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As filed with the Securities and Exchange Commission
on March 3, 2000.
Securities Act File No.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. / / Post-Effective Amendment No. / /
SCUDDER MUNICIPAL TRUST
(Exact Name of Registrant as Specified in Charter)
Two International Place, Boston, MA 02110-4103
(Address of Principal Executive Offices) (Zip Code)
John Millette
Scudder Kemper Investments, Inc.
Two International Place
Boston, MA 02110-4103
(Name and Address of Agent for Service)
(617) 295-1000
(Registrant's Area Code and Telephone Number)
with copies to:
Caroline Pearson, Esq. Sheldon A. Jones, Esq.
Scudder Kemper Investments, Inc. Dechert Price & Rhoads
Two International Place Ten Post Office Square - South
Boston, MA 02110-4103 Boston, MA 02109-4603
Approximate Date of Proposed Public Offering:
As soon as practicable after this Registration
Statement is declared effective.
Title of Securities Being Registered:
Shares of Beneficial Interest ($.01 par value)
of Scudder Managed Municipal Bonds, a series of the Registrant
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It is proposed that this filing will become effective
on April 3, 2000 pursuant to Rule 488 under the Securities Act of 1933.
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No filing fee is required because the Registrant has previously registered an
indefinite number of its shares under the Securities Act of 1933, as amended,
pursuant to Rule 24f-2 under the Investment Company Act of 1940, as amended.
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PART A
INFORMATION REQUIRED IN THE PROXY STATEMENT/PROSPECTUS
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS OF
AARP TAX FREE INCOME TRUST
AARP INSURED TAX FREE GENERAL BOND FUND
Please take notice that a Special Meeting of Shareholders (the "Meeting")
of AARP Insured Tax Free General Bond Fund (the "Fund"), a series of AARP Tax
Free Income Trust (the "Trust"), will be held at the offices of Scudder Kemper
Investments, Inc., Floor 13, 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; and
Proposal 2: To approve an Agreement and Plan of Reorganization for the
Fund whereby all or substantially all of the assets and
liabilities of the Fund would be acquired by Scudder Managed
Municipal Bonds in exchange for shares of the AARP Shares
class of Scudder Managed Municipal Bonds; 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.
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Table of Contents
Introduction....................
Proposal 1: Election of Trustees/Directors for the Acquired
Trust/Corporation........
Nominees for Election..............
Trustees/Directors Not Standing for Re-election............
Responsibilities of the Board -- Board and Committee Meetings........
Audit Committee........
Committee on Independent Trustees/Directors........
Attendance............
Honorary Trustees/Directors.........
Officers.............
Compensation of Trustees/Directors and Officers.........
Proposal 2: Approval of Agreement and Plan of Reorganization......
I. SYNOPSIS.........
Introduction.........
Background of the Reorganization...........
Reasons for the Proposed Transaction; Board Approval.......
Investment Objectives, Policies and Restrictions of the
Funds........
Portfolio Turnover..........
Performance...........
Investment Manager; Fees and Expenses......
Administrative Fee..........
Comparison of Expenses.........
Financial Highlights.........
Distribution of Shares........
Purchase, Redemption and Exchange Information.........
Dividends and other Distributions..........
Tax Consequences........
II. PRINCIPAL RISK FACTORS......
III. THE PROPOSED TRANSCTION..........
Description of the Plan........
Board Approval of the Proposed Transaction......
Description of the Securities to be Issued.....
Federal Income Tax Consequences.........
Capitalization...........
Proposal 3: Ratification or Rejection of the Selection of Independent
Accountants
Additional Information
Exhibit A
Exhibit B
Appendix 1
Appendix 2
Part B: Statement of Additional Information
Part C: Other Information
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PROXY STATEMENT/PROSPECTUS
[DATE]
Relating to the acquisition of the assets of
AARP INSURED TAX FREE GENERAL BOND FUND (the "Acquired Fund"),
a separate series of
AARP TAX FREE INCOME TRUST (the "Acquired Trust")
Two International Place
Boston, Massachusetts 02110-4103
(800) 253-2277
by and in exchange for the AARP Shares class of shares of beneficial interest of
SCUDDER MANAGED MUNICIPAL BONDS (the "Acquiring Fund"),
a separate series of
SCUDDER MUNICIPAL TRUST (the "Acquiring Trust")
Two International Place
Boston, Massachusetts 02110-4103
(800) 728-3337
INTRODUCTION
This Proxy Statement/Prospectus is being furnished to shareholders of the
Acquired Fund in connection with three proposals (each a "Proposal"). Proposal 1
describes the election of Trustees, and Proposal 3 proposes the ratification of
the Acquired Fund's accountants.
In Proposal 2, shareholders are asked to approve a proposed reorganization
in which all or substantially all of the assets of the Acquired Fund would be
acquired by the Acquiring Fund, in exchange for shares of beneficial interest of
the AARP Shares class of the Acquiring Fund (known as "AARP Shares") and the
assumption by the Acquiring Fund of all of the liabilities of the Acquired Fund,
as described more fully below (the "Reorganization"). Shares of the Acquiring
Fund thereby received would then be distributed to the shareholders of the
Acquired Fund in complete liquidation of the Acquired Fund. As a result of the
Reorganization, each shareholder of the Acquired Fund would receive that number
of AARP Shares having an aggregate net asset value equal to the aggregate net
asset value of such shareholder's shares of the Acquired Fund held as of the
close of business on the business day preceding the closing of the
Reorganization (the "Valuation Date"). Shareholders of the Acquired Fund will
vote on an Agreement and Plan of Reorganization (the "Plan") pursuant to which
the Reorganization would be consummated. A copy of the Plan is attached hereto
as Exhibit A. The closing of the Reorganization (the "Closing") is contingent
upon shareholder approval of the Plan. The Reorganization is expected to occur
on or about July 31, 2000.
Proposals 1 and 2 relate to a restructuring program proposed by Scudder
Kemper Investments, Inc. ("Scudder Kemper" or the "Investment Manager"), and
described in more detail below.
It is being proposed to shareholders of Scudder Ohio Tax Free Fund,
another fund advised by Scudder Kemper, the investment manager for each of the
Acquiring Fund and the Acquired Fund, that the Acquiring Fund acquire the assets
of that other fund. Each of the closing of this other acquisition and the
Closing is contingent upon the other.
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THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES NOR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
In the descriptions of the Proposals below, the word "fund" is sometimes
used to mean investment companies or series thereof in general, and not the
Acquired Fund whose proxy statement this is. In addition, for simplicity,
actions are described in this Proxy Statement as being taken by either the
Acquired Fund or the Acquiring Fund (each a "Fund" and collectively the
"Funds"), although all actions are actually taken either by the Acquired Trust
or the Acquiring Trust (together with the Acquired Trust, the "Trusts"), on
behalf of the applicable Fund.
This Proxy Statement/Prospectus sets forth concisely the information about
the Acquiring Fund that a prospective investor should know before investing and
should be retained for future reference. For a more detailed discussion of the
investment objective, policies, restrictions and risks of the Acquiring Fund,
see the Acquiring Fund's prospectus, dated October 1, 1999, as supplemented from
time to time, which is included herewith and incorporated herein by reference.
For a more detailed discussion of the investment objective, policies,
restrictions and risks of the Acquired Fund, see the Acquired Fund's prospectus,
dated February 1, 2000, as supplemented from time to time, which is incorporated
herein by reference and a copy of which may be obtained upon request and without
charge by calling or writing the Acquired Fund at the telephone number or
address set forth on the preceding page.
The Acquiring Fund's Statement of Additional Information, dated October 1,
1999, is incorporated herein by reference and may be obtained upon request and
without charge by calling or writing the Acquiring Fund at the telephone number
or address set forth on the preceding page. A Statement of Additional
Information dated ___________________, containing additional information about
the Reorganization and the parties thereto has been filed with the Securities
and Exchange Commission (the "SEC" or the "Commission") and is incorporated by
reference into this Proxy Statement/Prospectus. A copy of the Statement of
Additional Information relating to the Reorganization is available upon request
and without charge by calling or writing the Acquiring Fund at the telephone
number or address set forth on the preceding page. Shareholder inquiries
regarding the Acquired Fund may be made by calling (800) 253-2277. Shareholder
inquiries regarding the Acquiring Fund may be made by calling (800) 728-3337.
The information contained herein concerning the Acquired Fund has been provided
by, and is included herein in reliance upon, the Acquired Fund. The information
contained herein concerning the Acquiring Fund has been provided by, and is
included herein in reliance upon, the Acquiring Fund. The AARP Shares will be a
newly-established class of shares of the Acquiring Fund and will be identical in
all material respects to the Acquiring Fund shares currently offered and sold,
as described in the prospectus and statement of additional information for the
Acquiring Fund, dated October 1, 1999, except as otherwise described herein.
The Acquiring Fund and the Acquired Fund are diversified series of shares
of beneficial interest of, respectively, the Acquiring Trust and the Acquired
Trust. The Acquiring Trust and the Acquired Trust are open-end management
investment companies organized as Massachusetts business trusts.
The Board of Trustees (except as otherwise noted, "Trustees" refers to the
Trustees of the Acquired Trust and "Board" refers to the Board of Trustees of
the Acquired Trust) is soliciting proxies from shareholders of the Acquired
Fund, on behalf of the Acquired Fund, for the Special Meeting of Shareholders to
be held on July 11, 2000, at Scudder Kemper's offices, at Floor 13, Two
International Place, Boston, MA 02110-4103, at 2:00 p.m. (Eastern time), or at
such later time made necessary by adjournment (the "Meeting").
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The Board of Trustees recommends that shareholders vote for the nominees
listed in Proposal 1, and for Proposals 2 and 3.
PROPOSAL 1: ELECTION OF TRUSTEES FOR THE ACQUIRED TRUST
At the Meeting, shareholders will be asked to elect nine individuals to
constitute the Board of Trustees of the Acquired Trust. These individuals were
nominated after a careful and deliberate selection process by the present Board
of Trustees of the Acquired Trust. The nominees for election, who are listed
below, include seven persons who currently serve as Independent Trustees (as
defined below) of the Acquired Trust, the Acquiring Trust or as independent
trustees or directors of other no-load funds advised by Scudder Kemper and who
have no affiliation with Scudder Kemper or AARP. The nominees listed below are
also being nominated for election as Trustees of the Acquiring Trust and as
trustees or 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 below under Proposal 2, Scudder
Kemper has recommended, and the Board of Trustees has agreed, that shareholder
interests can more effectively be represented by a single board with
responsibility for overseeing substantially all of the Scudder no-load funds.
Creation of a single, consolidated board should also provide certain
administrative efficiencies and potential future cost savings for both the Funds
and Scudder Kemper.
Election of each of the listed nominees for Trustee on the Board of the
Acquired Trust 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 Acquired 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
Acquired 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 Trustees may
recommend. The following paragraphs and table set forth information concerning
the nominees and the Trustees not standing for re-election. Each nominee's or
Trustee's age is in parentheses after his or her name. Unless otherwise noted,
(i) each of the nominees and Trustees has engaged in the principal occupation
listed in the following paragraphs and table for more than five years, but 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. graduated from Yale University in 1965, where he was
elected to Phi Beta Kappa and was Chairman of the Yale Broadcasting Corporation.
He received his J.D. degree from Harvard Law School in 1968. He joined the staff
of WGBH Educational Foundation in 1970, was appointed General Manager in 1978,
and was elected President and General Manager in 1984. 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
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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 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. 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 has served as a board member of various mutual funds
advised by Scudder Kemper, including the AARP Investment Program Funds, since
1984.
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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 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
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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 the 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:
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Present Office with the Acquired Trust;
Principal Occupation or Employment
Name and Directorships
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Horace B. Deets (61)* Vice Chairperson and Trustee; Executive
Director, AARP (1989 - Present). Mr.
Deets serves on the Boards of an
additional 4 trusts whose funds are
advised by Scudder Kemper.
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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.
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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.
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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 Acquired 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 Acquired Trust, the Investment Manager
or AARP because of his or her employment by the Investment Manager or
AARP, and, in some cases, holding offices with the Acquired Trust.
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Appendix 1 hereto sets forth the number of shares of each series of the
Acquired Trust owned directly or beneficially by the Trustees of the Acquired
Trust and by the nominees for election.
Responsibilities of the Board -- Board and Committee Meetings
A fund's board is responsible for the general oversight of fund business.
The board that is proposed for shareholder voting at this Meeting is comprised
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 Acquired
Trust, a practice also favored by the SEC. The Independent Trustees have primary
responsibility for assuring that the Acquired Fund is managed in the best
interests of its shareholders.
The Trustees meet several times during the year to review the investment
performance of each fund of the Acquired Trust and other operational matters,
including policies and procedures designed to assure compliance with regulatory
and other requirements. Furthermore, the Independent Trustees review the fees
paid to 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 1999 Advisory Group Report on Best Practices
for Fund Directors (the "Advisory Group Report"). For example, the Independent
Trustees select independent legal counsel to work with them in reviewing fees,
advisory and other contracts and overseeing fund matters. The Trustees are also
assisted in this regard by the funds' independent public accountants and other
independent experts retained for this purpose. The Independent Trustees
regularly meet privately with their counsel and other advisors. In addition, the
Independent Trustees from time to time have appointed task forces and
subcommittees from their members to focus on particular matters.
The Board of the Acquired Trust has an Audit Committee and a Committee on
Independent Trustees, the responsibilities of which are described below. In
addition, the Acquired Trust has an Executive Committee, a Shareholder Service
Committee and a Valuation Committee.
Audit Committee
The Audit Committee reviews with management and the independent public
accountants for each series of the Acquired Trust, among other things, the scope
of the audit and the internal controls of each series of the Acquired Trust and
its agents, reviews and approves in advance the type of services to be rendered
by independent accountants, recommends the selection of independent accountants
for each series of the Acquired Trust to the Board, reviews the independence of
such firm and, in general, considers and reports to the Board on matters
regarding the accounting and financial reporting practices of each series of the
Acquired Trust.
As suggested by the Advisory Group Report, the Acquired Trust's Audit
Committee is comprised entirely of Independent Trustees, meets privately with
the independent accountants of each series of the Acquired 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.
-13-
<PAGE>
Committee on Independent Trustees
The Board of Trustees of the Acquired 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 Acquired Trust met five times, the Audit
Committee met two times and the Committee on Independent Trustees met two times
during calendar year 1999. Each then current Trustee attended 100% of the total
meetings of the Board and each committee on which he or she served as a regular
member that were held during that period, except Horace B. Deets, Robert J.
Myers and James H. Schulz, who attended 90%, 94% and 92%, respectively, of those
meetings. In addition to these Board and committee meetings, the Trustees of the
Acquired Trust attended various other meetings on behalf of the Acquired Trust
during the year, including meetings with their independent legal counsel and
informational meetings.
Officers
The following persons are officers of the Acquired Trust:
- --------------------------------------------------------------------------------
Present Office with the
Acquired Trust; Principal Year First
Name (Age) Occupation or Employment(1) Became an Officer(2)
- ---------- --------------------------- --------------------
- --------------------------------------------------------------------------------
Linda C. Coughlin (48) Trustee and President; 2000
Managing Director of
Scudder Kemper
- --------------------------------------------------------------------------------
William Glavin (41) Vice President; 1997
Senior Vice President of
Scudder Kemper
- --------------------------------------------------------------------------------
Ann M. McCreary (43) Vice President; Managing 1998
Director of Scudder
Kemper
- --------------------------------------------------------------------------------
James Masur (39) Vice President; Senior 1999
Vice President of Scudder
Kemper
- --------------------------------------------------------------------------------
John Millette (37) Vice President and 1999
Assistant Secretary;
Assistant Vice President
of Scudder Kemper
- --------------------------------------------------------------------------------
- ----------
(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 Acquired Trust.
-14-
<PAGE>
- --------------------------------------------------------------------------------
James W. Pasman (47) Vice President; Senior 1996
Vice President of Scudder
Kemper
- --------------------------------------------------------------------------------
Kathryn L. Quirk (47) Vice President and 1997
Secretary; Managing
Director of Scudder Kemper
- --------------------------------------------------------------------------------
John Hebble (41) Treasurer; Senior Vice 1997
President, Scudder Kemper
- --------------------------------------------------------------------------------
Compensation of Trustees and Officers
The Acquired Trust pays each Independent Trustee an annual Trustee's fee
for each series of the Acquired Trust plus specified amounts for Board and
committee meetings attended and reimburses expenses related to the business of
any series of the Acquired 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 Acquired
Trust and Scudder Kemper, or any of its other affiliates. The newly-constituted
Board may determine to change its compensation structure.
The Independent Trustees of the Acquired Trust are not entitled to
benefits under any pension or retirement plan. 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 Acquired 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 Acquired Trust's investments, pays the
compensation and certain expenses of its personnel who serve as Trustees and
officers of the Acquired Trust and receives a management fee for its services.
Several of the Acquired 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 Acquired 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 Acquired Trust.
Column (2) Aggregate compensation received by each Trustee of the Acquired
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.
-15-
<PAGE>
Compensation Table
- --------------------------------------------------------------------------------
Trustees Aggregate Compensation Total Compensation
(number of funds) from Fund Complex*
Paid to Trustee
- --------------------------------------------------------------------------------
Carole Lewis Anderson $5,078 (2 funds) $40,935 (16 funds)
- --------------------------------------------------------------------------------
Adelaide Attard $4,758 (2 funds) $38,375 (16 funds)
- --------------------------------------------------------------------------------
Robert N. Butler $4,318 (2 funds) $34,855 (16 funds)
- --------------------------------------------------------------------------------
Edgar R. Fiedler $2,198 (2 funds) $54,495 (17 funds)
- --------------------------------------------------------------------------------
Eugene P. Forrester $5,078 (2 funds) $40,935 (16 funds)
- --------------------------------------------------------------------------------
George L. Maddox, Jr. $5,078 (2 funds) $40,935 (16 funds)
- --------------------------------------------------------------------------------
Robert J. Myers $4,758 (2 funds) $38,200 (16 funds)
- --------------------------------------------------------------------------------
James H. Schulz $4,598 (2 funds) $37,095 (16 funds)
- --------------------------------------------------------------------------------
Gordon Shillinglaw $5,043 (2 funds) $44,280 (16 funds)
- --------------------------------------------------------------------------------
Jean Gleason Stromberg $5,078 (2 funds) $40,935 (16 funds)
- --------------------------------------------------------------------------------
* The Fund Complex includes two funds for which the Trustees serve without
compensation.
The Board of Trustees of AARP Tax Free Income Trust recommends that the
shareholders of AARP Tax Free General Bond Fund vote for each nominee.
PROPOSAL 2: APPROVAL OF
AGREEMENT AND PLAN OF REORGANIZATION
I. SYNOPSIS
The following is a summary of certain information contained in this Proxy
Statement/Prospectus relating to the Reorganization. This summary is qualified
by reference to the more complete information contained elsewhere in this Proxy
Statement/Prospectus, the Prospectuses and Statements of Additional Information
of the Funds, and the Plan. Shareholders should read this entire Proxy
Statement/Prospectus carefully.
Introduction
The Board of the Acquired Trust, including all of the Independent
Trustees, approved the Plan at a meeting held on February 7, 2000. Subject to
its approval by the shareholders of the Acquired Fund, the Plan provides for (a)
the transfer of all or substantially all of the assets and all of the
liabilities of the Acquired Fund to the Acquiring Fund in exchange for AARP
Shares; (b) the distribution of such shares to the shareholders of the Acquired
Fund in complete liquidation of the Acquired Fund; and (c) the abolition of the
Acquired Fund as a series of the Acquired Trust. As a result of the
Reorganization, each shareholder of the Acquired Fund will become a shareholder
of the AARP Shares and will hold, immediately after the Reorganization, AARP
Shares having an aggregate net asset value equal to the aggregate net asset
value of such shareholder's shares of the Acquired Fund on the Valuation Date.
Scudder Kemper is the investment manager of both Funds. If the
Reorganization is completed, the Acquired Fund's shareholders will continue to
enjoy many of the same shareholder privileges as they currently enjoy, such as
the ability to buy, exchange and sell shares without paying a sales commission,
access to professional service representatives, and automatic dividend
reinvestment. See "Purchase, Redemption and Exchange Information."
-16-
<PAGE>
Background of the Reorganization
The Reorganization is part of a broader restructuring program proposed by
Scudder Kemper to respond to changing industry conditions and investor needs.
Scudder Kemper seeks to offer the full lineup of the Scudder Family of no-load
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
interests 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 a focus of Scudder Kemper; and AARP will
continue to be involved with the Program and is proposed to have board
representation.
As part of this initiative, Scudder Kemper has sought ways to restructure
and streamline the management and operations of the funds it advises. Scudder
Kemper believes, and has advised the boards, that the consolidation of certain
funds advised by it would benefit fund shareholders. Scudder Kemper has,
therefore, proposed the consolidation of a number of no-load funds advised by it
that Scudder Kemper believes have similar or compatible investment objectives
and policies. In many cases, the proposed consolidations are designed to
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 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. The Reorganization is also expected
to result in lower operating expenses for Acquired Fund shareholders, as
described in "Comparison of Expenses" below.
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. (See
Proposal 1 above.)
As part of this restructuring effort, Scudder Kemper has also proposed the
adoption of an administrative fee for most of the no-load funds advised by
Scudder Kemper. Under this fee structure, in exchange for payment by the
Acquiring Fund of an administrative fee, Scudder Kemper would agree to provide
or pay for substantially all services that a fund normally requires for its
operations, other than those provided under the fund's investment management
agreement and certain other expenses. Such an administrative fee would enable
investors to determine with greater certainty the expense level that a fund will
experience, and would transfer substantially all of the risk of increased costs
to Scudder Kemper. Scudder Kemper has proposed that the Acquiring Fund implement
such an administrative fee upon the Closing, as described in "Administrative
Fee" below.
The fund consolidations, the adoption of an administrative fee and the
creation of a single board are expected to have a positive impact on Scudder
Kemper, as well. These changes are likely to result in reduced costs (and the
potential for increased profitability) for Scudder Kemper in advising or
servicing funds.
-17-
<PAGE>
Reasons for the Proposed Reorganization; Board Approval
Since receiving Scudder Kemper's proposals on September 22, 1999, the
Independent Trustees have conducted a thorough review of all aspects of the
proposed restructuring program. They have been assisted in this regard by their
independent counsel and by independent consultants with special expertise in
financial and mutual fund industry matters. In the course of discussions with
representatives of Scudder Kemper, the Independent Trustees have requested, and
Scudder Kemper has accepted, numerous changes designed to protect and enhance
the interests of shareholders. See "The Proposed Transaction - Board Approval of
the Proposed Transaction" below.
The Trustees believe that the Reorganization may provide shareholders of
the Acquired Fund with the following benefits:
o LOWER EXPENSES. If the Reorganization is approved, Acquired Fund
shareholders may benefit from lower total Fund operating expenses. Please
refer to "Comparison of Expenses" below.
o GREATER PREDICTABILITY OF EXPENSES. On or prior to Closing, the Acquiring
Fund and Scudder Kemper will enter into an administrative services
agreement pursuant to which Scudder Kemper will provide or pay others to
provide substantially all of the administrative services required by the
Acquiring Fund, and most Acquiring Fund expenses, in return for payment by
the Acquiring Fund of a single administrative fee rate. This agreement,
which has an initial three year term, will protect the Acquiring Fund's
shareholders from increases in the Acquiring Fund's expense ratio
attributed to any increases in the costs of providing these services.
o SIMILAR INVESTMENT OBJECTIVES AND POLICIES. The combined fund will
continue to seek income exempt from regular federal income tax through
investments primarily in domestic municipal bonds. Although the combined
fund will not have the Acquired Fund's current policy of investing in
insured bonds, if the Reorganization is approved, the combined fund will
modify its investment objective to also actively seek to reduce downside
risk as compared with other municipal bond funds, an objective consistent
with the risk-managed aspect of the Acquired Fund's objective. The Funds
are currently managed by the same portfolio management teams and,
notwithstanding the Acquired Fund's higher allocation of insured bonds,
have similar investment styles.
o INVESTMENT IN A LARGER FUND. Scudder Kemper has advised the Trustees that
the Acquired Fund's shareholders will benefit from an investment in a
larger fund which will likely have the ability to effect portfolio
transactions on more favorable terms and provide Scudder Kemper with
greater investment flexibility and the ability to select a larger number
of portfolio securities for the combined fund, with the attendant ability
to spread investment risks among a larger number of portfolio securities.
o TAX-FREE REORGANIZATION. Shareholders of the Acquired Fund will exchange
their shares for shares of the Acquiring Fund of equal value. It is
expected that the transaction will be tax-free for Acquired Fund
shareholders.
For these reasons, as more fully described below under "The Proposed
Transaction - Board Approval of the Proposed Transaction," the Trustees of the
Acquired Trust, including the Independent Trustees, have concluded that:
o the Reorganization is in the best interests of the Acquired Fund and its
shareholders; and
-18-
<PAGE>
o the interests of the existing shareholders of the Acquired Fund will not
be diluted as a result of the Reorganization.
Accordingly, the Trustees recommend approval of the Plan effecting the
Reorganization. If the Plan is not approved, the Acquired Fund will continue in
existence unless other action is taken by the Trustees.
Investment Objectives, Policies and Restrictions of the Funds
The investment objectives, policies and restrictions of the Acquired Fund
and the Acquiring Fund (and, consequently, the risks of investing in either
Fund) are very similar. Some differences do exist. The investment objective of
the Acquiring Fund is to seek income exempt from regular federal income tax. The
investment objective of the Acquired Fund is to produce a high level of income
free from federal income taxes while actively seeking to reduce downside risk as
compared with other insured tax-free bond mutual funds. There can be no
assurance that either Fund will achieve its investment objective. Both Funds
have the same portfolio managers and are managed in a substantially similar
manner, except that the Acquired Fund seeks to reduce downside risk. The Fund
seeks to reduce downside risk by maintaining a duration that is generally
shorter than comparable mutual funds and adjusting its duration in response to
market conditions.
The Acquiring Fund must invest 80% of its net assets in securities of
municipalities across the United States and in other securities whose income is
free from regular federal income tax. Under normal market conditions, the
Acquiring Fund expects to invest 100% of its portfolio in federally tax-exempt
municipal securities. The Acquiring Fund, while it may invest in short, medium-,
or long-term securities, has invested primarily in medium- and long-term
municipal bonds in recent years. The Acquired Fund normally invests at least 80%
of its net assets in high quality, tax-exempt municipal securities. It includes
short- and medium-term bonds in its portfolio. The Acquired Fund also may invest
up to 20% of its assets in U.S. government securities.
At least 65% of the total assets held by the Acquired Fund must be fully
insured as to the principal amount and interest by nationally recognized private
insurers. The Acquiring Fund has no such requirement. Insurance guarantees the
timely payment of principal and interest, but does not protect against a
decrease in value. Insurance also involves a cost to the Acquired Fund which
will reduce yield.
The Acquiring Fund normally invests at least 65% of its net assets in
securities rated within the top three rating categories by Moody's Investors
Service, Inc. ("Moody's") and Standard & Poor's Ratings Services, a division of
the McGraw-Hill Companies, Inc. ("S&P"), or if unrated, of equivalent quality as
determined by the Acquiring Fund's investment adviser. The Acquiring Fund may
invest up to 10% of its assets in debt securities rated lower than Baa by
Moody's or BBB by S&P, but will not purchase bonds rated below B. The Acquired
Fund, except with respect to futures and options, only purchases securities
rated within the top three rating categories by Moody's and S&P, independent of
any applicable insurance credit enhancement.
The Acquiring Fund may invest in municipal notes, including tax
anticipation notes, revenue anticipation notes and construction loan notes, and
municipal bonds, including general obligation bonds, revenue bonds, prerefunded
bonds, industrial development and pollution control bonds. The Acquiring Fund
may also invest in variable rate demand instruments, stand-by commitments,
municipal lease obligations, when-issued or forward delivery securities and
warrants to purchase debt securities, and may engage in other puts and
repurchase agreements.
-19-
<PAGE>
The Acquired Fund may invest in short-term taxable U.S. Government
securities and may engage in repurchase agreements on permitted investments or
backed by U.S. Government securities. In addition, the Acquired Fund may invest
in demand notes, tax-exempt commercial paper, financial futures contracts,
tax-exempt custodial receipts, municipal lease obligations, participation
agreements, stand-by commitments and third-party puts. The Acquired Fund seeks
to invest in bonds with "call protection." The Acquired Fund may make only
limited use of strategic transactions. The Acquiring Fund, while limited to 5%
of assets committed to strategic transactions entered into for non-hedging
purposes, may make more use of such transactions.
Each Fund may invest up to 20% of its assets in securities whose
investment income is taxable or is subject to the Alternative Minimum Tax. The
Acquired Fund has no current intention to purchase such securities.
Each Fund also has different limits regarding the percentage of assets
that may be invested in private activity bonds, which the Acquired Fund
currently does not intend to purchase. In addition, the Acquired Fund does not
invest in securities issued by tobacco-producing companies, and has a stated
goal of educating shareholders on investment topics affecting their lives. Upon
the Closing, the Acquiring Fund will modify its investment objective to provide
income exempt from regular federal income tax while actively seeking to reduce
downside risk as compared with other tax-free income funds. In addition, the
Acquiring Fund will adopt the policy of excluding investment in securities
issued by tobacco-producing companies.
The Acquiring Fund's investment restrictions, as set forth in its
Statement of Additional Information, are identical to the Acquired Fund's
investment restrictions, except that the Funds use different language to
characterize the types of instruments in which 80% of each Fund's assets must be
invested. The Acquiring Fund must have 80% of its net assets invested in
"municipal securities" during periods of normal market conditions, while the
Acquired fund must have 80% of its net assets invested in "securities that are
exempt from Federal income tax" during periods of normal market conditions.
Investment restrictions of each Fund that are fundamental policies may not
be changed without the approval of Fund shareholders. Investors should refer to
the respective Statements of Additional Information of the Acquiring Fund and
the Acquired Fund for a fuller description of each Fund's investment policies
and restrictions.
Portfolio Turnover
The average annual portfolio turnover rate for the Acquiring Fund, i.e.,
the ratio of the lesser of annual sales or purchases to the monthly average
value of the portfolio (excluding from both the numerator and the denominator
securities with maturities at the time of acquisition of one year or less), for
the fiscal year ended December 31, 1998 and for the five months ended May 31,
1999 (i.e., prior to the creation of AARP Shares) was 8.6% and 13.8%
(annualized), respectively. The average annual portfolio turnover rate for the
Acquired Fund for the fiscal year ended September 30, 1999 was 7.9%.
Performance
The following table compares the investment performance of each Fund, and
may provide some indication of the risks of investing in each Fund by showing
changes in each Fund's performance from year to year and how the Fund's average
annual return for the periods indicated compare with those of a broad measure of
market performance. Neither Fund's past performance is an indication of how the
Fund will perform in the future.
-20-
<PAGE>
Average Annual Total Return
For the Periods Ending December 31, 1999
- --------------------------------------------------------------------------------
Acquiring Fund* Acquired Fund Benchmark Index**
--------------- ------------- -----------------
- --------------------------------------------------------------------------------
Past year (1.96%) (2.00%) (2.06%)
- --------------------------------------------------------------------------------
Past 5 years 6.78% 6.27% 6.91%
- --------------------------------------------------------------------------------
Past 10 years 6.80% 6.38% 6.89%
- --------------------------------------------------------------------------------
* AARP Shares were not offered during the periods covered. Performance shown is
for shares of the Acquiring Fund existing during the periods covered.
**Each Fund's benchmark index is the Lehman Brothers Municipal Bond Index, a
market value-weighted measure of municipal bonds issued across the United
States. Index issues have a credit rating of at least Baa and a maturity of at
least two years. Index returns are calculated monthly, assume reinvestment of
dividends and, unlike Fund returns, do not reflect any fees or expenses.
For management's discussion of the Acquiring Fund's performance for the
fiscal year ended May 31, 1999 (prior to the creation of AARP Shares), see
Exhibit B attached hereto.
Investment Manager; Fees and Expenses
Each Fund retains the investment management firm of Scudder Kemper,
pursuant to separate contracts, to manage its daily investment and business
affairs, subject to the policies established by the Fund's Trustees.
Shareholders pay no direct charges or fees for investment management or other
services. Scudder Kemper is a Delaware corporation located at Two International
Place, Boston, Massachusetts 02110-4103.
The Investment Manager receives a fee for its services pursuant to its
investment management agreement with the Acquiring Fund. For these services, the
Acquiring Fund pays the Investment Manager a fee at an annual rate of 0.55% of
the first $200 million of average daily net assets, 0.50% of the next $500
million and 0.475% on average daily net assets in excess of $700 million. The
fee is graduated so that increases in the Acquiring Fund's net assets may result
in a lower annual fee rate and decreases in its net assets may result in a
higher annual fee rate. As of May 31, 1999, the Acquiring Fund had total net
assets of $713,401,169. For the fiscal year ended December 31, 1998 and for the
five months ended May 31, 1999, the Acquiring Fund paid the Investment Manager a
fee of 0.51% and 0.51% (annualized), respectively, of average daily net assets.
Scudder Kemper has proposed a new investment management agreement for the
Acquiring Fund. The proposed new investment management agreement includes a new
fee rate, which is, in all cases, effectively the same as or lower than the
current rate applicable to the Acquiring Fund. The proposed new fee rate is
0.49% of the first $2 billion of average daily net assets, 0.465% on the next $1
billion, and 0.44% on average daily net assets in excess of $3 billion. Each of
the effectiveness of the new investment management agreement for the Acquiring
Fund and the Closing is contingent upon the other.
-21-
<PAGE>
The Investment Manager receives a fee pursuant to the investment
management agreement as compensation for its services on behalf of the Acquired
Fund. Pursuant to the Acquired Fund's investment management agreement, the fee
payable to Scudder Kemper is calculated using a formula based in part on the
combined net assets of all AARP Funds, except for the two series of AARP Managed
Investment Portfolios Trust. The Acquired Fund currently pays the Investment
Manager a fee at an annual rate of 0.47% of average daily net assets. The fee
for the Acquiring Fund is calculated in a different manner than is currently
used for the Acquired Fund. Unlike the fee for the Acquired Fund, the Acquiring
Fund's fee will not go up or down based on the net assets of other funds managed
by the Investment Manager, but it will go up or down based on the net assets of
the Acquiring Fund. As of September 30, 1999, the Acquired Fund had total net
assets of $1,591,979,569. For the fiscal year ended September 30, 1999, the
Acquired Fund paid the Investment Manager a fee of 0.47% of average daily net
assets. The Investment Manager pays a portion of its management fee from the
Acquired Fund to AARP Financial Services Corporation ("AFSC") in return for
advice and other services relating to AARP Fund investment by AARP members. The
fee paid to AFSC is calculated on a daily basis as a percentage of the combined
net assets of all AARP Funds, except for the two series of AARP Managed
Investment Portfolios Trust, and decreases with the size of the AARP Investment
Program. The fee rate is 0.07% for the first $6 billion, 0.06% for the next $10
billion and 0.05% thereafter.
Administrative Fee
On or prior to the Closing, the Acquiring Fund will have entered into an
administrative services agreement with Scudder Kemper (the "Administration
Agreement"), pursuant to which Scudder Kemper will provide or pay others to
provide substantially all of the administrative services required by the
Acquiring Fund (other than those provided by Scudder Kemper under its investment
management agreement with the Fund, as described above) in exchange for the
payment by the Acquiring Fund of an administrative services fee (the
"Administrative Fee") of 0.15% of average daily net assets. One effect of this
arrangement is to make the Acquiring Fund's future expense ratio more
predictable. The details of the proposal (including expenses that are not
covered) are set out below.
Various third-party service providers (the "Service Providers"), some of
which are affiliated with Scudder Kemper, provide certain services to the
Acquiring Fund pursuant to separate agreements with the Fund, subject to
oversight and approval by the Acquiring Trust's trustees. Scudder Fund
Accounting Corporation, a subsidiary of Scudder Kemper, computes net asset value
for the Acquiring Fund and maintains its accounting records. Scudder Service
Corporation, also a subsidiary of Scudder Kemper, is the transfer, shareholder
servicing and dividend-paying agent for the shares of the Acquiring Fund.
Scudder Trust Company, an affiliate of Scudder Kemper, provides subaccounting
and recordkeeping services for shareholder accounts in certain retirement and
employee benefit plans. As custodian, State Street Bank and Trust Company holds
the portfolio securities of the Acquiring Fund, pursuant to a custodian
agreement. PricewaterhouseCoopers LLP audits the financial statements of the
Acquiring Fund and provides other audit, tax, and related services. Willkie Farr
& Gallagher acts as general counsel for the Acquiring Fund. In addition to the
fees it pays under its current investment management agreement with Scudder
Kemper, the Acquiring Fund pays the fees and expenses associated with these
service arrangements, as well as the Acquiring Fund's insurance, registration,
printing, postage and other costs.
Once the Administration Agreement becomes effective, each Service Provider
will continue to provide the services that it currently provides to the
Acquiring Fund, as described above, under the current arrangements, except that
Scudder Kemper will pay these entities for the provision of their services to
the Acquiring Fund and will pay most other Fund expenses, including insurance,
registration, printing and postage fees. In return, the Acquiring Fund will pay
Scudder Kemper the Administrative Fee.
-22-
<PAGE>
The proposed Administration Agreement will have an initial term of three
years, subject to earlier termination by the Acquiring Trust's trustees. The fee
payable by the Acquiring Fund to Scudder Kemper pursuant to the Administration
Agreement would be reduced by the amount of any credit received from the
Acquiring Fund's custodian for cash balances.
Certain expenses of the Acquiring Fund would not be borne by Scudder
Kemper under the Administration Agreement, such as taxes, brokerage, interest
and extraordinary expenses; and the fees and expenses of the Independent
Trustees (including the fees and expenses of their independent counsel). In
addition, the Acquiring Fund would continue to pay the fees required by its
investment management agreement with Scudder Kemper.
Comparison of Expenses
The tables and examples below are designed to assist you in understanding
the various costs and expenses that you will bear directly or indirectly as an
investor in the Class P Shares, and comparing these with the expenses of the
Acquired Fund. As indicated below, it is expected that the total expense ratio
of the Acquiring Fund following the Reorganization will be lower than the
current expense ratio of the Acquired Fund. Unless otherwise noted, the
information is based on each Fund's expenses (and average daily net assets)
during the twelve months ended October 31, 1999 and on a pro forma basis as of
that date and for the period then ended, giving effect to the Reorganization.
Information in the tables and examples relating to the Acquiring Fund relates to
the Acquiring Fund as a whole prior to the creation of the AARP Shares. Pro
Forma information in the tables and examples relates to the AARP Shares and the
Class S shares class of the Acquiring Fund.
Shareholder Transaction Expenses
- --------------------------------------------------------------------------------
Pro Forma*
Acquiring Fund Acquired Fund (Combined)
- --------------------------------------------------------------------------------
Maximum sales charge
(load) imposed on
purchases (as a percentage None None None
of offering price)
- --------------------------------------------------------------------------------
Maximum deferred sales
charge (load) (as a
percentage of purchase
price or redemption None None None
proceeds)
- --------------------------------------------------------------------------------
Maximum deferred sales
charge (load) imposed on
reinvested dividends None None None
- --------------------------------------------------------------------------------
Redemption fee (as a
percentage of amount
redeemed, if applicable)+ None None None
- --------------------------------------------------------------------------------
-23-
<PAGE>
Annual Fund Operating Expenses (Unaudited)
- --------------------------------------------------------------------------------
Acquiring Acquired Pro Forma*@
Fund Fund (Combined)
--------- -------- -----------
- --------------------------------------------------------------------------------
Management fees 0.51% 0.47% 0.49%
- --------------------------------------------------------------------------------
Distribution and/or service
(12b-1) fees None None None
- --------------------------------------------------------------------------------
Other expenses 0.16% 0.21% 0.15%
- --------------------------------------------------------------------------------
Total annual Fund operating
expenses 0.67% 0.68% 0.64%
- --------------------------------------------------------------------------------
+ There is a $5 wire service fee for receiving redemption proceeds via wire.
*Pro Forma expenses reflect the implementation of the Administrative Fee and of
a new investment management fee for the Acquiring Fund to be effective upon the
Reorganization.
@It is being proposed to shareholders of Scudder Ohio Tax Free Fund, another
fund advised by Scudder Kemper, that the Acquiring Fund acquire the assets of
that other fund. Each of the closing of this other acquisition and the Closing
is contingent upon the other. Pro Forma expenses reflect the acquisition by the
Acquiring Fund of both this other fund and the Acquired Fund.
In evaluating the Proposals, the Independent Trustees focused their
consideration on the Acquiring Fund's and the Acquired Fund's estimated expense
ratios calculated utilizing Fund net assets at December 31, 1999 (rather than
average daily net assets for a full year, as used in the table above), the
number of shareholder accounts at that date, and other relevant factors. This
calculation resulted in an estimated expense ratio of 0.64% for the Acquiring
Fund and 0.71% for the Acquired Fund.
Examples (Unaudited)
Based on the costs above, the following examples are intended to help you
compare the cost of investing in the Funds with the cost of investing in other
mutual funds. The examples assume that you invest $10,000 in each Fund for the
time periods indicated and then redeem all of your shares at the end of those
periods. The examples also assume that your investment has a 5% return each year
and that each Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions, your costs would be as
follows:
-24-
<PAGE>
- --------------------------------------------------------------------------------
Pro Forma
Year Acquiring Fund Acquired Fund (Combined)*@
- ---- -------------- ------------- ------------
- --------------------------------------------------------------------------------
1st $ 68 $ 69 $ 65
- --------------------------------------------------------------------------------
3rd $214 $218 $205
- --------------------------------------------------------------------------------
5th $373 $379 $357
- --------------------------------------------------------------------------------
10th $835 $847 $798
- --------------------------------------------------------------------------------
* Pro Forma expenses reflect the implementation of the Administrative Fee and of
a new investment management fee for the Acquiring Fund to be effective upon the
Reorganization.
@ It is being proposed to shareholders of Scudder Ohio Tax Free Fund, another
fund advised by Scudder Kemper, that the Acquiring Fund acquire the assets of
that other fund. Each of the closing of this other acquisition and the Closing
is contingent upon the other. Pro Forma expenses reflect the acquisition by the
Acquiring Fund of both this other fund and the Acquired Fund.
Financial Highlights
The financial highlights table for the Acquiring Fund prior to the
creation of the AARP Shares, which is intended to help you understand the
Acquiring Fund's financial performance for the past five years, is included in
the Acquiring Fund's prospectus dated October 1, 1999, which is included
herewith and incorporated herein by reference.
Distribution of Shares
Scudder Investor Services, Inc. ("SIS"), Two International Place, Boston,
Massachusetts 02110, a subsidiary of the Investment Manager, is the principal
underwriter of each Fund. SIS charges no direct fees in connection with the
distribution of shares of the Funds. Following the Reorganization, Acquiring
Fund shareholders will continue to be able to purchase shares of the funds in
the Scudder Family of Funds on a no-load basis.
Purchase, Redemption and Exchange Information
The purchase, redemption and exchange procedures and privileges of the
Acquired Fund are identical to those that will be in place for the AARP Shares,
except that Acquired Fund shareholders may exchange Acquired Fund shares only
into AARP Funds, while AARP Shares shareholders will be able to exchange AARP
Shares into AARP Shares of any fund within the Scudder Family of Funds on a
no-load basis.
The minimum balance for non-retirement accounts investing in the AARP
Shares will be $1,000, which is lower than the minimum balance for
non-retirement accounts investing in the Acquired Fund. The minimum balance for
Individual Retirement Accounts ("IRAs") investing in AARP Shares will be $500,
as compared to $250 for the Acquired Fund. However, Acquired Fund IRA
shareholders receiving AARP Shares as a result of the Reorganization will only
be required to meet the Acquired Fund's $250
-25-
<PAGE>
minimum balance requirement for IRAs. AARP Share shareholders will not currently
be charged an annual fee for accounts that fall below the $1,000 minimum balance
nor will such sub-minimum accounts currently be subject to involuntary
redemption by the Acquiring Fund.
Dividends and other Distributions
Each of the Funds intends to declare dividends from its net investment
income daily and distribute them monthly. Each Fund intends to distribute net
realized capital gains after utilization of capital loss carryforwards, if any,
in November or December of each year. An additional distribution may be made if
necessary. Dividends and distributions of each Fund will be invested in
additional shares of the Fund at net asset value and credited to the
shareholder's account on the payment date or, at the shareholder's election,
paid in cash.
If the Plan is approved by the Acquired Fund's shareholders, the Acquired
Fund will pay its shareholders a distribution of all undistributed net
investment income and undistributed realized net capital gains immediately prior
to the Closing.
Tax Consequences
As a condition to the Reorganization, the Acquiring Fund and the Acquired
Fund will have received an opinion of Willkie Farr & Gallagher in connection
with the Reorganization, to the effect that, based upon certain facts,
assumptions and representations, the Reorganization will constitute a tax-free
reorganization within the meaning of section 368(a)(1) of the Internal Revenue
Code of 1986, as amended (the "Code"). If the Reorganization constitutes a
tax-free reorganization, no gain or loss will be recognized by the Acquired Fund
or its shareholders as a direct result of the Reorganization. See "The Proposed
Transaction - Federal Income Tax Consequences."
II. PRINCIPAL RISK FACTORS
Because of their similar investment objectives, policies and strategies,
the principal risks presented by the Acquiring Fund are similar to those
presented by the Acquired Fund. The main risks applicable to each Fund include,
among others, management risk, risk associated with interest rates, and risk
associated with credit quality. Management risk refers to the fact that
securities selected by Scudder Kemper on behalf of a Fund might not perform as
well as the securities held by other mutual funds. Risk associated with interest
rates refers to the link between interest rates and debt security performance. A
rise in interest rates generally means a fall in bond prices and, therefore, in
the value of an investment in a Fund. An increase in a Fund's dollar-weighted
average maturity could make it more sensitive to this risk. Risk associated with
credit quality refers to the fact that, if a portfolio security declines in
credit quality or goes into default, it could hurt the Fund's performance. As
stated earlier, at least 65% of the total assets held by the Acquired Fund must
be fully insured as to the principal amount and interest by nationally
recognized private insurers. Generally, insured bonds receive a higher credit
rating than uninsured bonds; therefore, the greater the percentage of insured
holdings, generally the higher the Fund's credit quality and the less its
exposure to credit quality risk. The credit quality of a bond has an impact on
its price. In most cases, the higher the credit quality of a bond, the lower its
yield will be; consequently, the price of an insured bond may be higher. Because
the Acquiring Fund does not seek to reduce downside risk as compared with other
insured tax-free bond mutual funds it may present more significant risks than
the Acquired Fund in a weak market.
-26-
<PAGE>
For a further discussion of the investment techniques and risk factors
applicable to the Funds, see "Investment Objectives, Policies and Restrictions
of the Funds" above, and the Prospectuses and Statements of Additional
Information for the Funds, which are incorporated by reference herein.
III. THE PROPOSED TRANSACTION
Description of the Plan
As stated above, the Plan provides for the transfer of all or
substantially all of the assets of the Acquired Fund to the Acquiring Fund in
exchange for that number of full and fractional AARP Shares having an aggregate
net asset value equal to the aggregate net asset value of the Acquired Fund as
of the close of business on the Valuation Date. The Acquiring Fund will assume
all of the liabilities of the Acquired Fund. The Acquired Fund will distribute
the AARP Shares received in the exchange to the shareholders of the Acquired
Fund in complete liquidation of the Acquired Fund. The Acquired Fund will be
abolished as a series of the Acquired Trust.
Upon completion of the Reorganization, each shareholder of the Acquired
Fund will own that number of full and fractional AARP Shares having an aggregate
net asset value equal to the aggregate net asset value of such shareholder's
shares held in the Acquired Fund immediately as of the close of business on the
Valuation Date. Such shares will be held in an account with the Acquiring Trust
identical in all material respects to the account currently maintained by the
Acquired Trust for such shareholder, except as noted above. In the interest of
economy and convenience, AARP Shares issued to the Acquired Fund's shareholders
will be in uncertificated form.
Until the Closing, shareholders of the Acquired Fund will continue to be
able to redeem their shares at the net asset value next determined after receipt
by the Acquired Fund's transfer agent of a redemption request in proper form.
Redemption requests received by the transfer agent after the Closing will be
treated as requests received for the redemption of AARP Shares received by the
shareholder in connection with the Reorganization.
The obligations of each Trust on behalf of the Acquired Fund and the
Acquiring Fund, respectively, under the Plan are subject to various conditions,
as stated therein. Among other things, the Plan requires that all filings be
made with, and all authority be received from, the SEC and state securities
commissions as may be necessary in the opinion of counsel to permit the parties
to carry out the transactions contemplated by the Plan. The Acquired Fund and
the Acquiring Fund are in the process of making the necessary filings. To
provide against unforeseen events, the Plan may be terminated or amended at any
time prior to the Closing by action of the Trustees of either Trust,
notwithstanding the approval of the Plan by the shareholders of the Acquired
Fund. However, no amendment may be made that materially adversely affects the
interests of the shareholders of the Acquired Fund without obtaining the
approval of the Acquired Fund's shareholders. The Acquired Fund and the
Acquiring Fund may at any time waive compliance with certain of the covenants
and conditions contained in the Plan. For a complete description of the terms
and conditions of the Reorganization, see the Plan at Exhibit A.
Each Fund will pay its own allocable share of expenses associated with the
Reorganization, except that Scudder Kemper will bear any such expenses in excess
of $25,202 for the Acquiring Fund and $748,040 for the Acquired Fund
(approximately $.0003 and $.0086 per share, respectively, based on December 31,
1999 net assets for each Fund).
-27-
<PAGE>
Board Approval of the Proposed Transaction
Scudder Kemper first proposed the Reorganization to the Independent
Trustees of the Acquired Fund at a meeting held on September 22, 1999. The
Reorganization 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
advised by it that are currently offered to retail investors, see "Synopsis -
Background of the Reorganization" above. This initiative 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 an administration agreement for each fund,
covering, for a single fee rate, substantially all services required
for the operation of the fund (other than those provided under the
fund's investment management agreement) and most expenses; and
(iv) The consolidation of the separate boards currently responsible for
overseeing several groups of no-load funds managed by Scudder Kemper
into a single board.
The Independent Trustees of the Acquired Fund reviewed the potential
implications of these proposals for the Acquired Fund as well as the various
other funds for which they serve as trustees or 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 a number of occasions (including committee meetings) to review and discuss
these proposals, both among themselves and with representatives of Scudder
Kemper. On a number of occasions, these meetings included representatives of the
independent trustees or directors of other funds affected by these proposals. In
the course of their review, the Independent Trustees requested and received
substantial additional information and suggested numerous changes to Scudder
Kemper's proposals, many of which were accepted.
Following the conclusion of this process, the Independent Trustees of the
Acquired Fund, 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 of the Acquired Fund, including the
Independent Trustees of the Acquired Fund, approved the terms of the
Reorganization and certain related proposals. At the February 7, 2000 meeting,
the Independent Trustees also agreed to recommend that the Reorganization be
approved by the Acquired Fund's shareholders.
In determining to recommend that the shareholders of the Acquired Fund
approve the Reorganization, the Board considered, among other factors: (a) the
fees and expense ratios of the Funds, including comparisons between the
expenses of the Acquired Fund and the estimated operating expenses of the
Acquiring Fund, and between the estimated operating expenses of the Acquiring
Fund and other mutual funds with similar investment objectives; (b) the terms
and conditions of the Reorganization and whether the Reorganization would
result in the dilution of shareholder interests; (c) the compatibility of the
Acquired Fund's and the Acquiring Fund's investment objectives, policies,
restrictions and portfolios; (d) the
-28-
<PAGE>
agreement by Scudder Kemper to provide services to the Acquiring Fund for a
fixed fee rate under the Administration Agreement with an initial three year
term; (e) the service features available to shareholders of the Acquired Fund
and the Acquiring Fund; (f) the costs to be borne by the Acquired Fund, the
Acquiring Fund and Scudder Kemper as a result of the Reorganization; (g)
prospects for the Acquiring Fund to attract additional assets; (h) the tax
consequences of the Reorganization on the Acquired Fund, the Acquiring Fund and
their respective shareholders; and (i) the investment performance of the
Acquired Fund and the Acquiring Fund.
The Trustees also gave extensive consideration to possible economies of
scale that might be realized by Scudder Kemper in connection with the
Reorganization, as well as the other fund combinations included in Scudder
Kemper's restructuring proposal. The Trustees concluded that these economies
were appropriately reflected in the fee and expense arrangements of the
Acquiring Fund, as proposed to be revised upon completion of the Reorganization.
In particular, the Trustees considered the benefits to shareholders resulting
from locking in the rate of the Acquiring Fund's Administrative Fee for an
initial three-year period. Because the Acquiring Fund will pay only its stated
Administrative Fee rate for such services and expenses regardless of changes in
actual costs, the Acquiring Fund's shareholders will be protected from increases
in the Acquiring Fund's expense ratio attributable to increases in such actual
costs. The Board also considered the protection this would afford shareholders
if the Acquiring Fund's net assets declined as a result of market fluctuations
or net redemptions.
The Trustees also considered the impact of the Reorganization on the total
expenses to be borne by shareholders of the Acquired Fund. As noted above under
"Comparison of Expenses," the pro forma expense ratio (reflecting the
Administrative Fee) for the combined Fund following the Reorganization is lower
than the current expense ratio for the Acquired Fund. The Board also considered
that the Reorganization would permit the shareholders of the Acquired Fund to
pursue substantially similar investment goals in a larger fund. In this regard,
Scudder Kemper advised the Trustees of the Acquired Fund that the Acquired
Fund's shareholders will benefit from being in a larger fund which will likely
have the ability to effect portfolio transactions on more favorable terms and
provide Scudder Kemper with greater investment flexibility and the ability to
select a larger number of portfolio securities for the combined Fund, with the
ability to spread investment risks among a larger number of portfolio
securities.
Finally, the Trustees concluded that the shareholders of the Acquired Fund
would be better served by having their interests represented by a single board
of trustees with responsibility for overseeing substantially all of the funds to
be marketed as a "family of funds" through Scudder's no-load distribution
channels. Accordingly, the Trustees agreed to recommend the election of a new
consolidated board comprised of representatives of each of the various boards
currently serving as Trustees of these funds.
Based on all of the foregoing, the Board concluded that the Acquired
Fund's participation in the Reorganization would be in the best interests of the
Acquired Fund and would not dilute the interests of the Acquired Fund's
shareholders. The Board of Trustees, including the Independent Trustees,
recommends that shareholders of the Acquired Fund approve the Reorganization.
Description of the Securities to be Issued
The Acquiring Fund is a series of the Acquiring Trust, a Massachusetts
business trust established under a Declaration of Trust dated September 24,
1976, as amended. The Acquiring Trust's authorized capital consists of an
unlimited number of shares of beneficial interest, par value $0.01 per share.
The Trustees of the Acquiring Trust are authorized to divide the Acquiring
Trust's shares into separate series. The Acquiring Fund is one of two series of
the Acquiring Trust that the Board has created to date. The Trustees of the
Acquiring Trust are also authorized to further divide the shares of the series
of the
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<PAGE>
Acquiring Trust into classes. The Trustees of the Acquiring Trust have
authorized the division of the Acquiring Fund into two classes, Class S shares
and AARP Shares. It is anticipated that this division will occur prior to the
Closing and that shares of the Acquiring Fund existing at that time will be
redesignated as Class S shares of the Acquiring Fund. If AARP Shares are not
created prior to the Closing, then the Reorganization will not be consummated.
Although shareholders of different classes of a series have an interest in the
same portfolio of assets, shareholders of different classes may bear different
expenses in connection with different methods of distribution.
Each share of each class of the Acquiring Fund represents an interest in
the Acquiring Fund that is equal to and proportionate with each other share of
that class of the Acquiring Fund. Acquiring Fund shareholders are entitled to
one vote per share (and a proportionate fractional vote per each fractional
share) held on matters on which they are entitled to vote. The Acquiring Trust
is not required to hold shareholder meetings annually, although shareholder
meetings may be called for purposes such as electing or removing Trustees,
changing fundamental policies or approving an investment management contract. In
the event that shareholders of the Acquiring Trust wish to communicate with
other shareholders concerning the removal of any Trustee, such shareholders
shall be assisted in communicating with other shareholders for the purpose of
obtaining signatures to request a meeting of shareholders, all in the manner
provided in Section 16(c) of the 1940 Act as if Section 16(c) were applicable.
In the areas of shareholder voting and the powers and conduct of the
Trustees, there are no material differences between the rights of shareholders
of the Acquired Fund and the rights of shareholders of the Acquiring Fund.
Federal Income Tax Consequences
The Reorganization is conditioned upon the receipt by the Acquired Trust,
on behalf of the Acquired Fund, and the Acquiring Trust, on behalf of the
Acquiring Fund, of an opinion from Willkie Farr & Gallagher, substantially to
the effect that, based upon certain facts, assumptions and representations of
the parties, for federal income tax purposes: (i) the transfer to the Acquiring
Fund of all or substantially all of the assets of the Acquired Fund in exchange
solely for AARP Shares and the assumption by the Acquiring Fund of all of the
liabilities of the Acquired Fund, followed by the distribution of such shares to
the Acquired Fund's shareholders in exchange for their shares of the Acquired
Fund in complete liquidation of the Acquired Fund, will constitute a
"reorganization" within the meaning of Section 368(a)(1) of the Code, and the
Acquiring Fund and the Acquired Fund will each be "a party to a reorganization"
within the meaning of Section 368(b) of the Code; (ii) no gain or loss will be
recognized by the Acquired Fund upon the transfer of all or substantially all of
its assets to the Acquiring Fund in exchange solely for AARP Shares and the
assumption by the Acquiring Fund of all of the liabilities of the Acquired Fund
or upon the distribution of the AARP Shares to the Acquired Fund shareholders in
exchange for their shares of the Acquired Fund; (iii) the basis of the assets of
the Acquired Fund in the hands of the Acquiring Fund will be the same as the
basis of such assets of the Acquired Fund immediately prior to the transfer;
(iv) the holding period of the assets of the Acquired Fund in the hands of the
Acquiring Fund will include the period during which such assets were held by the
Acquired Fund; (v) no gain or loss will be recognized by the Acquiring Fund upon
the receipt of the assets of the Acquired Fund in exchange for AARP Shares and
the assumption by the Acquiring Fund of all of the liabilities of the Acquired
Fund; (vi) no gain or loss will be recognized by the shareholders of the
Acquired Fund upon the receipt of the AARP Shares solely in exchange for their
shares of the Acquired Fund as part of the transaction; (vii) the basis of the
AARP Shares received by the shareholders of the Acquired Fund will be the same
as the basis of the shares of the Acquired Fund exchanged therefor; and (viii)
the holding period of AARP Shares received by the shareholders of the Acquired
Fund will
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<PAGE>
include the holding period during which the shares of the Acquired Fund
exchanged therefor were held, provided that at the time of the exchange the
shares of the Acquired Fund were held as capital assets in the hands of the
shareholders of the Acquired Fund.
After the Closing, the Acquiring Fund may dispose of certain securities
received by it from the Acquired Fund in connection with the Reorganization,
which may result in transaction costs and capital gains.
While the Acquired Trust is not aware of any adverse state or local tax
consequences of the proposed Reorganization, it has not requested any ruling or
opinion with respect to such consequences and shareholders may wish to consult
their own tax adviser with respect to such matters.
Capitalization
The following table shows on an unaudited basis the capitalization of each
Fund and Scudder Ohio Tax Free Fund@ as of October 31, 1999 (i.e., prior to the
creation of AARP Shares), and, on a pro forma basis, as of that date, giving
effect to the Reorganization:
<TABLE>
<CAPTION>
Scudder Ohio Pro Forma Pro Forma
Acquiring Fund Acquired Fund Tax Free Fund Adjustments Combined(1)
-------------- ------------- ------------- ----------- -----------
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value
- ---------------------------------------------------------------------------------------------------------------------------------
Class S Shares $706,598,558 $91,883,566 (40,584)(3) $798,441,540
- ---------------------------------------------------------------------------------------------------------------------------------
AARP Shares $1,556,333,468 (748,040)(4) $1,555,585,428
--------------
- ---------------------------------------------------------------------------------------------------------------------------------
Total Net Assets $2,354,026,968(2)
-----------------
- ---------------------------------------------------------------------------------------------------------------------------------
Shares
Outstanding
- ---------------------------------------------------------------------------------------------------------------------------------
Class S Shares 82,235,127 7,220,299 3,474,484 92,929,910
- ---------------------------------------------------------------------------------------------------------------------------------
AARP Shares 89,098,171 91,994,428 181,092,599
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value
per Share
- ---------------------------------------------------------------------------------------------------------------------------------
Class S Shares $8.59 $12.73 $8.59
- ---------------------------------------------------------------------------------------------------------------------------------
AARP Shares $17.47 $8.59
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
@ It is being proposed to shareholders of Scudder Ohio Tax Free Fund, another
fund advised by Scudder Kemper, that the Acquiring Fund acquire the assets of
that other fund. Each of the closing of this other acquisition and the Closing
is contingent upon the other. Pro Forma capitalization reflects the acquisition
by the Acquiring Fund of both this other fund and the Acquired Fund.
(1) Assumes the Reorganization had been consummated on October 31, 1999, and is
for information purposes only. No assurance can be given as to how many shares
of the Acquiring Fund will be received by the shareholders of the Acquired Fund
and Scudder Ohio Tax Free Fund on the date the Reorganization takes place, and
the foregoing should not be relied upon to reflect the number of shares of the
Acquiring Fund that actually will be received on or after such date.
(2) Pro forma combined net assets do not reflect expense reductions that would
result from the implementation of the Administrative Fee and of a new investment
management fee for the Acquiring Fund.
-31-
<PAGE>
(3) Represents one-time proxy, legal, accounting and other costs of the
Reorganization of $25,202 and $15,382 to be borne by the Acquiring Fund and
Scudder Ohio Tax Free Fund, respectively.
(4) Represents one-time proxy, legal, accounting and other costs of the
Reorganization of $748,040 to be borne by the Acquired Fund.
The Board of Trustees of AARP Tax Free Income Trust recommends that the
shareholders of AARP Insured Tax Free General Bond Fund vote in favor of this
Proposal 2.
PROPOSAL 3: RATIFICATION OR REJECTION OF THE SELECTION
OF INDEPENDENT ACCOUNTANTS
The Board of the Acquired Trust, including a majority of the Independent
Trustees, has selected PricewaterhouseCoopers LLP to act as independent
accountants of the Acquired Fund for the Acquired 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 Board of Trustees of AARP Tax Free Income Trust recommends that the
shareholders of AARP Insured Tax Free General Bond Fund vote in favor of this
Proposal 3.
ADDITIONAL INFORMATION
Information about the Funds
Additional information about the Trusts, the Funds and the Reorganization
has been filed with the SEC and may be obtained without charge by writing to
Scudder Investor Services, Inc., Two International Place, Boston, MA 02110-4103,
or by calling 1-800-225-2470.
The Trusts are subject to the informational requirements of the Securities
Exchange Act of 1934 and the 1940 Act, and in accordance therewith, file
reports, proxy material and other information about each of the Funds with the
Securities and Exchange Commission. Such reports, proxy material and other
information filed by the Acquiring Trust, and those filed by the Acquired Trust,
can be inspected and copied at the Public Reference Room maintained by the
Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 and at the following SEC Regional Offices: Northeast Regional Office, 7
World Trade Center, Suite 1300, New York, NY 10048; Southeast Regional Office,
1401 Brickell Avenue, Suite 200, Miami, FL 33131; Midwest Regional Office,
Citicorp Center, 500 W. Madison Street, Chicago, IL, 60661-2511; Central
Regional Office, 1801 California Street, Suite 4800, Denver, CO 80202-2648; and
Pacific Regional Office, 5670 Wilshire Boulevard, 11th Floor, Los Angeles, CA
90036-3648. Copies of such material can also be obtained from the Public
Reference Branch, Office of Consumer Affairs and Information Services,
Securities and Exchange Commission 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. The SEC maintains an Internet World Wide Web site (at
http://www.sec.gov) which contains the Statements of Additional Information for
the Acquiring Trust and the Acquired Trust, materials that are incorporated by
reference into the prospectuses and Statements of Additional Information, and
other information about the Acquiring Trust, the Acquired Trust and the Funds.
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<PAGE>
Interests of Certain Persons
The Investment Manager has a financial interest in the Reorganization,
arising from the fact that its fee under its investment management agreement
with the Acquiring Fund will increase as the amount of the Acquiring Fund's
assets increases. The amount of those assets will increase by virtue of the
Reorganization. See "Synopsis - Fees and Expenses."
General
Proxy Solicitation. Proxy solicitation costs will be considered
Reorganization expenses and will be allocated accordingly. In addition to
solicitation by mail, certain officers and representatives of the Acquired
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/Prospectus, the Notice of Special 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 Acquired Fund shareholder giving a
proxy has the power to revoke it by mail (addressed to the Secretary at the
principal executive office of the Acquired Fund, c/o Scudder Kemper Investments,
Inc., at the address for the Acquired Fund shown at the beginning of this Proxy
Statement/Prospectus) or in person at the Meeting, by executing a superseding
proxy or by submitting a notice of revocation to the Acquired 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 any shareholders' meeting, in person or by proxy, of the
holders of one-third of the shares of the Acquired Trust (for a trust-wide vote)
or the Acquired Fund (for a fund-wide vote) entitled to be cast shall be
necessary and sufficient to constitute a quorum for the transaction of business.
In the event that the necessary quorum to transact business or the vote required
to approve any Proposal is not obtained at the Meeting, the persons named as
proxies may propose one or more adjournments of the Meeting in accordance with
applicable law to permit further solicitation of proxies with respect to that
Proposal. Any such adjournment as to a matter will require the affirmative vote
of the holders of a majority of the Acquired Trust's (for a trust-wide vote) or
the Acquired Fund's (for a fund-wide vote) shares present in person or by proxy
at the Meeting. The persons named as proxies will vote in favor of any such
adjournment those proxies which they are entitled to vote in favor of that
Proposal and will vote against any such adjournment those proxies to be voted
against that Proposal. For purposes of determining the presence of a quorum for
transacting business at 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 Acquired 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 Acquired Trust voting at the Meeting. Approval of Proposal 2
requires the affirmative vote of the holders of a majority of the Acquired
Fund's shares outstanding and entitled to vote thereon. Approval of Proposal 3
requires the affirmative vote of a majority of the shares of the Acquired Fund
voting at the Meeting. Abstentions and broker non-votes will not be counted in
favor of, but will have no other effect on, Proposal 1, and will have the effect
of a "no" vote on Proposals 2 and 3.
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Holders of record of the shares of the Acquired Fund at the close of
business on April 17, 2000 (the "Record Date") will be entitled to one vote per
share on all business of the Meeting. As of [date], there were ____________
shares of the Acquired Fund outstanding.
As of [date], the officers and Trustees of the Acquiring Trust as a group
owned beneficially [less than 1%][__%] of the outstanding shares of the
Acquiring Fund. [Appendix 2 hereto sets forth the beneficial owners of at least
5% of each Fund's shares.] To the best of each Trust's knowledge, as of
_______________, no person owned beneficially more than 5% of either Fund's
outstanding shares[, except as stated on Appendix 2.]
Shareholder Communications Corporation ("SCC") has been engaged to assist
in the solicitation of proxies, at an estimated cost of $35,159. As the Meeting
date approaches, certain shareholders of the Acquired 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
Acquired 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.
Shareholder Proposals for Subsequent Meetings. 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., Two
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International Place, Boston, Massachusetts 02110, 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 the Acquired 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
[name]
Secretary
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INDEX OF EXHIBITS
EXHIBIT A: AGREEMENT AND PLAN OF REORGANIZATION
EXHIBIT B: MANAGEMENT'S DISCUSSION OF THE ACQUIRING FUND'S PERFORMANCE FOR ITS
MOST RECENT FISCAL YEAR [TO BE PROVIDED].
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EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this ____ day of ________, 2000, by and between Scudder Municipal Trust (the
"Acquiring Trust"), a Massachusetts business trust, on behalf of Scudder Managed
Municipal Bonds (the "Acquiring Fund"), a separate series of the Acquiring
Trust, and AARP Tax Free Income Trust (the "Acquired Trust" and, together with
the Acquiring Trust, each a "Trust" and collectively the "Trusts"), a
Massachusetts business trust, on behalf of AARP Insured Tax Free General Bond
Fund (the "Acquired Fund" and, together with the Acquiring Fund, each a "Fund"
and collectively the "Funds"), a separate series of the Acquired Trust. The
principal place of business of each Trust is Two International Place, Boston,
Massachusetts 02110-4103
This Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"). The reorganization (the
"Reorganization") will consist of the transfer of all or substantially all of
the assets of the Acquired Fund to the Acquiring Fund in exchange solely for
voting shares of beneficial interest of the AARP Shares class of shares ($.01
par value per share) of the Acquiring Fund (the "Acquiring Fund Shares"), the
assumption by the Acquiring Fund of all of the liabilities of the Acquired Fund
and the distribution of the Acquiring Fund Shares to the shareholders of the
Acquired Fund in complete liquidation of the Acquired Fund as provided herein,
all upon the terms and conditions hereinafter set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND TO THE ACQUIRING FUND IN EXCHANGE
FOR ACQUIRING FUND SHARES, THE ASSUMPTION OF ALL ACQUIRED FUND LIABILITIES
AND THE LIQUIDATION OF THE ACQUIRED FUND
1.1. Subject to the terms and conditions herein set forth and on the basis
of the representations and warranties contained herein, the Acquired Fund agrees
to transfer to the Acquiring Fund all or substantially all of the Acquired
Fund's assets as set forth in section 1.2, and the Acquiring Fund agrees in
exchange therefor (i) to deliver to the Acquired Fund that number of full and
fractional Acquiring Fund Shares determined by dividing the value of the
Acquired Fund's net assets, computed in the manner and as of the time and date
set forth in section 2.1, by the net asset value of one Acquiring Fund Share,
computed in the manner and as of the time and date set forth in section 2.2; and
(ii) to assume all of the liabilities of the Acquired Fund. Such transactions
shall take place at the closing provided for in section 3.1 (the "Closing").
1.2. The assets of the Acquired Fund to be acquired by the Acquiring Fund
(the "Assets") shall consist of all assets, including, without limitation, all
cash, cash equivalents, securities, commodities and futures interests and
dividends or interest or other receivables that are owned by the Acquired Fund
and any deferred or prepaid expenses shown on the unaudited statement of assets
and liabilities of the Acquired Fund prepared as of the effective time of the
closing in accordance with generally accepted accounting principles ("GAAP")
applied consistently with those of the Acquired Fund's most recent audited
balance sheet. The Assets shall constitute at least 90% of the fair market value
of the net assets,
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and at least 70% of the fair market value of the gross assets, held by Acquired
Fund immediately before the Closing (excluding for these purposes assets used to
pay the dividends and other distributions paid pursuant to section 1.4).
1.3. The Acquired Fund will endeavor to discharge all of its known
liabilities and obligations prior to the Closing Date as defined in section 3.1.
1.4. On or as soon as practicable prior to the Closing Date as defined in
section 3.1, the Acquired Fund will declare and pay to its shareholders of
record one or more dividends and/or other distributions so that it will have
distributed substantially all of its investment company taxable income (computed
without regard to any deduction for dividends paid) and realized net capital
gain, if any, for the current taxable year through the Closing Date.
1.5. Immediately after the transfer of Assets provided for in section 1.1,
the Acquired Fund will distribute to the Acquired Fund's shareholders of record
(the "Acquired Fund Shareholders"), determined as of the Valuation Time (as
defined in section 2.1), on a pro rata basis, the Acquiring Fund Shares received
by the Acquired Fund pursuant to section 1.1 and will completely liquidate. Such
distribution and liquidation will be accomplished by the transfer of the
Acquiring Fund Shares then credited to the account of the Acquired Fund on the
books of the Acquiring Fund to open accounts on the share records of the
Acquiring Fund in the names of the Acquired Fund Shareholders. The aggregate net
asset value of Acquiring Fund Shares to be so credited to Acquired Fund
Shareholders shall be equal to the aggregate net asset value of the Acquired
Fund shares owned by such shareholders as of the Valuation Time. All issued and
outstanding shares of the Acquired Fund will simultaneously be cancelled on the
books of the Acquired Fund, although share certificates representing interests
in shares of the Acquired Fund will represent a number of Acquiring Fund Shares
after the Closing Date as determined in accordance with section 2.3. The
Acquiring Fund will not issue certificates representing Acquiring Fund Shares in
connection with such exchange.
1.6. Ownership of Acquiring Fund Shares will be shown on the books of the
Acquiring Fund. Shares of the Acquiring Fund will be issued in the manner
described in the Acquiring Fund's then-current prospectus and statement of
additional information.
1.7. Any reporting responsibility of the Acquired Fund including, without
limitation, the responsibility for filing of regulatory reports, tax returns, or
other documents with the Securities and Exchange Commission (the "Commission"),
any state securities commission, and any federal, state or local tax authorities
or any other relevant regulatory authority, is and shall remain the
responsibility of the Acquired Fund.
1.8. All books and records of the Acquired Fund, including all books and
records required to be maintained under the 1940 Act and the rules and
regulations thereunder, shall be available to the Acquiring Fund from and after
the Closing Date and shall be turned over to the Acquiring Fund as soon as
practicable following the Closing Date.
2. VALUATION
2.1. The value of the Assets shall be computed as of the close of regular
trading on The New York Stock Exchange, Inc. (the "NYSE") on the business day
immediately preceding the Closing Date, as defined in Section 3.1 (such time and
date being hereinafter called the "Valuation Time") after the declaration and
payment of any dividends and/or other distributions on that date, using the
valuation
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procedures set forth in the Acquiring Fund's Declaration of Trust, as amended,
and then-current prospectus or statement of additional information.
2.2. The net asset value of an Acquiring Fund share shall be the net asset
value per share computed as of the Valuation Time using the valuation procedures
referred to in section 2.1.
2.3. The number of the Acquiring Fund Shares to be issued (including
fractional shares, if any) in exchange for the Assets shall be determined by
dividing the value of the Assets with respect to shares of the Acquired Fund
determined in accordance with section 2.1 by the net asset value of an Acquiring
Fund Share determined in accordance with section 2.2.
2.4. All computations of value hereunder shall be made by or under the
direction of each Fund's respective accounting agent, if applicable, in
accordance with its regular practice and the requirements of the 1940 Act and
shall be subject to confirmation by each Fund's respective independent
accountants upon the reasonable request of the other Fund.
3. CLOSING AND CLOSING DATE
3.1. The Closing of the transactions contemplated by this Agreement shall
be July 31, 2000, or such later date as the parties may agree in writing (the
"Closing Date"). All acts taking place at the Closing shall be deemed to take
place simultaneously as of 9:00 a.m.., Eastern time, on the Closing Date, unless
otherwise agreed to by the parties. The Closing shall be held at the offices of
Dechert Price & Rhoads, Ten Post Office Square - South, Boston, MA 02109, or at
such other place and time as the parties may agree.
3.2. The Acquired Fund shall deliver to Acquiring Fund on the Closing Date
a schedule of Assets.
3.3. State Street Bank and Trust Company ("State Street"), custodian for
the Acquired Fund, shall deliver at the Closing a certificate of an authorized
officer stating that (a) the Assets shall have been delivered in proper form to
State Street, custodian for the Acquiring Fund, prior to or on the Closing Date
and (b) all necessary taxes in connection with the delivery of the Assets,
including all applicable federal and state stock transfer stamps, if any, have
been paid or provision for payment has been made. The Acquired Fund's portfolio
securities represented by a certificate or other written instrument shall be
presented by the custodian for the Acquired Fund to the custodian for the
Acquiring Fund for examination no later than five business days preceding the
Closing Date and transferred and delivered by the Acquired Fund as of the
Closing Date by the Acquired Fund for the account of Acquiring Fund duly
endorsed in proper form for transfer in such condition as to constitute good
delivery thereof. The Acquired Fund's portfolio securities and instruments
deposited with a securities depository, as defined in Rule 17f-4 under the 1940
Act, shall be delivered as of the Closing Date by book entry in accordance with
the customary practices of such depositories and the custodian for the Acquiring
Fund. The cash to be transferred by the Acquired Fund shall be delivered by wire
transfer of federal funds on the Closing Date.
3.4. Scudder Service Corp. (the "Transfer Agent"), on behalf of the
Acquired Fund, shall deliver at the Closing a certificate of an authorized
officer stating that its records contain the names and addresses of the Acquired
Fund Shareholders and the number and percentage ownership (to three decimal
places) of outstanding Acquired Fund shares owned by each such shareholder
immediately prior to the Closing. The Acquiring Fund shall issue and deliver a
confirmation evidencing the Acquiring Fund Shares to be credited on the Closing
Date to the Acquired Fund or provide evidence satisfactory to the Acquired Fund
that such Acquiring Fund Shares have been credited to the Acquired Fund's
account on
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<PAGE>
the books of the Acquiring Fund. At the Closing, each party shall deliver to the
other such bills of sale, checks, assignments, share certificates, if any,
receipts or other documents as such other party or its counsel may reasonably
request to effect the transactions contemplated by this Agreement.
3.5. In the event that immediately prior to the Valuation Time (a) the
NYSE or another primary trading market for portfolio securities of the Acquiring
Fund or the Acquired Fund shall be closed to trading or trading thereupon shall
be restricted, or (b) trading or the reporting of trading on such Exchange or
elsewhere shall be disrupted so that, in the judgment of the Board members of
either party to this Agreement, accurate appraisal of the value of the net
assets with respect to the Acquiring Fund Shares or the Acquired Fund shares is
impracticable, the Closing Date shall be postponed until the first business day
after the day when trading shall have been fully resumed and reporting shall
have been restored.
4. REPRESENTATIONS AND WARRANTIES
4.1. The Acquired Trust, on behalf of the Acquired Fund, represents and
warrants to the Acquiring Fund as follows:
(a) The Acquired Trust is a business trust duly organized and validly
existing under the laws of the Commonwealth of Massachusetts with power under
the Acquired Trust's Declaration of Trust, as amended, to own all of its
properties and assets and to carry on its business as it is now being conducted;
(b) The Acquired Trust is registered with the Commission as an open-end
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), and such registration is in full force and effect;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquired Fund of
the transactions contemplated herein, except such as have been obtained under
the Securities Act of 1933, as amended (the "1933 Act"), the Securities Exchange
Act of 1934, as amended (the "1934 Act") and the 1940 Act and such as may be
required by state securities laws;
(d) Other than with respect to contracts entered into in connection with
the portfolio management of the Acquired Fund which shall terminate on or prior
to the Closing Date, the Acquired Trust is not, and the execution, delivery and
performance of this Agreement by the Acquired Trust will not result, in
violation of Massachusetts law or of the Acquired Trust's Declaration of Trust,
as amended, or By-Laws, or of any material agreement, indenture, instrument,
contract, lease or other undertaking known to counsel to which the Acquired Fund
is a party or by which it is bound, and the execution, delivery and performance
of this Agreement by the Acquired Fund will not result in the acceleration of
any obligation, or the imposition of any penalty, under any agreement,
indenture, instrument, contract, lease, judgment or decree to which the Acquired
Fund is a party or by which it is bound;
(e) No material litigation or administrative proceeding or investigation
of or before any court or governmental body is presently pending or to its
knowledge threatened against the Acquired Fund or any properties or assets held
by it. The Acquired Fund knows of no facts which might form the basis for the
institution of such proceedings which would materially and adversely affect its
business and is not a party to or subject to the provisions of any order, decree
or judgment of any court or governmental body which materially and adversely
affects its business or its ability to consummate the transactions herein
contemplated;
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(f) The Statements of Assets and Liabilities, Operations, and Changes in
Net Assets, the Financial Highlights, and the Investment Portfolio of the
Acquired Fund at and for the fiscal year ended September 30, 1999, have been
audited by PricewaterhouseCoopers LLP, independent accountants, and are in
accordance with GAAP consistently applied, and such statements (a copy of each
of which has been furnished to the Acquiring Fund) present fairly, in all
material respects, the financial position of the Acquired Fund as of such date
in accordance with GAAP, and there are no known contingent liabilities of the
Acquired Fund required to be reflected on a balance sheet (including the notes
thereto) in accordance with GAAP as of such date not disclosed therein;
(g) Since September 30, 1999, there has not been any material adverse
change in the Acquired Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business, or any
incurrence by the Acquired Fund of indebtedness maturing more than one year from
the date such indebtedness was incurred except as otherwise disclosed to and
accepted in writing by the Acquiring Fund. For purposes of this subsection (g),
a decline in net asset value per share of the Acquired Fund due to declines in
market values of securities in the Acquired Fund's portfolio, the discharge of
Acquired Fund liabilities, or the redemption of Acquired Fund shares by Acquired
Fund Shareholders shall not constitute a material adverse change;
(h) At the date hereof and at the Closing Date, all federal and other tax
returns and reports of the Acquired Fund required by law to have been filed by
such dates (including any extensions) shall have been filed and are or will be
correct in all material respects, and all federal and other taxes shown as due
or required to be shown as due on said returns and reports shall have been paid
or provision shall have been made for the payment thereof, and, to the best of
the Acquired Fund's knowledge, no such return is currently under audit and no
assessment has been asserted with respect to such returns;
(i) For each taxable year of its operation (including the taxable year
ending on the Closing Date), the Acquired Fund has met the requirements of
Subchapter M of the Code for qualification as a regulated investment company and
has elected to be treated as such, has been eligible to and has computed its
federal income tax under Section 852 of the Code, and will have distributed all
of its investment company taxable income and net capital gain (as defined in the
Code) that has accrued through the Closing Date;
(j) All issued and outstanding shares of the Acquired Fund (i) have been
offered and sold in every state and the District of Columbia in compliance in
all material respects with applicable registration requirements of the 1933 Act
and state securities laws, (ii) are, and on the Closing Date will be, duly and
validly issued and outstanding, fully paid and non-assessable (recognizing that,
under Massachusetts law, Acquired Fund Shareholders, under certain
circumstances, could be held personally liable for obligations of the Acquired
Fund), and (iii) will be held at the time of the Closing by the persons and in
the amounts set forth in the records of the Transfer Agent, as provided in
section 3.4. The Acquired Fund does not have outstanding any options, warrants
or other rights to subscribe for or purchase any of the Acquired Fund shares,
nor is there outstanding any security convertible into any of the Acquired Fund
shares;
(k) At the Closing Date, the Acquired Fund will have good and marketable
title to the Acquired Fund's assets to be transferred to the Acquiring Fund
pursuant to section 1.2 and full right, power, and authority to sell, assign,
transfer and deliver such assets hereunder free of any liens or other
encumbrances, except those liens or encumbrances as to which the Acquiring Fund
has received notice at or prior to the Closing, and upon delivery and payment
for such assets, the Acquiring Fund will acquire good and marketable title
thereto, subject to no restrictions on the full transfer thereof, including such
restrictions as might arise under the 1933 Act and the 1940 Act, except those
restrictions as to which the Acquiring Fund has received notice and necessary
documentation at or prior to the Closing;
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(l) The execution, delivery and performance of this Agreement will have
been duly authorized prior to the Closing Date by all necessary action on the
part of the Board members of the Acquired Trust, and, subject to the approval of
the Acquired Fund Shareholders, this Agreement constitutes a valid and binding
obligation of the Acquired Trust, on behalf of the Acquired Fund, enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and other laws
relating to or affecting creditors' rights and to general equity principles;
(m) The information to be furnished by the Acquired Fund for use in
applications for orders, registration statements or proxy materials or for use
in any other document filed or to be filed with any federal, state or local
regulatory authority (including the National Association of Securities Dealers,
Inc. (the "NASD")), which may be necessary in connection with the transactions
contemplated hereby, shall be accurate and complete in all material respects and
shall comply in all material respects with federal securities and other laws and
regulations applicable thereto;
(n) The current prospectus and statement of additional information of the
Acquired Fund conform in all material respects to the applicable requirements of
the 1933 Act and the 1940 Act and the rules and regulations of the Commission
thereunder and do not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not materially misleading; and
(o) The proxy statement of the Acquired Fund to be included in the
Registration Statement referred to in section 5.7 (the "Proxy Statement"),
insofar as it relates to the Acquired Fund, will, on the effective date of the
Registration Statement and on the Closing Date, not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which such statements are made, not materially misleading;
provided, however, that the representations and warranties in this section shall
not apply to statements in or omissions from the Proxy Statement and the
Registration Statement made in reliance upon and in conformity with information
that was furnished or should have been furnished by the Acquiring Fund for use
therein.
4.2. The Acquiring Trust, on behalf of the Acquiring Fund, represents and
warrants to the Acquired Fund as follows:
(a) The Acquiring Trust is a business trust duly organized and validly
existing under the laws of the Commonwealth of Massachusetts with power under
the Acquiring Trust's Declaration of Trust, as amended, to own all of its
properties and assets and to carry on its business as it is now being conducted;
(b) The Acquiring Trust is registered with the Commission as an open-end
management investment company under the 1940 Act, and such registration is in
full force and effect;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquiring Fund of
the transactions contemplated herein, except such as have been obtained under
the 1933 Act, the 1934 Act and the 1940 Act and such as may be required by state
securities laws;
(d) The Acquiring Trust is not, and the execution, delivery and
performance of this Agreement by the Acquiring Trust will not result, in
violation of Massachusetts law or of the Acquiring Trust's Declaration of Trust,
as amended, or By-Laws, or of any material agreement, indenture,
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instrument, contract, lease or other undertaking known to counsel to which the
Acquiring Fund is a party or by which it is bound, and the execution, delivery
and performance of this Agreement by the Acquiring Fund will not result in the
acceleration of any obligation, or the imposition of any penalty, under any
agreement, indenture, instrument, contract, lease, judgment or decree to which
the Acquiring Fund is a party or by which it is bound;
(e) No material litigation or administrative proceeding or investigation
of or before any court or governmental body is presently pending or to its
knowledge threatened against the Acquiring Fund or any properties or assets held
by it. The Acquiring Fund knows of no facts which might form the basis for the
institution of such proceedings which would materially and adversely affect its
business and is not a party to or subject to the provisions of any order, decree
or judgment of any court or governmental body which materially and adversely
affects its business or its ability to consummate the transactions herein
contemplated;
(f) The Statements of Assets and Liabilities, Operations, and Changes in
Net Assets, the Financial Highlights, and the Investment Portfolio of the
Acquiring Fund at and for the fiscal year ended May 31, 1999, have been audited
by PricewaterhouseCoopers LLP, independent accountants, and are in accordance
with GAAP consistently applied, and such statements (a copy of each of which has
been furnished to the Acquired Fund) present fairly, in all material respects,
the financial position of the Acquiring Fund as of such date in accordance with
GAAP, and there are no known contingent liabilities of the Acquiring Fund
required to be reflected on a balance sheet (including the notes thereto) in
accordance with GAAP as of such date not disclosed therein;
(g) Since May 31, 1999, there has not been any material adverse change in
the Acquiring Fund's financial condition, assets, liabilities or business other
than changes occurring in the ordinary course of business, or any incurrence by
the Acquiring Fund of indebtedness maturing more than one year from the date
such indebtedness was incurred except as otherwise disclosed to and accepted in
writing by the Acquired Fund. For purposes of this subsection (g), a decline in
net asset value per share of the Acquiring Fund due to declines in market values
of securities in the Acquiring Fund's portfolio, the discharge of Acquiring Fund
liabilities, or the redemption of Acquiring Fund shares by Acquiring Fund
shareholders shall not constitute a material adverse change;
(h) At the date hereof and at the Closing Date, all federal and other tax
returns and reports of the Acquiring Fund required by law to have been filed by
such dates (including any extensions) shall have been filed and are or will be
correct in all material respects, and all federal and other taxes shown as due
or required to be shown as due on said returns and reports shall have been paid
or provision shall have been made for the payment thereof, and, to the best of
the Acquiring Fund's knowledge, no such return is currently under audit and no
assessment has been asserted with respect to such returns;
(i) For each taxable year of its operation, the Acquiring Fund has met the
requirements of Subchapter M of the Code for qualification as a regulated
investment company and has elected to be treated as such, has been eligible to
and has computed its federal income tax under Section 852 of the Code, and will
do so for the taxable year including the Closing Date;
(j) All issued and outstanding shares of the Acquiring Fund (i) have been
offered and sold in every state and the District of Columbia in compliance in
all material respects with applicable registration requirements of the 1933 Act
and state securities laws and (ii) are, and on the Closing Date will be, duly
and validly issued and outstanding, fully paid and non-assessable (recognizing
that, under Massachusetts law, Acquiring Fund Shareholders, under certain
circumstances, could be held personally liable for the obligations of the
Acquired Fund). The Acquiring Fund does not have outstanding any options,
warrants
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or other rights to subscribe for or purchase any of the Acquiring Fund shares,
nor is there outstanding any security convertible into any of the Acquiring Fund
shares;
(k) The Acquiring Fund Shares to be issued and delivered to the Acquired
Fund, for the account of the Acquired Fund Shareholders, pursuant to the terms
of this Agreement, will at the Closing Date have been duly authorized and, when
so issued and delivered, will be duly and validly issued and outstanding
Acquiring Fund Shares, and will be fully paid and non-assessable (recognizing
that, under Massachusetts law, Acquiring Fund Shareholders, under certain
circumstances, could be held personally liable for the obligations of the
Acquired Fund).
(l) At the Closing Date, the Acquiring Fund will have good and marketable
title to the Acquiring Fund's assets, free of any liens or other encumbrances,
except those liens or encumbrances as to which the Acquired Fund has received
notice at or prior to the Closing;
(m) The execution, delivery and performance of this Agreement will have
been duly authorized prior to the Closing Date by all necessary action on the
part of the Board members of the Acquiring Trust and this Agreement will
constitute a valid and binding obligation of the Acquiring Trust, on behalf of
the Acquiring Fund, enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other laws relating to or affecting creditors' rights and to
general equity principles;
(n) The information to be furnished by the Acquiring Fund for use in
applications for orders, registration statements or proxy materials or for use
in any other document filed or to be filed with any federal, state or local
regulatory authority (including the NASD), which may be necessary in connection
with the transactions contemplated hereby, shall be accurate and complete in all
material respects and shall comply in all material respects with federal
securities and other laws and regulations applicable thereto;
(o) The current prospectus and statement of additional information of the
Acquiring Fund conform in all material respects to the applicable requirements
of the 1933 Act and the 1940 Act and the rules and regulations of the Commission
thereunder and do not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not materially misleading;
(p) The Proxy Statement to be included in the Registration Statement, only
insofar as it relates to the Acquiring Fund, will, on the effective date of the
Registration Statement and on the Closing Date, not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which such statements were made, not materially misleading;
provided, however, that the representations and warranties in this section shall
not apply to statements in or omissions from the Proxy Statement and the
Registration Statement made in reliance upon and in conformity with information
that was furnished or should have been furnished by the Acquired Fund for use
therein; and
(q) The Acquiring Fund agrees to use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act and such of
the state securities laws as may be necessary in order to continue its
operations after the Closing Date.
-44-
<PAGE>
5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1. The Acquiring Fund and the Acquired Fund each covenants to operate
its business in the ordinary course between the date hereof and the Closing
Date, it being understood that (a) such ordinary course of business will include
(i) the declaration and payment of customary dividends and other distributions
and (ii) such changes as are contemplated by the Funds' normal operations; and
(b) each Fund shall retain exclusive control of the composition of its portfolio
until the Closing Date.
5.2. Upon reasonable notice, the Acquiring Fund's officers and agents
shall have reasonable access to the Acquired Fund's books and records necessary
to maintain current knowledge of the Acquired Fund and to ensure that the
representations and warranties made by the Acquired Fund are accurate.
5.3. The Acquired Fund covenants to call a meeting of the Acquired Fund
Shareholders entitled to vote thereon to consider and act upon this Agreement
and to take all other reasonable action necessary to obtain approval of the
transactions contemplated herein. Such meeting shall be scheduled for no later
than July 11, 2000.
5.4. The Acquired Fund covenants that the Acquiring Fund Shares to be
issued hereunder are not being acquired for the purpose of making any
distribution thereof other than in accordance with the terms of this Agreement.
5.5. The Acquired Fund covenants that it will assist the Acquiring Fund in
obtaining such information as the Acquiring Fund reasonably requests concerning
the beneficial ownership of the Acquired Fund shares and will provide the
Acquiring Fund with a list of affiliates of the Acquired Fund.
5.6. Subject to the provisions of this Agreement, the Acquiring Fund and
the Acquired Fund will each take, or cause to be taken, all actions, and do or
cause to be done, all things reasonably necessary, proper, and/or advisable to
consummate and make effective the transactions contemplated by this Agreement.
5.7. Each Fund covenants to prepare in compliance with the 1933 Act, the
1934 Act and the 1940 Act the Registration Statement on Form N-14 (the
"Registration Statement") in connection with the meeting of the Acquired Fund
Shareholders to consider approval of this Agreement and the transactions
contemplated herein. The Acquiring Fund will file the Registration Statement,
including the Proxy Statement, with the Commission. The Acquired Fund will
provide the Acquiring Fund with information reasonably necessary for the
preparation of a prospectus, which will include the Proxy Statement referred to
in section 4.1(o), all to be included in the Registration Statement, in
compliance in all material respects with the 1933 Act, the 1934 Act and the 1940
Act.
5.8. The Acquired Fund covenants that it will, from time to time, as and
when reasonably requested by the Acquiring Fund, execute and deliver or cause to
be executed and delivered all such assignments and other instruments, and will
take or cause to be taken such further action as the Acquiring Fund may
reasonably deem necessary or desirable in order to vest in and confirm the
Acquiring Fund's title to and possession of all the assets and otherwise to
carry out the intent and purpose of this Agreement.
5.9. The Acquiring Fund covenants to use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act and 1940 Act, and such
of the state securities laws as it deems appropriate in order to continue its
operations after the Closing Date and to consummate the transactions
-45-
<PAGE>
contemplated herein; provided, however, that the Acquiring Fund may take such
actions it reasonably deems advisable after the Closing Date as circumstances
change.
5.10. The Acquiring Fund covenants that it will, from time to time, as and
when reasonably requested by the Acquired Fund, execute and deliver or cause to
be executed and delivered all such assignments, assumption agreements, releases,
and other instruments, and will take or cause to be taken such further action,
as the Acquired Fund may reasonably deem necessary or desirable in order to (i)
vest and confirm to the Acquired Fund title to and possession of all Acquiring
Fund shares to be transferred to Acquired Fund pursuant to this Agreement and
(ii) assume the liabilities from the Acquired Fund.
5.11. As soon as reasonably practicable after the Closing, the Acquired
Fund shall make a liquidating distribution to its shareholders consisting of the
Acquiring Fund Shares received at the Closing.
5.12. The Acquiring Fund and the Acquired Fund shall each use its
reasonable best efforts to fulfill or obtain the fulfillment of the conditions
precedent to effect the transactions contemplated by this Agreement as promptly
as practicable.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Acquired Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquiring Fund of all the obligations to be performed by it hereunder on or
before the Closing Date, and, in addition thereto, the following further
conditions:
6.1. All representations and warranties of the Acquired Trust, with
respect to the Acquired Fund, contained in this Agreement shall be true and
correct in all material respects as of the date hereof and, except as they may
be affected by the transactions contemplated by this Agreement, as of the
Closing Date, with the same force and effect as if made on and as of the Closing
Date; and there shall be (i) no pending or threatened litigation brought by any
person (other than Acquiring Fund, its adviser or any of their affiliates)
against the Acquired Fund or its investment adviser(s), Board members or
officers arising out of this Agreement and (ii) no facts known to the Acquired
Fund which the Acquired Fund reasonably believes might result in such
litigation.
6.2. The Acquiring Fund shall have delivered to the Acquired Fund on the
Closing Date a certificate executed in its name by its President or a Vice
President, in a form reasonably satisfactory to the Acquired Trust, on behalf of
the Acquiring Fund, and dated as of the Closing Date, to the effect that the
representations and warranties of the Acquiring Fund made in this Agreement are
true and correct on and as of the Closing Date, except as they may be affected
by the transactions contemplated by this Agreement, and as to such other matters
as the Acquired Fund shall reasonably request;
6.3. The Acquired Fund shall have received on the Closing Date an opinion
of Dechert Price & Rhoads, in a form reasonably satisfactory to the Acquired
Fund, and dated as of the Closing Date, to the effect that:
(a) The Acquiring Trust has been duly formed and is an existing business
trust; (b) the Acquiring Fund has the power to carry on its business as
presently conducted in accordance with the description thereof in the Acquiring
Fund's registration statement under the 1940 Act; (c) the Agreement has been
duly authorized, executed and delivered by the Acquiring Trust, on behalf of the
Acquiring Fund, and constitutes a valid and legally binding obligation of the
Acquiring Trust, on behalf of the Acquiring Fund, enforceable in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent
-46-
<PAGE>
transfer, reorganization, moratorium and laws of general applicability relating
to or affecting creditors' rights and to general equity principles; (d) the
execution and delivery of the Agreement did not, and the exchange of the
Acquired Fund's assets for Acquiring Fund Shares pursuant to the Agreement will
not, violate the Acquiring Trust's Declaration of Trust, as amended, or By-laws;
and (e) to the knowledge of such counsel, all regulatory consents,
authorizations, approvals or filings required to be obtained or made by the
Acquiring Fund under the Federal laws of the United States or the laws of the
Commonwealth of Massachusetts for the exchange of the Acquired Fund's assets for
Acquiring Fund Shares, pursuant to the Agreement have been obtained or made; and
6.4. The Acquiring Fund shall have performed all of the covenants and
complied with all of the provisions required by this Agreement to be performed
or complied with by the Acquiring Fund on or before the Closing Date.
6.5 The Acquiring Fund shall have (i) adopted a new investment management
agreement and (ii) entered into an administrative services agreement with
Scudder Kemper Investments, Inc. ("Scudder Kemper"), each in a form reasonably
satisfactory to the Acquired Fund.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquired Fund of all of the obligations to be performed by it hereunder on or
before the Closing Date and, in addition thereto, the following further
conditions:
7.1. All representations and warranties of the Acquired Trust, on behalf
of the Acquired Fund, contained in this Agreement shall be true and correct in
all material respects as of the date hereof and, except as they may be affected
by the transactions contemplated by this Agreement, as of the Closing Date, with
the same force and effect as if made on and as of the Closing Date; and there
shall be (i) no pending or threatened litigation brought by any person (other
than Acquired Fund, its adviser or any of their affiliates) against the
Acquiring Fund or its investment adviser(s), Board members or officers arising
out of this Agreement and (ii) no facts known to the Acquiring Fund which the
Acquiring Fund reasonably believes might result in such litigation.
7.2. The Acquired Fund shall have delivered to the Acquiring Fund a
statement of the Acquired Fund's assets and liabilities as of the Closing Date,
certified by the Treasurer of the Acquired Fund;
7.3. The Acquired Fund shall have delivered to the Acquiring Fund on the
Closing Date a certificate executed in its name by its President or a Vice
President, in a form reasonably satisfactory to the Acquiring Fund and dated as
of the Closing Date, to the effect that the representations and warranties of
the Acquired Trust with respect to the Acquired Fund made in this Agreement are
true and correct on and as of the Closing Date, except as they may be affected
by the transactions contemplated by this Agreement, and as to such other matters
as the Acquiring Fund shall reasonably request;
7.4. The Acquiring Fund shall have received on the Closing Date an opinion
of Dechert Price & Rhoads, in a form reasonably satisfactory to the Acquiring
Fund, and dated as of the Closing Date, to the effect that:
(a) The Acquired Trust has been duly formed and is an existing business
trust; (b) the Acquired Fund has the power to carry on its business as presently
conducted in accordance with the
-47-
<PAGE>
description thereof in the Acquired Trust's registration statement under the
1940 Act; (c) the Agreement has been duly authorized, executed and delivered by
the Acquired Trust, on behalf of the Acquired Fund, and constitutes a valid and
legally binding obligation of the Acquired Trust, on behalf of the Acquired
Fund, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and laws of general
applicability relating to or affecting creditors' rights and to general equity
principles; (d) the execution and delivery of the Agreement did not, and the
exchange of the Acquired Fund's assets for Acquiring Fund Shares pursuant to the
Agreement will not, violate the Acquired Trust's Declaration of Trust, as
amended, or By-laws; and (e) to the knowledge of such counsel, all regulatory
consents, authorizations, approvals or filings required to be obtained or made
by the Acquired Fund under the Federal laws of the United States or the laws of
the Commonwealth of Massachusetts for the exchange of the Acquired Fund's assets
for Acquiring Fund Shares, pursuant to the Agreement have been obtained or made;
and
7.5. The Acquired Fund shall have performed all of the covenants and
complied with all of the provisions required by this Agreement to be performed
or complied with by the Acquired Fund on or before the Closing Date.
7.6 The Acquiring Fund shall have (i) adopted a new investment management
agreement and (ii) entered into an administrative services agreement with
Scudder Kemper.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND THE
ACQUIRED FUND
If any of the conditions set forth below have not been met on or before
the Closing Date with respect to the Acquired Fund or the Acquiring Fund, the
other party to this Agreement shall, at its option, not be required to
consummate the transactions contemplated by this Agreement:
8.1. This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Acquired Fund in accordance with the provisions of the Acquired Trust's
Declaration of Trust, as amended, and By-Laws, applicable Massachusetts law and
the 1940 Act, and certified copies of the resolutions evidencing such approval
shall have been delivered to the Acquiring Fund. Notwithstanding anything herein
to the contrary, neither the Acquiring Fund nor the Acquired Fund may waive the
conditions set forth in this section 8.1;
8.2. On the Closing Date, no action, suit or other proceeding shall be
pending or to its knowledge threatened before any court or governmental agency
in which it is sought to restrain or prohibit, or obtain material damages or
other relief in connection with, this Agreement or the transactions contemplated
herein;
8.3. All consents of other parties and all other consents, orders and
permits of Federal, state and local regulatory authorities deemed necessary by
the Acquiring Fund or the Acquired Fund to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order or permit would not
involve a risk of a material adverse effect on the assets or properties of the
Acquiring Fund or the Acquired Fund, provided that either party hereto may for
itself waive any of such conditions;
8.4. The Registration Statement shall have become effective under the 1933
Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act; and
-48-
<PAGE>
8.5. The parties shall have received an opinion of Willkie Farr &
Gallagher addressed to each of the Acquiring Fund and the Acquired Fund, in a
form reasonably satisfactory to each such party to this Agreement, substantially
to the effect that, based upon certain facts, assumptions and representations of
the parties, for federal income tax purposes: (i) the transfer to the Acquiring
Fund of all or substantially all of the assets of the Acquired Fund in exchange
solely for Acquiring Fund shares and the assumption by the Acquiring Fund of all
of the liabilities of the Acquired Fund, followed by the distribution of such
shares to the Acquired Fund's shareholders in exchange for their shares of the
Acquired Fund in complete liquidation of the Acquired Fund, will constitute a
"reorganization" within the meaning of Section 368(a)(1) of the Code, and the
Acquiring Fund and the Acquired Fund will each be "a party to a reorganization"
within the meaning of Section 368(b) of the Code; (ii) no gain or loss will be
recognized by the Acquired Fund upon the transfer of all or substantially all of
its assets to the Acquiring Fund in exchange solely for Acquiring Fund shares
and the assumption by the Acquiring Fund of all of the liabilities of the
Acquired Fund; (iii) the basis of the assets of the Acquired Fund in the hands
of the Acquiring Fund will be the same as the basis of such assets of the
Acquired Fund immediately prior to the transfer; (iv) the holding period of the
assets of the Acquired Fund in the hands of the Acquiring Fund will include the
period during which such assets were held by the Acquired Fund; (v) no gain or
loss will be recognized by the Acquiring Fund upon the receipt of the assets of
the Acquired Fund in exchange for Acquiring Fund shares and the assumption by
the Acquiring Fund of all of the liabilities of the Acquired Fund; (vi) no gain
or loss will be recognized by the shareholders of the Acquired Fund upon the
receipt of the Acquiring Fund shares solely in exchange for their shares of the
Acquired Fund as part of the transaction; (vii) the basis of the Acquiring Fund
shares received by the shareholders of the Acquired Fund will be the same as the
basis of the shares of the Acquired Fund exchanged therefor; and (viii) the
holding period of Acquiring Fund shares received by the shareholders of the
Acquired Fund will include the holding period during which the shares of the
Acquired Fund exchanged therefor were held, provided that at the time of the
exchange the shares of the Acquired Fund were held as capital assets in the
hands of the shareholders of the Acquired Fund. The delivery of such opinion is
conditioned upon receipt by Willkie Farr & Gallagher of representations it shall
request of each of the Acquiring Fund and Acquired Trust. Notwithstanding
anything herein to the contrary, neither the Acquiring Fund nor the Acquired
Fund may waive the condition set forth in this section 8.5.
9. INDEMNIFICATION
9.1. The Acquiring Fund agrees to indemnify and hold harmless the Acquired
Fund and each of the Acquired Fund's Board members and officers from and against
any and all losses, claims, damages, liabilities or expenses (including, without
limitation, the payment of reasonable legal fees and reasonable costs of
investigation) to which jointly and severally, the Acquired Fund or any of its
Board members or officers may become subject, insofar as any such loss, claim,
damage, liability or expense (or actions with respect thereto) arises out of or
is based on any breach by the Acquiring Fund of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
9.2. The Acquired Fund agrees to indemnify and hold harmless the Acquiring
Fund and each of the Acquiring Fund's Board members and officers from and
against any and all losses, claims, damages, liabilities or expenses (including,
without limitation, the payment of reasonable legal fees and reasonable costs of
investigation) to which jointly and severally, the Acquiring Fund or any of its
Board members or officers may become subject, insofar as any such loss, claim,
damage, liability or expense (or actions with respect thereto) arises out of or
is based on any breach by the Acquired Fund of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
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<PAGE>
10. FEES AND EXPENSES
10.1. Each of the Acquiring Fund on behalf of the Acquiring Fund, and the
Acquired Trust, on behalf of the Acquired Fund, represents and warrants to the
other that it has no obligations to pay any brokers or finders fees in
connection with the transactions provided for herein.
10.2. Each Fund will pay its own allocable share of expenses associated
with the Reorganization, except that Scudder Kemper will bear any such expenses
in excess of $25,202 for the Acquiring Fund and $748,040 for the Acquired Fund
(approximately $.0003 and $.0086 per share, respectively, based on December 31,
1999 net assets for each Fund). Any such expenses which are so borne by Scudder
Kemper will be solely and directly related to the Reorganization within the
meaning of Revenue Ruling 73-54, 1973-1 C.B. 187. The Acquired Fund shareholders
will pay their own expenses, if any, incurred in connection with the
Reorganization.
11. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
11.1. The Acquiring Fund and the Acquired Fund agree that neither party
has made any representation, warranty or covenant not set forth herein and that
this Agreement constitutes the entire agreement between the parties.
11.2. Except as specified in the next sentence set forth in this section
11.2, the representations, warranties and covenants contained in this Agreement
or in any document delivered pursuant hereto or in connection herewith shall not
survive the consummation of the transactions contemplated hereunder. The
covenants to be performed after the Closing and the obligations of each of the
Acquiring Fund and Acquired Fund in Sections 9.1 and 9.2 shall survive the
Closing.
12. TERMINATION
12.1. This Agreement may be terminated and the transactions contemplated
hereby may be abandoned by either party by (i) mutual agreement of the parties,
or (ii) by either party if the Closing shall not have occurred on or before July
31, 2000, unless such date is extended by mutual agreement of the parties, or
(iii) by either party if the other party shall have materially breached its
obligations under this Agreement or made a material and intentional
misrepresentation herein or in connection herewith. In the event of any such
termination, this Agreement shall become void and there shall be no liability
hereunder on the part of any party or their respective Board members or
officers, except for any such material breach or intentional misrepresentation,
as to each of which all remedies at law or in equity of the party adversely
affected shall survive.
13. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by any authorized officer of the Acquired
Fund and any authorized officer of the Acquiring Fund; provided, however, that
following the meeting of the Acquired Fund Shareholders called by the Acquired
Fund pursuant to section 5.2 of this Agreement, no such amendment may have the
effect of changing the provisions for determining the number of the Acquiring
Fund Shares to be issued to the Acquired Fund shareholders under this Agreement
to the detriment of such shareholders without their further approval.
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<PAGE>
14. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be deemed duly given
if delivered by hand (including by Federal Express or similar express courier)
or transmitted by facsimile or three days after being mailed by prepaid
registered or certified mail, return receipt requested, addressed to the
Acquired Fund, Two International Place, Boston, MA 02110-4103, with a copy to
Dechert Price & Rhoads, Ten Post Office Square South, Boston, MA 02109-4603,
Attention: Sheldon A. Jones, Esq., or to the Acquiring Fund, Two International
Place, Boston, MA 02110-4103, with a copy to Dechert Price & Rhoads, Ten Post
Office Square South, Boston, MA 02109-4603, Attention: Sheldon A. Jones, Esq.,
or to any other address that the Acquired Fund or the Acquiring Fund shall have
last designated by notice to the other party.
15. HEADINGS; COUNTERPARTS; ASSIGNMENT; LIMITATION OF LIABILITY
15.1. The Article and section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
15.2. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
15.3. This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and the shareholders of the
Acquiring Fund and the Acquired Fund and their respective successors and
assigns, any rights or remedies under or by reason of this Agreement.
15.4. References in this Agreement to the Trust mean and refer to the
Board members of the Trust from time to time serving under its Declaration of
Trust on file with the Secretary of State of the Commonwealth of Massachusetts,
as the same may be amended from time to time, pursuant to which the Trust
conducts its business. It is expressly agreed that the obligations of each Trust
hereunder shall not be binding upon any of the Board members, shareholders,
nominees, officers, agents, or employees of the Trusts or the Funds personally,
but bind only the respective property of the Funds, as provided in each Trust's
Declaration of Trust. Moreover, no series of either Trust other than the Funds
shall be responsible for the obligations of the Trusts hereunder, and all
persons shall look only to the assets of the Funds to satisfy the obligations of
the Trusts hereunder. The execution and the delivery of this Agreement have been
authorized by each Trust's Board members, on behalf of the applicable Fund, and
this Agreement has been signed by authorized officers of each Fund acting as
such, and neither such authorization by such Board members, nor such execution
and delivery by such officers, shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the respective property of the Funds, as provided in each Trust's
Declaration of Trust.
Notwithstanding anything to the contrary contained in this Agreement, the
obligations, agreements, representations and warranties with respect to each
Fund shall constitute the obligations, agreements, representations and
warranties of that Fund only (the "Obligated Fund"), and in no event shall any
other series of the Trusts or the assets of any such series be held liable with
respect to the breach or other default by the Obligated Fund of its obligations,
agreements, representations and warranties as set forth herein.
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<PAGE>
15.5. This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Massachusetts, without regard to its
principles of conflicts of laws.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by an authorized officer and its seal to be affixed thereto and
attested by its Secretary or Assistant Secretary.
Attest: AARP TAX FREE INCOME TRUST
on behalf of AARP Insured Tax Free General Fund
_________________________
Secretary
________________________________
By:_____________________________
Its:____________________________
Attest: SCUDDER MUNICIPAL TRUST
on behalf of Scudder Managed Municipal Bonds
_________________________
Secretary
________________________________
By:_____________________________
Its:____________________________
AGREED TO AND ACKNOWLEDGED
ONLY WITH RESPECT TO
PARAGRAPH 10.2 HERETO
SCUDDER KEMPER INVESTMENTS, INC.
____________________________________
By:_________________________________
Its:________________________________
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<PAGE>
APPENDIX 1
FUND SHARES OWNED BY NOMINEES AND TRUSTEES
Many of the Nominees and Trustees own shares of the series of the
Acquired 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 Acquired Trust
as of January 31, 2000. The information as to beneficial ownership is based
on statements furnished to the Acquired 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 Acquired 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 Acquired Trust.]
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
AARP HIGH AARP INSURED
QUALITY TAX FREE TAX FREE GENERAL
MONEY FUND BOND FUND
- ----------------------------------------------------------------
<S> <C> <C>
Carole Lewis Anderson(1)
- ----------------------------------------------------------------
Adelaide Attard(2)
- ----------------------------------------------------------------
Henry P. Becton, Jr.(3)
- ----------------------------------------------------------------
Robert N. Butler, M.D.(4)
- ----------------------------------------------------------------
Linda C. Coughlin(5)
- ----------------------------------------------------------------
Horace B. Deets(6)
- ----------------------------------------------------------------
Dawn-Marie Driscoll(7)
- ----------------------------------------------------------------
Edgar R. Fiedler(8)
- ----------------------------------------------------------------
Lt. Gen. Eugene P.
Forrester(9)
- ----------------------------------------------------------------
Keith R. Fox(10)
- ----------------------------------------------------------------
George L. Maddox, Jr.(11)
- ----------------------------------------------------------------
Robert J. Myers(12)
- ----------------------------------------------------------------
James H. Schulz(13)
- ----------------------------------------------------------------
Gordon Shillinglaw(14)
- ----------------------------------------------------------------
Joan Edelman Spero(15)
- ----------------------------------------------------------------
Jean Gleason Stromberg(16)
- ----------------------------------------------------------------
Jean C. Tempel(17)
- ----------------------------------------------------------------
Steven Zaleznick(18)
- ----------------------------------------------------------------
[All Trustees and Officers
as a Group]
- ----------------------------------------------------------------
</TABLE>
(1) As of January 31, 2000, Ms. Anderson's total aggregate holdings in each
series of the Acquired 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 Acquired 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 Acquired 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 Acquired 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. Coughlin's total aggregate holdings in each
series of the Acquired Trust listed above and all other funds in the Scudder
Family of Funds and AARP Funds ranged between $___________ and $___________.
<PAGE>
(6) As of January 31, 2000, Mr. Deets's total aggregate holdings in each
series of the Acquired 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 Acquired 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 Acquired 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 Acquired 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 Acquired 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 Acquired 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 Acquired 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 Acquired 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 Acquired 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 Acquired 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 Acquired 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 Acquired 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 Acquired Trust listed above and all other funds in the Scudder
Family of Funds and AARP Funds ranged between $___________ and $___________.
2
<PAGE>
Appendix 2
Beneficial Owners of Fund Shares
-55-
<PAGE>
This proxy statement/prospectus is accompanied by the Acquiring Fund's
prospectus dated October 1, 1999, which was previously filed with the Commission
via EDGAR on September 29, 1999 (File No. 2-57139) and is incorporated by
reference herein.
-56-
<PAGE>
PART B
SCUDDER MUNICIPAL TRUST
- --------------------------------------------------------------------------------
Statement of Additional Information
[date]
- --------------------------------------------------------------------------------
Acquisition of the Assets of By and in Exchange for Shares of
AARP Insured Tax Free General Bond Fund Scudder Managed Municipal Bonds
(the "Acquired Fund"), a series of (the "Acquiring Fund"),
AARP Tax Free Income Trust a series of Scudder Municipal Trust
Two International Place (the "Acquiring Trust")
Boston, MA 02110-4103 Two International Place
Boston, MA 02110-4103
This Statement of Additional Information is available to the shareholders of the
Acquired Fund in connection with a proposed transaction whereby the Acquiring
Fund will acquire all or substantially all of the assets and all of the
liabilities of the Acquired Fund in exchange for shares of the Acquiring Fund
(the "Reorganization").
This Statement of Additional Information of the Acquiring Trust contains
material which may be of interest to investors but which is not included in the
Prospectus/Proxy Statement of the Acquiring Trust relating to the
Reorganization. This Statement of Additional Information consists of this cover
page and the following documents:
1. The Acquiring Fund's statement of additional information dated October 1,
1999, which was previously filed with the Securities and Exchange Commission
(the "Commission") via EDGAR on September 29, 1999 (File No. 2-57139) and is
incorporated by reference herein.
2. The Acquiring Fund's annual report to shareholders for the fiscal year ended
May 31, 1999, which was previously filed with the Commission via EDGAR on July
26, 1999 (File No. 811-02671) and is incorporated by reference herein.
3. The Acquired Fund's prospectus dated February 1, 2000, which was previously
filed with the Commission via EDGAR on January 31, 2000 (File No. 2-91579) and
is incorporated by reference herein.
4. The Acquired Fund's statement of additional information dated February 1,
2000, which was previously filed with the Commission via EDGAR on January 31,
2000 (File No. 2-91579) and is incorporated by reference herein.
5. The Acquired Fund's annual report to shareholders for the fiscal year ended
September 30, 1999, which was previously filed with the Commission via EDGAR on
December 3, 1999 (File No. 811-04050) and is incorporated by reference herein.
6. The financial statements and schedules of the Acquiring Fund and the Acquired
Fund required by Regulation S-X for the periods specified in Article 3 thereof,
which are filed herein.
This Statement of Additional Information is not a prospectus. A Prospectus/Proxy
Statement dated ____________________ relating to the Reorganization may be
obtained by writing the Acquired Fund at
-57-
<PAGE>
Two International Place, Boston, MA 02110-4103 or by calling Scudder Investor
Services, Inc. at 1-800-225-2470. This Statement of Additional Information
should be read in conjunction with the Prospectus/Proxy Statement.
-58-
<PAGE>
PRO FORMA
PORTFOLIO OF INVESTMENTS
AS OF OCTOBER 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Scudder Scudder
Managed AARP Insured Ohio Tax Pro Forma Scudder
Muncipal Bond Tax Free Free Fund Combined Managed Municpal
Principal Amount General Bond Principal Principal Bond Market
($) Principal Amount($) Amount($) Value($)
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SHORT-TERM MUNICIPAL INVESTMENTS 1.5%
- ----------------------------------------
ALASKA
Valdez, AK, Marine Terminal Revenue, 1,500,000 1,500,000 1,500,000
Exxon Pipeline Project B, 3.750%,
12/1/33
ARIZONA
Maricopa County, AZ, Pollution Control 700,000 700,000
Revenue, Series A, Variable Rate,
5.100%, 05/01/2029
MASSACHUSETTS
Massachusetts Health & Educational 6,500,000 6,500,000 6,500,000
Facilities Authority, Series B, Daily
Demand Note, MBIA Insured, 3.850%,
7/1/05
NEW YORK
New York City, NY, General Obligation, 500,000 500,000
Series B, Daily Demand Note, FGIC
Insured, 4.050%, 10/01/2020
New York Municipal Water Authority, 3,000,000 3,000,000
Series 1994 G, Variable Rate Demand
Note, 3.750%, 06/15/2024
Long Island, NY, Power Authority New 5,000,000 5,000,000 5,000,000
York Electricity, Revenue, Series 6,
3.750%, 05/01/2033
New York State Energy Research & 5,000,000 5,000,000 5,000,000
Development Authority, Pollution
Control Revenue, Niagara Mohawk Co.,
Daily Demand Note, 3.950%, 07/01/2015
OHIO
Ohio Air Quality Development 1,200,000 1,200,000
Authority, Cincinnati Gas and
Electric, Daily Demmand Note, 4.150%,
12/1/15
Ohio Air Quality Development Authority 3,400,000 3,400,000
Revenue, Cincinnati Gas and Electric,
Daily Demand Note, 3.700%, 09/01/2030
Ohio Water Development Authority, 400,000 400,000
Environmental Mead Corporation, Series
1986 B, Daily Demand Note, 3.750%,
11/1/15
TEXAS
Harris County, TX, Health Facilities, 2,000,000 5,000,000 7,000,000 2,000,000
Revenue, Saint Lukes Episcopal
Hospital, Series A, 3.700%, 02/15/2027
Harris County, TX, Health Facilities, 1,500,000 1,500,000
Revenue, St Lukes Episcopal Hospital,
Series B, 3.800%, 02/15/2027
==============
SHORT-TERM MUNICIPAL INVESTMENTS 20,000,000
==============
Short-term Municipal Investments (Cost of
$20,000,000 $10,700,000 $5,000,000
and $35,700,000 respectively)
LONG-TERM MUNICIPAL INVESTMENTS 98.5%
- ----------------------------------------
ALASKA
Anchorage, AK, Electric Utility 2,620,000 2,620,000
Revenue, 6.500%, 12/01/2007
North Slope Borough, AK, General 7,000,000 4,000,000 11,000,000 4,967,340
Obligation, Capital Appreciation,
Series A, Zero Coupon, 06/30/2006
North Slope Borough, AK, General 5,000,000 5,000,000
Obligation, Capital Appreciation,
Series A, Zero Coupon, 06/30/2007
North Slope Borough, AK, General 7,000,000 7,000,000
Obligation, Series 1997A, Zero Coupon,
6/30/08
North Slope Borough, AK, General 18,200,000 25,600,000 43,800,000 13,672,022
Obligation, Capital Appreciation,
Series B, Zero Coupon, 06/30/2005
North Slope Borough, AK, General 8,000,000 11,000,000 19,000,000 6,871,760
Obligation, Series B, Zero Coupon,
1/1/03
North Slope Borough, AK, General 15,000,000 15,500,000 30,500,000 11,910,900
Obligation, Capital Appreciation,
Series B, Zero Coupon, 06/30/2004
ARIZONA
Arizonia Municipal Finance Program, 3,500,000 3,500,000
Certificate of Participation, Series
<CAPTION>
AARP Insured Scudder Pro Forma
Tax Free General Ohio Tax Free Combined
Bond Market Fund Market Market
Value($) Value($) Value($)(1)
--------------------------------------------
<S> <C> <C> <C>
SHORT-TERM MUNICIPAL INVESTMENTS 1.5%
- ----------------------------------------
ALASKA
Valdez, AK, Marine Terminal Revenue, 500,000
Exxon Pipeline Project B, 3.750%,
12/1/33
ARIZONA
Maricopa County, AZ, Pollution Control 700,000 700,000
Revenue, Series A, Variable Rate,
5.100%, 05/01/2029
MASSACHUSETTS
Massachusetts Health & Educational 6,500,000
Facilities Authority, Series B, Daily
Demand Note, MBIA Insured, 3.850%,
7/1/05
NEW YORK
New York City, NY, General Obligation, 500,000 500,000
Series B, Daily Demand Note, FGIC
Insured, 4.050%, 10/01/2020
New York Municipal Water Authority, 3,000,000 3,000,000
Series 1994 G, Variable Rate Demand
Note, 3.750%, 06/15/2024
Long Island, NY, Power Authority New 5,000,000
York Electricity, Revenue, Series 6,
3.750%, 05/01/2033
New York State Energy Research & 5,000,000
Development Authority, Pollution
Control Revenue, Niagara Mohawk Co.,
Daily Demand Note, 3.950%, 07/01/2015
OHIO
Ohio Air Quality Development 1,200,000 1,200,000
Authority, Cincinnati Gas and
Electric, Daily Demmand Note, 4.150%,
12/1/15
Ohio Air Quality Development Authority 3,400,000 3,400,000
Revenue, Cincinnati Gas and Electric,
Daily Demand Note, 3.700%, 09/01/2030
Ohio Water Development Authority, 400,000 400,000
Environmental Mead Corporation, Series
1986 B, Daily Demand Note, 3.750%,
11/1/15
TEXAS
Harris County, TX, Health Facilities, 5,000,000 7,000,000
Revenue, Saint Lukes Episcopal
Hospital, Series A, 3.700%, 02/15/2027
Harris County, TX, Health Facilities, 1,500,000 1,500,000
Revenue, St Lukes Episcopal Hospital,
Series B, 3.800%, 02/15/2027
============================================
SHORT-TERM MUNICIPAL INVESTMENTS 10,700,000 5,000,000 35,700,000
============================================
Short-term Municipal Investments (Cost of
$20,000,000 $10,700,000 $5,000,000
and $35,700,000 respectively)
LONG-TERM MUNICIPAL INVESTMENTS 98.5%
- ----------------------------------------
ALASKA
Anchorage, AK, Electric Utility 2,860,475 2,860,475
Revenue, 6.500%, 12/01/2007
North Slope Borough, AK, General 2,838,480 7,805,820
Obligation, Capital Appreciation,
Series A, Zero Coupon, 06/30/2006
North Slope Borough, AK, General 3,345,100 3,345,100
Obligation, Capital Appreciation,
Series A, Zero Coupon, 06/30/2007
North Slope Borough, AK, General 4,406,710 4,406,710
Obligation, Series 1997A, Zero Coupon,
6/30/08
North Slope Borough, AK, General 19,230,976 32,902,998
Obligation, Capital Appreciation,
Series B, Zero Coupon, 06/30/2005
North Slope Borough, AK, General 9,448,670 16,320,430
Obligation, Series B, Zero Coupon,
1/1/03
North Slope Borough, AK, General 12,307,930 24,218,830
Obligation, Capital Appreciation,
Series B, Zero Coupon, 06/30/2004
ARIZONA
Arizonia Municipal Finance Program, 4,193,630 4,193,630
Certificate of Participation, Series
<PAGE>
<CAPTION>
Scudder Scudder
Managed AARP Insured Ohio Tax Pro Forma Scudder
Muncipal Bond Tax Free Free Fund Combined Managed Municpal
Principal Amount General Bond Principal Principal Bond Market
($) Principal Amount($) Amount($) Value($)
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SHORT-TERM MUNICIPAL INVESTMENTS 1.5%
- ----------------------------------------
25, MBIA, 7.875%, 08/01/2014
Maricopa County, AZ, School District 4,000,000 4,000,000
#28, Kyrene Elementary, Series B, Zero
Coupon, FGIC, 01/01/2004
Maricopa County, AZ, School District 2,950,000 2,950,000
#6, Washington Elementary, Series B,
FGIC, 4.100%, 07/01/2013
Maricopa County, AZ, Unified School 5,280,000 5,280,000
District #41, Gilbert School, FGIC,
Zero Coupon, 01/01/2005
Maricopa County, AZ, School District 4,905,000 4,905,000 3,585,898
No. 28, Kyrene Elementary School,
Series B, Zero Coupon, 01/01/2006
CALIFORNIA
Alameda County, CA, Certificate of 8,995,000 8,995,000
Participation, Santa Rita Jail
Project, 5.375%, 06/01/2009
Banning, CA, Wastewater, Certificate 960,000 960,000
of Participation, AMBAC, 8.000%,
1/1/19
Banning, CA, Wastewater, Certificate 1,080,000 1,080,000
of Participation, AMBAC, 8.000%,
1/1/19
Big Bear Lake, CA , MBIA Insured, 3,800,000 3,800,000
Series 1996, 6.000%, 04/01/2011
California General Obligation, 6.250%, 4,000,000 4,000,000 4,389,360
10/1/07
California General Obligation, 6.250%, 5,000,000 5,000,000 5,468,200
4/1/08
California, General Obligation, 15,600,000 15,600,000 17,405,388
6.600%, 02/01/2009
California Housing Finance Agency, 1,000,000 1,000,000 1,079,340
Multi-Unit Rental Housing Revenue,
Series A, 7.700%, 08/01/2010
California Pollution Control Financing 12,000,000 12,000,000 12,914,760
Authority, Solid Waste Disposal
Revenue, Canadian Fibre of Riverside
PJ, Series 1997 A, 9.000%, 07/01/2019
California Statewide Community 2,250,000 2,250,000 2,304,675
Development Authority, Certificate of
Participation, Lutheran Homes, 5.500%,
11/15/08
Foothill Eastern Transportation 6,250,000 6,250,000 5,259,500
Corridor Agency, CA , Toll Road
Revenue, Senior Lien,
Series A, Step-up
Coupon 0% to
1/1/2005, 7.15% to
1/1/2014, 01/01/2014
Foothill Eastern Transportation 4,000,000 4,000,000 3,354,560
Corridor Agency, CA, Toll Road
Revenue, Senior Lien,
Series A, Step-up
Coupon, 0% to
1/1/2005, 7.1% to
1/1/2011, 01/01/2011
Foothill Eastern Transportation 4,000,000 4,000,000 3,359,440
Corridor Agency, CA, Toll Road
Revenue, Senior Lien,
Series A, Step-up
Coupon, 0% to
1/1/2005, 7.1% to
1/1/2012, 01/01/2012
Foothill Eastern Transportation 11,000,000 11,000,000 4,599,760
Corridor Agency, CA, Toll Road
Revenue, Senior Lien, Series A, Zero
Coupon, 01/01/2015
Foothill Eastern Transportation 5,000,000 5,000,000 4,110,500
Corridor Agency, CA, Toll Road
Revenue, Senior Lien,
Series A, Step-up
Coupon, 0% to
1/1/2005, 7.05% to
1/1/2009, 01/01/2009
Los Angeles County, CA, Certificate of 4,030,000 4,030,000 2,649,967
Participation, Disney Parking Project,
Zero Coupon, 09/01/2007
Los Angeles County, CA, Certificate of 5,425,000 5,425,000 3,129,618
Participation, Disney Parking Project,
Zero Coupon, 09/01/2009
California Housing Finance Agency, 2,015,000 2,015,000
MBIA Insured, 5.300%, 08/01/2014
California State Public Works Board, 8,095,000 8,095,000
Lease Revenue, Series A, AMBAC
insured, 6.300%, 12/01/2006
Los Angeles County, CA , Public Works 3,000,000 3,000,000
Authority, MBIA Insured, Series 1996B,
5.250%, 09/01/2011
Los Angeles County, CA, Capital Asset 9,000,000 9,000,000
Leasing, AMBAC, 6.000%, 12/01/2006
<CAPTION>
AARP Insured Scudder Pro Forma
Tax Free General Ohio Tax Free Combined
Bond Market Fund Market Market
Value($) Value($) Value($)(1)
--------------------------------------------
<S> <C> <C> <C>
SHORT-TERM MUNICIPAL INVESTMENTS 1.5%
- ----------------------------------------
25, MBIA, 7.875%, 08/01/2014
Maricopa County, AZ, School District 3,264,480 3,264,480
#28, Kyrene Elementary, Series B, Zero
Coupon, FGIC, 01/01/2004
Maricopa County, AZ, School District 2,440,152 2,440,152
#6, Washington Elementary, Series B,
FGIC, 4.100%, 07/01/2013
Maricopa County, AZ, Unified School 4,081,546 4,081,546
District #41, Gilbert School, FGIC,
Zero Coupon, 01/01/2005
Maricopa County, AZ, School District 3,585,898
No. 28, Kyrene Elementary School,
Series B, Zero Coupon, 01/01/2006
CALIFORNIA
Alameda County, CA, Certificate of 9,242,183 9,242,183
Participation, Santa Rita Jail
Project, 5.375%, 06/01/2009
Banning, CA, Wastewater, Certificate 1,182,202 1,182,202
of Participation, AMBAC, 8.000%,
1/1/19
Banning, CA, Wastewater, Certificate 1,316,639 1,316,639
of Participation, AMBAC, 8.000%,
1/1/19
Big Bear Lake, CA , MBIA Insured, 4,055,816 4,055,816
Series 1996, 6.000%, 04/01/2011
California General Obligation, 6.250%, 4,389,360
10/1/07
California General Obligation, 6.250%, 5,468,200
4/1/08
California, General Obligation, 17,405,388
6.600%, 02/01/2009
California Housing Finance Agency, 1,079,340
Multi-Unit Rental Housing Revenue,
Series A, 7.700%, 08/01/2010
California Pollution Control Financing 12,914,760
Authority, Solid Waste Disposal
Revenue, Canadian Fibre of Riverside
PJ, Series 1997 A, 9.000%, 07/01/2019
California Statewide Community 2,304,675
Development Authority, Certificate of
Participation, Lutheran Homes, 5.500%,
11/15/08
Foothill Eastern Transportation 5,259,500
Corridor Agency, CA , Toll Road
Revenue, Senior Lien,
Series A, Step-up
Coupon 0% to
1/1/2005, 7.15% to
1/1/2014, 01/01/2014
Foothill Eastern Transportation 3,354,560
Corridor Agency, CA, Toll Road
Revenue, Senior Lien,
Series A, Step-up
Coupon, 0% to
1/1/2005, 7.1% to
1/1/2011, 01/01/2011
Foothill Eastern Transportation 3,359,440
Corridor Agency, CA, Toll Road
Revenue, Senior Lien,
Series A, Step-up
Coupon, 0% to
1/1/2005, 7.1% to
1/1/2012, 01/01/2012
Foothill Eastern Transportation 4,599,760
Corridor Agency, CA, Toll Road
Revenue, Senior Lien, Series A, Zero
Coupon, 01/01/2015
Foothill Eastern Transportation 4,110,500
Corridor Agency, CA, Toll Road
Revenue, Senior Lien,
Series A, Step-up
Coupon, 0% to
1/1/2005, 7.05% to
1/1/2009, 01/01/2009
Los Angeles County, CA, Certificate of 2,649,967
Participation, Disney Parking Project,
Zero Coupon, 09/01/2007
Los Angeles County, CA, Certificate of 3,129,618
Participation, Disney Parking Project,
Zero Coupon, 09/01/2009
California Housing Finance Agency, 2,039,039 2,039,039
MBIA Insured, 5.300%, 08/01/2014
California State Public Works Board, 8,876,006 8,876,006
Lease Revenue, Series A, AMBAC
insured, 6.300%, 12/01/2006
Los Angeles County, CA , Public Works 2,991,930 2,991,930
Authority, MBIA Insured, Series 1996B,
5.250%, 09/01/2011
Los Angeles County, CA, Capital Asset 9,653,220 9,653,220
Leasing, AMBAC, 6.000%, 12/01/2006
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Scudder Scudder
Managed AARP Insured Ohio Tax Pro Forma Scudder
Muncipal Bond Tax Free Free Fund Combined Managed Municpal
Principal Amount General Bond Principal Principal Bond Market
($) Principal Amount($) Amount($) Value($)
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Los Angeles County, CA, Public Works 11,140,000 11,140,000
Finance Authority, Lease Revenue,
Multiple Projects IV, MBIA, 4.750%,
12/1/10
Madera County, CA, Certificates of 2,840,000 2,840,000
Participation, Valley Childrens
Hospital, 6.500%, 03/15/2010
Oakland, CA, Redevelopment Agency, Tax 2,000,000 2,000,000
Allocation, AMBAC, 6.000%, 02/01/2007
Roseville, CA, Unified High School 1,830,000 1,830,000 1,032,797
District, General Obligation, Series
B, Zero Coupon, 08/01/2010
Roseville, CA, Unified High School 1,000,000 1,000,000 399,450
District, General Obligation, Series
B, Zero Coupon, 08/01/2015
San Joaquin Hills, CA, Transportation, 2,000,000 2,000,000 1,015,280
Revenue, Series A, Zero Coupon,
1/15/12
San Joaquin, CA, Certificate of 3,895,000 3,895,000 3,917,630
Participation, County Public
Facilities Project, 5.500%, 11/15/2013
San Diego County, CA, Water Authority 6,300,000 6,300,000
Revenue, Certificate of Participation,
FGIC, 5.632%, 04/25/2007
San Diego, CA, Water Authority,, 4,500,000 4,500,000
Certificate of Participation, FGIC,
5.681%, 04/22/2009
San Francisco, CA, Bay Area Rapid 2,000,000 2,000,000
Transit District, Sales Tax Revenue
Refunding, AMBAC, 6.750%, 07/01/2010
San Joaquin Hills, CA, Transportation, 3,000,000 3,000,000
Revenue, Series A, Zero Coupon,
1/15/12
San Joaquin, CA, Certificate of 2,000,000 2,000,000
Participation, County Public
Facilities Project, 5.500%, 11/15/2013
Sweetwater Authority, CA, Water 10,000,000 10,000,000
Revenue, AMBAC insured, 5.250%,
4/1/10
COLORADO
Colorado Housing Finance Authority 2,030,000 2,030,000 2,205,209
Revenue, 8.100%, 10/01/2005
Colorado Housing Finance Authority 2,145,000 2,145,000 2,332,988
Revenue, 8.150%, 10/01/2006
Colorado Housing Finance Authority 2,320,000 2,320,000 2,523,325
Revenue, Multi-Family Mortgage, Series
A, 8.150%, 10/01/2007
Colorado Housing Finance Authority 2,510,000 2,510,000 2,733,315
Revenue, Multi-Family Mortgage, Series
A, 8.200%, 10/01/2008
Colorado Housing Finance Authority 2,725,000 2,725,000 2,967,443
Revenue, Multi-Family Mortgage, Series
A, 8.200%, 10/01/2009
Colorado Housing Finance Authority 1,940,000 1,940,000 2,115,201
Revenue, 8.250%, 10/01/2010
Colorado Housing Finance Authority 1,680,000 1,680,000 1,831,721
Revenue, 8.250%, 10/01/2011
Colorado Housing Finance Authority 1,945,000 1,945,000 2,120,653
Revenue, 8.250%, 10/01/2012
Denver, CO, Urban Renewal Authority, 945,000 945,000 990,029
Tax Increment Revenue,
Pavilions-Convention, AMT, Series
1989, 7.500%, 09/01/2004
Mesa County, CO, Residual Revenue, 6,435,000 6,435,000
Single Family Housing, ETM, Series
1992, Zero Coupon, 12/01/2011
CONNECTICUT
Connecticut Resource Recovery 2,000,000 2,000,000
Authority , MBIA Insured, Series 1996,
6.250%, 11/15/2005
Connecticut Resource Recovery 4,525,000 4,525,000
Authority , MBIA Insured, Series
1996A, 6.250%, 11/15/2006
Connecticut State Health Facility 5,000,000 5,000,000
Authority , Series 1992B, 6.150%,
11/15/04
DISTRICT OF COLUMBIA
<CAPTION>
AARP Insured Scudder Pro Forma
Tax Free General Ohio Tax Free Combined
Bond Market Fund Market Market
Value($) Value($) Value($)(1)
-------------------------------------------
<S> <C> <C> <C>
Los Angeles County, CA, Public Works 10,739,294 10,739,294
Finance Authority, Lease Revenue,
Multiple Projects IV, MBIA, 4.750%,
12/1/10
Madera County, CA, Certificates of 3,154,700 3,154,700
Participation, Valley Childrens
Hospital, 6.500%, 03/15/2010
Oakland, CA, Redevelopment Agency, Tax 2,150,480 2,150,480
Allocation, AMBAC, 6.000%, 02/01/2007
Roseville, CA, Unified High School 1,032,797
District, General Obligation, Series
B, Zero Coupon, 08/01/2010
Roseville, CA, Unified High School 399,450
District, General Obligation, Series
B, Zero Coupon, 08/01/2015
San Joaquin Hills, CA, Transportation, 1,015,280
Revenue, Series A, Zero Coupon,
1/15/12
San Joaquin, CA, Certificate of 3,917,630
Participation, County Public
Facilities Project, 5.500%, 11/15/2013
San Diego County, CA, Water Authority 6,613,110 6,613,110
Revenue, Certificate of Participation,
FGIC, 5.632%, 04/25/2007
San Diego, CA, Water Authority,, 4,701,240 4,701,240
Certificate of Participation, FGIC,
5.681%, 04/22/2009
San Francisco, CA, Bay Area Rapid 2,265,300 2,265,300
Transit District, Sales Tax Revenue
Refunding, AMBAC, 6.750%, 07/01/2010
San Joaquin Hills, CA, Transportation, 1,522,920 1,522,920
Revenue, Series A, Zero Coupon,
1/15/12
San Joaquin, CA, Certificate of 2,011,620 2,011,620
Participation, County Public
Facilities Project, 5.500%, 11/15/2013
Sweetwater Authority, CA, Water 10,111,600 10,111,600
Revenue, AMBAC insured, 5.250%,
4/1/10
COLORADO
Colorado Housing Finance Authority 2,205,209
Revenue, 8.100%, 10/01/2005
Colorado Housing Finance Authority 2,332,988
Revenue, 8.150%, 10/01/2006
Colorado Housing Finance Authority 2,523,325
Revenue, Multi-Family Mortgage, Series
A, 8.150%, 10/01/2007
Colorado Housing Finance Authority 2,733,315
Revenue, Multi-Family Mortgage, Series
A, 8.200%, 10/01/2008
Colorado Housing Finance Authority 2,967,443
Revenue, Multi-Family Mortgage, Series
A, 8.200%, 10/01/2009
Colorado Housing Finance Authority 2,115,201
Revenue, 8.250%, 10/01/2010
Colorado Housing Finance Authority 1,831,721
Revenue, 8.250%, 10/01/2011
Colorado Housing Finance Authority 2,120,653
Revenue, 8.250%, 10/01/2012
Denver, CO, Urban Renewal Authority, 990,029
Tax Increment Revenue,
Pavilions-Convention, AMT, Series
1989, 7.500%, 09/01/2004
Mesa County, CO, Residual Revenue, 3,288,864 3,288,864
Single Family Housing, ETM, Series
1992, Zero Coupon, 12/01/2011
CONNECTICUT
Connecticut Resource Recovery 2,149,460 2,149,460
Authority , MBIA Insured, Series 1996,
6.250%, 11/15/2005
Connecticut Resource Recovery 4,882,294 4,882,294
Authority , MBIA Insured, Series
1996A, 6.250%, 11/15/2006
Connecticut State Health Facility 5,136,250 5,136,250
Authority , Series 1992B, 6.150%,
11/15/04
DISTRICT OF COLUMBIA
<PAGE>
<CAPTION>
Scudder Scudder
Managed AARP Insured Ohio Tax Pro Forma Scudder
Muncipal Bond Tax Free Free Fund Combined Managed Municpal
Principal Amount General Bond Principal Principal Bond Market
($) Principal Amount($) Amount($) Value($)
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
District of Columbia, General 9,000,000 9,000,000
Obligation, Series B, 5.500%,
6/1/10
District of Columbia, Prerefunded, 350,000 350,000
Series A, 5.875%, 06/01/2005
District of Columbia, Unrefunded 4,400,000 4,400,000
Balance, Series A, 5.875%, 06/01/2005
District of Columbia, Unrefunded 2,160,000 2,160,000
Balance, MBIA Insured, 6.250%,
6/1/10
District of Columbia, General 110,000 110,000
Obligation, Prerefunded 8/1/99 at 100,
MBIA Insured,, 6.500%, 06/01/2010
District of Columbia, General 3,500,000 3,500,000
Obligation, Series B, MBIA, Zero
Coupon, 06/01/2000
District of Columbia, General 2,000,000 2,000,000 1,686,940
Obligation, Series B, Zero Coupon,
6/1/03
District of Columbia, General 1,350,000 1,350,000 1,368,819
Obligation, Series B3, 5.300%,
6/1/05
District of Columbia, General 1,000,000 1,000,000 1,017,940
Obligation, Series B3, 5.500%,
6/1/07
District of Columbia, General 3,225,000 3,225,000 3,266,677
Obligation, Series B3, 5.500%,
6/1/08
District of Columbia, Water and Sewer 5,000,000 5,000,000 4,714,600
Authority, Public Utility Revenue,
5.500%, 10/01/2023
District of Columbia, General 3,300,000 3,300,000 3,437,478
Obligation, Series A, 5.875%,
6/1/05
District of Columbia, General 12,500,000 12,500,000 12,618,250
Obligation, Inverse Floating Rate
Note, Series 1999B, 6.818%, 06/01/2010
District of Columbia, Certificate of 1,780,000 1,780,000 1,816,704
Participation, 6.875%, 01/01/2003
District of Columbia, Certificate of 1,000,000 1,000,000 1,047,830
Participation, 7.300%, 01/01/2013
District of Columbia, Unrefunded 3,905,000 3,905,000
Balance, Series B, 6.125%, 06/01/2003
District of Columbia, General 95,000 95,000
Obligation, Prerefunded 6/1/02 at 102,
Series B,, 6.125%, 06/01/2003
District of Columbia, General 18,905,000 18,905,000
Obligation, Series B, AMBAC, 5.400%,
6/1/06
District of Columbia, General 10,000,000 10,000,000
Obligation, Series B3, MBIA, 5.400%,
6/1/06
District of Columbia, General 25,000,000 25,000,000
Obligation, Series B, AMBAC, 5.500%,
6/1/07
District of Columbia, General 21,300,000 21,300,000
Obligation, Series B, AMBAC, 5.500%,
6/1/08
District of Columbia, General 16,150,000 16,150,000
Obligation, Series B, AMBAC, 5.500%,
6/1/09
District of Columbia, General 2,840,000 2,840,000
Obligation, Series B, MBIA, 5.500%,
6/1/09
District of Columbia, General 1,050,000 1,050,000
Obligation, Series B, MBIA, 5.500%,
6/1/12
Washington DC Convention Center, 4,000,000 4,000,000
Authority Dedicated Tax Revenue,
5.250%, 10/01/2012
GEORGIA
Cobb County, GA, Kennestone Hospital 2,305,000 2,305,000
Authority, Series A, MBIA, 5.625%,
4/1/11
Burke County, GA, Development 5,000,000 5,000,000 5,599,450
Authority, Pollution Control Revenue,
Votgle Project, 7.700%, 01/01/2006
Georgia Municipal Electric Authority, 5,000,000 5,000,000 5,429,650
Power Revenue, Series V, 6.500%,
1/1/12
<CAPTION>
AARP Insured Scudder Pro Forma
Tax Free General Ohio Tax Free Combined
Bond Market Fund Market Market
Value($) Value($) Value($)(1)
--------------------------------------------
<S> <C> <C> <C>
District of Columbia, General 9,056,970 9,056,970
Obligation, Series B, 5.500%,
6/1/10
District of Columbia, Prerefunded, 368,060 368,060
Series A, 5.875%, 06/01/2005
District of Columbia, Unrefunded 4,583,304 4,583,304
Balance, Series A, 5.875%, 06/01/2005
District of Columbia, Unrefunded 2,327,897 2,327,897
Balance, MBIA Insured, 6.250%,
6/1/10
District of Columbia, General 121,525 121,525
Obligation, Prerefunded 8/1/99 at 100,
MBIA Insured,, 6.500%, 06/01/2010
District of Columbia, General 3,417,680 3,417,680
Obligation, Series B, MBIA, Zero
Coupon, 06/01/2000
District of Columbia, General 1,686,940
Obligation, Series B, Zero Coupon,
6/1/03
District of Columbia, General 1,368,819
Obligation, Series B3, 5.300%,
6/1/05
District of Columbia, General 1,017,940
Obligation, Series B3, 5.500%,
6/1/07
District of Columbia, General 3,266,677
Obligation, Series B3, 5.500%,
6/1/08
District of Columbia, Water and Sewer 4,714,600
Authority, Public Utility Revenue,
5.500%, 10/01/2023
District of Columbia, General 3,437,478
Obligation, Series A, 5.875%,
6/1/05
District of Columbia, General 12,618,250
Obligation, Inverse Floating Rate
Note, Series 1999B, 6.818%, 06/01/2010
District of Columbia, Certificate of 1,816,704
Participation, 6.875%, 01/01/2003
District of Columbia, Certificate of 1,047,830
Participation, 7.300%, 01/01/2013
District of Columbia, Unrefunded 4,082,014 4,082,014
Balance, Series B, 6.125%, 06/01/2003
District of Columbia, General 100,565 100,565
Obligation, Prerefunded 6/1/02 at 102,
Series B,, 6.125%, 06/01/2003
District of Columbia, General 19,207,480 19,207,480
Obligation, Series B, AMBAC, 5.400%,
6/1/06
District of Columbia, General 10,160,000 10,160,000
Obligation, Series B3, MBIA, 5.400%,
6/1/06
District of Columbia, General 25,448,500 25,448,500
Obligation, Series B, AMBAC, 5.500%,
6/1/07
District of Columbia, General 21,575,196 21,575,196
Obligation, Series B, AMBAC, 5.500%,
6/1/08
District of Columbia, General 16,280,815 16,280,815
Obligation, Series B, AMBAC, 5.500%,
6/1/09
District of Columbia, General 2,863,004 2,863,004
Obligation, Series B, MBIA, 5.500%,
6/1/09
District of Columbia, General 1,034,030 1,034,030
Obligation, Series B, MBIA, 5.500%,
6/1/12
Washington DC Convention Center, 3,858,000 3,858,000
Authority Dedicated Tax Revenue,
5.250%, 10/01/2012
GEORGIA
Cobb County, GA, Kennestone Hospital 2,350,639 2,350,639
Authority, Series A, MBIA, 5.625%,
4/1/11
Burke County, GA, Development 5,599,450
Authority, Pollution Control Revenue,
Votgle Project, 7.700%, 01/01/2006
Georgia Municipal Electric Authority, 5,429,650
Power Revenue, Series V, 6.500%,
1/1/12
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Scudder Scudder
Managed AARP Insured Ohio Tax Pro Forma Scudder
Muncipal Bond Tax Free Free Fund Combined Managed Municpal
Principal Amount General Bond Principal Principal Bond Market
($) Principal Amount($) Amount($) Value($)
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Georgia Municipal Electricity 3,500,000 3,500,000 3,800,755
Authority, Power Revenue, Fourth
Crossover, Project No. 1, Series 1997
X, 6.500%, 01/01/2012
Georgia, General Obligation, Series B, 4,000,000 4,000,000
5.750%, 08/01/2012
Macon-Bibb County, GA, Hospital 3,000,000 3,000,000
Authority, Medical Center of Central
Georgia, Series C, FGIC, 5.250%,
8/1/2011
Municipal Electric Authority Power 3,500,000 3,500,000
Revenue , Series Y, 6.400%, 01/01/2013
HAWAII
State of Hawaii, General Obligation, 18,095,000 18,095,000
Series CT, 5.700%, 09/01/2013
State of Hawaii, General Obligation, 2,000,000 2,000,000
Series 1992 BZ, FGIC Insured, 6.000%,
10/1/2009
ILLINOIS
Central Lake County, IL, Joint Action 2,245,000 2,245,000
Water Agency, Refunding Revenue, MBIA,
Zero Coupon, 05/01/2002
Central Lake County, IL, Joint Action 2,445,000 2,445,000 1,954,655
Water Agency, Refunding, Zero Coupon,
5/1/2004
Chicago, IL, Public Building 4,000,000 4,000,000 2,598,200
Commission, Capital Appreciation, ETM,
Series 1990 A, Zero Coupon, 01/01/2008
Chicago, IL, Public Building 2,655,000 2,655,000 2,664,399
Commission, Building Revenue, Series
A, 5.250%, 12/01/2008
Chicago, IL, Wastewater Transmission 11,990,000 11,990,000
Revenue, FGIC, 5.500%, 01/01/2009
Chicago, IL, Wastewater Transmission 7,220,000 7,220,000
Revenue, FGIC, 5.500%, 01/01/2010
Chicago, IL, General Obligation Lease, 26,000,000 26,000,000
Board of Education, Series A, 6.250%,
1/1/2015
Chicago, IL, Board of Education, 36,625,000 36,625,000
Certificates of Participation, Series
A, 6.000%, 01/01/2020
Chicago, IL, Motor Fuel Tax Revenue, 5,000,000 5,000,000 4,810,150
5.375%, 01/01/2014
Chicago, IL, Wastewater Transmission 3,215,000 3,215,000 3,123,180
Revenue, 5.375%, 01/01/2013
Chicago, IL, General Obligation, 7,200,000 7,200,000 7,481,952
Emergency Telephone Systems, 5.600%,
1/1/2009
Chicago, IL, General Obligation, 1,620,000 1,620,000
Series B, 5.000%, 01/01/2011
Chicago, IL, General Obligation, 5,200,000 5,200,000
Series B, AMBAC, 5.000%, 01/01/2010
Chicago, IL, General Obligation, 9,550,000 9,550,000
Series B, AMBAC, 5.125%, 01/01/2015
Chicago, IL, General Obligation, 15,410,000 15,410,000
Series A, MBIA, 5.375%, 01/01/2013
Chicago, IL, General Obligation, 3,000,000 3,000,000
AMBAC, 6.250%, 01/01/2011
Chicago, IL, General Obligation, 3,750,000 3,750,000 3,948,300
Series 1996 A2, 6.250%, 01/01/2014
Chicago, IL, General Obligation Lease, 11,025,000 11,025,000
Board of Education, Series A, MBIA
Insured, 6.000%, 01/01/2016
Chicago, IL, General Obligation Lease, 1,600,000 1,600,000
Board of Education , MBIA Insured,
Series 1996, 6.250%, 12/01/2011
Chicago, IL, General Obligation Lease, 11,550,000 11,550,000
Board of Education, Series A, MBIA,
6.250%, 01/01/2010
Chicago, IL, General Obligation Lease, 2,725,000 2,725,000 2,861,414
Board of Education, Series A, 6.250%,
1/1/2015
Chicago, IL, O'Hare International 2,255,000 2,255,000
Airport, Refunding Revenue, AMBAC
Insured, Series 1996A, 6.000%,
1/1/2006
Chicago, IL, O'Hare International 2,250,000 2,250,000 1,966,433
Airport, Special Facilities Revenue,
<CAPTION>
AARP Insured Scudder Pro Forma
Tax Free General Ohio Tax Free Combined
Bond Market Fund Market Market
Value($) Value($) Value($)(1)
--------------------------------------------
<S> <C> <C> <C>
Georgia Municipal Electricity 3,800,755
Authority, Power Revenue, Fourth
Crossover, Project No. 1, Series 1997
X, 6.500%, 01/01/2012
Georgia, General Obligation, Series B, 4,134,960 4,134,960
5.750%, 08/01/2012
Macon-Bibb County, GA, Hospital 2,971,230 2,971,230
Authority, Medical Center of Central
Georgia, Series C, FGIC, 5.250%,
8/1/2011
Municipal Electric Authority Power 3,764,880 3,764,880
Revenue , Series Y, 6.400%, 01/01/2013
HAWAII
State of Hawaii, General Obligation, 18,217,322 18,217,322
Series CT, 5.700%, 09/01/2013
State of Hawaii, General Obligation, 2,113,180 2,113,180
Series 1992 BZ, FGIC Insured, 6.000%,
10/1/2009
ILLINOIS
Central Lake County, IL, Joint Action 1,995,872 1,995,872
Water Agency, Refunding Revenue, MBIA,
Zero Coupon, 05/01/2002
Central Lake County, IL, Joint Action 1,954,655
Water Agency, Refunding, Zero Coupon,
5/1/2004
Chicago, IL, Public Building 2,598,200
Commission, Capital Appreciation, ETM,
Series 1990 A, Zero Coupon, 01/01/2008
Chicago, IL, Public Building 2,664,399
Commission, Building Revenue, Series
A, 5.250%, 12/01/2008
Chicago, IL, Wastewater Transmission 12,231,239 12,231,239
Revenue, FGIC, 5.500%, 01/01/2009
Chicago, IL, Wastewater Transmission 7,264,114 7,264,114
Revenue, FGIC, 5.500%, 01/01/2010
Chicago, IL, General Obligation Lease, 27,301,560 27,301,560
Board of Education, Series A, 6.250%,
1/1/2015
Chicago, IL, Board of Education, 36,920,564 36,920,564
Certificates of Participation, Series
A, 6.000%, 01/01/2020
Chicago, IL, Motor Fuel Tax Revenue, 4,810,150
5.375%, 01/01/2014
Chicago, IL, Wastewater Transmission 3,123,180
Revenue, 5.375%, 01/01/2013
Chicago, IL, General Obligation, 7,481,952
Emergency Telephone Systems, 5.600%,
1/1/2009
Chicago, IL, General Obligation, 1,547,716 1,547,716
Series B, 5.000%, 01/01/2011
Chicago, IL, General Obligation, 5,018,728 5,018,728
Series B, AMBAC, 5.000%, 01/01/2010
Chicago, IL, General Obligation, 8,850,081 8,850,081
Series B, AMBAC, 5.125%, 01/01/2015
Chicago, IL, General Obligation, 14,969,890 14,969,890
Series A, MBIA, 5.375%, 01/01/2013
Chicago, IL, General Obligation, 3,188,250 3,188,250
AMBAC, 6.250%, 01/01/2011
Chicago, IL, General Obligation, 3,948,300
Series 1996 A2, 6.250%, 01/01/2014
Chicago, IL, General Obligation Lease, 11,253,328 11,253,328
Board of Education, Series A, MBIA
Insured, 6.000%, 01/01/2016
Chicago, IL, General Obligation Lease, 1,706,304 1,706,304
Board of Education , MBIA Insured,
Series 1996, 6.250%, 12/01/2011
Chicago, IL, General Obligation Lease, 12,291,048 12,291,048
Board of Education, Series A, MBIA,
6.250%, 01/01/2010
Chicago, IL, General Obligation Lease, 2,861,414
Board of Education, Series A, 6.250%,
1/1/2015
Chicago, IL, O'Hare International 2,369,644 2,369,644
Airport, Refunding Revenue, AMBAC
Insured, Series 1996A, 6.000%,
1/1/2006
Chicago, IL, O'Hare International 1,966,433
Airport, Special Facilities Revenue,
<PAGE>
<CAPTION>
Scudder Scudder
Managed AARP Insured Ohio Tax Pro Forma Scudder
Muncipal Bond Tax Free Free Fund Combined Managed Municpal
Principal Amount General Bond Principal Principal Bond Market
($) Principal Amount($) Amount($) Value($)
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
United Airlines Project, Series A,
5.350%, 09/01/2016
Chicago, IL, Public Building 9,705,000 9,705,000
Commission, Building Revenue, Series
A, MBIA, 5.250%, 12/01/2011
Chicago, IL, Public Building 10,420,000 10,420,000
Commission, Building Revenue, Series
A, MBIA, 5.250%, 12/01/2009
Chicago, IL, Public Building 3,500,000 3,500,000
Commission, Building Revenue, Series
A, MBIA Insured, 5.250%, 12/01/2007
Chicago, IL, Public Building 2,430,000 2,430,000
Commission, Board of Education, Series
A, MBIA, Zero Coupon, 01/01/2006
Chicago,IL, O'Hare International 6,500,000 6,500,000
Airport, Revenue Refunding, Series C,
MBIA, 5.000%, 01/01/2011
Cook & Dupage Counties, IL , Housing 2,550,000 2,550,000
Development Authority, Zero Coupon,
FSA Insured, 12/01/2007
Cook & Dupage Counties, IL , Housing 2,625,000 2,625,000
Development Authority, Zero Coupon,
FSA Insured, 12/01/2008
Cook & Dupage Counties, IL , Housing 2,860,000 2,860,000
Development Authority, Zero Coupon,
FSA Insured, 12/01/2009
Cook County, IL, Community High School 1,700,000 1,700,000
District #233, Capital Appreciation
Series 1993 B, FGIC Insured, Zero
Coupon, 12/01/2008
Cook County, IL, General Obligation, 3,205,000 3,205,000
Zero Coupon, ETM, AMBAC Insured,
11/1/2004
Cook County, IL, General Obligation, 5,000,000 5,000,000
Series C, FGIC, 6.000%, 11/15/2007
Decatur, IL, General Obligation, 1,455,000 1,455,000
Series 1991, AMBAC, Zero Coupon,
10/1/2003
Decatur, IL, General Obligation, 1,415,000 1,415,000
Series 1991, AMBAC, Zero Coupon,
10/1/2004
Decatur, IL, Public Building 1,725,000 1,725,000
Commission, General Obligation,
Certificate of Participation, FGIC,
6.500%, 01/01/2003
Decatur, IL, Public Building 1,500,000 1,500,000
Commission, General Obligation,
Certificate of Participation, FGIC,
6.500%, 01/01/2006
Du-Page, IL, Industrial Development 3,600,000 3,600,000 3,648,600
Revenue, Weyerhaeuser Company Project,
Series 1983, 8.650%, 11/01/2008
Hoffman Estates, IL, Tax Increment 8,500,000 8,500,000 6,005,250
Revenue, Capital Appreciation, Junior
Lien, Series 1991, Zero Coupon,
5/15/2006
Hoffman Estates, IL, Tax Increment 17,460,000 17,460,000
Revenue, Capital Appreciation, Junior
Lien, Series 1991, Zero Coupon,
5/15/2007
Illinois, Dedicated Tax Revenue, Civic 3,000,000 3,000,000
Center Project, AMBAC, 6.250%,
12/15/2011
Illinois, Dedicated Tax Revenue, Civic 6,975,000 6,975,000
Center Project, AMBAC, 6.250%,
12/15/2020
Illinois Dedicated Tax Revenue, Civic 4,765,000 4,765,000
Center Project, Series A, 6.500%,
12/15/2007
Illinois Dedicated Tax Revenue, Civic 5,255,000 5,255,000
Center Project, Series A, AMBAC,
6.500%, 12/15/2008
Illinois Development Finance 5,000,000 5,000,000 5,052,450
Authority, Commonwealth Edison,
Refunding, 5.850%, 01/15/2014
Illinois Educational Facilities 3,100,000 2,860,000 5,960,000 2,337,462
Authority, Loyola University, 1991
Series A, MBIA, Zero Coupon,
7/1/2004
Illinois Educational Facilities 4,000,000 4,000,000
Authority, Loyola University, Zero
Coupon, 07/01/2005
Illinois Health Facilities Authority, 1,640,000 1,640,000
Brokaw-Mennonite Healthcare, FGIC,
<CAPTION>
AARP Insured Scudder Pro Forma
Tax Free General Ohio Tax Free Combined
Bond Market Fund Market Market
Value($) Value($) Value($)(1)
--------------------------------------------
<S> <C> <C> <C>
United Airlines Project, Series A,
5.350%, 09/01/2016
Chicago, IL, Public Building 9,542,732 9,542,732
Commission, Building Revenue, Series
A, MBIA, 5.250%, 12/01/2011
Chicago, IL, Public Building 10,403,328 10,403,328
Commission, Building Revenue, Series
A, MBIA, 5.250%, 12/01/2009
Chicago, IL, Public Building 3,534,265 3,534,265
Commission, Building Revenue, Series
A, MBIA Insured, 5.250%, 12/01/2007
Chicago, IL, Public Building 1,776,500 1,776,500
Commission, Board of Education, Series
A, MBIA, Zero Coupon, 01/01/2006
Chicago,IL, O'Hare International 6,209,970 6,209,970
Airport, Revenue Refunding, Series C,
MBIA, 5.000%, 01/01/2011
Cook & Dupage Counties, IL , Housing 1,664,972 1,664,972
Development Authority, Zero Coupon,
FSA Insured, 12/01/2007
Cook & Dupage Counties, IL , Housing 1,611,645 1,611,645
Development Authority, Zero Coupon,
FSA Insured, 12/01/2008
Cook & Dupage Counties, IL , Housing 1,652,765 1,652,765
Development Authority, Zero Coupon,
FSA Insured, 12/01/2009
Cook County, IL, Community High School 1,043,732 1,043,732
District #233, Capital Appreciation
Series 1993 B, FGIC Insured, Zero
Coupon, 12/01/2008
Cook County, IL, General Obligation, 2,511,630 2,511,630
Zero Coupon, ETM, AMBAC Insured,
11/1/2004
Cook County, IL, General Obligation, 5,290,400 5,290,400
Series C, FGIC, 6.000%, 11/15/2007
Decatur, IL, General Obligation, 1,204,304 1,204,304
Series 1991, AMBAC, Zero Coupon,
10/1/2003
Decatur, IL, General Obligation, 1,108,058 1,108,058
Series 1991, AMBAC, Zero Coupon,
10/1/2004
Decatur, IL, Public Building 1,819,530 1,819,530
Commission, General Obligation,
Certificate of Participation, FGIC,
6.500%, 01/01/2003
Decatur, IL, Public Building 1,617,270 1,617,270
Commission, General Obligation,
Certificate of Participation, FGIC,
6.500%, 01/01/2006
Du-Page, IL, Industrial Development 3,648,600
Revenue, Weyerhaeuser Company Project,
Series 1983, 8.650%, 11/01/2008
Hoffman Estates, IL, Tax Increment 6,005,250
Revenue, Capital Appreciation, Junior
Lien, Series 1991, Zero Coupon,
5/15/2006
Hoffman Estates, IL, Tax Increment 11,611,948 11,611,948
Revenue, Capital Appreciation, Junior
Lien, Series 1991, Zero Coupon,
5/15/2007
Illinois, Dedicated Tax Revenue, Civic 3,199,740 3,199,740
Center Project, AMBAC, 6.250%,
12/15/2011
Illinois, Dedicated Tax Revenue, Civic 7,215,638 7,215,638
Center Project, AMBAC, 6.250%,
12/15/2020
Illinois Dedicated Tax Revenue, Civic 5,230,588 5,230,588
Center Project, Series A, 6.500%,
12/15/2007
Illinois Dedicated Tax Revenue, Civic 5,782,182 5,782,182
Center Project, Series A, AMBAC,
6.500%, 12/15/2008
Illinois Development Finance 5,052,450
Authority, Commonwealth Edison,
Refunding, 5.850%, 01/15/2014
Illinois Educational Facilities 2,277,933 4,615,395
Authority, Loyola University, 1991
Series A, MBIA, Zero Coupon,
7/1/2004
Illinois Educational Facilities 3,016,080 3,016,080
Authority, Loyola University, Zero
Coupon, 07/01/2005
Illinois Health Facilities Authority, 1,722,853 1,722,853
Brokaw-Mennonite Healthcare, FGIC,
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Scudder Scudder
Managed AARP Insured Ohio Tax Pro Forma Scudder
Muncipal Bond Tax Free Free Fund Combined Managed Municpal
Principal Amount General Bond Principal Principal Bond Market
($) Principal Amount($) Amount($) Value($)
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
6.000%, 08/15/2009
Illinois Health Facilities Authority 1,380,000 1,380,000
Brokaw-Mennonite Healthcare, FGIC,
6.000%, 08/15/2006
Illinois Health Facilities Authority, 1,460,000 1,460,000
Brokaw-Mennonite Healthcare, FGIC,
6.000%, 08/15/2007
Illinois Health Facilities Authority, 1,550,000 1,550,000
Brokaw-Mennonite Healthcare, FGIC,
6.000%, 08/15/2008
Illinois Health Facilities Authority, 3,400,000 3,400,000
Children's Memorial Hospital, MBIA,
6.250%, 08/15/2013
Illinois Health Facilities Authority, 17,000,000 17,000,000
Felician Healthcare Inc., Series A,
AMBAC, 6.250%, 12/01/2015
Illinois Health Facilities Authority, 1,350,000 1,350,000
SSM Healthcare System, MBIA, 6.400%,
6/1/2008
Illinois Health Facilities Authority, 2,135,000 2,135,000
Memorial Medical Center, MBIA, 6.750%,
10/1/2011
Illinois Health Facilities Authority, 2,700,000 2,700,000
Sherman Hospital, MBIA, 6.750%,
8/1/2011
Illinois Health Facilities Authority, 1,000,000 1,000,000 903,560
Centegra Health System, 5.200%,
9/1/2012
Illinois Health Facilities Authority, 1,725,000 1,725,000 1,715,702
Memorial Medical Certer-Springfield,
5.250%, 10/01/2009
Illinois Health Facilities Authority, 2,500,000 2,500,000 2,530,675
University of Chicago Hospital,
Refunding, Series A, 5.500%,
8/15/2008
Illinois State Toll Highway Authority, 3,665,000 3,665,000
Toll Highway Priority Revenue Bond,
Series A, 5.500%, 01/01/2013
Illinois State Sales Tax Revenue, 2,100,000 2,100,000 2,280,453
Series P, 6.500%, 06/15/2013
Joliet, IL, Junior College Assistance 2,500,000 2,500,000
Corp., Lease Revenue, North Campus
Extension Center, MBIA, 6.700%,
9/1/2012
Kane County, IL , MBIA Insured, Series 1,775,000 1,775,000
1996A, 6.500%, 02/01/2010
Kane, Cook and Dupage Counties, IL, 1,040,000 1,040,000
School District #46 Elgin, Series
1996B, FSA Insured, Zero Coupon,
1/1/2011
Kane, Cook and Dupage Counties, IL, 1,300,000 1,300,000
School District #46 Elgin, Series
1996B, FSA Insured, Zero Coupon,
1/1/2012
Kane, Cook and Dupage Counties, IL, 2,095,000 2,095,000
School District #46 Elgin, Series
1996B, FSA Insured, Zero Coupon,
1/1/2013
Kendall, Kane and Will Counties, IL, 1,055,000 1,055,000
Community Unit School District Number
308, Oswego, FGIC, Zero Coupon,
3/1/2002
Kendall, Kane and Will Counties, IL, 1,540,000 1,540,000
Community Unit School District Number
308, Oswego, FGIC, Zero Coupon,
3/1/2005
Kendall, Kane and Will Counties, IL, 1,595,000 1,595,000
Community Unit School District Number
308, Oswego, FGIC, Zero Coupon,
3/1/2006
Metropolitan Pier & Exposition 5,625,000 5,625,000
Authority, IL , McCormick Project,
Series 1994, Zero Coupon, 06/15/2013
Metropolitan Pier & Exposition 3,200,000 3,200,000
Authority, IL, McCormick Place
Expansion Project, MBIA, Zero Coupon,
12/15/2003
Metropolitan Pier & Exposition 10,300,000 10,300,000
Authority, IL, McCormick Place
Expansion Project, MBIA, Zero Coupon,
6/15/2004
Northwest Suburban Municipal Joint 2,575,000 2,575,000
Action Water Agency, IL, Supply System
Revenue, MBIA, 6.450%, 05/01/2007
<CAPTION>
AARP Insured Scudder Pro Forma
Tax Free General Ohio Tax Free Combined
Bond Market Fund Market Market
Value($) Value($) Value($)(1)
--------------------------------------------
<S> <C> <C> <C>
6.000%, 08/15/2009
Illinois Health Facilities Authority 1,453,678 1,453,678
Brokaw-Mennonite Healthcare, FGIC,
6.000%, 08/15/2006
Illinois Health Facilities Authority, 1,538,709 1,538,709
Brokaw-Mennonite Healthcare, FGIC,
6.000%, 08/15/2007
Illinois Health Facilities Authority, 1,630,910 1,630,910
Brokaw-Mennonite Healthcare, FGIC,
6.000%, 08/15/2008
Illinois Health Facilities Authority, 3,569,966 3,569,966
Children's Memorial Hospital, MBIA,
6.250%, 08/15/2013
Illinois Health Facilities Authority, 18,154,640 18,154,640
Felician Healthcare Inc., Series A,
AMBAC, 6.250%, 12/01/2015
Illinois Health Facilities Authority, 1,455,179 1,455,179
SSM Healthcare System, MBIA, 6.400%,
6/1/2008
Illinois Health Facilities Authority, 2,231,203 2,231,203
Memorial Medical Center, MBIA, 6.750%,
10/1/2011
Illinois Health Facilities Authority, 2,864,376 2,864,376
Sherman Hospital, MBIA, 6.750%,
8/1/2011
Illinois Health Facilities Authority, 903,560
Centegra Health System, 5.200%,
9/1/2012
Illinois Health Facilities Authority, 1,715,702
Memorial Medical Certer-Springfield,
5.250%, 10/01/2009
Illinois Health Facilities Authority, 2,530,675
University of Chicago Hospital,
Refunding, Series A, 5.500%,
8/15/2008
Illinois State Toll Highway Authority, 3,610,758 3,610,758
Toll Highway Priority Revenue Bond,
Series A, 5.500%, 01/01/2013
Illinois State Sales Tax Revenue, 2,280,453
Series P, 6.500%, 06/15/2013
Joliet, IL, Junior College Assistance 2,770,575 2,770,575
Corp., Lease Revenue, North Campus
Extension Center, MBIA, 6.700%,
9/1/2012
Kane County, IL , MBIA Insured, Series 1,924,118 1,924,118
1996A, 6.500%, 02/01/2010
Kane, Cook and Dupage Counties, IL, 554,455 554,455
School District #46 Elgin, Series
1996B, FSA Insured, Zero Coupon,
1/1/2011
Kane, Cook and Dupage Counties, IL, 647,413 647,413
School District #46 Elgin, Series
1996B, FSA Insured, Zero Coupon,
1/1/2012
Kane, Cook and Dupage Counties, IL, 972,729 972,729
School District #46 Elgin, Series
1996B, FSA Insured, Zero Coupon,
1/1/2013
Kendall, Kane and Will Counties, IL, 945,291 945,291
Community Unit School District Number
308, Oswego, FGIC, Zero Coupon,
3/1/2002
Kendall, Kane and Will Counties, IL, 1,174,481 1,174,481
Community Unit School District Number
308, Oswego, FGIC, Zero Coupon,
3/1/2005
Kendall, Kane and Will Counties, IL, 1,149,118 1,149,118
Community Unit School District Number
308, Oswego, FGIC, Zero Coupon,
3/1/2006
Metropolitan Pier & Exposition 2,543,344 2,543,344
Authority, IL , McCormick Project,
Series 1994, Zero Coupon, 06/15/2013
Metropolitan Pier & Exposition 2,622,528 2,622,528
Authority, IL, McCormick Place
Expansion Project, MBIA, Zero Coupon,
12/15/2003
Metropolitan Pier & Exposition 8,184,483 8,184,483
Authority, IL, McCormick Place
Expansion Project, MBIA, Zero Coupon,
6/15/2004
Northwest Suburban Municipal Joint 2,788,210 2,788,210
Action Water Agency, IL, Supply System
Revenue, MBIA, 6.450%, 05/01/2007
<PAGE>
<CAPTION>
Scudder Scudder
Managed AARP Insured Ohio Tax Pro Forma Scudder
Muncipal Bond Tax Free Free Fund Combined Managed Municpal
Principal Amount General Bond Principal Principal Bond Market
($) Principal Amount($) Amount($) Value($)
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Northern Illinois University, Board of 1,865,000 1,865,000 1,416,337
Regents, Zero Coupon, 04/01/2005
Northern Illinois University, Board of 1,865,000 1,865,000 1,380,865
Regents, Zero Coupon, 10/01/2005
Northern Illinois University, Board of 1,865,000 1,865,000 1,337,858
Regents, Zero Coupon, 04/01/2006
Northern Illinois University, Board of 1,865,000 1,865,000 1,303,710
Regents, Zero Coupon, 10/01/2006
Northern Illinois University, Board of 1,865,000 1,865,000 1,261,262
Regents, Zero Coupon, 04/01/2007
Northern Illinois University, Board of 1,865,000 1,865,000 1,228,457
Regents, Zero Coupon, 10/01/2007
Oak Lawn, IL, Water and Sewer Revenue, 1,295,000 1,295,000 1,070,641
Zero Coupon, 10/01/2003
Oak Lawn, IL, Water and Sewer Revenue, 1,295,000 1,295,000 1,014,568
Zero Coupon, 10/01/2004
Oak Lawn, IL, Water and Sewer Revenue, 1,295,000 1,295,000 959,375
Zero Coupon, 10/01/2005
Oak Lawn, IL, Water and Sewer Revenue, 1,295,000 1,295,000 905,257
Zero Coupon, 10/01/2006
Rosemont, IL, Tax Increment, Seriec C, 2,655,000 2,655,000
FGIC, Zero Coupon, 12/01/2007
Rosemont, IL, Tax Increment, Series C, 7,060,000 4,455,000 11,515,000 5,183,240
FGIC, Zero Coupon, 12/01/2005
Rosemont, IL, Tax Increment Revenue, 6,000,000 6,000,000 4,659,720
Zero Coupon, 12/1/2004
State University Retirement System, 7,000,000 7,000,000 5,182,870
IL, Special Revenue, Zero Coupon,
10/1/2005
Skokie, IL, Park District, Series 3,000,000 3,000,000
1994B, AMBAC Insured, Zero Coupon,
12/1/2011
State University Retirement System, 2,750,000 2,750,000
IL, Special Revenue, MBIA, Zero
Coupon, 10/01/2003
University of Illinois, Board of 3,890,000 3,890,000
Trustees, Series 1991, AMBAC, Zero
Coupon, 04/01/2003
University of Illinois, Board of 3,830,000 3,830,000
Trustees, Series 1991, AMBAC, Zero
Coupon, 04/01/2005
Will County, IL, Community Unit School 1,325,000 1,325,000
District #201-U, Crete-Monee, Capital
Appreciation, MBIA, Zero Coupon,
12/15/2000
Will County, IL, Community Unit School 1,730,000 1,730,000
District #201-U, Crete-Monee, Capital
Appreciation, MBIA, Zero Coupon,
12/15/2001
Will County, IL, Capital Appreciation, 3,725,000 3,725,000 2,594,314
School District No. 201-U, Zero
Coupon, 12/15/2006
Winnebago County, IL, School District 1,675,000 1,675,000 1,847,944
No. 122, 6.550%, 06/01/2009
Winnebago County, IL, School District 1,825,000 1,825,000 1,989,086
No. 122, 6.550%, 06/01/2010
INDIANA
Fort Wayne, IN, Parkview Memorial 1,400,000 1,400,000
Hospital, Series A, FGIC, 6.500%,
11/15/2012
Indiana Health Facilities Finance 5,000,000 5,000,000
Authority, Hospital Revenue, Community
Hospitals Project, MBIA, 6.400%,
5/1/2012
Indiana Health Facilities Financing 4,660,000 4,660,000
Authority, Charity Obligation Group,
Series D, 5.750%, 11/15/2012
Indiana Health Facilities Financing 230,000 1,570,000 1,800,000 239,803
Authority, Hospital Revenue, Series
1990 A, 6.000%, 07/01/2003
Indiana Health Facilities Financing 240,000 1,665,000 1,905,000 251,602
Authority, Hospital Revenue, Series
1990A, 6.000%, 07/01/2004
Indiana Health Facilities Financing 255,000 1,765,000 2,020,000 267,694
Authority, Hospital Revenue, Series
1990A, 6.000%, 07/01/2005
Indiana Health Facilities Financing 270,000 1,875,000 2,145,000 283,886
Authority, Hospital Revenue, Series
1990A, 6.000%, 07/01/2006
Indiana Health Facilities Financing 285,000 1,985,000 2,270,000 299,618
Authority, Hospital Revenue, Series
1990A, 6.000%, 07/01/2007
Indiana Health Facilities Financing 165,000 1,125,000 1,290,000 172,875
<CAPTION>
AARP Insured Scudder Pro Forma
Tax Free General Ohio Tax Free Combined
Bond Market Fund Market Market
Value($) Value($) Value($)(1)
--------------------------------------------
<S> <C> <C> <C>
Northern Illinois University, Board of 1,416,337
Regents, Zero Coupon, 04/01/2005
Northern Illinois University, Board of 1,380,865
Regents, Zero Coupon, 10/01/2005
Northern Illinois University, Board of 1,337,858
Regents, Zero Coupon, 04/01/2006
Northern Illinois University, Board of 1,303,710
Regents, Zero Coupon, 10/01/2006
Northern Illinois University, Board of 1,261,262
Regents, Zero Coupon, 04/01/2007
Northern Illinois University, Board of 1,228,457
Regents, Zero Coupon, 10/01/2007
Oak Lawn, IL, Water and Sewer Revenue, 1,070,641
Zero Coupon, 10/01/2003
Oak Lawn, IL, Water and Sewer Revenue, 1,014,568
Zero Coupon, 10/01/2004
Oak Lawn, IL, Water and Sewer Revenue, 959,375
Zero Coupon, 10/01/2005
Oak Lawn, IL, Water and Sewer Revenue, 905,257
Zero Coupon, 10/01/2006
Rosemont, IL, Tax Increment, Seriec C, 1,733,529 1,733,529
FGIC, Zero Coupon, 12/01/2007
Rosemont, IL, Tax Increment, Series C, 3,270,727 8,453,967
FGIC, Zero Coupon, 12/01/2005
Rosemont, IL, Tax Increment Revenue, 4,659,720
Zero Coupon, 12/1/2004
State University Retirement System, 5,182,870
IL, Special Revenue, Zero Coupon,
10/1/2005
Skokie, IL, Park District, Series 1,518,930 1,518,930
1994B, AMBAC Insured, Zero Coupon,
12/1/2011
State University Retirement System, 2,276,175 2,276,175
IL, Special Revenue, MBIA, Zero
Coupon, 10/01/2003
University of Illinois, Board of 3,301,599 3,301,599
Trustees, Series 1991, AMBAC, Zero
Coupon, 04/01/2003
University of Illinois, Board of 2,913,251 2,913,251
Trustees, Series 1991, AMBAC, Zero
Coupon, 04/01/2005
Will County, IL, Community Unit School 1,264,938 1,264,938
District #201-U, Crete-Monee, Capital
Appreciation, MBIA, Zero Coupon,
12/15/2000
Will County, IL, Community Unit School 1,572,397 1,572,397
District #201-U, Crete-Monee, Capital
Appreciation, MBIA, Zero Coupon,
12/15/2001
Will County, IL, Capital Appreciation, 2,594,314
School District No. 201-U, Zero
Coupon, 12/15/2006
Winnebago County, IL, School District 1,847,944
No. 122, 6.550%, 06/01/2009
Winnebago County, IL, School District 1,989,086
No. 122, 6.550%, 06/01/2010
INDIANA
Fort Wayne, IN, Parkview Memorial 1,429,638 1,429,638
Hospital, Series A, FGIC, 6.500%,
11/15/2012
Indiana Health Facilities Finance 5,252,850 5,252,850
Authority, Hospital Revenue, Community
Hospitals Project, MBIA, 6.400%,
5/1/2012
Indiana Health Facilities Financing 4,655,620 4,655,620
Authority, Charity Obligation Group,
Series D, 5.750%, 11/15/2012
Indiana Health Facilities Financing 1,636,913 1,876,716
Authority, Hospital Revenue, Series
1990 A, 6.000%, 07/01/2003
Indiana Health Facilities Financing 1,745,486 1,997,088
Authority, Hospital Revenue, Series
1990A, 6.000%, 07/01/2004
Indiana Health Facilities Financing 1,852,862 2,120,556
Authority, Hospital Revenue, Series
1990A, 6.000%, 07/01/2005
Indiana Health Facilities Financing 1,971,431 2,255,317
Authority, Hospital Revenue, Series
1990A, 6.000%, 07/01/2006
Indiana Health Facilities Financing 2,086,811 2,386,429
Authority, Hospital Revenue, Series
1990A, 6.000%, 07/01/2007
Indiana Health Facilities Financing 1,178,696 1,351,571
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Scudder Scudder
Managed AARP Insured Ohio Tax Pro Forma Scudder
Muncipal Bond Tax Free Free Fund Combined Managed Municpal
Principal Amount General Bond Principal Principal Bond Market
($) Principal Amount($) Amount($) Value($)
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Authority, Hospital Revenue, Series
1990A, 6.000%, 07/01/2009
Indiana Health Facilities Financing 175,000 1,185,000 1,360,000 181,977
Authority, Hospital Revenue, Series
1990A, 6.000%, 07/01/2010
Indiana Health Facilities Financing 185,000 1,260,000 1,445,000 191,904
Authority, Hospital Revenue, Series
1990A, 6.000%, 07/01/2011
Indiana Health Facilities Financing 190,000 1,345,000 1,535,000 195,943
Authority, Hospital Revenue, Series
1990A, 6.000%, 07/01/2012
Indiana Health Facilities Financing 200,000 1,420,000 1,620,000 205,052
Authority, Hospital Revenue, Series
1990A, 6.000%, 07/01/2013
Indiana Health Facilities Financing 215,000 1,505,000 1,720,000 219,188
Authority, Hospital Revenue, Series
1990A, 6.000%, 07/01/2014
Indiana Health Facilities Financing 225,000 1,600,000 1,825,000 227,489
Authority, Hospital Revenue, Series
1990A, 6.000%, 07/01/2015
Indiana Health Facilities Financing 235,000 1,700,000 1,935,000 237,200
Authority, Hospital Revenue, Series
1990A, 6.000%, 07/01/2016
Indiana Health Facilities Financing 250,000 1,800,000 2,050,000 251,875
Authority, Hospital Revenue, Series
1990A, 6.000%, 07/01/2017
Indiana Health Facilities Financing 265,000 1,910,000 2,175,000 266,754
Authority, Hospital Revenue, Series
1990A, 6.000%, 07/01/2018
Indiana Health Facilities Financing 160,000 1,085,000 1,245,000 167,920
Authority, Hospital Revenue, Series
1997A, 6.000%, 07/01/2008
Indiana Health Facilities Financing 205,000 1,395,000 1,600,000 210,285
Authority, Hospital Revenue, Tax
Exempt Custodian Receipts Refund,
Series 1997 A, 6.000%, 07/01/2001
Indiana Health Facilities Financing 215,000 1,480,000 1,695,000 222,581
Authority, Hospital Revenue, Tax
Exempt Custodian Receipts Refund,
Series 1997 A, 6.000%, 07/01/2002
Indiana Municipal Power Agency, Power 8,960,000 8,960,000 8,679,552
Supply System, Series B, 5.500%,
1/1/16
Indiana Municipal Power Agency, Power 1,750,000 1,750,000 1,822,013
Supply System, Series B, 6.000%,
1/1/12
Indiana Transportation Finance 5,000,000 5,000,000 5,098,550
Authority, Highway Revenue, Series A,
5.750%, 06/01/2012
Rockport, IN, Pollution Control 4,500,000 4,500,000 4,692,285
Revenue, Series B, Refunding, 7.600%,
3/1/16
Indiana University, Revenue Refunding, 8,500,000 8,500,000
Series H, AMBAC, Zero Coupon,
8/1/06
Indiana University, Revenue Refunding, 10,000,000 10,000,000
Student Fee Revenue, Series H, Zero
Coupon, AMBAC, 08/01/2008
Merrillville, IN, Multiple School 4,000,000 4,000,000
Building Corp., First Mortgage, MBIA,
Zero Coupon, 01/15/2011
IOWA
Polk County, IA, Mercy Hospital, MBIA, 5,000,000 5,000,000
6.750%, 11/01/2005
KANSAS
Kansas City, KS, Utility System 4,095,000 4,095,000
Revenue, Capital Appreciation, AMBAC
Insured, Prerefunded, Zero Coupon,
3/1/01
Kansas City, KS, Utility System 3,575,000 3,575,000
Revenue, ETM, Zero Coupon, 09/01/2004
Kansas City, KS, Utility System 5,300,000 5,300,000
Revenue, ETM, Zero Coupon, 09/01/2005
Kansas City, KS, Utility System 1,875,000 1,875,000
Revenue, ETM, Zero Coupon, 09/01/2006
Kansas City, KS, Utility System 2,640,000 2,640,000
Revenue, Zero Coupon, 09/01/2004
<CAPTION>
AARP Insured Scudder Pro Forma
Tax Free General Ohio Tax Free Combined
Bond Market Fund Market Market
Value($) Value($) Value($)(1)
--------------------------------------------
<S> <C> <C> <C>
Authority, Hospital Revenue, Series
1990A, 6.000%, 07/01/2009
Indiana Health Facilities Financing 1,232,246 1,414,223
Authority, Hospital Revenue, Series
1990A, 6.000%, 07/01/2010
Indiana Health Facilities Financing 1,307,023 1,498,927
Authority, Hospital Revenue, Series
1990A, 6.000%, 07/01/2011
Indiana Health Facilities Financing 1,387,072 1,583,015
Authority, Hospital Revenue, Series
1990A, 6.000%, 07/01/2012
Indiana Health Facilities Financing 1,455,869 1,660,921
Authority, Hospital Revenue, Series
1990A, 6.000%, 07/01/2013
Indiana Health Facilities Financing 1,534,317 1,753,505
Authority, Hospital Revenue, Series
1990A, 6.000%, 07/01/2014
Indiana Health Facilities Financing 1,617,696 1,845,185
Authority, Hospital Revenue, Series
1990A, 6.000%, 07/01/2015
Indiana Health Facilities Financing 1,715,912 1,953,112
Authority, Hospital Revenue, Series
1990A, 6.000%, 07/01/2016
Indiana Health Facilities Financing 1,813,500 2,065,375
Authority, Hospital Revenue, Series
1990A, 6.000%, 07/01/2017
Indiana Health Facilities Financing 1,922,644 2,189,398
Authority, Hospital Revenue, Series
1990A, 6.000%, 07/01/2018
Indiana Health Facilities Financing 1,138,708 1,306,628
Authority, Hospital Revenue, Series
1997A, 6.000%, 07/01/2008
Indiana Health Facilities Financing 1,430,963 1,641,248
Authority, Hospital Revenue, Tax
Exempt Custodian Receipts Refund,
Series 1997 A, 6.000%, 07/01/2001
Indiana Health Facilities Financing 1,532,185 1,754,766
Authority, Hospital Revenue, Tax
Exempt Custodian Receipts Refund,
Series 1997 A, 6.000%, 07/01/2002
Indiana Municipal Power Agency, Power 8,679,552
Supply System, Series B, 5.500%,
1/1/16
Indiana Municipal Power Agency, Power 1,822,013
Supply System, Series B, 6.000%,
1/1/12
Indiana Transportation Finance 5,098,550
Authority, Highway Revenue, Series A,
5.750%, 06/01/2012
Rockport, IN, Pollution Control 4,692,285
Revenue, Series B, Refunding, 7.600%,
3/1/16
Indiana University, Revenue Refunding, 5,993,265 5,993,265
Series H, AMBAC, Zero Coupon,
8/1/06
Indiana University, Revenue Refunding, 6,250,400 6,250,400
Student Fee Revenue, Series H, Zero
Coupon, AMBAC, 08/01/2008
Merrillville, IN, Multiple School 2,127,840 2,127,840
Building Corp., First Mortgage, MBIA,
Zero Coupon, 01/15/2011
IOWA
Polk County, IA, Mercy Hospital, MBIA, 5,289,750 5,289,750
6.750%, 11/01/2005
KANSAS
Kansas City, KS, Utility System 3,861,012 3,861,012
Revenue, Capital Appreciation, AMBAC
Insured, Prerefunded, Zero Coupon,
3/1/01
Kansas City, KS, Utility System 2,827,074 2,827,074
Revenue, ETM, Zero Coupon, 09/01/2004
Kansas City, KS, Utility System 3,967,792 3,967,792
Revenue, ETM, Zero Coupon, 09/01/2005
Kansas City, KS, Utility System 1,326,919 1,326,919
Revenue, ETM, Zero Coupon, 09/01/2006
Kansas City, KS, Utility System 2,083,752 2,083,752
Revenue, Zero Coupon, 09/01/2004
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Scudder Scudder
Managed AARP Insured Ohio Tax Pro Forma Scudder
Muncipal Bond Tax Free Free Fund Combined Managed Municpal
Principal Amount General Bond Principal Principal Bond Market
($) Principal Amount($) Amount($) Value($)
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Kansas City, KS, Utility System 3,950,000 3,950,000
Revenue, Zero Coupon, 09/01/2005
Kansas City, KS, Utility System 1,375,000 1,375,000
Revenue, Zero Coupon, 09/01/2006
LOUISIANA
Louisiana Public Facilities Authority 5,765,000 5,765,000
Prerefunded 2/15/08 at 100, 4.750%,
5/1/16
Bastrop, LA, Industrial Development 10,250,000 10,250,000 10,769,368
Board, Pollution Control Revenue,
International Paper Co. Project,
6.900%, 03/01/2007
New Orleans, LA, General Obligation, 2,500,000 2,500,000 1,866,275
Zero Coupon, 09/01/2005
New Orleans, LA, General Obligation, 10,000,000 10,000,000
AMBAC, Zero Coupon, 09/01/2007
New Orleans, LA, General Obligation, 4,850,000 4,850,000
Zero Coupon, 07/15/2006
Orleans, LA, Levee District, Levee 1,765,000 1,765,000
Improvement Bonds, Series 1986,
5.950%, 11/01/2014
MARYLAND
Baltimore, MD, Revenue Exchanged, Auto 3,100,000 3,100,000
Parking Revenue, Series 1996A, 5.900%
7/1/12
Northeast Maryland Waste Disposal 3,390,000 3,390,000 3,736,085
Authority, Southwest Resource Recovery
System Revenue, 7.200%, 01/01/2007
Northeast Maryland Waste Disposal 3,440,000 3,440,000 3,791,190
Authority Revenue, Southwest Resource
Recovery System, 7.200%, 01/01/2006
MASSACHUSETTS
Massachusetts General Obligation, 5,750,000 5,750,000
Series C, 5.250%, 08/01/2012
Massachusetts Health & Educational 2,920,000 2,920,000
Facilities Authority, Boston Medical
Center, Series A, 5.250%, 07/01/2012
Massachusetts Bay Transportation 2,500,000 2,500,000 2,591,025
Authority, Revenue, Series B, 6.200%,
3/1/16
Massachusetts College Building 4,110,000 4,110,000 4,813,139
Authority Project, Series A, 7.500%,
5/1/10
Massachusetts College Building 3,750,000 3,750,000 4,443,938
Authority Project, Series A, 7.500%,
5/1/14
Massachusetts Health & Educational 3,000,000 3,000,000 3,231,570
Facilities Authority, Massachusetts
General Hospital, Series F, 6.250%,
7/1/12
Massachusetts Port Authority Revenue, 2,000,000 2,000,000 1,972,940
Series B, AMT, 5.500%, 07/01/2012
Massachusetts State Development 2,000,000 2,000,000 1,927,360
Financial Agency, Revenue, Health Care
Facilities, Series A, 7.100%,
7/1/32
Massachusetts Water Resource 10,000,000 10,000,000 10,472,700
Authority, General Revenue, Series C,
6.000%, 12/01/2011
Massachusetts Water Resource 2,625,000 2,625,000 2,855,213
Authority, Series A, 6.500%,
7/15/09
Massachusetts Water Resource 13,445,000 13,445,000 14,367,596
Authority, Series A, 6.500%,
7/15/19
MICHIGAN
Detroit, MI, General Obligation, City 1,000,000 1,000,000
School District, Series 1998 C,
5.250%, 05/01/2014
Michigan, Hospital Finance Authority, 3,000,000 3,000,000 2,888,340
Series 1999A, 6.000%, 11/15/2019
Michigan Municipal Bond Authority 4,000,000 4,000,000
Revenue, Clean Water Revolving
Funding, 5.625%, 10/01/2011
Michigan Municipal Bond Authority 5,000,000 5,000,000
Revenue, Clean Water Revolving
Funding, 5.625%, 10/01/2012
Wayne Charter County, MI, Airport 4,040,000 4,040,000
<CAPTION>
AARP Insured Scudder Pro Forma
Tax Free General Ohio Tax Free Combined
Bond Market Fund Market Market
Value($) Value($) Value($)(1)
---------------------------------------------
<S> <C> <C> <C>
<S>
Kansas City, KS, Utility System 2,950,413 2,950,413
Revenue, Zero Coupon, 09/01/2005
Kansas City, KS, Utility System 970,489 970,489
Revenue, Zero Coupon, 09/01/2006
LOUISIANA
Louisiana Public Facilities Authority 5,671,549 5,671,549
Prerefunded 2/15/08 at 100, 4.750%,
5/1/16
Bastrop, LA, Industrial Development 10,769,368
Board, Pollution Control Revenue,
International Paper Co. Project,
6.900%, 03/01/2007
New Orleans, LA, General Obligation, 1,866,275
Zero Coupon, 09/01/2005
New Orleans, LA, General Obligation, 6,651,400 6,651,400
AMBAC, Zero Coupon, 09/01/2007
New Orleans, LA, General Obligation, 3,250,422 3,250,422
Zero Coupon, 07/15/2006
Orleans, LA, Levee District, Levee 1,788,369 1,788,369
Improvement Bonds, Series 1986,
5.950%, 11/01/2014
MARYLAND
Baltimore, MD, Revenue Exchanged, Auto 3,237,764 3,237,764
Parking Revenue, Series 1996A, 5.900%
7/1/12
Northeast Maryland Waste Disposal 3,736,085
Authority, Southwest Resource Recovery
System Revenue, 7.200%, 01/01/2007
Northeast Maryland Waste Disposal 3,791,190
Authority Revenue, Southwest Resource
Recovery System, 7.200%, 01/01/2006
MASSACHUSETTS
Massachusetts General Obligation, 5,613,783 5,613,783
Series C, 5.250%, 08/01/2012
Massachusetts Health & Educational 2,815,084 2,815,084
Facilities Authority, Boston Medical
Center, Series A, 5.250%, 07/01/2012
Massachusetts Bay Transportation 2,591,025
Authority, Revenue, Series B, 6.200%,
3/1/16
Massachusetts College Building 4,813,139
Authority Project, Series A, 7.500%,
5/1/10
Massachusetts College Building 4,443,938
Authority Project, Series A, 7.500%,
5/1/14
Massachusetts Health & Educational 3,231,570
Facilities Authority, Massachusetts
General Hospital, Series F, 6.250%,
7/1/12
Massachusetts Port Authority Revenue, 1,972,940
Series B, AMT, 5.500%, 07/01/2012
Massachusetts State Development 1,927,360
Financial Agency, Revenue, Health Care
Facilities, Series A, 7.100%,
7/1/32
Massachusetts Water Resource 10,472,700
Authority, General Revenue, Series C,
6.000%, 12/01/2011
Massachusetts Water Resource 2,855,213
Authority, Series A, 6.500%,
7/15/09
Massachusetts Water Resource 14,367,596
Authority, Series A, 6.500%,
7/15/19
MICHIGAN
Detroit, MI, General Obligation, City 952,190 952,190
School District, Series 1998 C,
5.250%, 05/01/2014
Michigan, Hospital Finance Authority, 2,888,340
Series 1999A, 6.000%, 11/15/2019
Michigan Municipal Bond Authority 4,050,280 4,050,280
Revenue, Clean Water Revolving
Funding, 5.625%, 10/01/2011
Michigan Municipal Bond Authority 5,026,100 5,026,100
Revenue, Clean Water Revolving
Funding, 5.625%, 10/01/2012
Wayne Charter County, MI, Airport 3,954,958 3,954,958
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Scudder Scudder
Managed AARP Insured Ohio Tax Pro Forma Scudder
Muncipal Bond Tax Free Free Fund Combined Managed Municpal
Principal Amount General Bond Principal Principal Bond Market
($) Principal Amount($) Amount($) Value($)
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue, Detroit Metro Wayne County
Airport, Series B, 5.250%, 12/01/2011
Wayne Charter County, MI, Airport 3,165,000 3,165,000
Revenue, Series 1998 B, 5.250%,
12/1/2012
MONTANA
Montana Board Housing Revenue, Capital 1,510,000 1,510,000 467,723
Appreciation, Single-Family Revenue,
Series A, Zero Coupon, 06/01/2010
MISSOURI
Missouri Health & Educational 8,125,000 8,125,000
Facilities Authority, SSM Healthcare,
1992 Series AA, MBIA, 6.350%,
6/1/2008
Missouri Health & Educational 8,640,000 8,640,000
Facilities Authority, SSM Healthcare,
1992 Series AA, MBIA, 6.400%,
6/1/2009
NEVADA
Clark County, NV, School District, 8,070,000 8,070,000
General Obligation, Series B, FGIC,
Zero Coupon, 03/01/2005
Clark County, NV, School District, 4,350,000 4,350,000
Series 1991B, Zero Coupon, 03/01/2009
Nevada State Housing Division, Single 3,050,000 3,050,000 3,087,820
Family Mortgage Revenue, Series R,
5.950%, 10/01/2011
NEW HAMPSHIRE
New Hampshire State Housing Finance 1,370,000 1,370,000 1,475,257
Authority, Single Family Revenue, AMT,
Series 1997 C, 5.900%, 07/01/2019
NEW JERSEY
New Jersey Highway Authority, ETM, 4,371,000 4,371,000
6.500%, 01/01/2011
New Jersey Turnpike Authority, MBIA 1,250,000 1,250,000
Insured, Series 1991A, 6.300%,
1/1/2001
NEW YORK
Metropolitan Transportation Authority 6,775,000 6,775,000 6,857,655
of New York, Transit Facilities
Revenue, Series O, 5.750%, 07/01/2013
Metropolitan Transportation Authority 1,595,000 1,595,000 1,684,304
of New York, Transit Facilities
Revenue, 7.000%, 07/01/2002
Monroe County, NY, Airport Authority, 4,515,000 4,515,000 4,568,683
Series 1999, 5.750%, 01/01/2013
New York City, NY, General Obligation, 5,500,000 5,500,000
5.900%, 02/01/2005
New York City, NY, General Obligation, 9,000,000 9,000,000
Series 1991 A, 3.000%, 08/15/2002
New York City, NY, General Obligation, 3,425,000 3,425,000 3,591,421
Series B, 6.000%, 08/15/2004
New York City, NY, General Obligation, 5,000,000 5,000,000 5,257,100
Series A, 6.375%, 08/01/2004
New York City, NY, General Obligation, 7,000,000 7,000,000 7,475,790
Series 1995 E, 6.500%, 02/15/2005
New York City, NY, General Obligation, 6,500,000 6,500,000 6,971,640
Series 1995 E, 6.600%, 08/01/2004
New York City, NY, General Obligation, 2,000,000 2,000,000 2,197,500
Series 1996 G, 6.750%, 02/01/2009
New York City, NY, General Obligation, 3,000,000 3,000,000 3,204,540
Series B, 6.750%, 08/15/2003
New York City, NY, General Obligation, 5,000 5,000 5,347
Prerefunded, Series H, 7.000%,
2/1/2005
New York City, NY, General Obligation, 480,000 480,000 509,270
Series H, 7.000%, 02/01/2005
New York City, NY, General Obligation, 165,000 165,000 168,671
Unrefunded Balance, Series 1989 D,
7.000%, 08/01/2002
New York City, NY, General Obligation, 655,000 655,000 669,318
Unrefunded Balance, Series 1989 D,
7.000%, 08/01/2002
New York City, NY, General Obligation, 2,005,000 2,005,000 2,080,348
Series H, 7.200%, 08/01/2001
New York City, NY, General Obligation, 3,510,000 3,510,000 3,700,418
Series B, 6.100%, 08/15/2005
<CAPTION>
AARP Insured Scudder Pro Forma
Tax Free General Ohio Tax Free Combined
Bond Market Fund Market Market
Value($) Value($) Value($)(1)
---------------------------------------------
<S> <C> <C> <C>
Revenue, Detroit Metro Wayne County
Airport, Series B, 5.250%, 12/01/2011
Wayne Charter County, MI, Airport 3,065,872 3,065,872
Revenue, Series 1998 B, 5.250%,
12/1/2012
MONTANA
Montana Board Housing Revenue, Capital 467,723
Appreciation, Single-Family Revenue,
Series A, Zero Coupon, 06/01/2010
MISSOURI
Missouri Health & Educational 8,736,081 8,736,081
Facilities Authority, SSM Healthcare,
1992 Series AA, MBIA, 6.350%,
6/1/2008
Missouri Health & Educational 9,327,917 9,327,917
Facilities Authority, SSM Healthcare,
1992 Series AA, MBIA, 6.400%,
6/1/2009
NEVADA
Clark County, NV, School District, 6,164,270 6,164,270
General Obligation, Series B, FGIC,
Zero Coupon, 03/01/2005
Clark County, NV, School District, 2,625,530 2,625,530
Series 1991B, Zero Coupon, 03/01/2009
Nevada State Housing Division, Single 3,087,820
Family Mortgage Revenue, Series R,
5.950%, 10/01/2011
NEW HAMPSHIRE
New Hampshire State Housing Finance 1,475,257
Authority, Single Family Revenue, AMT,
Series 1997 C, 5.900%, 07/01/2019
NEW JERSEY
New Jersey Highway Authority, ETM, 4,670,457 4,670,457
6.500%, 01/01/2011
New Jersey Turnpike Authority, MBIA 1,279,138 1,279,138
Insured, Series 1991A, 6.300%,
1/1/2001
NEW YORK
Metropolitan Transportation Authority 6,857,655
of New York, Transit Facilities
Revenue, Series O, 5.750%, 07/01/2013
Metropolitan Transportation Authority 1,684,304
of New York, Transit Facilities
Revenue, 7.000%, 07/01/2002
Monroe County, NY, Airport Authority, 4,568,683
Series 1999, 5.750%, 01/01/2013
New York City, NY, General Obligation, 5,769,830 5,769,830
5.900%, 02/01/2005
New York City, NY, General Obligation, 8,651,160 8,651,160
Series 1991 A, 3.000%, 08/15/2002
New York City, NY, General Obligation, 3,591,421
Series B, 6.000%, 08/15/2004
New York City, NY, General Obligation, 5,257,100
Series A, 6.375%, 08/01/2004
New York City, NY, General Obligation, 7,475,790
Series 1995 E, 6.500%, 02/15/2005
New York City, NY, General Obligation, 6,971,640
Series 1995 E, 6.600%, 08/01/2004
New York City, NY, General Obligation, 2,197,500
Series 1996 G, 6.750%, 02/01/2009
New York City, NY, General Obligation, 3,204,540
Series B, 6.750%, 08/15/2003
New York City, NY, General Obligation, 5,347
Prerefunded, Series H, 7.000%,
2/1/2005
New York City, NY, General Obligation, 509,270
Series H, 7.000%, 02/01/2005
New York City, NY, General Obligation, 168,671
Unrefunded Balance, Series 1989 D,
7.000%, 08/01/2002
New York City, NY, General Obligation, 669,318
Unrefunded Balance, Series 1989 D,
7.000%, 08/01/2002
New York City, NY, General Obligation, 2,080,348
Series H, 7.200%, 08/01/2001
New York City, NY, General Obligation, 3,700,418
Series B, 6.100%, 08/15/2005
<PAGE>
<CAPTION>
Scudder Scudder
Managed AARP Insured Ohio Tax Pro Forma Scudder
Muncipal Bond Tax Free Free Fund Combined Managed Municpal
Principal Amount General Bond Principal Principal Bond Market
($) Principal Amount($) Amount($) Value($)
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
New York State Dormitory Authority, 2,000,000 2,000,000 2,011,700
City University System, Consolidated
Revenue, Series F, 5.375%, 07/01/2007
New York State Dormitory Authority, 4,000,000 4,000,000 4,113,280
City University System, Consolidated
Revenue, Series A, 5.750%, 07/01/2006
New York State Dormitory Authority, 3,000,000 3,000,000 3,134,730
City University System, Consolidated
Revenue, Series A, 5.750%, 07/01/2006
New York State Dormitory Authority, 3,085,000 3,085,000 3,172,367
City University System, Consolidated
Revenue, Series E, 5.750%, 07/01/2006
Onondaga County, NY, Industrial 3,500,000 3,500,000 3,507,945
Development Agency, Solid Waste
Disposal Facility, Solvay Paperboard
LLC, Series 1998, 7.000%, 11/01/2030
Port Authority of New York & New 2,000,000 2,000,000 2,110,600
Jersey, Special Obligation Revenue,
Series 1996, 7.000%, 10/01/2007
New York City, NY, General Obligation, 55,000 55,000
Unrefunded Balance, Series D, 1998,
6.000%, 08/01/2008
New York City, NY, General Obligation, 225,000 225,000
Series C, AMBAC, 6.400%, 08/01/2004
New York City, NY, General Obligation, 195,000 195,000
Series C, AMBAC, 6.400%, 08/01/2005
New York City, NY, General Obligation, 10,235,000 10,235,000
Series C, AMBAC, Prerefunded 8/01/02
at 101.50, 6.400%, 08/01/2005
New York City, NY, General Obligation, 275,000 275,000
Series C, AMBAC, Prerefunded 8/1/02 at
101.50, 6.400%, 08/01/2004
New York City, NY, General Obligation, 1,385,000 1,385,000
Series E, ETM, MBIA, 7.000%,
12/1/2007
New York City, NY, General Obligation, 740,000 740,000
Series A, ETM, 8.000%, 11/01/2001
New York City, NY, General Obligation, 5,000 5,000
Series D, 8.000%, 08/01/2005
New York, NY, General Obligation, 14,460,000 14,460,000
Series A, 5.250%, 08/01/2011
New york, NY, General Obligation, 10,000,000 10,000,000
Series A, 5.200%, 08/01/2010
New York City, New York General 20,000 20,000
Obligation, Unrefunded Balance 1997,
Series D, 6.000%, 08/01/2006
New York State Dormitory Authority, 2,000,000 2,000,000
State University of New York, AMBAC
insured, 6.000%, 07/01/2009
New York State Dormitory Authority, 1,845,000 1,845,000
College and University Pooled Capital
Program, 7.800%, 12/01/2005
New York State Dormitory Authority 4,000,000 4,000,000
Revenue, City University, FGIC, Series
D, 7.000%, 07/01/2009
New York State Dormitory Authority 5,750,000 5,750,000
Revenue, City University, Series C,
FGIC, 7.500%, 07/01/2010
New York State Energy Research and 5,300,000 5,300,000
Development Authority, Pollution
Control Revenue, Electric and Gas,
5.900%, 12/01/2006
New York State, Urban Development 4,500,000 4,500,000
Authority, Correctional Facilities,
6.500%, 01/01/2011
Suffolk County, NY, Industrial 8,000,000 8,000,000
Development Agency, Southwest Sewer
Symstem, FGIC, 6.000%, 02/01/2007
NORTH CAROLINA
North Carolina Eastern Municipal Power 2,000,000 2,000,000
Agency, AMBAC insured, 5.500%,
1/1/2007
North Carolina Eastern Municipal Power 8,775,000 8,775,000
Agency, Power System Revenue, Series
B, FGIC, 6.000%, 01/01/2018
North Carolina Municipal Power Agency 8,500,000 8,500,000 8,426,220
No. 1, Catawba Electric Revenue,
5.250%, 01/01/2009
North Carolina Municipal Power Agency 2,500,000 2,500,000
No. 1, Catawba Electric Revenue, MBIA,
<CAPTION>
AARP Insured Scudder Pro Forma
Tax Free General Ohio Tax Free Combined
Bond Market Fund Market Market
Value($) Value($) Value($)(1)
---------------------------------------------
<S> <C> <C> <C>
New York State Dormitory Authority, 2,011,700
City University System, Consolidated
Revenue, Series F, 5.375%, 07/01/2007
New York State Dormitory Authority, 4,113,280
City University System, Consolidated
Revenue, Series A, 5.750%, 07/01/2006
New York State Dormitory Authority, 3,134,730
City University System, Consolidated
Revenue, Series A, 5.750%, 07/01/2006
New York State Dormitory Authority, 3,172,367
City University System, Consolidated
Revenue, Series E, 5.750%, 07/01/2006
Onondaga County, NY, Industrial 3,507,945
Development Agency, Solid Waste
Disposal Facility, Solvay Paperboard
LLC, Series 1998, 7.000%, 11/01/2030
Port Authority of New York & New 2,110,600
Jersey, Special Obligation Revenue,
Series 1996, 7.000%, 10/01/2007
New York City, NY, General Obligation, 55,270 55,270
Unrefunded Balance, Series D, 1998,
6.000%, 08/01/2008
New York City, NY, General Obligation, 237,692 237,692
Series C, AMBAC, 6.400%, 08/01/2004
New York City, NY, General Obligation, 205,275 205,275
Series C, AMBAC, 6.400%, 08/01/2005
New York City, NY, General Obligation, 10,904,369 10,904,369
Series C, AMBAC, Prerefunded 8/01/02
at 101.50, 6.400%, 08/01/2005
New York City, NY, General Obligation, 292,985 292,985
Series C, AMBAC, Prerefunded 8/1/02 at
101.50, 6.400%, 08/01/2004
New York City, NY, General Obligation, 1,388,795 1,388,795
Series E, ETM, MBIA, 7.000%,
12/1/07
New York City, NY, General Obligation, 753,956 753,956
Series A, ETM, 8.000%, 11/01/2001
New York City, NY, General Obligation, 5,099 5,099
Series D, 8.000%, 08/01/2005
New York, NY, General Obligation, 14,197,840 14,197,840
Series A, 5.250%, 08/01/2011
New york, NY, General Obligation, 9,885,700 9,885,700
Series A, 5.200%, 08/01/2010
New York City, New York General 20,093 20,093
Obligation, Unrefunded Balance 1997,
Series D, 6.000%, 08/01/2006
New York State Dormitory Authority, 2,118,680 2,118,680
State University of New York, AMBAC
insured, 6.000%, 07/01/2009
New York State Dormitory Authority, 1,878,173 1,878,173
College and University Pooled Capital
Program, 7.800%, 12/01/2005
New York State Dormitory Authority 4,443,400 4,443,400
Revenue, City University, FGIC, Series
D, 7.000%, 07/01/2009
New York State Dormitory Authority 6,643,205 6,643,205
Revenue, City University, Series C,
FGIC, 7.500%, 07/01/2010
New York State Energy Research and 5,604,167 5,604,167
Development Authority, Pollution
Control Revenue, Electric and Gas,
5.900%, 12/01/2006
New York State, Urban Development 4,906,845 4,906,845
Authority, Correctional Facilities,
6.500%, 01/01/2011
Suffolk County, NY, Industrial 8,441,280 8,441,280
Development Agency, Southwest Sewer
Symstem, FGIC, 6.000%, 02/01/2007
NORTH CAROLINA
North Carolina Eastern Municipal Power 2,036,580 2,036,580
Agency, AMBAC insured, 5.500%,
1/1/2007
North Carolina Eastern Municipal Power 8,803,080 8,803,080
Agency, Power System Revenue, Series
B, FGIC, 6.000%, 01/01/2018
North Carolina Municipal Power Agency 8,426,220
No. 1, Catawba Electric Revenue,
5.250%, 01/01/2009
North Carolina Municipal Power Agency 2,493,250 2,493,250
No. 1, Catawba Electric Revenue, MBIA,
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Scudder Scudder
Managed AARP Insured Ohio Tax Pro Forma Scudder
Muncipal Bond Tax Free Free Fund Combined Managed Municpal
Principal Amount General Bond Principal Principal Bond Market
($) Principal Amount($) Amount($) Value($)
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5.250%, 01/01/2008
North Carolina Municipal Power Agency 8,235,000 8,235,000
No. 1, Catawba Electric Revenue, MBIA,
6.000%, 01/01/2011
North Carolina Municipal Power Agency 5,000,000 5,000,000
No. 1, Catawba Electricity, Revenue,
Series 1992, 7.250%, 01/01/2007
North Carolina Municipal Power Agency, 2,585,000 2,585,000
Number 1, Catawba Electric Power
Revenue, Series 1997, AMBAC Insured,
6.000%, 01/01/2008
NORTH DAKOTA
Bismarck, ND, Hospital Revenue, St. 2,850,000 2,850,000
Alexius Medical Center, Series 1991,
AMBAC, Zero Coupon, 05/01/2002
OHIO
Cleveland, OH, Water Works Revenue, 10,000,000 10,000,000
MBIA Insured, Series 1993G, 5.500%,
1/1/2013
Beavercreek, OH, Local School 1,000,000 1,000,000
District, General Obligation, Series
1996, 6.600%, 12/01/2015
Butler County, OH , Transportation 1,500,000 1,500,000
Improvement District, Series 1997 A,
6.000%, 04/01/2010
Cleveland, OH, Non Taxable Revenue 820,000 820,000
Bond, Cleveland Stadium, Series A,
12/1/2011
Cleveland, OH, Public Power System 2,250,000 2,250,000
Improvement Revenue, Series 1994 A,
Zero Coupon,, 11/15/2009
Cleveland, OH, Revenue Bond, Cleveland 820,000 820,000
Stadium, Series A, 12/01/2014
Cleveland, OH, Revenue Bond, Cleveland 820,000 820,000
Stadium, Series A, 12/01/2017
Cleveland, OH, Revenue Bond, Cleveland 810,000 810,000
Stadium, Series B, 12/01/2009
Cleveland, OH, Revenue Bond, Cleveland 815,000 815,000
Stadium, Series B, 12/01/2015
Cleveland, OH, Revenue Bond, Cleveland 815,000 815,000
Stadium, Series B, 12/01/2018
Cleveland, OH, Waterworks Revenue, 1,000,000 1,000,000
Series I, 5.000%, 01/01/2017
Cleveland, OH, Waterworks Revenue, 50,000 50,000
Unrefunded, First Mortgage Revenue,
Series F 1992A, 6.250%, 01/01/2007
Cleveland, OH, Urban Renewal Tax 1,000,000 1,000,000
Increment Rock & Roll Hall of Fame and
Museum Project, 6.750%, 03/15/2018
Cleveland, OH, General Obligation, 1,000,000 1,000,000
Series A, Prerefunded 07/01/2002,
6.300%, 07/01/2006
Cleveland, OH, Parking Facility 1,385,000 1,385,000
Revenue, 6.000%, 09/15/2009
Cleveland, OH, Public Power System 750,000 750,000
Improvement Revenue, Series B
Prerefunded 11/15/2001, 7.000%,
11/15/2017
Cleveland, OH, Public Power System 1,050,000 1,050,000
Revenue, Series 1996-1, 6.000%,
11/15/2011
Cleveland, OH, Waterworks Revenue, 950,000 950,000
Prerefunded 1/1/2002, First Mortgage
Revenue, Series F 1992A, 6.250%,
1/1/2007
Cleveland-Cuyahoga County, OH, Port 1,000,000 1,000,000
Development Revenue, C&P Docks
Project, 6.000%, 03/01/2007
Clevland, OH Public Power Systems 2,250,000 2,250,000
Revenue, Capital Appreciation, First
Mortgage, Series 1994A, Zero Coupon,
11/15/2012
Columbus, OH, General Obligation, 1,000,000 1,000,000
Unlimited Tax, Sewer Improvement,
Prerefunded 05/01/2003, 6.000%,
5/1/2013
Cuyahoga County, OH, General 1,500,000 1,500,000
Obligation, Jail Facilities, Series
1991, ETM, Zero Coupon, 10/01/2002
Cuyahoga County, OH, Hospital 1,000,000 1,000,000
Facilities Revenue, Health Cleveland
Inc., Series 1993, 6.250%, 08/15/2010
Dublin, OH , City School District, 1,000,000 1,000,000
<CAPTION>
AARP Insured Scudder Pro Forma
Tax Free General Ohio Tax Free Combined
Bond Market Fund Market Market
Value($) Value($) Value($)(1)
---------------------------------------------
<S> <C> <C> <C>
5.250%, 01/01/2008
North Carolina Municipal Power Agency 8,546,695 8,546,695
No. 1, Catawba Electric Revenue, MBIA,
6.000%, 01/01/2011
North Carolina Municipal Power Agency 5,593,950 5,593,950
No. 1, Catawba Electricity, Revenue,
Series 1992, 7.250%, 01/01/2007
North Carolina Municipal Power Agency, 2,705,280 2,705,280
Number 1, Catawba Electric Power
Revenue, Series 1997, AMBAC Insured,
6.000%, 01/01/2008
NORTH DAKOTA
Bismarck, ND, Hospital Revenue, St. 2,537,270 2,537,270
Alexius Medical Center, Series 1991,
AMBAC, Zero Coupon, 05/01/2002
OHIO
Cleveland, OH, Water Works Revenue, 9,971,300 9,971,300
MBIA Insured, Series 1993G, 5.500%,
1/1/2013
Beavercreek, OH, Local School 1,096,786 1,096,786
District, General Obligation, Series
1996, 6.600%, 12/01/2015
Butler County, OH , Transportation 1,586,880 1,586,880
Improvement District, Series 1997 A,
6.000%, 04/01/2010
Cleveland, OH, Non Taxable Revenue 405,055 405,055
Bond, Cleveland Stadium, Series A,
12/1/2011
Cleveland, OH, Public Power System 1,316,205 1,316,205
Improvement Revenue, Series 1994 A,
Zero Coupon,, 11/15/2009
Cleveland, OH, Revenue Bond, Cleveland 332,141 332,141
Stadium, Series A, 12/01/2014
Cleveland, OH, Revenue Bond, Cleveland 269,362 269,362
Stadium, Series A, 12/01/2017
Cleveland, OH, Revenue Bond, Cleveland 456,743 456,743
Stadium, Series B, 12/01/2009
Cleveland, OH, Revenue Bond, Cleveland 306,114 306,114
Stadium, Series B, 12/01/2015
Cleveland, OH, Revenue Bond, Cleveland 251,273 251,273
Stadium, Series B, 12/01/2018
Cleveland, OH, Waterworks Revenue, 896,610 896,610
Series I, 5.000%, 01/01/2017
Cleveland, OH, Waterworks Revenue, 52,600 52,600
Unrefunded, First Mortgage Revenue,
Series F 1992A, 6.250%, 01/01/2007
Cleveland, OH, Urban Renewal Tax 1,008,390 1,008,390
Increment Rock & Roll Hall of Fame and
Museum Project, 6.750%, 03/15/2018
Cleveland, OH, General Obligation, 1,065,660 1,065,660
Series A, Prerefunded 07/01/2002,
6.300%, 07/01/2006
Cleveland, OH, Parking Facility 1,478,474 1,478,474
Revenue, 6.000%, 09/15/2009
Cleveland, OH, Public Power System 795,300 795,300
Improvement Revenue, Series B
Prerefunded 11/15/2001, 7.000%,
11/15/2017
Cleveland, OH, Public Power System 1,109,997 1,109,997
Revenue, Series 1996-1, 6.000%,
11/15/2011
Cleveland, OH, Waterworks Revenue, 1,004,264 1,004,264
Prerefunded 1/1/2002, First Mortgage
Revenue, Series F 1992A, 6.250%,
1/1/2007
Cleveland-Cuyahoga County, OH, Port 976,190 976,190
Development Revenue, C&P Docks
Project, 6.000%, 03/01/2007
Clevland, OH Public Power Systems 1,080,900 1,080,900
Revenue, Capital Appreciation, First
Mortgage, Series 1994A, Zero Coupon,
11/15/2012
Columbus, OH, General Obligation, 1,065,590 1,065,590
Unlimited Tax, Sewer Improvement,
Prerefunded 05/01/2003, 6.000%,
5/1/2013
Cuyahoga County, OH, General 1,308,915 1,308,915
Obligation, Jail Facilities, Series
1991, ETM, Zero Coupon, 10/01/2002
Cuyahoga County, OH, Hospital 1,047,020 1,047,020
Facilities Revenue, Health Cleveland
Inc., Series 1993, 6.250%, 08/15/2010
Dublin, OH , City School District, 512,900 512,900
<PAGE>
<CAPTION>
Scudder Scudder
Managed AARP Insured Ohio Tax Pro Forma Scudder
Muncipal Bond Tax Free Free Fund Combined Managed Municpal
Principal Amount General Bond Principal Principal Bond Market
($) Principal Amount($) Amount($) Value($)
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Capital Appreciation, Series 1998,
Zero Coupon, 12/01/2011
Fairfield, OH, City School District, 1,000,000 1,000,000
7.200%, 12/01/2009
Franklin County, OH , Health Care 500,000 500,000
Facilities, Revenue Refunding, Ohio
Presbyterian Services, Series 1997,
5.250%, 07/02/2008
Franklin County, OH, Riverside United 1,950,000 1,950,000
Methodist Hospital, Series A, 5.750%,
5/15/2012
Franklin County, OH, Health Care 1,000,000 1,000,000
Facilities, Revenue Refunding, Ohio
Presbyterian Services, Series 1997,
5.500%, 07/01/2017
Gateway Economic Development 4,000,000 4,000,000
Corporation of Cleveland, OH, Stadium
Revenue, 6.500%, 09/15/2014
Gateway Economic Development 2,550,000 2,550,000
Corporation of Greater Cleveland, OH,
Excise Tax, Series 1990, 7.200%,
9/1/2001
Hamilton County, OH, Sewer System 1,000,000 1,000,000
Revenue, Improvement and Refunding,
FGIC Insured, 5.450%, 12/01/2009
Hamilton County, OH, Sewer System 530,000 530,000
Revenue, Series 1991 A, 6.400%,
12/1/2005
Hamilton County, OH, Sewer System 220,000 220,000
Revenue, Series 1991 A, Prerefunded
06/01/2001, 6.400%, 12/01/2005
Hamilton County, OH, Health System 2,000,000 2,000,000
Revenue, Franciscan Sisters of the
Poor Health System, Providence
Hospital, Series 1992, 6.800%,
7/1/2008
Hamilton County, OH, Hospital 1,000,000 1,000,000
Facilities Revenue, Christ Hospital,
Series 1991 B, Prerefunded 01/01/2001,
6.625%, 01/01/2006
Hilliard, OH, School District, Series 1,655,000 1,655,000
1996A, Zero Coupon, FGIC Insured,
12/1/2012
Huber Heights, OH, Water System 1,005,000 1,005,000
Revenue, Capital Appreciation, Zero
Coupon, 12/01/2012
Lorain County, OH, Hospital Refunding 1,000,000 1,000,000
Revenue, Humility of Mary Health Care
System, Series A, Prerefunded
12/15/2005, 5.900%, 12/15/2008
Lorain, OH, Hospital Authority 1,000,000 1,000,000
Refunding Revenue, Lakeland Community
Hospital Inc., 6.500%, 11/15/2012
Lucas County, OH, Toledo Port 500,000 500,000
Authority Development, Revenue Bond,
Northwest Ohio Bond Fund, Series A,
5.400%, 05/15/2019
Lucas County, OH, Hospital Revenue, 1,375,000 1,375,000
Flower Hospital, Series 1993,
Prerefunded 12/01/2004, 6.125%,
12/1/2013
Mahoning County, OH, General 1,100,000 1,100,000
Obligation, Limited Tax, 6.600%,
12/1/2006
Medina, OH, City School District, 1,500,000 1,500,000
General Obligation, 12/01/2006
Miami County, OH, Revenue Refunding, 1,000,000 1,000,000
Hospital Upper Valley,Series 1996 C,
6.250%, 05/15/2013
North Olmstead, OH, General 2,000,000 2,000,000
Obligation, 6.200%, 12/01/2011
North Olmsted, OH, General 1,500,000 1,500,000
Obligation,, 6.250%, 12/15/2012
Northeast Ohio Regional Sewer 1,550,000 1,550,000
District, Wastewater Improvement
Revenue Refunding, 5.500%, 11/15/2012
Northeast Ohio Regional Sewer 1,000,000 1,000,000
District, Wastewater Improvement
Revenue Refunding,, 5.600%, 11/15/2013
Ohio Air Quality Development 1,250,000 1,250,000
Authority, Pollution Control Revenue,
Cleveland Electric Company, 8.000%,
12/1/2013
Ohio Gateway Economic Development 1,500,000 1,500,000
Corp., Revenue, Cuyahoga County Annual
Gateway, 7.500%, 09/01/2005
Ohio General Obligation, Series 1994, 1,000,000 1,000,000
6.000%, 08/01/2010
Ohio Higher Education Facilities 2,250,000 2,250,000
<CAPTION>
AARP Insured Scudder Pro Forma
Tax Free General Ohio Tax Free Combined
Bond Market Fund Market Market
Value($) Value($) Value($)(1)
---------------------------------------------
<S> <C> <C> <C>
Capital Appreciation, Series 1998,
Zero Coupon, 12/01/2011
Fairfield, OH, City School District, 1,138,120 1,138,120
7.200%, 12/01/2009
Franklin County, OH , Health Care 471,275 471,275
Facilities, Revenue Refunding, Ohio
Presbyterian Services, Series 1997,
5.250%, 07/02/2008
Franklin County, OH, Riverside United 1,953,608 1,953,608
Methodist Hospital, Series A, 5.750%,
5/15/2012
Franklin County, OH, Health Care 866,440 866,440
Facilities, Revenue Refunding, Ohio
Presbyterian Services, Series 1997,
5.500%, 07/01/2017
Gateway Economic Development 3,965,800 3,965,800
Corporation of Cleveland, OH, Stadium
Revenue, 6.500%, 09/15/2014
Gateway Economic Development 2,621,451 2,621,451
Corporation of Greater Cleveland, OH,
Excise Tax, Series 1990, 7.200%,
9/1/2001
Hamilton County, OH, Sewer System 1,025,700 1,025,700
Revenue, Improvement and Refunding,
FGIC Insured, 5.450%, 12/01/2009
Hamilton County, OH, Sewer System 555,795 555,795
Revenue, Series 1991 A, 6.400%,
12/1/2005
Hamilton County, OH, Sewer System 231,473 231,473
Revenue, Series 1991 A, Prerefunded
06/01/2001, 6.400%, 12/01/2005
Hamilton County, OH, Health System 2,143,980 2,143,980
Revenue, Franciscan Sisters of the
Poor Health System, Providence
Hospital, Series 1992, 6.800%,
7/1/2008
Hamilton County, OH, Hospital 1,027,960 1,027,960
Facilities Revenue, Christ Hospital,
Series 1991 B, Prerefunded 01/01/2001,
6.625%, 01/01/2006
Hilliard, OH, School District, Series 793,076 793,076
1996A, Zero Coupon, FGIC Insured,
12/1/2012
Huber Heights, OH, Water System 481,596 481,596
Revenue, Capital Appreciation, Zero
Coupon, 12/01/2012
Lorain County, OH, Hospital Refunding 1,049,990 1,049,990
Revenue, Humility of Mary Health Care
System, Series A, Prerefunded
12/15/2005, 5.900%, 12/15/2008
Lorain, OH, Hospital Authority 1,075,820 1,075,820
Refunding Revenue, Lakeland Community
Hospital Inc., 6.500%, 11/15/2012
Lucas County, OH, Toledo Port 434,380 434,380
Authority Development, Revenue Bond,
Northwest Ohio Bond Fund, Series A,
5.400%, 05/15/2019
Lucas County, OH, Hospital Revenue, 1,466,493 1,466,493
Flower Hospital, Series 1993,
Prerefunded 12/01/2004, 6.125%,
12/1/2013
Mahoning County, OH, General 1,168,508 1,168,508
Obligation, Limited Tax, 6.600%,
12/1/2006
Medina, OH, City School District, 1,040,985 1,040,985
General Obligation, 12/01/2006
Miami County, OH, Revenue Refunding, 959,100 959,100
Hospital Upper Valley,Series 1996 C,
6.250%, 05/15/2013
North Olmstead, OH, General 2,133,020 2,133,020
Obligation, 6.200%, 12/01/2011
North Olmsted, OH, General 1,589,130 1,589,130
Obligation,, 6.250%, 12/15/2012
Northeast Ohio Regional Sewer 1,557,952 1,557,952
District, Wastewater Improvement
Revenue Refunding, 5.500%, 11/15/2012
Northeast Ohio Regional Sewer 1,005,110 1,005,110
District, Wastewater Improvement
Revenue Refunding,, 5.600%, 11/15/2013
Ohio Air Quality Development 1,372,925 1,372,925
Authority, Pollution Control Revenue,
Cleveland Electric Company, 8.000%,
12/1/2013
Ohio Gateway Economic Development 1,582,830 1,582,830
Corp., Revenue, Cuyahoga County Annual
Gateway, 7.500%, 09/01/2005
Ohio General Obligation, Series 1994, 1,066,880 1,066,880
6.000%, 08/01/2010
Ohio Higher Education Facilities 2,416,770 2,416,770
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Scudder Scudder
Managed AARP Insured Ohio Tax Pro Forma Scudder
Muncipal Bond Tax Free Free Fund Combined Managed Municpal
Principal Amount General Bond Principal Principal Bond Market
($) Principal Amount($) Amount($) Value($)
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue, Case Western Reserve
University, Series B, 6.500%,
10/1/2020
Ohio Higher Educational Facility 1,000,000 1,000,000
Commission, Refunding Revenue, Case
Western Reserve University, 6.000%,
10/1/2014
Ohio Housing Finance Agency, 730,000 730,000
Single-Family Mortgage Revenue, Series
1990 F, 7.600%, 09/01/2016
Ohio Public Facilities Commission, 1,500,000 1,500,000
Higher Educational Capital Facilities
Revenue, Series 2B, 5.400%, 11/01/2007
Ohio State Building Authority, 5.375%, 2,000,000 2,000,000
10/1/2013
Ohio State Building Authority, 1,000,000 1,000,000
Administration Building, Series A,
5.375%, 10/01/2012
Ohio State Building Authority, Revenue 750,000 750,000
Bond, Adult Correctional Facilities,
Series A, 5.500%, 10/01/2010
Ohio State Building Authority, 1,000,000 1,000,000
Correctional Facilites Revenue, Series
1991 A, 6.500%, 10/01/2004
Ohio State Building Authority, Toledo 500,000 500,000
Government Office Building, Series A,
Prerefunded 04/01/2003, 8.000%,
10/1/2027
Ohio State Higher Education Facility, 2,325,000 2,325,000
Series 1997 A, Step-up Coupon 0% to
7/1/2000, 6.5 to, 07/01/2008
Ohio State Higher Education Facility , 200,000 200,000
Prefunded 12/01/2000, FGIC, 7.250%,
12/1/2012
Ohio State Higher Education Facility, 800,000 800,000
Prerefunded on 12/01/2000, Series
1989, 7.250%, 12/01/2012
Ohio State Higher Educational 1,000,000 1,000,000
Facilities Commission, Higher
Educational Facilities-Oberlin
College-Revenue Bonds, 5.250%,
10/1/2014
Ohio State Water Development 500,000 500,000
Authority, Revenue, Bay Shore Project,
Series A, 5.875%, 09/01/2020
Ohio Water Development Authority 1,000,000 1,000,000
Revenue Bond, 5.250%, 12/01/2010
Olmsted Falls, OH, City School 1,000,000 1,000,000
District, General Obligation, Series
1991, Prerefunded 12/15/2001, 7.050%,
12/15/2011
Rocky River, OH, City School District, 1,000,000 1,000,000
School Improvement, Series 1998,
5.375%, 12/01/2017
Strongsville, OH, City School 1,000,000 1,000,000
District, General Obligation, 5.350%,
12/1/2011
Summit County, OH, General Obligation, 1,000,000 1,000,000
Prerefunded 12/01/2004, 6.400%,
12/1/2014
University of Akron, General Receipts, 1,365,000 1,365,000
Revenue, 5.750%, 01/01/2013
Warren County, OH, Water Improvement, 1,720,000 1,720,000
General Obligation, The P&G Project,
Series 1995, 5.250%, 12/01/2016
OKLAHOMA
Oklahoma Development Financial 2,500,000 2,500,000 2,146,350
Authority, Revenue Bond, Hillcrest
Health Center Inc., 5.625%, 08/15/2019
Tulsa, OK, Industrial Development 6,430,000 6,430,000
Authority, Hospital Revenue, St.
John's Medical Center, MBIA Insured,
Zero Coupon, 12/01/2006
Tulsa, OK, Industrial Development 5,430,000 5,430,000
Authority, Hospital Revenue, St.
John's Medical Center, MBIA, Zero
Coupon, 12/01/2004
Tulsa, OK, Industrial Development 3,930,000 3,930,000
Authority, St. John's Medical Center,
MBIA, Zero Coupon, 12/01/2002
OREGON
Chemeketa, OR, Community College 2,385,000 2,385,000 2,361,293
District, 5.500%, 06/01/2014
PENNSYLVANIA
Allegheny County, PA, Airport Revenue, 1,500,000 1,500,000 1,499,865
Pittsburgh International Airport,
Series 1997 A, 5.750%, 01/01/2013
<CAPTION>
AARP Insured Scudder Pro Forma
Tax Free General Ohio Tax Free Combined
Bond Market Fund Market Market
Value($) Value($) Value($)(1)
--------------------------------------------
<S> <C> <C> <C>
Revenue, Case Western Reserve
University, Series B, 6.500%,
10/1/2020
Ohio Higher Educational Facility 1,035,940 1,035,940
Commission, Refunding Revenue, Case
Western Reserve University, 6.000%,
10/1/2014
Ohio Housing Finance Agency, 752,557 752,557
Single-Family Mortgage Revenue, Series
1990 F, 7.600%, 09/01/2016
Ohio Public Facilities Commission, 1,529,280 1,529,280
Higher Educational Capital Facilities
Revenue, Series 2B, 5.400%, 11/01/2007
Ohio State Building Authority, 5.375%, 1,949,260 1,949,260
10/1/2013
Ohio State Building Authority, 986,680 986,680
Administration Building, Series A,
5.375%, 10/01/2012
Ohio State Building Authority, Revenue 762,285 762,285
Bond, Adult Correctional Facilities,
Series A, 5.500%, 10/01/2010
Ohio State Building Authority, 1,056,270 1,056,270
Correctional Facilites Revenue, Series
1991 A, 6.500%, 10/01/2004
Ohio State Building Authority, Toledo 554,570 554,570
Government Office Building, Series A,
Prerefunded 04/01/2003, 8.000%,
10/1/2027
Ohio State Higher Education Facility, 2,437,205 2,437,205
Series 1997 A, Step-up Coupon 0% to
7/1/2000, 6.5 to, 07/01/2008
Ohio State Higher Education Facility , 210,994 210,994
Prefunded 12/01/2000, FGIC, 7.250%,
12/1/2012
Ohio State Higher Education Facility, 843,976 843,976
Prerefunded on 12/01/2000, Series
1989, 7.250%, 12/01/2012
Ohio State Higher Educational 957,070 957,070
Facilities Commission, Higher
Educational Facilities-Oberlin
College-Revenue Bonds, 5.250%,
10/1/2014
Ohio State Water Development 450,865 450,865
Authority, Revenue, Bay Shore Project,
Series A, 5.875%, 09/01/2020
Ohio Water Development Authority 998,290 998,290
Revenue Bond, 5.250%, 12/01/2010
Olmsted Falls, OH, City School 1,076,700 1,076,700
District, General Obligation, Series
1991, Prerefunded 12/15/2001, 7.050%,
12/15/2011
Rocky River, OH, City School District, 946,290 946,290
School Improvement, Series 1998,
5.375%, 12/01/2017
Strongsville, OH, City School 1,002,950 1,002,950
District, General Obligation, 5.350%,
12/1/2011
Summit County, OH, General Obligation, 1,094,750 1,094,750
Prerefunded 12/01/2004, 6.400%,
12/1/2014
University of Akron, General Receipts, 1,382,841 1,382,841
Revenue, 5.750%, 01/01/2013
Warren County, OH, Water Improvement, 1,611,107 1,611,107
General Obligation, The P&G Project,
Series 1995, 5.250%, 12/01/2016
OKLAHOMA
Oklahoma Development Financial 2,146,350
Authority, Revenue Bond, Hillcrest
Health Center Inc., 5.625%, 08/15/2019
Tulsa, OK, Industrial Development 4,474,701 4,474,701
Authority, Hospital Revenue, St.
John's Medical Center, MBIA Insured,
Zero Coupon, 12/01/2006
Tulsa, OK, Industrial Development 4,229,644 4,229,644
Authority, Hospital Revenue, St.
John's Medical Center, MBIA, Zero
Coupon, 12/01/2004
Tulsa, OK, Industrial Development 3,404,638 3,404,638
Authority, St. John's Medical Center,
MBIA, Zero Coupon, 12/01/2002
OREGON
Chemeketa, OR, Community College 2,361,293
District, 5.500%, 06/01/2014
PENNSYLVANIA
Allegheny County, PA, Airport Revenue, 1,499,865
Pittsburgh International Airport,
Series 1997 A, 5.750%, 01/01/2013
<PAGE>
<CAPTION>
Scudder Scudder
Managed AARP Insured Ohio Tax Pro Forma Scudder
Muncipal Bond Tax Free Free Fund Combined Managed Municpal
Principal Amount General Bond Principal Principal Bond Market
($) Principal Amount($) Amount($) Value($)
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Armstrong County, PA, Hospital 1,000,000 1,000,000 1,050,540
Authority, Revenue, St Francis Medical
Center Project, Series A, 6.250%,
6/1/2013
Berks County, PA, Municipal Authority 1,000,000 1,000,000 1,022,180
Hospital Revenue, Reading Hospital and
Medical Center Project, 5.500%,
10/1/2008
Berks County, PA, Municipal Authority 1,000,000 1,000,000 1,012,500
Hospital Revenue, Reading Hospital
Medical Center Project, 5.700%,
10/1/2014
Bethlehem, PA, Water Revenue, Series 1,000,000 1,000,000 1,039,932
1992, Prerefunded 11/15/01, 6.250%,
11/15/2001
Blair County, PA, Hospital Authority, 1,500,000 1,500,000 1,490,955
Altoona Hospital, Series 1998 PJ-A,
5.500%, 07/01/2011
Blair County, PA, Hospital Authority, 3,590,000 3,590,000
Altoona Hospital, Project A, 5.500%,
7/1/2010
Bucks County, PA, Water and Sewer 425,000 425,000 450,730
Authority Revenue, ETM, 6.375%,
12/1/2008
Commonwealth of Pennsylvania, 4,250,000 4,250,000
Industrial Development Authority,
Economic Development Revenue, 5.800%,
1/1/2008
Commonwealth of Pennsylvania, 4,875,000 4,875,000
Industrial Development Authority,
Economic Development Revenue, AMBAC,
5.800%, 07/01/2008
Commonwealth of Philadelphia, PA, 2,000,000 20,000,000 22,000,000 2,054,460
Water & Wastewater Refunding Revenue,
5.625%, 06/15/2009
Delaware County, PA, White Horse 1,000,000 1,000,000 996,580
Village, NC Series 1996 A, 6.600%,
7/1/2006
Delaware County, PA, Health Facilities 1,500,000 1,500,000 1,593,030
Revenue, Mercy Health Corporation of
Southeastern Pennsylvania, Series B,
6.000%, 11/15/2007
Delaware County, PA, Hospital Revenue, 1,750,000 1,750,000 1,705,305
Memorial Hospital, 5.500%, 08/15/2013
Erie County, PA, Pollution Control, 1,000,000 1,000,000 943,940
5.300%, 04/01/2012
Erie County, PA, Prison Authority, 1,000,000 1,000,000 1,039,230
Commonwealth Lease Revenue,
Prerefunded 11/1/01, 6.250%,
11/1/2001
Gettysburgh, PA, Gettysburgh College, 1,020,000 1,020,000 999,498
Revenue Bond, 5.375%, 08/15/2013
Harrisburg, PA, General Obligation, 1,000,000 1,000,000 514,140
Refunding, Zero Coupon, Series 1997 D,
9/15/2011
Indiana County, PA, Industrial 1,000,000 1,000,000 1,004,130
Development Authority, Pennsylvania
Electric Company, Pollution Control
Revenue, 5.350%, 11/01/2010
Latrobe, PA, Industrial Development 1,000,000 1,000,000 934,810
Authority, ST. Vincent College
Project, 5.375%, 05/01/2013
Lebanon County, PA, Good Samaritan 600,000 600,000 612,138
Hospital Authority Revenue, Series
1989 B, Prerefunded 11/1/99, 8.250%,
11/1/2018
Luzerne County, PA, Flood Protection 1,400,000 1,400,000 1,340,696
Authority, Series 1998 A, 5.250%,
1/15/2013
Montgomery County, PA, Redevelopment 1,500,000 1,500,000 1,500,180
Authority, Multi-Family Housing
Revenue, KBF Associates L.P. Project,
6.375%, 07/01/2012
Pennsylvania Convention Center 2,200,000 2,200,000 2,240,832
Authority, Funding Revenue, 6.000%,
9/1/2009
Pennsylvania General Obligation, 1,000,000 1,000,000 1,076,590
6.250%, 07/01/2010
Pennsylvania General Obligation, 2,500,000 2,500,000 2,814,400
10.000%, 04/15/2002
Pennsylvania Housing Finance Agency, 840,000 840,000 873,919
Single Family Mortgage Revenue, Series
1992-33, 6.850%, 10/01/2009
<CAPTION>
AARP Insured Scudder Pro Forma
Tax Free General Ohio Tax Free Combined
Bond Market Fund Market Market
Value($) Value($) Value($)(1)
---------------------------------------------
<S> <C> <C> <C>
Armstrong County, PA, Hospital 1,050,540
Authority, Revenue, St Francis Medical
Center Project, Series A, 6.250%,
6/1/2013
Berks County, PA, Municipal Authority 1,022,180
Hospital Revenue, Reading Hospital and
Medical Center Project, 5.500%,
10/1/2008
Berks County, PA, Municipal Authority 1,012,500
Hospital Revenue, Reading Hospital
Medical Center Project, 5.700%,
10/1/2014
Bethlehem, PA, Water Revenue, Series 1,039,932
1992, Prerefunded 11/15/01, 6.250%,
11/15/2001
Blair County, PA, Hospital Authority, 1,490,955
Altoona Hospital, Series 1998 PJ-A,
5.500%, 07/01/2011
Blair County, PA, Hospital Authority, 3,598,329 3,598,329
Altoona Hospital, Project A, 5.500%,
7/1/2010
Bucks County, PA, Water and Sewer 450,730
Authority Revenue, ETM, 6.375%,
12/1/2008
Commonwealth of Pennsylvania, 4,420,553 4,420,553
Industrial Development Authority,
Economic Development Revenue, 5.800%,
1/1/2008
Commonwealth of Pennsylvania, 5,080,140 5,080,140
Industrial Development Authority,
Economic Development Revenue, AMBAC,
5.800%, 07/01/2008
Commonwealth of Philadelphia, PA, 20,544,600 22,599,060
Water & Wastewater Refunding Revenue,
5.625%, 06/15/2009
Delaware County, PA, White Horse 996,580
Village, NC Series 1996 A, 6.600%,
7/1/2006
Delaware County, PA, Health Facilities 1,593,030
Revenue, Mercy Health Corporation of
Southeastern Pennsylvania, Series B,
6.000%, 11/15/2007
Delaware County, PA, Hospital Revenue, 1,705,305
Memorial Hospital, 5.500%, 08/15/2013
Erie County, PA, Pollution Control, 943,940
5.300%, 04/01/2012
Erie County, PA, Prison Authority, 1,039,230
Commonwealth Lease Revenue,
Prerefunded 11/1/01, 6.250%,
11/1/2001
Gettysburgh, PA, Gettysburgh College, 999,498
Revenue Bond, 5.375%, 08/15/2013
Harrisburg, PA, General Obligation, 514,140
Refunding, Zero Coupon, Series 1997 D,
9/15/2011
Indiana County, PA, Industrial 1,004,130
Development Authority, Pennsylvania
Electric Company, Pollution Control
Revenue, 5.350%, 11/01/2010
Latrobe, PA, Industrial Development 934,810
Authority, ST. Vincent College
Project, 5.375%, 05/01/2013
Lebanon County, PA, Good Samaritan 612,138
Hospital Authority Revenue, Series
1989 B, Prerefunded 11/1/99, 8.250%,
11/1/2018
Luzerne County, PA, Flood Protection 1,340,696
Authority, Series 1998 A, 5.250%,
1/15/2013
Montgomery County, PA, Redevelopment 1,500,180
Authority, Multi-Family Housing
Revenue, KBF Associates L.P. Project,
6.375%, 07/01/2012
Pennsylvania Convention Center 2,240,832
Authority, Funding Revenue, 6.000%,
9/1/2009
Pennsylvania General Obligation, 1,076,590
6.250%, 07/01/2010
Pennsylvania General Obligation, 2,814,400
10.000%, 04/15/2002
Pennsylvania Housing Finance Agency, 873,919
Single Family Mortgage Revenue, Series
1992-33, 6.850%, 10/01/2009
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Scudder Scudder
Managed AARP Insured Ohio Tax Pro Forma Scudder
Muncipal Bond Tax Free Free Fund Combined Managed Municpal
Principal Amount General Bond Principal Principal Bond Market
($) Principal Amount($) Amount($) Value($)
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Pennsylvania Housing Finance Agency, 865,000 865,000 893,164
Single Family Mortgage Revenue, Series
1991-32, 7.150%, 04/01/2015
Pennsylvania Intergovernmental 1,000,000 1,000,000 1,059,030
Cooperation Authority, Special Tax
Revenue, City of Philadelphia,
Prerefunded 6/15/02, 6.800%,
6/15/2012
Pennsylvania State Higher Education 1,525,000 1,525,000 1,459,776
Facilities Authority, Temple
University, Series 1998, 5.250%,
4/1/2013
Philadelphia, PA, Port Authority Lease 2,000,000 2,000,000 2,062,380
Revenue, Series 1993, 6.200%,
9/1/2013
Philadelphia, PA, General Obligation, 1,000,000 1,000,000 1,075,200
School District, Series A, 6.250%,
9/1/2009
Philadelphia, PA, Authority for 1,000,000 1,000,000 846,910
Industrial Development Health Care
Facilities Revenue, Baptist Home of
Philadelphia, Series A, 5.500%,
11/15/2018
Philadelphia, PA, Authority for 1,000,000 1,000,000 993,160
Industrial Development, Commercial
Development Revenues, 6.500%,
10/1/2027
Philadelphia, PA, Hospital and Higher 1,000,000 1,000,000 1,055,170
Education Facilities Authority,
Hospital Revenue, Children's Seashore
House, Series A, 7.000%, 08/15/2012
Philadelphia, PA, Water Revenue, 1,000,000 1,000,000 1,072,780
6.250%, 08/01/2010
Commonwealth of Philadelphia, PA, 5,000,000 5,000,000
Water & Wastewater Revenue, MBIA,
5.500%, 06/15/2007
Philadelphia, PA, Water and Wastewater 5,500,000 5,500,000
Revenue, 5.250%, 12/15/2012
Pittsburgh, PA, General Obligation, 1,500,000 1,500,000 1,468,635
Series 1993 A, 5.500%, 09/01/2014
Pittsburgh, PA, Water and Sewer System 150,000 150,000 171,048
Revenue, ETM, 7.250%, 09/01/2014
Somerset County, PA, General 1,000,000 1,000,000 1,038,380
Authority, Commonwealth Lease Revenue,
Prerefunded 10/15/01, 6.250%,
10/15/2011
Union County, PA, Higher Education 1,000,000 1,000,000 1,044,160
Facilities Authority, University
Revenue, Bucknell University, 6.200%,
4/1/2007
University Area, PA, Sewer Revenue, 1,750,000 1,750,000 1,678,093
5.250%, 11/01/2014
Westmoreland County, PA, Industrial 7,300,000 7,300,000
Development Revenue, Westmoreland
Health System, AMBAC, 5.375%,
7/1/2011
PUERTO RICO
Puerto Rico Aqueduct and Sewer 1,000,000 1,000,000
Authority, Revenue Refunding,, 6.000%,
7/1/2009
Puerto Rico Commonwealth, Highway & 1,000,000 1,000,000
Transportation Authority, Series
1993W, 5.500%, 07/01/2013
Puerto Rico Electric Power Authority, 2,000,000 2,000,000
Series 1994S, 6.125%, 07/01/2009
Puerto Rico, General Obligation, 1,000,000 1,000,000
Public Improvement, Prerefunded
07/01/2002, 6.600%, 07/01/2013
University Area, PA, Sewer Revenue, 1,000,000 1,000,000 1,073,320
5.250%, 11/01/2014
University of Puerto Rico, University 1,000,000 1,000,000
Systems, Series N, 6.250%, 06/01/2008
RHODE ISLAND
Rhode Island Clean Water Protection 2,000,000 2,000,000
Agency, Pollution Control Revenue,
Revolving Fund, Series A, MBIA,
5.400%, 10/01/2015
Rhode Island Convention Center 5,000,000 5,000,000
Authority, Refunding Revenue, Series
1993 B, MBIA, 5.000%, 05/15/2010
Rhode Island Convention Center 2,750,000 2,750,000 2,375,203
Authority, Series B, 5.000%,
5/15/2020
Rhode Island Convention Center 22,000,000 22,000,000
<CAPTION>
AARP Insured Scudder Pro Forma
Tax Free General Ohio Tax Free Combined
Bond Market Fund Market Market
Value($) Value($) Value($)(1)
---------------------------------------------
<S> <C> <C> <C>
Pennsylvania Housing Finance Agency, 893,164
Single Family Mortgage Revenue, Series
1991-32, 7.150%, 04/01/2015
Pennsylvania Intergovernmental 1,059,030
Cooperation Authority, Special Tax
Revenue, City of Philadelphia,
Prerefunded 6/15/02, 6.800%,
6/15/2012
Pennsylvania State Higher Education 1,459,776
Facilities Authority, Temple
University, Series 1998, 5.250%,
4/1/2013
Philadelphia, PA, Port Authority Lease 2,062,380
Revenue, Series 1993, 6.200%,
9/1/2013
Philadelphia, PA, General Obligation, 1,075,200
School District, Series A, 6.250%,
9/1/2009
Philadelphia, PA, Authority for 846,910
Industrial Development Health Care
Facilities Revenue, Baptist Home of
Philadelphia, Series A, 5.500%,
11/15/2018
Philadelphia, PA, Authority for 993,160
Industrial Development, Commercial
Development Revenues, 6.500%,
10/1/2027
Philadelphia, PA, Hospital and Higher 1,055,170
Education Facilities Authority,
Hospital Revenue, Children's Seashore
House, Series A, 7.000%, 08/15/2012
Philadelphia, PA, Water Revenue, 1,072,780
6.250%, 08/01/2010
Commonwealth of Philadelphia, PA, 5,127,950 5,127,950
Water & Wastewater Revenue, MBIA,
5.500%, 06/15/2007
Philadelphia, PA, Water and Wastewater 5,367,230 5,367,230
Revenue, 5.250%, 12/15/2012
Pittsburgh, PA, General Obligation, 1,468,635
Series 1993 A, 5.500%, 09/01/2014
Pittsburgh, PA, Water and Sewer System 171,048
Revenue, ETM, 7.250%, 09/01/2014
Somerset County, PA, General 1,038,380
Authority, Commonwealth Lease Revenue,
Prerefunded 10/15/01, 6.250%,
10/15/2011
Union County, PA, Higher Education 1,044,160
Facilities Authority, University
Revenue, Bucknell University, 6.200%,
4/1/2007
University Area, PA, Sewer Revenue, 1,678,093
5.250%, 11/01/2014
Westmoreland County, PA, Industrial 7,293,138 7,293,138
Development Revenue, Westmoreland
Health System, AMBAC, 5.375%,
7/1/2011
PUERTO RICO
Puerto Rico Aqueduct and Sewer 1,056,230 1,056,230
Authority, Revenue Refunding,, 6.000%,
7/1/2009
Puerto Rico Commonwealth, Highway & 1,001,820 1,001,820
Transportation Authority, Series
1993W, 5.500%, 07/01/2013
Puerto Rico Electric Power Authority, 2,166,740 2,166,740
Series 1994S, 6.125%, 07/01/2009
Puerto Rico, General Obligation, 1,074,730 1,074,730
Public Improvement, Prerefunded
07/01/2002, 6.600%, 07/01/2013
University Area, PA, Sewer Revenue, 1,073,320
5.250%, 11/01/2014
University of Puerto Rico, University 1,089,280 1,089,280
Systems, Series N, 6.250%, 06/01/2008
RHODE ISLAND
Rhode Island Clean Water Protection 1,909,880 1,909,880
Agency, Pollution Control Revenue,
Revolving Fund, Series A, MBIA,
5.400%, 10/01/2015
Rhode Island Convention Center 4,856,300 4,856,300
Authority, Refunding Revenue, Series
1993 B, MBIA, 5.000%, 05/15/2010
Rhode Island Convention Center 2,375,203
Authority, Series B, 5.000%,
5/15/2020
Rhode Island Convention Center 20,663,720 20,663,720
<PAGE>
<CAPTION>
Scudder Scudder
Managed AARP Insured Ohio Tax Pro Forma Scudder
Muncipal Bond Tax Free Free Fund Combined Managed Municpal
Principal Amount General Bond Principal Principal Bond Market
($) Principal Amount($) Amount($) Value($)
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Authority, Refunding Revenue, 1993
Series B, MBIA Insured, 5.250%,
5/15/2015
Rhode Island Depositors Economic 6,200,000 6,200,000
Protection Corp., Special Obligation,
Series B, MBIA, 5.800%, 08/01/2010
Rhode Island Depositors Economic 4,525,000 4,525,000
Protection Corp., Special Obligation,
Series B, MBIA, 5.800%, 08/01/2011
Rhode Island Depositors Economic 2,500,000 2,500,000
Protection Corp., Special Obligation,
Series B, MBIA, 5.800%, 08/01/2012
Rhode Island Depositors Economic 7,340,000 7,340,000
Protection Corp., Special Obligation,
Series B, MBIA, 5.800%, 08/01/2013
SOUTH CAROLINA
Piedmont, SC, Municipal Power Agency, 840,000 840,000
Electric Revenue, Series 1993, ETM,
MBIA Insured, 5.500%, 01/01/2008
Piedmont, SC, Municipal Power Agency, 2,190,000 2,190,000
Electric Revenue, Series 1993, ETM,
MBIA Insured, 5.500%, 01/01/2012
Piedmont, SC, Municipal Power Agency, 430,000 430,000
Electric Revenue, Series 1991 A, ETM,
FGIC Insured, 6.500%, 01/01/2016
Piedmont, SC, Municipal Power Agency, 2,810,000 2,810,000
Electric Revenue, MBIA Insured,
5.500%, 01/01/2012
TENNESSEE
Knox County, TN, Health & Educational 15,405,000 15,405,000
Hospital Facilities Board, Fort
Sanders Alliance, MBIA, 5.750%,
1/1/2011
Knox County, TN, Health & Educational 17,880,000 17,880,000
Hospital Facilities Board, Fort
Sanders Alliance, MBIA, 5.750%,
1/1/2012
Knox County, TN, Health, Education and 2,000,000 2,000,000
Housing Facilities Board, MBIA
insured, 5.750%, 01/01/2014
Knox County, TN, Health & Educational 4,000,000 4,000,000
Facilities Board, Fort Sanders
Alliance, MBIA, 6.250%, 01/01/2013
Knox County, TN, Health, Education & 3,250,000 3,750,000 7,000,000 3,711,695
Housing Facilities Board, Hospital
Facilities Revenue, Fort Sanders
Alliance, 7.250%, 01/01/2009
TEXAS
Austin, TX, Combined Utility System 5,020,000 5,020,000
Revenue, Zero Coupon, 11/15/2009
Austin, TX, Independant School 2,000,000 2,000,000 1,836,020
District, Series 1998, 5.000%,
8/1/2015
Austin, TX, Bergstrom Landhost 4,000,000 4,000,000 3,729,800
Enterprises, Revenue, Series A,
6.750%, 04/01/2027
Austin, TX, Utility Systems Revenue 3,460,000 3,460,000
Refunding, MBIA Insured, Series A,
Zero Coupon, 11/15/2008
Bexar County, TX, Health Facilities 3,000,000 3,000,000
Development Corp., Baptist Health
System, Series 1997, 6.000%,
11/15/2012
Bexar County, TX, Health Facilities 2,000,000 2,000,000
Development Corp., Baptist Health
System, Series 1997A, 6.000%,
11/15/2011
Brownsville, TX, Utility System 4,085,000 4,085,000
Revenue, AMBAC Insured, 6.250%,
9/1/2010
Cedar Hill, TX , Zero Coupon, Series 1,500,000 1,500,000
1996, 08/15/2009
Cedar Hill, TX , Zero Coupon, Series 3,130,000 3,130,000
1996, 08/15/2010
Conroe Texas, Independant School 1,250,000 1,250,000 1,237,125
District, 5.500%, 02/15/2013
Dallas-Fort Worth, TX, Airport 4,500,000 4,500,000 5,023,575
Revenue, 7.375%, 11/01/2009
Dallas-Fort Worth, TX, Airport 14,250,000 14,250,000 14,799,195
<CAPTION>
AARP Insured Scudder Pro Forma
Tax Free General Ohio Tax Free Combined
Bond Market Fund Market Market
Value($) Value($) Value($)(1)
--------------------------------------------
<S> <C> <C> <C>
Authority, Refunding Revenue, 1993
Series B, MBIA Insured, 5.250%,
5/15/2015
Rhode Island Depositors Economic 6,529,096 6,529,096
Protection Corp., Special Obligation,
Series B, MBIA, 5.800%, 08/01/2010
Rhode Island Depositors Economic 4,740,843 4,740,843
Protection Corp., Special Obligation,
Series B, MBIA, 5.800%, 08/01/2011
Rhode Island Depositors Economic 2,602,800 2,602,800
Protection Corp., Special Obligation,
Series B, MBIA, 5.800%, 08/01/2012
Rhode Island Depositors Economic 7,585,670 7,585,670
Protection Corp., Special Obligation,
Series B, MBIA, 5.800%, 08/01/2013
SOUTH CAROLINA
Piedmont, SC, Municipal Power Agency, 870,114 870,114
Electric Revenue, Series 1993, ETM,
MBIA Insured, 5.500%, 01/01/2008
Piedmont, SC, Municipal Power Agency, 2,220,879 2,220,879
Electric Revenue, Series 1993, ETM,
MBIA Insured, 5.500%, 01/01/2012
Piedmont, SC, Municipal Power Agency, 466,464 466,464
Electric Revenue, Series 1991 A, ETM,
FGIC Insured, 6.500%, 01/01/2016
Piedmont, SC, Municipal Power Agency, 2,780,326 2,780,326
Electric Revenue, MBIA Insured,
5.500%, 01/01/2012
TENNESSEE
Knox County, TN, Health & Educational 15,657,642 15,657,642
Hospital Facilities Board, Fort
Sanders Alliance, MBIA, 5.750%,
1/1/2011
Knox County, TN, Health & Educational 18,049,860 18,049,860
Hospital Facilities Board, Fort
Sanders Alliance, MBIA, 5.750%,
1/1/2012
Knox County, TN, Health, Education and 1,994,060 1,994,060
Housing Facilities Board, MBIA
insured, 5.750%, 01/01/2014
Knox County, TN, Health & Educational 4,197,680 4,197,680
Facilities Board, Fort Sanders
Alliance, MBIA, 6.250%, 01/01/2013
Knox County, TN, Health, Education & 4,282,725 7,994,420
Housing Facilities Board, Hospital
Facilities Revenue, Fort Sanders
Alliance, 7.250%, 01/01/2009
TEXAS
Austin, TX, Combined Utility System 2,916,570 2,916,570
Revenue, Zero Coupon, 11/15/2009
Austin, TX, Independant School 1,836,020
District, Series 1998, 5.000%,
8/1/2015
Austin, TX, Bergstrom Landhost 3,729,800
Enterprises, Revenue, Series A,
6.750%, 04/01/2027
Austin, TX, Utility Systems Revenue 2,134,993 2,134,993
Refunding, MBIA Insured, Series A,
Zero Coupon, 11/15/2008
Bexar County, TX, Health Facilities 3,095,880 3,095,880
Development Corp., Baptist Health
System, Series 1997, 6.000%,
11/15/2012
Bexar County, TX, Health Facilities 2,076,440 2,076,440
Development Corp., Baptist Health
System, Series 1997A, 6.000%,
11/15/2011
Brownsville, TX, Utility System 4,377,118 4,377,118
Revenue, AMBAC Insured, 6.250%,
9/1/2010
Cedar Hill, TX , Zero Coupon, Series 883,335 883,335
1996, 08/15/2009
Cedar Hill, TX , Zero Coupon, Series 1,727,979 1,727,979
1996, 08/15/2010
Conroe Texas, Independant School 1,237,125
District, 5.500%, 02/15/2013
Dallas-Fort Worth, TX, Airport 5,023,575
Revenue, 7.375%, 11/01/2009
Dallas-Fort Worth, TX, Airport 14,799,195
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Scudder Scudder
Managed AARP Insured Ohio Tax Pro Forma Scudder
Muncipal Bond Tax Free Free Fund Combined Managed Municpal
Principal Amount General Bond Principal Principal Bond Market
($) Principal Amount($) Amount($) Value($)
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue, American Airlines, AMT,
7.500%, 11/01/2025
Dallas-Fort Worth, TX, Airport 2,390,000 2,390,000 2,713,941
Revenue, 7.800%, 11/01/2007
Dallas, TX, Housing Finance Corp., 6,535,000 6,535,000
Single Family Mortgage Revenue, MBIA,
Zero Coupon, 10/01/2016
Dallas-Fort Worth, TX, Airport 4,500,000 4,500,000
Revenue, FGIC, 7.375%, 11/01/2008
Dallas-Fort Worth, TX, Airport 3,500,000 3,500,000
Revenue, FGIC, 7.375%, 11/01/2010
Dallas-Fort Worth, TX, Airport 1,000,000 1,000,000
Revenue, FGIC, 7.750%, 11/01/2003
Dallas-Fort Worth, TX, Airport 2,000,000 2,000,000
Revenue, FGIC, 7.800%, 11/01/2005
Dallas-Fort Worth, TX, Airport 2,025,000 2,025,000
Revenue, FGIC, 7.800%, 11/01/2006
Harris County, TX , Health Facilities 2,965,000 2,965,000
Development, MBIA Insured, 6.250%,
5/15/2009
Harris County, TX, General Obligation, 1,000,000 1,000,000
Flood Control District, MBIA, Zero
Coupon, 10/01/2000
Harris County, TX, General Obligation, 4,025,000 4,025,000
Toll Road Authority, Subordinate Lien,
Series A, Zero Coupon, 08/15/2005
Harris County, TX, General 2,050,000 2,050,000
Obligation,Toll Road Authority,
Subordinate Lien, Unlimited Tax,
Series A, Zero Coupon, 08/15/2004
Harris County, TX, General Obligation, 9,035,000 9,035,000
Capital Appreciation Bond, Zero
Coupon, FGIC, 10/01/2006
Harris County, TX, Health Facilities , 2,785,000 2,785,000
Texas Medical Center Project, MBIA
Insured, 6.250%, 05/15/2008
Harris County, TX, Toll Road 4,010,000 4,010,000
Authority, Toll Road Revenue,
Subordinate Lien, Series A, Zero
Coupon, 08/15/2006
Harris County, TX, Toll Road 4,050,000 4,050,000 3,196,139
Authority, Zero Coupon, 08/15/2004
Harris County, TX, AMT, Series 1998, 3,070,000 3,070,000 3,128,913
5.500%, 08/15/2006
Harris County, TX, Health Facilities, 3,000,000 3,000,000 3,183,060
Texas Medical Center Project, Series
1996, 6.250%, 05/15/2010
Houston, TX, Water and Sewer System 15,000,000 15,000,000 11,032,200
Authority, Series C, Zero Coupon,
12/1/2005
Houston, TX, Water and Sewer System 3,400,000 3,400,000 2,225,232
Authority, Series C, Zero Coupon,
12/1/2007
Houston, TX, Water Conveyance System 2,500,000 2,500,000 2,650,075
Contract, Certificate of
Participation, Series J, 6.125%,
12/15/2005
Houston, TX, Water & Sewer System 14,575,000 14,575,000
Authority, Series C, AMBAC, Zero
Coupon, 12/01/2006
Houston, TX, Water & Sewer System 19,000,000 19,000,000
Authority, Series C, AMBAC, Zero
Coupon, 12/01/2008
Houston, TX, Water & Sewer System 14,750,000 14,750,000
Authority, Series C, Zero Coupon,
AMBAC, 12/01/2009
Houston, TX, Water & Sewer System 5,000,000 5,000,000
Authority, Zero Coupon, AMBAC Insured,
12/1/2010
Houston, TX, Water & Sewer System 3,350,000 3,350,000
Authority, Zero Coupon, AMBAC Insured,
Series 1991C, 12/01/2012
Hurst Euless Bedford, TX, Independent 4,925,000 4,925,000
School District,Capital Appreciation
Refunding, Series 1994, Zero Coupon,
8/15/2009
Laredo TX, Independent School 2,465,000 2,465,000
District, 6.000%, 08/01/2011
Lower Colorado River Authority, TX, 8,900,000 8,900,000 7,659,073
Refunding, Zero Coupon, 01/01/2003
Lower Colorado River Authority, TX, 5,000,000 5,000,000 5,250,950
<CAPTION>
AARP Insured Scudder Pro Forma
Tax Free General Ohio Tax Free Combined
Bond Market Fund Market Market
Value($) Value($) Value($)(1)
---------------------------------------------
<S> <C> <C> <C>
Revenue, American Airlines, AMT,
7.500%, 11/01/2025
Dallas-Fort Worth, TX, Airport 2,713,941
Revenue, 7.800%, 11/01/2007
Dallas, TX, Housing Finance Corp., 1,159,505 1,159,505
Single Family Mortgage Revenue, MBIA,
Zero Coupon, 10/01/2016
Dallas-Fort Worth, TX, Airport 5,023,575 5,023,575
Revenue, FGIC, 7.375%, 11/01/2008
Dallas-Fort Worth, TX, Airport 3,892,175 3,892,175
Revenue, FGIC, 7.375%, 11/01/2010
Dallas-Fort Worth, TX, Airport 1,111,220 1,111,220
Revenue, FGIC, 7.750%, 11/01/2003
Dallas-Fort Worth, TX, Airport 2,267,420 2,267,420
Revenue, FGIC, 7.800%, 11/01/2005
Dallas-Fort Worth, TX, Airport 2,299,469 2,299,469
Revenue, FGIC, 7.800%, 11/01/2006
Harris County, TX , Health Facilities 3,157,784 3,157,784
Development, MBIA Insured, 6.250%,
5/15/2009
Harris County, TX, General Obligation, 963,190 963,190
Flood Control District, MBIA, Zero
Coupon, 10/01/2000
Harris County, TX, General Obligation, 3,004,622 3,004,622
Toll Road Authority, Subordinate Lien,
Series A, Zero Coupon, 08/15/2005
Harris County, TX, General 1,617,799 1,617,799
Obligation,Toll Road Authority,
Subordinate Lien, Unlimited Tax,
Series A, Zero Coupon, 08/15/2004
Harris County, TX, General Obligation, 6,328,566 6,328,566
Capital Appreciation Bond, Zero
Coupon, FGIC, 10/01/2006
Harris County, TX, Health Facilities , 2,966,805 2,966,805
Texas Medical Center Project, MBIA
Insured, 6.250%, 05/15/2008
Harris County, TX, Toll Road 2,827,331 2,827,331
Authority, Toll Road Revenue,
Subordinate Lien, Series A, Zero
Coupon, 08/15/2006
Harris County, TX, Toll Road 3,196,139
Authority, Zero Coupon, 08/15/2004
Harris County, TX, AMT, Series 1998, 3,128,913
5.500%, 08/15/2006
Harris County, TX, Health Facilities, 3,183,060
Texas Medical Center Project, Series
1996, 6.250%, 05/15/2010
Houston, TX, Water and Sewer System 11,032,200
Authority, Series C, Zero Coupon,
12/1/2005
Houston, TX, Water and Sewer System 2,225,232
Authority, Series C, Zero Coupon,
12/1/2007
Houston, TX, Water Conveyance System 2,650,075
Contract, Certificate of
Participation, Series J, 6.125%,
12/15/2005
Houston, TX, Water & Sewer System 10,121,900 10,121,900
Authority, Series C, AMBAC, Zero
Coupon, 12/01/2006
Houston, TX, Water & Sewer System 11,696,210 11,696,210
Authority, Series C, AMBAC, Zero
Coupon, 12/01/2008
Houston, TX, Water & Sewer System 8,548,953 8,548,953
Authority, Series C, Zero Coupon,
AMBAC, 12/01/2009
Houston, TX, Water & Sewer System 2,716,000 2,716,000
Authority, Zero Coupon, AMBAC Insured,
12/1/2010
Houston, TX, Water & Sewer System 1,589,073 1,589,073
Authority, Zero Coupon, AMBAC Insured,
Series 1991C, 12/01/2012
Hurst Euless Bedford, TX, Independent 2,900,283 2,900,283
School District,Capital Appreciation
Refunding, Series 1994, Zero Coupon,
8/15/2009
Laredo TX, Independent School 2,571,981 2,571,981
District, 6.000%, 08/01/2011
Lower Colorado River Authority, TX, 7,659,073
Refunding, Zero Coupon, 01/01/2003
Lower Colorado River Authority, TX, 5,250,950
<PAGE>
<CAPTION>
Scudder Scudder
Managed AARP Insured Ohio Tax Pro Forma Scudder
Muncipal Bond Tax Free Free Fund Combined Managed Municpal
Principal Amount General Bond Principal Principal Bond Market
($) Principal Amount($) Amount($) Value($)
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
6.000%, 05/15/2010
Lubbock, TX, Health Facilities 3,945,000 3,945,000
Development Corp., Methodist Hospital,
Series B, AMBAC, 5.500%, 12/01/2006
Lubbock, TX, Health Facilities 2,415,000 2,415,000
Development Corp., Methodist Hospital,
Series B, AMBAC, 5.600%, 12/01/2007
Lubbock, TX, Health Facilities 4,400,000 4,400,000
Development Corp., Methodist Hospital,
Series B, AMBAC, 5.625%, 12/01/2008
Lubbock, TX, Health Facilities 4,640,000 4,640,000
Development Corporation, Series B,,
5.625%, 12/01/2009
Montgomery County, TX, Prerefunded, 800,000 800,000
Capital Appreciation, Zero Coupon,
9/1/2003
Montgomery County, TX, Prerefunded, 795,000 795,000
Capital Appreciation, Zero Coupon,
9/1/2004
Montgomery County, TX, Unrefunded 2,675,000 2,675,000
Balance, Capital Appreciation, Zero
Coupon, 09/01/2003
Montgomery County, TX, Unrefunded 2,680,000 2,680,000
Balance, Capital Appreciation, Zero
Coupon, 09/01/2004
Montgomery County, TX, Unrefunded 2,790,000 2,790,000
Balance, Capital Appreciation, Zero
Coupon, 09/01/2005
Montgomery County, TX,Prerefunded, 685,000 685,000
Capital Appreciation, Zero Coupon,
9/1/2005
Northeast, TX, Hospital Authority, 2,180,000 2,180,000
Revenue Refunding, Northeast Medical
Center, Series 1997, 6.000%,
5/15/2010
Northwest Texas Independent School 3,690,000 3,690,000
District, Capital Appreciation Bonds,
Series 1991, Zero Coupon, 08/15/2010
San Antonio, TX, Airport Systems 1,695,000 1,695,000 1,801,751
Revenue, Refunding, 7.000%, 07/01/2002
San Antonio, TX, Electric & Gas, 17,900,000 17,900,000
Revenue Refunding, Series A, FGIC,
Zero Coupon, 02/01/2006
San Antonio, TX, Electric and Gas 7,000,000 2,500,000 9,500,000 5,369,420
Revenue, Refunding, Series A, Zero
Coupon, 02/01/2005
San Antonio, TX, Electric and Gas 5,000,000 8,000,000 13,000,000 3,835,300
Revenue, Refunding, Series A, Zero
Coupon, 02/01/2005
San Antonio, TX, Zero Coupon, FGIC 4,400,000 4,400,000
Insured, Series 1991B, 02/01/2009
San Antonio, TX, Hotel Revenue, FGIC 2,000,000 2,000,000
Insured, Series 1996, 6.000%,
8/15/2006
San Antonio, TX, Electric & Gas, 3,000,000 3,000,000
Revenue, Series A, 5.250%, 02/01/2012
State of Texas, General Obligation, 7,540,000 7,540,000
Capital Appreciation, Prerefunded,
Series C, 04/01/2005
State of Texas, General Obligation, 850,000 850,000
Capital Appreciation, Series C,
4/1/2005
State of Texas, General Obligation, 7,385,000 7,385,000
Capital Appreciation Bond, Super
Collider, Series C, Zero Coupon, FGIC,
4/1/2006
Tarrant County, TX, Health Facilities 4,615,000 4,615,000
Development Corp., Hospital Refunding
Revenue, Fort Worth Osteopathic
Hospital, MBIA, 6.000%, 05/15/2011
Tarrant County, TX, Health Facilities 6,235,000 6,235,000
Development Corp., Hospital Refunding
Revenue, Fort-Worth Osteopathic
Hospital, MBIA, 6.000%, 05/15/2021
Texas Municipal Power Agency, MBIA, 9,250,000 9,250,000
6.100%, 09/01/2007
Texas Municipal Power Agency, MBIA, 4,435,000 4,435,000
6.100%, 09/01/2009
Texas Public Finance Authority, 13,915,000 13,915,000
Building Authority, Zero Coupon, MBIA,
2/1/2006
Texas Public Finance Authority, 5,190,000 5,190,000
<CAPTION>
AARP Insured Scudder Pro Forma
Tax Free General Ohio Tax Free Combined
Bond Market Fund Market Market
Value($) Value($) Value($)(1)
--------------------------------------------
<S> <C> <C> <C>
6.000%, 05/15/2010
Lubbock, TX, Health Facilities 4,085,126 4,085,126
Development Corp., Methodist Hospital,
Series B, AMBAC, 5.500%, 12/01/2006
Lubbock, TX, Health Facilities 2,516,841 2,516,841
Development Corp., Methodist Hospital,
Series B, AMBAC, 5.600%, 12/01/2007
Lubbock, TX, Health Facilities 4,588,892 4,588,892
Development Corp., Methodist Hospital,
Series B, AMBAC, 5.625%, 12/01/2008
Lubbock, TX, Health Facilities 4,826,296 4,826,296
Development Corporation, Series B,,
5.625%, 12/01/2009
Montgomery County, TX, Prerefunded, 667,072 667,072
Capital Appreciation, Zero Coupon,
9/1/2003
Montgomery County, TX, Prerefunded, 628,384 628,384
Capital Appreciation, Zero Coupon,
9/1/2004
Montgomery County, TX, Unrefunded 2,225,520 2,225,520
Balance, Capital Appreciation, Zero
Coupon, 09/01/2003
Montgomery County, TX, Unrefunded 2,110,339 2,110,339
Balance, Capital Appreciation, Zero
Coupon, 09/01/2004
Montgomery County, TX, Unrefunded 2,078,048 2,078,048
Balance, Capital Appreciation, Zero
Coupon, 09/01/2005
Montgomery County, TX,Prerefunded, 512,531 512,531
Capital Appreciation, Zero Coupon,
9/1/2005
Northeast, TX, Hospital Authority, 2,266,263 2,266,263
Revenue Refunding, Northeast Medical
Center, Series 1997, 6.000%,
5/15/2010
Northwest Texas Independent School 2,037,138 2,037,138
District, Capital Appreciation Bonds,
Series 1991, Zero Coupon, 08/15/2010
San Antonio, TX, Airport Systems 1,801,751
Revenue, Refunding, 7.000%, 07/01/2002
San Antonio, TX, Electric & Gas, 13,038,897 13,038,897
Revenue Refunding, Series A, FGIC,
Zero Coupon, 02/01/2006
San Antonio, TX, Electric and Gas 1,917,650 7,287,070
Revenue, Refunding, Series A, Zero
Coupon, 02/01/2005
San Antonio, TX, Electric and Gas 6,136,480 9,971,780
Revenue, Refunding, Series A, Zero
Coupon, 02/01/2005
San Antonio, TX, Zero Coupon, FGIC 2,679,776 2,679,776
Insured, Series 1991B, 02/01/2009
San Antonio, TX, Hotel Revenue, FGIC 2,116,200 2,116,200
Insured, Series 1996, 6.000%,
8/15/2006
San Antonio, TX, Electric & Gas, 2,920,470 2,920,470
Revenue, Series A, 5.250%, 02/01/2012
State of Texas, General Obligation, 5,759,504 5,759,504
Capital Appreciation, Prerefunded,
Series C, 04/01/2005
State of Texas, General Obligation, 646,544 646,544
Capital Appreciation, Series C,
4/1/2005
State of Texas, General Obligation, 5,340,906 5,340,906
Capital Appreciation Bond, Super
Collider, Series C, Zero Coupon, FGIC,
4/1/2006
Tarrant County, TX, Health Facilities 4,842,289 4,842,289
Development Corp., Hospital Refunding
Revenue, Fort Worth Osteopathic
Hospital, MBIA, 6.000%, 05/15/2011
Tarrant County, TX, Health Facilities 6,227,269 6,227,269
Development Corp., Hospital Refunding
Revenue, Fort-Worth Osteopathic
Hospital, MBIA, 6.000%, 05/15/2021
Texas Municipal Power Agency, MBIA, 9,875,300 9,875,300
6.100%, 09/01/2007
Texas Municipal Power Agency, MBIA, 4,788,647 4,788,647
6.100%, 09/01/2009
Texas Public Finance Authority, 10,086,844 10,086,844
Building Authority, Zero Coupon, MBIA,
2/1/2006
Texas Public Finance Authority, 5,569,493 5,569,493
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Scudder Scudder
Managed AARP Insured Ohio Tax Pro Forma Scudder
Muncipal Bond Tax Free Free Fund Combined Managed Municpal
Principal Amount General Bond Principal Principal Bond Market
($) Principal Amount($) Amount($) Value($)
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Building Authority, Series B, AMBAC,
6.250%, 02/01/2008
Texas Municipal Power Agency, Series 5,150,000 5,150,000 2,477,923
1989, 09/01/2012
Travis County, TX, Health Facilities 1,720,000 1,720,000 1,770,448
Development Corp., Ascension Health,
Inverse Floating Rate Note, 7.320%,
11/15/2011
Travis County, TX, Health Facilities 1,390,000 1,390,000 1,447,671
Development Corp., Ascension Health,
Inverse Floating Rate Note, Series
1999A, 8.290%, 11/15/2015
Travis County, TX, Health Facilities 6,885,000 6,885,000 7,137,266
Development Corp., Ascension Health,
Inverse Floating Rate Note, 8.320%,
11/15/2016
Trinity River, Texas, Wastewater 6,040,000 6,040,000
Systems Revenue, Series B, 5.250%,
8/1/2012
UTAH
Associated Municipal Power System, UT, 2,755,000 2,755,000
Hunter Project, Refunding Revenue,
AMBAC, Zero Coupon, 07/01/2000
Associated Municipal Power System, UT, 5,200,000 5,200,000
Hunter Project, Refunding Revenue,
AMBAC, Zero Coupon, 07/01/2002
Associated Municipal Power System, UT, 5,895,000 5,895,000
Hunter Project, Refunding Revenue,
AMBAC, Zero Coupon, 07/01/2004
Associated Municipal Power System, UT, 5,900,000 5,900,000
Hunter Project, Refunding Revenue,
AMBAC, Zero Coupon, 07/01/2005
Associated Municipal Power System, UT, 5,895,000 5,895,000
Hunter Project, Refunding Revenue,
AMBAC, Zero Coupon, 07/01/2006
Associated Municipal Power System, UT, 3,750,000 3,750,000
Hunter Project, Refunding Revenue,
AMBAC, Zero Coupon, 07/01/2007
Intermountain Power Agency, UT, Power 1,000,000 1,000,000
Supply Revenue, Series A, MBIA, Zero
Coupon, 07/01/2003
Intermountain Power Agency, UT, Power 1,730,000 1,730,000
Supply Revenue, Series A, MBIA, Zero
Coupon, 07/01/2004
Intermountain Power Agency, UT, Power 8,230,000 8,230,000
Supply Revenue, Series B, Zero Coupon,
7/1/2002
Intermountain Power Agency, UT, Power 3,000,000 7,000,000 10,000,000 3,002,640
Supply Revenue, Series 1993, 5.550%,
7/1/2011
Intermountain Power Agency, UT, Power 4,000,000 4,000,000
Supply Revenue, Series A, 6.500%,
7/1/2008
Intermountain Power Supply Agency, UT, 1,655,000 1,655,000
Power Supply Revenue, Series A, AMBAC,
Zero Coupon, 07/01/2002
Intermountain Power Supply Agency, UT, 1,000,000 1,000,000
Power Supply Revenue, FGIC, 5.000%,
7/1/2012
Intermountain Power Agency, UT, Power 4,000,000 4,000,000 3,769,200
Supply Revenue, Series C, 5.250%,
7/1/2014
Provo, UT, Electric System Revenue, 1,800,000 1,800,000
ETM, AMBAC, 10.375%, 09/15/2015
Salt Lake City, UT, Hospital Revenue, 1,500,000 1,500,000 1,575,120
Intermountain Health Care, Inversed
Inflow, 5.660%, 02/15/2012
VIRGINIA
Roanoke, VA, Industrial Development 5,500,000 5,500,000
Authority, Roanoke Memorial Hospital,
Series B, MBIA, 6.125%, 07/01/2017
Southeastern Public Service Authority, 7,380,000 7,380,000
VA, Refunding Revenue, Series A, MBIA,
5.250%, 07/01/2010
Virginia Beach, VA, Development 1,595,000 1,595,000
Authority, Virginia Beach General
Hospital Project, AMBAC, 6.000%,
2/15/2011
Virginia Beach, VA, Development 3,000,000 3,000,000 2,695,200
Authority, VA Beach General Hospital
Project, 5.125%, 02/15/2018
Winchester County, VA, Industrial 5,700,000 5,700,000
<CAPTION>
AARP Insured Scudder Pro Forma
Tax Free General Ohio Tax Free Combined
Bond Market Fund Market Market
Value($) Value($) Value($)(1)
--------------------------------------------
<S> <C> <C> <C>
Building Authority, Series B, AMBAC,
6.250%, 02/01/2008
Texas Municipal Power Agency, Series 2,477,923
1989, 09/01/2012
Travis County, TX, Health Facilities 1,770,448
Development Corp., Ascension Health,
Inverse Floating Rate Note, 7.320%,
11/15/2011
Travis County, TX, Health Facilities 1,447,671
Development Corp., Ascension Health,
Inverse Floating Rate Note, Series
1999A, 8.290%, 11/15/2015
Travis County, TX, Health Facilities 7,137,266
Development Corp., Ascension Health,
Inverse Floating Rate Note, 8.320%,
11/15/2016
Trinity River, Texas, Wastewater 5,880,786 5,880,786
Systems Revenue, Series B, 5.250%,
8/1/2012
UTAH
Associated Municipal Power System, UT, 2,681,111 2,681,111
Hunter Project, Refunding Revenue,
AMBAC, Zero Coupon, 07/01/2000
Associated Municipal Power System, UT, 4,590,508 4,590,508
Hunter Project, Refunding Revenue,
AMBAC, Zero Coupon, 07/01/2002
Associated Municipal Power System, UT, 4,680,335 4,680,335
Hunter Project, Refunding Revenue,
AMBAC, Zero Coupon, 07/01/2004
Associated Municipal Power System, UT, 4,431,549 4,431,549
Hunter Project, Refunding Revenue,
AMBAC, Zero Coupon, 07/01/2005
Associated Municipal Power System, UT, 4,182,620 4,182,620
Hunter Project, Refunding Revenue,
AMBAC, Zero Coupon, 07/01/2006
Associated Municipal Power System, UT, 2,508,488 2,508,488
Hunter Project, Refunding Revenue,
AMBAC, Zero Coupon, 07/01/2007
Intermountain Power Agency, UT, Power 838,640 838,640
Supply Revenue, Series A, MBIA, Zero
Coupon, 07/01/2003
Intermountain Power Agency, UT, Power 1,373,534 1,373,534
Supply Revenue, Series A, MBIA, Zero
Coupon, 07/01/2004
Intermountain Power Agency, UT, Power 7,265,362 7,265,362
Supply Revenue, Series B, Zero Coupon,
7/1/2002
Intermountain Power Agency, UT, Power 7,006,160 10,008,800
Supply Revenue, Series 1993, 5.550%,
7/1/2011
Intermountain Power Agency, UT, Power 4,364,760 4,364,760
Supply Revenue, Series A, 6.500%,
7/1/2008
Intermountain Power Supply Agency, UT, 1,461,017 1,461,017
Power Supply Revenue, Series A, AMBAC,
Zero Coupon, 07/01/2002
Intermountain Power Supply Agency, UT, 945,120 945,120
Power Supply Revenue, FGIC, 5.000%,
7/1/2012
Intermountain Power Agency, UT, Power 3,769,200
Supply Revenue, Series C, 5.250%,
7/1/2014
Provo, UT, Electric System Revenue, 2,475,216 2,475,216
ETM, AMBAC, 10.375%, 09/15/2015
Salt Lake City, UT, Hospital Revenue, 1,575,120
Intermountain Health Care, Inversed
Inflow, 5.660%, 02/15/2012
VIRGINIA
Roanoke, VA, Industrial Development 5,658,565 5,658,565
Authority, Roanoke Memorial Hospital,
Series B, MBIA, 6.125%, 07/01/2017
Southeastern Public Service Authority, 7,290,481 7,290,481
VA, Refunding Revenue, Series A, MBIA,
5.250%, 07/01/2010
Virginia Beach, VA, Development 1,684,655 1,684,655
Authority, Virginia Beach General
Hospital Project, AMBAC, 6.000%,
2/15/2011
Virginia Beach, VA, Development 2,695,200
Authority, VA Beach General Hospital
Project, 5.125%, 02/15/2018
Winchester County, VA, Industrial 5,539,716 5,539,716
<PAGE>
<CAPTION>
Scudder Scudder
Managed AARP Insured Ohio Tax Pro Forma Scudder
Muncipal Bond Tax Free Free Fund Combined Managed Municpal
Principal Amount General Bond Principal Principal Bond Market
($) Principal Amount($) Amount($) Value($)
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Development Authority, Hospital
Revenue, AMBAC, 6.000%, 01/01/2015
VIRGIN ISLANDS
Virgin Islands Public Financial 1,500,000 1,000,000 2,500,000 1,652,400
Authority Revenue, Series A,
Prerefunded 10/01/2002, 7.250%,
10/1/2018
Virgin Islands, Public Finance 1,500,000 1,500,000 1,489,500
Authority, Matching Fund Loan Notes,
Senior Lien, Series C, 5.500%,
10/1/2008
WASHINGTON
Clark County, WA, Public Utility 7,500,000 7,500,000
District #1, FGIC insured, 6.000%,
1/1/2006
Clark County, WA, Public Utility 2,200,000 2,200,000
District, FGIC Insured, Series 1995,
6.000%, 01/01/2008
Cowlitz County, WA, General 1,560,000 1,560,000 1,495,198
Obligation, Series 1999, 5.500%,
11/1/2016
King & Snohomish Counties, WA, General 1,650,000 1,650,000
Obligation, School District #417,
FGIC, 5.600%, 12/01/2010
King County, WA, Public Hospital 3,500,000 3,500,000
District #1, Valley Medical Center,
Series 1992, AMBAC, 5.500%, 09/01/2017
Seattle, WA, General Obligation, 6,200,000 6,200,000 6,064,964
Library Facilities, Series A, 5.375%,
12/1/2013
Snohomish County, WA, School District 3,325,000 3,325,000
#6, FGIC, 6.500%, 12/01/2007
State of Washington, General 2,625,000 2,625,000
Obligation Series AT-5, MBIA Insured,
Zero Coupon, 08/01/2010
Washington Health Care Facilities 2,645,000 2,645,000 2,709,723
Authority, Franciscan Health System -
St. Joseph's Hospital, 5.400%,
1/1/2008
2,000,000 2,000,000 2,052,420
Washington Health Care Facilities
Authority, Franciscan Health System -
St. Joseph's Hospital, 5.400%,
1/1/2007
Washington Health Care Facilities 4,865,000 4,865,000 5,051,524
Authority, Empire Health
Services-Spokane, 5.800%, 11/01/2008
Washington Health Care Facilities 2,155,000 2,155,000
Authority, Empire Health
Services-Spokane, MBIA, 5.650%,
11/1/2005
Washington Health Care Facilities 3,440,000 3,440,000
Authority, Empire Health
Services-Spokane, MBIA, 5.700%,
11/1/2006
Washington Health Care Facilities 7,350,000 7,350,000
Authority, Empire Health
Services-Spokane, MBIA, 5.750%,
11/1/2007
Washington Health Care Facilities 4,595,000 4,595,000
Authority, Empire Health
Services-Spokane, MBIA, 5.800%,
11/1/2009
Washington Health Care Facilities 2,100,000 2,100,000
Authority, Empire Health
Services-Spokane, MBIA, 5.800%,
11/1/2010
Washington Public Power Supply System 7,000,000 7,000,000 7,390,740
Nuclear Project No. 2, Refunding ,
Series A, 6.0%, 07/01/2007
Washington Public Power Supply System, 8,570,000 8,570,000 5,719,875
Nuclear Project No. 1, Refunding,
Series A, Zero Coupon, 07/01/2007
Washington Public Power Supply System, 5,555,000 5,555,000 3,933,662
Nuclear Project No. 3, Refunding,
Series B, Zero Coupon, 07/01/2006
Washington Public Power Supply System, 11,925,000 11,925,000 10,519,043
Nuclear Project No. 3, Refunding,
Series B, Zero Coupon, 07/01/2002
Washington Public Power Supply System, 3,000,000 3,000,000 3,090,930
Nuclear Project No. 3, Refunding,
Series 1993 B, 5.650%, 07/01/2008
Washington Public Power Supply System, 12,350,000 12,350,000 14,137,786
Nuclear Project No. 1, Refunding,
Series 1990 B, 7.250%, 07/01/2009
Washington Public Power Supply System, 7,000,000 7,000,000 7,820,470
Nuclear Project No. 2, Refunding,
<CAPTION>
AARP Insured Scudder Pro Forma
Tax Free General Ohio Tax Free Combined
Bond Market Fund Market Market
Value($) Value($) Value($)(1)
--------------------------------------------
<S> <C> <C> <C>
Development Authority, Hospital
Revenue, AMBAC, 6.000%, 01/01/2015
VIRGIN ISLANDS
Virgin Islands Public Financial 1,101,600 2,754,000
Authority Revenue, Series A,
Prerefunded 10/01/2002, 7.250%,
10/1/2018
Virgin Islands, Public Finance 1,489,500
Authority, Matching Fund Loan Notes,
Senior Lien, Series C, 5.500%,
10/1/2008
WASHINGTON
Clark County, WA, Public Utility 7,893,450 7,893,450
District #1, FGIC insured, 6.000%,
1/1/2006
Clark County, WA, Public Utility 2,315,786 2,315,786
District, FGIC Insured, Series 1995,
6.000%, 01/01/2008
Cowlitz County, WA, General 1,495,198
Obligation, Series 1999, 5.500%,
11/1/2016
King & Snohomish Counties, WA, General 1,695,194 1,695,194
Obligation, School District #417,
FGIC, 5.600%, 12/01/2010
King County, WA, Public Hospital 3,280,515 3,280,515
District #1, Valley Medical Center,
Series 1992, AMBAC, 5.500%, 09/01/2017
Seattle, WA, General Obligation, 6,064,964
Library Facilities, Series A, 5.375%,
12/1/2013
Snohomish County, WA, School District 3,625,613 3,625,613
#6, FGIC, 6.500%, 12/01/2007
State of Washington, General 1,452,281 1,452,281
Obligation Series AT-5, MBIA Insured,
Zero Coupon, 08/01/2010
Washington Health Care Facilities 2,709,723
Authority, Franciscan Health System -
St. Joseph's Hospital, 5.400%,
1/1/2008
2,052,420
Washington Health Care Facilities
Authority, Franciscan Health System -
St. Joseph's Hospital, 5.400%,
1/1/2007
Washington Health Care Facilities 5,051,524
Authority, Empire Health
Services-Spokane, 5.800%, 11/01/2008
Washington Health Care Facilities 2,231,416 2,231,416
Authority, Empire Health
Services-Spokane, MBIA, 5.650%,
11/1/2005
Washington Health Care Facilities 3,568,484 3,568,484
Authority, Empire Health
Services-Spokane, MBIA, 5.700%,
11/1/2006
Washington Health Care Facilities 7,631,432 7,631,432
Authority, Empire Health
Services-Spokane, MBIA, 5.750%,
11/1/2007
Washington Health Care Facilities 4,753,573 4,753,573
Authority, Empire Health
Services-Spokane, MBIA, 5.800%,
11/1/2009
Washington Health Care Facilities 2,165,499 2,165,499
Authority, Empire Health
Services-Spokane, MBIA, 5.800%,
11/1/2010
Washington Public Power Supply System 7,390,740
Nuclear Project No. 2, Refunding ,
Series A, 6.0%, 07/01/2007
Washington Public Power Supply System, 5,719,875
Nuclear Project No. 1, Refunding,
Series A, Zero Coupon, 07/01/2007
Washington Public Power Supply System, 3,933,662
Nuclear Project No. 3, Refunding,
Series B, Zero Coupon, 07/01/2006
Washington Public Power Supply System, 10,519,043
Nuclear Project No. 3, Refunding,
Series B, Zero Coupon, 07/01/2002
Washington Public Power Supply System, 3,090,930
Nuclear Project No. 3, Refunding,
Series 1993 B, 5.650%, 07/01/2008
Washington Public Power Supply System, 14,137,786
Nuclear Project No. 1, Refunding,
Series 1990 B, 7.250%, 07/01/2009
Washington Public Power Supply System, 7,820,470
Nuclear Project No. 2, Refunding,
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Scudder Scudder
Managed AARP Insured Ohio Tax Pro Forma Scudder
Muncipal Bond Tax Free Free Fund Combined Managed Municpal
Principal Amount General Bond Principal Principal Bond Market
($) Principal Amount($) Amount($) Value($)
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Series A, 7.250%, 07/01/2006
Washington Public Power Supply System, 750,000 750,000 778,920
Nuclear Project No. 3, Refunding,
Series B, 7.375%, 07/01/2004
Washington Public Power Supply 1,380,000 1,380,000 977,219
System,, Nuclear Project No. 3,
Refunding, Series A, Zero Coupon,
7/1/2006
Washington Public Power Supply System, 3,625,000 3,625,000
Revenue Refunding, Nuclear Project #3,
Series A, MBIA, Zero Coupon,
7/1/2004
Washington Public Power Supply System, 4,125,000 4,125,000
Revenue Refunding, Nuclear Project #3,
Series A, MBIA, Zero Coupon,
7/1/2005
Washington Public Power Supply System, 5,000,000 5,000,000
Revenue Refunding, Nuclear Project #2,
Series A, MBIA, 5.700%, 07/01/2008
Washington Public Power Supply System, 5,000,000 5,000,000
Nuclear Power Project #1, AMBAC
Insured, 6.000%, 07/01/2008
Washington Public Power Supply System, 3,830,000 3,830,000
Revenue Refunding, Nuclear Project #1,
Series A, FGIC, 7.000%, 07/01/2011
Washington Public Power Supply System, 10,000,000 10,000,000
Revenue Refunding, Nuclear Project #2,
Series C, FGIC, 7.000%, 07/01/2001
Washington Public Power Supply System, 10,895,000 10,895,000
Revenue Refunding, Nuclear Project #1,
Series B, FGIC, 7.250%, 07/01/2012
Washington Public Power Supply System, 2,000,000 2,000,000
Revenue Refunding, Nuclear Project #2,
Series A, FGIC, 7.250%, 07/01/2003
Washington Public Power Supply System, 1,370,000 1,370,000
Revenue Refunding, Nuclear Project #2,
Series C, FGIC, 7.375%, 07/01/2011
Washington Public Power Supply System, 5,860,000 5,860,000
Nuclear Power Project #3, Series
1989A, MBIA/BIG Insured, 07/01/2010
Washington Public Power Supply System, 4,200,000 4,200,000
Nuclear Project #2, Series 1992A,
MBIA/BIG Insured, Zero Coupon,
7/1/2011
Washington Public Power Supply System, 2,000,000 2,000,000
Refunding Revenue, Nuclear Project #3,
7.500%, 07/01/2008
WEST VIRGINIA
West Virginia, School Building 4,000,000 4,000,000
Authority Revenue, Series B, MBIA
Insured, 6.750%, 07/01/2010
WISCONSIN
Kenosha, WI, General Obligation, 3,475,000 3,475,000
Series C, MBIA, Zero Coupon,
6/1/2004
Wisconsin Health & Educational 1,500,000 1,500,000
Facilities Authority, Aurora Medical,
FSA Insured, 5.750%, 11/15/2007
Wisconsin Health & Educational 2,000,000 2,000,000
Facilities Authority, Aurora Medical,
FSA Insured, 5.750%, 11/15/2006
Wisconsin Health & Educational 4,330,000 4,330,000
Facilities Authority, Aurora Medical,
FSA Insured, 6.000%, 11/15/2009
Wisconsin Health & Educational 4,085,000 4,085,000
Facilities Authority, Aurora Medical,
FSA Insured, 6.000%, 11/15/2008
Wisconsin Health & Educational 2,000,000 2,000,000
Facilities Authority , MBIA Insured,
6.100%, 08/15/2009
Wisconsin Health & Educational 4,580,000 4,580,000
Facilities Authority, Wheaton
Franciscan Services, MBIA, 6.100%,
8/15/2008
Wisconsin Health & Educational 5,285,000 5,285,000
Facilities Authority, Felician
Healthcare Inc., Series B, AMBAC,
6.250%, 01/01/2022
Wisconsin Health & Educational 9,230,000 9,230,000
Facilities Authority, Villa St.
Francis Inc., Series C, AMBAC, 6.250%,
<CAPTION>
AARP Insured Scudder Pro Forma
Tax Free General Ohio Tax Free Combined
Bond Market Fund Market Market
Value($) Value($) Value($)(1)
---------------------------------------------
<S> <C> <C> <C>
Series A, 7.250%, 07/01/2006
Washington Public Power Supply System, 778,920
Nuclear Project No. 3, Refunding,
Series B, 7.375%, 07/01/2004
Washington Public Power Supply 977,219
System,, Nuclear Project No. 3,
Refunding, Series A, Zero Coupon,
7/1/2006
Washington Public Power Supply System, 2,874,118 2,874,118
Revenue Refunding, Nuclear Project #3,
Series A, MBIA, Zero Coupon,
7/1/2004
Washington Public Power Supply System, 3,093,173 3,093,173
Revenue Refunding, Nuclear Project #3,
Series A, MBIA, Zero Coupon,
7/1/2005
Washington Public Power Supply System, 5,168,800 5,168,800
Revenue Refunding, Nuclear Project #2,
Series A, MBIA, 5.700%, 07/01/2008
Washington Public Power Supply System, 5,272,400 5,272,400
Nuclear Power Project #1, AMBAC
Insured, 6.000%, 07/01/2008
Washington Public Power Supply System, 3,981,591 3,981,591
Revenue Refunding, Nuclear Project #1,
Series A, FGIC, 7.000%, 07/01/2011
Washington Public Power Supply System, 10,428,700 10,428,700
Revenue Refunding, Nuclear Project #2,
Series C, FGIC, 7.000%, 07/01/2001
Washington Public Power Supply System, 11,343,329 11,343,329
Revenue Refunding, Nuclear Project #1,
Series B, FGIC, 7.250%, 07/01/2012
Washington Public Power Supply System, 2,082,300 2,082,300
Revenue Refunding, Nuclear Project #2,
Series A, FGIC, 7.250%, 07/01/2003
Washington Public Power Supply System, 1,444,090 1,444,090
Revenue Refunding, Nuclear Project #2,
Series C, FGIC, 7.375%, 07/01/2011
Washington Public Power Supply System, 3,246,850 3,246,850
Nuclear Power Project #3, Series
1989A, MBIA/BIG Insured, 07/01/2010
Washington Public Power Supply System, 2,229,528 2,229,528
Nuclear Project #2, Series 1992A,
MBIA/BIG Insured, Zero Coupon,
7/1/2011
Washington Public Power Supply System, 2,307,800 2,307,800
Refunding Revenue, Nuclear Project #3,
7.500%, 07/01/2008
WEST VIRGINIA
West Virginia, School Building 4,154,200 4,154,200
Authority Revenue, Series B, MBIA
Insured, 6.750%, 07/01/2010
WISCONSIN
Kenosha, WI, General Obligation, 2,770,340 2,770,340
Series C, MBIA, Zero Coupon,
6/1/2004
Wisconsin Health & Educational 1,554,630 1,554,630
Facilities Authority, Aurora Medical,
FSA Insured, 5.750%, 11/15/2007
Wisconsin Health & Educational 2,077,260 2,077,260
Facilities Authority, Aurora Medical,
FSA Insured, 5.750%, 11/15/2006
Wisconsin Health & Educational 4,539,529 4,539,529
Facilities Authority, Aurora Medical,
FSA Insured, 6.000%, 11/15/2009
Wisconsin Health & Educational 4,291,252 4,291,252
Facilities Authority, Aurora Medical,
FSA Insured, 6.000%, 11/15/2008
Wisconsin Health & Educational 2,108,640 2,108,640
Facilities Authority , MBIA Insured,
6.100%, 08/15/2009
Wisconsin Health & Educational 4,835,152 4,835,152
Facilities Authority, Wheaton
Franciscan Services, MBIA, 6.100%,
8/15/2008
Wisconsin Health & Educational 5,536,619 5,536,619
Facilities Authority, Felician
Healthcare Inc., Series B, AMBAC,
6.250%, 01/01/2022
Wisconsin Health & Educational 9,669,440 9,669,440
Facilities Authority, Villa St.
Francis Inc., Series C, AMBAC, 6.250%,
<PAGE>
<CAPTION>
Scudder Scudder
Managed AARP Insured Ohio Tax Pro Forma
Muncipal Bond Tax Free Free Fund Combined
Principal Amount General Bond Principal Principal
($) Principal Amount($) Amount($)
----------------------------------------------------------
<S> <C> <C> <C> <C>
1/1/22
Wisconsin Health & Educational 2,335,000 2,335,000
Facilities Authority, SSM Healthcare,
Series 1992 AA, MBIA, 6.400%,
6/1/2008
Wisconsin Health & Educational 2,650,000 2,650,000
Facilities Authority, SSM Healthcare,
Series 1992 AA, 6.450%, 06/01/2010
Wisconsin Health & Educational 2,485,000 2,485,000
Facilities Authority, SSM Healthcare,
Series 1992 AA, MBIA, 6.450%,
6/1/2009
Wisconsin Health & Educational 2,820,000 2,820,000
Facilities Authority, SSM Healthcare,
Series 1992 AA, MBIA, 6.500%,
6/1/2011
Wisconsin Health & Educational 3,000,000 3,000,000
Facilities Authority, SSM Healthcare,
Series 1992 AA, MBIA, 6.500%,
6/1/2012
Wisconsin Health & Educational 2,000,000 2,000,000
Facilities Authority, St. Luke's
Medical Center, MBIA, 7.100%,
8/15/2011
Wisconsin Health and Educational 4,800,000 4,800,000
Facilities Authority, Hospital Sisters
Services Inc. - Obligated Group,
5.375%, 06/01/2018
Green Bay, WI, Industrial Development 1,700,000 1,700,000
Revenue, Weyerhaeuser Company Project,
Series A, 9.000%, 09/01/2006
Wisconsin Health and Educational 1,500,000 1,500,000
Facilities Authority, Hospital Sisters
Inc., 5.375%, 06/01/2013
Wisconsin State Health & Educational 2,500,000 2,500,000
Facilities, Revenue, Series B, 5.625%,
2/15/2029
Wisconsin State Health & Educational 4,000,000 4,000,000
Facilities Authority, Revenue Bond,
Aurora Health Care Inc., Series A,
5.600%, 02/15/2029
WYOMING
Wyoming Community Development 3,000,000 3,000,000
Authority, Single Family Mortgage
Revenue, Series A, 5.850%, 06/01/2013
<CAPTION>
Scudder AARP Insured Scudder Pro Forma
Managed Municpal Tax Free General Ohio Tax Free Combined
Bond Market Bond Market Fund Market Market
Value($) Value($) Value($) Value($)(1)
----------------------------------------------------------------
<S> <C> <C> <C> <C>
1/1/2022
Wisconsin Health & Educational 2,510,242 2,510,242
Facilities Authority, SSM Healthcare,
Series 1992 AA, MBIA, 6.400%,
6/1/2008
Wisconsin Health & Educational 2,898,888 2,898,888
Facilities Authority, SSM Healthcare,
Series 1992 AA, 6.450%, 06/01/2010
Wisconsin Health & Educational 2,683,179 2,683,179
Facilities Authority, SSM Healthcare,
Series 1992 AA, MBIA, 6.450%,
6/1/2009
Wisconsin Health & Educational 3,044,077 3,044,077
Facilities Authority, SSM Healthcare,
Series 1992 AA, MBIA, 6.500%,
6/1/2011
Wisconsin Health & Educational 3,284,070 3,284,070
Facilities Authority, SSM Healthcare,
Series 1992 AA, MBIA, 6.500%,
6/1/2012
Wisconsin Health & Educational 2,135,340 2,135,340
Facilities Authority, St. Luke's
Medical Center, MBIA, 7.100%,
8/15/2011
Wisconsin Health and Educational 4,395,984 4,395,984
Facilities Authority, Hospital Sisters
Services Inc. - Obligated Group,
5.375%, 06/01/2018
Green Bay, WI, Industrial Development 1,721,063 1,721,063
Revenue, Weyerhaeuser Company Project,
Series A, 9.000%, 09/01/2006
Wisconsin Health and Educational 1,437,825 1,437,825
Facilities Authority, Hospital Sisters
Inc., 5.375%, 06/01/2013
Wisconsin State Health & Educational 2,145,450 2,145,450
Facilities, Revenue, Series B, 5.625%,
2/15/2029
Wisconsin State Health & Educational 3,420,040 3,420,040
Facilities Authority, Revenue Bond,
Aurora Health Care Inc., Series A,
5.600%, 02/15/2029
WYOMING
Wyoming Community Development 2,998,710 2,998,710
Authority, Single Family Mortgage
Revenue, Series A, 5.850%, 06/01/2013
================================================================
LONG-TERM MUNICIPAL INVESTMENTS 693,354,919 1,527,500,473 85,749,816 2,306,605,208
================================================================
Long-term Municipal Investments
(Cost of $661,326,129 $1,466,359,907
$84,356,000 and $2,212,042,036 respectively)
================================================================
TOTAL INVESTMENT PORTFOLIO-100% 713,354,919 1,538,200,473 90,749,816 2,342,305,208
================================================================
Investment Portfolio (Cost of $681,326,129
$1,477,059,907 $89,356,000 and
$2,247,742,036 respectively)
</TABLE>
1) Certain securities that do not conform to the investment policies to be in
effect after the Reorganization will be disposed of prior to the
Reorganization.
<PAGE>
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINING CONDENSED STATEMENT OF ASSETS AND LIABILITIES
AS OF OCTOBER 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SCUDDER SCUDDER
MANAGED AARP INSURED TAX OHIO TAX PRO FORMA PRO FORMA
MUNICIPAL BOND FREE GENERAL BOND FREE FUND ADJUSTMENTS COMBINED
--------------------------------------------------------- ---------------- -------------------
<S> <C> <C> <C> <C> <C>
Investments, at value $ 713,354,919 $ 1,538,200,473 $ 90,749,816 $2,342,305,208
Cash 301,905 380,484 248,909 931,298
Other assets less liabilities (7,058,266) 17,752,511 884,841 $ (788,624) (2) 10,790,462
========================================================= ================ ===================
Net assets $ 706,598,558 $ 1,556,333,468 $ 91,883,566 $ (788,624) $2,354,026,968
========================================================= ================ ===================
NET ASSETS
Scudder Shares $ 798,441,540
AARP Shares $1,555,585,428
SHARES OUTSTANDING
Scudder Shares 82,235,127 7,220,299 3,474,484 92,929,910
AARP Shares 89,098,171 91,994,428 181,092,599
NET ASSET VALUE PER SHARE
Scudder Shares $ 8.59 $ 12.73 $ 8.59
AARP Shares $ 17.47 $ 8.59
</TABLE>
<PAGE>
PRO FORMA COMBINING CONDENSED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTH PERIOD ENDED OCTOBER 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SCUDDER SCUDDER
MANAGED AARP INSURED TAX OHIO TAX PRO FORMA PRO FORMA
MUNICIPAL BOND FREE GENERAL BOND FREE FUND ADJUSTMENTS COMBINED
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Interest income $ 42,412,818 $ 89,228,402 5,254,408 $ -- $ 136,895,628
--------------------------------------------------------------------------------------
Total Investment Income 42,412,818 89,228,402 5,254,408 136,895,628
Expenses
Management fees 3,684,568 7,848,756 577,472 (65,381) (3) 12,045,415
Trustee fees 59,796 26,377 11,444 (37,821) (4) 59,796
All other expenses 1,056,763 3,422,871 207,528 (962,835) (5) 3,724,327
--------------------------------------------------------------------------------------
Total expenses before reductions 4,801,127 11,298,004 796,444 (1,066,037) 15,829,538
Expense reductions - - (111,936) 111,936 (6) -
--------------------------------------------------------------------------------------
Expenses, net 4,801,127 11,298,004 684,508 (954,101) 15,829,538
--------------------------------------------------------------------------------------
Net investment income (loss) 37,611,691 77,930,398 4,569,900 954,101 121,066,090
--------------------------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) from investments (137,427) 10,567,083 (409,992) -- 10,019,664
and futures
Net unrealized appreciation (depreciation)
of investments and futures (47,879,710) (120,778,206) (5,779,605) -- (174,437,521)
---------------------------------------------------------------------------------------
Net increase in net assets from operations $ (10,405,446) $ (32,280,725) $ (1,619,697) $ 954,101 $ (43,351,767)
=======================================================================================
</TABLE>
NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS
(UNAUDITED)
OCTOBER 31, 1999
1. These financial statements set forth the unaudited pro forma condensed
Statement of Assets and Liabilities as of October 31, 1999, and the
unaudited pro forma condensed Statement of Operations for the twelve month
period ended October 31, 1999 for Scudder Managed Municipal Bond Fund, AARP
Insured Tax Free General Bond Fund and Scudder Ohio Tax Free Fund as
adjusted giving effect to the Reorganization as if it had occurred as of the
beginning of the period. These statements have been derived from the books
and records utilized in calculating daily net asset value for each fund.
2. Represents one-time proxy, legal, accounting and other costs of the
Reorganization of $25,202, $748,040 and $15,382 to be borne by the Acquiring
Fund, AARP Insured Tax Free General Bond Fund and Scudder Ohio Tax Free
Fund, respectively.
3. Represents reduction in management fees resulting from a new management
agreement.
4. Reduction in trustee fees resulting from the Reorganization.
5. Represents reduction in other expenses resulting from the implementation of
an administrative fee contract.
6. Represents the elimination of expense reimbursements.
<PAGE>
PART C. OTHER INFORMATION
Item 15. Indemnification.
A policy of insurance covering Scudder Kemper Investments, Inc., its
subsidiaries including Scudder Investor Services, Inc., and all of
the registered investment companies advised by Scudder Kemper
Investments, Inc. insures the Registrant's trustees and officers and
others against liability arising by reason of an alleged breach of
duty caused by any negligent act, error or accidental omission in
the scope of their duties.
Article IV, Sections 4.1 - 4.3 of the Registrant's Declaration of
Trust provide as follows:
Section 4.1. No Personal Liability of Shareholders, Trustees, Etc.
No Shareholder shall be subject to any personal liability whatsoever
to any Person in connection with Trust Property or the acts,
obligations or affairs of the Trust. No Trustee, officer, employee
or agent of the Trust shall be subject to any personal liability
whatsoever to any Person, other than to the Trust or its
Shareholders, in connection with Trust Property or the affairs of
the Trust, save only that arising from bad faith, willful
misfeasance, gross negligence or reckless disregard of his duties
with respect to such Person; and all such Persons shall look solely
to the Trust Property for satisfaction of claims of any nature
arising in connection with the affairs of the Trust. If any
Shareholder, Trustee, officer, employee, or agent, as such, of the
Trust, is made a party to any suit or proceeding to enforce any such
liability of the Trust, he shall not, on account thereof, be held to
any personal liability. The Trust shall indemnify and hold each
Shareholder harmless from and against all claims and liabilities, to
which such Shareholder may become subject by reason of his being or
having been a Shareholder, and shall reimburse such Shareholder for
all legal and other expenses reasonably incurred by him in
connection with any such claim or liability. The indemnification and
reimbursement required by the preceding sentence shall be made only
out of the assets of the one or more Series of which the Shareholder
who is entitled to indemnification or reimbursement was a
Shareholder at the time the act or event occurred which gave rise to
the claim against or liability of said Shareholder. The rights
accruing to a Shareholder under this Section 4.1 shall not impair
any other right to which such Shareholder may be lawfully entitled,
nor shall anything herein contained restrict the right of the Trust
to indemnify or reimburse a Shareholder in any appropriate situation
even though not specifically provided herein.
Section 4.2. Non-Liability of Trustees, Etc. No Trustee, officer,
employee or agent of the Trust shall be liable to the Trust, its
Shareholders, or to any Shareholder, Trustee, officer, employee, or
agent thereof for any action or failure to act (including without
limitation the failure to compel in any way any former or acting
Trustee to redress any breach of trust) except for his own bad
faith, willful misfeasance, gross negligence or reckless disregard
of the duties involved in the conduct of his office.
Section 4.3. Mandatory Indemnification. (a) Subject to the
exceptions and limitations contained in paragraph (b) below:
(i) every person who is, or has been, a Trustee or officer of
the Trust shall be indemnified by the Trust to the fullest extent
permitted by law against all liability and
-59-
<PAGE>
against all expenses reasonably incurred or paid by him in
connection with any claim, action, suit or proceeding in which he
becomes involved as a party or otherwise by virtue of his being or
having been a Trustee or officer and against amounts paid or
incurred by him in the settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding"
shall apply to all claims, actions, suits or proceedings (civil,
criminal, administrative or other, including appeals), actual or
threatened; and the words "liability" and "expenses" shall include,
without limitation, attorneys' fees, costs, judgments, amounts paid
in settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a
Trustee or officer:
(i) against any liability to the Trust, a Series thereof, or
the Shareholders by reason of a final adjudication by a court or
other body before which a proceeding was brought that he engaged in
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office;
(ii) with respect to any matter as to which he shall have been
finally adjudicated not to have acted in good faith in the
reasonable belief that his action was in the best interest of the
Trust;
(iii) in the event of a settlement or other disposition not
involving a final adjudication as provided in paragraph (b)(i) or
(b)(ii) resulting in a payment by a Trustee or officer, unless there
has been a determination that such Trustee or officer did not engage
in willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office:
(A) by the court or other body approving the settlement
or other disposition; or
(B) based upon a review of readily available facts (as
opposed to a full trial-type inquiry) by (x) vote of a
majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then
in office act on the matter) or (y) written opinion of
independent legal counsel.
(c) The rights of indemnification herein provided may be
insured against by policies maintained by the Trust, shall be
severable, shall not affect any other rights to which any Trustee or
officer may now or hereafter be entitled, shall continue as to a
person who has ceased to be such Trustee or officer and shall insure
to the benefit of the heirs, executors, administrators and assigns
of such a person. Nothing contained herein shall affect any rights
to indemnification to which personnel of the Trust other than
Trustees and officers may be entitled by contract or otherwise under
law.
(d) Expenses of preparation and presentation of a defense to
any claim, action, suit or proceeding of the character described in
paragraph (a) of this Section 4.3 may be advanced by the Trust prior
to final disposition thereof upon receipt of an undertaking by or on
behalf of the recipient to repay such amount if it is ultimately
determined that he is not entitled to indemnification under this
Section 4.3, provided that either:
-60-
<PAGE>
(i) such undertaking is secured by a surety bond or some other
appropriate security provided by the recipient, or the Trust shall
be insured against losses arising out of any such advances; or
(ii) a majority of the Disinterested Trustees acting on the
matter (provided that a majority of the Disinterested Trustees act
on the matter) or an independent legal counsel in a written opinion
shall determine, based upon a review of readily available facts (as
opposed to a full trial-type inquiry), that there is reason to
believe that the recipient ultimately will be found entitled to
indemnification.
As used in this Section 4.3, a "Disinterested Trustee" is one who is not (i) an
"Interested Person" of the Trust (including anyone who has been exempted from
being an "Interested Person" by any rule, regulation or order of the
Commission), or (ii) involved in the claim, action, suit or proceeding.
Item 16. Exhibits.
(1) (a) (1) Amended and Restated Declaration of Trust, dated
December 8, 1987, is incorporated by reference to
Post-Effective Amendment No. 33 to the
Registrant's Registration Statement on Form N-1A,
as amended (the "Registration Statement").
(2) Amendment to Amended and Restated Declaration of
Trust, dated December 11, 1990, is incorporated by
reference to Post-Effective Amendment No. 33 to
the Registration Statement.
(3) Instrument, dated October 29, 1986, Establishing
and Designating an Additional Series of Shares is
incorporated by reference to Post-Effective
Amendment No. 33 to the Registration Statement.
(4) Establishment and Designation of Series dated
November 6, 1987, is incorporated by reference to
Post-Effective Amendment No. 33 to the
Registration Statement.
(2) (b) (1) By-laws of the Registrant, dated September 24,
1976 as amended through December 31, 1979, is
incorporated by reference to Post-Effective
Amendment No. 33 to the Registration Statement.
(2) Amendment to the By-laws of the Registrant as
amended through December 8, 1987, is incorporated
by reference to Post-Effective Amendment No. 33 to
the Registration Statement.
(3) Amendment to the By-laws of Registrant, dated
August 13, 1991, is incorporated by reference to
Post-Effective Amendment No. 33 to the
Registration Statement.
(4) Amendment to the By-laws of Registrant,dated
December 10, 1991, is incorporated by reference to
Post-Effective Amendment No. 33 to the
Registration Statement.
(3) Inapplicable.
-61-
<PAGE>
(4) Agreement and Plan of Reorganization is filed
as Exhibit A to Part A hereof.
(5) Inapplicable.
(6) (d) (1) Investment Management Agreement between the
Registrant (on behalf of Scudder Managed Municipal
Bonds) and Scudder Kemper Investments, Inc., dated
September 7, 1998, is incorporated by reference to
Post-Effective Amendment No. 36 to the
Registration Statement.
(2) Investment Management Agreement between the
Registrant (on behalf of Scudder High Yield Tax
Free Fund) and Scudder Kemper Investments, Inc.,
dated September 7, 1998, is incorporated by
reference to Post-Effective Amendment No. 36 to
the Registration Statement.
(7) Underwriting Agreement between the Registrant and
Scudder Investor Services, Inc., dated September
7, 1998, is incorporated by reference to
Post-Effective Amendment No. 36 to the
Registration Statement.
(8) Inapplicable.
(9) (g) (1) Custodian Contract between the Registrant and
State Street Bank and Trust Company, dated March
17, 1980, is incorporated by reference to
Post-Effective Amendment No. 33 to the
Registration Statement.
(2) Fee schedule for Exhibit (9)(g)(1) is incorporated
by reference to Post-Effective Amendment No. 33 to
the Registration Statement.
(3) Amendment No. 1 to the Custodian Contract between
the Registrant and State Street Bank and Trust
Company, dated March 17, 1980, incorporated by
reference to Post-Effective Amendment No. 33 to
the Registration Statement.
(4) Amendment to the Custodian Contract between the
Registrant and State Street Bank and Trust
Company, dated August 9, 1988, is incorporated by
reference to Post-Effective Amendment No. 33 to
the Registration Statement.
(5) Amendment to the Custodian Contract between the
Registrant and State Street Bank and Trust
Company, dated December 11, 1990, is incorporated
by reference to Post-Effective Amendment No. 33 to
the Registration Statement.
(6) Subcustodian Agreement and Fee Schedule between
State Street Bank and Trust Company and The Bank
of New York, London office, dated December 31,
1978, is incorporated by reference to
Post-Effective Amendment No. 33 to the
Registration Statement.
-62-
<PAGE>
(7) Subcustodian Agreement between Irving Trust
Company and State Street Bank, dated November 30,
1987, is incorporated by reference to
Post-Effective Amendment No. 33 to the
Registration Statement.
(8) Subcustodian Agreement between State Street Bank
and Trust Company and Morgan Guaranty Trust
Company of New York, dated November 25, 1985, is
incorporated by reference to Post-Effective
Amendment No. 33 to the Registration Statement.
(9) Subcustodian Agreement between Chemical Bank and
State Street Bank and Trust Company, dated May 31,
1988, is incorporated by reference to
Post-Effective Amendment No. 33 to the
Registration Statement.
(10) Subcustodian Agreement between and Security
Pacific National Bank and Trust Company (New York)
and State Street Bank and Trust Company, dated
February 18, 1988, is incorporated by reference to
Post-Effective Amendment No. 33 to the
Registration Statement.
(11) Subcustodian Agreement between Bankers Trust
Company and State Street Bank and Trust Company,
dated August 15, 1989, is incorporated by
reference to Post-Effective Amendment No. 33 to
the Registration Statement.
(10) Inapplicable.
(11) Opinion and Consent of Dechert Price & Rhoads
filed herein.
(12) Opinion and Consent of Willkie Farr & Gallagher to
be filed by post-effective amendment.
(13) (h) (1) Transfer Agency, Service Agreement and Fee
Schedule between the Registrant and Scudder
Service Agreement, dated October 2, 1989, is
incorporated by reference to Post-Effective
Amendment No. 33 to the Registration Statement.
(2) Revised Fee Schedule dated October 1, 1996 for
Exhibit (13)(h)(1) is incorporated by reference to
Post-Effective Amendment No. 32 to the
Registration Statement.
(3) Fund Accounting Services Agreement between the
Registrant (on behalf of Scudder High Yield Tax
Free Fund) and Scudder Fund Accounting
Corporation, dated January 23, 1995, is
incorporated by reference to Post-Effective
Amendment No. 29 to the Registration Statement.
(4) Fund Accounting Services Agreement between the
Registrant (on behalf of Scudder Managed Municipal
Bonds) and Scudder Fund Accounting Corporation,
dated February 9, 1995, is incorporated by
reference to Post-Effective Amendment No. 29 to
the Registration
-63-
<PAGE>
Statement.
(14) Consent of PricewaterhouseCoopers LLP filed
herein.
(15) Inapplicable.
(16) Powers of Attorney are filed herein.
(17) Form of proxy filed herein.
Item 17. Undertakings.
(1) The undersigned registrant agrees that prior to any public
reoffering of the securities registered through the use of a
prospectus which is a part of this registration statement by any
person or party who is deemed to be an underwriter within the
meaning of Rule 145(c) of the Securities Act [17 CFR 230.145c], the
reoffering prospectus will contain the information called for by the
applicable registration form for C-8 350 reofferings by persons who
may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(2) The undersigned registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as a part of an
amendment to the registration statement and will not be used until
the amendment is effective, and that, in determining any liability
under the 1933 Act, each post-effective amendment shall be deemed to
be a new registration statement for the securities offered therein,
and the offering of the securities at that time shall be deemed to
be the initial bona fide offering of them.
-64-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, Scudder Municipal Trust has duly caused this
Registration Statement on Form N-14 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boston and the
Commonwealth of Massachusetts on the 3rd day of March, 2000.
SCUDDER MUNICIPAL TRUST
By: /s/ Linda C. Coughlin
-----------------------------
Title: President
--------------------------
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form N-14 has been signed below by the following
persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Linda C. Coughlin President & Trustee March 3, 2000
- ----------------------
Linda C. Coughlin
/s/ Henry P. Becton, Jr.* Trustee March 3, 2000
- -------------------------
Henry P. Becton, Jr.
/s/ Dawn-Marie Driscoll* Trustee March 3, 2000
- ------------------------
Dawn-Marie Driscoll
/s/ Peter B. Freeman* Trustee March 3, 2000
- ---------------------
Peter B. Freeman
/s/ George M. Lovejoy, Jr.* Trustee March 3, 2000
- ---------------------------
George M. Lovejoy, Jr.
/s/ Welsey W. Marple, Jr.* Trustee March 3, 2000
- --------------------------
Welsey W. Marple, Jr.
/s/ Kathryn L. Quirk* Trustee, Vice President & March 3, 2000
- --------------------- Assistant Secretary
Kathryn L. Quirk
/s/ Jean C. Tempel* Trustee March 3, 2000
- -------------------
Jean C. Tempel
/s/ John R. Hebble Treasurer (Principal Financial March 3, 2000
- ------------------- and Accounting Officer)
John R. Hebble
-65-
<PAGE>
*By: /s/ Sheldon A. Jones March 3, 2000
--------------------
Sheldon A. Jones
Attorney-in-fact
*Executed pursuant to powers of attorney filed with the Registrant's
Registration Statement on Form N-14 as filed with the Commission electronically
herewith.
-66-
<PAGE>
EXHIBIT 11
DECHERT PRICE & RHOADS LETTERHEAD
[Date]
Scudder Municipal Trust on behalf of
Scudder Managed Municipal Bonds
Two International Place
Boston, Massachusetts 02110-4103
Dear Sirs:
We have acted as counsel to Scudder Municipal Trust, a Massachusetts
business trust (the "Trust"), and we have a general familiarity with the
Trust's business operations, practices and procedures. You have asked for our
opinion regarding the issuance of AARP Shares class of shares of beneficial
interest by the Trust in connection with the acquisition by Scudder Managed
Municipal Bonds, a series of the Trust, of the assets of AARP Insured Tax Free
General Bond Fund, a series of AARP Tax Free Income Trust, which shares are
registered on a Form N-14 Registration Statement (the "Registration Statement")
filed by the Trust with the Securities and Exchange Commission.
We have examined originals or certified copies, or copies otherwise
identified to our satisfaction as being true copies, of various trust records of
the Trust and such other instruments, documents and records as we have deemed
necessary in order to render this opinion. We have assumed the genuineness of
all signatures, the authenticity of all documents examined by us and the
correctness of all statements of fact contained in those documents.
On the basis of the foregoing, we are of the opinion that the AARP Shares
class of shares of beneficial interest of the Trust being registered under the
Securities Act of 1933 in the Registration Statement, subject to the creation
of the AARP Shares class of shares in accordance with the laws of the
Commonwealth of Massachusetts, will be legally and validly issued, fully paid
and non-assessable by the Trust, upon transfer of the assets of AARP Insured
Tax Free General Bond Fund pursuant to the terms of the Agreement and Plan of
Reorganization included in the Registration Statement.
We hereby consent to the filing of this opinion with and as part of the
Registration Statement.
Very truly yours,
/s/ DECHERT PRICE & RHOADS
-67-
<PAGE>
EXHIBIT 14
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Proxy
Statement/Prospectus and Statement of Additional Information constituting parts
of this Registration Statement on Form N-14 (the "Registration Statement") of
our report dated July 19, 1999, relating to the financial statements and
financial highlights appearing in the May 31, 1999 Annual Report to Shareholders
of Scudder Managed Municipal Bond Fund which are also incorporated by reference
into the Registration Statement. We also consent to the references to us under
the heading "Administrative Fee" in the Proxy Statement/Prospectus and under the
headings "Financial Highlights" in the Prospectus and "Experts" in the Statement
of Additional Information dated October 1, 1999.
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
March 1, 2000
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Proxy
Statement/Prospectus and Statement of Additional Information constituting parts
of this Registration Statement on Form N-14 (the "Registration Statement") of
our report dated November 8, 1999, relating to the financial statements and
financial highlights appearing in the September 30, 1999 Annual Report to
Shareholders of AARP Insured Tax Free General Bond Fund which are also
incorporated by reference into the Registration Statement. We also consent to
the references to us under the heading "Administrative Fee" in the Proxy
Statement/Prospectuses and under the headings "Financial Highlights" in the
Prospectus and "Experts" in the Statement of Additional Information dated
February 1, 2000.
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
March 1, 2000
<PAGE>
EXHIBIT 16
SCUDDER MUNICIPAL TRUST
POWERS OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, the Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated. By so signing, the undersigned in his capacity as
trustee or officer, or both, as the case may be, of the Registrant, does hereby
appoint Sheldon A. Jones, Allison R. Beakley, Caroline Pearson and John Millette
and each of them, severally, his/her true and lawful attorney and agent to
execute in his name, place and stead (in such capacity) any and all amendments
to the Registration Statement and any post-effective amendments thereto and all
instruments necessary or desirable in connection therewith, to attest the seal
of the Registrant thereon and to file the same with the Securities and Exchange
Commission. Each of said attorneys and agents shall have power to act with or
without the other and have full power and authority to do and perform in the
name and on behalf of the undersigned, in any and all capacities, every act
whatsoever necessary or advisable to be done in the premises as fully and to all
intents and the purposes as the undersigned might or could do in person, hereby
ratifying and approving the act of said attorneys and agents and each of them.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Linda C. Coughlin President & Trustee February 8, 2000
- ----------------------
Linda C. Coughlin
/s/ Henry P. Becton, Jr. Trustee February 8, 2000
- -------------------------
Henry P. Becton, Jr.
/s/ Dawn-Marie Driscoll Trustee February 8, 2000
- -------------------------
Dawn-Marie Driscoll
/s/ Peter B. Freeman Trustee February 8, 2000
- ---------------------
Peter B. Freeman
/s/ George M. Lovejoy, Jr. Trustee February 8, 2000
- ---------------------------
George M. Lovejoy, Jr.
/s/ Welsey W. Marple, Jr. Trustee February 8, 2000
- --------------------------
Welsey W. Marple, Jr.
/s/ Kathryn L. Quirk Trustee, Vice President & February 8, 2000
- --------------------- Assistant Secretary
Kathryn L. Quirk
/s/ Jean C. Tempel Trustee February 8, 2000
- -------------------
Jean C. Tempel
Treasurer (Principal Financial February 8, 2000
- ------------------- and Accounting Officer)
John R. Hebble
-68-
<PAGE>
EXHIBIT 17
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.
[ACQUIRED FUND]
[ACQUIRED TRUST/CORPORATION]
[address]
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
[time], on [date]
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 [Acquired 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.,
[address], on [date] at [time], 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/DIRECTORS] OF THE
[ACQUIRED FUND]. THE BOARD OF [TRUSTEES/DIRECTORS] RECOMMENDS A VOTE FOR THE
PROPOSALS.
PLEASE VOTE BY FILLING IN THE BOXES BELOW.
FOR AGAINST ABSTAIN
PROPOSAL 1
To elect Trustees to the Board of Trustees
of the Portfolio to hold office until their
respective successors have been duly elected / / / / / /
and qualified or until their earlier
resignation or removal.
NOMINEES:
(01) __________, (02) ____________, (03) _________, (04) ______________, (05)
______________, (06) __________, (07) ______________, (08)_______________, (09)
____________.
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE
FOR ANY INDIVIDUAL NOMINEE, WRITE THE
NAME(S) ON THE LINE IMMEDIATELY BELOW.
- ----------------------------------------------------
PROPOSAL 2
To approve an Agreement and Plan of
Reorganization for the Fund whereby all or
substantially all of the assets an / / / / / /
liabilities of the Fund would be acquired by
[Acquiring Fund] in exchange for shares of
the [class] of the [Acquiring Fund].
PROPOSAL 3
To ratify the selection of
PricewaterhouseCoopers LLP as the Fund's / / / / / /
independent accountants for the current
fiscal year.
<PAGE>
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
