Scudder Massachusetts Tax Free Fund
Semiannual Report
September 30, 1996
Pure No-Load(TM) Funds
For investors seeking double tax-free income exempt from both Massachusetts and
regular federal income taxes.
A pure no-load(TM) fund with no commissions to
buy, sell, or exchange shares.
<PAGE>
Table of Contents
2 In Brief
3 Letter from the Fund's President
4 Performance Update
5 Portfolio Summary
6 Portfolio Management Discussion
10 Investment Portfolio
15 Financial Statements
18 Financial Highlights
19 Notes to Financial Statements
22 Investment Products and Services
23 How to Contact Scudder
In Brief
o As of September 30, 1996, Scudder Massachusetts Tax Free Fund's 30-day net
annualized SEC yield was 4.86%, equivalent to a 9.14% taxable yield for
Massachusetts investors subject to the 46.85% maximum combined federal and state
income tax rate.
o The Fund received five stars from Morningstar, reflecting the highest possible
rating for risk-adjusted performance through September 30, 1996. The Fund has
held a five-star Morningstar rating since June 1994.
For your information, these ratings are subject to change every month and are
calculated from the Fund's five-year average annual return in excess of 90-day
Treasury bill returns with appropriate fee adjustments, and a risk factor that
reflects fund performance below T-bill returns. 561 municipal funds were rated.
10% received five stars, 22.5% received four stars, 35% three stars, 22.5% two
stars, and the bottom 10% one star. The Fund received five stars for three- and
five-year performance as well. Past performance is no guarantee of future
returns.
o For the semiannual and one-year periods ended September 30, 1996, Scudder
Massachusetts Tax Free Fund posted total returns of 2.98% and 6.22%,
respectively, compared with the 3.11% and 5.75% average returns of 51 similar
funds tracked by Lipper Analytical Services over the same periods. The Fund
ranked number one among its peers for the three-, four-, and five-year periods
ended September 30. See page 6 for additional information on the Fund's
rankings.
2 - Scudder Massachusetts Tax Free Fund
<PAGE>
Letter From the Fund's President
Dear Shareholders,
We hope you enjoy our newly redesigned shareholder report. The new format,
which is being gradually introduced for all Scudder funds, is intended to
enhance the usefulness and readability of the reports.
Let us know what you think.
We are very pleased to report Scudder Massachusetts Tax Free Fund's
outstanding long-term performance. In addition to the Fund's five-star
Morningstar rating (see "In Brief" on page 2), the Fund ranked number one among
all Massachusetts tax-free funds over three-, four-, and five-year periods for
total return performance as tracked by Lipper. And as portfolio managers Philip
Condon and Kathleen Meany report in the portfolio management discussion that
follows, the Fund continues to post a high double tax-free yield by investing in
a wide variety of Massachusetts municipal bonds. The Fund also attempts to
approximate the average maturity of the unmanaged Lehman Brothers Municipal Bond
Index but with a superior portfolio structure and the possibility of higher
returns. Please read the discussion beginning on page 6 for more information.
We would like to take this opportunity to introduce the two newest members
of Scudder's family of pure no-load(TM) funds -- Scudder 21st Century Growth
Fund and Scudder Classic Growth Fund. Scudder 21st Century Growth Fund seeks
long-term growth by investing primarily in the securities of emerging growth
companies poised to be leaders in the 21st century. Scudder Classic Growth Fund
seeks long-term growth by investing primarily in common stocks of medium to
large U.S. companies; additionally, it seeks to keep the value of its shares
more stable than the typical capital growth mutual fund. For more information on
either of these new funds and other Scudder products and services, please see
page 22. For questions about Scudder Massachusetts Tax Free Fund, please call a
Scudder Investor Information representative at 1-800-225-2470.
Sincerely,
/s/David S. Lee
David S. Lee
President,
Scudder Massachusetts Tax Free Fund
3 - Scudder Massachusetts Tax Free Fund
<PAGE>
PERFORMANCE UPDATE as of September 30, 1996
- ----------------------------------------------------------------
FUND INDEX COMPARISONS
- ----------------------------------------------------------------
Total Return
Period Growth --------------
Ended of Average
9/30/96 $10,000 Cumulative Annual
- --------------------------------------
SCUDDER MASSACHUSETTS TAX FREE FUND
- --------------------------------------
1 Year $10,622 6.22% 6.22%
5 Year $14,769 47.69% 8.11%
Life of
Fund* $21,651 116.51% 8.61%
- --------------------------------------
LEHMAN BROTHERS MUNICIPAL BOND INDEX
- --------------------------------------
1 Year $10,604 6.04% 6.04%
5 Year $14,323 43.23% 7.44%
Life of
Fund* $21,340 113.40% 8.46%
*The Fund commenced operations on May 28, 1987.
Index comparisons begin May 31, 1987.
- -----------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- -----------------------------------------------------------------
A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:
YEARLY PERIODS ENDED SEPTEMBER 30
SCUDDER MASSACHUSETTS TAX FREE FUND
Year Amount
- ----------------------
5/31/87 $10000
'87 $ 9871
'88 $11353
'89 $12349
'90 $12933
'91 $14660
'92 $16432
'93 $18981
'94 $18344
'95 $20384
'96 $21651
LEHMAN BROTHERS MUNICIPAL BOND INDEX
Year Amount
- ----------------------
5/31/87 $10000
'87 $10038
'88 $11341
'89 $12325
'90 $13163
'91 $14899
'92 $16426
'93 $18553
'94 $18100
'95 $20124
'96 $21340
The unmanaged Lehman Brothers Municipal Bond Index is a market value-weighted
measure of municipal bonds issued across the United States. Index issues have
a credit rating of at least Baa and a maturity of at least two years. Index
returns assume reinvestment of dividends and, unlike Fund returns, do not
reflect any fees or expenses.
- -----------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
- -----------------------------------------------------------------
A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) and Index Total
Return (%) with the exact data points listed in the table
below.
YEARLY PERIODS ENDED SEPTEMBER 30
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
-------------------------------------------------------------------------------
NET ASSET VALUE... $11.60 $12.30 $12.30 $12.03 $12.74 $13.28 $14.24 $12.95 $13.63 $13.75
INCOME DIVIDENDS.. $ .25 $ .81 $ .85 $ .82 $ .82 $ .83 $ .84 $ .78 $ .72 $ .71
CAPITAL GAINS
AND OTHER
DISTRIBUTIONS..... $ - $ .10 $ .19 $ .02 $ .04 $ .12 $ .18 $ .04 $ - $ -
FUND TOTAL
RETURN (%)........ -1.29 15.01 8.77 4.73 13.35 12.09 15.51 -3.36 11.12 6.22
INDEX TOTAL
RETURN (%)........ .38 12.98 8.68 6.80 13.19 10.45 12.74 -2.44 11.18 6.04
</TABLE>
All performance is historical, assumes reinvestment of all dividends and capital
gains, and is not indicative of future results. Investment return and principal
value will fluctuate, so an investor's shares, when redeemed, may be worth more
or less than when purchased. If the Adviser had not temporarily capped expenses,
the average annual total return for the Fund for the one year, five year and
life of Fund would have been lower.
4 - Scudder Massachusetts Tax Free Fund
<PAGE>
PORTFOLIO SUMMARY as of September 30, 1996
- --------------------------------------------------------------------------
DIVERSIFICATION
- --------------------------------------------------------------------------
General Obligation 26%
Hospital/Health 21%
Water/Sewer Revenue 12%
Higher Education 11%
Electric Utility Revenue 10%
Housing Finance Authority 5%
Public Housing Authority 5%
Pollution Control Industrial Development 4%
Miscellaneous Municipal 6%
- ---------------------------------------------
100%
- ---------------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
The Fund continues to invest in a broad
selection of Massachusetts municipal bonds.
- ---------------------------------------------------------------------------
QUALITY
- ---------------------------------------------------------------------------
AAA 38%
AA 2%
A 46%
BBB 11%
Not Rated 3%
- --------------------------------------
100%
- --------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
Weighted average quality: AA
Overall quality remains high, with
86% of portfolio securites rated
A or better.
- ---------------------------------------------------------------------------
EFFECTIVE MATURITY
- ---------------------------------------------------------------------------
Less than 1 year 1%
1-5 years 8%
5-10 years 45%
10-15 years 33%
15 years or greater 13%
- --------------------------------------
100%
- --------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
Weighted average effective maturity: 10.1 years
To take advantage of opportunities to lock
in a substantial income stream over time,
we buy and hold noncallable municipal
bonds with 10 to 15 year maturities.
- -----------------------------------------------------------------------------
For more complete details about the Fund's investment portfolio,
see page 10.
5 - Scudder Massachusetts Tax Free Fund
<PAGE>
Portfolio Management Discussion
Dear Shareholders,
Over two contrasting quarters of municipal bond market performance, Scudder
Massachusetts Tax Free Fund continued to post a high double tax-free yield and
maintain its superior long-term total return performance. On September 30, 1996,
the Fund's 30-day net annualized SEC yield was 4.86%, equivalent to a 9.14%
taxable yield for shareholders subject to the 46.85% maximum combined state and
federal income tax rate. This "tax-equivalent" yield is significantly higher
than current yields available from taxable investments of similar maturity and
credit quality. During its most recent semiannual period ended September 30, the
Fund's shareholders received $0.35 per share of income exempt from federal and
Massachusetts state income taxes.
During a six-month period that saw modest price gains for the
intermediate-maturity municipal bonds the Fund primarily invests in, the Fund's
share price increased $0.05 to $13.75 per share. The combination of the increase
in the Fund's share price and $0.35 in interest income enabled the Fund to post
a positive total return of 2.98% over the semiannual period. This performance is
roughly in keeping with the 3.11% average total return of similar funds tracked
by Lipper Analytical Services. The Fund continues to earn the number one total
return ranking among its peers for the three-, four-, and five-year periods
ended September 30, 1996.
An Update on the
Massachusetts Economy
Massachusetts' steadily recovering economy has helped the commonwealth replenish
its reserves, while also creating jobs. Fiscal year 1996 operating revenues were
up 5.7% while expenditures rose only 4.0%. The state finished its fiscal year
with an operating surplus of $426 million, and the overall Massachusetts
taxpayer income tax bill for 1996 will be reduced by $150 million from 1995. Key
industries benefiting from the latest but more modest "Massachusetts miracle"
have been computer, mutual fund, consulting, and biotechnology firms.
Approximately two-thirds of the jobs lost in the last recession have been
replaced. The state's unemployment rate in July 1996 of 4.5% -- the lowest since
1989 -- was well below the national average of 5.2%. And Massachusetts continues
to be a wealthy state. Per capita income in 1995 was $26,994, 18% higher than
the national average and fourth highest in the country. Debt levels are high,
but manageable. Lastly, recent federal welfare reform legislation is not
expected to affect the commonwealth negatively since its own welfare legislation
passed in September 1995 is similar.
Economic and Market Review
The U.S. economy continued to grow at a moderate to slow pace during the Fund's
most recent semiannual period. The two quarters were mixed in terms of bond
market performance; for the second quarter of 1996, the economy picked up some
6 - Scudder Massachusetts Tax Free Fund
<PAGE>
Scudder Massachusetts Tax Free Fund:
Superior Long-Term Performance
(Lipper rankings for periods ended September 30, 1996)
Number of Funds
Period Lipper Rank in Peer Group
- ------ ----------- -------------
Six Months 25 of 51
1 Year 10 of 51
2 Years 5 of 42
3 Years 1 of 29
4 Years 1 of 23
5 Years 1 of 20
Past performance does not guarantee future results.
steam as snow from heavy winter storms melted, shoppers returned to retail
stores, and hiring increased. In addition, the collapse of the Congressional
Republicans' budget initiatives was viewed unfavorably by the bond market. These
two factors helped to drive bond yields higher (and prices lower) during the
second quarter. Bond yields as well as the economy retreated during the third
quarter as consumers seemed to feel the weight of their personal debt -- credit
card debt service payments as a percentage of disposable income rose to an
all-time high this year, and analysts predicted over a million people will
declare bankruptcy in 1996.
Over the past several years, the economy has progressed at a fairly consistent
pace, with inflation restrained throughout. The bond market, on the other hand,
has been fairly volatile, constantly anticipating far greater changes than the
economy has exhibited. Now, after six years of expansion, the U.S. economy may
actually be slowing. Consumers appear to be overburdened, retail sales figures
were negative during the third quarter, the government's monetary policy is
tight by historical standards (with a Fed Funds rate of 5 1/4%), and business
investment is slowing. In recent months, bond yields have fluctuated, but have
generally declined in step with this pullback.
For the semiannual period, municipal bonds, which typically exhibit less price
volatility than Treasury bonds, held their own, thanks in part to a relatively
light supply. While yields of long-term Treasury bonds rose two tenths of a
percentage point and prices declined 2.4% during the period, yields of municipal
bonds of similar maturity declined two tenths of a percentage point while prices
rose 2.9% for the same period. Large numbers of municipal bonds were called or
matured during the period, especially in June and July. In September, new
municipal issues totaled $10.5 billion, the lowest monthly number in over a
year. The municipal market continues to be supported both by retail bond buyers
and institutions such as insurance companies.
Three-Point Strategy
Our strategy in managing Scudder Massachusetts Tax Free Fund's portfolio during
the past six months is similar to that cited in our last report to you. We
7 - Scudder Massachusetts Tax Free Fund
<PAGE>
buy and hold noncallable longer-intermediate-maturity bonds (those with
maturities of 10 to 15 years) to take advantage of opportunities to lock in a
substantial income stream for the Fund over time. As of September 30, 33% of the
Fund's securities had maturities in this range. We also continue to look for
opportunities to add some BBB-rated and non-rated bonds to the portfolio. These
bonds, while carrying some additional credit risk, generally exhibit less
interest rate sensitivity than municipal bonds rated A or above. The Fund held
14% of bonds in these two categories as of September 30. (For a summary of the
Fund's quality, diversification, and maturity structure, see page 5.) Lastly,
our goal is to have an average effective maturity similar to that of the
unmanaged Lehman Brothers Municipal Bond Index, the Fund's benchmark, but with a
superior, call-protected structure. As of September 30, the Fund's average
effective maturity was 10 years.
The Fund's overall quality remains high, with 86% of portfolio securities rated
A or better as of September 30. We continue to invest in a broad selection of
Massachusetts municipal bonds, including general obligation, hospital/health,
and water/sewer revenue bonds.
An Emphasis on Income
and Competitive Performance
The Fund seeks to provide investors with a high level of federal and state
tax-exempt income as well as total returns. We pursue the Fund's objectives by
concentrating on three broad categories of Massachusetts municipal bonds:
o Noncallable bonds, which an issuer cannot redeem before the maturity date.
When interest rates fall, bond issuers tend to reduce their borrowing expenses
by redeeming "callable" existing bonds and issuing new securities that pay lower
interest rates. Noncallable bonds provide a relatively stable stream of income
and solid price appreciation potential over time. During the period, we sold
bonds with weak call protection in favor of those with better call protection.
As of September 30, 40% of bonds the Fund held were noncallable.
o Steeply discounted callable bonds, which are unlikely to be subject to early
redemption at par value by their issuers.
o "Cushion" bonds. We balance the Fund's long-maturity bonds by purchasing
so-called cushion bonds -- bonds with high coupons that compensate investors for
the fact that they can be redeemed by their issuer in a relatively short time.
A Further Slowdown?
The U.S. economy is flashing several caution lights. Some companies -- notably
fast food outlets and department stores -- are attempting to interest their
customers in higher priced items. That these and other companies are even
considering raising prices makes us believe that the economy may slow further,
because we are confident that the Federal Reserve will raise interest rates at
the first signs of any uptick in inflation. Though we believe that any excesses
in the U.S. economy would soon be corrected, and that the economy will remain
resilient, any further slowdown should benefit the municipal bond market.
8 - Scudder Massachusetts Tax Free Fund
<PAGE>
Meanwhile, as managers we will retain our focus on noncallable,
longer-intermediate-maturity tax-free bonds, because we believe they offer the
most attractive balance of return and risk. We will continue to maintain a
neutral average maturity for the Fund and pay close attention to credit quality
as we pursue double tax-free income and competitive total return for Scudder
Massachusetts Tax Free Fund shareholders.
Sincerely,
Your Portfolio Management Team
/s/Philip G. Condon /s/Kathleen A. Meany
Philip G. Condon Kathleen A. Meany
9 - Scudder Massachusetts Tax Free Fund
<PAGE>
Investment Portfolio as of September 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating (b) Value ($)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Short-term Municipal Investments 0.5%
- --------------------------------------------------------------------------------------------------------------------------
Massachusetts
Massachusetts General Obligation, Dedicated Income Tax Series B, Daily Demand
Note, 3.859%, 12/1/97* ....................................................... 200,000 MIG1 200,000
Massachusetts Health and Educational Facilities Authority:
Series C, Daily Demand Note, 3.9%, 7/1/05 (c)* ............................... 1,100,000 A-1 1,100,000
Harvard University, 3.6%, 8/1/17* ............................................ 400,000 MIG1 400,000
- --------------------------------------------------------------------------------------------------------------------------
Total Short-term Municipal Investments (Cost $1,700,000) ....................... 1,700,000
- --------------------------------------------------------------------------------------------------------------------------
Long-term Municipal Investments 99.5%
- --------------------------------------------------------------------------------------------------------------------------
Massachusetts
Boston, MA, General Obligation, Series A, 6.5%, 7/1/12 (c) ..................... 2,320,000 AAA 2,508,639
Boston, MA, Industrial Development Authority, Springhouse Project,
9.25%, 7/1/25 ................................................................ 1,000,000 NR 1,023,860
Chicopee, MA, Electric System Revenue, ETM, 7.125%, 1/1/17*** .................. 1,210,000 AAA 1,394,210
Dedham-Westwood, MA, Water District, General Obligation, 5%, 10/15/08 (c) ...... 1,035,000 AAA 1,004,012
Haverhill, MA, Unlimited Tax, General Obligation, Series A, 7%, 6/15/12 (c) .... 600,000 AAA 667,944
Holyoke, MA, General Obligation C06 Series 1996, 6%, 6/15/09 (c) .............. 1,560,000 AAA 1,608,844
Massachusetts Bay Transportation Authority:
Certificate of Participation, 7.75%, 1/15/06 ................................. 1,000,000 A 1,163,450
General Transportation System:
Series A, 5.4%, 3/1/07 ...................................................... 13,325,000 A 13,421,473
Series A, 5.5%, 3/1/12 ...................................................... 3,000,000 A 2,981,370
Series 1993 A, 5.5%, 3/1/09 ................................................. 1,000,000 A 998,170
Series B, 6.2%, 3/1/16 ...................................................... 2,100,000 A 2,235,009
Series C, 6.1%, 3/1/13 ...................................................... 1,250,000 A 1,317,850
Massachusetts General Obligation:
Consolidated Loan, Series A, 7.5%, 6/1/04 .................................... 12,400,000 A 14,336,384
Hynes Convention Center, Zero Coupon, 9/1/04 ................................. 2,000,000 A 1,343,240
Series A, 6.5%, 6/1/08 ....................................................... 5,500,000 A 5,904,580
Series B, 6.5%, 8/1/08 ....................................................... 5,400,000 A 5,968,890
Series C, Zero Coupon, 12/1/04 ............................................... 8,415,000 A 5,666,324
Series D, 5.125%, 11/1/10 (c) ................................................ 5,000,000 AAA 4,813,350
C03 Series 1993B, 4.875%, 10/1/09 (c) ........................................ 9,000,000 AAA 8,474,400
Massachusetts Health & Educational Facilities Authority:
Anna Jaques Hospital, Series B, 6.875%, 10/1/12 .............................. 2,000,000 BBB 2,044,100
Berkshire Health Systems, Series D, 5.6%, 10/1/08 (c) ........................ 1,760,000 AAA 1,795,059
Boston College, Series 1993 K, 5.25%, 6/1/09 ................................. 2,880,000 A 2,845,699
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 - Scudder Massachusetts Tax Free Fund
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating (b) Value ($)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Charlton Memorial Hospital, Series B, 7.25%, 7/1/07 ................ 10,000,000 A 10,916,100
Community College Program, Series A, 6.5%, 10/1/09 ................. 1,000,000 AAA 1,076,690
Cooley Dickinson Hospital Inc.:
Series B, 5.25%, 11/15/10 (c) ..................................... 2,005,000 AAA 1,940,780
7.125%, 11/15/18, Prefunded 5/15/03** ............................. 2,115,000 AAA 2,394,095
Deaconess Hospital, Series B, 6.625%, 4/1/12 (c) ................... 2,000,000 AAA 2,163,040
Faulkner Hospital, Series C, 6%, 7/1/13 ............................ 2,650,000 BBB 2,515,115
Massachusetts General Hospital, Series F, 6.25%, 7/1/12 (c) ........ 5,000,000 AAA 5,374,800
Medical Academic and Scientific, Series A, 6.5%, 1/1/09 ............ 5,000,000 A 5,235,600
Medical Center of Central Massachusetts, Series A, 7%, 7/1/12 (c) .. 3,600,000 AAA 3,949,776
Melrose-Wakefield C06 Series 1996C, 6.625%, 7/1/18 ................. 1,000,000 A 995,860
Newton-Wellesley Hospital:
Series D, 7%,7/1/15 (c) ........................................... 1,500,000 AAA 1,641,735
Series E, 5.9%, 7/1/11 (c) ........................................ 3,015,000 AAA 3,085,069
North Adams, C06 Series 1996C, 6.625%, 7/1/18 ...................... 1,560,000 BBB 1,536,491
Northeastern University Series E:
6.4%, 10/1/07 (c) ................................................. 1,000,000 AAA 1,077,510
6.5%, 10/1/12 (c) ................................................. 450,000 AAA 486,446
St. Luke's Hospital New Bedford, Series C, Yield Curve Notes, 7.22%
8/15/10 (c)**** .................................................. 3,400,000 AAA 3,344,750
South Shore Hospital, 6.5%, 7/1/10 (c) ............................. 2,500,000 AAA 2,695,475
Stonehill College, Series E, 6.55%, 7/1/12 (c) ..................... 5,000,000 AAA 5,421,450
Suffolk University, Series 1996 C, 5.65%, 7/1/11 ................... 1,045,000 AAA 1,042,001
Tufts University, Series C, 7.4%, 8/1/18 ........................... 530,000 A 566,618
Williams College, 5.75%, 7/1/09 .................................... 3,000,000 AA 3,004,770
Massachusetts Housing Finance Agency:
Housing Project Refunding Revenue:
Series B, 6.05%, 12/1/09 (c) ...................................... 3,000,000 AAA 3,050,640
Series A, 6.3%, 10/1/13 ........................................... 7,000,000 A 7,119,630
Housing Project Revenue, Series A, 6.375%, 4/1/21 .................. 3,905,000 A 3,941,941
Residential Development, Series C, 6.875%, 11/15/11 ................ 15,250,000 AAA 16,189,553
Single-Family Mortgage Revenue, Series 44, 5.9%, 12/1/13 ........... 3,000,000 A 3,011,490
Massachusetts Industrial Finance Agency:
Edgewood Retirement Community, Series A, 9%, 11/15/25 .............. 1,650,000 NR 1,693,527
First Mortgage, Evanswood Bethzatha, Series A, 7.875%, 1/15/20 ..... 1,000,000 NR 1,026,890
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 - Scudder Massachusetts Tax Free Fund
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating (b) Value ($)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Holy Cross College:
C06 Series 1996, 5.5%, 3/1/16 (c) .......................................... 5,000,000 AAA 4,906,200
C06 Series 1996, 5.25%, 3/1/09 (c) ......................................... 1,190,000 AAA 1,170,770
Issue II, 6.375%, 11/1/09 .................................................. 1,000,000 A 1,101,110
Resource Recovery, North Andover Solid Waste, Series A, 6.3%, 7/1/05 ........ 6,500,000 BBB 6,771,960
Massachusetts Biomedical Research Corp.:
Series A, Zero Coupon, 8/1/00 .............................................. 2,860,000 A 2,396,737
Series A, Zero Coupon, 8/1/01 .............................................. 3,650,000 A 2,893,611
Series A, Zero Coupon, 8/1/02 .............................................. 3,650,000 A 2,742,282
Nantucket C06 AMT:
Series 1996 A, 5.75%, 7/1/08 (c) ........................................... 1,400,000 AAA 1,414,168
Series 1996 A, 5.75%, 7/1/09 (c) ........................................... 1,400,000 AAA 1,406,986
Series 1996, 5.875%, 7/1/17 (c) ............................................ 2,000,000 AAA 1,998,600
Pollution Control Revenue, Eastern Edison Company Project, 5.875%, 8/1/08 ... 4,750,000 BBB 4,604,793
Revenue East Boston C06 Series 1996, 7.625%, 7/1/26 ......................... 2,750,000 BB 2,712,903
Solid Waste Disposal, Peabody Monofil Project, 9%, 9/1/05 (d) ............... 3,000,000 NR 3,090,600
Sturdy Memorial Hospital, 7.9%, 6/1/09 ...................................... 1,820,000 A 1,954,134
Pollution Control Revenue, Boston Edison Company, Series A, 5.75%, 2/1/14 ... 2,000,000 BBB 1,912,580
Provider Lease Program, Series 1988 A-1, 8.4%, 7/15/08 ...................... 1,870,000 NR 1,925,763
Massachusetts Municipal Wholesale Electric Company Power Supply System Revenue:
Series A, 6.75%, 7/1/06 ..................................................... 2,855,000 BBB 3,125,254
Series A, 5%, 7/1/12 (c) .................................................... 1,000,000 AAA 927,770
Series A, 5%, 7/1/17 (c) .................................................... 3,610,000 AAA 3,316,796
Series A, 5.1%, 7/1/08 (c) .................................................. 840,000 AAA 816,077
Series B, 6.75%, 7/1/08 ..................................................... 9,000,000 BBB 9,851,940
Series B, 4.95%, 7/1/09 (c) ................................................. 1,575,000 AAA 1,510,425
Series C, 6.625%, 7/1/10 .................................................... 1,000,000 BBB 1,041,320
Series C, 6.625%, 7/1/10 (c) ................................................ 3,500,000 AAA 3,835,475
Massachusetts Port Authority Revenue, Tax Exempt Receipts, ETM,
Zero Coupon, 7/1/13*** ...................................................... 1,000,000 AAA 896,330
Massachusetts Special Obligation, Series 1996 A, 5.5%, 6/1/11 (c) ............. 5,000,000 AAA 4,979,650
Massachusetts Water Pollution Abatement Trust, Pooled Loan Program:
Series 2, 5.625%, 2/1/10 .................................................... 2,820,000 AAA 2,853,925
Series 2, 5.7%, 2/1/15 ...................................................... 1,150,000 AAA 1,157,038
Massachusetts Water Resource Authority:
Series A, 6.5%, 7/15/09 ..................................................... 15,000,000 A 16,450,200
Series A, 6.5%, 7/15/19 ..................................................... 3,000,000 A 3,287,520
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 - Scudder Massachusetts Tax Free Fund
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating (b) Value ($)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Series B, 6%, 11/1/08 ........................................................ 5,785,000 A 6,028,896
General Revenue, Series C, 5.25%, 12/1/08 .................................... 2,705,000 A 2,673,676
General Revenue, Series C, 5.25%, 12/1/15 .................................... 4,030,000 A 3,828,863
Nantucket, MA, General Obligation, 6.8%, 12/1/11 ............................... 1,000,000 A 1,085,530
New England Educational Loan Marketing Corporation, Massachusetts Student Loan
Revenue, 5.7%, 7/1/05 ........................................................ 6,250,000 A 6,357,000
Springfield, Massachusetts General Obligation C06 Series 1996,
5.3%, 8/1/11 (c) ............................................................. 1,250,000 AAA 1,217,350
University of Massachusetts, Building Authority Revenue:
Series B, 6.625%, 5/1/09 ..................................................... 2,415,000 A 2,680,191
Series B, 6.625%, 5/1/10 ..................................................... 2,575,000 A 2,857,349
Series B, 6.75%, 5/1/11 ...................................................... 2,745,000 A 3,080,055
Series B, 6.875%, 5/1/14 ..................................................... 1,300,000 A 1,485,419
Worcester, MA, General Obligation:
6.9%, 5/15/05, Prefunded 5/15/02 (c)** ....................................... 1,850,000 AAA 2,077,495
6.9%, 5/15/06, Prefunded 5/15/02 (c)** ....................................... 1,500,000 AAA 1,684,455
Puerto Rico
Puerto Rico Aqueduct and Sewer Authority, 6%, 7/1/09 ........................... 1,000,000 A 1,033,240
Puerto Rico Highway and Transportation Authority NC Series
1996 Y, 6.25%, 7/1/14 ........................................................ 2,000,000 A 2,130,856
- --------------------------------------------------------------------------------------------------------------------------
Total Long-term Municipal Investments (Cost $300,366,466) 315,287,991
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio - 100.0% (Cost $302,066,466) (a) 316,987,991
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The cost for federal income tax purposes was $302,066,466. At September
30, 1996, net unrealized appreciation for all securities based on tax cost
was $14,921,525. This consisted of aggregate gross unrealized appreciation
for all securities in which there was an excess of market value over tax
cost of $15,713,591 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$792,066.
(b) All of the securities held have been determined to be of appropriate
credit quality as required by the Fund's investment objectives. Credit
ratings shown are assigned by either Standard & Poor's Ratings Group,
Moody's Investors Service, Inc. or Fitch Investors Service, Inc. Unrated
securities (NR) have been determined to be of comparable quality to rated
eligible securities.
(c) Bond is insured by one of these companies: AMBAC, Connie Lee, FGIC, FSA
or MBIA.
(d) Restricted Security - Security which has not been registered with the
Securities and Exchange Commission under the Securities Act of 1933.
Information concerning such restricted security at September 30, 1996 is
as follows:
Security Acquisition Date Cost ($)
-------- ---------------- ---------
MIFA, Solid Waste, Peabody Monofil 12/30/94 3,000,000
The accompanying notes are an integral part of the financial statements.
13 - Scudder Massachusetts Tax Free Fund
<PAGE>
* 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.
**** Inverse floating rate notes are instruments whose yields have an inverse
relationship to benchmark interest rates. These securities are shown at
their rate as of September 30, 1996.
The accompanying notes are an integral part of the financial statements.
14 - Scudder Massachusetts Tax Free Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of September 30, 1996 (Unaudited)
<TABLE>
<S> <C>
Assets
- --------------------------------------------------------------------------------------------------
Investments, at market (identified cost $302,066,466) (Note A) .. $ 316,987,991
Interest receivable ............................................. 5,202,240
Receivable on Fund shares sold .................................. 298,852
Other assets .................................................... 219
-------------
Total assets .................................................... 322,489,302
Liabilities
- --------------------------------------------------------------------------------------------------
Dividends payable ............................................... 543,122
Payable for Fund shares redeemed ................................ 145,939
Accrued management fee (Note C) ................................. 159,385
Other accrued expenses (Note C) ................................. 95,387
-------------
Total liabilities ............................................... 943,833
--------------------------------------------------------------------------------
Net assets, at market value ..................................... $ 321,545,469
--------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------------------------
Net assets consist of:
Unrealized appreciation on investments .......................... 14,921,525
Accumulated net realized loss ................................... (3,812,974)
Shares of beneficial interest ................................... 233,864
Additional paid-in capital ...................................... 310,203,054
--------------------------------------------------------------------------------
Net assets, at market value ..................................... $ 321,545,469
--------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($321,545,469 / 23,386,432 outstanding shares of beneficial
interest, $.01 par value, unlimited number of shares -------------
authorized ..................................................... $ 13.75
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 - Scudder Massachusetts Tax Free Fund
<PAGE>
Statement of Operations
six months ended September 30, 1996 (Unaudited)
Investment Income
- ----------------------------------------------------------------------------
Income:
Interest ........................................... $ 9,301,625
-----------
Expenses:
Management fee (Note C) ............................ 944,974
Services to shareholders (Note C) .................. 145,794
Custodian and accounting fees (Note C) ............. 56,237
Trustees' fees and expenses (Note C) ............... 8,708
Reports to shareholders ............................ 22,737
Auditing ........................................... 18,022
Registration fees .................................. 7,724
Legal .............................................. 6,530
Other .............................................. 7,492
-----------
1,218,218
-----------------------------------------------------------------
Net investment income .............................. 8,083,407
-----------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ----------------------------------------------------------------------------
Net realized loss from:
Investments ................................. (108,627)
Futures ..................................... (99,181)
-----------
(207,808)
Net unrealized appreciation during the
period on:
Investments ................................. 1,389,379
Futures ..................................... 51,013
-----------
1,440,392
-----------
Net gain on investments ..................... 1,232,584
-----------------------------------------------------------------
Net increase in net assets resulting from
operations $ 9,315,991
-----------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
16 - Scudder Massachusetts Tax Free Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months
Ended
September 30, Year Ended
1996 March 31,
Increase (Decrease) in Net Assets (Unaudited) 1996
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income .................................. $ 8,083,407 $ 16,175,218
Net realized gain (loss) from investment transactions .. (207,808) 581,573
Net unrealized appreciation on investment
transactions during the period ...................... 1,440,392 7,364,821
------------- -------------
Net increase in net assets resulting from operations ... 9,315,991 24,121,612
------------- -------------
Distributions to shareholders from net investment
income .............................................. (8,083,407) (16,175,218)
------------- -------------
Fund share transactions:
Proceeds from shares sold .............................. 28,152,694 58,182,143
Net asset value of shares issued to shareholders in
reinvestment of distributions ....................... 4,754,802 9,475,939
Cost of shares redeemed ................................ (26,879,537) (57,794,885)
------------- -------------
Net increase in net assets from Fund share
transactions ........................................ 6,027,959 9,863,197
------------- -------------
Increase in net assets ................................. 7,260,543 17,809,591
Net assets at beginning of period ...................... 314,284,926 296,475,335
------------- -------------
Net assets at end of period ............................ $ 321,545,469 $ 314,284,926
------------- -------------
Other Information
- --------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period .............. 22,942,284 22,236,389
------------- -------------
Shares sold ............................................ 2,072,077 4,245,322
Shares issued to shareholders in reinvestment of
distributions ....................................... 348,477 690,492
Shares redeemed ........................................ (1,976,406) (4,229,919)
------------- -------------
Net increase in Fund shares ............................ 444,148 705,895
------------- -------------
Shares outstanding at end of period .................... 23,386,432 22,942,284
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17 - Scudder Massachusetts Tax Free Fund
<PAGE>
Financial Highlights
The following table includes select 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
(commence-
Six Months ment of
Ended operations)
September 30 to
1996 Years Ended March 31, March 31,
(unaudited) 1996 1995 1994 1993 1992 1991 1990 1989 1988
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
---------------------------------------------------------------------------------------------
period ......................... $13.70 $13.33 $13.16 $13.61 $12.81 $12.44 $12.25 $12.23 $12.28 $12.00
---------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income ............. .35 .72 .74 .81 .84 .81 .83 .82 .81 .69
Net realized and unrealized
gain (loss) on investment
transactions ................... .05 .37 .18 (.33) .96 .46 .19 .13 .22 .21
---------------------------------------------------------------------------------------------
Total from investment operations .. .40 1.09 .92 .48 1.80 1.27 1.02 .95 1.03 .90
---------------------------------------------------------------------------------------------
Less distributions:
From net investment income ........ (.35) (.72) (.74) (.81) (.84) (.81) (.83) (.82) (.88) (.62)
From net realized gains on
investment transactions ........ -- -- -- (.08) (.16) (.09) -- (.11)(a) (.20) --
In excess of net realized gains ... -- -- (.01) (.04) -- -- -- -- -- --
---------------------------------------------------------------------------------------------
Total distributions ............... (.35) (.72) (.75) (.93) (1.00) (.90) (.83) (.93) (1.08) (.62)
---------------------------------------------------------------------------------------------
Net asset value, end of ---------------------------------------------------------------------------------------------
period ......................... $13.75 $13.70 $13.33 $13.16 $13.61 $12.81 $12.44 $12.25 $12.23 $12.28
---------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (%) (b) .............. 2.98** 8.28 7.37 3.37 14.59 10.46 8.60 7.89 9.50 7.73**
Ratios and Supplemental Data
Net assets, end of period
($ millions) ................... 322 314 296 332 267 120 67 46 31 16
Ratio of operating expenses,
net to average daily net
assets (%) ..................... .77* .75 .47 .07 -- .48 .60 .60 .51 .50*
Ratio of operating expenses
before expense reductions,
to average daily net
assets (%) ..................... .77* .76 .77 .77 .83 .93 1.05 1.16 1.20 2.25*
Ratio of net investment income
to average daily net
assets (%) ..................... 5.13* 5.23 5.73 5.80 6.36 6.38 6.72 6.60 7.23 7.55*
Portfolio turnover rate (%) ....... 12.89* 20.9 10.2 17.0 29.6 23.2 27.1 45.5 110.5 95.9*
</TABLE>
(a) Includes $.01 per share distributions in excess of realized gains pursuant
to Internal Revenue Code Section 4982.
(b) Total returns are higher due to maintenance of the Fund's expenses.
* Annualized
** Not annualized
The accompanying notes are an integral part of the financial statements.
18 - Scudder Massachusetts Tax Free Fund
<PAGE>
Notes to Financial Statements (Unaudited)
A. Significant Accounting Policies
Scudder Massachusetts Tax Free Fund (the "Fund") is a non-diversified series of
Scudder State Tax Free Trust (the "Trust"). The Trust is organized as a
Massachusetts business trust and is registered under the Investment Company Act
of 1940, as amended, as an open-end management investment company. There are
currently six series in the Trust.
The 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.
Restricted Securities. The Fund may not purchase restricted securities (for
these purposes, restricted security means a security which cannot be sold to the
public without registration under the Securities Act of 1933 or the availability
of an exemption from registration, or which is subject to other legal or
contractual delays in or restrictions on resale), if, as a result thereof, more
than 10% of the value of the Fund's total assets would be invested in restricted
securities. The aggregate fair value of restricted securities at September 30,
1996 amounted to $3,090,600 which represents .96% of net assets.
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).
Upon entering into a futures contract, the Fund is required to deposit with a
financial intermediary an amount ("initial margin") equal to a certain
percentage of the face value indicated in the futures contract. Subsequent
payments ("variation margin") are made or received by the Fund each day,
dependent on the daily fluctuations in the value of the underlying security, and
are recorded for financial reporting purposes as unrealized gains or losses by
the Fund. When entering into a closing transaction, the Fund will realize a gain
or loss equal to the difference between the value of the futures contract to
sell and the futures contract to buy. Futures contracts are valued at the most
recent settlement price.
Certain risks may arise upon entering into futures contracts including the risk
that an illiquid secondary market will limit the Fund's ability to close out a
futures contract prior to the settlement date and that a change in the value of
a futures contract may not correlate exactly with changes in the value of the
securities or currencies hedged. When utilizing futures contracts to hedge, the
Fund gives up the opportunity to profit from favorable price movements in the
hedged positions during the term of the contract.
Amortization and Accretion. All premiums and original issue discounts
are amortized/accreted for both tax and financial reporting purposes.
19 - Scudder Massachusetts Tax Free Fund
<PAGE>
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code which are applicable to regulated investment companies
and to distribute all of its taxable and tax-exempt income to its shareholders.
Accordingly, the Fund paid no federal income taxes and no provision for federal
income taxes was required.
At March 31, 1996, the Fund had a net tax basis capital loss carryforward of
approximately $1,283,000 which may be applied against any realized net taxable
capital gains of each succeeding year until fully utilized or until March 31,
2003, the expiration date.
In addition, from November 1, 1995 through March 31, 1996, the Fund incurred
approximately $111,000 of net realized capital losses. As permitted by tax
regulations, the Fund intends to elect to defer these losses and treat them as
arising in the year ending March 31, 1997.
Distribution of Income and Gains. All of the net investment income of the Fund
is declared as a dividend to shareholders of record as of the close of business
each day and is paid to shareholders monthly. During any particular year, net
realized gains from investment transactions, in excess of available capital loss
carryforwards, would be taxable to the Fund if not distributed and, therefore,
will be distributed to shareholders. An additional distribution may be made to
the extent necessary to avoid the payment of a four percent federal excise tax.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. These
differences primarily relate to investments in futures contracts. As a result,
net investment income and net realized gain (loss) on investment transactions
for a reporting period may differ significantly from distributions during such
period. Accordingly, the Fund may periodically make reclassifications among
certain of its capital accounts without impacting the net asset value of the
Fund.
The Fund uses the specific identification method for determining realized gain
or loss on investments for both financial and federal income tax reporting
purposes.
Other. Investment security transactions are accounted for on a trade
date basis. Distributions of net gains to shareholders are recorded on
the ex-dividend date. Interest income is accrued pro rata to the
earlier of the call or maturity date.
B. Purchases and Sales of Securities
During the six months ended September 30, 1996, purchases and sales of municipal
securities (excluding short-term investments) aggregated $31,430,256 and
$20,096,298, respectively.
The aggregate face value of future contracts closed during the six months ended
September 30, 1996 was $7,930,388.
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. For the six months ended
September 30, 1996, the fee pursuant to the Advisory Agreement amounted to
$944,974.
20 - Scudder Massachusetts Tax Free Fund
<PAGE>
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend-paying and shareholder service agent for the Fund. For the
six months ended September 30, 1996, the amount charged to the Fund by SSC
aggregated $90,989, of which $15,126 is unpaid at September 30, 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 six months
ended September 30, 1996, the amount charged to the Fund by SFAC aggregated
$29,588, of which $4,931 is unpaid at September 30, 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 six months ended September 30,
1996, Trustees' fees and expenses charged to the Fund aggregated $8,708.
21 - Scudder Massachusetts Tax Free Fund
<PAGE>
Investment Products and Services
The Scudder Family of Funds
- --------------------------------------------------------------------------------
Money Market
Scudder Cash Investment Trust
Scudder U.S. Treasury Money Fund
Tax Free Money Market+
Scudder Tax Free Money Fund
Scudder California Tax Free Money Fund*
Scudder New York Tax Free Money Fund*
Tax Free+
Scudder California Tax Free Fund*
Scudder High Yield Tax Free Fund
Scudder Limited Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder Massachusetts Limited Term
Tax Free Fund*
Scudder Massachusetts Tax Free Fund*
Scudder Medium Term Tax Free Fund
Scudder New York Tax Free Fund*
Scudder Ohio Tax Free Fund*
Scudder Pennsylvania Tax Free Fund*
Growth and Income
Scudder Balanced Fund
Scudder Growth and Income Fund
Income
Scudder Emerging Markets Income Fund
Scudder Global Bond Fund
Scudder GNMA Fund
Scudder High Yield Bond Fund
Scudder Income Fund
Scudder International Bond Fund
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Growth
Scudder Capital Growth Fund
Scudder Classic Growth Fund
Scudder Development Fund
Scudder Emerging Markets Growth Fund
Scudder Global Discovery Fund
Scudder Global Fund
Scudder Gold Fund
Scudder Greater Europe Growth Fund
Scudder International Fund
Scudder Latin America Fund
Scudder Micro Cap Fund
Scudder Pacific Opportunities Fund
Scudder Quality Growth Fund
Scudder Small Company Value Fund
Scudder 21st Century Growth Fund
Scudder Value Fund
The Japan Fund
Retirement Plans and Tax-Advantaged Investments
- --------------------------------------------------------------------------------
IRAs
Keogh Plans
Scudder Horizon Plan*+++ (a variable annuity)
401(k) Plans
403(b) Plans
SEP-IRAs
Profit Sharing and Money Purchase
Pension Plans
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The First Iberian Fund, Inc.
The Korea Fund, Inc.
The Latin America Dollar Income Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder World Income Opportunities
Fund, Inc.
Institutional Cash Management
- --------------------------------------------------------------------------------
Scudder Institutional Fund, Inc.
Scudder Fund, Inc.
Scudder Treasurers Trust(TM)++
For complete information on any of the above Scudder funds, including management
fees and expenses, call or write for a free prospectus. Read it carefully before
you invest or send money. +A portion of the income from the tax-free funds may
be subject to federal, state, and local taxes. *Not available in all states.
+++A no-load variable annuity contract provided by Charter National Life
Insurance Company and its affiliate, offered by Scudder's insurance agencies,
1-800-225-2470. #These funds, advised by Scudder, Stevens & Clark, Inc., are
traded on various stock exchanges. ++For information on Scudder Treasurers
Trust,(TM) an institutional cash management service that utilizes certain
portfolios of Scudder Fund, Inc. ($100,000 minimum), call 1-800-541-7703.
22 - Scudder Massachusetts Tax Free Fund
<PAGE>
How to Contact Scudder
Account Service and Information
For existing account service and transactions
Scudder Investor Relations
1-800-225-5163
For personalized information about your Scudder accounts;
exchanges and redemptions; or information on any Scudder fund
Scudder Automated Information Line (SAIL)
1-800-343-2890
Investment Information
To receive information about the Scudder funds, for additional
applications and prospectuses, or for investment questions
Scudder Investor Relations
1-800-225-2470
For establishing 401(k) and 403(b) plans
Scudder Defined Contribution Services
1-800-323-6105
Please address all correspondence to
The Scudder Funds
P.O. Box 2291
Boston, Massachusetts
02107-2291
Visit the Scudder World Wide Web Site at:
http://funds.scudder.com
Or Stop by a Scudder Funds Center
Many shareholders enjoy the personal, one-on-one service of the
Scudder Funds Centers. Check for a Funds Center near you--they
can be found in the following cities:
Boca Raton New York
Boston Portland, OR
Chicago San Diego
Cincinnati San Francisco
Los Angeles Scottsdale
For information on Scudder Treasurers Trust(TM), an
institutional cash management service for corporations,
non-profit organizations and trusts which utilizes 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.
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.
23 - Scudder Massachusetts Tax Free Fund
<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 over 40 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.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
