Shares of Scudder New York Tax Free Money Fund are not insured or guaranteed by
the U.S. government. Scudder New York Tax Free Money Fund seeks to maintain a
constant net asset value of $1.00 per share, but there can be no assurance that
the stable net asset value will be maintained.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
Scudder New York
Tax Free Money Fund
- -----------------------
Scudder New York
Tax Free Fund
Annual Report
March 31, 1996
o For investors seeking triple-tax-free income exempt from New York City,
state, and regular federal income taxes.
o Pure no-load(TM) funds with no commissions to buy, sell, or exchange shares.
<PAGE>
SCUDDER NEW YORK TAX FREE MONEY FUND
SCUDDER NEW YORK TAX FREE FUND
CONTENTS
2 In Brief
3 Letter from the Funds' President
4 Scudder New York Tax Free Fund Performance Update
5 Scudder New York Tax Free Fund Portfolio Summary
6 Scudder New York Tax Free Money Fund Portfolio Management Discussion
7 Scudder New York Tax Free Fund Portfolio Management Discussion
11 Scudder New York Tax Free Money Fund Investment Portfolio
14 Scudder New York Tax Free Money Fund Financial Statements
17 Scudder New York Tax Free Money Fund Financial Highlights
18 Scudder New York Tax Free Fund Investment Portfolio
23 Scudder New York Tax Free Fund Financial Statements
26 Scudder New York Tax Free Fund Financial Highlights
27 Notes to Financial Statements
33 Report of Independent Accountants
34 Tax Information
37 Officers and Trustees
38 Investment Products and Services
39 How to Contact Scudder
IN BRIEF
Scudder New York Tax Free Money Fund
o Scudder New York Tax Free Money Fund offered a 7-day effective yield of
2.79% on March 31, 1996, equivalent to a 5.25% taxable yield for investors
in the top federal and state income tax brackets.
Seven-Day Effective Yields on March 31, 1996
------------------------------------------
Scudder New York Taxable
Tax Free Money Equivalent
Fund Yield
------------------------------------------
2.79% 5.25%
------------------------------------------
Scudder New York Tax Free Fund
o Scudder New York Tax Free Fund provided a 4.62% 30-day net annualized SEC
yield on March 31, 1996.
o For shareholders subject to the 46.88% maximum combined federal and state
income tax rate, the Fund's yield was equal to a taxable yield of 8.70%.
30-Day Yield on March 31, 1996
------------------------------------------
Scudder New York Taxable
Tax Free Money Equivalent
Fund Yield
------------------------------------------
4.62% 8.70%
------------------------------------------
o Scudder New York Tax Free Fund exceeded the average performance of New York
tax-exempt funds over one-, two-, three-, four-, five-, and 10-year
periods, according to Lipper.
2
<PAGE>
LETTER FROM THE FUNDS' PRESIDENT
Dear Shareholders,
Widespread declines in U.S. interest rates helped create generally
hospitable conditions for bonds during the past 12 months. Scudder New York Tax
Free Fund wrapped up the fiscal year ended March 31, 1996, with a total return
of 7.95%, reflecting appreciation in the Fund's share price and an attractive
stream of double-tax-free income to investors. From a competitive standpoint,
these results were especially rewarding, as the Fund outpaced the average
performance of similar New York tax-free funds over all time periods tracked by
Lipper Analytical Services, Inc. In addition, despite rate declines, Scudder New
York Tax Free Money Fund posted a 5.25% tax equivalent yield as of the close of
the period for investors in the highest state and federal tax brackets.
As bond markets regained strength during 1995, taxable bonds led the
march back, while tax-free municipal bonds recovered at a more leisurely pace.
By fall, municipal bonds had become attractively valued compared to Treasuries,
which helped renew investor interest and resulted in outperformance versus
taxable bonds.
Recent indicators raised concerns that the economy may be stronger than
originally believed, which unsettled investors. Still, ample evidence of slower
economic growth and the absence of mounting inflationary pressures suggests that
the economic expansion is indeed winding down. This latter scenario would be
beneficial to bonds. Given the current economic uncertainties, the Fund's
challenge is to stand ready to participate in potential price rallies but also
provide a measure of price stability should the market weaken instead, while
continuing to supply competitive levels of double-tax-free income.
In closing, we would like 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 in developing nations around
the globe. For more information about Scudder Emerging Markets Growth Fund and
other Scudder products and services, see page 38. For questions about Scudder
New York Tax Free Fund or New York Tax Free Money Fund, please call a Scudder
Investor Relations representative at 1-800-225-2470.
Sincerely,
/s/David S. Lee
David S. Lee
President,
Scudder New York Tax Free Fund
Scudder New York Tax Free Money Fund
3
<PAGE>
SCUDDER NEW YORK TAX FREE FUND
PERFORMANCE UPDATE as of March 31, 1996
- -----------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- -----------------------------------------------------------------
SCUDDER NEW YORK TAX FREE FUND
- ----------------------------------------
Total Return
Period Growth --------------
Ended of Average
3/31/96 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $10,795 7.95% 7.95%
5 Year $14,946 49.46% 8.37%
10 Year $20,818 108.18% 7.61%
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%
10 Year $21,713 117.13% 8.05%
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 New York Tax Free Fund
Year Amount
- ----------------------
'86 $10,000
'87 $11,071
'88 $11,004
'89 $11,945
'90 $12,922
'91 $13,929
'92 $15,477
'93 $17,892
'94 $18,126
'95 $19,285
'96 $20,818
Lehman Brothers Municipal Bond Index
Year Amount
- ----------------------
'86 $10,000
'87 $11,097
'88 $11,376
'89 $12,196
'90 $13,482
'91 $14,726
'92 $16,197
'93 $18,225
'94 $18,648
'95 $20,034
'96 $21,713
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> <C>
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
--------------------------------------------------------------------------------
NET ASSET VALUE... $11.43 $10.39 $10.53 $10.60 $10.73 $10.98 $11.40 $10.32 $10.38 $10.67
INCOME DIVIDENDS.. $ .75 $ .73 $ .72 $ .69 $ .67 $ .65 $ .61 $ .54 $ .52 $ .53
CAPITAL GAINS
AND OTHER
DISTRIBUTIONS..... $ .15 $ .20 $ -- $ .09 $ -- $ .25 $ .61 $ .73 $ .05 $ --
FUND TOTAL
RETURN (%)........ 10.71 -.61 8.55 8.18 7.79 11.11 15.60 1.31 6.39 7.95
INDEX TOTAL
RETURN (%)........ 10.97 2.52 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.
4
<PAGE>
PORTFOLIO SUMMARY as of March 31, 1996
- ---------------------------------------------------------------------------
DIVERSIFICATION
- ---------------------------------------------------------------------------
State Agency/Lease 20%
Pollution Control/
Industrial Development 12%
Higher Education 12% We continue to
Core Cities/Lease 10% emphasize careful
Water/Sewer Revenue 9% overall credit selection
Hospital Health 8% and portfolio
Other General diversification.
Obligation/Lease 8%
Housing Finance Authority 7%
Port/Airport Revenue 5%
Miscellaneous Municipal 9%
----
100%
====
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
QUALITY
- --------------------------------------------------------------------------
AAA 44% We increased somewhat
AA 6% the percentage of BBB
A 16% and non-rated bonds in
BBB 27% the Fund's portfolio to
Not Rated 7% enhance yield while
---- maintaining our
100% higher-quality
==== orientation.
Weighted average quality: AA
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
EFFECTIVE MATURITY
- --------------------------------------------------------------------------
Less than 1 year 7% Bonds with effective
1 - 5 years 12% maturities from five to
5 - 10 years 23% 20 years represented
10 - 20 years 45% 68% of the Fund's
Greater than 20 years 13% portfolio as of the close
---- of its fiscal year,
100% compared with 49% a
==== year earlier.
Weighted average effective maturity: 12 years
- -----------------------------------------------------------------------
For more complete details about the Fund's Investment Portfolio,
see page 18.
5
<PAGE>
SCUDDER NEW YORK TAX FREE MONEY FUND
PORTFOLIO MANAGEMENT DISCUSSION
Dear Shareholders,
During the course of Scudder New York Tax Free Money Fund's most recent
fiscal year, short-term interest rates generally declined. As fears of renewed
inflation diminished following the Federal Reserve's series of 1994 interest
rate increases, the Fed lowered interest rates in July and December of 1995, and
most recently in January 1996. These rate decreases fueled a strong recovery in
the bond markets. Since then, intermediate- and long-term yields have risen on
news of stronger-than-expected economic growth. Short-term interest rates held
firm, however, as sellers of long-term issues seeking a temporary haven created
strong demand for money market securities. The short-term New York municipal
market was marked by heavy issuance of New York City securities and moderate
issuance by other New York tax-exempt entities. As a result, New York City
securities offered the best overall value for investors with ample liquidity and
relatively attractive yields, as well as top-tier short-term credit ratings.
In this environment, our strategy has been to seek a relatively high
yield by maintaining an average maturity slightly longer than Scudder New York
Tax Free Money Fund's peers. As of March 31, 1996, the Fund's average maturity
stood at 69 days, compared with 47 days on March 31, 1995. The Fund's 7-day
effective yield as of March 31, 1996, was 2.79%. For investors in the highest
combined state and federal income tax bracket, the Fund's yield equaled a 5.25%
compounded taxable yield, higher than the 4.76% average for taxable money funds,
according to IBC/Donoghue, Inc., an independent firm that tracks money fund
performance. The Fund provided a total return of 3.18% for the 12 months ended
March 31, 1996, assuming reinvestment of all income distributions, which totaled
$0.031 during the period.
If you have any questions about the Fund or your investments, please
call a Scudder Investor Relations representative at 1-800-225-2470. Page 39
provides more information on how to contact Scudder. Thank you for choosing
Scudder New York Tax Free Money Fund to help meet your investment needs.
Sincerely,
Your Portfolio Management Team
/s/Rebecca Wilson /s/K. Sue Cote
Rebecca Wilson K. Sue Cote
Scudder New York Tax Free Money Fund:
A Team Approach to Investing
Rebecca Wilson is Lead Portfolio Manager for New York Tax Free Money
Fund and contributes 10 years of experience in municipal investing and research.
Rebecca assumed responsibility for the Fund in 1987 after joining Scudder in
1986. K. Sue Cote, Portfolio Manager, joined the Fund's team in 1987 and has
spent 12 years working with short-term fixed-income investments.
6
<PAGE>
SCUDDER NEW YORK TAX FREE FUND
PORTFOLIO MANAGEMENT DISCUSSION
Dear Shareholders,
Through the up and down periods the bond market experienced over its
most recent fiscal year, Scudder New York Tax Free Fund performed well and
continued to provide a high double-tax-free yield. On March 31, 1996, the Fund's
30-day net annualized SEC was 4.62% -- equivalent to a taxable yield of 8.70%
for shareholders subject to the 46.88% maximum combined federal and state income
tax rate. With such a yield, the Fund has a clear advantage over yields provided
by taxable investments of comparable credit quality. During the 12-month period
ended March 31, 1996, the Fund's shareholders received $0.53 per share of income
exempt from both federal and New York State income taxes.
Over the period, the Fund's share price increased $0.29 to $10.67 per
share. The combination of share price appreciation and interest income of $0.53
per share enabled the Fund to post a positive total return of 7.95% over the
12-month period. This return compares favorably with the 6.90% average total
return of the 94 New York municipal bond funds tracked by Lipper Analytical
Services for the same period.
Scudder New York Tax Free Fund also exceeded the average performance of
New York tax-exempt funds over one-, two-, three-, four-, five-, and 10-year
periods. The chart below provides the Fund's specific rankings over these
periods:
Scudder New York Tax Free Fund's Average Annual Return
Versus Lipper Average of All New York Tax-Free Funds
(Returns for periods ended March 31, 1996)
-------------------------------------------------------------------
Lipper
Scudder New Average Number
Tax York Free Annual of Funds
Period Fund Return Return Rank Tracked
-------------------------------------------------------------------
1 year 7.95% 6.90% 17 94
-------------------------------------------------------------------
2 years 7.17 6.14 9 67
-------------------------------------------------------------------
3 years 5.18 4.72 17 55
-------------------------------------------------------------------
4 years 7.69 7.03 8 45
-------------------------------------------------------------------
5 years 8.37 7.79 7 41
-------------------------------------------------------------------
10 years 7.61 7.17 3 16
-------------------------------------------------------------------
Past performance does not guarantee future results.
7
<PAGE>
Major Market Influences
During the Fund's 1995-1996 fiscal year, credit markets in general were
choppy as a result of alternating periods of increasing and declining interest
rates. As we mentioned in our September 1995 report, April through June 1995 was
marked by steadily rising bond prices and declining yields as a relatively slow
U.S. economy created the conditions for a rally. In July the Federal Reserve
made the first of three moves to ease interest rates, but the market reacted
with a two-month downturn, temporarily losing faith that the Fed would ease
further.
From there, other influences spurred a sustained rally. From August
through December the Republican majority in Congress staged a series of partial
government shutdowns in their efforts to achieve a balanced budget agreement on
their terms. Many bond market participants viewed these events as indications
that significant U.S. budget deficit reduction would now be possible. Another
plus for bonds during this period was low Japanese borrowing rates -- as low as
0.5%. With these rates in mind, many arbitrageurs took the opportunity to borrow
Japanese yen inexpensively and then purchase U.S. Treasury securities in heavy
volume over the five-month period, providing an additional boost for U.S. bond
prices. In the first quarter of 1996, however, bonds were once again set back as
Congressional balanced budget efforts failed and the Japanese and U.S. economies
showed some signs of heating up.
Municipals Regain Momentum
The municipal market, which typically follows the Treasury market but
at a more moderate pace, was significantly affected by Congressional discussions
of "flat tax" legislation beginning in the second quarter of 1995. The flat tax
cloud overhanging the market did not completely lift until the Presidential
primaries were underway in early 1996, when additional scrutiny from the press
and public deflated the proposal. As a result, municipal bonds underperformed
Treasuries during the first three quarters of the Fund's fiscal year, but more
than made up lost ground during the first quarter of 1996, when Treasuries and
many taxable bonds were negatively affected by stronger-than-expected economic
indicators.
Near- and Long-Term Strategy
To take advantage of the fact that municipals were undervalued compared
to Treasuries for most of the Fund's fiscal year, we generally maintained an
average effective maturity slightly longer than the average New York tax free
8
<PAGE>
fund. Additionally, to maintain as high a yield as possible given the Fund's
broad diversification and conservative strategy, we increased somewhat the
number of BBB-rated and non-rated bonds in the Fund's portfolio. These bonds,
while carrying some additional credit risk, generally exhibit less price
volatility than municipal bonds rated A and above. As of March 31, the Fund's
portfolio held 34% of bonds in these two categories. (For a summary of the
Fund's quality, diversification, and maturity structure, see page 5.)
The Fund's longer-term investment strategy continues to focus on four
basic elements: (1) purchasing bonds with effective maturities of less than 20
years; (2) purchasing noncallable bonds at yields close to those of callable
bonds with comparable maturities; (3) purchasing high-yielding callable bonds,
and (4) diversifying investments based on careful credit selection.
Bonds with effective maturities of at least five but less than 20 years
represented almost 68% of the portfolio on March 31, 1996, compared with
approximately 49% a year earlier. Bonds in this maturity range currently offer
good value and provide attractive yields with less price volatility than
longer-term bonds. These bonds are also generally less price sensitive to
changes in interest rates because of their shorter maturities.
While shorter-maturity bonds and noncallable bonds offer a relative
degree of price stability, they also typically yield less than longer-maturity,
callable debt instruments. In order to enhance the portfolio's overall yield, we
selectively purchased higher-coupon bonds that can be called by their issuer in
a relatively short time. Typically, these bonds provide yields three quarters to
one percentage point higher than bonds maturing on similar dates.
Scudder New York Tax Free Fund continues to emphasize careful overall
credit selection and portfolio diversification, investing in a variety of
issues, including state agency/lease, pollution control/industrial development,
and higher education bonds as of March 31, 1996. The Fund's average credit
quality at the close of its fiscal year was AA.
New York Posts Modest Growth
For the twelfth consecutive year New York State failed to pass a budget
by April 1, the start of the state's fiscal year. This happened principally
because Governor Pataki's proposed budget for fiscal year 1997 was based on
9
<PAGE>
expected relief of some of the state's welfare and Medicaid costs by the federal
government, which has not yet occurred. Ongoing state budget negotiations could
be protracted. While the state's current budget problems are disheartening, its
1996 fiscal year had a positive ending -- New York finished the year with a $445
million cash surplus. The surplus was the result of tax receipts that were $270
million higher than anticipated, with lower spending representing the balance.
Our Near-Term Outlook
As we stated earlier, demand for municipals has improved now that the
low-rate flat tax proposal has disappeared from current political discourse. In
terms of the U.S. economy, we still believe that consumers' heavy debt loads
could hinder momentum and create a slowdown sometime later this year or early
next year, which would benefit bonds. But economic indicators are sufficiently
mixed that it is unclear to us when and to what extent this might occur.
Meanwhile, the Federal Reserve is in a neutral stance, neither easing nor
tightening credit, and inflation remains in check. Adding to the uncertainty is
the wait until Presidential and Congressional elections, which will play a
significant role in how optimistically the bond market will view the prospects
for federal budget deficit reduction. Market participants have applauded,
however, as both parties have claimed fiscal responsibility as part of their
respective political platforms.
For these reasons we are currently maintaining a neutral stance and
average effective maturity for the Fund, and will continue to do so until the
direction of the U.S. economy becomes clearer. In pursuit of Scudder New York
Tax Free Fund's objectives, we will continue to emphasize noncallable bonds with
effective maturities between five and 15 years. We will also pay close attention
to credit quality as we position the Fund to seek high double-tax-free income
and a competitive total return.
Sincerely,
Your Portfolio Management Team
/s/Jeremy L. Ragus /s/Donald C. Carleton
Jeremy L. Ragus Donald C. Carleton
Scudder New York
Tax Free Fund:
A Team Approach to Investing
Scudder New York 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's portfolio. 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.
Scudder New York Tax Free Fund's Lead Portfolio Manager Jeremy L. Ragus
has had responsibility for the Fund's day-to-day operations since he joined
Scudder in 1990. Jeremy has 15 years of experience in municipal investing.
Donald C. Carleton, Portfolio Manager, has over 25 years of investment
management experience and has worked on the Fund since he arrived at Scudder in
1983.
10
<PAGE>
<TABLE>
SCUDDER NEW YORK TAX FREE MONEY FUND
INVESTMENT PORTFOLIO as of March 31, 1996
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
Unaudited
---------
Principal Credit Value ($)
Amount ($) Rating (b) (Note A)
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
---------------------------------------------------------------------------------------------
100.0% MUNICIPAL INVESTMENTS
---------------------------------------------------------------------------------------------
NEW YORK Albany, NY, City School District Tax Anticipation
Notes, Series 1996, 4%, 10/16/96 ..................... 1,000,000 SS&C 1,002,521
Brighton, NY, Central School District,
Bond Anticipation Notes, 3.875%, 6/17/96 ............. 2,015,000 SS&C 2,016,726
Buffalo, NY, Revenue Anticipation Notes,
Series 1995/1996A, 4.2%, 7/16/96 ..................... 1,200,000 MIG1 1,202,727
Copaigue Union Free School District, Suffolk County,
NY, Tax Anticipation Notes for 1995-1996,
4.5%, 6/28/96 ........................................ 1,000,000 MIG1 1,001,161
Erie County, NY, Water Authority, Waterworks
System Revenue, Weekly Demand Bonds,
3.35%, 12/1/16 (c)* .................................. 2,000,000 A1 2,000,000
Glen Cove, NY, General Obligation Bonds,
6.75%, 6/15/96 (c) ................................... 255,000 AAA 256,404
Harrison, NY, Central School District Bond
Anticipation Notes, General Obligation Unlimited,
Series 1996, 4%, 3/20/97 ............................. 1,000,000 SS&C 1,004,671
Hempstead Union Free School District, Nassau
County, NY, Tax Anticipation Notes, 4.5%, 6/28/96 .... 1,000,000 SS&C 1,001,389
Islip, NY, Bond Anticipation Notes, 4.25%, 7/26/96 ..... 1,000,000 SS&C 1,001,065
Levittown, NY, Union Free School District, Tax
Anticipation Notes, 4.5%, 6/26/96 .................... 925,000 SS&C 926,254
Longwood, NY, Central School District at Middle
Island, Tax Anticipation Notes, 4.5%, 6/26/96 ........ 1,000,000 MIG1 1,001,128
Monroe County, NY, Industrial Development Agency,
Office Building Associates, Series 1992, Weekly
Demand Note, 3.2%, 10/1/00* .......................... 1,599,000 P1 1,599,000
Nassau County, NY, General Obligation Unlimited
General Improvement, Series 1996 S, 5%, 3/1/97 (c) ... 1,500,000 AAA 1,524,112
New York City Municipal Water Finance Authority:
New York City, Series 3, 3.1%, 10/24/96 .............. 1,000,000 A1+ 1,000,000
Water & Sewer System Revenue, Series 1995, Daily
Demand Note, 3.75%, 6/15/25 (c)* ................... 600,000 AAA 600,000
New York City, General Obligation, Tax
Exempt Commercial Paper:
Series H4, 3.15%, 8/13/96 (c) ...................... 1,000,000 A1+ 1,000,000
Series 1994H-3, 3.2%, 8/14/96 (c) .................. 2,000,000 A1+ 2,000,000
New York City, Revenue Anticipation Notes,
4.5%, 4/11/96 ........................................ 1,000,000 MIG1 1,000,153
New York State Dormitory Authority Revenue:
Cornell University, Daily Demand Bonds, Series B,
3.6%, 7/1/25* ...................................... 500,000 A1+ 500,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
<TABLE>
SCUDDER NEW YORK TAX FREE MONEY FUND
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
Unaudited
---------
Principal Credit Value ($)
Amount ($) Rating (b) (Note A)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Memorial Sloan-Kettering Cancer Center Revenue,
Series C, 3.35%, 8/23/96 ............................. 750,000 A1 750,000
New York State Energy Research & Development
Authority:
Pollution Control Revenue, Orange & Rockland
Rochester Project, Weekly Demand Notes,
Series A, 3.15%, 10/1/14 (c)* .................... 1,000,000 MIG1 1,000,000
Orange & Rockland Utilities Inc., Project,
Weekly Demand Notes, 3.15%, 8/1/15 (c)* .......... 1,000,000 MIG1 1,000,000
Pollution Control Revenue, Rochester Gas &
Electric Co., Monthly Reset Bonds,
Series 1984, 3.2%, 10/1/14* ...................... 1,000,000 P1 1,000,000
New York State Electric & Gas, 3.45%, 10/1/29* ......... 1,300,000 A1+ 1,300,000
New York State Environmental Facilities Corp.,
Solid Waste Revenue, General Electric Corp.,
Series 1987A, Commercial Paper:
3%, 5/8/96 ......................................... 500,000 A1+ 500,000
3%, 8/6/96 ......................................... 1,000,000 A1+ 1,000,000
3%, 8/9/96 ......................................... 1,000,000 A1+ 1,000,000
New York State, Tax Exempt Commercial Paper,
Series Q, 3.2%, 5/8/96 ............................... 1,000,000 A1 1,000,000
New York State Housing Finance Agency, Housing
Revenue Bonds:
Liberty View Apartments Project,
Weekly Demand Bonds, 3.45%, 11/1/05* ............. 1,200,000 MIG1 1,200,000
Hospital for Special Surgery, Variable Rate
Demand Bonds, 3.45%, 11/1/10* .................... 2,300,000 MIG1 2,300,000
Memorial Sloan-Kettering Cancer Center,
Series 1985 A, 3.2%, 11/1/15* .................... 2,600,000 A1+ 2,600,000
Normandie Court 1 Housing Revenue, Variable Rate
Demand Bonds, 3.1%, 5/15/15* ....................... 1,900,000 MIG1 1,900,000
New York State Job Development Authority:
Monthly Reset Bonds, Series 1985 C,
3.85%, 3/1/00* ..................................... 1,000,000 MIG1 1,000,000
Monthly Reset Bonds, Series F, 3.5%, 3/1/99* ......... 710,000 MIG1 710,000
New York State Local Government Assistance
Corporation:
Series 1993 A, Weekly Demand Note,
3.15%, 4/1/22* ................................... 1,000,000 MIG1 1,000,000
Series 1994 B, Weekly Demand Note,
3.1%, 4/1/23* .................................... 500,000 MIG1 500,000
New York State Medical Care Facilities Financing
Agency, Children's Hospital of Buffalo, Weekly
Demand Bonds, 3.25%, 11/1/05* ........................ 1,800,000 MIG1 1,800,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
Unaudited
---------
Principal Credit Value ($)
Amount ($) Rating (b) (Note A)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
New York State Power Authority Revenue & General
Purpose, Optional Put Bonds, 3.25%, 3/1/16* .......... 1,800,000 MIG1 1,800,000
Niagara County, NY, General Obligation,
Series B, 5.125%, 1/15/97 (c) ........................ 750,000 AAA 758,785
North Hempstead, NY, Solid Waste Management
Revenue Refunding, Series 1993 A, Weekly
Demand Note, 3.1%, 2/1/12* ........................... 200,000 MIG1 200,000
North Hempstead, Nassau County, NY, Bond
Anticipation Notes, Series 1995 C, 5%, 5/30/96 ....... 1,500,000 SS&C 1,502,094
Rochester, NY, Bond Anticipation Notes, Series I,
4.5%, 10/31/96 ....................................... 1,000,000 SS&C 1,006,092
Rockland County, NY, Revenue Anticipation Notes,
5%, 5/17/96 .......................................... 795,000 SS&C 795,934
Schenectady County, NY, Industrial Development
Revenue, Scotia Industrial Park Project,
Weekly Demand Bonds, 3.25%, 6/1/09* .................. 2,270,000 P1 2,270,000
Seneca County, NY, Industrial Development Agency,
1991 Civic Facility, New York Chiropractic College,
Weekly Demand Bond, 3.2%, 10/1/21* ................... 500,000 A1+ 500,000
Triborough Bridge and Tunnel Authority, NY, Special
Obligation, Weekly Demand Note, 3.1%, 1/1/24 (c)* .... 3,600,000 MIG1 3,600,000
Trust for the Cultural Resources of the City of
New York, Museum of Natural History:
Weekly Demand Note, 3.15%, 4/1/21 (c)* ............. 1,600,000 MIG1 1,600,000
Weekly Demand Note, Series 1993 A,
3.15%, 4/1/21 (c)* ............................... 500,000 MIG1 500,000
----------
TOTAL INVESTMENT PORTFOLIO -- 100.0%
(Cost $57,730,216) (a) ............................... 57,730,216
==========
==========================================================================================================
<FN>
(a) The cost for federal income tax purposes was $57,730,216.
(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. Securities rated
by Scudder (SS&C) have been determined to be of comparable quality to rated
eligible securities.
(c) Bond is insured by one of these companies: AMBAC, FGIC, FSA 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.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
SCUDDER NEW YORK TAX FREE MONEY FUND
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
<CAPTION>
MARCH 31, 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at value (identified cost $57,730,216)
(Note A) ............................................ $57,730,216
Receivables:
Investments sold .................................... 500,000
Interest ............................................ 496,975
Fund shares sold .................................... 194,993
-----------
Total assets ...................................... 58,922,184
LIABILITIES
Payables:
Due to custodian bank ............................... $304,075
Fund shares redeemed ................................ 131,727
Dividends ........................................... 15,906
Accrued management fee (Note C) ..................... 13,670
Other accrued expenses (Note C) ..................... 42,927
--------
Total liabilities ................................. 508,305
-----------
Net assets, at value .................................. $58,413,879
===========
NET ASSETS
Net assets consist of:
Accumulated net realized loss ....................... $ (15,964)
Shares of beneficial interest ....................... 584,176
Additional paid-in capital .......................... 57,845,667
-----------
Net assets, at value .................................. $58,413,879
===========
NET ASSET VALUE, offering and redemption price per
share ($58,413,879/58,417,547 outstanding
shares of beneficial interest, $.01 par value,
unlimited number of shares authorized) .............. $1.00
=====
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED MARCH 31, 1996
- ---------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest ............................................... $2,067,646
Expenses:
Management fee (Note C) ................................ $ 277,273
Services to shareholders (Note C) ...................... 79,614
Custodian and accounting fees (Note C) ................. 51,179
Trustees' fees (Note C) ................................ 14,241
Auditing ............................................... 26,476
State registration ..................................... 8,410
Reports to shareholders ................................ 9,097
Legal .................................................. 2,953
Other .................................................. 6,328
---------
Total expenses before reductions ....................... 475,571
Expense reductions (Note C) ............................ (142,485)
---------
Expenses, net .......................................... 333,086
----------
Net investment income .................................. 1,734,560
NET REALIZED LOSS ON INVESTMENTS
Net realized loss from investment transactions ......... (3,311)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ... $1,731,249
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
SCUDDER NEW YORK TAX FREE MONEY FUND
- --------------------------------------------------------------------------------
<TABLE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<CAPTION>
YEARS ENDED MARCH 31,
---------------------
INCREASE (DECREASE) IN NET ASSETS 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income .......................... $ 1,734,560 $ 1,327,739
Net realized loss from investment
transactions ................................. (3,311) (6,662)
------------ ------------
Net increase in net assets resulting from
operations ................................... 1,731,249 1,321,077
------------ ------------
Distributions to shareholders from net
investment income ($.031 and $.025
per share, respectively) ..................... (1,734,560) (1,327,739)
------------ ------------
Fund share transactions at net asset value of
$1.00 per share:
Shares sold .................................... 57,520,540 66,783,648
Net asset value of shares issued to
shareholders in reinvestment of
distributions ................................ 1,503,912 1,176,765
Shares redeemed ................................ (55,556,958) (60,149,789)
------------ ------------
Net increase in net assets from Fund
share transactions ........................... 3,467,494 7,810,624
------------ ------------
INCREASE IN NET ASSETS ......................... 3,464,183 7,803,962
Net assets at beginning of period .............. 54,949,696 47,145,734
------------ ------------
NET ASSETS AT END OF PERIOD .................... $ 58,413,879 $ 54,949,696
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
THE FOLLOWING TABLE INCLUDES SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT
EACH PERIOD AND OTHER PERFORMANCE INFORMATION DERIVED FROM THE FINANCIAL
STATEMENTS.
<CAPTION>
FOR THE PERIOD
MAY 28, 1987
(COMMENCEMENT
YEARS ENDED MARCH 31, OF OPERATIONS)
---------------------------------------------------------------------------- TO MARCH 31,
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 ............ $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
------ ------ ------ ------ ------ ------ ------ ------ ------
Net investment income (a) ........ .031 .025 .017 .022 .035 .046 .052 .047 .033
Distributions from net
investment income .............. (.031) (.025) (.017) (.022) (.035) (.046) (.052) (.047) (.033)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period ... $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN (%) (b) ............. 3.18 2.57 1.75 2.22 3.55 4.69 5.33 4.78 3.33**
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
($ millions) ................... 58 55 47 40 36 40 36 41 30
Ratio of operating expenses
net to average daily net
assets (%) (a) ................. .60 .60 .60 .60 .60 .60 .60 .53 .50*
Ratio of net investment income
to average daily net
assets (%) ..................... 3.13 2.56 1.73 2.19 3.46 4.57 5.21 4.76 4.08*
(a) Reflects a per share amount
of expenses, exclusive of
management fees,
reimbursed by the
Adviser of ..................... $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ .002
Reflects a per share amount
of management fee not
imposed by the Adviser of ...... $ .003 $ .003 $ .004 $ .004 $ .004 $ .004 $ .004 $ .004 $ .004
Operating expense ratio
including expenses
reimbursed, management
fee and other expenses
not imposed (%) ................ .86 .89 .97 .97 1.01 1.08 1.08 .98 1.19*
<FN>
(b) Total returns are higher due to maintenance of the Fund's expenses.
* Annualized
** Not annualized
</FN>
</TABLE>
17
<PAGE>
<TABLE>
SCUDDER NEW YORK TAX FREE FUND
INVESTMENT PORTFOLIO as of March 31, 1996
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Unaudited
---------
Principal Credit Market
Amount ($) Rating (b) Value ($)
- ----------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
---------------------------------------------------------------------------------------------------
5.6% SHORT-TERM MUNICIPAL INVESTMENTS
---------------------------------------------------------------------------------------------------
NEW YORK New York City, NY, General Obligation, Unlimited Tax,
Daily Demand Note, Series A4, 3.75%, 8/1/21* ........ 100,000 MIG1 100,000
New York State Dormitory Authority Revenue,
Cornell University, Daily Demand Bonds, Series B,
3.6%, 7/1/25* ....................................... 1,700,000 A1+ 1,700,000
New York State Energy Research & Development
Authority, Pollution Control Revenue, Niagara
Mohawk Co., Daily Demand Note, 3.7%, 7/1/15* ........ 4,500,000 A1+ 4,500,000
New York State Job Development Authority, Special
Purpose, Series B1-21, Daily Demand Note,
Subject to AMT, 3.9%, 3/1/05* ....................... 280,000 MIG1 280,000
Syracuse, NY, Industrial Development Agency, Civic
Facilities Revenue, Syracuse University Project,
Daily Demand Bonds, 3.6%, 3/1/23* ................... 2,400,000 MIG1 2,400,000
Trust for the Cultural Resources of The City of
New York, The Solomon R. Guggenheim
Foundation, Daily Demand Note, 3.6%, 12/1/15* ....... 1,600,000 A1+ 1,600,000
----------
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(Cost $10,580,000) .................................. 10,580,000
----------
---------------------------------------------------------------------------------------------------
94.4% LONG-TERM MUNICIPAL INVESTMENTS
---------------------------------------------------------------------------------------------------
NEW YORK 34th Street Partnership Inc., NY, Capital Improvement,
5.5%, 1/1/14......................................... 1,900,000 A 1,781,132
Albany, NY, General Obligation, 7%, 1/15/08 (c) ....... 485,000 AAA 527,020
Battery Park City Authority, NY, Revenue Refunding,
Series A, 5%, 11/1/13 ............................... 1,850,000 AA 1,648,720
Battery Park City Project, NY, Housing Corporation,
Senior Revenue Refunding:
5.2%, 11/1/06 ..................................... 4,505,000 AA 4,411,521
5%, 11/1/13 ....................................... 2,500,000 AA 2,210,650
City University of New York, Certificates of
Participation, John Jay College, 5%, 8/15/09 (c) .... 2,000,000 AAA 1,917,000
Chautauqua County, NY:
7.3%, 4/1/08 (c) .................................... 575,000 AAA 684,676
7.3%, 4/1/09 (c) .................................... 575,000 AAA 686,533
Development Authority of The North Country, NY,
Solid Waste Management Authority, Series 1992A:
5.75%, 7/1/96 ..................................... 690,000 BAA 693,422
6%, 7/1/97 ........................................ 390,000 BAA 399,319
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Unaudited
---------
Principal Credit Market
Amount ($) Rating (b) Value ($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
6.15%, 7/1/98 ....................................... 980,000 BAA 1,014,459
Erie County, NY, General Obligation, Series A,
5.5%, 6/15/25 (c) ..................................... 500,000 AAA 477,605
Inverse Variable Rate Certificate Trust, Metropolitan
Transit Authority, Series 1993 B,
6.67%, 6/30/02 (c)** .................................. 8,000,000 NR 8,220,000
Monroe County, NY, Airport Authority, Greater
Rochester International Airport, Subject to AMT,
5.375%, 1/1/19 (c) .................................... 6,550,000 AAA 6,056,261
Nassau County Industrial Development Agency, NY,
Adelphi University, 5.5%, 6/1/03 ...................... 1,000,000 A 997,570
Nassau County, NY, General Obligation, Refunding
Combined Sewer Districts, Series 1993 G,
5.4%, 1/15/10 (c) ..................................... 3,405,000 AAA 3,398,803
New York City, Municipal Water Finance Authority,
Water and Sewer System Revenue,
Inverse Floater, 6.92%, 6/15/13 (c)** ................. 9,000,000 AAA 8,010,000
New York City, NY, General Obligation:
Series 1991, 7.5%, 2/1/06 ............................. 1,000,000 A 1,103,750
Series B, 7.5%, 2/1/05 ................................ 2,500,000 A 2,765,950
Series B, 8.25%, 6/1/06 ............................... 2,750,000 A 3,290,045
Series B, 6.2%, 8/15/06 ............................... 500,000 A 511,090
Series B, 7.25%, 8/15/07 .............................. 2,250,000 A 2,512,418
Series B, 7.3%, 8/15/10 ............................... 1,000,000 A 1,094,770
Series E, 8%, 8/1/05 (c) .............................. 330,000 AAA 401,742
Series E, 6.5%, 2/15/06 ............................... 4,000,000 A 4,174,360
Series F, 8.25%, 11/15/16 ............................. 200,000 A 227,774
Series 1996G, 5.9%, 2/1/05 ............................ 500,000 BBB 503,925
New York City, NY, Industrial Development Agency:
Civil Facilities, USTA National Tennis Center,
FSA Insured:
6.1%, 11/15/04 .................................... 1,215,000 AAA 1,314,727
6.25%, 11/15/06 ................................... 3,000,000 AAA 3,277,020
Special Facility, Terminal One Group,
Subject to AMT:
6%, 1/1/15 ........................................ 190,000 A 183,960
6%, 1/1/19 ........................................ 2,480,000 A 2,384,619
Visy Paper Inc. Project, Series 1995, 7.95%,
1/1/28 .............................................. 2,250,000 NR 2,287,350
New York State Dormitory Authority Revenue:
Capital Appreciation Insured, Canisius College:
5.4%, 7/1/10 ........................................ 1,000,000 AAA 979,680
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
<TABLE>
SCUDDER NEW YORK TAX FREE FUND
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Unaudited
---------
Principal Credit Market
Amount ($) Rating (b) Value ($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
5.45%, 7/1/11 ...................................... 1,000,000 AAA 976,340
City University:
Series A, 9.25%, 7/1/00 ............................ 2,000,000 BBB 2,322,360
Series B, 8.125%, 7/1/08 ........................... 1,200,000 BBB 1,310,904
Series D, 8.2%, 7/1/12 ............................. 2,000,000 BBB 2,188,020
Consolidated Revenue, Series A2,
5.75%, 7/1/09 (c) ................................ 3,750,000 AAA 3,879,938
Columbia University, 5%, 7/1/15 ...................... 2,500,000 AAA 2,277,725
Crouse Irving Memorial Hospital, 10.5%, 7/1/17 ....... 2,600,000 A 2,704,000
Department of Health, Roswell Cancer Center,
Series 1996, 5.75%, 7/1/17 ......................... 5,000,000 BBB 4,702,000
Mental Health Services Facilities Improvement,
Series 1996B:
6.5%, 2/15/10 .................................... 1,500,000 A 1,606,440
6.5%, 2/15/11 .................................... 1,000,000 A 1,064,930
6%, 2/15/12 ...................................... 2,500,000 A 2,527,925
Mt. Sinai School of Medicine, Series B,
5.7%, 7/1/11 (c) ................................... 1,825,000 AAA 1,863,690
Pooled Capital Program, 7.8%, 12/1/05 (c) ............ 3,970,000 AAA 4,306,418
State University Educational Facility, Series A:
6.5%, 5/15/06 ...................................... 2,000,000 BBB 2,148,740
7.125%, 5/15/09 .................................... 25,000 BBB 26,902
5.875%, 5/15/11 .................................... 2,250,000 BBB 2,252,048
Upstate Community College, Series A, 5.8%, 7/1/06 .... 1,075,000 BBB 1,085,309
7.125%, 5/15/09, prerefunded 5/15/99*** .............. 475,000 AAA 523,046
New York State Energy Research & Development
Authority Revenue Bonds, Western NY Nuclear
Service Center, Series B:
Series 1995, 5.5%, 4/1/05 .......................... 500,000 BBB 491,650
Series 1995, 5.5%, 4/1/06 .......................... 300,000 BBB 292,353
New York State Energy Research & Development
Authority, Consolidated Edison Company, Series B,
5.25%, 8/15/20 (c) ................................... 4,250,000 AAA 3,889,813
New York State Environmental Facilities Corporation,
Pollution Control Revenue, Water Revolving Fund,
Series D, 6.9%, 5/15/15 .............................. 2,445,000 AAA 2,769,549
New York State Housing Finance Agency Revenue
Health Facilities, Series 1996A, 6.375%, 11/1/04 ..... 2,000,000 BBB 2,074,740
New York State Housing Finance Agency, Service
Contract, Series F, 5.625%, 3/15/09 .................. 5,750,000 BBB 5,507,580
New York State Local Government Assistance
Corporation, Series 1994A, 5.25%, 4/1/19 ............. 1,000,000 A 909,390
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Unaudited
---------
Principal Credit Market
Amount ($) Rating (b) Value ($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
New York State Medical Care Facilities Finance
Agency:
Mental Health Center:
Series A, 8.25%, 2/15/99 ........................... 3,415,000 BBB 3,633,150
Series A, 8.875%, 8/15/07 .......................... 395,000 BBB 425,178
North Shore University, Glen Cove, Series A,
5.125%, 11/1/12 (c) ................................ 1,450,000 AAA 1,356,649
New York State Mortgage Agency Revenue,
Homeowner Mortgage, Series FF, 7.95%, 10/1/14 .......... 250,000 AA 263,863
New York State Power Authority:
Revenue & General Purpose, Series 1993CC,
5.125%, 1/1/11 ....................................... 1,500,000 AA 1,447,785
General Purpose Revenue, Series CC,
5.125%, 1/1/11 (c) ................................... 6,500,000 AAA 6,273,735
New York State Thruway Authority:
General Revenue, Series B, 5%, 1/1/20 (c) .............. 3,740,000 AAA 3,360,876
Service Contract Revenue, Local Highway and
Bridge Building:
5.125%, 4/1/07 ..................................... 3,000,000 BBB 2,881,710
5.75%, 4/1/08 ...................................... 1,000,000 BBB 1,003,010
New York State Urban Development Corporation
Revenue:
Correctional Capital Facilities:
Series A, 5.45%, 1/1/07 ............................ 2,000,000 BBB 1,949,040
Series A, 5.5%, 1/1/09 ............................. 2,500,000 BBB 2,415,325
Series 1994A, FSA Insured, 5.5%, 1/1/14 ............ 3,000,000 AAA 2,952,990
Series 1995, 5.375%, 1/1/15 ........................ 2,000,000 BBB 1,820,400
Series 1995, 5.375%, 1/1/25 ........................ 4,000,000 BBB 3,554,400
Series 6, 6%, 1/1/04 ............................... 2,370,000 BBB 2,443,754
Onondaga County Convention Center, 6%, 1/1/06 ........ 1,630,000 BBB 1,667,262
Niagara County, NY, General Obligation,
7.1%, 2/15/11 (c) ...................................... 500,000 AAA 586,570
Niagara, NY, Frontier Transportation Authority Airport
Revenue Greater Buffalo International Airport,
Series 1994A, 6.125%, 4/1/14 (c) ....................... 2,700,000 AAA 2,743,362
Niagara Falls, NY, Water Treatment Plant,
Subject to AMT:
7%, 11/1/03 (c) ...................................... 2,260,000 AAA 2,546,975
8.5%, 11/1/05 (c) .................................... 2,140,000 AAA 2,673,309
8.5%, 11/1/06 (c) .................................... 1,240,000 AAA 1,561,768
Shenendehowa Central School District, NY,
Clifton Park:
6.85%, 6/15/08 (c) ................................... 350,000 AAA 404,093
6.85%, 6/15/09 (c) ................................... 350,000 AAA 404,656
</TABLE>
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
<TABLE>
SCUDDER NEW YORK TAX FREE FUND
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Unaudited
---------
Principal Credit Market
Amount ($) Rating (b) Value ($)
- ----------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Syracuse, NY, Industrial Development Agency, Pilot
Revenue Bonds, Series 1995, 5.125%, 10/15/02 ............ 1,000,000 AA 992,030
Valley Central School District, Montgomery, NY,
7.15%, 6/15/08 (c) ...................................... 625,000 AAA 738,450
PUERTO RICO Puerto Rico Commonwealth Infrastructure Finance
Authority, Series A:
7.9%, 7/1/07 .......................................... 1,000,000 BBB 1,089,690
7.75%, 7/1/08 ......................................... 920,000 BBB 999,580
VIRGIN ISLANDS Virgin Islands Public Finance Authority,
General Obligation, Mortgage Fund Loan Notes,
Series A, 7%, 10/1/02 ................................... 500,000 BBB 529,635
Virgin Islands, Special Tax Bonds, Hugo Bonds,
7.75%, 10/1/06 .......................................... 1,500,000 NR 1,613,925
-----------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(Cost $173,628,182) ..................................... 178,182,851
-----------
- -----------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO -- 100.0%
(Cost $184,208,182) (a) ................................. 188,762,851
===========
<FN>
(a) The cost for federal income tax purposes was $184,535,167. At March 31,
1996, net unrealized appreciation for all securities based on tax cost was
$4,227,684. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $6,128,160 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$1,900,476.
(b) All of the securities held have been determined to be of appropriate credit
quality as required by the Fund's investment objectives. Credit ratings
shown are assigned by either Standard & Poor's Ratings Group, Moody's
Investors Service, Inc. or Fitch Investors Service, Inc. Unrated securities
(NR) have been determined to be of comparable quality to rated eligible
securities.
(c) Bond is insured by one of these companies: AMBAC, FGIC or MBIA.
* Floating rate and monthly, weekly, or daily demand notes are securities
whose yields vary with a designated market index or market rate, such as
the coupon-equivalent of the Treasury bill rate. Variable rate demand notes
are securities whose yields are periodically reset at levels that are
generally comparable to tax-exempt commercial paper. These securities are
payable on demand within seven calendar days and normally incorporate an
irrevocable letter of credit from a major bank. These notes are carried,
for purposes of calculating average weighted maturity, at the longer of the
period remaining until the next rate change or to the extent of the demand
period.
** Inverse floating rate notes are instruments whose yields have an inverse
relationship to benchmark interest rates. These securities are shown at
their rate as of March 31, 1996.
*** 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.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
- --------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------------------
<CAPTION>
MARCH 31, 1996
- --------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at market (identified cost $184,208,182)
(Note A) ................................................. $188,762,851
Cash ......................................................... 3,312
Receivables:
Interest ................................................. 3,261,737
Fund shares sold ......................................... 66,643
Other assets ................................................. 1,956
------------
Total assets .......................................... 192,096,499
LIABILITIES
Payables:
Dividends ................................................ $266,838
Fund shares redeemed ..................................... 13,584
Accrued management fee (Note C) .......................... 99,992
Other accrued expenses (Note C) .......................... 62,798
--------
Total liabilities ..................................... 443,212
------------
Net assets, at market value .................................. $191,653,287
============
NET ASSETS
Net assets consist of:
Unrealized appreciation on investments ................... $ 4,554,669
Accumulated net realized loss ............................ (7,905,244)
Shares of beneficial interest ............................ 179,646
Additional paid-in capital ............................... 194,824,216
------------
Net assets, at market value .................................. $191,653,287
============
NET ASSET VALUE, offering and redemption price per share
($191,653,287 / 17,964,551 outstanding shares of
beneficial interest, $.01 par value, unlimited number
of shares authorized) .................................... $10.67
======
</TABLE>
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
SCUDDER NEW YORK TAX FREE FUND
<TABLE>
- -------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- -------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED MARCH 31, 1996
- -------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest ....................................................... $11,132,644
Expenses:
Management fee (Note C) ........................................ $1,215,011
Services to shareholders (Note C) .............................. 165,749
Custodian and accounting fees (Note C) ......................... 105,622
Trustees' fees (Note C) ........................................ 14,241
Auditing ....................................................... 37,089
Reports to shareholders ........................................ 25,932
Legal .......................................................... 6,188
Federal and state registration ................................. 12,047
Other .......................................................... 12,450 1,594,329
-----------------------
Net investment income .......................................... 9,538,315
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENT TRANSACTIONS
Net realized gain (loss) from:
Investments ............................................ 61,889
Futures ................................................ (509,134)
Options ................................................ (67,500) (514,745)
------------------------
Net unrealized appreciation during the
period on investments .................................. 5,871,555
-----------
Net gain on investments ........................................ 5,356,810
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........... $14,895,125
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<CAPTION>
YEARS ENDED MARCH 31,
---------------------------
INCREASE (DECREASE) IN NET ASSETS 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ........................... $ 9,538,315 $ 10,299,978
Net realized loss from investment
transactions .................................. (514,745) (5,532,589)
Net unrealized appreciation on
investment transactions ....................... 5,871,555 6,398,650
------------ ------------
Net increase in net assets resulting from
operations .................................... 14,895,125 11,166,039
------------ ------------
Distributions to shareholders:
From net investment income ($.53 and
$.52 per share, respectively) ............... (9,538,315) (10,299,978)
------------ ------------
In excess of net realized
gains ($.05 per share) ...................... -- (1,028,717)
------------ ------------
Fund share transactions:
Proceeds from shares sold ....................... 26,487,697 34,151,916
Net asset value of shares issued to
shareholders in reinvestment
of distributions .............................. 6,276,457 7,668,354
Cost of shares redeemed ......................... (40,000,573) (55,402,814)
------------ ------------
Net decrease in net assets from
Fund share transactions ....................... (7,236,419) (13,582,544)
------------ ------------
DECREASE IN NET ASSETS .......................... (1,879,609) (13,745,200)
Net assets at beginning of period ............... 193,532,896 207,278,096
------------ ------------
NET ASSETS AT END OF PERIOD ..................... $191,653,287 $193,532,896
============ ============
OTHER INFORMATION
INCREASE (DECREASE) IN FUND SHARES
Shares outstanding at beginning of period ....... 18,645,871 20,085,899
------------ ------------
Shares sold ..................................... 2,462,070 3,366,073
Shares issued to shareholders in
reinvestment of distributions ................. 585,375 754,635
Shares redeemed ................................. (3,728,765) (5,560,736)
------------ ------------
Net decrease in Fund shares ..................... (681,320) (1,440,028)
------------ ------------
Shares outstanding at end of period ............. 17,964,551 18,645,871
============ =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
25
<PAGE>
<TABLE>
SCUDDER NEW YORK TAX FREE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
THE FOLLOWING TABLE INCLUDES SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT
EACH PERIOD AND OTHER PERFORMANCE INFORMATION DERIVED FROM THE FINANCIAL
STATEMENTS.
<CAPTION>
YEARS ENDED MARCH 31,
------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ........ $10.38 $10.32 $11.40 $10.98 $10.73 $10.60 $10.53 $10.39 $11.43 $11.19
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from investment
operations:
Net investment
income .................... .53 .52 .54 .61 .65 .67 .69 .72 .73 .75
Net realized and unrealized
gain (loss) on investment
transactions .............. .29 .11 (.35) 1.03 .50 .13 .16 .14 (.84) .39
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations ................. .82 .63 .19 1.64 1.15 .80 .85 .86 (.11) 1.14
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Less distributions:
From net investment
income .................... (.53) (.52) (.54) (.61) (.65) (.67) (.69) (.72) (.73) (.75)
From paid-in
capital ................... - - - - - - (.08) - - -
From net realized
gains ..................... - - (.67) (.61) (.25) - (.01) - (.20) (.15)
In excess of net
realized gains ............ - (.05) (.06) - - - - - - -
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions .......... (.53) (.57) (1.27) (1.22) (.90) (.67) (.78) (.72) (.93) (.90)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of period ............. $10.67 $10.38 $10.32 $11.40 $10.98 $10.73 $10.60 $10.53 $10.39 $11.43
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN (%) ............. 7.95 6.39 1.31 15.60 11.11 7.79 8.18 8.55 (.61) 10.71
RATIOS AND
SUPPLEMENTAL DATA
Net assets, end of
period ($ millions) ........ 192 194 207 201 159 142 132 123 116 154
Ratio of operating
expenses, net to
average daily net
assets (%) ................. .82 .82 .82 .82 .87 .91 .89 .89 .95 .88
Ratio of net investment
income to average
daily net assets (%) ....... 4.91 5.13 4.80 5.36 5.96 6.29 6.39 6.89 7.05 6.70
Portfolio turnover
rate (%) ................... 80.5 83.8 158.0 201.4 168.2 224.9 114.3 132.1 44.2 71.9
</TABLE>
26
<PAGE>
SCUDDER NEW YORK TAX FREE MONEY FUND
SCUDDER NEW YORK TAX FREE FUND
- --------------------------------------------------------------------------------
A. SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
Scudder New York Tax Free Money Fund ("Tax Free Money Fund"), a nondiversified
fund, and Scudder New York Tax Free Fund ("Tax Free Fund"), a diversified fund,
are two series of Scudder State Tax Free Trust (the "Trust"). The Trust,
currently consisting of six separate series, is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end management investment company.
The Funds' 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 Funds in the
preparation of their financial statements.
SECURITY VALUATION. Tax Free Money Fund values all portfolio securities
utilizing the amortized cost method permitted in accordance with Rule 2a-7 under
the 1940 Act and pursuant to which Tax Free Money Fund must adhere to certain
conditions. Under this method, which does not take into account unrealized gains
and losses on securities, an instrument is initially valued at its cost and
thereafter assumes a constant accretion/amortization to maturity of any
discount/premium.
Tax Free Fund's 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 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 year ended
March 31,1996, the Tax Free Fund purchased interest rate futures to manage the
duration of the portfolio. Additionally, during the year
27
<PAGE>
SCUDDER NEW YORK TAX FREE MONEY FUND
SCUDDER NEW YORK TAX FREE FUND
- --------------------------------------------------------------------------------
ended March 31, 1996, the Tax Free Fund sold interest rate futures to hedge
against declines in the value of portfolio securities.
Upon entering into a futures contract, the Tax Free 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 Tax Free 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 Tax Free Fund. When entering into a closing transaction, the
Tax Free 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.
Certain risks may arise upon entering into futures contracts including the risk
that an illiquid secondary market will limit the Tax Free 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 Tax Free Fund gives up the opportunity to profit from favorable
price movements in the hedged positions during the term of the contract.
OPTIONS. An option contract is a contract in which the writer of the option
grants the buyer of the option the right to purchase from (call option), or sell
to (put option), the writer a designated instrument at a specified price within
a specified period of time. Certain options, including options on indices, will
require cash settlement by the Fund if the option is exercised. During the year
ended March 31, 1996, the Tax Free Fund purchased put options on securities as a
hedge against potential adverse price movements in the value of portfolio
assets.
If the Fund writes an option and the option expires unexercised, the Fund will
realize income, in the form of a capital gain, to the extent of the amount
received for the option (the "premium"). If the Fund elects to close out the
option it would recognize a gain or loss based on the difference between the
cost of closing the option and the initial premium received. If the Fund
purchased an option and allows the option to expire it would realize a loss to
the extent
28
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
of the premium paid. If the Fund elects to close out the option it would
recognize a gain or loss equal to the difference between the cost of acquiring
the option and the amount realized upon the sale of the option.
The gain or loss recognized by the Fund upon the exercise of a written call or
purchased put option is adjusted for the amount of option premium. If a written
put or purchased call option is exercised the Fund's cost basis of the acquired
security or currency would be the exercise price adjusted for the amount of the
option premium.
The liability representing the Fund's obligation under an exchange traded
written option or investment in a purchased option is valued at the last sale
price or, in the absence of a sale, the mean between the closing bid and asked
price or at the most recent asked price (bid for purchased options) if no bid
and asked price are available. Over-the-counter written or purchased options are
valued using dealer supplied quotations.
When the Fund writes a covered call option, the Fund foregoes, in exchange for
the premium, the opportunity to profit during the option period from an increase
in the market value of the underlying security or currency above the exercise
price. When the Fund writes a put option it accepts the risk of a decline in the
market value of the underlying security or currency below the exercise price.
Over-the-counter options have the risk of the potential inability of
counterparties to meet the terms of their contracts. The Fund's maximum exposure
to purchased options is limited to the premium initially paid. In addition,
certain risks may arise upon entering into option contracts including the risk
that an illiquid secondary market will limit the Fund's ability to close out an
option contract prior to the expiration date and, that a change in the value of
the option contract may not correlate exactly with changes in the value of the
securities or currencies hedged.
AMORTIZATION AND ACCRETION. All premiums and original issue discounts are
amortized/accreted for both tax and financial reporting purposes.
FEDERAL INCOME TAXES. The Funds' policy is to comply with the requirements of
the Internal Revenue Code which are applicable to regulated investment companies
and to distribute all of their taxable and tax-exempt income to their
shareholders. Accordingly,
29
<PAGE>
SCUDDER NEW YORK TAX FREE MONEY FUND
SCUDDER NEW YORK TAX FREE FUND
- --------------------------------------------------------------------------------
the Funds paid no federal income taxes and no provisions for federal income
taxes were required.
At March 31, 1996, the Tax Free Money Fund had a net tax basis capital loss
carryforward of approximately $53,000 which may be applied against any realized
net taxable capital gains of each succeeding year until fully utilized or until
March 31, 2000 ($1,000), March 31, 2001 ($2,000), March 31, 2002 ($4,000), March
31, 2003 ($43,000), and March 31, 2004 ($3,000), the respective expiration
dates, whichever occurs first.
At March 31, 1996, the Tax Free Fund had a net tax basis capital loss
carryforward of approximately $6,317,000 which may be applied against any
realized net taxable capital gains of each succeeding year until fully utilized
or until March 31, 2003 ($3,937,000) and March 31, 2004 ($2,380,000), the
respective expiration dates, whichever occurs first.
DISTRIBUTION OF INCOME AND GAINS. All of the net investment income of the Funds
is declared as dividends 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 Funds if
not distributed and, therefore, will be distributed to shareholders. An
additional distribution may be made to the extent necessary to avoid the payment
of a four percent federal excise tax.
The timing and characterization of certain income and capital gains
distributions are determined in accordance with federal tax regulations which
may differ from generally accepted accounting principles. These differences
relate primarily to investments in futures contracts.
As a result, net investment income and net realized gain (loss) on investment
transactions for a reporting period may differ significantly from distributions
during such period. Accordingly, the Funds may periodically make
reclassifications among certain of its capital accounts without impacting the
net asset value of the Funds.
30
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The Funds use the specific identification method for determining realized gain
or loss on investments for both financial and federal income tax reporting
purposes.
OTHER. Investment 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 long-term municipal
securities aggregated $147,730,722 and $153,890,088, respectively, for Tax Free
Fund.
The aggregate face value of futures contracts both opened and closed during the
year ended March 31, 1996 amounted to $241,241,605, respectively, for Tax Free
Fund.
C. RELATED PARTIES
- --------------------------------------------------------------------------------
Each Fund has entered into an Investment Advisory Agreement (each an "Agreement"
and collectively the "Agreements") with Scudder, Stevens & Clark, Inc. (the
"Adviser"), under which each Fund agrees to pay the Adviser a fee computed and
accrued daily and paid monthly. The annual rate is 0.50% of the average daily
net assets of Tax Free Money Fund and 0.625% of the first $200,000,000 of the
average daily net assets, and 0.60% of such net assets in excess of $200,000,000
for Tax Free Fund.
As manager of the assets of Tax Free Money Fund and Tax Free Fund, the Adviser
directs the investments of Tax Free Money Fund and Tax Free Fund in accordance
with the investment objectives, policies, and restrictions of each Fund. The
Adviser determines the securities, instruments, and other contracts relating to
investments to be purchased, sold or entered into by each Fund. In addition to
portfolio management services, the Adviser provides certain administrative
services in accordance with the Agreements.
The Agreements also provide that if the Funds' expenses, exclusive of taxes,
interest and certain other expenses exceed specified limits, such excess, up to
the amount of the management fee, will be paid by the Adviser. For the year
ended March 31, 1996, the fee for Tax Free Fund pursuant to the Agreement
amounted to
31
<PAGE>
SCUDDER NEW YORK TAX FREE MONEY FUND
SCUDDER NEW YORK TAX FREE FUND
- --------------------------------------------------------------------------------
$1,215,011, which was equivalent to an annual effective rate of .625% of the
Fund's average daily net assets.
With respect to Tax Free Money Fund, 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 Tax Free Money Fund at not more than 0.60%
of average daily net assets. For the year ended March 31, 1996, the Adviser did
not impose a portion of its fee amounting to $142,485, and the portion imposed
amounted to $134,788.
Scudder Fund Accounting Corporation ("SFAC") a subsidiary of the Adviser, is
responsible for determining the net asset value per share and maintaining the
portfolio and general accounting records of the New York Tax Free Money Fund and
New York Tax Free Fund, respectively. For the year ended March 31, 1996 SFAC
imposed fees amounting to $30,000 for the New York Tax Free Money Fund. For the
year ended March 31, 1996, SFAC imposed fees amounting to $53,141 for the New
York Tax Free Fund.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend-paying and shareholder service agent for the Funds. For the
year ended March 31, 1996, $60,783 and $124,088 were charged by SSC to Tax Free
Money Fund and Tax Free Fund, of which $5,060 and $10,151 were unpaid at March
31, 1996, respectively.
The Trust pays each Trustee not affiliated with the Adviser $12,000 annually,
allocated 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 aggregated $14,241 each for both the Tax Free Money Fund and Tax
Free Fund.
32
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE TRUSTEES OF SCUDDER STATE TAX FREE TRUST AND THE SHAREHOLDERS OF SCUDDER
NEW YORK TAX FREE MONEY FUND AND SCUDDER NEW YORK TAX FREE FUND:
We have audited the accompanying statements of assets and liabilities of Scudder
New York Tax Free Money Fund and Scudder New York Tax Free Fund, including the
investment portfolios, as of March 31, 1996 and the related statements 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 periods indicated therein. These financial statements and financial
highlights are the responsibility of the Funds' 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 and brokers. 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 New York Tax Free Money Fund and Scudder New York Tax Free Fund as of
March 31, 1996, the results of their operations for the year then ended, the
changes in their net assets for each of the two years in the period then ended,
and their financial highlights for each of the periods indicated therein in
conformity with generally accepted accounting principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
May 20, 1996
33
<PAGE>
TAX INFORMATION
- --------------------------------------------------------------------------------
Of the dividends paid by the New York Tax Free Money Fund and New York Tax Free
Fund from net investment income for the taxable year ended March 31, 1996, 100%
constituted exempt interest dividends for regular federal income tax and New
York State and New York City 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.
34
<PAGE>
(This page intentionally left blank.)
35
<PAGE>
(This page intentionally left blank.)
36
<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
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.
37
<PAGE>
INVESTMENT PRODUCTS AND SERVICES
<TABLE>
<CAPTION>
The Scudder Family of Funds
-----------------------------------------------------------------------------------------------------------------
<C> <C>
Money Market Income
Scudder Cash Investment Trust Scudder Emerging Markets Income Fund
Scudder U.S. Treasury Money Fund Scudder 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.
</TABLE>
38
<PAGE>
HOW TO CONTACT SCUDDER
<TABLE>
<CAPTION>
Account Service and Information
-------------------------------------------------------------------------------------------------------------
<C> <C>
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 For information on Scudder
Treasurers Trust,(TM)an institutional Institutional Funds,* funds
cash management service for designed to meet the broad
corporations, non-profit investment management and
organizations and trusts that uses service needs of banks and
certain portfolios of Scudder Fund, other institutions, call
Inc.* ($100,000 minimum), call 1-800-854-8525.
1-800-541-7703.
-------------------------------------------------------------------------------------------------------------
Scudder Investor Relations and Scudder Funds Centers are services provided
through Scudder Investor Services, Inc., Distributor.
* Contact Scudder Investor Services, Inc., Distributor, to receive a
prospectus with more complete information, including management fees and
expenses. Please read it carefully before you invest or send money.
</TABLE>
39
<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.
