Scudder
Medium Term
Tax Free Fund
Annual Report
December 31, 1996
Pure No-Load(TM) Funds
A fund that seeks to provide a high level of tax-free income and limited
principal fluctuation by investing in high-grade municipal securities of
intermediate maturity.
A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
<PAGE>
Table of Contents
2 In Brief
3 Letter from the Fund's President
4 Performance Update
5 Portfolio Summary
6 Portfolio Management Discussion
9 Investment Portfolio
20 Financial Statements
23 Financial Highlights
24 Notes to Financial Statements
27 Report of Independent Accountants
28 Tax Information
29 Officers and Trustees
30 Investment Products and Services
31 How to Contact Scudder
In Brief
o Scudder Medium Term Tax Free Fund's 30-day net annualized SEC yield was
4.35% as of December 31, 1996. For investors in the top federal tax
brackets of 36% and 39.6%, the Fund's yield was equivalent to a fully
taxable 6.80% and 7.20%, respectively.
o The Fund received five stars from Morningstar, reflecting their highest
rating for risk-adjusted performance through December 31, 1996.*
o For one-, three-, and five-year periods, the Fund's total returns surpassed
the average of similar municipal bond funds as tracked by Lipper Analytical
Services. Please see page 6 for additional Lipper performance information.
* For your information, these ratings are subject to change every month and
are calculated from the Fund's three-, five-, and ten-year average annual
returns in excess of 90-day Treasury bill returns with appropriate fee
adjustments, and a risk factor that reflects fund performance below T-bill
returns. In all, 1,129 municipal funds were rated. 10% received five stars,
22.5% received four stars, 35% three stars, 22.5% two stars, and the bottom
10% one star. The Fund also received five stars for three-year performance
and five stars for five-year performance. Past performance is no guarantee
of future returns.
2 - SCUDDER MEDIUM TERM TAX FREE FUND
<PAGE>
Letter From the Fund's President
Dear Shareholders,
We hope you enjoy our newly redesigned shareholder report. The new format,
which is being gradually introduced for all Scudder funds, is designed to
enhance the attractiveness and readability of the reports. Let us know what you
think.
This annual report for Scudder Medium Term Tax Free Fund covers a year
which witnessed large swings of opinion concerning the direction of the U.S.
economy and interest rates. Despite the resulting market uncertainty, the Fund
posted a 4.02% total return for the 12-month period as well as a 4.35% 30-day
net annualized SEC yield and a 6.80% tax equivalent yield at the close of the
year based on the 36% federal tax rate. Please read the portfolio management
discussion beginning on page 6 for more information.
As part of Scudder's ongoing efforts to meet the needs of investors, we
recently launched an innovative new product called Scudder Pathway Series. A
"fund of funds," Pathway Series is a collection of four distinct portfolios --
Conservative, Growth, Balanced, and International -- that offers flexibility,
diversification, and simplicity. Each portfolio invests in a diverse mix of
Scudder funds, and each is geared towards people with different investment goals
and risk tolerances -- a team of Scudder's investment professionals makes
allocation decisions accordingly.
We'd like to remind you that new legislation passed last summer
significantly raised IRA contribution limits for many married couples. Beginning
with the 1997 tax year, married couples with one income may contribute up to
$4,000 jointly per year -- an increase of $1,750 from the previous limit. This
change may enhance your ability to use an IRA to defer taxes and let your
retirement assets grow over time. For more information on Scudder products and
services, please turn to page 30. If you have questions about Scudder Medium
Term Tax Free Fund, please contact a Scudder Investor Information representative
at 1-800-225-2470, or visit Scudder's Web site at funds.scudder.com.
Sincerely,
/s/David S. Lee
David S. Lee
President,
Scudder Medium Term Tax Free Fund
3 - SCUDDER MEDIUM TERM TAX FREE FUND
<PAGE>
PERFORMANCE UPDATE as of December 31, 1996
- ----------------------------------------------------------------
FUND INDEX COMPARISONS
- ----------------------------------------------------------------
Total Return
Period Growth --------------
Ended of Average
12/31/96 $10,000 Cumulative Annual
- --------------------------------------
SCUDDER MEDIUM TERM TAX FREE FUND
- --------------------------------------
1 Year $10,402 4.02% 4.02%
5 Year $13,868 38.68% 6.76%
10 Year* $18,975 89.75% 6.62%
- --------------------------------------
LEHMAN BROTHERS MUNICIPAL BOND INDEX
- --------------------------------------
1 Year $10,443 4.43% 4.43%
5 Year $14,212 42.12% 7.27%
10 Year $21,184 111.84% 7.79%
- -----------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- -----------------------------------------------------------------
A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:
YEARLY PERIODS ENDED DECEMBER 31
SCUDDER MEDIUM TERM TAX FREE FUND
Year Amount
- ----------------------
'86 $10,000
'87 $10,323
'88 $10,831
'89 $11,480
'90 $12,203
'91 $13,683
'92 $14,904
'93 $16,536
'94 $15,957
'95 $18,243
'96 $18,975
LEHMAN BROTHERS MUNICIPAL BOND INDEX
Year Amount
- ----------------------
'86 $10,000
'87 $10,151
'88 $11,183
'89 $12,389
'90 $13,292
'91 $14,906
'92 $16,220
'93 $18,212
'94 $17,271
'95 $20,285
'96 $21,184
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 invested and, unlike Fund returns, do not reflect any fees
or expenses.
- -----------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
- -----------------------------------------------------------------
A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) and Index Total
Return (%) with the exact data points listed in the table
below.
YEARLY PERIODS ENDED DECEMBER 31
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
-------------------------------------------------------------------------------
NET ASSET VALUE... $10.07 $10.02 $10.04 $10.11 $10.62 $10.86 $11.36 $10.39 $11.26 $11.15
INCOME DIVIDENDS.. $ .54 $ .54 $ .56 $ .54 $ .67 $ .65 $ .60 $ .53 $ .54 $ .53
CAPITAL GAINS
DIVIDENDS......... $ .05 $ -- $ -- $ -- $ .01 $ .03 $ .06 $ .05 $ .05 $ .02
FUND TOTAL
RETURN (%)........ 3.23 4.92 6.00 6.29 12.13 8.93 10.94 -3.50 14.32 4.02
INDEX TOTAL
RETURN (%)........ 1.51 10.16 10.79 7.29 12.14 8.82 12.28 05.17 17,46 4.43
</TABLE>
*ON NOVEMBER 1, 1990, THE FUND ADOPTED ITS PRESENT NAME AND OBJECTIVES. PRIOR
TO THAT DATE, THE FUND WAS KNOWN AS THE 1990 PORTFOLIO OF THE SCUDDER TAX FREE
TARGET FUND AND ITS OBJECTIVE WAS TO PROVIDE HIGH TAX-FREE INCOME AND CURRENT
LIQUIDITY. SINCE ADOPTING ITS CURRENT OBJECTIVES, THE CUMULATIVE AND AVERAGE
ANNUAL TOTAL RETURNS ARE 58.35% AND 7.74%, RESPECTIVELY.
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. If the Adviser had not temporarily
capped expenses for November 1, 1990 through October 31, 1995, the average
annual total return of the Fund for the five year and ten year periods would
have been lower.
4 - SCUDDER MEDIUM TERM TAX FREE FUND
<PAGE>
PORTFOLIO SUMMARY as of December 31, 1996
- --------------------------------------------------------------------------
DIVERSIFICATION
- --------------------------------------------------------------------------
Electric Utility Revenue 19%
Core Cities/Lease 17%
Hospital/Health 12%
State General Obligation 11%
Toll Revenue 6%
Other General Obligation/Lease 6%
School District/Lease 6%
Sales and Special Tax 4%
Resource Recovery 4%
Miscellaneous Municipal 15%
- ---------------------------------------------
100%
- ---------------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
Diversification remains an important
strategy for the Fund, allowing us to
spread risk over a large number of
sectors, maturities, and geographic
areas.
- ---------------------------------------------------------------------------
QUALITY
- ---------------------------------------------------------------------------
Cash Equivalents 1%
AAA 57%
AA 13%
A 18%
BBB 9%
Below BBB 1%
NR 1%
- --------------------------------------
100%
- --------------------------------------
Weighted average quality: AA
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
The Fund has maintained high quality,
with 71% of Fund assets rated AAA, AA,
or the equivalent as of December 31, 1996.
- --------------------------------------------------------------------------
EFFECTIVE MATURITY
- --------------------------------------------------------------------------
Less than 1 year 6%
1 - 5 21%
5 - 10 56%
10 - 15 17%
- --------------------------------------
100%
- --------------------------------------
Weighted average effective maturity: 6.7 years
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
To strike a balance between benefiting
from slightly higher rates and providing
a measure of protection from potential
future interest rate increases, we
maintained an average effective maturity
comparable to the Fund's competitive
universe during the most recent fiscal
year.
- -----------------------------------------------------------------------------
5 - SCUDDER MEDIUM TERM TAX FREE FUND
<PAGE>
Portfolio Management Discussion
Dear Shareholders,
In the face of shifting bond market sentiment during 1996, we held to our
long-term strategy as Scudder Medium Term Tax Free Fund posted a 4.02% total
return for the 12 months ended December 31, 1996. A slight decline in the Fund's
net asset value -- from $11.26 on December 31, 1995, to $11.15 as of December
31,1996 -- was offset by income distributions of $0.53 per share and a
short-term capital gain distribution of $0.02 per share over the 12-month
period. The Fund's return outpaced the 3.70% average total return of 136 similar
funds over the same period as measured by Lipper Analytical Services, Inc. As
shown in the chart below, the Fund's average annual total returns have exceeded
the average performance of its peer group for one-, three-, and five-year
periods. The Fund also posted top-quartile total return performance for three-
and
- ------------------------------------------------------------
Strong Relative Performance
(Average annual returns for periods ended December 31, 1996)
- ------------------------------------------------------------
Scudder
Medium Lipper
Term Tax average Number
Free Fund annual of Funds Percentile
Period return return tracked Rank
- -------------------------------------------------------------
1 year 4.02% 3.70% 136 33%
3 years 4.69% 4.29% 90 22%
5 years 6.76% 6.11% 34 15%
10 years 6.62% 6.63% 17 47%
- -------------------------------------------------------------
Past performance does not guarantee future results.
Scudder Medium Term Tax Free Fund adopted its current name and objective on
November 1, 1990.
five-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.
Scudder Medium Term Tax Free Fund provided a 30-day net annualized SEC yield of
4.35% as of December 31, 1996, equivalent to a 6.80% taxable yield for investors
in the 36% federal income tax bracket.
An Uncertain Bond Market
During the Fund's most recent fiscal year, bond prices moved alternately higher
and lower as opinions concerning the direction of the economy swung from one
extreme to the other. At the start of 1996, weakening economic indicators made
many market participants feel that the U.S. economy might be falling into a
recession. But the economy soon gained some strength, and the consensus of
economists' opinions shifted to expectations of a soft economic landing and
moderate inflation. At mid-year, the bond market struggled as the numbers seemed
to forecast very strong economic growth and an outbreak of inflation: Statistics
showed that shoppers were returning to retail stores, and hiring was increasing
significantly. But by late summer moderating economic indicators had soothed the
market. Bond yields declined and the economy retreated as consumers seemed to
feel the weight of their personal debt -- credit card debt service payments as a
percentage of disposable income rose to an all-time high in 1996.
Following a period of underperformance caused in part by the temporary
refloating of the "flat tax"
6 - SCUDDER MEDIUM TERM TAX FREE FUND
<PAGE>
idea during the presidential primaries, municipal bond returns exceeded those of
Treasuries during 1996. Yields of 10-year municipal bonds rose one quarter of a
percentage point, and their prices declined 1.77%, while 10-year Treasury yields
rose eight tenths of a percentage point and their prices declined 5.34%. Changes
in supply and demand were not decisive factors in tax-free bond performance, as
a modest increase in the supply of municipals was met by a corresponding
increase in demand, particularly from retail purchasers and insurance companies.
Noncallable Bonds
Central to Strategy
To strike a balance between benefiting from slightly higher rates and providing
a measure of protection from future interest rate increases, we maintained an
average effective maturity comparable to the Fund's competitive universe during
the most recent fiscal year. Scudder Medium Term Tax Free Fund's average
effective maturity was 6.7 years as of December 31, 1996. In conjunction with
our primary goals of maximizing the Fund's yield while maintaining as much price
stability as possible, we continued to purchase high-grade,
intermediate-maturity municipal bonds. On December 31, bonds with effective
maturities between 5 and 15 years represented 73% of the Fund's portfolio.
We have also been buying bonds priced at a slight premium to par value because
these issues tend to perform better in rising interest rate environments. In
addition, purchasing bonds with call protection remains a fundamental part of
our investment strategy, ensuring that a significant portion of the Fund's bonds
are not retired before maturity. (Generally, a bond is called in by its issuer
so that it can be refinanced at a lower prevailing rate.) Our emphasis on call
protection provides a more reliable income stream than would exist if the Fund's
portfolio held a significant proportion of bonds that could be called in before
their stated maturities. While many municipal market participants have recently
increased their focus on this segment of the market, Scudder shareholders have
benefited from our pursuit of attractive noncallable bonds for more than five
years.
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 December 31,1996, the Fund held securities issued in 38 states plus the
District of Columbia and the Virgin Islands. Lastly, the Fund's credit quality
remains high, with 71% of Fund assets rated AAA or AA, or of equivalent quality.
Securities are rated by Standard & Poor's, Moody's Investor Service, Fitch
Investors Service, or, if unrated, are assigned a rating by Scudder. The
Portfolio Summary on page 5 provides more information about the Fund's holdings,
including quality, maturity, and sector representation.
A New Era of Growth?
We expect the latter part of the 1990s to be a time of exciting change and
enormous economic possibilities. We believe that rapid technological advances,
falling trade barriers, and worldwide deregulation are forging a new U.S.
economy characterized by significant growth and declining inflation. Before this
new economy can take root, however, we
7 - SCUDDER MEDIUM TERM TAX FREE FUND
<PAGE>
expect a transitional period of weaker economic activity -- consumers are
currently weighed down by debt, and more banks are tightening lending to
consumers than at any time since the 1989-90 recession. Following this
transition, growth accompanied by even lower inflation can assert itself. This
scenario would be favorable for bonds, which have been outshone by stocks during
1995 and 1996 but remain an important ingredient of a balanced investment
portfolio: Bonds can provide investors with diversification, current income, and
increased principal stability. For investors in higher tax brackets, municipal
bonds continue to offer significant after-tax rewards.
Over the coming year, we expect to maintain an average effective maturity that
is in line with our competitive universe. We will seek to add value, as we have
in the past, by emphasizing call protection and security selection rather than
by making significant portfolio changes based on interest rate forecasts.
Sincerely,
Your Portfolio Management Team
/s/Donald C. Carleton /s/M. Ashton Patton
Donald C. Carleton M. Ashton Patton
Scudder Medium Term
Tax Free Fund:
A Team Approach to Investing
Scudder Medium Term Tax Free Fund is managed by a team of Scudder investment
professionals who each play 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 Scudder'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 Scudder's extensive resources.
Lead Portfolio Manager Donald C. Carleton has had responsibility for Scudder
Medium Term Tax Free Fund's day-to-day operations since he joined Scudder in
1983. Don, who has worked in the investment industry for more than 25 years,
also serves as Lead Portfolio Manager for Scudder Managed Municipal Bonds,
Scudder Ohio Tax Free Fund, and Scudder Pennsylvania Tax Free Fund. M. Ashton
Patton, Portfolio Manager, became a member of the team in 1989. Ashton, who has
worked with municipal investments since joining Scudder in 1986, focuses on the
Fund's security selection.
Your Portfolio Management Team: Donald C. Carleton and M. Ashton Patton
8 - SCUDDER MEDIUM TERM TAX FREE FUND
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT PORTFOLIO as of December 31, 1996
Credit
Principal Rating (e) Market
Amount ($) (Unaudited) Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL INVESTMENTS 2.1%
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ALABAMA
Phenix City, AL, Industrial Development Bond, Mead Coated Board Project, Daily
Demand Note, 5.1%, 10/1/25*............................................................ 650,000 A1 650,000
ARIZONA
Maricopa County, AZ, Pollution Control Revenue, Arizona Public Service Corporation,
Series F, Daily Demand Note, 5%, 5/1/29*............................................... 1,300,000 P1 1,300,000
FLORIDA
St. Johns County, FL, IDA, Hospital Revenue, Flagler Hospital, Series 1996A, Municipal
Auction Security, 3.7%, 12/15/26 (c)*.................................................. 1,000,000 AAA 1,000,000
KANSAS
Burlington, KS, Environmental Improvement Revenue, Kansas City Power & Light,
Municipal Auction Security:
Series A, 3.9%, 12/1/23*............................................................. 1,000,000 A 1,000,000
Series B, 3.8%, 12/1/23*............................................................. 3,000,000 A 3,000,000
MISSOURI
Missouri Environment Improvement Energy Resource Authority, Union Electric Project,
Auction Reset Security, 3.59%, 12/1/22*................................................ 2,000,000 A 2,000,000
MONTANA
Montana State Health Facility Authority, Deaconess Medical Center Project,
Series 1991A, 35day auction, 3.53%, 3/8/16 (c)*........................................ 200,000 AAA 200,000
OHIO
Cuyahoga County, OH, Health & Education, University Hospital of Cleveland, Daily
Demand Note, 5%, 1/1/16*............................................................... 1,100,000 MIG1 1,100,000
Hamilton County, OH, Franciscan Sisters of the Poor Health System, Series A, Daily
Demand Note, 5%, 3/1/17*............................................................... 800,000 MIG1 800,000
PENNSYLVANIA
Chester County, PA, Health and Education, Main Line Health System, Series 1994B,
Municipal Auction Security, 3.7%, 5/15/20 (c)*......................................... 1,000,000 AAA 1,000,000
RHODE ISLAND
Rhode Island Convention Center Authority Revenue, Series 1991A, 8.9%, 5/15/97 (c)........ 200,000 AAA 203,938
SOUTH CAROLINA
South Carolina Jobs-Economic Development Authority, Franciscan Sisters of the Poor,
St. Francis Hospital, Daily Demand Note, 4.95%, 7/1/22*................................ 700,000 MIG1 700,000
TEXAS
Grapevine, TX, Industrial Development Corporation, American Airlines, Series B4,
Daily Demand Note, 4.95%, 12/1/24*..................................................... 500,000 P1 500,000
The accompanying notes are an integral part of the financial statements.
</TABLE>
9 - SCUDDER MEDIUM TERM TAX FREE FUND
<PAGE>
<TABLE>
<CAPTION>
Credit
Principal Rating (e) Market
Amount ($) (Unaudited) Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
North Central, TX, Health Facilities Development Corp., Presbyterian Medical Center,
Daily Demand Note, Series 1985 C, 4.95%, 12/1/15* (c).................................. 200,000 MIG1 200,000
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (Cost $13,653,825) 13,653,938
- -------------------------------------------------------------------------------------------------------------------------------
LONG-TERM MUNICIPAL INVESTMENTS 97.9%
ALASKA
North Slope Borough, AK, General Obligation:
Capital Appreciation, Series B, Zero Coupon, 6/30/04 (c) (g)........................... 19,500,000 AAA 13,346,385
Capital Appreciation, Series A, Zero Coupon, 6/30/06 (c)............................... 11,150,000 AAA 6,764,705
Series A, Zero Coupon, 6/30/02 (c)..................................................... 3,275,000 AAA 2,506,751
Series A, Zero Coupon, 6/30/03 (c) (g)................................................. 7,000,000 AAA 5,071,500
Refunding, Series G, 7.5%, 6/30/97 (c)................................................. 2,350,000 AAA 2,396,530
ARIZONA
Arizona Health Facilities Authority, Phoenix Baptist Hospital and Medical Center,
6.1%, 9/1/03 (c)....................................................................... 2,000,000 AAA 2,174,120
Maricopa County, AZ, School District #28, Kyrene Elementary:
Series B, Zero Coupon, 1/1/03 (c)...................................................... 4,150,000 AAA 3,114,824
Series B, Zero Coupon, 7/1/03 (c)...................................................... 2,000,000 AAA 1,465,640
Maricopa County, AZ, Unified School District #41:
Capital Appreciation, Zero Coupon, 7/1/03 (c).......................................... 4,500,000 AAA 3,297,690
Capital Appreciation, Zero Coupon, 1/1/04 (c).......................................... 6,000,000 AAA 4,263,780
Gilbert, Zero Coupon, 1/1/06 (c)....................................................... 2,925,000 AAA 1,850,881
Zero Coupon, 7/1/04 (c)................................................................ 7,000,000 AAA 4,854,500
Zero Coupon, 7/1/06 (c)................................................................ 7,605,000 AAA 4,691,448
Maricopa County, AZ, Unified School District #97, Deer Valley, Zero Coupon,
7/1/05 (c)............................................................................. 4,060,000 AAA 2,659,381
ARKANSAS
Rogers, AR Sales & Use Tax Revenue, Series 1996, 5.35%, 11/1/11.......................... 2,500,000 AA 2,526,025
CALIFORNIA
California, General Obligation, Series 1991, 6.5%, 2/1/08................................ 7,000,000 A 7,897,540
California Housing Finance Agency, Multi-Unit Rental Housing Revenue, Series A,
7.25%, 8/1/98.......................................................................... 2,270,000 A 2,378,075
California State Department of Water Resources, Central Valley Project, Revenue Water
System, Series 1995O, 7%, 12/1/06...................................................... 6,095,000 AA 7,136,757
Foothill Eastern Transportation Corridor Agency, CA, Toll Road Revenue, Senior Lien,
Series A, Step-up coupon, 0% to 1/1/05, 7.05% to 1/1/09................................ 7,275,000 BBB 4,649,671
Long Beach, CA, Aquarium of the Pacific Project, Series 1995A, 5.75%, 7/1/05............. 1,300,000 BBB 1,300,871
The accompanying notes are an integral part of the financial statements.
</TABLE>
10 - SCUDDER MEDIUM TERM TAX FREE FUND
<PAGE>
<TABLE>
<CAPTION>
Credit
Principal Rating (e) Market
Amount ($) (Unaudited) Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Orange County, CA, Local Transportation Authority, Sales Tax Revenue, Measure M,
Step-down coupon, 5.1% to 2/15/98, 4.3% to 2/15/01 (c)................................. 5,100,000 AAA 4,999,173
Orange County, CA, Special Financing Authority, Teeter Plan Revenue, Series C,
Mandatory Put 11/1/99 at 100, 6.15%, 11/1/14........................................... 2,600,000 A 2,674,074
Southern California Public Power Authority, Power Project Revenue, Palo Verde Project,
Series 1996A, 6%, 7/1/07 (c)........................................................... 3,000,000 AAA 3,263,220
COLORADO
Castle Rock Ranch, CO, Public Improvements Authority, Public Facilities Revenue:
Series 1996, 6.1%, 12/1/05............................................................. 2,780,000 AA 2,949,636
Series 1996, 6.5%, 12/1/09............................................................. 3,525,000 AA 3,813,733
Colorado Health Facilities Authority, Hospital Revenue, Rocky Mountain Adventist
Healthcare Project, 6%, 2/1/98......................................................... 3,500,000 BBB 3,529,505
CONNECTICUT
Bristol, CT, Resource Recovery, Ogden Martin System, 6.125%, 7/1/03...................... 10,635,000 A 11,231,730
Connecticut Development Authority, Airport Facilities, Windsor Locks Hotel, Series A,
Mandatory put 10/1/97 at $100, 5.8%, 10/1/25........................................... 5,610,000 A 5,670,195
Connecticut State Health & Educational Facilities Authority, Windham Community
Memorial Hospital, Series 1996C, 5.75%, 7/1/11......................................... 3,700,000 BBB 3,566,874
DISTRICT OF COLUMBIA
District of Columbia, Certificate of Participation:
Series 1993, 6%, 1/1/97................................................................ 1,828,000 BB 1,828,000
Series 1993, 6.875%, 1/1/03............................................................ 2,500,000 BB 2,560,900
District of Columbia, General Obligation:
Series1993 A-1, 4.95%, 6/1/05 (c)...................................................... 3,940,000 AAA 3,895,557
Series D, 4.7%, 12/1/99 (c)............................................................ 5,435,000 AAA 5,484,893
Series A, 5.625%, 6/1/02 (c)........................................................... 8,360,000 AAA 8,681,526
Series A, 5.8%, 6/1/04 (c)............................................................. 6,950,000 AAA 7,290,689
Refunding, Series 1993 A, 4.85%, 6/1/04 (c)............................................ 2,000,000 AAA 1,979,320
Refunding, Series 1993 A, 5.875%, 6/1/05 (c)........................................... 3,650,000 AAA 3,841,442
Refunding, Series B, 5.3%, 6/1/05 (c).................................................. 8,000,000 AAA 8,108,000
Refunding, Series B, Zero Coupon, 6/1/01 (c)........................................... 7,100,000 AAA 5,753,059
District of Columbia, Redevelopment Land Agency, DC Sports Arena, Special Tax,
Series 1996, 5.625%, 11/1/10........................................................... 2,000,000 BBB 1,939,120
FLORIDA
Dade County, FL, Guaranteed Entitlement Revenue, Prerefunded 2/1/06:
Zero Coupon, 8/1/14 (c)................................................................ 4,000,000 AAA 1,405,280
Zero Coupon, 8/1/18 (c)................................................................ 6,000,000 AAA 1,545,480
The accompanying notes are an integral part of the financial statements.
</TABLE>
11 - SCUDDER MEDIUM TERM TAX FREE FUND
<PAGE>
<TABLE>
<CAPTION>
Credit
Principal Rating (e) Market
Amount ($) (Unaudited) Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Orange County, FL, Health Facilities Authority Revenue HSP - Orlando Regional
Healthcare, Series 1996A, 6%, 10/1/03 (c).............................................. 3,000,000 AAA 3,231,000
GEORGIA
Georgia State, Series 1994D, 6.7%, 8/1/08................................................ 3,400,000 AAA 3,913,094
Georgia, General Obligation, Series B:
6.3%, 3/1/08........................................................................... 5,000,000 AAA 5,564,250
6.75%, 9/1/10.......................................................................... 5,370,000 AAA 6,193,704
HAWAII
Hawaii State General Obligation, Unlimited Tax, Series 1993 CI, 4.75%, 11/1/08........... 7,050,000 AA 6,771,737
ILLINOIS
Alton, IL, Health Facilities Revenue, 6.7%, 2/15/00 (c).................................. 2,000,000 AAA 2,073,740
Berwyn, IL, Hospital Revenue, MacNeal Memorial Hospital, Series 1995, 5.25%,
6/1/04 (c)............................................................................. 3,935,000 AAA 4,004,925
Chicago, IL, Public Building Commission, Series A, 5.25%, 12/1/06 (c).................... 2,500,000 AAA 2,554,175
Illinois, General Obligation:
6.7%, 6/1/03........................................................................... 3,640,000 AA 3,954,569
4.6%, 12/1/05.......................................................................... 5,000,000 AA 4,853,150
Illinois Development Finance Authority Refunding Revenue, Commonwealth Edison,
Series 1994, 5.3%, 1/15/04 (c)......................................................... 7,500,000 AAA 7,685,625
Illinois Educational Facilities Authority Revenue, Loyola University, Revenue Refunding,
Series 1991 A, Zero Coupon, 7/1/02 (c)................................................. 2,130,000 AAA 1,637,374
Illinois Health Facilities Authority:
Evangelical Hospitals, Series B, 6.1%, 4/15/01 (c)..................................... 1,240,000 AAA 1,312,044
Memorial Hospital, Sisters Services, Series A, 6%, 6/1/99 (c).......................... 2,500,000 AAA 2,601,125
Sisters Services, Series C:
5.875%, 6/1/98 (c)................................................................... 2,400,000 AAA 2,464,296
6.1%, 6/1/00 (c)..................................................................... 1,500,000 AAA 1,578,060
6.2%, 6/1/01 (c)..................................................................... 1,900,000 AAA 2,023,291
Kendall, Kane and Will Counties, IL, School District, Zero Coupon, 3/1/03 (c)............ 1,345,000 AAA 995,475
Macon and Decatur County, IL, Public Building Commission, Certificate of
Participation, General Obligation, 6.3%, 1/1/00 (c).................................... 1,320,000 AAA 1,392,428
Metropolitan Pier and Exposition Authority of Illinois, McCormick Place Expansion
Project, Coupon Receipts, Zero Coupon, 6/15/04 (c)..................................... 14,400,000 AAA 9,935,568
Rosemont, IL, Tax Increment-2, Secondary, Series B, Zero Coupon, 12/1/02 (c)............. 2,785,000 AAA 2,098,637
Rosemont, IL, Tax Increment-3, Secondary, Series C, Zero Coupon, 12/1/02 (c)............. 3,345,000 AAA 2,520,625
The accompanying notes are an integral part of the financial statements.
</TABLE>
12 - SCUDDER MEDIUM TERM TAX FREE FUND
<PAGE>
<TABLE>
<CAPTION>
Credit
Principal Rating (e) Market
Amount ($) (Unaudited) Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INDIANA
Indiana Housing Finance Authority, Single Family Mortgage Revenue, Series 1995C-1,
5.25%, 7/1/12.......................................................................... 2,555,000 AAA 2,582,671
Indianapolis, IN, Resource Recovery Revenue, Ogden Martin Systems Inc. Project,
6.75%, 12/1/07 (c)..................................................................... 6,000,000 AAA 6,831,420
Madison County, IN, Hospital Authority, Holy Cross Health System, 6.7%,
12/1/02 (c)............................................................................ 1,385,000 AAA 1,531,450
IOWA
Iowa Certificate of Participation, Series 1992 A, 6.25%, 7/1/02 (c)...................... 5,000,000 AAA 5,369,050
KANSAS
Kansas City, KS, Utility System Revenue:
Zero Coupon, 3/1/03 (c)................................................................ 3,850,000 AAA 2,871,869
Zero Coupon, 3/1/03 (c)................................................................ 2,750,000 AAA 2,047,650
LOUISIANA
Jefferson Parish, LA, School Board Sales & Use Tax Revenue, ETM, Series 1986A,
7.35%, 2/1/03**........................................................................ 5,055,000 A 5,638,145
Louisiana Housing Finance Agency, Mortgage Revenue Refunding, Single Family,
Series 1995C-1, 5.125%, 12/1/10 (c).................................................... 2,670,000 AAA 2,684,338
Orleans, LA, Levee District, Levee Improvement Bonds, Series 1986, 5.95%,
11/1/14 (c)............................................................................ 1,930,000 AAA 2,013,665
MARYLAND
Northeast Maryland Waste Disposal Authority, Southwest Resource Recovery System
Revenue, Series 1993, 6.75%, 1/1/98 (c)................................................ 4,715,000 AAA 4,856,261
MASSACHUSETTS
Massachusetts General Obligation:
Refunding, Series B, 6.375%, 8/1/02.................................................... 2,150,000 A 2,337,910
Series A, 6.4%, 8/1/03................................................................. 1,000,000 A 1,098,100
Massachusetts Health & Educational Facilities Authority, St. Joseph's Hospital, Series C,
9.5%, 10/1/20 Prerefunded 10/1/99 (d).................................................. 2,780,000 AAA 3,156,356
Massachusetts Housing Finance Agency, Series 1992 C, FNMA Collateralized:
6.25%, 5/15/02......................................................................... 2,000,000 AAA 2,116,360
6.25%, 11/15/02........................................................................ 3,420,000 AAA 3,634,981
Massachusetts Industrial Finance Agency, Resource Recovery, North Andover Solid
Waste, Series A, 6.15%, 7/1/02......................................................... 3,250,000 BBB 3,353,773
Massachusetts Industrial Finance Agency, Study Memorial Hospital, 7.9%, 6/1/09........... 1,820,000 BBB 1,950,239
Massachusetts Municipal Wholesale Electric Co., Power Supply System Revenue,
Series A, 6.625%, 7/1/03............................................................... 3,165,000 A 3,449,280
The accompanying notes are an integral part of the financial statements.
</TABLE>
13 - SCUDDER MEDIUM TERM TAX FREE FUND
<PAGE>
<TABLE>
<CAPTION>
Credit
Principal Rating (e) Market
Amount ($) (Unaudited) Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Massachusetts Water Resource Authority, Series A, 7.25%, 4/1/01.......................... 1,000,000 A 1,095,350
New England Education Loan Marketing Corp., Massachusetts Student Loan Revenue
Refunding, Issue E, 5%, 7/1/99......................................................... 8,000,000 A 8,104,880
MICHIGAN
Michigan Municipal Bond Authority, Local Government Loan Program, School
Improvement, Zero Coupon, 6/15/06 (c).................................................. 4,750,000 AAA 2,936,878
Michigan State Hospital Finance Authority, Hospital Revenue, Sinai Hospital,
Series 1995, 6%, 1/1/08................................................................ 2,000,000 BBB 1,975,800
Romulus Township, MI, School District, Series II, Zero Coupon, 5/1/22 Prerefunded
5/1/07 (c) (d)......................................................................... 12,400,000 AAA 2,663,644
MISSISSIPPI
Mississippi Higher Education Assistance Corp., Student Loan Revenue, Series 1992 A,
6.2%, 1/1/02........................................................................... 1,200,000 A 1,256,004
NEVADA
Nevada State Housing Division, Single Family Mortgage Revenue, Series R, 5.95%,
10/1/2011.............................................................................. 2,940,000 AA 3,014,764
NEW HAMPSHIRE
New Hampshire Higher Education & Health Facilities Authority, Hospital Revenue,
Frisbie Memorial Hospital, Series 1993, 5.25%, 10/1/99................................. 2,025,000 BBB 2,036,036
NEW JERSEY
New Jersey Economic Development, Series A, 7%, 7/1/04 (c)................................ 2,500,000 AAA 2,829,550
NEW YORK
Metropolitan Transportation Authority of New York:
Commuter Facilities Revenue:
6.75%, 7/1/00........................................................................ 1,200,000 BBB 1,272,192
6.9%, 7/1/01......................................................................... 1,280,000 BBB 1,378,522
Transit Facilities Revenue:
Series K, 6.25%, 7/1/05 (c)............................................................ 4,250,000 AAA 4,675,978
Series M, 5.3%, 7/1/06 (c)............................................................. 4,750,000 AAA 4,911,167
Series M, 5.5%, 7/1/08 (c)............................................................. 3,500,000 AAA 3,654,770
Series O, 5.75%, 7/1/07 (c)............................................................ 1,975,000 BBB 2,034,645
Service Contract, 6.75%, 7/1/00........................................................ 2,270,000 BBB 2,406,563
Service Contract Lease Revenues, 6.9%, 7/1/01.......................................... 2,415,000 BBB 2,600,883
New York City, General Obligation:
Series 1992B, 6.4%, 10/1/02............................................................ 4,905,000 A 5,192,580
Series 1995E, 6.6%, 8/1/04............................................................. 2,500,000 A 2,687,400
Series 1996G, 6.75%, 2/1/09............................................................ 8,000,000 A 8,667,600
The accompanying notes are an integral part of the financial statements.
</TABLE>
14 - SCUDDER MEDIUM TERM TAX FREE FUND
<PAGE>
<TABLE>
<CAPTION>
Credit
Principal Rating (e) Market
Amount ($) (Unaudited) Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Series 1992H, 6.9%, 2/1/01............................................................. 6,000,000 A 6,395,520
Series A, 7%, 8/1/04................................................................... 7,650,000 A 8,402,913
Series A, 6%, 8/1/05 (c)............................................................... 2,560,000 AAA 2,744,141
Series B, 6.75%, 8/15/03............................................................... 7,000,000 A 7,558,880
Series B, 6.6%, 10/1/03................................................................ 10,200,000 A 10,889,520
Series C, 6.3%, 8/1/03 (c)............................................................. 50,000 AAA 54,329
Series D, 7.875%, 8/1/97............................................................... 1,330,000 A 1,361,082
Series D, ETM, 7.875%, 8/1/97**........................................................ 1,225,000 A 1,255,086
New York State Development Corporation, Correctional Facilities Lease Revenue,
Refunding, Series 1993A, 5.3%, 1/1/05 (c).............................................. 1,105,000 AAA 1,141,343
New York State Dormitory Authority:
City University System, Consolidated Revenue Lease:
Series A, 5.5%, 7/1/03............................................................... 8,000,000 BBB 8,170,720
Series A, 5.5%, 7/1/03 (c)........................................................... 1,250,000 AAA 1,316,175
College and University Pooled Capital Program, 7.8%, 12/1/05 (c)....................... 1,170,000 AAA 1,260,675
Cons City University System, 5.75%, 7/1/06 (c)......................................... 1,750,000 AAA 1,868,755
State University, 6.8%, 5/15/00 (c).................................................... 1,915,000 AAA 2,065,787
New York State Energy Research and Development Authority, Pollution Control
Revenue, Electric and Gas, 5.9%, 12/1/06 (c)........................................... 2,200,000 AAA 2,372,854
New York State Medical Care Facilities, Finance Agency Revenue, Mount Sinai
Hospital, Series 1983, 5.95%, 8/15/09.................................................. 7,620,000 AAA 7,861,706
New York State Thruway Authority, Special Obligation, Zero Coupon, 1/1/02................ 3,155,000 BBB 2,411,240
New York State, Urban Development Corporation Revenue Correctional Facilities:
Series A, 5.3%, 1/1/05 (c)............................................................. 7,000,000 AAA 7,230,230
Series A, 5.4%, 1/1/06 (c)............................................................. 3,500,000 AAA 3,628,730
NORTH CAROLINA
North Carolina, Municipal Power Agency #1Catawba Electric Revenue:
Series 1992, 5.9%, 1/1/03 (c).......................................................... 2,550,000 AAA 2,720,595
Series 1993, 4.1%, 1/1/05 (c).......................................................... 3,000,000 AAA 2,802,690
NORTH DAKOTA
Bismarck, ND, Hospital Revenue, St. Alexius Medical Center, Series 1991,
Zero Coupon, 5/1/00 (c)................................................................ 2,850,000 AAA 2,457,897
Grand Forks, ND, Health Facilities, United Hospital Obligation Group, Series A,
6%, 12/1/02 (c)........................................................................ 1,160,000 AAA 1,242,058
OHIO
Hamilton County, OH, Health System Revenue, Franciscan Sisters of the Poor Health
System, Providence Hospital, Series 1992, 6.375%, 7/1/04............................... 4,495,000 BBB 4,662,843
The accompanying notes are an integral part of the financial statements.
</TABLE>
15 - SCUDDER MEDIUM TERM TAX FREE FUND
<PAGE>
<TABLE>
<CAPTION>
Credit
Principal Rating (e) Market
Amount ($) (Unaudited) Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PENNSYLVANIA
Allegheny County, PA, Hospital Development Authority, 6.5%, 7/1/00 (c)................... 1,000,000 AAA 1,067,100
Armstrong County, PA, Hospital Authority, St. Frances Medical Center, Series A, 6.2%,
6/1/03 (c)............................................................................. 3,090,000 AAA 3,347,799
Montgomery County, PA, Redevelopment Authority, Multi Family Housing Revenue
Refunding, KBF Associates, LP Project, 6%, 7/1/04...................................... 2,685,000 BBB 2,696,250
Philadelphia, PA, General Obligation, Refunding Revenue, Series A, 11.5%, 8/1/99 (c)..... 1,000,000 AAA 1,175,000
Schuykill County, PA, Redevelopment Authority, Lease Rental, Series A, 6.55%,
6/1/00 (c)............................................................................. 1,105,000 AAA 1,180,494
Somerset County, PA, General Authority, Commonwealth Lease Revenue, ETM, 6.45%,
10/15/00 (c)**......................................................................... 2,000,000 AAA 2,148,700
SOUTH CAROLINA
South Carolina Jobs-Economic Development Authority, Franciscan Sisters of the Poor
Health System Inc., St. Francis Hospital, 6.375%, 7/1/04............................... 3,420,000 BBB 3,569,249
Sumter County, SC, Hospital Facility Revenue Refunding, Tuomey Medical Center,
6.375%, 11/15/99 (c)................................................................... 1,000,000 AAA 1,057,380
SOUTH DAKOTA
South Dakota Student Loan Assistance Corp. Revenue, Series A, 7%, 8/1/98................. 715,000 A 736,164
TENNESSEE
Shelby County, TN, General Obligation, Series A, Zero Coupon, 5/1/11,
Prerefunded 5/1/05 (d)................................................................. 3,700,000 AAA 1,705,478
TEXAS
Austin, TX, Combined Utility System Revenue, Zero Coupon, 11/15/09 (c)................... 6,775,000 AAA 3,369,682
Austin, TX, Utility District, Water, Sewer & Electric Revenue, 11%, 11/15/02,
Prerefunded 5/15/97 (d)................................................................ 2,430,000 AAA 2,495,780
Brownsville, TX, Utility System Revenue Refunding:
Series 1995, 6%, 9/1/08 (c)............................................................ 1,000,000 AAA 1,079,240
Series 1995, 6%, 9/1/09 (c)............................................................ 2,700,000 AAA 2,900,961
Dallas, TX, Civic Center, Senior Lien, 8.6%, 1/1/06...................................... 1,115,000 A 1,138,081
Harris County, TX, Toll Road Authority, Toll Road Revenue, Subordinate Lien,
Series A, Zero Coupon:
8/15/06 (c)............................................................................ 3,915,000 AAA 2,388,933
8/15/07 (c)............................................................................ 1,050,000 AAA 602,385
Richardson, TX, Hospital Authority Revenue, Richardson Medical Center, 6.5%,
12/1/2012.............................................................................. 1,915,000 BBB 1,950,753
The accompanying notes are an integral part of the financial statements.
</TABLE>
16 - SCUDDER MEDIUM TERM TAX FREE FUND
<PAGE>
<TABLE>
<CAPTION>
Credit
Principal Rating (e) Market
Amount ($) (Unaudited) Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
San Antonio, TX, General Obligation General Improvement, Series 1996, 6%:
8/1/07 (e)............................................................................. 1,000,000 AA 1,025,950
8/1/08 (e)............................................................................. 2,150,000 AA 2,194,849
Texas Municipal Power Agency, Zero Coupon, 9/1/07 (c).................................... 8,385,000 AAA 4,799,322
Texas Public Finance Authority, Building Revenue Refunding, Zero Coupon,
2/1/09 (c)............................................................................. 5,860,000 AAA 3,042,102
UTAH
Intermountain Power Agency, UT, Power Supply Revenue:
Series B, 6.25%, 7/1/06 (c)............................................................ 8,000,000 AAA 8,767,920
Series B, Zero Coupon, 7/1/01 (c)...................................................... 10,495,000 AAA 8,537,683
Series B, Zero Coupon, 7/1/02 (c)...................................................... 2,500,000 AAA 1,926,975
Salt Lake County, UT, Water Conservation District, Series A, Zero Coupon,
10/1/03 (c)............................................................................ 3,200,000 AAA 2,309,536
VIRGIN ISLANDS
Virgin Islands, General Obligation, Public Finance Authority Revenue, Matching Fund
Loan Notes, Series A:
6.7%, 10/1/99........................................................................ 3,170,000 NR 3,310,843
6.8%, 10/1/00........................................................................ 1,035,000 NR 1,091,376
WASHINGTON
Clark County, WA, Public Utility District #1, Generating System Revenue Bonds, 6%,
1/1/07 (c)............................................................................. 12,150,000 AAA 13,037,679
Snohomish County, WA, Public Utility District #1, Series 1991 B, 6.4%, 1/1/00............ 2,000,000 A 2,112,420
Washington Public Power Supply System, Nuclear Project #1, Refunding Revenue:
Series B, 5.15%, 7/1/02................................................................ 5,275,000 AA 5,345,527
Series B, 5.25%, 7/1/03................................................................ 5,555,000 AA 5,646,658
Washington Public Power Supply System, Nuclear Project #2, Refunding Revenue:
Series 1990c, 7.5%, 7/1/03 (b)......................................................... 5,800,000 AA 6,464,274
Series A, 6.3%, 7/1/01................................................................. 6,000,000 AA 6,365,340
Series A, 4.9%, 7/1/05................................................................. 4,330,000 AA 4,244,006
Series A, 5.8%, 7/1/07................................................................. 2,120,000 AA 2,195,896
Series A, 5.25%, 7/1/08................................................................ 3,000,000 AA 2,946,720
Series B, 5.15%, 7/1/02................................................................ 6,085,000 AA 6,166,356
Washington Public Power Supply System, Nuclear Project #3 Refunding Revenue:
Series B, 7.15%, 7/1/01................................................................ 1,310,000 AA 1,415,573
Series B, Zero Coupon, 7/1/04 (c)...................................................... 8,000,000 AAA 5,471,440
Series B, 5.15%, 7/1/02................................................................ 3,165,000 AA 3,207,316
The accompanying notes are an integral part of the financial statements.
</TABLE>
17 - SCUDDER MEDIUM TERM TAX FREE FUND
<PAGE>
<TABLE>
<CAPTION>
Credit
Principal Rating (e) Market
Amount ($) (Unaudited) Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Series B, 5.25%, 7/1/03................................................................ 6,100,000 AA 6,200,650
Washington State Housing Finance, Series A, 7.1%, 12/1/17................................ 1,990,000 AAA 2,045,143
WEST VIRGINIA
South Charleston, WV, Pollution Control Revenue, Union Carbide, 7.625%, 8/1/05........... 2,000,000 BBB 2,302,620
WISCONSIN
Wisconsin Health & Education Facilities Authority:
Columbia Hospital Inc., 6.125%, 11/15/01 (c)........................................... 1,000,000 AAA 1,065,820
Mercy Health System Corporation:
6%, 8/15/05 (c)...................................................................... 1,400,000 AAA 1,504,104
6.125%, 8/15/06 (c).................................................................. 1,480,000 AAA 1,603,491
6.25%, 8/15/07 (c)................................................................... 1,000,000 AAA 1,093,350
Wheaton Franciscan Hospital, 6%, 8/15/02 (c)............................................. 1,000,000 AAA 1,065,390
Wheaton Franciscan Services:
5.8%, 8/15/04 (c)...................................................................... 1,675,000 AAA 1,774,194
6%, 8/15/07 (c)........................................................................ 2,000,000 AAA 2,152,880
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (Cost $606,505,132) 631,554,697
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO - 100.0% (Cost $620,158,957) (a) 645,208,635
- -------------------------------------------------------------------------------------------------------------------------------
(a) The cost for federal income tax purposes was $620,158,957. At December 31, 1996, net
unrealized appreciation based on tax cost for all securities was $25,049,678. This
consisted of aggregate gross unrealized appreciation for all securities in which there
was an excess of market value over tax cost of $25,197,683 and aggregate gross unrealized
depreciation for all investment securities in which there was an excess of tax cost over
market value of $(148,005).
(b) At December 31, 1996 this security, in part, has been pledged to cover initial margin
requirements for open futures contracts.
<CAPTION>
At December 31, 1996, open futures contracts purchased were as follows (Note A):
Aggregate
Futures Expiration Contracts Face Value ($) Market Value ($)
- ------------- ---------- --------- --------------- -----------------
<S> <C> <C> <C> <C>
5 Year U.S.
Treasury Note Mar. 1997 105 11,341,050 11,192,344
--------------
Total net unrealized depreciation on open futures contracts purchased........ (148,706)
==============
(c) Bond is insured by one of these companies: AMBAC, Capital Guaranty, FGIC, FSA, or MBIA.
(d) Prerefunded: Bonds which are prerefunded are collateralized by U.S. Treasury securities
which are held in escrow and are used to pay principal and interest on tax-exempt issue
and to retire the bonds in full at the earliest refunding date.
The accompanying notes are an integral part of the financial statements.
18 - SCUDDER MEDIUM TERM TAX FREE FUND
<PAGE>
(e) All of the securities held have been determined by the Adviser to be of appropriate credit
quality as required by the Fund's investment objectives. Credit ratings are either Standard
& Poor's Rating Group, Moody's Investors Service, Inc. or Fitch Investors Service, Inc.
Unrated securities (NR) have been determined by the Adviser to be of comparable quality to rated
eligible securities.
(f) When-issued or forward delivery securities (See Note A in Notes to Financial Statements).
(g) At December 31, 1996, these securities, in part or in whole, have been segregated to cover
when-issued or forward delivery securities.
* Floating rate and monthly, weekly, or daily demand notes are securities whose yields vary
with a designated market index or market rate, such as the coupon-equivalent of the Treasury bill
rate. Variable rate demand notes are securities whose yields are periodically reset at levels
that are generally comparable to tax-exempt commercial paper. These securities are payable on
demand within seven calendar days and normally incorporate an irrevocable letter of credit or
line of credit from a major bank. These notes are carried, for purposes of calculating average
weighted maturity, at the longer of the period remaining until the next rate change or to the
extent of the demand period.
** ETM: Bonds bearing the description ETM (escrowed to maturity) are collateralized by U.S. Treasury
securities which are held in escrow by a trustee and used to pay principal and interest on bonds
so designated.
The accompanying notes are an integral part of the financial statements.
</TABLE>
19 - SCUDDER MEDIUM TERM TAX FREE FUND
<PAGE>
<TABLE>
<CAPTION>
Financial Statements
Statement of Assets and Liabilities
as of December 31, 1996
<S> <C>
Assets
- -----------------------------------------------------------------------------------------------------------
Investments, at market (identified cost $620,158,957) (Note A)........... $645,208,635
Cash..................................................................... 4,321
Interest receivable...................................................... 9,942,988
Receivable for investments sold.......................................... 920,000
Receivable for Fund shares sold.......................................... 165,243
Other assets............................................................. 4,747
-------------
Total assets............................................................. 656,245,934
Liabilities
- -----------------------------------------------------------------------------------------------------------
Payable for when issued and forward delivery securities (Note A)......... 3,276,166
Dividends payable........................................................ 1,033,830
Payable for Fund shares redeemed......................................... 921,662
Daily variation margin on open futures contracts (Note A)................ 49,219
Accrued management fee (Note C).......................................... 313,339
Accrued expenses (Note C)................................................ 147,637
-------------
Total liabilities........................................................ 5,741,853
- -----------------------------------------------------------------------------------------------------------
Net assets, at market value.............................................. $650,504,081
- -----------------------------------------------------------------------------------------------------------
Net Assets
- -----------------------------------------------------------------------------------------------------------
Net assets consist of:
Net unrealized appreciation (depreciation) on:
Investments............................................................ 25,049,678
Futures................................................................ (148,706)
Accumulated net realized gain............................................ 1,138,994
Paid-in capital.......................................................... 624,464,115
- -----------------------------------------------------------------------------------------------------------
Net assets, at market value.............................................. $650,504,081
- -----------------------------------------------------------------------------------------------------------
Net Asset Value
- -----------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share ($650,504,081/
58,325,377 outstanding shares of beneficial interest, $.01 par
value, unlimited number of shares authorized).......................... $11.15
-------------
The accompanying notes are an integral part of the financial statements.
</TABLE>
20 - SCUDDER MEDIUM TERM TAX FREE FUND
<PAGE>
<TABLE>
<CAPTION>
Statement of Operations
year ended December 31, 1996
Investment Income
- -----------------------------------------------------------------------------------------------------------
<S> <C>
Income:
Interest................................................................ $36,973,462
-------------
Expenses:
Management fee (Note C)................................................. 3,879,293
Services to shareholders (Note C)....................................... 554,556
Custodian and accounting fees (Note C).................................. 216,364
Trustees' fees and expenses (Note C).................................... 38,215
Reports to shareholders................................................. 78,505
Auditing................................................................ 54,839
Registration fees....................................................... 29,092
Legal................................................................... 8,703
Other................................................................... 24,847
-------------
4,884,414
- -----------------------------------------------------------------------------------------------------------
Net investment income................................................... 32,089,048
- -----------------------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- -----------------------------------------------------------------------------------------------------------
Net realized gain on:
Investments............................................................. 1,445,538
Futures................................................................. 202,234
-------------
1,647,772
-------------
Net unrealized depreciation during the period on:
Investments............................................................. (7,307,350)
Futures................................................................. (148,706)
-------------
(7,456,056)
- -----------------------------------------------------------------------------------------------------------
Net loss on investment transactions..................................... (5,808,284)
- -----------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations.................... $26,280,764
- -----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
</TABLE>
21 - SCUDDER MEDIUM TERM TAX FREE FUND
<PAGE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
Years Ended December 31,
Increase (Decrease) in Net Assets 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income................................................... $32,089,048 $35,231,509
Net realized gain from investments...................................... 1,647,772 4,031,600
Net unrealized appreciation (depreciation) on investments during the
period................................................................ (7,456,056) 56,190,627
------------- -------------
Net increase in net assets resulting from operations.................... 26,280,764 95,453,736
Distributions to shareholders: ------------- -------------
From net investment income.............................................. (32,089,048) (35,231,509)
From net realized gains from investment transactions.................... (1,232,175) (3,199,100)
Fund share transactions: ------------- -------------
Proceeds from shares sold............................................... 100,528,576 105,990,498
Net asset value of shares issued to shareholders in reinvestment of
distributions.......................................................... 20,151,729 23,977,046
Cost of shares redeemed................................................. (174,745,339) (176,818,110)
------------- -------------
Net decrease in net assets from Fund share transactions................. (54,065,034) (46,850,566)
------------- -------------
Increase (decrease) in net assets....................................... (61,105,493) 10,172,561
Net assets at beginning of period....................................... 711,609,574 701,437,013
------------- -------------
Net assets at end of period............................................. 650,504,081 711,609,574
------------- -------------
Other Information
- ----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period............................... 63,217,191 67,486,134
------------- -------------
Shares sold............................................................. 9,072,101 9,691,714
Shares issued to shareholders in reinvestment of distributions.......... 1,819,637 2,182,653
Shares redeemed......................................................... (15,783,552) (16,143,310)
------------- -------------
Net decrease in Fund shares............................................. (4,891,814) (4,268,943)
------------- -------------
Shares outstanding at end of period..................................... 58,325,377 63,217,191
------------- -------------
The accompanying notes are an integral part of the financial statements.
</TABLE>
22 - SCUDDER MEDIUM TERM TAX FREE FUND
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights
The following table includes selected data for a share outstanding throughout each period and other
performance information derived from the financial statements.
Years Ended December 31,
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning ------------------------------------------------------------------------------------
of period.................................. $11.26 $10.39 $11.36 $10.86 $10.62 $10.11 $10.04 $10.02 $10.07 $10.34
Income from investment operations: ------------------------------------------------------------------------------------
Net investment income........................ .53 .54 .53 .60 .65 .67 .54 .56 .54 .54
Net realized and unrealized gain (loss)
on investments............................. (.09) .92 (.92) .56 .27 .52 .07 .02 (.05) (.22)
------------------------------------------------------------------------------------
Total from investment operations............. .44 1.46 (.39) 1.16 .92 1.19 .61 .58 .49 .32
Less distributions: ------------------------------------------------------------------------------------
From net investment income................... (.53) (.54) (.53) (.60) (.65) (.67) (.54) (.56) (.54) (.54)
From net realized gains on investments....... (.02) (.05) (.05) (.06) (.03) (.01) -- -- -- (.05)
------------------------------------------------------------------------------------
Total distributions.......................... (.55) (.59) (.58) (.66) (.68) (.68) (.54) (.56) (.54) (.59)
Net asset value, end of ------------------------------------------------------------------------------------
period..................................... $11.15 $11.26 $10.39 $11.36 $10.86 $10.62 $10.11 $10.04 $10.02 $10.07
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (%) (a)......................... 4.02 14.32 (3.50) 10.94 8.93 12.13 6.29 6.00 4.92 3.23
Ratios and Supplemental Data
Net assets, end of period ($ millions)....... 651 712 701 1,017 661 268 27 54 99 125
Ratio of operating expenses net, to average
daily net assets (%)....................... .72 .70 .63 .14 -- -- .97 .91 .79 .80
Ratio of operating expenses before expense
reductions, to average daily net assets.... .72 .72 .71 .75 .80 .88 1.00 .91 .79 .80
Ratio of net investment income to average
daily net assets (%)....................... 4.75 4.92 4.94 5.35 6.07 6.44 5.37 5.62 5.05 5.37
Portfolio turnover rate (%).................. 14.1 36.1 33.8 37.3 22.4 14.0 116.9 15.7 31.2 32.6
(a) Total returns may have been lower had certain expenses not been reduced.
On November 1, 1990, the Fund adopted its present name and objective. Prior to that date, the Fund was known as the 1990
Portfolio of the Scudder Tax Free Target Fund and its objective was to provide high tax-free income and current liquidity.
Financial information for each of the four years in the period ended December 31, 1990 should not be considered representative
of the present Fund.
</TABLE>
23 - SCUDDER MEDIUM TERM TAX FREE FUND
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Scudder Medium Term Tax Free Fund (the "Fund") is a diversified series
of Scudder Tax Free Trust, a Massachusetts business trust (the "Trust"),
which is 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 with remaining maturities
greater than sixty days are valued by pricing agents approved by the
Officers of the Fund, which prices reflect broker/dealer-supplied
valuations and electronic data processing techniques. If the pricing
agents are unable to provide such quotations, the most recent bid
quotation supplied by a bona fide market maker shall be used. Short-term
investments having a maturity of sixty days or less are valued at
amortized cost. All other 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.
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 interest rate futures as a
hedge against municipal securities cheapening relative to U.S. Treasury
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.
Amortization and Accretion. All premiums and original issue discounts
are amortized/accreted for both tax and financial reporting purposes.
24 - SCUDDER MEDIUM TERM TAX FREE FUND
<PAGE>
Federal Income Taxes. The Fund's policy is to comply with the
requirements of the Internal Revenue Code which are applicable to
regulated investment companies and to distribute all of its taxable and
tax-exempt income to its shareholders. The Fund accordingly paid no
federal income taxes and no provision for federal income taxes was
required.
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 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 relate primarily to investments in
futures. As a result, net investment income and net realized gain
(loss) on investment transactions for a reporting period may differ
significantly from distributions during such period. Accordingly, the
Fund may periodically make reclassifications among certain of its
capital accounts without impacting the net asset value of the Fund.
The Fund uses the specific identification method for determining
realized gain or loss on investments for both financial and federal
income tax reporting purposes.
Other. Investment transactions are accounted for on a trade date basis.
Interest income is accrued pro rata to the earlier of the call or
maturity date.
B. Purchases and Sales of Securities
During the year ended December 31, 1996, purchases and sales of
municipal securities (excluding short-term investments) aggregated
$93,180,705 and $166,710,740, respectively.
The aggregate face value of futures contracts opened and closed during
the year ended December 31, 1996 was $34,434,996 and $23,093,946,
respectively.
C. Related Parties
Under the Investment Management Agreement (the "Agreement") with
Scudder, Stevens & Clark, Inc. (the "Adviser"), the Adviser directs the
investments of the Fund in accordance with its investment objective,
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 0.60% of the first $500,000,000 of the Fund's average daily net
assets and 0.50% of such assets in excess of $500,000,000 computed and
accrued daily and payable monthly. The Agreement provides that if the
Fund's expenses, exclusive of taxes, interest, and extraordinary
expenses, exceed specified limits, such excess, up to the amount of the
management fee, will be paid by the Adviser. For the year ended December
31,
25 - SCUDDER MEDIUM TERM TAX FREE FUND
<PAGE>
1996, the management fee aggregated $3,879,293 which was equivalent to
an annual effective rate of .57% 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.
For the year ended December 31, 1996 the amount charged to the Fund by
SSC amounted to $406,238 of which $33,406 is unpaid at December 31,
1996.
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 year ended December 31, 1996, the amount charged to
the Fund by SFAC aggregated $96,034, of which $7,900 is unpaid at
December 31, 1996.
The Fund pays each Trustee not affiliated with the Adviser $4,000
annually, plus specified amounts for attended board and committee
meetings. For the year ended December 31, 1996, Trustees' fees and
expenses aggregated $38,215.
26 - SCUDDER MEDIUM TERM TAX FREE FUND
<PAGE>
Report of Independent Accountants
To the Trustees of Scudder Tax Free Trust and the Shareholders of
Scudder Medium Term Tax Free Fund:
We have audited the accompanying statement of assets and liabilities of
Scudder Medium Term Tax Free Fund, including the investment portfolio,
as of December 31, 1996, and the related statement of operations for the
year then ended, the statements of changes in net assets for each of the
two years in the period then ended, and the financial highlights for
each of the ten years in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1996, by
correspondence with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Scudder Medium Term Tax Free Fund as of December
31, 1996, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the ten years in the
period then ended in conformity with generally accepted accounting
principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
February 5, 1997
27 - SCUDDER MEDIUM TERM TAX FREE FUND
<PAGE>
Tax Information
Of the dividends paid from net investment income for the fiscal year
ended December 31, 1996, 100% were exempt interest dividends which are
tax exempt for regular federal income tax purposes, and are not an item
of tax preference for purposes of the federal alternative minimum tax,
if applicable.
Pursuant to section 852 of the Internal Revenue Code, the Fund
designates $719,195 as capital gain dividends for the year ended
December 31, 1996.
28 - SCUDDER MEDIUM TERM TAX FREE FUND
<PAGE>
Officers and Trustees
David S. Lee*
President and Trustee
Dawn-Marie Driscoll
Trustee; Attorney and Corporate Director
Peter B. Freeman
Trustee; Corporate Director and Trustee
Wesley W. Marple, Jr.
Trustee; Professor of Business
Administration, Northeastern University College of Business Administration
Kathryn L. Quirk*
Trustee
Jean C. Tempel
Trustee; General Partner, TL Ventures
Donald C. Carleton*
Vice President
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
Vice President
Thomas F. McDonough*
Vice President and Secretary
Pamela A. McGrath*
Vice President and Treasurer
Edward J. O'Connell*
Vice President and Assistant Treasurer
M. Ashton Patton*
Vice President
*Scudder, Stevens & Clark, Inc.
29 - SCUDDER MEDIUM TERM TAX FREE FUND
<PAGE>
Investment Products and Services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Tax Free Money Market+
Scudder Tax Free Money Fund
Scudder California Tax Free Money Fund*
Scudder New York Tax Free Money Fund*
Tax Free+
Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund*
Scudder Massachusetts Limited Term
Tax Free Fund*
Scudder Massachusetts Tax Free Fund*
Scudder New York Tax Free Fund*
Scudder Ohio Tax Free Fund*
Scudder Pennsylvania Tax Free Fund*
U. S. Income
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder High Yield Bond Fund
Global Income
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
U.S. Growth and Income
Scudder Balanced Fund
Scudder Growth and Income 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 Quality Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Growth
Worldwide
Scudder Global Fund
Scudder International 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
Asset Allocation
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
Retirement Programs
IRA
SEP IRA
SIMPLE IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan *+++ +++
(a variable annuity)
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The First Iberian Fund, Inc.
The Korea Fund, Inc.
The Latin America Dollar Income Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder World Income Opportunities
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 from expected
least to most risk. +A portion of the income from the tax-free funds may be
subject to federal, state, and local taxes. *Not available in all states. +++
+++A no-load variable annuity contract provided by Charter National Life
Insurance Company and its affiliate, offered by Scudder's insurance agencies,
1-800-225-2470. #These funds, advised by Scudder, Stevens & Clark, Inc., are
traded on various stock exchanges.
30 - SCUDDER MEDIUM TERM TAX FREE FUND
<PAGE>
How to Contact Scudder
Account Service and Information
- --------------------------------------------------------------------------------
For existing account services and transactions
Scudder Investor Relations -- 1-800-225-5163
For 24 hour account information, fund information, exchanges, and an
overview of all the services available to you
Scudder Electronic Account Services -- http://funds.scudder.com
For information about your Scudder accounts, exchanges and redemptions
Scudder Automated Information Line (SAIL) -- 1-800-343-2890
Investment Information
- --------------------------------------------------------------------------------
For information about the Scudder funds, including additional applications
and prospectuses, or for answers to investment questions
Scudder Investor Relations -- 1-800-225-2470
[email protected]
Scudder's World Wide Web Site -- http://funds.scudder.com
For establishing 401(k) and 403(b) plans
Scudder Defined Contribution Services -- 1-800-323-6105
Scudder Brokerage Services
- --------------------------------------------------------------------------------
To receive information about this discount brokerage service and to obtain
an application
Scudder Brokerage Services* -- 1-800-700-0820
Please address all correspondence to
- --------------------------------------------------------------------------------
The Scudder Funds
P.O. Box 2291
Boston, Massachusetts
02107-2291
Or Stop by a Scudder Funds Center
- --------------------------------------------------------------------------------
Many shareholders enjoy the personal, one-on-one service of the Scudder
Funds Centers. Check for a Funds Center near you--they can be found in the
following cities:
Boca Raton Chicago San Francisco
Boston New York
For information on Scudder Treasurers Trust(TM), an institutional cash
management service for corporations, non-profit organizations and trusts
which utilizes certain portfolios of Scudder Fund, Inc.* ($100,000
minimum), call: 1-800-541-7703.
For information on Scudder Institutional Funds**, funds designed to meet
the broad investment management and service needs of banks and other
institutions, call: 1-800-854-8525.
Scudder Investor Relations and Scudder Funds Centers are services provided
through Scudder Investor Services, Inc., Distributor.
* Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061 --
Member NASD/SIPC.
** Contact Scudder Investor Services, Inc., Distributor, to receive a
prospectus with more complete information, including management fees and
expenses. Please read it carefully before you invest or send money.
31 - SCUDDER MEDIUM TERM TAX FREE FUND
<PAGE>
Celebrating Over 75 Years of Serving Investors
Established in 1919 by Theodore Scudder, Sidney Stevens, and F. Haven Clark,
Scudder, Stevens & Clark was the first independent investment counsel firm in
the United States. Since its birth, Scudder's pioneering spirit and commitment
to professional long-term investment management have helped shape the investment
industry. In 1928, we introduced the nation's first no-load mutual fund. Today
we offer over 40 pure no load(TM) funds, including the first international
mutual fund offered to U.S. investors.
Over the years, Scudder's global investment perspective and dedication to
research and fundamental investment disciplines have helped us become one of the
largest and most respected investment managers in the world. Though times have
changed since our beginnings, we remain committed to our long-standing
principles: managing money with integrity and distinction; keeping the interests
of our clients first; providing access to investments and markets that may not
be easily available to individuals; and making investing as simple and
convenient as possible through friendly, comprehensive service.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
SCUDDER
