This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
Scudder
Massachusetts
Tax Free Fund
Semiannual Report
September 30, 1995
* For investors seeking double tax-free income exempt from both Massachusetts
and regular federal income taxes.
* A pure no-load(TM) fund with no commissions to buy, sell, or exchange
shares.
<PAGE>
SCUDDER MASSACHUSETTS TAX FREE FUND
CONTENTS
2 In Brief
3 Letter from the Fund's President
4 Performance Update
5 Portfolio Summary
6 Portfolio Management Discussion
10 Investment Portfolio
15 Financial Statements
18 Financial Highlights
19 Notes to Financial Statements
25 Officers and Trustees
26 Investment Products and Services
27 How to Contact Scudder
IN BRIEF
* For the six-month period ended September 30, 1995, Scudder Massachusetts
Tax Free Fund posted a total return of 4.97%, outpacing the 4.25% average
return of the 48 Massachusetts tax-free funds tracked by Lipper Analytical
Services.
* As of September 30, 1995, the Fund's 30-day net annualized SEC yield was
4.98%, equivalent to a 9.37% taxable yield for Massachusetts investors
subject to the 46.85% combined federal and state income tax rate.
30-Day Yield on September 30, 1995
-------------------------------------------------------------------------------
Scudder Massachusetts Tax Taxable yield needed to equal
Free Fund the Fund's yield
4.98% 9.37%
-------------------------------------------------------------------------------
* For the three-, four-, and five-year periods ended September 30, 1995,
Scudder Massachusetts Tax Free Fund continued to rank number one among
comparable funds tracked by Lipper. Page 6 contains additional information
concerning the Fund's rankings.
2
<PAGE>
LETTER FROM THE FUND'S PRESIDENT
Dear Shareholders,
In our March 31 annual report we wondered whether we had seen the highs
in interest rates after their persistent rise in 1994. The answer turned out to
be "yes," for the most part. As the U.S. economy slowed and inflation remained
quiescent during the first quarter of 1995 and beyond, the Federal Reserve
permitted short-term interest rates to ease downward, cutting the federal funds
rate by 0.25% in July. Intermediate-term rates followed, and eventually even
long-term yields declined.
Throughout 1995, investors have been anticipating an economic slowdown,
but for now economic indicators are turning up, corporate profits remain
healthy, and consumers have responded to lower short-term rates by borrowing and
spending more. We believe consumers will fuel this reacceleration of U.S.
economic activity until their increasingly high debt burdens force them to
tighten their budgetary belts. The current economic expansion cycle is extremely
mature, and we expect a slowdown sometime in the second half of 1996.
What does this mean for tax-exempt fund investors? It's possible that
the pickup in economic activity could lead to some increases in interest rates
over the short term. But since the economy is extremely interest-rate sensitive
it should respond quickly to any rate changes. When the economy begins to slow
down, rates should move back down also. Most importantly, the relationship
between supply and demand for municipal bonds should work in the tax-exempt
investor's favor as the supply of bonds continues to shrink, placing upward
pressure on prices.
As always, your portfolio managers will continue to focus their efforts
on fundamental research and security selection as a means of generating high
current income and attractive total returns. Please call a Scudder Investor
Relations representative if you have questions about your Fund. Page 27 provides
more information on how to contact Scudder. Thank you for choosing Scudder
Massachusetts Tax Free Fund to help meet your investment needs.
Sincerely,
/S/David S. Lee
David S. Lee
President,
Scudder Massachusetts Tax Free Fund
3
<PAGE>
Scudder Massachusetts Tax Free Fund
Performance Update as of September 30, 1995
- -----------------------------------------------------------------
Growth of a $10,000 Investment
- -----------------------------------------------------------------
Scudder Massachusetts Tax Free Fund
- ----------------------------------------
Total Return
Period Growth --------------
Ended of Average
9/30/95 $10,000 Cumulative Annual
- ------- ------- ---------- ------
1 Year $11,112 11.12% 11.12%
5 Year $15,761 57.61% 9.53%
Life of
Fund* $20,384 103.84% 8.91%
Lehman Brothers Municipal Bond Index
- --------------------------------------
Total Return
Period Growth --------------
Ended of Average
9/30/95 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $11,118 11.18% 11.18%
5 Year $15,289 52.89% 8.86%
Life of
Fund* $20,124 101.24% 8.75%
*The Fund commenced operations on May 28, 1987.
Index comparisons begin on May 31, 1987.
A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:
Yearly periods ended September 30
Scudder Massachusetts Tax Free Fund
Year Amount
- ----------------------
5/31/87 $10,000
87 $ 9,871
88 $11,353
89 $12,349
90 $12,933
91 $14,660
92 $16,432
93 $18,981
94 $18,344
95 $20,384
Lehman Brothers Municipal Bond Index
Year Amount
- ----------------------
5/31/87 $10,000
87 $10,038
88 $11,341
89 $12,325
90 $13,163
91 $14,899
92 $16,456
93 $18,553
94 $18,100
95 $20,124
The unmanaged Lehman Brothers Municipal Bond Index is a market
value-weighted measure of municipal bonds issued across the United
States. Index issues have a credit rating of at least Baa and a
maturity of at least two years. Index returns assume reinvestment
of dividends and, unlike Fund returns, do not reflect any fees or
expenses.
- -----------------------------------------------------------------
Returns and Per Share Information
- -----------------------------------------------------------------
A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) and Index Total
Return (%) with the exact data points listed in the table
below.
Yearly periods ended September 30
- -----------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1987* 1988 1989 1990 1991 1992 1993 1994 1995
--------------------------------------------------------------------------
Net Asset Value... $11.60 $12.30 $12.30 $12.03 $12.74 $13.28 $14.24 $12.95 $13.63
Income Dividends.. $ .25 $ .81 $ .85 $ .82 $ .82 $ .83 $ .84 $ .78 $ .72
Capital Gains
and Other
Distributions..... $ -- $ .10 $ .19 $ .02 $ .04 $ .12 $ .18 $ .04 $ --
Fund Total
Return (%)........ -1.29 15.01 8.77 4.73 13.35 12.09 15.51 -3.36 11.12
Index Total
Return (%)........ .38 12.98 8.68 6.80 13.19 10.45 12.74 -2.44 11.18
</TABLE>
All performance is historical, assumes reinvestment of all dividends and
capital gains, and is not indicative of future results.
Investment return and principal value will fluctuate, so an investor's
shares, when redeemed, may be worth more or less than when purchased.
If the Adviser had not temporarily capped expenses, the average annual
total return for the Fund for the one year, five year, and life of Fund
periods would have been lower.
4
<PAGE>
<PAGE>
Portfolio Summary as of September 30, 1995
- ---------------------------------------------------------------------------
Diversification
- ---------------------------------------------------------------------------
Hospital/Health 21%
General Obligation 18%
Water/Sewer Revenue 16%
Electric Utility The Fund's focus on hospital and
Revenue 13% healthcare bonds reflects our belief
State Agency/Lease 9% that carefully selected holdings in
Higher Education 6% this area should provide attractive
Housing Finance returns.
Authority 6%
Student Loans 3%
Miscellaneous Municipal 8%
----
100%
====
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
Quality
- --------------------------------------------------------------------------
AAA 30%
AA 5% Portfolio quality remains high,
A 56% with 91% of the Fund's portfolio
BBB 6% rated A or better.
Not Rated 3%
----
100%
====
Weighted average quality: A
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 1% During the semiannual period we
1 - 5 years 4% sold intermediate-maturity bonds
5 - 10 years 47% that had become overvalued and
10 - 20 years 40% purchased several longer-maturity
20 years or greater 8% issues.
----
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 MASSACHUSETTS TAX FREE FUND
PORTFOLIO MANAGEMENT DISCUSSION
Dear Shareholders,
In a falling interest rate environment in which municipals lagged Treasury
securities, Scudder Massachusetts Tax Free Fund continued its run of good
performance. As the economy continued on a slow-growth, low-inflation track,
Treasury yields fell anywhere from 0.80 to 1.00 percentage point during the
six-month period ended September 30, while municipal yields declined only 0.10
to 0.65 percentage point. (Municipals tend to lag Treasuries during the initial
portion of a rally because Treasuries enjoy higher volume and a more active
market.) We are pleased to report that Scudder Massachusetts Tax Free Fund
posted a 4.97% total return for the period, outpacing the 4.25% average return
for its peer group of 48 Massachusetts tax free funds, according to Lipper
Analytical Services, Inc. Contributing to the Fund's favorable total return were
a $0.30 increase in net asset value per share to $13.63 on September 30, and
distributions totalling $0.36 per share in tax-free income.
Top Performance Over Time for
Scudder Massachusetts
Tax Free Fund
(Lipper rankings for periods
through September 30, 1995)
-----------------------------------------------------
Period Rank Number of Funds
Six months 4 of 48
One year 3 of 44
Two years 2 of 31
Three years 1 of 23
Four years 1 of 20
Five years 1 of 18
-----------------------------------------------------
Rankings are based on historical total returns, although the Fund's main
objective is income. Rankings for the Fund reflect the effect of an expense
limitation since the Fund's inception. Had the Fund's expenses not been limited,
total returns would have been lower. Past performance does not guarantee future
results.
Scudder Massachusetts Tax Free Fund's 30-day net annualized SEC yield
was 4.98% at the close of the semiannual period. For investors subject to the
46.85% maximum combined federal and state income tax rate, the Fund's yield was
equal to a 9.37% taxable yield, significantly higher than current yields
provided by comparable taxable investments.
The Fund continues its run of impressive performance, ranking number
one among all Massachusetts tax-exempt funds tracked by Lipper for the three-,
four-, and five-year periods ended September 30, 1995, and number two for the
two-year period.
Though many investors are reluctant to invest in bonds -- municipal,
Treasury, or corporate -- after their disappointing returns in 1994, bonds have
provided strong returns thus far in 1995. The Lehman Brothers Aggregate
(taxable) and Municipal Bond Indices, for example, have returned 13.63% and
12.80%, respectively, for the year to date. In the current environment of
declining interest rates, and with prospects good for continued modest rate
declines, bonds have attractive price appreciation potential. In addition,
municipal bonds currently offer higher "real yields," on average, than their
taxable counterparts (the current yield minus the inflation rate equals the real
yield).
6
<PAGE>
After-Tax Advantage: 30-Year AAA Municipal
Bonds vs. 30-Year Treasury Bonds
as of 9/30/95
--------------------------------------------
Municipal Bonds Treasury Bonds
5.85% 4.29%
--------------------------------------------
Graph assumes Treasury bonds taxed at a 36% rate.
Intermediate Maturities Performed Well
Historically, yields of municipal bonds across the maturity spectrum
have tended to move together. As a result, observers have been able to determine
whether the municipal market is, at a given point in time, overpriced, neutrally
priced, or underpriced. But in the six months ended September 30, tax-exempt
yields have spread out. At the close of the period, short-term municipal bond
yields were relatively low and therefore the bonds overpriced, intermediate
maturity bond yields and prices were neutral, and many long-term municipals
provided relatively high yields and attractive prices.
Intermediate-maturity municipal bonds provided solid price appreciation
during this period, we believe, because they experienced strong relative demand
from two high-volume classes of investors--individuals and property/casualty
insurance companies. Longer-maturity bonds suffered from lack of demand because
many investors were unwilling to commit to maturities of 20 years or more, given
their uncertainty over the long-term direction of interest rates.
Scudder Massachusetts Tax Free Fund has held a substantial number of
intermediate-maturity bonds for some time, and these holdings generally have
performed well. During the six-month period, our near-term strategy was twofold:
to identify and sell any intermediate-term bonds that in our judgment had become
overpriced, and to purchase several tax-free bonds with longer maturities.
Because longer maturities are currently inexpensive versus the rest of the
municipal market and especially versus Treasuries, we believe selective
purchases of these bonds offer the Fund the opportunity to capture higher yields
and potential capital appreciation. The Fund's extension of maturity is modest,
7
<PAGE>
however. As of September 30, bonds with maturities greater than 20 years
represented only 8% of the Fund's portfolio holdings.
Despite our purchases of several longer-maturity bonds, the Fund's
average effective maturity actually declined from 12 to approximately 11 years
during the period, as many other bonds the portfolio held drew one year closer
to maturity. Portfolio quality remains high, with 91% of the Fund's portfolio
rated A or better as of September 30. And the Fund continues to seek a broad
selection of Massachusetts municipals: At the close of the period, the Fund's
top three sectors were hospital and healthcare bonds, Massachusetts general
obligation bonds and water and sewer revenue bonds. Despite some recent
pressures on healthcare institutions, we believe that with ongoing research and
careful security selection, hospital and healthcare bonds will continue to
provide the Fund's portfolio with attractive returns over the long term.
Longer-Term Strategy Unchanged
The Fund seeks to provide investors with a competitive level of
tax-exempt income while also emphasizing total return. We pursue these
objectives by concentrating on three broad categories of Massachusetts municipal
bonds:
* Noncallable bonds, which an issuer cannot redeem before the maturity date.
When interest rates fall, bond issuers tend to reduce their borrowing
expenses by redeeming "callable" existing bonds and issuing new securities
that pay lower interest rates. Noncallable bonds provide a relatively
stable stream of income and solid price appreciation potential over time.
* Steeply discounted callable bonds, which are unlikely to be redeemed
prematurely because of their discounted prices.
* "Cushion" bonds. We balance the Fund's long-maturity bonds by purchasing
so-called cushion bonds -- bonds with high coupons that compensate for the
fact that they can be redeemed by their issuers in a relatively short time.
Massachusetts Economic Outlook Still Favorable
Massachusetts is enjoying yet another year of economic expansion following
the recession of 1990-1992. Even so, Governor Weld's budget for the state's 1996
fiscal year is conservative, with a projected revenue increase of only 3.6% over
8
<PAGE>
1995 levels and a meager 2.6% rise in expenditures. The state's recent economic
success has been based in part on continued diversification among its
traditional manufacturing, high technology, and service industries. The
decade-long decline in the state's manufacturing sector appears to have turned
around, with manufacturers posting employment gains in 1994. Consumer spending
remains an important component of growth. Massachusetts' per capita income
levels are 18% higher than the national average, with an overall ranking of
fourth in the United States. State debt levels, though high, are manageable
given the state's wealth. Overall, Massachusetts' economic climate is favorable
for bond issuers and investors alike.
Some Closing Thoughts
As stated in this report's introductory letter from Fund President
David Lee, we believe that a reduction in consumer spending will eventually keep
the economy on a moderate-growth track. In the short term, as investors
recognize the after-tax value of municipals versus similar investments, we
expect tax-free bonds to make some gains. However, because this year's lower
interest rates have helped pave the way for a late-cycle spurt in economic
growth, inflation as well as interest rates may blip upward in the months ahead.
Any increase in interest rates will be modest, in our view, and should reverse
itself as the U.S. economy begins to slow down in the latter part of 1996.
Consequently, our longer-term outlook for bonds is positive. We believe Scudder
Massachusetts Tax Free Fund's portfolio is well positioned to capture both
attractive yields and price appreciation.
Sincerely,
Your Portfolio Management Team
/s/Philip G. Condon /s/Kathleen A. Meany
Philip G. Condon Kathleen A. Meany
9
<PAGE>
<PAGE>
SCUDDER MASSACHUSETTS TAX FREE FUND
INVESTMENT PORTFOLIO as of September 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating (c) Value ($)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
0.4% SHORT-TERM MUNICIPAL INVESTMENTS
Boston, MA, Water and Sewer Commission,
Series A, Weekly Demand Note, 4.1%, 11/1/15* ............ 100,000 MIG1 100,000
Massachusetts General Obligation, Dedicated Income
Tax, Series B, Daily Demand Note,
4.6%, 12/1/97* .......................................... 1,000,000 MIG1 1,000,000
---------
Total Short-term Municipal Investments
(Cost $1,100,000) ....................................... 1,100,000
---------
99.6% LONG-TERM MUNICIPAL INVESTMENTS
Boston, MA, General Obligation, Series A,
6.5%, 7/1/12 (d) ........................................ 2,320,000 AAA 2,470,916
Boston, MA, Industrial Development Authority,
Springhouse Project, 9.25%, 7/1/25 ...................... 1,000,000 NR 1,014,750
Chicopee, MA, Electric System Revenue, ETM,
7.125%, 1/1/17** ........................................ 1,210,000 AAA 1,437,480
Dedham-Westwood, MA, Water District,
General Obligation, 5%, 10/15/08 (d) .................... 1,035,000 AAA 998,423
Haverhill, MA, Unlimited Tax, General Obligation,
Series A, 7%, 6/15/12 (d) ............................... 600,000 AAA 658,554
Massachusetts Bay Transportation Authority:
Certificate of Participation, 7.75%, 1/15/06 ............ 1,000,000 A 1,131,170
General Transportation System:
Series A, 5.4%, 3/1/07 ................................ 13,325,000 A 13,313,008
Series A, 5.5%, 3/1/12 ................................ 3,000,000 A 2,936,400
Series B, 6.2%, 3/1/16 ................................ 2,100,000 A 2,180,430
Series C, 6.1%, 3/1/13 ................................ 1,250,000 A 1,300,462
Massachusetts General Obligation:
Consolidated Loan, Series A, 7.5%, 6/1/04 ............... 12,400,000 A 14,625,428
Hynes Convention Center, Zero Coupon, 9/1/04 ............ 2,000,000 A 1,275,000
Series A, 5.25%, 2/1/08 ................................. 1,375,000 A 1,352,835
Series A, 6.5%, 6/1/08 .................................. 5,500,000 A 5,924,380
Series B, 6.5%, 8/1/08 .................................. 5,400,000 A 5,992,164
Series C, Zero Coupon, 12/1/04 .......................... 8,415,000 A 5,373,651
Series 1993 C, 5%, 8/1/07 ............................... 5,000,000 A 4,864,600
Massachusetts Health & Educational
Facilities Authority:
Anna Jaques Hospital, Series B, 6.875%, 10/1/12 ....... 2,000,000 BBB 2,022,000
Berkshire Health Systems, Series D, 5.6%,
10/1/08 (d) ........................................... 1,760,000 AAA 1,793,880
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
INVESTMENT PORTFOLIO
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating (c) Value ($)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Charlton Memorial Hospital, Series B,
7.25%, 7/1/07 (b) ...................................... 10,000,000 A 10,884,700
Community College Program, Series A, Connie
Lee Insured, 6.5%, 10/1/09 ............................. 1,000,000 AAA 1,072,460
Cooley Dickson Hospital Inc., 7.125%, 11/15/18 ........... 2,150,000 NR 2,093,950
Dana Farber Cancer Institute, Series F,
6%, 12/1/15 (d) ........................................ 2,500,000 AAA 2,493,925
Deaconess Hospital, Series B, 6.625%, 4/1/12 (d) ......... 2,000,000 AAA 2,135,780
Faulkner Hospital, Series C, 6%, 7/1/13 .................. 2,650,000 BBB 2,482,175
Massachusetts General Hospital:
Series B, 5.375%, 7/1/11 (d) ........................... 5,625,000 AAA 5,418,956
Series F, 6.25%, 7/1/12 (d) ............................ 3,500,000 AAA 3,705,625
Medical Academic and Scientific,
Series A, 6.5%, 1/1/09 ................................. 5,000,000 A 5,119,550
Medical Center of Central Massachusetts,
Series A, 7%, 7/1/12 (d) ............................... 3,600,000 AAA 3,962,484
Newton-Wellesley Hospital:
Series D, 7%, 7/1/15 (d) ............................... 1,500,000 AAA 1,637,700
Series E, 5.9%, 7/1/11 (d) ............................. 3,015,000 AAA 3,058,084
Northeastern University:
Series E, 6.4%, 10/1/07 (d) ............................ 1,000,000 AAA 1,087,960
Series E, 6.5%, 10/1/12 (d) ............................ 450,000 AAA 476,375
St. Luke's Hospital New Bedford, Series C,
Yield Curve Notes, 7.12%, 8/15/10 (d)*** ............... 3,400,000 AAA 3,255,500
South Shore Hospital, 6.5%, 7/1/10 (d) ................... 2,500,000 AAA 2,671,575
Stonehill College, Series E, 6.55%, 7/1/12 (d) ........... 5,000,000 AAA 5,306,800
Tufts University, Series C, 7.4%, 8/1/18 ................. 530,000 A 585,072
Wellesley College:
Series D, 5.1%, 7/1/09 ................................. 1,800,000 AA 1,732,662
Series D, 5.3%, 7/1/14 ................................. 2,000,000 AA 1,895,140
Massachusetts Housing Finance Agency:
Housing Project Refunding Revenue:
Series A, 6.3%, 10/1/13 .................................. 7,000,000 A 7,014,700
Series A, 6.375%, 4/1/21 ................................. 4,000,000 A 3,997,440
Series B, 6.05%, 12/1/09 (d) ............................. 3,000,000 AAA 3,047,400
Residential Development, Series C, 6.875%,
11/15/11 ................................................. 10,250,000 AAA 10,796,838
Single-Family Mortgage Revenue:
Series 2, 8.25%, 6/1/14 .................................. 260,000 AA 271,864
Series 3, 7.875%, 6/1/14 ................................. 4,000,000 AA 4,180,960
Massachusetts Industrial Finance Agency:
First Mortgage, Evanswood Bethzatha, Series A,
7.875%, 1/15/20 .......................................... 1,000,000 NR 1,025,740
Holy Cross College, Issue II, 6.375%, 11/1/09 .............. 1,000,000 A 1,064,060
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
SCUDDER MASSACHUSETTS TAX FREE FUND
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating (c) Value ($)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Massachusetts Biomedial Research Corp.,
Series A, Zero Coupon:
8/1/00 ........................................ 2,860,000 A 2,280,936
8/1/01 ........................................ 3,650,000 A 2,763,853
8/1/02 (b) .................................... 3,650,000 A 2,617,707
Milton Academy, Revenue Refunding,
Series B, 5.25%:
9/1/09 (d) .................................... 870,000 AAA 853,957
9/1/13 (d) .................................... 1,160,000 AAA 1,084,507
Museum of Science:
4.9%, 11/1/06 (d) ............................. 480,000 AAA 473,918
5%, 11/1/07 (d) ............................... 1,000,000 AAA 976,020
Pollution Control Revenue:
Boston Edison Company, Series A,
5.75%, 2/1/14 ................................. 2,000,000 BBB 1,868,800
Eastern Edison Company Project,
5.875%, 8/1/08 ................................ 2,250,000 BBB 2,232,788
Provider Lease Program, Series 1988 A-1,
8.4%, 7/15/08 ................................. 1,930,000 NR 2,030,051
Resource Recovery, North Andover Solid Waste,
Series A, 6.3%, 7/1/05 ........................ 6,500,000 BBB 6,660,875
Solid Waste Disposal Revenue, Peabody Monofil
Project, 9%, 9/1/05 ........................... 3,000,000 NR 3,092,730
Sturdy Memorial Hospital, 7.9%, 6/1/09 .......... 1,895,000 BBB 2,041,673
Massachusetts Municipal Wholesale Electric
Company, Power Supply System Revenue:
Series A, 5%, 7/1/05 (d) ........................ 2,020,000 AAA 2,004,466
Series A, 5.1%, 7/1/06 (d) ...................... 8,980,000 AAA 8,876,730
Series A, 6.75%, 7/1/06 ......................... 2,855,000 A 3,100,102
Series A, 5.1%, 7/1/08 (d) ...................... 840,000 AAA 813,137
Series A, 5%, 7/1/12 (d) ........................ 1,000,000 AAA 922,960
Series A, 5%, 7/1/17 (d) ........................ 3,610,000 AAA 3,222,503
Series B, 6.75%, 7/1/08 ......................... 9,000,000 A 9,714,240
Series B, 4.95%, 7/1/09 (d) ..................... 1,575,000 AAA 1,473,239
Series C, 6.625%, 7/1/10 (d) .................... 3,500,000 AAA 3,778,075
Series C, 6.625%, 7/1/10 ........................ 1,000,000 A 1,065,780
Massachusetts Port Authority Revenue, Tax
Exempt Receipts, ETM, Zero Coupon, 7/1/13** ....... 1,000,000 AAA 849,000
Massachusetts Special Obligation, Series A,
5.8%, 6/1/14 ...................................... 2,000,000 AA 1,970,660
Massachusetts Water Pollution Abatement Trust,
Pooled Loan Program:
Series 1, 5.6%, 8/1/13 .......................... 5,425,000 AA 5,310,804
Series 2, 5.625%, 2/1/10 ........................ 2,820,000 AAA 2,832,662
Series 2, 5.7%, 2/1/15 .......................... 1,150,000 AAA 1,126,804
Massachusetts Water Resource Authority:
Series A, 6.5%, 7/15/09 ......................... 15,000,000 A 16,389,600
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
INVESTMENT PORTFOLIO
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating (c) Value ($)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Series A, 6.5%, 7/15/19................................ 3,000,000 A 3,216,210
Series B, 6%, 11/1/08.................................. 5,785,000 A 5,989,384
Series B, 5.5%, 11/1/15................................ 3,300,000 A 3,115,959
General Revenue, Series C, 5.25%, 12/1/08.............. 2,705,000 A 2,637,050
General Revenue, Series C, 5.25%, 12/1/15.............. 4,030,000 A 3,745,482
Nantucket, MA, General Obligation, 6.8%, 12/1/11......... 1,000,000 A 1,079,810
New England Educational Loan Marketing
Corporation, Massachusetts Student Loan Revenue,
5.7%, 7/1/05........................................... 10,250,000 A 10,271,730
South Essex, MA, Sewer District, Series B, 6.75%,
6/1/13 (d)............................................. 1,000,000 AAA 1,086,100
University of Massachusetts, Building Authority
Revenue, Series B:
6.625%, 5/1/09........................................ 2,415,000 A 2,679,829
6.625%, 5/1/10........................................ 2,575,000 A 2,838,294
6.75%, 5/1/11......................................... 2,745,000 A 3,054,965
6.875%, 5/1/14........................................ 1,300,000 A 1,472,003
Worcester, MA, General Obligation, 6.9%:
5/15/05 (d)........................................... 1,850,000 AAA 2,094,052
5/15/06 (d)........................................... 1,500,000 AAA 1,682,400
-----------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(Cost $288,282,001).................................... 300,532,851
-----------
- -----------------------------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO - 100.0%
(Cost 289,382,001) (a)................................. 301,632,851
===========
</TABLE>
(a) The cost for federal income tax purposes was $289,382,001. At September 30,
1995, net unrealized appreciation for all securities based on tax cost was
$12,250,850. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost of
$13,873,154 and aggregate gross unrealized depreciation for all securities
in which there was an excess of tax cost over market value of $1,622,304.
(b) At September 30, 1995 these securities, in part, have been pledged to cover
initial margin requirements for open futures contracts.
AT SEPTEMBER 30, 1995, OPEN FUTURES CONTRACTS PURCHASED LONG WERE AS FOLLOWS
(NOTE A):
<TABLE>
<CAPTION>
Aggregate
Futures Expiration Contracts Face Value ($) Market Value ($)
------- ---------- --------- -------------- ----------------
<S> <C> <C> <C> <C>
Muni Bond Index Dec. 1995 50 5,656,750 5,704,687
--------- ---------
Total net unrealized appreciation on open futures contracts purchased long 47,937
=========
</TABLE>
(c) 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.
(d) Bond is insured by one of these companies: AMBAC, Capital Guaranty, FGIC or
MBIA.
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
SCUDDER MASSACHUSETTS TAX FREE FUND
* 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.
*** 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 September 30, 1995.
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
SEPTEMBER 30, 1995 (UNAUDITED)
- -------------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments, at market (identified cost $289,382,001)
(Note A) ...................................................... $ 301,632,851
Cash ............................................................. 591,415
Receivables:
Interest ...................................................... 4,682,009
Fund shares sold .............................................. 432,277
Daily variation margin on open futures contracts
(Note A) ................................................... 70,312
-------------
Total assets ............................................... 307,408,864
LIABILITIES
Payables:
Dividends ..................................................... $ 536,096
Fund shares redeemed .......................................... 187,559
Accrued management fee (Note C) ............................... 140,554
Other accrued expenses (Note C) ............................... 80,701
-------------
Total liabilities .......................................... 944,910
-------------
Net assets, at market value ...................................... $ 306,463,954
=============
NET ASSETS
Net assets consist of:
Unrealized appreciation on:
Investments ................................................ 12,250,850
Futures .................................................... 47,937
Accumulated net realized loss ................................. (3,831,947)
Shares of beneficial interest ................................. 224,777
Additional paid-in capital .................................... 297,772,337
-------------
Net assets, at market value ...................................... $ 306,463,954
=============
NET ASSET VALUE, offering and redemption price
per share ($306,463,954 divided by 22,477,663 outstanding
shares of beneficial interest, $.01 par value,
unlimited number of shares authorized) ........................ $ 13.63
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
SCUDDER MASSACHUSETTS TAX FREE FUND
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS ENDED SEPTEMBER 30, 1995 (UNAUDITED)
- -------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest ............................................. $ 9,057,422
Expenses:
Management fee (Note C) .............................. $ 877,037
Services to shareholders (Note C) .................... 123,004
Custodian and accounting fees (Note C) ............... 59,485
Trustees' fees (Note C) .............................. 7,707
Reports to shareholders .............................. 20,458
Auditing ............................................. 18,435
Legal ................................................ 12,468
State registration ................................... 8,602
Other................................................. 3,575 1,130,771
-------------------------------
Net investment income ................................ 7,926,651
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT TRANSACTIONS
Net realized gain (loss) from:
Investments ....................................... 375,323
Futures ........................................... (20,531) 354,792
Net unrealized appreciation during the period on:
Investments ....................................... 6,107,538
Futures ........................................... 74,937 6,182,475
-------------------------------
Net gain on investments .............................. 6,537,267
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.. $14,463,918
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED
1995 MARCH 31,
INCREASE (DECREASE) IN NET ASSETS (UNAUDITED) 1995
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ....................... $ 7,926,651 $ 17,734,143
Net realized gain (loss) from investment
transactions ............................. 354,792 (2,995,407)
Net unrealized appreciation on
investment transactions during the period 6,182,475 4,923,078
------------- -------------
Net increase in net assets resulting from
operations ............................... 14,463,918 19,661,814
------------- -------------
Distributions to shareholders:
From net investment income ($.36 and $.74 per
share, respectively) ..................... (7,926,651) (17,734,143)
------------- -------------
In excess of net realized gains
($.01 per share) ......................... -- (348,200)
------------- -------------
Fund share transactions:
Proceeds from shares sold ................... 30,579,202 80,817,626
Net asset value of shares issued to
shareholders in reinvestment
of distributions ......................... 4,640,574 11,772,714
Cost of shares redeemed ..................... (31,768,424) (129,761,019)
------------- -------------
Net increase (decrease) in net assets from
Fund share transactions .................. 3,451,352 (37,170,679)
------------- -------------
INCREASE (DECREASE) IN NET ASSETS ........... 9,988,619 (35,591,208)
Net assets at beginning of period ........... 296,475,335 332,066,543
------------- -------------
NET ASSETS AT END OF PERIOD ................. $ 306,463,954 $ 296,475,335
============= =============
OTHER INFORMATION
INCREASE (DECREASE) IN FUND SHARES
Shares outstanding at beginning of period ... 22,236,389 25,223,573
------------- -------------
Shares sold ................................. 2,253,629 6,244,742
Shares issued to shareholders in
reinvestment of distributions ............ 343,349 905,250
Shares redeemed ............................. (2,355,704) (10,137,176)
------------- -------------
Net increase (decrease) in Fund shares ...... 241,274 (2,987,184)
------------- -------------
Shares outstanding at end of period ......... 22,477,663 22,236,389
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
SCUDDER MASSACHUSETTS 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.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
SEPTEMBER 30, YEARS ENDED MARCH 31,
1995 --------------------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991 1990 1989
------------- --------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period ........................... $13.33 $13.16 $13.61 $12.81 $12.44 $12.25 $12.23 $12.28
------ ------ ------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income (a) ........ .36 .74 .81 .84 .81 .83 .82 .81
Net realized and unrealized
gain (loss) on investment
transactions ................... .30 .18 (.33) .96 .46 .19 .13 .22
------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations.... .66 .92 .48 1.80 1.27 1.02 .95 1.03
------ ------ ------ ------ ------ ------ ------ ------
Less distributions:
From net investment income ....... (.36) (.74) (.81) (.84) (.81) (.83) (.82) (.88)
From net realized gains on
investment transactions ....... -- -- (.08) (.16) (.09) -- (.11)(b) (.20)
In excess of net realized gains... -- (.01) (.04) -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------
Total distributions ................ (.36) (.75) (.93) (1.00) (.90) (.83) (.93) (1.08)
------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period ..... $13.63 $13.33 $13.16 $13.61 $12.81 $12.44 $12.25 $12.23
====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN (%) (c) ............... 4.97** 7.37 3.37 14.59 10.46 8.60 7.89 9.50
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
($ millions) ..................... 306 296 332 267 120 67 46 31
Ratio of operating expenses, net
to average daily net
assets (%) (a) ................... .75* .47 .07 -- .48 .60 .60 .51
Ratio of net investment income to
average daily net assets (%) ..... 5.26* 5.73 5.80 6.36 6.38 6.72 6.60 7.23
Portfolio turnover rate (%) ........ 20.6* 10.2 17.0 29.6 23.2 27.1 45.5 110.5
(a) Reflects a per share amount
of expenses, exclusive of
management fees,
reimbursed by the
Adviser of ..................... $ -- $ -- $ .01 $ .02 $ -- $ -- $ -- $ .01
Reflects a per share amount
of management fees and
other fees not imposed of ...... $ -- $ .04 $ .09 $ .08 $ .05 $ .06 $ .07 $ .07
Operating expense ratio
including expenses
reimbursed, management
fee and other expenses
not imposed (%) ................ .77* .77 .77 .83 .93 1.05 1.16 1.20
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
MAY 28, 1987
(COMMENCEMENT
OF OPERATIONS) TO
MARCH 31,
1988
-----------------
<S> <C>
Net asset value, beginning of
period ........................... $12.00
------
Income from investment operations:
Net investment income (a) ........ .69
Net realized and unrealized
gain (loss) on investment
transactions ................... .21
------
Total from investment operations ... .90
------
Less distributions:
From net investment income ....... (.62)
From net realized gains on
investment transactions ....... --
In excess of net realized gains... --
------
Total distributions ................ (.62)
------
Net asset value, end of period ..... $12.28
======
TOTAL RETURN (%) (c) ............... 7.73**
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
($ millions) ..................... 16
Ratio of operating expenses, net
to average daily net
assets (%) (a) ................... .50*
Ratio of net investment income to
average daily net assets (%) ..... 7.55*
Portfolio turnover rate (%) ........ 95.9*
(a) Reflects a per share amount
of expenses, exclusive of
management fees,
reimbursed by the
Adviser of ..................... $ .10
Reflects a per share amount
of management fees and
other fees not imposed of ...... $ .05
Operating expense ratio
including expenses
reimbursed, management
fee and other expenses
not imposed (%) ................ 2.25*
</TABLE>
(b) Includes $.01 per share distributions in excess of realized gains pursuant
to Internal Revenue Code Section 4982.
(c) Total returns are higher due to maintenance of the Fund's expenses.
* Annualized
** Not annualized
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
- --------------------------------------------------------------------------------
A. SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
Scudder Massachusetts 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. A futures contract is an agreement between a buyer or seller
and an established futures exchange or its clearinghouse in which the buyer or
seller agrees to take or make a delivery of a specific amount of an item at a
specified price on a specific date (settlement date). During the six months
ended September 30, 1995, the Fund purchased interest rate futures to manage the
duration of the portfolio and sold interest rate futures to hedge against
declines in the value of portfolio securities.
Upon entering into a futures contract, the Fund is required to deposit with a
financial intermediary an amount ("initial margin") equal to a certain
percentage of the face value indicated in the futures contract. Subsequent
payments ("variation margin") are made or received by the Fund each day,
dependent on the daily fluctuations in the value of the underlying security, and
are recorded for financial reporting purposes as unrealized gains or losses by
the Fund. When entering into a closing transaction, the Fund will realize a gain
or loss equal to the difference between the value of the futures contract to
sell and the futures contract to buy. Futures contracts are valued at the most
recent settlement price.
19
<PAGE>
SCUDDER MASSACHUSETTS TAX FREE FUND
- --------------------------------------------------------------------------------
Certain risks may arise upon entering into futures contracts including the risk
that an illiquid secondary market will limit the Fund's ability to close out a
futures contract prior to the settlement date and that a change in the value of
a futures contract may not correlate exactly with changes in the value of the
securities or currencies hedged. When utilizing futures contracts to hedge, the
Fund gives up the opportunity to profit from favorable price movements in the
hedged positions during the term of the contract.
AMORTIZATION AND ACCRETION. All premiums and original issue discounts are
amortized/accreted for both tax and financial reporting purposes.
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.
At March 31, 1995, the Fund had a net tax basis capital loss carryforward of
approximately $1,437,000 which may be applied against any realized net taxable
capital gains of each succeeding year until fully utilized or until March 31,
2003, the expiration date.
In addition, from November 1, 1994 through March 31, 1995, the Fund incurred
$651,000 of net realized capital losses. As permitted by tax regulations, the
Fund intends to elect to defer these losses and treat them as arising in the
fiscal year ended March 31, 1996.
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 annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. These
differences primarily relate 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
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
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 gains to shareholders are recorded on the ex-dividend
date. Interest income is accrued pro rata to maturity.
B. PURCHASES AND SALES OF SECURITIES
- --------------------------------------------------------------------------------
During the six months ended September 30, 1995, purchases and sales of municipal
securities (excluding short-term investments) aggregated $35,839,787 and
$29,787,830, respectively.
The aggregate face value of future contracts opened and closed during the six
months ended September 30, 1995 was $19,213,531 and $18,007,906, 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 December 31, 1995 and
during such period to maintain the annualized expenses of the Fund at not more
than 0.75% of average daily net assets. For the six months ended September 30,
1995, the Adviser did not impose a portion of its fee amounting to $24,899, and
the portion imposed amounted to $877,037 of which $140,554 was unpaid at
September 30, 1995.
Scudder Service Corporation ("SSC"), a wholly-owned subsidiary of the Adviser,
is the transfer, dividend-paying and shareholder service agent for the Fund. For
the six months ended September 30, 1995, the amount charged to the Fund by SSC
aggregated $92,894, of which $15,463 is unpaid at September 30, 1995.
Scudder Fund Accounting Corporation ("SFAC"), a wholly-owned subsidiary of the
Adviser, is responsible for determining the daily net asset value per share and
maintaining the portfolio and general accounting records of the Fund. For the
six months ended September 30, 1995, the amount charged to the Fund by SFAC
aggregated $28,614, of which $9,658 is unpaid at September 30, 1995.
21
<PAGE>
SCUDDER MASSACHUSETTS TAX FREE FUND
- --------------------------------------------------------------------------------
The Trust pays each Trustee not affiliated with the Adviser $12,000 annually,
divided equally among the series of the Trust, plus specified amounts for
attended board and committee meetings. For the six months ended September 30,
1995, Trustees' fees charged to the Fund aggregated $7,707.
22
<PAGE>
(This page intentionally left blank)
23
<PAGE>
(This page intentionally left 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; General Partner, TL Ventures
Donald C. Carleton*
Vice President
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
Vice President
Thomas F. McDonough*
Vice President and Secretary
Pamela A. McGrath*
Vice President and Treasurer
Edward J. O'Connell*
Vice President and Assistant Treasurer
Coleen Downs Dinneen*
Assistant Secretary
*Scudder, Stevens & Clark, Inc.
25
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT PRODUCTS AND SERVICES
The Scudder Family of Funds
-----------------------------------------------------------------------------------------------------------------
<C> <C>
Money Market Income
Scudder Cash Investment Trust Scudder Emerging Markets Income Fund
Scudder U.S. Treasury Money Fund Scudder GNMA Fund
Tax Free Money Market+ Scudder Income Fund
Scudder Tax Free Money Fund Scudder International Bond Fund
Scudder California Tax Free Money Fund* Scudder Short Term Bond Fund
Scudder New York Tax Free Money Fund* Scudder Short Term Global Income Fund
Tax Free+ Scudder Zero Coupon 2000 Fund
Scudder California Tax Free Fund* Growth
Scudder High Yield Tax Free Fund Scudder Capital Growth Fund
Scudder Limited Term Tax Free Fund Scudder Development Fund
Scudder Managed Municipal Bonds Scudder Global Fund
Scudder Massachusetts Limited Term Tax Free Fund* Scudder Global Small Company Fund
Scudder Massachusetts Tax Free Fund* Scudder Gold Fund
Scudder Medium Term Tax Free Fund Scudder Greater Europe Growth Fund
Scudder New York Tax Free Fund* Scudder International Fund
Scudder Ohio Tax Free Fund* Scudder Latin America Fund
Scudder Pennsylvania Tax Free Fund* Scudder Pacific Opportunities Fund
Growth and Income Scudder Quality Growth Fund
Scudder Balanced Fund Scudder Small Company Value Fund
Scudder Growth and Income Fund Scudder Value Fund
The Japan Fund
Retirement Plans and Tax-Advantaged Investments
-----------------------------------------------------------------------------------------------------------------
IRAs 403(b) Plans
Keogh Plans SEP-IRAs
Scudder Horizon Plan+++* (a variable annuity) Profit Sharing and Money Purchase
401(k) Plans Pension Plans
Closed-End Funds#
-----------------------------------------------------------------------------------------------------------------
The Argentina Fund, Inc. The Latin America Dollar Income Fund, Inc.
The Brazil Fund, Inc. Montgomery Street Income Securities, Inc.
The First Iberian Fund, Inc. Scudder New Asia Fund, Inc.
The Korea Fund, Inc. Scudder New Europe Fund, Inc.
Scudder World Income
Opportunities Fund, Inc.
Institutional Cash Management
-----------------------------------------------------------------------------------------------------------------
Scudder Institutional Fund, Inc. Scudder Treasurers Trust(TM)++
Scudder Fund, Inc.
-----------------------------------------------------------------------------------------------------------------
For complete information on any of the above Scudder funds, including
management fees and expenses, call or write for a free prospectus. Read it
carefully before you invest or send money. +A portion of the income from the
tax-free funds may be subject to federal, state, and local taxes. *Not
available in all states. +++A no-load variable annuity contract provided by
Charter National Life Insurance Company and its affiliate, offered by
Scudder's insurance agencies, 1-800-225-2470. #These funds, advised by
Scudder, Stevens & Clark, Inc. are traded on various stock exchanges. ++For
information on Scudder Treasurers Trust,(TM) an institutional cash
management service that utilizes certain portfolios of Scudder Fund, Inc.
($100,000 minimum), call 1-800-541-7703.
</TABLE>
26
<PAGE>
HOW TO CONTACT SCUDDER
Account Service and Information
- -------------------------------------------------------------------------------
For existing account service and transactions
SCUDDER INVESTOR RELATIONS
1-800-225-5163
For personalized information about your Scudder accounts; exchanges and
redemptions; or information on any Scudder fund
SCUDDER AUTOMATED INFORMATION LINE (SAIL)
1-800-343-2890
Investment Information
To receive information about the Scudder funds, for additional applications and
prospectuses, or for investment questions
SCUDDER INVESTOR RELATIONS
1-800-225-2470
For establishing 401(k) and 403(b) plans
SCUDDER DEFINED CONTRIBUTION SERVICES
1-800-323-6105
Please address all correspondence to
THE SCUDDER FUNDS
P.O. BOX 2291
BOSTON, MASSACHUSETTS
02107-2291
Or stop by a Scudder Funds Center
Many shareholders enjoy the personal, one-on-one service of the Scudder Funds
Centers. Check for a Funds Center near you--they can be found in the following
cities:
Boca Raton New York
Boston Portland, OR
Chicago San Diego
Cincinnati San Francisco
Los Angeles Scottsdale
For information on Scudder Treasurers Trust,(TM) an institutional cash
management service for corporations, non-profit organizations and trusts that
uses certain portfolios of Scudder Fund, Inc.* ($100,000 minimum), call
1-800-541-7703.
For information on Scudder Institutional Funds,* funds designed to meet the
broad investment management service needs of banks and other institutions, call
1-800-854-8525.
- --------------------------------------------------------------------------------
Scudder Investor Relations and Scudder Funds Centers are services provided
through Scudder Investor Services, Inc., Distributor.
* 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 Over 75 Years of Serving Investors
Established in 1919 by Theodore Scudder, Sidney Stevens, and F. Haven Clark,
Scudder, Stevens & Clark was the first independent investment counsel firm in
the United States. Since its birth, Scudder's pioneering spirit and commitment
to professional long-term investment management have helped shape the investment
industry. In 1928, we introduced the nation's first no-load mutual fund. Today
we offer 37 pure no load(TM) funds, including the first international mutual
fund offered to U.S. investors.
Over the years, Scudder's global investment perspective and dedication to
research and fundamental investment disciplines have helped us become one of the
largest and most respected investment managers in the world. Though times have
changed since our beginnings, we remain committed to our long-standing
principles: managing money with integrity and distinction; keeping the interests
of our clients first; providing access to investments and markets that may not
be easily available to individuals; and making investing as simple and
convenient as possible through friendly, comprehensive service.
