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 _______ 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) Vice President; Managing Director 1975 303,067 Less than
of 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.
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.
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
---------- -------------- ------- ---------------- --------
Henry P. Becton, Jr. President and General Manager, WGBH 1990 0 0
(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.
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.
Dudley Ladd (52)* Managing Director of Scudder, 1987 0 0
Stevens & Clark, Inc. Mr. Ladd
serves on the boards of 14 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> <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>
If the Trustees determine that the cost to the Fund of servicing accounts
above the current minimum account size outweighs the benefits to the Fund of
such accounts, they may determine that it is in the Fund's best interest to
increase the minimum account size. Such a change may decrease the amount of the
Fund's assets. Thus, if inflation or other changes in economic conditions were
to make a higher minimum account size appropriate, the Trustees would be able to
increase the minimum account size without calling a shareholder meeting to amend
the Amended and Restated Declaration of Trust.
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;
8
<PAGE>
possible benefits to Scudder from serving as adviser and from affiliates of
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
9
<PAGE>
governmental fees; the fees and expenses of the transfer agent; and any other
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 31, 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 $ .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 $ .25 of 1%.
Scudder Variable Life Investment $ .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 Investment Company Act of 1940, 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
modify or eliminate the restriction if no longer required under state law. If
17
<PAGE>
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
22
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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. Each
whole Share shall be entitled to one vote as to any matter on which it is
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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
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establishment and designation thereof. Each instrument referred to in this
paragraph shall have the status of an amendment to this Declaration.
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. 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. 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, if no 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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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 _______ 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. which the undersigned is entitled to vote at
the Special Meeting of Stockholders of Scudder Cash Investment Trust 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, Peter B. Freeman, Henry P. Becton, Jr., E. Michael Brown, Dawn-Marie Driscoll,
Dudley Ladd and George M. Lovejoy, Jr.
(INSTRUCTION To withhold authority to vote for any individual nominee, write that nominee's name on the space
provided below.)
--------------------------------------------------------------
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. Approval of the amendment of the Fund's Amended and Restated FOR AGAINST ABSTAIN
Declaration of Trust; --- --- ---
4. Approval of the new Investment Advisory Agreement between FOR AGAINST ABSTAIN
Scudder Cash Investment Trust and Scudder, Stevens & Clark, Inc.; --- --- ---
5. Approval of the amendment of certain fundamental investment policies; FOR AGAINST ABSTAIN
--- --- ---
The Proxies are authorized to vote in their discretion on any other business
which may properly come before the meeting and any adjournments thereof.
Please sign 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 Stockholder)
Date
------------------------------, 1996 --------------------------------------------------
(Signature of joint owner, if any)
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE
NO POSTAGE IS REQUIRED
</TABLE>
