Scudder Income Fund
Supplement to Statement of Additional Information 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 Statement of Additional Information.
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
