Scudder
Limited Term Tax
Free Fund
Semiannual Report
April 30, 1997
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.
Scudder (logo)
<PAGE>
Table of Contents
2 In Brief
3 Letter from the Fund's President
4 Performance Update
5 Portfolio Summary
6 Portfolio Management Discussion
9 Investment Portfolio
14 Financial Statements
17 Financial Highlights
18 Notes to Financial Statements
20 Officers and Trustees
21 Investment Products and Services
22 Scudder Solutions
In Brief
o Scudder Limited Term Tax Free Fund received a five-star rating from
Morningstar, reflecting the highest possible rating for risk-adjusted
performance through April 30, 1997.*
o As of April 30, 1997, Scudder Limited Term Tax Free Fund's 30-day net
annualized SEC yield was 4.22%, equivalent to a 6.99% 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
on April 30, 1997
BAR CHART DATA:
Scudder
Limited Term Taxable
Tax Free Fund Equivalent
4.22% 6.99%
o For the six months ended April 30, 1997, Scudder Limited Term Tax Free Fund
posted a total return of 1.57%. This return outpaced the 1.50% average
performance of the Fund's peers according to Lipper.
*For your information, these ratings are subject to change every month and are
calculated from the Fund's three-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 five stars for
three-year performance, and was rated among 1,257 municipal funds for the
period. Of the funds rated, 10% received five stars, and 22.5% received four
stars. Past performance is no guarantee of future returns.
2 - Scudder Limited Term Tax Free Fund
<PAGE>
Letter From the Fund's President
Dear Shareholders,
We are pleased to report on Scudder Limited Term Tax Free Fund's
performance over its most recent semiannual period. In addition to the Fund's
five-star Morningstar rating (see "In Brief" on page two for more information),
the Fund posted a 6.99% tax equivalent yield for investors in the highest
federal tax bracket, significantly higher than current CD rates. And the Fund
earned a positive total return of 1.57%, despite a significant rise in
short-term interest rates during the period that brought about price declines
for many short-term municipal bonds. Please read the discussion beginning on
page 6 for more information.
As part of Scudder's ongoing efforts to meet the needs of investors, last
fall we launched an innovative new product called Scudder Pathway Series. A
"fund of funds," Pathway Series is a collection of four distinct portfolios --
Conservative, Growth, Balanced, and International -- that offers flexibility,
diversification, and simplicity. Each portfolio invests in a diverse mix of
Scudder funds, and each is geared toward people with different investment goals
and risk tolerances. Moreover, a team of Scudder's investment professionals
rebalances the mix within the portfolios as market conditions warrant.
Please see pages 21 through 23 for more information on Scudder products and
services. As always, please call a Scudder Investor Information representative
at 1-800-225-2470 if you have questions about your account or any Scudder fund.
Thank you for investing with Scudder.
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 April 30, 1997
- ----------------------------------------------------------------
FUND INDEX COMPARISONS
- ----------------------------------------------------------------
Total Return
Period Growth --------------
Ended of Average
4/30/97 $10,000 Cumulative Annual
- --------------------------------------------
SCUDDER LIMITED TERM TAX FREE FUND
- --------------------------------------------
1 Year $ 10,433 4.33% 4.33%
Life of Fund* $ 11,489 14.89% 4.22%
- --------------------------------------------
LEHMAN BROTHERS MUNICIPAL BOND INDEX
(3 YEAR)
- --------------------------------------------
1 Year $ 10,462 4.62% 4.62%
Life of Fund* $ 11,561 15.61% 4.68%
- --------------------------------------------
*The Fund commenced operations on February 15, 1994.
Index comparisons begin on 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
4/97 $11,551
LEHMAN BROTHERS MUNICIPAL BOND INDEX (3 YEAR)
Year Amount
- ----------------------
2/94* $10,000
4/94 $ 9,938
10/94 $10,058
4/95 $10,401
10/95 $10,862
4/96 $11,051
10/96 $11,352
4/97 $11,561
The 3-year Lehman Brothers Municipal Bond Index is an unmanaged,
market-value-weighted measure of the short-term municipal bond market and
includes bonds with maturities of two to three years. Index returns assume
reinvested dividends and, unlike Fund returns, do not reflect any 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 APRIL 30
1994* 1995 1996 1997
-------------------------------------
NET ASSET VALUE... $ 11.80 $ 11.80 $ 11.92 $ 11.89
INCOME DIVIDENDS.. $ .09 $ .57 $ .55 $ .52
CAPITAL GAINS
DISTRIBUTIONS..... $ -- $ -- $ .01 $ .02
FUND TOTAL
RETURN (%)........ -.35 5.01 5.80 4.33
INDEX TOTAL
RETURN (%)........ -.62 4.64 6.26 4.62
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 April 30, 1997
- ---------------------------------------------------------------------------
DIVERSIFICATION
- ---------------------------------------------------------------------------
Hospital/Health 19%
Core Cities/Lease 18%
Electric Utility Revenue 12%
State General Obligation 11%
Port/Airport Revenue 8%
School District/Lease 7%
Pollution Control/
Industrial Development 6%
Housing Finance Authority 5%
Student Loans 4%
Miscellaneous Municipal 10%
- --------------------------------------
100%
- --------------------------------------
During the Fund's most recent
semiannual period we added to
our position in New York City
General Obligation and (State of)
Washington Public Power Supply
System bonds, which have
performed well over the past
year.
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
QUALITY
- --------------------------------------------------------------------------
AAA 55%
AA 15%
A 20%
BBB 10%
- --------------------------------------
100%
- --------------------------------------
Weighted average quality: AA
Overall credit quality remains
high, with 70% of the bonds in
the Fund's portfolio rated AAA or
AA.
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
EFFECTIVE MATURITY
- --------------------------------------------------------------------------
Less than 1 year 15%
1 - 5 years 47%
5 - 10 years 38%
- --------------------------------------
100%
- --------------------------------------
Weighted average effective maturity: 4.1 years
We reduced our holdings of
two-year bonds and focused
mainly on three- to eight-year
bonds, which we believe offer
attractive value relative to other
bonds in the Fund's permissible
maturity range.
For more complete details about the Fund's investment portfolio, see page 9.
5 - Scudder Limited Term Tax Free Fund
<PAGE>
Portfolio Management Discussion
Dear Shareholders,
Scudder Limited Term Tax Free Fund performed well over a semiannual period that
witnessed mixed performance for municipal bonds, and included an interest rate
hike by the Federal Reserve. On April 30, 1997, the Fund's 30-day net annualized
SEC yield was 4.22%, equivalent to a fully taxable yield of 6.99% for
shareholders subject to the 39.6% maximum federal income tax rate. The Fund's
"tax-equivalent" yield is significantly higher than current yields available
from taxable investments of similar maturity and credit quality. The Fund's
tax-equivalent yield also compares favorably with the 5.37% average yield of
2-year bank certificates of deposit as of April 30, 1997. 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. In addition, the Fund's four-year average maturity allows for a higher
yield.
As the accompanying graph shows, over the past six months, the Fund's
tax-equivalent yield has been consistently higher than the average yield of
2-year CDs tracked nationally.
THE PRINTED DOCUMENT CONTAINS A LINE CHART HERE
LINE CHART TITLE: Scudder Limited Term Tax Free Fund's
Tax-Equivalent Yield vs. National Two-Year
CD Rates
PERIOD: November 1996 through April 1997
LINE CHART DATA:
SLTTFF National
tax-equivalent average
yield of two year CD yields
6.44% 5.20%
6.51 5.15
6.56 5.17
6.27 5.18
6.62 5.21
6.99 5.37
Source of CD data: BanxQuote.
Tax equivalent yields are for the 39.6% maximum federal tax rate.
As short-term interest rates rose during the six-month period, prices of
short-term municipal bonds generally declined. Despite the rise in rates, the
Fund posted a positive 1.57% total return for the six months ended April 30,
1997. During the period, $0.26 in income distributions and $0.02 in long-term
capital gains offset a net asset value decline of $0.09 to $11.89. The Fund's
total return compares favorably with the 1.50% return of the 31 similar
municipal bond funds tracked by Lipper Analytical Services, Inc. As shown in the
chart on page 7, the Fund's performance placed it in the top 25% of its peer
group for one- and three-year periods:
6 - Scudder Limited Term Tax Free Fund
<PAGE>
Consistently Above-Average Performance
(Returns for periods ended April 30, 1997)
Scudder
Limited
Term Tax Number
Free of
Fund Lipper Funds Percentile
Period return return Rank tracked Ranking
--------------------------------------------------------
six
months 1.57% 1.50% 13 of 31 Top 42%
1 year 4.33% 4.01% 6 of 28 Top 21%
3 years* 5.03% 4.51% 2 of 16 Top 13%
*Average annual returns; past performance does not guarantee future results.
Economic and Market Review
Scudder Limited Term Tax Free Fund's most recent semiannual period witnessed a
healthy U.S. economy that combined strong consumer spending with continued low
inflation. The economy experienced real (inflation-adjusted) Gross Domestic
Product (GDP) growth of 2.4% during 1996, and at the close of the first quarter
of 1997 was on track for GDP growth of 2.5% or higher in 1997. The stock market
scaled unprecedented heights despite a short-lived sell-off in mid-March, and
the bond market struggled unsuccessfully to keep up. In the midst of this
healthy environment for corporate profits and the stock market, bond market
participants continued to monitor indicators closely for signs of economic
overheating and accelerating inflation. Their worry was reflected in the
performance of the Treasury market over the Fund's most recent semiannual
period, where yields of 10-year Treasury bonds rose approximately one third of a
percentage point, and prices declined 2.6%.
Municipals outperformed Treasuries during the six-month period, as yields of
10-year municipals rose only one fifth of a percentage point, and prices
declined 2%. Municipal bond prices were supported by shrinking overall supply, a
moderate level of new issuance, and steady demand from both individuals and
institutions such as insurance companies.
Our Portfolio Strategy
Scudder Limited Term Tax Free Fund is designed to deliver tax-free income with
below-average price risk through investments in municipal bonds with effective
maturities between one and 10 years. The Fund seeks higher income than is
typically available from tax-free money market investments and less share price
fluctuation than is found in intermediate- and long-term tax free bonds. The
Fund's professional management, economies of scale, liquidity, ability to
diversify its assets, and dividend reinvestment continue to offer advantages
compared to holding individual municipal bonds. Over the Fund's most recent
fiscal year we continued to diversify the Fund's maturities, but reduced our
position in two-year bonds because of the possibility of further short-term
interest rate increases by the Fed. We focused mainly on three- to eight-year
bonds because we felt they offered attractive value compared with other bonds in
the Fund's permissible maturity range. The Fund also continued to emphasize
premium noncallable bonds, which generally exhibit less interest rate
sensitivity than callable bonds priced close to par.
7 - Scudder Limited Term Tax Free Fund
<PAGE>
During the period we focused on modestly increasing the Fund's yield while
maintaining high credit quality. One way we implemented this strategy was to add
to our positions in New York City General Obligation and (State of) Washington
Public Power Supply System bonds. Both issues have performed well over the past
year, and we believe these bonds represent attractive value while paying high
coupons. The Fund's overall credit quality remains high, with 70% of the bonds
in the Fund's portfolio rated AAA or AA.
Our Outlook
Though it is possible that the national economy's momentum will carry over for
the remainder of 1997, we believe that a slight slowdown could occur later this
year. U.S. consumers, the major drivers of the country's economic growth,
continue to be overextended: Credit card defaults recently matched levels last
seen just after the 1989-90 recession. Deregulation of key industries worldwide,
the globalization of economic activity, and technological advances continue to
dampen any resurgence of inflation, and any signs that the economy is slowing
even slightly could soothe the bond market and diminish upward pressure on rates
coming from the Federal Reserve or market participants.
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
8 - Scudder Limited Term Tax Free Fund
<PAGE>
Investment Portfolio as of April 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating (b) Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Short-Term Municipal Investments 5.0%
- ----------------------------------------------------------------------------------------------------------------------------------
Alaska
Valdez, AK, Marine Term Revenue, Daily Demand Note, 3.9%, 12/1/33* ............... 3,000,000 A-1+ 3,000,000
Delaware
Wilmington, DE, Hospital Revenue, Franciscan Health Systems, Series A, Daily
Demand Note, 3.95%, 7/1/11* .................................................... 100,000 A-1+ 100,000
Pennsylvania
Delaware County, PA, Airport Facilities Revenue, United Parcel Service, Daily
Demand Note, 3.85%, 12/1/15* ................................................... 400,000 AAA 400,000
Montgomery County, PA, Higher Education & Health Authority Hospital Revenue,
Monthly Reset, 7/5/11, 3.85%, 7/5/11* .......................................... 500,000 AAA 500,000
Texas
Grapevine, TX, Industrial Development Revenue Bond, Daily Demand Note, 12/1/24,
3.95%, 12/1/24* ................................................................ 100,000 P1 100,000
Lone Star, TX, Airport Improvement Authority, Daily Demand Note:
Series A-4, 3.95%, 12/1/14* .................................................... 400,000 MIG1 400,000
3.95%, 12/1/14* ................................................................ 600,000 MIG1 600,000
Series 1995A-3, 3.95%, 12/1/14* ................................................ 500,000 MIG1 500,000
Lone Star, TX, Apartment Improvements Authority, Daily Demand Note, 3.95%,
12/1/14* ....................................................................... 200,000 MIG1 200,000
- ----------------------------------------------------------------------------------------------------------------------------------
Total Short-Term Municipal Investments (Cost $5,800,000) 5,800,000
- ----------------------------------------------------------------------------------------------------------------------------------
Intermediate-Term Municipal Investments 95.0%
- ----------------------------------------------------------------------------------------------------------------------------------
Arizona
Central Arizona Water Conservation District, Central Arizona Project, prerefunded
11/1/00, 7.5%, 11/1/05*** ...................................................... 1,000,000 AAA 1,108,860
Arkansas
Rogers, AR, Sales and Use Tax Revenue, 5%, 11/1/15 ............................... 1,000,000 AA 1,002,430
California
Foothill/Eastern Transportation Corridor Agency, CA, Toll Road Revenue, Senior
Lien, Series A, Zero Coupon, 1/1/05 ............................................ 1,000,000 BBB 651,290
Orange County, CA, Recovery Notes, Series A, 6.5%, 6/1/05 (c) .................... 1,665,000 AAA 1,829,352
Sacramento, CA, Cogeneration Project Revenue, Proctor & Gamble Project,
Series 1995, 7%, 7/1/04 ........................................................ 1,000,000 BBB 1,081,020
Colorado
Castle Rock Ranch, CO, Public Improvements Authority, Public Facilities Revenue,
Series 1996, 5.9%, 12/1/03 ..................................................... 1,475,000 AA 1,521,935
</TABLE>
The accompanying notes are an integral part of the financial statements.
9 - Scudder Limited Term Tax Free Fund
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating (b) Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Connecticut
Connecticut Development Authority, Airport Facilities, Windsor Locks Hotel,
Mandatory Tender Note, Series B, prerefunded 10/1/97, 5.8%, 10/1/25 ............ 2,000,000 AA 2,010,360
Delaware
Delaware, General Obligation, 6.6%, 4/1/10 ....................................... 1,700,000 AAA 1,843,293
District Of Columbia
District of Columbia, General Obligation:
Series A, 5.625%, 6/1/02 (c) ................................................... 1,500,000 AAA 1,535,490
Series D, 5.25%, 12/1/03 (c) ................................................... 1,000,000 AAA 1,002,710
Series 1993 C, 5.1%, 12/1/99 ................................................... 1,750,000 AAA 1,767,640
Florida
Dade County, FL, Port Authority Revenue, Series 1968 C, 5.5%, 10/1/07 ............ 5,110,000 AAA 5,194,928
Georgia
Municipal Electric Authority of Georgia, Power Revenue, 6.6%, 1/1/01 (c) ......... 1,000,000 AAA 1,060,230
Illinois
Berwin, IL, MacNeal Memorial Hospital, 5.5%, 6/1/01 (c) .......................... 2,795,000 AAA 2,850,062
Chicago, IL, General Obligation, Tender Note, Series C, 6.25%, 10/31/02 (c) ...... 3,450,000 AAA 3,653,447
Evergreen Park, Illinois Hospital Facilities, Little County Mary's Hospital,
7.75%, 2/15/09 (c) ............................................................. 1,200,000 AAA 1,253,040
Illinois Health Facilities Authority, Revenue Refunding, Sherman Hospital Project,
6.5%, 8/1/01 (c) ............................................................... 1,025,000 AAA 1,087,576
Indiana
Indiana Health Facility Finance Authority, Hospital Revenue, Ancilla Systems Inc.,
Series A, 5.875%, 7/1/02 (c) ................................................... 1,000,000 AAA 1,040,270
Indiana Housing Finance Authority, Single Family Mortgage Revenue, Series 1995
C-1, 5.25%, 7/1/12 ............................................................. 3,625,000 AAA 3,645,336
Madison County, IN, Hospital Authority, Holy Cross Health System, 6.3%,
12/1/98 (c) .................................................................... 1,000,000 AAA 1,030,660
Iowa
Cedar Rapids, IA, Hospital Revenue, St. Luke's Methodist Hospital, 5.65%,
8/15/02 (c) .................................................................... 1,250,000 AAA 1,285,513
Des Moines, IA, Hospital Revenue, St. Luke's Methodist Hospital, Series 1996A,
6%, 11/15/02 ................................................................... 1,750,000 AA 1,814,908
Kentucky
Jefferson County, KY, Trust Certificate, Enhanced 911 Emergency Telephone Project,
Series 1996, 5.25%, 9/1/98 ..................................................... 1,115,000 A 1,128,993
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 - Scudder Limited Term Tax Free Fund
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating (b) Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Louisiana
Jefferson Parish, LA, School Board Sales & Use Tax Revenue, ETM, Series 1986 A,
7.25%, 2/1/01** ................................................................ 6,135,000 A 6,590,524
Louisiana State, General Obligation, Series 1996 A, 6%, 8/1/02 (c) ............... 1,000,000 AAA 1,050,310
Maine
Maine, General Obligation, 6%, 7/1/98 ............................................ 1,000,000 AA 1,022,900
Massachusetts
New England Education Loan Marketing Corporation, Massachusetts Student Loan
Revenue Refunding:
Series A, 6%, 9/1/98 .......................................................... 2,000,000 AAA 2,043,320
Series D, 6.2%, 9/1/00 ........................................................ 2,000,000 AAA 2,076,100
Michigan
Michigan State Hospital Finance Authority Revenue, Genesys Health System,
Series A, 6.6%, 10/1/98 ........................................................ 1,000,000 BBB 1,021,490
New Hampshire
New Hampshire Higher Education & Health Facilities Authority, St. Josephs
Hospital, 5.65%, 1/1/04 (c) .................................................... 1,095,000 AAA 1,113,133
New York
New York City, NY, General Obligation:
Series 1991 A, 3%, 8/15/02 (c) ................................................. 1,000,000 AAA 910,140
Series 1997 I, 6.25%, 4/15/06 .................................................. 1,000,000 A 1,038,850
Series 1995 D, 6.5%, 2/15/05 ................................................... 1,315,000 A 1,387,062
Series 1996 I, 6.5%, 3/15/05 ................................................... 1,575,000 A 1,662,098
Series 1995 B, 6.75%, 8/15/03 .................................................. 6,000,000 A 6,406,860
Series 1996 A, 6.75%, 8/1/04 ................................................... 1,500,000 BBB 1,602,420
New York State Dormitory Authority, State University Educational Facility,
Series A, 6.5%, 5/15/04 ........................................................ 1,000,000 A 1,061,290
New York State Medical Care Facilities, Finance Agency, Mount Sinai Hospital,
Series 1983, 5.95%, 8/15/09 .................................................... 1,050,000 AAA 1,072,313
New York State Urban Development Corporation Project, Onondaga County
Convention Center:
6%, 1/1/04 .................................................................... 1,445,000 BBB 1,489,636
6%, 1/1/05 .................................................................... 1,535,000 BBB 1,582,355
Syracuse, NY, Industrial Development Agency, Pilot Revenue Bonds, Series 1995,
5.125%, 10/15/02 ............................................................... 1,500,000 AA 1,481,385
North Carolina
North Carolina Municipal Power Agency #1, Catawaba Electric Revenue,
5.75%, 1/1/02 (c) .............................................................. 1,150,000 AAA 1,192,700
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 - Scudder Limited Term Tax Free Fund
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating (b) Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pennsylvania
Allegheny County, PA, Hospital Development Authority, 6.4%, 7/1/99 (c) ........... 1,010,000 AAA 1,045,992
Delaware County, PA, Industrial Development Authority, Series 1997 A,
6.1%, 1/1/05 ................................................................... 2,000,000 A 2,061,480
Philadelphia, PA, Gas Works Revenue, prerefunded 7/1/97, 7.875%, 7/1/17*** ....... 500,000 AAA 513,340
University of Pittsburgh, Pennsylvania Higher Education, General Obligation,
Series A, prerefunded 6/1/97, 8.375%, 6/1/05*** ................................ 1,000,000 AAA 1,023,810
Puerto Rico
Puerto Rico Commonwealth:
prerefunded 7/1/97, 7.125%, 7/1/02 ............................................. 410,000 AAA 420,484
7.125%, 7/1/02 ................................................................. 1,590,000 A 1,628,939
Rhode Island
Rhode Island, Consolidated Capital Development Loan, General Obligation,
Series 1996, 6%, 8/1/03 (c) .................................................... 1,690,000 AAA 1,780,567
Texas
Austin, TX:
Independent School District, Guaranteed General Obligation, 8.125%, 8/1/01 ..... 1,000,000 AAA 1,127,570
Utility System Revenue:
Series A, 6.3%, 11/15/01 (c) .................................................. 365,000 AAA 388,013
Series A, 6.3%, 11/15/01 (c) .................................................. 635,000 AAA 671,316
Water, Sewer & Electric Refunding Revenue, prerefunded 5/15/97, 14.25%,
11/15/06*** ................................................................. 1,105,000 AAA 1,109,707
Ector County, TX, Hospital District Revenue, 5.5%, 4/15/03 (c) ................... 1,000,000 AAA 1,016,710
Midland County, TX, Hospital District, 4.85%, 6/1/97 ............................. 1,815,000 BBB 1,815,545
Richardson, TX, Hospital Authority Refunding and Improvement, Richardson Medical
Center, Series 1993, 6.5%, 12/1/12 ............................................. 960,000 BBB 975,562
Texas Department of Housing & Community Affairs, Single-Family Mortgage Revenue,
Series B, 5.5%, 3/1/11 (c) ..................................................... 2,000,000 AAA 2,010,740
Texas Turnpike Authority, North Dallas Thruway Revenue, 6.7%, 1/1/98 (c) ......... 1,310,000 AAA 1,334,510
Virgin Islands
Virgin Islands, General Obligation, 6.9%, 10/1/01 ................................ 1,000,000 BBB 1,052,370
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 1,580,079
Washington Public Power Supply System:
Nuclear Project #1, Revenue Refunding, Series C, 7.3%, 7/1/98 .................. 3,000,000 AA 3,105,000
Nuclear Project #2, Refunding Revenue Series C, 7.3%, 7/1/00 ................... 1,300,000 AA 1,389,180
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 - Scudder Limited Term Tax Free Fund
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating (b) Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Nuclear Project #2, Refunding Revenue Series A, 6.3%, 7/1/01 ................... 1,000,000 AA 1,047,530
Nuclear Project #2, Refunding Revenue Series 1992A, 5.7%, 7/1/02 ............... 1,550,000 AA 1,590,610
West Virginia
Wayne County, WV, Industrial Development, Atlantic Richfield Company Project,
11.75%, 12/1/01 ................................................................ 495,000 A 634,600
Wisconsin
Milwaukee, WI, Metropolitan Sewer District Revenue, Series A, 6.7%, 10/1/01 ...... 1,000,000 AA 1,075,380
Wisconsin Health and Education Facilities Authority:
St. Luke's Medical Center, 6.6%, 8/15/01 (c) ................................... 1,745,000 AAA 1,856,453
Wheaton Franciscan Services, prerefunded 8/15/98, 8.2%, 8/15/18 (c)*** ......... 1,000,000 AAA 1,069,620
- ----------------------------------------------------------------------------------------------------------------------------------
Total Intermediate-Term Municipal (Cost $108,196,282) 109,529,336
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio - 100.0% (Cost $113,996,282) (a) 115,329,336
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The cost for federal income tax purposes was $113,996,282. At April 30,
1997, net unrealized appreciation for all securities based on tax cost was
$1,333,054. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $1,501,213 and aggregate gross unrealized depreciation for all
securities in which there was an excess tax cost over market value of
$168,159.
(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, Connie Lee,
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.
13 - Scudder Limited Term Tax Free Fund
<PAGE>
Financial Statements
Statement of Assets and Liabilities
as of April 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Assets
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investments, at market (identified cost $113,996,282) ........................ $ 115,329,336
Cash ......................................................................... 25,391
Interest receivable .......................................................... 1,743,499
Receivable for Fund shares sold .............................................. 3,100
Deferred organization expenses ............................................... 14,372
Other assets ................................................................. 2,257
--------------
Total assets ................................................................. 117,117,955
Liabilities
---------------------------------------------------------------------------------------------------------------------------
Dividends payable ............................................................ 267,343
Payable for Fund shares redeemed ............................................. 74,299
Accrued management fee ....................................................... 44,703
Other payables and accrued expenses .......................................... 45,241
--------------
Total liabilities ............................................................ 431,586
-------------------------------------------------------------------------------------------------
Net assets, at market value $ 116,686,369
-------------------------------------------------------------------------------------------------
Net Assets
---------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Unrealized appreciation on investments ....................................... 1,333,054
Accumulated net realized gain ................................................ 31,457
Paid-in capital .............................................................. 115,321,858
-------------------------------------------------------------------------------------------------
Net assets, at market value $ 116,686,369
-------------------------------------------------------------------------------------------------
Net Asset Value
---------------------------------------------------------------------------------------------------------------------------
NetAsset Value, offering and redemption price per share
($116,686,369 / 9,817,356 outstanding shares of beneficial
interest, $.01 par value, unlimited number of --------------
shares authorized) ........................................................ $11.89
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 - Scudder Limited Term Tax Free Fund
<PAGE>
Statement of Operations
six months ended April 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Investment Income
---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Interest ..................................................................... $ 3,128,430
---------------
Expenses:
Management fee ............................................................... 372,688
Custodian and accounting fees ................................................ 32,125
Services to shareholders ..................................................... 34,788
Trustees' fees and expenses .................................................. 13,960
Registration fees ............................................................ 15,134
Auditing ..................................................................... 20,808
Legal ........................................................................ 1,648
Reports to shareholders ...................................................... 13,702
Amortization of organization expense ......................................... 4,159
Other ........................................................................ 4,025
----------------
Total expenses before expense reductions ..................................... 513,037
Expense reductions ........................................................... (51,479)
----------------
Expenses, net ................................................................ 461,558
---------------------------------------------------------------------------------------------------
Net investment income 2,666,872
---------------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
---------------------------------------------------------------------------------------------------------------------------
Net realized gain from investments ........................................... 65,124
Net unrealized depreciation on investments during the period ................. (894,434)
---------------------------------------------------------------------------------------------------
Net loss on investments (829,310)
---------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 1,837,562
---------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15 - Scudder Limited Term Tax Free Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months
Ended
April 30, Year Ended
1997 October 31,
Increase (Decrease) in Net Assets (Unaudited) 1996
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations:
Net investment income ...................................... $ 2,666,872 $ 5,437,602
Net realized gain on investments ........................... 65,124 210,333
Net unrealized appreciation (depreciation) on investments
during the period .......................................... (894,434) (358,014)
-------------- --------------
Net increase in net assets resulting from operations ....... 1,837,562 5,289,921
-------------- --------------
Distributions to shareholders from:
Net investment income ...................................... (2,666,872) (5,437,602)
-------------- --------------
Net realized gains ......................................... (205,773) (50,891)
-------------- --------------
Fund share transactions:
Proceeds from shares sold .................................. 24,136,015 57,374,072
Net asset value of shares issued to shareholders in
reinvestment of distributions .............................. 1,189,538 2,249,313
Cost of shares redeemed .................................... (31,264,532) (57,528,518)
-------------- --------------
Net increase (decrease) in net assets from Fund share
transactions ............................................... (5,938,979) 2,094,867
-------------- --------------
Increase (decrease) in net assets .......................... (6,974,062) 1,896,295
Net assets at beginning of period .......................... 123,660,431 121,764,136
-------------- --------------
Net assets at end of period ................................ $116,686,369 $123,660,431
-------------- --------------
Other Information
---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period .................. 10,318,550 10,139,449
-------------- --------------
Shares sold ................................................ 2,015,273 4,790,986
Shares issued to shareholders in reinvestment of
distributions .............................................. 99,350 187,834
Shares redeemed ............................................ (2,615,816) (4,799,719)
-------------- --------------
Net increase (decrease) in Fund shares ..................... (501,194) 179,101
-------------- --------------
Shares outstanding at end of period ........................ 9,817,356 10,318,550
-------------- --------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 - 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
Six Months February 15, 1994
Ended (commencement of
April 30, Years Ended October 31, operations) to
1997 October 31,
(Unaudited) 1996 1995 1994
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ............... $11.98 $12.01 $11.67 $12.00
------------------------------------------------------------------
Income from investment operations:
Net investment income .............................. .26 .53 .56 .38
Net realized and unrealized gain (loss) on
investments ..................................... (.07) (.02) .34 (.33)
------------------------------------------------------------------
Total from investment operations ................... .19 .51 .90 .05
------------------------------------------------------------------
Less distributions from:
Net investment income .............................. (.26) (.53) (.56) (.38)
Net realized gain on investment transactions ....... (.02) (.01) - -
------------------------------------------------------------------
Total distributions ................................ (.28) (.54) (.56) (.38)
------------------------------------------------------------------
------------------------------------------------------------------
Net asset value, end of period ..................... $11.89 $11.98 $12.01 $11.67
--------------------------------------------------------------------------------------------------------------------------
Total Return (%) (a) ............................... 1.57** 4.33 7.94 .44**
Ratios and Supplemental Data
Net assets, end of period ($ millions) ............. 117 124 122 68
Ratio of operating expenses, net to average daily .. .75* .63 .23 -
net assets (%)
Ratio of operating expenses before expense ......... .83* .82 .85 1.29*
reductions, to average daily net assets
Ratio of net investment income to average daily .... 4.33* 4.46 4.78 4.84*
net assets (%)
Portfolio turnover rate (%) ........................ 17.3* 37.7 37.5 36.3*
</TABLE>
(a) Total returns would have been lower had certain expenses not been reduced.
* Annualized
** Not annualized
The accompanying notes are an integral part of the financial statements.
17 - 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.
The accompanying notes are an integral part of the financial statements.
18 - Scudder Limited Term Tax Free Fund
<PAGE>
B. Purchases and Sales of Securities
For the six months ended April 30, 1997, purchases and sales of investments
(excluding short-term) aggregated $11,692,256 and $9,989,260, 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 Adviser agreed to maintain the annualized expenses at 0.75% of average daily
net assets until December 31, 1997. For the six months ended April 30, 1997, the
Adviser imposed fees amounting to $321,209 and the portion not imposed amounted
to $51,479 at April 30, 1997.
Scudder Service Corporation ("SSC"), a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service agent for the Fund. For the
six months ended April 30, 1997, the amount charged to the Fund by SSC
aggregated $23,365 of which $3,880 was unpaid at April 30, 1997.
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 six months
ended April 30, 1997, the amount charged to the Fund by SFAC aggregated $19,969
of which $3,456 was unpaid at April 30, 1997.
The Trust pays each Trustee not affiliated with the Adviser $4,000 annually plus
specified amounts for attended board and committee meetings. For the six months
ended April 30, 1997, Trustees' fees and expenses charged to the Fund aggregated
$13,960.
The accompanying notes are an integral part of the financial statements.
19 - 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
Kathryn L. Quirk*
Vice President and 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
*Scudder, Stevens & Clark, Inc.
20 - 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 Zero Coupon 2000 Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder High Yield Bond Fund
Global Income
- -------------
Scudder Global Bond Fund
Scudder International Bond Fund
Scudder Emerging Markets Income Fund
Asset Allocation
- ----------------
Scudder Pathway Conservative Portfolio
Scudder Pathway Balanced Portfolio
Scudder Pathway Growth Portfolio
Scudder Pathway International Portfolio
U.S. Growth and Income
- ----------------------
Scudder Balanced Fund
Scudder Growth and Income 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 Growth
- -------------
Worldwide
Scudder Global Fund
Scudder International Growth and Income Fund
Scudder International 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
Retirement Programs
- -------------------
IRA
SEP 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 in order from
expected least risk 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.
21 - Scudder Limited Term Tax Free Fund
<PAGE>
Scudder Solutions
<TABLE>
<CAPTION>
Convenient ways to invest, quickly and reliably:
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Investment Plan AutoBuy
A convenient investment program in which you designate Lets you purchase Scudder fund shares
the purchase details and the bank account, and money is electronically, avoiding potential mailing delays;
electronically debited from that account monthly to designate a bank account and the transaction
regularly purchase fund shares and "dollar cost average" details, and money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from that account.
fewer when it's higher, which can reduce your average
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 -- http://funds.scudder.com
1-800-343-2890
Scudder Electronic Account Services: 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 AutoSell
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 designate.
DistributionsDirect
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
- ------------------------------------------------------------------------------------------------------------------------------
22 - Scudder Limited Term Tax Free Fund
<PAGE>
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 6,000 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
500 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 Scudder 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 Funds 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 Funds Centers. Check for a Funds 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
[email protected] Boston New York
- ------------------------------------------------------------------------------------------------------------------------------
New From Scudder: Pathway Series
In a complex financial world, Scudder Pathway Series is a refreshingly simple concept. With one
investment, Pathway gives you instant access to broad diversification in U.S. markets and
across the globe. Select from four Portfolios -- Conservative, Balanced, Growth, or
International -- each with a distinct investment objective that can match your goals. Each
Portfolio, rather than investing in individual securities, invests in carefully selected
Scudder mutual funds.
- ------------------------------------------------------------------------------------------------------------------------------
The share price of each Pathway Series portfolio will fluctuate and the risk associated with
each portfolio is determined by the securities held in each underlying Scudder fund. Contact
Scudder Investor Services, Inc., Distributor, for a prospectus which contains more complete
information, including management fees and other expenses. Please read it carefully before you
invest or send money.
</TABLE>
23 - 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
SCUDDER
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