This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
Scudder Ohio
Tax Free Fund
Annual Report
March 31, 1995
* For investors seeking double tax-free income exempt from both Ohio and
regular federal income taxes.
* A pure no-load(TM) fund with no commissions to buy, sell, or exchange
shares.
<PAGE>
SCUDDER OHIO TAX FREE FUND
CONTENTS
2 Highlights
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 Report of Independent Accountants
22 Tax Information
25 Officers and Trustees
26 Investment Products and Services
27 How to Contact Scudder
HIGHLIGHTS
* Scudder Ohio Tax Free Fund generated a 6.82% total return for the 12 months
ended March 31, 1995, in spite of the generally negative market conditions
that prevailed for much of the fiscal year. A declining supply of municipal
bonds and improving bond prices in 1995 worked to the Fund's advantage in
the final months of the Fund's fiscal year.
Bar Chart - Fund Yield vs. Taxable Equivalent Yield
Chart Data:
30-Day Taxable
SEC Yield Equivalent Yield
--------- ----------------
5.16% 9.24%
5.99% 10.72%
5.22% 9.34%
* The chart above shows your Fund's 30-day net annualized SEC yield at key
points during the year along with yields that would be required of
comparable taxable investments to match the Fund's yield for Ohio residents
in the highest combined federal and state tax bracket of 44.13%.
* Throughout the period, the Fund continued to seek a high relative degree of
price stability, tax-free income, and credit quality.
2
<PAGE>
LETTER FROM THE FUND'S PRESIDENT
Dear Shareholders,
Investors' concerns over inflationary economic growth have abated in recent
months, after creating so much turmoil for the world's investment markets in
1994. Continued low inflation and indications of weakness in certain segments of
the economy, combined with the Federal Reserve's most recent interest-rate
increases, have reassured many investors. Bond prices have begun to recover,
yields have declined from their November highs, and bond mutual funds have
enjoyed positive net subscriptions after several months of redemptions. For the
three months ended March 31, municipal bonds, as measured by the unmanaged
Lehman Brothers Municipal Bond Index, returned 7.07% on average, more than
making up for the -5.17% return reported for all of 1994.
The rise in interest rates over the past year and a half has highlighted a
challenge for income funds: to provide shareholders with the higher income
available from bonds while protecting against price erosion. The question is,
have interest rates shifted direction once again? Unfortunately, the answer is
unclear. Rates should remain relatively stable if economic growth continues to
slacken in the United States. Nevertheless, additional interest-rate increases
cannot be ruled out, given some lingering inflationary concerns: Commodity
prices continue to rise, factory production is still pushing the limits of
capacity, and the dollar has fallen to record lows against the Japanese yen and
German mark.
Additional uncertainty regarding interest rates may, of course, spark
episodes of volatility in fixed-income markets. Your portfolio managers will
continue to focus on fundamental investment research and security selection as a
means to generate high current double tax-free income and attractive total
returns.
As of April 1995 the portfolio's management team consists of Lead Portfolio
Manager Donald C. Carleton and Philip G. Condon. Kimberley Manning, who had
served as the Fund's lead manager, has left Scudder. Please call a Scudder
Investor Relations representative at 1-800-225-2470 if you have questions about
your Fund. Page 27 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 March 31, 1995
- -----------------------------------------------------------------
Growth of a $10,000 Investment
- -----------------------------------------------------------------
Scudder Ohio Tax Free Fund
- ----------------------------------------
Total Return
Period Growth -------------
Ended of Average
3/31/95 $10,000 Cumulative Annual
- --------- ------- ---------- -------
1 Year $10,682 6.82% 6.82%
5 Year $14,712 47.12% 8.03%
Life of
Fund* $17,980 79.80% 7.76%
Lehman Brothers Municipal Bond Index
- --------------------------------------
Total Return
Period Growth -------------
Ended of Average
3/31/95 $10,000 Cumulative Annual
- --------- ------- ---------- -------
1 Year $10,743 7.43% 7.43%
5 Year $14,859 48.59% 8.24%
Life of
Fund* $19,102 91.02% 8.61%
*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 March 31
Scudder Ohio Tax Free Fund
Year Amount
- ----------------------
5/31/87 10000
88 10230
89 11337
90 12221
91 13291
92 14530
93 16425
94 16832
95 17980
Lehman Brothers Municipal Bond Index
Year Amount
- ----------------------
5/31/87 10000
88 10847
89 11628
90 12855
91 14041
92 15444
93 17378
94 17781
95 19102
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 March 31
- -----------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1988* 1989 1990 1991 1992 1993 1994 1995
--------------------------------------------------------------
Net Asset Value... $11.65 $11.94 $11.97 $12.14 $12.47 $13.13 $12.68 $12.77
Income Dividends.. $ .61 $ .84 $ .82 $ .78 $ .75 $ .72 $ .70 $ .70
Capital Gains
Distributions..... $ -- $ .02 $ .07 $ .06 $ .03 $ .19 $ .10 $ .04
Fund Total
Return (%)........ 2.30 10.83 7.80 8.75 9.33 13.04 2.48 6.82
Index Total
Return (%)........ 8.48 7.21 10.56 9.22 10.02 12.52 2.32 7.43
</TABLE>
All 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 the Fund's 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 March 31, 1995
- ---------------------------------------------------------------------------
Diversification
- ---------------------------------------------------------------------------
General Obligation 23%
Hospital/Health 20% During the year, the Fund invested
Escrow & Collateral 10% in a diverse selection of revenue
Higher Education 9% bonds and held a sizable position in
Pollution Control Revenue 7% general obligation bonds.
Water/Sewer Revenue 5%
Electric Utility Revenue 4%
Lease Rentals 4%
Sales and Special Tax 3%
Miscellaneous Municipal 15%
----
100%
====
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
Quality
- --------------------------------------------------------------------------
AAA 55%
AA 14% With turbulent conditions pervading
A 16% all bond markets, high credit quality
BBB 12% was especially important.
Not Rated 3%
----
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 7%
1 < 5 years 6% The Fund focused on bonds maturing
5 < 10 years 33% between five and 15 years, which
10 < 20 years 49% we believed offered the most
Greater than 20 years 5% attractive price and yield
---- characteristics.
100%
====
Weighted average effective maturity: 11 years
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
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 wrapped up its fiscal year ended March 31, 1995,
with a flourish. In a challenging 12-month period for most bond investors, your
Fund's performance was particularly heartening. The Fund generated a one-year
total return of 6.82%, reflecting a $0.09 increase in share price to $12.77 on
March 31, 1995, $0.70 in reinvested income distributions, and $0.04 in
reinvested capital gain distributions. The Fund's return beat the 6.45% average
return of the 38 Ohio tax-free funds tracked by Lipper Analytical Services.
Put in context, the Fund's performance reflects two distinct stages. From
the start of the fiscal year through the market's turning point last November,
the Fund generated a total return of -2.60%. By contrast, the total return for
the period's final four months was 9.67%. Although declining bond prices pushed
the Fund's return into negative terrain during the first stage, the income
earnings of the Fund helped to protect it from larger declines. The Fund's
30-day net annualized SEC yield as of March 31, 1994, was 5.16%. By November 30,
it had risen to 5.99%, reflecting the rise in overall interest rates. The Fund's
yield as of March 31, 1995, was 5.22%. Investors in Ohio's top combined federal
and state tax bracket would have had to earn 9.34% from a taxable investment to
match the Fund's 5.22% tax-free yield. Bond price volatility, which had been a
negative factor for much of the fiscal year, worked to the Fund's advantage
toward the end of the period as prices began to rise, more than offsetting the
decline in yield from its November high.
All in all, investors who stayed with their fixed-income investments
despite the sharp fall in prices in 1994 were rewarded as prices recovered in
1995. Had they redeemed their shares last fall, they would have done so at
prices substantially lower than share prices today. When investing for long-term
goals, it is generally wise to avoid the temptation to trade in and out of the
market as prices rise and fall.
A Year of Extremes
In early 1994, the Federal Reserve began raising short-term interest rates
in an effort to slow what it considered unsustainable economic growth. Despite
the Fed's efforts, inflationary concerns persisted, creating an overwhelmingly
negative sentiment among investors. (Bond investors dislike inflation because it
weakens the purchasing power of future income payments from their fixed-income
investments.) Bond prices fell while yields rose across all maturities for
6
<PAGE>
taxable and tax-free bonds alike. In late fall, the highly publicized bankruptcy
of Orange County, California, delivered a temporary blow to an already skittish
market. Again investor sentiment was tested, but the municipal market had
already begun turning the corner.
Since that time, preliminary evidence has surfaced suggesting that economic
growth has begun to slow as a result of the Fed's efforts to tame inflationary
pressures. With inflation no longer an immediate concern, fixed-income investors
have pushed up bond prices, yields on long-term instruments have declined, and
municipal bond funds have received net new investment dollars after months of
net redemptions.
Meanwhile, as discussed in our September report, the dynamics of supply and
demand continued to work to the Fund's advantage. Rising interest rates in 1994
put an end to the previous year's record pace of municipal refundings. The
supply of new issues fell sharply -- and is falling still. March's supply of new
issues was the lowest of any previous March for the last five years. Although
the demand for municipal securities has remained essentially the same, the
scanty volume of municipal bonds helped to support bond prices.
A Focus on Fundamentals
Throughout the market's ups and downs, Scudder Ohio Tax Free Fund sought to
maintain relative price stability and high tax-free income by emphasizing
high-quality, noncallable, and call-protected bonds with maturities of less than
20 years.
Noncallable and call-protected bonds -- respectively, those bonds that
cannot be retired before maturity and those that would be very expensive for the
issuers to retire before maturity -- continued to constitute a large segment of
the portfolio. We took advantage of opportunities to purchase these bonds
because of their favorable performance characteristics (versus callable bonds
with similar maturities) in an environment of rising bond prices. Moreover,
noncallable and call-protected bonds typically fare no worse than their callable
counterparts when prices decline. The reason: During periods of rising bond
prices (and falling yields) the incidence of calls increases, and callable bonds
behave more like short-term securities. Meanwhile, noncallable bonds respond to
interest rate movements based on their actual maturities. On the other hand,
during periods of falling bond prices, the behavior of callable bonds reflects
their actual maturities; hence, they perform similarly to noncallable bonds of
like maturities. All told, noncallable bonds afforded the Fund a dose of price
stability and an attractive stream of tax-free income during the year.
7
<PAGE>
As bond prices declined during 1994, we continued to emphasize bonds in the
intermediate-maturity range. Currently, over 70% of the portfolio is invested in
bonds with maturities of between five and 15 years, and only 5% is invested in
bonds maturing in over 20 years. Given last year's market conditions, there was
little yield advantage in extending into longer-maturity bonds, since the yield
differential among shorter- and longer-maturity securities was negligible.
Further, because longer-maturity securities tend to be subject to greater
fluctuations in price due to changes in interest rates, the risk/reward tradeoff
for long-term bonds during the year wasn't compelling. By structuring the
portfolio in the intermediate range, we were able to capture most of the yield
of longer-term bonds without the added price volatility.
Line Chart - Yields Across the Maturity Spectrum:
AAA-Rated Municipal Bonds on 3/31/95
(1 year to 30 years, in five-year increments)
Chart Data:
1 4.35
2 4.60
3 4.75
4 4.85
5 4.95
6 5.05
7 5.15
8 5.20
9 5.25
10 5.30
11 5.40
12 5.50
13 5.60
14 5.65
15 5.70
16 5.70
17 5.80
18 5.85
19 5.87
20 5.90
21 5.91
22 5.92
23 5.93
24 5.94
25 5.95
26 5.96
27 5.97
28 5.98
29 5.99
30 6.00
Footnote to chart: During the year, the Fund focused on the five- to 15-year
maturity range, which offered relative price stability and
attractive yields.
As a precautionary measure in an unsettled bond environment, we remained
attentive to credit quality throughout the fiscal year. Lower-quality bonds
offered little additional reward over high-quality bonds during the period. As a
result, we increased the Fund's holdings in bonds rated AA or better to 69% of
the portfolio on March 31. Further, nearly half of the bonds in the portfolio
were insured against municipal defaults by various bond insurance companies.
Strong Fiscal and Economic Conditions in Ohio
Ohio's well-managed finances and moderate debt levels should continue to
benefit the state's municipal bond market. While other states accumulated
8
<PAGE>
deficits during the recession of the early 1990s, Ohio acted promptly and
responsibly to curtail the recession's strain on its finances. A combination of
tax increases and budget cuts resulted in balanced budgets throughout this
difficult economic period. The trend is continuing in fiscal year 1995, with
expenditures running 5% below estimates. Ohio expects to end the fiscal year
with record levels of reserves.
Meanwhile, Ohio's highly developed economy remains strong. Manufacturing
has long been the mainstay of the economy and still accounts for 21.7% of the
state's workforce versus the national average of 16.2%. After declining for the
past two decades, manufacturing employment has increased with the nation's
economic recovery. While still the most important component of Ohio's economy,
manufacturing has seen its prominence diminish somewhat. A shift from
manufacturing to the service and trade sectors likely will mitigate Ohio's
cyclical economic swings, but could dampen the state's wealth levels since
manufacturing jobs have tended to pay better. While it is an industrialized
state, Ohio also has a large agricultural sector that contributes about $5.7
billion to its economy every year. Unemployment in Ohio remains lower than the
country's as a whole -- 3.8% versus 5.5% for the United States.
Outlook
Looking ahead, we believe the combination of slower economic growth, stable
inflation, and a relatively sparse supply of municipal issues will result in
favorable conditions overall for municipal bonds. While the possibility of
income tax cuts -- increasingly popular in Washington -- may reduce investors'
interest in tax-free investments, history has shown that the short-term
correlation between tax levels and municipal bond demand is low. Another
potential market drawback would be additional rate hikes. But we believe the
likelihood is slim for further increases in interest rates, unless the economy
turns in a stronger-than-expected performance. In conclusion, we believe our
total-return approach to investing will continue to help us strike an attractive
price/yield balance against an ever-changing market backdrop.
Sincerely,
Your Portfolio Management Team
/s/Donald C. Carleton /s/Philip G. Condon
Donald C. Carleton Philip G. Condon
Scudder Ohio Tax Free Fund:
A Team Approach to Investing
Scudder Ohio Tax Free Fund is managed by a team of Scudder investment
professionals who each play an important role in the Fund's management process.
Team members work together to develop investment strategies and select
securities for the Fund. They are supported by Scudder's large staff of
economists, research analysts, traders, and other investment specialists who
work in our offices across the United States and abroad. We believe our team
approach benefits Fund investors by bringing together many disciplines and
leveraging Scudder's extensive resources.
Lead Portfolio Manager Donald C. Carleton assumed responsibilities for the
Fund's day-to-day management and investment strategies in January 1995. Don has
over 25 years of investment management experience and has worked at Scudder
since 1983. Philip G. Condon, portfolio manager, became a member of the team in
1987 and has worked at Scudder since 1983. Phil has 15 years of experience in
municipal investing and portfolio management.
9
<PAGE>
<PAGE>
<TABLE>
SCUDDER OHIO TAX FREE FUND
INVESTMENT PORTFOLIO as of March 31, 1995
- -------------------------------------------------------------------------------------------------------
<CAPTION>
Unaudited
---------
Principal Credit Market
Amount ($) Rating (b) Value ($)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
3.9% SHORT-TERM MUNICIPAL INVESTMENTS
OHIO Cuyahoga County, OH, Health & Education,
University Hospital of Cleveland, Daily Demand Note,
4.55%, 1/1/16*......................................... 900,000 MIG1 900,000
Franklin County, OH, Health Systems, St. Anthony's
Medical Center, Daily Demand Note,
4.55%, 7/1/15*......................................... 100,000 MIG1 100,000
Student Loan Fund, OH, Auction Reset Security:
4.15%, 12/1/05 (c)*.................................... 1,000,000 AAA 1,000,000
4.2%, 12/1/05 (c)*..................................... 1,000,000 AAA 1,000,000
---------
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(Cost $3,000,000)...................................... 3,000,000
---------
96.1% LONG-TERM MUNICIPAL INVESTMENTS
OHIO Canton, OH, General Obligation, 5.375%, 12/1/07 (c)..... 1,000,000 AAA 986,820
Cleveland, OH:
General Obligation:
Series A, 6.3%, 7/1/06 (c)........................... 1,000,000 AAA 1,063,990
5.3%, 9/1/08 (c)..................................... 2,000,000 AAA 1,975,320
Series 1993, 5.375%, 9/1/09 (c)...................... 1,700,000 AAA 1,673,956
Cleveland, OH:
Public Power System Improvement Revenue,
Series B, 7%, 11/15/17............................... 750,000 BBB 779,888
Urban Renewal Tax Increment Rock & Roll Hall of
Fame and Museum Project, 6.75%, 3/15/18.............. 1,000,000 NR 1,008,600
Waterworks Improvement, First Mortgage Revenue,
Series 1992 F, 6.25%, 1/1/07 (c)..................... 1,000,000 AAA 1,047,890
Columbus, OH:
General Obligation:
Limited Tax, Various Purpose, Series 1993,
5.25%, 9/15/11...................................... 1,000,000 AA 937,100
Unlimited Tax, Sewer Improvement, 6%, 5/1/13......... 1,000,000 AA 1,008,970
Water System Refunding Revenue, Series 1991,
6.375%, 11/1/10..................................... 1,000,000 AA 1,027,500
Cuyahoga County, OH:
General Obligation:
Series 1993 B, 5%, 10/1/08 (c)....................... 4,180,000 AAA 3,907,004
Jail Facilities, Series 1991, ETM, Zero Coupon,
10/1/02***.......................................... 1,500,000 AA 1,003,650
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
Unaudited
---------
Principal Credit Market
Amount ($) Rating (b) Value ($)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Hospital Facilities Revenue, Health Cleveland Inc.,
Series 1993, 6.25%, 8/15/10................................ 1,000,000 A 1,004,290
Fairfield, OH, City School District, 7.2%, 12/1/09 (c)......... 1,000,000 AAA 1,130,690
Franklin County, OH:
General Obligation, County Courthouse,
prerefunded, 6.375%, 12/1/01**............................... 1,250,000 AAA 1,362,062
Riverside Hospital, 5.75%, 5/15/12............................ 1,950,000 AA 1,869,914
Gateway Economic Development Corporation of
Cleveland, OH, Stadium Revenue, 6.5%, 9/15/14................. 2,000,000 BBB 1,920,100
Hamilton County, OH:
Health System Revenue, Franciscan Sisters of the
Poor Health System, Providence Hospital,
Series 1992, 6.8%, 7/1/08.................................... 2,000,000 BBB 1,994,500
Hospital Facilities Revenue, Children's Hospital
Medical Center:
Series E Refunding, 5%, 5/15/06 (c)......................... 2,000,000 AAA 1,932,000
Series F Refunding, 5%, 5/15/06 (c)......................... 1,800,000 AAA 1,738,800
Hospital Facilities Revenue, Christ Hospital,
Series 1991 B, 6.625%, 1/1/06 (c)............................ 1,000,000 AAA 1,059,230
Sewer System Revenue, Improvement and
Refunding:
Series A, 6.4%, 12/1/05..................................... 750,000 AA 797,400
5.45%, 12/1/09 (c).......................................... 1,000,000 AAA 988,970
Logan-Hocking, OH, School District, General
Obligation, Unlimited Tax, Series B, prerefunded,
7.1%, 12/1/02 (c)**........................................... 1,000,000 AAA 1,122,500
Lorain County, OH, Hospital Refunding Revenue,
Humility of Mary Health Care System, Series A,
5.9%, 12/15/08................................................ 1,000,000 A 986,040
Lorain, OH, Hospital Authority Refunding Revenue,
Lakeland Community Hospital Inc., 6.5%, 11/15/12.............. 1,000,000 A 1,005,570
Lucas County, OH:
Hospital Revenue:
Flower Hospital, Series 1993, 6.125%, 12/1/13................ 1,375,000 BBB 1,255,856
St. Vincent Medical Center, 5.25%, 8/15/20 (c)............... 1,900,000 AAA 1,724,516
Mahoning County, OH, General Obligation,
Limited Tax, 6.6%, 12/1/06 (c)................................ 1,100,000 AAA 1,185,822
Marysville, OH, Water System Revenue, Series 1991,
prerefunded, 6.5%, 12/1/01 (c)**.............................. 750,000 AAA 804,765
Newark, OH, General Obligation, Limited Tax,
Water Improvement, 6%, 12/1/18 (c)............................ 1,000,000 AAA 1,000,670
North Olmsted, OH, General Obligation,
6.25%, 12/15/12 (c)........................................... 1,500,000 AAA 1,555,005
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
<TABLE>
SCUDDER OHIO TAX FREE FUND
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
Unaudited
---------
Principal Credit Market
Amount ($) Rating (b) Value ($)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Ohio Air Quality Development Authority:
Pollution Control Revenue, Cleveland Electric
Company, 8%, 12/1/13 (c)..................................... 1,250,000 AAA 1,446,962
Pollution Control Revenue, Dayton Power and
Light Company Project, 9.5%, 12/1/15......................... 1,010,000 AA 1,060,641
Ohio State Building Authority:
Correctional Facilities Revenue, Series 1991 A,
6.5%, 10/1/04................................................ 1,000,000 A 1,072,060
Juvenile Correction Facilities, 6%, 10/1/06................... 1,555,000 A 1,608,539
State Facility Revenue, Columbus State Office
Building, Series 1985 C, prerefunded,
7.35%, 10/1/99**............................................. 1,250,000 A 1,401,413
Toledo Government Office Building, Series A,
prerefunded, 8%, 4/1/03**.................................. 500,000 AAA 591,395
Worker's Compensation Facilities, William Green
Building, Series 1993 A, 4.75%, 4/1/14....................... 1,000,000 A 833,560
Ohio General Obligation, 6%, 8/1/10............................ 1,000,000 AA 1,027,210
Ohio Higher Education Facilities Revenue:
Case Western Reserve University, Series B,
6.5%, 10/1/20................................................ 2,250,000 AA 2,433,105
John Carroll University, Series B, 5.3%, 11/15/14............. 1,000,000 A 894,380
Oberlin College Project, prerefunded,
7.1%, 10/1/99**.............................................. 500,000 NR 549,420
University of Dayton Project:
7.25%, 12/1/12 (c)........................................... 1,000,000 AAA 1,095,720
1994 Project, 5.8%, 12/1/14 (c).............................. 500,000 AAA 494,175
Ohio Housing Finance Agency, Single-Family
Mortgage Revenue, Series 1990 F, 7.6%, 9/1/16................. 1,705,000 AAA 1,796,439
Ohio Liquor Profits Refunding Bonds, Economic
Development Revenue, Series 1989,
6.85%, 3/1/00 (c)............................................. 1,000,000 AAA 1,077,000
Ohio Mortgage Revenue, International Order of Odd
Fellows Home, FHA Insured, 8.15%, 8/1/17...................... 150,000 AAA 163,670
Ohio Public Facilities Commission, Higher Educational
Capital Facilities Revenue, Series 2B,
5.4%, 11/1/07 (c)............................................. 2,000,000 AAA 1,972,980
Ohio Water Development Authority, Pollution Control
Revenue, Ohio Edison Company Project:
10.625%, 7/1/15.............................................. 1,350,000 BBB 1,408,982
Series 1989 A, 7.625%, 7/1/23................................ 1,140,000 BBB 1,160,987
Olmsted Falls, OH, City School District, General
Obligation, Series 1991, 7.05%, 12/15/11 (c).................. 1,000,000 AAA 1,094,420
Stark County, OH, Hospital Revenue Refunding,
Timken Mercy Medical Center, Series B,
5%, 12/1/07 (c)............................................... 1,140,000 AAA 1,082,396
Summit County, OH, General Obligation,
6.4%, 12/1/14 (c)............................................. 1,000,000 AAA 1,043,350
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
Unaudited
---------
Principal Credit Market
Amount ($) Rating (b) Value ($)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PUERTO RICO Puerto Rico Electric Power Authority,
Power Revenue, Series S, 6.125%, 7/1/09.......... 2,000,000 A 2,050,500
Puerto Rico, General Obligation:
Public Improvement Refunding, 5.4%, 7/1/07....... 1,500,000 A 1,449,030
Public Improvement, prerefunded,
6.6%, 7/1/02 (c)**.............................. 1,000,000 AAA 1,102,180
VIRGIN ISLANDS Virgin Islands Public Finance Authority:
General Obligation, Matching Fund Loan Note,
Series A, 7.25%, 10/1/18........................ 500,000 NR 517,320
Highway Revenue, Series 1989, 7.7%, 10/1/04...... 1,000,000 BBB 1,075,350
TOTAL LONG-TERM MUNICIPAL INVESTMENTS ----------
(Cost $72,415,988)............................... 74,362,572
----------
============================================================================================================
TOTAL INVESTMENT PORTFOLIO - 100.0%
(Cost $75,415,988) (a)........................... 77,362,572
==========
<FN>
(a) The cost for federal income tax purposes was $75,415,988. At March 31,
1995, net unrealized appreciation for all securities based on tax cost
was $1,946,584. This consisted of aggregate gross unrealized
appreciation for all securities in which there was an excess of market
value over tax cost of $2,762,324 and aggregate gross unrealized
depreciation for all securities in which there was an excess of tax
cost over market value of $815,740.
(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
trustee and used to pay principal and interest on bonds so designated.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
<TABLE>
SCUDDER OHIO TAX FREE FUND
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------------
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1995
- --------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at market (identified cost $75,415,988)
(Note A)........................................... $77,362,572
Receivables:
Interest........................................... 1,403,199
Fund shares sold................................... 2,692
-----------
Total assets.................................... 78,768,463
LIABILITIES
Payables:
Due to custodian................................... $101,017
Dividends.......................................... 123,529
Fund shares redeemed............................... 114,930
Accrued management fee (Note C).................... 9,009
Other accrued expenses (Note C).................... 34,050
--------
Total liabilities............................... 382,535
-----------
Net assets, at market value........................... $78,385,928
===========
NET ASSETS
Net assets consist of:
Unrealized appreciation on investments............ $ 1,946,584
Accumulated distributions in excess
of net realized gains.......................... (255,981)
Shares of beneficial interest..................... 61,403
Additional paid-in capital........................ 76,633,922
-----------
Net assets, at market value........................... $78,385,928
===========
NET ASSET VALUE, offering and redemption price per
share ($78,385,928 / 6,140,345 outstanding
shares of beneficial interest, $.01 par value,
unlimited number of shares authorized)............ $12.77
======
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------------------------
<CAPTION>
STATEMENT OF OPERATIONS
YEAR ENDED MARCH 31, 1995
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest..................................................... $4,733,509
Expenses:
Management fee (Note C)...................................... $ 150,790
Services to shareholders (Note C)............................ 84,261
Custodian and accounting fees (Note C)....................... 70,596
Trustees' fees (Note C)...................................... 14,930
Auditing..................................................... 30,762
Reports to shareholders...................................... 18,957
Legal........................................................ 6,055
State registration........................................... 4,276
Other........................................................ 8,165 388,792
-------------------------
Net investment income........................................ 4,344,717
----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENT TRANSACTIONS
Net realized gain (loss) from:
Investment transactions.............................. 319,255
Futures contracts.................................... (310,337) 8,918
---------
Net unrealized appreciation on investments
during the period.................................... 526,733
----------
Net gain on investments...................................... 535,651
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS......... $4,880,368
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
<TABLE>
SCUDDER OHIO TAX FREE FUND
- ---------------------------------------------------------------------------------------------------------
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED MARCH 31,
--------------------------------------
INCREASE (DECREASE) IN NET ASSETS 1995 1994
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income.......................................... $ 4,344,717 $ 4,187,400
Net realized gain from investment
transactions................................................. 8,918 443,702
Net unrealized appreciation (depreciation)
on investments during the period............................. 526,733 (3,092,222)
------------ ------------
Net increase in net assets resulting from
operations................................................... 4,880,368 1,538,880
------------ ------------
Distributions to shareholders:
From net investment income ($.70 and $.70
per share, respectively)..................................... (4,344,717) (4,187,400)
------------ ------------
From net realized gains from investment
transactions ($.08 per share)................................ -- (449,316)
------------ ------------
In excess of net realized gains ($.04 and
$.02 per share, respectively) (252,478) (113,213)
------------ ------------
Fund share transactions:
Proceeds from shares sold...................................... 10,714,541 26,512,400
Net asset value of shares issued to
shareholders in reinvestment of distributions................ 3,306,000 3,066,158
Cost of shares redeemed........................................ (16,250,379) (14,629,985)
------------ ------------
Net increase (decrease) in net assets from
Fund share transactions...................................... (2,229,838) 14,948,573
------------ ------------
INCREASE (DECREASE) IN NET ASSETS.............................. (1,946,665) 11,737,524
Net assets at beginning of period.............................. 80,332,593 68,595,069
------------ ------------
NET ASSETS AT END OF PERIOD.................................... $ 78,385,928 $ 80,332,593
============ ============
OTHER INFORMATION
INCREASE (DECREASE) IN FUND SHARES
Shares outstanding at beginning of period...................... 6,334,774 5,223,439
------------ ------------
Shares sold.................................................... 855,533 1,976,097
Shares issued to shareholders in
reinvestment of distributions................................ 264,552 228,892
Shares redeemed................................................ (1,314,514) (1,093,654)
------------ ------------
Net increase (decrease) in Fund shares......................... (194,429) 1,111,335
------------ ------------
Shares outstanding at end of period............................ 6,140,345 6,334,774
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------------------------------------------------------
The following table includes selected data for a share outstanding throughout each period and other performance information
derived from the financial statements.
<CAPTION>
FOR THE PERIOD
MAY 28, 1987
(COMMENCEMENT
YEARS ENDED MARCH 31, OF OPERATIONS) TO
------------------------------------------------------------- MARCH 31,
1995 1994 1993 1992 1991 1990 1989 1988
------------------------------------------------------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period......................... $12.68 $13.13 $12.47 $12.14 $11.97 $11.94 $11.65 $12.00
------ ------ ------ ------ ------ ------ ------ ------
Income from investment
operations:
Net investment
income (a)................................. .70 .70 .72 .75 .78 .82 .79 .66
Net realized and
unrealized gain
(loss) on investment
transactions............................... .13 (.35) .85 .36 .23 .10 .36 (.40)
------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations................................. .83 .35 1.57 1.11 1.01 .92 1.15 .26
------ ------ ------ ------ ------ ------ ------ ------
Less distributions from:
Net investment income...................... (.70) (.70) (.72) (.75) (.78) (.82) (.84) (.61)
Net realized gains on
investment transactions................... -- (.08) (.19) (.03) (.06) (.07) (.02) --
In excess of net realized gains............ (.04) (.02) -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------
Total distributions.......................... (.74) (.80) (.91) (.78) (.84) (.89) (.86) (.61)
------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period............... $12.77 $12.68 $13.13 $12.47 $12.14 $11.97 $11.94 $11.65
====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN (%) (b)......................... 6.82 2.48 13.04 9.33 8.75 7.80 10.83 2.30**
RATIOS AND
SUPPLEMENTAL DATA
Net assets, end of period
($ millions)................................ 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*
Ratio of net investment income to
average daily net assets (%)................ 5.59 5.23 5.61 6.05 6.50 6.74 7.13 7.17*
Portfolio turnover rate (%).................. 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...................... $ .05 $ .05 $ .06 $ .07 $ .07 $ .07 $ .07 $ .05
Operating expense ratio including
expenses reimbursed, management fee and
other expenses not imposed (%).......... .91 .90 .95 1.03 1.21 1.62 2.14 4.51*
<FN>
(b) Total returns are higher due to maintenance of the Fund's expenses.
* Annualized
** Not annualized
</FN>
</TABLE>
17
<PAGE>
SCUDDER OHIO TAX FREE FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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.
FUTURES CONTRACTS. The Fund may enter into interest rate and securities index
futures contracts for bona fide hedging purposes. During the year ended March
31, 1995, to hedge against the negative effects of rising interest rates, the
Fund sold municipal bond futures contracts. Upon entering into a futures
contract, the Fund is required to deposit with a broker an amount ("initial
margin") equal to a certain percentage of the purchase price indicated in the
futures contract. Subsequent payments ("variation margin") are made or received
by the Fund each day, dependent on the daily fluctuations in the value of the
underlying security, and are recorded for financial reporting purposes as
unrealized gains or losses by the Fund. When entering into a closing
transaction, the Fund will realize, for book purposes, a gain or loss equal to
the difference between the value of the futures contract to sell and the futures
contract to buy. Futures contracts are valued at the most recent settlement
price. Certain risks may arise upon entering into futures contracts from the
contingency of imperfect market conditions.
AMORTIZATION AND ACCRETION. All premiums and original issue discounts are
amortized/accreted for both tax and financial reporting purposes.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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.
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 year ended March 31, 1995, purchases and sales of municipal
securities (excluding short-term investments) aggregated $14,696,827 and
$18,196,157, respectively.
The aggregate face value of futures contracts opened and closed during the year
ended March 31, 1995 amounted to $10,030,706, respectively.
19
<PAGE>
SCUDDER OHIO TAX FREE FUND
- --------------------------------------------------------------------------------
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 has agreed
not to impose all or a portion of its management fee until July 31, 1995 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 year ended March 31, 1995, the
Adviser did not impose a portion of its fee amounting to $317,609, and the
portion imposed amounted to $150,790, of which $9,009 was unpaid at March 31,
1995.
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 $63,737 charged to the Fund by SSC for
the year ended March 31, 1995, of which $4,978 was unpaid at March 31, 1995.
Effective November 21, 1994, Scudder Fund Accounting Corporation ("SFAC"), a
wholly-owned subsidiary of the Adviser, assumed responsibility for determining
the daily net asset value per share and maintaining the portfolio and general
accounting records of the Fund. For the year ended March 31, 1995, the amount
charged to the Fund by SFAC aggregated $13,011, of which $3,000 was unpaid at
March 31, 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 year ended March 31, 1995,
Trustees' fees charged to the Fund aggregated $14,930.
20
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- -------------------------------------------------------------------------------
TO THE TRUSTEES OF SCUDDER STATE TAX FREE TRUST AND THE SHAREHOLDERS OF SCUDDER
OHIO TAX FREE FUND:
We have audited the accompanying statement of assets and liabilities of Scudder
Ohio Tax Free Fund, including the investment portfolio, as of March 31, 1995,
and the related statement of operations for the year then ended, the statements
of changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the seven years in the period then ended,
and for the period May 28, 1987 (commencement of operations) to March 31, 1988.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1995, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Scudder Ohio Tax Free Fund as of March 31, 1995, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the seven
years in the period then ended, and for the period May 28, 1987 (commencement of
operations) to March 31, 1988, in conformity with generally accepted accounting
principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
May 8, 1995
21
<PAGE>
SCUDDER OHIO TAX FREE FUND
TAX INFORMATION
- --------------------------------------------------------------------------------
The Fund paid distributions of $.04 per share from net long-term capital gains
during its fiscal year ended March 31, 1995. Pursuant to Section 852 of the
Internal Revenue Code, the Fund designates $155,771 as capital gain dividends
for its fiscal year ended March 31, 1995.
Of the dividends paid by the Fund from net investment income for the fiscal year
ended March 31, 1995, 100% constituted exempt interest dividends for regular
federal income tax and Ohio personal 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 a Scudder Investor
Relations Representative at 1-800-225-5163.
22
(Pages 23 and 24 were intentionally left blank.)
<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; Director, Executive Vice President and Manager, Safeguard
Scientifics, Inc.
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.
25
<PAGE>
INVESTMENT PRODUCTS AND SERVICES
<TABLE>
<CAPTION>
The Scudder Family of Funds
- -----------------------------------------------------------------------------------------------------------------
<S> <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 Value Fund
Scudder Growth and Income 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 Fund, Inc.
Scudder Treasurers Trust(TM)++
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.
26
<PAGE>
HOW TO CONTACT SCUDDER
Account Service and Information
- -------------------------------------------------------------------------------------------------------------
For existing account service and transactions
SCUDDER INVESTOR RELATIONS
1-800-225-5163
For account updates, prices, yields, exchanges, and redemptions
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 For information on Scudder
Treasurers Trust,(TM) an Institutional Funds,* funds
institutional cash management designed to meet the broad
service for corporations, investment management and
non-profit organizations and trusts service needs of banks and
that uses certain portfolios of other institutions, call
Scudder Fund, Inc.* ($100,000 1-800-854-8525.
minimum), call 1-800-541-7703.
- -------------------------------------------------------------------------------------------------------------
Scudder Investor Relations and Scudder Funds Centers are services provided through Scudder Investor
Services, Inc., Distributor.
* 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.
</TABLE>
27
<PAGE>
Celebrating 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 36 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.
