AARP INCOME TRUST, 497, 1996-07-01

AARP INCOME TRUST
497, 1996-07-01

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AARP INVESTMENT PROGRAM FROM SCUDDER

PROSPECTUS

February 1, 1996
As Revised July 1, 1996

There are nine pure no-load AARP Mutual Funds that have been developed to
help meet the investment needs of AARP members. The Funds are organized into
four Trusts (see page 34 for more information on the Trusts).

Trusts AARP Mutual Funds
- ------ -----------------
AARP Cash Investment Funds AARP High Quality Money Fund

AARP Income Trust AARP GNMA and U.S. Treasury Fund
AARP High Quality Bond Fund

AARP Tax Free Income Trust AARP High Quality Tax Free Money Fund
AARP Insured Tax Free General Bond Fund

AARP Growth Trust AARP Balanced Stock and Bond Fund
AARP Growth and Income Fund
AARP Global Growth Fund
AARP Capital Growth Fund

This combined Prospectus provides information about the AARP Investment
Program from Scudder that a prospective investor should know before investing.
Please keep it for future reference.

The U.S. Government does not and has never insured or guaranteed shares of
any mutual fund, including the AARP Mutual Funds. For limitations on insurance
relative to the AARP Insured Tax Free General Bond Fund, see page 20. The AARP
High Quality Money Fund and the AARP High Quality Tax Free Money Fund each seek
to maintain a constant net asset value of $1.00 per share. The Fund Manager
cannot assure investors that these funds will be able to maintain a stable $1.00
per share or constant net asset value.

You may get more detailed information in the combined Statement of
Additional Information (SAI) dated February 1, 1996, as amended from time to
time. The SAI is considered part of this Prospectus by reference to it. The SAI
is on file with the Securities and Exchange Commission (SEC).

You may get a copy of the SAI or a LARGER PRINT VERSION OF THIS PROSPECTUS
without charge. Call 1-800-253-2277, or write to Scudder Investor Services,
Inc., P.O. Box 2540, Boston, MA 02208-2540.

LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS COMBINED
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

Prospectus
1
<PAGE>

FUND EXPENSES

The AARP Mutual Funds do not charge sales fees or commissions. 100% of your
investment goes to work for you.

* No fees to open your account

* No fees to open or maintain an AARP IRA or AARP Keogh Plan account

* No fees to buy shares

* No fees to exchange (move investments from one fund to another)

* No fees to sell (redeem) shares

* No marketing fees or distribution fees (12b-1 fees)

* No fees to reinvest dividends

There are Annual Fund Operating Expenses for each of the AARP Funds. You do not
pay these expenses directly. The AARP Funds pay these expenses before
distributing net investment income to you. These expenses include the management
fee paid to the Fund Manager as well as other expenses for services such as
maintaining shareholder records and furnishing shareholder statements and fund
reports. The expenses are reflected in the AARP Funds' share prices or dividends
and are not directly charged to shareholder accounts.

The following tables present information on the projected costs and expenses of
investing in an AARP Fund. You may use these tables to compare the fees and
expenses of the AARP Funds with other mutual funds.

Annual Fund Operating Expenses are expressed as a percentage of each AARP Fund's
average daily net assets.

The chart shows the expenses for each of the Funds, other than the AARP Global
Growth Fund, for the fiscal year ended September 30, 1995. For the AARP Global
Growth Fund, which was introduced on February 1, 1996, expenses have been
estimated for the coming year.
<TABLE>
<CAPTION>
Effective
Management Other Total Fund
Fund Fee Rate** Expenses Operating Expenses
---- ---------- -------- ------------------
<S> <C> <C> <C>

AARP High Quality Money Fund .40% .58% .98%
AARP High Quality Tax Free Money Fund .39% .48% .87%
AARP GNMA and U.S. Treasury Fund .42% .25% .67%
AARP High Quality Bond Fund .49% .46% .95%
AARP Insured Tax Free General Bond Fund .49% .20% .69%
AARP Balanced Stock and Bond Fund .49% .52% 1.01%
AARP Growth and Income Fund .49% .23% .72%
AARP Global Growth Fund .40%* 1.35% 1.75%*
AARP Capital Growth Fund .62% .33% .95%
</TABLE>

Prospectus
2
<PAGE>

EXAMPLES OF WHAT FUND EXPENSES WOULD BE ON A $1,000 INVESTMENT IN EACH AARP
FUND

Based on the level of assets as of September 30, 1995 (and projected September
30, 1996 assets for the AARP Global Growth Fund), we have calculated the
forecasted total expenses of a $1,000 investment in each AARP Fund over
specified periods. These examples assume 5% annual return. There are 3 other
assumptions: (1) redemption at the end of each period, (2) reinvestment of all
dividends and distributions, and (3) total fund operating expenses noted on page
2 remain the same each year.

For additional information, including reference to a $5.00 wire service fee that
is charged in some cases, please refer to page 41.

Fund 1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
AARP High Quality Money Fund $10 $31 $54 $120
AARP High Quality Tax Free Money Fund 9 28 48 107
AARP GNMA and U.S. Treasury Fund 7 21 37 83
AARP High Quality Bond Fund 10 30 53 117
AARP Insured Tax Free General Bond Fund 7 22 38 86
AARP Balanced Stock and Bond Fund 10 32 56 124
AARP Growth and Income Fund 7 23 40 89
AARP Global Growth Fund 18 55 N/A N/A
AARP Capital Growth Fund 10 30 53 117

You should not consider these examples as representations of past or future
expenses or returns. Actual fund expenses may be higher or lower in the future.

* The AARP Global Growth Fund was introduced on February 1, 1996. Fund
expenses are projected given the asset forecast as of September 30, 1996.
Until September 30, 1996, the Fund Manager has agreed to waive a portion of
its management fee for AARP Global Growth Fund to the extent necessary so
that the total annualized expenses of the Fund do not exceed 1.75% of
average daily net assets. If the Fund Manager had not agreed to waive a
portion of its fee, it is estimated that the total annualized expenses of
the Fund would be: investment management fee .85%, other expenses 1.35% and
total operating expenses 2.20% for the initial fiscal year. To the extent
that expenses fall below the current expense limitation, the Fund Manager
reserves the right to recoup, during the fiscal year incurred, amounts
waived during the period, but only to the extent that the Fund's expenses
do not exceed 1.75%.

** The AARP Funds' fee structure is designed to recognize the degree to which
the pooled resources of the Program provide economies in the management of
the AARP Funds. The fee consists of two elements: a "Base Fee" and an
"Individual Fund Fee." The combined Base Fee and Individual Fund Fee is
called the Effective Management Fee Rate. See page 36 for information on
how the Effective Management Fee Rate is calculated.

Prospectus
3
<PAGE>

FINANCIAL HIGHLIGHTS

On the next six pages you will find a variety of information about the income
and the expenses of each AARP Fund for the stated periods. You will also find
the following: (1) the net gain or loss on the investments, (2) the
distributions, if any, of income and gain, and, (3) the change in net asset
value per share from the beginning to the end of the stated periods. Price
Waterhouse LLP, the AARP Funds' independent accountants, have examined this
information. The Annual Report to Shareholders includes their report.

<TABLE>
<CAPTION>
For the Years Ended Net Asset Net Net Realized Total from Dividends Distributions Distributions
September 30 Value at Investment & Unrealized Investment from Net from Net from Tax
Beginning Income (a) Investment Operations Investment Realized Return of
of Period Gain (Loss) Income Gains Capital
- -------------------- --------- ---------- ----------- ---------- ----------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
AARP High Quality Money Fund

1996(e) (unaudited) $ 1.00 $ .023 -- $ .023 $(.023) -- --

1995 1.00 .049 -- .049 (.049) -- --
1994 1.00 .028 -- .028 (.028) -- --
1993 1.00 .021 -- .021 (.021) -- --
1992 1.00 .040 -- .040 (.040) (c) -- --
1991 1.00 .060 -- .060 (.060) -- --
1990 1.00 .073 -- .073 (.073) -- --
1989 1.00 .080 -- .080 (.080) -- --
1988 1.00 .060 -- .060 (.060) -- --
1987 1.00 .050 -- .050 (.050) -- --
1986 1.00 .064 -- .064 (.064) -- --

AARP High Quality Tax Free Money Fund (d)

1996(e) (unaudited) $1.000 $ .014 -- $ .014 $(.014) -- --

1995 1.000 .029 -- .029 (.029) -- --
1994 1.000 .017 -- .017 (.017) -- --
1993 1.000 .016 -- .016 (.016) -- --
1992 1.000 .026 -- .026 (.026) -- --
1991 (d) .996 .055 $ .004 .059 (.055) -- --
1990 .998 .061 (.002) .059 (.061) -- --
1989 1.008 .059 (.010) .049 (.059) -- --
1988 .998 .055 .010 .065 (.055) -- --
1987 1.027 .049 (.026) .023 (.049) $(.003) --
1986 .996 .048 .031 .079 (.048) -- --

AARP GNMA and U.S. Treasury Fund

1996(e) (unaudited) $15.19 $ .51 $(.13) $ .38 $(.51) -- --

1995 14.73 1.01 .46 1.47 (.98) -- $(.03)
1994 15.96 .93 (1.23) (.30) (.93) -- --
1993 16.19 1.15 (.23) .92 (1.15) -- --
1992 15.72 1.22 .47 1.69 (1.22) -- --
1991 14.95 1.26 .77 2.03 (1.26) -- --
1990 14.98 1.31 (.03) 1.28 (1.31) -- --
1989 15.11 1.31 (.13) 1.18 (1.31) -- --
1988 14.89 1.37 .22 1.59 (1.37) -- --
1987 15.99 1.35 (1.09) .26 (1.35) $(.01) --
1986 15.52 1.54 .50 2.04 (1.54) (.03) --

(a) Reflects a per share reimbursement of expenses during the period by the Fund Manager. See last column.
(b) Reflects fees not imposed by the Fund Manager of $.001 per share.
(c) Includes approximately $.005 per share of net realized short-term capital gains.

Prospectus
4
<PAGE>

For a copy of the Annual Report to Shareholders which includes more detailed
information concerning the Funds' performance, complete portfolio listings and
audited financial statements, please contact an AARP Mutual Fund Representative
at 1-800-253-2277.

Total Net Asset Total Net Assets Ratio of Ratio of Net Portfolio Per Share
Distributions Value at Return % End of Period Operating Investment Turnover Reimbursement
End of ($ millions) Expenses to Income to Rate % of Expenses (a):
Period Average Net Average Net
Assets % (a) Assets %
- -------------- --------- ---------- ----------- ------------- ------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>

$(.023) $ 1.00 2.30(f) 381 .988(g) 4.490(g) -- --

(.049) 1.00 4.99 384 .978 4.887 -- --
(.028) 1.00 2.84 333 1.125 2.889 -- --
(.021) 1.00 2.13 254 1.312 2.123 -- --
(.040) 1.00 4.12 323 1.151 3.613 -- $ .000
(.060) 1.00 6.22 357 1.053 6.050 -- .001
(.073) 1.00 7.58 376 1.058 7.319 -- .001
(.080) 1.00 8.32 324 1.071 8.061 -- .001
(.060) 1.00 6.15 224 1.097(b) 6.025 -- .001
(.050) 1.00 5.13 178 1.160 5.090 -- .004
(.064) 1.00 6.60 104 .712 6.310 -- .009

$(.014) $1.000 1.42(f) 115 .89(g) 2.82(g) -- --

(.029) 1.000 2.99 120 .87 2.94 -- --
(.017) 1.000 1.76 129 .90 1.75 -- $ .000
(.016) 1.000 1.62 134 .93 1.60 -- .002
(.026) 1.000 2.58 127 .95 2.54 -- .002
(.055) 1.000 6.10 119 1.06 5.43 -- .001
(.061) .996 6.02 98 1.12 6.06 39.88 --
(.059) .998 4.98 90 1.17 5.85 21.28 --
(.055) 1.008 6.65 79 1.27 5.47 62.73 .005
(.052) .998 2.25 70 1.31 4.80 22.20 .006
(.048) 1.027 8.07 48 1.48 4.72 23.00 --

$(.51) $15.06 2.49(f) 5,121 .64(g) 6.66(g) 56.28(g) --

(1.01) 15.19 10.31 5,252 .67 6.77 70.35 --
(.93) 14.73 (1.90) 5,585 .66 6.09 114.54 --
(1.15) 15.96 5.89 6,712 .70 7.15 105.49 --
(1.22) 16.19 11.19 5,232 .72 7.69 74.33 --
(1.26) 15.72 14.12 3,311 .74 8.23 86.64 --
(1.31) 14.95 8.86 2,583 .79 8.71 60.54 --
(1.31) 14.98 8.17 2,518 .79 8.76 48.35 --
(1.37) 15.11 11.07 2,837 .81 9.09 84.72 --
(1.36) 14.89 1.54 2,827 .88 8.76 50.68 --
(1.57) 15.99 13.62 1,963 .90 9.49 61.92 --

(d) On August 1, 1991 the Fund implemented a 15.17 to 1.00 stock split and
adopted its present name and investment objectives. Prior to that date, the
Fund was known as the AARP Insured Tax Free Short Term Fund. Financial
information prior to August 1, 1991 has been restated to reflect the stock
split and should not be considered representative of the present Fund.

(e) Operations for the period October 1, 1995 to March 31, 1996.
(f) Not annualized. (g) Annualized.

Prospectus
5
<PAGE>

For the Years Ended Net Asset Net Net Realized Total from Dividends Distributions Distributions
September 30 Value at Investment & Unrealized Investment from Net from Net in Excess of
Beginning Income (a) Investment Operations Investment Realized Net Realized
of Period Gain (Loss) Income Gains Gains
- -------------------- --------- ---------- ----------- ---------- ----------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
AARP High Quality Bond Fund

1996(g) (unaudited) $16.01 $ .47 $(.09) $ .38 $(.47) -- --

1995 15.05 .94 .95 1.89 (.93) -- --
1994 17.19 .85 (1.76) (.91) (.85) -- $(.38)
1993 16.44 .93 .93 1.86 (.93) $(.18) --
1992 15.71 1.03 .73 1.76 (1.03) -- --
1991 14.63 1.10 1.08 2.18 (1.10) -- --
1990 15.04 1.17 (.41) .76 (1.17) -- --
1989 14.80 1.23 .24 1.47 (1.23) -- --
1988 14.45 1.27 .46 1.73 (1.27) (.11)(e) --
1987 15.87 1.22 (1.19) .03 (1.22) (.23) --
1986 15.31 1.41 .61 2.02 (1.41) (.05) --

AARP Insured Tax Free General Bond Fund

1996(g) (unaudited) $17.74 $ .43 $ .13 $ .56 $(.43) -- --

1995 16.93 .87 .81 1.68 (.87) -- --
1994 19.00 .86 (1.67) (.81) (.86) $(.34) $(.06)
1993 17.88 .90 1.55 2.45 (.90) (.43) --
1992 17.30 .93 .75 1.68 (.93) (.17) --
1991 16.12 1.00 1.18 2.18 (1.00) -- --
1990 16.61 1.04 (.24) .80 (1.04) (.25) --
1989 16.02 1.08 .59 1.67 (1.08) -- --
1988 15.00 1.08 1.02 2.10 (1.08) -- --
1987 16.69 1.07 (1.49) (.42) (1.07) (.20) --
1986 15.12 1.01 1.63 2.64 (1.01) (.06) --

AARP Balanced Stock and Bond Fund

1996(g) (unaudited) $16.40 $ .30 $ .99 $ 1.29 $(.32) $(.21) --

1995 14.64 .61 1.79 2.40 (.60) (.04) --
1994(d) 15.00 .25 (.37)(f) (.12) (.24) -- --

AARP Growth and Income Fund

1996(g) (unaudited) $38.36 $ .52 $ 4.52 $ 5.04 $(.54) $(.84) --

1995 34.13 1.11 5.44 6.55 (1.09) (1.23) --
1994 32.91 .94 1.62 2.56 (1.13) (.21) --
1993 28.67 .83 4.58 5.41 (.87) (.30) --
1992 26.97 .97 2.11 3.08 (.90) (.48) --
1991 22.30 1.11 4.78 5.89 (1.17) (.05) --
1990 26.11 1.11 (3.69) (2.58) (1.15) (.08) --
1989 20.94 1.01 5.20 6.21 (1.04) -- --
1988 25.54 1.04 (3.93) (2.89) (.94) (.77) --
1987 20.88 .67 5.51 6.18 (.64) (.88) --
1986 16.84 .73 4.10 4.83 (.70) (.09) --

(a) Reflects a per share reimbursement of expenses during the period by the
Fund Manager. See last column.
(b) Not Annualized.
(c) Annualized.
(d) Operations for the period of February 1, 1994 (commencement of operations)
to September 30, 1994.
(e) Includes $0.06 of distributions from paid-in capital.

Prospectus
6
<PAGE>

Total Net Asset Total Net Assets Ratio of Ratio of Net Portfolio Average Per Share
Distributions Value at Return % End of Operating Investment Turnover Commission Reimbursement
End of Period Expenses to Income to Rate % Rate Paid(h) of
Period ($ millions) Average Net Average Net Expenses (a):
Assets %(a) Assets %
- ------------ --------- ---------- ----------- ----------- ------------ --------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ (.47) $15.92 2.35(b) 529 .95(c) 5.78(c) 199.17(c) --

(.93) 16.01 12.98 533 .95 6.13 201.07 --
(1.23) 15.05 (5.55) 568 .95 5.31 63.75 --
(1.11) 17.19 11.88 604 1.01 5.64 100.98 --
(1.03) 16.44 11.56 384 1.13 6.40 63.00 --
(1.10) 15.71 15.44 201 1.17 7.26 90.43 --
(1.17) 14.63 5.21 151 1.14 7.86 47.39 $.009
(1.23) 15.04 10.38 129 1.16 8.33 57.69 .007
(1.38) 14.80 12.38 123 1.17 8.55 23.57 .005
(1.45) 14.45 (.09) 108 1.18 7.81 192.80 .034
(1.46) 15.87 13.60 88 1.30 8.86 62.72 .011

$ (.43) $17.87 3.15(b) 1,786 .67(c) 4.75(c) 41.37(c) --

(.87) 17.74 10.21 1,807 .69 5.06 17.45 --
(1.26) 16.93 (4.48) 1,914 .68 4.80 38.39 --
(1.33) 19.00 14.31 2,087 .72 4.90 47.96 --
(1.10) 17.88 10.01 1,487 .74 5.31 62.45 --
(1.00) 17.30 13.85 1,068 .77 5.92 32.18 --
(1.29) 16.12 4.89 771 .80 6.29 48.24 --
(1.08) 16.61 10.66 527 .84 6.52 148.94 --
(1.08) 16.02 14.39 312 .92 6.95 163.51 --
(1.27) 15.00 (2.94) 238 1.00 6.58 135.32 --
(1.07) 16.69 17.96 129 1.13 6.40 35.99 --

$ (.53) $17.16 7.94(b) 319 1.01(c) 3.66(c) 40.57(c) $.0551 --

(.64) 16.40 16.80 247 1.01 4.12 63.77 --
(.24) 14.64 (.78)(b) 175 1.31(c) 3.58(c) 49.32(c) --

$(1.38) $42.02 13.34(b) 3,669 .70(c) 2.66(c) 30.45(c) $.0499 --

(2.32) 38.36 20.43 3,007 .72 3.28 31.26 --
(1.34) 34.13 7.99 2,312 .76 3.00 31.82 --
(1.17) 32.91 19.38 1,560 .84 3.08 17.44 --
(1.38) 28.67 11.59 748 .91 3.84 36.40 --
(1.22) 26.97 27.19 392 .96 4.61 53.68 --
(1.23) 22.30 (10.19) 248 1.03 4.76 58.47 --
(1.04) 26.11 30.58 236 1.04 4.19 55.21 --
(1.71) 20.94 (10.75) 228 1.06 4.52 61.34 --
(1.52) 25.54 30.92 358 1.08 3.81 43.25 $.007
(.79) 20.88 29.00 99 1.21 4.55 37.44 --

(f) The amount shown for a share outstanding throughout the period does not
accord with the change in the aggregate gains and losses in the portfolio
securities during the period because of the timing of sales and repurchases
of Fund shares in relation to fluctuating market values during the period.

(g) Operations for the period October 1, 1995 to March 31, 1996.
(h) Average commission rate paid per share is calculated for fiscal years
beginning on or after September 1, 1995.

Prospectus
7
<PAGE>

For the Years Ended Net Asset Net Net Realized Total from Dividends Distributions
September 30 Value at Investment & Unrealized Investment from Net from Net
Beginning Income (a) Investment Operations Investment Realized Total
of Period Gain (Loss) Income Gains Distributions
- -------------------- --------- ---------- ----------- ---------- ----------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>

AARP Global Growth Fund
1996 (b) (unaudited) $15.00 $ .02 $ .25 $ .27 -- -- --

AARP Capital Growth Fund

1996(g) (unaudited) $38.36 $ .18 $ 3.32 $ 3.50 $(.39) $(.51) $(.90)

1995 31.74 .36 6.91 7.27 (.01) (.64) (.65)
1994 36.20 .00 (1.51) (1.51) (.05) (2.90) (2.95)
1993 30.30 .06 7.19 7.25 (.14) (1.21) (1.35)
1992 30.23 .15 1.09 1.24 (.23) (.94) (1.17)
1991 23.32 .24 9.05 9.29 (.59) (1.79) (2.38)
1990 34.17 .54(f) (9.27) (8.73) (.19) (1.93) (2.12)
1989 23.88 .21 10.17 10.38 (.09) -- (.09)
1988 27.55 .10 (1.97) (1.87) (.15) (1.65) (1.80)
1987 21.13 .11 7.40 7.51 (.19) (.90) (1.09)
1986 16.95 .18 4.28 4.46 (.09) (.19) (.28)

(a) Reflects a per share reimbursement of expenses during the period by the
Fund Manager. See last column.
(b) Operations for the period of February 1, 1996 (commencement of operations)
to March 31, 1996.

AN OVERVIEW OF THE AARP INVESTMENT PROGRAM

AARP is a nonprofit organization dedicated to addressing the needs and
interests of persons aged 50 and older. It seeks through education,
advocacy, and service to enhance the quality of life for all by promoting
independence, dignity, and purpose. In the early 1980s, research conducted
by AARP indicated that many members were not taking steps to invest
adequately for their future. To encourage members to plan for their
retirement and beyond, AARP decided to make available a family of mutual
funds. The family of funds would provide members with a limited number of
distinct investment choices that were managed by an experienced investment
adviser. AARP sought an investment management firm to develop and manage
the funds. After interviewing a number of investment managers, AARP
selected Scudder, Stevens & Clark, Inc., who will be referred to in this
prospectus as Scudder or the Fund Manager.

Who is Scudder, Stevens & Clark?

Scudder, Stevens & Clark is America's oldest independent investment counsel
firm. Its founder, Theodore T. Scudder, established the profession of
long-term, fee-based investment counsel in 1919 at a time when investment
firms were focused on short-term, commission-based trading. In the more
than 75 years that have passed since then, Scudder has grown to be one of
America's largest independent investment managers. Today, Scudder manages
more than $100 billion in assets for clients around the world. Scudder
manages corporate funds, pension plans, and endowments for institutions,
and provides an array of investment products and services for individual
clients and other investors. These include the Scudder Funds, a family of
no-load mutual funds; a no-load variable annuity; 401(k) Plans; and several
closed-end funds.

Scudder brings decades of experience and innovation to mutual fund
investing. In 1928, Scudder offered America's first no-load mutual fund.
Scudder was the first company to offer an international mutual fund to U.S.
investors. In 1984, Scudder was selected by AARP to develop and manage the
AARP Mutual Funds.

Prospectus
8
<PAGE>

Net Asset Total Net Assets Ratio of Ratio of Net Portfolio Average Per Share
Value at Return % End of Operating Investment Turnover Commission Reimbursement
End of Period Expenses to Income to Rate % Rate Paid(h) of
Period ($ millions) Average Net Average Net Expenses (a):
Assets %(a) Assets %
- --------- ---------- ----------- ----------- ------------ --------- ----------- -------------
<C> <C> <C> <C> <C> <C> <C> <C>
$15.27 1.80(c) 28 1.75(d) 2.06(d) -- $.0172 $ .07

$40.96 9.27(c) 762 .91(d) .93(d) 75.90(d) $.0617 --

38.36 23.47 692 .95 1.00 98.44 --
31.74 (4.70) 683 .97 .02 79.65 --
36.20 24.53 607 1.05 .22 100.63 --
30.30 3.94 424 1.13 .61 89.20 --
30.23 42.81 242 1.17 .90 99.62 --
23.32 (26.94) 160 1.11 2.00 83.28 $.009
34.17 43.62 180 1.16 .89 63.51 --
23.88 (5.44) 91 1.23 .37 45.37 .044
27.55 37.02 116 1.24 .62 53.61 .025
21.13 26.65 56 1.44 1.27 46.32 --

(d) Annualized.
(e) Average commission rate paid per share is calculated for fiscal years
beginning on or after September 1, 1995.
(f) Net investment income per share includes non recurring dividend income
amounting to $.18 per share.
(g) Operations for the period October 1, 1995 to March 31, 1996.

</TABLE>

What are the roles of AARP and Scudder?

The AARP Investment Program from Scudder was established in accordance with
criteria set by AARP. Specifically, these criteria include providing
members with competitive investment performance, allowing easy access to
investments, offering easy-to-understand information concerning investing,
and delivering superior service. Fulfilling this mandate is the mission of
AARP and Scudder. Both organizations work closely to ensure these criteria
are met. Scudder provides investment management and administrative services
for the AARP Funds and brings to the Program more than 75 years of
investment counseling and management experience. AARP provides insight into
the diversity and changing character of AARP members. Association staff
closely monitor Program services and review all Program materials to ensure
conformity to AARP's high standards. Members of AARP leadership also serve
as Trustees for the AARP Funds.

WHAT DOES THE AARP INVESTMENT PROGRAM OFFER ME?

The Program was created to address the investment concerns of AARP members
and to help you make informed investment decisions. It features several
benefits that may make investing advantageous and give you greater
confidence that you've made decisions appropriate for your needs:

* A Unique Family of Funds: The Program offers a range of mutual funds
which recognize the needs of AARP members. Each of the AARP Funds is
conservatively managed, seeking to moderate share price volatility,
while seeking competitive returns. This makes the AARP Funds distinct
from other mutual funds, which may seek higher returns but do not
focus on reducing share price volatility.

* No Sales Fees or Commissions: Unlike most other mutual funds, the AARP
Funds are pure no-loadt so you don't pay any sales fees or commissions
to purchase, exchange or sell (redeem) shares. In addition, the Funds
do not charge 12b-1 fees, which are a form of a sales charge that
covers marketing and distribution expenses.

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* No Fees to open and maintain an AARP IRA or AARP Keogh Plan account:
You'll pay no separate fees to open or maintain your retirement plan
account. All your money goes to work for your retirement.

* Low initial investment: Open an account for just $500 for each AARP
Fund ($2,500 for the AARP High Quality Tax Free Money Fund) or $250
for each AARP Fund in an AARP IRA or AARP Keogh Plan account. So it's
easy to get started. See page 38 of this prospectus for more
information on minimum investments.

* Professional investment management by Scudder, Stevens & Clark:
Scudder brings over 75 years of investment management experience to
the AARP Funds.

* Responsive Service from AARP Mutual Fund Representatives: Our
knowledgeable representatives are ready to answer your questions,
initiate transactions or help you select the AARP Fund which meets
your needs--call them toll-free. They are available Monday through
Friday, from 8 a.m. to 8 p.m. Eastern time.

* Access to your investment when you need it. You'll be able to redeem
your investment at no charge by simply calling toll-free or
writing--your investment is not locked in. See page 41 of this
prospectus for more information.

You'll also benefit from:

* Informative Communications, such as newsletters and free educational
guides;
* Consolidated Monthly Statements or Quarterly AARP IRA or AARP Keogh
Plan Statements;
* Prompt transaction confirmations;
* Special Services designed to make investing simple and convenient; and
* AARP's commitment to represent your interests.

WHAT DO THE AARP MUTUAL FUNDS OFFER?

The nine AARP Mutual Funds offer members a choice of conservatively managed
investments which vary in the potential returns and risk they offer. The
Funds address four major investment needs: stability of principal, income,
tax-free income and growth. Each of the AARP Mutual Funds is managed to
offer you competitive returns. In addition, each AARP Fund follows a
conservative investment approach which seeks to moderate share price
volatility, so you can feel confident when you invest. The AARP Funds are
managed with the needs of AARP investors always in mind. Other mutual funds
not designed and managed for AARP investors may have higher share price
volatility and have higher returns.

While the AARP Funds are conservatively managed, it is important to realize
that your principal is never insured or guaranteed, and the value of your
investment and your return will move up and down as market conditions
change. The share price of a mutual fund, other than a money market fund,
typically moves up and down on a day-to-day basis. Share price volatility
reflects the level of fluctuation in the value of a Fund's shares over
relatively short time periods. A mutual fund that experiences large changes
in its share price on a daily basis would be considered to have high share
price volatility. The AARP Funds will be managed to seek to reduce share
price volatility as compared to other mutual funds or securities described
in a Fund's investment objective and policies. This does not mean a Fund's
share price will not be affected by market forces. Market forces may
include downward and upward movements of the stock market or interest
rates. The result will be upward or downward movements in the Fund's share
price. For a more detailed discussion of each AARP Fund, please read the
"Investment Objectives and Policies" section.

Information on each AARP Fund is included in this Prospectus, focusing on
how the AARP Funds differ in their potential return and risk. Before
investing, you should determine your investment objectives and personal
time horizons. This will help you decide which Fund or combination of AARP
Funds fits your investment needs.

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The following is a brief summary of the diversity of investment needs the
AARP Funds seek to meet. The differing nature of an investment in each Fund
will affect the length of time for which you should be planning to invest.

If you are investing for stability of principal and income:

Consider the AARP High Quality Money Fund or the AARP High Quality Tax Free
Money Fund. Each provides opportunities to meet short-term needs (1 year or
less) while providing a modest level of income. Both seek to provide
investors with stability of principal through a constant $1.00 share price,
although this may not always be achieved. Like other money funds, the AARP
Money Funds invest in short-term securities whose yields tend to follow
changes in short-term interest rates. If short-term interest rates rise or
fall dramatically, so could the yields of the AARP Money Funds in
relatively short periods of time. Keep in mind that the two AARP Money
Funds differ in that the income paid by the AARP High Quality Money Fund is
taxable, whereas the income paid by the AARP High Quality Tax Free Money
Fund is normally free from federal income taxes.

If you are investing for the longer term and are interested in monthly
income:

Consider the AARP GNMA and U.S. Treasury Fund, the AARP High Quality Bond
Fund or the AARP Insured Tax Free General Bond Fund. When you choose one of
these conservatively managed funds, remember that both the value of your
shares and the yield will change daily, generally in reaction to shifting
interest rates. In most cases, as interest rates rise, the value of
investments in bond funds like these tends to fall. As interest rates fall,
the value of investments in these bond funds tends to rise. Investing in
these Funds offers the opportunity for gain through potential appreciation
in the value of your investment and from the monthly income that the
investment earns. While each of these Funds is managed to attempt to
moderate share price volatility, the value of your investment can decline.
That's why you should be prepared to tolerate some fluctuation in the value
of your investment and in the income you earn and to invest for the longer
term (at least 1 year or more).

If you are investing for the long term and you are interested in growth:

Consider the AARP Balanced Stock and Bond Fund, the AARP Growth and Income
Fund, the AARP Global Growth Fund or the AARP Capital Growth Fund. When you
invest in one of these Funds, remember that any investment in stocks
involves risk and that the value of your shares will fluctuate daily. The
share price of these AARP Funds will tend to rise when the stock market
rises and decline when the stock market declines. Investing in these Funds
offers the opportunity for gain through potential appreciation in the value
of your investment as well as from the income that the investment earns.
While each of these Funds is managed to attempt to moderate share price
volatility, the value of your investment can decline. That's why you should
consider your investment as one that you can afford to let work for you
over time--generally for a period of 3 to 5 years or more.

How is my investment managed?

The AARP Mutual Funds are managed to seek both competitive returns and to
moderate share price volatility. Each of the AARP Mutual Funds is managed
by a team of investment professionals at Scudder. Professional portfolio
managers develop investment strategies and select securities for each AARP
Fund's portfolio. They are supported by Scudder's dedicated staff of
economists, research analysts, traders, and other investment specialists
who work in offices across the United States and abroad. At Scudder, there
has always been a strong partnership between research analysts and
portfolio managers. Scudder's large staff of independent research analysts
helps the portfolio managers assess

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economic and industry trends as they make their investment decisions.
Because of this emphasis on "fundamentals," the portfolio managers do not
take a short-term approach to investing. Instead, they seek to add value
over the long term, carefully selecting investments they believe have
superior potential for achieving each Fund's objectives.

INVESTMENT OBJECTIVES AND POLICIES

The following pages provide detail on the investment objectives and
policies of the nine AARP Mutual Funds. Included are each Fund's
objectives, whom it is designed for, what it offers investors, what it can
invest in, the risks involved, when distributions are paid and who at
Scudder manages the Fund. As with any investment, there is no guarantee
that the AARP Funds will successfully meet their investment objectives. Be
sure to read the section titled "Other Investment Policies and Risk
Factors" on page 28.

Each Trust's Trustees can modify a Fund's objectives without the approval
of a majority of that Fund's shareholders. Shareholders will be informed in
writing of any changes in objectives. In that event, they should consider
whether the Fund is still an appropriate investment given their then
current financial position and needs.

AARP HIGH QUALITY MONEY FUND

Fund Objective:

From investments in high quality securities, the Fund is designed to
provide current income. The Fund also seeks to maintain stability and
safety of principal while offering liquidity. The Fund seeks to maintain a
constant net asset value of $1.00 per share. There may be circumstances
under which this goal cannot be achieved.

For whom is the Fund designed?

The Fund may be appropriate for investors who have short-term needs or who
do not want the risk that accompanies investing in stocks or bonds. These
include:

* Investors creating a diversified portfolio who want a portion of their
assets in a conservative investment designed to offer safety and
stability.

* Investors seeking a short-term investment prior to making longer-term
investment choices.

* Investors seeking money market income to meet regular day-to-day
needs.

* Investors who need immediate access to their money through free
checkwriting services.

The Fund is also available for AARP IRA, AARP SEP-IRA, and AARP Keogh Plan
accounts.

What does the Fund offer to investors?

The Fund is designed to offer current income, while maintaining stability
and safety of principal. In addition, it provides a convenient way to
easily access your money through checkwriting.

What does the Fund invest in?

The Fund purchases high quality short-term securities consisting of
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities; obligations of supranational organizations such as the
International Bank for Reconstruction and Development (the World Bank);
obligations of domestic banks and their foreign branches, including
bankers' acceptances, certificates of deposit, deposit notes and time
deposits; obligations of savings and loan institutions; instruments whose
credit has been enhanced by: banks (letters of credit), insurance companies

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<PAGE>

(surety bonds), or other corporate entities (corporate guarantees);
corporate obligations, including commercial paper, notes, bonds, loans and
loan participations; securities with variable or floating interest rates;
asset-backed securities, including certificates, participations and notes;
municipal securities including notes, bonds and participation interests,
either taxable or tax-free, as described in more detail for the AARP High
Quality Tax Free Money Fund; securities with put features; and repurchase
agreements.

These securities will have remaining maturities of 397 calendar days or
less, except for U.S. Government securities, which may have maturities up
to 762 calendar days. The average dollar-weighted maturity of the Fund's
investments is 90 days or less.

All of the securities that the Fund purchases, or that underlie its
repurchase agreements, are considered to be high quality. Generally, the
Fund may purchase only securities rated, or issued by an entity with
comparable securities rated, within the two highest quality rating
categories of one or more rating agencies such as: Moody's Investors
Service, Inc. (Moody's), Standard & Poor's (S&P), and Fitch Investors
Service, Inc. (Fitch). Securities rated by only one agency may be purchased
if the rating falls within the categories above. Unrated securities may be
purchased if the Fund Manager judges them to be comparable in quality to
securities described above. Generally, the Fund will invest in securities
rated in the highest quality rating by at least two of these rating
agencies.

All of the securities purchased are U.S. dollar-denominated. The securities
must meet credit standards applied by the Fund Manager following procedures
established by the Trustees. If a security ceases to be rated or is reduced
below the Fund's standards, it will be sold unless the Trustees determine
that disposing of the security would not be in the best interests of the
Fund.

The Fund has certain nonfundamental policies designed to maintain
diversification. These policies may be changed without shareholder
approval. With limited exceptions, the Fund may not invest more than 5% of
its assets in the securities of a single issuer, except for U.S. Government
securities. Nor may it invest more than 10% of its total assets in
securities subject to unconditional puts by a single issuer.

What are the risks?

The risk to your principal is low, since the Fund seeks to maintain a
stable share price of $1.00. While the Fund has maintained a stable share
price since it began in June 1985, there may be situations under which this
goal cannot be achieved. The level of income you receive will be affected
by movements up and down in short-term interest rates. By investing
generally in highest-quality securities, the Fund may offer less income
than a money market fund investing in other high-quality securities in
which money market funds are allowed to invest. See "Other Investment
Policies and Risk Factors."

When are distributions paid?

Dividends are declared daily and distributed monthly to investors.
Generally, net realized capital gain or loss is included in the daily
declaration of income. See page 33 for additional information on
distributions and taxes.

Who at Scudder manages my investment?

Lead Portfolio Manager Stephen L. Akers assumed responsibility for setting
the Fund's investment strategy and for overseeing the Fund's day-to-day
management in February 1996. Mr. Akers has been a member of the AARP High
Quality Money Fund team since 1995 and has managed several other
fixed-income portfolios since joining Scudder in 1984. Robert T. Neff,
Portfolio Manager, focuses on securities selection and assists with the

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<PAGE>

creation and implementation of investment strategy for the Fund. Mr. Neff
joined Scudder in 1972 and has more than 20 years of experience managing
short-term fixed-income assets. Debra A. Hanson, Portfolio Manager, assists
with the development and execution of investment strategy and has been with
Scudder since 1983. K. Sue Cote, Portfolio Manager, joined Scudder in 1983
and has over 10 years of experience in the investment industry.

AARP HIGH QUALITY TAX FREE MONEY FUND

Fund Objective:

From investments in high quality municipal securities, the Fund is designed
to provide current income free from federal income taxes. The Fund also
seeks to maintain stability and safety of principal, while offering
liquidity. The Fund seeks to maintain a constant net asset value of $1.00
per share. There may be circumstances under which this goal cannot be
achieved.

For whom is the Fund designed?

The Fund may be appropriate for investors in high tax brackets who have
short-term investment needs or who do not want the risk that accompanies
investing in stocks or bonds. These include:

* Investors creating a diversified portfolio who want a portion of their
assets in a conservative investment designed to offer safety and
stability.

* Investors seeking a short-term investment prior to making longer-term
investment choices.

* Investors seeking tax free money market income to meet regular
day-to-day expenses.

* Investors who need immediate access to their money through free
checkwriting services.

This Fund is not available for AARP IRA, AARP SEP-IRA or AARP Keogh Plan
accounts.

What does the Fund offer to investors?

The Fund is designed to offer current income free from federal income tax,
while providing you with stability and safety of principal. Depending on
your tax bracket, the after-tax income from the Fund may be higher than
from a taxable investment of comparable quality and risk. In addition, it
provides a convenient way to easily access your money through checkwriting.

What does the Fund invest in?

The Fund invests in high-quality, short-term municipal securities. These
securities will have remaining maturities of 397 calendar days or less. The
average dollar-weighted maturity of its investments is 90 days or less.
These municipal securities may include obligations issued by or on behalf
of states, territories and possessions of the United States and the
District of Columbia. Interest from these securities is, in the opinion of
the issuer's bond counsel, exempt from federal income taxes. The Fund has
no current intention to invest in securities whose income is subject to
federal income tax, including the individual alternative minimum tax (AMT).

Municipal securities may include municipal notes such as tax anticipation
notes, revenue anticipation notes, bond anticipation notes and construction
loan notes; municipal bonds, which include general obligation bonds secured
by the issuer's pledge of its faith, credit and taxing power for payment of
principal and interest; and revenue bonds (including private activity
bonds), which are generally paid from the revenues of a particular
facility, a specific excise tax, or other source. The Fund's municipal
investments may also include participation interests in bank holdings of

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municipal securities, municipal lease obligations, securities with variable
or floating interest rates, demand obligations, and tax-exempt commercial
paper. The Fund may also purchase securities on a "when-issued" or "forward
delivery" basis, and may enter into stand-by commitments, which are
securities that may be sold back to the seller at the Fund's option.

All of the securities that the Fund purchases, or that underlie its
repurchase agreements, are considered to be high quality. These securities
are generally rated or issued by an issuer rated within the two highest
quality ratings of two or more rating agencies such as: Moody's (Aaa and
Aa, M1G1 and M1G2, and P1), S&P (AAA and AA, SP1+ and SP1, A1+ and A1) and
Fitch (AAA and AA, F1 and F2). The Fund may purchase a security rated by
only one rating agency if it meets the above rating standards. An unrated
security may be purchased if the Fund Manager judges it to be of comparable
quality to securities described above. Generally, the Fund will invest in
securities rated in the highest quality rating by at least two of these
rating agencies.

Ordinarily, the Fund expects that 100% of its portfolio securities will be
in federally tax-exempt securities.

As a fundamental policy, under normal circumstances, at least 80% of the
Fund's net assets will be invested in tax-exempt securities. Up to 20% of
the Fund's net assets may be invested in taxable securities. For defensive
purposes, or if unusual circumstances make it advisable, the Fund may
purchase U.S. Government securities and repurchase agreements
collateralized by such securities. For temporary defensive purposes, the
Fund's investment in taxable securities may exceed 20% when the Fund
Manager deems such a position advisable in light of economic or market
conditions.

All of the securities purchased are U.S. dollar-denominated. The securities
must meet credit standards applied by the Fund Manager, following
procedures established by the Trustees. If a security ceases to be rated,
or its rating is reduced below the Fund's standard, it will be sold unless
the Trustees determine that disposing of the security would not be in the
best interests of the Fund. As a matter of nonfundamental policy, which may
be changed without a shareholder vote, the Fund, with respect to 75% of its
total assets, may not invest more than 5% of its total assets in securities
subject to puts from any one issuer.

What are the risks?

The risk to your principal is low, since the Fund seeks to maintain a
stable share price of $1.00. While the Fund has maintained a stable share
price since it began operating as a tax-free money fund in August 1991,
there may be situations under which this goal cannot be achieved. The level
of income you receive will be affected by movements up and down in
short-term interest rates. By investing generally in highest-quality
securities, the Fund may offer less income than a money market fund
investing in other high-quality securities in which money market funds are
allowed to invest. See "Other Investment Policies and Risk Factors."

Will I be subject to taxes on this fund?

All income distributed by the Fund is expected to be exempt from federal
income taxes. However, income may be subject to state and local income
taxes. Each year you will be provided with a breakdown of the Fund's
investments on a state by state basis so that you can determine your state
and local income tax liability. Your state or local Department of Revenue
or tax advisor can answer questions regarding taxability of distributions.
Should there be any income from taxable securities, it would not be exempt
from federal income taxes.

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When are distributions paid?

Dividends are declared daily and distributed monthly to investors. Any net
realized capital gain typically will be distributed annually after
September 30 and is usually taxable. See page 33 for additional information
on distributions and taxes.

Who at Scudder manages my investment?

Lead Portfolio Manager K. Sue Cote has been responsible for setting the
Fund's investment strategy and has overseen the Fund's day-to-day
management since 1991. Ms. Cote joined Scudder in 1983 and has over 10
years of experience in the investment industry. Donald C. Carleton,
Portfolio Manager, focuses on securities selection and assists with the
creation and implementation of investment strategy for the Fund. Mr.
Carleton has more than 20 years' experience in tax-free investing and has
been at Scudder since 1983.

AARP GNMA AND U.S. TREASURY FUND

Fund Objective:

To produce a high level of current income and to keep the price of its
shares more stable than that of a long-term bond. The Fund pursues this
objective by investing principally in U.S. Government-guaranteed GNMA
securities and U.S. Treasury obligations.

For whom is the Fund designed?

The Fund is suitable for conservative investors who want high current
income but want a degree of protection from bond market price risk.
Investors should be seeking to invest for the longer term and be
comfortable with fluctuation in the value of their principal.

The Fund is also available for AARP IRA, AARP SEP-IRA, and AARP Keogh Plan
accounts.

What does the Fund offer to investors?

The Fund is designed to offer current income from a portfolio of
high-quality securities. The level of income should generally be higher
than available from fixed-price money market mutual funds,
government-insured bank accounts and fixed-rate, government-insured CDs. By
including short-term U.S. Treasury securities in its portfolio, the Fund
seeks to offer less share price volatility than long-term bonds or many
GNMA mutual funds, although its yield may be lower.

What does the Fund invest in?

The Fund invests principally in U.S. Treasury bills, notes, and bonds, and
other securities issued or backed by the full faith and credit of the U.S.
Government. These include Government National Mortgage Association (GNMA)
securities. GNMA securities represent part ownership of a pool of U.S.
Government-guaranteed mortgage loans each of which is insured by the
Federal Housing Administration or guaranteed by the Veterans
Administration. Each pool of mortgages is also guaranteed by GNMA as to the
timely payment of principal and interest (regardless of whether the
mortgagors actually make their payments). This guarantee by GNMA represents
the full faith and credit of the U.S. Government. However, this guarantee
is not related to the Fund's yield or the value of shareholders'
investments, which will fluctuate daily.

The maturities and types of securities held by the Fund may vary with
current market conditions. At any time, the Fund may invest a substantial
portion of its assets in securities of a particular maturity. With GNMA

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<PAGE>

securities, principal is paid back to the Fund over the life of the bond,
rather than at maturity. The Fund will receive monthly scheduled payments
of principal and interest and may receive unscheduled principal payments
resulting from prepayments of the underlying mortgages. The Fund may
realize a gain or loss upon receiving principal payments. The Fund
typically reinvests all payments and prepayments of principal in additional
GNMA securities or other U.S. Government-guaranteed securities. The Fund
may also purchase "when-issued" securities and invest in repurchase
agreements.

What are the risks?

The Fund is not a fixed price money market fund, so the value of its shares
will fluctuate up and down with changes in interest rates and other market
conditions. The level of income you receive will be affected by movements
up or down in interest rates. Like bonds, the value of mortgage-backed
securities decreases when interest rates rise. However, when interest rates
fall their value may not rise as much as does the value of bonds because of
the anticipation of prepayment of the underlying mortgages. This prepayment
may expose the Fund to a lower rate of return upon reinvestment. Thus, the
prepayment rate may also tend to limit any increase in net asset value. See
"Other Investment Policies and Risk Factors."

How does the Fund seek to manage risk?

The Fund actively seeks to reduce fluctuation, or price volatility to your
principal, by investing in a combination of short-, intermediate-, and
long-term securities. The Fund may also, on occasion, use portfolio
management techniques to seek to reduce volatility. These techniques, which
are subject to applicable regulatory guidelines, may include limited
transactions in financial futures contracts and related option transactions
which are unrated (see "Other Investment Policies and Risk Factors"). The
Fund may write (sell) covered call options to enhance investment returns.
These techniques will be entered into to reduce risk, but such techniques
involve risks themselves and under certain conditions may reduce current
income.

When are distributions paid?

Dividends are declared daily and distributed monthly to investors. Any net
realized capital gain typically will be distributed annually after
September 30. See page 33 for additional information on distributions and
taxes.

Who at Scudder manages my investment?

Lead Portfolio Manager David H. Glen has been responsible for setting the
Fund's investment strategy and overseeing security selection for the Fund's
portfolio since its inception in 1985. Mr. Glen has 15 years' experience in
finance and investing. Mark S. Boyadjian, Portfolio Manager, focuses on
securities selection and assists with the creation and implementation of
investment strategy for the Fund. Mr. Boyadjian joined the Fund's team in
1995 and has been involved in investment management since joining Scudder
in 1989.

AARP HIGH QUALITY BOND FUND

Fund Objective:

Consistent with investments primarily in high quality securities, the Fund
seeks to provide a high level of income and to keep the value of its shares
more stable than that of a long-term bond.

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<PAGE>

For whom is the Fund designed?

The Fund is suitable for investors who want high current income with
moderate risk from a high quality portfolio. Investors should be seeking to
invest for the longer term (at least 1 year or more) and be comfortable
with fluctuation in the value of their principal.

The Fund is also available for AARP IRA, AARP SEP-IRA, and AARP Keogh Plan
accounts.

What does the Fund offer to investors?

The Fund is designed to offer a high level of current income from a
portfolio of high-quality securities. Normally the level of return should
be higher than that available from the AARP GNMA and U.S. Treasury Fund,
with greater fluctuation in the value of your principal.

By including short- and medium-term bonds in its portfolio, the Fund seeks
to offer less share price volatility than long-term bonds or many long-term
bond funds, although its yield may be lower.

What does the Fund invest in?

Under normal circumstances, at least 65% of the assets of the Fund are
invested in U.S. Government, corporate and other fixed-income securities.
All the Fund's securities will be rated or judged by the Fund Manager to be
the equivalent of those rated in the three highest rating categories of
Moody's (Aaa, Aa, and A) or S&P (AAA, AA, and A) and at least 65% of the
Fund's assets must be in securities rated in the two highest rating
categories by Moody's or S&P.

The Fund may invest in any investment eligible for the AARP GNMA and U.S.
Treasury Fund. It may also purchase corporate notes and bonds, including
convertible issues, and obligations of federal agencies that are not backed
by the full faith and credit of the U.S. Government. Additionally, the Fund
may also purchase obligations of international agencies, U.S.
dollar-denominated foreign debt securities, mortgage-backed and other
asset-backed securities, and money market instruments such as commercial
paper, banker's acceptances, and certificates of deposit issued by domestic
and foreign branches of U.S. banks. The Fund may also purchase
"when-issued" securities and invest in repurchase agreements.

The Fund will invest in a broad range of short-, intermediate- and
long-term securities. The maturities and types of securities held by the
Fund will vary with current market conditions. The Fund may have a
substantial portion of its assets in securities of a particular maturity.
The non-governmental investments of the Fund will be spread among a variety
of companies and will not be concentrated in any one industry.

What are the risks?

The Fund is not a fixed price money market fund, so the value of its shares
will fluctuate up and down with changes in interest rates and other market
conditions. Due to the greater market price risk of the securities in which
it invests, the Fund may have a more variable share price than the AARP
GNMA and U.S. Treasury Fund. See "Other Investment Policies and Risk
Factors."

The level of income provided will be affected by movements up and down in
interest rates. Also, income from high-quality securities the Fund
purchases may be lower than income from lower-quality securities.

How does the Fund seek to manage risk?

The Fund actively seeks to reduce fluctuation, or the price volatility of
your investment, by investing in securities with varying maturities. Also,
the Fund may use approved portfolio management techniques, if appropriate,

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<PAGE>

such as limited transactions in financial futures contracts and related
option transactions which are unrated (see "Other Investment Policies and
Risk Factors"). The Fund may write (sell) covered call options to enhance
investment returns. These techniques will be entered into to reduce risk,
but such techniques involve risks themselves and under certain conditions
may reduce current income.

When are distributions paid?

Who at Scudder manages my investment?

Lead Portfolio Manager David H. Glen has set the Fund's overall investment
strategy and has overseen its day-to-day operations since 1995. Mr. Glen,
who started at Scudder in 1982 and has been a portfolio manager since 1985,
has 15 years' experience in finance and investing. William M. Hutchinson,
Portfolio Manager, who is also responsible for implementing the Fund's
strategy, has been involved with the Fund since 1987. Mr. Hutchinson joined
Scudder in 1986 as a portfolio manager and has over 20 years of investment
experience. Stephen A. Wohler, Portfolio Manager, focuses on securities
selection for the Fund. Mr. Wohler joined Scudder in 1979 as a portfolio
manager and has over 15 years' experience managing fixed-income
investments.

AARP INSURED TAX FREE GENERAL BOND FUND

Fund Objective:

From a portfolio consisting primarily of municipal securities covered by
insurance, the Fund seeks to provide high income free from federal income
taxes and to keep the value of its shares more stable than that of a
long-term municipal bond.

For whom is the Fund designed?

The Fund is suitable for investors in higher tax brackets who want high
income free from federal income taxes. Investors should invest for the
longer term (at least 1 year or more) and be comfortable with fluctuation
in the value of their principal.

The Fund is not available for AARP IRA, AARP SEP-IRA, and AARP Keogh Plan
accounts.

What does the Fund offer to investors?

The Fund is designed to offer high income free from federal tax. Depending
on an investor's tax bracket, the after-tax income from the Fund may be
higher than from a taxable investment of comparable quality and risk. The
Fund will typically pay higher income than the AARP High Quality Tax Free
Money Fund, although yield and principal value will fluctuate up and down
with market conditions. By including short- and medium-term bonds in its
portfolio, the Fund seeks to offer less share price volatility than
long-term municipal bonds or many long-term municipal bond funds, although
its yield may be lower.

The Fund is one of a distinct group of tax-free mutual funds with insurance
on the majority of its investments. Insurance on its securities protects
the Fund against loss from default by the municipal issuer. However, it
does not protect the investor from fluctuation in the yield or share price.

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19
<PAGE>

What does the Fund invest in?

The Fund invests primarily in a mix of short-, intermediate-, and long-term
municipal securities that are insured against default by private insurers.

The municipal securities purchased by the Fund will be only high-grade
securities or repurchase agreements on such securities. These may include
obligations issued by or on behalf of states, territories and possessions
of the United States and the District of Columbia to raise money for public
purposes. Interest from these securities is, in the opinion of the issuer's
bond counsel, exempt from federal income taxes. The Fund has no current
intention of investing in securities whose income is subject to federal
income tax, including the individual alternative minimum tax (AMT).
However, under unusual circumstances, the Fund may invest in taxable
securities for defensive purposes or to benefit from disparities in the
financial markets.

Municipal securities may include municipal notes, municipal bonds,
municipal lease obligations, participation interests in bank holdings of
municipal securities, securities with variable or floating interest rates,
demand obligations, and tax-exempt commercial paper. The Fund may purchase
securities on a "when-issued" or "forward delivery" basis, and may enter
into stand-by commitments in which securities may be sold back to the
seller at the Fund's option. Also, the Fund may use approved portfolio
techniques, if appropriate, such as limited use of financial futures
contracts and related options transactions (see "Other Investment Policies
and Risk Factors").

What portion of the securities is insured?

At least 65% of the Fund's assets are fully insured by private insurers as
to payment of face value and interest to the Fund, when due. If uninsured
securities or securities not directly or indirectly backed or guaranteed by
the U.S. Government are purchased and expected to be held for 60 days or
more, insurance will be obtained within 30 days to ensure that 65% of the
Fund's assets are insured by the issuer or arranged for by the Fund. If at
least 65% of its assets are not insured securities, the Fund will obtain
insurance for a portion of its U.S. Government guaranteed or backed
securities so that the 65% standard is achieved.

What are the risks?

The Fund is not a fixed price money market fund, so the value of its shares
will move up and down as interest rates and other market conditions change.
The level of income you receive will be affected by movements up and down
in interest rates. Income from the high-quality securities which the Fund
purchases may be lower than the income from lower-quality securities. See
"Other Investment Policies and Risk Factors."

How does the Fund seek to manage risk?

The Fund actively seeks to manage fluctuation, or the price volatility of
your investment, by investing in securities of varying maturities. The Fund
may also use approved portfolio management techniques.

Insurance on the securities held by the Fund protects the Fund as to
default by the municipal issuer. It does not protect an investor from
fluctuation in the Fund's yield or value per share, which change daily.
Insurance also involves a cost to the Fund which will reduce yield.
Historically, the yields on insured securities have been attractive in
comparison to the yields on uninsured securities of comparable quality.
There can be no assurance, however, that this relationship will continue.
Moreover, to the extent the Fund must purchase insurance on U.S. Government
securities, this will involve a cost to the Fund while not increasing the

Prospectus
20
<PAGE>

quality rating since U.S. Government-guaranteed or backed securities are
already high quality. Although the financial condition of each insurer of
its securities is periodically reviewed by the Fund, there can be no
guarantee that insurers can honor their obligations under all
circumstances. See "Other Investment Policies and Risk Factors."

Will I be subject to taxes on this fund?

All income distributed by the Fund is expected to be exempt from federal
income taxes. However, income may be subject to state and local income
taxes. Ordinarily, the Fund expects that 100% of its portfolio securities
will be in federally tax-exempt securities. As a fundamental policy, under
normal circumstances, at least 80% of the Fund's net assets will be
invested in federally tax-exempt securities. Up to 20% of the Fund's net
assets may be invested in federally taxable securities. For defensive
purposes, or if unusual circumstances make it advisable, the Fund may
purchase U.S. Government securities and repurchase agreements
collateralized by such securities. For temporary defensive purposes, the
Fund's investment in federally taxable securities may exceed 20%. Each year
you will be provided with a breakdown of the Fund's investments on a state
by state basis so that you can determine your state and local income tax
liability. Your state or local Department of Revenue or tax advisor can
answer questions regarding the taxability of distributions.

In the event there is income from taxable securities, it would not be
exempt from federal income taxes. In addition, any capital gains earned by
the Fund are usually taxable.

When are distributions paid?

Who at Scudder manages my investment?

Lead Portfolio Manager Donald C. Carleton has been responsible for setting
the Fund's investment strategy and has overseen the Fund's day-to-day
management since 1990. Mr. Carleton has over 20 years' experience in
tax-free investing. Philip G. Condon, Portfolio Manager, focuses on
securities selection and assists with the creation and implementation of
investment strategy for the Fund. Mr. Condon has been with Scudder since
1983 and has more than 17 years of investment experience.

AARP BALANCED STOCK AND BOND FUND

Fund Objective:

To seek to provide long-term growth of capital and income while attempting
to keep the value of its shares more stable than other balanced mutual
funds. The Fund pursues these objectives by investing in a combination of
stocks, bonds, and cash reserves.

For whom is the Fund designed?

This Fund is suitable for conservative investors who are seeking long-term
growth of their assets, but want less risk than an investment solely in
stocks. Investors should invest for the longer term (at least 3 years or
more) and be comfortable with the value of their principal fluctuating up
and down. The Fund is also available for AARP IRA, AARP SEP-IRA, and AARP
Keogh Plan accounts.

Prospectus
21
<PAGE>

What does the Fund offer to investors?

The Fund offers the opportunity for long-term growth of principal through a
single investment combining stocks, bonds, and cash reserves. Growth will
come from possible appreciation in the value of common stocks and other
equity investments. Bonds and other fixed-income investments provide
current income and may, over time, help reduce fluctuation in the Fund's
share price. Through a broadly diversified portfolio consisting primarily
of stocks with above average dividend yields and investment-grade bonds,
the Fund seeks to offer less share price volatility than many balanced
mutual funds. The Fund should typically have less risk and a lower return
than the AARP Growth and Income Fund, the AARP Global Growth Fund and the
AARP Capital Growth Fund.

The Fund does not take extreme investment positions as part of an effort to
"time the market." Shifts between stocks and fixed-income investments are
expected to occur in generally small increments. On occasion, the Fund will
adjust its investment mix. The Fund Manager will do so after analyzing
factors such as the level and direction of interest rates, capital flows,
inflationary expectations, anticipated growth of corporate profits, and the
financial climate worldwide.

What does the Fund invest in?

The Fund seeks to manage fluctuation by investing in a broadly diversified
mix of equity securities, bonds, and cash reserves. The Fund may invest up
to 70% of its assets in equity securities (stocks). At least 30% of the
Fund will be in investment-grade fixed-income securities and cash reserves.
For temporary defensive purposes, the Fund may invest without limit in
money market and short-term instruments when the Fund Manager deems such a
position advisable in light of economic or market conditions. These include
commercial paper, bankers' acceptances, certificates of deposit issued by
domestic and foreign branches of U.S. banks, and repurchase agreements.

Equity securities consist of common stocks, securities convertible into
common stocks, and preferred stocks. A research-oriented approach to
investing is used by the Fund, taking advantage of Scudder's large research
department. The Fund emphasizes securities of companies that offer the
opportunity for capital growth and growth of earnings while providing
dividends. The Fund will generally invest in companies domiciled in the
U.S.; it may invest, however, in foreign securities without limit.

All of the Fund's debt securities will be investment-grade, i.e., rated at
the time of purchase Baa or higher by Moody's or BBB or higher by S&P, or
deemed of comparable quality by the Fund's Manager. At least 75% of these
will be securities rated within the three highest quality ratings of
Moody's (Aaa, Aa and A) or S&P (AAA, AA, and A) or those the Fund Manager
judges are of equivalent quality (high-grade). Securities rated BBB by S&P
or Baa by Moody's are neither highly protected nor poorly secured. These
securities normally pay higher yields but involve potentially greater price
variability than higher-quality securities and are regarded as having
adequate capacity to repay principal and pay interest. Moody's considers
bonds it rates Baa to have speculative elements as well as investment-grade
characteristics. If the rating agencies downgrade a security, the Fund
Manager will determine whether to keep it or eliminate it based on the best
interests of the Fund. The Fund does not purchase securities rated below
investment-grade, commonly known as junk bonds.

The Fund can invest in a broad range of corporate bonds and notes,
convertible bonds, and preferred and convertible preferred securities. The
Fund may also invest in U.S. Government securities, obligations of federal
agencies, and instruments not backed by the full faith and credit of the
U.S. Government. The latter include obligations of the Federal Home Loan
Banks, Farm Credit Banks, and the Federal Home Loan Mortgage Corporation.

Prospectus
22
<PAGE>

The Fund may also invest in obligations of international agencies, U.S. and
non-U.S. dollar denominated foreign debt securities, mortgage-backed and
other asset-backed securities, municipal obligations, zero-coupon
securities, and restricted securities issued in private placements.

The Fund may make limited use of financial futures contracts and related
options and may also invest in forward foreign currency exchange contracts.
The Fund may write (sell) covered call options to enhance investment
returns and may purchase and sell options on stock indices for hedging
purposes. It may also invest in securities on a "when-issued" or forward
delivery basis.

What are the risks?

The risk to principal is consistent with an investment primarily in stocks
and bonds. The value of shares will fluctuate up and down with changes in
interest rates and other market conditions. Investors should focus on the
longer-term and be comfortable with fluctuation in the value of their
principal.

The level of income will be affected by movements up and down in interest
rates and by dividends paid on the stocks held by the Fund. See "Other
Investment Policies and Risk Factors."

When are distributions paid?

Dividends from the Fund's net ordinary income are distributed quarterly in
March, June, September and December. Any net realized capital gain
typically will be distributed annually after September 30. See page 33 for
additional information on distributions and taxes.

Who at Scudder manages my investment?

Lead Portfolio Manager Robert T. Hoffman is responsible for managing the
stock portion of the Fund. Mr. Hoffman, who joined Scudder in 1990, has 10
years of experience in the investment industry. William M. Hutchinson,
Portfolio Manager, is responsible for the bond portion of the Fund. Messrs.
Hutchinson and Hoffman have been Portfolio Managers for the Fund since it
commenced operations on February 1, 1994. Benjamin W. Thorndike, Portfolio
Manager, focuses on asset allocation strategy and stock selection. Mr.
Thorndike, who has more than 15 years of investment experience, joined
Scudder in 1986.

AARP GROWTH AND INCOME FUND

Fund Objective:

From investments primarily in common stocks and securities convertible into
common stocks, the Fund seeks to provide long-term capital growth and
income, and to keep the value of its shares more stable than other growth
and income mutual funds.

For whom is the Fund designed?

The Fund is suitable for investors who are seeking long-term growth of
their assets to keep ahead of inflation. Investors should invest for the
longer-term (at least 3 years or more) and be comfortable with fluctuation
to their principal that is associated with investing in stocks.

The Fund is also available for AARP IRA, AARP SEP-IRA, and AARP Keogh Plan
accounts.

What does the Fund offer to investors?

The Fund offers the opportunity for long-term growth of principal with some
income. This growth will come from possible appreciation in the value of
shares, as well as quarterly dividend distributions if they are reinvested

Prospectus
23
<PAGE>

in additional shares of the Fund. Dividends can also produce current income
for investors. Through a broadly diversified portfolio consisting primarily
of stocks with above average dividend yields, the Fund seeks to offer less
share price volatility than many growth and income funds. The Fund should
offer a greater opportunity for share price appreciation, over time, with
less income and with greater share price fluctuation than the AARP Balanced
Stock and Bond Fund.

What does the Fund invest in?

The Fund invests primarily in common stocks and securities convertible into
common stocks. The Fund may also invest in preferred stock. The Fund
emphasizes securities of companies that offer the opportunity for capital
growth and growth of earnings while providing dividends. A
research-oriented approach to investing is used by the Fund, taking
advantage of Scudder's large research department.

The Fund will invest in a variety of industries and companies. Generally,
the Fund will invest in companies domiciled in the United States. It may
invest, however, in foreign securities without limit. Also, the Fund may
write (sell) covered call options to enhance investment return, and may
purchase and sell options on stock indices for hedging purposes. See "Other
Investment Policies and Risk Factors."

The Fund's policy is to remain substantially invested in stocks and
securities convertible into stocks. However, for temporary defensive
purposes, the Fund may invest without limit in high quality money market
securities when the Fund Manager deems such a position advisable in light
of economic or market conditions. These include U.S. Treasury bills,
commercial paper, certificates of deposit issued by domestic and foreign
branches of U.S. banks, bankers' acceptances, and repurchase agreements.

What are the risks?

The risk to principal is consistent with an investment in stocks. The stock
market doesn't go up every year, and can rise and fall--sometimes quite
dramatically over a short period of time. Investors should focus on the
longer term (at least 3 years or more) and be comfortable with fluctuation
in the value of their principal. See "Other Investment Policies and Risk
Factors."

The level of income you receive will be affected by dividends paid on the
securities held by the Fund.

When are distributions paid?

Who at Scudder manages my investment?

Lead Portfolio Manager Robert T. Hoffman has had responsibility for setting
the Fund's stock investment strategy and has overseen the Fund's day-to-day
management since 1991. Mr. Hoffman, who joined Scudder in 1990, has 10
years of experience in the investment industry. Benjamin W. Thorndike,
Portfolio Manager, is the Fund's chief analyst and strategist for
convertible securities. Mr. Thorndike, who has more than 15 years of
investment experience, joined Scudder and the Fund in 1986. Kathleen T.
Millard, Portfolio Manager, focuses on stock investing strategy and stock
selection. Ms. Millard has worked in the investment industry since 1983 and
at Scudder since 1991. Lori Ensinger, Portfolio Manager, joined the Fund in
1996 and focuses on stock selection and investment strategy. Ms. Ensinger
has worked in the investment industry since 1983 and at Scudder since 1993.

Prospectus
24
<PAGE>

AARP GLOBAL GROWTH FUND

Fund Objective:

From investments primarily in equity securities of corporations worldwide,
the Fund seeks to offer long-term capital growth in a globally diversified
portfolio, and to keep the value of its shares more stable than other
global equity funds.

For whom is the Fund designed?

This new Fund, which commenced operations on February 1, 1996, is suitable
for investors who want to add worldwide equity opportunities to their
portfolio. The Fund is designed for investors seeking long-term growth of
their principal. Investors should invest for the longer term (at least 5
years or more) and be comfortable with the value of their principal
fluctuating up and down. The Fund is also available for AARP IRA, AARP
SEP-IRA, and AARP Keogh Plan accounts.

What does the Fund offer to investors?

The Fund offers the opportunity for long-term growth of principal from a
professionally managed portfolio of securities selected from the U.S. and
foreign equity markets. It also offers the opportunity for investors to
further diversify their portfolios which could help to lower their overall
risk.

Global investing takes advantage of the investment opportunities created by
the growing integration of economies around the world. The world has become
highly integrated in economic, industrial and financial terms. Companies
increasingly operate globally as they purchase raw materials, produce and
sell their products and raise capital. The Fund affords investors access to
opportunities wherever they arise, without being constrained by the
location of a company's headquarters or the trading market for its shares.

Because the Fund's portfolio invests globally, it provides the potential to
augment returns available from the U.S. stock market. In addition, since
U.S. and foreign markets do not always move in step with each other, a
global portfolio will be more diversified than one invested solely in U.S.
securities.

Investing directly in foreign securities is usually impractical for most
investors because it presents complications and extra costs. Investors
often find it difficult to arrange purchases and sales, to obtain current
information, to hold securities in safekeeping and to convert the value of
their investments from foreign currencies into dollars. The Fund manages
these problems for the investor. With a single investment, the investor has
a diversified worldwide investment portfolio which is managed actively by
experienced professionals. Scudder has had many years of experience
investing globally and dealing with trading, custody and currency
transactions around the world. Scudder has the benefit of information it
receives from worldwide research and believes the Fund affords investors an
efficient and cost-effective method of investing worldwide.

Through a broadly diversified portfolio consisting primarily of stocks of
established companies which are incorporated in the U.S. or in foreign
countries, and applying a strategy of relatively low portfolio turnover,
the Fund seeks to offer less share price volatility than many global growth
funds. However, in pursuing long-term growth, the Fund typically will have
more share price fluctuation than other AARP Funds, except the AARP Capital
Growth Fund. See "What are the risks?" below. Growth will come primarily

Prospectus
25
<PAGE>

from possible appreciation in the value of shares. The Fund is not expected
to provide regular income.

What does the Fund invest in?

The Fund will invest in securities of companies that the Fund Manager
believes will benefit from global economic trends, promising technologies
or products and changing geopolitical, currency or economic relationships.
The Fund will normally invest at least 65% of its total assets in
securities of at least three different countries. Typically it is expected
that the Fund will invest in a wide variety of regions and countries,
including both foreign and U.S. issues. Under normal circumstances it is
expected that both foreign and U.S. investments will be represented in the
Fund's portfolio. However, the Fund may be invested 100% in non-U.S.
issues, and for temporary defensive purposes may be invested 100% in U.S.
issues. For temporary defensive purposes, the Fund may invest without limit
in high quality money market securities, including U.S. Treasury bills,
repurchase agreements, commercial paper, certificates of deposit issued by
domestic and foreign branches of U.S. banks, bankers' acceptances and other
debt securities, such as U.S. Government obligations and corporate debt
instruments when the Fund Manager deems such a position advisable in light
of economic or market conditions.

The Fund generally invests in equity securities of established companies
listed on U.S. or foreign securities exchanges, but also may invest in
securities traded over-the-counter. It also may invest in debt securities
convertible into common stock, and convertible and non-convertible
preferred stock. Also, fixed-income securities of governments, government
agencies, supranational agencies and companies may be used when Scudder
believes the potential for appreciation for these investments will equal or
exceed that available from investments in equity securities. These debt and
fixed-income securities will be exclusively investment-grade securities,
that is, those rated Aaa, Aa, A or Baa by Moody's or AAA, AA, A or BBB by
S&P or those of equivalent quality as determined by Scudder. Securities
rated BBB by S&P or Baa by Moody's are neither highly protected nor poorly
secured. Moody's considers bonds it rates Baa to have speculative elements
as well as investment-grade characteristics.

The Fund may invest in zero coupon securities and closed-end investment
companies holding foreign securities. The Fund may make limited use of
financial futures contracts and related options and may also invest in
forward foreign currency exchange contracts. The Fund may write (sell)
covered call options to enhance investment return, and may purchase and
sell options on stock indices for hedging purposes. See "Other Investment
Policies and Risk Factors."

What is Scudder's international investing experience?

Scudder has been a leader in international investment management for over
40 years. In 1953, Scudder introduced Scudder International Fund, the first
mutual fund available in the U.S. investing internationally in securities
of issuers in several foreign countries. Today, Scudder manages over $22
billion in assets invested in foreign markets.

What are the risks?

The risk to principal is consistent with the Fund's objective of seeking
long-term growth through global investing. Global investing involves
economic and political considerations not typically found in U.S. markets.

The Fund is designed for long-term investors who can accept international
investment risk. Since the Fund normally will be invested in both U.S. and
foreign securities markets, changes in the Fund's share price may have a
low correlation with movements in the U.S. markets. The Fund's share price

Prospectus
26
<PAGE>

will reflect the movements of both the different stock and bond markets in
which it is invested and the currencies in which the investments are
denominated: The strength or weakness of the U.S. dollar against foreign
currencies may account for part of the Fund's investment performance.
Investors should focus on the longer term (at least 5 years or more) and be
comfortable with fluctuation to the value of their principal. Because of
the Fund's global investment policies and the investment considerations
discussed above, investment in shares of the Fund should be considered as
part of a broadly diversified portfolio. See "Other Investment Policies and
Risk Factors."

When are distributions paid?

Any dividends typically will be distributed in December. Any net realized
capital gain typically will be distributed annually after September 30. See
page 33 for additional information on distributions and taxes.

Who at Scudder manages my investment?

William E. Holzer is the Lead Portfolio Manager for the Fund. Mr. Holzer
has day-to-day responsibility for setting the Fund's worldwide strategy and
investment themes. Mr. Holzer has over 20 years' experience in global
investing and joined Scudder in 1980. Nicholas Bratt, Portfolio Manager,
directs Scudder's overall global equity investment strategies. Mr. Bratt
joined Scudder in 1976. Alice Ho, Portfolio Manager, is also responsible
for implementing the Fund's strategy. Ms. Ho, who joined Scudder in 1986 as
a member of the institutional and private investment counsel area, has
worked as a portfolio manager since 1989.

AARP CAPITAL GROWTH FUND

Fund Objective:

From investments primarily in common stocks and securities convertible into
common stocks, the Fund seeks to provide long-term capital growth, and to
keep the value of its shares more stable than other capital growth mutual
funds.

For whom is the Fund designed?

The Fund is suitable for investors seeking high long-term growth of their
principal. Investors should invest for the longer term (at least 5 years or
more) and be comfortable with the value of their principal fluctuating up
and down. The Fund is also available for AARP IRA, AARP SEP-IRA, and AARP
Keogh Plan accounts.

What does the Fund offer to investors?

The Fund offers the opportunity for long-term growth of principal. This
growth will come primarily from possible appreciation in the value of
shares. The Fund is not expected to provide regular income.

In pursuing long-term growth, the Fund will typically have more share price
fluctuation than the AARP Balanced Stock and Bond Fund, AARP Growth and
Income Fund and AARP Global Growth Fund.

Through a broadly diversified portfolio consisting primarily of high
quality, medium- to large-sized companies with strong competitive positions
in their industries, the Fund seeks to offer less share price volatility
than many growth funds.

Prospectus
27
<PAGE>

What does the Fund invest in?

The Fund invests primarily in common stocks and securities convertible into
common stocks. The Fund may also invest in preferred stocks. The Fund's
policy is to remain substantially invested in these securities.

In seeking capital growth, the Fund will invest in stocks which will offer
above-average potential for long-term growth of market value as represented
by the Standard & Poor's 500 Composite Stock Price Index. A
research-oriented approach to investing is used by the Fund, taking
advantage of Scudder's large research department. The Fund will invest in a
variety of industries and companies. Generally, the Fund will invest in
companies domiciled in the U.S. It may invest, however, in foreign
securities without limit. Also, the Fund may write (sell) covered call
options to enhance investment return, and may purchase and sell options on
stock indices for hedging purposes. See "Other Investment Policies and Risk
Factors."

For temporary defensive purposes, the Fund may invest without limit in high
quality money market securities, including U.S. Treasury bills, repurchase
agreements, commercial paper, certificates of deposit issued by domestic
and foreign branches of U.S. banks, bankers' acceptances, and other debt
securities, such as U.S. Government obligations and corporate debt
instruments when the Fund Manager deems such a position advisable in light
of economic or market conditions.

What are the risks?

The risk to principal is consistent with the Fund's objective of seeking
long-term growth. The Fund generally has greater share price fluctuation
than the other AARP Funds. The stock market doesn't go up every year, and
can rise and fall--sometimes quite dramatically over a short period of
time. Some of the securities selected may have above-average stock market
risk. Investors should focus on the longer term (at least 5 years or more)
and be comfortable with fluctuation to the value of their principal. See
"Other Investment Policies and Risk Factors."

When are distributions paid?

Who at Scudder manages my investment?

Lead Portfolio Manager William F. Gadsden has set the Fund's overall
investment strategy since 1994 and has been part of the Fund's day-to-day
management since 1989. He has 14 years of investment industry experience
and joined Scudder in 1983. Bruce F. Beaty, Portfolio Manager, focuses on
securities selection and assists with the creation and implementation of
investment strategy for the Fund. He has 15 years of investment industry
experience and joined Scudder in 1991.

OTHER INVESTMENT POLICIES AND RISK FACTORS

Below are some detailed descriptions of several types of securities and
investment techniques referred to in this prospectus.

Maintaining $1.00 Constant Share Price in Money Funds

The AARP High Quality Money Fund and the AARP High Quality Tax Free Money Fund
attempt to maintain a constant net asset value per share. To do so, they operate
in accordance with a rule of the Securities and Exchange Commission (SEC) that

Prospectus
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<PAGE>

requires all assets to be cash, cash items, and high-quality U.S.
dollar-denominated investments having a remaining maturity of generally not more
than 397 calendar days from the date of purchase. The AARP High Quality Money
Fund, however, may invest in U.S. Government securities having maturities of up
to 762 calendar days. The SEC also requires that the average dollar-weighted
maturity of these Funds not exceed 90 days.

When-Issued Securities

All AARP Funds, except the AARP Growth and Income Fund, the AARP Global Growth
Fund, and the AARP Capital Growth Fund, may purchase securities on a when-issued
or forward delivery basis. That means payment and delivery of the security will
be at a later date. The price and yield are generally fixed on the date of
commitment to purchase. The Fund does not earn interest before delivery of the
security. At the time of settlement, the market value of the security may be
more or less than the purchase price.

Repurchase Agreements

This is an agreement under which a Fund may buy one or more U.S. Government
obligations which the seller simultaneously agrees to repurchase at a specified
time and price. The Fund can earn income for periods as short as overnight. Such
an agreement may enhance liquidity since it is normally a short-term commitment.
If the seller under a repurchase agreement becomes insolvent, the Fund's right
to sell the securities may be restricted. Also, the value of such securities may
decline before the Fund can sell them. The Fund might also incur transaction
costs by selling the securities.

Each of the AARP Funds may enter into repurchase agreements only with Federal
Reserve member banks or broker-dealers recognized as reporting government
securities dealers.

Mortgage and other asset-backed securities

The AARP GNMA and U.S. Treasury Fund, the AARP High Quality Bond Fund, and the
AARP Balanced Stock and Bond Fund may invest in mortgage-backed securities,
which are securities representing interests in pools of mortgage loans. These
securities provide shareholders with payments consisting of both interest and
principal as the mortgages in the underlying mortgage pools are paid off.

The timely payment of principal and interest on mortgage-backed securities
issued or guaranteed by the Government National Mortgage Association ("GNMA") is
backed by GNMA and the full faith and credit of the U.S. Government. These
guarantees, however, do not apply to the market value or yield of
mortgage-backed securities or to the value of a Fund's shares. Also, GNMA and
other mortgage-backed securities may be purchased at a premium over the maturity
value of the underlying mortgages. This premium is not guaranteed and will be
lost if prepayment occurs. In addition, the AARP High Quality Bond Fund and the
AARP Balanced Stock and Bond Fund may invest in mortgage-backed securities
issued by other issuers, such as the Federal National Mortgage Association
(FNMA), which are not guaranteed by the U.S. Government. Moreover, the Funds may
invest in debt securities which are secured with collateral consisting of
mortgage-backed securities and in other types of mortgage-related securities.

The AARP High Quality Bond Fund and the AARP Balanced Stock and Bond Fund may
also invest in securities representing interests in pools of certain other
consumer loans, such as automobile loans or credit card receivables. In some
cases, principal and interest payments are partially guaranteed by a letter of
credit from a financial institution.

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<PAGE>

Zero Coupon Securities

The AARP Balanced Stock and Bond Fund and the AARP Global Growth Fund may invest
in zero coupon securities which pay no cash income and are issued at substantial
discounts from their value at maturity. Zero coupon securities are subject to
greater market value fluctuations from changing interest rates than debt
obligations of comparable maturities which make current cash distributions of
interest.

Foreign Securities

Each of the Funds in the AARP Growth Trust and the AARP High Quality Bond Fund
may invest without limit in foreign securities.

Investments in foreign securities may benefit a Fund by providing access to
different markets and opportunities. It may also help to reduce risk by
increasing diversification. However, foreign securities involve special
considerations. Brokerage costs are higher. Information about foreign securities
is more limited. Foreign companies or securities often have different and less
stringent government regulations, different accounting standards, slower
settlement of transactions, and more limited and volatile trading markets.

Investments in foreign securities may also involve other risks. These include
possible imposition of withholding, confiscatory and other taxes; possible
currency blockages or transfer restrictions; expropriation, nationalization or
other adverse political or economic developments; and the difficulty of
enforcing obligations in other countries. A Fund may incur currency conversion
costs of purchases made in foreign currencies. There may also be favorable or
unfavorable consequences from the changes in the value of foreign currencies
against the U.S. dollar.

Derivatives

The following descriptions of Forward Foreign Currency Exchange Contracts,
Options Transactions, Futures Contracts and Related Options discuss the types of
derivatives in which certain of the AARP Funds may invest.

Forward Foreign Currency Exchange Contracts

Each of the Funds in the AARP Growth Trust may enter into forward foreign
currency exchange contracts. These contracts, which involve costs, permit the
funds to purchase or sell a specific amount of a particular currency at a
specified price on a specified future date. They may be used by a Fund only to
hedge against possible variations in exchange rates of currencies in countries
in which it may invest.

A Fund will realize a benefit only to the extent that the relevant currencies
move as anticipated. If the currencies do not move as anticipated, the use of
these contracts may result in losses greater than if they had not been used.

Options Transactions

In an attempt to enhance investment returns, Funds in the AARP Growth Trust and
the AARP Income Trust may each write covered call options. These are agreements
to sell a particular security in the Fund's portfolio at a specified price on or
before the expiration date of the option. Covered call options may be written on
portfolio securities worth up to 25% of the Fund's net assets.

There are risks associated with writing covered options. These include the
possible inability to make closing transactions at favorable prices or because
an exercise notice has been received. The Funds also risk giving up appreciation
on the underlying security in excess of the exercise price.

Prospectus
30
<PAGE>

Each of the Funds in the AARP Growth Trust may purchase and sell exchange-traded
options on stock indices. In addition, these Funds may engage in
over-the-counter options transactions with broker-dealers who make markets in
these options. Over-the-counter options may be more difficult to terminate than
exchange-traded options. They are frequently illiquid, and involve counterparty
credit risk. The Fund Manager will engage in such transactions to hedge against
unfavorable price movements which can adversely affect the value of the Fund's
securities or securities the Fund intends to buy. These transactions involve
risk, including the risk that market prices may move in unanticipated directions
or will not correlate well with a Fund's portfolio, causing a Fund to lose the
value of the option premium and to fail to realize any benefit from the
transaction. Further, a closing transaction may not be available when a Fund
wishes to close out a transaction.

Futures Contracts and Related Options

To a limited extent, the Funds in the AARP Income Trusts and the AARP Insured
Tax Free General Bond Fund, the AARP Balanced Stock and Bond Fund and the AARP
Global Growth Fund may enter into financial futures contracts including futures
contracts on securities indices, may purchase and write related put and call
options, and may engage in related closing transactions. These techniques are
used to attempt to protect against adverse effects of interest rates changes or
currency changes in the case of the AARP Global Growth Fund. For example, a
particular index-based futures contract may be used when the Fund Manager
believes that correlation exists between price movements in an index-based
futures contract and securities in a Fund's portfolio. Such correlation is not
likely to be perfect. That is because a Fund's portfolio is not likely to
contain the same securities used in the index.

The margin deposits for futures contracts and premiums paid for related options
may not be more than 5% of a Fund's total assets. These transactions require a
Fund to segregate assets (such as liquid securities and cash) to cover contracts
that would require it to purchase securities. These transactions also result in
brokerage costs.

These techniques involve some risk. A Fund may be precluded from realizing a
benefit from favorable price movements in the related portfolio position of the
Fund and could lose the expected benefit of the transactions if interest rates
or currency changes in the case of AARP Global Growth Fund, move in an
unanticipated manner. To the extent that the Fund Manager's view of market
movements is incorrect, the use of such instruments may result in losses greater
than if they had not been used. In addition, if the AARP Insured Tax Free
General Bond Fund purchases futures contracts on taxable securities or indices
of such securities, their value may not fluctuate in proportion to the value of
the Fund's securities. This would limit that Fund's ability to hedge effectively
against interest rate risk. Further, while a Fund buys a futures contract only
if there appears to be a liquid secondary market for such contracts, there can
be no assurance that a Fund will be able to close out any particular futures
contract.

Segregated Accounts

Each Fund may be required to segregate assets (such as cash, U.S. Government
securities and other high grade debt obligations) or otherwise provide coverage
consistent with applicable regulatory policies. This would be in respect to the
Fund's permissible obligations under the call and put options it writes, the
forward foreign currency exchange contracts it enters into and the futures
contracts it enters into.

Convertible Securities

Convertible securities include convertible bonds, notes and debentures,
convertible preferred stocks, and other securities that give the holder the
right to exchange the security for a specific number of shares of common stock.

Prospectus
31
<PAGE>

Convertible securities entail less credit risk than the issuer's common stock
because they are considered to be "senior" to common stock. Convertible
securities generally offer lower interest or dividend yields than
non-convertible debt securities of similar quality. They may also reflect
changes in value of the underlying common stock.

Demand Obligations

Each of the AARP Funds may purchase demand obligations. Demand obligations
permit the holder to demand payment of a specified amount prior to maturity. The
holder's right to payment depends upon the issuer's ability to pay principal and
interest on demand. A Fund will purchase demand notes only to enhance liquidity.
The Fund Manager will continuously monitor the creditworthiness of issuers of
such obligations.

Stand-by Commitments

The AARP Tax Free Funds may enter into stand-by commitments (also known as puts)
to facilitate liquidity. Stand-by commitments permit a Fund to resell municipal
securities to the original seller at a specified price and generally involve no
cost. Costs, in any event, are limited to .5% of a Fund's total assets. To
minimize the risk that the seller may not be able to repurchase the security,
the Fund Manager will monitor the creditworthiness of the seller.

"Put" Bonds

The AARP Tax Free Funds may also purchase long-term fixed rate bonds that have
been coupled with an option granted by a third party financial institution. This
allows the Funds to tender (or "put") bonds to the institution at specified
intervals and receive the face value of them. For the AARP High Quality Tax Free
Money Fund, an interval can not exceed 397 calendar days. These third party puts
are available in several different forms. They may be custodial receipts or
trust certificates, and may be combined with other features such as interest
rate swaps.

Tax-exempt Participation Interests

The AARP Tax Free Funds may purchase tax-exempt participation interests from a
bank representing a fully-insured portion of the bank's holdings of municipal
securities. The Fund will obtain an irrevocable letter of credit or guarantee
from the bank and will have, under certain circumstances, the right to resell
the participation to the bank on 7 days' notice. To the extent any participation
interest is illiquid, it is subject to the Fund's limit on restricted and not
readily marketable securities.

Municipal Lease Obligations

The AARP Tax Free Funds may also invest in municipal lease obligations generally
as a participation interest in a municipal obligation from a bank or other
financial intermediary. Municipal lease obligations are issued by state and
local governments to acquire land, equipment or facilities. Unlike general
obligation or revenue bonds, these contracts are not secured by the issuer's
credit, and if the issuing state or local government does not appropriate
payments, the lease may terminate, leaving the funds with property that may
prove costly to dispose of. In deciding which contracts to invest in, the Fund
Manager evaluates the likelihood of the governmental issuer discontinuing
appropriation for the leased property.

Portfolio Turnover

Each of the AARP Funds may buy and sell securities to take advantage of
investment opportunities. The Fund Manager will do so to improve overall
investment return consistent with that Fund's objectives. These transactions

Prospectus
32
<PAGE>

involve transaction costs in the form of spreads or brokerage commissions.
Recent economic and market conditions have necessitated more active trading,
resulting in a higher portfolio turnover rate for the AARP High Quality Bond
Fund. A higher rate involves greater transaction costs to the Fund and may
result in the realization of net capital gains, which would be taxable to
shareholders when distributed.

In the case of AARP Global Growth Fund, it is anticipated, under normal
investment conditions, that the Fund's portfolio turnover rate will not exceed
75% for the initial fiscal year. However, economic and market conditions may
necessitate more active trading, resulting in a higher portfolio turnover rate.

INVESTMENT RESTRICTIONS

To help reduce investment risk, each of the AARP Funds has adopted certain
investment policies. Only the shareholders can approve changes to the following
policies:

* A Fund may not make loans. (A purchase of a debt security is not a
loan for this purpose.) However, the Fund may lend its portfolio
securities and enter into repurchase agreements.

* A Fund may borrow money only for temporary or emergency purposes.

The following policies may be changed without shareholder approval if applicable
legal requirements change.

* Each AARP Fund may not invest more than 10% of its net assets in
restricted or not readily marketable securities. These "illiquid
securities" include repurchase agreements maturing in more than 7
days. Funds in the AARP Growth Trust may not invest more than 5% of
their net assets in restricted securities.

A complete description of these and other policies and restrictions is contained
in the Statement of Additional Information.

ADDITIONAL INFORMATION ABOUT DISTRIBUTIONS AND TAXES

Are taxes withheld?

Generally, taxes are not withheld on purchases, redemptions, or distributions.
However, federal tax law requires the AARP Funds to withhold 31% of taxable
dividends, capital gain distributions and redemption or exchange proceeds for
accounts without a certified social security or tax identification number, or
other certified information. To avoid this withholding, make sure you complete
and sign the Signature and Investor Information Section of your Enrollment Form.
AARP IRA, AARP SEP-IRA and AARP Keogh Plan accounts are exempt from withholding
regulations.

The AARP Funds reserve the right to reject Enrollment Forms or close accounts
without a certified Social Security or tax identification number. In such cases,
Enrollment Forms received without this information will be returned to the
investor with a check for the amount invested.

What else should I know about distributions and taxes?

* You can receive your dividend and capital gain distributions in one of
three ways:

1. You can have a check sent to your address or to your bank;

2. You can reinvest them in additional shares of an AARP Fund; or
3. You can invest them in shares of another AARP Fund.

Prospectus
33
<PAGE>

* If your investment is in the form of an AARP IRA, AARP SEP-IRA or AARP
Keogh Plan account, all distributions are automatically reinvested.

* If you reinvest your dividends and capital gains, you will be
purchasing shares at the current share price.

* All taxable dividends from net investment income are taxable to you as
ordinary income. This is so whether you receive dividends as cash or
additional shares.

* Capital gains distributions are also currently taxable, whether
received in cash or reinvested.

* Distributions of short-term capital gains by all the AARP Funds are
taxable as ordinary income.

* Distributions of long-term capital gains are taxable for federal
income tax purposes as long-term capital gains regardless of the
length of time you have owned shares. Any capital gain distributed by
the AARP Tax Free Funds are generally taxable in the same manner as
distributions by other Funds.

* The AARP Tax Free Funds are managed to pay you dividends free from
federal income taxes, including the Alternative Minimum Tax (AMT).
However, these dividends may be subject to state and local income
taxes. Also, these dividends are taken into account in determining
whether your income is large enough to subject a portion of your
Social Security benefits and certain Railroad Retirement benefits, if
any, to federal income taxes.

* If you are a shareholder in the AARP Global Growth Fund, you may be
able to claim a credit or deduction on your income tax return for your
pro rata portion of qualified taxes paid by the Fund to foreign
countries.

* Each AARP Fund annually sends you detailed tax information about the
amount and type of its distributions.

* A redemption involves a sale of shares and may result in a capital
gain or loss for federal income tax purposes. Exchanges are treated as
redemptions for federal income tax purposes. Exchanges occur when you
sell shares in one AARP Fund and purchase shares in another AARP Fund.

* The AARP Funds reserve the right to make extra distributions for tax
purposes.

FUND ORGANIZATION

The AARP Investment Program Trusts

The nine mutual funds described in this prospectus are organized as four
Massachusetts business trusts--AARP Cash Investment Funds, AARP Income Trust,
AARP Tax Free Income Trust and AARP Growth Trust. Each trust is a diversified,
open-end management investment company registered under the Investment Company
Act of 1940. The AARP Cash Investment Funds was organized in January 1983, and
the other trusts were organized in June 1984. The AARP Tax Free Income Trust
(formerly the AARP Insured Tax Free Income Trust) was renamed effective August
1, 1991.

Prospectus
34
<PAGE>

General Management

The Trustees have overall responsibility for the management of their respective
Trusts under Massachusetts law. Under their direction, the Fund
Manager--Scudder, Stevens & Clark, Inc.--provides general investment management
of the AARP Funds. The Trustees supervise each Trust's activities. The
shareholders elect the Trustees and may remove them. Shareholders have one vote
per share held on matters on which they are entitled to vote.

The Trusts are not required to hold annual shareholder meetings and have no
current intention to do so. There may be special meetings for purposes such as
electing or removing Trustees, changing fundamental policies or approving an
investment advisory contract. The Fund Manager will help shareholders to
communicate with other shareholders in connection with removing a Trustee as if
Section 16(c) of the Investment Company Act of 1940 applied.

Since the Trusts use a combined prospectus, it is possible that one Trust or
AARP Fund might become liable for a misstatement in this prospectus regarding
another Trust or AARP Fund. The Trustees of each Trust considered this risk when
approving the use of a combined prospectus.

The right of the Trusts and AARP Funds to use the AARP name will end upon
termination of the member services agreement with the Fund Manager unless AARP
otherwise agrees to let the AARP Funds continue to use the AARP name.

Management Fees

Each AARP Fund pays the Fund Manager a fee for management and administrative
services. The management fee consists of two elements: a Base Fee and an
Individual Fund Fee. The Base Fee is calculated as a percentage of the combined
net assets of all of the AARP Funds. Each AARP Fund pays, as its portion of the
Base Fee, an amount equal to the ratio of its daily net assets to the daily net
assets of all of the AARP Funds. The table below shows the annual Base Fee Rate
at specified levels of Program assets:

Annual Base Fee Rate Program Assets
-------------------- --------------
.350% First $2 billion
.330% Next $2 billion
.300% Next $2 billion
.280% Next $2 billion
.260% Next $3 billion
.250% Next $3 billion
.240% Thereafter

In addition to the Base Fee Rate, each AARP Fund pays a flat Individual Fund Fee
based on the net assets of that Fund. This fee rate is not linked to the total
assets of the Program. The Individual Fee Rate recognizes the different
characteristics of each AARP Fund, the varying levels of complexity of
investment research and securities trading required to manage each Fund, as well
as the relative value that can be, and has been, added by the Fund Manager.

Prospectus
35
<PAGE>

The following table shows the Individual Fund Fee Rate for each of the AARP
Funds:

Fund Individual Fee Rate
---- -------------------
AARP High Quality Money Fund .10%
AARP High Quality Tax Free Money Fund .10%
AARP GNMA and U.S. Treasury Fund .12%
AARP High Quality Bond Fund .19%
AARP Insured Tax Free General Bond Fund .19%
AARP Balanced Stock and Bond Fund .19%
AARP Growth and Income Fund .19%
AARP Global Growth Fund .55%
AARP Capital Growth Fund .32%

Under this fee structure, the combined Base Fee and the Individual Fund Fee,
called the "Effective Management Fee Rate," would be reduced if total Program
assets increase to certain levels, regardless of whether an individual AARP
Fund's assets increase or decrease. The converse is also true--if assets
decrease to certain levels, the Effective Management Fee Rate increases,
regardless of any increase or decrease in assets of an individual AARP Fund. For
the fiscal year ended September 30, 1995, fees paid to the Fund Manager totaled
.40 of 1% of the average daily net assets of the AARP High Quality Money Fund,
.39 of 1% of the AARP High Quality Tax Free Money Fund, .42 of 1% of the AARP
GNMA and U.S. Treasury Fund, .62 of 1% of the AARP Capital Growth Fund, and .49
of 1% for each of the AARP High Quality Bond Fund, AARP Insured Tax Free General
Bond Fund, AARP Growth and Income Fund, and AARP Balanced Stock and Bond Fund.

The Fund Manager pays a portion of the management fee to AARP Financial Services
Corporation (AFSC). AFSC provides the Fund Manager with advice and other
services relating to AARP Fund investment by AARP members.

The fee paid to AFSC is calculated on a daily basis and depends on the level of
total assets of the AARP Investment Program. The fee rate decreases as the level
of total assets increases. The fee rate for each level of assets is .07 of 1%
for the first $6 billion, .06 of 1% for the next $10 billion and .05 of 1%
thereafter.

Under the Investment Management Agreements with the Fund Manager, the Funds are
responsible for all of their expenses, including fees and expenses incurred in
connection with membership in investment company organizations; brokers'
commissions; legal, auditing and accounting expenses; taxes and governmental
fees; the fees and expenses of the transfer agent; the expenses of and the fees
for registering or qualifying securities for sale; the fees and expenses of
Trustees, officers and executive employees of the Trusts who are not affiliated
with the Fund Manager; the cost of printing and distributing reports and notices
to shareholders; and the fees and disbursements of custodians.

UNDERSTANDING FUND PERFORMANCE

Performance of an AARP Fund may be included in advertisements, sales literature
or shareholder reports. Important components of performance are yield, total
return and cumulative total return. These components vary based on changes in
market conditions, the level of interest rates and the level of the Fund's
expenses. Yield, total return, and cumulative total return are based on
historical earnings and are not intended to indicate future performance.

Prospectus
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<PAGE>

What is Yield?

For the AARP High Quality Money Fund, the AARP Income Funds and the AARP Tax
Free Funds, yield is a measure of income. Yield refers to the net investment
income generated over a specific period of time. It is always calculated using a
standard industry formula so it is a useful way to compare the income produced
by different mutual funds. For non-money market funds, the "SEC yield" is an
annualized expression of net investment income generated by the investments in
the fund over a specified 30-day period. This income is then annualized and then
expressed as a percentage. This yield is calculated according to methods
required by the SEC, and may not equate to the level of income paid to
shareholders. For money market funds, yield refers to the net investment income
generated by the fund over a specified 7-day period. This income is then
annualized and expressed as a percentage. For the money market funds, effective
yield is expressed similarly but, when annualized, the income earned by an
investment in the fund is assumed to be reinvested. The effective yield will be
slightly higher than the yield because of the compounding effect of this assumed
reinvestment.

For GNMA securities, net investment income includes realized gains or losses
based on historic cost for principal repayments received. For other securities,
net investment income includes the amortization of market premium or market
discount.

What is Total Return?

The total return of a mutual fund refers to the average annual percentage change
in value of an investment in the fund assuming that the investment has been held
for the stated period. Total return quotations are expressed in terms of average
annual compound rates of return for all periods quoted and assume that all
dividends and capital gain distributions during the period were reinvested in
shares of the fund.

What is Cumulative Total Return?

Cumulative total return of a mutual fund represents the cumulative change in
value of an investment in a fund for various periods. It assumes that all
dividends and capital gain distributions during the period were reinvested in
shares of the fund.

What is meant by Tax-Equivalent Yield and how is it calculated?

To determine if tax-free investing is right for you, it is helpful to convert a
yield from a tax-free mutual fund to its equivalent taxable yield. The
tax-equivalent yields of the AARP Tax Free Funds, which may be quoted from time
to time, let you determine the yield you would have to receive from a fully
taxable investment to produce an after-tax yield equivalent to a tax-free fund.
The calculation is as follows:

Tax-Free Yield = Tax-Equivalent Yield
--------------------
100% - your tax rate

Example: If a tax-free mutual fund has a 30-day average annualized yield of
5.30% and you are in the 31% tax bracket, the calculation would be:

5.30% = 7.68%
----------
100% - 31%

You would need to earn 7.68% with a taxable investment to equal the 5.30% yield
of a tax-free fund. The tax-equivalent yield will vary depending upon your
income tax bracket.

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<PAGE>

UNDERSTANDING SHARE PRICE

How is a Fund's share price determined?

Share price is based on a Fund's net assets. It is calculated by dividing the
current market value (amortized cost in the case of the AARP High Quality Tax
Free Money Fund) of total fund assets, less all liabilities, by the total number
of shares outstanding. Scudder Fund Accounting Corporation, a subsidiary of the
Fund Manager, determines net asset value per share of each Fund as of the close
of regular trading on the New York Stock Exchange, normally 4:00 p.m. Eastern
time on each day the Exchange is open for trading. The Trusts reserve the right
to suspend the sale of Fund shares after appropriate notice to shareholders if
the Trustees determine that it is in the best interest of shareholders.

OPENING AN ACCOUNT

How do I get started?

Decide on the AARP Fund or Funds which meets your needs. Then fill out, sign and
return your Enrollment Form with your check in the postage paid envelope
provided. Once your Enrollment Form is received, an account number will be
assigned to you. Your check should only be drawn on a U.S. bank and be payable
to the AARP Investment Program.

If you don't want to send your check through the mail, you can send a bank wire.
Simply fill out and return your Enrollment Form in the mail. Then, before you
send the wire, call an AARP Mutual Fund Representative. The Representative will
set up the account and contact you to provide you with your account number and
further wiring instructions. To complete the wire transfer, follow the special
wire transfer instructions below. Please note you cannot open AARP IRA or AARP
Keogh Plan accounts by wire.

What is the minimum investment?

The minimum is $500 for each AARP Fund, except for the AARP High Quality Tax
Free Money Fund, which has a minimum investment of $2,500. You can open an AARP
IRA with as little as $250 for each applicable AARP Fund.

What happens if my investment falls below its minimum balance?

The Funds reserve the right to redeem accounts below the minimum balance and
return the proceeds to you if you do not increase an account above the minimum
within 60 days after notice. However, if your account falls below the minimum
solely as a result of market activity, your account will not be closed.

What is the normal processing time of checks when purchasing shares?

If checks are drawn on a Federal Reserve System member bank, the Program will
normally execute checks (and wire transfers) received in good order on the same
business day that they are received.

When do I start earning income on this purchase?

For AARP Funds paying daily dividends (AARP Money Funds, AARP Income Funds and
the AARP Insured Tax Free General Bond Fund), income begins to accrue on the
business day following actual execution of the order.

Prospectus
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<PAGE>

Third party transactions

If purchases and redemptions of Fund shares are arranged and settlement is made
at an investor's election through a member of the National Association of
Securities Dealers, Inc., other than Scudder Investor Services, Inc., that
member may, at its discretion, charge a fee for that service.

- --------------------------------------------------------------------------------
WIRE TRANSFER INSTRUCTIONS
* To open an account (mail Enrollment Form first and make sure to call a
Representative to obtain an account number--AARP IRA and AARP Keogh
Plan accounts cannot be opened by wire)
* To add to your account

Contact your bank with the following information:

1) the names(s) on your account;
2) your AARP Fund account number;
3) the name of the Fund(s) you want to invest in;
4) the following name and address: State Street Bank and Trust Company,
Boston MA 02101;
5) the routing numbers ABA Number 011000028 and AC-99035420.
- --------------------------------------------------------------------------------

Can I add another AARP Fund to my account?

You can open another AARP Fund at any time. The new investment must meet the
minimum initial investment described above. Your new AARP Fund will have the
same account number and registration as your existing one(s). You can open a new
AARP Fund in a number of ways:

- --------------------------------------------------------------------------------
Mail your request Send a letter stating your
request and naming the new AARP Fund.
Include a check made payable to the AARP
Investment Program.
- --------------------------------------------------------------------------------
Wire the money Have your account number ready and follow
the wire instructions above.
- --------------------------------------------------------------------------------
Exchange from See instructions on how to exchange--page 40.
an AARP Fund
- --------------------------------------------------------------------------------

Telephone Transactions

When you open an account you automatically become eligible to exchange shares by
telephone and to redeem by telephone up to $50,000 to your registered address.
You may also request by telephone that redemption proceeds be wired to a bank
account you select. When exchange or redemption requests are made over the
telephone, procedures are in place to give reasonable assurance that telephone
instructions are genuine, including recording telephone calls, testing a
caller's identity and sending written confirmation of such transactions. If an
AARP Fund does not follow such procedures, it may be liable for losses due to
unauthorized or fraudulent telephone instructions. The Trusts and their agents
each reserve the right to modify, interrupt, suspend, or terminate any of the
telephone services at any time, without notice.

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39
<PAGE>

ADDING TO YOUR INVESTMENT

How do I add to my investment?

After your account is opened, you can add to your AARP Fund investment in any
amount in the following ways:

<TABLE>
<CAPTION>
<S> <C>
- -----------------------------------------------------------------------------------------------------------
Mail your request Send your check with a
personalized investment slip or with a
letter naming your account number and
AARP Fund.
- -----------------------------------------------------------------------------------------------------------
Call Toll-Free If you selected the Transact By Phone service, you'll be able to call and have
money transferred from your checking account to cover the purchase. See page
43.
- -----------------------------------------------------------------------------------------------------------
Wire the purchase Have your account number ready and follow the wire instructions on page 39.
- -----------------------------------------------------------------------------------------------------------
Exchange from an See Exchanging below.
AARP Fund
- -----------------------------------------------------------------------------------------------------------
Invest See page 44 for information on the Automatic Investment Plan.
Automatically
- -----------------------------------------------------------------------------------------------------------
</TABLE>

EXCHANGING

What is an exchange?

You make an exchange when you sell shares in one AARP Fund to purchase shares in
another. This is technically two transactions, a sale and a purchase of shares.
If the value of the shares sold in the exchange was higher or lower than your
original purchase price, you may have a capital gain or loss. This is important
to note for tax planning purposes. You may exchange all or part of your shares
in one AARP Fund for shares in another AARP Fund. Exchanges between existing
AARP Funds can be for any amount. Exchanges that open a new AARP Fund must meet
the minimum balance.

How can I exchange shares?

There are several ways to exchange, including:

<TABLE>
<CAPTION>
<S> <C>
- ---------------------------------------------------------------------------------------------------------------------
Mail or fax your request Tell us the AARP Fund from which to take the money and the AARP Fund to
exchange to. Include your account number, registered name(s) and address,
and either the dollar amount or number of shares you want to exchange. Be
sure to sign your name(s) exactly as it appears on the account statement.

- ---------------------------------------------------------------------------------------------------------------------
Call Toll-Free Call us before 4:00 p.m. Eastern time to exchange by close of business the
same day.
- ---------------------------------------------------------------------------------------------------------------------
Call the You can exchange shares through this automated toll-free line. It is available
Easy-Access Line 24 hours a day, 7 days a week. Simply call toll-free and follow the recorded
voice instructions.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

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40
<PAGE>

ACCESS TO YOUR INVESTMENT

How do I redeem?

You can sell (redeem) fund shares in a number of ways. The share price may be
more or less than your original purchase price. Therefore, you may have either a
taxable capital gain or loss. Keep in mind that you can redeem shares of your
AARP IRA or AARP Keogh Plan account only by sending your request in writing.

<TABLE>
<CAPTION>
<S> <C>
- -------------------------------------------------------------------------------------------------------------------
Mail or Fax your request Tell us the name of the AARP Fund and the number of shares or dollar amount
you wish to sell. Make sure to give us your account number, registered name(s)
and where you want the proceeds sent. If you want the proceeds to go to an
address other than your registered address, to your bank, or to someone else,
please provide complete details. Under certain circumstances, this may require
a special type of authorization called a Signature Guarantee (see page 42).
Sign the letter exactly as it appears on your account statement. If your
request requires a Signature Guarantee, you must mail the request instead of
faxing it.
- -------------------------------------------------------------------------------------------------------------------
Call Toll-Free Call before 4:00 p.m. Eastern time business days and redeem up to $50,000 per
AARP Fund. The proceeds will be mailed to your registered address or to your
bank (unless you declined the Telephone Redemption to your Bank feature on
your Enrollment Form). The proceeds can also be wired to your bank if it is a
member of the Federal Reserve System. A $5.00 fee will be charged for each
wire to your bank. Your bank may also charge you for receiving a wire. In the
event that you are unable to reach us by telephone, you should write to the
AARP Investment Program; see "Service Information" for the address. If you
elected the Transact by Phone option on your Enrollment Form, you can have the
proceeds sent electronically to your checking account. See page 43 for more
information on Transact By Phone.
- -------------------------------------------------------------------------------------------------------------------

Call the You can redeem shares through this automated toll-free line. Initiate
Easy-Access Line redemptions any time--24 hours a day. Simply call toll-free and follow the
recorded voice instructions.
- -------------------------------------------------------------------------------------------------------------------
Sell See page 44 for information on the Automatic Withdrawal Plan or
Automatically Systematic Withdrawal Plan for AARP IRA or AARP Keogh Plan accounts.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>

When are redemptions processed?

Any redemption request received in good order prior to 4:00 p.m. Eastern time
during normal business operations will be processed on that day. The request
will be processed at that night's closing share price. Normally, requests
received in good order after 4:00 p.m. Eastern time will be processed on the
next business day.

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41
<PAGE>

Shares redeemed from Funds in the AARP Income Trust, AARP Tax Free Income Trust
or the AARP High Quality Money Fund will earn a dividend on the day of
redemption.

Normally, proceeds of your redemption will be sent on the business day following
a redemption request in good order. In any event, the AARP Funds may take no
more than 7 calendar days to send your redemption proceeds.

When can I expect to receive my money?

We will mail your redemption proceeds promptly. If you purchase shares by check
or by telephone and then redeem them by letter within 7 business days of the
purchase, the redemption proceeds may be held until the purchase check has
cleared the banking system. When the check has cleared, we will mail your
redemption proceeds promptly.

We will not accept redemption requests by telephone or by checkwriting prior to
the expiration of the 7 business day period. You may avoid this delay by
purchasing shares by wire.

- --------------------------------------------------------------------------------
Short-Term Trading

You should make purchases and sales for long-term investment purposes only. The
AARP Funds do not permit a pattern of frequent purchases and sales in response
to short-term changes in share price.

When such a pattern occurs, the AARP Funds and Scudder Investor Services, Inc.
reserve the right to restrict purchases or exchanges. This restriction does not
apply to the AARP money funds. This right extends to individual purchasers or
groups of related purchasers.
- --------------------------------------------------------------------------------

SIGNATURE GUARANTEES

What is a "Signature Guarantee"?

A "Signature Guarantee" is a certification of your signature. We require this
for your protection and to prevent fraudulent redemptions. In effect, the
appropriate institution (see below) guarantees that you are authorized to make
certain requests.

When do I need one?

A "Signature Guarantee" from each person on the account registration is needed
for the following redemption requests:

1) Redemptions of more than $50,000;
2) When redemption proceeds are payable to someone other than the
registered shareholder(s);
3) When redemption proceeds are to be sent to an address other than the
registered address; or
4) If the account's registered address has changed during the last 15
days.

Transactions requiring signature guarantees cannot be faxed.

Where can I get one?

You can get your signature guaranteed through most banks, credit unions or
savings associations, or from broker-dealers, government securities
broker-dealers, national securities exchanges, registered securities
associations, or clearing agencies deemed eligible by the Securities and
Exchange Commission. Signature Guarantees by notary publics are not acceptable.

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42
<PAGE>

INVESTOR SERVICES

To make investing simpler and more convenient there are many free investor
services available to you.

Easy-Access Line
- --------------------------------------------------------------------------------
* Exchange between AARP Funds CALL TOLL-FREE
* Exchange to open a new AARP Fund 1-800-631-4636
* Redeem money to your registered address 24 HOURS A DAY
* Get current performance information 7 DAYS A WEEK
* Get current account balance information
* Confirm your last transaction
- --------------------------------------------------------------------------------

With the Easy-Access Line you can get performance, and account information. If
you have a touch-tone phone, you can also exchange or redeem shares worth up to
$50,000. Simply call toll-free 1-800-631-4636 using a touch-tone phone and
follow the easy pre-recorded voice instructions.

Transact By Phone
- --------------------------------------------------------------------------------
* Add to an AARP Fund by transfer from
your bank checking or NOW account CALL TOLL-FREE
* Redeem and send the proceeds to your 1-800-253-2277
checking or NOW account
- --------------------------------------------------------------------------------

Transact By Phone allows you to call toll-free to purchase and redeem shares.
The money will be automatically transferred to or from your bank checking
account. Your bank must be a member of the Automated Clearing House for you to
take advantage of this service.

- --------------------------------------------------------------------------------
Buying Shares through Call us before 4:00 p.m. Eastern time,
Transact By Phone: business days, when you want to buy additional
shares, and money will be transferred from
your bank account to your AARP Fund account to
cover the purchase. Purchases must be for at
least $250 but not more than $250,000. Your
purchase will generally be completed in 2
business days at the closing share price on
the day of your call. Requests received after
4:00 p.m. will be purchased at the next
business day's closing price. Shares purchased
in this manner will not be redeemable for a
period of up to 7 business days.
- --------------------------------------------------------------------------------
Selling Shares through Call us before 4:00 p.m. Eastern time,
Transact By Phone: business days, when you want to sell shares.
We'll sell your shares and transfer the
proceeds to your bank account--generally
within 2 business days from the day of your
request. You can redeem any amount greater
than $250. Shares will be sold at that night's
closing price on the day of your request.
Requests received after 4:00 p.m. will be sold
at the next business day's closing price.
- --------------------------------------------------------------------------------

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43
<PAGE>

Free Checkwriting

Shareholders in the AARP High Quality Money Fund or the AARP High Quality Tax
Free Money Fund have free checkwriting privileges. There is no charge to
shareholders for this service, but the AARP Funds reserve the right to impose a
charge in the future. To enroll, you must fill out a signature card on the
Enrollment Form. If shares were purchase by your personal check, you may only
write checks against your purchase 7 business days from the day that the
purchase took place. Keep in mind that you cannot close your account by writing
a check. This service may be suspended or terminated at any time upon notice to
shareholders.

Distributions Direct

You may choose to have dividend and capital gain distributions automatically
deposited into your bank checking or NOW account. To enroll in this service,
your bank must be a member of the Automated Clearing House (ACH) network. Once
you enroll, your dividends and capital gains will be automatically deposited
into your personal bank account within 3 business days of the distribution date.
You'll receive a statement confirming the amount. There is no charge to
shareholders for the service.

Systematic Plans

Several other investor services are available. These include:

* Automatic Investment Plan: Arrange for regular investments into your
AARP Fund through automatic deductions from your bank checking
account. The Automatic Investment Plan may be discontinued at any time
without prior notice to a shareholder if any debit from their bank is
not paid, or by written notice to the shareholder at least thirty days
prior to the next scheduled payment to the Automatic Investment Plan.

* Direct Deposit: At your direction, your Social Security, U.S.
Government or any regular income checks (pension, dividend, interest
or payroll) will be automatically deposited into your AARP Fund.

* Automatic Withdrawal Plan: At your direction, we will automatically
send a monthly redemption of $50 or more directly to you when you have
at least $10,000 or more in an AARP Fund.

* Direct Payment of Fixed Bills: With $10,000 or more in an AARP Fund,
you can arrange for us to automatically pay regular bills of a fixed
amount. Pay your rent, mortgage or other payments of $50 or more.

* Systematic Retirement Withdrawal Plan: You can receive periodic
distributions from an AARP IRA or AARP Keogh Plan account.

STATEMENTS AND REPORTS

What kinds of statements do I receive?

You will receive a prompt confirmation statement for your transactions. You will
also receive a monthly Consolidated Statement. AARP IRA or AARP Keogh Plan
accounts will receive a quarterly Consolidated Statement.

The Consolidated Statement details the market value of all the AARP Funds in
your account. It also includes a listing of recent transactions. You should keep
these statements for your records.

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44
<PAGE>

What other reports do I get?

Each year, you will receive a current prospectus, mid year report and annual
report. To reduce the volume of mail, we will only send one copy of most reports
to a household (same surname, same address). Please contact us if you wish to
receive additional reports.

SERVICE PROVIDERS OF THE AARP FUNDS

Legal Counsel
Dechert Price & Rhoads,
Washington, DC

Independent Accountants
Price Waterhouse LLP, Boston, MA

Underwriter
Scudder Investor Services, Inc., Two International Place, Boston, MA (a
subsidiary of Scudder) is principal underwriter of the AARP Funds.

Scudder Investor Services, Inc. offers for sale and confirms as agent all
purchases of shares of the AARP Funds.

Custodians
Brown Brothers Harriman & Co., Boston, MA
State Street Bank and Trust Company, Boston, MA

Fund Accounting Agent
Scudder Fund Accounting Corporation, Two International Place, Boston, MA (a
subsidiary of Scudder) is responsible for determining the daily net asset value
per share and maintaining the general accounting records of the AARP Funds.

Transfer and Dividend-Disbursing Agent
Scudder Service Corporation, P.O. Box 2540, Boston, MA 02208-2540 (a subsidiary
of Scudder)

Investment Adviser
Scudder, Stevens & Clark, Inc., 345 Park Avenue, New York, New York is
investment adviser for the AARP Funds.

TRUSTEES AND OFFICERS

CAROLE LEWIS ANDERSON, Trustee (1,2), President, MASDUN Capital Advisors;
Formerly Principal, Suburban Capital Markets, Inc.; Director, VICORP
Restaurants, Inc.; Member of the Board, Association for Corporate Growth of
Washington, D.C.; Trustee, Hasbro Children's Foundation and Mary Baldwin
College.

ADELAIDE ATTARD, Trustee (2,4), Consultant, Gerontology; Commissioner, County of
Nassau, New York, Department of Senior Citizen Affairs (1971-1991); Chairperson,
Federal Council on Aging (1981-1986).

CYRIL F. BRICKFIELD, Trustee (2,3,4), Honorary Trustee (1); Honorary President
and Special Counsel, American Association of Retired Persons.

ROBERT N. BUTLER, M.D., Trustee (2,4), 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;
Formerly Director, National Institute on Aging, National Institute of Health.

Prospectus
45
<PAGE>

ESTHER CANJA, Trustee (5), Vice President, American Association of Retired
Persons; Trustee and Chair, AARP Group Health Insurance Plan; Board Liaison,
National Volunteer Leadership Network Advisory Committee; Chair, Board
Operations Committee; AARP State Director of Florida (1990-1992).

LINDA C. COUGHLIN, President and Trustee (5), Managing Director, Scudder,
Stevens & Clark, Inc., Director, Scudder Investor Services, Inc.*

HORACE B. DEETS, Vice Chairman and Trustee (5), Executive Director, American
Association of Retired Persons; Member, Board of Councilors, Andrus Gerontology
Center; Member of the Board, HelpAge International.

EDGAR R. FIEDLER, Trustee (1,2,3), Vice President and Economic Counselor, The
Conference Board, Inc.

CUYLER W. FINDLAY, Chairman and Trustee (5), Managing Director, Scudder, Stevens
& Clark, Inc., Senior Vice President and Director, Scudder Investor Services,
Inc.*

EUGENE P. FORRESTER, Trustee (2,3), Lt. General (Retired) U.S. Army;
International Trade Counselor; Consultant.

WAYNE F. HAEFER, Trustee (2,3,4), Director, Membership Division of AARP;
Formerly Secretary, Employee's Pension and Welfare Trusts of AARP and Retired
Persons Services, Inc.; Formerly Director, Administration and Data Management
Division of AARP.

GEORGE L. MADDOX, JR., Trustee (2,3), Professor Emeritus and Director, Long Term
Care Resources Program, Duke University Medical Center; Professor Emeritus of
Sociology, Departments of Sociology and Psychiatry, Duke University.

ROBERT J. MYERS, Trustee (1,2,4), Actuarial Consultant; Formerly Executive
Director, National Commission on Social Security Reform; Formerly Chairman,
Commission on Railroad Retirement Reform.

JAMES H. SCHULZ, Trustee (3,4), Professor of Economics and Kirstein Professor of
Aging Policy, Policy Center on Aging, Florence Heller School, Brandeis
University.

GORDON SHILLINGLAW, Trustee (1,3,4), Professor Emeritus of Accounting, Columbia
University Graduate School of Business.

MARGARET D. HADZIMA*, Vice President (5)

THOMAS W. JOSEPH*, Vice President (5)

DAVID S. LEE*, Vice President and Assistant Treasurer (5)

THOMAS F. McDONOUGH*, Vice President and Assistant Secretary (5)

PAMELA A. McGRATH*, Vice President and Treasurer (5)

EDWARD J. O'CONNELL*, Vice President and Assistant Treasurer (5)

JAMES W. PASMAN*, Vice President (5)

KATHRYN L. QUIRK*, Vice President and Secretary (5)

HOWARD SCHNEIDER*, Vice President (5)

CORNELIA M. SMALL*, Vice President (5)

*Scudder, Stevens & Clark, Inc.

(1) AARP Cash Investment Funds
(2) AARP Income Trust
(3) AARP Tax Free Income Trust
(4) AARP Growth Trust
(5) All Funds

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