Scudder Limited Term Tax Free Fund
Annual Report
October 31, 1996
Pure No-Load(TM) Funds
A fund designed to seek a high level of income, exempt from regular federal
income taxes and consistent with a high degree of principal stability.
A pure no-load(TM) fund with no commissions to buy, sell, or exchange shares.
<PAGE>
Table of Contents
2 In Brief
3 Letter from the Fund's President
4 Performance Update
5 Portfolio Summary
6 Portfolio Management Discussion
10 Investment Portfolio
15 Financial Statements
18 Financial Highlights
19 Notes to Financial Statements
21 Report of Independent Accountants
22 Tax Information
25 Officers and Trustees
26 Investment Products and Services
27 How to Contact Scudder
In Brief
o For the 12 months ended October 31, 1996, Scudder Limited Term Tax Free Fund
posted a total return of 4.33%. This return and the Fund's two-year average
annual return of 6.10% both placed the Fund in the top one fifth of its peers
according to Lipper. See page 7 for additional information on the Fund's
rankings.
o As of October 31, 1996, Scudder Limited Term Tax Free Fund's 30-day net
annualized SEC yield was 4.01%, equivalent to a 6.64% taxable yield for
investors subject to the 39.6% top federal income tax rate.
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE.
BAR CHART TITLE: 30-Day Yield
CHART PERIOD: on October 31, 1996
CHART DATA:
Scudder IBC/Donoghue's
Limited Term Taxable Taxable Money
Tax Free Fund Equivalent Fund Average
4.01% 6.64% 4.82%
2 - Scudder Limited Term Tax Free Fund
<PAGE>
Letter From the Fund's President
Dear Shareholders,
We hope you enjoy our newly redesigned shareholder report. The new format,
which is being gradually introduced for all Scudder funds, is designed to
enhance the usefulness and readability of the reports.
Let us know what you think.
We are pleased to report on Scudder Limited Term Tax Free Fund's
performance over its most recent fiscal year. The Fund posted a competitive
total return of 4.33% over the 12 months ended October 31, and its 6.64% tax
equivalent yield for investors in the highest federal tax bracket is
significantly higher than current CD rates. As portfolio managers Ashton Patton
and Donald Carleton report in the portfolio management discussion that follows,
the Fund continues to pursue a conservative investment strategy, diversifying
broadly by investing in a wide variety of municipal bonds. Please read the
discussion beginning on page 6 for more information.
We would like to take this opportunity to highlight some additions made
this fall to the Scudder Family of Funds. Scudder 21st Century Growth Fund seeks
long-term growth by investing primarily in the securities of emerging growth
companies poised to be leaders in the 21st century. Scudder Classic Growth Fund
seeks long-term growth by investing primarily in common stocks of medium to
large U.S. companies; additionally, it seeks to keep the value of its shares
more stable than the typical capital growth mutual fund. Most recently, we
introduced the Scudder Pathway Series, four portfolios -- Conservative,
Balanced, Growth, and International -- each of which includes five or more
Scudder funds and which together are designed to meet a range of investor needs.
For more information on these and other Scudder products and services, please
see page 26.
Thank you for your continued investment in Scudder Limited Term Tax Free
Fund. Please do not hesitate to call Scudder Investor Information at
1-800-225-2470 with any questions regarding your account.
Sincerely,
/s/David S. Lee
David S. Lee
President,
Scudder Limited Term Tax Free Fund
3 - Scudder Limited Term Tax Free Fund
<PAGE>
PERFORMANCE UPDATE as of October 31, 1996
- ----------------------------------------------------------------
FUND INDEX COMPARISONS
- ----------------------------------------------------------------
Total Return
Period Growth --------------
Ended of Average
10/31/96 $10,000 Cumulative Annual
- --------------------------------------
SCUDDER LIMITED TERM TAX FREE FUND
- --------------------------------------
1 Year $10,433 4.33% 4.33%
Life of
Fund* $11,312 13.12% 4.65%
- --------------------------------------
LEHMAN BROTHERS MUNICIPAL BOND INDEX
(3 YEAR)
- --------------------------------------
1 Year $10,451 4.51% 4.51%
Life of
Fund* $11,351 13.51% 4.86%
- --------------------------------------
*The Fund commenced operations on February 15, 1994.
Index comparisons begin February 28, 1994.
- -----------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- -----------------------------------------------------------------
A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:
SCUDDER LIMITED TERM
TAX FREE FUND
Year Amount
- ----------------------
2/94* $10,000
4/94 $ 9,965
10/94 $10,099
4/95 $10,465
10/95 $10,901
4/96 $11,072
10/96 $11,373
LEHMAN BROTHERS MUNICIPAL
BOND INDEX (3 year)
Year Amount
- ----------------------
2/94* $10,000
4/94 $ 9,938
10/94 $10,056
4/95 $10,399
10/95 $10,862
4/96 $11,051
10/96 $11,351
The 3-year Lehman Brothers Municipal Bond Index is an unmanaged
market-value-weighted measure of the short-term bond market and
includes bonds with maturities of two to three years. Index returns assume
reinvested dividends and, unlike Fund returns, do not reflect fees
or expenses.
- -----------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
- -----------------------------------------------------------------
A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) and Index Total
Return (%) with the exact data points listed in the table
below.
YEARLY PERIODS ENDED OCTOBER 31
1994* 1995 1996
-----------------------------
NET ASSET VALUE... $11.67 $12.01 $11.98
INCOME DIVIDENDS.. $ .38 $ .56 $ .53
CAPITAL GAINS
DISTRIBUTIONS..... $ -- $ -- $ .01
FUND TOTAL
RETURN (%)........ .44 7.94 4.33
INDEX TOTAL
RETURN (%)........ .56 8.01 4.51
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.
If the Adviser had not maintained the Fund's expenses, the total returns
for the one year and life of Fund periods would have been lower.
4 - Scudder Limited Term Tax Free Fund
<PAGE>
PORTFOLIO SUMMARY as of October 31, 1996
- --------------------------------------------------------------------------
DIVERSIFICATION
- --------------------------------------------------------------------------
Hospital/Health 19%
Core Cities/Lease 17%
Electric Utility Revenue 12%
School District/Lease 11%
Port/Airport Revenue 7%
State General Obligation 7%
Water/Sewer Revenue 6%
Housing Finance Authority 5%
Country General Obligation/Lease 4%
Miscellaneous Municipal 12%
- ---------------------------------------------
100%
- ---------------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
The Fund continues to hold a large
percentage of premium, high-coupon
insured and pre-refunded bonds in
its portfolio.
- ---------------------------------------------------------------------------
QUALITY
- ---------------------------------------------------------------------------
AAA 58%
AA 14%
A 18%
BBB 9%
Not Rated 1%
- --------------------------------------
100%
- --------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
WEIGHTED AVERAGE QUALITY: AA
Overall credit quality remains high
with 72% of the Fund's portfolio
rated AAA or AA.
- ---------------------------------------------------------------------------
EFFECTIVE MATURITY
- ---------------------------------------------------------------------------
Less than 1 year 17%
1 - 5 years 45%
1 - 10 years 38%
- --------------------------------------
100%
- --------------------------------------
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
WEIGHTED AVERAGE EFFECTIVE MATURITY: 4.1 YEARS
During the Fund's most recent fiscal year we
diversified its maturities - shorter maturities
were purchased for safety, and longer maturities
(up to 10 years) for higher yields and capital
appreciation.
- -----------------------------------------------------------------------------
For more complete details about the Fund's investment portfolio,
see page 10.
5 - Scudder Limited Term Tax Free Fund
<PAGE>
Portfolio Management Discussion
Dear Shareholders,
During a 12-month period that witnessed partial government shutdowns, talk of
tax overhaul, and intermittent bond market volatility, Scudder Limited Term Tax
Free Fund continued to provide investors with an attractive tax-free yield and
greater share price stability than would be available from a longer-maturity
tax-exempt fund.
For shareholders subject to the 39.6% maximum federal income tax rate, the
Fund's 30-day net annualized SEC yield of 4.01% as of October 31, 1996, was
equivalent to a fully taxable 6.64% yield, higher than yields currently provided
by comparable taxable investments. The Fund's tax-equivalent yield compares
favorably with the 5.22% average yield of 2-year bank certificates of deposit as
of October 31, 1996. Of course, unlike fixed-rate CDs, which are FDIC-insured up
to certain limits, the Fund's yield and share price fluctuate, and principal
investments in the Fund are not insured.
As the graph shows, over the past 12 months, the Fund's tax-equivalent yield has
been consistently higher than the yields of the average two-year CD tracked
nationally.
THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE.
CHART TITLE: Scudder Limited Term Tax Free Fund's
Tax-Equivalent Yield vs. National Two-Year
CD Rates
CHART PERIOD: November 1995 through October 1996
CHART DATA:
National SLTTFF
average of tax-equivalent
two-year CD yields yield
11/95 5.01% 6.84%
4.82 6.69
1/96 4.68 6.59
4.48 6.37
3/96 4.73 6.82
4.83 7.14
5/96 4.94 6.79
5.14 6.97
7/96 5.21 6.82
5.20 6.71
5.25 6.87
10/96 5.22 6.64
Source of CD data: BanxQuote.
Tax equivalent yields are for the 39.6% maximum federal tax rate.
For the most recent fiscal year ended October 31, 1996, the Fund's net asset
value dropped $0.03 to $11.98 per share, and the Fund provided $0.53 per share
in income distributions, and $0.01 per share in capital gain distributions,
contributing to a total return of 4.33%. This return outpaced the 3.72% return
of the 26 similar municipal bond funds tracked by Lipper Analytical Services,
Inc. As shown in the chart on page 7, the Fund's average annual total return
placed it in the top one fifth of its peer group for one- and two-year periods.
6 - Scudder Limited Term Tax Free Fund
<PAGE>
Strong Relative Performance
(Returns for periods ended October 31, 1996)
- ----------------------------------------------------------------
Scudder
Limited
Term Tax Lipper Number
Free average of
Fund annual Funds Percentile
Period return return Rank tracked Ranking
- ----------------------------------------------------------------
1 year 4.33% 3.72% 4 of 26 Top 15%
2 years 6.10% 5.45% 4 of 21 Top 19%
- ----------------------------------------------------------------
Past performance does not guarantee future results.
Economic and Market Review
During the Fund's most recent fiscal year, bonds alternately prospered and
languished under differing market influences. As we mentioned in our last report
to you, bonds rallied in late 1995 as the Republican-led Congress strove to
balance the U.S. budget deficit through a series of partial government
shutdowns. The municipal bond market then retreated for a time as these efforts
failed and Steve Forbes' presidential campaign temporarily re-floated the "flat
tax" idea. Meanwhile the U.S. economy picked up steam in April as snow from
heavy winter storms melted, shoppers returned to retail stores, and hiring
increased. While many were understandably heartened by this increase in economic
momentum, bond market participants feared a pickup in inflation, and bond yields
headed higher (and prices lower) during the second quarter of 1996. Bond yields
declined and the economy retreated toward the end of the Fund's fiscal year as
consumers seemed to feel the weight of their personal debt -- credit card debt
service payments as a percentage of disposable income rose to an all-time high
this year, and analysts predicted over a million people will declare bankruptcy
in 1996.
Over the past several years, the economy has actually progressed at a fairly
consistent pace, with inflation restrained throughout. The bond market, on the
other hand, has been volatile, constantly anticipating far greater changes than
the economy has exhibited. Now, after six years of expansion, the U.S. economy
may actually be slowing. Consumers appear to be overburdened, retail sales
figures were negative during the third quarter, the government's monetary policy
is tight by historical standards (with a Fed Funds rate of 5 1/4%), and business
investment is leveling off. In recent months, bond yields have fluctuated, but
have generally declined in step with this pullback.
For the 12 months ended October 31, municipal bonds, which typically exhibit
less price volatility than Treasury bonds, held their own, thanks to a
relatively light supply. While yields of 10-year Treasury bonds rose three
tenths of a percentage point and prices declined 2% during the period, yields
and prices of 10-year AAA municipal bonds ended essentially unchanged for the
same period. Large numbers of municipal bonds were called or matured during the
period, especially in June and July. The municipal market continues to be
supported both by retail bond buyers and institutions such as insurance
companies.
7 - Scudder Limited Term Tax Free Fund
<PAGE>
Our Portfolio Strategy
Scudder Limited Term Tax Free Fund's professional management, economies of
scale, liquidity, and ability to diversify its assets continue to offer
advantages compared with the holding of individual municipal bonds. Over the
Fund's most recent fiscal year we diversified the Fund's maturities -- shorter
maturities were purchased for safety and longer maturities (maximum of 10 years)
for higher yields and possible capital appreciation. We also sought value during
the period by purchasing bonds that were less liquid, and therefore less
expensive, because they require extensive credit research. In this respect,
Scudder's resources provide an advantage in performing the necessary investment
analysis.
The Fund continues to hold a large percentage of premium, high-coupon insured,
and pre-refunded bonds in its portfolio. Bonds are pre-refunded when issuers
sell new debt at lower prevailing rates and use the proceeds to establish an
escrow account designated to retire the original bonds on their future call
dates. Typically, when bonds are pre-refunded, their prices rise because they
offer no credit risk (the escrowed funds are invested in Treasury securities).
In fact, these bonds offer the highest quality available in the municipal
marketplace. The Fund's overall credit quality remains high, with 72% of the
bonds in its portfolio rated AAA or AA.
8 - Scudder Limited Term Tax Free Fund
<PAGE>
A Further Slowdown?
The U.S. economy is flashing several caution lights. Some companies -- notably
fast food outlets and department stores -- are attempting to interest their
customers in higher priced items. That these and other companies are even
considering raising prices makes us believe that the economy may slow further,
because we are confident that the Federal Reserve will raise interest rates at
the first signs of any uptick in inflation. Though we believe that any excesses
in the U.S. economy would soon be corrected, and that the economy will remain
resilient, any further slowdown should benefit the municipal bond market.
We will continue to maintain a conservative investment strategy, including
holding premium coupon bonds, diversifying broadly, and keeping the Fund's
credit quality high. We will also search for attractive value by weighing the
maturity characteristics, call features, credit quality, and income potential of
each bond we consider adding to Scudder Limited Term Tax Free Fund's portfolio.
Sincerely,
Your Portfolio Management Team
/s/M. Ashton Patton /s/Donald C. Carleton
M. Ashton Patton Donald C. Carleton
Scudder Limited Term
Tax Free Fund:
A Team Approach to Investing
Scudder Limited Term Tax Free Fund is run by a team of Scudder investment
professionals who each play 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 Scudder's large staff
of economists, research analysts, traders, and other investment specialists who
work in Scudder's offices across the United States and abroad. Scudder believes
its team approach benefits Fund investors by bringing together many disciplines
and leveraging Scudder's extensive resources.
M. Ashton Patton, Lead Portfolio Manager, has overseen the Fund's investment
strategy and daily operation since the Fund was introduced. Ashton is also a
Portfolio Manager of the Scudder Medium Term Tax Free Fund. Donald C. Carleton,
Portfolio Manager, has been a member of the Portfolio team since its inception
and has been at Scudder since 1983. Don also manages the Scudder Medium Term Tax
Free Fund.
Your Portfolio Management Team: M. Ashton Patton and Donald C. Carleton
9 - Scudder Limited Term Tax Free Fund
<PAGE>
Investment Portfolio as of October 31, 1996
<TABLE>
<CAPTION>
Credit
Principal Rating (b) Market
Amount ($) (Unaudited) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
Short-term Municipal Investments 9.8%
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
California
Los Angeles County, CA, Pension Obligation, Weekly Demand Reset, Series
1996 A, 3.4%, 6/30/07 (c)* ............................................................. 1,100,000 MIG-1 1,100,000
San Diego, CA, Unified School District, Tax and Revenue Anticipation Note, Series
1996, 4.75%, 10/1/97 ................................................................... 2,000,000 MIG-1 2,017,840
Illinois
Chicago, IL, General Obligation, Series C, 4.3%, 10/31/97 ................................ 500,000 A-1+ 502,970
Kansas
Burlington, KS, Environmental Improvement, Kansas City Power & Light, Series A,
Municipal Auction Security, 3.65%, 12/1/23* ............................................ 4,000,000 MIG-1 4,000,000
Michigan
University of Michigan Regents Medical Service Plan Revenue Bonds, Series 1995 A,
Daily Demand Note, 3.6%, 12/1/27* ...................................................... 1,000,000 MIG-1 1,000,000
New Mexico
Farmington, NM, Pollution Control Revenue, Arizona Public Service Co., Series
1994 B, Daily Demand Note, 3.6%, 9/1/24* ............................................... 100,000 P1 100,000
North Carolina
North Carolina Municipal Power Agency #1, Catawba Project Series 1996 A,
Tax Exempt Commercial Paper, 3.6%, 1/9/97* ............................................. 1,500,000 A-1+ 1,500,150
Ohio
Hamilton Health Systems, Franciscan Sisters of the Poor Health System, Series A,
Daily Demand Note, 3.7%, 3/1/17* ....................................................... 600,000 MIG-1 600,000
South Carolina
South Carolina Job Program Economic Development Revenues, Franciscan Health
System, St. Francis Hospital, Daily Demand Note, 3.65%, 7/1/22* ........................ 1,100,000 MIG-1 1,100,000
Tennessee
Metropolitan Nashville Airport Authority, TN, Special Facilities Revenue American
Airlines Daily Demand Note, 3.65%, 10/1/12* ............................................ 100,000 A-1+ 100,000
- -----------------------------------------------------------------------------------------------------------------------------------
Total Short-term Municipal Investments (Cost $12,010,827) ................................ 12,020,960
- -----------------------------------------------------------------------------------------------------------------------------------
Intermediate-term Municipal Investments 90.2%
- -----------------------------------------------------------------------------------------------------------------------------------
Arizona
Central Arizona Water Conservation District, Central Arizona Project, prerefunded
11/1/00, 7.5%, 11/1/05*** .............................................................. 1,000,000 AA 1,130,160
Arkansas
Rogers, AR, Sales and Use Tax Revenue, Series 1996, 5%, 11/1/15 .......................... 1,000,000 AA 1,003,530
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 - Scudder Limited Term Tax Free Fund
<PAGE>
<TABLE>
<CAPTION>
Credit
Principal Rating (b) Market
Amount ($) (Unaudited) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
California
Foothill/Eastern Transportation Corridor Agency, CA, Toll Road Revenue, Senior Lien,
Series A, Zero Coupon, 1/1/05 .......................................................... 1,000,000 BBB 629,420
Orange County, CA, Recovery Notes, Series A, 6.5%, 6/1/05 (c) ............................ 1,665,000 AAA 1,847,301
Sacramento, CA, Cogeneration Project Revenue, Proctor and Gamble Project,
Series 1995, 7%, 7/1/04 ................................................................ 1,000,000 BBB 1,088,790
Colorado
Castle Rock Ranch, CO, Public Improvements Authority, Public Facilities Revenue,
Series 1996, 5.9%, 12/1/03 ............................................................. 1,475,000 AA 1,544,163
Connecticut
Connecticut Development Authority, Airport Facilities, Windsor Locks Hotel,
Mandatory Tender Notes, Series B, 5.8%, 10/1/97 ........................................ 2,000,000 AA 2,022,100
District of Columbia
District of Colombia, General Obligation:
Series A, 5.625%, 6/1/02 (c) ........................................................... 1,500,000 AAA 1,555,455
Series D, 5.25%, 12/1/03 (c) ........................................................... 1,000,000 AAA 1,017,700
Series 1993 C, 5.1%, 12/1/99 (c) ....................................................... 1,750,000 AAA 1,778,840
Florida
Dade County, FL, Port Authority Revenue, Series 1968 C, 5.5%, 10/1/07 .................... 5,110,000 AAA 5,288,799
Georgia
Municipal Electric Authority of Georgia, Power Revenue, 6.6%, 1/1/01 (c) ................. 1,000,000 AAA 1,079,290
Illinois
Berwyn, IL, MacNeal Memorial Hospital, 5.5%, 6/1/01 (c) .................................. 2,795,000 AAA 2,883,797
Chicago, IL, Metropolitan Water District, ETM, 7.25%, 1/1/99** .......................... 2,000,000 AAA 2,128,280
Chicago, IL, General Obligation, Tender Note, Series C, 6.25%, 10/31/02 (c) .............. 3,450,000 AAA 3,709,992
Cook County, IL, General Obligation, 6.45%, 11/1/96 ...................................... 1,000,000 A 1,000,000
Evergreen Park, Illinois Hospital Facilities, Little County Mary's Hospital, 7.75%,
2/15/09 (c) ............................................................................ 1,200,000 AAA 1,274,436
Illinois Health Facilities Authority, Revenue Refunding, Sherman Hospital Project,
6.5%, 8/1/01 (c) ....................................................................... 1,025,000 AAA 1,104,437
Indiana
Indiana Health Facility Finance Authority, Hospital Revenue, Ancilla Systems Inc.,
Series A, 5.875%, 7/1/02 (c) ........................................................... 1,000,000 AAA 1,056,260
Indiana Housing Finance Authority, Single Family Mortgage Revenue,
Series 1995 C-1, 5.25%, 7/1/12 ......................................................... 4,230,000 AAA 4,276,022
Madison County, IN, Hospital Authority, Holy Cross Health System, 6.3%,
12/1/98 (c) ............................................................................ 1,000,000 AAA 1,041,430
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 - Scudder Limited Term Tax Free Fund
<PAGE>
<TABLE>
<CAPTION>
Credit
Principal Rating (b) Market
Amount ($) (Unaudited) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Iowa
Cedar Rapids, IA, Hospital Revenue, St. Luke's Methodist Hospital, 5.65%,
8/15/02 (c) ............................................................................ 1,250,000 AAA 1,303,687
Des Moines, IA, Hospital Revenue, General Hospital Project, Series 1996 A, 6%,
11/15/02 ............................................................................... 1,750,000 AA2 1,850,467
Kentucky
Jefferson County, KY, Trust Certificate, Enhanced 911 Emergency Telephone Project,
Series 1996, 5.25%, 9/1/98 ............................................................. 1,115,000 A 1,131,257
Louisiana
Jefferson Parish, LA, School Board Sales & Use Tax Revenue, ETM, Series 1986 A,
7.25%, 2/1/01 .......................................................................... 6,135,000 A 6,706,046
Jefferson, LA, Sales Tax, Series A, 6.1%, 12/1/96 (c) .................................... 1,000,000 AAA 1,001,920
Maine
Maine, General Obligation, 6%, 7/1/98 .................................................... 1,000,000 AA 1,033,180
Maryland
Washington Suburban Sanitation District, MD, 6.9%, 6/1/99 ................................ 675,000 AA 719,996
Massachusetts
New England Education Loan Marketing Corporation, Massachusetts Student Loan
Revenue Refunding:
Series A, 6%, 9/1/98 .................................................................. 2,000,000 AAA 2,058,480
Series D, 6.2%, 9/1/00 ................................................................ 2,000,000 AAA 2,096,100
Michigan
Michigan State Hospital Finance Authority Revenue, Genesys Health System, Series A,
6.6%, 10/1/98 .......................................................................... 1,000,000 BBB 1,027,000
New Hampshire
New Hampshire Higher Education & Health Facilities Authority Revenue, St. Josephs
Hospital, 5.65%, 1/1/04 (c) ............................................................ 1,095,000 AAA 1,124,083
New York
New York City, NY, General Obligation:
Series 1996 A, 6.75%, 8/1/04 ........................................................ 1,500,000 A 1,612,935
Series 1995 D, 6.5%, 2/15/05 ........................................................ 1,315,000 A 1,390,705
Series 1996 I, 6.5%, 3/15/05 ........................................................ 1,575,000 A 1,666,429
Series A, 3%, 8/15/02 (c) ........................................................... 1,000,000 AAA 918,490
Series B, 6.75%, 8/15/03 ............................................................ 6,000,000 A 6,440,580
New York State Dormitory Authority, State University Educational Facility, Series A,
6.5%, 5/15/04 .......................................................................... 1,000,000 A 1,080,200
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 - Scudder Limited Term Tax Free Fund
<PAGE>
<TABLE>
<CAPTION>
Credit
Principal Rating (b) Market
Amount ($) (Unaudited) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
New York State Medical Care Facilities, Finance Agency, Mount Sinai Hospital,
Series 1983, 5.95%, 8/15/09 ............................................................ 1,155,000 AAA 1,175,016
New York State Urban Development Corporation Project,
Onondaga County Convention Center:
6%, 1/1/04 .......................................................................... 1,445,000 BBB 1,501,919
6%, 1/1/05 .......................................................................... 1,535,000 BBB 1,591,964
Syracuse, NY, Industrial Development Agency, Pilot Revenue Bonds, Series 1995,
5.125%, 10/15/02 ....................................................................... 1,500,000 AA 1,501,860
North Carolina
North Carolina Municipal Power Agency #1, Catawaba Electric Revenue, 5.75%,
1/1/02 (c) ............................................................................. 1,150,000 AAA 1,203,130
Pennsylvania
Allegheny County, PA, Hospital Development Authority, 6.4%, 7/1/99 (c) ................... 1,010,000 AAA 1,061,268
Philadelphia, PA, Gas Works Revenue, prerefunded 7/1/97, 7.875%, 7/1/17*** ............... 500,000 AAA 523,425
Philadelphia, PA, School District, General Obligation, 6.7%, 7/1/99 (c) .................. 3,000,000 AAA 3,181,680
University of Pittsburgh, Pennsylvania Higher Education, General Obligation,
Series A, prerefunded 6/1/97, 8.375%, 6/1/05*** ........................................ 1,000,000 AAA 1,046,460
Rhode Island
Rhode Island State, Consolidated Capital Development Loan, General Obligation,
Series 1996, 6%, 8/1/03 (c) ............................................................ 1,690,000 AAA 1,811,646
Texas
Austin, TX:
Independent School District, Guaranteed General Obligation, 8.125%, 8/1/01 ............. 1,000,000 AAA 1,154,250
Utility System Revenue, Series A, 6.3%, 11/15/01 (c) ................................... 1,000,000 AAA 1,074,270
Water, Sewer & Electric Refunding Revenue, prerefunded 5/15/97, 14.25%,
11/15/06*** ......................................................................... 1,105,000 AAA 1,166,460
Harris County, TX, Toll Road Authority, Senior Lien, prerefunded 8/15/97, 8.1%,
8/15/00 (c)*** ......................................................................... 1,275,000 AAA 1,355,287
Midland County, TX, Hospital District, 4.85%, 6/1/97 ..................................... 1,815,000 BBB 1,819,973
Richardson, TX, Hospital Authority Refunding and Improvement, Richardson Medical
Center, Series 1993, 6.5%, 12/1/12 ..................................................... 1,000,000 BBB 1,007,420
Texas Department of Housing & Community Affairs, Single-Family Mortgage Revenue,
Series B, 5.5%, 3/1/11 (c) ............................................................. 2,000,000 AAA 2,026,420
Texas Turnpike Authority, North Dallas Thruway Revenue, 6.7%, 1/1/98 (c) ................. 1,310,000 AAA 1,351,802
Virgin Islands
Virgin Islands, General Obligation, 6.9%, 10/1/01 ........................................ 1,000,000 NR 1,062,630
</TABLE>
The accompanying notes are an integral part of the financial statements.
13 - Scudder Limited Term Tax Free Fund
<PAGE>
<TABLE>
<CAPTION>
Credit
Principal Rating (b) Market
Amount ($) (Unaudited) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Washington
Lewis County, WA, Public Utility District 1, Cowlitz Falls Hydroelectric Project,
Series 1991, prerefunded 10/1/01, 7%, 10/1/22*** ....................................... 1,430,000 AAA 1,611,052
Washington Public Power Supply System:
Nuclear Project #1, Revenue Refunding, Series C, 7.3%, 7/1/98 .......................... 3,000,000 AA 3,141,720
Nuclear Project #2, Refunding Revenue, Series C, 7.3%, 7/1/00 .......................... 1,300,000 AA 1,408,602
Nuclear Project #2, Refunding Revenue, Series 1992 A, 5.7%, 7/1/02 ..................... 1,550,000 AA 1,608,264
West Virginia
Wayne County, WV, Industrial Development, Atlantic Richfield Company Project,
11.75%, 12/1/01 ........................................................................ 1,000,000 A 1,005,960
Wisconsin
Milwaukee, WI, Metropolitan Sewer District Revenue, Series A, 6.7%, 10/1/01 .............. 1,000,000 AA 1,094,180
Wisconsin Health and Education Facilities Authority, St. Luke's Medical Center, 6.6%,
8/15/01 (c) ............................................................................ 1,745,000 AAA 1,887,881
Wisconsin Health and Education Facilities Authority, Wheaton Franciscan Services,
prerefunded 8/15/98, 8.2%, 8/15/18 (c)*** .............................................. 1,000,000 AAA 1,089,380
- ------------------------------------------------------------------------------------------------------------------------------------
Total Intermediate-term Municipal (Cost $108,868,321) .................................... 111,085,676
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio - 100.0% (Cost $120,879,148) (a) 123,106,636
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The cost for federal income tax purposes was $120,879,148. At October 31,
1996, net unrealized appreciation for all securities based on tax cost was
$2,227,488. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $2,228,491 and aggregate gross unrealized depreciation for all
securities in which there was an excess tax cost over market value of
$1,003.
(b) All of the securities held have been determined to be of 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.
(c) Bond is insured by one of these companies: AMBAC, FGIC, FSA, or MBIA
* Floating rate and monthly, weekly, or daily demand notes are securities
whose yields vary with a designated market index or market rate, such as
the coupon-equivalent of the Treasury bill rate. Variable rate demand notes
are securities whose yields are periodically reset at levels that are
generally comparable to tax-exempt commercial paper. These securities are
payable on demand within seven calendar days and normally incorporate an
irrevocable letter of credit or line of credit from a major bank. These
notes are carried, for purposes of calculating average weighted maturity,
at the longer of the period remaining until the next rate change or to the
extent of the demand period.
** 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.
*** 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.
The accompanying notes are an integral part of the financial statements.
14 - Scudder Limited Term Tax Free Fund
<PAGE>
<TABLE>
<CAPTION>
Financial Statements
Statement of Assets and Liabilities
as of October 31, 1996
Assets
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investments, at market (identified cost $120,879,148) (Note A) ................... $123,106,636
Cash ............................................................................. 225,972
Interest receivable .............................................................. 1,953,669
Receivable for Fund shares sold .................................................. 2,559
Deferred organization expenses (Note A) .......................................... 18,531
------------
Total assets ..................................................................... 125,307,367
Liabilities
-----------------------------------------------------------------------------------------------------------------------------------
Payable for investment purchased ................................................. $ 1,002,500
Dividends payable ............................................................... 275,832
Payable for Fund shares redeemed ................................................ 254,716
Accrued management fee (Note C) ................................................. 62,006
Other accrued expenses (Note C) ................................................. 51,882
------------
Total liabilities ............................................................... 1,646,936
------------------------------------------------------------------------------------------------
Net assets, at market value ..................................................... $123,660,431
------------------------------------------------------------------------------------------------
Net Assets
-----------------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Unrealized appreciation on investments ........................................... 2,227,488
Accumulated net realized gain .................................................... 172,106
Paid-in capital .................................................................. 121,260,837
------------
Net assets, at market value ...................................................... $123,660,431
------------
Net Asset Value
-----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($123,660,431 / 10,318,550 outstanding shares of beneficial ------------
interest, $.01 par value, unlimited number of shares authorized) .............. $ 11.98
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 - Scudder Limited Term Tax Free Fund
<PAGE>
Statement of Operations
year ended October 31, 1996
<TABLE>
<CAPTION>
Investment Income
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Interest ......................................................................... $ 6,201,982
Expenses:
Management fee (Note C) .......................................................... $ 731,711
Custodian and accounting fees (Note C) ........................................... 77,382
Services to shareholders (Note C) ................................................ 61,463
Trustees' fees and expenses (Note C) ............................................. 38,262
Registration fees ................................................................ 21,683
Auditing ......................................................................... 30,429
Legal ............................................................................ 3,253
Reports to shareholders .......................................................... 13,899
Amortization of organization expense (Note A) .................................... 8,411
Other ............................................................................ 8,686
------------
Total expenses before expense reductions ......................................... 995,179
Expense reductions (Note C) ...................................................... (230,799)
------------
Expenses, net .................................................................... 764,380
--------------------------------------------------------------------------------------------------
Net investment income ............................................................ 5,437,602
--------------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized gain from investments ............................................... 210,333
Net unrealized depreciation on investments during the period ..................... (358,014)
------------
Net loss on investments .......................................................... (147,681)
--------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations ............................. $ 5,289,921
--------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 - Scudder Limited Term Tax Free Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Years Ended October 31,
Increase (Decrease) in Net Assets 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income ........................................... $ 5,437,602 $ 5,161,497
Net realized gain on investments ................................ 210,333 59,333
Net unrealized appreciation (depreciation) on investments
during the period................................................ (358,014) 3,480,063
------------- -------------
Net increase in net assets resulting from operations .......... 5,289,921 8,700,893
------------- -------------
Distributions to shareholders from:
Net investment income ........................................... (5,437,602) (5,161,497)
------------- -------------
Net realized gains .............................................. (50,891) --
------------- -------------
Fund share transactions:
Proceeds from shares sold ....................................... 57,374,072 113,448,336
Net asset value of shares issued to shareholders in
reinvestment of distributions ................................... 2,249,313 2,280,520
Cost of shares redeemed ......................................... (57,528,518) (65,092,618)
------------- -------------
Net increase in net assets from Fund share transactions ......... 2,094,867 50,636,238
------------- -------------
Increase in net assets .......................................... 1,896,295 54,175,634
Net assets at beginning of period ............................... 121,764,136 67,588,502
------------- -------------
Net assets at end of period ..................................... $ 123,660,431 $ 121,764,136
------------- -------------
Other information
- -----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period ....................... 10,139,449 5,792,967
------------- -------------
Shares sold ..................................................... 4,790,986 9,697,002
Shares issued to shareholders in reinvestment of distributions... 187,834 192,663
Shares redeemed ................................................. (4,799,719) (5,543,183)
------------- -------------
Net increase in Fund shares ..................................... 179,101 4,346,482
------------- -------------
Shares outstanding at end of period ............................. 10,318,550 10,139,449
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17 - Scudder Limited Term Tax Free Fund
<PAGE>
Financial Highlights
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
For the Period
February 15, 1994
(commencement of
operations) to
Years Ended October 31, October 31,
1996 1995 1994
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period ............... $12.01 $11.67 $12.00
--------------------------------------------------
Income from investment operations:
Net investment income .............................. .53 .56 .38
Net realized and unrealized gain (loss) on .........
investments (.02) .34 (.33)
--------------------------------------------------
Total from investment operations ................... .51 .90 .05
--------------------------------------------------
Less distributions from:
Net investment income .............................. (.53) (.56) (.38)
Net realized gain on investment transactions ....... (.01) -- --
--------------------------------------------------
Total distributions ................................ (.54) (.56) (.38)
--------------------------------------------------
--------------------------------------------------
Net asset value, end of period ..................... $11.98 $12.01 $11.67
------------------------------------------------------------------------------------------------------
Total Return (%) (a) ............................... 4.33 7.94 .44**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ............. 124 122 68
Ratio of operating expenses, net to average daily
net assets (%) .................................. .63 .23 --
Ratio of operating expenses before expense
reductions, to average daily net assets
Ratio of net investment income to average daily .... .82 .85 1.29*
net assets (%) .................................. 4.46 4.78 4.84*
Portfolio turnover rate (%) ........................ 37.7 37.5 36.3*
</TABLE>
(a) Total returns would have been lower had certain expenses not been reduced.
* Annualized
** Not annualized
18 - Scudder Limited Term Tax Free Fund
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies
Scudder Limited Term Tax Free Fund (the "Fund") is a diversified series of
Scudder Tax Free Trust, a Massachusetts business trust (the "Trust"), which is
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company. There are currently two series in the Trust.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
Security Valuation. Portfolio debt securities with remaining maturities greater
than sixty days are valued by pricing agents approved by the Officers of the
Fund, which 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 Trustees. Short-term
investments having a maturity of sixty days or less are valued at amortized
cost.
Amortization and Accretion. All premiums and original issue discounts are
amortized/accreted for both tax and financial reporting purposes.
Federal Income Taxes. The Fund's policy is to comply with the requirements of
the Internal Revenue Code 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.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles. As a result, net
investment income (loss) and net realized gain (loss) on investment transactions
for a reporting period may differ significantly from distributions during such
period. Accordingly, the Fund may periodically make reclassifications among
certain of its capital accounts without impacting the net asset value of the
Fund.
The Fund uses the specific identification method for determining realized gain
or loss on investments for both financial and federal income tax reporting
purposes.
Organization Costs. Costs incurred by the Fund in connection with its
organization and initial registration of shares have been deferred and are being
amortized on a straight-line basis over a five-year period.
Other. Investment transactions are accounted for on a trade date basis.
Distributions of net realized gains to shareholders are recorded on the
ex-dividend date. Interest income is accrued pro rata to the earlier of the call
or maturity date.
19 - Scudder Limited Term Tax Free Fund
<PAGE>
B. Purchases and Sales of Securities
For the year ended October 31, 1996, purchases and sales of investments
(excluding short-term) aggregated $49,093,127 and $43,444,782, respectively.
C. Related Parties
Under the Investment Management Agreement (the "Agreement") with Scudder,
Stevens & Clark, Inc. (the "Adviser"), the Fund agrees to pay the Adviser a fee
equal to an annual rate of 0.60% of the Fund's average daily net assets,
computed and accrued daily and payable monthly. As manager of the assets of the
Fund, 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 Agreement also provides that if the Fund's expenses,
exclusive of taxes, interest, and extraordinary expenses, exceed specified
limits, such excess, up to the amount of the management fee, will be paid by the
Adviser.
For the period September 1, 1995 to April 30, 1996 the Adviser agreed not to
impose all or a portion of its management fee and to maintain the annualized
expenses of the Fund at not more than 0.50% of average daily net assets.
Effective May 1, 1996, the Adviser agreed to maintain the annualized expenses at
0.75% of average daily net assets until December 31, 1996. For the year ended
October 31, 1996, the Adviser imposed fees amounting to $500,912 and the portion
not imposed amounted to $230,799 at October 31, 1996.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
year ended October 31, 1996, the amount charged to the Fund by SSC aggregated
$44,784 of which $3,557 was unpaid at October 31, 1996.
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
October 31, 1996, the amount charged to the Fund by SFAC aggregated $39,722 of
which $3,351 was unpaid at October 31, 1996.
The Trust pays each Trustee not affiliated with the Adviser $4,000 annually plus
specified amounts for attended board and committee meetings. For the year ended
October 31, 1996, Trustees' fees and expenses charged to the Fund aggregated
$38,262.
20 - Scudder Limited Term Tax Free Fund
<PAGE>
Report of Independent Accountants
Tax Information
To the Trustees of Scudder Tax Free Trust and to the Shareholders of Scudder
Limited Term Tax Free Fund:
We have audited the accompanying statement of assets and liabilities of Scudder
Limited Term Tax Free Fund, including the investment portfolio, as of October
31, 1996, and the related statement of operations for the year then ended, the
statements of changes in net assets for the two years in the period then ended,
and the financial highlights for the two years then ended and the period
February 15, 1994 (commencement of operations) to October 31, 1994. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Scudder Limited Term Tax Free Fund as of October 31, 1996, the results of its
operations for the year then ended, the statements of changes in its net assets
for the two years in the period then ended, and the financial highlights for the
two years then ended October 31, 1996, and the period February 15, 1994
(commencement of operations) to October 31, 1994 in conformity with generally
accepted accounting principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
December 18, 1996
21 - Scudder Limited Term Tax Free Fund
<PAGE>
Tax Information
Of the dividends paid by the Scudder Limited Term Tax Free Fund from net
investment income for the taxable year ended October 31, 1996, 100% constituted
exempt interest dividends for regular federal income tax purposes.
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$210,333 as capital gain dividends for its taxable year ended October 31, 1996.
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.
22 - Scudder Limited Term Tax Free Fund
<PAGE>
This Page intentionally left blank.
23 - Scudder Limited Term Tax Free Fund
<PAGE>
This Page intentionally left blank.
24 - Scudder Limited Term Tax Free Fund
<PAGE>
Officers and Trustees
David S. Lee*
President and Trustee
Dawn-Marie Driscoll
Trustee; Attorney and Corporate Director
Peter B. Freeman
Trustee; Corporate Director and Trustee
Wesley W. Marple, Jr.
Trustee; Professor of Business Administration, Northeastern University
Juris Padegs*
Trustee
Jean C. Tempel
Trustee; General Partner, TL Ventures
Donald C. Carleton*
Vice President
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
Vice President
Thomas F. McDonough*
Vice President and Secretary
Pamela A. McGrath*
Vice President and Treasurer
M. Ashton Patton*
Vice President
Edward J. O'Connell*
Vice President and Assistant Treasurer
Coleen Downs Dinneen*
Assistant Secretary
*Scudder, Stevens & Clark, Inc.
25 - Scudder Limited Term Tax Free Fund
<PAGE>
Investment Products and Services
The Scudder Family of Funds+++
- --------------------------------------------------------------------------------
Money Market
- ------------
Scudder U.S. Treasury Money Fund
Scudder Cash Investment Trust
Tax Free Money Market+
- ----------------------
Scudder Tax Free Money Fund
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 GNMA Fund
Scudder Income Fund
Scudder Zero Coupon 2000 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 Growth and Income Fund
U.S. Growth
- -----------
Value
Scudder Capital Growth Fund
Scudder Value Fund
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund
Scudder Quality Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global Growth
- -------------
Worldwide
Scudder Global Fund
Scudder International Fund
Scudder Global Discovery Fund
Scudder Gold Fund
Regional
Scudder Greater Europe Growth Fund
Scudder Emerging Markets Growth Fund
Scudder Pacific Opportunities Fund
Scudder Latin America Fund
The Japan Fund
Retirement Programs
- -------------------
IRA
SEP IRA
SIMPLE IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan *+++ ++++
(a variable annuity)
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The First Iberian Fund, Inc.
The Korea Fund, Inc.
The Latin America Dollar Income Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder World Income Opportunities
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 from expected
least to most risk. +A portion of the income from the tax-free funds may be
subject to federal, state, and local taxes. *Not available in all states.
+++ +++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, Stevens & Clark, Inc., are
traded on various stock exchanges.
26 - Scudder Limited Term Tax Free Fund
<PAGE>
How to Contact Scudder
Account Service and Information
- --------------------------------------------------------------------------------
For existing account services and transactions
Scudder Investor Relations -- 1-800-225-5163
For 24 hour account information, fund information, exchanges,
and an overview of all the services available to you
Scudder Electronic Account Services -- http://funds.scudder.com
For information about your Scudder accounts, exchanges and redemptions
Scudder Automated Information Line (SAIL) -- 1-800-343-2890
Investment Information
- --------------------------------------------------------------------------------
For information about the Scudder funds, including additional
applications and prospectuses, or for answers to investment questions
Scudder Investor Relations -- 1-800-225-2470
[email protected]
Scudder's World Wide Web Site -- http://funds.scudder.com
For establishing 401(k) and 403(b) plans
Scudder Defined Contribution Services -- 1-800-323-6105
Scudder Brokerage Services
- --------------------------------------------------------------------------------
To receive information about this discount brokerage service and to
obtain an application
Scudder Brokerage Services* -- 1-800-700-0820
Please address all correspondence to
- --------------------------------------------------------------------------------
The Scudder Funds
P.O. Box 2291
Boston, Massachusetts
02107-2291
Or Stop by a Scudder Funds Center
- --------------------------------------------------------------------------------
Many shareholders enjoy the personal, one-on-one service of the
Scudder Funds Centers. Check for a Funds Center near you--they can be
found in the following cities:
Boca Raton Chicago San Francisco
Boston New York
For information on Scudder Treasurers Trust(TM), an institutional cash
management service for corporations, non-profit organizations and
trusts which utilizes certain portfolios of Scudder Fund, Inc.*
($100,000 minimum), call: 1-800-541-7703.
For information on Scudder Institutional Funds**, funds designed to
meet the broad investment management and service needs of banks and
other institutions, call: 1-800-854-8525.
Scudder Investor Relations and Scudder Funds Centers are services provided
through Scudder Investor Services, Inc., Distributor.
* Scudder Brokerage Services, Inc., 42 Longwater Drive, Norwell, MA 02061 --
Member NASD/SIPC
** Contact Scudder Investor Services, Inc., Distributor, to receive a
prospectus with more complete information, including management fees and
expenses. Please read it carefully before you invest or send money.
27 - Scudder Limited Term Tax Free Fund
<PAGE>
Celebrating Over 75 Years of Serving Investors
Established in 1919 by Theodore Scudder, Sidney Stevens, and F. Haven Clark,
Scudder, Stevens & Clark was the first independent investment counsel firm in
the United States. Since its birth, Scudder's pioneering spirit and commitment
to professional long-term investment management have helped shape the investment
industry. In 1928, we introduced the nation's first no-load mutual fund. Today
we offer over 40 pure no load(TM) funds, including the first international
mutual fund offered to U.S. investors.
Over the years, Scudder's global investment perspective and dedication to
research and fundamental investment disciplines have helped us become one of the
largest and most respected investment managers in the world. Though times have
changed since our beginnings, we remain committed to our long-standing
principles: managing money with integrity and distinction; keeping the interests
of our clients first; providing access to investments and markets that may not
be easily available to individuals; and making investing as simple and
convenient as possible through friendly, comprehensive service.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by
individual investors.
