<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>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] 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)
Thomas F. McDonough
- --------------------------------------------------------------------------------
(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 , 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 not affect 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
<PAGE> 3
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, definitional 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. You will still
own the same shares in the same Fund. The new investment management
agreement is 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. 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.
Q. WILL THE INVESTMENT MANAGEMENT FEES INCREASE?
A. No, the investment management fees 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
(continues on inside back cover)
<PAGE> 4
"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 1-800-733-8481, ext. 429.
<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 , 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 indirect parent 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 Meeting. AFTER CAREFUL REVIEW, THE MEMBERS
OF YOUR FUND'S BOARD HAVE APPROVED THE NEW INVESTMENT MANAGEMENT AGREEMENT. THE
BOARD MEMBERS OF YOUR FUND BELIEVE THAT EACH OF THE PROPOSALS SET
<PAGE> 6
FORTH IN THE NOTICE OF MEETING 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.
/s/ Nicholas Bratt
Nicholas Bratt
President
Global/International Fund, Inc. (all Funds, except Scudder Global Fund)
Scudder International Fund, Inc.
/s/ William E. Holzer
William E. Holzer
President
Global International Fund, Inc. (Scudder Global Fund only)
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 of the revision of each Fund's fundamental
lending policy; and
PROPOSAL 3: (For shareholders of Scudder S&P 500 Index Fund only) to
approve of 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 the Special Meeting or any adjournments thereof.
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.
<PAGE> 8
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 , 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 Meetings 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
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
<PAGE> 10
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 Meeting 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 the 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.
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
<PAGE> 11
(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.
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 800-225-5163 or writing the Fund, c/o Scudder Kemper
Investments, Inc., at the address for each Fund shown at the beginning of this
Proxy Statement.
<PAGE> 12
PROPOSAL 1: APPROVAL OF NEW INVESTMENT MANAGEMENT AGREEMENT
INTRODUCTION
Scudder Kemper acts as the investment manager to each Fund pursuant to
investment management agreements 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
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.")
On June 26, 1997, one of Scudder Kemper's predecessors, 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 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
<PAGE> 13
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., 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"). These
transactions were completed on September , 1998. As a result, upon the
completion of the Transaction, the former Zurich shareholders initially became
the owners (through Zurich Allied AG) of 57% of the voting stock of Zurich
Financial Services, and former B.A.T shareholders initially 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.
<PAGE> 14
Below is a simplified chart showing the corporate structure of Zurich
Financial Services after these transactions:
[SCUDDER 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, Zurich's current Chairman and Chief Executive Officer, became
Chairman and Chief Executive Officer of Zurich Financial Services. As Chairman,
Mr. Huppi
<PAGE> 15
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 are current 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 are current B.A.T executives.
The Board of Directors of Zurich Allied AG initially consists of 11
members, eight of whom are current 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 are current 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; the Eagle Star Insurance business, primarily in the
U.K.; 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
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.
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
<PAGE> 16
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 are now being proposed for
approval by shareholders of each Fund. The Funds have 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. A copy of the master form of the New Investment Management
Agreement is attached hereto as Exhibit A. THE NEW INVESTMENT MANAGEMENT
AGREEMENT FOR EACH FUND IS IN ALL MATERIAL RESPECTS ON THE SAME TERMS AS 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. 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 under the 1940 Act) (the "Non-interested
Trustees/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 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 each of Scudder International Fund,
Inc. and Value Equity Trust approved an amendment adding breakpoints to the New
Investment Management Agreement applicable to each of Scudder Greater Europe
Growth Fund and 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.
<PAGE> 17
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
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
<PAGE> 18
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 under 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.
Zurich or its affiliates will pay the costs of preparing and distributing proxy
materials to, and of holding the meeting 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.
<PAGE> 19
DESCRIPTION OF THE INVESTMENT MANAGEMENT AGREEMENTS
Except as disclosed below, all Former and New Investment Agreements are
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
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
<PAGE> 20
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.
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, the cost of responding to shareholders'
inquiries, 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
<PAGE> 21
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 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
<PAGE> 22
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 Former 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 prior to its becoming effective, as required by the 1940 Act, in
connection with the Scudder-Zurich Transaction.
<PAGE> 23
THE NEW INVESTMENT MANAGEMENT AGREEMENTS
The New Investment Management Agreement for each Fund is dated the date of
the consummation of the Transaction, which occurred on September , 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 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 the same as 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
and Scudder Massachusetts Tax Free Fund), the addition of certain breakpoints in
the fee structures. In addition, the New Investment Management Agreements of
each of Scudder Greater Europe Growth Fund and Scudder Large Company Value Fund
have been amended to add certain breakpoints in the fee structures. The New
Investment Management Agreement (as amended, in the case of each of Scudder
Greater Europe Growth Fund and 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 0.388% to
0.370%.
SCUDDER LARGE COMPANY VALUE FUND:
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, which resulted from the combination of the businesses of
Scudder and Kemper, an indirect subsidiary of Zurich, 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
<PAGE> 24
December 31, 1997, Scudder Kemper has served as investment adviser to both
Scudder and Kemper funds. As of , Scudder Kemper has more than [$200
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 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 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 Marcus Rohrbasser* 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 each of Rolf Huppi and Marcus Rohrbasser 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 Executive Committee
members are Messrs. Birdsong, Rohrbasser and Villani (Chairman).
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. ("KIH"), a subsidiary of Zurich; 20.86% by
Stephen R. Beckwith, Lynn S. Birdsong, Kathryn L. Quirk, Cornelia M. 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
- ------------------------------
* Mythenquai 2, Zurich Switzerland.
(#) 345 Park Avenue, New York, New York
<PAGE> 25
Kemper Investments, Inc. Executive Defined Contribution Plan Trust (the
"Trust"); and 9.66% by the 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. 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. The table provided in Appendix 7 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
<PAGE> 26
above, under the current arrangements if the New Investment Management
Agreements are approved.
Exhibit B sets forth 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. 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. SIS does not receive any commissions, fees or other
remuneration from the Funds for this service. 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.
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"). 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. 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
<PAGE> 27
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 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, (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
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.
<PAGE> 28
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. 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, unless changed by Board action, limit 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 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. 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.
<PAGE> 29
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.
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.
<PAGE> 30
THE BOARD MEMBERS OF INVESTMENT TRUST RECOMMEND THAT THE SHAREHOLDERS OF SCUDDER
S&P 500 INDEX FUND VOTE IN FAVOR OF THIS PROPOSAL 3.
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
<PAGE> 31
proxy cards, they may contact SCC toll-free at 1-800-733-8481, ext. 429. Any
proxy given 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 the 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
<PAGE> 32
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)
, 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
A-1
<PAGE> 33
(Trust)(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 (Trust)(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)
(Corporation) 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 organization which
shall have succeeded to your business as investment manager ("your
Successor")) and the Corporation), or any extension,
A-2
<PAGE> 34
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
OFFER offers in connection with the Scudder Marks shall meet commercially
reasonable standards of quality, as may be determined by you or the
Trademark Owner from time to time, provided that you acknowledge that the
services and products the (Trust)/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
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;
A-3
<PAGE> 35
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 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)
A-4
<PAGE> 36
(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 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 sh ift
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
A-5
<PAGE> 37
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/PORTFOLIOS
other than those specifically allocated to you in this section 5/YOU SHALL
NOT BE REQUIRED TO PAY ANY EXPENSES OF THE FUND/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/PORTFOLIOS'
(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 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)
A-6
<PAGE> 38
(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/PORTFOLIOS 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/PORTFOLIOS for such
month over any compensation waived by you from time to time (as more fully
described below). You shall be entitled to receive during any month such
interim payments of your 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/PORTFOLIOS and unpaid.
The "average daily net assets" of the Fund/PORTFOLIOS shall mean the
average of the values placed on the Fund's/PORTFOLIOS' net assets as of
4:00 p.m. (New York time) on each day on which the net asset value of the
Fund/PORTFOLIOS is determined consistent with the provisions of Rule 22c-1
under the 1940 Act or, if the Fund/PORTFOLIOS lawfully determines the value
A-7
<PAGE> 39
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/PORTFOLIOS 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/PORTFOLIOS 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/PORTFOLIOS' portfolio may be
lawfully determined on that day. If the Fund/PORTFOLIOS 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./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 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
A-8
<PAGE> 40
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 , 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 "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
A-9
<PAGE> 41
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, 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
A-10
<PAGE> 42
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> 43
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 ASSET
---- --------- -------- -----
<S> <C> <C> <C>
U.S. INCOME
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
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% of net assets $ 297,979,779
through investment in
undervalued equity securities.
GLOBAL GROWTH
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> 44
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSET
---- --------- -------- -----
<S> <C> <C> <C>
The Korea Fund, Inc. Long term capital appreciation Adviser: $[661,690,073]
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.
Scudder Variable Life Maximize long term capital 0.475% to $500 million $ 676,317,582
Investment Fund Capital growth from a portfolio 0.450% thereafter
Growth Portfolio consisting primarily of equity
securities.
</TABLE>
B-2
<PAGE> 45
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSET
---- --------- -------- -----
<S> <C> <C> <C>
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
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.
</TABLE>
B-3
<PAGE> 46
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSET
---- --------- -------- -----
<S> <C> <C> <C>
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
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.
</TABLE>
B-4
<PAGE> 47
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE ASSET
---- --------- -------- -----
<S> <C> <C> <C>
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>
- ------------------------------
++ Subject to waivers and/or expense limitations.
* The addition of this breakpoint is effective 9/30/98.
** Fee information is not available for Scudder Dividend & Growth Fund, which
commenced operations on June 1, 1998; Scudder Tax Managed Growth Fund and
Scudder Tax Managed Small Company Fund, each of which commenced operations on
July 31, 1998; Scudder Corporate Bond Fund, which commenced operations on
August 31, 1998; or Scudder International Growth Fund and Scudder
International Value Fund, each of which commenced operations on September 1,
1998.
@ Assets as of 5/31/98.
B-5
<PAGE> 48
KEMPER FUNDS
<TABLE>
<CAPTION>
TRUST/FUND OBJECTIVE FEE RATE ASSETS+
---------- --------- -------- -------
<S> <C> <C> <C>
Cash Account Trust:
Government Securities Maximum current income to the 0.220% to $500 million
Portfolio extent consistent with 0.200% next $500 million
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)*
Money Market Portfolio Maximum current income to the 0.220% to $500 million
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.
Tax-Exempt Portfolio Maximum current income exempt 0.220% to $500 million
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.
Cash Equivalent Fund:
Government Securities Maximum current income to the 0.220% to $500 million
Portfolio extent consistent with 0.200% next $500 million
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)
Money Market Portfolio Maximum current income to the 0.220% to $500 million
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(2)
obligations.
Tax-Exempt Portfolio Maximum current income that is 0.220% to $500 million
exempt from federal income 0.200% next $500 million
taxes to the extent consistent 0.175% next $1 billion
with stability of capital from 0.160% next $1 billion
a portfolio of municipal 0.150% thereafter
securities.
Investors Cash Trust:
Government Securities Maximum current income to the 0.150% of net assets(1)*
Portfolio extent consistent with
stability of capital by
investing in U.S. Government
obligations and repurchase
agreements.
Treasury Portfolio Maximum current income to the 0.150% of net assets(3)*
extent consistent with
stability of capital by
investing in U.S. Government
obligations and repurchase
agreements.
</TABLE>
B-6
<PAGE> 49
<TABLE>
<CAPTION>
TRUST/FUND OBJECTIVE FEE RATE ASSETS+
---------- --------- -------- -------
<S> <C> <C> <C>
Investors Fund Series:
Kemper Blue Chip Portfolio Growth of capital and income. 0.650% of net assets
Kemper-Dreman Financial Long-term capital appreciation 0.750% to $250 million
Services Portfolio by investing primarily in 0.720% next $750 million
common stocks and other equity 0.700% next $1.5 billion
securities of companies in the 0.680% next $2.5 billion
financial services industry 0.650% next $2.5 billion
believed by the investment 0.640% next $2.5 billion
manger to be undervalued. 0.630% next $2.5 billion
0.620% thereafter
Kemper-Dreman High Return High rate of total return. 0.750% to $250 million
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
Kemper Global Blue Chip Long-term growth of capital 1.000% to $250 million
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 consistent 0.750% of net assets
Portfolio with prudent total return
asset management.
Kemper Government Securities High current income consistent 0.550% of net assets
Portfolio 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
capital.
Kemper International Growth Long-term growth of capital 1.000% of net assets
and Income Portfolio and current income, primarily
from foreign equity
securities.
Kemper Total Return Portfolio High total return through a 0.550% of net assets
combination of income and
capital appreciation.
Kemper High Yield Portfolio High level of current income 0.600% of net assets
by investing in fixed income
securities.
Kemper Horizon A balance between growth of 0.600% of net assets
10+ Portfolio capital and income consistent
with moderate risk.
Kemper Horizon Growth of capital and, 0.600% of net assets
20+ Portfolio secondarily, income.
Kemper Horizon 5 Portfolio Income consistent with 0.600% of net assets
preservation of capital, and
secondarily, growth.
Kemper International Total return, a combination of 0.750% of net assets
Portfolio capital growth and income,
principally through an
internationally diversified
portfolio of equity
securities.
</TABLE>
B-7
<PAGE> 50
<TABLE>
<CAPTION>
TRUST/FUND OBJECTIVE FEE RATE ASSETS+
---------- --------- -------- -------
<S> <C> <C> <C>
Kemper Investment Grade Bond High current income by 0.600% of net assets
Portfolio investing primarily in a
diversified portfolio of
investment grade debt
securities.
Kemper Money Market Portfolio Maximum current income to the 0.500% of net assets
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
Portfolio from a portfolio primarily
consisting of growth stocks of
small companies.
Kemper Small Cap Value Long-term capital appreciation 0.750% of net assets
Portfolio from a portfolio primarily of
value stocks of smaller
companies.
Kemper Contrarian Value High rate of return. 0.750% of net assets
Portfolio
Kemper Value+Growth Portfolio Growth of capital through 0.750% of net assets
professional management of a
portfolio of growth and value
stocks.
Investors Municipal Cash Fund:
Investors Florida Municipal Maximum current income exempt 0.220% to $500 million
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(1)*
Investors New Jersey Maximum current income exempt 0.220% to $500 million
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(4)*
Investors Michigan Municipal Maximum current income exempt
Cash Fund from federal and Michigan
income taxes to the extent
consistent with stability of
capital.
Investors Pennsylvania Maximum current income exempt 0.220% to $500 million
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(4)*
Tax-Exempt New York Money Maximum current income exempt 0.220% to $500 million
Market Fund from federal, New York State 0.200% next $500 million
and New York City income taxes 0.175% next $1 billion
to the extent consistent with 0.160% next $1 billion
stability of capital. 0.150% thereafter(4)*
</TABLE>
B-8
<PAGE> 51
<TABLE>
<CAPTION>
TRUST/FUND OBJECTIVE FEE RATE ASSETS+
---------- --------- -------- -------
<S> <C> <C> <C>
Kemper Adjustable Rate U.S. High current income consistent 0.550% to $250 million
Government Fund with low volatility of 0.520% next $750 million
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 Aggressive Growth Fund Capital appreciation through 0.650% of net assets
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 Asian Growth Fund Long-term capital growth by 0.850% to $250 million
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 Blue Chip Fund Growth of capital and income. 0.580% to $250 million
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 Diversified Income High current return. 0.580% to $250 million
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
Kemper Europe Fund Long-term capital growth by 0.750% to $250 million
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
</TABLE>
B-9
<PAGE> 52
<TABLE>
<CAPTION>
TRUST/FUND OBJECTIVE FEE RATE ASSETS+
---------- --------- -------- -------
<S> <C> <C> <C>
Kemper Global Income Fund High current income consistent 0.750% to $250 million
with prudent total return 0.720% next $750 million
asset management by investing 0.700% next $1.5 billion
in a portfolio of investment 0.680% next $2.5 billion
grade foreign and domestic 0.650% next $2.5 billion
fixed income securities. 0.640% next $2.5 billion
0.630% next $2.5 billion
0.620% thereafter
Kemper Growth Fund Growth of capital through 0.580% to $250 million
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 High Income Trust Highest current income 0.850% of net assets
obtainable consistent with
reasonable risk with capital
gains secondary.
Kemper High Yield Series:
Kemper High Yield Fund The highest level of current 0.580% to $250 million
income from a professionally 0.550% next $750 million
managed, diversified portfolio 0.530% next $1.5 billion
of fixed income securities 0.510% next $2.5 billion
consistent with reasonable 0.480% next $2.5 billion
risk. 0.460% next $2.5 billion
0.440% next $2.5 billion
0.420% thereafter
Kemper High Yield Opportunity Total return through high 0.650% to $250 million
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 Horizon Fund:
Kemper Horizon A balance between growth of 0.580% to $250 million
10+ Portfolio capital and income, consistent 0.550% next $750 million
with moderate risk. 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 Growth of capital and, 0.580% to $250 million
20+ Portfolio 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
</TABLE>
B-10
<PAGE> 53
<TABLE>
<CAPTION>
TRUST/FUND OBJECTIVE FEE RATE ASSETS+
---------- --------- -------- -------
<S> <C> <C> <C>
Kemper Horizon 5 Portfolio Income consistent with 0.580% to $250 million
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
Kemper Income and Capital As high a level of current 0.550% to $250 million
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 Intermediate High current income consistent 0.800% of net assets(1)
Government Trust with preservation of capital
by investing in U.S. and
foreign government securities.
Kemper International Fund Total return, a combination of 0.750% to $250 million
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 Multi-Market Income High current income consistent 0.850% of net assets(5)
Trust with prudent total return
asset management by investing
in a diversified portfolio of
investment grade tax-exempt
securities.
Kemper Municipal Income Trust High level of current income 0.550% of net assets(5)
exempt from federal income
tax.
Kemper National Tax-Free
Income Series:
Kemper Intermediate Municipal As high a level of current 0.550% to $250 million
Bond Fund income, exempt from federal 0.520% next $750 million
income taxes, as is consistent 0.500% next $1.5 billion
with preservation of capital 0.480% next $2.5 billion
through a 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 Municipal Bond Fund As high a level of current 0.450% to $250 million
income, exempt from federal 0.430% next $750 million
income taxes, as is consistent 0.410% next $1.5 billion
with preservation of capital 0.400% next $2.5 billion
though a professionally 0.380% next $2.5 billion
managed portfolio of municipal 0.360% next $2.5 billion
securities. 0.340% next $2.5 billion
0.320% thereafter
</TABLE>
B-11
<PAGE> 54
<TABLE>
<CAPTION>
TRUST/FUND OBJECTIVE FEE RATE ASSETS+
---------- --------- -------- -------
<S> <C> <C> <C>
Kemper Portfolios:
Kemper Cash Reserves Fund Maximum current income to the 0.400% to $250 million
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
Kemper Short-Intermediate High current income and 0.550% to $250 million
Government Fund preservation of capital, with 0.520% next $750 million
equal emphasis, from a 0.500% next $1.5 billion
portfolio primarily consisting 0.480% next $2.5 billion
of short-and intermediate-term 0.450% next $2.5 billion
U.S. Government securities. 0.430% next $2.5 billion
0.410% next $2.5 billion
0.400% thereafter
Kemper U.S. Mortgage Fund Maximum current return from 0.550% to $250 million
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
Kemper Quantitative Equity Growth of capital and 0.580% to $250 million
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
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
Kemper State Tax-Free Income
Series:
Kemper California Tax-Free High level of current income 0.550% to $250 million
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
</TABLE>
B-12
<PAGE> 55
<TABLE>
<CAPTION>
TRUST/FUND OBJECTIVE FEE RATE ASSETS+
---------- --------- -------- -------
<S> <C> <C> <C>
Kemper Florida Tax-Free High level of current income 0.550% to $250 million
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 Michigan Tax-Free High level of current income 0.550% to $250 million
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 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 New Jersey Tax-Free High level of current income 0.550% to $250 million
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*
Kemper New York Tax-Free High level of current income 0.550% to $250 million
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 interest 0.550% to $250 million
Fund income exempt from federal and 0.520% next $750 million
state of Ohio 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 Pennsylvania Tax-Free High level of current income 0.550% to $250 million
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
Fund interest income exempt from 0.520% next $750 million
federal 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-13
<PAGE> 56
<TABLE>
<CAPTION>
TRUST/FUND OBJECTIVE FEE RATE ASSETS+
---------- --------- -------- -------
<S> <C> <C> <C>
Kemper Strategic Income Fund High current income by 0.850% of net assets(5)
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(5)
Income Trust exempt from federal income tax
by investing in a diversified
portfolio of tax-exempt
municipal securities.
Kemper Target Equity Fund:
Kemper Retirement Long-term capital growth with 0.500% of net assets
Fund--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 Long-term capital growth with 0.500% of net assets
Fund--Series II 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
Fund--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 Long-term capital growth with 0.500% of net assets
Fund--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 Long-term capital growth with 0.500% of net assets
Fund--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
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.
</TABLE>
B-14
<PAGE> 57
<TABLE>
<CAPTION>
TRUST/FUND OBJECTIVE FEE RATE ASSETS+
---------- --------- -------- -------
<S> <C> <C> <C>
Kemper Retirement Long-term capital growth with 0.500% of net assets
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
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).
Kemper Technology Fund Growth of capital. 0.580% to $250 million
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
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 U.S. Government High current income, liquidity 0.450% to $250 million
Securities Fund and security of principal. 0.430% next $750 million
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 Value Fund, Inc.: High total rate of return. 0.750% to $250 million
Kemper-Dreman High Return 0.720% next $750 million
Equity Fund 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 Contrarian Fund Long-term capital appreciation 0.750% to $250 million
and, secondarily, current 0.720% next $750 million
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
</TABLE>
B-15
<PAGE> 58
<TABLE>
<CAPTION>
TRUST/FUND OBJECTIVE FEE RATE ASSETS+
---------- --------- -------- -------
<S> <C> <C> <C>
Kemper Small Cap Value Fund Long-term capital 0.750% to $250 million
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 Value Plus Growth Fund Growth of capital through 0.720% to $250 million
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
Tax-Exempt California Money Maximum current income exempt 0.220% to $500 million
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
The Growth Fund of Spain, Long-term capital appreciation 1.000% of net assets
Inc. by investing primarily in
equity securities of Spanish
companies.
Zurich Money Funds:
Zurich Government Money Fund Maximum current income to the 0.500% to $215 million
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
extent consistent with 0.375% next $335 million
stability of principal from a 0.300% next $250 million
portfolio primarily consisting 0.250% thereafter(6)
of commercial paper and bank
obligations.
Zurich Tax-Free Money Fund Maximum current income to the 0.500% to $215 million
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
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.
Kemper Small Cap Relative Long-term capital 0.750% to $250 million
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*
</TABLE>
B-16
<PAGE> 59
<TABLE>
<CAPTION>
TRUST/FUND OBJECTIVE FEE RATE ASSETS+
---------- --------- -------- -------
<S> <C> <C> <C>
Kemper U.S. Growth and Income Long-term growth of capital, 0.600% to $250 million
Fund current income and growth of 0.570% next $750 million
income. 0.550% next $1.5 billion
0.530% thereafter
Kemper Global/International
Series, Inc.
Kemper Emerging Markets High current income and, 1.000% of net assets*
Income Fund secondarily, long-term capital
appreciation.
Kemper Emerging Markets Long-term growth of capital 1.250% of net assets*
Growth Fund primarily through equity
investment in emerging markets
around the globe.
Kemper Global Blue Chip Fund Long-term growth of capital 1.000% to $250 million
through a diversified 0.950% next $750 million
worldwide portfolio of 0.900% thereafter*
marketable securities,
primarily equity securities.
Kemper International Growth Long-term growth of capital 1.000% of net assets*
and Income Fund and income, primarily from
foreign equity securities.
Kemper Latin America Fund Long-term capital appreciation 1.250% to $250 million
through investment primarily 1.200% next $750 million
in the securities of Latin 1.150% thereafter*
American issuers.
Kemper Equity Trust
Kemper-Dreman Financial Long-term capital appreciation 0.750% to $250 million
Services Fund by investing primarily in 0.720% next $750 million
common stocks and other equity 0.700% next $1.5 billion
securities of companies in the 0.680% next $2.5 billion
financial services industry 0.650% next $2.5 billion
believed by the Fund's 0.640% next $2.5 billion
investment manager to be 0.630% next $2.5 billion
undervalued. 0.620% thereafter*
Kemper Classic Growth Fund Long-term growth of capital
with reduced share price
volatility compared to other
growth mutual funds.
Kemper Global Discovery Fund Above-average capital
appreciation over the long
term by investing primarily in
the equity securities of small
companies located throughout
the world.
Kemper Value Fund Long-term growth of capital
through investment in
undervalued equity securities.
</TABLE>
- ------------------------------
(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) Payable in the aggregate for each of the Government Securities Portfolio and
Money Market Portfolio series of Cash Equivalent Fund.
(3) Payable in the aggregate for each of the Government Securities Portfolio and
Treasury Portfolio series of Investors Cash Trust.
B-17
<PAGE> 60
(4) 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.
(5) Based on average weekly net assets.
(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.
* Subject to waivers and/or reimbursements.
B-18
<PAGE> 61
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> 62
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.
[TO BE PROVIDED]
<TABLE>
<CAPTION>
NUMBER OF SHARES
OUTSTANDING
FUND* AS OF JUNE 30, 1998
----- ------------------------
<S> <C>
Scudder 21st Century Growth Fund
Scudder Balanced Fund
Scudder California Tax Free Fund
Scudder California Tax Free Money Fund
Scudder Cash Investment Trust
Scudder Development Fund
Scudder Dividend & Growth Fund
Scudder Emerging Markets Growth Fund
Scudder Emerging Markets Income Fund
Scudder Financial Services Fund
Scudder Global Bond Fund
Scudder Global Fund
Scudder GNMA Fund
Scudder Gold Fund
Scudder Government Money Market Series
Scudder Greater Europe Growth Fund
Scudder Growth and Income Fund
Scudder Health Care Fund
Scudder High Yield Bond Fund
Scudder High Yield Tax Free Fund
Scudder Income Fund
Scudder International Bond Fund
Scudder International Fund
Scudder International Growth and Income Fund
Scudder International Growth Fund
Scudder International Value Fund
Scudder Large Company Growth Fund
Scudder Large Company Value Fund
Scudder Latin America Fund
</TABLE>
<PAGE> 63
<TABLE>
<CAPTION>
NUMBER OF SHARES
OUTSTANDING
FUND* AS OF JUNE 30, 1998
----- ------------------------
<S> <C>
Scudder Limited Term Tax Free Fund
Scudder Managed Municipal Bonds
Scudder Massachusetts Limited Term Tax Free Fund
Scudder Massachusetts Tax Free Fund
Scudder Medium Term Tax Free Fund
Scudder Micro Cap Fund
Scudder Money Market Series
Scudder New York Tax Free Fund
Scudder New York Tax Free Money Fund
Scudder Ohio Tax Free Fund
Scudder Pacific Opportunities Fund
Scudder Pathway Series: Balanced Portfolio
Scudder Pathway Series: Conservative Portfolio
Scudder Pathway Series: Growth Portfolio
Scudder Pathway Series: International Portfolio
Scudder Pennsylvania Tax Free Fund
Scudder Real Estate Investment Fund
Scudder S&P 500 Index Fund
Scudder Short Term Bond Fund
Scudder Small Company Value Fund
Scudder Tax Free Money Fund
Scudder Tax Free Money Market Series
Scudder Tax Managed Growth Fund
Scudder Tax Managed Small Company Fund
Scudder Technology Fund
Scudder U.S. Treasury Money Fund
</TABLE>
2
<PAGE> 64
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, 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, 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, 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, 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.
<PAGE> 65
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 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, 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, 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, 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, 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, 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.
2
<PAGE> 66
As of June 30, 1998, 3,546,186 shares in the aggregate, 19.47% of the
outstanding shares of SCUDDER GOLD 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 13,981,603 shares in the aggregate, or 22.45% of the outstanding
shares of SCUDDER GOVERNMENT MONEY MARKET SERIES: SCUDDER INSTITUTIONAL SHARES
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 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 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 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, 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, 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, 8.64% of the
outstanding shares of SCUDDER GREATER EUROPE GROWTH FUND were held in the
3
<PAGE> 67
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 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, 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, 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, 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, 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, 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> 68
As of June 30, 1998, 5,328,031 shares in the aggregate, 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, 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, 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, 10.89% of the
outstanding shares of SCUDDER INTERNATIONAL 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, 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, 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
Manager may be deemed to be a beneficial owner of such shares but disclaims any
beneficial ownership in such shares.
5
<PAGE> 69
As of June 30, 1998, 5,223,102 shares in the aggregate, 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, 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, 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, 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 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, 12.77% of the
outstanding shares of SCUDDER MICRO CAP FUND were held in the name of Charles
6
<PAGE> 70
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, 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 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, 5.28% of the
outstanding shares of SCUDDER MONEY MARKET SERIES: SCUDDER INSTITUTIONAL SHARES
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, 74.54% of the
outstanding shares of SCUDDER MONEY MARKET SERIES: SCUDDER INSTITUTIONAL SHARES
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, 8.78% of the
outstanding shares of SCUDDER MONEY MARKET SERIES: SCUDDER INSTITUTIONAL SHARES
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 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, 9.52% of the
outstanding shares of SCUDDER MONEY MARKET SERIES: SCUDDER MANAGED SHARES 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,10.23% of the
outstanding shares of SCUDDER MONEY MARKET SERIES: SCUDDER MANAGED SHARES were
held in the name of Hare & Co., Special Processing Dept., One Wall Street,
7
<PAGE> 71
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, 19.46% of the
outstanding shares of SCUDDER MONEY MARKET SERIES: SCUDDER MANAGED SHARES 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, 9.69% of the
outstanding shares of SCUDDER MONEY MARKET SERIES: SCUDDER MANAGED SHARES 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, 8.23% of the
outstanding shares of SCUDDER MONEY MARKET SERIES: SCUDDER MANAGED SHARES 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, 11.70% of the
outstanding shares of SCUDDER MONEY MARKET SERIES: SCUDDER MANAGED SHARES 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, 12.63% of the
outstanding shares of SCUDDER MONEY MARKET SERIES: SCUDDER MANAGED SHARES 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 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 1,186,513 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.
8
<PAGE> 72
As of June 30, 1998 11,203,011 shares in aggregate, 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, 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, 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, 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, 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, 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 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, 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.
9
<PAGE> 73
As of June 30, 1998 319,340 shares in aggregate, 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, 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, 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 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 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 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
10
<PAGE> 74
shares of SCUDDER TAX FREE MONEY MARKET SERIES: SCUDDER MANAGED SHARES 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, 8,15,153,967 shares in the aggregate, or 12.49% of the
outstanding shares of SCUDDER TAX FREE MONEY MARKET SERIES: SCUDDER MANAGED
SHARES were held in the name of Daniel Pierce, 354 Westfield Street, Dedham, MA
02026.
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 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 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 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, 16,477,444 shares in the aggregate, or 13.56% of the
outstanding shares of SCUDDER TAX FREE MONEY MARKET SERIES: SCUDDER MANAGED
SHARES 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.
To the best of the Trust's knowledge, as of June 30, 1998, no person owned
beneficially more than 5% of any Fund's outstanding shares, except as stated
above.
11
<PAGE> 75
APPENDIX 4
FUND SHARES OWNED BY TRUSTEES/DIRECTORS
[TO BE PROVIDED]
<PAGE> 76
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 1.10% 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 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; 0.388% on next $4
billion; **0.370% on assets over
$10 billion
Scudder Health Care Fund* N/A N/A 0.85% of avg. daily net assets N/A
</TABLE>
<PAGE> 77
<TABLE>
<CAPTION>
AGGREGATE
MANAGEMENT MANAGEMENT
FUND FISCAL YEAR NET ASSETS FEE RATE+ FEE
---- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
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
$ billion; ** on assets
over 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
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++
</TABLE>
2
<PAGE> 78
<TABLE>
<CAPTION>
AGGREGATE
MANAGEMENT MANAGEMENT
FUND FISCAL YEAR NET ASSETS FEE RATE+ FEE
---- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
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 Fund 12/31/97 $ 16,912,276 0.15% of avg. daily net $ 0***
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>
- ---------------
+ The management fee rates shown are for each Fund's most recently completed
fiscal year, unless otherwise noted.
++ After waivers and/or expense limitations.
* 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 June 1, 1998; Scudder Tax Managed Growth Fund and Scudder Tax
Managed Small Company Fund, each of which commenced operations on July 31,
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 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.
3
<PAGE> 79
APPENDIX 6
DATES RELATING TO
FORMER INVESTMENT MANAGEMENT AGREEMENTS
<TABLE>
<CAPTION>
FORMER TERMINATION
INVESTMENT NEW DATE
MANAGEMENT INVESTMENT (UNLESS
DATE OF AGREEMENT MANAGEMENT CONTINUED)
FORMER LAST AGREEMENT FOR NEW
COMMENCEMENT INVESTMENT APPROVED BY LAST APPROVED INVESTMENT
OF MANAGEMENT SHAREHOLDERS/ BY TRUSTEES/ MANAGEMENT
FUND OPERATIONS AGREEMENT STOCKHOLDERS 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
Scudder Health Care 1/5/98 1/5/98 12/4/97(@) 8/6/98 9/30/99
Fund
</TABLE>
<PAGE> 80
<TABLE>
<CAPTION>
FORMER TERMINATION
INVESTMENT NEW DATE
MANAGEMENT INVESTMENT (UNLESS
DATE OF AGREEMENT MANAGEMENT CONTINUED)
FORMER LAST AGREEMENT FOR NEW
COMMENCEMENT INVESTMENT APPROVED BY LAST APPROVED INVESTMENT
OF MANAGEMENT SHAREHOLDERS/ BY TRUSTEES/ MANAGEMENT
FUND OPERATIONS AGREEMENT STOCKHOLDERS DIRECTORS AGREEMENT
- ---- -------------- ---------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
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
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
</TABLE>
2
<PAGE> 81
<TABLE>
<CAPTION>
FORMER TERMINATION
INVESTMENT NEW DATE
MANAGEMENT INVESTMENT (UNLESS
DATE OF AGREEMENT MANAGEMENT CONTINUED)
FORMER LAST AGREEMENT FOR NEW
COMMENCEMENT INVESTMENT APPROVED BY LAST APPROVED INVESTMENT
OF MANAGEMENT SHAREHOLDERS/ BY TRUSTEES/ MANAGEMENT
FUND OPERATIONS AGREEMENT STOCKHOLDERS DIRECTORS AGREEMENT
- ---- -------------- ---------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
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> 82
<TABLE>
<CAPTION>
FORMER TERMINATION
INVESTMENT NEW DATE
MANAGEMENT INVESTMENT (UNLESS
DATE OF AGREEMENT MANAGEMENT CONTINUED)
FORMER LAST AGREEMENT FOR NEW
COMMENCEMENT INVESTMENT APPROVED BY LAST APPROVED INVESTMENT
OF MANAGEMENT SHAREHOLDERS/ BY TRUSTEES/ MANAGEMENT
FUND OPERATIONS AGREEMENT STOCKHOLDERS 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> 83
APPENDIX 7
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>
Pathway Balanced Portfolio 9/30/97 $ 37,420 $ 40,014 $ 690,836
Pathway Conservative Portfolio 9/30/97 $ 32,656 $ 19,885 $ 88,993
Pathway Growth Portfolio 9/30/97 $ 32,656 $ 69,356 $ 145,718
Pathway International
Portfolio 9/30/97 $ 32,656 $ 34,821 $ 4,131
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 $121,857 $2,402,311 $1,221,754
Scudder Emerging Market Growth
Fund 10/31/97 $178,487 $ 480,002 $ 41,624
Scudder Emerging Market Income 10/31/97 $258,022 $ 606,320 $ 33,703
Scudder Financial Services
Fund 5/31/98 $ 13,996@ $ 79,691@ $ 0@
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 $ 487,205 $ 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*
</TABLE>
<PAGE> 84
<TABLE>
<CAPTION>
AGGREGATE FEE AGGREGATE FEE AGGREGATE FEE
FUND FISCAL YEAR TO SFAC TO SSC TO STC
---- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Scudder Massachusetts Limited
Term Tax Free Fund 10/31/97 $ 36,000 $ 41,127 N/A*
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 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
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 June 1, 1998; Scudder Tax Managed Growth Fund and
Scudder Tax Managed Small Company Fund, each of which did not commence
operations until July 31, 1998; or Scudder International Growth Fund or
Scudder International Value Fund, each of which did not commence operations
until September 1, 1998.
@ 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 Corporation, an unaffiliated
entity, for the provision of fund accounting services.
2
<PAGE> 85
LOGO
For more information, please call Shareholder Communications Corporation, your
Fund's information agent, at 1-800-733-8481, ext. 429.
<PAGE> 86
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.
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> 87
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 of Shareholder)
---------------------------------------------------
(Signature of joint owner, if any)
Dated , 1998
------------------------------
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED.
