Scudder
New York
Tax Free Money Fund
Scudder
New York
Tax Free Fund
Semiannual Report
September 30, 1998
Pure No-Load(TM) Funds
For investors seeking triple-tax-free income exempt from New York state and New
York City personal income taxes and regular federal income taxes.
Pure no-load(TM) funds with no commissions to buy, sell, or exchange shares.
SCUDDER (logo)
<PAGE>
Scudder New York Tax Free Money Fund
- --------------------------------------------------------------------------------
Date of Inception: 5/28/87 Total Net Assets as of Ticker Symbol: SCNXX
9/30/98: $85.1 million
- --------------------------------------------------------------------------------
o Scudder New York Tax Free Money Fund offered a seven-day effective yield of
3.20% on September 30, 1998, equivalent to a 5.69% taxable yield for investors
in the top federal and state income tax brackets.
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
BAR CHART TITLE:
7-Day Effective Yield on September 30, 1998
BAR CHART DATA:
-----------------------------------------
Scudder New York Taxable
Tax Free Money Equivalent
Fund Yield
-----------------------------------------
3.20% 5.69%
-----------------------------------------
Table of Contents
4 Letter from the Funds' President 18 Financial Highlights
7 Portfolio Management Discussion 29 Notes to Financial Statements
11 Glossary of Investment Term 33 Investment Products and Services
12 Investment Portfolio 34 Scudder Solutions
15 Financial Statements
2 - Scudder New York Tax Free Money Fund
<PAGE>
Scudder New York Tax Free Fund
- --------------------------------------------------------------------------------
Date of Inception: 7/22/83 Total Net Assets as of Ticker Symbol: SCYTX
9/30/98: $209.6 million
- --------------------------------------------------------------------------------
o Scudder New York Tax Free Fund provided a 3.74% 30-day net annualized SEC
yield on September 30, 1998. For shareholders subject to the 43.74% maximum
combined federal and state income tax rate, the Fund's yield was equal to a
taxable yield of 6.65%. The Fund posted a solid 5.00% total return for its most
recent semiannual period ended September 30, 1998.
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
BAR CHART TITLE:
30-Day Net Annualized Yield on
September 30, 1998
BAR CHART DATA:
---------------------------------
Scudder New Taxable
York Equivalent
Tax Free Fund Yield
---------------------------------
3.74% 6.65%
---------------------------------
Table of Contents
4 Letter from the Funds' President 25 Financial Statements
5 Performance Update 28 Financial Highlights
6 Portfolio Summary 29 Notes to Financial Statements
8 Portfolio Management Discussion 33 Investment Products and Services
11 Glossary of Investment Terms 34 Scudder Solutions
19 Investment Portfolio
3 - Scudder New York Tax Free Fund
<PAGE>
Letter from the Funds' President
Dear Shareholders,
The municipal bond market has made a strong case for portfolio
diversification over the past several months. While volatility swept through
most global markets, including the U.S. stock market, municipal bonds posted
steady gains. We continue to see signs that investors, especially those in
higher tax brackets, are choosing to rebalance their portfolios with municipal
bond investments. Another positive sign for municipal bond investors: As shown
by the graph on page 10 of the Portfolio Management Discussion,
intermediate-term municipals (which make up most of Scudder New York Tax Free
Fund's portfolio) represent their most attractive value versus Treasury bonds in
ten years.
Scudder New York Tax Free Fund's total return over its most recent semiannual
period was 5.00%, outpacing the average performance of its peers as tracked by
Lipper. Scudder New York Tax Free Money Fund posted a 5.69% tax equivalent yield
based on the maximum federal and state tax rates at the close of the period.
For those of you interested in new Scudder funds, we recently introduced two
international funds: Scudder International Growth Fund -- which seeks to invest
in high growth opportunities in both developed and developing markets, and
Scudder International Value Fund -- which seeks to invest in undervalued foreign
securities. Please see pages 33 through 35 for more information on Scudder
products and services.
Please call a Scudder Investor Information representative at 1-800-225-2470
or visit Scudder's Web site at www.scudder.com, if you have questions about your
Fund. Thank you for choosing Scudder New York Tax Free Fund to help meet your
investment needs.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder New York Tax Free Money Fund
Scudder New York Tax Free Fund
4 - Scudder New York Tax Free Money Fund
Scudder New York Tax Free Fund
<PAGE>
Performance Update as of September 30, 1998
- -------------------------------------------
Fund Index Comparisons
- -------------------------------------------
Total Return
- -------------------------------------------
Period Ended Growth of Average
9/30/98 $10,000 Cumulative Annual
- -------------------------------------------
Scudder New York Tax Free Fund
- -------------------------------------------
1 Year $10,882 8.82% 8.82%
5 Year $13,244 32.44% 5.78%
10 Year $22,071 120.71% 8.24%
- -------------------------------------------
Lehman Brothers Municipal Bond Index
- -------------------------------------------
1 Year $10,872 8.72% 8.72%
5 Year $13,635 36.35% 6.39%
10 Year $22,311 123.11% 8.35%
- -------------------------------------------
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 New York
Tax Free Fund
Year Amount
- ---------------------
'88 $10,000
'89 $10,895
'90 $11,300
'91 $12,984
'92 $14,530
'93 $16,665
'94 $15,850
'95 $17,582
'96 $18,520
'97 $20,283
'98 $22,071
Lehman Brothers Municipal
Bond Index
Year Amount
- ---------------------
'88 $10,000
'89 $10,868
'90 $11,608
'91 $13,138
'92 $14,514
'93 $16,363
'94 $15,964
'95 $17,750
'96 $18,821
'97 $20,522
'98 $22,311
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>
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
--------------------------------------------------------------------------------
Net Asset Value $10.73 $10.36 $11.06 $11.36 $11.60 $10.10 $10.65 $10.68 $11.14 $11.57
Income Dividends $ .71 $ .68 $ .66 $ .64 $ .58 $ .53 $ .52 $ .53 $ .52 $ .51
Capital Gains and
Other Distributions $ -- $ .09 $ .13 $ .32 $ .75 $ .44 $ -- $ -- $ .01 $ .02
Fund Total
Return (%) 8.95 3.72 14.90 11.91 14.69 -4.89 10.92 5.34 9.52 8.82
Index Total
Return (%) 8.68 6.80 13.19 10.45 12.74 -2.44 11.18 6.04 9.04 8.72
</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.
5 - Scudder New York Tax Free Fund
<PAGE>
Portfolio Summary as of September 30, 1998
Diversification
- ---------------
A graph in the form of a pie chart appears here, illustrating the exact data
points in the above table.
Core Cities/Lease 14%
State General Obligation 12%
Hospital/Health 12%
Water/Sewer Revenue 10%
Country General Obligation/Lease 9%
Higher Education 8%
Sales/Special Tax 7%
Other General Obligation/Lease 6%
Pollution Control/Industrial
Development 5%
Miscellaneous Municipal 17%
---------------------------------------
100%
---------------------------------------
The Fund is broadly diversified, with investments in more
than 10 categories of municipal bonds and over 120
individual bond issues.
Quality
- -------
A graph in the form of a pie chart appears here, illustrating the exact data
points in the above table.
AAA 51%
AA 10%
A 21%
BBB 5%
Not Rated 13%
--------------------------------------
100%
--------------------------------------
Weighted average quality: AA
Overall credit quality remains at a high level, with more
than 80% of portfolio securities rated A or better as of
September 30.
Effective Maturity
- ------------------
A graph in the form of a pie chart appears here, illustrating the exact data
points in the above table.
Less than 1 year 3%
1-5 years 4%
5-10 years 53%
10-15 years 24%
Greater than 15 years 16%
--------------------------------------
100%
--------------------------------------
Weighted average effective maturity:
11.0 years
We continue to emphasize noncallable bonds with maturities
of 15 years or less. We are also focusing on 6- to 9-year
bonds, where we believe there is significant capital
appreciation potential should interest rates continue their
recent decline.
For more complete details about the Fund's investment portfolio, see page 19.
6 - Scudder New York Tax Free Fund
<PAGE>
Portfolio Management Discussion
Scudder New York Tax Free Money Fund
Dear Shareholders,
In an environment of declining money market yields, Scudder New York Tax Free
Money Fund maintained a conservative strategy during its most recent semiannual
period. The Fund's 7-day effective yield as of September 30 was 3.20%. For
investors in the highest combined state and federal income tax bracket, the
Fund's yield equaled a 5.69% compounded taxable yield, higher than the 4.98%
average for taxable money funds, according to IBC Financial Data, Inc., an
independent firm that tracks money fund performance.
The six months ended September 30 were marked by a strikingly low supply of
tax-exempt money market securities. As New York's economy has continued to
perform well, despite turbulence in the global financial markets, New York State
authorities and municipalities have reduced their money market security
issuance, choosing instead to take advantage of low interest rates to issue
longer-term bonds. The resulting low level of supply has tended to drive down
prevailing yields on tax-exempt money market securities even further. These
yield levels are almost unprecedented and seem unsustainable on a historical
basis, considering that they are considerably lower than comparable short-term
Treasury securities.
In light of these market conditions, we have taken a "wait and see" strategy: We
have refrained from extending the Fund's average maturity (17 days as of
September 30, 1998) because we felt that yields of longer-term money market
securities were too low to justify incurring the additional risk that comes with
an extended maturity. We continue to invest in tax-free commercial paper and
variable demand notes securities, emphasizing high quality issuers and
guarantors. Variable demand notes are especially useful under current
conditions, giving us the flexibility to extend our average maturity quickly
should yields improve.
Over time, we believe the Federal Reserve will err on the side of easing credit
and lowering short-term interest rates, making the near-term outlook for money
market securities a challenging one. At the same time, however, we believe that
tax-exempt money market yields should eventually rise to resume their typical
relationship to Treasury yields.
Our continuing goal is to provide Scudder New York Tax Free Money Fund
shareholders with a competitive double-tax-free yield by searching for
high-quality, short-term municipal securities while actively managing the Fund's
average maturity. We appreciate your investment with us.
Sincerely,
Your Portfolio Management Team
/s/Frank J. Rachwalski, Jr. /s/Jerri I. Cohen
Frank J. Rachwalski, Jr. Jerri I. Cohen
7 - Scudder New York Tax Free Money Fund
<PAGE>
Portfolio Management Discussion
Scudder New York Tax Free Fund
Dear Shareholders,
Municipal bonds registered gains in the wake of a strong U.S. Treasury bond
rally during Scudder New York Tax Free Fund's most recent semiannual period
ended September 30, 1998. During the six-month period, the Fund posted a solid
5.00% total return, comparing favorably with the 4.49% average return of New
York tax-exempt funds as tracked by Lipper Analytical Services, Inc.
New York Update
The State of New York passed its budget for the 1999 fiscal year on May 1, the
State's fourteenth consecutive late budget. Despite the delay, we believe that
the State's financial position has improved. The State has limited its
expenditure growth while income tax and sales tax collections have led to
repeated operating surpluses. New York State's economy continues to grow at a
modest rate.
The State's unemployment rate in August 1998 was 5.1%, compared with an average
rate of 6.4% in 1997. The business services sector of the State's economy has
been leading job growth, though recent turmoil in the financial markets could
have a negative impact on this sector. Job growth has led to increases in the
State's wealth levels: Personal income was up 5.7% in 1997, and per capita
income was $30,752 in 1997, 20% higher than the national average.
For each of the next five years, the State anticipates that new debt issuance
will exceed scheduled debt retirement by more than $1.5 billion. Due to the size
of the State's budget and its high wealth levels, we believe that its current
and proposed debt burden is high but within the means of the State.
Bonds Provided a Safe Haven
Investors worldwide went in search of a relative "safe haven" in the form of
U.S. Treasury bonds during the period, as a series of dramatic financial crises
rocked the global markets. In the international capital markets, the most
damaging developments were Russia's economic collapse -- including its
short-term debt default and ruble devaluation, Japan's failure to initiate
needed banking reform and climb out of recession, and Brazil's continuing
currency crisis. The Federal Reserve lowered interest rates by one quarter of a
percentage point on September 29 in an attempt to restore order to worldwide
financial markets. Initial reaction from market participants was that the Fed's
action was insufficient, driving even more investors to Treasury bonds. On the
domestic front, the U.S. stock market continually advanced to new highs until
late July, when it succumbed to pressure from overseas, as well as a series of
domestic earnings disappointments. The Dow Jones average declined 16% from its
July 17 all-time high to 7,842 as of September 30. The near collapse of the Long
Term Capital Management hedge fund also contributed to a sharp rise in Treasury
bond prices near the close of the period.
As is typically true during a strong Treasury bond rally, prices of municipal
bonds did not keep up. During the six-month period, 10-year Treasury bond yields
8 - Scudder New York Tax Free Fund
<PAGE>
declined one percentage point and their prices rose 9%. Over the same time
frame, 10-year AAA-rated municipal bond yields declined less than one half of a
percentage point, and their prices rose 3.3%. Two factors were most responsible
for the disparity in performance between the Treasury and municipal markets:
first, the "flight to quality" from stocks, emerging market bonds, and corporate
bonds into Treasuries; second, the heavy supply of new tax-exempt issues from
January through September 1998. Municipal supply is expected to reach
approximately $282 billion in 1998, which would be second only to 1993's total
of $292 billion over the past ten years.
A Slight Shift in Focus
Scudder New York Tax Free Fund seeks to provide investors with a competitive
level of federal and state tax-exempt income as well as the best possible total
return performance. Our long-term investment strategy focuses on four basic
elements: (1) purchasing bonds with effective maturities of 15 years or less;
(2) purchasing noncallable bonds at yields close to those of callable bonds with
comparable maturities; (3) purchasing high-yielding callable bonds, and (4)
diversifying investments based on careful credit selection.
As global events began to indicate a more volatile investment environment during
the period, we took some measures to reduce Scudder New York Tax Free Fund's
level of risk exposure, though our overall emphasis on noncallable bonds with
maturities of 15 years or less remains in place. During the six months ended
September 30, we sold some of the Fund's nonrated and corporate-backed bonds,
and purchased AAA-insured bonds in their place as precautionary measures. By the
close of the period, the Fund had also begun to focus on 6- to 9-year bonds,
where we believe there is significant capital appreciation potential should
interest rates continue their recent decline.
The Fund's 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 New York municipal bonds, including hospital/health
care, water/sewer, and general obligation bonds.
Outlook
There are several factors that -- taken together or separately -- could boost
bond prices over the next several months: First, the Fed may choose to continue
its recent series of interest rate reductions, which could cause short-term as
well as intermediate-term municipal bond yields to decline further. Second, we
view the selling off of leveraged holdings by the large hedge funds that began
in late September as a "wild card" that could continue to drive investors to
"safe haven" fixed income securities, including municipals. Third, we expect
inflation -- at 1.8% as of September 30 -- to remain low and U.S.
economic growth to slow significantly in 1999.
In addition to these positive signs for bonds overall, municipal bonds are
currently attractively valued, as indicated by the fact that the ratio of
municipal yields to Treasury yields on bonds of similar
9 - Scudder New York Tax Free Fund
<PAGE>
THE PRINTED DOCUMENT CONTAINS A LINE CHART HERE
LINE CHART TITLE:
Yields of 10-year AAA-Municipal Bonds Compared With 10-year Treasury Bonds
January 1, 1988 - September 30, 1998
10-year 10-year
AAA-Municipal Bonds Treasury Bonds
------------------- --------------
1/88 6.60% 8.80%
6.70 8.80
6.70 9.21
6.50 8.12
1/90 6.40 7.89
6.60 8.44
6.40 8.09
6.30 8.30
1/92 5.60 6.84
5.55 7.13
5.30 6.68
4.75 5.85
1/94 4.40 5.78
5.50 7.32
5.80 7.81
5.05 6.26
1/96 4.65 5.62
5.15 6.82
4.85 6.34
4.80 6.48
1/98 4.40 5.74
4.40 5.46
9/98 4.00 4.42
(Chart indicates a 0.42% spread between the 10-year Treasury Bonds at 4.42%
(9/98) and the 10-year AAA-Municipal Bonds at 4.00% (9/98).)
CHART CAPTION:
The "spread" between yields of 10-year municipal bonds and 10-year Treasuries is
at its narrowest point in 10 years.
Source: Scudder Kemper Investments, Inc.
------
maturity is by far the highest it has been in 10 years. (Please see the chart
above.) If, as we expect, Treasury yields remain low, the tendency would be for
municipals yields to decline and prices to rise, restoring a more typical
relationship between municipals and Treasuries.
We will continue our overall focus on noncallable municipal bonds with
maturities of 15 years or less as we seek to boost yield and achieve attractive
long-term returns for our investors. In addition, we will attempt to limit
volatility by reducing portfolio risk, and by maintaining a neutral average
maturity and high overall credit quality as we pursue double-tax-free income and
competitive total return for Scudder New York Tax Free Fund shareholders.
Sincerely,
Your Portfolio Management Team
/s/Jeremy L. Ragus /s/Christopher J. Mier
Jeremy L. Ragus Christopher J. Mier
10 - Scudder New York 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 Kemper Investments, Inc.; Barron's Dictionary of
Finance and Investment Terms)
11 - Scudder New York Tax Free Money Fund
Scudder New York Tax Free Fund
<PAGE>
Investment Portfolio as of September 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating(b) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Municipal Investments 100.0%
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
New York
Albany, NY, Industrial Development Authority, Davies Office Refurbishing,
AMT, Series 1997, Weekly Demand Note, 3.95%, 2/1/2017* ...................... 2,300,000 A1 2,300,000
Erie County, NY, Water Authority, Waterworks System Revenue, Weekly Demand
Bonds, 3.3%, 12/1/2016 (c)* ................................................. 2,000,000 A1+ 2,000,000
Franklin County, NY, Industrial Development Agency, Series 1991A, AMT,
Weekly Demand Bond, 4.45%, 7/1/2021* ........................................ 3,000,000 A1 3,000,000
Hempstead, NY, Industrial Development Agency, Trigen-Nassau Energy
Corporation, Series 1998, AMT, Weekly Demand Note, 3.35%, 9/15/2015* ........ 1,000,000 A1+ 1,000,000
Long Island Power Authority, Electric Systems Revenue:
Tax Exempt Commercial Paper:
3.55%, 10/20/1998 .......................................................... 1,000,000 A1+ 1,000,000
3.35%, 10/22/1998 .......................................................... 2,300,000 A1+ 2,300,000
Weekly Demand Note, 3.35%, 5/1/2033* ........................................ 1,000,000 A1+ 1,000,000
Monroe County, NY, Industrial Development Agency, Office Building
Associates, Series 1992, Weekly Demand Note, 3.55%, 10/1/2000* .............. 1,474,000 P1 1,474,000
Nassau County, NY:
Revenue Anticipation Note, Series C, 4%, 4/13/1999 .......................... 1,000,000 SP1 1,002,068
Tax Anticipation Note, Series 1997 C, 4.25%, 12/22/1998 ..................... 1,000,000 SP1 1,000,908
New York City, General Obligation:
Daily Demand Note, 4.25%, 8/15/2021* ........................................ 600,000 A1+ 600,000
Daily Demand Note, 4.25%, 10/1/2021 (c)* .................................... 1,450,000 A1+ 1,450,000
Daily Demand Note, 3.95%, 8/15/2022* ........................................ 4,000,000 A1+ 4,000,000
Daily Demand Note, 4.25%, 10/1/2022 (c)* .................................... 250,000 A1+ 250,000
Tax Exempt Commercial Paper:
3.35%, 10/21/1998 .......................................................... 2,400,000 A1+ 2,400,000
3.4%, 11/13/1998 (c) ....................................................... 1,000,000 A1+ 1,000,000
3.55%, 10/20/1998 .......................................................... 2,000,000 A1+ 2,000,000
New York City, Health and Hospital Corporation Revenue, Series 1997 A,
Weekly Demand Note, 3.35%, 2/15/2026* ....................................... 1,000,000 VMIG1 1,000,000
New York City, Housing Development Corporation, Residential Revenue
Bonds, Montefiore Medical Center, Weekly Demand Note, 3.3%, 5/1/2030* ....... 1,000,000 A1 1,000,000
New York City, Industrial Development Agency, Korean Airlines, Series
1997 A, Weekly Demand Note, 3.5%, 11/1/2024* ................................ 2,000,000 VMIG1 2,000,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 - Scudder New York Tax Free Money Fund
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating(b) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
New York City Municipal Water Finance Authority, Daily Demand Note, 4.15%,
6/15/2025 (c)* .............................................................. 2,800,000 VMIG1 2,800,000
New York State Dormitory Authority, Columbia University:
Series 1997, Tax Exempt Commercial Paper, 3.45%, 10/6/1998 .................. 2,000,000 A1+ 2,000,000
Series 1997, Tax Exempt Commercial Paper, 3.5%, 11/12/1998 .................. 2,000,000 A1+ 2,000,000
New York State Dormitory Authority, Sloan Kettering Cancer Center,
Series 1989 B, Tax Exempt Commercial Paper, 3.45%, 11/13/1998 ............... 3,000,000 A1 3,000,000
New York State Dormitory Authority, Cornell University, Series B, Daily
Demand Note, Series B, 4.1%, 7/1/2025* ...................................... 1,700,000 A1+ 1,700,000
New York State Energy Research and Development Authority:
Gas Facilities Revenue Bonds, Brooklyn Gas Co. Project, Weekly Demand
Note, 3.4%, 12/1/2020 (c)* ................................................. 1,000,000 A1+ 1,000,000
Long Island Lighting, AMT, Series 1997 A,Weekly Demand Note, 3.35%,
12/1/2027* ................................................................. 4,000,000 P1 4,000,000
New York State Electric & Gas, Daily Demand Note, 4.05%, 10/1/2029* ......... 4,000,000 A1+ 4,000,000
Niagara Mohawk Power Company, Daily Demand Note, 4.1%, 3/1/2027* ............ 1,250,000 A1+ 1,250,000
Orange & Rockland Utilities, Weekly Demand Notes, 3.3%, 10/1/2014 (c)* ...... 2,100,000 VMIG1 2,100,000
New York State, Environmental Quality, General Obligation:
Series 1997 A, Tax Exempt Commercial Paper, 3.45%, 10/15/1998 ............... 1,500,000 A1+ 1,500,000
Series 1997 A, Tax Exempt Commercial Paper, 3.6%, 11/9/1998 ................. 3,000,000 A1+ 3,000,000
Series 1998 A, Tax Exempt Commercial Paper, 3.55%, 11/10/1998 ............... 3,000,000 A1+ 3,000,000
New York State, General Obligation, Bond Anticipation Notes:
Series U, Tax Exempt Commercial Paper, 3.55%, 10/19/1998 .................... 1,000,000 P1 1,000,000
Series U, Tax Exempt Commercial Paper, 3.55%, 11/9/1998 ..................... 1,000,000 P1 1,000,000
Series V, Tax Exempt Commercial Paper, 3.5%, 11/12/1998 ..................... 1,000,000 P1 1,000,000
Series V, Tax Exempt Commercial Paper, 3.55%, 11/13/1998 .................... 1,000,000 P1 1,000,000
New York State Housing Finance Agency:
Hospital for Special Surgery, Weekly Demand Bonds, 3.85%, 11/1/2010* ........ 2,110,000 VMIG1 2,110,000
Normandie Court 1, Housing Revenue, Weekly Demand Bond, 3.3%, 5/15/2015* .... 3,900,000 VMIG1 3,900,000
Tribeca Landing Housing, AMT, Series 1997 A, Weekly Demand Note, 3.35%,
11/1/2030* ................................................................. 2,000,000 A1 2,000,000
New York State Job Development Authority:
Series F, Weekly Demand Bond, 3.35%, 3/1/1999* .............................. 495,000 A1+ 495,000
Series A1-42, AMT, Daily Demand Note, 4.2%, 3/1/2005* ....................... 570,000 VMIG1 570,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 - Scudder New York Tax Free Money Fund
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating(b) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Onondaga County, NY, Industrial Development Agency, Southern Container
Corp., Series 1997A, AMT, Weekly Demand Note, 3.95%, 8/1/2007* .............. 1,500,000 SKI 1,500,000
Power Authority of New York, Series 1, Tax Exempt Commercial Paper:
3.45%, 10/7/1998 ............................................................ 2,000,000 P1 2,000,000
3.5%, 10/14/1998 ............................................................ 1,000,000 P1 1,000,000
3.5%, 10/15/1998 ............................................................ 1,000,000 P1 1,000,000
Schenectady County, NY, Industrial Development Revenue, Scotia Industrial
Park Project, Weekly Demand Bonds, 3.6%, 6/1/2009* .......................... 1,970,000 P1 1,970,000
- ------------------------------------------------------------------------------------------------------------------------------
Total Municipal Investments (Cost $83,671,976) 83,671,976
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $83,671,976) (a) 83,671,976
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The cost for federal income tax purposes was $83,671,976.
(b) All of the securities held have been determined to be of appropriate
credit quality as required by the Fund's investment objectives.
Credit ratings shown are assigned by either Standard & Poor's
Ratings Group, Moody's Investors Service, Inc. or Fitch Investors
Service, Inc. Securities rated by Scudder Kemper Investments, Inc.
(SKI) have been determined by the Adviser to be of comparable
quality to rated eligible securities.
(c) Bond is insured by one of these companies: AMBAC, FGIC, FSA or MBIA.
* Floating rate and monthly, weekly, or daily demand notes are
securities whose yields vary with a designated market index or
market rate, such as the coupon-equivalent of the Treasury bill
rate. Variable rate demand notes are securities whose yields are
periodically reset at levels that are generally comparable to
tax-exempt commercial paper. These securities are payable on demand
within seven calendar days and normally incorporate an irrevocable
letter of credit from a major bank. These notes are carried, for
purposes of calculating average weighted maturity, at the longer of
the period remaining until the next rate change or to the extent of
the demand period.
AMT: Alternative minimum tax
The accompanying notes are an integral part of the financial statements.
14 - Scudder New York Tax Free Money Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of September 30, 1998 (Unaudited)
<TABLE>
<S> <C>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
Investments, at value (identified cost $83,671,976) .................... $ 83,671,976
Cash ................................................................... 451,377
Receivable for investments sold ........................................ 25,000
Interest receivable .................................................... 320,338
Receivable for Fund shares sold ........................................ 835,708
Other assets ........................................................... 1,167
----------------
Total assets ........................................................... 85,305,566
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Payable for Fund shares redeemed ....................................... 131,445
Dividends payable ...................................................... 19,729
Accrued management fee ................................................. 22,753
Other payables and accrued expenses .................................... 16,747
----------------
Total liabilities ...................................................... 190,674
--------------------------------------------------------------------------------------------
Net assets, at value $ 85,114,892
--------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Accumulated net realized gain (loss) ................................... (52,500)
Paid-in capital ........................................................ 85,167,392
--------------------------------------------------------------------------------------------
Net assets, at value $ 85,114,892
--------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($85,114,892/85,118,600 outstanding shares of beneficial ----------------
interest, $.01 par value, unlimited number of shares authorized) .... $1.00
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 - Scudder New York Tax Free Money Fund
<PAGE>
Statement of Operations
six months ended September 30, 1998 (Unaudited)
<TABLE>
<S> <C>
Investment Income
- ----------------------------------------------------------------------------------------------------------------------------
Income:
Interest ............................................................... $ 1,564,987
----------------
Expenses:
Management fee ......................................................... 220,785
Services to shareholders ............................................... 35,538
Custodian and accounting fees .......................................... 20,160
Trustees' fees and expenses ............................................ 7,641
Auditing ............................................................... 12,225
Reports to shareholders ................................................ 5,178
Legal .................................................................. 2,502
Registration fees ...................................................... 3,198
Other .................................................................. 3,511
----------------
Total expenses before reductions ....................................... 310,738
Expense reductions ..................................................... (45,796)
----------------
Expenses, net .......................................................... 264,942
--------------------------------------------------------------------------------------------
Net investment income 1,300,045
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 1,300,045
--------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 - Scudder New York Tax Free Money Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months
Ended September
30, 1998 Year Ended
Increase (Decrease) in Net Assets (Unaudited) March 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ................................. $ 1,300,045 $ 2,032,129
---------------- ----------------
Distributions to shareholders from net investment
income ............................................ (1,300,045) (2,032,129)
---------------- ----------------
Fund share transactions at net asset value of $1.00
per share:
Shares sold ........................................... 94,383,920 133,210,045
Net asset value of shares issued to shareholders in
reinvestment of distributions ..................... 1,122,266 1,770,083
Shares redeemed ....................................... (102,905,334) (102,004,740)
---------------- ----------------
Net increase (decrease) in net assets from Fund
share transactions ................................ (7,399,148) 32,975,388
---------------- ----------------
Increase (decrease) in net assets ..................... (7,399,148) 32,975,388
Net assets at beginning of period ..................... 92,514,040 59,538,652
Net assets at end of period ........................... $85,114,892 $92,514,040
</TABLE>
The accompanying notes are an integral part of the financial statements.
17 - Scudder New York Tax Free Money 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, 1998 Years Ended March 31,
(Unaudited) 1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------
Net asset value, beginning of period ........... $1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------------------------------------------------------------------------
Net investment income .......................... .015 .030 .028 .031 .025 .017
Distributions from net investment income ....... (.015) (.030) (.028) (.031) (.025) (.017)
---------------------------------------------------------------------------
Net asset value, end of period ................. $1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) (a) ........................... 1.48** 3.06 2.85 3.18 2.57 1.75
Ratios and Supplemental Data
Net assets, end of period ($ millions) ......... 85 93 60 58 55 47
Ratio of operating expenses, net to average
daily net assets (%) ......................... .60* .60 .60 .60 .60 .60
Ratio of operating expenses before expense
reductions, to average daily net assets (%) .. .70* .78 .85 .86 .89 .97
Ratio of net investment income to average
daily net assets (%) ......................... 2.94* 3.00 2.81 3.13 2.56 1.73
</TABLE>
(a) Total returns would have been lower had certain expenses not been reduced.
* Annualized
** Not annualized
The accompanying notes are an integral part of the financial statements.
18 - Scudder New York Tax Free Money Fund
<PAGE>
Investment Portfolio as of September 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating (b) Value ($)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Short-Term Municipal Investments 1.2%
- --------------------------------------------------------------------------------------------------------------------------------
New York
New York State Energy Research and Development Authority, PCR, Niagara
Mohawk Company, 1985 Series B, Daily Demand Note, 4.1%, 12/1/2025* -------------
(Cost $2,400,000) ............................................................. 2,400,000 AA 2,400,000
-------------
Long-Term Municipal Investments 98.8%
- --------------------------------------------------------------------------------------------------------------------------------
New York
34th Street Partnership Inc., NY, Capital Improvement, 5.5%, 1/1/2014 .......... 1,900,000 A 1,963,707
Albany County Airport Revenue:
Series 1997, 5.375%, 12/15/2017 (c) ........................................... 1,000,000 AAA 1,043,150
Series 1997, 5.5%, 12/15/2019 (c) ............................................. 1,000,000 AAA 1,055,610
Albany, NY, General Obligation, 7%, 1/15/2008 (c) .............................. 485,000 AAA 514,014
Babylon, NY, General Obligation:
Series 1998 A, Zero Coupon, 8/1/2006 (c) ...................................... 1,045,000 AAA 765,003
Series 1998 A, Zero Coupon, 8/1/2007 (c) ...................................... 735,000 AAA 514,838
Canandaigua, NY, School District, General Obligation:
Series 1991, 6.4%, 6/1/2008 (c) ............................................... 500,000 AAA 591,445
Series 1991, 6.5%, 6/1/2011 (c) ............................................... 550,000 AAA 666,006
Chautauqua County, NY:
7.3%, 4/1/2008 (c) ............................................................ 575,000 AAA 718,819
7.3%, 4/1/2009 (c) ............................................................ 575,000 AAA 727,030
Series 1990, 7.3%, 4/1/2007 (c) ............................................... 465,000 AAA 571,555
Series 1990, 6.4%, 9/15/2008 (c) .............................................. 520,000 AAA 617,438
Dutchess County, NY, Resource Agency Recovery, Solid Waste Management,
Series 1990 A, 7.5%, 1/1/2009 (c) ............................................. 1,000,000 AAA 1,067,300
Erie County, New York, Public Improvement General Obligation Unlimited,
Series 1992, 6.125%, 1/15/2012 (c) ............................................ 590,000 AAA 691,557
Glen Cove Housing Authority, Senior Living Facility, The Mayfair at Glen
Cove, AMT, Series 1996, 8.25%, 10/1/2026 ...................................... 1,500,000 SKI 1,691,790
Inverse Variable Rate Certificate Trust, Metropolitan Transit Authority,
Series 1993 B, 5.66%, 6/30/2002 (c)** ......................................... 8,000,000 SKI 9,000,000
Islip, New York Community Development Agency, New York Institute of
Technology, Series 1996, 7.5%, 3/1/2026 ....................................... 4,000,000 SKI 4,472,800
Jamestown, New York, General Obligation:
Series 1991 A, 7%, 3/15/2007 (c) .............................................. 725,000 AAA 875,133
Series 1991 A, 7%, 3/15/2008 (c) .............................................. 600,000 AAA 735,798
</TABLE>
The accompanying notes are an integral part of the financial statements.
19 - Scudder New York Tax Free Fund
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating (b) Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Long Island, NY, Power Authority Electric System:
Series 1998 A, Zero Coupon, 12/1/2015 (c) .................................... 4,800,000 AAA 2,133,072
Series 1998 A, Zero Coupon, 12/1/2016 (c) .................................... 3,500,000 AAA 1,470,525
Metropolitan Transportation Authority, New York Dedicated Tax Fund,
Series 1998 A, 4.75%, 4/1/2028 (c) ........................................... 3,300,000 AAA 3,233,274
Monroe County, NY, General Obligation, Unlimited:
6%, 6/1/2006 ................................................................. 500,000 AA 566,870
Series 1996, 6%, 3/1/2013 .................................................... 1,050,000 AA 1,220,583
Series 1996, 6%, 3/1/2014 .................................................... 1,040,000 AA 1,207,024
Series 1996, 6%, 3/1/2017 .................................................... 1,410,000 AA 1,641,832
Nassau County, NY, General Obligation:
Series 1997 A, 6%, 7/1/2011 (c) .............................................. 1,000,000 AAA 1,153,750
Series 1997 A, 6%, 7/1/2011 (c) .............................................. 780,000 AAA 903,232
Nassau County, NY, General Obligation Refunding, Combined Sewer Districts,
Series 1993 G, 5.4%, 1/15/2010 (c) ........................................... 1,655,000 AAA 1,817,935
New York City, Industrial Development Agency, Civil Facility Revenue, YMCA
Greater New York Project:
Series 1997, 5.8%, 8/1/2016 ................................................. 1,000,000 BBB 1,071,610
Series 1997, 5.85%, 8/1/2008 ................................................ 600,000 BBB 658,266
Series 1997, 6%, 8/1/2006 ................................................... 580,000 BBB 638,487
New York City, Industrial Development Agency, Japan Air Lines, Series
1996, AMT, 6%, 11/1/2015 (c) ................................................ 1,000,000 AAA 1,090,380
New York City, NY, General Obligation:
Series 1991 B, 7.5%, 2/1/2005 ................................................ 1,935,000 AAA 2,165,323
Series 1996 A, 7%, 8/1/2005 .................................................. 5,000,000 BBB 5,843,500
Series 1996 A, 7%, 8/1/2006 .................................................. 5,000,000 BBB 5,922,550
Series 1996 A, 6.25%, 8/1/2009 ............................................... 5,175,000 BBB 5,899,293
Series 1997 I, 6%, 4/15/2009 ................................................. 2,000,000 AAA 2,238,020
Series B, 7.5%, 2/1/2005 ..................................................... 425,000 AAA 480,573
Series B, 8.25%, 6/1/2006 .................................................... 2,750,000 BBB 3,466,788
Series B, 7.25%, 8/15/2007 ................................................... 2,250,000 BBB 2,738,048
Series B1, Prerefunded 8/15/04 at 101, 7.3%, 8/15/2010 (d) ................... 45,000 AAA 53,477
Series E, 8%, 8/1/2005 (c) ................................................... 330,000 AAA 408,467
</TABLE>
The accompanying notes are an integral part of the financial statements.
20 - Scudder New York Tax Free Fund
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating (b) Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
New York City, NY, Industrial Development Agency, Civil Facilities, USTA
National Tennis Center:
6.1%, 11/15/2004 (c) ........................................................ 1,215,000 AAA 1,359,050
6.25%, 11/15/2006 (c) ....................................................... 3,000,000 AAA 3,403,380
New York City, NY, Transitional Finance Authority, Revenue Bond, Future
Tax Secured, Series 1998 B, 4.75%, 11/15/2023 ................................ 6,905,000 AA 6,755,921
New York Environmental Facilities Corporation, Clean Water and Drinking
Revolving Funds:
Series 1998 F, 5.25%, 6/15/2013 ............................................. 2,500,000 AA 2,658,150
Series 1998 F, 5.25%, 6/15/2014 ............................................. 2,500,000 AA 2,642,000
New York, Revenue Bonds, Urban Development Corporation, Correctional
Facilities Service Contract 1998 A, 5%, 1/1/2028 ............................. 1,000,000 BBB 986,300
New York State Dormitory Authority:
City University System Series 1995 A, 5.625%, 7/1/2016 (c) ................... 1,100,000 AAA 1,234,266
College and University Pooled Capital Program, 7.8%, 12/1/2005 (c) ........... 2,805,000 AAA 2,877,902
Columbia University, NY, Revenue, 6%, 7/1/2010 ............................... 1,000,000 BBB 1,114,830
Jewish Medical Center, Series 1998, 5.25%, 7/1/2011 (c) ...................... 2,000,000 AAA 2,123,120
Lease Revenue, Municipal Health Facilities
Series 1998 A, 5.375%, 5/15/2009 (c) ........................................ 440,000 AAA 479,134
Series 1998 A, 5.375%, 5/15/2010 (c) ........................................ 465,000 AAA 504,060
Series 1998 A, 4.75%, 5/15/2024 (c) ......................................... 4,825,000 AAA 4,675,280
Mental Health Services Facilities:
Series 1997 B, 5.625%, 2/15/2021 (c) ........................................ 500,000 AAA 534,215
Series 1998 D, 5.25%, 8/15/2013 (c) ......................................... 2,400,000 AAA 2,528,112
Nyack Hospital:
Series 1996, 6%, 7/1/2006 ................................................... 1,000,000 NR 1,101,990
Series 1996, 6.25%, 7/1/2013 ................................................ 500,000 NR 542,325
Pace University:
Series 1997, 6.5%, 7/1/2008 (c) ............................................. 1,360,000 AAA 1,615,286
Series 1997, 6.5%, 7/1/2009 (c) ............................................. 555,000 AAA 666,627
Revenue Federal Housing Authority, Hospital, New York and Presbyterian,
Series 1998, 4.75%, 8/1/2027 (c) .......................................... 5,975,000 AAA 5,801,068
State University Series 1993 A, 5.875%, 5/15/2011 (c) ........................ 380,000 AAA 436,616
</TABLE>
The accompanying notes are an integral part of the financial statements.
21 - Scudder New York Tax Free Fund
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating (b) Value ($)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
New York State Dormitory Authority Revenue:
5.75%, 7/1/2009 .............................................................. 1,000,000 AAA 1,133,860
6.5%, 2/15/2011 .............................................................. 1,000,000 BBB 1,182,900
Columbia University, 5%, 7/1/2015 ............................................ 2,500,000 AA 2,513,550
Mental Health Services Facilities Improvement:
Series 1996 B, 6.5%, 2/15/2010 .............................................. 1,500,000 BBB 1,766,175
Series 1996 B, 6%, 2/15/2012 ................................................ 2,500,000 BBB 2,849,275
Montefiore Medical Center:
Series 1996, 6%, 8/1/2008 (c) ............................................... 2,000,000 AAA 2,294,460
Series 1996, 6%, 2/1/2009 (c) ............................................... 2,000,000 AAA 2,301,020
Mt. Sinai School of Medicine, Series B, 5.7%, 7/1/2011 (c) ................... 1,825,000 AAA 2,069,824
State University Educational Facility, Series A, 5.875%, 5/15/2011 ........... 2,250,000 BBB 2,559,353
Upstate Community College, 5.8%, 7/1/2006 .................................... 1,075,000 BBB 1,189,230
New York State Environmental Facilities Corporation:
State Water Revolving Fund, Series D, 6.9%, 5/15/2015 ........................ 1,325,000 AAA 1,543,956
Special Obligation Revenue, Riverbank State Park:
Series 1996, 6.25%, 4/1/2007 (c) ............................................ 2,055,000 AAA 2,375,888
Series 1996, 6.25%, 4/1/2008 (c) ............................................ 2,185,000 AAA 2,544,170
New York State, General Obligation, Series 1998 F, 5.25%, 9/15/2013 ........... 1,000,000 A 1,064,400
New York State Health Facilities Authority, 6.375%, 11/1/2004 ................. 1,500,000 BBB 1,685,955
New York State Local Government Assistance Corporation, Series 1993 E,
5.25%, 4/1/2016 (c) .......................................................... 1,185,000 AAA 1,270,984
New York State Mortgage Agency, Revenue, AMT, Series 1994, 6.8%, 10/1/2005 .... 1,000,000 AA 1,079,410
New York State Throughway Authority General Revenue, Capital Appreciation
Special Obligation, Series 1991 A, 1/1/2006 .................................. 2,905,000 SKI 2,123,148
New York State Urban Development Corp.:
Series 1996 A, 6.25%, 4/1/2005 (c) ........................................... 1,375,000 AAA 1,553,970
State Facilities Series 1995, 5.7%, 4/1/2009 (c) ............................. 4,250,000 AAA 4,779,210
New York State Urban Development Corp. Revenue, Correctional Capital
Facilities:
NC Series 95, 5.375%, 1/1/2015 (c) ........................................... 2,000,000 AAA 2,115,580
Series 1994 A, 5.5%, 1/1/2014 (c) ............................................ 2,000,000 AAA 2,202,540
New York Triborough Bridge and Tunnel Authority, Series 1998 A, 5.25%,
1/1/2013 (c) ................................................................. 1,500,000 AAA 1,593,030
Niagara County, NY, General Obligation, 7.1%, 2/15/2011 (c) ................... 500,000 AAA 632,015
</TABLE>
The accompanying notes are an integral part of the financial statements.
22 - Scudder New York Tax Free Fund
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating (b) Value ($)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Niagara Falls, NY, Water Treatment Plant, Subject to AMT:
7%, 11/1/2003 (c) ............................................................ 2,260,000 AAA 2,576,942
8.5%, 11/1/2005 (c) .......................................................... 2,140,000 AAA 2,713,113
8.5%, 11/1/2006 (c) .......................................................... 1,240,000 AAA 1,602,799
Oneida-Herkimer, NY, Solid Waste Management Authority:
Series 1998, 5.5%, 4/1/2013 (c) .............................................. 500,000 AAA 550,030
Series 1998, 5.5%, 4/1/2014 (c) .............................................. 1,000,000 AAA 1,097,810
Orange County, NY, Industrial Development Agency, The Glen Arden Project:
5.2%, 1/1/2005 ............................................................... 200,000 NR 202,730
5.3%, 1/1/2006 ............................................................... 200,000 NR 203,086
5.35%, 1/1/2007 .............................................................. 200,000 NR 202,766
5.4%, 1/1/2008 ............................................................... 100,000 NR 101,358
5.625%, 1/1/2018 ............................................................. 1,000,000 NR 1,006,320
5.7%, 1/1/2028 ............................................................... 1,250,000 NR 1,260,538
Oswego County, NY, General Obligation Series 1991, 6.7%, 6/15/2012 ............ 1,100,000 A 1,354,419
Port Authority of New York & New Jersey:
Split Amount, Series 1996, 7%, 10/1/2007 ..................................... 3,500,000 NR 3,951,570
Special Obligation Revenue, JFK International Air Terminal:
6.25%, 12/1/2010 (c) ........................................................ 2,500,000 AAA 2,937,200
6.25%, 12/1/2011 (c) ........................................................ 2,500,000 AAA 2,947,375
Shenendehowa Central School District, NY, Clifton Park:
6.85%, 6/15/2008 (c) ......................................................... 350,000 AAA 428,309
6.85%, 6/15/2009 (c) ......................................................... 350,000 AAA 431,347
Suffolk County, NY, General Obligation:
Series 1998, 5.25%, 8/1/2010 (c) ............................................. 1,285,000 AAA 1,393,505
Series 1998, 5.25%, 4/1/2010 (c) ............................................. 1,590,000 AAA 1,727,440
Suffolk County, NY, Industrial Development Agency, Southwest Sewer System,
6%, 2/1/2007 (c) ............................................................. 500,000 AAA 566,850
Troy, New York, Municipal Assistance Corporation:
Series B, Zero Coupon, 1/15/2007 ............................................. 650,000 AAA 465,394
Series B, Zero Coupon, 7/15/2007 ............................................. 650,000 AAA 456,112
Series B, Zero Coupon, 1/15/2008 ............................................. 750,000 AAA 511,118
Series B, Zero Coupon, 1/15/2009 ............................................. 650,000 AAA 420,797
Series B, Zero Coupon, 7/15/2009 ............................................. 350,000 AAA 221,844
Series B, Zero Coupon, 7/15/2010 ............................................. 600,000 AAA 360,390
</TABLE>
The accompanying notes are an integral part of the financial statements.
23 - Scudder New York Tax Free Fund
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating (b) Value ($)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Ulster County, NY, General Obligation:
Series 1998 A, 5%, 1/15/2010 (c) ............................................. 255,000 AAA 271,052
Series 1998 B, 5%, 10/15/2011 (c) ............................................ 275,000 AAA 292,080
Series 1998 B, 5%, 10/15/2012 (c) ............................................ 195,000 AAA 206,525
Series 1998 B, 5%, 10/15/2013 (c) ............................................ 130,000 AAA 137,046
Valley Central School District, Montgomery, NY, 7.15%, 6/15/2008 (c) .......... 625,000 AAA 776,750
Puerto Rico
Puerto Rico Commonwealth, General Obligation, Public Improvement, Series
1998, 4.5%, 7/1/2023 ......................................................... 1,000,000 A 941,560
Virgin Islands
Virgin Islands, General Obligation, Public Finance Authority, Mortgage Fund
Loan Notes, Series 1992 A, 7%, 10/1/2002 ..................................... 500,000 SKI 560,370
Virgin Islands, Public Finance Authority, Subordinate Lien, Series 1998 D,
6%, 10/1/2007 ................................................................ 3,000,000 SKI 3,181,860
Virgin Islands, Special Tax Bonds, Hugo Bonds, 7.75%, 10/1/2006 ............... 1,205,000 SKI 1,324,753
- --------------------------------------------------------------------------------------------------------------------------------
Total Long-Term Municipal Investments (Cost $187,337,567) 204,152,565
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio-- 100.0% (Cost $189,737,567) (a) 206,552,565
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The cost for federal income tax purposes was $189,740,939. At
September 30, 1998, net unrealized appreciation for all securities
based on tax cost was $16,811,626. This consisted of aggregate gross
unrealized appreciation for all securities in which there was an
excess of market value over tax cost of $16,811,626.
(b) All of the securities held have been determined to be of appropriate
credit quality as required by the Fund's investment objectives.
Credit ratings shown are assigned by either Standard & Poor's
Ratings Group, Moody's Investors Service, Inc. or Fitch Investors
Service, Inc. Securities rated by Scudder Kemper Investments (SKI)
and unrated securities (NR) have been determined by the Adviser to
be of comparable quality to rated eligible securities.
(c) Bond is insured by one of these companies: AMBAC, FGIC, FSA, FHA or
MBIA/BIG.
(d) 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 tax-exempt issues and to retire the bonds
in full at the earliest refunding date.
AMT: Alternative minimum tax
* Floating rate and monthly, weekly, or daily demand notes are
securities whose yields vary with a designated market index or
market rate, such as the coupon-equivalent of the Treasury bill
rate. Variable rate demand notes are securities whose yields are
periodically reset at levels that are generally comparable to
tax-exempt commercial paper. These securities are payable on demand
within seven calendar days and normally incorporate an irrevocable
letter of credit from a major bank. These notes are carried, for
purposes of calculating average weighted maturity, at the longer of
the period remaining until the next rate change or to the extent of
the demand period.
** Inverse floating rate notes are instruments whose yields have an
inverse relationship to benchmark interest rates. These securities
are shown at their rate as of September 30, 1998.
The accompanying notes are an integral part of the financial statements.
24 - Scudder New York Tax Free Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of September 30, 1998 (Unaudited)
<TABLE>
<S> <C>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
Investments, at market (identified cost $189,737,567) ................... $ 206,552,565
Cash .................................................................... 208,298
Receivable for investments sold ......................................... 105,000
Interest receivable ..................................................... 3,132,354
Receivable for Fund shares sold ......................................... 109,491
Other assets ............................................................ 3,883
----------------
Total assets ............................................................ 210,111,591
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Dividends payable ....................................................... 246,117
Payable for Fund shares redeemed ........................................ 89,311
Accrued management fee .................................................. 115,030
Other payables and accrued expenses ..................................... 45,171
----------------
Total liabilities ....................................................... 495,629
---------------------------------------------------------------------------------------------
Net assets, at market value $ 209,615,962
---------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Unrealized appreciation (depreciation) on investments ................... 16,814,998
Accumulated net realized gain (loss) .................................... (4,439,012)
Paid-in capital ......................................................... 197,239,976
---------------------------------------------------------------------------------------------
Net assets, at market value $ 209,615,962
---------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($209,615,962 /18,110,152 outstanding shares of beneficial ----------------
interest, $.01 par value, unlimited number of shares authorized) ..... $11.57
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
25 - Scudder New York Tax Free Fund
<PAGE>
Statement of Operations
six months ended September 30, 1998 (Unaudited)
<TABLE>
<S> <C>
Investment Income
- ----------------------------------------------------------------------------------------------------------------------------
Income:
Interest ............................................................... $ 5,328,271
----------------
Expenses:
Management fee ......................................................... 625,837
Services to shareholders ............................................... 80,886
Custodian and accounting fees .......................................... 45,131
Trustees' fees and expenses ............................................ 18,818
Auditing ............................................................... 18,072
Reports to shareholders ................................................ 13,284
Legal .................................................................. 2,668
Registration fees ...................................................... 3,660
Other .................................................................. 6,894
----------------
815,250
---------------------------------------------------------------------------------------------
Net investment income 4,513,021
---------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments ............................................................ 2,153,185
Futures ................................................................ 16,930
----------------
2,170,115
Net unrealized appreciation (depreciation) during the period on
investments .......................................................... 3,317,796
---------------------------------------------------------------------------------------------
Net gain (loss) on investments 5,487,911
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 10,000,932
---------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
26 - Scudder New York Tax Free Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months
Ended September
30, 1998 Year Ended
Increase (Decrease) in Net Assets (Unaudited) March 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ................................ $ 4,513,021 $ 8,735,659
Net realized gain (loss) from investment
transactions ....................................... 2,170,115 653,107
Net unrealized appreciation (depreciation) on
investment transactions ............................ 3,317,796 10,291,177
---------------- ----------------
Net increase (decrease) in net assets resulting
from operations .................................... 10,000,932 19,679,943
---------------- ----------------
Distributions to shareholders from net investment
income ............................................. (4,513,021) (8,735,659)
---------------- ----------------
Distributions to shareholders from net realized
gains .............................................. -- (254,878)
---------------- ----------------
Fund share transactions:
Proceeds from shares sold ............................ 27,863,308 47,326,586
Net asset value of shares issued to shareholders
in reinvestment of distributions ................... 2,976,049 5,891,191
Cost of shares redeemed .............................. (22,442,702) (48,822,944)
---------------- ----------------
Net increase (decrease) in net assets from Fund
share transactions ................................. 8,396,655 4,394,833
---------------- ----------------
Increase (decrease) in net assets .................... 13,884,566 15,084,239
Net assets at beginning of period .................... 195,731,396 180,647,157
---------------- ----------------
Net assets at end of period .......................... $ 209,615,962 $ 195,731,396
---------------- ----------------
Other Information
- ----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period ............ 17,368,966 16,986,861
---------------- ----------------
Shares sold .......................................... 2,465,331 4,258,999
Shares issued to shareholders in reinvestment of
distributions ...................................... 262,535 530,284
Shares redeemed ...................................... (1,986,680) (4,407,178)
---------------- ----------------
Net increase (decrease) in Fund shares ............... 741,186 382,105
---------------- ----------------
Shares outstanding at end of period .................. 18,110,152 17,368,966
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
27 - Scudder New York 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, 1998 Years Ended March 31,
(Unaudited) 1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------
Net asset value, beginning of period ........... $11.27 $ 10.63 $ 10.67 $ 10.38 $ 10.32 $ 11.40
--------------------------------------------------------------------------
Income from investment operations:
Net investment income .......................... .26 .51 .53 .53 .52 .54
Net realized and unrealized gain (loss) on
investment transactions ...................... .30 .66 (.03) .29 .11 (.35)
--------------------------------------------------------------------------
Total from investment operations ............... .56 1.17 .50 .82 .63 .19
--------------------------------------------------------------------------
Less distributions:
From net investment income ..................... (.26) (.51) (.53) (.53) (.52) (.54)
From net realized gains ........................ -- (.02) (.01) -- -- (.67)
In excess of net realized gains ................ -- -- -- -- (.05) (.06)
--------------------------------------------------------------------------
Total distributions ............................ (.26) (.53) (.54) (.53) (.57) (1.27)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Net asset value, end of period ................. $11.57 $ 11.27 $ 10.63 $ 10.67 $ 10.38 $ 10.32
--------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) ............................... 5.00** 11.20 4.76 7.95 6.39 1.31
Ratios and Supplemental Data
Net assets, end of period ($ millions) ......... 210 196 181 192 194 207
Ratio of operating expenses to average daily
net assets (%) ............................... .81* .83 .83 .82 .82 .82
Ratio of net investment income to average
daily net assets (%) ......................... 4.51* 4.65 4.95 4.91 5.13 4.80
Portfolio turnover rate (%) .................... 65.3* 28.8 71.0 80.5 83.8 158.0
</TABLE>
* Annualized
** Not annualized
The accompanying notes are an integral part of the financial statements.
28 - Scudder New York Tax Free Fund
<PAGE>
Notes to Financial Statements (Unaudited)
A. Significant Accounting Policies
Scudder New York Tax Free Money Fund ("Tax Free Money Fund"), a nondiversified
fund, and New York Tax Free Fund ("Tax Free Fund"), a diversified fund, are each
a series of Scudder State Tax Free Trust (the "Trust") which is organized as a
Massachusetts business trust and registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company.
The Funds' financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Funds in the
preparation of their financial statements.
Security Valuation. Tax Free Money Fund values all portfolio securities
utilizing the amortized cost method permitted in accordance with Rule 2a-7 under
the 1940 Act and pursuant to which Tax Free Money Fund must adhere to certain
conditions. Under this method, which does not take into account unrealized gains
and losses on securities, an instrument is initially valued at its cost and
thereafter assumes a constant accretion/amortization to maturity of any
discount/premium.
Tax Free Fund's portfolio debt securities other than short-term investments with
an original maturity over sixty days are valued by pricing agents approved by
the Officers of the Fund, whose 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 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, 1998, the Tax Free Fund purchased interest rate futures to
manage the duration of the portfolio and sold interest rate futures to hedge
against declines in the value of portfolio securities.
Upon entering into a futures contract, the Tax Free Fund is required to deposit
with a financial intermediary an amount ("initial margin") equal to a certain
percentage of the face value indicated in the futures contract. Subsequent
payments ("variation margin") are made or received by the Tax Free Fund each
day, dependent on the daily fluctuations in the value of the underlying
security, and are recorded for financial reporting purposes as unrealized gains
or losses by the Tax Free Fund. When entering into a closing transaction, the
Tax Free Fund will realize a gain or loss equal to the difference between the
value of the futures contract to sell and the futures contract to buy. Futures
contracts are valued at the most recent settlement price.
Certain risks may arise upon entering into futures contracts including the risk
that an illiquid secondary market will limit the Tax Free Fund's ability to
close out a futures contract prior to the settlement date and that a change in
the value of a futures contract may not correlate exactly with changes in the
value of the securities or currencies hedged. When utilizing futures contracts
to hedge, the Tax Free Fund gives up the opportunity to profit from favorable
price movements in the hedged positions during the term of the contract.
Options. An option contract is a contract in which the writer of the option
grants the buyer of the option the right to purchase from (call option), or sell
to (put option), the writer a designated instrument at a specified price within
a specified period of
29 - Scudder New York Tax Free Money Fund
Scudder New York Tax Free Fund
<PAGE>
time. Certain options, including options on indices, will require cash
settlement by the Tax Free Fund if the option is exercised. During the six
months ended September 30, 1998, the Tax Free Fund purchased put options on
interest rate futures as a hedge against potential adverse price movements in
the value of portfolio assets and purchased call options on interest rate
futures to manage the duration of the portfolio.
If the Tax Free Fund writes an option and the option expires unexercised, the
Tax Free Fund will realize income, in the form of a capital gain, to the extent
of the amount received for the option (the "premium"). If the Tax Free Fund
elects to close out the option it would recognize a gain or loss based on the
difference between the cost of closing the option and the initial premium
received. If the Tax Free Fund purchased an option and allows the option to
expire it would realize a loss to the extent of the premium paid. If the Tax
Free Fund elects to close out the option it would recognize a gain or loss equal
to the difference between the cost of acquiring the option and the amount
realized upon the sale of the option.
The gain or loss recognized by the Tax Free Fund upon the exercise of a written
call or purchased put option is adjusted for the amount of option premium. If a
written put or purchased call option is exercised the Tax Free Fund's cost basis
of the acquired security or currency would be the exercise price adjusted for
the amount of the option premium.
The liability representing the Tax Free Fund's obligation under an exchange
traded written option or investment in a purchased option is valued at the last
sale price or, in the absence of a sale, the mean between the closing bid and
asked price or at the most recent asked price (bid for purchased options) if no
bid and asked price are available. Over-the-counter written or purchased options
are valued using dealer supplied quotations.
When the Tax Free Fund writes a covered call option, the Tax Free Fund foregoes,
in exchange for the premium, the opportunity to profit during the option period
from an increase in the market value of the underlying security or currency
above the exercise price. When the Tax Free Fund writes a put option it accepts
the risk of a decline in the market value of the underlying security or currency
below the exercise price. Over-the-counter options have the risk of the
potential inability of counterparties to meet the terms of their contracts. The
Tax Free Fund's maximum exposure to purchased options is limited to the premium
initially paid. In addition, certain risks may arise upon entering into option
contracts including the risk that an illiquid secondary market will limit the
Tax Free Fund's ability to close out an option contract prior to the expiration
date and, that a change in the value of the option contract may not correlate
exactly with changes in the value of the securities or currencies hedged.
Amortization and Accretion. All premiums and original issue discounts are
amortized/accreted for both tax and financial reporting purposes.
Federal Income Taxes. The Funds' policy is to comply with the requirements of
the Internal Revenue Code of 1986, as amended, which are applicable to regulated
investment companies and to distribute all of their taxable and tax-exempt
income to their shareholders. Accordingly, the Funds paid no federal income
taxes and no provisions for federal income taxes were required.
As of March 31, 1998, the Tax Free Money Fund had a net tax basis capital loss
carryforward of approximately $52,500, which may be applied against any realized
net taxable capital gains of each succeeding year until full utilized or until
March 31, 2000 ($800), March 31, 2001 ($1,700), March 31, 2002 ($3,500), March
31, 2003 ($43,200) and March 31, 2004 ($3,300), the respective expiration dates,
whichever occurs first.
30 - Scudder New York Tax Free Money Fund
Scudder New York Tax Free Fund
<PAGE>
As of March 31, 1998, the Tax Free Fund had a net tax basis capital loss
carryforward of approximately $5,700,000 which may be applied against any
realized net taxable capital gains of each succeeding year until fully utilized
or until March 31, 2003 ($3,320,000) and March 31, 2004 ($2,380,000), the
respective expiration dates, whichever occurs first.
Distribution of Income and Gains. All of the net investment income of the Funds
is declared as dividends to shareholders of record as of the close of business
each day and is paid to shareholders monthly. During any particular year, net
realized gains from investment transactions, in excess of available capital loss
carryforwards, would be taxable to the Funds if not distributed and, therefore,
will be distributed to shareholders. An additional distribution may be made to
the extent necessary to avoid the payment of a four percent federal excise tax.
The timing and characterization of certain income and capital gains
distributions are determined in accordance with federal tax regulations which
may differ from generally accepted accounting principles. These differences
primarily relate to investments in options, futures, and certain securities sold
at a loss for the Tax Free Fund. As a result, net investment income and net
realized gain (loss) on investment transactions for a reporting period may
differ significantly from distributions during such period. Accordingly, the
Funds may periodically make reclassifications among certain of their capital
accounts without impacting the net asset value of the Funds.
The Funds use the specific identification method for determining realized gain
or loss on investments for both financial and federal income tax reporting
purposes.
Other. Investment transactions are accounted for on a trade-date basis.
Distributions of net realized gains to shareholders are recorded on the
ex-dividend date. Interest income is accrued pro rata to the earlier of the call
or maturity date.
B. Purchases and Sales of Securities
For the six months ended September 30, 1998, purchases and sales of long-term
municipal securities aggregated $73,291,956 and $63,116,770, respectively, for
Tax Free Fund.
The aggregate face value of futures contracts both opened and closed during the
six months ended September 30, 1998 amounted to $120,436,570 for Tax Free Fund.
C. Related Parties
Each Fund has entered into an Investment Advisory Agreement (each an "Agreement"
and collectively the "Agreements") with Scudder Kemper Investments, Inc. (the
"Adviser"), under which each Fund agrees to pay the Adviser a fee computed and
accrued daily and paid monthly. The annual rate is 0.50% of the average daily
net assets of Tax Free Money Fund and 0.625% of the first $200,000,000 of the
average daily net assets, and 0.60% of such net assets in excess of $200,000,000
for Tax Free Fund. The Adviser determines the securities, instruments, and other
contracts relating to investments to be purchased, sold or entered into by each
Fund. In addition to portfolio management services, the Adviser provides certain
administrative services in accordance with the Agreements. For the six months
ended September 30, 1998, the fee for Tax Free Fund pursuant to the Agreement
amounted to $625,837, which was equivalent to an annual effective rate of 0.62%
of the Fund's average daily net assets.
31 - Scudder New York Tax Free Money Fund
Scudder New York Tax Free Fund
<PAGE>
With respect to Tax Free Money Fund, the Adviser has agreed not to impose all or
a portion of its management fee until July 31, 1999 and during such period to
maintain the annualized expenses of the Tax Free Money Fund at not more than
0.60% of average daily net assets. For the six months ended September 30, 1998,
the Adviser did not impose a portion of its fee amounting to $45,796 and the
portion imposed amounted to $174,989.
On September 7, 1998, Zurich Insurance Company ("Zurich"), majority owner of the
adviser, entered into an agreement with B.A.T Industries p.l.c. ("B.A.T")
pursuant to which the financial services businesses of B.A.T were combined with
Zurich's businesses to form a new global insurance and financial services
company known as Zurich Financial Services. Upon consummation of the
transaction, each Fund's investment management agreement with Scudder Kemper was
deemed to have been assigned and, therefore, terminated. The Board of Trustees
of the Funds has approved new investment management agreements with Scudder
Kemper, which are substantially identical to the former investment management
agreements, except for the dates of execution, termination, and breakpoints in
the fee structure. The Board of Trustees of the Funds will seek shareholder
approval of the new investment management agreements through a proxy
solicitation that is currently scheduled to conclude in mid-December.
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 for the Tax Free Money Fund and Tax
Free Fund. For the six months ended September 30, 1998, $15,000 and $26,995 were
charged by SFAC to Tax Free Money Fund and Tax Free Fund, of which $2,500 and
$4,520 are unpaid at September 30, 1998 for the Tax Free Money Fund and Tax Free
Fund, respectively.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend-paying and shareholder service agent for the Funds. For the
six months ended September 30, 1998, $27,911 and $57,624 were charged by SSC to
Tax Free Money Fund and Tax Free Fund, of which $4,545 and $9,402 are unpaid at
September 30, 1998, respectively.
Each Fund pays each Trustee not affiliated with the Adviser an annual retainer,
allocated between the Funds, plus specified amounts for attended board and
committee meetings. For the six months ended September 30, 1998, Trustees' fees
amounted to $7,641 and $18,818 for the Tax Free Money Fund and Tax Free Fund,
respectively.
32 - Scudder New York Tax Free Money Fund
Scudder New York 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--
Prime Reserve Shares*
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 Corporate Bond 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 Dividend & Growth Fund
Scudder Growth and Income Fund
Scudder S&P 500 Index Fund
Scudder Real Estate Investment 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 Equity
- -------------
Worldwide
Scudder Global Fund
Scudder International Value Fund
Scudder International Growth and Income Fund
Scudder International Fund++
Scudder International Growth 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.
Industry Sector Funds
- ---------------------
Choice Series
Scudder Financial Services Fund
Scudder Health Care Fund
Scudder Technology Fund
Preferred Series
- ----------------
Scudder Tax Managed Growth Fund
Scudder Tax Managed Small
Company Fund
Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
Retirement Programs
- -------------------
Traditional IRA
Roth IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan**+++ +++
(a variable annuity)
Education Accounts
- ------------------
Education IRA
UGMA/UTMA
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder Global High Income Fund, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder Spain and Portugal 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. ***Only the Scudder Shares of the Fund are part
of the Scudder Family of Funds. ++Only the International Shares of the Fund are
part of the Scudder Family of Funds. +++ +++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 Kemper Investments, Inc., are traded on the New York Stock Exchange and,
in some cases, on various other stock exchanges.
33 - Scudder New York Tax Free Money Fund
Scudder New York 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 money is Lets you purchase Scudder fund shares
electronically debited from your bank account monthly to electronically, avoiding potential mailing delays;
regularly purchase fund shares and "dollar cost average" money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from a previously designated bank
fewer when it's higher, which can reduce your average account.
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 -- www.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 previously designated.
Distributions Direct
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
- ------------------------------------------------------------------------------------------------------------------------------
34 - Scudder New York Tax Free Money Fund
Scudder New York 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 8,000 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
800 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 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
</TABLE>
35 - Scudder New York Tax Free Money Fund
Scudder New York Tax Free Fund
<PAGE>
About the Fund's Adviser
Scudder Kemper Investments, Inc., is one of the largest and most experienced
investment management oganizations worldwide, managing more than $230 billion in
assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts. It is one of the ten largest mutual fund companies in the
United States.
Scudder Kemper Investments has a rich heritage of innovation, integrity, and
client-focused service. In 1997, Scudder, Stevens & Clark, Inc., founded 79
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Group. As a result, Zurich's subsidiary, Zurich Kemper Investments,
Inc., with 50 years of mutual fund and investment management experience, was
combined with Scudder. Headquartered in New York, Scudder Kemper Investments
offers a full range of investment counsel and asset management capabilities,
based on a combination of proprietary research and disciplined, long-term
investment strategies. With its global investment resources and perspective,
the firm seeks opportunities in markets throughout the world to meet the needs
of investors.
Scudder Kemper Investments, Inc., the global asset management firm, is a member
of the Zurich Group. The Zurich Group is an internationally recognized leader in
financial services, including property/casualty and life insurance, reinsurance,
and asset management.
Shares of the Funds are not insured or guaranteed by the U.S. Government.
Scudder New York Tax Free Money Fund seeks to maintain a constant net asset
value of $1.00 per share but there can be no assurance that the stable net
asset value will be maintained.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
SCUDDER
[LOGO]
