Filed electronically with the Securities and Exchange Commission
on July 30, 1998.

File No. 2-84021
File No. 811-3749

SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Pre-Effective Amendment No.
----------
Post-Effective Amendment No. 26
-----------
and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

Amendment No. 27
----------

Scudder State Tax Free Trust
----------------------------
(Exact Name of Registrant as Specified in Charter)

Two International Place, Boston, MA 02110-4103
----------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: (617) 295-2567
--------------

Thomas F. McDonough
Scudder Kemper Investments, Inc.
Two International Place, Boston, MA 02110-4103
----------------------------------------------
(Name and Address of Agent for Service)

It is proposed that this filing will become effective:

immediately upon filing pursuant to paragraph (b)
-------

X on August 1, 1998 pursuant to paragraph (b)
-------

60 days after filing pursuant to paragraph (a)(1)
-------

on _____________ pursuant to paragraph (a) of Rule 485
-------

75 days after filing pursuant to paragraph (a)(2)
------- on _____________ pursuant to paragraph (a)(3) of Rule 485

If appropriate, check the following:

this post-effective amendment designates a new effective date
------- for a previously filed post-effective amendment

CROSS-REFERENCE SHEET

SCUDDER NEW YORK TAX FREE MONEY FUND
AND
SCUDDER NEW YORK TAX FREE FUND

Items Required By Form N-1A
---------------------------

PART A
- ------

Item No. Item Caption Prospectus Caption
-------- ------------ ------------------

1. Cover Page COVER PAGE

2. Synopsis EXPENSE INFORMATION

3. Condensed Financial FINANCIAL HIGHLIGHTS
Information

4. General Description of SCUDDER NEW YORK TAX FREE MONEY FUND -- Investment objectives
Registrant and policies
SCUDDER NEW YORK TAX FREE FUND -- Investment objective and
policies
ADDITIONAL INFORMATION ABOUT POLICIES AND INVESTMENTS
FUND ORGANIZATION

5. Management of the Fund A MESSAGE FROM SCUDDER'S CHAIRMAN
FUND ORGANIZATION--Investment adviser, Transfer agent
SHAREHOLDER BENEFITS--A team approach to investing

5A. Management's Discussion of NOT APPLICABLE
Fund Performance

6. Capital Stock and Other DISTRIBUTION AND PERFORMANCE INFORMATION--Dividends and Capital
Securities Gains Distributions
FUND ORGANIZATION
TRANSACTION INFORMATION--Tax information
SHAREHOLDER BENEFITS--SAIL (Scudder Automated Information Line),
Dividend reinvestment plan, T.D.D. service for the hearing
impaired
HOW TO CONTACT SCUDDER

7. Purchase of Securities Being PURCHASES
Offered TRANSACTION INFORMATION--Purchasing shares
INVESTMENT PRODUCTS AND SERVICES
FUND ORGANIZATION -- Underwriter

8. Redemption or Repurchase EXCHANGES AND REDEMPTIONS
TRANSACTION INFORMATION--Redeeming shares

9. Pending Legal Proceedings NOT APPLICABLE

Cross Reference - Page 1

SCUDDER NEW YORK TAX FREE MONEY FUND
AND
SCUDDER NEW YORK TAX FREE FUND
(continued)
PART B
- ------

Caption in Statement of
Item No. Item Caption Additional Information
-------- ------------ ----------------------

10. Cover Page COVER PAGE

11. Table of Contents TABLE OF CONTENTS

12. General Information and History FUND ORGANIZATION

13. Investment Objectives and THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES
Policies PORTFOLIO TRANSACTIONS

14. Management of the Fund TRUSTEES AND OFFICERS
REMUNERATION

15. Control Persons and Principal TRUSTEES AND OFFICERS
Holders of Securities

16. Investment Advisory and Other INVESTMENT ADVISER
Services ADDITIONAL INFORMATION--Experts, Other Information

17. Brokerage Allocation PORTFOLIO TRANSACTIONS

18. Capital Stock and Other FUND ORGANIZATION
Securities

19. Purchase, Redemption and PURCHASES
Pricing of Securities Being EXCHANGES AND REDEMPTIONS
Offered FEATURES AND SERVICES OFFERED BY THE FUNDS--Dividend and Capital
Gain Distribution Options
SPECIAL PLAN ACCOUNTS
NET ASSET VALUE

20. Tax Status TAXES

21. Underwriters DISTRIBUTOR

22. Calculation of Performance PERFORMANCE AND OTHER INFORMATION
Information

23. Financial Statements FINANCIAL STATEMENTS

Cross Reference - Page 2

CROSS-REFERENCE SHEET

SCUDDER OHIO TAX FREE FUND

Items Required By Form N-1A
---------------------------

PART A
- ------

Item No. Item Caption Prospectus Caption
-------- ------------ ------------------

1. Cover Page COVER PAGE

2. Synopsis EXPENSE INFORMATION

3. Condensed Financial Information FINANCIAL HIGHLIGHTS

4. General Description of INVESTMENT OBJECTIVE AND POLICIES
Registrant ADDITIONAL INFORMATION ABOUT POLICIES AND INVESTMENTS
FUND ORGANIZATION

5. Management of the Fund A MESSAGE FROM SCUDDER'S CHAIRMAN
FUND ORGANIZATION--Investment adviser, Transfer agent
SHAREHOLDER BENEFITS--A team approach to investing

5A. Management's Discussion of Fund NOT APPLICABLE
Performance

6. Capital Stock and Other DISTRIBUTION AND PERFORMANCE INFORMATION--Dividends and capital
Securities gains distributions
FUND ORGANIZATION
TRANSACTION INFORMATION--Tax information
SHAREHOLDER BENEFITS--SAIL (Scudder Automated Information Line),
Dividend reinvestment plan, T.D.D. service for the hearing
impaired
HOW TO CONTACT SCUDDER

7. Purchase of Securities Being PURCHASES
Offered TRANSACTION INFORMATION--Purchasing shares
INVESTMENT PRODUCTS AND SERVICES
FUND ORGANIZATION--Underwriter

8. Redemption or Repurchase EXCHANGES AND REDEMPTIONS
TRANSACTION INFORMATION--Redeeming shares

9. Pending Legal Proceedings NOT APPLICABLE

Cross Reference - Page 3

SCUDDER OHIO TAX FREE FUND
(continued)

PART B
- ------

Caption in Statement of
Item No. Item Caption Additional Information
-------- ------------ ----------------------

10. Cover Page COVER PAGE

11. Table of Contents TABLE OF CONTENTS

12. General Information and History FUND ORGANIZATION

13. Investment Objectives and THE FUNDS' INVESTMENT OBJECTIVE AND POLICIES
Policies PORTFOLIO TRANSACTIONS

14. Management of the Fund TRUSTEES AND OFFICERS
REMUNERATION

15. Control Persons and Principal TRUSTEES AND OFFICERS
Holders of Securities

16. Investment Advisory and Other INVESTMENT ADVISER
Services ADDITIONAL INFORMATION--Experts, Other Information

17. Brokerage Allocation PORTFOLIO TRANSACTIONS

18. Capital Stock and Other FUND ORGANIZATION
Securities

19. Purchase, Redemption and PURCHASES
Pricing of Securities Being EXCHANGES AND REDEMPTIONS
Offered FEATURES AND SERVICES OFFERED BY THE FUND--Dividend and Capital
Gain Distribution Options
SPECIAL PLAN ACCOUNTS
NET ASSET VALUE

20. Tax Status TAXES

21. Underwriters DISTRIBUTOR

22. Calculation of Performance PERFORMANCE INFORMATION
Information

23. Financial Statements FINANCIAL STATEMENTS

Cross Reference - Page 4

CROSS-REFERENCE SHEET

SCUDDER PENNSYLVANIA TAX FREE FUND

Items Required By Form N-1A
---------------------------

PART A
- ------

Item No. Item Caption Prospectus Caption
-------- ------------ ------------------

1. Cover Page COVER PAGE

2. Synopsis EXPENSE INFORMATION

3. Condensed Financial FINANCIAL HIGHLIGHTS
Information

4. General Description of INVESTMENT OBJECTIVE AND POLICIES
Registrant ADDITIONAL INFORMATION ABOUT POLICIES AND INVESTMENTS
FUND ORGANIZATION

5. Management of the Fund A MESSAGE FROM SCUDDER'S CHAIRMAN
FUND ORGANIZATION--Investment adviser, transfer agent
SHAREHOLDER BENEFITS--A team approach to investing

5A. Management's Discussion of NOT APPLICABLE
Fund Performance

7. Purchase of Securities Being PURCHASES
Offered TRANSACTION INFORMATION--Purchasing shares
INVESTMENT PRODUCTS AND SERVICES
FUND ORGANIZATION--Underwriter

8. Redemption or Repurchase EXCHANGES AND REDEMPTIONS
TRANSACTION INFORMATION--Redeeming shares

9. Pending Legal Proceedings NOT APPLICABLE

Cross Reference - Page 5

SCUDDER PENNSYLVANIA TAX FREE FUND
(continued)

PART B
- ------
Caption in Statement of
Item No. Item Caption Additional Information
-------- ------------ ----------------------

10. Cover Page COVER PAGE

11. Table of Contents TABLE OF CONTENTS

12. General Information and History FUND ORGANIZATION

13. Investment Objectives and THE FUNDS' INVESTMENT OBJECTIVE AND POLICIES
Policies PORTFOLIO TRANSACTIONS

14. Management of the Fund TRUSTEES AND OFFICERS
REMUNERATION

15. Control Persons and Principal TRUSTEES AND OFFICERS
Holders of Securities

16. Investment Advisory and Other INVESTMENT ADVISER
Services ADDITIONAL INFORMATION--Experts, Other Information

17. Brokerage Allocation PORTFOLIO TRANSACTIONS

18. Capital Stock and Other FUND ORGANIZATION
Securities

20. Tax Status TAXES

21. Underwriters DISTRIBUTOR

22. Calculation of Performance Data PERFORMANCE INFORMATION

23. Financial Statements FINANCIAL STATEMENTS

Cross Reference - Page 6

CROSS-REFERENCE SHEET

SCUDDER MASSACHUSETTS TAX FREE FUND

Items Required By Form N-1A
---------------------------

PART A
- ------

Item No. Item Caption Prospectus Caption
-------- ------------ ------------------

1. Cover Page COVER PAGE

2. Synopsis EXPENSE INFORMATION

3. Condensed Financial FINANCIAL HIGHLIGHTS
Information

4. General Description of INVESTMENT OBJECTIVE AND POLICIES
Registrant ADDITIONAL INFORMATION ABOUT POLICIES AND INVESTMENTS
FUND ORGANIZATION

5. Management of the Fund A MESSAGE FROM SCUDDER'S CHAIRMAN
FUND ORGANIZATION--Investment adviser, Transfer agent
SHAREHOLDER BENEFITS--A team approach to investing

5A. Management's Discussion of NOT APPLICABLE
Fund Performance

6. Capital Stock and Other DISTRIBUTION AND PERFORMANCE INFORMATION--Dividends and capital
Securities gains distributions
FUND ORGANIZATION
TRANSACTION INFORMATION--Tax information
SHAREHOLDER BENEFITS--SAIL (Scudder Automated Information
Line), Dividend reinvestment plan, T.D.D. service for the
hearing impaired
HOW TO CONTACT SCUDDER

7. Purchase of Securities Being PURCHASES
Offered TRANSACTION INFORMATION--Purchasing shares
INVESTMENT PRODUCTS AND SERVICES
FUND ORGANIZATION -- Underwriter

8. Redemption or Repurchase EXCHANGES AND REDEMPTIONS
TRANSACTION INFORMATION--Redeeming shares

9. Pending Legal Proceedings NOT APPLICABLE

Cross Reference - Page 7

SCUDDER MASSACHUSETTS TAX FREE FUND
(continued)

PART B
- ------

Caption in Statement of
Item No. Item Caption Additional Information
-------- ------------ ----------------------

10. Cover Page COVER PAGE

11. Table of Contents TABLE OF CONTENTS

12. General Information and History FUND ORGANIZATION

13. Investment Objectives and THE FUNDS' INVESTMENT OBJECTIVE AND POLICIES
Policies PORTFOLIO TRANSACTIONS

14. Management of the Fund TRUSTEES AND OFFICERS
REMUNERATION

15. Control Persons and Principal TRUSTEES AND OFFICERS
Holders of Securities

16. Investment Advisory and Other INVESTMENT ADVISER
Services ADDITIONAL INFORMATION--Experts, Other Information

17. Brokerage Allocation PORTFOLIO TRANSACTIONS

18. Capital Stock and Other FUND ORGANIZATION
Securities

20. Tax Status TAXES

21. Underwriters DISTRIBUTOR

22. Calculation of Performance PERFORMANCE INFORMATION
Information

23. Financial Statements FINANCIAL STATEMENTS

Cross Reference - Page 8

CROSS-REFERENCE SHEET

SCUDDER MASSACHUSETTS LIMITED TERM TAX FREE FUND

Items Required By Form N-1A
---------------------------

PART A
- ------

Item No. Item Caption Prospectus Caption
-------- ------------ ------------------

1. Cover Page COVER PAGE

2. Synopsis EXPENSE INFORMATION

3. Condensed Financial FINANCIAL HIGHLIGHTS
Information

4. General Description of INVESTMENT OBJECTIVE AND POLICIES
Registrant ADDITIONAL INFORMATION ABOUT POLICIES AND INVESTMENTS
FUND ORGANIZATION

5. Management of the Fund A MESSAGE FROM SCUDDER'S CHAIRMAN
FUND ORGANIZATION--Investment adviser, Transfer agent
SHAREHOLDER BENEFITS--A team approach to investing

5A. Management's Discussion of NOT APPLICABLE
Fund Performance

7. Purchase of Securities Being PURCHASES
Offered TRANSACTION INFORMATION--Purchasing shares
INVESTMENT PRODUCTS AND SERVICES
FUND ORGANIZATION--Underwriter

8. Redemption or Repurchase EXCHANGES AND REDEMPTIONS
TRANSACTION INFORMATION--Redeeming shares

9. Pending Legal Proceedings NOT APPLICABLE

Cross Reference - Page 9

SCUDDER MASSACHUSETTS LIMITED TERM TAX FREE FUND
(continued)

PART B
- ------

Caption in Statement of
Item No. Item Caption Additional Information
-------- ------------ ----------------------

10. Cover Page COVER PAGE

11. Table of Contents TABLE OF CONTENTS

12. General Information and History FUND ORGANIZATION

13. Investment Objectives and THE FUNDS' INVESTMENT OBJECTIVE AND POLICIES
Policies PORTFOLIO TRANSACTIONS

14. Management of the Fund TRUSTEES AND OFFICERS
REMUNERATION

15. Control Persons and Principal TRUSTEES AND OFFICERS
Holders of Securities

16. Investment Advisory and Other INVESTMENT ADVISER
Services ADDITIONAL INFORMATION--Experts, Other Information

17. Brokerage Allocation PORTFOLIO TRANSACTIONS

18. Capital Stock and Other FUND ORGANIZATION
Securities

20. Tax Status TAXES

21. Underwriters DISTRIBUTOR

22. Calculation of Performance PERFORMANCE INFORMATION
Information

23. Financial Statements FINANCIAL STATEMENTS

Cross Reference - Page 10

This combined prospectus sets forth concisely the information about Scudder New
York Tax Free Money Fund and Scudder New York Tax Free Fund, each a
non-diversified series of Scudder State Tax Free Trust, an open-end management
investment company, that a prospective investor should know before investing.
Please retain it for future reference.

Shares of the Funds are not insured or guaranteed by the U.S. Government.
Scudder New York Tax Free Money Fund seeks to maintain a constant net asset
value of $1.00 per share but there can be no assurance that the stable net asset
value will be maintained.

If you require more detailed information, a Statement of Additional Information
for the Funds dated August 1, 1998, as amended from time to time, may be
obtained without charge by writing Scudder Investor Services, Inc., Two
International Place, Boston, MA 02110-4103 or calling 1-800-225-2470. The
Statement, which is incorporated by reference into the Funds' prospectus, has
been filed with the Securities and Exchange Commission and is available along
with other related materials on the SEC's Internet Web site
(http://www.sec.gov).

Because of its focus on New York tax-exempt investments, Scudder New York Tax
Free Money Fund may have to concentrate a significant percentage of its assets
in a single issuer. An investment in this Fund may be riskier than an investment
in a money market fund that does not focus on investments from a single state.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

Contents--see page 5.

NOT FDIC- MAY LOSE VALUE
INSURED NO BANK GUARANTEE

SCUDDER [LOGO]

Scudder New York
Tax Free Money Fund
- -------------------

Scudder New York
Tax Free Fund

Prospectus
August 1, 1998

Two pure no-load-TM- (no sales charges) mutual fund series which seek to provide
triple tax-free income, exempt from New York state and New York City personal
income taxes and regular federal income tax.

Expense information

How to compare a Scudder Family of Funds pure no-load-TM- fund

This information is designed to help you understand the various costs and
expenses of investing in Scudder New York Tax Free Money Fund and Scudder New
York Tax Free Fund (the "Funds"). By reviewing this table and those in other
mutual funds' prospectuses, you can compare each Fund's fees and expenses with
those of other funds. With Scudder's pure no-load-TM- funds, you pay no
commissions to purchase or redeem shares, or to exchange from one fund to
another. As a result, all of your investment goes to work for you.

1) Shareholder transaction expenses: Expenses charged directly to your
individual account in either Fund for various transactions.

Scudder New York Scudder New York
Tax Free Money Fund Tax Free Fund
------------------- -------------
Sales commissions to purchase shares (sales load) NONE NONE
Commissions to reinvest dividends NONE NONE
Redemption fees NONE* NONE*
Fees to exchange shares NONE NONE

2) Annual Fund operating expenses: Expenses paid by either Fund before it
distributes its net investment income, expressed as a percentage of its
average daily net assets for the fiscal year ended March 31, 1998.

Investment management fees (after waiver, if applicable) 0.32%** 0.63%
12b-1 fees NONE NONE
Other expenses 0.28% 0.20%
----- -----
Total Fund operating expenses (after waiver, if applicable) 0.60%** 0.83%
===== =====

Example

Based on the levels of total Fund operating expenses listed above, the total
expenses relating to a $1,000 investment, assuming a 5% annual return and
redemption at the end of each period, are listed below. Investors do not pay
these expenses directly; they are paid by each Fund before it distributes its
net investment income to shareholders. (As noted above, the Funds have no
redemption fees of any kind.)

One year $ 6 $ 8
Three years 19 26
Five years 33 46
Ten years 75 103

See "Fund organization--Investment adviser" for further information about the
investment management fees. This example assumes reinvestment of all dividends
and distributions and that the percentage amounts listed under "Annual Fund
operating expenses" remain the same each year. This example should not be
considered a representation of past or future expenses or return. Actual Fund
expenses and returns vary from year to year and may be higher or lower than
those shown.

* You may redeem by writing or calling the Funds, or by Write-A-Check for
Scudder New York Tax Free Money Fund. If you wish to receive redemption
proceeds via wire, there is a $5 wire service fee. For additional
information, please refer to "Transaction information--Redeeming shares."

** Until July 31, 1999, the Adviser has agreed to waive a portion of its fee
for Scudder New York Tax Free Money Fund to the extent necessary so that
the total annualized expenses of the Fund do not exceed 0.60% of average
daily net assets. If the Adviser had not done so, Fund expenses would have
been: investment management fee 0.50%, other expenses 0.28% and total
operating expenses 0.78% for the fiscal year ended March 31, 1998.

Financial highlights

Scudder New York Tax Free Money Fund

The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the audited financial
statements.

If you would like more detailed information concerning the Fund's performance, a
complete portfolio listing and audited financial statements are available in the
Fund's Annual Report dated March 31, 1998, which may be obtained without charge
by writing or calling Scudder Investor Services, Inc.

Years Ended March 31,
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
- ----------------------------------------------------------------------------------------------------------------------

Net asset value, beginning -----------------------------------------------------------------------------------
of period ..................... $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
-----------------------------------------------------------------------------------
Net investment income ............ .030 .028 .031 .025 .017 .022 .035 .046 .052 .047
Distributions from net
investment income ............. (.030) (.028) (.031) (.025) (.017) (.022) (.035) (.046) (.052) (.047)
Net asset value, end of -----------------------------------------------------------------------------------
period ........................ $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
-----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Total Return (%) (a) ............. 3.06 2.85 3.18 2.57 1.75 2.22 3.55 4.69 5.33 4.78
Ratios and Supplemental Data
Net assets, end of period
($ millions) .................. 93 60 58 55 47 40 36 40 36 41
Ratio of operating expenses, net
to average daily net
assets (%) .................... .60 .60 .60 .60 .60 .60 .60 .60 .60 .53
Ratio of operating expenses before
expense reductions, to average
daily net assets (%) .......... .78 .85 .86 .89 .97 .97 1.01 1.08 1.08 .98
Ratio of net investment income to
average daily net assets (%) .. 3.00 2.81 3.13 2.56 1.73 2.19 3.46 4.57 5.21 4.76

(a) Total returns would have been lower had certain expenses not been reduced.

Financial highlights

Scudder New York Tax Free Fund

The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the audited financial
statements.

Years Ended March 31,
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
----------------------------------------------------------------------------------------------------------------------

Net asset value, beginning of
period $10.63 $10.67 $10.38 $10.32 $11.40 $10.98 $10.73 $10.60 $10.53 $10.39
Income from investment .51 .53 .53 .52 .54 .61 .65 .67 .69 .72
operations:

Net investment income
Net realized and unrealized .66 (.03) .29 .11 (.35) 1.03 .50 .13 .16 .14
gain (loss) on investment
transactions
Total from investment
operations 1.17 .50 .82 .63 .19 1.64 1.15 .80 .85 .86
Less distributions:
From net investment income (.51) (.53) (.53) (.52) (.54) (.61) (.65) (.67) (.69) (.72)
From paid-in capital -- -- -- -- -- -- -- -- (.08) --
From net realized gains (.02) (.01) -- -- (.67) (.61) (.25) -- (.01) --
In excess of net realized gains -- -- -- (.05) (.06) -- -- -- -- --
Total distributions (.53) (.54) (.53) (.57) (1.27) (1.22) (.90) (.67) (.78) (.72)
Net asset value, end of
period $11.27 $10.63 $10.67 $10.38 $10.32 $11.40 $10.98 $10.73 $10.60 $10.53
----------------------------------------------------------------------------------------------------------------------
Total Return (%) 11.20 4.76 7.95 6.39 1.31 15.60 11.11 7.79 8.18 8.55
Ratios and Supplemental Data
Net assets, end of period 196 181 192 194 207 201 159 142 132 123
($ millions)
Ratio of operating expenses to .83 .83 .82 .82 .82 .82 .87 .91 .89 .89
average daily net assets (%)
Ratio of net investment 4.65 4.95 4.91 5.13 4.80 5.36 5.96 6.29 6.39 6.89
income to average daily
net assets (%)
Portfolio turnover rate (%) 28.8 71.0 80.5 83.8 158.0 201.4 168.2 224.9 114.3 132.1

A message from the President

Scudder Kemper Investments, Inc., investment adviser to the Scudder Family of
Funds, is one of the largest and most experienced investment management
organizations worldwide, managing more than $200 billion in assets globally for
mutual fund investors, retirement and pension plans, institutional and corporate
clients, and private family and individual accounts. It is one of the ten
largest mutual fund companies in the U.S.

We offered America's first no-load mutual fund in 1928, and today the Scudder
Family of Funds includes over 50 no-load mutual fund portfolios or classes of
shares. We also manage the mutual funds in a special program for the American
Association of Retired Persons, as well as the fund options available through
Scudder Horizon Plan, a tax-advantaged variable annuity. We also advise The
Japan Fund, and numerous other open- and closed-end funds that invest in this
country and other countries around the world.

The Scudder Family of Funds is designed to make investing easy and less costly.
It includes money market, tax free, income and growth funds as well as IRAs,
401(k)s, Keoghs and other retirement plans.

Services available to shareholders include toll-free access to professional
representatives, easy exchange among the Scudder Family of Funds, shareholder
reports, informative newsletters and the walk-in convenience of Scudder Investor
Centers.

Funds or fund classes in the Scudder Family of Funds are offered without
commissions to purchase or redeem shares or to exchange from one fund to
another. There are no 12b-1 fees either, which many other funds now charge to
support their marketing efforts. All of your investment goes to work for you. We
look forward to welcoming you as a shareholder.

/s/Edmond D. Villani

The Funds

o active portfolio management by the Adviser's professional team of credit
analysts and municipal bond market experts

o dividends declared daily and paid monthly

Scudder New York Tax Free Money Fund

o capital stability and income exempt from New York state and New York City
personal income taxes and regular federal income tax

o seeks to maintain a constant share price of $1.00 and investment in high
quality, short-term municipal securities tax-exempt in New York

Scudder New York Tax Free Fund

o income exempt from New York state and New York City personal income taxes
and regular federal income tax

o primarily long-term investment-grade municipal securities tax-exempt in New
York

Contents

Why invest in these Funds? 6
Summary of important features 7
Tax-exempt vs. taxable income 7
Scudder New York Tax Free Money Fund 8
Scudder New York Tax Free Fund 9
Additional information about policies
and investments 11
Distribution and performance information 15
Fund organization 17
Transaction information 18
Shareholder benefits 22
Purchases 25
Exchanges and redemptions 26
Trustees and Officers 28
Investment products and services 29
How to contact Scudder 30

Why invest in these Funds?

Scudder New York Tax Free Money Fund and Scudder New York Tax Free Fund (the
"Funds") are each non-diversified series of Scudder State Tax Free Trust, and
are designed for investors seeking double tax-free income (triple tax-free
income for New York City taxpayers)--exempt from New York state and New York
City personal income taxes and regular federal income tax. Because these Funds
are intended for investors subject to New York and regular federal income taxes,
they may not be appropriate for all investors and are not available in all
states.

Tax-free income

As illustrated in the chart on the following page, depending on your tax bracket
and individual situation, you may earn a substantially higher after-tax return
from these Funds than from comparable investments that pay income subject to New
York state and New York City personal income taxes and regular federal income
tax. For example, if your federal marginal tax rate is 36%, your New York state
marginal tax rate is 6.85% and your New York City marginal tax rate is 2.21%,
your effective combined marginal tax rate is 41.80%. Thus, you would need to
earn a taxable return of 5.10% to receive after-tax income equal to the 2.97%
tax-free yield provided by Scudder New York Tax Free Money Fund for the
seven-day period ended March 31, 1998, or earn a taxable return of 6.87% to
receive after-tax income equal to the 4.00% tax-free yield provided by Scudder
New York Tax Free Fund for the 30-day period ended March 31, 1998. In other
words, it would be necessary to earn $1,718 from a taxable investment to equal
$1,000 of tax-free income you receive from either Fund. The yield levels of
tax-free and taxable investments change continuously. Before investing in either
Fund, you should compare its yield to the after-tax yield you would receive from
a comparable investment paying taxable income. For up-to-date yield information
on either Fund, shareholders can call SAIL, Scudder Automated Information Line,
for toll-free information at any time.

Investment characteristics of each Fund

The Funds are income-oriented portfolios advised by Scudder Kemper Investments,
Inc. (the "Adviser"). Each Fund seeks to provide income free from New York state
and New York City personal income taxes and regular federal income tax. The two
Funds, however, have different investment objectives and characteristics. The
two Funds' prospectuses are presented together so you can understand their
important differences and decide which Fund or combination of the two is most
suitable for your needs.

Scudder New York Tax Free Money Fund's objectives include stability of capital
and the maintenance of a $1.00 net asset value per share. Scudder New York Tax
Free Fund ordinarily provides a higher, more stable income stream, but its net
asset value per share will fluctuate with market changes. As a result of these
different objectives, the average portfolio maturities of the Funds are
different.

Scudder New York Tax Free Money Fund invests primarily in short-term municipal
obligations (notes and bonds) with individual remaining maturities of 397
calendar days or less. The weighted average maturity of the portfolio is 90 days
or less. Scudder New York Tax Free Fund has flexible investment policies
regarding maturity but normally invests primarily in long-term municipal bonds.

The yield and the potential for price fluctuation are generally greater, the
greater the maturity of the municipal security. Other factors affecting the
yield and price variability include the absolute level of interest rates, the
relationship among short-, medium- and long-term interest rates, the quality of
each Fund's investments and each Fund's expenses.

Summary of important features

- -----------------------------------------------------------------------------------------------------------------------
Investment objectives
and characteristics Investments Maturity Quality Dividends

Scudder o price stability o short-term o average maturity o 100% of o declared daily
New York New York of 90 days or investments and paid monthly
Tax Free o income exempt from municipal less; no single rated within top
Money Fund New York state and securities investment two quality o option to
New York City maturity longer ratings or receive in cash
personal income than 397 judged to be of or reinvest in
taxes and regular calendar days comparable additional
federal income tax quality shares

Scudder o prices will o primarily o primarily o 100% of o declared daily
New York fluctuate with long-term long-term bonds investments and paid monthly
Tax Free Fund changes in New York rated within top
interest rates municipal six quality o option to
bonds ratings or receive in cash
o income exempt from judged to be of or reinvest in
New York state and comparable additional
New York City quality shares
personal income
taxes and regular
federal income tax

- -----------------------------------------------------------------------------------------------------------------------

Tax-exempt vs. taxable income

- -----------------------------------------------------------------------------------------------------------------------

Tax Free Yields and Corresponding Taxable Equivalents: The table below shows New
York City taxpayers what an investor would have to earn from a comparable
taxable investment to equal Scudder New York Tax Free Fund and Scudder New York
Tax Free Money Fund's triple tax-free yield. Today many investors may find that
regular federal income tax and New York City and New York state personal income
tax rates make these Funds attractive alternatives to investments paying taxable
income.

TO EQUAL HYPOTHETICAL TAX-FREE YIELDS
COMBINED OF 5%, 7% AND 9%, A TAXABLE INVESTMENT
1998 TAXABLE INCOME: MARGINAL TAX WOULD HAVE TO EARN*:
INDIVIDUAL JOINT RETURN RATE: 5% 7% 9%

$40,001-61,400 $42,351-102,300 34.52% 7.64% 10.69% 13.75%
61,401-128,100 102,301-155,950 37.25 7.97 11.16 14.34
128,101-278,450 155,951-278,450 41.80 8.59 12.03 15.46
OVER $278,450 OVER $278,450 45.07 9.10 12.74 16.39

Combined marginal tax rates are adjusted for the deductibility of state and City
taxes. *These illustrations assume a marginal federal income tax rate of 28% to
39.6% and that the federal alternative minimum tax is not applicable. Upper
income individuals may be subject to an effective federal income tax rate in
excess of the applicable marginal rate as a result of the phase-out of personal
exemptions and itemized deductions made permanent by the Revenue Reconciliation
Act of 1993. Moreover, upper income taxpayers will also be subject to a tax
table benefit recapture imposed by New York state that will have the effect of
increasing their effective tax rate. Individuals subject to these phase-out
provisions would have to invest in taxable securities with a yield in excess of
those shown on the table in order to achieve an after-tax yield equivalent to
the yield on a comparable tax-exempt security.

Except as otherwise indicated, each Fund's investment objectives and policies
are not fundamental and may be changed without a vote of shareholders. If there
is a change in investment objective, shareholders should consider whether that
Fund remains an appropriate investment in light of their then current financial
position and needs. There can be no assurance that either Fund's objectives will
be met.

Scudder New York Tax Free Money Fund

Investment objectives and policies

Scudder New York Tax Free Money Fund seeks stability of capital and the
maintenance of a constant net asset value of $1.00 per share, while providing
New York taxpayers income exempt from New York state and New York City personal
income taxes and regular federal income tax. The Fund is a professionally
managed portfolio of high quality, short-term New York municipal securities. All
of the Fund's investments are high quality, have a remaining maturity of 397
calendar days or less and have minimal credit risk as determined by the Adviser.
The weighted average effective maturity of the Fund's portfolio is 90 days or
less.

Quality

All of the Fund's municipal securities must meet certain quality criteria at the
time of purchase. Generally, the Fund may purchase only securities which are
rated, or issued by an issuer rated, within the two highest quality ratings of
two or more of the following rating agencies: Moody's Investors Service, Inc.
("Moody's") (Aaa and Aa, MIG-1 and MIG-2, and P1 and P2), Standard & Poor's
Corporation ("S&P") (AAA and AA, SP1+ and SP1, A1+ and A1 and A2) and Fitch
Investors Service, Inc. ("Fitch") (AAA and AA, F1+, F1 and F2). The Fund may
invest its assets in these securities to the extent permitted by Rule 2a-7 of
the Investment Company Act of 1940 (the "1940 Act"). The Fund may invest up to
20% of its assets in securities subject to the alternative minimum tax ("AMT
bonds"). The Fund's distributions from interest on AMT bonds may be taxable
depending upon an investor's particular situation. Where only one rating agency
has rated a security (or its issuer), the Fund may purchase that security as
long as the rating falls within the categories described above. Where a security
(or its issuer) is unrated, the Fund may purchase that security if, in the
judgment of the Adviser, it is comparable in quality to securities described
above. All of the securities in which the Fund may invest are dollar-denominated
and must meet credit standards applied by the Adviser pursuant to procedures
established by the Trustees. Should an issue of municipal securities cease to be
rated or if its rating is reduced below the minimum required for purchase by a
money market fund, the Adviser will dispose of any such security unless the
Trustees of the Fund determine that such disposal would not be in the best
interests of the Fund.

Investments

The Fund may invest in municipal notes, which are generally used to provide
short-term capital

needs, and have maturities of one year or less.

Municipal notes include tax anticipation notes, revenue anticipation notes, bond
anticipation notes and construction loan notes. The Fund may also invest in
municipal bonds with remaining maturities of 397 calendar days or less.

Ordinarily, the Fund expects that 100% of its portfolio securities will be New
York municipal securities. The Fund may also, for temporary defensive purposes,
hold cash or invest its assets in short-term taxable securities. It is
impossible to accurately predict how long such alternative strategies may be
utilized.

Scudder New York Tax Free Money Fund is concentrated in securities issued by New
York governments and related entities. Changes in the financial condition or
market assessment of the financial condition of these entities could have a
significant adverse impact on the Fund. Consequently, an investment in the Fund
may be riskier than an investment in a money market fund that does not
concentrate in securities issued by, or within, a single state.

The Fund may invest in stand-by commitments, third party puts, when-issued
securities, illiquid securities, and enter into repurchase agreements and
reverse repurchase agreements, which may involve certain expenses and risks,
including credit risks. The Fund may also invest in variable rate demand
instruments. These securities and techniques are not expected to comprise a
major portion of the Fund's investments. See "Additional information about
policies and investments" for more information about certain of these investment
techniques.

A portion of the Fund's income may be subject to federal, state and local income
taxes.

Scudder New York Tax
Free Fund

Investment objective and policies

Scudder New York Tax Free Fund seeks to provide New York taxpayers with income
exempt from New York state and New York City personal income taxes and regular
federal income tax. The Fund is a professionally managed portfolio consisting
primarily of investment-grade municipal securities.

The Adviser believes that investment results can be enhanced by active
professional management. Professional management distinguishes the Fund from
unit investment trusts, which cannot be actively managed.

Quality

Normally, at least 75% of the intermediate- and long-term securities purchased
by the Fund will be investment-grade municipal securities which are those rated
Aaa, Aa, A or Baa by Moody's or AAA, AA, A or BBB by S&P or Fitch, or unrated
securities judged by the Adviser to be of equivalent quality, or securities
issued or guaranteed by the U.S. Government. The Fund may also invest up to 25%
of its total assets in fixed-income securities rated below investment-grade,
that is, rated below Baa by Moody's or below BBB by S&P or Fitch, or in unrated
securities of equivalent quality as determined by the Adviser. The Fund may not
invest in fixed-income securities rated below B by Moody's, S&P or Fitch, or
their equivalent. The Fund expects to invest principally in securities rated A
or better by Moody's, S&P or Fitch or unrated securities judged by the Adviser
to be of equivalent quality at the time of purchase. Securities in these three
rating categories are judged by the Adviser to have an adequate if not strong
capacity to repay principal and pay interest.

During the fiscal year ended March 31, 1998, based upon the dollar-weighted
average ratings of the Fund's portfolio holdings at the end of each month during
that period, the Fund had the following percentage of its net assets invested in
debt securities rated below investment-grade (or if unrated, considered by the
Adviser to be equivalent to rated securities) in the category indicated: 1.94%
unrated.

High quality bonds, those within the two highest of the quality rating
categories, characteristically have a strong capacity to pay interest and repay
principal. Medium-grade bonds, those within the next two such categories, are
defined as having adequate capacity to pay interest and repay principal. In
addition, certain medium-grade bonds are considered to have speculative
characteristics. While some lower-grade bonds (so-called "junk bonds") have
produced higher yields in the past than investment-grade bonds, they are
considered to be predominantly speculative and, therefore, carry greater risk.

The Fund's investments must also meet credit standards applied by the Adviser.
Should the rating of a portfolio security be downgraded after being purchased by
the Fund, the Adviser will determine whether it is in the best interest of the
Fund to retain or dispose of the security.

Investments

The Fund's portfolio consists primarily of obligations issued by municipalities
located in New York state and other qualifying issuers (including Puerto Rico,
the U.S. Virgin Islands and Guam). It is the opinion of bond counsel, rendered
on the date of issuance, that income from these obligations is exempt from
regular federal, as well as New York state and New York City personal income tax
("New York municipal securities"). The Fund may invest in municipal bonds, which
meet longer-term capital needs and generally have maturities of more than one
year when issued. These securities include general obligation and revenue bonds
and notes of issuers located in New York and of other qualifying issuers. The
Fund may invest in municipal notes, which are generally used to provide
short-term capital needs, and have maturities of one year or less. Municipal
notes include tax anticipation notes, revenue anticipation notes, bond
anticipation notes and construction loan notes. General obligation bonds and
notes are secured by the issuer's pledge of its full faith, credit and taxing
power for payment of principal and interest. Revenue bonds and notes are
generally paid from the revenues of a particular facility or a specific excise
tax or other revenue source.

Under normal market conditions, the Fund expects to invest principally in New
York municipal securities with long-term maturities (i.e., more than 10 years).
The Fund has the flexibility, however, to invest in New York municipal
securities with short- and medium-term maturities as well.

The Fund may also invest up to 20% of its total assets in municipal securities
the interest income from which is taxable or subject to the alternative minimum
tax ("AMT" bonds). Fund distributions from interest on certain municipal
securities subject to the alternative minimum tax such as private activity
bonds, will be a preference item for purposes of calculating individual and
corporate alternative minimum taxes, depending upon investors' particular
situations. In addition, state and local taxes may apply, depending upon state
and local tax laws.

The Fund may invest in stand-by commitments, third party puts, when-issued
securities, illiquid securities, and enter into repurchase agreements and
reverse repurchase agreements, which may involve certain expenses and risks,
including credit risks. The Fund may also invest in variable rate demand
instruments. These securities and techniques are not expected to comprise a
major portion of the Fund's investments. The Fund may also utilize various other
strategic transactions. See "Additional information about policies and
investments" for more information about these investment techniques.

A portion of the Fund's income may be subject to federal, state and local income
taxes.

Additional information about policies and investments

Investment restrictions

The Funds have certain investment restrictions which are designed to reduce the
Funds' investment risk. Fundamental investment restrictions may not be changed
without a vote of shareholders; non-fundamental investment restrictions may be
changed by a vote of the Trust's Board of Trustees.

As a matter of fundamental policy, the Funds may not borrow money, except as
permitted under Federal law. Further, as a matter of non-fundamental policy, the
Funds may not borrow money in an amount greater than 5% of total assets, except
for temporary or emergency purposes.

As a matter of fundamental policy, the Funds may not make loans except through
the lending of portfolio securities, the purchase of debt securities or
interests in indebtedness or through repurchase agreements. The Funds have
adopted a non-fundamental policy restricting the lending of portfolio securities
to no more than 5% of total assets.

A complete description of these and other policies and restrictions is contained
under "Investment Restrictions" in the Funds' Statement of Additional
Information.

Investing in New York

Each Fund is more susceptible to factors adversely affecting issuers of New York
municipal securities than are comparable municipal bond funds that do not focus
on investments of New York issuers.

Each Fund's ability to achieve its investment objective is dependent upon the
ability of the issuers of New York municipal securities to meet their continuing
obligations for the payment of principal and interest. New York State and New
York City face long-term economic problems that could seriously affect their
ability and that of other issuers of New York municipal securities to meet their
financial obligations.

Certain substantial issuers of New York municipal securities (including issuers
whose obligations may be acquired by the Funds) have experienced serious
financial difficulties in recent years. These difficulties have at times
jeopardized the credit standing and impaired the borrowing abilities of all New
York issuers and have generally contributed to higher interest costs for their
borrowings and fewer markets for their outstanding debt obligations. Although
several different issues of municipal securities of New York State and its
agencies and instrumentalities and of New York City have been downgraded by S&P
and Moody's. In recent years, the most recent actions of S&P and Moody's have
been to place the debt obligations of New York State and New York City on Credit
Watch with positive implications and to upgrade the debt obligations of New York
City, respectively. Strong demand for New York municipal securities has also at
times had the effect of permitting New York municipal securities to be issued
with yields relatively lower, and after issuance, to trade in the market at
prices relatively higher, than comparably rated municipal obligations issued by
other jurisdictions. A recurrence of the financial difficulties previously
experienced by certain issuers of New York municipal securities could result in
defaults or declines in the market values of those issuers' existing obligations
and, possibly, in the obligations of other issuers of New York municipal
securities. Although, as of the date of this prospectus, no issuers of New York
municipal securities are in default with respect to the payment of their
municipal securities, the occurrence of any such default could adversely affect
the market values and marketability of all New York municipal securities and,
consequently, the net asset value of each Fund's portfolio.

For additional information about the New York economy and other considerations
affecting each Fund's investments in New York municipal securities see the
Funds' Statement of Additional Information dated August 1, 1998.

When-issued securities

Each Fund may purchase securities on a when-issued or forward delivery basis,
for payment and delivery at a later date. The price and yield are generally
fixed on the date of commitment to purchase. During the period between purchase
and settlement, no interest accrues to the Fund. At the time of settlement, the
market value of the security may be more or less than the purchase price.

Repurchase agreements

As a means of earning taxable income for periods as short as overnight, each
Fund may enter into repurchase agreements with selected banks and
broker/dealers. Under a repurchase agreement, a Fund acquires securities,
subject to the seller's agreement to repurchase at a specified time and price.
Income from repurchase agreements will be taxable when distributed to
shareholders.

Stand-by commitments

To facilitate liquidity, each Fund may enter into "stand-by commitments"
permitting them to resell municipal securities to the original seller at a
specified price. Stand-by commitments generally involve no cost to the Fund, and
any costs would be, in any event, limited to no more than 0.50% of the value of
the total assets of the Fund. Any such costs may, however, reduce yield.

Third party puts

Each Fund may purchase long-term fixed-rate bonds that have been coupled with an
option granted by a third party financial institution allowing the Fund at
specified intervals (not exceeding 397 calendar days in the case of Scudder New
York Tax Free Money Fund) to tender (or "put") its bonds to the institution and
receive the face value thereof. These third party puts are available in several
different forms, may be represented by custodial receipts or trust certificates
and may be combined with other features such as interest rate swaps.

Variable rate demand instruments

Municipal lease obligations

Scudder New York Tax Free Fund may invest in municipal lease obligations and
participation interests in such obligations. These obligations, which may take
the form of a lease, an installment purchase contract or a conditional sales
contract, are issued by state and local governments and authorities to acquire
land and a wide variety of equipment and facilities. Generally, the Fund will
not hold such obligations directly, but will purchase a certificate of
participation or other participation interest in a municipal obligation from a
bank or other financial intermediary. A participation interest gives the Fund a
proportionate interest in the underlying obligation.

Indexed securities

Scudder New York Tax Free Fund may invest in indexed securities, the value of
which is linked to currencies, interest rates, commodities, indices or other
financial indicators ("reference instruments"). The interest rate or (unlike
most fixed-income securities) the principal amount payable at maturity of an
indexed security may be increased or decreased, depending on changes in the
value of the reference instrument.

Illiquid securities

Each Fund may invest a portion of its assets in securities for which there is
not an active trading market, or which have resale restrictions. These types of
securities generally offer a higher return than more readily marketable
securities, but

carry the risk that the Fund may not be able to dispose of them at an
advantageous time or price.

Strategic Transactions and derivatives

Scudder New York Tax Free Fund may, but is not required to, utilize various
other investment strategies as described below to hedge various market risks
(such as interest rates and broad or specific market movements), to manage the
effective maturity or duration of the Fund's portfolio, or to enhance potential
gain. These strategies may be executed through the use of derivative contracts.
Such strategies are generally accepted as a part of modern portfolio management
and are regularly utilized by many mutual funds and other institutional
investors. Techniques and instruments may change over time as new instruments
and strategies are developed or regulatory changes occur.

In the course of pursuing these investment strategies, Scudder New York Tax Free
Fund may purchase and sell exchange-listed and over-the-counter put and call
options on securities, fixed-income indices and other financial instruments,
purchase and sell financial futures contracts and options thereon, and enter
into various interest rate transactions such as swaps, caps, floors or collars
(collectively, all the above are called "Strategic Transactions"). Strategic
Transactions may be used without limit to attempt to protect against possible
changes in the market value of securities held in or to be purchased for the
Fund's portfolio resulting from securities markets fluctuations, to protect the
Fund's unrealized gains in the value of its portfolio securities, to facilitate
the sale of such securities for investment purposes, to manage the effective
maturity or duration of the Fund's portfolio or to establish a position in the
derivatives markets as a temporary substitute for purchasing or selling
particular securities. Some Strategic Transactions may also be used to enhance
potential gain although no more than 5% of the Fund's assets will be committed
to Strategic Transactions entered into for non-hedging purposes. Any or all of
these investment techniques may be used at any time and in any combination, and
there is no particular strategy that dictates the use of one technique rather
than another, as use of any Strategic Transaction is a function of numerous
variables including market conditions. The ability of Scudder New York Tax Free
Fund to utilize these Strategic Transactions successfully will depend on the
Adviser's ability to predict pertinent market movements, which cannot be
assured. The Fund will comply with applicable regulatory requirements when
implementing these strategies, techniques and instruments. Strategic
Transactions involving financial futures and options thereon will be purchased,
sold or entered into only for bona fide hedging, risk management or portfolio
management purposes and not to create leveraged exposure in a Fund. Please refer
to "Risk factors--Strategic Transactions" for more information.

Risk factors

The Funds' risks are determined by the nature of the securities held and the
portfolio management strategies used by the Adviser. The following are
descriptions of certain risks related to the investments and techniques that the
Funds may use from time to time.

Non-diversified investment company. As "non-diversified" investment companies,
each Fund may invest a greater proportion of its assets in the securities of a
smaller number of issuers than a diversified investment company would.
Investment in each Fund may involve greater risk than investment in a
diversified fund.

Investing in New York. If either New York or any of its local governmental
entities or public instrumentalities were to be unable to meet its financial
obligations, the income derived by the Funds, their net asset value or liquidity
and the ability to preserve or realize appreciation of each Fund's capital could
be adversely affected. Although as of the date of this prospectus, no issuers of
New York municipal securities are in

default with respect to the payment of their municipal obligations, the
occurrence of any such default could adversely affect the market values and
marketability of all New York municipal securities and, consequently, the net
asset value of each Fund's portfolio. See "Investing in New York" in the Funds'
Statement of Additional Information for further details about the risks of
investing in New York obligations.

Securities backed by guarantees. The Scudder New York Tax Free Money Fund
invests in securities backed by guarantees from banks, insurance companies and
other financial institutions. The Fund's ability to maintain a stable share
price may depend upon such guarantees, which are not supported by federal
deposit insurance. Consequently, changes in the credit quality of these
institutions could have an adverse impact on securities they have guaranteed or
backed, which could cause losses to the Fund and affect its share price.

Lower-grade debt securities. While Scudder New York Tax Free Fund invests 75% of
its assets in investment-grade securities, the Fund may invest a portion of its
assets in securities rated below Baa by Moody's or BBB by S&P or Fitch. Moody's
considers bonds it rates Baa to have speculative elements as well as
investment-grade characteristics. Securities rated below investment-grade are
commonly referred to as "junk bonds" and involve greater price volatility and
higher degrees of speculation with respect to the payment of principal and
interest than higher quality fixed-income securities. The market prices of such
lower-rated debt securities may decline significantly in periods of general
economic difficulty. In addition, the trading market for these securities is
generally less liquid than for higher-rated securities and the Fund may have
difficulty disposing of these securities at the time it wishes to do so. The
lack of a liquid secondary market for certain securities may also make it more
difficult for the Fund to obtain accurate market quotations for purposes of
valuing its portfolio and calculating its net asset value.

Repurchase agreements. If the seller under a repurchase agreement becomes
insolvent, the Fund's right to dispose of the securities may be restricted, or
the value of the securities may decline before the Fund is able to dispose of
them. In the event of the commencement of bankruptcy or insolvency proceedings
with respect to the seller of the securities before repurchase of the securities
under a repurchase agreement, the Fund may encounter delay and incur costs,
including a decline in the value of the securities, before being able to sell
the securities.

Third party puts. In connection with third party puts, the financial institution
granting the option does not provide credit enhancement, and typically if there
is a default on or significant downgrading of the bond or a loss of its
tax-exempt status, the put option will terminate automatically, the risk to the
Fund will be that of holding a long-term bond and, in the case of Scudder New
York Tax Free Money Fund, the weighted average maturity of the Fund's portfolio
would be adversely affected.

Municipal lease obligations. Municipal lease obligations and participation
interests in such obligations frequently have risks distinct from those
associated with general obligation or revenue bonds. Municipal lease obligations
are not secured by the governmental issuer's credit, and if funds are not
appropriated for lease payments, the lease may terminate, with the possibility
of default on the lease obligation and significant loss to the Fund. Although
"non-appropriation" obligations are secured by the leased property, disposition
of that property in the event of foreclosure might prove difficult, time
consuming and costly. In addition, the tax treatment of such obligations in the
event of non-appropriation is unclear. In evaluating the credit quality of a
municipal lease obligation that

is unrated, the Adviser will consider a number of factors including the
likelihood that the governmental issuer will discontinue appropriating funding
for the leased property. For more information please refer to the Funds'
Statement of Additional Information.

Indexed securities. Indexed securities may be positively or negatively indexed,
so that appreciation of the reference instrument may produce an increase or a
decrease in the interest rate or value at maturity of the security. In addition,
the change in the interest rate or value at maturity of the security may be some
multiple of the change in the value of the reference instrument. Thus, in
addition to the credit risk of the security's issuer, the Fund will bear the
market risk of the reference instrument.

Illiquid securities. The absence of a trading market can make it difficult to
ascertain a market value for these investments. Disposing of illiquid
investments may involve time-consuming negotiation and legal expenses, and it
may be difficult or impossible for the Fund to sell them promptly at an
acceptable price.

Strategic Transactions and derivatives. Strategic Transactions, including
derivative contracts, have risks associated with them including possible default
by the other party to the transaction, illiquidity and, to the extent the
Adviser's view as to certain market movements is incorrect, the risk that the
use of such Strategic Transactions could result in losses greater than if they
had not been used. Use of put and call options may result in losses to the Fund,
force the purchase or sale of portfolio securities at inopportune times or for
prices higher than (in the case of put options) or lower than (in the case of
call options) current market values, limit the amount of appreciation the Fund
can realize on its investments or cause the Fund to hold a security it might
otherwise sell. The use of options and futures transactions entails certain
other risks. In particular, the variable degree of correlation between price
movements of futures contracts and price movements in the related portfolio
position of the Fund creates the possibility that losses on the hedging
instrument may be greater than gains in the value of the Fund's position. In
addition, futures and options markets may not be liquid in all circumstances and
certain over-the-counter options may have no markets. As a result, in certain
markets, the Fund might not be able to close out a transaction without incurring
substantial losses, if at all. Although the use of futures contracts and options
transactions for hedging should tend to minimize the risk of loss due to a
decline in the value of the hedged position, at the same time they tend to limit
any potential gain which might result from an increase in value of such
position. Finally, the daily variation margin requirements for futures contracts
would create a greater ongoing potential financial risk than would purchases of
options, where the exposure is limited to the cost of the initial premium.
Losses resulting from the use of Strategic Transactions would reduce net asset
value, and possibly income, and such losses can be greater than if the Strategic
Transactions had not been utilized. The Strategic Transactions that the Fund may
use and some of their risks are described more fully in the Funds' Statement of
Additional Information.

Distribution and performance information

Dividends and capital gains distributions

The Funds' dividends from net investment income are declared daily and
distributed monthly. The Funds intend to distribute net realized capital gains
after utilization of capital loss carryforwards, if any, in November or December
to prevent application of federal excise tax, although an additional
distribution may be made, if necessary. Any dividends or capital gains
distributions declared in October, November or December with a record date in
such a month and paid during the following January will be treated by
shareholders for federal income tax

purposes as if received on December 31 of the calendar year declared. According
to preference, shareholders may receive distributions in cash or have them
reinvested in additional shares of the Funds.

Distributions derived from interest on New York municipal securities are not
subject to New York state or New York City personal income taxes or to regular
federal income taxes, except for the possible applicability of the federal
alternative minimum tax. For federal income tax purposes, a portion of each
Fund's income may be taxable to shareholders as ordinary income. Long-term
capital gain distributions, if any, are taxable to individual shareholders at a
maximum 20% or 28% capital gains rate (depending on the Fund's holding period
for the assets giving rise to the gain), regardless of the length of time
shareholders have owned their shares. Short-term capital gains and any other
taxable income distributions are taxable as ordinary income. Distributions of
tax-exempt income are taken into consideration in computing the portion, if any,
of Social Security and railroad retirement benefits subject to federal and, in
some cases, state taxes.

The Funds expect to ordinarily provide income that is 100% free from New York
state, New York City and regular federal income taxes. However, income from
repurchase agreements and gains from certain Strategic Transactions are taxable.

Some of a Fund's interest income may be treated as a tax preference item that
may subject an individual investor to liability (or increased liability) under
the alternative minimum tax, depending upon an investor's particular situation.
However, at least 80% of a Fund's net assets will normally be invested in New
York municipal securities whose interest income is not treated as a tax
preference item under the individual alternative minimum tax. Tax-exempt income
may also subject a corporate investor to liability (or increased liability)
under the corporate alternative minimum tax.

Each Fund sends detailed tax information to shareholders about the amount and
type of its distributions by January 31 of each year.

Performance information

From time to time, quotations of the Funds' performance may be included in
advertisements, sales literature or shareholder reports. All performance figures
are historical, show the performance of a hypothetical investment and are not
intended to indicate future performance. The "yield" of Scudder New York Tax
Free Money Fund refers to income generated by an investment in the Fund over a
specified seven-day period. The "SEC yield" of Scudder New York Tax Free Fund is
an annualized expression of the net income generated by the Fund over a
specified 30-day (one month) period, as a percentage of the Fund's share price
on the last day of that period. This yield is calculated according to methods
required by the SEC, and therefore may not equate to the level of income paid to
shareholders. The "effective yield" of Scudder New York Tax Free Money Fund is
expressed similarly but, when annualized, the income earned by an investment in
the Fund is assumed to be reinvested and will reflect the effects of
compounding. Each Fund's "tax-equivalent yield" is calculated by determining the
rate of return that would have to be achieved on a fully taxable investment to
produce the combined federal and state after-tax equivalent of the Fund's yield,
assuming certain tax brackets for a Fund shareholder. Yields are expressed as
annualized percentages. "Total return" is the change in value of an investment
in a Fund for a specified period. The "average annual total return" of each Fund
is the average annual compound rate of return of an investment in a Fund
assuming the investment has been held for one year, five years and ten years as
of a stated ending date. "Cumulative total return"

represents the cumulative change in value of an investment in each Fund for
various periods. All types of total return calculations assume that all
dividends and capital gains distributions during the period were reinvested in
shares of the Fund.

Performance will vary based upon, among other things, changes in market
conditions and the level of each Fund's expenses.

Fund organization

Scudder New York Tax Free Money Fund and Scudder New York Tax Free Fund are
series of Scudder State Tax Free Trust (the "Trust"), an open-end management
investment company registered under the 1940 Act. The Trust was organized as a
Massachusetts business trust in May 1983.

The Funds' activities are supervised by the Trust's Board of Trustees.
Shareholders have one vote for each share held on matters on which they are
entitled to vote. The Trust is not required to hold and has no current intention
of holding annual shareholder meetings, although special meetings may be called
for purposes such as electing or removing Trustees, changing fundamental
investment policies or approving an investment advisory contract. Shareholders
will be assisted in communicating with other shareholders in connection with
removing a Trustee as if Section 16(c) of the 1940 Act were applicable.

The prospectuses of both Funds are combined in this prospectus. Each Fund offers
only its own shares, yet it is possible that a Fund might become liable for a
misstatement or omission in the prospectus of the other Fund. The Trustees of
the Trust have considered this and approved the use of a combined prospectus.

Investment adviser

Each Fund retains the investment management firm of Scudder Kemper Investments,
Inc., a Delaware corporation formerly known as Scudder, Stevens & Clark, Inc.
("Scudder"), to manage its daily investment and business affairs subject to the
policies established by the Board of Trustees. The Trustees have overall
responsibility for the management of the Funds under Massachusetts law.

Pursuant to the terms of an agreement, Scudder and Zurich Insurance Company
("Zurich"), an international insurance and financial services organization, have
formed a new global investment organization by combining Scudder with Zurich's
subsidiary, Zurich Kemper Investments, Inc. As a result of the transaction,
Zurich owns approximately 70% of the Adviser, with the balance owned by the
Adviser's officers and employees.

For the fiscal year ended March 31, 1998, the Adviser received monthly an
investment management fee equal to 0.63% of Scudder New York Tax Free Fund's
average daily net assets. The fee is graduated so that increases in the Fund's
net assets may result in a lower fee and decreases in the Fund's net assets may
result in a higher fee.

The fee payable under Scudder New York Tax Free Money Fund's Investment
Management Agreement is equal to an annual rate of 0.50% of the Fund's average
daily net assets. The Adviser has agreed to maintain the annualized expenses of
the Fund at not more than 0.60% of the average daily net assets of the Fund
until July 31, 1999.

For the fiscal year ended March 31, 1998, the Adviser received monthly an
investment management fee equal to 0.32% of Scudder New York Tax Free Money
Fund's average daily net assets on an annual basis.

Each Fund's management fee is payable monthly, provided that a Fund will make
such interim payments as may be requested by the Adviser not to exceed 75% of
the amount of the fee then accrued on the books of a Fund and unpaid.

All of a Fund's expenses are paid out of gross investment income. Shareholders
pay no direct charges or fees for investment services.

Scudder Kemper Investments, Inc. is located at Two International Place, Boston,
Massachusetts.

Like other mutual funds and financial and business organizations worldwide, the
Funds could be adversely affected if computer systems on which the Funds rely,
which primarily include those used by the Adviser, its affiliates or other
service providers, are unable to correctly process date-related information on
and after January 1, 2000. This risk is commonly called the Year 2000 Issue.
Failure to successfully address the Year 2000 Issue could result in
interruptions to and other material adverse effects on the Fund's business and
operations. The Adviser has commenced a review of the Year 2000 Issue as it may
affect the Funds and is taking steps it believes are reasonably designed to
address the Year 2000 Issue, although there can be no assurances that these
steps will be sufficient. In addition, there can be no assurances that the Year
2000 Issue will not have an adverse effect on the companies whose securities are
held by the Funds or on global markets or economies generally.

Transfer agent

Scudder Service Corporation, P.O. Box 2291, Boston, Massachusetts 02107-2291, a
subsidiary of the Adviser, is the transfer, shareholder servicing and
dividend-paying agent for the Funds.

Underwriter

Scudder Investor Services, Inc., a subsidiary of the Adviser, is the Funds'
principal underwriter. Scudder Investor Services, Inc. confirms, as agent, all
purchases of shares of each Fund. Scudder Investor Relations is a telephone
information service provided by Scudder Investor Services, Inc.

Fund accounting agent

Scudder Fund Accounting Corporation, a subsidiary of the Adviser, is responsible
for determining the daily net asset value per share and maintaining the general
accounting records of the Funds.

Custodian

State Street Bank and Trust Company is the Funds' custodian.

Transaction information

Purchasing shares

Purchases are executed at the next calculated net asset value per share after
the Funds' transfer agent receives the purchase request in good order. Purchases
are made in full and fractional shares. (See "Share price.")

By check. If you purchase shares with a check that does not clear, your purchase
will be canceled and you will be subject to any losses or fees incurred in the
transaction. Checks must be drawn on or payable through a U.S. bank. If you
purchase shares by check and redeem them within seven business days of purchase,
the Fund may hold redemption proceeds until the purchase check has cleared. If
you purchase shares by federal funds wire, you may avoid this delay. Redemption
requests by telephone or by "Write-A-Check," in the case of Scudder New York Tax
Free Money Fund, prior to the expiration of the seven-day period will not be
accepted.

By wire. To open a new account by wire, first call Scudder at 1-800-225-5163 to
obtain an account number. A representative will instruct you to send a
completed, signed application to the transfer agent. Accounts cannot be opened
without a completed, signed application and a Scudder fund account number.
Contact your bank to arrange a wire transfer to:
The Scudder Funds
State Street Bank and Trust Company
Boston, MA 02101
ABA Number 011000028
DDA Account 9903-5552

Your wire instructions must also include:
- -- the name of the fund in which the money is to be invested,
- -- the account number of the fund, and
- -- the name(s) of the account holder(s).

The account will be established once the application and money order are
received in good order.

You may also make additional investments of $100 or more to your existing
account by wire.

By exchange. Each Fund may be exchanged for shares of other funds in the Scudder
Family of Funds, unless otherwise determined by the Board of Trustees. Your new
account will have the same registration and address as your existing account.

The exchange requirements for corporations, other organizations, trusts,
fiduciaries, agents, institutional investors and retirement plans may be
different from those for regular accounts. Please call 1-800-225-5163 for more
information, including information about the transfer of special account
features.

You can also make exchanges among your Scudder fund accounts on SAIL, the
Scudder Automated Information Line, by calling 1-800-343-2890.

By telephone order. To a limited extent, certain financial institutions may
place orders to purchase shares of Scudder New York Tax Free Fund unaccompanied
by payment prior to the close of regular trading on the New York Stock Exchange
(the "Exchange"), normally 4 p.m. eastern time, and receive that day's price.
Please call 1-800-854-8525 for more information, including the dividend
treatment and method and manner of payment for Fund shares.

By "QuickBuy." If you elected "QuickBuy" for your account, you can call
toll-free to purchase shares. The money will be automatically transferred from
your predesignated bank checking account. Your bank must be a member of the
Automated Clearing House for you to use this service. If you did not elect
"QuickBuy," call 1-800-225-5163 for more information.

To purchase additional shares, call 1-800-225-5163. Purchases may not be for
more than $250,000. Proceeds in the amount of your purchase will be transferred
from your bank checking account in two or three business days following your
call. For requests received by the close of regular trading on the Exchange,
shares will be purchased at the net asset value per share calculated at the
close of trading on the day of your call. "QuickBuy" requests received after the
close of regular trading on the Exchange will begin their processing and be
purchased at the net asset value calculated the following business day.

If you purchase shares by "QuickBuy" and redeem them within seven days of the
purchase, the Fund may hold the redemption proceeds for a period of up to seven
business days. If you purchase shares and there are insufficient funds in your
bank account, the purchase will be canceled and you will be subject to any
losses or fees incurred in the transaction. "QuickBuy" transactions are not
available for most retirement plan accounts. However, "QuickBuy" transactions
are available for Scudder IRA accounts.

Redeeming shares

The Fund allows you to redeem shares (i.e., sell them back to the Fund) without
redemption fees.

By telephone. This is the quickest and easiest way to sell Fund shares. If you
provided your banking information on your application, you can call to request
that federal funds be sent to your authorized bank account. If you did not
include your banking information on your application, call 1-800-225-5163 for
more information.

Redemption proceeds will be wired to your bank unless otherwise requested. If
your bank cannot receive federal reserve wires, redemption proceeds will be
mailed to your bank. There will be a $5 charge for all wire redemptions.

You can also make redemptions from your Scudder fund account on SAIL by calling
1-800-343-2890.

If you open an account by wire, you cannot redeem shares by telephone until the
Fund's transfer agent has received your completed and signed application.
Telephone redemption is not available for shares held in Scudder IRA accounts
and most other Scudder retirement plan accounts.

In the event that you are unable to reach the Fund by telephone, you should
write to the Fund; see "How to contact Scudder" for the address.

By "QuickSell." If you elected "QuickSell" for your account, you can call
toll-free to redeem shares. The money will be automatically transferred to your
predesignated bank checking account. Your bank must be a member of the Automated
Clearing House for you to use this service. If you did not elect "QuickSell,"
call 1-800-225-5163 for more information.

To redeem shares, call 1-800-225-5163. Redemptions must be for at least $250.
Proceeds in the amount of your redemption will be transferred to your bank
checking account in two or three business days following your call. For requests
received by the close of regular trading on the Exchange, shares will be
redeemed at the net asset value per share calculated at the close of trading on
the day of your call. "QuickSell" requests received after the close of regular
trading on the Exchange will begin their processing and be redeemed at the net
asset value calculated the following business day.

"QuickSell" transactions are not available for Scudder IRA accounts and most
other retirement plan accounts.

Signature guarantees. For your protection and to prevent fraudulent redemptions,
on written redemption requests in excess of $100,000 we require an original
signature and an original signature guarantee for each person in whose name the
account is registered. (The Fund reserves the right, however, to require a
signature guarantee for all redemptions.) You can obtain a signature guarantee
from most banks, credit unions or savings associations, or from broker/dealers,
municipal securities broker/dealers, government securities broker/dealers,
national securities exchanges, registered securities associations or clearing
agencies deemed eligible by the Securities and Exchange Commission. Signature
guarantees by notaries public are not acceptable. Redemption requirements for
corporations, other organizations, trusts, fiduciaries, agents, institutional
investors and retirement plans may be different from those for regular accounts.
For more information, please call 1-800-225-5163.

By "Write-A-Check." You may redeem shares of Scudder New York Tax Free Money
Fund by writing checks against your account balance for at least $100. Your Fund
investments will continue to earn dividends until your check is presented to the
Fund for payment.

Checks will be returned by the Fund's transfer agent if there are insufficient
shares to meet the withdrawal amount. You should not attempt to close an account
by check, because the exact balance at the time the check clears will not be
known when the check is written.

Telephone transactions

Shareholders automatically receive the ability to exchange by telephone and the
right to redeem by telephone up to $100,000 to their address of record.
Shareholders also may, by telephone, request that redemption proceeds be sent to
a predesignated bank account. Each Fund uses procedures designed to give
reasonable assurance that telephone instructions are genuine, including
recording telephone calls, testing a caller's identity and sending written
confirmation of telephone transactions. If a Fund does not follow such
procedures, it may be liable for losses due to unauthorized or fraudulent
telephone instructions. Each Fund will not be liable for acting upon
instructions communicated by telephone that it reasonably believes to be
genuine.

Share price

Purchases and redemptions, including exchanges, are made at net asset value.
Scudder Fund Accounting Corporation determines net asset value per share for
Scudder New York Tax Free Money Fund as of twelve o'clock noon and as of the
close of regular trading on the New York Stock Exchange (the "Exchange"),
normally 4 p.m. eastern time, on each day the Exchange is open for trading. For
Scudder New York Tax Free Fund, Scudder Fund Accounting Corporation determines
net asset value per share as of the close of regular trading on the Exchange.
Net asset value per share is calculated by dividing the value of total Fund
assets, less all liabilities, by the total number of shares outstanding. In
calculating the net asset value per share, Scudder New York Tax Free Fund uses
the current market value of the securities, and Scudder New York Tax Free Money
Fund uses the amortized cost value.

Processing time

All purchase and redemption requests must be received in good order by the
Funds' transfer agent. For Scudder New York Tax Free Money Fund, purchases made
by wire and received by the Fund's transfer agent before noon on any business
day are executed at noon on that day and begin earning income the same day.
Those made by wire between noon and the close of regular trading on the Exchange
on any business day are executed at the close of trading the same day and begin
earning income the next business day. Purchases made by check are executed on
the day the check is received in good order by the Fund's transfer agent and
begin earning income on the next business day. Redemption requests received in
good order by the Fund's transfer agent between noon and the close of regular
trading on the Exchange are executed at the net asset value calculated at the
close of regular trading on that day and will earn a dividend on the redeemed
shares that day. If a redemption request for Scudder New York Tax Free Money
Fund is received by noon, proceeds will normally be wired that day, if requested
by the shareholder, but no dividend will be earned on the redeemed shares on
that day.

For Scudder New York Tax Free Fund, those requests received by the close of
regular trading on the Exchange are executed at the net asset value per share
calculated at the close of trading that day. Purchase and redemption requests
received after the close of regular trading on the Exchange will be executed the
following business day. Purchases made by federal funds wire before noon eastern
time will begin earning income that day; all other purchases received before the
close of regular trading on the Exchange will begin earning income the next
business day. Redeemed shares will earn income on the day on which the
redemption request is executed.

If you wish to make a purchase of $500,000 or more, you should notify Scudder
Investor Relations by calling 1-800-225-5163.

Each Fund will normally send redemption proceeds within one business day
following the redemption request, but may take up to seven business days (or
longer in the case of shares recently purchased by check).

Purchase restrictions

Purchases and sales of shares of Scudder New York Tax Free Fund should be made
for long-term investment purposes only. The Fund and Scudder Investor Services,
Inc. each reserves the right to reject purchases of Fund shares (including
exchanges) for any reason including when a pattern of frequent purchases and
sales made in response to short-term fluctuations in the Fund's share price
appears evident.

Tax information

A redemption of shares of Scudder New York Tax Free Fund, including an exchange
into another Scudder fund, is a sale of shares and may result in a gain or loss
for income tax purposes (although no gain or loss will be realized in the case
of a redemption or exchange of shares of Scudder New

York Tax Free Money Fund if it maintains a constant net asset value per share).

Tax identification number

Be sure to complete the Tax Identification Number section of the Fund's
application when you open an account. Federal tax law requires a Fund to
withhold 31% of taxable dividends, capital gains distributions and redemption
and exchange proceeds from accounts (other than those of certain exempt payees)
without a correct certified Social Security or tax identification number and
certain other certified information or upon notification from the IRS or a
broker that withholding is required. Each Fund reserves the right to reject new
account applications without a correct certified Social Security or tax
identification number. Each Fund also reserves the right, following 30 days'
notice, to redeem all shares in accounts without a correct certified Social
Security or tax identification number. A shareholder may avoid involuntary
redemption by providing the Fund with a tax identification number during the
30-day notice period.

Minimum balances

Shareholders should maintain a share balance worth at least $2,500, which amount
may be changed by the Board of Trustees. Scudder retirement plans and certain
other accounts have similar or lower minimum share balance requirements. A
shareholder may open an account with at least $1,000, if an automatic investment
plan of $100/month is established.

Shareholders who maintain a non-fiduciary account balance of less than $2,500 in
the Fund, without establishing an automatic investment plan, will be assessed an
annual $10.00 per fund charge with the fee to be paid to the Fund. The $10.00
charge will not apply to shareholders with a combined household account balance
in any of the Scudder Funds of $25,000 or more. The Fund reserves the right,
following 60 days' written notice to shareholders, to redeem all shares in
accounts below $250, including accounts of new investors, where a reduction in
value has occurred due to a redemption or exchange out of the account. The Fund
will mail the proceeds of the redeemed account to the shareholder. Reductions in
value that result solely from market activity will not trigger an involuntary
redemption. Retirement accounts and certain other accounts will not be assessed
the $10.00 charge or be subject to automatic liquidation. Please refer to
"Exchanges and Redemptions--Other Information" in the Fund's Statement of
Additional Information for more information.

Third party transactions

If purchases and redemptions of a Fund's shares are arranged and settlement is
made at an investor's election through a member of the National Association of
Securities Dealers, Inc., other than Scudder Investor Services, Inc., that
member may, at its discretion, charge a fee for that service.

Redemption-in-kind

Scudder New York Tax Free Fund reserves the right, if conditions exist which
make cash payments undesirable, to honor any request for redemption or
repurchase order by making payment in whole or in part in readily marketable
securities chosen by the Fund and valued as they are for purposes of computing
the Fund's net asset value (a redemption-in-kind). If payment is made in
securities, a shareholder may incur transaction expenses in converting these
securities to cash.

Shareholder benefits

Experienced professional management

Scudder Kemper Investments, Inc., one of the nation's most experienced
investment management firms, actively manages your fund investment. Professional
management is an important advantage for investors who do not have the time or
expertise to invest directly in individual securities.

A team approach to investing

Scudder New York Tax Free Money Fund and Scudder New York Tax Free Fund are each
managed by a team of investment professionals who each play an important role in
the Funds' management process. Team members work together to develop investment
strategies and select securities for the Funds' portfolios. They are supported
by the Adviser's large staff of economists, research analysts, traders and other
investment specialists. We believe our team approach benefits the Funds'
investors by bringing together many disciplines and leveraging the Adviser's
extensive resources.

Scudder New York Tax Free Money Fund's Lead Portfolio Manager Frank J.
Rachwalski, Jr. assumed responsibility for the Fund's day-to-day management in
1998. Mr. Rachwalski joined the Adviser in 1973 and he has 25 years of
experience managing money market portfolios. Jerri I. Cohen, Portfolio Manager,
joined the Fund's team in January 1998. Ms. Cohen, who has been with the Adviser
since 1981, has 17 years of experience in the financial industry including five
years in tax-exempt money fund investing.

Scudder New York Tax Free Fund's Lead Portfolio Manager, Jeremy L. Ragus, has
had responsibility for the Fund's day-to-day operations since he joined the
Adviser in 1990. Mr. Ragus has 17 years of experience in municipal investing.
Christopher J. Mier, Portfolio Manager, joined the Fund's management team in
1998. Mr. Mier, who has been with the Adviser since 1986, has more than 20 years
of experience in municipal investing and portfolio management.

SAIL-TM---Scudder Automated Information Line

For personalized account information including fund prices, yields and account
balances, to perform transactions in existing Scudder fund accounts, or to
obtain information on any Scudder fund, shareholders can call Scudder's
Automated Information Line (SAIL) at 1-800-343-2890, 24 hours a day. During
periods of extreme economic or market changes, or other conditions, it may be
difficult for you to effect telephone transactions in your account. In such an
event you should write to the Fund; please see "How to contact Scudder" for the
address.

Investment flexibility

Scudder offers toll-free telephone exchange between funds at current net asset
value. You can move your investments among money market, income, growth,
tax-free and growth and income funds with a simple toll-free call or, if you
prefer, by sending your instructions through the mail or by fax. (The exchange
privilege may not be available for certain Scudder funds or classes thereof. For
more information, please call 1-800-225-5163.) Telephone and fax redemptions and
exchanges are subject to termination and their terms are subject to change at
any time by the Fund or the transfer agent. In some cases, the transfer agent or
Scudder Investor Services, Inc. may impose additional conditions on telephone
transactions.

Personal Counsel-SM--- A Managed Fund Portfolio Program

If you would like to receive direct guidance and management of your overall
mutual fund portfolio to help you pursue your investment goals, you may be
interested in Personal Counsel from Scudder. Personal Counsel, a program of
Scudder Investor Services, Inc., a registered investment adviser and a
subsidiary of Scudder Kemper Investments, Inc., combines the benefits of a
customized portfolio of no-load mutual funds with ongoing portfolio monitoring
and individualized service, for an annual fee of generally 1.25% or less of
assets. In addition, it draws upon the Adviser's more than 75-year heritage of
providing investment counsel to large corporate and private clients. If you have
$100,000 or more to invest initially and would like more information about
Personal Counsel, please call 1-800-700-0183.

Dividend reinvestment plan

You may have dividends and distributions automatically reinvested in additional
Fund shares. Please call 1-800-225-5163 to request this feature.

Shareholder statements

You will receive a detailed statement summarizing account activity, including
dividend and capital gain reinvestment, purchases and redemptions. All of your
statements should be retained to help you keep track of account activity and the
cost of shares for tax purposes.

Shareholder reports

In addition to account statements, you receive periodic shareholder reports
highlighting relevant information, including investment results and a review of
portfolio changes.

To reduce the volume of mail you receive, only one copy of most Fund reports,
such as the Fund's Annual Report, may be mailed to your household (same surname,
same address). Please call 1-800-225-5163 if you wish to receive additional
shareholder reports.

Newsletters

Four times a year, Scudder sends you Perspectives, an informative newsletter
covering economic and investment developments, service enhancements and other
topics of interest to Scudder fund investors.

Scudder Investor Centers

As a convenience to shareholders who like to conduct business in person, Scudder
Investor Services, Inc. maintains Investor Centers in Boca Raton, Boston,
Chicago, New York and San Francisco.

T.D.D. service for the hearing impaired

Scudder's full range of investor information and shareholder services is
available to hearing impaired investors through a toll-free T.D.D. (Telephone
Device for the Deaf) service. If you have access to a T.D.D., call
1-800-543-7916 for investment information or specific account questions and
transactions.

Purchases

Opening Minimum initial investment: $2,500; IRAs $1,000
an account
Group retirement plans (401(k), 403(b), etc.) have similar or lower minimums.
See appropriate plan literature.

Make checks o By Mail Send your completed and signed application and check
payable to "The
Scudder Funds." by regular mail to: or by express, registered,
or certified mail to:

The Scudder Funds The Scudder Funds
P.O. Box 2291 66 Brooks Drive
Boston, MA Braintree, MA 02184
02107-2291

o By Wire Please see Transaction information--Purchasing shares--
By wire for details, including the ABA wire transfer number. Then call
1-800-225-5163 for instructions.

o In Person Visit one of our Investor Centers to complete your application with the
help of a Scudder representative. Investor Center locations are listed
under Shareholder benefits.
- -----------------------------------------------------------------------------------------------------------------------

Purchasing Minimum additional investment: $100; IRAs $50
additional shares
Group retirement plans (401(k), 403(b), etc.) have similar or lower minimums.
See appropriate plan literature.

Make checks o By Mail Send a check with a Scudder investment slip, or with a letter of
payable to "The instruction including your account number and the complete Fund name, to
Scudder Funds." the appropriate address listed above.

o By Wire Please see Transaction information--Purchasing shares--
By wire for details, including the ABA wire transfer number.

o In Person Visit one of our Investor Centers to make an additional
investment in your Scudder fund account. Investor Center locations
are listed under Shareholder benefits.

o By Telephone Please see Transaction information--Purchasing shares--
By QuickBuy or By telephone order for more details.

o By Automatic You may arrange to make investments on a regular basis through automatic
Investment Plan deductions from your bank checking account. Please call 1-800-225-5163
($50 minimum) for more information and an enrollment form.

Exchanges and redemptions

Exchanging Minimum investments: $2,500 to establish a new account;
shares $100 to exchange among existing accounts

o By Telephone To speak with a service representative, call 1-800-225-5163 from
8 a.m. to 8 p.m. eastern time or to access SAIL-TM-`, Scudder's Automated
Information Line, call 1-800-343-2890 (24 hours a day).

o By Mail Print or type your instructions and include:
or Fax - the name of the Fund and the account number you are exchanging from;
- your name(s) and address as they appear on your account;
- the dollar amount or number of shares you wish to exchange;
- the name of the Fund you are exchanging into;
- your signature(s) as it appears on your account; and
- a daytime telephone number.

Send your instructions

by regular mail to: or by express, registered, or by fax to:
or certified mail to:

The Scudder Funds The Scudder Funds 1-800-821-6234
P.O. Box 2291 66 Brooks Drive
Boston, MA 02107-2291 Braintree, MA 02184
- -----------------------------------------------------------------------------------------------------------------------

Redeeming shares o By Telephone To speak with a service representative, call 1-800-225-5163 from 8 a.m. to 8 p.m.
eastern time or to access SAIL-TM-, Scudder's Automated Information Line, call
1-800-343-2890 (24 hours a day). You may have redemption proceeds sent to your
predesignated bank account, or redemption proceeds of up to $100,000 sent to your
address of record.

o By "Write- You may redeem shares of your Scudder New York Tax Free Money Fund by writing
A-Check" checks against your account balance as often as you like for at least $100, but
not more than $5,000,000.

o By Mail Send your instructions for redemption to the appropriate address or fax number
or Fax above and include:
- the name of the Fund and account number you are redeeming from;
- your name(s) and address as they appear on your account;
- the dollar amount or number of shares you wish to redeem;
- your signature(s) as it appears on your account; and
- a daytime telephone number.

A signature guarantee is required for redemptions over $100,000.

See Transaction information--Redeeming shares.

o By Automatic You may arrange to receive automatic cash payments periodically. Call
Withdrawal 1-800-225-5163 for more information and an enrollment form.
Plan

Scudder tax-advantaged retirement plans

Scudder offers a variety of tax-advantaged retirement plans for individuals,
businesses and non-profit organizations. These flexible plans are designed for
use with the Scudder Family of Funds (except Scudder tax-free funds, which are
inappropriate for such plans). Scudder Funds offer a broad range of investment
objectives and can be used to seek almost any investment goal. Using Scudder's
retirement plans can help shareholders save on current taxes while building
their retirement savings.

o Scudder No-Fee IRA
o Scudder Roth No-Fee IRA
o Keogh Plans
o 401(k) Plans
o Profit Sharing and Money Purchase Pension Plans
o 403(b) Plans
o SEP-IRA
o Scudder Horizon Plan (a variable annuity)

Scudder Trust Company (an affiliate of the Adviser) is Trustee or Custodian for
some of these plans and is paid an annual fee for some of the above retirement
plans. For information about establishing a Scudder No-Fee IRA, SEP-IRA, Profit
Sharing Plan, Money Purchase Pension Plan or a Scudder Horizon Plan, please call
1-800-225-2470. For information about 401(k)s or 403(b)s please call
1-800-323-6105. To effect transactions in existing IRA, SEP-IRA and most Profit
Sharing or Pension Plan accounts, call 1-800-225-5163.

The variable annuity contract is provided by Charter National Life Insurance
Company (in New York State, Intramerica Life Insurance Company [S 1802]). The
contract is offered by Scudder Insurance Agency, Inc. (in New York State, Nevada
and Montana, Scudder Insurance Agency of New York, Inc.). CNL, Inc. is the
Principal Underwriter. Scudder Horizon Plan is not available in all states.

Scudder Investor Relations is a service provided through Scudder Investor
Services, Inc., Distributor.

Trustees and Officers

Daniel Pierce*
President and Trustee

Henry P. Becton, Jr.
Trustee; President and General Manager, WGBH Educational Foundation

Dawn-Marie Driscoll
Trustee; Executive Fellow, Center for Business Ethics;
President, Driscoll Associates

Peter B. Freeman
Trustee; Corporate Director and Trustee

George M. Lovejoy, Jr.
Trustee; President and Director, Fifty Associates

Wesley W. Marple, Jr.
Trustee; Professor of Business Administration,
Northeastern University College of Business Administration

Kathryn L. Quirk*
Trustee; Vice President and Assistant Secretary

Jean C. Tempel
Trustee; Managing Partner, Technology Equity Partners

Donald C. Carleton*
Vice President

Philip G. Condon*
Vice President

Jerard K. Hartman*
Vice President

Thomas W. Joseph*
Vice President

Jeremy L. Ragus*
Vice President

Rebecca Wilson*
Vice President

Thomas F. McDonough*
Vice President, Treasurer and Secretary

John R. Hebble*
Assistant Treasurer

Caroline Pearson*
Assistant Secretary

*Scudder Kemper Investments, Inc.

Investment products and services

The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series--
Premium Shares*
Managed Shares*
Scudder Government Money Market Series--
Managed Shares*

Tax Free Money Market+
- ----------------------
Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series--
Managed Shares*
Scudder California Tax Free Money Fund**
Scudder New York Tax Free Money Fund**

Tax Free+
- ---------
Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund**
Scudder Massachusetts Limited Term Tax Free Fund**
Scudder Massachusetts Tax Free Fund**
Scudder New York Tax Free Fund**
Scudder Ohio Tax Free Fund**
Scudder Pennsylvania Tax Free Fund**

U.S. Income
- -----------
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder High Yield Bond Fund

Global Income
- -------------
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund

Asset Allocation
- ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio

U.S. Growth and Income
- ----------------------
Scudder Balanced Fund
Scudder Dividend & Growth Fund
Scudder Growth and Income Fund
Scudder S&P 500 Index Fund
Scudder Real Estate Investment Fund

U.S. Growth
- -----------
Value
Scudder Large Company Value Fund
Scudder Value Fund***
Scudder Small Company Value Fund
Scudder Micro Cap Fund

Growth
Scudder Classic Growth Fund***
Scudder Large Company Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund

Global Equity
- -------------
Worldwide
Scudder Global Fund
Scudder International Value Fund
Scudder International Growth and Income Fund
Scudder International Fund++
Scudder International Growth Fund
Scudder Global Discovery Fund***
Scudder Emerging Markets Growth Fund
Scudder Gold Fund

Regional
Scudder Greater Europe Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund, Inc.

Industry Sector Funds
- ---------------------
Choice Series
Scudder Financial Services Fund
Scudder Health Care Fund
Scudder Technology Fund

Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
Retirement Programs
- -------------------
Traditional IRA
Roth IRA
SEP-IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan **+++ +++
(a variable annuity)

Education Accounts
- ------------------
Education IRA
UGMA/UTMA

Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder Global High Income Fund, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder Spain and Portugal Fund, Inc.

For complete information on any of the above Scudder funds, including management
fees and expenses, call or write for a free prospectus. Read it carefully before
you invest or send money. +++Funds within categories are listed in order from
expected least risk to most risk. Certain Scudder funds 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.
#These funds, advised by Scudder Kemper Investments, Inc., are traded on the New
York Stock Exchange and, in some cases, on various foreign stock exchanges.

How to contact Scudder

Account Service and Information:

For existing account service and transactions
Scudder Investor Relations -- 1-800-225-5163

For 24 hour account information, fund information, exchanges, and an
overview of all the services available to you

Scudder Electronic Account Services -- http://funds.scudder.com

For personalized information about your Scudder accounts, exchanges and redemptions

Scudder Automated Information Line (SAIL) -- 1-800-343-2890

Investment Information:

For information about the Scudder funds, including additional
applications and prospectuses, or for answers to investment questions

Scudder Investor Relations -- 1-800-225-2470
Investor.Relations@scudder.com

Scudder's World Wide Web Site -- http://funds.scudder.com

For establishing 401(k) and 403(b) plans

Scudder Defined Contribution Services -- 1-800-323-6105

Scudder Brokerage Services:

To receive information about this discount brokerage service and to obtain an application

Scudder Brokerage Services* -- 1-800-700-0820

Personal Counsel-SM- -- A Managed Fund Portfolio Program:

To receive information about this mutual fund portfolio guidance and management program

Personal Counsel from Scudder -- 1-800-700-0183

Please address all correspondence to:

The Scudder Funds
P.O. Box 2291
Boston, Massachusetts
02107-2291

Or Stop by a Scudder Investor Center:

Many shareholders enjoy the personal, one-on-one service of the Scudder
Investor Centers. Check for an Investor Center near you--they can be
found in the following cities:

Boca Raton Chicago San Francisco
Boston New York

Scudder Investor Relations and Scudder Investor Centers are services provided
through Scudder Investor Services, Inc., Distributor.

* Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA
02061--Member NASD/SIPC.

This combined prospectus sets forth concisely the information about Scudder
Massachusetts Limited Term Tax Free Fund and Scudder Massachusetts Tax Free
Fund, each a non-diversified series of Scudder State Tax Free Trust, an open-end
management investment company, that a prospective investor should know before
investing. Please retain it for future reference.

If you require more detailed information, a Statement of Additional Information
for the Funds dated August 1, 1998, as amended from time to time, may be
obtained without charge by writing Scudder Investor Services, Inc., Two
International Place, Boston, MA 02110-4103 or calling 1-800-225-2470. The
Statement, which is incorporated by reference into this prospectus, has been
filed with the Securities and Exchange Commission and is available along with
other related materials on the SEC's Internet Web site (http://www.sec.gov).

Contents--see page 6.

NOT FDIC-
INSURED
MAY LOSE VALUE
NO BANK GUARANTEE

Scudder Massachusetts
Limited Term Tax Free Fund
- ------------------------------
Scudder Massachusetts
Tax Free Fund

Prospectus
August 1, 1998

Two pure no-load-TM- (no sales charges) mutual funds which seek to provide
double tax-free income, exempt from both Massachusetts state personal income and
regular federal income tax.

Expense information

Scudder Massachusetts Limited Term Tax Free Fund

How to compare a Scudder Family of Funds pure no-load-TM- fund This information
is designed to help you understand the various costs and expenses of investing
in Scudder Massachusetts Limited Term Tax Free Fund (the "Fund"). By reviewing
this table and those in other mutual funds' prospectuses, you can compare the
Fund's fees and expenses with those of other funds. With Scudder's pure
no-load-TM- funds, you pay no commissions to purchase or redeem shares, or to
exchange from one fund to another. As a result, all of your investment goes to
work for you.

1) Shareholder transaction expenses: Expenses charged directly to your
individual account in the Fund for various transactions.

Sales commissions to purchase shares (sales load) NONE
Commissions to reinvest dividends NONE
Redemption fees NONE*
Fees to exchange shares NONE

2) Annual Fund operating expenses: Expenses paid by the Fund before it
distributes its net investment income, expressed as a percentage of the
Fund's average daily net assets for the fiscal year ended October 31, 1997.

Investment management fee (after waiver) 0.44%**
12b-1 fees NONE
Other expenses 0.31%
-------
Total Fund operating expenses (after waiver) 0.75%**
-------
-------

Example

Based on the level of total Fund operating expenses listed above, the total
expenses relating to a $1,000 investment, assuming a 5% annual return and
redemption at the end of each period, are listed below. Investors do not pay
these expenses directly; they are paid by the Fund before it distributes its net
investment income to shareholders. (As noted above, the Fund has no redemption
fees of any kind.)

1 Year 3 Years 5 Years 10 Years
$8 $24 $42 $93

See "Fund organization-Investment adviser" for further information about the
investment management fee. This example assumes reinvestment of all dividends
and distributions and that the percentage amounts listed under "Annual Fund
operating expenses" remain the same each year. This example should not be
considered a representation of past or future expenses or return. Actual Fund
expenses and return vary from year to year and may be higher or lower than those
shown.

* You may redeem by writing or calling the Fund or by Write-A-Check. If you
wish to receive your redemption proceeds via wire, there is a $5 wire
service fee. For additional information, please refer to "Transaction
information-Redeeming shares."

** Until February 28, 1999, the Adviser has agreed to waive a portion of its
fee to the extent necessary so that the total annualized expenses of the
Fund do not exceed 0.75% of average daily net assets. If the Adviser had
not agreed to waive a portion of its fee, Fund expenses would have been:
investment management fee 0.60%, other expenses 0.33% and total operating
expenses 0.93% for the fiscal year ended October 31, 1997.

Expense information

Scudder Massachusetts Tax Free Fund How to compare a Scudder Family of Funds
pure no-load-TM- fund This information is designed to help you understand the
various costs and expenses of investing in Scudder Massachusetts Tax Free Fund
(the "Fund"). By reviewing this table and those in other mutual funds'
prospectuses, you can compare the Fund's fees and expenses with those of other
funds. With Scudder's pure no-load-TM- funds, you pay no commissions to purchase
or redeem shares, or to exchange from one fund to another. As a result, all of
your investment goes to work for you.

1) Shareholder transaction expenses: Expenses charged directly to your
individual account in the Fund for various transactions.

Sales commissions to purchase shares (sales load) NONE
Commissions to reinvest dividends NONE
Redemption fees NONE*
Fees to exchange shares NONE

Investment management fee 0.60%
12b-1 fees NONE
Other expenses 0.16%
-----
Total Fund operating expenses 0.76%
-----
-----

Example

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$8 $24 $42 $94

See "Fund organization--Investment adviser" for further information about the
investment management fee. This example assumes reinvestment of all dividends
and distributions and that the percentage amounts listed under "Annual Fund
operating expenses" remain the same each year. This example should not be
considered a representation of past or future expenses or return. Actual Fund
expenses and return vary from year to year and may be higher or lower than those
shown.

* You may redeem by writing or calling the Fund. If you wish to receive your
redemption proceeds via wire, there is a $5 wire service fee. For
additional information, please refer to "Transaction information--Redeeming
shares."

Financial highlights

Scudder Massachusetts Limited Term Tax Free Fund

The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements. If you would like more detailed information concerning the Fund's
performance, a complete portfolio listing and financial statements are
available in the Fund's Semiannual Report dated April 30, 1998, which may be
obtained without charge by writing or calling Scudder Investor Services, Inc.

For the Period
February 15,
Six Months 1994
Ended (commencement
April 30, Years Ended October 31, of operations)
1998 to October 31,
(Unaudited) 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------
Net asset value, beginning of period ........................ $12.10 $11.99 $12.02 $11.64 $12.00
Income from investment operations: -------------------------------------------------------------------
Net investment income ....................................... .25 .53 .50 .54 .36
Net realized and unrealized gain (loss) on investment
transactions ............................................. (.04) .11 (.03) .38 (.36)
-------------------------------------------------------------------
Total from investment operations ............................ .21 .64 .47 .92 .00
-------------------------------------------------------------------
Less distributions from net investment income ............... (.25) (.53) (.50) (.54) (.36)
-------------------------------------------------------------------
Net asset value, end of period .............................. $12.06 $12.10 $11.99 $12.02 $11.64
-------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return (%) (a) ........................................ 1.76** 5.44 3.98 8.08 0.00**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ...................... 93 80 66 55 36
Ratio of operating expenses, net to average daily net
assets (%) ............................................... .75* .75 .67 .24 --
Ratio of operating expenses before expense reductions,
to average daily net assets (%) .......................... .85* .93 .90 .92 1.44*
Ratio of net investment income to average daily net
assets (%) ............................................... 4.17* 4.40 4.16 4.56 4.45*
Portfolio turnover rate (%) ................................. 13.2* 9.8 12.4 27.4 26.3*

(a) Total returns would have been lower had certain expenses not been reduced.
* Annualized
** Not annualized

Financial highlights

Scudder Massachusetts Tax Free Fund

The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the audited
financial statements. If you would like more detailed information concerning
the Fund's performance, a complete portfolio listing and audited financial
statements are available in the Fund's Annual Report dated March 31, 1998,
which may be obtained without charge by writing or calling Scudder Investor
Services, Inc.

Years Ended March 31,
1998 1997 1996 1995 1994

- ---------------------------------------------------------------------------------------------

Net asset value, beginning of ---------------------------------------------------
period ......................... $ 13.72 $ 13.70 $ 13.33 $ 13.16 $ 13.61
---------------------------------------------------
Income from investment operations:
Net investment income ............. .70 .70 .72 .74 .81
Net realized and unrealized gain
(loss) on investment
transactions ................... .62 .02 .37 .18 (.33)
---------------------------------------------------
Total from investment operations .. 1.32 .72 1.09 .92 .48
---------------------------------------------------
Less distributions:
From net investment income ........ (.70) (.70) (.72) (.74) (.81)
From net realized gains on
investment transactions ........ -- -- -- -- (.08)
In excess of net realized gains ... -- -- -- (.01) (.04)
---------------------------------------------------
Total distributions ............... (.70) (.70) (.72) (.75) (.93)
---------------------------------------------------
Net asset value, end of ---------------------------------------------------
period ......................... $ 14.34 $ 13.72 $ 13.70 $ 13.33 $ 13.16
- -----------------------------------------------------------------------------------------
Total Return (%) (b) .............. 9.82 5.39 8.28 7.37 3.37
Ratios and Supplemental Data
Net assets, end of period
($ millions) ................... 374 330 314 296 332
Ratio of operating expenses, net to
average daily net assets (%) ... .76 .76 .75 .47 .07
Ratio of operating expenses before
expense reductions, to average
daily net assets (%) ........... .76 .76 .76 .77 .77
Ratio of net investment income to
average daily net assets (%) .. 4.97 5.12 5.23 5.73 5.80
Portfolio turnover rate (%) ....... 8.4 11.5 20.9 10.2 17.0

Years Ended March 31,
1993 1992 1991 1990 1989
- ---------------------------------------------------------------------------------------------

Net asset value, beginning of ----------------------------------------------------
period ......................... $ 12.81 $ 12.44 $ 12.25 $ 12.23 $ 12.28
----------------------------------------------------
Income from investment operations:
Net investment income ............. .84 .81 .83 .82 .81
Net realized and unrealized gain
(loss) on investment
transactions ................... .96 .46 .19 .13 .22
----------------------------------------------------
Total from investment operations .. 1.80 1.27 1.02 .95 1.03
----------------------------------------------------
Less distributions:
From net investment income ........ (.84) (.81) (.83) (.82) (.88)
From net realized gains on
investment transactions ........ (.16) (.09) -- (.11)(a) (.20)
In excess of net realized gains ... -- -- -- -- --
----------------------------------------------------
Total distributions ............... (1.00) (.90) (.83) (.93) (1.08)
----------------------------------------------------
Net asset value, end of ----------------------------------------------------
period ......................... $ 13.61 $ 12.81 $ 12.44 $ 12.25 $ 12.23
- ------------------------------------------------------------------------------------------
Total Return (%) (b) .............. 14.59 10.46 8.60 7.89 9.50
Ratios and Supplemental Data
Net assets, end of period
($ millions) ................... 267 120 67 46 31
Ratio of operating expenses, net to
average daily net assets (%) ... -- .48 .60 .60 .51
Ratio of operating expenses before
expense reductions, to average
daily net assets (%) ........... .83 .93 1.05 1.16 1.20
Ratio of net investment income to
average daily net assets (%) .. 6.36 6.38 6.72 6.60 7.23
Portfolio turnover rate (%) ....... 29.6 23.2 27.1 45.5 110.5

(a) Includes $.01 per share distributions in excess of realized gains pursuant
to Internal Revenue Code Section 4982.

(b) Total returns would have been lower had certain expenses not been reduced
through March 31, 1996.

A message from the President

Scudder Kemper Investments, Inc., investment adviser to the Scudder Family of
Funds, is one of the largest and most experienced invest- ment management
organizations world- wide, managing more than $200 billion in assets globally
for mutual fund investors, retirement and pension plans, institutional and
corporate clients, and private family and individual accounts. It is one of the
ten largest mutual fund companies in the U.S.

/s/Edmond Villani

The Funds

o seek to provide double tax-free income exempt from both Massachusetts
personal and regular federal income tax

o active portfolio management by a professional team of credit analysts and
municipal bond market experts

o dividends declared daily and paid monthly

Scudder Massachusetts Limited Term
Tax Free Fund

o average portfolio maturity limited to between one and five years

o invests primarily in shorter-term, investment-grade municipal securities

o free checkwriting

Scudder Massachusetts Tax Free Fund

o invests primarily in long-term investment-grade municipal securities

Contents

Investment objectives and policies 7
Summary of important features 9
Tax-exempt vs. taxable income 9
Why invest in these Funds? 10
Additional information about policies
and investments 11
Distribution and performance information 16
Fund organization 17
Transaction information 18
Shareholder benefits 22
Purchases 25
Exchanges and redemptions 26
Trustees and Officers 28
Investment products and services 29
How to contact Scudder 30

Investment objectives and policies

Scudder Massachusetts Limited Term Tax Free Fund and Scudder Massachusetts Tax
Free Fund (the "Funds"), each a non-diversified series of Scudder State Tax Free
Trust, are pure no load-TM- funds designed for Massachusetts residents seeking
income exempt from both state and regular federal income tax. Because these
Funds are intended for investors subject to Massachusetts state personal income
tax, they may not be appropriate for all investors and are not available in all
states.

The two Funds have different investment objectives and characteristics. Their
two prospectuses are presented together so that you can understand their
important differences and decide which Fund or combination of the two is most
suitable for your investment needs.

Except as otherwise indicated, each Fund's investment objective and policies are
not fundamental and may be changed without a vote of shareholders. If there is a
change in investment objective, shareholders should consider whether that Fund
remains an appropriate investment in light of their then current financial
position and needs. There can be no assurance that either Fund's objective will
be met.

Scudder Massachusetts Limited Term
Tax Free Fund

Scudder Massachusetts Limited Term Tax Free Fund seeks a higher and more stable
level of income than normally provided by tax-free money market investments, yet
more price stability than investments in intermediate- and long-term municipal
bonds.

The Fund's objective is to provide as high a level of income exempt from
Massachusetts state personal income and regular federal income tax as is
consistent with a high degree of price stability. The dollar-weighted average
effective maturity of the Fund's portfolio will range between one and five
years. Within this limitation, Scudder Massachusetts Limited Term Tax Free Fund
may not purchase individual securities with effective maturities greater than 10
years at the time of purchase or issuance, whichever is later.

Scudder Massachusetts Tax Free Fund

Scudder Massachusetts Tax Free Fund seeks a higher level of income than normally
provided by tax-free money market or tax-free short-term investments. Typically,
however, it will experience less price stability than Scudder Massachusetts
Limited Term Tax Free Fund because the investments will be principally in
municipal securities with long-term maturities (i.e., more than 10 years).
Scudder Massachusetts Tax Free Fund has the flexibility, however, to invest in
Massachusetts municipal securities with short- and medium-term maturities as
well.

Quality standards of both Funds

Normally, at least 75% of the municipal securities purchased by each Fund will
be investment-grade quality which are those rated Aaa, Aa, A or Baa by Moody's
Investors Service, Inc. ("Moody's") or AAA, AA, A or BBB by Standard & Poor's
Corporation ("S&P") or Fitch Investors Service, Inc. ("Fitch"), or if unrated,
judged by the Fund's investment adviser, Scudder Kemper Investments, Inc. (the
"Adviser"), to be of equivalent quality. This limit notwithstanding, Scudder
Massachusetts Limited Term Tax Free Fund will, under normal conditions, invest
at least 50% of its total assets in fixed-income securities rated A or better by
Moody's, S&P or Fitch or unrated securities judged by the Adviser to be of
equivalent quality at the time of purchase. To the extent the Fund invests in
higher-grade securities, it will be unable to avail itself of opportunities for
higher income which may be available with lower-grade investments. Securities in
these three top rating categories are judged by the Adviser to have an adequate
if not strong capacity to repay principal and pay interest.

Each Fund may invest up to 25% of its total assets in fixed-income securities
rated below investment-grade; that is, rated below Baa by Moody's or below BBB
by S&P or Fitch, or in unrated securities of equivalent quality as determined by
the Adviser. The Funds may not invest in fixed-income securities rated
below B by Moody's, S&P or Fitch, or their equivalent.

During the fiscal year ended October 31, 1997 for Scudder Massachusetts Limited
Term Tax Free Fund, the average dollar weighted market value of the bonds in the
Fund's portfolio rated lower than Baa by Moody's or BBB by S&P or Fitch, or
their equivalent, was 0%. During the fiscal year ended March 31, 1998, based
upon the dollar-weighted average ratings of Scudder Massachusetts Tax Free
Fund's portfolio holdings at the end of each month during that period, the Fund
had the following percentage of its net assets invested in debt securities rated
below investment-grade (or if unrated, considered by the Adviser to be
equivalent to rated securities) in the category indicated: 3.65% unrated.

The Funds' investments must also meet credit standards applied by the Adviser.
Should the rating of a portfolio security be downgraded after being purchased by
either Fund, the Adviser will determine whether it is in the best interest of
that Fund to retain or dispose of the security.

Investments of both Funds

It is a fundamental policy, which may not be changed without a vote of
shareholders, that each Fund normally invests at least 80% of its net assets in
municipal securities of issuers located in Massachusetts and other qualifying
issuers (including Puerto Rico, the U.S. Virgin Islands and Guam). It is the
opinion of bond counsel, rendered on the date of issuance, that income from
these obligations is exempt from both Massachusetts personal income tax and
regular federal income tax ("Massachusetts municipal securities"). These
securities include municipal bonds, which meet longer-term capital needs and
generally have maturities of more than one year when issued. Municipal bonds
include general obligation bonds, which are secured by the issuer's pledge of
its faith, credit and taxing power for payment of principal and interest, and
revenue bonds, which may be issued to finance projects owned or used by either
private or public entities and which include bonds issued to finance industrial
enterprises and pollution control facilities.

Each Fund may invest in other municipal securities such as variable rate demand
instruments, as well as municipal notes of issuers located in Massachusetts and
other qualifying issuers, which are generally used to provide short-term capital
needs and have maturities of one year or less. Municipal notes include tax
anticipation notes, revenue anticipation notes, bond anticipation notes and
construction loan notes. For federal income tax purposes, the income earned from
municipal securities may be entirely tax-free, taxable or subject to only the
alternative minimum tax.

Under normal market conditions, each Fund expects 100% of its portfolio
securities to consist of Massachusetts municipal securities. However, if
defensive considerations or an unusual disparity between after-tax income on
taxable

Summary of important features

------------------------------------------------------------------------------------------------------------------------
Investment objectives Investments Maturity Quality Dividends
and characteristics
Scudder o prices expected to o focus on o primarily o 75% of o declared
Massachusetts fluctuate moderately investment- shorter-term investments rated daily and
Limited Term with changes in grade bonds, average within top four paid monthly
Tax Free Fund interest rates Massachusetts maturity quality ratings, o option to
o income exempt from municipal between one including 50% receive in
both Massachusetts securities and five years within top three, cash or
state personal income or judged to be reinvest in
tax and regular of comparable additional
federal income tax quality shares

Scudder o prices will fluctuate o focus on o primarily o 75% of o declared
Massachusetts with changes in investment- long-term investments rated daily and
Tax Free Fund interest rates grade bonds, within top four paid monthly
o income exempt from Massachusetts generally with quality ratings o option to
both Massachusetts municipal maturities of or judged to be receive in
state personal income securities more than ten of comparable cash or
tax and regular years quality reinvest in
federal income tax additional
shares

------------------------------------------------------------------------------------------------------------------------

Tax-exempt vs. taxable income

Tax Free Yields and Corresponding Taxable Equivalents. The table below shows
Massachusetts taxpayers what an investor would have to earn from a comparable
taxable investment to equal Scudder Massachusetts Limited Term Tax Free Fund's
or Scudder Massachusetts Tax Free Fund's double tax-free yield. Today many
investors may find that federal tax and Massachusetts personal income tax rates
make either Fund an attractive alternative to investments paying taxable
income.

COMBINED TO EQUAL HYPOTHETICAL TAX-FREE YIELDS OF 5%, 7% AND 9%, A
TAXABLE INVESTMENT WOULD HAVE TO EARN*:
1998 TAXABLE INCOME: MARGINAL TAX RATE: 5% 7% 9%

INDIVIDUAL

$ 25,351-61,400 36.64% 7.89% 11.05% 14.20%
61,401-128,100 39.28 8.23 11.53 14.82
128,101-278,450 43.68 8.88 12.43 15.98
OVER 278,450 46.85 9.41 13.17 16.93

JOINT RETURN

$ 42,351-102,300 36.64% 7.89% 11.05% 14.20%
102,301-155,950 39.28 8.23 11.53 14.82
155,951-278,450 43.68 8.88 12.43 15.98
OVER 278,450 46.85 9.41 13.17 16.93

* These illustrations assume a marginal federal income tax rate of 28% to
39.6% and that the federal alternative minimum tax is not applicable. Upper
income individuals may be subject to an effective federal income tax rate
in excess of the applicable marginal rate as a result of the phase-out of
personal exemptions and itemized deductions made permanent by the Revenue
Reconciliation Act of 1993. Individuals subject to these phase-out
provisions would have to invest in taxable securities with a yield in
excess of those shown on the table in order to achieve an after-tax yield
equivalent to the yield on a comparable tax-exempt security.
and municipal securities makes it advisable, up to 20% of a Fund's assets
may be held in cash or invested in short-term taxable investments,
including U.S. Government obligations and money market instruments and, in
the case of Scudder Massachusetts Tax Free Fund, repurchase agreements.

Each Fund may temporarily invest more than 20% of its net assets in taxable
securities during periods which, in the Adviser's opinion, require a defensive
position. It is impossible to accurately predict how long such alternative
strategies may be utilized.

Each Fund may also invest up to 20% of its total assets in municipal securities
the interest income from which is taxable or subject to the alternative minimum
tax ("AMT" bonds). Fund distributions from interest on certain AMT bonds, such
as private activity bonds, will be a preference item for purposes of calculating
individual and corporate alternative minimum taxes, depending upon investors'
particular situations. In addition, state and local taxes may apply, depending
upon your state and local tax laws.

Each Fund may invest in third party puts, and when-issued or forward delivery
securities, which may involve certain expenses and risks, including credit
risks. The Funds may also enter into repurchase agreements and stand-by
commitments which may involve certain expenses and risks, including credit
risks. None of these securities and techniques is expected to comprise a major
portion of the Funds' investments. In addition, each Fund may purchase indexed
securities and illiquid securities, and may engage in strategic transactions.
See "Additional information about policies and investments" for more information
about certain of these investment techniques.

Each Fund purchases securities that it believes are attractive and competitive
values in terms of quality, yield and the relationship of current price to
maturity value. However, recognizing the dynamics of municipal obligation prices
in response to changes in general economic conditions, fiscal and monetary
policies, interest rate levels and market forces such as supply and demand for
various issues, the Adviser, subject to the Trustees' supervision, performs
credit analysis and manages each Fund's portfolio continuously, attempting to
take advantage of opportunities to improve total return, which is a combination
of income and principal performance over the long term.

Why invest in these Funds?

The Funds are professionally managed portfolios consisting primarily of
investment-grade municipal securities. The Adviser believes that investment
results can be enhanced by active professional management. Professional
management distinguishes the Funds from unit investment trusts, which cannot be
actively managed.

Tax-free income

As illustrated by the chart on the preceding page, depending on your tax bracket
and individual situation, you may earn a substantially higher after-tax return
from these Funds than from comparable investments that pay income subject to
both Massachusetts personal income tax and regular federal income tax. For
example, if your regular federal marginal tax rate is 36% and your Massachusetts
tax rate is 12%, your effective combined marginal tax rate is 43.68% when
adjusted for the deductibility of state taxes. This means, for example, you
would need to earn a taxable return of 7.88% to receive after-tax income equal
to the 4.19% tax-free yield provided by Scudder Massachusetts Tax Free Fund for
the 30-day period ended March 31, 1998, or earn a taxable return of 6.9% to
receive after-tax income equal to the 3.9% tax-free yield provided by Scudder
Massachusetts Limited Term Tax Free Fund for the 30-day period ended October 31,
1997. In other words, it would be necessary to earn $1,775 from a taxable

investment to equal $1,000 of tax-free income you receive from either Fund. The
yield levels of tax-free and taxable investments continually change. Before
investing in a Fund, you should compare its yield to the after-tax yield you
would receive from a comparable investment paying taxable income. For up-to-date
yield information on the Funds, shareholders can call SAIL, Scudder Automated
Information Line, for toll-free information at any time.

Investment characteristics

Scudder Massachusetts Limited Term Tax Free Fund is managed for current income,
liquidity and a relatively high degree of price stability. For the investor who
can tolerate more price volatility, Scudder Massachusetts Limited Term Tax Free
Fund can be used as an alternative to a tax-free money market fund. While a
tax-free money fund is managed for total price stability, it generally offers
lower and less stable yields than a short-term municipal bond fund. Further,
Scudder Massachusetts Limited Term Tax Free Fund may appeal to investors
concerned about market volatility or the possibility of rising interest rates,
and so are willing to accept somewhat lower yields than normally provided by a
longer-term bond fund in exchange for greater price stability. Some investors
may view Scudder Massachusetts Limited Term Tax Free Fund as a tax-free
alternative to a bank certificate of deposit ("CD"). While an investment in
Scudder Massachusetts Limited Term Tax Free Fund is not federally insured and
there is no guarantee of price stability, an investment in the Fund--unlike a
CD--is not locked away for any period, may be redeemed at any time without
incurring early withdrawal penalties and may provide a higher after-tax yield.

Investors may choose Scudder Massachusetts Tax Free Fund as an alternative or
complement to tax-free money market or tax-free shorter-term investments.
Although shareholders will be assuming the possibility of greater price
fluctuation, they will typically be receiving a higher yield than normally
provided by tax-free income funds with relatively short maturities. Investors in
either Fund will also benefit from the convenience, cost-savings and
professional management of a mutual fund free of sales commissions.

Additional information about policies and investments

Investment restrictions

A complete description of these and other policies and restrictions is contained
under "Investment Restrictions" in the Funds' Statement of Additional
Information.

Investing in Massachusetts

Each Fund is more susceptible to factors adversely affecting issuers of
Massachusetts municipal securities than is a comparable municipal bond fund that
does not focus on investments of Massachusetts issuers. In 1989, Massachusetts
experienced growth rates significantly below the national average and an

economic recession in 1990 and 1991 caused negative growth rates in
Massachusetts. All sectors of the economy experienced job losses, including high
technology, construction and financial industries. In addition, the economy
experienced shifts in employment from labor-intensive manufacturing industries
to technology and service-based industries. After declining since 1989, however,
total Massachusetts employment showed positive annual growth in 1993 and 1994.
Employment in 1993 and 1994 increased in all sectors, except manufacturing which
had experienced declines in each year since 1985. In 1995, total
non-agricultural employment in Massachusetts grew at a rate of 2.4% with the
most rapid growth coming in the construction sector and the services sector,
which grew at rates of 4.7% and 4.9%, respectively. The unemployment rate for
the Commonwealth for 1996 and 1997 was 4.1% and 4.0%, respectively, compared to
the national rate of 5.2% for the same periods. In addition, in 1997 employment
in manufacturing increased by almost 2%, the largest annual increase in
manufacturing in over twelve years. Real income levels in Massachusetts declined
between 1989 and 1991. Since 1994, however, real per capita income levels in
Massachusetts continue to increase faster than the national average, showing
growth rates of 6.2% and 6.0% in 1996 and 1997, respectively. Massachusetts had
the third highest level of personal income in the United States in 1995. For
additional information about the Massachusetts economy, see the Funds' Statement
of Additional Information dated August 1, 1998.

When-issued securities

Repurchase agreements

As a means of earning taxable income for periods as short as overnight, Scudder
Massachusetts Tax Free Fund may enter into repurchase agreements with selected
banks and broker/dealers. Under a repurchase agreement, the Fund acquires
securities, subject to the seller's agreement to repurchase at a specified time
and price. Income from repurchase agreements will be taxable when distributed to
shareholders.

Stand-by commitments

To facilitate liquidity, Scudder Massachusetts Tax Free Fund may enter into
"stand-by commitments" permitting it to resell municipal securities to the
original seller at a specified price. Stand-by commitments generally involve no
cost to the Fund, and any costs would be, in any event, limited to no more than
0.50% of the value of the total assets of the Fund. Any such costs may, however,
reduce yield.

Third party puts

Each Fund may purchase long-term fixed rate bonds that have been coupled with an
option granted by a third party financial institution allowing the Funds at
specified intervals to tender (or "put") its bonds to the institution and
receive the face value thereof. These third party puts are available in several
different forms, may be represented by custodial receipts or trust certificates
and may be combined with other features such as interest rate swaps.

Variable rate demand instruments

These instruments also permit the Funds to demand payment of the unpaid
principal balance plus accrued interest upon a specified number of days' notice
to the issuer or its agent.

Municipal lease obligations

Each Fund may invest in municipal lease obligations and participation interests
in such obligations. These obligations, which may take the form of a lease, an
installment purchase contract or a conditional sales contract, are issued by
state and local governments and authorities to acquire land and a wide variety
of equipment and facilities. Generally, the Funds will not hold such obligations
directly, but will purchase a certificate of participation or other
participation interest in a municipal obligation from a bank or other financial
intermediary. A participation interest gives the Funds a proportionate interest
in the underlying obligation.

Indexed securities

Each Fund may invest in indexed securities, the value of which is linked to
currencies, interest rates, commodities, indices or other financial indicators
("reference instruments"). The interest rate or (unlike most fixed-income
securities) the principal amount payable at maturity of an indexed security may
be increased or decreased, depending on changes in the value of the reference
instrument.

Illiquid securities

The Funds may invest in securities for which there is not an active trading
market, or which have resale restrictions. These types of securities generally
offer a higher return than more readily marketable securities, but carry the
risk that the Funds may not be able to dispose of them at an advantageous time
or price.

Strategic Transactions and derivatives

Each Fund may, but is not required to, utilize various other investment
strategies as described below to hedge various market risks (such as interest
rates and broad or specific market movements), to manage the effective maturity
or duration of each Fund's portfolio, or to enhance potential gain. These
strategies may be executed through the use of derivative contracts. Such
strategies are generally accepted as a part of modern portfolio management and
are regularly utilized by many mutual funds and other institutional investors.
Techniques and instruments may change over time as new instruments and
strategies are developed or regulatory changes occur.

In the course of pursuing these investment strategies, the Funds may purchase
and sell exchange-listed and over-the-counter put and call options on
securities, fixed-income indices and other financial instruments, purchase and
sell financial futures contracts and options thereon, and enter into various
interest rate transactions such as swaps, caps, floors or collars (collectively,
all the above are called "Strategic Transactions"). Strategic Transactions may
be used without limit (except to the extent that 80% of each Fund's net assets
are required to be invested in tax-exempt Massachusetts municipal securities,
and as limited by each Fund's other investment restrictions) to attempt to
protect against possible changes in the market value of securities held in or to
be purchased for each Fund's portfolio resulting from securities markets
fluctuations, to protect each Fund's unrealized gains in the value of its
portfolio securities, to facilitate the sale of such securities for investment
purposes, to manage the effective maturity or duration of each Fund's portfolio,
or to establish a position in the derivatives markets as a temporary substitute
for purchasing or selling particular securities.

Some Strategic Transactions may also be used to enhance potential gain although
no more than 5% of each Fund's assets will be committed to Strategic
Transactions entered into for non-hedging purposes. Any or all of these
investment techniques may be used at any time and in any combination, and there
is no particular strategy that dictates the use of one technique rather than
another, as use of any Strategic Transaction is a function of numerous variables
including market conditions. The ability of the Funds to utilize these Strategic

Transactions successfully will depend on the Adviser's ability to predict
pertinent market movements, which cannot be assured. Each Fund will comply with
applicable regulatory requirements when implementing these strategies,
techniques and instruments. Strategic Transactions involving financial futures
and options thereon will be purchased, sold or entered into only for bona fide
hedging, risk management or portfolio management purposes and not to create
leveraged exposure in each Fund. Please refer to "Risk factors--Strategic
Transactions and derivatives" for more information.

Risk factors

Non-diversified investment company. As "non-diversified" investment companies,
each Fund may invest a greater proportion of its assets in the securities of a
smaller number of issuers than a diversified investment company. Investment in
either Fund may involve greater risk than investment in a diversified fund.

Investing in Massachusetts. If either Massachusetts or any of its local
governmental entities or public instrumentalities were to be unable to meet its
financial obligations, the income derived by the Funds, their net asset value or
liquidity and the ability to preserve or realize appreciation of the Funds'
capital could be adversely affected.

The persistence of serious financial difficulties could adversely affect the
market value and marketability of, or result in default in payment on,
outstanding municipal securities. Beginning in fiscal 1987 through fiscal 1991,
the Commonwealth experienced operating deficits and lower than anticipated tax
revenues resulting in an extended period of serious financial difficulties. The
Commonwealth ended both fiscal 1993 and fiscal 1994 with surpluses of $13.1
million and $26.8 million, respectively, and positive aggregate ending fund
balances in budgeted operating funds of $562.5 million and approximately $589.3
million, respectively. The Commonwealth ended fiscal 1995 and 1996 with
operating gains of $137 million and $446.4 million, respectively, and ending
fund balances of $726 million and $1.173 billion, respectively. The Commonwealth
ended fiscal year 1997 with an ending fund balance of $1.39 billion. The fiscal
year 1998 budget calls for approximately $18.7 billion in expenditures; the
aggregate ending fund balance is projected to be $1.2 billion.

As of the date of this prospectus, the Commonwealth's general obligation bonds
are rated AA- by S&P and A1 by Moody's. From time to time, the rating agencies
may change their ratings in response to budgetary matters or other economic
indicators. Massachusetts local governmental entities are subject to certain
limitations on their taxing power that could affect their ability or the ability
of the Commonwealth to meet their respective financial obligations. See
"Investing in Massachusetts" in the Funds' Statement of Additional Information
for further details about the risks of investing in Massachusetts.

Lower-grade debt securities. While each Fund invests 75% of its assets in
investment-grade securities, each may invest a portion of its assets in
lower-grade securities rated below Baa by Moody's or below BBB by S&P or Fitch.
Securities rated below investment-grade are commonly referred to as "junk bonds"
and involve greater price volatility and higher degrees of speculation with
respect to the payment of principal and interest than higher quality
fixed-income securities. The market prices of such lower-rated debt securities
may decline significantly in periods of general economic difficulty. In
addition, the trading market for these securities is generally less liquid than
for higher rated securities and a Fund may have difficulty disposing of these

securities at the time it wishes to. The lack of a liquid secondary market for
certain securities may also make it more difficult for a Fund to obtain accurate
market quotations for purposes of valuing its portfolio and calculating its net
asset value.

Third party puts. In connection with a third party put, the financial
institution granting the option does not provide credit enhancement, and
typically if there is a default on or significant downgrading of the bond or a
loss of its tax-exempt status, the put option will terminate automatically and
the risk to the Funds will be that of holding a long-term bond.

Municipal lease obligations. Municipal lease obligations and participation
interests in such obligations frequently have risks distinct from those
associated with general obligation or revenue bonds. Municipal lease obligations
are not secured by the governmental issuer's credit, and if funds are not
appropriated for lease payments, the lease may terminate, with the possibility
of default on the lease obligation and significant loss to the Funds. Although
"non-appropriation" obligations are secured by the leased property, disposition
of that property in the event of foreclosure might prove difficult, time
consuming and costly. In addition, the tax treatment of such obligations in the
event of non-appropriation is unclear. In evaluating the credit quality of a
municipal lease obligation that is unrated, the Adviser will consider a number
of factors including the likelihood that the governmental issuer will
discontinue appropriating funding for the leased property.

Indexed securities. Indexed securities may be positively or negatively indexed,
so that appreciation of the reference instrument may produce an increase or a
decrease in the interest rate or value at maturity of the security. In addition,
the change in the interest rate or value at maturity of the security may be some
multiple of the change in the value of the reference instrument. Thus, in
addition to the credit risk of the security's issuer, a Fund will bear the
market risk of the reference instrument.

The use of options and futures transactions entails certain other risks. In
particular, the variable degree of correlation between price movements of
futures contracts and price movements in the related portfolio position of a
Fund creates the possibility that losses on the hedging instrument may be
greater than gains in the value of a Fund's position. In addition, futures and
options markets may not be liquid in all circumstances and certain
over-the-counter options may have no markets. As a result, in certain markets, a
Fund might not be able to close out a transaction without incurring substantial
losses, if at all. Although the use of futures contracts and options
transactions for hedging should tend to minimize the risk of loss due to a
decline in the value of the hedged position, at the same time they tend to limit

any potential gain which might result from an increase in value of such
position. Finally, the daily variation margin requirements for futures contracts
would create a greater ongoing potential financial risk than would purchases of
options, where the exposure is limited to the cost of the initial premium.
Losses resulting from the use of Strategic Transactions would reduce net asset
value, and possibly income, and such losses can be greater than if the Strategic
Transactions had not been utilized. The Strategic Transactions that each Fund
may use and some of their risks are described more fully in the Funds' Statement
of Additional Information.

Distribution and performance information

Dividends and capital gains distributions

The Funds' dividends from net investment income are declared daily and
distributed monthly. The Funds intend to distribute net realized capital gains
after utilization of capital loss carryforwards, if any, in November or December
to prevent application of federal excise tax, although an additional
distribution may be made if necessary. Any dividends or capital gains
distributions declared in October, November or December with a record date in
such a month and paid during the following January will be treated by
shareholders for federal income tax purposes as if received on December 31 of
the calendar year declared. According to preference, shareholders may receive
distributions in cash or have them reinvested in additional shares of the Funds.

Distributions derived from interest on Massachusetts municipal securities are
not subject to regular federal income taxes, except for the possible
applicability of the federal alternative minimum tax. For federal income tax
purposes, a portion of the Funds' income may be taxable to shareholders as
ordinary income. Long-term capital gains distributions, if any, are taxable to
individual shareholders at a maximum 20% or 28% capital gains rate (depending on
the Fund's holding period for the assets giving rise to the gain), for federal
income tax purposes, regardless of the length of time shareholders have owned
their shares. Short-term capital gains and any other taxable income
distributions are taxable as ordinary income. Distributions of tax-exempt income
are taken into consideration in computing the portion, if any, of Social
Security and railroad retirement benefits subject to federal and, in some cases,
state taxes.

Under Massachusetts law, dividends paid by the Funds are exempt from
Massachusetts personal income tax for individuals who reside in Massachusetts to
the extent such dividends are exempt from regular federal income tax and are
identified by the Funds as derived from interest payments on Massachusetts
municipal securities and certain other qualifying securities (including Puerto
Rico, the U.S. Virgin Islands and Guam). Long-term capital gains distributions
are taxable as long-term capital gains, except such distributions which the
Funds identify as derived from the sale of certain Massachusetts obligations
which are exempt from Massachusetts personal income tax. These obligations,
which are few in number, are those issued pursuant to legislation which
specifically exempts gain on their sale from Massachusetts income taxation.

The Funds expect to ordinarily provide income that is 100% free from
Massachusetts personal income tax and regular federal income tax. However, gains
from certain Strategic Transactions are taxable.

Some of the Funds' interest income may be treated as a tax preference item that
may subject an individual investor to liability (or increased liability) under
the federal alternative minimum tax, depending upon an investor's particular
situation. However, at least 80% of each Fund's net assets will normally be
invested in Massachusetts municipal securities whose interest income is not
treated as a tax preference item under the individual alternative minimum tax.

Tax-exempt income may also subject a corporate investor to liability (or
increased liability) under the corporate alternative minimum tax.

Each Fund sends detailed tax information to shareholders about the amount and
type of their distributions by January 31 of the following year.

Performance information

From time to time, quotations of each Fund's performance may be included in
advertisements, sales literature, or shareholder reports. All performance
figures are historical, show the performance of a hypothetical investment and
are not intended to indicate future performance. The "SEC yield" of a Fund is an
annualized expression of the net income generated by a Fund over a specified
30-day (one month) period, as a percentage of a Fund's share price on the last
day of that period. This yield is calculated according to methods required by
the SEC, and therefore may not equate to the level of income paid to
shareholders. A Fund's "tax-equivalent yield" is calculated by determining the
rate of return that would have to be achieved on a fully taxable investment to
produce the after-tax equivalent of a Fund's yield, assuming certain tax
brackets for a Fund shareholder. Yields are expressed as annualized percentages.
"Total return" is the change in value of an investment in a Fund for a specified
period. The "average annual total return" of a Fund is the average annual
compound rate of return of an investment in a Fund assuming the investment has
been held for one year, five years, ten years and/or the life of the Fund as of
a stated ending date. (If a Fund has not been in operation for at least ten
years, the life of the Fund is used where applicable.) "Cumulative total return"
represents the cumulative change in value of an investment in a Fund for various
periods. All types of total return calculations assume that all dividends and
capital gains distributions during the period were reinvested in shares of a
Fund.

Performance will vary based upon, among other things, changes in market
conditions and the level of each Fund's expenses.

Fund organization

Scudder Massachusetts Limited Term Tax Free Fund and Scudder Massachusetts Tax
Free Fund are series of Scudder State Tax Free Trust (the "Trust"), an open-end
management investment company registered under the Investment Company Act of
1940 (the "1940 Act"). The Trust was organized as a Massachusetts business trust
in May 1983.

The Funds' activities are supervised by the Trust's Board of Trustees.
Shareholders have one vote for each share held on matters on which they are
entitled to vote. The Trust is not required to hold, and has no current
intention of holding annual shareholder meetings, although special meetings may
be called for purposes such as electing or removing Trustees, changing
fundamental investment policies or approving an investment management contract.
Shareholders will be assisted in communicating with other shareholders in
connection with removing a Trustee as if Section 16(c) of the 1940 Act were
applicable.

Investment adviser

The Fund retains the investment management firm of Scudder Kemper Investments,
Inc., a Delaware corporation formerly known as Scudder, Stevens & Clark, Inc.
("Scudder"), to manage its daily investment and business affairs subject to the
policies established by the Board of Trustees. The Trustees have overall

responsibility for the management of the Fund under Massachusetts law.

Scudder and Zurich Insurance Company ("Zurich"), an international insurance and
financial services organization, have formed a new global investment
organization by combining Scudder's business with that of Zurich's subsidiary,
Zurich Kemper Investments, Inc. and Scudder has changed its name to Scudder
Kemper Investments, Inc. As a result of the transaction, Zurich owns
approximately 70% of the Adviser, with the balance owned by the Adviser's
officers and employees.

The Adviser receives monthly an investment management fee for its services equal
to 0.60% of each Fund's average daily net assets on an annual basis. Each Fund's
fee is payable monthly, provided that a Fund will make such interim payments as
may be requested by the Adviser not to exceed 75% of the amount of the fee then
accrued on the books of a Fund and unpaid.

Until February 28, 1999, the Adviser has agreed to maintain the total annualized
expenses for Scudder Massachusetts Limited Term Tax Free Fund at 0.75% of
average daily net assets. Accordingly, for the fiscal year ended October 31,
1997, the Adviser received an investment management fee of 0.44% of the Fund's
average daily net assets on an annualized basis.

All of a Fund's expenses are paid out of gross investment income. Shareholders
pay no direct charges or fees for investment services.

Scudder Kemper Investments, Inc. is located at Two International Place, Boston,
Massachusetts.

Like other mutual funds and financial and business organizations worldwide, the
Funds could be adversely affected if computer systems on which the Funds rely,
which primarily include those used by the Adviser, its affiliates or other
service providers, are unable to correctly process date-related information on
and after January 1, 2000. This risk is commonly called the Year 2000 Issue.
Failure to successfully address the Year 2000 Issue could result in
interruptions to and other material adverse effects on the Funds' business and
operations. The Adviser has commenced a review of the Year 2000 Issue as it may
affect the Funds and is taking steps it believes are reasonably designed to
address the Year 2000 Issue, although there can be no assurances that these
steps will be sufficient. In addition, there can be no assurances that the Year
2000 Issue will not have an adverse effect on the companies whose securities are
held by the Funds or on global markets or economies generally.

Transfer agent

Scudder Service Corporation, P.O. Box 2291, Boston, Massachusetts 02107-2291, a
subsidiary of the Adviser, is the transfer, shareholder servicing and
dividend-paying agent for the Funds.

Underwriter

Fund accounting agent

Scudder Fund Accounting Corporation, a subsidiary of the Adviser, is responsible
for determining the daily net asset value per share and maintaining the general
accounting records of the Funds.

Custodian

State Street Bank and Trust Company is the Funds' custodian.

Transaction information

Purchasing shares

By check. If you purchase shares with a check that does not clear, your purchase
will be canceled and you will be subject to any losses or fees incurred in the
transaction. Checks must be drawn on or payable through a U.S. bank. If you
purchase shares by check and redeem them within seven business days of purchase,
a Fund may hold redemption proceeds until the purchase check has cleared. If you
purchase shares by federal funds wire, you may avoid this delay. Redemption
requests by telephone or by "Write-A-Check," in the case of Scudder
Massachusetts Limited Term Tax Free Fund, prior to the expiration of the
seven-day period will not be accepted.

Your wire instructions must also include:
- -- the name of the fund in which the money is to be invested, -- the account
number of the fund, and -- the name(s) of the account holder(s).

The account will be established once the application and money order are
received in good order.

You may also make additional investments of $100 or more to your existing
account by wire.

You can also make exchanges among your Scudder fund accounts on SAIL, the
Scudder Automated Information Line, by calling 1-800-343-2890.

By telephone order. To a limited extent, certain financial institutions may
place orders to purchase shares unaccompanied by payment prior to the close of
regular trading on the New York Stock Exchange (the "Exchange"), normally 4 p.m.
eastern time, and receive that day's price. Please call 1-800-854-8525 for more
information, including the dividend treatment and method and manner of payment
for Fund shares.

If you purchase shares by "QuickBuy" and redeem them within seven days of the
purchase, the Fund may hold the redemption proceeds for a period of up to seven

business days. If you purchase shares and there are insufficient funds in your
bank account, the purchase will be canceled and you will be subject to any
losses or fees incurred in the transaction. "QuickBuy" transactions are not
available for most retirement plan accounts. However, "QuickBuy" transactions
are available for Scudder IRA accounts.

Redeeming shares

The Fund allows you to redeem shares (i.e., sell them back to the Fund) without
redemption fees.

You can also make redemptions from your Scudder fund account on SAIL by calling
1-800-343-2890.

In the event that you are unable to reach the Fund by telephone, you should
write to the Fund; see "How to contact Scudder" for the address.

"QuickSell" transactions are not available for Scudder IRA accounts and most
other retirement plan accounts.

By "Write-A-Check." You may redeem shares of Scudder Massachusetts Limited Term
Tax Free Fund by writing checks against your account balance for at least $100.
Your Fund investments will continue to earn dividends until your check is
presented to the Fund for payment.

Checks will be returned by the Fund's transfer agent if there are insufficient
shares to meet the withdrawal amount. You should not attempt to close an account
by check because the exact balance at the time the check clears will not be
known when the check is written.

agencies deemed eligible by the SEC. Signature guarantees by notaries public are
not acceptable. Redemption requirements for corporations, other organizations,
trusts, fiduciaries, agents, institutional investors and retirement plans may be
different from those for regular accounts.
For more information, please call 1-800-225-5163.

Telephone transactions

Share price

Purchases and redemptions, including exchanges, are made at net asset value.
Scudder Fund Accounting Corporation determines the net asset value per share for
each Fund as of the close of regular trading on the Exchange, normally 4 p.m.
eastern time, on each day the Exchange is open for trading. Net asset value per
share is calculated by dividing the value of total Fund assets, less all
liabilities, by the total number of shares outstanding.

Processing time

All purchase and redemption requests must be received in good order by the
Funds' transfer agent. Those requests received by the close of regular trading
on the Exchange are executed at the net asset value per share calculated at the
close of trading that day. Purchase and redemption requests received after the
close of regular trading on the Exchange will be executed the following business
day. Purchases made by federal funds wire before noon eastern time will begin
earning income that day; all other purchases received before the close of
regular trading on the Exchange will begin earning income the next business day.
Redeemed shares will earn income on the day on which the redemption request is
executed.

If you wish to make a purchase of $500,000 or more, you should notify Scudder
Investor Relations by calling 1-800-225-5163.

Purchase restrictions

Purchases and sales should be made for long-term investment purposes only. The
Funds and Scudder Investor Services, Inc. each reserves the right to reject
purchases of Fund shares (including exchanges) for any reason including when a
pattern of frequent purchases and sales made in response to short-term
fluctuations in a Fund's share price appears evident.

Tax information

A redemption of shares, including an exchange into another Scudder fund, is a
sale of shares and may result in a gain or loss for income tax purposes.

Tax identification number

identification number. The Fund also reserves the right, following 30 days'
notice, to redeem all shares in accounts without a correct certified Social
Security or tax identification number. A shareholder may avoid involuntary
redemption by providing the Fund with a tax identification number during the
30-day notice period.

Minimum balances

Third party transactions

If purchases and redemptions of Fund shares are arranged and settlement is made
at an investor's election through a member of the National Association of
Securities Dealers, Inc., other than Scudder Investor Services, Inc., that
member may, at its discretion, charge a fee for that service.

Redemption-in-kind

Each Fund reserves the right, if conditions exist which make cash payments
undesirable, to honor any request for redemption or repurchase order by making
payment in whole or in part in readily marketable securities chosen by a Fund
and valued as they are for purposes of computing a Fund's net asset value (a
redemption-in-kind). If payment is made in securities, a shareholder may incur
transaction expenses in converting these securities to cash.

Shareholder benefits

Experienced professional management

Scudder Kemper Investments, Inc., one of the nation's most experienced
investment management firms, actively manages your Scudder fund investment.
Professional management is an important advantage for investors who do not have
the time or expertise to invest directly in individual securities.

A team approach to investing

Scudder Massachusetts Limited Term Tax Free Fund and Scudder Massachusetts Tax
Free Fund are each managed by a team of investment professionals who each play
an important role in the Funds' management process. Team members work together
to develop investment strategies and select securities for the Funds'
portfolios. They are supported by the Adviser's large staff of economists,
research analysts, traders and other investment specialists. We believe our team
approach benefits Fund investors by bringing together many disciplines and
leveraging our extensive resources.

Philip G. Condon, Lead Portfolio Manager of each Fund, joined Scudder in 1983
and has 17 years of experience in municipal investing and portfolio management.

Mr. Condon has had responsibility for Scudder Massachusetts Limited Term Tax
Free Fund since its inception in 1994 and since 1989 for Scudder Massachusetts
Tax Free Fund. Kathleen A. Meany, Portfolio Manager of each Fund, has worked on
Scudder Massachusetts Limited Term Tax Free Fund since it was introduced and
since 1988 for Scudder Massachusetts Tax Free Fund. Ms. Meany joined Scudder in
1988 and has 20 years of municipal investment and portfolio management
experience.

SAIL-TM---Scudder Automated Information Line

Investment flexibility

Personal Counsel-SM- -- A Managed Fund Portfolio Program

If you would like to receive direct guidance and management of your overall
mutual fund portfolio to help you pursue your investment goals, you may be
interested in Personal Counsel from Scudder. Personal Counsel, a program of
Scudder Investor Services, Inc., a registered investment adviser and a
subsidiary of Scudder Kemper Investments, Inc., combines the benefits of a
customized portfolio of pure no-load Scudder Funds with ongoing portfolio
monitoring and individualized service, for an annual fee of generally 1% or less
of assets (with a $1,000 minimum). In addition, it draws upon the Adviser's more
than 75-year heritage of providing investment counsel to large corporate and
private clients. If you have $100,000 or more to invest initially and would like
more information about Personal Counsel, please call 1-800-700-0183.

Dividend reinvestment plan

You may have dividends and distributions automatically reinvested in additional
Fund shares. Please call 1-800-225-5163 to request this feature.

Shareholder statements

Shareholder reports

In addition to account statements, you receive periodic shareholder reports
highlighting relevant information, including investment results and a review of
portfolio changes.

shareholder reports.

Newsletters

Scudder Investor Centers

As a convenience to shareholders who like to conduct business in person, Scudder
Investor Services, Inc. maintains Investor Centers in Boca Raton, Boston,
Chicago, New York and San Francisco.

T.D.D. service for the hearing impaired

Purchases

Opening
an account Minimum initial investment: $2,500; IRAs $1,000
Group retirement plans (401(k), 403(b), etc.) have similar or lower minimums.
See appropriate plan literature.

o By Mail Send your completed and signed application and check
Make checks
payable to "The
Scudder Funds."
by regular mail or by express, registered,
to: or certified mail to:

The Scudder Funds The Scudder Funds
P.O. Box 2291 66 Brooks Drive
Boston, MA Braintree, MA 02184
02107-2291

o By Wire Please see Transaction information--Purchasing shares-- By
wire for details, including the ABA wire transfer number. Then call
1-800-225-5163 for instructions.

o In Person Visit one of our Investor Centers to complete your application with the
help of a Scudder representative. Investor Center locations are listed
under Shareholder benefits.
-----------------------------------------------------------------------------------------------------------------------

Purchasing
additional shares Minimum additional investment: $100; IRAs $50
Group retirement plans (401(k), 403(b), etc.) have similar or lower minimums.
See appropriate plan literature.

o By Wire Please see Transaction information--Purchasing shares-- By wire for details, including
the ABA wire transfer number.

o In Person Visit one of our Investor Centers to make an additional investment in your
Scudder fund account. Investor Center locations are listed under Shareholder
benefits.

o By Telephone Please see Transaction information--Purchasing shares-- By QuickBuy or By telephone
order for more details.

Exchanges and redemptions

Exchanging shares
Minimum investments: $2,500 to establish a new account;
$100 to exchange among existing accounts

o By Telephone To speak with a service representative, call 1-800-225-5163 from
8 a.m. to 8 p.m. eastern time or to access SAIL-TM-, Scudder's Automated
Information Line, call 1-800-343-2890 (24 hours a day).

Send your instructions
by regular mail to: or by express, registered, or by fax to:
or certified mail to:
The Scudder Funds The Scudder Funds 1-800-821-6234
P.O. Box 2291 66 Brooks Drive
Boston, MA 02107-2291 Braintree, MA 02184

o By Mail Send your instructions for redemption to the appropriate address or fax number
or Fax above and include:

- the name of the Fund and account number you are redeeming from;
- your name(s) and address as they appear on your account;
- the dollar amount or number of shares you wish to redeem;
- your signature(s) as it appears on your account; and
- a daytime telephone number.

A signature guarantee is required for redemptions over $100,000. See Transaction
information--Redeeming shares.

o By Automatic You may arrange to receive automatic cash payments periodically. Call
Withdrawal Plan 1-800-225-5163 for more information and an enrollment form.

Scudder tax-advantaged retirement plans

Scudder Kemper offers a variety of tax-advantaged retirement plans for
individuals, businesses and non-profit organizations. These flexible plans are
designed for use with the Scudder Family of Funds (except Scudder tax-free
funds, which are inappropriate for such plans). Scudder Funds offer a broad
range of investment objectives and can be used to seek almost any investment
goal. Using Scudder's retirement plans can help shareholders save on current
taxes while building their retirement savings.

Scudder No-Fee IRA
Scudder Roth No-Fee IRA
Keogh Plans
401(k) Plans
Profit Sharing and Money Purchase Pension Plans
403(b) Plans
SEP-IRA
Scudder Horizon Plan (a variable annuity)

Scudder Trust Company (an affiliate of the Adviser) is Trustee or Custodian for
some of these plans and is paid an annual fee for some of the above retirement
plans. For information about establishing a Scudder No-Fee IRA, SEP-IRA, Profit
Sharing Plan, Money Purchase Pension Plan or a Scudder Horizon Plan, please call
1-800-225-2470. For information about 401(k)s or 403(b)s please call
1-800-323-6105. To effect transactions in existing IRA, SEP-IRA, and most Profit
Sharing or Pension Plan accounts, call 1-800-225-5163.

Scudder Investor Relations is a service provided through Scudder Investor
Services, Inc., Distributor.

Trustees and Officers

Daniel Pierce*
President and Trustee
Henry P. Becton, Jr.
Trustee; President and General Manager,
WGBH Educational Foundation
Dawn-Marie Driscoll
Trustee; Executive Fellow, Center for Business Ethics; President, Driscoll
Associates
Peter B. Freeman
Trustee; Corporate Director and Trustee
George M. Lovejoy, Jr.
Trustee; President and Director, Fifty Associates
Wesley W. Marple, Jr.
Trustee; Professor of Business Administration, Northeastern University
College of Business Administration
Kathryn L. Quirk*
Trustee, Vice President and Assistant Secretary
Jean C. Tempel
Trustee; Managing Partner,
Technology Equity Partners
Donald C. Carleton*
Vice President
Philip G. Condon*
Vice President
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
Vice President
Jeremy L. Ragus*
Vice President
Rebecca Wilson*
Vice President
Thomas F. McDonough*
Treasurer, Vice President and Secretary
John R. Hebble*
Assistant Treasurer
Caroline Pearson*
Assistant Secretary