SCUDDER
November 5, 1996
Dear Scudder Investor,
We're writing to inform you of a change in Scudder Income Fund's investment
policy recently approved by the Fund's Board of Trustees. Until January 1,
1997, the Fund is required to invest primarily in securities rated A or
higher and is not permitted to invest in securities rated below BBB-
(investment-grade). Under the new guidelines, which will take effect January
1, the Fund will maintain a minimum of 65% of its assets in securities rated
A or higher and may hold up to 20% of its portfolio in securities rated below
BBB-, but no lower than B- rated. The new policy is designed to allow the
Fund to explore a greater range of investment opportunities and pursue higher
income and total investment return. We do not believe this change will unduly
increase the Fund's risk over time. As always, we will carefully research
each security we select for your Fund's portfolio.
We hope you will carefully review the attached prospectus supplement, which
contains additional information about this change. If you have any questions,
please call us at 1-800-225-2470.
Sincerely,
/s/David S. Lee
David S. Lee
President, Scudder Investor Services
This letter is for explanatory purposes and is not
part of the prospectus supplement on the reverse side.
<PAGE>
SCUDDER
Scudder Income Fund
Supplement to Prospectus
Dated May 1, 1996
On November 5, 1996, the Board of Trustees of Scudder Income Fund voted to
change the quality requirements of the debt securities the Fund is permitted
to purchase. Effective January 1, 1997, the Fund may begin investing in
accordance with these new parameters. The change is set forth in detail
below, and serves to amend the text of the prospectus.
This change gives the Fund some increased flexibility to invest in medium or
lower rated securities. Lower rated securities generally provide higher
yields than higher rated securities, but also entail greater risks, as
described below:
Under normal market conditions, the Fund will invest at least 65% of its
assets in securities rated within the three highest quality rating categories
of Moody's Investors Service, Inc. ("Moody's") (Aaa, Aa and A) or Standard &
Poor's ("S&P") (AAA, AA and A), or if unrated, in bonds judged by the Fund's
investment adviser, Scudder, Stevens & Clark, Inc. (the "Adviser"), to be of
comparable quality at the time of purchase. The Fund may invest up to 20% of
its assets in debt securities rated lower than Baa3 or BBB- or, if unrated,
of equivalent quality as determined by the Adviser, but will not purchase
bonds rated below B3 by Moody's or B- by S&P or their equivalent.
Risks of debt securities rated below investment-grade: Securities rated below
investment-grade (those rated lower than Baa3 or BBB-) are commonly referred
to as "junk bonds". These securities can entail greater price volatility and
involve a higher degree of speculation with respect to the payment of
principal and interest than higher quality fixed-income securities. The
market prices of such lower rated debt securities may decline significantly
in periods of general economic difficulty. In addition, the trading market
for these securities is generally less liquid than for higher rated
securities, and the Fund may have difficulty disposing of these securities at
the time it wishes to do so. The lack of a liquid secondary market for
certain securities may also make it more difficult for the Fund to obtain
accurate market quotations for purposes of valuing its portfolio and
calculating its net asset value.
November 5, 1996 PS63-2A-116
MIS63PS
SU631196
