Scudder
Pennsylvania
Tax Free Fund
Semiannual Report
September 30, 1997
Pure No-Load(TM) Funds
For investors seeking double-tax-free income exempt from both Pennsylvania and
regular federal income taxes
A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
SCUDDER (logo)
<PAGE>
In Brief
o Scudder Pennsylvania Tax Free Fund received an overall four-star rating from
Morningstar, reflecting "above average" risk-adjusted performance through
September 30, 1997.*
o As of September 30, 1997, Scudder Pennsylvania Tax Free Fund's 30-day net
annualized SEC yield was 4.64%, equivalent to a 7.90% taxable yield for
Pennsylvania investors subject to the 41.29% combined federal and state income
tax rate.
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE:
BAR CHART TITLE:
30-Day Yield on September 30, 1997
BAR CHART DATA:
Scudder Taxable Yield
Pennsylvania Needed to Equal
Tax Free Fund the Fund's Yield
4.64% 7.90%
o For the six-month period ended September 30, 1997, Scudder Pennsylvania Tax
Free Fund posted a total return of 6.21%, compared with the 6.25% average return
of 66 similar funds tracked by Lipper Analytical Services.
* 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. The Fund received five stars
for three-year performance, four stars for five-year performance, and three
stars for ten-year performance, and was rated among 1,374, 668, and 326
municipal funds for the respective periods. Of the funds rated, 10% received
five stars, and 22.5% received four stars. Past performance is no guarantee of
future returns.
Table of Contents
3 Letter from the Fund's President 13 Financial Statements
4 Performance Update 16 Financial Highlights
5 Portfolio Summary 17 Notes to Financial Statements
6 Portfolio Management Discussion 20 Officers and Trustees
8 Glossary of Investment Terms 21 Investment Products and Services
9 Investment Portfolio 22 Scudder Solutions
2 - Scudder Pennsylvania Tax Free Fund
<PAGE>
Letter from the Fund's President
Dear Shareholders,
We are pleased to report to you concerning Scudder Pennsylvania Tax Free
Fund's performance over its most recent six-month period ended September 30,
1997. In addition to the Fund's four-star Morningstar rating as of September 30
(see "In Brief" on page 2), the Fund posted a 4.64% 30-day net annualized SEC
yield as of September 30, equivalent to an 7.90% taxable yield for investors in
the top Pennsylvania tax bracket. The Fund's portfolio management team continues
to focus on intermediate-term noncallable bonds in pursuit of high yield and
favorable total return. Please read the discussion beginning on page 6 for more
information.
For those interested in other offerings from Scudder, we would like to take
this opportunity to tell you about a recent addition to Scudder's family of
funds -- Scudder International Growth and Income Fund. The Fund employs a
yield-oriented approach to international investing and seeks to provide
long-term growth of capital plus current income. Investors who desire exposure
to overseas equities but who wish to take a more conservative approach to
international investing may appreciate the Fund's emphasis on the dividend
paying stocks of established companies listed on foreign exchanges. For a
complete listing of Scudder's mutual fund offerings, see page 21.
As always, please call a Scudder Investor Information representative at
1-800-225-2470 if you have questions about your Fund. Page 22 provides more
information on how to contact Scudder. Thank you for choosing Scudder
Pennsylvania Tax Free Fund to help meet your investment needs.
Sincerely,
/s/David S. Lee
David S. Lee
President,
Scudder Pennsylvania Tax Free Fund
3 - Scudder Pennsylvania Tax Free Fund
<PAGE>
PERFORMANCE UPDATE as of September 30, 1997
- ----------------------------------------------------------------
Fund Index Comparisons
- ----------------------------------------------------------------
Total Return
Period Growth --------------
Ended of Average
9/30/97 $10,000 Cumulative Annual
- --------------------------------------------
SCUDDER PENNSYLVANIA TAX FREE FUND
TICKER SYMBOL: SCPAX
- --------------------------------------------
1 Year $ 10,883 8.83% 8.83%
5 year $ 14,028 40.28% 7.00%
Life of Fund* $ 23,127 131.27% 8.75%
- --------------------------------------------
LEHMAN BROTHERS MUNICIPAL BOND INDEX
- --------------------------------------------
1 Year $ 10,904 5.45% 9.04%
5 Year $ 14,140 41.40% 7.17%
Life of Fund* $ 23,182 131.82% 8.76%
- --------------------------------------------
- -----------------------------------------------------------------
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:
SCUDDER PENNSYLVANIA TAX FREE FUND
Year Amount
- ----------------------
5/87* $10,000
88 $11,441
89 $12,532
90 $13,100
91 $14,922
92 $16,487
93 $18,828
94 $18,176
95 $20,087
96 $21,250
97 $23,127
LEHMAN BROTHERS MUNICIPAL BOND INDEX
Year Amount
- ----------------------
5/87* $10,000
88 $11,296
89 $12,277
90 $13,113
91 $14,842
92 $16,395
93 $18,484
94 $18,037
95 $20,051
96 $21,260
97 $23,182
Yearly periods ended September 30
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>
1988* 1989 1990 1991 1992 1993 1994 1995 1996 1997
------------------------------------------------------------------------------------------------
NET ASSET VALUE... $ 12.01 $ 12.26 $ 11.98 $ 12.78 $ 13.20 $ 14.06 $ 12.76 $ 13.31 $ 13.32 $ 13.73
INCOME DIVIDENDS.. $ .76 $ .84 $ .82 $ .80 $ .75 $ .76 $ .74 $ .72 $ .71 $ .71
CAPITAL GAINS
DISTRIBUTIONS..... $ .04 $ .02 $ .01 $ .02 $ .12 $ .18 $ .08 $ .03 $ .04 $ .02
FUND TOTAL
RETURN (%)........ 14.41 9.54 4.54 13.94 10.45 14.20 -3.47 10.51 5.79 8.83
INDEX TOTAL
RETURN (%)........ 12.98 8.68 6.80 13.19 10.45 12.74 -2.44 11.18 6.04 9.04
</TABLE>
All performance is historical and assumes reinvestment of all dividends and
capital gains and is not indicative of future results. Investment return and
principal value will fluctuate, so an investor's shares, when redeemed, may be
worth more or less than when purchased. If the Advisor had not temporarily
capped expenses, the average annual total return for the Fund for the one year,
five year, and ten year periods would have been lower.
4 - Scudder Pennsylvania Tax Free Fund
<PAGE>
PORTFOLIO SUMMARY as of September 30, 1997
- ---------------------------------------------------------------------------
Diversification
- ---------------------------------------------------------------------------
Hospital/Health 24%
General Obligations 19%
Water/Sewer Revenue 17%
Pollution Control/
Industrial Development 11%
Sales Specialty Tax 5%
Housing Finance Authority 5%
Port/Airport Authority 5%
Core Cities/Lease 4%
Resource Recovery 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 invests in a broad selection
of Pennsylvania municipal bonds, including
hospital/healthcare bonds, water/sewer
revenue bonds, and general obligation
bonds.
- --------------------------------------------------------------------------
Quality
- --------------------------------------------------------------------------
AAA 71%
AA 4%
A 5%
BBB 14%
Not Rated 6%
- --------------------------------------
100%
- --------------------------------------
Weighted average quality: AA
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
Overall quality remains high, with 80%
of portfolio securities rated A or
better.
- --------------------------------------------------------------------------
Effective Maturity
- --------------------------------------------------------------------------
Less than 1 year 6%
1-5 years 27%
5-10 years 27%
10-20 years 36%
Greater than 20 years 4%
- --------------------------------------
100%
- --------------------------------------
Weighted average effective maturity: 9.26 years
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
As a means of locking in a substantial
income stream for the Fund over time,
we are currently focusing on the
purchase of 10- to 15-year noncallable
bonds.
- -----------------------------------------------------------------------------
For more complete details about the Fund's investment portfolio,
see page 9.
5 - Scudder Pennsylvania Tax Free Fund
<PAGE>
Portfolio Management Discussion
Dear Shareholders,
For the six months ended September 30, 1997, Scudder Pennsylvania Tax Free Fund
posted a strong 6.21% total return as bonds continued to rack up solid gains. As
some analysts proclaimed a "New Era" of noninflationary growth, the bond market
inched its way upward, as any one statistical announcement that might imply a
resurgence of inflation was met by two others that more than allayed such fears.
The Fund's 6.21% total return for the period consisted of a $0.46 increase in
net asset value to $13.73 and income distributions of $0.36 per share. This
return is roughly in keeping with the 6.25% average of 66 similar funds tracked
by Lipper over the six-month period. The Fund's 12-month return for the period
ended September 30 was 8.83%, outpacing the 8.35% return of other Pennsylvania
tax free funds.
On September 30, 1997, the Fund's 30-day net annualized SEC yield was 4.64%,
equivalent to a taxable yield of 7.90% for shareholders subject to the 41.29%
maximum combined state and federal income tax rate. The Fund's tax equivalent
yield is significantly higher than current yields available from taxable
investments of similar maturity and credit quality.
Pennsylvania Update
The Commonwealth of Pennsylvania continues to benefit from the strength of the
local and national economies, although its economic growth is slowing. As
expected, the Commonwealth finished its 1997 fiscal year with a General Fund
surplus of $591 million. Service- and trade-related sectors are accounting for
job growth, as employment in these areas grew by 2.8% for the 12 months ended
July 1997. Pennsylvania's manufacturing sector was stagnant during the same
period, however, experiencing job growth of only 0.1%. The Commonwealth's
unemployment rate for 1996 was 5.3%, slightly below the national average.
Pennsylvania has a low debt burden, as per capita debt is $418, or 66% of the
national average. Moreover, retirement of outstanding debt is expected to offset
any future issuance.
Noncallable Bonds Still a Focus
As a means of locking in a substantial income stream for Scudder Pennsylvania
Tax Free Fund over time, we are currently focusing on the purchase of 10- to
15-year noncallable bonds. As of September 30, over 20% of the Fund's securities
had maturities in this range. We also continue to look for opportunities to add
high yielding BBB-rated and non-rated bonds to the portfolio. Higher yielding
bonds, while carrying some additional credit risk, generally exhibit less
interest rate sensitivity than municipal bonds rated A or above. The Fund held
20% of bonds in these two categories as of the end of September. (For a summary
of the Fund's quality, diversification, and maturity structure, see page.)
Lastly, our continuing goal is to have an average effective maturity similar to
that of other Pennsylvania tax-free bond funds. As of September 30, the Fund's
average effective maturity was approximately 9 years.
6 - Scudder Pennsylvania Tax Free Fund
<PAGE>
Overall portfolio quality remains high, with 80% of portfolio securities rated A
or better at the close of the period. We continue to invest in a broad selection
of Pennsylvania municipal bonds, including hospital/healthcare bonds,
water/sewer revenue bonds, and general obligation bonds.
Over the long-term, we seek to provide a competitive level of federal and state
tax-exempt income for Fund investors -- with total return as an additional
objective -- by concentrating on three broad categories of Pennsylvania
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 existing "callable" 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. As of September 30, 56% of
bonds the Fund held were noncallable.
o Steeply discounted callable bonds, which are less likely 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 that carry high coupons and are less volatile
than longer-term bonds with lower coupons.
Outlook
As a rising stock market continued to shatter records, the past six months also
witnessed increased activity in the bond market, as large and small investors
seeking additional diversification rebalanced their portfolios by adding bonds.
Amid Federal Reserve Chairman Greenspan's warnings about wage pressures, the
shrinking supply of labor, and the possible runout of the "peace dividend," it's
difficult to predict whether the Fed will continue to refrain from raising
interest rates in the near future and whether the currently favorable economic
and market conditions will prevail over the coming months. We do know, however,
that yields and prices of municipal bonds are currently attractive compared with
Treasuries, and that the continued low level of U.S. inflation -- aided by
business' strong investment in technological advances as well as subdued
economic activity in much of the rest of the world -- is a boon to investors.
In the near term, we will continue our focus on 10-15 year noncallable municipal
bonds as we seek to boost yield and long-term returns for our investors. At the
same time, we will attempt to limit volatility by maintaining a neutral average
maturity and high overall credit quality as we pursue double-tax-free income and
competitive total return for Scudder Pennsylvania Tax Free Fund shareholders.
Sincerely,
Your Portfolio Management Team
/s/Donald C. Carleton /s/Philip G. Condon
Donald C. Carleton Philip G. Condon
7 - Scudder Pennsylvania Tax Free Fund
<PAGE>
Glossary of Investment Terms
BOND An interest-bearing security issued by the
federal, state, or local government or a
corporation that obligates the issuer to
pay the bondholder a specified amount of
interest for a stated period -- usually a
number of years -- and to repay the face
amount of the bond at its maturity date.
GENERAL OBLIGATION BOND A municipal bond backed by the "full faith
and credit" (including the taxing and
further borrowing power) of the city,
state, or agency that issues the bond. A
general obligation bond is repaid with the
issuer's general revenue and borrowings.
INFLATION An overall increase in the prices of goods
and services, as happens when business and
consumer spending increases relative to
the supply of goods available in the
marketplace -- in other words, when too
much money is chasing too few goods. High
inflation has a negative impact on the
prices of fixed-income securities.
MUNICIPAL BOND An interest-bearing debt security issued
by a state or local government entity.
NET ASSET VALUE (NAV) The price per share of a mutual fund based
on the sum of the market value of all the
securities owned by the fund divided by
the number of outstanding shares.
TAXABLE EQUIVALENT YIELD The level of yield a fully taxable
instrument would have to provide to equal
that of a tax-free municipal bond on an
after-tax basis.
30-DAY SEC YIELD The standard yield reference for bond
funds, based on a formula prescribed by
the SEC. This annualized yield calculation
reflects the 30-day average of the income
earnings of every holding in a given
fund's portfolio, net of expenses,
assuming each is held to maturity.
TOTAL RETURN The most common yardstick to measure the
performance of a fund. Total return --
annualized or compound -- is based on a
combination of share price changes plus
income and capital gain distributions, if
any, expressed as a percentage gain or
loss in value.
(Sources: Scudder; Barron's Dictionary of Finance and Investment Terms)
8 - Scudder Pennsylvania Tax Free Fund
<PAGE>
Investment Portfolio as of September 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating (b) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Short-Term Municipal Investments 4.2%
- ------------------------------------------------------------------------------------------------------------------------------
Pennsylvania
Delaware County, PA, Airport Facilities Revenue, United Parcel Service, -----------
Daily Demand Note, 3.8%, 12/01/15* (Cost $3,200,000) ...................... 3,200,000 AAA 3,200,000
-----------
Long-Term Municipal Investments 95.8%
- ------------------------------------------------------------------------------------------------------------------------------
Pennsylvania
Allegheny County, PA, Airport Revenue, Pittsburgh International Airport,
Series 1997A, 5.75%, 1/01/13 (c) .......................................... 1,500,000 AAA 1,592,520
Allegheny County, PA, Sanitary Authority, Sewer Revenues, Series 1986 B,
Prerefunded 6/01/99, 7.5%, 12/01/16*** (c) ................................ 500,000 AAA 528,530
Armstrong County, PA, Hospital Authority, St. Frances Medical Center,
Series A, 6.25%, 6/01/13 (c) .............................................. 1,000,000 AAA 1,062,970
Berks County, PA, Municipal Authority Hospital Revenue, Reading Hospital
and Medical Center Project:
5.5%, 10/01/08 (c) ....................................................... 1,000,000 AAA 1,063,690
5.7%, 10/01/14 (c) ....................................................... 1,000,000 AAA 1,065,320
Bethlehem, PA, Water Authority, Refunding, 4.875%, 11/15/14 (c) ............. 1,000,000 AAA 950,330
Bethlehem, PA, Water Revenue, Series 1992, Prerefunded 11/15/01, 6.25%,
11/15/11*** (c) ........................................................... 1,000,000 AAA 1,076,840
Blair County, PA, Hospital Authority, Altoona Hospital Project, 5.5%,
7/01/07 (c) ............................................................... 1,000,000 AAA 1,064,350
Bucks County, PA, Water and Sewer Authority Revenue, ETM, 6.375%,
12/01/08** ................................................................ 425,000 NR 463,743
Clearfield, PA, Hospital Authority Revenue, Clearfield Hospital, 6.875%,
6/01/16 ................................................................... 1,450,000 BBB 1,537,247
Commonwealth of Pennsylvania, Certificate of Participation, Lease Revenue,
Series A, 5.25%, 7/01/10 (c) .............................................. 1,890,000 AAA 1,904,194
Delaware County Authority, Commonwealth of Pennsylvania, University Revenue,
Villanova University, Prerefunded 8/01/98, 7.75%, 8/01/18*** .............. 200,000 AAA 210,222
Delaware County, PA, Health Facilities Revenue, Mercy Health Corporation of
Southeastern Pennsylvania, Series B, 6%, 11/15/07 ......................... 1,500,000 BBB 1,578,600
Delaware County, PA, Hospital Revenue, Memorial Hospital, 5.5%, 8/15/13 ..... 1,750,000 AAA 1,785,963
Delaware County, PA, Industrial Development Authority, Resource Recovery
Revenue, Series A, Refunding Bond 6.5%, 1/01/08 ........................... 1,000,000 A 1,103,880
Delaware County, PA, White Horse Village, NC Series 1996 A, 6.6%, 7/01/06 ... 1,000,000 NR 1,033,740
Erie County, PA, Prison Authority, Commonwealth Lease Revenue, Prerefunded
11/01/01, 6.25%, 11/01/11***(c) ........................................... 1,000,000 AAA 1,076,190
Harrisburg, PA, Water Authority Revenue, Series 1993 B, Inverse Floater,
7.32%, 6/18/15**** (c) .................................................... 1,000,000 AAA 1,067,500
Indiana County, PA, Industrial Development Authority, Pennsylvania Electric
Company, Pollution Control Revenue, 5.35%, 11/01/10 (c) ................... 1,000,000 AAA 1,045,020
</TABLE>
The accompanying notes are an integral part of the financial statements.
9 - Scudder Pennsylvania Tax Free Fund
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating (b) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Lebanon County, PA, Good Samaritan Hospital Authority Revenue, Series 1989 B,
Prerefunded 11/01/99, 8.25%, 11/01/18*** .................................. 600,000 AAA 660,366
Montgomery County, PA, Holy Redeemer Hospital, 6.75%, 2/01/09 (c) ........... 500,000 AAA 518,230
Montgomery County, PA, Redevelopment Authority, Multi-Family Housing Revenue
Refunding, KBF Associates, LP Project, 6.375%, 7/01/12 .................... 1,500,000 BBB 1,543,650
Pennsylvania Convention Center Authority, Funding Revenue, 6%, 9/01/09 (c) .. 2,200,000 AAA 2,392,126
Pennsylvania Educational Development Financing Authority, RSC REC Revenue
C04 Series 1994 D, 7.125%, 12/01/15 ....................................... 2,700,000 BBB 2,955,960
Pennsylvania General Obligation:
10%, 4/15/02 (c) .......................................................... 2,500,000 AAA 3,070,575
6.25%, 7/01/10 ............................................................ 1,000,000 AA 1,124,790
Zero Coupon, Prerefunded 12/15/98, 12/15/02*** ............................ 2,040,000 AAA 1,422,512
Pennsylvania Higher Education Facilities Authority, Health Services, Series
1996 A, 5.6%, 11/15/10 (c) ................................................ 2,480,000 AAA 2,641,498
Pennsylvania Housing Finance Agency, Single Family Mortgage Revenue:
Series 1991-32, 7.15%, 4/01/15 ............................................ 865,000 AA 918,985
Series 1992-33, 6.85%, 10/01/09 ........................................... 840,000 AA 894,382
Pennsylvania Industrial Development Authority, Economic Development Revenue:
5.8%, 1/01/08 (c) ......................................................... 1,000,000 AAA 1,087,750
Series 1996, 6%, 7/01/08 (c) .............................................. 1,000,000 AAA 1,107,780
Pennsylvania Intergovernmental Cooperation Authority, Special Tax Revenue,
City of Philadelphia, Prerefunded 6/15/02, 6.8%, 6/15/12*** ............... 1,000,000 AAA 1,106,350
Philadelphia, PA, Authority for Industrial Development, Commercial
Development Revenues, 6.5%, 10/1/27 ....................................... 1,000,000 NR 1,038,090
Philadelphia, PA, General Obligation:
11.5%, 8/01/98 (c) ........................................................ 500,000 AAA 530,765
Refunding Revenue, Series A, 11.5%, 8/01/99 (c) ........................... 710,000 AAA 801,597
School District, Series A, 6.25%, 9/01/09 (c) ............................. 1,000,000 AAA 1,122,660
Philadelphia, PA, Hospital and Higher Education Facilities Authority,
Hospital Revenue:
Children's Seashore House, Series A, 7%, 8/15/12 (c) ..................... 1,000,000 A 1,087,610
Graduate Health System Obligation Group, 6.625%, 7/01/21 ................. 500,000 BBB 518,330
Albert Einstein Medical Center, 7.5%, 4/01/99 ............................ 535,000 A 546,754
Temple University Hospital, Series 1993 A, 6.625%, 11/15/23 ............... 1,100,000 BBB 1,184,733
Temple University, Series 1997, 5.5%, 11/15/27 ............................ 1,000,000 A 971,290
Philadelphia, PA, Municipal Authority, Lease Revenue Refunding, Series A,
5.625%, 11/15/14 (c) ...................................................... 1,000,000 AAA 1,025,140
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 - Scudder Pennsylvania Tax Free Fund
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating (b) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Philadelphia, PA, Water & Wastewater Refunding Revenue, Series A, 5.625%,
6/15/09 (c) ............................................................... 2,000,000 AAA 2,153,760
Philadelphia, PA, Water Revenue, 6.25%, 8/01/10 (c) ......................... 1,000,000 AAA 1,133,560
Philadelphia, PA, Port Authority Lease Revenue, Series 1993, 6.2%, 9/01/13 (c) 2,000,000 AAA 2,128,440
Pittsburgh, PA, General Obligation, Series 1993 A, 5.5%, 9/01/14 (c) ........ 1,500,000 AAA 1,570,875
Pittsburgh, PA, Water and Sewer System Revenue:
ETM, 7.25%, 9/01/14** (c) ................................................. 150,000 AAA 181,929
Series A, Prerefunded 9/01/01, 6.5%, 9/01/14*** (c) ....................... 1,250,000 AAA 1,374,088
Series A, 4.75%, 9/01/16 (c) .............................................. 2,000,000 AAA 1,829,280
Pottsville, PA, Hospital Authority, Warne Clinic, 7.25%, 7/01/24 ............ 1,000,000 BBB 1,076,070
Somerset County, PA, General Authority, Commonwealth Lease Revenue,
Prerefunded 10/15/01, 6.25%, 10/15/11 (c) ................................. 1,000,000 AAA 1,075,450
Union County, PA, Higher Education Facilities Authority, University Revenue,
Bucknell University, 6.2%, 4/01/07 (c) .................................... 1,000,000 AAA 1,069,610
University Area, PA, Sewer Revenue, 5.25%, 11/01/14 (c) ..................... 1,750,000 AAA 1,789,673
University of Pittsburgh, PA, Series 1997B, 5%, 6/01/12 (c) ................. 1,000,000 AAA 988,670
Washington County, PA, Lease Revenue, Shadyside Hospital Project,
Prerefunded 6/15/00, 7.375%, 12/15/09*** (c) .............................. 1,000,000 AAA 1,109,110
York County, PA, Resource Recovery Solid Waste Authority, General Obligation,
Series C, 8.2%, 12/01/14 .................................................. 315,000 A 326,051
Puerto Rico
Puerto Rico Public Building Authority, Government Facilities Revenue, 6.25%,
7/01/13 (c) ............................................................... 1,000,000 AAA 1,142,150
Virgin Islands
Virgin Islands Public Finance Authority, General Obligation, Matching Fund
Loan Notes, Series A, 7.25%, 10/01/18 ..................................... 1,500,000 NR 1,674,015
- ------------------------------------------------------------------------------------------------------------------------------
Total Long-Term Municipal Investments (Cost $67,344,560) 72,105,503
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio - 100.0% (Cost $70,544,560) (a) 75,305,503
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 - Scudder Pennsylvania Tax Free Fund
<PAGE>
- --------------------------------------------------------------------------------
(a) The cost for federal income tax purposes was $70,544,560. At
September 30, 1997, net unrealized appreciation for all securities
based on tax cost was $4,760,943. This consisted of aggregate gross
unrealized appreciation for all securities in which there was an
excess of market value over tax cost of $4,803,666 and aggregate
gross unrealized depreciation for all securities in which there was
an excess of tax cost over market value of $42,723.
(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, MBIA or BIG.
* Floating rate and monthly, weekly, or daily demand notes are
securities whose yields vary with a designated market index or
market rate, such as the coupon-equivalent of the Treasury bill
rate. Variable rate demand notes are securities whose yields are
periodically reset at levels that are generally comparable to
tax-exempt commercial paper. These securities are payable on demand
within seven calendar days and normally incorporate an irrevocable
letter of credit from a major bank. These notes are carried, for
purposes of calculating average weighted maturity, at the longer of
the period remaining until the next rate change or to the extent of
the demand period.
** ETM: Bonds bearing the description ETM (escrowed to maturity) are
collateralized by U.S. Treasury securities which are held in escrow
by a trustee and used to pay principal and interest on bonds so
designated.
*** Prerefunded: Bonds which are prerefunded are collateralized by U.S.
Treasury securities which are held in escrow and are used to pay
principal and interest, if any, on the tax-exempt issue and to
retire the bonds in full at the earliest refunding date.
**** Inverse floating rate notes are instruments whose yields have an
inverse relationship to benchmark interest rates. These securities
are shown at their rate as of September 30, 1997.
The accompanying notes are an integral part of the financial statements.
12 - Scudder Pennsylvania Tax Free Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of September 30, 1997 (Unaudited)
<TABLE>
<S> <C>
Assets
- ------------------------------------------------------------------------------------------------------------------------------
Investments, at market (identified cost $70,544,560) ................... $ 75,305,503
Interest receivable .................................................... 1,264,314
Receivable for Fund shares sold ........................................ 53,470
Other assets ........................................................... 1,487
-----------------
Total assets ........................................................... 76,624,774
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------
Due to custodian bank .................................................. 88,385
Payable for investments purchased ...................................... 1,582,273
Dividends payable ...................................................... 117,624
Payable for Fund shares redeemed ....................................... 7,356
Accrued management fee ................................................. 12,349
Other payables and accrued expenses .................................... 42,323
-----------------
Total liabilities ...................................................... 1,850,310
----------------------------------------------------------------------------------------------
Net assets, at market value $ 74,774,464
----------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Unrealized appreciation on investments ................................. 4,760,943
Accumulated net realized gain .......................................... 190,834
Paid-in capital ........................................................ 69,822,687
----------------------------------------------------------------------------------------------
Net assets, at market value $ 74,774,464
----------------------------------------------------------------------------------------------
Net Asset Value
- ------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share ($74,774,464/
5,447,852 outstanding shares of beneficial interest, $.01 par -----------------
value, unlimited number of shares authorized) ........................ $13.73
-----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 - Scudder Pennsylvania Tax Free Fund
<PAGE>
Statement of Operations
six months ended September 30, 1997 (Unaudited)
<TABLE>
<S> <C>
Investment Income
- ------------------------------------------------------------------------------------------------------------------------------
Income:
Interest ............................................................... $ 2,126,083
-----------------
Expenses:
Management fee ......................................................... 221,702
Services to shareholders ............................................... 44,946
Custodian and accounting fees .......................................... 28,851
Trustees' fees and expenses ............................................ 9,891
Auditing ............................................................... 15,310
Reports to shareholders ................................................ 9,609
Registration fees ...................................................... 2,996
Legal .................................................................. 2,976
Other .................................................................. 4,475
-----------------
Total expenses before reductions ....................................... 340,756
Expense reductions ..................................................... (156,004)
-----------------
Expenses, net .......................................................... 184,752
----------------------------------------------------------------------------------------------
Net investment income 1,941,331
----------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment transactions .................. 190,834
Net unrealized appreciation (depreciation) on investments during the
period ............................................................... 2,296,110
----------------------------------------------------------------------------------------------
Net gain (loss) on investment transactions 2,486,944
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 4,428,275
----------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 - Scudder Pennsylvania Tax Free Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months
Ended
September 30, Year Ended
1997 March 31,
Increase (Decrease) in Net Assets (Unaudited) 1997
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ..................................... $ 1,941,331 $ 4,007,012
Net realized gain from investment transactions ............ 190,834 84,346
Net unrealized appreciation (depreciation) on investments
during the period ....................................... 2,296,110 (190,591)
---------------- ---------------
Net increase (decrease) in net assets resulting from
operations .............................................. 4,428,275 3,900,767
---------------- ---------------
Distributions to shareholders:
From net investment income ................................ (1,941,331) (4,007,012)
---------------- ---------------
From net realized gains from investment transactions ...... -- (130,973)
---------------- ---------------
Fund share transactions:
Proceeds from shares sold ................................. 6,485,119 13,660,695
Net asset value of shares issued to shareholders in
reinvestment of distributions............................ 1,198,545 2,572,041
Cost of shares redeemed ................................... (9,574,141) (17,335,755)
---------------- ---------------
Net increase (decrease) in net assets from Fund share
transactions ............................................ (1,890,477) (1,103,019)
---------------- ---------------
Increase (decrease) in net assets ......................... 596,467 (1,340,237)
Net assets at beginning of period ......................... 74,177,997 75,518,234
---------------- ---------------
Net assets at end of period ............................... $74,774,464 $74,177,997
---------------- ---------------
Other Information
- ------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period ................. 5,591,548 5,674,116
---------------- ---------------
Shares sold ............................................... 480,259 1,024,372
Shares issued to shareholders in reinvestment of
distributions ........................................... 88,337 192,785
Shares redeemed ........................................... (712,292) (1,299,725)
---------------- ---------------
Net increase (decrease) in Fund shares .................... (143,696) (82,568)
---------------- ---------------
Shares outstanding at end of period ....................... 5,447,852 5,591,548
---------------- ---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 - Scudder Pennsylvania Tax Free Fund
<PAGE>
Financial Highlights
The following table included selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
Six Months
Ended
September 30,
1997 Years Ended March 31,
(Unaudited) 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988(b)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning -----------------------------------------------------------------------------------------------
of period ................ $13.27 $13.31 $13.13 $13.01 $13.46 $12.80 $12.35 $12.27 $12.08 $11.80 $12.00
Income from investment -----------------------------------------------------------------------------------------------
operations:
Net investment income ....... .36 .71 .71 .73 .75 .76 .77 .82 .84 .79 .65
Net realized and unrealized
gain (loss) on
investment transactions .. .46 (.02) .25 .15 (.36) .87 .52 .08 .20 .40 (.26)
Total from investment -----------------------------------------------------------------------------------------------
operations ............... .82 .69 .96 .88 .39 1.63 1.29 .90 1.04 1.19 .39
Less distributions: -----------------------------------------------------------------------------------------------
From net investment income .. (.36) (.71) (.71) (.73) (.75) (.76) (.77) (.82) (.84) (.85) (.59)
From net realized gains on
investment transactions .. -- (.02) (.07) (.03) (.09) (.21) (.07) -- (.01) (.06) --
-----------------------------------------------------------------------------------------------
Total distributions ......... (.36) (.73) (.78) (.76) (.84) (.97) (.84) (.82) (.85) (.91) (.59)
Net asset value, end of -----------------------------------------------------------------------------------------------
period ................... $13.73 $13.27 $13.31 $13.13 $13.01 $13.46 $12.80 $12.35 $12.27 $12.08 $11.80
-----------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Return (%) (a) ........ 6.21** 5.30 7.45 7.09 2.70 13.19 10.70 7.58 8.75 11.00 3.39**
Ratios and Supplemental Data
Net assets, end of period
($ millions) ............. 75 74 76 72 74 61 39 26 18 11 5
Ratio of operating expenses,
net to average daily net
assets (%) ............... .50* .50 .50 .50 .50 .50 .50 .50 .50 .50 .50*
Ratio of operating expenses
before expense reductions,
to average daily net
assets (%) ............... .92* .92 .91 .94 .95 1.02 1.13 1.43 1.84 2.43 5.75*
Ratio of net investment
income to average daily
net assets (%) ........... 5.25* 5.32 5.30 5.74 5.42 5.79 6.05 6.67 6.78 7.09 7.16*
Portfolio turnover
rate (%) ................. 12.67* 11.64 11.1 26.2 17.4 29.2 11.2 7.8 2.0 13.5 97.6*
</TABLE>
(a) Total returns are higher due to maintenance of the Fund's expenses.
(b) For the period May 28, 1987 (commencement of operations) to March 31,
1988.
* Annualized
** Not annualized
16 - Scudder Pennsylvania Tax Free Fund
<PAGE>
Notes to Financial Statements (Unaudited)
A. Significant Accounting Policies
Scudder Pennsylvania Tax Free Fund (the "Fund") is a non-diversified series of
Scudder State Tax Free Trust (the "Trust"). The Trust is organized as a
Massachusetts business trust and is registered under the Investment Company Act
of 1940, as amended, as an open-end management investment company. There are
currently six series in the Trust.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
Security Valuation. Portfolio debt securities with remaining maturities greater
than sixty days are valued by pricing agents approved by the Officers of the
Fund, which quotations reflect broker/dealer-supplied valuations and electronic
data processing techniques. If the pricing agents are unable to provide such
quotations, the most recent bid quotation supplied by a bona fide market maker
shall be used. All other debt securities are valued at their fair value as
determined in good faith by the Valuation Committee of the Board of Trustees.
Short-term investments having a maturity of sixty days or less are valued at
amortized cost.
Amortization and Accretion. All premiums and original issue discounts are
amortized/accreted for both tax and financial reporting purposes.
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code which are applicable to regulated investment companies
and to distribute all of its taxable and tax-exempt income to its shareholders.
Accordingly, the Fund paid no federal income taxes and no provision for federal
income taxes was required.
Distribution of Income and Gains. All of the net investment income of the Fund
is declared as a dividend to shareholders of record as of the close of business
each day and is paid to shareholders monthly. During any particular year, net
realized gains from investment transactions, in excess of available capital loss
carryforwards, would be taxable to the Fund if not distributed and, therefore,
will be distributed to shareholders. An additional distribution may be made to
the extent necessary to avoid the payment of a four percent federal excise tax.
The timing and characterization of certain income and capital gains
distributions are determined in accordance with federal tax regulations which
may differ from generally accepted accounting principles. As a result, net
investment income and net realized gain (loss) on investment transactions for a
reporting period may differ significantly from distributions during such period.
Accordingly, the Fund may periodically make reclassifications among certain of
its capital accounts without impacting the net asset value of the Fund.
The Fund uses the specific identification method for determining realized gain
or loss on investments for both financial and federal income tax reporting
purposes.
Other. Investment security transactions are accounted for on a trade date basis.
Distributions of net realized gains to shareholders are recorded on the
ex-dividend date. Interest income is accrued pro rata to the earlier of the call
or maturity date.
B. Purchases and Sales of Securities
During the six months ended September 30, 1997, purchases and sales of municipal
securities (excluding short-term investments) aggregated $4,551,435 and
$6,804,610, respectively.
17 - Scudder Pennsylvania Tax Free Fund
<PAGE>
C. Related Parties
Under the Fund's Investment Advisory Agreement (the "Agreement") with Scudder,
Stevens & Clark, Inc. (the "Adviser"), the Fund agrees to pay the Adviser a fee
equal to an annual rate of approximately 0.60% of the Fund's average daily net
assets, computed and accrued daily and payable monthly. The Adviser determines
the securities, instruments, and other contracts relating to investments to be
purchased, sold or entered into by the Fund. In addition to portfolio management
services, the Adviser provides certain administrative services in accordance
with the Agreement. The Adviser has agreed not to impose all or a portion of its
management fee until January 31, 1998, and during such period to maintain the
annualized expenses of the Fund at not more than 0.50% of average daily net
assets. For the six months ended September 30, 1997, the Adviser imposed fees
amounting to $65,698, of which $12,349 is unpaid at September 30, 1997, and the
portion not imposed amounted to $156,004.
On June 26, 1997, the Adviser entered into an agreement with The Zurich
Insurance Company ("Zurich"), an international insurance and financial services
organization, pursuant to which Zurich will acquire a majority interest in the
Adviser, and the Adviser will form a new global investment organization by
combining with Zurich's subsidiary, Zurich Kemper Investments, Inc. and change
its name to Scudder Kemper Investments, Inc. Subject to the receipt of the
required regulatory and shareholder approvals, the transaction is expected to
close in the fourth quarter of 1997.
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, 1997, the amount charged to the Fund by SSC
aggregated $31,055, of which $5,190 is unpaid at September 30, 1997.
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, 1997, the amount charged to the Fund by SFAC aggregated
$18,000, of which $3,000 is unpaid at September 30, 1997.
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,
1997, Trustees' fees and expenses charged to the Fund aggregated $9,891.
18 - Scudder Pennsylvania Tax Free Fund
<PAGE>
This Page
intentionally
left blank.
19 - Scudder Pennsylvania Tax Free Fund
<PAGE>
Officers and Trustees
David S. Lee*
President and Trustee
Henry P. Becton, Jr.
Trustee; President and General
Manager, WGBH Educational
Foundation
E. Michael Brown*
Trustee
Dawn-Marie Driscoll
Trustee; Executive Fellow;
President, Driscoll Associates
Peter B. Freeman
Trustee; Corporate Director and
Trustee
Wesley W. Marple, Jr.
Trustee; Professor of Business
Administration, Northeastern
University
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
*Scudder, Stevens & Clark, Inc.
20 - Scudder Pennsylvania Tax Free Fund
<PAGE>
Investment Products and Services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series --
Premium Shares*
Managed Shares*
Scudder Government Money Market Series --
Managed Shares*
Tax Free Money Market+
- ----------------------
Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series--
Managed Shares*
Scudder California Tax Free Money Fund**
Scudder New York Tax Free Money Fund**
Tax Free+
- ---------
Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund**
Scudder Massachusetts Limited Term Tax Free Fund**
Scudder Massachusetts Tax Free Fund**
Scudder New York Tax Free Fund**
Scudder Ohio Tax Free Fund**
Scudder Pennsylvania Tax Free Fund**
U.S. Income
- -----------
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder High Yield Bond Fund
Global Income
- -------------
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
Asset Allocation
- ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
U.S. Growth and Income
- ----------------------
Scudder Balanced Fund
Scudder Growth and Income Fund
Scudder S&P 500 Index Fund
U.S. Growth
- -----------
Value
Scudder Large Company Value Fund
Scudder Value Fund
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund
Scudder Large Company Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Growth
- -------------
Worldwide
Scudder Global Fund
Scudder International Growth and Income Fund
Scudder International Fund
Scudder Global Discovery Fund
Scudder Emerging Markets Growth Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund, Inc.
Retirement Programs
- -------------------
IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan**+++ +++
(a variable annuity)
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil 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 Spain and Portugal Fund, Inc.
Scudder World Income Opportunities
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. +++Funds within categories are listed in order from
expected least risk to most risk. Certain Scudder funds may not be available for
purchase or exchange. +A portion of the income from the tax-free funds may be
subject to federal, state, and local taxes. *A class of shares of the Fund.
**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.
21 - Scudder Pennsylvania Tax Free Fund
<PAGE>
Scudder Solutions
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Investment Plan QuickBuy
A convenient investment program in which you designate Lets you purchase Scudder fund shares
the purchase details and the bank account, and money is electronically, avoiding potential mailing delays;
electronically debited from that account monthly to designate a bank account and the transaction
regularly purchase fund shares and "dollar cost average" details, and money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from that account.
fewer when it's higher, which can reduce your average
purchase price over time.
Automatic Dividend Transfer Payroll Deduction and Direct Deposit
The most timely, reliable, and convenient way to Have all or part of your paycheck -- even government
purchase shares -- use distributions from one Scudder checks -- invested in up to four Scudder funds at
fund to purchase shares in another, automatically one time.
(accounts with identical registrations or the same
social security or tax identification number).
Dollar cost averaging involves continuous investment in securities regardless of price
fluctuations and does not assure a profit or protect against loss in declining markets.
Investors should consider their ability to continue such a plan through periods of low price
levels.
Around-the-clock electronic account service and information, including some transactions:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- http://funds.scudder.com
1-800-343-2890
Scudder Electronic Account Services: Offering
Personalized account information, the ability to account information and transactions, interactive
exchange or redeem shares, and information on other worksheets, prospectuses and applications for all
Scudder funds and services via touchtone telephone. Scudder funds, plus your current asset allocation,
whenever you need them. Scudder's Site also
provides news about Scudder funds, retirement
planning information, and more.
Retirees and those who depend on investment proceeds for living expenses can enjoy these convenient,
timely, and reliable automated withdrawal programs:
- ------------------------------------------------------------------------------------------------------------------------------
Automatic Withdrawal Plan QuickSell
You designate the bank account, determine the schedule Provides speedy access to your money by
(as frequently as once a month) and amount of the electronically crediting your redemption proceeds
redemptions, and Scudder does the rest. to the bank account you designate.
DistributionsDirect
Automatically deposits your fund distributions into the
bank account you designate within three business days
after each distribution is paid.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
22 - Scudder Pennsylvania Tax Free Fund
<PAGE>
Mutual Funds and More -- Brokerage and Guidance Services:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Brokerage Services Scudder Portfolio Builder
Offers you access to a world of investments, A free service designed to help suggest ways investors like
including stocks, corporate bonds, Treasuries, plus you can diversify your portfolio among domestic and global,
over 6,000 mutual funds from at least 150 mutual as well as equity, fixed-income, and money market funds,
fund companies. And Scudder Fund Folio(SM) provides using Scudder funds.
investors with access to a marketplace of more than
500 no-load funds from well-known companies--with no Personal Counsel from Scudder(SM)
transaction fees or commissions. Scudder
shareholders can take advantage of a Scudder Developed for investors who prefer the benefits of no-load
Brokerage account already reserved for them, with Scudder funds but want ongoing professional assistance in
no minimum investment. For information about managing a portfolio. Personal Counsel(SM) is a highly
Scudder Brokerage Services, call 1-800-700-0820. customized, fee-based asset management service for
individuals investing $100,000 or more.
Fund Folio funds held less than six months will be charged a fee for redemptions. You can buy
shares directly from the fund itself or its principal underwriter or distributor without
paying this fee. Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061.
Member SIPC.
Personal Counsel From Scudder(SM) and Personal Counsel(SM) are service marks of and represent a
program offered by Scudder Investor Services, Inc., Adviser.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
Additional Information on How to Contact Scudder:
- ------------------------------------------------------------------------------------------------------------------------------
For existing account services and transactions Please address all written correspondence to
Scudder Investor Relations -- 1-800-225-5163 The Scudder Funds
P.O. Box 2291
For establishing 401(k) and 403(b) plans Boston, Massachusetts
Scudder Defined Contribution Services -- 02107-2291
1-800-323-6105
Or Stop by a Scudder Investor Center
For information about The Scudder Funds, including Many shareholders enjoy the personal, one-on-one service of
additional applications and prospectuses, or for the Scudder Investor Centers. Check for an Investor Center near
answers to investment questions you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470 Boca Raton Chicago San Francisco
[email protected] Boston New York
- ------------------------------------------------------------------------------------------------------------------------------
New From Scudder: Scudder International Growth and Income Fund
Scudder International Growth and Income Fund takes a yield-oriented approach to investing in international equities. The
Fund seeks to provide long-term growth of capital plus current income. Investors who desire international exposure but
who wish to take a more conservative approach may appreciate the Fund's emphasis on the dividend paying stocks of
well-established companies outside the United States.
- ------------------------------------------------------------------------------------------------------------------------------
The share price of Scudder International Growth and Income Fund will fluctuate. International investing involves special
risks including currency fluctuation and political instability. Contact Scudder Investor Services, Inc., Distributor,
for a prospectus which contains more complete information, including management fees and other expenses. Please read it
carefully before you invest or send money.
</TABLE>
23 - Scudder Pennsylvania 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.
SCUDDER
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