Scudder
Limited Term
Tax Free Fund
Fund Profile
November 25, 1996
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SCUDDER LIMITED TERM TAX FREE FUND
1. What Is The Fund's Objective?
Scudder Limited Term Tax Free Fund seeks to provide as
high a level of income exempt from regular federal income
tax as is consistent with a high degree of principal
stability.
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2. What Does The Fund Invest In?
At least 80% of the Fund's total assets, and normally 100%
of its portfolio assets, will be invested in municipal
securities, the interest on which is exempt from regular
federal income tax. The Fund invests in shorter-term,
municipal debt securities with a dollar-weighted average
effective maturity of between one and five years. The Fund
may not purchase individual securities with effective
maturities greater than 10 years at the time of purchase
or issuance, whichever is later.
Normally at least 80% of the Fund's net assets are
invested in municipal securities rated within the three
highest quality rating categories of Moody's Investors
Service, Inc. (Aaa, Aa and A), Standard & Poor's or Fitch
Investors Service, Inc. (AAA, AA and A) or their
equivalents, or if unrated, judged by the Fund's
investment adviser, Scudder, Stevens & Clark, Inc. to be
of comparable quality at the time of purchase.
Effective December 16, 1996, at least 65% of the Fund's
net assets will normally be invested in municipal
securities which are rated, at the time of purchase,
within the three highest quality rating categories of
Moody's (Aaa, Aa and A), S&P or Fitch (AAA, AA and A) or
equivalent ratings by another nationally recognized
statistical rating organization, or if unrated, judged by
the adviser to be of comparable quality at the time of
purchase. The Fund will not invest in any debt security
rated lower than Baa by Moody's, BBB by S&P or Fitch or
their equivalent as determined by the adviser. The Fund
may, however, invest in a debt security so rated by one
rating agency even though the security may be rated lower
by one or more of the other agencies.
The Fund may invest more than 20% of its assets in taxable
securities during periods which require a defensive
position.
The 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.
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3. What Are The Risks Of Investing In The Fund?
The Fund's share price and yield may fluctuate daily in
response to changing bond market conditions. In addition,
changes in fiscal and monetary policies, interest rate
levels and general economic conditions may affect the
Fund's share price and yield. The Fund's share price tends
to decline as interest rates rise. You incur principal
risk when you invest because your shares, when sold, may
be worth more or less than what you paid for them.
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4. For Whom Is This Fund Appropriate?
You may wish to consider this Fund if you are seeking high
tax-free income with a high degree of price stability and:
o a secondary cash reserve,
o an alternative to a tax-free money fund, and
o are willing to accept somewhat lower yields then
normally provided by a longer-term bond fund in
exchange for greater price stability
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5. What Are The Fund's Expenses And Fees?
There are two kinds of expenses that a shareholder may
incur, directly or indirectly, by investing in a mutual
fund. These types of expenses, as they relate to Scudder
Limited Term Tax Free Fund are:
<TABLE>
<CAPTION>
Shareholder transaction expenses --
Expenses charged directly to your account for various transactions.
<S> <C>
Sales Commission None
Commissions to Reinvest Dividends None
Redemption Fee None
Exchange Fee None
Annual Fund operating expenses (after expense maintenance) --
Expenses paid by the Fund before it distributes its net investment income,
expressed as a percentage of the Fund's average daily net assets. Figures below
are for the fiscal year ended October 31, 1995, during which Scudder maintained
the total annualized expenses of the Fund at not more than 0% of average daily
net assets for the period November 1, 1994 to February 28, 1995, 0.25% for the
period March 1, 1995 to August 31, 1995, and 0.50% for the period September 1,
1995 to April 30, 1996. Had Scudder not done so, expenses would have amounted to
0.85%, including 0.60% for management fees. Until December 31, 1996, Scudder has
agreed to maintain the total annualized expenses of the fund at not more than
0.75% of average daily net assets.
Investment management fee 0.50%
12b-1 fees None
Other expenses 0.25%
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Total Fund operating expenses 0.75%
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Example:
Assuming a 5% annual return and redemption at the end of each period, the total
expenses relating to a $1,000 investment would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$8 $24 $42 $93
This example assumes reinvestment of all dividends and distributions and that
the total Fund operating expenses listed above 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. Please note that there is a $5 service fee if you
request redemption proceeds via wire.
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6. How Has The Fund Performed Historically?
This chart shows how the Fund has performed since it
commenced operations on February 15, 1994, assuming
reinvestment of all distributions. Performance is
historical and may not be indicative of future results.
Total return and principal value will fluctuate. The
Fund's 30-day net annualized SEC yield on September 30,
1996 was 4.15%.
BAR CHART TITLE: Total returns for year ended December 31:
BAR CHART DATA: 1995
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9.38%
The Fund's Average Annual Total Return for the period
ended September 30, 1996
One Year Life of Fund
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4.26% 4.50%
If the adviser had not maintained the Fund's expenses, the
average annual total return for the one year and life of
Fund periods would have been lower.
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7. Who Manages The Fund?
The Fund's investment adviser is Scudder, Stevens & Clark,
Inc., a leading provider of U.S. and international
investment management for clients throughout the world.
The Fund is managed by a team of Scudder investment
professionals who each play an important role in the
Fund's management process.
M. Ashton Patton, Lead Portfolio Manager, has overseen the
Fund's investment strategy and daily operations since the
Fund was introduced in 1994. Ms. Patton joined Scudder in
1986 and has been a portfolio manager since 1990. Donald
C. Carleton, Portfolio Manager, has been a portfolio
manager at Scudder since he joined the firm in 1983.
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8. How Can I Invest?
To make it easy for you to open an account, you may invest
by mail, phone, fax, or in person. The current minimum
initial investment is $1,000 ($500 for IRAs). Effective
January 1, 1997, the minimum initial investment will be
$2,500 ($1,000 for IRAs), except that shareholders may
open a regular account with a minimum of $1,000 if an
investment program of at least $100/month is established.
After January 1, 1997, a shareholder with a non-fiduciary
account who maintains an account balance of less than
$2,500 without establishing an investment program, may be
assessed an annual fee of $10.00, payable to the Fund. You
may also exchange Fund shares free of charge within the
Scudder Family of Funds.
9. How Can I Redeem Shares?
You may redeem shares at the current share price on any
business day by check, telephone, fax, or mail.
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10. When Are Distributions Made?
Dividends are declared daily and distributed monthly.
Capital gains distributions, if any, will be made in
November or December. You may elect to receive
distributions in cash or have them reinvested in
additional shares of the Fund.
Distributions of tax-exempt income are not subject to
federal income taxes, except for the possible
applicability of the alternative minimum tax. However,
distributions may be subject to state and local income
taxes. A portion of the Fund's income, including income
from repurchase agreements, gains from options, and market
discount bonds, may be taxable to shareholders as ordinary
income. Long-term capital gains distributions, if any, are
taxable as long-term capital gains regardless of the
length of time shareholders have owned 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.
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11. What Services Does Scudder Provide?
As a shareholder, you'll enjoy:
o professional service from representatives who can answer your
questions and execute your transactions
o automated toll-free touchtone access to account information, share
prices and yields, and to perform transactions
o Scudder's quarterly shareholder newsletter, Scudder Perspectives
o regular, informative reports about the performance of your Fund
Scudder wants you to make informed investment decisions. This Fund Profile
contains key information about the Fund. If you would like more information
before you invest, please consult the Fund's accompanying prospectus. For
details about the Fund's holdings or recent investment strategies, please
review the Fund's most recent annual or semiannual report. The reports are
free and may be ordered by calling 1-800-225-2470.
