<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 FUND, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Articles of Incorporation)
- --------------------------------------------------------------------------------
(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 FUND, INC.
IMPORTANT NEWS
FOR SCUDDER FUND STOCKHOLDERS
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 stockholder 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 stockholders
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 Directors. 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 result in
such a change of control and requires shareholder approval of a new
investment management agreement with your Fund.
Institutional
<PAGE> 3
Q. HOW WILL THE SCUDDER-ZURICH ALLIANCE AFFECT ME AS A FUND STOCKHOLDER?
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 stockholders 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 Directors will take such
action as it deems to be in the best interests of your Fund and its
stockholders.
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 Directors discretionary authority to
convert the Fund into a "master/feeder" structure, for the amendment of the
Articles of Incorporation 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 shown 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.
Institutional
<PAGE> 6
345 Park Avenue
New York, New York 10154
SCUDDER FUND, INC.
September 2, 1997
Dear Stockholders:
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 Directors 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.
Stockholders 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.
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.
<PAGE> 7
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,
/s/ Daniel Pierce
Daniel Pierce
President
STOCKHOLDERS 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 STOCKHOLDINGS.
<PAGE> 8
SCUDDER FUND, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
Please take notice that a Special Meeting of Stockholders (the "Special
Meeting") of the Scudder Corporation listed above (the "Corporation"), the
series of which are Scudder Money Market Series, Scudder Government Money Market
Series and Scudder Tax Free Money Market Series (each a "Fund" and,
collectively, the "Funds") will be held at the offices of Scudder, Stevens &
Clark, Inc., 25th Floor, 345 Park Avenue (at 51st Street), New York, New York
10154, on October 23, 1997, at 8:30 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 the Corporation, to elect Directors;
(3) For the Corporation, 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 Fund, to approve or disapprove the revision of certain
fundamental investment policies; and
(5) To ratify or reject the selection of Price Waterhouse LLP 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 meeting or any adjournments thereof.
Holders of record of shares of common stock of each Fund at the close of
business on August 15, 1997 are entitled to vote at the 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 the Corporation or, where applicable, one or more Funds,
the persons named as proxies may propose one or more adjournments of the Special
Meetings in accordance with applicable law, to permit further solicitation of
proxies. Any such adjournment as to a matter requiring, respectively, a
Corporation-wide or a Fund by Fund vote will require the affirmative vote of the
holders of a majority of the Corporation's (for a Corporation-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
<PAGE> 9
in favor and will vote against any such adjournment those proxies to be voted
against that proposal.
By order of the Board of Directors,
/s/ Thomas F. McDonough
--------------------------------
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
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> 10
SCUDDER FUND, INC.
345 PARK AVENUE
NEW YORK, NEW YORK 10154
JOINT PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of the Scudder Corporation
listed above (the "Corporation"), the series of which are Scudder Money Market
Series, Scudder Government Money Market Series and Scudder Tax Free Money Market
Series (each a "Fund" and, collectively, the "Funds") for use at the Special
Meeting of Stockholders of the Corporation, to be held at the offices of
Scudder, Stevens & Clark, Inc. ("Scudder") 25th Floor, 345 Park Avenue (at 51st
Street), New York, New York 10154, on October 23, 1997 at 8:30 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 stockholders on or about September 2, 1997 or as soon as
practicable thereafter. Any stockholder 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., 345 Park Avenue, New York, New York
10154), 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.
The presence at any stockholders' meeting, in person or by proxy, of the
holders of one-third of the shares entitled to be cast of the Corporation (for a
Corporation-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, Corporation-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 Corporation-wide or a Fund by Fund vote will require
1
<PAGE> 11
the affirmative vote of the holders of a majority of the Corporation's (for a
Corporation-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 of 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 by a 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, stockholders are urged to forward their voting
instructions promptly.
Proposals 1 and 4 require the affirmative vote of a "majority of the
outstanding voting securities" of each Fund. The term "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 3 requires the affirmative vote of a majority
of the shares of the Corporation outstanding and entitled to vote. Approval of
Proposal 5 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 effort of a "no" vote for Proposals 1, 3 and 4, which
require the approval of a specified percentage of the outstanding shares of each
Fund, if such vote is determined on the basis of obtaining the affirmative vote
of more than 50% of the outstanding shares of the Fund. Abstentions and broker
non-votes will not constitute "yes" or "no" votes for Proposals 1 or 4 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 present at the Special Meeting. Broker non-votes will not be counted
in favor of, but will have no other effect on the vote for Proposal 5 which
requires the approval of a majority of shares of each Fund voting at the Special
Meeting.
Stockholders of each Fund will vote separately with respect to each of
Proposals 1, 4 and 5; and stockholders of the Corporation will vote together on
Proposals 2 and 3.
2
<PAGE> 12
The following table summarizes those voting requirements:
<TABLE>
<CAPTION>
SHAREHOLDERS ENTITLED VOTE REQUIRED
TO VOTE FOR APPROVAL
---------------------- ----------------------
<S> <C> <C>
Proposal 1 Stockholders of each Approved by a "major-
(Approval of new Investment Fund vote separately ity of the outstanding
Management Agreement) voting securities" of
each Fund
Proposal 2 Stockholders of the Each nominee must be
(Election of Directors) Corporation vote elected by a plurality
together for each of the shares of the
nominee (since the Corporation voting at
Corporation has the Special Meeting
several Funds,
stockholders of all
Funds vote together as
a single class)
Proposal 3 Stockholders of the Approved by a major-
(Approval of discretionary Corporation vote ity of the outstanding
authority to convert to together. shares of stock of the
master/feeder fund structure) Corporation.
Proposal 4 Stockholders of each Approved by a "major-
(Approval of the revision of Fund vote separately ity of the outstanding
certain fundamental voting securities" of
investment policies) each Fund
Proposal 5 Stockholders of each Approved by a majority
(Ratification of selection of Fund vote separately of the shares voting
Accountants) at the Special Meeting
</TABLE>
Holders of record of the shares of common stock of each Fund at the close
of business on August 15, 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 FUND AS OF JUNE 30, 1997
- ------------------------------------------------ ----------------------------
<S> <C>
Scudder Money Market Series 273,069,403
Scudder Government Money Market Series 30,638,350
Scudder Tax Free Money Market Series 73,708,638
</TABLE>
3
<PAGE> 13
Each Fund provides periodic reports to all of its stockholders 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., 345 Park Avenue, New York, New York 10154.
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-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 stockholders 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 the funds currently advised by Scudder and to
permit ease of administration. The material terms of
4
<PAGE> 14
each Current Investment Management Agreement are described under "Description of
the Current Investment Management Agreement" below.
BOARD OF DIRECTORS' RECOMMENDATION
On August 6, 1997, the Board of the Corporation, including the Directors
who are not parties to such agreement or "interested persons" (as defined under
the 1940 Act) (the "Non-interested Directors") of any such party, voted to
approve the New Investment Management Agreements and to recommend their
respective approval to stockholders.
For information about the Board's deliberations and the reasons for their
recommendation, please see "Board of Directors' Evaluation" below.
The Board of the Corporation recommends that its stockholders vote in favor
of the approval of the New Investment Management Agreement for each Fund.
BOARD OF DIRECTORS' EVALUATION
On June 26, 1997, representatives of Scudder advised the Non-interested
Directors of the Corporation 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.
Scudder subsequently furnished the Non-interested Directors 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 Directors 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
Directors 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 Directors 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 Directors 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 Directors 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
5
<PAGE> 15
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 Directors, 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 the Corporation 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 Directors," would be in compliance
with this provision of Section 15(f). (See "Proposal 2: Election of Directors").
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 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 Directors.
During the course of their deliberations, the Non-interested Directors
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
6
<PAGE> 16
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 Directors gave
careful consideration to the likely impact of the Transactions on the Scudder
organization. In this regard, the Non-interested Directors 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 Directors concluded that the
Transactions should cause no reduction in the quality of services provided to
the Funds and believe that the Transactions should enhance Scudder's ability to
provide such services. The Non-interested Directors considered the foregoing
factors with respect to each of the Funds.
On August 6, 1997, the Directors of the Corporation, including the Non-
interested Directors of the Corporation, 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
7
<PAGE> 17
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, Switzerland,
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
8
<PAGE> 18
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 stockholder
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 Corporation by Scudder, and the information set forth below
concerning Zurich has been provided to the Corporation 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 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 the Corporation's
Articles of Incorporation, By-Laws, investment policies and restrictions, the
provisions of the 1940 Act, and such policies and instructions as the Directors
may determine.
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
9
<PAGE> 19
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 Directors; the cost of printing and distributing
reports, notices and dividends to current stockholders; 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 stockholders'
and other meetings, the cost of responding to stockholders' inquiries, and its
expenses incurred in connection with litigation, proceedings and claims and the
legal obligation it may have to indemnify officers and Directors of the
Corporation 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 the Corporation; 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 stockholders; costs of stationery; fees payable to the Investment
Manager and to any other Fund advisers 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.
Each Current Investment Management Agreement provides that the Investment
Manager will provide portfolio management services. The Investment Manager is
responsible for the payment of the compensation and expenses of all Directors,
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 services of such Directors, officers and
employees as may duly be elected officers of the Corporation, 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 Directors 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 Directors and
officers of the Corporation 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 Directors of the Corporation, 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 the Corporation to any of its officers or Directors who were
affiliated with the Investment Manager.
10
<PAGE> 20
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.
<TABLE>
<CAPTION>
AGGREGATE
FISCAL YEAR NET MANAGEMENT MANAGEMENT
FUND (ENDED) ASSETS FEE RATE+ FEE PAID
- ---------------------- ----------- ------------ ------------- ----------
<S> <C> <C> <C> <C>
Scudder Money Market 12/31/96 $431,298,275 .40% on first $1,227,581
Series $1.5 billion
avg. daily
net assets;
.35% on
assets over
$1.5 billion.
Scudder Government 12/31/96 $ 27,918,287 .40% on first $ 131,141
Money Market Series $1.5 billion
avg. daily
net assets;
.35% on
assets over
$1.5 billion.
Scudder Tax Free Money 12/31/96 $165,453,389 .40% on first $ 587,278
Market Series $1.5 billion
avg. daily
net assets;
.35% on
assets over
$1.5 billion.
</TABLE>
- ------------------------------
+ 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
vote of a majority of the outstanding voting securities of the Fund, or by a
vote of the Board of Directors. As stated above, each Current Investment
Management Agreement automatically terminates in the event of its assignment.
11
<PAGE> 21
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 Directors and the stockholders 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 stockholders prior to its becoming effective, as required by the 1940 Act.
<TABLE>
<CAPTION>
DATE OF
CURRENT
COMMENCEMENT INVESTMENT LAST LAST
OF MANAGEMENT APPROVED BY APPROVED BY DATE
FUND OPERATIONS AGREEMENT DIRECTORS STOCKHOLDERS CONTINUED TO
- ---------------- ------------ ---------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Scudder Money
Market Series 01/12/81 07/07/97 04/24/97 04/18/89 09/30/98
Scudder
Government
Money Market
Series 10/29/81 07/07/97 04/24/97 04/18/89 09/30/98
Scudder Tax Free
Money Market
Series 10/01/82 07/07/97 04/24/97 04/18/89 09/30/98
</TABLE>
- ------------------------------
* An Investment Management Agreement which is changed from a prior agreement
solely to reduce the fee payable by the Fund does not require stockholder
approval prior to becoming effective. In those cases, the date shown for
stockholder approval may be earlier than the effective date and may relate to
the previous management agreement.
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 Noninterested Directors, cast in
person at a meeting called for such purpose. In the event that stockholders 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 the Corporation will take such action as it deems to be in the best interests
of the Fund and its stockholders. 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
12
<PAGE> 22
for such periods as may be approved at least annually by the Board, including a
majority of the Non-interested Directors.
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, the New Investment Management Agreements would
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.
Further, the New Investment Management Agreements 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, the Corporation, with
respect to each of its Funds, 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 Corporation'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, the Corporation, on behalf of each of its Funds,
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 agreement is terminated, the
Corporation, on behalf of each of its Funds, must not use a name likely to be
confused with those associated with the Scudder Marks.
The New Investment Management Agreement for each Fund adds conforming
language that describes in greater detail the portfolio management services
provided by the Investment Manager and adds a new section that describes the
administrative responsibilities and duties of the Investment Manager with
respect to the Funds. For example, the section entitled Portfolio Management
Services specifies that the Funds will have the benefit of the Investment
Manager's analysis and research, and that the Investment Manager will undertake
responsibilities such as making records available to regulators and providing
periodic reports to the Board. The section entitled Administrative Services is
new and describes the types of administrative services that the Investment
Manager has been customarily providing to the Funds. The new section in each New
Investment Management Agreement provides that the
13
<PAGE> 23
Investment Manger will render significant administrative services on behalf of
the Fund (not otherwise provided by third parties) necessary for the Fund's
operating as an open-end investment company including, but not limited to,
preparing reports to and meeting materials for the Corporation's Board of
Directors and reports and notices to Fund stockholders; supervising, negotiating
contractual arrangements with, to the extent appropriate, and monitoring the
performance of various third-party service providers to the Fund (such as the
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 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 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 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 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 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 stockholders, preparing and arranging for the printing
of dividend notices to stockholders, 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 Fund in the conduct of its business,
subject to the direction and control of the Corporation's Board of Directors.
Another conforming change made in each Fund's New Investment Management
Agreement includes addition of a provision clarifying that the New Investment
Management Agreement supersedes all prior agreements.
14
<PAGE> 24
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.
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 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 of Scudder 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. Scudder
Trust Company ("STC"), an affiliate of Scudder, provides subaccounting and
record-keeping services for stockholder accounts in certain retire-
- ------------------------------
* 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
15
<PAGE> 25
ment and employee benefit plans. The table below sets forth for each Fund the
respective fees paid to SFAC, SSC and STC during the last fiscal year of each
Fund.
<TABLE>
<CAPTION>
AGGREGATE FEE PAID AGGREGATE FEE PAID AGGREGATE FEE PAID
TO SFAC DURING TO SSC DURING TO STC DURING
FUND FISCAL YEAR LAST FISCAL YEAR LAST FISCAL YEAR LAST FISCAL YEAR
- ---------------- ----------- ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Scudder Money
Market Series 12/31/96 $ 48,900 $ 66,490 $0
Scudder
Government
Money Market
Series 12/31/96 $ 30,000 $ 23,477 $0
Scudder Tax Free
Money Market
Series 12/31/96 $ 39,965 $ 23,477 $0
</TABLE>
SFAC, SSC and STC will continue to provide fund accounting, transfer
agency, subaccounting and recordkeeping 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 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 Directors of the Corporation recommend that the
stockholders of each Fund vote in favor of this Proposal 1.
PROPOSAL 2: ELECTION OF DIRECTORS FOR THE CORPORATION
At the Special Meeting, five Directors are to be elected to constitute the
Board of the Corporation. For election of Directors at the Special Meeting, the
16
<PAGE> 26
Board of Directors has approved the nomination of the following individuals: Dr.
Rosita P. Chang, Edgar R. Fiedler, Peter B. Freeman, Dr. J. D. Hammond and
Richard M. Hunt.
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 Director so elected will serve as a
Director of the Corporation until the next meeting of stockholders, if any,
called for the purpose of electing Directors and until the election and
qualification of a successor or until such Director sooner dies, resigns or is
removed as provided in the Articles of Incorporation of the Corporation. Since
the Corporation does not hold annual meetings, Directors will hold office for an
indeterminate period.
Each of the nominees has indicated that he or she is willing to serve as a
Director. 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 Directors may recommend. The
following table sets forth certain information concerning the current Directors
and the nominees. Unless otherwise noted, each of the Directors 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.
NOMINEES:
<TABLE>
<CAPTION>
PRESENT OFFICE WITH THE CORPORATION
(DATE NOMINEE BECAME DIRECTOR),
NAME (AGE) PRINCIPAL OCCUPATION OR
----------- EMPLOYMENT AND DIRECTORSHIPS
---------------------------------------------------------------
<S> <C>
DR. ROSITA P. CHANG (42) Professor of Finance, University of Rhode Island. Dr. Chang
serves on the Board of 1 Trust whose Funds are advised by
Scudder.
EDGAR R. FIEDLER* (68) Director (1987). Senior Fellow and Economic Counsellor, The
Conference Board, Inc.; Formerly Assistant Secretary of the
Treasury for Economic Policy. Director: The Stanley Works;
Harris Insight Funds; and Emerging Mexico Fund. Mr. Fiedler
serves on the Boards of an additional 8 Trusts or Corporations
whose Funds are advised by Scudder.
PETER B. FREEMAN (65) Director (1991). Director, The A.H. Belo Company; Trustee,
Eastern Utilities Associates (electric 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 9 Trusts or Corporations whose Funds are advised by
Scudder.
</TABLE>
17
<PAGE> 27
<TABLE>
<CAPTION>
PRESENT OFFICE WITH THE CORPORATION
(DATE NOMINEE BECAME DIRECTOR),
NAME (AGE) PRINCIPAL OCCUPATION OR
----------- EMPLOYMENT AND DIRECTORSHIPS
---------------------------------------------------------------
<S> <C>
DR. J. D. HAMMOND (63) Dean, Smeal College of Business Administration, Pennsylvania
State University; Member of the Board, The Atlantic Mutual
Insurance Co. Former Trustee, Provident Mutual Life Insurance
Company. Dr. Hammond serves on the Boards of an additional 2
Trusts or Corporations whose Funds are advised by Scudder.
RICHARD M. HUNT (70) University Marshal and Senior Lecturer, Harvard University;
Vice Chairman, American Council on Germany; Director, Council
on the United States and Italy; Life Trustee, American Field
Service; and Partner, Elmhurst Investment Trust (family
investment firm). Mr. Hunt serves on the Boards of an
additional 2 Trusts or Corporations whose Funds are advised by
Scudder.
</TABLE>
- ------------------------------
* Directors considered by the Corporation and its counsel to be "interested
persons" (as defined in the 1940 Act) of the Corporation or of its investment
manager because of their employment by the Investment Manager and, in some
cases, holding offices with the Corporation. Although Mr. Fiedler is currently
not an "interested person" he may be deemed to be so in the future by the
Commission because of his prior service as a director of Zurich American
Insurance Company, a subsidiary of Zurich. Mr. Fiedler resigned from that
position in July 1997 and has had no further affiliation with Zurich or any of
its subsidiaries since that date.
CURRENT DIRECTORS NOT STANDING FOR RE-ELECTION:
<TABLE>
<CAPTION>
PRESENT OFFICE WITH THE CORPORATION
(DATE BECAME DIRECTOR),
NAME (AGE) PRINCIPAL OCCUPATION OR
----------- EMPLOYMENT AND DIRECTORSHIPS
---------------------------------------------------------------
<S> <C>
ROBERT W. LEAR (80) Director (1989). Executive-in-Residence, Visiting Professor,
Columbia University Graduate School of Business; Director,
Equitable Capital Partners Enhancement Yield Funds. Former
Director, Cambrex Corp.
DAVID S. LEE* (63) Chairman of the Board and Director (1994). Managing Director,
Scudder, Stevens & Clark, Inc.; Trustee Emeritus, New England
Medical Center. Mr. Lee serves on the Boards of an additional
16 Trusts or Corporations whose Funds are advised by Scudder.
DANIEL PIERCE* (63) President and Director (1990). 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 18 Trusts or Corporations
whose Funds are advised by Scudder.
</TABLE>
- ------------------------------
* Directors considered by the Corporation and its counsel to be "interested
persons" (as defined in the 1940 Act) of the Corporation or of its investment
manger because of their employment by the Investment Manager and, in some
cases, holding offices with the Corporation.
18
<PAGE> 28
The table below sets forth the number of shares of each Fund owned directly
or beneficially by the nominees to and the Directors of the Board of Directors
as of June 30, 1997. Nominees or Directors who do not own any Shares have been
omitted from the table. Funds which are not owned by any nominees or Directors
also have been omitted from the table.
<TABLE>
<CAPTION>
ALL CURRENT DIRECTORS AND
FUND NAME(1) FREEMAN LEE OFFICERS AS A GROUP
- --------------------- --------- ------ -------------------------
<S> <C> <C> <C>
Scudder Fund, Inc.(2)
Managed Cash Fund 3,622,077(3) -- 3,622,077(4)
Managed Tax Free
Fund -- 68,049(5) 68,049(6)
</TABLE>
- ------------------------------
(1) The information as to beneficial ownership is based on statements furnished
to the Corporation by each Director or nominee. Unless otherwise noted,
beneficial ownership is based on sole voting and investment power. Each
Director's and nominee's individual shareholdings of any Fund constitutes
less than 1/4 of 1% of the shares outstanding of such Fund, except as stated
below. As a group, unless otherwise noted, the Directors and officers own
less than 1/4 of 1% of the shares of each Fund.
(2) The Board of Directors of Scudder Fund, Inc. has reclassified shares of the
Corporation's Capital Stock. The Corporation currently consists of three
series, Scudder Money Market Series, Scudder Tax Free Money Market Series
and Scudder Government Money Market Series, each of which offers various
classes of shares. Effective July 7, 1997, each Fund began offering a class
of Managed Shares and Institutional Shares, and in addition, Scudder Money
Market Series offers a Premium Money Market Shares class.
(3) As of June 30, 1997, Mr. Freeman owned beneficially 1.33% of the outstanding
shares of Managed Cash Fund.
(4) As a group on June 30, 1997, the Directors and officers owned beneficially
1.33% of the outstanding shares of Managed Cash Fund.
(5) Mr. Lee's shares in Managed Tax Free Fund are held in a fiduciary capacity
as to which he shares investment and voting power.
(6) As a group on June 30, 1997, the Directors and officer's total shares in
Managed Tax Free Fund were held with shared investment and voting power.
Certain accounts for which the Investment Manager acts as investment
adviser owned 101,264,253 shares in the aggregate, or 37.08% of the outstanding
shares of the Managed Cash Fund on June 30, 1997. The Investment Manager may be
deemed to be the beneficial owner of such shares but disclaims any beneficial
ownership in such shares.
19
<PAGE> 29
As of June 30, 1997, 23,558,713 shares in the aggregate, 8.63% of the
outstanding shares of the Managed Cash Fund, were held in the name of Lucian T.
Baldwin III Trust, 175 Sheridan Road, Winnetka, IL 60093.
As of June 30, 1997, 21,026,428 shares in the aggregate, 7.70% of the
outstanding shares of the Managed Cash Fund, were held in the name of Hare &
Co., Special Processing Department, One Wall Street, New York, NY 10005, who may
be deemed to be the beneficial owner of certain of these shares, but disclaims
any beneficial ownership therein.
As of June 30, 1997, 31,955,046 shares in the aggregate, 11.70% of the
outstanding shares of the Managed Cash Fund, were held in the name of Chemical
Bank, 270 Park Avenue, New York, NY 10017, who may be deemed to be the
beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1997, 18,156,187 shares in the aggregate, 6.65% of the
outstanding shares of the Managed Cash Fund, were held in the name of Scudder
Trust Company, Trustees of Scudder Stable Value Fund, Two International Place,
Boston, MA 02110, who may be deemed to be the beneficial owner of certain of
these shares, but disclaims any beneficial ownership therein.
As of June 30, 1997, 22,298,112 shares in the aggregate, 8.16% of the
outstanding shares of the Managed Cash Fund, were held in the name of Cudd &
Co., 1211 Avenue of the Americas, New York, NY 10036, who may be deemed to be
the beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1997, 41,765,231 shares in the aggregate, 15.29% of the
outstanding shares of the Managed Cash Fund, were held in the name of State
Street Bank & Trust Co., Newport Office Park, 108 Myrtle Street, North Quincy,
MA 02171-1753, who may be deemed to be the beneficial owner of certain of these
shares, but disclaims any beneficial ownership therein.
As of June 30, 1997, 27,420,990 shares in the aggregate, 10.06% of the
outstanding shares of the Managed Cash Fund, were held in the name of Wilmington
Trust Company, Rodney Square North, 100 North Market Street, Wilmington, DE
19801, who may be deemed to be the beneficial owner of certain of these shares,
but disclaims any beneficial ownership therein.
As of June 30, 1997, 21,747,700 shares in the aggregate, 7.96% of the
outstanding shares of the Managed Cash Fund, were held in the name of Citibank,
One Court Square, Long Island City, NY 11120, who may be deemed to be the
beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1997, 6,124,160 shares in the aggregate, 19.99% of the
outstanding shares of the Managed Government Securities Fund, were held in the
name of Cudd & Co., 1211 Avenue of the Americas, New York, NY 10036,
20
<PAGE> 30
who may be deemed to be the beneficial owner of certain of these shares, but
disclaims any beneficial ownership therein.
As of June 30, 1997, 16,208,581 shares in the aggregate, 52.90% of the
outstanding shares of the Managed Government Securities Fund, were held in the
name of Citibank, One Court Square, Long Island City, NY 11120, 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 50,974,762 shares in the aggregate, or 69.16% of the outstanding
shares of Managed Tax Free Fund. The Investment Manager may be deemed to be the
beneficial owner of such shares but disclaims any beneficial ownership in such
shares.
As of June 30, 1997, 14,781,118 shares in the aggregate, 20.05% of the
outstanding shares of the Managed Tax Free Fund, were held in the name of Cudd &
Co., 1211 Avenue of the Americas, New York, NY 10036, who may be deemed to be
the beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1997, 8,354,281 shares in the aggregate, 11.33% of the
outstanding shares of the Managed Tax Free Fund, were held in the name of State
Street Bank & Trust Co., Newport Office Park, 108 Myrtle Street, North Quincy,
MA 02171, who may be deemed to be the beneficial owner of certain of these
shares, but disclaims any beneficial ownership therein.
As of June 30, 1997, 12,755,424 shares in the aggregate, 17.30% of the
outstanding shares of the Managed Tax Free Fund, were held in the name of Hare &
Co., One Wall Street, New York, NY 10005, who may be deemed to be the beneficial
owner of certain of these shares, but disclaims any beneficial ownership
therein.
As of June 30, 1997, 26,781,463 shares in the aggregate, 36.33% of the
outstanding shares of the Managed Tax Free Fund, were held in the name of
Chemical Bank, 270 Park Avenue, New York, NY 10017, who may be deemed to be the
beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
To the best of the Corporation'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 Directors of the Corporation is responsible for the general
oversight of Fund business. A majority of the Board's members are not affiliated
with Scudder. These Non-interested Directors have primary responsibility for
assuring that each Fund is managed in a manner consistent with the best
interests of its stockholders. The Board met four times during 1996.
21
<PAGE> 31
The Board of Directors 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 Directors 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 Directors. In addition, the Non-interested Directors 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 the Corporation has both an Audit Committee and a Committee on
Independent Directors, the responsibilities of which are described below.
AUDIT COMMITTEE
The Board of the Corporation has an Audit Committee consisting of the
Non-interested Directors. 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. The Audit Committee met once in
1996.
COMMITTEE ON INDEPENDENT DIRECTORS
The Board of the Corporation has a Committee on Independent Directors
consisting of all the Non-interested Directors. The Committee is charged with
the duty of making all nominations for Non-interested Directors and
consideration of other related matters. Stockholders' recommendations as to
nominees received by management are referred to the Committee for its
consideration and action. The Committee on Independent Directors met once in
1996.
In addition to the Board and committee meetings listed above, the Directors
of the Corporation attended various other meetings on behalf of the Corporation
during the year, including meetings with their independent legal counsel and
informational meetings.
22
<PAGE> 32
EXECUTIVE OFFICERS
In addition to Mr. Pierce and Mr. Lee, Directors who are also officers of
the Corporation, the following persons are Executive Officers of the
Corporation:
<TABLE>
<CAPTION>
PRESENT OFFICE WITH THE
CORPORATION;
PRINCIPAL OCCUPATION OR YEAR FIRST BECAME
NAME (AGE) EMPLOYMENT (1) AN OFFICER (2)
- -------------------------- ------------------------- -----------------
<S> <C> <C>
K. Susan Cote (35) Vice President; Principal
of Scudder, Stevens &
Clark, Inc. 1996
Carol L. Franklin (44) Vice President; Managing
Director of Scudder,
Stevens & Clark, Inc. 1996
Jerard K. Hartman (64) Vice President; Managing
Director of Scudder, Ste-
vens & Clark, Inc. 1987
Thomas W. Joseph (58) Vice President and
Assistant Secretary;
Principal of Scudder,
Stevens & Clark, Inc. 1987
Thomas F. McDonough (50) Vice President and
Secretary; Principal of
Scudder, Stevens & Clark,
Inc. 1987
Pamela A. McGrath (43) Vice President and
Treasurer; Managing
Director of Scudder,
Stevens & Clark, Inc. 1991
Kathryn L. Quirk (44) Vice President; Managing
Director of Scudder,
Stevens & Clark, Inc. 1996
David B. Wines (41) Vice President; Principal
of Scudder, Stevens &
Clark, Inc. Formerly,
Director of Investment
Management Group at Stone
& Youngburg LLP
(1995-96); prior to that,
Director of Tax Exempt
Training and Research at
Wells Fargo Bank. 1997
</TABLE>
- ------------------------------
(1) Except for Mr. Wines, 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 Corporation.
23
<PAGE> 33
COMPENSATION OF DIRECTORS AND OFFICERS
The Corporation pays each Non-interested Director an annual Director's fee
plus specified amounts for Board and committee meetings attended and compensates
him or her for expenses related to Corporation business.
Scudder supervises each Fund's investments, pays the compensation and
certain expenses of its personnel who serve as Directors and officers of the
Corporation and receives a management fee for its services. Several of the
Corporation's officers and Directors are also officers, Directors, employees or
stockholders of Scudder and participate in the fees paid to that firm, although
the Corporation makes no direct payments to them other than for reimbursement of
travel expenses in connection with their attendance at Directors' and committee
meetings.
The following Compensation Table provides in tabular form the following
data:
Column (1) All Directors who receive compensation from the
Corporation.
Column (2) Aggregate compensation received by each Director of the
Corporation during the calendar year 1996.
Column (3) Total compensation received by each Director from funds
managed by Scudder (collectively, the "Fund Complex") during the calendar
year 1996.
The Directors do not receive any pension or retirement benefits from any
Corporation in the Fund Complex, unless otherwise noted.
<TABLE>
<CAPTION>
COMPENSATION TABLE
(3)
TOTAL COMPENSATION
FROM THE
CORPORATION AND FUND
(1) (2) COMPLEX
NAME OF DIRECTOR AGGREGATE COMPENSATION PAID TO DIRECTOR
- -------------------- ---------------------- ------------------------
<S> <C> <C> <C>
Dr. Rosita P. Chang -- $ 26,233 (7 Funds)
Edgar R. Fiedler* $ 17,776 $108,083 (20 Funds)
Peter B. Freeman $ 8,000 $131,734 (33 Funds)
Dr. J.D. Hammond -- $ 26,233 (7 Funds)
Richard M. Hunt -- $ 24,750 (6 Funds)
Robert W. Lear $ 8,000 $ 33,049 (11 Funds)
</TABLE>
- ------------------------------
* Mr. Fiedler received $17,776 through a deferred compensation program. As of
December 31, 1996, Mr. Fiedler had a total of $420,490 accrued over a number
of years in a deferred compensation program for serving on the Boards of
Directors of Scudder Fund, Inc. and Scudder Institutional Fund, Inc.
24
<PAGE> 34
REQUIRED VOTE
Election of each of the listed nominees for Director requires the
affirmative vote of a plurality of the votes of the Corporation cast at the
Special Meeting in person or by proxy. This means that the five nominees
receiving the largest number of votes will be elected. The Directors of the
Corporation recommend that the stockholders of the Corporation vote in favor of
each of the nominees listed in this Proposal 2.
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 stockholders, 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 stockholders.
A master/feeder fund structure is one in which a fund (a feeder fund),
instead of investing directly in a portfolio of securities, 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
and avoiding transaction costs and, if proper procedures are followed, the
realization of taxable gain or loss.
In this regard, the Maryland General Corporation law permits a Maryland
corporation, at the discretion of its Board of Directors, to transfer its assets
to an entity or entities of which all of the equity interests are owned by the
transferring corporation. This provision would permit the Corporation to convert
any of the existing Funds into a feeder fund by contributing Fund assets to an
entity or entities owned by the Corporation, at such time as the Board of
Directors of the Corporation deems such a transfer to be advisable.
The Board of Directors of the Corporation, having determined to amend the
Articles of Incorporation of the Corporation to make this discretionary power
express, has adopted the following resolutions.
RESOLVED, that the Corporation's Articles of Incorporation be amended
to add the following article:
The Corporation shall be empowered to transfer some or all of its
assets to any entity or entities of which all of the equity interests are
owned by the Corporation at the time of transfer for the purpose of
creating a master-feeder or similar structure in accordance with the
Investment Company Act
25
<PAGE> 35
of 1940, as amended, the precise structure of such transfer of assets to be
determined by action of the Corporation's Board of Directors as constituted
at the time such Board of Directors deems any such transfer to be
advisable; and
RESOLVED FURTHER, that the Board of Directors declares such amendment
to be advisable and directs that the proposed amendment be submitted for
consideration at the special meeting of stockholders of the Corporation to
be held on October 23, 1997.
Under the Corporation's Articles of Incorporation, 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 Corporation's Articles of Incorporation, 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 the Corporation 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 Directors' 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
stockholders 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 stockholders 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
26
<PAGE> 36
in a portfolio of investments in accordance with its investment objective and
policies.
REQUIRED VOTE
Stockholders of the Corporation will vote together with respect to this
Proposal 3. Approval of this Proposal 3 by the Corporation requires the
affirmative vote of a majority of all outstanding shares of stock of the
Corporation entitled to vote on the matter. The Directors of the Corporation
recommend that the stockholders of the Corporation vote in favor of the approval
of the amendment of the Corporation's Articles of Incorporation.
PROPOSAL 4: 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 stockholder vote.
Those policies are often referred to as "fundamental" policies. In the past,
fundamental policies were adopted by the Corporation on behalf of its Funds, and
in some cases amended by vote of the stockholders of the affected Fund, in order
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 stockholder approval of changes which are intended to
accomplish that goal. The proposed changes to the fundamental policies are
discussed in detail below. Please refer to the proposed policies as set forth in
Exhibit C. Each Fund's current fundamental investment policies are set forth in
Exhibit D.
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. Except for the policies on borrowing and diversification as
discussed below, none of the proposed policies differs from the respective
Fund's current comparable policy in a material way, although the formulation of
the policy may differ from the current one in the interest of uniformity and
simplicity. The policies with respect to 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. In
addition, certain of the policies of Scudder Money Market Series, Scudder
Government Money Market Series and Scudder Tax Free Money Market Series are
proposed to be eliminated.
27
<PAGE> 37
Stockholders will be asked to vote on each proposed fundamental policy
separately on the enclosed proxy card.
PROPOSAL 4.1: DIVERSIFICATION
Each Fund is a "diversified" fund under the 1940 Act. Under its current
diversification policy, each Fund, with respect to 75% of the value of its total
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. In addition,
each of the Funds may not, with respect to 100% of the Fund's assets invest more
than 5% of its assets in any one issuer, except U.S. Government securities. This
proposed restriction is substantially identical to the definition of a
diversified fund under the 1940 Act. Accordingly, in the interest of uniformity
and simplicity, management of the Corporation believes that adoption of the
proposed policy is appropriate.
PROPOSAL 4.2: BORROWING
The current policy of the Funds prohibits borrowing money, except as a
temporary measure in order to meet redemptions up to 10% of a Fund's net assets,
and these borrowings may be secured by the pledge of not more than 10% of a
Fund's net assets. In addition, a Fund may not purchase portfolio securities
while a borrowing exists. Under the proposed policy, each Fund would not be
limited to borrowing for temporary or emergency purposes and would not be
limited to borrowing for temporary purposes up to 10% of a Fund's net assets;
however, if the Directors 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
Directors 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. Borrowings under reverse repurchase
agreements would be permitted for all Funds under the proposed policy. The 1940
Act requires borrowings to have 300% asset coverage, which requirement would
apply under the proposed policy. Management believes that elimination of the 10%
limit on pledging of fund assets to secure borrowings provides the Fund with
greater flexibility when, in the opinion of management, the borrowing of money
is necessary or appropriate.
PROPOSAL 4.3: 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. The current policy, therefore,
specifically excepts from the prohibition on the issuance of senior securities
certain practices which, under the current policies of the Securities and
Exchange Commission (the "SEC" or the "Commission") or its staff, are not deemed
to involve the issuance of senior securities. Accordingly, management of the
Corporation 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.
28
<PAGE> 38
PROPOSAL 4.4: CONCENTRATION
Each Fund's current policy in effect prohibits the purchase of securities
if it would result in more than 25% of the current 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. There are exceptions for
U.S. Government securities, municipal obligations, bank obligations and, 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.
Because a fund may create its own reasonable industry classifications,
management of the Corporation believes that it is not necessary to include such
matters in the fundamental policy of a Fund.
PROPOSALS 4.5 THROUGH 4.8: OTHER POLICIES
Each of the other proposed fundamental policies regarding underwriting of
securities (Proposal 4.5), investment in real estate (Proposal 4.6), purchase of
physical commodities (Proposal 4.7) and lending (Proposal 4.8) is not materially
different from the current comparable policy of each Fund except that these
policies have been reworded or clarified.
PROPOSALS 4.9 THROUGH 4.15: ELIMINATION OF CERTAIN POLICIES
The current policies of the Funds prohibit (i) purchase of equity
securities and securities convertible into equity securities (Proposal 4.9);
(ii) investment for the purpose of exercising control or management (Proposal
4.10); (iii) purchase of restricted securities, i.e. securities that have legal
or contractual restrictions on resale (Proposal 4.11); (iv) investment of more
than 10% of total assets in illiquid securities, including restricted
securities, repurchase agreements maturing in more than seven days, and in the
case of Scudder Money Market Series, time deposits having maturities of more
than seven calendar days, subject to withdrawal penalties (Proposal 4.12); (v)
purchase of securities on margin or short sales (Proposal 4.13); (vi) writing,
purchase or sale of puts, calls, warrants or options or any combination thereof
(Proposal 4.14); and (vii) pledging or mortgaging of assets (Proposal 4.15).
Each such Fund is regulated as a money market fund under the 1940 Act. Under the
1940 Act and applicable interpretations of the SEC or its staff, money market
funds, like the Funds, generally are
29
<PAGE> 39
prohibited from purchasing securities other than liquid debt securities and,
therefore, are restricted from engaging in certain of the practices described
above. In addition, management of the Corporation believes that engaging in the
practices described in (i) through (vii) above is inconsistent with the
management of money market funds generally, except that the Funds may purchase
securities with put rights in order to maintain liquidity; however, in the
interests of uniformity and simplicity of restrictions among investment
companies managed by Scudder, management of the Corporation believes that
elimination of such policies is appropriate and would not result in any
substantive change in the management of the Funds.
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 stockholders of any Fund
fail to approve any proposed fundamental policy, the current such policy will
remain in effect. The Directors of the Corporation recommend that the
stockholders of each Fund vote in favor of each item in this Proposal 4.
PROPOSAL 5: RATIFICATION OR REJECTION
OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Corporation, including a majority of the Non-
interested Directors, has selected Price Waterhouse LLP to act as independent
accountants for each of the Funds for each Fund's current fiscal year. Price
Waterhouse LLP 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 Price Waterhouse LLP 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 stockholders 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 Directors of the Corporation recommend that
the stockholders of each Fund vote in favor of this Proposal 5.
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,
30
<PAGE> 40
telephone or telegraph, will be paid by Scudder. In addition to solicitation by
mail, certain officers and representatives of the Corporation, 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
stockholders 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 stockholders of each Fund. Proxies that are obtained
telephonically will be recorded in accordance with the procedures set forth
below. The Directors believe that these procedures are reasonably designed to
ensure that the identity of the stockholder casting the vote is accurately
determined and that the voting instructions of the stockholder are accurately
determined.
In all cases where a telephonic proxy is solicited, the SCC representative
is required to ask for each stockholder's full name, address, social security or
employer identification number, title (if the stockholder is authorized to act
on behalf of an entity, such as a corporation), and the number of shares owned
and to confirm that the stockholder has received the proxy statement and 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 stockholder'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 stockholder how to vote, other than to read any recommendation set forth
in the proxy statement. SCC will record the stockholder's instructions on the
card. Within 72 hours, the stockholder will be sent a letter or mailgram to
confirm his or her vote and asking the stockholder to call SCC immediately if
his or her instructions are not correctly reflected in the confirmation.
If the stockholder wishes to participate in the Special Meeting, but does
not wish to give his or her proxy by telephone, the stockholder may still submit
the proxy card originally sent with the proxy statement or attend in person.
Should stockholders 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 stockholder, whether in writing or by telephone, is
revocable.
PROPOSALS OF STOCKHOLDERS
Stockholders wishing to submit proposals for inclusion in a proxy statement
for a stockholder meeting subsequent to the Special Meeting, if any, should send
their written proposals to the Secretary of the Corporation, c/o Scudder,
Stevens & Clark, Inc., 345 Park Avenue, New York, New York 10154, within a
reasonable
31
<PAGE> 41
time before the solicitation of proxies for such meeting. The timely submission
of a proposal does not guarantee its inclusion.
OTHER MATTERS TO COME BEFORE THE SPECIAL MEETING
The Board of Directors is not 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 stockholders 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 the Corporation 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 Board of Directors,
/s/ Thomas F. McDonough
- -----------------------------
Thomas F. McDonough
Secretary
32
<PAGE> 42
EXHIBIT A
[NAME OF FUND]
TWO INTERNATIONAL PLACE
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 Corporation] (the "Corporation") has been established as a
Maryland corporation to engage in the business of an investment company.
Pursuant to the Corporation's Articles of Incorporation, as amended from time-
to-time (the "Articles"), the Board of Directors has divided the Corporation's
shares of capital stock, 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 Directors.
The Corporation, 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 Corporation on behalf of the
Fund agrees with you as follows:
1. Delivery of Documents. The Corporation 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 Corporation's Registration Statement on Form N-1A, as
amended from time to time, (the "Registration Statement") filed by the
Corporation 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 Corporation. The Corporation has also furnished you with copies
properly certified or
A-1
<PAGE> 43
authenticated of each of the following additional documents related to the
Corporation and the Fund:
(a) The Articles dated , 19 , as amended to date.
(b) By-Laws of the Corporation as in effect on the date hereof (the
"By-Laws").
(c) Resolutions of the Directors of the Corporation and the
shareholders of the Fund selecting you as investment manager and
approving the form of this Agreement.
The Corporation 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 Corporation a
nonexclusive right and sublicense to use (i) the "Scudder" name and mark as
part of the Corporation's name (the "Fund Name"), and (ii) the Scudder
Marks in connection with the Corporation's investment products and
services, in each case only for so long as this Agreement, any other
investment management agreement between you (or any organization which
shall have succeeded to your business as investment manager ("your
Successor")) and the Corporation, 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 Corporation 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
Corporation'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 Corporation shall not challenge the
validity of the Scudder Marks or the Trademark Owner's ownership thereof.
The Corporation 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 Corporation rendered during the one-year period preceding the
date of this Agreement are acceptable. At your reasonable request, the
Corporation 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 Corporation as a registered user
thereof. At such time as this Agreement or any other investment manage-
A-2
<PAGE> 44
ment agreement shall no longer be in effect between you (or your Successor)
and the Corporation, or you no longer are a licensee of the Scudder Marks,
the Corporation 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 your Successor) or the
Trademark Owner. In no event shall the Corporation 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 Corporation's Board of Directors. 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
Corporation or counsel to you. You shall also make available to the
Corporation promptly upon request all of the Fund's investment records and
ledgers as are necessary to assist the Corporation 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 Corporation 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.
A-3
<PAGE> 45
You shall furnish to the Corporation's Board of Directors 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 Corporation's officers or Board
of Directors shall reasonably request.
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 Corporation
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 Corporation's Board of Directors 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
A-4
<PAGE> 46
accounting agent with such information as is required for such parties to
effect the payment of dividends and distributions; and otherwise assisting
the Corporation as it may reasonably request in the conduct of the Fund's
business, subject to the direction and control of the Corporation's Board
of Directors. Nothing in this Agreement shall be deemed to shift to you or
to diminish the 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 Directors, officers and executive employees of the
Corporation (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 Corporation, 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 Directors 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 Corporation;
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 Corporation business) of Directors, officers and employees of
the Corporation who are not affiliated persons of you; brokerage
commissions or other costs of
A-5
<PAGE> 47
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 Directors and officers of the Corporation; costs of
shareholders' and other meetings; and travel expenses (or an appropriate
portion thereof) of Directors and officers of the Corporation who are
directors, officers or employees of you to the extent that such expenses
relate to attendance at meetings of the Board of Directors of the
Corporation 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 Corporation 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 Corporation 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) 1/2 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 1/2 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 1/2 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
A-6
<PAGE> 48
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 Articles and the Registration Statement. If the determination of net
asset value does not take place for any particular day, then for the
purposes of 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 Corporation.
8. Limitation of Liability of Manager. As an inducement to your
undertaking to render services pursuant to this Agreement, the Corporation
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 Corporation, 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 disregard of your obligations and duties hereunder.
Any
A-7
<PAGE> 49
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 Directors
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 Directors of the Corporation, 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 Corporation's Board of
Directors on 60 days' written notice to you, or by you on 60 days' written
notice to the Corporation. 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. 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 State
of Maryland, provided that nothing herein shall be construed in a manner
A-8
<PAGE> 50
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 Corporation 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 Corporation, whereupon this letter shall become a binding
contract effective as of the date of this Agreement.
Yours very truly,
[NAME OF CORPORATION], 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> 51
EXHIBIT B
INVESTMENT OBJECTIVES AND ADVISORY FEES FOR
MONEY MARKET 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> 52
<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.
INSURANCE PRODUCTS
Money Market Portfolio Stability of capital and current 0.370% of $ 97,785,626
income from a portfolio of money net assets
market instruments.
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
- ---------------
* 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> 53
EXHIBIT C
PROPOSED FUNDAMENTAL INVESTMENT POLICIES
SCUDDER FUND, INC.
SCUDDER MONEY MARKET SERIES
SCUDDER GOVERNMENT MONEY MARKET SERIES
SCUDDER TAX FREE MONEY MARKET SERIES
4.1 Each Fund has elected to be classified as a diversified series of an
open-end investment company.
In addition, as a matter of fundamental policy, each Fund will not:
4.2 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;
4.3 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;
4.4 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;
4.5 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;
4.6 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;
4.7 purchase physical commodities or contracts relating to physical
commodities; or
4.8 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.
C-1
<PAGE> 54
EXHIBIT D
CURRENT FUNDAMENTAL INVESTMENT POLICIES
SCUDDER FUND, INC.
SCUDDER MONEY MARKET SERIES
SCUDDER TAX FREE MONEY MARKET SERIES
SCUDDER GOVERNMENT MONEY MARKET SERIES
As a matter of fundamental policy, each Fund may not:
(1) issue senior securities, borrow money or pledge or mortgage its
assets, except that each Fund may borrow from banks up to 10% of the
current value of such Fund's total net assets for temporary purposes only
in order to meet redemptions, and these borrowings may be secured by the
pledge of not more than 10% of the current value of the Fund's total net
assets (but investments may not be purchased by such Fund while any such
borrowing exists);
(2) make loans, except that each Fund may loan portfolio securities,
purchase or hold a portion of an issue of publicly distributed bonds,
debentures or other obligations, and enter into repurchase agreements with
respect to its portfolio securities and except that each Money Market Fund
may purchase negotiable certificates of deposit and bankers' acceptances;
(3) invest an amount equal to 10% or more of the current value of such
Fund's total assets in investments that are not readily marketable,
including securities restricted as to disposition under the Securities Act
of 1933, repurchase agreements having maturities of more than seven days
and, in the case of the Cash Fund, fixed time deposits subject to
withdrawal penalties having maturities of more than seven calendar days;
(4) purchase the securities of issuers conducting their principal
business activity in the same industry if, immediately after the purchase
and as a result thereof, the value of any Fund's investments in that
industry would exceed 25% of the current value of such Fund's total assets,
provided that there is no limitation with respect to investments in (i)
municipal obligations (for the purpose of this restriction, private
activity bonds shall not be deemed municipal obligations if the payments of
principal and interest on such bonds is the ultimate responsibility of
non-governmental users), or (ii) obligations of the U.S. Government, its
agencies or instrumentalities; or (iii) bank obligations;
(5) purchase or sell real estate (other than municipal obligations or
other money market securities secured by real estate or interests therein
or securities issued by companies that invest in real estate or interests
therein), commodities or commodity contracts;
(6) purchase securities on margin (except for short-term credits
necessary for the clearance of transactions) or make short sales of
securities;
D-1
<PAGE> 55
(7) underwrite securities of other issuers, except to the extent that
the purchase of municipal obligations or other permitted investments
directly from the issuer thereof or from an underwriter for an issuer and
the later disposition of such securities in accordance with any Fund's
investment program may be deemed to be an underwriting;
(8) purchase restricted securities, which are securities that must be
registered under the Securities Act of 1933 before they may be offered or
sold to the public;
(9) invest more than 5% of the current value of any Fund's total
assets in the securities of any one issuer, other than obligations of the
U.S. Government, its agencies or instrumentalities or securities which are
backed by the full faith and credit of the U.S.;
(10) purchase securities of an issuer if, as a result, as to 75% of
such Fund's total assets, such Fund would own more than 10% of the voting
securities of such issuer;
(11) make investments for the purpose of exercising control or
management;
(12) write, purchase or sell puts, calls, warrants or options or any
combination thereof, except that the Funds may purchase securities with put
rights in order to maintain liquidity;
(13) purchase equity securities or securities convertible into equity
securities.
(14) may not make loans, except that each Fund may loan portfolio
securities, purchase or hold a portion of an issue of publicly distributed
bonds, debentures or other obligations, and enter into repurchase
agreements with respect to its portfolio securities and except that each
Fund may purchase negotiable certificates of deposit and bankers'
acceptances;
(15) issue senior securities, borrow money or pledge or mortgage the
assets of any of its Funds. However, each Fund may borrow from banks up to
10% of the current value of that Fund's total net assets for temporary
purposes only in order to meet redemptions, and these borrowings may be
secured by a pledge of not more than 10% of the current value of the Fund's
total net assets. Purchases of investment by the Fund will not be made
while any such borrowing exists; and
(16) invest an amount equal to 10% or more of the current value of
such Fund's total assets in investments that are not readily marketable,
including securities restricted as to disposition under the Securities Act
of 1933, repurchase agreements having maturities of more than seven days,
and, in the case of Scudder Money Market Series, fixed time deposits
subject to withdrawal penalties having maturities of more than seven
calendar days.
D-2
<PAGE> 56
With respect to Scudder Tax Free Money Market Series:
(17) Under ordinary market conditions, the Fund will maintain at least
80% of the value of its total assets in obligations that are exempt from
federal income taxes and are not subject to the alternative minimum tax.
D-3
<PAGE> 57
SCUDDER MONEY MARKET SERIES
PROXY PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 23, 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., 25th Floor, 345 Park Avenue (at 51st Street),
New York, New York 10154, on October 23, 1997 at 8:30 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 Directors;
[ ] FOR all nominees listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
Nominees: William T. Burgin, Dr. Rosita P. Chang, Edgar R. Fiedler, Peter B.
Freeman, Dr. J.D. Hammond, and Richard M. Hunt.
(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> 58
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
4. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C> <C>
4.1 diversification; 4.6 investment in real estate; 4.11 restricted
4.2 borrowing 4.7 commodities; securities;
4.3 senior securities; 4.8 loans; 4.12 10% of total
4.4 concentration; 4.9 equity or convertible assets in illiquid
4.5 underwriting of securities; securities;
securities; 4.10 exercising control or 4.13 purchase on
management; margin or short
sales;
4.14 puts, calls,
warrants, or
options;
4.15 pledging or
mortgaging assets.
</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.
------------------------------------------------------------------------------
5. Ratification of the selection of Price Waterhouse 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> 59
SCUDDER TAX FREE MONEY MARKET SERIES
PROXY PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF STOCKHOLDERS -- OCTOBER 23, 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 Stockholders of the Fund to be held at the offices of
Scudder, Stevens & Clark, Inc., 25th Floor, 345 Park Avenue (at 51st Street),
New York, New York 10154, on October 23, 1997 at 8:30 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 Directors;
[ ] FOR all nominees listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
Nominees: William T. Burgin, Dr. Rosita P. Chang, Edgar R. Fiedler, Peter B.
Freeman, Dr. J.D. Hammond and Richard M. Hunt.
(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> 60
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
4. To approve the revision of certain fundamental investment policies;
<TABLE>
<S> <C> <C>
4.1 diversification; 4.6 investment in real estate; 4.11 restricted securities;
4.2 borrowing 4.7 commodities; 4.12 10% of total assets in illiquid securities;
4.3 senior securities; 4.8 loans; 4.13 purchase on margin or short sales;
4.4 concentration; 4.9 equity or convertible securities; 4.14 puts, calls, warrants, or options;
4.5 underwriting of securities; 4.10 exercising control or management; 4.15 pledging or mortgaging assets.
</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.
------------------------------------------------------------------------------
5. Ratification of the selection of Price Waterhouse 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> 61
PROXY PROXY
SCUDDER GOVERNMENT MONEY MARKET SERIES
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF STOCKHOLDERS -- OCTOBER 23, 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 Stockholders of the Fund to be held at the offices of
Scudder, Stevens & Clark, Inc., 25th Floor, 345 Park Avenue (at 51st Street),
New York, New York 10154, on October 23, 1997 at 8:30 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 Directors;
[ ] FOR all nominees listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
Nominees: William T. Burgin, Dr. Rosita P. Chang, Edgar R. Fiedler, Peter B.
Freeman, Dr. J.D. Hammond, and Richard M. Hunt.
(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> 62
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
4. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
4.1 diversification; 4.6 investment in real estate; 4.11 restricted securities;
4.2 borrowing 4.7 commodities; 4.12 10% of total assets in illiquid securities;
4.3 senior securities; 4.8 loans; 4.13 purchase on margin or short sales;
4.4 concentration; 4.9 equity or convertible securities; 4.14 puts, calls, warrants, or options;
4.5 underwriting of securities; 4.10 exercising control or management; 4.15 pledging or mortgaging assets.
</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.
------------------------------------------------------------------------------
5. Ratification of the selection of Price Waterhouse 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 Stockholder)
------------------------------------------
(Signature of joint owner, if any)
Dated , 1997
---------------------------------------
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
