Scudder
Massachusetts
Limited Term
Tax Free Fund
Semiannual Report
April 30, 1998
Pure No-Load(TM) Funds
A fund seeking to provide as high a
level of income exempt from
Massachusetts state personal income and
regular federal income tax as is
consistent with a high degree of price
stability.
A pure no-load(TM) fund with no
commissions to buy, sell, or exchange
shares.
SCUDDER [logo]
<PAGE>
Scudder Massachusetts Limited Term Tax Free Fund
- --------------------------------------------------------------------------------
Total Net Assets as of
Date of Inception: 2/15/94 4/30/98: $93.0 million Ticker Symbol: SMLFX
- --------------------------------------------------------------------------------
o As of April 30, 1998, Scudder Massachusetts Limited Term Tax Free Fund's
30-day net annualized SEC yield was 3.62%, equivalent to a 6.81% taxable
yield for Massachusetts investors subject to the 46.85% combined federal
and state income tax rate.
o For the semiannual period ended April 30, 1998, Scudder Massachusetts
Limited Term Tax Free Fund posted a total return of 1.76%. The Fund's
return outpaced the average performance of the Fund's peers over six-month,
one-year, and three-year periods, according to Lipper Analytical Services.
o Scudder Massachusetts Limited Term Tax Free Fund received a four-star
rating from Morningstar, reflecting an "above-average" rating for
risk-adjusted performance through April 30, 1998.*
Table of Contents
3 Letter from the Fund's President 12 Financial Statements
4 Performance Update 15 Financial Highlights
5 Portfolio Summary 16 Notes to Financial Statements
6 Portfolio Management Discussion 20 Officers and Trustees
8 Glossary of Investment Terms 21 Investment Products and Services
9 Investment Portfolio 22 Scudder Solutions
* For your information, these ratings are subject to change every month and are
calculated from a Fund's average semiannual return in excess of 90-day
Treasury bill returns with appropriate fee adjustments, and a risk factor that
reflects fund performance below T-bill returns. The Fund received four stars
for three-year performance, and was rated among 1,547 funds for the period. Of
the funds rated, 10% received five stars, and 22.5% received four stars. Past
performance is no guarantee of future returns.
2-Scudder Massachusetts Limited Term Tax Free Fund
<PAGE>
Letter from the Fund's President
Dear Shareholders,
We are pleased to report to you concerning Scudder Massachusetts Limited
Term Tax Free Fund's performance over its most recent semiannual period ended
April 30, 1998. As of this date, the Fund provided a 6.81% tax equivalent yield
based on the maximum federal and state tax rates. In addition, the Fund earned a
four-star Morningstar rating as of April 30. Please read the portfolio
management discussion beginning on page 6 for more information about the Fund's
performance.
More good news -- Massachusetts' economic revival continues unabated. The
Commonwealth's unemployment level is at a nine-year low, per capita income is
significantly higher than the national average, and officials project a large
budget surplus for the 1998 fiscal year. Please read the "Massachusetts Update"
on page 6 for additional details.
For those of you interested in new Scudder products, we recently introduced
an addition to Scudder's series of growth and income offerings: Scudder Real
Estate Investment Fund invests primarily in Real Estate Investment Trusts
(REITs), and is designed to allow investors to participate in the impressive
long-term growth potential of the U.S. real estate industry. Please see page 21
for more information on Scudder products and services.
Lastly, at the start of 1998 the Fund's investment adviser changed its name
to Scudder Kemper Investments, Inc., from Scudder, Stevens & Clark, Inc.,
pursuant to the acquisition of a majority interest in Scudder by Zurich
Insurance Company, and the combining of Scudder's business with that of Zurich
Kemper Investments, Inc.
As always, please call a Scudder Investor Information representative at
1-800-225-2470 if you have questions about your Fund. Page 22 provides more
information on how to contact Scudder. Thank you for choosing Scudder
Massachusetts Limited Term Tax Free Fund to help meet your investment needs.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder Massachusetts Limited Term Tax Free Fund
3-Scudder Massachusetts Limited Term Tax Free Fund
<PAGE>
PERFORMANCE UPDATE as of April 30, 1998
- ----------------------------------------------------------------
FUND INDEX COMPARISONS
- ----------------------------------------------------------------
Total Return
- ------------------------------------------------
Period Ended Growth of Average
4/30/98 $10,000 Cumulative Annual
- ------------------------------------------------
SCUDDER MASSACHUSETTS LIMITED TERM
TAX FREE FUND
- ------------------------------------------------
1 Year $ 10,586 5.86% 5.86%
Life of Fund* $ 12,058 20.58% 4.55%
- ------------------------------------------------
LEHMAN BROTHERS MUNICIPAL BOND INDEX
(3 YEAR)
- ------------------------------------------------
1 Year $ 10,556 5.56% 5.56%
Life of Fund* $ 12,204 22.04% 4.89%
- ------------------------------------------------
*The Fund commenced operations on February 15, 1994.
Index comparisons begin February 28, 1994
- ----------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- ----------------------------------------------------------------
A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:
SCUDDER MASSACHUSETTS LIMITED TERM TAX FREE FUND
Year Amount
- ----------------------
2/94* $10,000
4/94 $ 9,912
10/94 $10,030
4/95 $10,414
10/95 $10,840
4/96 $10,997
10/96 $11,271
4/97 $11,425
10/97 $11,885
4/98 $12,094
LEHMAN BROTHERS MUNICIPAL BOND INDEX
(3 year)
Year Amount
- ----------------------
2/94* $10,000
4/94 $ 9,938
10/94 $10,058
4/95 $10,401
10/95 $10,862
4/96 $11,051
10/96 $11,352
4/97 $11,561
10/97 $11,978
4/98 $12,204
The 3-year Lehman Brothers Municipal Bond Index is an unmanaged,
market-value-weighted measure of the short-term municipal bond market and
includes bonds with maturities of two to three years. Index returns assume
reinvested dividends and, unlike Fund returns, do not reflect 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 April 30
<TABLE>
<S> <C> <C> <C> <C> <C>
1994* 1995 1996 1997 1998
----------------------------------------------
NET ASSET VALUE......... $ 11.76 $ 11.81 $ 11.94 $ 11.89 $ 12.06
INCOME DIVIDENDS........ $ .10 $ .53 $ .52 $ .51 $ .52
FUND TOTAL RETURN (%)... -1.18 5.07 5.60 3.89 5.86
INDEX TOTAL RETURN (%).. -.62 4.64 6.26 4.62 5.56
</TABLE>
All performance is historical, assumes reinvestment of all dividends and
capital gains, and is not indicative of future results. Investment return and
principal value will fluctuate, so an investor's shares, when redeemed, may be
worth more or less than when purchased. If the Adviser had not maintained the
Fund's expenses, the total return for the one year and life of Fund periods
would have been lower.
4 -- SCUDDER MASSACHUSETTS LIMITED TERM TAX FREE FUND
<PAGE>
PORTFOLIO SUMMARY as of April 30, 1998
- ---------------------------------------------------------------------------
DIVERSIFICATION
- ---------------------------------------------------------------------------
Hospital/Health 32%
Other General Obligation/
Lease 23%
State General Obligation 9%
Toll Revenue/Transportation 7%
Higher Education 6%
Water/Sewer Revenue 5%
Student Loans 4%
Electric Utility Revenue 4%
Pollution Control/Industrial
Development 3%
Miscellaneous Municipal 7%
- --------------------------------------
100%
- --------------------------------------
Scudder Massachusetts Limited
Term Tax Free Fund is broadly
diversified, and holds a large
percentage of pre-refunded bonds
which offer the highest quality
available in the municipal bond
marketplace.
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
QUALITY
- --------------------------------------------------------------------------
AAA 78%
AA 5%
A 7%
BBB 8%
BB 1%
Not Rated 1%
- --------------------------------------
100%
- --------------------------------------
Weighted average quality: AA
The Fund's overall quality
remains high, with over 80% of
its portfolio rated AAA or AA.
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
EFFECTIVE MATURITY
- --------------------------------------------------------------------------
Less than 1 year 9%
1 - 5 years 55%
5 - 10 years 36%
- ----------------------------------------------
100%
- ----------------------------------------------
Weighted average effective maturity:
4.06 years
We continued to maintain a
longer-than-neutral average
maturity to capitalize on the
favorable performance trend for
the five- to 10-year segment of
the municipal bond market.
For more complete details about the Fund's investment portfolio, see page 9.
5 -- SCUDDER MASSACHUSETTS LIMITED TERM TAX FREE FUND
<PAGE>
Portfolio Management Discussion
Dear Shareholders,
During Scudder Massachusetts Limited Term Tax Free Fund's most recent semiannual
period ended April 30, 1998, the supply of municipal bonds increased
dramatically. Despite the flood of supply -- including a 70% increase in the
first quarter of 1998 compared with the first quarter of 1997 -- Scudder
Massachusetts Limited Term Tax Free Fund posted a positive total return of 1.76%
for the six-month period. The Fund has outpaced the Lipper average return for
similar funds over six-month, one-year, and three-year periods, and the Fund
placed in the top 25% of similar funds over these three time periods. On April
30, 1998, the Fund's 30-day net annualized SEC yield was 3.62%, equivalent to a
taxable yield of 6.81% for shareholders subject to the 46.85% maximum combined
state and federal income tax rate.
Massachusetts Update
Massachusetts is maximizing the benefits of the steady growth the national
economy is experiencing. The Commonwealth's economic indicators are positive,
revenues continue to exceed projections, and unemployment is at its lowest level
since 1989. The Commonwealth projects that it will finish its 1998 fiscal year
with an operating surplus of $800 million, or 7% of revenues. Massachusetts'
personal income tax, which represents 30% of General Fund revenues, is the
primary revenue source funding the surplus.
At the root of the Commonwealth's fiscal health is a strong job market. Job
growth in the services sector was the principal factor in bringing the
unemployment rate down to 3.3% versus the national average of 4.6% in February
1998. Massachusetts' per capita income in 1996 was $29,439, 22% higher than the
national average. The Commonwealth's debt levels are high, but manageable, given
its high wealth levels. Overall, we continue to view Massachusetts' credit trend
as improving.
Scudder Massachusetts Limited Term Tax Free
Fund: Top Quartile Performance
(Returns for periods ended April 30, 1998)
Scudder Number
MALTTFF Lipper Percentile of Funds
Period return return Ranking tracked
- -----------------------------------------------------------
6 mos. 1.76% 1.45% Top 21% 28
1 year 5.86 5.35 Top 21% 28
3 years* 5.11 4.52 Top 14% 22
========================================================
*Average annual returns; past performance does not guarantee future results.
Steady Growth and
Low Inflation
The long-running U.S. economic scenario of moderate growth and low inflation
forges on. Asia, expected by many to export its way out of economic crisis and
in doing so derail U.S. growth, has so far increased exports only modestly. At
the same time, the U.S. bond market has benefited from Federal Reserve inaction
on interest rates, falling commodity prices, mixed economic statistics, and
portfolio rebalancing by investors who have acted to reduce the overweighting of
stocks in their portfolios. Moreover, the municipal bond market has enjoyed its
6-Scudder Massachusetts Limited Term Tax Free Fund
<PAGE>
first significant increase in investor interest in four years. During the Fund's
most recent semiannual period, yields of 10-year Treasury bonds declined
slightly and their prices rose 1.02%, while yields of comparable municipal bonds
increased slightly and their prices declined 0.38%.
Seeking Double-Tax-Free Income
Scudder Massachusetts Limited Term Tax Free Fund is designed to deliver double
tax-free income with below-average price risk through investments primarily in
municipal bonds with effective maturities between one and five years. The Fund
seeks higher income than is typically available from tax-free money market
investments and less share price fluctuation than is found in intermediate- and
long-term tax free bonds. The Fund's professional management, economies of
scale, liquidity, and ability to diversify its assets continue to offer
advantages compared with the holding of individual municipal bonds.
Over the Fund's most recent semiannual period the Fund continued to maintain a
longer-than-neutral average maturity of approximately 4 years to capitalize on
the favorable performance trend for the five-to 10-year segment of the municipal
bond market. The Fund also continued to emphasize premium noncallable bonds,
which generally exhibit less interest rate sensitivity than bonds priced at par.
In addition, we hold a large percentage (29% as of April 30) of pre-refunded
bonds in the Fund's portfolio. Bonds are pre-refunded when issuers sell new debt
at lower prevailing rates and use the proceeds to establish an escrow account of
U.S. Treasury bonds designated to retire the original municipal bonds on their
future call dates. These bonds offer the highest quality available in the
municipal marketplace, yet are typically priced lower than similar bonds of
slightly lower quality. The Fund's overall credit quality remains high, with
over 80% of the bonds in the Fund's portfolio rated AAA or AA.
Outlook
The recent heavy influx of municipal bond supply has caused municipal bond
performance to lag that of Treasuries. Though heavier-than-normal municipal
supply is expected for some time to come, we are optimistic about near-term
municipal market performance for two reasons: First, we expect to find
attractive value in many municipal bonds available in the marketplace; second,
we believe income investors will find municipals especially attractive given the
current narrow yield differential between Treasury and municipal bond yields.
In the months to come, the Fund will continue to maintain a conservative
investment strategy, including holding premium coupon bonds, diversifying
broadly, and keeping credit quality at a high level. We will also search for
value by weighing the maturity characteristics, call features, credit quality,
and income potential of each bond we consider adding to the Fund's portfolio.
Thank you for investing with Scudder Massachusetts Limited Term Tax Free Fund.
Sincerely,
Your Portfolio Management Team
/s/Philip G. Condon /s/Kathleen A. Meany
Philip G. Condon Kathleen A. Meany
7-Scudder Massachusetts Limited Term 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)
8-Scudder Massachusetts Limited Term Tax Free Fund
<PAGE>
Investment Portfolio as of April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating (b) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Short-Term Municipal Investments 8.6%
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Massachusetts
Massachusetts General Obligation, Refunding, Series 1993 B, 4.4%, 11/1/98 ...... 950,000 AA 953,097
Massachusetts Health & Educational Facilities Authority:
Series C, Daily Demand Note, 4.15%, 7/1/05 (c)* .............................. 3,300,000 A1+ 3,300,000
Series D, Daily Demand Note, 4.15%, 1/1/35 (c)* .............................. 1,600,000 A1+ 1,600,000
Puerto Rico
Puerto Rico, Series 1996, 180 Day Auction Reset, 3.55%, 7/1/11 (c) (d)* ........ 2,000,000 AAA 2,000,000
- ------------------------------------------------------------------------------------------------------------------------------
Total Short-Term Municipal Investments (Cost $7,852,329) 7,853,097
- ------------------------------------------------------------------------------------------------------------------------------
Intermediate-Term Municipal Investments 91.4%
- ------------------------------------------------------------------------------------------------------------------------------
Massachusetts
Lowell, MA, General Obligation:
Prerefunded 2/15/01, 8.3%, 2/15/05** ......................................... 1,635,000 AAA 1,852,668
Series 1992, 6.375%, 8/15/01 ................................................. 1,000,000 A 1,056,056
Series 1997, 6%, 12/15/04 (c) ................................................ 2,025,000 AAA 2,196,011
Malden, MA, Government Obligation, Series 1997, 5.5%, 8/1/05 (c) ............... 1,570,000 AAA 1,659,160
Massachusetts Bay Transportation Authority:
General Obligation, Series 1997C, 5%, 3/1/04 ................................. 500,000 A 513,195
System Revenue, Series 1992 C, Prerefunded 3/1/02, 6.1%, 3/1/23** ............ 5,000,000 AAA 5,384,450
Massachusetts Educational Loan Authority, Issue E, Series A, 6.7%, 1/1/02 (c) .. 415,000 AAA 439,630
Massachusetts General Obligation:
Series A, 5.25%, 2/1/01 (c) .................................................. 3,000,000 AAA 3,080,880
Series A, 5.2%, 6/1/04 ....................................................... 1,000,000 AA 1,038,480
Series A, Prerefunded 8/1/01, 6.5%, 8/1/11** ................................. 2,000,000 AAA 2,171,360
Series C, Prerefunded 12/1/00, 7.5%, 12/1/07** ............................... 750,000 AAA 825,338
Series C, Prerefunded 12/1/00, 7%, 12/1/10** ................................. 775,000 AAA 829,483
Massachusetts Health & Educational Facilities Authority:
Berkshire Health System, Series C, 5.9%, 10/1/11 ............................. 1,000,000 BBB 1,034,100
Berkshire Health System, Series D, 5.3%, 10/1/03 (c) ......................... 1,350,000 AAA 1,404,662
Central Massachusetts Medical Center, Series B, 6%, 7/1/02 (c) ............... 500,000 AAA 529,940
Daughters of Charity, Carney Hospital, Prerefunded 7/1/00, 7.5%, 7/1/05** .... 1,000,000 AAA 1,087,900
Daughters of Charity, Series D, 4.9%, 7/1/00 ................................. 550,000 AA 557,645
Fairview Extended Care, Series 1997B, 4.55%, 1/1/21 (c) ...................... 1,750,000 AAA 1,761,218
Hallmark Health System, Series 1997A, 5.25%, 7/1/06 (c) ...................... 1,000,000 AAA 1,034,150
Massachusetts Eye and Ear Infirmary, Series A, 7%, 7/1/01 .................... 2,120,000 BBB 2,192,462
</TABLE>
The accompanying notes are an integral part of the financial statements.
9 - SCUDDER MASSACHUSETTS LIMITED TERM TAX FREE FUND
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating (b) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Medical, Academic & Scientific:
Series A, 5.9%, 1/1/00 ...................................................... 500,000 A 511,345
Series A, 6%, 1/1/01 ........................................................ 1,000,000 A 1,033,200
Series A, 6.1%, 1/1/02 ...................................................... 500,000 A 522,620
Newton-Wellesley Hospital, Series D, Prerefunded 7/1/01, 7%, 7/1/15 (c)** .... 1,500,000 AAA 1,645,845
St. Joseph's Hospital, Series C, Prerefunded 10/1/99, 9.5%, 10/1/20** ........ 3,375,000 AAA 3,696,233
Valley Regional Health System, Series C, 5.3%, 7/1/00 ........................ 1,500,000 AAA 1,532,220
Wheaton College, Series B, Prerefunded 7/1/99, 7.2%, 7/1/09** ................ 590,000 AAA 623,772
Massachusetts Housing Finance Agency:
Housing Project Revenue, Series A, 5.2%, 10/1/00 ............................. 575,000 A 587,069
Multi-Family Housing Project, Series A, 8.8%, 8/1/21 ......................... 665,000 A 678,386
Massachusetts Industrial Finance Agency:
Boston Museum of Fine Arts, Series 1996, 5.125%, 1/1/04 (c) .................. 1,000,000 AAA 1,034,950
Cape Cod Health Systems, Series 1990, Prerefunded 11/15/00, 8.5%, 11/15/20**.. 2,150,000 AAA 2,413,074
College of the Holy Cross, Series 1996, 5.5%, 3/1/06 (c) ..................... 1,000,000 AAA 1,057,240
East Boston Neighborhood Project, 7.25%, 7/1/06 .............................. 930,000 BB 965,210
Leominster Hospital, Series 1989A, Prerefunded 8/1/99, 8.625%, 8/1/09** ...... 2,000,000 AAA 2,150,620
Merrimack College, Series 1997, 5.5%, 7/1/06 (c) ............................. 1,055,000 AAA 1,117,509
Milton Academy, Revenue Refunding, Series A, Prerefunded 9/1/99, 7.25%,
9/1/19 (c)** .............................................................. 700,000 AAA 743,988
Resource Recovery, North Andover Solid Waste, Series A, 6.15%, 7/1/02 ........ 750,000 BBB 785,280
Resource Recovery, North Andover Solid Waste, Series A, 6.3%, 7/1/05 ......... 2,750,000 BBB 2,963,015
Worcester Polytechnic, Series 1997II, 5.25%, 9/1/04 (c) ...................... 1,065,000 AAA 1,110,326
Massachusetts Municipal Wholesale Electric Company, Power Supply System Revenue:
Prerefunded 7/1/02, 6.75%, 7/1/17** .......................................... 1,720,000 AAA 1,905,863
Series B, 6.3%, 7/1/00 ....................................................... 345,000 A 359,107
Series B, 6.375%, 7/1/01 ..................................................... 1,000,000 A 1,056,700
Massachusetts Port Authority Revenue:
Series 1997A, 6%, 7/1/04 ..................................................... 1,140,000 AA 1,232,420
USAir Project, Series 1996A, 5.5%, 9/1/06 (c) ................................ 640,000 AAA 671,334
Massachusetts Turnpike Authority:
Series 1996A, Refunded, 5%, 6/1/99 ........................................... 785,000 NR 794,907
Series 1996A, Unrefunded, 5%, 6/1/99 ......................................... 215,000 NR 217,393
Massachusetts Water Resource Authority Revenue, Series 1998 A, 5%, 8/1/04 (c) .. 1,260,000 AAA 1,295,998
Massachusetts Water Resource Authority:
Series 1991A, Prerefunded 12/1/01 6.875%, 12/1/11** .......................... 1,000,000 AAA 1,103,970
Series A, Prerefunded 7/15/02, 6.75%, 7/15/12** .............................. 1,000,000 AAA 1,108,770
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 - SCUDDER MASSACHUSETTS LIMITED TERM TAX FREE FUND
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating (b) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Massachusetts, Special Obligation, Series 1997A, 5.5%, 6/1/05 .................. 1,000,000 AA 1,055,710
Nantucket, MA, General Obligation, Prerefunded 12/1/01, 6.25%, 12/1/02** ....... 250,000 AAA 269,353
New England Education Loan Marketing Corp., Massachusetts Student Loan Revenue
Refunding, Issue A, 5.8%, 3/1/02 ............................................. 3,150,000 AAA 3,285,608
North Andover, MA, General Obligation, Series 1998, 5.375%, 1/15/07 (c) ........ 1,275,000 AAA 1,338,623
North Attleboro, MA, General Obligation, Series 1997, 6%, 3/1/07 (c) ........... 1,000,000 AAA 1,098,360
South Essex, MA, Sewer District, Series B, Prerefunded 6/1/04, 6.75%,
6/1/13 (c)** ................................................................. 1,000,000 AAA 1,137,280
Southeastern Masssachusetts University Building, Series A, 5.5%, 5/1/04 (c) .... 1,010,000 AAA 1,064,247
Springfield, MA, General Obligation, Series 1996, 6.375%, 8/1/03 (c) ........... 2,035,000 AAA 2,215,525
Springfield, MA, Municipal Purpose Loan, General Obligation, Series 1996,
6.25%, 8/1/06 (c) ............................................................ 1,000,000 AAA 1,107,820
Worcester, MA, General Obligation, Revenue Refunding, Series G, 6%, 7/1/01 (c).. 2,000,000 AAA 2,100,800
Worcester, MA, Government Obligation, Series 1997, 5.75%, 8/1/07 (c) ........... 1,000,000 AAA 1,080,310
Puerto Rico
Puerto Rico Public Building Authority, 6.75%, 7/1/04 (c) ....................... 2,250,000 AAA 2,532,803
- ------------------------------------------------------------------------------------------------------------------------------
Total Intermediate-Term Municipal Investments (Cost $82,503,011) 83,853,591
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $90,355,340) (a) 91,706,688
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The cost for federal income tax purposes was $90,366,947. At April 30,
1998, net unrealized appreciation for all securities was $1,339,741. This
consisted of aggregate gross unrealized appreciation for all securities in
which there was an excess of market value over tax cost of $1,523,554 and
aggregate gross unrealized depreciation for all investment securities in
which there was an excess of tax cost over market value of $183,813.
(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 are either Standard & Poor's Ratings Group, Moody's Investors
Service, Inc. or Fitch Investors Services, Inc. Unrated securities (NR)
have been determined to be of comparable quality to rated eligible
securities.
(c) Bond is insured by one of these companies: AMBAC, FSA, FGIC, or MBIA.
(d) Auction rate securities carry a short term coupon that is reset on a
periodic basis, usually every 35 days. The reset occurs through a
marketplace auction process where all bidders receive the highest yield
necessary to sell all the securities. For maturity purposes the securities
are said to have the same maturity as the time remaining to the next
auction.
* 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 or line of credit from a major bank. These
notes are carried, for purposes of calculating average weighted maturity,
at the longer of the period remaining until the next rate change or to the
extent of the demand period.
** Prerefunded: Bonds which are prerefunded are collateralized by U.S.
Treasury securities which are held in escrow and are used to pay principal
and interest on tax-exempt issue and to retire the bonds in full at the
earliest refunding date.
The accompanying notes are an integral part of the financial statements.
11 - SCUDDER MASSACHUSETTS LIMITED TERM TAX FREE FUND
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of April 30, 1998 (Unaudited)
<TABLE>
<S> <C> <C>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
Investments, at market (identified cost $90,355,340) ................. $ 91,706,688
Cash ................................................................. 130,928
Interest receivable .................................................. 1,479,764
Receivable for Fund shares sold ...................................... 16,853
Deferred organization expenses ....................................... 4,461
Other assets ......................................................... 726
----------------
Total assets ......................................................... 93,339,420
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Dividends payable .................................................... 96,563
Payable for Fund shares redeemed ..................................... 203,606
Accrued management fee ............................................... 40,743
Other payables and accrued expenses .................................. 38,001
----------------
Total liabilities .................................................... 378,913
-------------------------------------------------------------------------------------------
Net assets, at market value $ 92,960,507
-------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Unrealized appreciation on investments ............................... 1,351,348
Accumulated net realized loss ........................................ (148,737)
Paid-in capital ...................................................... 91,757,896
-------------------------------------------------------------------------------------------
Net assets, at market value $ 92,960,507
-------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($92,960,507 / 7,707,010 outstanding shares of beneficial
interest, $.01 par value, unlimited number of shares ----------------
authorized) ........................................................ $12.06
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 - SCUDDER MASSACHUSETTS LIMITED TERM TAX FREE FUND
<PAGE>
Statement of Operations
six months ended April 30, 1998
<TABLE>
<S> <C> <C>
Investment Income
- ----------------------------------------------------------------------------------------------------------------------------
Interest ............................................................. $ 2,191,384
----------------
Expenses:
Management fee ....................................................... 266,090
Custodian and accounting fees ........................................ 28,236
Services to shareholders ............................................. 31,856
Trustees' fees and expenses .......................................... 8,326
Auditing ............................................................. 15,747
Legal ................................................................ 3,077
Reports to shareholders .............................................. 8,869
Registration fees .................................................... 7,243
Amortization of organization expenses ................................ 2,789
Other ................................................................ 4,788
----------------
Total expenses before reductions ..................................... 377,021
Expense reductions ................................................... (44,409)
----------------
Expenses, net ........................................................ 332,612
-------------------------------------------------------------------------------------------
Net investment income 1,858,772
-------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from investments ............................ (1,200)
Net unrealized appreciation (depreciation) on investments
during the period .................................................. (375,545)
-------------------------------------------------------------------------------------------
Net gain (loss) on investments (376,745)
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 1,482,027
-------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 - SCUDDER MASSACHUSETTS LIMITED TERM TAX FREE FUND
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months
Ended Year
April 30, Ended
Increase (Decrease) in Net Assets 1998 October 31,
(Unaudited) 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations:
Net investment income ...................................... $ 1,858,772 $ 3,039,006
Net realized gain (loss) on investments .................... (1,200) 8,891
Net unrealized appreciation (depreciation) on
investments during the period ............................ (375,545) 676,307
---------------- ----------------
Net increase in net assets resulting from operations ....... 1,482,027 3,724,204
---------------- ----------------
Distributions to shareholders from net investment
income ................................................... (1,858,772) (3,039,006)
---------------- ----------------
Fund share transactions:
Proceeds from shares sold .................................. 33,110,515 34,983,831
Net asset value of shares issued to shareholders in
reinvestment of distributions ............................ 1,295,003 1,974,195
Cost of shares redeemed .................................... (20,594,922) (23,621,656)
---------------- ----------------
Net increase in net assets from Fund share
transactions ............................................. 13,810,596 13,336,370
---------------- ----------------
Increase in net assets ..................................... 13,433,851 14,021,568
Net assets at beginning of period .......................... 79,526,656 65,505,088
---------------- ----------------
Net assets at end of period ................................ $ 92,960,507 $ 79,526,656
---------------- ----------------
Other Information
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period .................. 6,573,339 5,463,378
---------------- ----------------
Shares sold ................................................ 2,722,942 2,911,596
Shares issued to shareholders in reinvestment of
distributions ............................................ 106,692 164,273
Shares redeemed ............................................ (1,695,963) (1,965,908)
---------------- ----------------
Net increase in Fund shares ................................ 1,133,671 1,109,961
---------------- ----------------
Shares outstanding at end of period ........................ 7,707,010 6,573,339
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 - SCUDDER MASSACHUSETTS LIMITED TERM 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>
For the Period
February 15,
Six Months 1994
Ended (commencement
April 30, Years Ended October 31, of operations)
1998 to October 31,
(Unaudited) 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
-------------------------------------------------------------------
Net asset value, beginning of period ........................ $12.10 $11.99 $12.02 $11.64 $12.00
Income from investment operations: -------------------------------------------------------------------
Net investment income ....................................... .25 .53 .50 .54 .36
Net realized and unrealized gain (loss) on investment
transactions ............................................. (.04) .11 (.03) .38 (.36)
-------------------------------------------------------------------
Total from investment operations ............................ .21 .64 .47 .92 .00
-------------------------------------------------------------------
Less distributions from net investment income ............... (.25) (.53) (.50) (.54) (.36)
-------------------------------------------------------------------
Net asset value, end of period .............................. $12.06 $12.10 $11.99 $12.02 $11.64
-------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return (%) (a) ........................................ 1.76** 5.44 3.98 8.08 0.00**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ...................... 93 80 66 55 36
Ratio of operating expenses, net to average daily net
assets (%) ............................................... .75* .75 .67 .24 --
Ratio of operating expenses before expense reductions,
to average daily net assets (%) .......................... .85* .93 .90 .92 1.44*
Ratio of net investment income to average daily net
assets (%) ............................................... 4.17* 4.40 4.16 4.56 4.45*
Portfolio turnover rate (%) ................................. 13.2* 9.8 12.4 27.4 26.3*
</TABLE>
(a) Total returns would have been lower had certain expenses not been reduced.
* Annualized
** Not annualized
15 - SCUDDER MASSACHUSETTS LIMITED TERM TAX FREE FUND
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Scudder Massachusetts Limited Term Tax Free Fund (the "Fund") is a
non-diversified series of Scudder State Tax Free Trust, a Massachusetts business
trust (the "Trust"), which is registered under the Investment Company Act of
1940, as amended, as an open-end management investment company. There are
currently six series in the Trust.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
Security Valuation. Portfolio debt securities with remaining maturities greater
than sixty days are valued by pricing agents approved by the Officers of the
Fund, which quotations reflect broker/dealer-supplied valuations and electronic
data processing techniques. If the pricing agents are unable to provide such
quotations, the most recent bid quotation supplied by a bona fide market maker
shall be used. All other debt securities are valued at their fair value as
determined in good faith by the Valuation Committee of the Board of Trustees.
Money market instruments purchased with an original maturity of sixty days or
less are valued at amortized cost.
Amortization and Accretion. All premiums and original issue discounts are
amortized/accreted for both tax and financial reporting purposes.
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code, as amended, which are applicable to regulated
investment companies and to distribute all of its taxable and tax-exempt income
to its shareholders. The Fund accordingly paid no federal income taxes and no
provision for federal income taxes was required.
At October 31, 1997, the Fund had a net tax basis capital loss carryforward of
approximately $136,000 which may be applied against any realized net taxable
capital gains of each succeeding year until fully utilized or until October 31,
2002, ($21,000) and October 31, 2004 ($115,000), the respective expiration
dates, whichever occurs first.
Distribution of Income and Gains. All of the net investment income of the Fund
is declared as a dividend to shareholders of record as of the close of business
each day and is paid to shareholders monthly. During any particular year, net
realized gains from investment transactions, in excess of available capital loss
carryforwards, would be taxable to the Fund if not distributed and, therefore,
will be distributed to shareholders. An additional distribution may be made to
the extent necessary to avoid the payment of a four percent federal excise tax.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. As a result, net
investment income (loss) and net realized gain (loss) on investment transactions
for a reporting period may differ significantly from distributions during such
period. Accordingly, the Fund may periodically make reclassifications among
certain of its capital accounts without impacting the net asset value of the
Fund.
The Fund uses the specific identification method for determining realized gain
or loss on investments for both financial and federal income tax reporting
purposes.
Organization Cost. Costs incurred by the Fund in connection with its
organization and initial registration of shares have been deferred and are being
amortized on a straight-line basis over a five-year period.
16 - SCUDDER MASSACHUSETTS LIMITED TERM TAX FREE FUND
<PAGE>
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 April 30, 1998, purchases and sales of investments
(excluding short-term) aggregated $13,655,830 and $5,531,700, respectively.
C. Related Parties
Effective December 31, 1997, Scudder, Stevens & Clark, Inc. ("Scudder") and The
Zurich Insurance Company ("Zurich"), an international insurance and financial
services organization, formed a new global investment organization by combining
Scudder's business with that of Zurich's subsidiary, Zurich Kemper Investments,
Inc. As a result of the transaction, Scudder changed its name to Scudder Kemper
Investments, Inc. ("Scudder Kemper" or the "Adviser"). The transaction between
Scudder and Zurich resulted in the termination of the Fund's Investment
Management Agreement with Scudder. However, a new Investment Management
Agreement (the "Management Agreement") between the Fund and Scudder Kemper was
approved by the Fund's Board of Trustees and by the Fund's Shareholders. The
Management Agreement, which was effective December 31, 1997, is the same in all
material respects as the corresponding previous Investment Management Agreement,
except that Scudder Kemper is the new investment adviser to the Fund.
Under the Management Agreement with Scudder Kemper, the Fund agrees to pay the
Adviser a fee equal to an annual rate of approximately 0.60% of the Fund's
average daily net assets, computed and accrued daily and payable monthly. The
Adviser determines the securities, instruments, and other contracts relating to
investments to be purchased, sold or entered into by the Fund. In addition to
portfolio management services, the Adviser provides certain administrative
services in accordance with the Management Agreement. The Adviser agreed to
maintain the annualized expenses at 0.75% of average daily net assets until
February 28, 1999. For the six months ended April 30, 1998, the Adviser imposed
fees amounting to $266,090 and the portion not imposed amounted to $44,409.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
six months ended April 30, 1998, the amount charged to the Fund by SSC
aggregated $22,098 of which $3,631 was unpaid at April 30, 1998.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records of the Fund. For the six months
ended April 30, 1998, the amount charged to the Fund by SFAC aggregated $16,000,
of which $3,000 was unpaid at April 30, 1998.
The Trust pays each Trustee not affiliated with the Adviser an annual retainer,
divided equally among the series of the Trust, plus specified amounts for
attended board and committee meetings. For the six months ended April 30, 1998,
Trustees' fees aggregated $8,326.
17 - SCUDDER MASSACHUSETTS LIMITED TERM TAX FREE FUND
<PAGE>
This Page
intentionally
left blank.
18-Scudder Massachusetts Limited Term Tax Free Fund
<PAGE>
This Page
intentionally
left blank.
19-Scudder Massachusetts Limited Term Tax Free Fund
<PAGE>
Officers and Trustees
Daniel Pierce*
President and Trustee
Henry P. Becton, Jr.
Trustee; President and General Manager, WGBH Educational Foundation
Dawn-Marie Driscoll
Trustee; President, Driscoll Associates; Executive Fellow, Bentley College
Peter B. Freeman
Trustee; Corporate Director and Trustee
George M. Lovejoy, Jr.
Trustee; President and Director, Fifty Associates
Wesley W. Marple, Jr.
Trustee; Professor of Business Administration, Northeastern University
Kathryn L. Quirk*
Trustee, Vice President and Assistant Secretary
Jean C. Tempel
Trustee; Managing Partner, TL Ventures
Donald C. Carleton*
Vice President
Philip G. Condon*
Vice President
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
Vice President
Jeremy L. Ragus*
Vice President
Rebecca Wilson*
Vice President
Thomas F. McDonough*
Vice President, Secretary and Treasurer
John R. Hebble*
Assistant Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
20-Scudder Massachusetts Limited Term Tax Free Fund
<PAGE>
Investment Products and Services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series --
Premium Shares*
Managed Shares*
Scudder Government Money Market Series --
Managed Shares*
Tax Free Money Market+
- ----------------------
Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series--
Managed Shares*
Scudder California Tax Free Money Fund**
Scudder New York Tax Free Money Fund**
Tax Free+
- ---------
Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund**
Scudder Massachusetts Limited Term Tax Free Fund**
Scudder Massachusetts Tax Free Fund**
Scudder New York Tax Free Fund**
Scudder Ohio Tax Free Fund**
Scudder Pennsylvania Tax Free Fund**
U.S. Income
- -----------
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder High Yield Bond Fund
Global Income
- -------------
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
Asset Allocation
- ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
U.S. Growth and Income
- ----------------------
Scudder Balanced Fund
Scudder Growth and Income Fund
Scudder S&P 500 Index Fund
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 Growth
- -------------
Worldwide
Scudder Global Fund
Scudder International Growth and Income Fund
Scudder International Fund
Scudder Global Discovery Fund***
Scudder Emerging Markets Growth Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund, Inc.
Industry Sector Funds
- ---------------------
Choice Series
Scudder Financial Services Fund
Scudder Health Care Fund
Scudder Technology 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. +++ +++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.
21-Scudder Massachusetts Limited Term 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 -- http://funds.scudder.com
1-800-343-2890
Scudder Electronic Account Services: Offering
Personalized account information, the ability to account information and transactions, interactive
exchange or redeem shares, and information on other worksheets, prospectuses and applications for all
Scudder funds and services via touchtone telephone. Scudder funds, plus your current asset allocation,
whenever you need them. Scudder's Site also
provides news about Scudder funds, retirement
planning information, and more.
Retirees and those who depend on investment proceeds for living expenses can enjoy these convenient,
timely, and reliable automated withdrawal programs:
- ------------------------------------------------------------------------------------------------------------------------------
Automatic Withdrawal Plan QuickSell
You designate the bank account, determine the schedule Provides speedy access to your money by
(as frequently as once a month) and amount of the electronically crediting your redemption proceeds
redemptions, and Scudder does the rest. to the bank account you 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
- ------------------------------------------------------------------------------------------------------------------------------
22-Scudder Massachusetts Limited Term 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
500 no-load funds from well-known companies--with no Personal Counsel from Scudder(SM)
transaction fees or commissions. Scudder
shareholders can take advantage of a Scudder Developed for investors who prefer the benefits of no-load
Brokerage account already reserved for them, with Scudder funds but want ongoing professional assistance in
no minimum investment. For information about managing a portfolio. Personal Counsel(SM) is a highly
Scudder Brokerage Services, call 1-800-700-0820. customized, fee-based asset management service for
individuals investing $100,000 or more.
Fund Folio funds held less than six months will be charged a fee for redemptions. You can buy
shares directly from the fund itself or its principal underwriter or distributor without
paying this fee. Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061.
Member SIPC.
Personal Counsel From Scudder(SM) and Personal Counsel(SM) are service marks of and represent a
program offered by Scudder Investor Services, Inc., Adviser.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
Additional Information on How to Contact Scudder:
- ------------------------------------------------------------------------------------------------------------------------------
For existing account services and transactions Please address all written correspondence to
Scudder Investor Relations -- 1-800-225-5163 The Scudder Funds
P.O. Box 2291
For establishing 401(k) and 403(b) plans Boston, Massachusetts
Scudder Defined Contribution Services -- 02107-2291
1-800-323-6105
Or Stop by a Scudder Investor Center
For information about The Scudder Funds, including Many shareholders enjoy the personal, one-on-one service of
additional applications and prospectuses, or for the Scudder Investor Centers. Check for an Investor Center near
answers to investment questions you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470 Boca Raton Chicago San Francisco
[email protected] Boston New York
</TABLE>
23-Scudder Massachusetts Limited Term 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 $200 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
U.S.
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.
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]
