SCUDDER
INVESTMENTS(SM)
[LOGO]
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BOND/TAX FREE
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Scudder New York Tax
Free Money Fund
Fund #088
Annual Report
March 31, 2000
Scudder New York Tax Free Money Fund seeks
income that is exempt from New York state
and New York City personal income taxes and
regular federal income taxes and is
consistent with maintaining a stable $1.00
share price.
No-load funds with no commissions to buy,
sell, or exchange shares.
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Contents
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3 Portfolio Management Discussion
4 Investment Portfolio
6 Financial Statements
9 Financial Highlights
10 Notes to Financial Statements
13 Report of Independent Accountants
14 Tax Information
15 Officers and Trustees
16 Investment Products and Services
18 Scudder Solutions
2
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Portfolio Management Discussion
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March 31, 2000
Scudder New York Tax Free Money Fund posted a 2.79% total return for the year
ended March 31, 2000. The fund's 7-day effective yield as of March 31 was 3.10%.
For investors in the highest combined state and federal income tax bracket, the
fund's yield was equivalent to a 5.51% compounded yield. The fund's average
maturity was 13 days as of March 31, 2000, compared with 27 days 12 months
earlier. The fund continues to invest in variable rate demand notes, tax-free
commercial paper, and tax-free notes. The fund also continues to emphasize high
quality issuers and guarantors.
3
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Investment Portfolio as of March 31, 2000
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<TABLE>
<CAPTION>
Principal
Amount ($) Value ($)
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Municipal Investments 100.0%
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<S> <C> <C>
New York
Albany, NY, Industrial Development Authority, Davies Office
Refurbishing, Series 1997, Weekly Demand Note, AMT,
3.85%, 2/1/2017* ....................................... 1,650,000 1,650,000
Babylon, NY, Industrial Development Agency, Resource
Recovery Bond, Series 1989, Daily Demand Note,
4%, 12/1/2024* ......................................... 1,000,000 1,000,000
Erie County, NY, Water Authority, Waterworks Systems
Revenue, Weekly Demand Bond, 3.55%, 12/1/2016 (b)* ..... 2,000,000 2,000,000
Hempstead, NY, Industrial Development Agency,
Trigen-Nassau Energy Corporation, Series 1998,
Weekly Demand Bond, AMT, 3.8%, 9/15/2015* .............. 1,000,000 1,000,000
Long Island Power Authority, Electric Systems Revenue:
Weekly Demand Note, 3.8%, 5/1/2033* .................... 1,000,000 1,000,000
Tax Exempt Commercial Paper, Series 4, 3.55%,
4/10/2000 ............................................ 4,500,000 4,500,000
Monroe County, NY, Industrial Development Agency,
Office Building Associates, Series 1992,
Weekly Demand Note, 3.75%, 10/1/2000* .................. 1,674,000 1,674,000
Nassau County, NY, Tax Anticipation Note:
Series 1999A, 4.85%, 4/28/2000 ......................... 500,000 500,346
Series 1999B, 4.75%, 8/31/2000 ......................... 500,000 501,514
Series 1999C, 4.75%, 12/21/2000 ........................ 500,000 502,423
New York City, NY, Municipal Water Finance Authority,
Tax Exempt Commercial Paper:
3.8%, 4/11/2000 ...................................... 1,500,000 1,500,000
3.65%, 4/12/2000 ..................................... 2,000,000 2,000,000
3.75%, 4/12/2000 ..................................... 2,500,000 2,500,000
3.55%, 4/27/2000 ..................................... 1,000,000 1,000,000
New York Metropolitan Transit Authority, Tax Exempt
Commercial Paper, Series B, 3.55%, 4/11/2000 ........... 2,300,000 2,300,000
New York City, NY, General Obligation, Series 1996J3,
Weekly Demand Note, 3.8%, 2/15/2016* ................... 3,500,000 3,500,000
New York, NY, State General Obligations, Tax Exempt
Commercial Paper:
Environmental Quality, Series 1997A, 3.8%,
4/11/2000 .......................................... 1,000,000 1,000,000
Series W, 3.65%, 5/4/2000 ............................ 1,000,000 1,000,000
New York State Dormitory Authority:
Cornell University, Series 1990B, Daily Demand Note,
3.9%, 7/1/2025* ...................................... 1,500,000 1,500,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
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<TABLE>
<CAPTION>
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Principal
Amount ($) Value ($)
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<S> <C> <C>
Tax Exempt Commercial Paper:
Columbia University, 3.45%, 4/11/2000 ............ 1,500,000 1,500,000
3.7%, 4/13/2000 .................................. 2,000,000 2,000,000
New York State Energy Research and Development
Authority, Series 1985C, Daily Demand Note,
3.9%, 12/1/2025* ................................... 1,000,000 1,000,000
New York State Housing Finance Agency, Hospital for
Special Surgery, Series 1985A, Weekly Demand Bond,
3.6%, 11/1/2010* ................................... 1,885,000 1,885,000
New York State Local Government Assistance Corporation,
Series 1993A, Weekly Demand Note, 3.6%, 4/1/2022* .. 1,300,000 1,300,000
New York State Pollution Control Revenue, Orange &
Rockland Energy Research and Development Project,
Series 1994A, Weekly Demand Note, 3.55%,
10/1/2014 (b)* ..................................... 2,100,000 2,100,000
New York State Power Authority, Tax Exempt
Commercial Paper, 3.9%, 4/6/2000 ................... 1,500,000 1,500,000
Niagara County, NY, Industrial Development Agency,
Solid Waste Disposal Revenue, Weekly Demand Note,
AMT, 3.9%, 11/15/2024* ............................. 2,995,000 2,995,000
Onondaga County, NY, Industrial Development Agency,
Southern Container Corp., Series 1997A, Weekly
Demand Note, 3.85%, 8/1/2007* ...................... 1,400,000 1,400,000
Schenectady County, NY, Industrial Development Revenue,
Scotia Industrial Park Project, Series 1993A, Weekly
Demand Bonds, 3.85%, 6/1/2009* ..................... 1,770,000 1,770,000
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Total Municipal Investments (Cost $48,078,283) 48,078,283
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Total Investment Porfolio -- 100% (Cost $48,078,283) (a) 48,078,283
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</TABLE>
(a) The cost for federal income tax purposes was $48,078,283.
(b) Bond is insured by one of these companies: AMBAC, Capital Guaranty,
FGIC, FSA or MBIA/BIG.
* Floating rate and monthly, weekly, or daily demand notes are securities
whose yields vary with a designated market index or market rate, such
as the coupon-equivalent of the Treasury bill rate. Variable rate
demand notes are securities whose yields are periodically reset at
levels that are generally comparable to tax-exempt commercial paper.
These securities are payable on demand within seven calendar days and
normally incorporate an irrevocable letter of credit from a major bank.
These notes are carried, for purposes of calculating average weighted
maturity, at the longer of the period remaining until the next rate
change or to the extent of the demand period.
AMT: Subject to alternative minimum tax
The accompanying notes are an integral part of the financial statements.
5
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Financial Statements
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<TABLE>
<CAPTION>
Statement of Assets and Liabilities as of March 31, 2000
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Assets
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<S> <C>
Investments in securities, at value (cost $48,078,283) ................. $ 48,078,283
Cash ................................................................... 178,295
Receivable for investments sold ........................................ 100,000
Interest receivable .................................................... 221,315
Receivable for Fund shares sold ........................................ 273,096
Other assets ........................................................... 1,382
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Total assets ........................................................... 48,852,371
Liabilities
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Dividends payable ...................................................... 4,361
Payable for Fund shares redeemed ....................................... 795,606
Accrued management fee ................................................. 75,068
Other accrued expenses and payables .................................... 26,991
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Total liabilities ...................................................... 902,026
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Net assets, at value $ 47,950,345
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Net Assets
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Net assets consist of:
Accumulated net realized gain (loss) ................................... (52,838)
Paid-in capital ........................................................ 48,003,183
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Net assets, at value $ 47,950,345
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Net Asset Value
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Net Asset Value, offering and redemption price per share ($47,950,345 /
47,956,461 outstanding shares of beneficial interest, $.01 par value,
unlimited number of shares authorized) ------------
$ 1.00
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</TABLE>
The accompanying notes are an integral part of the financial statements.
6
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Statement of Operations for the year ended March 31, 2000
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Investment Income
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Interest ...................................................... $ 2,556,640
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Expenses:
Management fee ................................................ 383,453
Services to shareholders ...................................... 74,928
Custodian and accounting fees ................................. 46,800
Auditing ...................................................... 28,029
Legal ......................................................... 4,709
Trustees' fees and expenses ................................... 15,952
Reports to shareholders ....................................... 11,538
Registration fees ............................................. 6,996
Other ......................................................... 3,244
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Total expenses, before expense reductions ..................... 575,649
Expense reductions ............................................ (115,506)
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Total expenses, after expense reductions ...................... 460,143
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Net investment income 2,096,497
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Realized and unrealized gain (loss) on investment transactions
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Net realized gain (loss) from investments ..................... (713)
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Net increase (decrease) in net assets resulting from operations $ 2,095,784
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The accompanying notes are an integral part of the financial statements.
7
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Statements of Changes in Net Assets
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<TABLE>
<CAPTION>
Years Ended March 31,
Increase (Decrease) in Net Assets 2000 1999
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<S> <C> <C>
Operations:
Net investment income ........................... $ 2,096,497 $ 2,284,454
Net realized gain (loss) from investment
transactions ................................. (713) (388)
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Net increase (decrease) in net assets resulting
from operations .............................. 2,095,784 2,284,066
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Distributions to shareholders from net investment
income ....................................... (2,096,497) (2,284,454)
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Fund share transactions at net asset value of
$1.00 per share:
Proceeds from shares sold ....................... 92,399,086 197,943,189
Reinvestment of distributions ................... 1,865,460 2,006,593
Cost of shares redeemed ......................... (126,734,322) (212,042,600)
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Net increase (decrease) in net assets from Fund
share transactions ........................... (32,469,776) (12,092,818)
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Increase (decrease) in net assets ............... (32,470,489) (12,093,206)
Net assets at beginning of period ............... 80,420,834 92,514,040
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Net assets at end of period ..................... $ 47,950,345 $ 80,420,834
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</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<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>
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Years Ended March 31, 2000 1999 1998 1997 1996
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<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.000 $1.000 $1.000 $1.000 $1.000
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Net investment income .028 .027 .030 .028 .031
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Less distributions from:
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Net investment income (.028) (.027) (.030) (.028) (.031)
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Net asset value, end of period $1.000 $1.000 $1.000 $1.000 $1.000
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Total Return (%) (a) 2.79 2.71 3.06 2.85 3.18
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Ratios to Average Net Assets and Supplemental Data
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Net assets, end of period ($ millions) 48 80 93 60 58
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Ratio of expenses before expense
reductions (%) .75 .73 .78 .85 .86
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Ratio of expenses after expense
reductions (%) .60 .60 .60 .60 .60
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Ratio of net investment income (%) 2.74 2.68 3.00 2.81 3.13
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</TABLE>
(a) Total returns would have been lower had certain expenses not been reduced.
9
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Notes to Financial Statements
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A. Description of the Fund
Scudder New York Tax Free Money 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.
B. Cessation of Operations
On February 7, 2000, the Board of Trustees of the Fund approved the cessation of
operations of the Fund effective on or about May 5, 2000 (the "Closing Date").
Accordingly, the Board has voted to redeem involuntarily the shares of any Fund
shareholder outstanding at that time. This may be a taxable event for
shareholders with the exception of those participating in a qualified defined
contribution plan, defined benefit plan or other qualified retirement vehicle.
In conjunction with approving the cessation of operations of the Fund, the Board
approved closing the Fund to new investors effective as of the close of business
on February 7, 2000.
C. Significant Accounting Policies
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 values all portfolio securities utilizing the
amortized cost method permitted in accordance with Rule 2a-7 under the 1940 Act
and pursuant to which the Fund must adhere to certain conditions. Under this
method, which does not take into account unrealized gains or losses on
securities, an instrument is initially valued at its cost and thereafter assumes
a constant accretion/amortization to maturity of any discount/premium.
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.
10
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At March 31, 2000, the Fund had a net tax basis capital loss carryforward of
approximately $52,100, which may be applied against any realized net taxable
capital gains of each succeeding year until fully utilized, or until March 31,
2001 ($1,700), March 31, 2002 ($3,500), March 31, 2003 ($43,200), March 31, 2004
($3,300) and March 31, 2007 ($400), the respective expiration dates, or until
liquidation of the Fund, whichever occurs first. In addition, from November 1,
1999 through March 31, 2000, the Fund incurred $713 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 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.
D. 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
11
<PAGE>
0.50% of the Fund's average daily assets computed and accrued daily and payable
monthly. In addition, the Adviser has agreed not to impose all or a portion of
its management fee until May 5, 2000 and during such period to maintain the
annualized expenses of the Fund at not more than 0.60% of average daily net
assets. For the year ended March 31, 2000, the Adviser did not impose a portion
of its fee amounting to $112,402 and the portion imposed amounted to $271,051,
of which $75,068 is unpaid at March 31, 2000.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend-paying and shareholder service agent for the Fund. For the
year ended March 31, 2000, the amount charged to the Fund by SSC aggregated
$50,678 of which $7,399 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 Fund by SFAC aggregated $31,787 of
which $5,573 is unpaid at March 31, 2000.
The Fund pays each of its Trustees 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 $15,952.
E. 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 $957 and $2,147,
respectively, under these arrangements.
F. 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.
12
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Report of Independent Accountants
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To the Trustees of Scudder State Tax Free Trust and Shareholders of Scudder New
York Tax Free Money 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 Money
Fund (the "Fund") at March 31, 2000, the results of its operations, the changes
in their 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.
As described in Note B, on February 7, 2000, the Trustees voted to liquidate the
Fund on or about May 5, 2000.
Boston, Massachusetts PricewaterhouseCoopers LLP
May 3, 2000
13
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Tax Information
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Of the dividends paid by Scudder New York Tax Free Money Fund from net
investment income for the taxable year ended March 31, 2000, 100% are designated
as exempt interest dividends for federal income tax purposes.
In addition, of the dividends paid by Scudder New York Tax Free Money Fund from
April 1, 2000 through the liquidation date, 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.
14
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<TABLE>
<CAPTION>
Officers and Trustees
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<S> <C>
Linda C. Coughlin* Jean C. Tempel
o President and Trustee o Trustee; Venture Partner, Internet
Capital Group
Henry P. Becton, Jr.
o Trustee; President and General Eleanor R. Brennan*
Manager, WGBH Educational Foundation o Vice President
Dawn-Marie Driscoll Philip G. Condon*
o Trustee; President, Driscoll o Vice President
Associates; Executive Fellow, Bentley
College Ashton P. Goodfield*
o Vice President
Peter B. Freeman
o Trustee; Corporate Director and Trustee Ann M. McCreary*
o Vice President
George M. Lovejoy, Jr.
o Trustee; President and Director, Fifty Frank J. Rachwalski, Jr.*
Associates o Vice President
Wesley W. Marple, Jr. Rebecca L. Wilson*
o Trustee; Professor of Business o Vice President
Administration, Northeastern
University, College of Business John Millette*
Administration o Vice President and Secretary
Kathryn L. Quirk* John R. Hebble*
o Trustee, Vice President and Assistant o Treasurer
Secretary
Caroline Pearson*
o Assistant Secretary
*Scudder Kemper Investments, Inc.
</TABLE>
15
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Investment Products and Services
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1-800-SCUDDER www.scudder.com
<TABLE>
<CAPTION>
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The Scudder Family of Funds+++
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<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>
16
<PAGE>
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1-800-SCUDDER www.scudder.com
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Retirement Programs and Education Accounts
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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>
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Closed-End Funds#
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<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.
17
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Scudder Solutions
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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.
18
<PAGE>
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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
19
<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
