Scudder
California
Tax Free Money Fund
Scudder
California
Tax Free Fund
Annual Report
March 31, 1999
No-Load Funds
For investors seeking double-tax-free income, exempt from both California
personal income tax and regular federal income tax.
No-load funds with no commissions to buy, sell, or exchange shares.
SCUDDER
<PAGE>
Scudder California Tax Free Money Fund
- --------------------------------------------------------------------------------
Date of Inception: 5/28/87 Total Net Assets as of Ticker Symbol: SCAXX
3/31/99: $71.4 million
- --------------------------------------------------------------------------------
o Scudder California Tax Free Money Fund offered a seven-day effective yield of
2.23% on March 31, 1999, equivalent to a 4.07% taxable yield for investors in
the top federal and state income tax brackets.
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
CHART TITLE:
7-Day Yield on March 31, 1999
CHART DATA:
Scudder
California Taxable Yield
Tax Free Needed to Equal
Money Fund the Fund's Yield
---------- ----------------
2.23 4.07
Table of Contents
4 Letter from the Funds' President 38 Report of Independent Accountants
7 Portfolio Management Discussion 39 Tax Information
13 Glossary of Investment Terms 40 Shareholder Meeting Results
14 Investment Portfolio 44 Officers and Trustees
17 Financial Statements 45 Investment Products and Services
20 Financial Highlights 46 Scudder Solutions
34 Notes to Financial Statements
2 - Scudder California Tax Free Money Fund
<PAGE>
Scudder California Tax Free Fund
Date of Inception: 7/22/83 Total Net Assets as of 3/31/99: $340.3 million
Ticker Symbol: SCTFX
o Scudder California Tax Free Fund provided a 3.92% 30-day net annualized SEC
yield on March 31, 1999. For shareholders subject to the 45.22% maximum combined
federal and state income tax rate, the Fund's yield was equal to a taxable yield
of 7.16%. The Fund posted a 5.78% total return over its most recent fiscal year
ended March 31, 1999.
o Scudder California Tax Free Fund received an overall Morningstar Rating(TM) of
four stars out of 1578 tax-free funds as of March 31, 1999.*
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE:
CHART TITLE:
30-Day Yield on March 31, 1999
CHART DATA:
Scudder
California Taxable Yield
Tax Free Needed to Equal
Fund the Fund's Yield
--------- ----------------
3.92 7.16
Table of Contents
4 Letter from the Funds' President 34 Notes to Financial Statements
5 Performance Update 38 Report of Independent Accountants
6 Portfolio Summary 39 Tax Information
9 Portfolio Management Discussion 41 Shareholder Meeting Results
13 Glossary of Investment Terms 44 Officers and Trustees
21 Investment Portfolio 45 Investment Products and Services
30 Financial Statements 46 Scudder Solutions
33 Financial Highlights
* Morningstar proprietary ratings reflect risk-adjusted performance as of March
31, 1999. The ratings are subject to change every month. Past performance is
no guarantee of future results. Morningstar ratings 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. The Fund received four stars
for the three- and five-year periods, 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
1578, 1131, and 368 municipal funds for the three-, five-, and ten-year
periods, respectively.
3 - Scudder California Tax Free Fund
<PAGE>
Letter from the Funds' President
Dear Shareholders,
We are pleased to report to you concerning the latest fiscal year ended
March 31, 1999, for Scudder California Tax Free Fund and Scudder California Tax
Free Money Fund. As of March 31, 1999, Scudder California Tax Free Money Fund
posted a 4.07% tax equivalent yield based on maximum state and federal tax
rates. During the period, Scudder California Tax Free Fund returned 5.78%,
outpacing the 5.58% average return of similar California tax-free funds
according to Lipper. The Fund also placed in the top third of similar California
tax-free funds over three-, five-, and ten-year periods.
Investors concerned about the increased volatility of the financial markets
during the past 12 months should find the chart on page 10 of interest. The
chart shows that over the 12-month period ended March 31, long-term municipal
bonds displayed considerably less price volatility than comparable Treasury
securities. For additional information concerning the market performance,
strategy, and outlook for both Scudder California Tax Free Funds, please see the
Portfolio Management Discussions that begin on page 7.
For those of you 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 Scudder California Tax Free Fund or Scudder
California Tax Free Money Fund. Or visit our Web site at www.scudder.com. Thank
you for choosing Scudder's California Tax Free Funds to help meet your
investment needs.
Sincerely,
/s/Daniel Pierce
President,
Scudder California Tax Free Money Fund
Scudder California Tax Free Fund
4 - Scudder California Tax Free Money Fund
Scudder California Tax Free Fund
<PAGE>
Performance Update as of March 31, 1999
Fund Index Comparison
Total Return
--------------------------------------------
Period
Ended Growth of Average
3/31/1999 $ 10,000 Cumulative Annual
--------------------------------------------
Scudder California Tax Free Fund
--------------------------------------------
1 Year $ 10,578 5.78% 5.78%
5 Year $ 14,385 43.85% 7.54%
10 Year $ 21,899 118.99% 8.15%
--------------------------------------------
Lehman Brothers Municipal Bond Index
--------------------------------------------
1 Year $ 10,620 6.20% 6.20%
5 Year $ 14,440 44.40% 7.62%
10 Year $ 22,083 120.83% 8.24%
--------------------------------------------
THE PRINTED DOCUMENT CONTAINS A LINE CHART HERE
CHART TITLE:
Growth of a $10,000 Investment
CHART DATA:
Yearly Lehman Brothers Yearly Scudder
periods Municipal periods California
ended Bond ended Tax Free
March 31 Index March 31 Fund
-------- ----- -------- --------
89 10000 89 10000
90 11056 90 10862
91 12075 91 11789
92 13283 92 13054
93 14947 93 15029
94 15293 94 15223
95 16430 95 16252
96 17807 96 17554
97 18779 97 18509
98 20793 98 20702
99 22083 99 21899
The unmanaged Lehman Brothers Municipal Bond Index is a market value weighted
measure of municipal bonds issued across the United States. Index issues have a
credit rating of at least Baa and a maturity of at least two years. Index
returns assume reinvestment of dividends and, unlike Fund returns, do not
reflect any fees or expenses.
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
CHART TITLE:
Returns and Per Share Information
CHART DATA:
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value $ 10.29 $ 10.41 $ 10.60 $ 11.05 $ 10.02 $ 10.07 $ 10.36 $ 10.39 $ 11.06 $ 11.18
- -----------------------------------------------------------------------------------------------------------------------------
Income Dividends $ .65 $ .63 $ .61 $ .59 $ .53 $ .51 $ .51 $ .52 $ .52 $ .51
- -----------------------------------------------------------------------------------------------------------------------------
Capital Gains and other $ .19 $ .09 $ .28 $ .49 $ .68 $ .09 $ -- $ .01 $ .02 $ --
Distributions
- -----------------------------------------------------------------------------------------------------------------------------
Fund Total Return (%) 8.62 8.53 10.74 15.13 1.30 6.75 8.01 5.44 11.85 5.78
- -----------------------------------------------------------------------------------------------------------------------------
Index Total Return (%) 10.56 9.22 10.02 12.52 2.32 7.43 8.38 5.45 10.73 6.20
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.
</TABLE>
5 - Scudder California Tax Free Fund
<PAGE>
Portfolio Summary as of March 31, 1999
THE PRINTED DOCUMENT CONTAINS A PIE CHART HERE
CHART TITLE:
Diversification
CHART DATA:
Hospital/Health 16%
County General Obligation/Lease 14%
Water/Sewer 11%
Housing Finance Authority 9%
Other General Obligation/Lease 9%
Toll Revenue/Transportation 8%
Sales/Special Tax 8%
School District/Lease 7%
Electric Revenue 5%
State General Obligation/Lease 4%
Miscellaneous Municipal 9%
- --------------------------------------
100%
- --------------------------------------
The Fund invests in a broad selection of California municipal bonds.
THE PRINTED DOCUMENT CONTAINS A PIE CHART HERE
CHART TITLE:
Quality
CHART DATA:
AAA* 54%
AA 8%
A 19%
BBB 12%
SKI 7%
- -----------------------------------
100%
- -----------------------------------
Weighted average quality: AA
*Includes Cash Equivalents
Overall portfolio quality remains high, with over 80% of portfolio securities
rated A or better as of March 31.
THE PRINTED DOCUMENT CONTAINS A PIE CHART HERE
CHART TITLE:
Effective Maturity
CHART DATA:
Less than 1 year 3%
1-5 years 14%
5-10 years 32%
10-15 years 28%
Greater than 15 years 23%
- -----------------------------------
100%
- -----------------------------------
Weighted average effective maturity:
10.8 years
Our continuing goal is to have an average effective maturity similar to that
of the Lehman Brothers Municipal Bond Index, the Fund's benchmark, but with
a superior, call-protected structure.
For more complete details about the Fund's investment portfolio, see page 21. A
quarterly Fund Summary and Portfolio Holdings are available upon request.
6 - Scudder California Tax Free Fund
<PAGE>
Portfolio Management Discussion
Scudder California Tax Free Money Fund
Dear Shareholders,
Scudder California Tax Free Money Fund maintained a conservative portfolio
strategy in an environment of declining money market yields during the Fund's
most recent fiscal year ended March 31, 1999. The Fund's seven-day effective
yield as of March 31 was 2.23%. For investors in the highest combined state and
federal income tax bracket, the Fund's yield was equivalent to a 4.07%
compounded yield.
Two factors drove tax-exempt money market interest rates lower during the
period: First, the U.S. Federal Reserve lowered interest rates three times from
September through November in an effort to ease 1998's succession of global
financial crises. Second, the U.S. economy continued to thrive, with GDP soaring
to an annualized 6% rate of growth during the fourth quarter of 1998 with
minimal inflationary pressures. Many more states and cities enjoyed budget
surpluses, and the supply of short-term tax-exempt securities declined sharply.
With less competition for buyers, municipalities that did issue short-term
securities could do so at lower rates.
In this environment of dramatically lower supply and lower interest rates, we
pursued a cautious strategy through most of the period, and refrained from
extending the Fund's average maturity because we felt that yields of longer-term
money market securities were too low to justify incurring the additional risk
that comes with an extended maturity. These conditions persisted until March
7 - Scudder California Tax Free Money Fund
<PAGE>
when supply and interest rates inched higher, and we extended maturity slightly.
The Fund's average maturity was 19 days as of March 31, 1999, compared with 43
days 12 months earlier. The Fund continues to invest in variable rate demand
notes -- which provide flexibility in the present low interest rate environment
- -- and tax-free commercial paper and tax-free notes -- both of which provide
some stability in yield. The Fund continues to emphasize high quality issuers
and guarantors.
In its present dual role of presiding over global economic recovery and ensuring
that the U.S. economy doesn't overheat into accelerated inflation, the Fed
appears to be in a holding pattern. Over the coming months, we will continually
consider the opportunities offered by the market, weighing them against our
economic outlook. If we expect interest rates to be stable overall, but supply
increases and the market offers us higher rates to extend the Fund's maturity,
we expect to do so.
Our continuing goal is to provide Scudder California Tax Free Money Fund
shareholders with a competitive double-tax-free yield by searching for
high-quality, short-term municipal securities while actively managing the Fund's
average maturity. We appreciate your investment with us.
Sincerely,
Your Portfolio Management Team
/s/Frank J. Rachwalski, Jr. /s/Jerri I. Cohen
Frank J. Rachwalski, Jr. Jerri I. Cohen
/s/Elizabeth Meyer
Elizabeth Meyer
Scudder California Tax Free
Money Fund:
A Team Approach to Investing
Scudder California Tax Free Money Fund 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 Frank J. Rachwalski, Jr. and Jerri I. Cohen have
responsibility for the Fund's day-to-day management. Mr. Rachwalski who joined
the Adviser in 1973 and the Fund in 1998 has 26 years experience managing money
market portfolios. Ms. Cohen joined the Adviser in 1981 and the Fund in 1998 and
has 18 years experience in the financial industry. Together they oversee the
investment strategies of the Fund. Portfolio Manager Elizabeth Meyer joined the
Adviser in 1986 and the team in 1999. Ms. Meyer has 13 years experience in the
financial industry.
8 - Scudder California Tax Free Money Fund
<PAGE>
Portfolio Management Discussion
Scudder California Tax Free Fund
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 at the close of Scudder California Tax Free Fund's
most recent fiscal year. During the 12-month period ended March 31, 1999, the
Fund returned 5.78%, outpacing the 5.58% average return of California tax-exempt
funds as tracked by Lipper Analytical Services, Inc. In addition, the Fund's
total returns over three-, five- and ten-year periods placed it in the top
one-third of similar California tax-free funds. Please see the accompanying
table for additional information concerning the Fund's returns.
California Update
California's economy is exhibiting economic strength, leading the country in job
growth. From December 1997 to December 1998, the State added almost 430,000
jobs. The new jobs are concentrated in high technology industries, specifically
computer software, electronics manufacturing, and motion picture production.
This growth brought the State's unemployment rate down to an average of 5.9% in
1998, compared with the national average of 4.5%. The State finished its 1998
fiscal year with a General Fund balance of $2.8 billion and is projecting to
finish its 1999 fiscal year with a fund balance of $1.1 billion. The expected
decline in the
-----------------------------------------------------------------
Scudder California Tax Free Fund
Solid Competitive Performance
(Average annual returns for periods ended March 31, 1999)
-----------------------------------------------------------------
Scudder Number
California Lipper of
Tax Free Average California
Fund Annual State Funds Percentile
Period Return Return Rank Tracked Rank
-----------------------------------------------------------------
1 year 5.78% 5.58% 38 of 105 Top 36%
-----------------------------------------------------------------
3 years 7.65% 7.20% 25 of 89 Top 28%
-----------------------------------------------------------------
5 years 7.54% 7.05% 19 of 64 Top 30%
-----------------------------------------------------------------
10 years 8.15% 7.61% 6 of 33 Top 18%
-----------------------------------------------------------------
Source: Lipper Analytical Services, Inc., an independent analyst of
investment performance. Performance includes reinvestment of capital
gains, and is no guarantee of future results.
9 - Scudder California Tax Free Fund
<PAGE>
General Fund balance reflects increased spending on local education assistance.
California is one of the largest issuers of municipal debt, with $25.5 billion
of debt outstanding. The State's size and wealth levels mitigate the impact that
debt of that magnitude could have. California's debt per capita is $761, 15%
higher than the national average. During the 1998 fiscal year, annual debt
service as a percent of General Fund expenditures was a manageable 4%. In
summary, California is benefiting from a strong economy that has led to improved
finances, specifically an improved cash flow position. We will continue to
monitor the State's mounting infrastructure needs.
A Market Roller Coaster
Market turmoil hit a peak in the wake of the Russian currency devaluation on
August 17, followed by the near collapse of the Long Term Capital 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.
Although presidential impeachment proceedings distracted the financial markets
through the fall and beyond, the Federal Reserve's three consecutive interest
rate cuts in September, October, and November helped to gradually restore market
stability. During this period, the U.S. economy continued to grow beyond all
expectations, recording a dramatic 6% annualized increase in GDP for the fourth
quarter of 1998. This show of strength, in turn, worried bond investors, who
responded by sending 30-year
THE PRINTED DOCUMENT CONTAINS A LINE CHART HERE
CHART TITLE:
- -----------------------------------------------------------
Municipals Provided Greater Stability
Monthly prices of 30-year AAA-rated municipal bonds
compared with prices of 30-year U.S. Treasury Bonds,
3/31/98-3/31/99
- -----------------------------------------------------------
CHART DATA:
30-year U.S. Treasury Bonds 30-year AAA-rated municipal bonds
--------------------------- ---------------------------------
3/31/98 100.00 100.00
98.47 98.49
5/31/98 100.14 100.77
103.47 100.00
7/31/98 101.57 100.00
107.12 102.33
9/30/98 114.87 105.57
111.47 102.33
11/30/98 109.83 102.33
111.47 102.33
1/31/99 111.14 103.13
103.32 101.55
3/31/99 102.11 100.77
Source: Scudder Kemper Investments, Inc.
Treasury bond yields back up to July 1998 levels. Over the Fund's most recent
fiscal year, yields of 30-year Treasury bonds ended slightly lower, beginning
the period at 5.84% and ending it at 5.67%. Over the same time frame, yields of
30-year AAA insured municipal bonds declined from 5.10% to 5.05%.
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.
10 - Scudder California Tax Free Fund
<PAGE>
Emphasizing High
Coupon Bonds
Over the past 12 months, Scudder California Tax Free Fund pursued a two-part
strategy: First, the Fund emphasized premium "cushion" bonds -- bonds with high
coupons that compensate investors for the fact that they can be redeemed by
their issuer in a relatively short period of time. Second, the Fund continues to
hold a substantial position in noncallable bonds (64% of assets) to provide a
relatively stable income stream along with long-term price appreciation
potential. In terms of maturity, we focused on 13- to 15-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. Lastly, our continuing goal is to have an average effective maturity
similar to that of the Lehman Brothers Municipal Bond Index, but with a
superior, call-protected structure. As of March 31, the Fund's average duration
was 8.2 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.)
Overall portfolio quality remains high, with over 80% of portfolio securities
rated A or better at the close of the period. We continue to invest in a broad
selection of California tax-exempt issues, including hospital/health, general
obligation, and water/sewer revenue bonds.
11 - Scudder California Tax Free Fund
<PAGE>
Because the powerful market forces that have brought the United States close to
price stability -- including technology, deregulation, globalization, and
vigilant central banks -- are still in full effect, we believe that inflation
will remain restrained over the next several years. At the same time, we believe
that higher oil prices could prompt a "gentle slowdown" in U.S. economic
activity. This would relieve some of the financial imbalances (vigorous
individual and corporate spending contrasting with shrinking savings and profit
levels, for example) that we are currently observing in the economy.
Outlook
Because the powerful market forces that have brought the United States close to
price stability -- including technology, deregulation, globalization, and
vigilant central banks -- are still in full effect, we believe that inflation
will remain restrained over the next several years. At the same time, we believe
that higher oil prices could prompt a "gentle slowdown" in U.S. economic
activity. This would relieve some of the financial imbalances (vigorous
individual and corporate spending contrasting with shrinking savings and profit
levels, for example) that we are currently observing in the economy. Low
inflation, and any slowing of the economy, in turn, would benefit municipal
bonds, which continue to be attractively priced versus Treasuries. At the same
time, we are mindful that the U.S. economy is nearing "full employment," and
that an economic rebound in Asia could cause the U.S. economy to overheat. We
will therefore pursue a cautious strategy over the coming months, keeping the
Fund's duration at a moderate level in an attempt to limit share price
volatility. We plan to focus on 10-15 year premium coupon bonds as the Fund
seeks to benefit from the yield and capital appreciation opportunities afforded
by the California tax-exempt bond market. In addition to a cautious average
duration, we will maintain high overall credit quality as we seek
double-tax-free income and competitive returns for our shareholders. Thank you
for investing with Scudder.
Sincerely,
Your Portfolio Management Team
/s/Eleanor R. Brennan /s/Matthew J. Caggiano
Eleanor R. Brennan Matthew J. Caggiano
Scudder California Tax
Free Fund:
A Team Approach to Investing
Scudder California Tax Free Fund is managed by a team of Scudder Kemper
Investments, Inc. (the "Adviser") 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 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.
Lead Portfolio Manager Eleanor R. Brennan assumed responsibility for the Fund's
day-to-day management in 1999. Ms. Brennan joined the Adviser in 1995 and has 13
years of experience in municipal investing and portfolio management. Portfolio
Manager Matthew J. Caggiano joined the Fund in 1999. Mr. Caggiano, who joined
the Adviser in 1989, is the principal municipal bond trader for Scudder Kemper
Investments, Inc.
12 - Scudder California Tax Free Fund
<PAGE>
Glossary of Investment Terms
BOND An interest-bearing security issued by the federal,
state, or local government or a corporation that
obligates the issuer to pay the bondholder a
specified amount of interest for a stated period --
usually a number of years -- and to repay the face
amount of the bond at its maturity date.
GENERAL OBLIGATION BOND A municipal bond backed by the "full faith and
credit" (including the taxing and further borrowing
power) of the city, state or agency that issues the
bond. A general obligation bond is repaid with the
issuer's general revenue and borrowings.
INFLATION An overall increase in the prices of goods and
services, as happens when business and consumer
spending increases relative to the supply of goods
available in the marketplace -- in other words, when
too much money is chasing too few goods. High
inflation has a negative impact on the prices of
fixed-income securities.
MUNICIPAL BOND An interest-bearing debt security issued by a state
or local government entity.
NET ASSET VALUE (NAV) The price per share of a mutual fund based on the sum
of the market value of all the securities owned by
the fund divided by the number of outstanding shares.
TAXABLE EQUIVALENT YIELD The level of yield a fully taxable instrument would
have to provide to equal that of a tax-free municipal
bond on an after-tax basis.
30-DAY SEC YIELD The standard yield reference for bond funds, based
on a formula prescribed by the SEC. This annualized
yield calculation reflects the 30-day average of the
income earnings of every holding in a given fund's
portfolio, net of expenses, assuming each is held to
maturity.
TOTAL RETURN The most common yardstick to measure the performance
of a fund. Total return -- annualized or compound --
is based on a combination of share price changes plus
income and capital gain distributions, if any,
expressed as a percentage gain or loss in value.
(Sources: Scudder Kemper Investments, Inc.; Barron's Dictionary of Finance and
Investment Terms)
13 - Scudder California Tax Free Money Fund
- Scudder California Tax Free Fund
<PAGE>
Investment Portfolio as of March 31, 1999
<TABLE>
<CAPTION>
Credit
Principal Rating (b) Value ($)
Amount ($) (Unaudited) (Note A)
- -------------------------------------------------------------------------------------------------------------------------------
Municipal Investments 100.0%
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
California
Alhambra, CA, Redevelopment Agency, Multi-Family Housing Revenue, Main St.
Plaza Apartments, Series 1996, AMT, Weekly Demand Bond, 4.2%, 12/1/2028* ..... 1,000,000 SKI 1,000,000
California General Obligation, Tax Exempt Commercial Paper:
2.5%, 5/11/1999 .............................................................. 1,000,000 A1+ 1,000,000
2.6%, 5/14/1999 .............................................................. 1,000,000 A1+ 1,000,000
2.9%, 5/14/1999 .............................................................. 1,000,000 A1+ 1,000,000
California Health Facilities Finance Authority:
Catholic Healthcare West:
Series 1996 B, Weekly Demand Bond, 2.7%, 7/1/2006* .......................... 1,500,000 A1+ 1,500,000
Series 1998 C, Weekly Demand Bond, 2.7%, 7/1/2020* .......................... 2,000,000 A1+ 2,000,000
Pooled Loan Program, Series 1985 B, Weekly Demand Note, 2.85%, 10/1/2010 (c)* 385,000 MIG1 385,000
Sutter Health, Series 1990 B, Daily Demand Bond, 2.95%, 3/1/2020* ............ 2,600,000 A1+ 2,600,000
California Pollution Control Finance Authority:
Pacific Gas & Electric Company:
Series 1996 C, Daily Demand Note, 3.15%, 11/1/2026* ......................... 500,000 A1+ 500,000
Series 1996 E, Daily Demand Note, 3.25%, 11/1/2026* ......................... 500,000 A1+ 500,000
Series 1997 B, Daily Demand Note, AMT, 3.2%, 11/1/2026* ..................... 1,300,000 A1+ 1,300,000
Series 1997 D, AMT, Weekly Demand Note, 2.9%, 1/1/2010* ..................... 1,500,000 A1 1,500,000
Solid Waste Disposal:
CR&R Inc. Project, Series 1995 A, AMT, Weekly Demand Note, 2.9%, 10/1/2010* . 1,430,000 A1 1,430,000
Western Waste Industries, Series 1994 A, AMT, Weekly Demand Note, 3.1%,
10/1/2006* ................................................................ 1,300,000 MIG1 1,300,000
Southern California Edison, Series 1986 D, Daily Demand Note, 3.3%, 2/28/2008* 1,200,000 A1 1,200,000
Eastern Municipal Water District, CA, Water & Sewer Revenue, Series 1993 B,
Weekly Demand Note, 2.7%, 7/1/2020* .......................................... 1,100,000 MIG1 1,100,000
Huntington Beach, CA, Multi-Family Housing Revenue, River Meadows Apartments,
Series 1985 B, Weekly Demand Bond, 2.8%, 12/1/2005* .......................... 800,000 A1+ 800,000
Irvine, CA, Improvement Bond Act 1915, Special Assessment, Daily Demand Bond,
3%, 9/2/2024* ................................................................ 2,400,000 MIG1 2,400,000
Irvine, CA, Ranch Water District, Daily Demand Bond, 3%, 4/1/2033* ............. 1,300,000 MIG1 1,300,000
Kern County, CA, Certificate of Participation, Public Facilities Project:
Series 1986 A, Weekly Demand Bond, 2.7%, 8/1/2006* ........................... 1,100,000 MIG1 1,100,000
Series 1986 D, Weekly Demand Bond, 2.7%, 8/1/2006* ........................... 1,500,000 MIG1 1,500,000
The accompanying notes are an integral part of the financial statements.
14 - Scudder California Tax Free Money Fund
<PAGE>
Credit
Principal Rating (b) Value ($)
Amount ($) (Unaudited) (Note A)
- -------------------------------------------------------------------------------------------------------------------------------
Los Angeles County Metropolitan Transportation Authority, Sales Tax Revenue,
Series 1996, Weekly Demand Bond, 2.9%, 7/1/2017* ............................. 1,500,000 A1+ 1,500,000
Los Angeles County, CA, Asset Lease Revenue, Tax Exempt Commercial Paper:
2.5%, 5/11/1999 .............................................................. 1,500,000 A1+ 1,500,000
2.9%, 6/10/1999 .............................................................. 1,000,000 A1+ 1,000,000
Los Angeles County, CA, Certificate of Participation:
County Museum of Arts, Series 1985 A, Weekly Demand Note, 2.7%, 11/1/2005* ... 1,200,000 A1 1,200,000
Willowbrook Project, Series 1985, Weekly Demand Note, 2.7%, 11/1/2015* ....... 2,400,000 A1+ 2,400,000
Los Angeles, CA, Multi-Family Housing Revenue, Series K, Weekly Demand Bond,
2.75%, 7/1/2010* ............................................................. 3,100,000 A1+ 3,100,000
M-S-R Public Power Agency, San Juan Project, Revenue Bond, Subordinate Lien,
Series B, Weekly Demand Bond, 2.7%, 7/1/2022* ................................ 1,000,000 A1 1,000,000
Oakland, CA, Joint Powers Finance Authority, Lease Revenue, Weekly Demand Bond:
Series 1998 A-1, 2.7%, 8/1/2021* ............................................. 1,500,000 A1+ 1,500,000
Series 1998 A-2, 2.6%, 8/1/2021* ............................................. 1,000,000 A1+ 1,000,000
Orange County, CA, Improvement Bond, Daily Demand Note, 3.0%, 9/2/2018* ........ 1,300,000 A1+ 1,300,000
Orange County, CA, Sanitation District:
Certificate of Participation, Daily Demand Note, 3.0%, 8/1/2015* ............. 2,000,000 A1+ 2,000,000
Series 1992 C, Daily Demand Note, 3.0%, 8/1/2017 (c)* ........................ 600,000 MIG1 600,000
Orange County, CA, Transportation Authority, Tax Exempt Commercial Paper,
2.9%, 4/8/1999 ............................................................... 1,000,000 A1+ 1,000,000
Riverside County, CA, Certificate of Participation, Riverside County Public
Facilities, Series A, Weekly Demand Note, 2.7%, 12/1/2015* ................... 900,000 A1+ 900,000
Sacramento Municipal Utility District, CA, Tax Exempt Commercial Paper:
2.85%, 7/19/1999 ............................................................. 500,000 A1+ 500,000
2.85%, 7/21/1999 ............................................................. 1,000,000 A1+ 1,000,000
2.85%, 7/22/1999 ............................................................. 2,000,000 A1+ 2,000,000
Sacramento, CA, Multi-Family Housing Revenue, Smoketree Apartments Project,
Series 1990 A, Weekly Demand Bond, 2.65%, 4/15/2010* ......................... 1,000,000 A1+ 1,000,000
San Bernadino County, CA, Certificate of Participation:
County Center Refinancing, Series 1996, Weekly Demand Note, 2.75%, 7/1/2015* . 1,000,000 MIG1 1,000,000
Medical Center Financing Project, Series 1998, Weekly Demand Bond,, 2.75%,
8/1/2026* ................................................................... 1,000,000 A1+ 1,000,000
San Francisco Airport, AMT, Series 1997, Tax Exempt Commercial Paper:
2.5%, 4/7/1999 ............................................................... 1,000,000 A1+ 1,000,000
2.65%, 4/14/1999 ............................................................. 1,000,000 A1+ 1,000,000
The accompanying notes are an integral part of the financial statements.
15 - Scudder California Tax Free Money Fund
<PAGE>
Credit
Principal Rating (b) Value ($)
Amount ($) (Unaudited) (Note A)
- -------------------------------------------------------------------------------------------------------------------------------
San Jose, CA, Clean Water Financing Authority, Sewer Revenue Bond, Series 1995 B,
Weekly Demand Note, 2.7%, 11/15/2011* ........................................ 1,000,000 A1 1,000,000
San Marcos, CA, Redevelopment Agency, Multi-Family Rental Housing Revenue, Series
1985A, Weekly Demand Bond, 2.8%, 6/1/2005* ................................... 2,700,000 A1 2,700,000
Santa Clara County, CA, Multi-Family Housing Authority, Fox Chase I Project,
Series 1985 E, Weekly Demand Note, 2.7%, 11/1/2007 (c)* ...................... 1,000,000 MIG1 1,000,000
Santa Clara, CA, Electric Revenue:
Series B, Junior Lien, Weekly Demand Bond, 2.7%, 7/1/2010* ................... 900,000 MIG1 900,000
Series C, Junior Lien, Weekly Demand Bond, 2.7%, 7/1/2010* ................... 1,260,000 MIG1 1,260,000
Southern California Edison, Tax Exempt Commercial Paper, Series 1985 C, 2.8%,
7/20/1999 .................................................................... 1,000,000 A1+ 1,000,000
Southern California Metropolitan Water District, Series B, Tax Exempt Commercial
Paper: 2.8%, 7/19/1999 ....................................................... 1,000,000 A1+ 1,000,000
2.85%, 6/7/1999 .............................................................. 1,000,000 A1+ 1,000,000
Southern California Public Power Authority, Transmission Project, Series 1991,
Weekly Demand Note, 2.75%, 7/1/2019* ......................................... 1,100,000 A1+ 1,100,000
Vallejo, CA, Industrial Development Authority Revenue, Series 1993 A, AMT, Weekly
Demand Bond, 2.85%, 12/1/2023* ............................................... 1,500,000 A1+ 1,500,000
Guam
Guam Power Authority, Tax Exempt Commercial Paper, 2.45%, 4/14/1999 ............ 1,000,000 A1+ 1,000,000
Puerto Rico
Puerto Rico Commonwealth:
General Obligation, Tax Exempt Commercial Paper, 5.5%, 7/1/1999 .............. 900,000 SKI 905,189
Highway & Transportation Authority, Transportation Revenue, Series A, Weekly
Demand Bond, 2.65%, 7/1/2028* ............................................... 2,000,000 A1+ 2,000,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Municipal Investments (Cost $71,280,189) 71,280,189
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio-- 100.0% (Cost $71,280,189) (a) 71,280,189
- -------------------------------------------------------------------------------------------------------------------------------
(a) The cost for federal income tax purposes was $71,280,189.
(b) All of the securities held have been determined to be of the appropriate
credit quality as required by the Fund's investment objectives. Credit
ratings shown are either Standard & Poor's Ratings Group, Moody's
Investors Service, Inc. or Fitch Investors Service, Inc. Securities rated
by Scudder Kemper Investments, Inc. (SKI) have been determined by the
Adviser to be of comparable quality to rated securities.
(c) Bond is insured by one of these companies: AMBAC, Capital Guaranty,
FGIC, FSA or MBIA/BIG.
* 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.
AMT: Subject to alternative minimum tax
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 - Scudder California Tax Free Money Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of March 31, 1999
<TABLE>
<CAPTION>
Assets
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investments, at value (cost $71,280,189) .............................. $ 71,280,189
Receivable for investments sold ....................................... 100,000
Interest receivable ................................................... 201,631
Receivable for Fund shares sold ....................................... 74,393
Other assets .......................................................... 1,586
------------
Total assets .......................................................... 71,657,799
Liabilities
- -----------------------------------------------------------------------------------------------------------------------------
Dividends payable ..................................................... 15,547
Payable for Fund shares redeemed ...................................... 207,232
Accrued management fee ................................................ 19,906
Other payables and accrued expenses ................................... 60,941
------------
Total liabilities ..................................................... 303,626
--------------------------------------------------------------------------------------
Net assets, at value .................................................. $ 71,354,173
--------------------------------------------------------------------------------------
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Accumulated net realized gain (loss) .................................. (95,212)
Paid-in capital ....................................................... 71,449,385
--------------------------------------------------------------------------------------
Net assets, at value .................................................. $ 71,354,173
--------------------------------------------------------------------------------------
Net Asset Value
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share ($71,354,173
/ 71,364,946 outstanding shares of beneficial interest, $.01 par value, ------------
unlimited number of shares authorized)................................. 1.00
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17 - Scudder California Tax Free Money Fund
<PAGE>
Statement of Operations
year ended March 31, 1999
<TABLE>
<CAPTION>
Investment Income
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Income:
Interest ...................................................... $ 2,132,794
-----------
Expenses:
Management fee ................................................ 345,772
Services to shareholders ...................................... 73,343
Custodian and accounting fees ................................. 51,816
Trustees' fees and expenses ................................... 18,142
Auditing ...................................................... 28,154
Reports to shareholders ....................................... 12,215
Legal ......................................................... 4,808
Registration fees ............................................. 6,314
Other ......................................................... 5,420
-----------
Total expenses before reductions .............................. 545,984
Expense reductions ............................................ (131,057)
-----------
Expenses, net ................................................. 414,927
-----------------------------------------------------------------------------
Net investment income ......................................... 1,717,867
-----------------------------------------------------------------------------
Realized gain (loss) on investment transactions
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from investments ..................... (806)
-----------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 1,717,061
-----------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
18 - Scudder California Tax Free Money Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Years Ended March 31,
Increase (Decrease) in Net Assets 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income .................................. $ 1,717,867 $ 2,005,687
Net realized gain (loss) from investment transactions .. (806) 459
------------ ------------
Net increase (decrease) in net assets resulting from ... 1,717,061 2,006,146
operations
------------ ------------
Distributions to shareholders from net investment income (1,717,867) (2,005,687)
------------ ------------
Fund share transactions at net asset value of $1.00 per
share:
Shares sold ............................................ 63,965,964 77,305,649
Net asset value of shares issued to shareholders in
reinvestment of distributions .......................... 1,496,686 1,669,253
Shares redeemed ........................................ (64,654,272) (77,124,440)
------------ ------------
Net increase (decrease) in net assets from Fund share .. 808,378 1,850,462
transactions
------------ ------------
Increase (decrease) in net assets ...................... 807,572 1,850,921
Net assets at beginning of period ...................... 70,546,601 68,695,680
------------ ------------
Net assets at end of period ............................ $ 71,354,173 $ 70,546,601
------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
19 - Scudder California Tax Free Money Fund
<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>
Years Ended March 31,
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
----------------------------------------------------------
Net asset value, beginning of period........................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
----------------------------------------------------------
Net investment income.......................................... .025 .029 .028 .032 .027
Less: Distributions from net investment income................. (.025) (.029) (.028) (.032) (.027)
----------------------------------------------------------
Net asset value, end of period................................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
----------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Total Return (%) (a)........................................... 2.52 2.98 2.87 3.28 2.72
Ratios and Supplemental Data
Net assets, end of period ($ millions)......................... 71 71 69 67 64
Ratio of operating expenses, net to average daily net assets (%) .60 .60 .60 .60 .60
Ratio of operating expenses before expense reductions to average .79 .78 .79 .81 .84
daily net assets (%)
Ratio of net investment income to average daily net assets (%). 2.48 2.92 2.83 3.23 2.68
</TABLE>
(a) Total returns would have been lower had certain expenses not been
reduced.
20 - Scudder California Tax Free Money Fund
<PAGE>
Investment Portfolio as of March 31, 1999
<TABLE>
<CAPTION>
Credit
Principal Rating(b) Market
Amount ($) (Unaudited) Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
Short-Term Municipal Investments 0.7%
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
California
California Pollution Control Finance Authority, Southern California Edison, Daily
Demand Note, Series 1986 C, 3.3%, 2/28/2008* ................................... 1,000,000 A1+ 1,000,000
Irvine, CA, Improvement Bond:
District No 94-15, Daily Demand Note, 3%, 9/2/2020* ............................ 1,000,000 MIG1 1,000,000
District No 97-17, Daily Demand Note, 3%, 9/2/2023* ............................ 200,000 MIG1 200,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Short-Term Municipal Investments (Cost $2,200,000) ......................... 2,200,000
- -------------------------------------------------------------------------------------------------------------------------------
Long-Term Municipal Investments 99.3%
- -------------------------------------------------------------------------------------------------------------------------------
ABAG Finance Authority, CA, Nonprofit Corporations, Certificate of Participation,
5.25%, 10/1/2007 ............................................................... 1,900,000 BBB 1,952,554
ABAG Finance Authority, CA, Stanford Health Systems, Certificate of Participation,
6%, 11/1/2007 .................................................................. 605,000 AAA 690,255
Alameda County, CA, Water District Revenue:
Series 1998, 4.6%, 6/1/2013 (c) ................................................ 1,130,000 AAA 1,125,977
Series 1998, 4.75%, 6/1/2015 (c) ............................................... 2,600,000 AAA 2,585,336
Series 1998, 4.625%, 6/1/2016 (c) .............................................. 2,450,000 AAA 2,386,104
Anaheim County, CA, Convention Center Financing, Certificate of Participation,
Zero Coupon, 8/1/2005 (c) ...................................................... 1,250,000 AAA 970,275
Anaheim, CA, Public Finance Authority:
5.25%, 2/1/2018 (c) ............................................................ 2,000,000 AAA 2,052,400
Lease Revenue, Public Improvements Project:
Series 1997A, 6%, 9/1/2024 (c) ................................................ 3,500,000 AAA 4,011,350
Series 1997C, 6%, 9/1/2010 (c) ................................................ 1,000,000 AAA 1,143,310
Series 1997C, 6%, 9/1/2011 (c) (f) ............................................ 4,570,000 AAA 5,230,548
Series 1997C, 6%, 9/1/2014 (c) ................................................ 1,000,000 AAA 1,141,400
Series 1997C, 6%, 9/1/2016 (c) ................................................ 1,000,000 AAA 1,140,520
Series 1997C, Zero Coupon, 9/1/2017 (c) ....................................... 1,455,000 AAA 577,591
Series 1997C, Zero Coupon, 9/1/2018 (c) ....................................... 1,000,000 AAA 374,700
Brea County, CA, Public Finance Authority, Water Revenue, Series 1998, 4.75%,
7/1/2021 ....................................................................... 4,060,000 AAA 3,898,006
California Educational Facilities Authority, Stanford University, Series 1999 P,
5.25%, 12/1/2013 ............................................................... 1,750,000 AAA 1,870,260
The accompanying notes are an integral part of the financial statements.
21 - Scudder California Tax Free Fund
<PAGE>
Credit
Principal Rating(b) Market
Amount ($) (Unaudited) Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
California Health Facilities Finance Authority Revenue:
Capital Appreciation, Kaiser Permanente:
Series 1989 A, Zero Coupon, 10/1/2010 (c) ................................... 3,040,000 AAA 1,808,010
Series 1989 A, Zero Coupon, 10/1/2012 (c) ................................... 4,900,000 AAA 2,586,269
Series 1998 A, 5.25%, 6/1/2012 (c) .......................................... 2,000,000 AAA 2,105,260
Series 1998 B, 5.25%, 10/1/2016 ............................................. 4,000,000 A 3,954,920
Enloe Health Systems:
Series 1998 A, 5.375%, 11/15/2013 (c) ....................................... 2,260,000 AAA 2,393,114
Series 1998 A, 5%, 11/15/2018 (c) ........................................... 1,000,000 AAA 990,080
California Housing Finance Agency:
Home Mortgage Revenue:
Series F1, AMT, 6.2%, 8/1/2005 (c) .......................................... 840,000 AAA 893,416
Series F1, AMT, 6.3%, 8/1/2006 (c) .......................................... 1,310,000 AAA 1,410,870
Series 1995 G, AMT, 5.7%, 2/1/2007 (c) ...................................... 500,000 AAA 531,405
Series 1995 G, AMT, 5.8%, 2/1/2008 (c) ...................................... 1,330,000 AAA 1,410,611
Series 1995 G, AMT, 5.9%, 2/1/2009 (c) ...................................... 200,000 AAA 209,464
Multi-Unit Rental Housing Revenue:
Series A, 7.3%, 8/1/1999 .................................................... 2,435,000 A 2,460,884
Series A, 7.35%, 8/1/2000 ................................................... 2,615,000 A 2,723,287
Series A, 7.4%, 8/1/2001 .................................................... 1,555,000 A 1,651,208
Series A, 7.45%, 8/1/2002 ................................................... 1,015,000 A 1,104,340
Series A, 7.6%, 8/1/2006 .................................................... 4,030,000 A 4,440,899
Series A, 7.65%, 8/1/2007 ................................................... 2,335,000 A 2,569,014
Series A, 7.7%, 8/1/2009 .................................................... 700,000 A 766,906
Series A, 7.75%, 8/1/2016 ................................................... 2,440,000 A 2,665,895
Series A, 7.8%, 8/1/2023 .................................................... 2,635,000 A 2,882,927
Series II, 7.3%, 8/1/1999 ................................................... 325,000 A 328,315
Series II, 7.3%, 8/1/2000 ................................................... 345,000 A 357,475
Series II, 7.3%, 8/1/2001 ................................................... 375,000 A 396,870
Series II, 7.35%, 8/1/2002 .................................................. 400,000 A 430,020
Series II, 7.35%, 8/1/2003 .................................................. 430,000 A 467,496
Series II, 7.35%, 8/1/2004 .................................................. 460,000 A 506,626
Series II, 7.35%, 8/1/2005 .................................................. 495,000 A 550,762
California Pollution Control Finance Authority, Southern California Edison, AMT,
Series 1998 A, 6.9%, 9/1/2006 ................................................ 3,750,000 A 3,872,288
The accompanying notes are an integral part of the financial statements.
22 - Scudder California Tax Free Fund
<PAGE>
Credit
Principal Rating(b) Market
Amount ($) (Unaudited) Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
California Public Works Board, Department of Corrections, Lease Based Revenue,
Medera Prison, Series A-2, 7.4%, 9/1/2010 (c) .................................... 1,000,000 AAA 1,264,040
California Residence Efficiency Finance Authority, Certificate of Participation,
Capital Improvement Program:
Series 1997, 6%, 4/1/2008 (c) ................................................... 1,335,000 AAA 1,514,624
Series 1997, 6%, 4/1/2009 (c) ................................................... 1,420,000 AAA 1,619,496
Series 1997, 6%, 4/1/2010 (c) ................................................... 1,500,000 AAA 1,708,920
Series 1997, 6%, 4/1/2011 (c) ................................................... 1,590,000 AAA 1,814,047
California State General Obligation:
4.25%, 10/1/2004 ................................................................. 5,000,000 AA 5,138,250
4.375%, 10/1/2017 ................................................................ 6,830,000 AA 6,369,453
California Statewide Community Development Authority:
Apartment Development Revenue:
Series 1998 A, 5.1%, 5/15/2025* ................................................. 1,000,000 BBB 999,100
Series 1998 A, 5.25%, 5/15/2025* ................................................ 1,000,000 BBB 1,002,440
Certificate of Participation:
Children's Hospital, Series 1993, 6%, 6/1/2010 (c) .............................. 1,000,000 AAA 1,134,220
Lutheran Homes, Series 1993, 5.5%, 11/15/2008 ................................... 1,500,000 A 1,616,025
Lutheran Homes, Series 1993, 5.6%, 11/15/2013 ................................... 4,750,000 A 5,109,385
Unihealth America, Series A, Zero Coupon, 10/1/2005 (c) ......................... 1,450,000 AAA 1,116,616
Castaic Lake, CA, Water Agency, Certificate of Participation, Water System
Improvement Project, Series 1994 A, 7.25%, 8/1/2007 (c) .......................... 1,000,000 AAA 1,217,230
Center, CA, Unified School District, Capital Appreciation, Series 1997C, Zero
Coupon, 9/1/2014 (c) ............................................................. 2,240,000 AAA 1,063,619
Central Valley, CA, School District Finance Authority, Capital Appreciation:
Zero Coupon, 2/1/2006 (c) ........................................................ 3,300,000 AAA 2,490,708
Zero Coupon, 8/1/2006 (c) ........................................................ 5,035,000 AAA 3,722,778
Zero Coupon, 2/1/2007 (c) ........................................................ 2,210,000 AAA 1,588,504
Zero Coupon, 8/1/2007 (c) ........................................................ 5,510,000 AAA 3,877,883
Chino Basin, CA, Regional Finance Authority, Municipal Water District, Sewer System,
Series 1994, 5.9%, 8/1/2011 (c) .................................................. 1,290,000 AAA 1,463,350
Clovis County, CA, Sewer Development Revenue, Series 1998, 5.5%, 8/1/2019 (c) ...... 1,795,000 AAA 1,902,108
Coronado, CA, Tax Anticipation Note, 6%, 9/1/2007 (c) .............................. 1,150,000 AAA 1,304,158
Delmar, CA, Race Track Authority, Series 1996, 6%, 8/15/2006 ....................... 2,000,000 SKI 2,120,660
The accompanying notes are an integral part of the financial statements.
23 - Scudder California Tax Free Fund
<PAGE>
Credit
Principal Rating(b) Market
Amount ($) (Unaudited) Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
Dry Creek, CA, Joint Elementary School District, Capital Appreciation:
Series 1997A, Zero Coupon, 8/1/2010 (c) .......................................... 1,120,000 AAA 672,627
Series 1997A, Zero Coupon, 8/1/2011 (c) .......................................... 1,180,000 AAA 670,983
Series 1997A, Zero Coupon, 8/1/2016 (c) .......................................... 555,000 AAA 235,398
Series 1997A, Zero Coupon, 8/1/2021 (c) .......................................... 1,920,000 AAA 611,002
Series 1997A, Zero Coupon, 5/1/2022 (c) .......................................... 1,385,000 AAA 423,658
Duarte, CA, Certificate of Participation:
City of Hope Medical Center:
Series 1993, 5.75%, 4/1/2002 .................................................... 3,525,000 BBB 3,733,539
Series 1993, 5.8%, 4/1/2003 ..................................................... 3,735,000 BBB 4,019,831
Series 1993, 6%, 4/1/2008 ....................................................... 3,750,000 BBB 4,128,300
Series 1999 A, 5.25%, 4/1/2024 (e) ............................................... 1,250,000 BBB 1,222,763
Series 1999 A, 5.25%, 4/1/2031 (e) ............................................... 2,750,000 BBB 2,667,143
Elk Grove, CA, Unified School District #1, Special Tax, Community Facilities, 6.5%,
12/1/2008 (c) .................................................................... 1,000,000 AAA 1,182,000
Encinitas, CA, Certificate of Participation, Series 1997A, 5%, 12/1/2016 (c) ....... 1,000,000 AAA 1,016,410
Escondido County, CA, Unified School District, Capital Appreciation, Zero Coupon,
11/1/2018 (c) .................................................................... 4,605,000 AAA 1,717,573
Foothill Eastern Transportation Corridor Agency, CA, Toll Road Revenue, Senior Lien:
Series 1995 A, Step-up Coupon, 0% to 1/1/2005, 6.95% to 1/1/2007 ................. 575,000 BBB 461,374
Series 1995 A, Step-up Coupon, 0% to 1/1/2005, 7.1% to 1/1/2011 (f) .............. 6,000,000 BBB 5,054,640
Series A, Step-up Coupon, 0% to 1/1/2005, 7.15% to 1/1/2013 ...................... 975,000 BBB 819,761
Series A, Step-up Coupon 0% to 1/1/2005, 7.15% to 1/1/2014 ....................... 2,875,000 BBB 2,405,398
Healdsburg, CA, Unified School District, Capital Appreciation:
Series 1997, Zero Coupon, 7/15/2011 (c) .......................................... 400,000 AAA 227,916
Series 1997, Zero Coupon, 7/15/2012 (c) .......................................... 400,000 AAA 214,908
Series 1997, Zero Coupon, 7/15/2013 (c) .......................................... 400,000 AAA 202,816
Series 1997, Zero Coupon, 7/15/2014 (c) .......................................... 400,000 AAA 191,108
Inland Empire Solid Waste Finance Authority, California Landfill Improvement
Financing Project, Series 1996 B, AMT, 6%, 8/1/2006 (c) .......................... 1,000,000 AAA 1,109,200
Los Angeles County, CA, Certificate of Participation:
Capital Appreciation, Disney Parking Project:
Zero Coupon, 9/1/2006 ........................................................... 2,500,000 BBB 1,782,950
Zero Coupon, 3/1/2008 ........................................................... 2,780,000 BBB 1,825,987
Zero Coupon, 9/1/2008 ........................................................... 4,865,000 BBB 3,121,043
The accompanying notes are an integral part of the financial statements.
24 - Scudder California Tax Free Fund
<PAGE>
Credit
Principal Rating(b) Market
Amount ($) (Unaudited) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Marina Del Ray:
Series A, 6.25%, 7/1/2003 ....................................................... 2,500,000 SKI 2,623,925
Series A, 6.5%, 7/1/2008 ........................................................ 2,500,000 SKI 2,725,500
Los Angeles County, CA, Convention and Exhibition Center, Authority Lease
Revenue, Series 1993A, 6.125%, 8/15/2011 (c) ..................................... 1,000,000 AAA 1,152,820
Los Angeles, CA, Authority Lease Revenue, Department of General Services, Series
1993 A, 5.6%, 5/1/2008 ........................................................... 7,000,000 A 7,705,670
Midpeninsula Regional Open Space District, CA, Finance Authority Revenue, Capital
Appreciation, Zero Coupon, 9/1/2020 (c) .......................................... 1,190,000 AAA 397,174
Millbrae, CA Residential Facilities Revenue, Magnolia of Millbrae Project,
Series 1997A, AMT, 7.375%, 9/1/2027 .............................................. 4,000,000 SKI 4,288,720
Modesto, CA, Certificate of Participation, Community Project, Series A, 5.6%,
11/1/2014 (c) .................................................................... 1,370,000 AAA 1,505,082
Modesto, CA, Wastewater Facilities Treatment Revenue, Series 1997, AMT, 6%,
11/1/2011 (c) .................................................................... 1,255,000 AAA 1,438,217
Mojave Desert & Mountain Region, CA, Solid Waste Joint Powers Authority,
7.875%, 6/1/2020 ................................................................. 2,350,000 BBB 2,659,190
Oakland, CA, Port Revenue, AMT, Series 1997G, 5.375%, 11/1/2025 .................... 1,000,000 AAA 1,022,230
Orange County, CA, Recovery Certificate of Participation:
Series 1995A, 5.6%, 6/1/2007 (c) ................................................. 4,430,000 AAA 4,899,890
Series 1996A, 6%, 7/1/2006 (c) ................................................... 3,000,000 AAA 3,378,180
Series 1996A, 6%, 7/1/2008 (c) ................................................... 1,000,000 AAA 1,137,540
Pomona, CA, Unified School District, General Obligation, ETM:
Series 1992B, 6.25%, 8/1/2014 (c)** .............................................. 1,020,000 AAA 1,188,861
Series 1993D, 5.6%, 8/1/2014 (c)** ............................................... 170,000 AAA 186,182
Series 1993D, 5.6%, 8/1/2015 (c)** ............................................... 180,000 AAA 197,235
Series 1993D, 5.6%, 8/1/2016 (c)** ............................................... 190,000 AAA 207,501
Series 1993D, 5.6%, 8/1/2017 (c)** ............................................... 175,000 AAA 191,032
Series 1993D, 5.6%, 8/1/2018 (c)** ............................................... 205,000 AAA 223,591
Port of Hueneme, CA, Certificate of Participation, Capital Improvement, 6%,
4/1/2019 (c) ..................................................................... 925,000 AAA 1,046,157
Richmond, CA, Joint Powers Finance Authority:
Series 1996, 5.875%, 9/1/2006 .................................................... 500,000 BBB 540,145
Series 1996, 6.6%, 9/1/2016 ...................................................... 1,000,000 BBB 1,104,730
Riverside County, CA, Asset Leasing Corp., Leasehold Revenue Project:
Series 1998, Zero Coupon, 6/1/2015 (c) ........................................... 1,750,000 AAA 791,333
Series 1997, Zero Coupon, 6/1/2016 (c) ........................................... 2,395,000 AAA 1,020,797
The accompanying notes are an integral part of the financial statements.
25 - Scudder California Tax Free Fund
<PAGE>
Credit
Principal Rating(b) Market
Amount ($) (Unaudited) Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
Rocklin, CA, Unified School District, Community Facilities:
Zero Coupon, 9/1/2019 (c) ........................................................ 1,675,000 AAA 594,324
Zero Coupon, 9/1/2020 (c) ........................................................ 1,415,000 AAA 474,237
Sacramento, CA, Power Authority Cogeneration Project, Series 1995, 6.5%, 7/1/2004... 2,000,000 BBB 2,208,600
Sacramento, CA, City Finance Authority Lease, Series 1993B, 5%, 11/1/2014 .......... 5,200,000 A 5,307,276
Sacramento, CA, City Finance Authority Revenue, Capital Appreciation, Tax
Allocation, Series 1993B, Zero Coupon, 11/1/2016 (c) ............................. 2,685,000 AAA 1,124,800
Saddleback Valley Unified School District, Public Finance Authority, Special Tax
Revenue:
Series 1997A, 6%, 9/1/2010 (c) .................................................. 1,565,000 AAA 1,789,280
Series 1997A, 6%, 9/1/2013 (c) .................................................. 1,000,000 AAA 1,141,760
Series 1997A, 6%, 9/1/2014 (c) .................................................. 1,000,000 AAA 1,141,400
Series 1997A, 6%, 9/1/2015 (c) .................................................. 1,000,000 AAA 1,140,110
San Bernadino, CA, Certificate of Participation, Medical Center Financing Project:
Series 1994, 6%, 8/1/2009 (c) .................................................... 3,000,000 AAA 3,402,930
Series 1994, 5.5%, 8/1/2017 (c) .................................................. 3,965,000 AAA 4,245,365
San Bernardino County, CA, Certificate of Participation, 5.25%, 2/1/2015 (c) ....... 2,215,000 AAA 2,312,194
San Diego, CA, Water Utility Funding, Network System Revenue:
5.375%, 8/1/2014 (c) ............................................................. 1,000,000 AAA 1,061,620
5.375%, 8/1/2015 (c) ............................................................. 2,000,000 AAA 2,112,320
San Diego County, CA, Water Authority, Certificate of Participation, Series A,
5.125%, 5/1/2016 ................................................................. 11,175,000 AA 11,426,326
San Francisco, CA, City and County Redevelopment Agency Residential Facility,
Coventry Park Project, Series 1996A, AMT, 8.5%, 12/1/2026 ........................ 2,000,000 SKI 2,289,420
San Francisco, CA, Redevelopment Finance Agency, Tax Allocation Revenue,
Series A, Zero Coupon, 8/1/2003 (c) .............................................. 1,080,000 AAA 916,672
San Joaquin Hills, CA, Transportation Corridor Agency, Toll Road Revenue:
Capital Appreciation Refunding:
Series 1997A, Zero Coupon, 1/15/2010 (c) ........................................ 3,500,000 AAA 2,154,075
Series 1997 A, Zero Coupon, 1/15/2012 (c) ....................................... 2,500,000 AAA 1,374,950
Junior Lien, ETM:
Series 1993, Zero Coupon, 1/1/2002** ............................................ 515,000 AAA 465,107
Series 1993, Step-up Coupon, 0% to 1/1/2002, 7.3% to 1/1/2004** ................. 1,000,000 AAA 955,740
Series 1993, Zero Coupon, 1/1/2006** ............................................ 200,000 AAA 151,372
Series 1993, Zero Coupon, 1/1/2010** ............................................ 1,500,000 AAA 926,745
The accompanying notes are an integral part of the financial statements.
26 - Scudder California Tax Free Fund
<PAGE>
Credit
Principal Rating(b) Market
Amount ($) (Unaudited) Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
Senior Lien, ETM:
Series 1993, Zero Coupon, 1/1/2000** ............................................ 1,500,000 AAA 1,465,140
Step-up Coupon, 0% to 1/1/2002, 7.35% to 1/1/2005** ............................. 2,500,000 AAA 2,448,175
Series 1993, Step-up Coupon, 0% to 1/1/2002, 7.4% to 1/1/2007** ................. 6,000,000 AAA 6,121,320
Series 1993, Zero Coupon, 1/1/2014** ............................................ 2,500,000 AAA 1,231,225
Series 1997A, Zero Coupon, 1/15/2003 (c) ......................................... 900,000 AAA 779,787
Series 1997A, Zero Coupon, 1/15/2004 (c) ......................................... 400,000 AAA 331,984
Series 1997A, Zero Coupon, 1/15/2005 (c) ......................................... 1,900,000 AAA 1,507,289
San Jose, CA, Financing Revenue, Community Facilities Project:
Series 1993 B, Zero Coupon, 11/15/2003 ........................................... 735,000 A 613,431
Series 1993 B, Zero Coupon, 11/15/2004 ........................................... 1,605,000 A 1,280,373
Series 1993 B, Zero Coupon, 11/15/2005 ........................................... 1,605,000 A 1,221,180
Series 1993 B, Zero Coupon, 11/15/2006 ........................................... 1,605,000 A 1,161,362
San Jose, CA, Unified School District, Santa Clara County, Capital Appreciation,
Series 1997A, Zero Coupon, 8/1/2013 (c) .......................................... 2,445,000 AAA 1,237,097
San Mateo, CA, Transportation District, Series 1997A, 5.5%, 6/1/2015 (c) ........... 2,250,000 AAA 2,436,120
Santa Ana, CA, Finance Authority, Lease Revenue Bonds, Police Administration and
Holding Facility, Series 1994A, 6.25%, 7/1/2024 (c) .............................. 2,000,000 AAA 2,362,560
Santa Clara County, CA, Finance Authority, Lease Revenue, VMC Replacement Project,
7.75%, 11/15/2008 (c) ............................................................ 3,250,000 AAA 4,149,958
Santa Cruz County, CA, Certificate of Participation, Capital Facilities Project:
Series 1997, 5.5%, 9/1/2016 (c) .................................................. 955,000 AAA 1,033,262
Series 1997, 5.5%, 9/1/2017 (c) .................................................. 1,005,000 AAA 1,083,923
Series 1997, 5.5%, 9/1/2018 (c) .................................................. 1,060,000 AAA 1,140,422
Series 1997, 5.6%, 9/1/2019 (c) .................................................. 1,115,000 AAA 1,210,422
Series 1997, 5.6%, 9/1/2020 (c) .................................................. 1,180,000 AAA 1,278,884
Series 1997, 5.65%, 9/1/2024 (c) ................................................. 1,445,000 AAA 1,578,793
Series 1997, 5.65%, 9/1/2025 (c) ................................................. 1,520,000 AAA 1,662,029
Series 1997, 5.65%, 9/1/2026 (c) ................................................. 1,605,000 AAA 1,757,154
Santa Margarita/Dana Point, CA:
Improvement Districts 1-2-2A and 8, Series 1994 A, 7.25%, 8/1/2006 (c) ........... 465,000 AAA 558,786
Improvement Districts 3, 3A, 4 and 4A, Series 1994 B, 7.25%, 8/1/2005 (c) ........ 2,895,000 AAA 3,429,938
Simi Valley California, Certificate of Participation, Series 1998, 5.25%, 8/1/2017 (c) 575,000 AAA 600,542
South Orange County, CA, Public Power Authority, Special Tax Revenue, 7%,
9/1/2006 (c) ..................................................................... 2,230,000 AAA 2,649,285
The accompanying notes are an integral part of the financial statements.
27 - Scudder California Tax Free Fund
<PAGE>
Credit
Principal Rating(b) Market
Amount ($) (Unaudited) Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
Southern California Public Power Authority:
Series 1989, 6.75%, 7/1/2010 ..................................................... 6,000,000 A 7,140,000
Transmission Project Revenue, Capital Appreciation, Zero Coupon, 7/1/2015 ........ 2,000,000 AA 903,540
Torrance, CA, Redevelopment Agency, Tax Allocation, Sub Lien:
5.1%, 9/1/2008 ................................................................... 495,000 SKI 499,252
5.2%, 9/1/2009 ................................................................... 540,000 SKI 544,644
5.3%, 9/1/2010 ................................................................... 605,000 SKI 612,835
5.4%, 9/1/2011 ................................................................... 665,000 SKI 673,226
5.625%, 9/1/2028 ................................................................. 1,000,000 SKI 1,001,030
Ukiah, CA, Unified School District, Series 1997, Zero Coupon, 8/1/2010 (c) ......... 1,200,000 AAA 720,672
Vallejo Sanitation & Flood Control District, Solano County, CA, Certificate of
Participation, 5%, 7/1/2019 (c) .................................................. 2,500,000 AAA 2,512,500
Watsonville, CA, Community Hospital Revenue, Series 1996, 5.95%, 7/1/2007 .......... 1,135,000 A 1,277,250
West Covina, CA, Queen of the Valley Hospital, Certificate of Participation, Hospital
Revenue:
Series 1994, 5.7%, 8/15/2000 .................................................... 380,000 A 392,924
Series 1994, 5.8%, 8/15/2001 .................................................... 750,000 A 790,568
West Covina, CA, Redevelopment Agency Facility, Series 1996, 5.75%, 9/1/2009 ....... 865,000 A 947,305
Westminster, CA, Redevelopment Agency, Tax Allocation Revenue, Community
Development, Project #1, Series A, 7.3%, 8/1/2021 (d) ............................ 2,690,000 AAA 2,973,418
Whittier, CA, Presbyterian Intercommunity Hospital, Health Facilities Revenue:
6.25%, 6/1/2008 (c) .............................................................. 1,000,000 AAA 1,147,190
6.25%, 6/1/2010 (c) .............................................................. 1,250,000 AAA 1,449,813
Virgin Islands
Virgin Islands, General Obligation, Public Finance Authority, Mortgage Fund Loan
Notes, ETM, Series 1992 A, 7%, 10/1/2002** ....................................... 1,000,000 SKI 1,108,100
Virgin Islands, Public Finance Revenue Bonds, 6%, 10/1/2006 ........................ 3,720,000 SKI 3,888,814
Virgin Islands, Special Tax Bonds, Hugo Bonds, 7.75%, 10/1/2006 (d) ................ 1,470,000 SKI 1,607,342
- -------------------------------------------------------------------------------------------------------------------------------
Total Long-Term Municipal Investments (Cost $312,228,988) .......................... 335,364,348
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $314,428,988) (a) ....................... 337,564,348
- -------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
28 - Scudder California Tax Free Fund
<PAGE>
- -------------------------------------------------------------------------------------------------------------------------------
(a) The cost for federal income tax purposes was $314,428,988. At March 31,
1999, net unrealized appreciation for all securities based on tax cost was
$23,135,360. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $23,462,724 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$327,364.
(b) All of the securities held have been determined to be of appropriate
credit quality as required by the Fund's investment objectives. Credit
ratings shown are assigned by either Standard & Poor's Rating Group,
Moody's Investors Service, Inc. or Fitch Investors Service, Inc.
Securities rated by Scudder Kemper Investments, Inc. (SKI) have been
determined by the Adviser to be of comparable quality to rated securities.
(c) Bond is insured by one of these companies: AMBAC, Capital Guaranty,
FGIC, FSA, MBIA, or MBIA/BIG.
(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 issues and to retire the bonds in
full at the earliest refunding date.
(e) When issued or forward delivery securities (See Note A in Notes to
Financial Statements).
(f) At March 31, 1999, 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 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.
AMT: Subject to alternative minimum tax
</TABLE>
The accompanying notes are an integral part of the financial statements.
29 - Scudder California Tax Free Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of March 31, 1999
<TABLE>
<CAPTION>
Assets
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investments, at market (identified cost $314,428,988) ................. $ 337,564,348
Cash .................................................................. 743,679
Receivable for investments sold ....................................... 2,793,295
Interest receivable ................................................... 3,872,889
Receivable for Fund shares sold ....................................... 5,821
Other assets .......................................................... 6,703
----------------
Total assets .......................................................... 344,986,735
Liabilities
- -----------------------------------------------------------------------------------------------------------------------------
Dividends payable ..................................................... 455,633
Payable for investments purchased ..................................... 3,901,340
Payable for Fund shares redeemed ...................................... 82,029
Accrued management fee ................................................ 174,541
Other payables and accrued expenses ................................... 114,500
----------------
Total liabilities ..................................................... 4,728,043
-------------------------------------------------------------------------------------------
Net assets, at market value ........................................... $ 340,258,692
-------------------------------------------------------------------------------------------
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Net unrealized appreciation (depreciation) on investments ............. 23,135,360
Accumulated net realized gain (loss) .................................. (4,617,362)
Paid-in capital ....................................................... 321,740,694
-------------------------------------------------------------------------------------------
Net assets, at market value ........................................... $ 340,258,692
-------------------------------------------------------------------------------------------
Net Asset Value
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($340,258,692 / 30,428,525 outstanding shares of beneficial ----------------
interest, $.01 par value, unlimited number of shares authorized) .. $11.18
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
30 - Scudder California Tax Free Fund
<PAGE>
Statement of Operations
year ended March 31, 1999
<TABLE>
<CAPTION>
Investment Income
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Income:
Interest ............................................................... $ 17,776,156
----------------
Expenses:
Management fee ......................................................... 2,058,110
Services to shareholders ............................................... 208,389
Custodian and accounting fees 128,168
Trustees' fees and expenses ............................................ 25,167
Auditing ............................................................... 41,827
Reports to shareholders ................................................ 37,577
Legal .................................................................. 9,655
Registration fees ...................................................... 13,553
Other .................................................................. 9,959
----------------
......................................................................................... 2,532,405
-------------------------------------------------------------------------------------------
Net investment income .................................................. 15,243,751
-------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments ............................................................ 3,392,077
Futures ................................................................ (83,228)
----------------
......................................................................................... 3,308,849
Net unrealized appreciation (depreciation) on investments during the ... 363,460
period
-------------------------------------------------------------------------------------------
Net gain (loss) on investment transactions ............................. 3,672,309
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations ........ $ 18,916,060
-------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
31 - Scudder California Tax Free Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Years Ended March 31,
Increase (Decrease) in Net Assets 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ................................ $ 15,243,751 $ 14,707,556
Net realized gain (loss) from investment transactions 3,308,849 1,470,400
Net unrealized appreciation (depreciation) on
investment transactions during the period............. 363,460 17,754,593
---------------- ----------------
Net increase (decrease) in net assets resulting from . 18,916,060 33,932,549
operations
---------------- ----------------
Distributions to shareholders from:
Net investment income ................................ (15,243,751) (14,707,556)
---------------- ----------------
Net realized gains from investment transactions -- (567,059)
---------------- ----------------
Fund share transactions:
Proceeds from shares sold ............................ 60,022,937 57,885,567
Net asset value of shares issued to shareholders in
reinvestment of distributions......................... 9,780,792 9,574,561
Cost of shares redeemed .............................. (57,666,190) (50,245,259)
---------------- ----------------
Net increase (decrease) in net assets from Fund share 12,137,539 17,214,869
transactions
---------------- ----------------
Increase (decrease) in net assets .................... 15,809,848 35,872,803
Net assets at beginning of period .................... 324,448,844 288,576,041
---------------- ----------------
Net assets at end of period .......................... $ 340,258,692 $ 324,448,844
---------------- ----------------
Other Information
- -----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period ............ 29,339,439 27,774,183
---------------- ----------------
Shares sold .......................................... 5,371,062 5,326,399
Shares issued to shareholders in reinvestment of ..... 874,961 880,019
distributions
Shares redeemed ...................................... (5,156,937) (4,641,162)
---------------- ----------------
Net increase (decrease) in Fund shares ............... 1,089,086 1,565,256
---------------- ----------------
Shares outstanding at end of period .................. 30,428,525 29,339,439
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
32 - Scudder California Tax Free Fund
<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>
Years Ended March 31,
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ......................... $ 11.06 $ 10.39 $ 10.36 $ 10.07 $ 10.02
----------------------------------------------------------
Income from investment operations:
Net investment income ........................................ 51 .52 .52 .51 .51
Net realized and unrealized gain (loss) on investment transactions 12 .69 .04 .29 .14
Total from investment operations ............................. 63 1.21 .56 .80 .65
Less distributions:
From net investment income ................................... (.51) (.52) (.52) (.51) (.51)
From net realized gains on investment transactions -- (.02) (.01) -- (.09)
Total distributions .......................................... (.51) (.54) (.53) (.51) (.60)
Net asset value, end of period ............................... $ 11.18 $ 11.06 $ 10.39 $ 10.36 $ 10.07
- -----------------------------------------------------------------------------------------------------------------------------
Total Return (%) ............................................. 5.78 11.85 5.44 8.01 6.75
Ratios and Supplemental Data
Net assets, end of period ($ millions) ....................... 340 324 289 293 294
Ratio of operating expenses to average daily net .76 .78 .78 .77 .80
assets (%)
Ratio of net investment income to average daily net assets (%) 4.55 4.79 4.98 4.88 5.18
Portfolio turnover rate (%) .................................. 40.6 21.5 70.8 49.2 87.3
</TABLE>
33 - Scudder California Tax Free Fund
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Scudder California Tax Free Money Fund ("Tax Free Money Fund"), a
non-diversified fund, and Scudder California Tax Free Fund ("Tax Free Fund"), a
diversified fund, are each a series of Scudder California Tax Free Trust (the
"Trust") which is organized as a Massachusetts business trust and registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end management investment company.
The Funds' 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 Funds in the
preparation of their financial statements.
Security Valuation. Tax Free Money Fund values all portfolio securities
utilizing the amortized cost method permitted in accordance with Rule 2a-7 under
the 1940 Act, and pursuant to which Tax Free Money Fund must adhere to certain
conditions. Under this method, which does not take into account unrealized gains
and losses on securities, an instrument is initially valued at its cost and
thereafter assumes a constant accretion/amortization to maturity of any
discount/premium.
Tax Free Fund's portfolio debt securities 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 investments 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 Tax Free 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 Tax Free Fund to the issuer and no interest accrues to the Tax Free
Fund. At the time of settlement, the market value of the security may be more or
less than the purchase price. The Fund will establish a segregated account in
which it will maintain cash and liquid debt securities equal in value to
commitments for when-issued or forward delivery securities.
Futures Contracts. A futures contract is an agreement between a buyer or seller
and an established futures exchange or its clearinghouse in which the buyer or
seller agrees to take or make a delivery of a specific amount of an item at a
specified price on a specific date (settlement date). During the year ended
March 31, 1999, the Tax Free Fund purchased interest rate futures to manage the
duration of the portfolio and sold interest rate futures to hedge against
declines in the value of portfolio securities.
Upon entering into a futures contract, the Tax Free 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 Tax Free Fund each
day, dependent upon the daily fluctuations in the value of the underlying
security, and are recorded for financial reporting purposes as unrealized gains
or losses by the Tax Free Fund. When entering into a closing transaction, the
Tax Free 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.
34 - Scudder California Tax Free Money Fund
Scudder California Tax Free Fund
<PAGE>
Certain risks may arise upon entering into futures contracts including the risk
that an illiquid secondary market will limit the Tax Free 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 or currencies hedged. When utilizing futures contracts
to hedge, the Tax Free Fund gives up the opportunity to profit from favorable
price movements in the hedged positions during the term of the contract.
Options. An option contract is a contract in which the writer of the option
grants the buyer of the option the right to purchase from (call option), or sell
to (put option), the writer a designated instrument at a specified price within
a specified period of time. Certain options, including options on indices, will
require cash settlement by the Tax Free Fund if the option is exercised. During
the year ended March 31, 1999, the Tax Free Fund purchased put options to hedge
against declines in the value of portfolio securities and purchased call options
on interest rate futures to manage the duration of the portfolio.
If the Tax Free Fund writes an option and the option expires unexercised, the
Tax Free Fund will realize income, in the form of a capital gain, to the extent
of the amount received for the option (the "premium"). If the Tax Free Fund
elects to close out the option it would recognize a gain or loss based on the
difference between the cost of closing the option and the initial premium
received. If the Tax Free Fund purchased an option and allows the option to
expire it would realize a loss to the extent of the premium paid. If the Tax
Free Fund elects to close out the option it would recognize a gain or loss equal
to the difference between the cost of acquiring the option and the amount
realized upon the sale of the option.
The gain or loss recognized by the Tax Free Fund upon the exercise of a written
call or purchased put option is adjusted for the amount of option premium. If a
written put or purchased call option is exercised the Tax Free Fund's cost basis
of the acquired security or currency would be the exercise price adjusted for
the amount of the option premium.
The liability representing the Tax Free Fund's obligation under an exchange
traded written option or investment in a purchased option is valued at the last
sale price or, in the absence of a sale, the mean between the closing bid and
asked price or at the most recent asked price (bid for purchased options) if no
bid and asked price are available. Over-the-counter written or purchased options
are valued using dealer supplied quotations.
When the Tax Free Fund writes a covered call option, the Tax Free Fund foregoes,
in exchange for the premium, the opportunity to profit during the option period
from an increase in the market value of the underlying security above the
exercise price. When the Tax Free Fund writes a put option it accepts the risk
of a decline in the market value of the underlying security below the exercise
price. Over-the-counter options have the risk of the potential inability of
counterparties to meet the terms of their contracts. The Tax Free Fund's maximum
exposure to purchased options is limited to the premium initially paid. In
addition, certain risks may arise upon entering into option contracts including
the risk that an illiquid secondary market will limit the Tax Free Fund's
ability to close out an option contract prior to the expiration date and, that a
change in the value of the option contract may not correlate exactly with
changes in the value of the securities hedged.
Amortization and Accretion. All premiums and original issue discounts are
amortized/accreted for both tax and financial reporting purposes.
Federal Income Taxes. The Funds' 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 their taxable and tax-exempt
income to their shareholders. Accordingly, the Funds paid no federal income
taxes and no federal income tax provisions were required.
35 - Scudder California Tax Free Money Fund
Scudder California Tax Free Fund
<PAGE>
As of March 31, 1999, the Tax Free Money Fund had a net tax basis capital loss
carryforward of approximately $95,300, which may be applied against any realized
net taxable capital gains of each succeeding year until fully utilized or until
March 31, 2000 ($13,600), March 31, 2002 ($7,500), March 31, 2003 ($55,200),
March 31, 2004 ($17,800), March 31, 2005 ($400) and March 31, 2007 ($800), the
respective expiration dates, whichever occurs first.
As of March 31, 1999, the Tax Free Fund had a net tax basis capital loss
carryforward of approximately $2,400,000, which may be applied against any
realized net taxable capital gains of each succeeding year until fully utilized
or until March 31, 2003 ($2,000,000) and March 31, 2004 ($400,000), the
respective expiration dates, whichever occurs first.
Distribution of Income and Gains. All of the net investment income of the Funds
is declared as dividends 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 Funds 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.
The timing and characterization of certain income and capital gains
distributions are determined in accordance with federal tax regulations which
may differ from generally accepted accounting principles. These differences
primarily relate to investments in options, futures, and certain securities sold
at a loss for the Tax Free Fund. 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
Funds may periodically make reclassifications among certain of their capital
accounts without impacting the net asset value of the Funds.
The Funds use the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.
Other. Investment security transactions are accounted for on a trade-date basis.
Distributions of net realized gains to shareholders are recorded on the
ex-dividend date. 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 March 31, 1999, purchases and sales of long-term municipal
securities aggregated $142,092,189 and $133,209,919, respectively, for the Tax
Free Fund.
The aggregate face value of futures contracts opened and closed during the year
ended March 31, 1999 for the Tax Free Fund, was $229,005,184.
C. Related Parties
Under the Management Agreements (each an "Agreement" and collectively the
"Agreements") with Scudder Kemper Investments, Inc. ("Scudder Kemper" or the
"Adviser"), the Adviser directs the investments of the Funds in accordance with
their 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 Funds. In addition to portfolio
management services, the Adviser provides certain administrative services in
accordance with the Agreements. The management fee payable under the Agreements
is equal to an annual rate of .50% of the average daily net assets of Tax Free
Money Fund, and .625% of the first
36 - Scudder California Tax Free Money Fund
Scudder California Tax Free Fund
<PAGE>
$200,000,000 of the average daily net assets and .60% of such net assets in
excess of $200,000,000 for Tax Free Fund, computed and accrued daily and payable
monthly. For the year ended March 31, 1999, the fee for the Tax Free Fund
pursuant to these Agreements amounted to $2,058,110, of which $174,541 is unpaid
at March 31, 1999. This was equivalent to an annual effective rate of .61% of
the Fund's average daily net assets.
With respect to Tax Free Money Fund, the Adviser has agreed not to impose all or
a portion of its management fee until July 31, 1999 and during such period to
maintain the annualized expenses of Tax Free Money Fund at not more than .60% of
average daily net assets. For the year ended March 31, 1999, the Adviser did not
impose a portion of its fee amounting to $131,057, and the portion imposed
amounted to $214,715, of which $19,906 is unpaid at March 31, 1999.
Effective September 7, 1998, Zurich Insurance Company ("Zurich"), majority owner
of the Adviser, entered into an agreement with B.A.T Industries p.l.c. ("B.A.T")
pursuant to which the financial services businesses of B.A.T were combined with
Zurich's businesses to form a new global insurance and financial services
company known as Zurich Financial Services. Upon consummation of the
transaction, each Funds' Management Agreement with Scudder Kemper was deemed to
have been assigned and, therefore, terminated. In December 1998, the Board of
Trustees and the shareholders of the Funds approved new investment management
agreements with Scudder Kemper, which is substantially identical to the former
Management Agreements, except for the dates of execution and termination.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend-paying and shareholder service agent for the Funds. For the
year ended March 31, 1999, the amount charged to the Funds by SSC aggregated
$59,762 for the Tax Free Money Fund and $149,887 for the Tax Free Fund, of which
$4,539 and $12,170, respectively, are unpaid at March 31, 1999.
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 for the Funds. For the year ended
March 31, 1999, the amount charged to the Funds by SFAC aggregated $30,000 for
the Tax Free Money Fund and $68,917 for the Tax Free Fund, of which $5,000 and
$5,665, respectively, are unpaid at March 31, 1999.
Each Fund pays each Trustee not affiliated with the Adviser an annual retainer
allocated between the Funds, plus specified amounts for attended board and
committee meetings. For the year ended March 31, 1999, Trustees' fees and
expenses aggregated $18,142 for the Tax Free Money Fund and $25,167 for Tax Free
Fund.
D. Lines of Credit
The Funds and several 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 Funds may
borrow up to a maximum of 33 percent of their net assets under the agreement.
37 - Scudder California Tax Free Money Fund
Scudder California Tax Free Fund
<PAGE>
Report of Independent Accountants
To the Trustees of Scudder California Tax Free Trust and the Shareholders of
Scudder California Tax Free Money Fund and Scudder California Tax Free Fund:
In our opinion, the accompanying statements of assets and liabilities, including
the investment portfolios, 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 California Tax Free Money
Fund and Scudder California Tax Free Fund (the "Funds") at March 31, 1999, the
results of their operations for the year then ended and the changes in their net
assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended, in conformity
with generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Funds' 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 March 31, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
Boston, Massachusetts PricewaterhouseCoopers LLP
May 7, 1999
38 - Scudder California Tax Free Money Fund
Scudder California Tax Free Fund
<PAGE>
Tax Information
Of the dividends paid by Scudder California Tax Free Money Fund and Scudder
California Tax Free Fund from net investment income for the taxable year ended
March 31, 1999, 100% are designated as exempt interest dividends for federal
income tax purposes.
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 1-800-SCUDDER.
39 - Scudder California Tax Free Money Fund
Scudder California Tax Free Fund
<PAGE>
Shareholder Meeting Results
A Special Meeting of Shareholders (the "Meeting") of Scudder California Tax Free
Money Fund (the "Fund") was held on December 15, 1998, at the office of Scudder
Kemper Investments, Inc., Two International Place, Boston, Massachusetts 02110.
At the Meeting the following matters were voted upon by the shareholders (the
resulting votes for each matter are presented below).
1. To approve a new Investment Management Agreement for the Fund with Scudder
Kemper Investments, Inc.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
35,862,663 1,236,919 964,391 0
2. To approve the revision of the Fund's fundamental lending policy.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
34,416,579 2,142,100 1,493,077 12,217
- --------------------------------------------------------------------------------
* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary
power to vote on a particular matter.
40 - Scudder California Tax Free Money Fund
<PAGE>
Shareholder Meeting Results
A Special Meeting of Shareholders (the "Meeting") of Scudder California Tax Free
Fund (the "Fund") was held on December 15, 1998, at the office of Scudder Kemper
Investments, Inc., Two International Place, Boston, Massachusetts 02110. At the
Meeting the following matters were voted upon by the shareholders (the resulting
votes for each matter are presented below).
1. To approve a new Investment Management Agreement for the Fund with Scudder
Kemper Investments, Inc.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
18,828,737 594,005 833,759 0
2. To approve the revision of the Fund's fundamental lending policy.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
17,824,988 865,144 1,268,075 298,294
- --------------------------------------------------------------------------------
* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary
power to vote on a particular matter.
41 - Scudder California Tax Free Fund
<PAGE>
This Page
intentionally
left blank.
42 - Scudder California Tax Free Money Fund
Scudder California Tax Free Fund
<PAGE>
This Page
intentionally
left blank.
43 - Scudder California Tax Free Money Fund
Scudder California Tax Free Fund
<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 and
Trustee
George M. Lovejoy, Jr.
Trustee; President and Director,
Fifty Associates
Wesley W. Marple, Jr.
Trustee; Professor of Business
Administration, Northeastern
University, College of Business
Administration
Kathryn L. Quirk*
Trustee, Vice President and
Assistant Secretary
Jean C. Tempel
Trustee; Venture Partner,
Venture Capital Group
Ann M. McCreary*
Vice President
Thomas W. Joseph*
Vice President
Jeremy L. Ragus*
Vice President
Rebecca L. Wilson*
Vice President
John R. Hebble*
Treasurer
Caroline Pearson*
Assistant Secretary
* Scudder Kemper Investments, Inc.
44 - Scudder California Tax Free Money Fund
Scudder California 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
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.
45 - Scudder California Tax Free Money Fund
Scudder California Tax Free Fund
<PAGE>
Scudder Solutions
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Investment Plan QuickBuy
A convenient investment program in which money is Lets you purchase Scudder fund shares electronically, avoiding
electronically debited from your bank account monthly to potential mailing delays; money for each of your transactions
regularly purchase fund shares and "dollar cost average" is electronically debited from a previously designated bank
-- buy more shares when the fund's price is lower and account.
fewer when it's higher, which can reduce your average
purchase price over time.*
Automatic Dividend Transfer Payroll Deduction and Direct Deposit
The most timely, reliable, and convenient way to Have all or part of your paycheck -- even government
purchase shares -- use distributions from one Scudder checks -- invested in up to four Scudder funds at
fund to purchase shares in another, automatically one time.
(accounts with identical registrations or the same
social security or tax identification number).
* Dollar cost averaging involves continuous investment in securities regardless of price
fluctuations and does not assure a profit or protect against loss in declining markets.
Investors should consider their ability to continue such a plan through periods of low price
levels.
Around-the-clock electronic account service and information, including some transactions:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- www.scudder.com
1-800-343-2890
Personal Investment Organizer: Offering
Personalized account information, the ability to account information and transactions,
exchange or redeem shares, and information on other interactive worksheets, prospectuses and
Scudder funds and services via touchtone telephone. applications for all 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
redemptions, and Scudder does the rest. proceeds 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
- ------------------------------------------------------------------------------------------------------------------------------
46 - Scudder California Tax Free Money Fund
Scudder California Tax Free Fund
<PAGE>
Mutual Funds and More -- Brokerage and Guidance Services:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Brokerage Services Scudder Portfolio Builder
Offers you access to a world of investments, A free service designed to help suggest ways investors like
including stocks, corporate bonds, Treasuries, plus you can diversify your portfolio among domestic and global,
over 8,000 mutual funds from at least 150 mutual as well as equity, fixed-income, and money market funds,
fund companies. And Scudder Fund Folio(SM) provides using Scudder funds.
investors with access to a marketplace of more than
800 no-load funds from well-known companies--with no Personal Counsel from Scudder(SM)
transaction fees or commissions. Scudder
shareholders can take advantage of a Scudder Developed for investors who prefer the benefits of no-load
Brokerage account already reserved for them, with funds but want ongoing professional assistance in
no minimum investment. For information about managing a portfolio. Personal Counsel(SM) is a highly
Scudder Brokerage Services, call 1-800-700-0820. customized, fee-based asset management service for
individuals investing $100,000 or more.
Fund Folio funds held less than six months will be charged a 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.
Personal Counsel From Scudder(SM) and Personal Counsel(SM) are service marks of and represent a
program offered by Scudder Investor Services, Inc., Adviser.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
Additional Information on How to Contact Scudder:
- ------------------------------------------------------------------------------------------------------------------------------
For existing account services and transactions Please address all written correspondence to
Scudder Investor Relations -- 1-800-225-5163 The Scudder Funds
P.O. Box 2291
For establishing 401(k) and 403(b) plans Boston, Massachusetts
Scudder Defined Contribution Services -- 02107-2291
1-800-323-6105
Or Stop by a Scudder Investor Center
For information about The Scudder Funds, including Many shareholders enjoy the personal, one-on-one service of
additional applications and prospectuses, or for the Scudder Investor Centers. Check for an Investor Center near
answers to investment questions you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470 Boca Raton Chicago San Francisco
[email protected] Boston New York
</TABLE>
47 - Scudder California Tax Free Money Fund
Scudder California Tax Free Fund
<PAGE>
About the Fund's Adviser
Scudder Kemper Investments, Inc., is one of the largest and most experienced
investment management oganizations worldwide, managing more than $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.
Shares of the Funds are not insured or guaranteed by the U.S. Government.
Scudder California Tax Free Money Fund seeks to maintain a constant net asset
value of $1.00 per share but there can be no assurance that the stable net asset
value will be maintained.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
SCUDDER
