<PAGE> 1
[DP&R DRAFT 8/20/97]
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
AARP CASH INVESTMENT FUNDS
AARP INCOME TRUST
AARP TAX FREE INCOME TRUST
AARP GROWTH TRUST
(NAME OF REGISTRANT AS SPECIFIED IN ITS DECLARATION OF TRUST)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
No fee required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) TITLE OF EACH CLASS OF SECURITIES TO WHICH TRANSACTION APPLIES:
(2) AGGREGATE NUMBER OF SECURITIES TO WHICH TRANSACTION APPLIES:
(3) PER UNIT PRICE OR OTHER UNDERLYING VALUE OF TRANSACTION COMPUTED PURSUANT TO
EXCHANGE ACT RULE 0-11 (SET FORTH
the amount on which the filing fee is calculated and state how it was
determined):
(4) PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION:
(5) TOTAL FEE PAID:
Fee paid previously with preliminary materials:
Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identity the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) AMOUNT PREVIOUSLY PAID:
(2) FORM, SCHEDULE OR REGISTRATION STATEMENT NO.:
(3) FILING PARTY:
(4) DATE FILED:
<PAGE> 2
PRELIMINARY COPY
AARP CASH INVESTMENT FUNDS
AARP INCOME TRUST
AARP TAX FREE INCOME TRUST
AARP GROWTH TRUST
IMPORTANT NEWS
SEPTEMBER [ ], 1997
FOR AARP FUND SHAREHOLDERS
While we encourage you to read the full text of the enclosed proxy
statement, here's a brief overview of some matters affecting your Fund which
require a shareholder vote.
Q & A: QUESTIONS AND ANSWERS
Q. WHAT IS HAPPENING?
A. Scudder, Stevens & Clark, Inc. ("Scudder"), your Fund's investment manager,
has agreed to form an alliance with Zurich Insurance Company ("Zurich").
Zurich is a leading international insurance and financial services
organization. As a result of the proposed alliance, there will be a change
in ownership of Scudder. In order for Scudder to continue to serve as
investment manager of your Fund, it is necessary for the Fund's shareholders
to approve a new investment management agreement. A vote is also being
sought to approve a member services agreement with AARP Financial Services
Corporation that is substantially identical to the current member services
agreement. The following pages give you additional information on Zurich,
the proposed new investment management agreement, the member services
agreement and certain other matters. The most important matters to be voted
upon by you are approval of the new investment management agreement and the
election of Trustees. Shareholders of AARP Stock Index Fund are being asked
to approve a new subadvisory agreement with Bankers Trust Company that is
substantially identical to the current subadvisory agreement. The Board
members of your Fund, including those who are not affiliated with the Fund
or Scudder, recommend that you vote FOR these proposals.
Q. WHY AM I BEING ASKED TO VOTE ON THE PROPOSED NEW INVESTMENT MANAGEMENT
AGREEMENT?
A. The Investment Company Act of 1940, which regulates investment companies
such as the Fund, requires a vote whenever there is a change in control of a
fund's investment manager. Zurich's alliance with Scudder will result in
such a change of control and requires shareholder approval of a new
investment management agreement with the Fund.
Q. HOW WILL THE SCUDDER-ZURICH ALLIANCE AFFECT ME AS A FUND SHAREHOLDER?
A. Your Fund and your Fund's investment objective will not change. You will
still own the same shares in the same Fund. The terms of the new investment
management agreement are the same in all material respects as the current
investment management agreement. Similarly, the other service arrangements
between your Fund and Scudder will not be affected. You should continue to
receive the same level of services that you have come to expect over the
years. If shareholders do not approve the new investment management, member
services or subadvisory agreements, the current agreements will terminate
upon the closing of the transaction and the Board of Trustees will take such
action as it deems to be in the best interests of your Fund and its
shareholders.
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<PAGE> 3
Q. WHY HAS SCUDDER DECIDED TO ENTER INTO THIS ALLIANCE?
Scudder believes that the Scudder-Zurich alliance will enable Scudder to
enhance its capabilities as a global asset manager. Scudder further believes
that the alliance will enable it to enhance its ability to deliver the level
of services currently provided to you and your Fund and to fulfill its
obligations under the new investment management agreement consistent with
current practices.
Q. WILL THE INVESTMENT MANAGEMENT, MEMBER SERVICES AND SUBADVISORY FEES BE THE
SAME?
A. Yes, the fees paid by your Fund for these services will remain the same.
(Please note that Scudder, not the Funds, pays the Member Services fees.
This will not change).
Q. WILL I CONTINUE TO BE ABLE TO PURCHASE SHARES WITHOUT ANY SALES LOAD?
A. Yes, you will be able to continue to purchase shares of your Fund without
any sales load.
Q. WHAT OTHER MATTERS AM I BEING ASKED TO VOTE ON?
A. In order to save your Fund the expense of a subsequent meeting, a vote is
being sought for the amendment and restatement of the Declaration of Trust
applicable to your Fund to reflect regulatory and industry developments, and
for the revision of certain investment policies which can only be changed by
shareholder vote, to simplify and modernize such policies. In addition, a
vote is also being sought for granting the Trustees discretionary authority
to convert the Fund into a "master/feeder" structure, although there are no
current plans to effect such a conversion. You are also being asked to vote
for the ratification of the Board's selection of the Fund's accountants.
Q. HOW DO THE BOARD MEMBERS OF MY FUND RECOMMEND THAT I VOTE?
A. After careful consideration, the Board members of your Fund, including those
who are not affiliated with the Fund or Scudder, recommend that you vote in
favor of all of the proposals on the enclosed proxy card.
Q. WHOM DO I CALL FOR MORE INFORMATION?
A. Please call Shareholder Communications Corporation, your Fund's information
agent, at 1-800-733-8481 ext. 488.
Q. WILL THE FUND PAY FOR THE PROXY SOLICITATION AND LEGAL COSTS ASSOCIATED WITH
THIS TRANSACTION?
A. No, Scudder will bear these costs.
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ABOUT THE PROXY CARD
If you have more than one account in the Fund in your name at the same
address, you will receive separate proxy cards for each account but only one
proxy statement for the Fund. Please vote all issues on each proxy card that you
receive.
THANK YOU FOR MAILING YOUR PROXY CARDS PROMPTLY.
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AARP CASH INVESTMENT FUNDS
AARP INCOME TRUST
AARP TAX FREE INCOME TRUST
AARP GROWTH TRUST
Two International Place
Boston, Massachusetts 02110
1-800-225-2470
September 2, 1997
Dear Shareholder:
On June 26, 1997, Scudder, Stevens & Clark ("Scudder") entered into an
agreement with Zurich Insurance Company ("Zurich") pursuant to which Scudder and
Zurich have agreed to form an alliance. Under the terms of the agreement, Zurich
will acquire a majority interest in Scudder, and Zurich Kemper Investments,
Inc., a Zurich subsidiary, will become part of Scudder. Scudder's name will be
changed to Scudder Kemper Investments, Inc. As a result of this transaction, it
is necessary for the shareholders of each of the funds for which Scudder acts as
investment manager, including your Fund, to approve a new investment management
agreement.
The following important facts about the transaction are outlined below:
- The transaction has no effect on the number of shares you own or the
value of those shares.
- The advisory fees and expenses paid by your Fund will not increase as a
result of this transaction. As is now the case, you will not pay sales
loads on purchases of shares of your Fund.
- The investment objective of your Fund will remain the same.
- The non-interested trustees of your Fund have carefully reviewed the
proposed transaction, and have concluded that the transaction should
cause no reduction in the quality of services provided to the Fund and
should enhance Scudder's ability to provide such services.
Shareholders are also being asked to approve certain other matters that
have been set forth in the Fund's Notice of Meeting. THE BOARD MEMBERS OF YOUR
FUND BELIEVE THAT EACH OF THE PROPOSALS SET FORTH IN THE NOTICE OF MEETING FOR
YOUR FUND IS IMPORTANT AND RECOMMEND THAT YOU READ THE ENCLOSED MATERIALS
CAREFULLY AND THEN VOTE FOR ALL PROPOSALS.
Since all of the funds for which Scudder acts as investment manager are
required to conduct shareholder meetings, if you own shares of more than one
fund, you will receive more than one proxy card. Please sign and return each
proxy card you receive.
Your vote is important. PLEASE TAKE A MOMENT NOW TO SIGN AND RETURN YOUR
PROXY CARD(S) IN THE ENCLOSED POSTAGE-PAID RETURN ENVELOPE. If we do not receive
your executed proxy card(s) after a reasonable amount of time you may receive a
telephone call from our proxy solicitor, Shareholder Communications Corporation,
reminding you to vote your shares.
Respectfully,
Linda C. Coughlin
Chairman
SHAREHOLDERS ARE URGED TO SIGN THE PROXY CARD(S) AND RETURN IT IN THE
POSTAGE-PAID ENVELOPE TO ENSURE A QUORUM AT THE SPECIAL MEETING. YOUR VOTE IS
IMPORTANT REGARDLESS OF THE SIZE OF YOUR SHAREHOLDINGS.
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<PAGE> 6
AARP CASH INVESTMENT FUNDS
AARP INCOME TRUST
AARP TAX FREE INCOME TRUST
AARP GROWTH TRUST
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
Please take notice that Special Meetings of Shareholders (each a "Special
Meeting") of each AARP Trust listed above (each a "Trust" and, collectively, the
"Trusts"), the series of which are AARP High Quality Money Fund of AARP Cash
Investment Funds; AARP GNMA and U.S. Treasury Fund, AARP High Quality Bond Fund,
and AARP Bond Fund for Income of AARP Income Trust; AARP High Quality Tax Free
Money Fund, and AARP Insured Tax Free General Bond Fund of AARP Tax Free Income
Trust; and AARP Balanced Stock and Bond Fund, AARP Growth and Income Fund, AARP
U.S. Stock Index Fund, AARP Global Growth Fund, AARP Capital Growth Fund, AARP
International Stock Fund, and AARP Small Company Stock Fund of AARP Growth Trust
(each a "Fund"), will be held jointly at the offices of Scudder, Stevens &
Clark, Inc. ("Scudder"), 13th Floor, Two International Place, Boston,
Massachusetts 02110, on October 22, 1997, at 9:30 a.m., Eastern time, for the
following purposes:
(1) For each Trust, to elect Trustees;
(2) To approve or disapprove a new investment management agreement
between each Fund and Scudder;
(3) To approve or disapprove a new Member Services Agreement
between AARP Financial Services Corporation and Scudder;
(4) (For shareholders of AARP U.S. Stock Index Fund only) to
approve or disapprove a new subadvisory agreement between
Bankers Trust Company and that Fund's investment manager;
(5) To approve or disapprove the Board's discretionary authority to
convert each Fund to a master/feeder fund structure through a
sale or transfer of assets or otherwise;
(6)(A) For each Trust, to approve or disapprove certain provisions of
a proposed Amended and Restated Declaration of Trust requiring
a two-thirds vote of shareholders;
(B) For each Trust, to approve or disapprove certain other
provisions of a proposed Amended and Restated Declaration of
Trust requiring a majority vote of shareholders;
(7) For each Fund, to approve or disapprove the revision of certain
fundamental investment policies; and
(8) To ratify or reject the selection of Price Waterhouse L.L.P. as
the independent accountants for each of the Funds for each
Fund's current fiscal year.
The appointed proxies will vote on any other business as may properly come
before the Special Meeting or any adjournments thereof.
Holders of record of shares of beneficial interest of each Fund at the
close of business on August 24, 1997 are entitled to vote at the Special Meeting
and at any adjournments thereof.
In the event that the necessary quorum to transact business or the vote
required to approve or reject any proposal is not obtained at the Special
Meeting with respect to one or more Trusts or, where applicable, Funds, the
persons named as proxies may propose one or more adjournments of the Special
Meeting in accordance with applicable law, to permit further solicitation of
proxies. Any
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such adjournment as to a matter requiring, respectively, a Trust-wide or a Fund
by Fund vote will require the affirmative vote of the holders of a majority of
the concerned Trust's (for a Trust-wide vote) or, where applicable, the Fund's
(for a Fund by Fund vote), shares present in person or by proxy at the Special
Meeting. The persons named as proxies will vote in favor of such adjournment
those proxies which they are entitled to vote in favor and will vote against any
such adjournment those proxies to be voted against that proposal.
By Order of the Board of Trustees,
Kathryn L. Quirk,
Secretary
September [ ], 1997
IMPORTANT--WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN
THE ENCLOSED ADDRESSED ENVELOPE WHICH REQUIRES NO POSTAGE AND IS INTENDED FOR
YOUR CONVENIENCE. YOUR PROMPT RETURN OF THE ENCLOSED PROXY CARD MAY SAVE THE
NECESSITY AND EXPENSE OF FURTHER SOLICITATIONS TO ENSURE A QUORUM AT THE SPECIAL
MEETINGS. IF YOU CAN ATTEND THE SPECIAL MEETINGS AND WISH TO VOTE YOUR SHARES IN
PERSON AT THAT TIME, YOU WILL BE ABLE TO DO SO.
7
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AARP CASH INVESTMENT FUNDS
AARP INCOME TRUST
AARP TAX FREE INCOME TRUST
AARP GROWTH TRUST
TWO INTERNATIONAL PLACE, BOSTON, MASSACHUSETTS 02110
JOINT PROXY STATEMENT
------------------------
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees (the "Board") of each of the AARP Trusts listed
above (each a "Trust" and, collectively, the "Trusts"), the series of which are
AARP High Quality Money Fund of AARP Cash Investment Funds; AARP GNMA and U.S.
Treasury Fund, AARP High Quality Bond Fund, and AARP Bond Fund for Income of
AARP Income Trust; AARP High Quality Tax Free Money Fund, and AARP Insured Tax
Free General Bond Fund of AARP Tax Free Income Trust; and AARP Balanced Stock
and Bond Fund, AARP Growth and Income Fund, AARP U.S. Stock Index Fund, AARP
Global Growth Fund, AARP Capital Growth Fund, AARP International Stock Fund, and
AARP Small Company Stock Fund of AARP Growth Trust (each a "Fund") for use at
the Special Meeting of Shareholders of each Trust, to be held jointly at the
offices of Scudder, Stevens & Clark, Inc. ("Scudder"), 13th Floor, Two
International Place, Boston, Massachusetts 02110, on October 22, 1997 at 9:30
a.m., Eastern time, and at any and all adjournments thereof (each a "Special
Meeting"). (In the descriptions of the various proposals below, the word "fund"
is sometimes used to mean investment companies or series thereof in general, and
not the Funds whose proxy statement this is.)
This Proxy Statement, the Notice of Special Meeting and the proxy card are
first being mailed to shareholders on or about September 2, 1997 or as soon as
practicable thereafter. Any shareholder giving a proxy has the power to revoke
it by mail (addressed to the Secretary at the principal executive office of the
Funds, c/o Scudder, Stevens & Clark, Inc., Two International Place, Boston,
Massachusetts 02110), or in person at the Special Meeting, by executing a
superseding proxy or by submitting a notice of revocation to the Fund. All
properly executed proxies received in time for the Special Meeting will be voted
as specified in the proxy or, if no specification is made, in favor of each
proposal referred to in the Proxy Statement.
The presence at any shareholders' meeting, in person or by proxy, of the
holders of a majority of the shares entitled to be cast of a Trust (for a
Trust-wide vote) or a Fund (for a Fund by Fund vote) shall be necessary and
sufficient to constitute a quorum for the transaction of business requiring,
respectively, Trust-wide or Fund by Fund voting. In the event that the necessary
quorum to transact business or the vote required to approve or reject any
proposal is not obtained at the Special Meeting with respect to one or more
Funds, the persons named as proxies may propose one or more adjournments of the
Special Meeting in accordance with applicable law to permit further solicitation
of proxies with respect to any proposal which did not receive the vote necessary
for its passage or to obtain a quorum with respect to those proposals for which
there is represented a sufficient number of votes in favor. Actions taken at the
Special Meeting will be effective irrespective of any adjournments with respect
to any other proposals. Any such adjournment as to a matter requiring,
respectively, a Trust-wide or a Fund by Fund vote will require the affirmative
vote of the holders of a majority of the concerned Trust's (for a Trust-wide
vote) or Fund's (for a Fund by Fund vote) shares present in person or by proxy
at the Special Meeting. The persons named as proxies will vote in favor of such
adjournment those proxies which they are entitled to vote in favor and will vote
against any such adjournment those proxies to be voted against that proposal.
For purposes of determining the presence of a quorum for transacting business at
the Special Meeting, abstentions and broker "non-votes" will be treated as
shares that are present but which have not been voted. Broker non-votes are
proxies received by a Fund from brokers or nominees when the broker or nominee
has neither
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received instructions from the beneficial owner or other persons entitled to
vote nor has discretionary power to vote on a particular matter. Accordingly,
shareholders are urged to forward their voting instructions promptly.
Proposals 2, 3, 4, 6(B) and 7 each requires the affirmative vote of a
"majority of the outstanding voting securities" of each Fund. The terms
"majority of the outstanding voting securities" as defined in the Investment
Company Act of 1940, as amended (the "1940 Act"), and as used in this Proxy
Statement, means: the affirmative vote of the lesser of (1) 67% of the voting
securities of each Fund present at the meeting if more than 50% of the
outstanding shares of the Fund are present in person or by proxy or (2) more
than 50% of the outstanding shares of each Fund. Approval of Proposal 1 requires
the affirmative vote of a plurality of the shares of each Trust voting. The
requisite vote for Proposals 5, 6(A) and 6(B) is governed by the applicable
Declaration of Trust. Approval of Proposal 5 requires the affirmative vote of a
majority of the shares of each Fund. Approval of Proposal 6(A) requires the
affirmative vote of two thirds of shares of each Trust outstanding and entitled
to vote, while approval of Proposal 6(B) requires the affirmative vote of a
majority of the outstanding voting securities, as defined above, of each Trust.
Approval of Proposal 8 requires the affirmative vote of a majority of the shares
of each Fund voting.
Abstentions will have the effect of a "no" vote on all proposals. Broker
non-votes will have the effect of a "no" vote for Proposals 2, 3, 4, 5 and 7,
which require the approval of a specified percentage of the outstanding shares
of each Fund, and Proposals 6(A) and 6(B), which require the approval of a
specified percentage of the outstanding shares of each Trust, if such vote is
determined on the basis of obtaining the affirmative vote of more than 50% of
the outstanding shares of the Fund. Broker non-votes will not constitute "yes"
or "no" votes, and will be disregarded in determining the voting securities
"present" if such vote is determined on the basis of the affirmative vote of 67%
of the voting securities of the Fund, or the Trust, as the case may be, present
at the Special Meeting with respect to Proposals 2, 3, 4, 6(B) and 7.
Shareholders of each Fund will vote separately with respect to each of
Proposals 1, 2, 3, 5, 7 and 8; and Shareholders of each Trust will vote together
on proposals 1, 6(A), and 6(B).
The following table summarizes those voting requirements:
<TABLE>
<CAPTION>
SHAREHOLDERS ENTITLED TO VOTE VOTE REQUIRED FOR APPROVAL
------------------------------ ------------------------------
<S> <C> <C>
Proposal 1 Shareholders of each Trust Each nominee must be elected
(Election of Trustees)...... vote together for each nominee by a plurality of the shares
(if a Trust has several Funds, of each Trust voting at the
shareholders of all Funds vote Special Meeting
together as a single class)
Proposal 2 Shareholders of each Fund vote Approved by a "majority of the
(Approval of new Investment separately outstanding voting securities"
Management Agreement)....... of each Fund
Proposal 3 Shareholders of each Fund vote Approved by a "majority of the
(Approval of new Member separately outstanding voting securities"
Services Agreement)......... of each Fund
Proposal 4 Shareholders of AARP U.S. Approved by a "majority of the
(Approval of Subadvisory Stock Index Fund only vote outstanding voting securities"
Agreement BY SHAREHOLDERS OF separately of AARP U.S. Stock Index Fund
AARP U.S. STOCK INDEX FUND
ONLY).......................
</TABLE>
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<TABLE>
<CAPTION>
SHAREHOLDERS ENTITLED TO VOTE VOTE REQUIRED FOR APPROVAL
------------------------------ ------------------------------
<S> <C> <C>
Proposal 5 Shareholders of each Fund vote Approved by a majority of the
(Approval of discretionary separately shares of each Fund
authority to convert to
master/feeder fund
structure)..................
Proposal 6(A) Shareholders of each Trust Approved by the vote of
(Approval of a portion of vote together (if a Trust has two-thirds of shares of the
the Amended and Restated several Funds, shareholders of Trust outstanding and entitled
Declaration of Trust........ all Funds vote together as a to vote
single class)
Proposal 6(B) Shareholders of each Trust Approved by a "majority of the
(Approval of a portion of vote together (if a Trust has outstanding voting securities"
the Amended and Restated several Funds, shareholders of of the Trust
Declaration of Trust........ all Funds vote together as a
single class)
Proposal 7 Shareholders of each Fund vote Approved by a "majority of the
(Approval of the revision of separately outstanding voting securities"
certain fundamental of each Fund
investment policies)........
Proposal 8 Shareholders of each Fund vote Approved by a majority of the
(Ratification of selection separately shares voting at the Special
of Accountants)............. Meeting
</TABLE>
Holders of record of the shares of beneficial interest of each Fund at the
close of business on August 22, 1997 (the "Record Date"), as to any matter on
which they are entitled to vote, will be entitled to one vote per share on all
business of the Special Meeting. The table below sets forth the number of shares
outstanding for each Fund as of June 30, 1997
<TABLE>
<CAPTION>
NUMBER OF SHARES OUTSTANDING
NAME OF THE FUND AS OF JUNE 30, 1997
- ------------------------------------------------------------------- ----------------------------
<S> <C>
AARP High Quality Money Fund....................................... 466,821,949.7960
AARP GNMA and U.S. Treasury Fund................................... 306,514,869.7105
AARP High Quality Bond Fund........................................ 28,807,467.4720
AARP Bond Fund for Income.......................................... 2,334,880.9340
AARP High Quality Tax Free Money Fund.............................. 103,951,058.9860
AARP Insured Tax Free General Bond Fund............................ 94,000,562.2130
AARP Balanced Stock and Bond Fund.................................. 28,482,192.4870
AARP Growth and Income Fund........................................ 110,603,370.2870
AARP U.S. Stock Index Fund......................................... 1,421,017.0420
AARP Global Growth Fund............................................ 7,122,377.7860
AARP Capital Growth Fund........................................... 21,008,858.1900
AARP International Stock Fund...................................... 772,288.8530
AARP Small Company Stock Fund...................................... 1,454,080.3530
</TABLE>
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Each Trust provides periodic reports to all of its shareholders which
highlight relevant information including investment results and a review of
portfolio changes. You may receive an additional copy of the most recent annual
report for each Fund and a copy of any more recent semi-annual report, without
charge, by calling 800-225-5163 or writing the Fund, c/o Scudder, Stevens &
Clark, Inc., Two International Place, Boston, Massachusetts 02110.
PROPOSAL 1: ELECTION OF TRUSTEES FOR EACH TRUST
At the Special Meeting, twelve Trustees are to be elected to constitute the
Board of each Trust. For election of Trustees at the Special Meeting, each Board
of Trustees has approved the nomination of the following individuals: Carole
Lewis Anderson, Adelaide Attard, Robert N. Butler, M.D., Esther Canja (AARP
Income Trust only), Linda C. Coughlin, Horace Deets (each Trust except AARP
Income Trust), Edgar R. Fiedler, Lt. Gen. Eugene P. Forrester, George L. Maddox,
Jr., Robert J. Myers, James M. Schulz, Gordon Shillinglaw, and Jean Gleason
Stromberg.
The persons named as proxies on the enclosed proxy card will vote for the
election of the nominees named above unless authority to vote for any or all of
the nominees is withheld in the proxy. Each Trustee so elected will serve as a
Trustee of each Trust until the next meeting of shareholders, if any, called for
the purpose of electing Trustees and until the election and qualification of a
successor or until such Trustee sooner dies, resigns or is removed as provided
in the Declaration of Trust of each Trust.
Each of the nominees has indicated that he or she is willing to serve as a
Trustee. If any or all of the nominees should become unavailable for election
due to events not now known or anticipated, the persons named as proxies will
vote for such other nominee or nominees as the Trustees may recommend. The
following table sets forth certain information concerning the current Trustees
and the nominees. Unless otherwise noted, each of the Trustees and nominees has
engaged in the principal occupation listed in the following table for more than
five years, but not necessarily in the same capacity.
NOMINEES:
<TABLE>
<CAPTION>
YEAR
PRESENT OFFICE WITH THE TRUST FIRST
NAME (AGE) IF ANY, PRINCIPAL OCCUPATION OR BECAME A
----------- EMPLOYMENT AND DIRECTORSHIPS TRUSTEE
---------------------------------------------------------------------------- ---------
<S> <C> <C>
CAROLE LEWIS ANDERSON (52) Trustee. Principal, Suburban Capital Markets, Inc.; President, MASDUN 1995
- ------------------ Capital Advisors; Director, VICORP Restaurants, Inc.; Trustee, Hasbro
Children's Foundation; Trustee, Mary Baldwin College (resigned 1997); Member
of the Board of Directors of Association for Corporate Growth (resigned
1996) and CREW, Commercial Women in Real Estate (resigned 1995). Ms.
Anderson serves on the Board of an additional Trust whose Funds are advised
by Scudder.
ADELAIDE ATTARD (67) Trustee. Gerontology Consultant; Member, New York City Department of Aging 1984
- ------------------ Advisory Council -- Appointed by Mayor; Board Member, American Association
on International Aging; Commissioner, County of Nassau, New York, Dept. of
Senior Citizen Affairs (resigned 1991); Chairperson, Federal Council on
Aging (resigned 1986). Ms. Attard serves on the Board of an additional Trust
whose Funds are advised by Scudder.
</TABLE>
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<TABLE>
<CAPTION>
YEAR
PRESENT OFFICE WITH THE TRUST FIRST
NAME (AGE) IF ANY, PRINCIPAL OCCUPATION OR BECAME A
----------- EMPLOYMENT AND DIRECTORSHIPS TRUSTEE
---------------------------------------------------------------------------- ---------
<S> <C> <C>
ROBERT N. BUTLER, M.D. (70) Trustee. Director, International Longevity Center and Professor of 1984
- ------------------ Geriatrics and Adult Development; Chairman, Henry L. Schwartz Department of
Geriatrics and Adult Development, Mount Sinai Medical Center; Director,
National Institute on Aging, National Institute of Health (resigned 1982).
Dr. Butler serves on the Board of an additional Trust whose Funds are
advised by Scudder.
ESTHER CANJA *(70) Trustee. Vice President, American Association of Retired Persons; Trustee 1996
(AARP Income Trust and Chair, AARP Group Health Insurance Plan; Board Liaison, National
only) Volunteer Leadership Network Advisory Committee; Chair, Board Operations
- ------------------ Committee; AARP State Director of Florida (resigned 1992). Ms. Canja serves
on the Board of an additional Trust whose Funds are advised by Scudder.
LINDA C. COUGHLIN* (45) Chairman of the Board and Trustee. Managing Director of Scudder, Stevens & 1991
- ------------------ Clark, Inc.; Director, New Canaan Nature Center and Women Express, Inc. Ms.
Coughlin serves on the Board of an additional Trust whose Funds are advised
by Scudder.
HORACE B. DEETS* (59) Vice Chairman of the Board and Trustee. Executive Director, American 1988
(Each Trust except AARP Association of Retired Persons. Mr. Deets serves on the Board of an
Income Trust) additional Trust whose Funds are advised by Scudder.
- ------------------
EDGAR R. FIEDLER* (68) Trustee. Senior Fellow and Economic Counsellor, The Conference Board, Inc.; 1984
- ------------------ Formerly Assistant Secretary of the Treasury for Economic Policy; Director,
The Stanley Works; Harris Insight Funds; Emerging Mexico Fund; and Director,
Zurich-American Insurance Company (resigned 1997). Mr. Fiedler serves on the
Boards of an additional 5 Trusts or Corporations whose Funds are advised by
Scudder.
</TABLE>
12
<PAGE> 13
<TABLE>
<CAPTION>
YEAR
PRESENT OFFICE WITH THE TRUST FIRST
NAME (AGE) IF ANY, PRINCIPAL OCCUPATION OR BECAME A
----------- EMPLOYMENT AND DIRECTORSHIPS TRUSTEE
---------------------------------------------------------------------------- ---------
<S> <C> <C>
LT. GEN. EUGENE P. Trustee. Lt. General (Retired), U.S. Army; International Trade Counselor; 1984
FORRESTER (71) Consultant. Lt. Gen. Forrester serves on the Board of an additional Trust
- ------------------ whose Funds are advised by Scudder.
GEORGE L. MADDOX, JR. (72) Trustee. Professor Emeritus and Director, Long Term Care Resources Program, 1984
- ------------------ Duke University Medical Center; Professor Emeritus of Sociology, Departments
of Sociology and Psychiatry, Duke University. Mr. Maddox serves on the Board
of an additional Trust whose Funds are advised by Scudder.
ROBERT J. MYERS (85) Trustee. Trustee: NASL Series Trust, Inc. and North American Funds, Inc.; 1984
- ------------------ Member, Prospective Payment Assessment Commission; Chairman, Commission on
Railroad Retirement Reform (resigned 1990); Deputy Commissioner, Social
Security Administration (resigned 1982); Member, National Commission on
Social Security (resigned 1981); Executive Director, National Commission on
Social Security Reform (resigned 1983); Mr. Myers serves on the Board of an
additional Trust whose Funds are advised by Scudder.
JAMES H. SCHULZ (61) Trustee. Professor of Economics and Kirstein Professor of Aging Policy, 1984
- ------------------ Policy Center on Aging, Florence Heller School, Brandeis University. Mr.
Schulz serves on the Board of an additional Trust whose Funds are advised by
Scudder.
GORDON SHILLINGLAW (72) Trustee. Professor Emeritus of Accounting, Columbia University Graduate 1984
- ------------------ School of Business. Mr. Shillinglaw serves on the Boards of an additional 5
Trusts or Corporations whose Funds are advised by Scudder.
</TABLE>
13
<PAGE> 14
<TABLE>
<CAPTION>
YEAR
PRESENT OFFICE WITH THE TRUST FIRST
NAME (AGE) IF ANY, PRINCIPAL OCCUPATION OR BECAME A
----------- EMPLOYMENT AND DIRECTORSHIPS TRUSTEE
---------------------------------------------------------------------------- ---------
<S> <C> <C>
JEAN GLEASON STROMBERG (54) Trustee. Consultant; Director, Financial Institutions Issues, U.S. General 1997
- ------------------ Accounting Office (resigned 1997); Partner, Fulbright & Jaworski (law firm)
(resigned 1996). Ms. Gleason serves on the Board of an additional Trust
whose Funds are advised by Scudder.
</TABLE>
- ---------------
* Trustees considered by the Trusts and their counsel to be "interested persons"
(as defined in the 1940 Act) of the Trusts, their investment manager or AARP
because of their employment by the Investment Manager or AARP and, in some
cases, holding offices with the Trusts. Prior to the Transaction Agreement
entered into between Scudder and Zurich, Mr. Fiedler was considered not to be
an interested person of the Trusts; however, because of his former
relationship with Zurich-American Insurance Company, a subsidiary of Zurich,
the Trusts treat Mr. Fiedler as an interested person of the Trusts under the
1940 Act.
CURRENT TRUSTEES NOT STANDING FOR RE-ELECTION:
<TABLE>
<CAPTION>
YEAR
PRESENT OFFICE WITH THE TRUST FIRST
NAME (AGE) IF ANY, PRINCIPAL OCCUPATION OR BECAME A
----------- EMPLOYMENT AND DIRECTORSHIPS TRUSTEE
---------------------------------------------------------------------------- ---------
<S> <C> <C>
ESTHER CANJA (70)* Trustee. Vice President, American Association of Retired Persons; Trustee 1996
and Chair, AARP Group Health Insurance Plan; Board Liaison, National
Volunteer Leadership
(Each Trust except AARP Network Advisory Committee; Chair, Board Operations Committee; AARP State
Income Trust) Director of Florida (resigned 1992). Ms. Canja serves on the Board of an
additional Trust whose Funds are advised by Scudder.
HORACE B. DEETS* (59) Vice Chairman of the Board and Trustee. Executive Director, American 1988
Association of Retired Persons. Mr. Deets serves on the Board of an
additional Trust whose
(AARP Income Trust only) Funds are advised by Scudder.
CUYLER W. FINDLAY* (64) Trustee. Advisory Managing Director of Scudder, Stevens & Clark, Inc. Mr. 1984
Findlay serves on the Board of an additional Trust whose Funds are advised
by Scudder.
</TABLE>
- ---------------
* Trustees considered by the Trusts and their counsel to be "interested persons"
(as defined in the 1940 Act) of the Trusts, their investment manager or AARP
because of their employment by the Investment Manager or AARP and, in some
cases, holding offices with the Trusts.
The table below sets forth the number of shares of each Fund owned directly
or beneficially by and the Trustees of each Board of Trustees as of June 30,
1997. Trustees who do not own any Shares have been omitted from the table. Funds
which are not owned by any Trustees also have been omitted from the table.
14
<PAGE> 15
<TABLE>
<CAPTION>
FUND NAME (1) ANDERSON ATTARD BUTLER CANJA COUGHLIN DEETS FIEDLER FINDLAY FORRESTER
- ----------------------------------- -------- ------ ------ ----- -------- ----- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AARP Cash Investment Funds
AARP High Quality Money Fund...... -- -- -- -- -- -- -- -- --
AARP Income Trust
AARP Bond Fund for Income......... -- -- -- -- -- -- -- -- --
AARP GNMA and U.S. Treasury
Fund............................ -- 1,108 -- -- -- -- 80 -- --
AARP High Quality Bond Fund....... -- 1,052 -- -- -- -- -- -- 247
AARP Tax Free Income Trust
AARP High Quality Tax Free Money
Fund............................ -- -- -- -- -- -- 1,071 -- --
AARP Insured Tax Free General Bond
Fund............................ -- -- -- -- -- 3,930(9) 697 -- 203
AARP Growth Trust
AARP Growth and Income Fund....... -- 238 126(13) 216(14) 42 175(15) -- -- 2,624
AARP Capital Growth Fund.......... 283 304 -- -- 111(19) -- -- 564 2,214
AARP Balanced Stock and Bond
Fund............................ -- 264 -- -- -- 1,810 -- -- 782
AARP Global Growth Fund........... 670 240 -- -- 67 -- -- -- 330
AARP U.S. Stock Index Fund........ -- 302 -- -- -- -- -- -- --
AARP International Stock Fund..... -- -- -- -- 281* -- -- -- --
AARP Small Company Stock Fund..... -- -- -- -- 516* -- -- -- --
<CAPTION>
ALL CURRENT
TRUSTEES AND
OFFICERS AS
FUND NAME (1) MADDOX MYERS SCHULZ SHILLINGLAW A GROUP
- ----------------------------------- ------ ------ ------ ----------- ------------
<S> <<C> <C> <C> <C> <C>
AARP Cash Investment Funds
AARP High Quality Money Fund...... -- 16,257 3,338(2) 2,673 22,268(3)
AARP Income Trust
AARP Bond Fund for Income......... -- -- -- -- -0-
AARP GNMA and U.S. Treasury
Fund............................ 1,040 1,435 1,272(4) 289(5) 5,224(6)
AARP High Quality Bond Fund....... -- -- -- 407(7) 1,706(8)
AARP Tax Free Income Trust
AARP High Quality Tax Free Money
Fund............................ -- -- -- 22,980 24,051
AARP Insured Tax Free General Bond
Fund............................ -- -- 427(10) 3,772(11) 9,089(12)
AARP Growth Trust
AARP Growth and Income Fund....... 2,017 (16) 496 1,072(17) 1,616 8,622(18)
AARP Capital Growth Fund.......... -- 672 745(20) 1,816 6,724(21)
AARP Balanced Stock and Bond
Fund............................ -- 275 63(22) 1,177 4,371(23)
AARP Global Growth Fund........... -- 1,189 -- -- 2,496
AARP U.S. Stock Index Fund........ -- -- -- -- 302
AARP International Stock Fund..... -- -- -- -- -0-
AARP Small Company Stock Fund..... -- -- -- -- -0-
</TABLE>
- ---------------
* Acquired after June 30, 1997 and not included in Trustees and officers' total.
(1) The information as to beneficial ownership is based on statements furnished
to the Trusts by each Trustee and nominee. Unless otherwise noted,
beneficial ownership is based on sole voting and investment power. Each
Trustee's and nominee's individual shareholdings of any Fund constitutes
less than 1/4 of 1% of the shares outstanding of such Fund.
(2) Mr. Schulz' total in AARP High Quality Money Fund includes 1,387 shares
held with shared investment and voting power.
(3) As a group on June 30,1997, the Trustees and officers' total shares in AARP
High Quality Money Fund include 20,881 shares held with sole investment and
voting power and 1,387 shares held with shared investment and voting power.
(4) Mr. Schulz' total in AARP GNMA U.S. Treasury Fund includes 580 shares held
with shared investment and voting power.
(5) Mr. Shillinglaw's shares in AARP GNMA U.S. Treasury Fund are held with
shared investment and voting power.
(6) As a group on June 30,1997, the Trustees and officers' total shares in AARP
GNMA U.S. Treasury Fund include 4,355 shares held with sole investment and
voting power and 869 shares held with shared investment and voting power.
15
<PAGE> 16
(7) Mr. Shillinglaw's shares in AARP High Quality Bond Fund are held with
shared investment and voting power.
(8) As a group on June 30, 1997, the Trustees and officers' total shares in
AARP High Quality Bond Fund include 1,299 shares held with sole investment
and voting power and 407 shares held with shared investment and voting
power.
(9) Mr. Deets' shares in AARP Insured Tax Free General Bond Fund are held with
shared investment and voting power.
(10) Mr. Schulz' shares in AARP Insured Tax Free General Bond Fund are held with
shared investment and voting power.
(11) Mr. Shillinglaw's total in AARP Insured Tax Free General Bond Fund includes
2,019 shares held with shared investment and voting power.
(12) As a group on June 30, 1997, the Trustees and officers' total shares in
AARP Insured Tax Free General Bond Fund include 2,713 shares held with sole
investment and voting power and 6,376 shares held with shared investment
and voting power.
(13) Dr. Butler's shares in AARP Growth & Income Fund are held with shared
investment and voting power.
(14) Ms. Canja's shares in AARP Growth & Income Fund are held with shared
investment and voting power.
(15) Mr. Deets' shares in AARP Growth & Income Fund are held with shared
investment and voting power.
(16) Mr. Maddox' shares in AARP Growth & Income Fund are held with shared
investment and voting power.
(17) Mr. Schulz' total in AARP Growth & Income Fund includes 1,031 shares held
with shared investment and voting power.
(18) As a group on June 30, 1997,the Trustees and officers' total shares in AARP
Growth & Income Fund includes 5,057 shares held with sole investment and
voting power and 3,565 shares held with shared investment and voting power.
(19) Ms. Coughlin's total in AARP Capital Growth Fund includes 83 shares
acquired after June 30, 1997.
(20) Mr. Shulz' total in AARP Capital Growth Fund includes 698 shares held with
shared investment and voting power.
(21) As a group on June 30, 1997, the Trustees and officers' total shares in
AARP Capital Growth Fund include 5,928 shares held with sole investment and
voting power and 796 shares held with shared investment and voting power.
(22) Ms. Schulz' shares in AARP Balanced Stock & Bond Fund are held with shared
investment and voting power.
(23) As a group on June 30, 1997, the Trustees and officers' total shares in
AARP Balanced Stock and Bond Fund include 4,308 shares held with sole
investment and voting power and 63 shares held with shared investment and
voting power.
16
<PAGE> 17
As of June 30, 1997, 679,687 shares in the aggregate, 29.11% of the
outstanding shares of AARP Bond Fund for Income were held in the name of State
Street Bank & Trust Co., Custodian for AARP Diversified Income Portfolio, One
Heritage Drive, Quincy, MA 02171, who may be deemed to be the beneficial owner
of certain of these shares, but disclaims any beneficial ownership therein.
As of June 30, 1997, 136,374 shares in the aggregate, 5.84% of the
outstanding shares of AARP Bond Fund for Income were held in the name of SS&C
Investment Corporation, 345 Park Avenue, New York, NY 10154, who may be deemed
to be the beneficial owner of certain of these shares, but disclaims any
beneficial ownership therein.
As of June 30, 1997, 52,687 shares in the aggregate, 19.39% of the
outstanding shares of AARP Bond Fund for Income were held in the name of State
Street Bank & Trust Co., Custodian of AARP Diversified Growth Portfolio, One
Heritage Drive, Quincy, MA 02171, who may be deemed to be the beneficial owner
of certain of these shares, but disclaims any beneficial ownership therein.
As of June 30, 1997, 133,333 shares in the aggregate, 9.38% of the
outstanding shares of AARP U.S. Stock Index Fund were held in the name of
American Association of Retired Persons, AARP Membership Division, 601 E Street
NW, Washington, D.C. 20049, who may be deemed to be the beneficial owner of
certain of these shares, but disclaims any beneficial ownership therein.
As of June 30, 1997, 211,042 shares in the aggregate, 14.85% of the
outstanding shares of AARP U. S. Stock Index Fund were held in the name of State
Street Bank & Trust Co., Custodian for AARP Diversified Growth Portfolio, One
Heritage Drive, Quincy, MA 02171, who may be deemed to be the beneficial owner
of certain of these shares, but disclaims any beneficial ownership therein.
As of June 30, 1997, 100,292 shares in the aggregate, 7.06% of the
outstanding shares of AARP U.S. Stock Index Fund were held in the name of State
Street Bank & Trust Co., Custodian for AARP AARP Diversified Income Portfolio,
One Heritage Drive, Quincy, MA 02171, who may be deemed to be the beneficial
owner of certain of these shares, but disclaims any beneficial ownership
therein.
As of June 30, 1997, 201,307 shares in the aggregate, 14.17% of the
outstanding shares of AARP U.S. Stock Index Fund were held in the name of SS&C
Investment Corporation, 345 Park Avenue, New York, NY 10154, who may be deemed
to be the beneficial owner of certain of these shares, but disclaims any
beneficial ownership therein.
As of June 30, 1997, 153,035 shares in the aggregate, 19.82% of the
outstanding shares of AARP International Stock Fund were held in the name of
State Street Bank & Trust Co., Custodian for AARP Diversified Growth Portfolio,
One Heritage Drive, Quincy, MA 02171, who may be deemed to be the beneficial
owner of certain of these shares, but disclaims any beneficial ownership
therein.
As of June 30, 1997, 146,019 shares in the aggregate, 10.04% of the
outstanding shares of AARP Small Company Stock Fund were held in the name of
State Street Bank & Trust Co., Custodian for AARP Diversified Growth Portfolio,
One Heritage Drive, Quincy, MA 02171, who may be deemed to be the beneficial
owner of certain of these shares, but disclaims any beneficial ownership
therein.
To the best of each Trust's knowledge, as of June 30, 1997, no person owned
beneficially more than 5% of any Fund's outstanding shares, except as stated
above.
RESPONSIBILITIES OF THE BOARD -- BOARD AND COMMITTEE MEETINGS
The Board of Trustees of each Trust is responsible for the general
oversight of Fund business. A majority of the Board's members are not affiliated
with Scudder or AARP (the "Non-interested Trustees"). These Non-interested
Trustees have primary responsibility for assuring that the Fund is managed in
the best interests of its shareholders.
Each Board of Trustees meets at least quarterly to review the investment
performance of the Funds and other operational matters, including policies and
procedures designated to assure compliance with various regulatory requirements.
At least annually, the Non-interested Trustees review the
17
<PAGE> 18
fees paid to the Investment Manager and its affiliates for investment advisory
services and other administrative and shareholder services. In this regard, they
evaluate, among other things, each Fund's investment performance, the quality
and efficiency of the various other services provided, costs incurred by the
Investment Manager and its affiliates, and comparative information regarding
fees and expenses of competitive funds. They are assisted in this process by the
Fund's independent public accountants and by independent legal counsel selected
by the Non-interested Trustees. In addition, the Non-interested Trustees from
time to time have established and served on task forces and subcommittees
focusing on particular matters such as investment, accounting and shareholder
service issues.
The Board of each Trust has both an Audit Committee and a Committee on
Independent Trustees, the responsibilities of which are described below.
AUDIT COMMITTEE
The Board of each Trust has an Audit Committee consisting of the
Non-interested Trustees. The Audit Committee reviews with management and the
independent accountants for each Fund, among other things, the scope of the
audit and the controls of each Fund and its agents, reviews and approves in
advance the type of services to be rendered by independent accountants,
recommends the selection of independent accountants for each Fund to the Board
and, in general, considers and reports to the Board on matters regarding each
Fund's accounting and bookkeeping practices.
COMMITTEE ON INDEPENDENT TRUSTEES
The Board of each Trust has a Committee on Independent Trustees consisting
of all the Non-interested Trustees. The Committee is charged with the duty of
making all nominations for Non-interested Trustees and consideration of other
related matters. Shareholders' recommendations as to nominees received by
management are referred to the Committee for its consideration and action.
The following chart sets forth the number of meetings of the Board, the
Audit Committee and the Committee on Independent Trustees of each Trust during
the calendar year 1996. Each then current Trustee attended at least 75% of the
total number of meetings of each Board and committee on which they served as
regular members that were held during that period, except Mr. Deets who attended
60% of the meetings of the Board and Executive Committee of AARP Growth Trust.
NUMBER OF BOARD AND COMMITTEE MEETINGS HELD
DURING THE FISCAL YEAR 1996
<TABLE>
<CAPTION>
COMMITTEE ON
BOARD OF AUDIT INDEPENDENT
TRUSTEES COMMITTEE TRUSTEES
NAME OF TRUST MEETINGS MEETINGS MEETINGS
- ----------------------------------------------------------------------- --------- ------------
<S> <C> <C> <C>
AARP Cash Investment Funds 4 1 2
AARP Tax Free Income Trust 4 1 2
AARP Growth Trust 5 1 2
AARP Income Trust 4 1 2
</TABLE>
18
<PAGE> 19
EXECUTIVE OFFICERS
In addition to Ms. Coughlin and Mr. Deets, the following persons are
Executive Officers of the Trusts:
<TABLE>
<CAPTION>
PRESENT OFFICE WITH THE TRUST;
PRINCIPAL OCCUPATION OR TRUST (YEAR FIRST
NAME (AGE) EMPLOYMENT(1) BECAME AN OFFICER)(2)
- ------------------------- -------------------------------------------------------------- ---------------------
<S> <C> <C>
Thomas W. Joseph (58) Vice President; Principal of Scudder, Stevens & Clark, Inc. 1988
David S. Lee (63) Vice President and Assistant Treasurer; Managing Director of 1984
Scudder, Stevens & Clark, Inc.
Thomas F. McDonough (50) Vice President and Assistant Secretary; Principal of Scudder, 1984
Stevens & Clark, Inc.
Pamela A. McGrath (43) Vice President and Treasurer; Managing Director of Scudder, 1990
Stevens & Clark, Inc.
Edward J. O'Connell (52) Vice President and Assistant Treasurer; Principal of Scudder, 1988
Stevens & Clark, Inc.
James W. Pasman (45) Vice President; Principal of Scudder Stevens & Clark, Inc. 1996
Kathryn L. Quirk (44) Vice President and Secretary; Managing Director of Scudder, 1991
Stevens & Clark, Inc.
Howard S. Schneider (40) Vice President; Managing Director of Scudder, Stevens & Clark, 1991
Inc.
Cornelia M. Small (53) President; Managing Director of Scudder, Stevens & Clark, Inc. 1984
</TABLE>
- ------------------------------
(1) Unless otherwise stated, all of the Executive Officers have been associated
with their respective companies for more than five years, although not
necessarily in the same capacity.
(2) The President, Treasurer and Secretary each holds office until his or her
successor has been duly elected and qualified, and all other officers hold
offices in accordance with the By-laws of the Trust.
COMPENSATION OF TRUSTEES AND OFFICERS
Scudder supervises each Fund's investments, pays the compensation and
certain expenses of its personnel who serve as Trustees and officers of each
Trust and receives a management fee for its services. Several of each Trust's
officers and Trustees are also officers, Directors, employees or shareholders of
Scudder and participate in the fees paid to that firm, although such Trust makes
no direct payments to them other than for reimbursement of travel expenses in
connection with their attendance at Trustees' and committee meetings.
The following Compensation Table provides in tabular form the following
data:
Column (1) All Trustees who receive compensation from each Trust.
Column (2) Aggregate compensation received by each Trustee of each
Trust during the calendar year 1996.
Column (3) Total compensation received by each Trustee from funds
managed by Scudder (collectively, the "Fund Complex") during the calendar
year 1996.
The Trustees do not receive any pension or retirement benefits from any
Trust.
19
<PAGE> 20
COMPENSATION TABLE
<TABLE>
<CAPTION>
(2)
AGGREGATE COMPENSATION (3)
---------------------------------------------- TOTAL
AARP TAX COMPENSATION
AARP CASH AARP FREE AARP FROM THE TRUSTS+
(1) INVESTMENT INCOME INCOME GROWTH AND FUND COMPLEX
NAME OF TRUSTEE FUNDS+ TRUST@ TRUST# TRUST## PAID TO TRUSTEE
- --------------------------------------------- ---------- ------ -------- ------- ----------------
<S> <C> <C> <C> <C> <C>
Carole L. Anderson........................... $3,837 $7,974 $1,854 $3,708 $17,380
(9 funds)
Adelaide Attard.............................. $ 927 $7,274 $1,854 $15,668 $25,730
(9 funds)
Robert N. Butler, M.D........................ $ 752 $7,093 $1,504 $14,371 $23,727
(9 funds)
Edgar R. Fiedler............................. $3,337 $6,974 $6,674 $2,508 $108,083**
(20 funds)
Eugene P. Forrester.......................... $ 802 $7,674 $7,974 $3,208 $19,665
(9 funds)
George L. Maddox, Jr......................... $ 802 $7,674 $7,974 $3,208 $19,665
(9 funds)
Robert J. Myers.............................. $3,831 $7,658 $1,604 $15,510 $28,610
(9 funds)
James H. Schulz.............................. $ 927 $1,854 $7,274 $15,938 $26,000
(9 funds)
Gordon Shillinglaw........................... $3,731 $1,604 $7,458 $15,710 $119,918
(19 funds)
</TABLE>
- ---------------
+ AARP Cash Investment Funds consists of one Fund: AARP High Quality Money
Fund.
@ AARP Income Trust consists of three Funds: AARP GNMA and U.S. Treasury Fund,
AARP High Quality Bond Fund, and AARP Bond Fund for Income.*
# AARP Tax Free Income Trust consists of two Funds: AARP High Quality Tax Free
Money Fund and AARP Insured Tax Free General Bond Fund.
## AARP Growth Trust consists of seven Funds: AARP Balanced Stock and Bond Fund,
AARP U.S. Stock Index Fund,* AARP Growth and Income Fund, AARP Global Growth
Fund,* AARP Capital Growth Fund, AARP International Stock Fund,* and AARP
Small Company Stock Fund.*
+ AARP Diversified Income Portfolio and AARP Diversified Growth Portfolio,
series of AARP Managed Investment Portfolios Trust, commenced operations on
February 1, 1997.
* AARP Global Growth Fund commenced operations on February 1, 1996. AARP Bond
Fund for Income, AARP U.S. Stock Index Fund, AARP International Stock Fund,
and AARP Small Company Stock Fund commenced operations on February 1, 1997.
** Mr. Fiedler received $40,927 through a deferred compensation program. As of
December 31, 1996, Mr. Fiedler had a total of $420,490 accrued over a period
of several years in a deferred compensation program for serving on the
Boards of Directors of Scudder Institutional Fund, Inc. and Scudder Fund,
Inc. over a period of several years.
REQUIRED VOTE
Election of each of the listed nominees for Trustee requires the
affirmative vote of a plurality of the votes of each Trust cast at the Special
Meeting in person or by proxy. This means that the twelve nominees receiving the
largest number of votes will be elected. The Trustees of each Trust recommend
that the shareholders of each Trust vote in favor of each of the nominees listed
in this Proposal 4.
20
<PAGE> 21
PROPOSAL 2: APPROVAL OF NEW
INVESTMENT MANAGEMENT AGREEMENT
INTRODUCTION
Scudder acts as the investment manager to each Fund pursuant to investment
management agreements entered into by each Fund and Scudder (each a "Current
Investment Management Agreement" and, collectively, the "Current Investment
Management Agreements"). (Scudder is sometimes referred to in this proxy
statement as the "Investment Manager.") On June 26, 1997, Scudder entered into a
Transaction Agreement (the "Transaction Agreement") with Zurich Insurance
Company ("Zurich") pursuant to which Scudder and Zurich have agreed to form an
alliance. Under the terms of the Transaction Agreement, Zurich will acquire a
majority interest in Scudder, and Zurich Kemper Investments, Inc. ("ZKI"), a
Zurich subsidiary, will become part of Scudder. Scudder's name will be changed
to Scudder Kemper Investments, Inc. ("Scudder Kemper"). The foregoing are
referred to as the "Transactions." ZKI, a Chicago-based investment adviser and
the adviser to the Kemper funds, has approximately $80 billion under management.
The headquarters of Scudder Kemper will be in New York. Edmond D. Villani,
Scudder's Chief Executive Officer, will continue as Chief Executive Officer of
Scudder Kemper and will become a member of Zurich's Corporate Executive Board.
Consummation of the Transactions would constitute an "assignment," as that
term is defined in the 1940 Act, of each Fund's Current Investment Management
Agreement with Scudder. As required by the 1940 Act, each of the Current
Investment Management Agreements provide for its automatic termination in the
event of its assignment. In anticipation of the Transactions, a new investment
management agreement (each a "New Investment Management Agreement" and,
collectively, the "New Investment Management Agreements" together with the
Current Investment Management Agreements, the "Investment Management
Agreements") between each Fund and Scudder Kemper is being proposed for approval
by shareholders of each Fund. A copy of the form of the New Investment
Management Agreement is attached hereto as Exhibit A. THE NEW INVESTMENT
MANAGEMENT AGREEMENT FOR EACH FUND IS IN ALL MATERIAL RESPECTS ON THE SAME TERMS
AS THE CORRESPONDING CURRENT INVESTMENT MANAGEMENT AGREEMENT. Conforming changes
are being recommended to the New Investment Management Agreement in order to
promote consistency among all of the funds currently advised by Scudder and to
permit ease of administration. The material terms of each Current Investment
Management Agreement are described under "Description of the Current Investment
Management Agreement" below.
BOARD OF TRUSTEES' RECOMMENDATION
On August 20, 1997, the Board of each Trust, including Trustees who are not
parties to such agreement or "interested persons" (as defined under the 1940
Act) of any such party, voted to approve the New Investment Management
Agreements and to recommend their approval to shareholders.
For information about the Boards' deliberations and the reasons for their
recommendation, please see "Board of Trustees' Evaluation" below.
The Board of each Trust recommends that its shareholders vote in favor of
the approval of the New Investment Management Agreement for each Fund.
BOARD OF TRUSTEES' EVALUATION
On June 26, 1997, representatives of Scudder advised the Non-interested
Trustees of each Trust by means of a telephone conference call that Scudder had
entered into the Transaction Agreement. At that time, Scudder representatives
described the general terms of the proposed Transactions and the perceived
benefits for the Scudder organization and for its investment advisory clients.
21
<PAGE> 22
Scudder subsequently furnished the Non-interested Trustees additional
information regarding the proposed Transactions, including information regarding
the terms of the proposed Transactions, and information regarding the Zurich and
ZKI organizations. In a series of subsequent telephone conference calls and
in-person meetings, the Non-interested Trustees discussed this information among
themselves and with representatives of Scudder and Zurich. They were assisted in
their review of this information by their independent legal counsel.
In the course of these discussions, Scudder advised the Non-interested
Trustees that it did not expect that the proposed Transactions would have a
material effect on the operations of the Funds or their shareholders. Scudder
has advised the Non-interested Trustees that the Transaction Agreement, by its
terms, does not contemplate any changes in the structure or operations of the
Funds. Scudder representatives have informed the Trustees, that Scudder intends
to maintain the separate existence of the funds that Scudder and ZKI manage in
their respective distribution channels. Scudder has also advised the
Non-interested Trustees that although it expects that various portions of the
ZKI organization would be combined with Scudder's operations, the senior
executives of Scudder overseeing those operations will remain largely unchanged.
It is possible, however, that changes in certain personnel currently involved in
providing services to the Funds may result from future efforts to combine the
strengths and efficiencies of both firms. In their discussions with the
Trustees, Scudder representatives also emphasized the strengths of the Zurich
organization and its commitment to provide the new Scudder Kemper organization
with the resources necessary to continue to provide high quality services to the
Funds and the other investment advisory clients of the new Scudder Kemper
organization.
The Board of each Trust was advised that Scudder intends to rely on Section
15(f) of the 1940 Act, which provides a non-exclusive safe harbor for an
investment adviser to an investment company or any of the investment adviser's
affiliated persons (as defined under the 1940 Act) to receive any amount or
benefit in connection with a change in control of the investment adviser so long
as two conditions are met. First, for a period of three years after the
transaction, at least 75% of the board members of the investment company must
not be "interested persons" of the investment company's investment adviser or
its predecessor adviser. On or prior to the consummation of the Transactions,
each of the Boards, assuming the election of the nominees that you are being
asked to elect in "Proposal 1: Election of Trustees," would be in compliance
with this provision of Section 15(f). (See "Proposal 1: Election of Trustees").
Second, an "unfair burden" must not be imposed upon the investment company as a
result of such transaction or any express or implied terms, conditions or
understandings applicable thereto. The term "unfair burden" is defined in
Section 15(f) to include any arrangement during the two-year period after the
transaction whereby the investment adviser, or any interested person of any such
adviser, receives or is entitled to receive any compensation, directly or
indirectly, from the investment company or its shareholders (other than fees for
bona fide investment advisory or other services) or from any person in
connection with the purchase or sale of securities or other property to, from or
on behalf of the investment company (other than bona fide ordinary compensation
as principal underwriter for such investment company). No such compensation
agreements are contemplated in connection with the Transactions. Scudder has
undertaken to pay the costs of preparing and distributing proxy materials to,
and of holding the meeting of, the Funds' shareholders as well as other fees and
expenses in connection with the Transactions, including the fees and expenses of
legal counsel and consultants to the Funds and the Non-interested Trustees.
During the course of their deliberations, the Non-interested Trustees
considered a variety of factors, including the nature, quality and extent of the
services furnished by Scudder to the Funds; the necessity of Scudder maintaining
and enhancing its ability to retain and attract capable personnel to serve the
Funds; the investment record of Scudder in managing the Funds; the increased
complexity of the domestic and international securities markets; Scudder's
profitability from advising the Funds; possible economies of scale; comparative
data as to investment performance, advisory fees and other fees, including
administrative fees, and expense ratios; the risks assumed by Scudder; the
advantages and possible disadvantages to the Funds of having an adviser of the
Funds which also serves other
22
<PAGE> 23
investment companies as well as other accounts; possible benefits to Scudder
from serving as manager to the Funds and from affiliates of Scudder serving the
Funds in various other capacities; current and developing conditions in the
financial services industry, including the entry into the industry of large and
well capitalized companies which are spending and appear to be prepared to
continue to spend substantial sums to engage personnel and to provide services
to competing investment companies; and the financial resources of Scudder and
the continuance of appropriate incentives to assure that Scudder will continue
to furnish high quality services to the Funds.
In addition to the foregoing factors, the Non-interested Trustees gave
careful consideration to the likely impact of the Transactions on the Scudder
organization. In this regard, the Non-interested Trustees considered, among
other things, the structure of the Transactions which affords Scudder executives
substantial autonomy over Scudder's operations and provides substantial equity
participation and incentives for many Scudder employees; Scudder's and Zurich's
commitment to Scudder's paying compensation adequate to attract and retain top
quality personnel; Zurich's strategy for the development of its asset management
business through Scudder; information regarding the financial resources and
business reputation of Zurich; and the complementary nature of various aspects
of the business of Scudder and the Zurich Kemper organization. Based on the
foregoing, the Non-interested Trustees concluded that the Transactions should
cause no reduction in the quality of services provided to the Funds and believe
that the Transactions should enhance Scudder's ability to provide such services.
The Non-interested Trustees considered the foregoing factors with respect to
each of the Funds.
On August 20, 1997, the Trustees of each Trust, including the
Non-interested Trustees of each Trust approved the New Investment Management
Agreement.
INFORMATION CONCERNING THE TRANSACTIONS AND ZURICH
Under the Transaction Agreement, Zurich will pay $866.7 million in cash to
acquire two-thirds of Scudder's outstanding shares and will contribute ZKI to
Scudder for additional shares, following which Zurich will have a 79.1% fully
diluted equity interest in the combined business. Zurich will then transfer a
9.6% fully diluted equity interest in Scudder Kemper to a compensation pool for
the benefit of Scudder and ZKI employees, as well as cash and warrants on Zurich
shares for award to Scudder employees, in each case subject to five-year vesting
schedules. After giving effect to the Transactions, current Scudder stockholders
will have a 29.6% fully diluted equity interest in Scudder Kemper and Zurich
will have a 69.5% fully diluted interest in Scudder Kemper. Scudder's name will
be changed to Scudder Kemper Investments, Inc.
The purchase price for Scudder or for ZKI in the Transactions is subject to
adjustment based on the impact to revenues of non-consenting clients, and will
be reduced if the annualized investment management fee revenues (excluding the
effect of market changes, but taking into account new assets under management)
from clients at the time of closing, as a percentage of such revenues as of June
30, 1997 (the "Revenue Run Rate Percentage"), is less than 90%.
At the closing, Zurich and the other stockholders of Scudder Kemper will
enter into a Second Amended and Restated Security Holders Agreement (the "New
SHA"). Under the New SHA, Scudder stockholders will be entitled to designate
three of the seven members of the Scudder Kemper board of directors and two of
the four members of an Executive Committee, which will be the primary
management-level committee of Scudder Kemper. Zurich will be entitled to
designate the other four members of the Scudder Kemper board and other two
members of the Executive Committee.
The names, addresses and principal occupations of the initial
Scudder-designated directors of Scudder Kemper are as follows: Lynn S. Birdsong,
345 Park Avenue, New York, New York, Managing Director of Scudder; Cornelia M.
Small, 345 Park Avenue, New York, New York, Managing Director of Scudder; and
Edmond D. Villani, 345 Park Avenue, New York, New York, President, Chief
Executive Officer and Managing Director of Scudder.
23
<PAGE> 24
The names, addresses and principal occupations of the initial
Zurich-designated directors of Scudder Kemper are as follows: Lawrence W. Cheng,
Mythenquai 2, Zurich, Switzerland, Chief Investment Officer for Investments and
Institutional Asset Management and the corporate functions of Securities and
Real Estate for Zurich; Steven M. Gluckstern, Mythenquai 2, Zurich, Switzerland,
responsible for Reinsurance, Structured Finance, Capital Market Products and
Strategic Investments, and a member of the Corporate Executive Board of Zurich;
Rolf Hueppi, Mythenquai 2, Zurich, Switzerland, Chairman of the Board and Chief
Executive Officer of Zurich; and Markus Rohrbasser, Mythenquai 2, Zurich,
Switzerland, Chief Financial Officer and member of the Corporate Executive Board
of Zurich.
The initial Scudder-designated Executive Committee members will be Messrs.
Birdsong and Villani (Chairman). The initial Zurich-designated Executive
Committee members will be Messrs. Cheng and Rohrbasser.
The New SHA requires the approval of a majority of the Scudder-designated
directors for certain decisions, including changing the name of Scudder Kemper,
effecting an initial public offering before April 15, 2005, causing Scudder
Kemper to engage substantially in non-investment management and related
business, making material acquisitions or divestitures, making material changes
in Scudder Kemper's capital structure, dissolving or liquidating Scudder Kemper,
or entering into certain affiliated transactions with Zurich. The New SHA also
provides for various put and call rights with respect to Scudder Kemper stock
held by current Scudder employees, limitations on Zurich's ability to purchase
other asset management companies outside of Scudder Kemper, rights of Zurich to
repurchase Scudder Kemper stock upon termination of employment of Scudder Kemper
personnel, and registration rights for stock held by continuing Scudder
stockholders.
The Transactions are subject to a number of conditions, including approval
by Scudder stockholders; the Revenue Run Rate Percentages of Scudder and ZKI
being at least 75%; Scudder and ZKI having obtained director and shareholder
approvals from U.S.-registered funds representing 90% of assets of such funds
under management as of June 30, 1997; the absence of any restraining order or
injunction preventing the Transactions, or any litigation challenging the
Transactions that is reasonably likely to result in an injunction or
invalidation of the Transactions; and the continued accuracy of the
representations and warranties contained in the Transaction Agreement. The
Transactions are expected to close during the fourth quarter of 1997.
The information set forth above concerning the Transactions has been
provided to the Trusts by Scudder, and the information set forth below
concerning Zurich has been provided to the Trusts by Zurich.
Founded in 1872, Zurich is a multinational, public corporation organized
under the laws of Switzerland. Its home office is located at Mythenquai 2, 8002
Zurich, Switzerland. Historically, Zurich's earnings have resulted from its
operations as an insurer as well as from its ownership of its subsidiaries and
affiliated companies (the "Zurich Insurance Group"). Zurich and the Zurich
Insurance Group provide an extensive range of insurance products and services,
and have branch offices and subsidiaries in more than 40 countries throughout
the world. Zurich Insurance Group is particularly strong in the insurance of
international companies and organizations. Over the past few years, Zurich's
global presence, particularly in the United States, has been strengthened by
means of selective acquisitions.
DESCRIPTION OF THE CURRENT INVESTMENT MANAGEMENT AGREEMENTS
Under each Current Investment Management Agreement, Scudder provides each
Fund with continuing investment management services. The Investment Manager also
determines which securities shall be purchased, held, or sold, and what portion
of each Fund's assets shall be held uninvested, subject to each Trust's
Declaration of Trust, By-Laws, investment policies and restrictions, the
provisions of the 1940 Act, and such policies and instructions as the Trustees
may determine.
24
<PAGE> 25
Each Current Investment Management Agreement provides that the Investment
Manager will provide portfolio management services, place portfolio transactions
in accordance with policies expressed in each Fund's registration statement, pay
each Fund's office rent, render significant administrative services on behalf of
each Fund (not otherwise provided by third parties) necessary for each Fund's
operating as an open-end investment company including, but not limited to,
preparing reports to and meeting materials for each Trust's Board of Trustees
and reports and notices to Fund shareholders; supervising, negotiating
contractual arrangements with, to the extent appropriate, and monitoring the
performance of various third-party and affiliated service providers to each Fund
(such as each Fund's transfer and pricing agents, fund accounting agent,
custodian, accountants and others) and other persons in any capacity deemed
necessary or desirable to Fund operations; preparing and making filings with the
Securities and Exchange Commission (the "SEC" or the "Commission") and other
regulatory and self-regulatory organizations, including but not limited to,
preliminary and definitive proxy materials, post-effective amendments to the
Registration Statement, semi-annual reports on Form N-SAR and notices pursuant
to Rule 24f-2 under the 1940 Act; overseeing the tabulation of proxies by each
Fund's transfer agent; assisting in the preparation and filing of each Fund's
federal, state and local tax returns; preparing and filing each Fund's federal
excise tax returns pursuant to Section 4982 of the Internal Revenue Code of
1986, as amended; providing assistance with investor and public relations
matters; monitoring the valuation of portfolio securities and the calculation of
net asset value; monitoring the registration of shares of each Fund under
applicable federal and state securities laws; maintaining or causing to be
maintained for each Fund all books, records and reports and any other
information required under the 1940 Act, to the extent such books, records and
reports and other information are not maintained by each Fund's custodian or
other agents of each Fund; assisting in establishing accounting policies of each
Fund; assisting in the resolution of accounting issues that may arise with
respect to each Fund's operations and consulting with each Fund's independent
accountants, legal counsel and each Fund's other agents as necessary in
connection therewith; establishing and monitoring each Fund's operating expense
budgets; reviewing each Fund's bills; processing the payment of bills that have
been approved by an authorized person; assisting each Fund in determining the
amount of dividends and distributions available to be paid by each Fund to its
shareholders, preparing and arranging for the printing of dividend notices to
shareholders, and providing the transfer and dividend paying agent, the
custodian, and the accounting agent with such information as is required for
such parties to effect the payment of dividends and distributions; and otherwise
assisting each Fund in the conduct of its business, subject to the direction and
control of each Trust's Board of Trustees.
Each Current Investment Management Agreement also provides that the
Investment Manager is not required to pay any expenses of any activity primarily
intended to result in the sale of fund securities if and to the extent that (i)
the expenses are to be borne by a principal underwriter acting as the
distributor; (ii) the Fund has adopted a Rule 12b-1 Plan providing for the
assumption of some or all of those expenses; or (iii) the expenses are required
to be borne by Scudder pursuant to the Investment Company Services Agreement
dated October 9, 1984 among the American Association of Retired Persons,
AARP/Scudder Financial Management Company and the Investment Manager.
Under each Current Investment Management Agreement, each Fund is
responsible for other expenses, including organizational expenses (including
out-of-pocket expenses, but not including the Investment Manager's overhead or
employee costs); brokers' commissions or other costs of acquiring or disposing
of any portfolio securities of each Fund; legal, auditing and accounting
expenses; payment for portfolio pricing or valuation services to pricing agents,
accountants, bankers and other specialists, if any; taxes and governmental fees;
the fees and expenses of each Fund's transfer agent; expenses of preparing share
certificates and any other expenses, including clerical expenses, of issuance,
offering, distribution, sale, redemption or repurchase of shares; the expenses
of and fees for registering or qualifying securities for sale; the fees and
expenses of Non-interested Trustees; the cost of printing and distributing
reports, notices and dividends to current shareholders; and the fees and
expenses of each Fund's custodians, subcustodians, accounting agent, dividend
disbursing agents and registrars. Each Fund may arrange to have third parties
assume all or part of the expenses of sale,
25
<PAGE> 26
underwriting and distribution of shares of each Fund. Each Fund is also
responsible for expenses of shareholders' and other meetings, the cost of
responding to shareholders' inquiries, and its expenses incurred in connection
with litigation, proceedings and claims and the legal obligation it may have to
indemnify officers and Trustees of each Trust with respect thereto. Each Fund is
also responsible for the maintenance of books and records which are required to
be maintained by each Fund's custodian or other agents of each Trust; telephone,
telex, facsimile, postage and other communications expenses; any fees, dues and
expenses incurred by each Fund in connection with membership in investment
company trade organizations; expenses of printing and mailing prospectuses and
statements of additional information of each Fund and supplements thereto to
current shareholders; costs of stationery; fees payable to the Investment
Manager and to any other Fund advisors or consultants; expenses relating to
investor and public relations; interest charges, bond premiums and other
insurance expense; freight, insurance and other charges in connection with the
shipment of each Fund's portfolio securities; and other expenses.
The Investment Manager is responsible for the payment of the compensation
and expenses of all Trustees, officers and executive employees of each Fund
(including each Fund's share of payroll taxes) affiliated with the Investment
Manager and making available, without expense to each Fund, the services of such
Trustees, officers and employees as may duly be elected officers of each Trust,
subject to their individual consent to serve and to any limitations imposed by
law. Each Fund is responsible for the fees and expenses (specifically including
travel expenses relating to Fund business) of Trustees not affiliated with the
Investment Manager. Under each Current Investment Management Agreement, the
Investment Manager also pays each Fund's share of payroll taxes, as well as
expenses, such as travel expenses (or an appropriate portion thereof), of
Trustees and officers of each Trust who are directors, officers or employees of
the Investment Manager, except to the extent that such expenses relate to
attendance at meetings of the Board of Trustees of each Trust, or any committees
thereof or advisers thereto, held outside Boston, Massachusetts or New York, New
York. During each Fund's most recent fiscal year, no compensation, direct or
otherwise (other than through fees paid to the Investment Manager), was paid or
became payable by each Trust to any of its officers or Trustees who were
affiliated with the Investment Manager.
Each Current Investment Management Agreement provides that the Fund pays
the Investment Manager a fee for management and administrative services. The
management fee consists of two elements: a Base Fee and an Individual Fund Fee.
The Base Fee is calculated as a percentage of the combined net assets of all of
the AARP Funds. Each Fund pays as its portion of the Base Fee an amount equal to
the ratio of its daily net assets to the daily net assets of all of the AARP
Funds. Specifically, for the first $2 billion in assets, the annual base fee
rate is 0.35%; for the next $2 billion, 0.33%; for the next $2 billion, 0.30%;
for the next $2 billion, 0.28%; for the next $3 billion, 0.26%; for the next $3
billion, 0.25%; and thereafter, 0.24%.
In addition to the Base Fee, each Fund pays an Individual Fund Fee based on
its net assets. The Individual Fund Fee recognizes the different characteristics
of each Fund, the varying levels of complexity of investment research and
securities trading required to manage each Fund, as well as the relative value
added by the Investment Manager. For AARP Cash Investment Funds, the Investment
Manager receives 0.10% for AARP High Quality Money Fund. For AARP Growth Trust,
the Investment Manager receives 0.19% for AARP Growth and Income Fund, 0.32% for
AARP Capital Growth Fund, and 0.19% for AARP Balanced Stock and Bond Fund; 0.00%
for AARP Stock Index Fund; 0.55% for AARP Global Growth Fund; 0.60% for AARP
International Stock Fund; and 0.55% for AARP Small Company Stock Fund. For AARP
Income Trust, the Investment Manager receives 0.12% for AARP GNMA and U.S.
Treasury Fund, and 0.19% for AARP High Quality Bond Fund and 0.28% for AARP Bond
Fund for Income. For AARP Tax-Free Income Trust, the Investment Manager receives
0.10% for AARP High Quality Tax Free Money Fund, and 0.19% for AARP Insured Tax
Free General Bond Fund.
As of the end of each Fund's last fiscal year ended September 30, 1996,
each Fund had net assets and paid an aggregate management fee to the Investment
Manager during such period as set forth below.
26
<PAGE> 27
<TABLE>
<CAPTION>
AGGREGATE
NET MANAGEMENT
FUNDS ASSETS FEE PAID
- ------------------------------------------------------------------------------------- -------------- -----------
<S> <C> <C>
AARP CASH INVESTMENT FUNDS
AARP High Quality Money Fund....................................................... $ 412,126,193 $1,552,929
AARP GROWTH TRUST*
AARP Growth and Income Fund........................................................ $4,218,983,398 $17,423,770
AARP Capital Growth Fund........................................................... $ 826,136,713 $4,626,894
AARP Balanced Stock and Bond Fund.................................................. $ 403,179,939 $1,560,129
AARP Global Growth Fund............................................................ $ 77,651,978 $ 266,155
AARP INCOME TRUST**
AARP GNMA and U.S. Treasury Fund................................................... $4,904,439,844 $21,113,592
AARP High Quality Bond Fund........................................................ $ 511,905,166 $2,550,245
AARP TAX FREE INCOME TRUST
AARP High Quality Tax Free Money Fund.............................................. $ 111,264,728 $ 453,559
AARP Insured Tax Free General Bond Fund............................................ $1,755,412,222 $8,665,253
</TABLE>
- ---------------
* AARP U.S. Stock Index Fund, AARP International Stock Fund and AARP Small
Company Stock Fund were not in operation during fiscal year 1996.
** AARP Bond Fund for Income was not in operation during fiscal year 1996.
Each Current Investment Management Agreement further provides that the
Investment Manager shall not be liable for any error of judgment or mistake of
law or for any loss suffered by any Fund in connection with matters to which
such agreement relates, except a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the Investment Manager in the
performance of its duties or from reckless disregard by the Investment Manager
of its obligations and duties under such agreement.
Each Current Investment Management Agreement may be terminated without
penalty upon sixty (60) days' written notice by either party. Each Fund may
agree to terminate its Current Investment Management Agreement either by the
vote of a majority of the outstanding voting securities of the Fund, or by a
vote of the Board of Trustees. As stated above, each Current Investment
Management Agreement automatically terminates in the event of its assignment.
Scudder has acted as the Investment Manager for each Fund since each Fund
commenced operations as shown below. Also shown below is the date of each
Current Investment Management Agreement, the date when each Current Investment
Management Agreement was last approved by the Trustees and the shareholders of
each Fund and the date to which each Current Investment Management Agreement was
last continued. Each Current Investment Management Agreement was last submitted
to shareholders prior to its becoming effective, as required by the 1940 Act.*
27
<PAGE> 28
<TABLE>
<CAPTION>
DATE OF
CURRENT
COMMENCEMENT INVESTMENT LAST APPROVED BY
OF MANAGEMENT ------------------------- DATE
FUND OPERATIONS AGREEMENT TRUSTEES SHAREHOLDERS CONTINUED TO
- ----------------------------- ------------ ---------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
AARP High Quality Money Fund 7/22/85 2/1/94 6/25/97 1/13/94 8/31/98
AARP GNMA and U.S. Treasury
Fund 11/30/84 2/1/94 6/25/97 1/13/94 8/31/98
AARP High Quality Bond Fund 11/30/84 2/1/94 6/25/97 1/13/94 8/31/98
AARP Bond Fund for Income 2/1/97 2/1/97 12/17/96 1/30/97 8/31/98
AARP High Quality Tax Free
Money Fund 11/30/84 2/1/94 6/25/97 1/13/94 8/31/98
AARP Insured Tax Free General
Bond Fund 11/30/84 2/1/94 6/25/97 1/13/94 8/31/98
AARP Balanced Stock and Bond
Fund 2/1/94 2/1/94 6/25/97 1/13/94 8/31/98
AARP Growth and Income Fund 11/30/84 2/1/94 6/25/97 1/13/94 8/31/98
AARP U.S. Stock Index Fund 2/1/97 2/1/97 12/17/96 1/30/97 8/31/98
AARP Global Growth Fund 2/1/96 2/1/96 6/25/97 1/24/96 8/31/98
AARP Capital Growth Fund 11/30/84 2/1/94 6/25/97 1/13/94 8/31/98
AARP International Stock Fund 2/1/97 2/1/97 12/17/96 1/30/97 8/31/98
AARP Small Company Stock Fund 2/1/97 2/1/97 12/17/96 1/30/97 8/31/98
</TABLE>
- ------------------------------
* An Investment Management Agreement which is changed from a prior agreement
solely to reduce the fee payable by the Fund does not require shareholder
approval prior to becoming effective. In those cases, the date shown for
shareholder approval may be later than the effective date.
THE NEW INVESTMENT MANAGEMENT AGREEMENTS
The New Investment Management Agreement for each Fund will be dated as of
the date of the consummation of the Transactions, which is expected to occur in
the fourth quarter of 1997, but in no event later than February 28, 1998. Each
New Investment Management Agreement will be in effect for an initial term ending
on the same date as would the corresponding Current Investment Management
Agreement but for the Transactions, and may continue thereafter from year to
year only if specifically approved at least annually by the vote of "a majority
of the outstanding voting securities" of each Fund, or by the Board and, in
either event, the vote of a majority of the Non-interested Trustees, cast in
person at a meeting called for such purpose. In the event that shareholders of a
Fund do not approve the New Investment Management Agreement, the corresponding
Current Investment Management Agreement will remain in effect until the closing
of the Transactions, at which time it would terminate. In such event, the Board
of such Fund will take such action as it deems to be in the best interests of
each Fund and its shareholders. In the event the Transactions are not
consummated, Scudder will continue to provide services to each Fund in
accordance with the terms of each Current Investment Management Agreement for
such periods as may be approved at least annually by the Board, including a
majority of the Non-interested Trustees.
28
<PAGE> 29
DIFFERENCES BETWEEN THE CURRENT AND NEW INVESTMENT MANAGEMENT AGREEMENTS
The New Investment Management Agreements are substantially the same as the
Current Investment Management Agreements in all material respects. The principal
changes that have been made are summarized below. The New Investment Management
Agreements reflect conforming changes that have been made in order to promote
consistency among all funds currently advised by Scudder and to permit ease of
administration. For example, the New Investment Management Agreements for each
Fund would update the list of types of services that may be provided by the
Investment Manager to include the monitoring of accounting agents. In addition,
the New Investment Management Agreements would specify that the Investment
Manager is not responsible for payment of the fees and expenses of a Fund's
accounting agent. They also propose to add "accounting agents" to the list of
service providers to which the Investment Manager must provide information in
connection with the payment of dividends and distributions.
The provision addressing the expenses not required to be paid by the
Investment Manager has been simplified. Specifically, the New Investment
Management Agreements still provide that the Investment Manager does not pay for
expenses required to be borne by the distributor, and that the Funds may assume
certain expenses to the extent they have Rule 12b-1 Plans. However, the
provision referring to expenses required to be borne by the Investment Manager
pursuant to the Investment Company Services Agreement has been deleted. The
deletion of that provision from each New Investment Management Agreements does
not affect the relative responsibilities of the parties to the Investment
Company Services Agreement, but rather permits standardization of the New
Investment Management Agreement, and does not, on its face, limit the outside
agreements into which the Investment Manager may enter. For example, there is a
Member Services Agreement between AARP Financial Services Corporation ("AFSC")
and Scudder Kemper providing for payment by Scudder Kemper to AFSC of a monthly
member services fee based on net assets of the Funds. That agreement is
addressed separately in this proxy statement.
Other conforming changes include: deletion of the Investment Manager's
potential responsibility for monitoring the calculation and payment of
distributions to shareholders; and the addition of a provision replacing New
York with Massachusetts as the jurisdiction whose laws will govern the New
Investment Management Agreement.
INVESTMENT MANAGER
Scudder is one of the most experienced investment counsel firms in the
United States. It was established in 1919 as a partnership and was restructured
as a Delaware corporation in 1985. The principal source of Scudder's income is
professional fees received from providing continuing investment advice. Scudder
provides investment counsel for many individuals and institutions, including
insurance companies, endowments, industrial corporations and financial and
banking organizations.
Scudder is a Delaware corporation. Daniel Pierce* is the Chairman of the
Board of Scudder, Edmond D. Villani# is President and Chief Executive Officer of
Scudder, Stephen R. Beckwith#, Lynn S. Birdsong#, Nicholas Bratt#, E. Michael
Brown*, Mark S. Casady*, Linda C. Coughlin*, Margaret D. Hadzima*, Jerard K.
Hartman#, Richard A. Holt@, John T. Packard+, Kathryn L. Quirk#, Cornelia M.
Small# and Stephen A. Wohler* are the other members of the Board of Directors of
Scudder (see footnote for symbol key). The principal occupation of each of the
above named individuals is serving as a Managing Director of Scudder.
- ------------------------------
* 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
29
<PAGE> 30
Pierce and Edmond D. Villani in their capacity as the representatives of the
beneficial owners of such securities (the "Representatives"), pursuant to a
Security Holders' Agreement among Scudder, the beneficial owners of securities
of Scudder and such Representatives. Pursuant to the Security Holders'
Agreement, the Representatives have the right to reallocate shares among the
beneficial owners from time to time. Such reallocations will be at net book
value in cash transactions. All Managing Directors of Scudder own voting and
nonvoting stock and all Principals of Scudder own nonvoting stock.
Directors, officers and employees of Scudder from time to time may enter
into transactions with various banks, including the Fund's custodian bank. It is
Scudder's opinion that the terms and conditions of those transactions will not
be influenced by existing or potential custodial or other Fund relationships.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of Scudder,
computes net asset value for each Fund. Scudder Service Corporation ("SSC"),
also a subsidiary of Scudder, is the transfer, shareholding and dividend-paying
agent for each Fund. Scudder Trust Company ("STC"), an affiliate of Scudder,
provides subaccounting and recordkeeping services for shareholder accounts in
certain retirement and employee benefit plans. The table below sets forth for
each Fund the respective fees paid to SFAC, SSC and STC during the fiscal year
of each Fund ended September 30, 1996.
<TABLE>
<CAPTION>
AGGREGATE FEE AGGREGATE FEE AGGREGATE FEE
PAID TO PAID TO PAID TO
SFAC DURING SSC DURING STC DURING
LAST LAST LAST
FUND FISCAL YEAR FISCAL YEAR FISCAL YEAR
- ----------------------------------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
AARP High Quality Money Fund* $ 48,622 $ 1,526,580 n/a
AARP GNMA and U.S. Treasury Fund* $ 480,771 $ 7,340,012 n/a
AARP High Quality Bond Fund* $ 84,969 $ 1,586,232 n/a
AARP Bond Fund for Income n/a n/a n/a
AARP High Quality Tax Free Money Fund* $ 30,620 $ 304,924 n/a
AARP Insured Tax Free General Bond Fund* $ 150,802 $ 1,925,762 n/a
AARP Balanced Stock and Bond Fund* $ 76,639 $ 724,796 n/a
AARP Growth and Income Fund $ 266,385 $ 3,850,612 n/a
AARP U.S. Stock Index Fund n/a n/a n/a
AARP Global Growth Fund** $ 43,116 $ 178,759 n/a
AARP Capital Growth Fund $ 103,618 $ 1,176,990 n/a
AARP International Stock Fund n/a n/a n/a
AARP Small Company Stock Fund n/a n/a n/a
</TABLE>
- ------------------------------
* SFAC assumed responsibility for pricing Fund shares during Fiscal Year 1996.
Amounts shown represent fees for less than a one year period.
** Commenced operations February 1, 1996.
SFAC, SSC and STC will continue to provide fund accounting, transfer
agency, subaccounting and recordkeeping services to the Funds under the current
arrangements if the New Investment Management Agreements are approved.
Exhibit B sets forth the fees and other information regarding other
investment companies advised by Scudder.
BROKERAGE COMMISSIONS ON PORTFOLIO TRANSACTIONS
To the maximum extent feasible, Scudder places orders for portfolio
transactions through Scudder Investor Services, Inc., Two International Place,
Boston, Massachusetts 02110 (the "Distributor") (a corporation registered as a
broker/dealer and a subsidiary of Scudder), which in turn places orders on
behalf of the Funds with issuers, underwriters or other brokers and dealers. In
selecting
30
<PAGE> 31
brokers and dealers with which to place portfolio transactions for a Fund,
Scudder will not consider sales of shares of funds currently advised by ZKI,
although it may place such transactions with brokers and dealers that sell
shares of funds currently advised by ZKI. The Distributor receives no
commissions, fees or other remuneration from the Fund for this service.
Allocation of portfolio transactions is supervised by Scudder.
REQUIRED VOTE
Approval of this Proposal as to any Fund requires the affirmative vote of a
"majority of the outstanding voting securities" of the Fund. The Trustees of
each Trust recommend that the shareholders of each Fund vote in favor of this
Proposal 2.
PROPOSAL 3: APPROVAL OR DISAPPROVAL OF NEW MEMBER SERVICES AGREEMENT
AARP Financial Services Corporation ("AFSC") provides services to the
Trusts and the Funds pursuant to a Member Services Agreement ("Current
Agreement") with Scudder, dated February 1, 1994. The Current Agreement was
approved by shareholders of each Fund at a meeting held January 13, 1994. By its
terms, the Current Agreement has become applicable to subsequently-established
Funds of the Trusts, as well. The Current Agreement provides that it may not be
assigned by either party, and it may be amended only with approval by a majority
of the Trustees, a majority of the Non-Interested Trustees and a majority of the
outstanding voting securities of each Fund. Because the Transactions described
in Proposal 2 would result in an assignment of the Current Agreement by Scudder,
shareholders are being asked to approve a new Member Services Agreement ("New
Agreement") that is substantially identical to the Current Agreement, except
that the New Agreement will be between AFSC and Scudder Kemper, instead of
Scudder. The proposed New Agreement was approved by a majority of the Board of
Trustees and of the Non-Interested Trustees of each Trust at a meeting held
August 20, 1997. The form of New Agreement is attached as Exhibit C and the
description of its terms in this section is qualified in its entirety by
reference to Exhibit C.
TERMS OF THE AGREEMENT
Under the Current Agreement and the New Agreement ("Agreements"), AFSC
provides advice and services to Scudder (or Scudder Kemper, as applicable,)
aimed at assuring that the Funds and the various products and services offered
by the Funds are tailored to the needs of the AARP membership. AFSC's services
include: providing "seed money" for the Funds; making AARP directors, officers
and staff available to assist in operating the Trusts and to serve as Trustees
and officers of the Trusts; and facilitating communications with the AARP
membership by, among other things, providing Scudder (or Scudder Kemper, as
applicable) with AARP membership lists and access to AARP publications for
advertising.
The Agreements provide that Scudder (or Scudder Kemper, as applicable)
shall pay AFSC a fee, calculated daily and payable monthly, at an annual rate of
.07 of 1% of the average daily net assets of all Funds up to $6 billion. For any
month in which those assets are in excess of $6 billion, the fee with respect to
such excess assets will be at an annual rate of .06 of 1%, while for any month
in which assets exceed $16 billion, the rate will drop to .05 of 1% with respect
to such assets in excess of $16 billion. Fees paid to AFSC for the Trusts'
fiscal year ended September 30, 1996 were $8,179,069.74.
Each of the Agreements provides that it will continue in effect from year
to year with respect to any particular Fund provided it is approved at least
annually by a majority of the Non-Interested Trustees with respect to that Fund
and by a majority of the Trustees or of that Fund's outstanding voting
securities. If the Agreement is not approved with respect to a particular Fund,
it will not take effect with respect to that Fund, but will take effect with
respect to those Funds for which it is approved. Each Agreement may be
terminated, on 60 days' written notice and without penalty, by AFSC, Scudder (or
Scudder Kemper), by the Trustees, or, with respect to any Fund or Trust, by vote
31
<PAGE> 32
of a majority of the outstanding voting securities of that Fund or of each Fund
of the Trust, as applicable.
In determining to approve the New Agreement and recommend that shareholders
of the Trusts also approve it, the Trustees reviewed the nature and quality of
services provided to the Trusts by AFSC and the value of those services to the
Trusts. In evaluating the level of fees paid and payable under the New
Agreement, they also considered that benefits, in addition to the fees, might
flow to AFSC from its association with the Trusts. They reviewed factors that
had led them to recommend the Current Agreement to shareholders for approval at
the Trusts' shareholders meeting held January 13, 1994 and to reapprove the
Current Agreement annually, and they considered whether any additional matters
should be reviewed, in light of subsequent experience.
REQUIRED VOTE
Approval of this Proposal as to any Fund requires the affirmative vote of a
majority of the outstanding voting securities" of the Fund. The Trustees of each
Trust recommend that the shareholders of each Fund vote in favor of this
Proposal 3.
PROPOSAL 4: APPROVAL OR DISAPPROVAL OF SUBADVISORY AGREEMENT
WITH BANKERS TRUST COMPANY
(FOR SHAREHOLDERS OF AARP U.S. STOCK INDEX FUND ONLY)
Scudder has retained Bankers Trust Company as subadviser for the AARP U.S.
Stock Index Fund ("Index Fund"), a series of AARP Growth Trust, pursuant to a
Subadvisory Agreement dated February 1, 1997. By its terms, the Subadvisory
Agreement terminates automatically upon termination of the Current Investment
Management Agreement with AARP Growth Trust with respect to the Index Fund.
Thus, shareholders of AARP U.S. Stock Index Fund are asked to approve a new
Subadvisory Agreement between Scudder Kemper and Bankers Trust Company to take
effect upon the effective date of the Scudder-Zurich alliance. The new
Subadvisory Agreement would be substantially identical to the existing
Subadvisory Agreement, except as described below. The form of new Subadvisory
Agreement is attached hereto as Exhibit D and descriptions of that agreement in
this section are qualified in their entirety by reference to Exhibit D.
Under the current Subadvisory Agreement, Bankers Trust is responsible for
exercising any voting rights of any securities of the Index Fund. Under the
proposed Subadvisory Agreement, Scudder Kemper would be responsible for
exercising any voting rights of any securities of the Index Fund.
Under the terms of the current and proposed Subadvisory Agreements, Bankers
Trust Company provides (or would provide) day-to-day portfolio management of
Index Fund's assets, including developing and implementing an investment program
and strategy appropriate for Index Fund to meet its stated investment objective
and placing orders for execution of Index Fund's portfolio transactions. Bankers
Trust Company is required to provide transaction reports to Scudder (or Scudder
Kemper) and must report to the Trustees and Scudder (or Scudder Kemper) upon
request and at the time of any change in investment strategy or tactics. In
placing orders for portfolio transactions on behalf of Index Fund, Bankers Trust
Company is authorized to cause Index Fund to pay to an unaffiliated broker or
dealer commissions that may be higher than those that might be charged by
another broker or dealer if such higher commissions are considered by Bankers
Trust Company to be reasonable in relation to the value of the research and
brokerage services obtained.
The fees payable to Bankers Trust Company by the Trust on behalf of Index
Fund under the current and proposed Subadvisory Agreements, respectively, are at
an annual rate of 0.07% of the first $100 million of Index Fund's average net
assets, 0.03% of the next $100 million of such assets, and 0.01% of such average
net assets in excess of $200 million. For the period from February 1, 1997 to
February 1, 1998, Bankers Trust Company has agreed to discount this fee by 15%.
Fees paid to
32
<PAGE> 33
Bankers Trust Company from February 1, 1997 to [JUNE 30, 1997] totaled
$26,385.42. Without the discount, such fees would have totaled $31,041.67.
The current Subadvisory Agreement was reviewed and reapproved by the
Trustees, including a majority of the Non-Interested Trustees, to continue until
July 1, 1998, at their meeting June 25, 1997. In determining, at their August
20, 1997 meeting, to approve the proposed Subadvisory Agreement and to recommend
it for approval by shareholders of Index Fund, the Trustees updated their June
review, covering information and considering factors they deemed relevant,
including information concerning the growth and performance of Index Fund since
its inception February 1, 1997, as well as information on Bankers Trust
Company's historic performance in managing index funds compared to other
comparable index funds and its strategy in designing and managing Index Fund.
They also considered the fees payable by Index Fund for investment advisory and
subadvisory services relative to those paid by other comparable funds.
INFORMATION CONCERNING BANKERS TRUST COMPANY
Bankers Trust Company is a New York banking corporation with principal
offices at 130 Liberty Street (One Bankers Trust Plaza), New York, New York
10006, and is a wholly owned subsidiary of Bankers Trust New York Corporation.
Bankers Trust Company conducts a variety of general banking and trust activities
and is a major wholesale supplier of financial services to the international and
domestic institutional market. Bankers Trust Company is one of the largest
managers of indexed assets in the U.S. and, with affiliates, provides both
active and passive management for over $250 billion in assets globally.
Following is information concerning Bankers Trust Company's principal
executive officer and directors:
<TABLE>
<CAPTION>
POSITION WITH BANKERS
NAME AND AGE TRUST COMPANY PRINCIPAL OCCUPATION AND OTHER INFORMATION
- ------------------------- ---------------------- ---------------------------------------------
<S> <C> <C>
George B. Beitzel Director Director of various corporations; retired
Age: 68 senior vice president and director of
International Business Machines Corporation;
director of Computer Tax Group, Phillips
Petroleum Company, Caliber Systems, Inc.
(formerly Roadway Services, Inc.), Rohm and
Haas Company and TIG Holdings; chairman
emeritus of Amherst College; and chairman of
the Colonial Williamsburg Foundation.
Phillip A. Griffiths Director Director of Institute for Advanced Study;
Age: 58 Chairman of Committee on Science, Engineering
and Public Policy of the National Academies
of Sciences and Engineering & the Institute
of Medicine; member of National Academy of
Sciences, American Academy of Arts and
Sciences and American Philosophical Society;
member and chairman of the Nominations
Committee and Committee on Science and
Engineering Indicators, National Science
Board; and trustee of North Carolina School
of Science and Mathematics and the Woodward
Academy; former member of the board of
directors, Research Triangle Institute.
William R. Howell Director Chairman Emeritus of J.C. Penney Company,
Age. 61 Inc.; and a director of Exxon Corporation,
Hallburton Company, Warner-Lambert Company,
The Williams Companies, Inc. and the National
Retail Federation.
</TABLE>
33
<PAGE> 34
<TABLE>
<CAPTION>
POSITION WITH BANKERS
NAME AND AGE TRUST COMPANY PRINCIPAL OCCUPATION AND OTHER INFORMATION
- ------------------------- ---------------------- ---------------------------------------------
<S> <C> <C>
Vernon E. Jordan, Jr. >Director Senior Partner of Akin, Gump, Strauss, Hauer
Age: 61 & Feld, LLP, Attorneys-at-Law, Washington,
D.C. and Dallas, Texas; former president of
National Urban League, Inc.; director of
American Express Company, Dow-Jones, Inc.,
J.C. Penney Company, Inc., Revlon Group
Incorporated, Ryder System, Inc., Sara Lee
Corporation, Union Carbide Corporation and
Xerox Corporation; and a trustee of Brookings
Institute, The Ford Foundation and Howard
University.
Hamish Maxwell Director Retired Chairman and Chief Executive Officer
Age: 70 of Phillip Morris Companies Inc.; director of
The News Corporation Limited and Sola
International Inc., and chairman of WPP Group
plc.
Frank N. Newman Chairman of the Board, Chairman of the Board of Chief Executive
Age: 54 Chief Executive Officer and President of the Corporation;
Officer, President and former deputy secretary of the United States
Director Treasury and former vice chairman of the
board and director of BankAmerica Corporation
and Bank of America NT&AS; and director of
Dow-Jones, Inc. and Carnegie Hall.
N.J. Nicholas, Jr. Director Investor; former co-chief executive officer
Age: 57 of Time Warner Inc.; and director of Boston
Scientific Corporation and Xerox Corporation.
Russell E. Palmer Director Chairman and Chief Executive Officer of The
Age: 62 Palmer Group; former Dean of The Wharton
School, University of Pennsylvania; former
chief executive officer of Touche Ross & Co.
(now Deloitte & Touche); director of
Allied-Signal Inc., Federal Home Loan
Mortgage Corporation, GTE Corporation, The
May Department Stores Company and Safeguard
Scientifics, Inc.; member of advisory board
of the Controller General of the United
States; and a trustee of the University of
Pennsylvania.
Donald L. Staheli Director Chairman of the Board and Chief Executive Of-
Age: 68 ficer of Continental Grain Company; director
of Continental Corporation, Prudential Life
Insurance Company of America, Fresenius
Medical Care, A.g., America-China Society,
National Committee on United States-China
Relations and the New York City Partnership;
chairman of the U.S.-China Business Council,
Council on Foreign Relations and the National
Advisory Council of Brigham Young
University's Marriott School of Management;
vice chairman of The Points of Light
Foundation; and a trustee of the American
Graduate School of International Management.
Patricia Carry Stewart Director Former Vice President of The Edna McConnell
Age: Clark Foundation (a charitable foundation);
director of CVS Corporation and the Community
Foundation for Palm Beach and Martin College;
and a trustee Emirata of Cornell University.
</TABLE>
34
<PAGE> 35
<TABLE>
<CAPTION>
POSITION WITH BANKERS
NAME AND AGE TRUST COMPANY PRINCIPAL OCCUPATION AND OTHER INFORMATION
- ------------------------- ---------------------- ---------------------------------------------
<S> <C> <C>
George J. Vojta Vice Chairman and Vice Chairman of the Corporation; director of
Age: 61 Director Allicorp S.A., Northwest Airlines, Private
Export Funding Corp., the New York State
Banking Board and St. Lukes-Roosevelt
Hospital Center; a partner of New York City
Partnership; and chairman of Wharton
Financial Services Center.
Paul A. Volcker Director Director of various corporations; former
Age: 69 Chairman and Chief Executive Officer of
Wolfensohn & Co., Inc.; former Chairman of
the Board of Governors of the Federal Reserve
System; director of the American Stock
Exchange, Nestle S.A., Prudential Insurance
Company and UAL Corporation; chairman of
Group of 30; North American Chairman of the
Trilateral Commission; co-chairman of Bretton
Woods Committee and U.S./Hong Kong Economic
Cooperation Committee; director of American
Council on Germany, the Aspen Institute,
Council on Foreign Relations and The Japan
Society; trustee of The American Assembly;
and member of Senior Advisory Board of The
Arthritis Foundation.
A.B. Krongard Vice Chairman and Chairman of the Board of Directors (since
Age: 60 Director 1994) and Chief Executive Officer (since
1991) of Alex. Brown Incorporated; Director
of the Securities Industry Association;
Trustee and member of the Executive Committee
of The Johns Hopkins Health System.
Lee A. Ault, III Director Director of Alex. Brown Incorporated; Chief
Age: 60 Executive Officer of Telecredit, Inc., Los
Angeles (merged in 1990 with Equifax, Inc.)
(since 1974); Director of Equifax; Director
of Sunrise Medical Inc. and Viking Office
Products, Inc.
Neil R. Austrian Director Director of Alex. Brown Incorporated;
Age: 56 President and Chief Operating Officer of the
National Football League (since 1991); past
Managing Director of Dillon, Read & Co.,
Chairman and Chief Executive Officer of
Showtime/The Movie Channel, and President and
Chief Executive Officer of Doyle Dane
Bernbach.
G. Richard Thoman Director President and Chief Operating Officer of the
Age: 53 Xerox Corporation and a member of its Board
of Directors (since 1997); past Senior Vice
President and Chief Financial Officer of the
IBM Corporation.
</TABLE>
35
<PAGE> 36
The investment objective of each of the funds advised or subadvised by
Bankers Trust Company listed below is to attempt to track the performance of the
S&P 500 Composite Stock Price Index.
<TABLE>
<CAPTION>
FEES PAYABLE
ASSETS TO BTC BEFORE TOTAL
3/31/97 REIMBURSEMENT/ EXPENSE
FUND STRUCTURE/RELATIONSHIP ($MM) WAIVERS (%) CAP (%)
- ---------------------------------- ------------------------ ------- -------------- -------
<S> <C> <C> <C> <C>
S&P Index Funds
Equity 500 Index Portfolio Master portfolio not 0.15(1) 0.08
available for direct
purchase
BT Institutional Equity 500 Feeder fund available to 1,301.4 0.15(2) 0.10(3)
Index Fund institutional investors
through BTC
BT Pyramid Investment Equity Feeder fund available to 475.9 0.15(2) 0.25(3)
500 Index retail investors through
BTC
USAA S&P 500 Index Feeder fund available to 287.1 0.15(2) 0.18(3)
customers of USAA
Amer AADV; S&P 500-AMR Class Feeder fund available to 1.1 0.15(2) 0.50(3)
customers of American
Airlines
</TABLE>
[NOTES]
REQUIRED VOTE
Approval of this Proposal as to AARP U.S. Stock Index Fund requires the
affirmative vote of a "majority of the outstanding voting securities" of the
Fund. The Trustees of the Trust recommend that the shareholders of the Fund vote
in favor of this Proposal 4.
PROPOSAL 5: APPROVAL OR DISAPPROVAL OF THE BOARD'S
DISCRETIONARY AUTHORITY TO CONVERT EACH FUND TO A
MASTER/FEEDER FUND STRUCTURE
If this Proposal 5 is approved by shareholders, the Board could determine
that the objectives of a Fund would be achieved more efficiently, while
retaining its current distribution arrangements, by investing in a master fund
in a master/feeder structure as described below, and in that case cause the Fund
to do so without further approval by shareholders. While converting a Fund to a
master/feeder fund structure may be desirable given the right opportunity, there
are no current plans to effect such a conversion.
A master/feeder fund structure is one in which a fund (a feeder fund),
instead of investing directly in a portfolio of securities, invests all of its
investment assets in another investment company (the master fund) with
substantially the same investment objectives and policies as the feeder fund.
Such a structure permits the pooling of assets of two or more feeder funds in
the master fund in an effort to achieve possible economies of scale and
efficiencies in portfolio management, while preserving separate identities,
management and/or distribution channels at the feeder fund level. An existing
investment company could convert to a feeder fund by selling all of its
investments, which involves brokerage and other transaction costs and the
realization of taxable gain or loss, or by contributing its assets to the master
fund and avoiding transaction costs and, if proper procedures are followed, the
realization of taxable gain or loss.
Under each Trust's Declaration of Trust, the affirmative vote of a majority
of the outstanding voting securities of a Fund (as defined above) is required to
sell or transfer substantially all of the assets of the Fund. One way to convert
a Fund to a master/feeder fund structure is through a sale or transfer of
assets. Thus, approval of the Board's discretionary authority to convert a Fund
to a
36
<PAGE> 37
master/feeder fund structure through a sale or transfer of assets requires,
under a conservative interpretation of each Trust's Declaration of Trust, the
affirmative vote of a majority of the outstanding voting securities of the Fund.
A master fund must have the identical investment objective and
substantially the same investment policies as its feeder funds. This means that
the assets of the master fund are invested in the same types of securities in
which its feeder funds are authorized to invest.
Management of the Trust believes that, generally, the larger the pool of
assets being managed the more efficiently and cost-effectively it can be
managed. Because a master fund pools the assets of multiple feeder funds, it
provides an effective means of creating larger asset pools. Whether the Board
would exercise its discretionary authority to convert a Fund to a master/feeder
fund structure would depend upon the existence of appropriate opportunities to
pool the Fund's assets with those of other feeder funds. The primary motivation
for considering a master/feeder fund structure would be to seek to achieve
possible economies of scale and efficiencies in portfolio management, while
preserving separate identities, management and distribution channels at the
feeder level. The Trustees' decision to convert a Fund would be based upon their
determination that it would be in the best interests of both the Fund and its
shareholders.
A feeder fund can withdraw its investment in a master fund at any time if
its board determines that it is in the best interests of the shareholders to do
so or if the investment policies or restrictions of the master fund were changed
so that they were inconsistent with the policies and restrictions of the feeder
fund. Upon any such withdrawal, the board of the fund would consider what action
might be taken, including the investment of all of the assets of the fund in
another pooled investment entity having substantially the same investment
objectives and policies as the fund or the investment of the fund's assets
directly in accordance with its investment objective and policies.
Shareholders of each Fund will vote separately with respect to this
Proposal 5.
REQUIRED VOTE
Approval of this Proposal 5 by a Fund requires the affirmative vote of a
majority of the shares of the Fund. The Trustees of each Trust recommend that
shareholders of each Fund vote in favor of the approval of this Proposal 5.
PROPOSAL 6: APPROVAL OR DISAPPROVAL
OF AN AMENDED AND RESTATED DECLARATION
OF TRUST FOR EACH TRUST
Changes and regulatory developments in the investment company industry have
occurred since the current form of each Trust's Declaration of Trust was
adopted. Because consummation of the Transactions described in Proposal 2
requires the holding of this Special Meeting, the Trustees of each of the Trusts
have determined to seek at the same time shareholder approval of an Amended and
Restated Declaration of Trust ("Restated Declaration") designed to reflect those
changes and developments. Each Restated Declaration also includes other changes
of a minor or clarifying nature. The principal changes in the current
Declarations of Trust that would be effected by shareholder approval of the
Restated Declarations are described below. A copy of the form of Restated
Declaration is attached to this proxy statement as Exhibit E.
PROPOSAL 6(A): CHANGES TO EACH TRUST'S CURRENT DECLARATION
OF TRUST THAT REQUIRE A VOTE OF TWO-THIRDS OF SHARES OF
THE TRUST OUTSTANDING AND ENTITLED TO VOTE
MASTER/FEEDER STRUCTURE. A new Section 2.2(i) would be added to give the
Trustees the express power to accomplish each Fund's objective by investing all
or a portion of its assets in another
37
<PAGE> 38
investment company in a "master/feeder" structure, by transferring assets of the
Fund to the other investment company or otherwise, without further shareholder
approval. This section of each Restated Declaration would grant to the Trustees
power which is similar to that included in Proposal 5, but differs from it as
described in the next paragraph.
A master/feeder structure is described in Proposal 5. Management of each
Trust believes the Trustees currently have the power to enter into a
master/feeder structure, although a conservative interpretation of the current
Declarations of Trust is that shareholder approval is required for the transfer
of substantially all of a Fund's assets to a master fund to accomplish that
objective. Such a vote is not required to sell all of a Fund's portfolio
securities and to purchase its interest in the master fund with the proceeds.
The express grant to the Trustees of the power in each Restated Declaration to
enter into a master/feeder structure would remove any doubt as to the Trustees'
power to transfer assets to a master fund without shareholder approval, and
differs from the approval of entry into a master/feeder structure sought in
Proposal 5 primarily in that a power contained in any trust's declaration of
trust is effective in perpetuity unless the declaration of trust is amended or
terminated. Thus, if Proposal 5 is approved but if it were concluded in the
future that the approval had lapsed due to the passage of time, the power of the
Trustees to enter into a master/feeder structure would nevertheless continue
under proposed Section 2.2(i) of the applicable Restated Declaration, if
approved.
SHAREHOLDER VOTING. Under each Restated Declaration, shareholders would
continue to have the same rights as they now have to elect and remove Trustees,
to further amend the Restated Declaration and to vote on certain other matters.
Section 5.9 would be amended to eliminate shareholder voting under the
Declaration with respect to investment advisory or management contracts and Rule
12b-1 plans; each of these matters must be voted on under provisions of the 1940
Act or the rules thereunder, and a separate requirement in the Trust's governing
instrument is unnecessary. Each Restated Declaration would also eliminate
shareholder voting on a merger, consolidation, sale of assets or incorporation
of the Trust. Although the Trustees ordinarily would not expect to take such an
action without shareholder approval, there are situations, as with a very small,
uneconomical fund, a sufficient number of whose shareholders cannot be located,
where Trustee action alone would be in the best interest of shareholders.
REQUIRED VOTE
Approval of this Proposal 6(A) with respect to each Trust requires the vote
of two-thirds of the shares of that Trust outstanding and entitled to vote. If
the shareholders of a Trust fail to approve this Proposal 6(A), neither the
Restated Declaration for that Trust, if approved, nor that Trust's current
Declaration of Trust would be amended as described in this Proposal 6(A). The
Trustees of each Trust recommend that the shareholders of each Trust vote in
favor of this Proposal 6(A).
PROPOSAL 6(B): CHANGES TO EACH TRUST'S CURRENT DECLARATION
OF TRUST THAT REQUIRE A MAJORITY VOTE
REDEMPTION OF CERTAIN SHAREHOLDERS' INTERESTS. A new subparagraph (b)
would be added to Section 6.6 to give the Trustees the power to redeem a
shareholder's interest if the shareholder has previously been involved in
fraudulent securities transactions. The Trustees anticipate that this power
would be exercised only if they believed it was likely that the shareholder
might contemplate a fraudulent redemption or take other action to the detriment
of other shareholders.
All other minor and clarifying changes which would be effected by approval
of the Restated Declaration are included in this Proposal 6(B).
38
<PAGE> 39
REQUIRED VOTE
Approval of this Proposal 6(B) with respect to each Trust requires the
affirmative vote of a "majority of the outstanding voting securities" of that
Trust, as defined above. The Trustees of each Trust recommend that the
shareholders of each Trust vote in favor of this Proposal 6(B).
If this Proposal 6(B) is approved with respect to any Trust, the Restated
Declaration will be adopted for that Trust. The Restated Declaration (or the
current Declaration of Trust) of each Trust will include new Section 2.2(i) and
the amendments to Section 5.9 only if Proposal 6(A) is also adopted for that
Trust.
PROPOSAL 7: APPROVAL OR DISAPPROVAL OF THE
REVISION OF CERTAIN FUNDAMENTAL INVESTMENT POLICIES
The 1940 Act requires an investment company to have adopted certain
specified investment policies which can be changed only by a shareholder vote.
Those policies are often referred to as "fundamental" policies. In the past,
fundamental policies were adopted by the Trusts on behalf of their Funds, and in
some cases amended by vote of the shareholders of the affected Fund, in order to
reflect regulatory, business or industry conditions which were in effect at the
time the particular action was taken. Because of the opportunity afforded by
this Special Meeting, there has been a review of each Fund's fundamental
policies with the goal of simplifying, modernizing and making consistent as far
as possible the fundamental policies of all open-end investment companies
managed by Scudder.
This Proposal seeks shareholder approval of changes which are intended to
accomplish that goal. The proposed changes to each Fund's fundamental policies
are discussed in detail below. Please refer to the proposed policies as set
forth in Exhibit F.
Each of the fundamental policies proposed for adoption with respect to each
Fund is in an area in which the 1940 Act requires that the Fund adopt a
fundamental policy. Except for the policy on borrowing as discussed below, none
of the proposed policies differs from the respective Fund's current comparable
policy in a material way, although the formulation of the policy may differ from
the current one in the interest of uniformity and simplicity. Each Fund's
policies with respect to diversification, the issuance of senior securities, and
the underwriting of securities issued by others differ from the current policies
of each Fund in that the requirements of the 1940 Act, which of course apply,
are not spelled out in detail.
Shareholders will be asked to vote on each proposed fundamental policy
separately on the enclosed proxy card.
PROPOSAL 7.1: DIVERSIFICATION
Each Fund is a "diversified" fund under the 1940 Act. Under its current
diversification policy, each Fund, with respect to 75% of the value of its total
assets, may not purchase more than 10% of the voting securities of any one
issuer or invest more than 5% of the value of its total assets in the securities
of any one issuer, with exceptions for U.S. Government securities, cash and cash
equivalents and securities of other investment companies. This restriction is
substantially identical to the definition of a diversified fund under the 1940
Act. The applicable policy of AARP High Quality Money Fund and AARP High Quality
Tax Free Money Fund also states that the amount of total assets that may be
invested in the securities of any one issuer will instead be limited by federal
restrictions applicable to money market funds. In light of the provisions of the
1940 Act concerning the requirements of maintaining diversified status as well
as the rules applicable to money market funds, the absence or presence of
specific references to money market fund regulations, does not, in the opinion
of management of the Trusts, change the interpretation of the Funds'
diversification policies and, therefore, such reference is unnecessary.
Accordingly, the proposed statement that each Fund has elected to be classified
as a diversified Fund represents no substantive change in the current
diversification policy for any of the Funds.
39
<PAGE> 40
PROPOSAL 7.2: BORROWING
The current policy of each Fund prohibits borrowing money, except as a
temporary measure for extraordinary or emergency purposes and not for investment
purposes and except in connection with reverse repurchase agreements, provided
that the Fund maintains asset coverage of 300% for all borrowings. Under the
proposed policy, each Fund would not be limited to borrowing for temporary or
emergency purposes; however, if the Trustees determine with respect to any Fund
to permit borrowing for other purposes, which they currently do not intend to
do, the applicable Fund's disclosure documents would be amended to disclose that
fact. Although the Trustees do not currently intend to permit a Fund to borrow
for investment leverage purposes, such borrowings would increase the Fund's
volatility and the risk of loss in a declining market. Borrowings under reverse
repurchase agreements are now permitted, and would be permitted under the
proposed policy. The 1940 Act requires borrowings to have 300% asset coverage,
which requirement would, therefore, remain unchanged under the proposed policy.
Accordingly, therefore, except as stated above, the borrowing policy of each
Fund would not be changed by adoption of the proposed policy.
PROPOSAL 7.3: SENIOR SECURITIES
The current policy of each Fund prohibits the issuance of senior
securities, except in connection with permitted indebtedness and except in
connection with the issuance of separate classes or series of shares. The
issuance of separate classes or series of shares are not deemed to involve the
issuance of senior securities under current policies of the Commission or its
staff. Accordingly, management of each Trust believes that it is not necessary
to specify those exceptions in the Funds' fundamental policies with regard to
senior securities because they are permitted under the 1940 Act.
PROPOSAL 7.4: CONCENTRATION
Each Fund's current policy in effect prohibits the purchase of securities
if it would result in more than 25% of the market value of the Fund's total
assets being invested in securities of one or more issuers having their
principal business activities in the same industry, except for U.S. Government
securities. There are exceptions for certificates of deposit or bankers'
acceptances in the case of AARP High Quality Money Fund and AARP High Quality
Tax Free Money Fund, and municipal securities in the case of AARP Growth and
Income Fund, AARP High Quality Tax Free Money Fund and AARP Insured Tax Free
General Bond Fund, other than, in the case of AARP Growth and Income Fund,
pollution control and industrial development bonds. In addition, each of AARP
High Quality Tax Free Money Fund and AARP Insured Tax Free General Bond Fund may
not purchase private activity bonds if such purchase would cause more than 25%
of a Fund's assets to be invested in the securities of one or more issuers in a
particular industry. In the case of each Fund, what constitutes an industry for
the purposes of this restriction is included in the policy itself. While the
1940 Act does not define what constitutes "concentration" in an industry, the
staff of the Commission takes the position that investment of more than 25% of a
fund's assets in an industry constitutes concentration. If a fund concentrates
in an industry, it must at all times have more than 25% of its assets invested
in that industry, and if its policy is not to concentrate, as is the case with
each of the Funds, it may not invest more than 25% of its assets in the
applicable industry, unless, in either case, the fund discloses the specific
conditions under which it will change from concentrating to not concentrating or
vice versa. A fund is permitted to adopt reasonable definitions of what
constitutes an industry, or it may use standard classifications promulgated by
the Commission, or some combination thereof. Under the 1940 Act and applicable
interpretations of the Commission or its staff and, therefore, under the
proposed policy, municipal governments are not an industry, but private activity
bonds are subject to concentration policies (although these are municipal
securities). Because a fund may create its own reasonable industry
classifications, management of each Trust believes that it is not necessary to
include such matters in the fundamental policy of a Fund, and that the adoption
of the proposed concentration policy would make no substantive change in the
current concentration policy of any Fund.
40
<PAGE> 41
The proposed concentration policy of each of AARP High Quality Money Fund
and AARP High Quality Tax Free Money Fund reserves freedom of action for that
Fund to concentrate in instruments issued by domestic banks, which provision is
similar to but broader than the current provisions referred to above with
respect to certificates of deposit and bankers' acceptances. The proposed policy
is common among money market funds. No change in the operations of AARP High
Quality Money Fund and AARP High Quality Tax Free Money Fund is anticipated if
the proposed policies are approved.
PROPOSALS 7.5 THROUGH 7.9: OTHER POLICIES
Each of the other proposed fundamental policies regarding underwriting of
securities (Proposal 7.5), investment in real estate (Proposal 7.6), purchase of
physical commodities (Proposal 7.7), lending (Proposal 7.8) and, with respect to
AARP High Quality Tax Free Money Fund and AARP Insured Tax Free General Bond
Fund, investment in tax-exempt securities (Proposal 7.9) is substantially
identical to the current comparable policy of each Fund except that these
policies have been reworded or clarified.
REQUIRED VOTE
Approval of the proposed fundamental policies with respect to any Fund
requires the affirmative vote of a majority of the outstanding voting
securities, as defined above, of that Fund. If the shareholders of any Fund fail
to approve the proposed fundamental policies, the current policies will remain
in effect. The Trustees of each Trust recommend that the shareholders of each
Fund vote in favor of this Proposal 7.
PROPOSAL 8: RATIFICATION OR REJECTION
OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Trustees of each of the Trusts, including a majority of the
Non-interested Trustees, has selected Price Waterhouse L.L.P. to act as
independent accountants for each of the Funds for each Fund's current fiscal
year. Price Waterhouse L.L.P. are independent accountants and have advised the
Funds that they have no direct financial interest or material indirect financial
interest in the Funds. One or more representatives of Price Waterhouse L.L.P.
are expected to be present at the Special Meeting and will have an opportunity
to make a statement if they so desire. Such representatives are expected to be
available to respond to appropriate questions posed by shareholders or
management.
REQUIRED VOTE
Ratification of the selection of independent accountants requires the
affirmative vote of a majority of the votes cast at the Special Meeting in
person or by proxy. The Trustees of each Trust recommend that the shareholders
of the Funds vote in favor of this Proposal 8.
ADDITIONAL INFORMATION
GENERAL
The cost of preparing, printing and mailing the enclosed proxy, and proxy
statement and all other costs incurred in connection with the solicitation of
proxies, including any additional solicitation made by letter, telephone or
telegraph, will be paid by Scudder. In addition to solicitation by mail, certain
officers and representatives of each Trust, officers and employees of Scudder
and certain financial services firms and their representatives, who will receive
no extra compensation for their services, may solicit proxies by telephone,
telegram or personally.
Shareholder Communications Corporation ("SCC") has been engaged to assist
in the solicitation of proxies. As the Special Meeting date approaches, certain
shareholders of each Fund may receive a
41
<PAGE> 42
telephone call from a representative of SCC if their vote has not yet been
received. Authorization to permit SCC to execute proxies may be obtained by
telephonic or electronically transmitted instructions from shareholders of each
Fund. Proxies that are obtained telephonically will be recorded in accordance
with the procedures set forth below. The Trustees believe that these procedures
are reasonably designed to ensure that the identity of the shareholder casting
the vote is accurately determined and that the voting instructions of the
shareholder are accurately determined.
In all cases where a telephonic proxy is solicited, the SCC representative
is required to ask for each shareholder's full name, address, social security or
employer identification number, title (if the shareholder is authorized to act
on behalf of an entity, such as a corporation), and the number of shares owned
and to confirm that the shareholder has received the proxy statement card in the
mail. If the information solicited agrees with the information provided to SCC,
then the SCC representative has the responsibility to explain the process, read
the proposals listed on the proxy card, and ask for the shareholder's
instructions on each proposal. The SCC representative, although he or she is
permitted to answer questions about the process, is not permitted to recommend
to the shareholder how to vote, other than to read any recommendation set forth
in the proxy statement. SCC will record the shareholder's instructions on the
card. Within 72 hours, the shareholder will be sent a letter or mailgram to
confirm his or her vote and asking the shareholder to call SCC immediately if
his or her instructions are not correctly reflected in the confirmation.
If the shareholder wishes to participate in the Special Meeting, but does
not wish to give his or her proxy by telephone, the shareholder may still submit
the proxy card originally sent with the proxy statement or attend in person.
Should shareholders require additional information regarding the proxy or
replacement proxy cards, they may contact SCC toll-free at 1-800-733-8481 ext
488. Any proxy given by a shareholder, whether in writing or by telephone, is
revocable.
PROPOSALS OF SHAREHOLDERS
Shareholders wishing to submit proposals for inclusion in a proxy statement
for a shareholder meeting subsequent to the Special Meeting, if any, should send
their written proposals to the Secretary of the Trust, c/o Scudder, Stevens &
Clark, Inc., Two International Place, Boston, Massachusetts 02110, within a
reasonable time before the solicitation of proxies for such meeting. The timely
submission of a proposal does not guarantee its inclusion.
OTHER MATTERS TO COME BEFORE THE SPECIAL MEETING
No Board of Trustees is aware of any matters that will be presented for
action at the Special Meeting other than the matters set forth herein. Should
any other matters requiring a vote of shareholders arise, the proxy in the
accompanying form will confer upon the person or persons entitled to vote the
shares represented by such proxy the discretionary authority to vote the shares
as to any such other matters in accordance with their best judgment in the
interest of each Trust and/or Fund.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
By order of the Board of Trustees,
Kathryn L. Quirk
Secretary
42
<PAGE> 43
EXHIBIT A
MASTER FORM
OF
NEW INVESTMENT MANAGEMENT AGREEMENT
43
<PAGE> 44
EXHIBIT B
INVESTMENT OBJECTIVES AND ADVISORY FEES
FOR FUNDS ADVISED BY SCUDDER, STEVENS & CLARK, INC.
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
- -------------------------- ----------------------------------------------- ------------------- --------------
<S> <C> <C> <C>
MONEY MARKET
Scudder U.S. Treasury Safety, liquidity, and stability of capital 0.500% of 398,597,054
Money Fund and, consistent therewith, current income. net assets
Scudder Cash Investment Stability of capital while maintaining 0.500% to 1,430,623,516
Trust liquidity of capital and providing current $250 million
income from money market securities. 0.450% next
$250 million
0.400% next
$500 million
0.350% thereafter
Scudder Money Market High level of current income consistent with 0.250% of 384,509,425**
Series preservation of capital and liquidity by net assets
investing in a broad range of short-term money
market instruments.
Scudder Government Money High level of current income consistent with 0.250% of 36,794,563**
Market Series preservation of capital and liquidity by net assets
investing exclusively in obligations issued or
guaranteed by the U.S. Government or its
agencies or instrumentalities and in certain
repurchase agreements.
TAX FREE MONEY MARKET
Scudder Tax Free Money Income exempt from regular federal income taxes 0.500% to 220,245,241
Fund and stability of principal through investments $500 million
in municipal securities. 0.480% thereafter
Scudder Tax Free Money High level of current income consistent with 0.250% of 79,695,218**
Market Series preservation of capital and liquidity exempt net assets
from federal income tax by investing primarily
in high quality municipal obligations.
Scudder California Tax Stability of capital and the maintenance of a 0.500% of 68,695,680
Free Money Fund constant net asset value of $1.00 per share net assets
while providing California tax payers income
exempt from both California personal and
regular federal income tax through investment
in high quality, short-term tax-exempt
California municipal securities.
Scudder New York Tax Stability of capital and income exempt from New 0.500% of 59,538,652
Free Money Fund York state and New York City personal income net assets
taxes and regular federal income tax through
investment in high quality, short-term
municipal securities in New York.
TAX FREE
Scudder Limited Term Tax High level of income exempt from regular 0.600% of 123,660,431
Free Fund federal income tax consistent with a high net assets
degree of principal stability.
</TABLE>
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless
otherwise indicated.
** Program assets as of 7/31/97.
44
<PAGE> 45
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
- -------------------------- ----------------------------------------------- ------------------- --------------
<S> <C> <C> <C>
Scudder Medium Term Tax High level of income exempt from regular 0.600% to 650,504,081
Free Fund federal income tax and limited principal $500 million
fluctuation through investment primarily in 0.500% thereafter
high grade intermediate term municipal
securities.
Scudder Managed Income exempt from regular federal income tax 0.550% to 737,422,861
Municipal Bonds primarily through investments in high-grade $200 million
long-term municipal securities. 0.500% next
$500 million
0.475% thereafter
Scudder High Yield Tax High level of income, exempt from regular 0.650% to 293,101,021
Free Fund federal income tax, from an actively managed $300 million
portfolio consisting primarily of investment 0.600% thereafter
grade municipal securities.
Scudder California Tax Income exempt from both California state 0.625% to 288,576,041
Free Fund personal income tax and regular federal income $200 million
tax primarily through investment grade 0.600% thereafter
municipal securities.
Scudder Massachusetts A high level of income exempt from both 0.600% of 65,505,088
Limited Term Tax Free Massachusetts personal income tax and regular net assets
Fund federal income tax as is consistent with a high
degree of price stability.
Scudder Massachusetts A high level of income exempt from both 0.600% of 329,842,169
Tax Free Fund Massachusetts personal income tax and regular net assets
federal income tax through investment primarily
in long-term investment-grade municipal
securities in Massachusetts.
Scudder New York Tax Income exempt from New York state and New York 0.625% to 180,647,157
Free Fund City personal income taxes and regular federal $200 million
income tax through investment primarily in 0.600% thereafter
long-term investment-grade municipal securities
in New York.
Scudder Ohio Tax Free Income exempt from Ohio personal income tax and 0.600% of 84,109,009
Fund regular federal income tax through investment net assets
primarily in investment-grade municipal
securities in Ohio.
Scudder Pennsylvania Tax Income exempt from Pennsylvania personal income 0.600% of 74,177,997
Free Fund tax and regular federal income tax through net assets
investment primarily in investment-grade
municipal securities in Pennsylvania.
Scudder Short Term Bond High level of income consistent with a high 0.600% to 1,468,170,885
Fund degree of principal stability through $500 million
investments primarily in high quality 0.500% next
short-term bonds. $500 million
0.450% next
$500 million
0.400% next
$500 million
0.375% next
$1 billion
0.350% thereafter
</TABLE>
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless
otherwise indicated.
** Program assets as of 7/31/97.
45
<PAGE> 46
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
- -------------------------- ----------------------------------------------- ------------------- --------------
<S> <C> <C> <C>
Scudder Zero Coupon 2000 High investment returns over a selected period 0.600% of 25,440,414
Fund as is consistent with investment in U.S. net assets
Government securities and the minimization of
reinvestment risk.
Scudder GNMA Fund High current income and safety of principal 0.650% to 383,008,164
primarily from investment in U.S. Government $200 million
mortgage-backed GNMA securities. 0.600% next
$300 million
0.550% thereafter
Scudder Income Fund A high level of income, consistent with the 0.650% to 578,519,502
prudent investment of capital, through a $200 million
flexible investment program emphasizing 0.600% next
high-grade bonds. $300 million
0.550% thereafter
Scudder High Yield Bond A high level of current income and capital 0.700% of 73,523,094
Fund appreciation through investment primarily in net assets
below investment-grade domestic debt
securities.
GLOBAL INCOME
Scudder Global Bond Fund Total return with an emphasis on current income 0.750% to 217,403,907
by investing primarily in high-grade bonds $1 billion
denominated in foreign currencies and the U.S. 0.700% thereafter
dollar.
Scudder International Income primarily by investing in high-grade 0.850% to 235,993,183
Bond Fund international bonds and protection and possible $1 billion
enhancement of principal value by actively 0.800% thereafter
managing currency, bond market and maturity
exposure and by security selection.
Scudder Emerging Markets High current income and, secondarily, long-term 1.000% of 304,607,984
Income Fund capital appreciation by investing primarily in net assets
high-yielding debt securities issued in
emerging markets.
ASSET ALLOCATION
Scudder Pathway Current income and, secondarily, long-term There will be no 13,928,759***
Conservative Portfolio growth of capital by investing substantially in fee as the Manager
bond mutual funds, but will have some exposure will receive a fee
to equity mutual funds. from the underlying
funds.
Scudder Pathway Balanced Balance of growth and income by investing in a There will be no 167,721,722
Portfolio mix of money market, bond and equity mutual fee as the Manager
funds. will receive a fee
from the underlying
funds.
Scudder Pathway Growth Long-term growth of capital by investing There will be no 42,234,535***
Portfolio predominantly in equity mutual funds designed fee as the Manager
to provide long-term growth. will receive a fee
from the underlying
funds.
</TABLE>
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless
otherwise indicated.
** Program assets as of 7/31/97.
46
<PAGE> 47
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
- -------------------------- ----------------------------------------------- ------------------- --------------
<S> <C> <C> <C>
Scudder Pathway Maximize total return by investing in a select There will be no 8,983,598***
International mix of established international and global fee as the Manager
Portfolio Scudder Funds. will receive a fee
from the underlying
funds.
U.S. GROWTH AND INCOME
Scudder Balanced Fund A balance of growth and income from a 0.700% of 109,541,542
diversified portfolio of equity and fixed net assets
income securities and long-term preservation of
capital through a quality oriented investment
approach designed to reduce risk.
Scudder Growth and Long-term growth of capital, current income and 0.600% to 4,186,481,205
Income Fund growth of income primarily from common stocks, $500 million
preferred stocks and securities convertible 0.550% next
into common stocks. $500 million
0.500% next
$500 million
0.475% next
$500 million
0.450% next
$1 billion
0.425% next
$1.5 billion
0.405% thereafter
U.S. GROWTH
Scudder Large Company Maximize long-term capital appreciation through 0.750% to 1,651,459,797
Value Fund (formerly a value driven investment program emphasizing $500 million
Scudder Capital Growth common stocks and preferred stocks. 0.650% next
Fund) $500 million
0.600% next
$500 million
0.550% thereafter
Scudder Value Fund Long-term growth of capital through investment 0.700% of 88,874,292
in undervalued equity securities. net assets
Scudder Small Company Long-term growth of capital by investing 0.750% of 41,187,186
Value Fund primarily in undervalued equity securities of net assets
small U.S. companies.
Scudder Micro Cap Fund Long-term growth of capital by investing 0.750% of 72,048,339***
primarily in a diversified portfolio of U.S. net assets
micro-cap common stocks.
Scudder Classic Growth Long-term growth of capital while keeping the 0.700% of 33,867,066
Fund value of its shares more stable than other net assets
growth mutual funds.
Scudder Large Company Long-term growth of capital through investment 0.700% of 221,253,633
Growth Fund (formerly primarily in the equity securities of seasoned, net assets
Scudder Quality Growth financially strong U.S. growth companies.
Fund)
</TABLE>
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless
otherwise indicated.
** Program assets as of 7/31/97.
47
<PAGE> 48
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
- -------------------------- ----------------------------------------------- ------------------- --------------
<S> <C> <C> <C>
Scudder Development Fund Long-term growth of capital by investing 1.000% to 861,564,138
primarily in equity securities of emerging $500 million
growth companies. 0.950% next
$500 million
0.900% thereafter
Scudder 21st Century Long-term growth of capital by investing 1.000% of 20,942,531***
Growth Fund primarily in the securities of emerging growth net assets
companies poised to be leaders in the 21st
century.
GLOBAL GROWTH
Scudder Global Fund Long-term growth of capital through investment Effective 9/11/97: 1,604,465,769
in a diversified portfolio of marketable 1.000% to
foreign and domestic securities, primarily $500 million
equity securities. 0.950% next
$500 million
0.900% next
$500 million
0.850% thereafter
Institutional Long-term growth of capital primarily through a 0.900% of 17,897,508
International Equity diversified portfolio of marketable foreign net assets
Portfolio equity securities.
Scudder International Long-term growth of capital and current income 1.000% of 25,631,898***
Growth and Income Fund primarily from foreign equity securities net assets
Scudder International Long-term growth of capital primarily through a 0.900% to 2,583,030,686
Fund diversified portfolio of marketable foreign $500 million
equity securities. 0.850% next
$500 million
0.800% next
$1 billion
0.750% next
$1 billion
0.700% thereafter
Scudder Global Discovery Above-average capital appreciation over the 1.100% of 350,829,980
Fund long- term by investing primarily in the equity net assets
securities of small companies located
throughout the world.
Scudder Emerging Markets Long-term growth of capital primarily through 1.25% of 75,793,693
Growth Fund equity investments in emerging markets around net assets
the globe.
Scudder Gold Fund Maximum return consistent with investing in a 1.000% of 163,932,814
portfolio of gold-related equity securities and net assets
gold.
Scudder Greater Europe Long-term growth of capital through investment 1.000% of 120,300,058
Growth Fund primarily in the equity securities of European net assets
companies.
Scudder Pacific Long-term growth of capital primarily through 1.100% of 329,391,540
Opportunities Fund investment in the equity securities of Pacific net assets
Basin companies, excluding Japan.
</TABLE>
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless
otherwise indicated.
** Program assets as of 7/31/97.
48
<PAGE> 49
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
- -------------------------- ----------------------------------------------- ------------------- --------------
<S> <C> <C> <C>
Scudder Latin America Long-term capital appreciation through Effective 9/11/97: 621,914,690
Fund investment primarily in the securities of Latin 1.250% to
American issuers. $1 billion
1.150% thereafter
The Japan Fund, Inc. Long-term capital appreciation through 0.850% to 385,963,962
investment primarily in equity securities of $100 million
Japanese companies. 0.750% next
$200 million
0.700% next
$300 million
0.650% thereafter
CLOSED-END FUNDS
The Argentina Fund, Inc. Long-term capital appreciation through Advisor: 117,596,046
investment primarily in equity securities of Effective 11/1/97:
Argentine issuers. 1.100% of
net assets
Sub-Advisor:
Paid by Advisor.
0.160% of
net assets
The Brazil Fund, Inc. Long-term capital appreciation through 1.200% to 417,981,869
investment primarily in equity securities of $150 million
Brazilian issuers. 1.050% next
$150 million
1.000% thereafter
Effective 10/29/97:
1.200% to
$150 million
1.050% next
$150 million
1.000% next
$200 million
0.900% thereafter
Administrator:
Receives an annual
fee of $50,000
</TABLE>
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless
otherwise indicated.
** Program assets as of 7/31/97.
49
<PAGE> 50
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
- -------------------------- ----------------------------------------------- ------------------- --------------
<S> <C> <C> <C>
The Korea Fund, Inc. Long-term capital appreciation through Advisor: 661,690,073
investment primarily in equity securities of 1.150% to
Korean issuers. $50 million
1.100% next
$50 million
1.000% next
$250 million
0.950% next
$400 million
0.900% thereafter
Sub-Advisor -
Daewoo:
Paid by Advisor.
0.2875% to
$50 million
0.275% next
$50 million
0.250% next
$250 million
0.2375% next
$400 million
0.225% thereafter
The Latin America Dollar High level of current income and, secondarily, 1.200% of 94,748,606
Income Fund, Inc. capital appreciation through investment net assets
principally in dollar-denominated Latin
American debt instruments.
Montgomery Street Income High level of current income consistent with 0.500% to 198,465,822
Securities, Inc. prudent investment risks through a diversified $150 million
portfolio primarily of debt securities. 0.450% next
$50 million
0.400% thereafter
Scudder New Asia Fund, Long-term capital appreciation through 1.250% to 133,363,686
Inc. investment primarily in equity securities of $75 million
Asian companies. 1.150% next
$125 million
1.100% thereafter
Scudder New Europe Fund, Long-term capital appreciation through 1.250% to 266,418,730
Inc. investment primarily in equity securities of $75 million
companies traded on smaller or emerging 1.150% next
European markets and companies that are viewed $125 million
as likely to benefit from changes and 1.100% thereafter
developments throughout Europe.
Scudder Spain and Long-term capital appreciation through Advisor: 75,127,194
Portugal Fund, Inc. investment primarily in equity securities of 1.000% of
Spanish & Portuguese issuers. net assets
Administrator:
0.200% of
net assets
Scudder World Income High income and, consistent therewith, capital 1.200% of 54,488,637
Opportunities Fund, appreciation. net assets
Inc.
</TABLE>
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless
otherwise indicated.
** Program assets as of 7/31/97.
50
<PAGE> 51
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
- -------------------------- ----------------------------------------------- ------------------- --------------
<S> <C> <C> <C>
INSURANCE PRODUCTS
Balanced Portfolio Balance of growth and income consistent with 0.475% of 88,342,837
long-term preservation of capital through a net assets
diversified portfolio of equity and fixed
income securities.
Bond Portfolio High level of income consistent with a high 0.475% of 65,769,421
quality portfolio of debt securities. net assets
Capital Growth Portfolio Long-term capital growth from a portfolio 0.475% to 440,481,308
consisting primarily of equity securities. $500 million
0.450% thereafter
Global Discovery Above-average capital appreciation over the 0.975% of 16,757,264
Portfolio long- term by investing primarily in the equity net assets
securities of small companies located
throughout the world.
Growth and Income Long-term growth of capital, current income and 0.475% of 91,091,547
Portfolio growth of income. net assets
International Portfolio Long-term growth of capital primarily through 0.85% to 726,038,527
diversified holdings of marketable foreign $500 million
equity investments. 0.75% thereafter
Money Market Portfolio Stability of capital and, consistent therewith, 0.370% of 97,785,626
liquidity of capital and current income. net assets
AARP FUNDS
AARP High Quality Money Current income and liquidity, consistent with 0.350% to 412,126,193
Fund maintaining stability and safety of principal, $2 billion
through investment in high quality securities. 0.330% next
$2 billion
0.300% next
$2 billion
0.280% next
$2 billion
0.260% next
$3 billion
0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.100% of
net assets
</TABLE>
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless
otherwise indicated.
** Program assets as of 7/31/97.
51
<PAGE> 52
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
- -------------------------- ----------------------------------------------- ------------------- --------------
<S> <C> <C> <C>
AARP Balanced Stock and Long-term growth of capital and income, 0.350% to 403,139,939
Bond Fund consistent with a stable share price, through $2 billion
investment in a combination of stocks, bonds 0.330% next
and cash reserves. $2 billion
0.300% next
$2 billion
0.280% next
$2 billion
0.260% next
$3 billion
0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.190% of
net assets
AARP Capital Growth Fund Long-term capital growth, consistent with a 0.350% to 826,136,713
stable share price, through investment $2 billion
primarily in common stocks and securities 0.330% next
convertible into common stocks. $2 billion
0.300% next
$2 billion
0.280% next
$2 billion
0.260% next
$3 billion
0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.320% of
net assets
AARP Global Growth Fund Long-term growth of capital, consistent with a 0.350% to 77,651,978
stable share price, through investment $2 billion
primarily in a diversified portfolio of equity 0.330% next
securities of corporations worldwide. $2 billion
0.300% next
$2 billion
0.280% next
$2 billion
0.260% next
$3 billion
0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND FEE
0.550% of
net assets
</TABLE>
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless
otherwise indicated.
** Program assets as of 7/31/97.
52
<PAGE> 53
EXHIBIT C
FORM OF NEW MEMBER SERVICES AGREEMENT
53
<PAGE> 54
EXHIBIT D
FORM OF NEW SUBADVISORY AGREEMENT
54
<PAGE> 55
EXHIBIT E
Following are proposed amendments, other than non-material clarifying or
correcting changes, to be included in each Trust's Amended and Restated
Declaration of Trust, as described in the proxy statement. Additions are shown
in BOLD TYPE and deletions by a [ ]; language shown as added may be in the
current Declaration of Trust in some cases.
Unless otherwise indicated with respect to particular provisions, the
adoption of the Amended and Restated Declaration of Trust for each Trust
requires an affirmative vote of a majority of the outstanding voting securities
of the Trust as defined in the Investment Company Act of 1940, as amended.
PROPOSED AMENDMENTS TO BE INCLUDED IN THE
AMENDED AND RESTATED DECLARATION OF TRUST
[ ] DATED , 1997
Section 2.2. Investments.
The Trustees shall have the power:
(b) [ ] To invest in, hold for investment, or reinvest in, securities,
including SHARES OF OPEN-END INVESTMENT COMPANIES; 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.
(i) TO INVEST, THROUGH A TRANSFER OF CASH, SECURITIES AND OTHER ASSETS
OR OTHERWISE, ALL OR A PORTION OF THE TRUST PROPERTY, OR TO SELL ALL OR A
PORTION OF THE TRUST PROPERTY AND INVEST THE PROCEEDS OF SUCH SALES, IN
ANOTHER INVESTMENT COMPANY THAT IS REGISTERED UNDER THE 1940 ACT.(+)
SECTION 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 [ ]. 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 [ ] SUCH TIME AS LESS THAN A MAJORITY OF
THE TRUSTEES HOLDING OFFICE HAVE BEEN ELECTED BY SHAREHOLDERS, AND THEREAFTER
UNTIL THE HOLDING OF A SHAREHOLDERS' MEETING AS REQUIRED BY THE NEXT FOLLOWING
SENTENCE. IN SUCH EVENT THE TRUSTEES THEN IN OFFICE WILL CALL A SHAREHOLDERS'
MEETING FOR THE ELECTION OF TRUSTEES. EXCEPT FOR THE FOREGOING CIRCUMSTANCES,
THE TRUSTEES SHALL CONTINUE TO HOLD OFFICE AND MAY APPOINT SUCCESSOR TRUSTEES.
SECTION 2.16. SHAREHOLDER VOTE, ETC. NOT REQUIRED.
NOT REQUIRED. EXCEPT TO THE EXTENT SPECIFICALLY PROVIDED TO THE CONTRARY IN
THIS DECLARATION, THE TRUSTEES MAY EXERCISE EACH OF THE POWERS GRANTED TO THEM
IN THIS DECLARATION WITHOUT THE VOTE, APPROVAL OR AGREEMENT OF THE SHAREHOLDERS,
UNLESS SUCH A VOTE, APPROVAL OR AGREEMENT IS REQUIRED BY THE 1940 ACT OR
APPLICABLE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
- ------------------------------
+ Adoption of this Section 2.2(i) requires the affirmative vote of two-thirds of
the shares of the Trust outstanding and entitled to vote.
55
<PAGE> 56
SECTION 5.9. [ ]VOTING POWERS.
The Shareholders shall have power to vote only (i) for the election of
Trustees as provided in Section 2.12; (ii) for the removal of Trustees as
provided in Section 2.13; (iii) with respect to any [ ] amendment of this
Declaration to the extent and as provided in Section 8.3; [ ] (IV) to the same
extent as the stockholders of Massachusetts business corporation as to whether
or not a court action, proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the Trust or any
Series or Class [ ] THEREOF or the Shareholders (provided, however, that a
Shareholder of a particular Series or Class shall not be entitled to BRING a
derivative or class action on behalf of any other Series or Class (or
Shareholder of any other Series or Class) of the Trust); [ ] AND (V) with
respect to such additional matters relating to the Trust as may be required by
this Declaration, the By-laws or any registration of the Trust as an investment
company under the 1940 Act with the Commission (or any successor agency) or as
the Trustees may consider necessary or desirable. Each whole Share shall be
entitled to one vote as to any matter on which it is entitled to vote and each
fractional Share shall be entitled to a proportionate fractional vote, except
that the Trustees may, in conjunction with the establishment of any Series or
Class of Shares, establish or reserve the right to establish conditions under
which the several Series or Classes shall have separate voting rights or [ ] no
voting rights. There shall be no cumulative voting in the election of Trustees.
Until Shares are issued, the Trustees may exercise all rights of Shareholders
and may take any action required by law, this Declaration or the By-laws to be
taken by Shareholders. The By-laws may include further provisions for
Shareholders' votes and meetings and related matters.(++)
SECTION 6.2. PRICE.
[ ] Shares shall be redeemed at their net asset value, WHICH MAY BE REDUCED
BY ANY REDEMPTION FEE AUTHORIZED BY THE TRUSTEES, 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 6.6. [ ]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
(a) 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, OR [ ]
(B) [ ] THE TRUSTEES BELIEVE THAT IT IS IN THE BEST INTEREST OF THE TRUST
TO DO SO BECAUSE OF PRIOR INVOLVEMENT BY THE SHAREHOLDER IN FRAUDULENT ACTS
RELATING TO SECURITIES TRANSACTIONS.
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
- ------------------------------
++ Amendment of this Section 5.9 as set forth above requires the affirmative
vote of two-thirds of the shares of the Trust outstanding and entitled to
vote.
56
<PAGE> 57
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 [
] PURPOSES 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 [ ] AMOUNT AS 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 DEEM DESIRABLE TO USE
IN THE CONDUCT OF ITS AFFAIRS OR TO 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. THE ABOVE PROVISIONS MAY BE MODIFIED TO THE EXTENT
REQUIRED BY A PLAN ADOPTED BY THE TRUSTEES TO ESTABLISH CLASSES OF SHARES OF THE
TRUST OR OF A SERIES.
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 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 [ ] BY AN INSTRUMENT IN WRITING SIGNED BY A
MAJORITY OF THE TRUSTEES.(sec.)
SECTION 8.5. [ ] INCORPORATION.
WHEN AUTHORIZED BY AN INSTRUMENT IN WRITING SIGNED BY A MAJORITY OF THE
TRUSTEES, 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.**
- ------------------------------
sec. Amendment of this Section 8.4 as set forth above requires the affirmative
vote of two-thirds of the shares of the Trust outstanding and entitled to
vote.
** Amendment of this Section 8.5 as set forth above requires the affirmative
vote of two-thirds of the shares of the Trust outstanding and entitled to
vote.
57
<PAGE> 58
EXHIBIT F
AARP CASH INVESTMENT FUNDS
AARP HIGH QUALITY MONEY FUND
AARP GROWTH TRUST
AARP BALANCED STOCK AND BOND FUND
AARP CAPITAL GROWTH FUND
AARP U.S. STOCK INDEX FUND
AARP GLOBAL GROWTH FUND
AARP GROWTH AND INCOME FUND
AARP INTERNATIONAL STOCK FUND
AARP SMALL COMPANY STOCK FUND
AARP INCOME TRUST
AARP BOND FUND FOR INCOME
AARP GNMA AND U.S. TREASURY FUND
AARP HIGH QUALITY BOND FUND
AARP TAX FREE INCOME TRUST
AARP HIGH QUALITY TAX FREE MONEY FUND
AARP INSURED TAX FREE GENERAL BOND FUND
7.1 Each Fund has elected to be classified as a diversified series of an
open-end investment company:
In addition, each Fund will not:
7.2 borrow money, except as permitted under the Investment Company Act of 1940,
as amended, and as interpreted or modified by regulatory authority having
jurisdiction, from time to time;
7.3 issue senior securities, except as permitted under the Investment Company
Act of 1940, as amended, and as interpreted or modified by regulatory
authority having jurisdiction, from time to time;
7.4 concentrate its investments in a particular industry, as that term is used
in the Investment Company Act of 1940, as amended, and as interpreted or
modified by regulatory authority having jurisdiction, from time to time
(except that each of AARP High Quality Money Fund and AARP High Quality Tax
Free Money Fund reserves the freedom of action to concentrate its
investments in instruments issued by domestic banks);
7.5 engage in the business of underwriting securities issued by others, except
to the extent that the Fund may be deemed to be an underwriter in
connection with the disposition of portfolio securities;
7.6 purchase or sell real estate, which term does not include securities of
companies which deal in real estate or mortgages or investments secured by
real estate or interests therein, except that the Fund reserves freedom of
action to hold and to sell real estate acquired as a result of the Fund's
ownership of securities;
7.7 purchase physical commodities or contracts relating to physical
commodities; or
7.8 make loans to other persons, except (i) loans of portfolio securities, and
(ii) to the extent that entry into repurchase agreements and the purchase
of debt instruments or interests in indebtedness in accordance with the
Fund's investment objective and policies may be deemed to be loans.
In addition, each of AARP High Quality Tax Free Money Fund and AARP Insured
Tax Free General Bond Fund will:
7.9 have at least 80% of its net assets invested in securities that are exempt
from Federal income tax during periods of normal market conditions.
58
<PAGE> 59
NAME OF TRUST
345 PARK AVENUE
NEW YORK, NEW YORK 10154
, 199
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
INVESTMENT MANAGEMENT AGREEMENT
Ladies and Gentlemen:
[Name of Trust] (the "Trust") has been established as a Massachusetts
business trust to engage in the business of an investment company. Pursuant to
the Trust's Declaration of Trust, as amended from time-to-time (the
"Declaration"), the Board of Trustees has divided the Trust's shares of
beneficial interest, par value $ per share, (the "Shares") into separate
series, or funds (each a "Fund" and, collectively, the "Funds"). Series may be
abolished and dissolved, and additional series established, from time to time by
action of the Trustees.
The Trust, on behalf of the Funds, has selected you to act as the sole
investment manager of the Funds and for each series that may subsequently be
authorized by the Trustees (unless otherwise provided at the time and subject to
such conditions and amendments to this Agreement as shall be mutually agreed
upon), and to provide certain other services, as more fully set forth below, and
you have indicated that you are willing to act as such investment manager and to
perform such services under the terms and conditions hereinafter set forth.
Accordingly, the Trust on behalf of the Funds agrees with you as follows:
1. Delivery of Documents. The Trust engages in the business of
investing and reinvesting the assets of the Funds in the manner and in
accordance with the investment objectives, policies and restrictions
specified in the currently effective Prospectus (the "Prospectus") and
Statement of Additional Information (the "SAI") relating to each Fund
included in the Trust's Registration Statement on Form N-1A, as amended
from time to time, (the "Registration Statement") filed by the Trust under
the Investment Company Act of 1940, as amended, (the "1940 Act") and the
Securities Act of 1933, as amended. Copies of the documents referred to in
the preceding sentence have been furnished to you by the Trust. The Trust
has also furnished you with copies properly certified or authenticated of
each of the following additional documents related to the Trust and the
Fund:
(a) The Declaration dated , 19 , as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof (the
"By-Laws").
(c) Resolutions of the Trustees of the Trust and the shareholders
of the Funds selecting you as investment manager and approving the form
of this Agreement.
(d) Establishment and Designation of Series of Shares of Beneficial
Interest dated , 19 relating to the Funds.
The Trust will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements, if any, to
the foregoing, including the Prospectus, the SAI and the Registration
Statement.
2. Portfolio Management Services. As manager of the assets of the
Funds, you shall provide continuing investment management of the assets of
the Funds in accordance with the investment objectives, policies and
restrictions set forth in the Prospectus and SAI; the applicable provisions
of the 1940 Act and the Internal Revenue Code of 1986, as amended (the
"Code"), relating to regulated investment companies and all rules and
regulations thereunder; and all other applicable
59
<PAGE> 60
federal and state laws and regulations of which you have knowledge; subject
always to policies and instructions adopted by the Trust's Board of
Trustees. In connection therewith, you shall use reasonable efforts to
manage each Fund so that it will qualify as a regulated investment company
under Subchapter M of the Code and regulations issued thereunder. The Funds
shall have the benefit of the investment analysis and research, the review
of current economic conditions and trends and the consideration of
long-range investment policy generally available to your investment
advisory clients. In managing the Funds in accordance with the requirements
set forth in this section 2, you shall be entitled to receive and act upon
advice of counsel to the Trust or counsel to you. You shall also make
available to the Trust promptly upon request all of a Fund's investment
records and ledgers as are necessary to assist the Trust in complying with
the requirements of the 1940 Act and other applicable laws. To the extent
required by law, you shall furnish to regulatory authorities having the
requisite authority any information or reports in connection with the
services provided pursuant to this Agreement which may be requested in
order to ascertain whether the operations of the Trust are being conducted
in a manner consistent with applicable laws and regulations.
You shall determine the securities, instruments, investments,
currencies, repurchase agreements, futures, options and other contracts
relating to investments to be purchased, sold or entered into by the Funds
and place orders with broker-dealers, foreign currency dealers, futures
commission merchants or others pursuant to your determinations and all in
accordance with Fund policies as expressed in the Registration Statement.
You shall determine what portion of each Fund's portfolio shall be invested
in securities and other assets and what portion, if any, should be held
uninvested.
You shall furnish to the Trust's Board of Trustees periodic reports on
the investment performance of the Funds and on the performance of your
obligations pursuant to this Agreement, and you shall supply such
additional reports and information as the Trust's officers or Board of
Trustees shall reasonably request.
3. Administrative Services. In addition to the portfolio management
services specified above in section 2, you shall furnish at your expense
for the use of the Funds such office space and facilities in the United
States as the Funds may require for their reasonable needs, and you (or one
or more of your affiliates designated by you) shall render to the Trust
administrative services on behalf of the Funds necessary for operating as
open-end investment companies and not provided by persons not parties to
this Agreement including, but not limited to, preparing reports to and
meeting materials for the Trust's Board of Trustees and reports and notices
to Fund shareholders; supervising, negotiating contractual arrangements
with, to the extent appropriate, and monitoring the performance of,
accounting agents, custodians, depositories, transfer agents and pricing
agents, accountants, attorneys, printers, underwriters, brokers and
dealers, insurers and other persons in any capacity deemed to be necessary
or desirable to Fund operations; preparing and making filings with the
Securities and Exchange Commission (the "SEC") and other regulatory and
self-regulatory organizations, including, but not limited to, preliminary
and definitive proxy materials, post-effective amendments to the
Registration Statement, semi-annual reports on Form N-SAR and notices
pursuant to Rule 24f-2 under the 1940 Act; overseeing the tabulation of
proxies by the Funds' transfer agent; assisting in the preparation and
filing of each Fund's federal, state and local tax returns; preparing and
filing each Fund's federal excise tax return pursuant to Section 4982 of
the Code; providing assistance with investor and public relations matters;
monitoring the valuation of portfolio securities; monitoring the
registration of Shares of each Fund under applicable federal and state
securities laws; maintaining or causing to be maintained for each Fund all
books, records and reports and any other information required under the
1940 Act, to the extent that such books, records and reports and other
information are not maintained by the Fund's custodian or other agents of
the Fund; assisting in establishing the accounting policies of each Fund;
assisting in the resolution of accounting issues that may arise with
respect to each Fund's operations and consulting with each Fund's
independent account-
60
<PAGE> 61
ants, legal counsel and other agents as necessary in connection therewith;
establishing and monitoring each Fund's operating expense budgets;
reviewing each Fund's bills; processing the payment of bills that have been
approved by an authorized person; assisting each Fund in determining the
amount of dividends and distributions available to be paid by each Fund to
its shareholders, preparing and arranging for the printing of dividend
notices to shareholders, and providing the transfer and dividend paying
agent, the custodian, and the accounting agent with such information as is
required for such parties to effect the payment of dividends and
distributions; and otherwise assisting the Trust as it may reasonably
request in the conduct of each Fund's business, subject to the direction
and control of the Trust's Board of Trustees. Nothing in this Agreement
shall be deemed to shift to you or to diminish the obligations of any agent
of a Fund or any other person not a party to this Agreement which is
obligated to provide services to the Fund.
[ ]. [AARP U.S. STOCK INDEX FUND ONLY][In rendering the services
required under this Agreement, you may, subject to the legally required
approval of the Trust, its shareholders and Trustees, cause such services
to be provided by a registered investment adviser or bank (together with
Bankers Trust Company, the "Subadvisor") exempt from the registration
requirements under the Investment Advisers Act of 1940, as amended, (the
"Advisers Act") and receive other assistance from such Subadvisor pursuant
to an agreement or agreements and may contract with such other parties as
you deem appropriate to obtain information, advice and management services
and other assistance, provided that such services shall not be deemed to
render such party a registered investment adviser, but any fees,
compensation or expenses to be paid to any such party shall be paid by you,
and no obligation shall be incurred on the Trust's behalf in any respect.
[ ]. [AARP U.S. STOCK INDEX FUND ONLY][You hereby acknowledge that
the employment of a Subadvisor or other service providers hereunder shall
not relieve you of any of your obligations under this Agreement, including
your obligations under section 7 of this Agreement. Further, you
acknowledge that for purposes of this Agreement, the acts of such
Subadvisor or other service provider shall be deemed to be acts of you, the
Manager.
4. Allocation of Charges and Expenses. Except as otherwise
specifically provided in this section 4, you shall pay the compensation and
expenses of all Trustees, officers and executive employees of the Trust
(including each Fund's share of payroll taxes) who are affiliated persons
of you, and you shall make available, without expense to the Funds, the
services of such of your directors, officers and employees as may duly be
elected officers of the Trust, subject to their individual consent to serve
and to any limitations imposed by law. You shall provide at your expense
the portfolio management services described in section 2 hereof and the
administrative services described in section 3 hereof.
You shall not be required to pay any expenses of a Fund other than
those specifically allocated to you in this section 4 [AARP MANAGED
INVESTMENT PORTFOLIOS TRUST ONLY] [and under the terms of the Special
Servicing Agreement dated , 1997 ("Special Servicing
Agreement") among you, the Trust, AARP Financial Services Company, Scudder
Fund Accounting Corporation, Scudder Service Corporation, Scudder Trust
Company, Scudder Investor Services, Inc. and the various funds in which the
Portfolios may invest (the "Underlying Funds")]. In particular, but without
limiting the generality of the foregoing, you shall not be responsible,
except to the extent of the reasonable compensation of such of a Fund's
Trustees and officers as are directors, officers or employees of you whose
services may be involved, for the following expenses of each Fund:
organization expenses of the Fund (including out-of-pocket expenses, but
not including your overhead or employee costs); fees payable to you and to
any other Fund advisors or consultants; legal expenses; auditing and
accounting expenses; maintenance of books and records which are required to
be maintained by the Fund's custodian or other agents of the Trust;
telephone, telex, facsimile, postage and other communications expenses;
taxes and governmental fees; fees, dues and expenses incurred by the Fund
in connection with member-
61
<PAGE> 62
ship in investment company trade organizations; fees and expenses of the
Fund's accounting agent, custodians, subcustodians, transfer agents,
dividend disbursing agents and registrars; payment for portfolio pricing or
valuation services to pricing agents, accountants, bankers and other
specialists, if any; expenses of preparing share certificates and, except
as provided below in this section 4, other expenses in connection with the
issuance, offering, distribution, sale, redemption or repurchase of
securities issued by the Fund; expenses relating to investor and public
relations; expenses and fees of registering or qualifying Shares of the
Fund for sale; interest charges, bond premiums and other insurance expense;
freight, insurance and other charges in connection with the shipment of the
Fund's portfolio securities; the compensation and all expenses
(specifically including travel expenses relating to Trust business) of
Trustees, officers and employees of the Trust who are not affiliated
persons of you; brokerage commissions or other costs of acquiring or
disposing of any portfolio securities of the Fund; expenses of printing and
distributing reports, notices and dividends to shareholders; expenses of
printing and mailing Prospectuses and SAIs of the Fund and supplements
thereto; costs of stationery; any litigation expenses; indemnification of
Trustees and officers of the Trust; costs of shareholders' and other
meetings; and travel expenses (or an appropriate portion thereof) of
Trustees and officers of the Trust who are directors, officers or employees
of you to the extent that such expenses relate to attendance at meetings of
the Board of Trustees of the Trust or any committees thereof or advisors
thereto held outside of Boston, Massachusetts or New York, New York.
[AARP MANAGED INVESTMENT PORTFOLIOS TRUST ONLY][Except as provided in
the Special Servicing Agreement,] you shall not be required to pay expenses
of any activity which is primarily intended to result in sales of Shares of
a Fund if and to the extent that (i) such expenses are required to be borne
by a principal underwriter which acts as the distributor of the Fund's
Shares pursuant to an underwriting agreement which provides that the
underwriter shall assume some or all of such expenses, or (ii) the Trust on
behalf of the Fund shall have adopted a plan in conformity with Rule 12b-1
under the 1940 Act providing that the Fund (or some other party) shall
assume some or all of such expenses, or (iii) such expenses are required to
be borne by Scudder pursuant to section 4 of the Investment Company
Services Agreement, dated as of , among American Association of Retired
Persons, AARP/Scudder Financial Management Company, and us. You shall be
required to pay such of the foregoing sales expenses as are not required to
be paid by the principal underwriter pursuant to the underwriting agreement
or are not permitted to be paid by the Fund (or some other party) pursuant
to such a plan.
5. Management Fee. [AARP MANAGED INVESTMENT PORTFOLIOS TRUST ONLY]
[As you expect to receive additional compensation under the investment
management agreements currently between you and the Underlying Funds due to
growth in the assets of the Underlying Funds resulting from investments in
the Underlying Funds by the Portfolios, you shall not be paid a fee for
services described in sections 2 and 3 hereof.]
[FOR ALL TRUSTS EXCEPT FOR AARP MANAGED INVESTMENT PORTFOLIOS TRUST]
For all services to be rendered, payments to be made and costs to be
assumed by you as provided in sections 2, 3 and 4 hereof, the Trust on
behalf of the Funds shall pay you on the last day of each month the unpaid
balance of a fee composed of an asset charge in two parts.
(a) The asset charge for each calendar day of each year shall be
equal to the total of 1/365th ( 1/366th in each leap year) of the amount
computed in accordance with paragraphs (b) and (c) below. The
computation shall be made for each such day on the basis of net assets
as of the close of business of the full business day one (1) business
day prior to the day for which the computation is being made. In the
case of the suspension of the computation of net asset value, the asset
charge for each day during such suspension shall be computed as of the
close of business on the last full business day on which the net assets
were computed. As used herein, "net assets" as of the close of a full
business day shall include all transactions in shares of each Fund
recorded on the books of each Fund for that day.
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<PAGE> 63
(b) The base fee rate part of the fee shall be based on the average
daily net assets of all funds within the AARP Investment Program from
Scudder (the "Program"), including any new fund which may be organized
in the future. The base fee rate will be the percent of Program net
assets as set forth in the following table.
BASE FEE RATE
<TABLE>
<CAPTION>
PROGRAM ASSETS ANNUAL RATE AT EACH
(BILLIONS) ASSET LEVEL
---------------------------------------------------------- --------------------
<S> <C>
First $2.................................................. 0.35%
Next $2................................................... 0.33
Next $2................................................... 0.30
Next $2................................................... 0.28
Next $3................................................... 0.26
Next $3................................................... 0.25
Over $14.................................................. 0.24
</TABLE>
The portion of the base fee rate which each Fund shall bear will be
the same percentage of the base fee rate as its net assets are to the
total net assets of all the Program funds.
(c) The fund fee rate part of the fee shall be [0.10 percent per
annum of net assets of AARP High Quality Money Fund, of AARP Cash
Investment Funds; 0.12 percent per annum of net assets of AARP GNMA and
U.S. Treasury Fund, 0.19 percent per annum of net assets of AARP High
Quality Bond Fund, 0.28 percent per annum of net assets of AARP Bond
Fund for Income, of AARP Income Trust; 0.10 percent per annum of net
assets of AARP High Quality Tax Free Money Fund and 0.19 percent per
annum of net assets of AARP Insured Tax Free General Bond Fund, of AARP
Tax Free Income Trust; and, 0.19 percent per annum of net assets of AARP
Balanced Stock and Bond Fund, 0.19 percent per annum of net assets of
AARP Growth and Income Fund, 0.55 percent per annum of net assets of
AARP Global Growth Fund, 0.32 percent per annum of net assets of AARP
Capital Growth Fund, 0.60 percent per annum of the net assets of AARP
International Stock Fund, 0.55 percent per annum of the net assets of
AARP Small Company Stock Fund, and 0.00 percent per annum of the net
assets of AARP U.S. Stock Index Fund, of AARP Growth Trust.]
The value of net assets of the Trust or any Fund shall be determined
pursuant to the applicable provisions of the Declaration, By-Laws and
Registration Statement of the Trust. If, pursuant to such provisions, the
determination of net asset value for any Fund is suspended for any
particular business day, then for the purposes of this paragraph 5, the
value of the net assets of that series of the Trust as last determined
shall be deemed to be the value of the net assets as of the close of the
New York Stock Exchange, or as of such other time as the value of the net
assets of the portfolio of that Fund may lawfully be determined, on that
day. If the determination of the net asset value of the shares of any Fund
of the Trust has been suspended pursuant to the Declaration, By-Laws or
Registration Statement of the Trust for a period including such month, your
compensation payable at the end of such month shall be computed on the
basis of the value of the net assets of the Trust as last determined
(whether during or prior to such month). If a Fund determines the net asset
value of its portfolio more than once on any day, then the last such
determination thereof on that day shall be deemed to be the sole
determination thereof on that day for the purposes of this section 5.
You may waive all or a portion of your fees provided for hereunder and
such waiver shall be treated as a reduction in purchase price of your
services. You shall be contractually bound hereunder by the terms of any
publicly announced waiver of your fee, or any limitation of a Fund's
expenses, as if such waiver or limitation were fully set forth herein.]
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<PAGE> 64
6. Avoidance of Inconsistent Position; Services Not Exclusive. In
connection with purchases or sales of portfolio securities and other
investments for the account of a Fund, neither you nor any of your
directors, officers or employees shall act as a principal or agent or
receive any commission. You or your agent shall arrange for the placing of
all orders for the purchase and sale of portfolio securities and other
investments for each Fund's account with brokers or dealers selected by you
in accordance with Fund policies as expressed in the Registration
Statement. If any occasion should arise in which you give any advice to
clients of yours concerning the Shares of a Fund, you shall act solely as
investment counsel for such clients and not in any way on behalf of the
Fund.
Your services to the Trust and each Fund pursuant to this Agreement
are not to be deemed to be exclusive and it is understood that you may
render investment advice, management and services to others. In acting
under this Agreement, you shall be an independent contractor and not an
agent of the Trust or a Fund. Whenever a Fund and one or more other
accounts or investment companies advised by the Manager have available
funds for investment, investments suitable and appropriate for each shall
be allocated in accordance with procedures believed by the Manager to be
equitable to each entity. Similarly, opportunities to sell securities shall
be allocated in a manner believed by the Manager to be equitable. Each Fund
recognizes that in some cases this procedure may adversely affect the size
of the position that may be acquired or disposed of for the Fund.
7. Limitation of Liability of Manager. As an inducement to your
undertaking to render services pursuant to this Agreement, the Trust agrees
that you shall not be liable under this Agreement for any error of judgment
or mistake of law or for any loss suffered by a Fund in connection with the
matters to which this Agreement relates, provided that nothing in this
Agreement shall be deemed to protect or purport to protect you against any
liability to the Trust, a Fund or its shareholders to which you would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of your duties, or by reason of your reckless
disregard of your obligations and duties hereunder. Any person, even though
also employed by you, who may be or become an employee of and paid by a
Fund shall be deemed, when acting within the scope of his or her employment
by the Fund, to be acting in such employment solely for the Fund and not as
your employee or agent.
8. Duration and Termination of This Agreement. This Agreement shall
remain in force until August 31, 1998, and continue in force from year to
year thereafter, but only so long as such continuance is specifically
approved at least annually (a) by the vote of a majority of the Trustees
who are not parties to this Agreement or interested persons of any party to
this Agreement, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by the Trustees of the Trust, or, with
respect to each Fund, by the vote of a majority of the outstanding voting
securities of such Fund of the Trust. The aforesaid requirement that
continuance of this Agreement be "specifically approved at least annually"
shall be construed in a manner consistent with the 1940 Act and the rules
and regulations thereunder and any applicable SEC exemptive order
therefrom.
This Agreement may be terminated with respect to a Fund at any time,
without the payment of any penalty, by the vote of a majority of the
outstanding voting securities of the Fund or by the Trust's Board of
Trustees on 60 days' written notice to you, or by you on 60 days' written
notice to the Trust. This Agreement shall terminate automatically in the
event of its assignment.
9. Amendment of this Agreement. No provision of this Agreement may
be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought, and no amendment of
this Agreement shall be effective until approved in a manner consistent
with the 1940 Act and rules and regulations thereunder and any applicable
SEC exemptive order therefrom.
64
<PAGE> 65
10. Limitation of Liability for Claims. The Declaration, a copy of
which, together with all amendments thereto, is on file in the Office of
the Secretary of The Commonwealth of Massachusetts, provides that the name
"AARP Trust" refers to the Trustees under the Declaration collectively as
Trustees and not as individuals or personally, and that no shareholder of
any Fund of the Trust, or Trustee, officer, employee or agent of the Trust,
shall be subject to claims against or obligations of the Trust or of any
Fund of the Trust to any extent whatsoever, but that the Trust estate only
shall be liable.
You are hereby expressly put on notice of the limitation of liability
as set forth in the Declaration and you agree that the obligations assumed
by the Trust on behalf of each Fund pursuant to this Agreement shall be
limited in all cases to the applicable Fund and its assets, and you shall
not seek satisfaction of any such obligation from the shareholders or any
shareholder of the Fund or any other series of the Trust, or from any
Trustee, officer, employee or agent of the Trust. You understand that the
rights and obligations of each Fund, or series, under the Declaration are
separate and distinct from those of any and all other series.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
In interpreting the provisions of this Agreement, the definitions contained
in Section 2(a) of the 1940 Act (particularly the definitions of "affiliated
person," "assignment" and "majority of the outstanding voting securities"), as
from time to time amended, shall be applied, subject, however, to such
exemptions as may be granted by the SEC by any rule, regulation or order.
This Agreement shall be construed in accordance with the laws of The
Commonwealth of Massachusetts, provided that nothing herein shall be construed
in a manner inconsistent with the 1940 Act, or in a manner which would cause a
Fund to fail to comply with the requirements of Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or management
agreements entered into between you and the Trust on behalf of the Funds.
If you are in agreement with the foregoing, please execute the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding contract
effective as of the date of this Agreement.
Yours very truly,
[NAME OF TRUST], on behalf of
[Name(s) of AARP Fund(s)]
By:
-------------------------
President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By:
-------------------------
Managing Director
65
<PAGE> 66
SUBADVISORY AGREEMENT
AGREEMENT made as of the day of , 1997, between Scudder Kemper
Investments, Inc., a Delaware corporation (hereinafter called the "Manager"),
and Bankers Trust Company, a New York corporation (hereinafter called the
"Subadviser").
W I T N E S S E T H:
WHEREAS AARP Growth Trust (the "Trust") is a Massachusetts business trust
organized with one or more series of shares, and is registered as an investment
company under the Investment Company Act of 1940 (the "1940 Act"); and
WHEREAS, the Manager desires to utilize the services of the Subadviser as
investment counsel with respect to certain portfolio assets of the Trust; and
WHEREAS, the Subadviser is willing to perform such services on the terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual agreements herein contained,
it is agreed as follows:
1. The Subadviser's Services. The Subadviser will serve the Manager as
investment counsel with respect to the investment portfolio of AARP U.S. Stock
Index Fund (the "Series"), being one of the portfolio series of the Trust, which
is under the management of the Manager pursuant to an Investment Management
Agreement between the Manager and the Trust dated , as supplemented
.
The Subadviser is hereby authorized and directed and hereby agrees, subject
to the stated investment policies and restrictions of the Series as set forth in
the current Prospectus and Statement of Additional Information of the Trust
(including amendments) and in accordance with the Fund's Declaration of Trust,
as amended, and By-laws governing the offering of its shares and subject to such
resolutions as from time to time may be adopted by the Fund's Trustees and
furnished to the Subadviser, to develop, recommend and implement such investment
program and strategy for the Series as may from time to time be most appropriate
to the achievement of the investment objectives of the Series as stated in the
aforesaid Prospectus, to provide research and analysis relative to the
investment program and investments of the Series, to determine what securities
should be purchased and sold and to monitor on a continuing basis the
performance of the portfolio securities of the Series. In addition, the
Subadviser will place orders for the purchase and sale of portfolio securities
and, subject to the provisions of the following paragraph, will take reasonable
steps to assure that portfolio transactions are effected to the best price and
execution available. The Subadviser will advise the Fund's custodian and the
Manager on a prompt basis of each purchase and sale of a portfolio security
specifying the name of the issuer, the description and amount or number of
shares of the security purchased, the market price, commission and gross or net
price, trade date, settlement date and identity of the effecting broker or
dealer. From time to time as the Trustees of the Trust or the Manager may
reasonably request, the Subadviser will furnish to the Manager, Trust's officers
and to each of its Trustees reports on portfolio transactions and reports on
assets held in the Series, all in such detail as the Trust or the Manager may
reasonably request. The Subadviser will also inform the Manager, Trust's
officers and Trustees on a current basis of changes in investment strategy or
tactics. The Subadviser will make its officers and employees available to meet
with the Manager, Trust's officers and Trustees at least quarterly on due notice
to review the investments and investment performance of the Series in the light
of the Trust's investment objectives and policies and market conditions.
Additionally, the Manager will provide the Subadviser with a list of tobacco
producing companies that are subject to the stated restrictions of the Series.
In using its best efforts to obtain for the Series the most favorable price
and execution available, the Subadviser, bearing in mind the Series' best
interests at all times, shall consider all factors it deems
66
<PAGE> 67
relevant, including, by way of illustration, price, the size of the transaction,
the nature of the market for the security, the amount of the commission, the
timing of the transaction taking into account market prices and trends, the
reputation, experience and financial stability of the broker or dealer involved
and the quality of service rendered by the broker or dealer in other
transactions. Subject to such policies as the Trustees of the Trust may
determine, the Subadviser shall not be deemed to have acted unlawfully or to
have breached any duty created by this Agreement or otherwise solely by reason
of its having caused the Series to pay an unaffiliated broker or dealer that
provides brokerage and research services to the Subadviser an amount of
commission for effecting a portfolio investment transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction, if the Subadviser determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Subadviser's overall responsibilities with respect
to the clients.
It shall be the duty of the Subadviser to furnish to the Trustees of the
Trust such information as may reasonably be requested in order for such Trustees
to evaluate this Agreement or any proposed amendments thereto for the purposes
of casting a vote pursuant to Section 9 hereof.
In the performance of its duties hereunder, the Subadviser is and shall be
an independent contractor and except as otherwise expressly provided herein or
otherwise authorized in writing, shall have no authority to act for or represent
the Trust, the Series or the Manager in any way or otherwise be deemed to be an
agent of the Trust, the Series or the Manager.
In furnishing the services under this Agreement, the Subadviser will comply
with the requirements of the 1940 Act applicable to it, and the regulations
promulgated thereunder.
2. Delivery of Documents to Subadviser. The Manager will furnish to the
Subadviser copies of each of the following documents:
(a) The Declaration of Trust of the Trust as in effect on the date
hereof;
(b) The By-laws of the Trust in effect on the date hereof;
(c) The resolutions of the Trustees approving the engagement of the
Subadviser as subadviser to the Series and approving the form of this
agreement;
(d) The resolutions of the Trustees selecting the Manager as
investment manager to the Trust and approving the form of the Investment
Management Agreement with the Trust, on behalf of the Series;
(e) The Investment Management Agreement with the Trust, on behalf of
the Series;
(f) The Code of Ethics of the Trust and of the Manager as currently in
effect; and
(g) Current copies of the Series' Prospectus and Statement of
Additional Information.
The Manager will furnish the Subadviser from time to time with copies,
properly certified or otherwise authenticated, of all amendments of or
supplements to the foregoing, if any. Such amendments or supplements as to Items
(a) though (g) above will be provided within 30 days of the time such materials
became available to the Manager and until so provided the Subadviser may
continue to rely on those documents previously provided.
During the term of this Agreement, the Manager also will furnish to the
Subadviser prior to use thereof copies of all Trust documents, proxy statements,
reports to shareholders, sales literature, or other material prepared for
distribution to shareholders of the Series or the public that refer in any way
to the Subadviser, and will not use such material if the Subadviser reasonably
objects in writing within five business days (or such other time period as may
be mutually agreed) after receipt thereof. However, the Manager and the
Subadviser may agree amongst themselves that certain of the above-mentioned
documents do not need to be furnished to the Subadviser prior to the document's
use.
67
<PAGE> 68
In the event of termination of this Agreement, the Trust will continue to
furnish to the Subadviser copies of any of the above-mentioned materials that
refer in any way to the Subadviser. The Trust shall furnish or otherwise make
available to the Subadviser such other information relating to the business
affairs of the Trust as the Subadviser at any time, or from time to time,
reasonably requests in order to discharge its obligations hereunder.
3. Delivery of Documents to the Manager. The Subadviser has furnished the
Manager with copies of each of the following documents:
(a) The Subadviser's most recent balance sheet;
(b) Separate lists of persons who the Subadviser wishes to have
authorized to give written and/or oral instructions to Custodians and the
fund accounting agent of Trust assets for the Series; and
(c) The Code of Ethics of the Subadviser as currently in effect.
The Subadviser will furnish the Manager from time to time with copies,
properly certified or otherwise authenticated, of all material amendments of or
supplements to the foregoing, if any. Additionally, the Subadviser will provide
to the Manager such other documents relating to its services under this
Agreement as the Manager may reasonably request on a periodic basis. Such
amendments or supplements as to items (a) through (c) above will be provided
within 30 days of the time such materials became available to the Subadviser.
4. Other Agreements, etc. It is understood that any of the shareholders,
Trustees, officers and employees of the Trust or the Series may be a
shareholder, director, officer or employee of, or be otherwise interested in,
the Subadviser, any interested person of the Subadviser, any organization in
which the Subadviser may have an interest or any organization which may have an
interest in the Subadviser, any such interested person or any such organization
may have an interest in the Trust or the Series. It is also understood that the
Subadviser, the Manager and the Trust may have advisory, management, service or
other contracts with other individuals or entities, and may have other interests
and businesses. When a security proposed to be purchased or sold for the Series
is also to be purchased or sold for other accounts managed by the Subadviser at
the same time, the Subadviser shall make such purchases or sales on a pro-rata,
rotating or other equitable basis so as to avoid any one account's being
preferred over any other account.
The Subadviser may give advice and take action with respect to other funds
or clients, or for its own account (collectively, "Other Accounts") which may
differ from the advice or the timing or nature of action taken with respect to
the Series.
Nothing in this Agreement shall be implied to prevent the (i) Manager from
engaging other subadvisers to provide investment advice and other services in
relation to portfolios of the Trust for which the Subadviser does not provide
such services, or to prevent the Manager from providing such services itself in
relation to such portfolios; or (ii) the Subadviser from providing investment
advice and other services to other funds or clients.
5. Fees, Expenses and Other Charges.
(a) For its services hereunder, the Subadviser shall be paid a
management fee by the Trust according to the fee schedule attached hereto
as Schedule A.
(b) The Subadviser, at its expense, will furnish all necessary
investment facilities, including salaries of personnel required for it to
execute its duties faithfully.
6. Confidential Treatment. It is understood that any information or
recommendation supplied by the Subadviser in connection with the performance of
its obligations hereunder is to be regarded as confidential and for use only by
the Manager, the Trust or such persons as the Manager may designate in
connection with the Series. It is also understood that any information supplied
to the Subadviser in connection with the performance of its obligations
hereunder, particularly, but not limited to, any list
68
<PAGE> 69
of securities which, on a temporary basis, may not be bought or sold for the
Series, is to be regarded as confidential and for use only by the Subadviser in
connection with its obligation to provide investment advice and other services
to the Series.
7. Representations and Covenants of the Parties. The Subadviser hereby
acknowledges that it is a "bank" as defined in Section 202(a)(2) of the
Investment Advisers Act of 1940 and neither it nor any "affiliated person" of
it, as defined in the 1940 Act, is subject to any disqualification that would
make the Subadviser unable to serve as an investment adviser to a registered
investment company under Section 9 of the 1940 Act. The Subadviser covenants
that it will carry out appropriate compliance procedures necessary to the
operation of the Series as the Subadviser and the Manager may agree. The
Subadviser also covenants that it will manage the Series so that the Trust will
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code.
8. Reports by the Subadviser and Records of the Series. The Subadviser
shall furnish the Manager monthly, quarterly and annual reports concerning
transactions and performance of the Series, including information required to be
disclosed in the Trust's registration statement, in such form as may be mutually
agreed, to review the Series and discuss the management of it. The Subadviser
shall permit the financial statements, books and records with respect to the
Series to be inspected and audited by the Trust, the Manager or their agents at
all reasonable times during normal business hours. The Subadviser shall
immediately notify and forward to both the Manager and legal counsel for the
Trust any legal process served upon it on behalf of the Manager or the Trust.
The Subadviser shall promptly notify the Manager of any changes in any
information concerning the Subadviser of which the Subadviser becomes aware that
would be required to be disclosed in the Trust's registration statement.
In compliance with the requirements of Rule 31a-3 under the 1940 Act, the
Subadviser agrees that all records it maintains for the Trust are the property
of the Trust and further agrees to surrender promptly to the Trust or the
Manager any such records upon the Trust's or the Manager's request. The
Subadviser further agrees to maintain for the Trust the records the Trust is
required to maintain under Rule 31a-1(b) insofar as such records relate to the
investment affairs of the Trust. The Subadviser further agrees to preserve for
the periods prescribed by Rule 31a-2 under the 1940 Act the records it maintains
for the Trust.
9. Continuance and Termination. This Agreement shall remain in full force
and effect through August 31, 1998, and is renewable annually thereafter by
specific approval of the Board of Trustees of the Trust or by the affirmative
vote of a majority of the outstanding voting securities of the Series. Any such
renewal shall be approved by the vote of a majority of the Trustees of the Trust
who are not interested persons under the 1940 Act, cast in person at a meeting
called for the purpose of voting on such renewal. This agreement may be
terminated without penalty at any time by the Trustees, by vote of a majority of
the outstanding voting securities of the Series, or by the Manager or by the
Subadviser upon 60 days written notice, and will automatically terminate in the
event of its assignment by either party to this Agreement, as defined in the
1940 Act, or (provided Subadviser has received prior written notice thereof)
upon termination of the Manager's Investment Management Agreement with the
Trust.
10. Voting Rights. The Manager shall be responsible for exercising any
voting rights of any securities of the Series.
11. Indemnification. The Subadviser agrees to indemnify and hold harmless
the Manager, any affiliated person within the meaning of Section 2(a)(3) of the
1940 Act ("affiliated person") of the Manager and each person, if any who,
within the meaning of Section 15 of the Securities Act of 1933 (the "1933 Act"),
controls ("controlling person") the Manager, against any and all losses, claims
damages, liabilities or litigation (including reasonable legal and other
expenses), to which the Manager or such affiliated person or controlling person
may become subject under the 1933 Act, the 1940 Act, the Advisers Act, under any
other statute, at common law or otherwise, arising out of Subadviser's
responsibilities as portfolio manager of the Series (1) to the extent of and as
a result of
69
<PAGE> 70
the willful misconduct, bad faith, or gross negligence by the Subadviser, any of
the Subadviser's employees or representatives or any affiliate of or any person
acting on behalf of the Subadviser, or (2) as a result of any untrue statement
or alleged untrue statement of a material fact contained in a prospectus or
statement of additional information covering the Series or the Trust or any
amendment thereof or any supplement thereto or the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statement therein not misleading, if such a statement or omission was
made in reliance upon written information furnished by the Subadviser to the
Manager, the Trust or any affiliated person of the Manager or the Trust
expressly for use in the Trust's registration statement, or upon verbal
information confirmed by the Subadviser in writing expressly for use in the
Trust's registration statement or (3) to the extent of, and as a result of, the
failure of the Subadviser to execute, or cause to be executed, portfolio
transactions according to the standards and requirements of the 1940 Act;
provided, however, that in no case is the Subadviser's indemnity in favor of the
Manager or any affiliated person or controlling person of the Manager deemed to
protect such person against any liability to which any such person would
otherwise be subject by reason of willful misconduct, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement.
The Manager agrees to indemnify and hold harmless the Subadviser, any
affiliated person within the meaning of Section 2(a)(3) of the 1940 Act
("affiliated person") of the Subadviser and each person, if any who, within the
meaning of Section 15 of the 1933 Act, controls ("controlling person") the
Subadviser, against any and all losses, claims, damages, liabilities or
litigation (including reasonable legal and other expenses), to which the
Subadviser or such affiliated person or controlling person may become subject
under the 1933 Act, the 1940 Act, the Advisers Act, under any other statute, at
common law or otherwise, arising out of the Manager's responsibilities as
investment manager of the Series (1) to the extent of and as a result of the
willful misconduct, bad faith, or gross negligence by the Manager, any of the
Manager's employees or representatives or any affiliate of or any person acting
on behalf of the Manager, or (2) as a result of any untrue statement or alleged
untrue statement of a material fact contained in a prospectus or statement of
additional information covering the Series or the Trust or any amendment thereof
or any supplement thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statement
therein not misleading, if such a statement or omission was made by the Trust
other than in reliance upon written information furnished by the Subadviser, or
any affiliated person of the Subadviser, expressly for use in the Trust's
registration statement or other than upon verbal information confirmed by the
Subadviser in writing expressly for use in the Trust's registration statement;
provided, however, that in no case is the Manager's indemnity in favor of the
Subadviser or any affiliated person or controlling person of the Subadviser
deemed to protect such person against any liability to which any such person
would otherwise be subject by reason of willful misconduct, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement.
12. Certain Definitions. For the purposes of this Agreement, the "vote of
a majority of the outstanding voting securities of the Series" means the
affirmative vote, at a duly called and held meeting of shareholders of the
Series, (a) of the holders of 67% or more of the shares of the Series present
(in person or by proxy) and entitled to vote at such meeting, if the holders of
more than 50% of the outstanding shares of the Series entitled to vote at such
meeting are present in person or by proxy, or (b) of the holders of more than
50% of the outstanding shares of the Series entitled to vote at such meeting,
whichever is less.
For the purposes of this Agreement, the terms "interested person" and
"assignment" shall have their respective meanings defined in the 1940 Act,
subject, however, to such exemptions as may be granted by the Securities and
Exchange Commission under said Act.
For the purposes of this Agreement, the terms "assets", "net assets",
"securities", "portfolio securities" or "investments" of the Series shall mean,
respectively, such assets, net assets, securities,
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<PAGE> 71
portfolio securities or investments which are from time to time under the
management of the Subadviser pursuant to this Agreement.
13. Notices. All notices or other communications required or permitted to
be given hereunder shall be in writing and shall be delivered or sent by
pre-paid first class letter post to the following addresses or to such other
address as the relevant addressee shall hereafter notify for such purpose to the
others by notice in writing and shall be deemed to have been given at the time
of delivery.
<TABLE>
<S> <C>
If to the Manager: SCUDDER KEMPER INVESTMENTS, INC.
345 Park Avenue
New York, NY 10154
Attention: Lisa A. Sheeler
If to the Trust: AARP GROWTH TRUST
AARP U.S. STOCK INDEX FUND
Two International Place
Boston, MA 02110
Attention: Linda C. Coughlin
If to the Subadviser: BANKERS TRUST COMPANY
Global Investment Management
One Bankers Trust Plaza
New York, New York 10006
Attention: Frank R. Salerno
</TABLE>
14. Instructions. The Subadviser is authorized to honor and act on any
notice, instruction or confirmation given by the Trust or Manager in writing
signed or sent by one of the persons whose names, addresses and specimen
signatures will be provided by the Trust or Manager from time to time.
15. Law. This Agreement is governed by and shall be construed in
accordance with the laws of the State of New York in a manner not in conflict
with the provisions of the 1940 Act.
16. Limitation of Liability of the AARP Mutual Funds, Trustees, and
Shareholders. It is understood and expressly stipulated that none of the
trustees, officers, agents, or shareholders of any AARP Mutual Fund shall be
personally liable hereunder. It is understood and acknowledged that all persons
dealing with any AARP Mutual Fund must look solely to the property of such AARP
Mutual Fund for the enforcement of any claims against such AARP Mutual Fund as
neither the trustees, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of any AARP Mutual Fund. No
AARP Mutual Fund shall be liable for the obligations or liabilities of any other
AARP Mutual Fund. No series of any AARP Mutual Fund, if any, shall be liable for
the obligations of any other series.
17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all such
counterparts shall constitute a single instrument.
71
<PAGE> 72
IN WITNESS WHEREOF, the parties hereto have each caused this instrument to
be signed in duplicate on its behalf by the officer designated below thereunto
duly authorized.
SCUDDER KEMPER INVESTMENTS, INC.
<TABLE>
<S> <C>
Attest: By
- --------------------------------------------- --------------------------------------------
Name:
Title:
BANKERS TRUST COMPANY
Attest: By
- --------------------------------------------- -------------------------------------------
Name:
Title:
</TABLE>
72
<PAGE> 73
SCHEDULE A TO THE SUBADVISORY AGREEMENT
FOR THE AARP U.S. STOCK INDEX FUND (THE "SERIES")
DATED AS OF , 1997 BETWEEN SCUDDER KEMPER INVESTMENTS, INC.
AND BANKERS TRUST COMPANY
FEE SCHEDULE
As compensation for its services described herein, Bankers Trust Company
shall receive a fee based on a percentage of average net assets calculated
according to the following annualized fee schedule:
<TABLE>
<CAPTION>
SERIES ASSETS ANNUALIZED RATE
------------- ---------------
<S> <C> <C>
On the first.................................. $ 100 million 0.07 of 1%
On the next................................... $ 100 million 0.03 of 1%
On the balance over........................... $ 200 million 0.01 of 1%
</TABLE>
MINIMUM ANNUAL FEE: $75,000
The above fees exclude all custody charges. Valuations are made based on
the market value of assets held in the Account at the end of each calendar
month, and fees are charged quarterly in arrears based on one-fourth of the
annual fee. Fees will be prorated appropriately if Bankers Trust Company does
not perform services for a full quarter.
To assist Scudder and the AARP Investment Program in maintaining an
appropriate and competitive level of fund expenses during the Series' start-up
phase, Bankers Trust Company will apply a 15% discount to the above stated fee
schedule for the first 12 months of management. After this 12 month period
expires, the stated (standard) fees will be charged.
73
<PAGE> 74
SCUDDER KEMPER INVESTMENTS, INC.
2 INTERNATIONAL PLACE
BOSTON, MA 02110
, 1997
AARP Financial Services Corp.
c/o American Association of Retired Persons
601 E Street, N.W.
Washington, DC 20049
MEMBER SERVICES AGREEMENT
Dear Sirs:
Reference is made to the Omnibus Agreement, dated as of October 9, 1984,
between American Association of Retired Persons ("AARP") and us; the Partnership
Agreement, dated as of October 9, 1984, between you and us; and the Investment
Company Service Agreement (the 'ICS Agreement"), dated as of October 9, 1984,
among AARP, AARP/Scudder Financial Management Company (the "Partnership") and
us. Capitalized terms used herein without definition shall have the meanings
assigned thereto in the ICS Agreement.
This Agreement constitutes the agreement required to be entered into by you
and us pursuant to Section 5 of the ICS Agreement and referred to as the "Member
Services Agreement" therein.
This Agreement supersedes all prior Member Services Agreements entered into
between you and the Partnership.
We hereby agree with you as follows:
1. You agree to provide us with such advice and services relating to
investments by members of AARP in the AARP Cash Investment Funds, the AARP
Growth Trust, the AARP Income Trust, and the AARP Tax Free Income Trust, each
established as a Massachusetts business trust to engage in the business of an
investment management company (each a "Fund" and, collectively, the "Funds"),
and any separate portfolios of the Funds, created from time to time by action of
the Trustees (each a "Portfolio" and, collectively, the "Portfolios"), as we
shall from time to time reasonably request, including advice and services as to
product design of the Funds and Portfolios, the development of new products and
services for the Funds and Portfolios and such other information as will assist
us in tailoring the Funds and Portfolios best to meet the investment objectives
and needs of the AARP membership, based upon your analysis thereof. You agree to
contribute or cause to be contributed certain resources to the Funds and
Portfolios to assist in the organization and operation of the Funds and
Portfolios, including "seed money" for the Funds and assistance in monitoring
our activities and the services provided by Scudder and other agents of the
Funds and Portfolios. You agree to make available certain of your directors,
officers and staff to assist in the operation of the Funds and Portfolios, and,
subject to their individual consent, to serve as directors and officers of the
Funds. You also agree to facilitate communications with and the provision of
services to the AARP membership by analyzing the needs of AARP members of
recommending the appropriate services and methods of communication for the
purpose of disseminating information and providing services relating to the
Account and the Services. For this purpose, you will arrange that there be made
available to us, in accordance with AARP's policies and practices, membership
lists of AARP and of AARP's publications and access to advertising space in AARP
publications. Further, AARP and we have agreed to grant to the Partnership the
right and license to do business under the name "AARP/Scudder Financial
Management Company," and each of AARP and we have agreed to grant to the Funds a
license to use certain of our respective service marks.
2. We agree to pay you, as compensation for the services to be rendered by
you hereunder, a monthly fee equal to the Monthly Member Services Fee. The
Monthly Member Services Fee shall be a monthly fee calculated for each calendar
day of each year in an amount equal to the sum of: 1/365 ( 1/366 in each leap
year) of .07 of 1% of the average daily net assets as defined below of all
Portfolios within
74
<PAGE> 75
AARP Financial Services Corp.
August 20, 1997
Page 2
the AARP Investment Program from Scudder, including any new fund or portfolio
which may be organized in the future, for such month; provided that, for any
calendar month during which the average of such values exceed $6 billion, the
fee payable for that month based on the portion of the average of such values in
excess of $6 billion shall be 1/365 ( 1/366 in each leap year) of .06 of 1% of
such portion; provided that, for any calendar month during which the average of
such values exceed $16 billion, the fee payable for that month based on the
portion of the average of such values in excess of $16 billion shall be 1/365
( 1/366 in each leap year) of .05 of 1% of such portion. The value of the
average daily net assets of the Portfolios shall be determined in the manner set
forth in the respective Investment Management Agreements dated as of February 1,
1994, between us and each Fund.
3. Nothing herein shall be construed as constituting you as an agent of us
or of the Funds.
4. This Agreement shall become effective as of the date hereof and shall
remain in effect, with respect to each Portfolio of each Fund, until August 31,
1995 and shall continue in effect thereafter with respect to each Portfolio so
long as such continuance is specifically approved at least annually by the
affirmative vote of (i) a majority of the members of the Trustees of each Fund
who are not interested persons of such Fund, you or us, cast in person at a
meeting called for the purpose of voting on such approval; and (ii) the Trustees
of each Fund or, with respect to each Portfolio of such Fund, the holders of a
majority of the outstanding voting securities of such Portfolio. In the event
that the Trustees or security holders of fewer than all of the Portfolios of a
Fund, fail to approve this Agreement in the manner described in the preceding
sentence, this Agreement shall remain in effect only with respect to such
Portfolio as do so approve this Agreement. This Agreement may, on 60 days'
written notice, be terminated at any time without the payment of any penalty by
us, or, as to a particular Fund, by the Trustees to such Fund or by vote of
holders of a majority of the outstanding voting securities of each Portfolio, as
to a Fund, or the Portfolio, as to that Portfolio, or by you.
5. This Agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged by either party hereto. It may be amended as to any
Portfolio by mutual agreement, but only after authorization of such amendment by
the affirmative vote of (i) the holders of a majority of the outstanding voting
securities of such Portfolio; and (ii) the Trustees of each Fund, including a
majority of the Trustees of such Fund who are not interested persons of such
Fund, the Partnership, you or us, cast in person at a meeting called for the
purpose of voting on such approval.
6. This Agreement shall be construed in accordance with the laws of the
State of New York, provided, however, that nothing herein shall be construed as
being inconsistent with the Investment Company Act of 1940, as amended. As used
herein the terms "interested persons," "assignments" and "vote of a majority of
the outstanding voting securities" shall have the meanings set forth in the
Investment Company Act of 1940, as amended.
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart hereof and return the same to us.
Very truly yours,
SCUDDER KEMPER INVESTMENTS, INC.
By:
------------------------------------
Managing Director
75
<PAGE> 76
AARP Financial Services Corp.
August 20, 1997
Page 3
The foregoing Agreements is hereby
accepted as of the date first written
above.
AARP FINANCIAL SERVICES CORP.
By:
----------------------------------
Title
Accepted:
AARP CASH INVESTMENT FUNDS
By:
----------------------------------
AARP GROWTH TRUST
By:
----------------------------------
AARP INCOME TRUST
By:
----------------------------------
AARP TAX FREE INCOME TRUST
By:
----------------------------------
76
<PAGE> 77
AARP U.S. STOCK INDEX FUND
PROXY PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 22, 1997
The undersigned hereby appoints [ ], [ ] and [ ] and each of
them, the proxies of the undersigned, with the power of substitution to each of
them, to vote all shares of the Fund which the undersigned is entitled to vote
at the Special Meeting of Shareholders of the Fund to be held at the offices of
Scudder, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 22, 1997 at 9:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund, Scudder or AARP, recommend that you vote FOR each item.
1. The election of Trustees;
<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for all nominees listed below
(except as marked to the contrary below)
</TABLE>
Nominees: Carole Lewis Anderson, Adelaide Attard, Robert N. Butler, M.D., Linda
C. Coughlin, Horace B. Deets, Edgar R. Fiedler, Lt. Gen. Eugene P. Forrester,
George L. Maddox, Jr., Robert J. Meyers, James H. Schulz, Gordon Shillinglaw,
and Jean Gleason Stromberg.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
2. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve the new Member Services Agreement between AARP Financial Services
Corporation and Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Not applicable;
(continued on other side)
<PAGE> 78
5. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6(A). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6(B). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
7. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
7.1 diversification; 7.4 concentration; 7.7 commodities;
7.2 borrowing; 7.5 underwriting of securities; 7.8 lending;
7.3 senior securities; 7.6 investment in real estate; 7.9 tax exempt securities.
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
---------------------------------------------------------------------------
8. Ratification of the selection of Price Waterhouse L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The proxies are authorized to vote in their discretion on any other business
which may properly come before the meeting and any adjournments thereof.
Please sign exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
------------------------------------------
(Signature of Shareholder)
------------------------------------------
(Signature of joint owner, if any)
Dated _____________________________________ , 1997
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
<PAGE> 79
AARP HIGH QUALITY MONEY FUND
PROXY PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 22, 1997
The undersigned hereby appoints [ ], [ ] and [ ] and each of
them, the proxies of the undersigned, with the power of substitution to each of
them, to vote all shares of the Fund which the undersigned is entitled to vote
at the Special Meeting of Shareholders of the Fund to be held at the offices of
Scudder, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 22, 1997 at 9:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund, Scudder or AARP, recommend that you vote FOR each item.
1. The election of Trustees;
<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for all nominees listed below
(except as marked to the contrary below)
</TABLE>
Nominees: Carole Lewis Anderson, Adelaide Attard, Robert N. Butler, M.D., Linda
C. Coughlin, Horace B. Deets, Edgar R. Fiedler, Lt. Gen. Eugene P. Forrester,
George L. Maddox, Jr., Robert J. Meyers, James H. Schulz, Gordon Shillinglaw,
and Jean Gleason Stromberg.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
2. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve the new Member Services Agreement between AARP Financial Services
Corporation and Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Not applicable;
(continued on other side)
<PAGE> 80
5. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6(A). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6(B). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
7. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
7.1 diversification; 7.4 concentration; 7.7 commodities;
7.2 borrowing; 7.5 underwriting of securities; 7.8 lending;
7.3 senior securities; 7.6 investment in real estate; 7.9 tax exempt securities.
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
---------------------------------------------------------------------------
8. Ratification of the selection of Price Waterhouse L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The proxies are authorized to vote in their discretion on any other business
which may properly come before the meeting and any adjournments thereof.
Please sign exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
------------------------------------------
(Signature of Shareholder)
------------------------------------------
(Signature of joint owner, if any)
Dated _____________________________________ , 1997
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
<PAGE> 81
AARP BALANCED STOCK AND BOND FUND
PROXY PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 22, 1997
The undersigned hereby appoints [ ], [ ] and [ ] and each of
them, the proxies of the undersigned, with the power of substitution to each of
them, to vote all shares of the Fund which the undersigned is entitled to vote
at the Special Meeting of Shareholders of the Fund to be held at the offices of
Scudder, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 22, 1997 at 9:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund, Scudder or AARP, recommend that you vote FOR each item.
1. The election of Trustees;
<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for all nominees listed below
(except as marked to the contrary below)
</TABLE>
Nominees: Carole Lewis Anderson, Adelaide Attard, Robert N. Butler, M.D., Linda
C. Coughlin, Horace B. Deets, Edgar R. Fiedler, Lt. Gen. Eugene P. Forrester,
George L. Maddox, Jr., Robert J. Meyers, James H. Schulz, Gordon Shillinglaw,
and Jean Gleason Stromberg.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
2. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve the new Member Services Agreement between AARP Financial Services
Corporation and Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Not applicable;
(continued on other side)
<PAGE> 82
5. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6(A). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6(B). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
7. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
7.1 diversification; 7.4 concentration; 7.7 commodities;
7.2 borrowing; 7.5 underwriting of securities; 7.8 lending;
7.3 senior securities; 7.6 investment in real estate; 7.9 tax exempt securities.
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
---------------------------------------------------------------------------
8. Ratification of the selection of Price Waterhouse L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The proxies are authorized to vote in their discretion on any other business
which may properly come before the meeting and any adjournments thereof.
Please sign exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
------------------------------------------
(Signature of Shareholder)
------------------------------------------
(Signature of joint owner, if any)
Dated _____________________________________ , 1997
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
<PAGE> 83
AARP CAPITAL GROWTH FUND
PROXY PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 22, 1997
The undersigned hereby appoints [ ], [ ] and [ ] and each of
them, the proxies of the undersigned, with the power of substitution to each of
them, to vote all shares of the Fund which the undersigned is entitled to vote
at the Special Meeting of Shareholders of the Fund to be held at the offices of
Scudder, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 22, 1997 at 9:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund, Scudder or AARP, recommend that you vote FOR each item.
1. The election of Trustees;
<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for all nominees listed below
(except as marked to the contrary below)
</TABLE>
Nominees: Carole Lewis Anderson, Adelaide Attard, Robert N. Butler, M.D., Linda
C. Coughlin, Horace B. Deets, Edgar R. Fiedler, Lt. Gen. Eugene P. Forrester,
George L. Maddox, Jr., Robert J. Meyers, James H. Schulz, Gordon Shillinglaw,
and Jean Gleason Stromberg.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
2. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve the new Member Services Agreement between AARP Financial Services
Corporation and Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Not applicable;
(continued on other side)
<PAGE> 84
5. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6(A). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6(B). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
7. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
7.1 diversification; 7.4 concentration; 7.7 commodities;
7.2 borrowing; 7.5 underwriting of securities; 7.8 lending;
7.3 senior securities; 7.6 investment in real estate; 7.9 tax exempt securities.
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
---------------------------------------------------------------------------
8. Ratification of the selection of Price Waterhouse L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The proxies are authorized to vote in their discretion on any other business
which may properly come before the meeting and any adjournments thereof.
Please sign exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
------------------------------------------
(Signature of Shareholder)
------------------------------------------
(Signature of joint owner, if any)
Dated _____________________________________ , 1997
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
<PAGE> 85
AARP GLOBAL GROWTH FUND
PROXY PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 22, 1997
The undersigned hereby appoints [ ], [ ] and [ ] and each of
them, the proxies of the undersigned, with the power of substitution to each of
them, to vote all shares of the Fund which the undersigned is entitled to vote
at the Special Meeting of Shareholders of the Fund to be held at the offices of
Scudder, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 22, 1997 at 9:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund, Scudder or AARP, recommend that you vote FOR each item.
1. The election of Trustees;
<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for all nominees listed below
(except as marked to the contrary below)
</TABLE>
Nominees: Carole Lewis Anderson, Adelaide Attard, Robert N. Butler, M.D., Linda
C. Coughlin, Horace B. Deets, Edgar R. Fiedler, Lt. Gen. Eugene P. Forrester,
George L. Maddox, Jr., Robert J. Meyers, James H. Schulz, Gordon Shillinglaw,
and Jean Gleason Stromberg.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
2. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve the new Member Services Agreement between AARP Financial Services
Corporation and Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Not applicable;
(continued on other side)
<PAGE> 86
5. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6(A). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6(B). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
7. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
7.1 diversification; 7.4 concentration; 7.7 commodities;
7.2 borrowing; 7.5 underwriting of securities; 7.8 lending;
7.3 senior securities; 7.6 investment in real estate; 7.9 tax exempt securities.
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
---------------------------------------------------------------------------
8. Ratification of the selection of Price Waterhouse L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The proxies are authorized to vote in their discretion on any other business
which may properly come before the meeting and any adjournments thereof.
Please sign exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
------------------------------------------
(Signature of Shareholder)
------------------------------------------
(Signature of joint owner, if any)
Dated _____________________________________ , 1997
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
<PAGE> 87
AARP GROWTH AND INCOME FUND
PROXY PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 22, 1997
The undersigned hereby appoints [ ], [ ] and [ ] and each of
them, the proxies of the undersigned, with the power of substitution to each of
them, to vote all shares of the Fund which the undersigned is entitled to vote
at the Special Meeting of Shareholders of the Fund to be held at the offices of
Scudder, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 22, 1997 at 9:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund, Scudder or AARP, recommend that you vote FOR each item.
1. The election of Trustees;
<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for all nominees listed below
(except as marked to the contrary below)
</TABLE>
Nominees: Carole Lewis Anderson, Adelaide Attard, Robert N. Butler, M.D., Linda
C. Coughlin, Horace B. Deets, Edgar R. Fiedler, Lt. Gen. Eugene P. Forrester,
George L. Maddox, Jr., Robert J. Meyers, James H. Schulz, Gordon Shillinglaw,
and Jean Gleason Stromberg.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
2. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve the new Member Services Agreement between AARP Financial Services
Corporation and Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Not applicable;
(continued on other side)
<PAGE> 88
5. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6(A). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6(B). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
7. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
7.1 diversification; 7.4 concentration; 7.7 commodities;
7.2 borrowing; 7.5 underwriting of securities; 7.8 lending;
7.3 senior securities; 7.6 investment in real estate; 7.9 tax exempt securities.
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
---------------------------------------------------------------------------
8. Ratification of the selection of Price Waterhouse L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The proxies are authorized to vote in their discretion on any other business
which may properly come before the meeting and any adjournments thereof.
Please sign exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
------------------------------------------
(Signature of Shareholder)
------------------------------------------
(Signature of joint owner, if any)
Dated _____________________________________ , 1997
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
<PAGE> 89
AARP BOND FUND FOR INCOME
PROXY PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 22, 1997
The undersigned hereby appoints [ ], [ ] and [ ] and each of
them, the proxies of the undersigned, with the power of substitution to each of
them, to vote all shares of the Fund which the undersigned is entitled to vote
at the Special Meeting of Shareholders of the Fund to be held at the offices of
Scudder, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 22, 1997 at 9:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund, Scudder or AARP, recommend that you vote FOR each item.
1. The election of Trustees;
<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for all nominees listed below
(except as marked to the contrary below)
</TABLE>
Nominees: Carole Lewis Anderson, Adelaide Attard, Robert N. Butler, M.D., Linda
C. Coughlin, Horace B. Deets, Edgar R. Fiedler, Lt. Gen. Eugene P. Forrester,
George L. Maddox, Jr., Robert J. Meyers, James H. Schulz, Gordon Shillinglaw,
and Jean Gleason Stromberg.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
2. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve the new Member Services Agreement between AARP Financial Services
Corporation and Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Not applicable;
(continued on other side)
<PAGE> 90
5. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6(A). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6(B). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
7. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
7.1 diversification; 7.4 concentration; 7.7 commodities;
7.2 borrowing; 7.5 underwriting of securities; 7.8 lending;
7.3 senior securities; 7.6 investment in real estate; 7.9 tax exempt securities.
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
---------------------------------------------------------------------------
8. Ratification of the selection of Price Waterhouse L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The proxies are authorized to vote in their discretion on any other business
which may properly come before the meeting and any adjournments thereof.
Please sign exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
------------------------------------------
(Signature of Shareholder)
------------------------------------------
(Signature of joint owner, if any)
Dated _____________________________________ , 1997
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
<PAGE> 91
AARP SMALL COMPANY STOCK FUND
PROXY PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 22, 1997
The undersigned hereby appoints [ ], [ ] and [ ] and each of
them, the proxies of the undersigned, with the power of substitution to each of
them, to vote all shares of the Fund which the undersigned is entitled to vote
at the Special Meeting of Shareholders of the Fund to be held at the offices of
Scudder, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 22, 1997 at 9:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund, Scudder or AARP, recommend that you vote FOR each item.
1. The election of Trustees;
<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for all nominees listed below
(except as marked to the contrary below)
</TABLE>
Nominees: Carole Lewis Anderson, Adelaide Attard, Robert N. Butler, M.D., Linda
C. Coughlin, Horace B. Deets, Edgar R. Fiedler, Lt. Gen. Eugene P. Forrester,
George L. Maddox, Jr., Robert J. Meyers, James H. Schulz, Gordon Shillinglaw,
and Jean Gleason Stromberg.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
2. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve the new Member Services Agreement between AARP Financial Services
Corporation and Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Not applicable;
(continued on other side)
<PAGE> 92
5. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6(A). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6(B). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
7. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
7.1 diversification; 7.4 concentration; 7.7 commodities;
7.2 borrowing; 7.5 underwriting of securities; 7.8 lending;
7.3 senior securities; 7.6 investment in real estate; 7.9 tax exempt securities.
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
---------------------------------------------------------------------------
8. Ratification of the selection of Price Waterhouse L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The proxies are authorized to vote in their discretion on any other business
which may properly come before the meeting and any adjournments thereof.
Please sign exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
------------------------------------------
(Signature of Shareholder)
------------------------------------------
(Signature of joint owner, if any)
Dated _____________________________________ , 1997
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
<PAGE> 93
\
AARP INTERNATIONAL STOCK FUND
PROXY PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 22, 1997
The undersigned hereby appoints [ ], [ ] and [ ] and each of
them, the proxies of the undersigned, with the power of substitution to each of
them, to vote all shares of the Fund which the undersigned is entitled to vote
at the Special Meeting of Shareholders of the Fund to be held at the offices of
Scudder, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 22, 1997 at 9:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund, Scudder or AARP, recommend that you vote FOR each item.
1. The election of Trustees;
<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for all nominees listed below
(except as marked to the contrary below)
</TABLE>
Nominees: Carole Lewis Anderson, Adelaide Attard, Robert N. Butler, M.D., Linda
C. Coughlin, Horace B. Deets, Edgar R. Fiedler, Lt. Gen. Eugene P. Forrester,
George L. Maddox, Jr., Robert J. Meyers, James H. Schulz, Gordon Shillinglaw,
and Jean Gleason Stromberg.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
2. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve the new Member Services Agreement between AARP Financial Services
Corporation and Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Not applicable;
(continued on other side)
<PAGE> 94
5. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6(A). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6(B). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
7. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
7.1 diversification; 7.4 concentration; 7.7 commodities;
7.2 borrowing; 7.5 underwriting of securities; 7.8 lending;
7.3 senior securities; 7.6 investment in real estate; 7.9 tax exempt securities.
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
---------------------------------------------------------------------------
8. Ratification of the selection of Price Waterhouse L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The proxies are authorized to vote in their discretion on any other business
which may properly come before the meeting and any adjournments thereof.
Please sign exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
------------------------------------------
(Signature of Shareholder)
------------------------------------------
(Signature of joint owner, if any)
Dated _____________________________________ , 1997
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
<PAGE> 95
AARP GNMA AND U.S. TREASURY FUND
PROXY PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 22, 1997
The undersigned hereby appoints [ ], [ ] and [ ] and each of
them, the proxies of the undersigned, with the power of substitution to each of
them, to vote all shares of the Fund which the undersigned is entitled to vote
at the Special Meeting of Shareholders of the Fund to be held at the offices of
Scudder, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 22, 1997 at 9:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund, Scudder or AARP, recommend that you vote FOR each item.
1. The election of Trustees;
<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for all nominees listed below
(except as marked to the contrary below)
</TABLE>
Nominees: Carole Lewis Anderson, Adelaide Attard, Robert N. Butler, M.D., Linda
C. Coughlin, Horace B. Deets, Edgar R. Fiedler, Lt. Gen. Eugene P. Forrester,
George L. Maddox, Jr., Robert J. Meyers, James H. Schulz, Gordon Shillinglaw,
and Jean Gleason Stromberg.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
2. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve the new Member Services Agreement between AARP Financial Services
Corporation and Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Not applicable;
(continued on other side)
<PAGE> 96
5. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6(A). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6(B). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
7. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
7.1 diversification; 7.4 concentration; 7.7 commodities;
7.2 borrowing; 7.5 underwriting of securities; 7.8 lending;
7.3 senior securities; 7.6 investment in real estate; 7.9 tax exempt securities.
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
---------------------------------------------------------------------------
8. Ratification of the selection of Price Waterhouse L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The proxies are authorized to vote in their discretion on any other business
which may properly come before the meeting and any adjournments thereof.
Please sign exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
------------------------------------------
(Signature of Shareholder)
------------------------------------------
(Signature of joint owner, if any)
Dated __________________________________ , 1997
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
<PAGE> 97
AARP HIGH QUALITY BOND FUND
PROXY PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 22, 1997
The undersigned hereby appoints [ ], [ ] and [ ] and each of
them, the proxies of the undersigned, with the power of substitution to each of
them, to vote all shares of the Fund which the undersigned is entitled to vote
at the Special Meeting of Shareholders of the Fund to be held at the offices of
Scudder, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 22, 1997 at 9:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund, Scudder or AARP, recommend that you vote FOR each item.
1. The election of Trustees;
<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for all nominees listed below
(except as marked to the contrary below)
</TABLE>
Nominees: Carole Lewis Anderson, Adelaide Attard, Robert N. Butler, M.D., Linda
C. Coughlin, Horace B. Deets, Edgar R. Fiedler, Lt. Gen. Eugene P. Forrester,
George L. Maddox, Jr., Robert J. Meyers, James H. Schulz, Gordon Shillinglaw,
and Jean Gleason Stromberg.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
2. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve the new Member Services Agreement between AARP Financial Services
Corporation and Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Not applicable;
(continued on other side)
<PAGE> 98
5. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6(A). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6(B). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
7. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
7.1 diversification; 7.4 concentration; 7.7 commodities;
7.2 borrowing; 7.5 underwriting of securities; 7.8 lending;
7.3 senior securities; 7.6 investment in real estate; 7.9 tax exempt securities.
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
---------------------------------------------------------------------------
8. Ratification of the selection of Price Waterhouse L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The proxies are authorized to vote in their discretion on any other business
which may properly come before the meeting and any adjournments thereof.
Please sign exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
------------------------------------------
(Signature of Shareholder)
------------------------------------------
(Signature of joint owner, if any)
Dated _____________________________________ , 1997
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
<PAGE> 99
AARP HIGH QUALITY TAX FREE MONEY FUND
PROXY PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 22, 1997
The undersigned hereby appoints [ ], [ ] and [ ] and each of
them, the proxies of the undersigned, with the power of substitution to each of
them, to vote all shares of the Fund which the undersigned is entitled to vote
at the Special Meeting of Shareholders of the Fund to be held at the offices of
Scudder, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 22, 1997 at 9:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund, Scudder or AARP, recommend that you vote FOR each item.
1. The election of Trustees;
<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for all nominees listed below
(except as marked to the contrary below)
</TABLE>
Nominees: Carole Lewis Anderson, Adelaide Attard, Robert N. Butler, M.D., Linda
C. Coughlin, Horace B. Deets, Edgar R. Fiedler, Lt. Gen. Eugene P. Forrester,
George L. Maddox, Jr., Robert J. Meyers, James H. Schulz, Gordon Shillinglaw,
and Jean Gleason Stromberg.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
2. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve the new Member Services Agreement between AARP Financial Services
Corporation and Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Not applicable;
(continued on other side)
<PAGE> 100
5. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6(A). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6(B). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
7. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
7.1 diversification; 7.4 concentration; 7.7 commodities;
7.2 borrowing; 7.5 underwriting of securities; 7.8 lending;
7.3 senior securities; 7.6 investment in real estate; 7.9 tax exempt securities.
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
---------------------------------------------------------------------------
8. Ratification of the selection of Price Waterhouse L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The proxies are authorized to vote in their discretion on any other business
which may properly come before the meeting and any adjournments thereof.
Please sign exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
------------------------------------------
(Signature of Shareholder)
------------------------------------------
(Signature of joint owner, if any)
Dated ________________________________________ , 1997
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
<PAGE> 101
AARP INSURED TAX FREE GENERAL BOND FUND
PROXY PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 22, 1997
The undersigned hereby appoints [ ], [ ] and [ ] and each of
them, the proxies of the undersigned, with the power of substitution to each of
them, to vote all shares of the Fund which the undersigned is entitled to vote
at the Special Meeting of Shareholders of the Fund to be held at the offices of
Scudder, Stevens & Clark, Inc., Two International Place, Boston, Massachusetts
02110, on October 22, 1997 at 9:30 a.m., eastern time, and at any adjournments
thereof.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH NUMBERED ITEM LISTED BELOW.
The Board members of your Fund, including those who are not affiliated with
the Fund, Scudder or AARP, recommend that you vote FOR each item.
1. The election of Trustees;
<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for all nominees listed below
(except as marked to the contrary below)
</TABLE>
Nominees: Carole Lewis Anderson, Adelaide Attard, Robert N. Butler, M.D., Linda
C. Coughlin, Horace B. Deets, Edgar R. Fiedler, Lt. Gen. Eugene P. Forrester,
George L. Maddox, Jr., Robert J. Meyers, James H. Schulz, Gordon Shillinglaw,
and Jean Gleason Stromberg.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
------------------------------------------------------------
2. To approve the new Investment Management Agreement between the Fund and
Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve the new Member Services Agreement between AARP Financial Services
Corporation and Scudder Kemper Investments, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Not applicable;
(continued on other side)
<PAGE> 102
5. To approve the Board's discretionary authority to convert the Fund to a
master/feeder fund structure through a sale or transfer of assets or
otherwise;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6(A). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6(B). To approve certain provisions of the Amended and Restated Declaration of
Trust;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
7. To approve changes to certain of the fundamental investment policies and
restrictions.
<TABLE>
<S> <C> <C>
7.1 diversification; 7.4 concentration; 7.7 commodities;
7.2 borrowing; 7.5 underwriting of securities; 7.8 lending;
7.3 senior securities; 7.6 investment in real estate; 7.9 tax exempt securities.
</TABLE>
TO VOTE AGAINST OR ABSTAIN WITH RESPECT TO A PARTICULAR PROPOSED CHANGE,
REFER TO THE PROXY STATEMENT FOR THE CHANGES APPLICABLE TO THE FUND AND
WRITE THE NUMBER OF THE SUB-PROPOSAL ON THE LINE BELOW.
---------------------------------------------------------------------------
8. Ratification of the selection of Price Waterhouse L.L.P. as the Fund's
independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The proxies are authorized to vote in their discretion on any other business
which may properly come before the meeting and any adjournments thereof.
Please sign exactly as your name or names
appear. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such.
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(Signature of Shareholder)
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(Signature of joint owner, if any)
Dated ________________________________________ , 1997
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
