A Borehamwood street was last week targeted by fanatics who posted Al Qaeda propaganda through residents' letterboxes.
The leaflets, delivered to dozens of Manor Way residents, are entitled Sheikh Osama's Message to the People of Europe.
It condemns Britain and America's action during the War on Terror and attempts to justify the attacks on America and Spain stating: "What happened on September 11 and March 11 with the Madrid train bombings is your commodity that was returned to you."
Although there is no direct threat to Borehamwood, Manor Way residents voiced their concerns.
One resident, who asked not to be named for fear of reprisals, said she was furious to receive a leaflet through her letterbox.
"This sort of thing should be stopped because it stirs up such dangerous racial hatred. To be honest it's worrying," she added.
Inspector Dave Rankin from Hertfordshire Police said this was the first time he had heard about the leaflets.
"The incidents are certainly unusual and we're interested to hear from those who received such leaflets so that we can find out how widely they have been distributed.
"I'm not sure why Borehamwood has been targeted and would like to speak to those who posted the leaflets to find out what they want to gain from distributing them."
Ward councillors Ernie Butler and Frank Ward were astonished that Manor Way had been targeted by fanatics.
Mr Butler described those who distributed the leaflets as "scaremongering" taking advantage of the current climate of fear.
"My advice to the people who received the leaflets is; don't let these people alter your lives but at the same time remain vigilant," he said.
After reading the leaflet Mr Ward described the content as "anti-semitic propaganda".
"There are rumours that there will be a BNP candidate standing in the next local election and it concerns me that these leaflets herald their arrival.
"Anyone who has received the leaflet should chuck it straight into the bin along with the rest of the junk mail."
Inspector Dave Rankin added: "My advice to the Manor Way residents is to not take contents of the leaflets as a direct threat and if problems persist then contact the police's hate crime unit on 01727 796024."
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