Scudder
New York
Tax Free Money Fund
Scudder
New York
Tax Free Fund
Annual Report
March 31, 1999
No-Load 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.
No-load funds with no commissions to buy, sell, or exchange shares.
SCUDDER
<PAGE>
Scudder New York Tax Free Money Fund
- --------------------------------------------------------------------------------
Date of Inception: 5/28/87 Total Net Assets as of Ticker Symbol: SCNXX
3/31/99: $80.4 million
- --------------------------------------------------------------------------------
o Scudder New York Tax Free Money Fund offered a seven-day effective yield of
2.36% on March 31, 1999, equivalent to a 4.19% taxable yield for investors in
the top federal and state income tax brackets.
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BAR CHART TITLE:
- ------------------------------
7-Day Yield on March 31, 1999
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CHART DATA:
2.36% 4.19%
Scudder New York Taxable
Tax Free Money Equivalent
Fund Yield
Table of Contents
4 Letter from the Funds' President 36 Report of Independent Accountants
7 Portfolio Management Discussion 37 Tax Information
13 Glossary of Investment Terms 38 Shareholder Meeting Results
14 Investment Portfolio 40 Officers and Trustees
17 Financial Statements 41 Investment Products and Services
20 Financial Highlights 42 Scudder Solutions
32 Notes to Financial Statements
2 - Scudder New Tax Free Money Fund
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Scudder New York Tax Free Fund
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Date of Inception: 7/22/83 Total Net Assets as Ticker Symbol: SCYTX
of 3/31/99: $211.7 million
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o Scudder New York Tax Free Fund provided a 3.84% 30-day net annualized SEC
yield on March 31, 1999. 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 6.83%. The Fund posted a 5.46% total return over its most recent fiscal year
ended March 31, 1999.
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BAR CHART TITLE:
- ------------------------------
30-Day Yield on March 31, 1999
- ------------------------------
CHART DATA:
3.84% 6.83%
Scudder New York Taxable
Tax Free Fund Equivalent
Yield
Table of Contents
4 Letter from the Funds' President 32 Notes to Financial Statements
5 Performance Update 36 Report of Independent Accountants
6 Portfolio Summary 37 Tax Information
9 Portfolio Management Discussion 39 Shareholder Meeting Results
13 Glossary of Investment Terms 40 Officers and Trustees
21 Investment Portfolio 41 Investment Products and Services
28 Financial Statements 42 Scudder Solutions
31 Financial Highlights
3 - Scudder New York Tax Free Fund
<PAGE>
Letter from the Funds' President
Dear Shareholders,
We are pleased to report to you concerning the latest fiscal year ended
March 31, 1999, for Scudder New York Tax Free Fund and Scudder New York Tax Free
Money Fund. During the period, Scudder New York Tax Free Fund returned 5.46%,
outpacing the 5.17% average return of similar New York tax-free funds. As of
March 31, 1999, Scudder New York Tax Free Money Fund posted a 4.19% tax
equivalent yield based on maximum state and federal tax rates.
Investors concerned about the increased volatility of the financial
markets during the past 12 months should find the chart on page 9 of interest.
The chart shows that over the 12-month period ended March 31, long-term
municipal bonds displayed considerably less price volatility than comparable
Treasury securities. For additional information concerning the market
performance, strategy, and outlook for both Scudder New York Tax Free Funds,
please see the Portfolio Management Discussions that begin on page 7.
For those of you interested in new Scudder products, we are pleased to
introduce Scudder Select 500 Fund and Scudder Select 1000 Growth Fund. Both
funds are managed with the goal of providing long-term outperformance compared
to their benchmark indices, the S&P 500 Index and the Russell 1000 Growth Index,
respectively. For more information on either Select fund, please call us at the
number below.
Please call a Scudder Investor Information representative at
1-800-225-2470 if you have questions about Scudder New York Tax Free Fund or
Scudder New York Tax Free Money Fund. Or, visit Scudder's Web site at
www.scudder.com. Thank you for choosing Scudder's New York Tax Free Funds 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
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Performance Update as of March 31, 1999
- ---------------------
Fund Index Comparison
- ---------------------
Total Return
---------------------------------------------
Period
Ended Growth of Average
3/31/1999 $10,000 Cumulative Annual
---------------------------------------------
Scudder New York Tax Free Fund
---------------------------------------------
1 Year $ 10,546 5.46% 5.46%
5 Year $ 14,110 41.10% 7.13%
10 Year $ 21,412 114.12% 7.91%
---------------------------------------------
Lehman Brothers Municipal Bond Index
---------------------------------------------
1 Year $ 10,620 6.20% 6.20%
5 Year $ 14,440 44.40% 7.62%
10 Year $ 22,083 120.83% 8.24%
---------------------------------------------
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CHART TITLE:
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Growth of a $10,000 Investment
- ------------------------------
CHART DATA:
Scudder New York Lehman Brothers Municipal
Tax Free Fund Bond Index
--------------------- -------------------------
'89 10000 10000
'90 10818 11056
'91 11662 12075
'92 12958 13283
'93 14979 14947
'94 15175 15293
'95 16145 16430
'96 17429 17807
'97 18258 18779
'98 20302 20793
'99 21412 22083
Yearly periods ended March 31
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.
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
ILLUSTRATING THE FUND TOTAL RETURN (%) AND
INDEX TOTAL RETURN (%)
CHART TITLE:
- ---------------------------------
Returns and Per Share Information
- ---------------------------------
Yearly periods ended March 31
CHART DATA:
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value $ 10.60 $ 10.73 $ 10.98 $ 11.40 $ 10.32 $ 10.38 $ 10.67 $ 10.63 $ 11.27 $ 11.37
- -----------------------------------------------------------------------------------------------------------------------------
Income Dividends $ .69 $ .67 $ .65 $ .61 $ .54 $ .52 $ .53 $ .53 $ .51 $ .51
- -----------------------------------------------------------------------------------------------------------------------------
Capital Gains and Other $ .09 $ -- $ .25 $ .61 $ .73 $ .05 $ -- $ .01 $ .02 $ --
Distributions
- -----------------------------------------------------------------------------------------------------------------------------
Fund Total Return (%) 8.18 7.79 11.11 15.60 1.31 6.39 7.95 4.76 11.20 5.46
- -----------------------------------------------------------------------------------------------------------------------------
Index Total Return (%) 10.56 9.22 10.02 12.52 2.32 7.43 8.38 5.45 10.73 6.20
- -----------------------------------------------------------------------------------------------------------------------------
</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
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Portfolio Summary as of March 31, 1999
- ---------------
Diversification
- ---------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the table below.
Core Cities/Lease 19%
State General Obligation/Lease 17%
County General Obligation/Lease 9%
Higher Education 8%
Hospital/Health Revenue 7%
Sales/Special Tax 7%
Port/Airport Revenue 6%
Project Revenue/Special Assessment 5%
Other General Obligation/Lease 5%
Miscellaneous Municipal 17%
----------------------------------------------------
100%
----------------------------------------------------
The Fund invests in a broad selection of New York State municipal bonds.
- --------
Quality
- --------
A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
AAA 47%
AA 11%
A 20%
BBB 7%
SKI 15%
--------------------------------------
100%
--------------------------------------
Weighted average quality: AA
Overall portfolio quality remains high, with over 75% of portfolio securities
rated A or better as of March 31.
- --------------------
Effective Maturity
- --------------------
A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
Less than 1 year 4%
1-5 years 6%
5-10 years 49%
10-15 years 31%
15 years or greater 10%
--------------------------------------
100%
--------------------------------------
Weighted average effective maturity:
9.83 years
Our continuing goal is to have an average effective maturity similar to that of
the Lehman Brothers Municipal Bond Index, the Fund's benchmark, but with a
superior, call-protected structure.
For more complete details about the Fund's investment portfolio, see page. A
quarterly Fund Summary and Portfolio Holdings are available upon request.
6 - Scudder New York Tax Free Fund
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Portfolio Management Discussion
Scudder New York Tax Free Money Fund
Dear Shareholders,
Scudder New York Tax Free Money Fund maintained a conservative portfolio
strategy in an environment of declining money market yields during the Fund's
most recent fiscal year ended March 31, 1999. The Fund's seven-day effective
yield as of March 31 was 2.36%. For investors in the highest combined state and
federal income tax bracket, the Fund's yield was equivalent to a 4.19%
compounded yield.
Two factors drove tax-exempt money market interest rates lower during the
period: First, the U.S. Federal Reserve lowered interest rates three times from
September through November in an effort to ease 1998's succession of global
financial crises. Second, the U.S. economy continued to thrive, with GDP soaring
to an annualized 6% rate of growth during the fourth quarter of 1998 with
minimal inflationary pressures. Many more states and cities enjoyed budget
surpluses, and the supply of short-term tax-exempt securities declined sharply.
With less competition for buyers, municipalities that did issue short-term
securities could do so at lower rates.
In this environment of dramatically lower supply and lower interest rates, we
pursued a cautious strategy through most of the period, and refrained from
extending the Fund's average maturity 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
7 - Scudder New York Tax Free Money Fund
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maturity. These conditions persisted until March, when supply and interest rates
inched higher, and we extended maturity slightly. The Fund's average maturity
was 27 days as of March 31, 1999, compared with 38 days 12 months earlier. The
Fund continues to invest in variable rate demand notes -- which provide
flexibility in the present low interest rate environment -- and tax-free
commercial paper and tax-free notes -- both of which provide some stability in
yield. The Fund continues to emphasize high quality issuers and guarantors.
In its present dual role of presiding over global economic recovery and ensuring
that the U.S. economy doesn't overheat into accelerated inflation, the Fed
appears to be in a holding pattern. Over the coming months, we will continually
consider the opportunities offered by the market, weighing them against our
economic outlook. If we expect interest rates to be stable overall, but supply
increases and the market offers us higher rates to extend the Fund's maturity,
we expect to do so.
Our continuing goal is to provide Scudder New York Tax Free Money Fund
shareholders with a competitive triple-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
/s/Elizabeth Meyer
Elizabeth Meyer
Scudder New York
Tax Free Money Fund:
A Team Approach to Investing
Scudder New York Tax Free Money Fund is managed by a team of Scudder Kemper
Investments, Inc. (the "Adviser") professionals, each of whom plays an important
role in the Fund's management process. Team members work together to develop
investment strategies and select securities for the Fund's portfolio. They are
supported by the Adviser's large staff of economists, research analysts,
traders, and other investment specialists who work in our offices across the
United States and abroad. We believe our team approach benefits Fund investors
by bringing together many disciplines and leveraging our extensive resources.
Co-Lead Portfolio Managers Frank J. Rachwalski and Jerri I. Cohen have
responsibility for the Fund's day-to-day management. Mr. Rachwalski, who joined
the Adviser in 1973 and the Fund in 1998, has 26 years experience managing money
market portfolios. Ms. Cohen, who joined the Adviser in 1981 and the Fund in
1998, has 18 years experience in the financial industry. Together they oversee
the investment strategies of the Fund. Portfolio Manager Elizabeth Meyer joined
the Adviser in 1986 and the team in 1999. Ms. Meyer has 13 years experience in
the financial industry.
8 - Scudder New York Tax Free Money Fund
<PAGE>
Portfolio Management Discussion
Scudder New York Tax Free Fund
Dear Shareholders,
Following a series of overseas and domestic financial crises that prompted
uncertainty, volatility, and a "flight to quality," bond yields plummeted, then
returned to July 1998 levels at the close of Scudder New York Tax Free Fund's
most recent fiscal year. During the 12-month period ended March 31, 1999, the
Fund returned 5.46%, outpacing the 5.17% average return of New York tax-exempt
funds as tracked by Lipper Analytical Services, Inc.
A Market Roller Coaster
Market turmoil hit a peak in the wake of the Russian currency devaluation on
August 17, followed by the near collapse of the Long Term Capital Management
hedge fund. Volatility in the U.S. stock market increased greatly while a
massive reallocation to U.S. Treasury bonds led to substantially lower yields.
Though presidential impeachment proceedings distracted the financial markets
through the fall and beyond, the Federal Reserve's three consecutive interest
rate cuts in September, October, and November helped to gradually restore market
stability. During this period, the U.S. economy continued to grow beyond all
expectations, recording a dramatic 6% annualized increase in GDP for the fourth
quarter of 1998. This show of strength, in turn, worried bond investors, who
responded by sending 30-year
THE PRINTED DOCUMENT CONTAINS A LINE CHART HERE
CHART TITLE:
- -------------------------------------------------------
Municipals Provided Greater Stability
Monthly prices of 30-year AAA-rated municipal bonds
compared with prices of 30-year U.S. Treasury Bonds,
3/31/98-3/31/99
- -------------------------------------------------------
CHART DATA:
30-year U.S. Treasury Bonds 30-year AAA-rated municipal bonds
--------------------------- ---------------------------------
3/31/98 100.00 100.00
98.47 98.49
5/31/98 100.14 100.77
103.47 100.00
7/31/98 101.57 100.00
107.12 102.33
9/30/98 114.87 105.57
111.47 102.33
11/30/98 109.83 102.33
111.47 102.33
1/31/99 111.14 103.13
103.32 101.55
3/31/99 102.11 100.77
Source: Scudder Kemper Investments, Inc.
Treasury bond yields back up to July 1998 levels. Over the Fund's most recent
fiscal year, yields of 30-year Treasury bonds ended slightly lower, beginning
the period at 5.84% and ending it at 5.67%. Over the same time frame, yields of
30-year AAA-rated municipal bonds declined from 5.10% to 5.05%.
In addition to high tax-free yields, municipal bonds have historically offered
greater price stability over time than Treasury bonds of comparable maturity.
The accompanying chart demonstrates the record over the past 12 months, when
most financial markets were at a peak of volatility.
9 - Scudder New York Tax Free Fund
<PAGE>
Recent Strategy
Over the past 12 months, Scudder New York Tax Free Fund pursued a two-part
strategy: First, the Fund emphasized premium "cushion" bonds -- bonds with high
coupons that compensate investors for the fact that they can be redeemed by
their issuer in a relatively short period of time. Second, the Fund continues to
hold a substantial position in noncallable bonds (59% of assets) to provide a
relatively stable income stream along with long-term price appreciation
potential. In terms of maturity, we focused on 11- to 15-year bonds, because we
believe they offer the best total return potential, based on our outlook for
interest rates and the yield differentials among bonds across the maturity
spectrum. Lastly, our continuing goal is to have an average effective maturity
similar to that of the Lehman Brothers Municipal Bond Index, but with a
superior, call-protected structure. As of March 31, the Fund's average duration
was 7.4 years. (Duration gives relative weight to both principal and interest
payments through the life of a bond and has replaced average maturity as the
standard measure of interest rate sensitivity among professional investors.
Generally, the shorter the duration, the less sensitive a portfolio will be to
changes in interest rates.)
Overall portfolio quality remains high, with 78% of portfolio securities rated A
or better at the close of the period. We continue to invest in a broad selection
of New York tax-exempt issues, including core cities/lease, general obligation,
and higher education bonds.
New York Update
For the fifteenth consecutive year, April 1st came and went without a budget for
New York State. Despite this delay, the State continues to benefit from the
strength of the economy, both locally and nationally. As expected, the State
finished its 1999 fiscal year with an operating surplus of $1.9 billion in its
General Fund. Higher than expected income tax revenues and lower than expected
social service costs accounted for the surplus. New York State's economy
continues to grow, though more slowly than the national economy. The State's
1998 private sector job growth of 2%, or 130,500 jobs, was the strongest annual
growth in a decade. New York's average unemployment rate was 5.6% in 1998,
compared with the national average of 4.5%.
The financial, insurance, and real estate sectors represent the underlying
strength of the New York State economy. Although these sectors only represent 6%
of the job market and are experiencing minimal job growth, they are an integral
factor in the State's strong financial position. Financial companies on Wall
Street have been reaping tremendous profits, resulting in higher salaries and
even higher year-end bonuses for their employees. The dramatic rise in the stock
market has also increased the State's capital gain receipts. In 1997 the State's
per capita income was $30,752, 20% higher than the national average.
New York's debt burden is high, but manageable: The State currently has $57
billion in direct and appropriation debt outstanding. The Governor's
10 - Scudder New York Tax Free Fund
<PAGE>
proposed increase in pay-as-you-go financing and the State's scheduled debt
retirement plan will offset new debt issuance, leaving the State's debt
outstanding relatively flat for the next five years. New York's credit outlook
continues to be stable given its positive economy and the resulting growth in
employment and continued improvements in the State's financial position. But the
State's thin reserves and the continual lack of consensus between its political
parties negatively impact New York State's credit standing.
Outlook
Because the powerful market forces that have brought the United States close to
price stability -- including technology, deregulation, globalization, and
vigilant central banks -- are still in full effect, we believe that inflation
will remain restrained over the next several years. At the same time, we believe
that higher oil prices could prompt a "gentle slowdown" in U.S. economic
activity. This would relieve some of the financial imbalances (vigorous
individual and corporate spending contrasting with shrinking savings and profit
levels, for example) that we are currently observing in the economy.
Low inflation, and any slowing of the economy, in turn, would benefit municipal
bonds, which continue to be attractively priced versus Treasuries. At the same
time, we are mindful that the U.S. economy is nearing "full employment," and
that an economic rebound in Asia could cause the U.S. economy to overheat. Over
the coming months we plan to maintain a neutral portfolio duration compared with
similar New York tax-free funds and will attempt to limit the Fund's share price
volatility.
11 - Scudder New York Tax Free Fund
<PAGE>
We plan to focus on 10-15 year premium coupon bonds as the Fund seeks to benefit
from the yield and capital appreciation opportunities afforded by the New York
tax-exempt bond market. In addition to a neutral average duration, we will
maintain high overall credit quality as we seek triple-tax-free income and
competitive returns for our shareholders. Thank you for investing with Scudder.
Sincerely,
Your Portfolio Management Team
/s/Ashton P. Goodfield /s/Eleanor R. Brennan
Ashton P. Goodfield Eleanor R. Brennan
Scudder New York
Tax Free Fund:
A Team Approach to Investing
Scudder New York Tax Free Fund is managed by a team of Scudder Kemper
Investments, Inc. (the "Adviser") professionals, each of whom plays an important
role in the Fund's management process. Team members work together to develop
investment strategies and select securities for the Fund's portfolio. They are
supported by the Adviser's large staff of economists, research analysts,
traders, and other investment specialists who work in our offices across the
United States and abroad. We believe our team approach benefits Fund investors
by bringing together many disciplines and leveraging our extensive resources.
Lead Portfolio Manager Ashton P. Goodfield assumed responsibility for the Fund's
day-to-day management and overall investment strategies in 1999. Ms. Goodfield
joined the Adviser in 1986 and has over 13 years of experience in the mutual
fund industry. Portfolio Manager Eleanor R. Brennan joined the team in 1999 and
the Adviser in 1995. Ms. Brennan has 13 years of experience in municipal
investing and portfolio management.
12 - 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)
13 - Scudder New York Tax Free Money Fund
Scudder New York Tax Free Fund
<PAGE>
Investment Portfolio as of March 31, 1999
<TABLE>
<CAPTION>
Credit
Principal Rating(b) Market
Amount ($) (Unaudited) Value ($)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Municipal Investments 100.0%
- ---------------------------------------------------------------------------------------------------------------------------------
New York
Albany, NY, Industrial Development Authority, Davies Office Refurbishing,
Series 1997, AMT, Weekly Demand Note, 2.95%, 2/1/2017* ...................... 2,240,000 A1 2,240,000
Erie County, NY, Water Authority, Waterworks Systems Revenue, Weekly Demand
Bonds, 2.75%, 12/1/2016* .................................................... 2,000,000 A1+ 2,000,000
Hempstead, NY, Industrial Development Agency, Trigen-Nassua Energy Corporation,
Series 1998, Weekly Demand Note, AMT, 2.85%, 9/15/2015* ..................... 1,000,000 A1+ 1,000,000
Long Island, NY, Power Authority, Electric Systems Revenue:
Tax Exempt Commercial Paper:
2.45%, 4/8/1999 ............................................................ 2,000,000 A1+ 2,000,000
3.05%, 6/17/1999 ........................................................... 1,000,000 A1+ 1,000,000
Weekly Demand Note, 2.9%, 5/1/2033* ......................................... 1,000,000 A1+ 1,000,000
Monroe County, NY, Industrial Development Agency, Office Building Associates,
Series 1992, Weekly Demand Note, 2.85%, 10/1/2000* .......................... 1,724,000 P1 1,724,000
Nassau County, NY:
Revenue Anticipation Note, Series 1998 C, 4%, 4/13/1999 ..................... 1,000,000 SP1 1,000,128
Tax Anticipation Note:
Series 1998 B, 3.5%, 8/18/1999 ............................................. 1,000,000 SP1 1,001,681
Series 1998 C, 3.5%, 12/22/1999 ............................................ 1,000,000 SP1 1,002,810
New York City, General Obligation, Bond Anticipation Note:
Series 1995 B, Daily Demand Note, 3.2%, 8/15/2005* .......................... 1,200,000 A1 1,200,000
Series 1995 B, Daily Demand Note, 3.2%, 8/15/2009* .......................... 1,598,000 A1+ 1,598,000
Series 1995 B, Daily Demand Note, 3.2%, 8/15/2022* .......................... 757,000 A1+ 757,000
Tax Exempt Commercial Paper:
3%, 4/1/1999 ............................................................... 1,000,000 A1 1,000,000
3.1%, 6/10/1999 ............................................................ 1,000,000 A1 1,000,000
Series 1996, 3.25%, 4/1/1999 ............................................... 1,000,000 A1 1,000,000
New York City Municipal Water Finance Authority:
Tax Exempt Commercial Paper, 2.75%, 4/9/1999 ................................ 2,000,000 A1+ 2,000,000
Daily Demand Note, Series 1995 A, 3.35%, 6/15/2025 (c)* ..................... 3,500,000 VMIG1 3,500,000
New York City Health and Hospital Corporation Revenue, Series 1997 A, Weekly
Demand Note, 2.8%, 2/15/2026* .............................................. 980,000 A1+ 980,000
New York City, Housing Development Corporation, Residential Revenue Bonds,
Montefiore Medical Center, Weekly Demand Note, 2.7%, 5/1/2030* ............. 1,000,000 A1+ 1,000,000
The accompanying notes are an integral part of the financial statements.
14 - Scudder New York Tax Free Money Fund
<PAGE>
Credit
Principal Rating(b) Market
Amount ($) (Unaudited) Value ($)
- ---------------------------------------------------------------------------------------------------------------------------------
New York City, Industrial Development Agency, Korean Airlines, Series 1997 A,
Weekly Demand Note, AMT, 2.9%, 11/1/2024* .................................. 2,000,000 A1 2,000,000
New York Metropolitan Transit Authority, Tax Exempt Commercial Paper:
Series B, 2.7%, 5/13/1999 .................................................. 2,000,000 A1+ 2,000,000
Series B, 2.7%, 5/14/1999 .................................................. 1,000,000 A1+ 1,000,000
Series B, 3%, 7/21/1999 .................................................... 1,000,000 A1+ 1,000,000
New York Power Authority, Tax Exempt Commercial Paper:
3%, 5/11/1999 .............................................................. 1,000,000 A1 1,000,000
3.15%, 6/14/1999 ........................................................... 2,500,000 A1 2,500,000
New York State, Environmental Quality, General Obligation, Tax Exempt Commercial
Paper, Series 1997 A, 2.7%, 4/12/1999 ...................................... 1,000,000 A1+ 1,000,000
New York State, General Obligation, Bond Anticipation Note, Tax Exempt
Commercial Paper:
3.1%, 6/14/1999 ........................................................... 1,000,000 A1 1,000,000
3.05%, 7/13/1999 .......................................................... 2,000,000 A1 2,000,000
3.05%, 7/19/1999 .......................................................... 1,000,000 A1 1,000,000
New York State Dormitory Authority:
Columbia University, Tax Exempt Commercial Paper:
Series 1997, 2.95%, 7/13/1999 ............................................. 2,000,000 A1+ 2,000,000
Series 1997, 2.95%, 7/19/1999 ............................................. 1,000,000 A1+ 1,000,000
Cornell University, Daily Demand Note, Series 1990 B, 2.95%, 7/1/2025* ..... 3,600,000 A1+ 3,600,000
Sloan Kettering Cancer Center, Tax Exempt Commercial Paper, Series 1989 B,
2.95%, 4/12/1999 ........................................................ 3,000,000 A1 3,000,000
New York State Energy Research and Development Authority:
Daily Demand Note, Series 1994 D, 2.9%, 10/1/2029* ......................... 3,500,000 VMIG1 3,500,000
Gas Facilities Revenue Bonds, Weekly Demand Note, Series 1997 A-1, 2.95%,
12/1/2020* .............................................................. 1,000,000 A1+ 1,000,000
Niagara Project, Daily Demand Note, Series 1985 C, 3.2%, 12/1/2025* ........ 2,500,000 P1 2,500,000
Long Island Lighting Co., AMT, Series 1997 A, Weekly Demand Note, 2.85%,
12/1/2027* .............................................................. 4,000,000 MIG1 4,000,000
New York State Housing Finance Agency:
Hospital for Special Surgery, Weekly Demand Bond, Series 1985 A, 2.95%,
11/1/2010* .............................................................. 2,005,000 VMIG1 2,005,000
Normandie Court I Housing Revenue, Weekly Demand Bond, 2.80%, 5/15/2015* ... 3,900,000 A1+ 3,900,000
Tribeca Landing Housing, Revenue Bonds, Weekly Demand Note, AMT,
Series 1997A, 2.95%, 11/1/2030* ......................................... 2,000,000 A1 2,000,000
The accompanying notes are an integral part of the financial statements.
15 - Scudder New York Tax Free Money Fund
<PAGE>
Credit
Principal Rating(b) Market
Amount ($) (Unaudited) Value ($)
- ---------------------------------------------------------------------------------------------------------------------------------
New York State Pollution Control Revenue, Orange & Rockland, Weekly Demand
Notes, Series 1994 A, 2.75%, 10/1/2014* .................................... 2,100,000 A1+ 2,100,000
Niagara County, NY, Industrial Development Agency, Solid Waste Disposal Revenue,
Weekly Demand Note, AMT, Series 1994 B, 3.05%, 11/15/2024* ................. 2,500,000 A1 2,500,000
Onondaga County, NY, Industrial Development Agency, Southern Container Corp.,
Weekly Demand Note, AMT, Series 1997 A, 2.95%, 8/1/2007* ................... 1,500,000 A1 1,500,000
Schenectady County, NY, Industrial Development Revenue, Scotia Industrial Park
Project, Weekly Demand Bond, Series 1993 A, 2.9%, 6/1/2009* ................ 1,970,000 P1 1,970,000
Puerto Rico
Puerto Rico Commonwealth, General Obligation Note, 5.5%, 7/1/1999 ............ 1,000,000 A 1,005,766
- ---------------------------------------------------------------------------------------------------------------------------------
Total Municipal Investments (Cost $80,084,385) 80,084,385
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $80,084,385) (a) 80,084,385
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The cost for federal income tax purposes was $80,084,385.
(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, Capital Guaranty, FGIC,
FSA or MBIA/BIG.
* Floating rate and monthly, weekly, or daily demand notes are securities
whose yields vary with a designated market index or market rate, such as
the coupon-equivalent of the Treasury bill rate. Variable rate demand notes
are securities whose yields are periodically reset at levels that are
generally comparable to tax-exempt commercial paper. These securities are
payable on demand within seven calendar days and normally incorporate an
irrevocable letter of credit from a major bank. These notes are carried,
for purposes of calculating average weighted maturity, at the longer of the
period remaining until the next rate change or to the extent of the demand
period.
AMT: Subject to alternative minimum tax
The accompanying notes are an integral part of the financial statements.
16 - Scudder New York Tax Free Money Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of March 31, 1999
<TABLE>
<CAPTION>
Assets
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investments, at value (identified cost $80,084,385) ......... $ 80,084,385
Cash ........................................................ 31,936
Interest receivable ......................................... 243,569
Receivable for Fund shares sold ............................. 198,862
Other assets ................................................ 1,480
----------------
Total assets ................................................ 80,560,232
Liabilities
- -----------------------------------------------------------------------------------------------------------------------------
Payable for Fund shares redeemed ............................ 54,258
Dividends payable ........................................... 11,388
Accrued management fee ...................................... 28,164
Other payables and accrued expenses ......................... 45,588
----------------
Total liabilities ........................................... 139,398
-------------------------------------------------------------------------------------------
Net assets, at value $ 80,420,834
-------------------------------------------------------------------------------------------
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Accumulated net realized gain (loss) ........................ (52,888)
Paid-in capital ............................................. 80,473,722
-------------------------------------------------------------------------------------------
Net assets, at value $ 80,420,834
-------------------------------------------------------------------------------------------
Net Asset Value
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share ($80,420,834
/ 80,424,541 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.
17 - Scudder New York Tax Free Money Fund
<PAGE>
Statement of Operations
year ended March 31, 1999
<TABLE>
<CAPTION>
Investment Income
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Income:
Interest .................................................... $ 2,795,644
----------------
Expenses:
Management fee .............................................. 425,992
Services to shareholders .................................... 71,895
Custodian and accounting fees ............................... 51,232
Trustees' fees and expenses ................................. 17,465
Auditing .................................................... 23,840
Reports to shareholders ..................................... 11,879
Legal ....................................................... 3,631
Registration fees ........................................... 14,504
Other ....................................................... 5,606
----------------
Total expenses before reductions ............................ 626,044
Expense reductions .......................................... (114,854)
----------------
Expenses, net ............................................... 511,190
-------------------------------------------------------------------------------------------
Net investment income 2,284,454
-------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments ................................................. (388)
-------------------------------------------------------------------------------------------
Net gain (loss) on investment transactions (388)
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 2,284,066
-------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
18 - Scudder New York Tax Free Money Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Years Ended March 31,
Increase (Decrease) in Net Assets 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income .................................. $ 2,284,454 $ 2,032,129
Net realized gain (loss) from investment transactions .. (388) --
---------------- ----------------
Net increase (decrease) in net assets resulting from ... 2,284,066 2,032,129
operations ---------------- ----------------
Distributions to shareholders from net investment ...... (2,284,454) (2,032,129)
income ---------------- ----------------
Fund share transactions at net asset value of $1.00
per share:
Shares sold ............................................ 197,943,189 133,210,045
Net asset value of shares issued to shareholders in
reinvestment of distributions .......................... 2,006,593 1,770,083
Shares redeemed ........................................ (212,042,600) (102,004,740)
---------------- ----------------
Net increase (decrease) in net assets from Fund share .. (12,092,818) 32,975,388
transactions ---------------- ----------------
Increase (decrease) in net assets ...................... (12,093,206) 32,975,388
Net assets at beginning of period ...................... 92,514,040 59,538,652
---------------- ----------------
Net assets at end of period ............................ $80,420,834 $92,514,040
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
19 - 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>
Years Ended March 31,
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............................ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------------------------------------------------------
Net investment income ........................................... .027 .030 .028 .031 .025
Distributions from net investment income ........................ (.027) (.030) (.028) (.031) (.025)
------------------------------------------------------
Net asset value, end of period .................................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Total Return (%) (a) ............................................ 2.71 3.06 2.85 3.18 2.57
Ratios and Supplemental Data
Net assets, end of period ($ millions) .......................... 80 93 60 58 55
Ratio of operating expenses, net to average daily net assets (%) .60 .60 .60 .60 .60
Ratio of operating expenses before expense reductions, to average .73 .78 .85 .86 .89
daily net assets (%)
Ratio of net investment income to average daily net assets (%) .. 2.68 3.00 2.81 3.13 2.56
</TABLE>
(a) Total returns would have been lower had certain expenses not been reduced.
20 - Scudder New York Tax Free Money Fund
<PAGE>
Investment Portfolio as of March 31, 1999
<TABLE>
<CAPTION>
Credit
Principal Rating (b) Market
Amount ($) (Unaudited) Value ($)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Short-Term Municipal Investments 2.3%
- ---------------------------------------------------------------------------------------------------------------------------------
New York
Long Island Power Authority, Electrical Systems Revenue Bond, Series 5,
Daily Demand Note, 3.15%, 5/1/2033* ......................................... 1,600,000 A1+ 1,600,000
New York City, Series B, Daily Demand Note, 3.2%, 8/15/2022 (c)* .............. 190,000 A1+ 190,000
New York State Dormitory Authority Revenue, Cornell University, Daily Demand
Note, Series B, 2.95%, 7/1/2025* ............................................ 2,000,000 A1+ 2,000,000
New York, NY, General Obligation:
Daily Demand Note, 3.4%, 8/15/2020* ......................................... 700,000 A1+ 700,000
Daily Demand Note, Series B2, 2.9%, 8/15/2009 (c)* .......................... 350,000 A1+ 350,000
- ---------------------------------------------------------------------------------------------------------------------------------
Total Short-Term Municipal Investments (Cost $4,840,000) 4,840,000
- ---------------------------------------------------------------------------------------------------------------------------------
Long-Term Municipal Investments 97.7%
- ---------------------------------------------------------------------------------------------------------------------------------
New York
34th Street Partnership Inc., NY, Capital Improvement, 5.5%, 1/1/2014 ......... 1,900,000 A 1,961,180
Albany County Airport Revenue:
Series 1997, AMT, 5.375%, 12/15/2017 (c) .................................... 1,000,000 AAA 1,026,540
Series 1997, AMT, 5.5%, 12/15/2019 (c) ...................................... 1,000,000 AAA 1,037,620
Albany, NY, General Obligation, 7%, 1/15/2008 (c) ............................. 485,000 AAA 508,207
Babylon, NY, General Obligation:
Series 1998 A, Zero Coupon, 8/1/2006 (c) .................................... 1,045,000 AAA 766,027
Series 1998 A, Zero Coupon, 8/1/2007 (c) .................................... 735,000 AAA 512,251
Canandaigua, NY, School District, General Obligation:
Series 1991, 6.4%, 6/1/2008 (c) ............................................. 500,000 AAA 580,465
Series 1991, 6.5%, 6/1/2011 (c) ............................................. 550,000 AAA 649,886
Chautauqua County, NY:
7.3%, 4/1/2008 (c) .......................................................... 575,000 AAA 704,254
7.3%, 4/1/2009 (c) .......................................................... 575,000 AAA 712,632
Series 1990, 7.3%, 4/1/2007 (c) ............................................. 465,000 AAA 558,832
Series 1990, 6.4%, 9/15/2008 (c) ............................................ 520,000 AAA 605,851
Dutchess County, NY, Resource Agency Recovery, Solid Waste Management,
Series 1990 A, 7.5%, 1/1/2009 (c) ........................................... 1,000,000 AAA 1,051,770
Erie County, NY, Public Improvement General Obligation Unlimited, Series 1992,
6.125%, 1/15/2012 (c) ....................................................... 590,000 AAA 674,978
Glen Cove Housing Authority, Senior Living Facility, The Mayfair at Glen Cove,
AMT, Series 1996, 8.25%, 10/1/2026 .......................................... 1,500,000 SKI 1,692,285
The accompanying notes are an integral part of the financial statements.
21 - Scudder New York Tax Free Fund
<PAGE>
Credit
Principal Rating (b) Market
Amount ($) (Unaudited) Value ($)
- ---------------------------------------------------------------------------------------------------------------------------------
Inverse Variable Rate Certificate Trust, Metropolitan Transit Authority,
Series 1993 B, 7.17%, 6/30/2002 (c)** ....................................... 8,000,000 SKI 8,960,000
Islip, New York Community Development Agency, New York Institute of Technology,
Series 1996, 7.5%, 3/1/2026 ................................................. 4,000,000 SKI 4,380,600
Jamestown, New York, General Obligation:
Series 1991 A, 7%, 3/15/2007 (c) ............................................ 725,000 AAA 856,225
Series 1991 A, 7%, 3/15/2008 (c) ............................................ 600,000 AAA 721,326
Long Island Power Authority, Electrical Systems Revenue Bond:
Electrical Systems Revenue Bond, 5.125%, 4/1/2012 (c) (f) ................... 4,000,000 AAA 4,145,080
Series 1998 A, Zero Coupon, 12/1/2015 (c) ................................... 3,800,000 AAA 1,668,466
Series 1998 A, Zero Coupon, 12/1/2016 (c) ................................... 1,000,000 AAA 414,330
Monroe County, NY, General Obligation Unlimited:
6%, 6/1/2006 ................................................................ 500,000 AA 557,460
Series 1996, 6%, 3/1/2013 ................................................... 1,050,000 AA 1,191,687
Series 1996, 6%, 3/1/2014 ................................................... 1,040,000 AA 1,181,357
Series 1996, 6%, 3/1/2017 ................................................... 1,410,000 AA 1,600,759
Nassau County, NY, General Obligation:
Combined Sewer District, Series 1997 A, 6%, 7/1/2011 (c) .................... 1,000,000 AAA 1,125,910
Series 1997 A, 6%, 7/1/2011 (c) ............................................. 780,000 AAA 881,330
Nassau County, NY, General Obligation Refunding, Combined Sewer Districts,
Series 1993 G, 5.4%, 1/15/2010 (c) .......................................... 1,655,000 AAA 1,778,149
New York City, Industrial Development Agency:
Civil Facility Revenue, YMCA Greater New York Project:
Series 1997, 5.85%, 8/1/2008 ............................................... 600,000 BBB 642,708
Series 1997, 5.8%, 8/1/2016 ................................................ 1,000,000 BBB 1,053,160
Series 1997, 6%, 8/1/2006 .................................................. 580,000 BBB 626,272
Japan Air Lines, Series 1996, AMT, 6%, 11/1/2015 (c) ........................ 1,000,000 AAA 1,074,480
New York City, NY, General Obligation:
Series 1991 B, 7.5%, 2/1/2005 ............................................... 1,935,000 A 2,138,852
Series 1996 A, 7%, 8/1/2005 ................................................. 5,000,000 A 5,747,100
Series 1996 A, 7%, 8/1/2006 ................................................. 5,000,000 A 5,813,700
Series 1996 A, 6.25%, 8/1/2009 .............................................. 5,175,000 A 5,811,680
Series 1997 I, 6%, 4/15/2009 ................................................ 2,000,000 A 2,195,980
Series 1998 F, 5.25%, 9/15/2013 ............................................. 1,000,000 A 1,044,660
Series B, Prerefunded 2/1/2002, 7.5%, 2/1/2005 .............................. 425,000 A 473,131
Series B, 8.25%, 6/1/2006 ................................................... 2,750,000 A 3,393,913
The accompanying notes are an integral part of the financial statements.
22 - Scudder New York Tax Free Fund
<PAGE>
Credit
Principal Rating (b) Market
Amount ($) (Unaudited) Value ($)
- ---------------------------------------------------------------------------------------------------------------------------------
Series B, 7.25%, 8/15/2007 .................................................. 2,250,000 A 2,680,110
Series B1, Prerefunded 8/15/2004, 7.3%, 8/15/2010 (d) ....................... 45,000 AAA 52,666
Series E, 8%, 8/1/2005 (c) .................................................. 330,000 AAA 400,095
New York City, NY, Industrial Development Agency, Civil Facilities, USTA National
Tennis Center:
6.1%, 11/15/2004 (c) ....................................................... 1,215,000 AAA 1,347,423
6.25%, 11/15/2006 (c) ...................................................... 3,000,000 AAA 3,368,550
New York City, NY, Transitional Finance Authority, Revenue Bond:
Future Tax Secured, Series 1998 B, 4.75%, 11/15/2023 ........................ 5,000,000 AA 4,722,400
Series 1998 A, 5.25%, 11/15/2011 ............................................ 1,250,000 AA 1,319,863
New York Environmental Facilities Corporation, Clean Water and Drinking Revolving
Funds:
Series 1998 F, 5.25%, 6/15/2013 ............................................ 2,500,000 AA 2,609,675
Series 1998 F, 5.25%, 6/15/2014 ............................................ 2,500,000 AA 2,594,250
New York State Dormitory Authority:
City University System Series 1995 A, 5.625%, 7/1/2016 (c) .................. 1,100,000 AAA 1,198,780
College and University Pooled Capital Program, 7.8%, 12/1/2005 (c) .......... 795,000 AAA 815,622
Columbia University, NY, Revenue, 6%, 7/1/2010 .............................. 1,000,000 BBB 1,103,050
Jewish Medical Center, Series 1998, 5.25%, 7/1/2011 (c) ..................... 2,000,000 AAA 2,091,820
Lease Revenue, Municipal Health Facilities:
Series 1998, 4.75%, 1/15/2029 (c) .......................................... 2,000,000 AAA 1,875,780
Series 1998 A, 5.375%, 5/15/2009 (c) ....................................... 440,000 AAA 470,633
Series 1998 A, 5.375%, 5/15/2010 (c) ....................................... 465,000 AAA 495,006
Lease Revenue, Court Facilities:
Zero Coupon, 8/1/2020 ...................................................... 1,600,000 AA 541,904
Zero Coupon, 8/1/2021 ...................................................... 3,850,000 AA 1,236,736
Zero Coupon, 8/1/2022 ...................................................... 2,795,000 AA 852,168
Zero Coupon, 8/1/2023 ...................................................... 2,545,000 AA 735,683
Mental Health Services Facilities:
Series B, 5.5%, 7/1/2018 (c) (e) ........................................... 1,375,000 AAA 1,439,873
Series 1998 D, 5.25%, 8/15/2013 (c) ........................................ 2,400,000 AAA 2,485,152
Mental Health Services, Facilities Improvement:
5.25%, 8/15/2011 (c) ....................................................... 1,750,000 AAA 1,836,223
4.75%, 2/15/2025 (c) ....................................................... 2,500,000 AAA 2,361,200
The accompanying notes are an integral part of the financial statements.
23 - Scudder New York Tax Free Fund
<PAGE>
Credit
Principal Rating (b) Market
Amount ($) (Unaudited) Value ($)
- ---------------------------------------------------------------------------------------------------------------------------------
Nyack Hospital:
Series 1996, 6%, 7/1/2006 .................................................. 1,000,000 SKI 1,079,520
Series 1996, 6.25%, 7/1/2013 ............................................... 500,000 SKI 530,200
Pace University:
Series 1997, 6.5%, 7/1/2008 (c) ............................................ 1,360,000 AAA 1,585,121
Series 1997, 6.5%, 7/1/2009 (c) ............................................ 555,000 AAA 654,301
State University Series 1993 A, 5.875%, 5/15/2011 (c) ....................... 380,000 AAA 425,741
Upstate Community Colleges, Series A, 5%, 7/1/2014 (c) (e) .................. 1,170,000 AAA 1,188,147
New York State Dormitory Authority Revenue:
5.75%, 7/1/2009 ............................................................. 1,000,000 AAA 1,111,390
Columbia University, 5%, 7/1/2015 ........................................... 2,500,000 AA 2,503,700
Mental Health Services Facilities Series 1997 B, 5.625%, 2/15/2021 (c) ...... 500,000 AAA 526,475
Mental Health Services Facilities Improvement:
Series 1996 B, 6.5%, 2/15/2010 ............................................. 1,500,000 A 1,720,800
Series 1996 B, 6.5%, 2/15/2011 ............................................. 1,000,000 A 1,149,490
Series 1996 B, 6%, 2/15/2012 ............................................... 2,500,000 A 2,767,650
Montefiore Medical Center:
Series 1996, 6%, 8/1/2008 (c) .............................................. 2,000,000 AAA 2,242,640
Series 1996, 6%, 2/1/2009 (c) .............................................. 2,000,000 AAA 2,232,760
Mt. Sinai School of Medicine, Series B, 5.7%, 7/1/2011 (c) .................. 1,825,000 AAA 2,022,100
State University Educational Facility, Series A, 5.875%, 5/15/2011 .......... 2,250,000 A 2,492,055
Upstate Community College, 5.8%, 7/1/2006 ................................... 1,075,000 BBB 1,167,472
New York State Environmental Facilities Corporation:
State Water Revolving Fund, Series D, 6.9%, 5/15/2015 ....................... 1,260,000 AAA 1,447,286
Special Obligation Revenue, Riverbank State Park:
Series 1996, 6.25%, 4/1/2007 (c) ........................................... 2,055,000 AAA 2,332,774
Series 1996, 6.25%, 4/1/2008 (c) ........................................... 2,185,000 AAA 2,498,460
New York State Health Facilities Authority, 6.375%, 11/1/2004 ................. 1,500,000 BBB 1,655,715
New York State Housing Finance Agency, Service Contract, Series A, 5.875%,
9/15/2014 ................................................................... 6,000,000 BBB 6,342,540
New York State Local Government Assistance Corporation, Series 1993 E, 5.25%,
4/1/2016 (c) ................................................................ 1,185,000 AAA 1,243,669
New York State Mortgage Agency, Revenue, AMT, Series 1994, 6.8%, 10/1/2005 .... 1,000,000 AA 1,070,130
New York State Throughway Authority General Revenue, Capital Appreciation
Special Obligation, Series 1991 A, Zero Coupon, 1/1/2006 .................... 2,905,000 BBB 2,155,510
The accompanying notes are an integral part of the financial statements.
24 - Scudder New York Tax Free Fund
<PAGE>
Credit
Principal Rating (b) Market
Amount ($) (Unaudited) Value ($)
- ---------------------------------------------------------------------------------------------------------------------------------
New York State Urban Development Corp.:
Series 1996 A, 6.25%, 4/1/2005 (c) .......................................... 1,375,000 AAA 1,531,613
State Facilities Series 1995, 5.7%, 4/1/2009 (c) ............................ 4,250,000 AAA 4,693,105
New York State, Urban Development Corporation Revenue, Correctional Facilities:
NC Series 95, 5.375%, 1/1/2015 (c) .......................................... 2,000,000 AAA 2,073,980
Series 1994 A, 5.5%, 1/1/2014 (c) ........................................... 2,000,000 AAA 2,157,620
New York Triborough Bridge and Tunnel Authority, Series 1998 A, 5.25%,
1/1/2013 (c) ................................................................ 1,500,000 AAA 1,565,025
Niagara County, NY, General Obligation, 7.1%, 2/15/2011 (c) ................... 500,000 AAA 616,340
Niagara Falls, NY, Water Treatment Plant, AMT:
7%, 11/1/2003 (c) ........................................................... 2,260,000 AAA 2,547,314
8.5%, 11/1/2005 (c) ......................................................... 2,140,000 AAA 2,668,559
8.5%, 11/1/2006 (c) ......................................................... 1,240,000 AAA 1,576,672
Oneida-Herkimer, NY, Solid Waste Management Authority:
Series 1998, 5.5%, 4/1/2013 (c) ............................................. 500,000 AAA 535,380
Series 1998, 5.5%, 4/1/2014 (c) ............................................. 1,000,000 AAA 1,070,920
Onondaga County, NY, Industrial Development Agency, Solid Waste Disposal
Facility, Solvay Paperboard LLC, Series 1998, AMT, 7%, 11/1/2030 ............ 3,000,000 SKI 3,117,060
Orange County, NY, Industrial Development Agency, The Glen Arden Project:
5.2%, 1/1/2005 .............................................................. 200,000 SKI 202,042
5.3%, 1/1/2006 .............................................................. 200,000 SKI 202,334
5.35%, 1/1/2007 ............................................................. 200,000 SKI 201,990
5.4%, 1/1/2008 .............................................................. 100,000 SKI 100,956
5.625%, 1/1/2018 ............................................................ 1,000,000 SKI 992,700
5.7%, 1/1/2028 .............................................................. 1,250,000 SKI 1,234,038
Oswego County, NY, General Obligation Series 1991, 6.7%, 6/15/2012 ............ 1,100,000 A 1,321,771
Port Authority of New York & New Jersey:
Special Obligation Revenue, JFK International Air Terminal, AMT:
6.25%, 12/1/2010 (c) ....................................................... 2,500,000 AAA 2,866,600
6.25%, 12/1/2011 (c) ....................................................... 2,500,000 AAA 2,866,525
Split Amount, Series 1996, 7%, 10/1/2007 .................................... 3,500,000 SKI 3,870,685
Shenendehowa Central School District, NY, Clifton Park:
6.85%, 6/15/2008 (c) ........................................................ 350,000 AAA 420,714
6.85%, 6/15/2009 (c) ........................................................ 350,000 AAA 423,784
The accompanying notes are an integral part of the financial statements.
25 - Scudder New York Tax Free Fund
<PAGE>
Credit
Principal Rating (b) Market
Amount ($) (Unaudited) Value ($)
- ---------------------------------------------------------------------------------------------------------------------------------
Suffolk County, NY, General Obligation:
Series 1998, 5.25%, 8/1/2010 (c) ............................................ 1,285,000 AAA 1,367,394
Series 1998, 5.25%, 4/1/2010 (c) ............................................ 1,590,000 AAA 1,689,741
Suffolk County, NY, Industrial Development Agency, Southwest Sewer System,
6%, 2/1/2007 (c) ............................................................ 500,000 AAA 556,340
Troy, New York, Municipal Assistance Corporation:
Series B, Zero Coupon, 1/15/2007 (c) ........................................ 650,000 AAA 463,821
Series B, Zero Coupon, 7/15/2007 (c) ........................................ 650,000 AAA 453,882
Series B, Zero Coupon, 1/15/2008 (c) ........................................ 750,000 AAA 508,538
Series B, Zero Coupon, 1/15/2009 (c) ........................................ 650,000 AAA 418,457
Series B, Zero Coupon, 7/15/2009 (c) ........................................ 350,000 AAA 220,311
Series B, Zero Coupon, 7/15/2010 (c) ........................................ 600,000 AAA 357,492
Ulster County, NY, General Obligation:
Series 1998 B, 5%, 10/15/2011 (c) ........................................... 275,000 AAA 285,387
Series 1998 B, 5%, 10/15/2012 (c) ........................................... 195,000 AAA 201,995
Series 1998 B, 5%, 10/15/2013 (c) ........................................... 130,000 AAA 133,934
Valley Central School District, Montgomery, NY, 7.15%, 6/15/2008 (c) .......... 625,000 AAA 761,150
Virgin Islands
Virgin Islands, General Obligation, Public Finance Authority, Mortgage Fund Loan
Notes, Series 1992 A, EMT, 7%, 10/1/2002*** ................................. 500,000 AAA 554,050
Virgin Islands, Public Finance Authority, Subordinate Lien, Series 1998 D, 6%,
10/1/2007 ................................................................... 3,000,000 SKI 3,140,130
Virgin Islands, Special Tax Bonds, Hugo Bonds, 7.75%, 10/1/2006 ............... 1,205,000 SKI 1,317,583
- ---------------------------------------------------------------------------------------------------------------------------------
Total Long-Term Municipal Investments (Cost $193,435,712) 206,589,333
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $198,275,712) (a) 211,429,333
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The cost for federal income tax purposes was $198,279,084. At March 31,
1999, net unrealized appreciation for all securities based on tax cost was
$13,150,249. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $13,397,008 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$246,759.
(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) 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, Capital Guaranty, FGIC,
FSA, FHA or MBIA/BIG.
The accompanying notes are an integral part of the financial statements.
26 - Scudder New York Tax Free Fund
<PAGE>
- --------------------------------------------------------------------------------
(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.
(e) When issued or forward delivery securities (See Note A in Notes to
Financial Statements)
(f) At March 31, 1999, these securities, in part or in whole, have been
segregated to cover when issued or forward delivery securities.
* Floating rate and monthly, weekly, or daily demand notes are securities
whose yields vary with a designated market index or market rate, such as
the coupon-equivalent of the Treasury bill rate. Variable rate demand notes
are securities whose yields are periodically reset at levels that are
generally comparable to tax-exempt commercial paper. These securities are
payable on demand within seven calendar days and normally incorporate an
irrevocable letter of credit from a major bank. These notes are carried,
for purposes of calculating average weighted maturity, at the longer of the
period remaining until the next rate change or to the extent of the demand
period.
** 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 March 31, 1999.
*** ETM: Bonds bearing the description ETM (escrowed to maturity) are
collateralized by U.S. Treasury securities which are held in escrow by a
trustee and used to pay principal and interest on bonds so designated.
AMT: Subject to alternative minimum tax
27 - Scudder New York Tax Free Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of March 31, 1999
<TABLE>
<CAPTION>
Assets
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investments, at market (identified cost $198,275,712) ........ $ 211,429,333
Cash ......................................................... 232,096
Interest receivable .......................................... 3,130,209
Receivable for Fund shares sold .............................. 69,808
Other assets ................................................. 4,391
----------------
Total assets ................................................. 214,865,837
Liabilities
- -----------------------------------------------------------------------------------------------------------------------------
Payable for when-issued and forward delivery securities ...... 2,628,216
Dividends payable ............................................ 242,676
Payable for Fund shares redeemed ............................. 49,512
Accrued management fee ....................................... 110,428
Other payables and accrued expenses .......................... 120,858
----------------
Total liabilities ............................................ 3,151,690
-------------------------------------------------------------------------------------------
Net assets, at market value $ 211,714,147
-------------------------------------------------------------------------------------------
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Unrealized appreciation (depreciation) on investments ........ 13,153,621
Accumulated net realized gain (loss) ......................... (4,421,992)
Paid-in capital .............................................. 202,982,518
-------------------------------------------------------------------------------------------
Net assets, at market value $ 211,714,147
-------------------------------------------------------------------------------------------
Net Asset Value
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($211,714,147 / 18,624,470 outstanding shares of beneficial ----------------
interest, $.01 par value, unlimited number of shares authorized) $11.37
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
28 - Scudder New York Tax Free Fund
<PAGE>
Statement of Operations
year ended March 31, 1999
<TABLE>
<CAPTION>
Investment Income
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Income:
Interest ..................................................... $ 10,842,168
----------------
Expenses:
Management fee ............................................... 1,285,712
Services to shareholders ..................................... 171,604
Custodian and accounting fees ................................ 95,155
Trustees' fees and expenses .................................. 31,427
Auditing ..................................................... 42,359
Reports to shareholders ...................................... 26,296
Legal ........................................................ 2,496
Registration fees ............................................ 12,887
Other ........................................................ 11,132
----------------
1,679,068
-------------------------------------------------------------------------------------------
Net investment income 9,163,100
-------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments .................................................. 2,112,216
Futures ...................................................... (43,747)
----------------
2,068,469
Net unrealized appreciation (depreciation) during the period on
investments .................................................. (343,581)
-------------------------------------------------------------------------------------------
Net gain (loss) on investments 1,724,888
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 10,887,988
-------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
29 - Scudder New York Tax Free Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Years Ended March 31,
Increase (Decrease) in Net Assets 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income .................................. $ 9,163,100 $ 8,735,659
Net realized gain (loss) from investment transactions .. 2,068,469 653,107
Net unrealized appreciation (depreciation) on
investment transactions ................................ (343,581) 10,291,177
---------------- ----------------
Net increase (decrease) in net assets resulting from ... 10,887,988 19,679,943
operations
---------------- ----------------
Distributions to shareholders from net investment
income ................................................. (9,163,100) (8,735,659)
---------------- ----------------
Distributions to shareholders from net realized gains .. -- (254,878)
---------------- ----------------
Fund share transactions:
Proceeds from shares sold .............................. 56,426,831 47,326,586
Net asset value of shares issued to shareholders in
reinvestment of distributions .......................... 6,158,807 5,891,191
Cost of shares redeemed ................................ (48,327,775) (48,822,944)
---------------- ----------------
Net increase (decrease) in net assets from Fund share
transactions ........................................... 14,257,863 4,394,833
---------------- ----------------
Increase (decrease) in net assets ...................... 15,982,751 15,084,239
Net assets at beginning of period ...................... 195,731,396 180,647,157
---------------- ----------------
Net assets at end of period ............................ $ 211,714,147 $ 195,731,396
---------------- ----------------
Other Information
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period .............. 17,368,966 16,986,861
---------------- ----------------
Shares sold ............................................ 4,958,346 4,258,999
Shares issued to shareholders in reinvestment of
distributions .......................................... 540,309 530,284
Shares redeemed ........................................ (4,243,151) (4,407,178)
---------------- ----------------
Net increase (decrease) in Fund shares ................. 1,255,504 382,105
---------------- ----------------
Shares outstanding at end of period .................... 18,624,470 17,368,966
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
30 - 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>
Years Ended March 31,
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
----------------------------------------------------------
Net asset value, beginning of period ........................... $ 11.27 $ 10.63 $ 10.67 $ 10.38 $ 10.32
----------------------------------------------------------
Income from investment operations:
Net investment income .......................................... .51 .51 .53 .53 .52
Net realized and unrealized gain (loss) on investment transactions .10 .66 (.03) .29 .11
----------------------------------------------------------
Total from investment operations ............................... .61 1.17 .50 .82 .63
----------------------------------------------------------
Less distributions:
From net investment income ..................................... (.51) (.51) (.53) (.53) (.52)
From net realized gains ........................................ -- (.02) (.01) -- (.05)
----------------------------------------------------------
Total distributions ............................................ (.51) (.53) (.54) (.53) (.57)
----------------------------------------------------------
----------------------------------------------------------
Net asset value, end of period ................................. $ 11.37 $ 11.27 $ 10.63 $ 10.67 $ 10.38
----------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Total Return (%) ............................................... 5.46 11.20 4.76 7.95 6.39
Ratios and Supplemental Data
Net assets, end of period ($ millions) ......................... 212 196 181 192 194
Ratio of operating expenses to average daily net assets (%) .... .82 .83 .83 .82 .82
Ratio of net investment income to average daily net assets (%) . 4.45 4.65 4.95 4.91 5.13
Portfolio turnover rate (%) .................................... 44.5 28.8 71.0 80.5 83.8
</TABLE>
31 - Scudder New York Tax Free Fund
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Scudder New York Tax Free Money Fund ("Tax Free Money Fund") and New York Tax
Free Fund ("Tax Free Fund"), each a non-diversified fund, are 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 (the
"1940 Act"), as amended, 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 purchased with remaining maturities
greater than sixty days are valued by pricing agents approved by the officers of
the Fund, whose quotations affect 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. Money market investments purchased with an original
maturity of sixty days or less are valued at amortized cost. All other
securities are valued at their fair value as determined in good faith by the
Valuation Committee of the Board of Trustees.
When-issued and Forward Delivery Securities. The Tax Free Fund may purchase
securities on a when-issued or forward delivery basis, for payment and delivery
at a later date. The price of such securities, which may be expressed in yield
terms, is fixed at the time the commitment to purchase is made, but delivery and
payment take place at a later time. At the time the Fund makes the commitment to
purchase a security on a when-issued or forward delivery basis, it will record
the transaction and reflect the value of the security in determining its net
asset value. During the period between purchase and settlement, no payment is
made by the Tax Free Fund to the issuer and no interest accrues to the Tax Free
Fund. At the time of settlement, the market value of the security may be more or
less than the purchase price. The Fund will establish a segregated account in
which it will maintain cash and liquid debt securities equal in value to
commitments for when-issued or forward delivery securities.
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 year ended
March 31, 1999, 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 upon 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.
32 - Scudder New York Tax Free Money Fund
Scudder New York Tax Free Fund
<PAGE>
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 time. Certain options, including options on indices, will
require cash settlement by the Tax Free Fund if the option is exercised. During
the year ended March 31, 1999, the Tax Free Fund purchased put options on
interest rate futures as a hedge against declines in the value of portfolio
securities 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 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 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.
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 federal income tax provisions were required.
33 - Scudder New York Tax Free Money Fund
Scudder New York Tax Free Fund
<PAGE>
As of March 31, 1999, the Tax Free Money Fund had a net tax basis capital loss
carryforward of approximately $52,900, 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), March 31, 2004 ($3,300) and March 31, 2007 ($400), the
respective expiration dates, whichever occurs first.
As of March 31, 1999, the Tax Free Fund had a net tax basis capital loss
carryforward of approximately $3,508,000 which may be applied against any
realized net taxable capital gains of each succeeding year until fully utilized
or until March 31, 2003 ($1,128,000) 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 identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.
Other. Investment security transactions are accounted for on a trade-date basis.
Distributions of net realized gains to shareholders are recorded on the
ex-dividend date. Interest income is accrued pro rata to the earlier of the call
or maturity date.
B. Purchases and Sales of Securities
For the year ended March 31, 1999, purchases and sales of long-term municipal
securities aggregated $100,329,740 and $84,955,841, respectively, for Tax Free
Fund.
The aggregate face value of futures contracts both opened and closed during the
year ended March 31, 1999 amounted to $179,727,412 for Tax Free Fund.
C. Related Parties
Under the Management Agreements (each an "Agreement" and collectively the
"Agreements") with Scudder Kemper Investments, Inc. ("Scudder Kemper" or the
"Adviser"), the Adviser directs the investments of the Fund in accordance with
its investment objectives, policies, and restrictions. The Adviser determines
the securities, instruments, and other contracts relating to investments to be
purchased, sold or entered into by the Funds. In addition to portfolio
management services, the Adviser provides certain administrative services in
accordance with the Agreements. The management fee payable under the Agreements
is equal to an annual rate of .50% of the average daily net assets of Tax Free
Money Fund, and .625% of the first
34 - Scudder New York Tax Free Money Fund
Scudder New York Tax Free Fund
<PAGE>
$200,000,000 of the average daily net assets and .60% of such net assets in
excess of $200,000,000 for Tax Free Fund, computed and accrued daily and payable
monthly. For the year ended March 31, 1999, the fee for the Tax Free Fund
pursuant to these Agreements amounted to $1,285,712, of which $110,428 is unpaid
at March 31, 1999. This was equivalent to an annual effective rate of .63% of
the Fund's average daily net assets.
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 year ended March 31, 1999, the
Adviser did not impose a portion of its fee amounting to $114,854 and the
portion imposed amounted to $311,138, of which $28,164 is unpaid at March 31,
1999.
Effective 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 Management Agreement with Scudder Kemper was deemed to
have been assigned and, therefore, terminated. In December 1998, the Board of
Trustees and the shareholders of the Fund approved a new investment management
agreements with Scudder Kemper, which is substantially identical to the former
Management Agreements, except for the dates of execution and termination.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend-paying and shareholder service agent for the Funds. For the
year ended March 31, 1999, the amount charged to the Funds by SSC aggregated
$54,875 for the Tax Free Money Fund and $114,000 for the Tax Free Fund, of which
$4,476 and $9,422, respectively, are unpaid at March 31, 1999.
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 Funds. For the year ended
March 31, 1999, the amount charged to the Funds by SFAC aggregated $30,000 for
the Tax Free Money Fund and $53,895 for the Tax Free Fund, of which $2,500 and
$8,895, respectively, are unpaid at March 31, 1999.
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 year ended March 31, 1999, Trustees' fees and
expenses aggregated $17,465 for the Tax Free Money Fund and $31,427 for the Tax
Free Fund.
D. Lines of Credit
The Funds and several Scudder Funds (the "Participants") share in a $850 million
revolving credit facility for temporary or emergency purposes, including the
meeting of redemption requests that otherwise might require the untimely
disposition of securities. The Participants are charged an annual commitment fee
which is allocated pro rata among each of the Participants. Interest is
calculated based on the market rates at the time of the borrowing. The Funds may
borrow up to a maximum of 33 percent of their net assets under the agreement.
35 - Scudder New York Tax Free Money Fund
Scudder New York Tax Free Fund
<PAGE>
Report of Independent Accountants
To the Trustees of Scudder State Tax Free Trust and the Shareholders of Scudder
New York Tax Free Money Fund and Scudder New York Tax Free Fund:
In our opinion, the accompanying statements of assets and liabilities, including
the investment portfolios, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Scudder New York Tax Free Money
Fund and Scudder New York Tax Free Fund (the "Funds") at March 31, 1999, the
results of their operations for the year then ended and the changes in their net
assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended, in conformity
with generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at March 31, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
Boston, Massachusetts PricewaterhouseCoopers LLP
May 12, 1999
36 - Scudder New York Tax Free Money Fund
Scudder New York Tax Free Fund
<PAGE>
Tax Information
Of the dividends paid by Scudder New York Tax Free Money Fund and Scudder New
York Tax Free Fund from net investment income for the taxable year ended March
31, 1999, 100% are designated as exempt interest dividends for federal income
tax purposes.
Please consult a tax adviser if you have any questions about federal or state
income tax laws, or on how to prepare your tax returns. If you have specific
questions about your account, please call 1-800-225-5163.
37 - Scudder New York Tax Free Money Fund
Scudder New York Tax Free Fund
<PAGE>
Shareholder Meeting Results
A Special Meeting of Shareholders (the "Meeting") of Scudder New York Tax Free
Money Fund (the "Fund") was held on December 15, 1998, at the office of Scudder
Kemper Investments, Inc., Two International Place, Boston, Massachusetts 02110.
At the Meeting the following matters were voted upon by the shareholders (the
resulting votes for each matter are presented below).
1. To approve a new Investment Management Agreement for the Fund with Scudder
Kemper Investments, Inc.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
44,709,256 1,236,604 1,361,967 0
2. To approve the revision of the Fund's fundamental lending policy.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
42,775,919 2,225,675 2,306,233 0
- --------------------------------------------------------------------------------
* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary
power to vote on a particular matter.
38 - Scudder New York Tax Free Money Fund
<PAGE>
Shareholder Meeting Results
A Special Meeting of Shareholders (the "Meeting") of Scudder New York Tax Free
Fund (the "Fund") was held on December 15, 1998, at the office of Scudder Kemper
Investments, Inc., Two International Place, Boston, Massachusetts 02110. At the
Meeting the following matters were voted upon by the shareholders (the resulting
votes for each matter are presented below).
1. To approve a new Investment Management Agreement for the Fund with Scudder
Kemper Investments, Inc.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
10,521,044 444,418 502,851 0
2. To approve the revision of the Fund's fundamental lending policy.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
9,670,570 657,536 885,946 254,261
- --------------------------------------------------------------------------------
* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary
power to vote on a particular matter.
39 - Scudder New York 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; Venture Partner,
Venture Capital Group
Philip G. Condon*
Vice President
Thomas W. Joseph*
Vice President
Ann M. McCreary*
Vice President
Jeremy L. Ragus*
Vice President
Rebecca Wilson*
Vice President
John R. Hebble*
Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
40 - 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 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
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Scudder Balanced Fund
Scudder Dividend & Growth Fund
Scudder Growth and Income Fund
Scudder Select 500 Fund
Scudder S&P 500 Index Fund
Scudder Real Estate Investment Fund
U.S. Growth
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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 Select 1000 Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Equity
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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
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Choice Series
Scudder Financial Services Fund
Scudder Health Care Fund
Scudder Technology Fund
Preferred Series
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Scudder Tax Managed Growth Fund
Scudder Tax Managed Small
Company Fund
Retirement Programs and Education Accounts
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Retirement Programs
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Traditional IRA
Roth IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Variable Annuities
Scudder Horizon Plan**+++ +++
Scudder Horizon Advantage**+++ +++ +++
Education Accounts
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Education IRA
UGMA/UTMA
Closed-End Funds#
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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.
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 or classes thereof 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. +++
+++ +++A no-load variable annuity contract issued by Glenbrook Life and Annuity
Company and underwritten by Allstate Financial Services, Inc., sold 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.
41 - 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:
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<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:
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Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- www.scudder.com
1-800-343-2890
Personal Investment Organizer: 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:
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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
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42 - Scudder New York Tax Free Money Fund
Scudder New York Tax Free Fund
<PAGE>
Mutual Funds and More -- Brokerage and Guidance Services:
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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 transaction fee. You can buy
shares directly from the fund itself or its principal underwriter or distributor without
paying this fee. Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061.
Member SIPC.
Personal Counsel From Scudder(SM) and Personal Counsel(SM) are service marks of and represent a
program offered by Scudder Investor Services, Inc., Adviser.
For more information about these services, call a Scudder representative at 1-800-225-5163
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Additional Information on How to Contact Scudder:
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For existing account services and transactions Please address all written correspondence to
Scudder Investor Relations -- 1-800-225-5163 The Scudder Funds
P.O. Box 2291
For establishing 401(k) and 403(b) plans Boston, Massachusetts
Scudder Defined Contribution Services -- 02107-2291
1-800-323-6105
Or Stop by a Scudder Investor Center
For information about The Scudder Funds, including Many shareholders enjoy the personal, one-on-one service of
additional applications and prospectuses, or for the Scudder Investor Centers. Check for an Investor Center near
answers to investment questions you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470 Boca Raton Chicago San Francisco
[email protected] Boston New York
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43 - 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 $280 billion in
assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts.
Scudder Kemper Investments has a rich heritage of innovation, integrity, and
client-focused service. In 1997, Scudder, Stevens & Clark, Inc., founded 80
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Financial Services 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 Financial Services Group. The Zurich Financial Services 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
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