SCUDDER STATE TAX FREE TRUST, N-30D, 1997-12-03

SCUDDER STATE TAX FREE TRUST
N-30D, 1997-12-03

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Scudder

Massachusetts
Tax Free Fund

Semiannual Report
September 30, 1997

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.

SCUDDER [LOGO]

<PAGE>

In Brief

o Scudder Massachusetts 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 Massachusetts Tax Free Fund's 30-day net
annualized SEC yield was 4.41%, equivalent to an 8.30% taxable yield for
Massachusetts investors subject to the 46.85% combined federal and state income
tax rate.

o Scudder Massachusetts Tax Free Fund ranked number one among its peers for
five- and ten-year periods ended September 30 according to Lipper Analytical
Services. See page 6 for additional information on the Fund's rankings.

THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE.

BAR CHART TITLE: 30-Day Yield on September 30, 1997

CHART DATA:

Scudder Massachusetts Tax Free Fund 4.41%

Taxable yield needed to equal the Fund's yield 8.30%

* 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 three-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
4 Performance Update
5 Portfolio Summary
6 Portfolio Management Discussion
9 Glossary of Investment Terms
10 Investment Portfolio
15 Financial Statements
18 Financial Highlights
19 Notes to Financial Statements
24 Officers and Trustees
25 Investment Products and Services
26 Scudder Solutions

2 -- Scudder Massachusetts Tax Free Fund
<PAGE>

Letter from the Fund's President

Dear Shareholders,

We are pleased to report to you concerning Scudder Massachusetts Tax Free
Fund's performance over its most recent fiscal year 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 continues to post outstanding long-term results,
placing number one in total return performance over five- and ten-year periods
ended September 30, 1997, compared with similar funds tracked by Lipper. The
Fund posted a 4.41% 30-day net annualized SEC yield as of September 30,
equivalent to an 8.30% taxable yield for investors in the top Massachusetts tax
bracket. The Fund's portfolio management team continues to pursue its long-term
strategy of seeking high yield and favorable returns with lower-than-average
share price volatility by purchasing intermediate-term noncallable bonds and
keeping overall portfolio quality high. 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 overseas
equity exposure 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 25.

As always, please call a Scudder Investor Information representative at
1-800-225-2470 if you have questions about your Fund. Page 26 provides more
information on how to contact Scudder. Thank you for choosing Scudder
Massachusetts Tax Free Fund to help meet your investment needs.

Sincerely,

/s/David S. Lee
David S. Lee
President,
Scudder Massachusetts Tax Free Fund

3 -- Scudder Massachusetts Tax Free Fund
<PAGE>

Performance Update as of September 30, 1997

- -------------------------------------------
Fund Index Comparisons
- -------------------------------------------
Total Return
- -------------------------------------------
Period Ended Growth of Average
9/30/97 $10,000 Cumulative Annual
- -------------------------------------------
Scudder Massachusetts Tax Free Fund
Ticker Symbol: SCMAX
- -------------------------------------------
1 Year $10,838 8.38% 8.38%
5 Year $14,281 42.81% 7.39%
10 Year $23,772 137.72% 9.05%
- -------------------------------------------
Lehman Brothers Municipal Bond Index
- -------------------------------------------
1 Year $10,904 9.04% 9.04%
5 Year $14,140 41.40% 7.17%
10 Year $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:

Yearly periods ended September 30

Scudder Massachusetts
Tax Free Fund
Year Amount
- ---------------------
'87 $10,000
'88 $11,502
'89 $12,510
'90 $13,102
'91 $14,851
'92 $16,647
'93 $19,229
'94 $18,583
'95 $20,650
'96 $21,934
'97 $23,772

Lehman Brothers Municipal
Bond Index
Year Amount
- ---------------------
'87 $10,000
'88 $11,296
'89 $12,277
'90 $13,113
'91 $14,842
'92 $16,395
'93 $18,484
'94 $18,033
'95 $20,051
'96 $21,260
'97 $23,182

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 $12.30 $12.30 $12.03 $12.74 $13.28 $14.24 $12.95 $13.63 $13.75 $14.17
Income Dividends $ .81 $ .85 $ .82 $ .82 $ .83 $ .84 $ .78 $ .72 $ .71 $ .70
Capital Gains and
Other Distributions $ .10 $ .19 $ .02 $ .04 $ .12 $ .18 $ .04 $ -- $ -- $ --
Fund Total
Return (%) 15.01 8.77 4.73 13.35 12.09 15.51 -3.36 11.12 6.22 8.38
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, 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 five year, and ten year
periods would have been lower.

4 -- Scudder Massachusetts Tax Free Fund
<PAGE>

Portfolio Summary as of September 30, 1997

- -------------------------------
Diversification
- -------------------------------
General Obligation 24%
Hospital/Health 20%
Higher Education 12%
Water/Sewer Revenue 11%
Housing Finance Authority 10%
Electric Utility Revenue 9%
Pollution Control Industrial
Development 4%
Toll Revenue/
Transportation 2%
Miscellaneous Municipal 8%
- -------------------------------
100%
- -------------------------------

The Fund is broadly diversified,
with investments in over 110
different issues.

A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.

- ------------------------------
Quality
- ------------------------------
AAA 37%
AA 3%
A 44%
BBB 9%
BB 1%
Not Rated 6%
- ------------------------------
100%
- ------------------------------

Weighted average quality: AA

Overall portfolio quality remains
high, with over 80% of Fund assets
rated A or better.

A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.

- ------------------------------
Effective Maturity
- ------------------------------
Less than 1 year 2%
1-5 years 24%
5-10 years 32%
10-15 years 30%
15 years or greater 12%
- ------------------------------
100%
- ------------------------------

Weighted average effective maturity: 9.14 years

We are currently focusing on the
purchase of 15- to 20-year
noncallable bonds as we seek to
boost yield and long-term returns.

A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.

For more complete details about the Fund's investment portfolio, see page 10.

5 -- Scudder Massachusetts Tax Free Fund
<PAGE>

Portfolio Management Discussion

Dear Shareholders,

For the six months ended September 30, 1997, Scudder Massachusetts Tax Free Fund
posted a strong 5.90% 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 5.90% total return for the period consisted of a $0.45 increase in
net asset value and income distributions of $0.35 per share. This return
outpaced the Lipper average of similar funds over one- and three-year periods.
The Fund also achieved the number one ranking among its peers for the five- and
ten-year periods ended September 30, 1997.

On September 30, 1997, the Fund's 30-day net annualized SEC yield was 4.41%,
equivalent to a taxable yield of 8.30% for shareholders subject to the 46.85%
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.

Massachusetts Update

The Massachusetts economy continues to lead growth in the New England region.
Job creation is still strong, and unemployment is at its lowest level since
1989. The Commonwealth finished its 1997 fiscal year with an operating surplus
of $182 million in its General Fund. Massachusetts had anticipated issuing $900
million per year in bonds for the next five years, a total of $4.5 billion, to
finance transportation-related capital projects. Due to changes in federal
funding for the Central Artery Project, the Commonwealth increased its debt
limits for the 1998 and 1999 fiscal years to allow for additional bond issuance
of up to $1 billion. The pending legislative approval of a convention center
will also require debt financing, secured by a hotel tax. Although
Massachusetts' future debt issuance will be large, the burden should still be
manageable, given the Commonwealth's high wealth levels and scheduled debt
retirement.

=============================================================
Scudder Massachusetts Tax Free Fund:
Long-Term Top Performance
(Average annual returns for periods ended September 30, 1997)
=============================================================

Scudder
Massachusetts Number
Tax Free Fund Lipper of
Period return average Rank Funds
-------------------------------------------------------------

1 Year 8.38 8.27 24 of 52
-------------------------------------------------------------

3 Years 8.55 7.94 5 of 42
-------------------------------------------------------------

5 Years 7.39 6.64 1 of 23
-------------------------------------------------------------

10 Years 9.05 8.36 1 of 15
=============================================================

Past performance does not guarantee future results.

6 -- Scudder Massachusetts Tax Free Fund
<PAGE>

Noncallable Bonds Still a Focus

As a means of locking in a substantial income stream for Scudder Massachusetts
Tax Free Fund over time, we are currently focusing on the purchase of 15- to
20-year noncallable bonds. Though only a few such bonds met our credit standards
during the period, 15- to 20-year noncallable bonds already held by the Fund
performed extremely well. As of September 30, 10% 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. The Fund held 15% 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 the
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 approximately 9 years.

Overall portfolio quality remains high, with over 80% of portfolio securities
rated A or better at the close of the period. We continue to invest in a broad
selection of Massachusetts municipal bonds, including general obligation
(offering the highest quality available in the Commonwealth),
hospital/healthcare bonds, and higher education bonds.

In addition, we continue to 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 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 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. During the period, we
continued to sell bonds with weak call protection in favor of those with better
call protection. As of September 30, 41% 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.

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

7 -- Scudder Massachusetts Tax Free Fund
<PAGE>

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 15- to 20-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. Thank you for
investing in Scudder Massachusetts Tax Free Fund.

Sincerely,

Your Portfolio Management Team

/s/Philip G. Condon /s/Kathleen A. Meany
Philip G. Condon Kathleen A. Meany

8 -- Scudder Massachusetts 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)

9 -- Scudder Massachusetts Tax Free Fund
<PAGE>
Investment Portfolio as of September 30, 1997 (Unaudited)

<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating (b) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Short-Term Municipal Investments 1.9%
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Massachusetts
Massachusetts, General Obligation, Dedicated Income Tax:
Series B, Daily Demand Note, 3.8%, 12/1/97* .............................. 3,700,000 MIG1 3,700,000
Series E, Daily Demand Note, 3.8%, 12/1/97* .............................. 100,000 MIG1 100,000
Massachusetts Health & Educational Facilities Authority:
Series B, Daily Demand Note, 3.8%, 7/1/05 (c)* ........................... 200,000 A1+ 200,000
Capital Assets Program, Series 1989 G-1, Weekly Demand Note, 3.95%,
1/1/19 (c)* ........................................................... 900,000 AAA 900,000
Series D, Weekly Demand Note, 3.55%, 1/1/35 (c)* ......................... 700,000 SP1+ 700,000
Puerto Rico
Puerto Rico, Series 1996, Variable Rate Demand Bond, 3.65%, 7/1/11 (c)* ... 1,000,000 AAA 1,000,000
- ------------------------------------------------------------------------------------------------------------------------------
Total Short-Term Municipal Investments (Cost $6,600,000) 6,600,000
- ------------------------------------------------------------------------------------------------------------------------------

Long-Term Municipal Investments 98.1%
- ------------------------------------------------------------------------------------------------------------------------------
Massachusetts
Boston, MA, General Obligation, Series A, 6.5%, 7/1/12 (c) ................ 2,320,000 AAA 2,547,613
Boston, MA, Industrial Development Authority, Springhouse Project, 9.25%,
7/1/25 ................................................................... 1,000,000 NR 1,119,170
Chicopee, MA, Electric System Revenue, ETM, 7.125%, 1/1/17*** ............. 1,210,000 AAA 1,427,485
Haverhill, MA, Unlimited Tax, General Obligation, Series A, 7%,
6/15/12 (c) .............................................................. 600,000 AAA 671,052
Holyoke, MA, General Obligation, Series 1996A, 6%, 6/15/09 (c) ............ 1,560,000 AAA 1,691,711
Mashpee, MA, General Obligation:
5.125%, 2/1/11 (c) ....................................................... 1,025,000 AAA 1,034,738
5.35%, 2/1/12 (c) ........................................................ 1,525,000 AAA 1,560,883
Massachusetts Bay Transportation Authority:
General Transportation System:
Series 1993 A, 5.5%, 3/1/09 ............................................. 1,000,000 A 1,058,240
Series A, 5.4%, 3/1/07 .................................................. 8,325,000 A 8,757,567
Series A, 5.5%, 3/1/12 .................................................. 3,000,000 A 3,149,520
Series B, 6.2%, 3/1/16 .................................................. 2,100,000 A 2,328,312
Series C, 6.1%, 3/1/13 .................................................. 1,250,000 A 1,376,650
Certificate of Participation, 7.75%, 1/15/06 ............................. 1,000,000 A 1,195,200
Massachusetts General Obligation:
Consolidated Loan, Series A, 7.5%, 6/1/04 ................................ 12,400,000 A 14,502,296
Hynes Convention Center, Zero Coupon, 9/1/04 ............................. 2,000,000 A 1,462,000
Series 96A, 6%, 11/1/10 .................................................. 10,000,000 A 11,042,700
Series A, 6.5%, 6/1/08 ................................................... 3,170,000 AAA 3,487,951
</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>
Series A, 6.5%, 6/1/08 ................................................... 330,000 A 363,099
Series B, 6.5%, 8/1/08 ................................................... 5,400,000 A 6,182,946
Series C, Zero Coupon, 12/1/04 ........................................... 8,415,000 A 6,082,194
Massachusetts Health & Educational Facilities Authority:
Anna Jaques Hospital Series B, 6.875%, 10/1/12 ........................... 2,000,000 BBB 2,139,360
Berkshire Health System, Series D, 5.6%, 10/1/08 (c) ..................... 1,760,000 AAA 1,881,774
Boston College, Series 1993 K, 5.25%, 6/1/09 ............................. 2,880,000 AAA 2,986,733
Charlton Memorial Hospital Series B, 7.25%, 7/1/07 ....................... 10,000,000 A 10,987,700
Community College Program Series A, 6.5%, 10/1/09 (c) .................... 1,000,000 AAA 1,095,040
Cooley Dickson Hospital Inc.:
Prerefunded 5/15/03, 7.125%, 11/15/18** ................................. 2,075,000 AAA 2,366,517
Series B, 5.25%, 11/15/10 (c) ........................................... 2,005,000 AAA 2,034,774
Deaconess Hospital Series B, 6.625%, 4/1/12 (c) .......................... 2,000,000 AAA 2,187,480
Lowell General Hospital, Series B, 5.2%, 6/1/10 (c) ...................... 1,180,000 AAA 1,198,502
Massachusetts General Hospital Series F, 6.25%, 7/1/12 (c) ............... 5,000,000 AAA 5,607,250
Medical Academic & Scientific, Series A, 6.5%, 1/1/09 .................... 5,000,000 A 5,422,150
Medical Center of Central Massachusetts, Series A, 7%, 7/1/12 (c) ........ 3,600,000 AAA 3,957,012
Melrose-Wakefield C06 Series 1996C, 6%, 7/1/12 ........................... 1,000,000 AAA 1,031,880
Newton-Wellesley Hospital, Series E, 5.9%, 7/1/11 (c) .................... 3,015,000 AAA 3,224,573
Newton-Wellesley Hospital, Series G, 6%, 7/1/12 (c) ...................... 1,000,000 AAA 1,081,500
North Adams, C06 Series 1996C, 6.625%, 7/1/18 ............................ 1,560,000 BBB 1,636,253
Northeastern University:
Series E, 6.4%, 10/1/07 (c) ............................................. 1,000,000 AAA 1,097,440
Series E, 6.5%, 10/1/12 (c) ............................................. 450,000 AAA 495,842
Partners Healthcare System, Series 1997A, 5.25%, 7/1/13 (c) .............. 2,000,000 AAA 1,993,460
St. Luke's Hospital New Bedford, Series C, Yield Curve Notes, 7.22%,
8/15/10 (c)**** ....................................................... 3,400,000 AAA 3,650,750
South Shore Hospital, 6.5%, 7/1/10 (c) ................................... 2,500,000 AAA 2,729,550
Stonehill College Series E, 6.55%, 7/1/12 (c) ............................ 5,000,000 AAA 5,501,150
Suffolk University, Series 1996 C, 5.65%, 7/1/11 ......................... 1,045,000 AAA 1,092,203
Tufts University Series C, 7.4%, 8/1/18 .................................. 530,000 AAA 554,571
Massachusetts Housing Finance Project Refunding Revenue:
Residential Development Series C, 6.875%, 11/15/11 ....................... 15,250,000 AAA 16,501,263
Series A, 6.3%, 10/1/13 .................................................. 7,000,000 A 7,362,390
Series A, 6.375%, 4/1/21 ................................................. 3,905,000 A 4,088,340
Series B, 6.05%, 12/1/09 (c) ............................................. 3,000,000 AAA 3,064,860
Single-Family Mortgage Revenue, Series 44, 5.9%, 12/1/13 ................. 3,000,000 AA 3,075,240
</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>
Massachusetts Industrial Finance Agency:
Dana Hall School Issue, Series 1997A, 5.7%, 7/1/13 ....................... 1,000,000 BBB 1,022,090
Edgewood Retirement Community, Series A, 9%, 11/15/25 .................... 1,650,000 NR 1,842,522
First Mortgage, Evanswood Bethzatha, Series A, 7.875%, 1/15/20 ........... 1,000,000 NR 1,060,000
College of the Holy Cross:
C06 Series 1996, 5.25%, 3/1/09 (c) ...................................... 1,190,000 AAA 1,222,642
C06 Series 1996, 5.5%, 3/1/16 (c) ....................................... 5,000,000 AAA 5,067,050
Issue II, 6.375%, 11/1/09 ............................................... 1,000,000 A 1,108,500
Massachusetts Biomedial Research Corp.:
Series A, Zero Coupon, 8/1/00 ........................................... 2,860,000 A 2,529,298
Series A, Zero Coupon, 8/1/01 ........................................... 3,650,000 A 3,079,505
Series A, Zero Coupon, 8/1/02 ........................................... 3,650,000 A 2,932,155
Merrimack College:
5%, 7/1/11 (c) .......................................................... 1,490,000 AAA 1,482,565
5%, 7/1/12 (c) .......................................................... 1,560,000 AAA 1,542,247
5%, 7/1/17 (c) .......................................................... 1,000,000 AAA 963,460
Nantucket Electric C06 AMT:
Series 1996, 5.875%, 7/1/17 (c) ......................................... 2,000,000 AAA 2,082,340
Series 1996 A, 5.75%, 7/1/08 (c) ........................................ 1,400,000 AAA 1,486,394
Series 1996 A, 5.75%, 7/1/09 (c) ........................................ 1,400,000 AAA 1,474,480
Pollution Control Revenue:
Boston Edison Company Series A, 5.75%, 2/1/14 ........................... 2,000,000 BBB 2,022,900
Eastern Edison Company Project, 5.875%, 8/1/08 .......................... 4,750,000 BBB 4,816,500
Provider Lease Program Series 1988 A-1, 8.4%, 7/15/08 .................... 1,805,000 NR 1,836,497
Resource Recovery, North Andover Solid Waste, Series A, 6.3%, 7/1/05 ..... 6,500,000 BBB 6,980,675
Revenue:
Babson College, Series A, 5.375%, 10/1/17 ............................... 1,700,000 A 1,688,678
Dexter School Project, 5.4%, 5/1/13 (c) ................................. 1,000,000 AAA 1,011,810
East Boston C06 Series 1996, 7.625%, 7/1/26 ............................. 2,750,000 BB 2,815,945
Solid Waste Disposal, Peabody Monofill Project, 9%, 9/1/05 .............. 2,905,000 NR 3,159,217
Worcester Polytechnical Institute, 5%, 3/1/11 (c) ....................... 1,645,000 AAA 1,647,862
Sturdy Memorial Hospital, 7.9%, 06/1/09 .................................. 1,735,000 BBB 1,845,832
Worcester Polytechnical University:
Series 1997 II, 5.125%, 9/1/11 (c) ...................................... 1,300,000 AAA 1,302,821
Series 1997 II, 5.125%, 9/1/16 (c) ...................................... 2,600,000 AAA 2,551,432
</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>
Massachusetts Municipal Wholesale Electric Company, Power Supply System Revenue:
Series A, 6.75%, 7/1/06 .................................................. 2,855,000 BBB 3,084,942
Series A, 5.1%, 7/1/08 (c) ............................................... 840,000 AAA 865,183
Series A, 5%, 7/1/12 (c) ................................................. 1,000,000 AAA 984,550
Series A, 5%, 7/1/17 (c) ................................................. 3,110,000 AAA 2,977,981
Series B, 6.75%, 7/1/08 .................................................. 9,000,000 BBB 9,740,700
Series B, 4.95%, 7/1/09 (c) .............................................. 1,575,000 AAA 1,566,290
Series C, 6.625%, 7/1/10 ................................................. 1,000,000 BBB 1,072,270
Series C, 6.625%, 7/1/10 (c) ............................................. 3,500,000 AAA 3,861,900
Massachusetts Port Authority Revenue:
Series 1997A, 5.125%, 7/1/16 ............................................. 3,500,000 AA 3,434,795
Tax Exempt Receipts, ETM, Zero Coupon until 7/1/03 then 13%, 7/1/13*** ... 1,000,000 NR 1,003,690
USAir Private Jet, Series 1996A, 5.75%, 9/1/16 (c) ....................... 1,000,000 AAA 1,031,040
Massachusetts Special Obligation:
Series 1996 A, 5.5%, 6/1/11 (c) .......................................... 5,000,000 AAA 5,191,850
Series 1997A, 5%, 6/1/17 ................................................. 5,000,000 AA 4,805,950
Massachusetts Turnpike Authority:
5%, 1/1/11 ............................................................... 3,000,000 A 2,959,740
Series 1997A, 5%, 1/1/10 ................................................. 2,000,000 A 1,988,980
Massachusetts Water Pollution Abatement Trust, Pooled Loan Program:
Series 2, 5.625%, 2/1/10 ................................................. 2,820,000 AAA 2,986,690
Series 2, 5.7%, 2/1/15 ................................................... 1,150,000 AAA 1,206,408
Massachusetts Water Resource Authority:
General Revenue, Series C, 5.25%, 12/1/08 ................................ 2,705,000 A 2,813,849
General Revenue, Series C, 5.25%, 12/1/15 ................................ 4,030,000 A 4,029,678
Series A, 6.5%, 7/15/09 .................................................. 15,000,000 A 17,187,000
Series A, 6.5%, 7/15/19 .................................................. 3,000,000 A 3,461,670
Series B, 6%, 11/1/08 .................................................... 5,785,000 A 6,158,595
Nantucket, MA, General Obligation:
6.8%, 12/1/11 ............................................................ 1,000,000 A 1,115,240
5%, 7/15/17 (c) .......................................................... 2,710,000 AAA 2,610,868
New England Educational Loan Marketing Corporation, Massachusetts Student Loan
Revenue, 5.7%, 7/1/05 .................................................... 6,250,000 AAA 6,483,063
North Attleboro, MA, General Obligation, 5%, 2/15/12 (c) .................. 1,120,000 AAA 1,116,707
Somerville, MA, General Obligation, 5.25%, 2/15/12 (c) .................... 1,180,000 AAA 1,196,083
</TABLE>

The accompanying notes are an integral part of the financial statements.

13 -- Scudder Massachusetts Tax Free Fund
<PAGE>

(a) The cost for federal income tax purposes was $328,365,860. At September
30, 1997, net unrealized appreciation for all securities based on tax cost
was $23,690,693. This consisted of aggregate gross unrealized appreciation
for all securities in which there was an excess of market value over tax
cost of $23,777,424 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$86,731.

(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.

* 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, 1997.

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, 1997 (Unaudited)

<TABLE>
<S> <C>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
Investments, at market (identified cost $328,365,860) ............. $ 352,056,553
Cash .............................................................. 24,025
Receivable for investments sold ................................... 5,259,750
Interest receivable ............................................... 5,315,378
Receivable on Fund shares sold .................................... 75,697
Other assets ...................................................... 6,161
----------------
Total assets ...................................................... 362,737,564
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased ................................. 10,795,150
Payable for Fund shares redeemed .................................. 142,268
Dividends payable ................................................. 565,896
Accrued management fee ............................................ 176,511
Other payables and accrued expenses ............................... 143,375
----------------
Total liabilities ................................................. 11,823,200
--------------------------------------------------------------------------------------------
Net assets, at market value $ 350,914,364
--------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Net unrealized appreciation on investments ........................ 23,690,693
Accumulated net realized loss ..................................... (2,530,418)
Paid-in capital ................................................... 329,754,089
--------------------------------------------------------------------------------------------
Net assets, at market value $ 350,914,364
--------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($350,914,364 / 24,763,624 outstanding shares of beneficial
interest, $.01 par value, unlimited number of shares ----------------
authorized) ..................................................... $14.17
----------------
</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, 1997 (Unaudited)
<TABLE>
<S> <C>
Investment Income
- ------------------------------------------------------------------------------------------------------------------------------
Income:
Interest .......................................................... $ 9,883,419
-----------------
Expenses:
Management fee .................................................... 1,021,561
Services to shareholders .......................................... 145,520
Custodian and accounting fees ..................................... 56,958
Trustees' fees and expenses ....................................... 10,885
Reports to shareholders ........................................... 22,879
Auditing .......................................................... 14,645
Registration fees ................................................. 7,966
Legal ............................................................. 5,244
Other ............................................................. 32,126
-----------------
1,317,784
---------------------------------------------------------------------------------------------
Net investment income 8,565,635
---------------------------------------------------------------------------------------------

Realized and unrealized gain (loss) on investment transactions
- ------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments ....................................................... 1,010,747
Futures ........................................................... (29,483)
-----------------
981,264
-----------------
Net unrealized appreciation during the period on:
Investments ....................................................... 9,948,335
Futures ........................................................... 48,023
-----------------
9,996,358
---------------------------------------------------------------------------------------------
Net gain on investments transactions 10,977,622
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 19,543,257
---------------------------------------------------------------------------------------------
</TABLE>

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 Year
September 30, Ended
1997 March 31,
Increase (Decrease) in Net Assets (Unaudited) 1997
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ...................................... $ 8,565,635 $16,486,395
Net realized gain from investment transactions ............. 981,264 66,607
Net unrealized appreciation on investment transactions
during the period ....................................... 9,996,358 213,202
---------------- ---------------
Net increase in net assets resulting from operations ....... 19,543,257 16,766,204
---------------- ---------------
Distributions to shareholders from net investment income ... (8,565,635) (16,486,395)
---------------- ---------------
Fund share transactions:
Proceeds from shares sold .................................. 34,320,376 61,413,587
Net asset value of shares issued to shareholders in
reinvestment of distributions ........................... 5,058,502 9,637,952
Cost of shares redeemed .................................... (29,284,305) (55,774,105)
---------------- ---------------
Net increase in net assets from Fund share transactions .... 10,094,573 15,277,434
---------------- ---------------
Increase in net assets ..................................... 21,072,195 15,557,243
Net assets at beginning of period .......................... 329,842,169 314,284,926
---------------- ---------------
Net assets at end of period ................................ $350,914,364 $329,842,169
---------------- ---------------
Other Information
- ---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period .................. 24,047,228 22,942,284
---------------- ---------------
Shares sold ................................................ 2,455,409 4,465,949
Shares issued to shareholders in reinvestment of
distributions ........................................... 361,151 700,390
Shares redeemed ............................................ (2,100,164) (4,061,395)
---------------- ---------------
Net increase in Fund shares ................................ 716,396 1,104,944
---------------- ---------------
Shares outstanding at end of period ........................ 24,763,624 24,047,228
---------------- ---------------
</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 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(c)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning ------------------------------------------------------------------------------------------------
of period ............. $13.72 $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 .70 .72 .74 .81 .84 .81 .83 .82 .81 .69
Net realized and unrealized
gain (loss) on
investment
transactions .......... .45 .02 .37 .18 (.33) .96 .46 .19 .13 .22 .21
Total from investment ------------------------------------------------------------------------------------------------
operations ............ .80 .72 1.09 .92 .48 1.80 1.27 1.02 .95 1.03 .90
------------------------------------------------------------------------------------------------
Less distributions:
From net investment
income ................ (.35) (.70) (.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) (.70) (.72) (.75) (.93) (1.00) (.90) (.83) (.93) (1.08) (.62)
Net asset value, end of ------------------------------------------------------------------------------------------------
period ................ $14.17 $13.72 $13.70 $13.33 $13.16 $13.61 $12.81 $12.44 $12.25 $12.23 $12.28
------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) (b) ..... 5.90** 5.39 8.28 7.37 3.37 14.59 10.46 8.60 7.89 9.50 7.73**
Ratios and Supplemental Data
Net assets, end of period
($ millions) .......... 351 330 314 296 332 267 120 67 46 31 16
Ratio of operating
expenses, net to average
daily net assets (%)... .77* .76 .75 .47 .07 -- .48 .60 .60 .51 .50*
Ratio of operating
expenses before expense
reductions, to average
daily net assets (%)... .77* .76 .76 .77 .77 .83 .93 1.05 1.16 1.20 2.25*
Ratio of net investment
income to average daily
net assets (%) ........ 5.03* 5.12 5.23 5.73 5.80 6.36 6.38 6.72 6.60 7.23 7.55*
Portfolio turnover
rate (%) .............. 9.39* 11.51 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 would have been lower had certain expenses not been reduced
through March 31, 1996.
(c) For the period May 28, 1987 (commencement of operations) to March 31, 1988.
* Annualized
** Not annualized

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 other than money market securities
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.
Money market instruments purchased with an original maturity of sixty days or
less are valued at amortized cost.

Futures Contracts. A futures contract is an agreement between a buyer or seller
and an established futures exchange or its clearinghouse in which the buyer or
seller agrees to take or make a delivery of a specific amount of an item at a
specified price on a specific date (settlement date). During the six months
ended September 30, 1997, the Fund purchased interest rate futures to manage the
duration of the portfolio.

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.

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.

19 -- Scudder Massachusetts Tax Free Fund
<PAGE>

At March 31, 1997, the Fund had a net tax basis capital loss carryforward of
approximately $1,420,000 which may be applied against any realized net taxable
capital gains of each succeeding year until fully utilized or until March 31,
2003, ($1,310,000) and March 31, 2005 ($110,000), the respective expiration
dates, whichever occurs first.

In addition, from November 1, 1996 through March 31, 1997, the Fund incurred
approximately $18,000 of realized long-term 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, 1998.

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, 1997, purchases and sales of municipal
securities (excluding short-term investments) aggregated $27,634,538 and
$15,334,995, respectively.

The aggregate face value of future contracts closed during the six months ended
September 30, 1997 was $3,396,773.

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. For the six months ended September 30, 1997, the fee
pursuant to the Advisory Agreement amounted to $1,021,561 of which $176,511 was
unpaid at September 30, 1997.

20 -- Scudder Massachusetts Tax Free Fund
<PAGE>

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 $98,288, of which $16,244 was 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
$30,703, of which $5,301 was 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 $10,885.

21 -- Scudder Massachusetts Tax Free Fund
<PAGE>

This Page
intentionally
left blank.

22 -- Scudder Massachusetts Tax Free Fund
<PAGE>
This Page
intentionally
left blank.

23 -- Scudder Massachusetts 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.

24 -- Scudder Massachusetts 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.

25 -- Scudder Massachusetts 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.

26 -- Scudder Massachusetts 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
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Additional Information on How to Contact Scudder:
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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

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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.
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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>

27 -- 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.

SCUDDER [LOGO]