 (d).............. 2,725,000 AAA 2,818,577
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
Principal Credit Market
Amount ($) Rating (c) Value ($)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Chicago, Il, General Obligation, Emergency
Telephone System, 5.6%, 1/1/09 (d)....................... 7,200,000 AAA 7,053,192
Chicago, IL, Public Building Commission, Building
Revenue, Series A:
5.25%, 12/1/07 (d)..................................... 5,000,000 AAA 4,892,700
5.25%, 12/1/08 (d)..................................... 2,655,000 AAA 2,565,580
Chicago, IL, Wastewater Transmission Revenue,
5.375%, 1/1/13 (d)....................................... 2,000,000 AAA 1,878,040
Du-Page, IL, Industrial Development Revenue,
Weyerhaeuser Company Project, Series 1983,
8.65%, 11/1/08........................................... 3,600,000 NR 3,714,084
Illinois Development Finance Authority Refunding
Revenue, Commonwealth Edison Company,
5.85%, 1/15/14........................................... 5,000,000 BBB 4,542,500
Illinois Educational Facilities Authority, Loyola
University, Zero Coupon, 7/1/05 (d)...................... 3,100,000 AAA 1,766,876
Illinois Health Facilities Authority:
Delnor Community Hospital, 5.5%, 5/15/13 (d)............. 1,500,000 AAA 1,395,030
Memorial Medical Center - Springfield,
5.25%, 10/1/09 (d)..................................... 1,725,000 AAA 1,622,501
Illinois State Sales Tax Revenue, Series P,
6.5%, 6/15/13 ........................................... 2,100,000 AAA 2,277,345
Northern Illinois University, Board of Regents,
Series 1992, Zero Coupon:
4/1/05 (d) ............................................ 1,865,000 AAA 1,078,007
4/1/06 (d) ............................................ 1,865,000 AAA 1,007,454
4/1/07 (d) ............................................ 1,865,000 AAA 939,494
10/1/05 (d) ........................................... 1,865,000 AAA 1,048,149
10/1/06 (d) ........................................... 1,865,000 AAA 979,013
10/1/07 (d) ........................................... 1,865,000 AAA 912,489
Northwest Suburban Municipal Joint Action Water
Agency, IL, ETM, 6.5%, 5/1/15**.......................... 2,000,000 AAA 2,077,040
Oak Lawn, IL, Water and Sewer Revenue,
Series A, Zero Coupon:
10/1/03 (d) ........................................... 1,295,000 AAA 828,891
10/1/04 (d) ........................................... 1,295,000 AAA 777,531
10/1/05 (d) ........................................... 1,295,000 AAA 727,803
10/1/06 (d) ........................................... 1,295,000 AAA 679,797
Rosemont, IL, Zero Coupon:
Tax Increment, 12/1/04 (d)............................... 6,000,000 AAA 3,569,520
Tax Increment-3, Series C, 12/1/05 (d)................... 7,060,000 AAA 3,930,796
State University Retirement System, IL, Special
Revenue, Zero Coupon, 10/1/05 (d)........................ 7,000,000 AAA 3,934,070
University of Chicago, IL, Hospital Refunding, 5.5%,
8/15/08 (d).............................................. 2,500,000 AAA 2,429,325
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
<TABLE>
SCUDDER MANAGED MUNICIPAL BONDS
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
Principal Credit Market
Amount ($) Rating (c) Value ($)
- ------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Will County, IL, School District #201-U, Crete Monee,
Zero Coupon, 12/15/06 (d).................................. 3,725,000 AAA 1,932,493
Winnebago County, IL, School District #122:
6.55%, 6/1/09 (d).......................................... 1,675,000 AAA 1,810,424
6.55%, 6/1/10 (d).......................................... 1,825,000 AAA 1,958,408
INDIANA Indiana Health Facilities Finance Authority, Hospital
Revenue, Ancilla Systems Inc., Series A,
6%, 7/1/18 (d)............................................. 3,965,000 AAA 3,960,044
Indiana Municipal Power Agency,
Power Supply System, Series B:
6%, 1/1/12 (d) .......................................... 1,750,000 AAA 1,786,838
5.5%, 1/1/16 (b) (d)..................................... 24,860,000 AAA 23,460,133
Indiana Transportation Finance Authority, Highway
Revenue, Series A, 5.75%, 6/1/12 (d)....................... 5,000,000 AAA 4,914,850
LOUISIANA Bastrop, LA, Industrial Development Board Pollution
Control Revenue, International Paper Company
Project, 6.9%, 3/1/07...................................... 10,250,000 A 10,865,513
New Orleans, LA, General Obligation, Zero Coupon,
9/1/05 (d)................................................. 2,500,000 AAA 1,420,000
MAINE Maine Housing Authority, Mortgage Purchase
Revenue, 1987 Series A2, 7.65%, 11/15/15................... 1,950,000 A 2,039,408
MARYLAND Northeast Maryland Waste Disposal Authority,
Southwest Resource Recovery System Revenue:
6.85%, 1/1/99 (d)........................................ 1,925,000 AAA 2,045,197
6.9%, 1/1/00 (d)......................................... 3,195,000 AAA 3,438,491
7.2%, 1/1/06 (d)......................................... 3,440,000 AAA 3,888,920
7.2%, 1/1/07 (d)......................................... 3,390,000 AAA 3,792,935
MASSACHUSETTS Massachusetts Bay Transportation Authority,
General Transportation System:
5.25%, 3/1/06 (d)........................................ 7,500,000 AAA 7,487,250
Series B, 6.2%, 3/1/16................................... 2,500,000 A 2,564,500
Massachusetts College Building Authority, Series A:
7.5%, 5/1/10............................................... 4,110,000 A 4,753,626
7.5%, 5/1/14............................................... 3,750,000 A 4,412,175
Massachusetts General Obligation:
Series B, 5.3%, 11/1/06 (d)................................ 4,000,000 AAA 3,972,760
Prerefunded, 6.5%, 5/1/96 (d) (e).......................... 1,000,000 AAA 1,046,750
Massachusetts Port Authority, Series B,
Prerefunded, 9.375%, 7/1/95 (e)............................ 1,155,000 AA 1,178,273
Massachusetts Water Resource Authority:
Series A, 6.5%, 7/15/09.................................... 7,625,000 A 8,201,069
Series A, 6.5%, 7/15/19.................................... 13,445,000 A 14,135,535
Series C, 6%, 12/1/11...................................... 10,000,000 A 10,093,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
- ---------------------------------------------------------------------------------------------------------
<CAPTION>
Principal Credit Market
Amount ($) Rating (c) Value ($)
- ---------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
New England Education Loan Marketing
Corporation, Student Loan Revenue Refunding,
Series F, 4.75%, 7/1/98.............................. 5,000,000 A 4,983,400
MICHIGAN Michigan Strategic Fund, Limited Obligation,
Revenue Refunding, Ford Motor Company Project,
Series A, 7.1%, 2/1/06............................... 3,000,000 A 3,255,660
MONTANA Montana Board of Housing, Single-Family Program,
Federally Insured or Guaranteed Mortgage Loans,
Zero Coupon, 6/1/10.................................. 25,940,000 AA 4,962,063
NEVADA Nevada Housing Division, Single Family Mortgage
Revenue:
Series A, Zero Coupon, 10/1/15..................... 26,705,000 AA 2,775,718
Series R, 5.95%, 10/1/11........................... 9,290,000 AA 9,629,828
NEW YORK Metropolitan Transportation Authority of New York,
Transit Facilities Revenue:
7%, 7/1/02......................................... 1,595,000 BBB 1,754,835
Service Contract, Series O, 5.75%, 7/1/13.......... 6,775,000 BBB 6,377,037
New York City, General Obligation:
Series A, 6.375%, 8/1/04............................. 5,000,000 A 5,136,550
Series B, 7.1%, 2/1/97............................... 2,695,000 A 2,794,661
Series D, 7%, 8/1/02 (d)............................. 3,000,000 A 3,188,430
Series D, 7%, 8/1/02 (d)............................. 3,250,000 AAA 3,536,130
Series E, 5.5%, 8/1/05............................... 6,000,000 A 5,696,700
Series G, 5.25%, 8/1/03.............................. 1,250,000 A 1,200,600
Series H, 7%, 2/1/05................................. 4,000,000 A 4,300,560
Series H, 7.2%, 8/1/01 (d)........................... 2,260,000 AAA 2,516,894
Series H, 5.8%, 8/1/04 .............................. 5,000,000 A 4,926,950
New York State Dormitory Authority:
City University System, Consolidated Revenue:
Series A, 5.75%, 7/1/06 ........................... 9,000,000 BBB 8,927,640
Series E, 5.75%, 7/1/06 ........................... 5,255,000 BBB 5,212,750
Series F, 5.375%, 7/1/07........................... 5,000,000 BBB 4,694,550
College and University Pooled Capital Program,
7.8%, 12/1/05 (d).................................. 4,570,000 AAA 4,953,652
State University Educational Facility Revenue,
Series B, 5.25%, 5/15/10 (d)....................... 5,000,000 AAA 4,795,300
New York State Medical Care Facilities, Finance
Agency Revenue, Mount Sinai Hospital, Series 1983,
5.95%, 8/15/09....................................... 5,510,000 AAA 5,671,939
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
<TABLE>
SCUDDER MANAGED MUNICIPAL BONDS
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
Principal Credit Market
Amount ($) Rating (c) Value ($)
- -------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
New York State Urban Development Corporation,
Lease Revenue, Correctional Facilities, Series A:
5.3%, 1/1/05.......................................... 2,625,000 BBB 2,509,815
5.4%, 1/1/06.......................................... 6,000,000 BBB 5,731,440
5.45%, 1/1/07......................................... 6,475,000 BBB 6,171,646
5.1%, 1/1/08 (d)...................................... 6,735,000 AAA 6,493,685
NORTH CAROLINA North Carolina Municipal Power Agency #1,
Catawba Electric Refunding Revenue:
7.25%, 1/1/07......................................... 6,500,000 A 7,145,385
5.25%, 1/1/09......................................... 8,500,000 A 8,013,205
5%, 1/1/18 (d)........................................ 7,805,000 AAA 6,874,176
North Carolina Eastern Municipal Power Agency,
Series C, 7%, 1/1/07.................................... 7,965,000 A 8,483,522
PENNSYLVANIA Beaver County, PA, Industrial Development Authority,
Ohio Edison, Beaver Valley, Pollution Control
Revenue, 10.5%, 10/1/15................................. 1,600,000 BBB 1,673,872
RHODE ISLAND Rhode Island Convention Center Authority, Refunding
Revenue, 1993 Series B, 5.25%, 5/15/15 (d).............. 2,250,000 AAA 2,065,208
Rhode Island Housing and Mortgage Finance Corp.,
Home Ownership Opportunity Bond, Series 2,
7.5%, 10/1/21........................................... 1,680,000 AA 1,747,166
SOUTH CAROLINA Piedmont Municipal Power Agency, SC, Electric
Revenue, 5.5%, 1/1/10 (d)............................... 2,600,000 AAA 2,541,604
TENNESSEE Knox County, TN, Health, Education and Housing
Facilities Board, Fort Sanders Alliance,
7.25%, 1/1/09 (d)....................................... 3,250,000 AAA 3,753,295
TEXAS Austin TX, Utility System Revenue Refunding,
Series A, Zero Coupon, 5/15/03 (d)...................... 2,890,000 AAA 1,896,678
Dallas-Fort Worth, TX, International Airport Revenue,
Series A:
7.8%, 11/1/07 (d)..................................... 2,390,000 AAA 2,823,188
7.375%, 11/1/09 (d)................................... 4,500,000 AAA 5,129,370
Harris County, TX, Toll and Sub Lien, Series A,
Zero Coupon, 8/15/04 (d)................................ 4,050,000 AAA 2,461,914
Houston, TX, Water Conveyance System Contract,
Certificate of Participation, Series J,
6.125%, 12/15/05 (d).................................... 2,500,000 AAA 2,693,025
Houston, TX, Water and Sewer System Authority,
Series C, Zero Coupon:
12/1/05 (d)........................................... 15,000,000 AAA 8,402,400
12/1/07 (d)........................................... 3,400,000 AAA 1,659,370
Lower Colorado River Authority, TX, Revenue
Refunding, Zero Coupon, 1/1/03 (d)...................... 8,900,000 AAA 5,958,461
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
Principal Credit Market
Amount ($) Rating (c) Value ($)
- ------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
San Antonio, TX, Airport Systems Revenue Refunding,
7%, 7/1/02 (d) ........................................... 1,695,000 AAA 1,899,587
San Antonio, TX, Electric and Gas, Revenue
Refunding, Series A, Zero Coupon, 2/1/05 (d).............. 12,000,000 AAA 7,040,760
UTAH Intermountain Power Agency, UT, Power
Supply Revenue:
Series C, 5.25%, 7/1/14................................. 4,000,000 AA 3,654,080
Series I, Crossover Refunded, 9%, 7/1/19 (f)............ 2,175,000 AA 2,207,930
Salt Lake City, UT, Hospital Revenue,
Intermountain Health Care, Series 1992, Inversed
Inflow, 6.79%, 2/15/12***................................. 1,500,000 AA 1,515,375
VIRGINIA Virginia Beach, VA, Development Authority, Virginia
Beach General Hospital Project, 5.125%,
2/15/18 (d)................................................. 3,000,000 AAA 2,650,050
WASHINGTON Washington Healthcare Facilities Authority:
Empire Health Services-Spokane, 5.8%, 11/1/08 (d)......... 3,865,000 AAA 3,896,809
Franciscan Health System - St. Joseph's/Tacoma:
5.4%, 1/1/07 (d)........................................ 2,000,000 AAA 1,968,060
5.4%, 1/1/08 (d)........................................ 2,645,000 AAA 2,572,421
Sisters of St. Joseph of Peace, 5.3%, 3/1/09 (d) ......... 4,315,000 AAA 4,105,075
Washington Public Power Supply System,
Nuclear Project #1, Refunding Revenue:
Series A, 7.15%, 7/1/02 (d)............................ 2,550,000 AAA 2,781,719
Series A, Zero Coupon, 7/1/07 (d)...................... 8,570,000 AAA 4,225,010
Series A, 7%, 7/1/11................................... 4,725,000 AA 5,020,124
Series B, 5.5%, 7/1/06................................. 4,915,000 AA 4,784,605
Series B, 7.25%, 7/1/09................................ 11,350,000 AA 12,533,238
Washington Public Power Supply System,
Nuclear Project #2, Refunding Revenue:
Series A, 7.25%, 7/1/06................................. 7,000,000 AA 7,798,980
Series A, 6%, 7/1/07.................................... 7,000,000 AA 7,083,580
Series B, 5.5%, 7/1/06 ................................. 4,000,000 AA 3,893,880
Series B, 7%, 7/1/12.................................... 11,385,000 AA 12,041,687
Series C, 7.2%, 7/1/99 ................................. 5,000,000 AA 5,381,450
Washington Public Power Supply System,
Nuclear Project #3, Refunding Revenue:
Series A, Zero Coupon, 7/1/06 (d)....................... 1,380,000 AAA 730,158
Series B, 7.2%, 7/1/99 ................................. 1,000,000 AA 1,076,290
Series B, Prerefunded, 7.25%, 1/1/00 (e)................ 5,000,000 AAA 5,597,450
Series B, Zero Coupon, 7/1/02 (d)....................... 11,925,000 AAA 8,188,778
Series B, 7.375%, 7/1/04................................ 750,000 AA 825,000
Series B, 5.5%, 7/1/06 ................................. 10,160,000 AA 9,890,455
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
<TABLE>
SCUDDER MANAGED MUNICIPAL BONDS
- -----------------------------------------------------------------------------------------------------------
<CAPTION>
Principal Credit Market
Amount ($) Rating (c) Value ($)
- -----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Series B, Zero Coupon, 7/1/06 (d)..................... 5,555,000 AAA 2,939,151
Series B, 5.65%, 7/1/08............................... 3,000,000 AA 2,898,240
Series C, 5%, 7/1/06.................................. 10,000,000 AA 9,332,800
WISCONSIN Green Bay, WI, Industrial Development Revenue,
Weyerhaeuser Company Project, Series A,
9%, 9/1/06............................................ 1,700,000 NR 1,731,586
Wisconsin Health and Educational Facilities Authority:
Lutheran Hospital, Lacrosse, L. Benevolent,
5.6%, 2/15/09 (d)................................... 2,000,000 AAA 1,957,000
Hospital Sisters Services Inc., Obligated Group:
5.25%, 6/1/10 (d)..................................... 3,250,000 AAA 3,026,888
5.375%, 6/1/13 (d) ................................... 1,500,000 AAA 1,380,840
WYOMING Wyoming Community Development Authority, Single
Family Mortgage, Series A, 5.85%, 6/1/13.............. 3,000,000 AA 2,906,010
-----------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(Cost $677,572,626)................................... 706,002,596
-----------
- -----------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO - 100.0%
(Cost $702,722,626) (a)............................... 731,152,596
===========
<FN>
(a) The cost for federal income tax purposes was $702,722,626. At June 30, 1995,
net unrealized appreciation for all securities based on tax cost was $28,429,970.
This consisted of aggregate gross unrealized appreciation for all securities
in which there was an excess of market value over tax cost of $33,458,794 and
aggregate gross unrealized depreciation for all securities in which there was
an excess of tax cost over market value of $5,028,824.
(b) At June 30, 1995 these securities, in part, have been pledged to cover initial
margin requirements for open futures contracts.
</FN>
</TABLE>
<TABLE>
AT JUNE 30, 1995, OPEN FUTURES CONTRACTS SOLD SHORT WERE AS FOLLOWS (NOTE A):
<CAPTION>
Aggregate
Futures Expiration Contracts Face Value ($) Market Value ($)
------- ---------- --------- -------------- ----------------
<S> <C> <C> <C> <C>
30 Year U.S.
Treasury Bonds Sep. 1995 100 11,417,750 11,353,125
--- ---------- ----------
Total net unrealized appreciation on open futures contracts sold short... 64,625
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(c) All of the securities held have been determined to be of appropriate
credit quality as required by the Fund's investment objectives. Credit
ratings are either Standard & Poor's Ratings Group, Moody's
Investors Service, Inc. of Fitch Investors Service, Inc. Unrated
securities (NR) have been determined to be of comparable quality to
rated eligible securities.
(d) Bond is insured by one of these companies: AMBAC, Capital Guaranty,
FGIC, FSA or MBIA.
(e) Prerefunded: Bonds which are prerefunded are collateralized by U.S.
Treasury securities which are held in escrow and are used to pay
principal and interest on tax-exempt issue and to retire the bonds in
full at the earliest refunding date.
(f) Bonds which are crossover refunded are secured by an escrow of
securities which is used to pay principal on the tax exempt issue and
retire the bonds in full at the earliest refunding date, except
in the case of default by the issuer or inadequacy in the escrow
account.
* Floating rate and monthly, weekly, or daily demand notes are securities
whose yields vary with a designated market index or market rate, such
as the coupon-equivalent of the Treasury bill rate. Variable rate
demand notes are securities whose yields are periodically reset at
levels that are generally comparable to tax-exempt commercial
paper. These securities are payable on demand within seven calendar
days and normally incorporate an irrevocable letter of credit or line of
credit from a major bank. These notes are carried, for purposes of
calculating average weighted maturity, at the longer of the period
remaining until the next rate change or to the extent of the demand
period.
** ETM: Bonds bearing the description ETM (escrowed to maturity) are
collateralized by U.S. Treasury securities which are held in escrow by
a trustee and used to pay principal and interest on bonds so designated.
*** Inverse floating rate notes are instruments whose yields have an
inverse relationship to benchmark interest rates. These securities are
shown at their rates as of June 30, 1995.
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
<TABLE>
SCUDDER MANAGED MUNICIPAL BONDS
FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- -----------------------------------------------------------------------------------------
JUNE 30, 1995 (UNAUDITED)
- -----------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at market (identified cost $702,722,626)
(Note A).................................................. $731,152,596
Receivables:
Interest.................................................. 13,451,759
Investments sold.......................................... 255,000
Fund shares sold.......................................... 13,210
Other assets................................................ 10,130
------------
Total assets............................................ 744,882,695
LIABILITIES
Payables:
Due to custodian bank..................................... $ 19,913
Dividends ................................................ 1,621,933
Fund shares redeemed ..................................... 146,122
Daily variation margin on open futures contracts
(Note A)................................................ 46,875
Accrued management fee (Note C)........................... 317,984
Other accrued expenses (Note C)........................... 90,657
----------
Total liabilities....................................... 2,243,484
------------
Net assets, at market value ................................ $742,639,211
============
NET ASSETS
Net assets consist of:
Net unrealized appreciation on:
Investments............................................. 28,429,970
Futures................................................. 64,625
Accumulated net realized loss............................. (9,771,374)
Shares of beneficial interest............................. 871,549
Additional paid-in capital................................ 723,044,441
------------
Net assets, at market value................................. $742,639,211
============
NET ASSET VALUE, offering and redemption price per share
($742,639,211 / 87,154,910 outstanding shares of
beneficial interest, $.01 par value, unlimited number
of shares authorized)..................................... $8.52
=====
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- -----------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
- -----------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest................................................. $24,470,952
Expenses:
Management fee (Note C).................................. $ 1,895,840
Services to shareholders (Note C)........................ 231,149
Trustees' fees (Note C).................................. 24,103
Custodian and accounting fees (Note C)................... 93,292
Reports to shareholders.................................. 35,666
Legal.................................................... 6,041
Auditing................................................. 29,018
State registration....................................... 12,624
Other.................................................... 28,664 2,356,397
------------------------
Net investment income.................................... 22,114,555
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT TRANSACTIONS
Net realized gain (loss) from:
Investments........................................... (238,511)
Futures............................................... (2,859,825) (3,098,336)
-----------
Net unrealized appreciation during the period on:
Investments........................................... 42,701,679
Futures............................................... 528,061 43,229,740
------------------------
Net gain on investment transactions...................... 40,131,404
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..... $62,245,959
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
<TABLE>
SCUDDER MANAGED MUNICIPAL BONDS
- -------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------------
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED
1995 DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS (UNAUDITED) 1994
- -------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income.............................. $ 22,114,555 $ 43,762,308
Net realized loss from investment
transactions..................................... (3,098,336) (1,839,563)
Net unrealized appreciation (depreciation)
on investment transactions
during the period................................ 43,229,740 (95,987,397)
------------ -------------
Net increase (decrease) in net assets
resulting from operations........................ 62,245,959 (54,064,652)
------------ -------------
Distributions to shareholders:
From net investment income ($.25 and $.46 per
share, respectively)............................. (22,114,555) (43,762,308)
------------ -------------
In excess of net realized gains ($.02 per share)... -- (1,966,549)
------------ -------------
Fund share transactions:
Proceeds from shares sold.......................... 39,648,286 131,369,207
Net asset value of shares issued to
shareholders in reinvestment
of distributions................................. 11,045,584 25,132,815
Cost of shares redeemed............................ (56,734,752) (258,254,784)
------------ -------------
Net decrease in net assets from
Fund share transactions.......................... (6,040,882) (101,752,762)
------------ -------------
INCREASE (DECREASE) IN NET ASSETS.................. 34,090,522 (201,546,271)
Net assets at beginning of period.................. 708,548,689 910,094,960
------------ -------------
NET ASSETS AT END OF PERIOD........................ $742,639,211 $ 708,548,689
============ =============
OTHER INFORMATION
INCREASE (DECREASE) IN FUND SHARES
Shares outstanding at beginning of period.......... 87,839,034 100,151,558
------------ -------------
Shares sold........................................ 4,720,540 15,825,513
Shares issued to shareholders in
reinvestment of distributions.................... 1,305,326 2,768,673
Shares redeemed.................................... (6,709,990) (30,906,710)
------------ -------------
Net decrease in Fund shares......................... (684,124) (12,312,524)
------------ -------------
Shares outstanding at end of period................. 87,154,910 87,839,034
============ =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------------------------------------------------------
The following table includes selected data for a share outstanding throughout each period and other performance information
derived from the financial statements.
<CAPTION>
SIX MONTHS ENDED YEARS ENDED DECEMBER 31,
JUNE 30, 1995 ------------------------------------------------------------------------------------
(UNAUDITED) 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
------------- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period................. $8.07 $ 9.09 $ 8.72 $8.80 $ 8.45 $8.54 $ 8.60 $ 8.24 $8.93 $ 8.40 $ 7.69
----- ------ ------ ----- ------ ----- ------ ------ ----- ------ ------
Income from
investment
operations:
Net investment
income................. .25 .46 .47 .51 .53 .55 .59 .60 .61 .61 .59
Net realized
and unrealized
gain (loss) on
investment
transactions........... .45 (1.00) .66 .25 .47 -- .33 .38 (.58) .77 .71
----- ------ ------ ----- ------ ----- ------ ------ ----- ------ ------
Total from
investment
operations............... .70 (.54) 1.13 .76 1.00 .55 .92 .98 .03 1.38 1.30
----- ------ ------ ----- ------ ----- ------ ------ ----- ------ ------
Less distributions:
From net
investment
income................. (.25) (.46) (.47) (.51) (.53) (.55) (.59) (.60) (.61) (.61) (.59)
From net realized
gains on
investment
transactions........... -- -- (.29) (.33) (.12) (.09) (.39) (.02) (.11) (.24) --
In excess of net
realized gains......... -- (.02) -- -- -- -- -- -- -- -- --
----- ------ ------ ----- ------ ----- ------ ------ ----- ------ ------
Total distributions...... (.25) (.48) (.76) (.84) (.65) (.64) (.98) (.62) (.72) (.85) (.59)
----- ------ ------ ----- ------ ----- ------ ------ ----- ------ ------
Net asset value,
end of period............ $8.52 $ 8.07 $ 9.09 $8.72 $ 8.80 $8.45 $ 8.54 $ 8.60 $8.24 $ 8.93 $ 8.40
===== ====== ====== ===== ====== ===== ====== ====== ===== ====== ======
TOTAL RETURN (%)........... 8.76** (6.04) 13.32 8.98 12.23 6.77 11.19 12.27 .34 16.84 17.37
RATIOS AND
SUPPLEMENTAL DATA
Net assets, end of
period ($ millions)...... 743 709 910 830 796 719 691 635 592 663 574
Ratio of operating
expenses to average
daily net assets (%)..... .64* .63 .63 .63 .64 .61 .62 .61 .63 .58 .58
Ratio of net investment
income to average
daily net assets (%)..... 6.01* 5.41 5.21 5.76 6.16 6.61 6.78 7.13 7.20 6.88 7.27
Portfolio turnover
rate (%)................. 18.6* 33.7 52.8 59.6 32.4 72.1 89.8 75.5 73.5 78.0 98.2
<FN>
* Annualized
** Not annualized
</FN>
</TABLE>
23
<PAGE>
SCUDDER MANAGED MUNICIPAL BONDS
NOTES TO FINANCIAL STATEMENTS (Unaudited)
- --------------------------------------------------------------------------------
A. SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
Scudder Managed Municipal Bonds (the "Fund") is organized as a diversified
series of Scudder Municipal Trust, a Massachusetts business trust, registered
under the Investment Company Act of 1940, as amended, as an open-end management
investment company. The policies described below are followed consistently
by the Fund in the preparation of its financial statements in conformity with
generally accepted accounting principles.
SECURITY VALUATION. Portfolio debt securities with remaining maturities greater
than sixty days are valued by pricing agents approved by the officers of the
Fund, which quotations reflect broker/dealer-supplied valuations and electronic
data processing techniques. If the pricing agents are unable to provide such
quotations, the most recent bid quotation supplied by a bona fide market maker
shall be used. Short-term investments having a maturity of sixty days or less
are valued at amortized cost. All other securities are valued at their fair
value as determined in good faith by the Valuation Committee of the Board of
Trustees.
FUTURES CONTRACTS. A futures contract is an agreement between a buyer or seller
and an established futures exchange or its clearinghouse in which the buyer or
seller agrees to take or make a delivery of a specific amount of an item at a
specified price on a specific date (settlement date). During the period the
Fund sold interest rate and securities index futures to hedge against declines
in the value of portfolio securities.
Upon entering into a futures contract, the Fund is required to deposit with a
financial intermediary an amount ("initial margin") equal to a certain
percentage of the face value indicated in the futures contract. Subsequent
payments ("variation margin") are made or received by the Fund each day,
dependent on the daily fluctuations in the value of the underlying security,
and are recorded for financial reporting purposes as unrealized gains or
losses by the Fund. When entering into a closing transaction, the Fund will
realize a gain or loss equal to the difference between the value of the futures
contract to sell and the futures contract to buy. Futures contracts are valued
at the most recent settlement price.
24
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Certain risks may arise upon entering into futures contracts including the
risk that an illiquid secondary market will limit the Fund's ability to close
out a futures contract prior to the settlement date and that a change in the
value of a futures contract may not correlate exactly with changes in the value
of the securities hedged. When utilizing futures contracts to hedge the Fund
gives up the opportunity to profit from favorable price movements in the hedged
positions during the term of the contract.
AMORTIZATION AND ACCRETION. All premiums and original issue discounts are
amortized/accreted for both tax and financial reporting purposes.
FEDERAL INCOME TAXES. The Fund's policy is to comply with the requirements of
the Internal Revenue Code which are applicable to regulated investment companies
and to distribute all of its taxable and tax-exempt income to its shareholders.
The Fund accordingly paid no federal income taxes and no provision for federal
income taxes was required.
At December 31, 1994, the Fund had a net tax basis capital loss carryforward of
approximately $4,230,000 which may be applied against any realized net taxable
capital gains of each succeeding year until fully utilized or until December
31, 2002, the expiration date.
In addition, from November 1, 1994 through December 31, 1994, the Fund incurred
approximately $2,687,000 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 year ending December 31, 1995.
DISTRIBUTION OF INCOME AND GAINS. All of the net investment income of the Fund
is declared as a dividend to shareholders of record as of the close of business
each day and is paid to shareholders monthly. During any particular year, net
realized gains from investment transactions, in excess of available capital
loss carryforwards, would be taxable to the Fund if not distributed and,
therefore, will be distributed to shareholders. An additional distribution may
be made to the extent necessary to avoid the payment of a four percent federal
excise tax. Distributions of net realized capital gains to shareholders are
recorded on the ex-dividend date.
25
<PAGE>
SCUDDER MANAGED MUNICIPAL BONDS
- --------------------------------------------------------------------------------
The timing and characterization of certain income and capital gains
distributions are determined in accordance with federal tax regulations which
may differ from generally accepted accounting principles. These differences
relate primarily to investments in futures contracts. As a result, net
investment income (loss) and net realized gain (loss) on investment transactions
for a reporting period may differ significantly from distributions during
such period. Accordingly, the Fund may periodically make reclassifications
among certain of its capital accounts without impacting the net asset value of
the Fund.
The Fund uses the specific identification method for determining realized gain
or loss on investments for both financial and federal income tax reporting
purposes.
OTHER. Investment transactions are accounted for on a trade date basis. Interest
income is accrued pro rata to the earlier of call or maturity.
B. PURCHASES AND SALES OF SECURITIES
- --------------------------------------------------------------------------------
During the six months ended June 30, 1995, purchases and sales of municipal
securities (excluding short-term investments) aggregated $65,475,644 and
$98,880,305, respectively.
The aggregate face value of futures contracts opened and closed during the
six months ended June 30, 1995 was $21,848,150 and $32,618,525, respectively.
C. RELATED PARTIES
- --------------------------------------------------------------------------------
Under the Investment Management Agreement (the "Agreement") with Scudder,
Stevens & Clark, Inc. (the "Adviser"), the Adviser directs the investments of
the Fund in accordance with its investment objectives, policies, and
restrictions. The Adviser determines the securities, instruments, and other
contracts relating to investments to be purchased, sold or entered into by the
Fund. In addition to portfolio management services, the Adviser provides
certain administrative services in accordance with the Agreement. The
management fee payable under the Agreement is equal to an annual rate of 0.55%
on the first $200,000,000 of average daily net assets, 0.50% on the next
$500,000,000 of such net assets and 0.475% on such net assets in excess of
$700,000,000, computed and accrued daily and payable monthly. The Agreement
also provides that if the Fund's expenses, exclusive of taxes, interest, and
extraordinary expenses, exceed specified limits, such excess, up to the amount
of the management fee, will be paid by the Adviser. For the six months ended
June 30, 1995,
26
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
the fee pursuant to the agreement amounted to $1,895,840, which was equivalent
to an annualized effective rate of .52% of the Fund's average daily net assets.
Scudder Service Corporation ("SSC"), a wholly-owned subsidiary of the Adviser,
is the transfer, dividend paying and shareholder service agent for the Fund.
During the six months ended June 30, 1995, the amount charged to the Fund by
SSC aggregated $176,405, of which $29,010 is unpaid at June 30, 1995.
Effective February 9, 1995, Scudder Fund Accounting Corporation ("SFAC"), a
wholly-owned subsidiary of the Adviser, assumed responsibility for determining
the daily net asset value per share and maintaining the portfolio and general
accounting records of the Fund. For the six months ended June 30, 1995, the
amount charged to the Fund by SFAC aggregated $39,097, of which $8,404 is unpaid
at June 30, 1995.
The Fund pays each Trustee not affiliated with the Adviser $4,000 annually
plus specified amounts for attended board and committee meetings. During the
six months ended June 30, 1995, Trustees' fees aggregated $24,103.
27
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28
<PAGE>
OFFICERS AND TRUSTEES
David S. Lee*
President and Trustee
Daniel Pierce*
Vice President and Trustee
Henry P. Becton, Jr.
Trustee; President and General Manager, WGBH Educational Foundation
Dawn-Marie Driscoll
Trustee; Attorney and Corporate Director
Peter B. Freeman
Trustee; Corporate Director and Trustee
Dudley H. Ladd*
Trustee
George M. Lovejoy, Jr.
Trustee; President and Director, Fifty Associates
Wesley W. Marple, Jr.
Trustee; Professor of Business Administration, Northeastern University
College of Business Administration
Juris Padegs*
Trustee
Donald C. Carleton*
Vice President
Cuyler W. Findlay*
Vice President
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
Vice President
Thomas F. McDonough*
Vice President and Secretary
Pamela A. McGrath*
Vice President and Treasurer
Edward J. O'Connell*
Vice President and
Assistant Treasurer
Coleen Downs Dinneen*
Assistant Secretary
* Scudder, Stevens & Clark, Inc.
29
<PAGE>
INVESTMENT PRODUCTS AND SERVICES
<TABLE>
<CAPTION>
The Scudder Family of Funds
-----------------------------------------------------------------------------------------------------------------
<S> <C>
Money market Income
Scudder Cash Investment Trust Scudder Emerging Markets Income Fund
Scudder U.S. Treasury Money Fund Scudder GNMA Fund
Tax free money market+ Scudder Income Fund
Scudder Tax Free Money Fund Scudder International Bond Fund
Scudder California Tax Free Money Fund* Scudder Short Term Bond Fund
Scudder New York Tax Free Money Fund* Scudder Short Term Global Income Fund
Tax free+ Scudder Zero Coupon 2000 Fund
Scudder California Tax Free Fund* Growth
Scudder High Yield Tax Free Fund Scudder Capital Growth Fund
Scudder Limited Term Tax Free Fund Scudder Development Fund
Scudder Managed Municipal Bonds Scudder Global Fund
Scudder Massachusetts Limited Term Tax Free Fund* Scudder Global Small Company Fund
Scudder Massachusetts Tax Free Fund* Scudder Gold Fund
Scudder Medium Term Tax Free Fund Scudder Greater Europe Growth Fund
Scudder New York Tax Free Fund* Scudder International Fund
Scudder Ohio Tax Free Fund* Scudder Latin America Fund
Scudder Pennsylvania Tax Free Fund* Scudder Pacific Opportunities Fund
Growth and Income Scudder Quality Growth Fund
Scudder Balanced Fund Scudder Value Fund
Scudder Growth and Income Fund The Japan Fund
Retirement Plans and Tax-Advantaged Investments
-----------------------------------------------------------------------------------------------------------------
IRAs 403(b) Plans
Keogh Plans SEP-IRAs
Scudder Horizon Plan+++* (a variable annuity) Profit Sharing and Money Purchase
401(k) Plans Pension Plans
Closed-end Funds#
-----------------------------------------------------------------------------------------------------------------
The Argentina Fund, Inc. The Latin America Dollar Income Fund, Inc.
The Brazil Fund, Inc. Montgomery Street Income Securities, Inc.
The First Iberian Fund, Inc. Scudder New Asia Fund, Inc.
The Korea Fund, Inc. Scudder New Europe Fund, Inc.
Scudder World Income
Opportunities Fund, Inc.
Institutional Cash Management
-----------------------------------------------------------------------------------------------------------------
Scudder Institutional Fund, Inc.
Scudder Fund, Inc.
Scudder Treasurers Trust(TM)++
-----------------------------------------------------------------------------------------------------------------
For complete information on any of the above Scudder funds, including management fees and expenses, call or
write for a free prospectus. Read it carefully before you invest or send money. +A portion of the income
from the tax-free funds may be subject to federal, state and local taxes. *Not available in all states. +++A
no-load variable annuity contract provided by Charter National Life Insurance Company and its affiliate,
offered by Scudder's insurance agencies, 1-800-225-2470. #These funds, advised by Scudder, Stevens & Clark,
Inc., are traded on various stock exchanges. ++For information on Scudder Treasurers Trust(TM), an
institutional cash management service that utilizes certain portfolios of Scudder Fund, Inc. ($100,000
minimum), call: 1-800-541-7703.
</TABLE>
30
<PAGE>
HOW TO CONTACT SCUDDER
<TABLE>
<CAPTION>
Account Service and Information
-------------------------------------------------------------------------------------------------------------
<S> <C>
For existing account service and transactions
SCUDDER INVESTOR RELATIONS
1-800-225-5163
For account updates, prices, yields, exchanges and redemptions
SCUDDER AUTOMATED INFORMATION LINE (SAIL)
1-800-343-2890
Investment Information
-------------------------------------------------------------------------------------------------------------
To receive information about the Scudder funds, for additional
applications and prospectuses, or for investment questions
SCUDDER INVESTOR RELATIONS
1-800-225-2470
For establishing 401(k) and 403(b) plans
SCUDDER DEFINED CONTRIBUTION SERVICES
1-800-323-6105
Please address all correspondence to
-------------------------------------------------------------------------------------------------------------
THE SCUDDER FUNDS
P.O. BOX 2291
BOSTON, MASSACHUSETTS
02107-2291
Or stop by a Scudder Funds Center
-------------------------------------------------------------------------------------------------------------
Many shareholders enjoy the personal, one-on-one service of the
Scudder Funds Centers. Check for a Funds Center near you--they can
be found in the following cities:
Boca Raton New York
Boston Portland, OR
Chicago San Diego
Cincinnati San Francisco
Los Angeles Scottsdale
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
For information on Scudder For information on Scudder
Treasurers Trust(TM), an institutional Institutional Funds,* funds
cash management service for designed to meet the broad
corporations, non-profit investment management and
organizations and trusts which service needs of banks and
utilizes certain portfolios of other institutions, call:
Scudder Fund, Inc.* ($100,000 1-800-854-8525.
minimum), call: 1-800-541-7703.
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
Scudder Investor Relations and Scudder Funds Centers are services provided
through Scudder Investor Services, Inc., Distributor.
* Contact Scudder Investor Services, Inc., Distributor, to receive a
prospectus with more complete information, including management fees and
expenses. Please read it carefully before you invest or send money.
</TABLE>
31
<PAGE>
Celebrating Over 75 Years of Serving Investors
Established in 1919 by Theodore Scudder, Sidney Stevens, and F. Haven
Clark, Scudder, Stevens & Clark was the first independent investment counsel
firm in the United States. Since its birth, Scudder's pioneering spirit and
commitment to professional long-term investment management have helped shape the
investment industry. In 1928, we introduced the nation's first no-load mutual
fund. Today we offer 36 pure no load(TM) funds, including the first
international mutual fund offered to U.S. investors.
Over the years, Scudder's global investment perspective and dedication to
research and fundamental investment disciplines have helped us become one of the
largest and most respected investment managers in the world. Though times have
changed since our beginnings, we remain committed to our long-standing
principles: managing money with integrity and distinction; keeping the interests
of our clients first; providing access to investments and markets that may not
be easily available to individuals; and making investing as simple and
convenient as possible through friendly, comprehensive service.
