Scudder
Managed
Municipal
Bonds
Semiannual Report
June 30, 1998
Pure No-Load(TM) Funds
A fund that seeks to provide income exempt from regular federal income tax
primarily through investments in high-grade, long-term municipal securities.
A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
SCUDDER (logo)
<PAGE>
Scudder Managed Municipal Bonds
- --------------------------------------------------------------------------------
Date of Inception: 10/14/76 Total Net Assets as of Ticker Symbol: SCMBX
6/30/98: $732.72 million
- --------------------------------------------------------------------------------
o Scudder Managed Municipal Bonds' 30-day net annualized SEC yield was 4.19% as
of June 30, 1998. For investors in the two highest federal tax brackets of 36%
and 39.6%, the Fund's yield was equivalent to a fully taxable 6.55% and 6.94%,
respectively.
o The Fund received four stars from Morningstar, reflecting an "above-average"
rating for risk-adjusted performance through June 30, 1998.*
o For the six-month, as well as the one-, three-, five- and ten-year periods
ended June 30, 1998, the Fund's total returns outpaced the average performance
of similar municipal bond funds as tracked by Lipper Analytical Services. Please
see page 6 for additional Lipper performance information.
Table of Contents
3 Letter from the Fund's President 20 Financial Statements
4 Performance Update 23 Financial Highlights
5 Portfolio Summary 24 Notes to Financial Statements
6 Portfolio Management Discussion 28 Officers and Trustees
9 Glossary of Investment Terms 29 Investment Products and Services
10 Investment Portfolio 30 Scudder Solutions
* For your information, these ratings are subject to change every month and are
calculated from the Fund's five-year average annual return in excess of 90-day
Treasury bill returns with appropriate fee adjustments, and a risk factor that
reflects fund performance below T-bill returns. The Fund received four stars
for three- and five-year performance and three stars for ten-year performance,
and was rated among 1549, 860, and 349 municipal funds for the respective
periods. Of the funds rated, 10% received five stars, and 22.5% received four
stars. Past performance is no guarantee of future returns.
2 - Scudder Managed Municipal Bonds
<PAGE>
Letter from the Fund's President
Dear Shareholders,
We are pleased to report to you on Scudder Managed Municipal Bonds'
performance over its most recent six-month period ended June 30, 1998. The Fund
posted a 4.19% 30-day net annualized SEC yield as of June 30, equivalent to a
taxable yield of 6.94% for investors in the top federal tax bracket. In
addition, the Fund earned a four-star Morningstar rating as of June 30. The Fund
also outpaced the average total return of similar funds as tracked by Lipper as
of June 30, 1998, for the six-month as well as the one-, three-, five- and
ten-year periods.
Recent evidence indicates renewed investor interest in tax-exempt bonds. In
part this traces to investors who are heavily invested in the stock market,
seeking to rebalance their portfolios. A recent example was the Long Island
Power Authority's successful offering of $3.4 billion of municipal securities --
the largest ever -- which received bids for almost four times that amount from
institutional and individual investors. We are confident that investors in
higher tax brackets will continue to recognize the potential value of holding
some portion of their portfolio in tax-exempt securities.
For those of you interested in the newest Scudder offerings, we would like
to take this opportunity to highlight two upcoming additions to our
international category, both of which are scheduled to begin operations on
September 1. Scudder International Growth Fund will seek long-term capital
appreciation by investing primarily in the equity securities of foreign
companies with high earnings growth potential, and Scudder International Value
Fund will seek long-term capital appreciation by investing primarily in
undervalued foreign equity securities. These two funds make Scudder among the
first in the industry to offer funds that pursue long-term growth of capital
internationally in both the growth and value styles of investing. Please see
page 29 for more information on Scudder products and services.
If you have any questions regarding Scudder Managed Municipal Bonds or any
other Scudder fund, please call Investor Relations at 1-800-225-2470. Or visit
Scudder's Web site at http://funds.scudder.com.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder Managed Municipal Bonds
3 - Scudder Managed Municipal Bonds
<PAGE>
PERFORMANCE UPDATE as of June 30, 1998
- ----------------------------------------------------------------
FUND INDEX COMPARISONS
- ----------------------------------------------------------------
Total Return
Period Growth --------------
Ended of Average
6/30/98 $10,000 Cumulative Annual
- --------------------------------------------
SCUDDER MANAGED MUNICIPAL BONDS
- --------------------------------------------
1 Year $ 10,845 8.45% 8.45%
5 Year $ 13,451 34.51% 6.11%
10 Year $ 22,385 123.85% 8.39%
- --------------------------------------------
LEHMAN BROTHERS MUNICIPAL BOND INDEX
- --------------------------------------------
1 Year $ 10,865 8.65% 8.65%
5 Year $ 13,675 36.75% 6.46%
10 Year $ 22,197 121.97% 8.30%
- --------------------------------------------
- -----------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- -----------------------------------------------------------------
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
- ----------------------
'88 $10,000
'89 $11,390
'90 $11,997
'91 $13,092
'92 $14,719
'93 $16,642
'94 $16,510
'95 $17,845
'96 $18,993
'97 $20,641
'98 $22,385
LEHMAN BROTHERS MUNICIPAL
BOND INDEX
Year Amount
- ----------------------
'88 $10,000
'89 $11,138
'90 $11,898
'91 $12,969
'92 $14,498
'93 $16,232
'94 $16,260
'95 $17,694
'96 $18,869
'97 $20,430
'98 $22,197
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>
<CAPTION>
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------
NET ASSET VALUE... $8.82 $8.36 $8.47 $8.86 $9.17 $8.35 $8.52 $8.61 $8.88 $9.11
INCOME DIVIDENDS.. $ .60 $ .57 $ .54 $ .47 $ .50 $ .46 $ .48 $ .45 $ .46 .46
CAPITAL GAINS
DISTRIBUTIONS..... $ .12 $ .33 $ .09 $ .12 $ .29 $ .31 $ -- $ -- $.01 $ .05
FUND TOTAL
RETURN (%)........ 13.90 5.32 9.13 12.43 13.06 -.80 8.09 6.43 8.68 8.45
INDEX TOTAL
RETURN (%)........ 11.39 6.81 9.01 11.77 11.96 .20 8.82 6.64 8.27 8.65
</TABLE>
All performance is historical, 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 - Scudder Managed Municipal Bonds
<PAGE>
PORTFOLIO SUMMARY as of June 30, 1998
- ---------------------------------------------------------------------------
DIVERSIFICATION
- ---------------------------------------------------------------------------
Electric Utility Revenue 22%
Core Cities/Lease 12%
Hospital/Health 8%
Water/Sewer Revenue 8%
Pollution Control/
Industrial Development 8%
State General Obligation 6%
Toll Revenue/Transportation 6%
Higher Education 5%
Other General Obligation/Lease 5%
Housing Finance Authority 4%
Miscellaneous Municipal 16%
- --------------------------------------------
100%
- --------------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
Diversification remains an
important strategy for the Fund,
allowing us to spread risk over a
large number of sectors,
maturities, and geographic areas.
- --------------------------------------------------------------------------
QUALITY
- --------------------------------------------------------------------------
AAA* 60%
AA 9%
A 17%
BBB 10%
Not Rated 4%
- --------------------------------------------
100%
- --------------------------------------------
Weighted average quality: AA
* Includes Cash Equivalents
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
The Fund's overall quality
remains high, with 69% of
Fund assets rated AAA or AA
or the equivalent.
- --------------------------------------------------------------------------
EFFECTIVE MATURITY
- --------------------------------------------------------------------------
Less than 1 year 4%
1 - 5 18%
5 - 10 39%
10 - 15 24%
Greater than 15 years 15%
- --------------------------------------------
100%
- --------------------------------------------
Weighted average effective maturity: 9.4 years
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
We continued to take a
cautious stance on the market,
maintaining an average
maturity similar to that of the
Fund's benchmark, the Lehman
Brothers Municipal Bond
Index.
For more complete details about the Fund's investment portfolio, see page 10.
5 - Scudder Managed Municipal Bonds
<PAGE>
Portfolio Management Discussion
Dear Shareholders,
During a period marked by a heavy supply of municipal bonds as well as rising
demand, the performance of municipal bonds was mixed over the six-month period
ended June 30, 1998. Scudder Managed Municipal Bonds provided a 2.34% total
return for the period, outpacing the 2.26% average return of similar funds as
tracked by Lipper Analytical Services, Inc. In addition, the Fund posted a
30-day net annualized SEC yield of 4.19% as of June 30, equivalent to fully
taxable yields of 6.55% and 6.94%, respectively, for investors in the 36% and
39.6% federal tax brackets. The Fund's total return was comprised of a $0.02
decline in net asset value to $9.11, offset by income distributions of $0.23 per
share and $0.01 per share in long-term capital gains. For the 12-month period
ended June 30, the Fund's total return was 8.45%.
Scudder Managed Municipal Bonds continues to display competitive long-term
performance: As shown in the accompanying chart, the Fund's average annual total
return outpaced the average return of its peer group for the six-month period,
as well as for one-, three-, five- and ten-year periods. 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.
Consistently Exceeding the Averages
(Average annual returns for periods ended June 30, 1998)
Scudder Lipper
Managed average Number
Municipal annual of Funds
Period Bonds return return tracked
------ ------------ ------ -------
Six months 2.34% 2.26% 246
1 year 8.45% 8.39% 233
3 years 7.85% 7.32% 192
5 years 6.11% 5.77% 124
10 years 8.39% 7.95% 70
Past performance does not guarantee future results.
Portfolio Reallocations
Boost Bonds
During the first and second quarters of 1998, U.S. equity markets continued
their winning ways, despite additional bad economic news from Asia during the
second quarter. Bonds actually benefited from news of Asia's troubles (and
outperformed equities during the second quarter), as income investors came to
believe that the Federal Reserve would not raise interest rates any time soon,
despite the Fed's well-publicized current bias towards tightening credit. In
turn, mutual fund investors began to allocate a larger portion of their
portfolios to fixed income, pushing bond prices up further. Long-term Treasuries
were the most obvious benefactor of this renewed interest, as 30-year Treasury
yields declined to 5.63%, the lowest yield for this class of Treasury security
since the U.S. government began auctioning these bonds in 1972.
6 - Scudder Managed Municipal Bonds
<PAGE>
As is often the case, municipal bonds lagged behind U.S. Treasuries in terms of
yield declines and price increases. Though this lag -- when it occurs -- can
offer a benefit when yields are rising and fixed-income markets are volatile,
municipal bonds registered more modest gains compared with Treasuries during the
first six months of 1998. Over the period, 10-year Treasury bond yields declined
one-third of a percentage point and their prices rose 2.4%, while 10-year
municipal bond yields and prices were unchanged.
Part of the municipal market's slower reaction to favorable economic conditions
for bonds compared with Treasuries can be attributed to the complexity of
pricing the wide range of municipal bonds available in the marketplace, but
supply issues played the most significant role. While Treasury supply has
contracted recently, thanks to the shrinking Federal deficit, the supply of
municipal bonds has grown substantially, overwhelming recent increases in
demand. Municipal supply during the first six months of 1998 was $149 billion,
up 54% compared with the same period in 1997.
Two-Tier Strategy
Our portfolio strategy during the first half of 1998 had two main elements, in
conjunction with Scudder Managed Municipal Bonds' primary goals of generating
federally tax-free income through investments in high-grade, long-term municipal
securities, while posting competitive total return. First, because
longer-intermediate municipal bonds offered more attractive yields, the Fund
shifted out of some nine- and 10-year bonds into 15- to 20-year bonds. Second,
the Fund continued its strong emphasis on call protection. (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 for
the Fund than would exist if the portfolio held a significant proportion of
bonds that could be called in before their stated maturities.
In addition, we continued to take a cautious interest rate stance on the market,
maintaining a neutral average portfolio duration similar to that of the Lehman
Brothers Municipal Bond Index. As of June 30, the Fund's average duration was
9.4 years. (Duration gives relative weight to both interest and principal
payments and has replaced average maturity as the standard measure of interest
rate sensitivity among professional investors. Generally, the shorter the
duration, the less sensitive a portfolio will be to changes in interest rates.)
Overall portfolio quality remains high, with 69% of the Fund's portfolio rated
AAA or AA, or of equivalent quality. And diversification remains an important
strategy for the Fund, allowing us to spread risk over a large number of
sectors, maturities, and geographic areas. As of June 30, 1998, the Fund held
securities issued in 26 states plus the District of Columbia and the Virgin
Islands. The Portfolio Summary on page 5 provides more information about the
Fund's holdings, including quality, maturity, and sector representation.
Cautious Optimism on Bonds
It is difficult to predict whether the Federal Reserve will choose to raise
short-term interest rates in the near future to prevent a resurgence of
inflation, but we do believe Asia's economic woes by themselves will restrain
7 - Scudder Managed Municipal Bonds
<PAGE>
U.S. economic growth for the remainder of 1998 and into 1999. Because the
difference or "spread" between the short- and long-term interest rates of
Treasury securities is unusually narrow at present, it's difficult to predict
continued significant declines in Treasury rates for the remainder of the year.
But as we've mentioned, municipal bonds have lagged Treasuries of late, and we
believe longer-maturity municipals have the potential to post gains if the U.S.
economy slows.
In conjunction with the Fund's objective to pursue high current income and
attractive total return in high-grade municipals, the Fund will seek to purchase
select longer-maturity noncallable bonds over the coming months. And as always,
rather than attempting to predict short-term market movements, we will continue
to search for the best value when making investment decisions. Thank you for
investing with Scudder.
Sincerely,
Your Portfolio Management Team
/s/Philip G. Condon /s/M. Ashton Patton
Philip G. Condon M. Ashton Patton
8 - Scudder Managed Municipal Bonds
<PAGE>
Glossary of Investment Terms
BOND An interest-bearing security issued by the
federal, state, or local government or a
corporation that obligates the issuer to pay
the bondholder a specified amount of interest
for a stated period -- usually a number of
years -- and to repay the face amount of the
bond at its maturity date.
GENERAL OBLIGATION BOND A municipal bond backed by the "full faith
and credit" (including the taxing and further
borrowing power) of the city, state, or
agency that issues the bond. A general
obligation bond is repaid with the issuer's
general revenue and borrowings.
INFLATION An overall increase in the prices of goods
and services, as happens when business and
consumer spending increases relative to the
supply of goods available in the marketplace
-- in other words, when too much money is
chasing too few goods. High inflation has a
negative impact on the prices of fixed-income
securities.
MUNICIPAL BOND An interest-bearing debt security issued by a
state or local government entity.
NET ASSET VALUE (NAV) The price per share of a mutual fund based on
the sum of the market value of all the
securities owned by the fund divided by the
number of outstanding shares.
TAXABLE EQUIVALENT YIELD The level of yield a fully taxable instrument
would have to provide to equal that of a
tax-free municipal bond on an after-tax
basis.
30-DAY SEC YIELD The standard yield reference for bond funds,
based on a formula prescribed by the SEC.
This annualized yield calculation reflects
the 30-day average of the income earnings of
every holding in a given fund's portfolio,
net of expenses, assuming each is held to
maturity.
TOTAL RETURN The most common yardstick to measure the
performance of a fund. Total return --
annualized or compound -- is based on a
combination of share price changes plus
income and capital gain distributions, if
any, expressed as a percentage gain or loss
in value.
(Sources: Scudder Kemper Investments, Inc.; Barron's Dictionary of Finance and
Investment Terms)
9 - Scudder Managed Municipal Bonds
<PAGE>
Investment Portfolio as of June 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating(b) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Short-Term Municipal Investments 1.3%
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
California
Santa Clara County, CA, Transit District, Daily Adjustable Rate, Series 1985A,
4%, 6/1/2015* ................................................................ 1,400,000 MIG1 1,400,000
Illinois
Chicago-O'Hare International Airport, Daily Demand Note, 4%, 12/1/2017* ........ 1,000,000 P1 1,000,000
North Carolina
Raleigh, NC, Airport Authority Special Facility Revenue, Daily Demand Note,
Series 1995B1, 3.85%, 11/1/2015* ............................................. 1,000,000 A1+ 1,000,000
Ohio
Ohio Air Quality Development Authority, Cincinnati Gas and Electric, Daily
Demand Note, 3.8%, 12/1/2015* ................................................ 2,000,000 A1+ 2,000,000
Texas
Harris County, TX, Health Facilities Authority, Saint Lukes, Daily Demand Note,
4%, 2/15/2027* ............................................................... 1,300,000 A1+ 1,300,000
North Central TX, Health Facilities Development Corp., Presbyterian Medical
Center, 1995 Series D, Daily Demand Note, Series C, 4%, 12/1/2015* ........... 3,000,000 MIG1 3,000,000
- ------------------------------------------------------------------------------------------------------------------------------
Total Short-Term Municipal Investments (Cost $9,700,000) 9,700,000
- ------------------------------------------------------------------------------------------------------------------------------
Long-Term Municipal Investments 98.7%
- ------------------------------------------------------------------------------------------------------------------------------
Alaska
North Slope Borough, AK, General Obligation:
Series B, Zero Coupon, 1/1/2003 (c) .......................................... 8,000,000 AAA 6,570,480
Capital Appreciation:
Series A, Zero Coupon, 6/30/2006 (c) ........................................ 7,000,000 AAA 4,872,700
Series B, Zero Coupon, 6/30/2004 (c) ........................................ 15,000,000 AAA 11,498,550
Series B, Zero Coupon, 6/30/2005 (c) ........................................ 18,200,000 AAA 13,301,288
Arizona
Maricopa County, AZ, School District #28, Kyrene Elementary School, Series B,
Zero Coupon, 1/1/2006 ........................................................ 4,905,000 AAA 3,502,366
California
California General Obligation:
6.25%, 10/1/2007 (c) ......................................................... 4,000,000 AAA 4,570,240
6.25%, 4/1/2008 (c) .......................................................... 5,000,000 AAA 5,726,700
6.6%, 2/1/2009 (c) ........................................................... 15,600,000 AAA 18,313,932
California Housing Finance Agency, Multi-Unit Rental Housing Revenue, Series A,
7.7%, 8/1/2010 ............................................................... 1,000,000 A 1,102,060
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 - Scudder Managed Municipal Bonds
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating(b) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
California Pollution Control Financing Authority, Solid Waste Disposal Revenue,
Canadian Fibre of Riverside PJ, Series 1997A, 9%, 7/1/2019 ................... 12,000,000 NR 12,558,720
California Statewide Community Development Authority, Certificate of
Participation, Lutheran Homes, 5.5%, 11/15/2008 .............................. 2,250,000 A 2,413,530
Foothill Eastern Transportation Corridor Agency, CA, Toll Road Revenue, Senior
Lien, Series A:
Step-up Coupon, 0% to 1/1/2005, 7.05% to 1/1/2009 ........................... 5,000,000 BBB 3,913,900
Step-up Coupon, 0% to 1/1/2005, 7.1% to 1/1/2011 ............................ 4,000,000 BBB 3,197,040
Step-up Coupon, 0% to 1/1/2005, 7.1% to 1/1/2012 ............................ 4,000,000 BBB 3,180,760
Step-up Coupon, 0% to 1/1/2005, 7.15% to 1/1/2014 ........................... 6,250,000 BBB 4,953,563
Zero Coupon, 0% to 1/1/2015 ................................................. 11,000,000 BBB 4,573,030
Los Angeles County, CA, Certificate of Participation, Disney Parking Project:
Zero Coupon, 9/1/2007 ........................................................ 4,030,000 A 2,528,221
Zero Coupon, 9/1/2009 ........................................................ 5,425,000 A 3,040,984
Roseville, CA, Unified High School District, General Obligation:
Series B, Zero Coupon, 8/1/2010 (c) .......................................... 1,830,000 AAA 1,036,402
Series B, Zero Coupon, 8/1/2015 (c) .......................................... 1,000,000 AAA 420,860
San Joaquin, CA, Certificate of Participation, County Public Facilities
Project, 5.5%, 11/15/2013 (c) ................................................ 3,895,000 AAA 4,188,839
San Joaquin Hills, CA, Transportation Corridor Agency, Toll Road Revenue,
Capital Appreciation, Refunding, Series 1997A, Zero Coupon, 1/15/2012 ........ 2,000,000 AAA 1,030,120
Colorado
Castle Rock Ranch Colorado Public Improvements Authority Public Facilities
Revenue, 6.25%, 12/1/2017 .................................................... 4,820,000 AA 5,549,844
Colorado Housing Finance Authority Revenue:
Series A, 8.1%, 10/1/2005 .................................................... 2,030,000 AA 2,285,252
Series A, 8.15%, 10/1/2006 ................................................... 2,145,000 AA 2,414,369
Series A, 8.25%, 10/1/2010 ................................................... 1,940,000 AA 2,166,495
Series A, 8.25%, 10/1/2011 ................................................... 1,680,000 AA 1,870,042
Series A, 8.25%, 10/1/2012 ................................................... 1,945,000 AA 2,157,219
Series A, Multi-Family Mortgage:
8.15%, 10/1/2007 ............................................................ 2,320,000 AA 2,606,613
8.2%, 10/1/2008 ............................................................. 2,510,000 AA 2,819,684
8.2%, 10/1/2009 ............................................................. 2,725,000 AA 3,050,147
Denver, CO, Urban Renewal Authority Tax Incremental Revenue, 7.5%, 9/1/2004 .... 1,000,000 NR 1,072,080
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 - Scudder Managed Municipal Bonds
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating(b) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
District Of Columbia
District of Columbia, Certificate of Participation:
7.3%, 1/1/2013 ............................................................... 1,000,000 BB 1,089,950
Series 1993, 6.875%, 1/1/2003 ................................................ 2,155,000 BB 2,250,854
District of Columbia, General Obligation:
Series A, 5.875%, 6/1/2005 (c) ............................................... 3,300,000 AAA 3,569,115
Series B, Zero Coupon, 6/1/2003 (c) .......................................... 2,000,000 AAA 1,612,960
Series B3, 5.3%, 6/1/2005 (c) ................................................ 1,350,000 AAA 1,414,368
Series B3, 5.5%, 6/1/2007 (c) ................................................ 1,000,000 AAA 1,063,690
Series B3, 5.5%, 6/1/2008 (c) ................................................ 3,225,000 AAA 3,435,431
District of Columbia, Georgetown University, Series A, 7.25%, 4/1/2011 ......... 2,965,000 A 3,031,772
District of Columbia Water and Sewer Authority, Public Utility Revenue, 6%,
10/1/2013 .................................................................... 3,630,000 AAA 4,059,284
Georgia
Burke County, GA, Development Authority, Pollution Control Revenue, Ogelthorpe
Power Corp., Vogtle Project, 7.7%, 1/1/2006 (c) .............................. 5,000,000 AAA 5,842,350
Fulton County, GA, School District, General Obligation, Series 1998, 5.375%,
1/1/2016 (e) ................................................................. 1,500,000 AA 1,579,470
Georgia Municipal Electricity Authority Power Revenue, 6.5%, 1/1/2012 .......... 3,500,000 AAA 4,082,470
Monroe County, GA, Development Authority, Pollution Control Revenue, Ogelthorpe
Power Corporation, Scherer Project, 6.7%, 1/1/2009 ........................... 3,255,000 A 3,766,361
Municipal Electric Authority of Georgia, Power Revenue, Series V, 6.5%,
1/1/2012 (c) ................................................................. 5,000,000 AAA 5,810,400
Illinois
Central Lake County, IL, Joint Action Water Agency, Refunding Revenue, Zero
Coupon, 5/1/2004 (c) ......................................................... 2,445,000 AAA 1,887,907
Chicago, IL, General Obligation:
Emergency Telephone System, 5.6%, 1/1/2009 (c) ............................... 7,200,000 AAA 7,813,152
Lease, Board of Education, Series A, 6.25%, 1/1/2015 (c) ..................... 2,725,000 AAA 3,128,000
Series 1996-A-2, 6.25%, 1/1/2014 (c) ......................................... 3,750,000 AAA 4,308,638
Chicago, IL, Motor Fuel Tax Revenue, 5.375%, 1/1/2014 (c) ...................... 5,000,000 AAA 5,272,550
Chicago, IL, Public Building Commission:
Building Revenue, Series A, 5.25%, 12/1/2008 (c) ............................. 2,655,000 AAA 2,816,796
Capital Appreciation, ETM, Series 1990A, Zero Coupon, 1/1/2008 (c)** ......... 4,000,000 AAA 2,591,560
Chicago, IL, Wastewater Transmission Revenue, 5.375%, 1/1/2013 (c) ............. 3,100,000 AAA 3,284,698
Cook County, IL, Community High School District #233, Homewood & Flossmor,
Series 1993B, Zero Coupon, 12/1/2011 (c) ..................................... 1,690,000 AAA 879,121
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 - Scudder Managed Municipal Bonds
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating(b) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Du-Page, IL, Industrial Development Revenue, Weyerhaeuser Company Project,
Series 1983, 8.65%, 11/1/2008 ................................................ 3,600,000 NR 3,659,364
Hoffman Estates, IL, Tax Incremental Revenue, Zero Coupon, 5/15/2006 ........... 8,500,000 A 5,895,685
Illinois Development Finance Authority Refunding Revenue Commonwealth Edison,
Series 1994, 5.85%, 1/15/2014 (c) ............................................ 5,000,000 AAA 5,486,050
Illinois Educational Facilities Authority, Loyola University, Zero Coupon,
7/1/2005 (c) ................................................................. 3,100,000 AAA 2,265,325
Illinois Health Facilities Authority:
Delnor Community Hospital, 5.5%, 5/15/2013 (c) ............................... 1,500,000 AAA 1,543,095
Memorial Medical Center -- Springfield, 5.25%, 10/1/2009 (c) ................. 1,725,000 AAA 1,802,453
Illinois Health Facilities Authority Revenue, Centegra Health System, Series
1998, 5.2%, 9/1/2012 ......................................................... 1,000,000 A- 996,950
Illinois State Sales Tax Revenue, Series P, 6.5%, 6/15/2013 .................... 2,100,000 AAA 2,460,591
Northern Illinois University, Board of Regents:
Series 1992, Zero Coupon, 4/1/2005 (c) ....................................... 1,865,000 AAA 1,378,198
Series 1992, Zero Coupon, 10/1/2005 (c) ...................................... 1,865,000 AAA 1,347,668
Series 1992, Zero Coupon, 4/1/2006 (c) ....................................... 1,865,000 AAA 1,312,829
Series 1992, Zero Coupon, 10/1/2006 (c) ...................................... 1,865,000 AAA 1,283,437
Series 1992, Zero Coupon, 4/1/2007 (c) ....................................... 1,865,000 AAA 1,249,364
Series 1992, Zero Coupon, 10/1/2007 (c) ...................................... 1,865,000 AAA 1,221,090
Oak Lawn, IL, Water and Sewer Revenue:
Series A, Zero Coupon, 10/1/2003 (c) ......................................... 1,295,000 AAA 1,029,292
Series A, Zero Coupon, 10/1/2004 (c) ......................................... 1,295,000 AAA 981,649
Series A, Zero Coupon, 10/1/2005 (c) ......................................... 1,295,000 AAA 935,780
Series A, Zero Coupon, 10/1/2006 (c) ......................................... 1,295,000 AAA 891,180
Rosemont, IL:
Zero Coupon, Tax Increment, 12/1/2004 (c) .................................... 6,000,000 AAA 4,514,700
Zero Coupon, Tax Increment-3, Series C, 12/1/2005 (c) ........................ 7,060,000 AAA 5,063,714
State University Retirement System, IL, Special Revenue, Zero Coupon,
10/1/2005 (c) ................................................................ 7,000,000 AAA 5,058,270
University of Chicago, IL, Hospital Refunding, 5.5%, 8/15/2008 (c) ............. 2,500,000 AAA 2,632,125
Will County, IL, School District #201-U, Crete Monee, Zero Coupon,
12/15/2006 (c) ............................................................... 3,725,000 AAA 2,539,705
Winnebago County, IL, School District #122:
6.55%, 6/1/2009 (c) .......................................................... 1,675,000 AAA 1,963,536
6.55%, 6/1/2010 (c) .......................................................... 1,825,000 AAA 2,146,437
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 - Scudder Managed Municipal Bonds
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating(b) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Indiana
Indiana Health Facilities Financing Authority, Hospital Revenue Community
Hospitals Project, Tax Exempt Custodian Receipts Refund:
Series 1990A, 6%, 7/1/2001 .................................................. 205,000 AAA 215,840
Series 1990A, 6%, 7/1/2003 .................................................. 230,000 AAA 247,432
Series 1990A, 6%, 7/1/2004 .................................................. 240,000 AAA 260,064
Series 1990A, 6%, 7/1/2005 .................................................. 255,000 AAA 278,238
Series 1990A, 6%, 7/1/2006 .................................................. 270,000 AAA 296,776
Series 1990A, 6%, 7/1/2007 .................................................. 285,000 AAA 314,364
Series 1990A, 6%, 7/1/2009 .................................................. 165,000 AAA 183,264
Series 1990A, 6%, 7/1/2010 .................................................. 175,000 AAA 194,838
Series 1990A, 6%, 7/1/2011 .................................................. 185,000 AAA 206,290
Series 1990A, 6%, 7/1/2012 .................................................. 190,000 AAA 212,021
Series 1990A, 6%, 7/1/2013 .................................................. 200,000 AAA 223,406
Series 1990A, 6%, 7/1/2014 .................................................. 215,000 AAA 240,258
Series 1990A, 6%, 7/1/2015 .................................................. 225,000 AAA 251,393
Series 1990A, 6%, 7/1/2016 .................................................. 235,000 AAA 262,086
Series 1990A, 6%, 7/1/2017 .................................................. 250,000 AAA 279,125
Series 1990A, 6%, 7/1/2018 .................................................. 265,000 AAA 296,469
Series 1997A, 6%, 7/1/2002 .................................................. 215,000 AAA 229,123
Series 1997A, 6%, 7/1/2008 .................................................. 160,000 AAA 177,526
Indiana Municipal Power Agency, Power Supply System:
Series B, 6%, 1/1/2012 (c) (f) ............................................... 1,750,000 AAA 1,964,340
Series B, 5.5%, 1/1/2016 (c) (f) ............................................. 8,960,000 AAA 9,489,267
Indiana Transportation Finance Authority, Highway Revenue, Series A, 5.75%,
6/1/2012 (c) ................................................................. 5,000,000 AAA 5,488,700
Rockport, IN, Pollution Control Revenue, Series B, Refunding Bonds, 7.6%,
3/1/2016 ..................................................................... 4,500,000 BBB 4,885,695
Louisiana
Bastrop, LA, Industrial Development Board Pollution Control Revenue,
International Paper Co. Project, 6.9%, 3/1/2007 .............................. 10,250,000 A 11,268,850
New Orleans, LA, General Obligation, Zero Coupon, 9/1/2005 (c) ................. 2,500,000 AAA 1,798,100
Maryland
Northeast Maryland Waste Disposal Authority, Southwest Resource Recovery System
Revenue:
6.9%, 1/1/2000 .............................................................. 1,595,000 AAA 1,662,484
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 - Scudder Managed Municipal Bonds
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating(b) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
7.2%, 1/1/2006 .............................................................. 3,440,000 AAA 3,960,369
7.2%, 1/1/2007 .............................................................. 3,390,000 AAA 3,902,805
Massachusetts
Massachusetts Bay Transportation Authority, General Transportation System,
Series B, 6.2%, 3/1/2016 ..................................................... 2,500,000 A 2,865,025
Massachusetts College Building Authority Project:
Series A, 7.5%, 5/1/2010 ..................................................... 4,110,000 A 5,158,091
Series A, 7.5%, 5/1/2014 ..................................................... 3,750,000 A 4,829,550
Massachusetts Health & Educational Facilities Authority, Massachusetts General
Hospital, Series F, 6.25%, 7/1/2012 (c) ...................................... 3,000,000 AAA 3,416,730
Massachusetts Water Resource Authority:
General Revenue, Series C, 6%, 12/1/2011 ..................................... 10,000,000 A 11,229,500
Series A, 6.5%, 7/15/2009 .................................................... 2,625,000 A 3,045,551
Series A, 6.5%, 7/15/2019 .................................................... 13,445,000 A 15,894,948
Michigan
Michigan State Hospital Finance Authority, Hospital Revenue, Sinai Hospital,
Series 1995, 6%, 1/1/2008 .................................................... 3,000,000 A 3,231,780
Michigan State Trunk Line, Series 1998A, 5.25%, 11/1/2013 ...................... 3,000,000 AA- 3,138,510
Montana
Montana Board Housing Revenue, Capital Appreciation, Single-Family Revenue,
Series A, Zero Coupon, 6/1/2010 .............................................. 3,265,000 AA 880,766
Nevada
Nevada State Housing Division, Single Family Mortgage Revenue, Series R, 5.95%,
10/1/2011 .................................................................... 5,895,000 AA 6,163,989
New Hampshire
New Hampshire Higher Educational & Health Facilities Authority Revenue, 6.2%,
1/1/2012 ..................................................................... 1,085,000 BBB 1,161,069
New Hampshire State Housing Authority, Single Family Revenue, 5.9%, 7/1/2019 ... 1,940,000 AA 2,133,243
New York
Long Island Power Authority, Electric Systems Revenue, Series 1998A, 5%,
12/1/2018 (c) ................................................................ 2,000,000 AAA 1,957,340
Metropolitan Transportation Authority of New York:
Services Contract, 5.75%, 7/1/2013 (c) ....................................... 6,775,000 AAA 7,423,435
Transit Facilities Revenue, 7%, 7/1/2002 ..................................... 1,595,000 BBB 1,741,756
New York, NY, 7%, 2/1/2005 ..................................................... 2,700,000 AAA 2,999,565
New York City, NY, General Obligation:
Series 1995 B, 6.75%, 8/15/2003 .............................................. 3,000,000 A 3,321,870
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 - Scudder Managed Municipal Bonds
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating(b) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Series 1995 E, 6.6%, 8/1/2004 ................................................ 6,500,000 A 7,224,490
Series 1995 E, 6.5%, 2/15/2005 ............................................... 7,000,000 A 7,760,060
Series 1996 G, 6.75%, 2/1/2009 ............................................... 3,000,000 A 3,467,430
Series A, 6.375%, 8/1/2004 ................................................... 5,000,000 A 5,411,600
Series B, 6%, 8/15/2004 ...................................................... 3,425,000 A 3,700,952
Series B, 6.1%, 8/15/2005 .................................................... 3,510,000 A 3,833,236
Series H, 7.2%, 8/1/2001 ..................................................... 255,000 A 275,418
Series H, 7.2%, 8/1/2001 (c) ................................................. 2,005,000 AAA 2,160,548
Prerefunded Balance, Series 1989D, 7%, 8/1/2002 (c) (d) ...................... 1,200,000 AAA 1,259,856
Prerefunded, Series 1989D, 7%, 8/1/2002 (c) (d) .............................. 1,805,000 AAA 1,895,034
Unrefunded Balance, Series 1989D, 7%, 8/1/2002 ............................... 1,125,000 A 1,176,795
Unrefunded Balance, Series 1989D, 7%, 8/1/2002 (c) ........................... 1,215,000 AAA 1,273,599
Unrefunded Balance, Series 1992-H, 7%, 2/1/2005 .............................. 1,195,000 A 1,312,433
New York State Dormitory Authority:
City University System, Consolidated Revenue:
Series A, 5.75%, 7/1/2006 ................................................... 4,000,000 BBB 4,280,200
Series A, 5.75%, 7/1/2006 (c) ............................................... 3,000,000 AAA 3,268,590
Series E, 5.75%, 7/1/2006 ................................................... 5,255,000 BBB 5,623,113
Series F, 5.375%, 7/1/2007 .................................................. 2,000,000 BBB 2,089,220
College and University Pooled Capital Program, 7.8%,12/1/2005 (c) ............ 3,225,000 AAA 3,334,715
Montefiore Medical Center, 5.75%, 8/1/2007 (c) ............................... 5,015,000 AAA 5,474,173
New York State Medical Care Facilities, Finance Agency, Mount Sinai Hospital,
Series 1983, 5.95%, 8/15/2009 ................................................ 3,245,000 AAA 3,416,368
Port Authority of New York & New Jersey, Series 1996, 7%, 10/1/2007 ............ 2,000,000 BBB 2,262,340
North Carolina
North Carolina Eastern Municipal Power Agency, Series C, 7%, 1/1/2007 .......... 7,965,000 AA 9,093,003
North Carolina Municipal Power Agency, 5.25%, 1/1/2009 ......................... 8,500,000 AAA 8,985,180
North Carolina Municipal Power Agency #1, Catawba Electric Refunding Revenue,
7.25%, 1/1/2007 .............................................................. 6,500,000 A 7,603,570
Ohio
Ohio Water Development Authority, Pollution Control Revenue, Ohio Edison
Company Project, Series 1989 A, 7.625%, 7/1/2023 ............................. 4,890,000 BBB 5,106,872
Pennsylvania
Philadelphia, PA, Hospital and Higher Education Facilities Authority, Temple
University Hospital, Series A, 6.5%, 11/15/2008 .............................. 2,800,000 A 3,148,656
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 - Scudder Managed Municipal Bonds
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating(b) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Rhode Island
Convention Center Authority Rhode Island Revenue, 5%, 5/15/2020 (c) ............ 14,000,000 AAA 13,653,780
Rhode Island Housing and Mortgage Finance Corp., Home Ownership Opportunity
Bond, Series 2, 7.5%, 10/1/2021 .............................................. 30,000 AA 30,558
Tennessee
Knox County, TN, Health, Education and Housing Facilities Board, Fort Sanders
Alliance, 7.25%, 1/1/2009 (c) ................................................ 3,250,000 AAA 3,948,880
Texas
Austin, TX, Combined Utility Systems Revenue Refunding, Zero Coupon,
Series 1993A, 5/15/2003 (c) .................................................. 2,890,000 AAA 2,336,388
Dallas-Fort Worth, TX, International Airport, American Airlines Inc., 7.5%,
11/1/2025 .................................................................... 14,250,000 BBB 15,370,763
Dallas-Fort Worth, TX, International Airport Revenue:
Series A, 7.375%, 11/1/2009 (c) .............................................. 4,500,000 AAA 5,264,640
Series A, 7.8%, 11/1/2007 (c) ................................................ 2,390,000 AAA 2,854,783
Harris County, TX, 5.5%, 8/15/2006 (c) (e) ..................................... 3,070,000 AAA 3,259,665
Harris County, TX, Health Facilities Texas Medical Center Project, Series 1996,
6.25%, 5/15/2010 (c) ......................................................... 3,000,000 AAA 3,404,640
Harris County, TX, Toll and Sub Lien, Series A, Zero Coupon, 8/15/2004 (c) ..... 4,050,000 AAA 3,089,300
Houston, TX, Water Conveyance System Contract, Certificate of Participation,
Series J, 6.125%, 12/15/2005 ................................................. 2,500,000 AAA 2,773,300
Houston, TX, Water and Sewer System Authority:
Series C, Zero Coupon, 12/1/2005 (c) ......................................... 15,000,000 AAA 10,766,400
Series C, Zero Coupon, 12/1/2007 (c) ......................................... 3,400,000 AAA 2,211,224
Lower Colorado River Authority, TX, Revenue Refunding, Zero Coupon,
1/1/2003 (c) ................................................................. 8,900,000 AAA 7,312,863
San Antonio, TX, Airport Systems Revenue Refunding, 7%, 7/1/2002 (c) ........... 1,695,000 AAA 1,869,500
San Antonio, TX, Electric and Gas, Revenue Refunding:
Series A, Zero Coupon, 2/1/2005 (c) .......................................... 7,000,000 AAA 5,214,930
Series B, Zero Coupon, 2/1/2005 (c) .......................................... 5,000,000 AAA 3,724,950
Texas Municipal Power Agency Revenue, Zero Coupon, 9/1/2012 .................... 5,150,000 AAA 2,550,950
Utah
Intermountain Power Agency, UT, Power Supply Revenue, Series C, 5.25%,
7/1/2014 ..................................................................... 4,000,000 AA 4,122,640
Intermountain Power Supply Agency, UT, Series 1993, 5.55%, 7/1/2011 ............ 3,000,000 A 3,135,330
Salt Lake City, UT, Hospital Revenue, Intermountain Health Care, Series 1992,
Inversed Inflow, 7.26%, 2/15/2012*** ......................................... 1,500,000 AA 1,677,915
</TABLE>
The accompanying notes are an integral part of the financial statements.
17 - Scudder Managed Municipal Bonds
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating(b) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Utah Associated Municipal Power System, Hunter Project, Refunding Revenue,
Zero Coupon, 7/1/2003 (c) .................................................... 5,700,000 AAA 4,589,241
Virgin Islands
Virgin Islands Public Finance Authority Revenue, 5.5%, 10/1/2008 ............... 1,500,000 BBB- 1,569,270
Virginia
Chesapeake, VA Water and Sewer, Series 1995A, 5%, 12/1/2025 .................... 5,000,000 AA 4,955,550
Virginia Beach, VA, Development Authority, Virginia Beach General Hospital
Project, 5.125%, 2/15/2018 (c) ............................................... 3,000,000 AAA 3,009,060
Washington
Seattle, WA, Port Revenue:
5.375%, 8/1/2013 ............................................................. 1,460,000 AAA 1,512,385
5.375%, 8/1/2014 ............................................................. 1,805,000 AAA 1,861,984
Washington Health Care Facilities Authority:
Empire Health Services-Spokane, 5.8%, 11/1/2008 (c) .......................... 4,865,000 AAA 5,353,251
Franciscan Health System -- St. Joseph's Hospital:
5.4%, 1/1/2007 (c) .......................................................... 2,000,000 AAA 2,114,420
5.4%, 1/1/2008 (c) .......................................................... 2,645,000 AAA 2,812,693
Washington Public Power Supply System:
Nuclear Project #1, Refunding Revenue:
Series 1990B, 7.25%, 7/1/2009 (c) ........................................... 12,350,000 AAA 14,913,119
Series 1993B, 5.5%, 7/1/2006 (c) ............................................ 4,915,000 AAA 5,238,849
Series A, 7.15%, 7/1/2002 (c) ............................................... 2,550,000 AAA 2,685,762
Series A, Zero Coupon, 7/1/2007 (c) ......................................... 8,570,000 AAA 5,616,092
Nuclear Project #2, Refunding Revenue:
Series 1993B, 5.5%, 7/1/2006 (c) ............................................ 4,000,000 AAA 4,263,560
Series A, 6%, 7/1/2007 (c) .................................................. 7,000,000 AAA 7,721,210
Series A, 7.25%, 7/1/2006 ................................................... 7,000,000 AAA 8,197,000
Nuclear Project #3, Refunding Revenue:
5.65%, 7/1/2008 (c) ......................................................... 3,000,000 AAA 3,245,280
Series A, Zero Coupon, 7/1/2006 (c) ......................................... 1,380,000 AAA 951,524
Series B, 7.375%, 7/1/2004 .................................................. 750,000 AA 807,578
Series B, Prerefunded, 7.25%, 7/1/2015 (d) .................................. 5,000,000 AAA 5,339,600
Series B, Zero Coupon, 7/1/2002 (c) ......................................... 11,925,000 AAA 9,983,133
Series B, Zero Coupon, 7/1/2006 (c) ......................................... 5,555,000 AAA 3,830,228
Series C, 5%, 7/1/2006 (c) .................................................. 5,000,000 AAA 5,163,050
</TABLE>
The accompanying notes are an integral part of the financial statements.
18 - Scudder Managed Municipal Bonds
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating(b) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Wisconsin
Green Bay, WI, Industrial Development Revenue, Weyerhaeuser Company Project,
Series A, 9%, 9/1/2006 ....................................................... 1,700,000 NR 1,712,835
Wisconsin Health and Educational Facilities Authority, Hospital Sisters
Services Inc., Obligated Group, 5.375%, 6/1/2013 (c) ......................... 1,500,000 AAA 1,526,355
Wyoming
Wyoming Community Development Authority, Single Family Mortgage, Series A,
5.85%, 6/1/2013 .............................................................. 3,000,000 AA 3,097,890
- ------------------------------------------------------------------------------------------------------------------------------
Total Long-Term Municipal Investments (Cost $648,792,861) 721,199,024
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $658,492,861) (a) 730,899,024
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The cost for federal income tax purposes was $658,492,861. At June 30,
1998, gross and net unrealized appreciation for all securities based on
tax cost was $72,406,163. This consisted of aggregate gross unrealized
appreciation for all securities in which there was an excess of market
value over tax cost of $72,431,826 and aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost
over market value of $25,663.
(b) All of the securities held have been determined by the Adviser to be of
the appropriate credit quality as required by the Fund's investment
objectives. Credit ratings shown are assigned by either Standard & Poor's
Ratings Group, Moody's Investors Service, Inc. or Fitch Investors Service,
Inc. Securities rated by Scudder Kemper Investments (SKI) and unrated
securities (NR) have been determined to be of comparable quality to rated
securities.
(c) Bond is insured by one of these companies: AMBAC, FGIC, FSA or MBIA.
(d) 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.
(e) When-issued or forward delivery securities (See Note A in Notes to
Financial Statements).
(f) At June 30, 1998, these securities, in part or in whole, have been
segregated to cover when-issued or forward delivery securities.
* 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 may change based
on the change in the relationship between long-term and short-term
interest rates and which exhibit added interest rate sensitivity compared
to other bonds with a similar maturity. These securities are shown at
their rates as of June 30, 1998.
The accompanying notes are an integral part of the financial statements.
19 - Scudder Managed Municipal Bonds
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of June 30, 1998 (Unaudited)
<TABLE>
<S> <C> <C>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
Investments, at market (identified cost $658,492,861) ................ $ 730,899,024
Cash ................................................................. 97,158
Interest receivable .................................................. 11,262,984
Receivable for Fund shares sold ...................................... 393,044
Other assets ......................................................... 18,270
----------------
Total assets ......................................................... 742,670,480
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Dividends payable .................................................... 1,450,145
Payable for investments purchased .................................... 3,138,523
Payable for when-issued securities ................................... 4,658,275
Payable for Fund shares redeemed ..................................... 250,221
Accrued management fee ............................................... 297,909
Other payables and accrued expenses .................................. 155,923
----------------
Total liabilities .................................................... 9,950,996
-------------------------------------------------------------------------------------------
Net assets, at market value $ 732,719,484
-------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Net unrealized appreciation (depreciation) on investments ............ 72,406,163
Accumulated net realized loss ........................................ (5,342,378)
Paid-in capital ...................................................... 665,655,699
-------------------------------------------------------------------------------------------
Net assets, at market value $ 732,719,484
-------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($732,719,484 / 80,459,907 outstanding shares of beneficial
interest, $.01 par value, unlimited number of shares ----------------
authorized) ........................................................ $9.11
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
20 - Scudder Managed Municipal Bonds
<PAGE>
Statement of Operations
six months ended June 30, 1998 (Unaudited)
<TABLE>
<S> <C> <C>
Investment Income
- ----------------------------------------------------------------------------------------------------------------------------
Income:
Interest ............................................................. $ 20,465,377
----------------
Expenses:
Management fee ....................................................... 1,860,101
Services to shareholders ............................................. 225,491
Custodian and accounting fees ........................................ 97,406
Trustees' fees and expenses .......................................... 19,517
Reports to shareholders .............................................. 24,345
Auditing ............................................................. 24,646
Registration fees .................................................... 16,105
Legal ................................................................ 7,419
Other ................................................................ 10,902
----------------
2,285,932
-------------------------------------------------------------------------------------------
Net investment income 18,179,445
-------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments .......................................................... 789,827
Futures .............................................................. (188,900)
----------------
600,927
----------------
Net unrealized appreciation (depreciation) during the period on:
Investments .......................................................... (2,065,515)
Futures .............................................................. 128,825
----------------
(1,936,690)
-------------------------------------------------------------------------------------------
Net gain (loss) on investment transactions (1,335,763)
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 16,843,682
-------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
21 - Scudder Managed Municipal Bonds
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months
Ended
June 30, Year ended
1998 December 31,
Increase (Decrease) in Net Assets (Unaudited) 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ....................................... $ 18,179,445 $ 36,962,574
Net realized gain (loss) from investment transactions ....... 600,927 4,446,931
Net unrealized appreciation (depreciation) on
investment transactions during the period ................ (1,936,690) 22,559,064
---------------- ----------------
Net increase (decrease) in net assets resulting from
operations ............................................... 16,843,682 63,968,569
---------------- ----------------
Distributions to shareholders from:
Net investment income ....................................... (18,179,445) (36,962,574)
---------------- ----------------
Net realized gains .......................................... (400,769) (3,989,109)
---------------- ----------------
Fund share transactions:
Proceeds from shares sold ................................... 43,946,610 65,569,325
Net asset value of shares issued to shareholders in
reinvestment of distributions ............................ 9,644,184 21,815,625
Cost of shares redeemed ..................................... (47,442,783) (119,516,692)
---------------- ----------------
Net increase (decrease) in net assets from Fund share
transactions ............................................. 6,148,011 (32,131,742)
---------------- ----------------
Increase (decrease) in net assets ........................... 4,411,479 (9,114,856)
Net assets at beginning of period ........................... 728,308,005 737,422,861
---------------- ----------------
Net assets at end of period ................................. $ 732,719,484 $ 728,308,005
---------------- ----------------
Other Information
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period ................... 79,790,697 83,437,562
---------------- ----------------
Shares sold ................................................. 4,813,245 7,354,111
Shares issued to shareholders in reinvestment of
distributions ............................................ 1,058,947 2,441,767
Shares redeemed ............................................. (5,202,982) (13,442,743)
---------------- ----------------
Net increase (decrease) in Fund shares ...................... 669,210 (3,646,865)
---------------- ----------------
Shares outstanding at end of period ......................... 80,459,907 79,790,697
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
22 - Scudder Managed Municipal Bonds
<PAGE>
Financial Highlights
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
Six Months
Ended June 30,
1998 Years Ended December 31,
(Unaudited) 1997 1996 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------
Net asset value, beginning of period ............ $ 9.13 $ 8.84 $ 8.94 $ 8.07 $ 9.09 $ 8.72
-------------------------------------------------------------------------
Income from investment operations:
Net investment income ........................... .23 .46 .45 .48 .46 .47
Net realized and unrealized gain (loss) on
investment transactions ....................... (.01) .34 (.10) .87 (1.00) .66
-------------------------------------------------------------------------
Total from investment operations ................ .22 .80 .35 1.35 (.54) 1.13
-------------------------------------------------------------------------
Less distributions:
From net investment income ...................... (.23) (.46) (.45) (.48) (.46) (.47)
From net realized gains on investment
transactions .................................. (.01) (.05) -- -- -- (.29)
In excess of net realized gains ................. -- -- -- -- (.02) --
-------------------------------------------------------------------------
Total distributions ............................. (.24) (.51) (.45) (.48) (.48) (.76)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net asset value, end of period .................. $ 9.11 $ 9.13 $ 8.84 $ 8.94 $ 8.07 $ 9.09
-------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) ................................ 2.34** 9.29 4.15 17.12 (6.04) 13.32
Ratios and Supplemental Data
Net assets, end of period ($ millions) .......... 733 728 737 775 709 910
Ratio of operating expenses to average net
assets (%) .................................... .63* .64 .63 .63 .63 .63
Ratio of net investment income to average net
assets (%) .................................... 5.01* 5.12 5.20 5.59 5.41 5.21
Portfolio turnover rate (%) ..................... 18.7* 9.8 12.2 17.8 33.7 52.8
</TABLE>
* Annualized
** Not annualized
23 - Scudder Managed Municipal Bonds
<PAGE>
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 Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
Security Valuation. Portfolio debt securities other than money market securities
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. All other debt securities are valued at their fair value as
determined in good faith by the Valuation Committee of the Board of Trustees.
Money market instruments purchased with an original maturity of sixty days or
less are valued at amortized cost.
When-issued and Forward Delivery Securities. The Fund may purchase securities on
a when-issued or forward delivery basis, for payment and delivery at a later
date. The price of such securities, which may be expressed in yield terms, is
fixed at the time the commitment to purchase is made, but delivery and payment
take place at a later time. At the time the Fund makes the commitment to
purchase a security on a when-issued or forward delivery basis, it will record
the transaction and reflect the value of the security in determining its net
asset value. During the period between purchase and settlement, no payment is
made by the Fund to the issuer and no interest accrues to the Fund. At the time
of settlement, the market value of the security may be more or less than the
purchase price. The Fund will establish a segregated account in which it will
maintain cash and liquid debt securities equal in value to commitments for
when-issued or forward delivery securities.
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 six months
ended June 30, 1998, the Fund did not enter into any futures contracts.
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.
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.
24 - Scudder Managed Municipal Bonds
<PAGE>
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, as amended, 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.
In addition, from November 1, 1997 through December 31, 1997, the Fund incurred
approximately $151,000 of net realized capital losses. As permitted by tax
regulations, the Fund intends to elect to defer these losses and treat them as
arising in the fiscal year ending December 31, 1998.
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.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. These
differences primarily relate 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 identified cost 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, 1998, purchases and sales of municipal
securities (excluding short-term investments) aggregated $70,259,174 and
$66,341,382, respectively.
The aggregate face value of futures contracts closed during the six months ended
June 30, 1998 was $11,918,050. No futures contracts were opened during the
period.
C. Related Parties
Under the Investment Management Agreement (the "Agreement") with Scudder Kemper
Investments, 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
25 - Scudder Managed Municipal Bonds
<PAGE>
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. For the six months ended June 30, 1998, the fee pursuant to
these agreements amounted to $1,860,101, which was equivalent to an annual
effective rate of .51% of the Fund's average daily net assets.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. During the
six months ended June 30, 1998, the amount charged to the Fund by SSC aggregated
$158,782, of which $26,400 is unpaid at June 30, 1998.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible 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, 1998, the amount charged to the Fund by SFAC aggregated $49,300,
of which $8,379 is unpaid at June 30, 1998.
The Fund pays each Trustee not affiliated with the Adviser an annual retainer,
divided equally among the series of the Trust, plus specified amounts for
attended board and committee meetings. For the six months ended June 30, 1998,
Trustees' fees and expenses aggregated $19,517.
26 - Scudder Managed Municipal Bonds
<PAGE>
This Page
intentionally
left blank.
27 - Scudder Managed Municipal Bonds
<PAGE>
Officers and Trustees
Daniel Pierce*
President and Trustee
Henry P. Becton, Jr.
Trustee; President and General
Manager, WGBH Educational
Foundation
Dawn-Marie Driscoll
Trustee; President, Driscoll
Associates; Executive Fellow,
Center for Business Ethics,
Bentley College
Peter B. Freeman
Trustee; Corporate Director
George M. Lovejoy, Jr.
Trustee; President and Director,
Fifty Associates
Wesley W. Marple, Jr.
Trustee; Professor of Business
Administration, Northeastern
University
Kathryn L. Quirk*
Trustee, Vice President and
Assistant Secretary
Jean C. Tempel
Trustee; Managing Partner,
Technology Equity Partners
Philip G. Condon*
Vice President
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
Vice President
Thomas F. McDonough*
Vice President, Secretary and
Treasurer
John R. Hebble*
Assistant Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
28 - Scudder Managed Municipal Bonds
<PAGE>
Investment Products and Services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series --
Premium Shares*
Managed Shares*
Scudder Government Money Market Series --
Managed Shares*
Tax Free Money Market+
- ----------------------
Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series--
Managed Shares*
Scudder California Tax Free Money Fund**
Scudder New York Tax Free Money Fund**
Tax Free+
- ---------
Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund**
Scudder Massachusetts Limited Term Tax Free Fund**
Scudder Massachusetts Tax Free Fund**
Scudder New York Tax Free Fund**
Scudder Ohio Tax Free Fund**
Scudder Pennsylvania Tax Free Fund**
U.S. Income
- -----------
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder High Yield Bond Fund
Global Income
- -------------
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
Asset Allocation
- ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
U.S. Growth and Income
- ----------------------
Scudder Balanced Fund
Scudder Dividend & Growth Fund
Scudder Growth and Income Fund
Scudder S&P 500 Index Fund
Scudder Real Estate Investment Fund
U.S. Growth
- -----------
Value
Scudder Large Company Value Fund
Scudder Value Fund***
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund***
Scudder Large Company Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Equity
- -------------
Worldwide
Scudder Global Fund
Scudder International Value Fund
Scudder International Growth and Income Fund
Scudder International Fund++
Scudder International Growth Fund
Scudder Global Discovery Fund***
Scudder Emerging Markets Growth Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund, Inc.
Industry Sector Funds
- ---------------------
Choice Series
Scudder Financial Services Fund
Scudder Health Care Fund
Scudder Technology Fund
Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
Retirement Programs
- -------------------
Traditional IRA
Roth IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan**+++ +++
(a variable annuity)
Education Accounts
- ------------------
Education IRA
UGMA/UTMA
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder Global High Income Fund, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder Spain and Portugal Fund, Inc.
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. +++Funds within categories are listed in order from
expected least risk to most risk. Certain Scudder funds may not be available for
purchase or exchange. +A portion of the income from the tax-free funds may be
subject to federal, state, and local taxes. *A class of shares of the Fund.
**Not available in all states. ***Only the Scudder Shares of the Fund are part
of the Scudder Family of Funds. ++Only the International Shares of the Fund are
part of the Scudder Family of Funds. +++ +++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 Kemper Investments, Inc., are traded on the New York Stock Exchange and,
in some cases, on various other stock exchanges.
29 - Scudder Managed Municipal Bonds
<PAGE>
Scudder Solutions
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Investment Plan QuickBuy
A convenient investment program in which money is Lets you purchase Scudder fund shares
electronically debited from your bank account monthly to electronically, avoiding potential mailing delays;
regularly purchase fund shares and "dollar cost average" money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from a previously designated bank
fewer when it's higher, which can reduce your average account.
purchase price over time.*
Automatic Dividend Transfer Payroll Deduction and Direct Deposit
The most timely, reliable, and convenient way to Have all or part of your paycheck -- even government
purchase shares -- use distributions from one Scudder checks -- invested in up to four Scudder funds at
fund to purchase shares in another, automatically one time.
(accounts with identical registrations or the same
social security or tax identification number).
* Dollar cost averaging involves continuous investment in securities regardless of price
fluctuations and does not assure a profit or protect against loss in declining markets.
Investors should consider their ability to continue such a plan through periods of low price
levels.
Around-the-clock electronic account service and information, including some transactions:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- http://funds.scudder.com
1-800-343-2890
Scudder Electronic Account Services: Offering
Personalized account information, the ability to account information and transactions, interactive
exchange or redeem shares, and information on other worksheets, prospectuses and applications for all
Scudder funds and services via touchtone telephone. Scudder funds, plus your current asset allocation,
whenever you need them. Scudder's Site also
provides news about Scudder funds, retirement
planning information, and more.
Retirees and those who depend on investment proceeds for living expenses can enjoy these convenient,
timely, and reliable automated withdrawal programs:
- ------------------------------------------------------------------------------------------------------------------------------
Automatic Withdrawal Plan QuickSell
You designate the bank account, determine the schedule Provides speedy access to your money by
(as frequently as once a month) and amount of the electronically crediting your redemption proceeds
redemptions, and Scudder does the rest. to the bank account you previously designated.
Distributions Direct
Automatically deposits your fund distributions into the
bank account you designate within three business days
after each distribution is paid.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
30 - Scudder Managed Municipal Bonds
<PAGE>
Mutual Funds and More -- Brokerage and Guidance Services:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Brokerage Services Scudder Portfolio Builder
Offers you access to a world of investments, A free service designed to help suggest ways investors like
including stocks, corporate bonds, Treasuries, plus you can diversify your portfolio among domestic and global,
over 8,000 mutual funds from at least 150 mutual as well as equity, fixed-income, and money market funds,
fund companies. And Scudder Fund Folio(SM) provides using Scudder funds.
investors with access to a marketplace of more than
500 no-load funds from well-known companies--with no Personal Counsel from Scudder(SM)
transaction fees or commissions. Scudder
shareholders can take advantage of a Scudder Developed for investors who prefer the benefits of no-load
Brokerage account already reserved for them, with funds but want ongoing professional assistance in
no minimum investment. For information about managing a portfolio. Personal Counsel(SM) is a highly
Scudder Brokerage Services, call 1-800-700-0820. customized, fee-based asset management service for
individuals investing $100,000 or more.
Fund Folio funds held less than six months will be charged a fee for redemptions. You can buy
shares directly from the fund itself or its principal underwriter or distributor without
paying this fee. Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061.
Member SIPC.
Personal Counsel From Scudder(SM) and Personal Counsel(SM) are service marks of and represent a
program offered by Scudder Investor Services, Inc., Adviser.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
Additional Information on How to Contact Scudder:
- ------------------------------------------------------------------------------------------------------------------------------
For existing account services and transactions Please address all written correspondence to
Scudder Investor Relations -- 1-800-225-5163 The Scudder Funds
P.O. Box 2291
For establishing 401(k) and 403(b) plans Boston, Massachusetts
Scudder Defined Contribution Services -- 02107-2291
1-800-323-6105
Or Stop by a Scudder Investor Center
For information about The Scudder Funds, including Many shareholders enjoy the personal, one-on-one service of
additional applications and prospectuses, or for the Scudder Investor Centers. Check for an Investor Center near
answers to investment questions you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470 Boca Raton Chicago San Francisco
[email protected] Boston New York
</TABLE>
31 - Scudder Managed Municipal Bonds
<PAGE>
About the Fund's Adviser
Scudder Kemper Investments, Inc., is one of the largest and most experienced
investment management oganizations worldwide, managing more than $200 billion in
assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts. It is one of the ten largest mutual fund companies in the
U.S.
Scudder Kemper Investments has a rich heritage of innovation, integrity, and
client-focused service. In 1997, Scudder, Stevens & Clark, Inc., founded 79
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Group. As a result, Zurich's subsidiary, Zurich Kemper Investments,
Inc., with 50 years of mutual fund and investment management experience, was
combined with Scudder. Headquartered in New York, Scudder Kemper Investments
offers a full range of investment counsel and asset management capabilities,
based on a combination of proprietary research and disciplined, long-term
investment strategies. With its global investment resources and perspective,
the firm seeks opportunities in markets throughout the world to meet the needs
of investors.
Scudder Kemper Investments, Inc., the global asset management firm, is a member
of the Zurich Group. The Zurich Group is an internationally recognized leader in
financial services, including property/casualty and life insurance, reinsurance,
and asset management.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
SCUDDER
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