<PAGE>
[AARP SCUDDER LOGO]
IMPORTANT NEWS FOR
AARP GLOBAL GROWTH FUND SHAREHOLDERS
While we encourage you to read the full text of the enclosed Proxy
Statement/Prospectus, here's a brief overview of some matters affecting your
Fund that will be the subject of a shareholder vote.
Q & A: QUESTIONS AND ANSWERS
Q: WHAT AM I BEING ASKED TO VOTE ON?
A: You are being asked to vote on a proposed combination of your Fund into
Scudder Global Fund. This proposal is part of a larger effort to expand the
offerings in the AARP Investment Program to include the fund lineup of the
Scudder Family of Funds. THE BOARD OF YOUR FUND RECOMMENDS THAT YOU VOTE IN
FAVOR OF THIS PROPOSAL.
Q: WHY HAS THE BOARD RECOMMENDED THAT I VOTE IN FAVOR OF THE COMBINATION?
A: The Board of your Fund is recommending that shareholders vote in favor of
this proposal for the following reasons:
- LOWER EXPENSES. The combination of the two funds would result in REDUCED
expenses for shareholders of your Fund.
- GREATER PREDICTABILITY OF EXPENSES. As part of the proposal to combine
funds, a new fixed administrative fee rate arrangement would be
implemented. The arrangement protects shareholders from most ordinary
administrative expense increases for a minimum of three years.
- TAX-FREE REORGANIZATION. It is a condition of the proposed combination
that your Fund receive an opinion of tax counsel that the transaction
would be a TAX-FREE transaction.
Q: ARE THE INVESTMENT POLICIES OF SCUDDER GLOBAL FUND SIMILAR TO THOSE OF MY
FUND?
A: The investment objectives, policies and restrictions of Scudder Global Fund
and your Fund are very similar. The combined fund will continue to
<PAGE>
seek long-term growth of capital through investment in global securities.
The Funds are currently managed by the same portfolio management teams and
have similar investments.
In addition, if the Reorganization is approved, the combined fund will
modify its investment policies to also actively seek to reduce downside risk
as compared with other global growth funds and will avoid investing in
securities of tobacco-producing companies, policies consistent with those of
your Fund.
Q: HOW DOES THIS AFFECT THE AARP INVESTMENT PROGRAM?
A: This consolidation of similar funds will enable Scudder to offer a broader
range of investment choices through the AARP Investment Program. Except for
the changes to your Fund outlined above, there are no plans to change the
characteristics of the AARP Investment Program:
- AARP classes will be created in the Scudder Funds for investors in the
AARP Investment Program.
- Scudder Kemper will continue its strong commitment to education, both for
AARP Investment Program shareholders and for AARP members in general.
- AARP, through its for-profit subsidiary, will continue to OVERSEE SERVICE
LEVELS AND COMMUNICATIONS to shareholders in the AARP Investment Program
and to AARP members. AARP will also continue to PROVIDE INSIGHT AND
DIRECTION as to what best represents the interests and concerns of its
membership.
- Scudder Kemper will continue to develop NEW PRODUCTS AND SERVICES with the
interests of AARP members in mind.
- Scudder Kemper will MAINTAIN SEPARATE RECORDS for AARP Investment Program
shareholders.
Q: ARE THERE OTHER PROPOSALS I WILL BE VOTING ON?
A: You are also being asked to vote on the election of Board members for your
Fund. As part of a larger effort to restructure the Scudder Family of Funds,
the Board of your Fund has voted in favor of creating a single board of
trustees/directors responsible for most Scudder Funds. It is proposed that
this board would continue to have AARP representation. It is the Board's
belief that this has the potential for increasing efficiency and benefiting
fund shareholders. The Board also believes that a single board, responsible
for overseeing most of the no-load funds advised by Scudder Kemper, can more
effectively represent shareholder interests. THE BOARD OF YOUR FUND
RECOMMENDS THAT YOU VOTE IN FAVOR OF EACH NOMINEE.
(continued on inside back cover)
<PAGE>
April 18, 2000
Dear AARP Investment Program Shareholder,
Scudder Kemper Investments, investment manager for the AARP Investment
Program, is proposing a series of changes to offer you a wider range of fund
options to meet a broader range of investment goals. The current offering of 16
AARP mutual funds will soon expand to include 43 funds, six of which will
maintain a risk-managed focus. This will be accomplished by making the entire
lineup of funds from the Scudder Family of Funds available to AARP Investment
Program shareholders. In addition, subject to shareholder approval, most AARP
Investment Program funds will be combined with Scudder Funds that have similar
investment objectives. The funds will be called Scudder Funds, indicating
Scudder Kemper's distinct role as investment manager of the funds.
The involvement and level of participation from AARP in the AARP Investment
Program from Scudder is not changing. AARP will continue to oversee the
Investment Program's service quality and communications; and AARP will continue
to provide insight and direction as to what best represents the interests and
concerns of its membership.
PLEASE READ THE ENCLOSED MATERIALS
Enclosed with this letter is a packet of materials we ask that you read and,
where applicable, fill out and return to us. The Q&A that begins on the front
cover of the proxy statement explains the proposals we're making, why we're
making them, and how they apply to your AARP Fund. The packet also contains a
proxy card and a prospectus for the fund that we are proposing to merge your
Fund into.
After careful review, the members of your Fund's Board have approved each of
the proposals explained in the Q&A and described in the proxy statement. THE
BOARD RECOMMENDS THAT YOU READ THE ENCLOSED MATERIALS CAREFULLY AND THEN VOTE
FOR ALL THE PROPOSALS. (Because many of the funds for which Scudder Kemper acts
as investment manager are holding shareholder meetings, you may receive more
than one proxy card. If so, please vote each one.)
Your vote is important to us. Once you've voted, please sign and date the
proxy card and return it in the enclosed postpaid envelope. If you prefer, you
can save time and postage cost by voting on the Internet or by telephone -- the
enclosed flyer describes how. If we do not hear from you by May 17, our proxy
solicitor may contact you. Thank you for your response and for your continued
investment in the AARP Investment Program.
Respectfully,
<TABLE>
<S> <C>
/s/ Edmond D. Villani /s/ Linda C. Coughlin
Edmond D. Villani Linda C. Coughlin
Chief Executive Officer Chairperson
Scudder Kemper Investments, Inc. Board of Trustees
AARP Investment Program
</TABLE>
<PAGE>
AARP GLOBAL GROWTH FUND
--------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS OF
AARP GROWTH TRUST
Please take notice that a Special Meeting of Shareholders (the "Meeting") of
AARP Global Growth Fund (the "Fund"), a series of AARP Growth Trust (the
"Trust"), will be held at the offices of Scudder Kemper Investments, Inc.,
13th Floor, Two International Place, Boston, MA 02110-4103, on July 11, 2000, at
2:00 p.m., Eastern time, for the following purposes:
<TABLE>
<S> <C>
PROPOSAL 1: To elect Trustees of the Trust;
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 Global Fund in exchange for shares of the
AARP Class of Scudder Global Fund; and
PROPOSAL 3: To ratify the selection of
PricewaterhouseCoopers LLP as the independent
accountants for the Fund for the Fund's current
fiscal year.
</TABLE>
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,
/s/ Kathryn L. Quirk
Kathryn L. Quirk
Secretary
April 18, 2000
IMPORTANT -- WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY CARD(S) AND
RETURN IT IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE (OR TO TAKE
ADVANTAGE OF THE ELECTRONIC OR TELEPHONIC VOTING PROCEDURES DESCRIBED ON THE
PROXY CARD(S)). YOUR PROMPT RETURN OF THE ENCLOSED PROXY CARD(S) (OR YOUR VOTING
BY OTHER AVAILABLE MEANS) MAY SAVE THE NECESSITY AND EXPENSE OF FURTHER
SOLICITATIONS. IF YOU WISH TO ATTEND THE MEETING AND VOTE YOUR SHARES IN PERSON
AT THAT TIME, YOU WILL STILL BE ABLE TO DO SO.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
INTRODUCTION................................................ 1
PROPOSAL 1: ELECTION OF TRUSTEES OF THE ACQUIRED TRUST...... 3
PROPOSAL 2: APPROVAL OF AGREEMENT AND PLAN OF
REORGANIZATION............................................ 15
SYNOPSIS................................................ 15
PRINCIPAL RISK FACTORS.................................. 27
THE PROPOSED TRANSACTION................................ 27
PROPOSAL 3: RATIFICATION OR REJECTION OF THE SELECTION OF
INDEPENDENT ACCOUNTANTS................................... 34
ADDITIONAL INFORMATION...................................... 34
</TABLE>
i
<PAGE>
PROXY STATEMENT/PROSPECTUS
APRIL 18, 2000
RELATING TO THE ACQUISITION OF THE ASSETS OF
AARP GLOBAL GROWTH FUND (THE "ACQUIRED FUND"),
A SEPARATE SERIES OF AARP GROWTH TRUST
(THE "ACQUIRED TRUST")
TWO INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02110-4103
(800) 253-2277
--------------------------
BY AND IN EXCHANGE FOR
THE AARP CLASS OF SHARES OF CAPITAL STOCK
OF SCUDDER GLOBAL FUND (THE "ACQUIRING FUND"),
A SEPARATE SERIES OF GLOBAL/INTERNATIONAL FUND, INC.
(THE "ACQUIRING CORPORATION")
345 PARK AVENUE
NEW YORK, NEW YORK 10154
(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,"
collectively the "Proposals"). Proposal 1 describes the election of Trustees,
and Proposal 3 proposes the ratification of the selection 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 capital stock of the
AARP Class of the Acquiring Fund ("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
--------------------------
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.
<PAGE>
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
September 11, 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.
In the descriptions of the Proposals below, the word "fund" is sometimes
used to mean an investment company or series thereof in general, and not the
Acquired Fund whose proxy statement this is. In addition, for simplicity,
actions are described in this Proxy Statement/Prospectus 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 Corporation, 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 January 1, 2000, 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 January 1,
2000, as supplemented from time to time, 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 April 18, 2000, 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
2
<PAGE>
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 above. 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
January 1, 2000, except as otherwise described herein.
The Acquiring Fund and the Acquired Fund are diversified series of capital
stock, in the case of the Acquiring Fund, and shares of beneficial interest, in
the case of the Acquired Fund, of, respectively, the Acquiring Corporation and
the Acquired Trust. The Acquiring Corporation and the Acquired Trust are each an
open-end management investment company organized as a Maryland corporation and a
Massachusetts business trust, respectively.
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, 13th Floor, 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"). 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.
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 OF 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 or independent directors of the Acquiring
Corporation or as independent trustees or directors of other no-load funds
3
<PAGE>
advised by Scudder Kemper and who have no affiliation with Scudder Kemper or the
American Association of Retired Persons ("AARP"). The nominees listed below are
also being nominated for election as directors of the Acquiring Corporation and
as trustees or directors of all of the other AARP Funds (as defined below) and
open-end, directly-distributed, no-load Scudder Funds.
Currently five different boards of trustees or directors are responsible for
overseeing different groups of no-load funds advised by Scudder Kemper. As 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(s) will vote for the election of the nominees named below unless
authority to vote for any or all of the nominees is withheld in the proxy. Each
Trustee so elected will serve as a Trustee of the 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 current Trustees may
recommend. The following paragraphs and table set forth information concerning
the nominees and the Trustees not standing for re-election. Each nominee's or
Trustee's age is in parentheses after his or her name. Unless otherwise noted,
(i) each of the nominees and Trustees has engaged in the principal occupation(s)
noted in the following paragraphs and table for at least the most recent five
years, although not necessarily in the same capacity, and (ii) the address of
each nominee is c/o Scudder Kemper Investments, Inc., Two International Place,
Boston, MA 02110-4103.
NOMINEES FOR ELECTION AS TRUSTEES:
HENRY P. BECTON, JR. (56)
Henry P. Becton, Jr. is president of the WGBH Educational Foundation, producer
and distributor of public broadcasting programming and educational
4
<PAGE>
and interactive software. He graduated from Yale University in 1965, where he
was elected to Phi Beta Kappa. He received his J.D. degree CUM LAUDE from
Harvard Law School in 1968. Mr. Becton is a member of the PBS Board of
Directors, a Trustee of American Public Television, the New England Aquarium,
the Boston Museum of Science, Concord Academy, and the Massachusetts Corporation
for Educational Telecommunications, an Overseer of the Boston Museum of Fine
Arts, and a member of the Board of Governors of the Banff International
Television Festival Foundation. He is also a Director of Becton Dickinson and
Company and A.H. Belo Company, a Trustee of the Committee for Economic
Development, and a member of the Board of Visitors of the Dimock Community
Health Center, the Dean's Council of Harvard University's Graduate School of
Education, and the Massachusetts Bar. Mr. Becton has served as a trustee or
director of various mutual funds advised by Scudder Kemper since 1990.
LINDA C. COUGHLIN (48)*
Linda C. Coughlin, a Managing Director of Scudder Kemper, is head of Scudder
Kemper's U.S. Retail Mutual Funds Business. Ms. Coughlin joined Scudder Kemper
in 1986 and was a member of the firm's Board of Directors. She currently
oversees the marketing, service and operations of Scudder Kemper retail
businesses in the United States, which include the Scudder, Kemper, AARP, and
closed-end fund families, and the direct and intermediary channels. She also
serves as Chairperson of the AARP Investment Program from Scudder and as a
Trustee of the Program's mutual funds. Ms. Coughlin is also a member of the
Mutual Funds Management Group. Previously, she served as a regional Marketing
Director in the retail banking division of Citibank and at the American Express
Company as Director of Consumer Marketing for the mutual fund group.
Ms. Coughlin received a B.A. degree in economics SUMMA CUM LAUDE from Fordham
University. Ms. Coughlin is a Trustee of the Acquired Trust and has served on
the boards of various funds advised by Scudder Kemper, including the AARP
Investment Program Funds, since 1996.
DAWN-MARIE DRISCOLL (53)
Dawn-Marie Driscoll is an Executive Fellow and Advisory Board member of the
Center for Business Ethics at Bentley College, one of the nation's leading
institutes devoted to the study and practice of business ethics. Ms. Driscoll is
also president of Driscoll Associates, a consulting firm. She is a member of the
Board of Governors of the Investment Company Institute and serves as Chairman of
the Directors Services Committee. Ms. Driscoll was recently named 1999 "Fund
Trustee of the Year" by Fund Directions, a publication of Institutional
Investor, Inc. She has been a director, trustee and overseer of many civic
5
<PAGE>
and business institutions, including The Massachusetts Bay United Way and Regis
College. Ms. Driscoll was formerly a law partner at Palmer & Dodge in Boston and
served for over a decade as Vice President of Corporate Affairs and General
Counsel of Filene's, the Boston-based department store chain. Ms. Driscoll
received a B.A. from Regis College, a J.D. from Suffolk University Law School, a
D.H.L. (honorary) from Suffolk University and a D.C.S. (honorary) from Bentley
College Graduate School of Business. Ms. Driscoll has served as a trustee or
director of various mutual funds advised by Scudder Kemper since 1987.
EDGAR R. FIEDLER (70)
Edgar R. Fiedler is Senior Fellow and Economic Counsellor at The Conference
Board. He served as the Board's Vice President, Economic Research from 1975 to
1986 and as Vice President and Economic Counsellor from 1986 to 1996.
Mr. Fiedler's business experience includes positions at Eastman Kodak in
Rochester (1956-59), Doubleday and Company in New York City (1959-60), and
Bankers Trust Company in New York City (1960-69). He also served as Assistant
Secretary of the Treasury for Economic Policy from 1971 to 1975. Mr. Fiedler
graduated from the University of Wisconsin in 1951. He received his M.B.A. from
the University of Michigan and his doctorate from New York University. During
the 1980's, Mr. Fiedler was an Adjunct Professor of Economics at the Columbia
University Graduate School of Business. From 1990 to 1991, he was the Stephen
Edward Scarff Distinguished Professor at Lawrence University in Wisconsin.
Mr. Fiedler is a Director of The Stanley Works, Harris Insight Funds, Brazil
Fund, and PEG Capital Management, Inc. He is a Trustee of the Acquired Trust and
has served as a board member of various mutual funds advised by Scudder Kemper,
including the AARP Investment Program Funds, since 1984.
KEITH R. FOX (46)
Keith R. Fox is the managing partner of the Exeter Group of Funds, a series of
private equity funds with offices in New York and Boston, which he founded in
1986. The Exeter Group invests in a wide range of private equity situations,
including venture capital, expansion financings, recapitalizations and
management buyouts. Prior to forming Exeter, Mr. Fox was a director and vice
president of BT Capital Corporation, a subsidiary of Bankers Trust New York
Corporation organized as a small business investment company and based in New
York City. Mr. Fox graduated from Oxford University in 1976 and in 1981 received
an M.B.A. degree from the Harvard Business School. Mr. Fox is also a qualified
accountant. He is a board member and former Chairman of the National Association
of Small Business Investment Companies, and a director
6
<PAGE>
of Golden State Vintners, K-Communications, Progressive Holding Corporation and
Facts On File, as well as a former director of over twenty companies. Mr. Fox
has served as a trustee or director of various mutual funds advised by Scudder
Kemper since 1996.
JOAN EDELMAN SPERO (55)
Joan E. Spero is the president of the Doris Duke Charitable Foundation, a
position to which she was named in January 1997. From 1993 to 1997, Ms. Spero
served as Undersecretary of State for Economic, Business and Agricultural
Affairs under President Clinton. From 1981 to 1993, she was an executive at the
American Express Company, where her last position was executive vice president
for Corporate Affairs and Communications. Ms. Spero served as U.N. Ambassador to
the United Nations Economic and Social Council under President Carter from 1980
to 1981. She was an assistant professor at Columbia University from 1973 to
1979. She graduated Phi Beta Kappa from the University of Wisconsin and holds a
master's degree in international affairs and a doctorate in political science
from Columbia University. Ms. Spero is a member of the Council on Foreign
Relations and the Council of American Ambassadors. She also serves as a trustee
of the Wisconsin Alumni Research Foundation, The Brookings Institution and
Columbia University and is a Director of First Data Corporation. Ms. Spero has
served as a trustee or director of various mutual funds advised by Scudder
Kemper since 1998.
JEAN GLEASON STROMBERG (56)
Ms. Stromberg acts as a consultant on regulatory matters. From 1996 to 1997,
Ms. Stromberg represented the U.S. General Accounting Office before Congress and
elsewhere on issues involving banking, securities, securities markets, and
government-sponsored enterprises. Prior to that, Ms. Stromberg was a corporate
and securities law partner at the Washington, D.C. law office of Fulbright and
Jaworski, a national law firm. She served as Associate Director of the SEC's
Division of Investment Management from 1977 to 1979 and prior to that was
Special Counsel for the Division of Corporation Finance from 1972 to 1977.
Ms. Stromberg graduated Phi Beta Kappa from Wellesley College and received her
law degree from Harvard Law School. From 1988 to 1991 and 1993 to 1996, she was
a Trustee of the American Bar Retirement Association, the funding vehicle for
American Bar Association-sponsored retirement plans. Ms. Stromberg serves on the
Wellesley College Business Leadership Council and the Council for Mutual Fund
Director Education at Northwestern University Law School and was a panelist at
the SEC's Investment Company Director's Roundtable. Ms. Stromberg is a Trustee
of the Acquired Trust and has served as a board member of the AARP Investment
Program Funds since 1997.
7
<PAGE>
JEAN C. TEMPEL (56)
Jean C. Tempel is a venture partner for Internet Capital Group, a strategic
network of Internet partnership companies whose principal offices are in Wayne,
Pennsylvania. Ms. Tempel concentrates on investment opportunities in the Boston
area. She spent 25 years in technology/operations executive management at
various New England banks, building custody operations and real time
financial/securities processing systems, most recently as Chief Operations
Officer at The Boston Company. From 1991 until 1993 she was president/COO of
Safeguard Scientifics, a Pennsylvania technology venture company. In that role
she was a founding investor, director and vice chairman of Cambridge Technology
Partners. She is a director of XLVision, Inc., Marathon Technologies, Inc.,
Aberdeen Group and Sonesta Hotels International, and is a Trustee of
Northeastern University, Connecticut College, and The Commonwealth Institute.
She received a B.A. from Connecticut College, an M.S. from Rensselaer
Polytechnic Institute of New York, and attended Harvard Business School's
Advanced Management Program. Ms. Tempel has served as a trustee or director of
various mutual funds advised by Scudder Kemper since 1994.
STEVEN ZALEZNICK (45)*
Steven Zaleznick is President and CEO of AARP Services, Inc., a wholly-owned and
independently-operated subsidiary of AARP which manages a range of products and
services offered to AARP members, provides marketing services to AARP and its
member service providers and establishes an electronic commerce presence for
AARP members. Mr. Zaleznick previously served as AARP's general counsel for nine
years. He was responsible for the legal affairs of AARP, which included tax and
legal matters affecting non-profit organizations, contract negotiations,
publication review and public policy litigation. In 1979, he joined AARP as a
legislation representative responsible for issues involving taxes, pensions, age
discrimination, and other national issues affecting older Americans.
Mr. Zaleznick is President of the Board of Cradle of Hope Adoption Center in
Washington, D.C. He is a former treasurer and currently a board member of the
National Senior Citizens Law Center. Mr. Zaleznick received his B.A. in
economics from Brown University. He received his J.D. degree from Georgetown
University Law Center and is a member of the District of Columbia Bar
Association.
8
<PAGE>
TRUSTEES NOT STANDING FOR RE-ELECTION:
<TABLE>
<CAPTION>
PRESENT OFFICE WITH THE ACQUIRED TRUST;
PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME (AGE) AND DIRECTORSHIPS
- ---------- ---------------------------------------
<S> <C>
Horace B. Deets (61)*................ Vice Chairperson and Trustee; Executive
Director, AARP (1989-Present).
Mr. Deets serves on the boards of an
additional 4 trusts whose funds are
advised by Scudder Kemper.
Carole Lewis Anderson (55)........... Trustee; Principal, Suburban Capital
Markets, Inc. (1995-Present).
Ms. Anderson serves on the boards of an
additional 4 trusts whose funds are
advised by Scudder Kemper.
Adelaide Attard (69)................. Trustee; Member, NYC Department of
Aging Advisory Council (1995-Present).
Ms. Attard serves on the boards of an
additional 4 trusts whose funds are
advised by Scudder Kemper.
Robert N. Butler, M.D. (73).......... Trustee; CEO and President,
International Longevity Center and
Professor of Geriatrics and Adult
Development; Chairman, Henry L.
Schwartz Department of Geriatrics and
Adult Development, Mount Sinai Medical
Center (1982-present). Dr. Butler
serves on the boards of an additional 4
trusts whose funds are advised by
Scudder Kemper.
Lt. Gen. Eugene P. Forrester (74).... Trustee; Lt. General (Retired), U.S.
Army; International Trade Counselor
(1983-present); Consultant. Lt. Gen.
Forrester serves on the boards of an
additional 4 trusts whose funds are
advised by Scudder Kemper.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
PRESENT OFFICE WITH THE ACQUIRED TRUST;
PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME (AGE) AND DIRECTORSHIPS
- ---------- ---------------------------------------
<S> <C>
George L. Maddox, Jr. (74)........... Trustee; Professor Emeritus and
Director, Long Term Care Resources
Program, Duke University Medical
Center; Professor Emeritus of
Sociology, Departments of Sociology and
Psychiatry, Duke University.
Mr. Maddox serves on the boards of an
additional 4 trusts whose funds are
advised by Scudder Kemper.
Robert J. Myers (87)................. Trustee; Actuarial Consultant
(1983-present). Mr. Myers serves on the
boards of an additional 4 trusts whose
funds are advised by Scudder Kemper.
James H. Schulz (63)................. Trustee; Professor of Economics and
Kirstein Professor of Aging Policy,
Policy Center on Aging, Florence Heller
School, Brandeis University.
Mr. Schulz serves on the boards of an
additional 4 trusts whose funds are
advised by Scudder Kemper.
Gordon Shillinglaw (74).............. Trustee; Professor Emeritus of
Accounting, Columbia University
Graduate School of Business.
Mr. Shillinglaw serves on the boards of
an additional 4 trusts whose funds are
advised by Scudder Kemper.
</TABLE>
- ------------------------
* 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.
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.
10
<PAGE>
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 or AARP 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 Investment Company Institute's 1999 Report of
the Advisory Group on Best Practices for Fund Directors (the "Advisory Group
Report"). For example, the Independent Trustees select independent legal counsel
to work with them in reviewing fees, advisory and other contracts and overseeing
fund matters. The Trustees are also assisted in this regard by the funds'
independent public accountants and other independent experts retained from time
to time for this purpose. The Independent Trustees regularly meet privately with
their counsel and other advisors. In addition, the Independent Trustees from
time to time have appointed task forces and subcommittees from their members to
focus on particular matters.
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,
11
<PAGE>
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 of only Independent Trustees (all of whom serve on the
committee), 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.
COMMITTEE ON INDEPENDENT TRUSTEES
The Board of Trustees of the Acquired Trust has a Committee on Independent
Trustees, comprised of all of the Independent Trustees, charged with the duty of
making all nominations of Independent Trustees, establishing Trustees'
compensation policies and reviewing matters relating to the Independent
Trustees.
ATTENDANCE
The full Board of Trustees of the Acquired Trust met six times, the Audit
Committee met two times and the Committee on Independent Trustees met five times
during calendar year 1999. Each then current Trustee attended 100% of the total
meetings of the Board and each above named committee on which he or she served
as a regular member that were held during that period, except Horace B. Deets,
Robert J. Myers, James H. Schulz and Robert N. Butler, who attended 90%, 85%,
92% and 85%, respectively, of those meetings. In addition to these Board and
committee meetings, the Trustees of the 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.
12
<PAGE>
OFFICERS
The following persons are officers of the Acquired Trust:
<TABLE>
<CAPTION>
PRESENT OFFICE WITH THE ACQUIRED TRUST;
PRINCIPAL OCCUPATION OR YEAR FIRST BECAME
NAME (AGE) EMPLOYMENT(1) AN OFFICER(2)
- ---------- --------------------------------------- -----------------
<S> <C> <C>
Linda C. Coughlin (48)....... Trustee and President; Managing
Director of Scudder Kemper 2000
William F. Glavin, Jr. (41).. Vice President; Managing Director of
Scudder Kemper 1997
Ann M. McCreary (43)......... Vice President; Managing Director of
Scudder Kemper 1998
James E. Masur (39).......... Vice President; Senior Vice President
of Scudder Kemper 1999
John Millette (37)........... Vice President and Assistant Secretary;
Vice President of Scudder Kemper 1999
James W. Pasman (48)......... Vice President; Senior Vice President
of Scudder Kemper 1996
Kathryn L. Quirk (47)........ Vice President and Secretary; Managing
Director of Scudder Kemper 1997
John R. Hebble (41).......... Treasurer; Senior Vice President of
Scudder Kemper 1997
</TABLE>
- ------------------------
(1) Unless otherwise stated, all of the officers have been associated with their
respective companies for more than five years, although not necessarily in
the same capacity.
(2) The President, Treasurer and Secretary each holds office until his or her
successor has been duly elected and qualified, and all other officers hold
offices in accordance with the By-laws of the Acquired Trust.
COMPENSATION OF TRUSTEES AND OFFICERS
The Acquired Trust pays each Independent Trustee an annual Trustee's fee
plus specified amounts for Board and committee meetings attended and reimburses
expenses related to the business of any series of the Acquired Trust. As of
April 1, 1999, each Independent Trustee receives an aggregate annual Trustee's
fee of $12,000 for service on the boards of trustees of the funds offered
through the AARP Investment Program (the "AARP Funds"). (Prior to April 1, 1999,
the annual Trustee's fee was $10,000.) Each Independent Trustee also
13
<PAGE>
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 affiliates. The
newly-constituted Board may determine to change its compensation structure.
The current compensation package for the Independent Trustees of the
Acquired Trust has not included any provisions for pensions or other retirement
benefits. A one-time benefit, however, will be provided to those Independent
Trustees who are not standing for re-election in an amount equal to twice a
Trustee's calendar year 1999 compensation from the AARP Funds. In as much 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 certain 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.
14
<PAGE>
COMPENSATION TABLE
<TABLE>
<CAPTION>
AGGREGATE TOTAL COMPENSATION
COMPENSATION FROM FUND COMPLEX
TRUSTEES (NUMBER OF SERIES) PAID TO TRUSTEE
- -------- ------------------ --------------------
<S> <C> <C>
Carole Lewis Anderson......... $20,280 (7 series) $40,935 (16 funds)
Adelaide Attard............... $19,013 (7 series) $38,375 (16 funds)
Robert N. Butler.............. $17,271 (7 series) $34,855 (16 funds)
Edgar R. Fiedler.............. $16,013 (7 series) $73,230 (29 funds)*
Eugene P. Forrester........... $20,280 (7 series) $40,935 (16 funds)
George L. Maddox, Jr.......... $20,280 (7 series) $40,935 (16 funds)
Robert J. Myers............... $18,838 (7 series) $38,200 (16 funds)
James H. Schulz............... $18,381 (7 series) $37,095 (16 funds)
Gordon Shillinglaw............ $24,083 (7 series) $44,280 (16 funds)
Jean Gleason Stromberg........ $20,276 (7 series) $40,935 (16 funds)
</TABLE>
- ------------------------
* Mr. Fiedler's total compensation includes $9,900 accrued, but not received,
through a deferred compensation program for serving on the Board of Directors
of Scudder Fund, Inc.
THE BOARD OF TRUSTEES OF AARP GROWTH TRUST RECOMMENDS THAT THE
SHAREHOLDERS OF AARP GLOBAL GROWTH 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
15
<PAGE>
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."
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 AARP Funds and AARP members. The Program would
comprise the shares of the AARP Class of each of forty-three no-load funds
compared with the current sixteen, and would retain its separate identity, with
separate statements and generally lower minimum investments for participating
shareholders; six core funds(1) 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.
- ------------------------
(1) The six core funds would be Scudder GNMA Fund (currently known as AARP
GNMA and U.S. Treasury Fund), Scudder Capital Growth Fund (currently known
as AARP Capital Growth Fund), Scudder Small Company Stock Fund (currently
known as AARP Small Company Stock Fund), Scudder Managed Municipal Bonds,
Scudder Global Fund and Scudder Growth and Income Fund.
16
<PAGE>
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 the AARP Funds and for the open-end,
directly-distributed, no-load Scudder Funds 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 a fund of
an administrative fee, Scudder Kemper would agree to provide or pay for
substantially all services that the 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, for the term of the administrative agreement, 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:
- LOWER EXPENSES. If the Reorganization is approved, Acquired Fund
shareholders will benefit from lower total Fund operating expenses. Please
refer to "Comparison of Expenses" below.
- GREATER PREDICTABILITY OF EXPENSES. On or prior to the 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 will pay 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.
- SIMILAR INVESTMENT OBJECTIVES AND POLICIES. The combined fund will
continue to seek long-term growth of capital through investment in global
securities. The Funds are currently managed by the same portfolio
management teams and have similar investments.
- TAX-FREE REORGANIZATION. It is a condition of the Reorganization that each
Fund receive an opinion of tax counsel that the transaction would be a
TAX-FREE transaction.
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:
- the Reorganization is in the best interests of the Acquired Fund and its
shareholders; and
18
<PAGE>
- 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 long-term growth of capital. The investment
objective of the Acquired Fund is to provide long-term capital growth while
actively seeking to reduce downside risk as compared with other global growth
funds. There can be no assurance that either Fund will achieve its investment
objective.
Both Funds have the same portfolio management teams and are managed in a
substantially similar manner, except that the Acquired Fund seeks to reduce
downside risk by diversifying widely among regions, market sectors and
individual companies. The Acquiring Fund normally invests at least 65% of its
total assets in U.S. and foreign equities (equities issued by U.S. and foreign
based companies). Most of the Acquiring Fund's equities are common stocks.
Although the Acquiring Fund can invest in companies of any size and from any
country, it generally focuses on established companies in countries with
developed economies. Similarly, the Acquired Fund normally invests at least 65%
of its total assets in stocks issued by established companies of any size in
developed countries around the world, including the U.S. Each Fund invests
primarily in companies that offer, among other things, the potential for
sustainable above-average earnings growth. Unlike the Acquiring Fund, the
Acquired Fund is prohibited from investing in emerging market securities.
The Acquiring Fund may invest up to 5% of its total assets in debt
securities that are rated Baa or below by Moody's Investor Services, Inc. or BBB
or below by Standard & Poor's Ratings Services ("high yield" or "junk" bonds).
To the extent the Acquired Fund invests in debt securities, such securities will
be investment-grade debt securities with credit ratings determined by one or
more nationally recognized rating services or, if unrated, believed by the
Investment Manager to be of comparable quality.
The Acquired Fund may make only limited use (in terms of transaction type
and amount) of derivatives, futures and options. The Acquiring Fund, while
limited to 5% of assets committed to such transactions entered into for
19
<PAGE>
non-hedging purposes, may make more use (in terms of transaction type and
amount) of such transactions.
Lastly, 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 of the Reorganization,
the Acquiring Fund will modify its investment policies to also actively seek to
reduce downside risk as compared with other global growth funds by diversifying
widely among regions, market sectors and individual companies. 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 are identical to the Acquired
Fund's investment restrictions, as such restrictions are set forth under
"Investment Restrictions" in each Fund's statement of additional information,
except that the Acquiring Fund may not, as a non-fundamental policy, lend
portfolio securities in an amount greater than 5% of its total assets.
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 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 June 30, 1999 and for the two months ended August 31, 1999 (i.e., prior to
the creation of AARP Shares), was 70.2% and 28.8% (annualized), respectively.
The portfolio turnover rate for the Acquired Fund for the fiscal year ended
September 30, 1999 was 54.8%.
PERFORMANCE
The following table shows how each Fund's returns over different periods
average out. For context, the table also includes a broad-based market index
(which, unlike the Funds, does not have any fees or expenses). The performances
of both Funds and the index vary over time. All figures assume reinvestment of
dividends and distributions.
20
<PAGE>
AVERAGE ANNUAL TOTAL RETURN
FOR THE PERIODS ENDING DECEMBER 31, 1999
<TABLE>
<CAPTION>
ACQUIRING FUND(+) ACQUIRED FUND BENCHMARK INDEX**
----------------- ------------- -----------------
<S> <C> <C> <C>
Past year................ 23.47% 22.13% 24.93%
Past 5 years............. 17.42% N/A 19.74%
Past 10 years............ 12.38% N/A 11.42%
Since Inception*......... N/A 14.96% 19.43%
</TABLE>
- ------------------------
(+) AARP Shares were not offered during the periods covered. Performance shown
is for shares of the Acquiring Fund existing during the periods covered.
* The inception date for the Acquired Fund is February 1, 1996.
** Each Fund's benchmark index is the Morgan Stanley Capital International
(MSCI) World Index, an unmanaged capitalization-weighted measure of global
stock markets including the U.S., Canada, Europe, Australia, and the Far
East. Index returns are calculated monthly.
Total return for the Acquired Fund would have been lower during 1996 and
1997 if the Investment Manager had not maintained expenses during those years.
For management's discussion of the Acquiring Fund's performance for the
annual period ended August 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/Directors.
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 1.00% of
the first $500 million of average daily net assets, 0.95% of the next $500
million, 0.90% of the next $500 million, and 0.85% on average daily net assets
in excess of $1.5 billion. The fee is graduated so that increases in the
Acquiring Fund's net assets may result in a lower annual fee rate and decreases
21
<PAGE>
in its net assets may result in a higher annual fee rate. As of August 31, 1999,
the Acquiring Fund had total net assets of $1,552,517,078. For the fiscal year
ended June 30, 1999 and for the two months ended August 31, 1999, the Acquiring
Fund paid the Investment Manager a fee of 0.94% and 0.94% (annualized),
respectively, of average daily net assets.
The Investment Manager receives a fee pursuant to an 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 0.83% 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 $144,931,413. For the fiscal year ended September 30, 1999, the
Acquired Fund paid the Investment Manager a fee of 0.83% of average daily net
assets. There is currently an arrangement between Scudder Kemper and AARP
Financial Services Corporation ("AFSC") pursuant to which Scudder Kemper
currently pays AFSC a monthly fee based on the net assets of AARP Funds.
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 0.375% 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 this arrangement (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 Corporation's directors. Scudder Fund
22
<PAGE>
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, Brown Brothers Harriman & Co. 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. Dechert Price & Rhoads 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.
The proposed Administration Agreement will have an initial term of three
years, subject to earlier termination by the Acquiring Corporation's directors.
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 directors
(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 AARP 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 SUBSTANTIALLY LOWER
THAN
23
<PAGE>
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 September 30, 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
S Class of shares of the Acquiring Fund. (Please see "Description of the
Securities to be Issued" below.)
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
PRO FORMA
ACQUIRING FUND ACQUIRED FUND (COMBINED)
-------------- ------------- ----------
<S> <C> <C> <C>
Maximum sales charge (load)
imposed on purchases (as a
percentage of offering
price)......................... None None None
Maximum deferred sales charge
(load) (as a percentage of
purchase price or redemption
proceeds)...................... None None None
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
</TABLE>
ANNUAL FUND OPERATING EXPENSES (UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA*
ACQUIRING FUND ACQUIRED FUND (COMBINED)
-------------- ------------- ----------
<S> <C> <C> <C>
Management fees.................. 0.94% 0.83% 0.94%
Distribution and/or service
(12b-1) fees................... None None None
Other expenses................... 0.42% 0.82% 0.38%
Total annual Fund operating
expenses....................... 1.36% 1.65% 1.32%
</TABLE>
- ------------------------
(+) There is a $5 wire service fee for receiving redemption proceeds via wire.
* Pro Forma expenses reflect the implementation of the Administrative Fee for
the Acquiring Fund to be effective upon the Reorganization.
24
<PAGE>
In evaluating the Reorganization, 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 total annual expense ratio of 1.31% for the
Acquiring Fund and 1.53% 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, you reinvested all dividends and distributions, and 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:
<TABLE>
<CAPTION>
PRO
FORMA*
YEAR ACQUIRING FUND ACQUIRED FUND (COMBINED)
- ---- -------------- ------------- ----------
<S> <C> <C> <C>
1ST.................. $ 138 $ 168 $ 134
3RD.................. $ 431 $ 520 $ 418
5TH.................. $ 745 $ 897 $ 723
10TH................. $1,635 $1,955 $1,590
</TABLE>
- ------------------------
* Pro Forma expenses reflect the implementation of the Administrative Fee for
the Acquiring Fund to be effective upon the Reorganization.
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 January 1, 2000, 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
25
<PAGE>
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 for the range of funds available under the exchange privilege and the
minimum balance requirements.
Acquired Fund shareholders may currently exchange Acquired Fund shares only
into AARP Funds, while holders of AARP Shares will be able to exchange AARP
Shares into shares of any fund within the Scudder Family of Funds on a no-load
basis. The minimum balance for non-retirement accounts investing in the AARP
Shares will be $1,000, which is lower than the 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 minimum balance requirement for
IRAs.
DIVIDENDS AND OTHER DISTRIBUTIONS
Each of the Funds intends to distribute dividends from its net investment
income and net realized capital gains after utilization of capital loss
carryforwards, if any, in December. 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
26
<PAGE>
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 (i.e., securities selection by the Investment Manager),
market risk, foreign currency risk and, to the extent that a Fund invests in
debt securities, interest rate risk and credit risk. When foreign stock prices
fall, the value of an investment in a Fund will fall as well. Foreign stocks in
particular tend to be more volatile than their U.S. counterparts for various
reasons including political and economic uncertainties and difficulty in
obtaining accurate information. Similarly, emerging markets tend to be more
volatile than developed markets. The risks associated with emerging markets
apply only to the Acquiring Fund which, unlike the Acquired Fund, may invest in
emerging markets. The Acquiring Fund's investments in high yield securities, or
"junk bonds," entail relatively greater risk of loss of income and principal
than investments in higher rated securities, and may fluctuate more in value.
For a further discussion of the investment techniques and risk factors
applicable to the Acquired Fund and the Acquiring Fund, see "Investment
Objectives, Policies and Restrictions of the Funds" herein, 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
27
<PAGE>
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 Corporation 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 and purchase requests received by the transfer agent after the
Closing will be treated as requests received for the redemption or purchase of
AARP Shares received by the shareholder in connection with the Reorganization.
The obligations of each of the Acquiring Corporation and the Acquired Trust
on behalf of the Acquiring Fund and the Acquired 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 Directors/Trustees of either the Acquiring Corporation or the Acquired
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 $92,472 for the Acquiring Fund and $142,764 for the Acquired Fund
(approximately $0.0017 and $0.0184 per share, respectively, based on December
31, 1999 net assets for each Fund). As investors in a Fund, Fund shareholders
indirectly bear a portion of these expenses.
28
<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
29
<PAGE>
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. The Independent Trustees have 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 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.
30
<PAGE>
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
substantially 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 similar investment goals in a larger fund.
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 or directors 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 Corporation, a corporation
organized under the laws of the state of Maryland on May 15, 1986. The Acquiring
Corporation's authorized capital consists of 800 million shares of capital
stock, par value $0.01 per share, 100 million shares of which are allocated to
the Acquiring Fund. The Directors of the Acquiring Corporation are authorized to
divide the Acquiring Corporation's shares into separate series. The Acquiring
Fund is one of five series of the Acquiring Corporation that the Board has
created to date. The Directors of the Acquiring Corporation are also authorized
to further divide the shares of the series of the Acquiring Corporation into
classes. The Directors of the Acquiring Corporation have authorized the division
of the Acquiring Fund into two classes, S Class and AARP Class. 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 S Class
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 and certain other matters.
31
<PAGE>
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 held on matters on which they are entitled to vote. The Acquiring
Corporation is organized in Maryland, while the Acquired Trust is organized in
Massachusetts. Under Massachusetts law, shareholders of a trust such as the
Acquired Trust may, under certain circumstances, be held personally liable as
partners for the obligations of the trust. The Acquired Trust's Declaration of
Trust contains a disclaimer of liability and provides for indemnification out of
the Trust property of any shareholder held personally liable for the claims and
liabilities to which a shareholder may become subject by reason of being or
having been a shareholder. Thus, the risk of shareholder liability is limited to
circumstances in which the Acquired Trust itself would be unable to meet its
obligations. The Acquiring Corporation does not provide such a disclaimer of
liability or indemnification to its shareholders, because Maryland law generally
does not impose such liability on shareholders.
FEDERAL INCOME TAX CONSEQUENCES
The Reorganization is conditioned upon the receipt by the Acquired Trust, on
behalf of the Acquired Fund, and the Acquiring Corporation, 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
32
<PAGE>
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 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 as of September 30, 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>
PRO FORMA PRO FORMA
ACQUIRING FUND ACQUIRED FUND ADJUSTMENTS COMBINED(1)
-------------- -------------- ----------- --------------
<S> <C> <C> <C> <C>
NET ASSETS
S Class..................... $1,516,081,901 ($92,472)(3) $1,515,989,429
AARP Shares................. $144,931,413 ($142,764)(4) $ 144,788,649
--------------
Total Net Assets............ $1,660,778,078(2)
==============
SHARES OUTSTANDING
S Class..................... 49,316,111 49,316,111
AARP Shares................. 7,162,400 (2,452,294) 4,710,106
NET ASSET VALUE PER SHARE
S Class..................... $ 30.74 $ 30.74
AARP Shares................. $ 20.24 $ 30.74
</TABLE>
- ------------------------------
(1) Assumes the Reorganization had been consummated on September 30, 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 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.
33
<PAGE>
(2) Pro forma combined net assets do not reflect expense reductions that would
result from the implementation of the Administrative Fee for the Acquiring
Fund.
(3) Represents one-time proxy, legal, accounting and other costs of the
Reorganization to be borne by the Acquiring Fund.
(4) Represents one-time proxy, legal, accounting and other costs of the
Reorganization to be borne by the Acquired Fund.
THE BOARD OF TRUSTEES OF AARP GROWTH TRUST RECOMMENDS THAT THE SHAREHOLDERS OF
AARP GLOBAL GROWTH 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 GROWTH TRUST RECOMMENDS THAT THE SHAREHOLDERS OF
AARP GLOBAL GROWTH FUND VOTE IN FAVOR OF THIS PROPOSAL 3.
ADDITIONAL INFORMATION
INFORMATION ABOUT THE FUNDS
Additional information about the Acquiring Corporation and the Acquired
Trust, 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 Acquiring Corporation and Acquired Trust are subject to the
informational requirements of the Securities Exchange Act of 1934, as amended,
and the 1940 Act, and in accordance therewith, file reports, proxy material and
other information about each of the Funds with the SEC. Such reports, proxy
material and other information filed by the Acquiring Corporation, and those
filed by the Acquired Trust, can be inspected and copied at the Public Reference
Room maintained by the SEC 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
34
<PAGE>
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 Corporation
and the Acquired Trust, materials that are incorporated by reference into the
prospectuses and statements of additional information, and other information
about the Acquiring Corporation, the Acquired Trust and the Funds.
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 -- Investment Manager; 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.
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.
35
<PAGE>
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.
Holders of record of the shares of the Acquired Fund at the close of
business on April 17, 2000 will be entitled to one vote per share on all
business of the Meeting. As of March 20, 2000, there were 8,301,797 shares of
the Acquired Fund outstanding.
As of January 31, 2000, the officers and Directors of the Acquiring
Corporation 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
more than 5% of each Fund's shares, as well as the beneficial owners of more
than 5% of the shares of each other series of the Acquired Trust. To the best of
the applicable Trust's/Corporation's knowledge, as of January 31, 2000, no
person owned beneficially more than 5% of either Fund's outstanding shares or
the shares of any other series of the Acquired Trust, except as stated in
Appendix 2.
Shareholder Communications Corporation ("SCC") has been engaged to assist in
the solicitation of proxies, at an estimated cost of $11,446. As the
36
<PAGE>
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(s), 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(s) originally sent with the proxy statement or attend in person.
Should shareholders require additional information regarding the proxy or
replacement proxy card(s), 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.
37
<PAGE>
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 Acquired Trust, c/o Scudder Kemper Investments, Inc., Two
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 Acquired 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,
[SIGNATURE]
Kathryn L. Quirk
Secretary
38
<PAGE>
INDEX OF EXHIBITS AND APPENDICES
<TABLE>
<S> <C>
EXHIBIT A: Agreement and Plan of Reorganization
EXHIBIT B: Management's Discussion of Acquiring Fund's Performance
APPENDIX 1: Trustee and Nominee Shareholdings
APPENDIX 2: Beneficial Owners of Fund Shares
</TABLE>
<PAGE>
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 Global/International Fund, Inc.
(the "Acquiring Corporation"), a Maryland Corporation with a principal place of
business at 345 Park Avenue, New York, NY 10154, on behalf of Scudder Global
Fund (the "Acquiring Fund"), a separate series of the Acquiring Corporation, and
AARP Growth Trust (the "Acquired Trust"), a Massachusetts business trust with
its principal place of business at Two International Place, Boston,
Massachusetss 02110-4103, on behalf of AARP Global Growth Fund (the "Acquired
Fund" and, together with the Acquiring Fund, each a "Fund" and collectively the
"Funds"), a separate series of the Acquired Trust.
This Agreement is intended to be and is adopted as a plan of reorganization
and liquidation within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"). The reorganization (the "Reorganization")
will consist of the transfer of all or substantially all of the assets of the
Acquired Fund to the Acquiring Fund in exchange solely for voting shares of
capital stock of the AARP 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
A-1
<PAGE>
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, 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
A-2
<PAGE>
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 Investment Company Act of 1940, as
amended (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 (the
"Valuation Time") after the declaration and payment of any dividends and/or
other distributions on that date, using the valuation procedures set forth in
the Acquiring Corporation's Charter, 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
A-3
<PAGE>
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
September 11, 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. Brown Brothers Harriman & Co. ("Brown Brothers"), 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
Brown Brothers, 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
A-4
<PAGE>
Acquired Fund that such Acquiring Fund Shares have been credited to the Acquired
Fund's account on the books of the Acquiring Fund. At the Closing, each party
shall deliver to the other such bills of sale, checks, assignments, share
certificates, if any, receipts or other documents as such other party or its
counsel may reasonably request to effect the transactions contemplated by this
Agreement.
3.5. In the event that immediately prior to the Valuation Time (a) the NYSE
or another primary trading market for portfolio securities of 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 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
A-5
<PAGE>
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;
(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;
A-6
<PAGE>
(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
A-7
<PAGE>
the 1940 Act, except those restrictions as to which the Acquiring Fund has
received notice and necessary documentation at or prior to the Closing;
(l) The execution, delivery and performance of this Agreement will have
been duly authorized prior to the Closing Date by all necessary action on
the part of the Board members of the Acquired Trust, and, subject to the
approval of 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.
A-8
<PAGE>
4.2. The Acquiring Corporation, on behalf of the Acquiring Fund, represents
and warrants to the Acquired Fund as follows:
(a) The Acquiring Corporation is a corporation duly organized and
validly existing under the laws of the State of Maryland with power under
the Acquiring Corporation's Charter, 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 Corporation 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 Corporation is not, and the execution, delivery and
performance of this Agreement by the Acquiring Corporation will not result,
in violation of Maryland law or of the Acquiring Corporation's Charter, as
amended, or By-Laws, or of any material agreement, indenture, 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 August 31, 1999 have been
audited by PricewaterhouseCoopers LLP, independent accountants, and are in
accordance with GAAP consistently applied, and such
A-9
<PAGE>
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 August 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. The Acquiring Fund does not have outstanding any
options, warrants 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;
A-10
<PAGE>
(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;
(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 Corporation and this
Agreement will constitute a valid and binding obligation of the Acquiring
Corporation, 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
A-11
<PAGE>
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.
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.
A-12
<PAGE>
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
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 the Acquired Fund pursuant to this Agreement
and (ii) assume the liabilities from the Acquired Fund.
5.11. As soon as reasonably practicable after the Closing, 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.
A-13
<PAGE>
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 Acquiring Trust, on behalf of
the Acquiring 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 the 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.
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 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
Ober, Kaler, Grimes & Shriver, in a form reasonably satisfactory to the Acquired
Fund, and dated as of the Closing Date, to the effect that:
(a) The Acquiring Corporation has been duly formed and is an existing
corporation; (b) the Acquiring Corporation has the power to carry on its
business as presently conducted in accordance with the description thereof
in the Acquiring Corporation's registration statement under the 1940 Act;
(c) the Agreement has been duly authorized, executed and delivered by the
Acquiring Corporation, on behalf of the Acquiring Fund, and constitutes a
valid and legally binding obligation of the Acquiring Corporation, on behalf
of the Acquiring Fund, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
laws of general applicability relating to or affecting creditors' rights and
to general equity principles; (d) the execution and delivery of the
Agreement did not, and the exchange of the Acquired
A-14
<PAGE>
Fund's assets for Acquiring Fund Shares pursuant to the Agreement will not,
violate the Acquiring Corporation's Charter, 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 State of Maryland for the exchange of the Acquired Fund's assets for
Acquiring Fund Shares, pursuant to the Agreement have been obtained or made.
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 entered into an administrative services
agreement with Scudder Kemper Investments, Inc. ("Scudder Kemper") 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 the 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.
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
A-15
<PAGE>
Acquired Corporation 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 Trust has the power to carry on its business as
presently conducted in accordance with the description thereof in the
Acquired Trust's registration statement under the 1940 Act; (c) the
Agreement has been duly authorized, executed and delivered by the 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.
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 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:
A-16
<PAGE>
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.
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 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
A-17
<PAGE>
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 Acquired Fund Shareholders 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 Acquired Fund Shareholders will be the same as the basis of the
shares of the Acquired Fund exchanged therefor; and (viii) the holding period of
Acquiring Fund Shares received by Acquired Fund Shareholders will include the
holding period during which the shares of the Acquired Fund exchanged therefor
were held, provided that at the time of the exchange the shares of the Acquired
Fund were held as capital assets in the hands of Acquired Fund Shareholders. The
delivery of such opinion is conditioned upon receipt by Willkie Farr & Gallagher
of representations it shall request of each of the Acquiring Corporation and the
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,
A-18
<PAGE>
claim, damage, liability or expense (or actions with respect thereto) arises out
of or is based on any breach by the Acquired Fund of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
10. FEES AND EXPENSES
10.1. Each of the Acquiring 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 $92,472 for the Acquiring Fund and $142,764 for the Acquired Fund
(approximately $0.0017 and $0.0184 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. 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
October 31, 2000, unless such date is extended by mutual agreement of the
parties, or (iii) by either party if the other party shall have materially
breached its obligations under this Agreement or made a material and intentional
misrepresentation herein or in connection herewith. In the event of any such
termination, this Agreement shall become void and there shall be no liability
hereunder on the part of any party or their respective Board members or
officers, except
A-19
<PAGE>
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 5.3 of this Agreement, no such amendment may have the
effect of changing the provisions for determining the number of the Acquiring
Fund Shares to be issued to the Acquired Fund Shareholders under this Agreement
to the detriment of such shareholders without their further approval.
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, 345 Park Avenue,
New York, NY 10154, 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
A-20
<PAGE>
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 Acquired Trust mean and refer to
the Board members of the Acquired 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 Acquired Trust conducts its business. It is expressly agreed that the
obligations of the Acquired Trust hereunder shall not be binding upon any of the
Board members, shareholders, nominees, officers, agents, or employees of the
Acquired Trust or the Acquired Fund personally, but bind only the property of
the Acquired Fund, as provided in the Acquired Trust's Declaration of Trust.
Moreover, no series of the Acquired Trust other than the Acquired Fund shall be
responsible for the obligations of the Acquired Trust hereunder, and all persons
shall look only to the assets of the Acquired Fund to satisfy the obligations of
the Acquired Trust hereunder. The execution and the delivery of this Agreement
have been authorized by the Acquired Trust's Board members, on behalf of the
Acquired Fund, and this Agreement has been signed by authorized officers of the
Acquired 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 property of the Acquired Fund, as
provided in the Acquired Trust's Declaration of Trust.
Notwithstanding anything to the contrary contained in this Agreement, the
obligations, agreements, representations and warranties with respect to the
Acquired Fund shall constitute the obligations, agreements, representations and
warranties of the Acquired Fund only, and in no event shall any other series of
the Acquired Trust or the assets of any such series be held liable with respect
to the breach or other default by the Acquired Fund of its obligations,
agreements, representations and warranties as set forth herein.
15.5. This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the Commonwealth of Massachusetts, without regard
to its principles of conflicts of laws.
A-21
<PAGE>
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.
<TABLE>
<S> <C> <C> <C>
AARP GROWTH TRUST
Attest: on behalf of AARP Global Growth Fund
- ----------------------------
Secretary
By: -----------------------------------
Its: -----------------------------------
GLOBAL/INTERNATIONAL FUND, INC.
Attest: on behalf of Scudder Global Fund
- ----------------------------
Secretary
By: -----------------------------------
Its: -----------------------------------
</TABLE>
A-22
<PAGE>
<TABLE>
<S> <C> <C> <C>
AGREED TO AND ACKNOWLEDGED
ONLY WITH RESPECT TO
PARAGRAPH 10.2 HERETO
SCUDDER KEMPER INVESTMENTS, INC.
By:
- ---------------------------------
Its:
- ---------------------------------
</TABLE>
A-23
<PAGE>
EXHIBIT B
MANAGEMENT'S DISCUSSION OF
ACQUIRING FUND'S PERFORMANCE
- -------------------------------------------------------------------------------
Performance Update
August 31, 1999
Growth of a $10,000 Investment
THE ORIGINAL DOCUMENT CONTAINS A LINE CHART HERE
LINE CHART DATA:
<TABLE>
<CAPTION>
Scudder Global Fund MSCI World Index*
<S> <C> <C>
'89 10000 10000
'90 10151 9019
'91 10848 9789
'92 11746 10036
'93 14288 12183
'94 15982 13208
'95 17182 14294
'96 19118 16092
'97 23579 19681
'98 23733 20417
'99 29543 27167
</TABLE>
Yearly periods ended August 31
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Fund Index Comparison
- --------------------------------------------------------------------------------
Total Return
Growth of Average
Period ended 8/31/1999 $10,000 Cumulative Annual
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Scudder Global Fund
- --------------------------------------------------------------------------------
1 year $ 12,448 24.48% 24.48%
5 year $ 18,485 84.85% 13.07%
10 year $ 29,543 195.43% 11.44%
- --------------------------------------------------------------------------------
MSCI World Index*
- --------------------------------------------------------------------------------
1 year $ 13,306 33.06% 33.06%
5 year $ 20,569 105.69% 15.51%
10 year $ 27,167 171.67% 10.50%
</TABLE>
* The Morgan Stanley Capital International (MSCI) World Index is an unmanaged
capitalization- weighted measure of global stock markets including the U.S.,
Canada, Europe, Australia, and the Far East. Index returns assume dividends
reinvested net of withholding tax and, unlike Fund returns, do not reflect
any fees or expenses.
Portfolio Management Discussion
- --------------------------------------------------------------------------------
August 31, 1999
In the following interview, lead portfolio manager William Holzer discusses
Scudder Global Fund's strategy and the market environment in the twelve-month
period ended August 31, 1999.
Q: What is your take on the recent performance of the global stock markets?
A: Although the overall trend in the global markets remains positive, volatility
has been steadily on the rise. When we last spoke two months ago, we said that
the cause of the markets' fluctuations was the lack of clarity with respect to
the direction of the global economy. That has remained the case throughout the
summer, as market participants have continued to weigh the impact of higher
interest rates and stronger corporate earnings growth. Investors' unease was
reflected by the fact that in July, credit spreads widened to levels higher than
they reached during the crisis phase last fall. August was also a volatile
month, as the markets absorbed the impact of a U.S. rate increase, then rallied
briefly on the belief that no further rate hikes would be forthcoming. By late
in the month, however, investors were once again focused on the potential for an
additional increase in the fall. We believe that such volatility is likely to
continue as long as there is a lack of a firm consensus with regard to the
interest rate outlook.
The fundamental framework behind our investment strategy has been our desire to
keep the portfolio positioned for unforeseen changes in the global economy. At
this time, we continue to see reasons for caution across all regions of the
world. European stocks, for example, continue to be plagued by the lack of
meaningful structural reform and the weak performance of the euro. Although a
pickup in growth should, at long last, put the wind at the back of European
businesses, the potential for higher rates on the continent should also remain a
cause for concern into next year. Meanwhile, Japanese equities have continued to
rebound through the summer, with signs of an economic recovery and the growing
influence of corporate restructuring attracting foreign investors and
<PAGE>
pushing up the value of the yen. Still, it remains to be seen how much of
Japan's nascent recovery has been driven by government stimulus programs, which
cannot be sustained at current levels without harmful increases to the country's
debt load. Consumers will have to increase their spending substantially in order
for Japan's economy to fully break out of its doldrums, but so far the evidence
of such activity is spotty. Finally, the U.S. stock market remains susceptible
to negative surprises (particularly on the interest rate front) due to the
excessive valuations of many large-cap stocks.
In light of the potential for further market turbulence in the months ahead, we
continue to focus on the themes that we believe will transcend the short-term
fluctuations of the markets. To that end, we have constructed a portfolio of
companies that are positioned to increase their earnings by capitalizing on
important secular trends. Over time, we believe that such an approach will allow
the fund to outperform the broader market no matter what direction the global
economy may take.
Q: How did the fund perform over the period?
A: For the twelve-month period ended August 31, 1999, the fund returned 24.48%,
trailing the 33.06% of its unmanaged benchmark, the MSCI World Index. The
reasons for the fund's underperformance are the same as those we cited when we
last spoke two months ago. The fourth quarter of 1998 saw a narrow group of
expensive, high-risk stocks spark a quarterly advance of 20% in the MSCI World
Index, a phenomenal gain. Since then, the weakness of the broader market in
relation to this small group of growth stocks continued to hurt the fund's
performance in relation to the index. Over the long term, however, we feel that
our approach will add value for shareholders, particularly if the bull market
begins to cool off. The results of the past three months have been encouraging,
as the fund's return of 5.15% outpaced the 4.13% return of the MSCI World Index.
<PAGE>
Q: Has your underlying philosophy changed in recent months?
A: No -- our "top-down" approach has allowed us to uncover several important
trends that we believe stand out above the noise. Most important, we are focused
on the role of technology in society. The Internet enables both businesses and
consumers to leap geographic boundaries and physical barriers, and creates new
markets for consumer-to-business and business-to-business commerce. Over time,
this has been, and will continue to be, a powerful driver of falling prices as
competition increases and corporations become more efficient. The legacy of
excess industrial capacity in Asia and Europe after the long period of
globalization in the 1990s has also contributed to weak prices. Technology is
both a source of secular growth and a driver of fundamental, and deflationary,
corporate change. Our investment themes seek to achieve balanced exposure to
these processes of change by focusing on the companies that can enable and adapt
to the Internet world, and those companies in traditional industries that can
adapt successfully to the shifting global business environment.
Q: What are some of the most important new investment themes in the portfolio?
A: The themes we have developed recently are consistent with our goal of
constructing a portfolio that should deliver outperformance in any environment.
Specifically, we have been adding what we call "virtual companies," those that
retain control over the highest level of intellectual content and value-added
activities, and outsource all other functions to companies with the strongest
competencies in those functions. The investment potential of virtual companies
lies in their ability to create brand names, new franchises, and monopoly power,
as well as their potential to achieve immediate "first mover" advantages. The
extreme case of the virtual company is the Internet firm with no hard assets,
where all production is contracted in order to increase flexibility. We believe
that
<PAGE>
over time, the virtual company will develop into the superior institution for
wealth creation in the global marketplace. Examples of fund holdings that fit
within this theme are Sabre Group Holdings, a U.S. travel services firm, and
EDS, a U.S. provider of technology systems. Although the investible universe
under this theme is still limited, we expect it, and our exposure to it, to
increase in the coming months.
We also continued to build on a theme called "The Ultimate Subcontractor," which
focuses on the companies whose low costs and superior efficiencies have made
them the leading beneficiaries of the trend toward outsourcing. Woodside
Petroleum, an Australian oil concern, and Rio Tinto, a U.K. mining company, are
examples of such companies.
Q: In the last report, you discussed themes called "The Empowered Consumer" and
"Secure Streams of Income." Are these two concepts still playing an important
role in the portfolio?
A: Yes. We have maintained substantial holdings in stocks that fit within both
categories. The Empowered Consumer involves companies that provide
consumer-enabling technologies related to the Internet. We believe that the
companies that are building electronic infrastructure and/or creating the
content for the new medium, such as AT&T, Sony, and America Online, are poised
for significant growth in the years ahead. Many of the stocks we hold within
this theme benefited from the strong rally in technology and media shares over
the past year, which prompted us to trim our positions in a few of the fund's
top performers. The Empowered Consumer, at 21% of equity as of August 31, is
still a core theme. Secure Streams of Income (15% of equity) includes companies
that should have the ability to produce stable returns even in a world where
prices are falling. We expect that utility companies such as National Grid in
the U.K. and Enron in the U.S. will both provide strong returns and cushion the
portfolio in the event of a downturn in the world markets.
<PAGE>
Q: What is your outlook for equities from here?
A: The longstanding tendency of market participants to gravitate to a small
group of growth names slowly reasserted itself as the summer progressed. We
believe, however, that this narrow rally will be difficult to sustain if
interest rates continue to rise.
The portfolio's strategic positioning is therefore unchanged, and turnover
remains low. Our strategy will continue to develop around several main themes:
The Empowered Consumer and Virtuality, which provides exposure to secular growth
from technology, the Ultimate Subcontractor, which provides exposure to the
winners of the process of rationalization in cyclical industries, and Secure
Streams of Income, which provides both defensive qualities in a deflationary
environment and exposure to winners in the rapidly deregulating utility sector.
Going forward, we intend to maintain a strategy that keeps the portfolio
balanced thematically and positioned for further changes in the global economy.
<PAGE>
APPENDIX 1
TRUSTEE AND NOMINEE SHAREHOLDINGS
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 outstanding shares 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 AARP
BALANCED AARP AARP GROWTH AND AARP AARP AARP
STOCK AND CAPITAL GROWTH GLOBAL GROWTH INCOME INTERNATIONAL SMALL COMPANY U.S. STOCK
BOND FUND FUND FUND FUND STOCK FUND STOCK FUND INDEX FUND
--------- -------------- ------------- ----------- ------------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Carole Lewis Anderson
(3)..................... 0 371 806 0 0 0 0
Adelaide Attard (1)....... 552(5) 607(8) 303 431(11) 0 0 632
Henry P. Becton, Jr.
(1)..................... 0 0 0 0 00 0 0
Robert N. Butler, M.D.
(3)..................... 0 0 0 0 0 0 401(20)
Linda C. Coughlin (1)..... 0 547 487 343 1,468 417 352
Horace B. Deets (1)....... 3,003(6) 0 0 1,567(12) 0 37(18) 82
Dawn-Marie Driscoll (1)... 0 28 0 0 0 113 0
Edgar R. Fiedler (1)...... 0 0 0 0 0 0 0
Lt. Gen. Eugene P.
Forrester (1)........... 981 2,560 506 3,328 711 546 625
Keith R. Fox (1).......... 0 0 0 0 0 0 0
George L. Maddox, Jr.
(1)..................... 0 0 0 2,869(13) 0 0 0
Robert J. Myers (2)....... 0 0 0 0 0 0 0
James H. Schulz (3)....... 0 62(9) 0 55(14) 296(16) 0 0
Gordon Shillinglaw (1).... 1,447 1,859 1,372 2,299 2,577 0 585
Joan Edelman Spero (2).... 0 0 0 0 0 0 0
Jean Gleason Stromberg
(2)..................... 0 0 0 1,044 0 0 0
Jean C. Tempel (1)........ 0 0 0 0 0 0 0
Steven Zaleznick (4)...... 0 0 0 0 0 0 0
All Trustees and Officers
as a Group.............. 6,535(7) 6,034(10) 3,474 11,938(15) 5,052(17) 1,113(19) 2,677(21)
</TABLE>
- ------------------------------
(1) Total aggregate holdings in each series of the Acquired Trust listed and all
other funds in the Scudder Family of Funds and AARP Funds were over
$100,000.
<PAGE>
(2) Total aggregate holdings in each series of the Acquired Trust listed and all
other funds in the Scudder Family of Funds and AARP Funds ranged between
$50,000 and $100,000.
(3) Total aggregate holdings in each series of the Acquired Trust listed and all
other funds in the Scudder Family of Funds and AARP Funds ranged between
$10,000 and $50,000.
(4) Total aggregate holdings in each series of the Acquired Trust listed and all
other funds in the Scudder Family of Funds and AARP Funds were $0.
(5) Ms. Attard's shares in AARP Balanced Stock and Bond Fund are held with sole
investment but no voting power. Shares held with sole investment but no
voting power are shares held in profit sharing and 401(k) plans for which
Scudder Kemper serves as trustee.
(6) Mr. Deets's shares in AARP Balanced Stock and Bond Fund include 67 shares
with sole investment and voting power, and 2,936 shares with shared
investment and voting power.
(7) As a group, as of January 31, 2000, the Trustees and officers of AARP
Balanced Stock and Bond Fund held 3,047 shares with sole voting and
investment power, 2,936 shares with shared investment and voting power, and
552 shares with sole investment but no voting power. Shares held with sole
investment but no voting power are shares held in profit sharing and 401(k)
plans for which Scudder Kemper serves as trustee.
(8) Ms. Attard's shares in AARP Capital Growth Fund include 36 shares with sole
investment and voting power and 571 with sole investment but no voting
power. Shares held with sole investment but no voting power are shares held
in profit sharing and 401(k) plans for which Scudder Kemper serves as
trustee.
(9) Mr. Schulz's shares in AARP Capital Growth Fund are held with sole
investment but no voting power. Shares held with sole investment but no
voting power are shares held in profit sharing and 401(k) plans for which
Scudder Kemper serves as trustee.
(10) As a group, as of January 31, 2000, the Trustees and officers of AARP
Capital Growth Fund held 5,402 shares with sole voting and investment power
and 632 shares with sole investment but no voting power. Shares held with
sole investment but no voting power are shares held in profit sharing and
401(k) plans for which Scudder Kemper serves as trustee.
(11) Ms. Attard's shares in AARP Growth and Income Fund include 153 shares with
sole investment and voting power and 278 with sole investment but no voting
power. Shares held with sole investment but no voting power are shares held
in profit sharing and 401(k) plans for which Scudder Kemper serves as
trustee.
(12) Mr. Deets's shares in AARP Growth and Income Fund include 1,180 shares with
shared investment and voting power, and 387 shares with sole investment but
no voting power. Shares held with sole investment but no voting power are
shares held in profit sharing and 401(k) plans for which Scudder Kemper
serves as trustee.
(13) Mr. Maddox's shares in AARP Growth and Income Fund include 743 shares with
sole investment and voting power, and 2,126 shares with shared investment
and voting power.
<PAGE>
(14) Mr. Schulz's shares in AARP Growth and Income Fund are held with sole
investment but no voting power. Shares held with sole investment but no
voting power are shares held in profit sharing and 401(k) plans for which
Scudder Kemper serves as trustee.
(15) As a group, as of January 31, 2000, the Trustees and officers of AARP
Growth and Income Fund held 7,911 shares with sole voting and investment
power, 3,307 shares with shared investment and voting power, and 720 shares
with sole investment but no voting power. Shares held with sole investment
but no voting power are shares held in profit sharing and 401(k) plans for
which Scudder Kemper serves as trustee.
(16) Mr. Schulz's shares in AARP International Stock Fund are held with sole
investment but no voting power. Shares held with sole investment but no
voting power are shares held in profit sharing and 401(k) plans for which
Scudder Kemper serves as trustee.
(17) As a group, as of January 31, 2000, the Trustees and officers of AARP
International Stock Fund held 4,756 shares with sole voting and investment
power and 296 shares with sole investment but no voting power. Shares held
with sole investment but no voting power are shares held in profit sharing
and 401(k) plans for which Scudder Kemper serves as trustee.
(18) Mr. Deets' shares in AARP Small Company Stock Fund are held with shared
investment and voting power.
(19) As a group, as of January 31, 2000, the Trustees and officers of AARP Small
Company Stock Fund held 1,076 shares with sole voting and investment power
and 37 shares with shared investment and voting power.
(20) Dr. Butler's shares in AARP U.S. Stock Index Fund are held with shared
investment and voting power.
(21) As a group, as of January 31, 2000, the Trustees and officers of AARP U.S.
Stock Index Fund held 2,276 shares with sole voting and investment power and
401 shares with shared investment but no voting power.
<PAGE>
APPENDIX 2
BENEFICIAL OWNERS OF FUND SHARES
As of January 31, 2000, 244,625 shares in the aggregate, or 11.48% of the
outstanding shares, of AARP INTERNATIONAL STOCK FUND were held in the name of
State Street Bank & Trust Company, Custodian of AARP Managed Investment
Portfolio Trust: Diversified Growth Portfolio, One Heritage Drive, Quincy, MA
02171, who may be deemed to be the beneficial owner of certain of these shares.
As of January 31, 2000, 359,439 shares in the aggregate, or 11.66% of the
outstanding shares, of AARP SMALL COMPANY STOCK FUND were held in the name of
State Street Bank & Trust Company, Custodian of AARP Managed Investment
Portfolio Trust: Diversified Growth Portfolio, One Heritage Drive, Quincy, MA
02171, who may be deemed to be the beneficial owner of certain of these shares.
As of January 31, 2000, 1,875,347 shares in the aggregate, or 6.38% of the
outstanding shares, of AARP U.S. STOCK INDEX FUND were held in the name of State
Street Bank & Trust Company, Custodian of AARP Managed Investment Portfolio
Trust: Diversified Growth Portfolio, One Heritage Drive, Quincy, MA 02171, who
may be deemed to be the beneficial owner of certain of these shares.
As of January 31, 2000, 5,556,037 shares in the aggregate, or 10.50% of the
outstanding shares, of SCUDDER GLOBAL FUND were held in the name of Charles
Schwab, 101 Montgomery Street, San Francisco, CA 94104, who may be deemed to be
the beneficial owner of certain of these shares.
<PAGE>
You are also being asked to ratify the selection of PricewaterhouseCoopers
LLP as the independent accountants of your Fund for the current fiscal year.
THE BOARD OF YOUR FUND RECOMMENDS THAT YOU VOTE IN FAVOR OF THIS PROPOSAL.
Q: WHEN WILL THESE CHANGES TAKE EFFECT?
A: The Board expects that the proposed changes will take effect during the third
calendar quarter of this year if the proposed combination is approved.
Q: WHOM SHOULD I CALL FOR MORE INFORMATION ABOUT THIS PROXY STATEMENT?
A: Please call Shareholder Communications Corporation, your Fund's information
agent, at 1-800-605-1203.
<PAGE>
For more information, please call Shareholder Communications
Corporation, your Fund's information agent at 1-800-605-1203.
AA Global Growth
<PAGE>
This proxy statement/prospectus is accompanied by the Acquiring Fund's
prospectus dated January 1, 2000, which was previously filed with the
Commission via EDGAR on December 28, 1999 (File No. 33-05724) and is
incorporated by reference herein.
<PAGE>
PART B
GLOBAL/INTERNATIONAL FUND, INC.
- ------------------------------------------------------------------------------
Statement of Additional Information
April 18, 2000
- ------------------------------------------------------------------------------
<TABLE>
<S> <C>
Acquisition of the Assets of By and in Exchange for Shares of
AARP Global Growth Fund (the "Acquired Scudder Global Fund (the "Acquiring Fund"), a
Fund"), a series of AARP Growth Trust (the series of Global/International Fund, Inc. (the
"Acquired Trust") "Acquiring Corporation")
Two International Place 345 Park Avenue
Boston, MA 02110-4103 New York, NY 10154
</TABLE>
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 Corporation contains
material which may be of interest to investors but which is not included in the
Prospectus/Proxy Statement of the Acquiring Corporation 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 January 1,
2000, which was previously filed with the Securities and Exchange Commission
(the "Commission") via EDGAR on December 28, 1999 (File No. 33-05724) and is
incorporated by reference herein.
2. The Acquiring Fund's annual report to shareholders for the fiscal year
ended August 31, 1999, which was previously filed with the Commission via EDGAR
on October 21, 1999 (File No. 811-04670) 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 February 1, 2000 (File No.
2-91578) 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 February 1,
2000 (File No. 2-91578) 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. 811-04048) 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 April 18, 2000 relating to the Reorganization may be obtained by
writing the Acquired Fund at Two
52
<PAGE>
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.
53
<PAGE>
PRO FORMA
PORTFOLIO OF INVESTMENTS
AS OF SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Scudder AARP Global Pro Forma Pro Forma
Global Fund Growth Combined Scudder AARP Global Combined
Par/Share Par/Share Par/Share Global Fund Growth Market Market
Amount Amount Amount Market Value($) Value($) Value($)(1)
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
REPURCHASE AGREEMENTS 0.2%
- ---------------------------------
Repurchase Agreement with Donaldson, 3,373,000 3,373,000 3,373,000 3,373,000
Lufkin & Jenrette, 5.30%, 10/1/1999
TOTAL REPURCHASE AGREEMENTS (COST OF
$0, $3,373,000 AND ================================================
$3,373,000 RESPECTIVELY) 0 3,373,000 3,373,000
================================================
BONDS 3.9%
- ---------------------------------
GERMANY
Federal Republic of Germany, 59,000,000 59,000,000 63,270,744 63,270,744
4.000%, 3/17/00
TOTAL BONDS (COST OF $62,286,340, $0 ================================================
AND $62,286,340 RESPECTIVELY) 63,270,744 0 63,270,744
================================================
PARTICIPATION LOAN NOTES 0.4%
- ---------------------------------
LUXEMBOURG
Eurotunnel Finance Ltd., 04/30/2040 4,617 (a) 300 (a) 4,917 (a) 6,946,465 451,362 7,397,827
TOTAL PARTICIPATION LOAN NOTES (COST OF ================================================
$6,183,494, $404,411 AND $6,587,905 RESPECTIVELY) 6,946,465 451,362 7,397,827
================================================
COMMON STOCKS 95.5%
- ---------------------------------
AUSTRALIA 3.1%
Broken Hill Proprietary Co., Ltd. 718,800 68,900 787,700 8,278,782 793,556 9,072,338
(Petroleum, mineral exploration
and steel production)
Foster's Brewing Group, Ltd. 2,832,000 356,858 3,188,858 7,983,451 1,005,988 8,989,439
(Leading brewery)
WMC Ltd. 2,021,351 195,800 2,217,151 10,288,452 996,600 11,285,052
(Mineral exploration and production)
Woodside Petroleum Ltd. 2,763,700 259,800 3,023,500 19,183,319 1,803,317 20,986,636
------------------------------------------------
(Major oil and gas producer)
45,734,004 4,599,461 50,333,465
------------------------------------------------
AUSTRIA 0.0%
Flughafen Wien AG 14,100 14,100 563,751 563,751
------------------------------------------------
(Operator of terminals and facilities
at Vienna International Airport)
BRAZIL 1.7%
Aracruz Celulose S.A. (ADR) 605,400 38,650 644,050 12,637,725 806,819 13,444,544
(Producer of eucalyptus kraft pulp)
Companhia Vale do Rio Doce 621,200 55,200 676,400 13,011,622 1,156,216 14,167,838
------------------------------------------------
(Diverse mining and industrial
complex)
25,649,347 1,963,035 27,612,382
------------------------------------------------
CANADA 4.0%
BCE, Inc. 235,000 21,600 256,600 11,690,746 1,074,554 12,765,300
(Telecommunication services)
Barrick Gold Corp. 857,800 84,600 942,400 18,657,150 1,840,050 20,497,200
(Gold exploration and production in
North and South America)
Canadian National Railway Co. 338,600 48,000 386,600 10,291,373 1,458,907 11,750,280
(Railroad operator)
Canadian Pacific Ltd. (Ord.) 296,656 46,050 342,706 6,792,723 1,054,436 7,847,159
(Transportation and natural resource
conglomerate)
Molson Cos., Ltd. "A" 484,000 44,900 528,900 8,361,319 775,668 9,136,987
<PAGE>
Scudder AARP Global Pro Forma Pro Forma
Global Fund Growth Combined Scudder AARP Global Combined
Par/Share Par/Share Par/Share Global Fund Growth Market Market
Amount Amount Amount Market Value($) Value($) Value($)(1)
-----------------------------------------------------------------------------------------
(Brewery)
Noranda, Inc. 269,000 26,100 295,100 3,675,515 356,621 4,032,136
------------------------------------------------
(Operator in mining and metals)
59,468,826 6,560,236 66,029,062
------------------------------------------------
CHINA 0.5%
American Standard China "B" 526 526 3,419,000 3,419,000
(Plumbing products)
Huaneng Power International, Inc. "N" 319,300 319,300 3,971,294 3,971,294
------------------------------------------------
(ADR)
(Developer and operator of large
coal-fired power plants)
7,390,294 7,390,294
------------------------------------------------
FRANCE 2.1%
Canal Plus 222,980 21,280 244,260 13,347,921 1,273,853 14,621,774
(Provider of television programs)
Compagnie de Saint-Gobain 97,773 9,568 107,341 18,257,523 1,786,669 20,044,192
------------------------------------------------
(Glass manufacturer)
31,605,444 3,060,522 34,665,966
------------------------------------------------
GERMANY 10.1%
BASF AG 424,799 37,640 462,439 18,131,275 1,606,551 19,737,826
(International chemical producer)
Bayer AG 551,474 51,505 602,979 22,037,470 2,058,193 24,095,663
(Chemical producer)
Heidelberger Druckmaschinen AG 75,651 6,915 82,566 4,706,175 430,175 5,136,350
(Manufacturer of commercial printing
presses)
Hoechst AG 448,432 47,033 495,465 19,570,628 2,052,631 21,623,259
(Chemical producer)
HypoVereinsbank AG 200,654 21,256 221,910 11,733,113 1,242,931 12,976,044
(Bank)
Muenchener 41,231 3,924 45,155 8,345,956 794,294 9,140,250
Rueckversicherungs-Gesellschaft AG
(Registered)
(Insurance company)
RWE AG (pfd.) 351,832 37,337 389,169 14,622,703 1,551,786 16,174,489
(Producer of petroleum and chemical
products)
Schering AG 143,705 13,845 157,550 15,717,397 1,514,264 17,231,661
(Pharmaceutical and chemical producer)
Siemens AG 45,185 4,300 49,485 3,739,047 355,824 4,094,871
(Electrical engineering and
electronics company)
VEBA AG 277,482 27,031 304,513 15,233,688 1,483,995 16,717,683
(Electric utility, distributor of oil
and chemicals)
VIAG AG 896,376 49,192 945,568 17,025,312 934,328 17,959,640
------------------------------------------------
(Provider of electrical power and
natural gas services, aluminum
products, chemicals, ceramics and
glass)
150,862,764 14,024,972 164,887,736
------------------------------------------------
HONG KONG 1.1%
Citic Pacific Ltd. 247,000 247,000 683,638 683,638
(Diversified holding company)
Hutchison Whampoa, Ltd. 1,725,000 164,000 1,889,000 15,988,671 1,520,082 17,508,753
------------------------------------------------
(Diversified investment holding
company)
15,988,671 2,203,720 18,192,391
------------------------------------------------
HUNGARY 0.3%
The First Hungary Fund Limited "A" 3,619 3,619 4,433,275 4,433,275
------------------------------------------------
(Investment company)
JAPAN 19.4%
Asahi Chemical Industry Co., Ltd. 1,409,000 134,000 1,543,000 7,854,268 746,964 8,601,232
(Producer of synthetic fibers,
industrial chemicals, petrochemicals,
plastics, rubber, and food products)
Bank of Tokyo-Mitsubishi, Ltd. 647,000 63,000 710,000 9,944,021 968,274 10,912,295
(Provider of financial services)
<PAGE>
Scudder AARP Global Pro Forma Pro Forma
Global Fund Growth Combined Scudder AARP Global Combined
Par/Share Par/Share Par/Share Global Fund Growth Market Market
Amount Amount Amount Market Value($) Value($) Value($)(1)
-----------------------------------------------------------------------------------------
Chugai Pharmaceutical Co., Ltd. 342,000 33,000 375,000 4,131,134 398,618 4,529,752
(Pharmaceutical company)
Daiwa Securities Co., Ltd. 1,844,000 180,000 2,024,000 16,814,063 1,641,286 18,455,349
(Provider of brokerage and other
financial services)
East Japan Railway Co. 2,331 273 2,604 14,856,345 1,739,932 16,596,277
(Railroad operator)
Fuji Bank, Ltd. 1,074,000 103,000 1,177,000 13,064,072 1,252,886 14,316,958
(Commercial bank)
Fujitsu Ltd. 239,000 23,000 262,000 7,458,921 717,804 8,176,725
(Manufacturer of computers)
Mitsubishi Estate Co., Ltd. 1,489,000 159,000 1,648,000 15,130,748 1,615,708 16,746,456
(Real estate company)
Mitsui Fudosan Co., Ltd. 984,000 96,000 1,080,000 7,899,380 770,671 8,670,051
(Real estate company)
NEC Corp. 449,000 43,000 492,000 9,053,441 867,033 9,920,474
(Manufacturer of telecommunication
and computer equipment)
Nissan Motor Co., Ltd. 1,403,000 153,000 1,556,000 8,506,627 927,665 9,434,292
(Manufacturer of motor vehicles)
Sakura Bank, Ltd. 2,469,000 236,000 2,705,000 18,567,400 1,774,770 20,342,170
(Bank)
Sanwa Bank, Ltd. 775,000 76,000 851,000 10,381,416 1,018,049 11,399,465
(Bank)
Sharp Corp. 1,556,000 152,000 1,708,000 24,953,337 2,437,601 27,390,938
(Manufacturer of consumer and
industrial electronics)
Shohkoh Fund & Co., Ltd. 15,600 2,300 17,900 11,658,206 1,718,838 13,377,044
(Finance company for small and
medium-sized firms)
Sony Corp. 209,800 20,500 230,300 31,377,308 3,065,943 34,443,251
(Manufacturer of consumer electronic
products)
Sumitomo Metal Mining Co., Ltd. 1,427,000 102,000 1,529,000 7,069,271 505,302 7,574,573
(Leading gold, nickel and copper
mining company)
TDK Corp. 100,000 9,000 109,000 11,590,525 1,043,147 12,633,672
(Manufacturer of magnetic tapes and
floppy discs)
Teijin Ltd. 1,603,000 152,000 1,755,000 7,730,203 732,995 8,463,198
(Manufacturer of polyester products)
Toray Industries, Inc. 1,633,000 155,000 1,788,000 8,442,846 801,372 9,244,218
(Manufacturer of synthetic fibers,
leather and polyester)
Toshiba Corp. 2,401,000 234,000 2,635,000 17,898,035 1,744,332 19,642,367
(Manufacturer of electric machinery)
Yamanouchi Pharmaceutical Co., Ltd. 497,000 49,000 546,000 23,312,935 2,298,458 25,611,393
------------------------------------------------
(Pharmaceutical company)
287,694,502 28,787,648 316,482,150
------------------------------------------------
NETHERLANDS 0.3%
STMicroelectronics 54,634 5,219 59,853 4,267,357 407,646 4,675,003
------------------------------------------------
(Manufacturer of semiconductor
integrated circuits)
SOUTH AFRICA 1.9%
Anglo American Platinum Corp., Ltd. 462,586 48,765 511,351 12,374,176 1,304,464 13,678,640
(ADR)
(Leading platinum producer)
Anglo American Platinum Corp. 60,000 60,000 1,591,337 1,591,337
(Platinum mining company)
Impala Platinum Holdings Ltd. (ADR) 468,500 468,500 15,952,425 15,952,425
------------------------------------------------
(Mines and markets platinum group
metals)
29,917,938 1,304,464 31,222,402
------------------------------------------------
<PAGE>
Scudder AARP Global Pro Forma Pro Forma
Global Fund Growth Combined Scudder AARP Global Combined
Par/Share Par/Share Par/Share Global Fund Growth Market Market
Amount Amount Amount Market Value($) Value($) Value($)(1)
---------------------------------------------------------------------------------------
SWITZERLAND 4.2%
Clariant AG (Registered) 29,883 2,889 32,772 13,569,576 1,311,866 14,881,442
(Manufacturer of dye chemicals)
Nestle SA (Registered) 6,863 666 7,529 12,923,980 1,254,170 14,178,150
(Food manufacturer)
Roche Holdings AG (PC) 1,462 143 1,605 16,953,342 1,658,227 18,611,569
(Producer of drugs and medicines)
Swisscom AG (Registered) 25,991 3,598 29,589 8,122,730 1,124,450 9,247,180
(Operator of telecommunication
networks and network application
services)
UBS AG-Registered 36,616 3,557 40,173 10,342,950 1,004,749 11,347,699
------------------------------------------------
(Provider of banking and asset
management services)
61,912,578 6,353,462 68,266,040
------------------------------------------------
UNITED KINGDOM 13.8%
BOC Group plc 806,556 107,723 914,279 16,835,891 2,248,589 19,084,480
(Producer of industrial gases)
Carlton Communications PLC 1,677,899 178,742 1,856,641 12,705,915 1,353,526 14,059,441
(Television post production products
and services)
Enterprise Oil PLC 1,166,447 113,267 1,279,714 7,949,644 771,944 8,721,588
(Oil and gas exploration and
production)
Gallaher Group PLC 1,494,152 1,494,152 10,330,620 10,330,620
(Manufacturer of tobacco products)
General Electric Co., plc 1,534,658 147,024 1,681,682 14,728,634 1,411,039 16,139,673
(Manufacturer of power, communications
and defense equipment)
Great Universal Stores PLC "A" 1,083,880 40,327 1,124,207 8,216,619 305,709 8,522,328
(Catalog home shopping, retailing,
finance and property investment)
J Sainsbury plc 2,601,086 254,983 2,856,069 16,228,420 1,590,863 17,819,283
(Retail distributor of food through
supermarkets)
LASMO plc 1,136,744 110,354 1,247,098 2,685,325 260,689 2,946,014
(Oil production and exploration)
National Grid Group PLC 2,048,142 198,114 2,246,256 14,295,792 1,382,813 15,678,605
(Owner and operator of electric
transmission systems)
Prudential Corp. PLC 1,014,634 92,732 1,107,366 15,617,206 1,427,327 17,044,533
(Provider of broad range of financial
services)
Railtrack Group PLC 800,938 76,840 877,778 16,903,212 1,621,652 18,524,864
(Operator of railway infrastructure)
Reuters Group plc 1,445,469 137,517 1,582,986 16,323,572 1,552,969 17,876,541
(International news and information
agency)
Rio Tinto PLC 1,351,548 131,709 1,483,257 23,472,873 2,287,443 25,760,316
(Mining company)
Shell Transport & Trading plc 2,015,280 192,000 2,207,280 14,995,334 1,428,637 16,423,971
(Petroleum company)
SmithKline Beecham PLC 1,323,035 128,267 1,451,302 15,175,067 1,471,209 16,646,276
(Manufacturer of ethical drugs and
healthcare products)
Standard Chartered PLC 28,028 2,670 30,698 403,722 38,459 442,181
------------------------------------------------
(Iinternational banking group
operating globally)
206,867,846 19,152,868 226,020,714
------------------------------------------------
UNITED STATES 33.1%
AT&T Corp - Liberty Media Group 523,476 52,576 576,052 19,434,047 1,951,881 21,385,928
(Holding company of entertainment
<PAGE>
Scudder AARP Global Pro Forma Pro Forma
Global Fund Growth Combined Scudder AARP Global Combined
Par/Share Par/Share Par/Share Global Fund Growth Market Market
Amount Amount Amount Market Value($) Value($) Value($)(1)
---------------------------------------------------------------------------------------
networks)
AT&T Corp. 290,301 28,043 318,344 12,628,094 1,219,871 13,847,965
(Telecommunication services)
Amerada Hess Corp. 194,800 18,700 213,500 11,931,500 1,145,375 13,076,875
(Exploration, production and
transmission of crude oil and natural
gas)
America Online Inc. 65,800 6,400 72,200 6,843,200 665,600 7,508,800
(Provider of online computer services)
Azurix Corp. 411,400 40,200 451,600 7,070,938 690,938 7,761,876
(Provider of wastewater related
services)
Biogen, Inc. 111,940 10,900 122,840 8,822,271 859,056 9,681,327
(Biotechnology research and
development company)
CSX Corp. 307,100 29,600 336,700 13,013,363 1,254,300 14,267,663
(Railroad, integrated transportation
systems and shipping container
company)
Conoco, Inc. "A" 442,800 43,100 485,900 12,287,700 1,196,025 13,483,725
(Explorer of crude oil, natural gas,
and natural gas liquids)
Electronic Data Systems Corp. 403,100 38,500 441,600 21,339,106 2,038,094 23,377,200
(Provider of information technology
systems)
Enron Corp. 602,600 58,820 661,420 24,857,250 2,426,325 27,283,575
(Producer of natural gas and
electricty)
Equity Residential Properties Trust 363,300 34,000 397,300 15,394,838 1,440,750 16,835,588
(REIT)
(Owner of apartment properties)
Freeport McMoRan Copper & Gold, Inc. 69,100 6,700 75,800 1,075,369 104,269 1,179,638
"B"
(U.S. company mining copper, gold and
silver in Indonesia)
Homestake Mining Co. 1,377,800 133,600 1,511,400 12,658,538 1,227,450 13,885,988
(Major international gold producer)
Immunex Corp. 430,400 41,600 472,000 18,668,600 1,804,400 20,473,000
(Pharmaceutical company)
International Business Machines Corp. 175,180 18,000 193,180 21,262,473 2,184,750 23,447,223
(Manufacturer of computers and
servicer of information processing
units)
Lockheed Martin Corp. 490,900 47,700 538,600 16,046,294 1,559,194 17,605,488
(Manufacturer of aircraft, missiles
and space equipment)
Manulife Financial Corp. 1,438,400 136,800 1,575,200 17,105,138 1,626,796 18,731,934
(Provider of financial services)
Motorola, Inc. 174,100 16,600 190,700 15,320,800 1,460,800 16,781,600
(Manufacturer of telecommunication
products and semiconductors)
Newmont Mining Corp. 804,800 76,800 881,600 20,824,200 1,987,200 22,811,400
(International gold exploration and
mining company)
Northrop Grumman Corp. 255,900 24,900 280,800 16,265,644 1,582,706 17,848,350
(Manufacturer of aircraft, aircraft
assemblies and electronic systems for
military and commercial use)
Oracle Corp. 399,000 41,050 440,050 18,154,500 1,867,775 20,022,275
(Database management software)
PacifiCorp 854,400 82,000 936,400 17,194,800 1,650,250 18,845,050
(Electric utility)
Parametric Technology Corp. 529,400 40,400 569,800 7,146,900 545,400 7,692,300
(Mechanical design software producer)
Peco Energy Co. 416,900 48,300 465,200 15,633,750 1,811,250 17,445,000
<PAGE>
Scudder AARP Global Pro Forma Pro Forma
Global Fund Growth Combined Scudder AARP Global Combined
Par/Share Par/Share Par/Share Global Fund Growth Market Market
Amount Amount Amount Market Value($) Value($) Value($)(1)
---------------------------------------------------------------------------------------
(Electric and gas utility)
Phillips Petroleum Co. 247,700 24,000 271,700 12,075,375 1,170,000 13,245,375
(Petroleum exploration, production and
refining)
ProLogis Trust (REIT) 219,800 20,100 239,900 4,148,725 379,388 4,528,113
(Global owner of corporate
distribution facilities)
Progressive Corp. 45,300 4,400 49,700 3,700,444 359,425 4,059,869
(Property and casualty insurance
company)
Sabre Group Holdings Inc. "A" 251,900 24,100 276,000 10,831,700 1,036,300 11,868,000
(Travel reservation system provider)
Sterling Commerce, Inc. 43,600 43,600 809,325 809,325
(Producer of electronic data
interchange products and services)
Stillwater Mining Co. 647,050 59,100 706,150 17,389,469 1,588,313 18,977,782
(Exploration and development of mines
in Montana producing platinum,
palladium and associated metals)
Sun Microsystems, Inc. 233,900 22,100 256,000 21,752,700 2,055,300 23,808,000
(Manufacturer of high-performance
workstations, servers and networking
software)
US Airways Group, Inc. 265,100 25,800 290,900 6,958,875 677,250 7,636,125
(Major airline)
USEC Inc. 1,978,200 189,600 2,167,800 20,276,550 1,943,400 22,219,950
(Provider of enriched uranium
products and services)
Unocal Corp. 295,400 28,600 324,000 10,948,263 1,059,988 12,008,251
(Explorer and producer of oil and gas)
UnumProvident Corp. 349,200 34,000 383,200 10,279,575 1,000,875 11,280,450
(Provider of group disability and
special risk insurance)
Williams Cos., Inc. 430,700 47,800 478,500 16,124,330 1,789,513 17,913,843
(Gas pipeline operator and petroleum
producer)
XL Capital Ltd. " A" 137,533 13,092 150,625 6,188,980 589,140 6,778,120
------------------------------------------------
(Provider of insurance)
491,654,299 48,758,672 540,412,971
------------------------------------------------
================================================
TOTAL COMMON STOCKS (COST OF $1,115,725,169 ,
$116,824,857 AND $1,232,550,026 RESPECTIVELY) 1,423,447,145 137,740,457 1,561,187,602
================================================
================================================
TOTAL INVESTMENT PORTFOLIO - 100% (COST OF
$1,184,195,003, $120,602,268 AND $1,304,797,271 RESPECTIVELY) 1,493,664,354 141,564,819 1,635,229,173
================================================
(a) Represents number of contracts. Each contract equals a nominal value of EUR 2,931
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.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINING CONDENSED STATEMENT OF ASSETS AND LIABILITIES
AS OF SEPTEMBER 30, 1999 (UNAUDITED)
Scudder
Global AARP Pro Forma Pro Forma
Fund Global Growth Adjustments Combined
----------------- ----------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Investments, at value $1,493,664,354 $ 141,564,819 $1,635,229,173
Cash 1,520,964 2,985,627 4,506,591
Other assets less liabilities 20,896,583 380,967 $ (235,236) (2) 21,042,314
================= ================= ================ ================
Total Net assets $1,516,081,901 $ 144,931,413 $ (235,236) $1,660,778,078
================= ================= ================ ================
Net Assets
S Class $1,515,989,429
AARP Class $ 144,788,649
Shares Outstanding
S Class 49,316,111 49,316,111
AARP Class 7,162,400 (2,452,294) 4,710,106
Net Asset Value per Share
S Class $ 30.74 $ 30.74
AARP Class $ 20.24 30.74
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA COMBINING CONDENSED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTH PERIOD ENDED SEPTEMBER 30, 1999 (UNAUDITED)
Scudder
Global AARP Pro Forma Pro Forma
Fund Global Growth Adjustments Combined
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income:
Interest and dividend income $ 32,979,860 $ 3,153,707 $ - $ 36,133,567
--------------------------------------------------------------------------
Total Investment Income 32,979,860 3,153,707 36,133,567
Expenses
Management fees 14,797,403 1,250,584 34,754 (3) 16,082,741
Trustee Fees 54,541 25,475 (25,475) (4) 54,541
All other expenses 6,497,308 1,213,198 (1,276,944) (5) 6,433,562
--------------------------------------------------------------------------
Total expenses before reductions 21,349,252 2,489,257 (1,267,665) 22,570,844
Expense reductions - - - -
--------------------------------------------------------------------------
Expenses, net 21,349,252 2,489,257 (1,267,665) 22,570,844
--------------------------------------------------------------------------
Net investment income (loss) 11,630,608 664,450 1,267,665 13,562,723
--------------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) from investments 168,603,632 11,607,431 -- 180,211,063
and foreign currency related transactions
Net unrealized appreciation (depreciation)
of investments and foreign currency
related transactions 105,964,022 13,068,184 -- 119,032,206
---------------------------------------------------------------------------
Net increase in net assets from operations $ 286,198,262 $ 25,340,065 $ 1,267,665 $ 312,805,992
===========================================================================
</TABLE>
NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 1999
1. These financial statements set forth the unaudited pro forma condensed
Statement of Assets and Liabilities as of September 30, 1999, and the
unaudited pro forma condensed Statement of Operations for the twelve month
period ended September 30, 1999 for Scudder Global Fund and AARP Global
Growth 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 $92,472 and $142,764 to be borne by the Acquiring Fund
and the Acquired Fund, respectively.
3. Represents increase in management fees resulting from the application of
Scudder Global Fund's higher management fee.
4. Reduction in trustee fees resulting from the Reorganization.
5. Represents reduction in other expenses resulting from the implementation of
an administrative fee contract.
