AARP Investment Program TWO INTERNATIONAL PLACE BOSTON, MA 02110
from SCUDDER 1-800-253-2277
July 22, 1996
Dear AARP Investment Program Shareholder:
I'm writing to let you know about several topics which require your
attention as a shareholder in the AARP Investment Program from Scudder.
The Trustees of the AARP Mutual Funds considered and approved several
matters affecting the Funds. Before the items can be enacted, they must
be voted on by shareholders of the AARP Mutual Funds.
As a shareholder in the Program, you are asked to consider the items
and cast your votes. The Trustees of the Funds recommend that you vote in
favor of each of these items. It is important that you consider these
items, cast your votes, and return your completed Proxy Card(s) as soon
as possible. This will help to obtain a quorum and reduce expenses of
gathering the vote.
In this package you will find:
o A Proxy Statement, which is the legal document setting forth
the details of the items to be voted upon;
o A Proxy Card for each account you have in the Program, on
which you cast your votes; and
o A Postage Prepaid Envelope, in which you can return your Proxy
Card(s).
The Proxy Cards will be tabulated at a Special Meeting of
Shareholders of the AARP Investment Program to be held on September 13,
1996 at 8:30 a.m. eastern time at the offices of Scudder, Stevens &
Clark, Inc., 13th Floor, Two International Place, Boston, Massachusetts
02110. You are invited to attend the meeting, although you do not need to
be present. Please return the enclosed Proxy Card(s) even if you do plan
to attend the meeting.
To help you understand the items under consideration, I've summarized
them below.
Proposal 1: Election of Trustees
You are asked to elect the Board of Trustees for
each Trust in which the Fund or Funds you invest
are a part. All of the proposed Trustees are
presently serving the AARP Mutual Funds.
Proposal 2: Independent Accountants
You are asked to approve the selection of Price
Waterhouse LLP as the independent accountants for
MIS-91/92/93/94/95/96/97/98/99-1
<PAGE>
the AARP Mutual Funds for the fiscal year ending
September 30, 1997. Price Waterhouse LLP has
served in this capacity since the Funds'
inception.
Proposal 3: Amended and Restated Declarations of Trust
You are asked to approve Amended and Restated
Declarations of Trust for the Funds. The
Declarations of Trust are legal documents
governing policies of the AARP Mutual Funds. The
Amended and Restated Declarations of Trust will
give the Trustees the flexibility to divide the
shares of each Fund into separate classes, and to
set the number of Trustees serving on the Board
of Trustees for each Trust without the need and
expense of a shareholder vote. The Trustees
currently have no intention of dividing the
shares of any Fund into separate classes.
Proposal 4: Modified Diversification Policies
(AARP High Quality Money Fund and AARP High
Quality Tax Free Money Fund shareholders only)
You are asked to approve a modification to the
current fundamental diversification policies of
the AARP High Quality Money Fund and AARP High
Quality Tax Free Money Fund. The modifications
will give the Funds greater flexibility to obtain
commitments from third parties to assure that
particular portfolio securities satisfy the
Funds' credit, maturity and liquidity standards.
Should shareholders approve these items, the Amended and Restated
Declarations of Trust and Modified Diversification Policies will go into
effect on or about October 1, 1996.
Again, it is important for you to consider these items and return
your completed Proxy Card(s) in the envelope provided. The Trustees
recommend that you vote in favor of each of the proposals.
If you have any questions, please feel free to contact us by calling
1-800-253-2277, Monday to Friday, from 8:00 a.m. to 8:00 p.m. eastern
time. One of our AARP Mutual Fund Representatives will be happy to
help you.
We look forward to continuing to meet your investment needs and
helping you achieve your financial objectives.
Sincerely,
/s/Cuyler W. Findlay
Cuyler W. Findlay
Chairman,
AARP Investment
Program from Scudder
We encourage you to read the attached proxy statement which includes more
complete information about the proposals.
<PAGE>
AARP Investment Program
from SCUDDER
NOTICE OF SPECIAL MEETINGS OF SHAREHOLDERS
July 22, 1996
Dear Shareholder:
We will hold Special Meetings of shareholders of each of the nine
mutual funds offered through the AARP Investment Program from Scudder at
8:30 a.m., eastern time, September 13, 1996. The meetings will be held
concurrently at the offices of Scudder, Stevens & Clark, Inc., 13th
Floor, Two International Place, Boston, Massachusetts 02110. These
meetings are being called so that shareholders may vote on several
important issues which are listed in the agenda on the following page.
Please read this proxy statement, which discusses each agenda item.
The Trustees have approved each proposal and recommend that you vote in
favor of each item. If you were a shareholder of record on July 1, 1996,
you are entitled to vote at the meetings or any adjournments of the
meetings. You are welcome to attend the meetings and cast your vote in
person. Whether you plan to attend or not, we urge you to sign and date
the enclosed proxy card(s) as soon as possible and return it in the
enclosed postage prepaid envelope. Your prompt response may save the
Funds the expense of further solicitations to obtain a sufficient number
of votes to hold the meetings.
Sincerely,
Kathryn L. Quirk, Secretary
By order of the Trustees
IMPORTANT--Please fill out, sign, date and return the enclosed
proxy card(s) promptly.
<PAGE>
AARP Investment Program
from SCUDDER
AGENDA AND TABLE OF CONTENTS
The Special Meetings are being called for the following purposes:
For each Trust: Page
(1) To elect the Trustees to hold office until their respective
successors shall have been duly elected and qualified 4
(2) To ratify or reject the action taken by the Trustees in
selecting Price Waterhouse LLP as independent accountants
for the fiscal year ending September 30, 1997 14
(3) To approve or disapprove an Amended and Restated
Declaration of Trust 14
For shareholders of the AARP High Quality Money Fund and
the AARP High Quality Tax Free Money Fund only:
(4) To approve or disapprove modifications to the
current fundamental diversification policies of the
AARP High Quality Money Fund and the AARP High
Quality Tax Free Money Fund 16
The appointed Trustees will also vote on any other matter not now
anticipated but which might properly come before the meetings or any
adjournments of the meetings.
2
<PAGE>
GENERAL INFORMATION
JOINT PROXY STATEMENT
AARP HIGH QUALITY MONEY FUND
(a series of the AARP Cash Investment Funds)
AARP GNMA AND U.S. TREASURY FUND
AARP HIGH QUALITY BOND FUND
(each a series of the AARP Income Trust)
AARP HIGH QUALITY TAX FREE MONEY FUND
AARP INSURED TAX FREE GENERAL BOND FUND
(each a series of the AARP Tax Free Income Trust)
AARP BALANCED STOCK AND BOND FUND
AARP GROWTH AND INCOME FUND
AARP GLOBAL GROWTH FUND
AARP CAPITAL GROWTH FUND
(each a series of the AARP Growth Trust)
GENERAL
This proxy statement, which was mailed on or about July 22, 1996, has
been sent to you in connection with the Special Meetings of shareholders
of the AARP Funds. The meetings will be held concurrently at the same
location and are hereinafter referred to as the "Meeting". As a
shareholder in one or more of the above mutual funds, you are invited to
attend the Meeting, at which shareholders will vote on the matters
described in this proxy statement. Each share you own is entitled to one
vote, which will be cast in accordance with the directions you give on
the enclosed proxy card(s). The Trustees ask that you return your proxy
card(s) at your earliest convenience.
If you sign, date and return the proxy card(s) but give no voting
instructions, your shares will be voted in favor of each of the
proposals. If you change your mind, you may revoke your vote prior to the
Meeting by voting another proxy or by sending a letter or telegram to the
Secretary of the Trusts, c/o Scudder, Stevens & Clark, Inc., 25th Floor,
345 Park Avenue, New York, New York 10154. If you are able to attend the
Meeting and wish to vote your shares in person, you may do so, thereby
revoking any proxy which you have previously mailed. It is important to
send your proxy card(s) whether or not you wish to attend the Meeting.
In order to hold the Meeting, a majority of the shares entitled to be
voted must have been received by proxy or be present at the Meeting.
Proxies which are returned marked to abstain from voting, as well as
proxies returned by brokers or others who have not received voting
instructions and do not have discretion to vote for their clients
("broker non-votes") will be counted towards this majority of shares.
These proxies will not be counted in favor of, but will have no other
effect on, the vote for proposal (1) which requires the affirmative vote
of a plurality of shares voting at the Meeting for each Trust; proposal
(2) which requires the affirmative vote of a majority of shares voting at
the Meeting for each Trust; and proposal (3) which requires the
affirmative vote of a majority of the outstanding voting securities for
3
<PAGE>
PROPOSAL 1
each Trust. Abstentions and broker non-notes will have the effect of a
"No" vote for proposal (4) because this proposal requires the approval of
a specified percentage of the outstanding shares or of the shares present
at the Meeting for each Fund entitled to vote on the proposal. Because of
this, shareholders who hold their shares through a broker or other
nominee are urged to forward their voting instructions.
Shareholders may only vote on matters which concern the Fund or Funds
in which they hold shares. Some of the proposals relate to the Trusts, of
which the Funds are a part. In the case of proposals on behalf of a
Trust, shares of all Funds in that Trust will vote together. In the case
of a proposal on behalf of a Fund within a Trust, only shareholders of
that Fund are entitled to vote. On July 1, 1996, the record date, the
shares outstanding for each Fund were as follows:
AARP CASH INVESTMENT FUNDS
AARP High Quality Money Fund 387,084,882 shares
AARP INCOME TRUST
AARP GNMA and U.S. Treasury Fund 334,424,031 shares
AARP High Quality Bond Fund 32,820,957 shares
AARP TAX FREE INCOME TRUST
AARP High Quality Tax Free Money Fund 113,330,187 shares
AARP Insured Tax Free General Bond Fund 99,014,031 shares
AARP GROWTH TRUST
AARP Balanced Stock and Bond Fund 21,592,713 shares
AARP Growth and Income Fund 92,745,220 shares
AARP Global Growth Fund 4,111,439 shares
AARP Capital Growth Fund 18,955,676 shares
The Funds provide periodic reports to all shareholders which highlight
relevant information, including investment results and a review of
changes made to your Fund's portfolio. You may receive an additional copy
of the most recent annual report for the AARP Investment Program from
Scudder, without charge, by calling (800) 253-2277 or writing the Funds
at P.O. Box 2540, Boston, Massachusetts 02208-2540.
PROPOSAL 1: ELECTION OF TRUSTEES
Each Trust is served by a Board of Trustees who have overall
responsibility for the management of the Funds under Massachusetts law.
Shareholders of the Funds in each Trust are being asked to elect their
Trust's Board of Trustees.
Trustees of each Trust are responsible for the general oversight of
each Fund's business and for assuring that each Fund is managed in the
best interests of its shareholders. The Trustees periodically review each
Fund's investment performance as well as the quality of other services
provided to each Fund and its shareholders by the Fund Manager--Scudder,
Stevens & Clark, Inc., including administration, distribution and
investor servicing. At least annually, the Trustees review the fees paid
to Scudder for these services and the overall level of each Fund's
operating expenses. The Trustees monitor potential conflicts of interest
4
<PAGE>
PROPOSAL 1
among the Funds and between the Funds and Scudder. In carrying out these
responsibilities, the Trustees are assisted by each Trust's accountants
and legal counsel, which are selected by the Trustees and are independent
of Scudder.
All nominees have consented to stand for election and to serve if
elected. If any nominee should be unable to serve, an event not now
anticipated, the proxies will be voted for any replacement nominee whom
the Trustees may designate.
Information About the Nominees
The table below sets forth certain information concerning each of the
nominees for Trustee. At a meeting held on March 20, 1996 the Board of
Trustees approved a "Program Board" where all Trustees would serve on the
Board of Trustees for each of the four Trusts.
Each of the nominees is now a Trustee of at least one of the Trusts
for which he or she has been nominated and, with the exception of Ms.
Anderson and Ms. Canja, who became Trustees after the last Special
Meeting of Shareholders, each was elected to serve as a Trustee of at
least one Trust at the last Special Meeting. Unless otherwise noted, each
of the nominees has engaged in the principal occupation listed in the
following table for more than five years, although not necessarily in the
same capacity.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Present Office with the Trusts, if any; Year First Beneficial Shares Owned
Principal Occupation or Employment and Became a on
Name (Age) Directorships in Publicly Held Companies Trustee May 31, 1996 (1)
---------- ---------------------------------------- ------- ----------------
Carole Lewis President, MASDUN Capital Advisors; Formerly Principal, 1995 AARP Global Growth
Anderson(51) Suburban Capital Markets; Director, VICORP Restaurants, Fund: 667(6)
Inc.; Member of the Board, Association for Corporate AARP Capital Growth
Growth of Washington, D.C.; Trustee, Hasbro Children's Fund: 256(6)
Foundation and Mary Baldwin College.
Adelaide Attard Consultant, Gerontology; Member, New York City Department 1984 AARP High Quality Bond Fund:
(66) of Aging Advisory Council--Appointed by Mayor (1995); 988
Commissioner, County of Nassau, New York, Department of AARP GNMA & U.S. Treasury
Senior Citizen Affairs, (1971-1991); Board Member, Fund: 1,147
American Association of International Aging AARP Balanced Stock & Bond
(1981-present); Member, NYS Community Services for the Fund: 136
Elderly Advisory Council--Appointed by Governor AARP Growth & Income Fund:
(1987-1991); Chairperson, Federal Council on Aging, 222
(1981-1986); U.S. Delegate to 1982 United Nations World AARP Capital Growth Fund: 276
Assembly on Aging.
5
<PAGE>
PROPOSAL 1
Present Office with the Trusts, if any; Year First Beneficial Shares Owned
Principal Occupation or Employment and Became a on
Name (Age) Directorships in Publicly Held Companies Trustee May 31, 1996 (1)
---------- ---------------------------------------- ------- ----------------
Cyril F. Brickfield Honorary President and Special Counsel, American 1984 AARP High Quality Money
(77)* Association of Retired Persons; Former Board Member: Fund: 51,916 (2)
American Association of International Aging, National AARP GNMA & U.S. Treasury
Alzheimer's Association, and American Federation of Aging Fund: 3,643 (2)
Research (AFAR).
Robert N. Butler, Director, International Longevity Center and Professor of 1984 AARP Growth & Income Fund:
M.D.(69) Geriatrics and Adult Development; Chairman, Henry L. 104 (2)
Schwartz Department of Geriatrics and Adult Development,
Mount Sinai Medical Center; Formerly Director, National
Institute on Aging, National Institute of Health.
Esther Canja Vice President, American Association of Retired Persons; 1996 AARP Growth & Income Fund:
(69)* Trustee and Chair, AARP Group Health Insurance Plan; Board 95 (2)
Liaison, National Volunteer Leadership Network Advisory
Committee; Chair, Board Operations Committee; AARP State
Director of Florida (1990-1992).
Linda C. Coughlin President; Managing Director of Scudder, Stevens & Clark, 1991 AARP Insured Tax Free
(44)*+++ Inc. General Bond Fund: 56
AARP Growth & Income Fund: 39
AARP Global Growth Fund: 67
AARP Capital Growth Fund: 26
6
<PAGE>
PROPOSAL 1
Present Office with the Trusts, if any; Year First Beneficial Shares Owned
Principal Occupation or Employment and Became a on
Name (Age) Directorships in Publicly Held Companies Trustee May 31, 1996 (1)
---------- ---------------------------------------- ------- ----------------
Horrace B. Deets Vice Chairman; Executive Director, American Association 1988 AARP Insured Tax Free
(58)*+++ of Retired Persons; Member, Board of Councilors, Andrus General Bond Fund: 3,709 (2)
Gerontology Center; Member of the Board, HelpAge AARP Balanced Stock & Bond
International. Fund: 1,706 (2)
AARP Growth & Income Fund:
155 (2)
Edgar R. Fiedler Vice President and Economic Counselor, The Conference 1984 AARP GNMA & U.S. Treasury
(67) Board, Inc.; Director: The Stanley Works, Zurich-American Fund: 74
Insurance Company, Harris Insight Funds and Emerging AARP High Quality Tax Free
Mexico Fund. Mr. Fiedler serves on the boards of an Money Fund: 1,040
additional 11 funds managed by Scudder. AARP Insured Tax Free
General Bond Fund: 658
Cuyler W. Findlay Chairman; Managing Director of Scudder, Stevens & Clark, 1984 AARP Capital Growth Fund: 511
(63)*+++ Inc. Mr. Findlay serves on the board of an additional fund
managed by Scudder.
Eugene P. Forrester Consultant; International Trade Counselor; Lt. General 1984 AARP High Quality Bond Fund:
(70) (Retired), U.S. Army; Command General, U.S. Army Western 232
Command, Honolulu; Consultant: Digital Equipment Corp., AARP Insured Tax Free
DHI, Philip Morris, PICS Previews, and Whittle General Bond Fund: 191
Communications. AARP Balanced Stock & Bond
Fund: 762
AARP Growth & Income Fund: 2,613
AARP Capital Growth Fund: 2,202
7
<PAGE>
PROPOSAL 1
Present Office with the Trusts, if any; Year First Beneficial Shares Owned
Principal Occupation or Employment and Became a on
Name (Age) Directorships in Publicly Held Companies Trustee May 31, 1996 (1)
---------- ---------------------------------------- ------- ----------------
Wayne F. Haefer Director, Membership Division of AARP; Trustee, Employee's 1993 AARP High Quality Bond Fund:
(59)* Pension and Welfare Trusts of AARP and Retired Persons 115 (2)
Services, Inc.; Formerly Director, Administration and Data AARP Balanced Stock & Bond
Management Division of AARP. Fund: 292 (2) AARP Capital
Growth Fund: 3,519 (2)
George L. Maddox, Professor Emeritus and Director, Long Term Care Resources 1984 AARP GNMA & U.S. Treasury
Jr.(71) Program, Duke University Medical Center; Senior Fellow, Fund: 970 (2)
Center for the Study of Aging and Human Development, Duke AARP Growth & Income Fund:
University; Professor Emeritus of Sociology, Departments 1,952 (2)
of Sociology and Psychiatry, Duke University.
Robert J. Myers Actuarial Consultant; Formerly Executive Director, 1984 AARP High Quality Money
(83) National Commission on Social Security Reform; Director, Fund: 874
NASL Series Trust, Inc. and North American Funds, Inc.; AARP High Quality Bond Fund:
Formerly Director, Board of Pensions, Evangelical Lutheran 127
Church in America; Formerly Chairman, Commission on AARP GNMA & U.S. Treasury
Railroad Retirement Reform; Member, Prospective Payment Fund: 5,748
Assessment Commission. AARP Balanced Stock & Bond
Fund: 346
AARP Growth & Income Fund: 644
AARP Global Growth Fund: 1,184
AARP Capital Growth Fund: 835
8
<PAGE>
PROPOSAL 1
Present Office with the Trusts, if any; Year First Beneficial Shares Owned
Principal Occupation or Employment and Became a on
Name (Age) Directorships in Publicly Held Companies Trustee May 31, 1996 (1)
---------- ---------------------------------------- ------- ----------------
James H. Schulz Professor of Economics and Kirstein Professor of Aging 1984 AARP High
(60) Policy, Policy Center on Aging, Florence Heller School, Quality Money Fund: 2,850 (2)
Brandeis University. AARP GNMA &
U.S. Treasury Fund: 1,175 (3)
AARP High Quality Tax Free
Money Fund: 20,394 (2)
AARP Insured Tax Free
General Bond Fund: 403 (2)
AARP Balanced Stock & Bond
Fund: 59 (2)
AARP Growth & Income Fund:
962 (2)
AARP Capital Growth Fund: 665 (5)
Gordon Shillinglaw Professor Emeritus of Accounting, Columbia University 1984 AARP High Quality Money
(71) Graduate School of Business; Formerly Director and Fund: 2,544
Treasurer, FERIS Foundation of America. Mr. Shillinglaw AARP High Quality Tax Free
serves on an additional 10 funds managed by Scudder. Money Fund: 2,768
AARP High Quality Bond Fund:
383 (2)
AARP GNMA & U.S. Treasury
Fund: 269 (2)
AARP Insured Tax Free
General Bond Fund: 2,949 (4)
AARP Balanced Stock & Bond
Fund: 1,109
AARP Growth & Income Fund:
1,289
AARP Global Growth Fund: 659
AARP Capital Growth Fund: 1,647
</TABLE>
<TABLE>
<CAPTION>
All Trustees and Officers as a Group
<S> <C> <C>
Sole investment Shared investment
and voting power and voting power
---------------- ----------------
AARP High Quality Money Fund 3,418 54,766
AARP GNMA and U.S. Treasury Fund 7,614 5,412
AARP High Quality Bond Fund 1,347 498
AARP High Quality Tax Free Money Fund 3,808 20,394
AARP Insured Tax Free General Bond Fund 1,949 6,018
AARP Balanced Stock and Bond Fund 2,353 2,057
AARP Growth and Income Fund 4,807 3,268
AARP Global Growth Fund 1,910 0
AARP Capital Growth Fund 5,617 4,152
-------- --------
TOTAL 32,823 96,565
</TABLE>
9
<PAGE>
PROPOSAL 1
* Trustees considered by the Trusts and their counsel to be "interested
persons" (which as used in this Proxy Statement is as defined in the
Investment Company Act of 1940, as amended, the "1940 Act") of the
Trusts, of Scudder or of AARP. Mr. Findlay and Ms. Coughlin are deemed
to be interested persons because of their affiliation with Scudder.
Ms. Canja, Messrs. Brickfield, Deets and Haefer are deemed to be
interested persons because of their affiliation with AARP.
+++ Messrs. Deets and Findlay and Ms. Coughlin are members of the
Executive Committee of the Funds.
(1) The information as to beneficial ownership is based on statements
furnished to the Trusts by the nominees. Unless otherwise noted,
beneficial ownership is based on sole voting and investment power.
Beneficial shares owned by each Trustee constituted less than 1/4 of
1% of such class of shares.
(2) Shares held with shared investment and voting power.
(3) 530 shares held with shared investment and voting power.
(4) 1,906 shares held with shared investment and voting power.
(5) 633 shares held with shared investment and voting power.
(6) Shares held on July 15, 1996. These shares are not included in the
totals provided on page 9.
The Trustees and Officers of the Trusts may also serve in similar
capacities for other funds managed by Scudder, Stevens & Clark, Inc.
To the best of the Trusts' knowledge, as of May 31, 1996 no person
owned beneficially more than 5% of the outstanding shares of any of the
Funds.
Committees of the Board--Board Meetings
The Board of Trustees of each of the Trusts met five times during the
fiscal year ended September 30, 1995. Each Trustee attended at least 75%
of the total number of meetings of the Board of Trustees and of all
committees on which he or she serves, except for Horace B. Deets. A
representative of AARP was present at every Board Meeting.
The Trustees, in addition to an Executive Committee, have an Audit
Committee, a Valuation Committee and a Special Nominating Committee.
Audit Committee
The Trustees of each Trust have an Audit Committee which meets to
review with management and the independent accountants the scope of the
audit and the controls of each Trust and its agents. It also reviews and
approves in advance the types of services to be rendered by the
independent accountants; it recommends the selection of independent
accountants for each Trust to the Trustees for approval; and in general
the Committee considers and reports to the Trustees on matters regarding
each Trust's accounting and bookkeeping practices. The Audit Committee of
each Trust met once during the fiscal year ended September 30, 1995. The
composition of the Audit Committees for each of the four Trusts is as
follows:
<TABLE>
<CAPTION>
Composition of the Committee
----------------------------
<S> <C>
AARP Cash Investment Funds Messrs. Myers and Shillinglaw
AARP Income Trust Ms. Anderson, Messrs. Butler, Fiedler and Myers
AARP Tax Free Income Trust Messrs. Forrester, Maddox and Shillinglaw
AARP Growth Trust Ms. Attard, Messrs. Schulz and Shillinglaw
</TABLE>
10
<PAGE>
PROPOSAL 1
Special Nominating Committee
The Trustees of each Trust have a Special Nominating Committee
consisting of those Trustees who are not interested persons of AARP,
Scudder, Stevens & Clark, Inc. or any of the Trusts ("Noninterested
Trustees") as defined in the 1940 Act. The Committee is charged with the
duty of making all nominations for Noninterested Trustees. Shareholders'
recommendations as to nominees received by management are referred to the
Committee for its consideration and action. Each Trust's Nominating
Committee met three times during the fiscal year ended September 30,
1995. The Committee most recently met on March 20, 1996 to consider and
to nominate the Noninterested nominees set forth above.
Executive Officers
In addition to Messrs. Deets and Findlay and Ms. Coughlin, Trustees
who are also Officers of the Trusts, the following persons are Executive
Officers of the Trusts:
<TABLE>
<CAPTION>
Year First
Present Office with the Trusts; Became an
Name (Age) Principal Occupation or Employment(1) Officer(2)
---------- ------------------------------------- ----------
<S> <C> <C>
Edward J. O'Connell (51) Vice President and Assistant Treasurer of the Trusts; Principal of 1988
Scudder, Stevens & Clark, Inc.
Kathryn L. Quirk (43) Vice President and Secretary of the Trusts; Managing Director of 1991
Scudder, Stevens & Clark, Inc.
David S. Lee (62) Vice President and Assistant Treasurer of the Trusts; Managing 1984
Director of Scudder, Stevens & Clark, Inc.
Pamela A. McGrath (42) Vice President and Treasurer of the Trusts; Managing Director of 1990
Scudder, Stevens & Clark, Inc.
Thomas F. McDonough (49) Vice President and Assistant Secretary of the Trusts; Principal of 1984
Scudder, Stevens & Clark, Inc.
Margaret D. Hadzima (44) Vice President of the Trusts; Managing Director of Scudder, Stevens & 1996
Clark, Inc.
Thomas W. Joseph (57) Vice President of the Trusts; Principal of Scudder, Stevens & Clark, 1988
Inc.
James W. Pasman (44) Vice President of the Trusts; Principal of Scudder, Stevens & Clark, 1996
Inc.
Howard Schneider (39) Vice President of the Trusts; Managing Director of Scudder, Stevens & 1991
Clark, Inc.
Cornelia M. Small (52) Vice President of the Trusts; Managing Director of Scudder, Stevens & 1984
Clark, Inc.
</TABLE>
(1)Unless otherwise stated, all Executive Officers have been
associated with Scudder for more than five years, although not
necessarily in the same capacity.
(2)The President, Treasurer and Secretary each hold office until his
or her successor has been duly elected and qualified, and all other
Officers hold office at the pleasure of the Trustees.
11
<PAGE>
PROPOSAL 1
Payments to Trustees and Officers
Trustees and Officers who are affiliated with Scudder or AARP receive
no compensation from the Trusts for their services as Trustees or
Officers. Total payments made to all Trustees not affiliated with Scudder
or AARP for the fiscal year ended September 30, 1995 for each Trust were
as follows: AARP Cash Investment Funds, $19,837; AARP Income Trust,
$60,387; AARP Tax Free Income Trust, $61,436; AARP Growth Trust, $81,463.
In addition to out-of-pocket expenses, each unaffiliated Trustee
currently receives an annual fee of $2,000 per Fund; a fee of $270 for
attending each Trustees' meeting; $200 for attending each audit and
contract committee meeting; and $100 for attending each additional
committee meeting. The Trustees approved a new compensation structure,
effective October 1, 1996, which is consistent with the goal of
increasing the number of Trustees serving on the Board of Trustees of
each Trust with little or no additional cost to the Funds. The new
compensation structure provides that, in addition to out-of-pocket
expenses, each unaffiliated Trustee will receive an annual retainer of
$10,000 for serving as a Trustee of the AARP Investment Program. In
addition, each Trustee will receive for each Fund on which they serve, a
fee of $175 for attending each Trustees' meeting; $150 for attending each
audit and contract committee meeting; $100 for attending each nominating
committee meeting; and $125 for attending each additional committee
meeting. Scudder and AARP Financial Services Corporation (AFSC), which
receive fees for the services they perform for the Funds, pay the
expenses of their officers, directors or employees who serve as Officers
and/or Trustees of the Trusts.
The following Compensation Table provides, in tabular form, the following
data:
Column (1): all Trustees who receive compensation from the Trusts.
Column (2): aggregate compensation received by a Trustee from all the
series of a Trust.
Column (3): total compensation received by a Trustee from the Trusts,
plus compensation received from all Funds that are advised by Scudder
(the "Fund Complex") for which a Trustee serves. The total number of
Funds from which a Trustee receives such compensation is also provided.
12
<PAGE>
PROPOSAL 1
<TABLE>
<CAPTION>
Compensation Table
for the year ended December 31, 1995
=============================================================================================================================
(1) (2) (3)
Aggregate Compensation from
(a) (b) (c) (d)
AARP Cash AARP Income AARP Tax Free AARP Growth Trust
Investment Fund Trust consisting Income Trust consisting of four
consisting of of two Funds: consisting of two Funds: AARP Balanced
one Fund: AARP AARP GNMA and Funds: AARP High Stock and Bond Fund,
High Quality U.S. Treasury Quality Tax Free AARP Growth and Income Total Compensation
Money Fund Fund and AARP Money Fund and Fund, AARP Global from the AARP
High Quality AARP Insured Tax Growth Fund*, and Trusts and Fund
Name of Person, Bond Fund Free General AARP Capital Complex Paid to
Position Bond Fund Growth Fund Trustee
<S> <C> <C> <C> <C> <C>
=============================================================================================================================
Carole L. Anderson, $538 $1076 -- -- $1,614
Trustee (3 funds)
Adelaide Attard, $3177 $7387 -- $11,677 $22,241
Trustee (6 funds)
Robert N. Butler, -- $7140 -- $10,110 $17,250
Trustee (5 funds)
Mary Johnston Evans, $3477 -- $6553 $10,430 $33,460
Retired Trustee as of (7 funds)
May 31, 1996
Edgar R. Fiedler, $3720 $8000 $7600 -- $81,713**
Trustee (15 funds)
Eugene P. Forrester, -- $8160 $8560 -- $16,720
Trustee (4 funds)
William B. Macomber, -- -- $7680 $10,920 $18,600
Retired Trustee as of (5 funds)
March 31, 1996
George L. Maddox, Jr., -- $8560 $8960 -- $17,520
Trustee (4 funds)
Robert J. Myers, $3950 $7892 -- $11,238 $23,080
Trustee (6 funds)
James H. Schulz, -- $5968 $7006 $11,108 $24,082
Trustee (7 funds)
Gordon Shillinglaw, Trustee $4008 -- $8026 $12,046 $102,097
(15 funds)
</TABLE>
* AARP Global Growth Fund commenced operations on February 1, 1996.
** Includes $48,143 accrued through a deferred compensation program. As of
December 31, 1995, Mr. Fiedler had a total of $206,003 accrued in a
deferred compensation program for serving on the Board of Directors of
Scudder Institutional Fund, Inc., which had four active portfolios during
1995 and $208,215 accrued in a deferred compensation program for serving
on the Board of Scudder Fund, Inc., which has five active portfolios. As
of April 3, 1996, Scudder Institutional Fund, Inc. has five active
portfolios.
Required Vote
For each Trust, election of each of the listed nominees for Trustee
requires the affirmative vote of a plurality of the votes cast at the
Meeting in person or by proxy. The Trustees recommend that shareholders
vote in favor of each of the nominees.
13
<PAGE>
PROPOSALS 2 AND 3
PROPOSAL 2: RATIFICATION OR REJECTION OF
SELECTION OF INDEPENDENT
ACCOUNTANTS
Each year, the Board of Trustees for each Trust selects independent
accountants to audit the Funds' financial statements.
At meetings held on June 18, 1996, the Trustees of each Trust,
including a majority of the Noninterested Trustees, selected Price
Waterhouse LLP to act as independent accountants for the Trusts for the
fiscal year ending September 30, 1997. Price Waterhouse LLP are
independent accountants and have advised the Trusts that they have no
direct financial or material indirect financial interest in the Trusts.
One or more representatives of Price Waterhouse LLP are expected to
be present at the Meeting and will have an opportunity to make a
statement if they desire to do so. In addition, they will be available to
respond to appropriate questions.
The Trusts' financial statements for the fiscal year ended September
30, 1995 were examined by Price Waterhouse LLP. In connection with its
audit services, Price Waterhouse LLP reviewed the financial statements
included in the Trusts' reports to shareholders and their filings with
the Securities and Exchange Commission.
Required Vote
For each Trust, ratification of the selection of independent
accountants requires the affirmative vote of a majority of the votes cast
at the Meeting in person or by proxy. The Trustees recommend that
shareholders ratify the selection of Price Waterhouse LLP as independent
accountants.
PROPOSAL 3: APPROVAL OR DISAPPROVAL OF AMENDED
AND RESTATED DECLARATIONS OF TRUST
The Trustees propose that each Trust's Declaration of Trust be
amended and restated to expressly permit the division of shares of
beneficial interest of the Funds into separate classes, and to allow the
Trustees to set the number of Trustees serving on each Trust's Board of
Trustees. The principal purpose of the proposed amendments is to give the
Trustees additional flexibility to manage the business of the Trusts and
to adapt to changing market conditions. If this proposal is approved,
each Declaration of Trust will be amended and restated as shown in
Exhibit A to this Proxy Statement.
Different Classes of Shares
The Trusts, each a Massachusetts business trust, have authorized
capital consisting of an unlimited number of shares of beneficial
interest of $.01 par value per share (the "Shares"), all of which are of
one class and have equal rights as to voting, dividends and liquidation.
Under each Declaration of Trust, as currently in effect (the "Declaration
of Trust"), the Trustees have the authority to issue two or more series
of Shares (each a "Series") and to designate the relative rights and
14
<PAGE>
PROPOSAL 3
preferences as between the different Series. Under the Declaration of
Trust, shareholders of each Series have an interest in a separate
portfolio of assets.
Division of the Shares into different classes (each a "Class") would
permit Shares of different Classes to be distributed by different
methods, and shareholders of different Classes might bear different
expenses in connection with such methods of distribution. Shareholders of
different Classes of a particular Series would continue to have an
interest in the same portfolio of assets. For example, the Shares of one
Class might be made available through an administrative agreement with a
bank, while the Shares of another Class might continue to be available
through Scudder Investor Services, Inc. ("the Distributor"). In such an
instance, the bank might be compensated for its services through payment
by a Fund of an administrative fee, which would be allocated only to the
Shares of the Class available through the bank. In the future, there may
be other considerations which would make it advisable to divide shares
into different classes.
The Trustees have no present intention of taking the action necessary
to effect the division of Shares into separate Classes, nor of changing
the method of distribution of Shares of each Fund. If the Shares were
divided into Classes and it was proposed that one or more Classes bear
expenses of an activity primarily intended to result in the sale of
Shares, the vote of a majority of the outstanding voting securities of
the affected Class or Classes would be required to approve a "Rule 12b-1
plan" to permit the bearing of such expenses. No 12b-1 plan is currently
in effect and, accordingly, the Funds do not bear any of the expenses of
distribution. No sales commission or load is charged to the investor on
Shares sold through the Distributor.
Because allocation of expenses among different Classes could affect
the calculation of each Fund's net asset value per Share, the proposed
Amended and Restated Declaration of Trust would also revise provisions
relating to such calculations. The Amended and Restated Declaration of
Trust would also state explicitly that a shareholder of a particular
Series or Class thereof is not entitled to bring a derivative or class
action on behalf of any other Series or Class (or shareholder of any
other Series or Class) of a Fund and that any indemnification to a
shareholder would be solely from one or more Series of which the
shareholder holds shares.
Number of Trustees
Each Trust's Declaration of Trust currently states that the number of
Trustees shall be such number as shall be fixed from time to time by a
written instrument signed by a majority of such Trustees, provided that
the number of Trustees shall be more than one and no more than fifteen.
The Trustees propose that the Declarations of Trust be amended and
restated to allow the Trustees to determine the appropriate number of
Trustees by majority vote, as long as there is a minimum of one Trustee
serving on each Trust. Thus, if increasing the number of Trustees over
fifteen was necessary, the Trustees would have clear authority to
increase the number of Trustees serving on each Trust without the expense
of calling a shareholder meeting to amend the Declarations of Trust.
The purpose of changing this provision in the Amended and Restated
Declaration of Trust is to allow for the implementation of the AARP
15
<PAGE>
PROPOSALS 3 AND 4
Program Board (as discussed under Proposal 1) which will allow all
Trustees to serve on each of the four Trusts within the AARP Investment
Program from Scudder. The Trustees believe that the Program Board will
allow for greater efficiency by having a Board of Trustees consistent for
each Trust, but at little or no additional cost to the Funds.
In addition, the Amended and Restated Declaration of Trust includes a
provision for Scudder to employ one or more sub-advisers from time to
time, changes to proxy and report delivery requirements and changes made
since the last Special Meeting of Shareholders regarding setting the
minimum account size.
Required Vote
Pursuant to the Declarations of Trust, approval of each Amended and
Restated Declaration of Trust requires the affirmative vote of a majority
of the outstanding voting securities entitled to vote. If an affirmative
vote of shareholders is not obtained with respect to the shares entitled
to vote, the present Declaration for that Trust will continue in effect.
The Trustees recommend that shareholders vote in favor of the Amended and
Restated Declarations of Trust.
PROPOSAL 4: APPROVAL OR DISAPPROVAL OF MODIFIED
DIVERSIFICATION POLICIES
(AARP High Quality Money Fund and
AARP High Quality Tax Free Money Fund)
The Securities and Exchange Commission ("SEC") has adopted extensive
changes to the principal rule governing the operations of money market
funds -- Rule 2a-7 ("Rule") under the Investment Company Act of 1940
("1940 Act"). The Rule is intended to help assure that money market funds
can maintain a stable net asset value. It contains extensive restrictions
in addition to those concerning diversification, including quality and
maturity standards. The amendments to the Rule generally take effect on
October 3, 1996.
The SEC recognized, in adopting the Rule, that certain of its
provisions might not be consistent with the definition of "diversified
company" contained in the 1940 Act. It determined, however, that a money
market fund that complies with applicable diversification requirements of
the Rule will be deemed to satisfy the 1940 Act's requirements for
classification as a "diversified company."
Each of the AARP Funds operates as a "diversified company." Each Fund
has adopted an investment policy reflecting the requirements of the 1940
Act applicable to a diversified company. That policy provides that none
of the Funds may:
with respect to 75% of each Fund's total net assets, purchase more
than 10% of the voting securities of any one issuer or invest more
than 5% of the value of the total assets of the Fund in the securities
of any one issuer (except for investments in obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities
and except securities of other investment companies).
This policy, as required by the 1940 Act, may not be changed except
with the approval of shareholders.
16
<PAGE>
PROPOSAL 4
The Trustees have determined that it would be in the best interests
of AARP High Quality Money Fund and AARP High Quality Tax Free Money Fund
as well as any other money market fund that becomes an AARP Fund
(collectively, "Money Funds") to operate in accordance with the Rule, as
amended. The Trustees have also determined that the diversification
standards of the Rule, rather than those stated above, should govern the
activities of the Money Funds.
The modification to the diversification policies will give the Funds
greater flexibility to obtain commitments from third parties to assure
that particular portfolio securities satisfy the Funds' credit, maturity
and liquidity standards.
Management of the Money Funds believes that the protections of the
Rule, including its diversification and other requirements, can fairly be
characterized as stricter overall than what is otherwise required by the
1940 Act. They therefore believe that a change in the Money Funds'
diversification policies to be consistent with the Rule will provide the
Money Funds with desirable flexibility (within the parameters of a very
restrictive Rule), will permit those Funds to operate more effectively,
and will be consistent with the investment objectives of each Money Fund
and with the best interests of the Money Funds and their shareholders.
Modification of Diversification Policies
The Trustees of the AARP Cash Investment Funds and the Trustees of
AARP Tax Free Income Trust propose that the diversification policies of
the AARP High Quality Money Fund and the AARP High Quality Tax Free Money
Fund be modified to provide that none of the Funds may:
with respect to 75% of each Fund's total assets, purchase more than
10% of the voting securities of any one issuer or invest more than 5%
of the value of the total assets of the Fund in the securities of any
one issuer (except for investments in obligations issued or guaranteed
by the U.S. Government or its agencies or instrumentalities, cash and
cash equivalents and securities of other investment companies),
provided that the amount of the total assets of each of the AARP High
Quality Money Fund and AARP High Quality Tax Free Money Fund as well
as of any other fund that is operated as a money market fund, that may
be invested in the securities of any one issuer will, instead, be
limited in accordance with federal law, regulation and regulatory
interpretation applicable to money market funds, as amended from time
to time.
Required Vote
Approval of this proposal requires the affirmative vote of a majority
of the outstanding voting securities of each Fund, which means, for each
Fund (1) the holders of more than 50% of the outstanding shares of that
Fund or (2) the holders of 67% or more of the shares of that Fund present
at the Meeting, if the holders of more than 50% of the shares of that
Fund are present at the Meeting in person or by proxy, whichever is less.
The Trustees have considered various factors and believe that this
proposal is in the best interest of the Funds' shareholders. If an
affirmative vote is not obtained as to any restriction, that fundamental
investment restriction will remain unchanged. The Trustees recommend that
shareholders vote in favor of the modifications to the Funds'
diversification policies as described above.
17
<PAGE>
ADDITIONAL INFORMATION
ADDITIONAL INFORMATION
Investment Adviser
Scudder is one of the most experienced investment counsel firms in
the United States. It was established in 1919 as a partnership and was
restructured as a Delaware corporation in 1985. The principal source of
Scudder's income is professional fees received from providing continuing
investment advice. Scudder's subsidiary, Scudder Investor Services, Inc.,
Two International Place, Boston, MA 02110, acts as the principal
underwriter for shares of registered open-end investment companies.
Scudder provides investment counsel for many individuals and
institutions, including insurance companies, endowments, industrial
corporations and financial and banking organizations. Today, Scudder
manages more than $100 billion in assets for clients around the world.
Scudder is a Delaware corporation. Daniel Pierce* is the Chairman
of the Board of Scudder. Edmond D. Villani# is the President and Chief
Executive Officer of Scudder. Stephen R. Beckwith#, Lynn S. Birdsong#,
Nicholas Bratt#, E. Michael Brown*, Mark S. Casady*, Linda C. Coughlin*,
Margaret D. Hadzima*, Jerard K. Hartman#, Richard A. Holt@, Dudley H.
Ladd*, John T. Packard+++, Kathryn L. Quirk#, Cornelia M. Small# and
Stephen A. Wohler* are the other members of the Board of Directors of
Scudder. The principal occupation of each of the above named individuals
is serving as a Managing Director of Scudder.
---------------------------
* 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
All of the outstanding voting and nonvoting securities of Scudder are
held of record by Stephen R. Beckwith, Juris Padegs, Daniel Pierce and
Edmond D. Villani in their capacity as the representatives (the
"Representatives") of the beneficial owners of such securities, pursuant
to a Security Holders' Agreement among Scudder, the beneficial owners of
securities of Scudder and the Representatives. Pursuant to the Security
Holders' Agreement, the Representatives have the right to reallocate
shares among the beneficial owners from time to time. Such reallocation
will be at net book value in cash transactions. All Managing Directors of
Scudder own voting and nonvoting stock; all Principals own nonvoting
stock.
Other Matters
The Board of Trustees does not know of any matters to be brought
before the Meeting other than those mentioned in this Proxy Statement.
The appointed Trustees will vote on any other business that comes before
the Meeting or any adjournments thereof in accordance with their best
judgment.
Please complete and sign the enclosed proxy card(s) and return them
in the envelope provided so that the Meeting may be held and action may
be taken, with the greatest possible number of shares participating, on
the matters described in this Proxy Statement. This will not preclude
your voting in person if you attend the Meeting.
18
<PAGE>
MISCELLANEOUS
MISCELLANEOUS
Proxies will be solicited by mail and may be solicited in person or
by telephone or facsimile by Officers of the Trusts or Scudder. The
expenses connected with the solicitation of these proxies and with any
further proxies which may be solicited by the Officers of the Trusts or
Scudder in person, by telephone or by facsimile will be borne by the
particular Trust. The Trusts will reimburse banks, brokers and other
persons holding Trust shares registered in their names, or in the names
of their nominees, for their expenses incurred in sending proxy material
to and obtaining proxies from the beneficial owners of such shares.
For each Trust, in the event that sufficient votes in favor of any
proposal set forth in the Agenda are not received by September 13, 1996,
the persons named on the enclosed proxy card(s) may propose one or more
adjournments of the Meeting to permit further solicitation of proxies.
Any such adjournment will require the affirmative vote of a majority of
such shares entitled to vote on the adjourned matter present in person or
by proxy at the session of the Meeting to be adjourned. The persons named
as appointed Trustees on the enclosed proxy card(s) will vote in favor of
such adjournment those proxies which they are entitled to vote in favor
of the proposal for which further solicitation of proxies is to be made.
They will vote against any such adjournment those proxies required to be
voted against such proposal. The costs of any such additional
solicitation and of any adjourned session will be borne by the respective
Trust.
Shareholders wishing to submit proposals for inclusion in a proxy
statement for any subsequent shareholders' meeting should send their
written proposals to Kathryn L. Quirk, Secretary of the Trusts, c/o
Scudder, Stevens & Clark, Inc., 25th Floor, 345 Park Avenue (at 51st
Street), New York, New York 10154 within a reasonable time before the
solicitation of proxies for such shareholders' meeting. The timely
submission of a proposal does not guarantee its inclusion.
By order of the Trustees,
Kathryn L. Quirk
Secretary
345 Park Avenue
New York, New York 10154
July 22, 1996
19
<PAGE>
Exhibit A
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
AARP ________ TRUST
DATED: September __, 1996
A-1
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C> <C>
ARTICLE I
NAME AND DEFINITIONS A-4
Section 1.1. Name A-4
Section 1.2. Definitions A-4
ARTICLE II
TRUSTEES A-6
Section 2.1. General Powers A-6
Section 2.2. Investments A-6
Section 2.3. Legal Title A-7
Section 2.4. Issuance and Repurchase of Shares A-8
Section 2.5. Delegation; Committees A-8
Section 2.6. Collection and Payment A-8
Section 2.7. Expenses A-8
Section 2.8. Manner of Acting; By-laws A-9
Section 2.9. Miscellaneous Powers A-9
Section 2.10. Principal Transactions A-9
Section 2.11. Number of Trustees A-9
Section 2.12. Election and Term A-9
Section 2.13. Resignation and Removal A-10
Section 2.14. Vacancies A-10
Section 2.15. Delegation of Power to Other Trustees A-10
ARTICLE III
CONTRACTS A-11
Section 3.1. Distribution Contract A-11
Section 3.2. Advisory or Management Contract A-11
Section 3.3. Affiliations of Trustees or Officers, Etc. A-11
Section 3.4. Compliance with 1940 Act A-12
ARTICLE IV
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS A-12
Section 4.2. Non-Liability of Trustees, Etc. A-12
Section 4.3. Mandatory Indemnification A-13
Section 4.4. No Bond Required of Trustees A-14
Section 4.5. No Duty of Investigation; Notice
in Trust Instruments, Etc. A-14
Section 4.6. Reliance on Experts, Etc. A-14
ARTICLE V
SHARES OF BENEFICIAL INTEREST A-15
Section 5.1. Beneficial Interest A-15
Section 5.2. Rights of Shareholders A-15
Section 5.3. Trust Only A-15
Section 5.4. Issuance of Shares A-15
Section 5.5. Register of Shares A-15
Section 5.6. Transfer of Shares A-16
A-2
<PAGE>
Section 5.7. Notices, Reports A-16
Section 5.8. Treasury Shares A-16
Section 5.9. Voting Powers A-17
Section 5.10. Meetings of Shareholders A-17
Section 5.11. Series Designation A-17
Section 5.12. Assent to Declaration of Trust A-19
Section 5.13. Class Designation A-19
ARTICLE VI
REDEMPTION AND REPURCHASE OF SHARES A-20
Section 6.1. Redemption of Shares A-20
Section 6.2. Price A-20
Section 6.3. Payment A-20
Section 6.4. Effect of Suspension of Determination
of Net Asset Value A-21
Section 6.5. Repurchase by Agreement A-21
Section 6.6. Redemption of Shareholder's Interest A-21
Section 6.7. Redemption of Shares in Order to Qualify as Regulated
Investment Company; Disclosure of Holding A-21
Section 6.8. Reductions in Number of Outstanding Shares
Pursuant to Net Asset Value Formula A-22
Section 6.9. Suspension of Right of Redemption A-22
ARTICLE VII
DETERMINATION OF NET ASSET VALUE,
NET INCOME AND DISTRIBUTIONS A-22
Section 7.1. Net Asset Value A-22
Section 7.2. Distributions to Shareholders A-23
Section 7.3. Determination of Net Income; Constant Net Asset Value;
Reduction of Outstanding Shares A-23
Section 7.4. Allocation Between Principal and Income A-24
Section 7.5. Power to Modify Foregoing Procedures A-24
ARTICLE VIII
DURATION; TERMINATION OF TRUST;
AMENDMENT; MERGERS, ETC. A-24
Section 8.1. Duration A-24
Section 8.2. Termination of Trust A-24
Section 8.3. Amendment Procedure A-25
Section 8.4. Merger, Consolidation and Sale of Assets A-26
Section 8.5. Incorporation A-26
ARTICLE IX
REPORTS TO SHAREHOLDERS A-26
ARTICLE X
MISCELLANEOUS A-27
Section 10.1. Filing A-27
Section 10.2. Governing Law A-27
Section 10.3. Counterparts A-27
Section 10.4. Reliance by Third Parties A-27
Section 10.5. Provisions in Conflict with Law or Regulations A-27
</TABLE>
A-3
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
AARP ________ TRUST
DATED: September __, 1996
AMENDED AND RESTATED DECLARATION OF TRUST made September __, 1996 by a
majority of the Trustees of AARP __________ Trust (together with all other
persons from time to time duly elected, qualified and serving as Trustees in
accordance with the provisions of Article II hereof, the "Trustees").
WHEREAS, the undersigned, being duly elected and qualified Trustees of
AARP _____________ Trust (the "Trust"), a business trust organized under the
laws of the Commonwealth of Massachusetts, pursuant to an Amended and Restated
Declaration of Trust dated September __, 1996, as amended, do hereby certify
that at a meeting of the Shareholders of the Trust, by favorable vote on
September __, 1996, of a majority of the shares issued and entitled to vote, the
Shareholders adopted the Amended and Restated Declaration of Trust as follows:
ARTICLE I
NAME AND DEFINITIONS
Section 1.1. Name. The name of the trust created hereby, until and
unless changed by the Trustees as provided in Section 8.3(a) hereof, is the
"AARP ___________Trust."
Section 1.2. Definitions. Wherever they are used herein, the following
terms have the following respective meanings:
(a) "By-laws" means the By-laws referred to in Section 2.8 hereof,
as from time to time amended.
(b) "Class" means the two or more Classes as may be established
and designated from time to time by the Trustees pursuant to Section 5.13
hereof.
(c) The term "Commission" has the meaning given it in the 1940 Act. The
term "Interested Person" has the meaning given it in the 1940 Act, as modified
by any applicable order or orders of the Commission. Except as otherwise defined
by the Trustees in conjunction with the establishment of any series of Shares,
the term "vote of a majority of the Shares outstanding and entitled to vote"
shall have the same meaning as the term "vote of a majority of the outstanding
voting securities" given it in the 1940 Act.
(d) "Custodian" means any Person other than the Trust who has custody
of any Trust Property as required by Section 17(f) of the 1940 Act, but does not
include a system for the central handling of securities described in said
Section 17(f).
(e) "Declaration" means this Amended and Restated Declaration of Trust,
as further amended from time to time. Reference in this Declaration of Trust to
A-4
<PAGE>
"Declaration," "hereof," "herein," and "hereunder" shall be deemed to refer to
this Declaration rather than exclusively to the article or section in which such
words appear.
(f) "Distributor" means the party, other than the Trust, to the
contract described in Section 3.1 hereof.
(g) "His" shall include the feminine and neuter, as well as the
masculine, genders.
(h) "Investment Adviser" means the party, other than the Trust, to
the contract described in Section 3.2 hereof.
(i) "Municipal Bonds" means obligations issued by or on behalf
of states, territories of the United States and the District of Columbia and
their political subdivisions, agencies and instrumentalities, the interest from
which is exempt from regular Federal income tax.
(j) The "1940 Act" means the Investment Company Act of 1940, as
amended from time to time.
(k) "Person" means and includes individuals, corporations,
partnerships, trusts, associations, joint ventures and other entities, whether
or not legal entities, and governments and agencies and political subdivisions
thereof.
(l) "Series" individually or collectively means the two or more
Series as may be established and designated from time to time by the Trustees
pursuant to Section 5.11 hereof. Unless the context otherwise requires, the term
"Series" shall include Classes into which shares of the Trust, or of a Series,
may be divided from time to time.
(m) "Shareholder" means a record owner of Outstanding Shares.
(n) "Shares" means the equal proportionate units of interest into
which the beneficial interest in the Trust shall be divided from time to
time, including the Shares of any and all Series and Classes which may be
established by the Trustees, and includes fractions of Shares as well as
whole Shares. "Outstanding Shares" means those Shares shown from time to time
on the books of the Trust or its Transfer Agent as then issued and outstanding,
but shall not include Shares which have been redeemed or repurchased by the
Trust and which are at the time held in the treasury of the Trust.
(o) "Transfer Agent" means any one or more Persons other than the
Trust who maintains the Shareholder records of the Trust, such as the list
of Shareholders, the number of Shares credited to each account, and the like.
(p) The "Trust" means AARP _________ Trust.
(q) The "Trust Property" means any and all property, real or
personal, tangible or intangible, which is owned or held by or for the
account of the Trust or the Trustees.
(r) The "Trustees" means the person or persons who has or have
signed this Declaration, so long as he or they shall continue in office in
accordance with the terms hereof, and all other persons who may from time to
time or be duly qualified and serving
A-5
<PAGE>
as Trustees in accordance with the provisions of Article II hereof,
and reference herein to a Trustee or the Trustees shall refer to such
person or persons in this capacity or their capacities as trustees
hereunder.
Section 1.3. Principal Place of Business. The principal place of
business of the Trust shall be Two International Place, Boston, Massachusetts.
ARTICLE II
TRUSTEES
Section 2.1. General Powers. The Trustees shall have exclusive and
absolute control over the Trust Property and over the business of the Trust to
be the same extent as if the Trustees were the sole owners of the Trust Property
and business in their own right, but with such powers of delegation as may be
permitted by this Declaration. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without the Commonwealth of Massachusetts,
in any and all states of the United States of America, in the District of
Columbia, and in any and all commonwealths, territories, dependencies, colonies,
possessions, agencies or instrumentalities of the United States of America and
of foreign governments, and to do all such other things and execute all such
instruments as they deem necessary, proper or desirable in order to promote the
interests of the Trust although such things are not herein specifically
mentioned. Any determination as to what is in the interests of the Trust made by
the Trustees in good faith shall be conclusive. In construing the provisions of
this Declaration, the presumption shall be in favor of a grant of power to the
Trustees.
The enumeration of any specific power herein shall not be construed as
limiting the aforesaid power. Such powers of the Trustees may be exercised
without order of or resort to any court.
Section 2.2. Investments. The Trustees shall have the power:
(a) To operate as and carry on the business of an investment
company, and exercise all the powers necessary and appropriate to the conduct of
such operations.
(b) To invest in, hold for investment, or reinvest in,
securities, including common and preferred stocks; warrants; bonds, debentures,
bills, time notes and all other evidences of indebtedness; negotiable or
non-negotiable instruments; government securities, including securities of any
state, municipality or other political subdivision thereof, or any governmental
or quasi-governmental agency or instrumentality; and money market instruments
including bank certificates of deposit, finance paper, commercial paper, bankers
acceptances and all kinds of repurchase agreements, of any corporation, company,
trust, association, firm or other business organization however established, and
of any country, state, municipality or other political subdivision, or any
governmental or quasi-governmental agency or instrumentality.
(c) To acquire (by purchase, subscription or otherwise), to
hold, to trade in and deal in, to acquire any rights or options to purchase or
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sell, to sell or otherwise dispose of, to lend, and to pledge any such
securities and to enter into repurchase agreements and forward foreign currency
exchange contracts, to purchase and sell futures contracts on securities,
securities indices and foreign currencies, to purchase or sell options on such
contracts, foreign currency contracts and foreign currencies and to engage in
all types of hedging and risk management transactions, as determined appropriate
by the Trustees.
(d) To exercise all rights, powers and privileges of ownership
or interest in all securities, repurchase agreements, future contracts and
options and other assets included in the Trust Property, including the right to
vote thereon and otherwise act with respect thereto and to do all acts for the
preservation, protection, improvement and enhancement in value of all such
assets.
(e) To acquire (by purchase, lease or otherwise) and to hold,
use, maintain, develop and dispose of (by sale or otherwise) any property, real
or personal, including cash, and any interest therein.
(f) To borrow money and in this connection issue notes or
other evidence of indebtedness; to secure borrowings by mortgaging, pledging or
otherwise subjecting as security the Trust Property; to endorse, guarantee, or
undertake the performance of any obligation or engagement of any other Person
and to lend Trust Property.
(g) To aid by further investment any corporation, company,
trust, association or firm, any obligation of or interest in which is included
in the Trust Property or in the affairs of which the Trustees have any direct or
indirect interest; to do all acts and things designed to protect, to preserve,
improve or enhance the value of such obligation or interest, and to guarantee or
become surety on any or all of the contracts, stocks, bonds, notes, debentures
and other obligations of any such corporation, company, trust, association or
firm.
(h) To enter into a plan of distribution and any related
agreements whereby the Trust may finance directly or indirectly any activity
which is primarily intended to result in the sale of Shares.
(i) In general to carry on any other business in connection
with or incidental to any of the foregoing powers, to do everything necessary,
suitable or proper for the accomplishment of any purpose or the attainment of
any object or the furtherance of any power hereinbefore set forth, either alone
or in association with others, and to do every other act or thing incidental or
appurtenant to or growing out of or connected with the aforesaid business or
purposes, objects or powers.
The foregoing clauses shall be construed both as objects and powers,
and the foregoing enumeration of specific powers shall not be held to limit or
restrict in any manner the general powers of the Trustees.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust, nor shall the Trustees be limited
by any law limiting the investments which may be made by fiduciaries.
Section 2.3. Legal Title. Legal title to all the Trust Property,
including the property of any Series of the Trust, shall be vested in the
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Trustees as joint tenants except that the Trustees shall have power to cause
legal title to any Trust Property to be held by or in the name of one or more of
the Trustees, or in the name of the Trust, or in the name of any other Person as
nominee, on such terms as the Trustees may determine, provided that the interest
of the Trust therein is deemed appropriately protected. The right, title and
interest of the Trustees in the Trust Property and the property of each Series
of the Trust shall vest automatically in each Person who may hereafter become a
Trustee. Upon the termination of the term of office, resignation, removal or
death of a Trustee he shall automatically cease to have any right, title or
interest in any of the Trust Property or the property of any Series of the
Trust, and the right, title and interest of such Trustee in the Trust Property
shall vest automatically in the remaining Trustees. Such vesting and cessation
of title shall be effective whether or not conveyancing documents have been
executed and delivered.
Section 2.4. Issuance and Repurchase of Shares. The Trustees shall have
the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of, transfer, and otherwise deal in Shares and, subject
to the provisions set forth in Articles VI and VII and Section 5.11 hereof, to
apply to any such repurchase, redemption, retirement, cancellation or
acquisition of Shares any funds or property of the particular series of the
Trust with respect to which such Shares are issued, whether capital or surplus
or otherwise, to the full extent now or hereafter permitted by the laws of the
Commonwealth of Massachusetts governing business corporations.
Section 2.5. Delegation; Committees. The Trustees shall have power to
delegate from time to time to such of their number or to officers, employees or
agents of the Trust the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the Trustees or
otherwise as the Trustees may deem expedient, to the same extent as such
delegation is permitted by the 1940 Act.
Section 2.6. Collection and Payment. The Trustees shall have power to
collect all property due to the Trust; to pay all claims, including taxes,
against the Trust Property; to prosecute, defend, compromise or abandon any
claims relating to the Trust Property; to foreclose any security interest
securing any obligations, by virtue of which any property is owed to the Trust;
and to enter into releases, agreements and other instruments.
Section 2.7. Expenses. The Trustees shall have the power to incur and
pay any expenses which in the opinion of the Trustees are necessary or
incidental to carry out any of the purposes of this Declaration, and to pay
reasonable compensation from the funds of the Trust to themselves as Trustees.
The Trustees shall fix the compensation of all officers, employees and Trustees.
Section 2.8. Manner of Acting; By-laws. Except as otherwise provided
herein or in the By-laws, any action to be taken by the Trustees may be taken by
a majority of the Trustees present at a meeting of Trustees (a quorum being
present), including any meeting held by means of a conference telephone circuit
or similar communications equipment by means of which all persons participating
in the meeting can hear each other, or by written consents of the entire number
of Trustees then in office. The Trustees may adopt By-laws not inconsistent with
this Declaration to provide for the conduct of the business of the Trust and may
amend or repeal such By-laws to the extent such power is not reserved to the
Shareholders.
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Notwithstanding the foregoing provisions of this Section 2.8 and in
addition to such provisions or any other provision of this Declaration or of the
By-laws, the Trustees may by resolution appoint a committee consisting of less
than the whole number of Trustees then in office, which committee may be
empowered to act for and bind the Trustees and the Trust, as if the acts of such
committee were the acts of all the Trustees then in office, with respect to the
institution, prosecution, dismissal, settlement, review or investigation of any
action, suit or proceeding which shall be pending or threatened to be brought
before any court, administrative agency or other adjudicatory body.
Section 2.9. Miscellaneous Powers. Subject to Section 5.11, hereof, the
Trustees shall have the power to: (a) employ or contract with such Persons as
the Trustees may deem desirable for the transaction of the business of the
Trust; (b) enter into joint ventures, partnerships and any other combinations or
associations; (c) remove Trustees or fill vacancies in or add to their number,
elect and remove such officers and appoint and terminate such agents or
employees as they consider appropriate, and appoint from their own number, and
terminate, any one or more committees which may exercise some or all of the
power and authority of the Trustees as the Trustees may determine; (d) purchase,
and pay for out of Trust Property, insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, investment advisers, distributors,
selected dealers or independent contractors of the Trust against all claims
arising by reason of holding any such position or by reason of any action taken
or omitted by any such Person in such capacity, whether or not constituting
negligence, or whether or not the Trust would have the power to indemnify such
Person against such liability; (e) establish pension, profit-sharing, share
purchase, and other retirement, incentive and benefit plans for any Trustees,
officers, employees and agents of the Trust; (f) to the extent permitted by law,
indemnify any person with whom the Trust has dealings, including the Investment
Adviser, Distributor, Transfer Agent and selected dealers, to such extent as the
Trustees shall determine; (g) guarantee indebtedness or contractual obligations
of others; (h) determine and change the fiscal year of the Trust and the method
by which its accounts shall be kept; and (i) adopt a seal for the Trust, but the
absence of such seal shall not impair the validity of any instrument executed on
behalf of the Trust.
Section 2.10. Principal Transactions. Except in transactions not
permitted by the 1940 Act or rules and regulations adopted by the Commission,
the Trustees may, on behalf of the Trust, buy any securities from or sell any
securities to, or lend any assets of the Trust to, any Trustee or officer of the
Trust or any firm of which any such Trustee or officer is a member acting as
principal, or have any such dealings with the Investment Adviser, Distributor or
Transfer Agent or with any Interested Person of such Person; and the Trust may
employ any such Person, or firm or company in which such Person is an Interested
Person, as broker, legal counsel, registrar, Transfer Agent, dividend disbursing
agent or custodian upon customary terms.
Section 2.11. Number of Trustees. The number of Trustees shall
initially be one (1), and thereafter shall be such number as shall be fixed from
time to time by a written instrument signed by a majority of the Trustees.
Section 2.12. Election and Term. Except for the Trustees named herein
or appointed to fill vacancies pursuant to Section 2.14 hereof, the Trustees
shall be elected by the Shareholders owning of record a plurality of the Shares
voting at a meeting of Shareholders called pursuant to the provisions of Section
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16(a) of the 1940 Act. Such a meeting shall be held on a date fixed by the
Trustees. Except in the event of resignation or removals pursuant to Section
2.13 hereof, each Trustee shall hold office until the next such meeting of
Shareholders and until his successor is duly elected and qualified.
Section 2.13. Resignation and Removal. Any Trustee may resign his trust
(without the need for any prior or subsequent accounting) by an instrument in
writing signed by him and delivered to the other Trustees and such resignation
shall be effective upon such delivery, or at a later date according to the terms
of the instrument. Any of the Trustees may be removed (provided the aggregate
number of Trustees after such removal shall not be less than one) with cause, by
the action of two-thirds of the remaining Trustees. Any Trustee may be removed
at any meeting of Shareholders by vote of two thirds of the Outstanding Shares.
The Trustees shall promptly call a meeting of the shareholders for the purpose
of voting upon the question of removal of any such Trustee or Trustees when
requested in writing to do so by the holders of not less than ten percent (10%)
of the Outstanding Shares, and in that connection, the Trustees will assist
shareholder communications to the extent provided for in Section 16(c) under the
1940 Act. Upon the resignation or removal of a Trustee, or his otherwise ceasing
to be a Trustee, he shall execute and deliver such documents as the remaining
Trustees shall require for the purpose of conveying to the Trust or the
remaining Trustees any Trust Property or property of any series of the Trust
held in the name of the resigning or removed Trustee. Upon the incapacity or
death of any Trustee, his legal representative shall execute and deliver on his
behalf such documents as the remaining Trustees shall require as provided in the
preceding sentence.
Section 2.14. Vacancies. The term of office of a Trustee shall
terminate and a vacancy shall occur in the event of the death, resignation,
removal, bankruptcy, adjudicated incompetence or other incapacity to perform the
duties of the office of a Trustee. No such vacancy shall operate to annul the
Declaration or to revoke any existing agency created pursuant to the terms of
the Declaration. In the case of an existing vacancy, including a vacancy
existing by reason of an increase in the number of Trustees, subject to the
provisions of Section 16(a) of the 1940 Act, the remaining Trustees shall fill
such vacancy by the appointment of such other person as they in their discretion
shall see fit, made by a written instrument signed by a majority of the Trustees
then in office. Any such appointment shall not become effective, however, until
the person named in the written instrument of appointment shall have accepted in
writing such appointment and agreed in writing to be bound by the terms of the
Declaration. An appointment of a Trustee may be made in anticipation of a
vacancy to occur at a later date by reason of retirement, resignation or
increase in the number of Trustees, provided that such appointment shall not
become effective prior to such retirement, resignation or increase in the number
of Trustees. Whenever a vacancy in the number of Trustees shall occur, until
such vacancy is filled as provided in this Section 2.14, the Trustees in office,
regardless of their number, shall have all the powers granted to the Trustees
and shall discharge all the duties imposed upon the Trustees by the Declaration.
A written instrument certifying the existence of such vacancy signed by a
majority of the Trustees in office shall be conclusive evidence of the existence
of such vacancy.
Section 2.15. Delegation of Power to Other Trustees. Any Trustee may,
by power of attorney, delegate his power for a period not exceeding six (6)
months at any one time to any other Trustee or Trustees; provided that in no
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case shall less than two (2) Trustees personally exercise the powers granted to
the Trustees under this Declaration except as herein otherwise expressly
provided.
ARTICLE III
CONTRACTS
Section 3.1. Distribution Contract. The Trustees may in their
discretion from time to time enter into an exclusive or non-exclusive
distribution contract or contracts providing for the sale of Shares at a price
based on the net asset value of a Share, whereby the Trustees may either agree
to sell the Shares to the other party to the contract or appoint such other
party their sales agent for the Shares, and in either case on such terms and
conditions, if any, as may be prescribed in the By-laws; and such further terms
and conditions as the Trustees may in their discretion determine not
inconsistent with the provisions of this Article III or of the By-laws; and such
contract may also provide for the repurchase of the Shares by such other party
as agent of the Trustees.
Section 3.2. Advisory or Management Contract. The Trustees may in their
discretion from time to time enter into an investment advisory or management
contract or separate advisory contracts with respect to one or more Series
whereby the other party to such contract shall undertake to furnish to the Trust
such management, investment advisory, statistical and research facilities and
services and such other facilities and services, if any, and all upon such terms
and conditions as the Trustees may in their discretion determine, including the
grant of authority to such other party to determine what securities shall be
purchased or sold by the Trust and what portion of its assets shall be
uninvested, which authority shall include the power to make changes in the
investments of the Trust or any Series.
The Trustees may also employ, or authorize the Investment Adviser to
employ, one or more sub-advisers from time to time to perform such of the acts
and services of the Investment Adviser and upon such terms and conditions as may
be agreed upon between the Investment Adviser and such sub-advisers and approved
by the Trustees. Any reference in this Declaration to the Investment Adviser
shall be deemed to include such sub-advisers unless the context otherwise
requires.
Section 3.3. Affiliations of Trustees or Officers, Etc. The fact that:
(i) any of the Shareholders, Trustees or officers of the
Trust is a shareholder, director, officer, partner, trustee,
employee, manager, adviser or distributor of or for any
partnership, corporation, trust, association or other
organization or of or for any parent or affiliate of any
organization, with which a contract of the character described in
Sections 3.1 or 3.2 above or for services as Custodian, Transfer
Agent or disbursing agent or for related services may have been
or may hereafter be made, or that any such organization, or any
parent or affiliate thereof, is a Shareholder of or has an
interest in the Trust, or that
(ii) any partnership, corporation, trust, association or
other organization with which a contract of the character
described in Sections 3.1 or 3.2 above or for services as
Custodian, Transfer Agent or disbursing agent or for related
services may have been or may hereafter be made also has any one
or more of such contracts with one or more other
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partnerships, corporations, trusts, associations or other
organizations, or has other business or interests,
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same or create any liability or accountability to the Trust or its Shareholders.
Section 3.4. Compliance with 1940 Act. Any contract entered into
pursuant to Sections 3.1 or 3.2 shall be consistent with and subject to the
requirements of Section 15 of the 1940 Act (including any amendment thereof or
other applicable act of Congress hereafter enacted), as modified by any
applicable order or orders of the Commission, with respect to its continuance in
effect, its termination and the method of authorization and approval of such
contract or renewal thereof.
ARTICLE IV
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS
Section 4.1. No Personal Liability of Shareholders, Trustees, Etc. No
Shareholder shall be subject to any personal liability whatsoever to any Person
in connection with Trust Property or the acts, obligations or affairs of the
Trust. No Trustee, officer, employee or agent of the Trust shall be subject to
any personal liability whatsoever to any Person, other than to the Trust or its
Shareholders, in connection with Trust Property or the affairs of the Trust,
save only that arising from bad faith, willful misfeasance, gross negligence or
reckless disregard of his duties with respect to such Person; and all such
Persons shall look solely to the Trust Property for satisfaction of claims of
any nature arising in connection with the affairs of the Trust. If any
Shareholder, Trustee, officer, employee, or agent, as such, of the Trust, is
made a party to any suit or proceeding to enforce any such liability of the
Trust, he shall not, on account thereof, be held to any personal liability. The
Trust shall indemnify and hold each Shareholder harmless from and against all
claims and liabilities, to which such Shareholder may become subject by reason
of his being or having been a Shareholder, and shall reimburse such Shareholder
for all legal and other expenses reasonably incurred by him in connection with
any such claim or liability. The indemnification and reimbursement required by
the preceding sentence shall be made only out of the assets of the one or more
Series of which the Shareholder who is entitled to indemnification or
reimbursement was a Shareholder at the time the act or event which gave rise to
the claim against or liability of said Shareholder. The rights accruing to a
Shareholder under this Section 4.1 shall not impair any other right to which
such Shareholder may be lawfully entitled, nor shall anything herein contained
restrict the right of the Trust to indemnify or reimburse a Shareholder in any
appropriate situation even though not specifically provided herein.
Section 4.2. Non-Liability of Trustees, Etc. No Trustee, officer,
employee or agent of the Trust shall be liable to the Trust, its Shareholders,
or to any Shareholder, Trustee, officer, employee, or agent thereof for any
action or failure to act (including without limitation the failure to compel in
any way any former or acting Trustee to redress any breach of trust) except for
his own bad faith, willful misfeasance, gross negligence or reckless disregard
of the duties involved in the conduct of his office.
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Section 4.3. Mandatory Indemnification.
(a) Subject to the exceptions and limitations contained in paragraph
(b) below:
(i) every person who is, or has been, a Trustee or officer
of the Trust shall be indemnified by the Trust to the fullest
extent permitted by law against all liability and against all
expenses reasonably incurred or paid by him in connection with
any claim, action, suit or proceeding in which he becomes
involved as a party or otherwise by virtue of his being or having
been a Trustee or officer and against amounts paid or incurred by
him in the settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding"
shall apply to all claims, actions, suits or proceedings (civil,
criminal, administrative or other, including appeals), actual or
threatened; and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments,
amounts paid in settlement, fines, penalties and other
liabilities.
(b) No indemnification shall be provided hereunder to a Trustee or
officer:
(i) against any liability to the Trust, a Series thereof, or
the Shareholders by reason of a final adjudication by a court or
other body before which a proceeding was brought that he engaged
in willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office;
(ii) with respect to any matter as to which he shall have
been finally adjudicated not to have acted in good faith in the
reasonable belief that his action was in the best interests of
the Trust; or
(iii) in the event of a settlement or other disposition not
involving a final adjudication as provided in paragraph (b)(i) or
(b)(ii) resulting in a payment by a Trustee or officer, unless
there has been a determination that such Trustee or officer did
not engage in willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his
office:
(A) by the court or other body approving the
settlement or other disposition; or
(B) based upon a review of readily available facts
(as opposed to a full trial-type inquiry) by (x) vote of a
majority of the Disinterested Trustees (as defined below)
acting on the matter (provided that a majority of the
Disinterested Trustees then in office act on the matter),
or (y) written opinion of independent legal counsel.
(c) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not affect any other
rights to which any Trustee or officer may now or hereafter be entitled, shall
continue as to a person who has ceased to be such Trustee or officer and shall
inure to the benefit of the heirs, executors, administrators and assigns of such
a person. Nothing contained herein shall affect any rights to indemnification to
which personnel of the Trust other than Trustees and officers may be entitled by
contract or otherwise under law.
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(d) Expenses of preparation and presentation of a defense to any claim,
action, suit or proceeding of the character described in paragraph (a) of this
Section 4.3 may be advanced by the Trust prior to a final disposition thereof
upon receipt of an undertaking by or on behalf of the recipient to repay such
amount if it is ultimately determined that he is not entitled to indemnification
under this Section 4.3, provided that either:
(i) such undertaking is secured by a surety bond or some other
appropriate security provided by the recipient, or the Trust shall be
insured against losses arising out of any such advances; or
(ii) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees act on the matter)
or an independent legal counsel in a written opinion shall determine, based
upon a review of readily available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that the recipient ultimately
will be found entitled to indemnification.
As used in this Section 4.3, a "Disinterested Trustee" is one who (i)
is not an Interested Person of the Trust, as defined under ss.2(a)(19) of the
1940 Act (including anyone who has been exempted from being an Interested Person
by any rule, regulation or order of the Commission), and (ii) is not involved in
the claim, action, suit or proceeding.
Section 4.4. No Bond Required of Trustees. No Trustee shall be
obligated to give any bond or other security for the performance of any of his
duties hereunder.
Section 4.5. No Duty of Investigation; Notice in Trust Instruments,
Etc. No purchaser, lender, transfer agent or other Person dealing with the
Trustees or any officer, employee or agent of the Trust shall be bound to make
any inquiry concerning the validity of any transaction purporting to be made by
the Trustees or by said officer, employee or agent or be liable for the
application of money or property paid, loaned, or delivered to or on the order
of the Trustees or of said officer, employee or agent. Every obligation,
contract, instrument, certificate, Share, other security of the Trust or
undertaking, and every other act or thing whatsoever executed in connection with
the Trust shall be conclusively presumed to have been executed or done by the
executors thereof only in their capacity as Trustees under this Declaration or
in their capacity as officers, employees or agents of the Trust. Every written
obligation, contract, instrument, certificate, Share, other security of the
Trust or undertaking made or issued by the Trustees may recite that the same is
executed or made by them not individually, but as Trustees under the
Declaration, and that the obligations of the Trust under any such instrument are
not binding upon any of the Trustees or Shareholders individually, but bind only
the trust estate, and may contain any further recital which they or he may deem
appropriate, but the omission of such recital shall not operate to bind the
Trustees individually. The Trustees shall at all times maintain insurance for
the protection of the Trust Property, its Shareholders, Trustees, officers,
employees and agents in such amount as the Trustees shall deem adequate to cover
possible tort liability, and such other insurance as the Trustees in their sole
judgment shall deem advisable.
Section 4.6. Reliance on Experts, Etc. Each Trustee and officer or
employee of the Trust shall, in the performance of his duties, be fully and
completely justified and protected with regard to any act or any failure to act
resulting from reliance in good faith upon the books of account or other records
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of the Trust, upon an opinion of counsel, or upon reports made to the Trust by
any of its officers or employees or by the Investment Adviser, the Distributor,
Transfer Agent, selected dealers, accountants, appraisers or other experts or
consultants selected with reasonable care by the Trustees, officers or employees
of the Trust, regardless of whether such counsel or expert may also be a
Trustee.
ARTICLE V
SHARES OF BENEFICIAL INTEREST
Section 5.1. Beneficial Interest. The interest of the beneficiaries
hereunder shall be divided into transferable Shares of beneficial interest, all
of one class, except as provided in Section 5.11 and Section 5.13 hereof, par
value $.01 per share. The number of Shares of beneficial interest authorized
hereunder is unlimited. All Shares issued hereunder including, without
limitation, Shares issued in connection with a dividend in Shares or a split of
Shares, shall be fully paid and non-assessable.
Section 5.2. Rights of Shareholders. The ownership of the Trust
Property and the property of each Series of the Trust of every description and
the right to conduct any business hereinbefore described are vested exclusively
in the Trustees, and the Shareholders shall have no interest therein other than
the beneficial interest conferred by their Shares, and they shall have no right
to call for any partition or division of any property, profits, rights or
interests of the Trust nor can they be called upon to share or assume any losses
of the Trust or suffer an assessment of any kind by virtue of their ownership of
Shares. The Shares shall be personal property giving only the rights
specifically set forth in this Declaration. The Shares shall not entitle the
holder to preference, preemptive, appraisal, conversion or exchange rights,
except as the Trustees may determine with respect to any Series of Shares.
Section 5.3. Trust Only. It is the intention of the Trustees to create
only the relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees to create
a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a trust.
Nothing in this Declaration of Trust shall be construed to make the
Shareholders, either by themselves or with the Trustees, partners or members of
a joint stock association.
Section 5.4. Issuance of Shares. The Trustees in their discretion may,
from time to time without vote of the Shareholders, issue Shares, in addition to
the then issued and outstanding Shares and shares held in the treasury, to such
party or parties and for such amount and type of consideration, including cash
or property, at such time or times and on such terms as the Trustees may deem
best, and may in such manner acquire other assets (including the acquisition of
assets subject to, and in connection with the assumption of liabilities) and
businesses. In connection with any issuance of Shares, the Trustees may issue
fractional Shares and Shares held in the treasury, and Shares may be issued in
separate Series as provided in Section 5.11 hereof. The Trustees may from time
to time divide or combine the Shares into a greater or lesser number without
thereby changing the proportionate beneficial interests in the Trust, or any
Series. Contributions to the Trust may be accepted for, and Shares shall be
redeemed as, whole Shares and/or 1/1,000ths of a Share or integral multiples
thereof.
Section 5.5. Register of Shares. A register shall be kept at the
principal office of the Trust or an office of the Transfer Agent which shall
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contain the names and addresses of the Shareholders and the number of Shares
held by them respectively and a record of all transfers thereof. Such register
shall be conclusive as to who are the holders of the Shares and who shall be
entitled to receive dividends or distributions or otherwise to exercise or enjoy
the rights of Shareholders. No Shareholder shall be entitled to receive payment
of any dividend or distribution, nor to have notice given to him as herein or in
the By-laws provided, until he has given his address to the Transfer Agent or
such other officer or agent of the Trustees as shall keep the said register for
entry thereon. It is not contemplated that certificates will be issued for the
Shares; however, the Trustees, in their discretion, may authorize the issuance
of share certificates and promulgate appropriate rules and regulations as to
their use.
Section 5.6. Transfer of Shares. Except as otherwise provided by the
Trustees, shares shall be transferable on the records of the Trust only by the
record holder thereof or by his agent thereunto duly authorized in writing, upon
delivery to the Trustees or the Transfer Agent of a duly executed instrument of
transfer, together with such evidence of the genuineness of each such execution
and authorization and of other matters as may reasonably be required. Upon such
delivery the transfer shall be recorded on the register of the Trust. Until such
record is made, the Shareholder of record shall be deemed to be the holder of
such Shares for all purposes hereunder and neither the Trustees nor any transfer
agent or registrar nor any officer, employee or agent of the Trust shall be
affected by any notice of the proposed transfer.
Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to the Trustees or the Transfer
Agent, but until such record is made, the Shareholder of record shall be deemed
to be the holder of such Shares for all purposes hereunder and neither the
Trustees nor any Transfer Agent or registrar nor any officer or agent of the
Trust shall be affected by any notice of such death, bankruptcy or incompetence,
or other operation of law.
Section 5.7. Notices, Reports. Any and all notices to which any
Shareholder may be entitled and any and all communications shall be deemed duly
served or given if mailed, postage prepaid, addressed to any Shareholder of
record at his last known address as recorded on the register of the Trust. A
notice of a meeting, an annual report and any other communication to
Shareholders need not be sent to a Shareholder (i) if an annual report and a
proxy statement for two consecutive shareholder meetings have been mailed to
such Shareholder's address and have been returned as undeliverable, (ii) if all,
and at least two, checks (if sent by first class mail) in payment of dividends
on Shares during a twelve-month period have been mailed to such Shareholder's
address and have been returned as undeliverable or (iii) in any other case in
which a proxy statement concerning a meeting of security holders is not required
to be given pursuant to the Commission's proxy rules as from time to time in
effect under the Securities Exchange Act of 1934. However, delivery of such
proxy statements, annual reports and other communications shall resume if and
when such Shareholder delivers or causes to be delivered to the Trust written
notice setting forth such Shareholder's then current address.
Section 5.8. Treasury Shares. Shares held in the treasury shall, until
reissued pursuant to Section 5.4, not confer any voting rights on the Trustees,
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nor shall such Shares be entitled to any dividends or other distributions
declared with respect to the Shares.
Section 5.9. Voting Powers. The Shareholders shall have power to vote
only (i) for the election of Trustees as provided in Section 2.12; (ii) for the
removal of Trustees as provided in Section 2.13; (iii) with respect to any
investment advisory or management contract entered into pursuant to Section 3.2;
(iv) with respect to termination of the Trust as provided in Section 8.2; (v)
with respect to any amendment of this Declaration to the extent and as provided
in Section 8.3; (vi) with respect to any merger, consolidation or sale of assets
as provided in Section 8.4; (vii) with respect to incorporation of the Trust or
any Series to the extent and as provided in Section 8.5; (viii) to the same
extent as the stockholders of Massachusetts business corporation as to whether
or not a court action, proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the Trust or any
Series or Class hereof or the Shareholders (provided, however, that a
Shareholder of a particular Series or Class shall not be entitled to a
derivative or class action on behalf of any other Series or Class (or
Shareholder of any other Series or Class) of the Trust); (ix) with respect to
any plan adopted pursuant to Rule 12b-1 (or any successor rule) under the 1940
Act; and (x) with respect to such additional matters relating to the Trust as
may be required by this Declaration, the By-laws or any registration of the
Trust as an investment company under the 1940 Act with the Commission (or any
successor agency) or as the Trustees may consider necessary or desirable. Each
whole Share shall be entitled to one vote as to any matter on which it is
entitled to vote and each fractional Share shall be entitled to a proportionate
fractional vote, except that the Trustees may, in conjunction with the
establishment of any Series or Class of Shares, establish or reserve the right
to establish conditions under which the several Series or Classes shall have
separate voting rights or, if a Series or Class would not, in the sole judgment
of the Trustees, be materially affected by a proposal, no voting rights. There
shall be no cumulative voting in the election of Trustees. Until Shares are
issued, the Trustees may exercise all rights of Shareholders and may take any
action required by law, this Declaration or the By-laws to be taken by
Shareholders. The By-laws may include further provisions for Shareholders' votes
and meetings and related matters.
Section 5.10. Meetings of Shareholders. Meetings of Shareholders may be
called at any time by the President, and shall be called by the President and
Secretary at the request in writing or by resolution, of a majority of Trustees,
or at the written request of the holder or holders of ten percent (10%) or more
of the total number of Shares then issued and outstanding of the Trust entitled
to vote at such meeting. Any such request shall state the purpose of the
proposed meeting.
Section 5.11. Series Designation. The Trustees, in their discretion,
may authorize the division of Shares into two or more Series, and the different
Series shall be established and designated, and the variations in the relative
rights and preferences as between the different Series shall be fixed and
determined, by the Trustees; provided, that all Shares shall be identical except
that there may be variations so fixed and determined between different Series as
to investment objective, purchase price, allocation of expenses, right of
redemption, special and relative rights as to dividends and on liquidation,
conversion rights, and conditions under which the several Series shall have
separate voting rights. All references to Shares in this Declaration shall be
deemed to be Shares of any or all Series as the context may require.
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If the Trustees shall divide the Shares of the Trust into two or more
Series, the following provisions shall be applicable:
(a) All provisions herein relating to the Trust shall apply equally to
each Series of the Trust except as the context requires otherwise.
(b) The number of authorized Shares and the number of Shares of each
Series that may be issued shall be unlimited. The Trustees may classify or
reclassify any unissued Shares or any Shares previously issued and
reacquired of any Series into one or more Series that may be established
and designated from time to time. The Trustees may hold as treasury Shares
(of the same or some other Series), reissue for such consideration and on
such terms as they may determine, or cancel any Shares of any Series
reacquired by the Trust at their discretion from time to time.
(c) All consideration received by the Trust for the issue or sale of
Shares of a particular Series, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to that Series for all purposes, subject only to the
rights of creditors of such Series and except as may otherwise be required
by applicable laws, and shall be so recorded upon the books of account of
the Trust. In the even that there are any assets, income, earnings,
profits, and proceeds thereof, funds, or payments which are not readily
identifiable as belonging to any particular Series, the Trustees shall
allocate them among any one or more of the Series established and
designated from time to time in such manner and on such basis as they, in
their sole discretion, deem fair and equitable. Each such allocation by the
Trustees shall be conclusive and binding upon the shareholders of all
Series for all purposes.
(d) The assets belonging to each particular Series shall be charged
with the liabilities of the Trust in respect of that Series and all
expenses, costs, charges and reserves attributable to that Series, and any
general liabilities, expenses, costs, charges or reserves of the Trust
which are not readily identifiable as belonging to any particular Series
shall be allocated and charged by the Trustees to and among any one or more
of the Series established and designated from time to time in such manner
and on such basis as the Trustees in their sole discretion deem fair and
equitable. Each allocation of liabilities, expenses, costs, charges and
reserves by the Trustees shall be conclusive and binding upon the
Shareholders of all Series for all purposes. The Trustees shall have full
discretion, to the extent not inconsistent with the 1940 Act, to determine
which items are capital; and each such determination and allocation shall
be conclusive and binding upon the Shareholders. The assets for a
particular Series of the Trust shall, under no circumstances, be charged
with liabilities attributable to any other Series of the Trust. All persons
extending credit to, or contracting with or having any claim against a
particular Series of the Trust shall look only to the assets of that
particular Series for payment of such credit, contract or claim. No
Shareholder or former Shareholder of any Series shall have any claim on or
right to any assets allocated or belonging to any other Series.
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(e) Each Share of a Series of the Trust shall represent a beneficial
interest in the net assets of such Series. Each holder of Shares of a
Series shall be entitled to receive his pro rata share of distributions of
income and capital gains made with respect to such Series. Upon redemption
of his Shares or indemnification for liabilities incurred by reason of his
being or having been a Shareholder of a Series, such shareholder shall be
paid solely out of the funds and property of such Series of the Trust. Upon
liquidation or termination of a Series of the Trust, Shareholders of such
Series shall be entitled to receive a pro rata share of the net assets of
such Series. A Shareholder of a particular Series of the Trust shall not be
entitled to participate in a derivative or class action on behalf of any
other Series or the Shareholders of any other Series of the Trust.
The establishment and designation of any series of Shares shall be
effective upon the execution by a majority of the then Trustees of an instrument
setting forth such establishment and designation and the relative rights and
preferences of such Series, or as otherwise provided in such instrument. The
Trustees may by an instrument executed by a majority of their number abolish any
Series and the establishment and designation thereof. Except as otherwise
provided in this Article V, the Trustees shall have the power to determine the
designations, preferences, privileges, limitations and rights, of each Series or
Class of Shares. Each instrument referred to in this paragraph shall have the
status of an amendment to this Declaration.
Section 5.12. Assent to Declaration of Trust. Every Shareholder, by
virtue of having become a shareholder, shall be held to have expressly assented
and agreed to the terms hereof and to have become a party hereto.
Section 5.13. Class Designation. The Trustees, in their discretion, may
authorize the division of the Shares of the Trust, or, if any Series be
established, the Shares of any Series, into two or more Classes, and the
different Classes shall be established and designated, and the variations in the
relative rights and preferences as between the different Classes shall be fixed
and determined, by the Trustees; provided, that all Shares of the Trust or of
any Series shall be identical to all other Shares of the Trust or the same
Series, as the case may be, except that there may be variations between
different classes as to allocation of expenses, right of redemption, special and
relative rights as to dividends and on liquidation, conversion rights, and
conditions under which the several Classes shall have separate voting rights.
All references to Shares in this Declaration shall be deemed to be Shares of any
or all Classes as the context may require.
If the Trustees shall divide the Shares of the Trust of any Series into
two or more Classes, the following provisions shall be applicable:
All provisions herein relating to the Trust, or any
Series of the Trust, shall apply equally to each Class of Shares of the
Trust or of any Series of the Trust, except as the context requires
otherwise.
The number of Shares of each Class that may be issued
shall be unlimited. The Trustees may classify or reclassify any
unissued Shares of the Trust or any Series or any Shares previously
issued and reacquired of any Class of the Trust or of any Series into
one or more Classes that may be established and designated from time to
time. The Trustees may hold as treasury Shares (of the same or some
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other Class), reissue for such consideration on such terms as they may
determine, or cancel any Shares of any Class reacquired by the Trust at
their discretion from time to time.
Liabilities, expenses, costs, charges and reserves
related to the distribution of, and other identified expenses that
should properly be allocated to, the Shares of a particular Class may
be charged to and borne solely by such Class and the bearing of
expenses solely by a Class of Shares may be appropriately reflected (in
a manner determined by the Trustees) and cause differences in the net
asset value attributable to, and the dividend, redemption and
liquidation rights of, the Shares of different Classes. Each allocation
of liabilities, expenses, costs, charges and reserves by the Trustees
shall be conclusive and binding upon the Shareholders of all Classes
for all purposes.
The establishment and designation of any Class of
Shares shall be effective upon the execution of a majority of the then
Trustees of an instrument setting forth such establishment and
designation and the relative rights and preferences of such Class, or
as otherwise provided in such instrument. The Trustees may, by an
instrument executed by a majority of their number, abolish any Class
and the establishment and designation thereof. Each instrument referred
to in this paragraph shall have the status of an amendment to this
Declaration.
ARTICLE VI
REDEMPTION AND REPURCHASE OF SHARES
Section 6.1. Redemption of Shares. All Shares of the Trust shall be
redeemable, at the redemption price determined in the manner set out in this
Declaration. Redeemed or repurchased Shares may be resold by the Trust.
The Trust shall redeem the Shares upon the appropriately verified
written application of the record holder thereof (or upon such other form of
request as the Trustees may determine) at such office or agency as may be
designated from time to time for that purpose in the Trust's then effective
registration statement under the Securities Act of 1933. The Trustees may from
time to time specify additional conditions, not inconsistent with the 1940 Act,
regarding the redemption of Shares in the Trust's then effective registration
statement under the Securities Act of 1933.
Section 6.2. Price. Shares shall be redeemed at their net asset value
determined as set forth in Section 7.1 hereof as of such time as the Trustees
shall have theretofore prescribed by resolution. In the absence of such
resolution, the redemption price of Shares deposited shall be the net asset
value of such Shares next determined as set forth in Section 7.1 hereof after
receipt of such application.
Section 6.3. Payment. Payment for such Shares shall be made in cash or
in property out of the assets of the relevant Series for the Trust to the
Shareholder of record at such time and in the manner, not inconsistent with the
1940 Act or other applicable laws, as may be specified from time to time in the
Trust's then effective registration statement under the Securities Act of 1933,
subject to the provisions of Section 6.4 hereof.
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Section 6.4. Effect of Suspension of Determination of Net Asset Value.
If, pursuant to Section 6.9 hereof, the Trustees shall declare a suspension of
the determination of net asset value, the rights of Shareholders (including
those who shall have applied for redemption pursuant to Section 6.1 hereof but
who shall not yet have received payment) to have Shares redeemed and paid for by
the Trust shall be suspended until the termination of such suspension is
declared. Any record holder who shall have his redemption right so suspended
may, during the period of such suspension, by appropriate written notice of
revocation at the office or agency where application was made, revoke any
application for redemption not honored and withdraw any certificates on deposit.
The redemption price of Shares for which redemption applications have not been
revoked shall be the net asset value of such Shares next determined as set forth
in Section 7.1 after the termination of such suspension, and payment shall be
made within seven (7) days after the date upon which the application was made
plus the period after such application during which the determination of net
asset value was suspended.
Section 6.5. Repurchase by Agreement. The Trust may repurchase Shares
directly, or through the Distributor or another agent designated for the
purpose, by agreement with the owner thereof at a price not exceeding the net
asset value per share determined as of the time when the purchase or contract of
purchase is made or the net asset value as of any time which may be later
determined pursuant to Section 7.1 hereof, provided payment is not made for the
Shares prior to the time as of which such net asset value is determined.
Section 6.6. Redemption of Shareholder's Interest. The Trust shall have
the right at any time without prior notice to the shareholder to redeem Shares
of any shareholder for their then current net asset value per Share if at such
time the shareholder owns Shares having an aggregate net asset value of less
than an amount set from time to time by the Trustees subject to such terms and
conditions as the Trustees may approve, and subject to the Trust's giving
general notice to all shareholders of its intention to avail itself of such
right, either by publication in the Trust's registration statement, if any, or
by such other means as the Trustees may determine.
Section 6.7. Redemption of Shares in Order to Qualify as Regulated
Investment Company; Disclosure of Holding. If the Trustees shall, at any time
and in good faith, be of the opinion that direct or indirect ownership of Shares
or other securities of the Trust has or may become concentrated in any Person to
an extent which would disqualify any Series of the Trust as a regulated
investment company under the Internal Revenue Code, then the Trustees shall have
the power by lot or other means deemed equitable by them (i) to call for
redemption by any such Person a number, or principal amount, of Shares or other
securities of the Trust sufficient to maintain or bring the direct or indirect
ownership of Shares or other securities of the Trust into conformity with the
requirements of such qualification and (ii) to refuse to transfer or issue
Shares or other securities of the Trust to any Person whose acquisition of the
Shares or other securities of the Trust in question would result in
disqualification. The redemption shall be effected at the redemption price and
in the manner provided in Section 6.1.
The holders of Shares or other securities of the Trust shall upon
demand disclose to the Trustees in writing such information with respect to
direct and indirect ownership of Shares or other securities of the Trust as the
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Trustees deem necessary to comply with the provisions of the Internal Revenue
Code, or to comply with the requirements of any other taxing authority.
Section 6.8. Reductions in Number of Outstanding Shares Pursuant to Net
Asset Value Formula. The Trust may also reduce the number of Outstanding Shares
pursuant to the provisions of Section 7.3.
Section 6.9. Suspension of Right of Redemption. The Trust may declare a
suspension of the right of redemption or postpone the date of payment or
redemption for the whole or any part of any period (i) during which the New York
Stock Exchange is closed other than customary weekend and holiday closings, (ii)
during which trading on the New York Stock Exchange is restricted, (iii) during
which an emergency exists as a result of which disposal by the Trust of
securities owned by it is not reasonably practicable or it is not reasonably
practicable for the Trust fairly to determine the value of its net assets, or
(iv) during any other period when the Commission may for the protection of
Shareholders of the Trust by order permit suspension of the right of redemption
or postponement of the date of payment or redemption; provided that applicable
rules and regulations of the Commission shall govern as to whether the
conditions prescribed in (ii), (iii), or (iv) exist. Such suspension shall take
effect at such time as the Trust shall specify but not later than the close of
business on the business day next following the declaration of suspension, and
thereafter there shall be no right of redemption or payment on redemption until
the Trust shall declare the suspension at an end, except that the suspension
shall terminate in any event on the first day on which said stock exchange shall
have reopened or the period specified in (ii) or (iii) shall have expired as to
which in the absence of an official ruling by the Commission, the determination
of the Trust shall be conclusive). In the case of a suspension of the right of
redemption, a Shareholder may either withdraw his request for redemption or
receive payment based on the net asset value existing after the termination of
the suspension.
ARTICLE VII
DETERMINATION OF NET ASSET VALUE,
NET INCOME AND DISTRIBUTIONS
Section 7.1. Net Asset Value. The value of the assets of the Trust or
any Series of the Trust shall be determined by appraisal of the securities of
the Trust or allocated to such Series, such appraisal to be on the basis of such
method as shall be deemed to reflect the fair value thereof, determined in good
faith by or under the direction of the Trustees. From the total value of said
assets, there shall be deducted all indebtedness, interest, taxes, payable or
accrued, including estimated taxes on unrealized book profits, expenses and
management charges accrued to the appraisal date, net income determined and
declared as a distribution and all other items in the nature of liabilities
attributable to the Trust or such Series or Class thereof which shall be deemed
appropriate. The net asset value of a Share shall be determined by dividing the
net asset value of the Class, or if no Class has been established, of the
Series, or, if no Series has been established, of the Trust, by the number of
Shares of that Class, or Series, or of the Trust, as applicable, outstanding.
The net asset value of Shares of the Trust or any Class or Series of the Trust
shall be determined pursuant to the procedure and methods prescribed or approved
by the Trustees in their discretion and as set forth in the most recent
Registration Statement of the Trust as filed with the Securities and Exchange
Commission pursuant to the requirement of the Securities Act of 1933, as
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amended, the Investment Company Act of 1940, as amended, and the Rules
thereunder. The net asset value of the Shares shall be determined at least once
on each business day, as of the close of trading on the New York Stock Exchange
or as of such other time or times as the Trustees shall determine.
The power and duty to make the daily calculations may be delegated by
the Trustees to the Investment Adviser, the Custodian, the Transfer Agent or
such other Person as the Trustees may determine by resolution or by approving a
contract which delegates such duty to another Person. The Trustees may suspend
the daily determination of net asset value to the extent permitted by the 1940
Act.
Section 7.2. Distributions to Shareholders. The Trustees shall from
time to time distribute ratably among the Shareholders of the Trust or a Series
such proportion of the net profits, surplus (including paid-in surplus),
capital, or assets of the Trust or such Series held by the Trustees as they may
deem proper. Such distributions may be made in cash or property (including
without limitation any type of obligations of the Trust or such Series or any
assets thereof), and the Trustees may distribute ratably among the Shareholders
additional Shares of the Trust or such Series issuable hereunder in such manner,
at such times, and on such terms as the Trustees may deem proper. Such
distributions may be among the Shareholders of record at the time of declaring a
distribution or among the Shareholders of record at such other date or time or
dates or times as the Trustees shall determine. The Trustees may in their
discretion determine that, solely for the proposes of such distributions,
Outstanding Shares shall exclude Shares for which orders have been placed
subsequent to a specified time on the date the distribution is declared or on
the next preceding day if the distribution is declared as of a day on which
Boston banks are not open for business, all as described in the registration
statement under the Securities Act of 1933. The Trustees may always retain from
the net profits such amounts they may deem necessary to pay the debts or
expenses of the Trust or the Series or to meet obligations of the Trust or the
series, or as they may retain for future requirements or extensions of the
business. The Trustees may adopt and offer to Shareholders such dividend
reinvestment plans, cash dividend payout plans or related plans as the Trustees
shall deem appropriate.
Inasmuch as the computation of net income and gains for Federal income
tax purposes may vary from the computation thereof on the books, the above
provisions shall be interpreted to give the Trustees the power in their
discretion to distribute for any fiscal year as ordinary dividends and as
capital gains distributions, respectively, additional amounts sufficient to
enable the Trust or the Series to avoid or reduce liability for taxes.
Section 7.3. Determination of Net Income; Constant Net Asset Value;
Reduction of Outstanding Shares. Subject to Section 5.11 hereof, the net income
of the Trust or any Series shall be determined in such manner as the Trustees
shall provide by resolution. Expenses of the Trust or a Series, including the
advisory or management fee, shall be accrued each day. Such net income may be
determined by or under the direction of the Trustees as of the close of trading
on the New York Stock Exchange on each day on which such Exchange is open or as
of such other time or times as the Trustees shall determine, and, except as
provided herein, all the net income of the Trust or any Series, as so
determined, may be declared as a dividend on the Outstanding Shares of the Trust
or such Series. If, for any reason, the net income of the Trust or any Series,
determined at any time is a negative amount, the Trustees shall have the power
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with respect to the Trust or such Series (i) to offset each Shareholder's pro
rata share of such negative amount from the accrued dividend account of such
Shareholder, or (ii) to reduce the number of Outstanding Shares of the Trust or
such Series by reducing the number of Shares in the account of such Shareholder
by that number of full and fractional Shares which represents the amount of such
excess negative net income, or (iii) to cause to be recorded on the books of the
Trust or such Series an asset account in the amount of such negative net income,
which account may be reduced by the amount, provided that the same shall
thereupon become the property of the Trust or such Series with respect to the
Trust or such Series and shall not be paid to any Shareholder, of dividends
declared thereafter upon the outstanding Shares of the Trust or such Series on
the day such negative net income is experienced, until such asset account is
reduced to zero; or (iv) to combine the methods described in clauses (i) and
(ii) and (iii) of this sentence, in order to cause the net asset value per Share
of the Trust or such Series to remain at a constant amount per Outstanding Share
immediately after each such determination and declaration. The Trustees shall
also have the power to fail to declare a dividend out of net income for the
purpose of causing the net asset value per Share to be increased to a constant
amount. The Trustees shall not be required to adopt, but may at any time adopt,
discontinue or amend the practice of maintaining the net asset value per Share
of the Trust or a Series at a constant amount.
Section 7.4. Allocation Between Principal and Income. The Trustees
shall have full discretion to determine whether any cash or property received
shall be treated as income or as principal and whether any item of expense shall
be charged to the income or the principal account, and their determination made
in good faith shall be conclusive upon the Shareholders. In the case of stock
dividends received, the Trustees shall have full discretion to determine, in the
light of the particular circumstances, how much, if any, of the value thereof
shall be treated as income, the balance, if any, to be treated as principal.
Section 7.5. Power to Modify Foregoing Procedures. Notwithstanding any
of the foregoing provisions of this Article VII, the Trustees may prescribe, in
their absolute discretion, such other bases and times for determining the per
Share net asset value or net income, or the declaration and payment of dividends
and distributions as they may deem necessary or desirable.
ARTICLE VIII
DURATION; TERMINATION OF TRUST;
AMENDMENT; MERGERS, ETC.
Section 8.1. Duration. The Trust or the Series of the Trust shall
continue without limitation of time but subject to the provisions of this
Article VIII.
Section 8.2. Termination of Trust or the Series of the Trust. (a) The
Trust or any Series of the Trust may be terminated by an instrument in writing
signed by a majority of the Trustees or by the affirmative vote of the holders
of a majority of the Shares outstanding and entitled to vote, at any meeting of
Shareholders. Upon the termination of the Trust or any Series,
(i) the Trust or any Series shall carry on no business except for the
purpose of winding up its affairs;
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(ii) the Trustees shall proceed to wind up the affairs of the Trust or
Series and all of the powers of the Trustees under this Declaration shall
continue until the affairs of the Trust or Series shall have been wound up,
including the power to fulfill or discharge the contracts of the Trust or
Series, collect its assets, sell, convey, assign, exchange, transfer or
otherwise dispose of all or any part of the remaining Trust Property or
property of the Series to one or more persons at public or private sale for
consideration which may consist in whole or in part of cash, securities or
other property of any kind, discharge or pay its liabilities, and do all
other acts appropriate to liquidate its business;
(iii) after paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and refunding
agreements as they deem necessary for their protection, the Trustees may
distribute the remaining Trust Property or property of the Series, in cash
or in kind or partly each, among the Shareholders of the Trust or Series
according to their respective rights.
(b) After termination of the Trust or any Series and distribution to
the Shareholders as herein provided, a majority of the Trustees shall execute
and lodge among the records of the Trust or the Series of the Trust an
instrument in writing setting forth the fact of such termination, and the
Trustees shall thereupon be discharged from all further liabilities an duties
hereunder, and the rights and interests of all Shareholders of the Trust or
Series shall thereupon cease.
Section 8.3. Amendment Procedure. (a) This Declaration may be amended
by a vote of the holders of a majority of the Shares outstanding and entitled to
vote or by any instrument in writing, without a meeting, signed by a majority of
the Trustees and consented to by the holders of a majority of the Shares
outstanding and entitled to vote. Amendments shall be effective upon the taking
of action as provided in this section or at such later time as shall be
specified in the applicable vote or instrument. The Trustees may also amend this
Declaration without the vote or consent of Shareholders if they deem it
necessary to conform this Declaration to the requirements of applicable federal
or state laws or regulations or the requirements of the regulated investment
company provisions of the Internal Revenue Code (including those provisions of
such Code relating to the retention of the exemption from federal income tax
with respect to dividends paid by the Trust out of interest income received on
Municipal Bonds), but the Trustees shall not be liable for failing to do so. The
Trustees may also amend this Declaration without the vote or consent of
Shareholders if they deem it necessary or desirable to change the name of the
Trust, to supply any omission, to cure, correct or supplement any ambiguous,
defective or inconsistent provision hereof, or to make any other changes in the
Declaration which do not materially adversely affect the rights of Shareholders
hereunder.
(b) No amendment may be made under this Section 8.3 which would change
any rights with respect to any Shares of the Trust or Series by reducing the
amount payable thereon upon liquidation of the Trust or Series or by diminishing
or eliminating any voting rights pertaining thereto, except with the vote or
consent of the holders of two-thirds of the Shares of the Trust or Series
outstanding and entitled to vote. Nothing contained in this Declaration shall
permit the amendment of this Declaration to impair the exemption from personal
liability of the Shareholders, Trustees, officers, employees and agents of the
Trust or to permit assessments upon Shareholders.
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(c) A certificate signed by a majority of the Trustees setting forth an
amendment and reciting that it was duly adopted by the Shareholders or by the
Trustees as aforesaid or a copy of the Declaration, as amended, and executed by
a majority of the Trustees, shall be conclusive evidence of such amendment when
lodged among the records of the Trust.
Notwithstanding any other provision hereof, until such time as the
Registration Statement under the Securities Act of 1933, as amended, covering
the first public offering of securities of the Trust shall have become
effective, this Declaration may be terminated or amended in any respect by the
affirmative vote of a majority of the Trustees or by an instrument signed by a
majority of the Trustees.
Section 8.4. Merger, Consolidation and Sale of Assets. The Trust or any
Series thereof may merge or consolidate with any other corporation, association,
trust or other organization or may sell, lease or exchange all or substantially
all of the Trust Property or the property of any Series, including its good
will, upon such terms and conditions and for such consideration when and as
authorized at any meeting of Shareholders of the Trust or Series called for the
purpose by the affirmative vote of the holders of a majority of the Shares of
the Trust or Series.
Section 8.5. Incorporation. With the approval of the holders of a
majority of the Shares of the Trust or any Series outstanding and entitled to
vote, the Trustees may cause to be organized or assist in organizing a
corporation or corporations under the laws of any jurisdiction or any other
trust, partnership, association or other organization to take over all of the
Trust Property or the property of any Series or to carry on any business in
which the Trust or the Series shall directly or indirectly have any interest,
and to sell, convey and transfer the Trust Property or the property of any
Series to any such corporation, trust, association or organization in exchange
for the Shares or securities thereof or otherwise, and to lend money to,
subscribe for the Shares or securities of, and enter into any contracts with any
such corporation, trust, partnership, association or organization, or any
corporation, partnership, trust, association or organization in which the Trust
or the Series holds or is about to acquire shares or any other interest. The
Trustees may also cause a merger or consolidation between the Trust or any
Series or any successor thereto and any such corporation, trust, partnership,
association or other organization if and to the extent permitted by law, as
provided under the law then in effect. Nothing contained herein shall be
construed as requiring approval of Shareholders for the Trustees to organize or
assist in organizing one or more corporations, trusts, partnerships,
associations or other organizations and selling, conveying or transferring a
portion of the Trust Property to such organization or entities.
ARTICLE IX
REPORTS TO SHAREHOLDERS
The Trustees shall at least semi-annually submit to the Shareholders a
written financial report, which may be included in the Trust's prospectus, of
the transactions of the Trust, including financial statements which shall at
least annually be certified by independent public accountants.
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<PAGE>
ARTICLE X
MISCELLANEOUS
Section 10.1. Filing. This Declaration and any amendment hereto shall
be filed in the Office of the Secretary of the Commonwealth of Massachusetts and
in such other places as may be required under the laws of Massachusetts and may
also be filed or recorded in such other places as the Trustees deem appropriate.
Unless the amendment is embodied in an instrument signed by a majority of the
Trustees, each amendment filed shall be accompanied by a certificate signed and
acknowledged by a Trustee stating that such action was duly taken in a manner
provided herein. A restated Declaration, integrating into a single instrument
all of the provisions of the Declaration which are then in effect and operative,
may be executed from time to time by a majority of the Trustees and shall, upon
filing with the Secretary of the Commonwealth of Massachusetts, be conclusive
evidence of all amendments contained therein and may hereafter be referred to in
lieu of the original Declaration and the various amendments thereto. The
restated Declaration may include any amendment which the Trustees are empowered
to adopt, whether or not such amendment has been adopted prior to the execution
of the restated Declaration.
Section 10.2. Governing Law. This Declaration is executed by the
Trustees and delivered in the Commonwealth of Massachusetts and with reference
to the internal laws thereof, and the rights of all parties and the validity and
construction of every provision hereof shall be subject to and construed
according to the internal laws of said State without regard to the choice of law
rules thereof.
Section 10.3. Counterparts. This Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts, together, shall constitute one and the same
instrument, which shall be sufficiently evidenced by any such original
counterpart.
Section 10.4. Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust appears to be Trustee
hereunder, certifying to: (a) the number or identity of Trustees or
Shareholders, (b) the due authorization of the execution of any instrument or
writing, (c) the form of any vote passed at a meeting of Trustees or
Shareholders, (d) the fact that the number of Trustees or Shareholders present
at any meeting or executing any written instrument satisfies the requirements of
this Declaration, (e) the form of any By-laws adopted by or the identity of any
officers elected by the Trustees, or (f) the existence of any fact or facts
which in any manner relate to the affairs of the Trust, shall be conclusive
evidence as to the matters so certified in favor of any Person dealing with the
Trustees and their successors.
Section 10.5. Provisions in Conflict with Law or Regulations.
(a) The provisions of this Declaration are severable, and if the
Trustees shall determine, with the advice of counsel, that any of such
provisions is in conflict with the 1940 Act, the regulated investment company
provisions of the Internal Revenue Code or with other applicable laws and
regulations, the conflicting provision shall be deemed never to have constituted
a part of this Declaration; provided, however, that such determination shall not
affect any of the remaining provisions of this Declaration or render invalid or
improper any action taken or omitted prior to such determination.
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
A-27
<PAGE>
attach only to such provision in such jurisdiction and shall not in any manner
affect such provisions in any other jurisdiction or any other provision of this
Declaration in any jurisdiction.
IN WITNESS WHEREOF, the undersigned, pursuant to Article VIII, Section
8.3(c) hereof, have executed this instrument this ____ day of September, 1996.
----------------------
Cuyler W. Findlay
----------------------
Linda C. Coughlin
----------------------
Carole Lewis Anderson
----------------------
Adelaide Attard
----------------------
Cyril F. Brickfield
----------------------
Robert N. Butler, M.D.
----------------------
Esther Canja
----------------------
Horace Deets
----------------------
Edgar R. Fiedler
----------------------
Eugene P. Forrester
----------------------
Wayne F. Haefer
----------------------
George L. Maddox, Jr.
----------------------
Robert J. Myers
----------------------
James H. Schulz
----------------------
Gordon Shillinglaw
A-28
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
County of Suffolk ______________________, 1996
Then personally appeared the above-named _________________________, who
acknowledged the foregoing instrument to be ____ free act and deed.
Before me,
------------------------------
Notary Public
My commission expires:
A-29
<PAGE>
PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE AARP TRUSTEES PROXY
Special Meeting of Shareholders--September 13, 1996
The undersigned, revoking previous proxies, hereby appoints Cuyler W.
Findlay, Horace B. Deets and Linda C. Coughlin, and each of them, the proxies of
the undersigned, with power of substitution to each of them, to vote all shares
of beneficial interest in the Fund which the undersigned is entitled to vote, at
the Special Meeting of Shareholders to be held at the offices of Scudder,
Stevens & Clark, Inc., 13th Floor, Two International Place, Boston,
Massachusetts, 02110 on September 13, 1996 at 8:30 a.m. eastern time, and at any
adjournments thereof.
<TABLE>
<CAPTION>
<S> <C> <C>
1. Election of Trustees. FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked by crossing out) to vote for all nominees listed below
If you do not wish to approve any individual nominee, cross out that nominee's name:
Carole Anderson, Adelaide Attard, Cyril F. Brickfield, Robert N. Butler, Esther Canja, Linda C. Coughlin, Horace B.
Deets, Edgar R. Fiedler, Cuyler W. Findlay, Eugene P. Forrester, Wayne F. Haefer, George L. Maddox, Jr., Robert J.
Myers, James H. Schulz, and Gordon Shillinglaw.
2. To ratify the selection of Price Waterhouse LLP as independent accountants FOR __ AGAINST __ ABSTAIN __
for the fiscal year ending September 30, 1997.
3. To approve Amended and Restated Declarations of Trust. FOR __ AGAINST __ ABSTAIN __
(continue voting on reverse side)
<PAGE>
For shareholders in AARP High Quality Money Fund and/or AARP High Quality Tax Free Money Fund.
4. To approve a modification to the current fundamental diversification policies
of the AARP High Quality Money Fund and AARP High Quality Tax Free Money
Fund. FOR __ AGAINST __ ABSTAIN __
The Proxies are authorized to vote in their discretion on any other business
as may properly come before the Meeting or 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)
---------------------------
Date
</TABLE>
