SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(A) of the Securities
Exchange Act of 1934 (Amendment No.__ )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
[ ] Definitive Proxy Statement Rule 14a-6(e)(2))
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
AARP INCOME TRUST
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identity the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
AARP GNMA AND U.S. TREASURY FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
Please take notice that a Special Meeting of Shareholders (the
"Meeting") of AARP GNMA and U.S. Treasury Fund (the "Fund"), a series of AARP
Income Trust (the "Trust") will be held at the offices of Scudder Kemper
Investments, Inc., 13th Floor, Two International Place, Boston, MA 02110-4103,
on July 11, 2000, at 2:00 p.m., Eastern time, for the following purposes:
Proposal 1: To elect Trustees of the Trust;
Proposal 2: To approve or disapprove a new investment
management agreement between the Fund and
Scudder Kemper Investments, Inc.; and
Proposal 3: To ratify the selection of PricewaterhouseCoopers
LLP as the independent accountants for the Fund for
the Fund's current fiscal year.
The appointed proxies will vote in their discretion on any other
business that may properly come before the Meeting or any adjournments thereof.
Holders of record of shares of the Fund at the close of business on
April 17, 2000 are entitled to vote at the Meeting and at any adjournments
thereof.
In the event that the necessary quorum to transact business or the vote
required to approve any Proposal is not obtained at the Meeting, the persons
named as proxies may propose one or more adjournments of the Meeting in
accordance with applicable law to permit further solicitation of proxies. Any
such adjournment as to a matter will require the affirmative vote of the holders
of a majority of the Fund's shares present in person or by proxy at the Meeting.
The persons named as proxies will vote FOR any such adjournment those proxies
which they are entitled to vote in favor of that Proposal and will vote AGAINST
any such adjournment those proxies to be voted against that Proposal.
By Order of the Board,
[Signature]
Kathryn L. Quirk
Secretary
[date]
IMPORTANT -- We urge you to sign and date the enclosed proxy card(s) and return
it in the enclosed envelope which requires no postage (or to take advantage of
the electronic or telephonic voting procedures described on the proxy card(s)).
Your prompt return of the enclosed proxy card(s) (or your voting by other
available means) may save the necessity and expense of further solicitations. If
you wish to attend the Meeting and vote your shares in person at that time, you
will still be able to do so.
<PAGE>
AARP INCOME TRUST
Two International Place
Boston, Massachusetts 02110
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Trustees (the "Board," the Trustees on which are
referred to as the "Trustees") of AARP Income Trust (the "Trust") for use at the
Special Meeting of Shareholders of AARP GNMA and U.S. Treasury Fund (the
"Fund"), to be held at the offices of Scudder Kemper Investments, Inc. ("Scudder
Kemper" or the "Investment Manager"), 13th Floor, Two International Place,
Boston, Massachusetts 02110, on July 11, 2000, at 2:00 p.m., Eastern time, and
at any and all adjournments thereof (the "Meeting").
In the descriptions of the Proposals below, the word "fund" is
sometimes used to mean an investment company or series thereof in general, and
not the Fund whose proxy statement this is. In addition, for simplicity, actions
are described in this Proxy Statement as being taken by the Fund, although all
actions are actually taken by the Trust on behalf of the Fund.
THE FUND PROVIDES PERIODIC REPORTS TO ITS SHAREHOLDERS WHICH HIGHLIGHT
RELEVANT INFORMATION, INCLUDING INVESTMENT RESULTS AND A REVIEW OF PORTFOLIO
CHANGES. YOU MAY RECEIVE AN ADDITIONAL COPY OF THE MOST RECENT ANNUAL REPORT FOR
THE FUND AND A COPY OF ANY MORE RECENT SEMI-ANNUAL REPORT, WITHOUT CHARGE, BY
CALLING (800) 253-2277 OR WRITING THE FUND, C/O SCUDDER KEMPER INVESTMENTS,
INC., AT THE ADDRESS FOR THE FUND SHOWN AT THE BEGINNING OF THIS PROXY
STATEMENT.
BACKGROUND
Proposals 1 and 2 in this Proxy Statement are part of a program
proposed by Scudder Kemper to respond to changing industry conditions and
investor needs. Scudder Kemper seeks to offer the full line-up of the Scudder
Family of Funds to members of the AARP Investment Program. The expanded offering
should position the AARP Investment Program to meet the increasingly diverse
needs of current and prospective AARP members.
Scudder Kemper and AARP have advised the Board that they believe that
the proposed changes in the AARP Investment Program from Scudder are in the
interest of shareholders of the funds offered through the AARP Investment
Program (the "AARP Funds") and AARP members: the Program would consist of
forty-three no-load funds compared with the current sixteen and would retain its
separate identity with separate statements and lower minimum investments for
participating shareholders; six core funds would continue to have a risk managed
strategy; education will remain an objective of Scudder Kemper; and AARP will
continue to be involved with the Program and is proposed to have Board
representation.
As part of this initiative, Scudder Kemper has sought ways to
restructure and streamline the management and operations of the funds it
advises. Scudder Kemper believes, and has advised the Board, that the
consolidation of certain funds advised by it would benefit fund shareholders.
Scudder Kemper has, therefore, proposed the consolidation of a number of no-load
funds advised by it that Scudder Kemper believes have similar or compatible
investment objectives and policies. In many cases, the proposed consolidations
are designed to eliminate the substantial overlap in current offerings by the
Scudder Funds and the AARP Funds, all of which are advised by Scudder Kemper.
Consolidation plans are also proposed for other funds that have not gathered
enough assets to operate efficiently and, in turn, have relatively high expense
ratios. Scudder Kemper believes that these consolidations may help to enhance
investment performance of funds and increase efficiency of operations. Many of
the proposed consolidations are also expected to result in lower operating
expenses for shareholders of acquired funds.
Subject to the approval of the shareholders of Scudder GNMA Fund, the
Fund will acquire the assets of Scudder GNMA Fund as part of the restructuring
program. The current investment management agreement for the Fund, and all funds
in the AARP Investment Program, includes two components: a fund-specific
individual fee and a base fee based on the aggregate combined net assets of all
AARP Funds, except for the series of AARP Managed Investment Portfolios Trust.
Under Scudder Kemper's proposal, the AARP Funds would be consolidated with
similar Scudder Funds. The restructuring proposal among other things continues
the existence of the AARP Investment Program from Scudder and AARP's
contributions to it, expands the investment options for Program participants to
forty-three from sixteen (six of which will follow a risk-managed strategy), and
eliminates "AARP" from fund names. Due to the restructuring plan, however, there
would be no distinct AARP Funds. The AARP Investment Program would offer Scudder
Funds to its participants. The base fee is, therefore, no longer applicable, and
the Fund requires a new fee structure under its investment management agreement.
It is anticipated that, effective upon the closing of the
reorganization whereby all of the assets and liabilities of the Scudder GNMA
Fund would be acquired by the Fund (the "Reorganization"), the name of the Fund
will be changed to Scudder GNMA Fund and the name of the Trust will be changed
to Scudder Income Trust.
There are currently five different Boards for the no-load funds advised
by Scudder Kemper. Scudder Kemper believes, and has proposed to the boards, that
creating a single board responsible for most of the no-load funds advised by
Scudder Kemper would increase efficiency and benefit fund shareholders. This
initiative is described in greater detail in Proposal 1 below. In Proposal 2
below, shareholders are being asked to approve a new investment management
agreement between the Fund and Scudder Kemper. As described below, the new
agreement is identical to the Fund's current agreement, except for the dates of
execution and termination and except for the fee schedule.
PROPOSAL 1: ELECTION OF TRUSTEES
At the Meeting, as part of the overall restructuring effort outlined
above, shareholders of the Fund will be asked to elect nine individuals to
constitute the Board of Trustees of the Trust. These individuals were nominated
after a careful and deliberate selection process by the present Board of
Trustees of the Trust. The nominees for election, who are listed below, include
seven persons who currently serve as Independent Trustees (as defined below) of
the Trust or as independent trustees/directors of other no-load funds advised by
Scudder Kemper and who have no affiliation with Scudder Kemper or the American
Association of Retired Persons ("AARP"). The nominees listed below are also
being nominated for election as trustees/directors of most of the other no-load
funds advised by Scudder Kemper.
Currently five different boards of trustees or directors are
responsible for overseeing different groups of no-load funds advised by Scudder
Kemper. As part of a broader restructuring effort described above, Scudder
Kemper has recommended, and the Board of Trustees has agreed, that shareholder
interests can more effectively be represented by a single board with
responsibility for overseeing substantially all of the Scudder no-load funds.
Creation of a single, consolidated board should also provide certain
administrative efficiencies and potential future cost savings for both the Fund
and Scudder Kemper.
Election of each of the listed nominees for Trustee on the Board
requires the affirmative vote of a plurality of the votes cast at the Meeting,
in person or by proxy. The persons named as proxies on the enclosed proxy card
will vote for the election of the nominees named below unless authority to vote
for any or all of the nominees is withheld in the proxy. Each Trustee so elected
will serve as a Trustee of the Trust until the next meeting of shareholders, if
any, called for the purpose of electing Trustees and until the election and
qualification of a successor or until such Trustee sooner dies, resigns or is
removed as provided in the governing documents of the Trust. Each of the
nominees has indicated that he or she is willing to serve as a Trustee. If any
or all of the nominees should become unavailable for election due to events not
now known or anticipated, the persons named as proxies will vote for such other
nominee or nominees as the current Trustees may recommend. The following
paragraphs and table set forth information concerning the nominees and Trustees
not standing for re-election. Each nominee's or Trustee's age is in parentheses
after his or her name. Unless otherwise noted, (i) each of the nominees and
Trustees has engaged in the principal occupation(s) noted in the following
paragraphs and table for at least the most recent five years, although not
necessarily in the same capacity, and (ii) the address of each nominee is c/o
Scudder Kemper Investments, Inc., Two International Place, Boston, MA
02110-4103.
Nominees for Election as Trustees:
Henry P. Becton, Jr. (56)
Henry P. Becton, Jr. is president of the WGBH Educational Foundation, producer
and distributor of public broadcasting programming and educational and
interactive software. He graduated from Yale University in 1965, where he was
elected to Phi Beta Kappa. He received his J.D. degree cum laude from Harvard
Law School in 1968. Mr. Becton is a member of the PBS Board of Directors, a
Trustee of American Public Television, the New England Aquarium, the Boston
Museum of Science, Concord Academy, and the Massachusetts Corporation for
Educational Telecommunications, an Overseer of the Boston Museum of Fine Arts,
and a member of the Board of Governors of the Banff International Television
Festival Foundation. He is also a Director of Becton Dickinson and Company and
A.H. Belo Company, a Trustee of the Committee for Economic Development, and a
member of the Board of Visitors of the Dimock Community Health Center, the
Dean's Council of Harvard University's Graduate School of Education, and the
Massachusetts Bar. Mr. Becton has served as a trustee of various mutual funds
advised by Scudder Kemper since 1990.
Linda C. Coughlin (48)*
Linda C. Coughlin, a Managing Director of Scudder Kemper, is head of Scudder
Kemper's U.S. Retail Mutual Funds Business. Ms. Coughlin joined Scudder Kemper
in 1986 and was a member of the firm's Board of Directors. She currently
oversees the marketing, service and operations of Scudder Kemper retail
businesses in the United States, which include the Scudder, Kemper, AARP, and
closed-end fund families, and the direct and intermediary channels. She also
serves as Chairperson of the AARP Investment Program from Scudder and as a
Trustee of the Program's mutual funds. Ms. Coughlin is also a member of the
Mutual Funds Management Group. Previously, she served as a regional Marketing
Director in the retail banking division of Citibank and at the American Express
Company as Director of Consumer Marketing for the mutual fund group. Ms.
Coughlin received a B.A. degree in economics (summa cum laude) from Fordham
University. Ms. Coughlin is currently a Trustee of the Trust and has served on
the boards of various funds advised by Scudder Kemper, including the AARP
Investment Program Funds, since 1996.
Dawn-Marie Driscoll (53)
Dawn-Marie Driscoll is an Executive Fellow and Advisory Board member of the
Center for Business Ethics at Bentley College, one of the nation's leading
institutes devoted to the study and practice of business ethics. Ms. Driscoll is
also president of Driscoll Associates, a consulting firm. She is a member of the
Board of Governors of the Investment Company Institute and serves as Chairman of
the Directors Services Committee. Ms. Driscoll was recently named 1999 "Fund
Trustee of the Year" by Fund Directions, a publication of Institutional
Investor, Inc. She has been a director, trustee and overseer of many civic and
business institutions, including The Massachusetts Bay United Way and Regis
College. Ms. Driscoll was formerly a law partner at Palmer & Dodge in Boston and
served for over a decade as Vice President of Corporate Affairs and General
Counsel of Filene's, the Boston-based department store chain. Ms. Driscoll
received a B.A. from Regis College, a J.D. from Suffolk University Law School, a
D.H.L. (honorary) from Suffolk University and a D.C.S. (honorary) from Bentley
College Graduate School of Business. Ms. Driscoll has served as a trustee of
various mutual funds advised by Scudder Kemper since 1987.
Edgar R. Fiedler (70)
Edgar R. Fiedler is Senior Fellow and Economic Counsellor at The Conference
Board. He served as the Board's Vice President, Economic Research from 1975 to
1986 and as Vice President and Economic Counsellor from 1986 to 1996. Mr.
Fiedler's business experience includes positions at Eastman Kodak in Rochester
(1956-59), Doubleday and Company in New York City (1959-60), and Bankers Trust
Company in New York City (1960-69). He also served as Assistant Secretary of the
Treasury for Economic Policy from 1971 to 1975. Mr. Fiedler graduated from the
University of Wisconsin in 1951. He received his M.B.A. from the University of
Michigan and his doctorate from New York University. During the 1980's, Mr.
Fiedler was an Adjunct Professor of Economics at the Columbia University
Graduate School of Business. From 1990 to 1991, he was the Stephen Edward Scarff
Distinguished Professor at Lawrence University in Wisconsin. Mr. Fiedler is a
Director of The Stanley Works, Harris Insight Funds, Brazil Fund, and PEG
Capital Management, Inc. He is currently a Trustee of the Trust and has served
as a board member of various mutual funds advised by Scudder Kemper, including
the AARP Investment Program Funds, since 1984.
Keith R. Fox (46)
Keith R. Fox is the managing partner of the Exeter Group of Funds, a series of
private equity funds with offices in New York and Boston, which he founded in
1986. The Exeter Group invests in a wide range of private equity situations,
including venture capital, expansion financings, recapitalizations and
management buyouts. Prior to forming Exeter, Mr. Fox was a director and vice
president of BT Capital Corporation, a subsidiary of Bankers Trust New York
Corporation organized as a small business investment company and based in New
York City. Mr. Fox graduated from Oxford University in 1976, and in 1981
received an M.B.A. degree from the Harvard Business School. Mr. Fox is also a
qualified accountant. He is a board member and former Chairman of the National
Association of Small Business Investment Companies, and a director of Golden
State Vintners, K-Communications, Progressive Holding Corporation and Facts On
File, as well as a former director of over twenty companies. Mr. Fox has served
as a trustee of various mutual funds advised by Scudder Kemper since 1996.
Joan Edelman Spero (55)
Joan E. Spero is the president of the Doris Duke Charitable Foundation, a
position to which she was named in January 1997. From 1993 to 1997, Ms. Spero
served as Undersecretary of State for Economic, Business and Agricultural
Affairs under President Clinton. From 1981 to 1993, she was an executive at the
American Express Company, where her last position was executive vice president
for Corporate Affairs and Communications. Ms. Spero served as U.N. Ambassador to
the United Nations Economic and Social Council under President Carter from 1980
to 1981. She was an assistant professor at Columbia University from 1973 to
1979. She graduated Phi Beta Kappa from the University of Wisconsin and holds a
master's degree in international affairs and a doctorate in political science
from Columbia University. Ms. Spero is a member of the Council on Foreign
Relations and the Council of American Ambassadors. She also serves as a trustee
of the Wisconsin Alumni Research Foundation, The Brookings Institution and
Columbia University and is a Director of First Data Corporation. Ms. Spero has
served as a trustee of various mutual funds advised by Scudder Kemper since
1998.
Jean Gleason Stromberg (56)
Ms. Stromberg acts as a consultant on regulatory matters. From 1996 to 1997, Ms.
Stromberg represented the U.S. General Accounting Office before Congress and
elsewhere on issues involving banking, securities, securities markets, and
government-sponsored enterprises. Prior to that, Ms. Stromberg was a corporate
and securities law partner at the Washington, D.C. law office of Fulbright and
Jaworski, a national law firm. She served as Associate Director of the SEC's
Division of Investment Management from 1977 to 1979 and prior to that was
Special Counsel for the Division of Corporation Finance from 1972 to 1977. Ms.
Stromberg graduated Phi Beta Kappa from Wellesley College and received her law
degree from Harvard Law School. From 1988 to 1991 and 1993 to 1996, she was a
Trustee of the American Bar Retirement Association, the funding vehicle for
American Bar Association-sponsored retirement plans. Ms. Stromberg serves on the
Wellesley College Business Leadership Council and the Council for Mutual Fund
Director Education at Northwestern University Law School and was a panelist at
the SEC's Investment Company Director's Roundtable. Ms. Stromberg is currently a
Trustee of the Trust and has served as a board member of the AARP Investment
Program Funds since 1997.
Jean C. Tempel (56)
Jean C. Tempel is a venture partner for Internet Capital Group, a strategic
network of Internet partnership companies whose principal offices are in Wayne,
Pennsylvania. Ms. Tempel concentrates on investment opportunities in the Boston
area. She spent 25 years in technology/operations executive management at
various New England banks, building custody operations and real time
financial/securities processing systems, most recently as Chief Operations
Officer at The Boston Company. From 1991 until 1993 she was president/COO of
Safeguard Scientifics, a Pennsylvania technology venture company. In that role
she was a founding investor, director and vice chairman of Cambridge Technology
Partners. She is a director of XLVision, Inc., Marathon Technologies, Inc.,
Aberdeen Group and Sonesta Hotels International, and is a Trustee of
Northeastern University, Connecticut College, and The Commonwealth Institute.
She received a B.A. from Connecticut College, an M.S. from Rensselaer
Polytechnic Institute of New York, and attended Harvard Business School's
Advanced Management Program. Ms. Tempel has served as a trustee of various
mutual funds advised by Scudder Kemper since 1994.
Steven Zaleznick (45)*
Steven Zaleznick is President and CEO of AARP Services, Inc., a wholly-owned and
independently-operated subsidiary of AARP which manages a range of products and
services offered to AARP members, provides marketing services to AARP and its
member service providers and establishes an electronic commerce presence for
AARP members. Mr. Zaleznick previously served as AARP's general counsel for nine
years. He was responsible for the legal affairs of the AARP, which included tax
and legal matters affecting non-profit organizations, contract negotiations,
publication review and public policy litigation. In 1979, he joined the AARP as
a legislation representative responsible for issues involving taxes, pensions,
age discrimination, and other national issues affecting older Americans. Mr.
Zaleznick is President of the Board of Cradle of Hope Adoption Center in
Washington, D.C. He is a former treasurer and currently a board member of the
National Senior Citizens Law Center. Mr. Zaleznick received his B.A. in
economics from Brown University. He received his J.D. degree from Georgetown
University Law Center and is a member of the District of Columbia Bar
Association.
Trustees Not Standing for Re-election:
- --------------------------------------------------------------------------------
Present Office with the Trust;
Principal Occupation or Employment
Name (Age) and Directorships
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Carole Lewis Anderson (55) Trustee; Principal, Suburban Capital
Markets, Inc. (1995 - Present). Ms.
Anderson serves on the Boards of
an additional 4 trusts whose funds are
advised by Scudder Kemper.
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- --------------------------------------------------------------------------------
Adelaide Attard (69) Trustee; Member, NYC Department of Aging
Advisory Council (1995 - Present);
Consultant, Gerontology Commissioner,
County of Nassau, New York, Department of
Senior Citizen Affairs (1971-1991). Ms.
Attard serves on the Boards of an additional
4 trusts whose funds are advised by Scudder
Kemper.
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- --------------------------------------------------------------------------------
Robert N. Butler, M.D. (73) Trustee; Director, International Longevity
Center and Professor of Geriatrics and Adult
Development; Chairman, Henry L. Schwartz
Department of Geriatrics and Adult
Development, Mount Sinai Medical Center
(1982 - present). Dr. Butler serves on the
Boards of an additional 4 trusts whose
funds are advised by Scudder Kemper.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Esther Canja (72)* Trustee; President-Elect of AARP (to assume
the Presidency in May 2000); Trustee and
Chairperson, AARP Group Health Insurance
Plan. Ms. Canja serves on the Boards
of an additional 4 trusts whose funds are
advised by Scudder Kemper.
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- --------------------------------------------------------------------------------
Lt. Gen. Eugene P. Forrester (73) Trustee; Lt. General (Retired), U.S. Army;
International Trade Counselor (1983 -
present); Consultant. Lt. Gen. Forrester
serves on the Boards of an additional 4
trusts whose funds are advised by Scudder
Kemper.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
George L. Maddox, Jr. (74) Trustee; Professor Emeritus and Director,
Long Term Care Resources Program, Duke
University Medical Center; Professor
Emeritus of Sociology, Departments of
Sociology and Psychiatry, Duke University.
Mr. Maddox serves on the Boards of an
additional 4 trusts whose funds are advised
by Scudder Kemper.
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- --------------------------------------------------------------------------------
Robert J. Myers (87) Trustee; Actuarial Consultant (1983 -
present). Mr. Myers serves on the Boards
of an additional 4 trusts whose funds
are advised by Scudder Kemper.
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- --------------------------------------------------------------------------------
James H. Schulz (63) Trustee; Professor of Economics and Kirstein
Professor of Aging Policy, Policy Center
on Aging, Florence Heller School, Brandeis
University. Mr. Schulz serves on the
Boards of an additional 4 trusts whose funds
are advised by Scudder Kemper.
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- --------------------------------------------------------------------------------
Gordon Shillinglaw (74) Trustee; Professor Emeritus of Accounting,
Columbia University Graduate School of
Business. Dr. Shillinglaw serves on the
Boards of an additional 4 trusts whose funds
are advised by Scudder Kemper.
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* Nominee or Trustee considered by the Trust and its counsel to be an
"interested person" (as defined in the Investment Company Act of 1940,
as amended (the "1940 Act")) of the Trust, Scudder Kemper or AARP
because of his or her employment by Scudder Kemper or AARP, and, in
some cases, holding offices with the Trust.
RESPONSIBILITIES OF THE BOARD -- BOARD AND COMMITTEE MEETINGS
A fund's board is responsible for the general oversight of fund
business. The nominees proposed for election at the Meeting consist of two
individuals who are considered "interested" Trustees, and seven individuals who
have no affiliation with Scudder Kemper and who are called "independent"
Trustees (the "Independent Trustees"). The SEC has recently proposed a rule that
would require a majority of the board members of a fund to be "independent" if
the fund were to take advantage of certain exemptive rules under the 1940 Act.
On the proposed Board of Trustees, if approved by shareholders, nearly 78% will
be Independent Trustees. The Independent Trustees have been nominated solely by
the current Independent Trustees of the Trust, a practice also favored by the
SEC. The Independent Trustees have primary responsibility for assuring that the
Trust is managed in the best interests of its shareholders.
The Trustees meet several times during the year to review the
investment performance of the Fund and other operational matters, including
policies and procedures designed to assure compliance with regulatory and other
requirements. Furthermore, the Independent Trustees review the fees paid to the
Investment Manager and its affiliates for investment advisory services and other
administrative and shareholder services. The Trustees have adopted several
policies and practices which help ensure their effectiveness and independence in
reviewing fees and representing shareholders. Many of these are similar to those
suggested in the Investment Company Institute's 1999 Report of the Advisory
Group on Best Practices for Fund Directors (the "Advisory Group Report"). For
example, the Independent Trustees select independent legal counsel to work with
them in reviewing fees, advisory and other contracts and overseeing fund
matters. The Trustees are also assisted in this regard by the funds' independent
public accountants and other independent experts retained from time to time for
this purpose. The Independent Trustees regularly meet privately with their
counsel and other advisors. In addition, the Independent Trustees from time to
time have appointed task forces and subcommittees from their members to focus on
particular matters such as investment, accounting and shareholder servicing
issues.
The Board has an Audit Committee and a Committee on Independent
Trustees, the responsibilities of which are described below. In addition, the
Board has an Executive Committee, a Shareholder Service Committee and a
Valuation Committee.
AUDIT COMMITTEE
The Audit Committee reviews with management and the Fund's independent
public accountants, among other things, the scope of the audit and the internal
controls of the Fund and its agents, reviews and approves in advance the type of
services to be rendered by independent accountants, recommends the selection of
independent accountants for the Fund to the Board, reviews the independence of
such firm and, in general, considers and reports to the Board on matters
regarding the Fund's accounting and financial reporting practices.
As suggested by the Advisory Group Report, the Trust's Audit Committee is
comprised of the Independent Trustees, meets privately with the independent
accountants of each series of the Trust, will receive annual representations
from the accountants as to their independence, and has a written charter that
delineates the committee's duties and powers.
COMMITTEE ON INDEPENDENT TRUSTEES
The Board of Trustees of the Trust has a Committee on Independent
Trustees, comprised solely of Independent Trustees, charged with the duty of
making all nominations of Independent Trustees, establishing Trustees'
compensation policies and reviewing matters relating to the Independent
Trustees.
ATTENDANCE
The full Board of Trustees of the Trust met five times, the Audit
Committee met two times and the Committee on Independent Trustees met five times
during calendar year 1999. Each then current Trustee attended 100% of the total
meetings of the Board and each above named committee on which he or she served
as a regular member that were held during that period, except Esther Canja,
Robert J. Myers, James H. Schulz and Robert N. Butler, who attended 90%, 92%,
92% and 83%, respectively, of those meetings. In addition to these Board and
committee meetings, the Trustees of the Trust attended various other meetings on
behalf of the Trust during the year, including meetings with their independent
legal counsel and informational meetings.
OFFICERS
The following persons are officers of the Trust:
- -------------------------- --------------------------------------- -----------
Name (Age) Present Office with the Trust; Year First
Principal Occupation or Employment(1) Became an
Officer(2)
- -------------------------- --------------------------------------- --------
Linda C. Coughlin (48) Trustee and President; Managing 2000
Director of Scudder Kemper
- -------------------------- --------------------------------------- --------
William Glavin (41) Vice President; 1997
Senior Vice President of Scudder
Kemper
- -------------------------- --------------------------------------- --------
Ann M. McCreary (43) Vice President; Managing Director of 1998
Scudder Kemper
- -------------------------- --------------------------------------- --------
James Masur (39) Vice President; Senior Vice President 1999
of Scudder Kemper
- -------------------------- --------------------------------------- --------
John Millette (37) Vice President and Assistant 1999
Secretary; Vice President of Scudder
Kemper
- -------------------------- --------------------------------------- --------
James W. Pasman (47) Vice President; Senior Vice President 1996
of Scudder Kemper
- -------------------------- --------------------------------------- --------
Kathryn L. Quirk (47) Vice President and Secretary; 1997
Managing Director of Scudder Kemper
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John Hebble (41) Treasurer; Senior Vice President, 1997
Scudder Kemper
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1 Unless otherwise stated, all of the officers have been associated
with their respective companies for more than five years, although not
necessarily in the same capacity.
2 The President, Treasurer and Secretary each holds office until his
or her successor has been duly elected and qualified, and all other
officers hold offices in accordance with the By-laws of the Trust.
COMPENSATION OF TRUSTEES AND OFFICERS
The Trust pays each Independent Trustee an annual Trustee's fee for
each series of the Trust plus specified amounts for Board and committee meetings
attended and reimburses for expenses related to the business of any series of
the Trust. As of April 1, 1999, each Independent Trustee receives an annual
Trustee's fee of $12,000. (Prior to April 1, 1999, the annual Trustee's fee was
$10,000.) Each Independent Trustee also receives fees of $175 per fund for
attending each meeting of the Board and between $80 and $150 per fund (depending
on meeting type) for attending each committee meeting, or meeting held for the
purpose of considering arrangements between the Trust and Scudder Kemper, or any
of its other affiliates. The newly-constituted Board may determine to change its
compensation structure.
The current compensation package for the Independent Trustees of the
Trust has not included any provisions for pensions or other retirement benefits.
A one-time benefit, however, will be provided to those Independent Trustees who
are not standing for re-election in an amount equal to twice a Trustee's
calendar year 1999 compensation from the Trust. Inasmuch as Scudder Kemper will
also benefit from the administrative efficiencies of a consolidated board,
Scudder Kemper has agreed to bear one-half of the cost of any such benefit.
Scudder Kemper supervises the Trust's investments, pays the
compensation and certain expenses of its personnel who serve as Trustees and
officers of the Trust and receives a management fee for its services. Several of
the Trust's officers and Trustees are also officers, directors, employees or
stockholders of Scudder Kemper and participate in the fees paid to that firm,
although the Trust makes no direct payments to them other than for reimbursement
of travel expenses in connection with their attendance at Board and committee
meetings.
The following Compensation Table provides in tabular form the following
data:
Column (1) All Trustees who receive compensation from the Trust.
Column (2) Aggregate compensation received by each Trustee of the Trust
during calendar year 1999.
Column (3) Total compensation received by each Trustee from funds
managed by Scudder Kemper (collectively, the "Fund Complex") during calendar
year 1999.
COMPENSATION TABLE
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Trustees Aggregate Compensation Total Compensation from
(number of funds) Fund Complex* Paid to
Trustee
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Carole Lewis Anderson $10,103 (3 funds) $40,935 (16 Funds)
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Adelaide Attard $ 9,467 (3 funds) $38,375 (16 Funds)
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Robert N. Butler $ 8,714 (3 funds) $34,855 (16 Funds)
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Edgar R. Fiedler $ 7,948 (3 funds) $54,495 (29 Funds)
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Eugene P. Forrester $10,103 (3 funds) $40,935 (16 Funds)
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George L. Maddox, Jr. $10,103 (3 funds) $40,935 (16 Funds)
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Robert J. Myers $ 9,467 (3 funds) $38,200 (16 Funds)
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James H. Schulz $ 9,147 (3 funds) $37,095 (16 Funds)
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Gordon Shillinglaw $ 9,840 (3 funds) $44,280 (16 Funds)
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Jean Gleason Stromberg $10,106 (3 funds) $40,935 (16 Funds)
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* The Fund Complex includes two funds for which the Trustees serve without
compensation.
The Trustees recommend that the shareholders of the Fund vote
for each nominee.
PROPOSAL 2: APPROVAL OF PROPOSED INVESTMENT MANAGEMENT AGREEMENT
INTRODUCTION
Proposal 2 seeks shareholder approval of a new investment management
agreement between Scudder Kemper and the Fund.
Scudder Kemper acts as the investment manager to the Fund pursuant to
an investment management agreement entered into by the Fund and Scudder Kemper.
The investment management agreement currently in effect between the Fund and
Scudder Kemper is referred to in this Proxy Statement as the "Current Investment
Management Agreement." The Board is proposing that shareholders of the Fund
approve a new investment management agreement between the Fund and Scudder
Kemper (the "Proposed Investment Management Agreement," together with the
Current Investment Management Agreement, the "Investment Management
Agreements"). (A copy of the Proposed Investment Management Agreement marked to
show changes against the Current Investment Management Agreement is attached
hereto as Exhibit A.) The material terms of the Investment Management Agreements
are described under "Description of the Investment Management Agreements" below.
(Scudder Kemper is sometimes referred to in this Proxy Statement as the
"Investment Manager.")
The information set forth in this Proxy Statement and the accompanying
materials concerning Scudder Kemper and its affiliates has been provided to the
Fund by Scudder Kemper.
The Current Investment Management Agreement is identical to the
Proposed Investment Management Agreement, except for (i) the dates of execution
and termination; and (ii) the fee structure. However, under most circumstances,
the fee rate under the Proposed Investment Management Agreement is equal to or
less than the fee rate under the Current Investment Management Agreement.
Because, as described earlier, the portion of the fee determined under the
Current Investment Management Agreement on the basis of the aggregate combined
net assets of all AARP Funds, except for the series of AARP Managed Investment
Portfolios Trust, would be eliminated under the Proposed Investment Management
Agreement, it is possible that, under certain circumstances (i.e., where the
applicable net assets of the AARP Investment Program increase to $16.5 billion),
the fee rate under the Current Investment Management Agreement could be lower
than the fee rate under the Proposed Investment Management Agreement. Due to the
consolidation of AARP Funds and Scudder Funds, it is no longer feasible for a
component of the fee rate paid under the Fund's investment management agreement
to be based on assets in the AARP Investment Program.
BOARDS' RECOMMENDATION
On February 7, 2000, the Board met and the Trustees of the Trust,
including the Independent Trustees, voted to approve the Proposed Investment
Management Agreement and to recommend approval to the shareholders of the Fund.
For information about the Board's deliberations and the reasons for
their recommendation, please see "Board's Evaluation" below.
BOARD'S EVALUATION
Scudder Kemper first proposed the Proposed Investment Management
Agreement to the Independent Trustees of the Trust at a meeting held on
September 22, 1999. The Proposed Investment Management Agreement was presented
to the Trustees and considered by them as part of a broader initiative by
Scudder Kemper to restructure many of the mutual funds offered through its
no-load distribution channels. This initiative was undertaken in response to
competitive developments in the mutual fund industry and includes four major
components:
(i) The combination of funds with similar investment objectives
and policies, including in particular the combination of the
AARP Funds with similar Scudder Funds currently offered to the
general public;
(ii) The liquidation of certain small funds which have not achieved
market acceptance and which are unlikely to reach an efficient
operating size;
(iii) The implementation of administration agreements covering, for
a single fee rate, substantially all services and expenses
required for the operation of the funds, other than those
provided under each fund's Investment Management Agreement;
and
(iv) The consolidation of the separate boards of trustees or
directors currently responsible for overseeing several groups
of no-load funds managed by Scudder Kemper into a single board
of trustees.
The Independent Trustees reviewed the potential implications of these
proposals for the Fund as well as the various other funds for which they serve
as Trustees/Directors. They were assisted in this review by their independent
legal counsel and by independent consultants with special expertise in financial
and mutual fund industry matters. Following the September 22 meeting, the
Independent Trustees met in person or by telephone on several occasions
(including committee meetings) to review and discuss these proposals, both among
themselves and with representatives of Scudder Kemper. In the course of their
review, the Independent Trustees requested and received substantial additional
information and suggested numerous changes in Scudder Kemper's proposals, many
of which were accepted.
Following the conclusion of this process, the Independent Trustees, the
independent trustees/directors of other funds involved and Scudder Kemper
reached general agreement on the elements of a restructuring plan as it affects
shareholders of various funds and, where required, agreed to submit elements of
the plan for approval to shareholders of those Funds. On February 7, 2000, the
Board, including all of the Independent Trustees, approved the terms of the
Proposed Investment Management Agreement and certain related proposals. At the
February 7, 2000 meeting, the Independent Trustees also agreed to recommend that
the Proposed Investment Management Agreement be approved by the Fund's
shareholders.
In determining to recommend that the shareholders of the Fund vote to
approve the Proposed Investment Management Agreement, the Board gave
consideration to the increase in the Fund's net assets that would result from
the Reorganization, and that the implementation of the Proposed Investment
Management Agreement was contingent upon the closing of the Reorganization.
During the course of their deliberations relating to the Proposed
Investment Management Agreement, the Independent Trustees considered a variety
of factors, including the nature, quality and extent of the services furnished
by Scudder Kemper to the Fund; the necessity of Scudder Kemper's maintaining and
enhancing its ability to retain and attract capable personnel to serve the Fund;
the investment record of Scudder Kemper in managing the Fund; Scudder Kemper's
profitability with respect to the Fund and the other investment companies
managed by Scudder Kemper before marketing expenses paid by Scudder Kemper;
possible economies of scale; Scudder Kemper's willingness to assume a major
portion of the risk of increased costs of providing services to the Fund for a
period of three years; comparative data as to investment performance, advisory
fees and expense ratios; Scudder Kemper's expenditures in developing worthwhile
and innovative shareholder services for the Fund; improvements in the quality
and scope of the shareholder services provided to the Fund's shareholders; the
advantages and possible disadvantages to the Fund of having an adviser of the
Fund which also serves other investment companies as well as other accounts;
possible benefits to Scudder Kemper from serving as adviser and from affiliates
of Scudder Kemper serving as principal underwriter, transfer agent and fund
accounting agent of the Fund; current and developing conditions in the financial
services industry, the financial resources of Scudder Kemper and the continuance
of appropriate incentives to assure that Scudder Kemper will continue to furnish
high quality services to the Fund; and various other factors.
Based on all of the foregoing, the Board of Trustees, including all of
the Independent Trustees, approved the terms of the Proposed Investment
Management Agreement, and recommend that shareholders of the Fund approve the
terms of the Proposed Investment Management Agreement.
DESCRIPTION OF THE INVESTMENT MANAGEMENT AGREEMENTS
Except as disclosed below, the Current and Proposed Investment
Management Agreements are identical. Under the Investment Management Agreements,
Scudder Kemper provides the Fund with continuing investment management services.
The Investment Manager also determines which securities should be purchased,
held, or sold, and what portion of the Fund's assets should be held uninvested,
subject to the Trust's governing documents, investment policies and
restrictions, the provisions of the 1940 Act, and such policies and instructions
as the Trustees may have determined.
Each Investment Management Agreement provides that the Investment
Manager will provide portfolio management services, place portfolio transactions
in accordance with policies expressed in the Fund's registration statement, pay
the Fund's office rent, and render significant administrative services on behalf
of the Fund (not otherwise provided by third parties) necessary for the Fund's
operating as an open-end investment company, including, but not limited to,
preparing reports to and meeting materials for the Board and reports and notices
to Fund shareholders; supervising, negotiating contractual arrangements with, to
the extent appropriate, and monitoring the performance of various third-party
and affiliated service providers to the Fund (such as the Fund's transfer and
pricing agents, fund accounting agent, custodian, accountants and others) and
other persons in any capacity deemed necessary or desirable to Fund operations;
preparing and making filings with the SEC and other regulatory and
self-regulatory organizations, including but not limited to, preliminary and
definitive proxy materials, post-effective amendments to the Registration
Statement, semi-annual reports on Form N-SAR and notices pursuant to Rule 24f-2
under the 1940 Act; overseeing the tabulation of proxies by the Fund's transfer
agent; assisting in the preparation and filing of the Fund's federal, state and
local tax returns; preparing and filing the Fund's federal excise tax returns
pursuant to Section 4982 of the Internal Revenue Code of 1986, as amended;
providing assistance with investor and public relations matters; monitoring the
valuation of portfolio securities and the calculation of net asset value;
monitoring the registration of shares of the Fund under applicable federal and
state securities laws; maintaining or causing to be maintained for the Fund all
books, records and reports and any other information required under the 1940
Act, to the extent such books, records and reports and other information are not
maintained by the Fund's custodian or other agents of the Fund; assisting in
establishing accounting policies of the Fund; assisting in the resolution of
accounting issues that may arise with respect to the Fund's operations and
consulting with the Fund's independent accountants, legal counsel and other
agents as necessary in connection therewith; establishing and monitoring the
Fund's operating expense budgets; reviewing the Fund's bills; processing the
payment of bills that have been approved by an authorized person; assisting the
Fund in determining the amount of dividends and distributions available to be
paid by the Fund to its shareholders, preparing and arranging for the printing
of dividend notices to shareholders, and providing the transfer and dividend
paying agent, the custodian, and the accounting agent with such information as
is required for such parties to effect the payment of dividends and
distributions; and otherwise assisting the Fund in the conduct of its business,
subject to the direction and control of the Board.
Each Investment Management Agreement also provides that the Investment
Manager is not required to pay any expenses of any activity primarily intended
to result in the sale of Fund securities if and to the extent that (i) the
expenses are to be borne by a principal underwriter acting as the distributor;
or (ii) the Fund has adopted a Rule 12b-1 Plan providing for the assumption of
some or all of those expenses. Under each Investment Management Agreement, the
Fund is responsible for other expenses, including organizational expenses
(including out-of-pocket expenses, but not including the Investment Manager's
overhead or employee costs); brokers' commissions or other costs of acquiring or
disposing of any portfolio securities of the Fund; legal, auditing and
accounting expenses; payment for portfolio pricing or valuation services to
pricing agents, accountants, bankers and other specialists, if any; taxes and
governmental fees; the fees and expenses of the Fund's transfer agent; expenses
of preparing share certificates and any other expenses, including clerical
expenses, of issuance, offering, distribution, sale, redemption or repurchase of
shares; the expenses of and fees for registering or qualifying securities for
sale; the fees and expenses of Independent Trustees; the cost of printing and
distributing reports, notices and dividends to current shareholders; and the
fees and expenses of the Fund's custodians, subcustodians, accounting agent,
dividend disbursing agents and registrars. The Fund may arrange to have third
parties assume all or part of the expenses of sale, underwriting and
distribution of shares of the Fund. The Fund is also responsible for expenses of
shareholders' and other meetings and its expenses incurred in connection with
litigation and the legal obligation it may have to indemnify officers and
Trustees of the Trust with respect thereto. The Fund is also responsible for the
maintenance of books and records which are required to be maintained by the
Fund's custodian or other agents of the Trust; telephone, telex, facsimile,
postage and other communications expenses; any fees, dues and expenses incurred
by the Fund in connection with membership in investment company trade
organizations; expenses of printing and mailing prospectuses and statements of
additional information of the Fund and supplements thereto to current
shareholders; costs of stationery; fees payable to the Investment Manager and to
any other Fund advisors or consultants; expenses relating to investor and public
relations; interest charges, bond premiums and other insurance expenses;
freight, insurance and other charges in connection with the shipment of the
Fund's portfolio securities; and other expenses.
The Investment Manager is responsible for the payment of the
compensation and expenses of all Trustees, officers and executive employees of
the Fund (including the Fund's share of payroll taxes) affiliated with the
Investment Manager and making available, without expense to the Fund, the
services of such Trustees, officers and employees as may duly be elected
officers of the Trust, subject to their individual consent to serve and to any
limitations imposed by law. The Fund is responsible for the fees and expenses
(specifically including travel expenses relating to Fund business) of Trustees
not affiliated with the Investment Manager. Under each Investment Management
Agreement, the Investment Manager also pays the Fund's share of payroll taxes,
as well as expenses, such as travel expenses (or an appropriate portion
thereof), of Trustees and officers of the Trust who are directors, officers or
employees of the Investment Manager, except to the extent that such expenses
relate to attendance at meetings of the Board of the Trust, or any committees
thereof or advisers thereto, held outside Boston, Massachusetts or New York, New
York. During the Fund's most recent fiscal year, no compensation, direct or
otherwise (other than through fees paid to the Investment Manager), was paid or
became payable by the Trust to any of its officers or Trustees who were
affiliated with the Investment Manager.
In return for the services provided by the Investment Manager as
investment manager and the expenses it assumes under each Investment Management
Agreement, the Fund pays the Investment Manager a management fee which is
accrued daily and payable monthly. The management fee rate for the Fund under
the Investment Management Agreements is described below under "Differences
Between the Current and Proposed Investment Management Agreements." As of the
end of the Fund's last fiscal year, the Fund had net assets of $4,216,062,269
and paid an aggregate management fee to the Investment Manager during such
period of $17,789,059.
Each Investment Management Agreement further provides that the
Investment Manager shall not be liable for any error of judgment or mistake of
law or for any loss suffered by any Fund in connection with matters to which
such agreement relates, except a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the Investment Manager in the
performance of its duties or from reckless disregard by the Investment Manager
of its obligations and duties under such agreement. Each Investment Management
Agreement also provides that purchase and sale opportunities, which are suitable
for more than one client of the Investment Manager, will be allocated by the
Investment Manager in an equitable manner. In addition, each Investment
Management Agreement identifies Scudder Kemper as the exclusive licensee of the
rights to use and sublicense the names "Scudder," "Scudder Kemper Investments,
Inc.," and "Scudder, Stevens & Clark, Inc." (together the "Scudder Marks").
Under this license, the Trust, with respect to the Fund, has the non-exclusive
right to use and sublicense the Scudder name and marks as part of its name, and
to use the Scudder Marks in the Trust's investment products and services. This
license continues only as long as the Investment Management Agreement or any
other investment advisory agreement is in place, and only as long as Scudder
Kemper continues to be a licensee of the Scudder Marks from Scudder Trust
Company, which is the owner and licensor of the Scudder Marks. As a condition of
the license, the Trust, on behalf of the Fund, undertakes certain
responsibilities and agrees to certain restrictions, such as agreeing not to
challenge the validity of the Scudder Marks or ownership by Scudder Trust
Company and the obligation to use the name within commercially reasonable
standards of quality. In the event the agreement is terminated, the Trust, on
behalf the Fund, must not use a name likely to be confused with those associated
with the Scudder Marks. Lastly, each Investment Management Agreement contains a
provision stating that it supersedes all prior agreements.
Each Investment Management Agreement may be terminated without penalty
upon sixty (60) days' written notice by either party. The Fund may agree to
terminate its Investment Management Agreement either by the vote of a majority
of the outstanding voting securities of the Fund, or by a vote of the Board. As
stated above, each Investment Management Agreement automatically terminates in
the event of its assignment.
Scudder Kemper or one of its predecessors has acted as the Investment
Manager for the Fund since the Fund commenced operations on November 30, 1984.
The Current Investment Management Agreement, which is dated September 7, 1998,
was last approved by the shareholders of the Fund on December 15, 1998. The
Current Investment Management Agreement was last submitted to shareholders prior
to its becoming effective, as required by the 1940 Act, in connection with the
B.A.T Transaction (as defined below). The Proposed Investment Management
Agreement was approved by the Board on February 7, 2000 to be continued until
September 30, 2001.
THE PROPOSED INVESTMENT MANAGEMENT AGREEMENT
The Proposed Investment Management Agreement for the Fund will be dated
on or about July 17, 2000. The effectiveness of the Proposed Investment
Management Agreement is contingent upon shareholder approval of the agreement.
Each of the effectiveness of the Proposed Investment Management Agreement and
the closing of the acquisition of the assets of Scudder GNMA Fund by the Fund is
contingent upon the other. The Proposed Investment Management Agreement will be
in effect for an initial term ending on September 30, 2001, and may continue
thereafter from year to year only if specifically approved at least annually by
the vote of "a majority of the outstanding voting securities" of the Fund, or by
the Board and, in either event, the vote of a majority of the Independent
Trustees, cast in person at a meeting called for such purpose. In the event that
shareholders of the Fund do not approve the Proposed Investment Management
Agreement, the Current Management Agreement will remain in effect. In such
event, the Board will take such further action as it deems to be in the best
interests of the shareholders of the Fund.
DIFFERENCES BETWEEN THE CURRENT AND PROPOSED INVESTMENT MANAGEMENT AGREEMENTS
The Proposed Investment Management Agreement is identical to the
Current Investment Management Agreement, except for (i) the dates of execution
and termination; and (ii) the fee structure.
The Proposed Investment Management Agreement provides for fees payable
to the Investment Manager at a rate of 0.40% of the first $5 billion of average
daily net assets, 0.385% of the next $1 billion, and 0.370% of average daily net
assets in excess of $6 billion. The Current Investment Management Agreement for
the Fund provides for fees that are calculated using both a "base fee" rate, the
amount of which is based on the aggregate combined net assets of all AARP Funds,
except the series of AARP Managed Portfolios Trust, and an "individual fund fee"
rate, which is a set rate for the Acquiring Fund, regardless of the fund's net
asset level. Based on the current size of the Investment Program, the base fee
rate is approximately 0.28% of average daily net assets. The Fund's individual
fee rate is 0.12% of average daily net assets. Using this method of calculation,
the fee payable to the Investment Manager under the Current Investment
Management Agreement is at an annual rate of 0.40% of average daily net assets.
It is possible that, under certain circumstances (i.e., where the applicable net
assets of the AARP Investment Program increase to $16.5 billion), the fee rate
under the Current Investment Management Agreement could be lower than the fee
rate under the Proposed Investment Management Agreement. However, under most
circumstances, the fee rate under the Proposed Investment Management Agreement
is equal to or less than the fee rate under the Current Investment Management
Agreement. As discussed earlier, due to the consolidation of AARP Funds and
Scudder Funds, it is no longer feasible for a component of the fee rate paid
under the Fund's investment management agreement to be based on assets in the
AARP Investment Program. The Fund's investment management agreement, therefore,
requires a new fee structure that does not include this component. In addition,
the Fund's total expenses would be limited under the new fixed administrative
fee rate arrangement discussed below. The Fund's total annual Fund operating
expenses based on net assets at January 31, 2000 (and not on average daily net
assets for a full year) were _______. It is expected that, following the Fund's
acquisition of the assets of Scudder GNMA Fund, the Fund's total annual Fund
operating expenses will be 0.70%.
In addition, the fee payable by the Fund under the Proposed Investment
Management Agreement will be calculated on a monthly, rather than a daily,
basis. The fee payable under the Current Investment Management Agreement is
calculated on a daily basis.
ADMINISTRATION AGREEMENT
As part of the restructuring effort, Scudder Kemper has also proposed
the adoption of administration agreements, each of which provides for payment of
an administrative fee, for most of the no-load funds advised by Scudder Kemper.
Under this fee arrangement, in exchange for payment by a fund of an
administrative fee, Scudder Kemper will provide or pay for substantially all
services that a fund normally requires for its operations, other than (i) those
provided under the fund's investment management agreement; (ii) certain other
expenses, such as taxes, brokerage, interest and extraordinary expenses; and
(iii) the fees and expenses of independent trustees/directors (including the
fees and expenses of their independent counsel). Such an administrative fee
would enable investors to determine with greater certainty the expense level
that a fund will experience and would transfer the risk of increased costs to
Scudder Kemper. Scudder Kemper has proposed that the Fund implement such an
administrative fee. The Fund's administrative services fee will be 0.30% of
average daily net assets. It is anticipated that the total expense ratio of the
Fund will be substantially the same following implementation of the
administrative fee. The Fund's administration agreement will have an initial
term of three years, subject to earlier termination by the Trustees.
INVESTMENT MANAGER
Scudder Kemper, an indirect subsidiary of Zurich Insurance Company
("Zurich") which resulted from the combination of the businesses of Scudder,
Stevens & Clark, Inc. ("Scudder") and Zurich Kemper Investments, Inc. ("Kemper")
in connection with a transaction between Scudder and Zurich (the "Scudder-Zurich
Transaction"), is one of the largest and most experienced investment counsel
firms in the United States. Scudder was established in 1919 as a partnership and
was restructured as a Delaware corporation in 1985. Scudder launched its first
fund in 1928. Kemper launched its first fund in 1948. On September 7, 1998, the
businesses of Zurich (including Zurich's 70% interest in Scudder Kemper) and the
financial services businesses of B.A.T Industries p.l.c. ("B.A.T") were combined
to form a new global insurance and financial services company known as Zurich
Financial Services Group (the "B.A.T Transaction"). By way of a dual holding
company structure, former Zurich shareholders initially owned approximately 57%
of Zurich Financial Services Group, with the balance initially owned by former
B.A.T shareholders. Since December 31, 1997, Scudder Kemper has served as
investment adviser to both Scudder and Kemper funds. As of January 1, 2000,
Scudder Kemper has over $290 billion in assets under management. The principal
source of Scudder Kemper's income is professional fees received from providing
continuing investment advice. Scudder Kemper provides investment counsel for
many individuals and institutions, including insurance companies, endowments,
industrial corporations and financial and banking organizations.
Founded in 1872, Zurich is a multinational, public corporation
organized under the laws of Switzerland. Its home office (and the home offices
of Zurich Financial Services and Zurich Allied AG) is located at Mythenquai 2,
8002 Zurich, Switzerland. Historically, Zurich's earnings have resulted from its
operations as an insurer as well as from its ownership of its subsidiaries and
affiliated companies (the "Zurich Insurance Group"). Zurich and the Zurich
Insurance Group provide an extensive range of insurance and financial products
and services and have branch offices and subsidiaries in more than 70 countries
throughout the world. Zurich owns approximately 70% of Scudder Kemper, with the
balance owned by Scudder Kemper's officers and employees.
Rolf Huppi* is the Chairman of the Board and Director of Scudder
Kemper, Edmond D. Villani# is the President, Chief Executive Officer and
Director, Harold D. Kahn# is the Chief Financial Officer, Kathryn L. Quirk# is
the General Counsel, Chief Compliance Officer and Secretary, each of Nicholas
Bratt# and Lynn S. Birdsong# is a Corporate Vice President and Director, and
each of Laurence Cheng*, Gunther Gose* and William H. Bolinder+ is a Director of
Scudder Kemper. The principal occupation of each of Edmond D. Villani, Harold D.
Kahn, Nicholas Bratt, Kathryn L. Quirk and Lynn S. Birdsong is serving as a
Managing Director of Scudder Kemper; the principal occupation of Rolf Huppi is
serving as Chairman and Chief Executive Officer of Zurich Financial Services;
the principal occupation of Lawrence Cheng is serving as Chief Investment
Officer of Zurich Financial Services; the principal occupation of Gunther Gose
is serving as the Chief Financial Officer of Zurich Financial Services; and the
principal occupation of William H. Bolinder is serving as a member of the Group
Executive Board of Zurich Financial Services. Appendix 1 includes information
regarding each Trustee and officer of the Trust who is associated with Scudder
Kemper.
* Mythenquai 2, Zurich, Switzerland
# 345 Park Avenue, New York, New York
+ 1400 American Lane, Schaumburg, Illinois
The outstanding voting securities of Scudder Kemper are held of record
1.46% by Zurich Insurance Company, a subsidiary of Zurich; 38.75% by Zurich
Holding Company of America ("ZHCA"), a subsidiary of Zurich; 32.34% by ZKI
Holding Corp. ("ZKIH"), a subsidiary of Zurich; 19.62% by Stephen R. Beckwith,
Lynn S. Birdsong, Kathryn L. Quirk and Edmond D. Villani, in their capacity as
representatives (the "Management Representatives") of Scudder Kemper's
management holders and retiree holders pursuant to a Second Amended and Restated
Security Holders Agreement (the "Security Holders Agreement") among Scudder
Kemper, Zurich, ZHCA, ZKIH, the Management Representatives, the management
holders, the retiree holders and Edmond D. Villani, as trustee of Scudder Kemper
Investments, Inc. Executive Defined Contribution Plan Trust (the "Plan Trust");
and 7.73% by the Plan Trust. There are no outstanding non-voting securities of
Scudder Kemper.
Pursuant to the Security Holders Agreement (which was entered into in
connection with the Scudder-Zurich Transaction), the Board of Directors of
Scudder Kemper consists of four directors designated by ZHCA and ZKIH and three
directors designated by Management Representatives. The Security Holders
Agreement requires the approval of a majority of the Scudder-designated
directors for certain material and other decisions.
Directors, officers and employees of Scudder Kemper from time to time
may enter into transactions with various banks, including the Fund's custodian
bank. It is Scudder Kemper's opinion that the terms and conditions of those
transactions will not be influenced by existing or potential custodial or other
Fund relationships.
During the Fund's most recent fiscal year, no compensation, direct or
otherwise (other than through fees paid to Scudder Kemper), was paid or became
payable by the Trust to any of its officers or Trustees who were affiliated with
Scudder Kemper.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of Scudder
Kemper, computes net asset value and prepares the financial statements for the
Fund. Scudder Service Corporation ("SSC"), also a subsidiary of Scudder Kemper,
is the transfer, shareholder servicing and dividend-paying agent for the Fund.
The fees paid by the Fund to SFAC and SSC during the last fiscal year of the
Fund were $628,816 and $6,524,199, respectively.
SFAC and SSC will continue to provide fund accounting and transfer
agency services, respectively, to the Fund, as described above, under the
current arrangements (with the implementation of an administrative fee, as
described above) if the Proposed Investment Management Agreement is approved.
Exhibit B sets forth (as of each fund's last fiscal year end, unless
otherwise noted) the fees and other information regarding investment companies
advised by Scudder Kemper that have similar investment objectives to the Fund.
BROKERAGE COMMISSIONS ON PORTFOLIO TRANSACTIONS
To the maximum extent feasible, Scudder Kemper places orders for
portfolio transactions through Scudder Investor Services, Inc. ("SIS"), Two
International Place, Boston, Massachusetts 02110, which in turn places orders on
behalf of the Fund with issuers, underwriters or other brokers and dealers. SIS
is a corporation registered as a broker/dealer and a subsidiary of Scudder
Kemper. SIS does not receive any commissions, fees or other remuneration from
the Fund for this service. When it can be done consistently with the policy of
obtaining the most favorable net results, it is Scudder Kemper's practice to
place such orders with broker/dealers who supply brokerage and research services
to Scudder Kemper or the Fund. The term "research services" includes advice as
to the value of securities; the advisability of investing in, purchasing or
selling securities; the availability of securities or purchasers or sellers of
securities; and analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy and the performance of accounts.
Scudder Kemper is authorized when placing portfolio transactions, if applicable,
for the Fund to pay a brokerage commission in excess of that which another
broker might charge for executing the same transaction on account of execution
services and the receipt of research services. Scudder Kemper has negotiated
arrangements with certain broker/dealers pursuant to which a broker/dealer will
provide research services, to Scudder Kemper or the Fund in exchange for the
direction by Scudder Kemper of brokerage transactions to the broker/dealer.
These arrangements regarding receipt of research services generally apply to
equity security transactions. Scudder Kemper will not place orders with a
broker/dealer on the basis that the broker/dealer has or has not sold shares of
the Fund, although it may place such transactions with brokers and dealers that
sell shares of funds currently advised by Scudder Kemper. Allocation of
portfolio transactions is supervised by Scudder Kemper.
The Trustees recommend that the shareholders of the Fund vote
in favor of this Proposal 2.
PROPOSAL 3: RATIFICATION OR REJECTION OF THE
SELECTION OF INDEPENDENT ACCOUNTANTS
The Board, including a majority of the Independent Trustees, has
selected PricewaterhouseCoopers LLP to act as independent accountants of the
Fund for the Fund's current fiscal year. One or more representatives of
PricewaterhouseCoopers LLP are expected to be present at the Meeting and will
have an opportunity to make a statement if they so desire. Such representatives
are expected to be available to respond to appropriate questions posed by
shareholders or management.
The Trustees recommend that the shareholders of the Fund vote
in favor of this Proposal 3.
ADDITIONAL INFORMATION
General
The cost of preparing, printing and mailing the enclosed proxy card and
proxy statement and all other costs incurred in connection with the solicitation
of proxies, including any additional solicitation made by letter, telephone or
telegraph, will be paid by Scudder Kemper. In addition to solicitation by mail,
certain officers and representatives of the Trust, officers and employees of
Scudder Kemper and certain financial services firms and their representatives,
who will receive no extra compensation for their services, may solicit proxies
by telephone, telegram or personally.
This Proxy Statement, the Notice of Meeting and the proxy card(s) are
first being mailed to shareholders on or about April 18, 2000 or as soon as
practicable thereafter. Any shareholder giving a proxy has the power to revoke
it by mail (addressed to the Secretary at the principal executive office of the
Fund, c/o Scudder Kemper Investments, Inc., at the address for the Fund shown at
the beginning of this Proxy Statement) or in person at the Meeting, by executing
a superseding proxy or by submitting a notice of revocation to the Fund. All
properly executed proxies received in time for the Meeting will be voted as
specified in the proxy or, if no specification is made, in favor of each
Proposal.
The presence at the shareholders' meeting, in person or by proxy, of
the holders of one-third of the shares entitled to be cast of the Trust (for a
Trust-wide vote) or the Fund (for a Fund-wide vote) shall be necessary and
sufficient to constitute a quorum for the transaction of business. In the event
that the necessary quorum to transact business or the vote required to approve
any Proposal is not obtained at the Meeting, the persons named as proxies may
propose one or more adjournments of the Meeting in accordance with applicable
law to permit further solicitation of proxies with respect to the Proposal that
did not receive the vote necessary for its passage or to obtain a quorum. Any
such adjournment as to a matter requiring a Trust-wide or a Fund by Fund vote
will require, respectively, the affirmative vote of the holders of a majority of
the Trust's (for a Trust-wide vote) or Fund's (for a Fund-wide vote) shares
present in person or by proxy at the Meeting. The persons named as proxies will
vote in favor of such adjournment those proxies which they are entitled to vote
in favor of that Proposal and will vote against any such adjournment those
proxies to be voted against that Proposal. For purposes of determining the
presence of a quorum for transacting business at the Meeting, abstentions and
broker "non-votes" will be treated as shares that are present but which have not
been voted. Broker non-votes are proxies received by the Fund from brokers or
nominees when the broker or nominee has neither received instructions from the
beneficial owner or other persons entitled to vote nor has discretionary power
to vote on a particular matter. Accordingly, shareholders are urged to forward
their voting instructions promptly.
Approval of Proposal 1 requires the affirmative vote of a plurality of
the shares of the Trust voting at the Meeting. Approval of Proposal 2 requires
the affirmative vote of a "majority of the outstanding voting securities" of the
Fund. The term "majority of the outstanding voting securities," as defined in
the 1940 Act, and as used in this Proxy Statement, means: the affirmative vote
of the lesser of (1) 67% of the voting securities of the Fund present at the
meeting if more than 50% of the outstanding voting securities of the Fund are
present in person or by proxy or (2) more than 50% of the outstanding voting
securities of the Fund. Approval of Proposal 3 requires the affirmative vote of
a majority of the shares of the Fund voting at the Meeting.
Abstentions and broker non-votes will not be counted in favor of, but
will have no other effect on, the vote for Proposal 1 and will have the effect
of a "no" vote on Proposals 2 and 3.
Holders of record of the shares of the Fund at the close of business on
April 17, 2000 (the "Record Date"), as to any matter on which they are entitled
to vote, will be entitled to one vote per share on all business of the Meeting.
As of March 20, 2000, there were _______ shares of the Fund outstanding.
Appendix 2 sets forth the beneficial owners of at least 5% of the
Fund's shares. To the best of the Trust's knowledge, as of January 31, 2000, no
person owned beneficially more than 5% of the Fund's outstanding shares, except
as stated in Appendix 2.
Appendix 3 hereto sets forth the number of shares of each series of the
Trust owned directly or beneficially by the Trustees of the Board and by the
nominees for election.
Shareholder Communications Corporation ("SCC") has been engaged to
assist in the solicitation of proxies, at an estimated cost of $102,789.66. As
the Meeting date approaches, certain shareholders of the Fund may receive a
telephone call from a representative of SCC if their votes have not yet been
received. Authorization to permit SCC to execute proxies may be obtained by
telephonic or electronically transmitted instructions from shareholders of the
Fund. Proxies that are obtained telephonically will be recorded in accordance
with the procedures set forth below. The Trustees believe that these procedures
are reasonably designed to ensure that both the identity of the shareholder
casting the vote and the voting instructions of the shareholder are accurately
determined.
In all cases where a telephonic proxy is solicited, the SCC
representative is required to ask for each shareholder's full name, address,
social security or employer identification number, title (if the shareholder is
authorized to act on behalf of an entity, such as a corporation), and the number
of shares owned, and to confirm that the shareholder has received the proxy
materials in the mail. If the information solicited agrees with the information
provided to SCC, then the SCC representative has the responsibility to explain
the process, read the Proposals on the proxy card, and ask for the shareholder's
instructions on the Proposals. Although the SCC representative is permitted to
answer questions about the process, he or she is not permitted to recommend to
the shareholder how to vote, other than to read any recommendation set forth in
the proxy statement. SCC will record the shareholder's instructions on the card.
Within 72 hours, the shareholder will be sent a letter or mailgram to confirm
his or her vote and asking the shareholder to call SCC immediately if his or her
instructions are not correctly reflected in the confirmation.
If a shareholder wishes to participate in the Meeting, but does not
wish to give a proxy by telephone or electronically, the shareholder may still
submit the proxy card originally sent with the proxy statement or attend in
person. Should shareholders require additional information regarding the proxy
or replacement proxy cards, they may contact SCC toll-free at 1-800-605-1203.
Any proxy given by a shareholder is revocable until voted at the Meeting.
Shareholders may also provide their voting instructions through
telephone touch-tone voting or Internet voting. These options require
shareholders to input a control number which is located on each voting
instruction card. After inputting this number, shareholders will be prompted to
provide their voting instructions on the Proposals. Shareholders will have an
opportunity to review their voting instructions and make any necessary changes
before submitting their voting instructions and terminating their telephone call
or Internet link. Shareholders who vote on the Internet, in addition to
confirming their voting instructions prior to submission, will also receive an
e-mail confirming their instructions.
Proposals of Shareholders
Shareholders wishing to submit proposals for inclusion in a proxy
statement for a shareholder meeting subsequent to the Meeting, if any, should
send their written proposals to the Secretary of the Trust, c/o Scudder Kemper
Investments, Inc., at the address for the Trust shown at the beginning of this
Proxy Statement, within a reasonable time before the solicitation of proxies for
such meeting. The timely submission of a proposal does not guarantee its
inclusion.
Other Matters To Come Before the Meeting
No Trustee is aware of any matters that will be presented for action at
the Meeting other than the matters set forth herein. Should any other matters
requiring a vote of shareholders arise, the proxy in the accompanying form will
confer upon the person or persons entitled to vote the shares represented by
such proxy the discretionary authority to vote the shares as to any such other
matters in accordance with their best judgment in the interest of the Trust
and/or Fund.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) (OR TAKE
ADVANTAGE OF AVAILABLE ELECTRONIC OR TELEPHONIC VOTING PROCEDURES)
PROMPTLY. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
By Order of the Board,
[Kathryn L. Quirk signature]
Kathryn L. Quirk
Secretary
<PAGE>
Exhibit A
Proposed Investment Management Agreement
marked against
Current Investment Management Agreement
[deleted language is bracketed and new language is in ALL CAPS]
----------------------
[AARP] SCUDDER INCOME TRUST
Two International Place
Boston, Massachusetts 02110
[September 7, 1998] JULY 17, 2000
Scudder Kemper Investments, Inc.
Two International Place
Boston, Massachusetts 02110
Investment Management Agreement
[AARP GNMA and U.S. Treasury] SCUDDER GNMA FUND
Ladies and Gentlemen:
[AARP] SCUDDER Income Trust (the "Trust") has been established as a
Massachusetts business trust to engage in the business of an investment company.
Pursuant to the Trust's Declaration of Trust, as amended from time-to-time (the
"Declaration"), the Board of Trustees has divided the Trust's shares of
beneficial interest, par value $0.01 per share, (the "Shares") into separate
series, or funds including [AARP GNMA and U.S. Treasury] SCUDDER GNMA Fund (the
"Fund"). Series may be abolished and dissolved, and additional series
established, from time to time by action of the Trustees.
The Trust, on behalf of the Fund, has selected you to act as the sole
investment manager of the Fund and for each series that may subsequently be
authorized by the Trustees (unless otherwise provided at the time and subject to
such conditions and amendments to this Agreement as shall be mutually agreed
upon), and to provide certain other services, as more fully set forth below, and
you have indicated that you are willing to act as such investment manager and to
perform such services under the terms and conditions hereinafter set forth.
Accordingly, the Trust on behalf of the Fund agrees with you as follows:
1. Delivery of Documents. The Trust engages in the business of
investing and reinvesting the assets of the Fund in the manner and in accordance
with the investment objectives, policies and restrictions specified in the
currently effective Prospectus (the "Prospectus") and Statement of Additional
Information (the "SAI") relating to the Fund included in the Trust's
Registration Statement on Form N-1A, as amended from time to time, (the
"Registration Statement") filed by the Trust under the Investment Company Act of
1940, as amended, (the "1940 Act") and the Securities Act of 1933, as amended.
Copies of the documents referred to in the preceding sentence have been
furnished to you by the Trust. The Trust has also furnished you with copies
properly certified or authenticated of each of the following additional
documents related to the Trust and the Fund:
(a) The Declaration dated June 8, 1984, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof (the
"By-Laws").
(c) Resolutions of the Trustees of the Trust and the
shareholders of the Fund selecting you as investment manager
and approving the form of this Agreement.
(d) Establishment and Designation of Series of Shares of Beneficial
Interest dated ___________ relating to [AARP GNMA and U.S.]
SCUDDER GNMA Fund.
The Trust will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements, if any, to the
foregoing, including the Prospectus, the SAI and the Registration Statement.
2. Portfolio Management Services. As manager of the assets of the Fund,
you shall provide continuing investment management of the assets of the Fund in
accordance with the investment objectives, policies and restrictions set forth
in the Prospectus and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended (the "Code"), relating to regulated
investment companies and all rules and regulations thereunder; and all other
applicable federal and state laws and regulations of which you have knowledge;
subject always to policies and instructions adopted by the Trust's Board of
Trustees. In connection therewith, you shall use reasonable efforts to manage
the Fund so that it will qualify as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder. The Fund shall have
the benefit of the investment analysis and research, the review of current
economic conditions and trends and the consideration of long-range investment
policy generally available to your investment advisory clients. In managing the
Fund in accordance with the requirements set forth in this section 2, you shall
be entitled to receive and act upon advice of counsel to the Trust or counsel to
you. You shall also make available to the Trust promptly upon request all of the
Fund's investment records and ledgers as are necessary to assist the Trust in
complying with the requirements of the 1940 Act and other applicable laws. To
the extent required by law, you shall furnish to regulatory authorities having
the requisite authority any information or reports in connection with the
services provided pursuant to this Agreement which may be requested in order to
ascertain whether the operations of the Trust are being conducted in a manner
consistent with applicable laws and regulations.
You shall determine the securities, instruments, investments,
currencies, repurchase agreements, futures, options and other contracts relating
to investments to be purchased, sold or entered into by the Fund and place
orders with broker-dealers, foreign currency dealers, futures commission
merchants or others pursuant to your determinations and all in accordance with
Fund policies as expressed in the Registration Statement. You shall determine
what portion of the Fund's portfolio shall be invested in securities and other
assets and what portion, if any, should be held uninvested.
You shall furnish to the Trust's Board of Trustees periodic reports on
the investment performance of the Fund and on the performance of your
obligations pursuant to this Agreement, and you shall supply such additional
reports and information as the Trust's officers or Board of Trustees shall
reasonably request.
3. Administrative Services. In addition to the portfolio management
services specified above in section 2, you shall furnish at your expense for the
use of the Fund such office space and facilities in the United States as the
Fund may require for their reasonable needs, and you (or one or more of your
affiliates designated by you) shall render to the Trust administrative services
on behalf of the Fund necessary for operating as open-end investment companies
and not provided by persons not parties to this Agreement including, but not
limited to, preparing reports to and meeting materials for the Trust's Board of
Trustees and reports and notices to Fund shareholders; supervising, negotiating
contractual arrangements with, to the extent appropriate, and monitoring the
performance of, accounting agents, custodians, depositories, transfer agents and
pricing agents, accountants, attorneys, printers, underwriters, brokers and
dealers, insurers and other persons in any capacity deemed to be necessary or
desirable to Fund operations; preparing and making filings with the Securities
and Exchange Commission (the "SEC") and other regulatory and self-regulatory
organizations, including, but not limited to, preliminary and definitive proxy
materials, post-effective amendments to the Registration Statement, semi-annual
reports on Form N-SAR and notices pursuant to Rule 24f-2 under the 1940 Act;
overseeing the tabulation of proxies by the Fund's transfer agent; assisting in
the preparation and filing of the Fund's federal, state and local tax returns;
preparing and filing the Fund's federal excise tax return pursuant to Section
4982 of the Code; providing assistance with investor and public relations
matters; monitoring the valuation of portfolio securities and the calculation of
net asset value; monitoring the registration of Shares of the Fund under
applicable federal and state securities laws; maintaining or causing to be
maintained for the Fund all books, records and reports and any other information
required under the 1940 Act, to the extent that such books, records and reports
and other information are not maintained by the Fund's custodian or other agents
of the Fund; assisting in establishing the accounting policies of the Fund;
assisting in the resolution of accounting issues that may arise with respect to
the Fund's operations and consulting with the Fund's independent accountants,
legal counsel and other agents as necessary in connection therewith;
establishing and monitoring the Fund's operating expense budgets; reviewing the
Fund's bills; processing the payment of bills that have been approved by an
authorized person; assisting the Fund in determining the amount of dividends and
distributions available to be paid by the Fund to its shareholders, preparing
and arranging for the printing of dividend notices to shareholders, and
providing the transfer and dividend paying agent, the custodian, and the
accounting agent with such information as is required for such parties to effect
the payment of dividends and distributions; and otherwise assisting the Trust as
it may reasonably request in the conduct of the Fund's business, subject to the
direction and control of the Trust's Board of Trustees. Nothing in this
Agreement shall be deemed to shift to you or to diminish the obligations of any
agent of the Fund or any other person not a party to this Agreement which is
obligated to provide services to the Fund.
4. Allocation of Charges and Expenses. Except as otherwise specifically
provided in this section 4, you shall pay the compensation and expenses of all
Trustees, officers and executive employees of the Trust (including the Fund's
share of payroll taxes) who are affiliated persons of you, and you shall make
available, without expense to the Fund, the services of such of your directors,
officers and employees as may duly be elected officers of the Trust, subject to
their individual consent to serve and to any limitations imposed by law. You
shall provide at your expense the portfolio management services described in
section 2 hereof and the administrative services described in section 3 hereof.
You shall not be required to pay any expenses of the Fund other than
those specifically allocated to you in this section 4. In particular, but
without limiting the generality of the foregoing, you shall not be responsible,
except to the extent of the reasonable compensation of such of the Fund's
Trustees and officers as are directors, officers or employees of you whose
services may be involved, for the following expenses of the Fund: organization
expenses of the Fund (including out-of-pocket expenses, but not including your
overhead or employee costs); fees payable to you and to any other Fund advisors
or consultants; legal expenses; auditing and accounting expenses; maintenance of
books and records which are required to be maintained by the Fund's custodian or
other agents of the Trust; telephone, telex, facsimile, postage and other
communications expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Fund in connection with membership in investment company trade
organizations; fees and expenses of the Fund's accounting agent, custodians,
subcustodians, transfer agents, dividend disbursing agents and registrars;
payment for portfolio pricing or valuation services to pricing agents,
accountants, bankers and other specialists, if any; expenses of preparing share
certificates and, except as provided below in this section 4, other expenses in
connection with the issuance, offering, distribution, sale, redemption or
repurchase of securities issued by the Fund; expenses relating to investor and
public relations; expenses and fees of registering or qualifying Shares of the
Fund for sale; interest charges, bond premiums and other insurance expense;
freight, insurance and other charges in connection with the shipment of the
Fund's portfolio securities; the compensation and all expenses (specifically
including travel expenses relating to Trust business) of Trustees, officers and
employees of the Trust who are not affiliated persons of you; brokerage
commissions or other costs of acquiring or disposing of any portfolio securities
of the Fund; expenses of printing and distributing reports, notices and
dividends to shareholders; expenses of printing and mailing Prospectuses and
SAIs of the Fund and supplements thereto; costs of stationery; any litigation
expenses; indemnification of Trustees and officers of the Trust; costs of
shareholders' and other meetings; and travel expenses (or an appropriate portion
thereof) of Trustees and officers of the Trust who are directors, officers or
employees of you to the extent that such expenses relate to attendance at
meetings of the Board of Trustees of the Trust or any committees thereof or
advisors thereto held outside of Boston, Massachusetts or New York, New York.
You shall not be required to pay expenses of any activity which is
primarily intended to result in sales of Shares of the Fund if and to the extent
that (i) such expenses are required to be borne by a principal underwriter which
acts as the distributor of the Fund's Shares pursuant to an underwriting
agreement which provides that the underwriter shall assume some or all of such
expenses, or (ii) the Trust on behalf of the Fund shall have adopted a plan in
conformity with Rule 12b-1 under the 1940 Act providing that the Fund (or some
other party) shall assume some or all of such expenses, or (iii) such expenses
are required to be borne by Scudder Kemper pursuant to section 4 of the
Investment Company Services Agreement, dated as of October 8, 1984 among
American Association of Retired Persons, AARP/Scudder Financial Management
Company, and us. You shall be required to pay such of the foregoing sales
expenses as are not required to be paid by the principal underwriter pursuant to
the underwriting agreement or are not permitted to be paid by the Fund (or some
other party) pursuant to such a plan.
5. Management Fee. For all services to be rendered, payments to be made and
costs to be assumed by you as provided in sections 2, 3 and 4 hereof, the Trust
on behalf of the Fund shall pay you IN UNITED STATES DOLLARS on the last day of
each month the unpaid balance of a fee EQUAL TO THE EXCESS OF 1/12 OF 0.40 OF 1
PERCENT OF THE AVERAGE DAILY NET ASSETS AS DEFINED BELOW OF THE FUND FOR SUCH
MONTH; PROVIDED THAT, FOR ANY CALENDAR MONTH DURING WHICH THE AVERAGE OF SUCH
VALUES EXCEEDS $5 BILLION, THE FEE PAYABLE FOR THAT MONTH BASED ON THE PORTION
OF THE AVERAGE OF SUCH VALUES IN EXCESS OF $5 BILLION SHALL BE 1/12 OF 0.385 OF
1 PERCENT OF SUCH PORTION; AND PROVIDED THAT, FOR ANY CALENDAR MONTH DURING
WHICH THE AVERAGE OF SUCH VALUES EXCEEDS $6 BILLION THE FEE PAYABLE FOR THAT
MONTH BASED ON THE PORTION OF THE AVERAGE OF SUCH VALUES IN EXCESS OF $6 BILLION
SHALL BE 1/12 OF 0.370 OF SUCH PORTION OVER ANY COMPENSATION WAIVED BY YOU FROM
TIME TO TIME (AS MORE FULLY DESCRIBED BELOW). YOU SHALL BE ENTITLED TO RECEIVE
DURING ANY MONTH SUCH INTERIM PAYMENTS OF YOUR FEE HEREUNDER AS YOU SHALL
REQUEST, PROVIDED THAT NO SUCH PAYMENT SHALL EXCEED 75 PERCENT OF THE AMOUNT OF
YOUR FEE THEN ACCRUED [composed of an asset charge in two parts].
[(a) The asset charge for each calendar day of each year shall be equal to the
total of 1/365th (1/366th in each leap year) of the amount computed in
accordance with paragraphs (b) and (c) below. The computation shall be made for
each such day on the basis of net assets as of the close of business of the full
business day one (1) business day prior to the day for which the computation is
being made. In the case of the suspension of the computation of net asset value,
the asset charge for each day during such suspension shall be computed as of the
close of business on the last full business day on which the net assets were
computed. As used herein, "net assets" as of the close of a full business day
shall include all transactions in shares of the Fund recorded] on the books of
the Fund [for that day.] AND UNPAID.
[(b) The base fee rate part of the fee shall be based on the] THE
"average daily net assets" OF THE FUND SHALL MEAN THE AVERAGE OF THE VALUES
PLACED ON THE FUND'S NET ASSETS AS OF 4:00 P.M. (NEW YORK TIME) ON EACH DAY ON
WHICH THE NET ASSET VALUE OF THE FUND IS DETERMINED CONSISTENT WITH THE
PROVISIONS OF RULE 22C-1 UNDER THE 1940 ACT OR, IF THE FUND LAWFULLY DETERMINES
THE VALUE OF ITS NET ASSETS AS OF SOME OTHER TIME ON EACH BUSINESS DAY, AS OF
SUCH TIME. THE VALUE OF THE [of all funds within the AARP Investment Program
from Scudder (the "Program"), including any new fund which may be organized in
the future. The base fee rate will be the percent of Program net assets as set
forth in the following table.]
[Base Fee Rate]
[Program Assets(Billions) Annual Rate at EachAsset Level First $2 0.35% Next
$2 0.33 Next $2 0.30 Next $2 0.28 Next $3 0.26 Next $3 0.25 Over $14 0.24]
[The portion of the base fee rate which the Fund shall bear will be the same
percentage of the base fee rate as its net assets are to the total net assets of
all the Program funds.]
[(c) The fund fee rate part of the fee shall be 0.40 percent per annum of] net
assets of the Fund shall always.
[The value of net assets of the Trust or any Fund shall] be determined pursuant
to the applicable provisions of the Declaration, [ByLaws] and THE Registration
Statement [of the Trust. If, pursuant to such provisions,]. IF the determination
of net asset value [for any Fund is suspended] DOES NOT TAKE PLACE for any
particular [business] day, then for the purposes of this paragraph 5, the value
of the net assets of [that series of] the [Trust] FUND as last determined shall
be deemed to be the value of [the] ITS net assets as of [the close of the] 4:00
P.M. (New York [Stock Exchange] TIME), or as of such other time as the value of
the net assets of the [portfolio of that Fund may lawfully be determined, on
that day. If the determination of the net asset value of the shares of any Fund
of the Trust has been suspended pursuant to the Declaration, ByLaws or
Registration Statement of the Trust for a period including such month, your
compensation payable at the end of such month shall be computed on the basis of]
FUND'S PORTFOLIO MAY BE LAWFULLY DETERMINED ON THAT DAY. IF THE FUND DETERMINES
the value of the net assets of [the Trust as last determined (whether during or
prior to such month). If the Fund determines the net asset value of] its
portfolio more than once on any day, then the last such determination thereof on
that day shall be deemed to be the sole determination thereof on that day for
the purposes of this section 5.
You may waive all or a portion of your fees provided for hereunder and
such waiver shall be treated as a reduction in purchase price of your services.
You shall be contractually bound hereunder by the terms of any publicly
announced waiver of your fee, or any limitation of the Fund's expenses, as if
such waiver or limitation were fully set forth herein.
6. Avoidance of Inconsistent Position; Services Not Exclusive. In
connection with purchases or sales of portfolio securities and other investments
for the account of the Fund, neither you nor any of your directors, officers or
employees shall act as a principal or agent or receive any commission. You or
your agent shall arrange for the placing of all orders for the purchase and sale
of portfolio securities and other investments for the Fund's account with
brokers or dealers selected by you in accordance with Fund policies as expressed
in the Registration Statement. If any occasion should arise in which you give
any advice to clients of yours concerning the Shares of the Fund, you shall act
solely as investment counsel for such clients and not in any way on behalf of
the Fund.
Your services to the Trust and the Fund pursuant to this Agreement are
not to be deemed to be exclusive and it is understood that you may render
investment advice, management and services to others. In acting under this
Agreement, you shall be an independent contractor and not an agent of the Trust
or the Fund. Whenever the Fund and one or more other accounts or investment
companies advised by the Manager have available funds for investment,
investments suitable and appropriate for each shall be allocated in accordance
with procedures believed by the Manager to be equitable to each entity.
Similarly, opportunities to sell securities shall be allocated in a manner
believed by the Manager to be equitable. The Fund recognizes that in some cases
this procedure may adversely affect the size of the position that may be
acquired or disposed of for the Fund.
7. Limitation of Liability of Manager. As an inducement to your
undertaking to render services pursuant to this Agreement, the Trust agrees that
you shall not be liable under this Agreement for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with the
matters to which this Agreement relates, provided that nothing in this Agreement
shall be deemed to protect or purport to protect you against any liability to
the Trust, the Fund or its shareholders to which you would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of your duties, or by reason of your reckless disregard of your
obligations and duties hereunder. Any person, even though also employed by you,
who may be or become an employee of and paid by the Fund shall be deemed, when
acting within the scope of his or her employment by the Fund, to be acting in
such employment solely for the Fund and not as your employee or agent.
8. Duration and Termination of This Agreement. This Agreement shall
remain in force until [August 31, 1999] SEPTEMBER 30, 2001, and continue in
force from year to year thereafter, but only so long as such continuance is
specifically approved at least annually (a) by the vote of a majority of the
Trustees who are not parties to this Agreement or interested persons of any
party to this Agreement, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by the Trustees of the Trust, or, with respect
to the Fund, by the vote of a majority of the outstanding voting securities of
such Fund of the Trust. The aforesaid requirement that continuance of this
Agreement be "specifically approved at least annually" shall be construed in a
manner consistent with the 1940 Act and the rules and regulations thereunder and
any applicable SEC exemptive order therefrom.
This Agreement may be terminated with respect to the Fund at any time,
without the payment of any penalty, by the vote of a majority of the outstanding
voting securities of the Fund or by the Trust's Board of Trustees on 60 days'
written notice to you, or by you on 60 days' written notice to the Trust. This
Agreement shall terminate automatically in the event of its assignment.
9. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Agreement shall be
effective until approved in a manner consistent with the 1940 Act and rules and
regulations thereunder and any applicable SEC exemptive order therefrom.
10. Limitation of Liability for Claims. The Declaration, a copy of
which, together with all amendments thereto, is on file in the Office of the
Secretary of The Commonwealth of Massachusetts, provides that the name "AARP
Income Trust" refers to the Trustees under the Declaration collectively as
Trustees and not as individuals or personally, and that no shareholder of any
Fund of the Trust, or Trustee, officer, employee or agent of the Trust, shall be
subject to claims against or obligations of the Trust or of any Fund of the
Trust to any extent whatsoever, but that the Trust estate only shall be liable.
You are hereby expressly put on notice of the limitation of liability
as set forth in the Declaration and you agree that the obligations assumed by
the Trust on behalf of the Fund pursuant to this Agreement shall be limited in
all cases to the applicable Fund and its assets, and you shall not seek
satisfaction of any such obligation from the shareholders or any shareholder of
the Fund or any other series of the Trust, or from any Trustee, officer,
employee or agent of the Trust. You understand that the rights and obligations
of the Fund, or series, under the Declaration are separate and distinct from
those of any and all other series.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
In interpreting the provisions of this Agreement, the definitions
contained in Section 2(a) of the 1940 Act (particularly the definitions of
"affiliated person," "assignment" and "majority of the outstanding voting
securities"), as from time to time amended, shall be applied, subject, however,
to such exemptions as may be granted by the SEC by any rule, regulation or
order.
This Agreement shall be construed in accordance with the laws of The
Commonwealth of Massachusetts, provided that nothing herein shall be construed
in a manner inconsistent with the 1940 Act, or in a manner which would cause the
Fund to fail to comply with the requirements of Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or
management agreements entered into between you and the Trust on behalf of the
Fund
If you are in agreement with the foregoing, please execute the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding contract
effective as of the date of this Agreement.
Yours very truly,
[AARP INCOME] SCUDDER INCOME TRUST, on behalf of
[AARP GNMA and U.S. Treasury] SCUDDER GNMA Fund
By: ______________________________
President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: ______________________________
Managing Director
<PAGE>
Exhibit B
Investment Objectives, Advisory Fees and Assets
of
Funds Advised by Scudder Kemper Investments, Inc.
[To Come]
<PAGE>
APPENDIX 1
Trustees and Officers Associated with Scudder Kemper
<PAGE>
APPENDIX 2
Beneficial Ownership of Fund Shares
<PAGE>
APPENDIX 3
Fund Shares Owned by Nominees and Trustees
Many of the nominees and Trustees own shares of the series of the Trust
and of other funds in the Scudder Family of Funds and AARP Funds, allocating
their investments among such funds based on their individual investment needs.
The following table sets forth, for each nominee and Trustee, the number of
shares owned in each series of the Trust as of January 31, 2000. The information
as to beneficial ownership is based on statements furnished to the Trust by each
nominee and Trustee. Unless otherwise noted, beneficial ownership is based on
sole voting and investment power. [Each nominee's and Trustee's individual
shareholdings of any series of the Trust constitute less than 1% of the shares
outstanding of such fund.] [As a group, the Trustees and officers own less than
1% of the shares of any series of the Trust.]
- -------------------------- ---------------- --------------- --------------------
AARP Bond Fund AARP GNMA and AARP High Quality
for Income U.S. Treasury Short Term Bond
Fund Fund
- -------------------------- ---------------- --------------- --------------------
Carole Lewis Anderson1
- -------------------------- ---------------- --------------- --------------------
Adelaide Attard2
- -------------------------- ---------------- --------------- --------------------
Henry P. Becton, Jr.3
- -------------------------- ---------------- --------------- --------------------
Robert N. Butler, M.D.4
- -------------------------- ---------------- --------------- --------------------
Esther Canja5
- -------------------------- ---------------- --------------- --------------------
Linda C. Coughlin6
- -------------------------- ---------------- --------------- --------------------
Dawn-Marie Driscoll7
- -------------------------- ---------------- --------------- --------------------
Edgar R. Fiedler8
- -------------------------- ---------------- --------------- --------------------
Lt. Gen. Eugene P.
Forrester9
- -------------------------- ---------------- --------------- --------------------
Keith R. Fox10
- -------------------------- ---------------- --------------- --------------------
George L. Maddox, Jr.11
- -------------------------- ---------------- --------------- --------------------
Robert J. Myers12
- -------------------------- ---------------- --------------- --------------------
James H. Schulz13
- -------------------------- ---------------- --------------- --------------------
Gordon Shillinglaw14
- -------------------------- ---------------- --------------- --------------------
Joan Edelman Spero15
- -------------------------- ---------------- --------------- --------------------
Jean Gleason Stromberg16
- -------------------------- ---------------- --------------- --------------------
Jean C. Tempel17
- -------------------------- ---------------- --------------- --------------------
Steven Zaleznick18
- -------------------------- ---------------- --------------- --------------------
[All Trustees and Officers
as a Group]
- -------------------------- ---------------- --------------- --------------------
1 As of January 31, 2000, Ms. Anderson's total aggregate holdings in each
series of the Trust listed above and all other funds in the Scudder Family
of Funds and AARP Funds ranged between $___________ and $___________.
2 As of January 31, 2000, Ms. Attard's total aggregate holdings in each
series of the Trust listed above and all other funds in the Scudder Family
of Funds and AARP Funds ranged between $___________ and $___________.
3 As of January 31, 2000, Mr. Becton's total aggregate holdings in each
series of the Trust listed above and all other funds in the Scudder Family
of Funds and AARP Funds ranged between $___________ and $___________.
4 As of January 31, 2000, Dr. Butler's total aggregate holdings in each
series of the Trust listed above and all other funds in the Scudder Family
of Funds and AARP Funds ranged between $___________ and $___________.
5 As of January 31, 2000, Ms. Canja's total aggregate holdings in each series
of the Trust listed above and all other funds in the Scudder Family of
Funds and AARP Funds ranged between $___________ and $___________.
6 As of January 31, 2000, Ms. Coughlin's total aggregate holdings in each
series of the Trust listed above and all other funds in the Scudder Family
of Funds and AARP Funds ranged between $___________ and $___________.
7 As of January 31, 2000, Ms. Driscoll's total aggregate holdings in each
series of the Trust listed above and all other funds in the Scudder Family
of Funds and AARP Funds ranged between $___________ and $___________.
8 As of January 31, 2000, Mr. Fiedler's total aggregate holdings in each
series of the Trust listed above and all other funds in the Scudder Family
of Funds and AARP Funds ranged between $___________ and $___________.
9 As of January 31, 2000, Lt. Gen. Forrester's total aggregate holdings in
each series of the Trust listed above and all other funds in the Scudder
Family of Funds and AARP Funds ranged between $___________ and
$___________.
10 As of January 31, 2000, Mr. Fox's total aggregate holdings in each series
of the Trust listed above and all other funds in the Scudder Family of
Funds and AARP Funds ranged between $___________ and $___________.
11 As of January 31, 2000, Mr. Maddox's total aggregate holdings in each
series of the Trust listed above and all other funds in the Scudder Family
of Funds and AARP Funds ranged between $___________ and $___________.
12 As of January 31, 2000, Mr. Myers's total aggregate holdings in each series
of the Trust listed above and all other funds in the Scudder Family of
Funds and AARP Funds ranged between $___________ and $___________.
13 As of January 31, 2000, Mr. Schulz's total aggregate holdings in each
series of the Trust listed above and all other funds in the Scudder Family
of Funds and AARP Funds ranged between $___________ and $___________.
14 As of January 31, 2000, Dr. Shillinglaw's total aggregate holdings in each
series of the Trust listed above and all other funds in the Scudder Family
of Funds and AARP Funds ranged between $___________ and $___________.
15 As of January 31, 2000, Ms. Spero's total aggregate holdings in each series
of the Trust listed above and all other funds in the Scudder Family of
Funds and AARP Funds ranged between $___________ and $___________.
16 As of January 31, 2000, Ms. Stromberg's total aggregate holdings in each
series of the Trust listed above and all other funds in the Scudder Family
of Funds and AARP Funds ranged between $___________ and $___________.
17 As of January 31, 2000, Ms. Tempel's total aggregate holdings in each
series of the Trust listed above and all other funds in the Scudder Family
of Funds and AARP Funds ranged between $___________ and $___________.
18 As of January 31, 2000, Mr. Zaleznick's total aggregate holdings in each
series of the Trust listed above and all other funds in the Scudder Family
of Funds and AARP Funds ranged between $___________ and $___________.
<PAGE>
FORM OF PROXY
[LOGO] YOUR VOTE IS IMPORTANT!
[ADDRESS]
VOTE TODAY BY MAIL,
TOUCH-TONE PHONE OR THE INTERNET
CALL TOLL FREE 1-XXX-XXX-XXXX OR
LOG ON TO WWW.PROXYWEB.COM/XXXXX
***CONTROL NUMBER: XXX XXX XXX XXX XX*** Please fold and detach card at
perforation before mailing.
AARP GNMA AND U.S. TREASURY FUND
AARP INCOME TRUST
Two International Place
Boston, MA 02110-4103
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
2:00 p.m., Eastern time, on July 11, 2000
The undersigned hereby appoints __________, ____________ and ____________,
and each of them, the proxies of the undersigned, with the power of substitution
to each of them, to vote all shares of the AARP GNMA and U.S. Treasury Fund (the
"Fund") which the undersigned is entitled to vote at the Special Meeting of
Shareholders of the Fund to be held at the offices of Scudder Kemper
Investments, Inc., Two International Place, Boston, MA 02110-4103, on July 11,
2000 at 2:00 p.m., Eastern time, and at any adjournments thereof.
PLEASE SIGN AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED.
Dated ____________________________,2000
PLEASE SIGN EXACTLY AS YOUR NAME OR NAMES
APPEAR. WHEN SIGNING AS AN ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE
GIVE YOUR FULL TITLE AS SUCH.
----------------------------------------------------
[Name]
[address]
----------------------------------------------------
Signature(s) of Shareholder(s)
<PAGE>
[Logo] YOUR VOTE IS IMPORTANT!
[Address]
VOTE TODAY BY MAIL,
TOUCH-TONE PHONE OR THE INTERNET
CALL TOLL FREE 1-XXX-XXX-XXXX OR
LOG ON TO WWW.PROXYWEB.COM/XXXXX
Please fold and detach card at perforation before mailing.
All properly executed proxies will be voted as directed. If no
instructions are indicated on a properly executed proxy, the proxy will be voted
for approval of the proposals.
THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF AARP Income Trust.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE PROPOSALS.
Please vote by filling in the boxes below.
PROPOSAL 1 FOR all WITHHOLD ABSTAIN
nominees authority
listed to vote
(except as for all
noted in nominees
space listed
provided)
To elect Trustees to the Board of
Trustees of AARP Income Trust to
hold office until their respective
successors have been duly elected
and qualified or until their
earlier resignation or removal. ______ ______ ______
NOMINEES:
(01) Henry P. Becton, Jr., (02)
Linda C. Coughlin, (03) Dawn-Marie
Driscoll, (04) Edgar R. Fiedler,
(05) Keith R. Fox, (06) Joan
Edelman Spero, (07) Jean Gleason
Stromberg, (08) Jean C. Tempel,
(09) Steven Zaleznick.
INSTRUCTION: To withhold authority
to vote for any individual nominee,
write the name(s) on the line
immediately below.
- -----------------------------------
PROPOSAL 2 FOR AGAINST ABSTAIN
To approve a new investment
management agreement between the
Fund and Scudder Kemper
Investments, Inc. ______ ______ ______
PROPOSAL 3 FOR AGAINST ABSTAIN
To ratify the selection of
PricewaterhouseCoopers LLP as the
Fund's independent accountants for
the current fiscal year. ______ ______ ______
The proxies are authorized to vote
in their discretion on any other
business which may properly come
before the meeting and any
adjournments thereof.
PLEASE SIGN ON REVERSE SIDE
