Scudder
Managed
Municipal
Bonds
Annual Report
May 31, 1999
No-Load 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 no-load fund with no commissions to buy, sell, or exchange shares.
SCUDDER
<PAGE>
Scudder Managed Municipal Bonds
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Date of Inception: 10/14/76 Total Net Assets as of Ticker Symbol: SCMBX
5/31/99: $713.4 million
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o Scudder Managed Municipal Bonds' fiscal year end has changed from December 31
to May 31. For its abbreviated fiscal year beginning January 1, 1999, through
May 31, 1999, Scudder Managed Municipal Bonds posted a total return of -0.17%.
Over the 12 months ended May 31, the Fund returned 4.04%, outpacing the 3.26%
average performance of the Fund's peers over the same period, according to
Lipper Analytical Services.
o For the one-, three-, five-, and ten-year periods, the Fund's total returns
placed it in the top one-third of municipal bond funds as tracked by Lipper.
Please see page 5 for additional Lipper performance information.
o As of May 31, 1999, Scudder Managed Municipal Bonds' 30-day net annualized SEC
yield was 4.16%, equivalent to a 6.89% taxable yield for investors subject to
the 39.6% maximum federal income tax rate.
o Scudder Managed Municipal Bonds received an overall Morningstar Rating(TM) of
four stars out of 1,586 tax free funds as of May 31, 1999.*
Table of Contents
3 Letter from the Fund's President 24 Financial Highlights
4 Performance Update 25 Notes to Financial Statements
5 Portfolio Summary 28 Report of Independent Accountants
6 Portfolio Management Discussion 29 Tax Information
10 Glossary of Investment Terms 32 Officers and Trustees
11 Investment Portfolio 33 Investment Products and Services
21 Financial Statements 34 Scudder Solutions
* Morningstar proprietary rankings reflect historical risk-adjusted performance
as of May 31, 1999. Ratings are subject to change monthly, and past
performance does not guarantee future results. Morningstar ratings are
calculated from the Fund's three-, five-, and ten-year average annual returns
in excess of 90-day Treasury bills with appropriate fee adjustments, and a
risk factor that reflects fund performance below 90-day T-bill returns. The
Fund received four stars for the three-year period, four stars for the
five-year period, and three stars for the ten-year period. The top 10% of
funds in a broad asset class receive 5 stars, the next 22.5% receive 4 stars,
and the next 35% receive 3 stars. The Fund was rated among 1586, 1184, and 368
funds in its broad asset class for the three-, five-, and ten-year periods,
respectively.
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'
abbreviated fiscal year ended May 31, 1999. We have changed the Fund's fiscal
year from December 31 to May 31 as part of a larger effort to create
efficiencies and reduce the costs of producing Scudder fund regulatory materials
such as fund reports and prospectuses. Going forward, you will receive regular
reports following the Fund's annual and semiannual periods ending in May and
November. For its abbreviated fiscal year that began January 1, 1999, and ended
May 31, 1999, the Fund posted a total return of -0.17%. Over the 12 months ended
May 31, the Fund returned 4.04%, outpacing the 3.26% average performance of the
Fund's peers over the same period, according to Lipper.
Investors concerned about the increased volatility of the financial markets
during the past 12 months should find the chart on page 7 of interest. The chart
shows that over the 12-month period ended May 31, 30-year municipal bonds
displayed measurably less price volatility than comparable Treasury securities.
For more information concerning Scudder Managed Municipal Bonds' market
performance, strategy, and outlook, please see the Portfolio Management
Discussion that begins on page 6.
For those interested in new Scudder products, we are pleased to introduce
Scudder Select 500 Fund and Scudder Select 1000 Growth Fund. Both funds are
managed with the goal of providing long-term outperformance compared to their
benchmark indices, the S&P 500 Index and the Russell 1000 Growth Index,
respectively. For more information on either Select fund, please call us at the
number below.
Please call a Scudder Investor Information representative at 1-800-225-2470
if you have questions about your Fund. Page 35 provides more information on how
to contact Scudder. Thank you for choosing Scudder Managed Municipal Bonds to
help meet your investment needs.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder Managed Municipal Bonds
3 - Scudder Managed Municipal Bonds
<PAGE>
Performance Update as of May 31, 1999
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Fund Index Comparisons
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Total Return
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Period Ended Growth of Average
5/31/1999 $10,000 Cumulative Annual
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Scudder Managed Municipal Bonds
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1 Year $ 10,404 4.04% 4.04%
5 Year $ 13,946 39.46% 6.88%
10 Year $ 20,546 105.46% 7.47%
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Lehman Brothers Municipal Bond Index
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1 Year $ 10,467 4.67% 4.67%
5 Year $ 14,147 41.47% 7.18%
10 Year $ 21,062 110.62% 7.73%
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Growth of a $10,000 Investment
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THE ORIGINAL DOCUMENT CONTAINS A LINE CHART HERE
LINE CHART DATA
Scudder Managed Lehman Brothers
Municipal Bonds Municipal Bond Index
'89 10000 10000
'90 10557 10733
'91 11645 11814
'92 12787 12976
'93 14457 14529
'94 14732 14888
'95 15978 16243
'96 16712 16986
'97 18084 18395
'98 19748 20121
'99 20546 21062
Yearly periods ended May 31
The unmanaged Lehman Brothers Municipal Bond Index is a market value-weighted
measure of the long-term, investment grade tax-exempt bond market consisting of
municipal bonds with a maturity of at least two years. Index returns assume
dividends are reinvested and, unlike Fund returns, do not reflect any fees or
expenses.
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Returns and Per Share Information
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THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
ILLUSTRATING THE FUND TOTAL RETURN (%) AND
INDEX TOTAL RETURN (%)
CHART DATA:
<TABLE>
<CAPTION>
Yearly Periods Ended May 31
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value $ 8.35 $ 8.55 $ 8.73 $ 9.03 $ 8.45 $ 8.65 $ 8.59 $ 8.82 $ 9.11 $ 8.98
- -------------------------------------------------------------------------------------------------------------------------------
Income Dividends $ .57 $ .54 $ .52 $ .50 $ .46 $ .48 $ .45 $ .46 $ .46 $ .45
- -------------------------------------------------------------------------------------------------------------------------------
Capital Gains
Distributions $ .34 $ .09 $ .12 $ .29 $ .31 $ -- $ -- $ .01 $ .05 $ .05
- -------------------------------------------------------------------------------------------------------------------------------
Fund Total Return (%) 5.57 10.31 9.80 13.06 1.91 8.45 4.60 8.21 9.20 4.04
- -------------------------------------------------------------------------------------------------------------------------------
Index Total Return (%) 7.33 10.08 9.83 11.97 2.47 9.11 4.57 8.29 9.39 4.67
- -------------------------------------------------------------------------------------------------------------------------------
</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 May 31, 1999
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Diversification
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A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
Electric Utility Revenue 18%
Water/Sewer Revenue 9%
Core Cities/Lease 9%
State General Obligation/Lease 8%
Hospital/Health 8%
Other General Obligation/Lease 7%
Port/Airport Revenue 6%
Toll Revenue/Transportation 6%
Pollution Control/
Industrial Development 5%
Miscellaneous Municipal 24%
--------------------------------------
100%
--------------------------------------
Diversification remains an important strategy for the Fund, allowing us to
spread risk over a large number of sectors, maturities, and geographic areas.
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Quality
- --------------------------------------------------------------------------------
A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
AAA* 60%
AA 9%
A 13%
BBB 10%
BB 1%
Not Rated 7%
--------------------------------------
100%
--------------------------------------
Weighted Average quality: AA
* Includes Cash Equivalents
Overall portfolio quality remains high, with 69% of portfolio assets rated AAA
or AA.
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Effective Maturity
- --------------------------------------------------------------------------------
A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
Less than 1 year 3%
1 through 5 18%
5 through 10 41%
10 through 15 27%
Greater than 15 years 11%
--------------------------------------
100%
--------------------------------------
Weighted average effective maturity: 9.1 years
The Fund continues its cautious stance on the market with respect to interest
rate risk, maintaining an average effective maturity similar to that of its
competitive universe.
For more complete details about the Fund's investment portfolio, see page 11.
A quarterly Fund Summary and Portfolio Holdings are available upon request.
5 - Scudder Managed Municipal Bonds
<PAGE>
Portfolio Management Discussion
Dear Shareholders,
Following a series of overseas and domestic financial crises that prompted
uncertainty, volatility, and a "flight to quality," bond yields plummeted, then
returned to July 1998 levels by the close of Scudder Managed Municipal Bonds'
most recent fiscal year. During its abbreviated fiscal year beginning January 1,
1999, through May 31, 1999, the Fund returned -0.17%. Over the 12 months ended
May 31, the Fund posted a 4.04% total return, outpacing the 3.26% average
performance of the Fund's peers over the same period as tracked by Lipper
Analytical Services, Inc., an independent analyst of investment performance. As
of May 31, 1999, Scudder Managed Municipal Bonds' 30-day net annualized SEC
yield was 4.16%, equivalent to a 6.89% taxable yield for investors subject to
the 39.6% maximum federal income tax rate.
Scudder Managed Municipal Bonds' long-term performance record remains highly
competitive: As shown in the accompanying table, the Fund's average annual total
returns placed it in the top one-third of its peers over 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.
A Market Roller Coaster
Market turmoil hit a peak in the wake of the Russian currency devaluation late
last summer, followed by the near collapse of the Long Term Capital
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Competitive Long-Term Returns
(Average annual returns for periods ended May 31, 1999)
- --------------------------------------------------------------------------------
Scudder
Managed Lipper Number
Municipal average of
Bonds annual Funds Percentile
Period return return Rank tracked Ranking
1 year 4.04% 3.26% 32 of 260 Top 12%
3 years 7.13% 6.68% 55 of 202 Top 27%
5 years 6.88% 6.42% 39 of 153 Top 25%
10 years 7.47% 7.17% 17 of 76 Top 22%
Past performance does not guarantee future results.
Lipper Analytical Services, Inc., is an independent analyst of investment
performance. Performance includes reinvestment of dividends and capital gains.
- --------------------------------------------------------------------------------
Management hedge fund. Volatility in the U.S. stock market increased greatly
while a massive reallocation to U.S. Treasury bonds led to substantially lower
yields. The Federal Reserve's three interest rate cuts during the third and
fourth quarters of 1998 helped to gradually restore market stability. During
this period, the U.S. economy continued to grow beyond all expectations, with a
dramatic 6% annualized increase in GDP for the fourth quarter of 1998 and a
strong start in 1999 that seemed to assure at least 4% GDP growth this year.
This show of strength, in turn, worried bond investors, who responded by sending
30-year Treasury bond yields back up to July 1998 levels.
Over the twelve months ended May 31, yields of
6 - Scudder Managed Municipal Bonds
<PAGE>
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Municipals Provided Greater Stability
Monthly prices of 30-year AAA-rated municipal bonds
compared with prices of 30-year U.S. Treasury bonds,
5/31/98-5/31/99.
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THE ORIGINAL DOCUMENT CONTAINS A LINE CHART HERE
LINE CHART DATA
30-year 30-year
U.S. AAA-rated
Treasury Bonds municipal bonds
5/31/98 100.14 100.77
103.47 100.00
7/31/98 101.57 100.00
107.12 102.33
9/31/98 114.87 105.57
111.47 102.33
11/31/98 109.83 102.33
111.47 102.33
1/31/99 111.14 103.13
103.32 101.55
3/31/99 102.11 100.77
104.665 100.31
5/31/99 100.00 98.19
Past performance is not indicative of future results.
Source: Scudder Kemper Investments, Inc.
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30-year Treasury bonds ended slightly higher, beginning at 5.60% and ending at
5.84%. Over the same time frame, yields of 30-year AAA insured municipal bonds
also rose slightly, from 5.10% to 5.22%.
In addition to high tax free yields, municipal bonds have historically offered
greater price stability over time than Treasury bonds of comparable maturity.
The accompanying chart demonstrates the record over the past 12 months, when
most financial markets were at a peak of volatility.
Tax-Free Income and
Below-Average Risk
Scudder Managed Municipal Bonds' primary goals are to generate high federally
tax-free income through investments in high-grade, long-term municipal
securities. During the Fund's abbreviated fiscal year, we maintained a two-part
strategy: First, we focused on premium "cushion" bonds -- bonds with high
coupons that compensate investors for the fact that they can be redeemed by
their issuer prior to maturity. At the same time, we continued the Fund's 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 terms of maturity, we focused on six- to
13-year bonds, because we believe they offer the best total return potential,
based on our outlook for interest rates and the yield differentials among bonds
across the maturity spectrum.
The Fund continues its cautious stance on the market with respect to interest
rate risk, maintaining an average duration similar to that of its competitive
universe. As of May 31, 1999, the Fund's average duration was 6.9 years.
(Duration gives relative weight to both principal and interest payments through
the life of a bond 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.)
7 - Scudder Managed Municipal Bonds
<PAGE>
The Fund's overall level of portfolio quality remains high, with over
65% of the Fund's portfolio rated AAA or AA. 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 May 31, 1999, the Fund held
securities issued in 27 states plus the District of Columbia and the Virgin
Islands. The Portfolio Summary on page 17 provides more information about the
Fund's holdings, including quality, maturity, and sector representation.
Outlook
In light of recent increases in short-term interest rates -- including an
increase in the Federal Funds target rate following the close of the period -- a
long-predicted slowdown in U.S. economic activity seems more likely to occur
during the second half of 1999. At the same time, we expect that inflation will
remain restrained, which should place an upper limit on interest rate increases.
Though as a general rule we maintain a portfolio duration in line with our
market, we will take a cautious approach during the coming months. We will also
monitor the level of worldwide economic activity closely over the remainder of
the year: The United States has been the only significant engine of economic
growth for some time. If the incipient economic recovery in Asia and other parts
of the world gathers steam, we will watch for additional upward pressure on
inflation and short-term interest rates and adjust our strategy accordingly. In
terms of the Fund's day-to-day strategy, we will continue to seek competitive
returns by purchasing eight- to 13-year premium cushion bonds and noncallable
bonds over the coming months. And rather than attempting to make investment
decisions based on short-term market movements, we will search for the most
attractively valued bonds as we seek a high level of tax-free income for our
shareholders.
Scudder
Managed Municipal Bonds:
A Team Approach to Investing
Scudder Managed Municipal Bonds is managed by a team of Scudder Kemper
Investments, Inc. (the "Adviser") professionals, each of whom plays an important
role in the Fund's management process. Team members work together to develop
investment strategies and select securities for the Fund's portfolio. They are
supported by the Adviser's large staff of economists, research analysts,
traders, and other investment specialists who work in our offices across the
United States and abroad. We believe our team approach benefits Fund investors
by bringing together many disciplines and leveraging our extensive resources.
Co-Lead Portfolio Managers Philip G. Condon and Ashton P. Goodfield have
responsibility for the Fund's day-to-day management and investment strategies.
Mr. Condon, who joined the Adviser in 1983 and the team in 1998, has 17 years of
investment industry experience. Ms. Goodfield, who joined the Adviser in 1986
and the team in 1998, has 13 years of investment industry experience.
8 - Scudder Managed Municipal Bonds
<PAGE>
In terms of the Fund's day-to-day strategy, we will continue to seek competitive
returns by purchasing eight- to 13-year premium cushion bonds and noncallable
bonds over the coming months. And rather than attempting to make investment
decisions based on short-term market movements, we will search for the most
attractively valued bonds as we seek a high level of tax-free income for our
shareholders.
Sincerely,
Your Portfolio Management Team
/s/Philip G. Condon /s/Ashton P. Goodfield
Philip G. Condon Ashton P. Goodfield
9 - Scudder Managed Municipal Bonds
<PAGE>
Glossary of Investment Terms
<TABLE>
<S> <C>
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, plus other assets less liabilities, 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.
</TABLE>
(Sources: Scudder Kemper Investments, Inc.; Barron's Dictionary of Finance and
Investment Terms)
10 - Scudder Managed Municipal Bonds
<PAGE>
Investment Portfoliolio as of May 31, 1999
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
Short-Term Municipal Investments 1.6%
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Alaska
Valdez, AK, Marine Terminal Revenue, Exxon Pipeline Company Project, Daily Demand Note:
Series 1993 B, 3.3%, 12/1/2033* ....................................................................... 1,000,000 1,000,000
Series 1993 C, 3.3%, 12/1/2033* ....................................................................... 1,100,000 1,100,000
Arizona
Maricopa County, AZ, Pollution Control Revenue, Arizona Public Service Co., Daily Demand Note:
Series 1994 A, 3.3%, 5/1/2029* ........................................................................ 1,400,000 1,400,000
Series 1994 C, 3.35%, 5/1/2029* ....................................................................... 1,000,000 1,000,000
Illinois
Chicago, IL, O'Hare International Airport Revenue, American Airlines Project, Series 1983 A, Daily
Demand Note, 3.4%, 12/1/2017* ......................................................................... 2,700,000 2,700,000
Texas
Harris County, TX, Health Facilities Development Corp., St. Lukes Hospital, Daily Demand Note,
Series 1997 B, 3.25%, 2/15/2027* ...................................................................... 1,000,000 1,000,000
Washington
Washington State Health Care Facilities Authority, Sisters of Providence, Daily Demand Note:
Series 1985 B, 3.3%, 10/1/2005* ....................................................................... 1,200,000 1,200,000
Series 1985 C, 3.3%, 10/1/2005* ....................................................................... 1,900,000 1,900,000
- ----------------------------------------------------------------------------------------------------------------------------------
Total Short-Term Municipal Investments (Cost $11,300,000) ............................................... 11,300,000
- ----------------------------------------------------------------------------------------------------------------------------------
Long-Term Municipal Investments 98.4%
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Alaska
North Slope Borough, AK, General Obligation:
Series 1993 B, Zero Coupon, 1/1/2003 (b) .............................................................. 8,000,000 6,892,960
Series 1994 B, Zero Coupon, 6/30/2004 (b) ............................................................. 15,000,000 12,067,950
Series 1994 B, Zero Coupon, 6/30/2005 (b) ............................................................. 18,200,000 13,938,106
Series 1995 A, Zero Coupon, 6/30/2006 (b) ............................................................. 7,000,000 5,095,510
Arizona
Maricopa County, AZ, School District #28, General Obligation, Series 1993 B, Zero Coupon,
1/1/2006 (b) .......................................................................................... 4,905,000 3,662,711
California
California General Obligation:
Series 1989, 6.25%, 10/1/2007 (b) ..................................................................... 4,000,000 4,532,640
Series 1990, 6.25%, 4/1/2008 (b) ...................................................................... 5,000,000 5,663,300
Series 1991, 6.6%, 2/1/2009 (b) ....................................................................... 15,600,000 18,172,284
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 - Scudder Managed Municipal Bonds
<PAGE>
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
California Housing Finance Agency, Multi-Unit Rental Housing Revenue, Series 1992 A, 7.7%,
8/1/2010 ..................................................................................... 1,000,000 1,087,350
California Pollution Control Finance Authority, Solid Waste Disposal Revenue, Canadian Fibre
of Riverside PJ, AMT, Series 1997 A, 9%, 7/1/2019 ............................................ 12,000,000 12,326,760
California Statewide Community Development Authority, Certificate of Participation, Lutheran
Homes, 5.5%, 11/15/2008 ...................................................................... 2,250,000 2,393,252
Foothill/Eastern Transportation Corridor Agency, CA, Toll Road Revenue:
Series 1995 A, Step-up Coupon, 0% to 1/1/2005, 7.05% to 1/1/2009 ............................. 5,000,000 4,055,200
Series 1995 A, Step-up Coupon, 0% to 1/1/2005, 7.1% to 1/1/2011 .............................. 4,000,000 3,318,520
Series 1995 A, Step-up Coupon, 0% to 1/1/2005, 7.1% to 1/1/2012 .............................. 4,000,000 3,320,920
Series 1995 A, Step-up Coupon, 0% to 1/1/2005, 7.15% to 1/1/2014 ............................. 6,250,000 5,184,188
Series 1995 A, Zero Coupon, 1/1/2015 ......................................................... 11,000,000 4,851,330
Los Angeles County, CA, Certificate of Participation, Disney Parking Project:
Series 1993, Zero Coupon, 9/1/2007 ........................................................... 4,030,000 2,710,699
Series 1993, Zero Coupon, 9/1/2009 ........................................................... 5,425,000 3,249,195
Roseville, CA, Unified High School District, General Obligation:
Series 1995 B, Zero Coupon, 8/1/2010 (b) ..................................................... 1,830,000 1,080,615
Series 1995 B, Zero Coupon, 8/1/2015 (b) ..................................................... 1,000,000 440,730
San Diego, CA, Certificate of Participation, Water Utility Funding Revenue, Series 1998, 5.375%,
8/1/2013 (b) ................................................................................. 2,155,000 2,256,608
San Joaquin, CA:
Certificate of Participation, Series 1993, 5.5%, 11/15/2013 (b) .............................. 3,895,000 4,185,333
Transportation Corridor Agency, Toll Road Revenue, Series 1997 A, Zero Coupon,
1/15/2012 (b) ............................................................................... 2,000,000 1,074,500
Colorado
Colorado Housing Finance Authority Revenue:
Series 1992, 8.1%, 10/1/2005 ................................................................. 2,030,000 2,253,016
Series 1992, 8.15%, 10/1/2006 ................................................................ 2,145,000 2,387,428
Series 1992, 8.25%, 10/1/2010 ................................................................ 1,940,000 2,165,156
Series 1992, 8.25%, 10/1/2011 ................................................................ 1,680,000 1,874,981
Series 1992, 8.25%, 10/1/2012 ................................................................ 1,945,000 2,172,468
Multi-Family Mortgage:
Series 1992 A, 8.15%, 10/1/2007 ............................................................. 2,320,000 2,582,206
Series 1992 A, 8.2%, 10/1/2008 .............................................................. 2,510,000 2,797,495
Series 1992 A, 8.2%, 10/1/2009 .............................................................. 2,725,000 3,037,122
Denver, CO, Urban Renewal Authority, Tax Increment Revenue, Pavilions-Convention, AMT,
Series 1989, 7.5%, 9/1/2004 .................................................................. 1,000,000 1,077,940
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 - Scudder Managed Municipal Bonds
<PAGE>
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
District of Columbia
District of Columbia, Certificate of Participation:
Series 1993, 6.875%, 1/1/2003 ............................................................... 1,780,000 1,850,862
Series 1993, 7.3%, 1/1/2013 (e) ............................................................. 1,000,000 1,080,110
District of Columbia, General Obligation:
Series 1989 B, Zero Coupon, 6/1/2003 (b) .................................................... 2,000,000 1,691,080
Series 1993 A, ETM, 5.875%, 6/1/2005 (b)** .................................................. 3,300,000 3,550,932
Series 1993 B3, 5.3%, 6/1/2005 (b) .......................................................... 1,350,000 1,412,802
Series 1993 B3, 5.5%, 6/1/2007 (b) .......................................................... 1,000,000 1,056,970
Series 1993 B3, 5.5%, 6/1/2008 (b) .......................................................... 3,225,000 3,402,988
District of Columbia, Georgetown University, Series 1990 A, 7.25%, 4/1/2011 ................... 2,965,000 2,995,540
District of Columbia, Water and Sewer Authority, Public Utility Revenue:
Series 1998, 6%, 10/1/2013 (b) .............................................................. 3,630,000 4,013,873
Series 1998, 5.5%, 10/1/2023 (b) (e) ........................................................ 5,000,000 5,191,300
Georgia
Burke County, GA, Development Authority, Pollution Control Revenue, Votgle Project,
Series 1992, 7.7%, Prerefunded 1/1/2003, 1/1/2006 (b) (c) ................................... 5,000,000 5,744,900
Fulton County, GA, School District, General Obligation, Series 1998, 5.375%, 1/1/2016 ......... 2,000,000 2,090,700
Georgia Municipal Electric Authority, Power Revenue:
Series 1991 V, 6.5%, 1/1/2012 (b) ........................................................... 5,000,000 5,765,250
Series 1997 X, 6.5%, 1/1/2012 (b) ........................................................... 3,500,000 4,035,675
Hawaii
Honolulu, HI, General Obligation, Series 1999 C, 5%, 7/1/2018 (b) ............................. 3,000,000 2,913,630
Illinois
Central Lake County, IL, Joint Action Water Agency, Zero Coupon, Series 1991, 5/1/2004 (b) .... 2,445,000 1,976,122
Chicago, IL, Public Building Commission:
Series 1990 A, ETM, Zero Coupon, 1/1/2008 (b)** ............................................. 4,000,000 2,701,680
Series 1993 A, 5.25%, 12/1/2008 (b) ......................................................... 2,655,000 2,778,378
Chicago, IL, General Obligation:
Board of Education, Series 1992 A, 6.25%, 1/1/2015 (b) ...................................... 2,725,000 3,087,480
Emergency Telephone Systems, Series 1993, 5.6%, 1/1/2009 (b) ................................ 7,200,000 7,816,968
Series 1996 A2, 6.25%, 1/1/2014 (b) ......................................................... 3,750,000 4,247,925
Chicago, IL, Motor Fuel Tax Revenue, Series 1993, 5.375%, 1/1/2014 (b) ........................ 5,000,000 5,213,450
Chicago, IL, O'Hare International Airport, Special Facilities Revenue, United Airlines Project,
Series 1999 A, 5.35%, 9/1/2016 .............................................................. 2,250,000 2,210,040
Chicago, IL, Wastewater Transmission Revenue, Series 1993, 5.375%, 1/1/2013 (b) ............... 3,215,000 3,358,582
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 - Scudder Managed Municipal Bonds
<PAGE>
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Du-Page County, IL, Industrial Development Revenue, Weyerhaeuser Company Project,
Series 1983, 8.65%, 11/1/2008 .............................................................. 3,600,000 3,650,076
Hoffman Estates, IL, Tax Increment Revenue, Series 1991, Zero Coupon, 5/15/2006 .............. 8,500,000 6,142,270
Illinois Development Finance Authority, Commonwealth Edison, Series 1994, 5.85%,
1/15/2014 (b) .............................................................................. 5,000,000 5,458,750
Illinois Educational Facilities Authority, Loyola University, Series 1991 A, ETM, Zero Coupon,
7/1/2005 (b)** ............................................................................. 3,100,000 2,378,041
Illinois Health Facilities Authority:
Centegra Health System, Series 1998, 5.2%, 9/1/2012 ........................................ 1,000,000 982,260
Delnor Community Hospital, Series 1993, 5.5%, 5/15/2013 (b) ................................ 1,500,000 1,557,015
Memorial Medical Center-Springfield, Series 1993, 5.25%, 10/1/2009 (b) ..................... 1,725,000 1,791,861
University of Chicago, Series 1993 A, 5.5%, 8/15/2008 (b) .................................. 2,500,000 2,606,500
Illinois State Sales Tax Revenue, Series 1992 P, 6.5%, 6/15/2013 ............................. 2,100,000 2,404,983
Illinois State University Retirement System, Series 1990, Zero Coupon, 10/1/2005 (b) ......... 7,000,000 5,285,350
Northern Illinois University, Board of Regents:
Series 1992, Zero Coupon, 4/1/2005 (b) ..................................................... 1,865,000 1,439,705
Series 1992, Zero Coupon, 10/1/2005 (b) .................................................... 1,865,000 1,408,168
Series 1992, Zero Coupon, 4/1/2006 (b) ..................................................... 1,865,000 1,368,127
Series 1992, Zero Coupon, 10/1/2006 (b) .................................................... 1,865,000 1,337,503
Series 1992, Zero Coupon, 4/1/2007 (b) ..................................................... 1,865,000 1,297,574
Series 1992, Zero Coupon, 10/1/2007 (b) .................................................... 1,865,000 1,267,902
Oak Lawn, IL, Water and Sewer Revenue:
Series 1992 A, Zero Coupon, 10/1/2003 (b) .................................................. 1,295,000 1,079,797
Series 1992 A, Zero Coupon, 10/1/2004 (b) .................................................. 1,295,000 1,029,590
Series 1992 A, Zero Coupon, 10/1/2005 (b) .................................................. 1,295,000 979,616
Series 1992 A, Zero Coupon, 10/1/2006 (b) .................................................. 1,295,000 931,196
Rosemont, IL, General Obligation:
Series 1990, Zero Coupon, 12/1/2004 (b) .................................................... 6,000,000 4,728,660
Series 1990, Zero Coupon, 12/1/2005 (b) .................................................... 7,060,000 5,291,399
Will County, IL, School District #201-U, General Obligation, Series 1991, ETM, Zero Coupon,
12/15/2006 (b)** ........................................................................... 3,725,000 2,662,332
Winnebago County, IL, School District #122:
Series 1992, 6.55%, 6/1/2009 (b) ........................................................... 1,675,000 1,934,625
Series 1992, 6.55%, 6/1/2010 (b) ........................................................... 1,825,000 2,095,629
Indiana
Indiana Health Facilities Finance Authority, Hospital Revenue:
Series 1990 A, 6%, 7/1/2003 (b) ............................................................ 230,000 245,672
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 - Scudder Managed Municipal Bonds
<PAGE>
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Series 1990 A, 6%, 7/1/2004 (b) ....................................................................... 240,000 258,809
Series 1990 A, 6%, 7/1/2005 (b) ....................................................................... 255,000 276,723
Series 1990 A, 6%, 7/1/2006 (b) ....................................................................... 270,000 294,173
Series 1990 A, 6%, 7/1/2007 (b) ....................................................................... 285,000 311,491
Series 1997 A, 6%, 7/1/2008 (b) ....................................................................... 160,000 175,114
Series 1990 A, 6%, 7/1/2009 (b) ....................................................................... 165,000 180,820
Series 1990 A, 6%, 7/1/2010 (b) ....................................................................... 175,000 191,942
Series 1990 A, 6%, 7/1/2011 (b) ....................................................................... 185,000 203,038
Series 1990 A, 6%, 7/1/2012 (b) ....................................................................... 190,000 209,044
Series 1990 A, 6%, 7/1/2013 (b) ....................................................................... 200,000 220,472
Series 1990 A, 6%, 7/1/2014 (b) ....................................................................... 215,000 237,341
Series 1990 A, 6%, 7/1/2015 (b) ....................................................................... 225,000 247,820
Series 1990 A, 6%, 7/1/2016 (b) ....................................................................... 235,000 258,639
Series 1990 A, 6%, 7/1/2017 (b) ....................................................................... 250,000 274,803
Series 1990 A, 6%, 7/1/2018 (b) ....................................................................... 265,000 291,813
Tax Exempt Custodian Receipts Refund:
Series 1997 A, 6%, 7/1/2001 (b) ...................................................................... 205,000 213,643
Series 1997 A, 6%, 7/1/2002 (b) ...................................................................... 215,000 226,995
Indiana Municipal Power Agency, Power Supply System:
Series 1993 B, 6%, 1/1/2012 (b) ....................................................................... 1,750,000 1,934,415
Series 1993 B, 5.5%, 1/1/2016 (b) ..................................................................... 8,960,000 9,408,896
Indiana Transportation Finance Authority, Highway Revenue, Series 1993 A, 5.75%, 6/1/2012 (b) ........... 5,000,000
5,420,300
Rockport, IN, Pollution Control Revenue, Series 1991 B, 7.6%, 3/1/2016 .................................. 4,500,000 4,770,720
Louisiana
Bastrop, LA, Industrial Development Board, Pollution Control Revenue, International Paper Co.
Project, Series 1992, 6.9%, 3/1/2007 (e) .............................................................. 10,250,000 11,010,550
New Orleans, LA, General Obligation, Series 1991, Zero Coupon, 9/1/2005 (b) ............................. 2,500,000 1,900,425
Maryland
Northeast Maryland Waste Disposal Authority, Southwest Resource Recovery System:
Series 1993, 6.9%, 1/1/2000 (b) ....................................................................... 1,595,000 1,628,288
Series 1993, 7.2%, 1/1/2006 (b) ....................................................................... 3,440,000 3,908,081
Series 1993, 7.2%, 1/1/2007 (b) ....................................................................... 3,390,000 3,851,277
Massachusetts
Massachusetts Bay Transportation Authority, Series 1992 B, 6.2%, 3/1/2016 ............................... 2,500,000 2,825,300
Massachusetts College Building Authority Project:
Series 1994 A, 7.5%, 5/1/2010 ......................................................................... 4,110,000 5,062,493
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 - Scudder Managed Municipal Bonds
<PAGE>
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Series 1994 A, 7.5%, 5/1/2014 ........................................................... 3,750,000 4,736,775
Massachusetts Health & Educational Facilities Authority, Massachusetts General Hospital,
Series 1992 F, 6.25%, 7/1/2012 (b) ...................................................... 3,000,000 3,422,190
Massachusetts Water Resource Authority:
General Revenue, Series C, 6%, 12/1/2011 ................................................ 10,000,000 11,078,900
Series 1992 A, 6.5%, 7/15/2009 .......................................................... 2,625,000 2,990,820
Series 1992 A, 6.5%, 7/15/2019 .......................................................... 13,445,000 15,577,511
Michigan
Detroit, MI, City School District, General Obligation, Series 1998 C, 5.25%, 5/1/2014 (b) . 1,000,000 1,035,630
Michigan State Trunk Line, Series 1998 A, 5.25%, 11/1/2013 ................................ 3,000,000 3,113,880
Wayne Charter County, MI, Airport Revenue, Series 1998 B, 5.25%, 12/1/2012 (b) ............ 3,165,000 3,244,726
Montana
Montana State Board of Housing, Family Housing Authority, Series 1984 A, Zero Coupon,
6/1/2010 ................................................................................ 1,510,000 441,886
Nevada
Nevada Municipal Bond Bank Project, General Obligation, Series 1998, 5.25%, 5/15/2013 (d) . 2,000,000 2,041,520
Nevada State Housing Division, Single Family Mortgage Revenue, Series 1993 R, 5.95%,
10/1/2011 ............................................................................... 3,695,000 3,853,552
New Hampshire
New Hampshire Housing Finance Authority, Single Family Revenue, AMT, Series 1998 C, 5.9%,
7/1/2019 ................................................................................ 1,520,000 1,662,515
New York
Long Island Power Authority, NY, Electric Systems Revenue, Series 1998 A, 5%, 12/1/2018 (b) 2,000,000 1,941,780
Metropolitan Transportation Authority, New York, Transit Facilities:
Series 1991, 7%, 7/1/2002 ............................................................... 1,595,000 1,714,370
Series 1993 O, 5.75%, 7/1/2013 (b) ...................................................... 6,775,000 7,355,821
Series 1998 C, 5.125%, 7/1/2013 (b) ..................................................... 3,500,000 3,544,380
New York City, NY, General Obligation:
Series 1989 D, 7%, 8/1/2002 (b) ......................................................... 280,000 285,860
Series 1989 D, 7%, 8/1/2002 (b) ......................................................... 935,000 954,570
Series 1989 D, 7%, 8/1/2002 ............................................................. 1,125,000 1,148,243
Series 1990 H, 7.2%, 8/1/2001 (b) ....................................................... 2,005,000 2,117,320
Series 1990 H, 7.2%, Prerefunded 8/1/2000, 8/1/2001 (b) (c) ............................. 255,000 269,948
Series 1992 A, 6.375%, 8/1/2004 ......................................................... 5,000,000 5,367,700
Series 1992 H, 7%, 2/1/2005 ............................................................. 480,000 520,114
Series 1992 H, 7%, Prerefunded 2/1/2002, 2/1/2005 (b) (c) ............................... 5,000 5,464
Series 1995 B, 6.75%, 8/15/2003 ......................................................... 3,000,000 3,291,180
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 - Scudder Managed Municipal Bonds
<PAGE>
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Series 1995 B, 6%, 8/15/2004 ............................................................... 3,425,000 3,694,102
Series 1995 B, 6.1%, 8/15/2005 ............................................................. 3,510,000 3,826,286
Series 1995 E, 6.6%, 8/1/2004 .............................................................. 6,500,000 7,180,225
Series 1995 E, 6.5%, 2/15/2005 ............................................................. 7,000,000 7,723,800
Series 1996 G, 6.75%, 2/1/2009 ............................................................. 2,000,000 2,305,540
New York State Dormitory Authority, City University System, Consolidated Revenue Lease:
Series 1993 A, 5.75%, 7/1/2006 ............................................................. 4,000,000 4,282,960
Series 1993 A, 5.75%, 7/1/2006 (b) ......................................................... 3,000,000 3,253,800
Series 1993 E, 5.75%, 7/1/2006 ............................................................. 3,085,000 3,303,233
Series 1993 F, 5.375%, 7/1/2007 ............................................................ 2,000,000 2,095,400
New York State Medical Care Facilities Finance Agency, Hospital and Nursing Home, Series 1992,
5.95%, 8/15/2009 (b) ....................................................................... 2,965,000 3,109,840
New York State Thruway Authority, Series 1998 A2, 5.25%, 4/1/2012 (b) ........................ 2,000,000 2,059,900
New York Triborough Bridge and Tunnel Authority, Special Obligation, Series 1998 A, 5.125%,
1/1/2013 (b) ............................................................................... 8,605,000 8,744,573
Onondaga County, NY, Industrial Development Agency, Solid Waste Disposal Facility, Solvay
Paperboard LLC, AMT, Series 1998, 7%, 11/1/2030 ............................................ 3,500,000 3,632,475
Port Authority of New York & New Jersey, Special Obligation, AMT, Series 1996, 7%, 10/1/2007 . 2,000,000 2,200,040
North Carolina
North Carolina Municipal Power Agency #1, Catawba Electric Revenue, Series 1993, 5.25%,
1/1/2009 (b) ............................................................................... 8,500,000 8,863,885
Ohio
Ohio Water Development Authority, Pollution Control Revenue, Ohio Edison Company Project,
Series 1989 A, 7.625%, 7/1/2023 ............................................................ 4,890,000 5,005,453
Oklahoma
Oklahoma Development Finance Authority, Hillcrest Health Center Inc., Series 1999 A, 5.625%,
8/15/2019 .................................................................................. 2,500,000 2,483,350
Rhode Island
Rhode Island Convention Center Authority, Series 1993 B, 5%, 5/15/2020 (b) ................... 5,250,000 5,039,160
Tennessee
Knox County, TN, Health, Education & Housing Facilities Board, Fort Sanders Alliance,
Series 1993 C, 7.25%, 1/1/2009 (b) ......................................................... 3,250,000 3,858,075
Texas
Austin, TX, Bergstrom Landhost Enterprises Inc., Airport Hotel, Series 1999 A, 6.75%, 4/1/2027 4,000,000 4,019,560
Austin, TX, Independent School District, General Obligation, Series 1998, 5%, 8/1/2015 (e) ... 2,000,000 2,015,340
</TABLE>
The accompanying notes are an integral part of the financial statements.
17 - Scudder Managed Municipal Bonds
<PAGE>
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Dallas-Fort Worth, TX, Airport Revenue:
American Airlines, AMT, Series 1990, 7.5%, 11/1/2025 ..................................... 14,250,000 15,120,818
Series 1992 A, 7.8%, 11/1/2007 (b) ....................................................... 2,390,000 2,805,717
Series 1992 A, 7.375%, 11/1/2009 (b) ..................................................... 4,500,000 5,187,600
Harris County, TX:
Health Facilities, Texas Medical Center Project, Series 1996, 6.25%, 5/15/2010 (b) ....... 3,000,000 3,348,420
Series 1998, AMT, 5.5%, 8/15/2006 (b) .................................................... 3,070,000 3,247,415
Toll Road Authority, Series 1992 A, Zero Coupon, 8/15/2004 (b) ........................... 4,050,000 3,240,972
Houston, TX, Airport System, Inversed Floater, Series 1999, 5.25%, 7/1/2010 (d)*** ......... 7,610,000 8,047,879
Houston, TX, Water and Sewer System Authority:
Series 1991 C, Zero Coupon, 12/1/2005 (b) ................................................ 15,000,000 11,278,200
Series 1991 C, Zero Coupon, 12/1/2007 (b) ................................................ 3,400,000 2,303,262
Houston, TX, Water Conveyance System Contract, Certificate of Participation, Series 1993 J,
6.125%, 12/15/2005 (b) ................................................................... 2,500,000 2,742,200
Lower Colorado River Authority, TX, Series 1992, Zero Coupon, 1/1/2003 (b) ................. 8,900,000 7,668,418
San Antonio, TX, Airport Systems Revenue, Series 1991, 7%, 7/1/2002 (b) .................... 1,695,000 1,842,448
San Antonio, TX, Electric and Gas Revenue:
Series 1989 A, Zero Coupon, 2/1/2005 (b) ................................................. 7,000,000 5,458,950
Series 1991 B, ETM, Zero Coupon, 2/1/2005 (b)** .......................................... 5,000,000 3,899,250
Texas Municipal Power Agency, Series 1989, Zero Coupon, 9/1/2012 (b) ....................... 5,150,000 2,648,233
Utah
Intermountain Power Agency, UT, Power Supply Revenue:
Series 1993, 5.55%, 7/1/2011 ............................................................. 3,000,000 3,123,720
Series 1993 C, 5.25%, 7/1/2014 ........................................................... 4,000,000 4,109,160
Series 1998 A, 5.25%, 7/1/2014 (b) ....................................................... 7,000,000 7,103,740
Salt Lake City, UT, Hospital Revenue, Inversed Inflow, Series 1992, 7.5%, 2/15/2012*** ..... 1,500,000 1,665,930
Virgin Islands
Virgin Islands, Public Finance Authority, Series 1998 C, 5.5%, 10/1/2008 ................... 1,500,000 1,561,005
Virginia
Virginia Beach, VA, Development Authority, General Hospital, Series 1993, 5.125%,
2/15/2018 (b) ............................................................................ 3,000,000 2,976,600
Peninsula Ports Authority, VA, Riverside Health System Project, Series 1998, 5.25%, 7/1/2012 2,735,000 2,775,232
Washington
Seattle, WA, Port Revenue:
Series 1998, 5.375%, 8/1/2013 (b) ........................................................ 1,460,000 1,501,537
Series 1998, 5.375%, 8/1/2014 (b) ........................................................ 1,805,000 1,849,204
</TABLE>
The accompanying notes are an integral part of the financial statements.
18 - Scudder Managed Municipal Bonds
<PAGE>
<TABLE>
<CAPTION>
Principal Market
Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Washington State Health Care Facilities Authority:
Empire Health Services-- Spokane, Series 1993, 5.8%, 11/1/2008 (b) ...................... 4,865,000 5,287,039
Franciscan Health System-- St. Joseph's Hospital:
Series 1993, ETM, 5.4%, 1/1/2007 (b)** ................................................. 2,000,000 2,123,840
Series 1993, ETM, 5.4%, 1/1/2008 (b)** ................................................. 2,645,000 2,814,915
Washington State Public Power Supply System:
Nuclear Project #1:
Series 1990 B, 7.25%, 7/1/2009 (b) ..................................................... 12,350,000 14,747,135
Series 1991 A, Zero Coupon, 7/1/2007 (b) ............................................... 8,570,000 5,898,731
Nuclear Project #2:
Series 1990 A, 7.25%, 7/1/2006 ......................................................... 7,000,000 8,123,640
Series 1994 A, 6%, 7/1/2007 (b) ........................................................ 7,000,000 7,680,330
Nuclear Project #3:
Series 1989 A, Zero Coupon, 7/1/2006 (b) ............................................... 1,380,000 1,001,645
Series 1989 B, 7.25%, Prerefunded 1/1/2000, 1/1/2015 (b) (c) ........................... 5,000,000 5,212,350
Series 1989 B, Zero Coupon, 7/1/2006 (b) ............................................... 5,555,000 4,031,986
Series 1990 B, 7.375%, 7/1/2004 (b) .................................................... 750,000 791,768
Series 1990 B, Zero Coupon, 7/1/2002 (b) ............................................... 11,925,000 10,515,584
Series 1993 B, 5.65%, 7/1/2008 (b) ..................................................... 3,000,000 3,222,540
Washington State, General Obligation, Series 1998 A, 5.25%, 7/1/2012 ...................... 4,210,000 4,310,661
Wisconsin
Green Bay, WI, Industrial Development Revenue, Weyerhaeuser Company Project, Series 1981 A,
9%, 9/1/2006 ............................................................................ 1,700,000 1,718,768
Wisconsin State Health & Educational Facilities Authority:
Aurora Health Care, Inc.:
Series 1999 A, 5.6%, 2/15/2029 ......................................................... 4,000,000 3,854,040
Series 1999 B, 5.625%, 2/15/2029 (d) ................................................... 2,500,000 2,427,775
Hospital Sisters Services Inc., Series 1993, 5.375%, 6/1/2013 (b) ....................... 1,500,000 1,539,045
Wyoming
Wyoming Community Development Authority, Single Family Mortgage Revenue, Series 1993 A,
5.85%, 6/1/2013 ......................................................................... 3,000,000 3,094,830
- ------------------------------------------------------------------------------------------------------------------------
Total Long-Term Municipal Investments (Cost $644,212,998) 703,559,920
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $655,512,998) (a) 714,859,920
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
19 - Scudder Managed Municipal Bonds
<PAGE>
(a) The cost for federal income tax purposes was $655,512,998. At May 31, 1999,
net unrealized appreciation for all securities based on tax cost was
$59,346,922. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $60,258,771 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$911,849.
(b) Bond is insured by one of these companies: AMBAC, Capital Guaranty, FGIC,
FSA or MBIA/BIG.
(c) Prerefunded: Bonds which are prerefunded are collateralized by U.S.
Treasury securities which are held in escrow and are used to pay principal
and interest on tax-exempt issues and to retire the bonds in full at the
earliest refunding date.
(d) When-issued or forward delivery securities (See Note A in Notes to
Financial Statements).
(e) At May 31, 1999, these securities, in part or in whole, have been
segregated to cover when-issued securities and initial margin requirements
for open futures contracts.
* Floating rate and monthly, weekly, or daily demand notes are securities
whose yields vary with a designated market index or market rate, such as
the coupon-equivalent of the Treasury bill rate. Variable rate demand notes
are securities whose yields are periodically reset at levels that are
generally comparable to exempt commercial paper. These securities are
payable on demand within seven calendar days and normally incorporate an
irrevocable letter of credit from a major bank. These notes are carried,
for purposes of calculating average weighted maturity, at the longer of the
period remaining until the next rate change or to the extent of the demand
period.
** ETM: Bonds bearing the description ETM (escrowed to maturity) are
collateralized by U.S. Treasury securities which are held in escrow by a
trustee and used to pay principal and interest on bonds so designated.
*** Inverse floating rate notes are instruments whose yields may change based
on the change in the relationship between long-term and short-term interest
rates and which exhibit added interest rate sensitivity compared to other
bonds with a similar maturity. These securities are shown at their rates as
of May 31, 1999.
AMT: Alternative minimum tax
At May 31, 1999, open futures contracts purchased short were as follows:
<TABLE>
<CAPTION>
Aggregate Face
Futures Expiration Contracts Value ($) Market Value ($)
------------------------------------ ------------------ ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Municipal Bond Index June 19, 1999 50 6,098,438 6,088,763
------------ ------------
Total unrealized depreciation on open futures contracts purchased short................... (9,675)
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
20 - Scudder Managed Municipal Bonds
<PAGE>
Financial Statements
Statements of Assets and Liabilities
as of May 31, 1999
<TABLE>
<CAPTION>
Assets
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
Investments, at market (identified cost $655,512,998) .................. $ 714,859,920
Cash ................................................................... 935,652
Receivable for investments sold ........................................ 2,244,146
Interest receivable .................................................... 9,699,339
Receivable for Fund shares sold ........................................ 115,158
Other assets ........................................................... 10,129
-------------
Total assets ........................................................... 727,864,344
Liabilities
- ---------------------------------------------------------------------------------------------------------------
Dividends payable ...................................................... 1,379,429
Payable for when-issued securities ..................................... 12,533,013
Payable for daily variation margin on open futures contracts ........... 17,188
Payable for Fund shares redeemed ....................................... 59,731
Accrued management fee ................................................. 295,243
Other payables and accrued expenses .................................... 178,571
-------------
Total liabilities ...................................................... 14,463,175
----------------------------------------------------------------------------------------
Net assets, at market value ............................................ $ 713,401,169
----------------------------------------------------------------------------------------
Net Assets
- ---------------------------------------------------------------------------------------------------------------
Net assets consist of:
Net unrealized appreciation (depreciation) on:
Investments ............................................................ 59,346,922
Futures ................................................................ (9,675)
Accumulated net realized gain (loss) ................................... (2,245,343)
Paid-in capital ........................................................ 656,309,265
----------------------------------------------------------------------------------------
Net assets, at market value ............................................ 713,401,169
----------------------------------------------------------------------------------------
Net Asset Value
- ---------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share ($713,401,169 /
79,451,883 outstanding shares of beneficial interest, $.01 par value,
unlimited number of shares authorized) .............................. $ 8.98
</TABLE>
The accompanying notes are an integral part of the financial statements.
21 - Scudder Managed Municipal Bonds
<PAGE>
Statements of Operations
<TABLE>
<CAPTION>
Five Months
Ended Year Ended
May 31, 1999 December 31,
Investment Income (Note E) 1998
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Income:
Interest ....................................................... $ 16,768,032 $ 40,966,157
------------ ------------
Expenses:
Management fee ................................................. 1,547,581 3,760,257
Services to shareholders ....................................... 186,924 442,967
Custodian and accounting fees .................................. 63,951 158,973
Trustees' fees and expenses .................................... 20,871 37,351
Reports to shareholders ........................................ 29,080 36,390
Auditing ....................................................... 44,930 48,806
Registration fees .............................................. 20,217 31,111
Legal .......................................................... 3,344 9,662
Other .......................................................... 8,748 26,949
------------ ------------
1,925,646 4,552,466
------------------------------------------------------------------------------- ------------
Net investment income .......................................... 14,842,386 36,413,691
------------------------------------------------------------------------------- ------------
Realized and unrealized gain (loss) on investment transactions
- ------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments .................................................... 3,094,358 4,261,533
Futures ........................................................ -- (188,900)
------------ ------------
3,094,358 4,072,633
------------ ------------
Net unrealized appreciation (depreciation) during the period on:
Investments .................................................... (19,063,869) 3,939,113
Futures ........................................................ (9,675) 128,825
------------ ------------
(19,073,544) 4,067,938
------------------------------------------------------------------------------- ------------
Net gain (loss) on investment transactions ..................... (15,979,186) 8,140,571
------------------------------------------------------------------------------- ------------
------------------------------------------------------------------------------- ------------
Net increase (decrease) in net assets resulting from operations $ (1,136,800) $ 44,554,262
------------------------------------------------------------------------------- ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
22 - Scudder Managed Municipal Bonds
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Five Months
Ended May 31,
1999 (Note E) Years Ended December 31,
Increase (Decrease) in Net Assets 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations:
Net investment income ............................... $ 14,842,386 $ 36,413,691 $ 36,962,574
Net realized gain (loss) from investment transactions 3,094,358 4,072,633 4,446,931
Net unrealized appreciation (depreciation) on
investment transactions during the period ........ (19,073,544) 4,067,938 22,559,064
------------- ------------- -------------
Net increase (decrease) in net assets resulting from
operations........................................ (1,136,800) 44,554,262 63,968,569
------------- ------------- -------------
Distributions to shareholders from:
Net investment income ............................... (14,842,386) (36,413,691) (36,962,574)
------------- ------------- -------------
Net realized gains .................................. -- (3,996,751) (3,989,109)
------------- ------------- -------------
Fund share transactions:
Proceeds from shares sold ........................... 37,202,992 83,789,509 65,569,325
Net asset value of shares issued to shareholders in
reinvestment of distributions..................... 7,966,563 21,988,411 21,815,625
Cost of shares redeemed ............................. (52,816,744) (101,202,201) (119,516,692)
------------- ------------- -------------
Net increase (decrease) in net assets from Fund share -------------- ------------------------------
transactions...................................... (7,647,189) 4,575,719 (32,131,742)
-------------- ------------------------------
Increase (decrease) in net assets ................... (23,626,375) 8,719,539 (9,114,856)
Net assets at beginning of period ................... 737,027,544 728,308,005 737,422,861
------------- ------------- -------------
Net assets at end of period ......................... $ 713,401,169 $ 737,027,544 $ 728,308,005
------------- ------------- -------------
Other Information
- ------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period ........... 80,293,360 79,790,697 83,437,562
------------- ------------- -------------
Shares sold ......................................... 4,073,627 9,148,915 7,354,111
Shares issued to shareholders in reinvestment of
distributions..................................... 874,504 2,402,379 2,441,767
Shares redeemed ..................................... (5,789,608) (11,048,631) (13,442,743)
------------- ------------- -------------
Net increase (decrease) in Fund shares .............. (841,477) 502,663 (3,646,865)
-------------- ------------------------------
Shares outstanding at end of period ................. 79,451,883 80,293,360 79,790,697
-------------- ------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
23 - 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>
Five Months Ended
May 31, 1999 Years Ended December 31,
(Note E) 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------
Net asset value, beginning of period ........... $ 9.18 $ 9.13 $ 8.84 $ 8.94 $ 8.07 $ 9.09
----------------------------------------------------------------------------
Income from investment operations:
Net investment income .......................... .19 .45 .46 .45 .48 .46
Net realized and unrealized gain (loss) on
investment transactions....................... (.20) .10 .34 (.10) .87 (1.00)
----------------------------------------------------------------------------
Total from investment operations ............... (.01) .55 .80 .35 1.35 (.54)
----------------------------------------------------------------------------
Less distributions from:
Net investment income .......................... (.19) (.45) (.46) (.45) (.48) (.46)
Net realized gains on investment transactions .. -- (.05) (.05) -- -- (.02)
----------------------------------------------------------------------------
Total distributions ............................ (.19) (.50) (.51) (.45) (.48) (.48)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net asset value, end of period ................. $ 8.98 $ 9.18 $ 9.13 $ 8.84 $ 8.94 $ 8.07
----------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Return (%) ............................... (.17)** 6.23 9.29 4.15 17.12 (6.04)
Ratios and Supplemental Data
Net assets, end of period ($ millions) ......... 713 737 728 737 775 709
Ratio of operating expenses to average daily net
assets (%).................................... .64* .62 .64 .63 .63 .63
Ratio of net investment income to average daily
net assets (%)................................ 4.92* 4.96 5.12 5.20 5.59 5.41
Portfolio turnover rate (%) .................... 13.8* 8.6 9.8 12.2 17.8 33.7
</TABLE>
* Annualized
** Not annualized
24 - Scudder Managed Municipal Bonds
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Scudder Managed Municipal Bonds (the "Fund") is organized as a diversified
series of Scudder Municipal Trust, a Massachusetts business trust (the "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 purchased with remaining
maturities greater than sixty days are valued by pricing agents approved by the
officers of the Fund, whose 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. Money market instruments purchased with an original
maturity of sixty days or less are valued at amortized cost. All other debt
securities are valued at their fair value as determined in good faith by the
Valuation Committee of the Board of Trustees.
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 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 period, the
Fund purchased index futures to hedge against changes 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.
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.
25 - 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 of 1986, 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.
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 five months ended May 31, 1999, purchases and sales of municipal
securities (excluding short-term investments) aggregated $41,252,347 and
$57,317,004, respectively. During the year ended December 31, 1998, purchases
and sales of municipal securities (excluding short-term investments) aggregated
$61,712,948 and $65,283,639, respectively.
The aggregate face value of futures contracts opened during the five months
ended May 31, 1999 was $6,098,438. No futures contracts were closed during the
period. The aggregate face value of futures contracts closed during the year
ended December 31, 1998 was $11,918,050.
C. Related Parties
Under the Management Agreement (the "Agreement") with Scudder Kemper
Investments, Inc. ("Scudder Kemper" or 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
26 - Scudder Managed Municipal Bonds
<PAGE>
excess of $700,000,000, computed and accrued daily and payable monthly. For the
five months ended May 31, 1999, the fee pursuant to this Agreement amounted to
$1,547,581, which was equivalent to an annual effective rate of 0.51% of the
Fund's average daily net assets. For the year ended December 31, 1998, the fee
pursuant to this Agreement amounted to $3,760,257, which was equivalent to an
annual effective rate of 0.51% 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
five months ended May 31, 1999, the amount charged to the Fund by SSC aggregated
$125,396, of which $24,833 is unpaid at May 31, 1999. For the year ended
December 31, 1998, the amount charged to the Fund by SSC aggregated $316,492.
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 five months
ended May 31, 1999, the amount charged to the Fund by SFAC aggregated $40,520,
of which $8,079 is unpaid at May 31, 1999. For the year ended December 31, 1998,
the amount charged to the Fund by SFAC aggregated $98,235.
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 five months ended May 31, 1999,
Trustees' fees and expenses aggregated $20,871. For the year ended December 31,
1998, the Trustee's fees and expenses aggregated $37,351.
D. Line of Credit
The Fund and several other Scudder Funds (the "Participants") share in a $850
million revolving credit facility for temporary or emergency purposes, including
the meeting of redemption requests that otherwise might require the untimely
disposition of securities. The Participants are charged an annual commitment fee
which is allocated pro rata among each of the Participants. Interest is
calculated based on the market rates at the time of the borrowing. The Fund may
borrow up to a maximum of 33 percent of its net assets under the agreement.
E. Year End Change
On August 10, 1998, the Board of Trustees of the Trust changed the fiscal year
end of the Fund from December 31 to May 31.
27 - Scudder Managed Municipal Bonds
<PAGE>
Report of Independent Accountants
To the Trustees of Scudder Municipal Trust and the Shareholders of Scudder
Managed Municipal Bonds:
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Scudder Managed Municipal Bonds
(the "Fund") at May 31, 1999, the results of its operations, the changes in its
net assets, and the financial highlights for the periods indicated therein, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at May 31, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
Boston, Massachusetts PricewaterhouseCoopers LLP
July 19, 1999
28 - Scudder Managed Municipal Bonds
<PAGE>
Tax Information
Of the dividends paid from net investment income for the five months ended May
31, 1999, 100% are designated as exempt interest dividends for federal income
tax purposes.
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$3,000,000 as capital gain dividends for the five months ended May 31, 1999.
Please consult a tax adviser if you have any questions about federal or state
income tax laws, or on how to prepare your tax returns. If you have specific
questions about your Scudder Fund account, please call a Scudder Investor
Relations Representative at 1-800-225-5163.
29 - Scudder Managed Municipal Bonds
<PAGE>
This Page
intentionally
left blank.
30 - Scudder Managed Municipal Bonds
<PAGE>
This Page
intentionally
left blank.
31 - 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; Venture Partner,
Venture Capital Group
Philip G. Condon*
Vice President
Ashton P. Goodfield*
Vice President
Thomas W. Joseph*
Vice President
Ann M. McCreary*
Vice President
John Millette*
Vice President and Secretary
John R. Hebble*
Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
32 - 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 --
Prime Reserve Shares*
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 GNMA Fund
Scudder Income Fund
Scudder Corporate Bond 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 Select 500 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 Select 1000 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
Preferred Series
- ----------------
Scudder Tax Managed Growth Fund
Scudder Tax Managed Small
Company Fund
Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
Retirement Programs
- -------------------
Traditional IRA
Roth IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Variable Annuities
Scudder Horizon Plan** [[
Scudder Horizon Advantage** [[[
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.
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 or classes thereof 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. [[[A no-load
variable annuity contract issued by Glenbrook Life and Annuity Company and
underwritten by Allstate Financial Services, Inc., sold 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.
33 - Scudder Managed Municipal Bonds
<PAGE>
Scudder Solutions
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
- -----------------------------------------------------------------------------------------------------------------------------
Automatic Investment Plan QuickBuy
<S> <C> <C>
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
fewer when it's higher, which can reduce your average bank account.
purchase price over time.*
Automatic Dividend Transfer Payroll Deduction and Direct Deposit
The most timely, reliable, and convenient way to purchase Have all or part of your paycheck-- even government
shares-- use distributions from one Scudder fund to checks-- invested in up to four Scudder funds at
purchase shares in another, automatically (accounts with one time.
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 -- www.scudder.com
1-800-343-2890
Personal Investment Organizer: Offering account
Personalized account information, the ability to exchange information and transactions, interactive
or redeem shares, and information on other Scudder funds worksheets, prospectuses and applications for all
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
- -----------------------------------------------------------------------------------------------------------------------------
34 - 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 FolioSM provides using Scudder funds.
investors with access to a marketplace of more than
800 no-load funds from well-known companies--with no
transaction fees or commissions. Scudder
shareholders can take advantage of a Scudder
Brokerage account already reserved for them, with no
minimum investment. For information about Scudder
Brokerage Services, call 1-800-700-0820.
Fund Folio funds held less than six months will be charged a
transaction fee. 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.
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
additional applications and prospectuses, or for Many shareholders enjoy the personal, one-on-one service of
answers to investment questions the Scudder Investor Centers. Check for an Investor Center
near you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470
[email protected] Boca Raton Chicago San Francisco
Boston New York
</TABLE>
35 - Scudder Managed Municipal Bonds
<PAGE>
About the Fund's Adviser
Scudder Kemper Investments, Inc., is one of the largest and most experienced
investment management organizations worldwide, managing more than $280 billion
in assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts.
Scudder Kemper Investments has a rich heritage of innovation, integrity, and
client-focused service. In 1997, Scudder, Stevens & Clark, Inc., founded 80
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Financial Services 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 Financial Services Group. The Zurich Financial Services 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
