<PAGE> PAGE 1
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<PAGE> PAGE 2
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011 C01AA01 BOSTON
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012 A00AA01 SCUDDER SERVICE CORPORATION
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<PAGE> PAGE 3
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<PAGE> PAGE 4
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<PAGE> PAGE 5
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<PAGE> PAGE 6
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<PAGE> PAGE 7
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<PAGE> PAGE 8
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<PAGE> PAGE 10
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<PAGE> PAGE 17
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008 A000301 SCUDDER KEMPER INVESTMENTS, INC.
008 B000301 A
008 C000301 801-3650
<PAGE> PAGE 19
008 D010301 BOSTON
008 D020301 MA
008 D030301 02110
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<PAGE> PAGE 20
062 G000300 0.0
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070 A010300 Y
070 A020300 Y
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070 C010300 Y
070 C020300 N
070 D010300 Y
070 D020300 N
070 E010300 Y
070 E020300 N
070 F010300 Y
070 F020300 N
070 G010300 Y
070 G020300 N
070 H010300 Y
070 H020300 N
070 I010300 N
070 I020300 N
070 J010300 Y
070 J020300 Y
070 K010300 Y
070 K020300 N
070 L010300 Y
070 L020300 Y
070 M010300 Y
070 M020300 Y
070 N010300 Y
070 N020300 N
070 O010300 N
070 O020300 N
070 P010300 Y
070 P020300 N
070 Q010300 N
070 Q020300 N
070 R010300 N
070 R020300 N
071 A000300 524306
071 B000300 388590
071 C000300 685498
<PAGE> PAGE 21
071 D000300 57
072 A000300 12
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072 C000300 12995
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074 E000300 1269
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<PAGE> PAGE 22
074 N000300 744548
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076 000300 0.00
008 A000401 SCUDDER KEMPER INVESTMENTS, INC.
008 B000401 A
008 C000401 801-3650
008 D010401 BOSTON
008 D020401 MA
008 D030401 02110
028 A010400 4094
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<PAGE> PAGE 23
028 G020400 0
028 G030400 0
028 G040400 17265
028 H000400 0
049 000400 N
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059 000400 Y
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060 B000400 Y
061 000400 2000
062 A000400 N
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062 D000400 0.0
062 E000400 0.0
062 F000400 0.0
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062 M000400 0.0
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062 O000400 0.0
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062 R000400 0.0
070 A010400 Y
070 A020400 Y
070 B010400 Y
070 B020400 N
070 C010400 Y
070 C020400 N
070 D010400 Y
070 D020400 N
070 E010400 Y
070 E020400 N
070 F010400 Y
070 F020400 N
070 G010400 Y
070 G020400 N
070 H010400 Y
070 H020400 N
070 I010400 N
070 I020400 N
<PAGE> PAGE 24
070 J010400 Y
070 J020400 Y
070 K010400 Y
070 K020400 N
070 L010400 Y
070 L020400 Y
070 M010400 Y
070 M020400 Y
070 N010400 Y
070 N020400 N
070 O010400 N
070 O020400 N
070 P010400 Y
070 P020400 N
070 Q010400 N
070 Q020400 N
070 R010400 N
070 R020400 N
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071 B000400 86149
071 C000400 145654
071 D000400 59
072 A000400 12
072 B000400 1526
072 C000400 2539
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072 F000400 1277
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072 I000400 788
072 J000400 290
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<PAGE> PAGE 25
072CC020400 0
072DD010400 1240
072DD020400 0
072EE000400 4108
073 A010400 0.1600
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074 B000400 5198
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076 000400 0.00
008 A000501 BANKERS TRUST COMPANY
008 B000501 S
008 C000501 801-xxxxxx
008 D010501 BOSTON
008 D020501 MA
008 D030501 00000
008 A000502 SCUDDER KEMPER INVESTMENTS, INC.
008 B000502 A
008 C000502 801-22973
008 D010502 BOSTON
<PAGE> PAGE 26
008 D020502 MA
008 D030502 02110
025 D000501 0
025 D000502 0
025 D000503 0
025 D000504 0
025 D000505 0
025 D000506 0
025 D000507 0
025 D000508 0
028 A010500 10484
028 A020500 0
028 A030500 0
028 A040500 1291
028 B010500 9280
028 B020500 0
028 B030500 0
028 B040500 1896
028 C010500 14473
028 C020500 292
028 C030500 0
028 C040500 1643
028 D010500 22906
028 D020500 0
028 D030500 0
028 D040500 2464
028 E010500 17001
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028 F040500 4963
028 G010500 85578
028 G020500 706
028 G030500 0
028 G040500 18039
028 H000500 0
049 000500 N
050 000500 N
051 000500 N
052 000500 Y
053 A000500 Y
053 B000500 Y
053 C000500 N
058 A000500 N
059 000500 Y
060 A000500 Y
060 B000500 Y
061 000500 2000
<PAGE> PAGE 27
062 A000500 N
062 B000500 0.0
062 C000500 0.0
062 D000500 0.0
062 E000500 0.0
062 F000500 0.0
062 G000500 0.0
062 H000500 0.0
062 I000500 0.0
062 J000500 0.0
062 K000500 0.0
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062 M000500 0.0
062 N000500 0.0
062 O000500 0.0
062 P000500 0.0
062 Q000500 0.0
062 R000500 0.0
066 A000500 Y
066 B000500 N
066 C000500 N
066 D000500 N
066 E000500 Y
066 F000500 N
066 G000500 N
067 000500 N
068 A000500 N
068 B000500 N
069 000500 Y
070 A010500 Y
070 A020500 Y
070 B010500 Y
070 B020500 N
070 C010500 Y
070 C020500 N
070 D010500 Y
070 D020500 N
070 E010500 Y
070 E020500 N
070 F010500 Y
070 F020500 Y
070 G010500 Y
070 G020500 N
070 H010500 Y
070 H020500 N
070 I010500 N
070 I020500 N
070 J010500 Y
070 J020500 N
070 K010500 Y
070 K020500 N
<PAGE> PAGE 28
070 L010500 Y
070 L020500 N
070 M010500 Y
070 M020500 N
070 N010500 Y
070 N020500 N
070 O010500 N
070 O020500 N
070 P010500 Y
070 P020500 N
070 Q010500 N
070 Q020500 N
070 R010500 N
070 R020500 N
071 A000500 89698
071 B000500 771
071 C000500 69761
071 D000500 1
072 A000500 12
072 B000500 170
072 C000500 1372
072 D000500 0
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072AA000500 129
072BB000500 0
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072CC020500 2892
072DD010500 1166
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<PAGE> PAGE 29
073 A010500 0.2900
073 A020500 0.0000
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074 C000500 214
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074 N000500 128261
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074 U010500 6422
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076 000500 0.00
008 A000601 SCUDDER KEMPER INVESTMENTS, INC
008 B000601 A
008 C000601 801-3650
008 D010601 BOSTON
008 D020601 MA
008 D030601 02110
025 D000601 0
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<PAGE> PAGE 30
028 A010600 4153
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028 C040600 800
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028 G010600 23832
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028 G030600 0
028 G040600 7938
028 H000600 0
049 000600 N
050 000600 N
051 000600 N
052 000600 Y
053 A000600 Y
053 B000600 Y
053 C000600 Y
058 A000600 N
059 000600 Y
060 A000600 Y
060 B000600 Y
061 000600 2000
062 A000600 N
062 B000600 0.0
062 C000600 0.0
062 D000600 0.0
062 E000600 0.0
062 F000600 0.0
062 G000600 0.0
062 H000600 0.0
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<PAGE> PAGE 31
062 K000600 0.0
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066 A000600 Y
066 B000600 N
066 C000600 N
066 D000600 N
066 E000600 Y
066 F000600 N
066 G000600 N
067 000600 N
068 A000600 N
068 B000600 Y
069 000600 N
070 A010600 Y
070 A020600 Y
070 B010600 Y
070 B020600 N
070 C010600 Y
070 C020600 N
070 D010600 Y
070 D020600 Y
070 E010600 Y
070 E020600 N
070 F010600 Y
070 F020600 Y
070 G010600 Y
070 G020600 N
070 H010600 Y
070 H020600 N
070 I010600 Y
070 I020600 N
070 J010600 Y
070 J020600 N
070 K010600 Y
070 K020600 N
070 L010600 Y
070 L020600 Y
070 M010600 Y
070 M020600 Y
070 N010600 Y
070 N020600 N
070 O010600 N
070 O020600 N
070 P010600 Y
070 P020600 N
<PAGE> PAGE 32
070 Q010600 N
070 Q020600 N
070 R010600 N
070 R020600 N
071 A000600 46037
071 B000600 23066
071 C000600 30639
071 D000600 75
072 A000600 12
072 B000600 174
072 C000600 836
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073 A010600 0.1100
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074 A000600 321
074 B000600 0
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074 D000600 570
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<PAGE> PAGE 33
074 G000600 0
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008 A000701 SCUDDER KEMPER INVESTMENTZS, INC.
008 B000701 A
008 C000701 801-3650
008 D010701 BOSTON
008 D020701 MA
008 D030701 02110
028 A010700 15476
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028 B010700 10569
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<PAGE> PAGE 34
028 E030700 0
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028 F010700 2883
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028 H000700 0
049 000700 N
050 000700 N
051 000700 N
052 000700 Y
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053 C000700 Y
058 A000700 N
059 000700 Y
060 A000700 Y
060 B000700 Y
061 000700 2000
062 A000700 N
062 B000700 0.0
062 C000700 0.0
062 D000700 0.0
062 E000700 0.0
062 F000700 0.0
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062 R000700 0.0
066 A000700 Y
066 B000700 N
066 C000700 N
066 D000700 Y
066 E000700 N
066 F000700 N
066 G000700 N
067 000700 N
068 A000700 N
068 B000700 N
<PAGE> PAGE 35
069 000700 N
070 A010700 Y
070 A020700 Y
070 B010700 Y
070 B020700 N
070 C010700 Y
070 C020700 N
070 D010700 Y
070 D020700 N
070 E010700 Y
070 E020700 N
070 F010700 Y
070 F020700 N
070 G010700 Y
070 G020700 N
070 H010700 Y
070 H020700 N
070 I010700 N
070 I020700 N
070 J010700 Y
070 J020700 N
070 K010700 N
070 K020700 N
070 L010700 Y
070 L020700 N
070 M010700 Y
070 M020700 N
070 N010700 Y
070 N020700 N
070 O010700 N
070 O020700 N
070 P010700 Y
070 P020700 N
070 Q010700 N
070 Q020700 N
070 R010700 N
070 R020700 N
071 A000700 78029
071 B000700 10128
071 C000700 82934
071 D000700 12
072 A000700 12
072 B000700 195
072 C000700 1373
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072 J000700 73
<PAGE> PAGE 36
072 K000700 0
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072 M000700 23
072 N000700 52
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072 S000700 8
072 T000700 0
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072 X000700 1550
072 Y000700 43
072 Z000700 61
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072CC010700 0
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072DD010700 123
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073 A010700 0.0400
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073 B000700 0.0800
073 C000700 0.0000
074 A000700 1
074 B000700 918
074 C000700 0
074 D000700 0
074 E000700 0
074 F000700 96752
074 G000700 0
074 H000700 0
074 I000700 0
074 J000700 251
074 K000700 0
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074 M000700 8
074 N000700 98047
074 O000700 1050
074 P000700 64
074 Q000700 0
074 R010700 0
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074 R030700 0
074 R040700 242
074 S000700 0
074 T000700 96691
074 U010700 5711
<PAGE> PAGE 37
074 U020700 0
074 V010700 16.93
074 V020700 0.00
074 W000700 0.0000
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076 000700 0.00
SIGNATURE THOMAS F. MCDONOUGH
TITLE VICE PRESIDENT
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the AARP
Growth And Income Fund Annual Report for the fiscal year ended 9/30/98 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> AARP Growth and Income Fund
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 5,499,233,774
<INVESTMENTS-AT-VALUE> 6,384,182,086
<RECEIVABLES> 108,181,018
<ASSETS-OTHER> 41,269
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,492,404,373
<PAYABLE-FOR-SECURITIES> 31,457,482
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,079,579
<TOTAL-LIABILITIES> 40,537,061
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,852,988,901
<SHARES-COMMON-STOCK> 129,663,295
<SHARES-COMMON-PRIOR> 113,474,683
<ACCUMULATED-NII-CURRENT> 5,829,789
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 707,889,787
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 885,158,835
<NET-ASSETS> 6,451,867,312
<DIVIDEND-INCOME> 191,464,484
<INTEREST-INCOME> 13,514,801
<OTHER-INCOME> 0
<EXPENSES-NET> 47,349,614
<NET-INVESTMENT-INCOME> 157,629,671
<REALIZED-GAINS-CURRENT> 768,155,112
<APPREC-INCREASE-CURRENT> (1,245,386,100)
<NET-CHANGE-FROM-OPS> (319,601,317)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (150,480,599)
<DISTRIBUTIONS-OF-GAINS> (581,929,952)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,314,868,507
<NUMBER-OF-SHARES-REDEEMED> (1,088,793,618)
<SHARES-REINVESTED> 671,791,394
<NET-CHANGE-IN-ASSETS> (154,145,585)
<ACCUMULATED-NII-PRIOR> 3,321,388
<ACCUMULATED-GAINS-PRIOR> 517,023,954
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 33,479,324
<INTEREST-EXPENSE> 42,919
<GROSS-EXPENSE> 47,349,614
<AVERAGE-NET-ASSETS> 7,110,795,354
<PER-SHARE-NAV-BEGIN> 58.22
<PER-SHARE-NII> 1.25
<PER-SHARE-GAIN-APPREC> (3.45)
<PER-SHARE-DIVIDEND> (1.19)
<PER-SHARE-DISTRIBUTIONS> (5.07)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 49.76
<EXPENSE-RATIO> 0.67
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the AARP
Capital Growth Fund Annual Report for the fiscal year ended 9/30/98 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 2
<NAME> AARP Capital Growth Fund
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 1,015,155,474
<INVESTMENTS-AT-VALUE> 1,250,662,994
<RECEIVABLES> 10,887,368
<ASSETS-OTHER> 7,632
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,261,557,994
<PAYABLE-FOR-SECURITIES> 12,223,564
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,998,808
<TOTAL-LIABILITIES> 14,222,372
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 848,487,263
<SHARES-COMMON-STOCK> 24,342,283
<SHARES-COMMON-PRIOR> 21,237,515
<ACCUMULATED-NII-CURRENT> 5,606,304
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 157,734,890
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 235,507,165
<NET-ASSETS> 1,247,335,622
<DIVIDEND-INCOME> 14,470,933
<INTEREST-INCOME> 3,669,746
<OTHER-INCOME> 0
<EXPENSES-NET> 11,532,094
<NET-INVESTMENT-INCOME> 6,608,585
<REALIZED-GAINS-CURRENT> 158,605,233
<APPREC-INCREASE-CURRENT> (218,002,482)
<NET-CHANGE-FROM-OPS> (52,788,664)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (6,661,535)
<DISTRIBUTIONS-OF-GAINS> (92,509,359)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 278,559,039
<NUMBER-OF-SHARES-REDEEMED> (202,250,533)
<SHARES-REINVESTED> 94,606,720
<NET-CHANGE-IN-ASSETS> 18,955,668
<ACCUMULATED-NII-PRIOR> 6,420,037
<ACCUMULATED-GAINS-PRIOR> 90,878,235
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,953,203
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11,532,094
<AVERAGE-NET-ASSETS> 1,330,266,493
<PER-SHARE-NAV-BEGIN> 57.84
<PER-SHARE-NII> 0.28
<PER-SHARE-GAIN-APPREC> (2.26)
<PER-SHARE-DIVIDEND> (0.31)
<PER-SHARE-DISTRIBUTIONS> (4.31)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 51.24
<EXPENSE-RATIO> 0.87
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the AARP
Balanced Stock and Bond Fund Annual Report for the fiscal year ended 9/30/98 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 3
<NAME> AARP Balanced Stock & Bond Fund
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 679,324,905
<INVESTMENTS-AT-VALUE> 733,010,707
<RECEIVABLES> 11,530,346
<ASSETS-OTHER> 7,211
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 744,548,264
<PAYABLE-FOR-SECURITIES> 3,332,471
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,153,202
<TOTAL-LIABILITIES> 4,485,673
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 645,692,326
<SHARES-COMMON-STOCK> 37,071,341
<SHARES-COMMON-PRIOR> 29,829,626
<ACCUMULATED-NII-CURRENT> 489,400
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 40,192,220
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 53,688,645
<NET-ASSETS> 740,062,591
<DIVIDEND-INCOME> 12,994,855
<INTEREST-INCOME> 18,606,027
<OTHER-INCOME> 0
<EXPENSES-NET> 6,140,598
<NET-INVESTMENT-INCOME> 25,460,284
<REALIZED-GAINS-CURRENT> 45,011,122
<APPREC-INCREASE-CURRENT> (67,515,206)
<NET-CHANGE-FROM-OPS> 2,956,200
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (25,262,963)
<DISTRIBUTIONS-OF-GAINS> (30,730,876)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10,797,928
<NUMBER-OF-SHARES-REDEEMED> (6,061,243)
<SHARES-REINVESTED> 2,505,030
<NET-CHANGE-IN-ASSETS> 101,706,334
<ACCUMULATED-NII-PRIOR> 225,657
<ACCUMULATED-GAINS-PRIOR> 25,974,502
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,420,192
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6,140,598
<AVERAGE-NET-ASSETS> 726,738,193
<PER-SHARE-NAV-BEGIN> 21.40
<PER-SHARE-NII> 0.75
<PER-SHARE-GAIN-APPREC> (0.46)
<PER-SHARE-DIVIDEND> (0.73)
<PER-SHARE-DISTRIBUTIONS> (1.00)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 19.96
<EXPENSE-RATIO> 0.84
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the AARP
Global Growth Fund Annual Report for the fiscal year ended 9/30/98 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 4
<NAME> AARP Global Growth Fund
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 134,736,800
<INVESTMENTS-AT-VALUE> 142,564,480
<RECEIVABLES> 11,528,370
<ASSETS-OTHER> 557,784
<OTHER-ITEMS-ASSETS> 42,675
<TOTAL-ASSETS> 154,693,309
<PAYABLE-FOR-SECURITIES> 9,596,930
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 406,469
<TOTAL-LIABILITIES> 10,003,399
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 128,242,807
<SHARES-COMMON-STOCK> 7,984,664
<SHARES-COMMON-PRIOR> 7,693,438
<ACCUMULATED-NII-CURRENT> 1,499,016
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7,071,647
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,876,440
<NET-ASSETS> 144,689,910
<DIVIDEND-INCOME> 2,538,772
<INTEREST-INCOME> 1,526,320
<OTHER-INCOME> 0
<EXPENSES-NET> 2,542,883
<NET-INVESTMENT-INCOME> 1,522,209
<REALIZED-GAINS-CURRENT> 8,584,866
<APPREC-INCREASE-CURRENT> (14,167,905)
<NET-CHANGE-FROM-OPS> (4,060,830)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,240,117)
<DISTRIBUTIONS-OF-GAINS> (4,107,884)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 35,909,431
<NUMBER-OF-SHARES-REDEEMED> (35,001,773)
<SHARES-REINVESTED> 5,161,710
<NET-CHANGE-IN-ASSETS> (3,339,463)
<ACCUMULATED-NII-PRIOR> 1,144,886
<ACCUMULATED-GAINS-PRIOR> 2,678,448
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,277,487
<INTEREST-EXPENSE> 120
<GROSS-EXPENSE> 2,542,883
<AVERAGE-NET-ASSETS> 153,798,978
<PER-SHARE-NAV-BEGIN> 19.24
<PER-SHARE-NII> 0.19
<PER-SHARE-GAIN-APPREC> (0.62)
<PER-SHARE-DIVIDEND> (0.16)
<PER-SHARE-DISTRIBUTIONS> (0.53)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 18.12
<EXPENSE-RATIO> 1.65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the AARP
U.S. Stock Index Fund Annual Report for the fiscal year ended 9/30/98 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 5
<NAME> AARP U.S. Stock Index Fund
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 126,551,452
<INVESTMENTS-AT-VALUE> 127,455,773
<RECEIVABLES> 793,146
<ASSETS-OTHER> 11,632
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 128,260,551
<PAYABLE-FOR-SECURITIES> 3,959,983
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 618,287
<TOTAL-LIABILITIES> 4,578,270
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 122,767,649
<SHARES-COMMON-STOCK> 6,422,055
<SHARES-COMMON-PRIOR> 2,117,187
<ACCUMULATED-NII-CURRENT> 23,173
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 37,677
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 853,782
<NET-ASSETS> 123,682,281
<DIVIDEND-INCOME> 1,371,541
<INTEREST-INCOME> 169,881
<OTHER-INCOME> 0
<EXPENSES-NET> 368,552
<NET-INVESTMENT-INCOME> 1,172,870
<REALIZED-GAINS-CURRENT> 128,809
<APPREC-INCREASE-CURRENT> (2,891,885)
<NET-CHANGE-FROM-OPS> (1,590,206)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,166,480)
<DISTRIBUTIONS-OF-GAINS> (299,527)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 113,869,347
<NUMBER-OF-SHARES-REDEEMED> (26,567,905)
<SHARES-REINVESTED> 1,351,979
<NET-CHANGE-IN-ASSETS> 85,597,208
<ACCUMULATED-NII-PRIOR> 6,274
<ACCUMULATED-GAINS-PRIOR> 208,407
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 201,960
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 843,021
<AVERAGE-NET-ASSETS> 74,445,654
<PER-SHARE-NAV-BEGIN> 17.99
<PER-SHARE-NII> 0.32
<PER-SHARE-GAIN-APPREC> 1.37
<PER-SHARE-DIVIDEND> (0.29)
<PER-SHARE-DISTRIBUTIONS> (0.13)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 19.26
<EXPENSE-RATIO> 0.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the Aarp
Insured Tax Free General Bond Fund Annual Report for the fiscal year ended
9/30/98 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<SERIES>
<NUMBER> 6
<NAME> AARP Insured Tax Free General Bond Fund
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 1,520,266,054
<INVESTMENTS-AT-VALUE> 1,717,569,698
<RECEIVABLES> 19,532,308
<ASSETS-OTHER> 219,551
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,737,321,557
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,541,360
<TOTAL-LIABILITIES> 5,541,360
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,576,683,867
<SHARES-COMMON-STOCK> 91,878,322
<SHARES-COMMON-PRIOR> 92,944,577
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (38,355,651)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 193,451,981
<NET-ASSETS> 1,731,780,197
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 91,369,157
<OTHER-INCOME> 0
<EXPENSES-NET> 10,624,278
<NET-INVESTMENT-INCOME> 80,744,879
<REALIZED-GAINS-CURRENT> (10,723,118)
<APPREC-INCREASE-CURRENT> 54,722,106
<NET-CHANGE-FROM-OPS> 124,743,867
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (80,744,879)
<DISTRIBUTIONS-OF-GAINS> (4,608,507)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,709,199
<NUMBER-OF-SHARES-REDEEMED> (10,523,858)
<SHARES-REINVESTED> 2,748,404
<NET-CHANGE-IN-ASSETS> 19,772,029
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (23,167,336)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8,035,738
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 10,624,278
<AVERAGE-NET-ASSETS> 1,706,347,280
<PER-SHARE-NAV-BEGIN> 18.42
<PER-SHARE-NII> 0.88
<PER-SHARE-GAIN-APPREC> 0.48
<PER-SHARE-DIVIDEND> (0.88)
<PER-SHARE-DISTRIBUTIONS> (0.05)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 18.85
<EXPENSE-RATIO> 0.62
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the AARP
Small Company Stock Fund Annual Report for the fiscal year ended 9/30/98 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 7
<NAME> AARP Small Company Stock Fund
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 109,491,005
<INVESTMENTS-AT-VALUE> 97,669,632
<RECEIVABLES> 368,237
<ASSETS-OTHER> 9,416
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 98,047,285
<PAYABLE-FOR-SECURITIES> 1,049,875
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 305,922
<TOTAL-LIABILITIES> 1,355,797
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 108,705,948
<SHARES-COMMON-STOCK> 5,710,713
<SHARES-COMMON-PRIOR> 2,510,889
<ACCUMULATED-NII-CURRENT> 14,982
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (208,069)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (11,821,373)
<NET-ASSETS> 96,691,488
<DIVIDEND-INCOME> 1,372,675
<INTEREST-INCOME> 195,648
<OTHER-INCOME> 0
<EXPENSES-NET> 1,507,010
<NET-INVESTMENT-INCOME> 61,313
<REALIZED-GAINS-CURRENT> (208,069)
<APPREC-INCREASE-CURRENT> (19,455,499)
<NET-CHANGE-FROM-OPS> (19,602,255)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (123,413)
<DISTRIBUTIONS-OF-GAINS> (246,828)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 99,397,378
<NUMBER-OF-SHARES-REDEEMED> (33,364,172)
<SHARES-REINVESTED> 359,305
<NET-CHANGE-IN-ASSETS> 46,420,015
<ACCUMULATED-NII-PRIOR> 71,236
<ACCUMULATED-GAINS-PRIOR> 243,255
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 718,086
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,550,325
<AVERAGE-NET-ASSETS> 86,352,741
<PER-SHARE-NAV-BEGIN> 20.02
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> (2.98)
<PER-SHARE-DIVIDEND> (0.04)
<PER-SHARE-DISTRIBUTIONS> (0.08)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 16.93
<EXPENSE-RATIO> 1.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of AARP Growth Trust:
In planning and performing our audit of the financial statements and financial
highlights (hereinafter referred to as "financial statements") of AARP Balanced
Stock and Bond Fund, AARP Growth and Income Fund, AARP Global Growth Fund, AARP
Capital Growth Fund, AARP U.S. Stock Index Fund, AARP Small Company Stock Fund
and AARP International Growth and Income Fund (hereinafter referred to as the
"Funds"), constituting AARP Growth Trust, for the year ended September 30, 1998,
we considered its internal control, including control activities for
safeguarding securities, in order to determine our auditing procedures for the
purpose of expressing our opinion on the financial statements and to comply with
the requirements of Form N-SAR, not to provide assurance on internal control.
The management of the funds is responsible for establishing and maintaining
internal control. In fulfilling this responsibility, estimates and judgments by
management are required to assess the expected benefits and related costs of
controls. Generally, controls that are relevant to an audit pertain to the
entity's objective of preparing financial statements for external purposes that
are fairly presented in conformity with generally accepted accounting
principles. Those controls include the safeguarding of assets against
unauthorized acquisition, use, or disposition.
Because of inherent limitations in internal control, error or fraud may occur
and not be detected. Also, projection of any evaluation of internal control to
future periods is subject to the risk that it may become inadequate because of
changes in conditions or that the effectiveness of the design and operation may
deteriorate.
Our consideration of internal control would not necessarily disclose all matters
in internal control that might be material weaknesses under standards
established by the American Institute of Certified Public Accountants. A
material weakness is a condition in which the design or operation of one or more
of the internal control components does not reduce to a relatively low level the
risk that misstatements caused by error or fraud in amounts that would be
material in relation to the financial statements being audited may occur and not
be detected within a timely period by employees in the normal course of
performing their assigned functions. However, we noted no matters involving
internal control and its operation, including controls for safeguarding
securities, that we consider to be material weaknesses as defined above as of
September 30, 1998.
This report is intended solely for the information and use of management, the
Trustees of AARP Growth Trust, and the Securities and Exchange Commission.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
November 9, 1998
AARP Growth Trust
345 Park Avenue
New York, New York 10154
September 7, 1998
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
AARP U.S. Stock Index Fund
Ladies and Gentlemen:
AARP Growth 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 $0.01 per share, (the "Shares") into separate
series, or funds, including AARP U.S. Stock Index Fund (the "Fund"). Series may
be abolished and dissolved, and additional series established, from time to time
by action of the Trustees.
The Trust, on behalf of the Fund, has selected you to act as the sole
investment manager of the Fund and 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 Fund agrees with you as follows:
1. Delivery of Documents. The Trust engages in the business of investing
and reinvesting the assets of the Fund in the manner and in accordance with the
investment objectives, policies and restrictions specified in the currently
effective Prospectus (the "Prospectus") and Statement of Additional Information
(the "SAI") relating to the Fund included in the Trust's Registration Statement
on Form N-1A, as amended from time to time, (the "Registration Statement") filed
by the Trust under the Investment Company Act of 1940, as amended, (the "1940
Act") and the Securities Act of 1933, as amended. Copies of the documents
referred to in the preceding sentence have been furnished to you by the Trust.
The Trust has also furnished you with copies properly certified or authenticated
of each of the following additional documents related to the Trust and the Fund:
(a) The Declaration dated September 13, 1996, 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 Fund
selecting you as investment manager and approving the form of this
Agreement.
<PAGE>
(d) Establishment and Designation of Series of Shares of Beneficial Interest
dated January 31, 1997 relating to the Fund.
The Trust will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements, if any, to the
foregoing, including the Prospectus, the SAI and the Registration Statement.
2. Portfolio Management Services. As manager of the assets of the Fund, you
shall provide continuing investment management of the assets of the Fund in
accordance with the investment objectives, policies and restrictions set forth
in the Prospectus and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended (the "Code"), relating to regulated
investment companies and all rules and regulations thereunder; and all other
applicable federal and state laws and regulations of which you have knowledge;
subject always to policies and instructions adopted by the Trust's Board of
Trustees. In connection therewith, you shall use reasonable efforts to manage
the Fund so that it will qualify as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder. The Fund shall have
the benefit of the investment analysis and research, the review of current
economic conditions and trends and the consideration of long-range investment
policy generally available to your investment advisory clients. In managing the
Fund in accordance with the requirements set forth in this section 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 Fund and place orders
with broker-dealers, foreign currency dealers, futures commission merchants or
others pursuant to your determinations and all in accordance with Fund policies
as expressed in the Registration Statement. You shall determine what portion of
the Fund's portfolio shall be invested in securities and other assets and what
portion, if any, should be held uninvested.
You shall furnish to the Trust's Board of Trustees periodic reports on the
investment performance of the Fund and on the performance of your obligations
pursuant to this Agreement, and you shall supply such additional reports and
information as the Trust's officers or Board of Trustees shall reasonably
request.
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 Fund such office space and facilities in the United States as the
Fund 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 Fund 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,
2
<PAGE>
custodians, depositories, transfer agents and pricing agents, accountants,
attorneys, printers, underwriters, brokers and dealers, insurers and other
persons in any capacity deemed to be necessary or desirable to Fund operations;
preparing and making filings with the Securities and Exchange Commission (the
"SEC") and other regulatory and self-regulatory organizations, including, but
not limited to, preliminary and definitive proxy materials, post-effective
amendments to the Registration Statement, semi-annual reports on Form N-SAR and
notices pursuant to Rule 24f-2 under the 1940 Act; overseeing the tabulation of
proxies by the Fund's transfer agent; assisting in the preparation and filing of
the Fund's federal, state and local tax returns; preparing and filing the Fund's
federal excise tax return pursuant to Section 4982 of the Code; providing
assistance with investor and public relations matters; monitoring the valuation
of portfolio securities and the calculation of net asset value; monitoring the
registration of Shares of the Fund under applicable federal and state securities
laws; maintaining or causing to be maintained for the Fund all books, records
and reports and any other information required under the 1940 Act, to the extent
that such books, records and reports and other information are not maintained by
the Fund's custodian or other agents of the Fund; assisting in establishing the
accounting policies of the Fund; assisting in the resolution of accounting
issues that may arise with respect to the Fund's operations and consulting with
the Fund's independent accountants, legal counsel and other agents as necessary
in connection therewith; establishing and monitoring the Fund's operating
expense budgets; reviewing the Fund's bills; processing the payment of bills
that have been approved by an authorized person; assisting the Fund in
determining the amount of dividends and distributions available to be paid by
the Fund to its shareholders, preparing and arranging for the printing of
dividend notices to shareholders, and providing the transfer and dividend paying
agent, the custodian, and the accounting agent with such information as is
required for such parties to effect the payment of dividends and distributions;
and otherwise assisting the Trust as it may reasonably request in the conduct of
the Fund's business, subject to the direction and control of the Trust's Board
of Trustees. Nothing in this Agreement shall be deemed to shift to you or to
diminish the 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.
4. 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.
5. 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 9 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.
6. Allocation of Charges and Expenses. Except as otherwise specifically
provided in this section 6, you shall pay the compensation and expenses of all
Trustees, officers and executive employees of the Trust (including the Fund's
share of payroll taxes) who are affiliated persons of you, and you shall make
available, without expense to the Fund, the services of such of your directors,
officers and employees as may duly be elected officers of the Trust, subject to
their individual consent to serve and to
3
<PAGE>
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 6. 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 the Fund: organization expenses of the
Fund (including out-of-pocket expenses, but not including your overhead or
employee costs); fees payable to you and to any other Fund advisors or
consultants; legal expenses; auditing and accounting expenses; maintenance of
books and records which are required to be maintained by the Fund's custodian or
other agents of the Trust; telephone, telex, facsimile, postage and other
communications expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Fund in connection with membership in investment company trade
organizations; fees and expenses of the Fund's accounting agent, custodians,
subcustodians, transfer agents, dividend disbursing agents and registrars;
payment for portfolio pricing or valuation services to pricing agents,
accountants, bankers and other specialists, if any; expenses of preparing share
certificates and, except as provided below in this section 6, 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.
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 6 of the Investment
Company Services Agreement, dated as of October 8, 1984, 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.
7. Management Fee. For all services to be rendered, payments to be made and
costs to be assumed by you as provided in sections 2, 3 and 6 hereof, the Trust
on behalf of the Fund 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.
4
<PAGE>
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 the Fund recorded on the books of the Fund for that day.
(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
----------------------------------------------------------------
Program Assets Annual Rate at Each
(Billions) Asset Level
----------------------------------------------------------------
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%
----------------------------------------------------------------
The portion of the base fee rate which the 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 0.00 percent per annum
of the net assets of the Fund.
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 7.
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.
5
<PAGE>
8. 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 the Fund's account with
brokers or dealers selected by you in accordance with Fund policies as expressed
in the Registration Statement. If any occasion should arise in which you give
any advice to clients of yours concerning the Shares of 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 the Fund pursuant to this Agreement are not
to be deemed to be exclusive and it is understood that you may render investment
advice, management and services to others. In acting under this Agreement, you
shall be an independent contractor and not an agent of the Trust 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. The Fund recognizes that in some cases this procedure may adversely
affect the size of the position that may be acquired or disposed of for the
Fund.
9. 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.
10. Duration and Termination of This Agreement. This Agreement shall remain
in force until August 31, 1999, 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 the 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.
11. 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
6
<PAGE>
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.
12. 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 Growth 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 the 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 the Fund, or
series, under the Declaration are separate and distinct from those of any and
all other series.
13. 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 Fund.
7
<PAGE>
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,
AARP GROWTH TRUST, on behalf of
AARP U.S. Stock Index Fund
By: ______________________________
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: ______________________________
Managing Director
AARP Growth Trust
345 Park Avenue
New York, New York 10154
September 7, 1998
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
AARP Balanced Stock and Bond Fund
AARP Capital Growth Fund
AARP Global Growth Fund
AARP Growth and Income Fund
AARP International Growth and Income Fund
AARP Small Company Stock Fund
Ladies and Gentlemen:
AARP Growth 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 $0.01 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:
<PAGE>
(a) The Declaration dated September 13, 1996, 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 each Fund
selecting you as investment manager and approving the form of this
Agreement.
(d) Establishment and Designation of Series of Shares of Beneficial Interest
dated November 12, 1996 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 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.
2
<PAGE>
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 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 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
accountants, 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.
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. 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;
3
<PAGE>
legal expenses; auditing and accounting expenses; maintenance of books and
records which are required to be maintained by the Fund's custodian or other
agents of the Trust; telephone, telex, facsimile, postage and other
communications expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Fund in connection with membership in investment company trade
organizations; fees and expenses of the Fund's accounting agent, custodians,
subcustodians, transfer agents, dividend disbursing agents and registrars;
payment for portfolio pricing or valuation services to pricing agents,
accountants, bankers and other specialists, if any; expenses of preparing share
certificates and, except as provided below in this section 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.
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 October 8, 1984 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. 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.
(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
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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
----------------------------------------------------------------------
Program Assets Annual Rate at Each
(Billions) Asset Level
----------------------------------------------------------------------
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%
----------------------------------------------------------------------
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 0.19 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
Growth and Income Fund and 0.55 percent per annum of the net assets of AARP
Small Company Stock Fund.
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.
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
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<PAGE>
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, 1999, 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.
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<PAGE>
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
Growth 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.
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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,
AARP GROWTH TRUST, on behalf of
AARP Balanced Stock and Bond Fund
AARP Capital Growth Fund
AARP Global Growth Fund
AARP Growth and Income Fund
AARP International Growth and Income Fund
AARP Small Company Stock Fund
By: /s/Thomas F. McDonough
-----------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/Daniel Pierce
-----------------------
Managing Director
AARP GROWTH TRUST
Two International Place
Boston, MA 02110
September 7, 1998
Scudder Investor Services, Inc.
Two International Place
Boston, Massachusetts 02110
Underwriting Agreement
Dear Ladies and Gentlemen:
AARP Growth Trust (hereinafter called the "Trust") is a business trust
organized under the laws of Massachusetts and is engaged in the business of an
investment company. The authorized capital of the Trust consists of shares of
beneficial interest, with par value of $0.01 per share ("Shares"), currently
divided into two portfolios ("Portfolio"); however, shares may be divided into
additional Portfolios of the Trust and the Portfolios may be terminated from
time to time. The Trust has selected you to act as principal underwriter (as
such term is defined in Section 2(a)(29) of the Investment Company Act of 1940,
as amended (the "1940 Act")) of the Shares and you are willing to act as such
principal underwriter and to perform the duties and functions of underwriter in
the manner and on the terms and conditions hereinafter set forth. Accordingly,
the Trust hereby agrees with you as follows:
1. Delivery of Documents. The Trust has furnished you with copies properly
certified or authenticated of each of the following:
(a) Declaration of Trust of the Trust, dated September 12, 1996, as amended
to date.
(b) By-Laws of the Trust as in effect on the date hereof.
<PAGE>
(c) Resolutions of the Board of Trustees of the Trust selecting you as
principal underwriter and approving this form of Agreement.
The Trust will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements to the
foregoing, if any.
The Trust will furnish you promptly with properly certified or
authenticated copies of any registration statement filed by it with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
(the "1933 Act") or the 1940 Act, together with any financial statements and
exhibits included therein, and all amendments or supplements thereto hereafter
filed.
2. Registration and Sale of Additional Shares. The Trust will from time to
time use its best efforts to register under the 1933 Act such number of Shares
not already so registered as you may reasonably be expected to sell on behalf of
the Trust. You and the Trust will cooperate in taking such action as may be
necessary from time to time to comply with requirements applicable to the sale
of Shares by you or the Trust in any states mutually agreeable to you and the
Trust, and to maintain such compliance. This Agreement relates to the issue and
sale of Shares that are duly authorized and registered under the 1933 Act and
available for sale by the Trust, including redeemed or repurchased Shares if and
to the extent that they may be legally sold and if, but only if, the Trust sees
fit to sell them.
3. Sale of Shares. Subject to the provisions of paragraphs 5 and 7 hereof
and to such minimum purchase requirements as may from time to time be currently
indicated in the Trust's prospectus or statement of additional information, you
are authorized to sell as agent on behalf of the Trust Shares authorized for
issue and registered under the 1933 Act. You may also purchase as principal
Shares for resale to the public. Such sales will be made by you on behalf of the
Trust by accepting unconditional orders to purchase Shares placed with you by
investors and such purchases will be made by you only after acceptance by you of
such orders. The sales price to the public of Shares shall be the public
offering price as defined in paragraph 6 hereof.
4. Solicitation of Orders. You will use your best efforts (but only in
states in which you may lawfully do so) to obtain from investors unconditional
orders for Shares authorized for issue by
2
<PAGE>
the Trust and registered under the 1933 Act, provided that you may in your
discretion refuse to accept orders for Shares from any particular applicant.
5. Sale of Shares by the Trust. Unless you are otherwise notified by the
Trust, any right granted to you to accept orders for Shares or to make sales on
behalf of the Trust or to purchase Shares for resale will not apply to (i)
Shares issued in connection with the merger or consolidation of any other
investment company with the Trust or its acquisition, by purchase or otherwise,
of all or substantially all of the assets of any investment company or
substantially all the outstanding shares of any such company, and (ii) to Shares
that may be offered by the Trust to shareholders of the Trust by virtue of their
being such shareholders.
6. Public Offering Price. All Shares sold to investors by you will be sold
at the public offering price. The public offering price for all accepted
subscriptions will be the net asset value per Share, determined, in the manner
provided in the Trust's registration statements as from time to time in effect
under the 1933 Act and the 1940 Act, next after the order is accepted by you.
7. Suspension of Sales. If and whenever the determination of net asset
value is suspended and until such suspension is terminated, no further orders
for Shares shall be accepted by you except unconditional orders placed with you
before you had knowledge of the suspension. In addition, the Trust reserves the
right to suspend sales and your authority to accept orders for Shares on behalf
of the Trust if, in the judgment of a majority of the Board of Trustees or a
majority of the Executive Committee of such Board, if such body exists, it is in
the best interests of the Trust to do so, such suspension to continue for such
period as may be determined by such majority; and in that event, no Shares will
be sold by you on behalf of the Trust while such suspension remains in effect
except for Shares necessary to cover unconditional orders accepted by you before
you had knowledge of the suspension.
8. Portfolio Securities. Portfolio securities of any Portfolio of the Trust
may be bought or sold by or through you and you may participate directly or
indirectly in brokerage commissions or "spread" in respect to transactions in
portfolio securities of any Portfolio of the Trust; provided, however, that all
sums of money received by you as a result of such purchases and sales or as a
result
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<PAGE>
of such participation must, after reimbursement of your actual expenses in
connection with such activity, be paid over by you to or for the benefit of the
Trust.
9. Expenses. (a) The Trust will pay (or will enter into arrangements
providing that others than you will pay) all fees and expenses:
(1) in connection with the preparation, setting in type and filing of any
registration statement (including a prospectus and statement of
additional information) under the 1933 Act or the 1940 Act, or both,
and any amendments or supplements thereto that may be made from time
to time;
(2) in connection with the registration and qualification of Shares for
sale, or compliance with other conditions applicable to the sale of
Shares in the various jurisdictions in which the Trust shall determine
it advisable to sell such Shares (including registering the Trust as a
broker or dealer or any officer of the Trust or other person as agent
or salesman of the Trust in any such jurisdictions);
(3) of preparing, setting in type, printing and mailing any notice, proxy
statement, report, prospectus or other communication to shareholders
of the Trust in their capacity as such;
(4) of preparing, setting in type, printing and mailing prospectuses
annually, and any supplements thereto, to existing shareholders;
(5) in connection with the issue and transfer of Shares resulting from the
acceptance by you of orders to purchase Shares placed with you by
investors, including the expenses of printing and mailing
confirmations of such purchase orders and the expenses of printing and
mailing a prospectus included with the confirmation of such orders;
(6) of any issue taxes or any initial transfer taxes;
(7) of WATS (or equivalent) telephone lines other than the portion
allocated to you in this paragraph 9;
4
<PAGE>
(8) of wiring funds in payment of Share purchases or in satisfaction of
redemption or repurchase requests, unless such expenses are paid for
by the investor or shareholder who initiates the transaction;
(9) of the cost of printing and postage of business reply envelopes sent
to Trust shareholders;
(10) of one or more CRT terminals connected with the computer facilities of
the transfer agent other than the portion allocated to you in this
paragraph 9;
(11) permitted to be paid or assumed by the Trust pursuant to a plan
("12b-1 Plan"), if any, adopted by the Trust in conformity with the
requirements of Rule 12b-1 under the 1940 Act ("Rule 12b-1") or any
successor rule, notwithstanding any other provision to the contrary
herein;
(12) of the expense of setting in type, printing and postage of the
periodic newsletter to shareholders other than the portion allocated
to you in this paragraph 9; and
(13) of the salaries and overhead of persons employed by you as shareholder
representatives other than the portion allocated to you in this
paragraph 9.
b) You shall pay or arrange for the payment of all fees and expenses:
(1) of printing and distributing any prospectuses or reports prepared for
your use in connection with the offering of Shares to the public;
(2) of preparing, setting in type, printing and mailing any other
literature used by you in connection with the offering of Shares to
the public;
(3) of advertising in connection with the offering of Shares to the
public;
(4) incurred in connection with your registration as a broker or dealer or
the registration or qualification of your officers, trustees, agents
or representatives under Federal and state laws;
(5) of that portion of WATS (or equivalent) telephone lines, allocated to
you on the basis of use by investors (but not shareholders) who
request information or prospectuses;
5
<PAGE>
(6) of that portion of the expenses of setting in type, printing and
postage of the periodic newsletter to shareholders attributable to promotional
material included in such newsletter at your request concerning investment
companies other than the Trust or concerning the Trust to the extent you are
required to assume the expense thereof pursuant to paragraph 9(b)(8), except
such material which is limited to information, such as listings of other
investment companies and their investment objectives, given in connection with
the exchange privilege as from time to time described in the Trust's prospectus;
(7) of that portion of the salaries and overhead of persons employed by you
as shareholder representatives attributable to the time spent by such persons in
responding to requests from prospective investors and shareholders for
information about the Trust;
(8) of any activity which is primarily intended to result in the sale of
Shares, unless a 12b-1 Plan shall be in effect which provides that the Trust
shall bear some or all of such expenses, in which case the Trust shall bear such
expenses in accordance with such Plan; and
(9) of that portion of one or more CRT terminals connected with the
computer facilities of the transfer agent attributable to your use of such
terminal(s) to gain access to such of the transfer agent's records as also serve
as your records.
Expenses which are to be allocated between you and the Trust shall be
allocated pursuant to reasonable procedures or formulae mutually agreed upon
from time to time, which procedures or formulae shall to the extent practicable
reflect studies of relevant empirical data.
10. Conformity with Law. You agree that in selling Shares you will duly
conform in all respects with the laws of the United States and any state in
which Shares may be offered for sale by you pursuant to this Agreement and to
the rules and regulations of the National Association of Securities Dealers,
Inc., of which you are a member.
6
<PAGE>
11. Independent Contractor. You shall be an independent contractor and
neither you nor any of your officers or employees is or shall be an employee of
the Trust in the performance of your duties hereunder. You shall be responsible
for your own conduct and the employment, control and conduct of your agents and
employees and for injury to such agents or employees or to others through your
agents or employees. You assume full responsibility for your agents and
employees under applicable statutes and agree to pay all employee taxes
thereunder.
12. Indemnification. You agree to indemnify and hold harmless the Trust and
each of its trustees and officers and each person, if any, who controls the
Trust within the meaning of Section 15 of the 1933 Act, against any and all
losses, claims, damages, liabilities or litigation (including legal and other
expenses) to which the Trust or such trustees, officers, or controlling person
may become subject under such Act, under any other statute, at common law or
otherwise, arising out of the acquisition of any Shares by any person which (i)
may be based upon any wrongful act by you or any of your employees or
representatives, or (ii) may be based upon any untrue statement or alleged
untrue statement of a material fact contained in a registration statement
(including a prospectus or statement of additional information) covering Shares
or any amendment thereof or 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 statement or
omission was made in reliance upon information furnished to the Trust by you, or
(iii) may be incurred or arise by reason of your acting as the Trust's agent
instead of purchasing and reselling Shares as principal in distributing the
Shares to the public, provided, however, that in no case (i) is your indemnity
in favor of a trustee or officer or any other person deemed to protect such
trustee or officer or other person against any liability to which any such
person would otherwise be subject by reason of willful misfeasance, bad faith,
or gross negligence in the performance of his duties or by reason of his
reckless disregard of obligations and duties under this Agreement or (ii) are
you to be liable under your indemnity agreement contained in this paragraph with
respect to any claim made against the Trust or any person indemnified unless the
Trust or such person, as the case may be, shall have notified you in writing
within a reasonable time after the summons or other first legal process giving
7
<PAGE>
information of the nature of the claims shall have been served upon the Trust or
upon such person (or after the Trust or such person shall have received notice
of such service on any designated agent), but failure to notify you of any such
claim shall not relieve you from any liability which you may have to the Trust
or any person against whom such action is brought otherwise than on account of
your indemnity agreement contained in this paragraph. You shall be entitled to
participate, at your own expense, in the defense, or, if you so elect, to assume
the defense of any suit brought to enforce any such liability, but if you elect
to assume the defense, such defense shall be conducted by counsel chosen by you
and satisfactory to the Trust, to its officers and trustees, or to any
controlling person or persons, defendant or defendants in the suit. In the event
that you elect to assume the defense of any such suit and retain such counsel,
the Trust, such officers and trustees or controlling person or persons,
defendant or defendants in the suit shall bear the fees and expenses of any
additional counsel retained by them, but, in case you do not elect to assume the
defense of any such suit, you will reimburse the Trust, such officers and
trustees or controlling person or persons, defendant or defendants in such suit
for the reasonable fees and expenses of any counsel retained by them. You agree
promptly to notify the Trust of the commencement of any litigation or
proceedings against it in connection with the issue and sale of any Shares.
The Trust agrees to indemnify and hold harmless you and each of your
trustees and officers and each person, if any, who controls you within the
meaning of Section 15 of the 1933 Act, against any and all losses, claims,
damages, liabilities or litigation (including legal and other expenses) to which
you or such trustees, officers or controlling person may become subject under
such Act, under any other statute, at common law or otherwise, arising out of
the acquisition of any Shares by any person which (i) may be based upon any
wrongful act by the Trust or any of its employees or representatives, or (ii)
may be based upon any untrue statement or alleged untrue statement of a material
fact contained in a registration statement (including a prospectus or statement
of additional information) covering Shares or any amendment thereof or
supplement thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading if such statement or omission was made in reliance upon
8
<PAGE>
information furnished to you by the Trust; provided, however, that in no case
(i) is the Trust's indemnity in favor of you, a trustee or officer or any other
person deemed to protect you, such trustee or officer or other person against
any liability to which any such person would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of his
duties or by reason of his reckless disregard of obligations and duties under
this Agreement or (ii) is the Trust to be liable under its indemnity agreement
contained in this paragraph with respect to any claims made against you or any
such trustee, officer or controlling person unless you or such trustee, officer
or controlling person, as the case may be, shall have notified the Trust in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon you or
upon such trustee, officer or controlling person (or after you or such trustee,
officer or controlling person shall have received notice of such service on any
designated agent), but failure to notify the Trust of any such claim shall not
relieve it from any liability which it may have to the person against whom such
action is brought otherwise than on account of its indemnity agreement contained
in this paragraph. The Trust will be entitled to participate at its own expense
in the defense, or, if it so elects, to assume the defense of any suit brought
to enforce any such liability, but if the Trust elects to assume the defense,
such defense shall be conducted by counsel chosen by it and satisfactory to you,
your trustees, officers, or controlling person or persons, defendant or
defendants in the suit. In the event that the Trust elects to assume the defense
of any such suit and retain such counsel, you, your trustees, officers or
controlling person or persons, defendant or defendants in the suit, shall bear
the fees and expenses of any additional counsel retained by them, but, in case
the Trust does not elect to assume the defense of any such suit, it will
reimburse you or such trustees, officers or controlling person or persons,
defendant or defendants in the suit, for the reasonable fees and expenses of any
counsel retained by them. The Trust agrees promptly to notify you of the
commencement of any litigation or proceedings against it or any of its officers
or trustees in connection with the issuance or sale of any Shares.
13. Authorized Representations. The Trust is not authorized to give any
information or to make any representations on behalf of you other than the
information and representations contained
9
<PAGE>
in a registration statement (including a prospectus or statement of additional
information) covering Shares, as such registration statement and prospectus may
be amended or supplemented from time to time.
You are not authorized to give any information or to make any
representations on behalf of the Trust or in connection with the sale of Shares
other than the information and representations contained in a registration
statement (including a prospectus or statement of additional information)
covering Shares, as such registration statement may be amended or supplemented
from time to time. No person other than you is authorized to act as principal
underwriter (as such term is defined in the 1940 Act) for the Trust.
14. Duration and Termination of this Agreement. This Agreement shall become
effective upon the date first written above and will remain in effect until
August 31, 1999 and from year to year thereafter, but only so long as such
continuance is specifically approved at least annually by the vote of a majority
of the trustees who are not interested persons of you or of the Trust, cast in
person at a meeting called for the purpose of voting on such approval, and by
vote of the Board of Trustees or of a majority of the outstanding voting
securities of the Trust. This Agreement may, on 60 days' written notice, be
terminated at any time without the payment of any penalty, by the Board of
Trustees of the Trust, by a vote of a majority of the outstanding voting
securities of the Trust, or by you. This Agreement will automatically terminate
in the event of its assignment. In interpreting the provisions of this paragraph
14, the definitions contained in Section 2(a) of the 1940 Act (particularly the
definitions of "interested person", "assignment" and "majority of the
outstanding voting securities"), as modified by any applicable order of the
Securities and Exchange Commission, shall be applied.
15. Amendment of this Agreement. No provisions of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. If the Trust should at any time deem it
necessary or advisable in the best interests of the Trust that any amendment of
this Agreement be made in order to comply with the recommendations or
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requirements of the Securities and Exchange Commission or other governmental
authority or to obtain any advantage under state or federal tax laws and should
notify you of the form of such amendment, and the reasons therefor, and if you
should decline to assent to such amendment, the Trust may terminate this
Agreement forthwith. If you should at any time request that a change be made in
the Trust's Declaration of Trust or By-laws or in its methods of doing business,
in order to comply with any requirements of federal law or regulations of the
Securities and Exchange Commission or of a national securities association of
which you are or may be a member relating to the sale of shares of the Trust,
and the Trust should not make such necessary change within a reasonable time,
you may terminate this Agreement forthwith.
16. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit 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.
If you are in agreement with the foregoing, please sign 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.
Very truly yours,
AARP GROWTH TRUST
By: _____________________________
Thomas F. McDonough
Vice President
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The foregoing agreement is hereby accepted as of the foregoing date
thereof.
SCUDDER INVESTOR SERVICES, INC.
By:________________________________
Daniel Pierce
Vice President
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