<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
SCUDDER CALIFORNIA TAX FREE TRUST
SCUDDER MUNICIPAL TRUST
SCUDDER STATE TAX FREE TRUST
SCUDDER TAX FREE MONEY FUND
SCUDDER TAX FREE TRUST
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Declaration of Trust)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
[SCUDDER LOGO]
September 1997
SCUDDER CALIFORNIA TAX FREE TRUST
SCUDDER MUNICIPAL TRUST
SCUDDER STATE TAX FREE TRUST
SCUDDER TAX FREE MONEY FUND
SCUDDER TAX FREE TRUST
IMPORTANT NEWS
FOR SCUDDER FUND SHAREHOLDERS
While we encourage you to read the full text of the enclosed Proxy
Statement, here's a brief overview of some matters affecting your Fund which
require a shareholder vote.
Q & A: QUESTIONS AND ANSWERS
Q. WHAT IS HAPPENING?
A. Scudder, Stevens & Clark, Inc. ("Scudder"), your Fund's investment manager,
has agreed to form an alliance with Zurich Insurance Company ("Zurich").
Zurich is a leading international insurance and financial services
organization. As a result of the proposed alliance, there will be a change
in ownership of Scudder. In order for Scudder to continue to serve as
investment manager of your Fund, it is necessary for the Fund's shareholders
to approve a new investment management agreement. The following pages give
you additional information on Zurich and the proposed new investment
management agreement and certain other matters. The most important matters
to be voted upon by you are approval of the new investment management
agreement and the election of Trustees. THE BOARD MEMBERS OF YOUR FUND,
INCLUDING THOSE WHO ARE NOT AFFILIATED WITH THE FUND OR SCUDDER, RECOMMEND
THAT YOU VOTE FOR THESE PROPOSALS.
Q. WHY AM I BEING ASKED TO VOTE ON THE PROPOSED NEW INVESTMENT MANAGEMENT
AGREEMENT?
A. The Investment Company Act of 1940, which regulates investment companies
such as your Fund, requires a vote whenever there is a change in control of
a fund's investment manager. Zurich's alliance with Scudder will
Boston Tax Free
<PAGE> 3
result in such a change of control and requires shareholder approval of a
new investment management agreement with your Fund.
Q. HOW WILL THE SCUDDER-ZURICH ALLIANCE AFFECT ME AS A FUND SHAREHOLDER?
A. Your Fund and your Fund's investment objective will not change. You will
still own the same shares in the same Fund. The terms of the new investment
management agreement are the same in all material respects as the current
investment management agreement. Similarly, the other service arrangements
between your Fund and Scudder will not be affected. You should continue to
receive the same level of services that you have come to expect from Scudder
over the years. If shareholders do not approve the new investment management
agreement, the current investment management agreement will terminate upon
the closing of the transaction and the Board of Trustees will take such
action as it deems to be in the best interests of your Fund and its
shareholders.
Q. WHY HAS SCUDDER DECIDED TO ENTER INTO THIS ALLIANCE?
A. Scudder believes that the Scudder-Zurich alliance will enable Scudder to
enhance its capabilities as a global asset manager. Scudder further believes
that the alliance will enable it to enhance its ability to deliver the level
of services currently provided to you and your Fund and to fulfill its
obligations under the new investment management agreement consistent with
current practices.
Q. WILL THE INVESTMENT MANAGEMENT FEES BE THE SAME?
A. Yes, the investment management fees paid by your Fund will remain the same.
Q. WILL I CONTINUE TO BE ABLE TO PURCHASE SHARES WITHOUT ANY SALES LOAD?
A. Yes, you will be able to continue to purchase shares of your Fund without
any sales load.
Q. WHAT OTHER MATTERS AM I BEING ASKED TO VOTE ON?
A. In order to save your Fund the expense of a subsequent meeting, a vote is
also being sought for granting the Trustees discretionary authority to
convert the Fund into a "master/feeder" structure, for the amendment of the
Declaration of Trust applicable to your Fund, and for the revision of
certain fundamental investment policies. You are also being asked to vote
for the ratification of the Board's selection of the Fund's accountants.
(continues on inside back cover)
<PAGE> 4
Q. HOW DO THE BOARD MEMBERS OF MY FUND RECOMMEND THAT I VOTE?
A. After careful consideration, the Board members of your Fund, including those
who are not affiliated with the Fund or Scudder, recommend that you vote in
favor of all the proposals on the enclosed proxy card.
Q. WHOM DO I CALL FOR MORE INFORMATION?
A. Please call Shareholder Communications Corporation, your Fund's information
agent, at 1-800-733-8481, ext. 488.
Q. WILL THE FUND PAY FOR THE PROXY SOLICITATION AND LEGAL COSTS ASSOCIATED WITH
THIS TRANSACTION?
A. No, Scudder will bear these costs.
ABOUT THE PROXY CARD
If you have more than one account in the Fund in your name at the same
address, you will receive separate proxy cards for each account but only one
proxy statement for the Fund. Please vote all issues on each proxy card that you
receive.
THANK YOU FOR MAILING YOUR PROXY CARD(S) PROMPTLY.
<PAGE> 5
[SCUDDER LOGO]
For more information, please call Shareholder Communications Corporation, your
Fund's information agent, at 1-800-733-8481, ext. 488.
Boston Tax Free
<PAGE> 6
Two International Place
Boston, Massachusetts 02110
SCUDDER CALIFORNIA TAX FREE TRUST
SCUDDER MUNICIPAL TRUST
SCUDDER STATE TAX FREE TRUST
SCUDDER TAX FREE MONEY FUND
SCUDDER TAX FREE TRUST
September 2, 1997
Dear Shareholder:
On June 26, 1997, Scudder, Stevens & Clark, Inc. ("Scudder") entered into
an agreement with Zurich Insurance Company ("Zurich") pursuant to which Scudder
and Zurich have agreed to form an alliance. Under the terms of the agreement,
Zurich will acquire a majority interest in Scudder, and Zurich Kemper
Investments, Inc., a Zurich subsidiary, will become part of Scudder. Scudder's
name will be changed to Scudder Kemper Investments, Inc. As a result of this
transaction, it is necessary for the shareholders of each of the funds for which
Scudder acts as investment manager, including your Fund, to approve a new
investment management agreement.
The following important facts about the transaction are outlined below:
- The transaction has no effect on the number of shares you own or the
value of those shares.
- The advisory fees and expenses paid by your Fund will not increase as a
result of this transaction. As is now the case, you will not pay sales
loads on purchases of shares of your Fund.
- The investment objective of your Fund will remain the same.
- The Non-interested Trustees of your Fund have carefully reviewed the
proposed transaction, and have concluded that the transaction should
cause no reduction in the quality of services provided to the Fund and
should enhance Scudder's ability to provide such services.
Shareholders are also being asked to approve certain other matters that
have been set forth in the Fund's Notice of Meeting. THE BOARD MEMBERS OF YOUR
FUND BELIEVE THAT EACH OF THE PROPOSALS SET FORTH IN THE NOTICE OF MEETING FOR
YOUR FUND IS IMPORTANT AND RECOMMEND THAT YOU READ THE ENCLOSED MATERIALS
CAREFULLY AND THEN VOTE FOR ALL PROPOSALS.
<PAGE> 7
Since all of the funds for which Scudder acts as investment manager are
required to conduct shareholder meetings, if you own shares of more than one
fund, you will receive more than one proxy card. Please sign and return each
proxy card you receive.
Your vote is important. PLEASE TAKE A MOMENT NOW TO SIGN AND RETURN YOUR
PROXY CARD(S) IN THE ENCLOSED POSTAGE-PAID RETURN ENVELOPE. If we do not receive
your executed proxy card(s) after a reasonable amount of time you may receive a
telephone call from our proxy solicitor, Shareholder Communications Corporation,
reminding you to vote your shares.
Respectfully,
[DAVID LEE SIGNATURE]
David S. Lee
President
SHAREHOLDERS ARE URGED TO SIGN THE PROXY CARD(S) AND RETURN IT IN THE
POSTAGE-PAID ENVELOPE TO ENSURE A QUORUM AT THE MEETING. YOUR VOTE IS IMPORTANT
REGARDLESS OF THE SIZE OF YOUR SHAREHOLDINGS.
<PAGE> 8
SCUDDER CALIFORNIA TAX FREE TRUST
SCUDDER MUNICIPAL TRUST
SCUDDER STATE TAX FREE TRUST
SCUDDER TAX FREE MONEY FUND
SCUDDER TAX FREE TRUST
NOTICE OF SPECIAL MEETINGS OF SHAREHOLDERS
Please take notice that Special Meetings of Shareholders (each a "Special
Meeting") of each Scudder Trust listed above (each a "Trust" and, collectively,
the "Trusts"), the series of which are Scudder California Tax Free Fund and
Scudder California Tax Free Money Fund of Scudder California Tax Free Trust;
Scudder High Yield Tax Free Fund and Scudder Managed Municipal Bonds of Scudder
Municipal Trust; Scudder Massachusetts Limited Term Tax Free Fund, Scudder
Massachusetts Tax Free Fund, Scudder New York Tax Free Fund, Scudder New York
Tax Free Money Fund, Scudder Ohio Tax Free Fund and Scudder Pennsylvania Tax
Free Fund of Scudder State Tax Free Trust; and Scudder Limited Term Tax Free
Fund and Scudder Medium Term Tax Free Fund of Scudder Tax Free Trust (each a
"Fund" and, collectively, where applicable, with those Trusts that do not have
any series, the "Funds") will be held jointly at the offices of Scudder, Stevens
& Clark, Inc., 13th Floor, Two International Place, Boston, Massachusetts 02110,
on October 24, 1997, at 9:30 a.m., Eastern time, for the following purposes:
(1) To approve or disapprove a new investment management agreement
between each Fund and Scudder Kemper Investments, Inc.;
(2) For each Trust, to elect Trustees;
(3) To approve or disapprove the Board's discretionary authority to
convert each Fund to a master/feeder fund structure through a
sale or transfer of assets or otherwise;
(4) For each Trust, to approve or disapprove certain amendments to
the Declaration of Trust;
(5) For each Fund, to approve or disapprove the revision of certain
fundamental investment policies; and
(6) To ratify or reject the selection of Coopers & Lybrand L.L.P. as
the independent accountants for each of the Funds for each
Fund's current fiscal year.
The appointed proxies will vote on any other business as may properly come
before the Special Meeting or any adjournments thereof.
<PAGE> 9
Holders of record of shares of beneficial interest of each Fund at the
close of business on August 25, 1997 are entitled to vote at the Special Meeting
and at any adjournments thereof.
In the event that the necessary quorum to transact business or the vote
required to approve or reject any proposal is not obtained at the Special
Meeting with respect to one or more Trusts or, where applicable, Funds, the
persons named as proxies may propose one or more adjournments of the Special
Meeting in accordance with applicable law, to permit further solicitation of
proxies. Any such adjournment as to a matter requiring, respectively, a
Trust-wide or a Fund by Fund vote will require the affirmative vote of the
holders of a majority of the concerned Trust's (for a Trust-wide vote) or, where
applicable, the Fund's (for a Fund by Fund vote), shares present in person or by
proxy at the Special Meeting. The persons named as proxies will vote in favor of
such adjournment those proxies which they are entitled to vote in favor and will
vote against any such adjournment those proxies to be voted against that
proposal.
By order of the Boards of Trustees,
[THOMAS F. MCDONOUGH SIGNATURE]
Thomas F. McDonough
Secretary
September 2, 1997
IMPORTANT--WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY CARD(S) AND RETURN IT
IN THE ENCLOSED ADDRESSED ENVELOPE WHICH REQUIRES NO POSTAGE AND IS INTENDED FOR
YOUR CONVENIENCE. YOUR PROMPT RETURN OF THE ENCLOSED PROXY CARD(S) MAY SAVE THE
NECESSITY AND EXPENSE OF FURTHER SOLICITATIONS TO ENSURE A QUORUM AT THE SPECIAL
MEETINGS. IF YOU CAN ATTEND THE SPECIAL MEETINGS AND WISH TO VOTE YOUR SHARES IN
PERSON AT THAT TIME, YOU WILL BE ABLE TO DO SO.
<PAGE> 10
SCUDDER CALIFORNIA TAX FREE TRUST
SCUDDER MUNICIPAL TRUST
SCUDDER STATE TAX FREE TRUST
SCUDDER TAX FREE MONEY FUND
SCUDDER TAX FREE TRUST
TWO INTERNATIONAL PLACE,
BOSTON, MASSACHUSETTS 02110
JOINT PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees (the "Board") of each of the Scudder Trusts
listed above (each a "Trust" and, collectively, the "Trusts"), the series of
which are Scudder California Tax Free Fund and Scudder California Tax Free Money
Fund of Scudder California Tax Free Trust; Scudder High Yield Tax Free Fund and
Scudder Managed Municipal Bonds of Scudder Municipal Trust; Scudder
Massachusetts Limited Term Tax Free Fund, Scudder Massachusetts Tax Free Fund,
Scudder New York Tax Free Fund, Scudder New York Tax Free Money Fund, Scudder
Ohio Tax Free Fund and Scudder Pennsylvania Tax Free Fund of Scudder State Tax
Free Trust; and Scudder Limited Term Tax Free Fund and Scudder Medium Term Tax
Free Fund of Scudder Tax Free Trust (each a "Fund" and, collectively, where
applicable, with those Trusts that do not have any series, the "Funds") for use
at the Special Meetings of Shareholders of each Trust, to be held jointly at the
offices of Scudder, Stevens & Clark, Inc. ("Scudder"), 13th Floor, Two
International Place, Boston, Massachusetts 02110, on October 24, 1997 at 9:30
a.m., Eastern time, and at any and all adjournments thereof (the "Special
Meeting"). (In the descriptions of the various proposals below, the word "fund"
is sometimes used to mean investment companies or series thereof in general, and
not the Funds whose proxy statement this is.)
This Proxy Statement, the Notice of Special Meeting and the proxy cards are
first being mailed to shareholders on or about September 2, 1997 or as soon as
practicable thereafter. Any shareholder giving a proxy has the power to revoke
it by mail (addressed to the Secretary at the principal executive office of the
Funds, c/o Scudder, Stevens & Clark, Inc., Two International Place, Boston,
Massachusetts 02110), or in person at the Special Meeting, by executing a
superseding proxy or by submitting a notice of revocation to the Fund. All
properly executed proxies received in time for the Special Meeting will be voted
as specified in the proxy or, if no specification is made, in favor of each
proposal referred to in the Proxy Statement.
<PAGE> 11
The presence at any shareholders' meeting, in person or by proxy, of the
holders of a majority of the shares entitled to be cast of a Trust (for a
Trust-wide vote) or a Fund (for a Fund by Fund vote) shall be necessary and
sufficient to constitute a quorum for the transaction of business requiring,
respectively, Trust-wide or Fund by Fund voting. In the event that the necessary
quorum to transact business or the vote required to approve or reject any
proposal is not obtained at the Special Meeting with respect to one or more
Funds, the persons named as proxies may propose one or more adjournments of the
Special Meeting in accordance with applicable law to permit further solicitation
of proxies with respect to any proposal which did not receive the vote necessary
for its passage or to obtain a quorum. With respect to those proposals for which
there is represented a sufficient number of votes in favor, actions taken at the
Special Meeting will be effective irrespective of any adjournments with respect
to any other proposals. Any such adjournment as to a matter requiring,
respectively, a Trust-wide or a Fund by Fund vote will require the affirmative
vote of the holders of a majority of the concerned Trust's (for a Trust-wide
vote) or Fund's (for a Fund by Fund vote) shares present in person or by proxy
at the Special Meeting. The persons named as proxies will vote in favor of such
adjournment those proxies which they are entitled to vote in favor and will vote
against any such adjournment those proxies to be voted against that proposal.
For purposes of determining the presence of a quorum for transacting business at
the Special Meeting, abstentions and broker "non-votes" will be treated as
shares that are present but which have not been voted. Broker non-votes are
proxies received from brokers or nominees when the broker or nominee has neither
received instructions from the beneficial owner or other persons entitled to
vote nor has discretionary power to vote on a particular matter. Accordingly,
shareholders are urged to forward their voting instructions promptly.
Proposals 1 and 5 each requires the affirmative vote of a "majority of the
outstanding voting securities" of each Fund. The terms "majority of the
outstanding voting securities" as defined in the Investment Company Act of 1940,
as amended (the "1940 Act"), and as used in this Proxy Statement, means: the
affirmative vote of the lesser of (1) 67% of the voting securities of each Fund
present at the meeting if more than 50% of the outstanding shares of the Fund
are present in person or by proxy or (2) more than 50% of the outstanding shares
of each Fund. Approval of Proposal 2 requires the affirmative vote of a
plurality of the shares of each Trust voting at the Special Meeting. The
requisite vote for Proposals 3 and 4 is governed by the applicable Declaration
of Trust. Approval of Proposal 3 requires the affirmative vote of a majority of
the shares of each Fund. Approval of Proposal 4 requires the affirmative vote of
two-thirds of the shares of the Trust outstanding and entitled to vote. Approval
of Proposal 6 requires the affirmative vote of a majority of the shares of each
Fund voting at the Special Meeting.
Abstentions will have the effect of a "no" vote on all proposals. Broker
non-votes will have the effect of a "no" vote for Proposals 1, 3 and 5, which
require the approval of a specified percentage of the outstanding shares of each
Fund
2
<PAGE> 12
and Proposal 4, which requires the approval of a specified percentage of the
outstanding shares of each Trust, if such vote is determined on the basis of
obtaining the affirmative vote of more than 50% of the outstanding shares of the
Fund. Broker non-votes will not constitute "yes" or "no" votes, and will be
disregarded in determining the voting securities "present" if such vote is
determined on the basis of the affirmative vote of 67% of the voting securities
of the Fund, or the Trust, as the case may be, present at the Special Meeting
with respect to Proposals 1 and 5. Broker non-votes will not be counted in favor
of, but will have no other effect on the vote for Proposals 2 and 6, which
require the approval of a plurality of the shares of each Trust, and a majority
of the shares of each Fund, respectively, voting at the Special Meeting.
Shareholders of each Fund will vote separately with respect to each of
Proposals 1, 3, 5 and 6; and Shareholders of each Trust will vote together on
Proposals 2 and 4.
3
<PAGE> 13
The following table summarizes those voting requirements:
<TABLE>
<CAPTION>
SHAREHOLDERS ENTITLED VOTE REQUIRED
TO VOTE FOR APPROVAL
---------------------- ----------------------
<S> <C> <C>
Proposal 1 Shareholders of each Approved by a
(Approval of new Investment Fund vote separately "majority of the
Management Agreement) outstanding voting
securities" of each
Fund
Proposal 2 Shareholders of each Each nominee must be
(Election of Trustees) Trust vote together elected by a plurality
for each nominee (if a of the shares of the
Trust has several Trust voting at the
Funds, shareholders of Special Meeting
all Funds vote
together as a single
class)
Proposal 3 Shareholders of each Approved by a majority
(Approval of discretionary Fund vote separately of the shares of each
authority to convert to Fund
master/feeder fund structure)
Proposal 4 Shareholders of each Approved by the vote
(Approval of amendments to Trust vote together of two-thirds of the
the Declaration of Trust) (if a Trust has shares of the Trust
several Funds, outstanding and
shareholders of all entitled to vote
Funds vote together as
a single class)
Proposal 5 Shareholders of each Approved by a
(Approval of the revision of Fund vote separately "majority of the
certain fundamental outstanding voting
investment policies) securities" of each
Fund
Proposal 6 Shareholders of each Approved by a majority
(Ratification of selection of Fund vote separately of the shares of each
Accountants) Fund voting at the
Special Meeting
</TABLE>
4
<PAGE> 14
Holders of record of the shares of beneficial interest of each Fund at the
close of business on August 25, 1997 (the "Record Date"), as to any matter on
which they are entitled to vote, will be entitled to one vote per share on all
business of the Special Meeting. The table below sets forth the number of shares
outstanding for each Fund as of June 30, 1997.
<TABLE>
<CAPTION>
NUMBER OF SHARES OUTSTANDING
NAME OF THE FUND AS OF JUNE 30, 1997
- ------------------------------------------------ ----------------------------
<S> <C>
Scudder California Tax Free Fund 27,872,496
Scudder California Tax Free Money Fund 65,841,679
Scudder High Yield Tax Free Fund 24,762,002
Scudder Managed Municipal Bonds 80,332,111
Scudder Massachusetts Limited Term
Tax Free Fund 5,898,914
Scudder Massachusetts Tax Free Fund 24,301,889
Scudder New York Tax Free Fund 16,777,438
Scudder New York Tax Free Money Fund 59,064,357
Scudder Ohio Tax Free Fund 6,545,048
Scudder Pennsylvania Tax Free Fund 5,447,028
Scudder Tax Free Money Fund 223,043,625
Scudder Limited Term Tax Free Fund 9,517,248
Scudder Medium Term Tax Free Fund 56,378,708
</TABLE>
Each Fund provides periodic reports to all of its shareholders which
highlight relevant information, including investment results and a review of
portfolio changes. You may receive an additional copy of the most recent annual
report for each Fund and a copy of any more recent semi-annual report, without
charge, by calling 800-225-2470 or writing the Fund, c/o Scudder, Stevens &
Clark, Inc., Two International Place, Boston, Massachusetts 02110.
PROPOSAL 1: APPROVAL OF NEW
INVESTMENT MANAGEMENT AGREEMENT
INTRODUCTION
Scudder acts as the investment manager to each Fund pursuant to investment
management agreements entered into by each Fund and Scudder (each a "Current
Investment Management Agreement" and, collectively, the "Current Investment
Management Agreements"). (Scudder is sometimes referred to in this proxy
statement as the "Investment Manager.") On June 26, 1997, Scudder entered into a
Transaction Agreement (the "Transaction Agreement") with Zurich Insurance
Company ("Zurich") pursuant to which Scudder and Zurich have agreed to form an
alliance. Under the terms of the Transaction Agreement, Zurich will acquire a
majority interest in Scudder, and Zurich Kemper Investments, Inc. ("ZKI"), a
Zurich subsidiary, will become part of Scudder. Scudder's name will be changed
to Scudder Kemper Investments, Inc. ("Scudder Kemper"). The foregoing are
referred to as the "Transactions." ZKI, a Chicago-
5
<PAGE> 15
based investment adviser and the adviser to the Kemper funds, has approximately
$80 billion under management. The headquarters of Scudder Kemper will be in New
York. Edmond D. Villani, Scudder's Chief Executive Officer, will continue as
Chief Executive Officer of Scudder Kemper and will become a member of Zurich's
Corporate Executive Board.
Consummation of the Transactions would constitute an "assignment," as that
term is defined in the 1940 Act, of each Fund's Current Investment Management
Agreement with Scudder. As required by the 1940 Act, each of the Current
Investment Management Agreements provides for its automatic termination in the
event of its assignment. In anticipation of the Transactions, a new investment
management agreement (each a "New Investment Management Agreement" and,
collectively, the "New Investment Management Agreements," together with the
Current Investment Management Agreements, the "Investment Management
Agreements") between each Fund and Scudder Kemper is being proposed for approval
by shareholders of each Fund. A copy of the master form of the New Investment
Management Agreement is attached hereto as Exhibit A. THE NEW INVESTMENT
MANAGEMENT AGREEMENT FOR EACH FUND IS IN ALL MATERIAL RESPECTS ON THE SAME TERMS
AS THE CORRESPONDING CURRENT INVESTMENT MANAGEMENT AGREEMENT. Conforming changes
are being recommended to the New Investment Management Agreement in order to
promote consistency among all of the funds currently advised by Scudder and to
permit ease of administration. The material terms of each Current Investment
Management Agreement are described under "Description of the Current Investment
Management Agreement" below.
BOARD OF TRUSTEES' RECOMMENDATION
On August 6, 1997, the Board of each Trust, including the Trustees who are
not parties to such agreement or "interested persons" (as defined under the 1940
Act) of any such party, voted to approve the New Investment Management
Agreements and to recommend their respective approval to shareholders.
For information about the Boards' deliberations and the reasons for their
recommendation, please see "Board of Trustees' Evaluation" below.
The Board of each Trust recommends that its shareholders vote in favor of
the approval of the New Investment Management Agreement for each Fund.
BOARD OF TRUSTEES' EVALUATION
On June 26, 1997, representatives of Scudder advised the Non-interested
Trustees of each Trust by means of a telephone conference call that Scudder had
entered into the Transaction Agreement. At that time, Scudder representatives
described the general terms of the proposed Transactions and the perceived
benefits for the Scudder organization and for its investment advisory clients.
6
<PAGE> 16
Scudder subsequently furnished the Non-interested Trustees with additional
information regarding the proposed Transactions, including information regarding
the terms of the proposed Transactions, and information regarding the Zurich and
ZKI organizations. In a series of subsequent telephone conference calls and
in-person meetings, the Non-interested Trustees discussed this information among
themselves and with representatives of Scudder and Zurich. They were assisted in
their review of this information by their independent legal counsel and also
consulted with a representative of the Funds' independent auditors and with an
independent consultant knowledgeable in mutual fund industry matters.
In the course of these discussions, Scudder advised the Non-interested
Trustees that it did not expect that the proposed Transactions would have a
material effect on the operations of the Funds or their shareholders. Scudder
has advised the Non-interested Trustees that the Transaction Agreement, by its
terms, does not contemplate any changes in the structure or operations of the
Funds. Scudder representatives have informed the Trustees that Scudder currently
intends to maintain the separate existence of the funds that Scudder and ZKI
manage in their respective distribution channels. Scudder has also advised the
Non-interested Trustees that although it expects that various portions of the
ZKI organization would be combined with Scudder's operations, the senior
executives of Scudder overseeing those operations will remain largely unchanged.
It is possible, however, that changes in certain personnel currently involved in
providing services to the Funds may result from future efforts to combine the
strengths and efficiencies of both firms. In their discussions with the
Trustees, Scudder representatives also emphasized the strengths of the Zurich
organization and its commitment to provide the new Scudder Kemper organization
with the resources necessary to continue to provide high quality services to the
Funds and the other investment advisory clients of the new Scudder Kemper
organization.
The Board of each Trust was advised that Scudder intends to rely on Section
15(f) of the 1940 Act, which provides a non-exclusive safe harbor for an
investment adviser to an investment company or any of the investment adviser's
affiliated persons (as defined under the 1940 Act) to receive any amount or
benefit in connection with a change in control of the investment adviser so long
as two conditions are met. First, for a period of three years after the
transaction, at least 75% of the board members of the investment company must
not be "interested persons" of the investment company's investment adviser or
its predecessor adviser. On or prior to the consummation of the Transactions,
each of the Boards, assuming the election of the nominees that you are being
asked to elect in "Proposal 2: Election of Trustees," would be in compliance
with this provision of Section 15(f). (See "Proposal 2: Election of Trustees").
Second, an "unfair burden" must not be imposed upon the investment company as a
result of such transaction or any express or implied terms, conditions or
understandings applicable thereto. The term "unfair burden" is defined in
Section 15(f) to include any arrangement during the two-year period after the
transaction
7
<PAGE> 17
whereby the investment adviser, or any interested person of any such adviser,
receives or is entitled to receive any compensation, directly or indirectly,
from the investment company or its shareholders (other than fees for bona fide
investment advisory or other services) or from any person in connection with the
purchase or sale of securities or other property to, from or on behalf of the
investment company (other than bona fide ordinary compensation as principal
underwriter for such investment company). No such compensation agreements are
contemplated in connection with the Transactions. Scudder has undertaken to pay
the costs of preparing and distributing proxy materials to, and of holding the
meeting of, the Funds' shareholders as well as other fees and expenses in
connection with the Transactions, including the fees and expenses of legal
counsel and consultants to the Funds and the Non-interested Trustees.
During the course of their deliberations, the Non-interested Trustees
considered a variety of factors, including the nature, quality and extent of the
services furnished by Scudder to the Funds; the necessity of Scudder's
maintaining and enhancing its ability to retain and attract capable personnel to
serve the Funds; the investment record of Scudder in managing the Funds; the
increased complexity of the domestic and international securities markets;
Scudder's profitability from advising the Funds; possible economies of scale;
comparative data as to investment performance, advisory fees and other fees,
including administrative fees, and expense ratios; the risks assumed by Scudder;
the advantages and possible disadvantages to the Funds of having an adviser of
the Funds which also serves other investment companies as well as other
accounts; possible benefits to Scudder from serving as manager to the Funds and
from affiliates of Scudder serving the Funds in various other capacities;
current and developing conditions in the financial services industry, including
the entry into the industry of large and well capitalized companies which are
spending and appear to be prepared to continue to spend substantial sums to
engage personnel and to provide services to competing investment companies; and
the financial resources of Scudder and the continuance of appropriate incentives
to assure that Scudder will continue to furnish high quality services to the
Funds.
In addition to the foregoing factors, the Non-interested Trustees gave
careful consideration to the likely impact of the Transactions on the Scudder
organization. In this regard, the Non-interested Trustees considered, among
other things, the structure of the Transactions which affords Scudder executives
substantial autonomy over Scudder's operations and provides substantial equity
participation and incentives for many Scudder employees; Scudder's and Zurich's
commitment to Scudder's paying compensation adequate to attract and retain top
quality personnel; Zurich's strategy for the development of its asset management
business through Scudder; information regarding the financial resources and
business reputation of Zurich; and the complementary nature of various aspects
of the business of Scudder and the Zurich Kemper organization and the intention
to maintain separate Scudder and Kemper brands in the mutual fund business.
Based on the foregoing, the Non-interested Trustees concluded that the
Transactions should cause no reduction in the quality of
8
<PAGE> 18
services provided to the Funds and believe that the Transactions should enhance
Scudder's ability to provide such services. The Non-interested Trustees
considered the foregoing factors with respect to each of the Funds.
On August 6, 1997, the Trustees of each Trust, including the Non-interested
Trustees of each Trust, approved the New Investment Management Agreement.
INFORMATION CONCERNING THE TRANSACTIONS AND ZURICH
Under the Transaction Agreement, Zurich will pay $866.7 million in cash to
acquire two-thirds of Scudder's outstanding shares and will contribute ZKI to
Scudder for additional shares, following which Zurich will have a 79.1% fully
diluted equity interest in the combined business. Zurich will then transfer a
9.6% fully diluted equity interest in Scudder Kemper to a defined contribution
plan for the benefit of Scudder and ZKI employees, as well as cash and warrants
on Zurich shares for award to Scudder employees, in each case subject to
five-year vesting schedules. After giving effect to the Transactions, current
Scudder stockholders will have a 29.6% fully diluted equity interest in Scudder
Kemper and Zurich will have a 69.5% fully diluted interest in Scudder Kemper.
Scudder's name will be changed to Scudder Kemper Investments, Inc.
The purchase price for Scudder or for ZKI in the Transactions is subject to
adjustment based on the impact to revenues of non-consenting clients, and will
be reduced if the annualized investment management fee revenues (excluding the
effect of market changes, but taking into account new assets under management)
from clients at the time of closing, as a percentage of such revenues as of June
30, 1997 (the "Revenue Run Rate Percentage"), is less than 90%.
At the closing, Zurich and the other stockholders of Scudder Kemper will
enter into a Second Amended and Restated Security Holders Agreement (the "New
SHA"). Under the New SHA, Scudder stockholders will be entitled to designate
three of the seven members of the Scudder Kemper board of directors and two of
the four members of an Executive Committee, which will be the primary
management-level committee of Scudder Kemper. Zurich will be entitled to
designate the other four members of the Scudder Kemper board and the other two
members of the Executive Committee.
The names, addresses and principal occupations of the initial Scudder-
designated directors of Scudder Kemper are as follows: Lynn S. Birdsong, 345
Park Avenue, New York, New York, Managing Director of Scudder; Cornelia M.
Small, 345 Park Avenue, New York, New York, Managing Director of Scudder; and
Edmond D. Villani, 345 Park Avenue, New York, New York, President, Chief
Executive Officer and Managing Director of Scudder.
The names, addresses and principal occupations of the initial Zurich-
designated directors of Scudder Kemper are as follows: Lawrence W. Cheng,
Mythenquai 2, Zurich, Switzerland, Chief Investment Officer for Investments and
Institutional Asset Management and the corporate functions of Securities and
Real Estate for Zurich; Steven M. Gluckstern, Mythenquai 2, Zurich, Switzer-
9
<PAGE> 19
land, responsible for Reinsurance, Structured Finance, Capital Market Products
and Strategic Investments, and a member of the Corporate Executive Board of
Zurich; Rolf Hueppi, Mythenquai 2, Zurich, Switzerland, Chairman of the Board
and Chief Executive Officer of Zurich; and Markus Rohrbasser, Mythenquai 2,
Zurich, Switzerland, Chief Financial Officer and member of the Corporate
Executive Board of Zurich.
The initial Scudder-designated Executive Committee members will be Messrs.
Birdsong and Villani (Chairman). The initial Zurich-designated Executive
Committee members will be Messrs. Cheng and Rohrbasser.
The New SHA requires the approval of a majority of the Scudder-designated
directors for certain decisions, including changing the name of Scudder Kemper,
effecting an initial public offering before April 15, 2005, causing Scudder
Kemper to engage substantially in non-investment management and related
business, making material acquisitions or divestitures, making material changes
in Scudder Kemper's capital structure, dissolving or liquidating Scudder Kemper,
or entering into certain affiliated transactions with Zurich. The New SHA also
provides for various put and call rights with respect to Scudder Kemper stock
held by current Scudder employees, limitations on Zurich's ability to purchase
other asset management companies outside of Scudder Kemper, rights of Zurich to
repurchase Scudder Kemper stock upon termination of employment of Scudder Kemper
personnel, and registration rights for stock held by continuing Scudder
stockholders.
The Transactions are subject to a number of conditions, including approval
by Scudder stockholders; the Revenue Run Rate Percentages of Scudder and ZKI
being at least 75%; Scudder and ZKI having obtained director and shareholder
approvals from U.S.-registered funds representing 90% of assets of such funds
under management as of June 30, 1997; the absence of any restraining order or
injunction preventing the Transactions, or any litigation challenging the
Transactions that is reasonably likely to result in an injunction or
invalidation of the Transactions, and the continued accuracy of the
representations and warranties contained in the Transaction Agreement. The
Transactions are expected to close during the fourth quarter of 1997.
The information set forth above concerning the Transactions has been
provided to the Trusts by Scudder, and the information set forth below
concerning Zurich has been provided to the Trusts by Zurich.
Founded in 1872, Zurich is a multinational, public corporation organized
under the laws of Switzerland. Its home office is located at Mythenquai 2, 8002
Zurich, Switzerland. Historically, Zurich's earnings have resulted from its
operations as an insurer as well as from its ownership of its subsidiaries and
affiliated companies (the "Zurich Insurance Group"). Zurich and the Zurich
Insurance Group provide an extensive range of insurance products and services,
and have branch offices and subsidiaries in more than 40 countries throughout
the world. Zurich Insurance Group is particularly strong in the insurance of
international
10
<PAGE> 20
companies and organizations. Over the past few years, Zurich's global presence,
particularly in the United States, has been strengthened by means of selective
acquisitions.
DESCRIPTION OF THE CURRENT INVESTMENT MANAGEMENT AGREEMENTS
Under each Current Investment Management Agreement, Scudder provides each
Fund with continuing investment management services. The Investment Manager also
determines which securities shall be purchased, held, or sold, and what portion
of each Fund's assets shall be held uninvested, subject to each Trust's
Declaration of Trust, By-Laws, investment policies and restrictions, the
provisions of the 1940 Act, and such policies and instructions as the Trustees
may determine.
Each Current Investment Management Agreement provides that the Investment
Manager will provide portfolio management services, place portfolio transactions
in accordance with policies expressed in each Fund's registration statement, pay
each Fund's office rent, render significant administrative services on behalf of
each Fund (not otherwise provided by third parties) necessary for each Fund's
operating as an open-end investment company including, but not limited to,
preparing reports to and meeting materials for each Trust's Board of Trustees
and reports and notices to Fund shareholders; supervising, negotiating
contractual arrangements with, to the extent appropriate, and monitoring the
performance of various third-party and affiliated service providers to each Fund
(such as each Fund's transfer and pricing agents, fund accounting agent,
custodian, accountants and others) and other persons in any capacity deemed
necessary or desirable to Fund operations; preparing and making filings with the
Securities and Exchange Commission (the "SEC" or the "Commission") and other
regulatory and self-regulatory organizations, including but not limited to,
preliminary and definitive proxy materials, post-effective amendments to the
Registration Statement, semi-annual reports on Form N-SAR and notices pursuant
to Rule 24f-2 under the 1940 Act; overseeing the tabulation of proxies by each
Fund's transfer agent; assisting in the preparation and filing of each Fund's
federal, state and local tax returns; preparing and filing each Fund's federal
excise tax returns pursuant to Section 4982 of the Internal Revenue Code of
1986, as amended; providing assistance with investor and public relations
matters; monitoring the valuation of portfolio securities and the calculation of
net asset value; monitoring the registration of shares of each Fund under
applicable federal and state securities laws; maintaining or causing to be
maintained for each Fund all books, records and reports and any other
information required under the 1940 Act, to the extent such books, records and
reports and other information are not maintained by each Fund's custodian or
other agents of each Fund; assisting in establishing accounting policies of each
Fund; assisting in the resolution of accounting issues that may arise with
respect to each Fund's operations and consulting with each Fund's independent
accountants, legal counsel and each Fund's other agents as necessary in
connection therewith; establishing and monitoring each Fund's operating expense
budgets;
11
<PAGE> 21
reviewing each Fund's bills; processing the payment of bills that have been
approved by an authorized person; assisting each Fund in determining the amount
of dividends and distributions available to be paid by each Fund to its
shareholders, preparing and arranging for the printing of dividend notices to
shareholders, and providing the transfer and dividend paying agent, the
custodian, and the accounting agent with such information as is required for
such parties to effect the payment of dividends and distributions; and otherwise
assisting each Fund in the conduct of its business, subject to the direction and
control of each Trust's Board of Trustees.
Under each Current Investment Management Agreement, each Fund is
responsible for other expenses, including organizational expenses (including
out-of-pocket expenses, but not including the Investment Manager's overhead or
employee costs); brokers' commissions or other costs of acquiring or disposing
of any portfolio securities of each Fund; legal, auditing and accounting
expenses; payment for portfolio pricing or valuation services to pricing agents,
accountants, bankers and other specialists, if any; taxes and governmental fees;
the fees and expenses of each Fund's transfer agent; expenses of preparing share
certificates and any other expenses, including clerical expenses, of issuance,
offering, distribution, sale, redemption or repurchase of shares; the expenses
of and fees for registering or qualifying securities for sale; the fees and
expenses of Non-interested Trustees; the cost of printing and distributing
reports, notices and dividends to current shareholders; and the fees and
expenses of each Fund's custodians, subcustodians, accounting agent, dividend
disbursing agents and registrars. Each Fund may arrange to have third parties
assume all or part of the expenses of sale, underwriting and distribution of
shares of each Fund. Each Fund is also responsible for expenses of shareholders'
and other meetings, the cost of responding to shareholders' inquiries, and its
expenses incurred in connection with litigation, proceedings and claims and the
legal obligation it may have to indemnify officers and Trustees of each Trust
with respect thereto. Each Fund is also responsible for the maintenance of books
and records which are required to be maintained by each Fund's custodian or
other agents of each Trust; telephone, telex, facsimile, postage and other
communications expenses; any fees, dues and expenses incurred by each Fund in
connection with membership in investment company trade organizations; expenses
of printing and mailing prospectuses and statements of additional information of
each Fund and supplements thereto to current shareholders; costs of stationery;
fees payable to the Investment Manager and to any other Fund advisors or
consultants; expenses relating to investor and public relations; interest
charges, bond premiums and other insurance expense; freight, insurance and other
charges in connection with the shipment of each Fund's portfolio securities; and
other expenses.
The Investment Manager is responsible for the payment of the compensation
and expenses of all Trustees, officers and executive employees of each Fund
(including each Fund's share of payroll taxes) affiliated with the Investment
Manager and making available, without expense to each Fund, the
12
<PAGE> 22
services of such Trustees, officers and employees as may duly be elected
officers of each Trust, subject to their individual consent to serve and to any
limitations imposed by law. Each Fund is responsible for the fees and expenses
(specifically including travel expenses relating to Fund business) of Trustees
not affiliated with the Investment Manager. Under each Current Investment
Management Agreement, the Investment Manager also pays each Fund's share of
payroll taxes, as well as expenses, such as travel expenses (or an appropriate
portion thereof), of Trustees and officers of each Trust who are directors,
officers or employees of the Investment Manager, except to the extent that such
expenses relate to attendance at meetings of the Board of Trustees of each
Trust, or any committees thereof or advisers thereto, held outside Boston,
Massachusetts or New York, New York. During each Fund's most recent fiscal year,
no compensation, direct or otherwise (other than through fees paid to the
Investment Manager), was paid or became payable by each Trust to any of its
officers or Trustees who were affiliated with the Investment Manager.
In return for the services provided by the Investment Manager as investment
manager, and the expenses it assumes under each Current Investment Management
Agreement, each Fund pays the Investment Manager a management fee which is
accrued daily and payable monthly. The management fee rate for each Fund is set
forth in the table below. As of the end of each Fund's last fiscal year, each
Fund had net assets and paid an aggregate management fee to the Investment
Manager during such period as set forth below.
13
<PAGE> 23
<TABLE>
<CAPTION>
AGGREGATE
NET MANAGEMENT MANAGEMENT
FUND FISCAL YEAR ASSETS FEE RATE+ FEE PAID
- ----------------------- ----------- ------------ ----------------------------- ----------
<S> <C> <C> <C> <C>
Scudder California Tax 3/31/97 $288,576,042 .625% of first $200 mil. avg. $1,800,657
Free Fund daily net assets; .60% of
assets over $200 mil.
Scudder California Tax 3/31/97 $ 68,695,680 .50% $ 210,030 *
Free Money
Scudder High Yield Tax 12/31/96 $293,101,022 .70% on first $200 mil. avg. $1,885,083
Free Fund daily net assets; .65% on
assets over $200 mil.
Scudder Managed 12/31/96 $737,422,861 .55% on first $200 mil. Of $3,826,131
Municipal Bonds avg. daily net assets; .50%
on next $500 mil; .475% on
assets over $700 mil.
Scudder Massachusetts 10/31/96 $ 65,505,088 .60% $ 231,096 *
Limited Term Tax Free
Fund
Scudder Massachusetts 3/31/97 $329,844,621 .60% $1,933,810
Tax Free Fund
Scudder New York Tax 3/31/97 $180,646,318 .625% for first $200 mil. $1,165,330
Free Fund avg. daily net assets; .60%
for assets over $200 mil.
Scudder New York Tax 3/31/97 $ 59,538,652 .50% $ 142,937 *
Free Money Fund
Scudder Ohio Tax Free 3/31/97 $ 84,109,415 .60% $ 190,438 *
Fund
Scudder Pennsylvania 3/31/97 $ 74,177,997 .60% $ 136,180 *
Tax Free Fund
Scudder Tax Free Money 12/31/96 $220,245,242 .50% on first $500 mil. avg. $1,030,755*
Fund daily net assets; .48% on
assets over $500 mil.
Scudder Limited Term 10/31/96 $123,660,430 .60% $ 500,912 *
Tax Free Fund
Scudder Medium Term Tax 12/31/96 $650,504,081 .60% on first $500 mil. avg. $3,879,293
Free Fund daily net assets; .50% on
assets over $500 mil.
</TABLE>
- ------------------------------
* After waivers and/or expense limitations.
+ The management fee rates shown above are for each Fund's most recently
completed fiscal year, unless otherwise noted. For each Fund's current
management fee rate, see Exhibit B attached to this proxy statement.
Each Current Investment Management Agreement further provides that the
Investment Manager shall not be liable for any error of judgment or mistake of
law or for any loss suffered by any Fund in connection with matters to which
such agreement relates, except a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the Investment Manager in the
performance of its duties or from reckless disregard by the Investment Manager
of its obligations and duties under such agreement.
Each Current Investment Management Agreement may be terminated without
penalty upon sixty (60) days' written notice by either party. Each Fund may
agree to terminate its Current Investment Management Agreement either by the
14
<PAGE> 24
vote of a majority of the outstanding voting securities of the Fund, or by a
vote of the Board of Trustees. As stated above, each Current Investment
Management Agreement automatically terminates in the event of its assignment.
Scudder has acted as the Investment Manager for each Fund since each Fund
commenced operations as shown below. Also shown below is the date of each
Current Investment Management Agreement, the date when each Current Investment
Management Agreement was last approved by the Trustees and the shareholders of
each Fund and the date to which each Current Investment Management Agreement was
last continued. Each Current Investment Management Agreement was last submitted
to shareholders prior to its becoming effective, as required by the 1940 Act.*
<TABLE>
<CAPTION>
DATE OF
CURRENT
COMMENCEMENT INVESTMENT LAST APPROVED BY
OF MANAGEMENT ---------------------- DATE
FUND OPERATIONS AGREEMENT TRUSTEES SHAREHOLDERS CONTINUED TO
- ---------------------- ------------ ---------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Scudder California Tax
Free Fund 7/22/83 12/12/90 8/6/97 12/11/90 9/30/98
Scudder California Tax
Free Money Fund 5/28/87 12/12/90 8/6/97 12/11/90 9/30/98
Scudder High Yield Tax
Free Fund 1/22/87 8/13/97 8/6/97 12/11/90 9/30/98
Scudder Managed
Municipal Bonds 10/5/76 8/10/94 8/6/97 12/11/90 9/30/98
Scudder Massachusetts
Limited Term Tax
Free Fund 2/15/94 2/15/94 8/6/97 2/10/94 9/30/98
Scudder Massachusetts
Tax Free Fund 5/28/87 12/11/96 8/6/97 12/10/96 9/30/98
Scudder New York Tax
Free Fund 7/22/83 12/12/90 8/6/97 12/11/90 9/30/98
Scudder New York Tax
Free Money Fund 5/28/87 6/1/87 8/6/97 12/10/96 9/30/98
Scudder Ohio Tax Free
Fund 5/28/87 6/1/87 8/6/97 12/10/96 9/30/98
Scudder Pennsylvania
Tax Free Fund 5/28/87 6/1/87 8/6/97 12/10/96 9/30/98
Scudder Tax Free Money
Fund 1/9/80 12/12/90 8/6/97 12/11/90 9/30/98
Scudder Limited Term
Tax Free Fund 2/15/94 2/15/94 8/6/97 12/13/94 9/30/98
Scudder Medium Term
Tax Free Fund 4/12/83 8/10/94 8/6/97 12/13/94 9/30/98
</TABLE>
- ------------------------------
* An Investment Management Agreement which is changed from a prior agreement
solely to reduce the fee payable by the Fund does not require shareholder
approval prior to becoming effective. In those cases, the date shown for
shareholder approval may be earlier than the effective date and may relate to
the previous management agreement.
15
<PAGE> 25
THE NEW INVESTMENT MANAGEMENT AGREEMENTS
The New Investment Management Agreement for each Fund will be dated as of
the date of the consummation of the Transactions, which is expected to occur in
the fourth quarter of 1997, but in no event later than February 28, 1998. Each
New Investment Management Agreement will be in effect for an initial term ending
on the same date as would the corresponding Current Investment Management
Agreement but for the Transactions, and may continue thereafter from year to
year only if specifically approved at least annually by the vote of "a majority
of the outstanding voting securities" of each Fund, or by the Board and, in
either event, the vote of a majority of the Non-interested Trustees, cast in
person at a meeting called for such purpose. In the event that shareholders of a
Fund do not approve the New Investment Management Agreement, the corresponding
Current Investment Management Agreement will remain in effect until the closing
of the Transactions, at which time it would terminate. In such event, the Board
of such Fund will take such action as it deems to be in the best interests of
the Fund and its shareholders. In the event the Transactions are not
consummated, Scudder will continue to provide services to each Fund in
accordance with the terms of each Current Investment Management Agreement for
such periods as may be approved at least annually by the Board, including a
majority of the Non-interested Trustees.
DIFFERENCES BETWEEN THE CURRENT AND NEW INVESTMENT MANAGEMENT AGREEMENTS
The New Investment Management Agreements are substantially the same as the
Current Investment Management Agreements in all material respects. The principal
changes that have been made are summarized below. The New Investment Management
Agreements reflect conforming changes that have been made in order to promote
consistency among all funds currently advised by Scudder and to permit ease of
administration. For example, Scudder California Tax Free Fund, Scudder
California Tax Free Money Fund, Scudder High Yield Tax Free Fund, Scudder
Managed Municipal Bonds, Scudder Massachusetts Limited Term Tax Free Fund,
Scudder New York Tax Free Fund, Scudder Tax Free Money Fund, Scudder Limited
Term Tax Free Fund and Scudder Medium Term Tax Free Fund would update the list
of types of services that may be provided by the Investment Manager to include
the monitoring of accounting agents. In addition, the New Investment Management
Agreements for these same Funds would add "accounting agents" to the list of
service providers to which the Investment Manager must provide information in
connection with the payment of dividends and distributions. The New Investment
Management Agreements for these Funds would specify that the Investment Manager
is not responsible for payment of the fees and expenses of the Fund's accounting
agent. The New Investment Management Agreements would also clarify that purchase
and sale opportunities, which are suitable for more than one client of the
Investment Manager, will be allocated by the Investment Manager in an equitable
manner.
16
<PAGE> 26
In addition, each Fund (except for Scudder Massachusetts Tax Free Fund,
Scudder New York Tax Free Money Fund, Scudder Ohio Tax Free Fund and Scudder
Pennsylvania Tax Free Fund, all of which already included such provision with
respect to Scudder) would clarify the scope of the licensing provisions
governing the use of the Scudder name. Specifically, each New Investment
Management Agreement identifies Scudder Kemper as the exclusive licensee of the
rights to use and sublicense the names "Scudder," "Scudder Kemper Investments,
Inc.," and "Scudder, Stevens & Clark, Inc." (together the "Scudder Marks").
Under this license, each Trust, with respect to each of its Funds, if any, has
the nonexclusive right to use and sublicense the Scudder name and marks as part
of its name, and to use the Scudder Marks in the Trust's investment products and
services. This license continues only as long as the New Investment Management
Agreement is in place, and only as long as Scudder Kemper continues to be a
licensee of the Scudder Marks from Scudder Trust Company, which is the owner and
licensor of the Scudder Marks. As a condition of the license, each Trust, on
behalf of each of its Funds, if any, undertakes certain responsibilities and
agrees to certain restrictions, such as agreeing not to challenge the validity
of the Scudder Marks or ownership by Scudder Trust Company and the obligation to
use the name within commercially reasonable standards of quality. In the event
the New Investment Management Agreement is terminated, each Trust, on behalf of
each of its Funds, if any, must not use a name likely to be confused with those
associated with the Scudder Marks.
Other conforming changes include: deletion of the Investment Manager's
potential responsibility for monitoring the calculation and payment of
distributions to shareholders (for all Funds except Scudder Massachusetts Tax
Free Fund, Scudder New York Tax Free Money Fund, Scudder Ohio Tax Free Fund,
Scudder Pennsylvania Tax Free Fund, which do not contain such provision);
deletion of a provision not permitting application of the Current Investment
Management Agreement to newly-created series (for Scudder Tax Free Money Fund);
and the inclusion of a provision clarifying that the New Investment Management
Agreement supersedes all prior agreements (for Scudder Massachusetts Limited
Term Tax Free Fund and Scudder Limited Term Tax Free Fund).
INVESTMENT MANAGER
Scudder is one of the most experienced investment counsel firms in the
United States. It was established in 1919 as a partnership and was restructured
as a Delaware corporation in 1985. The principal source of Scudder's income is
professional fees received from providing continuing investment advice. Scudder
provides investment counsel for many individuals and institutions, including
insurance companies, endowments, industrial corporations and financial and
banking organizations.
17
<PAGE> 27
As stated above, Scudder is a Delaware corporation. Daniel Pierce* is the
Chairman of the Board of Scudder, Edmond D. Villani# is President and Chief
Executive Officer of Scudder, Stephen R. Beckwith#, Lynn S. Birdsong#, Nicholas
Bratt#, E. Michael Brown*, Mark S. Casady*, Linda C. Coughlin*, Margaret D.
Hadzima*, Jerard K. Hartman#, Richard A. Holt@, John T. Packard+, Kathryn L.
Quirk#, Cornelia M. Small# and Stephen A. Wohler* are the other members of the
Board of Directors of Scudder (see footnote for symbol key). The principal
occupation of each of the above named individuals is serving as a Managing
Director of Scudder.
All of the outstanding voting and nonvoting securities of Scudder are held
of record by Stephen R. Beckwith, Juris Padegs#, Daniel Pierce and Edmond D.
Villani in their capacity as the representatives of the beneficial owners of
such securities (the "Representatives"), pursuant to a Security Holders'
Agreement among Scudder, the beneficial owners of securities of Scudder and such
Representatives. Pursuant to the Security Holders' Agreement, the
Representatives have the right to reallocate shares among the beneficial owners
from time to time. Such reallocations will be at net book value in cash
transactions. All Managing Directors of Scudder own voting and nonvoting stock
and all Principals own nonvoting stock.
Directors, officers and employees of Scudder from time to time may enter
into transactions with various banks, including each Fund's custodian bank. It
is Scudder's opinion that the terms and conditions of those transactions will
not be influenced by existing or potential custodial or other Fund
relationships.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of Scudder,
computes net asset value and provides fund accounting services for each Fund.
Scudder Service Corporation ("SSC"), also a subsidiary of Scudder, is the
transfer, shareholder servicing and dividend-paying agent for each Fund. The
table below sets forth for each Fund the respective fees paid to SFAC and SSC
during the last fiscal year of each Fund.
- ------------------------------
* Two International Place, Boston, Massachusetts
# 345 Park Avenue, New York, New York
+ 101 California Street, San Francisco, California
@ Two Prudential Plaza, 180 North Stetson, Suite 5400, Chicago, Illinois.
18
<PAGE> 28
<TABLE>
<CAPTION>
AGGREGATE FEE AGGREGATE FEE
PAID TO SFAC PAID TO SSC
FISCAL YEAR DURING LAST DURING LAST
FUND (ENDED) FISCAL YEAR FISCAL YEAR
- ---------------------------------- ----------- ---------------- ----------------
<S> <C> <C> <C>
Scudder California Tax Free Fund 3/31/97 $ 66,630 $159,122
Scudder California Tax Free Money
Fund 3/31/97 $ 30,000 $ 67,597
Scudder High Yield Tax Free Fund 12/31/96 $ 59,882 $292,138
Scudder Managed Municipal Bonds 12/31/96 $ 99,729 $329,743
Scudder Massachusetts Limited Term
Tax Free Fund 10/31/96 $ 36,000 $ 36,098
Scudder Massachusetts Tax Free
Fund 3/31/97 $ 59,760 $188,646
Scudder New York Tax Free Fund 3/31/97 $ 53,983 $119,944
Scudder New York Tax Free Money
Fund 3/31/97 $ 30,000 $ 58,369
Scudder Ohio Tax Free Fund 3/31/97 $ 36,000 $ 58,820
Scudder Pennsylvania Tax Free Fund 3/31/97 $ 36,000 $ 62,522
Scudder Tax Free Money Fund 12/31/96 $ 45,463 $221,703
Scudder Limited Term Tax Free Fund 10/31/96 $ 39,722 $ 44,784
Scudder Medium Term Tax Free Fund 12/31/96 $ 96,034 $406,238
</TABLE>
SFAC and SSC will continue to provide fund accounting and transfer agency
services to the Funds under the current arrangements if the New Investment
Management Agreements are approved.
Exhibit B sets forth the fees and other information regarding other
investment companies advised by Scudder.
BROKERAGE COMMISSIONS ON PORTFOLIO TRANSACTIONS
To the maximum extent feasible, Scudder places orders for portfolio
transactions through Scudder Investor Services, Inc., Two International Place,
Boston, Massachusetts 02110 (the "Distributor") (a corporation registered as a
broker/dealer and a subsidiary of Scudder), which in turn places orders on
behalf of the Funds with issuers, underwriters or other brokers and dealers. In
selecting brokers and dealers with which to place portfolio transactions for a
Fund, Scudder will not consider sales of shares of funds currently advised by
ZKI, although it may place such transactions with brokers and dealers that sell
shares
19
<PAGE> 29
of funds currently advised by ZKI. The Distributor receives no commissions, fees
or other remuneration from the Funds for this service. Allocation of portfolio
transactions is supervised by Scudder.
REQUIRED VOTE
Approval of the New Investment Management Agreement for any Fund requires
the affirmative vote of a "majority of the outstanding voting securities", as
defined above, of the Fund. The Trustees of each Trust recommend that the
shareholders of each Fund vote in favor of this Proposal 1.
PROPOSAL 2: ELECTION OF TRUSTEES FOR EACH TRUST
At the Special Meeting, eight Trustees are to be elected to constitute the
Board of each Trust. For election of Trustees at the Special Meeting, each
Trust's Board of Trustees has approved the nomination of the following
individuals: Henry P. Becton, Jr., Dawn-Marie Driscoll, Peter B. Freeman, George
M. Lovejoy, Jr., Dr. Wesley W. Marple, Jr., Daniel Pierce, Kathryn L. Quirk, and
Jean C. Tempel.
The persons named as proxies on the enclosed proxy card will vote for the
election of the nominees named above unless authority to vote for any or all of
the nominees is withheld in the proxy. Each Trustee so elected will serve as a
Trustee of the respective Trust until the next meeting of shareholders, if any,
called for the purpose of electing Trustees and until the election and
qualification of a successor or until such Trustee sooner dies, resigns or is
removed as provided in the Declaration of Trust of each Trust.
Each of the nominees has indicated that he or she is willing to serve as a
Trustee. If any or all of the nominees should become unavailable for election
due to events not now known or anticipated, the persons named as proxies will
vote for such other nominee or nominees as the Trustees may recommend. The
following table sets forth certain information concerning the current Trustees
and the nominees. Unless otherwise noted, each of the Trustees and nominees has
engaged in the principal occupation listed in the following table for more than
five years, but not necessarily in the same capacity.
20
<PAGE> 30
NOMINEES:
<TABLE>
<CAPTION>
PRESENT OFFICE WITH THE TRUST
(DATE NOMINEE BECAME TRUSTEE),
NAME (AGE) PRINCIPAL OCCUPATION OR
----------- EMPLOYMENT AND DIRECTORSHIPS
---------------------------------------------------------------
<S> <C>
HENRY P. BECTON, JR. (53) Trustee, Scudder California Tax Free Trust (1990), Scudder
Municipal Trust (1990) and Scudder State Tax Free Trust (1990).
President and General Manager, WGBH Educational Foundation;
Director: Becton Dickinson and Company; The A.H. Belo Company;
The Public Broadcasting Service; and several private companies.
Former Director, The Providence Journal Company. Mr. Becton
serves on the Boards of an additional 3 Trusts or Corporations
whose Funds are advised by Scudder.
DAWN-MARIE DRISCOLL (50) Trustee, Scudder California Tax Free Trust (1990), Scudder
Municipal Trust (1987), Scudder State Tax Free Trust (1987),
Scudder Tax Free Money Fund (1988) and Scudder Tax Free Trust
(1993). Executive Fellow, Center for Business Ethics, Bentley
College; President, Driscoll Associates; Director of several
private companies. Prior to 1990, law partner (Palmer & Dodge)
and Vice President of Corporate Affairs and General Counsel,
Filene's. Ms. Driscoll serves on the Boards of an additional 3
Trusts or Corporations whose Funds are advised by Scudder.
PETER B. FREEMAN (65) Trustee, Scudder California Tax Free Trust (1983), Scudder
Municipal Trust (1983), Scudder State Tax Free Trust (1986),
Scudder Tax Free Money Fund (1979) and Scudder Tax Free Trust
(1983). Director, The A.H. Belo Company; Trustee, Eastern
Utilities Associates (public utility holding company);
Director, AMICA Life Insurance Co.; Director, AMICA Insurance
Co. Formerly: President, Fields Point Management Co. and Goelet
Estate Co. (private investment management companies); Former
Director, The Providence Journal Company (multi-media company).
Mr. Freeman serves on the Boards of an additional 5 Trusts or
Corporations whose Funds are advised by Scudder.
GEORGE M. LOVEJOY, JR. (67) Trustee, Scudder California Tax Free Trust (1997), Scudder
Municipal Trust (1976) and Scudder Tax Free Money Fund (1979).
President and Director, Fifty Associates (real estate
investment trust); Director or Trustee of various for-profit
and not-for-profit organizations. Prior to 1994, Chairman,
Meredith & Grew, Inc. (real estate services company). Mr.
Lovejoy serves on the Boards of an additional 5 Trusts or
Corporations whose Funds are advised by Scudder.
DR. WESLEY W. MARPLE, JR. Trustee, Scudder Municipal Trust (1987), Scudder State Tax Free
(65) Trust (1983) and Scudder Tax Free Trust (1983). Professor of
Business Administration, Northeastern University, teaching
financial management and investment banking. Trustee, Eastern
Utilities Associates (public utility holding company). Dr.
Marple serves on the Boards of an additional 3 Trusts or
Corporations whose Funds are advised by Scudder.
</TABLE>
21
<PAGE> 31
<TABLE>
<CAPTION>
PRESENT OFFICE WITH THE TRUST
(DATE NOMINEE BECAME TRUSTEE),
NAME (AGE) PRINCIPAL OCCUPATION OR
----------- EMPLOYMENT AND DIRECTORSHIPS
---------------------------------------------------------------
<S> <C>
DANIEL PIERCE* (63) Trustee, Scudder California Tax Free Trust (1991) and Scudder
State Tax Free Trust (1991); Vice President and Trustee,
Scudder Municipal Trust (1991). Chairman of the Board and
Managing Director of Scudder, Stevens & Clark, Inc. Director,
Fiduciary Trust Company (bank and trust company) and Fiduciary
Company Incorporated (bank and trust company). Mr. Pierce
serves on the Boards of an additional 13 Trusts or Corporations
whose Funds are advised by Scudder.
KATHRYN L. QUIRK* (44) Trustee, Scudder Municipal Trust (1997); Vice President and
Trustee, Scudder Tax Free Money Fund (1996) and Scudder Tax
Free Trust 1997. Managing Director of Scudder, Stevens & Clark,
Inc. Ms. Quirk serves on the Boards of an additional 9 Trusts
or Corporations whose Funds are advised by Scudder.
JEAN C. TEMPEL (54) Trustee, Scudder State Tax Free Trust (1994), Scudder Tax Free
Money Fund (1994) and Scudder Tax Free Trust (1994). Managing
Partner, Technology Equity Partners; Special Limited Partner,
TL Ventures (a venture capital fund); Director and Vice
Chairman, Cambridge Technology Partners, Inc. (a systems
integration on client/server platform company); Director,
Sonesta International Hotels, Inc.; Director, Centocor, Inc.
(diagnostic and pharmaceutical biotechnology company); Director
of several private companies. Prior to 1993, President of
Safeguard Scientific, Inc. and Executive Vice President and
Chief Operating Officer of The Boston Company. Ms. Tempel
serves on the Boards of an additional 4 Trusts or Corporations
whose Funds are advised by Scudder.
</TABLE>
- ------------------------------
* Trustees considered by the Trusts and their counsel to be "interested persons"
(as defined in the 1940 Act) of the Trusts or of their investment manager
because of their employment by the Investment Manager and, in some cases,
holding offices with the Trust.
CURRENT TRUSTEES NOT STANDING FOR RE-ELECTION:
<TABLE>
<CAPTION>
PRESENT OFFICE WITH THE TRUST
(DATE BECAME TRUSTEE),
NAME (AGE) PRINCIPAL OCCUPATION OR
----------- EMPLOYMENT AND DIRECTORSHIPS
---------------------------------------------------------------
<S> <C>
E. MICHAEL BROWN* (56) Trustee, Scudder State Tax Free Trust (1996) and Scudder Tax
Free Money Fund (1996). Managing Director of Scudder, Stevens &
Clark, Inc. Mr. Brown serves on the Boards of an additional 4
Trusts or Corporations whose Funds are advised by Scudder.
DAVID S. LEE* (63) President and Trustee, Scudder California Tax Free Trust
(1983), Scudder Municipal Trust (1982), Scudder State Tax Free
Trust (1983), Scudder Tax Free Money Fund (1979) and Scudder
Tax Free Trust (1982). Managing Director, Scudder, Stevens &
Clark, Inc.; Trustee Emeritus, New England Medical Center. Mr.
Lee serves on the Boards of an additional 12 Trusts or
Corporations whose Funds are advised by Scudder.
</TABLE>
- ------------------------------
* Trustees considered by the Trusts and their counsel to be "interested persons"
(as defined in the 1940 Act) of the Trusts or of their investment manager
because of their employment by the Investment Manager and, in some cases,
holding offices with the Trust.
22
<PAGE> 32
The table below sets forth the number of shares of each Fund owned directly
or beneficially by the nominees to and the Trustees of the relevant Board of
Trustees as of June 30, 1997. Nominees or Trustees who do not own any Shares
have been omitted from the table. Funds which are not owned by any nominees or
Trustees also have been omitted from the table.
<TABLE>
<CAPTION>
ALL CURRENT
TRUSTEES AND
OFFICERS AS
FUND NAME (1) BECTON BROWN DRISCOLL FREEMAN LEE LOVEJOY MARPLE PIERCE TEMPEL A GROUP
- --------------------- ------ ----- -------- ------- ------- ------- ------ ------- ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Scudder California
Tax Free Trust
Scudder California
Tax Free Fund...... 92* -- 97 177 82,842(2) -- -- -- -- 83,116(3)
Scudder California
Tax Free Money
Fund............... 1,000* -- 1,008 -- 181,722(4) -- -- -- -- 182,730(5)
Scudder Municipal
Trust
Scudder High Yield
Tax Free Fund...... 174 -- 1,931(6) -- 112,173(7) 643 121* 1,750 -- 116,671(8)
Scudder Managed
Municipal Bonds.... 192 -- 122 190 216,029(9) 1,825 326 108,699(10) -- 327,383(11)
Scudder Tax Free
Trust
Scudder Medium Term
Tax Free Fund...... 88* -- 1,628 154 106,328(12) 11,542 2,345 58,071(13) 1,049 132,268(14)
Scudder Limited Term
Tax Free Fund...... 82* -- 85 -- -- -- -- -- 964 13,221
Scudder Tax Free
Money Fund.......... 1000* -- 14,896(15) 1,000 841,247(16) 4,770 2,746 52,966(17) 3,733 868,220(18)
Scudder State Tax
Free Trust
Scudder
Massachusetts
Limited Term Tax
Free Fund.......... 121 208 45 83 -- 9,675 104 41,356(19) 962 42,879(20)
Scudder
Massachusetts Tax
Free Fund.......... 125 181 116 72 8,776(21) 14,925 26,834(22) 12,942(23) 844 51,470(24)
Scudder New York Tax
Free Fund.......... 89* -- 51 175 6,409(25) -- 102 -- 485 7,222(26)
Scudder New York Tax
Free Money Fund.... 1000* -- 538 1,000 61,329(27) -- -- -- 5,130 147,031(28)
Scudder Ohio Tax
Free Fund.......... 74* -- 42 -- -- -- 80 4,380(29) 399 4,901(30)
Scudder Pennsylvania
Tax Free Fund...... 73* -- 41 -- -- -- 86 -- 390 517
</TABLE>
- ------------------------------
* Shares acquired after June 30, 1997.
(1) The information as to beneficial ownership is based on statements furnished
to the Trusts by each Trustee and nominee. Unless otherwise noted,
beneficial ownership is based on sole voting and investment power. Each
Trustee's and nominee's individual shareholdings of any Fund constitutes
less than 1/4 of 1% of the shares outstanding of such Fund.
(2) Mr. Lee's shares, 0.30% of the outstanding shares of Scudder California Tax
Free Fund, are held in a fiduciary capacity as to which he shares investment
and voting power.
(3) As a group on June 30, 1997, the Trustees and officers owned beneficially
0.30% of the outstanding shares of Scudder California Tax Free Fund of which
274 shares were held with sole investment and voting power and 82,842 shares
were held with shared investment and voting power.
(4) Mr. Lee's shares, 0.28% of the outstanding shares of Scudder California Tax
Free Money Fund, are held in a fiduciary capacity as to which he shares
investment and voting power.
(5) As a group on June 30, 1997, the Trustees and officers owned beneficially
0.28% of the outstanding shares of Scudder California Tax Free Money Fund of
which 1,008 shares were held with sole investment and voting power and
181,722 shares were held with shared investment and voting power.
(6) Ms. Driscoll's total in Scudder High Yield Tax Free Fund includes 732 shares
held with shared investment and voting power.
23
<PAGE> 33
(7) Mr. Lee's shares, 0.45% of the outstanding shares of Scudder High Yield Tax
Free Fund, are held in a fiduciary capacity as to which he shares
investment and voting power.
(8) As a group on June 30, 1997, the Trustees and officers owned beneficially
0.47% of the outstanding shares of Scudder High Yield Tax Free Fund of
which 3,766 shares were held with sole investment and voting power and
112,905 shares were held with shared investment and voting power.
(9) Mr. Lee's shares, 0.27% of the outstanding shares of Scudder Managed
Municipal Bonds, are held in a fiduciary capacity as to which he shares
investment and voting power.
(10) Mr. Pierce's total in Scudder Managed Municipal Bonds includes 5,488 shares
owned by members of his family and 103,211 shares held in a fiduciary
capacity as to which he shares investment and voting power.
(11) As a group on June 30, 1997, the Trustees and officers owned beneficially
0.41% of the outstanding shares of Scudder Managed Municipal Bonds of which
2,655 shares were held with sole investment and voting power and 324,728
shares were held with shared investment and voting power.
(12) Mr. Lee's total in Scudder Medium Term Tax Free Fund includes 5,354 shares
owned by members of his family and 100,973 shares held in a fiduciary
capacity as to which he shares investment and voting power.
(13) Mr. Pierce's total in Scudder Medium Term Tax Free Fund includes 4,891
shares owned by members of his family and 52,027 shares held in a fiduciary
capacity as to which he shares investment and voting power.
(14) As a group on June 30, 1997, the Trustees and officers of Scudder Medium
Term Tax Free Fund held 25,851 shares with sole investment and voting power
and 106,417 shares with shared investment and voting power.
(15) Ms. Driscoll's total in Scudder Tax Free Money Fund includes 6,835 shares
held with shared investment and voting power.
(16) Mr. Lee's shares, 0.38% of the outstanding shares of Scudder Tax Free Money
Fund, Scudder Tax Free Money Fund are held in a fiduciary capacity as to
which he shares investment and voting power.
(17) Mr. Pierce's total in Scudder Tax Free Money Fund includes 21,482 shares
held with shared investment and voting power
(18) As a group on June 30, 1997, the Trustees and officers owned beneficially
0.39% of the outstanding shares of Scudder Tax Free Money Fund of which
20,138 shares were held with sole investment and voting power and 848,082
shares were held with shared investment and voting power.
(19) As of June 30, 1997, Mr. Pierce beneficially owned 0.70% of the outstanding
shares of Scudder Massachusetts Limited Term Tax Free Fund.
(20) As a group on June 30, 1997, the Trustees and officers owned beneficially
0.73% of the outstanding shares of Scudder Massachusetts Limited Term Tax
Free Fund which were held with sole investment and voting power.
(21) Mr. Lee's shares in Scudder Massachusetts Tax Free Fund are held in a
fiduciary capacity as to which he shares investment and voting power.
(22) Dr. Marple's total in Scudder Massachusetts Tax Free Fund includes 5,851
shares held with shared investment and voting power.
(23) Mr. Pierce's total in Scudder Massachusetts Tax Free Fund includes 7,039
shares owned by members of his family and 4,301 shares held in a fiduciary
capacity as to which he shares investment and voting power.
(24) As a group on June 30, 1997, the Trustees and officers of Scudder
Massachusetts Tax Free Fund held 25,377 shares with sole investment and
voting power and 26,093 shares with shared investment and voting power.
24
<PAGE> 34
(25) Mr. Lee's shares in New York Tax Free Fund are held in a fiduciary capacity
as to which he shares investment and voting power.
(26) As a group on June 30,1997, the Trustees and officers of Scudder New York
Tax Free Fund held 813 shares with sole investment and voting power and
6,409 shares with shared investment and voting power.
(27) Mr. Lee's shares in Scudder New York Tax Free Money Fund are held in a
fiduciary capacity as to which he shares investment and voting power.
(28) As a group on June 30, 1997, the Trustees and Officers owned beneficially
0.25% of the outstanding shares of Scudder New York Tax Free Money Fund of
which 85,702 shares were held with sole investment and voting power and
61,329 shares were held with shared investment and voting power.
(29) Mr. Pierce's shares in Scudder Ohio Tax Free Fund are held in a fiduciary
capacity as to which he shares investment and voting power.
(30) As a group on June 30, 1997, the Trustees and officers of Scudder Ohio Tax
Free Fund held 4,380 shares with sole investment and voting power and 521
with shared investment and voting power.
As of June 30, 1997, 2,125,280 shares in the aggregate, 7.62% of the
outstanding shares of Scudder California Tax Free Fund were held in the name of
Charles Schwab & Co., 101 Montgomery Street, San Francisco, CA 94104, who may be
deemed to be the beneficial owner of certain of these shares, but disclaims any
beneficial ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 7,026,717 shares in the aggregate, or 10.67% of the outstanding
shares of Scudder California Tax Free Money Fund on June 30, 1997. The
Investment Manager may be deemed to be a beneficial owner of such shares but
disclaims any beneficial ownership in such shares.
Certain accounts for which the Investment Manager acts as investment
adviser owned 10,913,532 shares in the aggregate, or 13.59% of the outstanding
shares of Scudder Managed Municipal Bonds on June 30, 1997. The Investment
Manager may be deemed to be a beneficial owner of such shares but disclaims any
beneficial ownership in such shares.
As of June 30, 1997, 5,125,738 shares in the aggregate, 6.38% of the
outstanding shares of Scudder Managed Municipal Bonds were held in the nominees
of Fiduciary Trust Company. Fiduciary Trust Company may be deemed to be the
beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 9,731,502 shares in the aggregate, or 17.26% of the outstanding
shares of Scudder Medium Term Tax Free Fund on June 30, 1997. The Investment
Manager may be deemed to be a beneficial owner of such shares but disclaims any
beneficial ownership in such shares.
As of June 30, 1997, 3,694,235 shares in the aggregate, 6.55% of the
outstanding shares of Scudder Medium Term Tax Free Fund were held in the name of
Charles Schwab & Co., 101 Montgomery Street, San Francisco, CA
25
<PAGE> 35
94104, who may be deemed to be the beneficial owner of certain of these shares,
but disclaims any beneficial ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 4,541,006 shares in the aggregate, or 47.71% of the outstanding
shares of Scudder Limited Term Tax Free Fund on June 30, 1997. The Investment
Manager may be deemed to be a beneficial owner of such shares but disclaims any
beneficial ownership in such shares.
As of June 30, 1997, 12,012,788 shares in the aggregate, 5.39% of the
outstanding shares of Scudder Tax Free Money Fund were held in the name of
Scudder Trust Company Disbursement Account, 5 Industrial Way, Salem, NH 03079,
who may be deemed to be the beneficial owner of certain of these shares, but
disclaims any beneficial ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 374,882 shares in the aggregate, or 6.35% of the outstanding
shares of Scudder Massachusetts Limited Term Tax Free Fund on June 30, 1997. The
Investment Manager may be deemed to be a beneficial owner of such shares but
disclaims any beneficial ownership in such shares.
As of June 30, 1997, 405,632 shares in the aggregate, 6.88% of the
outstanding shares of Scudder Massachusetts Limited Term Tax Free Fund were held
in the nominees of Fiduciary Trust Company. Fiduciary Trust Company may be
deemed to be the beneficial owner of certain of these shares, but disclaims any
beneficial ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 2,235,522 shares in the aggregate, or 9.20% of the outstanding
shares of Scudder Massachusetts Tax Free Fund on June 30, 1997. The Investment
Manager may be deemed to be a beneficial owner of such shares but disclaims any
beneficial ownership in such shares.
As of June 30, 1997, 2,197,860 shares in the aggregate, 9.04% of the
outstanding shares of Scudder Massachusetts Tax Free Fund were held in the
nominees of Fiduciary Trust Company. Fiduciary Trust Company may be deemed to be
the beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 1,055,197 shares in the aggregate, or 6.29% of the outstanding
shares of Scudder New York Tax Free Fund on June 30, 1997. The Investment
Manager may be deemed to be a beneficial owner of such shares but disclaims any
beneficial ownership in such shares.
Certain accounts for which the Investment Manager acts as investment
adviser owned 724,512 shares in the aggregate, or 13.30% of the outstanding
shares of Scudder Pennsylvania Tax Free Fund on June 30, 1997. The Investment
Manager may be deemed to be a beneficial owner of such shares but disclaims any
beneficial ownership in such shares.
26
<PAGE> 36
To the best of each Trust's knowledge, as of June 30, 1997, no person owned
beneficially more than 5% of any Fund's outstanding shares except as stated
above.
RESPONSIBILITIES OF THE BOARD--BOARD AND COMMITTEE MEETINGS
The Board of Trustees of each Trust is responsible for the general
oversight of Fund business. A majority of the Board's members are not affiliated
with Scudder. These Non-interested Trustees have primary responsibility for
assuring that each Fund is managed in a manner consistent with the best
interests of its shareholders.
Each Board of Trustees meets at least quarterly to review the investment
performance of the Funds and other operational matters, including policies and
procedures designed to assure compliance with various regulatory requirements.
At least annually, the Non-interested Trustees review the fees paid to the
Investment Manager and its affiliates for investment advisory services and other
administrative and shareholder services. In this regard, they evaluate, among
other things, each Fund's investment performance, the quality and efficiency of
the various other services provided, costs incurred by the Investment Manager
and its affiliates, and comparative information regarding fees and expenses of
competitive funds. They are assisted in this process by the Funds' independent
public accountants and by independent legal counsel selected by the Non-
interested Trustees. In addition, the Non-interested Trustees from time to time
have established and served on task forces and subcommittees focusing on
particular matters such as investment, accounting and shareholder service
issues.
The Board of each Trust has both an Audit Committee and a Committee on
Independent Trustees, the responsibilities of which are described below.
AUDIT COMMITTEE
The Board of each Trust has an Audit Committee consisting of the Non-
interested Trustees. The Audit Committee reviews with management and the
independent accountants for each Fund, among other things, the scope of the
audit and the controls of each Fund and its agents, reviews and approves in
advance the type of services to be rendered by independent accountants,
recommends the selection of independent accountants for each Fund to the Board
and, in general, considers and reports to the Board on matters regarding each
Fund's accounting and bookkeeping practices.
COMMITTEE ON INDEPENDENT TRUSTEES
The Board of each Trust has a Committee on Independent Trustees consisting
of all the Non-interested Trustees. The Committee is charged with the duty of
making all nominations for Non-interested Trustees and consideration of
27
<PAGE> 37
other related matters. Shareholders' recommendations as to nominees received by
management are referred to the Committee for its consideration and action.
The following chart sets forth the number of meetings of the Board, the
Audit Committee and the Committee on Independent Trustees of each Trust during
the calendar year 1996.
NUMBER OF BOARD AND COMMITTEE MEETINGS HELD
DURING THE CALENDAR YEAR 1996
<TABLE>
<CAPTION>
COMMITTEE ON
BOARD OF AUDIT INDEPENDENT
TRUSTEES COMMITTEE TRUSTEES
NAME OF TRUST MEETINGS MEETINGS MEETINGS
- ---------------------------------------------------- ---------- -------------
<S> <C> <C> <C>
Scudder California Tax Free Trust 6 2 2
Scudder Municipal Trust 6 2 2
Scudder State Tax Free Trust 6 2 2
Scudder Tax Free Money Trust 6 2 2
Scudder Tax Free Trust 6 2 2
</TABLE>
In addition to the Board and committee meetings listed above, the Trustees
of each Trust had thirteen other meetings on behalf of the Trust during the
year, including meetings with their independent legal counsel and informational
meetings.
EXECUTIVE OFFICERS
In addition to Ms. Quirk and Messrs. Lee and Pierce, Trustees who are also
officers of the Trusts, the following persons are Executive Officers of the
Trusts:
<TABLE>
<CAPTION>
PRESENT OFFICE WITH THE TRUST;
PRINCIPAL OCCUPATION OR TRUST (YEAR FIRST BECAME
NAME (AGE) EMPLOYMENT(1) AN OFFICER)(2)
- -------------------- ------------------------------ ------------------------------------
<S> <C> <C>
Olin Barrett (59) Vice President; Managing Scudder California Tax Free Trust
Director of Scudder, Stevens & (1983)
Clark, Inc.
Donald C. Carleton Vice President; Managing Scudder California Tax Free Trust
(63) Director of Scudder, Stevens & (1987)
Clark, Inc. Scudder Municipal Trust (1987)
Scudder State Tax Free Trust (1987)
Scudder Tax Free Money Fund (1987)
Scudder Tax Free Trust (1987)
Philip G. Condon Vice President; Managing Scudder Municipal Trust (1995)
(47) Director of Scudder, Stevens & Scudder State Tax Free Trust (1995)
Clark, Inc.
K. Sue Cote (35) Vice President; Principal of Scudder Tax Free Money Fund (1995)
Scudder, Stevens & Clark, Inc.
Jerard K. Hartman Vice President; Managing Scudder California Tax Free Trust
(64) Director of Scudder, Stevens & (1987)
Clark, Inc. Scudder Municipal Trust (1987)
Scudder State Tax Free Trust (1987)
Scudder Tax Free Money Fund (1987)
Scudder Tax Free Trust (1987)
</TABLE>
28
<PAGE> 38
<TABLE>
<CAPTION>
PRESENT OFFICE WITH THE TRUST;
PRINCIPAL OCCUPATION OR TRUST (YEAR FIRST BECAME
NAME (AGE) EMPLOYMENT(1) AN OFFICER)(2)
- -------------------- ------------------------------ ------------------------------------
<S> <C> <C>
Thomas W. Joseph Vice President; Principal of Scudder California Tax Free Trust
(58) Scudder, Stevens & Clark, Inc. (1986)
Scudder Municipal Trust (1986)
Scudder State Tax Free Trust (1986)
Scudder Tax Free Money Fund (1986)
Scudder Tax Free Trust (1986)
Thomas F. McDonough Vice President and Secretary; Scudder California Tax Free Trust
(50) Principal of Scudder, Stevens (1984)
& Clark, Inc. Scudder Municipal Trust (1984)
Scudder State Tax Free Trust (1984)
Scudder Tax Free Money Fund (1984)
Scudder Tax Free Trust
Vice President (1984)
Secretary (1983)
Pamela A. McGrath Vice President and Treasurer; Scudder California Tax Free Trust
(43) Managing Director of Scudder, (1990)
Stevens & Clark, Inc. Scudder Municipal Trust (1990)
Scudder State Tax Free Trust (1990)
Scudder Tax Free Money Fund (1990)
Scudder Tax Free Trust (1990)
Edward J. O'Connell Vice President and Assistant Scudder California Tax Free Trust
(52) Treasurer; Principal of (1990)
Scudder, Stevens & Clark, Inc. Scudder Municipal Trust (1990)
Scudder State Tax Free Trust (1990)
Scudder Tax Free Money Fund (1987)
Scudder Tax Free Trust (1990)
M. Ashton Patton Vice President; Vice President Scudder Tax Free Trust (1995)
(33) of Scudder, Stevens & Clark,
Inc.
Jeremy L. Ragus (45) Vice President; Principal of Scudder California Tax Free Trust
Scudder, Stevens & Clark, Inc. (1995)
Scudder State Tax Free Trust (1995)
Rebecca L. Wilson Vice President; Assistant Vice Scudder California Tax Free Trust
(35) President of Scudder, Stevens (1995)
& Clark, Inc. Scudder State Tax Free Trust (1995)
</TABLE>
- ------------------------------
(1) Unless otherwise stated, all of the Executive Officers have been associated
with their respective companies for more than five years, although not
necessarily in the same capacity.
(2) The President, Treasurer and Secretary each holds office until his or her
successor has been duly elected and qualified, and all other officers hold
offices in accordance with the By-laws of the Trust.
COMPENSATION OF TRUSTEES AND OFFICERS
Each Trust pays each of its Non-interested Trustees an annual Trustee's fee
plus specified amounts for Board and committee meetings attended and compensates
him or her for expenses related to Trust business.
Scudder supervises each Fund's investments, pays the compensation and
certain expenses of its personnel who serve as Trustees and officers of each
Trust and receives a management fee for its services. Several of each Trust's
officers and Trustees are also officers, Directors, employees or shareholders of
Scudder and participate in the fees paid to that firm, although each such Trust
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<PAGE> 39
makes no direct payments to them other than for reimbursement of travel expenses
in connection with their attendance at Trustees' and committee meetings.
The following Compensation Table provides in tabular form the following
data:
Column (1) All Trustees who receive compensation from each Trust.
Column (2) Aggregate compensation received by each Trustee of each
Trust during the calendar year 1996.
Column (3) Total compensation received by each Trustee from funds
managed by Scudder (collectively, the "Fund Complex") during the calendar
year 1996.
The Trustees do not receive any pension or retirement benefits from
any Trust in the Fund Complex.
COMPENSATION TABLE
<TABLE>
<CAPTION>
(1) (2) (3)
AGGREGATE COMPENSATION
-------------------------------------------------------------- TOTAL
SCUDDER SCUDDER COMPENSATION
CALIFORNIA SCUDDER STATE TAX SCUDDER SCUDDER FROM THE TRUSTS
TAX FREE MUNICIPAL FREE TAX FREE TAX FREE AND FUND COMPLEX
NAME OF TRUSTEE TRUST TRUST TRUST MONEY FUND TRUST PAID TO TRUSTEE
- --------------------------- ---------- --------- --------- ---------- -------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Henry P. Becton, Jr........ $8,900 $ 17,800 $ 16,900 -- -- $91,012
(16 Funds)
Dawn-Marie Driscoll........ $9,500 $ 19,000 $ 17,500 $9,500 $ 19,000 $103,000
(16 Funds)
Peter B. Freeman........... $9,500 $ 19,000 $ 17,500 $9,500 $ 19,000 $131,734
(33 Funds)
George M. Lovejoy, Jr...... -- $ 19,000 -- $9,500 -- $124,512
(13 Funds)
Dr. Wesley W. Marple,
Jr....................... -- $ 19,000 $ 17,500 -- $ 19,000 $106,812
(16 Funds)
Jean C. Tempel............. -- -- $ 17,138 $9,200 $ 18,400 $102,895
(16 Funds)
</TABLE>
REQUIRED VOTE
Election of each of the listed nominees for Trustee requires the
affirmative vote of a plurality of the votes of each Trust cast at the Special
Meeting in person or by proxy. This means that the eight nominees receiving the
largest number of votes will be elected. The Trustees of each Trust recommend
that the shareholders of each Trust vote in favor of each of the nominees listed
in this Proposal 2.
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<PAGE> 40
PROPOSAL 3: APPROVAL OR DISAPPROVAL OF THE BOARD'S
DISCRETIONARY AUTHORITY TO CONVERT EACH FUND TO
A MASTER/FEEDER FUND STRUCTURE
If this Proposal 3 is approved by shareholders, the Board could determine
that the objectives of a Fund would be achieved more efficiently, while
retaining its current distribution arrangements, by investing in a master fund
in a master/feeder fund structure as described below, and in that case cause the
Fund to do so without further approval by shareholders.
A master/feeder fund structure is one in which a fund (a feeder fund)
invests all of its investment assets in another investment company (the master
fund) with substantially the same investment objectives and policies as the
feeder fund. Such a structure permits the pooling of assets of two or more
feeder funds in the master fund in an effort to achieve possible economies of
scale and efficiencies in portfolio management, while preserving separate
identities, management and/or distribution channels at the feeder fund level. An
existing investment company could convert to a feeder fund by selling all of its
investments, which involves brokerage and other transaction costs and the
realization of taxable gain or loss, or by contributing its assets to the master
fund and avoiding transaction costs and, if proper procedures are followed, the
realization of taxable gain or loss.
Under each Trust's Declaration of Trust, the affirmative vote of a majority
of the shares of a Fund is required to sell or transfer substantially all of the
assets of the Fund. One way to convert a Fund to a master/feeder fund structure
is through a sale or transfer of assets. Thus, approval of the Board's
discretionary authority to convert a Fund to a master/feeder fund structure
through a sale or transfer of assets requires, under a conservative
interpretation of each Trust's Declaration of Trust, the affirmative vote of a
majority of the shares of the Fund.
A master fund must have the identical investment objective and
substantially the same investment policies as its feeder funds. This means that
the assets of the master fund are invested in the same types of securities in
which its feeder funds are authorized to invest.
Management of each Trust believes that, generally, the larger the pool of
assets being managed the more efficiently and cost-effectively it can be
managed. Because a master fund pools the assets of multiple feeder funds, it
provides an effective means of creating larger asset pools. Whether the Board
would exercise its discretionary authority to convert a Fund to a master/feeder
fund structure would depend upon the existence of appropriate opportunities to
pool the Fund's assets with those of other feeder funds. The primary motivation
for considering a master/feeder fund structure is to seek to achieve possible
economies of scale and efficiencies in portfolio management, while preserving
separate identities, management and/or distribution channels at the feeder fund
level. The Trustees' decision to convert a Fund would be based upon their
determination that it would be in the best interests of both the Fund and its
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<PAGE> 41
shareholders after consideration of all relevant factors, including the relevant
fund expenses associated with a master/feeder fund structure.
A feeder fund can withdraw its investment in a master fund at any time if
its board determines that it is in the best interests of the shareholders to do
so or if the investment policies or restrictions of the master fund were changed
so that they were inconsistent with the policies and restrictions of the feeder
fund. Upon any such withdrawal, the board of the fund would consider what action
might be taken, including the investment of all of the assets of the fund in
another pooled investment entity having substantially the same investment
objectives and policies as the fund or the investment of the fund's assets
directly in a portfolio of investments in accordance with its investment
objective and policies.
REQUIRED VOTE
Shareholders of each Fund will vote separately with respect to this
Proposal 3. Approval of this Proposal 3 by a Fund requires the affirmative vote
of a majority of the shares of the Fund. The Trustees of each Trust recommend
that the shareholders of each Fund vote in favor of this Proposal 3.
PROPOSAL 4: APPROVAL OR DISAPPROVAL
OF AMENDMENTS TO THE DECLARATION
OF TRUST FOR EACH TRUST
Changes and regulatory developments in the investment company industry have
occurred since the current form of each Trust's Declaration of Trust was
adopted. Because consummation of the Transactions described in Proposal 1
requires the holding of this Special Meeting, the Trustees of each Trust have
determined to seek at the same time shareholder approval of amendments to the
Declaration of Trust (with such amendments, the "Amended Declaration") designed
to reflect those changes and developments. The principal changes in the current
Declaration of Trust which would be effected by shareholder approval of the
Amended Declaration are described below. A copy of the amendments to the
Declarations of Trust is attached to this proxy statement as Exhibit C.
Master/Feeder Structure. A new Section 2.2(i) would be added to give the
Trustees the express power to accomplish each Fund's objective by investing all
or a portion of its assets in another investment company in a "master/feeder"
fund structure, by transferring assets of the Fund to the other investment
company or otherwise, without further shareholder approval. This section of the
Amended Declaration would grant to the Trustees power which is similar to that
included in Proposal 3, but differs from it as described in the next paragraph.
A master/feeder fund structure is described in Proposal 3. Management of
each Trust believes the Trustees currently have the power to enter into a
master/feeder fund structure, although a conservative interpretation of the
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<PAGE> 42
current Declaration of Trust is that shareholder approval is required for the
transfer of substantially all of a Fund's assets to a master fund to accomplish
that objective. Such a vote is not required to sell all of the Fund's portfolio
securities and to purchase its interest in the master fund with the proceeds.
The express grant to the Trustees of the power in the Amended Declaration to
enter into a master/feeder fund structure would remove any doubt as to the
Trustees' power to transfer assets to a master fund without shareholder
approval, and differs from the approval of entry into a master/feeder fund
structure sought in Proposal 3 primarily in that a power contained in any
Trust's Declaration of Trust is effective in perpetuity unless the Declaration
of Trust is amended or terminated. Thus, if Proposal 3 is approved but if it
were concluded in the future that the approval had lapsed due to the passage of
time, the power of the Trustees to enter into a master/feeder fund structure
would nevertheless continue under proposed Section 2.2(i) of the Amended
Declaration, if approved.
Shareholder Voting. Under the Amended Declaration, shareholders would
continue to have the same rights as they now have to elect and remove Trustees,
to further amend the Declaration of Trust and to vote on certain other matters.
Section 5.9 would be amended to eliminate shareholder voting under the
Declaration with respect to investment advisory or management contracts and Rule
12b-1 plans; each of these matters must be voted on under provisions of the 1940
Act or the rules thereunder, and a separate requirement in the Trust's governing
instrument is unnecessary. The Amended Declaration would also eliminate
shareholder voting on a merger, consolidation, sale of assets or incorporation
of the Trust. Although the Trustees ordinarily would not expect to take such an
action without shareholder approval, there are situations, as with a very small,
uneconomical fund, a sufficient number of whose shareholders cannot be located,
where Trustee action alone would be in the best interest of shareholders.
REQUIRED VOTE
Approval of this Proposal 4 with respect to each Trust requires the vote of
two-thirds of the shares of that Trust outstanding and entitled to vote. If the
shareholders of any Trust fail to approve this Proposal 4, the Trust's current
Declaration of Trust would not be amended as described in this Proposal 4. The
Trustees of each Trust recommend that the shareholders of each Trust vote in
favor of this Proposal 4.
PROPOSAL 5: APPROVAL OR DISAPPROVAL OF THE
REVISION OF CERTAIN FUNDAMENTAL INVESTMENT POLICIES
The 1940 Act requires an investment company to have adopted certain
specified investment policies which can be changed only by a shareholder vote.
Those policies are often referred to as "fundamental" policies. In the past,
fundamental policies were adopted by the Trusts on behalf of their Funds, and in
some cases amended by vote of the shareholders of the affected Fund, in order
33
<PAGE> 43
to reflect regulatory, business or industry conditions which were in effect at
the time the particular action was taken. Because of the opportunity afforded by
this Special Meeting, there has been a review of each Fund's fundamental
policies with the goal of simplifying, modernizing and making consistent as far
as possible the fundamental policies of all open-end investment companies
managed by Scudder.
This Proposal seeks shareholder approval of changes which are intended to
accomplish that goal. The proposed changes to each Fund's fundamental policies
are discussed in detail below. Please refer to the proposed policies as set
forth in Exhibit D. Each Fund's current fundamental investment policies are set
forth in Exhibit E.
Each of the fundamental policies proposed for adoption with respect to each
Fund is in an area in which the 1940 Act requires that the Fund adopt a
fundamental policy. Each Fund's policies with respect to SEC diversification,
the issuance of senior securities, and the underwriting of securities issued by
others differ from the current policies of each Fund in that the requirements of
the 1940 Act, which of course apply, are not spelled out in detail. Under such
new policies, the limitation on each Fund would, therefore, be determined by
reference to the provisions of the 1940 Act, the rules thereunder, and
applicable interpretations of the Commission or its staff rather than the
express terms of the policies.
Shareholders will be asked to vote on each proposed fundamental policy
separately on the enclosed proxy card.
PROPOSAL 5.1: SEC DIVERSIFICATION
Each Fund, except for Scudder California Tax Free Money Fund, Scudder
Massachusetts Limited Term Tax Free Fund, Scudder Massachusetts Tax Free Fund,
Scudder New York Tax Free Fund, Scudder New York Tax Free Money Fund, Scudder
Ohio Tax Free Fund and Scudder Pennsylvania Tax Free Fund, is a "diversified"
fund under the 1940 Act. Under its current diversification policy, each
diversified Fund, with respect to 75% of the value of its assets, may not
purchase more than 10% of the voting securities of any one issuer or invest more
than 5% of the value of its total assets in the securities of any one issuer,
with exceptions for U.S. Government securities and, in the case of Scudder Tax
Free Money Fund, securities of other investment companies. These restrictions
are substantially identical to the definition of a diversified fund under the
1940 Act. The applicable policy of Scudder Tax Free Money Fund also expressly
exempts from the limitations of the policy cash and cash equivalents, which are
also exempt from the 1940 Act limitations, and further states that the amount of
total assets that may be invested in the securities of any one issuer will
instead be limited by federal restrictions applicable to money market funds. In
light of the provisions of the 1940 Act concerning the requirements of
maintaining diversified status as well as the rules applicable to money market
funds, the absence or presence of specific references to cash and cash
equivalents, money market
34
<PAGE> 44
fund regulations, or securities of other investment companies does not, in the
opinion of management of the Trusts, change the interpretation of the Funds'
diversification policies and, therefore, such references are unnecessary.
Accordingly, the proposed statement that each Fund has elected to be classified
as a diversified Fund represents no substantive change in the current
diversification policy for any of such Funds.
PROPOSAL 5.2: BORROWING
The current policy of each Fund prohibits borrowing money, except as a
temporary measure for extraordinary or emergency purposes and except in
connection with reverse repurchase agreements, provided that the Fund maintains
asset coverage of 300% for all borrowings. In addition, the current policy of
each of Scudder Limited Term Tax Free Fund and Scudder Medium Term Tax Free Fund
also prohibits borrowing, except from banks, and prohibits purchases of
securities for a Fund while borrowings of that Fund exceed 5% of its assets.
Under the proposed policy, each Fund would not be limited to borrowing for
temporary or emergency purposes; however, if the Trustees determine with respect
to any Fund to permit borrowing for other purposes, which they currently do not
intend to do, the applicable Fund's disclosure documents would be amended to
disclose that fact. Although the Trustees do not currently intend to permit a
Fund to borrow for investment leverage purposes, such borrowings would increase
the Fund's volatility and the risk of loss in a declining market. Further, under
the proposed policy, a Fund would not be prohibited from purchasing securities
while a Fund has outstanding borrowings exceeding 5% of assets; management of
the Trust believes that elimination of this restriction will provide greater
investment flexibility when, in the opinion of management, borrowings are
necessary or appropriate. Borrowings under reverse repurchase agreements are now
permitted, and would be permitted under the proposed policy. The 1940 Act
requires borrowings to have 300% asset coverage, which requirement would,
therefore, remain unchanged under the proposed policy, except to the extent that
reverse repurchase agreements would not be subject, under the proposed policy,
to the 300% asset coverage requirement. Consequently, the proposed policy would
permit a Fund to engage in reverse repurchase agreements to a greater extent
than under the current policy.
PROPOSAL 5.3: SENIOR SECURITIES
The current policy of each Fund prohibits the issuance of senior securities
(i.e., securities which are obligations or instruments evidencing indebtedness),
except in connection with permitted indebtedness and except in connection with
the issuance of separate classes or series of shares. Each Fund, except Scudder
California Tax Free Money Fund, Scudder Limited Term Tax Free Fund and Scudder
Medium Term Tax Free Fund, excepts from the prohibition on the issuance of
senior securities collateral arrangements for certain types of derivatives
transactions. In addition, each Fund, except Scudder Limited Term Tax Free Fund
and Scudder Medium Term Tax Free Fund, excepts from the
35
<PAGE> 45
prohibition on the issuance of senior securities the issuance of separate
classes of shares. The current policy of each Fund, therefore, specifically
excepts from the prohibition on the issuance of senior securities certain
practices which, under the current policies of the SEC or its staff, are not
deemed to involve the issuance of senior securities. Accordingly, management of
each Trust believes that it is not necessary to specify those exceptions in the
Funds' fundamental policies with regard to senior securities because they are
permitted under the 1940 Act.
PROPOSAL 5.4: CONCENTRATION
Each Fund's current policy in effect prohibits the purchase of securities
if it would result in more than 25% of the market value of the Fund's total
assets being invested in securities of one or more issuers having their
principal business activities in the same industry or, in the case of Scudder
California Tax Free Fund, Scudder California Tax Free Money Fund, Scudder High
Yield Tax Free Fund and Scudder Managed Municipal Bonds Fund, in private
activity bonds or, in the case of Scudder Limited Term Tax Free Fund and Scudder
Medium Term Tax Free Fund, in pollution control and industrial development
bonds. In some cases, there are exceptions for U.S. Government securities and
municipal obligations, and, in the case of Scudder Tax Free Money Fund, for
certificates of deposit or bankers' acceptances. In some cases, what constitutes
an industry for the purposes of this restriction is included in the policy
itself. While the 1940 Act does not define what constitutes "concentration" in
an industry, the staff of the Commission takes the position that investment of
more than 25% of a fund's assets in an industry constitutes concentration. If a
fund concentrates in an industry, it must at all times have more than 25% of its
assets invested in that industry, and if its policy is not to concentrate, as is
the case with each of the Funds, it may not invest more than 25% of its assets
in the applicable industry, unless, in either case, the fund discloses the
specific conditions under which it will change from concentrating to not
concentrating or vice versa. A fund is permitted to adopt reasonable definitions
of what constitutes an industry, or it may use standard classifications
promulgated by the Commission, or some combination thereof. Under the 1940 Act
and applicable interpretations of the SEC or its staff and, therefore, under the
proposed policy, municipal governments are not an industry but private activity
bonds are subject to concentration policies (although these are municipal
securities). Because a fund may create its own reasonable industry
classifications, management of each Trust believes that it is not necessary to
include such matters in the fundamental policy of a Fund.
The proposed concentration policy of Scudder New York Tax Free Money Fund
reserves freedom of action for that Fund to concentrate in instruments issued by
domestic banks, which provision is similar to but broader than the current
provisions referred to above with respect to certificates of deposit and
bankers' acceptances. The proposed policy is common among money market funds. No
change in the operations of Scudder New York Tax Free Money Fund is anticipated
if the proposed policies are approved.
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<PAGE> 46
PROPOSAL 5.5: LOANS
The current policy of each Fund prohibits the making of loans, except loans
of portfolio securities (for all Funds except Scudder Medium Term Tax Free Fund)
and to the extent the entry into repurchase agreements and the purchase of debt
securities is deemed to be loans. The proposed policy is substantially identical
to the current policy of each Fund except that loans of portfolio securities
would not be prohibited for Scudder Medium Term Tax Free Fund. Management of the
Trusts believes that the proposed policy will provide the Trusts with greater
investment flexibility in the future.
PROPOSALS 5.6 THROUGH 5.15: OTHER POLICIES
Each of the other proposed fundamental policies regarding underwriting of
securities (Proposal 5.6), investment in real estate (Proposal 5.7), purchase of
physical commodities (Proposal 5.8) and investment in municipal securities
(Proposals 5.9 through 5.15) is not materially different from the current
comparable policy of each Fund except that these policies have been reworded or
clarified.
ELIMINATION OF CERTAIN POLICIES:
PROPOSAL 5.16: TAX DIVERSIFICATION
The current policies of Scudder Massachusetts Tax Free Fund, Scudder Ohio
Tax Free Fund, Scudder New York Tax Free Money Fund and Scudder Pennsylvania Tax
Free Fund prohibit, with respect to 50% of the total assets of a Fund, (i)
purchases of voting securities of an issuer if such purchase would cause more
than 10% of the voting securities of such issuer to be held by such Fund,
provided that in the case of Scudder New York Tax Free Money Fund, the amount of
the total assets of the Fund that may be invested in the securities of any one
issuer will, instead be limited in accordance with federal law applicable to
money market funds, and (ii) investment of more than 5% of a Fund's total assets
in securities of one issuer, except U.S. Government securities. Each of Scudder
Massachusetts Tax Free Fund, Scudder Massachusetts Limited Term Tax Free Fund,
Scudder Ohio Tax Free Fund and Scudder Pennsylvania Tax Free Fund is prohibited,
with respect to 50% of its total assets, from investing more than 5% of the
Fund's total assets in securities of one issuer, except U.S. Government
securities. In addition, each of Scudder Massachusetts Tax Free Fund, Scudder
Massachusetts Limited Term Tax Free Fund, Scudder New York Tax Free Money Fund,
Scudder Ohio Tax Free Fund, Scudder Pennsylvania Tax Free Fund and Scudder
California Tax Free Money Fund is prohibited from investing more than 25% of its
total assets in the securities of any one issuer. These restrictions are
substantially similar to certain requirements for qualification as a regulated
investment company ("RIC") under Subchapter M of the Internal Revenue Code of
1986 (the "Code"). Each of the Funds has sought annually to qualify as a RIC
under Subchapter M of the Code and management of the Trusts presently intends to
continue to qualify the Funds as RICs.
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<PAGE> 47
Accordingly, the elimination of these fundamental investment policies represents
no substantive change in the current investment policy for such Funds.
PROPOSAL 5.17: PURCHASES OF VOTING SECURITIES
Each of Scudder Limited Term Tax Free Fund and Scudder Medium Term Tax Free
Fund is prohibited with respect to 100% of its assets from purchasing more than
10% of the voting securities of a single issuer. In the past certain state
securities laws required funds to adopt such a restriction. Each such Fund is
currently limited by its policy of SEC diversification to purchasing, with
respect to 75% of its assets, no more than 10% of the voting securities of a
single issuer. Management of the Trust believes that, in the interest of
simplicity and uniformity of investment restrictions, elimination of the 10%
restriction on investment in an issuer's voting securities is appropriate and
will provide the Funds with greater investment flexibility in the future.
PROPOSAL 5.18: AFFILIATED TRANSACTIONS
Each of Scudder Limited Term Tax Free Fund and Scudder Medium Term Tax Free
Fund is prohibited from purchasing from or selling to any of its officers and
the Trust's Trustees, its investment adviser, principal underwriter and certain
other affiliated parties, any of a Fund's portfolio securities. Transactions
between each Fund and affiliated persons of a Fund are currently regulated under
the 1940 Act. Accordingly, management of the Trust believes that such
transactions are sufficiently regulated under the 1940 Act and that in the
interest of uniformity and simplicity the elimination of such policy is
appropriate and will provide the Funds with greater investment flexibility in
the future.
PROPOSAL 5.19: DISCLOSED PRACTICES
The current policy of each of Scudder High Yield Tax Free Fund and Scudder
Managed Municipal Bonds prohibits the purchase of securities other than those
described in the Fund's prospectus or statement of additional information. The
disclosure practices of registered investment companies, like the Trust, are
regulated under the 1940 Act and releases and interpretations of the SEC or its
staff. Accordingly, in the interest of uniformity and simplicity, management of
the Trust believes that elimination of this policy is appropriate.
REQUIRED VOTE
Approval of the proposed fundamental policies with respect to any Fund
requires the affirmative vote of a "majority of the outstanding voting
securities," as defined above, of that Fund. If the shareholders of any Fund
fail to approve the proposed fundamental policies, the current policies will
remain in effect. The Trustees of each Trust recommend that the shareholders of
each Fund vote in favor of this Proposal 5.
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<PAGE> 48
PROPOSAL 6: RATIFICATION OR REJECTION
OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Trustees of each of the Trusts, including a majority of the
Non-interested Trustees, has selected Coopers & Lybrand L.L.P. to act as
independent accountants for each of the Funds for each Fund's current fiscal
year. Coopers & Lybrand L.L.P. are independent accountants and have advised the
Funds that they have no direct financial interest or material indirect financial
interest in the Funds. One or more representatives of Coopers & Lybrand L.L.P.
are expected to be present at the Special Meeting and will have an opportunity
to make a statement if they so desire. Such representatives are expected to be
available to respond to appropriate questions posed by shareholders or
management.
REQUIRED VOTE
Ratification of the selection of independent accountants requires the
affirmative vote of a majority of the votes of each Fund cast at the Special
Meeting in person or by proxy. The Trustees of each Trust recommend that the
shareholders of each Fund vote in favor of this Proposal 6.
ADDITIONAL INFORMATION
GENERAL
The cost of preparing, printing and mailing the enclosed proxy,
accompanying notice and proxy statement and all other costs incurred in
connection with the solicitation of proxies, including any additional
solicitation made by letter, telephone or telegraph, will be paid by Scudder. In
addition to solicitation by mail, certain officers and representatives of each
Trust, officers and employees of Scudder and certain financial services firms
and their representatives, who will receive no extra compensation for their
services, may solicit proxies by telephone, telegram or personally.
Shareholder Communications Corporation ("SCC") has been engaged to assist
in the solicitation of proxies. As the Special Meeting date approaches, certain
shareholders of each Fund may receive a telephone call from a representative of
SCC if their vote has not yet been received. Authorization to permit SCC to
execute proxies may be obtained by telephonic or electronically transmitted
instructions from shareholders of each Fund. Proxies that are obtained
telephonically will be recorded in accordance with the procedures set forth
below. The Trustees believe that these procedures are reasonably designed to
ensure that the identity of the shareholder casting the vote is accurately
determined and that the voting instructions of the shareholder are accurately
determined.
In all cases where a telephonic proxy is solicited, the SCC representative
is required to ask for each shareholder's full name, address, social security or
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<PAGE> 49
employer identification number, title (if the shareholder is authorized to act
on behalf of an entity, such as a corporation), and the number of shares owned
and to confirm that the shareholder has received the proxy statement card in the
mail. If the information solicited agrees with the information provided to SCC,
then the SCC representative has the responsibility to explain the process, read
the proposals listed on the proxy card, and ask for the shareholder's
instructions on each proposal. The SCC representative, although he or she is
permitted to answer questions about the process, is not permitted to recommend
to the shareholder how to vote, other than to read any recommendation set forth
in the proxy statement. SCC will record the shareholder's instructions on the
card. Within 72 hours, the shareholder will be sent a letter or mailgram to
confirm his or her vote and asking the shareholder to call SCC immediately if
his or her instructions are not correctly reflected in the confirmation.
If the shareholder wishes to participate in the Special Meeting, but does
not wish to give his or her proxy by telephone, the shareholder may still submit
the proxy card originally sent with the proxy statement or attend in person.
Should shareholders require additional information regarding the proxy or
replacement proxy cards, they may contact SCC toll-free at 1-800-733-8481, ext.
488. Any proxy given by a shareholder, whether in writing or by telephone, is
revocable.
PROPOSALS OF SHAREHOLDERS
Shareholders wishing to submit proposals for inclusion in a proxy statement
for a shareholder meeting subsequent to the Special Meeting, if any, should send
their written proposals to the Secretary of the Trust, c/o Scudder, Stevens &
Clark, Inc., Two International Place, Boston, Massachusetts 02110, within a
reasonable time before the solicitation of proxies for such meeting. The timely
submission of a proposal does not guarantee its inclusion.
40
<PAGE> 50
OTHER MATTERS TO COME BEFORE THE SPECIAL MEETING
No Board of Trustees is aware of any matters that will be presented for
action at the Special Meeting other than the matters set forth herein. Should
any other matters requiring a vote of shareholders arise, the proxy in the
accompanying form will confer upon the person or persons entitled to vote the
shares represented by such proxy the discretionary authority to vote the shares
as to any such other matters in accordance with their best judgment in the
interest of each Trust and/or Fund.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) PROMPTLY. NO POSTAGE
IS REQUIRED IF MAILED IN THE UNITED STATES.
By order of the Boards of Trustees,
/s/ Thomas F. McDonough
Thomas F. McDonough
Secretary
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<PAGE> 51
EXHIBIT A
BOSTON, MASSACHUSETTS 02110
, 199
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
INVESTMENT MANAGEMENT AGREEMENT
[NAME OF SERIES]
Ladies and Gentlemen:
[Name of Trust] (the "Trust") has been established as a Massachusetts
business Trust to engage in the business of an investment company. Pursuant to
the Trust's Declaration of Trust, as amended from time-to-time (the
"Declaration"), the Board of Trustees has divided the Trust's shares of
beneficial interest, par value $ per share, (the "Shares") into
separate series, or funds, including [name of series] (the "Fund"). Series may
be abolished and dissolved, and additional series established, from time to time
by action of the Trustees.
The Trust, on behalf of the Fund, has selected you to act as the sole
investment manager of the Fund and to provide certain other services, as more
fully set forth below, and you have indicated that you are willing to act as
such investment manager and to perform such services under the terms and
conditions hereinafter set forth. Accordingly, the Trust on behalf of the Fund
agrees with you as follows:
1. Delivery of Documents. The Trust engages in the business of
investing and reinvesting the assets of the Fund in the manner and in
accordance with the investment objectives, policies and restrictions
specified in the currently effective Prospectus (the "Prospectus") and
Statement of Additional Information (the "SAI") relating to the Fund
included in the Trust's Registration Statement on Form N-1A, as amended
from time to time, (the "Registration Statement") filed by the Trust under
the Investment Company Act of 1940, as amended, (the "1940 Act") and the
Securities Act of 1933, as amended. Copies of the documents referred to in
the preceding sentence have been furnished to you by the Trust. The Trust
has also furnished you with copies properly certified or authenticated of
each of the following additional documents related to the Trust and the
Fund:
(a) The Declaration dated , 19 , as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof (the
"By-Laws").
A-1
<PAGE> 52
(c) Resolutions of the Trustees of the Trust and the shareholders
of the Fund selecting you as investment manager and approving the form
of this Agreement.
(d) Establishment and Designation of Series of Shares of Beneficial
Interest dated , 19 relating to the Fund.
The Trust will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements, if any, to the
foregoing, including the Prospectus, the SAI and the Registration Statement.
2. Sublicense to Use the Scudder Trademarks. As exclusive licensee
of the rights to use and sublicense the use of the "Scudder" and ["Scudder
Kemper Investments, Inc."/"Scudder, Stevens & Clark, Inc."] trademarks
(together, the "Scudder Marks"), you hereby grant the Trust a nonexclusive
right and sublicense to use (i) the "Scudder" name and mark as part of the
Trust's name (the "Fund Name"), and (ii) the Scudder Marks in connection
with the Trust's investment products and services, in each case only for so
long as this Agreement, any other investment management agreement between
you and the Trust, or any extension, renewal or amendment hereof or thereof
remains in effect, and only for so long as you are a licensee of the
Scudder Marks, provided however, that you agree to use your best efforts to
maintain your license to use and sublicense the Scudder Marks. The Trust
agrees that it shall have no right to sublicense or assign rights to use
the Scudder Marks, shall acquire no interest in the Scudder Marks other
than the rights granted herein, that all of the Trust's uses of the Scudder
Marks shall inure to the benefit of Scudder Trust Company as owner and
licensor of the Scudder Marks (the "Trademark Owner"), and that the Trust
shall not challenge the validity of the Scudder Marks or the Trademark
Owner's ownership thereof. The Trust further agrees that all services and
products it offers in connection with the Scudder Marks shall meet
commercially reasonable standards of quality, as may be determined by you
or the Trademark Owner from time to time, provided that you acknowledge
that the services and products the Trust rendered during the one-year
period preceding the date of this Agreement are acceptable. At your
reasonable request, the Trust shall cooperate with you and the Trademark
Owner and shall execute and deliver any and all documents necessary to
maintain and protect (including but not limited to in connection with any
trademark infringement action) the Scudder Marks and/or enter the Trust as
a registered user thereof. At such time as this Agreement or any other
investment management agreement shall no longer be in effect between you
(or your successor) and the Trust, or you no longer are a licensee of the
Scudder Marks, the Trust shall (to the extent that, and as soon as, it
lawfully can) cease to use the Fund Name or any other name indicating that
it is advised by, managed by or otherwise connected with you (or any
organization which shall have succeeded to your business as investment
manager) or the Trademark Owner. In no
A-2
<PAGE> 53
event shall the Trust use the Scudder Marks or any other name or mark
confusingly similar thereto (including, but not limited to, any name or
mark that includes the name "Scudder") if this Agreement or any other
investment advisory agreement between you (or your successor) and the Fund
is terminated.
3. Portfolio Management Services. As manager of the assets of the
Fund, you shall provide continuing investment management of the assets of
the Fund in accordance with the investment objectives, policies and
restrictions set forth in the Prospectus and SAI; the applicable provisions
of the 1940 Act and the Internal Revenue Code of 1986, as amended, (the
"Code") relating to regulated investment companies and all rules and
regulations thereunder; and all other applicable federal and state laws and
regulations of which you have knowledge; subject always to policies and
instructions adopted by the Trust's Board of Trustees. In connection
therewith, you shall use reasonable efforts to manage the Fund so that it
will qualify as a regulated investment company under Subchapter M of the
Code and regulations issued thereunder. The Fund shall have the benefit of
the investment analysis and research, the review of current economic
conditions and trends and the consideration of long-range investment policy
generally available to your investment advisory clients. In managing the
Fund in accordance with the requirements set forth in this section 3, you
shall be entitled to receive and act upon advice of counsel to the Trust or
counsel to you. You shall also make available to the Trust promptly upon
request all of the Fund's investment records and ledgers as are necessary
to assist the Trust in complying with the requirements of the 1940 Act and
other applicable laws. To the extent required by law, you shall furnish to
regulatory authorities having the requisite authority any information or
reports in connection with the services provided pursuant to this Agreement
which may be requested in order to ascertain whether the operations of the
Trust are being conducted in a manner consistent with applicable laws and
regulations.
You shall determine the securities, instruments, investments, currencies,
repurchase agreements, futures, options and other contracts relating to
investments to be purchased, sold or entered into by the Fund and place orders
with broker-dealers, foreign currency dealers, futures commission merchants or
others pursuant to your determinations and all in accordance with Fund policies
as expressed in the Registration Statement. You shall determine what portion of
the Fund's portfolio shall be invested in securities and other assets and what
portion, if any, should be held uninvested.
You shall furnish to the Trust's Board of Trustees periodic reports on the
investment performance of the Fund and on the performance of your obligations
pursuant to this Agreement, and you shall supply such additional reports and
information as the Trust's officers or Board of Trustees shall reasonably
request.
A-3
<PAGE> 54
4. Administrative Services. In addition to the portfolio management
services specified above in section 3, you shall furnish at your expense
for the use of the Fund such office space and facilities in the United
States as the Fund may require for its reasonable needs, and you (or one or
more of your affiliates designated by you) shall render to the Trust
administrative services on behalf of the Fund necessary for operating as an
open-end investment company and not provided by persons not parties to this
Agreement including, but not limited to, preparing reports to and meeting
materials for the Trust's Board of Trustees and reports and notices to Fund
shareholders; supervising, negotiating contractual arrangements with, to
the extent appropriate, and monitoring the performance of, accounting
agents, custodians, depositories, transfer agents and pricing agents,
accountants, attorneys, printers, underwriters, brokers and dealers,
insurers and other persons in any capacity deemed to be necessary or
desirable to Fund operations; preparing and making filings with the
Securities and Exchange Commission (the "SEC") and other regulatory and
self-regulatory organizations, including, but not limited to, preliminary
and definitive proxy materials, post-effective amendments to the
Registration Statement, semi-annual reports on Form N-SAR and notices
pursuant to Rule 24f-2 under the 1940 Act; overseeing the tabulation of
proxies by the Fund's transfer agent; assisting in the preparation and
filing of the Fund's federal, state and local tax returns; preparing and
filing the Fund's federal excise tax return pursuant to Section 4982 of the
Code; providing assistance with investor and public relations matters;
monitoring the valuation of portfolio securities and the calculation of net
asset value; monitoring the registration of Shares of the Fund under
applicable federal and state securities laws; maintaining or causing to be
maintained for the Fund all books, records and reports and any other
information required under the 1940 Act, to the extent that such books,
records and reports and other information are not maintained by the Fund's
custodian or other agents of the Fund; assisting in establishing the
accounting policies of the Fund; assisting in the resolution of accounting
issues that may arise with respect to the Fund's operations and consulting
with the Fund's independent accountants, legal counsel and the Fund's other
agents as necessary in connection therewith; establishing and monitoring
the Fund's operating expense budgets; reviewing the Fund's bills;
processing the payment of bills that have been approved by an authorized
person; assisting the Fund in determining the amount of dividends and
distributions available to be paid by the Fund to its shareholders,
preparing and arranging for the printing of dividend notices to
shareholders, and providing the transfer and dividend paying agent, the
custodian, and the accounting agent with such information as is required
for such parties to effect the payment of dividends and distributions; and
otherwise assisting the Trust as it may reasonably request in the conduct
of the Fund's business, subject to the direction and control of the Trust's
Board of Trustees. Nothing in this Agreement shall be deemed to shift to
you or to diminish the
A-4
<PAGE> 55
obligations of any agent of the Fund or any other person not a party to
this Agreement which is obligated to provide services to the Fund.
5. Allocation of Charges and Expenses. Except as otherwise
specifically provided in this section 5, you shall pay the compensation and
expenses of all Trustees, officers and executive employees of the Trust
(including the Fund's share of payroll taxes) who are affiliated persons of
you, and you shall make available, without expense to the Fund, the
services of such of your directors, officers and employees as may duly be
elected officers of the Trust, subject to their individual consent to serve
and to any limitations imposed by law. You shall provide at your expense
the portfolio management services described in section 3 hereof and the
administrative services described in section 4 hereof.
You shall not be required to pay any expenses of the Fund other than
those specifically allocated to you in this section 5. In particular, but
without limiting the generality of the foregoing, you shall not be
responsible, except to the extent of the reasonable compensation of such of
the Fund's Trustees and officers as are directors, officers or employees of
you whose services may be involved, for the following expenses of the Fund:
organization expenses of the Fund (including out-of-pocket expenses, but
not including your overhead or employee costs); fees payable to you and to
any other Fund advisors or consultants; legal expenses; auditing and
accounting expenses; maintenance of books and records which are required to
be maintained by the Fund's custodian or other agents of the Trust;
telephone, telex, facsimile, postage and other communications expenses;
taxes and governmental fees; fees, dues and expenses incurred by the Fund
in connection with membership in investment company trade organizations;
fees and expenses of the Fund's accounting agent, custodians,
subcustodians, transfer agents, dividend disbursing agents and registrars;
payment for portfolio pricing or valuation services to pricing agents,
accountants, bankers and other specialists, if any; expenses of preparing
share certificates and, except as provided below in this section 5, other
expenses in connection with the issuance, offering, distribution, sale,
redemption or repurchase of securities issued by the Fund; expenses
relating to investor and public relations; expenses and fees of registering
or qualifying Shares of the Fund for sale; interest charges, bond premiums
and other insurance expense; freight, insurance and other charges in
connection with the shipment of the Fund's portfolio securities; the
compensation and all expenses (specifically including travel expenses
relating to Trust business) of Trustees, officers and employees of the
Trust who are not affiliated persons of you; brokerage commissions or other
costs of acquiring or disposing of any portfolio securities of the Fund;
expenses of printing and distributing reports, notices and dividends to
shareholders; expenses of printing and mailing Prospectuses and SAIs of the
Fund and supplements thereto; costs of stationery; any litigation expenses;
indemnification of Trustees and officers of the Trust; costs of
shareholders' and other meetings; and travel expenses (or an
A-5
<PAGE> 56
appropriate portion thereof) of Trustees and officers of the Trust who are
directors, officers or employees of you to the extent that such expenses
relate to attendance at meetings of the Board of Trustees of the Trust or
any committees thereof or advisors thereto held outside of Boston,
Massachusetts or New York, New York.
You shall not be required to pay expenses of any activity which is
primarily intended to result in sales of Shares of the Fund if and to the
extent that (i) such expenses are required to be borne by a principal
underwriter which acts as the distributor of the Fund's Shares pursuant to
an underwriting agreement which provides that the underwriter shall assume
some or all of such expenses, or (ii) the Trust on behalf of the Fund shall
have adopted a plan in conformity with Rule 12b-1 under the 1940 Act
providing that the Fund (or some other party) shall assume some or all of
such expenses. You shall be required to pay such of the foregoing sales
expenses as are not required to be paid by the principal underwriter
pursuant to the underwriting agreement or are not permitted to be paid by
the Fund (or some other party) pursuant to such a plan.
6. Management Fee. For all services to be rendered, payments to be
made and costs to be assumed by you as provided in sections 3, 4 and 5
hereof, the Trust on behalf of the Fund shall pay you in United States
Dollars on the last day of each month the unpaid balance of a fee equal to
the excess of (a) 1/12 of of 1 percent of the average daily net
assets as defined below of the Fund for such month; [provided that, for any
calendar month during which the average of such values exceeds $ ,
the fee payable for that month based on the portion of the average of such
values in excess of $ shall be 1/12 of of 1 percent of
such portion;] [and provided that, for any calendar month during which the
average of such values exceeds $ , the fee payable for that month
based on the portion of the average of such values in excess of $
shall be 1/12 of of 1 percent of such portion;] over any
compensation waived by you from time to time (as more fully described
below). You shall be entitled to receive during any month such interim
payments of your fee hereunder as you shall request, provided that no such
payment shall exceed 75 percent of the amount of your fee then accrued on
the books of the Fund and unpaid.
The "average daily net assets" of the Fund shall mean the average of
the values placed on the Fund's net assets as of 4:00 p.m. (New York time)
on each day on which the net asset value of the Fund is determined
consistent with the provisions of Rule 22c-1 under the 1940 Act or, if the
Fund lawfully determines the value of its net assets as of some other time
on each business day, as of such time. The value of the net assets of the
Fund shall always be determined pursuant to the applicable provisions of
the Declaration and the Registration Statement. If the determination of net
asset value does not take place for any particular day, then for the
purposes of
A-6
<PAGE> 57
this section 6, the value of the net assets of the Fund as last determined
shall be deemed to be the value of its net assets as of 4:00 p.m. (New York
time), or as of such other time as the value of the net assets of the
Fund's portfolio may be lawfully determined on that day. If the Fund
determines the value of the net assets of its portfolio more than once on
any day, then the last such determination thereof on that day shall be
deemed to be the sole determination thereof on that day for the purposes of
this section 6.
You may waive all or a portion of your fees provided for hereunder and
such waiver shall be treated as a reduction in purchase price of your
services. You shall be contractually bound hereunder by the terms of any
publicly announced waiver of your fee, or any limitation of the Fund's
expenses, as if such waiver or limitation were fully set forth herein.
7. Avoidance of Inconsistent Position; Services Not Exclusive. In
connection with purchases or sales of portfolio securities and other
investments for the account of the Fund, neither you nor any of your
directors, officers or employees shall act as a principal or agent or
receive any commission. You or your agent shall arrange for the placing of
all orders for the purchase and sale of portfolio securities and other
investments for the Fund's account with brokers or dealers selected by you
in accordance with Fund policies as expressed in the Registration
Statement. If any occasion should arise in which you give any advice to
clients of yours concerning the Shares of the Fund, you shall act solely as
investment counsel for such clients and not in any way on behalf of the
Fund.
Your services to the Fund pursuant to this Agreement are not to be
deemed to be exclusive and it is understood that you may render investment
advice, management and services to others. In acting under this Agreement,
you shall be an independent contractor and not an agent of the Trust.
Whenever the Fund and one or more other accounts or investment companies
advised by the Manager have available funds for investment, investments
suitable and appropriate for each shall be allocated in accordance with
procedures believed by the Manager to be equitable to each entity.
Similarly, opportunities to sell securities shall be allocated in a manner
believed by the Manager to be equitable. The Fund recognizes that in some
cases this procedure may adversely affect the size of the position that may
be acquired or disposed of for the Fund.
8. Limitation of Liability of Manager. As an inducement to your
undertaking to render services pursuant to this Agreement, the Trust agrees
that you shall not be liable under this Agreement for any error of judgment
or mistake of law or for any loss suffered by the Fund in connection with
the matters to which this Agreement relates, provided that nothing in this
Agreement shall be deemed to protect or purport to protect you against any
liability to the Trust, the Fund or its shareholders to which you would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of your duties, or by reason of your reckless
A-7
<PAGE> 58
disregard of your obligations and duties hereunder. Any person, even though
also employed by you, who may be or become an employee of and paid by the
Fund shall be deemed, when acting within the scope of his or her employment
by the Fund, to be acting in such employment solely for the Fund and not as
your employee or agent.
9. Duration and Termination of This Agreement. This Agreement shall
remain in force until September 30, 1998, and continue in force from year
to year thereafter, but only so long as such continuance is specifically
approved at least annually (a) by the vote of a majority of the Trustees
who are not parties to this Agreement or interested persons of any party to
this Agreement, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by the Trustees of the Trust, or by the
vote of a majority of the outstanding voting securities of the Fund. The
aforesaid requirement that continuance of this Agreement be "specifically
approved at least annually" shall be construed in a manner consistent with
the 1940 Act and the rules and regulations thereunder and any applicable
SEC exemptive order therefrom.
This Agreement may be terminated with respect to the Fund at any time,
without the payment of any penalty, by the vote of a majority of the
outstanding voting securities of the Fund or by the Trust's Board of
Trustees on 60 days' written notice to you, or by you on 60 days' written
notice to the Trust. This Agreement shall terminate automatically in the
event of its assignment.
10. Amendment of this Agreement. No provision of this Agreement may
be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought, and no amendment of
this Agreement shall be effective until approved in a manner consistent
with the 1940 Act and rules and regulations thereunder and any applicable
SEC exemptive order therefrom.
11. Limitation of Liability for Claims. The Declaration, a copy of
which, together with all amendments thereto, is on file in the Office of
the Secretary of the Commonwealth of Massachusetts, provides that the name
"Scudder Trust" refers to the Trustees under the Declaration
collectively as Trustees and not as individuals or personally, and that no
shareholder of the Fund, or Trustee, officer, employee or agent of the
Trust, shall be subject to claims against or obligations of the Trust or of
the Fund to any extent whatsoever, but that the Trust estate only shall be
liable.
You are hereby expressly put on notice of the limitation of liability
as set forth in the Declaration and you agree that the obligations assumed
by the Trust on behalf of the Fund pursuant to this Agreement shall be
limited in all cases to the Fund and its assets, and you shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Fund or
A-8
<PAGE> 59
any other series of the Trust, or from any Trustee, officer, employee or
agent of the Trust. You understand that the rights and obligations of each
Fund, or series, under the Declaration are separate and distinct from those
of any and all other series.
12. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
In interpreting the provisions of this Agreement, the definitions contained
in Section 2(a) of the 1940 Act (particularly the definitions of "affiliated
person," "assignment" and "majority of the outstanding voting securities"), as
from time to time amended, shall be applied, subject, however, to such
exemptions as may be granted by the SEC by any rule, regulation or order.
This Agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts, provided that nothing herein shall be construed
in a manner inconsistent with the 1940 Act, or in a manner which would cause the
Fund to fail to comply with the requirements of Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or management
agreements entered into between you and the Trust on behalf of the Fund.
If you are in agreement with the foregoing, please execute the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding contract
effective as of the date of this Agreement.
Yours very truly,
[NAME OF TRUST], on behalf of Scudder
Fund
By:
---------------------------------------------
President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By:
---------------------------------------------
Managing Director
A-9
<PAGE> 60
EXHIBIT B
INVESTMENT OBJECTIVES AND ADVISORY FEES
FOR INCOME FUNDS ADVISED BY SCUDDER, STEVENS & CLARK, INC.
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- --------------------------------- ------------------- --------------
<S> <C> <C> <C>
MONEY MARKET
Scudder U.S. Treasury Money Safety, liquidity, and stability 0.500% of $ 398,597,054
Fund of capital and, consistent net assets+
therewith, current income.
Scudder Cash Investment Stability of capital while 0.500% to $1,430,623,516
Trust maintaining liquidity of capital $250 million
and providing current income from 0.450% next
money market securities. $250 million
0.400% next
$500 million
0.350%
thereafter+
Scudder Money Market Series High level of current income 0.250% of $ 384,509,425**
consistent with preservation of net assets
capital and liquidity by
investing in a broad range of
short-term money market
instruments.
Scudder Government Money High level of current income 0.250% of $ 36,794,563**
Market Series consistent with preservation of net assets
capital and liquidity by
investing exclusively in
obligations issued or guaranteed
by the U.S. Government or its
agencies or instrumentalities and
in certain repurchase agreements.
TAX FREE MONEY MARKET
Scudder Tax Free Money Fund Income exempt from regular 0.500% to $ 220,245,241
federal income taxes and $500 million
stability of principal through 0.480%
investments in municipal thereafter+
securities.
Scudder Tax Free Money High level of current income, 0.250% of $ 79,695,218**
Market Series consistent with preservation of net assets
capital and liquidity, exempt
from federal income tax by
investing primarily in high
quality municipal obligations.
Scudder California Tax Free Stability of capital and the 0.500% of $ 68,695,680
Money Fund maintenance of a constant net net assets+
asset value of $1.00 per share
while providing California tax
payers income exempt from both
California state personal and
regular federal income tax
through investment in high
quality, short-term tax-exempt
California municipal securities.
- ---------------
* Assets are shown as of a Fund's most recent fiscal year end unless otherwise indicated.
** Assets as of 7/31/97.
+ Subject to waivers and/or expense limitations.
</TABLE>
B-1
<PAGE> 61
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- --------------------------------- ------------------- --------------
<S> <C> <C> <C>
Scudder New York Tax Free Stability of capital and income 0.500% of $ 59,538,652
Money Fund exempt from New York state and net assets+
New York City personal income
taxes and regular federal income
tax through investment in high
quality, short-term municipal
securities in New York.
TAX FREE
Scudder Limited Term Tax High level of income exempt from 0.600% of $ 123,660,431
Free Fund regular federal income tax net assets+
consistent with a high degree of
principal stability.
Scudder Medium Term Tax Free High level of income exempt from 0.600% to $ 650,504,081
Fund regular federal income tax and $500 million
limited principal fluctuation 0.500% thereafter
through investment primarily in
high grade intermediate term
municipal securities.
Scudder Managed Municipal Income exempt from regular 0.550% to $ 737,422,861
Bonds federal income tax primarily $200 million
through investments in high-grade 0.500% next
long-term municipal securities. $500 million
0.475% thereafter
Scudder High Yield Tax Free High level of income, exempt from 0.650% to $ 293,101,021
Fund regular federal income tax, from $300 million
an actively managed portfolio 0.600% thereafter
consisting primarily of
investment grade municipal
securities.
Scudder California Tax Free Income exempt from both 0.625% to $ 288,576,041
Fund California state personal income $200 million
tax and regular federal income 0.600% thereafter
tax primarily through investment
grade municipal securities.
Scudder Massachusetts A high level of income exempt 0.600% of $ 65,505,088
Limited Term Tax Free Fund from both Massachusetts personal net assets+
income tax and regular federal
income tax as is consistent with
a high degree of price stability.
Scudder Massachusetts Tax A high level of income exempt 0.600% of $ 329,842,169
Free Fund from both Massachusetts personal net assets
income tax and regular federal
income tax through investment
primarily in long-term
investment-grade municipal
securities in Massachusetts.
Scudder New York Tax Free Income exempt from New York state 0.625% to $ 180,647,157
Fund and New York City personal income $200 million
taxes and regular federal income 0.600% thereafter
tax through investment primarily
in long-term investment-grade
municipal securities in New York.
- ---------------
* Assets are shown as of a Fund's most recent fiscal year end unless otherwise indicated.
+ Subject to waivers and/or expense limitations.
</TABLE>
B-2
<PAGE> 62
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- --------------------------------- ------------------- --------------
<S> <C> <C> <C>
Scudder Ohio Tax Free Fund Income exempt from Ohio personal 0.600% of $ 84,109,009
income tax and regular federal net assets+
income tax through investment
primarily in investment-grade
municipal securities in Ohio.
Scudder Pennsylvania Tax Income exempt from Pennsylvania 0.600% of $ 74,177,997
Free Fund personal income tax and regular net assets+
federal income tax through
investment primarily in
investment-grade municipal
securities in Pennsylvania.
U.S. INCOME
Scudder Short Term Bond Fund High level of income consistent 0.600% to $1,468,170,885
with a high degree of principal $500 million
stability through investments 0.500% next
primarily in high quality $500 million
short-term bonds. 0.450% next
$500 million
0.400% next
$500 million
0.375% next
$1 billion
0.350% thereafter
Scudder Zero Coupon 2000 High investment returns over a 0.600% of $ 25,440,414
Fund selected period as is consistent net assets+
with investment in U.S.
Government securities and the
minimization of reinvestment
risk.
Scudder GNMA Fund High current income and safety of 0.650% to $ 383,008,164
principal primarily from $200 million
investment in U.S. Government 0.600% next
guaranteed mortgage-backed GNMA $300 million
securities. 0.550% thereafter
Scudder Income Fund A high level of income, 0.650% to $ 578,519,502
consistent with the prudent $200 million
investment of capital, through a 0.600% next
flexible investment program $300 million
emphasizing high-grade bonds. 0.550% thereafter
Scudder High Yield Bond Fund A high level of current income 0.700% of $ 73,523,094
and capital appreciation through net assets
investment primarily in below
investment-grade domestic debt
securities.
GLOBAL INCOME
Scudder Global Bond Fund Total return with an emphasis on 0.750% to $ 217,403,907
current income by investing $1 billion
primarily in high-grade bonds 0.700%
denominated in foreign currencies thereafter+
and the U.S. dollar.
- ---------------
* Assets are shown as of a Fund's most recent fiscal year end unless otherwise indicated.
+ Subject to waivers and/or expense limitations.
</TABLE>
B-3
<PAGE> 63
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- --------------------------------- ------------------- --------------
<S> <C> <C> <C>
Scudder International Bond Income primarily by investing in 0.850% to $ 235,993,183
Fund high-grade international bonds $1 billion
and protection and possible 0.800% thereafter
enhancement of principal value by
actively managing currency, bond
market and maturity exposure and
by security selection.
Scudder Emerging Markets High current income and, 1.000% of $ 304,607,984
Income Fund secondarily, long-term capital net assets
appreciation by investing
primarily in high-yielding debt
securities issued in emerging
markets.
ASSET ALLOCATION
Scudder Pathway Conservative Current income and, secondarily, There will be no $ 13,928,759***
Portfolio long-term growth of capital by fee as the Manager
investing substantially in will receive a fee
Scudder bond mutual funds, but from the underlying
will have some exposure to funds.
Scudder equity mutual funds.
Scudder Pathway Balanced Balance of growth and income by There will be no $ 167,721,722***
Portfolio investing in a mix of Scudder fee as the Manager
money market, bond and equity will receive a fee
mutual funds. from the underlying
funds.
Scudder Pathway Maximize total return by There will be no $ 8,983,598***
International Portfolio investing in a select mix of fee as the Manager
established international and will receive a fee
global Scudder Funds. from the underlying
funds.
INSURANCE PRODUCTS
Balanced Portfolio Balance of growth and income 0.475% of $ 88,342,837
consistent with long-term net assets
preservation of capital through a
diversified portfolio of equity
and fixed income securities.
Bond Portfolio High level of income consistent 0.475% of $ 65,769,421
with a high quality portfolio of net assets
debt securities.
Money Market Portfolio Stability of capital and current 0.370% of $ 97,785,626
income from a portfolio of money net assets
market instruments.
- ---------------
* Assets are shown as of a Fund's most recent fiscal year end unless otherwise indicated.
*** Assets as of 6/30/97.
+ Subject to waivers and/or expense limitations.
</TABLE>
B-4
<PAGE> 64
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- --------------------------------- ------------------- --------------
<S> <C> <C> <C>
AARP FUNDS
AARP High Quality Money Fund Current income and liquidity, 0.350% to $ 412,126,193
consistent with maintaining $2 billion
stability and safety of 0.330% next
principal, through investment in $2 billion
high quality securities. 0.300% next
$2 billion
0.280% next
$2 billion
0.260% next
$3 billion
0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.100% of
net assets
AARP Balanced Stock and Bond Long-term growth of capital and 0.350% to $ 403,179,939
Fund income, consistent with a stable $2 billion
share price, through investment 0.330% next
in a combination of stocks, bonds $2 billion
and cash reserves. 0.300% next
$2 billion
0.280% next
$2 billion
0.260% next
$3 billion
0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.190% of
net assets
AARP Bond Fund for Income High level of current income, 0.350% to $ 34,951,973***
consistent with greater share $2 billion
price stability than a long term 0.330% next
bond, through investment $2 billion
primarily in investment-grade 0.300% next
debt securities. $2 billion
0.280% next
$2 billion
0.260% next
$3 billion
0.250% next
$3 billion
0.240%
thereafter+
INDIVIDUAL FUND FEE
0.280% of
net assets
- ---------------
* Assets are shown as of a Fund's most recent fiscal year end unless otherwise indicated.
*** Assets as of 6/30/97.
+ Subject to waivers and/or expense limitations.
</TABLE>
B-5
<PAGE> 65
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- --------------------------------- ------------------- --------------
<S> <C> <C> <C>
AARP GNMA and U.S. Treasury High level of current income, 0.350% to $4,904,439,844
Fund consistent with greater share $2 billion
price stability than a long-term 0.330% next
bond, through investment $2 billion
principally in U.S. 0.300% next
Government-guaranteed GNMA $2 billion
securities and U.S. Treasury 0.280% next
obligations. $2 billion
0.260% next
$3 billion
0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.120% of
net assets
AARP High Quality Bond Fund High level of income, consistent 0.350% to $ 511,905,166
with greater share price $2 billion
stability than a long-term bond, 0.330% next
through investment primarily in a $2 billion
portfolio of high quality 0.300% next
securities $2 billion
0.280% next
$2 billion
0.260% next
$3 billion
0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.190% of
net assets
AARP Diversified Income Current income with modest long- There will be no $ 34,230,023***
Portfolio term appreciation through fee as the manager
investment primarily in AARP bond will receive a fee
mutual funds. from the underlying
funds.
- ---------------
* Assets are shown as of a Fund's most recent fiscal year end unless otherwise indicated.
*** Assets as of 6/30/97.
</TABLE>
B-6
<PAGE> 66
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSETS*
- ----------------------------- --------------------------------- ------------------- --------------
<S> <C> <C> <C>
AARP High Quality Tax Free Current income free from federal 0.350% to $ 111,264,728
Money Fund income taxes and liquidity, $2 billion
consistent with maintaining 0.330% next
stability and safety of $2 billion
principal, through investment in 0.300% next
high-quality municipal $2 billion
securities. 0.280% next
$2 billion
0.260% next
$3 billion
0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.100% of
net assets
AARP Insured Tax Free High level of income free from 0.350% to $1,755,412,222
General Bond Fund federal income taxes, consistent $2 billion
with greater share price 0.330% next
stability than a long-term $2 billion
municipal bond, through 0.300% next
investment primarily in municipal $2 billion
securities covered by insurance. 0.280% next
$2 billion
0.260% next
$3 billion
0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.190% of
net assets
- ---------------
* Assets are shown as of a Fund's most recent fiscal year end unless otherwise indicated.
</TABLE>
B-7
<PAGE> 67
EXHIBIT C
PROPOSED AMENDMENTS TO THE
DECLARATION OF TRUST
Following are proposed amendments to each Trust's Declaration of Trust, as
described in the proxy statement. Additions are shown in BOLD TYPE and deletions
by a [ ]; language shown as added may be in the current Declaration of Trust in
some cases.
Section 2.2. Investments.
The Trustees shall have the power:
(i) TO INVEST, THROUGH A TRANSFER OF CASH, SECURITIES AND OTHER ASSETS
OR OTHERWISE, ALL OR A PORTION OF THE TRUST PROPERTY, OR TO SELL ALL OR A
PORTION OF THE TRUST PROPERTY AND INVEST THE PROCEEDS OF SUCH SALES, IN
ANOTHER INVESTMENT COMPANY THAT IS REGISTERED UNDER THE 1940 ACT.
Section 5.9. Voting Powers.
The [ ] SHAREHOLDERS shall have power to vote only (i) for the election
of Trustees as provided in Section 2.12; (ii) for the removal of Trustees as
provided in Section 2.13; (iii) with respect to any [ ] amendment of this
Declaration to the extent and as provided in Section 8.3; [ ] (iv) to the
same extent as the stockholders of Massachusetts business corporation as to
whether or not a court action, proceeding or claim should or should not be
brought or maintained derivatively or as a class action on behalf of the Trust
or [ ] ANY SERIES OR CLASS THEREOF OR THE SHAREHOLDERS (PROVIDED, HOWEVER,
THAT A SHAREHOLDER OF A PARTICULAR SERIES OR CLASS SHALL NOT BE ENTITLED TO
BRING A DERIVATIVE OR CLASS ACTION ON BEHALF OF ANY OTHER SERIES OR CLASS (OR
SHAREHOLDER OF ANY OTHER SERIES OR CLASS) OF THE TRUST); AND [ ] (v) with
respect to such additional matters relating to the Trust as may be required by
this Declaration, the By-laws or any registration of the Trust as an investment
company under the 1940 Act with the Commission (or any successor agency) or as
the Trustees may consider necessary or desirable. Each whole Share shall be
entitled to one vote as to any matter on which it is entitled to vote and each
fractional Share shall be entitled to a proportionate fractional vote, except
that the Trustees may, in conjunction with the establishment of any Series OR
CLASS of Shares, establish or reserve the right to establish conditions under
which the several Series OR CLASSES shall have separate voting rights or [ ]
no voting rights. There shall be no cumulative voting in the election of
Trustees. Until Shares are issued, the Trustees may exercise all rights of
Shareholders and may take any action required by law, this Declaration or the
[ ] BY-LAWS to be taken by Shareholders. The By-laws may include further
provisions for SHAREHOLDERS' votes and meetings and related matters.
C-1
<PAGE> 68
EXHIBIT D
PROPOSED FUNDAMENTAL INVESTMENT POLICIES
SCUDDER CALIFORNIA TAX FREE TRUST
SCUDDER CALIFORNIA TAX FREE FUND
SCUDDER CALIFORNIA TAX FREE MONEY FUND
SCUDDER MUNICIPAL TRUST
SCUDDER HIGH YIELD TAX FREE FUND
SCUDDER MANAGED MUNICIPAL BONDS
SCUDDER STATE TAX FREE TRUST
SCUDDER MASSACHUSETTS LIMITED TERM TAX FREE FUND
SCUDDER MASSACHUSETTS TAX FREE FUND
SCUDDER NEW YORK TAX FREE FUND
SCUDDER NEW YORK TAX FREE MONEY FUND
SCUDDER OHIO TAX FREE FUND
SCUDDER PENNSYLVANIA TAX FREE FUND
SCUDDER TAX FREE MONEY FUND
SCUDDER TAX FREE TRUST
SCUDDER MEDIUM TERM TAX FREE FUND
SCUDDER LIMITED TERM TAX FREE FUND
5.1. SCUDDER CALIFORNIA TAX FREE FUND, SCUDDER HIGH YIELD TAX FREE FUND,
SCUDDER LIMITED TERM TAX FREE FUND, SCUDDER MANAGED MUNICIPAL BONDS AND SCUDDER
MEDIUM TERM TAX FREE FUND.
The Fund has elected to be classified as a diversified series of an
open-end investment company.
SCUDDER TAX FREE MONEY FUND.
The Fund has elected to be classified as a diversified investment company.
SCUDDER CALIFORNIA TAX FREE MONEY FUND, SCUDDER MASSACHUSETTS LIMITED TERM
TAX FREE FUND, SCUDDER MASSACHUSETTS TAX FREE FUND, SCUDDER NEW YORK TAX FREE
FUND, SCUDDER NEW YORK TAX FREE MONEY FUND, SCUDDER OHIO TAX FREE FUND AND
SCUDDER PENNSYLVANIA TAX FREE FUND.
The Fund has elected to be classified as a non-diversified series of an
open-end investment company.
In addition, as a matter of fundamental policy, each Fund will not:
5.2. borrow money, except as permitted under the Investment Company
Act of 1940, as amended, and as interpreted or modified by regulatory
authority having jurisdiction, from time to time;
D-1
<PAGE> 69
5.3. issue senior securities, except as permitted under the Investment
Company Act of 1940, as amended, and as interpreted or modified by
regulatory authority having jurisdiction, from time to time;
5.4 concentrate its investments in a particular industry, as that term
is used in the Investment Company Act of 1940, as amended, and as
interpreted or modified by regulatory authority having jurisdiction, from
time to time (except that Scudder New York Tax Free Money Fund reserves the
freedom of action to concentrate its investments in instruments issued by
domestic banks);
5.5 make loans to other persons, except (i) loans of portfolio
securities, and (ii) to the extent that entry into repurchase agreements
and the purchase of debt instruments or interests in indebtedness in
accordance with the Fund's investment objective and policies may be deemed
to be loans.
5.6 engage in the business of underwriting securities issued by
others, except to the extent that the Fund may be deemed to be an
underwriter in connection with the disposition of portfolio securities;
5.7 purchase or sell real estate, which term does not include
securities of companies which deal in real estate or mortgages or
investments secured by real estate or interests therein, except that the
Fund reserves freedom of action to hold and to sell real estate acquired as
a result of the Fund's ownership of securities;
5.8 purchase physical commodities or contracts relating to physical
commodities; or
In addition, with respect to each of Scudder California Tax Free Fund and
Scudder California Tax Free Money Fund, the Fund will, as a matter of
fundamental policy:
5.9 have at least 80% of its net assets invested in California
municipal securities during periods of normal market conditions.
In addition, with respect to each of Scudder High Yield Tax Free Fund,
Scudder Managed Municipal Bonds, Scudder Medium Term Tax Free Fund, and Scudder
Limited Term Tax Free Fund, the Fund will, as a matter of fundamental policy:
5.10 have at least 80% of its net assets invested in municipal
securities during periods of normal market conditions.
In addition, with respect to each of Scudder Massachusetts Limited Term Tax
Free Fund and Scudder Massachusetts Tax Free Fund, the Fund will, as a matter of
fundamental policy:
5.11 have at least 80% of its net assets invested in municipal
securities of issuers located in Massachusetts and other qualifying issuers
(including
D-2
<PAGE> 70
Puerto Rico, the U.S. Virgin Islands and Guam) during periods of normal
market conditions.
In addition, with respect to each of Scudder New York Tax Free Fund and
Scudder New York Tax Free Money Fund, the Fund will, as a matter of fundamental
policy:
5.12 have at least 80% of its net assets invested in New York
municipal securities during periods of normal market conditions.
In addition, Scudder Ohio Tax Free Fund will, as a matter of fundamental
policy:
5.13 have at least 80% of its net assets invested in Ohio municipal
securities during periods of normal market conditions.
In addition, Scudder Pennsylvania Tax Free Fund will, as a matter of
fundamental policy:
5.14 have at least 80% of its net assets invested in Pennsylvania
municipal securities during periods of normal market conditions.
In addition, Scudder Tax Free Money Fund will, as a matter of fundamental
policy:
5.15 have at least 80% of its net assets invested in short-term
municipal securities during periods of normal market conditions.
D-3
<PAGE> 71
EXHIBIT E
CURRENT FUNDAMENTAL INVESTMENT POLICIES
SCUDDER CALIFORNIA TAX FREE TRUST
SCUDDER CALIFORNIA TAX FREE MONEY FUND
SCUDDER CALIFORNIA TAX FREE FUND
As a matter of fundamental policy, the Trust may not, on behalf of each
Fund:
(1) borrow money except as a temporary measure for extraordinary or
emergency purposes or except in connection with reverse repurchase
agreements; provided that the Fund maintains asset coverage of 300% for all
borrowings;
(2) purchase or sell real estate (except that the Fund may invest in
(i) securities of companies which deal in real estate or mortgages and (ii)
securities secured by real estate or interests therein, and the Trust, on
behalf of Scudder California Tax Free Fund only, reserves freedom of action
to hold and to sell real estate acquired as a result of Scudder California
Tax Free Fund's ownership of securities); and the Trust, on behalf of each
Fund, may not purchase or sell physical commodities or contracts relating
to physical commodities;
(3) act as underwriter of the securities issued by others, except to
the extent that it may be deemed an underwriter in connection with the
disposition of portfolio securities of the Funds;
(4) make loans to other persons, except (a) loans of portfolio
securities and (b) to the extent the purchase of debt securities in
accordance with its investment objective and investment policies and the
entry into repurchase agreements may be deemed to be loans;
(5) issue senior securities, except as appropriate to evidence
indebtedness which it is permitted to incur, and except for shares of the
separate classes or series of the Trust, provided, in the case of Scudder
California Tax Free Fund only, that collateral arrangements with respect to
currency-related contracts, futures contracts, options or other permitted
investments, including deposits of initial and variation margin, are not
considered to be the issuance of senior securities for purposes of this
restriction;
(6) purchase (a) private activity bonds, or (b) securities which are
neither municipal obligations nor securities of the U.S. Government, its
agencies or instrumentalities, if in either case the purchase would cause
more than 25% of the market value of its total assets at the time of such
purchase to be invested in the securities of one or more issuers having
their principal business activities in the same industry (for the purposes
of this restriction, telephone companies are considered to be in a separate
industry
E-1
<PAGE> 72
from gas and electric public utilities, and wholly-owned finance companies
are considered to be in the industry of their parents if their activities
are primarily related to financing the activities of their parents); or
(7) (Scudder California Tax Free Money Fund only) invest more than 25%
of the value of its total assets in the securities of any one issuer;
In addition, with respect to each Fund,
(8) the Fund may invest more than 25% of its assets in industrial
development or other private activity bonds. For purposes of the Fund's
investment limitation regarding concentration of investments in any one
industry, all such bonds ultimately payable by companies within the same
industry will be considered as if they were issued by issuers in the same
industry.
(9) at least 80% of the Fund's net assets is normally invested in
California municipal securities. When the adviser determines that market
conditions warrant, the Fund may, for temporary defensive purposes, invest
more than 20% of its net assets in taxable securities.
E-2
<PAGE> 73
SCUDDER MUNICIPAL TRUST
SCUDDER MANAGED MUNICIPAL BONDS
SCUDDER HIGH YIELD TAX FREE FUND
As a matter of fundamental policy, each of Scudder Managed Municipal Bonds
and Scudder High Yield Tax Free Fund may not:
(1) with respect to 75% of its total assets taken at market value,
purchase more than 10% of the voting securities of any one issuer or invest
more than 5% of the value of its total assets in the securities of any one
issuer, except obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities and except securities of other investment
companies;
(2) borrow money except as a temporary measure for extraordinary or
emergency purposes or except in connection with reverse repurchase
agreements; provided that the Fund maintains asset coverage of 300% for all
borrowings;
(3) purchase or sell real estate (except that the Fund may invest in
(i) securities of companies which deal in real estate or mortgages, and
(ii) securities secured by real estate or interests therein, and that the
Fund reserves freedom of action to hold and to sell real estate acquired as
a result of the Fund's ownership of securities); each Fund may not purchase
or sell physical commodities or contracts relating to physical commodities;
(4) act as underwriter of securities issued by others, except to the
extent that it may be deemed an underwriter in connection with the
disposition of portfolio securities of the Fund;
(5) make loans to other persons, except (a) loans of portfolio
securities and (b) to the extent the entry into repurchase agreements and
the purchase of debt obligations in accordance with its investment
objectives and investment policies may be deemed to be loans;
(6) issue senior securities, except as appropriate to evidence
indebtedness which it is permitted to incur, and except for shares of the
separate classes or series of the Fund, provided that collateral
arrangements with respect to currency-related contracts, futures contracts,
options or other permitted investments, including deposits of initial and
variation margin, are not considered to be the issuance of senior
securities for purposes of this restriction;
(7) purchase (a) private activity bonds, or (b) securities which are
neither municipal obligations nor securities of the U.S. Government, its
agencies or instrumentalities, if in either case the purchase would cause
more than 25% of the market value of its total assets at the time of such
purchase to be invested in the securities of one or more issuers having
their principal business activities in the same industry (for the purposes
of this
E-3
<PAGE> 74
restriction, telephone companies are considered to be in a separate
industry from gas and electric public utilities, and wholly-owned finance
companies are considered to be in the industry of their parents if their
activities are related primarily to financing the activities of their
parents);
(8) (for Scudder High Yield Tax Free Fund only) purchase securities
which are not tax free obligations if such purchase would cause more than
20% of its total assets to be invested in such securities, except that for
temporary defensive purposes, the Fund may invest more than 20% of its
total assets in securities the interest income from which may be subject to
federal income tax (i) to meet temporary liquidity requirements, and (ii)
during the period between the commitment to purchase tax free securities
and the settlement date of such purchases.
(9) (for Scudder Managed Municipal Bonds only) purchase securities
which are not tax free obligations if such purchase would cause more than
20% of its net assets to be invested in such securities, except that for
temporary defensive purposes, the Fund may invest more than 20% of its net
assets in securities the interest income from which may be subject to
federal income tax (i) until the Fund is substantially invested in
municipal securities, (ii) to meet temporary liquidity requirements, and
(iii) during the period between the commitment to purchase municipal
securities and the settlement date of such purchases.
(10) purchase securities other than those described in the Fund's
prospectus or statement of additional information.
In addition,
(11) With respect to Scudder High Yield Tax Free Fund: At least 80% of
the Fund's net assets will normally be invested in municipal securities.
(12) With respect to Scudder Managed Municipal Bonds: At least 80% of
the Fund's net assets will normally be invested in municipal bonds.
E-4
<PAGE> 75
SCUDDER STATE TAX FREE TRUST
SCUDDER MASSACHUSETTS LIMITED TERM TAX FREE FUND
SCUDDER MASSACHUSETTS TAX FREE FUND
As a matter of fundamental policy, Massachusetts Limited Term Tax Free Fund
and Massachusetts Tax Free Fund may not:
(1) invest more than 25% of the value of its total assets in the
securities of any one issuer;
(2) borrow money, except as a temporary measure for extraordinary or
emergency purposes or except in connection with reverse repurchase
agreements; provided that the Fund maintains asset coverage of 300% for all
borrowings;
(3) purchase or sell real estate (except that the Fund may invest in
(i) securities of companies which deal in real estate or mortgages, and
(ii) securities secured by real estate or interests therein, and that the
Fund reserves freedom of action to hold and to sell real estate acquired as
a result of the Fund's ownership of securities);
(4) purchase or sell physical commodities or contracts relating to
physical commodities;
(5) act as an underwriter of securities issued by others, except to
the extent that it may be deemed an underwriter in connection with the
disposition of portfolio securities of the Fund;
(6) make loans to other persons, except (a) loans of portfolio
securities, and (b) to the extent the entry into repurchase agreements and
the purchase of debt securities in accordance with its investment
objectives and investment policies may be deemed to be loans;
(7) issue senior securities, except as appropriate to evidence
indebtedness which it is permitted to incur, and except for shares of the
separate classes or series of the Trust, provided that collateral
arrangements with respect to currency-related contracts, futures contracts,
options or other permitted investments, including deposits of initial and
variation margin, are not considered to be the issuance of senior
securities for purposes of this restriction;
(8) with respect to 50% of the total assets of the Fund, invest more
than 5% of its total assets in securities of any one issuer, except U.S.
Government securities; and
(9) purchase securities if such purchase would cause more than 25% in
the aggregate of the market value of the total assets of the Fund at the
time of such purchase to be invested in the securities of one or more
issuers having their principal business activities in the same industry,
provided that
E-5
<PAGE> 76
there is no limitation in respect to investments in obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities.
In addition, with respect to each Fund:
(10) The Fund may invest more than 25% of its assets in industrial
development or other private activity bonds. For purposes of the Fund's
investment limitation regarding concentration of investments in any one
industry, all such bonds ultimately payable by companies within the same
industry will be considered as if they were issued by issuers in the same
industry.
(11) The Fund normally invests at least 80% of its net assets in
municipal securities of issuers located in Massachusetts and other
qualifying issuers (including Puerto Rico, the U.S. Virgin Islands and
Guam).
In addition, as a matter of fundamental policy, Scudder Massachusetts Tax
Free Fund may not:
(12) with respect to 50% of the total assets of the Fund, purchase the
securities of any issuer if such purchase would cause more than 10% of the
voting securities of such issuer to be held by the Fund.
E-6
<PAGE> 77
SCUDDER STATE TAX FREE TRUST
SCUDDER NEW YORK TAX FREE MONEY FUND
As a matter of fundamental policy, the Trust may not, on behalf of Scudder
New York Tax Free Money Fund:
(1) borrow money, except as a temporary measure for extraordinary or
emergency purposes or except in connection with reverse repurchase
agreements; provided that the Fund maintains asset coverage of 300% for all
borrowings;
(2) purchase or sell real estate (except that the Fund may invest in
(i) securities of companies which deal in real estate or mortgages, and
(ii) securities secured by real estate or interests therein;
(3) act as an underwriter of securities issued by others, except to
the extent that it may be deemed an underwriter in connection with the
disposition of portfolio securities of the Fund;
(4) make loans to other persons, except (a) loans of portfolio
securities, and (b) to the extent the entry into repurchase agreements and
the purchase of debt securities in accordance with its investment
objectives and investment policies may be deemed to be loans;
(5) issue senior securities, except as appropriate to evidence
indebtedness which it is permitted to incur, and except for shares of the
separate classes or series of the Trust, provided that collateral
arrangements with respect to currency-related contracts, futures contracts,
options or other permitted investments, including deposits of initial and
variation margin, are not considered to be the issuance of senior
securities for purposes of this restriction;
(6) purchase securities if such purchase would cause more than 25% in
the aggregate of the market value of the total assets of the Fund at the
time of such purchase to be invested in the securities of one or more
issuers having their principal business activities in the same industry,
provided that there is no limitation in respect to investments in
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities and in municipal obligations issued by governments or
political subdivisions of governments, or in certificates of deposit or
bankers' acceptances issued by domestic banks;
(7) with respect to 50% of the total assets of the Fund, invest more
than 5% of its total assets in the securities of any one issuer, except
U.S. Government securities, and with respect to 100% of the value of the
total assets of the Fund, the Fund may not invest more than 25% of the
value of its total assets in the securities of any one issuer;
(8) with respect to 50% of the total assets of the Fund purchase the
securities of any issuer if such purchase would cause more than 10% of the
E-7
<PAGE> 78
voting securities of such issuer to be held by the Fund, provided that the
amount of the total assets of the Fund that may be invested in the
securities of any one issuer will, instead, be limited in accordance with
federal law, regulation and regulatory interpretation applicable to money
market funds, as amended from time to time; and
(9) purchase or sell physical commodities or contracts relating to
physical commodities.
In addition,
(10) The Fund may invest more than 25% of its assets in industrial
development or other private activity bonds. For purposes of the Fund's
investment limitation regarding concentration of investments in any one
industry, all such bonds ultimately payable by companies within the same
industry will be considered as if they were issued by issuers in the same
industry.
(11) At least 80% of the Fund's net assets is normally invested in New
York municipal securities. When the adviser determines that market
conditions warrant, the Fund may, for temporary defensive purposes, invest
more than 20% of its net assets in taxable securities.
E-8
<PAGE> 79
SCUDDER STATE TAX FREE TRUST, CONTINUED
SCUDDER NEW YORK TAX FREE FUND
As a matter of fundamental policy, the Trust, on behalf of Scudder New York
Tax Free Fund, may not:
(1) purchase any security (other than obligations of the U.S.
Government, its agencies or instrumentalities) if as a result (a) more than
25% of the Registrant's total assets would then be invested in securities
of any single issuer, or (b) 25% or more of the Registrant's total assets
would then be invested in securities of issuers in any one industry or
group of similar or related industries, provided, however, that the
foregoing restriction shall not be deemed to prohibit the Fund from
purchasing the securities of any issuer pursuant to the exercise of rights
distributed to the Fund by the issuer, except that no such purchase may be
made if as a result the Fund will fail to meet the diversification
requirements of the Code;
(2) borrow money, except as a temporary measure for extraordinary or
emergency purposes or except in connection with reverse repurchase
agreements; provided that the Fund maintains asset coverage of 300% for all
borrowings;
(3) purchase or sell real estate (except that the Fund may invest in
(i) securities of companies which deal in real estate or mortgages, and
(ii) securities secured by real estate or interests therein, and that the
Fund reserves freedom of action to hold and to sell real estate acquired as
a result of the Fund's ownership of securities); the Fund may not purchase
or sell physical commodities or contracts relating to physical commodities;
(4) act as underwriter of securities issued by others, except to the
extent that it may be deemed an underwriter in connection with the
disposition of portfolio securities of the Fund;
(5) make loans to other persons, except (a) loans of portfolio
securities, and (b) to the extent the purchase of debt securities in
accordance with its investment objective and investment policies and the
entry into repurchase agreements may be deemed to be loans;
(6) issue senior securities, except as appropriate to evidence
indebtedness which it is permitted to incur, and except for shares of the
separate classes or series of the Trust, provided that collateral
arrangements with respect to currency-related contracts, futures contracts,
options or other permitted investments, including deposits of initial and
variation margin, are not considered to be the issuance of senior
securities for purposes of this restriction; and
(7) purchase securities if such purchase would cause more than 25% in
the aggregate of the market value of the total assets of the Fund at the
time of such purchase to be invested in the securities of one or more
issuers
E-9
<PAGE> 80
having their principal business activities in the same industry, provided
that there is no limitation in respect to investments in obligations issued
or guaranteed by the U.S. Government or its agencies or instrumentalities.
In addition,
(8) The Fund may invest more than 25% of its assets in industrial
development or other private activity bonds. For purposes of the Fund's
investment limitation regarding concentration of investments in any one
industry, all such bonds ultimately payable by companies within the same
industry will be considered as if they were issued by issuers in the same
industry.
(9) At least 80% of the Fund's net assets is normally invested in New
York municipal securities. When the adviser determines that market
conditions warrant, the Fund may, for temporary defensive purposes, invest
more than 20% of its net assets in taxable securities.
E-10
<PAGE> 81
SCUDDER STATE TAX FREE TRUST, CONTINUED
SCUDDER OHIO TAX FREE MONEY FUND
As a matter of fundamental policy, the Trust, on behalf of Scudder Ohio Tax
Free Fund, may not:
(1) invest more than 25% of the value of its total assets in the
securities of any one issuer;
(2) borrow money, except as a temporary measure for extraordinary or
emergency purposes or except in connection with reverse repurchase
agreements; provided that the Fund maintains asset coverage of 300% for all
borrowings;
(3) purchase or sell real estate (except that the Fund may invest in
(i) securities of companies which deal in real estate or mortgages, and
(ii) securities secured by real estate or interests therein, and that the
Fund reserves freedom of action to hold and to sell real estate acquired as
a result of the Fund's ownership of securities);
(4) act as an underwriter of securities issued by others, except to
the extent that it may be deemed an underwriter in connection with the
disposition of portfolio securities of the Fund;
(5) make loans to other persons, except (a) loans of portfolio
securities, and (b) to the extent the entry into repurchase agreements and
the purchase of debt securities in accordance with its investment
objectives and investment policies may be deemed to be loans;
(6) issue senior securities, except as appropriate to evidence
indebtedness which it is permitted to incur, and except for shares of the
separate classes or series of the Trust, provided that collateral
arrangements with respect to currency-related contracts, futures contracts,
options or other permitted investments, including deposits of initial and
variation margin, are not considered to be the issuance of senior
securities for purposes of this restriction;
(7) with respect to 50% of the total assets of the Fund, purchase the
securities of any issuer if such purchase would cause more than 10% of the
voting securities of such issuer to be held by the Fund;
(8) with respect to 50% of the total assets of the Fund, invest more
than 5% of its total assets in securities of any one issuer, except U.S.
Government securities;
(9) purchase securities if such purchase would cause more than 25% in
the aggregate of the market value of the total assets of the Fund at the
time of such purchase to be invested in the securities of one or more
issuers having their principal business activities in the same industry,
provided that
E-11
<PAGE> 82
there is no limitation in respect to investments in obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities; and
(10) purchase or sell physical commodities or contracts relating to
physical commodities.
In addition,
(11) The Fund may invest more than 25% of its assets in industrial
development or other private activity bonds. For purposes of the Fund's
investment limitation regarding concentration of investments in any one
industry, all such bonds ultimately payable by companies within the same
industry will be considered as if they were issued by issuers in the same
industry.
(12) At least 80% of the Fund's net assets is normally invested in
Ohio municipal securities. When the adviser determines that market
conditions warrant, the Fund may, for temporary defensive purposes, invest
more than 20% of its net assets in taxable securities.
E-12
<PAGE> 83
SCUDDER STATE TAX FREE TRUST, CONTINUED
SCUDDER PENNSYLVANIA TAX FREE MONEY FUND
As a matter of fundamental policy, the Trust, on behalf of Scudder
Pennsylvania Tax Free Fund, may not:
(1) invest more than 25% of the value of its total assets in the
securities of any one issuer;
(2) borrow money, except as a temporary measure for extraordinary or
emergency purposes or except in connection with reverse repurchase
agreements; provided that the Fund maintains asset coverage of 300% for all
borrowings;
(3) purchase or sell real estate (except that the Fund may invest in
(i) securities of companies which deal in real estate or mortgages, and
(ii) securities secured by real estate or interests therein, and that the
Fund reserves freedom of action to hold and to sell real estate acquired as
a result of the Fund's ownership of securities);
(4) act as an underwriter of securities issued by others, except to
the extent that it may be deemed an underwriter in connection with the
disposition of portfolio securities of the Fund;
(5) make loans to other persons, except (a) loans of portfolio
securities, and (b) to the extent the entry into repurchase agreements and
the purchase of debt securities in accordance with its investment
objectives and investment policies may be deemed to be loans;
(6) issue senior securities, except as appropriate to evidence
indebtedness which it is permitted to incur, and except for shares of the
separate classes or series of the Trust, provided that collateral
arrangements with respect to currency-related contracts, futures contracts,
options or other permitted investments, including deposits of initial and
variation margin, are not considered to be the issuance of senior
securities for purposes of this restriction;
(7) with respect to 50% of the total assets of the Fund, purchase the
securities of any issuer if such purchase would cause more than 10% of the
voting securities of such issuer to be held by the Fund;
(8) with respect to 50% of the total assets of the Fund, invest more
than 5% of its total assets in securities of any one issuer, except U.S.
Government securities;
(9) purchase securities if such purchase would cause more than 25% in
the aggregate of the market value of the total assets of the Fund at the
time of such purchase to be invested in the securities of one or more
issuers having their principal business activities in the same industry,
provided that
E-13
<PAGE> 84
there is no limitation in respect to investments in obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities; and
(10) purchase or sell physical commodities or contracts relating to
physical commodities.
In addition,
(11) The Fund may invest more than 25% of its assets in industrial
development or other private activity bonds. For purposes of the Fund's
investment limitation regarding concentration of investments in any one
industry, all such bonds ultimately payable by companies within the same
industry will be considered as if they were issued by issuers in the same
industry.
(12) At least 80% of the Fund's net assets is normally invested in
Pennsylvania municipal securities. When the adviser determines that market
conditions warrant, the Fund may, for temporary defensive purposes, invest
more than 20% of its net assets in taxable securities.
E-14
<PAGE> 85
SCUDDER TAX FREE MONEY FUND
As a matter of fundamental policy, Scudder Tax Free Money Fund may not:
(1) with respect to 75% of the Fund's total assets, purchase more than
10% of the voting securities of any one issuer or invest more than 5% of
the value of the total assets of the Fund in the securities of any one
issuer (except for investments in obligations issued or guaranteed by the
U.S. Government, or its agencies, or instrumentalities cash and cash
equivalents and securities of other investment companies); provided that
the amount of the total assets of the Fund that may be invested in the
securities of any one issuer will, instead, be limited in accordance with
federal law, regulation and regulatory interpretation applicable to money
market funds, as amended from time to time;
(2) borrow money except as a temporary measure for extraordinary or
emergency purposes or except in connection with reverse repurchase
agreements; provided that the Fund maintains asset coverage of 300% for all
borrowings;
(3) purchase or sell real estate (except that the Fund may invest in
(i) securities of companies which deal in real estate or mortgages, and
(ii) securities secured by real estate or interests therein);
(4) purchase or sell physical commodities or contracts relating to
physical commodities;
(5) act as underwriter of securities issued by others except to the
extent that it may be deemed an underwriter in connection with the
disposition of portfolio securities of the Fund;
(6) make loans to other persons, except (a) loans of portfolio
securities, and (b) to the extent that the entry into repurchase agreements
and the purchase of debt securities in accordance with its investment
objectives and investment policies may be deemed to be loans;
(7) issue senior securities, except as appropriate to evidence
indebtedness which it is permitted to incur and except for shares of the
separate classes or series of the Fund, provided that collateral
arrangements with respect to currency-related contracts, futures contracts,
options or other permitted investments, including deposits of initial and
variation margins are not considered to be the issuers of senior securities
for the purposes of this restriction;
(8) purchase securities if such purchase would cause more than 25% in
the aggregate of the market value of the total assets of the Fund at the
time of such purchase to be invested in the securities of one or more
issuers having their principal business activities in the same industry,
provided that there is no limitation in respect to investment in
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalitics, in
E-15
<PAGE> 86
municipal obligations issued by governments or political subdivisions of
governments or in certificates of deposit or bankers acceptances issued by
domestic banks; or
(9) purchase securities which are not tax free obligations if such
purchase would cause more than 20% of its total assets to be invested in
such securities, except that, for temporary defensive purposes, the Fund
may invest more than 20% of its total assets in such securities the
interest income from which may be subject to federal income (i) to meet
temporary liquidity requirements, (ii) during the periods between the
commitment to purchase municipal securities and the settlement date of such
purchases and (iii) during other than normal market conditions.
In addition,
(11) At least 80% of the Fund's assets will normally be invested in
municipal securities.
E-16
<PAGE> 87
SCUDDER TAX FREE TRUST
SCUDDER LIMITED TERM TAX FREE FUND
As a matter of fundamental policy, Scudder Limited Term Tax Free Fund may
not:
(1) with respect to 75% of the value of the total assets of the Fund
invest more than 5% of the value of the total assets of the Fund in the
securities of any one issuer, except U.S. Government securities;
(2) borrow money, except from banks or pursuant to reverse repurchase
agreements as a temporary measure for extraordinary or emergency purposes
(the Fund is required to maintain asset coverage [including borrowings] of
300% for all borrowings) and no purchases of securities for the Fund will
be made while borrowings of the Fund exceed 5% of the Fund's assets;
(3) purchase and sell real estate (though it may invest in securities
of companies which deal in real estate and in other permitted investments
secured by real estate) or physical commodities or physical commodities
contracts;
(4) act as underwriter of the securities issued by others except to
the extent that the purchase of securities in accordance with its
investment objectives and policies directly from the issuer thereof and the
later disposition thereof may be deemed to be underwriting;
(5) issue senior securities, except as appropriate to evidence
indebtedness which the Fund is permitted to incur pursuant to Investment
Restriction (2) and except for shares of the separate series of the Trust,
shares of each of which will be preferred in liquidation and as to
dividends over all other series of the Trust with respect to assets
specifically allocated to that series;
(6) purchase the securities of any issuer if such purchase would cause
more than 10% of the voting securities of such issuer to be held by the
Fund;
(7) purchase from or sell to any of its officers and Trustees, its
investment adviser, its principal underwriter or the officers or directors
of its investment adviser or principal underwriter, portfolio securities of
the Fund; or
(8) purchase (i) pollution control and industrial development bonds or
(ii) securities which are not municipal obligations if the purchase would
cause more than 25% in the aggregate of the market value of the total
assets of the Fund at the time of such purchase to be invested in the
securities of one or more issuers having their principal business
activities in the same industry.
E-17
<PAGE> 88
(9) make loans to other persons, except (a) loans of portfolio
securities, and (b) to the extent the entry into repurchase agreements and
the purchase of debt securities in accordance with its investment
objectives and investment policies may be deemed to be loans.
In addition,
(10) At least 80% of the Fund's total assets will normally be invested
in municipal securities and, under normal market conditions, the Fund
expects to invest 100% of its portfolio securities in municipal securities.
E-18
<PAGE> 89
SCUDDER TAX FREE TRUST, CONTINUED
SCUDDER MEDIUM TERM TAX FREE FUND
As a matter of fundamental policy, Scudder Medium Term Tax Free Fund may
not:
(1) with respect to 75% of the value of the total assets of the Fund
invest more than 5% of the value of the total assets of the Fund in the
securities of any one issuer, except U.S. Government securities;
(2) borrow money, except from banks or pursuant to reverse repurchase
agreements as a temporary measure for extraordinary or emergency purposes
(the Fund is required to maintain asset coverage [including borrowings] of
300% for all borrowings) and no purchases of securities for the Fund will
be made while borrowings of the Fund exceed 5% of the Fund's assets (the
payment of interest on borrowings will reduce the Fund's income);
(3) purchase and sell real estate (though it may invest in securities
of companies which deal in real estate and in other permitted investments
secured by real estate) or physical commodities or physical commodities
contracts;
(4) act as underwriter of the securities issued by others except to
the extent that it may be deemed to be an underwriter in connection with
the purchase of securities in accordance with its investment objectives and
policies directly from the issuer thereof and the later disposition thereof
may be deemed to be underwriting;
(5) make loans to other persons, except to the extent that the
purchase of debt obligations in accordance with its investment objectives
and policies and the entry into repurchase agreements may be deemed to be
loans. The purchase of all of a publicly offered issue of debt obligations
or all or a portion of non-publicly offered debt obligations may be deemed
the making of a loan for this purpose, but, although not a policy which may
be changed only by a vote of the shareholders, management expects that such
securities would seldom exceed 25% of the net assets of the Fund. These
securities are not expected to comprise a major part of the Fund's
investments;
(6) issue senior securities, except as appropriate to evidence
indebtedness which the Fund is permitted to incur pursuant to Investment
Restriction (2) and except for shares of the separate series of the Trust,
shares of each of which will be preferred in liquidation and as to
dividends over all other series of the Trust with respect to assets
specifically allocated to that series;
(7) purchase the securities of any issuer if such purchase would cause
more than 10% of the voting securities of such issuer to be held by the
Fund
E-19
<PAGE> 90
(the Fund has not employed this practice within the last year nor does it
have any current intention of doing so in the foreseeable future);
(8) purchase from or sell to any of its officers and Trustees, its
investment adviser, its principal underwriter or the officers, directors
and partners of its investment adviser or principal underwriter, portfolio
securities of the Fund; or
(9) purchase (i) pollution control and industrial development bonds or
(ii) securities which are not municipal obligations if the purchase would
cause more than 25% in the aggregate of the market value of the total
assets of the Fund at the time of such purchase to be invested in the
securities of one or more issuers having their principal business
activities in the same industry.
E-20
<PAGE> 91
SCUDDER CALIFORNIA
PROXY PROXY
TAX FREE FUND
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 24, 1997
The undersigned hereby appoints [ ], [ ] and [ ] and each of
them, the proxies of the undersigned, with the power of substitution to each of
them, to vote all shares of the Fund which the undersigned is entitled to vote
at the Special Meeting of Shareholders of the Fund to be held at the offices of
Scudder, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 24, 1997 at 9:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund or Scudder, recommend that you vote FOR each item.
1. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. The election of Trustees;
[ ] FOR all nominees listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
Nominees: Henry P. Becton, Jr., Dawn-Marie Driscoll, Peter B. Freeman, George M.
Lovejoy, Jr., Dr. Wesley W. Marple, Jr., Daniel Pierce, Kathryn L. Quirk and
Jean C. Tempel.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(continued on other side)
<PAGE> 92
4. To approve certain amendments to Declaration of Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
5.1 diversification; 5.8 commodities; 5.14 Ohio municipal securities;
5.2 borrowing; 5.9 California municipal securities; 5.15 short-term municipal securities;
5.3 senior securities; 5.10 municipal securities; 5.16 tax diversification;
5.4 concentration; 5.11 Massachusetts municipal securities; 5.17 voting securities;
5.5 loans; 5.12 New York municipal securities; 5.18 affiliated transactions;
5.6 underwriting of securities; 5.13 restricted and illiquid securities; 5.19 disclosed practices.
5.7 investment in real estate;
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
---------------------------------------------------------------------------
6. Ratification of the selection of Coopers & Lybrand L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The proxies are authorized to vote in their discretion on any other business
which may properly come before the meeting and any adjournments thereof.
Please sign exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
------------------------------------------
(Signature of Shareholder)
------------------------------------------
(Signature of joint owner, if any)
Dated , 1997
------------------------------------
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
<PAGE> 93
SCUDDER CALIFORNIA
PROXY PROXY
TAX FREE MONEY FUND
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 24, 1997
The undersigned hereby appoints [ ], [ ] and [ ] and each of
them, the proxies of the undersigned, with the power of substitution to each of
them, to vote all shares of the Fund which the undersigned is entitled to vote
at the Special Meeting of Shareholders of the Fund to be held at the offices of
Scudder, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 24, 1997 at 9:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund or Scudder, recommend that you vote FOR each item.
1. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. The election of Trustees;
[ ] FOR all nominees listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
Nominees: Henry P. Becton, Jr., Dawn-Marie Driscoll, Peter B. Freeman, George M.
Lovejoy, Jr., Dr. Wesley W. Marple, Jr., Daniel Pierce, Kathryn L. Quirk and
Jean C. Tempel.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(continued on other side)
<PAGE> 94
4. To approve certain amendments to the Declaration of Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
5.1 diversification; 5.8 commodities; 5.14 Ohio municipal securities;
5.2 borrowing; 5.9 California municipal securities; 5.15 short-term municipal securities;
5.3 senior securities; 5.10 municipal securities; 5.16 tax diversification;
5.4 concentration; 5.11 Massachusetts municipal 5.17 voting securities;
5.5 loans; securities; 5.18 affiliated transactions;
5.6 underwriting of securities; 5.12 New York municipal securities; 5.19 disclosed practices.
5.7 investment in real estate; 5.13 restricted and illiquid
securities;
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
---------------------------------------------------------------------------
6. Ratification of the selection of Coopers & Lybrand L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The proxies are authorized to vote in their discretion on any other business
which may properly come before the meeting and any adjournments thereof.
Please sign exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
------------------------------------------
(Signature of Shareholder)
------------------------------------------
(Signature of joint owner, if any)
Dated , 1997
------------------------------------
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
<PAGE> 95
SCUDDER HIGH YIELD
PROXY PROXY
TAX FREE FUND
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 24, 1997
The undersigned hereby appoints [ ], [ ] and [ ] and each of
them, the proxies of the undersigned, with the power of substitution to each of
them, to vote all shares of the Fund which the undersigned is entitled to vote
at the Special Meeting of Shareholders of the Fund to be held at the offices of
Scudder, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 24, 1997 at 9:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund or Scudder, recommend that you vote FOR each item.
1. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. The election of Trustees;
[ ] FOR all nominees listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
Nominees: Henry P. Becton, Jr., Dawn-Marie Driscoll, Peter B. Freeman, George M.
Lovejoy, Jr., Dr. Wesley W. Marple, Jr., Daniel Pierce, Kathryn L. Quirk and
Jean C. Tempel.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(continued on other side)
<PAGE> 96
4. To approve certain amendments to the Declaration of Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
5.1 diversification; 5.7 investment in real estate; 5.13 restricted and illiquid
5.2 borrowing; 5.8 commodities; securities;
5.3 senior securities; 5.9 California municipal securities; 5.14 Ohio municipal securities;
5.4 concentration; 5.10 municipal securities; 5.15 short-term municipal securities;
5.5 loans; 5.11 Massachusetts municipal 5.16 tax diversification;
5.6 underwriting of securities; securities; 5.17 voting securities;
5.12 New York municipal securities; 5.18 affiliated transactions;
5.19 disclosed practices.
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
-------------------------------------------------------------------------
6. Ratification of the selection of Coopers & Lybrand L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The proxies are authorized to vote in their discretion on any other business
which may properly come before the meeting and any adjournments thereof.
Please sign exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
------------------------------------------
(Signature of Shareholder)
------------------------------------------
(Signature of joint owner, if any)
Dated , 1997
------------------------------------
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
<PAGE> 97
SCUDDER
PROXY PROXY
MANAGED MUNICIPAL BONDS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 24, 1997
The undersigned hereby appoints [ ], [ ] and [ ] and each of
them, the proxies of the undersigned, with the power of substitution to each of
them, to vote all shares of the Fund which the undersigned is entitled to vote
at the Special Meeting of Shareholders of the Fund to be held at the offices of
Scudder, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 24, 1997 at 9:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund or Scudder, recommend that you vote FOR each item.
1. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. The election of Trustees;
[ ] FOR all nominees listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
Nominees: Henry P. Becton, Jr., Dawn-Marie Driscoll, Peter B. Freeman, George M.
Lovejoy, Jr., Dr. Wesley W. Marple, Jr., Daniel Pierce, Kathryn L. Quirk and
Jean C. Tempel.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(continued on other side)
<PAGE> 98
4. To approve certain amendments to the Declaration of Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
5.1 diversification; 5.8 commodities; 5.14 Ohio municipal securities;
5.2 borrowing; 5.9 California municipal securities; 5.15 short-term municipal securities;
5.3 senior securities; 5.10 municipal securities; 5.16 tax diversification;
5.4 concentration; 5.11 Massachusetts municipal 5.17 voting securities;
5.5 loans; securities; 5.18 affiliated transactions;
5.6 underwriting of securities; 5.12 New York municipal securities; 5.19 disclosed practices.
5.7 investment in real estate; 5.13 restricted and illiquid
securities;
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
-------------------------------------------------------------------------
6. Ratification of the selection of Coopers & Lybrand L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The proxies are authorized to vote in their discretion on any other business
which may properly come before the meeting and any adjournments thereof.
Please sign exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
------------------------------------------
(Signature of Shareholder)
------------------------------------------
(Signature of joint owner, if any)
Dated , 1997
------------------------------------
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
<PAGE> 99
SCUDDER MASSACHUSETTS
PROXY PROXY
LIMITED TERM TAX FREE FUND
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 24, 1997
The undersigned hereby appoints [ ], [ ] and [ ] and each of
them, the proxies of the undersigned, with the power of substitution to each of
them, to vote all shares of the Fund which the undersigned is entitled to vote
at the Special Meeting of Shareholders of the Fund to be held at the offices of
Scudder, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 24, 1997 at 9:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund or Scudder, recommend that you vote FOR each item.
1. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. The election of Trustees;
[ ] FOR all nominees listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
Nominees: Henry P. Becton, Jr., Dawn-Marie Driscoll, Peter B. Freeman, George M.
Lovejoy, Jr., Dr. Wesley W. Marple, Jr., Daniel Pierce, Kathryn L. Quirk and
Jean C. Tempel.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(continued on other side)
<PAGE> 100
4. To approve certain amendments to the Declaration of Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
5.1 diversification; 5.8 commodities; 5.15 short-term municipal securities;
5.2 borrowing; 5.9 California municipal securities; 5.16 tax diversification;
5.3 senior securities; 5.10 municipal securities; 5.17 voting securities;
5.4 concentration; 5.11 Massachusetts municipal 5.18 affiliated transactions;
5.5 loans; securities; 5.19 disclosed practices.
5.6 underwriting of securities; 5.12 New York municipal securities;
5.7 investment in real estate; 5.13 restricted and illiquid
securities;
5.14 Ohio municipal securities;
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
-------------------------------------------------------------------------
6. Ratification of the selection of Coopers & Lybrand L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The proxies are authorized to vote in their discretion on any other business
which may properly come before the meeting and any adjournments thereof.
Please sign exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
------------------------------------------
(Signature of Shareholder)
------------------------------------------
(Signature of joint owner, if any)
Dated , 1997
------------------------------------
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
<PAGE> 101
SCUDDER MASSACHUSETTS
PROXY PROXY
TAX FREE FUND
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 24, 1997
The undersigned hereby appoints [ ], [ ] and [ ] and each of
them, the proxies of the undersigned, with the power of substitution to each of
them, to vote all shares of the Fund which the undersigned is entitled to vote
at the Special Meeting of Shareholders of the Fund to be held at the offices of
Scudder, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 24, 1997 at 9:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund or Scudder, recommend that you vote FOR each item.
1. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. The election of Trustees;
[ ] FOR all nominees listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
Nominees: Henry P. Becton, Jr., Dawn-Marie Driscoll, Peter B. Freeman, George M.
Lovejoy, Jr., Dr. Wesley W. Marple, Jr., Daniel Pierce, Kathryn L. Quirk and
Jean C. Tempel.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(continued on other side)
<PAGE> 102
4. To approve certain amendments to the Declaration of Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
5.1 diversification; 5.8 commodities; 5.14 Ohio municipal securities;
5.2 borrowing; 5.9 California municipal securities; 5.15 short-term municipal securities;
5.3 senior securities; 5.10 municipal securities; 5.16 tax diversification;
5.4 concentration; 5.11 Massachusetts municipal securities; 5.17 voting securities;
5.5 loans; 5.12 New York municipal securities; 5.18 affiliated transactions;
5.6 underwriting of securities; 5.13 restricted and illiquid securities; 5.19 disclosed practices.
5.7 investment in real estate;
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
---------------------------------------------------------------------------
6. Ratification of the selection of Coopers & Lybrand L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The proxies are authorized to vote in their discretion on any other business
which may properly come before the meeting and any adjournments thereof.
Please sign exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
------------------------------------------
(Signature of Shareholder)
------------------------------------------
(Signature of joint owner, if any)
Dated , 1997
------------------------------------
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
<PAGE> 103
SCUDDER NEW YORK
PROXY PROXY
TAX FREE MONEY FUND
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 24, 1997
The undersigned hereby appoints [ ], [ ] and [ ] and each of
them, the proxies of the undersigned, with the power of substitution to each of
them, to vote all shares of the Fund which the undersigned is entitled to vote
at the Special Meeting of Shareholders of the Fund to be held at the offices of
Scudder, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 24, 1997 at 9:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund or Scudder, recommend that you vote FOR each item.
1. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. The election of Trustees;
[ ] FOR all nominees listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
Nominees: Henry P. Becton, Jr., Dawn-Marie Driscoll, Peter B. Freeman, George M.
Lovejoy, Jr., Dr. Wesley W. Marple, Jr., Daniel Pierce, Kathryn L. Quirk and
Jean C. Tempel.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(continued on other side)
<PAGE> 104
4. To approve certain amendments to the Declaration of Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
5.1 diversification; 5.8 commodities; 5.14 Ohio municipal securities;
5.2 borrowing; 5.9 California municipal securities; 5.15 short-term municipal securities;
5.3 senior securities; 5.10 municipal securities; 5.16 tax diversification;
5.4 concentration; 5.11 Massachusetts municipal 5.17 voting securities;
5.5 loans; securities; 5.18 affiliated transactions;
5.6 underwriting of securities; 5.12 New York municipal securities; 5.19 disclosed practices.
5.7 investment in real estate; 5.13 restricted and illiquid
securities;
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
---------------------------------------------------------------------------
6. Ratification of the selection of Coopers & Lybrand L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The proxies are authorized to vote in their discretion on any other business
which may properly come before the meeting and any adjournments thereof.
Please sign exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
------------------------------------------
(Signature of Shareholder)
------------------------------------------
(Signature of joint owner, if any)
Dated , 1997
------------------------------------
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
<PAGE> 105
SCUDDER NEW YORK
PROXY PROXY
TAX FREE FUND
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 24, 1997
The undersigned hereby appoints [ ], [ ] and [ ] and each of
them, the proxies of the undersigned, with the power of substitution to each of
them, to vote all shares of the Fund which the undersigned is entitled to vote
at the Special Meeting of Shareholders of the Fund to be held at the offices of
Scudder, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 24, 1997 at 9:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund or Scudder, recommend that you vote FOR each item.
1. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. The election of Trustees;
[ ] FOR all nominees listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
Nominees: Henry P. Becton, Jr., Dawn-Marie Driscoll, Peter B. Freeman, George M.
Lovejoy, Jr., Dr. Wesley W. Marple, Jr., Daniel Pierce, Kathryn L. Quirk and
Jean C. Tempel.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(continued on other side)
<PAGE> 106
4. To approve certain amendments to the Declaration of Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
5.1 diversification; 5.8 commodities; 5.14 Ohio municipal securities;
5.2 borrowing; 5.9 California municipal securities; 5.15 short-term municipal securities;
5.3 senior securities; 5.10 municipal securities; 5.16 tax diversification;
5.4 concentration; 5.11 Massachusetts municipal 5.17 voting securities;
5.5 loans; securities; 5.18 affiliated transactions;
5.6 underwriting of securities; 5.12 New York municipal securities; 5.19 disclosed practices.
5.7 investment in real estate; 5.13 restricted and illiquid
securities;
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
---------------------------------------------------------------------------
6. Ratification of the selection of Coopers & Lybrand L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The proxies are authorized to vote in their discretion on any other business
which may properly come before the meeting and any adjournments thereof.
Please sign exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
------------------------------------------
(Signature of Shareholder)
------------------------------------------
(Signature of joint owner, if any)
<PAGE> 107
SCUDDER OHIO
PROXY PROXY
TAX FREE FUND
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 24, 1997
The undersigned hereby appoints [ ], [ ] and [ ] and each of
them, the proxies of the undersigned, with the power of substitution to each of
them, to vote all shares of the Fund which the undersigned is entitled to vote
at the Special Meeting of Shareholders of the Fund to be held at the offices of
Scudder, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 24, 1997 at 9:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund or Scudder, recommend that you vote FOR each item.
1. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. The election of Trustees;
[ ] FOR all nominees listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
Nominees: Henry P. Becton, Jr., Dawn-Marie Driscoll, Peter B. Freeman, George M.
Lovejoy, Jr., Dr. Wesley W. Marple, Jr., Daniel Pierce, Kathryn L. Quirk and
Jean C. Tempel.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(continued on other side)
<PAGE> 108
4. To approve certain amendments to the Declaration of Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
5.1 diversification; 5.8 commodities; 5.15 short-term municipal securities;
5.2 borrowing; 5.9 California municipal securities; 5.16 tax diversification;
5.3 senior securities; 5.10 municipal securities; 5.17 voting securities;
5.4 concentration; 5.11 Massachusetts municipal 5.18 affiliated transactions;
5.5 loans; securities; 5.19 disclosed practices.
5.6 underwriting of securities; 5.12 New York municipal securities;
5.7 investment in real estate; 5.13 restricted and illiquid
securities;
5.14 Ohio municipal securities;
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
---------------------------------------------------------------------------
6. Ratification of the selection of Coopers & Lybrand L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The proxies are authorized to vote in their discretion on any other business
which may properly come before the meeting and any adjournments thereof.
Please sign exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
------------------------------------------
(Signature of Shareholder)
------------------------------------------
(Signature of joint owner, if any)
Dated , 1997
------------------------------------
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
<PAGE> 109
SCUDDER PENNSYLVANIA
PROXY PROXY
TAX FREE FUND
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 24, 1997
The undersigned hereby appoints [ ], [ ] and [ ] and each of
them, the proxies of the undersigned, with the power of substitution to each of
them, to vote all shares of the Fund which the undersigned is entitled to vote
at the Special Meeting of Shareholders of the Fund to be held at the offices of
Scudder, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 24, 1997 at 9:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund or Scudder, recommend that you vote FOR each item.
1. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. The election of Trustees;
[ ] FOR all nominees listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
Nominees: Henry P. Becton, Jr., Dawn-Marie Driscoll, Peter B. Freeman, George M.
Lovejoy, Jr., Dr. Wesley W. Marple, Jr., Daniel Pierce, Kathryn L. Quirk and
Jean C. Tempel.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(continued on other side)
<PAGE> 110
4. To approve certain amendments to the Declaration of Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
5.1 diversification; 5.8 commodities; 5.14 Ohio municipal securities;
5.2 borrowing; 5.9 California municipal securities; 5.15 short-term municipal securities;
5.3 senior securities; 5.10 municipal securities; 5.16 tax diversification;
5.4 concentration; 5.11 Massachusetts municipal securities; 5.17 voting securities;
5.5 loans; 5.12 New York municipal securities; 5.18 affiliated transactions;
5.6 underwriting of securities; 5.13 restricted and illiquid securities; 5.19 disclosed practices.
5.7 investment in real estate;
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
---------------------------------------------------------------------------
6. Ratification of the selection of Coopers & Lybrand L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The proxies are authorized to vote in their discretion on any other business
which may properly come before the meeting and any adjournments thereof.
Please sign exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
------------------------------------------
(Signature of Shareholder)
------------------------------------------
(Signature of joint owner, if any)
Dated , 1997
------------------------------------
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
<PAGE> 111
SCUDDER
PROXY PROXY
TAX FREE MONEY FUND
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 24, 1997
The undersigned hereby appoints [ ], [ ] and [ ] and each of
them, the proxies of the undersigned, with the power of substitution to each of
them, to vote all shares of the Fund which the undersigned is entitled to vote
at the Special Meeting of Shareholders of the Fund to be held at the offices of
Scudder, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 24, 1997 at 9:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund or Scudder, recommend that you vote FOR each item.
1. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. The election of Trustees;
[ ] FOR all nominees listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
Nominees: Henry P. Becton, Jr., Dawn-Marie Driscoll, Peter B. Freeman, George M.
Lovejoy, Jr., Dr. Wesley W. Marple, Jr., Daniel Pierce, Kathryn L. Quirk and
Jean C. Tempel.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(continued on other side)
<PAGE> 112
4. To approve certain amendments to the Declaration of Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
5.1 diversification; 5.8 commodities; 5.14 Ohio municipal securities;
5.2 borrowing; 5.9 California municipal securities; 5.15 short-term municipal securities;
5.3 senior securities; 5.10 municipal securities; 5.16 tax diversification;
5.4 concentration; 5.11 Massachusetts municipal securities; 5.17 voting securities;
5.5 loans; 5.12 New York municipal securities; 5.18 affiliated transactions;
5.6 underwriting of securities; 5.13 restricted and illiquid securities; 5.19 disclosed practices.
5.7 investment in real estate;
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
---------------------------------------------------------------------------
6. Ratification of the selection of Coopers & Lybrand L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The proxies are authorized to vote in their discretion on any other business
which may properly come before the meeting and any adjournments thereof.
Please sign exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
------------------------------------------
(Signature of Shareholder)
------------------------------------------
(Signature of joint owner, if any)
Dated , 1997
------------------------------------
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
<PAGE> 113
SCUDDER LIMITED TERM
PROXY PROXY
TAX FREE FUND
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 24, 1997
The undersigned hereby appoints [ ], [ ] and [ ] and each of
them, the proxies of the undersigned, with the power of substitution to each of
them, to vote all shares of the Fund which the undersigned is entitled to vote
at the Special Meeting of Shareholders of the Fund to be held at the offices of
Scudder, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 24, 1997 at 9:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund or Scudder, recommend that you vote FOR each item.
1. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. The election of Trustees;
[ ] FOR all nominees listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
Nominees: Henry P. Becton, Jr., Dawn-Marie Driscoll, Peter B. Freeman, George M.
Lovejoy, Jr., Dr. Wesley W. Marple, Jr., Daniel Pierce, Kathryn L. Quirk and
Jean C. Tempel.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(continued on other side)
<PAGE> 114
4. To approve certain amendments to the Declaration of Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
5.1 diversification; 5.8 commodities; 5.15 short-term municipal securities;
5.2 borrowing; 5.9 California municipal securities; 5.16 tax diversification;
5.3 senior securities; 5.10 municipal securities; 5.17 voting securities;
5.4 concentration; 5.11 Massachusetts municipal 5.18 affiliated transactions;
5.5 loans; securities; 5.19 disclosed practices.
5.6 underwriting of securities; 5.12 New York municipal securities;
5.7 investment in real estate; 5.13 restricted and illiquid
securities;
5.14 Ohio municipal securities;
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
---------------------------------------------------------------------------
6. Ratification of the selection of Coopers & Lybrand L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The proxies are authorized to vote in their discretion on any other business
which may properly come before the meeting and any adjournments thereof.
Please sign exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
------------------------------------------
(Signature of Shareholder)
------------------------------------------
(Signature of joint owner, if any)
Dated , 1997
------------------------------------
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
<PAGE> 115
SCUDDER MEDIUM TERM
PROXY PROXY
TAX FREE FUND
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 24, 1997
The undersigned hereby appoints [ ], [ ] and [ ] and each of
them, the proxies of the undersigned, with the power of substitution to each of
them, to vote all shares of the Fund which the undersigned is entitled to vote
at the Special Meeting of Shareholders of the Fund to be held at the offices of
Scudder, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 24, 1997 at 9:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund or Scudder, recommend that you vote FOR each item.
1. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. The election of Trustees;
[ ] FOR all nominees listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
Nominees: Henry P. Becton, Jr., Dawn-Marie Driscoll, Peter B. Freeman, George M.
Lovejoy, Jr., Dr. Wesley W. Marple, Jr., Daniel Pierce, Kathryn L. Quirk and
Jean C. Tempel.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
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3. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(continued on other side)
<PAGE> 116
4. To approve certain amendments to the Declaration of Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
5.1 diversification; 5.8 commodities; 5.14 Ohio municipal securities;
5.2 borrowing; 5.9 California municipal securities; 5.15 short-term municipal securities;
5.3 senior securities; 5.10 municipal securities; 5.16 tax diversification;
5.4 concentration; 5.11 Massachusetts municipal 5.17 voting securities;
5.5 loans; securities; 5.18 affiliated transactions;
5.6 underwriting of securities; 5.12 New York municipal securities; 5.19 disclosed practices.
5.7 investment in real estate; 5.13 restricted and illiquid
securities;
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
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6. Ratification of the selection of Coopers & Lybrand L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The proxies are authorized to vote in their discretion on any other business
which may properly come before the meeting and any adjournments thereof.
Please sign exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
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(Signature of Shareholder)
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(Signature of joint owner, if any)
Dated , 1997
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PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
