Scudder Cash Investment Trust
Two International Place
Boston, MA 02110
(800) 225-5163
September 16, 1996
To the Shareholders:
A Special Meeting of Shareholders of Scudder Cash Investment Trust (the
"Fund") is to be held at 10:45 a.m., eastern time, on Tuesday, November 5, 1996,
at the offices of Scudder, Stevens & Clark, Inc., 13th Floor, Two International
Place, Boston, Massachusetts 02110. Shareholders who are unable to attend this
meeting are strongly encouraged to vote by proxy, which is customary in
corporate meetings of this kind. A Proxy Statement regarding the meeting, a
proxy card for your vote at the meeting and an envelope--postage prepaid--in
which to return your proxy card are enclosed.
At the Special Meeting the shareholders will elect seven Trustees of the
Fund and consider the ratification of the selection of Coopers & Lybrand L.L.P.
as the Fund's independent accountants, approve or disapprove an Amendment to the
Fund's Amended and Restated Declaration of Trust, approve or disapprove a new
Investment Advisory Agreement between the Fund and Scudder, Stevens & Clark,
Inc., and approve or disapprove the elimination, amendment and/or
reclassification of certain fundamental investment policies. In addition, the
shareholders present will hear a report on the Fund. There will be an
opportunity to discuss matters of interest to you as a shareholder.
Your Fund's Trustees recommend that you vote in favor of each of the
foregoing matters.
Respectfully,
/s/David S. Lee
David S. Lee
President
SHAREHOLDERS ARE URGED TO SIGN THE PROXY CARD AND MAIL IT IN THE ENCLOSED
POSTAGE PREPAID ENVELOPE SO AS TO ENSURE A QUORUM AT THE MEETING. THIS IS
IMPORTANT WHETHER YOU OWN FEW OR MANY SHARES.
<PAGE>
Scudder Cash Investment Trust
Notice of Special Meeting of Shareholders
To the Shareholders of
Scudder Cash Investment Trust:
Please take notice that a Special Meeting of Shareholders of Scudder Cash
Investment Trust (the "Fund") has been called to be held at the offices of
Scudder, Stevens & Clark, Inc., 13th Floor, Two International Place, Boston,
Massachusetts 02110 on Tuesday, November 5, 1996, at 10:45 a.m., eastern time,
for the following purposes:
(1) To elect seven Trustees to hold office until their respective
successors shall have been duly elected and qualified;
(2) To ratify or reject the action taken by the Board of Trustees in
selecting Coopers & Lybrand L.L.P. as independent accountants for the fiscal
year ending June 30, 1997;
(3) To approve or disapprove the amendment of the Fund's Amended and
Restated Declaration of Trust;
(4) To approve or disapprove a new Investment Advisory Agreement between
the Fund and Scudder, Stevens & Clark, Inc.; and
(5) To approve or disapprove the elimination, amendment and/or
reclassification of certain fundamental investment policies.
The appointed proxies will vote on any other business as may properly come
before the meeting or any adjournments thereof.
Holders of record of shares of beneficial interest of the Fund at the close of
business on September 6, 1996 are entitled to vote at the meeting and at any
adjournments thereof.
By Order of the Board of Trustees,
September 16, 1996 THOMAS F. McDONOUGH, Secretary
IMPORTANT--We urge you to sign and date the enclosed proxy card and return it in
the enclosed addressed envelope which requires no postage and is intended for
your convenience. Your prompt return of the enclosed proxy card may save the
Fund the necessity and expense of further solicitations to ensure a quorum at
the Special Meeting. If you can attend the meeting and wish to vote your shares
in person at that time, you will be able to do so.
<PAGE>
Scudder Cash Investment Trust
Two International Place
Boston, MA 02110
PROXY STATEMENT
General
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees of Scudder Cash Investment Trust (the "Fund")
for use at the Special Meeting of Shareholders of Scudder Cash Investment Trust,
to be held at the offices of Scudder, Stevens & Clark, Inc. ("Scudder"), Two
International Place, Boston, Massachusetts 02110, on Tuesday, November 5, 1996
at 10:45 a.m., eastern time, and at any adjournments thereof (collectively, the
"Meeting").
This Proxy Statement, the Notice of Special Meeting and the proxy card are
being mailed to shareholders on or about September 16, 1996 or as soon as
practicable thereafter. 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 referred to in the Proxy Statement. Any shareholder
giving a proxy has the power to revoke it by mail (addressed to the Secretary of
the Fund at the principal executive office of the Fund, Two International Place,
Boston, Massachusetts 02110) or in person at the Meeting, by executing a
superseding proxy or by submitting a notice of revocation to the Fund.
The presence at any shareholders' meeting, in person or by proxy, of
shareholders entitled to cast a majority of the votes entitled to be cast shall
be necessary and sufficient to constitute a quorum for the transaction of
business. For purposes of determining the presence of a quorum for transacting
business at the Meeting, abstentions and broker "non-votes" will be treated as
shares that are present but which have not been voted. Broker non-votes are
proxies received by the Fund from brokers or nominees when the broker or nominee
has neither received instructions from the beneficial owner or other persons
entitled to vote nor has discretionary power to vote on a particular matter.
Accordingly, shareholders are urged to forward their voting instructions
promptly.
Abstentions and broker non-votes will not be counted in favor of, but will
have no other effect on, the vote for proposals (1) and (2) which requires the
approval of a plurality and majority, respectively, of shares voting at the
Meeting. Abstentions and broker non-votes will have the effect of a "no" vote
for proposals (3), (4) and (5) that require the approval of a specified
percentage of the outstanding shares of the Fund or of such shares present at
the Meeting.
Holders of record of shares of the Fund at the close of business on
September 6, 1996 (the "Record Date"), will be entitled to one vote per share on
all business of the Meeting and any adjournments. There were 1,432,034,544
shares of the Fund outstanding on the Record Date.
The Fund provides periodic reports to all shareholders which highlight
relevant information, including investment results and a review of portfolio
changes. You may receive an additional copy of the most recent annual report for
the Fund, without charge, by calling (800) 225-2470 or writing the Fund at P.O.
Box 2291, Boston, Massachusetts 02107-2291.
1
<PAGE>
(1) ELECTION OF TRUSTEES
The persons named on the accompanying proxy card intend, in the absence of
contrary instructions, to vote all proxies in favor of the election of the
nominees listed below as Trustees of the Fund to serve until their successors
are duly elected and qualified. The nominees have consented to stand for
election and to serve if elected. If the nominees should be unable to serve, an
event not now anticipated, the proxies will be voted for such persons, if any,
as shall be designated by the Board of Trustees to replace such nominee. The
Board of Trustees recommends that shareholders vote in favor of the election of
the nominees listed below.
Information Concerning Nominees
The following table sets forth certain information concerning the nominees
as Trustees of the Fund. With the exception of Mr. Brown, each of the nominees
is now a Trustee of the Fund. Mr. Brown, if elected, will replace Cuyler Findlay
as Trustee, who will be retiring from the Board on November 5, 1996. Unless
otherwise noted, the nominees have engaged in the principal occupation or
employment listed in the following table for more than five years, but not
necessarily in the same capacity.
<TABLE>
<CAPTION>
Present Office with the
Trust, if any; Principal Shares
Occupation or Employment Year First Beneficially
and Trusteeships in Publicly Became a Owned on Percent
Name (Age) Held Companies Trustee July 31, 1996(1) of Class
---------- -------------- ------- ---------------- --------
<S> <C> <C> <C> <C>
David S. Lee (62)*#(2) President; Managing Director of 1975 303,067 Less than
Scudder, Stevens & Clark, Inc.; 1/4 of 1%
Executive Committee and Board of
Governors, Investment Company
Institute; Trustee Emeritus, New
England Medical Center. Mr. Lee
serves on the boards of an
additional 30 funds managed by
Scudder.
Dudley Ladd (52)* Vice President; Managing Director 1987 -- --
of Scudder, Stevens & Clark, Inc.
Mr. Ladd serves on the boards of 14
funds managed by Scudder.
Henry P. Becton, Jr. President and General Manager, WGBH 1990 -- --
(53)# Educational Foundation (public
television and radio); Director,
Becton Dickinson and Company, The
Providence Journal Company
(multi-media company), The Public
Broadcasting Service and several
private companies. Mr. Becton
serves on the boards of an
additional 15 funds managed by
Scudder.
2
<PAGE>
Present Office with the
Trust, if any; Principal Shares
Occupation or Employment Year First Beneficially
and Trusteeships in Publicly Became a Owned on Percent
Name (Age) Held Companies Trustee July 31, 1996(1) of Class
---------- -------------- ------- ---------------- --------
E. Michael Brown Managing Director of Scudder, -- 18,987 Less than
(55)*(3) Stevens & Clark, Inc. Mr. Brown 1/4 of 1%
serves on the boards of an
additional three funds managed by
Scudder.
Dawn Marie Driscoll Executive Fellow, Center for 1987 27,575 Less than
(50) Business Ethics, Bentley College; 1/4 of 1%
President, Driscoll Associates;
Director of several private
companies. Prior to 1990, law
partner (Palmer & Dodge); Vice
President of Corporate Affairs and
General Counsel, Filene's. Ms.
Driscoll serves on the boards of an
additional 15 funds managed by
Scudder.
Peter B. Freeman Corporate Director and Trustee; 1980 183,278 Less than
(64) Trustee, Eastern Utilities 1/4 of 1%
Associates (electric utility
holding company); Director, AMICA
Insurance Co., AMICA Life Insurance
Co. and Providence Journal Company
(multi-media company); former
President, Fields Point Management
Co. Goelet Estate Co. (private
investment management companies);
Chairman, Rhode Island School of
Design. Mr. Freeman serves on the
boards of an additional 26 funds
managed by Scudder.
George M. Lovejoy, Jr. President and Director, Fifty 1976 106,153 Less than
(66)# Associates (real estate investment 1/4 of 1%
trust); director or trustee of
various for-profit and
not-for-profit organizations. Prior
to 1994, Chairman, Meredith & Grew,
Incorporated (real estate services
company). Mr. Lovejoy serves on the
boards of an additional 12 funds
managed by Scudder.
All Trustees and Officers as a group 9,649,503(4)(5) .66%
</TABLE>
3
<PAGE>
* Persons considered by the Fund and its counsel to be persons who are
"interested persons" (which as used in this Proxy Statement is as defined in
the Investment Company Act of 1940, as amended (the "1940 Act")) of the Fund
or of the Fund's investment adviser, Scudder, Stevens & Clark, Inc. Messrs.
Brown, Ladd and Lee are deemed to be "interested persons" because of their
affiliation with the Fund's investment adviser, or because they are Officers
of the Fund or both.
# Messrs. Becton, Lee and Lovejoy are members of the Executive Committee.
(1)The information as to beneficial ownership is based on statements furnished
to the Fund by the nominees and Trustees. Unless otherwise noted, beneficial
ownership is based on sole voting and investment power.
(2)Mr. Lee's total includes 77,803 shares held by members of his family and
213,914 shares in a fiduciary capacity as to which he shares investment and
voting power.
(3)Mr. Brown's total includes 18,987 shares held by members of his family as to
which he shares investment and voting power.
(4)Of which 328,356 shares are held with sole investment and voting power,
325,423 shares are held with shared investment and voting power, and
8,995,724 shares are held with sole voting but no investment power.
(5)Shares held with sole voting but no investment power are shares filed in
profit sharing and 401(k) for which Jerard K. Hartman serves as trustee.
Except as noted above, to the best of the Fund's knowledge, as of July 31,
1996, no other person owned beneficially more than 5% of the Fund's
outstanding voting securities.
Responsibilities of the Board--Board and Committee Meetings
The Board of Trustees is responsible for the general oversight of the
Fund's business. A majority of the Board's members are not affiliated with
Scudder, Stevens & Clark, Inc. (the "Adviser"). These "Independent Trustees"
have primary responsibility for assuring that the Fund is managed in the best
interests of its shareholders.
The Board of Trustees meets at least quarterly to review the investment
performance of the Fund and other operational matters, including policies and
procedures designated to assure compliance with various regulatory requirements.
At least annually, the Independent Trustees review the fees paid to the Adviser
and its affiliates for investment advisory services and other administrative and
shareholder services. In this regard, they evaluate, among other things, the
Fund's investment performance, the quality and efficiency of the various other
services provided, costs incurred by the Adviser and its affiliates, and
comparative information regarding fees and expenses of competitive funds. They
are assisted in this process by the Fund's independent public accountants and by
independent legal counsel selected by the Independent Trustees.
All of the Independent Trustees serve on the Committee on Independent
Trustees, which nominates Independent Trustees and considers other related
matters, and the Audit Committee, which selects the Fund's independent public
accountants and reviews accounting policies and controls. In addition,
Independent Trustees from time to time have established and served on task
forces and subcommittees focusing on particular matters such as investment,
accounting and shareholder service issues.
The Independent Trustees met eight times during 1995, including Board and
Committee meetings and meetings to review the Fund's contractual arrangements as
described above. All of the Independent Trustees attended at least 75% of all
such meetings.
4
<PAGE>
Executive Officers
In addition to Messrs. Lee and Ladd, Trustees who are also Officers of the
Fund, the following persons are Executive Officers of the Fund:
<TABLE>
<CAPTION>
Present Office with the Fund; Year First Became
Name (Age) Principal Occupation or Employment(1) an Officer (2)
---------- ------------------------------------- --------------
<S> <C>
Stephen L. Akers (44) Vice President; Managing Director of 1994
Scudder, Stevens & Clark, Inc.
Jerard K. Hartman (63) Vice President; Managing Director of 1991
Scudder, Stevens & Clark, Inc.
Thomas W. Joseph (57) Vice President; Principal of Scudder, 1986
Stevens & Clark, Inc.
Thomas F. McDonough (49) Vice President and Secretary; Principal of 1984
Scudder, Stevens & Clark, Inc.
Pamela A. McGrath (42) Vice President and Treasurer; Managing 1990
Director of Scudder, Stevens & Clark, Inc.
Robert T. Neff (64) Vice President; Managing Director of 1976
Scudder, Stevens & Clark, Inc.
Edward J. O'Connell (51) Vice President and Assistant Treasurer; 1990
Principal of Scudder, Stevens & Clark, Inc.
Coleen Downs Dinneen (35) Assistant Secretary; Vice President of 1992
Scudder, Stevens & Clark, Inc.
</TABLE>
(1) Unless otherwise stated, all Executive Officers have been associated with
Scudder for more than five years, although not necessarily in the same
capacity.
(2) The President, Treasurer and Secretary each hold office until his or her
successor has been duly elected and qualified, and all other officers hold
office in accordance with the By-Laws of the Fund.
Compensation of Officers and Trustees
The Independent Trustees receive the following compensation from the Fund:
an annual trustee's fee of $4,000; a fee of $300 for attendance at each Board
meeting, audit committee meeting, or other meeting held for the purposes of
considering arrangements between the Fund and the Adviser or any affiliate of
the Adviser; $100 for any other committee meeting (although in some cases the
Independent Trustees have waived committee meeting fees); and reimbursement of
expenses incurred for travel to and from Board Meetings. No additional
compensation is paid to any Independent Trustee for travel time to meetings,
attendance at directors' educational seminars or conferences, service on
industry or association committees, participation as speakers at directors'
conferences, service on special trustee task forces or subcommittees or service
as lead or liaison trustee. Independent Trustees do not receive any employee
benefits such as pension, retirement or health insurance.
The Independent Trustees also serve in the same capacity for other funds
managed by the Adviser. These funds differ broadly in type and complexity and in
some cases have substantially different Trustee fee schedules. The following
table shows the aggregate compensation received by each Independent Trustee
during 1995 from the Fund and from all of Scudder funds as a group.
5
<PAGE>
Fund All Scudder Funds
---- -----------------
Henry P. Becton, Jr. $8,600 $82,800 (15 funds+++)
Dawn-Marie Driscoll, Esq. $8,900 $92,800 (16 funds)
Peter B. Freeman $8,900 $126,750 (26 funds*)
George M. Lovejoy, Jr. $8,900 $112,900 (12 funds+++)
+++This does not include membership on the Board of Scudder High Yield Bond Fund
which commenced operations on June 28, 1996.
* This does not include membership on the Board of Institutional International
Equity Portfolio which commenced operations on April 3, 1996.
Members of the Board of Trustees who are employees of Scudder or its
affiliates receive no direct compensation from the Trust, although they are
compensated as employees of Scudder, which in turn receives an investment
advisory fee from the Fund.
Required Vote
Election of the listed nominees for Trustee requires the affirmative vote of a
plurality of the votes cast at the Meeting in person or by proxy. The Trustees
recommend that shareholders vote in favor of the nominees.
(2) RATIFICATION OR
REJECTION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
At a meeting held on August 13, 1996, the Board of Trustees, including a
majority of the Independent Trustees, selected Coopers & Lybrand L.L.P. as the
Fund's independent accountants for the fiscal year ending June 30, 1997 to
examine the Fund's books and accounts and to certify the Fund's financial
statements. Coopers & Lybrand L.L.P. are independent accountants and have
advised the Fund that they have no direct financial interest or material
indirect financial interest in the Fund. One or more representatives of Coopers
& Lybrand L.L.P. 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 Fund's financial statements for the fiscal year ended June 30, 1996
were audited by Coopers & Lybrand L.L.P. In connection with its audit services,
Coopers & Lybrand L.L.P. reviews the financial statements included in the Fund's
annual and semiannual reports.
Required Vote
Ratification of the selection of independent accountants requires the
affirmative vote of a majority of the votes cast at the Meeting in person or by
proxy. The Trustees recommend that shareholders ratify the selection of Coopers
& Lybrand L.L.P. as independent accountants.
6
<PAGE>
(3) APPROVAL OR DISAPPROVAL OF AN AMENDMENT TO THE FUND'S AMENDED AND RESTATED
DECLARATION OF TRUST
This Proposal would replace, under Massachusetts corporate law, the Fund's
Amended and Restated Declaration of Trust, as amended (the "current Amendment")
with Articles of Amendment and Restatement (the "proposed Amendment") in the
form set forth in Exhibit A.
The Fund was organized in December, 1975. The current Amendment was last
amended and restated in November, 1987. Many changes have occurred since that
time in both the investment company industry and in Massachusetts corporate law
which the Trustees of the Fund have determined would make the adoption of the
proposed Amendment beneficial to shareholders. The principal changes which would
occur if the proposed Amendment is approved are described below.
Multiple Series and Classes of Shares
The proposed Amendment would permit the Board of Trustees of the Fund to
issue shares of capital stock in multiple series and classes. The proposed
Amendment sets forth that any additional series of the Fund would have separate
investment objectives and policies, and under the proposed Amendment each series
would be insulated from the liabilities of the other series.
Division of the shares into different classes (each a "Class") would permit
shares of different Classes to be distributed by different methods, and
shareholders of different Classes might bear different expenses in connection
with such methods of distribution. Shareholders of a particular Series would
continue to have an interest in the same portfolio of assets. For example, the
shares of one Class might be made available through an administrative agreement
with a bank, while the shares of another Class might continue to be available
through Scudder Investor Services, Inc. (the "Distributor") without a sales
charge. In such an instance, the bank might be compensated for its services
through payment by the Fund of an administrative fee, which would be allocated
only to the shares of the Class available through the bank. Thus, shareholders
who purchased their shares through the Distributor would not bear the expense of
making shares available through the bank. In the future, there may be other
considerations which would make it advisable to divide shares into different
Classes.
The Trustees have no present intention of taking the action necessary to
effect the division of shares into separate Classes, nor of changing the method
of distribution of Shares of the Fund, although the Fund may take such action in
the future without further shareholder approval. If the shares were divided into
Classes and it was proposed that one or more Classes bear expenses of an
activity primarily intended to result in the sale of shares, the vote of a
majority of the outstanding voting securities of the affected Class or Classes
would be required to approve a "Rule 12b-1 plan" to permit the bearing of such
expenses.
Minimum Account Size
If the value of a shareholder's account falls below the minimum size of
$1,000 currently set forth in the Amended and Restated Declaration of Trust, the
Trustees have the authority to cause that account to be redeemed and the
proceeds sent to the shareholder. The proposed amendment to the Amended and
Restated Declaration of Trust would permit the Trustees to fix the minimum
account size without seeking shareholder approval of an amendment to the Amended
and Restated Declaration of Trust.
7
<PAGE>
The Trustees have determined that the cost to the Fund of servicing
accounts above the current minimum account size outweighs the benefits to the
Fund of such accounts, and they have determined that it is in the Fund's best
interest to increase the minimum account size. Therefore, effective January 1,
1997, the initial investment and the maximum account balance will increase to
$2,500 for regular accounts and $1,000 for fiduciary accounts such as IRAs. Such
a change may decrease the amount of the Fund's assets.
Required Vote
This proposal requires the affirmative vote of a majority of the Fund's
outstanding voting securities, which as used in this Proxy Statement means (1)
holders of more than 50% of the outstanding voting securities of the Fund or (2)
the holders of 67% or more of the shares present if more than 50% of the shares
are present at a meeting in person or by proxy, whichever is less. The Trustees
recommend that shareholders vote to approve the Amendment to the Fund's Amended
and Restated Declaration of Trust.
(4) APPROVAL OR DISAPPROVAL OF A NEW INVESTMENT
ADVISORY AGREEMENT BETWEEN THE FUND AND
SCUDDER, STEVENS & CLARK, INC.
Scudder acts as investment manager to Scudder Cash Investment Trust
pursuant to an Investment Advisory Agreement dated November 12, 1985 (the
"present Agreement") between the Fund and Scudder.
The Trustees recommend that shareholders approve the proposed Investment
Advisory Agreement (the "proposed Agreement") in place of the present Agreement.
At a meeting held on August 13, 1996 the Trustees, including the Independent
Trustees, approved the terms of the proposed Agreement and its adoption subject
to approval by shareholders of the Fund. The proposed and present Agreements are
substantially the same, including the same fee schedule. Set forth below is a
description of certain differences between the present Agreement and the
proposed Agreement, as well as a description of those provisions which are the
same under both the proposed and present Agreement. A form of a proposed
Agreement is attached hereto as Exhibit B.
In approving the proposed Agreement and recommending its approval by
shareholders, the Independent Trustees, considering the best interests of the
shareholders of the Fund, took into account all such factors as they deemed
relevant. Among such factors were the nature, quality and extent of the services
furnished by Scudder to the Fund; the necessity of Scudder maintaining and
enhancing its ability to retain and attract capable personnel to serve the Fund;
the increased complexity of the securities market; the investment record of
Scudder in managing the Fund; Scudder's profitability with respect to the Fund
and the other investment companies managed by Scudder before marketing expenses
paid by Scudder; possible economies of scale; comparative data as to investment
performance; Scudder's expenditures in developing worthwhile and innovative
shareholder services for the Fund; improvements in the quality and scope of the
shareholder services provided to the Fund's shareholders; the risks assumed by
Scudder; the advantages and possible disadvantages to the Fund of having an
adviser which also serves other investment companies as well as other accounts;
possible benefits to Scudder from serving as adviser and from affiliates of
8
<PAGE>
Scudder serving as principal underwriter, transfer agent and fund accounting
agent of the Fund; current and developing conditions in the financial services
industry, including the entry into the industry of large and well capitalized
companies which are spending, and appear to be prepared to continue to spend,
substantial sums to engage personnel and to provide services to competing
investment companies; the financial resources of Scudder and the continuance of
appropriate incentives to assure that Scudder will continue to furnish high
quality services to the Fund; and various other factors.
Description of the Proposed Agreement
Under the present Agreement, Scudder regularly provides the Fund with
investment research, advice and supervision and furnishes a continuous
investment program. Under the proposed Agreement, Scudder will provide the Fund
with continuing investment management services. Under both agreements, Scudder
determines what securities shall be purchased, held, or sold, and what portion
of the Fund's assets shall be held uninvested, subject to the Fund's Amended and
Restated Declaration of Trust, By-Laws, investment policies and restrictions,
the Investment Company Act of 1940 (the "1940 Act"), and such policies and
instructions as the Trustees of the Fund may determine.
In addition to the provision of portfolio management services and the
payment of the Fund's office rent, under the proposed Agreement Scudder will
render significant administrative services (not otherwise provided by third
parties) necessary for the Fund's operations as an open-end investment company
including, but not limited to, preparing reports to and meeting materials for
the Fund's Board of Trustees and reports and notices to Fund shareholders;
supervising, negotiating contractual arrangements with, and monitoring the
performance of various third-party service providers to the Fund (such as the
Fund's transfer and pricing agents, fund accounting agent, custodian,
accountants and others); preparing and making filings with the Securities and
Exchange Commission (the "SEC") and other regulatory agencies; assisting in the
preparation and filing of the Fund's federal, state and local tax returns;
preparing and filing the Fund's federal excise tax returns; assisting with
investor and public relations matters; monitoring the valuation of portfolio
securities and the calculation of net asset value; monitoring the registration
of shares of the Fund under applicable federal and state securities laws;
maintaining the Fund's books and records to the extent not otherwise maintained
by a third party; assisting in establishing accounting policies of the Fund;
assisting in the resolution of accounting and legal issues; establishing and
monitoring the Fund's operating budgets; processing the payment of the Fund's
bills; assisting the Fund in, and otherwise arranging for the payment of
dividends and distributions and otherwise assisting the Fund in the conduct of
its business, subject to the direction and control of the Fund's Board of
Trustees. The Trustees believe it is desirable to include the responsibility for
providing these services in the proposed Agreement.
Under both the proposed and the present Agreements, the Fund is responsible
for other expenses, including organization expenses; clerical salaries; fees and
expenses incurred in connection with membership in investment company
organizations; brokers' commissions; legal, auditing and accounting expenses;
payment for portfolio pricing services to a pricing agent, if any; taxes and
governmental fees; the fees and expenses of the transfer agent; and any other
9
<PAGE>
expenses, including clerical expenses, of issuance, redemption or repurchase of
shares; the expenses of and fees for registering or qualifying securities for
sale; the fees and expenses of Independent Trustees; the cost of printing and
distributing reports and notices to shareholders; and the fees and expenses of
the Fund's custodians. The Fund may arrange to have third parties assume all or
part of the expenses of sale, underwriting and distribution of shares of the
Fund. The Fund is also responsible for expenses of shareholders' meetings, the
cost of responding to shareholders' inquiries, and its expenses incurred in
connection with litigation, proceedings and claims and the legal obligation it
may have to indemnify officers and Trustees of the Fund with respect thereto.
Under the proposed Agreement, the Fund is responsible for maintenance of
books and records which are not otherwise required to be maintained by the
Fund's custodian or other agents of the Fund; telephone, telex, facsimile,
postage and other communications expenses; any dues incurred by the Fund in
connection with membership in investment company trade organizations; payment
for valuation services to pricing agents; costs of acquiring or disposing of any
portfolio securities of the Fund; printing and distributing reports, notices and
dividends to shareholders; expenses of printing and mailing Prospectuses and
Statements of Additional Information of the Fund and supplements thereto; costs
of stationery; any litigation expenses; indemnification of Trustees and Officers
of the Fund and costs of shareholders' meetings and other expenses.
Under both Agreements, Scudder pays the compensation and expenses of
officers and executive employees of the Fund affiliated with Scudder and makes
available, without expense to the Fund, the services of such trustees, officers
and employees as may be duly elected officers or Trustees of the Fund, subject
to their individual consent to serve and to any limitations imposed by law. The
Fund is responsible for the fees and expenses of Trustees not affiliated with
Scudder. The proposed Agreement also states that Scudder will pay the Fund's
share of payroll taxes. The proposed Agreement also specifically provides that
the Fund will pay the expenses, such as travel expenses, of Trustees and
officers of the Fund who are trustees, officers or employees of Scudder, to the
extent that such expenses relate to attendance at meetings of the Board of
Trustees of the Fund or any committees thereof held outside Boston,
Massachusetts or New York, New York. During the fiscal year ended June 30, 1996
for the Fund, no compensation, direct or otherwise (other than through fees paid
to Scudder) was paid or became payable by the Fund to any of its officers or
Trustees who were affiliated with Scudder.
The present Agreement provides that the Fund may use a name derived from
the name "Scudder, Stevens & Clark, Inc.," only so long as such Agreement, or
any extension, renewal or amendment thereof, remains in effect. The proposed
Agreement provides that the Fund is granted a nonexclusive right and sublicense
to use the "Scudder" name and mark as part of the Fund's name, and the Scudder
Marks in connection with the Fund's investment products and services.
The proposed and present Agreements further provide that Scudder shall not
be liable for any act or omission, error of judgment or mistake of law or for
any loss suffered by the Fund in connection with matters to which such
Agreements relate, except a loss resulting from willful misfeasance, bad faith
or gross negligence on the part of Scudder in the performance of its duties or
from reckless disregard by Scudder of its obligations and duties under such
Agreements.
10
<PAGE>
In reviewing the terms of the proposed and present Agreements and in
discussions with Scudder concerning such Agreements, the Independent Trustees
have been represented, at the Fund's expense, by independent counsel, Ropes &
Gray. Counsel for the Fund is Dechert Price & Rhoads.
If approved by the shareholders of the Fund, the proposed Agreement will
become effective on the day following such approval and will remain in force
until September 30, 1998, and the present Agreement will terminate. The proposed
Agreement would continue in effect thereafter by its terms from year to year
only so long as its continuance is specifically approved at least annually by
the vote of a majority of the Independent Trustees cast in person at a meeting
called for the purpose of voting on such approval, and either by vote of the
Trustees, or a majority of the Fund's outstanding voting securities, as defined
below. The proposed Agreement may be terminated on 60 days' written notice,
without penalty, by the Trustees, by the vote of the shareholders of a majority
of the Fund's outstanding voting securities, or by Scudder, and automatically
terminates in the event of its assignment. The present Agreement requires annual
approval of its continuance and contains the same termination provisions as the
proposed Agreement.
The present Agreement will continue in effect if this Proposal is not
approved by the shareholders of the Fund. The present Agreement was last
approved by the Trustees on August 13, 1996.
Required Vote
Approval of the proposed Agreement on behalf of the Fund requires the
affirmative vote of a majority of the outstanding voting securities entitled to
vote. The Board of Trustees recommends that the shareholders of the Fund vote in
favor of the approval of the proposed Agreement.
Investment Manager
Scudder is one of the most experienced investment counsel firms in the
United States. It was established in 1919 as a partnership and was restructured
as a Delaware corporation in 1985. The principal source of Scudder's income is
professional fees received from providing continuing investment advice.
Scudder's subsidiary, Scudder Investor Services, Inc., Two International Place,
Boston, MA 02110, acts as the principal underwriter for shares of registered
open-end investment companies. Scudder provides investment counsel for many
individuals and institutions, including insurance companies, endowments,
industrial corporations and financial and banking organizations.
Scudder is a Delaware corporation. Daniel Pierce* is the Chairman of the Board
of Scudder. Edmond D. Villani# is the President and Chief Executive Officer of
Scudder. Stephen R. Beckwith#, Lynn S. Birdsong#, Nicholas Bratt#, E. Michael
Brown*, Mark S. Casady*, Linda C. Coughlin*, Margaret D. Hadzima*, Jerard K.
Hartman#, Richard A. Holt@, Dudley H. Ladd*, John T. Packard+++, Kathryn L.
Quirk#, Cornelia M. Small# and Stephen A. Wohler* are the other members of the
Board of Directors of Scudder. The principal occupation of each of the above
named individuals is serving as a Managing Director of Scudder.
- ---------------------------
* Two International Place, Boston, Massachusetts
# 345 Park Avenue, New York, New York
+++ 101 California Street, San Francisco, California
@ Two Prudential Plaza, 180 North Stetson, Suite 5400, Chicago, Illinois
11
<PAGE>
All of the outstanding voting and nonvoting securities of Scudder are held of
record by Stephen R. Beckwith, Juris Padegs, Daniel Pierce and Edmond D. Villani
in their capacity as the representatives (the "Representatives") of the
beneficial owners of such securities, pursuant to a Security Holders' Agreement
among Scudder, the beneficial owners of securities of Scudder and the
Representatives. Pursuant to the Security Holders' Agreement, the
Representatives have the right to reallocate shares among the beneficial owners
from time to time. Such reallocation will be at net book value in cash
transactions. All Managing Directors of Scudder own voting and nonvoting stock
and all Principals own nonvoting stock.
In addition to acting as investment manager to individuals and other
organizations, Scudder, or an affiliate, acts as investment adviser to numerous
investment companies including the investment companies listed below. All of the
investment companies listed below are open-end investment companies or mutual
funds.
<TABLE>
<CAPTION>
Total Net Assets as of Management Compensation
August 30, 1996 on an Annual Basis Based on the
Name (000 omitted) Value of Average Daily Net Assets
---- ------------- ---------------------------------
<S> <C> <C>
AARP High Quality Money Fund $ 403,400 .350 of 1% of first $2 billion, .330 of 1% of
next $2 billion, .300 of 1% of next $2
billion, .300 of 1% of next $2 billion, .280
of 1% of next $2 billion, .260 of 1% of next
$2 billion, .250 of 1% of next $2 billion,
.240 of 1% thereafter.
Scudder U.S. Treasury Money Fund $ 405,100 .25 of 1%.
Scudder Variable Life Investment $ 98,300 .37 of 1%.
Fund - Money Market Portfolio
</TABLE>
Directors, officers and employees of Scudder from time to time may have
transactions with various banks, including the Fund's custodian bank. It is
Scudder's opinion that the terms and conditions of those transactions will not
be influenced by existing or potential custodial or other Fund relationships.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of Scudder,
computes net asset value for the Fund. The Fund pays SFAC an annual fee equal to
0.02% of the first $150 million of average daily net assets, 0.006% of such
assets in excess of $150 million, 0.0035% of such assets in excess of $1
billion, plus holding and transaction charges for this service. For the period
ended June 30, 1996, the amount charged to the Fund by SFAC aggregated $104,207.
Brokerage Commissions on Portfolio Transactions
To the maximum extent feasible Scudder places orders for portfolio
transactions through Scudder Investor Services, Inc. (the "Distributor") (a
corporation registered as a broker/dealer and a subsidiary of Scudder), which in
turn places orders on behalf of the Fund with issuers, underwriters or other
brokers and dealers. The Distributor receives no commissions, fees or other
remuneration from the Fund for this service. Allocation of portfolio
transactions is supervised by Scudder.
12
<PAGE>
(5) APPROVAL OR DISAPPROVAL OF THE ELIMINATION, AMENDMENT AND/OR
RECLASSIFICATION OF CERTAIN FUNDAMENTAL INVESTMENT POLICIES
As described in the following proposals, the Trustees are recommending that
shareholders approve a number of changes to the Fund's fundamental investment
restrictions, including the elimination of certain policies. Generally, the
purpose of these proposed changes is to increase the Fund's investment
flexibility and to bring the Fund's policies more in line with those of many
other Scudder funds.
These changes largely reflect the elimination of certain restrictions which
were required at one time by various state securities authorities but which are
no longer required under current regulations.
The adoption of any of these proposals is not contingent on the adoption of
any other proposal.
Required Vote
Approval of each of these proposals require the vote of a majority of the
outstanding voting securities of the Fund. The Trustees have considered various
factors and believe that these proposals are in the best interests of the Fund's
shareholders. If a proposal is not approved, the Fund's present fundamental
investment restriction will remain in effect and a shareholder vote would be
required before the Fund could engage in activities prohibited by a fundamental
policy.
The Trustees recommend that shareholders vote in favor of the elimination,
amendment and/or reclassification of the Fund's investment restrictions as
described in Proposals A-M below.
A. Approval Or Disapproval Of Amendments To The Fund's Investment Restriction
With Respect To Borrowing
The Trustees are recommending that the Fund's fundamental investment
restriction relating to borrowing be clarified and rephrased consistent with the
equivalent restrictions of other funds managed by Scudder. The proposed amended
restriction would permit the Fund to borrow from entities other than banks;
however, the Fund will continue to be permitted to borrow only for extraordinary
or emergency purposes or except in connection with reverse repurchase
agreements. However, upon approval of this proposal, to conform to applicable
state requirements, the Trustees will adopt a non-fundamental restriction which
would permit the Fund to borrow only from banks and would limit borrowings to 5%
of total assets taken at market value. Should state restrictions change, the
Trustees would be able to change this non-fundamental policy without shareholder
approval.
The current restriction states as follows:
"The Fund may not. . .
borrow money except from banks as a temporary measure for extraordinary or
emergency purposes (a Fund is required to maintain asset coverage
(including borrowings) of 300% for all borrowings) and no purchases of
securities will be made while such borrowings exceed 5% of the value of the
Fund's assets."
13
<PAGE>
If this proposal is approved, the Trustees intend to replace this
restriction with the following fundamental investment restriction:
"The Fund may not. . .
borrow money, except as a temporary measure for extraordinary or emergency
purposes or except in connection with reverse repurchase agreements;
provided that the Fund maintains asset coverage of 300% for all
borrowings."
And would adopt the following non-fundamental policy:
"The Fund may not. . .
borrow money in excess of 5% of its total assets (taken at market value)
except for temporary or emergency purposes, borrow other than from banks or
in connection with reverse repurchase agreements."
B. Approval Or Disapproval Of Amendments To The Fund's Investment Restriction
With Respect To Investments In Real Estate
The Trustees are recommending that the Fund's fundamental investment
restriction relating to investments in real estate be revised to grant the Fund
the maximum flexibility in light of current regulatory requirements. The
proposed policies are consistent with the equivalent policies of other funds
managed by Scudder.
The current restriction states as follows:
"The Fund will not. . .
purchase and sell real estate (though it may invest in short-term
securities of companies which deal in real estate and in other permitted
investments secured by real estate) or commodities or commodities
contracts."
The proposed amendments would provide maximum flexibility to invest in real
estate related securities, as well as reserve for the Fund the freedom of action
to hold and sell real estate acquired as a result of the Fund's ownership of
securities.
The proposed amended fundamental investment restriction regarding real
estate would read as follows:
"The Fund may not. . .
purchase or sell real estate (except that the Fund may invest in (i)
securities of companies which deal in real estate or mortgages, and (ii)
securities secured by real estate or interests therein)."
To the extent the Fund invests in real estate-related securities, it will
be subject to the risks associated with the real estate market. These risks may
include declines in the value of real estate, changes in general or local
economic conditions, overbuilding, difficulty in completing construction,
increased competition, changes in zoning laws, increases in property taxes and
operating expenses, and variations in rental income. Generally, increases in
interest rates will increase the costs of obtaining financing, which may result
in a decrease in the value of such investments. Finally, management of real
estate, even on a temporary or emergency basis, requires different skills and
experience than managing a pool of securities.
14
<PAGE>
In addition, the Fund will adopt a new fundamental restriction to
separately address the purchase of commodities. The new fundamental restriction
regarding commodities would read as follows:
"The Fund may not. . .
purchase or sell physical commodities or contracts relating to physical
commodities."
The proposed new fundamental policy regarding commodities amends the
restriction to refer exclusively to physical commodities, so that transactions
in what may technically be deemed to be commodities (such as certain derivatives
contracts, and other similar instruments which may be developed in the future)
would not be subject to the policy. The Fund has no current intention to invest
in any new types of derivatives, although the amended restriction will provide
greater flexibility to do so in the future as new types of derivatives are
developed.
C. Approval Or Disapproval Of An Amendment To The Fund's Investment Restriction
Relating To Underwriting Securities
The Trustees are recommending that the Fund's fundamental investment restriction
relating to underwriting securities be clarified and rephrased consistent with
the equivalent policies of other funds managed by Scudder. The proposed
amendment would replace the current restriction, which states that:
"The Fund may not. . .
act as an underwriter of the securities issued by others, except to the
extent that the purchase of securities in accordance with its investment
objective and policies directly from the issuer thereof and the later
disposition thereof may be deemed to be an underwriting."
The proposed amended fundamental investment restriction would read as
follows:
"The Fund may not. . .
act as an underwriter of securities issued by others, except to the extent
that it may be deemed an underwriter in connection with the disposition of
portfolio securities of the Fund."
D. Approval Or Disapproval Of The Reclassification Of And Amendment To The
Fund's Investment Restriction Relating To Repurchase Agreements
The Trustees are recommending that the Fund's fundamental investment
restriction with respect to repurchase agreements be reclassified as
non-fundamental and amended.
The current policy states as follows:
"The Fund may not. . .
enter into repurchase agreements or purchase any securities if, as a result
thereof, more than 10% of the total assets of a Fund (taken at market
value) would be, in the aggregate, subject to repurchase agreements
maturing in more than seven days and invested in restricted securities or
securities which are not readily marketable."
Certain state securities laws in the past required this restriction, and
the restriction is not required to be a fundamental policy. If the proposal is
approved, the Trustees intend to replace this fundamental restriction with a
similar non-fundamental restriction, which will be re-worded consistent with
equivalent policies of other funds managed by Scudder. Scudder recommended to
15
<PAGE>
the Board of Trustees that this restriction be made non-fundamental to provide
the Fund with maximum flexibility to modify or eliminate the policy if no longer
required. If the restriction were no longer required, the Trustees could
eliminate the restriction to increase the Fund's investment flexibility without
the need for further shareholder approval.
The proposed and amended non-fundamental restriction would state as
follows:
"The Fund may not. . .
invest more than 10% of its total assets in securities which are not
readily marketable, the disposition of which is restricted under Federal
securities laws or in repurchase agreements not terminable within 7 days
provided that the fund will not invest more than 5% of its total assets in
restricted securities."
E. Approval Or Disapproval Of The Elimination Of The Fund's Investment
Restriction Relating To The Fund's Participation In A Trading Account In
Securities
The Trustees are recommending that the Fund's fundamental investment
restriction with respect to the Fund's participation in any trading account in
securities be eliminated. The current restriction states as follows:
"The Fund may not. . .
participate on a joint or a joint and several basis in any trading account
in securities, but may for the purpose of possibly achieving better net
results on portfolio transactions or lower brokerage commission rates join
with other investment company and client accounts managed by Scudder,
Stevens & Clark, Inc. in the purchase or sale of portfolio securities."
The activities contemplated by this restriction are specifically regulated
under the 1940 Act, and therefore it is unnecessary to have a fundamental
restriction to that effect.
F. Approval Or Disapproval Of The Reclassification Of And Amendments To The
Fund's Investment Restriction With Respect To Investments In Securities Of
Issuers In Which Management Of The Fund Or Scudder Owns Securities
The Trustees are recommending the reclassification as non-fundamental and
subsequent amendment of the fundamental investment restriction which prevents
the Fund from investing in the securities of issuers in which management of the
Fund or Scudder owns a certain percentage of securities. The current restriction
states as follows:
"The Fund may not. . .
purchase or retain securities of an issuer any of whose officers,
directors, trustees or security holders is an officer, director or Trustee
of a Fund or a member, officer, director or trustee of the investment
adviser of a Fund if one or more of such individuals owns beneficially more
than one-half of one percent (1/2 of 1%) of the shares or securities or
both (taken at market value) of such issuer and such individuals owning
more than one-half of one percent (1/2 of 1%) of such shares or securities
together own beneficially more than 5% of such shares or securities or
both."
Certain state securities laws in the past required this restriction, and
the restriction is currently required by only one state but is not required to
be a fundamental policy. If this proposal is approved, the Trustees intend to
16
<PAGE>
replace this fundamental policy with a substantially identical non-fundamental
investment restriction to comply with the remaining state's requirement. The
text of this proposed non-fundamental restriction would read as follows:
"The Fund may not. . .
purchase or retain securities of an issuer any of whose officers,
directors, trustees or security holders is an officer or director of the
Trust or a member, officer, director or trustee of the investment adviser
of the Fund if one or more of such individuals owns beneficially more than
one-half of one percent (1/2%) of the outstanding shares or securities or
both (taken at market value) of such issuer and such individuals owning
more than one-half of one percent (1/2%) of such shares or securities
together own beneficially more than 5% of such shares or securities or
both."
Scudder recommended to the Trustees making this restriction non-fundamental
to provide the Fund with maximum flexibility to modify or eliminate the
restriction if no longer required under state law. If the restriction were no
longer required, the Trustees could eliminate the restriction to increase the
Fund's investment flexibility without the need for further shareholder approval.
If the restriction were eliminated, the Fund would be able to invest in the
securities of any issuer without regard to ownership in such issuer by
management of the Fund or Scudder, except to the extent prohibited by the Fund's
investment objective and policies and the 1940 Act.
G. Approval Or Disapproval Of The Reclassification Of And Amendment To The
Fund's Investment Restriction With Respect To Margin Transactions
The Trustees are recommending that the Fund's fundamental investment
restriction with respect to margin transactions be reclassified as
non-fundamental and amended.
The current restriction states as follows:
"The Fund may not. . .
purchase securities on margin or make short sales unless, by virtue of its
ownership of other securities, it has the right to obtain securities
equivalent in kind and amount to the securities sold and, if the right is
conditional, the sale is made upon the same conditions."
Certain state securities laws in the past required this restriction, and
the restriction is currently required by only one state but is not required to
be a fundamental restriction. If the proposal is approved, the Trustees intend
to replace this fundamental restriction with a similar non-fundamental
restriction to comply with the remaining state's requirement.
The proposed amended non-fundamental restriction would read as follows:
"The Fund may not. . .
purchase securities on margin or make short sales, unless, by virtue of its
ownership of other securities, it has the right to obtain securities
equivalent in kind and amount to the securities sold and, if the right is
conditional, the sale is made upon the same conditions, except in
connection with arbitrage transactions and except that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities."
Scudder recommended to the Trustees making this fundamental investment
restriction non-fundamental to provide the Fund with maximum flexibility to
17
<PAGE>
modify or eliminate the restriction if no longer required under state law. If
the restriction were no longer required, the Trustees could eliminate the
restriction to increase the Fund's investment flexibility without the need for
further shareholder approval. However, the Fund's potential use of margin
transactions beyond transactions in futures and options and for the clearance of
purchases and sales of securities, including the use of margin in ordinary
securities transactions, is generally limited by the current position taken by
the Staff of the SEC that margin transactions with respect to securities are
prohibited under Section 18 of the 1940 Act because they create senior
securities. "Margin transactions" involve the purchase of securities with money
borrowed from a broker, with cash or eligible securities being used as
collateral against the loan. The Fund's ability to engage in margin transactions
is also limited by its borrowing policies, which permit the Fund to borrow money
in limited circumstances and only from banks.
H. Approval Or Disapproval Of An Amendment To The Fund's Investment Restriction
Regarding The Issuance Of Senior Securities
The Trustees are recommending that the fundamental investment restriction
relating to the issuance of senior securities be clarified and rephrased
consistent with the equivalent policies of other funds managed by Scudder. The
proposed amendment would replace the current restriction, which states that:
"The Fund may not. . .
issue senior securities, except as appropriate to evidence indebtedness
which a Fund is permitted to incur pursuant to Investment Restriction (1)
and except for shares of any additional series which may be established by
the Trustees."
The Trustees propose that this policy be amended to read as follows:
"The Fund may not. . .
Issue senior securities, except as appropriate to evidence indebtedness
which it is permitted to incur, and except for shares of the separate
classes or series of the Trust, provided that collateral arrangements with
respect to currency-related contracts, futures contracts, options or other
permitted investments, including deposits of initial and variation margin,
are not considered to be the issuance of senior securities for purposes of
this restriction."
I. Approval Or Disapproval Of The Reclassification Of And Amendments To The
Fund's Investment Restriction With Respect To Investments In Issuers That
Have Been In Operation For Less Than Three Years
The Trustees are recommending the elimination of the Fund's fundamental
investment restriction which limits the Fund's investments in issuers with
limited operating histories, which are sometimes referred to as "unseasoned
issuers." The current restriction states as follows:
"The Fund may not. . .
purchase securities of any issuer with a record of less than three years
continuous operation, including predecessors, except obligations issued or
guaranteed by the U.S. Government or its agencies, if such purchase would
cause the Fund's investments in all such issuers to exceed 5% of the Fund's
total assets taken at market value."
18
<PAGE>
Certain state securities laws in the past required this restriction, and
the restriction is currently required by only one state but is not required to
be a fundamental policy. If this proposal is approved, the Trustees intend to
replace this policy with a substantially similar non-fundamental investment
restriction to comply with the remaining state's requirement. Following such
amendment, the Fund will, consistent with this state's requirement, continue to
be able to invest up to 5% of its assets in the securities of unseasoned
issuers. In addition, the restriction will exempt obligations issued by any
foreign government or its agencies or instrumentalities, as well as certain U.S.
government securities from its limitations to provide the Fund maximum
flexibility.
The new non-fundamental restriction would read as follows:
"The Fund may not. . .
purchase securities of any issuer with a record of less than three years
continuous operations, including predecessors, except U.S. Government
securities, obligations issued or guaranteed by any foreign government or
its agencies or instrumentalities and securities of closed-end investment
companies, if such purchase would cause the investments of the Fund in all
such issuers to exceed 5% of the total assets of the Fund taken at market
value."
Scudder recommended to the Trustees making this restriction non-fundamental
to provide the Fund with maximum flexibility to modify or eliminate the
restriction if no longer required under state law. If the policy were no longer
required, the Trustees could change or eliminate the policy to increase the
Fund's investment flexibility without the need for further shareholder approval.
J. Approval Or Disapproval Of The Elimination Of The Fund's Investment
Restriction With Respect To Purchasing Common Stock or Other Voting
Securities
The Trustees are recommending that the Fund's fundamental restriction
prohibiting the purchase of common stocks or other voting securities be
eliminated because the Fund is not required by state or federal law to have an
investment restriction to this effect, and therefore, this express investment
restriction ("The Fund will not purchase common stocks or other voting
securities") is unnecessary.
K. Approval Or Disapproval Of Amendments To The Fund's Investment Restriction
With Respect To Concentration Of Its Assets
The Trustees are recommending that the Fund's fundamental investment
restriction with respect to concentration of its assets be revised to make it
clear that the Fund may invest more than 25% of its total assets in the
securities of agencies or instrumentalities of the U.S. government. The current
policy states as follows:
"The Fund may not. . .
purchase securities if such purchase would cause more than 25% in the
aggregate of the market value of the total assets of the Fund at the time
of such purchase to be invested in the securities of one or more issuers
having their principal business activities in the same industry, provided
that there is no limitation in respect to investments in obligations issued
or guaranteed by the U.S. Government or its agencies or instrumentalities,
or in certificates of deposit or bankers' acceptances (for the purposes of
this policy telephone companies are considered to be a separate industry
from gas and electric public utilities, and wholly-owned finance companies
19
<PAGE>
are considered to be in the industry of their parents if their activities
are primarily related to financing the activities of the parents)."
The proposed amended fundamental restriction, which makes certain other
clarifying changes, would read as follows:
"The Fund may not. . .
purchase any securities which would cause more than 25% of the market value
of its total assets at the time of such purchase to be invested in the
securities of one or more issuers having their principal business
activities in the same industry, provided that there is no limitation with
respect to investments in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, or in certificates of
deposit or bankers' acceptances."
Scudder recommended this amendment to the Trustees to make it clear that
the Fund may invest in the securities of the agencies or instrumentalities of
the U.S. government without regard to the 25% limit. Scudder believes that the
current restriction does not prevent the Fund from investing in such securities
without limit, because the SEC takes the position that government issuers,
including agencies and instrumentalities of a governmental issuer, are not
members of any industry. However, the proposed amendment is being made to avoid
any ambiguity in the future, as well as to make that provision of the
restriction consistent with the equivalent restrictions of other funds managed
by Scudder.
L. Approval Or Disapproval Of The Elimination Of The Fund's Investment
Restriction Which Prohibits Investing For The Purpose Of Controlling Another
Company
The Trustees are recommending that the Fund's fundamental restriction
prohibiting investing for control of another company be eliminated because such
activities are regulated specifically under the 1940 Act, and therefore, this
express investment restriction ("The Fund may not invest for the purpose of
controlling or managing any other company") is unnecessary.
M. Approval or Disapproval Of Amendments To The Fund's Investment Restriction
With Respect To Diversification
The Trustees are recommending that the Fund's fundamental investment
restriction with respect to diversification be modified to give the Fund greater
flexibility to obtain commitments from third parties to assure that particular
portfolio securities satisfy the Fund's credit, maturity and liquidity
standards.
The SEC has adopted extensive changes to the principal rule governing the
operations of money market funds--Rule 2a-7 (the"Rule") under the 1940 Act. The
Rule is intended to help assure that money market funds can maintain a stable
net asset value. It contains extensive restrictions in addition to those
concerning diversification, including quality and maturity standards. The
amendments to the Rule are currently expected to take effect on October 3, 1996.
The current restriction states as follows:
"The Fund may not...
with respect to 75% of the value of the total assets of the Fund, invest
more than 5% of the value of total assets of the Fund in the securities of
any one issuer, except U.S. Government securities."
20
<PAGE>
The proposed amended fundamental restriction, would read as follows for the
Fund:
"The Fund may not...
with respect to 75% of the Fund's total assets, purchase more than 10% of
the voting securities of any one issuer or invest more than 5% of the value
of the total assets of the Fund in the securities of any one issuer (except
for investments in obligations issued or guaranteed by the U.S. Government
or its agencies or instrumentalities, cash and cash equivalents and
securities of other investment companies), provided that the amount of the
total assets of the Fund that may be invested in the securities of any one
issuer will, instead, be limited in accordance with federal law, regulation
and regulatory interpretation applicable to money market funds, as amended
from time to time."
The Trustees have determined that it would be in the best interest of the
Fund to operate in accordance with the Rule, as amended. The Trustees have also
determined that the diversification standards of the Rule, rather than those
stated above, should govern the activities of the Fund. The modification to the
diversification restriction will give the Fund greater flexibility to obtain
commitments from third parties to assure that particular portfolio securities
satisfy the Fund's credit, maturity and liquidity standards.
Scudder believes that the protections of the Rule, including its
diversification and other requirements, can fairly be characterized as stricter
overall than what is otherwise required by the 1940 Act. The Rule is designed
specifically for money market funds and imposes what is considered to be strict
but appropriate regulation of those funds. The Rule should govern the operation
of such funds to the extent that the specific Rule might conflict with the
general diversification requirements applicable to all mutual funds regardless
of investment objectives and policies. Therefore a change in the Fund's
diversification restriction to be consistent with the Rule will provide the Fund
with desirable flexibility (within the parameters of a very restrictive Rule),
will permit the Fund to operate more effectively, and will be consistent with
the investment objectives of the Fund and with the best interests of the Fund
and its shareholders.
ADDITIONAL INFORMATION
Other Matters
The Board of Trustees does not know of any matters to be brought before the
Meeting other than those mentioned in this Proxy Statement. The appointed
proxies will vote on any other business that comes before the Meeting or any
adjournments thereof in accordance with their best judgment.
Please complete and sign the enclosed proxy card and return it in the
envelope provided so that the Meeting may be held and action may be taken, with
the greatest possible number of shares participating, on the matters described
in this Proxy Statement. This will not preclude your voting in person if you
attend the Meeting.
Miscellaneous
Proxies will be solicited by mail and may be solicited in person or by
telephone or facsimile by Officers of the Fund, personnel of Scudder or an agent
of the Fund for compensation. The expenses connected with the solicitation of
proxies and with any further proxies which may be solicited will be borne by the
Fund. The Fund will reimburse banks, brokers and other persons holding the
21
<PAGE>
Fund's shares registered in their names or in the names of their nominees, for
their expenses incurred in sending proxy material to and obtaining proxies from
the beneficial owners of such shares.
In the event that sufficient votes in favor of the proposals set forth in
the Notice of Special Meeting are not received by November 5, 1996, the persons
named as appointed proxies on the enclosed proxy card may propose one or more
adjournments of the Meeting to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of the holders of a majority of
the shares present in person or by proxy at the session of the meeting to be
adjourned. The persons named as appointed proxies on the enclosed proxy card
will vote in favor of such adjournment those proxies which they are entitled to
vote in favor of the proposal for which further solicitation of proxies is to be
made. They will vote against any such adjournment those proxies required to be
voted against such proposal. The costs of any such additional solicitation and
of any adjourned session will be borne by the Fund.
Shareholder Proposals
Shareholders wishing to submit proposals for inclusion in a proxy statement
for any subsequent shareholders' meeting should send their written proposals to
Thomas F. McDonough, Secretary of the Fund, c/o Scudder, Stevens & Clark, Inc.,
Two International Place, Boston, Massachusetts 02110, within a reasonable time
before the solicitation of proxies for such shareholders' meeting. The timely
submission of a proposal does not guarantee its inclusion.
Two International Place By Order of the Board of Trustees
Boston, Massachusetts 02110 Thomas F. McDonough
September 16, 1996 Secretary
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EXHIBIT A
PROPOSED AMENDMENTS TO AMENDED AND RESTATED
DECLARATION OF TRUST
(ADDITIONS ARE SHOWN IN ITALICS; DELETIONS ARE CROSSED OUT)
Article I, Section 1.2, subsections (k), (m) and (r):
(k) "Series" individually or collectively means the two or more Series as may be
established and designated from time to time by the Trustees pursuant to Section
5.11 hereof. Unless the context otherwise requires, the term "Series" shall
include Classes into which shares of the Trust, or of a Series, may be divided
from time to time.
(m) "Shares" means the equal proportionate units of interest into which the
beneficial interest in the Trust shall be divided from time to time, including
the Shares of any and all Series and Classes which may be established by the
Trustees and includes fractions of Shares as well as whole Shares. "Outstanding
Shares" means those shares shown from time to time on the books of the Trust or
its Transfer Agent as then issued and outstanding, but shall not include Shares
which have been redeemed or repurchased by the Trust and which are at the time
held in the Treasury of the Trust.
(r) "Class" means the two or more Classes as may be established and designated
from time to time by the Trustees pursuant to Section 5.13 hereof.
Article V, Sections 5.1, 5.9 and 5.13:
Section 5.1. Beneficial Interest. The interest of the beneficiaries hereunder
shall be divided into transferable Shares of beneficial interest, all of one
class, except as provided in Section 5.11 and Section 5.13 hereof, par value
$.01 per share. The number of Shares of beneficial interest authorized hereunder
is unlimited. All Shares issued hereunder including, without limitation, Shares
issued in connection with a dividend in Shares or a split of Shares, shall be
fully paid and non-assessable.
Section 5.9. Voting Powers. The Shareholders shall have power to vote only (i)
for the election of Trustees as provided in Section 2.12; (ii) for the removal
of Trustees as provided in Section 2.13; (iii) with respect to any investment
advisory or management contract entered into pursuant to Section 3.2; (iv) with
respect to termination of the Trust as provided in Section 8.2; (v) with respect
to any amendment of this Declaration to the extent and as provided in Section
8.3; (vi) with respect to any merger, consolidation or sale of assets as
provided in Section 8.4; (vii) with respect to incorporation of the Trust, or
any Series to the extent and as provided in Section 8.5; (viii) to the same
extent as the stockholders of Massachusetts business corporation as to whether
or not a court action, proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the Trust or any
Series or Class thereof or the Shareholders (provided, however, that a
Shareholder of a particular Series or Class shall not be entitled to a
derivative or class action on behalf of any other Series or Class (or
Shareholder of any other Series or Class) of the Trust); (ix) with respect to
any plan adopted pursuant to Rule 12b-1 (or any successor rule) under the 1940
Act; and (x) with respect to such additional matters relating to the Trust as
may be required by this Declaration, the By-laws or any registration of the
Trust as an investment company under the 1940 Act with the Commission (or any
successor agency) or as the Trustees may consider necessary or desirable.
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Each whole Share shall be entitled to one vote as to any matter on which it is
entitled to vote and each fractional Share shall be entitled to a proportionate
fractional vote, except that the Trustees may, in conjunction with the
establishment of any Series or Class of Shares, establish or reserve the right
to establish conditions under which the several Series or Classes shall have
separate voting rights or, if a Series or Class would not, in the sole judgment
of the Trustees, be materially affected by a proposal, no voting rights. There
shall be no cumulative voting in the election of Trustees. Until Shares are
issued, the Trustees may exercise all rights of Shareholders and may take any
action required by law, this Declaration or the By-laws to be taken by
Shareholders. The By-laws may include further provisions for Shareholders' votes
and meetings and related matters.
Section 5.13. Class Designation. The Trustees, in their discretion, may
authorize the division of the Shares of the Trust, or, if any Series be
established, the Shares of any Series, into two or more Classes, and the
different Classes shall be established and designated, and the variations in the
relative rights and preferences as between the different Classes shall be fixed
and determined, by the Trustees; provided, that all Shares of the Trust or of
any Series shall be identical to all other Shares of the Trust or the same
Series, as the case may be, except that there may be variations between
different classes as to allocation of expenses, right of redemption, special and
relative rights as to dividends and on liquidation, conversion rights, and
conditions under which the several Classes shall have separate voting rights.
All references to Shares in this Declaration shall be deemed to be Shares of any
or all Classes as the context may require.
If the Trustees shall divide the Shares of the Trust or any Series into two or
more Classes, the following provisions shall be applicable:
(a) All provisions herein relating to the Trust, or any Series of the Trust,
shall apply equally to each Class of Shares of the Trust or of any Series of the
Trust, except as the context requires otherwise.
(b) The number of Shares of each Class that may be issued shall be unlimited.
The Trustees may classify or reclassify any unissued Shares of the Trust or any
Series or any Shares previously issued and reacquired of any Class of the Trust
or of any Series into one or more Classes that may be established and designated
from time to time. The Trustees may hold as treasury Shares (of the same or some
other Class), reissue for such consideration and on such terms as they may
determine, or cancel any Shares of any Class reacquired by the Trust at their
discretion from time to time.
(c) Liabilities, expenses, costs, charges and reserves related to the
distribution of, and other identified expenses that should properly be allocated
to, the Shares of a particular Class may be charged to and borne solely by such
Class and the bearing of expenses solely by a Class of Shares may be
appropriately reflected (in a manner determined by the Trustees) and cause
differences in the net asset value attributable to, and the dividend, redemption
and liquidation rights of, the Shares of different Classes. Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the Shareholders of all Classes for all purposes.
(d) The establishment and designation of any Class of Shares shall be effective
upon the execution of a majority of the then Trustees of an instrument setting
forth such establishment and designation and the relative rights and preferences
of such Class, or as otherwise provided in such instrument. The Trustees may, by
an instrument executed by a majority of their number, abolish any Class and the
establishment and designation thereof. Each instrument referred to in this
paragraph shall have the status of an amendment to this Declaration.
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Article VI, Section 6.6:
Section 6.6. Redemption of Shareholder's Interest. The Trust shall have the
right at any time without prior notice to the shareholder to redeem Shares of
any shareholder for their then current net asset value per Share if at such time
the shareholder owns Shares having an aggregate net asset value of less than
$1,000 an amount set from time to time by the Trustees subject to such terms and
conditions as the Trustees may approve, and subject to the Trust's giving
general notice to all shareholders of its intention to avail itself of such
right, either by publication in the Trust's registration statement, if any, or
by such other means as the Trustees may determine.
Article VII, Section 7.1:
Section 7.1. Net Asset Value. The value of the assets of the Trust or any Series
of the Trust shall be determined by appraisal of the securities of the Trust or
allocated to such Series, such appraisal to be on the basis of the amortized
cost of such securities in the case of money market securities, market value in
the case of other securities, or by such other method as shall be deemed to
reflect the fair value thereof, determined in good faith by or under the
direction of the Trustees. From the total value of said assets, there shall be
deducted all indebtedness, interest, taxes, payable or accrued, including
estimated taxes on unrealized book profits, expenses and management charges
accrued to the appraisal date, net income determined and declared as a
distribution and all other items in the nature of liabilities attributable to
the Trust or such Series or Class thereof which shall be deemed appropriate.
[Begin strikethrough] The resulting amount which shall represent the total net
assets of the Trust or the Series shall be divided by the number of Shares of
the Trust or such Series outstanding at the time and the quotient so obtained
shall be deemed to be the net asset value of the Shares. [End strikethrough]
The net asset value of a Share shall be determined by dividing the net
asset value of the Class, or, if no Class has been established, of the Series,
or, ifno Series has been established, of the Trust, by the number of Shares of
that Class, or Series, or of the Trust, as applicable, outstanding. The net
asset value of Shares of the Trust or any Class or Series of the Trust shall be
determined pursuant to the procedure and methods prescribed or approved by the
Trustees in their discretion and as set forth in the most recent Registration
Statement of the Trust as filed with the Securities and Exchange Commission
pursuant to the requirements of the Securities Act of 1933, as amended, the
Investment Company Act of 1940, as amended, and the Rules thereunder. The net
asset value of the Shares shall be determined at least once on each business
day, as of the close of trading on the New York Stock Exchange or as of such
other time or times as the Trustees shall determine. The power and duty to make
the daily calculations may be delegated by the Trustees to the Investment
Adviser, the Custodian, the Transfer Agent or such other Person as the Trustees
may determine by resolution or by approving a contract which delegates such duty
to another Person. The Trustees may suspend the daily determination of net asset
value to the extent permitted by the 1940 Act.
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EXHIBIT B
Scudder Cash Investment Trust
Two International Place
Boston, Massachusetts 02110
_________, 1996
Scudder, Stevens & Clark, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Scudder Cash Investment Trust
Ladies and Gentlemen:
Scudder Cash Investment Trust (the "Trust") has been established as a
Massachusetts business Trust to engage in the business of an investment company.
Pursuant to the Trust's Declaration of Trust, as amended from time-to-time (the
"Declaration"), the Board of Trustees may divide the Trust's shares of
beneficial interest, par value $0.01 per share (the "Shares"), into separate
series or funds. Series may be abolished and dissolved, and additional series
established, from time to time by action of the Trustees.
The Trust, on behalf of the Fund, has selected you to act as the sole
investment manager of the Fund and to provide certain other services, as more
fully set forth below, and you have indicated that you are willing to act as
such investment manager and to perform such services under the terms and
conditions hereinafter set forth. Accordingly, the Trust on behalf of the Fund
agrees with you as follows:
1. Delivery of Documents. The Trust engages in the business of
investing and reinvesting the assets of the Fund in the manner and in accordance
with the investment objectives, policies and restrictions specified in the
currently effective Prospectus (the "Prospectus") and Statement of Additional
Information (the "SAI") relating to the Fund included in the Trust's
Registration Statement on Form N-1A, as amended from time to time, (the
"Registration Statement") filed by the Trust under the Investment Company Act of
1940, as amended, (the "1940 Act") and the Securities Act of 1933, as amended.
Copies of the documents referred to in the preceding sentence have been
furnished to you by the Trust. The Trust has also furnished you with copies
properly certified or authenticated of each of the following additional
documents related to the Trust and the Fund:
(a) The Declaration dated November 3, 1987, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof (the "By-Laws").
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(c) Resolutions of the Trustees and the shareholders of the Trust selecting you
as investment manager and approving the form of this Agreement.
The Trust will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements, if any, to the
foregoing, including the Prospectus, the SAI and the Registration Statement.
2. Sublicense to Use the Scudder Trademarks. As exclusive licensee of
the rights to use and sublicense the use of the "Scudder" and "Scudder, Stevens
& Clark," trademarks (together, the "Scudder Marks"), you hereby grant the Trust
a nonexclusive right and sublicense to use (i) the "Scudder" name and mark as
part of the Trust's name (the "Fund Name"), and (ii) the Scudder Marks in
connection with the Trust's investment products and services, in each case only
for so long as this Agreement, any other investment management agreement between
you and the Trust, or any extension, renewal or amendment hereof or thereof
remains in effect, and only for so long as you are a licensee of the Scudder
Marks, provided however, that you agree to use your best efforts to maintain
your license to use and sublicense the Scudder Marks. The Trust agrees that it
shall have no right to sublicense or assign rights to use the Scudder Marks,
shall acquire no interest in the Scudder Marks other than the rights granted
herein, that all of the Trust's uses of the Scudder Marks shall inure to the
benefit of Scudder Trust Company as owner and licensor of the Scudder Marks (the
"Trademark Owner"), and that the Trust shall not challenge the validity of the
Scudder Marks or the Trademark Owner's ownership thereof. The Trust further
agrees that all services and products it offers in connection with the Scudder
Marks shall meet commercially reasonable standards of quality, as may be
determined by you or the Trademark Owner from time to time, provided that you
acknowledge that the services and products the Trust rendered during the
one-year period preceding the date of this Agreement are acceptable. At your
reasonable request, the Trust shall cooperate with you and the Trademark Owner
and shall execute and deliver any and all documents necessary to maintain and
protect (including but not limited to in connection with any trademark
infringement action) the Scudder Marks and/or enter the Trust as a registered
user thereof. At such time as this Agreement or any other investment management
agreement shall no longer be in effect between you (or your successor) and the
Trust, or you no longer are a licensee of the Scudder Marks, the Trust shall (to
the extent that, and as soon as, it lawfully can) cease to use the Fund Name or
any other name indicating that it is advised by, managed by or otherwise
connected with you (or any organization which shall have succeeded to your
business as investment manager) or the Trademark Owner. In no event shall the
Trust use the Scudder Marks or any other name or mark confusingly similar
thereto (including, but not limited to, any name or mark that includes the name
"Scudder") if this Agreement or any other investment advisory agreement between
you (or your successor) and the Fund is terminated.
3. Portfolio Management Services. As manager of the assets of the Fund,
you shall provide continuing investment management of the assets of the Fund in
accordance with the investment objectives, policies and restrictions set forth
in the Prospectus and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended, (the "Code") relating to regulated
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investment companies and all rules and regulations thereunder; and all other
applicable federal and state laws and regulations of which you have knowledge;
subject always to policies and instructions adopted by the Trust's Board of
Trustees. In connection therewith, you shall use reasonable efforts to manage
the Fund so that it will qualify as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder. The Fund shall have
the benefit of the investment analysis and research, the review of current
economic conditions and trends and the consideration of long-range investment
policy generally available to your investment advisory clients. In managing the
Fund in accordance with the requirements set forth in this section 3, you shall
be entitled to receive and act upon advice of counsel to the Trust or counsel to
you. You shall also make available to the Trust promptly upon request all of the
Fund's investment records and ledgers as are necessary to assist the Trust to
comply with the requirements of the 1940 Act and other applicable laws. To the
extent required by law, you shall furnish to regulatory authorities having the
requisite authority any information or reports in connection with the services
provided pursuant to this Agreement which may be requested in order to ascertain
whether the operations of the Trust are being conducted in a manner consistent
with applicable laws and regulations.
You shall determine the securities, instruments, investments,
currencies, repurchase agreements, futures, options and other contracts relating
to investments to be purchased, sold or entered into by the Fund and place
orders with broker-dealers, foreign currency dealers, futures commission
merchants or others pursuant to your determinations and all in accordance with
Fund policies as expressed in the Registration Statement. You shall determine
what portion of the Fund's portfolio shall be invested in securities and other
assets and what portion, if any, should be held uninvested.
You shall furnish to the Trust's Board of Trustees periodic reports on
the investment performance of the Fund and on the performance of your
obligations pursuant to this Agreement, and you shall supply such additional
reports and information as the Trust's officers or Board of Trustees shall
reasonably request.
4. Administrative Services. In addition to the portfolio management
services specified above in section 3, you shall furnish at your expense for the
use of the Fund such office space and facilities in the United States as the
Fund may require for its reasonable needs, and you (or one or more of your
affiliates designated by you) shall render to the Trust administrative services
on behalf of the Fund necessary for operating as an open-end investment company
and not provided by persons not parties to this Agreement including, but not
limited to, preparing reports to and meeting materials for the Trust's Board of
Trustees and reports and notices to Fund shareholders; supervising, negotiating
contractual arrangements with, to the extent appropriate, and monitoring the
performance of, accounting agents, custodians, depositories, transfer agents and
pricing agents, accountants, attorneys, printers, underwriters, brokers and
dealers, insurers and other persons in any capacity deemed to be necessary or
desirable to Fund operations; preparing and making filings with the Securities
and Exchange Commission (the "SEC") and other regulatory and self-regulatory
organizations, including, but not limited to, preliminary and definitive proxy
materials, post-effective amendments to the Registration Statement, semi-annual
reports on Form N-SAR and notices pursuant to Rule 24f-2 under the 1940 Act;
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overseeing the tabulation of proxies by the Fund's transfer agent; assisting in
the preparation and filing of the Fund's federal, state and local tax returns;
preparing and filing the Fund's federal excise tax return pursuant to Section
4982 of the Code; providing assistance with investor and public relations
matters; monitoring the valuation of portfolio securities, the calculation of
net asset value; monitoring the registration of Shares of the Fund under
applicable federal and state securities laws; maintaining or causing to be
maintained for the Fund all books, records and reports and any other information
required under the 1940 Act, to the extent that such books, records and reports
and other information are not maintained by the Fund's custodian or other agents
of the Fund; assisting in establishing the accounting policies of the Fund;
assisting in the resolution of accounting issues that may arise with respect to
the Fund's operations and consulting with the Fund's independent accountants,
legal counsel and the Fund's other agents as necessary in connection therewith;
establishing and monitoring the Fund's operating expense budgets; reviewing the
Fund's bills; processing the payment of bills that have been approved by an
authorized person; assisting the Fund in determining the amount of dividends and
distributions available to be paid by the Fund to its shareholders, preparing
and arranging for the printing of dividend notices to shareholders, and
providing the transfer and dividend paying agent, the custodian, and the
accounting agent with such information as is required for such parties to effect
the payment of dividends and distributions; and otherwise assisting the Trust as
it may reasonably request in the conduct of the Fund's business, subject to the
direction and control of the Trust's Board of Trustees. Nothing in this
Agreement shall be deemed to shift to you or to diminish the obligations of any
agent of the Fund or any other person not a party to this Agreement which is
obligated to provide services to the Fund.
5. Allocation of Charges and Expenses. Except as otherwise specifically
provided in this section 5, you shall pay the compensation and expenses of all
Trustees, officers and executive employees of the Trust (including the Fund's
share of payroll taxes) who are affiliated persons of you, and you shall make
available, without expense to the Fund, the services of such of your directors,
officers and employees as may duly be elected officers of the Trust, subject to
their individual consent to serve and to any limitations imposed by law. You
shall provide at your expense the portfolio management services described in
section 3 hereof and the administrative services described in section 4 hereof.
You shall not be required to pay any expenses of the Fund other than
those specifically allocated to you in this section 5. In particular, but
without limiting the generality of the foregoing, you shall not be responsible,
except to the extent of the reasonable compensation of such of the Fund's
Trustees and officers as are directors, officers or employees of you whose
services may be involved, for the following expenses of the Fund: organization
expenses of the Fund (including out-of-pocket expenses, but not including your
overhead or employee costs); fees payable to you and to any other Fund advisors
or consultants; legal expenses; auditing and accounting expenses; maintenance of
books and records which are required to be maintained by the Fund's custodian or
other agents of the Trust; telephone, telex, facsimile, postage and other
communications expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Fund in connection with membership in investment company trade
organizations; fees and expenses of the Fund's accounting agent, custodians,
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subcustodians, transfer agents, dividend disbursing agents and registrars;
payment for portfolio pricing or valuation services to pricing agents,
accountants, bankers and other specialists, if any; expenses of preparing share
certificates and, except as provided below in this section 5, other expenses in
connection with the issuance, offering, distribution, sale, redemption or
repurchase of securities issued by the Fund; expenses relating to investor and
public relations; expenses and fees of registering or qualifying Shares of the
Fund for sale; interest charges, bond premiums and other insurance expense;
freight, insurance and other charges in connection with the shipment of the
Fund's portfolio securities; the compensation and all expenses (specifically
including travel expenses relating to Trust business) of Trustees, officers and
employees of the Trust who are not affiliated persons of you; brokerage
commissions or other costs of acquiring or disposing of any portfolio securities
of the Fund; expenses of printing and distributing reports, notices and
dividends to shareholders; expenses of printing and mailing Prospectuses and
SAIs of the Fund and supplements thereto; costs of stationery; any litigation
expenses; indemnification of Trustees and officers of the Trust; costs of
shareholders' and other meetings; and travel expenses (or an appropriate portion
thereof) of Trustees and officers of the Trust who are directors, officers or
employees of you to the extent that such expenses relate to attendance at
meetings of the Board of Trustees of the Trust or any committees thereof or
advisors thereto held outside of Boston, Massachusetts or New York, New York.
You shall not be required to pay expenses of any activity which is
primarily intended to result in sales of Shares of the Fund if and to the extent
that (i) such expenses are required to be borne by a principal underwriter which
acts as the distributor of the Fund's Shares pursuant to an underwriting
agreement which provides that the underwriter shall assume some or all of such
expenses, or (ii) the Trust on behalf of the Fund shall have adopted a plan in
conformity with Rule 12b-1 under the 1940 Act providing that the Fund (or some
other party) shall assume some or all of such expenses. You shall be required to
pay such of the foregoing sales expenses as are not required to be paid by the
principal underwriter pursuant to the underwriting agreement or are not
permitted to be paid by the Fund (or some other party) pursuant to such a plan.
6. Management Fee. For all services to be rendered, payments to be made
and costs to be assumed by you as provided in sections 3, 4 and 5 hereof, the
Trust on behalf of the Fund shall pay you on the last day of each month the
unpaid balance of a fee equal to the excess of (a) 1/12 of 0.50 of 1 percent of
the average daily net assets as defined below of the Fund for such month;
provided that, for any calendar month during which the average of such values
exceeds $250 million, the fee payable for that month based on the portion of the
average of such values in excess of $250 million shall be 1/12 of 0.45 of 1
percent of such portion; provided that, for any calendar month during which the
average of such values exceeds $500 million, the fee payable for that month
based on the portion of the average of such values in excess of $500 million
shall be 1/12 of 0.40 of 1 percent of such portion; and provided that, for any
calendar month during which the average of such values exceeds $1 billion, the
fee payable for that month based on the portion of the average of such values in
excess of $1 billion shall be 1/12 of 0.35 of 1 percent of such portion; over
(b) the greater of (i) the amount by which the Fund's expenses exceed the lowest
applicable expense limitation (as more fully described below) or (ii) any
compensation waived by you from time to time (as more fully described below).
You shall be entitled to receive during any month such interim payments of your
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fee hereunder as you shall request, provided that no such payment shall exceed
75 percent of the amount of your fee then accrued on the books of the Fund and
unpaid.
The "average daily net assets" of the Fund shall mean the average of
the values placed on the Fund's net assets as of 4:00 p.m. (New York time) on
each day on which the net asset value of the Fund is determined consistent with
the provisions of Rule 22c-1 under the 1940 Act or, if the Fund lawfully
determines the value of its net assets as of some other time on each business
day, as of such time. The value of the net assets of the Fund shall always be
determined pursuant to the applicable provisions of the Declaration and the
Registration Statement. If the determination of net asset value does not take
place for any particular day, then for the purposes of this section 6, the value
of the net assets of the Fund as last determined shall be deemed to be the value
of its net assets as of 4:00 p.m. (New York time), or as of such other time as
the value of the net assets of the Fund's portfolio may be lawfully determined
on that day. If the Fund determines the value of the net assets of its portfolio
more than once on any day, then the last such determination thereof on that day
shall be deemed to be the sole determination thereof on that day for the
purposes of this section 6.
You agree that your gross compensation for any fiscal year shall not be
greater than an amount which, when added to the other expenses of the Fund,
shall cause the aggregate expenses of the Fund to equal the maximum expenses
under the lowest applicable expense limitation established pursuant to the
statutes or regulations of any jurisdiction in which the Shares of the Fund may
be qualified for offer and sale. Except to the extent that such amount has been
reflected in reduced payments to you, you shall refund to the Fund the amount of
any payment received in excess of the limitation pursuant to this section 6 as
promptly as practicable after the end of such fiscal year, provided that you
shall not be required to pay the Fund an amount greater than the fee paid to you
in respect of such year pursuant to this Agreement. As used in this section 6,
"expenses" shall mean those expenses included in the applicable expense
limitation having the broadest specifications thereof, and "expense limitation"
means a limit on the maximum annual expenses which may be incurred by an
investment company determined (i) by multiplying a fixed percentage by the
average, or by multiplying more than one such percentage by different specified
amounts of the average, of the values of an investment company's net assets for
a fiscal year or (ii) by multiplying a fixed percentage by an investment
company's net investment income for a fiscal year. The words "lowest applicable
expense limitation" shall be construed to result in the largest reduction of
your compensation for any fiscal year of the Fund; provided, however, that
nothing in this Agreement shall limit your fees if not required by an applicable
statute or regulation referred to above in this section 6.
You may waive all or a portion of your fees provided for hereunder and
such waiver shall be treated as a reduction in purchase price of your services.
You shall be contractually bound hereunder by the terms of any publicly
announced waiver of your fee, or any limitation of the Fund's expenses, as if
such waiver or limitation were fully set forth herein.
7. Avoidance of Inconsistent Position; Services Not Exclusive. In
connection with purchases or sales of portfolio securities and other investments
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for the account of the Fund, neither you nor any of your directors, officers or
employees shall act as a principal or agent or receive any commission. You or
your agent shall arrange for the placing of all orders for the purchase and sale
of portfolio securities and other investments for the Fund's account with
brokers or dealers selected by you in accordance with Fund policies as expressed
in the Registration Statement. If any occasion should arise in which you give
any advice to clients of yours concerning the Shares of the Fund, you shall act
solely as investment counsel for such clients and not in any way on behalf of
the Fund.
Your services to the Fund pursuant to this Agreement are not to be
deemed to be exclusive and it is understood that you may render investment
advice, management and services to others. In acting under this Agreement, you
shall be an independent contractor and not an agent of the Trust.
8. Limitation of Liability of Manager. As an inducement to your
undertaking to render services pursuant to this Agreement, the Trust agrees that
you shall not be liable under this Agreement for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with the
matters to which this Agreement relates, provided that nothing in this Agreement
shall be deemed to protect or purport to protect you against any liability to
the Trust, the Fund or its shareholders to which you would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of your duties, or by reason of your reckless disregard of your
obligations and duties hereunder. Any person, even though also employed by you,
who may be or become an employee of and paid by the Fund shall be deemed, when
acting within the scope of his or her employment by the Fund, to be acting in
such employment solely for the Fund and not as your employee or agent.
9. Duration and Termination of This Agreement. This Agreement shall
remain in force until September 30, 1998, and continue in force from year to
year thereafter, but only so long as such continuance is specifically approved
at least annually (a) by the vote of a majority of the Trustees who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Trustees of the Trust, or by the vote of a majority of the
outstanding voting securities of the Fund. The aforesaid requirement that
continuance of this Agreement be "specifically approved at least annually" shall
be construed in a manner consistent with the 1940 Act and the rules and
regulations thereunder.
This Agreement may be terminated with respect to the Fund at any time,
without the payment of any penalty, by the vote of a majority of the outstanding
voting securities of the Fund or by the Trust's Board of Trustees on 60 days'
written notice to you, or by you on 60 days' written notice to the Trust. This
Agreement shall terminate automatically in the event of its assignment.
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Agreement shall be
effective until approved by the vote of a majority of the outstanding voting
securities of the Fund and by the Trust's Board of Trustees, including a
B-7
<PAGE>
majority of the Trustees who are not parties to this Agreement or interested
persons of any party to this Agreement, cast in person at a meeting called for
the purpose of voting on such approval.
11. Limitation of Liability for Claims. The Declaration, a copy of
which, together with all amendments thereto, is on file in the Office of the
Secretary of the Commonwealth of Massachusetts, provides that the name "Scudder
Cash Investment Trust" refers to the Trustees under the Declaration collectively
as Trustees and not as individuals or personally, and that no shareholder of the
Fund, or Trustee, officer, employee or agent of the Trust, shall be subject to
claims against or obligations of the Trust or of the Fund to any extent
whatsoever, but that the Trust estate only shall be liable.
You are hereby expressly put on notice of the limitation of liability
as set forth in the Declaration and you agree that the obligations assumed by
the Trust on behalf of the Fund pursuant to this Agreement shall be limited in
all cases to the Fund and its assets, and you shall not seek satisfaction of any
such obligation from the shareholders or any shareholder of the Fund or any
other series of the Trust, or from any Trustee, officer, employee or agent of
the Trust. You understand that the rights and obligations of each Fund, or
series, under the Declaration are separate and distinct from those of any and
all other series.
12. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
In interpreting the provisions of this Agreement, the definitions
contained in Section 2(a) of the 1940 Act (particularly the definitions of
"affiliated person," "assignment" and "majority of the outstanding voting
securities"), as from time to time amended, shall be applied, subject, however,
to such exemptions as may be granted by the SEC by any rule, regulation or
order.
This Agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts, provided that nothing herein shall be construed
in a manner inconsistent with the 1940 Act, or in a manner which would cause the
Fund to fail to comply with the requirements of Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or
management agreements entered into between you and the Trust on behalf of the
Fund.
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<PAGE>
If you are in agreement with the foregoing, please execute the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding contract
effective as of the date of this Agreement.
Yours very truly,
SCUDDER CASH INVESTMENT TRUST
By: ______________________________
President
The foregoing Agreement is hereby accepted as of the date thereof.
SCUDDER, STEVENS & CLARK, INC.
By: ______________________________
Managing Director
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<PAGE>
PROXY SCUDDER CASH INVESTMENT TRUST PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES
Special Meeting of Shareholders--November 5, 1996
The undersigned hereby appoints David S. Lee, Dudley Ladd and George M.
Lovejoy and each of them, the proxies of the undersigned, with the power of
substitution to each of them, to vote all shares of Scudder Cash Investment
Trust (the "Fund") which the undersigned is entitled to vote at the Special
Meeting of Shareholders of the Fund to be held at the offices of Scudder,
Stevens & Clark, Inc., Two International Place, Boston, MA 02110, on Tuesday,
November 5, 1996 at 10:45 a.m., eastern time, and at any adjournments thereof.
Unless otherwise specified in the squares provided, the undersigned's vote will
be cast FOR each numbered item listed below.
<TABLE>
<CAPTION>
<S> <C> <C>
1. The election of Trustees;
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary below)___ to vote for all nominees listed below ___
Nominees: David S. Lee, Henry P. Becton, Jr., E. Michael Brown, Dawn-Marie Driscoll, Peter
B. Freeman, Dudley Ladd and George M. Lovejoy, Jr.
(INSTRUCTION To withhold authority to vote for any individual nominee, please
strike a line through that nominee's name.)
2. Ratification of the selection of Coopers & Lybrand L.L.P. as the Fund's FOR AGAINST ABSTAIN
independent accountants; --- --- ---
(continued on other side)
<PAGE>
3. To approve of the amendment of the Fund's Amended and Restated FOR AGAINST ABSTAIN
Declaration of Trust; --- --- ---
4. To approve the new Investment Advisory Agreement between FOR AGAINST ABSTAIN
Scudder Cash Investment Trust and Scudder, Stevens & Clark, Inc.; --- --- ---
5. To approve the amendmentand/or addition of certain fundamental FOR AGAINST ABSTAIN
investment policies; --- --- ---
To transact such other business as may properly come before the meeting or any
adjournments thereof.
Please sign exactly as your name or names appear.
When signing as attorney, executor, administrator,
trustee or guardian, please give your full title
as such.
--------------------------------------------------
(Signature of Shareholder)
Date
------------------------------, 1996 --------------------------------------------------
(Signature of joint owner, if any)
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED POSTAGE-PREPAID ENVELOPE
</TABLE>
