[LOGO] Scudder Investments(SM)
BOND/TAX FREE
Scudder New York
Tax Free Fund
Semiannual Report
September 30, 2000
Scudder New York Tax Free Fund seeks income that is exempt from New York state
and New York City personal income taxes and regular federal income taxes.
<PAGE>
Contents
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4 Letter from the Fund's President
6 Performance Update
8 Portfolio Summary
9 Portfolio Management Discussion
13 Investment Portfolio
18 Financial Statements
21 Financial Highlights
22 Notes to Financial Statements
26 Shareholder Meeting Results
27 Officers and Trustees
28 Investment Products and Services
30 Account Management Resources
2 Scudder New York Tax Free Fund
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Scudder New York Tax Free Fund
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ticker symbol SCYTX fund number 042
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Date of o Scudder New York Tax Free Fund posted a total return
Inception: of 3.92% for its most recent semiannual period ended
7/22/83 September 30, 2000. The average return of 104 similar
funds tracked by Lipper Analytical Services was
3.49%.
Total Net Assets as o As of September 30, 2000, Scudder New York Tax Free
of 9/30/00: Fund's 30-day net annualized SEC yield was 4.32%,
$173.2 million equivalent to a 7.68% taxable yield for New York
investors subject to the 43.74% combined federal and
state income tax rate.
THE ORIGINAL DOCUMENT CONTAINS A BAR CHART HERE:
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30-Day Yield on September 30, 2000
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Scudder Taxable Yield
New York Needed to Equal
Tax Free Fund the Fund's Yield
4.32% 7.68%
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3 Scudder New York Tax Free Fund
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Letter from the Fund's President
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Dear Shareholders,
We are pleased to report to you on Scudder New York Tax Free Fund's most recent
semiannual period ended September 30, 2000. The fund posted a 3.92% total return
for the period, and placed within the top 25% of similar funds for total return
over the six-month period, as well as for the one-, three-, five-, and ten-year
periods ended September 30.
Scudder New York Tax Free Fund seeks income exempt from New York State and New
York City personal and regular federal income taxes. It does this by investing
most of its assets in a broadly diversified portfolio of New York municipals
bonds that finance public transportation, road and bridge construction, state
colleges and universities, hospitals, and other projects or entities. The fund's
managers look for securities that appear to offer the best total return
potential, and normally prefer those that cannot be called in before maturity.
In making decisions, the managers weigh a number of factors against each other,
from national and state economic outlooks to supply and demand within the
municipal market. Please see the Portfolio Management Discussion beginning on
page 9 for additional information on the fund's performance, strategy, and
outlook.
In closing, we thought you'd like to know that municipal bonds currently
represent attractive value when compared with U.S.
4 Scudder New York Tax Free Fund
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government securities: yields of 10-year municipal bonds were 82.8% as high as
yields of comparable Treasuries as of September 30. This means that -- on an
after-tax basis -- an individual in an income tax bracket higher than 17% would
be better off owning municipal securities over Treasuries. Of course, Treasury
securities are backed by the full faith and credit of the U.S. government, but
municipal bonds are considered "next in line" in terms of creditworthiness. And
with their superior liquidity and diversification compared with the holding of
individual bonds, municipal bond funds are a convenient way for investors to
seek attractive yields and steady total returns.
Thank you for investing with Scudder New York Tax Free Fund. If you have any
questions regarding the fund, please call 1-800-SCUDDER, or visit Scudder's Web
site at www.scudder.com.
Sincerely,
/s/ Lin C. Coughlin
Linda C. Coughlin
President
Scudder New York Tax Free Fund
5 Scudder New York Tax Free Fund
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Performance Update
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September 30, 2000
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Growth of a $10,000 Investment
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THE ORIGINAL DOCUMENT CONTAINS A LINE CHART HERE:
Scudder New York Tax Free Fund Lehman Brothers Municipal Bond Index
90 10000 90 10000
91 11489 91 11318
92 12858 92 12503
93 14747 93 14096
94 14026 94 13752
95 15559 95 15291
96 16389 96 16213
97 17948 97 17679
98 19531 98 19220
99 19102 99 19085
00 20237 00 20259
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Yearly periods ended September 30
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Fund Index Comparison
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<TABLE>
<S> <C> <C> <C>
Total Return
Growth of Average
Period ended 9/30/2000 $10,000 Cumulative Annual
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Scudder New York Tax Free Fund
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1 year $ 10,594 5.94% 5.94%
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5 year $ 13,007 30.07% 5.40%
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10 year $ 20,237 102.37% 7.30%
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Lehman Brothers Municipal Bond Index*
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1 year $ 10,616 6.16% 6.16%
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5 year $ 13,249 32.49% 5.78%
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10 year $ 20,259 102.59% 7.31%
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</TABLE>
* 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.
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.
6 Scudder New York Tax Free Fund
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Returns and Per Share Information
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Scudder New York Tax Free Fund
Lehman Brothers Municipal Bond Index
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
ILLUSTRATING THE SCUDDER NEW YORK TAX FREE FUND TOTAL RETURN (%) AND
LEHMAN BROTHERS MUNICIPAL BOND INDEX TOTAL RETURN (%)
Yearly periods ended September 30
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
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Fund Total
Return (%) 14.90 11.91 14.69 -4.89 10.92 5.34 9.52 8.82 -2.20 5.94
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Index Total
Return (%) 13.19 10.45 12.74 -2.44 11.18 6.04 9.04 8.72 -.70 6.16
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Net Asset
Value ($) 11.06 11.36 11.60 10.10 10.65 10.68 11.14 11.57 10.82 10.93
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Income
Dividends ($) .66 .64 .58 .53 .52 .53 .52 .51 .50 .51
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Capital Gains
Distributions ($) .13 .32 .75 .44 -- -- .01 .02 -- --
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</TABLE>
7 Scudder New York Tax Free Fund
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Portfolio Summary
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September 30, 2000
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Diversification
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A GRAPH IN THE FORM OF A PIE CHART APPEARS HERE, ILLUSTRATING THE EXACT DATA
POINTS IN THE TABLE BELOW.
State General Obligation/ The fund invests in a
Lease 20% broad selection of New
Core Cities/Lease 16% York State municipal
Sales/Special Tax 9% bonds.
Transportation/Toll Revenue 8%
Higher Education 7%
Hospital/Health Revenue 7%
County General Obligation/
Lease 6%
Other General Obligation/
Lease 5%
Electric Revenue 5%
Miscellaneous Municipal 17%
------------------------------------
100%
------------------------------------
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Quality
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A GRAPH IN THE FORM OF A PIE CHART APPEARS HERE, ILLUSTRATING THE EXACT DATA
POINTS IN THE TABLE BELOW.
AAA 52% Overall portfolio
AA 11% quality remains high,
A 22% with 85% of portfolio
BBB 5% securities rated A or
SKI* 10% better as of
------------------------------------ September 30.
100%
------------------------------------
Weighted Average Quality: AA
* Scudder Kemper Investments
(SKI) has determined these
securities to be of comparable
quality to rated eligible
securities.
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Effective Maturity
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A GRAPH IN THE FORM OF A PIE CHART APPEARS HERE, ILLUSTRATING THE EXACT DATA
POINTS IN THE TABLE BELOW.
Less than 1 year 1% A comparatively high
1-5 years 16% percentage of bonds with
5-10 years 38% maturities between 11
10-15 years 18% and 17 years produced a
15 years or greater 27% positive total return
------------------------------------ for the fund.
100%
------------------------------------
Weighted Effective Maturity:
10.6 years
For more complete details about the Fund's investment portfolio, see page 13. A
quarterly Fund Summary and Portfolio Holdings are available upon request.
8 Scudder New York Tax Free Fund
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Portfolio Management Discussion
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September 30, 2000
Dear Shareholders,
The municipal bond market recorded respectable gains during Scudder New
York Tax Free Fund's most recent semiannual period. The fund's total
return for the six months ended September 30, 2000, was 3.92%,
outpacing the 3.49% average return of 104 similar funds as tracked by
Lipper Analytical Services, Inc. The fund's 30-day SEC yield as of
September 30 was 4.32%, equivalent to a 7.68% taxable yield for New
York investors subject to the 43.74% combined federal and state income
tax rate.
In addition, the fund ranked in the top 25% of similar New York
tax-free funds over the six-month period as well as for the one-,
three-, five-, and ten-year periods ended September 30, 2000. Please
see the accompanying table for additional information concerning the
fund's returns.
New York Update
New York State's economy continues to grow at a modest rate, and to
edge closer to the level of overall U.S. growth. The state's
unemployment rate of 5.2% in 1999 was one point higher than the
national average of 4.2%. And for the first time in many years, New
York's 1999 employment growth exceeded the U.S. rate (2.7% versus 2.3%,
respectively).
Growth in the service and trade sectors accounts for 80% of this job
growth. Growth in employment in New York State
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Scudder New York Tax Free Fund:
Consistent Long-Term Performance
(Average annual returns for periods ended September 30, 2000)
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<TABLE>
<S> <C> <C> <C> <C> <C>
Scudder
New York Number of
Tax Free Fund Lipper Funds Percentile
Period Return Average Rank Tracked Rank
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1 Year 5.94% 5.01% 15 of 104 Top 15%
3 Years 4.08% 3.29% 9 of 94 Top 9%
5 Years 5.40% 4.78% 19 of 82 Top 23%
10 Years 7.30% 6.53% 3 of 35 Top 9%
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</TABLE>
Past performance does not guarantee future results.
9 Scudder New York Tax Free Fund
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is not geographically dispersed, however: the New York City
metropolitan area is thriving, while growth is sluggish in many upstate
areas.
New York remains the fourth wealthiest state, with 1999 per capita
income 19% higher than the U.S. average. The state's debt burden is
high, but manageable, given New York's size. And New York State's
credit trend is improving, due to recent debt reform, the positive
economy, and the resulting growth in employment. Obstacles to further
credit trend improvement include the cyclical nature of New York's
economy and the state's continued dependence on tax receipts from Wall
Street. We will continue to monitor the state's growing debt burden.
Market Environment
During the six-month period the municipal yield curve, which began 2000
unusually flat, steepened. Yields declined across the maturity spectrum
during the period, but yields of short-term bonds declined the most (29
basis points); yields of 30-year bonds dropped by 8 basis points. The
gradual steepening of the yield curve and reductions in yields (bond
yields and prices move in opposite directions) brought about higher
prices and positive total returns for most municipal bonds during the
period. In addition, municipal bonds slightly underperformed Treasuries
over the six months ended in September: while yields of 10-year
AAA-rated municipals declined 20 basis points and their prices rose
1.5%, yields of 10-year Treasury bonds declined 27 basis points and
their prices rose 2.0%. At the close of the period, municipal bonds
represented attractive value compared with Treasuries as the average
yield of 10-year municipal bonds was 82.8% of the average yield of
comparable Treasury bonds.
Portfolio Strategy
Because the yield curve between 10 and 20 years steepened to a slightly
higher level than its three-year average, the fund focused its
purchases in the 11- to 17-year portion of the curve during the period
and sold bonds with maturities of seven to 11 years where the yield
curve's slope was
10 Scudder New York Tax Free Fund
<PAGE>
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flatter than normal. Additionally, we sold bonds priced near par at
attractive prices due to strong retail demand from New York residents.
And as part of the fund's overall strategy we looked for opportunities
to purchase bonds after they become "market discounts."^1 The fund
typically buys market discount bonds when they are attractively valued
and have the opportunity for strong performance during market rallies.
In addition, we retained two important elements of our long-term
strategy: first, we focused on premium "cushion" bonds -- high coupon
bonds trading at a premium to face value that can be redeemed prior to
maturity. We believe that the extra yield provided by cushion bonds
adequately compensates the fund for the call feature in the current
environment. Second, we continued the fund's strong emphasis on call
protection -- generally, a bond is called in by its issuer so that it
can be refinanced at a lower prevailing rate. Our call-protection
strategy provides a more reliable income stream for the fund than would
exist if the portfolio held a significant proportion of bonds that
could be called in before their stated maturities. Though "structured"
bonds -- premium bonds as well as noncallable bonds -- are more popular
than ever within our industry (and therefore slightly more expensive
than in the past), we feel that their long-term return potential more
than justifies their cost.
In addition, credit spreads -- the difference in yield between higher-
and lower-rated bonds -- remained at historically wide levels. Because
of this, we continued to selectively add lower-rated bonds which we
deemed to be appropriate risks. The fund's overall portfolio quality
remains high, with over 60% of portfolio securities rated AAA or AA at
the close of the period. We continue to invest in a broad selection of
New York tax-exempt issues, including general obligation, core cities,
and sales/special tax bonds.
^1 "Market discount" is a provision that can subject a portion of income from
municipal bonds sold at a discount to ordinary income tax.
11 Scudder New York Tax Free Fund
<PAGE>
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Outlook
Because of the relative economic balance between the tight U.S. labor
market on one hand and evidence of a slowing economy on the other, we
do not expect the Federal Reserve to adjust short-term interest rates
for the remainder of 2000. Thus the prospects for additional steepening
of the yield curve seem guarded for the moment. Bond markets are likely
to be relatively static until they see signs that the Fed's next move
will be to cut interest rates. We believe the likelihood of such a
reduction -- leading to higher bond prices -- will increase in early
2001. In terms of fund strategy, we will continue to search for
attractively valued -- and structured -- intermediate-term municipal
bonds. We will also continue to selectively invest in bonds with
slightly lower ratings to boost the fund's yield. We believe Scudder
New York Tax Free Fund remains an attractive investment for those
seeking a high level of income free from federal taxes as well as from
New York State and New York City personal and regular income taxes.
Sincerely,
Your Portfolio Management Team
/s/ Philip G. Condon /s/ Ashton P. Goodfield
Philip G. Condon Ashton P. Goodfield
/s/ Eleanor R. Brennan
Eleanor R. Brennan
12 Scudder New York Tax Free Fund
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Investment Portfolio as of September 30, 2000 (Unaudited)
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<TABLE>
<S> <C> <C>
Principal
Amount ($) Value ($)
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Short-Term Municipal Investments 1.3%
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New York
New York City, NY, General Obligation Unlimited,
Series B, Daily Demand Note, 5.5%, 10/1/2021 (b)*
(Cost $2,200,000)................................. 2,200,000 2,200,000
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Long-Term Municipal Investments 98.7%
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New York
34th Street Partnership Inc., NY, Capital Improvement,
5.5%, 1/1/2014.................................... 1,900,000 1,898,043
Albany County, NY, Airport Revenue:
Series 1997, AMT, 5.375%, 12/15/2017 (b).......... 1,000,000 966,691
Series 1997, AMT, 5.5%, 12/15/2019 (b)............ 1,000,000 968,800
Albany, NY, General Obligation, 7%, 1/15/2008 (b).... 10,000 10,220
Babylon, NY, General Obligation:
Series 1998 A, Zero Coupon, 8/1/2006 (b).......... 1,045,000 794,010
Series 1998 A, Zero Coupon, 8/1/2007 (b).......... 735,000 530,317
Chautauqua County, NY:
7.3%, 4/1/2008 (b)................................ 575,000 665,131
7.3%, 4/1/2009 (b)................................ 575,000 673,279
Series 1990, 7.3%, 4/1/2007 (b)................... 465,000 531,672
Erie County, NY, Public Improvement General
Obligation Unlimited, Series 1992, 6.125%,
1/15/2012 (b)..................................... 590,000 646,168
Glen Cove Housing Authority, NY, Senior Living
Facility, The Mayfair at Glen Cove, AMT, Series
1996, 8.25%, 10/1/2026............................ 1,500,000 1,574,700
Islip, NY, New York Community Development Agency,
New York Institute of Technology, Series 1996,
Prerefunded 3/1/2006, 7.5%, 3/1/2026 (c).......... 4,000,000 4,545,120
Jamestown, NY, General Obligation, Series 1991 A,
7%, 3/15/2008 (b)................................. 600,000 682,752
Long Island Power Authority, NY, Electric Systems
Revenue: Series 1998 A, 5.5%, 12/1/2013 (b)....... 3,000,000 3,119,700
Series 1998 A, 5%, 12/1/2018 (b).................. 4,000,000 3,732,520
Zero Coupon, 6/1/2012 (b)......................... 2,000,000 1,087,320
Metropolitan Transportation Authority, NY, Dedicated
Tax Fund, Series 1999 A, 5.25%, 4/1/2016 (b)...... 2,000,000 1,958,480
Metropolitan Transportation Authority, NY, Series
1993 B, 4.386%, 6/30/2002 (b)**................... 8,000,000 8,340,000
The accompanying notes are an integral part of the financial statements.
13 Scudder New York Tax Free Fund
<PAGE>
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Principal
Amount ($) Value ($)
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Monroe County, NY, General Obligation Unlimited:
Series 1996, 6%, 3/1/2013......................... 1,050,000 1,139,145
Series 1996, 6%, 3/1/2014......................... 1,040,000 1,126,954
Series 1996, 6%, 3/1/2017......................... 1,410,000 1,515,665
Nassau County, NY, General Obligation Unlimited,
Series 2000 F, 7%, 3/1/2010 (b)................... 2,000,000 2,305,660
New York City, NY, City Transitional Finance
Authority Revenue Bond:
Series 1999 C, 5%, 5/1/2017....................... 4,000,000 3,763,240
Series 1999 C, 5.5%, 5/1/2025 (b.................. 3,780,000 3,675,596
Series 2000 B, 6.125%, 11/15/2014................. 1,000,000 1,074,770
New York City, NY, General Obligation:
Series 1991 B, 7.5%, 2/1/2005..................... 1,935,000 2,029,467
Series 1995 B, 7.25%, 8/15/2007................... 2,250,000 2,568,803
Series 1996 A, 7%, 8/1/2005....................... 5,000,000 5,496,700
Series 1996 A, 7%, 8/1/2006....................... 5,000,000 5,570,050
Series 1996 A, 6.25%, 8/1/2009.................... 5,175,000 5,567,731
Series 1997 I, 6%, 4/15/2009...................... 2,000,000 2,130,640
Series B, 8.25%, 6/1/2006......................... 2,750,000 3,221,625
Series B1, Prerefunded 8/15/2004, 7.3%,
8/15/2010 (c)................................... 45,000 49,779
Series E, 8%, 8/1/2005 (b)........................ 330,000 376,919
NewYork City, NY, Industrial Development Agency,
Civil Facilities Revenue, USTA National Tennis
Center:
6.1%, 11/15/2004 (b)............................ 1,215,000 1,283,198
6.25%, 11/15/2006 (b)........................... 3,000,000 3,221,970
Civil Facility Revenue, YMCA Greater New York Project:
Series 1997, 6%, 8/1/2006....................... 580,000 605,137
Series 1997, 5.85%, 8/1/2008.................... 600,000 620,892
Series 1997, 5.8%, 8/1/2016..................... 1,000,000 1,001,070
Japan Airlines, Series 1996, AMT, 6%, 11/1/2015 (b) 930,000
976,258.........................................
New York State Dormitory Authority:
Series 1998, 5%, 7/1/2018 (b)..................... 1,875,000 1,735,369
Series 2000, 6.39%, 2/15/2010 (b)................. 2,500,000 2,890,300
City University System:
Series 1993, 5.75%, 7/1/2009 (b)................ 1,000,000 1,061,310
Series 1995 A, 5.625%, 7/1/2016 (b)............. 1,100,000 1,137,169
College and University Pooled Capital Program,
7.8%, 12/1/2005 (b)............................. 470,000 476,937
Columbia University, 5%, 7/1/2015................. 2,500,000 2,441,175
Columbia University, Revenue, 6%, 7/1/2010........ 1,000,000 1,055,000
The accompanying notes are an integral part of the financial statements.
14 Scudder New York Tax Free Fund
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Principal
Amount ($) Value ($)
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Green Chimneys School, Series 1999 A, 5.5%,
7/1/2018 (b).................................... 1,375,000 1,367,176
Lease Revenue, Office Facilities, Audit & Control,
Series 1999, 5.25%, 4/1/2013 (b)................ 720,000 722,880
Mt. Sinai Health, Series A, 6.5%, 7/1/2025........ 2,000,000 2,092,700
Mt. Sinai School of Medicine, Series B, 5.7%,
7/1/2011........................................ 1,825,000 1,922,364
Nyack Hospital:
Series 1996, 6%, 7/1/2006....................... 1,000,000 994,040
Series 1996, 6.25%, 7/1/2013.................... 500,000 498,595
Pace University:
Series 1997, 6.5%, 7/1/2008 (b)................. 1,360,000 1,508,118
Series 1997, 6.5%, 7/1/2009 (b)................. 555,000 620,068
State University Dormitory Facilities, Lease
Revenue, Series B, 5.375%, 7/1/2019 (b)......... 1,980,000 1,912,898
State University Educational Facilities:
Revenue Bond, 5.25%, 5/15/2018 (b).............. 3,000,000 2,899,410
Series A, 5.875%, 5/15/2011..................... 2,250,000 2,391,548
Series C, 5.75%, 5/17/2017 (b).................. 1,000,000 1,045,870
State University, Series 1993 A, 5.875%,
5/15/2011 (b)................................... 408,755 380,000
Upstate Community College, 5.8%, 7/1/2006......... 1,075,000 1,128,417
New York State Environmental Facilities Corporation:
Special Obligation Revenue, Riverbank State Park,
Series 1996, 6.25%, 4/1/2008 (b)................ 2,185,000 2,384,141
State Water Revolving Fund, Series D, 6.9%,
5/15/2015....................................... 1,000,000 1,088,270
New York State General Obligation, Series 1998 F,
5.25%, 9/15/2013.................................. 1,000,000 1,000,740
New York State Health Facilities Authority,
6.375%, 11/1/2004................................. 1,500,000 1,578,165
New York State Local Government Assistance
Corporation, Series 1993 E, 5.25%, 4/1/2016 (b)... 1,185,000 1,176,314
New York State Mortgage Agency Revenue, AMT,
Series 1994, 6.8%, 10/1/2005...................... 1,000,000 1,074,720
New York State Thruway Authority General Revenue,
Capital Appreciation Special Obligation,
Series 1991 A, Zero Coupon, 1/1/2006.............. 2,905,000 2,248,993
New York State Thruway Authority General Revenue,
Series 1998 E, 5%, 1/1/2025....................... 5,360,000 4,804,918
New York State Urban Development Corp.:
Revenue, Correctional Capital Facilities:
Series 1994 A, 5.5%, 1/1/2014 (b)............... 2,000,000 2,058,720
Series 1998, 5.125%, 4/1/2016................... 2,525,000 2,437,256
Series 1998, 5%, 1/1/2028 (b)................... 6,500,000 5,799,690
The accompanying notes are an integral part of the financial statements.
15 Scudder New York Tax Free Fund
<PAGE>
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Principal
Amount ($) Value ($)
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Niagara County, NY, General Obligation, 7.1%,
2/15/2011 (b)..................................... 500,000 588,170
Niagara Falls, NY, Water Treatment Plant, AMT:
7%, 11/1/2003 (b)................................. 2,260,000 2,408,572
8.5%, 11/1/2005 (b)............................... 2,140,000 2,483,663
8.5%, 11/1/2006 (b)............................... 1,240,000 1,469,251
Oneida-Herkimer, NY, Solid Waste Management Authority:
Series 1998, 5.5%, 4/1/2013 (b)................... 500,000 510,895
Series 1998, 5.5%, 4/1/2014 (b)................... 1,000,000 1,017,180
Onondaga County, NY, Industrial Development Agency,
Solid Waste Disposal Facility, Solvay Paperboard LLC,
Series 1998, AMT, 7%, 11/1/2030................... 3,000,000 2,869,650
Orange County, NY, Industrial Development Agency,
The Glen Arden Project:
5.2%, 1/1/2005.................................. 200,000 192,282
5.3%, 1/1/2006.................................. 200,000 190,822
5.35%, 1/1/2007................................. 200,000 188,958
5.4%, 1/1/2008.................................. 100,000 93,431
5.625%, 1/1/2018................................ 1,000,000 817,540
5.7%, 1/1/2028.................................. 1,250,000 984,175
Port Authority of New York & New Jersey:
Special Obligation Revenue, JFK International
Air Terminal:
6.25%, 12/1/2010 (b)............................ 2,500,000 2,759,200
6.25%, 12/1/2011 (b)............................ 2,500,000 2,751,300
Split Amount, Series 1996, 7%, 10/1/2007........ 3,500,000 3,646,090
Shenendehowa Central School District, NY, Clifton Park:
6.85%, 6/15/2008 (b).............................. 350,000 397,250
6.85%, 6/15/2009 (b).............................. 350,000 400,988
Tompkins County, NY, Industrial Development Agency
Revenue, Series 2000, 6%, 7/1/2017................ 1,100,000 1,161,479
Troy, NY, Municipal Assistance Corporation:
Series B, Zero Coupon, 1/15/2007 (b).............. 650,000 481,338
Series B, Zero Coupon, 7/15/2007 (b).............. 650,000 469,983
Series B, Zero Coupon, 1/15/2008 (b).............. 750,000 526,493
Ulster County, NY, General Obligation:
Series 1998 B, 5%, 10/15/2011 (b)................. 275,000 275,921
Series 1998 B, 5%, 10/15/2012 (b)................. 195,000 194,123
Series 1998 B, 5%, 10/15/2013 (b)................. 130,000 128,283
The accompanying notes are an integral part of the financial statements.
16 Scudder New York Tax Free Fund
<PAGE>
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Principal
Amount ($) Value ($)
----------------------------------------------------------------------------------
Valley Central School District, Montgomery, NY,
7.15%, 6/15/2008 (b).............................. 625,000 719,319
Virgin Islands
Virgin Islands, Public Finance Authority:
General Obligation, Mortgage Fund Loan Notes,
Series 1992 A, ETM, 7%, 10/1/2002 (c)***........ 500,000 526,165
Subordinate Lien, Series 1998 D, 6%, 10/1/2007.... 3,000,000 3,049,650
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Total Long-Term Municipal Investments (Cost $161,900,966) 169,310,389
----------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $164,100,966) (a) 171,510,389
----------------------------------------------------------------------------------
</TABLE>
(a)The cost for federal income tax purposes was $164,104,338. At September 30,
2000, net unrealized appreciation for all securities based on tax cost was
$7,406,051. This consisted of aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost of $8,259,914
and aggregate gross unrealized depreciation for all securities in which there
was an excess of tax cost over value of $853,863.
(b)Bond is insured by one of these companies: AMBAC, Capital Guaranty, FGIC,
FSA, FHA or MBIA/BIG.
(c)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.
* 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 may change based on
the change in the relationship between long-term and short-term interest
rates and which exhibit added interest rate sensitivity compared to other
bonds with a similar maturity. These securities are shown at their rate as of
September 30, 2000.
***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: Alternative minimum tax.
The accompanying notes are an integral part of the financial statements.
17 Scudder New York Tax Free Fund
<PAGE>
Financial Statements
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Statement of Assets and Liabilities as of September 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets
-----------------------------------------------------------------------------------
Investments in securities, at value (cost $164,100,966)......... $ 171,510,389
Cash............................................................ 342,291
Receivable for investments sold................................. 35,000
Interest receivable............................................. 2,954,777
Receivable for Fund shares sold................................. 1,350
Due from Adviser................................................ 17,925
Other assets.................................................... 2,737
---------------
Total assets.................................................... 174,864,469
Liabilities
------------------------------------------------------------------------------------
Payable for investments purchased............................... 1,058,329
Dividends payable............................................... 205,903
Payable for Fund shares redeemed................................ 90,746
Accrued management fee.......................................... 155,343
Accrued Trustees' fees and expenses............................. 33,677
Other accrued expenses and payables............................. 168,391
---------------
Total liabilities............................................... 1,712,389
------------------------------------------------------------------------------------
Net assets, at value $ 173,152,080
------------------------------------------------------------------------------------
Net Assets
------------------------------------------------------------------------------------
Net assets consist of:
Net unrealized appreciation (depreciation) on investments....... 7,409,423
Accumulated net realized gain (loss)............................ (7,232,805)
Paid-in capital................................................. 172,975,462
-----------------------------------------------------------------------------------
Net assets, at value $ 173,152,080
-----------------------------------------------------------------------------------
Net Asset Value
------------------------------------------------------------------------------------
NetAsset Value, offering and redemption price per share
($173,152,080 / 15,841,577 outstanding shares of beneficial
interest, $.01 par value, unlimited number of shares ---------
authorized)....................... $ 10.93
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
18 Scudder New York Tax Free Fund
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Statement of Operations for the six months ended September 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment Income
------------------------------------------------------------------------------------
Income:
Interest........................................................... $ 4,866,632
---------------
Expenses:
Management fee..................................................... 541,770
Services to shareholders........................................... 81,573
Custodian and accounting fees...................................... 35,977
Auditing........................................................... 32,217
Legal.............................................................. 4,508
Trustees' fees and expenses........................................ 37,907
Reports to shareholders............................................ 5,472
Registration fees.................................................. 4,153
Other.............................................................. 28,404
---------------
Total expenses, before expense reductions.......................... 771,981
Expense reductions................................................. (26,630)
---------------
Total expenses, after expense reductions........................... 745,351
------------------------------------------------------------------------------------
Net investment income 4,121,281
------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
------------------------------------------------------------------------------------
Net realized gain (loss) from investments.......................... (262,864)
Net unrealized appreciation (depreciation) during the period
on investments.................................................. 2,833,372
------------------------------------------------------------------------------------
Net gain (loss) on investment transactions 2,570,508
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 6,691,789
------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
19 Scudder New York Tax Free Fund
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Statements of Changes in Net Assets
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Six Months
Ended
September 30, Year Ended
2000 March 31,
Increase (Decrease) in Net Assets (Unaudited) 2000
------------------------------------------------------------------------------------
Operations:
Net investment income.............................. $ 4,121,281 $ 8,930,892
Net realized gain (loss) on investment transactions (262,864) (2,429,285)
Net unrealized appreciation (depreciation) on
investment transactions during the period....... 2,833,372 (8,577,570)
--------------- ---------------
Net increase (decrease) in net assets resulting
from operations................................. 6,691,789 (2,075,963)
Distributions to shareholders from net investment
income.......................................... (4,121,281) (8,930,892)
--------------- ---------------
Fund share transactions:
Proceeds from shares sold.......................... 15,265,129 23,720,730
Reinvestment of distributions...................... 2,848,413 6,197,150
Cost of shares redeemed............................ (21,997,205) (56,159,937)
--------------- ---------------
Net increase (decrease) in net assets from Fund
share transactions.............................. (3,883,663) (26,242,057)
--------------- ---------------
Increase (decrease) in net assets.................. (1,313,155) (37,248,912)
Net assets at beginning of period.................. 174,465,235 211,714,147
--------------- ---------------
Net assets at end of period........................ $ 173,152,080 $ 174,465,235
--------------- ---------------
Other Information
------------------------------------------------------------------------------------
Shares outstanding at beginning of period.......... 16,201,269 18,624,470
--------------- ---------------
Shares sold........................................ 1,413,034 2,182,485
Shares issued to shareholders in reinvestment of
distributions................................... 263,704 571,194
Shares redeemed.................................... (2,036,430) (5,176,880)
--------------- ---------------
Net increase (decrease) in Fund shares............. (359,692) (2,423,201)
--------------- ---------------
Shares outstanding at end of period................ 15,841,577 16,201,269
--------------- ---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
20 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>
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------
Years Ended March 31, 2000(a) 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------
Net asset value, beginning of
period $10.77 $11.37 $11.27 $10.63 $10.67 $10.38
-----------------------------------------------------
------------------------------------------------------------------------------------
Income (loss) from investment
operations:
------------------------------------------------------------------------------------
Net investment income .26 .51 .51 .51 .53 .53
------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investment transactions .16 (.60) .10 .66 (.03) .29
-----------------------------------------------------
------------------------------------------------------------------------------------
Total from investment
operations .42 (.09) .61 1.17 .50 .82
------------------------------------------------------------------------------------
Less distributions from:
------------------------------------------------------------------------------------
Net investment income (.26) (.51) (.51) (.51) (.53) (.53)
------------------------------------------------------------------------------------
Net realized gains on investment
transactions -- -- -- (.02) (.01) --
-----------------------------------------------------
------------------------------------------------------------------------------------
Total distributions (.26) (.51) (.51) (.53) (.54) (.53)
------------------------------------------------------------------------------------
Net asset value, end of period $10.93 $10.77 $11.37 $11.27 $10.63 $10.67
-----------------------------------------------------
------------------------------------------------------------------------------------
Total Return (%) 3.92** (.74) 5.46 11.20 4.76 7.95
------------------------------------------------------------------------------------
Ratios to Average Net Assets and Supplemental Data
------------------------------------------------------------------------------------
Net assets, end of period
($ millions) 173 174 212 196 181 192
------------------------------------------------------------------------------------
Ratio of expenses before expense
reductions (%) .89(b)* .83 .82 .83 .83 .82
------------------------------------------------------------------------------------
Ratio of expenses after expense
reductions (%) .86(b)* .83 .82 .83 .83 .82
------------------------------------------------------------------------------------
Ratio of net investment income 4.74* 4.67 4.45 4.65 4.95 4.91
(%)
------------------------------------------------------------------------------------
Portfolio turnover rate (%) 14* 25 45 29 71 81
------------------------------------------------------------------------------------
</TABLE>
(a) For the six months ended September 30, 2000 (Unaudited).
(b) The ratios of operating expenses excluding costs incurred in connection
with the reorganization before and after expense reductions were 0.85% and
0.84%, respectively (see Notes to Financial Statements).
* Annualized
** Not annualized
21 Scudder New York Tax Free Fund
<PAGE>
Notes to Financial Statements (Unaudited)
--------------------------------------------------------------------------------
A. Significant Accounting Policies
Scudder New York Tax Free Fund (the "Fund") is a non-diversified series of
Scudder State Tax Free Trust (the "Trust") which is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company organized as a Massachusetts business trust.
The Fund's financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America which require the
use of management estimates. The policies described below are followed
consistently by the Fund in the preparation of its financial statements.
Security Valuation. Portfolio debt securities purchased with an original
maturity greater than sixty days are valued by pricing agents approved by the
officers of the Trust, whose quotations reflect broker/dealer-supplied
valuations and electronic data processing techniques. If the pricing agents are
unable to provide such quotations, the most recent bid quotation supplied by a
bona fide market maker shall be used. Money market instruments 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.
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code, as amended, which are applicable to regulated
investment companies and to distribute all of its taxable and tax-exempt income
to its shareholders. Accordingly, the Fund paid no federal income taxes and no
federal income tax provision was required.
At March 31, 2000, the Fund had a net tax basis capital loss carryforward of
approximately $4,990,000, which may be applied against any realized net taxable
capital gains of each succeeding year until fully utilized or until March 31,
2003 ($1,100,000), March 31, 2004 ($2,400,000) and March 31, 2008 ($1,490,000),
the respective expiration dates, whichever occurs first. In addition, from
November 1, 1999 through March 31, 2000, the Fund incurred approximately
$1,390,000 of net realized capital losses. As permitted by tax regulations, the
Fund intends to elect to defer these losses and treat them as arising in the
fiscal year ending March 31, 2001.
Distribution of Income and Gains. All of the net investment income of the Fund
is declared as a daily dividend and is distributed to shareholders monthly. Net
realized gains from investment transactions, in excess of
22 Scudder New York Tax Free Fund
<PAGE>
--------------------------------------------------------------------------------
available capital loss carryforwards, would be taxable to the Fund if not
distributed, and, therefore, will be distributed to shareholders at least
annually.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from accounting principles generally accepted in the United
States of America. As a result, net investment income (loss) and net realized
gain (loss) on investment transactions for a reporting period may differ
significantly from distributions during such period. Accordingly, the Fund may
periodically make reclassifications among certain of its capital accounts
without impacting the net asset value of the Fund.
Investment Transactions and Investment Income. Investment transactions are
accounted for on the trade date. Interest income is recorded on the accrual
basis. Realized gains and losses from investment transactions are recorded on an
identified cost basis. All premiums and original issue discounts are
amortized/accreted for both tax and financial reporting purposes.
B. Purchases and Sales of Securities
During the six months ended September 30, 2000, purchases and sales of long-term
municipal securities aggregated $11,857,280 and $13,964,636, respectively.
C. Related Parties
Under the Investment Management Agreement (the "Agreement") with Scudder Kemper
Investments, Inc. (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 Fund. In addition to
portfolio management services, the Adviser provides certain administrative
services in accordance with the Agreement. The management fee payable under the
Agreement is equal to an annual rate of 0.625% of the first $200,000,000 of the
average daily net assets and 0.60% of such net assets in excess of $200,000,000,
computed and accrued daily and payable monthly. For the six months ended
September 30, 2000, the fee pursuant to the Agreement amounted to $541,770,
which was equivalent to an annualized effective rate of 0.625% of the Fund's
average daily net assets.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend-paying and shareholder service agent for the Fund. For the
23 Scudder New York Tax Free Fund
<PAGE>
six months ended September 30, 2000, the amount charged to the Fund by SSC
aggregated $47,933, of which $26,315 is unpaid at September 30, 2000.
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 Fund. For the six months
ended September 30, 2000, the amount charged to the Fund by SFAC aggregated
$28,051, of which $12,069 is unpaid at September 30, 2000.
The Fund pays each Trustee not affiliated with the Adviser an annual retainer,
plus specified amounts for attended board and committee meetings. For the six
months ended September 30, 2000, Trustees' fees and expenses aggregated $2,057.
In addition, a one-time fee of $35,850 was accrued for payment to those Trustees
not affiliated with the Adviser who did not stand for re-election under the
reorganization discussed in Note F. Inasmuch as the Adviser will also benefit
from administrative efficiencies of a consolidated Board, the Adviser has agreed
to bear $17,925 of such costs.
D. Expense Off-Set Arrangements
The Fund has entered into arrangements with its custodian and transfer agent
whereby credits realized as a result of uninvested cash balances are used to
reduce a portion of the Fund's expenses. During the six months ended
September 30, 2000, the Fund's custodian and transfer agent fees were reduced by
$5,829 and $2,876, respectively, under these arrangements.
E. Line of Credit
The Fund and several other Scudder Funds (the "Participants") share in a $1
billion revolving credit facility with Chase Manhattan Bank 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 based upon net
assets, among each of the Participants. Interest is calculated based on the
market rates at the time of the borrowing. The Fund may borrow up to a maximum
of 33 percent of its net assets under the agreement.
F. Reorganization
In early 2000, Scudder Kemper initiated a restructuring program for most of its
Scudder no-load open-end funds in response to changing industry conditions and
investor needs. The program proposes to streamline the
24 Scudder New York Tax Free Fund
<PAGE>
management and operations of most of the no-load open-end funds Scudder Kemper
advises principally through the liquidation of several small funds, mergers of
certain funds with similar investment objectives, the creation of one Board of
Directors/Trustees and the adoption of an administrative fee covering the
provision of most of the services currently paid for by the affected funds.
Costs incurred in connection with this restructuring initiative are being borne
jointly by Scudder Kemper and certain of the affected funds.
25 Scudder New York Tax Free Fund
<PAGE>
Shareholder Meeting Results (Unaudited)
--------------------------------------------------------------------------------
A Special Meeting of Shareholders (the "Meeting") of Scudder New York Tax Free
Fund (the "fund"), a series of Scudder State Tax Free Trust, was held on July
13, 2000, 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 elect Trustees of Scudder State Tax Free Trust.
<TABLE>
<S> <C> <C>
Number of Votes:
Trustee For Withheld
--------------------------------------------------------------------------------
Henry P. Becton, Jr. 8,693,437 374,095
Linda C. Coughlin 8,673,639 393,893
Dawn-Marie Driscoll 8,698,336 369,196
Edgar R. Fiedler 8,680,850 386,682
Keith R. Fox 8,696,852 370,680
Joan E. Spero 8,678,598 388,934
Jean Gleason Stromberg 8,696,071 371,461
Jean C. Tempel 8,700,318 367,214
Steven Zaleznick 8,675,189 392,344
--------------------------------------------------------------------------------
</TABLE>
2. To ratify the selection of PricewaterhouseCoopers LLP as the independent
accountants for the fund for the fiscal year ending March 31, 2001.
<TABLE>
<S> <C> <C> <C> <C>
Number of Votes:
For Against Abstain Broker
Non-Votes*
--------------------------------------------------------------------------------
8,697,728 187,628 182,176 0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
* 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.
26 Scudder New York Tax Free Fund
<PAGE>
Officers and Trustees
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
Linda C. Coughlin* Philip G. Condon*
o President and Trustee o Vice President
Henry P. Becton, Jr. William F. Glavin*
o Trustee; President, WGBH o Vice President
Educational Foundation
Ashton P. Goodfield*
Dawn-Marie Driscoll o Vice President
o Trustee; President, Driscoll
Associates; Executive Fellow, James E. Masur*
Center for Business Ethics, Bentley o Vice President
College
Ann M. McCreary*
Edgar R. Fiedler o Vice President
o Trustee; Senior Fellow and
Economic Counsellor, The Howard S. Schneider*
Conference Board, Inc. o Vice President
Keith R. Fox Rebecca L. Wilson*
o Trustee; General Partner, o Vice President
The Exeter Group of Funds
John Millette*
Joan E. Spero o Vice President and Secretary
o Trustee; President, The Doris
Duke Charitable Foundation Kathryn L. Quirk*
o Vice President and
Jean Gleason Stromberg Assistant Secretary
o Trustee; Consultant
John R. Hebble*
Jean C. Tempel o Treasurer
o Trustee; Managing Director,
First Light Capital, LLC Brenda Lyons*
o Assistant Treasurer
Steven Zaleznick
o Trustee; President and Caroline Pearson*
Chief Executive Officer, o Assistant Secretary
AARP Services, Inc.
Eleanor R. Brennan* *Scudder Kemper Investments, Inc.
o Vice President
Thomas V. Bruns*
o Vice President
</TABLE>
27 Scudder New York Tax Free Fund
<PAGE>
Investment Products and Services
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Scudder Funds
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
Money Market U.S. Growth
Scudder U.S. Treasury Money Fund Value
Scudder Cash Investment Trust Scudder Large Company Value Fund
Scudder Money Market Series -- Scudder Value Fund
Prime Reserve Shares Scudder Small Company Value Fund
Premium Shares
Managed Shares Growth
Scudder Tax Free Money Fund Scudder Classic Growth Fund
Scudder Capital Growth Fund
Tax Free Scudder Large Company Growth Fund
Scudder Medium Term Tax Free Fund Scudder Select 1000 Growth Fund
Scudder Managed Municipal Bonds Scudder Development Fund
Scudder High Yield Tax Free Fund Scudder Small Company Stock Fund
Scudder California Tax Free Fund Scudder 21st Century Growth Fund
Scudder Massachusetts Tax Free Fund
Scudder New York Tax Free Fund Global Equity
Worldwide
U.S. Income Scudder Global Fund
Scudder Short Term Bond Fund Scudder International Fund
Scudder GNMA Fund Scudder Global Discovery Fund
Scudder Income Fund Scudder Emerging Markets Growth Fund
Scudder Corporate Bond Fund Scudder Gold Fund
Scudder High Yield Bond Fund
Regional
Global Income Scudder Greater Europe Growth Fund
Scudder Global Bond Fund Scudder Pacific Opportunities Fund
Scudder Emerging Markets Income Fund Scudder Latin America Fund
The Japan Fund, Inc.
Asset Allocation
Scudder Pathway Conservative Portfolio Industry Sector Funds
Scudder Pathway Balanced Portfolio Scudder Health Care Fund
Scudder Pathway Growth Portfolio Scudder Technology Fund
U.S. Growth and Income
Scudder Balanced Fund
Scudder Dividend & Growth Fund
Scudder Growth and Income Fund
Scudder Select 500 Fund
Scudder S&P 500 Index Fund
28 Scudder New York Tax Free Fund
<PAGE>
--------------------------------------------------------------------------------
Retirement Programs and Education Accounts
--------------------------------------------------------------------------------
Retirement Programs Education Accounts
Traditional IRA Education IRA
Roth IRA UGMA/UTMA
SEP-IRA IRA for Minors
Inherited IRA
Keogh Plan
401(k), 403(b) Plans
Variable Annuities
--------------------------------------------------------------------------------
Closed-End Funds
--------------------------------------------------------------------------------
The Argentina Fund, Inc. Montgomery Street Income Securities, Inc.
The Brazil Fund, Inc. Scudder Global High Income Fund, Inc.
The Korea Fund, Inc. Scudder New Asia Fund, Inc.
</TABLE>
Scudder funds are offered by prospectus only. For more complete information on
any fund or variable annuity registered in your state, including information
about a fund's objectives, strategies, risks, advisory fees, distribution
charges, and other expenses, please order a free prospectus. Read the prospectus
before investing in any fund to ensure the fund is appropriate for your goals
and risk tolerance. There is no assurance that the objective of any fund will be
achieved, and fund returns and net asset values fluctuate. Shares are redeemable
at current net asset value, which may be more or less than their original cost.
A money market mutual fund investment is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although a
money market mutual fund seeks to preserve the value of your investment at $1
per share, it is possible to lose money by investing in such a fund.
The services and products described should not be considered a solicitation to
buy or an offer to sell a security to any person in any jurisdiction where such
offer, solicitation, purchase, or sale would be unlawful under the securities
laws of such jurisdiction.
Scudder Investor Services, Inc.
29 Scudder New York Tax Free Fund
<PAGE>
Account Management Resources
--------------------------------------------------------------------------------
For shareholders of Scudder funds including those in the AARP Investment Program
Convenient Automatic Investment Plan
ways to invest,
quickly and A convenient investment program in which money is
reliably electronically debited from your bank account monthly
to regularly purchase fund shares and "dollar cost
average" -- buy more shares when the fund's price is
lower and fewer when it's higher, which can reduce
your average purchase price over time.*
Automatic Dividend Transfer
The most timely, reliable, and convenient way to
purchase shares -- use distributions from one Scudder
fund to purchase shares in another, automatically
(accounts with identical registrations or the same
social security or tax identification number).
QuickBuy
Lets you purchase Scudder fund shares electronically,
avoiding potential mailing delays; money for each of
your transactions is electronically debited from a
previously designated bank account.
Payroll Deduction and Direct Deposit
Have all or part of your paycheck -- even government
checks -- invested in up to four Scudder funds at one
time.
* 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- Automated Information Lines
clock electronic
account Scudder Class S Shareholders:
service and Call SAIL(TM) -- 1-800-343-2890
information,
including some AARP Investment Program Shareholders:
transactions Call Easy-Access Line -- 1-800-631-4636
Personalized account information, the ability to
exchange or redeem shares, and information on other
Scudder funds and services via touchtone telephone.
Web Site
Scudder Class S Shareholders --
www.scudder.com
AARP Investment Program Shareholders --
aarp.scudder.com
Personal Investment Organizer: Offering account
information and transactions, interactive worksheets,
prospectuses and applications for all 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.
30 Scudder New York Tax Free Fund
<PAGE>
<PAGE>
--------------------------------------------------------------------------------
Those who Automatic Withdrawal Plan
depend on
investment You designate the bank account, determine the
proceeds for schedule (as frequently as once a month) and amount
living expenses of the redemptions, and Scudder does the rest.
can enjoy these
convenient, Distributions Direct
timely, and
reliable Automatically deposits your fund distributions into
automated the bank account you designate within three business
withdrawal days after each distribution is paid.
programs
QuickSell
Provides speedy access to your money by
electronically crediting your redemption proceeds to
the bank account you previously designated.
For more Scudder Class S Shareholders:
information
about these Call a Scudder representative at
services 1-800-SCUDDER
AARP Investment Program Shareholders:
Call an AARP Investment Program representative at
1-800-253-2277
Please address For Scudder Class S Shareholders:
all written
correspondence The Scudder Funds
to PO Box 2291
Boston, Massachusetts
02107-2291
For AARP Investment Program Shareholders:
AARP Investment Program from Scudder
PO Box 2540
Boston, Massachusetts
02208-2540
31 Scudder New York Tax Free Fund
<PAGE>
About the Fund's Adviser
[LOGO] Scudder Investments (TM)
PO Box 2291
Boston, MA 02107-2291
1-800-SCUDDER
www.scudder.com
A member of the [LOGO] Zurich Financial Services Group
Scudder Kemper Investments, Inc. is one of the largest and most experienced
investment management organizations worldwide, managing more than $290 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 over 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.
