[LOGO] AARP Investment Program
from SCUDDER
Supplement to the Prospectus dated February 1, 2000:
AARP Balanced Stock and Bond Fund
AARP Bond Fund for Income
AARP Diversified Growth Portfolio
AARP Diversified Income with Growth Portfolio
AARP Global Growth Fund
AARP Growth and Income Fund
AARP High Quality Money Fund
AARP High Quality Short Term Bond Fund
AARP High Quality Tax Free Money Fund
AARP Insured Tax Free General Bond Fund
AARP International Stock Fund
AARP Premium Money Fund
AARP U.S. Stock Index Fund
On February 7, 2000, the applicable Board of each of the above-mentioned funds
(identified in the chart below under the heading "Acquired Fund") approved an
Agreement and Plan of Reorganization (the "Plan") between each Fund and the
corresponding Acquiring Fund identified in the chart below. Each proposed
transaction is part of Scudder Kemper Investments, Inc.'s initiative to
restructure and streamline the management and operations of the funds it
manages.
The Plan applicable to each Fund provides for the transfer of substantially all
of the assets and the assumption of all of the liabilities of the Fund solely in
exchange for voting shares of the corresponding Acquiring Fund. Following the
exchange, the Fund will distribute shares of the corresponding Acquiring Fund to
the Fund's shareholders as part of the Fund's liquidation as provided for in the
Plan (the transactions contemplated by the Plan are referred to as the
"Reorganization").
Each Reorganization can be consummated only if, among other things, it is
approved by a majority vote of shareholders of the applicable Fund. A Special
Meeting (the "Meeting") of the shareholders of each Fund will be held on or
about July 11, 2000 and shareholders will be given the opportunity to vote on
the Plan and any other applicable matters affecting the Fund at that time. In
connection with the Meeting, each Fund will be filing with the Securities and
Exchange Commission and delivering to its shareholders: (i) a Proxy Statement
describing in detail the Reorganization and the Board's considerations in
recommending that shareholders approve the Reorganization, and (ii) a Prospectus
for the Acquiring Fund.
If the Plan for a Fund is approved at the Meeting and certain conditions
required by the Plan are satisfied, the Reorganization is expected to become
effective at 9:00 a.m. eastern standard time on or about the appropriate
Proposed Reorganization Date identified in the chart below. If shareholder
approval of a Plan is delayed due to failure to obtain a quorum or otherwise,
the applicable Reorganization will become effective as soon as practicable after
the receipt of shareholder approval.
In the event that shareholders of a Fund fail to approve the Plan for that Fund,
the Fund will continue to operate and the Fund's Board may resubmit the Plan for
shareholder approval or consider other proposals.
<TABLE>
<CAPTION>
Acquired Fund Acquiring Fund Proposed Reorganization Date
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<S> <C> <C>
AARP Balanced Stock and Bond Fund Scudder Balanced Fund August 28, 2000
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AARP Bond Fund for Income Scudder Income Fund July 31, 2000
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AARP Diversified Growth Portfolio Scudder Pathway Growth Portfolio September 25, 2000
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AARP Diversified Income with Growth Portfolio Scudder Pathway Conservative Portfolio September 25, 2000
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AARP Global Growth Fund Scudder Global Fund September 11, 2000
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AARP Growth and Income Fund Scudder Growth and Income Fund August 14, 2000
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AARP High Quality Money Fund Scudder Cash Investment Trust September 11, 2000
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AARP High Quality Short Term Bond Fund Scudder Short Term Bond Fund August 14, 2000
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AARP High Quality Tax Free Money Fund Scudder Tax Free Money Fund September 11, 2000
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AARP Insured Tax Free General Bond Fund Scudder Managed Municipal Bonds July 31, 2000
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AARP International Stock Fund Scudder International Fund August 28, 2000
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AARP Premium Money Fund Scudder Money Market Series August 14, 2000
- Prime Reserve Shares
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AARP U.S. Stock Index Fund Scudder S&P 500 Index Fund September 11, 2000
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</TABLE>
<PAGE>
AARP GNMA and U.S. Treasury Fund
On February 7, 2000, the Board of AARP GNMA and U.S. Treasury Fund approved a
proposed new investment management agreement (the "New Management Agreement")
between the Fund and Scudder Kemper Investments, Inc. ("Scudder Kemper"), the
Fund's investment adviser. Shareholders of the Fund will be asked to approve the
New Management Agreement at a Special Meeting of Shareholders to be held on or
about July 11, 2000. The current management fee structure provides that the Fund
pays Scudder Kemper a monthly fee consisting of a base fee and an individual
Fund fee. The base fee is based on the average daily net assets of all funds in
the AARP Investment Program, and the individual fee for the Fund only is set at
a fixed rate (see table below). The New Management Agreement provides a revised
fee structure with new rates based only on the average daily net assets of the
Fund, as stated below. The New Management Agreement, if approved, is contingent
and will become effective only upon the consummation of the acquisition by the
Fund of another fund advised by Scudder Kemper, currently scheduled to occur in
the third quarter of 2000.
The AARP Investment Program had net assets of $16,950,267,000 as of December 31,
1999.
<TABLE>
<CAPTION>
Fund Current Annual Fee Rate* Proposed Annual Fee Rate** Assets as of 12/31/99
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<S> <C> <C> <C>
AARP GNMA and U.S. Treasury Fund Current effective fee of 0.40%, 0.40% to $5 billion $4,014,834,000
calculated as follows: 0.385% next $1 billion
0.37% thereafter
Base fee rate:
0.35% to $2 billion
0.33% next $2 billion
0.30% next $2 billion
0.28% next $3 billion
0.26% next $3 billion
0.25% next $3 billion
0.24% thereafter
+
Individual fee rate: 0.12%
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</TABLE>
* The percentage for the base fee rate is based on the average daily net
assets of all funds in the AARP Investment Program. The percentage for the
individual fee rate is based on a fixed fee rate for the applicable fund
only. The current effective fee is based on assets as of 12/31/99.
** Percentages are based on the average daily net assets of the Fund.
<PAGE>
AARP Capital Growth Fund
AARP Small Company Stock Fund
On February 7, 2000, the Board of AARP Capital Growth Fund and AARP Small
Company Stock Fund approved an Agreement and Plan of Reorganization for each
Fund (each a "Plan of Reorganization") providing for the reorganization of each
Fund into newly established separate series of Investment Trust, a Massachusetts
business trust. A key purpose of each reorganization is to enhance efficiency in
the administration of the Funds. Each newly established series, which have not
yet commenced business operations, will have substantially the same investment
objective, policies and limitations as those of the applicable Fund. The
investment management agreements between each newly established series and
Scudder Kemper Investments, Inc. ("Scudder Kemper"), the series' investment
adviser, will be substantially similar to each Fund's current investment
management agreement except for the fee structure. The Funds' current management
fee structure provides that each Fund pays Scudder Kemper a monthly fee
consisting of a base fee and an individual Fund fee. The base fee is based on
the average daily net assets of all funds in the AARP Investment Program, and
the individual fee for the Fund only is set at a fixed rate (see table below).
The investment management agreements for the newly established series will
provide for a fee rate based only on the average daily net assets of each
series, as stated below. Shareholders of each Fund will be asked to approve the
Plan of Reorganization for the Fund at a Special Meeting of Shareholders to be
held on or about July 11, 2000.
The AARP Investment Program had net assets of $16,950,267,000 as of December 31,
1999.
<TABLE>
<CAPTION>
Fund Current Annual Fee Rate* Proposed Annual Fee Rate** Assets as of 12/31/99
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<S> <C> <C> <C>
AARP Capital Growth Fund Current effective fee of 0.60%, 0.58% to $3 billion $2,238,362,000
calculated as follows: 0.555% next $1 billion
0.53% thereafter
Base fee rate:
0.35% to $2 billion
0.33% next $2 billion
0.30% next $2 billion
0.28% next $2 billion
0.25% next $3 billion
0.26% next $3 billion
0.24% thereafter
+
Individual fee rate: 0.32%
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AARP Small Company Stock Fund Current effective fee of 0.83%, 0.75% to $500 million $59,019,000
calculated as follows: 0.70% next $500 million
0.65% thereafter
Base fee rate:
0.35% to $2 billion
0.33% next $2 billion
0.30% next $2 billion
0.28% next $2 billion
0.26% next $3 billion
0.25% next $3 billion
0.24% thereafter
+
Individual fee rate: 0.55%
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</TABLE>
* The percentage for the base fee rate is based on the average daily net
assets of all funds in the AARP Investment Program. The percentage for the
individual fee rate is based on a fixed fee rate for the applicable fund
only. The current effective fee is based on assets as of 12/31/99.
** Percentages are based on the average daily net assets of the Fund.
<PAGE>
February 8, 2000
