SCUDDER
SCUDDER TAX FREE MONEY FUND
Two International Place
Boston, MA 02110
(800) 225-5163
October 28, 1996
To the Shareholders:
A Special Meeting of Shareholders of Scudder Tax Free Money Fund (the
"Fund"), is to be held at 10:15 a.m., eastern time, on Tuesday, December 10,
1996, at the offices of Scudder, Stevens & Clark, Inc., 13th Floor, Two
International Place, Boston, MA 02110. Shareholders who are unable to attend
this meeting are strongly encouraged to vote by proxy, which is customary in
corporate meetings of this kind. A Proxy Statement regarding the meeting, a
proxy card(s) for your vote at the meeting and an envelope--postage prepaid--in
which to return your proxy card(s) are enclosed.
At the Special Meeting the shareholders will elect seven Trustees of the
Fund, consider the ratification of the selection of Coopers & Lybrand L.L.P. as
the Fund's independent accountants, and approve or disapprove of the
elimination, addition or amendment of certain fundamental investment policies.
In addition, the shareholders present will hear a report on the Fund. There will
be an opportunity to discuss matters of interest to you as a shareholder.
Your Fund's Trustees recommend that you vote in favor of each of the
foregoing matters.
Respectfully,
/s/David S. Lee
David S. Lee
President
SHAREHOLDERS ARE URGED TO SIGN THE PROXY CARD(S) AND MAIL IT IN THE ENCLOSED
POSTAGE PREPAID ENVELOPE SO AS TO ENSURE A QUORUM AT THE MEETING. THIS IS
IMPORTANT WHETHER YOU OWN FEW OR MANY SHARES.
<PAGE>
SCUDDER TAX FREE MONEY FUND
Notice of Special Meeting of Shareholders
To the Shareholders of
Scudder Tax Free Money Fund:
Please take notice that a Special Meeting of Shareholders of Scudder Tax Free
Money Fund (the "Fund"), has been called to be held at the offices of Scudder,
Stevens & Clark, Inc., 13th Floor, Two International Place, Boston, MA 02110 on
Tuesday, December 10, 1996, at 10:15 a.m., eastern time, for the following
purposes:
(1) To elect seven Trustees to hold office until their respective
successors shall have been duly elected and qualified;
(2) To ratify or reject the action taken by the Board of Trustees in
selecting Coopers & Lybrand L.L.P. as independent accountants for the fiscal
year ending December 31, 1997;
(3) To approve or disapprove of the elimination, addition or amendment of
certain fundamental investment policies.
The appointed proxies will vote on any other business as may properly come
before the meeting or any adjournments thereof.
Holders of record of shares of beneficial interest of the Fund at the close of
business on October 14, 1996 are entitled to vote at the meeting and at any
adjournments thereof.
By Order of the Board of Trustees,
October 28, 1996 THOMAS F. McDonough, Secretary
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
Fund the necessity and expense of further solicitations to ensure a quorum at
the Special Meeting. If you can attend the meeting and wish to vote your shares
in person at that time, you will be able to do so.
<PAGE>
SCUDDER TAX FREE MONEY FUND
TWO INTERNATIONAL PLACE
BOSTON, MA 02110
PROXY STATEMENT
General
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees of Scudder Tax Free Money Fund (the "Fund") for
use at the Special Meeting of Shareholders, to be held at the offices of
Scudder, Stevens & Clark, Inc. ("Scudder"), 13th Floor, Two International Place,
Boston, MA 02110, on Tuesday, December 10, 1996 at 10:15 a.m., eastern time, and
at any adjournments thereof (collectively, the "Meeting").
This Proxy Statement, the Notice of Special Meeting and the proxy card(s)
are being mailed to shareholders on or about October 28, 1996, or as soon as
practicable thereafter. All properly executed proxies received in time for the
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. Any shareholder
giving a proxy has the power to revoke it by mail (addressed to the Secretary of
the Fund at the principal executive office of the Fund, Two International Place,
Boston, MA 02110) or in person at the Meeting, by executing a superseding proxy
or by submitting a notice of revocation to the Fund.
The presence at any shareholders' meeting, in person or by proxy, of
shareholders entitled to cast a majority of the votes entitled to be cast shall
be necessary and sufficient to constitute a quorum for the transaction of
business. For purposes of determining the presence of a quorum for transacting
business at the 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 by the Fund 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.
Abstentions and broker non-votes will not be counted in favor of, but will
have no other effect on, the vote for proposals (1) and (2) which require the
affirmative vote of a plurality and majority, respectively, of shares voting at
the Meeting. Abstentions and broker non-votes will have the effect of a "no"
vote for proposal (3), which requires the affirmative vote of a specified
percentage of the outstanding shares of the Fund or of such shares present at
the Meeting.
Holders of record of shares of the Fund at the close of business on October
14, 1996 (the "Record Date"), will be entitled to one vote per share on all
business of the Meeting and any adjournments. There were 221,743,647 shares of
the Fund outstanding on the Record Date.
The Fund provides periodic reports to all 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
the Fund, without charge, by calling (800) 225-2470 or writing the Fund at P.O.
Box 2291, Boston, Massachusetts 02107-2291.
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<PAGE>
(1) ELECTION OF TRUSTEES
The persons named on the accompanying proxy card(s) intend, in the absence
of contrary instructions, to vote all proxies in favor of the election of the
nominees listed below as Trustees of the Fund to serve until their successors
are duly elected and qualified. The nominees have consented to stand for
election and to serve if elected. If the nominees should be unable to serve, an
event not now anticipated, the proxies will be voted for such persons, if any,
as shall be designated by the Board of Trustees to replace such nominee. The
Trustees recommend that shareholders vote in favor of the election of the
nominees listed below.
Information Concerning Nominees
The following table sets forth certain information concerning the nominees
as Trustees of the Fund. With the exception of Ms. Quirk, each of the nominees
is now a Trustee of the Fund. Unless otherwise noted, the nominees have engaged
in the principal occupation or employment listed in the following table for more
than five years, but not necessarily in the same capacity.
<TABLE>
<CAPTION>
Present Office with the
Fund, if any; Principal Shares
Occupation or Employment Year First Benefically
and Directorships in Publicly Became a Owned on Percent
Name (Age) Held Companies Trustee August 31, 1996(1) of Class
------------------------ ----------------------------- ---------- ------------------ --------
<S> <C> <C> <C> <C>
David S. Lee (62)*# President; Managing Director of Scudder, 1983 774,525(2) 0.34%
Stevens & Clark, Inc.; Trustee Emeritus,
New England Medical Center. Mr. Lee
serves on the boards of an additional 30
funds managed by Scudder.
E. Michael Brown Managing Director of Scudder, Stevens & 1995 0 --
(56)* Clark, Inc. Mr. Brown serves on the
boards of an additional two funds
managed by Scudder.
Dawn-Marie Driscoll Executive Fellow, Center for Business 1988 14,644(3) Less than
(49) Ethics, Bentley College; President, 1/4 of 1%
Driscoll Associates; Director of several
private companies. Prior to 1990, law
partner (Palmer & Dodge); Vice President
of Corporate Affairs and General Counsel,
Filene's. Ms. Driscoll serves on the
boards of an additional 15 funds managed
by Scudder.
2
<PAGE>
Present Office with the
Fund, if any; Principal Shares
Occupation or Employment Year First Benefically
and Directorships in Publicly Became a Owned on Percent
Name (Age) Held Companies Trustee August 31, 1996(1) of Class
------------------------ ----------------------------- ---------- ------------------ --------
Peter B. Freeman (64)# Corporate Director and Trustee; Trustee, 1979 1,000 Less than
Eastern Utilities Associates (electric 1/4 of 1%
utility holding company); Director,
AMICA Life Insurance Co., AMICA
Insurance Co. and Providence Journal
Company (multi-media company); former
President, Fields Point Management Co.
and Goelet Estate Co. (private
investment management companies);
Chairman, Rhode Island School of Design.
Mr. Freeman serves on the boards of an
additional 26 funds managed by Scudder.
George M. Lovejoy, Jr. President and Director, Fifty Associates 1979 4,653 Less than
(66)# (real estate investment trust); Director 1/4 of 1%
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 12 funds managed by Scudder.
Kathryn L. Quirk (43)* Managing Director of Scudder, Stevens & -- 0 --
Clark, Inc. Ms. Quirk serves on the
board of one additional Fund managed by
Scudder.
Jean C. Tempel (53) General Partner, TL Ventures, (a venture 1994 101,189 Less than
capital fund); Director, Sonesta 1/4 of 1%
International Hotels, Inc.; Director,
Centocor, Inc. (diagnostic and
pharmaceutical biotechnology co.);
Director, Cambridge Technology Partners,
Inc. (a systems integration on
client/server platform co.) and several
private companies. Prior to 1993,
President of Safeguard Scientifics,
Inc.; Executive Vice President and Chief
Operating Officer of The Boston Company.
Ms. Tempel serves on the boards of an
additional 15 funds managed by Scudder.
3
<PAGE>
All Trustees and Officers as a group 899,686(4) Less than
1%
</TABLE>
* Persons considered by the Fund and its counsel to be persons who are
"interested persons" (which as used in this Proxy Statement is as defined
in the Investment Company Act of 1940, as amended (the "1940 Act")) of the
Fund or of the Fund's investment adviser, Scudder, Stevens & Clark, Inc.
(the "Adviser") Messrs. Lee and Brown and Ms. Quirk are deemed to be
"interested persons" because of their affiliation with the Adviser, or
because they are Officers of the Fund or both.
# Messrs. Lee, Freeman and Lovejoy are members of the Executive Committee of
the Fund.
(1) The information as to beneficial ownership is based on statements furnished
to the Fund by the nominees and Trustees. Unless otherwise noted,
beneficial ownership is based on sole voting and investment power.
(2) Mr. Lee's shares are held in a fiduciary capacity as to which he shares
investment and voting power.
(3) Ms. Driscoll's total includes 12,414 shares owned by members of her family
to which she shares investment and voting power.
(4) Of which 111,747 shares are held with sole investment and voting, and
786,939 shares are held with shared investment and voting power.
Except as noted above, to the best of the Fund's knowledge, as of August
31, 1996, no other person owned beneficially more than 5% of the Fund's
outstanding voting securities.
Responsibilities of the Board--Board and Committee Meetings
The Board of Trustees is responsible for the general oversight of the
Fund's business. A majority of the Board's members are not affiliated with the
Adviser. These "Independent Trustees" have primary responsibility for assuring
that the Fund is managed in the best interests of its shareholders.
The Board of Trustees meets at least quarterly to review the investment
performance of the Fund and other operational matters, including policies and
procedures designated to assure compliance with various regulatory requirements.
At least annually, the Independent Trustees review the fees paid to the Adviser
and its affiliates for investment advisory services and other administrative and
shareholder services. In this regard, they evaluate, among other things, the
Fund's investment performance, the quality and efficiency of the various other
services provided, costs incurred by the Adviser and its affiliates, and
comparative information regarding fees and expenses of competitive funds. They
are assisted in this process by the Fund's independent public accountants and by
independent legal counsel selected by the Independent Trustees.
All of the Independent Trustees serve on the Committee on Independent
Trustees, which nominates Independent Trustees and considers other related
matters, and the Audit Committee, which selects the Fund's independent public
accountants and reviews accounting policies and controls. In addition,
Independent 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 Independent Trustees met 16 times during 1995, including Board and
Committee meetings and meetings to review the Fund's contractual arrangements as
described above. As a group, the Independent Trustees had a 100% attendance
record for all such meetings.
4
<PAGE>
Executive Officers
In addition to Mr. Lee, a Trustee who is also an Officer of the Fund, the
following persons are Executive Officers of the Fund:
<TABLE>
<CAPTION>
Present Office with the Fund; Year First
Name (Age) Principal Occupation or Employment(1) Became an Officer (2)
---------- ----------------------------------- -----------------
<S> <C> <C>
Donald C. Carleton (62) Vice President; Managing Director of 1987
Scudder, Stevens & Clark, Inc.
K. Sue Cote (34) Vice President; Principal of Scudder, 1995
Stevens & Clark, Inc.
Jerard K. Hartman (63) Vice President; Managing Director of 1990
Scudder, Stevens & Clark, Inc.
Thomas W. Joseph (57) Vice President; Principal of Scudder, 1986
Stevens & Clark, Inc.
Thomas F. McDonough (49) Vice President and Secretary; Principal of 1984
Scudder, Stevens & Clark, Inc.
Pamela A. McGrath (42) Vice President and Treasurer; Managing 1990
Director of Scudder, Stevens & Clark, Inc.
Edward J. O'Connell (51) Vice President and Assistant Treasurer; 1993
Principal of Scudder, Stevens & Clark, Inc.
Coleen Downs Dinneen (35) Assistant Secretary; Vice President of 1992
Scudder, Stevens & Clark, Inc.
</TABLE>
(1) Unless otherwise stated, all Executive Officers have been associated with
Scudder for more than five years, although not necessarily in the same
capacity.
(2) The President, Treasurer and Secretary each hold office until his or her
successor has been duly elected and qualified, and all other officers hold
office in accordance with the By-Laws of the Fund.
Compensation of Officers and Trustees
The Independent Trustees receive the following compensation from the Fund:
an annual trustee's fee of $4,000; a fee of $300 for attendance at each Board
meeting, audit committee meeting, or other meeting held for the purposes of
considering arrangements between the Fund and the Adviser or any Affiliate of
the Adviser; $100 for any other committee meeting (although in some cases the
Independent Trustees have waived committee meeting fees); and reimbursement of
expenses incurred for travel to and from Board Meetings. No additional
compensation is paid to any Independent Trustee for travel time to meetings,
attendance at directors' educational seminars or conferences, service on
industry or association committees, participation as speakers at directors'
conferences, service on special trustee task forces or subcommittees or service
as lead or liaison trustee. Independent Trustees do not receive any employee
benefits such as pension, retirement or health insurance.
The Independent Trustees also serve in the same capacity for other funds
managed by the Adviser. These funds differ broadly in type and complexity and in
some cases have substantially different Trustee fee schedules. The following
table shows the aggregate compensation received by each Independent Trustee
during 1995 from the Fund and from all of Scudder Funds as a group.
5
<PAGE>
Fund All Scudder Funds
---- -----------------
Dawn-Marie Driscoll $8,600 $92,800 (16 funds)
Peter B. Freeman $8,600 $126,750* (26 funds*)
George M. Lovejoy, Jr. $8,600 $112,900+++ (12 funds+++)
Jean C. Tempel $8,600 $92,200+++ (15 funds+++)
* This does not include membership on the Board of Institutional Equity
Portfolio which commenced operations on April 3, 1996.
+++ This does not include membership on the Board of Scudder High Yield Bond
Fund which commenced operations on June 28, 1996.
Members of the Board of Trustees who are employees of Scudder or its
affiliates receive no direct compensation from the Fund, although they are
compensated as employees of Scudder, which in turn receives an investment
advisory fee from the Fund.
Required Vote
Election of the listed nominees for Trustee requires the affirmative vote
of a plurality of the votes cast at the Meeting in person or by proxy. The
Trustees recommend that shareholders vote in favor of the nominees.
(2) RATIFICATION OR REJECTION OF THE SELECTION OF
INDEPENDENT ACCOUNTANTS
At a meeting held on August 13, 1996, the Board of Trustees of the Fund,
including a majority of the Independent Trustees, selected Coopers & Lybrand
L.L.P. to act as independent accountants for the Fund for the fiscal year ending
December 31, 1997. Coopers & Lybrand L.L.P. are independent accountants and have
advised the Fund that they have no direct financial interest or material
indirect financial interest in the Fund. One or more representatives of Coopers
& Lybrand L.L.P. are expected to be present at the 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.
The Fund's financial statements for the fiscal year ended December 31, 1995
were audited by Coopers & Lybrand L.L.P. The Fund's financial statements for the
fiscal year ended December 31, 1996 will be audited by Coopers & Lybrand L.L.P.
In connection with its audit services, Coopers & Lybrand L.L.P. reviews the
financial statements included in the Fund's annual and semiannual reports.
Required Vote
Ratification of the selection of independent accountants requires the
affirmative vote of a majority of the votes cast at the Meeting in person or by
proxy. The Trustees recommend that shareholders ratify the selection of Coopers
& Lybrand L.L.P. as independent accountants.
6
<PAGE>
(3) APPROVAL OR DISAPPROVAL OF THE ELIMINATION, ADDITION
OR AMENDMENT OF CERTAIN FUNDAMENTAL
INVESTMENT POLICIES
As described in the following proposals, the Trustees are recommending that
shareholders approve a number of changes to the Fund's fundamental investment
restrictions, including the elimination of certain restrictions. Generally, the
purpose of these proposed changes is to increase the Fund's investment
flexibility and to bring the Fund's policies more in line with those of many
other Scudder funds.
These changes largely reflect the elimination of certain investment
restrictions which were required at one time by various state securities
authorities but which are no longer required under current regulations.
The adoption of any of these proposals is not contingent on the adoption of
any other proposal.
Required Vote
Approval of each of these proposals requires the vote of a majority of the
outstanding voting securities of the Fund, which as used in this proposal means,
(1) the holders of more than 50% of the outstanding shares of the Fund or (2)
the holders of 67% or more of the shares present if more than 50% of the shares
are present at a meeting in person or by proxy, whichever is less. The Trustees
have considered various factors and believe that these proposals are in the best
interests of the Fund's shareholders. If a proposal is not approved, the Fund's
present fundamental investment restriction will remain in effect and a
shareholder vote would be required before the Fund could engage in activities
prohibited by a fundamental restriction. The Trustees recommend that
shareholders vote in favor of the elimination or amendment of certain of the
Fund's investment restrictions as described in Proposals A-F below.
A. Approval Or Disapproval Of Amendments To The Fund's Investment Restriction
With Respect To Investments In Real Estate
The Trustees are recommending that the Fund's fundamental investment
restriction relating to investments in real estate be revised to grant the Fund
the maximum flexibility in light of current regulatory requirements. The
proposed policies are consistent with the equivalent policies of other funds
managed by Scudder. The current restriction states as follows:
"The Fund may not. . .
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); the Fund may not
purchase or sell physical commodities or contracts relating to physical
commodities;"
The proposed amendments would provide maximum flexibility to invest in real
estate related securities.
The proposed amended fundamental investment restriction regarding real
estate would read as follows:
"The Fund may not. . .
7
<PAGE>
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)."
To the extent the Fund invests in real estate-related securities, it will
be subject to the risks associated with the real estate market. These risks may
include declines in the value of real estate, changes in general or local
economic conditions, overbuilding, difficulty in completing construction,
increased competition, changes in zoning laws, increases in property taxes and
operating expenses, and variations in rental income. Generally, increases in
interest rates will increase the costs of obtaining financing, which may result
in a decrease in the value of such investments. Finally, management of real
estate, even on a temporary or emergency basis, requires different skills and
experience than managing a pool of securities.
In addition, the Fund will adopt a new fundamental restriction to
separately address the treatment of commodities. The new fundamental restriction
regarding commodities would read as follows:
"The Fund may not. . .
purchase or sell physical commodities or contracts relating to physical
commodities."
The adoption of the above restriction is made solely to separate the two
restrictions.
B. Approval Or Disapproval Of An Amendment To The Fund's Investment Restriction
Regarding The Issuance Of Senior Securities
The Trustees are recommending that the fundamental investment restriction
relating to the issuance of senior securities be clarified and rephrased
consistent with the equivalent policies of other funds managed by Scudder. The
proposed amendment would replace the current restriction, which states that:
"The Fund may not. . .
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;"
The Trustees propose that this policy be amended to read as follows:
"The Fund may not. . .
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."
C. Approval Or Disapproval Of Amendments To The Fund's Investment Restriction
With Respect To Concentration Of Its Assets
The Trustees are recommending that the Fund's fundamental investment
restriction with respect to concentration of its assets be revised to make it
clear that the Fund may invest more than 25% of its total assets in the
securities of agencies or instrumentalities of the U.S. government. The current
restriction states as follows:
8
<PAGE>
"The Fund may not. . .
purchase (a) private activity bonds or (b) securities which are neither
municipal obligations or 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 purposes of this 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
primarily related to financing the activities of their parents);"
The proposed amended fundamental restriction, which makes certain other
clarifying changes, would read as follows:
"The Fund may not. . .
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,
in municipal obligations issued by governments or political subdivisions of
governments, or in certificates of deposit or bankers' acceptances issued
by domestic banks; or"
Scudder recommended this amendment to the Trustees to make it clear that
the Fund may invest in the securities of the agencies or instrumentalities of
the U.S. government without regard to the 25% limit. Scudder believes that the
current restriction does not prevent the Fund from investing in such securities
without limit, because the Securities and Exchange Commission (the "SEC") takes
the position that government issuers, including agencies and instrumentalities
of a governmental issuer, are not members of any industry. However, the proposed
amendment is being made to avoid any ambiguity in the future, as well as to make
that provision of the restriction consistent with the equivalent policies of
other funds managed by Scudder. Because private activity bonds are considered
representative of the industry in which the obligor is engaged, no explicit
reference to private activity bonds is necessary. The omission in the amended
policy of any reference to private activity bonds does not imply a change to the
Fund's fundamental policy limiting to 25% its investment in issuers engaged in
the same industry.
D. Approval Or Disapproval Of The Elimination Of The Fund's Investment
Restriction Concerning Securities Eligible For Purchase
The Trustees are recommending that the Fund's fundamental restriction
concerning securities eligible for purchase be eliminated because the 1940 Act
requires that a mutual fund enumerate in its prospectus and Statement of
Additional Information types of securities in which the Fund will invest. There
is no Federal or State requirement that such a practice be designated a
Fundamental Policy, and therefore, this express investment restriction ("The
Fund may not purchase securities other than those described in the Fund's
prospectus or statement of additional information") is unnecessary.
9
<PAGE>
E. Approval Or Disapproval of Amendments To The Fund's Investment Restriction
With Respect To Municipal Securities
The Trustees are recommending that the Fund's fundamental investment
restriction with respect to municipal securities be revised to reflect the fact
that the Fund has achieved normal operating conditions. The current restriction
states as follows:
"The Fund may not...
purchase securities which are not municipal obligations if such purchase
would cause more than 20% of the Fund's total assets to be invested in such
securities, except that the Fund may invest more than 20% of its total
assets in such securities prior to the time normal operating conditions
have been achieved and during other than normal market conditions."
The proposed amended fundamental restriction, which makes certain other
clarifying changes, would read as follows:
"The Fund may not...
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, (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."
F. Approval or Disapproval Of Amendments To The Fund's Investment Restriction
With Respect To Diversification:
The Trustees are recommending that the Fund's fundamental investment
restriction with respect to diversification be modified to give the Fund greater
flexibility to obtain commitments from third parties to assure that particular
portfolio securities satisfy the Fund's credit, maturity and liquidity
standards.
The SEC has proposed extensive changes to the principal rule governing the
operations of money market funds - Rule 2a-7 ("Rule") under the 1940 Act. The
Rule is intended to help assure that money market funds can maintain a stable
net asset value. It contains extensive restrictions in addition to those
concerning diversification, including quality and maturity standards.
The current restrictions state as follows:
"The Fund may not...
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;"
10
<PAGE>
The proposed amended fundamental restriction, would read as follows for the
Fund:
"The Fund may not...
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."
The Trustees have determined that it would be in the best interest of the
Fund to operate in accordance with the Rule, as amended. The Trustees have also
determined that the diversification standards of the Rule, rather than the
current restrictions stated above, should govern the activities of the Fund. The
modification to the diversification restriction will give the Fund greater
flexibility to obtain commitments from third parties to assure that particular
portfolio securities satisfy the Fund's credit, maturity and liquidity
standards.
Scudder believes that the protections of the Rule, including its
diversification and other requirements can fairly be characterized as stricter
overall than what is otherwise required by the 1940 Act. The Rule is designed
specifically for money market funds and imposes what is considered to be strict
but appropriate regulation of these funds. The Rule should govern the operation
of such funds to the extent that the specific Rule might conflict with the
general diversification requirements applicable to all mutual funds regardless
of investment objectives and policies. Therefore a change in the Fund's
diversification restriction to be consistent with the Rule will provide the Fund
with desirable flexibility (within the parameters of a very restrictive Rule),
will permit the Fund to operate more effectively, and will be consistent with
the investment objectives of the Fund and with the best interests of the Fund
and its shareholders.
ADDITIONAL INFORMATION
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's subsidiary, Scudder Investor Services, Inc., Two International Place,
Boston, MA 02110, acts as the principal underwriter for shares of registered
open-end investment companies. Scudder provides investment counsel for many
individuals and institutions, including insurance companies, endowments,
industrial corporations and financial and banking organizations.
11
<PAGE>
Scudder is a Delaware corporation. Daniel Pierce* is the Chairman of the
Board of Scudder. Edmond D. Villani# is the President and Chief Executive
Officer of Scudder. Stephen R. Beckwith#, E. Michael Brown*, Lynn S. Birdsong#,
Nicholas Bratt#, Mark S. Casady*, Linda C. Coughlin*, Margaret D. Hadzima*,
Jerard K. Hartman#, Richard A. Holt@, Dudley H. Ladd*, John T. Packard+++,
Kathryn L. Quirk#, Cornelia M. Small# and Stephen Wohler* are the other members
of the Board of Directors of Scudder. 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 (the "Representatives") of the
beneficial owners of such securities, pursuant to a Security Holders' Agreement
among Scudder, the beneficial owners of securities of Scudder and the
Representatives. Pursuant to the Security Holders' Agreement, the
Representatives have the right to reallocate shares among the beneficial owners
from time to time. Such reallocation 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.
Brokerage Commissions on Portfolio Transactions
To the maximum extent feasible Scudder places orders for portfolio
transactions through Scudder Investor Services, Inc. (the "Distributor") (a
corporation registered as a broker/dealer and a subsidiary of Scudder), which in
turn places orders on behalf of the Fund with issuers, underwriters or other
brokers and dealers. The Distributor receives no commissions, fees or other
remuneration from the Fund for this service. Allocation of portfolio
transactions is supervised by Scudder.
During the fiscal year ended December 31, 1995, the Fund paid no brokerage
commissions.
Other Matters
The Board of Trustees does not know of any matters to be brought before the
Meeting other than those mentioned in this Proxy Statement. The appointed
proxies will vote on any other business that comes before the Meeting or any
adjournments thereof in accordance with their best judgment.
Please complete and sign the enclosed proxy card(s) and return it in the
envelope provided so that the Meeting may be held and action may be taken, with
the greatest possible number of shares participating, on the matters described
in this Proxy Statement. This will not preclude your voting in person if you
attend the Meeting.
Miscellaneous
Proxies will be solicited by mail and may be solicited in person or by
telephone or telegraph by Officers of the Fund, personnel of Scudder or an agent
of the Fund for compensation. The expenses
- ---------------------------
* 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
12
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connected with the solicitation of proxies and with any further proxies which
may be solicited will be borne by the Fund. The Fund will reimburse banks,
brokers and other persons holding the Fund's shares registered in their names or
in the names of their nominees, for their expenses incurred in sending proxy
material to and obtaining proxies from the beneficial owners of such shares.
In the event that sufficient votes in favor of the proposals set forth in
the Notice of Special Meeting are not received by December 10, 1996, the persons
named as appointed proxies on the enclosed proxy card(s) may propose one or more
adjournments of the Meeting to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of the holders of a majority of
the shares present in person or by proxy at the session of the meeting to be
adjourned. The persons named as appointed proxies on the enclosed proxy card(s)
will vote in favor of such adjournment those proxies which they are entitled to
vote in favor of the proposal for which further solicitation of proxies is to be
made. They will vote against any such adjournment those proxies required to be
voted against such proposal. The costs of any such additional solicitation and
of any adjourned session will be borne by the Fund.
Shareholder Proposals
Shareholders wishing to submit proposals for inclusion in a proxy statement
for any subsequent shareholders' meeting should send their written proposals to
Thomas F. McDonough, Secretary of the Fund, c/o Scudder, Stevens & Clark, Inc.,
Two International Place, Boston, MA, 02110 within a reasonable time before the
solicitation of proxies for such shareholders' meeting. The timely submission of
a proposal does not guarantee its inclusion.
Two International Place By Order of the Board of Trustees
Boston, MA 02110 THOMAS F. MCDONOUGH
October 28, 1996 Secretary
13
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<TABLE>
PROXY SCUDDER TAX FREE MONEY FUND PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
Special Meeting of Stockholders -- December 10, 1996
The undersigned hereby appoints David S. Lee, E. Michael Brown and George M.
Lovejoy, Jr. and each of them, the proxies of the undersigned, with the power of
substitution to each of them, to vote all shares of Scudder Tax Free Money Fund,
which the undersigned is entitled to vote at the Special Meeting of Stockholders
of Scudder Tax Free Money Fund to be held at the offices of Scudder, Stevens &
Clark, Inc., 13th Floor, Two International Place, Boston, MA 02110, on Tuesday,
December 10, 1996 at 10:15 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.
1. The election of Trustees;
<S> <C>
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary below) / / to vote for all nominees listed below / /
Nominees: David S. Lee, E. Michael Brown, Dawn-Marie Driscoll, Peter B. Freeman, George M.
Lovejoy, Jr., 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.)
----------------------------------
(continued on other side)
<PAGE>
2. Ratification of the selection of Coopers & Lybrand L.L.P. as the Fund's FOR / / AGAINST / / ABSTAIN / /
independent accountants;
3. Approval of the elimination or amendment of certain fundamental investment FOR / / WITH- / / FOR ALl / /
policies. HOLD EXCEPT
If you do not wish your shares voted "FOR" a particular Amendment, mark the "FOR A B C D E F
ALL EXCEPT" box and strike a line through that Amendment's letter. Your shares
shall be voted for the remaining Amendments.
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 Stockholder)
-----------------------------------------------
(Signature of joint owner, if any)
Date , 1996
--------------------------
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE
NO POSTAGE IS REQUIRED
</TABLE>
