Scudder
Limited Term Tax
Free Fund
Semiannual Report
April 30, 1998
Pure No-Load(TM) Funds
A fund seeking to provide as high a level of income exempt from regular federal
income tax as is 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>
Scudder Limited Term Tax Free Fund
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Date of Inception: 2/15/94 Total Net Assets as of Ticker Symbol: SCLTX
4/30/98: $136.2 million
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o As of April 30, 1998, Scudder Limited Term Tax Free Fund's 30-day net
annualized SEC yield was 3.73%, equivalent to a 6.18% taxable yield for
investors subject to the 39.6% maximum federal tax rate.
o For the semiannual period ended April 30, 1998, Scudder Limited Term Tax Free
Fund posted a total return of 1.46%. This helped place the Fund in the top
quartile as compared with similar funds over one-and three-year periods ended
April 30.
o Scudder Limited Term Tax Free Fund received a four-star rating from
Morningstar, reflecting an "above-average" rating for risk-adjusted performance
through April 30, 1998.*
Table of Contents
3 Letter from the Fund's President 14 Financial Statements
4 Performance Update 17 Financial Highlights
5 Portfolio Summary 18 Notes to Financial Statements
6 Portfolio Management Discussion 20 Officers and Trustees
8 Glossary of Investment Terms 21 Investment Products and Services
9 Investment Portfolio 22 Scudder Solutions
* For your information, these ratings are subject to change every month and are
calculated from the Fund's average semiannual return in excess of 90-day
Treasury bill returns with appropriate fee adjustments, and a risk factor that
reflects fund performance below T-bill returns. The Fund received four stars
for three-year performance, and was rated among 1,547 municipal bond 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 to you concerning Scudder Limited Term Tax Free
Fund's performance over its most recent semiannual period ended April 30, 1998.
This placed the Fund in the top quartile for total return performance for one-
and three-year periods ended April 30. The Fund continues to meet its objectives
of providing tax-free income with below-average price risk. Based on the net
asset value as of April 30, the Fund provided a 3.73% federal tax free yield,
which is the equivalent of a 6.18% tax equivalent yield at the maximum federal
tax rate of 39.6%. Please read the portfolio management discussion beginning on
page 6 for more information about the Fund's performance.
For those of you interested in new Scudder products, we recently introduced
an addition to Scudder's series of growth and income offerings, and we plan to
debut another soon. Scudder Real Estate Investment Fund, launched on April 6,
invests primarily in Real Estate Investment Trusts (REITs), and is designed to
allow investors to participate in the impressive long-term growth potential of
the U.S. real estate industry. Scudder Dividend & Growth Fund will commence
operations on July 17. Designed to be conservatively managed, Dividend & Growth
Fund will seek high current income and growth of capital by investing primarily
in income-paying U.S. stocks and other equity-based securities. Please see page
21 for more information on Scudder products and services.
Lastly, at the start of 1998 the Fund's investment adviser changed its name
to Scudder Kemper Investments, Inc., from Scudder, Stevens & Clark, Inc.,
pursuant to the acquisition of a majority interest in Scudder by Zurich
Insurance Company, and the combining of Scudder's business with that of Zurich
Kemper Investments, Inc.
As always, please call a Scudder Investor Information representative at
1-800-225-2470 if you have questions about your Fund. Page 22 provides more
information on how to contact Scudder. Thank you for choosing Scudder Limited
Term Tax Free Fund to help meet your investment needs.
Sincerely,
/s/Daniel Pierce
Daniel Pierce
President,
Scudder Limited Term Tax Free Fund
3 - Scudder Limited Term Tax Free Fund
<PAGE>
PERFORMANCE UPDATE as of April 30, 1998
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FUND INDEX COMPARISONS
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Total Return
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Period Ended Growth of Average
4/30/98 $10,000 Cumulative Annual
- --------------------------------------------
SCUDDER LIMITED TERM TAX FREE FUND
- --------------------------------------------
1 Year $ 10,579 5.79% 5.79%
Life of Fund* $ 12,153 21.53% 4.75%
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LEHMAN BROTHERS MUNICIPAL BOND INDEX
(3 YEAR)
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1 Year $ 10,556 5.56% 5.56%
Life of Fund* $ 12,204 22.04% 4.89%
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*The Fund commenced operations on February 15, 1994.
Index comparisons begin on February 28, 1994.
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GROWTH OF A $10,000 INVESTMENT
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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
10/97 $12,044
4/98 $12,210
LEHMAN BROTHERS MUNICIPAL BOND INDEX (3 YEAR)
Year Amount
- ----------------------
2/94* $10,000
4/94 $ 9,936
10/94 $10,058
4/95 $10,401
10/95 $10,862
4/96 $11,051
10/96 $11,352
4/97 $11,561
10/97 $11,978
4/98 $12,204
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.
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RETURNS AND PER SHARE INFORMATION
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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 1998
-----------------------------------------------
NET ASSET VALUE... $ 11.80 $ 11.80 $ 11.92 $ 11.89 $ 12.05
INCOME DIVIDENDS.. $ .09 $ .57 $ .55 $ .52 $ .51
CAPITAL GAINS
DISTRIBUTIONS..... $ -- $ -- $ .01 $ .02 $ .01
FUND TOTAL
RETURN (%)........ -.35 5.01 5.80 4.33 5.79
INDEX TOTAL
RETURN (%)........ -.62 4.64 6.26 4.62 5.56
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, 1998
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DIVERSIFICATION
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Hospital/Health 15%
Core Cities/Lease 15%
State General Obligation 13%
School District/Lease 13%
Electric Utility Revenue 11%
Pollution Control/
Industrial Development 6%
Port/Airport Revenue 6%
Water/Sewer Revenue 5%
Country General Obligation/Lease 4%
Housing Finance Authority 3%
Miscellaneous Municipal 9%
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100%
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The Fund is broadly diversified
geographically, with holdings in
30 states plus the District of
Columbia, the Virgin Islands, and
Puerto Rico.
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
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QUALITY
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AAA 61%
AA 12%
A 20%
BBB 7%
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100%
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Weighted average quality: AA
Overall credit quality remains
high, with over 90% of the bonds
in the Fund's portfolio rated A or
better.
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
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EFFECTIVE MATURITY
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Less than 1 year 15%
1 - 5 years 50%
5 - 10 years 35%
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100%
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Weighted average effective maturity: 3.92 years
We continued to maintain a
longer-than-neutral average
maturity to capitalize on the
favorable performance trend for
the five-year segment of the
municipal bond market.
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,
During Scudder Limited Term Tax Free Fund's most recent semiannual period ended
April 30, 1998, the supply of municipal bonds increased dramatically, and bonds
struggled to make gains. Despite the flood of supply -- including a 70% increase
in the first quarter of 1998 compared with the first quarter of 1997 -- Scudder
Limited Term Tax Free Fund posted a positive total return of 1.46% for the six
month period. This return was roughly in keeping with the 1.64% Lipper average
of similar funds over the six-month period. In addition, the Fund placed in the
top quartile of similar funds over the one-year and three-year periods ended
April 30. The Fund's 30-day net annualized SEC yield was 3.73% as of April 30,
1998, equivalent to a taxable yield of 6.18% for shareholders subject to the
39.6% maximum federal tax rate.
Scudder Limited Term Tax Free Fund:
Longer-Term Performance Exceeding the Averages
(Returns for periods ended April 30, 1998)
------------------------------------------------------
Scudder
Limited
Term Tax
Free Fund Lipper Percentile Number of
Period return average Rank Funds
------------------------------------------------------
6 months 1.46% 1.64% 79% 34
1 year 5.79% 5.29% Top 24% 34
3 years* 5.29% 4.75% Top 19% 26
*Average annual return. Past performance does not guarantee future results.
Steady Growth and
Low Inflation
The long-running U.S. economic scenario of moderate growth and low inflation
forges on. Asia, expected by many to export its way out of economic crisis and
in doing so derail U.S. growth, has so far increased exports only modestly. At
the same time, the U.S. bond market has benefited from Federal Reserve inaction
on interest rates, falling commodity prices, mixed economic statistics, and
portfolio rebalancing by investors who have acted to reduce the overweighting of
stocks in their portfolios. Moreover, the municipal bond market has enjoyed its
first significant increase in investor interest in four years. During the Fund's
most recent semiannual period, yields of 10-year Treasury bonds declined
slightly and their prices rose 1.02%, while yields of comparable municipal bonds
increased slightly and their prices declined 0.38%.
Seeking Tax-Free Income
Scudder Limited Term Tax Free Fund is designed to deliver tax-free income with
below-average price risk through investments primarily in municipal bonds with
effective maturities averaging between one and five 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,
option to reinvest dividends and ability to diversify its assets continue to
offer advantages compared with the holding of individual municipal bonds.
6 - Scudder Limited Term Tax Free Fund
<PAGE>
Over the Fund's most recent semiannual period the Fund continued to maintain a
longer-than-neutral average maturity of approximately 4 years to capitalize on
the favorable performance trend for the five-year segment of the municipal bond
market. During the period, we also emphasized high quality bonds when making new
purchases: High quality bonds at the middle of the Fund's permissible maturity
range represented especially attractive value, while bonds of lower quality were
not paying sufficiently high yields to make it worthwhile to incur additional
credit risk. The Fund's overall credit quality remains high, with over 90% of
the bonds in the Fund's portfolio rated A or better. The Fund also continued to
emphasize premium noncallable bonds, which generally exhibit less interest rate
sensitivity than bonds priced at par.
Outlook
The recent heavy influx of municipal bond supply has caused municipal bond
performance to lag that of Treasuries. Though heavier-than-normal municipal
supply is expected for some time to come, we are optimistic about near-term
municipal market performance for two reasons: First, we expect to find
attractive value in many municipal bonds available in the marketplace; second,
we believe income investors will find municipals especially attractive given the
current narrow differential between Treasury and municipal bond yields.
In the months to come, the Fund will continue to maintain a conservative
investment strategy, keeping credit quality at a high level, holding premium
coupon bonds, and diversifying broadly. We will also search for value by
weighing the maturity characteristics, call features, credit quality, and income
potential of each bond we consider adding to the Fund's portfolio. Thank you for
investing with Scudder Limited Term Tax Free Fund.
Sincerely,
Your Portfolio Management Team
/s/M. Ashton Patton /s/K. Sue Cote
M. Ashton Patton K. Sue Cote
7 - Scudder Limited Term Tax Free Fund
<PAGE>
Glossary of Investment Terms
BOND An interest-bearing security issued by the
federal, state, or local government or a
corporation that obligates the issuer to pay
the bondholder a specified amount of interest
for a stated period -- usually a number of
years -- and to repay the face amount of the
bond at its maturity date.
GENERAL OBLIGATION BOND A municipal bond backed by the "full faith
and credit" (including the taxing and further
borrowing power) of the city, state, or
agency that issues the bond. A general
obligation bond is repaid with the issuer's
general revenue and borrowings.
INFLATION An overall increase in the prices of goods
and services, as happens when business and
consumer spending increases relative to the
supply of goods available in the marketplace
-- in other words, when too much money is
chasing too few goods. High inflation has a
negative impact on the prices of fixed-income
securities.
MUNICIPAL BOND An interest-bearing debt security issued by a
state or local government entity.
NET ASSET VALUE (NAV) The price per share of a mutual fund based on
the sum of the market value of all the
securities owned by the fund divided by the
number of outstanding shares.
TAXABLE EQUIVALENT YIELD The level of yield a fully taxable instrument
would have to provide to equal that of a
tax-free municipal bond on an after-tax
basis.
30-DAY SEC YIELD The standard yield reference for bond funds,
based on a formula prescribed by the SEC.
This annualized yield calculation reflects
the 30-day average of the income earnings of
every holding in a given fund's portfolio,
net of expenses, assuming each is held to
maturity.
TOTAL RETURN The most common yardstick to measure the
performance of a fund. Total return --
annualized or compound -- is based on a
combination of share price changes plus
income and capital gain distributions, if
any, expressed as a percentage gain or loss
in value.
(Sources: Scudder Kemper Investments, Inc.; Barron's Dictionary of Finance and
Investment Terms)
8 - Scudder Limited Term Tax Free Fund
<PAGE>
Investment Portfolio as of April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating (b) Value ($)
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Short-Term Municipal Investments 7.1%
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<S> <C> <C> <C>
California
Los Angeles County, CA, Local Educational Agency, Pooled Tax and Revenue
Anticipation Notes, Series 1997B, 4.5%, 9/30/98 .............................. 3,000,000 SP1+ 3,008,010
Ontario, CA, General Obligation, Tax and Revenue Anticipation Notes,
Series 1997, 4.5%, 6/30/98 ................................................... 1,000,000 SP1+ 1,000,750
Missouri
Missouri Environment Improvement and Energy Agency Resource Authority, Union
Electric Project, Periodic Auction Reset, 3.66%, 12/1/20 (d)* ................ 3,000,000 A+ 3,000,000
Pennsylvania
Delaware County, PA, Airport Facilities Revenue, United Parcel Service, Daily
Demand Note, 4.15%, 12/1/15* ................................................. 1,000,000 AAA 1,000,000
Harrisburg, PA, Water Authority Revenue, Series 1993 B, Periodic Action Reset,
7.72%, 6/18/15 (c) (d)* ...................................................... 300,000 AAA 328,875
Puerto Rico
Puerto Rico, Series 1996, 180 Day Auction Reset, 3.55%, 7/1/11 (c) (d)* ........ 1,000,000 AAA 1,000,000
- ------------------------------------------------------------------------------------------------------------------------------
Total Short-Term Municipal Investments (Cost $9,341,429) 9,337,635
- ------------------------------------------------------------------------------------------------------------------------------
Intermediate-Term Municipal Investments 92.9%
- ------------------------------------------------------------------------------------------------------------------------------
Arizona
Central Arizona Water Conservation District:
Central Arizona Project, Prerefunded 11/1/00, 7.5%, 11/1/05*** ............... 1,000,000 AAA 1,097,410
Contract Revenue, Prerefunded 5/1/01, Series 1991B, 6.5%, 11/1/11*** ......... 1,195,000 AAA 1,291,568
Arkansas
Rogers, AR, Sales and Use Tax Revenue, Series 1996, 5%, 11/1/15 ................ 870,000 AA 874,550
California
Foothill/Eastern Transportation Corridor Agency, CA, Toll Road Revenue,
Senior Lien, Series A, Zero Coupon, 1/1/05 ................................... 1,000,000 BBB 715,640
Orange County, CA, Recovery Notes, Series A, 6.5%, 6/1/05 (c) .................. 1,665,000 AAA 1,860,771
Sacramento, CA, Cogeneration Project Revenue, Proctor & Gamble Project,
Series 1995, 7%, 7/1/04 ...................................................... 1,000,000 BBB 1,115,620
Colorado
Boulder County, CO, Industrial Development, Revenue Refunding, May Department
Stores, Colorado Project, Series 1992, 6.25%, 9/1/07 ......................... 1,250,000 A 1,323,100
Castle Rock Ranch, CO, Public Improvements Authority, Public Facilities Revenue,
Series 1996, 5.9%, 12/1/03 ................................................... 1,475,000 AA 1,566,362
</TABLE>
The accompanying notes are an integral part of the financial statements.
9 - Scudder Limited Term Tax Free Fund
<PAGE>
<TABLE>
<CAPTION>
Principal Credit Market
Amount ($) Rating (b) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Delaware
Delaware State Health Facilities Authorities Revenue Bonds, Medical Center of
Delaware, Series 1989, 7%, 10/1/03 (c) ....................................... 1,500,000 AAA 1,589,790
Delaware, General Obligation, Series 1991, Prerefunded 4/1/01,
6.6%, 4/1/10*** .............................................................. 1,700,000 AAA 1,841,049
District Of Columbia
District of Columbia, General Obligation:
Series A, 5.625%, 6/1/02 (c) ................................................. 1,500,000 AAA 1,563,240
Series D, 5.25%, 12/1/03 (c) ................................................. 1,000,000 AAA 1,032,260
Florida
Dade County, FL, Port Authority Revenue, Series 1968 C, 5.5%, 10/1/07 .......... 4,785,000 AAA 4,955,537
Georgia
Georgia State Environmental Facilities Authority Revenue, Guaranteed Water &
Wastewater Loan Program, Series 1997, 4.5%, 7/1/05 ........................... 3,000,000 AAA 3,010,770
Municipal Electric Authority of Georgia, Power Revenue, 6.6%, 1/1/01 (c) ....... 1,000,000 AAA 1,058,380
Illinois
Berwyn, IL, MacNeal Memorial Hospital, Association Project, Series 1995, 5.5%,
6/1/01 (c) ................................................................... 2,795,000 AAA 2,884,328
Chicago, IL, General Obligation, Tender Note, Series C, 6.25%, 10/31/02 (c) .... 3,450,000 AAA 3,708,440
Cook County, IL, Community High School District #219, Niles Township,
Series 1998, Zero Coupon, 12/1/06 (c) ........................................ 2,360,000 AAA 1,561,305
Illinois Health Facilities Authority, Revenue Refunding, Sherman Hospital
Project, 6.5%, 8/1/01 (c) .................................................... 1,025,000 AAA 1,094,608
Springfield, IL, Electric Revenue, Junior Lien, Series 1995, 6%, 3/1/04 (c) .... 1,500,000 AAA 1,614,255
Indiana
Indiana Health Facility Finance Authority, Hospital Revenue, Ancilla
Systems Inc., Series A, 5.875%, 7/1/02 (c) ................................... 1,000,000 AAA 1,054,200
Indiana Housing Finance Authority, Single Family Mortgage Revenue, Series
1995 C-1, 5.25%, 7/1/12 ...................................................... 2,590,000 AAA 2,606,213
Madison County, IN, Hospital Authority, Holy Cross Health System,
6.3%, 12/1/98 (c) ............................................................ 1,000,000 AAA 1,014,370
Iowa
Cedar Rapids, IA, Hospital Revenue, St. Luke's Methodist Hospital,
5.65%, 8/15/02 (c) ........................................................... 1,250,000 AAA 1,306,925
Des Moines, IA, Hospital Revenue, Revenue Refunding Bonds, Des Moines General
Hospital Project, Series 1996A, 6%, 11/15/02 ................................. 1,750,000 AAA 1,852,655
Kentucky
Jefferson County, KY, Trust Certificate, Enhanced 911 Emergency Telephone
Project, Series 1996, 5.25%, 9/1/98 .......................................... 1,115,000 A 1,119,951
</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 6,556,475
Louisiana State, General Obligation, Series 1996 A, 6%, 8/1/02 (c) ............. 1,000,000 AAA 1,060,490
Maine
Maine, General Obligation, 6%, 7/1/98 .......................................... 1,000,000 AA 1,003,380
Maryland
Montgomery County, MD, Public Improvement, Series 1994A, 5.5%, 10/1/02 ......... 1,000,000 AAA 1,050,260
Massachusetts
New England Education Loan Marketing Corporation, Massachusetts Student Loan
Revenue Refunding:
Series A, 6%, 9/1/98 ........................................................ 2,000,000 AAA 2,013,560
Series D, 6.2%, 9/1/00 ...................................................... 2,000,000 AAA 2,079,140
Michigan
Michigan State Hospital Finance Authority Revenue, Genesys Health System,
Series A, 6.6%, 10/1/98 ...................................................... 1,000,000 BBB 1,010,090
Nevada
Clark County, NV, Airport Revenue, Subordinate Lien, Series A, 5%, 7/1/03 (c) .. 2,000,000 AAA 2,048,320
New Hampshire
New Hampshire Higher Education & Health Facilities Authority, St. Josephs
Hospital, 5.65%, 1/1/04 ...................................................... 1,095,000 AAA 1,150,615
New York
New York City, NY, General Obligation:
Series 1991 A, 3%, 8/15/02 (c) ............................................... 1,000,000 AAA 947,630
Series 1995 B, 6.75%, 8/15/03 ................................................ 6,000,000 A 6,587,460
Series 1996 A, 6.75%, 8/1/04 ................................................. 1,500,000 BBB 1,661,370
Series 1995 D, 6.5%, 2/15/05 ................................................. 1,315,000 A 1,439,951
Series 1996 I, 6.5%, 3/15/05 ................................................. 1,575,000 A 1,726,247
Series 1997 I, 6.25%, 4/15/06 ................................................ 1,000,000 A 1,088,060
New York State Dormitory Authority, State University Educational Facility,
Series A, 6.5%, 5/15/04 ...................................................... 1,000,000 A 1,097,550
New York State Medical Care Facilities:
Finance Agency, Mount Sinai Hospital, Series 1983, 5.95%, 8/15/09 ............ 875,000 AAA 918,409
Secured Hospital Revenue Bonds, Wyckoff Heights Medical Center, Series 1991A,
7.4%, 8/15/21 ............................................................... 3,000,000 AAA 3,330,570
</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>
New York State Urban Development Corporation Project, Onondaga County
Convention Center:
6%, 1/1/04 .................................................................. 1,445,000 BBB 1,528,593
6%, 1/1/05 .................................................................. 1,535,000 BBB 1,628,159
Syracuse, NY, Industrial Development Agency, Pilot Revenue Bonds, Series 1995,
5.125%, 10/15/02 ............................................................. 1,500,000 AA 1,526,430
North Carolina
North Carolina Municipal Power Agency #1, Catawaba Electric Revenue,
5.75%, 1/1/02 (c) ............................................................ 1,150,000 AAA 1,203,188
Ohio
Ohio Building Authority, Revenue, State Facilities, Arts Faculties Building
Fund, Series A, 5.5%, 10/1/03 ................................................ 1,000,000 AA 1,050,520
Pennsylvania
Allegheny County, PA, Hospital Development Authority, 6.4%, 7/1/99 (c) ......... 1,010,000 AAA 1,037,986
Delaware County, PA, Industrial Development Authority, Resource Recovery
Facility, Series 1997 A, 6.1%, 1/1/05 ........................................ 2,000,000 A 2,136,160
Rhode Island
Rhode Island, Consolidated Capital Development Loan, General Obligation,
Series 1996, 6%, 8/1/03 (c) .................................................. 1,690,000 AAA 1,812,187
Tennessee
Metropolitan Government Nashville & Davidson County, TN, General Obligation,
6.125%, 5/15/19 .............................................................. 1,000,000 AAA 1,081,540
Texas
Austin, TX, Independent School District, Guaranteed General Obligation,
8.125%, 8/1/01 ............................................................... 1,000,000 AAA 1,116,140
Austin, TX, Utility System Revenue:
Series A, 6.3%, 11/15/01 (c) ................................................. 365,000 AAA 389,477
Series A, 6.3%, 11/15/01 (c) ................................................. 635,000 AAA 675,716
Ector County, TX, Hospital District Revenue, Series 1997, 5.5%, 4/15/03 (c) .... 1,000,000 AAA 1,042,490
Plano, TX, Independent School District, General Obligation, 6%, 2/15/04 ........ 4,790,000 AAA 5,152,364
Richardson, TX, Hospital Authority Refunding and Improvement, Richardson Medical
Center, Series 1993, 6.5%, 12/1/12 ........................................... 920,000 BBB 982,542
Texas Department of Housing & Community Affairs, Single-Family Mortgage Revenue,
Series B, 5.5%, 3/1/11 (c) ................................................... 1,885,000 AAA 1,918,760
Utah
Utah State, General Obligation, Series 1997, 5.5%, 7/1/07 ...................... 2,000,000 AAA 2,142,560
Virgin Islands
Virgin Islands, General Obligation, Public Finance Authority, Matching Fund Loan
Notes, Series A, 6.9%, 10/1/01 ............................................... 1,000,000 BBB 1,081,810
</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>
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 1,578,148
Washington Public Power Supply System, Nuclear Project #1, Revenue Refunding,
Series C, 7.3%, 7/1/98 ....................................................... 3,000,000 AA 3,016,140
Washington Public Power Supply System, Nuclear Project #2, Refunding Revenue:
Series C, 7.3%, 7/1/00 ....................................................... 1,300,000 AA 1,379,495
Series A, 6.3%, 7/1/01 ....................................................... 1,000,000 AA 1,054,600
Series 1992A, 5.7%, 7/1/02 ................................................... 1,550,000 AA 1,618,696
West Virginia
Wayne County, WV, Industrial Development, Atlantic Richfield Company Project,
11.75%, 12/1/01 .............................................................. 495,000 A 609,375
Wisconsin
Milwaukee, WI, Metropolitan Sewer District Revenue, Series A, 6.7%, 10/1/01 .... 1,000,000 AA 1,076,510
Wisconsin Health and Education Facilities Authority:
St. Luke's Medical Center, 6.6%, 8/15/01 (c) ................................. 1,745,000 AAA 1,870,151
Wheaton Franciscan Sisters, Prerefunded 8/15/98, 8.2%, 8/15/18*** ............ 1,000,000 AAA 1,032,070
- ------------------------------------------------------------------------------------------------------------------------------
Total Intermediate-Term Municipal Investments (Cost $119,371,662) 122,224,681
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0% (Cost $128,713,091) (a) 131,562,316
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The cost for federal income tax purposes was $128,713,091. At April 30,
1998, net unrealized appreciation for all securities based on tax cost was
$2,849,225. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $3,067,853 and aggregate gross unrealized depreciation for all
securities in which there was an excess tax cost over market value of
$218,628.
(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.
(d) Auction rate securities carry a short term coupon that is reset on a
periodic basis, usually every 35 days. The reset occurs through a
marketplace auction process where all bidders receive the highest yield
necessary to sell all the securities. For maturity purposes the securities
are said to have the same maturity as the time remaining to the next
auction.
* 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, 1998 (Unaudited)
<TABLE>
<S> <C> <C>
Assets
- ----------------------------------------------------------------------------------------------------------------------------
Investments, at market (identified cost $128,713,091) ........... $ 131,562,316
Cash ............................................................ 345,208
Receivable for investments sold ................................. 2,589,554
Interest receivable ............................................. 1,915,062
Receivable for Fund shares sold ................................. 249,105
Deferred organization expenses .................................. 5,984
Other assets .................................................... 1,359
----------------
Total assets .................................................... 136,668,588
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Dividends payable ............................................... 276,727
Payable for Fund shares redeemed ................................ 90,196
Accrued management fee .......................................... 62,468
Other payables and accrued expenses ............................. 39,940
----------------
Total liabilities ............................................... 469,331
-------------------------------------------------------------------------------------------
Net assets, at market value $ 136,199,257
-------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------
Net assets consist of:
Unrealized appreciation on investments .......................... 2,849,225
Accumulated net realized gain (loss) ............................ (129,174)
Paid-in capital ................................................. 133,479,206
-------------------------------------------------------------------------------------------
Net assets, at market value $ 136,199,257
-------------------------------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, offering and redemption price per share
($136,199,257 / 11,301,720 outstanding shares of beneficial
interest, $.01 par value, unlimited number of shares ----------------
authorized) ................................................... $12.05
----------------
</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, 1998 (Unaudited)
<TABLE>
<S> <C> <C>
Investment Income
- ----------------------------------------------------------------------------------------------------------------------------
Interest ........................................................ $ 3,171,619
----------------
Expenses:
Management fee .................................................. 387,375
Custodian and accounting fees ................................... 34,935
Services to shareholders ........................................ 39,758
Trustees' fees and expenses ..................................... 12,151
Registration fees ............................................... 20,797
Auditing ........................................................ 15,017
Legal ........................................................... 2,705
Reports to shareholders ......................................... 11,592
Amortization of organization expense ............................ 4,159
Other ........................................................... 5,381
----------------
Total expenses before expense reductions ........................ 533,870
Expense reductions .............................................. (48,956)
----------------
Expenses, net ................................................... 484,914
-------------------------------------------------------------------------------------------
Net investment income 2,686,705
-------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment transactions
- ----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from investments ....................... (113,721)
Net unrealized appreciation (depreciation) on investments
during the period ............................................. (764,578)
-------------------------------------------------------------------------------------------
Net gain (loss) on investments (878,299)
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 1,808,406
-------------------------------------------------------------------------------------------
</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 Year
April 30, Ended
1998 October 31,
Increase (Decrease) in Net Assets (Unaudited) 1997
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations:
Net investment income .................................... $ 2,686,705 $ 5,201,534
Net realized gain (loss) on investments .................. (113,721) 75,394
Net unrealized appreciation (depreciation) on
investments during the period .......................... (764,578) 1,386,314
---------------- ----------------
Net increase in net assets resulting from operations ..... 1,808,406 6,663,242
---------------- ----------------
Distributions to shareholders from:
Net investment income .................................... (2,686,705) (5,201,534)
---------------- ----------------
Net realized gains ....................................... (57,180) (205,773)
---------------- ----------------
Fund share transactions:
Proceeds from shares sold ................................ 53,331,449 46,364,831
Net asset value of shares issued to shareholders in
reinvestment of distributions .......................... 1,140,369 2,206,361
Cost of shares redeemed .................................. (34,213,453) (56,611,187)
---------------- ----------------
Net increase (decrease) in net assets from Fund share
transactions ........................................... 20,258,365 (8,039,995)
---------------- ----------------
Increase (decrease) in net assets ........................ 19,322,886 (6,784,060)
Net assets at beginning of period ........................ 116,876,371 123,660,431
---------------- ----------------
Net assets at end of period .............................. $ 136,199,257 $ 116,876,371
---------------- ----------------
Other Information
- ----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Fund shares
Shares outstanding at beginning of period ................ 9,639,451 10,318,550
---------------- ----------------
Shares sold .............................................. 4,384,326 3,856,337
Shares issued to shareholders in reinvestment of
distributions .......................................... 94,028 183,612
Shares redeemed .......................................... (2,816,085) (4,719,048)
---------------- ----------------
Net increase (decrease) in Fund shares ................... 1,662,269 (679,099)
---------------- ----------------
Shares outstanding at end of period ...................... 11,301,720 9,639,451
---------------- ----------------
</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
February 15,
Six Months 1994
Ended (commencement
April 30, Years Ended October 31, of operations)
1998 to October 31,
(Unaudited) 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
----------------------------------------------------------------
Net asset value, beginning of period .................... $12.12 $11.98 $12.01 $11.67 $12.00
Income from investment operations: ----------------------------------------------------------------
Net investment income ................................... .25 .52 .53 .56 .38
Net realized and unrealized gain (loss) on investments .. (.06) .16 (.02) .34 (.33)
----------------------------------------------------------------
Total from investment operations ........................ .19 .68 .51 .90 .05
Less distributions from: ----------------------------------------------------------------
Net investment income ................................... (.25) (.52) (.53) (.56) (.38)
Net realized gain on investment transactions ............ (.01) (.02) (.01) -- --
----------------------------------------------------------------
Total distributions ..................................... (.26) (.54) (.54) (.56) (.38)
----------------------------------------------------------------
----------------------------------------------------------------
Net asset value, end of period .......................... $12.05 $12.12 $11.98 $12.01 $11.67
----------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total Return (%) (a) .................................... 1.46** 5.89 4.33 7.94 .44**
Ratios and Supplemental Data
Net assets, end of period ($ millions) .................. 136 117 124 122 68
Ratio of operating expenses, net to average daily net
assets (%) ........................................... .75* .75 .63 .23 --
Ratio of operating expenses before expense reductions,
to average daily net assets (%) ...................... .83* .83 .82 .85 1.29*
Ratio of net investment income to average daily net
assets (%) ........................................... 4.16* 4.32 4.46 4.78 4.84*
Portfolio turnover rate (%) ............................. 17.6* 17.8 37.7 37.5 36.3*
</TABLE>
(a) Total returns would have been lower had certain expenses not been reduced.
* Annualized
** Not annualized
17 - Scudder Limited Term Tax Free Fund
<PAGE>
Notes to Financial Statements (Unaudited)
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 Board of Trustees.
Money market instruments purchased with an original 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, as amended, which are applicable to regulated
investment companies and to distribute all of its taxable and tax-exempt income
to its shareholders. The Fund accordingly paid no federal income taxes and no
provision for federal income taxes was required.
Distribution of Income and Gains. All of the net investment income of the Fund
is declared as a dividend to shareholders of record as of the close of business
each day and is paid to shareholders monthly. During any particular year, net
realized gains from investment transactions, in excess of available capital loss
carryforwards, would be taxable to the Fund if not distributed and, therefore,
will be distributed to shareholders. An additional distribution may be made to
the extent necessary to avoid the payment of a four percent federal excise tax.
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.
18 - Scudder Limited Term Tax Free Fund
<PAGE>
B. Purchases and Sales of Securities
For the six months ended April 30, 1998, purchases and sales of investments
(excluding short-term) aggregated $28,547,800 and $9,994,684, respectively.
C. Related Parties
Effective December 31, 1997, Scudder, Stevens & Clark, Inc. ("Scudder") and The
Zurich Insurance Company ("Zurich"), an international insurance and financial
services organization, formed a new global investment organization by combining
Scudder's business with that of Zurich's subsidiary, Zurich Kemper Investments,
Inc. As a result of the transaction, Scudder changed its name to Scudder Kemper
Investments, Inc. ("Scudder Kemper" or the "Adviser"). The transaction between
Scudder and Zurich resulted in the termination of the Fund's Investment
Management Agreement with Scudder. However, a new Investment Management
Agreement (the "Management Agreement") between the Fund and Scudder Kemper was
approved by the Fund's Board of Trustees and by the Fund's Shareholders. The
Management Agreement, which was effective December 31, 1997, is the same in all
material respects as the corresponding previous Investment Management Agreement,
except that Scudder Kemper is the new investment adviser to the Fund.
Under the Management Agreement with Scudder Kemper, 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 February 28, 1999. For the six months ended April 30, 1998, the
Adviser imposed fees amounting to $387,375 and the portion not imposed amounted
to $48,956 at April 30, 1998.
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, 1998, the amount charged to the Fund by SSC
aggregated $22,576 of which $3,697 was unpaid at April 30, 1998.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Adviser, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records of the Fund. For the six months
ended April 30, 1998, the amount charged to the Fund by SFAC aggregated $20,546
of which $3,483 was unpaid at April 30, 1998.
The Trust pays each Trustee not affiliated with the Adviser an annual retainer
plus specified amounts for attended board and committee meetings. For the six
months ended April 30, 1998, Trustees' fees and expenses charged to the Fund
aggregated $12,151.
19 - Scudder Limited Term Tax Free Fund
<PAGE>
Officers and Trustees
Daniel Pierce*
President and Trustee
Henry P. Becton, Jr.
Trustee; President and General
Manager, WGBH Educational
Foundation
Dawn-Marie Driscoll
Trustee; Executive Fellow, Center
for Business Ethics; President,
Driscoll Associates
Peter B. Freeman
Trustee; Corporate Director and
Trustee
George M. Lovejoy, Jr.
Trustee; President and Director,
Fifty Associates Real Estate
Corporation
Wesley W. Marple, Jr.
Trustee; Professor of Business
Administration, Northeastern
University
Kathryn L. Quirk*
Trustee, Vice President and
Assistant Secretary
Jean C. Tempel
Trustee; Managing Partner,
Technology Equity Partners
M. Ashton Patton*
Vice President
Donald C. Carleton*
Vice President
Jerard K. Hartman*
Vice President
Thomas W. Joseph*
Vice President
Thomas F. McDonough*
Vice President, Secretary and
Treasurer
John R. Hebble*
Assistant Treasurer
Caroline Pearson*
Assistant Secretary
*Scudder Kemper Investments, 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
Scudder Money Market Series --
Premium Shares*
Managed Shares*
Scudder Government Money Market Series --
Managed Shares*
Tax Free Money Market+
- ----------------------
Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series--
Managed Shares*
Scudder California Tax Free Money Fund**
Scudder New York Tax Free Money Fund**
Tax Free+
- ---------
Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder High Yield Tax Free Fund
Scudder California Tax Free Fund**
Scudder Massachusetts Limited Term Tax Free Fund**
Scudder Massachusetts Tax Free Fund**
Scudder New York Tax Free Fund**
Scudder Ohio Tax Free Fund**
Scudder Pennsylvania Tax Free Fund**
U.S. Income
- -----------
Scudder Short Term Bond Fund
Scudder Zero Coupon 2000 Fund
Scudder GNMA Fund
Scudder Income Fund
Scudder 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
Scudder S&P 500 Index Fund
Scudder Real Estate Investment Fund
U.S. Growth
- -----------
Value
Scudder Large Company Value Fund
Scudder Value Fund***
Scudder Small Company Value Fund
Scudder Micro Cap Fund
Growth
Scudder Classic Growth Fund***
Scudder Large Company Growth Fund
Scudder Development Fund
Scudder 21st Century Growth Fund
Global 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, Inc.
Industry Sector Funds
- ---------------------
Choice Series
Scudder Financial Services Fund
Scudder Health Care Fund
Scudder Technology Fund
Retirement Programs and Education Accounts
- --------------------------------------------------------------------------------
Retirement Programs
- -------------------
Traditional IRA
Roth IRA
SEP IRA
Keogh Plan
401(k), 403(b) Plans
Scudder Horizon Plan**+++ +++
(a variable annuity)
Education Accounts
- ------------------
Education IRA
UGMA/UTMA
Closed-End Funds#
- --------------------------------------------------------------------------------
The Argentina Fund, Inc.
The Brazil Fund, Inc.
The Korea Fund, Inc.
Montgomery Street Income Securities, Inc.
Scudder Global High Income Fund, Inc.
Scudder New Asia Fund, Inc.
Scudder New Europe Fund, Inc.
Scudder Spain and Portugal Fund, Inc.
For complete information on any of the above Scudder funds, including management
fees and expenses, call or write for a free prospectus. Read it carefully before
you invest or send money. +++Funds within categories are listed in order from
expected least risk to most risk. Certain Scudder funds may not be available for
purchase or exchange. +A portion of the income from the tax-free funds may be
subject to federal, state, and local taxes. *A class of shares of the Fund.
**Not available in all states. ***Only the Scudder Shares of the Fund are part
of the Scudder Family of Funds. +++ +++A no-load variable annuity contract
provided by Charter National Life Insurance Company and its affiliate, offered
by Scudder's insurance agencies, 1-800-225-2470. #These funds, advised by
Scudder Kemper Investments, Inc., are traded on the New York Stock Exchange and,
in some cases, on various other stock exchanges.
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 QuickBuy
A convenient investment program in which money is Lets you purchase Scudder fund shares
electronically debited from your bank account monthly to electronically, avoiding potential mailing delays;
regularly purchase fund shares and "dollar cost average" money for each of your transactions is
-- buy more shares when the fund's price is lower and electronically debited from a previously designated bank
fewer when it's higher, which can reduce your average account.
purchase price over time.
Automatic Dividend Transfer Payroll Deduction and Direct Deposit
The most timely, reliable, and convenient way to Have all or part of your paycheck -- even government
purchase shares -- use distributions from one Scudder checks -- invested in up to four Scudder funds at
fund to purchase shares in another, automatically one time.
(accounts with identical registrations or the same
social security or tax identification number).
Dollar cost averaging involves continuous investment in securities regardless of price
fluctuations and does not assure a profit or protect against loss in declining markets.
Investors should consider their ability to continue such a plan through periods of low price
levels.
Around-the-clock electronic account service and information, including some transactions:
- ------------------------------------------------------------------------------------------------------------------------------
Scudder Automated Information Line: SAIL(TM) -- Scudder's Web Site -- 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 QuickSell
You designate the bank account, determine the schedule Provides speedy access to your money by
(as frequently as once a month) and amount of the electronically crediting your redemption proceeds
redemptions, and Scudder does the rest. to the bank account you previously designated.
Distributions Direct
Automatically deposits your fund distributions into the
bank account you designate within three business days
after each distribution is paid.
For more information about these services, call a Scudder representative at 1-800-225-5163
- ------------------------------------------------------------------------------------------------------------------------------
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 8,000 mutual funds from at least 150 mutual as well as equity, fixed-income, and money market funds,
fund companies. And Scudder Fund Folio(SM) provides using Scudder funds.
investors with access to a marketplace of more than
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 Investor Center
For information about The Scudder Funds, including Many shareholders enjoy the personal, one-on-one service of
additional applications and prospectuses, or for the Scudder Investor Centers. Check for an Investor Center near
answers to investment questions you -- they can be found in the following cities:
Scudder Investor Relations -- 1-800-225-2470 Boca Raton Chicago San Francisco
[email protected] Boston New York
</TABLE>
23 - Scudder Limited Term Tax Free Fund
<PAGE>
About the Fund's Adviser
Scudder Kemper Investments, Inc., is one of the largest and most experienced
investment management oganizations worldwide, managing more than $200 billion in
assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, insurance companies, and private family and
individual accounts. It is one of the ten largest mutual fund companies in the
U.S.
Scudder Kemper Investments has a rich heritage of innovation, integrity, and
client-focused service. In 1997, Scudder, Stevens & Clark, Inc., founded 79
years ago as one of the nation's first investment counsel organizations, joined
the Zurich Group. As a result, Zurich's subsidiary, Zurich Kemper Investments,
Inc., with 50 years of mutual fund and investment management experience, was
combined with Scudder. Headquartered in New York, Scudder Kemper Investments
offers a full range of investment counsel and asset management capabilities,
based on a combination of proprietary research and disciplined, long-term
investment strategies. With its global investment resources and perspective,
the firm seeks opportunities in markets throughout the world to meet the needs
of investors.
Scudder Kemper Investments, Inc., the global asset management firm, is a member
of the Zurich Group. The Zurich Group is an internationally recognized leader in
financial services, including property/casualty and life insurance, reinsurance,
and asset management.
This information must be preceded or accompanied by a
current prospectus.
Portfolio changes should not be considered recommendations
for action by individual investors.
SCUDDER
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