Scudder
Ohio
Tax Free Fund
Annual Report
March 31, 1996
o For investors seeking double-tax-free income exempt from both Ohio and regular
federal income taxes.
o A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
<PAGE>
CONTENTS
2 In Brief
3 Letter from the Fund's President
4 Performance Update
5 Portfolio Summary
6 Portfolio Management Discussion
10 Investment Portfolio
14 Financial Statements
17 Financial Highlights
18 Notes to Financial Statements
21 Report of Independent Accountants
22 Tax Information
25 Officers and Trustees
26 Investment Products and Services
27 How to Contact Scudder
IN BRIEF
o Scudder Ohio Tax Free Fund rewarded investors with a total return of 7.85%
for the fiscal year ended March 31, 1996. The Fund's share price rose $0.18
to $12.95 at the end of the period, while investors received tax-free
income distributions totaling $0.69 and a taxable capital gain distribution
of $0.12 per share.
o During the period, the Fund performed markedly better than the average Ohio
tax free fund tracked by Lipper Analytical Services, Inc., which returned
6.76%.
o The Fund's 30-day net annualized SEC yield was 5.04% on March 31, 1996. For
Ohio residents in the combined state and federal income tax bracket of
44.13%, this tax-free yield translated to a 9.02% yield for a taxable
investment.
BAR CHART OMITTED HERE WITH THE CAPTION BELOW:
Fund Yield vs. Taxable Equivalent Yield
3/31/96 9/30/96
------- -------
The Fund's 30-Day SEC Yield: 5.04% 5.08%
Taxable Equivalent Yield: 9.02% 9.09%
2
<PAGE>
Dear Shareholders,
Widespread declines in U.S. interest rates helped create hospitable
conditions for bonds during the past 12 months. Scudder Ohio Tax Free Fund
completed the fiscal year ended March 31, 1996, with a total return of 7.85%,
reflecting appreciation in the Fund's share price and an attractive level of
double-tax-free income to investors. From a competitive standpoint, these
results were especially rewarding, placing the Fund well ahead of the average
Ohio Tax Free Fund monitored by Lipper Analytical Services, Inc.
As bond markets regained strength during 1995, taxable bonds led the march
back, while tax-free municipal bonds recovered more slowly. By fall, municipal
bonds had become attractively valued compared to Treasuries, which helped renew
investor interest and resulted in municipals slightly outperforming taxable
bonds for the past six months.
Recent economic indicators raised concerns that the economy may be stronger
than originally believed, which unsettled the market. Still, ample evidence
suggests the absence of mounting inflationary pressures. This scenario would be
beneficial for bonds. Given the current economic uncertainties, the Fund's
challenge is to stand ready to participate in potential price rallies but
provide a measure of price stability should the market weaken instead, while
also continuing to supply competitive levels of double-tax-free income.
In closing, we wish to take this opportunity to announce that a new member
joins the Scudder Family of Funds as of May 8 -- Scudder Emerging Markets Growth
Fund. The new Fund focuses on stocks of developing nations around the globe. For
more information about Scudder Emerging Markets Growth Fund and other Scudder
products and services, please see page 26. For questions about Scudder Ohio Tax
Free Fund, please call a Scudder Investor Relations representative at
1-800-225-2470.
Sincerely,
/s/David S. Lee
David S. Lee
President,
Scudder Ohio Tax Free Fund
3
<PAGE>
SCUDDER OHIO TAX FREE FUND
PERFORMANCE UPDATE as of March 31, 1996
- -----------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- -----------------------------------------------------------------
SCUDDER OHIO TAX FREE FUND
- ----------------------------------------
Total Return
Period Growth --------------
Ended of Average
3/31/96 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $10,785 7.85% 7.85%
5 Year $14,590 45.90% 7.85%
Life of
Fund* $19,392 93.92% 7.77%
LEHMAN BROTHERS MUNICIPAL BOND INDEX
- --------------------------------------
Total Return
Period Growth --------------
Ended of Average
3/31/96 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $10,838 8.38% 8.38%
5 Year $14,745 47.45% 8.07%
Life of
Fund* $20,703 107.03% 8.58%
*The Fund commenced operations on
May 28, 1987. Index comparisons begin
May 31, 1987.
A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:
YEARLY PERIODS ENDED MARCH 31
Scudder Ohio Tax Free Fund
Year Amount
- ----------------------
5/31/87 $10,000
'88 $10,230
'89 $11,337
'90 $12,221
'91 $13,291
'92 $14,530
'93 $16,425
'94 $16,832
'95 $17,980
'96 $19,392
Lehman Brothers Municipal Bond Index
Year Amount
- ----------------------
5/31/87 $10,000
'88 $10,847
'89 $11,628
'90 $12,855
'91 $14,041
'92 $15,444
'93 $17,378
'94 $17,781
'95 $19,102
'96 $20,703
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> <C>
1988* 1989 1990 1991 1992 1993 1994 1995 1996
-----------------------------------------------------------------------
NET ASSET VALUE... $11.65 $11.94 $11.97 $12.14 $12.47 $13.13 $12.68 $12.77 $12.95
INCOME DIVIDENDS.. $ .61 $ .84 $ .82 $ .78 $ .75 $ .72 $ .70 $ .70 $ .69
CAPITAL GAINS
DISTRIBUTIONS..... $ -- $ .02 $ .07 $ .06 $ .03 $ .19 $ .10 $ .04 $ .12
FUND TOTAL
RETURN (%)........ 2.30 10.83 7.80 8.75 9.33 13.04 2.48 6.82 7.85
INDEX TOTAL
RETURN (%)........ 8.48 7.21 10.56 9.22 10.02 12.52 2.32 7.43 8.38
</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 temporarily capped expenses, the average annual
total returns for the Fund for the one year, five year and Life of Fund
periods would have been lower.
4
<PAGE>
PORTFOLIO SUMMARY as of March 31, 1996
- ---------------------------------------------------------------------------
DIVERSIFICATION
- ---------------------------------------------------------------------------
General Obligations 23%
Hospital/Health 18% During the year, the Fund
Sales and Special Tax 12% remained well diversified
Water/Sewer Revenue 12% across a broad range of
Higher Education 11% revenue bonds, while
Core Cities/Lease 6% modestly increasing
State Agency/Lease 5% investments in Ohio's general
Electric Utility Revenue 5% obligation bonds.
School District/Lease 3%
Miscellaneous Municipal 5%
----
100%
====
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
QUALITY
- --------------------------------------------------------------------------
AAA 53%
AA 13%
A 19% Attention to credit quality
BBB 8% continued to be central part
Not Rated 7% of Fund strategy.
----
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 4% As interest rates declined,
1 - 5 years 10% the Fund slightly increased
5 - 10 years 34% its investments in bonds with
10 - 20 years 45% longer-term effective
Greater than 20 years 7% maturities, though the bulk
---- of the portfolio remained
100% focused on intermediate-term
==== bonds.
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>
Dear Shareholders,
Scudder Ohio Tax Free Fund continued to reward investors with strong
results during the fiscal year ended March 31, 1996. In addition to providing
investors a healthy stream of income free from Ohio state and federal income
taxes, the Fund posted an $0.18 gain in share price. Combined, the increase in
share price to $12.95 on March 31, 1996, from $12.77 a year ago and the
reinvestment of tax-free dividend distributions totaling $0.69 and taxable
capital gains of $0.12 per share, helped the Fund generate a 7.85% total return
for the year. This performance placed the Fund well ahead of the average Ohio
tax free fund tracked by Lipper Analytical Services, Inc., which returned 6.76%.
For bonds, the downward path of interest rates boosted prices
significantly, more than making up for the corresponding drop in yields. The
Fund ended the period with a 5.04% 30-day net annualized SEC yield, down
slightly from its 5.22% yield at the beginning of the period. Yet, the Fund's
yield remains attractive versus comparable taxable investments. Ohio residents
in the highest combined federal and state tax bracket of 44.13% would have to
earn a 9.02% yield from a comparable taxable investment to match your Fund's
double-tax-free yield.
Slower Economic Growth Fosters
Recovery in Bond Markets
The confluence of slower, more sustainable economic growth, tame levels of
inflation, and weak consumer spending put a decisive end to 1994's faltering
bond prices. As bond markets began to recover, Treasury securities led the way.
During periods of falling interest rates, Treasuries have an edge over municipal
bonds: Treasuries are not callable (which means they cannot be retired in
advance of their stated maturity dates) whereas most municipal bonds can be
called by their issuers. Lower rates increase the likelihood of calls as
municipal issuers take advantage of opportunities to refinance as a way to lower
debt costs.
Proposed flat tax legislation -- which threatened to eliminate the tax
advantages of owning municipal bonds -- also hampered the performance of
municipal bonds for much of 1995. Meanwhile, other factors detracted from
municipal demand including the impressive performance of stocks, investors'
reluctance to reenter bond markets, and lingering effects of Orange County's
financial problems that made headlines as 1994 drew to a close. Towards the end
of the period, the presidential primaries once again put the spotlight on the
flat tax, negatively affecting municipals. Since then, however, discussions
6
<PAGE>
about the flat tax have disappeared along with the presidential aspirations of
Steve Forbes, and municipal demand has begun to improve.
Balancing Opportunities for Price Appreciation and Income Preservation
The Fund's basic goal of blending a healthy level of double-tax-free income
with strong price performance remained in place during the fiscal year. This
total return approach meant that when interest rates were rising in 1994, a
higher level of income earnings helped to stabilize overall Fund performance by
offsetting weak prices. In 1995, this approach translated into pursuing
opportunities to capture price gains while maintaining a reasonable level of
income in the face of falling rates.
Noncallable bonds remained a focal point during the year. In an environment
of falling interest rates, noncallable bonds can add more value than their
callable counterparts, offering both price appreciation potential and a more
reliable income stream, since they are not at risk of being repaid prematurely.
Because noncallable bonds are a scarce commodity in the realm of municipal
bonds, portfolios owning a sizable amount of these bonds have an advantage.
During the year, bonds with maturities of five to 20 years continued to
compose the vast majority of the portfolio. In our estimation, this segment of
the maturity spectrum offered the most compelling tradeoff between risk and
reward. With rates generally declining, we pushed maturities slightly further
out along the intermediate-maturity spectrum, where the Fund was able to capture
most of the yield and much of the price gain of longer-term bonds. In
particular, we increased the weighting of bonds maturing between 15 and 20
years. These bonds contributed heavily to the Fund's performance over the
period. Generally, we avoided securities with more than 20 years to maturity,
believing that they did not offer enough extra yield to justify their additional
price sensitivity to changes in the direction of interest rates.
Credit quality, as usual, remained an important focus, with 66% of the
portfolio invested in bonds rated AA or better. In addition, we maintained
substantial investments in insured bonds, which afford a degree of liquidity and
safety, since they are protected against default by various bond insurance
companies.
7
<PAGE>
Ohio Review
The state of Ohio's fiscal health remained sound. The state's broad revenue
base helped to cushion it against shifts in the economic cycle. Increased tax
revenues and decreased expenditures on public health and assistance during
fiscal year 1995 contributed to Ohio's operating surplus. Revenues are expected
to grow at a 4% rate during fiscal year 1996, with the state's debt levels
remaining moderate compared to the rest of the country. The combination of a
gradual decline in Ohio's manufacturing sector and growth in the trade and
service sectors has enabled the state's economy to become more diversified.
Meanwhile, Ohio's unemployment rate, at 5%, remains below the national average
of 5.5%.
Given the state's improving financial performance and moderate debt levels,
Ohio's general obligation bonds (which are funded by the state's tax revenues)
have been attractive investments. These bonds carry a favorable Aa rating from
Moody's and an AA rating from Standard & Poor's. The market, however, treats
these bonds as even higher-quality instruments, given their strong credit
characteristics and the relative infrequency of new issues.
Outlook
We believe the key catalysts for attractive bond market conditions -- slow
economic growth, low inflation, and therefore the potential for stable to lower
interest rates -- remain in place, despite short-term uncertainty. Municipal
bonds also stand to benefit from relatively low new issuance and a more
favorable demand environment now that the flat tax proposal is more or less
tabled.
Positives aside, conflicting reports about the economy's future direction
have added a degree of uncertainty to the bond markets. In addition, bonds may
find it difficult to stage a real recovery without robust foreign demand, which
was so instrumental last year in pushing yields down and prices up. We will
continue to study economic data to help us shape investment strategy through the
year. Until it becomes clear which direction the economy will take, we have
become a bit more cautious, allowing cash reserves to build up more than usual.
This affords us the flexibility to move quickly when attractive investment
opportunities come our way while helping to stabilize the Fund's value during
times of market declines.
8
<PAGE>
In the months ahead, the Fund's share price and income will vary in
response to changes in interest rates and other economic factors. In our view,
Scudder Ohio Tax Free Fund is well positioned to continue to provide investors
with a healthy stream of income exempt from state and federal income taxes while
seeking to limit share price volatility.
Sincerely,
Your Portfolio Management Team
/s/Donald C. Carleton /s/Philip G. Condon
Donald C. Carleton Philip G. Condon
Scudder Ohio Tax Free Fund:
A Team Approach to Investing
Scudder Ohio Tax Free Fund is managed by a team of Scudder investment
professionals who each play an important role in the Fund's management process.
Team members work together to develop investment strategies and select
securities for the Fund. They are supported by Scudder's large staff of
economists, research analysts, traders, and other investment specialists who
work in our offices across the United States and abroad. We believe our team
approach benefits Fund investors by bringing together many disciplines and
leveraging Scudder's extensive resources.
Lead Portfolio Manager Donald C. Carleton assumed responsibilities for the
Fund's day-to-day management and investment strategies in January 1995. Don has
over 25 years of investment management experience and has worked at Scudder
since 1983. Philip G. Condon, portfolio manager, became a member of the team in
1987 and has worked at Scudder since 1983. Phil has 16 years of experience in
municipal investing and portfolio management.
9
<PAGE>
SCUDDER OHIO TAX FREE FUND
INVESTMENT PORTFOLIO as of March 31, 1996
<TABLE>
<CAPTION>
Unaudited
---------
Principal Credit Market
Amount ($) Rating (b) Value ($)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
3.9% SHORT-TERM MUNICIPAL INVESTMENTS
OHIO Cuyahoga County, OH, Health & Education, University
Hospital of Cleveland, Daily Demand Note,
3.85%, 1/1/16* ........................................ 1,100,000 MIG1 1,100,000
Franklin County, OH, Health Systems, St. Anthony's
Medical Center, Daily Demand Note,
3.85%, 7/1/15* ........................................ 500,000 MIG1 500,000
Hamilton Health Systems, Franciscan Sisters of the
Poor Health Systems, Series A, Daily Demand Note,
3.85%, 3/1/17* ........................................ 1,400,000 MIG1 1,400,000
Ohio Water Development Authority, Environmental
Mead Corporation, Series 1986 B, Daily Demand
Note, 3.7%, 11/1/15* .................................. 200,000 A1+ 200,000
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS ---------
(Cost $3,200,000) ..................................... 3,200,000
---------
96.1% LONG-TERM MUNICIPAL INVESTMENTS
OHIO Cleveland, OH:
General Obligation:
Series A, 6.3%, 7/1/06 (c) .......................... 1,000,000 AAA 1,080,320
5.3%, 9/1/08 (c) .................................... 2,000,000 AAA 2,010,400
Series 1993, 5.375%, 9/1/09 (c) ..................... 1,700,000 AAA 1,705,576
Public Power System Improvement Revenue:
Series 1994 A, Zero Coupon, 11/15/09 (c) ............ 2,250,000 AAA 1,061,393
Series B, 7%, 11/15/17 .............................. 750,000 BBB 794,355
Urban Renewal Tax Increment Rock & Roll Hall of
Fame and Museum Project, 6.75%, 3/15/18 ............. 1,000,000 NR 1,011,330
Waterworks Improvement, First Mortgage Revenue,
Series 1992 F, 6.25%, 1/1/07 (c) .................... 1,000,000 AAA 1,072,130
Columbus, OH, General Obligation:
Limited Tax, Various Purpose, Series 1993,
5.25%, 9/15/11 ...................................... 1,000,000 AAA 979,260
Unlimited Tax, Sewer Improvement, 6%, 5/1/13 .......... 1,000,000 AAA 1,028,130
Cuyahoga County, OH:
General Obligation, Jail Facilities:
Series 1991, ETM, Zero Coupon, 10/1/02*** ........... 1,500,000 AA 1,093,365
Series 1993 B, 5%, 10/1/08 (c) ...................... 4,180,000 AAA 4,111,364
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
INVESTMENT PORTFOLIO
<TABLE>
<CAPTION>
Unaudited
---------
Principal Credit Market
Amount ($) Rating (b) Value ($)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Hospital Facilities Revenue, Health Cleveland Inc.,
Series 1993, 6.25%, 8/15/10 ......................... 1,000,000 A 1,011,450
Fairfield, OH, City School District, 7.2%, 12/1/09 (c) 1,000,000 AAA 1,154,530
Franklin County, OH, Riverside United Methodist
Hospital, Series A, 5.75%, 5/15/12 .................. 1,950,000 AA 1,884,285
Gateway Economic Development Corporation of
Cleveland, OH, Stadium Revenue, 6.5%, 9/15/14 ......... 4,000,000 NR 3,875,960
Gateway Economic Development Corporation of
Cuyahoga County, OH, Excise Tax, Series 1990,
7.5%, 9/1/05 .......................................... 1,000,000 A 1,103,550
Gateway Economic Development Corporation of
Greater Cleveland, OH, Excise Tax, Series 1990,
7.2%, 9/1/01 .......................................... 2,550,000 A 2,689,689
Hamilton County, OH:
General Obligation, 5.1%, 12/1/11 ..................... 1,000,000 AA 954,230
Health System Revenue, Franciscan Sisters of the
Poor Health System, Providence Hospital,
Series 1992, 6.8%, 7/1/08 ........................... 2,000,000 BBB 2,032,500
Hospital Facilities Revenue, Christ Hospital,
Series 1991 B, 6.625%, 1/1/06 (c) ................... 1,000,000 AAA 1,070,980
Sewer System Revenue, Improvement and Refunding:
Series 1991 A, 6.4%, 12/1/05 ........................ 530,000 AA 569,453
Series 1991 A, 6.4%, 12/1/05, prerefunded
6/1/01** .......................................... 220,000 AAA 241,718
5.45%, 12/1/09 (c) .................................. 1,000,000 AAA 1,011,850
Hilliard, OH, School District, Series 1996A,
Zero Coupon, 12/1/12 (c) .............................. 1,655,000 AAA 653,593
Huber Heights, OH, Water System Revenue,
Zero Coupon 12/1/12 ................................... 1,005,000 AAA 396,895
Lorain County, OH:
Hospital Refunding Revenue:
EMH Regional Medical Center, 5%, 11/1/07 (c) ........ 1,000,000 AAA 981,850
Humility of Mary Health Care System,
Series A, 5.9%, 12/15/08 ............................ 1,000,000 A 984,200
Lorain, OH, Hospital Authority Refunding Revenue,
Lakeland Community Hospital Inc., 6.5%, 11/15/12 ...... 1,000,000 A 1,021,060
Lucas County, OH, Hospital Revenue:
Flower Hospital, Series 1993, 6.125%, 12/1/13 ......... 1,375,000 BBB 1,323,231
St. Vincent Medical Center, 5.25%, 8/15/20 (c) ........ 1,900,000 AAA 1,745,853
Mahoning County, OH, General Obligation,
Limited Tax, 6.6%, 12/1/06 (c) ........................ 1,100,000 AAA 1,206,535
North Olmsted, OH, General Obligation,
6.25%, 12/15/12 (c) ................................... 1,500,000 AAA 1,564,230
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
SCUDDER OHIO TAX FREE FUND
<TABLE>
<CAPTION>
Unaudited
---------
Principal Credit Market
Amount ($) Rating (b) Value ($)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Northeast Ohio Regional Sewer District, Wastewater
Improvement Revenue Refunding:
5.5%, 11/15/12 (c) .................................. 1,550,000 AAA 1,529,959
5.6%, 11/15/13 (c) .................................. 1,000,000 AAA 988,680
Ohio Air Quality Development Authority, Pollution
Control Revenue, Cleveland Electric Company,
8%, 12/1/13 (c) ....................................... 1,250,000 AAA 1,465,050
Ohio General Obligation, 6%, 8/1/10 .................... 1,000,000 AA 1,064,420
Ohio Higher Education Facilities Revenue:
Case Western Reserve University, Series B,
6.5%, 10/1/20 ....................................... 2,250,000 AA 2,470,320
John Carroll University, Series B, 5.3%, 11/15/14 ..... 1,000,000 A 938,030
Oberlin College Project, 7.1%, 10/1/12,
prerefunded 10/1/99** ............................... 495,000 AAA 534,249
University of Dayton Project:
7.25%, 12/1/12 (c) .................................. 1,000,000 AAA 1,108,940
1994 Project, 5.8%, 12/1/14 (c) ..................... 500,000 AAA 500,740
Ohio Housing Finance Agency, Single-Family
Mortgage Revenue, Series 1990 F, 7.6%, 9/1/16 ......... 1,590,000 AAA 1,685,177
Ohio Liquor Profits Refunding Bonds, Economic
Development Revenue, Series 1989,
6.85%, 3/1/00 (c) ..................................... 1,000,000 AAA 1,084,040
Ohio Mortgage Revenue, International Order of
Odd Fellows Home, 8.15%, 8/1/17 (c) ................... 150,000 AAA 159,675
Ohio Public Facilities Commission, Higher Educational
Capital Facilities Revenue, Series 2B,
5.4%,11/1/07 (c) ...................................... 2,000,000 AAA 2,028,580
Ohio State Building Authority:
Correctional Facilities Revenue, Series 1991 A,
6.5%, 10/1/04 ......................................... 1,000,000 A 1,089,680
Juvenile Correction Facilities, 6%, 10/1/06 ........... 1,555,000 A 1,663,819
Toledo Government Office Building, Series A,
8%, 10/1/07, prerefunded 4/1/03** ................... 500,000 AAA 595,550
Worker's Compensation Facilities, William Green
Building, Series 1993 A, 4.75%, 4/1/14 .............. 1,000,000 A 884,650
Ohio Water Development Authority, Pollution Control
Revenue, Ohio Edison Company Project,
Series 1989 A, 7.625%, 7/1/23 ......................... 1,140,000 BBB 1,211,831
Olmsted Falls, OH, City School District, General
Obligation, Series 1991, 7.05%, 12/15/11 (c) .......... 1,000,000 AAA 1,109,410
Parma, OH, General Obligation, 5.4%, 12/1/11 ........... 1,000,000 AAA 981,480
Solon, OH, School District, 5.3%, 12/1/13 .............. 1,000,000 AA 970,900
Summit County, OH, General Obligation,
6.4%, 12/1/14 (c) ..................................... 1,000,000 AAA 1,054,480
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
INVESTMENT PORTFOLIO
<TABLE>
<CAPTION>
Unaudited
---------
Principal Credit Market
Amount ($) Rating (b) Value ($)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Warren County, OH, Water Improvement, General
Obligation, The P&G Project, Series 1995,
5.25%, 12/1/16 ........................................ 1,720,000 AA 1,610,694
PUERTO RICO Puerto Rico Aqueduct and Sewer Authority,
6%, 7/1/09 ............................................ 1,000,000 A 1,037,930
Puerto Rico Electric Power Authority,
Power Revenue, Series S, 6.125%, 7/1/09 ............... 2,000,000 A 2,112,480
Puerto Rico, General Obligation:
Public Improvement, 6.6%, 7/1/13, prerefunded
7/1/02 (c)** ........................................ 1,000,000 AAA 1,119,430
Public Improvement Refunding, 5.4%, 7/1/07 ............ 1,500,000 A 1,493,610
University of Puerto Rico, University Systems,
Series N, 6.25%, 6/1/08 (c) ........................... 1,000,000 AAA 1,103,250
VIRGIN ISLANDS Virgin Islands Public Finance Authority:
General Obligation, Matching Fund Loan Notes,
Series A, 7.25%, 10/1/18 ............................ 1,000,000 NR 1,061,140
Highway Revenue, Series 1989, 7.7%, 10/1/04 ........... 1,000,000 BBB 1,087,820
TOTAL LONG-TERM MUNICIPAL INVESTMENTS ----------
(Cost $76,240,011) .................................... 79,171,279
----------
- --------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO - 100.0%
(Cost $79,440,011) (a) ................................ 82,371,279
==========
</TABLE>
(a) The cost for federal income tax purposes was $79,440,011. At March 31,
1996, net unrealized appreciation for all securities based on tax cost was
$2,931,268. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $3,173,414 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$242,146.
(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, FHA or MBIA
* Floating rate and monthly, weekly, or daily demand notes are securities
whose yields vary with a designated market index or market rate, such as
the coupon-equivalent of the Treasury bill rate. Variable rate demand notes
are securities whose yields are periodically reset at levels that are
generally comparable to tax-exempt commercial paper. These securities are
payable on demand within seven calendar days and normally incorporate an
irrevocable letter of credit from a major bank. These notes are carried,
for purposes of calculating average weighted maturity, at the longer of the
period remaining until the next rate change or to the extent of the demand
period.
** Prerefunded: Bonds which are prerefunded are collateralized by U.S.
Treasury securities which are held in escrow and are used to pay principal
and interest on the tax-exempt issue and to retire the bonds in full at the
earliest refunding date.
*** ETM: Bonds bearing the description ETM (escrowed to maturity) are
collateralized by U.S. Treasury securities which are held in escrow by a
trustee and used to pay principal and interest on bonds so designated.
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
SCUDDER OHIO TAX FREE FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1996
- --------------------------------------------------------------------------------
Assets
Investments, at market (identified cost $79,440,011)
(Note A) .............................................. $82,371,279
Cash ...................................................... 40,739
Receivables:
Interest .............................................. 1,449,050
Fund shares sold ...................................... 2,553
-----------
Total assets ....................................... 83,863,621
Liabilities
Payables:
Dividends ............................................. $132,334
Fund shares redeemed .................................. 8,000
Accrued management fee (Note C) ....................... 19,568
Other accrued expenses (Note C) ....................... 54,008
--------
Total liabilities .................................. 213,910
-----------
Net assets, at market value ............................... $83,649,711
===========
Net Assets Net assets consist of:
Unrealized appreciation on investments ................ $ 2,931,268
Accumulated net realized loss ......................... (185,761)
Shares of beneficial interest ......................... 64,577
Additional paid-in capital ............................ 80,839,627
-----------
Net assets, at market value ............................... $83,649,711
-----------
Net asset value, offering and redemption price per
share ($ 83,649,711 DIVIDED BY 6,457,717 outstanding
shares of beneficial interest, $.01 par value,
unlimited number of shares authorized) ................ $ 12.95
===========
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
Year Ended March 31, 1996
- --------------------------------------------------------------------------------
Investment income
Interest .................................................. $ 4,698,285
Expenses:
Management fee (Note C) .................................. $ 486,363
Services to shareholders (Note C) ......................... 78,523
Custodian and accounting fees (Note C) .................... 63,168
Trustees' fees and expenses (Note C) ...................... 14,214
Auditing .................................................. 31,871
Reports to shareholders ................................... 21,504
Legal ..................................................... 5,540
State registration ........................................ 6,724
Other ..................................................... 12,143
--------
Total expenses before reductions .......................... 720,050
Expense reductions (Note C) ............................... (314,079)
--------
Expenses, net ............................................. 405,971
-----------
Net investment income ..................................... 4,292,314
-----------
Net realized and unrealized gain
on investment transactions
Net realized gain from investment transactions ............ 778,640
Net unrealized appreciation on investments
during the period ..................................... 984,684
-----------
Net gain on investments ................................... 1,763,324
-----------
Net increase in net assets resulting from operations ...... $ 6,055,638
===========
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
SCUDDER OHIO TAX FREE FUND
STATEMENTS OF CHANGES IN NET ASSETS
Years Ended March 31,
---------------------
Increase (Decrease) in Net Assets 1996 1995
- --------------------------------------------------------------------------------
Operations:
Net investment income ........................ $4,292,314 $4,344,717
Net realized gain from investment
transactions ............................. 778,640 8,918
Net unrealized appreciation on
investments during the period ............ 984,684 526,733
---------- ----------
Net increase in net assets resulting from
operations ............................... 6,055,638 4,880,368
---------- ----------
Distributions to shareholders:
From net investment income ($.69 and $.70
per share, respectively) ................ (4,292,314) (4,344,717)
---------- ----------
From net realized gains from investment
transactions ($.12 per share) ........... (708,420) --
---------- ----------
In excess of net realized gains ($.04 per share) -- (252,478)
---------- ----------
Fund share transactions:
Proceeds from shares sold .................... 9,467,393 10,714,541
Net asset value of shares issued to
shareholders in reinvestment of
distributions ............................ 3,377,267 3,306,000
Cost of shares redeemed ...................... (8,635,781) (16,250,379)
---------- ----------
Net increase (decrease) in net assets from
Fund share transactions ................. 4,208,879 (2,229,838)
---------- ----------
Increase (decrease) in net assets ............ 5,263,783 (1,946,665)
Net assets at beginning of period ............ 78,385,928 80,332,593
---------- ----------
Net assets at end of period .................. $83,649,711 $78,385,928
========== ==========
Other Information
Increase (decrease) in Fund shares
Shares outstanding at beginning of period .... 6,140,345 6,334,774
---------- ----------
Shares sold .................................. 720,794 855,533
Shares issued to shareholders in
reinvestment of distributions ............ 258,369 264,552
Shares redeemed .............................. (661,791) (1,314,514)
---------- ----------
Net increase (decrease) in Fund shares ....... 317,372 (194,429)
---------- ----------
Shares outstanding at end of period .......... 6,457,717 6,140,345
========== ==========
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
For the
Period
May 28, 1987
(commencement
Years Ended March 31, of operations)
----------------------------------------------------------------------------- to March 31
1996 1995 1994 1993 1992 1991 1990 1989 1988
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ................. $ 12.77 $ 12.68 $ 13.13 $ 12.47 $ 12.14 $ 11.97 $ 11.94 $ 11.65 $ 12.00
------- ------- ------- ------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment income (a) ........... .69 .70 .70 .72 .75 .78 .82 .79 .66
Net realized and unrealized
gain (loss) on investment
transactions ...................... .30 .13 (.35) .85 .36 .23 .10 .36 (.40)
------- ------- ------- ------- ------- ------- ------- ------- -------
Total from investment
operations .......................... .99 .83 .35 1.57 1.11 1.01 .92 1.15 .26
------- ------- ------- ------- ------- ------- ------- ------- -------
Less distributions from:
Net investment income ............... (.69) (.70) (.70) (.72) (.75) (.78) (.82) (.84) (.61)
Net realized gains on
investment transactions ........... (.12) -- (.08) (.19) (.03) (.06) (.07) (.02) --
In excess of net
realized gains .................... -- (.04) (.02) -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions ................... (.81) (.74) (.80) (.91) (.78) (.84) (.89) (.86) (.61)
------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of period ........ $ 12.95 $ 12.77 $ 12.68 $ 13.13 $ 12.47 $ 12.14 $ 11.97 $ 11.94 $ 11.65
======= ======= ======= ======= ======= ======= ======= ======= =======
Total Return (%) (b) .................. 7.85 6.82 2.48 13.04 9.33 8.75 7.80 10.83 2.30**
Ratios and
Supplemental Data
Net assets, end of period
($ millions) ........................ 84 78 80 69 51 37 25 12 6
Ratio of operating expenses,
net to average daily
net assets (%) (a) .................. .50 .50 .50 .50 .50 .50 .50 .50 .50*
Ratio of net investment income to
average daily net assets (%) ........ 5.30 5.59 5.23 5.61 6.05 6.50 6.74 7.13 7.17*
Portfolio turnover rate (%) ........... 19.6 19.9 12.2 34.7 13.2 22.6 15.9 35.7 105.5*
<FN>
(a) Reflects a per share amount
of expenses, exclusive of
management fees,
reimbursed by the
Adviser of ...................... $ -- $ -- $ -- $ -- $ -- $ -- $ .03 $ .11 $ .31
Reflects a per share amount
of management fee not
imposed of ...................... $ .05 $ .05 $ .05 $ .06 $ .07 $ .07 $ .07 $ .07 $ .05
Operating expense ratio
before expense
reductions (%) .................. .89 .91 .90 .95 1.03 1.21 1.62 2.14 4.51*
(b) Total returns are higher due to maintenance of the Fund's expenses.
* Annualized
** Not annualized
</FN>
</TABLE>
17
<PAGE>
SCUDDER OHIO TAX FREE FUND
NOTES TO FINANCIAL STATEMENTS
A. Significant Accounting Policies
- --------------------------------------------------------------------------------
Scudder Ohio Tax Free Fund (the "Fund") is a non-diversified series of Scudder
State Tax Free Trust (the "Trust"). The Trust is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company. There are currently six
series in the Trust.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
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. All other debt securities are valued at their fair value as
determined in good faith by the Valuation Committee of the Board of Trustees.
Short-term investments having a maturity of sixty days or less are valued at
amortized cost.
Amortization and Accretion. All premiums and original issue discounts are
amortized/accreted for both tax and financial reporting purposes.
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code which are applicable to regulated investment companies
and to distribute all of its taxable and tax-exempt income to its shareholders.
Accordingly, the Fund paid no federal income taxes and no provision for federal
income taxes was required.
Distribution of Income and Gains. All of the net investment income of the Fund
is declared as a dividend to shareholders of record as of the close of business
each day and is paid to shareholders monthly. During any particular year, net
realized gains from investment transactions, in excess of available capital loss
carryforwards, would be taxable to the Fund if not distributed and, therefore,
will be distributed to shareholders. An additional distribution may be made to
the extent necessary to avoid the payment of a four percent federal excise tax.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The timing and characterization of certain income and capital gains
distributions are determined in accordance with federal tax regulations which
may differ from generally accepted accounting principles. As a result, net
investment income and net realized gain (loss) on investment transactions for a
reporting period may differ significantly from distributions during such period.
Accordingly, the Fund may periodically make reclassifications among certain of
its capital accounts without impacting the net asset value of the Fund.
The Fund uses the specific identification method for determining realized gain
or loss on investments for both financial and federal income tax reporting
purposes.
Other. Investment security transactions are accounted for on a trade date basis.
Distributions of net realized gains to shareholders are recorded on the
ex-dividend date. Interest income is accrued pro rata to the earlier of the call
or maturity date.
B. Purchases and Sales of Securities
- --------------------------------------------------------------------------------
During the year ended March 31, 1996, purchases and sales of municipal
securities (excluding short-term investments) aggregated $18,399,064 and
$15,296,685, respectively.
C. Related Parties
- --------------------------------------------------------------------------------
Under the Fund's Investment Advisory Agreement (the "Agreement") with Scudder,
Stevens & Clark, Inc. (the "Adviser"), the Fund agrees to pay the Adviser a fee
equal to an annual rate of approximately 0.60% of the Fund's average daily net
assets, computed and accrued daily and payable monthly. The Adviser determines
the securities, instruments, and other contracts relating to investments to be
purchased, sold or entered into by the Fund. In addition to portfolio management
services, the Adviser provides certain administrative services in accordance
with the Agreement. The Adviser has agreed not to impose all or a portion of its
management fee until July 31, 1996 and during such period to maintain the
annualized expenses of the Fund at not more than 0.50% of average daily net
assets. For the year ended March 31, 1996, the Adviser imposed fees amounting to
$172,284 and the portion not imposed amounted to $314,079 at March 31, 1996.
19
<PAGE>
SCUDDER OHIO TAX FREE FUND
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend-paying and shareholder service agent for the Fund. For the
year ended March 31, 1996, the amount charged to the Fund by SSC aggregated
$58,847 of which $4,831 is unpaid at March 31, 1996.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records of the Fund. For the year ended
March 31, 1996, the amount charged to the Fund by SFAC aggregated $36,000, of
which $3,000 was unpaid at March 31, 1996.
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, 1996,
Trustees' fees and expenses charged to the Fund aggregated $14,214.
20
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Scudder State Tax Free Trust and the Shareholders of Scudder
Ohio Tax Free Fund:
We have audited the accompanying statement of assets and liabilities of Scudder
Ohio Tax Free Fund, including the investment portfolio, as of March 31, 1996,
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 eight 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, 1996, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Scudder Ohio Tax Free Fund as of March 31, 1996, 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 eight
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 20, 1996
21
<PAGE>
SCUDDER OHIO TAX FREE FUND
TAX INFORMATION
The Fund paid distributions of $.115 per share from net long-term capital gains
during its year ended March 31, 1996. Pursuant to Section 852 of the Internal
Revenue Code, the Fund designates $721,002 as capital gain dividends for its
year ended March 31, 1996.
Of the dividends paid by the Fund from net investment income for the year ended
March 31, 1996, 100% constituted exempt interest dividends for regular federal
income tax and Ohio personal income tax purposes.
Please consult a tax adviser if you have any questions about federal or state
income tax laws, or on how to prepare your tax returns. If you have specific
questions about your Scudder Fund account, please call a Scudder Investor
Relations Representative at 1-800-225-5163.
22
<PAGE>
(This page intentionally left blank.)
23
<PAGE>
(This page intentionally left blank.)
24
<PAGE>
David S. Lee*
President and Trustee
Henry P. Becton, Jr.
Trustee; President and General Manager, WGBH Educational Foundation
Dawn-Marie Driscoll
Trustee; Consultant 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
Philip G. Condon*
Vice President
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
Vice President
Jeremy L. Ragus*
Vice President
Rebecca Wilson*
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>
The Scudder Family of Funds
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Money Market Income
Scudder Cash Investment Trust Scudder Emerging Markets Income Fund
Scudder U.S. Treasury Money Fund Scudder Global Bond Fund
Tax Free Money Market+ Scudder GNMA Fund
Scudder Tax Free Money Fund Scudder Income Fund
Scudder California Tax Free Money Fund* Scudder International Bond Fund
Scudder New York Tax Free Money Fund* Scudder Short Term Bond 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 Emerging Markets Growth Fund
Scudder Massachusetts Limited Term Tax Free Fund* Scudder Global Fund
Scudder Massachusetts Tax Free Fund* Scudder Global Discovery Fund
Scudder Medium Term Tax Free Fund Scudder Gold Fund
Scudder New York Tax Free Fund* Scudder Greater Europe Growth Fund
Scudder Ohio Tax Free Fund* Scudder International Fund
Scudder Pennsylvania Tax Free Fund* Scudder Latin America Fund
Growth and Income Scudder Pacific Opportunities Fund
Scudder Balanced Fund Scudder Quality Growth Fund
Scudder Growth and Income Fund Scudder Small Company Value 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.
26
<PAGE>
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 Treasurer's 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 and service needs of banks and other institutions,
call 1-800-854-8525.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
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 38 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.
