Scudder
Managed
Municipal
Bonds
Annual Report
December 31, 1998
Pure No-Load(TM) Funds
A fund that seeks to provide income exempt from regular federal income tax
primarily through investments in high-grade, long-term municipal securities.
A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
SCUDDER (logo)
Scudder Managed Municipal Bonds
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Date of Inception: 10/14/76 Total Net Assets as of Ticker Symbol: SCMBX
12/31/98: $737 million
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- - Scudder Managed Municipal Bonds posted a 6.23% total return over its most
recent year ended December 31, 1998. For the one-, three-, and ten-year periods
ended December 31, the Fund's total returns placed it in the top 25% of
municipal bond funds as tracked by Lipper Analytical Services.
Please see page 6 for additional Lipper performance information.
- - The Fund received four stars from Morningstar, reflecting an "above average"
rating for risk-adjusted performance through December 31, 1998.^1
- - The Fund's 30-day net annualized SEC yield was 3.98% as of December 31, 1998.
For investors in the two highest federal tax brackets of 36% and 39.6%, the
Fund's yield was equivalent to a fully taxable 6.22% and 6.59%, respectively.
Table of Contents
3 Letter from the Fund's President 24 Notes to Financial Statements
4 Performance Update 27 Report of Independent Accountants
5 Portfolio Summary 28 Tax Information
6 Portfolio Management Discussion 29 Shareholder Meeting Results
9 Glossary of Investment Terms 32 Officers and Trustees
10 Investment Portfolio 33 Investment Products and Services
20 Financial Statements 34 Scudder Solutions
23 Financial Highlights
^1 For your information, these ratings are subject to change every month and
are calculated from the Fund's five-year average annual return in excess of
90-day Treasury bill returns with appropriate fee adjustments, and a risk
factor that reflects fund performance below T-bill returns. The Fund
received four stars for three- and five-year performance and three stars
for ten-year performance, and was rated among 1577, 1040, and 370 municipal
funds for the respective periods. Of the funds rated, 10% received five
stars, and 22.5% received four stars. Past performance is no guarantee of
future returns.
2 - Scudder Managed Municipal Bonds
Letter from the Fund's President
Dear Shareholders,
Despite the fact that mainstream media -- and most investors -- tend to
focus on stocks when discussing financial markets, the importance of including
bonds in a well-diversified portfolio cannot be overstated. Many financial
professionals rank municipal bonds second only to Treasuries as secure fixed
income investments. Municipals can be counted on to deliver reliable income
along with substantially less price volatility when compared with most other
financial instruments. Moreover, in a global financial environment where market
movements are increasingly correlated, the municipal bond market is among the
most independent.
In 1998, municipals recorded modest gains amid a turbulent global financial
environment: Prices of the average 10-year AAA municipal bond rose 2% during the
year, on yield declines of one quarter of a percentage point. During its most
recent year ended December 31, 1998, Scudder Managed Municipal Bonds posted a
6.23% total return based on a net asset value increase of $0.05 per share and
distributions of $0.45 per share in income, $.006 per share in short-term gains,
and $0.044 per share in long-term gains. Please read the Portfolio Management
Discussion beginning on page 6 for additional information concerning your Fund's
investment environment, strategy, and outlook.
For those of you who are interested in new Scudder products, we recently
introduced the Scudder Tax Managed Growth Fund, investing in medium- to
large-sized U.S. companies, and Scudder Tax Managed Small Company Fund, which
invests in small U.S. companies. Using a combination of quantitative and
fundamental research, the funds will focus on companies with strong earnings
growth, reasonable valuations, and favorable risk profiles. Both funds strive to
maximize after-tax returns by systematically taking into account the tax
implications of portfolio transactions and seeking to offset capital gains by
realizing losses when appropriate. Please see pages 33 through 35 for more
information on Scudder products and services.
If you have any questions regarding Scudder Managed Municipal Bonds or any
other Scudder fund, please call Investor Relations at 1-800-225-2470. Or visit
Scudder's Web site at www.scudder.com.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder Managed Municipal Bonds
3 - Scudder Managed Municipal Bonds
Performance Update as of December 31, 1998
- ----------------------
Fund Index Comparisons
- ----------------------
Total Return
- ---------------------------------------------------
Period Ended Growth of Average
12/31/98 $10,000 Cumulative Annual
- ---------------------------------------------------
Scudder Managed Municipal Bonds
- ---------------------------------------------------
1 Year $ 10,623 6.23% 6.23%
5 Year $ 13,304 33.04% 5.88%
10 Year $ 21,891 118.91% 8.15%
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Lehman Brothers Municipal Bond Index
- ---------------------------------------------------
1 Year $ 10,648 6.48% 6.48%
5 Year $ 13,527 35.27% 6.22%
10 Year $ 22,034 120.34% 8.22%
- ------------------------------
Growth of a $10,000 Investment
- ------------------------------
THE PRINTED DOCUMENT CONTAINS A LINE CHART HERE
CHART DATA:
Lehman Brothers Municipal Scudder Managed
Bond Index Municipal Bonds
------------------------- ---------------
'88 10000 10000
'89 11080 11119
'90 11887 11872
'91 13331 13323
'92 14508 14520
'93 16289 16454
'94 15447 15460
'95 18144 18106
'96 18947 18856
'97 20693 20608
'98 22034 21891
Yearly periods ended December 31
The unmanaged Lehman Brothers Municipal Bond Index is a market value-weighted
measure of the long-term, investment grade tax-exempt bond market consisting of
municipal bonds with a maturity of at least two years. Generally, the Index's
average effective maturity is longer than the Fund's. Index returns assume
dividends are reinvested and, unlike Fund returns, do not reflect any fees or
expenses.
- ---------------------------------
Returns and Per Share Information
- ---------------------------------
Yearly Periods Ended December 31
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE
ILLUSTRATING THE FUND TOTAL RETURN (%) AND
INDEX TOTAL RETURN (%)
CHART DATA:
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
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Net Asset Value $ 8.54 $ 8.45 $ 8.80 $ 8.72 $ 9.09 $ 8.07 $ 8.94 $ 8.84 $ 9.13 $ 9.18
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Income Dividends $ .59 $ .55 $ .53 $ .51 $ .47 $ .46 $ .48 $ .45 $ .46 $ .45
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Capital Gains Distributions $ .39 $ .09 $ .12 $ .33 $ .29 $ .02 $ -- $ -- $ .05 $ .05
- ------------------------------------------------------------------------------------------------------------------------------------
Fund Total Return (%) 11.19 6.77 12.23 8.98 13.32 -6.04 17.12 4.15 9.29 6.23
- ------------------------------------------------------------------------------------------------------------------------------------
Index Total Return (%) 10.79 7.29 12.14 8.82 12.28 -5.17 17.46 4.43 9.21 6.48
- ------------------------------------------------------------------------------------------------------------------------------------
All performance is historical, assumes reinvestment of all dividends and capital
gains, and is not indicative of future results. Investment return and principal
value will fluctuate, so an investor's shares, when redeemed, may be worth more
or less than when purchased.
4 - Scudder Managed Municipal Bonds
Portfolio Summary as of December 31, 1998
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Diversification
- ---------------
A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
Electric Utility Revenue 20%
Core Cities/Lease 12%
Water/Sewer Revenue 8%
Toll Revenue/Transportation 8%
Hospital/Health 8%
Pollution Control/
Industrial Development 7%
State General Obligation 7%
Other General Obligation/Lease 5%
Port/Airport Revenue 5%
Sales & Special Tax 5%
Miscellaneous Municipal 15%
---------------------------------------------
100%
---------------------------------------------
The Fund is broadly diversified, with securities issued in
26 states plus the District of Columbia and the Virgin
Islands.
- -------
Quality
- -------
A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
AAA* 61%
AA 9%
A 18%
BBB 8%
SKI 3%
Not Rated 1%
---------------------------------------------
100%
---------------------------------------------
Weighted Average quality: AA
* Includes Cash Equivalents
Overall portfolio quality remains high, with 70% of the
Fund's portfolio rated AAA or AA, or of equivalent quality.
- ------------------
Effective Maturity
- ------------------
A graph in the form of a pie chart appears here, illustrating the exact data
points in the table below.
Less than 1 year 2%
1 - 5 18%
5 - 10 38%
10 - 15 28%
Greater than 15 years 14%
---------------------------------------------
100%
---------------------------------------------
Weighted average effective maturity: 9.1
years
During the period, we focused on 15- to 20-year bonds,
because we believe they offer the best total return
potential, based on our outlook for interest rates and the
yield differentials among bonds across the maturity
spectrum.
For more complete details about the Fund's investment portfolio, see page 10. A
quarterly Fund Summary and Portfolio Holdings are available upon request.
5 - Scudder Managed Municipal Bonds
Portfolio Management Discussion
Dear Shareholders,
Yields of municipal bonds declined slightly and their prices rose modestly
during Scudder Managed Municipal Bonds' most recent year ended December 31,
1998. The Fund provided a 6.23% total return over the 12-month period,
surpassing the 5.32% average return of similar funds and ranking the Fund in the
top 9% as reported by Lipper Analytical Services, Inc. The Fund posted a 3.98%
30-day net annualized SEC yield as of December 31, equivalent to fully taxable
yields of 6.22% and 6.59%, respectively, for investors in the 36% and 39.6%
federal tax brackets. Comprising the Fund's total return over the period were a
$0.05 increase in its net asset value to $9.18 as of December 31, plus fund
distributions of $0.45 per share in income, $.006 per share in short-term gains,
and $0.044 per share in long-term gains.
Scudder Managed Municipal Bonds' long-term returns remain highly competitive: As
shown in the accompanying table, the Fund's average annual total returns placed
it in the top 25% of its peers over one-, three-, and ten-year periods. Please
turn to the Performance Update on page for more information on the Fund's
long-term progress, including comparisons with the unmanaged Lehman Brothers
Municipal Bond Index.
Municipals Gain Amid Turbulence
In 1998, most municipal bonds posted modest gains in the face of dramatic
financial crises that rocked the global markets. In the international capital
markets, the most troublesome developments were Russia's short-term debt default
and ruble devaluation, Japan's continuing banking crisis and recession, the run
on Brazil's currency reserves (despite an IMF stabilization package), and the
near collapse of the Long Term Capital Management hedge fund. The Federal
Reserve lowered short-term interest rates by one quarter of a percentage point
three times between September and November -- taking the unexpected step of
adjusting interest rates between Federal Open Market Committee meetings -- in an
attempt to restore order to worldwide financial markets. Though the Fed had
reportedly changed to a "neutral" stance on interest rate adjustments by late in
1998, the more than 60 interest rate reductions by central banks around the
world during this period seemed to ease fears of rampant deflation and gave
encouragement to U. S. equity investors.
THE DOCUMENT CONTAINS A TABLE HERE
===============================================================
Competitive Long-Term Results
(Average annual returns for periods ended
December 31, 1998)
- ---------------------------------------------------------------
Scudder
Managed Lipper Number
Municipal average of
Bonds annual Funds Percentile
Period return return Rank tracked Ranking
- -------------------------------------------------------------
1 year 6.23% 5.32% 21 of 246 Top 9%
3 years 6.53% 5.90% 31 of 198 Top 16%
5 years 5.88% 5.43% 37 of 141 Top 26%
10 years 8.15% 7.68% 16 of 74 Top 22%
- -------------------------------------------------------------
Past performance does not guarantee future results.
Municipal bonds registered modest gains compared with Treasuries during the
period, as municipal yield declines lagged those of their Treasury counterparts.
6 - Scudder Managed Municipal Bonds
Over the 12 months ended December 31, 1998, yields of 10-year Treasury bonds
declined more than one percentage point and their prices rose 8.6%, while yields
of 10-year AAA-rated municipal bonds declined one quarter of a percentage point,
and their prices rose 2%. We attribute much of this disparity in performance to
a heavy $284 billion supply of municipal bonds in 1998, the second highest
volume over the past 10 years.
A Shift in Focus
Scudder Managed Municipal Bonds' primary goals are to generate federally
tax-free income through investments in high-grade, long-term municipal
securities, while posting competitive total return. Over the past several years,
our primary strategy has been to purchase noncallable bonds to provide a
relatively stable income stream along with long-term price appreciation
potential. While we plan to retain and take full advantage of the Fund's large
existing position in noncallable bonds, we have recently felt that most
noncallable bonds available for purchase did not represent attractive value.
Therefore, over the course of the most recent 12-month period, the Fund shifted
its emphasis toward the purchase of premium "cushion" bonds -- bonds with high
coupons that compensate investors for the fact that they can be redeemed by
their issuer prior to maturity. In terms of maturity, we focused on 15- to
20-year bonds, because we believe they offer the best total return potential,
based on our outlook for interest rates and the yield differentials among bonds
across the maturity spectrum.
The Fund also continues its cautious stance on the market with respect to
interest rate risk, maintaining a neutral average duration similar to that of
the Lehman Brothers Municipal Bond Index. As of December 31, the Fund's average
duration was 6.9 years. (Duration gives relative weight to both principal and
interest payments through the life of a bond and has replaced average maturity
as the standard measure of interest rate sensitivity among professional
investors. Generally, the shorter the duration, the less sensitive a portfolio
will be to changes in interest rates.)
The Fund's overall level of portfolio quality remains high, with 70% of the
Fund's portfolio rated AAA or AA, or of equivalent quality. And diversification
remains an important strategy for the Fund, allowing us to spread risk over a
large number of sectors, maturities, and geographic areas. As of December 31,
1998, the Fund held securities issued in 26 states plus the District of Columbia
and the Virgin Islands. The Portfolio Summary on page provides more information
about the Fund's holdings, including quality, maturity, and sector
representation.
Economic Slowdown in 1999?
Shrinking corporate profit margins, a widening trade deficit, pressure on the
dollar, and troubles in the emerging markets could dampen U.S. economic growth
during the coming months. We do not doubt, however, the power of consumer and
investor confidence to overcome adversity, as has been shown throughout the
current economic expansion.
7 - Scudder Managed Municipal Bonds
With the outlook for the U.S. economy uncertain, the outlook for municipal bonds
is nonetheless very positive, as yields of municipals compared with Treasuries
are near historic highs. This ratio should eventually assume a more typical
level, which could mean significant yield reductions and price gains for
municipal bonds relative to U.S. Treasuries.
In terms of the day-to-day management of the Fund, we will continue to seek
competitive returns by purchasing 15- to 20-year premium cushion bonds over the
coming months. As always, we will refrain from making investment decisions based
on short-term market movements and search instead for the most attractively
valued bonds as we seek a high level of tax-free income for our shareholders.
Sincerely,
Your Portfolio Management Team
/s/Philip G. Condon /s/Ashton P. Goodfield
Philip G. Condon Ashton P. Goodfield
Scudder
Managed Municipal Bonds:
A Team Approach to Investing
Scudder Managed Municipal Bonds is managed by a team of Scudder Kemper
Investments, Inc. (the "Adviser") professionals, each of whom plays an
important role in the Fund's management process. Team members work together to
develop investment strategies and select securities for the Fund's portfolio.
They are supported by the Adviser's large staff of economists, research
analysts, traders, and other investment specialists who work in our offices
across the United States and abroad. We believe our team approach benefits
Fund investors by bringing together many disciplines and leveraging our
extensive resources.
Lead Portfolio Manager Philip G. Condon assumed responsibility for the Fund's
daily operations in 1998. Mr. Condon joined the Adviser in 1983 and has over
16 years of experience in the investment industry. Portfolio Manager Ashton
P. Goodfield joined the team in 1998 and the Adviser in 1986.
8 - Scudder Managed Municipal Bonds
Glossary of Investment Terms
BOND An interest-bearing security issued by the federal,
state, or local government or a corporation that
obligates the issuer to pay the bondholder a
specified amount of interest for a stated period --
usually a number of years -- and to repay the face
amount of the bond at its maturity date.
GENERAL OBLIGATION BOND A municipal bond backed by the "full faith and
credit" (including the taxing and further
borrowing power) of the city, state, or agency that
issues the bond. A general obligation bond is repaid
with the issuer's general revenue and borrowings.
INFLATION An overall increase in the prices of goods and
services, as happens when business and consumer
spending increases relative to the supply of goods
available in the marketplace -- in other words, when
too much money is chasing too few goods. High
inflation has a negative impact on the prices of
fixed-income securities.
MUNICIPAL BOND An interest-bearing debt security issued by a
state or local government entity.
NET ASSET VALUE (NAV) The price per share of a mutual fund based on
the sum of the market value of all the securities
owned by the fund divided by the number of
outstanding shares.
TAXABLE EQUIVALENT YIELD The level of yield a fully taxable instrument would
have to provide to equal that of a tax-free
municipal bond on an after-tax basis.
30-DAY SEC YIELD The standard yield reference for bond funds, based
on a formula prescribed by the SEC. This annualized
yield calculation reflects the 30-day average of the
income earnings of every holding in a given fund's
portfolio, net of expenses, assuming each is held to
maturity.
TOTAL RETURN The most common yardstick to measure theperformance
of a fund. Total return -- annualized or compound --
is based on a combination of share price changes
plus income and capital gain distributions, if any,
expressed as a percentage gain or loss in value.
(Sources: Scudder Kemper Investments, Inc.; Barron's Dictionary of
Finance and Investment Terms)
9 - Scudder Managed Municipal Bonds
Investment Portfolio as of December 31, 1998
Credit
Principal Rating (b) Market
Amount ($) (Unaudited) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Long-Term Municipal Investments 100.0%
- ------------------------------------------------------------------------------------------------------------------------------
Alaska
North Slope Borough, AK, General Obligation:
Capital Appreciation:
Series A, Zero Coupon, 6/30/2006 (c) ........................................ 7,000,000 AAA 5,087,740
Series B, Zero Coupon, 1/1/2003 (c) ......................................... 8,000,000 AAA 6,814,560
Series B, Zero Coupon, 6/30/2004 (c) ........................................ 15,000,000 AAA 11,999,100
Series B, Zero Coupon, 6/30/2005 (c) ........................................ 18,200,000 AAA 13,891,150
Arizona
Maricopa County, AZ, School District No. 28, Kyrene Elementary School, Series B,
Zero Coupon, 1/1/2006 (c) .................................................... 4,905,000 AAA 3,661,681
California
California General Obligation:
6.25%, 10/1/2007 (c) ......................................................... 4,000,000 AAA 4,631,440
6.25%, 4/1/2008 (c) .......................................................... 5,000,000 AAA 5,805,650
6.6%, 2/1/2009 (c) ........................................................... 15,600,000 AAA 18,692,537
California Housing Finance Agency, Multi-Unit Rental Housing Revenue, Series A,
7.7%, 8/1/2010 ............................................................... 1,000,000 A 1,099,080
California Pollution Control Financing Authority, Solid Waste Disposal Revenue,
Canadian Fibre of Riverside PJ, Series 1997 A, 9%, 7/1/2019 .................. 12,000,000 SKI 12,572,640
California Statewide Community Development Authority, Certificate of
Participation, California Lutheran Homes, 5.5%, 11/15/2008 ................... 2,250,000 A 2,454,435
Foothill Eastern Transportation Corridor Agency, CA, Toll Road Revenue,
Senior Lien, Series A:
Step-up Coupon, 0% to 1/1/2005, 7.05% to 1/1/2009 ........................... 5,000,000 BBB 4,110,450
Step-up Coupon, 0% to 1/1/2005, 7.1% to 1/1/2011 ............................ 4,000,000 BBB 3,366,360
Step-up Coupon, 0% to 1/1/2005, 7.1% to 1/1/2012 ............................ 4,000,000 BBB 3,349,440
Step-up Coupon, 0% to 1/1/2005, 7.15% to 1/1/2014 ........................... 6,250,000 BBB 5,196,438
Zero Coupon, 1/1/2015 ....................................................... 11,000,000 BBB 4,807,990
Los Angeles County, CA, Certificate of Participation, Disney Parking Project:
Zero Coupon, 9/1/2007 ........................................................ 4,030,000 A 2,696,594
Zero Coupon, 9/1/2009 ........................................................ 5,425,000 A 3,240,407
Roseville, CA, Unified High School District, General Obligation:
Series B, Zero Coupon, 8/1/2010 (c) .......................................... 1,830,000 AAA 1,089,198
Series B, Zero Coupon, 8/1/2015 (c) .......................................... 1,000,000 AAA 443,030
The accompanying notes are an integral part of the financial statements.
10 - Scudder Managed Municipal Bonds
Credit
Principal Rating (b) Market
Amount ($) (Unaudited) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
San Diego, CA, Certificate of Participation, Water Utility Funding Revenue,
Series 1998, 5.375%, 8/1/2013 (c) ............................................ 2,155,000 AAA 2,296,066
San Joaquin, CA, Certificate of Participation, County Public Facilities Project,
5.5%, 11/15/2013 (c) ......................................................... 3,895,000 AAA 4,283,059
San Joaquin Hills, CA, Transportation Corridor Agency, Toll Road Revenue,
Capital Appreciation, Refunding, Series 1997 A, Zero Coupon, 1/15/2012 (c) ... 2,000,000 AAA 1,087,180
Colorado
Castle Rock Ranch, CO, Public Improvements Authority, Public Facilities Revenue,
Series 1996, 6.25%, 12/1/2017 ................................................ 4,820,000 AA 5,319,738
Colorado Housing Finance Authority Revenue:
8.1%, 10/1/2005 .............................................................. 2,030,000 AA 2,282,958
8.15%, 10/1/2006 ............................................................. 2,145,000 AA 2,419,860
8.25%, 10/1/2010 ............................................................. 1,940,000 AA 2,195,168
8.25%, 10/1/2011 ............................................................. 1,680,000 AA 1,900,970
8.25%, 10/1/2012 ............................................................. 1,945,000 AA 2,202,751
Multi-Family Mortgage:
Series A, 8.15%, 10/1/2007 .................................................. 2,320,000 AA 2,617,285
Series A, 8.2%, 10/1/2008 ................................................... 2,510,000 AA 2,835,873
Series A, 8.2%, 10/1/2009 ................................................... 2,725,000 AA 3,078,787
Denver, CO, Urban Renewal Authority, Tax Increment Revenue,
Pavilions-Convention, AMT, Series 1989, 7.5%, 9/1/2004 ....................... 1,000,000 SKI 1,084,710
District of Columbia
District of Columbia, Certificate of Participation:
6.875%, 1/1/2003 ............................................................. 1,780,000 BB 1,860,331
7.3%, 1/1/2013 ............................................................... 1,000,000 BB 1,075,090
District of Columbia, General Obligation:
Series A, 5.875%, 6/1/2005 (c) ............................................... 3,300,000 AAA 3,604,458
Series B, Zero Coupon, 6/1/2003 (c) .......................................... 2,000,000 AAA 1,675,420
Series B3, 5.3%, 6/1/2005 (c) ................................................ 1,350,000 AAA 1,431,324
Series B3, 5.5%, 6/1/2007 (c) ................................................ 1,000,000 AAA 1,081,170
Series B3, 5.5%, 6/1/2008 (c) ................................................ 3,225,000 AAA 3,499,061
District of Columbia, Georgetown University, Series A, 7.25%, 4/1/2011 ......... 2,965,000 A 3,033,254
District of Columbia, Water and Sewer Authority, Public Utility Revenue, 6%,
10/1/2013 (c) ................................................................ 3,630,000 AAA 4,133,118
Georgia
Burke County, GA, Development Authority, Pollution Control Revenue, Votgle
Project, 7.7%, 1/1/2006 (c) (f) .............................................. 5,000,000 AAA 5,854,550
The accompanying notes are an integral part of the financial statements.
11 - Scudder Managed Municipal Bonds
Credit
Principal Rating (b) Market
Amount ($) (Unaudited) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------
Fulton County School District, GA, General Obligation, Series 1998, 5.375%,
1/1/2016 ..................................................................... 2,000,000 AA 2,144,680
Georgia Municipal Electric Authority, Power Revenue:
Fourth Crossover, Project No. 1, Series 1997 X, 6.5%, 1/1/2012 (c) ........... 3,500,000 AAA 4,160,450
Series V, 6.5%, 1/1/2012 (c) ................................................. 5,000,000 AAA 5,943,500
Illinois
Central Lake County, IL, Joint Action Water Agency, Refunding, Zero Coupon,
5/1/2004 (c) ................................................................. 2,445,000 AAA 1,966,049
Chicago, IL, General Obligation:
Board of Education, Series A, 6.25%, 1/1/2015 (c) ............................ 2,725,000 AAA 3,182,855
Emergency Telephone Systems, 5.6%, 1/1/2009 (c) .............................. 7,200,000 AAA 7,935,840
Series 1996 A2, 6.25%, 1/1/2014 (c) .......................................... 3,750,000 AAA 4,388,363
Chicago, IL, Motor Fuel Tax Revenue, 5.375%, 1/1/2014 (c) ...................... 5,000,000 AAA 5,382,750
Chicago, IL, Public Building Commission:
Building Revenue, Series A, 5.25%, 12/1/2008 (c) ............................. 2,655,000 AAA 2,863,471
Capital Appreciation, ETM, Series 1990 A, Zero Coupon, 1/1/2008 (c)* ......... 4,000,000 AAA 2,727,520
Chicago, IL, Wastewater Transmission Revenue, 5.375%, 1/1/2013 (c) ............. 3,215,000 AAA 3,470,110
Du-Page, IL, Industrial Development Revenue, Weyerhaeuser Company Project,
Series 1983, 8.65%, 11/1/2008 ................................................ 3,600,000 SKI 3,658,680
Hoffman Estates, IL, Tax Increment Revenue, Capital Appreciation, Junior Lien,
Series 1991, Zero Coupon, 5/15/2006 .......................................... 8,500,000 A 6,175,845
Illinois Development Finance Authority, Commonwealth Edison, Refunding, 5.85%,
1/15/2014 (c) ................................................................ 5,000,000 AAA 5,658,950
Illinois Educational Facilities Authority, Loyola University, Zero Coupon,
7/1/2005 (c) ................................................................. 3,100,000 AAA 2,361,549
Illinois Health Facilities Authority:
Centegra Health System, 5.2%, 9/1/2012 ....................................... 1,000,000 SKI 1,019,130
Delnor Community Hospital, 5.5%, 5/15/2013 (c) ............................... 1,500,000 AAA 1,594,140
Memorial Medical Center-- Springfield, 5.25%, 10/1/2009 (c) .................. 1,725,000 AAA 1,847,561
University of Chicago Hospital, Refunding, Series A, 5.5%, 8/15/2008 (c) ..... 2,500,000 AAA 2,659,850
Illinois State Sales Tax Revenue, Series P, 6.5%, 6/15/2013 .................... 2,100,000 AAA 2,495,976
Northern Illinois University, Board of Regents:
Zero Coupon, 4/1/2005 (c) .................................................... 1,865,000 AAA 1,435,696
Zero Coupon, 10/1/2005 (c) ................................................... 1,865,000 AAA 1,405,949
Zero Coupon, 4/1/2006 (c) .................................................... 1,865,000 AAA 1,367,101
Zero Coupon, 10/1/2006 (c) ................................................... 1,865,000 AAA 1,338,119
Zero Coupon, 4/1/2007 (c) .................................................... 1,865,000 AAA 1,303,430
The accompanying notes are an integral part of the financial statements.
12 - Scudder Managed Municipal Bonds
Credit
Principal Rating (b) Market
Amount ($) (Unaudited) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------
Zero Coupon, 10/1/2007 (c) ................................................... 1,865,000 AAA 1,275,436
Oak Lawn, IL, Water and Sewer Revenue:
Zero Coupon, 10/1/2003 (c) ................................................... 1,295,000 AAA 1,068,932
Zero Coupon, 10/1/2004 (c) ................................................... 1,295,000 AAA 1,023,736
Zero Coupon, 10/1/2005 (c) ................................................... 1,295,000 AAA 976,249
Zero Coupon, 10/1/2006 (c) ................................................... 1,295,000 AAA 929,150
Rosemont, IL, Tax Increment Revenue, Zero Coupon, 12/1/2004 (c) ................ 6,000,000 AAA 4,710,960
Rosemont, IL, Tax Increment-3, Series C, Zero Coupon, 12/1/2005 (c) ............ 7,060,000 AAA 5,285,257
State University Retirement System, IL, Special Revenue, Zero Coupon,
10/1/2005 (c) ................................................................ 7,000,000 AAA 5,277,020
Will County, IL, Capital Appreciation, School District No. 201-U, Zero Coupon,
12/15/2006 (c) ............................................................... 3,725,000 AAA 2,649,220
Winnebago County, IL, School District No. 122:
6.55%, 6/1/2009 (c) .......................................................... 1,675,000 AAA 1,983,435
6.55%, 6/1/2010 (c) .......................................................... 1,825,000 AAA 2,171,568
Indiana
Indiana Health Facilities Financing Authority, Hospital Revenue:
Series 1990 A, 6%, 7/1/2003 (c) .............................................. 230,000 AAA 248,970
Series 1990 A, 6%, 7/1/2004 (c) .............................................. 240,000 AAA 262,498
Series 1990 A, 6%, 7/1/2005 (c) .............................................. 255,000 AAA 281,178
Series 1990 A, 6%, 7/1/2006 (c) .............................................. 270,000 AAA 299,892
Series 1990 A, 6%, 7/1/2007 (c) .............................................. 285,000 AAA 318,761
Series 1990 A, 6%, 7/1/2009 (c) .............................................. 165,000 AAA 186,638
Series 1990 A, 6%, 7/1/2010 (c) .............................................. 175,000 AAA 198,620
Series 1990 A, 6%, 7/1/2011 (c) .............................................. 185,000 AAA 210,454
Series 1990 A, 6%, 7/1/2012 (c) .............................................. 190,000 AAA 216,222
Series 1990 A, 6%, 7/1/2013 (c) .............................................. 200,000 AAA 227,454
Series 1990 A, 6%, 7/1/2014 (c) .............................................. 215,000 AAA 244,631
Series 1990 A, 6%, 7/1/2015 (c) .............................................. 225,000 AAA 255,395
Series 1990 A, 6%, 7/1/2016 (c) .............................................. 235,000 AAA 267,082
Series 1990 A, 6%, 7/1/2017 (c) .............................................. 250,000 AAA 283,698
Series 1990 A, 6%, 7/1/2018 (c) .............................................. 265,000 AAA 300,444
Tax Exempt Custodian Receipts Refund:
Series 1997 A, 6%, 7/1/2001 (c) ............................................. 205,000 AAA 216,060
Series 1997 A, 6%, 7/1/2002 (c) ............................................. 215,000 AAA 229,783
Series 1997 A, 6%, 7/1/2008 (c) ............................................. 160,000 AAA 179,835
The accompanying notes are an integral part of the financial statements.
13 - Scudder Managed Municipal Bonds
Credit
Principal Rating (b) Market
Amount ($) (Unaudited) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Indiana Municipal Power Agency, Power Supply System:
Series B, 6%, 1/1/2012 (c) ................................................... 1,750,000 AAA 2,006,235
Series B, 5.5%, 1/1/2016 (c) ................................................. 8,960,000 AAA 9,661,568
Indiana Transportation Finance Authority, Highway Revenue, Series A, 5.75%,
6/1/2012 (c) ................................................................. 5,000,000 AAA 5,600,550
Rockport, IN, Pollution Control Revenue, Series B, Refunding, 7.6%, 3/1/2016 ... 4,500,000 BBB 4,827,015
Louisiana
Bastrop, LA, Industrial Development Board, Pollution Control Revenue,
International Paper Co. Project, 6.9%, 3/1/2007 .............................. 10,250,000 A 11,072,973
New Orleans, LA, General Obligation, Zero Coupon, 9/1/2005 (c) ................. 2,500,000 AAA 1,899,900
Maryland
Northeast Maryland Waste Disposal Authority, Southwest Resource Recovery System
Revenue:
6.9%, 1/1/2000 (c) .......................................................... 1,595,000 AAA 1,653,074
7.2%, 1/1/2006 (c) .......................................................... 3,440,000 AAA 3,978,945
7.2%, 1/1/2007 (c) .......................................................... 3,390,000 AAA 3,921,111
Massachusetts
Massachusetts Bay Transportation Authority, General Transportation System,
Series B, 6.2%, 3/1/2016 ..................................................... 2,500,000 AA 2,918,175
Massachusetts College Building Authority Project:
Series A, 7.5%, 5/1/2010 ..................................................... 4,110,000 A 5,231,619
Series A, 7.5%, 5/1/2014 ..................................................... 3,750,000 A 4,874,325
Massachusetts Health & Educational Facilities Authority, Massachusetts General
Hospital, Series F, 6.25%, 7/1/2012 (c) ...................................... 3,000,000 AAA 3,488,430
Massachusetts Water Resource Authority:
General Revenue, Series C, 6%, 12/1/2011 ..................................... 10,000,000 A 11,457,900
Series A, 6.5%, 7/15/2009 .................................................... 2,625,000 A 3,094,350
Series A, 6.5%, 7/15/2019 .................................................... 13,445,000 A 16,134,000
Michigan
Detroit, MI, General Obligation, City School District, Series 1998 C, 5.25%,
5/1/2014 (c) ................................................................. 1,000,000 AAA 1,063,730
Michigan Hospital Finance Authority, Hospital Revenue, Sinai Hospital, Series
1995, 6%, 1/1/2008 ........................................................... 3,000,000 A 3,311,610
Michigan State Trunk Line, Refunding, Series 1998 A, 5.25%, 11/1/2013 .......... 3,000,000 AA 3,201,780
Wayne Charter County, MI, Airport Revenue, Series 1998 B, 5.25%, 12/1/2012 (c) . 3,165,000 AAA 3,345,057
The accompanying notes are an integral part of the financial statements.
14 - Scudder Managed Municipal Bonds
Credit
Principal Rating (b) Market
Amount ($) (Unaudited) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Montana
Montana Board Housing Revenue, Capital Appreciation, Single-Family Revenue,
Series A, Zero Coupon, 6/1/2010 .............................................. 2,085,000 AA 593,766
Nebraska
Scotts Bluff County Hospital Authority No. 1, West Medical Center, Series 1998,
5.125%, 11/15/2019 ........................................................... 1,375,000 A- 1,341,354
Nevada
Nevada State Housing Division, Single Family Mortgage Revenue, Series R, 5.95%,
10/1/2011 .................................................................... 5,050,000 AA 5,309,873
New Hampshire
New Hampshire State Housing Finance Authority, Single Family Revenue, AMT,
Series 1997 C, 5.9%, 7/1/2019 ................................................ 1,720,000 AA 1,899,809
New York
Long Island Power Authority, Electric Systems Revenue, Series 1998 A, 5%,
12/1/2018 (c) ................................................................ 2,000,000 AAA 1,995,160
Metropolitan Transportation Authority of New York, Transit Facilities Revenue:
7%, 7/1/2002 ................................................................. 1,595,000 BBB 1,740,257
Series 1998 C, 5.125%, 7/1/2013 (c) .......................................... 3,500,000 AAA 3,631,810
Series O, 5.75%, 7/1/2013 (c) ................................................ 6,775,000 AAA 7,581,361
New York City, NY, General Obligation:
Prerefunded, Series 1990 H, 7.2%, 8/1/2001 (c) (d) ........................... 255,000 AAA 273,755
Prerefunded, Series H, 7%, 2/1/2005 (d) ...................................... 3,410,000 AAA 3,785,134
Series 1995 E, 6.6%, 8/1/2004 ................................................ 6,500,000 A 7,319,910
Series 1995 E, 6.5%, 2/15/2005 ............................................... 7,000,000 A 7,900,270
Series 1996 G, 6.75%, 2/1/2009 ............................................... 2,000,000 A 2,386,360
Series A, 6.375%, 8/1/2004 ................................................... 5,000,000 A 5,449,400
Series B, 6.75%, 8/15/2003 ................................................... 3,000,000 A 3,348,600
Series B, 6%, 8/15/2004 ...................................................... 3,425,000 A 3,760,890
Series B, 6.1%, 8/15/2005 .................................................... 3,510,000 A 3,912,035
Series H, 7.2%, 8/1/2001 (c) ................................................. 2,005,000 AAA 2,146,593
Unrefunded Balance, Series 1989 D, 7%, 8/1/2002 (c) .......................... 280,000 AAA 290,133
Unrefunded Balance, Series 1989 D, 7%, 8/1/2002 (c) .......................... 935,000 AAA 968,838
Unrefunded Balance, Series 1989 D, 7%, 8/1/2002 .............................. 1,125,000 A 1,164,713
Unrefunded Balance, Series H, 7%, 2/1/2005 ................................... 485,000 A 533,466
The accompanying notes are an integral part of the financial statements.
15 - Scudder Managed Municipal Bonds
Credit
Principal Rating (b) Market
Amount ($) (Unaudited) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
New York State Dormitory Authority, City University System, Consolidated Revenue:
Series A, 5.75%, 7/1/2006 .................................................... 4,000,000 BBB 4,392,680
Series A, 5.75%, 7/1/2006 (c) ................................................ 3,000,000 AAA 3,312,750
Series E, 5.75%, 7/1/2006 .................................................... 3,085,000 BBB 3,387,854
Series F, 5.375%, 7/1/2007 ................................................... 2,000,000 BBB 2,156,160
New York State Medical Care Facilities, Finance Agency Revenue, Mount Sinai
Hospital, 5.95%, 8/15/2009 (c) ............................................... 3,105,000 AAA 3,276,769
New York State Thruway Authority, Service Contract Revenue, Series 1998 A2,
5.25%, 4/1/2012 (c) .......................................................... 2,000,000 AAA 2,117,480
New York Triborough Bridge and Tunnel Authority, Special Obligation, Series
1998 A, 5.125%, 1/1/2013 (c) ................................................. 8,605,000 AAA 9,002,723
Onondaga County, NY, Industrial Development Agency, Solid Waste Disposal
Facility, Solvay Paperboard LLC, Series 1998, 7%, 11/1/2030 .................. 3,500,000 NR 3,534,860
Port Authority of New York & New Jersey, Special Obligation Revenue, Series
1996, 7%, 10/1/2007 .......................................................... 2,000,000 SKI 2,232,420
North Carolina
North Carolina Eastern Municipal Power Agency, Series C, 7%, 1/1/2007 .......... 7,965,000 A 9,152,024
North Carolina Municipal Power Agency No. 1, Catawba Electric Revenue:
7.25%, 1/1/2007 .............................................................. 6,500,000 A 7,663,500
5.25%, 1/1/2009 (c) .......................................................... 8,500,000 AAA 9,143,535
Ohio
Ohio Water Development Authority, Pollution Control Revenue, Ohio Edison
Company Project, Series 1989 A, 7.625%, 7/1/2023 ............................. 4,890,000 BBB 5,046,431
Rhode Island
Rhode Island Convention Center Authority, Series B, 5%, 5/15/2020 (c) .......... 14,000,000 AAA 13,782,440
Tennessee
Knox County, TN, Health, Education & Housing Facilities Board, Hospital
Facilities Revenue, Fort Sanders Alliance, 7.25%, 1/1/2009 (c) ............... 3,250,000 AAA 3,997,305
Texas
Austin, TX, Combined Utility Systems Revenue, Series A, Zero Coupon,
5/15/2003 (c) ................................................................ 2,890,000 AAA 2,425,288
Austin, TX, Independent School District, Series 1998, 5%, 8/1/2015 (c) ......... 2,000,000 AAA 2,062,440
Dallas-Fort Worth, TX, Airport Revenue:
7.8%, 11/1/2007 (c) .......................................................... 2,390,000 AAA 2,861,212
7.375%, 11/1/2009 (c) ........................................................ 4,500,000 AAA 5,284,305
American Airlines, AMT, 7.5%, 11/1/2025 ...................................... 14,250,000 BBB 15,274,005
Harris County, TX, AMT, Series 1998, 5.5%, 8/15/2006 (c) ....................... 3,070,000 AAA 3,308,754
The accompanying notes are an integral part of the financial statements.
16 - Scudder Managed Municipal Bonds
Credit
Principal Rating (b) Market
Amount ($) (Unaudited) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Harris County, TX, Health Facilities, Texas Medical Center Project, Series 1996,
6.25%, 5/15/2010 (c) ......................................................... 3,000,000 AAA 3,485,220
Harris County, TX, Toll Road Authority, Zero Coupon, 8/15/2004 (c) ............. 4,050,000 AAA 3,223,719
Houston, TX, Water and Sewer System Authority:
Series C, Zero Coupon, 12/1/2005 (c) ......................................... 15,000,000 AAA 11,252,100
Series C, Zero Coupon, 12/1/2007 (c) ......................................... 3,400,000 AAA 2,314,482
Houston, TX, Water Conveyance System Contract, Certificate of Participation,
Series J, 6.125%, 12/15/2005 (c) ............................................. 2,500,000 AAA 2,788,575
Lower Colorado River Authority, TX, Refunding, Zero Coupon, 1/1/2003 (c) ....... 8,900,000 AAA 7,581,198
San Antonio, TX, Airport Systems Revenue, Refunding, 7%, 7/1/2002 (c) .......... 1,695,000 AAA 1,870,026
San Antonio, TX, Electric and Gas Revenue, Refunding:
Series A, 5.25%, 2/1/2014 .................................................... 2,000,000 AA 2,088,640
Series A, Zero Coupon, 2/1/2005 (c) .......................................... 12,000,000 AAA 9,318,960
Texas Municipal Power Agency, Series 1989, Zero Coupon, 9/1/2012 (c) ........... 5,150,000 AAA 2,696,849
Utah
Intermountain Power Agency, UT, Power Supply Revenue:
Series 1993, 5.55%, 7/1/2011 ................................................. 3,000,000 A 3,173,820
Series C, 5.25%, 7/1/2014 .................................................... 4,000,000 AA 4,206,440
Salt Lake City, UT, Hospital Revenue, Intermountain Health Care, Inversed
Inflow, 7.1%, 2/15/2012** .................................................... 1,500,000 BBB- 1,719,150
Utah Associated Municipal Power System, Refunding, Hunter Project, Zero Coupon,
7/1/2003 (c) ................................................................. 5,700,000 AAA 4,767,423
Utah Intermountain Power Agency, Power Supply Revenue, Refunded, Series A,
5.25%, 7/1/2014 (c) .......................................................... 7,000,000 AAA 7,272,090
Virgin Islands
Virgin Islands Public Finance Authority Revenue, Matching Fund Loan Notes,
Senior Lien, Series C, 5.5%, 10/1/2008 ....................................... 1,500,000 BBB- 1,591,320
Virginia
Virginia Beach, VA, Development Authority, VA Beach General Hospital Project,
5.125%, 2/15/2018 (c) ........................................................ 3,000,000 AAA 3,056,430
Virginia Peninsula Port Authority, Riverside Health System Project, Refunded,
5.25%, 7/1/2012 (e) .......................................................... 2,735,000 AA 2,851,374
Washington
Seattle, WA, Port Revenue:
Series 1998, 5.375%, 8/1/2013 (c) ............................................ 1,460,000 AAA 1,547,045
Series 1998, 5.375%, 8/1/2014 (c) ............................................ 1,805,000 AAA 1,903,463
The accompanying notes are an integral part of the financial statements.
17 - Scudder Managed Municipal Bonds
Credit
Principal Rating (b) Market
Amount ($) (Unaudited) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
Washington Health Care Facilities Authority:
Empire Health Services-- Spokane, 5.8%, 11/1/2008 (c) ........................ 4,865,000 AAA 5,431,627
Franciscan Health System-- St. Joseph's Hospital:
5.4%, 1/1/2007 (c) .......................................................... 2,000,000 AAA 2,172,980
5.4%, 1/1/2008 (c) .......................................................... 2,645,000 AAA 2,889,134
Washington Public Power Supply System:
Nuclear Project No. 1, Refunding:
Series 1990 B, 7.25%, 7/1/2009 (c) .......................................... 12,350,000 AAA 15,161,478
Series A, Zero Coupon, 7/1/2007 (c) ......................................... 8,570,000 AAA 5,939,610
Nuclear Project No. 2, Refunding:
Series A, 7.25%, 7/1/2006 ................................................... 7,000,000 AA 8,279,880
Series A, 6%, 7/1/2007 (c) .................................................. 7,000,000 AAA 7,829,220
Nuclear Project No. 3, Refunding:
Series 1993 B, 5.65%, 7/1/2008 (c) .......................................... 3,000,000 AAA 3,293,520
Series A, Zero Coupon, 7/1/2006 (c) ......................................... 1,380,000 AAA 1,003,012
Series B, 7.375%, 7/1/2004 .................................................. 750,000 AA 800,843
Series B, Prerefunded, 7.25%, 7/1/2015 ...................................... 5,000,000 AAA 5,296,650
Series B, Zero Coupon, 7/1/2002 (c) ......................................... 11,925,000 AAA 10,399,316
Series B, Zero Coupon, 7/1/2006 (c) ......................................... 5,555,000 AAA 4,037,485
Washington State, General Obligation, Series 1998 A, 5.25%, 7/1/2012 ........... 4,210,000 AA 4,436,919
Wisconsin
Green Bay, WI, Industrial Development Revenue, Weyerhaeuser Company Project,
Series A, 9%, 9/1/2006 ....................................................... 1,700,000 SKI 1,712,546
Wisconsin State Health and Educational Facilities Authority, Hospital Sisters
Inc., 5.375%, 6/1/2013 (c) ................................................... 1,500,000 AAA 1,575,975
Wyoming
Wyoming Community Development Authority, Single Family Mortgage Revenue,
Series A, 5.85%, 6/1/2013 .................................................... 3,000,000 AA 3,118,350
- ------------------------------------------------------------------------------------------------------------------------------
Total Long-Term Municipal Investments (Cost $653,295,090) 731,705,881
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $653,295,090) (a) 731,705,881
- ------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
18 - Scudder Managed Municipal Bonds
(a) The cost for federal income tax purposes was $653,295,090. At December 31,
1998, gross and net unrealized appreciation for all securities based on
tax cost was $78,410,791. This consisted of aggregate gross unrealized
appreciation for all securities in which there was an excess of market
value over tax cost of $78,431,851 and aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost
over market value of $21,060.
(b) All of the securities held have been determined by the Adviser to be of
the appropriate credit quality as required by the Fund's investment
objectives. Credit ratings shown are assigned by either Standard & Poor's
Ratings Group, Moody's Investors Service, Inc. or Fitch Investors Service,
Inc. Securities rated by Scudder Kemper Investments (SKI) and unrated
securities (NR) have been determined to be of comparable quality to rated
securities.
(c) Bond is insured by one of these companies: AMBAC, Capital Guaranty, FGIC,
FSA or MBIA/BIG.
(d) Prerefunded: Bonds which are prerefunded are collateralized by U.S.
Treasury securities which are held in escrow and are used to pay principal
and interest on tax-exempt issue and to retire the bonds in full at the
earliest refunding date.
(e) When-issued or forward delivery securities (See Note A in Notes to
Financial Statements).
(f) At December 31, 1998, these securities, in part or in whole, have been
segregated to cover when-issued or forward delivery securities.
* ETM: Bonds bearing the description ETM (escrowed to maturity) are
collateralized by U.S. Treasury securities which are held in escrow by a
trustee and used to pay principal and interest on bonds so designated.
** Inverse floating rate notes are instruments whose yields may change based
on the change in the relationship between long-term and short-term
interest rates and which exhibit added interest rate sensitivity compared
to other bonds with a similar maturity. These securities are shown at
their rates as of December 31, 1998.
AMT: Alternative minium tax
The accompanying notes are an integral part of the financial statements.
19 - Scudder Managed Municipal Bonds
Financial Statements
Statement of Assets and Liabilities
as of December 31, 1998
Assets
- ----------------------------------------------------------------------------------------------------------------------------
Investments, at market (identified cost $653,295,090) ................ $ 731,705,881
Cash ................................................................. 16,232
Receivable for investments sold ...................................... 390,000
Interest receivable .................................................. 11,077,217
Receivable for Fund shares sold ...................................... 338,590
Other assets ......................................................... 15,543
----------------
Total assets ......................................................... 743,543,463
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Dividends payable .................................................... 1,445,774
Payable for investments purchased .................................... 2,845,986
Notes payable ........................................................ 1,622,000
Payable for Fund shares redeemed ..................................... 166,062
Accrued management fee ............................................... 315,123
Other payables and accrued expenses .................................. 120,974
----------------
Total liabilities .................................................... 6,515,919
-------------------------------------------------------------------------------------------
Net assets, at market value $ 737,027,544
-------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Net unrealized appreciation (depreciation) on investments ............ 78,410,791
Accumulated net realized loss ........................................ (5,141,126)
Paid-in capital ...................................................... 663,757,879
-------------------------------------------------------------------------------------------
Net assets, at market value 737,027,544
-------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($737,027,544 / 80,293,360 outstanding shares of beneficial
interest, $.01 par value, unlimited number of shares ----------------
authorized) ....................................................... $9.18
----------------
The accompanying notes are an integral part of the financial statements.
20 - Scudder Managed Municipal Bonds
Statement of Operations
year ended December 31, 1998
Investment Income
- ----------------------------------------------------------------------------------------------------------------------------
Income:
Interest ............................................................. $ 40,966,157
----------------
Expenses:
Management fee ....................................................... 3,760,257
Services to shareholders ............................................. 442,967
Custodian and accounting fees ........................................ 158,973
Trustees' fees and expenses .......................................... 37,351
Reports to shareholders .............................................. 36,390
Auditing ............................................................. 48,806
Registration fees .................................................... 31,111
Legal ................................................................ 9,662
Other ................................................................ 26,949
----------------
4,552,466
-------------------------------------------------------------------------------------------
Net investment income 36,413,691
-------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments .......................................................... 4,261,533
Futures .............................................................. (188,900)
----------------
4,072,633
----------------
Net unrealized appreciation (depreciation) during the period on:
Investments .......................................................... 3,939,113
Futures .............................................................. 128,825
----------------
4,067,938
-------------------------------------------------------------------------------------------
Net gain (loss) on investment transactions 8,140,571
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 44,554,262
-------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
21 - Scudder Managed Municipal Bonds
Statements of Changes in Net Assets
Years Ended December 31,
Increase (Decrease) in Net Assets 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Operations:
Net investment income ......................................... $ 36,413,691 $ 36,962,574
Net realized gain (loss) from investment transactions ......... 4,072,633 4,446,931
Net unrealized appreciation (depreciation) on
investment transactions during the period .................. 4,067,938 22,559,064
---------------- ----------------
Net increase (decrease) in net assets resulting from
operations ................................................. 44,554,262 63,968,569
---------------- ----------------
Distributions to shareholders from:
Net investment income ......................................... (36,413,691) (36,962,574)
---------------- ----------------
Net realized gains ............................................ (3,996,751) (3,989,109)
---------------- ----------------
Fund share transactions:
Proceeds from shares sold ..................................... 83,789,509 65,569,325
Net asset value of shares issued to shareholders in
reinvestment of distributions .............................. 21,988,411 21,815,625
Cost of shares redeemed ....................................... (101,202,201) (119,516,692)
---------------- ----------------
Net increase (decrease) in net assets from Fund share
transactions ............................................... 4,575,719 (32,131,742)
---------------- ----------------
Increase (decrease) in net assets ............................. 8,719,539 (9,114,856)
Net assets at beginning of period ............................. 728,308,005 737,422,861
---------------- ----------------
Net assets at end of period ................................... $ 737,027,544 $ 728,308,005
---------------- ----------------
Other Information
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period ..................... 79,790,697 83,437,562
---------------- ----------------
Shares sold ................................................... 9,148,915 7,354,111
Shares issued to shareholders in reinvestment of
distributions .............................................. 2,402,379 2,441,767
Shares redeemed ............................................... (11,048,631) (13,442,743)
---------------- ----------------
Net increase (decrease) in Fund shares ........................ 502,663 (3,646,865)
---------------- ----------------
Shares outstanding at end of period ........................... 80,293,360 79,790,697
---------------- ----------------
The accompanying notes are an integral part of the financial statements.
22 - Scudder Managed Municipal Bonds
Financial Highlights
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
Years Ended December 31,
1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------
Net asset value, beginning of period ........................ $ 9.13 $ 8.84 $ 8.94 $ 8.07 $ 9.09
------------------------------------------------------------
Income from investment operations:
Net investment income ....................................... .45 .46 .45 .48 .46
Net realized and unrealized gain (loss) on investment
transactions .............................................. .10 .34 (.10) .87 (1.00)
------------------------------------------------------------
Total from investment operations ............................ .55 .80 .35 1.35 (.54)
------------------------------------------------------------
Less distributions:
From net investment income .................................. (.45) (.46) (.45) (.48) (.46)
From net realized gains on investment transactions .......... (.05) (.05) -- -- (.02)
------------------------------------------------------------
Total distributions ......................................... (.50) (.51) (.45) (.48) (.48)
------------------------------------------------------------
------------------------------------------------------------
Net asset value, end of period .............................. $ 9.18 $ 9.13 $ 8.84 $ 8.94 $ 8.07
------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) ............................................ 6.23 9.29 4.15 17.12 (6.04)
Ratios and Supplemental Data
Net assets, end of period ($ millions) ...................... 737 728 737 775 709
Ratio of operating expenses to average net assets (%) ....... .62 .64 .63 .63 .63
Ratio of net investment income to average net assets (%) .... 4.96 5.12 5.20 5.59 5.41
Portfolio turnover rate (%) ................................. 8.6 9.8 12.2 17.8 33.7
23 - Scudder Managed Municipal Bonds
Notes to Financial Statements
A. Significant Accounting Policies
Scudder Managed Municipal Bonds (the "Fund") is organized as a diversified
series of Scudder Municipal Trust, a Massachusetts business trust, registered
under the Investment Company Act of 1940, as amended, as an open-end management
investment company.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
Security Valuation. Portfolio debt securities with remaining maturities greater
than sixty days are valued by pricing agents approved by the Officers of the
Fund, whose quotations reflect broker/dealer-supplied valuations and electronic
data processing techniques. If the pricing agents are unable to provide such
quotations, the most recent bid quotation supplied by a bona fide market maker
shall be used. All other debt securities are valued at their fair value as
determined in good faith by the Valuation Committee of the Board of Trustees.
Money market instruments purchased with an original maturity of sixty days or
less are valued at amortized cost.
When-issued and Forward Delivery Securities. The Fund may purchase securities on
a when-issued or forward delivery basis, for payment and delivery at a later
date. The price of such securities, which may be expressed in yield terms, is
fixed at the time the commitment to purchase is made, but delivery and payment
take place at a later time. At the time the Fund makes the commitment to
purchase a security on a when-issued or forward delivery basis, it will record
the transaction and reflect the value of the security in determining its net
asset value. During the period between purchase and settlement, no payment is
made by the Fund to the issuer and 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. The Fund will establish a segregated account in which it will
maintain cash and liquid debt securities equal in value to commitments for
when-issued or forward delivery securities.
Futures Contracts. A futures contract is an agreement between a buyer or seller
and an established futures exchange or its clearinghouse in which the buyer or
seller agrees to take or make a delivery of a specific amount of an item at a
specified price on a specific date (settlement date).
Upon entering into a futures contract, the Fund is required to deposit with a
financial intermediary an amount ("initial margin") equal to a certain
percentage of the face value indicated in the futures contract. Subsequent
payments ("variation margin") are made or received by the Fund each day,
dependent on the daily fluctuations in the value of the underlying security, and
are recorded for financial reporting purposes as unrealized gains or losses by
the Fund. When entering into a closing transaction, the Fund will realize a gain
or loss equal to the difference between the value of the futures contract to
sell and the futures contract to buy. Futures contracts are valued at the most
recent settlement price.
Certain risks may arise upon entering into futures contracts including the risk
that an illiquid secondary market will limit the Fund's ability to close out a
futures contract prior to the settlement date and that a change in the value of
a futures contract may not correlate exactly with changes in the value of the
securities hedged. When utilizing futures contracts to hedge the Fund gives up
the opportunity to profit from favorable price movements in the hedged positions
during the term of the contract.
Amortization and Accretion. All premiums and original issue discounts are
amortized/accreted for both tax and financial reporting purposes.
24 - Scudder Managed Municipal Bonds
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code of 1986, as amended, which are applicable to regulated
investment companies and to distribute all of its taxable and tax-exempt income
to its shareholders. The Fund accordingly paid no federal income taxes and no
provision for federal income taxes was required.
Distribution of Income and Gains. All of the net investment income of the Fund
is declared as a dividend to shareholders of record as of the close of business
each day and is paid to shareholders monthly. During any particular year, net
realized gains from investment transactions, in excess of available capital loss
carryforwards, would be taxable to the Fund if not distributed and, therefore,
will be distributed to shareholders. An additional distribution may be made to
the extent necessary to avoid the payment of a four percent federal excise tax.
Distributions of net realized capital gains to shareholders are recorded on the
ex-dividend date.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. These
differences primarily relate to investments in futures contracts. As a result,
net investment income (loss) and net realized gain (loss) on investment
transactions for a reporting period may differ significantly from distributions
during such period. Accordingly, the Fund may periodically make
reclassifications among certain of its capital accounts without impacting the
net asset value of the Fund.
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.
Other. Investment transactions are accounted for on a trade date basis. Interest
income is accrued pro rata to the earlier of call or maturity.
B. Purchases and Sales of Securities
During the year ended December 31, 1998, purchases and sales of municipal
securities (excluding short-term investments) aggregated $61,712,948 and
$65,283,639, respectively.
The aggregate face value of futures contracts closed during the year ended
December 31, 1998 was $11,918,050. No futures contracts were opened during the
year.
C. Related Parties
Under the Management Agreement (the "Agreement") with Scudder Kemper
Investments, Inc. ("Scudder Kemper" or the "Adviser"), the Adviser directs the
investments of the Fund in accordance with its investment objectives, policies,
and restrictions. The Adviser determines the securities, instruments and other
contracts relating to investments to be purchased, sold or entered into by the
Fund. In addition to portfolio management services, the Adviser provides certain
administrative services in accordance with the Agreement. The management fee
payable under the Agreement is equal to an annual rate of 0.55% on the first
$200,000,000 of average daily net assets, 0.50% on the next $500,000,000 of such
net assets and 0.475% on such net assets in excess of $700,000,000, computed and
accrued daily and payable monthly. For the year ended December 31, 1998, the fee
pursuant to this Agreement amounted to $3,760,257, which was equivalent to an
annual effective rate of .51% of the Fund's average daily net assets.
25 - Scudder Managed Municipal Bonds
Effective September 7, 1998, Zurich Insurance Company ("Zurich"), majority owner
of the Adviser, entered into an agreement with B.A.T Industries p.l.c. ("B.A.T")
pursuant to which the financial services businesses of B.A.T were combined with
Zurich's businesses to form a new global insurance and financial services
company known as Zurich Financial Services. Upon consummation of the
transaction, the Fund's Management Agreement with Scudder Kemper was deemed to
have been assigned and, therefore, terminated. In December 1998 the Board of
Trustees and the shareholders of the Fund approved a new investment management
agreement with Scudder Kemper, which is substantially identical to the former
Management Agreement, except for the dates of execution and termination.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. During the
year ended December 31, 1998, the amount charged to the Fund by SSC aggregated
$316,492, of which $26,419 is unpaid at December 31, 1998.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records of the Fund. For the year ended
December 31, 1998, the amount charged to the Fund by SFAC aggregated $98,235, of
which $8,393 is unpaid at December 31, 1998.
The Fund pays each Trustee not affiliated with the Adviser an annual retainer,
divided equally among the series of the Trust, plus specified amounts for
attended board and committee meetings. For the year ended December 31, 1998,
Trustees' fees and expenses aggregated $37,351.
D. Lines of Credit
The Fund and several other Scudder Funds (the "Participants") share in a $850
million revolving credit facility for temporary or emergency purposes, including
the meeting of redemption requests that otherwise might require the untimely
disposition of securities. The Participants are charged an annual commitment fee
which is allocated among each of the Participants. Interest is calculated based
on the market rates at the time of the borrowing. The Fund may borrow up to a
maximum of 33 percent of its net assets under the agreement. The Fund also had
available an uncommitted line of credit.
The weighted average outstanding daily balance of all loans (based on the number
of days the loans were outstanding) was $1,346,611 with a weighted average
interest rate of 5.59%. Interest for the year ended December 31, 1998 was $3,732
(less than $.01 per share).
The maximum month-end borrowings outstanding at any time during the period was
$2,300,000.
26 - Scudder Managed Municipal Bonds
Report of Independent Accountants
To the Trustees of Scudder Municipal Trust and the Shareholders of Scudder
Managed Municipal Bonds:
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Scudder Managed Municipal Bonds
(the "Fund") at December 31, 1998, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1998 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
Boston, Massachusetts PricewaterhouseCoopers LLP
February 12, 1999
27 - Scudder Managed Municipal Bonds
Tax Information
The Fund paid distributions of $0.044 per share from long-term capital gains
during its year ended December 31, 1998. Pursuant to Section 852 of the Internal
Revenue Code, the Fund designates $4,000,000 as capital gain dividends for its
year ended December 31, 1998.
Of the dividends paid from net investment income for the taxable year ended
December 31, 1998, 100% are designated as exempt interest dividends for federal
income tax purposes.
Please consult a tax adviser if you have any questions about federal or state
income tax laws, or on how to prepare your tax returns. If you have specific
questions about your Scudder Fund account, please call a Scudder Investor
Relations Representative at 1-800-225-5163.
28 - Scudder Managed Municipal Bonds
Shareholder Meeting Results
A Special Meeting of Shareholders (the "Meeting") of Scudder Managed Municipal
Bonds (the "Fund") was held on December 15, 1998, at the office of Scudder
Kemper Investments, Inc., Two International Place, Boston, Massachusetts 02110.
At the Meeting the following matters were voted upon by the shareholders (the
resulting votes for each matter are presented below).
1. To approve a new Investment Management Agreement for the Fund with Scudder
Kemper Investments, Inc.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
50,502,695 947,614 1,246,147 0
2. To approve the revision of the Fund's fundamental lending policy.
Number of Votes:
----------------
For Against Abstain Broker Non-Votes*
--- ------- ------- -----------------
46,977,380 1,993,847 1,748,167 1,977,062
- --------------------------------------------------------------------------------
* Broker non-votes are proxies received by the Fund from brokers or nominees
when the broker or nominee neither has received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary power
to vote on a particular matter.
29 - Scudder Managed Municipal Bonds
This Page
intentionally
left blank.
30 - Scudder Managed Municipal Bonds
This Page
intentionally
left blank.
31 - Scudder Managed Municipal Bonds
Officers and Trustees
Daniel Pierce*
President and Trustee
Henry P. Becton, Jr.
Trustee; President and General
Manager, WGBH Educational
Foundation
Dawn-Marie Driscoll
Trustee; President, Driscoll
Associates; Executive Fellow,
Center for Business Ethics,
Bentley College
Peter B. Freeman
Trustee; Corporate Director
George M. Lovejoy, Jr.
Trustee; President and Director,
Fifty Associates
Wesley W. Marple, Jr.
Trustee; Professor of Business
Administration, Northeastern
University
Kathryn L. Quirk*
Trustee, Vice President and
Assistant Secretary
Jean C. Tempel
Trustee; Managing Partner,
Technology Equity Partners
Philip G. Condon*
Vice President
Thomas W. Joseph*
Vice President
Ann M. McCreary*
Vice President
Thomas F. McDonough*
Vice President and Secretary
John R. Hebble*
Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, Inc.
32 - Scudder Managed Municipal Bonds
Investment Products and Services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Scudder Money Market Series --
Prime Reserve Shares*
Premium Shares*
Managed Shares*
Scudder Government Money Market Series --
Managed Shares*
Tax Free Money Market+
- ----------------------
Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series --
Managed Shares*
Scudder California Tax Free Money Fund**
Scudder New York Tax Free Money Fund**
Tax Free+
- ---------
Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund**
Scudder Massachusetts Limited Term Tax Free Fund**
Scudder Massachusetts Tax Free Fund**
Scudder New York Tax Free Fund**
Scudder Ohio Tax Free Fund**
Scudder Pennsylvania Tax Free Fund**
U.S. Income
- -----------
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder Corporate Bond Fund
Scudder High Yield Bond Fund
Global Income
- -------------
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
Asset Allocation
- ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
U.S. Growth and Income
- ----------------------
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
Preferred Series
- ----------------
Scudder Tax Managed Growth Fund
Scudder Tax Managed Small
Company 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 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 other stock exchanges.
33 - Scudder Managed Municipal Bonds
Scudder Solutions
Convenient ways to invest, quickly and reliably:
- ------------------------------------------------------------------------------------------------------------------------------
Automatic Investment Plan QuickBuy
A convenient investment program in which money is Lets you purchase Scudder fund shares
electronically debited from your bank account monthly to electronically, avoiding potential mailing delays;
regularly purchase fund shares and "dollar cost average" money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from a previously designated bank
fewer when it's higher, which can reduce your average account.
purchase price over time.*
Automatic Dividend Transfer Payroll Deduction and Direct Deposit
The most timely, reliable, and convenient way to Have all or part of your paycheck -- even government
purchase shares -- use distributions from one Scudder checks -- invested in up to four Scudder funds at
fund to purchase shares in another, automatically one time.
(accounts with identical registrations or the same
social security or tax identification number).
* Dollar cost averaging involves continuous investment in securities regardless of price
fluctuations and does not assure a profit or protect against loss in declining markets.
Investors should consider their ability to continue such a plan through periods of low price
levels.
Around-the-clock electronic account service and information, including some transactions:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- www.scudder.com
1-800-343-2890
Personal Investment Organizer: Offering
Personalized account information, the ability to account information and transactions, interactive
exchange or redeem shares, and information on other worksheets, prospectuses and applications for all
Scudder funds and services via touchtone telephone. Scudder funds, plus your current asset allocation,
whenever you need them. Scudder's Site also
provides news about Scudder funds, retirement
planning information, and more.
Retirees and those who depend on investment proceeds for living expenses can enjoy these convenient,
timely, and reliable automated withdrawal programs:
- ------------------------------------------------------------------------------------------------------------------------------
Automatic Withdrawal Plan QuickSell
You designate the bank account, determine the schedule Provides speedy access to your money by
(as frequently as once a month) and amount of the electronically crediting your redemption proceeds
redemptions, and Scudder does the rest. to the bank account you previously designated.
Distributions Direct
Automatically deposits your fund distributions into the
bank account you designate within three business days
after each distribution is paid.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
34 - Scudder Managed Municipal Bonds
Mutual Funds and More -- Brokerage and Guidance Services:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Brokerage Services Scudder Portfolio Builder
Offers you access to a world of investments, A free service designed to help suggest ways investors like
including stocks, corporate bonds, Treasuries, plus you can diversify your portfolio among domestic and global,
over 8,000 mutual funds from at least 150 mutual as well as equity, fixed-income, and money market funds,
fund companies. And Scudder Fund Folio(SM) provides using Scudder funds.
investors with access to a marketplace of more than
800 no-load funds from well-known companies--with no Personal Counsel from Scudder(SM)
transaction fees or commissions. Scudder
shareholders can take advantage of a Scudder Developed for investors who prefer the benefits of no-load
Brokerage account already reserved for them, with funds but want ongoing professional assistance in
no minimum investment. For information about managing a portfolio. Personal Counsel(SM) is a highly
Scudder Brokerage Services, call 1-800-700-0820. customized, fee-based asset management service for
individuals investing $100,000 or more.
Fund Folio funds held less than six months will be charged a fee for redemptions. You can buy
shares directly from the fund itself or its principal underwriter or distributor without
paying this fee. Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061.
Member SIPC.
Personal Counsel From Scudder(SM) and Personal Counsel(SM) are service marks of and represent a
program offered by Scudder Investor Services, Inc., Adviser.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
Additional Information on How to Contact Scudder:
- ------------------------------------------------------------------------------------------------------------------------------
For existing account services and transactions Please address all written correspondence to
Scudder Investor Relations -- 1-800-225-5163 The Scudder Funds
P.O. Box 2291
For establishing 401(k) and 403(b) plans Boston, Massachusetts
Scudder Defined Contribution Services -- 02107-2291
1-800-323-6105
Or Stop by a Scudder Investor Center
For information about The Scudder Funds, including Many shareholders enjoy the personal, one-on-one service of
additional applications and prospectuses, or for the Scudder Investor Centers. Check for an Investor Center near
answers to investment questions you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470 Boca Raton Chicago San Francisco
Investor.Relations@scudder.com Boston New York
35 - Scudder Managed Municipal Bonds
About the Fund's Adviser
Scudder Kemper Investments, Inc., is one of the largest and most experienced
investment management oganizations worldwide, managing more than $230 billion in
assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts.
Scudder Kemper Investments has a rich heritage of innovation, integrity, and
client-focused service. In 1997, Scudder, Stevens & Clark, Inc., founded 79
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Group. As a result, Zurich's subsidiary, Zurich Kemper Investments,
Inc., with 50 years of mutual fund and investment management experience, was
combined with Scudder. Headquartered in New York, Scudder Kemper Investments
offers a full range of investment counsel and asset management capabilities,
based on a combination of proprietary research and disciplined, long-term
investment strategies. With its global investment resources and perspective,
the firm seeks opportunities in markets throughout the world to meet the needs
of investors.
Scudder Kemper Investments, Inc., the global asset management firm, is a member
of the Zurich Group. The Zurich Group is an internationally recognized leader in
financial services, including property/casualty and life insurance, reinsurance,
and asset management.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
SCUDDER
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