This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
Scudder
Pennsylvania
Tax Free Fund
Annual Report
March 31, 1995
* For investors seeking double tax-free income exempt from both Pennsylvania
and regular federal income taxes
* A pure no-load(TM) fund with no commissions to buy, sell, or exchange
shares.
<PAGE>
SCUDDER PENNSYLVANIA 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
15 Financial Statements
18 Financial Highlights
19 Notes to Financial Statements
22 Report of Independent Accountants
23 Tax Information
25 Officers and Trustees
26 Investment Products and Services
27 How to Contact Scudder
HIGHLIGHTS
* Scudder Pennsylvania Tax Free Fund generated a 7.09% 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 Title)
Fund Yield vs. Taxable Equivalent Yield
(Bar Chart Data)
30-Day SEC Yield Taxable Equivalent Yield
3/31/94 5.37% 9.15%
11/30/94 5.99% 10.20%
3/31/95 5.29% 9.01%
* 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 Pennsylvania
residents in the highest combined federal and state tax bracket of 41.29%.
* 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 Pennsylvania Tax Free Fund to help meet your investment
needs.
Sincerely,
/s/David S. Lee
David S. Lee
President,
Scudder Pennsylvania Tax Free Fund
3
<PAGE>
Scudder Pennsylvania Tax Free Fund
Performance Update as of March 31, 1995
- -----------------------------------------------------------------
Growth of a $10,000 Investment
- -----------------------------------------------------------------
Scudder Pennsylvania Tax Free Fund
- ----------------------------------------
Total Return
Period Growth -------------
Ended of Average
3/31/95 $10,000 Cumulative Annual
- --------- ------- ---------- -------
1 Year $10,709 7.09% 7.09%
5 Year $14,825 48.25% 8.19%
Life of
Fund* $18,516 85.16% 8.17%
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:
Scudder Pennsylvania Tax Free Fund
Year Amount
- ----------------------
5/31/87 10000
88 10399
89 11484
90 12489
91 13436
92 14874
93 16835
94 17289
95 18516
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... $11.80 $12.08 $12.27 $12.35 $12.80 $13.46 $13.01 $13.13
Income Dividends.. $ .59 $ .85 .84 .82 .77 .76 .75 .73
Capital Gains
Distributions..... $ -- $ .06 .01 -- .07 .21 .09 .03
Fund Total
Return (%)........ 3.39 11.00 8.75 7.58 10.70 13.19 2.70 7.09
Index Total
Return (%)........ 8.48 7.21 10.56 9.22 10.02 12.52 2.32 7.43
</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>
Scudder Pennsylvania Tax Free Fund
Portfolio Summary as of March 31, 1995
- ---------------------------------------------------------------------------
Diversification
- ---------------------------------------------------------------------------
Hospital/Health 24% During the year, the Fund
General Obligation 20% invested in a broad selection
Escrow & Collateral 15% of revenue bonds and held a
Lease Rentals 13% sizable position in general
Water/Sewer Revenue 10% obligation bonds.
Higher Education 6%
Housing Finance Authority 5%
Port/Airport Authority 2%
Electric Utility Revenue 1%
Miscellaneous Municipal 4%
-------
100%
=======
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
Quality
- --------------------------------------------------------------------------
AAA 60% In a generally negative bond
AA 9% market environment, high credit
A 8% quality proved especially important.
BBB 17%
Not Rated 6%
-------
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 10% The Fund focused on bonds with
1 < 5 years 12% maturities of between five and
5 < 10 years 22% 15 years, which we believed offered
10 < 20 years 41% the most attractive price and yield
Greater than 20 years 15% characteristics.
-------
100%
=======
Weighted average effective maturity: 12 years
5
<PAGE>
SCUDDER PENNSYLVANIA TAX FREE FUND
PORTFOLIO MANAGEMENT DISCUSSION
Dear Shareholders,
Scudder Pennsylvania 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
produced a one-year total return of 7.09%, reflecting a $0.12 increase in share
price to $13.13 on March 31, 1995, $0.73 in reinvested income distributions, and
$0.03 in reinvested capital gain distributions. This return was nearly three
quarters of a percentage point better than the average total return of 6.39%
generated by the 47 Pennsylvania 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 -2.43%. By contrast, the total return for
the period's final four months was 9.77%. 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 5.37%. 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 5.29%. Investors in Pennsylvania's top combined
federal and state tax bracket would have had to earn 9.01% from a comparable
taxable investment to match the Fund's 5.29% 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 new investment dollars after months of
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 Pennsylvania 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
7
<PAGE>
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.
As bond prices declined during 1994, we continued to emphasize bonds in the
intermediate-maturity range. Currently, over 60% of the portfolio is invested in
bonds with maturities of between five and 20 years, and only 14% is invested in
bonds maturing in over 15 years. Given last year's market conditions, there was
little yield advantage in extending into longer-maturity bonds, since the yield
differential between 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 Title)
Yields Across the Maturity Spectrum: AAA-Rated Municipal Bonds on 3/31/95
(Line Chart Data)
Years Yield
1 4.35%
2 4.6
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 5.5
13 5.6
14 5.65
15 5.7
16 5.75
17 5.8
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
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.
8
<PAGE>
Improving Economic and Fiscal Conditions in Pennsylvania
The climate for Pennsylvania's municipal market is good. The state's
economic recovery continues, although employment growth in Pennsylvania lags
that of the nation's. Reflecting positive conditions that first emerged during
fiscal year 1994, Pennsylvania's finances have continued to improve. The state's
estimated total revenues of $16.1 billion for fiscal year 1995 are now higher
than originally expected and above estimated expenditures for the year. A
balanced budget for fiscal year 1996 is expected to pass on schedule, although
the governor's proposed school reform plan could cause a delay. In any case,
Pennsylvania is committed to controlling its finances and balancing its budget.
The state's debt levels are moderate and well within its means, which bodes well
for Pennsylvania municipal bonds.
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 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 Pennsylvania Tax Free Fund: A Team Approach to Investing
Scudder Pennsylvania 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>
SCUDDER PENNSYLVANIA TAX FREE FUND
<TABLE>
INVESTMENT PORTFOLIO as of March 31, 1995
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
Unaudited
---------
Principal Credit Market
Amount ($) Rating (b) Value ($)
- ---------------------------------------------------------------------------------------------------------------
10.4% SHORT-TERM MUNICIPAL INVESTMENTS
<S> <C> <C> <C> <C>
Pennsylvania Bucks County, PA, Oxford Falls Plaza, Series 1984,
Weekly Demand Note, 4.5%, 10/1/14*............... 100,000 MIG1 100,000
Delaware County, PA, Airport Facilities Revenue,
United Parcel Service, Daily Demand Note,
4.6%, 12/1/15*.................................. 300,000 A1+ 300,000
Keystone Oaks, PA, Auction Rate Securities,
4.1%, 9/1/16 (c)*............................... 2,250,000 AAA 2,250,000
Pennsylvania General Obligation, Auction Rate
Securities, 4.05%, 4/15/02*..................... 150,000 AAA 150,000
Pennsylvania Higher Educational Facilities Authority,
Temple University, Series 1984, Daily Demand Note,
4.45%, 10/1/09*................................. 2,100,000 MIG1 2,100,000
Philadelphia PA, Regional Port Authority, Inverse
Floater, 4.3%, 9/1/13 (c)****................... 1,000,000 NR 1,000,000
Philadelphia, PA, Tax and Revenue Anticipation Note,
4.75%, 6/15/95.................................. 1,500,000 SP1 1,500,570
Total Short-term Municipal Investments ---------
(Cost $7,402,024)............................... 7,400,570
---------
89.6% LONG-TERM MUNICIPAL INVESTMENTS
Pennsylvania Allegheny County, PA:
Hospital Development Authority, Hospital Revenue,
Magee Women's Hospital, 5.3%, 10/1/07 (c)....... 1,260,000 AAA 1,237,420
Sanitary Authority, Sewer Revenues, Series 1986 B,
prerefunded, 7.5%, 6/1/99 (c)***................. 500,000 AAA 549,595
Armstrong County, PA, Hospital Authority, St. Frances
Medical Center, Series A, 6.25%, 6/1/13 (c)...... 1,000,000 AAA 1,011,690
Beaver County, PA, Industrial Development Authority,
Ohio Edison, Beaver Valley, Pollution Control
Revenue, 10.5%, 10/1/15.......................... 500,000 BBB 526,910
Berks County, PA, Municipal Authority Hospital
Revenue, Reading Hospital and Medical
Center Project:
5.5%, 10/1/08 (c)............................... 2,000,000 AAA 1,979,360
5.7%, 10/1/14 (c)............................... 1,000,000 AAA 963,560
Bethlehem, PA, Water Authority, Refunding,
4.875%, 11/15/14 (c)............................ 1,000,000 AAA 867,050
Bethlehem, PA, Water Revenue, Series 1992,
prerefunded, 6.25%, 11/15/01 (c)***............. 1,000,000 AAA 1,065,020
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
Unaudited
---------
Principal Credit Market
Amount ($) Rating (b) Value ($)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Blair County, PA, Hospital Authority, 5.5%, 7/1/07 (c).. 1,000,000 AAA 979,850
Bucks County, PA, Water and Sewer Authority
Revenue, ETM, 6.375%, 12/1/08**........................ 425,000 NR 453,186
Clearfield, PA, Hospital Authority Revenue,
Clearfield Hospital, 6.875%, 6/1/16.................... 1,490,000 NR 1,443,839
Commonwealth of Pennsylvania, Certificate of
Participation, Lease Revenue, Series A:
5.25%, 7/1/10 (c)..................................... 1,890,000 AAA 1,778,244
5%, 7/1/15 (c)........................................ 1,000,000 AAA 885,720
Delaware County, PA, Health Facilities Revenue,
Mercy Health Corporation of Southeastern
Pennsylvania, Series B, 6%, 11/15/07................... 1,500,000 BBB 1,447,155
Delaware County Authority, Commonwealth of
Pennsylvania, University Revenue, Villanova
University, prerefunded, 7.75%, 8/1/98***.............. 200,000 NR 220,912
Erie, PA, Higher Education Building Authority, College
Revenue, Mercyhurst College Project,
5.75%, 3/15/20......................................... 1,000,000 BBB 842,120
Erie County, PA:
General Obligation, 5.25%, 9/1/12 (c).................. 1,000,000 AAA 930,820
Prison Authority, Commonwealth Lease Revenue,
prerefunded, 6.25%, 11/1/01 (c)***................... 1,000,000 AAA 1,060,130
Harrisburg, PA, Water Authority Revenue,
Series 1993 B, Inverse Floater, 7.38%,
6/18/15 (c)****........................................ 1,000,000 AAA 963,750
Lebanon County, PA, Good Samaritan Hospital
Authority Revenue, Series 1989 B, prerefunded,
8.25%, 11/1/99***...................................... 600,000 BBB 690,120
Lehigh County, PA:
Hospital Revenue, Healtheast, Series B, prerefunded,
9%, 7/1/97***........................................ 200,000 A 221,100
Industrial Development Authority, Pollution Control
Revenue, PA Power and Light Company Project,
9.375%, 7/1/15....................................... 150,000 A 154,608
Montgomery County, PA:
Holy Redeemer Hospital, 6.75%, 2/1/09 (c).............. 500,000 AAA 523,475
Redevelopment Authority, Multi-Family Housing
Revenue Refunding, KBF Associates,
6.375%, 7/1/12........................................ 1,500,000 BBB 1,411,005
Pennsylvania Convention Center Authority,
Funding Revenue, Series 1994 A, 6.75%, 9/1/19........... 2,550,000 BBB 2,561,883
Pennsylvania General Obligation:
6.25%, 7/1/10........................................... 1,000,000 AA 1,051,250
5.375%, 5/1/13.......................................... 1,500,000 AA 1,394,175
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
<TABLE>
SCUDDER PENNSYLVANIA TAX FREE FUND
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
Unaudited
---------
Principal Credit Market
Amount ($) Rating (b) Value ($)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Inverse Floater, 18.445%, 4/15/02 (c)****...................... 1,000,000 AAA 1,671,250
Prerefunded, Zero Coupon, 12/15/98***.......................... 2,040,000 AA 1,251,274
Pennsylvania Higher Educational Facilities Authority,
Colleges and University Revenue, Carnegie-
Mellon University, 9%, 11/1/09................................. 50,000 A 53,603
Pennsylvania Housing Finance Agency,
Single Family Mortgage Revenue:
Series 1992-33, 6.85%, 10/1/09............................... 840,000 AA 892,684
Series 1991-32, 7.15%, 4/1/15................................ 1,000,000 AA 1,058,650
Pennsylvania Industrial Development Authority,
Economic Development Revenue, 5.8%, 1/1/08 (c)................. 1,000,000 AAA 1,014,290
Pennsylvania Intergovernmental Cooperation
Authority, Special Tax Revenue, City of
Philadelphia, prerefunded, 6.8%, 6/15/02***.................... 1,000,000 AAA 1,099,440
Philadelphia, PA, Airport Revenue, Philadelphia
Airport System, 9%, 6/15/15.................................... 100,000 BBB 103,796
Philadelphia, PA, Gas Works Revenue,
Series A, prerefunded, 7.3%, 7/1/97***......................... 1,000,000 BBB 1,069,250
Philadelphia, PA, General Obligation:
11.5%, 8/1/98 (c).............................................. 500,000 AAA 597,220
Refunding Revenue, Series A, 11.5%, 8/1/99 (c)................. 710,000 AAA 882,069
Philadelphia, PA, Hospital and Higher Education
Facilities Authority, Hospital Revenue:
Albert Einstein Medical Center, 7.5%, 4/1/99.................. 1,000,000 A 1,059,910
Chestnut Hill Hospital, 6.5%, 11/15/22........................ 1,750,000 A 1,729,875
Children's Seashore House, Series A, 7%,
8/15/12...................................................... 1,000,000 A 1,015,650
Graduate Health System Obligation Group,
6.625%, 7/1/21............................................... 1,000,000 BBB 926,920
Temple University Hospital, Series 1993 A,
6.625%, 11/15/23............................................. 1,100,000 BBB 1,083,929
Philadelphia, PA, Municipal Authority, Lease
Revenue Refunding:
Series C, 5%, 4/1/07 (c)...................................... 2,000,000 AAA 1,906,220
Series A, 5.625%, 11/15/14 (c)................................ 1,000,000 AAA 958,110
Philadelphia, PA, Regional Port Authority,
Inverse Floater, 7.82%, 9/1/13 (c)****......................... 1,000,000 AAA 1,016,250
Philadelphia, PA, Water and Wastewater Refunding
Revenue, 5.625%, 6/15/09 (c)................................... 2,000,000 AAA 1,994,960
Pittsburgh, PA, General Obligation, Series 1993 A,
5.5%, 9/1/14 (c)............................................... 1,500,000 AAA 1,429,440
Pittsburgh, PA, Water and Sewer System Revenue:
Series A, prerefunded, 6.5%, 9/1/01 (c)***.................. 1,250,000 AAA 1,365,650
ETM, 7.25%, 9/1/14 (c)**.................................... 150,000 AAA 177,081
Series A, 4.75%, 9/1/16 (c)................................. 2,000,000 AAA 1,683,680
</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>
Pottsville, PA, Hospital Authority, 7.25%, 7/1/24.......... 1,000,000 BBB 953,350
Shenango Valley, PA, Osteopathic Hospital Authority,
Shenango Valley Medical Center, 7.875%, 4/1/10............ 500,000 BBB 514,700
Somerset County, PA, General Authority,
Commonwealth Lease Revenue, prerefunded,
6.25%, 10/15/01 (c)***.................................... 1,000,000 AAA 1,059,810
Union County, PA, Higher Education Facilities
Authority, University Revenue, Bucknell University,
6.2%, 4/1/07 (c).......................................... 1,000,000 AAA 1,041,730
University Area, PA, Sewer Revenue, 5.25%,
11/1/14 (c)............................................... 1,750,000 AAA 1,618,838
Upper Merion County, PA:
General Authority, Lease Revenue, crossover
refunded, 7.2%, 8/15/96*****............................ 350,000 AA 367,602
Municipal Utility Authority, Sewer Revenue,
crossover refunded, 7.2%, 8/15/96*****.................. 150,000 AA 157,544
Washington County, PA, Lease Revenue, Shadyside
Hospital Project, prerefunded, 7.375%,
6/15/00 (c)***............................................ 1,000,000 AAA 1,130,270
York County, PA, Resource Recovery Solid Waste
Authority, General Obligation, Series C,
8.2%, 12/1/14............................................. 315,000 AA 342,273
Puerto Rico Puerto Rico Electric Power Authority, Power Revenue
Refunding, Series N, Zero Coupon, 7/1/03 (c).............. 1,500,000 AAA 986,850
Puerto Rico, Public Improvement Refunding,
General Obligation, 5.4%, 7/1/07.......................... 1,500,000 A 1,449,030
Virgin Islands Virgin Islands Public Finance Authority,
General Obligation, Matching Fund Loan Notes,
Series A, 7.25%, 10/1/18.................................. 1,000,000 NR 1,034,640
Total Long-term Municipal Investments ----------
(Cost $62,393,297)........................................ 63,911,785
----------
- -----------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio - 100.0%
(Cost $69,795,321) (a).................................... 71,312,355
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
SCUDDER PENNSYLVANIA TAX FREE FUND
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(a) The cost for federal income tax purposes was $69,795,321. At March 31,
1995, net unrealized appreciation for all securities based on tax cost
was $1,517,034. This consisted of aggregate gross unrealized
appreciation for all securities in which there was an excess of market
value over tax cost of $2,423,614 and aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost
over market value of $906,580.
(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.
** 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.
*** 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.
**** Inverse floating rate notes are instruments whose yields have an inverse
relationship to benchmark interest rates. These securities are shown at
their rate as of March 31, 1995.
***** Bonds which are crossover refunded are secured by an escrow of
securities which is used to pay principal on the tax exempt issue and
retire the bonds in full at the earliest refunding date, except in the
case of default by the issuer or inadequacy in the escrow account.
The accompanying notes are an integral part of the financial statements
14
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1995
- -----------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at market (identified cost $69,795,321)
(Note A)............................................. $ 71,312,355
Receivables:
Interest............................................. 1,302,095
Fund shares sold..................................... 5,569
------------
Total assets.................................. 72,620,019
LIABILITIES
Payables:
Due to custodian bank................................ $ 78,520
Dividends............................................ 129,166
Fund shares redeemed................................. 78,218
Accrued management fee (Note C)...................... 4,921
Other accrued expenses (Note C)...................... 37,077
------------
Total liabilities............................. 327,902
-------------
Net assets, at market value............................. $ 72,292,117
=============
NET ASSETS
Net assets consist of:
Unrealized appreciation on investments............... $ 1,517,034
Accumulated net realized gain........................ 168,196
Shares of beneficial interest........................ 55,071
Additional paid#in capital........................... 70,551,816
-------------
Net assets, at market value............................. $ 72,292,117
=============
NET ASSET VALUE, offering and redemption price per share
($72,292,117 -:- 5,507,084 outstanding shares of
beneficial interest, $.01 par value, unlimited number
of shares authorized)............................... $13.13
======
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
SCUDDER PENNSYLVANIA TAX FREE FUND
- -------------------------------------------------------------------------------
<TABLE>
STATEMENT OF OPERATIONS
Year Ended March 31, 1995
- -------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest............................................ $ 4,442,917
Expenses:
Management fee (Note C)............................. $ 114,361
Services to shareholders (Note C)................... 89,038
Custodian and accounting fees (Note C).............. 60,436
Trustees' fees (Note C)............................. 14,900
Auditing............................................ 29,352
Reports to shareholders............................. 20,403
Legal............................................... 7,165
State registration.................................. 3,050
Other............................................... 17,403 356,108
---------------------
Net investment income 4,086,809
-----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENT TRANSACTIONS
Net realized gain from investment transactions...... 181,781
Net unrealized appreciation on investments
during the period............................... 452,741
-----------
Net gain on investments............................. 634,522
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.. $ 4,721,331
===========
</TABLE>
The accompanying notes are in intergral part of the financial statements
16
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
Years Ended March 31,
-----------------------
Increase (Decrease) in Net Assets 1995 1994
- ----------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income............................ $ 4,086,809 $ 3,861,005
Net realized gain from investment
transactions.................................. 181,781 443,959
Net unrealized appreciation (depreciation)
on investments during the period.............. 452,741 (2,824,618)
Net increase in net assets resulting from ----------- -------------
operations.................................... 4,721,331 1,480,346
Distributions to shareholders: ----------- -------------
From net investment income ($.73 and $.75 per
share, respectively).......................... (4,086,809) (3,861,005)
From net realized gains from investment ----------- -------------
transactions ($.03 and $.09 per share,
respectively)................................. (157,473) (461,284)
Fund share transactions: ----------- -------------
Proceeds from shares sold........................ 15,679,635 29,798,073
Net asset value of shares issued to
shareholders in reinvestment
of distributions.............................. 2,980,880 2,820,609
Cost of shares redeemed.......................... (20,409,846) (17,260,892)
Net increase (decrease) in net assets from ----------- -------------
Fund share transactions....................... (1,749,331) 15,357,790
------------ -------------
INCREASE (DECREASE) IN NET ASSETS................ (1,272,282) 12,515,847
Net assets at beginning of period................ 73,564,399 61,048,552
------------ -------------
NET ASSETS AT END OF PERIOD...................... $ 72,292,117 $ 73,564,399
============ =============
OTHER INFORMATION
Increase (decrease) in Fund shares
Shares outstanding at beginning of period 5,653,359 4,535,748
------------ -------------
Shares sold...................................... 1,242,877 2,163,009
Shares issued to shareholders in
reinvestment of distributions................. 232,520 204,984
Shares redeemed.................................. (1,621,672) (1,250,382)
------------ -------------
Net increase (decrease) in Fund shares (146,275) 1,117,611
------------ -------------
Shares outstanding at end of period.............. 5,507,084 5,653,359
============ =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
<TABLE>
SCUDDER PENNSYLVANIA TAX FREE FUND
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..................... $13.01 $13.46 $12.80 $12.35 $12.27 $12.08 $11.80 $12.00
------ ------ ------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income (a)............... .73 .75 .76 .77 .82 .84 .79 .65
Net realized and unrealized gain
(loss) on investment
transactions.......................... .15 (.36) .87 .52 .08 .20 .40 (.26)
------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations.......... .88 .39 1.63 1.29 .90 1.04 1.19 .39
------ ------ ------ ------ ------ ------ ------ ------
Less distributions:
From net investment income.............. (.73) (.75) (.76) (.77) (.82) (.84) (.85) (.59)
From net realized gains on
investment transactions............... (.03) (.09) (.21) (.07) -- (.01) (.06) --
------ ------ ------ ------ ------ ------ ------ ------
Total distributions....................... (.76) (.84) (.97) (.84) (.82) (.85) (.91) (.59)
------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period............ $13.13 $13.01 $13.46 $12.80 $12.35 $12.27 $12.08 $11.80
====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN (%) (b)...................... 7.09 2.70 13.19 10.70 7.58 8.75 11.00 3.39**
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
($ millions)............................ 72 74 61 39 26 18 11 5
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 (%)............ 5.74 5.42 5.79 6.05 6.67 6.78 7.09 7.16*
Portfolio turnover rate (%)............... 26.2 17.4 29.2 11.2 7.8 2.0 13.5 97.6*
(a) Reflects a per share amount of
expenses, exclusive of
management fees, reimbursed
by the Adviser of.................... $ -- $ -- $ -- $ -- $ .02 $ .06 $ .15 $ .43
Reflects a per share amount of
management fees and other
fees not imposed of.................. $ .06 $ .06 $ .07 $ .08 $ .07 $ .07 $ .07 $ .05
Operating expense ratio
including expenses reimbursed,
management fee and other
expenses not imposed (%)............. .94 .95 1.02 1.13 1.43 1.84 2.43 5.75*
<FN>
(b) Total returns are higher due to maintenance of the Fund's expenses.
* Annualized
** Not annualized
</FN>
</TABLE>
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
A. SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
Scudder Pennsylvania 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.
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. As a
19
<PAGE>
SCUDDER PENNSYLVANIA TAX FREE FUND
- --------------------------------------------------------------------------------
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 $17,134,932 and
$20,253,673, 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 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 management fee amounting to $312,807 and
the portion imposed amounted to $114,361.
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 $67,137 charged to the Fund by SSC for
the year ended March 31, 1995, of which $5,286 is unpaid at March 31, 1995.
Effective November 16, 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.
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
For the year ended March 31, 1995, the amount charged to the Fund by SFAC
aggregated $13,429, of which $3,000 is 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 $14,900.
21
<PAGE>
SCUDDER PENNSYLVANIA TAX FREE FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE TRUSTEES OF SCUDDER STATE TAX FREE TRUST AND THE SHAREHOLDERS OF SCUDDER
PENNSYLVANIA TAX FREE FUND:
We have audited the accompanying statement of assets and liabilities of Scudder
Pennsylvania 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 Pennsylvania 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
22
<PAGE>
TAX INFORMATION
- --------------------------------------------------------------------------------
The Fund paid distributions of $.028 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 $181,781 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 Pennsylvania 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.
23
<PAGE>
This page is blank.
24
<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
<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 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)++
</TABLE>
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, non-profit investment management and
organizations and trusts that uses service needs of banks and
certain portfolios of Scudder Fund, other institutions, call
Inc.* ($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.
* 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.
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.
