SCUDDER
INVESTMENTS (SM)
[LOGO]
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BOND/TAX FREE
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Scudder New York
Tax Free Fund
Fund #042
Annual Report
March 31, 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.
No-load funds with no commissions to buy, sell, or exchange shares.
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Contents
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4 Letter from the Fund's President
6 Performance Update
8 Portfolio Summary
9 Portfolio Management Discussion
14 Investment Portfolio
19 Financial Statements
22 Financial Highlights
23 Notes to Financial Statements
26 Report of Independent Accountants
27 Tax Information
27 Officers and Trustees
28 Investment Products and Services
30 Scudder Solutions
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 In a difficult environment for all fixed-income instruments,
Inception: including municipal bonds, Scudder New York Tax Free Fund
7/22/83 posted a total return of -0.74% for its most recent fiscal
year ended March 31, 2000. While negative, the fund's return
Total Net outpaced the -2.43% average return of 103 similar funds
Assets as tracked by Lipper Analytical Services.*
of 3/31/00:
$174.5 million o As of March 31, 2000, Scudder New York Tax Free Fund's
30-day net annualized SEC yield was 4.72%, equivalent to an
8.39% taxable yield for New York investors subject to the
43.74% combined federal and state income tax rate.
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30-Day Yield on March 31, 2000
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THE ORIGINAL DOCUMENT CONTAINS A BAR CHART HERE
BAR CHART DATA:
Scudder Taxable Yield
New York Needed to Equal
Tax Free Fund the Fund's Yield
4.72% 8.39%
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* Lipper Analytical Services, Inc., is an independent analyst of investment
performance. Performance includes reinvestment of dividends and capital
gains.
Scudder New York Tax Free Fund | 3
<PAGE>
Letter from the Fund's President
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Dear Shareholders,
Municipal bonds endured a challenging investment environment during Scudder New
York Tax Free Fund's most recent fiscal year ended March 31, 2000. The fund
posted a -0.74% total return during the period, but outperformed the -2.43%
average performance of its peers as compiled by Lipper. To match the fund's
tax-free 4.72% 30-day SEC yield on March 31, a taxable investment would have had
to yield 8.39%. Over the period, municipal bonds were negatively affected by
significant interest rate increases across all fixed-income markets as the
Federal Reserve attempted to restrain surging U.S. economic growth and head off
a major increase in inflation by gradually raising the federal funds rate to 6%.
Following this period of relative underperformance, we nevertheless believe the
municipal market offers attractive return potential: Adjusted for inflation,
municipal yields are high by historical standards and are attractive when
compared to yields of comparable Treasury bonds. As of March 31, yields of
10-year AAA-rated municipal bonds were 84% of comparable Treasuries. Second, a
recent reduction in the supply of municipal bonds should provide strong support
for bond prices. And third, fixed-income markets could be primed for a rally
once a consensus is reached that the Fed has completed its current cycle of
interest rate increases.
On a related note, we'd like to point out some of the advantages of owning a
municipal bond fund compared with holding individual municipal bonds. First and
foremost, municipal bond
4 | Scudder New York Tax Free Fund
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funds offer professional management. While many investors believe that
purchasing an individual bond is a relatively simple process, knowing what price
to pay for a municipal bond and what structure and characteristics to seek can
be confusing, and can make a dramatic difference in how a bond will perform on a
total return basis. Though investors understandably value income and coupon
level, they are not the only factors that determine whether a bond will prove to
be a worthwhile investment. Other important advantages offered by municipal bond
funds include portfolio diversification, dividend reinvestment, and quarterly
statements that display performance information clearly and concisely.
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/Linda C. Coughlin
Linda C. Coughlin
President,
Scudder New York Tax Free Fund
Scudder New York Tax Free Fund | 5
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Performance Update
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March 31, 2000
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Growth of a $10,000 Investment
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THE ORIGINAL DOCUMENT CONTAINS A LINE CHART HERE
LINE CHART DATA:
Scudder New York Lehman Brothers
Tax Free Fund Municipal Bond Index*
'90 10000 10000
'91 10779 10922
'92 11977 12015
'93 13846 13520
'94 14027 13833
'95 14924 14861
'96 16110 16107
'97 16877 16985
'98 18767 18808
'99 19792 19974
'00 19646 19954
Yearly periods ended March 31
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Fund Index Comparison
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Total Return
Growth of Average
Period ended 3/31/2000 $10,000 Cumulative Annual
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Scudder New York Tax Free Fund
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1 year $ 9,926 -.74% -.74%
5 year $ 13,164 31.64% 5.65%
10 year $ 19,646 96.46% 6.99%
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Lehman Brothers Municipal Bond Index*
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1 year $ 9,990 -.10% -.10%
5 year $ 13,427 34.27% 6.06%
10 year $ 19,954 99.54% 7.15%
* 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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THE ORIGINAL DOCUMENT CONTAINS A BAR CHART HERE
BAR CHART DATA:
Yearly periods ended March 31
Total Return
Scudder New York Lehman Brothers
Tax Free Fund Municipal Bond Index*
1991 7.79 9.22
1992 11.11 10.02
1993 15.60 12.52
1994 1.31 2.32
1995 6.39 7.43
1996 7.95 8.38
1997 4.76 5.45
1998 11.20 10.73
1999 5.46 6.20
2000 -.74 -0.10
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fund Total
Return (%) 7.79 11.11 15.60 1.31 6.39 7.95 4.76 11.20 5.46 -.74
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Index Total
Return (%) 9.22 10.02 12.52 2.32 7.43 8.38 5.45 10.73 6.20 -.10
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Net Asset
Value ($) 10.73 10.98 11.40 10.32 10.38 10.67 10.63 11.27 11.37 10.77
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Income
Dividends ($) .67 .65 .61 .54 .52 .53 .53 .51 .51 .51
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Capital Gains
Distributions ($) -- .25 .61 .73 .05 -- .01 .02 -- --
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</TABLE>
Scudder New York Tax Free Fund | 7
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Portfolio Summary
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March 31, 2000
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Diversification
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A PIE CHART APPEARS HERE, ILLUSTRATING THE EXACT DATA POINTS IN THE TABLE BELOW.
State General Obligation/ The fund invests in a
Lease 25% broad selection of New
Core Cities/Lease 17% York state and New York
Higher Education 8% City municipal bonds.
Sales/Special Tax 8%
County General Obligation/
Lease 5%
Port/Airport Revenue 5%
Other General Obligation/
Lease 5%
Hospital/Health Revenue 4%
Project Revenue/Resource
Recovery 4%
Miscellaneous Municipal 19%
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100%
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Quality
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A PIE CHART APPEARS HERE, ILLUSTRATING THE EXACT DATA POINTS IN THE TABLE BELOW.
AAA 53% Overall portfolio
AA 11% quality remains high,
A 22% with 86% of portfolio
BBB 3% securities rated A or
SKI* 11% better as of March 31.
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100%
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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 PIE CHART APPEARS HERE, ILLUSTRATING THE EXACT DATA POINTS IN THE TABLE BELOW.
Less than 1 year 2% In a rising interest
1-5 years 12% rate environment, we
5-10 years 42% emphasized
10-15 years 18% longer-maturity bonds
15 years or greater 26% while the yield curve
- ------------------------------------ remained steep and then
100% resumed our usual
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Weighted Effective Maturity: concentrating on
10.8 years intermediate maturities
when the yield curve
flattened.
For more complete details about the Fund's investment portfolio, see page 14. 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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March 31, 2000
Dear Shareholders,
Municipal bonds faced a difficult environment during Scudder New York Tax Free
Fund's most recent fiscal year as the Federal Reserve repeatedly raised interest
rates in an attempt to forestall inflationary pressures arising from the strong
U.S. economy. The fund's total return for its most recent fiscal year ended
March 31, 2000, was -0.74%, outpacing the -2.43% average return of 103 similar
funds as tracked by Lipper Analytical Services, Inc. The fund's 30-day SEC yield
as of September 30 was 4.72%, equivalent to an 8.39% taxable yield for New York
investors subject to the 43.74% combined federal and state income tax rate.
Despite the negative posting over its most recent fiscal year, the fund's total
returns over one-, three-, five- and ten-year periods placed it in the top 19%
of similar New York tax-free funds. Please see the accompanying table for
additional information concerning the fund's returns.
Premium Bonds Aided Our
Defensive Posture
During the fund's most recent fiscal year, the Federal Reserve
began to raise interest rates to head off inflationary pressures as commodity
prices rebounded, the nation's unemployment index reached 30-year lows, and
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Scudder New York Tax Free Fund:
Consistent Top-Tier Performance
(Average annual returns for periods ended March 31, 2000)
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Scudder
New York Number of
Tax Free Fund Lipper Funds Percentile
Period Return Average Rank Tracked Rank
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1 Year -0.74% -2.43% 7 of 103 Top 7%
3 Years 5.19% 4.28% 7 of 92 Top 8%
5 Years 5.65% 4.91% 15 of 80 Top 19%
10 Years 6.99% 6.47% 6 of 33 Top 18%
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Past performance does not guarantee future results.
Scudder New York Tax Free Fund | 9
<PAGE>
consumer spending proceeded at a brisk pace. The Fed's latest action, in March,
raised its short-term interest rate target to 6%. As a consequence, yields on
10-year Treasury bonds rose nearly 72 basis points and their prices declined
4.9%, while municipal bond yields rose 60 basis points and their prices also
declined 4.9%. Our strategy in light of these market conditions was to emphasize
longer maturity bonds because of the steep municipal yield curve between 10 and
30 years, and sell intermediate and short maturities. As the yield curve
flattened towards the end of the fiscal year, we resumed our usual strategy of
concentrating on intermediate maturities.
During the 12-month period, we also maintained three key elements of our
longer-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. Third, we sought
to avoid "market discounts," a provision that can subject municipal bonds sold
at a discount to ordinary income tax. Key to this strategy was our emphasis on
purchasing premium bonds rather than par bonds (which can decline more easily to
a discount). The table on page 11 illustrates this element of our strategy,
showing the difference in the performance over the previous 12-month period of a
type of premium bond we favored versus a type of long-maturity par bond we
avoided. In a difficult municipal bond market the premium bond posted positive
performance, while the par bond posted negative performance because of its
exposure to the market discount tax.
10 | Scudder New York Tax Free Fund
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Premium Coupon Bonds Avoided "Market Discount"
(12-month returns as of March 31, 2000, following a 60 basis point
rise in interest rates)
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Starting price Ending price Total
Type of Bond 3/31/99 3/31/00 Return
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Premium bond with a
5.50% coupon due 2015 $105.92 $101.06 +0.68%
Par bond with a
5.0% coupon due 2020 $100.00 $91.92 -3.02%
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Result: The premium bond outperformed the par bond by 3.70%.
In addition, over the period, credit spreads for higher yielding securities
widened to historically high levels. Because of this, we chose to selectively
add to credits which we deemed to be appropriate credit risks. The fund's
overall portfolio quality remains high, with over 86% 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 general obligation, utility
revenue and transportation revenue bonds.
New York Update
The year 2000 marks the fifth consecutive year New York State has enjoyed a
year-end budget surplus. The State continues to benefit from the strength of the
economy, both locally and nationally. In addition, State general obligation
bonds were upgraded over the 12 months ended March 31. New York State's economy
continues to grow at a modest rate. The State's unemployment rate was 5.2% in
1999, compared with the national average of 4.2%. During the 12-month period
ended January, 2000, New York State added 199,500 non-farm jobs, with the
service and trade sectors accounting for 80% of job growth. Substantive job
growth, in turn, has led to increases in the State's wealth levels.
The State's debt burden is high, but manageable, given the State's size. New
York currently has $37.7 billion of State-supported debt outstanding. The
Governor has proposed a debt reduction plan that focuses on increased
pay-as-you-go financing in order to reduce the State's annual debt issuance.
This proposal, along with scheduled
Scudder New York Tax Free Fund | 11
<PAGE>
debt retirement, would leave the State's debt outstanding relatively flat over
the next five years. Overall, New York State's credit status continues to be
stable given the positive economic environment and resulting growth in
employment and improvements in the State's financial position. However, thin
reserves and the continual lack of consensus between the political parties on
the budget process cloud New York's credit outlook. We will continue to monitor
the State's debt burden.
Outlook
Since it is widely expected that the Fed will continue to raise interest rates
into the summer, municipals will continue to face a challenging environment.
Still, we believe the municipal bond market represents attractive value, with
yields of longer maturity municipals approaching those of Treasury bonds, and
tax-equivalent yields near double-digit levels for investors in the highest tax
brackets (in January, municipal bond yields reached 6.35% on average*, the
highest level since August 1995). And the robust U.S. and New York economies
should continue to bolster the credit ratings of individual New York bond
issues.
In addition to the long-term strategy outlined above, we will seek to take
advantage of newly widened credit spreads (differences in yield between higher
and lower quality bonds). Wider credit spreads make it worthwhile to invest in
bonds with slightly lower credit ratings in an effort to boost the fund's yield.
We believe Scudder New York Tax Free Fund remains an attractive investment
option for investors seeking a high level of income free from federal and New
York income taxes.
Sincerely,
Your Portfolio Management Team
/s/Ashton P. Goodfield /s/Eleanor R. Brennan
Ashton P. Goodfield Eleanor R. Brennan
*Source: The Bond Buyer
12 | Scudder New York Tax Free Fund
<PAGE>
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 offices across the United
States and abroad. The Adviser believes that a team approach benefits fund
investors by bringing together many disciplines and leveraging the firm's
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 14 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.
Scudder New York Tax Free Fund | 13
<PAGE>
Investment Portfolio as of March 31, 2000
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Principal
Amount ($) Value ($)
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Short-Term Municipal Investments 1.7%
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New York
New York Municipal Water Authority, Series 1994 G,
Daily Demand Note, 3.95%,
6/15/2024* (Cost $3,000,000) ........................ 3,000,000 3,000,000
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Long-Term Municipal Investments 98.3%
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New York
34th Street Partnership Inc., NY, Capital Improvement,
5.5%, 1/1/2014 ...................................... 1,900,000 1,878,188
Albany County, NY, Airport Revenue:
Series 1997, AMT, 5.375%, 12/15/2017 (b) ............ 1,000,000 963,970
Series 1997, AMT, 5.5%, 12/15/2019 (b) .............. 1,000,000 963,810
Albany, NY, General Obligation, 7%, 1/15/2008 (b) ...... 10,000 10,223
Bablyon, NY, General Obligation:
Series 1998A, Zero Coupon, 8/1/2006 (b) ............. 1,045,000 758,216
Series 1998A, Zero Coupon, 8/1/2007 (b) ............. 735,000 505,504
Chautauqua County, NY:
7.3%, 4/1/2008 (b) .................................. 575,000 657,697
7.3%, 4/1/2009 (b) .................................. 575,000 664,407
Series 1990, 7.3%, 4/1/2007 (b) ..................... 465,000 526,082
Erie County, NY, Public Improvement General
Obligation Unlimited, Series 1992, 6.125%,
1/15/2012 (b) ....................................... 590,000 640,581
Glen Cove Housing Authority, NY, Senior Living Facility,
The Mayfair at Glen Cove, AMT, Series 1996,
8.25%, 10/1/2026 .................................... 1,500,000 1,585,380
Islip, NY, New York Community Development Agency,
New York Institute of Technology, Series 1996,
7.5%, 3/1/2026 ...................................... 4,000,000 4,153,320
Jamestown, NY, General Obligation:
Series 1991 A, 7%, 3/15/2007 (b) .................... 725,000 807,483
Series 1991 A, 7%, 3/15/2008 (b) .................... 600,000 674,604
Long Island Power Authority, NY, Electric Systems
Revenue:
Series 1998A, 5.5%, 12/1/2013 (b) ................... 3,000,000 3,073,740
Series 1998A, 5%, 12/1/2018 (b) ..................... 4,000,000 3,671,880
The accompanying notes are an integral part of the financial statements.
14 | Scudder New York Tax Free Fund
<PAGE>
<TABLE>
<CAPTION>
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Principal
Amount ($) Value ($)
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<S> <C> <C>
Metropolitan Transit Authority, Inverse Variable Rate
Certificate Trust, Series 1993B, 5.93%, 6/30/2002 (b)** ............... 8,000,000 8,210,000
Metropolitan Transportation Authority, NY, Dedicated
Tax Fund, Series 1999A, 5.25%, 4/1/2016 ............................... 2,000,000 1,930,760
Monroe County, NY, General Obligation Unlimited:
Series 1996, 6%, 3/1/2013 ............................................. 1,050,000 1,130,304
Series 1996, 6%, 3/1/2014 ............................................. 1,040,000 1,117,355
Series 1996, 6%, 3/1/2017 ............................................. 1,410,000 1,507,854
Japan Air Lines, Series 1996, AMT, 6%, 11/1/2015 (b) .................. 965,000 997,096
New York City, NY, City Transitional Finance Authority
Revenue Bond:
Series 1999C, 5%, 5/1/2017 ............................................ 4,000,000 3,709,000
Series 1999C, 5.5%, 5/1/2025 (b) ...................................... 3,780,000 3,616,439
Series 2000B, 6.125%, 11/15/2014 ...................................... 1,000,000 1,065,680
New York City, NY, General Obligation:
Series 1991B, 7.5%, 2/1/2005 .......................................... 1,935,000 2,045,411
Series 1996A, 7%, 8/1/2005 ............................................ 5,000,000 5,431,000
Series 1996A, 7%, 8/1/2006 ............................................ 5,000,000 5,485,550
Series 1996A, 6.25%, 8/1/2009 ......................................... 5,175,000 5,500,456
Series 1997I, 6%, 4/15/2009 ........................................... 2,000,000 2,098,760
Series B, 8.25%, 6/1/2006 ............................................. 2,750,000 3,185,023
Series B, 7.25%, 8/15/2007 ............................................ 2,250,000 2,526,795
Series B, Prerefunded 2/1/2002, 7.5%, 2/1/2005 (c) .................... 425,000 451,639
Series B1, Prerefunded 8/15/2004, 7.3%,
8/15/2010 (c) ....................................................... 45,000 49,733
Series E, 8%, 8/1/2005 (b) ............................................ 330,000 374,986
New York City, NY, Industrial Development Agency, Civil Facilities Revenue,
USTA National Tennis Center:
6.1%, 11/15/2004 (b) ................................................ 1,215,000 1,274,474
6.25%, 11/15/2006 (b) ............................................... 3,000,000 3,189,090
Civil Facility Revenue, YMCA Greater New York Project:
Series 1997, 6%, 8/1/2006 ........................................... 580,000 592,174
Series 1997, 5.85%, 8/1/2008 ........................................ 600,000 607,434
Series 1997, 5.8%, 8/1/2016 ......................................... 1,000,000 988,480
New York State Dormitory Authority:
Series 1998, 5%, 7/1/2018 (b) ......................................... 1,875,000 1,709,269
Series 2000, 8%, 2/15/2010 (b)** ...................................... 2,500,000 2,846,225
City University System Series 1995A, 5.625%,
7/1/2016 (b) ........................................................ 1,100,000 1,130,657
College and University Pooled Capital Program, 7.8%,
12/1/2005 (b) ....................................................... 590,000 601,889
</TABLE>
The accompanying notes are an integral part of the financial statements.
Scudder New York Tax Free Fund | 15
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Principal
Amount ($) Value ($)
- ------------------------------------------------------------------------------------
<S> <C> <C>
Columbia University, 5%, 7/1/2015 ...................... 2,500,000 2,391,775
Columbia University, Revenue, 6%, 7/1/2010 ............. 1,000,000 1,039,420
Green Chimneys School, Series 1999A, 4.94%,
7/1/2018 (b) ......................................... 1,375,000 1,356,190
Lease Revenue, Municipal Health Facilities, Series 1998,
4.75%, 1/15/2029 (b) ................................. 2,000,000 1,666,260
Lease Revenue, Office Facilities, Audit & Control,
Series 1999, 5.25%, 4/1/2013 (b) ..................... 720,000 712,656
Mental Health Services Facilities Series 1997B, 5.625%,
2/15/2021 (b) ........................................ 500,000 490,635
Mt. Sinai School of Medicine, Series B, 5.7%,
7/1/2011 (b) ......................................... 1,825,000 1,893,620
New York State Dormitory Authority Revenue, 5.75%,
7/1/2009 (b) ......................................... 1,000,000 1,045,120
Nyack Hospital:
Series 1996, 6%, 7/1/2006 ............................ 1,000,000 989,040
Series 1996, 6.25%, 7/1/2013 ......................... 500,000 475,705
Pace University:
Series 1997, 6.5%, 7/1/2008 (b) ...................... 1,360,000 1,487,745
Series 1997, 6.5%, 7/1/2009 (b) ...................... 555,000 611,249
State University Educational Facility:
Series A, 5.875%, 5/15/2011 .......................... 2,250,000 2,358,473
Revenue Bond, 5.25%, 5/15/2018 (b) ................... 3,000,000 2,864,790
State University Dormitory Facilities, Lease Revenue,
Series B, 5.375%, 7/1/2019 (b) ....................... 1,980,000 1,874,209
State University, Series 1993A, 5.875%, 5/15/2011 (b) .. 380,000 402,914
Upstate Community College, 5.8%, 7/1/2006 .............. 1,075,000 1,106,057
New York State Environmental Facilities Corporation:
Special Obligation Revenue, Riverbank State Park:
Series 1996, 6.25%, 4/1/2007 (b) ..................... 2,055,000 2,198,891
Series 1996, 6.25%, 4/1/2008 (b) ..................... 2,185,000 2,349,858
State Water Revolving Fund, Series D, 6.9%, 5/15/2015 .. 1,185,000 1,281,862
New York State, General Obligation, Series 1998F,
5.25%, 9/15/2013 ....................................... 1,000,000 988,580
New York State Health Facilities Authority, 6.375%,
11/1/2004 .............................................. 1,500,000 1,564,770
New York State Highway Authority, Series 1998E,
5%, 1/1/2025 ........................................... 5,360,000 4,723,125
New York State Local Government Assistance Corporation,
Series 1993E, 5.25%, 4/1/2016 (b) ...................... 1,185,000 1,166,111
New York State Mortgage Agency, Revenue, AMT,
Series 1994, 6.8%, 10/1/2005 ........................... 1,000,000 1,063,420
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 | Scudder New York Tax Free Fund
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
Principal
Amount ($) Value ($)
- ----------------------------------------------------------------------------------
<S> <C> <C>
New York State Throughway Authority General Revenue,
Capital Appreciation Special Obligation, Series 1991A,
Zero Coupon, 1/1/2006 ................................ 2,905,000 2,137,179
New York State Urban Development Corp.:
Revenue, Correctional Capital Facilities:
NC Series 95, 5.375%, 1/1/2015 (b) ................. 2,000,000 1,980,760
Series 1994A, 5.5%, 1/1/2014 (b) ................... 2,000,000 2,036,580
Series 1998, 5.125%, 4/1/2016 ........................ 2,525,000 2,396,781
State Facilities Series 1995, 5.7%, 4/1/2009 (b) ..... 4,250,000 4,422,890
Niagara County, NY, General Obligation,
7.1%, 2/15/2011 (b) .................................. 500,000 580,720
Niagara Falls, NY, Water Treatment Plant, AMT:
7%, 11/1/2003 (b) .................................... 2,260,000 2,406,493
8.5%, 11/1/2005 (b) .................................. 2,140,000 2,477,713
8.5%, 11/1/2006 (b) .................................. 1,240,000 1,462,171
Oneida-Herkimer, NY, Solid Waste Management Authority:
Series 1998, 5.5%, 4/1/2013 (b) ...................... 500,000 504,630
Series 1998, 5.5%, 4/1/2014 (b) ...................... 1,000,000 1,004,850
Onondaga County, NY, Industrial Development Agency,
Solid Waste Disposal Facility, Solvay Paperboard LLC,
Series 1998, AMT, 7%, 11/1/2030 ...................... 3,000,000 2,958,810
Orange County, NY, Industrial Development Agency,
The Glen Arden Project:
5.2%, 1/1/2005 ....................................... 200,000 191,194
5.3%, 1/1/2006 ....................................... 200,000 189,698
5.35%, 1/1/2007 ...................................... 200,000 187,758
5.4%, 1/1/2008 ....................................... 100,000 92,788
5.625%, 1/1/2018 ..................................... 1,000,000 822,200
5.7%, 1/1/2028 ....................................... 1,250,000 992,963
Oswego County, NY, General Obligation Series 1991,
6.7%, 6/15/2012 ...................................... 1,100,000 1,251,899
Port Authority of New York & New Jersey:
Special Obligation Revenue, JFK International
Air Terminal:
6.25%, 12/1/2010 (b) ............................... 2,500,000 2,721,175
6.25%, 12/1/2011 (b) ............................... 2,500,000 2,720,375
Split Amount, Series 1996, 7%, 10/1/2007 ............. 3,500,000 3,641,505
Shenendehowa Central School District, NY, Clifton Park:
6.85%, 6/15/2008 (b) ................................. 350,000 391,713
6.85%, 6/15/2009 (b) ................................. 350,000 395,672
Suffolk County, NY, Industrial Development Agency,
Southwest Sewer System, 6%, 2/1/2007 (b) ............. 500,000 527,125
The accompanying notes are an integral part of the financial statements.
Scudder New York Tax Free Fund | 17
<PAGE>
- -----------------------------------------------------------------------------------------
Principal
Amount ($) Value ($)
- -----------------------------------------------------------------------------------------
Tompkins County, NY, Industrial Development
Agency Revenue, Series 2000, 6%, 7/1/2017 .............. 1,100,000 1,150,270
Troy, NY, Municipal Assistance Corporation:
Series B, Zero Coupon, 1/15/2007 (b) ................... 650,000 458,731
Series B, Zero Coupon, 7/15/2007 (b) ................... 650,000 447,103
Series B, Zero Coupon, 1/15/2008 (b) ................... 750,000 501,293
Ulster County, NY, General Obligation:
Series 1998B, 5%, 10/15/2011 (b) ....................... 275,000 270,034
Series 1998B, 5%, 10/15/2012 (b) ....................... 195,000 190,384
Series 1998B, 5%, 10/15/2013 (b) ....................... 130,000 126,018
Valley Central School District, Montgomery, NY,
7.15%, 6/15/2008 (b) ................................... 625,000 710,644
Virgin Islands
Virgin Islands, General Obligation, Public Finance
Authority, Mortgage Fund Loan Notes, Series 1992A,
EMT, 7%, 10/1/2002 (c)*** .............................. 500,000 530,035
Virgin Islands, Public Finance Authority, Subordinate Lien,
Series 1998D, 6%, 10/1/2007 ............................ 3,000,000 2,987,490
Total Long-Term Municipal Investments (Cost $164,302,686) 168,878,737
Total Investment Portfolio -- 100.0% (Cost $167,302,686) (a) 171,878,737
</TABLE>
(a) The cost for federal income tax purposes was $167,306,058. At March 31,
2000, net unrealized appreciation for all securities based on tax cost was
$4,572,679. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of value over tax cost of
$5,801,812 and aggregate gross unrealized depreciation for all securities
in which there was an excess of tax cost over value of $1,229,133.
(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 March 31, 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: Subject to alternative minimum tax.
The accompanying notes are an integral part of the financial statements.
18 | Scudder New York Tax Free Fund
<PAGE>
Financial Statements
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities as of March 31, 2000
- --------------------------------------------------------------------------------
Assets
- --------------------------------------------------------------------------------
Investments in securities, at value (cost $167,302,686) . $ 171,878,737
Cash .................................................... 698,033
Receivable for investments sold ......................... 2,559,371
Interest receivable ..................................... 2,995,967
Receivable for Fund shares sold ......................... 24,200
Other assets ............................................ 3,626
-------------
Total assets ............................................ 178,159,934
Liabilities
- --------------------------------------------------------------------------------
Payable for investments purchased ....................... 3,063,390
Dividends payable ....................................... 215,502
Payable for Fund shares redeemed ........................ 145,445
Accrued management fee .................................. 155,113
Other accrued expenses and payables ..................... 115,249
-------------
Total liabilities ....................................... 3,694,699
Net assets, at value .................................... $ 174,465,235
Net Assets
- --------------------------------------------------------------------------------
Net assets consist of:
Net unrealized appreciation (depreciation) on investments 4,576,051
Accumulated net realized gain (loss) .................... (6,969,941)
Paid-in capital ......................................... 176,859,125
Net assets, at value .................................... $ 174,465,235
Net Asset Value
- --------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share ($174,465,235 /
16,201,269 outstanding shares of beneficial interest, $.01 par value,
unlimited number of shares authorized)................ $ 10.77
The accompanying notes are an integral part of the financial statements.
Scudder New York Tax Free Fund | 19
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations for the year ended March 31, 2000
- --------------------------------------------------------------------------------
Investment Income
- --------------------------------------------------------------------------------
Interest ...................................................... $ 10,515,720
------------
Expenses:
Management fee ................................................ 1,196,591
Services to shareholders ...................................... 176,372
Custodian and accounting fees ................................. 73,355
Auditing ...................................................... 38,654
Legal ......................................................... 13,088
Trustees' fees and expenses ................................... 22,178
Reports to shareholders ....................................... 14,147
Registration fees ............................................. 13,016
Other ......................................................... 44,527
------------
Total expenses, before expense reductions ..................... 1,591,928
Expense reductions ............................................ (7,100)
------------
Total expenses, after expense reductions ...................... 1,584,828
Net investment income ......................................... 8,930,892
Realized and unrealized gain (loss) on investment transactions
- --------------------------------------------------------------------------------
Net realized gain (loss) from investments ..................... (2,429,285)
Net unrealized appreciation (depreciation) during the period
on investments.............................................. (8,577,570)
Net gain (loss) on investment transactions .................... (11,006,855)
Net increase (decrease) in net assets resulting from operations $ (2,075,963)
The accompanying notes are an integral part of the financial statements.
20 | Scudder New York Tax Free Fund
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Statements of Changes in Net Assets
- ------------------------------------------------------------------------------------
Years Ended March 31,
Increase (Decrease) in Net Assets 2000 1999
- ------------------------------------------------------------------------------------
Operations:
<S> <C> <C>
Net investment income ............................. $ 8,930,892 $ 9,163,100
Net realized gain (loss) on investment transactions (2,429,285) 2,068,469
Net unrealized appreciation (depreciation) on
investment transactions during the period. ..... (8,577,570) (343,581)
------------- -------------
Net increase (decrease) in net assets resulting
from operations................................. (2,075,963) 10,887,988
------------- -------------
Distributions to shareholders from net investment
income.......................................... (8,930,892) (9,163,100)
------------- -------------
Fund share transactions:
Proceeds from shares sold ......................... 23,720,730 56,426,831
Reinvestment of distributions ..................... 6,197,150 6,158,807
Cost of shares redeemed ........................... (56,159,937) (48,327,775)
------------- -------------
Net increase (decrease) in net assets from Fund
share transactions.............................. (26,242,057) 14,257,863
------------- -------------
Increase (decrease) in net assets ................. (37,248,912) 15,982,751
Net assets at beginning of period ................. 211,714,147 195,731,396
------------- -------------
Net assets at end of period ....................... $ 174,465,235 $ 211,714,147
Other Information
- --------------------------------------------------------------------------------
Shares outstanding at beginning of period ......... 18,624,470 17,368,966
------------- -------------
Shares sold ....................................... 2,182,485 4,958,346
Shares issued to shareholders in reinvestment of
distributions................................... 571,194 540,309
Shares redeemed ................................... (5,176,880) (4,243,151)
------------- -------------
Net increase (decrease) in Fund shares ............ (2,423,201) 1,255,504
Shares outstanding at end of period ............... 16,201,269 18,624,470
</TABLE>
The accompanying notes are an integral part of the financial statements.
Scudder New York Tax Free Fund | 21
<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, 2000 1999 1998 1997 1996
- --------------------------------------------------------------------------------
Net asset value, beginning of period $11.37 $11.27 $10.63 $10.67 $10.38
--------------------------------------------
<S> <C> <C> <C> <C> <C>
Income from investment operations:
Net investment income .51 .51 .51 .53 .53
Net realized and unrealized gain (.60) .10 .66 (.03) .29
(loss) on investment transactions
--------------------------------------------
Total from investment operations (.09) .61 1.17 .50 .82
Less distributions from:
Net investment income (.51) (.51) (.51) (.53) (.53)
Net realized gains on investment -- -- (.02) (.01) --
transactions
--------------------------------------------
Total distributions (.51) (.51) (.53) (.54) (.53)
Net asset value, end of period $10.77 $11.37 $11.27 $10.63 $10.67
--------------------------------------------
Total Return (%) (.74) 5.46 11.20 4.76 7.95
Ratios to Average Net Assets and Supplemental Data
- ------------------------------------------------------------------------------------
Net assets, end of period ($ millions) 174 212 196 181 192
Ratio of expenses (%) .83 .82 .83 .83 .82
Ratio of net investment income (%) 4.67 4.45 4.65 4.95 4.91
Portfolio turnover rate (%) 25 45 29 71 81
</TABLE>
22 | Scudder New York Tax Free Fund
<PAGE>
Notes to Financial Statements
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 generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
Security Valuation.The Fund's portfolio debt securities purchased with an
original maturity greater than sixty days are valued by pricing agents approved
by the officers of the Fund, whose quotations reflect broker/dealer-supplied
valuations and electronic data processing techniques. If the pricing agents are
unable to provide such quotations, the most recent bid quotation supplied by a
bona fide market maker shall be used. 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
Scudder New York Tax Free Fund | 23
<PAGE>
monthly. Net realized gains from investment transactions, in excess of available
capital loss carryforwards, would be taxable to the Fund if not distributed,
and, therefore, will be distributed to shareholders 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 generally accepted accounting principles. As a result, net
investment income (loss) and net realized gain (loss) on investment transactions
for a reporting period may differ significantly from distributions during such
period. Accordingly, the Fund may periodically make reclassifications among
certain of its capital accounts without impacting the net asset value of the
Fund.
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
For the year ended March 31, 2000, purchases and sales of long-term municipal
securities aggregated $44,157,686 and $70,676,985, 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 year ended March 31,
2000, the fee for the Fund pursuant to the Agreement amounted to $1,196,591, was
equivalent to an annual 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
24 | Scudder New York Tax Free Fund
<PAGE>
year ended March 31, 2000, the amount charged to the Fund by SSC aggregated
$108,398, of which $15,833 is unpaid at March 31, 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 year ended
March 31, 2000, the amount charged to the Funds by SFAC aggregated $51,823, of
which $1,700 is unpaid at March 31, 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 year
ended March 31, 2000, Trustees' fees and expenses aggregated $22,178.
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 were used to
reduce a portion of the Fund's expenses. For the year ended March 31, 2000, the
Fund's custodian and transfer agent fees were reduced by $1,684 and $5,416,
respectively, under these arrangements.
E. Line of Credit
The Fund and several Scudder Funds (the "Participants") share in a $1 billion
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 Fund may
borrow up to a maximum of 33 percent of its net assets under the agreement.
Scudder New York Tax Free Fund | 25
<PAGE>
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Trustees of Scudder State Tax Free Trust and the Shareholders of Scudder
New York Tax Free Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, 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 Fund (the
"Fund") at March 31, 2000, the results of its operations, the changes in its net
assets, and the financial highlights for each of the periods indicated therein,
in conformity with accounting principles generally accepted in the United
States. 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 auditing standards generally accepted in the United States 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, 2000 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
Boston, Massachusetts PricewaterhouseCoopers LLP
May 19, 2000
26 | Scudder New York Tax Free Fund
<PAGE>
Tax Information
- --------------------------------------------------------------------------------
Of the dividends paid from net investment income for the taxable year ended
March 31, 2000, 100% are designated as exempt interest dividends for federal
income tax purposes.
Please consult a tax adviser if you have 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-SCUDDER.
Officers and Trustees
- --------------------------------------------------------------------------------
Linda C. Coughlin*
o President and Trustee
Henry P. Becton, Jr.
o Trustee; President and General
Manager, WGBH Educational
Foundation
Dawn-Marie Driscoll
o Trustee; President, Driscoll
Associates; Executive Fellow,
Bentley College
Peter B. Freeman
o Trustee; Corporate Director and
Trustee
George M. Lovejoy, Jr.
o Trustee; President and Director,
Fifty Associates
Wesley W. Marple, Jr.
o Trustee; Professor of Business
Administration, Northeastern
University, College of Business
Administration
Kathryn L. Quirk*
o Trustee, Vice President and
Assistant Secretary
Jean C. Tempel
o Trustee; Venture Partner, Internet
Capital Group
Eleanor R. Brennan*
o Vice President
Philip G. Condon*
o Vice President
Ashton P. Goodfield*
o Vice President
Ann M. McCreary*
o Vice President
Frank J. Rachwalski, Jr.*
o Vice President
Rebecca L. Wilson*
o Vice President
John Millette*
o Vice President and Secretary
John R. Hebble*
o Treasurer
Caroline Pearson*
o Assistant Secretary
*Scudder Kemper Investments, Inc.
Scudder New York Tax Free Fund | 27
<PAGE>
Investment Products and Services
- --------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
<S> <C>
Money Market U.S. Growth and Income
Scudder U.S. Treasury Money Fund Scudder Balanced Fund
Scudder Cash Investment Trust Scudder Dividend & Growth Fund
Scudder Money Market Series -- Scudder Growth and Income Fund***
Prime Reserve Shares* Scudder Select 500 Fund
Premium Shares* Scudder S&P 500 Index Fund
Managed Shares* Scudder Real Estate Investment Fund
Scudder Government Money Market
Series -- Managed Shares* U.S. Growth
Value
Tax Free Money Market+ Scudder Large Company Value Fund
Scudder Tax Free Money Fund Scudder Value Fund***
Scudder Tax Free Money Market Scudder Small Company Value Fund
Series -- Managed Shares* Scudder Micro Cap Fund
Scudder California Tax Free Money Fund** Growth
Scudder New York Tax Free Money Fund** Scudder Classic Growth Fund***
Scudder Large Company Growth Fund***
Tax Free+ Scudder Select 1000 Growth Fund
Scudder Limited Term Tax Free Fund Scudder Development Fund
Scudder Medium Term Tax Free Fund Scudder 21st Century Growth Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund Global Equity
Scudder California Tax Free Fund** Worldwide
Scudder Massachusetts Limited Term Scudder Global Fund
Tax Free Fund** Scudder International Value Fund
Scudder Massachusetts Tax Free Fund** Scudder International Growth and
Scudder New York Tax Free Fund** Income Fund
Scudder Ohio Tax Free Fund** Scudder International Fund++
Scudder International Growth Fund
U.S. Income Scudder Global Discovery Fund***
Scudder Short Term Bond Fund Scudder Emerging Markets Growth Fund
Scudder GNMA Fund Scudder Gold Fund
Scudder Income Fund Regional
Scudder Corporate Bond Fund Scudder Greater Europe Growth Fund
Scudder High Yield Bond Fund Scudder Pacific Opportunities Fund
Scudder Latin America Fund
Global Income The Japan Fund, Inc.
Scudder Global Bond Fund
Scudder International Bond Fund Industry Sector Funds
Scudder Emerging Markets Income Fund Choice Series
Scudder Financial Services Fund
Asset Allocation Scudder Health Care Fund
Scudder Pathway Conservative Portfolio Scudder Technology Fund
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio Preferred Series
Scudder Tax Managed Growth Fund
Scudder Tax Managed Small Company Fund
</TABLE>
28 | Scudder New York Tax Free Fund
<PAGE>
- --------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
- --------------------------------------------------------------------------------
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
Scudder Horizon Plan**+++ +++
Scudder Horizon Advantage**+++ +++ +++
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Closed-End Funds#
- -----------------------------------------------------------------------------------------
<S> <C>
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>
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.
Scudder New York Tax Free Fund | 29
<PAGE>
Scudder Solutions
- --------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
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- Scudder Automated Information Line: SAIL(TM) --
clock electronic 1-800-343-2890
account
service and Personalized account information, the ability to exchange
information, or redeem shares, and information on other Scudder funds
including some and services via touchtone telephone.
transactions
Scudder's Web Site -- www.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 your need them. Scudder's site also
provides news about Scudder funds, retirement planning
information, and more.
Scudder New York Tax Free Fund | 29
<PAGE>
- --------------------------------------------------------------------------------
1-800-SCUDDER www.scudder.com
Retirees and Automatic Withdrawal Plan
those who depend
on investment You designate the bank account, determine the schedule (as
proceeds for frequently as once a month) and amount of the redemptions,
living expenses and Scudder does the rest.
can enjoy these
convenient, Distributions Direct
timely, and
reliable Automatically deposits your fund distributions into the
automated bank account you designate within three business days after
withdrawal 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 Call a Scudder representative at
information about 1-800-SCUDDER
these services
Or visit our Web site at
www.scudder.com
Please address The Scudder Funds
all written PO Box 2291
correspondence Boston, Massachusetts
to 02107-2291
30 | 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 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.
SCUDDER
INVESTMENTS(SM)
[LOGO]
PO Box 2291
Boston, MA 02107-2291
1-800-SCUDDER
www.scudder.com
A member of the [LOGO] Zurich Financial Services Group
