<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
</TABLE>
<TABLE>
<S> <C>
GLOBAL/INTERNATIONAL FUND, INC. SCUDDER MUTUAL FUNDS, INC.
INVESTMENT TRUST SCUDDER PATHWAY SERIES
SCUDDER CALIFORNIA TAX FREE TRUST SCUDDER PORTFOLIO TRUST
SCUDDER CASH INVESTMENT TRUST SCUDDER SECURITIES TRUST
SCUDDER FUND, INC. SCUDDER STATE TAX FREE TRUST
SCUDDER FUNDS TRUST SCUDDER TAX FREE MONEY FUND
SCUDDER GNMA FUND SCUDDER TAX FREE TRUST
SCUDDER INTERNATIONAL FUND, INC. SCUDDER U.S. TREASURY MONEY FUND
SCUDDER MUNICIPAL TRUST VALUE EQUITY TRUST
</TABLE>
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[SCUDDER LOGO] October 19, 1998
GLOBAL/INTERNATIONAL FUND, INC.
INVESTMENT TRUST
SCUDDER CALIFORNIA TAX FREE TRUST
SCUDDER CASH INVESTMENT TRUST
SCUDDER FUND, INC.
SCUDDER FUNDS TRUST
SCUDDER GNMA FUND
SCUDDER INTERNATIONAL FUND, INC.
SCUDDER MUNICIPAL TRUST
SCUDDER MUTUAL FUNDS, INC.
SCUDDER PATHWAY SERIES
SCUDDER PORTFOLIO TRUST
SCUDDER SECURITIES TRUST
SCUDDER STATE TAX FREE TRUST
SCUDDER TAX FREE MONEY FUND
SCUDDER TAX FREE TRUST
SCUDDER U.S. TREASURY MONEY FUND
VALUE EQUITY TRUST
IMPORTANT NEWS
FOR SCUDDER FUND SHAREHOLDERS
While we encourage you to read the full text of the enclosed Proxy
Statement, here's a brief overview of some matters affecting your Fund that will
be the subject of a shareholder vote.
Q & A: QUESTIONS AND ANSWERS
Q. WHAT IS HAPPENING?
A. Zurich Insurance Company ("Zurich"), which is the majority owner of your
Fund's investment manager, Scudder Kemper Investments, Inc. ("Scudder
Kemper"), has combined its businesses with the financial services businesses
of B.A.T Industries p.l.c. ("B.A.T"). The resulting company, Zurich
Financial Services ("Zurich Financial Services"), has become Zurich's parent
company. Although this transaction will have virtually no effect on
<PAGE> 3
the operations of Scudder Kemper or your Fund, we are asking the Fund's
shareholders to approve a new investment management agreement to assure that
there is no interruption in the services Scudder Kemper provides to your
Fund. The following pages give you additional information about Zurich
Financial Services, the new investment management agreement and certain
other matters. THE BOARD MEMBERS OF YOUR FUND, INCLUDING THOSE WHO ARE NOT
AFFILIATED WITH THE FUND, SCUDDER KEMPER OR ZURICH, RECOMMEND THAT YOU VOTE
FOR APPROVAL OF THE NEW INVESTMENT MANAGEMENT AGREEMENT.
Q. WHY AM I BEING ASKED TO VOTE ON THE NEW INVESTMENT MANAGEMENT AGREEMENT?
A. As a result of the Zurich-B.A.T transaction, the former shareholders of
B.A.T indirectly own a 43% interest in Zurich through a new holding company,
Allied Zurich p.l.c. This change in ownership of Zurich may be deemed to
have caused a "change in control" of Scudder Kemper, even though Scudder
Kemper's operations will not change as a result. The Investment Company Act
of 1940, which regulates investment companies such as your Fund, requires
that fund shareholders approve a new investment management agreement
whenever there is a change in control of a fund's investment manager (even
in the most technical sense). Pursuant to an exemptive order issued by the
Securities and Exchange Commission, your Fund entered into a new investment
management agreement, subject to receipt of shareholder approval within 150
days. Accordingly, we are seeking shareholder approval of the new investment
management agreement with your Fund.
Q. HOW WILL THE ZURICH-B.A.T TRANSACTION AFFECT ME AS A FUND SHAREHOLDER?
A. We do not expect the transaction to affect you as a Fund shareholder. Your
Fund and your Fund's investment objectives will not change as a result of
the transaction. You will still own the same shares in the same Fund. The
new investment management agreement is substantially identical to the former
investment management agreement, except for the dates of execution and
termination and the addition, for certain Funds, of breakpoints in the fee
structure. Similarly, the other service arrangements between your Fund and
Scudder Kemper or affiliates of Scudder Kemper will not be affected by the
transaction. If shareholders do not approve the new investment management
agreement, the agreement will terminate and the Board Members of your Fund
will take such action as they deem to be in the best interests of your Fund
and its shareholders.
(continues on inside back cover)
<PAGE> 4
Q. WILL THE INVESTMENT MANAGEMENT FEES INCREASE?
A. No, the investment management fee rates paid by your Fund will remain the
same. For some Funds, effective investment management fee rates may even
decrease in the future, as a result of the addition of certain breakpoints
in the fee structures (as described in the enclosed Proxy Statement under
"Differences Between the Former and New Investment Management Agreements").
Q. WHAT OTHER MATTERS AM I BEING ASKED TO VOTE ON?
A. In order to save your Fund the expense of a subsequent meeting, a vote is
also being sought for a revision of your Fund's fundamental lending policy
(and, with respect to Scudder S&P 500 Index Fund only, a revision of the
Fund's fundamental borrowing policy) to give the Board of your Fund
discretionary authority to permit your Fund to enter into interfund lending
arrangements, subject to Securities and Exchange Commission approval.
Q. HOW DO THE BOARD MEMBERS OF MY FUND RECOMMEND THAT I VOTE?
A. After careful consideration, the Board Members of your Fund, including those
who are not affiliated with the Fund, Scudder Kemper or Zurich, recommend
that you vote FOR the Proposals on the enclosed proxy card(s).
Q. WILL THE FUND PAY FOR THIS PROXY SOLICITATION?
A. No, Zurich or its affiliates will bear these costs.
Q. WHOM DO I CALL FOR MORE INFORMATION?
A. Please call Shareholder Communications Corporation, your Fund's information
agent, at 1-800-248-2681.
<PAGE> 5
INVESTMENT TRUST
SCUDDER CALIFORNIA TAX FREE TRUST
SCUDDER CASH INVESTMENT TRUST
SCUDDER FUNDS TRUST
SCUDDER GNMA FUND
SCUDDER MUNICIPAL TRUST
SCUDDER PATHWAY SERIES
SCUDDER PORTFOLIO TRUST
SCUDDER SECURITIES TRUST
SCUDDER STATE TAX FREE TRUST
SCUDDER TAX FREE MONEY FUND
SCUDDER TAX FREE TRUST
SCUDDER U.S. TREASURY MONEY FUND
VALUE EQUITY TRUST
Two International Place
Boston, Massachusetts 02110
GLOBAL/INTERNATIONAL FUND, INC.
SCUDDER FUND, INC.
SCUDDER INTERNATIONAL FUND, INC.
SCUDDER MUTUAL FUNDS, INC.
345 Park Avenue
New York, New York 10154
October 19, 1998
Dear Shareholders:
Zurich Insurance Company, the majority owner of Scudder Kemper Investments,
Inc., has combined its businesses with the financial services businesses of
B.A.T Industries p.l.c. The resulting company, Zurich Financial Services, has
become the parent company of Zurich and the majority owner of Scudder Kemper. As
a result of this transaction, we are asking the shareholders of each of the
funds for which Scudder Kemper acts as investment manager, including your Fund,
to approve a new investment management agreement with Scudder Kemper.
The Zurich-B.A.T transaction should not affect you as a Fund shareholder.
Your Fund shares will not change, the advisory fee rates and expenses paid by
your Fund will not increase, the investment objectives of your Fund will remain
the same, and, as is now the case, you will not pay sales loads on purchases of
shares of your Fund.
Shareholders are also being asked to approve certain other matters that
have been set forth in the Notice of Meetings. AFTER CAREFUL REVIEW, THE MEMBERS
OF YOUR FUND'S BOARD HAVE APPROVED THE NEW INVESTMENT MANAGEMENT
<PAGE> 6
AGREEMENT. THE BOARD MEMBERS OF YOUR FUND BELIEVE THAT EACH OF THE PROPOSALS SET
FORTH IN THE NOTICE OF MEETINGS FOR YOUR FUND IS IMPORTANT AND RECOMMEND THAT
YOU READ THE ENCLOSED MATERIALS CAREFULLY AND THEN VOTE FOR ALL PROPOSALS.
Because all of the funds for which Scudder Kemper acts as investment
manager are holding shareholder meetings, if you own shares of more than one
fund, you will receive more than one proxy card. Please sign and return each
proxy card you receive.
Your vote is important. PLEASE TAKE A MOMENT NOW TO SIGN AND RETURN YOUR
PROXY CARD(S) IN THE ENCLOSED POSTAGE-PAID RETURN ENVELOPE. If we do not receive
your executed proxy card(s) after a reasonable amount of time, you may receive a
telephone call from our proxy solicitor, Shareholder Communications Corporation,
reminding you to vote.
Respectfully,
/s/ Daniel Pierce
Daniel Pierce
President
Each Trust/Corporation listed above, except Global/International Fund, Inc.
and Scudder International Fund, Inc.
Chairman
Global/International Fund, Inc.
Scudder International Fund, Inc.
WE URGE YOU TO SIGN AND RETURN YOUR PROXY CARD(S) IN THE ENCLOSED POSTAGE-PAID
ENVELOPE TO ENSURE A QUORUM AT THE MEETING. YOUR VOTE IS IMPORTANT REGARDLESS OF
THE NUMBER OF SHARES YOU OWN.
<PAGE> 7
GLOBAL/INTERNATIONAL FUND, INC.
INVESTMENT TRUST
SCUDDER CALIFORNIA TAX FREE TRUST
SCUDDER CASH INVESTMENT TRUST
SCUDDER FUND, INC.
SCUDDER FUNDS TRUST
SCUDDER GNMA FUND
SCUDDER INTERNATIONAL FUND, INC.
SCUDDER MUNICIPAL TRUST
SCUDDER MUTUAL FUNDS, INC.
SCUDDER PATHWAY SERIES
SCUDDER PORTFOLIO TRUST
SCUDDER SECURITIES TRUST
SCUDDER STATE TAX FREE TRUST
SCUDDER TAX FREE MONEY FUND
SCUDDER TAX FREE TRUST
SCUDDER U.S. TREASURY MONEY FUND
VALUE EQUITY TRUST
NOTICE OF SPECIAL MEETINGS OF SHAREHOLDERS
Please take notice that Special Meetings of Shareholders (each a "Special
Meeting") of each Scudder Trust/Corporation listed above (each Trust is a
"Trust," collectively, the "Trusts" and each Corporation is a "Corporation,"
collectively, the "Corporations"), or, if applicable, each of its series that is
listed on Appendix 1 to the Proxy Statement (each such series is referred to
herein as a "Fund" and, collectively, where applicable, with those
Trusts/Corporations that do not have any series, the "Funds"), will be held
jointly at the offices of Scudder Kemper Investments, Inc., 13th Floor, Two
International Place, Boston, Massachusetts 02110, on December 15, 1998, at 10:00
a.m., Eastern time, for the following purposes:
PROPOSAL 1: To approve a new investment management agreement for each
Fund with Scudder Kemper Investments, Inc.;
PROPOSAL 2: To approve the revision of each Fund's fundamental
lending policy; and
PROPOSAL 3: (For shareholders of Scudder S&P 500 Index Fund only) to
approve the revision of the Fund's fundamental borrowing
policy.
The appointed proxies will vote in their discretion on any other business
as may properly come before a Special Meeting or any adjournments thereof.
<PAGE> 8
Holders of record of shares of each Fund at the close of business on
October 19, 1998 are entitled to vote at the Special Meeting and at any
adjournments thereof.
In the event that the necessary quorum to transact business or the vote
required to approve a Proposal is not obtained at the Special Meeting with
respect to one or more Funds, the persons named as proxies may propose one or
more adjournments of the Special Meeting in accordance with applicable law, to
permit further solicitation of proxies. Any such adjournment as to a matter will
require the affirmative vote of the holders of a majority of the concerned
Fund's shares present in person or by proxy at the Special Meeting. The persons
named as proxies will vote in favor of such adjournment those proxies which they
are entitled to vote in favor of the Proposals and will vote against any such
adjournment those proxies to be voted against the Proposals.
By Order of the Boards of Trustees/Directors,
/s/ Thomas F. McDonough
Thomas F. McDonough
Secretary
October 19, 1998
IMPORTANT--WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY CARD(S) 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(S) MAY SAVE THE
NECESSITY AND EXPENSE OF FURTHER SOLICITATIONS TO ENSURE A QUORUM AT THE SPECIAL
MEETINGS. IF YOU CAN ATTEND THE SPECIAL MEETINGS AND WISH TO VOTE YOUR SHARES IN
PERSON AT THAT TIME, YOU WILL BE ABLE TO DO SO.
<PAGE> 9
INVESTMENT TRUST
SCUDDER CALIFORNIA TAX FREE TRUST
SCUDDER CASH INVESTMENT TRUST
SCUDDER FUNDS TRUST
SCUDDER GNMA FUND
SCUDDER MUNICIPAL TRUST
SCUDDER PATHWAY SERIES
SCUDDER PORTFOLIO TRUST
SCUDDER SECURITIES TRUST
SCUDDER STATE TAX FREE TRUST
SCUDDER TAX FREE MONEY FUND
SCUDDER TAX FREE TRUST
SCUDDER U.S. TREASURY MONEY FUND
VALUE EQUITY TRUST
Two International Place
Boston, Massachusetts 02110
GLOBAL/INTERNATIONAL FUND, INC.
SCUDDER FUND, INC.
SCUDDER INTERNATIONAL FUND, INC.
SCUDDER MUTUAL FUNDS, INC.
345 Park Avenue
New York, New York 10154
JOINT PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees/Directors (the "Board") of each of the Scudder
Trusts/Corporations listed above (each Trust is a "Trust," collectively, the
"Trusts" and each Corporation is a "Corporation," collectively, the
"Corporations") for use at the Special Meeting of Shareholders of each
Trust/Corporation, or, if applicable, its series that are listed on Appendix 1
hereto (each such series is referred to herein as a "Fund" and, collectively,
where applicable, with those Trusts/Corporations that do not have any series,
the "Funds"), to be held jointly at the offices of Scudder Kemper Investments,
Inc. ("Scudder Kemper"), 13th Floor, Two International Place, Boston,
Massachusetts 02110, on December 15, 1998 at 10:00 a.m., Eastern time, and at
any and all adjournments thereof (the "Special Meeting").
In the descriptions of the Proposals below, the word "fund" is sometimes
used to mean investment companies or series thereof in general, and not the
<PAGE> 10
Funds whose proxy statement this is. In addition, in this Proxy Statement, for
simplicity, actions are described as being taken by a Fund that is a series of a
Trust or Corporation, although all actions are actually taken by the respective
Trust or Corporation on behalf of the applicable series.
This Proxy Statement, the Notice of Special Meetings and the proxy cards
are first being mailed to shareholders on or about October 19, 1998 or as soon
as practicable thereafter. Any shareholder giving a proxy has the power to
revoke it by mail (addressed to the Secretary at the principal executive office
of the Funds, c/o Scudder Kemper Investments, Inc., at the address for each Fund
shown at the beginning of this Proxy Statement) or in person at the Special
Meeting, by executing a superseding proxy or by submitting a notice of
revocation to the Fund. All properly executed proxies received in time for the
Special Meeting will be voted as specified in the proxy or, if no specification
is made, in favor of the Proposals referred to in the Proxy Statement.
The presence at any shareholders' meeting, in person or by proxy, of the
holders of a majority, in the case of Investment Trust, Scudder California Tax
Free Trust, Scudder Cash Investment Trust, Scudder Funds Trust, Scudder GNMA
Fund, Scudder Municipal Trust, Scudder Portfolio Trust, Scudder Securities
Trust, Scudder State Tax Free Trust, Scudder Tax Free Money Fund, Scudder Tax
Free Trust, Scudder U.S. Treasury Money Fund and Value Equity Trust, and
one-third, in the case of Global/International Fund, Inc., Scudder International
Fund, Inc., Scudder Fund, Inc., Scudder Mutual Funds, Inc. and Scudder Pathway
Series, of the shares of a Fund entitled to be cast shall be necessary and
sufficient to constitute a quorum for the transaction of business. In the event
that the necessary quorum to transact business or the vote required to approve
any Proposal is not obtained at the Special Meeting with respect to one or more
Funds, the persons named as proxies may propose one or more adjournments of the
Special Meeting in accordance with applicable law to permit further solicitation
of proxies with respect to the Proposal that did not receive the vote necessary
for its passage or to obtain a quorum. Any such adjournment as to a matter will
require the affirmative vote of the holders of a majority of the concerned
Fund's shares present in person or by proxy at the Special Meeting. The persons
named as proxies will vote in favor of such adjournment those proxies which they
are entitled to vote in favor of that Proposal and will vote against any such
adjournment those proxies to be voted against that Proposal. For purposes of
determining the presence of a quorum for transacting business at a Special
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
a 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.
2
<PAGE> 11
Each Proposal requires the affirmative vote of a "majority of the
outstanding voting securities" of a Fund. The term "majority of the outstanding
voting securities," as defined in the Investment Company Act of 1940, as amended
(the "1940 Act"), and as used in this Proxy Statement, means: the affirmative
vote of the lesser of (1) 67% of the voting securities of each Fund present at
the meeting if more than 50% of the outstanding voting securities of the Fund
are present in person or by proxy or (2) more than 50% of the outstanding voting
securities of each Fund.
Abstentions will have the effect of a "no" vote on each Proposal. Broker
non-votes will have the effect of a "no" vote on each Proposal, each of which
requires the approval of a specified percentage of the outstanding shares of
each Fund, if such vote is determined on the basis of obtaining the affirmative
vote of more than 50% of the outstanding voting securities of the Fund. Broker
non-votes will not constitute "yes" or "no" votes, and will be disregarded in
determining the voting securities "present" if such vote is determined on the
basis of the affirmative vote of 67% of the voting securities of the Fund
present at the Special Meeting with respect to each Proposal.
Shareholders of each Fund will vote separately with respect to each
Proposal.
Holders of record of the shares of each Fund at the close of business on
October 19, 1998 (the "Record Date"), as to any matter on which they are
entitled to vote, will be entitled to one vote per share on all business of the
Special Meeting. The table provided in Appendix 2 hereto sets forth the number
of shares outstanding for each Fund as of June 30, 1998.
Appendix 3 sets forth the beneficial owners of at least 5% of a Fund's
shares. To the best of each Trust's/Corporation's knowledge, as of June 30,
1998, no person owned beneficially more than 5% of any Fund's outstanding
shares, except as stated in Appendix 3.
Appendix 4 hereto sets forth the number of shares of each Fund owned
directly or beneficially by the Trustees/Directors of the relevant Board and the
number of applicable Fund shares owned directly or beneficially by the President
of each of Global/International Fund, Inc., Scudder Fund, Inc., Scudder
International Fund, Inc. and Scudder Pathway Series.
Each Fund provides periodic reports to all of its shareholders which
highlight relevant information, including investment results and a review of
portfolio changes. You may receive an additional copy of the most recent annual
report for each Fund and a copy of any more recent semi-annual report, without
charge, by calling 800-225-2470 or writing the Fund, c/o Scudder Kemper
Investments, Inc., at the address for each Fund shown at the beginning of this
Proxy Statement.
3
<PAGE> 12
PROPOSAL 1: APPROVAL OF NEW INVESTMENT MANAGEMENT AGREEMENT
INTRODUCTION
Scudder Kemper acts as the investment manager to each Fund pursuant to an
investment management agreement entered into by each Fund and Scudder Kemper.
The investment management agreement in effect between each Fund and Scudder
Kemper prior to the consummation of the transaction between Zurich Insurance
Company ("Zurich") and B.A.T Industries p.l.c. ("B.A.T") (the "Zurich-B.A.T
Transaction" or the "Transaction"), which is described below, is referred to in
this Proxy Statement as a "Former Investment Management Agreement,"
collectively, the "Former Investment Management Agreements." The investment
management agreement currently in effect between each Fund and Scudder Kemper,
which is also described below, was executed as of the consummation of the
Zurich-B.A.T Transaction and is referred to in this Proxy Statement as a "New
Investment Management Agreement," collectively, the "New Investment Management
Agreements" and, together with the Former Investment Management Agreements, the
"Investment Management Agreements." (Scudder Kemper is sometimes referred to in
this Proxy Statement as the "Investment Manager.")
The information set forth in this Proxy Statement and the accompanying
materials concerning the Transaction, Scudder Kemper, Zurich, B.A.T and their
respective affiliates has been provided to the Funds by Scudder Kemper based
upon information that Scudder Kemper received from Zurich and its affiliates.
On June 26, 1997, Scudder, Stevens & Clark, Inc. ("Scudder") entered into
an agreement with Zurich pursuant to which Scudder and Zurich agreed to form an
alliance. On December 31, 1997, Zurich acquired a majority interest in Scudder,
and Zurich Kemper Investments, Inc. ("Kemper"), a Zurich subsidiary, became part
of Scudder. Scudder's name was changed to Scudder Kemper Investments, Inc. The
transaction between Scudder and Zurich (the "Scudder-Zurich Transaction")
resulted in the termination of each Fund's investment management agreement with
Scudder. Consequently, the Former Investment Management Agreement between each
Fund and Scudder Kemper was approved by each Trust's/Corporation's Board and by
each Fund's shareholders.
The Zurich-B.A.T Transaction. On December 22, 1997, Zurich and B.A.T
entered into a definitive agreement (the "Merger Agreement") pursuant to which
businesses of Zurich (including Zurich's almost 70% ownership interest in
Scudder Kemper) were to be combined with the financial services businesses of
B.A.T. On October 12, 1997, Zurich and B.A.T had confirmed that they were
engaged in discussions concerning a possible business combination; on October
16, 1997, Zurich and B.A.T announced that they had entered into an Agreement in
Principle, dated as of October 15, 1997 (the "Agreement in
4
<PAGE> 13
Principle"), to merge B.A.T's financial services businesses with Zurich's
businesses. The Merger Agreement superseded the Agreement in Principle.
In order to effect this combination, Zurich and B.A.T first reorganized
their respective operations. Zurich became a subsidiary of a new Swiss holding
company, Zurich Allied AG, and Zurich shareholders became Zurich Allied AG
shareholders. At the same time, B.A.T separated its financial services business
from its tobacco-related businesses by spinning off to its shareholders a new
British company, Allied Zurich p.l.c., 22 Arlington Street, London, England SW1A
1RW, United Kingdom, which held B.A.T's financial services businesses.
Zurich Allied AG then contributed its interest in Zurich, and Allied Zurich
p.l.c. contributed the B.A.T financial services businesses, to a jointly owned
company, Zurich Financial Services ("Zurich Financial Services"), in each case
in exchange for shares of Zurich Financial Services. These transactions were
completed on September 7, 1998. As a result, upon the completion of the
Transaction, the former Zurich shareholders became the owners (through Zurich
Allied AG) of 57% of the voting stock of Zurich Financial Services, and former
B.A.T shareholders became the owners (through Allied Zurich p.l.c.) of 43% of
the voting stock of Zurich Financial Services. Zurich Financial Services now
owns Zurich and the financial services businesses previously owned by B.A.T.
5
<PAGE> 14
Below is a simplified chart showing the corporate structure of Zurich
Financial Services after these transactions:
[ZURICH FINANCIAL SERVICES FLOW CHART]
Corporate Governance. At the closing of the Zurich-B.A.T Transaction, the
parties entered into a Governing Agreement that establishes the corporate
governance structure for Zurich Allied AG, Allied Zurich p.l.c. and Zurich
Financial Services.
The Board of Directors of Zurich Financial Services consists of ten
members, five of whom were initially selected by Zurich and five by B.A.T. Mr.
Rolf Huppi,
6
<PAGE> 15
Zurich's Chairman and Chief Executive Officer, became Chairman and Chief
Executive Officer of Zurich Financial Services. In addition to his vote by
virtue of his position on the Board of Directors, as Chairman, Mr. Huppi will
have a tie-breaking vote on all matters except recommendations of the Audit
Committee, recommendations of the Remuneration Committee in respect of the
remuneration of the Chairman and the CEO, appointment and removal of the
Chairman and CEO, appointments to the Nominations, Audit and Remuneration
Committees and nominations to the Board of Directors not made through the
Nominations Committee.
The Group Management Board of Zurich Financial Services has been given
responsibility by the Board of Directors for the executive management of Zurich
Financial Services and has wide authority for such purpose. Of the 11 initial
members of the Group Management Board, eight were members of the Corporate
Executive Board of Zurich (including Mr. Edmond D. Villani, CEO of Scudder
Kemper, who is responsible for Global Asset Management for Zurich Financial
Services), and three were B.A.T executives.
The Board of Directors of Zurich Allied AG initially consists of 11
members, eight of whom were Zurich directors and three of whom were proposed by
B.A.T. The Board of Directors of Allied Zurich p.l.c. also initially consists of
11 members, eight of whom were B.A.T directors and three of whom were proposed
by Zurich. The parties have agreed that, as soon as possible, the Boards of
Directors of Zurich Financial Services, Zurich Allied AG and Allied Zurich
p.l.c. will have identical membership.
Shareholder resolutions of Zurich Financial Services in general require
approval by at least 58% of all shares outstanding.
The Governing Agreement also contains provisions relating to dividend
equalization and provisions intended to ensure equal treatment of Zurich Allied
AG and Allied Zurich p.l.c. shareholders in the event of a takeover bid for
either company.
The B.A.T financial services businesses, which, since the closing of the
Transaction, are owned by Zurich Financial Services, include: the Farmers Group
of Insurance companies; Eagle Star Reinsurance Company Ltd., UK ("Eagle Star")
(which Zurich Financial Services has agreed to sell to GE Capital);
Allied-Dunbar, one of the leading U.K. unit-linked life insurance and pensions
companies; and Threadneedle Asset Management, which was formed initially to
manage the investment assets of Eagle Star and Allied-Dunbar, and which, at
December 31, 1997, had $58.8 billion under management. Overall, at year-end
1997, the financial services businesses of B.A.T had $79 billion in assets under
management, including $18 billion in third party assets.
Zurich has informed the Funds that the financial services businesses of
B.A.T do not include any of B.A.T's tobacco businesses and that, after careful
7
<PAGE> 16
review, Zurich has concluded that the tobacco-related liabilities connected with
B.A.T's tobacco business should not adversely affect Zurich or the present
Zurich subsidiaries, including Scudder Kemper.
Governance arrangements that were put in place at the time of the
acquisition of Zurich's 70% interest in Scudder Kemper (which are discussed
below under "Investment Manager") remain unaffected by the Transaction. These
arrangements preclude the making of certain major decisions affecting Scudder
Kemper without the approval of Scudder Kemper directors elected by the
non-Zurich shareholders of Scudder Kemper.
Consummation of the Zurich-B.A.T Transaction may be deemed to have
constituted an "assignment," as that term is defined in the 1940 Act, of each
Fund's Former Investment Management Agreement with Scudder Kemper. As required
by the 1940 Act, each of the Former Investment Management Agreements provided
for its automatic termination in the event of its assignment. Accordingly, a New
Investment Management Agreement between each Fund and Scudder Kemper was
approved by the Board members of each Fund and is now being proposed for
approval by shareholders of each Fund. Scudder Kemper has received an exemptive
order from the Securities and Exchange Commission (the "SEC" or the
"Commission") permitting each Fund to obtain shareholder approval of its New
Investment Management Agreement within 150 days after the consummation of the
Transaction (and, consequently, within 150 days after the termination of its
Former Investment Management Agreement), instead of before the consummation of
the Transaction. Pursuant to the exemptive order, each Fund's investment
management fees are being held in escrow until the earlier of shareholder
approval of the Fund's New Investment Management Agreement or the expiration of
the 150 day period. A copy of the master form of New Investment Management
Agreement is attached hereto as Exhibit A. THE NEW INVESTMENT MANAGEMENT
AGREEMENT FOR EACH FUND IS SUBSTANTIALLY IDENTICAL TO THE CORRESPONDING FORMER
INVESTMENT MANAGEMENT AGREEMENT, EXCEPT FOR THE DATES OF EXECUTION AND
TERMINATION AND, IN THE CASE OF CERTAIN FUNDS, THE ADDITION OF CERTAIN
BREAKPOINTS IN THE FEE STRUCTURES. In addition, the portfolio managers for each
Fund will not change as a result of the Transaction. The material terms of the
Investment Management Agreements are described under "Description of the
Investment Management Agreements" below.
BOARD'S RECOMMENDATION
On various dates between August 6, 1998 and August 12, 1998, the Board of
each Trust/Corporation met and the Board members of each Trust/Corporation,
including the Board members who are not parties to such agreement or "interested
persons" (as defined in the 1940 Act) (the "Non-Interested Trust-
8
<PAGE> 17
ees/Directors" or "Non-Interested Board members") of any such party, voted to
approve the New Investment Management Agreements and to recommend approval to
the shareholders of each applicable Fund. The New Investment Management
Agreements applicable to each of Scudder Growth and Income Fund, Scudder Greater
Europe Growth Fund and Scudder Massachusetts Tax Free Fund include, effective
September 30, 1998, additional breakpoints, which reduce fee rates as assets
increase (as described below under "Differences Between the Former and New
Investment Management Agreements"). On September 15, 1998, the Board members of
Value Equity Trust approved an amendment adding breakpoints to the New
Investment Management Agreement applicable to Scudder Large Company Value Fund,
effective September 30, 1998 (also described below).
For information about the Boards' deliberations and the reasons for their
recommendation, please see "Board's Evaluation" below.
BOARD'S EVALUATION
The Non-Interested Board members of each Trust/Corporation have been aware
of the proposed Zurich-B.A.T Transaction since the announcement of the Agreement
in Principle on October 16, 1997. The Board members of each Trust/Corporation
were kept informed by Scudder Kemper of significant subsequent developments
regarding the Transaction, including the execution of the Merger Agreement on
December 22, 1997 and the receipt of necessary regulatory approvals.
In the course of the annual review by the Non-Interested Board members of
the continuance of the investment management agreements between each Fund and
Scudder Kemper, Scudder Kemper furnished the Board members with detailed
information regarding the proposed Transaction, including information provided
to the shareholders of Zurich and B.A.T and information regarding the structure
of the Transaction, the resulting ownership and governance arrangements of
Zurich and the investment management business of B.A.T expected to be acquired
by Scudder Kemper following completion of the Transaction. The Non-Interested
Board members had the opportunity to consider this information with the
assistance of their independent counsel and to ask questions of Scudder Kemper
representatives. In the course of these deliberations, Scudder Kemper advised
the Non-Interested Board members that the proposed Transaction would not have a
material effect on the operations of the Funds or on their shareholders.
During the course of their deliberations, the Non-Interested Trustees/
Directors considered a variety of factors, including the nature, quality and
extent of the services furnished by Scudder Kemper to the Funds; the necessity
of Scudder Kemper's maintaining and enhancing its ability to retain and attract
capable personnel to serve the Funds; the increased complexity of the domestic
9
<PAGE> 18
and international securities markets; the investment record of Scudder Kemper in
managing the Funds; Scudder Kemper's profitability with respect to the Funds and
the other investment companies managed by Scudder Kemper before marketing
expenses paid by Scudder Kemper; possible economies of scale; comparative data
as to investment performance, advisory fees and expense ratios; Scudder Kemper's
expenditures in developing worthwhile and innovative shareholder services for
the Funds; improvements in the quality and scope of the shareholder services
provided to the Funds' shareholders; the advantages and possible disadvantages
to the Funds of having an adviser of the Funds which also serves other
investment companies as well as other accounts; possible benefits to Scudder
Kemper from serving as adviser and from affiliates of Scudder Kemper serving as
principal underwriter, transfer agent and fund accounting agent of the Funds;
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 Kemper and the continuance of appropriate
incentives to assure that Scudder Kemper will continue to furnish high quality
services to the Funds; and various other factors. The Non-Interested Board
members of each Trust/Corporation considered the foregoing factors with respect
to each of the applicable Funds.
The Board of each Trust/Corporation was advised that Zurich intends to rely
on Section 15(f) of the 1940 Act, which provides a non-exclusive safe harbor for
an investment adviser to an investment company or any of the investment
adviser's affiliated persons (as defined in the 1940 Act) to receive any amount
or benefit in connection with a change in control of the investment adviser so
long as two conditions are met. First, for a period of three years after the
transaction, at least 75% of the board members of the investment company must
not be "interested persons" of the investment company's investment adviser or
its predecessor adviser. On or prior to the consummation of the Transaction,
each of the Boards was in compliance with this provision of Section 15(f).
Second, an "unfair burden" must not be imposed upon the investment company as a
result of such transaction or any express or implied terms, conditions or
understandings applicable thereto. The term "unfair burden" is defined in
Section 15(f) to include any arrangement during the two-year period after the
transaction whereby the investment adviser, or any interested person of any such
adviser, receives or is entitled to receive any compensation, directly or
indirectly, from the investment company or its shareholders (other than fees for
bona fide investment advisory or other services) or from any person in
connection with the purchase or sale of securities or other property to, from or
on behalf of the investment company (other than bona fide ordinary compensation
as principal underwriter for such investment company). No such compensation
agreements are contemplated in connection with the Transaction.
10
<PAGE> 19
Zurich or its affiliates will pay the costs of preparing and distributing proxy
materials to, and of holding the meetings of, the Funds' shareholders as well as
other fees and expenses in connection with the Transaction, including the fees
and expenses of legal counsel and consultants to the Funds and the Non-
Interested Trustees/Directors.
In addition to the foregoing factors, the Non-Interested Trustees/Directors
gave careful consideration to the likely impact of the Transaction on the
Scudder Kemper organization. In this regard, the Non-Interested
Trustees/Directors considered, among other things, the fact that the Transaction
does not appear to alter in any material respect the substantial autonomy
afforded to Scudder Kemper executives over Scudder Kemper's operations, the
equity participation and incentives for many Scudder Kemper employees, or
Zurich's strategy for the development of its asset management business through
Scudder Kemper. Based on the foregoing, the Non-Interested Trustees/Directors
concluded that the Transaction should cause no reduction in the quality of
services provided to the Funds and believe that the Transaction should enhance
Scudder Kemper's capabilities and strengths.
DESCRIPTION OF THE INVESTMENT MANAGEMENT AGREEMENTS
Except as disclosed below, all Former and New Investment Management
Agreements are substantially identical. Under the Investment Management
Agreements, Scudder Kemper provides each Fund with continuing investment
management services. The Investment Manager also determines which securities
should be purchased, held, or sold, and what portion of each Fund's assets
should be held uninvested, subject to each Trust's/Corporation's Charter,
By-Laws, investment policies and restrictions, the provisions of the 1940 Act,
and such policies and instructions as the Trustees/Directors may have
determined.
Each Investment Management Agreement provides that the Investment Manager
will provide portfolio management services, place portfolio transactions in
accordance with policies expressed in each Fund's registration statement, pay
each Fund's office rent, and render significant administrative services on
behalf of each Fund (not otherwise provided by third parties) necessary for each
Fund's operating as an open-end investment company, including, but not limited
to, preparing reports to and meeting materials for each Trust's/Corporation's
Board and reports and notices to Fund shareholders; supervising, negotiating
contractual arrangements with, to the extent appropriate, and monitoring the
performance of various third-party and affiliated service providers to each Fund
(such as each Fund's transfer and pricing agents, fund accounting agent,
custodian, accountants and others) and other persons in any capacity deemed
necessary or desirable to Fund operations; preparing and making filings with the
SEC and other regulatory and self-regulatory organizations, including but not
11
<PAGE> 20
limited to, preliminary and definitive proxy materials, post-effective
amendments to the Registration Statement, semi-annual reports on Form N-SAR and
notices pursuant to Rule 24f-2 under the 1940 Act; overseeing the tabulation of
proxies by each Fund's transfer agent; assisting in the preparation and filing
of each Fund's federal, state and local tax returns; preparing and filing each
Fund's federal excise tax returns pursuant to Section 4982 of the Internal
Revenue Code of 1986, as amended; providing assistance with investor and public
relations matters; monitoring the valuation of portfolio securities and the
calculation of net asset value; monitoring the registration of shares of each
Fund under applicable federal and state securities laws; maintaining or causing
to be maintained for each Fund all books, records and reports and any other
information required under the 1940 Act, to the extent such books, records and
reports and other information are not maintained by each Fund's custodian or
other agents of each Fund; assisting in establishing accounting policies of each
Fund; assisting in the resolution of accounting issues that may arise with
respect to each Fund's operations and consulting with each Fund's independent
accountants, legal counsel and other agents as necessary in connection
therewith; establishing and monitoring each Fund's operating expense budgets;
reviewing each Fund's bills; processing the payment of bills that have been
approved by an authorized person; assisting each Fund in determining the amount
of dividends and distributions available to be paid by each 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 each Fund in the conduct of its business, subject to the direction and
control of each Trust's/Corporation's Board.
The Investment Management Agreement for the Funds in the Scudder Pathway
Series also provides that the Investment Manager is not required to pay any
expenses of the Funds except those expenses specifically allocated to the
Investment Manager in the Investment Management Agreement and under the Special
Servicing Agreement ("Service Agreement") among the Investment Manager, the
Trust, Scudder Fund Accounting Corporation, Scudder Service Corporation, Scudder
Trust Company, Scudder Investor Services, Inc., and the various funds in which
the Trust's Funds may invest ("Underlying Funds"). Under the Service Agreement,
the Investment Manager is responsible for arranging all services pertaining to
the operation of the Trust, including the services of Scudder Service
Corporation and Scudder Fund Accounting Corporation to act as Shareholder
Servicing Agent and Fund Accounting Agent, respectively, for each Fund of the
Trust.
Each Investment Management Agreement also provides that the Investment
Manager is not required to pay any expenses of any activity primarily intended
to result in the sale of Fund securities if and to the extent that (i) the
expenses are
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<PAGE> 21
to be borne by a principal underwriter acting as the distributor; or (ii) the
Fund has adopted a Rule 12b-1 Plan providing for the assumption of some or all
of those expenses. Under each Investment Management Agreement, each Fund is
responsible for other expenses, including organizational expenses (including
out-of-pocket expenses, but not including the Investment Manager's overhead or
employee costs); brokers' commissions or other costs of acquiring or disposing
of any portfolio securities of each Fund; legal, auditing and accounting
expenses; payment for portfolio pricing or valuation services to pricing agents,
accountants, bankers and other specialists, if any; taxes and governmental fees;
the fees and expenses of each Fund's transfer agent; expenses of preparing share
certificates and any other expenses, including clerical expenses, of issuance,
offering, distribution, sale, redemption or repurchase of shares; the expenses
of and fees for registering or qualifying securities for sale; the fees and
expenses of Non-Interested Trustees/Directors; the cost of printing and
distributing reports, notices and dividends to current shareholders; and the
fees and expenses of each Fund's custodians, subcustodians, accounting agent,
dividend disbursing agents and registrars. Each Fund may arrange to have third
parties assume all or part of the expenses of sale, underwriting and
distribution of shares of each Fund. Each Fund is also responsible for expenses
of shareholders' and other meetings, and its expenses incurred in connection
with litigation and the legal obligation it may have to indemnify officers and
Trustees/Directors of each Trust/Corporation with respect thereto. Each Fund is
also responsible for the maintenance of books and records which are required to
be maintained by each Fund's custodian or other agents of each
Trust/Corporation; telephone, telex, facsimile, postage and other communications
expenses; any fees, dues and expenses incurred by each Fund in connection with
membership in investment company trade organizations; expenses of printing and
mailing prospectuses and statements of additional information of each Fund and
supplements thereto to current shareholders; costs of stationery; fees payable
to the Investment Manager and to any other Fund advisors or consultants;
expenses relating to investor and public relations; interest charges, bond
premiums and other insurance expense; freight, insurance and other charges in
connection with the shipment of each Fund's portfolio securities; and other
expenses.
The Investment Manager is responsible for the payment of the compensation
and expenses of all Trustees/Directors, officers and executive employees of each
Fund (including each Fund's share of payroll taxes) affiliated with the
Investment Manager and making available, without expense to each Fund, the
services of such Trustees/Directors, officers and employees as may duly be
elected officers of each Trust/Corporation, subject to their individual consent
to serve and to any limitations imposed by law. Each Fund is responsible for the
fees and expenses (specifically including travel expenses relating to Fund
business) of Trustees/Directors not affiliated with the Investment Manager.
Under each Investment Management Agreement, the Investment Manager also
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<PAGE> 22
pays each Fund's share of payroll taxes, as well as expenses, such as travel
expenses (or an appropriate portion thereof), of Trustees/Directors and officers
of each Trust/Corporation who are directors, officers or employees of the
Investment Manager, except to the extent that such expenses relate to attendance
at meetings of the Board of each Trust/Corporation, or any committees thereof or
advisers thereto, held outside Boston, Massachusetts or New York, New York.
During each Fund's most recent fiscal year, no compensation, direct or otherwise
(other than through fees paid to the Investment Manager), was paid or became
payable by each Trust/Corporation to any of its officers or Trustees/Directors
who were affiliated with the Investment Manager.
The Investment Manager does not receive a fee for its services from any
Fund under the Investment Management Agreement for Scudder Pathway Series, since
it expects to receive additional compensation under investment management
agreements currently in effect between the Investment Manager and the Underlying
Funds due to growth in the assets of the Underlying Funds resulting from
investment in the Underlying Funds by the Funds in Scudder Pathway Series.
In return for the services provided by the Investment Manager as investment
manager and the expenses it assumes under each Investment Management Agreement,
each Fund, other than those in Scudder Pathway Series, pays the Investment
Manager a management fee which is accrued daily and payable monthly. The
management fee rate for each Fund under the Investment Management Agreements is
set forth in Appendix 5 hereto. As of the end of each Fund's last fiscal year,
each Fund had net assets and paid an aggregate management fee to the Investment
Manager during such period as also set forth in Appendix 5 hereto.
Each Investment Management Agreement further provides that the Investment
Manager shall not be liable for any error of judgment or mistake of law or for
any loss suffered by any Fund in connection with matters to which such agreement
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Investment Manager in the performance of its
duties or from reckless disregard by the Investment Manager of its obligations
and duties under such agreement. Each Investment Management Agreement also
provides that purchase and sale opportunities, which are suitable for more than
one client of the Investment Manager, will be allocated by the Investment
Manager in an equitable manner. In addition, each Investment Management
Agreement identifies Scudder Kemper as the exclusive licensee of the rights to
use and sublicense the names "Scudder," "Scudder Kemper Investments, Inc.," and
"Scudder, Stevens & Clark, Inc." (together the "Scudder Marks"). Under this
license, each Trust/Corporation, with respect to each of its Funds, if any, has
the non-exclusive right to use and sublicense the Scudder name and marks as part
of its name, and to use the Scudder Marks in the Trust's/Corporation's
investment products and services. This license continues only as long as the
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<PAGE> 23
Investment Management Agreement or any other investment advisory agreement is in
place, and only as long as Scudder Kemper continued to be a licensee of the
Scudder Marks from Scudder Trust Company, which is the owner and licensor of the
Scudder Marks. As a condition of the license, each Trust/ Corporation, on behalf
of each of its Funds, if any, undertakes certain responsibilities and agrees to
certain restrictions, such as agreeing not to challenge the validity of the
Scudder Marks or ownership by Scudder Trust Company and the obligation to use
the name within commercially reasonable standards of quality. In the event the
agreement is terminated, each Trust/Corporation, on behalf of each of its Funds,
if any, must not use a name likely to be confused with those associated with the
Scudder Marks. Lastly, each Investment Management Agreement contains a provision
stating that it supersedes all prior agreements.
Each Investment Management Agreement may be terminated without penalty upon
sixty (60) days' written notice by either party. Each Fund may agree to
terminate its Investment Management Agreement either by the vote of a majority
of the outstanding voting securities of the Fund, or by a vote of the Board. As
stated above, each Investment Management Agreement automatically terminates in
the event of its assignment.
Scudder Kemper or one of its predecessors has acted as the Investment
Manager for each Fund since each Fund commenced operations as shown in Appendix
6 hereto. Also shown in Appendix 6 is the date of each Former Investment
Management Agreement, the date when each Former Investment Management Agreement
was last approved by the shareholders of each Fund, the date when each New
Investment Management Agreement was last approved by the Trustees/Directors of
each Fund and the date to which each New Investment Management Agreement was
last continued. Each Former Investment Management Agreement was last submitted
to shareholders (or, in some cases, to a Fund's sole shareholder) prior to its
becoming effective, as required by the 1940 Act, in connection with the
Scudder-Zurich Transaction.
THE NEW INVESTMENT MANAGEMENT AGREEMENTS
The New Investment Management Agreement for each Fund which is currently in
effect, is dated the date of the consummation of the Transaction, which occurred
on September 7, 1998. Each New Investment Management Agreement will be in effect
for an initial term ending on September 30, 1999, and may continue thereafter
from year to year only if specifically approved at least annually by the vote of
"a majority of the outstanding voting securities" of each Fund, or by the Board
and, in either event, the vote of a majority of the Non-Interested
Trustees/Directors, cast in person at a meeting called for such purpose. In the
event that shareholders of a Fund do not approve the New Investment Management
Agreement, it will terminate. In such event, each Board
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<PAGE> 24
will take such action as it deems to be in the best interests of the Fund and
its shareholders.
DIFFERENCES BETWEEN THE FORMER AND NEW INVESTMENT MANAGEMENT AGREEMENTS
The New Investment Management Agreements are substantially identical to the
Former Investment Management Agreements, except for the dates of execution and
termination and, in the case of certain Funds (Scudder Growth and Income Fund,
Scudder Greater Europe Growth Fund and Scudder Massachusetts Tax Free Fund), the
addition of certain breakpoints in the fee structures. In addition, the New
Investment Management Agreement of Scudder Large Company Value Fund has been
amended to add certain breakpoints in the fee structure. The New Investment
Management Agreement (as amended, in the case of Scudder Large Company Value
Fund) for each of the following Funds provides for the following additional
breakpoints, which reduce fees payable to the Investment Manager as assets
increase, effective as of September 30, 1998:
SCUDDER GREATER EUROPE GROWTH FUND: a breakpoint has been added at the $1
billion level, reducing the fee on assets over $1 billion from 1.00% to 0.90%.
SCUDDER GROWTH AND INCOME FUND: a breakpoint has been added at the $10
billion level, reducing the fee on assets over $10 billion from 0.3875% to
0.370%.
SCUDDER LARGE COMPANY VALUE FUND: a breakpoint has been added at the $2
billion level, reducing the fee on assets over $2 billion and up to and
including $3 billion from 0.55% to 0.50%.
SCUDDER MASSACHUSETTS TAX FREE FUND: a breakpoint has been added at the
$400 million level, reducing the fee on assets over $400 million from 0.600% to
0.525%.
INVESTMENT MANAGER
Scudder Kemper, an indirect subsidiary of Zurich which resulted from the
combination of the businesses of Scudder and Kemper in connection with the
Scudder-Zurich Transaction, is one of the largest and most experienced
investment counsel firms in the United States. Scudder was established in 1919
as a partnership and was restructured as a Delaware corporation in 1985. Scudder
launched its first fund in 1928. Kemper launched its first fund in 1948. Since
December 31, 1997, Scudder Kemper has served as investment adviser to both
Scudder and Kemper funds. As of August 31, 1998, Scudder Kemper has more than
$241.1 billion in assets under management. The principal source of Scudder
Kemper's income is professional fees received from providing continuing
investment advice. Scudder Kemper provides investment counsel for many
16
<PAGE> 25
individuals and institutions, including insurance companies, endowments,
industrial corporations and financial and banking organizations.
Founded in 1872, Zurich is a multinational, public corporation organized
under the laws of Switzerland. Its home office (and the home offices of Zurich
Financial Services and Zurich Allied AG) is located at Mythenquai 2, 8002
Zurich, Switzerland. Historically, Zurich's earnings have resulted from its
operations as an insurer as well as from its ownership of its subsidiaries and
affiliated companies (the "Zurich Insurance Group"). Zurich and the Zurich
Insurance Group provide an extensive range of insurance products and services
and have branch offices and subsidiaries in more than 40 countries throughout
the world. Zurich owns approximately 70% of the Investment Manager, with the
balance owned by the Investment Manager's officers and employees.
As stated above, Scudder Kemper is a Delaware corporation. Rolf Huppi* is
the Chairman of the Board and Director, Edmond D. Villani(#) is the President,
Chief Executive Officer and Director, Stephen R. Beckwith(#) is the Treasurer
and Chief Financial Officer, Kathryn L. Quirk(#) is the General Counsel, Chief
Compliance Officer and Secretary, Lynn S. Birdsong(#) is a Corporate Vice
President and Director, Cornelia M. Small(#) is a Corporate Vice President and
Director, Laurence Cheng* is a Director, and, effective November 1, 1998, each
of Gunther Gose* and William H. Bolinder(+) is a Director of the Investment
Manager. The principal occupation of each of Edmond D. Villani, Stephen R.
Beckwith, Kathryn L. Quirk, Lynn S. Birdsong and Cornelia M. Small is serving as
a Managing Director of the Investment Manager; the principal occupation of Rolf
Huppi is serving as an officer of Zurich; the principal occupation of Lawrence
Cheng is serving as a senior partner of Capital Z Partners, an investment fund;
the principal occupation of Gunther Gose is serving as the Chief Financial
Officer of Zurich Financial Services; the principal occupation of William H.
Bolinder is serving as a member of the Group Executive Board of Zurich Financial
Services. Appendix 7 includes information regarding each Trustee/ Director and
officer of each Trust/Corporation who is associated with Scudder Kemper.
The outstanding voting securities of the Investment Manager are held of
record 36.63% by Zurich Holding Company of America ("ZHCA"), a subsidiary of
Zurich; 32.85% by ZKI Holding Corp. ("ZKIH"), a subsidiary of Zurich; 20.86% by
Stephen R. Beckwith, Lynn S. Birdsong, Kathryn L. Quirk, Cornelia M.
- ------------------------------
* Mythenquai 2, Zurich, Switzerland
(#) 345 Park Avenue, New York, New York
* Mythenquai 2, Zurich, Switzerland
(+) 1400 American Lane, Schaumburg, Illinois
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Small and Edmond D. Villani, in their capacity as representatives (the
"Management Representatives") of the Investment Manager's management holders and
retiree holders pursuant to a Second Amended and Restated Security Holders
Agreement (the "Security Holders Agreement") among the Investment Manager,
Zurich, ZHCA, ZKIH, the Management Representatives, the management holders, the
retiree holders and Edmond D. Villani, as trustee of Scudder Kemper Investments,
Inc. Executive Defined Contribution Plan Trust (the "Plan Trust"); and 9.66% by
the Plan Trust. There are no outstanding non-voting securities of the Investment
Manager.
In connection with the Scudder-Zurich Transaction (described above),
pursuant to which Zurich acquired a two-thirds interest in Scudder for $866.7
million in cash in December, 1997, Daniel Pierce, a Trustee/Director of each
Trust/Corporation, except Scudder Fund, Inc. and Scudder Pathway Series, sold
85.1% of his holdings in Scudder to Zurich for cash.
Pursuant to the Security Holders Agreement (which was entered into in
connection with the Scudder-Zurich Transaction), the Board of Directors of the
Investment Manager consists of four directors designated by ZHCA and ZKIH and
three directors designated by Management Representatives.
The Security Holders Agreement requires the approval of a majority of the
Scudder-designated directors for certain decisions, including changing the name
of Scudder Kemper, effecting an initial public offering before April 15, 2005,
causing Scudder Kemper to engage substantially in non-investment management and
related business, making material acquisitions or divestitures, making material
changes in Scudder Kemper's capital structure, dissolving or liquidating Scudder
Kemper, or entering into certain affiliated transactions with Zurich. The
Security Holders Agreement also provides for various put and call rights with
respect to Scudder Kemper stock held by persons who were employees of Scudder at
the time of the Scudder-Zurich Transaction, limitations on Zurich's ability to
purchase other asset management companies outside of Scudder Kemper, rights of
Zurich to repurchase Scudder Kemper stock upon termination of employment of
Scudder Kemper personnel, and registration rights for stock held by stockholders
of Scudder continuing after the Scudder-Zurich Transaction.
Directors, officers and employees of Scudder Kemper from time to time may
enter into transactions with various banks, including each Fund's custodian
bank. It is Scudder Kemper's opinion that the terms and conditions of those
transactions will not be influenced by existing or potential custodial or other
Fund relationships.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of Scudder
Kemper, computes net asset value for each Fund (other than Scudder S&P 500 Index
Fund, which uses Bankers Trust Company, an unaffiliated entity, for the
18
<PAGE> 27
provision of these services). Scudder Service Corporation ("SSC"), also a
subsidiary of Scudder Kemper, is the transfer, shareholder servicing and
dividend-paying agent for the shares of each Fund. Scudder Trust Company
("STC"), an affiliate of Scudder Kemper, provides subaccounting and
recordkeeping services for shareholder accounts in certain retirement and
employee benefit plans. As disclosed in Appendix 8 hereto, certain Funds
currently do not offer their shares to retirement or employee benefit plans. The
table provided in Appendix 8 sets forth for each Fund the respective fees paid
to SFAC, SSC and STC during the last fiscal year of each Fund.
SFAC, SSC and STC will continue to provide fund accounting, transfer
agency, subaccounting and recordkeeping services to the Funds, as described
above, under the current arrangements if the New Investment Management
Agreements are approved.
Exhibit B sets forth (as of each fund's last fiscal year end, unless
otherwise noted) the fees and other information regarding investment companies
advised by Scudder Kemper that have similar investment objectives to any of the
Funds. (See Appendix 5 for information regarding the management fee rate, net
assets and aggregate management fee paid for each Fund.)
BROKERAGE COMMISSIONS ON PORTFOLIO TRANSACTIONS
To the maximum extent feasible, Scudder Kemper places orders for portfolio
transactions through Scudder Investor Services, Inc. ("SIS"), Two International
Place, Boston, Massachusetts 02110, which in turn places orders on behalf of the
Funds with issuers, underwriters or other brokers and dealers. SIS is a
corporation registered as a broker/dealer and a subsidiary of Scudder Kemper.
SIS does not receive any commissions, fees or other remuneration from the Funds
for this service. When it can be done consistently with the policy of obtaining
the most favorable net results, Scudder Kemper may place such orders with broker
dealers who supply research, market and statistical information to a Fund or to
Scudder Kemper. Scudder Kemper is authorized when placing portfolio transactions
for equity securities to pay a brokerage commission (to the extent applicable)
in excess of that which another broker might charge for executing the same
transaction on account of the receipt of research, market or statistical
information. In selecting brokers and dealers with which to place portfolio
transactions for a Fund, Scudder Kemper will not consider sales of shares of
funds currently advised by Scudder Kemper as a decision-making factor, although
it may place such transactions with brokers and dealers that sell shares of
funds currently advised by Scudder Kemper. Allocation of portfolio transactions
is supervised by Scudder Kemper.
THE BOARD MEMBERS OF EACH TRUST/CORPORATION RECOMMEND THAT THE
SHAREHOLDERS OF EACH FUND VOTE IN FAVOR OF THIS PROPOSAL 1.
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PROPOSAL 2: APPROVAL OF THE REVISION OF EACH FUND'S
FUNDAMENTAL LENDING POLICY
This Proposal seeks shareholder approval of a change to each Fund's
fundamental lending policy. The 1940 Act requires an investment company to adopt
policies with respect to certain activities, including the making of loans by
the fund, which can be changed only by a shareholder vote (i.e., "fundamental"
policies). The proposed change would permit each Fund to engage in lending in a
manner and to the extent permitted by applicable law. The proposed change would,
therefore, permit each Fund, subject to the receipt of any necessary regulatory
approval and Board authorization, to enter into lending arrangements, including
lending agreements under which the funds advised by Scudder Kemper could for
temporary purposes lend money directly to and borrow money directly from each
other through a credit facility ("Interfund Lending Arrangements"). The Boards
have no present intention to engage in lending other than that permitted under
each Fund's fundamental lending policy. Each of the Funds believes that the
flexibility provided by this policy change could possibly reduce substantially
the Fund's borrowing costs and enhance its ability to earn higher rates of
interest on short-term lendings in the event that the Board determines that such
arrangements are warranted in light of the Fund's circumstances. Certain other
fund groups have obtained the exemptive relief necessary to permit the funds to
engage in lending and borrowing among the funds advised by the same adviser.
Approval of the revision to each Fund's lending policy requires the affirmative
vote of a majority of the outstanding voting securities, as defined above, of
that Fund. If the shareholders of any Fund fail to approve the proposed
fundamental policy, that Fund's current policy will remain in effect. The Board
members of each Trust/Corporation recommend that the shareholders of each Fund
vote in favor of the Proposal. The proposed change to each Fund's fundamental
lending policy is discussed in detail below.
LENDING POLICY
The current policy of each Fund prohibits the making of loans, except loans
of portfolio securities and to the extent the entry into repurchase agreements
and the purchase of debt securities or interests in indebtedness in accordance
with the Fund's investment objectives and policies are deemed to be loans. The
proposed policy, unlike the current policy, does not specify the particular
types of lending in which each Fund is permitted to engage; instead, the
proposed policy permits each Fund to lend only in a manner and to an extent in
accordance with applicable law. Accordingly, each Fund's fundamental lending
policy would be revised as follows (with additions to the policy underscored and
deletions to the policy struck through):
As a matter of fundamental policy, the Fund may not make loans
except as permitted under the Investment Company Act of
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<PAGE> 29
1940, as amended, and as interpreted or modified by regulatory
authority having jurisdiction, from time to time. to other
persons, except (i) loans of portfolio securities, and (ii) to the
extent that entry into repurchase agreements and the purchase of
debt instruments or interests in indebtedness in accordance with
the Fund's investment objectives and policies may be deemed to be
loans.
DISCUSSION
Management believes that there may be advantages to these Interfund Lending
Arrangements as compared with other arrangements currently in place for some of
the Funds. Currently, some of the Funds, in effect, lend money to banks and
broker-dealers by entering into repurchase agreements or purchasing other
short-term instruments. Other Funds borrow money from the same or other banks
for temporary purposes to satisfy redemption requests or to cover other
unanticipated cash shortfalls. Many of the Funds have entered into uncommitted
lines of credit with banks under which the banks may, but are not required to,
lend money to the Funds to meet the Funds' temporary cash needs. If a Fund were
to borrow money from a bank under its current line of credit agreement, the Fund
would pay interest on the borrowed cash at a rate that would be significantly
higher than the rate that would be earned by other (non-borrowing) Funds on
investments in repurchase agreements and other short-term instruments of the
same maturity as the bank loan. The Funds believe this differential represents
the bank's profit for serving as "middleman" between borrower and lender. Other
bank loan arrangements, such as committed lines of credit into which certain
Funds have entered, require the Funds to pay substantial commitment fees in
addition to the interest rate to be paid by the borrowing Fund.
The 1940 Act generally prohibits one fund from lending money or other
property to or borrowing money or other property from another fund having the
same investment adviser (currently, in order to be able to participate in these
lending or borrowing arrangements, a fund must first receive an exemptive order
from the SEC). If the revised policy is adopted, each Board would have
discretion to request an order from the SEC to permit the Funds to enter into
Interfund Lending Arrangements consistent with their respective investment
objectives and policies.
Each Fund's current borrowing policy (except for that of Scudder S&P 500
Index Fund, as discussed in Proposal 3 below) would permit the Fund to engage in
the contemplated Interfund Lending Arrangements; thus no corresponding revision
of that policy is being sought. Each Fund (other than Scudder S&P 500 Index
Fund) currently has a non-fundamental policy, which may be changed without a
shareholder vote, limiting borrowings in certain circumstances that,
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<PAGE> 30
unless changed by Board action, restrict a Fund's ability to borrow through
Interfund Lending Arrangements. The Funds anticipate that the Interfund Lending
Arrangements may provide a borrowing Fund with savings when the Fund's cash
position is insufficient to meet temporary cash requirements arising, for
example, when redemptions exceed anticipated volumes. When a Fund is forced to
liquidate portfolio securities to meet redemption requests, the proceeds of
which are normally paid the next day after receipt of the request immediately,
the Fund often does not receive payment in settlement on a sale of portfolio
securities for up to three days (or longer, when a Fund sells foreign
securities). The Interfund Lending Arrangements would provide a source of
immediate, short-term liquidity pending settlement of the sale of portfolio
securities. In addition, Funds making short-term cash loans directly to other
Funds would earn interest at a higher rate than they otherwise could obtain from
investing their cash through repurchase agreements or otherwise. Although
Interfund Lending Arrangements may reduce the Funds' borrowing costs, enhance
their ability to earn higher rates of interest on short-term lendings, and
substantially reduce the Funds' need to borrow from banks, the Funds may also
continue to maintain uncommitted or committed lines of credit or other borrowing
arrangements with banks as an added measure of safety and liquidity.
THE BOARD MEMBERS OF EACH TRUST/CORPORATION RECOMMEND THAT THE
SHAREHOLDERS OF EACH FUND VOTE IN FAVOR OF THIS PROPOSAL 2.
PROPOSAL 3: APPROVAL OF THE REVISION OF THE FUND'S
FUNDAMENTAL BORROWING POLICY
(FOR SHAREHOLDERS OF SCUDDER S&P 500 INDEX FUND ONLY)
This Proposal seeks shareholder approval of a change to the fundamental
borrowing policy applicable to Scudder S&P 500 Index Fund in order to permit the
Fund, subject to the receipt of any necessary regulatory approval and Board
authorization, to enter into borrowing arrangements, including Interfund Lending
Arrangements, as described in Proposal 2 above. The proposed change would
conform the fundamental borrowing policy for the Fund to that of all of the
other Funds in this Proxy Statement by permitting the Fund to engage in
borrowing in a manner and to the extent permitted by applicable law.
Approval of the revision to the Fund's borrowing policy requires the
affirmative vote of a majority of the outstanding voting securities, as defined
above, of the Fund. If the shareholders of the Fund fail to approve the proposed
fundamental policy, the Fund's current policy will remain in effect. The Board
members of Investment Trust recommend that the shareholders of the Fund vote in
favor of the Proposal. The proposed change to the Fund's fundamental borrowing
policy is discussed below.
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<PAGE> 31
BORROWING POLICY
The current policy, which was adopted to make the Fund's fundamental
borrowing policy consistent with that of the master fund in which the Fund
invests, is as follows:
As a matter of fundamental policy, the Fund may not borrow money or
mortgage or hypothecate assets of the Fund, except that in an amount not to
exceed 1/3 of the current value of the Fund's assets, it may borrow money
as a temporary measure for extraordinary or emergency purposes and enter
into reverse repurchase agreements or dollar roll transactions, and except
that it may pledge, mortgage or hypothecate not more than 1/3 of such
assets to secure such borrowings (it is intended that money would be
borrowed only from banks and only either to accommodate requests for the
withdrawal of beneficial interests while effecting an orderly liquidation
of portfolio securities or to maintain liquidity in the event of an
unanticipated failure to complete a portfolio security transaction or other
similar situations) or reverse repurchase agreements, provided that
collateral arrangements with respect to options and futures, including
deposits of initial deposit and variation margin, are not considered a
pledge of assets for purposes of this restriction and except that assets
may be pledged to secure letters of credit solely for the purpose of
participating in a captive insurance company sponsored by the Investment
Company Institute.
The Fund's fundamental borrowing policy would be revised to read as
follows:
As a matter of fundamental policy, the Fund may not borrow
money, except as permitted under the Investment Company Act of
1940, as amended, and as interpreted or modified by regulatory
authority having jurisdiction, from time to time.
THE BOARD MEMBERS OF INVESTMENT TRUST RECOMMEND THAT THE SHAREHOLDERS OF SCUDDER
S&P 500 INDEX FUND VOTE IN FAVOR OF THIS PROPOSAL 3.
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<PAGE> 32
ADDITIONAL INFORMATION
GENERAL
The cost of preparing, printing and mailing the enclosed proxy card and
Proxy Statement and all other costs incurred in connection with the solicitation
of proxies, including any additional solicitation made by letter, telephone or
telegraph, will be paid by Zurich or its affiliates. In addition to solicitation
by mail, certain officers and representatives of each Trust/Corporation,
officers and employees of Scudder Kemper and certain financial services firms
and their representatives, who will receive no extra compensation for their
services, may solicit proxies by telephone, telegram or personally.
Shareholder Communications Corporation ("SCC") has been engaged to assist
in the solicitation of proxies. As the Special Meeting date approaches, certain
shareholders of each Fund may receive a telephone call from a representative of
SCC if their votes have not yet been received. Authorization to permit SCC to
execute proxies may be obtained by telephonic or electronically transmitted
instructions from shareholders of each Fund. Proxies that are obtained
telephonically will be recorded in accordance with the procedures set forth
below. The Trustees/Directors believe that these procedures are reasonably
designed to ensure that the identity of the shareholder casting the vote is
accurately determined and that the voting instructions of the shareholder are
accurately determined.
In all cases where a telephonic proxy is solicited, the SCC representative
is required to ask for each shareholder's full name, address, social security or
employer identification number, title (if the shareholder is authorized to act
on behalf of an entity, such as a corporation), and the number of shares owned,
and to confirm that the shareholder has received the proxy materials in the
mail. If the information solicited agrees with the information provided to SCC,
then the SCC representative has the responsibility to explain the process, read
the Proposals on the proxy card, and ask for the shareholder's instructions on
the Proposals. The SCC representative, although he or she is permitted to answer
questions about the process, is not permitted to recommend to the shareholder
how to vote, other than to read any recommendation set forth in the Proxy
Statement. SCC will record the shareholder's instructions on the card. Within 72
hours, the shareholder will be sent a letter or mailgram to confirm his or her
vote and asking the shareholder to call SCC immediately if his or her
instructions are not correctly reflected in the confirmation.
If a shareholder wishes to participate in the Special Meeting, but does not
wish to give a proxy by telephone, the shareholder may still submit the proxy
card originally sent with the Proxy Statement or attend in person. Should
shareholders require additional information regarding the proxy or replacement
proxy cards, they may contact SCC toll-free at 1-800-248-2681. Any proxy given
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<PAGE> 33
by a shareholder, whether in writing or by telephone, is revocable until voted
at the Special Meeting.
PROPOSALS OF SHAREHOLDERS
Shareholders wishing to submit proposals for inclusion in a proxy statement
for a shareholder meeting subsequent to the Special Meeting, if any, should send
their written proposals to the Secretary of the Trust/Corporation, c/o Scudder
Kemper Investments, Inc., at the address for each Trust/Corporation shown at the
beginning of this Proxy Statement, within a reasonable time before the
solicitation of proxies for such meeting. The timely submission of a proposal
does not guarantee its inclusion.
OTHER MATTERS TO COME BEFORE THE SPECIAL MEETING
No Board member is aware of any matters that will be presented for action
at a Special Meeting other than the matters set forth herein. Should any other
matters requiring a vote of shareholders arise, the proxy in the accompanying
form will confer upon the person or persons entitled to vote the shares
represented by such proxy the discretionary authority to vote the shares as to
any such other matters in accordance with their best judgment in the interest of
each Trust/Corporation and/or Fund.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) PROMPTLY. NO POSTAGE
IS REQUIRED IF MAILED IN THE UNITED STATES.
By order of the Boards of Trustees/Directors,
/s/ Thomas F. McDonough
Thomas F. McDonough
Secretary
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<PAGE> 34
EXHIBIT A
MASTER FORM OF
NEW INVESTMENT MANAGEMENT AGREEMENT
(Underscored items in brackets are applicable to Massachusetts
business trusts only (including Scudder Pathway Series, unless an alternative
provision for Scudder Pathway Series is provided in each instance).)
(Items in brackets that are not underscored are applicable to
Maryland corporations only.)
/ITEMS IN BOLD THAT ARE PRECEDED BY A "/" ARE APPLICABLE TO
SCUDDER PATHWAY SERIES ONLY.
(NAME OF TRUST)(NAME OF CORPORATION)
(TWO INTERNATIONAL PLACE)(345 PARK AVENUE)
(BOSTON, MASSACHUSETTS 02110)(NEW YORK, NEW YORK 10154)
September 7, 1998
Scudder Kemper Investments, Inc.
(Two International Place)(345 Park Avenue)
(Boston, Massachusetts 02110)(New York, New York 01054)
INVESTMENT MANAGEMENT AGREEMENT
[NAME OF FUND, IF ANY]
Ladies and Gentlemen:
[Name of (Trust)(Corporation)] (the ("Trust")("Corporation")) has been
established as a (Massachusetts business trust)(Maryland corporation) to engage
in the business of an investment company. Pursuant to the (Trust's)
ICorporation's)(Declaration of Trust)(Articles of Incorporation), as amended
from time-to-time (the ("Declaration")("Articles")), the Board of (Trustees)
IDirectors) has divided (/may divide) the (Trust's)(Corporation's)
shares of (beneficial interest)(capital stock), par value $0.01 per share, (the
"Shares") into separate series, or funds/PORTFOLIOS, including [name of Fund
/PORTFOLIOS, if any] (the "Fund/PORTFOLIOS"). Series may be abolished and
dissolved, and additional series established, from time to time by action of the
ITrustees)(Directors).
The (Trust)(Corporation), on behalf of the Fund/PORTFOLIOS, has selected
you to act as the sole investment manager of the Fund/PORTFOLIOS 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
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ITrust)(Corporation) on behalf of the Fund/PORTFOLIOS agrees with you as
follows:
1. Delivery of Documents. The (Trust)(Corporation) engages in the
business of investing and reinvesting the assets of the Fund/PORTFOLIOS 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/Portfolios included in the (Trust's)(Corporation's)
Registration Statement on Form N-1A, as amended from time to time, (the
"Registration Statement") filed by the (Trust)(Corporation) 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)(Corporation). The ITrust)(Corporation) has also furnished you with
copies properly certified or authenticated of each of the following
additional documents related to the (Trust)(Corporation) and the
Fund/PORTFOLIOS:
(a) The (Declaration)(Articles) dated ________ , as amended to
date.
(b) By-Laws of the (Trust)(Corporation) as in effect on the date
hereof (the "By-Laws").
(c) Resolutions of the (Trustees)(Directors) of the (Trust)
ICorporation) and the shareholders of the Fund/EACH PORTFOLIO selecting
you as investment manager and approving the form of this Agreement.
((d) Establishment and Designation of Series of Shares of
Beneficial Interest dated __________ relating to the Fund/EACH
PORTFOLIO.)
The (Trust)(Corporation) 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," "Scudder
Kemper Investments, Inc." and "Scudder, Stevens & Clark, Inc." trademarks
(together, the "Scudder Marks"), you hereby grant the (Trust)/TRUST AND
PORTFOLIOS(Corporation) a nonexclusive right and sublicense to use (i) the
"Scudder" name and mark as part of (the Trust's)/THEIR(the Corporation's)
name/S (the "Fund/TRUST NAME/S"), and (ii) the Scudder Marks in connection
with (the Trust's)/THEIR(Corporation'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
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<PAGE> 36
organization which shall have succeeded to your business as investment
manager ("your Successor")) and the Corporation), 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)/TRUST AND PORTFOLIOS (Corporation) agrees/AGREE
that it/THEY 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)/THEIR (Corporation'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)/TRUST AND PORTFOLIOS (Corporation) shall not challenge
the validity of the Scudder Marks or the Trademark Owner's ownership
thereof. The (Trust)/TRUST AND PORTFOLIOS (Corporation) further
agrees/AGREE that all services and products it/THEY offers/OFFER 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)/TRUST AND PORTFOLIOS (Corporation) rendered during the
one-year period preceding the date of this Agreement are acceptable. At
your reasonable request, the (Trust)/TRUST AND PORTFOLIOS (Corporation)
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)/TRUST AND PORTFOLIOS
(Corporation) as a/AS registered user/USERS 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)/TRUST AND
PORTFOLIOS (Corporation), or you no longer are a licensee of the Scudder
Marks, the (Trust)/TRUST AND PORTFOLIOS (Corporation) shall (to the extent
that, and as soon as, it lawfully can) cease to use the Fund/TRUST Name/S
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)(your Successor)) or the Trademark Owner. In
no event shall the (Trust)(Corporation) 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/TRUST is terminated.
3. Portfolio Management Services. As manager of the assets of the
Fund/PORTFOLIOS, you shall provide continuing investment management of the
assets of the Fund/PORTFOLIOS in accordance with the investment objectives,
policies and restrictions set forth in the Prospectus and SAI; the
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<PAGE> 37
applicable provisions of the 1940 Act and the Internal Revenue Code of
1986, as amended, (the "Code") relating to regulated investment companies
and all rules and regulations thereunder; and all other applicable federal
and state laws and regulations of which you have knowledge; subject always
to policies and instructions adopted by the (Trust's)(Corporation's) Board
of (Trustees)(Directors). In connection therewith, you shall use reasonable
efforts to manage the Fund/EACH PORTFOLIO so that it will qualify as a
regulated investment company under Subchapter M of the Code and regulations
issued thereunder. The Fund/PORTFOLIOS 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/PORTFOLIOS 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)(Corporation) or counsel to you. You shall also make
available to the (Trust) (Corporation) promptly upon request all of the
Fund's/PORTFOLIOS' investment records and ledgers as are necessary to
assist the (Trust) (Corporation) in complying with the requirements of the
1940 Act and other applicable laws. To the extent required by law, you
shall furnish to regulatory authorities having the requisite authority any
information or reports in connection with the services provided pursuant to
this Agreement which may be requested in order to ascertain whether the
operations of the (Trust) (Corporation) 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/PORTFOLIOS and place orders with broker-dealers, foreign currency
dealers, futures commission merchants or others pursuant to your
determinations and all in accordance with Fund/PORTFOLIO policies as
expressed in the Registration Statement. You shall determine what portion
of the Fund's/EACH PORTFOLIO'S INVESTMENT 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)(Corporation's) Board of (Trustees)
(Directors) periodic reports on the investment performance of the Fund
/PORTFOLIOS and on the performance of your obligations pursuant to this
Agreement, and you shall supply such additional reports and information as
the (Trust's)(Corporation's) officers or Board of
(Trustees)(Directors)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/PORTFOLIOS such office space and facilities in the
United
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States as the Fund/PORTFOLIOS may require for its/THEIR reasonable needs,
and you (or one or more of your affiliates designated by you) shall render
to the (Trust) (Corporation) administrative services on behalf of the Fund
/PORTFOLIOS 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)
(Corporation's) Board of (Trustees)(Directors) and reports and notices to
Fund/PORTFOLIO 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/PORTFOLIO operations; preparing and
making filings with the SEC and other regulatory and self-regulatory
organizations, including, but not limited to, preliminary and definitive
proxy materials, post-effective amendments to the Registration Statement,
semi-annual reports on Form N-SAR and notices pursuant to Rule 24f-2 under
the 1940 Act; overseeing the tabulation of proxies by the
Fund's/PORTFOLIOS' transfer agent; assisting in the preparation and filing
of the Fund's/EACH PORTFOLIO'S federal, state and local tax returns;
preparing and filing the Fund's/EACH PORTFOLIO'S federal excise tax return
pursuant to Section 4982 of the Code; providing assistance with investor
and public relations matters; monitoring the valuation of portfolio
securities and the calculation of net asset value; monitoring the
registration of Shares of the Fund/EACH PORTFOLIO under applicable federal
and state securities laws; maintaining or causing to be maintained for the
Fund/EACH PORTFOLIO 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/PORTFOLIOS' custodian or other agents of the Fund/PORTFOLIOS;
assisting in establishing the accounting policies of the Fund/EACH
PORTFOLIO; assisting in the resolution of accounting issues that may arise
with respect to the Fund's/EACH PORTFOLIO'S operations and consulting with
the Fund's /PORTFOLIOS' independent accountants, legal counsel and the
Fund's/PORTFOLIOS' other agents as necessary in connection therewith;
establishing and monitoring the Fund's/EACH PORTFOLIO'S operating expense
budgets; reviewing the Fund's/EACH PORTFOLIO'S bills; processing the
payment of bills that have been approved by an authorized person; assisting
the Fund/EACH PORTFOLIO in determining the amount of dividends and
distributions available to be paid by the Fund/EACH PORTFOLIO 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)(Corporation) as it may reasonably request
in the conduct of the
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Fund's/EACH PORTFOLIO'S business, subject to the direction and control of
the (Trust's)(Corporation's) Board of (Trustees)(Directors). Nothing in
this Agreement shall be deemed to shift to you or to diminish the
obligations of any agent of the Fund/A PORTFOLIO or any other person not a
party to this Agreement which is obligated to provide services to the
Fund/PORTFOLIOS.
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)(Directors), officers and executive employees of
the (Trust)(Corporation) (including the Fund's/EACH PORTFOLIO'S share of
payroll taxes) who are affiliated persons of you, and you shall make
available, without expense to the Fund/PORTFOLIOS, the services of such of
your directors, officers and employees as may duly be elected officers of
the (Trust)(Corporation), 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/YOU SHALL NOT BE
REQUIRED TO PAY ANY EXPENSES OF THE PORTFOLIOS OTHER THAN THOSE
SPECIFICALLY ALLOCATED TO YOU IN THIS SECTION 5 AND UNDER THE TERMS OF THE
SPECIAL SERVICING AGREEMENT DATED NOVEMBER 15, 1996 ("SPECIAL SERVICING
AGREEMENT") AMONG YOU, THE TRUST, SCUDDER FUND ACCOUNTING CORPORATION,
SCUDDER SERVICE CORPORATION, SCUDDER TRUST COMPANY, SCUDDER INVESTOR
SERVICES, INC. AND THE VARIOUS FUNDS IN WHICH THE PORTFOLIOS MAY INVEST
(THE "UNDERLYING FUNDS"). 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)(Directors) and officers as are directors, officers or employees
of you whose services may be involved, for the following expenses of the
Fund/ IN PARTICULAR, BUT WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
SUCH EXPENSES INCLUDE THE FOLLOWING: organization expenses of the Fund/EACH
PORTFOLIO (including out-of-pocket expenses, but not including your
overhead or employee costs); fees payable to you and to any other
Fund/PORTFOLIO advisors or consultants; legal expenses; auditing and
accounting expenses; maintenance of books and records which are required to
be maintained by the Fund's/PORTFOLIOS' custodian or other agents of the
(Trust)(Corporation); telephone, telex, facsimile, postage and other
communications expenses; taxes and governmental fees; fees, dues and
expenses incurred by the Fund/PORTFOLIOS in connection with membership in
investment company trade organizations; fees and expenses of the
Fund's/PORTFOLIOS' accounting agent, custodians, subcustodians, transfer
agents, dividend disbursing agents and registrars; payment for portfolio
pricing or valuation services to pricing agents, accountants, bankers and
other specialists, if any; expenses of preparing share
A-6
<PAGE> 40
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/PORTFOLIOS;
expenses relating to investor and public relations; expenses and fees of
registering or qualifying Shares of the Fund/PORTFOLIOS for sale; interest
charges, bond premiums and other insurance expense; freight, insurance and
other charges in connection with the shipment of the Fund's/PORTFOLIOS'
INVESTMENT portfolio securities; the compensation and all expenses
(specifically including travel expenses relating to (Trust)(Corporation)
business) of (Trustees)(Directors), officers and employees of the
(Trust)(Corporation) who are not affiliated persons of you; brokerage
commissions or other costs of acquiring or disposing of any portfolio
securities of the Fund/PORTFOLIOS; expenses of printing and distributing
reports, notices and dividends to shareholders; expenses of printing and
mailing Prospectuses and SAIs of the Fund/ PORTFOLIOS and supplements
thereto; costs of stationery; any litigation expenses; indemnification of
(Trustees)(Directors) and officers of the (Trust)(Corporation); costs of
shareholders' and other meetings; and travel expenses (or an appropriate
portion thereof) of (Trustees)(Directors) and officers of the
(Trust)(Corporation) who are directors, officers or employees of you to the
extent that such expenses relate to attendance at meetings of the Board of
(Trustees)(Directors) of the (Trust)(Corporation) or any committees thereof
or advisors thereto held outside of Boston, Massachusetts or New York, New
York.
You/EXCEPT AS PROVIDED IN THE SPECIAL SERVICING AGREEMENT, YOU shall
not be required to pay expenses of any activity which is primarily intended
to result in sales of Shares of the Fund/PORTFOLIOS 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/PORTFOLIOS' Shares pursuant to
an underwriting agreement which provides that the underwriter shall assume
some or all of such expenses, or (ii) the (Trust)(Corporation) on behalf of
the Fund/PORTFOLIOS shall have adopted a plan in conformity with Rule 12b-1
under the 1940 Act providing that the Fund/PORTFOLIOS (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/PORTFOLIOS (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)(Corporation) on behalf of the Fund shall pay you in
United States Dollars on the last day of each month the unpaid balance of a
fee equal to the excess of 1/12 of ___ of 1 percent of the average daily
net assets as defined below of the Fund for such month over any
compensation
A-7
<PAGE> 41
waived by you from time to time (as more fully described below). You shall
be entitled to receive during any month such interim payments of your fee
hereunder as you shall request, provided that no such payment shall exceed
75 percent of the amount of your fee then accrued 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)(Articles) 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 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
/PORTFOLIOS' expenses, as if such waiver or limitation were fully set forth
herein./6. MANAGEMENT FEE AND PAYMENT OF CERTAIN EXPENSES. AS YOU EXPECT
TO RECEIVE ADDITIONAL COMPENSATION UNDER INVESTMENT MANAGEMENT AGREEMENTS
CURRENTLY IN EFFECT BETWEEN YOU AND THE UNDERLYING FUNDS DUE TO GROWTH IN
THE ASSETS OF THE UNDERLYING FUNDS RESULTING FROM INVESTMENTS IN THE
UNDERLYING FUNDS BY THE PORTFOLIOS, YOU WILL NOT BE PAID A FEE FOR THE
SERVICES DESCRIBED IN SECTIONS 3 AND 4 HEREOF.
7. Avoidance of Inconsistent Position; Services Not Exclusive. In
connection with purchases or sales of portfolio securities and other
investments for the account of the Fund/PORTFOLIOS, 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/EACH PORTFOLIO'S account with brokers or dealers
selected by you in accordance with Fund/PORTFOLIOS policies as expressed in
the Registration Statement. If any occasion should arise in which you give
any advice to
A-8
<PAGE> 42
clients of yours concerning the Shares of the Fund/PORTFOLIOS, you shall
act solely as investment counsel for such clients and not in any way on
behalf of the Fund/PORTFOLIOS.
Your services to the Fund/PORTFOLIOS 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)(Corporation). Whenever the Fund/PORTFOLIOS and one or more other
accounts or investment companies advised by the Manager have available
funds for investment, investments suitable and appropriate for each shall
be allocated in accordance with procedures believed by the Manager to be
equitable to each entity. Similarly, opportunities to sell securities shall
be allocated in a manner believed by the Manager to be equitable. The
Fund/PORTFOLIOS recognizes/RECOGNIZE that in some cases this procedure may
adversely affect the size of the position that may be acquired or disposed
of for the Fund/PORTFOLIOS.
8. Limitation of Liability of Manager. As an inducement to your
undertaking to render services pursuant to this Agreement, the (Trust)
(Corporation) 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 /PORTFOLIOS 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)(Corporation), the Fund/PORTFOLIOS 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 /PORTFOLIOS shall be deemed, when acting within the scope
of his or her employment by the Fund/PORTFOLIOS, to be acting in such
employment solely for the Fund/PORTFOLIOS and not as your employee or
agent.
9. Duration and Termination of This Agreement. This Agreement shall
remain in force until September 30, 1999, 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)(Directors) 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)(Directors) of the (Trust)(Corporation), or/OR, WITH RESPECT TO
EACH PORTFOLIO, by the vote of a majority of the outstanding voting
securities of the Fund/SUCH PORTFOLIO. The aforesaid requirement that
continuance of this Agreement be
A-9
<PAGE> 43
"specifically approved at least annually" shall be construed in a manner
consistent with the 1940 Act and the rules and regulations thereunder and
any applicable SEC exemptive order therefrom.
This Agreement may be terminated with respect to the Fund/A PORTFOLIO
at any time, without the payment of any penalty, by the vote of a majority
of the outstanding voting securities of the Fund/PORTFOLIO or by the
(Trust's)(Corporation's) Board of (Trustees)(Directors) on 60 days' written
notice to you, or by you on 60 days' written notice to the
(Trust)(Corporation). 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 in a manner consistent
with the 1940 Act and rules and regulations thereunder and any applicable
SEC exemptive order therefrom.
(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
'[Name of Trust]" refers to the Trustees under the Declaration collectively
as Trustees and not as individuals or personally, and that no shareholder
of the Fund/ANY PORTFOLIO, or Trustee, officer, employee or agent of the
Trust, shall be subject to claims against or obligations of the Trust or of
the Fund/ANY PORTFOLIO 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/EACH PORTFOLIO pursuant to this
Agreement shall be limited in all cases to the Fund/PORTFOLIOS and its
assets, and you shall not seek satisfaction of any such obligation from the
shareholders or any shareholder of the Fund/PORTFOLIOS 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/PORTFOLIO, or
series, under the Declaration are separate and distinct from those of any
and all other series.
(12.)(11.) Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define or limit
any of the provisions hereof or otherwise affect their construction or
effect. This Agreement may be executed simultaneously in two or more
counterparts,
A-10
<PAGE> 44
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)(State) of (Massachusetts)(Maryland), provided that nothing
herein shall be construed in a manner inconsistent with the 1940 Act, or in
a manner which would cause the Fund/A PORTFOLIO 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)(Corporation)
on behalf of the Fund/PORTFOLIOS.
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)(Corporation), whereupon this letter shall become
a binding contract effective as of the date of this Agreement.
Yours very truly,
[Name of (Trust)(Corporation)], on behalf of
[Name of Fund/PORTFOLIOS, if any]
By:
----------------------------------------------------------------
President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By:
----------------------------------------------------------------
Managing Director
A-11
<PAGE> 45
EXHIBIT B
INVESTMENT OBJECTIVES AND ADVISORY FEES
FOR FUNDS NOT INCLUDED IN THIS PROXY STATEMENT AND
ADVISED BY SCUDDER KEMPER INVESTMENTS, INC.
SCUDDER FUNDS+
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE NET ASSETS
---- --------- -------- ----------
<S> <C> <C> <C>
U.S. INCOME FUNDS
Scudder Corporate Bond Fund A high level of current income 0.650% of net assets N/A**
through investment primarily
in investment-grade corporate
debt securities.
Scudder Zero Coupon 2000 Fund As high an investment return 0.600% of net assets++ $ 20,453,972
over a selected period as is
consistent with investment in
U.S. Government securities and
the minimization of
reinvestment risk.
U.S. GROWTH FUNDS
Classic Growth Fund Long term growth of capital 0.700% of net assets++ $ 53,225,783
with reduced share price
volatility compared to other
growth mutual funds.
Value Fund Long term growth of capital 0.700% to $500 million $ 297,979,779
through investment in 0.650% over $500
undervalued equity securities. million*
GLOBAL GROWTH FUNDS
Global Discovery Fund Above-average capital 1.100% of net assets $ 349,121,954
appreciation over the long
term by investing primarily in
the equity securities of small
companies located throughout
the world.
The Japan Fund, Inc. Long term capital appreciation 0.850% to $100 million $ 265,181,931
through investment primarily 0.750% next $200 million
in equity securities, 0.700% next $300 million
(including American Depository 0.650% thereafter
Receipts of Japanese
companies).
CLOSED-END FUNDS
The Argentina Fund, Inc. Long term capital appreciation Adviser: $ 135,327,320
through investment primarily 1.100% of net assets
in equity securities of Sub-Adviser:
Argentine issuers. Paid by Adviser. 0.100%
of net assets
The Brazil Fund, Inc. Long term capital appreciation 1.200% to $150 million $ 429,429,751
through investment primarily 1.050% next $150 million
in equity securities of 1.000% next $200 million
Brazilian issuers. 0.900% thereafter
Administrator: Receives
an annual fee of $50,000
</TABLE>
B-1
<PAGE> 46
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE NET ASSETS
---- --------- -------- ----------
<S> <C> <C> <C>
The Korea Fund, Inc. Long term capital appreciation Adviser: $ 406,244,000
through investment primarily 1.150% to $50 million
in equity securities of Korean 1.100% next $50 million
companies. 1.000% next $250 million
0.950% next $400 million
0.900% thereafter
Sub-Adviser -- Daewoo:
Paid by Adviser.
0.2875% to $50 million
0.275% next $50 million
0.250% next $250 million
0.2375% next $400
million
0.225% thereafter
Montgomery Street Income High level of current income 0.500% to $150 million $ 207,315,702
Securities, Inc. consistent with prudent 0.450% next $50 million
investment risks through a 0.400% thereafter
diversified portfolio
primarily of debt securities.
Scudder Global High Income High level of current income 1.200% of net assets $ 80,721,844
Fund, Inc. (formerly The and, secondarily, capital
Latin America Dollar Income appreciation through
Fund, Inc.) investment principally in
dollar-denominated Latin
American debt instruments.
Scudder New Asia Fund, Inc. Long term capital appreciation 1.250% to $75 million $ 98,866,168
through investment primarily 1.150% next $125 million
in equity securities of Asian 1.100% thereafter
companies.
Scudder New Europe Fund, Inc. Long term capital appreciation 1.250% to $75 million $ 320,293,393
through investment primarily 1.150% next $125 million
in equity securities of 1.100% thereafter
companies traded on smaller or
emerging European markets and
companies Inc. that are viewed
as likely to benefit from
changes and developments
throughout Europe.
Scudder Spain and Portugal Long term capital appreciation Adviser: $ 112,909,567
Fund, Inc. through investment primarily 1.000% of net assets
in equity securities of Administrator:
Spanish & Portuguese issuers. 0.200% of net assets
INSURANCE PRODUCTS
Scudder Variable Life Balance of growth and income, 0.475% of net assets $ 118,373,215
Investment Fund Balanced as well as long term
Portfolio preservation of capital, from
a diversified portfolio of
equity and fixed income
securities.
Scudder Variable Life High level of income from a 0.475% of net assets $ 81,387,032
Investment Fund Bond high quality portfolio of
Portfolio bonds.
</TABLE>
B-2
<PAGE> 47
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE NET ASSETS
---- --------- -------- ----------
<S> <C> <C> <C>
Scudder Variable Life Maximize long term capital 0.475% to $500 million $ 676,317,582
Investment Fund Capital growth from a portfolio 0.450% next $500 million
Growth Portfolio consisting primarily of equity 0.425% on assets over
securities. $1.0 billion
Scudder Variable Life Above-average capital 0.975% of net assets++ $ 20,115,141
Investment Fund Global appreciation over the long
Discovery Portfolio term by investing primarily in
the equity securities of small
companies located throughout
the world.
Scudder Variable Life Long term growth of capital, 0.475% of net assets $ 163,603,606
Investment Fund Growth and current income and growth of
Income Portfolio income from a portfolio
consisting primarily of common
stocks and securities
convertible into common
stocks.
Scudder Variable Life Long term growth of capital 0.875% to $500 million $ 427,237,880
Investment Fund principally from a diversified 0.725% thereafter
International Portfolio portfolio of foreign equity
securities.
Scudder Variable Life Stability of capital and 0.370% of net assets $ 102,576,377
Investment Fund Money current income from a
Market Portfolio portfolio of money market
instruments.
AARP FUNDS
AARP Balanced Stock and Bond Long term capital growth and 0.350% to $2 billion $ 638,356,257
Fund income, consistent with a 0.330% next $2 billion
share price more stable than 0.300% next $2 billion
other balanced mutual funds, 0.280% next $2 billion
through investment in a 0.260% next $3 billion
combination of stocks, bonds 0.250% next $3 billion
and cash reserves. 0.240% thereafter
INDIVIDUAL FUND FEE
0.190% of net assets
AARP Bond Fund for Income High level of current income, 0.350% to $2 billion $ 58,324,146
consistent with greater share 0.330% next $2 billion
price stability than other 0.300% next $2 billion
long term bond mutual funds, 0.280% next $2 billion
through investment primarily 0.260% next $3 billion
in investment-grade debt 0.250% next $3 billion
securities. 0.240% thereafter++
INDIVIDUAL FUND FEE
0.280% of net assets
AARP Capital Growth Fund Long term capital growth, 0.350% to $2 billion $1,228,379,954
consistent with a share price 0.330% next $2 billion
more stable than other growth 0.280% next $2 billion
funds, through investment in a 0.260% next $3 billion
combination of common stocks 0.250% next $3 billion
and securities convertible 0.240% thereafter
into common stocks. INDIVIDUAL FUND FEE
0.320% of net assets
AARP Diversified Growth Long term growth of capital There will be no fee as $ 61,796,818
Portfolio through investment primarily the manager will receive
in AARP stock mutual funds. a fee
</TABLE>
B-3
<PAGE> 48
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE NET ASSETS
---- --------- -------- ----------
<S> <C> <C> <C>
AARP Diversified Income with Current income with modest There will be no fee as $ 43,446,418
Growth Portfolio long term appreciation through the manager will receive
investment primarily in AARP a fee
bond mutual funds.
AARP Global Growth Fund Long term capital growth, 0.350% to $2 billion $ 148,029,373
consistent with a share price 0.330% next $2 billion
more stable than other global 0.300% next $2 billion
funds, through investment 0.280% next $2 billion
primarily in common stocks of 0.260% next $3 billion
established corporations in a 0.250% next $3 billion
wide variety of developed 0.240% thereafter
countries. INDIVIDUAL FUND FEE
0.550% of net assets
AARP GNMA and U.S. Treasury High level of current income, 0.350% to $2 billion $4,583,980,460
Fund consistent with greater share 0.330% next $2 billion
price stability than other 0.300% next $2 billion
GNMA mutual funds, through 0.280% next $2 billion
investment primarily in high 0.260% next $3 billion
quality U.S. Government- 0.250% next $3 billion
guaranteed GNMA securities and 0.240% thereafter
U.S. Treasury obligations. INDIVIDUAL FUND FEE
0.120% of net assets
AARP Growth and Income Fund Long term capital growth and 0.350% to $2 billion $6,606,012,897
income, consistent with a 0.330% next $2 billion
share price more stable than 0.300% next $2 billion
other growth and income mutual 0.280% next $2 billion
funds, through investment 0.260% next $3 billion
primarily in common stocks 0.250% next $3 billion
with above-average dividend 0.240% thereafter
yields and securities INDIVIDUAL FUND FEE
convertible into common 0.190% of net assets
stocks.
AARP High Quality Short Term High level of current income, 0.350% to $2 billion $ 454,869,518
Bond Fund consistent with greater share 0.330% next $2 billion
price stability than other 0.300% next $2 billion
short-term bond mutual funds, 0.280% next $2 billion
through investment primarily 0.260% next $3 billion
in a portfolio of high 0.250% next $3 billion
quality, short-term 0.240% thereafter
securities. INDIVIDUAL FUND FEE
0.190% of net assets
AARP High Quality Money Fund Current income consistent with 0.350% to $2 billion $ 471,310,867
maintaining stability and 0.330% next $2 billion
safety of principal and a 0.300% next $2 billion
constant net asset value of 0.280% next $2 billion
$1.00 per share while offering 0.260% next $3 billion
liquidity, through investment 0.250% next $3 billion
in high quality securities. 0.240% thereafter
INDIVIDUAL FUND FEE
0.100% of net assets
</TABLE>
B-4
<PAGE> 49
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE NET ASSETS
---- --------- -------- ----------
<S> <C> <C> <C>
AARP High Quality Tax Free Current income free from 0.350% to $2 billion $ 102,613,893
Money Fund federal income taxes 0.330% next $2 billion
consistent with maintaining 0.300% next $2 billion
stability and safety of 0.280% next $2 billion
principal and a constant net 0.260% next $3 billion
asset value of $1.00 per share 0.250% next $3 billion
while offering liquidity, 0.240% thereafter
through investment in INDIVIDUAL FUND FEE
high-quality municipal 0.100% of net assets
securities.
AARP Insured Tax Free General High level of current income 0.350% to $2 billion $1,712,008,168
Bond Fund free from federal income 0.330% next $2 billion
taxes, consistent with greater 0.300% next $2 billion
share price stability than 0.280% next $2 billion
other insured tax-free general 0.260% next $3 billion
bond mutual funds, through 0.250% next $3 billion
investment primarily in high 0.240% thereafter
quality municipal securities INDIVIDUAL FUND FEE
covered by insurance. 0.190% of net assets
AARP International Growth and Long term capital growth, 0.350% to $2 billion $ 20,259,062
Income Fund consistent with a share price 0.330% next $2 billion
more stable than other 0.300% next $2 billion
international mutual funds, 0.280% next $2 billion
through investment primarily 0.260% next $3 billion
in a diversified portfolio of 0.250% next $3 billion
foreign common stocks with 0.240% thereafter++
above-average dividend yields INDIVIDUAL FUND FEE
and foreign securities 0.600% of net assets
convertible into common
stocks.
AARP Small Company Stock Fund Long term growth of capital, 0.350% to $2 billion $ 50,271,473
consistent with a share price 0.330% next $2 billion
more stable than other small 0.300% next $2 billion
company stock mutual funds, 0.280% next $2 billion
through investment primarily 0.260% next $3 billion
in common stocks of small U.S. 0.250% next $3 billion
companies. 0.240% thereafter++
INDIVIDUAL FUND FEE
0.550% of net assets
AARP U.S. Stock Index Fund Long term capital growth and 0.350% to $2 billion $ 38,085,073
income, consistent with 0.330% next $2 billion
greater share price stability 0.300% next $2 billion
than an S&P 500 Index mutual 0.280% next $2 billion
fund, by taking an indexing 0.260% next $3 billion
approach to investing in 0.250% next $3 billion
common stocks, emphasizing 0.240% thereafter++
higher dividend stocks while INDIVIDUAL FUND FEE
maintaining investment 0.000% of net assets
characteristics otherwise
similar to the S&P 500 Index.
</TABLE>
- ------------------------------
+ The information provided below is shown as of the end of each Fund's last
fiscal year, unless otherwise noted.
++ Subject to waivers and/or expense limitations.
* The addition of this breakpoint is effective 9/30/98.
** Fee information is not available for Scudder Corporate Bond Fund, which
commenced operations on August 31, 1998.
B-5
<PAGE> 50
KEMPER FUNDS+
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE NET ASSETS
---- --------- -------- ----------
<S> <C> <C> <C>
EQUITY/GROWTH STYLE FUNDS
Kemper Aggressive Growth Capital appreciation through 0.650% of net assets $ 11,609,000
Fund the use of aggressive plus or minus an
investment techniques. incentive fee based on
the performance of the
Standard & Poor's 500
Stock Index, which may
result in a fee ranging
from 0.450 of 1.000% to
0.850 of 1.000% of net
assets
Kemper Blue Chip Fund Growth of capital and income. 0.580% to $250 million $ 446,891,000
0.550% next $750 million
0.530% next $1.5 billion
0.510% next $2.5 billion
0.480% next $2.5 billion
0.460% next $2.5 billion
0.440% next $2.5 billion
0.420% thereafter
Kemper Growth Fund Growth of capital through 0.580% to $250 million $2,827,565,000
professional management and 0.550% next $750 million
diversification of investment 0.530% next $1.5 billion
securities having potential 0.510% next $2.5 billion
for capital appreciation. 0.480% next $2.5 billion
0.460% next $2.5 billion
0.440% next $2.5 billion
0.420% thereafter
Kemper Quantitative Equity Growth of capital and 0.580% to $250 million $ 11,217,000
Fund reduction of risk through 0.550% next $750 million
professional management of a 0.530% next $1.5 billion
diversified portfolio of 0.510% next $2.5 billion
equity securities. 0.480% next $2.5 billion
0.460% next $2.5 billion
0.440% next $2.5 billion
0.420% thereafter
Kemper Small Capitalization Maximum capital appreciation. 0.650% of net assets $1,095,478,000
Equity Fund plus or minus an
incentive fee based on
the performance of the
Standard & Poor's 500
Stock Index, which may
result in a fee ranging
from 0.350 of 1.000% to
0.950 of 1.000% of net
assets
</TABLE>
B-6
<PAGE> 51
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE NET ASSETS
---- --------- -------- ----------
<S> <C> <C> <C>
Kemper Technology Fund Growth of capital. 0.580% to $250 million $1,209,723,000
0.550% next $750 million
0.530% next $1.5 billion
0.510% next $2.5 billion
0.480% next $2.5 billion
0.460% next $2.5 billion
0.440% next $2.5 billion
0.420% thereafter
Kemper Total Return Fund The highest total return, a 0.580% to $250 million $3,241,383,000
combination of income and 0.550% next $750 million
capital gain, consistent with 0.530% next $1.5 billion
reasonable risk. 0.510% next $2.5 billion
0.480% next $2.5 billion
0.460% next $2.5 billion
0.440% next $2.5 billion
0.420% thereafter
Kemper Value + Growth Fund Growth of capital through 0.720% to $250 million $ 97,741,000
professional management of 0.690% next $750 million
growth and value stocks. 0.660% next $1.5 billion
0.640% next $2.5 billion
0.600% next $2.5 billion
0.580% next $2.5 billion
0.560% next $2.5 billion
0.540% thereafter
EQUITY/VALUE STYLE FUNDS
Kemper Contrarian Fund Long-term capital 0.750% to $250 million $ 178,115,000
appreciation and, 0.720% next $750 million
secondarily, current income. 0.700% next $1.5 billion
0.680% next $2.5 billion
0.650% next $2.5 billion
0.640% next $2.5 billion
0.630% next $2.5 billion
0.620% thereafter
Kemper Small Cap Relative Long-term capital 0.750% to $250 million N/A*
Value Fund appreciation. 0.720% next $750 million
0.700% next $1.5 billion
0.680% next $2.5 billion
0.650% next $2.5 billion
0.640% next $2.5 billion
0.630% next $2.5 billion
0.620% thereafter**
Kemper Small Cap Value Fund Long-term capital 0.750% to $250 million $1,263,144,000
appreciation 0.720% next $750 million
0.700% next $1.5 billion
0.680% next $2.5 billion
0.650% next $2.5 billion
0.640% next $2.5 billion
0.630% next $2.5 billion
0.620% thereafter
Kemper U.S. Growth and Long-term growth of capital, 0.600% to $250 million $ 3,864,000***
Income Fund current income and growth of 0.570% next $750 million
income. 0.550% next $1.5 billion
0.530% thereafter
</TABLE>
B-7
<PAGE> 52
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE NET ASSETS
---- --------- -------- ----------
<S> <C> <C> <C>
Kemper-Dreman Financial Long-term capital 0.750% to $250 million N/A*
Services Fund appreciation by investing 0.720% next $750 million
primarily in common stocks 0.700% next $1.5 billion
and other equity securities 0.680% next $2.5 billion
of companies in the financial 0.650% next $2.5 billion
services industry believed by 0.640% next $2.5 billion
the Fund's investment manager 0.630% next $2.5 billion
to be undervalued. 0.620% thereafter**
Kemper-Dreman High Return High total rate of return. 0.750% to $250 million N/A*
Equity Fund 0.720% next $750 million
0.700% next $1.5 billion
0.680% next $2.5 billion
0.650% next $2.5 billion
0.640% next $2.5 billion
0.630% next $2.5 billion
0.620% thereafter
GLOBAL AND INTERNATIONAL FUNDS
Kemper Asian Growth Fund Long-term capital growth by 0.850% to $250 million $ 6,398,000
investing in a diversified 0.820% next $750 million
portfolio of Asian equity 0.800% next $1.5 billion
securities. 0.780% next $2.5 billion
0.750% next $2.5 billion
0.740% next $2.5 billion
0.730% next $2.5 billion
0.720% thereafter**
Kemper Emerging Markets Long-term growth of capital 1.250% of net assets** $ 1,147,000@
Growth Fund primarily through equity
investment in emerging
markets around the globe.
Kemper Emerging Markets High current income and, 1.000% of net assets** $ 5,616,000@
Income Fund secondarily, long-term
capital appreciation.
Kemper Europe Fund Long-term capital growth by 0.750% to $250 million $ 23,910,000
investing in a diversified 0.720% next $750 million
portfolio of European equity 0.700% next $1.5 billion
securities. 0.680% next $2.5 billion
0.650% next $2.5 billion
0.640% next $2.5 billion
0.630% next $2.5 billion
0.620% thereafter
Kemper Global Blue Chip Fund Long-term growth of capital 1.000% to $250 million $ 3,663,000@
through a diversified 0.950% next $750 million
worldwide portfolio of 0.900% thereafter**
marketable securities,
primarily equity securities.
Kemper Global Income Fund High current income 0.750% to $250 million $ 99,054,000
consistent with prudent total 0.720% next $750 million
return asset management by 0.700% next $1.5 billion
investing in a portfolio of 0.680% next $2.5 billion
investment grade foreign and 0.650% next $2.5 billion
domestic fixed income 0.640% next $2.5 billion
securities. 0.630% next $2.5 billion
0.620% thereafter
</TABLE>
B-8
<PAGE> 53
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE NET ASSETS
---- --------- -------- ----------
<S> <C> <C> <C>
Kemper International Fund Total return, a combination 0.750% to $250 million $ 588,069,000
of capital growth and income, 0.720% next $750 million
principally through an 0.700% next $1.5 billion
internationally diversified 0.680% next $2.5 billion
portfolio of equity 0.650% next $2.5 billion
securities. 0.640% next $2.5 billion
0.630% next $2.5 billion
0.620% thereafter
Kemper International Growth Long-term growth of capital 1.000% of net assets** $ 1,556,000@
and Income Fund and income, primarily from
foreign equity securities.
Kemper Latin America Fund Long-term capital 1.250% to $250 million $ 1,441,000@
appreciation through 1.200% next $750 million
investment primarily in the 1.150% thereafter**
securities of Latin American
issuers.
ASSET ALLOCATION FUNDS
Kemper Horizon 10+ Portfolio A balance between growth of 0.580% to $250 million $ 106,339,000
capital and income, 0.550% next $750 million
consistent with moderate 0.530% next $1.5 billion
risk. 0.510% next $2.5 billion
0.480% next $2.5 billion
0.460% next $2.5 billion
0.440% next $2.5 billion
0.420% thereafter
Kemper Horizon 20+ Portfolio Growth of capital and, 0.580% to $250 million $ 110,076,000
secondarily, income. 0.550% next $750 million
0.530% next $1.5 billion
0.510% next $2.5 billion
0.480% next $2.5 billion
0.460% next $2.5 billion
0.440% next $2.5 billion
0.420% thereafter
Kemper Horizon 5 Portfolio Income consistent with 0.580% to $250 million $ 55,335,000
preservation of capital and, 0.550% next $750 million
secondarily, growth of 0.530% next $1.5 billion
capital. 0.510% next $2.5 billion
0.480% next $2.5 billion
0.460% next $2.5 billion
0.440% next $2.5 billion
0.420% thereafter
TARGET EQUITY FUNDS
Kemper Retirement Fund-- Long-term capital growth with 0.500% of net assets $ 111,687,000
Series I guaranteed return of
investment on the maturity
date to investors who
reinvest all dividends and
hold their shares to the
maturity date.
Kemper Retirement Fund-- Long-term capital growth with 0.500% of net assets $ 158,437,000
Series II guaranteed return of
investment on the maturity
date to investors who
reinvest all dividends and
hold their shares to the
maturity date.
</TABLE>
B-9
<PAGE> 54
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE NET ASSETS
---- --------- -------- ----------
<S> <C> <C> <C>
Kemper Retirement Fund-- Long-term capital growth with 0.500% of net assets $ 118,084,000
Series III guaranteed return of
investment on the maturity
date to investors who
reinvest all dividends and
hold their shares to the
maturity date.
Kemper Retirement Fund-- Long-term capital growth with 0.500% of net assets $ 124,417,000
Series IV guaranteed return of
investment on the maturity
date to investors who
reinvest all dividends and
hold their shares to the
maturity date.
Kemper Retirement Fund-- Long-term capital growth with 0.500% of net assets $ 125,886,000
Series V guaranteed return of
investment on the maturity
date to investors who
reinvest all dividends and
hold their shares to the
maturity date.
Kemper Retirement Long-term capital growth with 0.500% of net assets $ 70,487,000
Fund--Series VI guaranteed return of
investment on the maturity
date to investors who
reinvest all dividends and
hold their shares to the
maturity date.
Kemper Retirement Long-term capital growth with 0.500% of net assets $ 25,787,000
Fund--Series VII guaranteed return of
investment on the maturity
date to investors who
reinvest all dividends and
hold their shares to the
maturity date.
Kemper Worldwide 2004 Fund Total return with guaranteed 0.600% of net assets $ 33,070,000
return of investment on the
maturity date to investors
who reinvest all their
dividends and hold their
shares to the maturity date
(11/15/2004).
INCOME FUNDS
Kemper Adjustable Rate U.S. High current income 0.550% to $250 million $ 81,967,000
Government Fund consistent with low 0.520% next $750 million
volatility of principal. 0.500% next $1.5 billion
0.480% next $2.5 billion
0.450% next $2.5 billion
0.430% next $2.5 billion
0.410% next $2.5 billion
0.400% thereafter
Kemper Diversified Income High current return. 0.580% to $250 million $ 861,543,000
Fund 0.550% next $750 million
0.530% next $1.5 billion
0.510% next $2.5 billion
0.480% next $2.5 billion
0.460% next $2.5 billion
0.440% next $2.5 billion
0.420% thereafter
</TABLE>
B-10
<PAGE> 55
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE NET ASSETS
---- --------- -------- ----------
<S> <C> <C> <C>
Kemper High Yield Fund The highest level of current 0.580% to $250 million $4,939,302,000
income from a professionally 0.550% next $750 million
managed, diversified 0.530% next $1.5 billion
portfolio of fixed income 0.510% next $2.5 billion
securities consistent with 0.480% next $2.5 billion
reasonable risk. 0.460% next $2.5 billion
0.440% next $2.5 billion
0.420% thereafter
Kemper High Yield Total return through high 0.650% to $250 million $ 16,188,000
Opportunity Fund current income and capital 0.620% next $750 million
appreciation. 0.600% next $1.5 billion
0.580% next $2.5 billion
0.550% next $2.5 billion
0.530% next $2.5 billion
0.510% next $2.5 billion
0.490% thereafter
Kemper Income and Capital As high a level of current 0.550% to $250 million $ 613,470,000
Preservation Fund income as is consistent with 0.520% next $750 million
preservation of capital. 0.500% next $1.5 billion
0.480% next $2.5 billion
0.450% next $2.5 billion
0.430% next $2.5 billion
0.410% next $2.5 billion
0.400% thereafter
Kemper Short-Intermediate High current income and 0.550% to $250 million $ 171,400,000
Government Fund preservation of capital, with 0.520% next $750 million
equal emphasis, from a 0.500% next $1.5 billion
portfolio primarily 0.480% next $2.5 billion
consisting of short-and 0.450% next $2.5 billion
intermediate-term U.S. 0.430% next $2.5 billion
Government securities. 0.410% next $2.5 billion
0.400% thereafter
Kemper U.S. Government High current income, 0.450% to $250 million $3,642,027,000
Securities Fund liquidity and security of 0.430% next $750 million
principal. 0.410% next $1.5 billion
0.400% next $2.5 billion
0.380% next $2.5 billion
0.360% next $2.5 billion
0.340% next $2.5 billion
0.320% thereafter
Kemper U.S. Mortgage Fund Maximum current return from 0.550% to $250 million $2,497,825,000
U.S. Government securities. 0.520% next $750 million
0.500% next $1.5 billion
0.480% next $2.5 billion
0.450% next $2.5 billion
0.430% next $2.5 billion
0.410% next $2.5 billion
0.400% thereafter
</TABLE>
B-11
<PAGE> 56
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE NET ASSETS
---- --------- -------- ----------
<S> <C> <C> <C>
TAX-FREE INCOME FUNDS
Kemper California Tax-Free High level of current income 0.550% to $250 million $1,007,907,000
Income Fund exempt from federal and 0.520% next $750 million
California income taxes 0.500% next $1.5 billion
through a portfolio of 0.480% next $2.5 billion
municipal securities. 0.450% next $2.5 billion
0.430% next $2.5 billion
0.410% next $2.5 billion
0.400% thereafter
Kemper Florida Tax-Free High level of current income 0.550% to $250 million $ 103,845,000
Income Fund that is exempt from income 0.520% next $750 million
taxes through a diversified 0.500% next $1.5 billion
portfolio of municipal 0.480% next $2.5 billion
securities. 0.450% next $2.5 billion
0.430% next $2.5 billion
0.410% next $2.5 billion
0.400% thereafter
Kemper Intermediate As high a level of current 0.550% to $250 million $ 21,889,000
Municipal Bond Fund income, exempt from federal 0.520% next $750 million
income taxes, as is 0.500% next $1.5 billion
consistent with preservation 0.480% next $2.5 billion
of capital through a 0.450% next $2.5 billion
diversified portfolio of 0.430% next $2.5 billion
municipal securities. 0.410% next $2.5 billion
0.400% thereafter**
Kemper Michigan Tax-Free High level of current income 0.550% to $250 million $ 3,091,000
Income Fund exempt from federal and 0.520% next $750 million
Michigan income taxes through 0.500% next $1.5 billion
a non-diversified portfolio 0.480% next $2.5 billion
of municipal securities. 0.450% next $2.5 billion
0.430% next $2.5 billion
0.410% next $2.5 billion
0.400% thereafter**
Kemper Municipal Bond Fund As high a level of current 0.450% to $250 million $3,216,221,000
income, exempt from federal 0.430% next $750 million
income taxes, as is 0.410% next $1.5 billion
consistent with preservation 0.400% next $2.5 billion
of capital though a 0.380% next $2.5 billion
professionally managed 0.360% next $2.5 billion
portfolio of municipal 0.340% next $2.5 billion
securities. 0.320% thereafter
Kemper New Jersey Tax-Free High level of current income 0.550% to $250 million $ 5,304,000
Income Fund exempt from federal and New 0.520% next $750 million
Jersey income taxes through a 0.500% next $1.5 billion
professionally managed non- 0.480% next $2.5 billion
diversified portfolio of 0.450% next $2.5 billion
municipal securities. 0.430% next $2.5 billion
0.410% next $2.5 billion
0.400% thereafter**
</TABLE>
B-12
<PAGE> 57
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE NET ASSETS
---- --------- -------- ----------
<S> <C> <C> <C>
Kemper New York Tax-Free High level of current income 0.550% to $250 million $ 285,934,000
Income Fund that is exempt from federal, 0.520% next $750 million
New York and New York city 0.500% next $1.5 billion
income taxes through a 0.480% next $2.5 billion
professionally managed non- 0.450% next $2.5 billion
diversified portfolio of 0.430% next $2.5 billion
municipal securities. 0.410% next $2.5 billion
0.400% thereafter
Kemper Ohio Tax-Free Income High level of current 0.550% to $250 million $ 39,468,000
Fund interest income exempt from 0.520% next $750 million
federal and state of Ohio 0.500% next $1.5 billion
income taxes through a 0.480% next $2.5 billion
professionally managed 0.450% next $2.5 billion
non-diversified portfolio of 0.430% next $2.5 billion
municipal securities. 0.410% next $2.5 billion
0.400% thereafter
Kemper Pennsylvania Tax- High level of current income 0.550% to $250 million $ 6,304,000
Free Income Fund exempt from federal and state 0.520% next $750 million
of Pennsylvania income taxes 0.500% next $1.5 billion
through a professionally 0.480% next $2.5 billion
managed non-diversified 0.450% next $2.5 billion
portfolio of municipal 0.430% next $2.5 billion
securities. 0.410% next $2.5 billion
0.400% thereafter**
Kemper Texas Tax-Free Income A high level of current 0.550% to $250 million $ 12,469,000
Fund interest income exempt from 0.520% next $750 million
federal income taxes through 0.500% next $1.5 billion
a professionally managed non- 0.480% next $2.5 billion
diversified portfolio of 0.450% next $2.5 billion
municipal securities. 0.430% next $2.5 billion
0.410% next $2.5 billion
0.400% thereafter
CLOSED-END FUNDS
The Growth Fund of Spain, Long-term capital 1.000% of net assets(2) $ 315,059,000
Inc. appreciation by investing
primarily in equity
securities of Spanish
companies.
Kemper High Income Trust Highest current income 0.850% of net assets(2) $ 222,919,000
obtainable consistent with
reasonable risk with capital
gains secondary.
Kemper Intermediate High current income 0.800% of net assets(1) $ 267,218,000
Government Trust consistent with preservation
of capital by investing in
U.S. and foreign government
securities.
Kemper Multi-Market Income High current income 0.850% of net assets(2) $ 217,508,000
Trust consistent with prudent total
return asset management by
investing in a diversified
portfolio of investment grade
tax-exempt securities.
</TABLE>
B-13
<PAGE> 58
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE NET ASSETS
---- --------- -------- ----------
<S> <C> <C> <C>
Kemper Municipal Income High level of current income 0.550% of net assets(2) $ 686,179,000
Trust exempt from federal income
tax.
Kemper Strategic Income Fund High current income by 0.850% of net assets(2) $ 53,129,000
investing its assets in a
combination of lower-rated
corporate fixed-income
securities, fixed-income
securities of emerging market
and other foreign issuers
and, fixed-income securities
of the U.S. Government and
its agencies and
instrumentalities and private
mortgage-backed issuers.
Kemper Strategic Municipal High level of current income 0.600% of net assets(2) $ 130,895,000
Income Trust exempt from federal income
tax by investing in a
diversified portfolio of
tax-exempt municipal
securities.
ANNUITY PRODUCTS
Kemper Blue Chip Portfolio Growth of capital and income. 0.650% of net assets $ 18,421,000
Kemper Contrarian Value High rate of return. 0.750% of net assets $ 162,380,000
Portfolio
Kemper Global Blue Chip Long-term growth of capital 1.000% to $250 million N/A*
Portfolio through diversified worldwide 0.950% next $750 million
portfolio of marketable 0.900% thereafter
securities, primarily equity
securities.
Kemper Global Income High current income 0.750% of net assets $ 2,145,000
Portfolio consistent with prudent total
return asset management.
Kemper Government Securities High current income 0.550% of net assets $ 86,682,000
Portfolio consistent with preservation
of capital from a portfolio
consisting primarily of U.S.
Government securities.
Kemper Growth Portfolio Maximum appreciation of 0.600% of net assets $ 563,016,000
capital.
Kemper High Yield Portfolio High level of current income 0.600% of net assets $ 391,664,000
by investing in fixed income
securities.
Kemper Horizon 10+ Portfolio A balance between growth of 0.600% of net assets $ 22,553,000
capital and income consistent
with moderate risk.
Kemper Horizon 20+ Portfolio Growth of capital and, 0.600% of net assets $ 16,659,000
secondarily, income.
Kemper Horizon 5 Portfolio Income consistent with 0.600% of net assets $ 14,258,000
preservation of capital, and
secondarily, growth.
</TABLE>
B-14
<PAGE> 59
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE NET ASSETS
---- --------- -------- ----------
<S> <C> <C> <C>
Kemper International Growth Long-term growth of capital 1.000% of net assets N/A*
and Income Portfolio and current income, primarily
from foreign equity
securities.
Kemper International Total return, a combination 0.750% of net assets $ 200,046,000
Portfolio of capital growth and income,
principally through an
internationally diversified
portfolio of equity
securities.
Kemper Investment Grade Bond High current income by 0.600% of net assets $ 15,504,000
Portfolio investing primarily in a
diversified portfolio of
investment grade debt
securities.
Kemper Money Market Maximum current income to the 0.500% of net assets $ 100,143,000
Portfolio extent consistent with
stability of principal from a
portfolio of high quality
money market instruments.
Kemper Small Cap Growth Maximum capital appreciation 0.650% of net assets $ 137,415,000
Portfolio from a portfolio primarily
consisting of growth stocks
of small companies.
Kemper Small Cap Value Long-term capital 0.750% of net assets $ 76,108,000
Portfolio appreciation from a portfolio
primarily of value stocks of
smaller companies.
Kemper Total Return High total return through a 0.550% of net assets $ 786,996,000
Portfolio combination of income and
capital appreciation.
Kemper Value+Growth Growth of capital through 0.750% of net assets $ 69,094,000
Portfolio professional management of a
portfolio of growth and value
stocks.
Kemper-Dreman Financial Long-term capital 0.750% to $250 million N/A*
Services Portfolio appreciation by investing 0.720% next $750 million
primarily in common stocks 0.700% next $1.5 billion
and other equity securities 0.680% next $2.5 billion
of companies in the financial 0.650% next $2.5 billion
services industry believed by 0.640% next $2.5 billion
the investment manger to be 0.630% next $2.5 billion
undervalued. 0.620% thereafter
</TABLE>
B-15
<PAGE> 60
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE NET ASSETS
---- --------- -------- ----------
<S> <C> <C> <C>
Kemper-Dreman High Return High rate of total return. 0.750% to $250 million N/A*
Equity Portfolio 0.720% next $750 million
0.700% next $1.5 billion
0.680% next $2.5 billion
0.650% next $2.5 billion
0.640% next $2.5 billion
0.630% next $2.5 billion
0.620% thereafter
MONEY MARKET FUNDS
Government Securities Maximum current income to the 0.220% to $500 million $ 810,001,000
Portfolio (Cash Account extent consistent with 0.200% next $500 million
Trust) stability of capital from a 0.175% next $1 billion
portfolio of U.S. Government 0.160% next $1 billion
obligations. 0.150% thereafter(1)**
Government Securities Maximum current income to the 0.220% to $500 million $ 391,861,000
Portfolio (Cash Equivalent extent consistent with 0.200% next $500 million
Fund) stability of capital from a 0.175% next $1 billion
portfolio of U.S. Government 0.160% next $1 billion
obligations. 0.150% thereafter(4)
Government Securities Maximum current income to the 0.150% of net $ 312,194,000
Portfolio (Investors Cash extent consistent with assets(5)**
Trust) stability of capital by
investing in U.S. Government
obligations and repurchase
agreements.
Investors Florida Municipal Maximum current income exempt 0.220% to $500 million $ 7,611,000
Cash Fund from federal income taxes to 0.200% next $500 million
the extent consistent with 0.175% next $1 billion
stability of capital. 0.160% next $1 billion
0.150% thereafter(3)**
Investors Michigan Municipal Maximum current income exempt 0.22% to $500 million N/A*
Cash Fund from federal and Michigan 0.20% next $500 million
income taxes to the extent 0.175% next $1 billion
consistent with stability of 0.16% next $1 billion
capital 0.15% thereafter
Investors New Jersey Maximum current income exempt 0.220% to $500 million $ 4,665,000
Municipal Cash Fund from federal and New Jersey 0.200% next $500 million
income taxes to the extent 0.175% next $1 billion
consistent with stability of 0.160% next $1 billion
capital. 0.150% thereafter(3)**
Investors Pennsylvania Maximum current income exempt 0.220% to $500 million $ 3,195,000
Municipal Cash Fund from federal and Pennsylvania 0.200% next $500 million
income taxes to the extent 0.175% next $1 billion
consistent with stability of 0.160% next $1 billion
capital. 0.150% thereafter(3)**
</TABLE>
B-16
<PAGE> 61
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE NET ASSETS
---- --------- -------- ----------
<S> <C> <C> <C>
Kemper Cash Reserves Fund Maximum current income to the 0.400% to $250 million $ 339,655,000
extent consistent with 0.380% next $750 million
stability of principal from a 0.350% next $1.5 billion
portfolio of high quality 0.320% next $2.5 billion
money market instruments. 0.300% next $2.5 billion
0.280% next $2.5 billion
0.260% next $2.5 billion
0.250% thereafter
Money Market Portfolio (Cash Maximum current income to the 0.220% to $500 million $2,004,420,000
Account Trust) extent consistent with 0.200% next $500 million
stability of capital from a 0.175% next $1 billion
portfolio primarily of 0.160% next $1 billion
commercial paper and bank 0.150% thereafter(1)**
obligations.
Money Market Portfolio (Cash Maximum current income to the 0.220% to $500 million $ 851,592,000
Equivalent Fund) extent consistent with 0.200% next $500 million
stability of capital from a 0.175% next $1 billion
portfolio primarily of 0.160% next $1 billion
commercial paper and bank 0.150% thereafter(4)
obligations.
Tax-Exempt Portfolio (Cash Maximum current income exempt 0.220% to $500 million $ 370,036,000
Account Trust) from federal income taxes to 0.200% next $500 million
the extent consistent with 0.175% next $1 billion
stability of capital from a 0.160% next $1 billion
portfolio of municipal 0.150% thereafter(1)**
securities.
Tax-Exempt Portfolio (Cash Maximum current income that 0.220% to $500 million $ 333,427,000
Equivalent Fund) is exempt from federal income 0.200% next $500 million
taxes to the extent 0.175% next $1 billion
consistent with stability of 0.160% next $1 billion
capital from a portfolio of 0.150% thereafter
municipal securities.
Treasury Portfolio Maximum current income to the 0.150% of net $ 74,290,000
(Investors Cash Trust) extent consistent with assets(5)**
stability of capital by
investing in U.S. Government
obligations and repurchase
agreements.
Zurich Government Money Fund Maximum current income to the 0.500% to $215 million $ 686,871,000
extent consistent with 0.375% next $335 million
stability of principal from a 0.300% next $250 million
portfolio of U.S. Government 0.250% thereafter(6)
obligations.
Zurich Money Market Fund Maximum current income to the 0.500% to $215 million $4,538,627,000
extent consistent with 0.375% next $335 million
stability of principal from a 0.300% next $250 million
portfolio primarily 0.250% thereafter(6)
consisting of commercial
paper and bank obligations.
</TABLE>
B-17
<PAGE> 62
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE NET ASSETS
---- --------- -------- ----------
<S> <C> <C> <C>
Zurich Tax-Free Money Fund Maximum current income to the 0.500% to $215 million $ 815,894,000
extent consistent with 0.375% next $335 million
stability of principal from a 0.300% next $250 million
portfolio of municipal 0.250% thereafter(6)
securities.
Zurich YieldWise Money Fund Maximum current income to the 0.500% to $215 million $1,071,728,000
extent consistent with 0.375% next $335 million
stability of principal by 0.300% next $250 million
investing in high-quality 0.250% thereafter**
short-term money market
instruments
Tax-Exempt New York Money Maximum current income exempt 0.220% to $500 million $ 104,198,000
Market Fund from federal, New York State 0.200% next $500 million
and New York City income 0.175% next $1 billion
taxes to the extent 0.160% next $1 billion
consistent with stability of 0.150% thereafter(3)**
capital.
Tax-Exempt California Money Maximum current income exempt 0.220% to $500 million $ 117,432,000
Market Fund from federal and California 0.200% next $500 million
income taxes to the extent 0.175% next $1 billion
consistent with stability of 0.160% next $1 billion
capital. 0.150% thereafter
</TABLE>
- ------------------------------
+ The information provided below is shown as of the end of each Fund's last
fiscal year, unless otherwise noted.
* Fee information is not available for Kemper-Dreman Financial Services Fund,
which commenced operations on March 9, 1998; Investors Michigan Municipal
Cash Fund, which commenced operations on April 6, 1998; Kemper-Dreman High
Return Equity Portfolio, which commenced operations on May 1, 1998;
Kemper-Dreman Financial Services Portfolio, which commenced operations on
May 4, 1998; Kemper Global Blue Chip Portfolio and Kemper International
Growth and Income Portfolio, each of which commenced operations on May 5,
1998; or Kemper Small Cap Relative Value Fund, which commenced operations on
May 6, 1998.
** Subject to waivers and/or reimbursements.
*** Net asset information is provided as of semi-annual period ended April 30,
1998.
@ Net asset information is provided as of semi-annual period ended March 31,
1998.
(1) Payable in the aggregate for each of the Government Securities Portfolio,
Money Market Portfolio and Tax-Exempt Portfolio series of Cash Account
Trust.
(2) Based on average weekly net assets.
(3) Payable in the aggregate for each of the Investors Florida Municipal Cash
Fund, Investors New Jersey Municipal Cash Fund, Investors Pennsylvania
Municipal Cash Fund and Tax-Exempt New York Money Market Fund series of
Investors Municipal Cash Fund.
(4) Payable in the aggregate for each of the Government Securities Portfolio
and Money Market Portfolio series of Cash Equivalent Fund.
(5) Payable in the aggregate for each of the Government Securities Portfolio
and Treasury Portfolio series of Investors Cash Trust.
(6) Payable in the aggregate for each of the Zurich Government Money Fund,
Zurich Money Market Fund and Zurich Tax-Free Money Fund series of Zurich
Money Funds.
B-18
<PAGE> 63
APPENDIX 1
SCUDDER TRUSTS/CORPORATIONS and Series
GLOBAL/INTERNATIONAL FUND, INC.
Scudder Emerging Markets Income Fund
Scudder Global Bond Fund
Scudder Global Fund
Scudder International Bond Fund
INVESTMENT TRUST
Scudder Dividend & Growth Fund
Scudder Growth and Income Fund
Scudder Large Company Growth Fund
Scudder Real Estate Investment Fund
Scudder S&P 500 Index Fund
Scudder Tax Managed Growth Fund
Scudder Tax Managed Small Company Fund
SCUDDER CALIFORNIA TAX FREE TRUST
Scudder California Tax Free Fund
Scudder California Tax Free Money Fund
SCUDDER CASH INVESTMENT TRUST
SCUDDER FUND, INC.
Scudder Government Money Market Series
Scudder Money Market Series
Scudder Tax Free Money Market Series
SCUDDER FUNDS TRUST
Scudder Short Term Bond Fund
SCUDDER GNMA FUND
SCUDDER INTERNATIONAL FUND, INC.
Scudder Emerging Markets Growth Fund
Scudder Greater Europe Growth Fund
Scudder International Fund
Scudder International Growth and Income Fund
Scudder International Growth Fund
Scudder International Value Fund
Scudder Latin America Fund
Scudder Pacific Opportunities Fund
SCUDDER MUNICIPAL TRUST
Scudder High Yield Tax Free Fund
Scudder Managed Municipal Bonds
SCUDDER MUTUAL FUNDS, INC.
Scudder Gold Fund
SCUDDER PATHWAY SERIES
Scudder Pathway Series: Balanced Portfolio
Scudder Pathway Series: Conservative Portfolio
Scudder Pathway Series: Growth Portfolio
Scudder Pathway Series: International Portfolio
SCUDDER PORTFOLIO TRUST
Scudder Balanced Fund
Scudder High Yield Bond Fund
Scudder Income Fund
SCUDDER SECURITIES TRUST
Scudder 21st Century Growth Fund
Scudder Development Fund
Scudder Financial Services Fund
Scudder Health Care Fund
Scudder Micro Cap Fund
Scudder Small Company Value Fund
Scudder Technology Fund
SCUDDER STATE TAX FREE TRUST
Scudder Massachusetts Limited Term Tax Free Fund
Scudder Massachusetts Tax Free Fund
Scudder New York Tax Free Fund
Scudder New York Tax Free Money Fund
Scudder Ohio Tax Free Fund
Scudder Pennsylvania Tax Free Fund
SCUDDER TAX FREE TRUST
Scudder Limited Term Tax Free Fund
Scudder Medium Term Tax Free Fund
SCUDDER TAX FREE MONEY FUND
SCUDDER U.S. TREASURY MONEY FUND
VALUE EQUITY TRUST
Scudder Large Company Value Fund
<PAGE> 64
APPENDIX 2
FUND SHARES OUTSTANDING
Holders of record of the shares of each Fund at the close of business on
October 19, 1998 (the "Record Date"), as to any matter on which they are
entitled to vote, will be entitled to one vote per share on all business of the
Special Meeting. The table below sets forth the number of shares outstanding for
each Fund as of June 30, 1998.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OUTSTANDING
FUND AS OF JUNE 30, 1998*
---- --------------------
<S> <C>
Scudder 21st Century Growth Fund 2,634,811.163
Scudder Balanced Fund 10,802,593.097
Scudder California Tax Free Fund 29,494,951.955
Scudder California Tax Free Money Fund 66,317,085.765
Scudder Cash Investment Trust 1,173,830,046.034
Scudder Development Fund 20,253,026.813
Scudder Emerging Markets Growth Fund 13,636,273.670
Scudder Emerging Markets Income Fund 30,251,931.795
Scudder Financial Services Fund 2,620,237.517
Scudder Global Bond Fund 11,414,569.678
Scudder Global Fund 54,486,575.664
Scudder GNMA Fund 25,687,142.565
Scudder Gold Fund 18,206,097.629
Scudder Government Money Market Series 90,649,694.743
Scudder Greater Europe Growth Fund 40,284,092.451
Scudder Growth and Income Fund 280,527,178.870
Scudder Health Care Fund 3,458,260.812
Scudder High Yield Bond Fund 15,578,023.469
Scudder High Yield Tax Free Fund 29,386,308.669
Scudder Income Fund 57,342,402.174
Scudder International Bond Fund 14,651,842.388
Scudder International Fund 56,582,058.364
Scudder International Growth and Income Fund 4,401,897.144
Scudder Large Company Growth Fund 12,747,541.338
Scudder Large Company Value Fund 80,840,972.539
Scudder Latin America Fund 29,734,565.801
Scudder Limited Term Tax Free Fund 11,340,877.766
Scudder Managed Municipal Bonds 80,285,425.328
Scudder Massachusetts Limited Term Tax Free Fund 7,506,254.776
Scudder Massachusetts Tax Free Fund 26,944,757.048
</TABLE>
<PAGE> 65
<TABLE>
<CAPTION>
NUMBER OF SHARES
OUTSTANDING
FUND AS OF JUNE 30, 1998*
---- --------------------
<S> <C>
Scudder Medium Term Tax Free Fund 58,886,614.358
Scudder Micro Cap Fund 7,549,014.629
Scudder Money Market Series 1,215,695,609.255
Scudder New York Tax Free Fund 17,643,044.693
Scudder New York Tax Free Money Fund 85,239,406.523
Scudder Ohio Tax Free Fund 7,067,165.478
Scudder Pacific Opportunities Fund 13,031,038.906
Scudder Pathway Series: Balanced Portfolio 17,853,213.895
Scudder Pathway Series: Conservative Portfolio 2,268,271.537
Scudder Pathway Series: Growth Portfolio 4,990,387.063
Scudder Pathway Series: International Portfolio 750,979.967
Scudder Pennsylvania Tax Free Fund 5,737,139.096
Scudder Real Estate Investment Fund 1,800,837.672
Scudder S&P 500 Index Fund 3,419,609.904
Scudder Short Term Bond Fund 97,088,805.578
Scudder Small Company Value Fund 13,341,836.399
Scudder Tax Free Money Fund 230,002,877.723
Scudder Tax Free Money Market Series 214,068,833.060
Scudder Technology Fund 3,181,305.596
Scudder U.S. Treasury Money Fund 382,315,106.383
</TABLE>
- ------------------------------
* Shares outstanding information is not available for Scudder Dividend & Growth
Fund, which commenced operations on July 17, 1998; Scudder Tax Managed Growth
Fund and Scudder Tax Managed Small Company Fund, each of which commenced
operations on September 18, 1998; or Scudder International Growth Fund and
Scudder International Value Fund, each of which commenced operations on
September 1, 1998.
2
<PAGE> 66
APPENDIX 3
BENEFICIAL OWNERS OF 5% OR MORE OF FUND SHARES
Certain accounts for which the Investment Manager acts as investment
adviser owned 134,528 shares in the aggregate, or 5.10% of the outstanding
shares of SCUDDER 21ST CENTURY GROWTH FUND on June 30, 1998. The Investment
Manager may be deemed to be a beneficial owner of such shares but disclaims any
beneficial ownership in such shares.
As of June 30, 1998, 512,601 shares in the aggregate, or 19.45% of the
outstanding shares of SCUDDER 21ST CENTURY GROWTH FUND were held in the name of
Charles Schwab & Co., 101 Montgomery Street, San Francisco, CA 94104, who may be
deemed to be the beneficial owner of certain of these shares, but disclaims any
beneficial ownership therein.
As of June 30, 1998, 144,822 shares in the aggregate, or 5.49% of the
outstanding shares of SCUDDER 21ST CENTURY GROWTH FUND were held in the name of
A Lindsay & Olive B. O'Connor Foundation, Hobart, NY 13788.
As of June 30, 1998, 1,166,455 shares in the aggregate, or 10.79% of the
outstanding shares of SCUDDER BALANCED FUND were held in the name of Scudder
Stevens & Clark Profit Sharing and 401(k) Plan Trust One, 345 Park Avenue, New
York, NY 10154, who may be deemed to be the beneficial owner of certain of these
shares, but disclaims any beneficial ownership therein.
As of June 30, 1998, 2,903,971 shares in the aggregate, or 9.84% of the
outstanding shares of SCUDDER CALIFORNIA TAX FREE FUND were held in the name of
Charles Schwab & Co., 101 Montgomery Street, San Francisco, CA 94104, who may be
deemed to be the beneficial owner of certain of these shares, but disclaims any
beneficial ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 6,392,214 shares in the aggregate, or 9.63% of the outstanding
shares of SCUDDER CALIFORNIA TAX FREE MONEY FUND on June 30, 1998. The
Investment Manager may be deemed to be a beneficial owner of such shares but
disclaims any beneficial ownership in such shares.
Certain accounts for which the Investment Manager acts as investment
adviser owned 1,607,104 shares in the aggregate, or 7.93% of the outstanding
shares of SCUDDER DEVELOPMENT FUND on June 30, 1998. The Investment Manager may
be deemed to be a beneficial owner of such shares but disclaims any beneficial
ownership in such shares.
Certain accounts for which the Investment Manager acts as investment
adviser owned 2,715,269 shares in the aggregate, or 19.91% of the outstanding
shares of SCUDDER EMERGING MARKET GROWTH FUND on June 30, 1998. The
<PAGE> 67
Investment Manager may be deemed to be a beneficial owner of such shares but
disclaims any beneficial ownership in such shares.
As of June 30, 1998, 1,390,156 shares in the aggregate, or 10.19% of the
outstanding shares of SCUDDER EMERGING MARKETS GROWTH FUND were held in the name
of Charles Schwab Co., 101 Montgomery Street, San Francisco, CA 94104, who may
be deemed to be the beneficial owner of certain of these shares, but disclaims
any beneficial ownership therein.
As of June 30, 1998, 775,979 shares in the aggregate, or 5.54% of the
outstanding shares of SCUDDER EMERGING MARKETS GROWTH FUND were held in the name
of State Street Bank and Trust Co., Custodian for the Scudder Pathway Portfolio,
One Heritage Drive, Quincy, MA 02171-2105, who may be deemed to be the
beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 1,763,629 shares in the aggregate, or 5.82% of the outstanding
shares of SCUDDER EMERGING MARKETS INCOME FUND on June 30, 1998. The Investment
Manager may be deemed to be a beneficial owner of such shares but disclaims any
beneficial ownership in such shares.
As of June 30, 1998, 6,632,288 shares in the aggregate, or 21.92% of the
outstanding shares of SCUDDER EMERGING MARKETS INCOME FUND were held in the name
of Charles Schwab Co., 101 Montgomery Street, San Francisco, CA 94104, who may
be deemed to be the beneficial owner of certain of these shares, but disclaims
any beneficial ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 1,523,054 shares in the aggregate, or 5.92% of the outstanding
shares of SCUDDER GNMA FUND on June 30, 1998. The Investment Manager may be
deemed to be a beneficial owner of such shares but disclaims any beneficial
ownership in such shares.
As of June 30, 1998, 5,621,802 shares in the aggregate, or 10.37% of the
outstanding shares of SCUDDER GLOBAL FUND were held in the name of Charles
Schwab Co., 101 Montgomery Street, San Francisco, CA 94104, who may be deemed to
be the beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1998, 777,724 shares in the aggregate, or 6.18% of the
outstanding shares of SCUDDER GLOBAL FUND were held in the name of Charles
Schwab Co., 101 Montgomery Street, San Francisco, CA 94104, who may be deemed to
be the beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1998, 3,546,186 shares in the aggregate, or 19.47% of the
outstanding shares of SCUDDER GOLD FUND were held in the name of Charles
2
<PAGE> 68
Schwab Co., 101 Montgomery Street, San Francisco, CA 94104, who may be deemed to
be the beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 13,981,603 shares in the aggregate, or 22.45% of the outstanding
shares of SCUDDER GOVERNMENT MONEY MARKET SERIES: SCUDDER INSTITUTIONAL SHARES
(15.42% of the Fund) on June 30, 1998. The Investment Manager may be deemed to
be a beneficial owner of such shares but disclaims any beneficial ownership in
such shares.
As of June 30, 1998, 61,394,657 shares in the aggregate, or 98.58% of the
outstanding shares of SCUDDER GOVERNMENT MONEY MARKET SERIES: SCUDDER
INSTITUTIONAL SHARES (67.72% of the Fund) were held in the nominees of Fiduciary
Trust Company. Fiduciary Trust Company may be deemed to be the beneficial owner
of certain of these shares, but disclaims any beneficial ownership therein.
As of June 30, 1998, 4,824,033 shares in the aggregate, or 17.00% of the
outstanding shares of SCUDDER GOVERNMENT MONEY MARKET SERIES: SCUDDER MANAGED
SHARES (5.32% of the Fund) were held in the name of Cudd & Co., 1211 Avenue of
the Americas, 33rd Floor, New York, NY 10036, who may be deemed to be the
beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1998, 14,060,717 shares in the aggregate, or 49.55% of the
outstanding shares of SCUDDER GOVERNMENT MONEY MARKET SERIES: SCUDDER MANAGED
SHARES (15.51% of the Fund) were held in the name of Citibank, One Court Square,
22nd Floor Zone 7, Long Island City, NY 11120, who may be deemed to be the
beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1998, 11,301,921 shares in the aggregate, or 28.05% of the
outstanding shares of SCUDDER GREATER EUROPE GROWTH FUND were held in the name
of Charles Schwab Co., 101 Montgomery Street, San Francisco, CA 94104, who may
be deemed to be the beneficial owner of certain of these shares, but disclaims
any beneficial ownership therein.
As of June 30, 1998, 2,773,660 shares in the aggregate, or 6.88% of the
outstanding shares of SCUDDER GREATER EUROPE GROWTH FUND were held in the name
of Fidelity Investments Institutional Operations Co., 100 Magellan Way, Mail
Zone KWIC, Covington, Kentucky 41015, who may be deemed to be the beneficial
owner of certain of these shares, but disclaims any beneficial ownership
therein.
As of June 30, 1998, 3,484,943 shares in the aggregate, or 8.64% of the
outstanding shares of SCUDDER GREATER EUROPE GROWTH FUND were held in the name
of National Financial Services Co., Exclusive Benefit of Customers, P. O. Box
3908, Church Street Station, New York, NY 10008-3908, who may be
3
<PAGE> 69
deemed to be the beneficial owner of certain of these shares, but disclaims any
beneficial ownership therein.
As of June 30, 1998, 2,551,891 shares in the aggregate, or 6.33% of the
outstanding shares of SCUDDER GREATER EUROPE GROWTH FUND were held in the name
of Merrill Lynch Pierce Fenner & Smith for the Sole Benefit of ITS Customers,
Attn. Service Team, 4800 Deer lake Drive East 3rd Floor, Jacksonville, FL
32246-6484, who may be deemed to be the beneficial owner of certain of these
shares, but disclaims any beneficial ownership therein.
As of June 30, 1998, 22,487,935 shares in the aggregate, or 8.01% of the
outstanding shares of SCUDDER GROWTH AND INCOME FUND were held in the name of
Charles Schwab & Co., 101 Montgomery Street, San Francisco, CA 94101, who may be
deemed to be the beneficial owner of certain of these shares, but disclaims any
beneficial ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 2,059,866 shares in the aggregate, or 13.20% of the outstanding
shares of SCUDDER HIGH YIELD BOND FUND on June 30, 1998. The Investment Manager
may be deemed to be a beneficial owner of such shares but disclaims any
beneficial ownership in such shares.
As of June 30, 1998, 1,894,224 shares in the aggregate, or 12.15% of the
outstanding shares of SCUDDER HIGH YIELD BOND FUND were held in the name of
Charles Schwab & Co., 101 Montgomery Street, San Francisco, CA 94101, who may be
deemed to be the beneficial owner of certain of these shares, but disclaims any
beneficial ownership therein.
As of June 30, 1998, 1,121,117 shares in the aggregate, or 7.19% of the
outstanding shares of SCUDDER HIGH YIELD BOND FUND were held in the name of
State Street Bank and Trust Co., Custodian for the Scudder Pathway Series,
Balanced Portfolio, One Heritage Drive, Quincy, MA 02171, who may be deemed to
be the beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1998, 2,313,499 shares in the aggregate, or 7.87% of the
outstanding shares of SCUDDER HIGH YIELD TAX FREE FUND were held in the name of
Charles Schwab & Co., 101 Montgomery Street, San Francisco, CA 94104, who may be
deemed to be the beneficial owner of certain of these shares, but disclaims any
beneficial ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 2,915,512 shares in the aggregate, or 5.08% of the outstanding
shares of SCUDDER INCOME FUND on June 30, 1998. The Investment Manager may be
deemed to be a beneficial owner of such shares but disclaims any beneficial
ownership in such shares.
4
<PAGE> 70
As of June 30, 1998, 5,328,031 shares in the aggregate, or 9.28% of the
outstanding shares of SCUDDER INCOME FUND were held in the name of State Street
Bank and Trust Co., Custodian for the Scudder Pathway Series, Balanced
Portfolio, One Heritage Drive, Quincy, MA 02171, who may be deemed to be the
beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1998, 2,989,382 shares in the aggregate, or 5.21% of the
outstanding shares of SCUDDER INCOME FUND were held in the name of Charles
Schwab & Co., 101 Montgomery Street, San Francisco, CA 94101, who may be deemed
to be the beneficial owner of certain of these shares, but disclaims any
beneficial ownership therein.
As of June 30, 1998, 2,181,324 shares in the aggregate, or 14.88% of the
outstanding shares of SCUDDER INTERNATIONAL BOND FUND were held in the name of
Charles Schwab Co., 101 Montgomery Street, San Francisco, CA 94104, who may be
deemed to be the beneficial owner of certain of these shares, but disclaims any
beneficial ownership therein.
As of June 30, 1998, 6,116,968 shares in the aggregate, or 10.89% of the
outstanding shares of SCUDDER INTERNATIONAL FUND: INTERNATIONAL SHARES (10.81%
of the Fund) were held in the name of Charles Schwab Co., 101 Montgomery Street,
San Francisco, CA 94104, who may be deemed to be the beneficial owner of certain
of these shares, but disclaims any beneficial ownership therein.
As of June 30, 1998, 692,777 shares in the aggregate, or 5.43% of the
outstanding shares of SCUDDER LARGE COMPANY GROWTH FUND were held in the name of
State Street Bank and Trust Co., Custodian for the Scudder Pathway Series,
Growth Portfolio, One Heritage Drive, Quincy, MA 02171, who may be deemed to be
the beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1998, 2,662,245 shares in the aggregate, or 8.95% of the
outstanding shares of SCUDDER LATIN AMERICAN FUND were held in the name of
Charles Schwab Co., 101 Montgomery Street, San Francisco, CA 94104, who may be
deemed to be the beneficial owner of certain of these shares, but disclaims any
beneficial ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 5,705,244 shares in the aggregate, or 50.30% of the outstanding
shares of SCUDDER LIMITED TERM TAX FREE FUND on June 30, 1998. The Investment
Manager may be deemed to be a beneficial owner of such shares but disclaims any
beneficial ownership in such shares.
Certain accounts for which the Investment Manager acts as investment
adviser owned 10,596,191 shares in the aggregate, or 13.19% of the outstanding
shares of SCUDDER MANAGED MUNICIPAL BONDS on June 30, 1998. The Investment
5
<PAGE> 71
Manager may be deemed to be a beneficial owner of such shares but disclaims any
beneficial ownership in such shares.
As of June 30, 1998, 5,223,102 shares in the aggregate, or 6.50% of the
outstanding shares of SCUDDER MANAGED MUNICIPAL BONDS were held in the nominees
of Fiduciary Trust Company. Fiduciary Trust Company may be deemed to the
beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 446,073 shares in the aggregate, or 5.94% of the outstanding
shares of SCUDDER MASSACHUSETTS LIMITED TERM TAX FREE FUND on June 30, 1998. The
Investment Manager may be deemed to be a beneficial owner of such shares but
disclaims any beneficial ownership in such shares.
As of June 30, 1998 641,226 shares in aggregate, or 8.54% of the
outstanding shares of SCUDDER MASSACHUSETTS LIMITED TERM TAX FREE FUND were held
in the nominees of Fiduciary Trust Company. Fiduciary Trust Company may be
deemed to be the beneficial owner of certain of these shares, but disclaims any
beneficial ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 2,584,455 shares in the aggregate, or 8.59% of the outstanding
shares of SCUDDER MASSACHUSETTS TAX FREE FUND on June 30, 1998. The Investment
Manager may be deemed to be a beneficial owner of such shares but disclaims any
beneficial ownership in such shares.
As of June 30, 1998 2,201,717 shares in aggregate, or 8.17% of the
outstanding shares of SCUDDER MASSACHUSETTS TAX FREE FUND were held in the
nominees of Fiduciary Trust Company. Fiduciary Trust Company may be deemed to be
the beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 9,570,304 shares in the aggregate, or 16.25% of the outstanding
shares of SCUDDER MEDIUM TERM TAX FREE FUND on June 30, 1998. The Investment
Manager may be deemed to be a beneficial owner of such shares but disclaims any
beneficial ownership in such shares.
As of June 30, 1998, 5,164,052 shares in the aggregate, or 8.76% of the
outstanding shares of SCUDDER MEDIUM TERM TAX FREE FUND were held in the name of
Charles Schwab & Co., 101 Montgomery Street, San Francisco, CA 94104, who may be
deemed to be the beneficial owner of certain of these shares, but disclaims any
beneficial ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 1,196,128 shares in the aggregate, or 15.84% of the outstanding
shares of SCUDDER MICRO CAP FUND on June 30, 1998. The Investment Manager
6
<PAGE> 72
may be deemed to be a beneficial owner of such shares but disclaims any
beneficial ownership in such shares.
As of June 30, 1998, 689,104 shares in the aggregate, or 12.77% of the
outstanding shares of SCUDDER MICRO CAP FUND were held in the name of Charles
Schwab & Co., 101 Montgomery Street, San Francisco, CA 94104, who may be deemed
to be the beneficial owner of certain of these shares, but disclaims any
beneficial ownership therein.
As of June 30, 1998, 390,931 shares in the aggregate, or 5.17% of the
outstanding shares of SCUDDER MICRO CAP FUND were held in the name of State
Street Bank and Trust Co., Custodian for the Scudder Pathway Series, Growth
Portfolio, One Heritage Drive, Quincy, MA 02171, who may be deemed to be the
beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 27,594,619 shares in the aggregate, or 7.15% of the outstanding
shares of SCUDDER MONEY MARKET SERIES: SCUDDER INSTITUTIONAL SHARES (2.26% of
the Fund) on June 30, 1998. The Investment Manager may be deemed to be a
beneficial owner of such shares but disclaims any beneficial ownership in such
shares.
As of June 30, 1998, 20,377,756 shares in the aggregate, or 5.28% of the
outstanding shares of SCUDDER MONEY MARKET SERIES: SCUDDER INSTITUTIONAL SHARES
(1.67% of the Fund) were held in the name of VICR Securities Co., 23 Frontage
Road, Andover, MA 01810, who may be deemed to be the beneficial owner of certain
of these shares, but disclaims any beneficial ownership therein.
As of June 30, 1998, 287,344,768 shares in the aggregate, or 74.54% of the
outstanding shares of SCUDDER MONEY MARKET SERIES: SCUDDER INSTITUTIONAL SHARES
(23.63% of the Fund) were held in the nominees of Fiduciary Trust Company.
Fiduciary Trust Company may be deemed to be the beneficial owner of certain of
these shares, but disclaims any beneficial ownership therein.
As of June 30, 1998, 33,869,046 shares in the aggregate, or 8.78% of the
outstanding shares of SCUDDER MONEY MARKET SERIES: SCUDDER INSTITUTIONAL SHARES
(2.78% of the Fund) were held in the name of Scudder Trust Company Trustees of
Scudder Stable Value Fund, Two International Place, Boston, MA 02110, who may be
deemed to be the beneficial owner of certain of these shares, but disclaims any
beneficial ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 139,035,192 shares in the aggregate, or 43.01% of the outstanding
shares of SCUDDER MONEY MARKET SERIES: SCUDDER MANAGED SHARES (11.43% of the
Fund) on June 30, 1998. The Investment Manager may be deemed to be a beneficial
owner of such shares but disclaims any beneficial ownership in such shares.
As of June 30, 1998, 30,786,424 shares in the aggregate, or 9.52% of the
outstanding shares of SCUDDER MONEY MARKET SERIES: SCUDDER MANAGED SHARES
7
<PAGE> 73
(2.53% of the Fund) were held in the name of Lucian T Baldwin III Tr., 175
Sheridan Road, Winnetka, IL 60093.
As of June 30, 1998, 33,069,024 shares in the aggregate, or 10.23% of the
outstanding shares of SCUDDER MONEY MARKET SERIES: SCUDDER MANAGED SHARES (2.72%
of the Fund) were held in the name of Hare & Co., Special Processing Dept., One
Wall Street, New York, NY 10005, who may be deemed to be the beneficial owner of
certain of these shares, but disclaims any beneficial ownership therein.
As of June 30, 1998, 62,901,982 shares in the aggregate, or 19.46% of the
outstanding shares of SCUDDER MONEY MARKET SERIES: SCUDDER MANAGED SHARES (5.17%
of the Fund) were held in the name of Chemical Bank, 1211 Avenue of the
Americas, 33rd Floor, New York, NY 10036, who may be deemed to be the beneficial
owner of certain of these shares, but disclaims any beneficial ownership
therein.
As of June 30, 1998, 31,343,563 shares in the aggregate, or 9.69% of the
outstanding shares of SCUDDER MONEY MARKET SERIES: SCUDDER MANAGED SHARES (2.57%
of the Fund) were held in the name of Citibank, One Court Square, 22nd Floor
Zone 7, Long Island City, NY 11120, who may be deemed to be the beneficial owner
of certain of these shares, but disclaims any beneficial ownership therein.
As of June 30, 1998, 26,599,456 shares in the aggregate, or 8.23% of the
outstanding shares of SCUDDER MONEY MARKET SERIES: SCUDDER MANAGED SHARES (2.18%
of the Fund) were held in the name of Cudd & Co., 1211 Avenue of the Americas,
33rd Floor, New York, NY 10036, who may be deemed to be the beneficial owner of
certain of these shares, but disclaims any beneficial ownership therein.
As of June 30, 1998, 37,842,724 shares in the aggregate, or 11.70% of the
outstanding shares of SCUDDER MONEY MARKET SERIES: SCUDDER MANAGED SHARES (3.11%
of the Fund) were held in the name of State Street Bank and Trust Co., 225
Franklin Street, Boston, MA 02210, who may be deemed to be the beneficial owner
of certain of these shares, but disclaims any beneficial ownership therein.
As of June 30, 1998, 40,837,602 shares in the aggregate, or 12.63% of the
outstanding shares of SCUDDER MONEY MARKET SERIES: SCUDDER MANAGED SHARES (3.35%
of the Fund) were held in the name of Wilmington Trust Company, 1100 North
Market Street, Wilmington, DE 19890, who may be deemed to be the beneficial
owner of certain of these shares, but disclaims any beneficial ownership
therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 49,746,489 shares in the aggregate, or 9.81% of the outstanding
shares of SCUDDER MONEY MARKET SERIES: SCUDDER PREMIUM SHARES (4.09% of the
Fund) on June 30, 1998. The Investment Manager may be deemed to be a beneficial
owner of such shares but disclaims any beneficial ownership in such shares.
8
<PAGE> 74
Certain accounts for which the Investment Manager acts as investment
adviser owned 1,186,513 shares in the aggregate, or 6.72% of the outstanding
shares of SCUDDER NEW YORK TAX FREE FUND on June 30, 1998. The Investment
Manager may be deemed to be a beneficial owner of such shares but disclaims any
beneficial ownership in such shares.
Certain accounts for which the Investment Manager acts as investment
adviser owned 4,584,266 shares in the aggregate, or 5.37% of the outstanding
shares of SCUDDER NEW YORK TAX FREE MONEY FUND on June 30, 1998. The Investment
Manager may be deemed to be a beneficial owner of such shares but disclaims any
beneficial ownership in such shares.
As of June 30, 1998 11,203,011 shares in aggregate, or 13.14% of the
outstanding shares of SCUDDER NEW YORK TAX FREE MONEY FUND were held in the name
of Edmond D. Villani, 345 Park Avenue, New York, NY 10128.
As of June 30, 1998 577,092 shares in aggregate, or 8.16% of the
outstanding shares of SCUDDER OHIO TAX FREE FUND were held in the name of
Charles Schwab & Co., 101 Montgomery Street, San Francisco, CA 94104, may be
deemed to be the beneficial owner of certain of these shares, but disclaims any
beneficial ownership therein.
As of June 30, 1998, 920,497 shares in the aggregate, or 7.06% of the
outstanding shares of SCUDDER PACIFIC OPPORTUNITIES FUND were held in the name
of Charles Schwab Co., 101 Montgomery Street, San Francisco, CA 94104, who may
be deemed to be the beneficial owner of certain of these shares, but disclaims
any beneficial ownership therein.
As of June 30, 1998, 1,402,636 shares in the aggregate, or 7.85% of the
outstanding shares of SCUDDER PATHWAY SERIES: BALANCED PORTFOLIO were held in
the name of Scudder Stevens & Clark Trustee, Scudder Defined Benefit Plan &
Trust, 345 Park Avenue, New York, NY 10154, who may deemed to be the beneficial
owner of certain of these shares, but disclaims any beneficial ownership
therein.
As of June 30, 1998, 279,010 shares in the aggregate, or 12.30% of the
outstanding shares of SCUDDER PATHWAY SERIES: CONSERVATIVE PORTFOLIO were held
in the name of Trustees of the ACR Defined Contribution Retirement Plan & Trust,
747 Locus Street, Pasadena, CA 91101, who may deemed to be the beneficial owner
of certain of these shares, but disclaims any beneficial ownership therein.
As of June 30, 1998, 270,605 in the aggregate, or 11.93% the outstanding
shares of SCUDDER PATHWAY SERIES: CONSERVATIVE PORTFOLIO were held in the name
of Scudder Trust Company Trustee, ITHACA Industries Inc., Employee Retirement
Savings Plan Trust, Hwy. 268 West, Wilkeboro, NC 28697, who may
9
<PAGE> 75
deemed to be the beneficial owner of certain of these shares, but disclaims any
beneficial ownership therein.
As of June 30, 1998, 266,375 in the aggregate, or 5.33% the outstanding
shares of SCUDDER PATHWAY SERIES: GROWTH PORTFOLIO were held in the name of
Scudder Trust Company Trustee, O'Neil & Associates Inc. Profit sharing and
Savings Plan Trust, 425 North Findlay Street, Dayton, OH 45404, who may be
beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 805,433 shares in the aggregate, or 14.03% of the outstanding
shares of SCUDDER PENNSYLVANIA TAX FREE FUND on June 30, 1998. The Investment
Manager may be deemed to be a beneficial owner of such shares but disclaims any
beneficial ownership in such shares.
As of June 30, 1998 319,340 shares in aggregate, or 5.56% of the
outstanding shares of SCUDDER PENNSYLVANIA TAX FREE FUND were held in the name
of Charles Schwab & Co., 101 Montgomery Street, San Francisco, CA 94104, may be
deemed to be the beneficial owner of certain of these shares, but disclaims any
beneficial ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 6,177,214 shares in the aggregate, or 6.36% of the outstanding
shares of SCUDDER SHORT TERM BOND FUND on June 30, 1998. The Investment Manager
may be deemed to be a beneficial owner of such shares but disclaims any
beneficial ownership in such shares.
Certain accounts for which the Investment Manager acts as investment
adviser owned 2,371,926 shares in the aggregate, or 17.37% of the outstanding
shares of SCUDDER SMALL COMPANY VALUE FUND on June 30, 1998. The Investment
Manager may be deemed to be a beneficial owner of such shares but disclaims any
beneficial ownership in such shares.
As of June 30, 1998, 936,847 shares in the aggregate, or 7.02% of the
outstanding shares of SCUDDER SMALL COMPANY VALUE FUND were held in the name of
Charles Schwab & Co., 101 Montgomery Street, San Francisco, CA 94104, who may be
deemed to be the beneficial owner of certain of these shares, but disclaims any
beneficial ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 12,163,060 shares in the aggregate, or 5.28% of the outstanding
shares of SCUDDER TAX FREE MONEY FUND on June 30, 1998. The Investment Manager
may be deemed to be a beneficial owner of such shares but disclaims any
beneficial ownership in such shares.
As of June 30, 1998 19,306,376 shares in aggregate, or 8.36% of the
outstanding shares of SCUDDER TAX FREE MONEY FUND were held in the name of
Scudder Trust Company Disbursement Account, 5 Industrial Way, Salem, NH
10
<PAGE> 76
03079, who may be deemed to be the beneficial owner of certain of these shares,
but disclaim any beneficial ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 19,950,763 shares in the aggregate, or 21.50% of the outstanding
shares of SCUDDER TAX FREE MONEY MARKET SERIES: SCUDDER INSTITUTIONAL SHARES
(9.31% of the Fund) on June 30, 1998. The Investment Manager may be deemed to be
a beneficial owner of such shares but disclaims any beneficial ownership in such
shares.
As of June 30, 1998, 85,110,574 shares in the aggregate, or 91.73% of the
outstanding shares of SCUDDER TAX FREE MONEY MARKET SERIES: SCUDDER
INSTITUTIONAL SHARES (39.75% of the Fund) were held in the nominees of Fiduciary
Trust Company. Fiduciary Trust Company may be deemed to be the beneficial owner
of certain of these shares, but disclaims any beneficial ownership therein.
Certain accounts for which the Investment Manager acts as investment
adviser owned 81,276,163 shares in the aggregate, or 67.00% of the outstanding
shares of SCUDDER TAX FREE MONEY MARKET SERIES: SCUDDER MANAGED SHARES (37.96%
of the Fund) on June 30, 1998. The Investment Manager may be deemed to be a
beneficial owner of such shares but disclaims any beneficial ownership in such
shares.
As of June 30, 1998, 15,153,967 shares in the aggregate, or 12.49% of the
outstanding shares of SCUDDER TAX FREE MONEY MARKET SERIES: SCUDDER MANAGED
SHARES (7.07% of the Fund) were held in the name of Daniel Pierce, Two
International Place, Boston, MA 02110-4103.
As of June 30, 1998, 13,292,290 shares in the aggregate, or 10.95% of the
outstanding shares of SCUDDER TAX FREE MONEY MARKET SERIES: SCUDDER MANAGED
SHARES (6.20% of the Fund) were held in the name of Hare & Co., Special
Processing Dept., One Wall Street, New York, NY 10005, who may be deemed to be
the beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1998, 44,289,143 shares in the aggregate, or 36.51% of the
outstanding shares of SCUDDER TAX FREE MONEY MARKET SERIES: SCUDDER MANAGED
SHARES (20.68% of the Fund) were held in the name of Chemical Bank, 1211 Avenue
of the Americas, 33rd Floor, New York, NY 10036, who may be deemed to be the
beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
As of June 30, 1998, 19,873,104 shares in the aggregate, or 16.38% of the
outstanding shares of SCUDDER TAX FREE MONEY MARKET SERIES: SCUDDER MANAGED
SHARES (9.28% of the Fund) were held in the name of Cudd & Co., 1211 Avenue of
the Americas, 33rd Floor, New York, NY 10036, who may be deemed to be the
beneficial owner of certain of these shares, but disclaims any beneficial
ownership therein.
11
<PAGE> 77
As of June 30, 1998, 16,477,444 shares in the aggregate, or 13.56% of the
outstanding shares of SCUDDER TAX FREE MONEY MARKET SERIES: SCUDDER MANAGED
SHARES (7.68% of the Fund) were held in the name of State Street Bank and Trust
Co.,225 Franklin St., Boston, MA 02110, who may be deemed to be the beneficial
owner of certain of these shares, but disclaims any beneficial ownership
therein.
12
<PAGE> 78
APPENDIX 4
FUND SHARES OWNED BY TRUSTEES/DIRECTORS+
<TABLE>
<CAPTION>
FUND NAME (1) BECTON DRISCOLL FREEMAN LOVEJOY MARPLE PIERCE QUIRK TEMPEL
------------- ------ -------- ------- ------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Scudder Cash Investment Trust 7,222(2) 30,183 7,456(3) 65,843 75,808(4) 5,146(5) 16,420(6) 5,032*
Scudder Funds Trust
Scudder Short Term Bond Fund 95 629(8) 16,070 19,038 138* 76(9) -- 231*
Scudder GNMA Fund 72 211 502* 1,607 330 -- 160 872
Investment Trust
Scudder Dividend & Growth
Fund 848* 125* 5,260* -- -- -- -- 460*
Scudder Growth & Income Fund 4,311(11) 12,921(12) 4,539 18,834 1,213 27,296(13) -- 2,473(14)
Scudder Large Company Growth
Fund 3,304 2,248 400* 393 386(16) 209(17) -- 4,188(18)
Scudder S&P 500 Index Fund 252 300* -- 98* -- -- 351*
Scudder Real Estate
Investment Fund 1,330* 112(20) 508* 421 137* -- -- 484*
Scudder Tax Managed Growth
Fund 167* 417* 417* 625* 167* -- -- --
Scudder Tax Managed Small
Company Fund 167* 417* 417* 833* 167* -- -- --
Scudder Portfolio Trust
Scudder Income Fund 2,638(21) 442 1,496(22) 884 1,938(23) 14,540(24) 237 1,405
Scudder High Yield Bond Fund 871(26) 2,321 503* 8,602 128 14,793(27) -- 788*
Scudder Balanced Fund 2,277 860(29) 1,005* 551 93 -- 35,365(30) 4,862
Scudder U.S. Treasury Money
Fund 1,045 5,934 3,011* 60,999 2,781 -- -- 18,349
<CAPTION>
ALL CURRENT
TRUSTEES
AND OFFICERS
FUND NAME (1) AS A GROUP
------------- ------------
<S> <C>
Scudder Cash Investment Trust 143,367(7)
Scudder Funds Trust
Scudder Short Term Bond Fund 102,829(10)
Scudder GNMA Fund 3,252
Investment Trust
Scudder Dividend & Growth
Fund
Scudder Growth & Income Fund 122,489(15)
Scudder Large Company Growth
Fund 11,195(19)
Scudder S&P 500 Index Fund 252
Scudder Real Estate
Investment Fund 421
Scudder Tax Managed Growth
Fund
Scudder Tax Managed Small
Company Fund
Scudder Portfolio Trust
Scudder Income Fund 141,930(25)
Scudder High Yield Bond Fund 27,107(28)
Scudder Balanced Fund 43,214(31)
Scudder U.S. Treasury Money
Fund 89,082
</TABLE>
- ---------------
* Shares acquired after 6/30/98
+ The information as to beneficial ownership is based on statements furnished to
each Trust/Corporation by each Trustee/Director.
(1) Unless otherwise noted, beneficial ownership is based on sole voting and
investment power. Each Trustee's individual shareholdings of a Fund
constitutes less than 1/4 of 1% of the shares outstanding of such Fund.
Unless otherwise noted below, as a group, the Trustees and officers own
less than 1/4 of 1% of the shares of each Fund.
(2) Mr. Becton's total in Scudder Cash Investment Trust includes 6,106 shares
acquired after June 30, 1998.
(3) Mr. Freeman's total in Scudder Cash Investment Trust includes 1,578 shares
acquired after June 30, 1998.
(4) Mr. Marple's shares in Scudder Cash Investment Trust include 1,512 shares
with sole investment and voting power and 74,296 shares held by members of
his family.
(5) Mr. Pierce's shares in Scudder Cash Investment Trust are held with shared
investment and voting power.
(6) Ms. Quirk's total in Scudder Cash Investment Trust includes 3,824 shares
held with shared investment and voting power.
<PAGE> 79
(7) As a group, on June 30, 1998, the Trustees and officers of Scudder Cash
Investment Trust held 115,476 shares with sole investment and voting power,
26,460 shares with shared investment and voting power, and 1,432 shares
with sole investment and no voting power. Shares held with sole investment
but no voting power are shares held in profit sharing and 401(k) plans for
which Scudder Kemper Investments, Inc. serves as Trustee.
(8) Ms. Driscoll's total in Scudder Short Term Bond Fund includes 259 shares
held with shared investment and voting power.
(9) Mr. Pierce's shares in Scudder Short Term Bond Fund are held with shared
investment and voting power.
(10) As a group, on June 30, 1998, the Trustees and officers of Scudder Short
Term Bond Fund held 38,042 shares with sole investment and voting power,
40,813 shares with shared investment and voting power, and 23,974 shares
with sole investment but no voting power. Shares held with sole investment
and no voting power are shares held in profit sharing and 401(k) plans for
which Scudder Kemper Investments, Inc. serves as Trustee.
(11) Mr. Becton's total in Scudder Growth and Income Fund includes 147 shares
held with shared investment and voting power.
(12) Ms. Driscoll's total in Scudder Growth and Income Fund includes 2,571
shares held with shared investment and voting power.
(13) Mr. Pierce's total in Scudder Growth and Income Fund includes 251 shares
held in a fiduciary capacity as to which he shares investment and voting
power and 27,044 shares held with sole investment and no voting power.
Shares held with sole voting but no investment power are shares held in
profit sharing and 401(k) plans for which Scudder Kemper Investments, Inc.
serves as Trustee.
(14) Ms. Tempel's total in Scudder Growth and Income Fund includes 202 shares
acquired after June 30, 1998.
(15) As a group, on June 30, 1998, the Trustees and officers of Scudder Growth
and Income Fund held 42,117 shares with sole investment and voting power,
8,155 shares with shared investment and voting power, and 72,216 shares
with sole investment and no voting power. Shares held with sole investment
but no voting power are shares held in profit sharing and 401(k) plans for
which Scudder Kemper Investments, Inc. serves as Trustee.
(16) Dr. Marple's totals in Scudder Large Company Growth Fund includes 325
shares held with shared investment and voting power.
(17) Mr. Pierce's shares in Scudder Large Company Growth Fund are held with
shared investment and voting power.
(18) Ms. Tempel's total in Scudder Large Company Growth Fund includes 351 shares
acquired after June 30, 1998.
(19) As a group, on June 30, 1998, the Trustees and officers of Scudder Large
Company Growth Fund held 9,844 shares with sole investment and voting power
and 1,350 shares with shared investment and voting power.
(20) Ms. Driscoll's total in Scudder Real Estate Investment Fund includes 69
shares acquired after June 30, 1998.
(21) Mr. Becton's total in Scudder Income Fund includes 778 shares acquired
after June 30, 1998.
(22) Mr. Freeman's total in Scudder Income Fund includes 721 shares acquired
after June 30, 1998.
(23) Dr. Marple's total in Scudder Income Fund includes 500 shares held with
shared investment and voting power.
(24) Mr. Pierce's total in Scudder Income Fund includes 1,859 shares owned by
members of his family, 1,723 shares held in a fiduciary capacity as to
which he shares investment and voting power and 10,957 shares with sole
investment and no voting power. Shares held with sole investment but no
voting power are shares held in profit sharing and 401(k) plans for which
Scudder Kemper Investments serves as Trustee.
(25) As a group, on June 30, 1998, the Trustees and officers owned beneficially
0.25% of the outstanding shares of Scudder Income Fund held 15,042 shares
with sole investment and voting power, 2,479 shares with shared investment
and voting power, and 123,403 shares with sole investment and no voting
power. Shares held with sole investment but no voting power are shares held
in profit sharing and 401(k) plans for which Scudder Kemper Investments,
Inc. serves as Trustee.
(26) Mr. Becton's total in Scudder High Yield Bond Fund includes 786 shares
acquired after June 30, 1998.
(27) Mr. Pierce's shares in Scudder High Yield Bond Fund are held with sole
investment power and no voting power. Shares held with sole investment but
no voting power are shares held in profit sharing and 401(k) plans for
which Scudder Kemper Investments, Inc. serves as Trustee.
<PAGE> 80
(28) As a group, on June 30, 1998, the Trustees and officers of Scudder High
Yield Bond Fund held 11,034 shares with sole investment and voting power
and 15,986 shares with sole investment but no voting power. Shares held
with sole investment but no voting power are shares held in profit sharing
and 401(k) plans for which Scudder Kemper Investments, Inc. serves as
Trustee.
(29) Ms. Driscoll's shares in Scudder Balanced Fund includes 795 shares acquired
after June 30, 1998.
(30) Ms. Quirk's shares in Scudder Balanced Fund are held with sole investment
power and no voting power. Shares held with sole investment but no voting
power are shares held in profit sharing and 401(k) plans for which Scudder
Kemper Investments, Inc. serves as Trustee.
(31) As a group, on June 30, 1998, the Trustees and officers owned beneficially
0.40% of the outstanding shares of Scudder Balanced Fund of which 7,849
shares were held with sole investment and voting power and 35,365 shares
were held with sole investment and no voting power. Shares held with sole
investment but no voting power are shares held in profit sharing and 401(k)
plans for which Scudder Kemper Investments, Inc. serves as Trustee.
<PAGE> 81
<TABLE>
<CAPTION>
FUND NAME(1) BECTON DRISCOLL FREEMAN LOVEJOY MARPLE PIERCE QUIRK
- ------------ ------ -------- ------- ------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Scudder California Tax Free Trust
Scudder California Tax Free Fund 96 101 185 -- 137* 82,993(2) --
Scudder California Tax Free Money
Fund 1,027 1,038 1,500 -- -- 36,721(4) --
Scudder Municipal Trust
Scudder High Yield Tax Free Fund 183 2,026 500 674 128 1,843 --
Scudder Managed Municipal Bonds 202 129 199 1,921 342 189,387(6) --
Scudder Tax Free Trust
Scudder Medium Term Tax Free Fund 91 1,709 160 12,075 2,453 126,705(8) --
Scudder Limited Term Tax Free Fund 85 88 100* -- 125* -- --
Scudder Tax Free Money Fund 1,028 44,053(10) 1,023 4,905 2,823 3,729,448(11) --
Scudder State Tax Free Trust
Scudder Massachusetts Limited Term
Tax Free Fund 128 89(13) 86 18,665 107 24,501(14) --
Scudder Massachusetts Tax Free
Fund 130 121 142(16) 15,611 28,067(17) 9,074(18) --
Scudder New York Tax Free Fund 93 98(20) 183 -- 106 -- --
Scudder New York Tax Free Money
Fund 1,028 1,039(21) 1,022 -- -- -- 78,907
Scudder Ohio Tax Free Fund 77 82(22) -- -- 83 4,390(23) --
Scudder Pennsylvania Tax Free Fund 78 80(24) -- -- 90 -- --
<CAPTION>
ALL CURRENT
TRUSTEES AND
OFFICERS AS A
FUND NAME(1) TEMPEL GROUP
- ------------ ------- -------------
<S> <C> <C>
Scudder California Tax Free Trust
Scudder California Tax Free Fund 226* 83,376(3)
Scudder California Tax Free Money
Fund 2,508* 38,783(5)
Scudder Municipal Trust
Scudder High Yield Tax Free Fund 393* 4,845
Scudder Managed Municipal Bonds 552* 192,157(7)
Scudder Tax Free Trust
Scudder Medium Term Tax Free Fund 1,097 168,168(9)
Scudder Limited Term Tax Free Fund 1,002 1,176
Scudder Tax Free Money Fund 106,668 4,826,609(12)
Scudder State Tax Free Trust
Scudder Massachusetts Limited Term
Tax Free Fund 999 44,454(15)
Scudder Massachusetts Tax Free
Fund 883 54,058(19)
Scudder New York Tax Free Fund 506 942
Scudder New York Tax Free Money
Fund 5,272 86,784
Scudder Ohio Tax Free Fund 418 5,014
Scudder Pennsylvania Tax Free Fund 409 618
</TABLE>
- ---------------
* Shares acquired after 6/30/98
(1) Unless otherwise noted, beneficial ownership is based on sole voting and
investment power. Unless otherwise noted, each Trustee's individual
shareholdings of a Fund constitutes less than 1/4 of 1% of the shares
outstanding of such Fund. Unless otherwise noted below, as a group, the
Trustees and officers own less than 1/4 of 1% of the shares of each Fund.
(2) Mr. Pierce's shares, 0.28% of the outstanding shares of Scudder California
Tax Free Fund, are held in a fiduciary capacity as to which he shares
investment and voting power.
(3) As a group, on June 30, 1998, the Trustees and officers owned beneficially
0.28% of the outstanding shares of Scudder California Tax Free Fund of
which 382 shares are held with sole investment and voting power and 82,993
shares were held with shared investment and voting power.
(4) Mr. Pierce's shares in Scudder California Tax Free Money Fund are held in a
fiduciary capacity as to which he shares investment and voting power.
(5) As a group, on June 30, 1998, the Trustees and officers of Scudder
California Tax Free Money Fund held 2,061 shares with sole investment and
voting power and 36,721 shares with shared investment and voting power.
(6) Mr. Pierce's total in Scudder Managed Municipal Bonds includes 5,778 shares
owned by members of his family and 183,585 shares held in fiduciary
capacity as to which he shares investment and voting power.
(7) As a group, on June 30, 1998, the Trustees and officers of Scudder Managed
Municipal Bonds held 2,594 shares with sole investment and voting power and
189,363 shares with shared investment and voting power.
<PAGE> 82
(8) Mr. Pierce's total in Scudder Medium Term Tax Free Fund includes 5,136
shares owned by members of his family and 120,358 shares held in fiduciary
capacity as to which he shares investment and voting power.
(9) As a group, on June 30, 1998, the Trustees and officers owned beneficially
0.25% of the outstanding shares of Scudder Medium Term Tax Free Fund of
which 18,773 shares were held with sole investment and voting power and
125,475 shares were held with shared investment and voting power.
(10) Ms. Driscoll's total in Scudder Tax Free Money Fund includes 25,154 shares
held with shared investment and voting power.
(11) Mr. Pierce's shares, 1.62% of the outstanding shares of Scudder Tax Free
Money Fund, includes 22,144 shares held with shared investment and voting
power.
(12) As a group, on June 30, 1998, the Trustees and officers owned beneficially
2.09% of the outstanding shares of Scudder Tax Free Money Fund of which
4,776,718 shares were held with sole investment and voting power and 49,891
shares were held with shared investment and voting power.
(13) Ms. Driscoll's total in Scudder Massachusetts Limited Tax Free Fund
includes 41 shares acquired after June 30,1998.
(14) As of June 30, 1998, Mr. Pierce beneficially owned 0.33% of the outstanding
shares of Scudder Massachusetts Limited Term Tax Free Fund.
(15) As a group, on June 30, 1998, the Trustees and officers owned beneficially
0.59% of the outstanding shares of Scudder Massachusetts Limited Term Tax
Free Fund which were held with sole investment and voting power.
(16) Mr. Freeman's total in Scudder Massachusetts Tax Free Fund includes 66
shares acquired after June 30, 1998.
(17) Dr. Marple's total in Scudder Massachusetts Tax Free Fund includes 6,119
shares held with shared investment and voting power.
(18) Mr. Pierce's total in Scudder Massachusetts Tax Free Fund includes 7,391
shares owned by members of his family as to which he shares investment and
voting power.
(19) As a group, on June 30, 1998, the Trustees and officers of Scudder
Massachusetts Tax Free Fund held 40,575 shares with sole investment and
voting power and 13,482 shares with shared investment and voting power.
(20) Ms. Driscoll's total in Scudder New York Tax Free Fund includes 44 shares
acquired after June 30, 1998.
(21) Ms. Driscoll's total in Scudder New York Tax Free Money Fund includes 485
shares acquired after June 30, 1998.
(22) Ms. Driscoll's total in Scudder Ohio Tax Free Fund includes 37 shares
acquired after June 30, 1998.
(23) Mr. Pierce's shares in Scudder Ohio Tax Free Money Fund are held in a
fiduciary capacity as to which he shares investment and voting power.
(24) Ms. Driscoll's total in Scudder Pennsylvania Tax Free Fund includes 36
shares acquired after June 30, 1998.
<PAGE> 83
<TABLE>
<CAPTION>
FUND NAME(1) BANCROFT BOLTON BURGIN DEVINE FOX LUERS NOLEN PIERCE QUIRK
------------ -------- ------ ------ ------ ----- ----- ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Value Equity Trust
Scudder Large Company Value Fund 4,981 473 3,954* 6,070(2) 440 337 15,819 -- 478(3)
Scudder Securities Trust
Scudder Development Fund -- -- -- 1,779(5) 226 -- 3,450 43,359(6) 129
Scudder Micro Cap Fund 4,882 312 -- -- 1,263 -- 4,743 724(8) --
Scudder Small Company Value Fund 7,111 265 -- -- 1,412 1,241 6,397 856 --
Scudder 21st Century Growth Fund -- -- -- -- 773 -- -- -- --
Scudder Financial Services Fund -- -- -- -- -- -- -- -- --
Scudder Health Care Fund -- -- -- -- -- -- -- -- --
Scudder Technology Fund -- -- -- -- -- -- -- -- --
<CAPTION>
ALL CURRENT
TRUSTEES AND
OFFICERS AS A
FUND NAME(1) SPERO GROUP
------------ ----- --------------
<S> <C> <C>
Value Equity Trust
Scudder Large Company Value Fund -- 36,558(4)
Scudder Securities Trust
Scudder Development Fund -- 60,849(7)
Scudder Micro Cap Fund -- 14,438(9)
Scudder Small Company Value Fund -- 20,940(10)
Scudder 21st Century Growth Fund -- 50,380(11)
Scudder Financial Services Fund -- 11,635(12)
Scudder Health Care Fund -- --
Scudder Technology Fund -- --
</TABLE>
- ---------------
* Shares acquired after June 30, 1998.
(1) Unless otherwise noted, beneficial ownership is based on sole voting and
investment power. Each Trustee's individual shareholdings of any Fund
constitutes less than 1/4 of 1% of the shares outstanding of such Fund.
Unless otherwise noted below, as a group, the Trustees and officers own
less than 1/4 of 1% of the shares of each Fund.
(2) Mr. Devine's total in Scudder Large Company Value Fund includes 5,383
shares held with shared investment and voting power.
(3) Ms. Quirk's total in Scudder Large Company Value Fund includes 285 shares
held with shared investment and voting power.
(4) As a group, on June 30, 1998, the Trustees and officers of Scudder Large
Company Value Fund held 23,073 shares with sole investment and voting
power, 5,526 shares with shared investment and voting power, and 7,959
shares with sole investment and no voting power. Shares held with sole
investment but no voting power are shares held in profit sharing and 401(k)
plans for which Scudder Kemper Investments, Inc. serves as Trustee.
(5) Mr. Devine's total shares in Scudder Development Fund are held with shared
investment and voting power.
(6) Mr. Pierce's total in Scudder Development Fund includes 6,314 shares held
by members of his family, 32,813 shares held in a fiduciary capacity as to
which he shares investment and voting power and 4,231 shares held with sole
investment power but no voting power. Shares held with sole investment but
no voting power are shares held in profit sharing and 401(k) plans for
which Scudder Kemper Investments, Inc. serves as Trustee.
(7) As a group, on June 30, 1998, the Trustees and officers owned beneficially
0.30% of the outstanding shares of Scudder Development Fund of which 4,904
shares were held with sole investment and voting power, 42,191 shares were
held with shared investment and voting power, and 13,754 shares were held
with sole investment and no voting power. Shares held with sole investment
but no voting power are shares held in profit sharing and 401(k) plans for
which Scudder Kemper Investments, Inc. serves as Trustee.
(8) Mr. Pierce's total in Scudder Micro Cap Fund includes 435 shares held by
members of his family.
(9) As a group, on June 30, 1998, the Trustees and officers of Scudder Micro
Cap Fund held 11,200 shares with sole investment and voting power and 3,237
shares with sole investment and no voting power. Shares held with sole
investment but no voting power are shares held in profit sharing and 401(k)
plans for which Scudder Kemper Investments, Inc. serves as Trustee.
<PAGE> 84
(10) As a group, on June 30, 1998, the Trustees and officers of Scudder Small
Company Value Fund held 18,133 shares with sole investment and voting power
and 2,806 shares with sole investment and no voting power. Shares held with
sole investment but no voting power are shares held in profit sharing and
401(k) plans for which Scudder Kemper Investments Inc. serves as Trustee.
(11) As a group, on June 30, 1998, the Trustees and officers owned beneficially
1.91% of the outstanding shares of Scudder 21st Century Growth Fund of
which 773 shares were held with sole investment and voting power and 49,606
shares were held with sole investment and no voting power. Shares held with
sole investment but no voting power are shares held in profit sharing and
401(k) plans for which Scudder Kemper Investments, Inc. serves as Trustee.
(12) As a group, on June 30, 1998, the Trustees and officers owned beneficially
0.44% of the outstanding shares of Scudder Financial Services Fund which
were held with shared investment and voting power.
<PAGE> 85
<TABLE>
<CAPTION>
FUND NAME (1) BANCROFT BOLTON BRATT++ DEVINE FOX GLEYSTEEN HOLZER+ LUERS PIERCE
- ------------- -------- ------ ------- -------- --- --------- ------- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Global/International Fund, Inc.
Scudder Emerging Markets Income
Fund -- 515 671 -- 466 -- -- 2,288 22,474 (2)
Scudder Global Fund 9,481 253 -- 2,628(4) -- 2,794 25,666 318 --
Scudder Global Bond Fund -- -- -- -- 545 -- -- -- --
Scudder International Bond Fund -- -- -- -- 505 -- -- -- --
<CAPTION>
ALL CURRENT
DIRECTORS
AND OFFICERS
FUND NAME (1) QUIRK SPERO AS A GROUP
- ------------- ------ ------ --------------
<S> <C> <C> <C>
Global/International Fund, Inc.
Scudder Emerging Markets Income
Fund -- -- 92,506(3)
Scudder Global Fund 145(5) -- 111,648(6)
Scudder Global Bond Fund -- -- 34,352(7)
Scudder International Bond Fund -- -- 5,313(8)
</TABLE>
<TABLE>
<CAPTION>
FUND NAME (1) BANCROFT BOLTON BRATT++ DEVINE BURGIN FOX GLEYSTEEN LUERS NOLEN
- ------------- -------- ------ ------- ------ ------ ----- --------- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Scudder International Fund, Inc.
Scudder Emerging Markets Growth
Fund 13,462 681 -- -- -- 635 -- -- 16,425
Scudder Greater Europe Growth Fund 6,189 349 -- -- 4,093* 545 -- 616 5,041
Scudder International Fund
(International Shares) 497 -- -- 460 -- 208 665 92 5,661
Scudder International Growth and
Income Fund -- -- -- -- -- -- -- -- --
Scudder Latin America Fund 1,937 170 -- -- -- 1,487 -- -- 7,747
Scudder Pacific Opportunities Fund -- -- 2,072 -- -- 525 621 -- 3,137
Scudder International Growth Fund -- -- -- -- -- -- -- -- --
Scudder International Value Fund -- -- -- -- -- -- -- -- --
<CAPTION>
ALL CURRENT
DIRECTORS
AND OFFICERS
FUND NAME (1) PIERCE QUIRK SPERO AS A GROUP
- ------------- ---------- ----- ----- --------------
<S> <C> <C> <C> <C>
Scudder International Fund, Inc.
Scudder Emerging Markets Growth
Fund -- -- -- 50,450 (9)
Scudder Greater Europe Growth Fund 968 -- -- 15,652(10)
Scudder International Fund
(International Shares) 18,905(11) 122 -- 30,840(12)
Scudder International Growth and
Income Fund -- -- -- --
Scudder Latin America Fund 9,374(13) -- -- 26,973(14)
Scudder Pacific Opportunities Fund 13,389(15) -- -- 30,040(16)
Scudder International Growth Fund -- -- -- --
Scudder International Value Fund -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
FUND NAME (1) BANCROFT BOLTON DEVINE BURGIN FOX GLEYSTEEN LUERS NOLEN PIERCE QUIRK
------------- -------- ------ ------ ------ ---- --------- ----- ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Scudder Mutual Funds, Inc.
Scudder Gold Fund -- -- -- -- 619 -- -- -- 1,046 --
<CAPTION>
ALL CURRENT
DIRECTORS AND
OFFICERS AS A
FUND NAME (1) SPERO GROUP
------------- ----- -------------
<S> <C> <C>
Scudder Mutual Funds, Inc.
Scudder Gold Fund -- 1,666
</TABLE>
- ---------------
* Shares acquired after June 30, 1998.
(1) Unless otherwise noted, beneficial ownership is based on sole voting and
investment power. Each Director's individual shareholdings of any Fund
constitutes less than 1/4 of 1% of the shares outstanding of such Fund.
Unless otherwise noted below, as a group, the Directors and officers own
less than 1/4 of 1% of the shares of each Fund.
(2) Mr. Pierce's total in Scudder Emerging Markets Income Fund includes 3,347
shares held by members of his family, 19,127 shares held with sole
investment and no voting power. Shares held with sole investment but no
voting power are shares held in profit sharing and 401(k) plans for which
Scudder Kemper Investments, Inc. serves as Trustee.
<PAGE> 86
(3) As a group, on June 30, 1998, the Directors and officers of Scudder
Emerging Markets Income Fund held 0.30% of the outstanding shares of which
15,504 shares were held with sole investment and voting power and 77,001
shares were held with sole investment but no voting power. Shares held with
sole investment but no voting power are shares held in profit sharing and
401(k) plans for which Scudder Kemper Investments, Inc. serves as Trustee.
(4) Mr. Devine's shares in Scudder Global Fund are held with shared investment
and voting power.
(5) Ms. Quirk's shares in Scudder Global Fund are held with shared investment
and voting power.
(6) As a group, on June 30, 1998, the Directors and officers of Scudder Global
Fund held 27,984 shares with sole investment and voting power, 7,794 shares
with shared investment and voting power and 75,869 shares with sole
investment but no voting power. Shares held with sole investment but no
voting power are shares held in profit sharing and 401(k) plans for which
Scudder Kemper Investments, Inc. serves as Trustee.
(7) As a group, on June 30, 1998, the Directors and officers of Scudder Global
Bond Fund held 3,128 shares with sole investment and voting power, and
31,223 shares with sole investment and no voting power. Shares held with
sole investment and no voting power are shares held in profit sharing and
401(k) plans for which Scudder Kemper Investments, Inc. serves as Trustee.
(8) As a group, on June 30, 1998, the Directors and officers of Scudder
International Bond Fund held 3,971 shares with sole investment and voting
power and 1,341 shares with sole investment and no voting power. Shares
held with sole investment but no voting power are shares held in profit
sharing and 401(k) plans for which Scudder Kemper Investments, Inc. serves
as Trustee.
(9) As a group, on June 30, 1998, the Directors and officers of Scudder
Emerging Markets Growth Fund held 0.37% of the outstanding shares of which
39,368 shares were held with sole investment and voting power and 11,081
shares were held with sole investment and no voting power. Shares held with
sole investment but no voting power are shares held in profit sharing and
401(k) plans for which Scudder Kemper Investments, Inc. serves as Trustee.
(10) As a group, on June 30, 1998, the Directors and officers of Scudder Greater
Europe Growth Fund held 14,295 shares with sole investment and voting power
and 1,357 shares with sole investment and no voting power. Shares held with
sole investment but no voting power are shares held in profit sharing and
401(k) plans for which Scudder Kemper Investments, Inc. serves as Trustee.
(11) Mr. Pierce's total in Scudder International Fund includes 78 shares held by
members of his family and 18,826 shares held in a fiduciary capacity as to
which he shares investment and voting power.
(12) As a group, on June 30, 1998, the Directors and officers of Scudder
International Fund held 8,256 shares with sole investment and voting power,
19,092 shares with shared investment and voting power and 3,491 shares with
sole investment and no voting power. Shares held with sole investment but
no voting power are shares held in profit sharing and 401(k) plans for
which Scudder Kemper Investments, Inc. serves as Trustee.
(13) Mr. Pierce's total in Scudder Latin American Fund includes 1,216 shares
held with sole investment and voting power, 882 shares held by members of
his family, 1,242 shares held in a fiduciary capacity as to which he shares
investment and voting power and 6,033 shares with sole investment and no
voting power. Shares held with sole investment but no voting power are
shares held in profit sharing and 401(k) plans for which Scudder Kemper
Investments, Inc. serves as Trustee.
(14) As a group, on June 30, 1998, the Directors and officers of Scudder Latin
America Fund held 14,463 shares with sole investment and voting power,
1,920 shares with shared investment and voting power and 10,589 shares with
sole investment and no voting power. Shares held with sole investment but
no voting power are shares held in profit sharing and 401(k) plans for
which Scudder Kemper Investments, Inc. serves as Trustee.
(15) Mr. Pierce's total in Scudder Pacific Opportunities Fund includes 1,151
shares held with sole investment and voting power,3,357 shares held by
members of his family and 8,880 shares held with sole investment and no
voting power. Shares held with sole investment and no voting power are
shares held in profit sharing and 401(k) plans for which Scudder Kemper
Investments, Inc. serves as Trustee.
<PAGE> 87
(16) As a group, on June 30, 1998, the Directors and officers of Scudder Pacific
Opportunities Fund held 12,898 shares with sole investment and voting
power, 2,410 shares with shared investment and voting power and 14,732
shares with sole investment and no voting power. Shares held with sole
investment but no voting power are shares held in profit sharing and 401(k)
plans for which Scudder Kemper Investments, Inc. serves as Trustee.
+ Mr. Holzer's shares are shown only for the Fund for which he serves as
president. Mr. Holzer's shares in Scudder Global Fund include 14,521 shares held
with sole investment and voting power, 691 shares held with shared investment
and voting power and 10,454 shares held with sole investment but no voting
power. Shares held with sole investment but no voting power are shares held in
profit sharing and 401(k) plans for which Scudder Kemper Investments, Inc.
serves as Trustee.
++ Mr. Bratt's shares are shown only for those Funds for which he serves as
president.
<TABLE>
<CAPTION>
PIERCE ALL CURRENT TRUSTEES
FUND NAME(1) FIEDLER HAMMOND (PRESIDENT) AND OFFICERS AS A GROUP
- ------------ ------- ------- ----------- -----------------------
<S> <C> <C> <C> <C>
Scudder Pathway Series
Scudder Pathway Series: Balanced Portfolio -- 4,187 -- 4,187
Scudder Pathway Series: Conservative Portfolio -- -- -- --
Scudder Pathway Series: Growth Portfolio -- 1,996 -- 1,996
Scudder Pathway Series: International Portfolio 427 -- -- 427
</TABLE>
- ---------------
(1) Unless otherwise noted, beneficial ownership is based on sole voting and
investment power. Each Trustee's and nominee's individual shareholdings of
any Fund constitute less than 1% of the shares outstanding of such Fund.
<PAGE> 88
<TABLE>
<CAPTION>
ALL CURRENT
DIRECTORS AND
PIERCE OFFICERS AS A
FUND NAME(1) CHANG HAMMOND HUNT FIEDLER FREEMAN (PRESIDENT) GROUP
- ------------ ----- ------- ---- ------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Scudder Fund, Inc.
Scudder Money Market Series
Scudder Institutional Shares -- -- -- -- 1,990,525(2) 275,817 2,266,341(3)
Scudder Managed Shares -- -- -- -- -- -- --
Scudder Premium Money Market Shares -- 105,233 -- 386,063(4) 498,831 62,957 990,128(5)
Scudder Government Money Market Series
Scudder Institutional Shares -- -- -- -- -- -- --
Scudder Managed Shares -- -- -- -- -- -- --
Scudder Tax Free Money Market Series
Scudder Institutional Shares -- -- -- -- -- 1,210,877 1,210,877(6)
Scudder Managed Shares -- -- -- 2,414 -- 15,153,967 15,196,876(7)
</TABLE>
- ---------------
(1) Unless otherwise noted, beneficial ownership is based on sole voting and
investment power. Unless otherwise noted, each Director's individual
shareholdings of any Fund constitute less than 1/4 of 1% of the shares
outstanding of such Fund. Unless otherwise noted, as a group, the Directors
and Officers own less than 1/4 of 1% of the shares of each Fund.
(2) As of June 30, 1998, Mr. Freeman owned beneficially 0.51% of the outstanding
shares of Scudder Institutional Shares of Scudder Money Market Series.
(3) As a group, on June 30, 1998, the Directors and officers owned beneficially
0.58% of the outstanding shares of Scudder Money Market Series:
Institutional Shares of which 1,990,525 shares were held with sole
investment and voting power and 275,817 shares held with shared investment
and voting power.
(4) Mr. Fiedler's total in Scudder Premium Money Market Shares of Scudder Money
Market Series includes 324,450 shares held with shared investment and voting
power.
(5) As of June 30, 1998, the Directors and Officers of Scudder Premium Money
Market Shares of Scudder Money Market Series held 665,677 shares with sole
investment and voting power and 324,450 shares with shared investment and
voting power.
(6) As a group, on June 30, 1998, the Directors and officers owned beneficially
1.30% of the outstanding shares of Scudder Tax Free Money Market Series:
Institutional Shares with shared investment and voting power.
(7) As a group, on June 30, 1998, the Directors and officers owned beneficially
12.53% of the outstanding shares of Scudder Tax Free Money Market Series:
Managed Shares with sole investment and voting power.
<PAGE> 89
APPENDIX 5
INVESTMENT MANAGEMENT FEE RATES, NET ASSETS
AND AGGREGATE MANAGEMENT FEES OF EACH FUND
<TABLE>
<CAPTION>
AGGREGATE
MANAGEMENT MANAGEMENT
FUND FISCAL YEAR NET ASSETS FEE RATE+ FEE
---- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Scudder 21st Century 8/31/97 $ 23,296,176 1.00% of avg. daily net assets $ 0++
Growth Fund@
Scudder Balanced Fund 12/31/97 $ 158,711,908 0.70% of avg. daily net assets $ 480,340
Scudder California Tax 3/31/98 $ 324,448,844 0.625% on first $200 million of $ 1,892,742
Free Fund avg. daily net assets; 0.60% on
assets over $200 million
Scudder California Tax 3/31/98 $ 70,546,601 0.50% of avg. daily net assets $ 218,236++
Free Money Fund
Scudder Cash Investment 6/30/98 $1,182,012,567 0.50% on first $250 million of $ 3,970,851++
Trust avg. daily net assets; 0.45% on
next $250 million; 0.40% on next
$500 million; 0.35% on assets
over $1 billion
Scudder Development Fund 6/30/98 $ 845,405,075 1.00% on first $500 million of $ 8,554,028
avg. daily net assets; 0.95% on
next $500 million; 0.90% on
assets over $1 billion
Scudder Dividend & Growth N/A N/A 0.75% of avg. daily net assets N/A
Fund*
Scudder Emerging Markets 10/31/97 $ 219,624,481 1.25% of avg. daily net assets $ 1,724,110++
Growth Fund
Scudder Emerging Markets 10/31/97 $ 323,628,082 1.00% of avg. daily net assets $ 3,563,175
Income Fund
Scudder Financial Services 5/31/98 $ 36,926,469 0.75% of avg. daily net assets $ 0++
Fund@
Scudder Global Bond Fund 10/31/97 $ 135,113,465 0.75% on first $1 billion of $ 604,704++
avg. daily net assets; 0.70% on
assets over $1 billion
Scudder Global Fund 6/30/98 $1,766,207,742 1.00% on first $500 million of $15,502,974
avg. daily net assets; 0.95% on
next $500 million; 0.90% on next
$500 million; 0.85% on assets
over $1.5 billion
Scudder GNMA Fund 3/31/98 $ 392,444,820 0.65% of first $200 million of $ 2,433,157
avg. daily net assets; 0.60% on
next $300 million; 0.55% on
assets over $500 million
Scudder Gold Fund 6/30/98 $ 132,131,545 1.00% of avg. daily net assets $ 1,471,427
Scudder Government Money 12/31/97 $ 83,870,139 0.25% of avg. daily net assets $ 11,942++
Market Series
Scudder Greater Europe 10/31/97 $ 195,514,335 1.00% on first $1 billion of $ 1,653,445
Growth Fund avg. daily net assets; **0.90%
on assets over $1 billion
Scudder Growth and Income 12/31/97 $6,833,584,122 0.60% on first $500 million of $26,072,293
Fund avg. daily net assets; 0.55% on
next $500 million; 0.50% on next
$500 million; 0.475% on next
$500 million; 0.45% on next $1
billion; 0.425% on next $1.5
billion; 0.405% on next $1.5
billion; 0.3875% on next $4
billion; **0.370% on assets over
$10 billion
</TABLE>
<PAGE> 90
<TABLE>
<CAPTION>
AGGREGATE
MANAGEMENT MANAGEMENT
FUND FISCAL YEAR NET ASSETS FEE RATE+ FEE
---- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Scudder Health Care Fund* N/A N/A 0.85% of avg. daily net assets N/A
Scudder High Yield Bond 2/28/98 $ 176,221,237 0.70% of avg. daily net assets $ 0++
Fund
Scudder High Yield Tax 12/31/97 $ 336,690,734 0.65% on first $300 million of $ 2,050,368
Free Fund avg. daily net assets; 0.60% on
assets over $300 million
Scudder Income Fund 12/31/97 $ 695,255,717 0.65% of first $200 million of $ 3,750,067
avg. daily net assets; 0.60% on
next $300 million; 0.55% on
assets over $500 million
Scudder International Bond 6/30/98 $ 145,818,767 0.85% on first $1 billion of $ 1,444,303++
Fund avg. daily net assets; 0.80% on
assets over $1 billion
Scudder International Fund 3/31/98 $2,884,919,345 0.90% on first $500 million of $22,491,681
avg. daily net assets; 0.85% on
next $500 million; 0.80% on next
$1 billion; 0.75% on next $1
billion; 0.70% on assets over $3
billion
Scudder International 2/28/98 $ 48,880,164 1.00% of avg. daily net assets $ 36,408++
Growth and Income Fund@
Scudder International N/A N/A 1.00% of avg. daily net assets N/A
Growth Fund*
Scudder International N/A N/A 1.00% of avg. daily net assets N/A
Value Fund*
Scudder Large Company 10/31/97 $ 288,064,975 0.70% of avg. daily net assets $ 1,790,426
Growth Fund
Scudder Large Company 9/30/97 $2,212,733,138 0.75% on first $500 million of $12,187,280
Value Fund avg. daily net assets; 0.65% on
next $500 million; 0.60% on next
$500 million; 0.55% on next $500
million; ** 0.50% on assets over
$2.0 billion
Scudder Latin America Fund 10/31/97 $ 882,555,049 1.25% on first $1 billion of $11,498,432
avg. daily net assets; 1.15% on
assets over $1 billion
Scudder Limited Term Tax 10/31/97 $ 116,876,371 0.60% of avg. daily net assets $ 629,013++
Free Fund
Scudder Managed Municipal 12/31/97 $ 728,308,005 0.55% on first $200 million of $ 3,705,253
Bonds avg. daily net assets; 0.50% on
next $500 million; 0.475% on
assets over $700 million
Scudder Massachusetts 10/31/97 $ 79,526,656 0.60% of avg. daily net assets $ 302,455++
Limited Term Tax Free
Fund
Scudder Massachusetts Tax 3/31/98 $ 373,905,826 0.60% on first $400 million of $ 2,110,713
Free Fund avg. daily net assets; **0.525%
on assets over $400 million.
Scudder Medium Term Tax 12/31/97 $ 656,951,039 0.60% on first $500 million of $ 3,710,976
Free Fund avg. daily net assets; 0.50% on
assets over $500 million
Scudder Micro Cap Fund 8/31/97 $ 91,627,404 0.75% of avg. daily net assets $ 152,080
Scudder Money Market 12/31/97 $1,041,528,715 0.25% of avg. daily net assets $ 1,301,440++
Series
</TABLE>
2
<PAGE> 91
<TABLE>
<CAPTION>
AGGREGATE
MANAGEMENT MANAGEMENT
FUND FISCAL YEAR NET ASSETS FEE RATE+ FEE
---- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Scudder New York Tax Free 3/31/98 $ 195,731,396 0.625% on first $200 million of $ 1,184,089
Fund avg. daily net assets; 0.60% on
assets over $200 million
Scudder New York Tax Free 3/31/98 $ 92,514,040 0.50% of avg. daily net assets $ 215,318++
Money Fund
Scudder Ohio Tax Free Fund 3/31/98 $ 94,450,782 0.60% of avg. daily net assets $ 226,379++
Scudder Pacific 10/31/97 $ 147,276,692 1.10% of avg. daily net assets $ 3,147,986
Opportunities Fund
Scudder Pathway Series: 9/30/97 $ 192,146,173 N/A N/A
Balanced Portfolio@
Scudder Pathway Series: 9/30/97 $ 16,971,681 N/A N/A
Conservative Portfolio@
Scudder Pathway Series: 9/30/97 $ 49,574,256 N/A N/A
Growth Portfolio@
Scudder Pathway Series: 9/30/97 $ 11,728,045 N/A N/A
International Portfolio@
Scudder Pennsylvania Tax 3/31/98 $ 78,695,405 0.60% of avg. daily net assets $ 158,978++
Free Fund
Scudder Real Estate N/A N/A 0.80% of avg. daily net assets N/A
Investment Fund*
Scudder S&P 500 Index 12/31/97 $ 16,912,276 0.15% of avg. daily net $ 0***
Fund@ assets***
Scudder Short Term Bond 12/31/97 $1,165,531,162 0.60% on first $500 million of $ 6,769,577
Fund avg. daily net assets; 0.50% on
next $500 million; 0.45% on next
$500 million; 0.40% on next $500
million; 0.375% on next $1
billion, 0.35% on assets over $3
billion
Scudder Small Company 8/31/97 $ 123,398,822 0.75% of avg. daily net assets $ 436,985
Value Fund
Scudder Tax Free Money 12/31/97 $ 283,055,833 0.50% on first $500 million of $ 881,998++
Fund avg. daily net assets; 0.48% on
assets over $500 million
Scudder Tax Free Money 12/31/97 $ 270,225,034 0.25% of avg. daily net assets $ 337,288++
Market Series
Scudder Tax Managed Growth N/A N/A 0.80% of avg. daily net assets N/A
Fund
Scudder Tax Managed Small N/A N/A 0.90% of avg. daily net assets N/A
Company Fund
Scudder Technology Fund* N/A N/A 0.85% of avg. daily net assets N/A
Scudder U.S. Treasury 6/30/98 $ 388,528,203 0.50% of avg. daily net assets $ 617,161++
Money Fund
</TABLE>
- ---------------
<TABLE>
<C> <S>
+ The management fee rates shown are for each Fund's most
recently completed fiscal year, unless otherwise noted.
++ After waivers and/or expense limitations.
@ Scudder 21(st) Century Growth Fund commenced operations on
September 9, 1996; Scudder Financial Services Fund commenced
operations on November 3, 1997; Scudder International Growth
and Income Fund commenced operations on June 30, 1997;
Scudder Pathway Series: Balanced Portfolio commenced
operations on November 15, 1996; Scudder Pathway Series:
Conservative Portfolio commenced operations on November 15,
1996; Scudder Pathway Series: Growth Portfolio commenced
operations on November 15, 1996; Scudder Pathway Series:
International Portfolio commenced operations on November 15,
1996; Scudder S&P 500 Index Fund commenced operations on
August 29, 1997.
</TABLE>
3
<PAGE> 92
* Audited fee and net asset information is not available for
Scudder Health Care Fund and Scudder Technology Fund, each
of which commenced operations on March 2, 1998; Scudder Real
Estate Investment Fund, which commenced operations on April
6, 1998; Scudder Dividend & Growth Fund, which commenced
operations on July 17, 1998; Scudder Tax Managed Growth Fund
and Scudder Tax Managed Small Company Fund, each of which
commenced operations on September 18, 1998; or Scudder
International Growth Fund and Scudder International Value
Fund, each of which commenced operations on September 1,
1998.
** Breakpoint added, effective September 30, 1998.
*** The Adviser is not entitled to this fee so long as the
assets of the Fund are invested in a master portfolio.
Scudder Kemper is entitled to receive an administrative
services fee of 0.10% of the Fund's average daily net
assets, accrued daily and paid monthly. For the period from
August 29, 1997 (commencement of operations) to December 31,
1997, Scudder Kemper waived this fee.
4
<PAGE> 93
APPENDIX 6
DATES RELATING TO
INVESTMENT MANAGEMENT AGREEMENTS
<TABLE>
<CAPTION>
TERMINATION
FORMER NEW DATE
INVESTMENT INVESTMENT (UNLESS
DATE OF MANAGEMENT MANAGEMENT CONTINUED)
FORMER AGREEMENT AGREEMENT FOR NEW
COMMENCEMENT INVESTMENT LAST LAST APPROVED INVESTMENT
OF MANAGEMENT APPROVED BY BY TRUSTEES/ MANAGEMENT
FUND OPERATIONS AGREEMENT SHAREHOLDERS DIRECTORS AGREEMENT
- ---- -------------- ---------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Scudder 21st Century 9/9/96 12/31/97 10/27/98 8/6/98 9/30/99
Growth Fund
Scudder Balanced Fund 1/14/93 12/31/97 10/24/97 8/10/98 9/30/99
Scudder California 7/22/83 12/31/97 10/24/97 8/10/98 9/30/99
Tax Free Fund
Scudder California 5/28/87 12/31/97 10/24/97 8/10/98 9/30/99
Tax Free Money Fund
Scudder Cash 7/23/76 12/31/97 10/24/97 8/10/98 9/30/99
Investment Trust
Scudder Development 2/11/71 12/31/97 10/27/97 8/6/98 9/30/99
Fund
Scudder Dividend & 6/1/98 6/1/98 6/1/98 8/10/98 9/30/99
Growth Fund
Scudder Emerging 5/8/96 12/31/97 10/27/97 8/6/98 9/30/99
Markets Growth Fund
Scudder Emerging 12/31/93 12/31/97 10/27/97 8/6/98 9/30/99
Markets Income Fund
Scudder Financial 9/30/97 9/30/97 9/30/97 9/11/97 9/30/99
Services Fund
Scudder Global Bond 3/1/91 12/31/97 10/27/97 8/6/98 9/30/99
Fund
Scudder Global Fund 8/6/86 12/31/97 10/27/97 8/6/98 9/30/99
Scudder GNMA Fund 7/5/85 12/31/97 10/24/97 8/10/98 9/30/99
Scudder Gold Fund 9/2/88 12/31/97 10/27/97 8/6/98 9/30/99
Scudder Government 10/29/81 12/31/97 10/23/97 8/10/98 9/30/99
Money Market Series
Scudder Greater 10/10/94 12/21/97 10/27/97 9/15/98 9/30/99
Europe Growth Fund
Scudder Growth and 5/31/29 1/1/98 10/24/97 8/10/98 9/30/99
Income Fund
</TABLE>
<PAGE> 94
<TABLE>
<CAPTION>
TERMINATION
FORMER NEW DATE
INVESTMENT INVESTMENT (UNLESS
DATE OF MANAGEMENT MANAGEMENT CONTINUED)
FORMER AGREEMENT AGREEMENT FOR NEW
COMMENCEMENT INVESTMENT LAST LAST APPROVED INVESTMENT
OF MANAGEMENT APPROVED BY BY TRUSTEES/ MANAGEMENT
FUND OPERATIONS AGREEMENT SHAREHOLDERS DIRECTORS AGREEMENT
- ---- -------------- ---------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Scudder Health Care 1/5/98 1/5/98 12/4/97(@) 8/6/98 9/30/99
Fund
Scudder High Yield 6/28/96 12/31/97 10/24/97 8/10/98 9/30/99
Bond Fund
Scudder High Yield 1/22/87 12/31/97 10/24/97 8/10/98 9/30/99
Tax Free Fund
Scudder Income Fund 4/24/28 12/31/97 10/24/97 8/10/98 9/30/99
Scudder International 7/6/88 12/31/97 10/27/97 8/6/98 9/30/99
Bond Fund
Scudder International 6/18/53 12/31/97 10/27/97 8/6/98 9/30/99
Fund
Scudder International 6/5/97 12/31/97 10/27/97 8/6/98 9/30/99
Growth and Income
Fund
Scudder International 9/1/98 6/29/98 6/1/98(@) 10/27/97 9/30/99
Growth Fund
Scudder International 9/1/98 6/29/98 6/1/98(@) 10/27/97 9/30/99
Value Fund
Scudder Large Company 5/15/91 12/31/97 10/24/97 8/10/98 9/30/99
Growth Fund
Scudder Large Company 11/21/66 12/21/97 10/27/97 9/15/98(@@) 9/30/99
Value Fund
Scudder Latin America 12/8/92 12/31/97 10/27/97 8/6/98 9/30/99
Fund
Scudder Limited Term 2/15/94 12/31/97 10/24/97 8/10/98 9/30/99
Tax Free Fund
Scudder Managed 10/5/76 12/31/97 10/24/97 8/10/98 9/30/99
Municipal Bonds
Scudder Massachusetts 2/15/94 12/31/97 10/24/97 8/10/98 9/30/99
Limited Term Tax
Free Fund
Scudder Massachusetts 5/28/87 12/31/97 10/24/97 8/10/98 9/30/99
Tax Free Fund
Scudder Medium Term 4/12/83 12/31/97 10/24/97 8/10/98 9/30/99
Tax Free Fund
Scudder Micro Cap 8/12/96 12/31/97 10/27/97 8/6/98 9/30/99
Fund
</TABLE>
2
<PAGE> 95
<TABLE>
<CAPTION>
TERMINATION
FORMER NEW DATE
INVESTMENT INVESTMENT (UNLESS
DATE OF MANAGEMENT MANAGEMENT CONTINUED)
FORMER AGREEMENT AGREEMENT FOR NEW
COMMENCEMENT INVESTMENT LAST LAST APPROVED INVESTMENT
OF MANAGEMENT APPROVED BY BY TRUSTEES/ MANAGEMENT
FUND OPERATIONS AGREEMENT SHAREHOLDERS DIRECTORS AGREEMENT
- ---- -------------- ---------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Scudder Money Market 1/12/81 12/31/97 10/23/97 8/10/98 9/30/99
Series
Scudder New York Tax 7/22/83 12/31/97 10/24/97 8/10/98 9/30/99
Free Fund
Scudder New York Tax 5/28/87 12/31/97 10/24/97 8/10/98 9/30/99
Free Money Fund
Scudder Ohio Tax Free 5/28/87 12/31/97 10/24/97 8/10/98 9/30/99
Fund
Scudder Pacific 12/8/92 12/31/97 10/27/97 8/6/98 9/30/99
Opportunities Fund
Scudder Pathway 11/15/86 12/31/97 10/24/97 8/12/98 9/30/99
Series: Balanced
Portfolio
Scudder Pathway 11/15/96 12/31/97 10/24/98 8/12/98 9/30/99
Series:
Conservative
Portfolio
Scudder Pathway 11/15/96 12/31/97 10/24/98 8/12/98 9/30/99
Series: Growth
Portfolio
Scudder Pathway 11/15/96 12/31/97 10/24/98 8/12/98 9/30/99
Series:
International
Portfolio
Scudder Pennsylvania 5/28/87 12/31/97 10/24/97 8/10/98 9/30/99
Tax Free Fund
Scudder Real Estate 4/6/98 3/2/98 3/2/98(@) 8/10/98 9/30/99
Investment Fund
Scudder S&P 500 Index 8/29/97 12/31/97 8/27/97(@) 8/12/97 9/30/99
Fund
Scudder Short Term 4/2/84 12/31/97 10/27/97 8/6/98 9/30/99
Bond Fund
Scudder Small Company 10/6/95 12/31/97 10/27/97 8/6/98 9/30/99
Value Fund
Scudder Tax Free 1/9/80 12/31/97 10/24/97 8/10/98 9/30/99
Money Fund
Scudder Tax Free 10/1/82 12/31/97 10/23/97 8/10/98 9/30/99
Money Market Series
Scudder Tax Managed 9/18/98 8/31/98 7/27/98@ 6/9/98 9/30/99
Growth Fund
Scudder Tax Managed 9/18/98 8/31/98 7/27/98@ 6/9/98 9/30/99
Small Company Fund
</TABLE>
3
<PAGE> 96
<TABLE>
<CAPTION>
TERMINATION
FORMER NEW DATE
INVESTMENT INVESTMENT (UNLESS
DATE OF MANAGEMENT MANAGEMENT CONTINUED)
FORMER AGREEMENT AGREEMENT FOR NEW
COMMENCEMENT INVESTMENT LAST LAST APPROVED INVESTMENT
OF MANAGEMENT APPROVED BY BY TRUSTEES/ MANAGEMENT
FUND OPERATIONS AGREEMENT SHAREHOLDERS DIRECTORS AGREEMENT
- ---- -------------- ---------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Scudder Technology 1/5/98 1/5/98 12/4/97(@) 8/6/98 9/30/99
Fund
Scudder U.S. Treasury 11/23/81 12/31/97 10/24/97 8/10/98 9/30/99
Money Fund
</TABLE>
- ---------------
* An Investment Management Agreement which is changed from a prior agreement
solely to reduce the fee payable by the Fund does not require shareholder
approval prior to becoming effective. In those cases, the date shown for
shareholder approval may be later than the effective date.
(@) Approval by the sole shareholder of the Fund prior to the Fund's
commencement of operations.
(@@) On September 15, 1998 the Board approved an amendment to the Fund's
Investment Management Agreement adding a breakpoint to the investment
management fee rate effective September 30, 1998.
4
<PAGE> 97
APPENDIX 7
TRUSTEES/DIRECTORS AND OFFICERS ASSOCIATED
WITH SCUDDER KEMPER
<TABLE>
<CAPTION>
ASSOCIATION WITH
NAME POSITION WITH TRUSTS/CORPORATIONS SCUDDER KEMPER
---- --------------------------------- ----------------
<S> <C> <C>
Daniel Pierce President (Scudder Pathway Series & Managing Director
Scudder Fund, Inc.); President & Director
(Scudder Mutual Funds, Inc.); Chairman of
the Board & Director (Scudder Int'l Fund,
Inc.); Chairman of the Board, Director &
Vice President (Global/Int'l Fund, Inc.);
President & Trustee (all other
Trusts/Corporations)
Nicholas Bratt President (Global/Int'l Fund [all series Managing Director
except Scudder Global Fund], Scudder Int'l
Fund, Inc.)
William E. Holzer President (Global/Int'l Fund, Inc. Managing Director
[Scudder Global Fund Series only])
Kathryn L. Quirk Vice President (Scudder Fund, Inc.); Vice Managing Director,
President & Assistant Secretary (Scudder Chief Legal Officer,
Pathway Series); Director, Vice President Chief Compliance
& Assistant Secretary (Scudder Mutual Officer & Secretary
Funds, Inc., Scudder Int'l Fund, Inc.,
Global/Int'l Fund, Inc.); Trustee, Vice
President & Assistant Secretary (all other
Trusts/Corporations)
Elizabeth J. Allan Vice President (Scudder Int'l Fund, Inc.) Senior Vice President
Kelly D. Babson Vice President (Scudder Portfolio Trust) Senior Vice President
Bruce F. Beaty Vice President (Investment Trust) Senior Vice President
Irene T. Cheng Vice President (Scudder Int'l Fund, Inc.) Managing Director
Peter Chin Vice President (Scudder Securities Trust) Senior Vice President
Philip G. Condon Vice President (Scudder State Tax Free Managing Director
Trust, Scudder Municipal Trust)
Joyce E. Cornell Vice President (Scudder Int'l Fund, Inc.) Managing Director
K. Sue Cote Vice President (Scudder Tax Free Money Senior Vice President
Fund)
Susan E. Dahl Vice President (Scudder Int'l Fund, Inc., Managing Director
Global/Int'l Fund, Inc.
J. Brooks Dougherty Vice President (Scudder Securities Trust) Senior Vice President
James M. Eysenbach Vice President (Scudder Securities Trust) Senior Vice President
James E. Fenger Vice President (Scudder Securities Trust) Managing Director
Philip S. Fortuna Vice President (Investment Trust, Scudder Managing Director
Securities Trust)
Carol L. Franklin Vice President (Scudder Int'l Fund, Inc.) Managing Director
William F. Gadsden Vice President (Investment Trust) Managing Director
Edmund B. Games, Jr. Vice President (Scudder Int'l Fund, Inc.) Managing Director
Theresa Gusman Vice President (Scudder Int'l Fund, Inc.) Senior Vice President
Donald E. Hall Vice President (Value Equity Trust) Managing Director
Clay L. Hoes Vice President (Scudder Mutual Funds, Vice President
Inc.)
Robert T. Hoffman Vice President (Investment Trust) Managing Director
</TABLE>
<PAGE> 98
<TABLE>
<CAPTION>
ASSOCIATION WITH
NAME POSITION WITH TRUSTS/CORPORATIONS SCUDDER KEMPER
---- --------------------------------- ----------------
<S> <C> <C>
William M. Hutchinson Vice President (Scudder Portfolio Trust) Senior Vice President
Gary P. Johnson Vice President (Global/Int'l Fund, Inc.) Managing Director
Thomas W. Joseph Vice President & Assistant Secretary Senior Vice President
(Scudder Fund, Inc. only); Vice President
(all other Trusts/Corporations)
Valerie F. Malter Vice President (Scudder Portfolio Trust, Senior Vice President
Investment Trust)
Thomas F. McDonough Vice President & Secretary Senior Vice President
Roy C. McKay Vice President (Scudder Securities Trust) Managing Director
Kathleen Millard Vice President (Value Equity Trust) Managing Director
Gerald J. Moran Vice President (Global/Int'l Fund, Inc.) Senior Vice President
Thaddeus W. Paluszck Vice President (Scudder Securities Trust) Vice President
M. Ashton Patton Vice President (Scudder Tax Free Trust) Senior Vice President
Kimberly A. Purvis Vice President (Scudder Securities Trust) Vice President
Frank J. Rachwalski, Vice President (Scudder Fund, Inc., Managing Director
Jr. Scudder Cash Investment Trust, Scudder
U.S. Treasury Money Fund)
Jeremy L. Ragus Vice President (Scudder Tax Free Trust, Senior Vice President
Scudder California Tax Free Trusts)
Sheridan P. Reilly Vice President (Scudder Int'l Fund, Inc.) Senior Vice President
M. Isabel Saltzman Vice President (Global/Int'l Fund, Inc.) Managing Director
Peter A. Taylor Vice President (Scudder Securities Trust) Managing Director
Richard L. Vandenberg Vice President (Scudder GNMA Fund) Managing Director
Rebecca L. Wilson Vice President (Scudder State Tax Free Vice President
Trust, Scudder California Tax Free Trust)
David B. Wines Vice President (Scudder Fund, Inc., Senior Vice President
Scudder Cash Investment Trust, Scudder
U.S. Treasury Money Fund)
Stephen A. Wohler Vice President (Scudder Portfolio Trust, Managing Director
Scudder Funds Trust)
John R. Hebble Treasurer Senior Vice President
Richard W. Desmond Assistant Secretary (Scudder Int'l Fund, Vice President
Inc., Scudder Securities Trust)
Caroline Pearson Assistant Secretary Senior Vice President
</TABLE>
2
<PAGE> 99
APPENDIX 8
FEES TO SFAC, SSC AND STC+
<TABLE>
<CAPTION>
AGGREGATE FEE AGGREGATE FEE AGGREGATE FEE
FUND FISCAL YEAR TO SFAC TO SSC TO STC
---- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Scudder 21st Century Growth
Fund++ 8/31/97 $ 6,942@ $ 14,592@ $ 586@
Scudder Balanced Fund 12/31/97 $ 48,318 $ 269,472 $ 294,504
Scudder California Tax Free
Fund 3/31/98 $ 66,491 $ 154,721 N/A*
Scudder California Tax Free
Money Fund 3/31/98 $ 30,000 $ 63,224 N/A*
Scudder Cash Investment Trust 6/30/98 $ 98,059 $3,099,779 $1,883,755
Scudder Development Fund 6/30/98 $121,851 $1,402,341 $1,221,754
Scudder Emerging Markets
Growth Fund 10/31/97 $178,487 $ 480,002 $ 41,624
Scudder Emerging Markets
Income Fund 10/31/97 $258,022 $ 606,320 $ 33,703
Scudder Financial Services
Fund++ 5/31/98 $ 13,996@ $ 79,691@ N/A*
Scudder Global Bond Fund 10/31/97 $156,250 $ 375,659 $ 16,092
Scudder Global Fund 6/30/98 $601,315 $2,508,727 $1,195,885
Scudder GNMA Fund 3/31/98 $ 68,114 $ 597,013 $ 170,217
Scudder Gold Fund 6/30/98 $ 67,605 $ 487,250 $ 19,391
Scudder Government Money
Market Series 12/31/97 $ 51,695 $ 66,869 N/A*
Scudder Greater Europe Growth
Fund 10/31/97 $135,790 $ 471,548 $ 26,160
Scudder Growth and Income Fund 12/31/97 $338,966 $6,262,085 $4,655,851
Scudder High Yield Bond Fund 2/28/98 $ 0@ $ 0@ $ 0@
Scudder High Yield Tax Free
Fund 12/31/97 $ 60,501 $ 287,904 N/A*
Scudder Income Fund 12/31/97 $ 91,363 $ 787,239 $1,641,229
Scudder International Bond
Fund 6/30/98 $154,342 $ 462,449 $ 80,418
Scudder International Fund 3/31/98 $838,885 $3,394,358 $1,561,049
Scudder International Growth
and Income Fund++ 2/28/98 $ 36,039 $ 196,689 $ 452
Scudder Large Company Growth
Fund 10/31/97 $ 57,787 $ 525,877 $ 320,268
Scudder Large Company Value
Fund 9/30/97 $157,173 $2,505,046 $1,562,194
Scudder Latin America Fund 10/31/97 $447,599 $2,362,155 $ 24,787
Scudder Limited Term Tax Free
Fund 10/31/97 $ 38,322 $ 46,003 N/A*
Scudder Managed Municipal
Bonds 12/31/97 $ 96,839 $ 329,430 N/A*
Scudder Massachusetts Limited
Term Tax Free Fund 10/31/97 $ 36,000 $ 41,127 N/A*
</TABLE>
<PAGE> 100
<TABLE>
<CAPTION>
AGGREGATE FEE AGGREGATE FEE AGGREGATE FEE
FUND FISCAL YEAR TO SFAC TO SSC TO STC
---- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Scudder Massachusetts Tax Free
Fund 3/31/98 $ 63,206 $ 194,865 N/A*
Scudder Medium Term Tax Free
Fund 12/31/97 $ 91,551 $ 382,526 N/A*
Scudder Money Market Series 12/31/97 $109,482 $ 276,134 N/A*
Scudder Micro Cap Fund 8/31/97 $ 84,245 $ 251,988 $ 13,747
Scudder New York Tax Free Fund 3/31/98 $ 52,711 $ 118,928 N/A*
Scudder New York Tax Free
Money Fund 3/31/98 $ 30,000 $ 57,141 N/A*
Scudder Ohio Tax Free Fund 3/31/98 $ 36,000 $ 58,657 N/A*
Scudder Pacific Opportunities
Fund 10/31/97 $192,884 $1,057,225 $ 56,892
Scudder Pathway Series:
Balanced Portfolio++ 9/30/97 $ 37,420+ $ 40,014 $ 690,836+
Scudder Pathway Series:
Conservative Portfolio++ 9/30/97 $ 32,656+ $ 19,885 $ 88,993+
Scudder Pathway Series:
Growth Portfolio++ 9/30/97 $ 32,656+ $ 69,356 $ 145,718+
Scudder Pathway Series:
International Portfolio++ 9/30/97 $ 32,656+ $ 34,821 $ 4,131+
Scudder Pennsylvania Tax Free
Fund 3/31/98 $ 36,000 $ 61,715 N/A*
Scudder S&P 500 Index Fund 12/31/97 N/A** $ 0@ N/A*
Scudder Short Term Bond Fund 12/31/97 $173,925 $1,966,378 $ 611,127
Scudder Small Company Value
Fund 8/31/97 $ 57,935 $ 285,621 $ 20,160
Scudder Tax Free Money Fund 12/31/97 $ 44,913 $ 204,129 N/A+
</TABLE>
2
<PAGE> 101
<TABLE>
<CAPTION>
AGGREGATE FEE AGGREGATE FEE AGGREGATE FEE
FUND FISCAL YEAR TO SFAC TO SSC TO STC
---- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Scudder Tax Free Money Market
Series 12/31/97 $ 56,782 $ 55,536 N/A*
Scudder U.S. Treasury Money
Fund 6/30/98 $ 50,194 $ 698,152 $ 730,475
</TABLE>
- ------------------------------
+ The above information is not available for Scudder Health Care Fund and
Scudder Technology Fund, each of which did not commence operations until
March 2, 1998; Scudder Real Estate Investment Fund, which did not commence
operations until April 6, 1998; Scudder Dividend & Growth Fund, which did not
commence operations until July 17, 1998; Scudder Tax Managed Growth Fund and
Scudder Tax Managed Small Company Fund, each of which did not commence
operations until September 18, 1998; or Scudder International Growth Fund and
Scudder International Value Fund, each of which did not commence operations
until September 1, 1998.
++ Scudder 21st Century Growth Fund commenced operations on September 9, 1996;
Scudder Financial Services Fund commenced operations on November 3, 1997;
Scudder International Growth and Income Fund commenced operations on June 30,
1997; Scudder Pathway Series: Balanced Portfolio commenced operations on
November 15, 1996; Scudder Pathway Series: Conservative Portfolio commenced
operations on November 15, 1996; Scudder Pathway Series: Growth Portfolio
commenced operations on November 15, 1996; Scudder Pathway Series:
International Portfolio commenced operations on November 15, 1996; Scudder
S&P 500 Index Fund commenced operations on August 29, 1997.
+Fees paid on behalf of the Fund by either Underlying Funds or Scudder Kemper.
@ After waivers and/or expense limitations.
* These funds do not currently offer their shares to retirement or employment
benefit plans.
** Scudder S&P 500 Index Fund uses Bankers Trust Company, an unaffiliated
entity, for the provision of fund accounting services.
3
<PAGE> 102
LOGO
For more information, please call Shareholder Communications Corporation, your
Fund's information agent, at 1-800-248-2681.
SD Open End
<PAGE> 103
PLEASE VOTE YOUR PROXY TODAY!
[Scudder logo] YOUR VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN ALL
PROXIES RECEIVED IN THE ENCLOSED
POSTAGE PAID ENVELOPE.
PROXY [NAME OF FUND] PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF YOUR FUND
Special Meeting of Shareholders -- December 15, 1998
The undersigned hereby appoints Bruce H. Goldfarb, Kathryn L. Quirk, Thomas
F. McDonough and Daniel Pierce and each of them, the proxies of the undersigned,
with the power of substitution to each of them, to vote all shares of the Fund
which the undersigned is entitled to vote at the Special Meeting of Shareholders
of the Fund to be held at the offices of Scudder Kemper Investments, Inc., Two
International Place, Boston, Massachusetts 02110, on Tuesday, December 15, 1998
at 10:00 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.
The Board members of your Fund, including those who are not affiliated with
the Fund, Scudder Kemper Investments, Inc. or Zurich Insurance Company,
recommend that you vote FOR each item. Please vote by filling in the boxes
below.
1. To approve the new Investment Management
Agreement between the Fund and Scudder
Kemper Investments, Inc. FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. To approve the revision of the Fund's
fundamental lending policy. FOR [ ] AGAINST [ ] ABSTAIN [ ]
[For shareholders of SCUDDER S&P 500 INDEX FUND only]
[3. To approve the revision of the Fund's
fundamental borrowing policy. FOR [ ] AGAINST [ ] ABSTAIN [ ]]
(CONTINUED OPPOSITE SIDE)
<PAGE> 104
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 given your full title as
such.
---------------------------------------------------
Signature(s) of Shareholder(s)
Dated , 1998
------------------------------
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED.
