Scudder
Ohio
Tax Free Fund
Semiannual Report
September 30, 1995
o For investors seeking double-tax-free income exempt from both Ohio and regular
federal income taxes.
o A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
<PAGE>
SCUDDER OHIO TAX FREE FUND
CONTENTS
2 In Brief
3 Letter from the Fund's President
4 Performance Update
5 Portfolio Summary
6 Portfolio Management Discussion
10 Investment Portfolio
14 Financial Statements
17 Financial Highlights
18 Notes to Financial Statements
21 Officers and Trustees
22 Investment Products and Services
23 How to Contact Scudder
IN BRIEF
* Long-term interest rates remained on a downward slope throughout the
six-month period ended September 30, 1995. Scudder Ohio Tax Free Fund
generated a solid 4.93% total return for the period, based on a $0.25
increase in the Fund's share price to $13.02 on September 30 and reinvested
distributions totaling $0.38 per share.
* The Fund's six-month total return outpaced the 4.19% average return of the 51
Ohio tax free funds tracked by Lipper Analytical Services, Inc.
* The Fund's 30-day net annualized SEC yield was 5.08% on September 30, 1995,
equivalent to a 9.09% taxable yield for Ohio investors subject to the 44.13%
combined federal and state income tax rate.
(bar chart title)
Fund Yield vs. Taxable Equivalent Yield
(bar chart data)
The Fund's 30-Day Taxable Equivalent
SEC Yield Yield
--------- -----
3/31/95 5.22% 9.34%
9/30/95 5.08% 9.09%
2
<PAGE>
LETTER FROM THE FUND'S PRESIDENT
Dear Shareholders,
In our annual report dated March 31, we wondered whether we had seen
the highs in interest rates after their persistent rise in 1994. The answer
turned out to be "yes," for the most part. As the U.S. economy slowed and
inflation remained quiescent during the first quarter of 1995 and beyond,
interest rates (long-term and short-term alike) fell markedly lower.
Throughout 1995, investors have been anticipating an economic slowdown.
For now, economic indicators are turning up, corporate profits remain healthy,
and consumers have responded to lower short-term rates by borrowing and spending
more. We believe consumers will fuel this reacceleration of U.S. economic
activity until their increasingly high debt burdens force them to tighten their
budgetary belts. The current economic expansion cycle is extremely mature, and
we expect a slowdown sometime in the second half of 1996.
What does this mean for tax-exempt fund investors? It is possible that
the pickup in economic activity could lead to some increases in interest rates
over the short term. But the economy is extremely interest-rate sensitive and
should respond quickly to any rate changes. When the economy begins to slow
down, rates should move back down. Most importantly, the relationship between
supply and demand for municipal bonds should work in the tax-exempt investor's
favor as the supply of bonds continues to shrink, placing upward pressure on the
prices of these bonds.
As always, your portfolio managers will continue to focus their efforts
on fundamental research and security selection as a means of generating high
current income and attractive total returns. Please call a Scudder Investor
Relations representative at 1-800-225-2470 if you have questions about your
Fund. Page 23 provides more information on how to contact Scudder. Thank you for
choosing Scudder Ohio Tax Free Fund to help meet your investment needs.
Sincerely,
/s/ David S. Lee
David S. Lee
President,
Scudder Ohio Tax Free Fund
3
<PAGE>
Scudder Ohio Tax Free Fund
Performance Update as of September 30, 1995
- -----------------------------------------------------------------
Growth of a $10,000 Investment
- -----------------------------------------------------------------
Scudder Ohio Tax Free Fund
- ----------------------------------------
Total Return
Period Growth --------------
Ended of Average
9/30/95 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $11,058 10.58% 10.58%
5 Year $15,238 52.38% 8.79%
Life of
Fund* $18,867 88.67% 7.90%
Lehman Brothers Municipal Bond Index
- --------------------------------------
Total Return
Period Growth --------------
Ended of Average
9/30/95 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $11,118 11.18% 11.18%
5 Year $15,289 52.89% 8.86%
Life of
Fund* $20,124 101.24% 8.75%
*The Fund commenced operations on May 28, 1987.
Index comparisons begin May 31, 1987.
A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:
Yearly periods ended September 30
Scudder Ohio Tax Free Fund
Year Amount
- ----------------------
5/31/87* $10,000
87 $ 9,462
88 $10,858
89 $11,823
90 $12,381
91 $14,095
92 $15,534
93 $17,671
94 $17,062
95 $18,867
Index
Year Amount
- ----------------------
5/31/87* $10,000
87 $10,038
88 $11,341
89 $12,325
90 $13,163
91 $14,899
92 $16,456
93 $18,553
94 $18,100
95 $20,124
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.
- -----------------------------------------------------------------
Returns and Per Share Information
- -----------------------------------------------------------------
A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) and Index Total
Return (%) with the exact data points listed in the table
below.
Yearly periods ended September 30
- ---------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1987* 1988 1989 1990 1991 1992 1993 1994 1995
------------------------------------------------------------------------
Net Asset Value... $11.10 $11.86 $12.00 $11.71 $12.46 $12.93 $13.72 $12.46 $13.02
Income Dividends.. $ .26 $ .76 $ .84 $ .79 $ .77 $ .74 $ .71 $ .70 $ .69
Capital Gains
Distributions..... $ -- $ .01 $ .05 $ .06 $ .06 $ .02 $ .21 $ .10 $ .03
Fund Total
Return (%)........ -5.38 14.75 8.88 4.72 13.84 10.21 13.76 -3.44 10.58
Index Total
Return (%)........ .38 12.98 8.68 6.80 13.19 10.45 12.74 -2.44 11.18
</TABLE>
Performance is historical and assumes reinvestment of all dividends and
capital gains and is not indicative of future results.
Investment return and principal value will fluctuate, so an investor's
shares, when redeemed, may be worth more or less than when purchased.
If the Adviser had not temporarily capped expenses, the average annual
total returns for the Fund for the one year, five year, and life of Fund
periods would have been lower.
4
<PAGE>
Portfolio Summary as of September 30, 1995
- ---------------------------------------------------------------------------
Diversification
- ---------------------------------------------------------------------------
General Obligation 23%
Hospital/Health 18%
Sales and Special Tax 12%
Higher Education 11% The Fund remained well diversified
Water/Sewer Revenue 11% across carefully selected revenue
Core Cities/Lease 6% and general obligation bonds.
Pollution Control
Revenue 5%
State Agency/Lease 5%
Electric Utility Revenue 4%
Miscellaneous Municipal 5%
----
100%
====
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
Quality
- --------------------------------------------------------------------------
AAA 51%
AA 15% The portfolio's emphasis on credit
A 14% quality remained intact, even
BBB 13% amidst improving market conditions.
Not Rated 7%
----
100%
====
Weighted average quality: AA
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
Effective Maturity
- --------------------------------------------------------------------------
Less than 1 year 3%
1 - 5 years 7% Intermediate-term bonds constituted
5 - 10 years 38% the bulk of the Fund's portfolio,
10 - 20 years 45% and contributed solidly to the
Greater than 20 years 7% Fund's performance.
----
100%
====
Weighted average effective maturity: 11 years
For more complete details about the Fund's Investment Portfolio,
see page 10.
5
<PAGE>
SCUDDER OHIO TAX FREE FUND
PORTFOLIO MANAGEMENT DISCUSSION
Dear Shareholders,
Scudder Ohio Tax Free Fund rewarded investors with strong competitive
results during the six-month period ended September 30, 1995, as interest rates
continued to fall. Generating a total return of 4.93% for the period, your Fund
outpaced the 4.19% average return for the 51 Ohio tax free funds tracked by
Lipper Analytical Services, Inc. The Fund's return reflects an increase in share
price to $13.02 on September 30 from $12.77 six months ago, and the reinvestment
of distributions totaling $0.38 per share -- $0.35 in income distributions and
$0.03 in long-term capital gain distributions.
The Fund's 30-day net annualized SEC yield stood at 5.08% on September
30, down from 5.22% at the start of the period, reflecting the declining rate
environment. Still, the Fund's yield on a taxable equivalent basis is
substantially higher than yields from comparable taxable investments. For Ohio
taxpayers in the top combined federal and state tax bracket of 44.13%, a taxable
investment had to provide a yield of 9.09% to match your Fund's tax-free yield
as of September 30.
The Fund's modest dip in yield was more than offset by its rising share
price. Price appreciation, in fact, has played a prominent role in the Fund's
performance throughout this year, as evidenced by its 12.16% return for the
first nine months of 1995. Strengthening bond prices were also behind the Fund's
June capital gain distribution -- which represented the net profits from the
sale of some Fund holdings.
Favorable Overall Bond Market Conditions
Belie Differences in Specific Sectors
Despite strong performance in 1995, investors remain hesitant about
bonds -- municipal, Treasury, and corporate -- as memories linger of 1994's
price declines. But those who did re-enter the bond markets generally
encountered favorable conditions. Encouraged by reports indicating slowing
economic growth and the continued absence of inflationary pressures, investors
have pushed up fixed-income prices and driven down yields since long-term
interest rates peaked in November 1994.
6
<PAGE>
Yields did not fall uniformly nor did prices rise in lockstep across
different sectors of the bond market, however -- nor along the maturity
spectrum. Treasury securities, for instance, outperformed municipal securities
during the six-month period largely because Treasuries respond more quickly to
changing conditions, as they enjoy a larger, more active market. Moreover,
unlike Treasuries, most municipal bonds are callable, meaning they can be
retired by their issuers before maturity. Falling interest rates typically raise
the incidence of calls as bond issuers refinance their debt at more favorable
rates. Compared with taxable investments, specifically Treasuries, long-term
municipal bonds displayed the weakest relative performance, while short-term
municipal bonds displayed the strongest.
On a positive note, the supply/demand balance for municipal bonds
remains favorable because of the continued dearth of new issues. Today, supply
remains below even 1994's levels, when rising interest rates virtually dried up
the refinancing activity that had been flooding the market with new issues for
some years.
Strategy Focuses on Intermediate Maturities, Call Protection
During the period, we took advantage of opportunities to make the most
of our total-return orientation. Several strategies helped provide investors
with an attractive level of tax-free income and, at the same time, enhanced the
value of their overall investment: a focus on noncallable bonds, the addition of
more intermediate-term securities, and an overall emphasis on well-researched
issues of creditworthy municipal entities.
The Fund's existing holdings of noncallable bonds contributed to
portfolio performance throughout the period. Noncallable bonds tend to perform
better than their callable counterparts when interest rates fall since the value
of callable bonds typically diminishes as their call dates approach.
Noncallables also help the Fund maintain a stable stream of income. When
callable bonds are called, investors are forced to reinvest the proceeds in
lower-income-producing securities. Because the vast majority of municipal bonds
are callable, portfolios owning a healthy dose of noncallable bonds tend to have
an edge in performance.
7
<PAGE>
We added to bonds with intermediate-term maturities during the period,
given their attractive price and yield characteristics. Specifically, we focused
on bonds with maturities between 14 and 18 years. Because we believed that
intermediate to longer-intermediate bonds provided reasonable income together
with a measure of price stability, more than 90% of the portfolio was invested
in bonds with effective maturities under 20 years as of the end of the period.
In addition to this emphasis on intermediate term securities, we
replaced shorter-term holdings with select longer-term bonds. These bonds
afforded high levels of income and strong price appreciation during the period.
As always, we remained attentive to credit quality -- average weighted
portfolio quality at the end of the period was AA. As a further protection, we
added to our holdings of insured securities. (The Fund, of course, is not
insured.) Diversification, as always, retained a central role. The portfolio was
broadly diversified among general obligation bonds, which are supported by state
and local taxing authorities; and a variety of revenue bonds, which derive their
income from their underlying public projects.
Ohio Review
Investors of Ohio bonds continue to benefit from the state's excellent
financial condition. Moderate debt levels and tax rates combined with a strong,
diverse economy have translated into a stable market for the state's bonds.
Debt levels in Ohio are moderate, in part because all general
obligation bond issues must be approved by voters. Another source of strength is
Ohio's broad revenue base, which acts as a cushion against shifting economic
cycles. Helping to expand this base are the state's tax rates, which are
moderate in comparison with other states, giving Ohio a competitive advantage in
attracting new businesses. Finally, economic activity in Ohio is in better shape
than the nation as a whole. Unemployment levels in September were 5.2% versus a
national average of 5.6%. Though manufacturing remains a dominant economic
force, the state has evolved in recent decades as the trade and service
industries have gained prominence.
8
<PAGE>
Outlook
We believe the interest rate environment will remain favorable to bond
investors in the months ahead. Moreover, tax-exempt securities with maturities
longer than 10 years remain attractively priced compared with their taxable
counterparts. On this basis alone, we expect municipal bonds to outperform
taxables. In the meantime, we expect investors in the Fund to continue to enjoy
solid price appreciation while earning a high level of income free from both
federal and state of Ohio income taxes.
Thank you for your continued interest in Scudder Ohio Tax Free Fund.
Sincerely,
Your Portfolio Management Team
/s/ Donald C. Carleton /s/ Philip G. Condon
Donald C. Carleton Philip G. Condon
9
<PAGE>
<PAGE>
SCUDDER OHIO TAX FREE FUND
INVESTMENT PORTFOLIO AS OF SEPTEMBER 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating (b) Value ($)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1.9% SHORT-TERM MUNICIPAL INVESTMENTS
OHIO Cuyahoga County, OH, Health & Education,
University Hospital of Cleveland,
Daily Demand Note, 4.8%, 1/1/16*. . . . . . . . . . . . 300,000 MIG1 300,000
Hamilton Health Systems, Franciscan Sisters
of the Poor Health Systems, Series A,
Daily Demand Note, 4.8%, 3/1/17*. . . . . . . . . . . . 1,200,000 MIG1 1,200,000
---------
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(Cost $1,500,000) . . . . . . . . . . . . . . . . . . . 1,500,000
---------
98.1% LONG-TERM MUNICIPAL INVESTMENTS
OHIO Cleveland, OH:
General Obligation:
Series A, 6.3%, 7/1/06 (c) . . . . . . . . . . . . . . 1,000,000 AAA 1,081,970
5.3%, 9/1/08 (c) . . . . . . . . . . . . . . . . . . . 2,000,000 AAA 2,001,740
Series 1993, 5.375%, 9/1/09 (c). . . . . . . . . . . . 1,700,000 AAA 1,695,767
Public Power System Improvement Revenue,
Series B, 7%, 11/15/17 . . . . . . . . . . . . . . . . 750,000 BBB 780,975
Urban Renewal Tax Increment Rock & Roll Hall of
Fame and Museum Project, 6.75%, 3/15/18. . . . . . . . 1,000,000 NR 1,007,590
Waterworks Improvement, First Mortgage
Revenue, Series 1992 F, 6.25%, 1/1/07 (c). . . . . . . 1,000,000 AAA 1,071,520
Columbus, OH:
General Obligation:
Limited Tax, Various Purpose, Series 1993,
5.25%, 9/15/11 . . . . . . . . . . . . . . . . . . . 1,000,000 AAA 979,860
Unlimited Tax, Sewer Improvement, 6%, 5/1/13. . . . . 1,000,000 AAA 1,039,080
Cuyahoga County, OH:
General Obligation, Jail Facilities:
Series 1991, ETM, Zero Coupon, 10/1/02*** . . . . . . 1,500,000 AA 1,067,115
Series 1993 B, 5%, 10/1/08 (c). . . . . . . . . . . . 4,180,000 AAA 4,055,519
Hospital Facilities Revenue, Health Cleveland Inc.,
Series 1993, 6.25%, 8/15/10 . . . . . . . . . . . . . 1,000,000 A 1,014,770
Fairfield, OH, City School District, 7.2%, 12/1/09 (c) . 1,000,000 AAA 1,158,950
Franklin County, OH, Riverside United Methodist
Hospital, Series A, 5.75%, 5/15/12. . . . . . . . . . . 1,950,000 AA 1,908,991
Gateway Economic Development Corporation of
Cleveland, OH, Stadium Revenue, 6.5%, 9/15/14 . . . . . 4,000,000 NR 3,902,080
Gateway Economic Development Corporation of
Cuyahoga County, OH, Excise Tax, Series 1990,
7.5%, 9/1/05. . . . . . . . . . . . . . . . . . . . . . 1,000,000 BBB 1,084,730
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
10
<PAGE>
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating (b) Value ($)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gateway Economic Development Corporation of
Greater Cleveland, OH, Excise Tax, Series 1990,
7.2%, 9/1/01. . . . . . . . . . . . . . . . . . . . . . 2,550,000 BBB 2,746,426
Hamilton County, OH:
General Obligation, 5.1%, 12/1/11 . . . . . . . . . . . 1,000,000 AA 942,100
Health System Revenue, Franciscan Sisters of the
Poor Health System, Providence Hospital, Series
1992, 6.8% 7/1/08. . . . . . . . . . . . . . . . . . . 2,000,000 BBB 2,029,960
Hospital Facilities Revenue, Christ Hospital,
Series 1991 B, 6.625%, 1/1/06 (c). . . . . . . . . . . 1,000,000 AAA 1,075,610
Sewer System Revenue, Improvement and
Refunding:
Series A, 6.4%, 12/1/05 . . . . . . . . . . . . . . . 750,000 AA 812,572
5.45%, 12/1/09 (c). . . . . . . . . . . . . . . . . . 1,000,000 AAA 1,003,840
Huber Heights, OH, Water System Revenue, Capital
Appreciation Bonds, Zero Coupon, 12/1/12. . . . . . . . 1,005,000 AAA 379,005
Lorain County, OH:
Hospital Refunding Revenue:
EMH Regional Medical Center, 5%, 11/1/07 (c) . . . . . 1,000,000 AAA 974,290
Humility of Mary Health Care System, Series A,
5.9%, 12/15/08. . . . . . . . . . . . . . . . . . . . 1,000,000 A 1,045,760
Lorain, OH, Hospital Authority Refunding Revenue,
Lakeland Community Hospital Inc., 6.5%, 11/15/12. . . . 1,000,000 A 1,017,790
Lucas County, OH:
Hospital Revenue:
Flower Hospital, Series 1993, 6.125%, 12/1/13. . . . . 1,375,000 BBB 1,309,069
St. Vincent Medical Center, 5.25%, 8/15/20 (c) . . . . 1,900,000 AAA 1,735,194
Mahoning County, OH, General Obligation,
Limited Tax, 6.6%, 12/1/06 (c). . . . . . . . . . . . . 1,100,000 AAA 1,212,310
North Olmsted, OH, General Obligation,
6.25%, 12/15/12 (c) . . . . . . . . . . . . . . . . . . 1,500,000 AAA 1,564,860
Northeast Ohio Regional Sewer District, Wastewater
Improvement Revenue Refunding:
5.5%, 11/15/12 (c) . . . . . . . . . . . . . . . . . . 1,550,000 AAA 1,522,891
5.6%, 11/15/13 (c) . . . . . . . . . . . . . . . . . . 1,000,000 AAA 975,480
Ohio Air Quality Development Authority, Pollution
Control Revenue:
Cleveland Electric Company, 8%, 12/1/13 (c). . . . . . 1,250,000 AAA 1,465,450
Dayton Power and Light Company Project,
prerefunded, 9.5%, 12/1/95**. . . . . . . . . . . . . 1,010,000 AA 1,044,542
Ohio General Obligation, 6%, 8/1/10 . . . . . . . . . . 1,000,000 AA 1,051,210
Ohio Higher Education Facilities Revenue:
Case Western Reserve University, Series B,
6.5%, 10/1/20. . . . . . . . . . . . . . . . . . . . . 2,250,000 AA 2,459,678
John Carroll University, Series B, 5.3%, 11/15/14 . . . 1,000,000 A 936,020
Oberlin College Project, prerefunded,
7.1%, 10/1/99**. . . . . . . . . . . . . . . . . . . . 495,000 AAA 546,327
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
11
<PAGE>
SCUDDER OHIO TAX FREE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating (b) Value ($)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
University of Dayton Project:
1994 Project, 5.8%, 12/1/14 (c). . . . . . . . . . . . 500,000 AAA 495,670
7.25%, 12/1/12 (c) . . . . . . . . . . . . . . . . . . 1,000,000 AAA 1,120,720
Ohio Housing Finance Agency, Single-Family
Mortgage Revenue, Series 1990 F, 7.6%, 9/1/16 . . . . . 1,665,000 AAA 1,774,341
Ohio Liquor Profits Refunding Bonds, Economic
Development Revenue, Series 1989,
6.85%, 3/1/00 (c) . . . . . . . . . . . . . . . . . . . 1,000,000 AAA 1,095,330
Ohio Mortgage Revenue, International Order of
Odd Fellows Home, FHA Insured, 8.15%, 8/1/17. . . . . . 150,000 AAA 162,434
Ohio Public Facilities Commission, Higher
Educational Capital Facilities Revenue,
Series 2B, 5.4%, 11/1/07 (c). . . . . . . . . . . . . . 2,000,000 AAA 2,037,340
Ohio State Building Authority:
Correctional Facilities Revenue, Series 1991 A,
6.5%, 10/1/04. . . . . . . . . . . . . . . . . . . . . 1,000,000 A 1,097,310
Juvenile Correction Facilities, 6%, 10/1/06 . . . . . . 1,555,000 A 1,670,397
Toledo Government Office Building, Series A,
prerefunded, 8%, 4/1/03**. . . . . . . . . . . . . . . 500,000 AAA 602,635
Worker's Compensation Facilities, William Green
Building, Series 1993 A, 4.75%, 4/1/14 . . . . . . . . 1,000,000 A 863,430
Ohio Water Development Authority, Pollution Control
Revenue, Ohio Edison Company Project,
Series 1989 A, 7.625%, 7/1/23 . . . . . . . . . . . . . 1,140,000 BBB 1,216,391
Olmsted Falls, OH, City School District, General
Obligation, Series 1991, 7.05%, 12/15/11 (c). . . . . . 1,000,000 AAA 1,124,040
Parma, OH, General Obligation, 5.4%, 12/1/11 . . . . . . 1,000,000 AAA 984,040
Solon, OH, School District, 5.3%, 12/1/13. . . . . . . . 1,000,000 AA 953,910
Stark County, OH, Hospital Revenue Refunding,
Timken Mercy Medical Center, Series B,
5%, 12/1/07 (c) . . . . . . . . . . . . . . . . . . . . 1,140,000 AAA 1,110,520
Summit County, OH, General Obligation
6.4%, 12/1/14 (c) . . . . . . . . . . . . . . . . . . . 1,000,000 AAA 1,064,810
Warren County, OH, Water Improvement, General
Obligation, The P&G Project, Series 1995,
5.25%, 12/1/16. . . . . . . . . . . . . . . . . . . . . 1,720,000 AA 1,572,097
PUERTO RICO Puerto Rico Electric Power Authority,
Power Revenue, Series S, 6.125%, 7/1/09 . . . . . . . . 2,000,000 A 2,099,540
Puerto Rico, General Obligation:
Public Improvement Refunding, 5.4%, 7/1/07. . . . . . . 1,500,000 A 1,490,835
Public Improvement, prerefunded, 6.6%,
7/1/02 (c)** . . . . . . . . . . . . . . . . . . . . . 1,000,000 AAA 1,129,060
University of Puerto Rico, University Systems,
Series N, 6.25%, 6/1/08 (c) . . . . . . . . . . . . . . 1,000,000 AAA 1,101,360
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTERGAL PART OF THE FINANCIAL STATMENTS.
12
<PAGE>
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating (b) Value ($)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
VIRGIN ISLANDS Virgin Islands Public Finance Authority:
General Obligation, Matching Fund Loan Notes,
Series A, 7.25%, 10/1/18. . . . . . . . . . . 500,000 NR 529,445
Highway Revenue, Series 1989, 7.7%, 10/1/04 . 1,000,000 BBB 1,098,000
-----------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(Cost $75,051,855). . . . . . . . . . . . . . . 78,094,696
-----------
- ------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO - 100.0%
(Cost $76,551,855) (a). . . . . . . . . . . . . 79,594,696
-----------
-----------
</TABLE>
(a) The cost for federal income tax purposes was $76,551,855. At September 30,
1995, net unrealized appreciation for all securities based on tax cost was
$3,042,841. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $3,304,507 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$261,666.
(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 Ratings Group, Moody's
Investors Service, Inc. or Fitch Investors Service, Inc. Unrated securities
(NR) have been determined to be of comparable quality to rated eligible
securities.
(c) Bond is insured by one of these companies: AMBAC, FGIC or MBIA.
* 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.
** 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 the tax-exempt issue and to retire the bonds in full at the
earliest refunding date.
*** ETM: Bonds bearing the description ETM (escrowed to maturity) are
collateralized by U.S. Treasury securities which are held in escrow by a
trustee and used to pay principal and interest on bonds so designated.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
13
<PAGE>
SCUDDER OHIO TAX FREE FUND
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
SEPTEMBER 30, 1995 (UNAUDITED)
- ------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at market (identified cost $76,551,855)
(Note A). . . . . . . . . . . . . . . . . . . . . . . . . $ 79,594,696
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,927
Receivables:
Interest. . . . . . . . . . . . . . . . . . . . . . . . . 1,299,581
Fund shares sold. . . . . . . . . . . . . . . . . . . . . 3,673
------------
Total assets . . . . . . . . . . . . . . . . . . . . . 80,926,877
LIABILITIES
Payables:
Investment Purchased. . . . . . . . . . . . . . . . . . . $ 364,142
Dividends . . . . . . . . . . . . . . . . . . . . . . . . 121,401
Fund shares redeemed. . . . . . . . . . . . . . . . . . . 27,622
Accrued management fee (Note C) . . . . . . . . . . . . . 5,139
Other accrued expenses (Note C) . . . . . . . . . . . . . 44,192
---------
Total liabilities. . . . . . . . . . . . . . . . . . . 562,496
------------
Net assets, at market value. . . . . . . . . . . . . . . . . $ 80,364,381
------------
------------
NET ASSETS
Net assets consist of:
Unrealized appreciation on investments. . . . . . . . . . $ 3,042,841
Accumulated net realized gain . . . . . . . . . . . . . . 296,363
Shares of beneficial interest . . . . . . . . . . . . . . 61,734
Additional paid-in capital. . . . . . . . . . . . . . . . 76,963,443
------------
Net assets, at market value. . . . . . . . . . . . . . . . . $ 80,364,381
------------
------------
NET ASSET VALUE, offering and redemption price per
share ($80,364,381 + 6,173,358 outstanding shares
of beneficial interest, $.01 par value, unlimited
number of shares authorized). . . . . . . . . . . . . . . $13.02
------------
------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
14
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS ENDED SEPTEMBER 30, 1995 (UNAUDITED)
- ------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,324,808
Expenses:
Management fee (Note C). . . . . . . . . . . . . . . . . . . $ 73,036
Services to shareholders (Note C). . . . . . . . . . . . . . 39,464
Custodian and accounting fees (Note C) . . . . . . . . . . . 34,254
Trustees' fees (Note C). . . . . . . . . . . . . . . . . . . 7,677
Auditing . . . . . . . . . . . . . . . . . . . . . . . . . . 20,564
Reports to shareholders. . . . . . . . . . . . . . . . . . . 11,719
State registration . . . . . . . . . . . . . . . . . . . . . 3,807
Legal. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,489
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,335 198,345
---------------------------
Net investment income. . . . . . . . . . . . . . . . . . . . 2,126,463
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENT TRANSACTIONS
Net realized gain from investment transactions . . . . . . . 704,640
Net unrealized appreciation on investments
during the period. . . . . . . . . . . . . . . . . . . . 1,096,257
-----------
Net gain on investments. . . . . . . . . . . . . . . . . . . 1,800,897
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . $ 3,927,360
-----------
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
15
<PAGE>
SCUDDER OHIO TAX FREE FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED
1995 MARCH 31,
INCREASE (DECREASE) IN NET ASSETS (UNAUDITED) 1995
- -------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income. . . . . . . . . . . . . . . $ 2,126,463 $ 4,344,717
Net realized gain from investment
transactions. . . . . . . . . . . . . . . . . . 704,640 8,918
Net unrealized appreciation on
investments during the period . . . . . . . . . 1,096,257 526,733
------------ ------------
Net increase in net assets resulting from
operations. . . . . . . . . . . . . . . . . . . 3,927,360 4,880,368
------------ ------------
Distributions to shareholders:
From net investment income ($.35 and $.70
per share, respectively). . . . . . . . . . . . (2,126,463) (4,344,717)
------------ ------------
From net realized gains from investment
transactions ($.03 per share) . . . . . . . . . (152,296) -
------------ ------------
In excess of net realized gains ($.04 per share) . - (252,478)
------------ ------------
Fund share transactions:
Proceeds from shares sold. . . . . . . . . . . . . 4,023,855 10,714,541
Net asset value of shares issued to
shareholders in reinvestment of
distributions . . . . . . . . . . . . . . . . . 1,510,544 3,306,000
Cost of shares redeemed. . . . . . . . . . . . . . (5,204,547) (16,250,379)
------------ ------------
Net increase (decrease) in net assets from
Fund share transactions . . . . . . . . . . . . 329,852 (2,229,838)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS. . . . . . . . . 1,978,453 (1,946,665)
Net assets at beginning of period. . . . . . . . . 78,385,928 80,332,593
------------ ------------
NET ASSETS AT END OF PERIOD. . . . . . . . . . . . $ 80,364,381 $ 78,385,928
------------ ------------
------------ ------------
OTHER INFORMATION
INCREASE (DECREASE) IN FUND SHARES
Shares outstanding at beginning of period. . . . . 6,140,345 6,334,774
------------ ------------
Shares sold. . . . . . . . . . . . . . . . . . . . 318,905 855,533
Shares issued to shareholders in
reinvestment of distributions . . . . . . . . . 116,903 264,552
Shares redeemed. . . . . . . . . . . . . . . . . . (402,795) (1,314,514)
------------ ------------
Net increase (decrease) in Fund shares . . . . . . 33,013 (194,429)
------------ ------------
Shares outstanding at end of period. . . . . . . . 6,173,358 6,140,345
------------ ------------
------------ ------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
16
<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>
FOR THE PERIOD
SIX MONTHS MAY 28, 1987
ENDED (COMMENCEMENT
SEPTEMBER 30, YEARS ENDED MARCH 31, OF OPERATIONS)
1995 ------------------------------------------------------------------ TO MARCH 31,
(UNAUDITED) 1995 1994 1993 1992 1991 1990 1989 1988
----------- ------ ------ ------ ------ ------ ------ ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period . . . . . . . $12.77 $12.68 $13.13 $12.47 $12.14 $11.97 $11.94 $11.65 $12.00
------ ------ ------ ------ ------ ------ ------ ------ ------
Income from investment
operations:
Net investment
income (a) . . . . . . . . . . . .35 .70 .70 .72 .75 .78 .82 .79 .66
Net realized and
unrealized gain
(loss) on investment
transactions . . . . . . . . . . .28 .13 (.35) .85 .36 .23 .10 .36 (.40)
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations. . . . . . . . . . . . .63 .83 .35 1.57 1.11 1.01 .92 1.15 .26
------ ------ ------ ------ ------ ------ ------ ------ ------
Less distributions from:
Net investment income . . . . . . (.35) (.70) (.70) (.72) (.75) (.78) (.82) (.84) (.61)
Net realized gains on
investment transactions. . . . . (.03) - (.08) (.19) (.03) (.06) (.07) (.02) -
In excess of net realized gains . - (.04) (.02) - - - - - -
------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions. . . . . . . . (.38) (.74) (.80) (.91) (.78) (.84) (.89) (.86) (.61)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period . . $13.02 $12.77 $12.68 $13.13 $12.47 $12.14 $11.97 $11.94 $11.65
------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL RETURN (%)(b). . . . . . . . 4.93** 6.82 2.48 13.04 9.33 8.75 7.80 10.83 2.30**
RATIOS AND
SUPPLEMENTAL DATA
Net assets, end of period
($ millions). . . . . . . . . . . 80 78 80 69 51 37 25 12 6
Ratio of operating expenses,
net to average daily
net assets (%)(a) . . . . . . . . .50* .50 .50 .50 .50 .50 .50 .50 .50*
Ratio of net investment income to
average daily net assets (%). . . 5.36* 5.59 5.23 5.61 6.05 6.50 6.74 7.13 7.17*
Portfolio turnover rate (%). . . . 34.0* 19.9 12.2 34.7 13.2 22.6 15.9 35.7 105.5*
(a) Reflects a per share amount
of expenses, exclusive of
management fees,
reimbursed by the
Adviser of. . . . . . . . . . $ - $ - $ - $ - $ - $ - $ .03 $ .11 $ .31
Reflects a per share amount
of management fee not
imposed of. . . . . . . . . . $ .03 $ .05 $ .05 $ .06 $ .07 $ .07 $ .07 $ .07 $ .05
Operating expense ratio
including expenses
reimbursed, management
fee and other expenses
not imposed (%) . . . . . . . .92* .91 .90 .95 1.03 1.21 1.62 2.14 4.51*
</TABLE>
(b) Total returns are higher due to maintenance of the Fund's expenses.
* Annualized
** Not annualized
17
<PAGE>
SCUDDER OHIO TAX FREE FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
A. SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
Scudder Ohio Tax Free Fund (the "Fund") is a non-diversified series of Scudder
State Tax Free Trust (the "Trust"). The Trust is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940,
as amended, as an open-end management investment company. There are currently
six series in the Trust. The policies described below are followed consistently
by the Fund in the preparation of its financial statements in conformity with
generally accepted accounting principles.
SECURITY VALUATION. Portfolio debt securities with remaining maturities greater
than sixty days are valued by pricing agents approved by the Officers of the
Fund, which quotations reflect broker/dealer-supplied valuations and electronic
data processing techniques. If the pricing agents are unable to provide such
quotations, the most recent bid quotation supplied by a bona fide market maker
shall be used. Short-term investments having a maturity of sixty days or less
are valued at amortized cost. All other debt securities are valued at their
fair value as determined in good faith by the Valuation Committee of the Board
of Trustees.
AMORTIZATION AND ACCRETION. All premiums and original issue discounts are
amortized/accreted for both tax and financial reporting purposes.
FEDERAL INCOME TAXES. The Fund's policy is to comply with the requirements
of the Internal Revenue Code which are applicable to regulated investment
companies and to distribute all of its taxable and tax-exempt income to its
shareholders. Accordingly, the Fund paid no federal income taxes and no
provision for federal income taxes was required.
DISTRIBUTION OF INCOME AND GAINS. All of the net investment income of the Fund
is declared as a dividend to shareholders of record as of the close of business
each day and is paid to shareholders monthly. During any particular year, net
realized gains from investment transactions, in excess of available capital
loss carryforwards, would be taxable to the Fund if not distributed and,
therefore, will be distributed to shareholders. An additional distribution may
be made to the extent necessary to avoid the payment of a four percent federal
excise tax.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The timing and characterization of certain income and capital gains
distributions are determined in accordance with federal tax regulations which
may differ from generally accepted accounting principles. These differences
relate primarily to investments in futures contracts. As a result, net
investment income and net realized gain (loss) on investment transactions for a
reporting period may differ significantly from distributions during such period.
Accordingly, the Fund may periodically make reclassifications among certain of
its capital accounts without impacting the net asset value of the Fund.
The Fund uses the specific identification method for determining realized gain
or loss on investments for both financial and federal income tax reporting
purposes.
OTHER. Investment 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 maturity.
B. PURCHASES AND SALES OF SECURITIES
- --------------------------------------------------------------------------------
During the six months ended September 30, 1995, purchases and sales of municipal
securities (excluding short-term investments) aggregated $15,022,440 and
$12,992,718, respectively.
C. RELATED PARTIES
- --------------------------------------------------------------------------------
Under the Fund's Investment Advisory Agreement (the "Agreement") with Scudder,
Stevens & Clark, Inc. (the "Adviser"), the Fund agrees to pay the Adviser a
fee equal to an annual rate of approximately 0.60% of the Fund's average daily
net assets, computed and accrued daily and payable monthly. The Adviser
determines the securities, instruments, and other contracts relating to
investments to be purchased, sold or entered into by the Fund. In addition to
portfolio management services, the Adviser provides certain administrative
services in accordance with the Agreement. The Adviser has agreed not to impose
all or a portion of its management fee until July 31, 1996 and during such
period to maintain the annualized expenses of the Fund at not more than 0.50% of
average daily net assets. For the six months ended September 30, 1995, the
Adviser did not impose a portion of its fee amounting to $164,821, and the
portion imposed amounted to $73,036, of which $5,139 was unpaid at September 30,
1995.
19
<PAGE>
SCUDDER OHIO TAX FREE FUND
- --------------------------------------------------------------------------------
Scudder Service Corporation ("SSC"), a wholly-owned subsidiary of the Adviser,
is the transfer, dividend-paying and shareholder service agent for the Fund.
Included in services to shareholders is $29,886 charged to the Fund by SSC
for the six months ended September 30, 1995, of which $4,956 was unpaid at
September 30, 1995.
Scudder Fund Accounting Corporation ("SFAC"), a wholly-owned subsidiary of
the Adviser, is responsible for determining the daily net asset value per share
and maintaining the portfolio and general accounting records of the Fund. For
the six months ended September 30, 1995, the amount charged to the Fund by
SFAC aggregated $18,000, of which $6,000 was unpaid at September 30, 1995.
The Trust pays each Trustee not affiliated with the Adviser $12,000 annually,
divided equally among the series of the Trust, plus specified amounts for
attended board and committee meetings. For the six months ended September 30,
1995, Trustees' fees charged to the Fund aggregated $7,677.
20
<PAGE>
OFFICERS AND TRUSTEES
David S. Lee*
President and Trustee
Henry P. Becton, Jr.
Trustee; President and General Manager, WGBH Educational Foundation
Dawn-Marie Driscoll
Trustee; Attorney and Corporate Director
Peter B. Freeman
Trustee; Corporate Director and Trustee
Dudley H. Ladd*
Trustee
Wesley W. Marple, Jr.
Trustee; Professor of Business Administration, Northeastern University
Juris Padegs*
Trustee
Daniel Pierce*
Trustee
Jean C. Tempel
Trustee; General Partner, TL Ventures
Donald C. Carleton*
Vice President
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
Vice President
Thomas F. McDonough*
Vice President and Secretary
Pamela A. McGrath*
Vice President and Treasurer
Edward J. O'Connell*
Vice President and Assistant Treasurer
Coleen Downs Dinneen*
Assistant Secretary
*Scudder, Stevens & Clark, Inc.
21
<PAGE>
INVESTMENT PRODUCTS AND SERVICES
<TABLE>
<CAPTION>
The Scudder Family of Funds
<C> <C>
Money Market Income
Scudder Cash Investment Trust Scudder Emerging Markets Income Fund
Scudder U.S. Treasury Money Fund Scudder GNMA Fund
Tax Free Money Market+ Scudder Income Fund
Scudder Tax Free Money Fund Scudder International Bond Fund
Scudder California Tax Free Money Fund* Scudder Short Term Bond Fund
Scudder New York Tax Free Money Fund* Scudder Short Term Global Income Fund
Tax Free+ Scudder Zero Coupon 2000 Fund
Scudder California Tax Free Fund* Growth
Scudder High Yield Tax Free Fund Scudder Capital Growth Fund
Scudder Limited Term Tax Free Fund Scudder Development Fund
Scudder Managed Municipal Bonds Scudder Global Fund
Scudder Massachusetts Limited Term Tax Free Fund* Scudder Global Small Company Fund
Scudder Massachusetts Tax Free Fund* Scudder Gold Fund
Scudder Medium Term Tax Free Fund Scudder Greater Europe Growth Fund
Scudder New York Tax Free Fund* Scudder International Fund
Scudder Ohio Tax Free Fund* Scudder Latin America Fund
Scudder Pennsylvania Tax Free Fund* Scudder Pacific Opportunities Fund
Growth and Income Scudder Quality Growth Fund
Scudder Balanced Fund Scudder Small Company Value Fund
Scudder Growth and Income Fund Scudder Value Fund
The Japan Fund
Retirement Plans and Tax-Advantaged Investments
IRAs 403(b) Plans
Keogh Plans SEP-IRAs
Scudder Horizon Plan+++* (a variable annuity) Profit Sharing and Money Purchase
401(k) Plans Pension Plans
Closed-End Funds#
The Argentina Fund, Inc. The Latin America Dollar Income Fund, Inc.
The Brazil Fund, Inc. Montgomery Street Income Securities, Inc.
The First Iberian Fund, Inc. Scudder New Asia Fund, Inc.
The Korea Fund, Inc. Scudder New Europe Fund, Inc.
Scudder World Income
Opportunities Fund, Inc.
Institutional Cash Management
Scudder Institutional Fund, Inc. Scudder Treasurers Trust(TM)++
Scudder 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. +A portion of the income from the
tax-free funds may be subject to federal, state, and local taxes. *Not
available in all states. +++A no-load variable annuity contract provided by
Charter National Life Insurance Company and its affiliate, offered by
Scudder's insurance agencies, 1-800-225-2470. #These funds, advised by
Scudder, Stevens & Clark, Inc. are traded on various stock exchanges. ++For
information on Scudder Treasurers Trust,(TM) an institutional cash
management service that utilizes certain portfolios of Scudder Fund, Inc.
($100,000 minimum), call 1-800-541-7703.
</TABLE>
22
<PAGE>
HOW TO CONTACT SCUDDER
<TABLE>
<S> <C>
Account Service and Information
For existing account service and transactions
SCUDDER INVESTOR RELATIONS
1-800-225-5163
For personalized information about your Scudder accounts;
exchanges and redemptions; or information on any Scudder fund
SCUDDER AUTOMATED INFORMATION LINE (SAIL)
1-800-343-2890
Investment Information
To receive information about the Scudder funds, for additional
applications and prospectuses, or for investment questions
SCUDDER INVESTOR RELATIONS
1-800-225-2470
For establishing 401(k) and 403(b) plans
SCUDDER DEFINED CONTRIBUTION SERVICES
1-800-323-6105
Please address all correspondence to
THE SCUDDER FUNDS
P.O. BOX 2291
BOSTON, MASSACHUSETTS
02107-2291
Or stop by a Scudder Funds Center
Many shareholders enjoy the personal, one-on-one service of the
Scudder Funds Centers. Check for a Funds Center near you--they can
be found in the following cities:
Boca Raton New York
Boston Portland, OR
Chicago San Diego
Cincinnati San Francisco
Los Angeles Scottsdale
For information on Scudder Treasurers For information on Scudder
Trust,(TM) an institutional Institutional Funds,* funds
cash management service for designed to meet the broad
corporations, non-profit organizations investment management and
and trusts that uses certain service needs of banks and
portfolios of Scudder Fund, Inc.* other institutions, call
($100,000 minimum), call 1-800-854-8525.
1-800-541-7703.
Scudder Investor Relations and Scudder Funds Centers are services provided
through Scudder Investor Services, Inc., Distributor.
<FN>
* Contact Scudder Investor Services, Inc., Distributor, to receive a prospectus
with more complete information, including management fees and expenses.
Please read it carefully before you invest or send money.
</FN>
</TABLE>
23
<PAGE>
Celebrating Over 75 Years of Serving Investors
Established in 1919 by Theodore Scudder, Sidney Stevens, and F. Haven
Clark, Scudder, Stevens & Clark was the first independent investment counsel
firm in the United States. Since its birth, Scudder's pioneering spirit and
commitment to professional long-term investment management have helped shape the
investment industry. In 1928, we introduced the nation's first no-load mutual
fund. Today we offer 37 pure no load(TM) funds, including the first
international mutual fund offered to U.S. investors.
Over the years, Scudder's global investment perspective and dedication
to research and fundamental investment disciplines have helped us become one of
the largest and most respected investment managers in the world. Though times
have changed since our beginnings, we remain committed to our long-standing
principles: managing money with integrity and distinction; keeping the interests
of our clients first; providing access to investments and markets that may not
be easily available to individuals; and making investing as simple and
convenient as possible through friendly, comprehensive service.
