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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(A) of the Securities
Exchange Act of 1934 (Amendment No.__ )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
AARP GROWTH TRUST
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identity the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
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[AARP SCUDDER LOGO]
IMPORTANT NEWS FOR SHAREHOLDERS OF
AARP CAPITAL GROWTH FUND AND
AARP SMALL COMPANY STOCK FUND
While we encourage you to read the full text of the enclosed Proxy
Statement, here's a brief overview of some matters affecting your Fund that will
be the subject of a shareholder vote.
QUESTIONS AND ANSWERS
Q: WHAT AM I BEING ASKED TO VOTE ON?
A: You are being asked to vote on three proposals: The election of a new Board
of Trustees, approval of a plan to reorganize your Fund into newly-created
funds in Investment Trust (a trust comprised of Scudder Funds), and the
ratification of the selection of PricewaterhouseCoopers LLP as the
independent accountants of your Fund for the current fiscal year. THE BOARD
OF YOUR FUND RECOMMENDS THAT YOU VOTE IN FAVOR OF EACH PROPOSAL.
Q: WHY AM I BEING ASKED TO VOTE ON A NEW BOARD OF TRUSTEES?
A: As part of a larger effort to restructure the Scudder Family of Funds and the
Funds currently offered through the AARP Investment Program, the Board of
your Fund has voted in favor of creating a single board of
trustees/directors responsible for most of the Scudder Funds. It is proposed
that this board would continue to have AARP representation. It is the
Board's belief that this has the potential for increasing efficiency and
benefiting fund shareholders. The Board also believes that a single board,
responsible for overseeing most of the no-load funds advised by Scudder
Kemper Investments, Inc. will be more effective in representing shareholder
interests. THE BOARD OF YOUR FUND RECOMMENDS THAT YOU VOTE IN FAVOR OF EACH
NOMINEE.
Q: WHY AM I BEING ASKED TO VOTE TO APPROVE THE REORGANIZATION OF MY TRUST INTO
INVESTMENT TRUST?
A: As part of this larger restructuring, most of the funds offered through the
AARP Investment Program are being combined with similar funds in the Scudder
Family of Funds. Because this restructuring will result in most AARP funds
being reorganized into trusts that are comprised of Scudder
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Funds, Scudder Kemper has proposed that your funds also be reorganized into
a trust that is comprised of Scudder Funds. This reorganization will allow
for greater operating efficiencies. THE BOARD OF YOUR FUND RECOMMENDS THAT
YOU VOTE IN FAVOR OF THIS PROPOSAL.
Q: HOW DOES THIS AFFECT THE AARP INVESTMENT PROGRAM?
A: This consolidation of similar funds will enable Scudder Kemper to offer a
broader range of investment choices through the AARP Investment Program.
Although the name of your Fund will change to either the Scudder Capital
Growth Fund or the Scudder Small Company Stock Fund, your Fund wll maintain
its downside risk policy and will not invest in tobacco-producing companies.
There are no plans to change the characteristics of the AARP Investment
Program:
- AARP Classes will be created in the Scudder Funds for investors in the
AARP Investment Program.
- Scudder Kemper will continue its strong commitment to education, both for
AARP Investment Program shareholders and for AARP members in general.
- AARP, through its for-profit subsidiary, will continue to OVERSEE SERVICE
LEVELS AND COMMUNICATIONS to shareholders in the AARP Investment Program
and to AARP members. AARP will also continue to PROVIDE INSIGHT AND
DIRECTION as to what best represents the interests and concerns of its
membership.
- Scudder Kemper will continue to develop NEW PRODUCTS AND SERVICES with the
interests of AARP members in mind.
- Scudder Kemper will MAINTAIN SEPARATE RECORDS for AARP Investment Program
shareholders.
Q: ARE THERE OTHER PROPOSALS I WILL BE VOTING ON?
A: You are also being asked to ratify the selection of PricewaterhouseCoopers
LLP as the independent accountants of your Fund for the current fiscal year.
THE BOARD OF YOUR FUND RECOMMENDS THAT YOU VOTE IN FAVOR OF THIS PROPOSAL.
<PAGE>
April 18, 2000
Dear AARP Investment Program Shareholder,
Scudder Kemper Investments, investment manager for the AARP Investment
Program, is proposing a series of changes to offer you a wider range of fund
options to meet a broader range of investment goals. The current offering of 16
AARP mutual funds will soon expand to include 43 funds, six of which will
maintain a risk-managed focus. This will be accomplished by making the entire
lineup of funds from the Scudder Family of Funds available to AARP Investment
Program shareholders. In addition, subject to shareholder approval, most AARP
Investment Program funds will be combined with Scudder Funds that have similar
investment objectives. The funds will be called Scudder Funds, indicating
Scudder Kemper's distinct role as investment manager of the funds.
The involvement and level of participation from AARP in the AARP Investment
Program from Scudder is not changing. AARP will continue to oversee the
Investment Program's service quality and communications; and AARP will continue
to provide insight and direction as to what best represents the interests and
concerns of its membership.
PLEASE READ THE ENCLOSED MATERIALS
Enclosed with this letter is a packet of materials we ask that you read and,
where applicable, fill out and return to us. The Q&A that begins on the front
cover of the proxy statement explains the proposals we're making, why we're
making them, and how they apply to your AARP fund. The packet also contains a
proxy card.
After careful review, the members of your Fund's Board have approved each of
the proposals explained in the Q&A and described in the proxy statement. THE
BOARD RECOMMENDS THAT YOU READ THE ENCLOSED MATERIALS CAREFULLY AND THEN VOTE
FOR ALL THE PROPOSALS. (Because many of the funds for which Scudder Kemper acts
as investment manager are holding shareholder meetings, you may receive more
than one proxy card. If so, please vote each one.)
Your vote is important to us. Once you've voted, please sign and date the
proxy card and return it in the enclosed postpaid envelope. If you prefer, you
can save time and postage cost by voting on the Internet or by telephone -- the
enclosed flyer describes how. If we do not hear from you by May 17, our proxy
solicitor may contact you. Thank you for your response and for your continued
investment in the AARP Investment Program.
Respectfully,
<TABLE>
<S> <C>
[SIGNATURE] [SIGNATURE]
Edmond D. Villani Linda C. Coughlin
Chief Executive Officer Chairperson
Scudder Kemper Investments, Inc. Board of Trustees
AARP Investment Program
</TABLE>
<PAGE>
AARP GROWTH TRUST
AARP CAPITAL GROWTH FUND
AARP SMALL COMPANY STOCK FUND
-----------------------------
NOTICE OF SPECIAL MEETINGS OF SHAREHOLDERS
Please take notice that Special Meetings of Shareholders (each, a "Meeting")
of AARP Capital Growth Fund and AARP Small Company Stock Fund (each, a "Fund"),
each of which is a series of AARP Growth Trust (the "Trust"), will be held
jointly at the offices of Scudder Kemper Investments, Inc., 13(th) Floor, Two
International Place, Boston, MA 02110-4103, on July 11, 2000, at 2:00 p.m.,
Eastern time, for the following purposes:
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<S> <C>
PROPOSAL 1: To elect Trustees of the Trust.
PROPOSAL 2: To approve an Agreement and Plan of Reorganization for each
Fund whereby all or substantially all the assets and the
liabilities of each Fund would be acquired by new series of
Investment Trust in exchange for shares of the AARP Class of
such series.
PROPOSAL 3: To ratify the selection of PricewaterhouseCoopers LLP as the
independent accountants for each Fund for each Fund's
current fiscal year.
</TABLE>
The appointed proxies will vote in their discretion on any other business
that may properly come before a Meeting or any adjournments thereof.
Holders of record of shares of each Fund at the close of business on
April 17, 2000 are entitled to vote at the Meetings and at any adjournments
thereof.
In the event that the necessary quorum to transact business or the vote
required to approve any Proposal is not obtained at a Meeting with respect to
either Fund, the persons named as proxies may propose one or more adjournments
of the Meeting in accordance with applicable law to permit further solicitation
of proxies. Any such adjournment as to a matter will require the affirmative
vote of the holders of a majority of the concerned Fund's shares present in
person or by proxy at the Meeting. The persons named as proxies will vote FOR
any such adjournment those proxies which they are entitled to vote in favor of
that Proposal and will vote AGAINST any such adjournment those proxies to be
voted against that Proposal.
By Order of the Board,
[SIGNATURE]
Kathryn L. Quirk
Secretary
April 18, 2000
IMPORTANT -- WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY CARD(S) AND
RETURN IT IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE (OR TO TAKE
ADVANTAGE OF THE ELECTRONIC OR TELEPHONIC VOTING PROCEDURES DESCRIBED ON THE
PROXY CARD(S)). YOUR PROMPT RETURN OF THE ENCLOSED PROXY CARD(S) (OR YOUR VOTING
BY OTHER AVAILABLE MEANS) MAY SAVE THE NECESSITY AND EXPENSE OF FURTHER
SOLICITATIONS. IF YOU WISH TO ATTEND THE MEETINGS AND VOTE YOUR SHARES IN PERSON
AT THAT TIME, YOU WILL STILL BE ABLE TO DO SO.
<PAGE>
AARP GROWTH TRUST
AARP CAPITAL GROWTH FUND
AARP SMALL COMPANY STOCK FUND
TWO INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02110-4103
--------------------------
JOINT PROXY STATEMENT
--------------------------
GENERAL
This Proxy Statement is being furnished to shareholders of each of AARP
Capital Growth Fund ("Capital Growth") and AARP Small Company Stock Fund ("Small
Company") (each, a "Fund," and together, the "Funds"), each of which is a series
of AARP Growth Trust (the "Trust"). The Board of Trustees (the "Board", the
trustees of which are referred to as "Trustees") of the Trust is soliciting
proxies from shareholders on behalf of each Fund, for use at the Meetings of
Shareholders of the Funds, to be held jointly at the offices of Scudder Kemper
Investments, Inc., the investment manager of each Fund ("Scudder Kemper"),
13(th) Floor, Two International Place, Boston, Massachusetts 02110-4103, on
July 11, 2000 at 2:00 p.m., Eastern time, and at any and all adjournments
thereof (each, a "Meeting"). This Proxy Statement, the Notice of Meetings and
the proxy cards are first being mailed to shareholders on or about April 18,
2000 or as soon as practicable thereafter.
At the Meetings, shareholders will be asked to vote on three proposals (each
a "Proposal," collectively, the "Proposals"). Proposal 1 describes the election
of Trustees, and Proposal 3 proposes the ratification of each Fund's
accountants. Proposals 1 and 2 relate to a restructuring program proposed by
Scudder Kemper and also described in more detail below. In Proposal 2,
shareholders are asked to approve proposed reorganizations in which all or
substantially all of the assets of Capital Growth and Small Company would be
acquired by two newly-formed series of Investment Trust, Scudder Capital Growth
Fund and Scudder Small Company Stock Fund (together, the "Series"),
respectively, in exchange for shares of beneficial interest of the AARP Class of
the applicable Series ("AARP Shares") and the assumption by the Series of all of
the liabilities of its respective Fund, as described more fully below (each a
"Reorganization," and together, the "Reorganizations").
In the descriptions of the Proposals below, the word "fund" is sometimes
used to mean an investment company or series thereof in general, and not the
Funds whose proxy statement this is. In addition, for simplicity, actions are
described in this Proxy Statement as being taken by a Fund that is a series of
the Trust, although all actions are actually taken by the Trust on behalf of the
applicable Fund.
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EACH FUND PROVIDES PERIODIC REPORTS TO ITS SHAREHOLDERS WHICH HIGHLIGHT
RELEVANT INFORMATION, INCLUDING INVESTMENT RESULTS AND A REVIEW OF PORTFOLIO
CHANGES. YOU MAY RECEIVE AN ADDITIONAL COPY OF THE MOST RECENT ANNUAL REPORT FOR
A FUND AND A COPY OF ANY MORE RECENT SEMI-ANNUAL REPORT, WITHOUT CHARGE, BY
CALLING 1-800-253-2277 OR WRITING THE FUND, C/O SCUDDER KEMPER INVESTMENTS,
INC., AT THE ADDRESS FOR EACH FUND SHOWN AT THE BEGINNING OF THIS PROXY
STATEMENT.
BACKGROUND
Proposals 1 and 2 in this Proxy Statement are part of a broader
restructuring program proposed by Scudder Kemper to respond to changing industry
conditions and investor needs. Scudder Kemper seeks to offer the full line-up of
the Scudder Family of Funds to members of the AARP Investment Program. The
expanded offering should position the AARP Investment Program to meet the
increasingly diverse needs of current and prospective AARP members.
Scudder Kemper and AARP have advised the Board that they believe that the
proposed changes in the AARP Investment Program from Scudder are in the interest
of shareholders of the funds offered through the AARP Investment Program (the
"AARP Funds") and AARP members. The Program would comprise the shares of the
AARP Shares class of each of forty-three no-load funds, compared with the shares
of the current sixteen and would retain its separate identity, with separate
statements and lower minimum investments for participating shareholders; six
core funds(1) would continue to have a risk-managed strategy; education will
remain focus of Scudder Kemper; and AARP will continue to be involved with the
Program and is proposed to have Board representation.
As part of this initiative, Scudder Kemper has sought ways to restructure
and streamline the management and operations of the funds it advises. Scudder
Kemper believes, and has advised the Boards, that the consolidation of certain
funds advised by it would benefit fund shareholders. Scudder Kemper has,
therefore, proposed the consolidation of a number of no-load funds advised by it
that Scudder Kemper believes have similar or compatible investment objectives
and policies. In many cases, the proposed consolidations are designed to
- ------------------------
(1) The six core funds would be Scudder Capital Growth Fund, Scudder Small
Company Stock Fund, Scudder GNMA Fund (currently known as AARP GNMA and U.S.
Treasury Fund), Scudder Managed Municipal Bonds, Scudder Global Fund and
Scudder Growth and Income Fund.
2
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eliminate the substantial overlap in current offerings by the Scudder Funds and
the AARP Funds, all of which are advised by Scudder Kemper. Consolidation plans
are also proposed for other funds that have not gathered enough assets to
operate efficiently and, in turn, have relatively high expense ratios. Scudder
Kemper believes that these consolidations may help to enhance investment
performance of funds and increase efficiency of operations.
Scudder Kemper believes, and has proposed to the boards, that creating a
single board responsible for the AARP Funds and the open-end, directly-
distributed, no-load Scudder Funds would increase efficiency and benefit fund
shareholders. (See Proposal 1 below.)
As described in Proposal 2, as part of this restructuring effort, Scudder
Kemper has also proposed the adoption of an administrative fee for most of the
no-load funds advised by Scudder Kemper. Under this fee structure, in exchange
for the payment by each Series of an administrative fee, Scudder Kemper would
agree to provide or pay for substantially all services that a fund normally
requires for its operations, other than those provided under the fund's
investment management agreement and except for certain other expenses. Such an
administrative fee would enable investors to determine with greater certainty
the expense level that a fund will experience, and would transfer substantially
all of the risk of increased costs to Scudder Kemper. Each Series is expected to
implement such an administrative fee upon the closing of its Reorganization, as
described in "Administrative Fee" below, although the implementation of the
administrative fee for Scudder Small Company Stock Fund is contingent upon the
closing of the reorganization of Scudder Micro Cap Fund into Small Company.
PROPOSAL 1: ELECTION OF TRUSTEES
At the Meeting, as part of the overall restructuring effort outlined above,
shareholders will be asked to elect nine individuals to constitute the Board of
Trustees of the Trust. These individuals were nominated after a careful and
deliberate selection process by the present Board of Trustees of the Trust. The
nominees for election, who are listed below, include seven persons who currently
serve as Independent Trustees (as defined below) of the Trust or as independent
trustees/directors of other no-load funds advised by Scudder Kemper and who have
no affiliation with Scudder Kemper or the American Association of Retired
Persons ("AARP"). The nominees listed below are also being nominated for
election as trustees/directors of all of the other AARP Funds and open-end,
directly-distributed, no-load Scudder Funds.
Currently five different boards of trustees or directors are responsible for
overseeing different groups of no-load funds advised by Scudder Kemper. As
3
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part of a broader restructuring effort described above, Scudder Kemper has
recommended, and the Board of Trustees has agreed, that shareholder interests
can more effectively be represented by a single board with responsibility for
overseeing substantially all of the Scudder no-load funds. Creation of a single,
consolidated board should also provide certain administrative efficiencies and
potential future cost savings for both the Funds and Scudder Kemper.
Election of each of the listed nominees for Trustee on the Board requires
the affirmative vote of a plurality of the votes cast at the Meeting, in person
or by proxy. The persons named as proxies on the enclosed proxy card(s) will
vote for the election of the nominees named below unless authority to vote for
any or all of the nominees is withheld in the proxy. Each Trustee so elected
will serve as a Trustee of the Trust until the next meeting of shareholders, if
any, called for the purpose of electing Trustees and until the election and
qualification of a successor or until such Trustee sooner dies, resigns or is
removed as provided in the governing documents of the Trust. Each of the
nominees has indicated that he or she is willing to serve as a Trustee. If any
or all of the nominees should become unavailable for election due to events not
now known or anticipated, the persons named as proxies will vote for such other
nominee or nominees as the current Trustees may recommend. The following
paragraphs and table set forth information concerning the nominees and the
Trustees not standing for re-election. Each nominee's or Trustee's age is in
parentheses after his or her name. Unless otherwise noted, (i) each of the
nominees and Trustees has engaged in the principal occupation(s) noted in the
following paragraphs and table for at least the most recent five years, although
not necessarily in the same capacity, and (ii) the address of each nominee is
c/o Scudder Kemper Investments, Inc., Two International Place, Boston, MA
02110-4103.
NOMINEES FOR ELECTION AS TRUSTEES:
HENRY P. BECTON, JR. (56)
Henry P. Becton, Jr. is president of the WGBH Educational Foundation, producer
and distributor of public broadcasting programming and educational and
interactive software. He graduated from Yale University in 1965, where he was
elected to Phi Beta Kappa. He received his J.D. degree CUM LAUDE from Harvard
Law School in 1968. Mr. Becton is a member of the PBS Board of Directors, a
Trustee of American Public Television, the New England Aquarium, the Boston
Museum of Science, Concord Academy, and the Massachusetts Corporation for
Educational Telecommunications, an Overseer of the Boston Museum of Fine Arts,
and a member of the Board of Governors of the Banff International Television
Festival Foundation. He is also a Director of Becton Dickinson and Company and
A.H. Belo Company, a Trustee of the Committee
4
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for Economic Development, and a member of the Board of Visitors of the Dimock
Community Health Center, the Dean's Council of Harvard University's Graduate
School of Education, and the Massachusetts Bar. Mr. Becton has served as a
trustee or director of various mutual funds advised by Scudder Kemper since
1990.
LINDA C. COUGHLIN (48)*
Linda C. Coughlin, a Managing Director of Scudder Kemper, is head of Scudder
Kemper's U.S. Retail Mutual Funds Business. Ms. Coughlin joined Scudder Kemper
in 1986 and was a member of the firm's Board of Directors. She currently
oversees the marketing, service and operations of Scudder Kemper retail
businesses in the United States, which include the Scudder, Kemper, AARP, and
closed-end fund families, and the direct and intermediary channels. She also
serves as Chairperson of the AARP Investment Program from Scudder and as a
Trustee of the Program's mutual funds. Ms. Coughlin is also a member of the
Mutual Funds Management Group. Previously, she served as a regional Marketing
Director in the retail banking division of Citibank and at the American Express
Company as Director of Consumer Marketing for the mutual fund group.
Ms. Coughlin received a B.A. degree in economics (summa cum laude) from Fordham
University. Ms. Coughlin is currently a Trustee of the Trust and has served on
the boards of various funds advised by Scudder Kemper, including the AARP
Investment Program Funds, since 1996.
DAWN-MARIE DRISCOLL (53)
Dawn-Marie Driscoll is an Executive Fellow and Advisory Board member of the
Center for Business Ethics at Bentley College, one of the nation's leading
institutes devoted to the study and practice of business ethics. Ms. Driscoll is
also president of Driscoll Associates, a consulting firm. She is a member of the
Board of Governors of the Investment Company Institute and serves as Chairman of
the Directors Services Committee. Ms. Driscoll was recently named 1999 "Fund
Trustee of the Year" by Fund Directions, a publication of Institutional
Investor, Inc. She has been a director, trustee and overseer of many civic and
business institutions, including The Massachusetts Bay United Way and Regis
College. Ms. Driscoll was formerly a law partner at Palmer & Dodge in Boston and
served for over a decade as Vice President of Corporate Affairs and General
Counsel of Filene's, the Boston-based department store chain. Ms. Driscoll
received a B.A. from Regis College, a J.D. from Suffolk University Law School, a
D.H.L. (honorary) from Suffolk University and a D.C.S. (honorary) from Bentley
College Graduate School of Business. Ms. Driscoll has served as a trustee or
director of various mutual funds advised by Scudder Kemper since 1987.
5
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EDGAR R. FIEDLER (70)
Edgar R. Fiedler is Senior Fellow and Economic Counsellor at The Conference
Board. He served as the Board's Vice President, Economic Research from 1975 to
1986 and as Vice President and Economic Counsellor from 1986 to 1996.
Mr. Fiedler's business experience includes positions at Eastman Kodak in
Rochester (1956-59), Doubleday and Company in New York City (1959-60), and
Bankers Trust Company in New York City (1960-69). He also served as Assistant
Secretary of the Treasury for Economic Policy from 1971 to 1975. Mr. Fiedler
graduated from the University of Wisconsin in 1951. He received his M.B.A. from
the University of Michigan and his doctorate from New York University. During
the 1980's, Mr. Fiedler was an Adjunct Professor of Economics at the Columbia
University Graduate School of Business. From 1990 to 1991, he was the Stephen
Edward Scarff Distinguished Professor at Lawrence University in Wisconsin.
Mr. Fiedler is a Director of The Stanley Works, Harris Insight Funds, Brazil
Fund, and PEG Capital Management, Inc. He is currently a Trustee of the Trust
and has served as a board member of various mutual funds advised by Scudder
Kemper, including the AARP Investment Program Funds, since 1984.
KEITH R. FOX (46)
Keith R. Fox is the managing partner of the Exeter Group of Funds, a series of
private equity funds with offices in New York and Boston, which he founded in
1986. The Exeter Group invests in a wide range of private equity situations,
including venture capital, expansion financings, recapitalizations and
management buyouts. Prior to forming Exeter, Mr. Fox was a director and vice
president of BT Capital Corporation, a subsidiary of Bankers Trust New York
Corporation organized as a small business investment company and based in New
York City. Mr. Fox graduated from Oxford University in 1976 and in 1981 received
an M.B.A. degree from the Harvard Business School. Mr. Fox is also a qualified
accountant. He is a board member and former Chairman of the National Association
of Small Business Investment Companies, and a director of Golden State Vintners,
K-Communications, Progressive Holding Corporation and Facts On File, as well as
a former director of over twenty companies. Mr. Fox has served as a trustee or
director of various mutual funds advised by Scudder Kemper since 1996.
JOAN EDELMAN SPERO (55)
Joan E. Spero is the president of the Doris Duke Charitable Foundation, a
position to which she was named in January 1997. From 1993 to 1997, Ms. Spero
served as Undersecretary of State for Economic, Business and Agricultural
6
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Affairs under President Clinton. From 1981 to 1993, she was an executive at the
American Express Company, where her last position was executive vice president
for Corporate Affairs and Communications. Ms. Spero served as U.N. Ambassador to
the United Nations Economic and Social Council under President Carter from 1980
to 1981. She was an assistant professor at Columbia University from 1973 to
1979. She graduated Phi Beta Kappa from the University of Wisconsin and holds a
master's degree in international affairs and a doctorate in political science
from Columbia University. Ms. Spero is a member of the Council on Foreign
Relations and the Council of American Ambassadors. She also serves as a trustee
of the Wisconsin Alumni Research Foundation, The Brookings Institution and
Columbia University and is a Director of First Data Corporation. Ms. Spero has
served as a trustee or director of various mutual funds advised by Scudder
Kemper since 1998.
JEAN GLEASON STROMBERG (56)
Ms. Stromberg acts as a consultant on regulatory matters. From 1996 to 1997,
Ms. Stromberg represented the U.S. General Accounting Office before Congress and
elsewhere on issues involving banking, securities, securities markets, and
government-sponsored enterprises. Prior to that, Ms. Stromberg was a corporate
and securities law partner at the Washington, D.C. law office of Fulbright and
Jaworski, a national law firm. She served as Associate Director of the
Securities and Exchange Commission's Division of Investment Management from 1977
to 1979 and prior to that was Special Counsel for the Division of Corporation
Finance from 1972 to 1977. Ms. Stromberg graduated Phi Beta Kappa from Wellesley
College and received her law degree from Harvard Law School. From 1988 to 1991
and 1993 to 1996, she was a Trustee of the American Bar Retirement Association,
the funding vehicle for American Bar Association-sponsored retirement plans.
Ms. Stromberg serves on the Wellesley College Business Leadership Council and
the Council for Mutual Fund Director Education at Northwestern University Law
School and was a panelist at the Securities and Exchange Commission's Investment
Company Director's Roundtable. Ms. Stromberg is currently a Trustee of the Trust
and has served as a board member of the AARP Investment Program Funds since
1997.
JEAN C. TEMPEL (56)
Jean C. Tempel is a venture partner for Internet Capital Group, a strategic
network of Internet partnership companies whose principal offices are in Wayne,
Pennsylvania. Ms. Tempel concentrates on investment opportunities in the Boston
area. She spent 25 years in technology/operations executive management at
various New England banks, building custody operations and real time
financial/securities processing systems, most recently as Chief Operations
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Officer at The Boston Company. From 1991 until 1993 she was president/COO of
Safeguard Scientifics, a Pennsylvania technology venture company. In that role
she was a founding investor, director and vice chairman of Cambridge Technology
Partners. She is a director of XLVision, Inc., Marathon Technologies, Inc.,
Aberdeen Group and Sonesta Hotels International, and is a Trustee of
Northeastern University, Connecticut College, and The Commonwealth Institute.
She received a B.A. from Connecticut College, an M.S. from Rensselaer
Polytechnic Institute of New York, and attended Harvard Business School's
Advanced Management Program. Ms. Tempel has served as a trustee or director of
various mutual funds advised by Scudder Kemper since 1994.
STEVEN ZALEZNICK (45)*
Steven Zaleznick is President and CEO of AARP Services, Inc., a wholly-owned and
independently-operated subsidiary of AARP which manages a range of products and
services offered to AARP members, provides marketing services to AARP and its
member service providers and establishes an electronic commerce presence for
AARP members. Mr. Zaleznick previously served as AARP's general counsel for nine
years. He was responsible for the legal affairs of AARP, which included tax and
legal matters affecting non-profit organizations, contract negotiations,
publication review and public policy litigation. In 1979, he joined AARP as a
legislation representative responsible for issues involving taxes, pensions, age
discrimination, and other national issues affecting older Americans.
Mr. Zaleznick is President of the Board of Cradle of Hope Adoption Center in
Washington, D.C. He is a former treasurer and currently a board member of the
National Senior Citizens Law Center. Mr. Zaleznick received his B.A. in
economics from Brown University. He received his J.D. degree from Georgetown
University Law Center and is a member of the District of Columbia Bar
Association.
8
<PAGE>
TRUSTEES NOT STANDING FOR RE-ELECTION:
<TABLE>
<CAPTION>
PRESENT OFFICE WITH THE TRUST,
PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME (AGE) AND DIRECTORSHIPS
- ---------- -----------------------------------
<S> <C>
Horace B. Deets* (61)............... Vice Chairperson and Trustee;
Executive Director, AARP
(1989-present). Mr. Deets serves on
the boards of an additional 2
trusts whose funds are advised by
Scudder Kemper.
Carole Lewis Anderson (55).......... Trustee; Principal, Suburban
Capital Markets, Inc.
(1995-present). Ms. Anderson serves
on the boards of an additional 4
trusts whose funds are advised by
Scudder Kemper.
Adelaide Attard (69)................ Trustee; Member, NYC Department of
Aging Advisory Council
(1995-present); Consultant,
Gerontology. Ms. Attard serves on
the boards of an additional
4 trusts whose funds are advised by
Scudder Kemper.
Robert N. Butler, M.D. (73)......... Trustee; Director, International
Longevity Center and Professor of
Geriatrics and Adult Development;
Chairman, Henry L. Schwartz
Department of Geriatrics and Adult
Development, Mount Sinai Medical
Center (1982-present). Dr. Butler
serves on the boards of an
additional 4 trusts whose funds are
advised by Scudder Kemper.
Lt. Gen. Eugene P. Forrester (73)... Trustee; Lt. General (Retired),
U.S. Army; International Trade
Counselor (1983-present);
Consultant. Lt. Gen. Forrester
serves on the boards of an
additional 4 trusts whose funds are
advised by Scudder Kemper.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
PRESENT OFFICE WITH THE TRUST,
PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME (AGE) AND DIRECTORSHIPS
- ---------- -----------------------------------
<S> <C>
George L. Maddox, Jr. (74).......... Trustee; Professor Emeritus and
Director, Long Term Care Resources
Program, Duke University Medical
Center; Professor Emeritus of
Sociology, Departments of Sociology
and Psychiatry, Duke University.
Mr. Maddox serves on the boards of
an additional 4 trusts whose funds
are advised by Scudder Kemper.
Robert J. Myers (87)................ Trustee; Actuarial Consultant
(1983-present). Mr. Myers serves on
the boards of an additional
4 trusts whose funds are advised
by Scudder Kemper.
James H. Schulz (63)................ Trustee; Professor of Economics and
Kirstein Professor of Aging Policy,
Policy Center on Aging, Florence
Heller School, Brandeis University.
Mr. Schulz serves on the boards of
an additional 4 trusts whose funds
are advised by Scudder Kemper.
Gordon Shillinglaw (74)............. Trustee; Professor Emeritus of
Accounting, Columbia University
Graduate School of Business.
Mr. Shillinglaw serves on the
boards of an additional 4 trusts
whose funds are advised by Scudder
Kemper.
</TABLE>
- ------------------------
* Trustee or nominee considered by the Trust and its counsel to be an
"interested person" (as defined in the Investment Company Act of 1940, as
amended (the "1940 Act")) of the Trust, Scudder Kemper or AARP because of his
or her employment by Scudder Kemper or AARP, and, in some cases, holding
offices with the Trust.
RESPONSIBILITIES OF THE BOARD -- BOARD AND COMMITTEE MEETINGS
A fund's board is responsible for the general oversight of fund business.
The board that is proposed for shareholder voting at each Meeting is comprised
10
<PAGE>
of two individuals who are considered "interested" Trustees, and seven
individuals who have no affiliation with Scudder Kemper or AARP and who are
called "independent" Trustees (the "Independent Trustees"). The Securities and
Exchange Commission (the "SEC") has recently proposed a rule that would require
a majority of the board members of a fund to be "independent" if the fund were
to take advantage of certain exemptive rules under the 1940 Act. On the proposed
Board of Trustees, if approved by shareholders, nearly 78% will be Independent
Trustees. The Independent Trustees have been nominated solely by the current
Independent Trustees of the Trust, a practice also favored by the SEC. The
Independent Trustees have primary responsibility for assuring that each Fund is
managed in the best interests of its shareholders.
The Trustees meet several times during the year to review the investment
performance of each series of the Trust and other operational matters, including
policies and procedures designed to assure compliance with regulatory and other
requirements. Furthermore, the Independent Trustees review the fees paid to
Scudder Kemper and its affiliates for investment advisory services and other
administrative and shareholder services. The Trustees have adopted several
policies and practices which help ensure their effectiveness and independence in
reviewing fees and representing shareholders. Many of these are similar to those
suggested in the Investment Company Institute's 1999 Report of the Advisory
Group on Best Practices for Fund Directors (the "Advisory Group Report"). For
example, the Independent Trustees select independent legal counsel to work with
them in reviewing fees, advisory and other contracts and overseeing fund
matters. The Trustees are also assisted in this regard by the Funds' independent
public accountants and other independent experts retained for this purpose. The
Independent Trustees regularly meet privately with their counsel and other
advisors. In addition, the Independent Trustees from time to time have appointed
task forces and subcommittees from their members to focus on particular matters.
The Board has an Audit Committee and a Committee on Independent Trustees,
the responsibilities of which are described below. In addition, the Board has an
Executive Committee, a Shareholder Service Committee and a Valuation Committee.
AUDIT COMMITTEE
The Audit Committee reviews with management and the independent public
accountants for each series of the Trust, among other things, the scope of the
audit and the internal controls of each series of the Trust and its agents,
reviews and approves in advance the type of services to be rendered by
independent accountants, recommends the selection of independent accountants for
11
<PAGE>
each series of the Trust to the Board, reviews the independence of such firm
and, in general, considers and reports to the Board on matters regarding the
accounting and financial reporting practices of each series of the Trust.
As suggested by the Advisory Group Report, the Trust's Audit Committee is
comprised of only Independent Trustees (all of whom serve on the committee),
meets privately with the independent accountants of each series of the Trust,
will receive annual representations from the accountants as to their
independence, and has a written charter that delineates the committee's duties
and powers.
COMMITTEE ON INDEPENDENT TRUSTEES
The Board of Trustees of the Trust has a Committee on Independent Trustees,
comprised of all of the Independent Trustees, charged with the duty of making
all nominations of Independent Trustees, establishing Trustees' compensation
policies and reviewing matters relating to the Independent Trustees.
ATTENDANCE
The full Board of Trustees of the Trust met six times, the Audit Committee
met two times and the Committee on Independent Trustees met five times during
calendar year 1999. Each then current Trustee attended 100% of the total
meetings of the Board and each above named committee on which he or she served
as a regular member that were held during that period, except Horace B. Deets,
Robert J. Myers, James H. Schulz and Robert N. Butler, who attended 90%, 85%,
92% and 85%, respectively, of those meetings. In addition to these Board and
committee meetings, the Trustees of the Trust attended various other meetings on
behalf of the Trust during the year, including meetings with their independent
legal counsel and informational meetings.
OFFICERS
The following persons are officers of the Trust:
<TABLE>
<CAPTION>
PRESENT OFFICE WITH THE TRUST; PRINCIPAL YEAR FIRST BECAME
NAME (AGE) OCCUPATION OR EMPLOYMENT(1) AN OFFICER(2)
- ---------- ---------------------------------------- -----------------
<S> <C> <C>
Linda C. Coughlin Trustee and President; Managing Director
(48)................... of Scudder Kemper 2000
William Glavin (41).... Vice President; Managing Director of
Scudder Kemper 1997
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
PRESENT OFFICE WITH THE TRUST; PRINCIPAL YEAR FIRST BECAME
NAME (AGE) OCCUPATION OR EMPLOYMENT(1) AN OFFICER(2)
- ---------- ---------------------------------------- -----------------
<S> <C> <C>
Ann M. McCreary (43)... Vice President; Managing Director of
Scudder Kemper 1998
James Masur (39)....... Vice President; Senior Vice President of
Scudder Kemper 1999
John Millette (37)..... Vice President and Assistant Secretary;
Vice President of Scudder Kemper 1999
James W. Pasman (47)... Vice President; Senior Vice President of
Scudder Kemper 1996
Kathryn L. Quirk Vice President and Secretary; Managing
(47)................... Director of Scudder Kemper 1997
John Hebble (41)....... Treasurer; Senior Vice President of
Scudder Kemper 1997
</TABLE>
- ------------------------
(1) Unless otherwise stated, all of the officers have been associated with their
respective companies for more than five years, although not necessarily in
the same capacity.
(2) The President, Treasurer and Secretary each holds office until his or her
successor has been duly elected and qualified, and all other officers hold
offices in accordance with the By-laws of the Trust.
COMPENSATION OF TRUSTEES AND OFFICERS
The Trust pays each Independent Trustee an annual Trustee's fee plus
specified amounts for Board and committee meetings attended and reimburses
expenses related to the business of any series of the Trust. Effective April 1,
1999, each Independent Trustee receives an aggregate annual Trustee's fee of
$12,000 for service on the boards of trustees of the AARP Funds. (Prior to
April 1, 1999, the annual Trustee's fee was $10,000.) Each Independent Trustee
also receives fees of $175 per fund for attending each meeting of the Board and
between $80 and $150 per fund (depending on meeting type) for attending each
committee meeting, or meeting held for the purpose of considering arrangements
between the Trust and Scudder Kemper, or any of its affiliates. The
newly-constituted Board may determine to change its compensation structure.
The current compensation package for the Independent Trustees of the Trust
has not included any provisions for pensions or other retirement benefits. A
one-time benefit, however, will be provided to those Independent Trustees
13
<PAGE>
who are not standing for re-election in an amount equal to twice a Trustee's
calendar year 1999 compensation from the AARP Funds. Inasmuch as Scudder Kemper
will also benefit from the administrative efficiencies of a consolidated board,
Scudder Kemper has agreed to bear one-half of the cost of any such benefit.
Scudder Kemper supervises the Trust's investments, pays the compensation and
certain expenses of its personnel who serve as Trustees and officers of the
Trust and receives a management fee for its services. Several of the Trust's
officers and Trustees are also officers, directors, employees or stockholders of
Scudder Kemper and participate in the fees paid to that firm, although the Trust
makes no direct payments to them other than for reimbursement of travel expenses
in connection with their attendance at Board and committee meetings.
The following Compensation Table provides in tabular form the following
data:
COLUMN (1) All Trustees who receive compensation from the Trust.
COLUMN (2) Aggregate compensation received by each Trustee of the Trust
during the calendar year 1999.
COLUMN (3) Total compensation received by each Trustee from funds managed by
Scudder Kemper (collectively, the "Fund Complex") during the calendar year 1999.
14
<PAGE>
COMPENSATION TABLE
<TABLE>
<CAPTION>
AGGREGATE TOTAL COMPENSATION
COMPENSATION FROM FUND COMPLEX
TRUSTEES (NUMBER OF SERIES) PAID TO TRUSTEE
- -------- ------------------ --------------------
<S> <C> <C>
Carole Lewis Anderson.......... $20,280 (7 series) $40,935 (16 funds)
Adelaide Attard................ $19,013 (7 series) $38,375 (16 funds)
Robert N. Butler............... $17,271 (7 series) $34,855 (16 funds)
Edgar R. Fiedler............... $16,013 (7 series) $73,230 (29 funds)*
Eugene P. Forrester............ $20,280 (7 series) $40,935 (16 funds)
George L. Maddox, Jr........... $20,280 (7 series) $40,935 (16 funds)
Robert J. Myers................ $18,838 (7 series) $38,200 (16 funds)
James H. Schulz................ $18,381 (7 series) $37,095 (16 funds)
Gordon Shillinglaw............. $24,083 (7 series) $44,280 (16 funds)
Jean Gleason Stromberg......... $20,276 (7 series) $40,935 (16 funds)
</TABLE>
- ------------------------
* Mr. Fiedler's total compensation includes $9,900 accrued, but not received,
through a deferred compensation program for serving on the Board of Directors
of Scudder Fund, Inc.
THE BOARD OF TRUSTEES OF AARP GROWTH TRUST RECOMMENDS THAT THE SHAREHOLDERS OF
AARP CAPITAL GROWTH FUND AND AARP SMALL COMPANY STOCK FUND VOTE FOR EACH
NOMINEE.
15
<PAGE>
PROPOSAL 2: APPROVAL OF REORGANIZATION OF EACH FUND INTO SEPARATE SERIES OF
INVESTMENT TRUST
On February 7, 2000, the Board of the Trust approved the Agreement and Plan
of Reorganization (the "Plan") for each Fund in the form attached hereto as
Exhibit A. The Plan provides for the Reorganization of each Fund into its
respective Series, each of which is a newly-formed series of an existing
Massachusetts business trust named Investment Trust. Except as described below,
there will be no material differences between the operation of each Fund now and
after the Reorganization. Specifically, the investment objectives and policies
of each Fund will be substantially identical after the Reorganization and
shareholders will have the same rights and services available to them.
REASONS FOR THE PROPOSED REORGANIZATIONS
As described above, as part of a restructuring program, many AARP Funds are
being reorganized into various funds managed by Scudder Kemper. In order to
streamline the administration of the funds that will comprise the Scudder Family
of Funds after the completion of the restructuring program, Scudder Kemper is
proposing that most Massachusetts business trusts that have been organized on
behalf of the AARP Funds be eliminated. Scudder Kemper believes, and has advised
the Board, that administering the Funds will be more efficient and
cost-effective if the Funds are part of a business trust that is comprised by
other funds in the Scudder Family of Funds. Therefore, the Board of Trustees of
the Trust has approved, and recommends to shareholders that they approve, the
Plan, in order to make the administration of your Funds more efficient and
cost-effective as the Funds move into the Scudder Family of Funds.
The cost savings include spreading trust maintenance costs and the fees and
expenses of the Independent Trustees and their counsel over a larger asset base,
as well as savings on registration fees. After the Reorganizations, other series
of Investment Trust, in addition to the Series, will be able to reduce their
registration fees by using redemption credits that have resulted from the
redemption of shares of the Funds. Scudder Kemper believes that other series of
Investment Trust should be permitted to use the Funds' redemption credits
because it is unlikely that the Series could use all of the redemption credits
that the Funds have accumulated in the foreseeable future. Because of Scudder
Kemper's undertaking to pay a portion of the expenses of certain reorganizations
involving Investment Trust and because of the anticipated implementation of an
administrative fee (described below), it is likely that Scudder Kemper will
benefit from these cost savings. The cost savings also provide an incentive for
Scudder Kemper to agree to the administrative fee arrangement, under which it
will assume the risk of cost increases under the administrative fee. The
Trustees
16
<PAGE>
believe that because of these factors and because Scudder Kemper is assuming
certain costs of the Reorganizations there will be a net benefit to shareholders
from the Reorganization.
PRINCIPAL FEATURES OF THE PROPOSED REORGANIZATIONS
Investment Trust is a Massachusetts business trust that is registered as an
open-end investment company of the series type. Currently, there are eight
active series of Investment Trust that are each separate funds managed by
Scudder Kemper. Investment Trust will establish two additional series for the
purpose of succeeding to the business of each Fund. Each Reorganization
contemplates that each Fund will transfer all of its assets to the applicable
Series; the liabilities of each Fund will be assumed by the applicable Series;
and each shareholder's shares of each Fund will automatically be exchanged for
an equal number of AARP Shares (including any fractional share) of the
applicable Series.
Investment Trust is organized under a Declaration of Trust that is
substantially similar to the Declaration of Trust of the Trust. Therefore,
following the Reorganizations, the rights of shareholders of each Fund will not
differ in any material respect from their rights currently. In addition, the
shareholder services available to the current shareholders of the Funds will not
change after the Reorganization, except for the range of funds available under
the exchange privilege and the minimum balance requirements. Shareholders of the
Funds may currently exchange only into AARP Funds, while holders of AARP Shares
of the Series will be able to exchange into shares of any fund within the
Scudder Family of Funds on a no-load basis. The minimum balance for
non-retirement accounts investing in the AARP Shares will be $1,000, which is
lower than the current minimum balance for non-retirement accounts investing in
the Funds. The minimum balance for Individual Retirement Accounts ("IRAs")
investing in AARP Shares will be $500, as compared to $250 for the Funds.
However, IRA shareholders receiving AARP Shares as a result of the
Reorganization will only be required to meet the Series' $250 minimum balance
requirement for IRAs.
Following the Reorganizations, each Series will have the same investment
strategies as its comparable Fund, except for the following differences. Unlike
Small Company, Scudder Small Company Stock Fund will be permitted to engage in
reverse repurchase agreements. Currently, each Fund may make only limited use
(in terms of transaction type and amount) of derivatives, futures and options.
Following the Reorganizations, each Series, while limited to 5% of assets
committed to such transactions entered into for non-hedging purposes, will be
able to make more use (in terms of transaction type and amount) of such
17
<PAGE>
transactions. Finally, each Fund currently has a stated goal of educating
shareholders on investment topics affecting their lives. Neither Series will
have this stated goal.
INVESTMENT MANAGEMENT AGREEMENTS
Investment Trust will enter into new investment management agreements with
Scudder Kemper on behalf of each Series. Other than the investment management
fee, all material terms of each Fund's current investment management agreement
will remain unchanged. The current investment management fee for each Fund, and
all AARP Funds, includes two components: a "base fee" rate, the amount of which
is based on the aggregate combined net assets of all AARP Funds, except for the
two series of AARP Managed Investment Portfolios Trust, and an "individual fund
fee" rate, which is a set rate for each Fund, regardless of the Fund's net asset
level. Based on the current size of the AARP Investment Program, the base fee
rate is approximately 0.28% of each Fund's average daily net assets.
Small Company's current individual fund fee rate is 0.55%, and it therefore
pays Scudder Kemper a fee at an annual rate of 0.83% of its average daily net
assets. The new investment management agreement for Scudder Small Company Stock
Fund will have a graduated fee rate equal to an annual rate of 0.75% of the
first $500 million of average daily net assets, 0.70% of the next $500 million,
and 0.65% on average daily net assets in excess of $1 billion. At all asset
levels, the investment management fee will be lower for Scudder Small Company
Stock Fund than for Small Company.
Capital Growth's current individual fund fee rate is 0.32%, and it therefore
pays Scudder Kemper a fee at an annual rate of 0.60% of its average daily net
assets. The new investment management agreement for Scudder Capital Growth Fund
will have a graduated fee rate equal to an annual rate of 0.58% of the first $3
billion of average daily net assets, 0.55% of the next $1 billion, and 0.53% on
average daily net assets in excess of $4 billion. It is not feasible to retain
the base fee rate, which is based on the assets of the AARP Investment Program,
under the investment management agreement for Scudder Capital Growth Fund.
Therefore, it is possible that, under certain circumstances (i.e., if the
applicable net assets of the AARP Investment Program increased to $35 billion),
the fee rate under the new investment management agreement could be higher than
the fee rate under the current investment management agreement. For information
about the current fees and expenses of Capital Growth and the proposed fees and
expenses of Scudder Capital Growth Fund after the reorganization, see below.
18
<PAGE>
FEE AND EXPENSE INFORMATION FOR CAPITAL GROWTH
The following provides information on the current expenses for Capital
Growth and the proposed expenses for Scudder Capital Growth Fund. The tables and
examples below are designed to assist you in understanding the various costs and
expenses that you will bear directly or indirectly as an investor in Capital
Growth, under its current fee structure, and under the proposed fee structure
for Scudder Capital Growth Fund. The information is based on Capital Growth's
expenses and average daily net assets during the twelve months ended
September 30, 1999.
<TABLE>
<CAPTION>
PROPOSED STRUCTURE--
CURRENT STRUCTURE-- SCUDDER CAPITAL
CAPITAL GROWTH GROWTH FUND
------------------- --------------------
<S> <C> <C>
Investment Management Agreement.... 0.60% 0.58%
Administrative Fee................. n/a 0.30%
Other Operating Expenses........... 0.32%* 0.00%
Estimated Total Annual Operating
Expenses......................... 0.92% 0.88%
</TABLE>
- ------------------------
* "Other Operating Expenses" are restated to reflect changes in certain
shareholder fees.
Based on the costs in the table above, the following examples are intended
to help you compare the cost of investing in Capital Growth (under its current
fee structure and the proposed fee structure for Scudder Capital Growth Fund)
with the cost of investing in other mutual funds. The examples assume that you
invest $10,000 in Capital Growth or Scudder Capital Growth Fund for the time
periods indicated and then redeem all of your shares at the end of those
periods. The examples also assume that your investment has a 5% return each year
and that operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions, your costs would be as follows:
<TABLE>
<CAPTION>
PROPOSED FEE
CURRENT FEE STRUCTURE--
STRUCTURE-- SCUDDER CAPITAL
YEAR CAPITAL GROWTH GROWTH FUND
- ---- -------------- ---------------
<S> <C> <C>
1ST....................... $ 94 $ 90
3RD....................... $ 293 $ 281
5TH....................... $ 509 $ 488
10TH...................... $1,131 $1,084
</TABLE>
19
<PAGE>
ADMINISTRATIVE FEE
On or prior to the closing of the Reorganizations, Investment Trust, on
behalf of the Series, will have entered into administrative services agreements
with Scudder Kemper (the "Administration Agreements"), pursuant to which Scudder
Kemper would provide or pay others to provide substantially all of the
administrative services required by the Series (other than those provided by
Scudder Kemper under its investment management agreements with the Series, as
described above) in exchange for the payment by each Series of an administrative
services fee (the "Administrative Fee") of 0.45% of average daily net assets for
Scudder Small Company Stock Fund and 0.30% of average daily net assets for
Scudder Capital Growth Fund. One effect of these arrangements is to make each
Series' future expense ratio more predictable. The details of the proposal
(including expenses that are not covered) are set out below.
Various third-party service providers (the "Service Providers"), some of
which are affiliated with Scudder Kemper, provide certain services to the Funds
pursuant to separate agreements with the Funds. Scudder Fund Accounting
Corporation, a subsidiary of Scudder Kemper, computes net asset value for the
Funds and maintains their accounting records. Scudder Service Corporation, also
a subsidiary of Scudder Kemper, is the transfer, shareholder servicing and
dividend-paying agent for the shares of the Funds. Scudder Trust Company, an
affiliate of Scudder Kemper, provides subaccounting and recordkeeping services
for shareholders in certain retirement and employee benefit plans. As custodian,
State Street Bank and Trust Company holds the portfolio securities of the Funds,
pursuant to a custodian agreement. PricewaterhouseCoopers LLP audits the
financial statements of the Funds and provides other audit, tax, and related
services. Dechert Price & Rhoads acts as general counsel for each Fund. In
addition to the fees they pay under the investment management agreements with
Scudder Kemper, the Funds pay the fees and expenses associated with these
service arrangements, as well as each Fund's insurance, registration, printing,
postage and other costs.
Under each Administration Agreement, which will become effective no later
than the applicable Reorganization, each Service Provider will provide to the
Series the services that it currently provides to each Fund under the current
arrangements, except that Scudder Kemper will pay these entities for the
provision of their services to the Series and will pay other Series' expenses,
including insurance, registration, printing and postage fees. In return, each
Series will pay Scudder Kemper an Administrative Fee.
The proposed Administration Agreement will have an initial term of three
years, subject to earlier termination by Investment Trust's Trustees. The fee
payable by the Series to Scudder Kemper pursuant to the Administration
20
<PAGE>
Agreements would be reduced by the amount of any credit received from the
Series' custodian for cash balances.
Certain expenses of each Series would not be borne by Scudder Kemper under
the Administration Agreements, such as taxes, brokerage, interest and
extraordinary expenses, and the fees and expenses of the Independent Trustees
(including the fees and expenses of their independent counsel). In addition,
each Series would continue to pay the fees required by its investment management
agreement with Scudder Kemper.
PROCEDURES FOR PROPOSED REORGANIZATIONS
If the shareholders of each Fund approve the Reorganization, each Fund will
transfer all of its assets to the Series; each Series will assume all of the
liabilities of its respective Fund and issue AARP Shares to each shareholder of
the Fund in a number equal to the number of shares (including any fractional
shares) of the Fund then owned by such shareholder, in exchange for all of the
shares of the Fund owned by the shareholder; and the Funds and the Trust will
then be dissolved. Shareholders of each Fund will acquire the same pro rata
interest in the AARP Shares class of the applicable Series as of the effective
time of the Reorganization as the shareholder had in the Fund immediately prior
to the Reorganization. The address and phone number of Investment Trust, Scudder
Capital Growth Fund and Scudder Small Company Stock Fund is Two International
Place, Boston, Massachusetts 02110-4103, 1-800-728-3337.
It will not be necessary for a shareholder holding certificates representing
shares of each Fund to exchange those certificates for new certificates
representing AARP Shares of the applicable Series following consummation of the
Reorganization. Certificates for shares of each Fund issued prior to the
Reorganization will represent outstanding AARP Shares of the applicable
Series after the Reorganization. New certificates will not be issued by the
Series after the Reorganization unless specifically requested in writing. Shares
of each Fund not represented by certificates will automatically be exchanged for
the same number of AARP Shares of the applicable Series.
Confirmations of the AARP Shares received in the Reorganizations in exchange
for shares of each Fund will not be issued to shareholders, because the number
of shares held by a shareholder will not be changed by the Reorganization.
The obligations of the Trust and Investment Trust under the Plan are subject
to various conditions, as stated therein. Among other things, the Plan requires
that all filings be made with, and all authority be received from, the SEC and
state securities commissions as may be necessary in the opinion of
21
<PAGE>
counsel to permit the parties to carry out the transactions contemplated by the
Plan. The Trust and Investment Trust are in the process of making the necessary
filings. To provide against unforeseen events, the Plan may be terminated or
amended at any time prior to the closing of the Reorganization by action of the
Trustees of the Trust or of Investment Trust, notwithstanding the approval of
the Plan by the shareholders of either Fund. However, no amendment may be made
that materially adversely affects the interests of the shareholders of either
Fund without obtaining the approval of that Fund's shareholders. The Trust and
Investment Trust may at any time waive compliance with certain of the covenants
and conditions contained in the Plan. For a complete description of the terms
and conditions of each Reorganization, see the Plan at Exhibit A.
FEDERAL INCOME TAX CONSEQUENCES
Each Reorganization is conditioned upon the receipt by the Trust, on behalf
of each Fund, and Investment Trust, on behalf of each Series, of an opinion from
Willkie Farr & Gallagher, substantially to the effect that, based upon certain
facts, assumptions and representations of the parties, for federal income tax
purposes: (i) the transfer to each Series of all or substantially all of the
assets of each Fund in exchange solely for AARP Shares and the assumption by
each Series of all of the liabilities of each Fund, followed by the issuance of
such shares to each Fund's shareholders in exchange for their shares of the Fund
in complete liquidation of each Fund, will constitute a "reorganization" within
the meaning of Section 368(a)(1) of the Internal Revenue Code of 1986, as
amended (the "Code"), and the Series and the Funds will each be "a party to a
reorganization" within the meaning of Section 368(b) of the Code; (ii) no gain
or loss will be recognized by either Fund upon the transfer of all or
substantially all of its assets to the Series in exchange solely for AARP Shares
and the assumption by each Series of all of the liabilities of the applicable
Fund or upon the issuance of the AARP Shares to each Fund's shareholders in
exchange for their shares of the applicable Fund; (iii) the basis of the assets
of each Fund in the hands of each Series will be the same as the basis of such
assets of each Fund immediately prior to the transfer; (iv) the holding period
of the assets of each Fund in the hands of each Series will include the period
during which such assets were held by each Fund; (v) no gain or loss will be
recognized by a Series upon the receipt of the assets of the applicable Fund in
exchange for AARP Shares and the assumption by each Series of all of the
liabilities of the applicable Fund; (vi) no gain or loss will be recognized by
the shareholders of a Fund upon the receipt of the AARP Shares of the applicable
Series solely in exchange for their shares of the Fund as part of the
transaction; (vii) the basis of the AARP Shares received by the shareholders of
the applicable Fund will be the same as the basis of the shares of the Fund
exchanged therefor; and
22
<PAGE>
(viii) the holding period of AARP Shares received by the shareholders of each
Fund will include the holding period during which the shares of each Fund
exchanged therefor were held, provided that at the time of the exchange the
shares of each Fund were held as capital assets in the hands of the shareholders
of the Fund.
While the Trust is not aware of any adverse state or local tax consequences
of the proposed Reorganizations, it has not requested any ruling or opinion with
respect to such consequences and shareholders may wish to consult their own tax
advisers with respect to such matters.
THE BOARD OF TRUSTEES OF AARP GROWTH TRUST RECOMMENDS THAT THE SHAREHOLDERS OF
AARP CAPITAL GROWTH FUND AND AARP SMALL COMPANY STOCK FUND VOTE IN FAVOR OF THIS
PROPOSAL 2.
PROPOSAL 3: RATIFICATION OR REJECTION OF THE SELECTION OF INDEPENDENT
ACCOUNTANTS
The Board, including a majority of the Independent Trustees, has selected
PricewaterhouseCoopers LLP to act as independent accountants of each Fund for
the Fund's current fiscal year. One or more representatives of
PricewaterhouseCoopers LLP are expected to be present at the Meetings and will
have an opportunity to make a statement if they so desire. Such representatives
are expected to be available to respond to appropriate questions posed by
shareholders or management.
THE BOARD OF TRUSTEES OF AARP GROWTH TRUST RECOMMENDS THAT THE SHAREHOLDERS OF
AARP CAPITAL GROWTH FUND AND AARP SMALL COMPANY STOCK FUND VOTE IN FAVOR OF THIS
PROPOSAL 3.
ADDITIONAL INFORMATION
GENERAL
Small Company will pay its allocable share of the cost of preparing,
printing and mailing the enclosed proxy card(s) and proxy statement and all
other costs incurred in connection with the solicitation of proxies, including
any additional solicitation made by letter, telephone or telegraph (collectively
"Proxy Costs"), except that Scudder Kemper will bear any Proxy Costs of Small
Company in excess of $74,752 (approximately $0.002281 per share, based on
December 31, 1999 net assets for Small Company). Scudder Kemper will bear all
Proxy Costs for Capital Growth. In addition to solicitation by mail, certain
officers and representatives of each Trust, officers and employees of Scudder
Kemper and certain financial services firms and their representatives, who will
receive no
23
<PAGE>
extra compensation for their services, may solicit proxies by telephone,
telegram or personally.
Any shareholder giving a proxy has the power to revoke it by mail (addressed
to the Secretary at the principal executive office of the Funds, c/o Scudder
Kemper Investments, Inc., at the address for the Funds shown at the beginning of
this Proxy Statement) or in person at the Meeting, by executing a superseding
proxy or by submitting a notice of revocation to the Fund. All properly executed
proxies received in time for each Meeting will be voted as specified in the
proxy or, if no specification is made, in favor of the Proposals referred to in
the Proxy Statement.
The presence at any shareholders' meeting, in person or by proxy, of the
holders of one-third of the shares of the Trust (for a trust-wide vote) or a
Fund (for a fund-wide vote) entitled to be cast shall be necessary and
sufficient to constitute a quorum for the transaction of business. In the event
that the necessary quorum to transact business or the vote required to approve
any Proposal is not obtained at the Meeting with respect to either Fund, the
persons named as proxies may propose one or more adjournments of the Meeting in
accordance with applicable law to permit further solicitation of proxies with
respect to that Proposal. Any such adjournment as to a matter will require the
affirmative vote of the holders of a majority of the Trust's (for a trust-wide
vote) or a Fund's (for a fund-wide vote) shares present in person or by proxy at
the Meeting. The persons named as proxies will vote in favor of any such
adjournment those proxies which they are entitled to vote in favor of that
Proposal and will vote against any such adjournment those proxies to be voted
against that proposal. For purposes of determining the presence of a quorum for
transacting business at a Meeting, abstentions and broker "non-votes" will be
treated as shares that are present but which have not been voted. Broker
non-votes are proxies received by the Trust from brokers or nominees when the
broker or nominee has neither received instructions from the beneficial owner or
other persons entitled to vote nor has discretionary power to vote on a
particular matter. Accordingly, shareholders are urged to forward their voting
instructions promptly.
Approval of Proposal 1 requires the affirmative vote of a plurality of the
shares of the Trust voting at the Meeting. Approval of Proposal 2 with respect
to a Fund requires the affirmative vote of a "majority of the outstanding voting
securities" of that Fund. The term "majority of the outstanding voting
securities," as defined in the 1940 Act, and as used in this Proxy Statement,
means: the affirmative vote of the lesser of (1) 67% of the voting securities of
the Fund present at the meeting if more than 50% of the outstanding voting
securities of the Fund are present in person or by proxy or (2) more than 50% of
the
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<PAGE>
outstanding voting securities of the Fund. Approval of Proposal 3 requires the
affirmative vote of a majority of the shares of a Fund voting at a Meeting.
Abstentions and broker non-votes will not be counted in favor of, but will have
not other effect on Proposal 1, and will have the effect of a "no" vote on
Proposals 2 and 3. Shareholders of the Trust will vote together on Proposal 1
and shareholders of each Fund will vote separately with respect to Proposals 2
and 3.
Holders of record of the shares of each Fund at the close of business on
April 17, 2000 (the "Record Date"), as to any matter on which they are entitled
to vote, will be entitled to one vote per share on all business of the Meeting.
As of March 20, 2000, there were 32,782,061 and 2,965,234 shares of Capital
Growth and Small Company outstanding, respectively.
Appendix 1 sets forth the beneficial owners of more than 5% of each Fund's
shares as well as the shares of each other series of the Trust. To the best of
the Fund's knowledge, as of January 31, 2000, no person owned beneficially more
than 5% of outstanding shares of either Fund or any other series of the Trust,
except as stated in Appendix 1.
Appendix 2 hereto sets forth the number of shares of each Fund owned
directly or beneficially by the Trustees of the Fund and by the nominees for
election.
Shareholder Communications Corporation ("SCC") has been engaged to assist in
the solicitation of proxies, at an estimated cost of $66,564. As the Meeting
date approaches, certain shareholders of the Funds may receive a telephone call
from a representative of SCC if their votes have not yet been received.
Authorization to permit SCC to execute proxies may be obtained by telephonic or
electronically transmitted instructions from shareholders of the Funds. Proxies
that are obtained telephonically will be recorded in accordance with the
procedures set forth below. The Trustees believe that these procedures are
reasonably designed to ensure that both the identity of the shareholder casting
the vote and the voting instructions of the shareholder are accurately
determined.
In all cases where a telephonic proxy is solicited, the SCC representative
is required to ask for each shareholder's full name, address, social security or
employer identification number, title (if the shareholder is authorized to act
on behalf of an entity, such as a corporation), and the number of shares owned,
and to confirm that the shareholder has received the proxy materials in the
mail. If the information solicited agrees with the information provided to SCC,
then the SCC representative has the responsibility to explain the process, read
the Proposals on the proxy card, and ask for the shareholder's instructions on
the
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<PAGE>
Proposals. Although the SCC representative is permitted to answer questions
about the process, he or she is not permitted to recommend to the shareholder
how to vote, other than to read any recommendation set forth in the proxy
statement. SCC will record the shareholder's instructions on the card. Within 72
hours, the shareholder will be sent a letter or mailgram to confirm his or her
vote and asking the shareholder to call SCC immediately if his or her
instructions are not correctly reflected in the confirmation.
If a shareholder wishes to participate in a Meeting, but does not wish to
give a proxy by telephone or electronically, the shareholder may still submit
the proxy card originally sent with the proxy statement or attend in person.
Should shareholders require additional information regarding the proxy or
replacement proxy cards, they may contact SCC toll-free at 1-800-605-1203. Any
proxy given by a shareholder is revocable until voted at the Meeting.
Shareholders may also provide their voting instructions through telephone
touch-tone voting or Internet voting. These options require shareholders to
input a control number which is located on each voting instruction card. After
inputting this number, shareholders will be prompted to provide their voting
instructions on the Proposals. Shareholders will have an opportunity to review
their voting instructions and make any necessary changes before submitting their
voting instructions and terminating their telephone call or Internet link.
Shareholders who vote on the Internet, in addition to confirming their voting
instructions prior to submission, will also receive an e-mail confirming their
instructions.
PRINCIPAL UNDERWRITER
Scudder Investor Services, Inc., Two International Place, Boston,
Massachusetts 02110, is the principal underwriter for each Fund.
PROPOSALS OF SHAREHOLDERS
Shareholders wishing to submit proposals for inclusion in a proxy statement
for a shareholder meeting subsequent to the Meetings, if any, should send their
written proposals to the Secretary of the Trust, c/o Scudder Kemper Investments,
Inc., Two International Place, Boston, Massachusetts 02110-4103, within a
reasonable time before the solicitation of proxies for such meeting. The timely
submission of a proposal does not guarantee its inclusion.
OTHER MATTERS TO COME BEFORE THE MEETINGS
No Trustee is aware of any matters that will be presented for action at a
Meeting other than the matters set forth herein. Should any other matters
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<PAGE>
requiring a vote of shareholders arise, the proxy in the accompanying form will
confer upon the person or persons entitled to vote the shares represented by
such proxy the discretionary authority to vote the shares as to any such other
matters in accordance with their best judgment in the interest of the Trust and
each Fund.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) (OR TAKE
ADVANTAGE OF AVAILABLE ELECTRONIC OR TELEPHONIC VOTING PROCEDURES) PROMPTLY. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
By Order of the Board,
[SIGNATURE]
Kathryn L. Quirk
Secretary
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EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this day of , 2000, by and between Investment Trust (the
"Acquiring Trust"), a Massachusetts business trust with its principal place of
business at Two International Place, Boston, Massachusetts 02110-4103, on behalf
of Scudder Capital Growth Fund and Scudder Small Company Stock Fund (each, an
"Acquiring Fund" and, together, the "Acquiring Funds"), each of which is a
separate series of the Acquiring Trust, and AARP Growth Trust (the "Acquired
Trust"), a Massachusetts business trust with its principal place of business at
Two International Place, Boston, Massachusetts 02110-4103, on behalf of AARP
Capital Growth Fund and AARP Small Company Stock Fund (each, an "Acquired Fund"
and, together, the "Acquired Funds", and collectively with the Acquiring Funds,
the "Funds"), each of which is a separate series of the Acquired Trust.
This Agreement is intended to be and is adopted as a plan of reorganization
and liquidation within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"). The reorganization (the "Reorganization")
will consist of the transfer of all or substantially all of the assets of each
Acquired Fund to its respective Acquiring Fund in exchange solely for voting
shares of beneficial interest ($.01 par value per share) of the applicable
Acquiring Fund (the "Acquiring Fund Shares"), the assumption by each Acquiring
Fund of all of the liabilities of each Acquired Fund and the distribution of the
Acquiring Fund Shares to the shareholders of each Acquired Fund in complete
liquidation of each Acquired Fund as provided herein, all upon the terms and
conditions hereinafter set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. TRANSFER OF ASSETS OF EACH ACQUIRED FUND TO ITS RESPECTIVE ACQUIRING FUND IN
EXCHANGE FOR ACQUIRING FUND SHARES, THE ASSUMPTION OF ALL ACQUIRED FUND
LIABILITIES AND THE LIQUIDATION OF EACH ACQUIRED FUND
1.1. Subject to the terms and conditions herein set forth and on the basis
of the representations and warranties contained herein, each Acquired Fund
agrees to transfer to its respective Acquiring Fund all or substantially all of
the Acquired Fund's assets as set forth in section 1.2, and each Acquiring Fund
agrees in exchange therefor (i) to deliver to its respective Acquired Fund that
number of full and fractional Acquiring Fund Shares determined by dividing the
value of each Acquired Fund's net assets, computed in the manner and as of the
time and date set forth in section 2.1, by the net asset value of one Acquiring
<PAGE>
Fund Share, computed in the manner and as of the time and date set forth in
section 2.2; and (ii) to assume all of the liabilities of its respective
Acquired Fund. Such transactions shall take place at the closing provided for in
section 3.1 (the "Closing").
1.2. The assets of each Acquired Fund to be acquired by its respective
Acquiring Fund (the "Assets") shall consist of all assets, including, without
limitation, all cash, cash equivalents, securities, commodities and futures
interests and dividends or interest or other receivables that are owned by the
Acquired Fund and any deferred or prepaid expenses shown on the unaudited
statement of assets and liabilities of the Acquired Fund prepared as of the
effective time of the Closing in accordance with generally accepted accounting
principles ("GAAP") applied consistently with those of the Acquired Fund's most
recent audited balance sheet. The Assets shall constitute at least 90% of the
fair market value of the net assets, and at least 70% of the fair market value
of the gross assets, held by the Acquired Fund immediately before the Closing
(excluding for these purposes assets used to pay the dividends and other
distributions paid pursuant to section 1.4).
1.3. Each Acquired Fund will endeavor to discharge all of its known
liabilities and obligations prior to the Closing Date as defined in
section 3.1.
1.4. On or as soon as practicable prior to the Closing Date as defined in
section 3.1, each Acquired Fund will declare and pay to its shareholders of
record one or more dividends and/or other distributions so that it will have
distributed substantially all of its investment company taxable income (computed
without regard to any deduction for dividends paid) and realized net capital
gain, if any, for the current taxable year through the Closing Date.
1.5. Immediately after the transfer of Assets provided for in section 1.1,
each Acquired Fund will distribute to the Acquired Fund's shareholders of record
(the "Acquired Fund Shareholders"), determined as of the Valuation Time (as
defined in section 2.1), on a pro rata basis, the Acquiring Fund Shares received
by the Acquired Fund pursuant to section 1.1 and will completely liquidate. Such
distribution and liquidation will be accomplished by the transfer of the
Acquiring Fund Shares then credited to the account of the Acquired Fund on the
books of the Acquiring Fund to open accounts on the share records of the
Acquiring Fund in the names of the Acquired Fund Shareholders. The aggregate net
asset value of Acquiring Fund Shares to be so credited to Acquired Fund
Shareholders shall be equal to the aggregate net asset value of the Acquired
Fund shares owned by such shareholders as of the Valuation Time. All issued and
outstanding shares of the Acquired Fund will simultaneously be cancelled on the
books of the Acquired Fund, although share certificates representing interests
in shares of the Acquired Fund will represent a number of
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Acquiring Fund Shares after the Closing Date as determined in accordance with
section 2.3. The Acquiring Fund will not issue certificates representing
Acquiring Fund Shares in connection with such exchange.
1.6. Ownership of Acquiring Fund Shares will be shown on the books of each
Acquiring Fund. Shares of each Acquiring Fund will be issued in the manner
described in the Acquiring Fund's then-current prospectus and statement of
additional information.
1.7. Any reporting responsibility of an Acquired Fund including, without
limitation, the responsibility for filing of regulatory reports, tax returns, or
other documents with the Securities and Exchange Commission (the "Commission"),
any state securities commission, and any federal, state or local tax authorities
or any other relevant regulatory authority, is and shall remain the
responsibility of the Acquired Fund.
1.8. All books and records of each Acquired Fund, including all books and
records required to be maintained under the Investment Company Act of 1940, as
amended (the "1940 Act") and the rules and regulations thereunder, shall be
available to its respective Acquiring Fund from and after the Closing Date and
shall be turned over to the Acquiring Fund as soon as practicable following the
Closing Date.
2. VALUATION
2.1. The value of the Assets shall be computed as of the close of regular
trading on The New York Stock Exchange, Inc. (the "NYSE") on the business day
immediately preceding the Closing Date, as defined in Section 3.1 (the
"Valuation Time") after the declaration and payment of any dividends and/or
other distributions on that date, using the valuation procedures set forth in
the Acquiring Trust's Declaration of Trust, as amended, and then-current
prospectus or statement of additional information.
2.2. The net asset value of an Acquiring Fund share shall be the net asset
value per share computed as of the Valuation Time using the valuation procedures
referred to in section 2.1.
2.3. The number of shares of each Acquiring Fund to be issued (including
fractional shares, if any) in exchange for the Assets shall be determined by
dividing the value of the Assets with respect to shares of the applicable
Acquired Fund determined in accordance with section 2.1 by the net asset value
of an Acquiring Fund Share determined in accordance with section 2.2.
2.4. All computations of value hereunder shall be made by or under the
direction of each Fund's respective accounting agent, if applicable, in
accordance with its regular practice and the requirements of the 1940 Act and
shall
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be subject to confirmation by each Fund's respective independent accountants
upon the reasonable request of the other Fund.
3. CLOSING AND CLOSING DATE
3.1. The Closing of the transactions contemplated by this Agreement shall
be July 17, 2000 or such later date as the parties may agree in writing (the
"Closing Date"). All acts taking place at the Closing shall be deemed to take
place simultaneously as of 9:00 a.m., Eastern time, on the Closing Date, unless
otherwise agreed to by the parties. The Closing shall be held at the offices of
Dechert Price & Rhoads, Ten Post Office Square -- South, Boston, MA 02109, or at
such other place and time as the parties may agree.
3.2. Each Acquired Fund shall deliver to its respective Acquiring Fund on
the Closing Date a schedule of Assets.
3.3. State Street Bank and Trust Company, custodian for each Acquired Fund,
shall deliver at the Closing a certificate of an authorized officer stating that
(a) the Assets shall have been delivered in proper form to State Street Bank and
Trust Company, custodian for each Acquiring Fund, prior to or on the Closing
Date and (b) all necessary taxes in connection with the delivery of the Assets,
including all applicable federal and state stock transfer stamps, if any, have
been paid or provision for payment has been made. Each Acquired Fund's portfolio
securities represented by a certificate or other written instrument shall be
presented by the custodian for the Acquired Fund to the custodian for its
respective Acquiring Fund for examination no later than five business days
preceding the Closing Date and transferred and delivered by the Acquired Fund as
of the Closing Date by the Acquired Fund for the account of its respective
Acquiring Fund duly endorsed in proper form for transfer in such condition as to
constitute good delivery thereof. Each Acquired Fund's portfolio securities and
instruments deposited with a securities depository, as defined in Rule 17f-4
under the 1940 Act, shall be delivered as of the Closing Date by book entry in
accordance with the customary practices of such depositories and the custodian
for its respective Acquiring Fund. The cash to be transferred by each Acquired
Fund shall be delivered by wire transfer of federal funds on the Closing Date.
3.4. Scudder Securities Corporation (the "Transfer Agent"), on behalf of
each Acquired Fund, shall deliver at the Closing a certificate of an authorized
officer stating that its records contain the names and addresses of the Acquired
Fund Shareholders and the number and percentage ownership (to three decimal
places) of outstanding Acquired Fund Shares owned by each such shareholder
immediately prior to the Closing. Each Acquiring Fund shall issue and deliver a
confirmation evidencing the Acquiring Fund Shares to be credited on the Closing
Date to its respective Acquired Fund or provide evidence satisfactory to
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the Acquired Fund that such Acquiring Fund Shares have been credited to the
Acquired Fund's account on the books of the Acquiring Fund. At the Closing, each
party shall deliver to the other such bills of sale, checks, assignments, share
certificates, if any, receipts or other documents as such other party or its
counsel may reasonably request to effect the transactions contemplated by this
Agreement.
3.5. In the event that immediately prior to the Valuation Time (a) the NYSE
or another primary trading market for portfolio securities of each Acquiring
Fund or each Acquired Fund shall be closed to trading or trading thereupon shall
be restricted, or (b) trading or the reporting of trading on such Exchange or
elsewhere shall be disrupted so that, in the judgment of the Board members of
either party to this Agreement, accurate appraisal of the value of the net
assets with respect to the Acquiring Fund Shares or the Acquired Fund Shares is
impracticable, the Closing Date shall be postponed until the first business day
after the day when trading shall have been fully resumed and reporting shall
have been restored.
4. REPRESENTATIONS AND WARRANTIES
4.1. The Acquired Trust, on behalf of each Acquired Fund, represents and
warrants to each Acquiring Fund as follows:
(a) The Acquired Trust is a business trust duly organized and validly
existing under the laws of the Commonwealth of Massachusetts with power
under the Acquired Trust's Declaration of Trust, as amended, to own all of
its properties and assets and to carry on its business as it is now being
conducted;
(b) The Acquired Trust is registered with the Commission as an open-end
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), and such registration is in full force and effect;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquired Fund
of the transactions contemplated herein, except such as have been obtained
under the Securities Act of 1933, as amended (the "1933 Act"), the
Securities Exchange Act of 1934, as amended (the "1934 Act") and the 1940
Act and such as may be required by state securities laws;
(d) Other than with respect to contracts entered into in connection with
the portfolio management of each Acquired Fund which shall terminate on or
prior to the Closing Date, the Acquired Trust is not, and the execution,
delivery and performance of this Agreement by the Acquired
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Trust will not result, in violation of Massachusetts law or of the Acquired
Trust's Declaration of Trust, as amended, or By-Laws, or of any material
agreement, indenture, instrument, contract, lease or other undertaking known
to counsel to which either Acquired Fund is a party or by which it is bound,
and the execution, delivery and performance of this Agreement by the
Acquired Fund will not result in the acceleration of any obligation, or the
imposition of any penalty, under any agreement, indenture, instrument,
contract, lease, judgment or decree to which the Acquired Fund is a party or
by which it is bound;
(e) No material litigation or administrative proceeding or investigation
of or before any court or governmental body is presently pending or to its
knowledge threatened against either Acquired Fund or any properties or
assets held by it. Neither Acquired Fund knows of any facts which might form
the basis for the institution of such proceedings which would materially and
adversely affect its business and is not a party to or subject to the
provisions of any order, decree or judgment of any court or governmental
body which materially and adversely affects its business or its ability to
consummate the transactions herein contemplated;
(f) The Statement of Assets and Liabilities, Operations, and Changes in
Net Assets, the Supplementary Information, and the Investment Portfolio of
each Acquired Fund at and for the fiscal year ended September 30, 1999 has
been audited by PricewaterhouseCoopers LLP, independent certified public
accountants, and is in accordance with GAAP consistently applied, and such
statements (copies of which have been furnished to the Acquiring Fund)
present fairly, in all material respects, the financial position of the
Acquired Fund as of such date in accordance with GAAP, and there are no
known contingent liabilities of the Acquired Fund required to be reflected
on a balance sheet (including the notes thereto) in accordance with GAAP as
of such date not disclosed therein;
(g) Since September 30, 1999, there has not been any material adverse
change in either Acquired Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business, or
any incurrence by the Acquired Fund of indebtedness maturing more than one
year from the date such indebtedness was incurred except as otherwise
disclosed to and accepted in writing by the Acquiring Fund. For purposes of
this subsection (g), a decline in net asset value per share of each Acquired
Fund due to declines in market values of securities in the Acquired Fund's
portfolio, the discharge of Acquired Fund liabilities, or the redemption of
Acquired Fund shares by Acquired Fund Shareholders shall not constitute a
material adverse change;
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<PAGE>
(h) At the date hereof and at the Closing Date, all federal and other
tax returns and reports of each Acquired Fund required by law to have been
filed by such dates (including any extensions) shall have been filed and are
or will be correct in all material respects, and all federal and other taxes
shown as due or required to be shown as due on said returns and reports
shall have been paid or provision shall have been made for the payment
thereof, and, to the best of the Acquired Fund's knowledge, no such return
is currently under audit and no assessment has been asserted with respect to
such returns;
(i) For each taxable year of its operation (including the taxable year
ending on the Closing Date), each Acquired Fund has met the requirements of
Subchapter M of the Code for qualification as a regulated investment company
and has elected to be treated as such, has been eligible to and has computed
its federal income tax under Section 852 of the Code, and will have
distributed all of its investment company taxable income and net capital
gain (as defined in the Code) that has accrued through the Closing Date;
(j) All issued and outstanding shares of each Acquired Fund (i) have
been offered and sold in every state and the District of Columbia in
compliance in all material respects with applicable registration
requirements of the 1933 Act and state securities laws, (ii) are, and on the
Closing Date will be, duly and validly issued and outstanding, fully paid
and non-assessable (recognizing that, under Massachusetts law, Acquired Fund
Shareholders, under certain circumstances, could be held personally liable
for obligations of the Acquired Fund), and (iii) will be held at the time of
the Closing by the persons and in the amounts set forth in the records of
the Transfer Agent, as provided in section 3.4. Neither Acquired Fund has
outstanding any options, warrants or other rights to subscribe for or
purchase any of the Acquired Fund shares, nor is there outstanding any
security convertible into any of the Acquired Fund shares;
(k) At the Closing Date, each Acquired Fund will have good and
marketable title to the Acquired Fund's assets to be transferred to its
respective Acquiring Fund pursuant to section 1.2 and full right, power, and
authority to sell, assign, transfer and deliver such assets hereunder free
of any liens or other encumbrances, except those liens or encumbrances as to
which the Acquiring Fund has received notice at or prior to the Closing, and
upon delivery and payment for such assets, the Acquiring Fund will acquire
good and marketable title thereto, subject to no restrictions on the full
transfer thereof, including such restrictions as might arise under the 1933
Act and the 1940 Act, except those restrictions as to which the
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Acquiring Fund has received notice and necessary documentation at or prior
to the Closing;
(l) The execution, delivery and performance of this Agreement will have
been duly authorized prior to the Closing Date by all necessary action on
the part of the Board members of the Acquired Trust, and, subject to the
approval of each Acquired Fund's Shareholders, this Agreement constitutes a
valid and binding obligation of the Acquired Trust, on behalf of each
Acquired Fund, enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other laws relating to or affecting creditors' rights and to
general equity principles;
(m) The information to be furnished by each Acquired Fund for use in
applications for orders, registration statements or proxy materials or for
use in any other document filed or to be filed with any federal, state or
local regulatory authority (including the National Association of Securities
Dealers, Inc. (the "NASD")), which may be necessary in connection with the
transactions contemplated hereby, shall be accurate and complete in all
material respects and shall comply in all material respects with federal
securities and other laws and regulations applicable thereto;
(n) The current prospectus and statement of additional information of
each Acquired Fund conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules and regulations
of the Commission thereunder and do not include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not materially misleading; and
(o) The proxy statement of the Acquired Funds (the "Proxy Statement"),
insofar as it relates to each Acquired Fund, will, on the Closing Date, not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which such statements are made,
not materially misleading; provided, however, that the representations and
warranties in this section shall not apply to statements in or omissions
from the Proxy Statement made in reliance upon and in conformity with
information that was furnished or should have been furnished by its
respective Acquiring Fund for use therein.
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4.2. The Acquiring Trust, on behalf of each Acquiring Fund, represents and
warrants to each Acquired Fund as follows:
(a) The Acquiring Trust is a business trust duly organized and validly
existing under the laws of the Commonwealth of Massachusetts with power
under the Acquiring Trust's Declaration of Trust, as amended, to own all of
its properties and assets and to carry on its business as it is now being
conducted;
(b) The Acquiring Trust is registered with the Commission as an open-end
management investment company under the 1940 Act, and such registration is
in full force and effect;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by each Acquiring
Fund of the transactions contemplated herein, except such as have been
obtained under the 1933 Act, the 1934 Act and the 1940 Act and such as may
be required by state securities laws;
(d) The Acquiring Trust is not, and the execution, delivery and
performance of this Agreement by the Acquiring Trust will not result, in
violation of Massachusetts law or of the Acquiring Trust's Declaration of
Trust, as amended, or By-Laws, or of any material agreement, indenture,
instrument, contract, lease or other undertaking known to counsel to which
either Acquiring Fund is a party or by which it is bound, and the execution,
delivery and performance of this Agreement by the Acquiring Fund will not
result in the acceleration of any obligation, or the imposition of any
penalty, under any agreement, indenture, instrument, contract, lease,
judgment or decree to which the Acquiring Fund is a party or by which it is
bound;
(e) No material litigation or administrative proceeding or investigation
of or before any court or governmental body is presently pending or to its
knowledge threatened against either Acquiring Fund or any properties or
assets held by it. Neither Acquiring Fund knows of any facts which might
form the basis for the institution of such proceedings which would
materially and adversely affect its business and is not a party to or
subject to the provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects its business or its
ability to consummate the transactions herein contemplated;
(f) Each Acquiring Fund has conducted no operations except those
incident to its organization.
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(g) The Acquiring Fund Shares to be issued and delivered to each
Acquired Fund, for the account of the Acquired Fund Shareholders, pursuant
to the terms of this Agreement, will at the Closing Date have been duly
authorized and, when so issued and delivered, will be duly and validly
issued and outstanding Acquiring Fund Shares, and will be fully paid and
non-assessable (recognizing that, under Massachusetts law, Acquiring Fund
Shareholders, under certain circumstances, could be held personally liable
for the obligations of the Acquired Fund).
(h) At the Closing Date, each Acquiring Fund will have good and
marketable title to the Acquiring Fund's assets, free of any liens or other
encumbrances, except those liens or encumbrances as to which its respective
Acquired Fund has received notice at or prior to the Closing;
(i) The execution, delivery and performance of this Agreement will have
been duly authorized prior to the Closing Date by all necessary action on
the part of the Board members of the Acquiring Trust and this Agreement will
constitute a valid and binding obligation of the Acquiring Trust, on behalf
of each Acquiring Fund, enforceable in accordance with its terms, subject,
as to enforcement, to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other laws relating to or affecting
creditors' rights and to general equity principles;
(j) The information to be furnished by each Acquiring Fund for use in
applications for orders, registration statements or proxy materials or for
use in any other document filed or to be filed with any federal, state or
local regulatory authority (including the NASD), which may be necessary in
connection with the transactions contemplated hereby, shall be accurate and
complete in all material respects and shall comply in all material respects
with federal securities and other laws and regulations applicable thereto;
(k) The Proxy Statement related to the Reorganization, only insofar as
it relates to each Acquiring Fund, will, on the Closing Date, not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which such statements were made, not
materially misleading; provided, however, that the representations and
warranties in this section shall not apply to statements in or omissions
from the Proxy Statement made in reliance upon and in conformity with
information that was furnished or should have been furnished by its
respective Acquired Fund for use therein; and
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(l) Each Acquiring Fund agrees to use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act, the 1940 Act and
such of the state securities laws as may be necessary in order to continue
its operations after the Closing Date.
5. COVENANTS OF EACH ACQUIRING FUND AND ACQUIRED FUND
5.1. Each Fund covenants to operate its business in the ordinary course
between the date hereof and the Closing Date, it being understood that (a) such
ordinary course of business will include (i) the declaration and payment of
customary dividends and other distributions and (ii) such changes as are
contemplated by the Funds' normal operations; and (b) each Fund shall retain
exclusive control of the composition of its portfolio until the Closing Date.
5.2. Upon reasonable notice, the Acquiring Trust's officers and agents
shall have reasonable access to each Acquired Fund's books and records necessary
to maintain current knowledge of the Acquired Fund and to ensure that the
representations and warranties made by the Acquired Fund are accurate.
5.3. The Acquired Trust covenants to call a meeting of each Acquired Fund's
Shareholders entitled to vote thereon to consider and act upon this Agreement
and to take all other reasonable action necessary to obtain approval of the
transactions contemplated herein. Such meeting shall be scheduled for no later
than July 11, 2000.
5.4. The Acquired Trust covenants that the Acquiring Fund Shares to be
issued hereunder are not being acquired for the purpose of making any
distribution thereof other than in accordance with the terms of this Agreement.
5.5. Each Acquired Fund covenants that it will assist its respective
Acquiring Fund in obtaining such information as the Acquiring Fund reasonably
requests concerning the beneficial ownership of the Acquired Fund Shares and
will provide the Acquiring Fund with a list of affiliates of the Acquired Fund.
5.6. Subject to the provisions of this Agreement, each Fund will take, or
cause to be taken, all actions, and do or cause to be done, all things
reasonably necessary, proper, and/or advisable to consummate and make effective
the transactions contemplated by this Agreement.
5.7. Each Fund covenants to prepare in compliance with the 1934 Act and the
1940 Act the proxy materials in connection with the meeting of each Acquired
Fund's Shareholders to consider approval of this Agreement and the transactions
contemplated herein. The Acquired Trust will file the Proxy Statement with the
Commission.
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5.8. Each Acquired Fund covenants that it will, from time to time, as and
when reasonably requested by its respective Acquiring Fund, execute and deliver
or cause to be executed and delivered all such assignments and other
instruments, and will take or cause to be taken such further action as the
Acquiring Fund may reasonably deem necessary or desirable in order to vest in
and confirm the Acquiring Fund's title to and possession of all the assets and
otherwise to carry out the intent and purpose of this Agreement.
5.9. Each Acquiring Fund covenants to use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act and 1940 Act, and such
of the state securities laws as it deems appropriate in order to continue its
operations after the Closing Date and to consummate the transactions
contemplated herein; provided, however, that the Acquiring Fund may take such
actions it reasonably deems advisable after the Closing Date as circumstances
change.
5.10. Each Acquiring Fund covenants that it will, from time to time, as and
when reasonably requested by its respective Acquired Fund, execute and deliver
or cause to be executed and delivered all such assignments, assumption
agreements, releases, and other instruments, and will take or cause to be taken
such further action, as the Acquired Fund may reasonably deem necessary or
desirable in order to (i) vest and confirm to the Acquired Fund title to and
possession of all Acquiring Fund shares to be transferred to the Acquired Fund
pursuant to this Agreement and (ii) assume the liabilities from the Acquired
Fund.
5.11. As soon as reasonably practicable after the Closing, each Acquired
Fund shall make a liquidating distribution to its shareholders consisting of the
Acquiring Fund Shares received at the Closing.
5.12. Each Fund shall each use its reasonable best efforts to fulfill or
obtain the fulfillment of the conditions precedent to effect the transactions
contemplated by this Agreement as promptly as practicable.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH ACQUIRED FUND
The obligations of each Acquired Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by its
respective Acquiring Fund of all the obligations to be performed by it hereunder
on or before the Closing Date, and, in addition thereto, the following further
conditions:
6.1. All representations and warranties of the Acquired Trust, with respect
to each Acquired Fund, contained in this Agreement shall be true and correct in
all material respects as of the date hereof and, except as they may be
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affected by the transactions contemplated by this Agreement, as of the Closing
Date, with the same force and effect as if made on and as of the Closing Date;
and there shall be (i) no pending or threatened litigation brought by any person
(other than each Acquiring Fund, its adviser or any of their affiliates) against
its respective Acquired Fund or its investment adviser(s), Board members or
officers arising out of this Agreement and (ii) no facts known to the Acquired
Fund which the Acquired Fund reasonably believes might result in such
litigation.
6.2. Each Acquiring Fund shall have delivered to its respective Acquired
Fund on the Closing Date a certificate executed in its name by its President or
a Vice President, in a form reasonably satisfactory to the Acquired Fund and
dated as of the Closing Date, to the effect that the representations and
warranties of the Acquiring Trust, with respect to the Acquiring Fund, made in
this Agreement are true and correct on and as of the Closing Date, except as
they may be affected by the transactions contemplated by this Agreement, and as
to such other matters as the Acquired Fund shall reasonably request.
6.3. Each Acquired Fund shall have received on the Closing Date an opinion
of Dechert Price & Rhoads, in a form reasonably satisfactory to the Acquired
Fund, and dated as of the Closing Date, to the effect that:
(a) The Acquiring Trust has been duly formed and is an existing business
trust; (b) each Acquiring Fund has the power to carry on its business as
presently conducted in accordance with the description thereof in the
Acquiring Trust's registration statement under the 1940 Act; (c) the
Agreement has been duly authorized, executed and delivered by the Acquiring
Trust, on behalf of each Acquiring Fund, and constitutes a valid and legally
binding obligation of the Acquiring Trust, on behalf of each Acquiring Fund,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and laws of general
applicability relating to or affecting creditors' rights and to general
equity principles; (d) the execution and delivery of the Agreement did not,
and the exchange of each acquired Fund's assets for Acquiring Fund Shares
pursuant to the Agreement will not, violate the Acquiring Trust's
Declaration of Trust, as amended, or By-laws; and (e) to the knowledge of
such counsel, all regulatory consents, authorizations, approvals or filings
required to be obtained or made by each Acquiring Fund under the Federal
laws of the United States or the laws of the Commonwealth of Massachusetts
for the exchange of the Acquired Fund's assets for Acquiring Fund Shares,
pursuant to the Agreement have been obtained or made; and
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<PAGE>
6.4. Each Acquiring Fund shall have performed all of the covenants and
complied with all of the provisions required by this Agreement to be performed
or complied with by the Acquiring Fund on or before the Closing Date.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH ACQUIRING FUND
The obligations of each Acquiring Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquired Fund of all of the obligations to be performed by it hereunder on or
before the Closing Date and, in addition thereto, the following further
conditions:
7.1. All representations and warranties of the Acquired Trust, with respect
to each Acquired Fund, contained in this Agreement shall be true and correct in
all material respects as of the date hereof and, except as they may be affected
by the transactions contemplated by this Agreement, as of the Closing Date, with
the same force and effect as if made on and as of the Closing Date; and there
shall be (i) no pending or threatened litigation brought by any person (other
than each Acquired Fund, its adviser or any of their affiliates) against each
Acquiring Fund or its investment adviser(s), Board members or officers arising
out of this Agreement and (ii) no facts known to the Acquiring Fund which the
Acquiring Fund reasonably believes might result in such litigation.
7.2. Each Acquired Fund shall have delivered to its respective Acquiring
Fund a statement of the Acquired Fund's assets and liabilities as of the Closing
Date, certified by the Treasurer of the Acquired Fund.
7.3. Each Acquired Fund shall have delivered to its respective Acquiring
Fund on the Closing Date a certificate executed in its name by its President or
a Vice President, in a form reasonably satisfactory to the Acquiring Fund and
dated as of the Closing Date, to the effect that the representations and
warranties of the Acquired Trust with respect to the Acquired Fund made in this
Agreement are true and correct on and as of the Closing Date, except as they may
be affected by the transactions contemplated by this Agreement, and as to such
other matters as the Acquiring Fund shall reasonably request.
7.4. Each Acquiring Fund shall have received on the Closing Date an opinion
of Dechert Price & Rhoads, in a form reasonably satisfactory to the Acquiring
Fund, and dated as of the Closing Date, to the effect that:
(a) The Acquired Trust has been duly formed and is an existing business
trust; (b) each Acquired Fund has the corporate power to carry on its
business as presently conducted in accordance with the description thereof
in the Acquired Trust's registration statement under the 1940 Act; (c) the
Agreement has been duly authorized, executed and delivered by the
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<PAGE>
Acquired Trust, on behalf of each Acquired Fund, and constitutes a valid and
legally binding obligation of the Acquired Trust, on behalf of each Acquired
Fund, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and laws of
general applicability relating to or affecting creditors' rights and to
general equity principles; (d) the execution and delivery of the Agreement
did not, and the exchange of each Acquired Fund's assets for Acquiring Fund
Shares pursuant to the Agreement will not, violate the Acquired Trust's
Declaration of Trust, as amended, or By-laws; and (e) to the knowledge of
such counsel, all regulatory consents, authorizations, approvals or filings
required to be obtained or made by each Acquired Fund under the Federal laws
of the United States or the laws of the Commonwealth of Massachusetts for
the exchange of the Acquired Fund's assets for Acquiring Fund Shares,
pursuant to the Agreement have been obtained or made; and
7.5. Each Acquired Fund shall have performed all of the covenants and
complied with all of the provisions required by this Agreement to be performed
or complied with by the Acquired Fund on or before the Closing Date.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH ACQUIRING FUND AND ITS
RESPECTIVE ACQUIRED FUND
If any of the conditions set forth below have not been met on or before the
Closing Date with respect to each Acquired Fund or its respective Acquiring
Fund, the other party to this Agreement shall, at its option, not be required to
consummate the transactions contemplated by this Agreement:
8.1. This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the respective Acquired Fund in accordance with the provisions of the Acquired
Trust's Declaration of Trust, as amended, and By-Laws, applicable Massachusetts
law and the 1940 Act, and certified copies of the resolutions evidencing such
approval shall have been delivered to its respective Acquiring Fund.
Notwithstanding anything herein to the contrary, neither an Acquiring Fund nor
an Acquired Fund may waive the conditions set forth in this section 8.1.
8.2. On the Closing Date, no action, suit or other proceeding shall be
pending or to its knowledge threatened before any court or governmental agency
in which it is sought to restrain or prohibit, or obtain material damages or
other relief in connection with, this Agreement or the transactions contemplated
herein.
8.3. All consents of other parties and all other consents, orders and
permits of Federal, state and local regulatory authorities deemed necessary by
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<PAGE>
an Acquiring Fund or an Acquired Fund to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order or permit would not
involve a risk of a material adverse effect on the assets or properties of an
Acquiring Fund or an Acquired Fund, provided that either party hereto may for
itself waive any of such conditions.
8.4. The parties shall have received an opinion of Willkie Farr & Gallagher
addressed to each of the Acquiring Trust and the Acquired Trust, in a form
reasonably satisfactory to each such party to this Agreement, substantially to
the effect that, based upon certain facts, assumptions and representations of
the parties, for federal income tax purposes: (i) the transfer to each Acquiring
Fund of all or substantially all of the assets of its respective Acquired Fund
in exchange solely for Acquiring Fund Shares and the assumption by the Acquiring
Fund of all of the liabilities of the Acquired Fund, followed by the
distribution of such shares to Acquired Fund Shareholders in exchange for their
shares of the Acquired Fund in complete liquidation of the Acquired Fund, will
constitute a "reorganization" within the meaning of Section 368(a)(1) of the
Code, and the Acquiring Fund and the Acquired Fund will each be "a party to a
reorganization" within the meaning of Section 368(b) of the Code; (ii) no gain
or loss will be recognized by an Acquired Fund upon the transfer of all or
substantially all of its assets to its respective Acquiring Fund in exchange
solely for Acquiring Fund Shares and the assumption by the Acquiring Fund of all
of the liabilities of the Acquired Fund; (iii) the basis of the assets of each
Acquired Fund in the hands of its respective Acquiring Fund will be the same as
the basis of such assets of the Acquired Fund immediately prior to the transfer;
(iv) the holding period of the assets of each Acquired Fund in the hands of its
respective Acquiring Fund will include the period during which such assets were
held by the Acquired Fund; (v) no gain or loss will be recognized by an
Acquiring Fund upon the receipt of the assets of its respective Acquired Fund in
exchange for Acquiring Fund Shares and the assumption by the Acquiring Fund of
all of the liabilities of the Acquired Fund; (vi) no gain or loss will be
recognized by the Acquired Fund Shareholders upon the receipt of Acquiring Fund
Shares solely in exchange for their shares of the Acquired Fund as part of the
transaction; (vii) the basis of the Acquiring Fund Shares received by the
Acquired Fund Shareholders will be the same as the basis of the shares of the
Acquired Fund exchanged therefor; and (viii) the holding period of Acquiring
Fund Shares received by the Acquired Fund Shareholders will include the holding
period during which the shares of the Acquired Fund exchanged therefor were
held, provided that at the time of the exchange the shares of the Acquired Fund
were held as capital assets in the hands of Acquired Fund Shareholders. The
delivery of such opinion is conditioned upon receipt by Willkie Farr & Gallagher
of
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representations it shall request of each of the Acquiring Trust and Acquired
Trust. Notwithstanding anything herein to the contrary, neither an Acquiring
Fund nor an Acquired Fund may waive the condition set forth in this section 8.4.
9. INDEMNIFICATION
9.1. Each Acquiring Fund agrees to indemnify and hold harmless its
respective Acquired Fund and each of the Acquired Trust's Board members and
officers from and against any and all losses, claims, damages, liabilities or
expenses (including, without limitation, the payment of reasonable legal fees
and reasonable costs of investigation) to which jointly and severally, the
Acquired Fund or any of the Acquired Trust's Board members or officers may
become subject, insofar as any such loss, claim damage liability or expense (or
actions with respect thereto) arises out of or is based on any breach by the
Acquiring Fund of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
9.2. Each Acquired Fund agrees to indemnify and hold harmless its
respective Acquiring Fund and each of the Acquiring Trust's Board members and
officers from and against any and all losses, claims, damages, liabilities or
expenses (including, without limitation, the payment of reasonable legal fees
and reasonable costs of investigation) to which jointly and severally, the
Acquiring Fund or any of the Acquiring Trust's Board members or officers may
become subject, insofar as any such loss, claim damage liability or expense (or
actions with respect thereto) arises out of or is based on any breach by the
Acquired Fund of any of its representations, warranties, covenants or agreements
set forth in this Agreement.
10. FEES AND EXPENSES
10.1. Each of the Acquiring Trust on behalf of the Acquiring Funds, and the
Acquired Trust, on behalf of the Acquired Funds, represents and warrants to the
other that it has no obligations to pay any brokers or finders fees in
connection with the transactions provided for herein.
10.2. AARP Small Company Stock Fund will pay its own allocable share of
expenses associated with the Reorganization, except that Scudder Kemper
Investments, Inc. ("Scudder Kemper") will bear any such expenses in excess of
$74,752 for the Acquiring Fund (approximately $0.002281 per share based on
current net assets for AARP Small Company Stock Fund. Scudder Kemper will pay
all expenses associated with the Reorganization that are allocable to AARP
Capital Growth Fund. Any such expenses which are so borne by Scudder Kemper will
be solely and directly related to the Reorganization within the
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meaning of Revenue Ruling 73-54, 1973-1 C.B. 187. Acquired Fund Shareholders
will pay their own expenses, if any, incurred in connection with the
Reorganization.
11. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
11.1. Each Fund agrees that neither party has made any representation,
warranty or covenant not set forth herein and that this Agreement constitutes
the entire agreement between the parties.
11.2. Except as specified in the next sentence set forth in this
section 11.2, the representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall not survive the consummation of the transactions contemplated hereunder.
The covenants to be performed after the Closing and the obligations of each
Acquired Fund and Acquiring Fund in Sections 9.1 and 9.2 shall survive the
Closing.
12. TERMINATION
This Agreement may be terminated and the transactions contemplated hereby
may be abandoned by either party by (i) mutual agreement of the parties, or
(ii) by either party if the Closing shall not have occurred on or before
October 31, 2000, unless such date is extended by mutual agreement of the
parties, or (iii) by either party if the other party shall have materially
breached its obligations under this Agreement or made a material and intentional
misrepresentation herein or in connection herewith. In the event of any such
termination, this Agreement shall become void and there shall be no liability
hereunder on the part of any party or their respective Board members or
officers, except for any such material breach or intentional misrepresentation,
as to each of which all remedies at law or in equity of the party adversely
affected shall survive.
13. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by any authorized officer of the Acquired
Trust and any authorized officer of the Acquiring Trust; provided, however, that
following the meeting of each Acquired Fund Shareholders called by the Acquired
Trust pursuant to section 5.3 of this Agreement, no such amendment may have the
effect of changing the provisions for determining the number of the Acquiring
Fund Shares to be issued to the Acquired Fund shareholders under this Agreement
to the detriment of such shareholders without their further approval.
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<PAGE>
14. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be deemed duly given
if delivered by hand (including by Federal Express or similar express courier)
or transmitted by facsimile or three days after being mailed by prepaid
registered or certified mail, return receipt requested, addressed to the
Acquired Fund, Two International Place, Boston, Massachusetts 02110-4103, with a
copy to Dechert Price & Rhoads, Ten Post Office Square South, Boston, MA
02109-4603, Attention: Sheldon A. Jones, Esq., or to the Acquiring Fund, Two
International Place, Boston, Massachusetts 02110-4103, with a copy to Dechert
Price & Rhoads, Ten Post Office Square South, Boston, MA 02109-4603, Attention:
Sheldon A. Jones, Esq., or to any other address that an Acquired Fund or an
Acquiring Fund shall have last designated by notice to the other party.
15. HEADINGS; COUNTERPARTS; ASSIGNMENT; LIMITATION OF LIABILITY
15.1. The Article and section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
15.2. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
15.3. This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and the shareholders of each
Acquiring Fund and Acquired Fund and their respective successors and assigns,
any rights or remedies under or by reason of this Agreement.
15.4. Each Trust is organized as a Massachusetts business trust, and
references in this Agreement to the Acquiring Trust or Acquired Trust mean and
refer to the Board members from time to time serving under each Trust's
Declaration of Trust on file with the Secretary of State of the Commonwealth of
Massachusetts, as the same may be amended from time to time, pursuant to which
each Trust conducts its business. It is expressly agreed that the obligations of
the Trusts hereunder shall not be binding upon any of the Board members,
shareholders, nominees, officers, agents, or employees of either Trust, or the
Acquiring Funds or Acquired Funds personally, but bind only the respective
property of each Acquiring Fund or Acquired Fund, as applicable, as provided in
the each Trust's Declaration of Trust. Moreover, no series of either Trust other
than the Acquiring Funds or the Acquired Funds, as applicable, shall be
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responsible for the obligations of the either Trust hereunder, and all persons
shall look only to the assets of each Acquiring Fund or Acquired Fund, as
applicable, to satisfy the obligations of each Trust hereunder. The execution
and the delivery of this Agreement have been authorized by each Trust's Board
members, on behalf of each Fund and this Agreement has been signed by authorized
officers of each Trust acting as such, and neither such authorization by such
Board members, nor such execution and delivery by such officers, shall be deemed
to have been made by any of them individually or to impose any liability on any
of them personally, but shall bind only the property of applicable Fund, as
provided in the Trust's Declaration of Trust.
Notwithstanding anything to the contrary contained in this Agreement, the
obligations, agreements, representations and warranties with respect to each
Acquiring Fund and Acquired Fund, as the case may be, shall constitute the
obligations, agreements, representations and warranties of the Acquiring Fund or
the Acquired Fund, as the case may be, only (the "Obligated Fund"), and in no
event shall any other series of the Acquiring Trust or the Acquired Trust or the
assets of any such series be held liable with respect to the breach or other
default by the Obligated Fund of its obligations, agreements, representations
and warranties as set forth herein.
15.5. This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Massachusetts, without regard to its
principles of conflicts of laws.
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its President or Vice President and its seal to be affixed
thereto and attested by its Secretary or Assistant Secretary.
Attest: AARP GROWTH TRUST
on behalf of AARP Capital Growth Fund and AARP
Small Company Stock Fund
- ------------------------------
Secretary
----------------------------------
By: ------------------------------
Its: ------------------------------
Attest: INVESTMENT TRUST
on behalf of Scudder Capital Growth Fund and
Scudder Small Company Stock Fund
- ------------------------------
Secretary
----------------------------------
By: ------------------------------
Its: ------------------------------
AGREED TO AND ACKNOWLEDGED
ONLY WITH RESPECT TO
PARAGRAPH 10.2 HERETO
SCUDDER KEMPER INVESTMENTS, INC.
----------------------------------
By: ------------------------------
Its: ------------------------------
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<PAGE>
APPENDIX 1
BENEFICIAL OWNERS OF TRUST SHARES
As of January 31, 2000, 244,625 shares in the aggregate, or 11.48% of the
outstanding shares of AARP INTERNATIONAL STOCK FUND, were held in the name of
State Street Bank & Trust Company, Custodian of AARP Managed Investment
Portfolios Trust: Diversified Growth Portfolio, One Heritage Drive, Quincy, MA
02171, who may be deemed to be the beneficial owner of certain of these shares.
As of January 31, 2000, 359,439 shares in the aggregate, or 11.66% of the
outstanding shares of AARP SMALL COMPANY STOCK FUND, were held in the name of
State Street Bank & Trust Company, Custodian of AARP Managed Investment
Portfolios Trust: Diversified Growth Portfolio, One Heritage Drive, Quincy, MA
02171, who may be deemed to be the beneficial owner of certain of these shares.
As of January 31, 2000, 1,875,347 shares in the aggregate, or 6.38% of the
outstanding shares of AARP U.S. STOCK INDEX FUND, were held in the name of State
Street Bank & Trust Company, Custodian of AARP Managed Investment Portfolios
Trust: Diversified Growth Portfolio, One Heritage Drive, Quincy, MA 02171, who
may be deemed to be the beneficial owner of certain of these shares.
<PAGE>
APPENDIX 2
FUND SHARES OWNED BY NOMINEES AND TRUSTEES
Many of the nominees and Trustees own shares of the series of the Trust and
of other funds in the Scudder Family of Funds and AARP Funds, allocating their
investments among such funds based on their individual investment needs. The
following table sets forth, for each nominee and Trustee, the number of shares
owned in each series of the Trust as of January 31, 2000. The information as to
beneficial ownership is based on statements furnished to the Trust by each
nominee and Trustee. Unless otherwise noted, beneficial ownership is based on
sole voting and investment power. Each nominee's and Trustee's individual
shareholdings of any series of the Trust constitute less than 1% of the
outstanding shares of such fund. As a group, the Trustees and officers own less
than 1% of the shares of any series of the Trust.
<TABLE>
<CAPTION>
AARP AARP
AARP AARP AARP GROWTH SMALL AARP
BALANCED CAPITAL GLOBAL AND AARP COMPANY U.S. STOCK
STOCK AND GROWTH GROWTH INCOME INTERNATIONAL STOCK INDEX
BOND FUND FUND FUND FUND STOCK FUND FUND FUND
---------- -------- -------- ---------- ------------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Carole Lewis Anderson(3)... 0 371 806 0 0 0 0
Adelaide Attard(1)......... 552(5) 607(8) 303 431(11) 0 0 632
Henry P. Becton,
Jr. (1).................. 0 0 0 0 0 0 0
Robert N. Butler, M.D...... 0 0 0 0 0 0 401(20)
Linda C. Coughlin (1)...... 0 547 487 343 1,468 417 352
Horace B. Deets(1)......... 3,003(6) 0 0 1,567(12) 0 37(18) 82
Dawn-Marie Driscoll (1).... 0 28 0 0 0 113 0
Edgar R. Fiedler (1)....... 0 0 0 0 0 0 0
Lt. Gen. Eugene P.
Forrester................ 981 2,560 506 3,328 711 546 625
Keith R. Fox (1)........... 0 0 0 0 0 0 0
Dr. George L. Maddox,
Jr.(1)................... 0 0 0 2,869(13) 0 0 0
Robert J. Myers(2)......... 0 0 0 0 0 0 0
James H. Schulz(3)......... 0 62(9) 0 55(14) 296(16) 0 0
Dr. Gordon
Shillinglaw(1)........... 1,447 1,859 1,372 2,299 2,577 0 585
Joan Edelman Spero (2)..... 0 0 0 0 0 0 0
Jean Gleason
Stromberg (2)............ 0 0 0 1,044 0 0 0
Jean C. Tempel (1)......... 0 0 0 0 0 0 0
Steven Zaleznick (4)....... 0 0 0 0 0 0 0
All Trustees and Officers
as a Group............... 6,535(7) 6,034(10) 3,474 11,938(15) 5,052(17) 1,113(19) 2,677(21)
</TABLE>
- ------------------------------
(1) Total aggregate holdings in each series of the Trust listed and all other
funds in the Scudder Family of Funds and AARP Funds were over $100,000.
(2) Total aggregate holdings in each series of the Trust listed and all other
funds in the Scudder Family of Funds and AARP Funds ranged between $50,000
and $100,000.
(3) Total aggregate holdings in each series of the Trust listed and all other
funds in the Scudder Family of Funds and AARP Funds ranged between $10,000
and $50,000.
(4) Nominee's total aggregate holdings in each series of the Trust listed and
all other funds in the Scudder Family of Funds and AARP Funds were $0.
<PAGE>
(5) Ms. Attard's shares in AARP Balanced Stock and Bond Fund are held with sole
investment but no voting power. Shares held with sole investment but no
voting power are shares held in profit sharing and 401(k) plans for which
Scudder Kemper serves as trustee.
(6) Mr. Deets's shares in AARP Balanced Stock and Bond Fund include 67 shares
with sole investment and voting power, and 2,936 shares with shared
investment and voting power.
(7) As a group, as of January 31, 2000, the Trustees and officers of AARP
Balanced Stock and Bond Fund held 3,047 shares with sole voting and
investment power, 2,936 shares with shared investment and voting power, and
552 shares with sole investment but no voting power. Shares held with sole
investment but no voting power are shares held in profit sharing and 401(k)
plans for which Scudder Kemper serves as trustee.
(8) Ms. Attard's shares in AARP Capital Growth Fund include 36 shares with sole
investment and voting power and 571 with sole investment but no voting
power. Shares held with sole investment but no voting power are shares held
in profit sharing and 401(k) plans for which Scudder Kemper serves as
trustee.
(9) Mr. Schulz's shares in AARP Capital Growth Fund are held with sole
investment but no voting power. Shares held with sole investment but no
voting power are shares held in profit sharing and 401(k) plans for which
Scudder Kemper serves as trustee.
(10) As a group, as of January 31, 2000, the Trustees and officers of AARP
Capital Growth Fund held 5,402 shares with sole voting and investment
power and 632 shares with sole investment but no voting power. Shares held
with sole investment but no voting power are shares held in profit sharing
and 401(k) plans for which Scudder Kemper serves as trustee.
(11) Ms. Attard's shares in AARP Growth and Income Fund include 153 shares with
sole investment and voting power and 278 with sole investment but no
voting power. Shares held with sole investment but no voting power are
shares held in profit sharing and 401(k) plans for which Scudder Kemper
serves as trustee.
(12) Mr. Deets's shares in AARP Growth and Income Fund include 1,180 shares
with shared investment and voting power, and 387 shares with sole
investment but no voting power. Shares held with sole investment but no
voting power are shares held in profit sharing and 401(k) plans for which
Scudder Kemper serves as trustee.
(13) Dr. Maddox's shares in AARP Growth and Income Fund include 743 shares with
sole investment and voting power, and 2,126 shares with shared investment
and voting power.
(14) Mr. Schulz's shares in AARP Growth and Income Fund are held with sole
investment but no voting power. Shares held with sole investment but no
voting power are shares held in profit sharing and 401(k) plans for which
Scudder Kemper serves as trustee.
(15) As a group, as of January 31, 2000, the Trustees and officers of AARP
Growth and Income Fund held 7,911 shares with sole voting and investment
power, 3,307 shares with shared investment and voting power, and 720
shares with sole investment but no voting power. Shares held with sole
investment but no voting power are shares held in profit sharing and
401(k) plans for which Scudder Kemper serves as trustee.
(16) Mr. Schulz's shares in AARP International Stock Fund are held with sole
investment but no voting power. Shares held with sole investment but no
voting power are shares held in profit sharing and 401(k) plans for which
Scudder Kemper serves as trustee.
(17) As a group, as of January 31, 2000, the Trustees and officers of AARP
International Stock Fund held 4,756 shares with sole voting and investment
power and 296 shares with sole investment but no voting power. Shares held
with sole investment but no voting power are shares held in profit sharing
and 401(k) plans for which Scudder Kemper serves as trustee.
2
<PAGE>
(18) Mr. Deets's shares in AARP Small Company Stock Fund are held with shared
investment and voting power.
(19) As a group, as of January 31, 2000, the Trustees and officers of AARP
Small Company Stock Fund held 1,076 shares with sole voting and investment
power and 37 shares with shared investment and voting power.
(20) Dr. Butler's shares in AARP U.S. Stock Index Fund are held with shared
investment and voting power.
(21) As a group, as of January 31, 2000, the Trustees and officers of AARP U.S.
Stock Index Fund held 2,276 shares with sole voting and investment power
and 401 shares with shared investment but no voting power.
3
<PAGE>
Q: WHEN WILL THESE CHANGES TAKE EFFECT?
A: The Board expects that the proposed changes will take effect during the third
calendar quarter of this year if the proposals are approved.
Q: WHOM SHOULD I CALL FOR MORE INFORMATION ABOUT THIS PROXY STATEMENT?
A: Please call Shareholder Communications Corporation, your Fund's information
agent, at 1-800-605-1203.
<PAGE>
For more information, please call Shareholder Communications
Corporation, your Fund's Information agent at 1-800-605-1203.
AA Growth Trust
<PAGE>
FORM OF PROXY
[LOGO] YOUR VOTE IS IMPORTANT!
[ADDRESS]
VOTE TODAY BY MAIL,
TOUCH-TONE PHONE OR THE INTERNET
CALL TOLL FREE 1-XXX-XXX-XXXX OR
LOG ON TO WWW.PROXYWEB.COM/XXXXX
*** CONTROL NUMBER: XXX XXX XXX XXX XX *** PLEASE FOLD AND DETACH CARD AT
PERFORATION BEFORE MAILING.
AARP SMALL COMPANY STOCK FUND
PROXY SPECIAL MEETING OF SHAREHOLDERS - JULY 11, 2000
The undersigned hereby appoints John Millette, Kathryn L. Quirk and John R.
Hebble, and each of them, the proxies of the undersigned, with the power of
substitution to each of them, to vote all shares of the above-referenced fund
(the "Fund") which the undersigned is entitled to vote at the Special Meeting of
Shareholders of the Fund to be held at the offices of Scudder Kemper
Investments, Inc., Two International Place, Boston, MA 02110, on July 11, 2000
at 2:00 p.m., Eastern time, and at any adjournments thereof.
PLEASE SIGN AND RETURN PROMPTLY
IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED.
Dated ______________________,2000
PLEASE SIGN EXACTLY AS YOUR NAME OR
NAMES APPEAR. WHEN SIGNING AS AN
ATTORNEY, EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE YOUR
FULL TITLE AS SUCH.
-------------------------------------
[NAME]
[ADDRESS]
-------------------------------------
SIGNATURE(S) OF SHAREHOLDER(S)
<PAGE>
[LOGO] YOUR VOTE IS IMPORTANT!
[ADDRESS]
VOTE TODAY BY MAIL,
TOUCH-TONE PHONE OR THE INTERNET
CALL TOLL FREE 1-XXX-XXX-XXXX OR
LOG ON TO WWW.PROXYWEB.COM/XXXXX
PLEASE FOLD AND DETACH CARD AT PERFORATION BEFORE MAILING.
ALL PROPERLY EXECUTED PROXIES WILL BE VOTED AS DIRECTED. IF NO INSTRUCTIONS
ARE INDICATED ON A PROPERLY EXECUTED PROXY, THE PROXY WILL BE VOTED FOR APPROVAL
OF THE PROPOSALS.
THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF THE FUND. THE BOARD OF TRUSTEES
RECOMMENDS A VOTE FOR THE PROPOSALS.
PLEASE VOTE BY FILLING IN THE BOXES BELOW.
FOR ALL WITHHOLD
NOMINEES AUTHORITY TO
LISTED VOTE FOR ALL
(EXCEPT AS NOMINEES
NOTED IN LISTED
SPACE
PROVIDED)
PROPOSAL 1
- ----------
To elect Trustees to hold office until / / / /
their respective successors have been
duly elected and qualified or until
their earlier resignation or removal.
NOMINEES:
(01) Henry P. Becton, Jr. (02) Linda C.
Coughlin (03) Dawn-Marie Driscoll (04)
Edgar R. Fiedler (05) Keith R. Fox (06)
Joan Edelman Spero (07) Jean Gleason
Stromberg (08) Jean C. Tempel (09)
Steven Zaleznick
INSTRUCTION: TO WITHHOLD AUTHORITY TO
VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THE NAME(S) ON THE LINE IMMEDIATELY
BELOW.
- ----------------------------------------
PROPOSAL 2 FOR AGAINST ABSTAIN
- ----------
To approve an Agreement and Plan of / / / / / /
Reorganization for the Fund whereby all
or substantially all of the assets and
liabilities of the Fund would be
acquired by a new series of Investment
Trust in exchange for shares of the AARP
Class of such series.
<PAGE>
PROPOSAL 3
- ----------
To ratify the selection of / / / / / /
PricewaterhouseCoopers LLP as the Fund's
independent accountants for the current
fiscal year.
THE PROXIES ARE AUTHORIZED TO VOTE IN THEIR DISCRETION ON ANY OTHER BUSINESS
WHICH MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS THEREOF.
PLEASE SIGN ON REVERSE SIDE
<PAGE>
FORM OF PROXY
[LOGO] YOUR VOTE IS IMPORTANT!
[ADDRESS]
VOTE TODAY BY MAIL,
TOUCH-TONE PHONE OR THE INTERNET
CALL TOLL FREE 1-XXX-XXX-XXXX OR
LOG ON TO WWW.PROXYWEB.COM/XXXXX
*** CONTROL NUMBER: XXX XXX XXX XXX XX *** PLEASE FOLD AND DETACH CARD AT
PERFORATION BEFORE MAILING.
AARP CAPITAL GROWTH FUND
PROXY SPECIAL MEETING OF SHAREHOLDERS - JULY 11, 2000
The undersigned hereby appoints John Millette, Kathryn L. Quirk and John R.
Hebble, and each of them, the proxies of the undersigned, with the power of
substitution to each of them, to vote all shares of the above-referenced fund
(the "Fund") which the undersigned is entitled to vote at the Special Meeting of
Shareholders of the Fund to be held at the offices of Scudder Kemper
Investments, Inc., Two International Place, Boston, MA 02110, on July 11, 2000
at 2:00 p.m., Eastern time, and at any adjournments thereof.
PLEASE SIGN AND RETURN PROMPTLY
IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED.
Dated ______________________,2000
PLEASE SIGN EXACTLY AS YOUR NAME OR
NAMES APPEAR. WHEN SIGNING AS AN
ATTORNEY, EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE YOUR
FULL TITLE AS SUCH.
-------------------------------------
[NAME]
[ADDRESS]
-------------------------------------
SIGNATURE(S) OF SHAREHOLDER(S)
<PAGE>
[LOGO] YOUR VOTE IS IMPORTANT!
[ADDRESS]
VOTE TODAY BY MAIL,
TOUCH-TONE PHONE OR THE INTERNET
CALL TOLL FREE 1-XXX-XXX-XXXX OR
LOG ON TO WWW.PROXYWEB.COM/XXXXX
PLEASE FOLD AND DETACH CARD AT PERFORATION BEFORE MAILING.
ALL PROPERLY EXECUTED PROXIES WILL BE VOTED AS DIRECTED. IF NO INSTRUCTIONS
ARE INDICATED ON A PROPERLY EXECUTED PROXY, THE PROXY WILL BE VOTED FOR APPROVAL
OF THE PROPOSALS.
THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF THE FUND. THE BOARD OF TRUSTEES
RECOMMENDS A VOTE FOR THE PROPOSALS.
PLEASE VOTE BY FILLING IN THE BOXES BELOW.
FOR ALL WITHHOLD
NOMINEES AUTHORITY TO
LISTED VOTE FOR ALL
(EXCEPT AS NOMINEES
NOTED IN LISTED
SPACE
PROVIDED)
PROPOSAL 1
- ----------
To elect Trustees to hold office until / / / /
their respective successors have been
duly elected and qualified or until
their earlier resignation or removal.
NOMINEES:
(01) Henry P. Becton, Jr. (02) Linda C.
Coughlin (03) Dawn-Marie Driscoll (04)
Edgar R. Fiedler (05) Keith R. Fox (06)
Joan Edelman Spero (07) Jean Gleason
Stromberg (08) Jean C. Tempel (09)
Steven Zaleznick
INSTRUCTION: TO WITHHOLD AUTHORITY TO
VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THE NAME(S) ON THE LINE IMMEDIATELY
BELOW.
- ----------------------------------------
PROPOSAL 2 FOR AGAINST ABSTAIN
- ----------
To approve an Agreement and Plan of / / / / / /
Reorganization for the Fund whereby all
or substantially all of the assets and
liabilities of the Fund would be
acquired by a new series of Investment
Trust in exchange for shares of the AARP
Class of such series.
<PAGE>
PROPOSAL 3
- ----------
To ratify the selection of / / / / / /
PricewaterhouseCoopers LLP as the Fund's
independent accountants for the current
fiscal year.
THE PROXIES ARE AUTHORIZED TO VOTE IN THEIR DISCRETION ON ANY OTHER BUSINESS
WHICH MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS THEREOF.
PLEASE SIGN ON REVERSE SIDE
