[Image] Scudder Medium Term Tax Free Fund Profile [Image]
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The fund profile, a supplement to the full prospectus, is designed as an
easy-to-read summary of fund risks, fees, and objectives. You can click on
any question to link to the Fund's prospectus and get more information on
that topic. Or, if you wish, you can proceed directly to the Fund's
prospectus. Once you have read the prospectus and considered your
investment goals, you can proceed to a Scudder Funds application.
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Fund Profile
November 25, 1996
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1. What Is The Fund's Objective?
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Scudder Medium Term Tax Free Fund seeks to provide a high level of income
free from regular federal income tax and to limit principal fluctuation.
2. What Does The Fund Invest In?
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At least 80% of the Fund's total assets will normally be invested in
municipal bonds. The Fund normally expects to invest 100% of its portfolio
assets in municipal securities, the interest on which is exempt from
federal income tax. The Fund will invest primarily in high-grade,
intermediate-term municipal bonds. The dollar-weighted average effective
maturity of the Fund's portfolio will range between five and 10 years. The
Fund may not purchase individual securities with effective maturities
greater than 15 years.
Normally, at least 80% of the Fund's net assets are invested in municipal
bonds rated within the three highest 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 bonds which are rated 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 equivalents, as determined by the adviser. The Fund may, however,
invest in a debt security so rated by one agency even though the security
may be rated lower by one or more of the other agencies.
For temporary defensive purposes, the Fund may invest more than 20% of its
assets in taxable securities. The Fund may invest more than 25% of its
assets in industrial development or other private activity bonds.
3. What Are The Risks Of Investing In The Fund?
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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 falls 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.
4. For Whom Is This Fund Appropriate?
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You may wish to consider this Fund if you are seeking a higher level of
federally tax-free income than offered by tax-free money market or other
short-term investments, and:
o can tolerate fluctuations in share price and yield,
o an alternative to a tax-free money fund,
o greater price stability than is generally available from longer-term
municipal bonds, and
o have or plan to have other investments for the benefit of
diversification.
5. What Are The Fund's Expenses And Fees?
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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 Medium Term Tax Free Fund are:
Shareholder transaction expenses --
Expenses charged directly to your account for various transactions.
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 December 31, 1995, during which
Scudder maintained the total annualized expenses of the Fund at not more
than 0.70% of average daily net assets from January 1, 1995 to October
31, 1995. Had Scudder not done so, expenses would have amounted to the
figures below.
Investment management fee 0.57%
12b-1 fees None
Other expenses 0.15%
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Total Fund operating expenses 0.72%
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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
$7 $ 23 $40 $90
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.
6. How Has The Fund Performed Historically?
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This chart shows how the Fund has performed over the past 10 years,
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 4.54%.
A BAR CHART WAS INSERTED HERE. THE CAPTION AND DATA FROM THIS CHART ARE LISTED
BELOW:
Total returns for years ended December 31:
1986 10.54%
1987 3.23
1988 4.92
1989 6.00
1990 6.29
1991 12.13
1992 8.93
1993 10.94
1994 -3.50
1995 14.32
BAR CHART ENDS HERE
The Fund's Average Annual Total Return
for the period ended September 30, 1996
One Year 4.79%
Five Years 6.96%
Ten Years 6.64%
If the adviser had not maintained the Fund's expenses, the average annual
total return for the one year, five year and ten year periods would have
been lower.
7. Who Manages The Fund?
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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.
Lead Portfolio Manager Donald C. Carleton has been a portfolio manager
at Scudder since he joined the firm in 1983. M. Ashton Patton,
Portfolio Manager, joined Scudder in 1986 and has been a portfolio
manager since 1990.
8. How Can I Invest?
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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?
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You may redeem shares at the current share price on any business day by
check, telephone, fax, or mail.
10. When Are Distributions Made?
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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.
11. What Services Does Scudder Provide?
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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
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[Image]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.
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