<PAGE>
As filed with the Securities and Exchange Commission
on December 15, 2000
Securities Act File No.
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / x /
-----
Pre-Effective Amendment No. /____/ Post-Effective Amendment No. /____/
INVESTMENT TRUST
(Exact Name of Registrant as Specified in Charter)
Two International Place, Boston, Massachusetts 02110-4103
(Address of Principal Executive Offices) (Zip Code)
John Millette
Scudder Kemper Investments, Inc.
Two International Place
Boston, MA 02110-4103
(Name and Address of Agent for Service)
(617) 295-1000
(Registrant's Area Code and Telephone Number)
with copies to:
Caroline Pearson, Esq. Joseph R. Fleming, Esq.
Scudder Kemper Investments, Inc. Dechert
Two International Place Ten Post Office Square - South
Boston, MA 02110-4103 Boston, MA 02109-4603
Approximate Date of Proposed Public Offering:
As soon as practicable after this Registration Statement is declared
effective.
Title of Securities Being Registered:
Shares of Beneficial Interest ($.01 par value)
of Scudder Capital Growth Fund, a series of the Registrant
________________________________________________________________________________
It is proposed that this filing will become effective on January 14, 2001
pursuant to Rule 488 under the Securities Act of 1933.
________________________________________________________________________________
No filing fee is required because the Registrant has previously registered an
indefinite number of its shares under the Securities Act of 1933, as amended,
pursuant to Rule 24f-2 under the Investment Company Act of 1940, as amended.
<PAGE>
PART A
INFORMATION REQUIRED IN THE PROXY STATEMENT/PROSPECTUS
<PAGE>
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS OF
CLASSIC GROWTH FUND
Please take notice that a Special Meeting of Shareholders (the "Meeting")
of Classic Growth Fund (the "Fund"), a series of Investment Trust, will be held
at the offices of Scudder Kemper Investments, Inc., 13th Floor, Two
International Place, Boston, MA 02110-4103, on May 24, 2001, at 3:00 p.m.,
Eastern time, for the following purpose:
Proposal: To approve an Agreement and Plan of Reorganization for the Fund
(the "Plan"). Under the Plan, (i) all or substantially all of
the assets and all of the liabilities of the Fund would be
transferred to Scudder Capital Growth Fund, (ii) each shareholder
of the Fund would receive shares of Scudder Capital Growth Fund
of a corresponding class to those held by the shareholder in the
Fund in an amount equal to the value of their holdings in the
Fund, and (iii) the Fund would then be terminated.
The persons named as proxies will vote in their discretion on any other
business that may properly come before the Meeting or any adjournments or
postponements thereof.
Holders of record of shares of the Fund at the close of business on March
5, 2001 are entitled to vote at the Meeting and at any adjournments or
postponements thereof.
In the event that the necessary quorum to transact business or the vote
required to approve the Proposal is not obtained at the Meeting, the persons
named as proxies may propose one or more adjournments of the Meeting in
accordance with applicable law to permit further solicitation of proxies. Any
such adjournment as to a matter will require the affirmative vote of the holders
of a majority of the Fund's shares present in person or by proxy at the Meeting.
The persons named as proxies will vote FOR any such adjournment those proxies
which they are entitled to vote in favor of the Proposal and will vote AGAINST
any such adjournment those proxies to be voted against the Proposal.
By Order of the Board,
/s/ John Millette
John Millette
Secretary
March 6, 2001
IMPORTANT -- WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY CARD(S) AND RETURN
IT IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE (OR TO TAKE ADVANTAGE OF
THE ELECTRONIC OR TELEPHONIC VOTING PROCEDURES DESCRIBED ON THE PROXY CARD(S)).
YOUR PROMPT RETURN OF THE ENCLOSED PROXY CARD(S) (OR YOUR VOTING BY OTHER
AVAILABLE MEANS) MAY SAVE THE NECESSITY AND EXPENSE OF FURTHER SOLICITATIONS.
IF YOU WISH TO ATTEND THE MEETING AND VOTE YOUR SHARES IN PERSON AT THAT TIME,
YOU WILL STILL BE ABLE TO DO SO.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
INTRODUCTION................................................................. __
PROPOSAL: APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION................... __
SYNOPSIS........................................................... __
PRINCIPAL RISK FACTORS............................................. __
THE PROPOSED TRANSACTION........................................... __
ADDITIONAL INFORMATION....................................................... __
</TABLE>
<PAGE>
PROXY STATEMENT/PROSPECTUS
March [ ], 2001
Relating to the acquisition of the assets of
CLASSIC GROWTH FUND,
a separate series of
INVESTMENT TRUST (the "Trust")
Two International Place
Boston, Massachusetts 02110-4103
(800) [ ]
___________________________
by and in exchange for shares of beneficial interest of
SCUDDER CAPITAL GROWTH FUND,
a separate series of the Trust
Two International Place
Boston, Massachusetts 02110-4103
(800) [ ]
___________________________
INTRODUCTION
This Proxy Statement/Prospectus is being furnished in connection with
the solicitation of proxies by the Board of Trustees of the Trust in connection
with the Special Meeting of Shareholders of Classic Growth Fund (the "Fund") to
be held on May 24, 2001, at the offices of Scudder Kemper Investments, Inc.
("Scudder Kemper" or the "Investment Manager"), 13th Floor, Two International
Place, Boston, MA 02110-4103 at 3:00 p.m. (Eastern time), or at such later time
made necessary by all adjournments or postponements thereof (the "Meeting").
This Proxy Statement/Prospectus, the Notice of Special Meeting and the proxy
card(s) are first being mailed to shareholders on or about March 6, 2001 or as
soon as practicable thereafter.
At the meeting, shareholders of the Fund will be asked to approve an
Agreement and Plan of Reorganization (the "Plan") pursuant to which all or
substantially all of the assets of the Fund would be acquired by Scudder Capital
Growth Fund, a fund with similar investment characteristics and managed by the
same investment manager as the Fund, in exchange for shares of beneficial
interest of Scudder Capital Growth Fund and the assumption by Scudder Capital
Growth Fund of all of the liabilities of the Fund, as described more fully below
(the "Reorganization"). Shares of Scudder Capital Growth Fund received would
then be distributed to the shareholders of the Fund in complete liquidation of
the Fund. As a result of the Reorganization, shareholders of the Fund will
become shareholders of Scudder Capital Growth Fund and will receive shares of
Scudder Capital Growth Fund in an amount equal to the value of their holdings in
the Fund as of the close of business on the business day preceding the closing
of the Reorganization (the "Valuation Date"). The closing of the Reorganization
(the "Closing") is contingent upon shareholder approval of the Plan. A copy of
the Plan is attached as Exhibit A. The Reorganization is expected to occur on
or about June 25, 2001.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES NOR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
In the descriptions of the Proposal below, the word "fund" is
sometimes used to mean an investment company or series thereof in general, and
not the Fund whose proxy statement this
-1-
<PAGE>
is. In addition, for simplicity, actions are described in this Proxy
Statement/Prospectus as being taken by either the Fund or Scudder Capital Growth
Fund (which are collectively referred to as the "Funds" and each referred to as
a "Fund"), although all actions are actually taken by the Trust, on behalf of
the applicable Fund.
This Proxy Statement/Prospectus sets forth concisely the information
about Scudder Capital Growth Fund that a prospective investor should know before
investing and should be retained for future reference. For a more detailed
discussion of the investment objective, policies, restrictions and risks of
Scudder Capital Growth Fund, see Scudder Capital Growth Fund's prospectus
relating to the class of shares that you will receive in the Reorganization,
as each is supplemented from time to time, which is included in the materials
you received with this document and incorporated herein by reference (meaning
that it is legally part of this document). For a more detailed discussion of the
investment objective, policies, restrictions and risks of the Fund, see the
Fund's prospectus dated February 1, 2001, as supplemented from time to time,
which is also incorporated herein by reference and a copy of which may be
obtained upon request and without charge by calling or writing the Fund at the
telephone number or address listed above.
Also incorporated herein by reference is Scudder Capital Growth Fund's
statement of additional information relating to the class of shares that you
will receive in the Reorganization, as supplemented from time to time, which may
be obtained upon request and without charge by calling or writing Scudder
Capital Growth Fund at the telephone number or address listed above. A Statement
of Additional Information, dated March [ ], 2001, containing additional
information about the Reorganization has been filed with the Securities and
Exchange Commission (the "SEC" or the "Commission") and is incorporated by
reference into this Proxy Statement/Prospectus. A copy of this Statement of
Additional Information is available upon request and without charge by calling
or writing Scudder Capital Growth Fund at the telephone number or address listed
above. Shareholder inquiries regarding Scudder Capital Growth Fund may be made
by calling (800) [ ] and shareholder inquiries regarding the Fund may be made
by calling (800) [ ]. The information contained in this document concerning
each Fund has been provided by, and is included herein in reliance upon, that
Fund.
Scudder Capital Growth Fund and the Fund are diversified series of
shares of beneficial interest of the Trust, an open-end management investment
company organized as a Massachusetts business trust.
The Board of Trustees of the Trust unanimously recommends that shareholders
vote FOR the Proposal.
PROPOSAL: APPROVAL OF AGREEMENT
AND PLAN OF REORGANIZATION
I. SYNOPSIS
Introduction
The Board of Trustees of the Trust, including all of the Independent
Trustees, approved the Plan at a meeting held on November 13, 2000. Subject to
its approval by the shareholders of the Fund, the Plan provides for (a) the
transfer of all or substantially all of the assets and all of the liabilities of
the Fund to Scudder Capital Growth Fund in exchange for Class S, Class A, Class
B and Class C shares of Scudder Capital Growth Fund; (b) the distribution of
such shares to the shareholders of the Fund in complete liquidation of the Fund;
and (c) the termination of the Fund. As a result of the Reorganization, each
shareholder of the Fund will become a shareholder of Scudder Capital Growth Fund
and will hold, immediately after the Reorganization, shares of the class of
shares of Scudder Capital Growth Fund that corresponds to the class of shares of
the Fund held by that shareholder on the Valuation Date, having an
-2-
<PAGE>
aggregate net asset value equal to the aggregate net asset value of such
shareholder's shares of the Fund on the Valuation Date.
Scudder Kemper is the investment manager of both Funds. If the
Reorganization is completed, the Fund's shareholders will continue to enjoy all
of the same shareholder privileges as they currently enjoy, such as access to
professional service representatives, exchange privileges and automatic dividend
reinvestment. Services provided to the Class S, Class A, Class B and Class C
shareholders of Scudder Capital Growth Fund following the Reorganization will be
identical to those currently provided to shareholders of the corresponding class
of the Fund. See "Purchases, Exchanges and Redemptions" below.
Background of the Reorganization
The Reorganization is part of a broader Scudder Kemper restructuring
program to respond to changing industry conditions and investor needs. The
mutual fund industry has grown dramatically over the last ten years. During this
period of rapid growth, investment managers expanded the range of fund offerings
that are available to investors in an effort to meet the growing and changing
needs and desires of an increasingly large and dynamic group of investors. With
this expansion has come increased complexity and competition among mutual funds,
as well as the potential for increased confusion among investors. The group of
funds advised by Scudder Kemper has followed this pattern.
As a result, Scudder Kemper has sought ways to restructure and streamline
the management and operations of the funds it advises by consolidating all of
the retail mutual funds that it currently sponsors into a single product line
offered under the "Scudder" name. Scudder Kemper believes, and has advised the
boards, that reducing the number of funds it advises and adding the classes of
shares currently offered on all Kemper Funds to the Scudder Funds will benefit
fund shareholders. In addition, Scudder Kemper anticipates changing its name to
"Zurich Scudder Investments, Inc." Scudder Kemper believes that the combination
of its open-end, directly-distributed funds and classes (the "Scudder Funds")
with the funds in the Kemper Family of Funds (the "Kemper Funds") will permit it
to streamline its administrative infrastructure and focus its distribution
efforts. Scudder Kemper has, therefore, proposed the combination of many Scudder
Funds and Kemper Funds that have similar or compatible investment objectives and
policies. Scudder Kemper believes that the larger funds, along with the fewer
number of funds, that result from these combinations may help to enhance
investment performance and increase efficiency of operations. The restructuring
program will not result in any changes in the shareholder services currently
offered to shareholders of the Scudder Funds.
The fund consolidations are expected to have a positive impact on Scudder
Kemper, as well. These consolidations are likely to result in reduced costs (and
the potential for increased profitability) for Scudder Kemper in advising or
servicing funds.
Reasons for the Proposed Reorganization; Board Approval
Since receiving Scudder Kemper's proposal on June 5, 2000, the Trustees
have conducted a thorough review of all aspects of the proposed Reorganization.
See "The Proposed Transaction - Board Approval of the Proposed Transaction"
below.
The Trustees believe that the Reorganization will provide shareholders of
the Fund with the following benefits:
-3-
<PAGE>
. LOWER FUND EXPENSES. If the Reorganization is approved, the Fund's
shareholders are expected to benefit from lower total fund operating
expenses. Please refer to "Comparison of Expenses" below.
. GREATER PREDICTABILITY OF EXPENSES. Scudder Capital Growth Fund and
Scudder Kemper have entered into an administrative services agreement
pursuant to which Scudder Kemper provides or pays others to provide
substantially all of the administrative services required by Scudder
Capital Growth Fund in return for payment by each class of shares of
Scudder Capital Growth Fund of an annual administrative services fee.
This agreement, which has an initial three year term, protects Scudder
Capital Growth Fund's shareholders from increases in Scudder Capital
Growth Fund's expense ratio attributed to any increases in the costs
of providing these services.
. SIMILAR INVESTMENT OBJECTIVES AND POLICIES. Although some differences
do exist, Scudder Kemper has advised the Trustees that the Funds have
compatible investment objectives and policies. Scudder Kemper has also
advised the Trustees that both Funds have the same portfolio
management team and follow a substantially similar investment process.
Please refer to "Investment Objectives, Policies and Restrictions of
the Funds" below.
. TAX-FREE REORGANIZATION. It is a condition of the Reorganization that
the Fund receives an opinion of tax counsel that the transaction would
be a TAX-FREE transaction.
For these reasons, as more fully described below under "The Proposed
Transaction -- Board Approval of the Proposed Transaction," the Board of
Trustees, including the Independent Trustees, has concluded that:
. the Reorganization is in the best interests of the Fund and its
shareholders; and
. the interests of the existing shareholders of the Fund will not be
diluted as a result of the Reorganization.
Accordingly, the Trustees unanimously recommend approval of the Plan
effecting the Reorganization. If the Plan is not approved, the Fund will
continue in existence unless other action is taken by the Trustees.
Investment Objectives, Policies and Restrictions of the Funds
This section will help you compare the investment objectives and policies
of the Fund and Scudder Capital Growth Fund. Please be aware that this is only
a summary. More complete information may be found in the Funds' prospectuses.
-4-
<PAGE>
The investment objectives, policies and restrictions of the Fund and
Scudder Capital Growth Fund are similar. Some differences do exist. The
investment objective of Scudder Capital Growth Fund is to seek long-term capital
growth while actively seeking to reduce downside risk compared with other growth
mutual funds. The investment objective of the Fund is to seek long-term growth
of capital with reduced share price volatility compared with other growth mutual
funds. There can be no assurance that either Fund will achieve its investment
objective.
Both Funds have the same lead portfolio manager and are managed in a
substantially similar manner. Scudder Capital Growth Fund invests at least 65%
of its total assets in equities, mainly common stocks of U.S. companies. The
Fund also invests primarily in common stocks of U.S. companies. Although both
Funds can invest in companies of any size, Scudder Capital Growth Fund generally
focuses on established companies with market values of $3 billion or more, while
the Fund generally focuses on established companies with market values of $2
billion or more. In addition, the Fund may invest up to 25% of its total assets
in foreign securities, while Scudder Capital Growth Fund may invest in such
securities without limit. Scudder Capital Growth Fund does not invest in
securities issued by tobacco-producing companies. Each Fund also is permitted to
use various types of derivatives (contracts whose value is based on, for
example, indices, commodities or securities ), but the Investment Manager does
not expect to use them as principal investments, and might not use them at all,
for either Fund.
In choosing stocks for Scudder Capital Growth Fund, the Investment Manager
looks for individual companies that have displayed above-average earnings growth
compared to other growth companies and that have strong product lines, effective
management and leadership positions within core markets. The Investment Manager
also analyzes each company's valuation, stock price movements and other factors.
In choosing stocks for the Fund, the Investment Manager looks for individual
companies that have strong competitive positions, prospects for consistent
growth, effective management and strong balance sheets. In actively monitoring
the risk profile of Scudder Capital Growth Fund, the Investment Manager focuses
on high quality companies with reasonable valuations, diversifies broadly among
companies, industries and sectors, and limits the majority of its portfolio to
no more than 3.5% of [total/net] assets in any one issuer. In seeking to reduce
share price volatility for the Fund, the Investment Manager diversifies the
Fund's investments by company, industry and sector and prefers to invest in
companies whose stock appears reasonably valued in light of potential growth
based on various factors. In addition, with respect to the Fund, the Investment
Manager also prefers to avoid companies whose business fundamentals are
deteriorating. Both Funds will normally sell a stock when the Investment Manager
believes it is too highly valued, its fundamental qualities have deteriorated or
its potential risks have increased.
The Funds' investment restrictions are identical, as such restrictions are
set forth under "Investment Restrictions" in each Fund's statement of additional
information. Investment restrictions of each Fund that are fundamental policies
may not be changed without the approval of Fund shareholders, while non-
fundamental policies may be changed by the particular Fund's Board without
shareholder approval. Investors should refer to the respective statements of
additional information of the Funds for a fuller description of each Fund's
investment policies and restrictions.
Portfolio Turnover
The portfolio turnover rate for Scudder Capital Growth Fund, i.e., the
ratio of the lesser of annual sales or purchases to the monthly average value of
the portfolio (excluding from both the numerator and the denominator securities
with maturities at the time of acquisition of one year or less), for the fiscal
year ended September 30, 2000 was 66%. The portfolio turnover rate for the Fund
for the fiscal year ended October 31, 2000 was 58%.
-5-
<PAGE>
Performance
The following table shows how the returns of the Fund and Scudder Capital
Growth Fund over different periods average out. For context, the table also
includes a broad-based market index (which, unlike the Funds, does not have any
fees or expenses). The performances of both Funds and the index vary over time,
and past performance is not necessarily indicative of future results. All
figures assume reinvestment of dividends and distributions.
Average Annual Total Return
for the Periods Ended December 31, 2000
[Insert Table]
For management's discussion of Scudder Capital Growth Fund's performance
for the fiscal year ended September 30, 2000, please refer to Exhibit B.
Investment Manager; Fees and Expenses
Each Fund retains the investment management firm of Scudder Kemper,
pursuant to separate contracts, to manage its daily investment and business
affairs, subject to the policies established by each Fund's Trustees. The same
individual serves as the lead portfolio manager for each Fund. Scudder Kemper is
a Delaware corporation located at Two International Place, Boston, Massachusetts
02110-4103.
Scudder Capital Growth Fund pays the Investment Manager a graduated
investment management fee for its services. The fee is graduated so that
increases in Scudder Capital Growth Fund's net assets may result in a lower
annual fee rate and decreases in its net assets may result in a higher annual
fee rate. As of September 30, 2000, Scudder Capital Growth Fund had total net
assets of $2,457,327,409. For the fiscal year ended September 30, 2000, Scudder
Capital Growth Fund paid the Investment Manager a fee of 0.60% of its average
daily net assets.
The Fund pays the Investment Manager a fee at an annual rate of 0.70% of
the Fund's average daily net assets, payable monthly. As of October 31, 2000,
the Fund had total net assets of $250,374,000. For the fiscal year ended October
31, 2000, the Fund paid the Investment Manager a fee of 0.45% (after waiver) of
its average daily net assets.
The investment management fee schedule for the combined Fund after the
Reorganization will be identical to the current fee schedule for Scudder Capital
Growth Fund. Currently the fee schedules for the Fund and Scudder Capital Growth
Fund are as follows:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
Fund Scudder Capital Growth Fund
----------------------------------------------------------------------------------------------------------
Average Daily Net Assets Fee Rate Average Daily Net Assets Fee Rate
------------------------ -------- ------------------------ --------
<S> <C> <C> <C>
Annual rate for all asset levels 0.70% First $3 billion 0.580%
Next $1 billion 0.555%
Over $4 billion 0.530%
----------------------------------------------------------------------------------------------------------
</TABLE>
Based upon the Fund's average net assets for the twelve-month period ended
September 30, 2000, the effective advisory fee rate for the Fund was 0.70%.
Based upon each Fund's average net assets for
-6-
<PAGE>
the twelve-month period ended September 30, 2000, the effective advisory fee
rate for Scudder Capital Growth Fund after the Reorganization would be 0.58% of
average daily net assets.
Administrative Fee
Scudder Capital Growth Fund has entered into an administration agreement
with Scudder Kemper (the "Administration Agreement"), pursuant to which Scudder
Kemper provides or pays others to provide substantially all of the
administrative services required by Scudder Capital Growth Fund (other than
those provided by Scudder Kemper under its investment management agreement with
that Fund) in exchange for the payment by Scudder Capital Growth Fund of an
annual administrative services fee (the "Administrative Fee") equal to 0.300%,
0.325%, 0.375% and 0.350% of average daily net assets attributable to the Class
S, Class A, Class B and Class C shares, respectively. The fees for the services
provided by Kemper Distributors, Inc. ("KDI") under its services agreement and
underwriting and distribution agreement with Scudder Capital Growth Fund
applicable to the Class A, Class B and Class C shares are not covered by, and
are in addition to, the Administrative Fee. One effect of this arrangement is to
make Scudder Capital Growth Fund's future expense ratio more predictable. On the
other hand, the administrative fee rate does not decrease with economies of
scale from increases in asset size or decreased operating expenses. The details
of this arrangement (including expenses that are not covered) are set out below.
Various service providers (the "Service Providers"), some of which are
affiliated with Scudder Kemper, provide certain services to Scudder Capital
Growth Fund pursuant to separate agreements. Some of these Service Providers may
differ from current Service Providers of the Fund. Scudder Fund Accounting
Corporation, a subsidiary of Scudder Kemper, computes net asset value for
Scudder Capital Growth Fund and maintains its accounting records. Scudder
Service Corporation, also a subsidiary of Scudder Kemper, is the transfer,
shareholder servicing and dividend-paying agent for the shares of Scudder
Capital Growth Fund. By contract with Scudder Service Corporation, Kemper
Service Company, also a subsidiary of Scudder Kemper, serves as shareholder
servicing agent for the Class A, Class B and Class C shares following the
Reorganization. Scudder Trust Company, an affiliate of Scudder Kemper, provides
subaccounting and recordkeeping services for shareholder accounts in certain
retirement and employee benefit plans. Scudder Investor Services, Inc. ("SIS"),
also a wholly-owned subsidiary of Scudder Kemper, acts as the principal
underwriter and distributor for the Class S shares of Scudder Capital Growth
Fund and acts as agent of such Fund in the continuous offering of its Class S
shares. KDI, an affiliate of Scudder Kemper, acts as the principal underwriter
and distributor for the Class A, Class B and Class C shares of Scudder Capital
Growth Fund and acts as agent of such Fund in the continuous offering its Class
A, Class B and Class C shares. As custodian, State Street Bank and Trust Company
holds the portfolio securities of Scudder Capital Growth Fund, pursuant to a
custodian agreement. Other Service Providers include the independent public
accountants and legal counsel for Scudder Capital Growth Fund.
Under the Administration Agreement, each Service Provider provides the
services to Scudder Capital Growth Fund described above, except that Scudder
Kemper pays these entities for the provision of their services to Scudder
Capital Growth Fund pays most other fund expenses, including insurance,
registration, printing and postage fees. In return, Scudder Capital Growth Fund
pays Scudder Kemper the Administrative Fee.
The Administration Agreement will remain in effect for an initial term
ending September 30, 2003, subject to earlier termination by the trustees that
oversee Scudder Capital Growth Fund. The fee payable by Scudder Capital Growth
Fund to Scudder Kemper pursuant to the Administration Agreement is reduced by
the amount of any credit received from Scudder Capital Growth Fund's custodian
for cash balances.
-7-
<PAGE>
Certain expenses of Scudder Capital Growth Fund are not borne by Scudder
Kemper under the Administration Agreement, such as taxes, brokerage, interest
and extraordinary expenses, and the fees and expenses of the Independent
Trustees (including the fees and expenses of their independent counsel). Scudder
Capital Growth Fund continues to pay the fees required by its investment
management agreement with Scudder Kemper. In addition, Class A, Class B and
Class C shares of Scudder Capital Growth Fund pay the fees under the services
agreement and underwriting and distribution services agreement with KDI, as
described in "Distribution and Service Fees - Class A, Class B and Class C
Shares" below.
Comparison of Expenses
The tables and examples below are designed to assist you in understanding the
various costs and expenses that you will bear directly or indirectly as an
investor in the Class S, Class A, Class B and Class C shares of Scudder Capital
Growth Fund, and compares these with the expenses of the Fund. As indicated
below, it is expected that the total expense ratio of each class of Scudder
Capital Growth Fund following the Reorganization will be substantially lower
than the current expense ratio of the corresponding classes of the Fund. Unless
otherwise noted, the information is based on each Fund's expenses and average
daily net assets during the twelve months ended September 30, 2000 (prior to the
creation of Class A, Class B and Class C shares of Scudder Capital Growth Fund)
and on a pro forma basis as of that date and for the twelve month period then
ended, assuming the Reorganization had been in effect for the period.
Expense Comparison Table
Class S Shares
Scudder
Capital Pro Forma
Fund Growth Fund (Combined) (1)
---- ----------- ----------
Shareholder Fees
----------------
Maximum Sales Charge (Load) Imposed on None None None
Purchases (as % of offering price)
Maximum Contingent Deferred Sales Charge None None None
(Load) (as % of redemption proceeds)
Maximum Deferred Sales Charge (Load) None None None
imposed on reinvested dividends
Redemption Fee (as a percentage of amount None None* None*
redeemed, if applicable)
Annual Fund Operating Expenses
------------------------------
(Unaudited) (as a % of average net assets)
------------------------------------------
Management Fees .70% .58%(2) .58%
-8-
<PAGE>
Distribution and/or Service (12b-1) Fees None None None
Other Expenses .70% .30%(3) .30%
Total Annual Fund Operating Expenses 1.40% .88% .88%
Expense Waiver 0.25% -- --
Net Annual Fund Operating Expenses 1.15%(4) .88% .88%
Expense Example of Total Operating Expenses
-------------------------------------------
at the End of the Period(5)
------------------------
One Year $ 117 $ 90 $ 90
Three Years $ 419 $ 281 $ 281
Five Years $ 742 $ 488 $ 488
Ten Years $1,658 $1,084 $1,084
________________
* There is a $5 wire service fee for receiving redemption proceeds via wire.
Notes to Expense Comparison Table:
----------------------------------
(1) The Pro Forma column reflects expenses estimated for the Reorganized Fund
subsequent to the Reorganization and reflects the effect of the
Reorganization.
(2) Restated to reflect the implementation of Scudder Capital Growth Fund's new
investment management agreement.
(3) Restated to reflect the implementation of Scudder Capital Growth Fund's
Administration Agreement.
(4) By contract, Scudder Kemper has agreed to waive 0.25% of its management fee
until January 31, 2002. There is no guarantee that this expense waiver
will continue beyond January 31, 2002.
(5) Expense examples reflect what an investor would pay on a $10,000
investment, assuming a 5% annual return, the reinvestment of all dividends
and total operating expenses remain the same.
Expense Comparison Table
Class A Shares
Scudder
Capital Pro Forma
Shareholder Fees Fund Growth Fund (Combined)(1)
---------------- ---- ----------- ----------
Maximum Sales Charge (Load) Imposed on 5.75% 5.75% 5.75%
Purchases (as % of offering price)
Maximum Contingent Deferred Sales Charge None None None
(Load) (as % of redemption proceeds)(2)
-9-
<PAGE>
Maximum Deferred Sales Charge (Load) None None None
imposed on reinvested dividends
Redemption Fee (as a percentage of amount None None None
redeemed, if applicable)
Annual Fund Operating Expenses
------------------------------
(Unaudited) (as a % of average net assets)
------------------------------------------
Management Fees .70% .58%(3) .58%
Distribution and/or Service (12b-1) Fees None .25% .25%
Other Expenses .90% .33%(4) .33%
Total Annual Fund Operating Expenses 1.60% 1.16% 1.16%
Expense Waiver .25% -- --
Net Annual Fund Operating Expenses 1.35%(5) 1.16% 1.16%
Expense Example of Total Operating
----------------------------------
Expenses at the End of the Period(6)
------------------------------------
One Year $ 705 $ 686 $ 686
Three Years $1,028 $ 922 $ 922
Five Years $1,374 $1,177 $ 1,177
Ten Years $2,346 $1,903 $ 1,903
________________
Notes to Expense Comparison Table:
----------------------------------
(1) The Pro Forma column reflects expenses estimated for the Reorganized Fund
subsequent to the Reorganization and reflects the effect of the
Reorganization.
(2) Class A shares purchased under the Large Order NAV Purchase Privilege have
a 1% contingent deferred sales charge for shares sold during the first year
after purchase and .50% for shares sold during the second year.
(3) Restated to reflect the implementation of Scudder Capital Growth Fund's new
investment management agreement.
(4) Restated to reflect the implementation of Scudder Capital Growth Fund's
Administration Agreement.
(5) By contract, Scudder Kemper has agreed to waive 0.25% of its management fee
until January 31, 2002. There is no guarantee that this expense waiver
will continue beyond January 31, 2002.
(6) Expense examples reflect what an investor would pay on a $10,000
investment, assuming a 5% annual return, the reinvestment of all dividends
and total operating expenses remain the same.
Expense Comparison Table
Class B Shares
Scudder
Capital Pro Forma
Fund Growth Fund (Combined)(1)
---- ----------- ----------
Shareholder Fees
----------------
-10-
<PAGE>
<TABLE>
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on None None None
Purchases (as % of offering price)
Maximum Contingent Deferred Sales Charge 4.00% 4.00% 4.00%
(Load) (as % of redemption proceeds)(2)
Maximum Deferred Sales Charge (Load) imposed None None None
on reinvested dividends
Redemption Fee (as a percentage of amount None None None
redeemed, if applicable)
Annual Fund Operating Expenses (unaudited)
------------------------------------------
(as a % of average net assets)
------------------------------
Management Fees .70% .58%(3) .58%
Distribution and/or Service (12b-1) Fees .75% 1.00% 1.00%
Other Expenses 1.00% .38%(4) .38%
Total Annual Fund Operating Expenses 2.45% 1.96% 1.96%
Expense Waiver .25% -- --
Net Annual Fund Operating Expenses 2.20%(5) 1.96% 1.96%
Expense Example of Total Operating Expenses
-------------------------------------------
Assuming Redemption at the End of the
-------------------------------------
Period(6)
---------
One Year $ 623 $ 599 $ 599
Three Years $1,040 $ 915 $ 915
Five Years $1,483 $1,257 $1,257
Ten Years $2,364 $1,888 $1,888
Expense Example of Total Operating Expenses
-------------------------------------------
Assuming No Redemption at the End of the
----------------------------------------
Period(6)
---------
One Year $ 223 $ 199 $ 199
Three Years $ 740 $ 615 $ 615
Five Years $1,283 $1,057 $1,057
Ten Years $2,364 $1,888 $1,888
</TABLE>
________________
Notes to Expense Comparison Table:
----------------------------------
-11-
<PAGE>
(1) The Pro Forma column reflects expenses estimated for the Reorganized Fund
subsequent to the Reorganization and reflects the effect of the
Reorganization.
(2) Contingent deferred sales charges on Class B shares sold within the first
six years of ownership are 4% in the first year, 3% in the second and third
year, 2% in the fourth and fifth year, and 1% in the sixth year.
(3) Restated to reflect the implementation of Scudder Capital Growth Fund's new
investment management agreement.
(4) Restated to reflect the implementation of Scudder Capital Growth Fund's
Administration Agreement.
(5) By contract, Scudder Kemper has agreed to waive 0.25% of its management fee
until January 31, 2002. There is no guarantee that this expense waiver will
continue beyond January 31, 2002.
(6) Expense examples reflect what an investor would pay on a $10,000
investment, assuming a 5% annual return, the reinvestment of all dividends
and total operating expenses remain the same. Assumes conversion to Class A
shares six years after purchase.
Expense Comparison Table
Class C Shares
<TABLE>
<CAPTION>
Scudder
Capital Pro Forma
Fund Growth Fund (Combined)(1)
---- ----------- -------------
<S> <C> <C> <C>
Shareholder Fees
----------------
Maximum Sales Charge (Load) Imposed on None None None
Purchases (as % of offering price)
Maximum Contingent Deferred Sales Charge 1.00% 1.00% 1.00%
(Load) (as % of redemption proceeds)(2)
Maximum Deferred Sales Charge (Load) imposed None None None
on reinvested dividends
Redemption Fee (as a percentage of amount None None None
redeemed, if applicable)
Annual Fund Operating Expenses Unaudited) (as
---------------------------------------------
a % of average net assets)
--------------------------
Management Fees .70% .58%(3) .58%
Distribution and/or Service (12b-1) Fees .75% 1.00% 1.00%
Other Expenses 1.35% .35%(4) .35%
Total Annual Fund Operating Expenses 2.80% 1.93% 1.93%
Expense Waiver .25% -- --
Net Fund Operating Expenses 2.55%(5) 1.93% 1.93%
Expense Example of Total Operating Expenses
-------------------------------------------
Assuming Redemption at the End of the
-------------------------------------
Period(6)
---------
One Year $ 358 $ 296 $ 296
</TABLE>
-12-
<PAGE>
<TABLE>
<S> <C> <C> <C>
Three Years $ 845 $ 606 $ 606
Five Years $1,457 $1,042 $1,042
Ten Years $3,110 $2,254 $2,254
Expense Example of Total Operating
----------------------------------
Expenses Assuming No Redemption at the
--------------------------------------
End of the Period(6)
--------------------
One Year $ 258 $ 196 $ 196
Three Years $ 845 $ 606 $ 606
Five Years $1,457 $1,042 $1,042
Ten Years $3,110 $2,254 $2,254
</TABLE>
________________
Notes to Expense Comparison Table:
----------------------------------
(1) The Pro Forma column reflects expenses estimated for the Reorganized Fund
subsequent to the Reorganization and reflects the effect of the
Reorganization.
(2) Contingent deferred sales charge on Class C shares is 1% for shares sold
during the first year after purchase.
(3) Restated to reflect the implementation of Scudder Capital Growth Fund's new
investment management agreement.
(4) Restated to reflect the implementation of Scudder Capital Growth Fund's
Administration Agreement.
(5) By contract, Scudder Kemper has agreed to waive 0.25% of its management fee
until January 31, 2002. There is no guarantee that this expense waiver
will continue beyond January 31, 2002.
(6) Expense examples reflect what an investor would pay on a $10,000
investment, assuming a 5% annual return, the reinvestment of all dividends
and total operating expenses remain the same.
Financial Highlights
The financial highlights table for Scudder Capital Growth Fund prior to
the creation of Class A, Class B and Class C shares, which is intended to help
you understand Scudder Capital Growth Fund's financial performance for the past
five years, is included in Scudder Capital Growth Fund's prospectus that relates
to Class S shares, which is included in the materials provided to Class S
shareholders of the Fund with this document.
Distribution of Class S Shares
SIS, Two International Place, Boston, Massachusetts 02110, a subsidiary of
the Investment Manager, is the principal underwriter of the Class S Shares of
the Fund and will serve as the principal underwriter of the Class S shares of
Scudder Capital Growth Fund. SIS charges no direct fees in connection with the
distribution of the Class S Shares of the Fund or the Class S shares of Scudder
Capital Growth Fund. Following the Reorganization, shareholders of Class S
shares of Scudder Capital Growth Fund will continue to be able to purchase
shares of the funds in the Scudder Family of Funds on a no-load basis.
Distribution and Services Fees - Class A, Class B and Class C Shares
Pursuant to an underwriting and distribution services agreement with
Scudder Capital Growth Fund, KDI, 222 South Riverside Plaza, Chicago, Illinois
60606, an affiliate of the Investment Manager, will act as the principal
underwriter and distributor of the Class A, Class B and Class C shares of
Scudder Capital Growth Fund and will act as agent of that Fund in the continuing
offer of such shares. Prior to the
-13-
<PAGE>
Closing, Scudder Capital Growth Fund will also adopt distribution plans in
accordance with Rule 12b-1 under the 1940 Act that are substantially identical
to the existing distribution plans adopted by the Fund, with one exception. As
under the current distribution plans for the Fund, Scudder Capital Growth Fund
will pay KDI an asset-based fee at an annual rate of 0.75% of Class B and Class
C shares. The distribution plans for Scudder Capital Growth Fund, however,
unlike the distribution plans for the Fund, will also authorize the payment to
KDI of the 0.25% services fee with respect to the Class A, Class B and Class C
shares pursuant to the services agreement described below. Neither KDI nor the
Trustees of the Fund believe that the services performed by KDI under the
services agreement have been primarily intended to result in sales of fund
shares (i.e., "distribution" services) as defined in Rule 12b-1, but rather are
post-sale administrative and other services provided to existing shareholders.
Nonetheless, to avoid legal uncertainties due to the ambiguity of the language
contained in Rule 12b-1 and eliminate any doubt that may arise in the future
regarding whether the services performed by KDI under the services agreement are
"distribution" services, the distribution plans for Scudder Capital Growth Fund
will authorize the payment of the services fee. The fact that the services fee
will be authorized by Scudder Capital Growth Fund's distribution plans will not
change the fee rate nor will it affect the nature or quality of the services
provided by KDI.
Pursuant to the services agreement with Scudder Capital Growth Fund, which
is substantially identical to the current services agreement with the Fund, KDI
will receive a services fee of up to 0.25% per year with respect to the Class A,
Class B and Class C shares of Scudder Capital Growth Fund. KDI will use the
services fee to compensate financial services firms ("firms") for providing
personal services and maintenance of accounts for their customers that hold
those classes of shares of Scudder Capital Growth Fund, and may retain any
portion of the fee not paid to firms to compensate itself for administrative
functions performed for the Class A, Class B and Class C shares of the Fund. All
fee amounts are payable monthly and are based on the average daily net assets of
each Fund attributable to the relevant class of shares.
Purchases, Exchanges and Redemptions - General
Both Funds are part of the Scudder Kemper complex of mutual funds. At the
time of the Closing, the procedures for purchases, exchanges and redemptions of
Class S, Class A, Class B and Class C shares of Scudder Capital Growth Fund will
be identical to those of the Fund. Shares of Scudder Capital Growth Fund will be
exchangeable for shares of the same class of most other open-end funds advised
by Scudder Kemper offering such shares.
Services available to shareholders of Class S, Class A, Class B and Class C
shares of Scudder Capital Growth Fund will be identical to those available to
shareholders of the corresponding classes of the Fund and include the purchase
and redemption of shares through an automated telephone system and over the
Internet, telephone redemptions, exchanges by telephone to most other Scudder
Kemper funds that offer Class S, Class A, Class B and Class C shares, and
reinvestment privileges. Please see the prospectus of Scudder Capital Growth
Fund for additional information.
Purchases, Exchanges and Redemptions - Class A, Class B and Class C Shares
At the time of the Closing, corresponding classes of shares of Scudder
Capital Growth Fund will have identical sales charges to those of the Class A,
Class B and Class C shares of the Fund. Scudder Capital Growth Fund will have a
maximum initial sales charge of 5.75% on Class A shares. Shareholders who
purchase $1 million or more of Class A shares will pay no initial sales charge
but may have to pay a contingent deferred sales charge (a "CDSC") of up to 1% if
the shares are sold within 2 years of the date on which they were purchased.
Class B shares will be sold without a front-end sales charge, but may be subject
to a CDSC upon redemption, depending on the length of time the shares are held.
The CDSC will
-14-
<PAGE>
begin at 4% for shares sold in the first year, will decline to 1% in the sixth
year and is eliminated after the sixth year. After six years, Class B shares
automatically convert to Class A shares. Class C shares will be sold without a
front-end sales charge, but may be subject to a CDSC of up to 1% if the shares
are sold within one year of purchase.
Class A, Class B and Class C shares of Scudder Capital Growth Fund received
in the Reorganization will be issued at net asset value, without a sales charge,
and no CDSC will be imposed on any shares of the Fund exchanged for shares of
Scudder Capital Growth Fund as a result of the Reorganization. However,
following the Reorganization, any CDSC that applies to shares of the Fund will
continue to apply to shares of Scudder Capital Growth Fund received in the
Reorganization, using the original purchase date for such shares to calculate
the holding period, rather than the date such shares are received in the Reorg
Reorganization.
Dividends and Other Distributions
Each Fund intends to distribute dividends from its net investment income
and net realized capital gains after utilization of capital loss carryforwards,
if any, in December of each year. An additional distribution may be made if
necessary. Dividends and distributions of each Fund will be invested in
additional shares of the same class of that Fund at net asset value and credited
to the shareholder's account on the payment date or, at the shareholder's
election, paid in cash.
If the Plan is approved by the Fund's shareholders, the Fund will pay its
shareholders a distribution of all undistributed net investment income and
undistributed realized net capital gains immediately prior to the Closing.
Tax Consequences
As a condition to the Reorganization, each Fund will have received an
opinion of Willkie Farr & Gallagher in connection with the Reorganization, to
the effect that, based upon certain facts, assumptions and representations, the
Reorganization will constitute a tax-free reorganization within the meaning of
section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code").
If the Reorganization constitutes a tax-free reorganization, no gain or loss
will be recognized by the Fund or its shareholders as a direct result of the
Reorganization. See "The Proposed Transaction -- Federal Income Tax
Consequences."
* * *
The preceding is only a summary of certain information contained in this
Proxy Statement/Prospectus relating to the Reorganization. This summary is
qualified by reference to the more complete information contained elsewhere in
this Proxy Statement/Prospectus, the prospectuses and statements of additional
information of the Funds, and the Plan. Shareholders should read this entire
Proxy Statement/Prospectus carefully.
II. PRINCIPAL RISK FACTORS
Because of their similar investment objectives, policies and strategies,
the principal risks presented by the Funds are similar. The main risks
applicable to each Fund include, among others, market risk and management risk
(i.e., securities selection by the Investment Manager). In addition, Scudder
Capital Growth Fund's attempt to reduce downside risk and the Fund's attempt to
reduce share price volatility may reduce their respective performances relative
to other similar funds in a strong market. To the extent that a Fund invests in
foreign securities, it may be subject to the risks associated with such
investments and foreign currency risk. Because Scudder Capital Growth Fund may
invest a greater percentage of its assets in foreign securities than may the
Fund, Scudder Capital Growth Fund
-15-
<PAGE>
may be subject to these risks to a greater extent than the Fund. Lastly, the
Funds are not insured or guaranteed by the FDIC or any other government agency.
Share prices will go up and down, so be aware that you could lose money.
For a further discussion of the investment techniques and risk factors
applicable to the Funds, see "Investment Objectives, Policies and Restrictions
of the Funds" above, and the prospectuses and statements of additional
information for the Funds.
III. THE PROPOSED TRANSACTION
Description of the Plan
As stated above, the Plan provides for the transfer of all or substantially
all of the assets of the Fund to Scudder Capital Growth Fund in exchange for
that number of full and fractional Class S, Class A, Class B and Class C shares
having an aggregate net asset value equal to the aggregate net asset value of
the shares of the corresponding classes of the Fund as of the close of business
on the Valuation Date. Scudder Capital Growth Fund will assume all of the
liabilities of the Fund. The Fund will distribute the Class S, Class A, Class B
and Class C shares received in the exchange to the shareholders of the
corresponding classes of the Fund in complete liquidation of the Fund. The Fund
will then be terminated.
Upon completion of the Reorganization, each shareholder of the Fund will
own that number of full and fractional Class S, Class A, Class B or Class C
shares having an aggregate net asset value equal to the aggregate net asset
value of such shareholder's shares of the corresponding class held in the Fund
as of the close of business on the Valuation Date. Such shares will be held in
an account with Scudder Capital Growth Fund identical in all material respects
to the account currently maintained by the Fund for such shareholder. In the
interest of economy and convenience, Class S, Class A, Class B and Class C
shares issued to the Fund's shareholders in the Reorganization will be in
uncertificated form. If Class S, Class A, Class B or Class C shares of the Fund
are represented by certificates prior to the Closing, such certificates should
be returned to the Fund's shareholder servicing agent. Any Class S, Class A,
Class B or Class C shares of Scudder Capital Growth Fund distributed in the
Reorganization to shareholders in exchange for certificated shares of the Fund
may not be transferred, exchanged or redeemed without delivery of such
certificates.
Until the Closing, shareholders of the Fund will continue to be able to
redeem their shares at the net asset value next determined after receipt by the
Fund's transfer agent of a redemption request in proper form. Redemption and
purchase requests received on or after the Valuation Date by the transfer agent
will be treated as requests received for the redemption or purchase of Class S,
Class A, Class B or Class C shares of Scudder Capital Growth Fund received by
the shareholder in connection with the Reorganization.
The obligations of the Trust, on behalf of Scudder Capital Growth Fund and
the Fund, respectively, under the Plan are subject to various conditions, as
stated therein. The Plan also requires that all filings be made with, and all
authority be received from, the SEC and state securities commissions as may be
necessary in the opinion of counsel to permit the parties to carry out the
transactions contemplated by the Plan. Each Fund is in the process of making the
necessary filings. To provide for unforeseen events, the Plan may be terminated:
(i) by the mutual agreement of the parties; (ii) by either party if the Closing
has not occurred by _____ __, 2001, unless such date is extended by mutual
agreement of the parties; or (iii) by either party if the other party has
materially breached its obligations under the Plan or made a material
misrepresentation in the Plan or in connection with the Reorganization. The Plan
may also be amended by mutual agreement in writing. However, no amendment may be
made following the shareholder meeting if such amendment would have the effect
of changing the provisions for determining the number of shares of Scudder
Capital Growth Fund to be issued to the Fund in the Plan
-16-
<PAGE>
to the detriment of the Fund's shareholders without their approval. For a
complete description of the terms and conditions of the Reorganization, please
refer to the Plan at Exhibit A.
Scudder Kemper will pay Scudder Capital Growth Fund's allocable share of
expenses associated with the Reorganization. Each class of the Fund will pay its
allocable share of expenses associated with the Reorganization (approximately
$12,328 for Class A, $6,492 for Class B, $13,382 for Class C and $78,805 for
Class S Shares, or $[ ], $[ ], $[ ] and $[ ] per share, respectively,
based on [ ], 2000 net assets for the Fund).
Board Approval of the Proposed Transaction
Scudder Kemper first proposed the Reorganization to the Independent
Trustees of the Fund at a meeting held on June 5, 2000. The Reorganization was
presented to the Trustees and considered by them as part of a broader initiative
by Scudder Kemper to consolidate its mutual fund lineup and to offer all of the
open-end mutual funds it advises under the "Scudder" brand name (see "Synopsis -
Background of the Reorganization" above). This initiative includes five major
components:
(i) A change in branding to offer virtually all funds advised by
Scudder Kemper under the Scudder name, with a concentration on
distribution through financial intermediaries and the AARP Investment
Program;
(ii) The combination of funds with similar investment objectives and
policies, including in particular the combination of similar Scudder
Funds and Kemper Funds currently offered to the general public;
(iii) The liquidation of certain small funds which have not achieved
market acceptance and which are unlikely to reach an efficient
operating size;
(iv) The creation of new classes of shares of each continuing Scudder
Fund to facilitate future distribution of such funds through the
"intermediary" or broker-sold distribution channel, and the creation
of new classes of shares of each Fund into which a Scudder Fund is
merging (including Scudder Capital Growth Fund) in order to allow
current Scudder Fund Class S and Class AARP shareholders to continue
holding a class of shares with similar rights, privileges and expense
structures as they currently possess; and
(v) The implementation by each acquiring fund of an Administration
Agreement similar in scope and structure to the Administration
Agreements recently adopted by many of the Scudder Funds.
The Independent Trustees of the Fund reviewed the potential implications of
these proposals for the Fund as well as the various other funds for which they
serve as trustees or directors. They were assisted in this review by their
independent legal counsel and by independent consultants with special expertise
in financial and mutual fund industry matters. Following the June 5th meeting,
the Independent Trustees met on several occasions to review and discuss these
proposals, both among themselves and with representatives of Scudder Kemper. In
the course of their review, the Independent Trustees requested and received
substantial additional information and suggested numerous changes to Scudder
Kemper's proposals, many of which were accepted.
Following the conclusion of this process, the Independent Trustees of the
Fund, the independent trustees/directors of other funds involved and Scudder
Kemper reached general agreement on the
-17-
<PAGE>
elements of a restructuring plan as it affects shareholders of various funds
and, where required, agreed to submit elements of the plan for approval to
shareholders of those funds.
On November 13, 2000, the Board of the Fund, including the Independent
Trustees of the Fund, approved the terms of the Reorganization and certain
related proposals. The Independent Trustees have also unanimously agreed to
recommend that the Reorganization be approved by the Fund's shareholders.
In determining to recommend that the shareholders of the Fund approve the
Reorganization, the Board considered, among other factors: (a) the fees and
expense ratios of the Funds, including comparisons between the expenses of the
Fund and the estimated operating expenses of Scudder Capital Growth Fund, and
between the estimated operating expenses of Scudder Capital Growth Fund and
other mutual funds with similar investment objectives; (b) the terms and
conditions of the Reorganization and whether the Reorganization would result in
the dilution of shareholder interests; (c) the compatibility of the Fund's and
Scudder Capital Growth Fund's investment objectives, policies, restrictions and
portfolios; (d) the agreement by Scudder Kemper to provide services to Scudder
Capital Growth Fund for a fixed fee rate under the Administration Agreement with
an initial three year term; (e) the service features available to shareholders
of the Fund and Scudder Capital Growth Fund; (f) the costs to be borne by the
Fund, Scudder Capital Growth Fund and Scudder Kemper as a result of the
Reorganization; (g) prospects for Scudder Capital Growth Fund to attract
additional assets; (h) the tax consequences of the Reorganization on the Fund,
Scudder Capital Growth Fund and their respective shareholders; and (i) the
investment performance of the Fund and Scudder Capital Growth Fund.
The Trustees also gave extensive consideration to possible economies of
scale that might be realized by Scudder Kemper in connection with the
Reorganization, as well as the other fund combinations included in Scudder
Kemper's restructuring proposal. The Trustees concluded that these economies
were appropriately reflected in the fee and expense arrangements of Scudder
Capital Growth Fund, as proposed to be revised upon completion of the
Reorganization. In particular, the Trustees considered the benefits to
shareholders resulting from locking in the rate of Scudder Capital Growth Fund's
Administrative Fee for an initial three-year period, and the resulting
protection this would afford shareholders if Scudder Capital Growth Fund's net
assets declined as a result of market fluctuations or net redemptions.
The Trustees also considered the impact of the Reorganization on the total
expenses to be borne by shareholders of the Fund. As noted above under
"Comparison of Expenses," the pro forma expense ratio (reflecting the
Administrative Fee) for the combined Fund following the Reorganization is
substantially lower than the current expense ratio for the Fund. The Board also
considered that the Reorganization would permit the shareholders of the Fund to
pursue similar investment goals in a larger fund.
Based on all of the foregoing, the Board concluded that the Fund's
participation in the Reorganization would be in the best interests of the Fund
and would not dilute the interests of the Fund's shareholders. The Board of
Trustees, including the Independent Trustees, unanimously recommends that
shareholders of the Fund approve the Reorganization.
Description of the Securities to Be Issued
Scudder Capital Growth Fund is a series of the Trust, a Massachusetts
business trust established under a Declaration of Trust dated September 20,
1984, as amended. The Trust's authorized capital consists of an unlimited number
of shares of beneficial interest, par value $0.01 per share. The Trustees of the
Trust are authorized to divide the Trust's shares into separate series. Scudder
Capital Growth Fund is one of seven series of the Trust that the board has
created to date. The Trustees of the Trust are also
-18-
<PAGE>
authorized to further divide the shares of the series of the Trust into classes.
The shares of Scudder Capital Growth Fund are currently divided into six
classes, Class S, Class AARP, Class A, Class B, Class C and Class I. Although
shareholders of different classes of a series have an interest in the same
portfolio of assets, shareholders of different classes bear different expense
levels because distribution costs and certain other expenses approved by the
Trustees of the Trust are borne by the class incurring such expenses.
Each share of each class of Scudder Capital Growth Fund represents an
interest in Scudder Capital Growth Fund that is equal to and proportionate with
each other share of that class of Scudder Capital Growth Fund. Scudder Capital
Growth Fund shareholders are entitled to one vote per share held on matters on
which they are entitled to vote. In the areas of shareholder voting and the
powers and conduct of the Trustees, there are no differences between the rights
of shareholders of the Fund and the rights of shareholders of Scudder Capital
Growth Fund.
Federal Income Tax Consequences
The Reorganization is conditioned upon the receipt by each Fund of an
opinion from Willkie Farr & Gallagher substantially to the effect that, based
upon certain facts, assumptions and representations of the parties, for federal
income tax purposes: (i) the transfer to Scudder Capital Growth Fund of all or
substantially all of the assets of the Fund in exchange solely for Class S,
Class A, Class B and Class C shares and the assumption by Scudder Capital Growth
Fund of all of the liabilities of the Fund, followed by the distribution of such
shares to the Fund's shareholders in exchange for their shares of the Fund in
complete liquidation of the Fund, will constitute a "reorganization" within the
meaning of Section 368(a)(1) of the Code, and Scudder Capital Growth Fund and
the Fund will each be "a party to a reorganization" within the meaning of
Section 368(b) of the Code; (ii) no gain or loss will be recognized by the Fund
upon the transfer of all or substantially all of its assets to Scudder Capital
Growth Fund in exchange solely for Class S, Class A, Class B and Class C shares
and the assumption by Scudder Capital Growth Fund of all of the liabilities of
the Fund or upon the distribution of the Class S, Class A, Class B and Class C
shares to shareholders of the Fund in exchange for their shares of the Fund;
(iii) the basis of the assets of the Fund in the hands of Scudder Capital Growth
Fund will be the same as the basis of such assets of the Fund immediately prior
to the transfer; (iv) the holding period of the assets of the Fund in the hands
of Scudder Capital Growth Fund will include the period during which such assets
were held by the Fund; (v) no gain or loss will be recognized by Scudder Capital
Growth Fund upon the receipt of the assets of the Fund in exchange for Class S,
Class A, Class B and Class C shares and the assumption by Scudder Capital Growth
Fund of all of the liabilities of the Fund; (vi) no gain or loss will be
recognized by the shareholders of the Fund upon the receipt of the Class S,
Class A, Class B and Class C shares solely in exchange for their shares of the
Fund as part of the transaction; (vii) the basis of the Class S, Class A, Class
B and Class C shares received by each shareholder of the Fund will be the same
as the basis of the shares of the Fund exchanged therefor; and (viii) the
holding period of Class S, Class A, Class B and Class C shares received by each
shareholder of the Fund will include the holding period during which the shares
of the Fund exchanged therefor were held, provided that at the time of the
exchange the shares of the Fund were held as capital assets in the hands of such
shareholder of the Fund.
After the Closing, Scudder Capital Growth Fund may dispose of certain
securities received by it from the Fund in connection with the Reorganization,
which may result in transaction costs and capital gains.
While the Fund is not aware of any adverse state or local tax consequences
of the proposed Reorganization, it has not requested any ruling or opinion with
respect to such consequences and shareholders may wish to consult their own tax
adviser with respect to such matters.
-19-
<PAGE>
Legal Matters
Certain legal matters concerning the federal income tax consequences
of the Reorganization will be passed on by Willkie Farr & Gallagher, 787 Seventh
Avenue, New York, New York 10019. Certain legal matters concerning the issuance
of shares of Scudder Capital Growth Fund will be passed on by Dechert, Ten Post
Office Square, South, Boston, Massachusetts 02109.
Capitalization
The following table shows on an unaudited basis the capitalization of
Scudder Capital Growth Fund and the Fund as of September 30, 2000 and on a pro
forma basis as of that date, giving effect to the Reorganization(1):
<TABLE>
<CAPTION>
Scudder Capital Pro Forma Pro Forma
Fund Growth Fund Adjustments (Combined)
------------ --------------- ------------ -----------------
<S> <C> <C> <C> <C>
Net Assets
Class S shares $188,712,618 $ 6,993,007 (3) $ 195,705,625
Class AARP shares $2,450,334,402 (4) $ 2,450,334,402
Class A shares $151,807,681 (5) $ 151,807,681
Class B shares $107,604,801 (5) $ 107,604,801
Class C shares $ 24,473,141 (5) $ 24,473,141
----------------
Total Net Assets $ 2,929,925,650(2)
================
Shares Outstanding
Class S shares 7,000,702 95,255 (4,430,036) 2,665,921
Class AARP shares 33,379,474 33,379,474
Class A shares 5,617,530 (3,549,587) 2,067,943
Class B shares 4,070,287 (2,604,481) 1,465,806
Class C shares 928,839 (595,463) 333,376
Net Asset Value
per Share
Class S shares $ 26.96 $ 73.41 $73.41
Class AARP shares $ 73.41 $73.41
Class A shares $ 27.02 $73.41
Class B shares $ 26.44 $73.41
Class C shares $ 26.35 $73.41
</TABLE>
____________________
(1) Assumes the Reorganization had been consummated on September 30, 2000, and
is for informational purposes only. No assurance can be given as to how many
shares of Scudder Capital Growth Fund will be received by the shareholders of
the Fund on the date the Reorganization takes place, and the foregoing should
not be relied upon to reflect the number of shares of Scudder Capital Growth
Fund that actually will be received on or after such date.
(2) Pro forma combined net assets do not reflect expense reductions that would
result from the application of Scudder Capital Growth Fund's lower investment
management fee and its administrative fee for the entire year.
(3) Represents one-time proxy, legal, accounting and other costs of the
Reorganization of $xxxxxx and $xxxxxx to be borne by the Class S shares of
Scudder Capital Growth Fund and the Fund, respectively.
(4) Represents one-time proxy, legal, accounting and other costs of the
Reorganization to be borne by Class AARP shares of Scudder Capital Growth Fund.
(5) Represents one-time proxy, legal, accounting and other costs of the
Reorganization to be borne by the Fund's Class A, Class B and Class C shares.
The Board of Trustees unanimously recommends that the shareholders of the
Fund vote in favor of this Proposal.
-20-
<PAGE>
ADDITIONAL INFORMATION
Information about the Funds
Additional information about the Trust, the Funds and the
Reorganization has been filed with the SEC and may be obtained without charge by
writing to Scudder Investor Services, Inc., Two International Place, Boston,
Massachusetts 02110-4103, or by calling 1-800-[ ].
The Trust is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and the 1940 Act, and in accordance
therewith, file reports, proxy material and other information about each of the
Funds with the SEC. Such reports, proxy material and other information filed by
the Trust can be inspected and copied at the Public Reference Room maintained by
the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the following
SEC Regional Offices: Northeast Regional Office, 7 World Trade Center, Suite
1300, New York, NY 10048; Southeast Regional Office, 1401 Brickell Avenue, Suite
200, Miami, FL 33131; Midwest Regional Office, Citicorp Center, 500 W. Madison
Street, Chicago, IL 60661-2511; Central Regional Office, 1801 California Street,
Suite 4800, Denver, CO 80202-2648; and Pacific Regional Office, 5670 Wilshire
Boulevard, 11th Floor, Los Angeles, CA 90036-3648. Copies of such material can
also be obtained from the Public Reference Branch, Office of Consumer Affairs
and Information Services, Securities and Exchange Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates. The SEC maintains an Internet
World Wide Web site (at http://www.sec.gov) which contains the prospectuses and
statements of additional information for the Funds, materials that are
incorporated by reference into the prospectuses and statements of additional
information, and other information about the Trusts and the Funds.
General
Proxy Solicitation. Proxy solicitation costs will be considered
Reorganization expenses and will be allocated accordingly. See "The Proposed
Transaction - Description of the Plan." In addition to solicitation by mail,
certain officers and representatives of the Trust, officers and employees of
Scudder Kemper and certain financial services firms and their representatives,
who will receive no extra compensation for their services, may solicit proxies
by telephone, telegram or personally.
Any shareholder of the Fund giving a proxy has the power to revoke it
by mail (addressed to the Secretary at the principal executive office of the
Fund, c/o Scudder Kemper Investments, Inc., at the address for the Fund shown at
the beginning of this Proxy Statement/Prospectus) or in person at the Meeting,
by executing a superseding proxy or by submitting a notice of revocation to the
Fund. All properly executed proxies received in time for the Meeting will be
voted as specified in the proxy or, if no specification is made, in favor of the
Proposal.
The presence at any shareholders' meeting, in person or by proxy, of
the holders of at least one-third of the shares of the 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 the Proposal is not obtained at the Meeting, the
persons named as proxies may propose one or more adjournments of the Meeting in
accordance with applicable law to permit further solicitation of proxies with
respect to the Proposal. Any such adjournment as to a matter will require the
affirmative vote of the holders of a majority of the Fund's shares present in
person or by proxy at the Meeting. The persons named as proxies will vote in
favor of any such adjournment those proxies which they are entitled to vote in
favor of the Proposal and will vote against any such adjournment those proxies
to be voted against the Proposal. For purposes of determining the presence of a
quorum for transacting business at the Meeting, abstentions and broker "non-
votes" will be treated as shares that are present but which have not been voted.
Broker non-votes are proxies received by the Fund from brokers or nominees
-21-
<PAGE>
when the broker or nominee has neither received instructions from the beneficial
owner or other persons entitled to vote nor has discretionary power to vote on a
particular matter. Accordingly, shareholders are urged to forward their voting
instructions promptly.
Approval of the Proposal requires the affirmative vote of the holders
of a majority of the Fund's shares outstanding and entitled to vote thereon.
Abstentions and broker non-votes and will have the effect of a "no" vote on the
Proposal.
Holders of record of the shares of the Fund at the close of business
on March 5, 2001 will be entitled to one vote per share on all business of the
Meeting. As of February 5, 2001, there were [ ]Class S shares, [ ] Class
A shares, [ ] Class B shares and [ ] Class C shares of the Fund
outstanding.
[As of December 31, 2000, the officers and Trustees of the Trust as a
group owned beneficially less than 1% of the outstanding shares of Scudder
Capital Growth Fund.] The Appendix hereto sets forth the beneficial owners of
more than 5% of each class of each Fund's shares, as well as the beneficial
owners of more than 5% of the shares of each class of each other series of the
Trust. To the best of the Trust's knowledge, as of December 31, 2000, no person
owned beneficially more than 5% of any class of either Fund's outstanding shares
or the shares of any other series of the Trust, except as stated on the
Appendix.
Shareholder Communications Corporation ("SCC") has been engaged to
assist in the solicitation of proxies, at an estimated cost of $[ ]. As
the Meeting date approaches, certain shareholders of the Fund may receive a
telephone call from a representative of SCC if their votes have not yet been
received. Authorization to permit SCC to execute proxies may be obtained by
telephonic or electronically transmitted instructions from shareholders of the
Fund. Proxies that are obtained telephonically will be recorded in accordance
with the procedures described below. The Trustees believe that these procedures
are reasonably designed to ensure that both the identity of the shareholder
casting the vote and the voting instructions of the shareholder are accurately
determined.
In all cases where a telephonic proxy is solicited, the SCC
representative is required to ask for each shareholder's full name and address,
or the last four digits of the shareholder's social security or employer
identification number, or both, and to confirm that the shareholder has received
the proxy materials in the mail. If the shareholder is a corporation or other
entity, the SCC representative is required to ask for the person's title and
confirmation that the person is authorized to direct the voting of the shares.
If the information solicited agrees with the information provided to SCC, then
the SCC representative has the responsibility to explain the process, read the
Proposal on the proxy card(s), and ask for the shareholder's instructions on the
Proposal. Although the SCC representative is permitted to answer questions about
the process, he or she is not permitted to recommend to the shareholder how to
vote, other than to read any recommendation set forth in the Proxy
Statement/Prospectus. 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.
Shareholders may also provide their voting instructions through
telephone touch-tone voting or Internet voting. These options require
shareholders to input a control number which is located on each voting
instruction card. After inputting this number, shareholders will be prompted to
provide their voting instructions on the Proposal. Shareholders will have an
opportunity to review their voting instructions and make any necessary changes
before submitting their voting instructions and terminating their telephone call
or Internet link. Shareholders who vote via the Internet, in addition to
confirming their voting instructions prior to submission, will also receive an
e-mail confirming their instructions.
-22-
<PAGE>
If a shareholder wishes to participate in the Meeting, but does not
wish to give a proxy by telephone or electronically, the shareholder may still
submit the proxy card(s) originally sent with the Proxy Statement/Prospectus or
attend in person. Should shareholders require additional information regarding
the proxy or replacement proxy card(s), they may contact SCC toll-free at 1-800-
[ ]. Any proxy given by a shareholder is revocable until voted at the
Meeting.
Shareholder Proposals for Subsequent Meetings. Shareholders wishing to
submit proposals for inclusion in a proxy statement for a shareholder meeting
subsequent to the Meeting, if any, should send their written proposals to the
Secretary of the Trust, c/o Scudder Kemper Investments, Inc., Two International
Place, Boston, Massachusetts 02110-4103, within a reasonable time before the
solicitation of proxies for such meeting. The timely submission of a proposal
does not guarantee its inclusion.
Other Matters to Come Before the Meeting. The Board is not aware of
any matters that will be presented for action at the Meeting other than the
matters described in this material. Should any other matters requiring a vote of
shareholders arise, the proxy in the accompanying form will confer upon the
person or persons entitled to vote the shares represented by such proxy the
discretionary authority to vote the shares as to any such other matters in
accordance with their best judgment in the interest of the Trust and/or the
Fund.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) (OR TAKE ADVANTAGE
OF AVAILABLE ELECTRONIC OR TELEPHONIC VOTING PROCEDURES) PROMPTLY. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
By Order of the Board,
/s/ John Millette
John Millette
Secretary
-23-
<PAGE>
INDEX OF EXHIBITS AND APPENDIX
EXHIBIT A: FORM OF AGREEMENT AND PLAN OF REORGANIZATION......................
EXHIBIT B: MANAGEMENT'S DISCUSSION OF SCUDDER CAPITAL GROWTH FUND'S
PERFORMANCE.......................................................
APPENDIX: BENEFICIAL OWNERS OF FUND SHARES..................................
-24-
<PAGE>
EXHIBIT A
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this [_] day of [_], 2001, by and among Investment Trust (the "Trust"), a
Massachusetts business trust, on behalf of each of Scudder Capital Growth Fund
(the "Acquiring Fund") and Classic Growth Fund (the "Acquired Fund" and,
together with the Acquiring Fund, each a "Fund" and collectively the "Funds"),
and Scudder Kemper Investments, Inc. ("Scudder Kemper"), investment adviser to
the Funds (for purposes of Paragraph 10.2 of the Agreement only). Each of the
Acquiring Fund and the Acquired Fund is a separate series of the Trust. The
principal place of business of the Trust is Two International Place, Boston,
Massachusetts 02110-4103.
This Agreement is intended to be and is adopted as a plan of reorganization
and liquidation within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"). The reorganization (the "Reorganization")
will consist of the transfer of all or substantially all of the assets of the
Acquired Fund to the Acquiring Fund in exchange solely for Class S, Class A,
Class B and Class C voting shares of beneficial interest ($.01 par value per
share) of the Acquiring Fund (the "Acquiring Fund Shares"), the assumption by
the Acquiring Fund of all of the liabilities of the Acquired Fund and the
distribution of the Acquiring Fund Shares to the Class S, Class A, Class B and
Class C shareholders of the Acquired Fund in complete liquidation of the
Acquired Fund as provided herein, all upon the terms and conditions hereinafter
set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND TO THE ACQUIRING FUND IN EXCHANGE
FOR ACQUIRING FUND SHARES, THE ASSUMPTION OF ALL ACQUIRED FUND LIABILITIES
AND THE LIQUIDATION OF THE ACQUIRED FUND
1.1. Subject to the terms and conditions herein set forth and on the
basis of the representations and warranties contained herein, the Acquired Fund
agrees to transfer to the Acquiring Fund all or substantially all of the
Acquired Fund's assets as set forth in section 1.2, and the Acquiring Fund
agrees in exchange therefor (i) to deliver to the Acquired Fund that number of
full and fractional Class S, Class A, Class B and Class C Acquiring Fund Shares
determined by dividing the value of the Acquired Fund's assets net of any
liabilities of the Acquired Fund with respect to the Class S, Class A, Class B
and Class C shares of the Acquired Fund, computed in the manner and as of the
time and date set forth in section 2.1, by the net asset value of one Acquiring
Fund Share of the corresponding class, computed in the manner and as of the time
and date set forth in section 2.2; and (ii) to assume all of the liabilities of
the Acquired Fund, including, but not limited to, any deferred compensation to
Acquired Fund board members. All Acquiring Fund Shares delivered to the
Acquired Fund shall be delivered at net asset value without sales load,
commission or other similar fee being imposed. Such transactions shall take
place at the closing provided for in section 3.1 (the "Closing").
1.2. The assets of the Acquired Fund to be acquired by the Acquiring
Fund (the "Assets") shall consist of all assets, including, without limitation,
all cash, cash equivalents, securities, commodities and futures interests and
dividends or interest or other receivables that are owned by the Acquired Fund
and any deferred or prepaid expenses shown on the unaudited statement of assets
and liabilities of the Acquired Fund prepared as of the effective time of the
Closing in accordance with generally accepted
<PAGE>
accounting principles ("GAAP") applied consistently with those of the Acquired
Fund's most recent audited balance sheet. The Assets shall constitute at least
90% of the fair market value of the net assets, and at least 70% of the fair
market value of the gross assets, held by the Acquired Fund immediately before
the Closing (excluding for these purposes assets used to pay the dividends and
other distributions paid pursuant to section 1.4).
1.3. The Acquired Fund will endeavor to discharge all of its known
liabilities and obligations prior to the Closing Date as defined in section 3.6.
1.4. On or as soon as practicable prior to the Closing Date as defined
in section 3.1, the Acquired Fund will declare and pay to its shareholders of
record one or more dividends and/or other distributions so that it will have
distributed substantially all of its investment company taxable income (computed
without regard to any deduction for dividends paid) and realized net capital
gain, if any, for the current taxable year through the Closing Date.
1.5. Immediately after the transfer of Assets provided for in section
1.1, the Acquired Fund will distribute to the Acquired Fund's shareholders of
record with respect to each class of its shares (the "Acquired Fund
Shareholders"), determined as of the Valuation Time (as defined in section 2.1),
on a pro rata basis within that class, the Acquiring Fund Shares of the same
class received by the Acquired Fund pursuant to section 1.1 and will completely
liquidate. Such distribution and liquidation will be accomplished with respect
to each class of the Acquired Fund by the transfer of the Acquiring Fund Shares
then credited to the account of the Acquired Fund on the books of the Acquiring
Fund to open accounts on the share records of the Acquiring Fund in the names of
the Acquired Fund Shareholders. The Acquiring Fund shall have no obligation to
inquire as to the validity, propriety or correctness of such records, but shall
assume that such transaction is valid, proper and correct. The aggregate net
asset value of Class S, Class A, Class B and Class C Acquiring Fund Shares to be
so credited to the Class S, Class A, Class B and Class C Acquired Fund
Shareholders shall, with respect to each class, be equal to the aggregate net
asset value of the Acquired Fund shares of the same class owned by such
shareholders as of the Valuation Time. All issued and outstanding shares of the
Acquired Fund will simultaneously be cancelled on the books of the Acquired
Fund, although share certificates representing interests in Class S, Class A,
Class B and Class C shares of the Acquired Fund will represent a number of
Acquiring Fund Shares after the Closing Date as determined in accordance with
section 2.3. The Acquiring Fund will not issue certificates representing
Acquiring Fund Shares in connection with such exchange.
1.6. Ownership of Acquiring Fund Shares will be shown on the books of
the Acquiring Fund. Shares of the Acquiring Fund will be issued in the manner
described in the Acquiring Fund's then-current prospectus and statement of
additional information.
1.7. Any reporting responsibility of the Acquired Fund including,
without limitation, the responsibility for filing of regulatory reports, tax
returns, or other documents with the Securities and Exchange Commission (the
"Commission"), any state securities commission, and any federal, state or local
tax authorities or any other relevant regulatory authority, is and shall remain
the responsibility of the Acquired Fund.
1.8. All books and records of the Acquired Fund, including all books
and records required to be maintained under the Investment Company Act of 1940,
as amended (the "1940 Act"), and the rules and regulations thereunder, shall be
available to the Acquiring Fund from and after the Closing Date and shall be
turned over to the Acquiring Fund as soon as practicable following the Closing
Date.
<PAGE>
2. VALUATION
2.1. The value of the Assets shall be computed as of the close of
regular trading on The New York Stock Exchange, Inc. (the "NYSE") on the
business day immediately preceding the Closing Date, as defined in section 3.1
(the "Valuation Time") after the declaration and payment of any dividends and/or
other distributions on that date, using the valuation procedures set forth in
the Trust's Declaration of Trust, as amended, and then-current prospectus or
statement of additional information, copies of which have been delivered to the
Acquired Fund.
2.2. The net asset value of a Class S, Class A, Class B or Class C
Acquiring Fund Share shall be the net asset value per share computed with
respect to that class as of the Valuation Time using the valuation procedures
referred to in section 2.1. Notwithstanding anything to the contrary contained
in this Agreement, in the event that, as of the Valuation Time, there are no
Class A, Class B and/or Class C Acquiring Fund Shares issued and outstanding,
then, for purposes of this Agreement, the per share net asset value of a Class
A, Class B and/or Class C share, as applicable, shall be equal to the net asset
value of one Class S Acquiring Fund Share.
2.3. The number of the Class S, Class A, Class B and Class C Acquiring
Fund Shares to be issued (including fractional shares, if any) in exchange for
the Assets shall be determined with respect to each such class by dividing the
value of the Assets with respect to Class S, Class A, Class B and Class C shares
of the Acquired Fund, as the case may be, determined in accordance with section
2.1 by the net asset value of an Acquiring Fund Share of the same class
determined in accordance with section 2.2.
2.4. All computations of value hereunder shall be made by or under the
direction of each Fund's respective accounting agent, if applicable, in
accordance with its regular practice and the requirements of the 1940 Act and
shall be subject to confirmation by each Fund's respective independent
accountants upon the reasonable request of the other Fund.
3. CLOSING AND CLOSING DATE
3.1. The Closing of the transactions contemplated by this Agreement
shall be June 25, 2001, or such later date as the parties may agree in writing
(the "Closing Date"). All acts taking place at the Closing shall be deemed to
take place simultaneously as of 9:00 a.m., Eastern time, on the Closing Date,
unless otherwise agreed to by the parties. The Closing shall be held at the
offices of Dechert, Ten Post Office Square - South, Boston, MA 02109, or at such
other place and time as the parties may agree.
3.2. The Acquired Fund shall deliver to Acquiring Fund on the Closing
Date a schedule of Assets.
3.3. State Street Bank and Trust Company ("State Street"), custodian
for the Acquired Fund, shall deliver at the Closing a certificate of an
authorized officer stating that (a) the Assets shall have been delivered in
proper form to State Street, custodian for the Acquiring Fund, prior to or on
the Closing Date and (b) all necessary taxes in connection with the delivery of
the Assets, including all applicable federal and state stock transfer stamps, if
any, have been paid or provision for payment has been made. The Acquired Fund's
portfolio securities represented by a certificate or other written instrument
shall be presented by the custodian for the Acquired Fund to the custodian for
the Acquiring Fund for examination no later than five business days preceding
the Closing Date and transferred and delivered by the Acquired Fund as of the
Closing Date by the Acquired Fund for the account of Acquiring Fund duly
endorsed in proper form for transfer in such condition as to constitute good
delivery thereof. The Acquired Fund's portfolio securities and instruments
deposited with a securities depository, as defined in Rule 17f-4 under the 1940
Act, shall be delivered as of the Closing Date by book entry in accordance with
the customary
<PAGE>
practices of such depositories and the custodian for the Acquiring Fund. The
cash to be transferred by the Acquired Fund shall be delivered by wire transfer
of federal funds on the Closing Date.
3.4. Scudder Service Corporation, as transfer agent for the Acquired
Fund, on behalf of the Acquired Fund, shall deliver at the Closing a certificate
of an authorized officer stating that its records contain the names and
addresses of the Acquired Fund Shareholders and the number and percentage
ownership (to three decimal places) of outstanding Class S, Class A, Class B and
Class C Acquired Fund shares owned by each such shareholder immediately prior to
the Closing. The Acquiring Fund shall issue and deliver a confirmation
evidencing the Acquiring Fund Shares to be credited on the Closing Date to the
Acquired Fund or provide evidence satisfactory to the Acquired Fund that such
Acquiring Fund Shares have been credited to the Acquired Fund's account on the
books of the Acquiring Fund. At the Closing, each party shall deliver to the
other such bills of sale, checks, assignments, share certificates, if any,
receipts or other documents as such other party or its counsel may reasonably
request to effect the transactions contemplated by this Agreement.
3.5. In the event that immediately prior to the Valuation Time (a) the
NYSE or another primary trading market for portfolio securities of the Acquiring
Fund or the Acquired Fund shall be closed to trading or trading thereupon shall
be restricted, or (b) trading or the reporting of trading on such Exchange or
elsewhere shall be disrupted so that, in the judgment of the Board members of
either party to this Agreement, accurate appraisal of the value of the net
assets with respect to the Class S, Class A, Class B and Class C shares of the
Acquiring Fund or the Acquired Fund is impracticable, the Closing Date shall be
postponed until the first business day after the day when trading shall have
been fully resumed and reporting shall have been restored.
3.6. The liabilities of the Acquired Fund shall include all of the
Acquired Fund's liabilities, debts, obligations, and duties of whatever kind or
nature, whether absolute, accrued, contingent, or otherwise, whether or not
arising in the ordinary course of business, whether or not determinable at the
Closing Date, and whether or not specifically referred to in this Agreement
including but not limited to any deferred compensation to the Acquired Fund's
board members.
4. REPRESENTATIONS AND WARRANTIES
4.1. The Trust, on behalf of the Acquired Fund, represents and warrants
to the Acquiring Fund as follows:
(a) The Trust is a voluntary association with transferable shares
commonly referred to as a Massachusetts business trust duly organized and
validly existing under the laws of The Commonwealth of Massachusetts with power
under the Trust's Declaration of Trust, as amended, to own all of its properties
and assets and to carry on its business as it is now being conducted and,
subject to approval of shareholders of the Acquired Fund, to carry out the
Agreement. The Acquired Fund is a separate series of the Trust duly designated
in accordance with the applicable provisions of the Trust's Declaration of
Trust. The Trust and Acquired Fund are qualified to do business in all
jurisdictions in which they are required to be so qualified, except
jurisdictions in which the failure to so qualify would not have material adverse
effect on the Trust or Acquired Fund. The Acquired Fund has all material
federal, state and local authorizations necessary to own all of the properties
and assets and to carry on its business as now being conducted, except
authorizations which the failure to so obtain would not have a material adverse
effect on the Acquired Fund;
(b) The Trust is registered with the Commission as an open-end
management investment company under the 1940 Act, and such registration is in
full force and effect and the Acquired Fund is in compliance in all material
respects with the 1940 Act and the rules and regulations thereunder;
<PAGE>
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquired Fund of
the transactions contemplated herein, except such as have been obtained under
the Securities Act of 1933, as amended (the "1933 Act"), the Securities Exchange
Act of 1934, as amended (the "1934 Act"), and the 1940 Act and such as may be
required by state securities laws;
(d) Other than with respect to contracts entered into in connection
with the portfolio management of the Acquired Fund which shall terminate on or
prior to the Closing Date, the Trust is not, and the execution, delivery and
performance of this Agreement by the Trust will not result (i) in violation of
Massachusetts law or of the Trust's Declaration of Trust, as amended, or By-
Laws, (ii) in a violation or breach of, or constitute a default under, any
material agreement, indenture, instrument, contract, lease or other undertaking
to which the Acquired Fund is a party or by which it is bound, and the
execution, delivery and performance of this Agreement by the Acquired Fund will
not result in the acceleration of any obligation, or the imposition of any
penalty, under any agreement, indenture, instrument, contract, lease, judgment
or decree to which the Acquired Fund is a party or by which it is bound, or
(iii) in the creation or imposition of any lien, charge or encumbrance on any
property or assets of the Acquired Fund;
(e) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or to its knowledge threatened against the Acquired Fund or any properties or
assets held by it. The Acquired Fund knows of no facts which might form the
basis for the institution of such proceedings which would materially and
adversely affect its business and is not a party to or subject to the provisions
of any order, decree or judgment of any court or governmental body which
materially and adversely affects its business or its ability to consummate the
transactions herein contemplated;
(f) The Statements of Assets and Liabilities, Operations, and Changes
in Net Assets, the Financial Highlights, and the Investment Portfolio of the
Acquired Fund at and for the fiscal year ended October 31, 2000, have been
audited by PricewaterhouseCoopers LLP, independent accountants, and are in
accordance with GAAP consistently applied, and such statements (a copy of each
of which has been furnished to the Acquiring Fund) present fairly, in all
material respects, the financial position of the Acquired Fund as of such date
in accordance with GAAP, and there are no known contingent liabilities of the
Acquired Fund required to be reflected on a balance sheet (including the notes
thereto) in accordance with GAAP as of such date not disclosed therein;
(g) Since October 31, 2000, there has not been any material adverse
change in the Acquired Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business, or any
incurrence by the Acquired Fund of indebtedness maturing more than one year from
the date such indebtedness was incurred except as otherwise disclosed to and
accepted in writing by the Acquiring Fund. For purposes of this subsection (g),
a decline in net asset value per share of the Acquired Fund due to declines in
market values of securities in the Acquired Fund's portfolio, the discharge of
Acquired Fund liabilities, or the redemption of Acquired Fund shares by Acquired
Fund Shareholders shall not constitute a material adverse change;
(h) At the date hereof and at the Closing Date, all federal and other
tax returns and reports of the Acquired Fund required by law to have been filed
by such dates (including any extensions) shall have been filed and are or will
be correct in all material respects, and all federal and other taxes shown as
due or required to be shown as due on said returns and reports shall have been
paid or provision shall have been made for the payment thereof, and, to the best
of the Acquired Fund's knowledge, no such return is currently under audit and no
assessment has been asserted with respect to such returns;
<PAGE>
(i) For each taxable year of its operation (including the taxable
year ending on the Closing Date), the Acquired Fund has met the requirements of
Subchapter M of the Code for qualification as a regulated investment company and
has elected to be treated as such, has been eligible to and has computed its
federal income tax under Section 852 of the Code, and will have distributed all
of its investment company taxable income and net capital gain (as defined in the
Code) that has accrued through the Closing Date;
(j) All issued and outstanding shares of the Acquired Fund (i) have
been offered and sold in every state and the District of Columbia in compliance
in all material respects with applicable registration requirements of the 1933
Act and state securities laws, (ii) are, and on the Closing Date will be, duly
and validly issued and outstanding, fully paid and non-assessable and not
subject to preemptive or dissenter's rights (recognizing that, under
Massachusetts law, Acquired Fund Shareholders, under certain circumstances,
could be held personally liable for obligations of the Acquired Fund), and (iii)
will be held at the time of the Closing by the persons and in the amounts set
forth in the records of Scudder Service Corporation, as provided in section 3.4.
The Acquired Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any of the Acquired Fund shares, nor is
there outstanding any security convertible into any of the Acquired Fund shares;
(k) At the Closing Date, the Acquired Fund will have good and
marketable title to the Acquired Fund's assets to be transferred to the
Acquiring Fund pursuant to section 1.2 and full right, power, and authority to
sell, assign, transfer and deliver such assets hereunder free of any liens or
other encumbrances, except those liens or encumbrances as to which the Acquiring
Fund has received notice at or prior to the Closing, and upon delivery and
payment for such assets, the Acquiring Fund will acquire good and marketable
title thereto, subject to no restrictions on the full transfer thereof,
including such restrictions as might arise under the 1933 Act and the 1940 Act,
except those restrictions as to which the Acquiring Fund has received notice and
necessary documentation at or prior to the Closing;
(l) The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary action on
the part of the Board members of the Trust (including the determinations
required by Rule 17a-8(a) under the 1940 Act), and, subject to the approval of
the Acquired Fund Shareholders, this Agreement constitutes a valid and binding
obligation of the Trust, on behalf of the Acquired Fund, enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and other laws
relating to or affecting creditors' rights and to general equity principles;
(m) The information to be furnished by the Acquired Fund for use in
applications for orders, registration statements or proxy materials or for use
in any other document filed or to be filed with any federal, state or local
regulatory authority (including the National Association of Securities Dealers,
Inc. (the "NASD")), which may be necessary in connection with the transactions
contemplated hereby, shall be accurate and complete in all material respects and
shall comply in all material respects with federal securities and other laws and
regulations applicable thereto;
(n) The current prospectus and statement of additional information of
the Acquired Fund conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules and regulations of
the Commission thereunder and do not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not materially misleading; and
(o) The proxy statement of the Acquired Fund to be included in the
Registration Statement referred to in section 5.7 (the "Proxy Statement"),
insofar as it relates to the Acquired Fund,
<PAGE>
will, on the effective date of the Registration Statement and on the Closing
Date, (i) comply in all material respects with the provisions and Regulations of
the 1933 Act, 1934 Act and 1940 Act, as applicable, and (ii) not contain any
untrue statement of a material fact or omit to stat e a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which such statements are made, not materially
misleading; provided, however, that the representations and warranties in this
section shall not apply to statements in or omissions from the Proxy Statement
and the Registration Statement made in reliance upon and in conformity with
information that was furnished or should have been furnished by the Acquiring
Fund for use therein.
4.2. The Trust, on behalf of the Acquiring Fund, represents and warrants
to the Acquired Fund as follows:
(a) The Trust is a voluntary association with transferable shares
commonly referred to as a Massachusetts business trust duly organized and
validly existing under the laws of The Commonwealth of Massachusetts with power
under the Trust's Declaration of Trust, as amended, to own all of its properties
and assets and to carry on its business as it is now being conducted and,
subject to the approval of shareholders of the Acquired Fund, to carry out the
Agreement. The Acquiring Fund is a separate series of the Trust duly designated
in accordance with the applicable provisions of the Trust's Declaration of
Trust. The Trust and Acquiring Fund are qualified to do business in all
jurisdictions in which they are required to be so qualified, except
jurisdictions in which the failure to so qualify would not have material adverse
effect on the Trust or Acquiring Fund. The Acquiring Fund has all material
federal, state and local authorizations necessary to own all of the properties
and assets and to carry on its business as now being conducted, except
authorizations which the failure to so obtain would not have a material adverse
effect on the Acquiring Fund;
(b) The Trust is registered with the Commission as an open-end
management investment company under the 1940 Act, and such registration is in
full force and effect and the Acquiring Fund is in compliance in all material
respects with the 1940 Act and the rules and regulations thereunder;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquiring Fund of
the transactions contemplated herein, except such as have been obtained under
the 1933 Act, the 1934 Act and the 1940 Act and such as may be required by state
securities laws;
(d) The Trust is not, and the execution, delivery and performance
of this Agreement by the Trust will not result (i) in violation of Massachusetts
law or of the Trust's Declaration of Trust, as amended, or By-Laws, or (ii) in a
violation or breach of, or constitute a default under, any material agreement,
indenture, instrument, contract, lease or other undertaking known to counsel to
which the Acquiring Fund is a party or by which it is bound, and the execution,
delivery and performance of this Agreement by the Acquiring Fund will not result
in the acceleration of any obligation, or the imposition of any penalty, under
any agreement, indenture, instrument, contract, lease, judgment or decree to
which the Acquiring Fund is a party or by which it is bound, or (iii) in the
creation or imposition of any lien, charge or encumbrance on any property or
assets of the Acquiring Fund;
(e) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or to its knowledge threatened against the Acquiring Fund or any properties or
assets held by it. The Acquiring Fund knows of no facts which might form the
basis for the institution of such proceedings which would materially and
adversely affect its business and is not a party to or subject to the provisions
of any order, decree or judgment of any court or
<PAGE>
governmental body which materially and adversely affects its business or its
ability to consummate the transactions herein contemplated;
(f) The Statements of Assets and Liabilities, Operations, and Changes
in Net Assets, the Financial Highlights, and the Investment Portfolio of the
Acquiring Fund at and for the fiscal year ended September 30, 2000, have been
audited by PricewaterhouseCoopers LLP, independent accountants, and are in
accordance with GAAP consistently applied, and such statements (a copy of each
of which has been furnished to the Acquired Fund) present fairly, in all
material respects, the financial position of the Acquiring Fund as of such date
in accordance with GAAP, and there are no known contingent liabilities of the
Acquiring Fund required to be reflected on a balance sheet (including the notes
thereto) in accordance with GAAP as of such date not disclosed therein;
(g) Since September 30, 2000, there has not been any material adverse
change in the Acquiring Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business, or any
incurrence by the Acquiring Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred except as otherwise disclosed to
and accepted in writing by the Acquired Fund. For purposes of this subsection
(g), a decline in net asset value per share of the Acquiring Fund due to
declines in market values of securities in the Acquiring Fund's portfolio, the
discharge of Acquiring Fund liabilities, or the redemption of Acquiring Fund
shares by Acquiring Fund shareholders shall not constitute a material adverse
change;
(h) At the date hereof and at the Closing Date, all federal and other
tax returns and reports of the Acquiring Fund required by law to have been filed
by such dates (including any extensions) shall have been filed and are or will
be correct in all material respects, and all federal and other taxes shown as
due or required to be shown as due on said returns and reports shall have been
paid or provision shall have been made for the payment thereof, and, to the best
of the Acquiring Fund's knowledge, no such return is currently under audit and
no assessment has been asserted with respect to such returns;
(i) For each taxable year of its operation, the Acquiring Fund has
met the requirements of Subchapter M of the Code for qualification as a
regulated investment company and has elected to be treated as such, has been
eligible to and has computed its federal income tax under Section 852 of the
Code, and will do so for the taxable year including the Closing Date;
(j) All issued and outstanding shares of the Acquiring Fund (i) have
been offered and sold in every state and the District of Columbia in compliance
in all material respects with applicable registration requirements of the 1933
Act and state securities laws and (ii) are, and on the Closing Date will be,
duly and validly issued and outstanding, fully paid and non-assessable, and not
subject to preemptive or dissenter's rights (recognizing that, under
Massachusetts law, Acquiring Fund Shareholders, under certain circumstances,
could be held personally liable for the obligations of the Acquiring Fund). The
Acquiring Fund does not have outstanding any options, warrants or other rights
to subscribe for or purchase any of the Acquiring Fund shares, nor is there
outstanding any security convertible into any of the Acquiring Fund shares;
(k) The Acquiring Fund Shares to be issued and delivered to the
Acquired Fund, for the account of the Acquired Fund Shareholders, pursuant to
the terms of this Agreement, will at the Closing Date have been duly authorized
and, when so issued and delivered, will be duly and validly issued and
outstanding Acquiring Fund Shares, and will be fully paid and non-assessable
(recognizing that, under Massachusetts law, Acquiring Fund Shareholders, under
certain circumstances, could be held personally liable for the obligations of
the Acquiring Fund);
<PAGE>
(l) At the Closing Date, the Acquiring Fund will have good and
marketable title to the Acquiring Fund's assets, free of any liens or other
encumbrances, except those liens or encumbrances as to which the Acquired Fund
has received notice at or prior to the Closing;
(m) The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary action on
the part of the Board members of the Trust (including the determinations
required by Rule 17a-8(a) under the 1940 Act) and this Agreement will constitute
a valid and binding obligation of the Trust, on behalf of the Acquiring Fund,
enforceable in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
other laws relating to or affecting creditors' rights and to general equity
principles;
(n) The information to be furnished by the Acquiring Fund for use in
applications for orders, registration statements or proxy materials or for use
in any other document filed or to be filed with any federal, state or local
regulatory authority (including the NASD), which may be necessary in connection
with the transactions contemplated hereby, shall be accurate and complete in all
material respects and shall comply in all material respects with federal
securities and other laws and regulations applicable thereto;
(o) The current prospectus and statement of additional information of
the Acquiring Fund conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules and regulations of
the Commission thereunder and do not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not materially misleading;
(p) The Proxy Statement to be included in the Registration Statement,
only insofar as it relates to the Acquiring Fund, will, on the effective date of
the Registration Statement and on the Closing Date, (i) comply in all material
respects with the provisions and Regulations of the 1933 Act, 1934 Act, and 1940
Act and (ii) not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which such statements
were made, not materially misleading; provided, however, that the
representations and warranties in this section shall not apply to statements in
or omissions from the Proxy Statement and the Registration Statement made in
reliance upon and in conformity with information that was furnished or should
have been furnished by the Acquired Fund for use therein; and
(q) The Acquiring Fund agrees to use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act, the 1940 Act and such
of the state securities laws as may be necessary in order to continue its
operations after the Closing Date.
5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1. The Acquiring Fund and the Acquired Fund each covenants to operate its
business in the ordinary course between the date hereof and the Closing Date, it
being understood that (a) such ordinary course of business will include (i) the
declaration and payment of customary dividends and other distributions and (ii)
such changes as are contemplated by the Funds' normal operations; and (b) each
Fund shall retain exclusive control of the composition of its portfolio until
the Closing Date. No party shall take any action that would, or reasonably would
be expected to, result in any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect. The Acquired
Fund and Acquiring Fund covenant and agree to coordinate the respective
portfolios of the Acquired Fund and Acquiring Fund from the date of the
Agreement up to and including the Closing Date in order that at Closing, when
the Assets are added to the Acquiring Fund's portfolio, the resulting
<PAGE>
portfolio will meet the Acquiring Fund's investment objective, policies and
restrictions, as set forth in the Acquiring Fund's Prospectus, a copy of which
has been delivered to the Acquired Fund.
5.2. Upon reasonable notice, the Acquiring Fund's officers and agents
shall have reasonable access to the Acquired Fund's books and records necessary
to maintain current knowledge of the Acquired Fund and to ensure that the
representations and warranties made by the Acquired Fund are accurate.
5.3. The Acquired Fund covenants to call a meeting of the Acquired Fund
Shareholders entitled to vote thereon to consider and act upon this Agreement
and to take all other reasonable action necessary to obtain approval of the
transactions contemplated herein. Such meeting shall be scheduled for no later
than May 24, 2001.
5.4. The Acquired Fund covenants that the Acquiring Fund Shares to be
issued hereunder are not being acquired for the purpose of making any
distribution thereof other than in accordance with the terms of this Agreement.
5.5. The Acquired Fund covenants that it will assist the Acquiring Fund
in obtaining such information as the Acquiring Fund reasonably requests
concerning the beneficial ownership of the Acquired Fund shares.
5.6. Subject to the provisions of this Agreement, the Acquiring Fund and
the Acquired Fund will each take, or cause to be taken, all actions, and do or
cause to be done, all things reasonably necessary, proper, and/or advisable to
consummate and make effective the transactions contemplated by this Agreement.
5.7. Each Fund covenants to prepare in compliance with the 1933 Act, the
1934 Act and the 1940 Act the Registration Statement on Form N-14 (the
"Registration Statement") in connection with the meeting of the Acquired Fund
Shareholders to consider approval of this Agreement and the transactions
contemplated herein. The Acquiring Fund will file the Registration Statement,
including the Proxy Statement, with the Commission. The Acquired Fund will
provide the Acquiring Fund with information reasonably necessary for the
preparation of a prospectus, which will include the Proxy Statement referred to
in section 4.1(o), all to be included in the Registration Statement, in
compliance in all material respects with the 1933 Act, the 1934 Act and the 1940
Act.
5.8. The Acquired Fund covenants that it will, from time to time, as and
when reasonably requested by the Acquiring Fund, execute and deliver or cause to
be executed and delivered all such assignments and other instruments, and will
take or cause to be taken such further action as the Acquiring Fund may
reasonably deem necessary or desirable in order to vest in and confirm the
Acquiring Fund's title to and possession of all the assets and otherwise to
carry out the intent and purpose of this Agreement.
5.9. The Acquiring Fund covenants to use all reasonable efforts to
obtain the approvals and authorizations required by the 1933 Act and 1940 Act,
and such of the state securities laws as it deems appropriate in order to
continue its operations after the Closing Date and to consummate the
transactions contemplated herein; provided, however, that the Acquiring Fund may
take such actions it reasonably deems advisable after the Closing Date as
circumstances change.
5.10. The Acquiring Fund covenants that it will, from time to time, as
and when reasonably requested by the Acquired Fund, execute and deliver or cause
to be executed and delivered all such assignments, assumption agreements,
releases, and other instruments, and will take or cause to be taken
<PAGE>
such further action, as the Acquired Fund may reasonably deem necessary or
desirable in order to (i) vest and confirm to the Acquired Fund title to and
possession of all Acquiring Fund shares to be transferred to the Acquired Fund
pursuant to this Agreement and (ii) assume the liabilities from the Acquired
Fund.
5.11. As soon as reasonably practicable after the Closing, the Acquired
Fund shall make a liquidating distribution to its shareholders consisting of the
Acquiring Fund Shares received at the Closing.
5.12. The Acquiring Fund and the Acquired Fund shall each use its
reasonable best efforts to fulfill or obtain the fulfillment of the conditions
precedent to effect the transactions contemplated by this Agreement as promptly
as practicable.
5.13. The intention of the parties is that the transaction will qualify
as a reorganization within the meaning of Section 368(a) of the Code. Neither
the Trust, the Acquiring Fund nor the Acquired Fund shall take any action, or
cause any action to be taken (including, without limitation, the filing of any
tax return) that is inconsistent with such treatment or results in the failure
of the transaction to qualify as a reorganization within the meaning of Section
368(a) of the Code. At or prior to the Closing Date, the Trust, the Acquiring
Fund and the Acquired Fund will take such action, or cause such action to be
taken, as is reasonably necessary to enable Willkie Farr & Gallagher to render
the tax opinion contemplated herein in section 8.5.
5.14. At or immediately prior to the Closing, the Acquired Fund may
declare and pay to its stockholders a dividend or other distribution in an
amount large enough so that it will have distributed substantially all (and in
any event not less than 98%) of its investment company taxable income (computed
without regard to any deduction for dividends paid) and realized net capital
gain, if any, for the current taxable year through the Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Acquired Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquiring Fund of all the obligations to be performed by it hereunder on or
before the Closing Date, and, in addition thereto, the following further
conditions:
6.1. All representations and warranties of the Trust, on behalf of the
Acquiring Fund, contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the Closing Date, with
the same force and effect as if made on and as of the Closing Date; and there
shall be (i) no pending or threatened litigation brought by any person (other
than the Acquired Fund, its adviser or any of their affiliates) against the
Acquiring Fund or its investment adviser(s), Board members or officers arising
out of this Agreement and (ii) no facts known to the Acquiring Fund which the
Acquiring Fund reasonably believes might result in such litigation.
6.2. The Acquiring Fund shall have delivered to the Acquired Fund on the
Closing Date a certificate executed in its name by its President or a Vice
President, in a form reasonably satisfactory to the Trust, on behalf of the
Acquired Fund, and dated as of the Closing Date, to the effect that the
representations and warranties of the Acquiring Fund made in this Agreement are
true and correct on and as of the Closing Date, except as they may be affected
by the transactions contemplated by this Agreement, and as to such other matters
as the Acquired Fund shall reasonably request.
6.3. The Acquired Fund shall have received on the Closing Date an
opinion of Dechert, in a form reasonably satisfactory to the Acquired Fund, and
dated as of the Closing Date, to the effect that:
<PAGE>
(a) The Trust has been duly formed and is an existing business
trust; (b) the Acquiring Fund has the power to carry on its business as
presently conducted in accordance with the description thereof in the Acquiring
Fund's registration statement under the 1940 Act; (c) the Agreement has been
duly authorized, executed and delivered by the Trust, on behalf of the Acquiring
Fund, and constitutes a valid and legally binding obligation of the Trust, on
behalf of the Acquiring Fund, enforceable in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
laws of general applicability relating to or affecting creditors' rights and to
general equity principles; (d) the execution and delivery of the Agreement did
not, and the exchange of the Acquired Fund's assets for Acquiring Fund Shares
pursuant to the Agreement will not, violate the Trust's Declaration of Trust, as
amended, or By-laws; and (e) to the knowledge of such counsel, and without any
independent investigation, (i) the Trust is not subject to any litigation or
other proceedings that might have a materially adverse effect on the operations
of the Trust, (ii) the Trust is duly registered as an investment company with
the Commission and is not subject to any stop order; and (iii) all regulatory
consents, authorizations, approvals or filings required to be obtained or made
by the Acquiring Fund under the federal laws of the United States or the laws of
The Commonwealth of Massachusetts for the exchange of the Acquired Fund's assets
for Acquiring Fund Shares, pursuant to the Agreement have been obtained or made.
The delivery of such opinion is conditioned upon receipt by Dechert of
customary representations it shall reasonably request of the Trust, on behalf of
each of the Acquiring Fund and the Acquired Fund.
6.4. The Acquiring Fund shall have performed all of the covenants and
complied with all of the provisions required by this Agreement to be performed
or complied with by the Acquiring Fund on or before the Closing Date.
6.5. The Acquiring Fund shall have entered into an administrative services
agreement with Scudder Kemper in a form reasonably satisfactory to the Acquired
Fund.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquired Fund of all of the obligations to be performed by it hereunder on or
before the Closing Date and, in addition thereto, the following further
conditions:
7.1. All representations and warranties of the Trust, on behalf of the
Acquired Fund, contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the Closing Date, with
the same force and effect as if made on and as of the Closing Date; and there
shall be (i) no pending or threatened litigation brought by any person (other
than the Acquiring Fund, its adviser or any of their affiliates) against the
Acquired Fund or its investment adviser(s), Board members or officers arising
out of this Agreement and (ii) no facts known to the Acquired Fund which the
Acquired Fund reasonably believes might result in such litigation.
7.2. The Acquired Fund shall have delivered to the Acquiring Fund a
statement of the Acquired Fund's assets and liabilities as of the Closing Date,
certified by the Treasurer of the Acquired Fund.
7.3. The Acquired Fund shall have delivered to the Acquiring Fund on the
Closing Date a certificate executed in its name by its President or a Vice
President, in a form reasonably satisfactory to
<PAGE>
the Trust, on behalf of the Acquiring Fund, and dated as of the Closing Date, to
the effect that the representations and warranties of the Trust with respect to
the Acquired Fund made in this Agreement are true and correct on and as of the
Closing Date, except as they may be affected by the transactions contemplated by
this Agreement, and as to such other matters as the Acquiring Fund shall
reasonably request.
7.4. The Acquiring Fund shall have received on the Closing Date an
opinion of Dechert, in a form reasonably satisfactory to the Acquiring Fund, and
dated as of the Closing Date, to the effect that:
(a) The Trust has been duly formed and is an existing business
trust; (b) the Acquired Fund has the power to carry on its business as presently
conducted in accordance with the description thereof in the Trust's registration
statement under the 1940 Act; (c) the Agreement has been duly authorized,
executed and delivered by the Trust, on behalf of the Acquired Fund, and
constitutes a valid and legally binding obligation of the Trust, on behalf of
the Acquired Fund, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and laws
of general applicability relating to or affecting creditors' rights and to
general equity principles; (d) the execution and delivery of the Agreement did
not, and the exchange of the Acquired Fund's assets for Acquiring Fund Shares
pursuant to the Agreement will not, violate the Trust's Declaration of Trust, as
amended, or By-laws; and (e) to the knowledge of such counsel, and without any
independent investigation, (i) the Trust is not subject to any litigation or
other proceedings that might have a materially adverse effect on the operations
of the Trust, (ii) the Trust is duly registered as an investment company with
the Commission and is not subject to any stop order, and (iii) all regulatory
consents, authorizations, approvals or filings required to be obtained or made
by the Acquired Fund under the federal laws of the United States or the laws of
The Commonwealth of Massachusetts for the exchange of the Acquired Fund's assets
for Acquiring Fund Shares pursuant to the Agreement have been obtained or made.
The delivery of such opinion is conditioned upon receipt by Dechert
of customary representations it shall reasonably request of the Trust, on behalf
of each of the Acquiring Fund and the Acquired Fund.
7.5. The Acquired Fund shall have performed all of the covenants and
complied with all of the provisions required by this Agreement to be performed
or complied with by the Acquired Fund on or before the Closing Date.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND THE
ACQUIRED FUND
If any of the conditions set forth below have not been met on or before
the Closing Date with respect to the Acquired Fund or the Acquiring Fund, the
other party to this Agreement shall, at its option, not be required to
consummate the transactions contemplated by this Agreement:
8.1. This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Acquired Fund in accordance with the provisions of the Trust's Declaration
of Trust, as amended, and By-Laws, applicable Massachusetts law and the 1940
Act, and certified copies of the resolutions evidencing such approval shall have
been delivered to the Acquiring Fund. Notwithstanding anything herein to the
contrary, neither the Acquiring Fund nor the Acquired Fund may waive the
conditions set forth in this section 8.1.
8.2. On the Closing Date, no action, suit or other proceeding shall be
pending or to its knowledge threatened before any court or governmental agency
in which it is sought to restrain or
<PAGE>
prohibit, or obtain material damages or other relief in connection with, this
Agreement or the transactions contemplated herein.
8.3. All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities deemed necessary by
the Acquiring Fund or the Acquired Fund to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order or permit would not
involve a risk of a material adverse effect on the assets or properties of the
Acquiring Fund or the Acquired Fund, provided that either party hereto may for
itself waive any of such conditions.
8.4. The Registration Statement shall have become effective under the
1933 Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act.
8.5. The parties shall have received an opinion of Willkie Farr &
Gallagher addressed to each of the Acquiring Fund and the Acquired Fund, in a
form reasonably satisfactory to each such party to this Agreement, substantially
to the effect that, based upon certain facts, assumptions and representations of
the parties, for federal income tax purposes: (i) the transfer to the Acquiring
Fund of all or substantially all of the assets of the Acquired Fund in exchange
solely for Acquiring Fund Shares and the assumption by the Acquiring Fund of all
of the liabilities of the Acquired Fund, followed by the distribution of such
shares to the Acquired Fund Shareholders in exchange for their shares of the
Acquired Fund in complete liquidation of the Acquired Fund, will constitute a
"reorganization" within the meaning of Section 368(a)(1) of the Code, and the
Acquiring Fund and the Acquired Fund will each be "a party to a reorganization"
within the meaning of Section 368(b) of the Code; (ii) no gain or loss will be
recognized by the Acquired Fund upon the transfer of all or substantially all of
its assets to the Acquiring Fund in exchange solely for Acquiring Fund Shares
and the assumption by the Acquiring Fund of all of the liabilities of the
Acquired Fund; (iii) the basis of the assets of the Acquired Fund in the hands
of the Acquiring Fund will be the same as the basis of such assets of the
Acquired Fund immediately prior to the transfer; (iv) the holding period of the
assets of the Acquired Fund in the hands of the Acquiring Fund will include the
period during which such assets were held by the Acquired Fund; (v) no gain or
loss will be recognized by the Acquiring Fund upon the receipt of the assets of
the Acquired Fund in exchange for Acquiring Fund Shares and the assumption by
the Acquiring Fund of all of the liabilities of the Acquired Fund; (vi) no gain
or loss will be recognized by Acquired Fund Shareholders upon the receipt of the
Acquiring Fund Shares solely in exchange for their shares of the Acquired Fund
as part of the transaction; (vii) the basis of the Acquiring Fund Shares
received by Acquired Fund Shareholders will be the same as the basis of the
shares of the Acquired Fund exchanged therefor; and (viii) the holding period of
Acquiring Fund Shares received by Acquired Fund Shareholders will include the
holding period during which the shares of the Acquired Fund exchanged therefor
were held, provided that at the time of the exchange the shares of the Acquired
Fund were held as capital assets in the hands of Acquired Fund Shareholders. The
delivery of such opinion is conditioned upon receipt by Willkie Farr & Gallagher
of representations it shall request of the Trust. Notwithstanding anything
herein to the contrary, neither the Acquiring Fund nor the Acquired Fund may
waive the condition set forth in this section 8.5.
9. INDEMNIFICATION
9.1. The Acquiring Fund agrees to indemnify and hold harmless the
Acquired Fund and each of the Acquired Fund's Board members and officers from
and against any and all losses, claims, damages, liabilities or expenses
(including, without limitation, the payment of reasonable legal fees and
reasonable costs of investigation) to which jointly and severally, the Acquired
Fund or any of its Board members or officers may become subject, insofar as any
such loss, claim, damage, liability or expense (or actions with
<PAGE>
respect thereto) arises out of or is based on any breach by the Acquiring Fund
of any of its representations, warranties, covenants or agreements set forth in
this Agreement.
9.2. The Acquired Fund agrees to indemnify and hold harmless the
Acquiring Fund and each of the Acquiring Fund's Board members and officers from
and against any and all losses, claims, damages, liabilities or expenses
(including, without limitation, the payment of reasonable legal fees and
reasonable costs of investigation) to which jointly and severally, the Acquiring
Fund or any of its Board members or officers may become subject, insofar as any
such loss, claim, damage, liability or expense (or actions with respect thereto)
arises out of or is based on any breach by the Acquired Fund of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
10. FEES AND EXPENSES
10.1. The Trust, on behalf of each of the Funds, represents and warrants
that it has no obligations to pay any brokers or finders fees in connection with
the transactions provided for herein.
10.2. [Scudder Kemper will pay the Acquiring Fund's allocable share of
expenses associated with the Reorganization.] Each class of the Acquired Fund
will pay its allocable share of expenses associated with the Reorganization
(approximately $12,328 for Class A, $6,492 for Class B, $13,382 for Class C and
$78,805 for Class S Shares, or $[_], $[_], $[_] and $[_] per share,
respectively, based on [_], 2000 net assets for the Fund). Any such expenses
which are so borne by Scudder Kemper will be solely and directly related to the
Reorganization within the meaning of Revenue Ruling 73-54, 1973-1 C.B. 187.
Acquired Fund Shareholders will pay their own expenses, if any, incurred in
connection with the Reorganization.
11. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
11.1. The Acquiring Fund and the Acquired Fund agree that neither party
has made any representation, warranty or covenant not set forth herein and that
this Agreement constitutes the entire agreement between the parties.
11.2. Except as specified in the next sentence set forth in this section
11.2, the representations, warranties and covenants contained in this Agreement
or in any document delivered pursuant hereto or in connection herewith shall not
survive the consummation of the transactions contemplated hereunder. The
covenants to be performed after the Closing and the obligations of each of the
Acquiring Fund and Acquired Fund in sections 9.1 and 9.2 shall survive the
Closing.
12. TERMINATION
12.1. This Agreement may be terminated and the transactions contemplated
hereby may be abandoned by either party by (i) mutual agreement of the parties,
or (ii) by either party if the Closing shall not have occurred on or before [_]
, 2001, unless such date is extended by mutual agreement of the parties, or
(iii) by either party if the other party shall have materially breached its
obligations under this Agreement or made a material and intentional
misrepresentation herein or in connection herewith. In the event of any such
termination, this Agreement shall become void and there shall be no liability
hereunder on the part of any party or their respective Board members or
officers, except for any such material breach or intentional misrepresentation,
as to each of which all remedies at law or in equity of the party adversely
affected shall survive.
<PAGE>
13. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by any authorized officer of the Acquired
Fund and any authorized officer of the Acquiring Fund; provided, however, that
following the meeting of the Acquired Fund Shareholders called by the Acquired
Fund pursuant to section 5.3 of this Agreement, no such amendment may have the
effect of changing the provisions for determining the number of the Acquiring
Fund Shares to be issued to the Acquired Fund Shareholders under this Agreement
to the detriment of such shareholders without their further approval.
14. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be deemed duly given
if delivered by hand (including by Federal Express or similar express courier)
or transmitted by facsimile or three days after being mailed by prepaid
registered or certified mail, return receipt requested, addressed to the
Acquired Fund, Two International Place, Boston, MA 02110-4103, with a copy to
Dechert, Ten Post Office Square South, Boston, MA 02109-4603, Attention: Joseph
R. Fleming, Esq., or to the Acquiring Fund, Two International Place, Boston, MA
02110-4103, with a copy to Dechert, Ten Post Office Square South, Boston, MA
02109-4603, Attention: Joseph R. Fleming, Esq., or to any other address that the
Acquired Fund or the Acquiring Fund shall have last designated by notice to the
other party.
15. HEADINGS; COUNTERPARTS; ASSIGNMENT; LIMITATION OF LIABILITY
15.1. The Article and section headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
15.2. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
15.3. This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and the shareholders of the
Acquiring Fund and the Acquired Fund and their respective successors and
assigns, any rights or remedies under or by reason of this Agreement.
15.4. References in this Agreement to the Trust mean and refer to the
Board members of the Trust from time to time serving under its Declaration of
Trust on file with the Secretary of State of The Commonwealth of Massachusetts,
as the same may be amended from time to time, pursuant to which the Trust
conducts its business. It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Board members, shareholders,
nominees, officers, agents, or employees of the Trust or the Funds personally,
but bind only the respective property of the Funds, as provided in the Trust's
Declaration of Trust. Moreover, no series of the Trust other than the Funds
shall be responsible for the obligations of the Trust hereunder, and all persons
shall look only to the assets of the Funds to satisfy the obligations of the
Trust hereunder. The execution and the delivery of this Agreement have been
authorized by the Trust's Board members, on behalf of the applicable Fund, and
this Agreement has been signed by authorized officers of each Fund acting as
such, and neither such authorization by such Board members, nor such execution
and delivery by such officers, shall be deemed to have been made by
<PAGE>
any of them individually or to impose any liability on any of them personally,
but shall bind only the respective property of the Funds, as provided in the
Trust's Declaration of Trust.
Notwithstanding anything to the contrary contained in this Agreement, the
obligations, agreements, representations and warranties with respect to each
Fund shall constitute the obligations, agreements, representations and
warranties of that Fund only (the "Obligated Fund"), and in no event shall any
other series of the Trust or the assets of any such series be held liable with
respect to the breach or other default by the Obligated Fund of its obligations,
agreements, representations and warranties as set forth herein.
15.5. This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of The Commonwealth of Massachusetts, without regard
to its principles of conflicts of laws.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by an authorized officer and its seal to be affixed thereto and
attested by its Secretary or Assistant Secretary.
Attest: INVESTMENT TRUST
on behalf of Classic Growth Fund
_________________________
Secretary
______________________________
By:___________________________
Its:__________________________
Attest: INVESTMENT TRUST
on behalf of Scudder Capital Growth Fund
_________________________
Secretary
______________________________
By:___________________________
Its:__________________________
AGREED TO AND ACKNOWLEDGED
ONLY WITH RESPECT TO
PARAGRAPH 10.2 HERETO
SCUDDER KEMPER INVESTMENTS, INC.
_________________________________
By:______________________________
Its:_____________________________
<PAGE>
EXHIBIT B
MANAGEMENT'S DISCUSSION OF SCUDDER CAPITAL GROWTH FUND'S
PERFORMANCE
<PAGE>
EXHIBIT B
Performance Update
--------------------------------------------------------------------------------
September 30, 2000
--------------------------------------------------------------------------------
Growth of a $10,000 Investment
--------------------------------------------------------------------------------
THE ORIGINAL DOCUMENT CONTAINS A LINE CHART HERE
LINE CHART DATA:
Scudder Capital
Growth Fund -- Standard & Poor's
Class AARP 500 Index*
'90 10000 10000
'91 14281 13115
'92 14843 14567
'93 18484 16461
'94 17616 17068
'95 21750 22144
'96 25223 26645
'97 37009 37426
'98 35754 40811
'99 48922 52165
'00 61644 59101
Yearly periods ended September 30
--------------------------------------------------------------------------------
Fund Index Comparison
--------------------------------------------------------------------------------
Total Return
Page 1
<PAGE>
Growth of
Average Scudder
Period ended 9/30/2000 $10,000 Cumulative Capital Growth
Annual Fund
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
1 year $ 12,601 26.01% 26.01%
-------------------------------------------------------------------------------
5 year $ 28,342 183.42% 23.16%
-------------------------------------------------------------------------------
10 year $ 61,644 516.44% 19.95%
-------------------------------------------------------------------------------
Standard & Poor's 500 Index*
-------------------------------------------------------------------------------
1 year $ 11,330 13.30% 13.30%
-------------------------------------------------------------------------------
5 year $ 26,689 166.89% 21.67%
-------------------------------------------------------------------------------
10 year $ 59,101 491.01% 19.43%
-------------------------------------------------------------------------------
* The Standard & Poor's 500 Index is a capitalization-weighted index of
500 stocks. The index is designed to measure performance
Page 2
<PAGE>
of domestic stocks through changes in the aggregate market value of 500
stocks representing all major industries. Index returns assume
reinvestment of dividends and, unlike Fund returns, do not reflect any
fees or expenses.
On July 17, 2000, existing shares of the Fund were redesignated as
Class AARP shares. In addition, the Fund commenced offering Class S
shares. The total return information provided is for the Fund's Class
AARP shares.
All performance is historical, assumes reinvestment of all dividends
and capital gains, and is not indicative of future results. Investment
return and principal value will fluctuate, so an investor's shares,
when redeemed, may be worth more or less than when purchased.
Portfolio Management Discussion
--------------------------------------------------------------------------------
September 30, 2000
In the following interview, William F. Gadsden, portfolio manager of the Scudder
Capital Growth Fund, discusses the fund's strategy and the market environment
during the twelve-month period ended September 30, 2000.
Q: How did the fund perform over the period?
Page 3
<PAGE>
A: The fund's Class AARP shares returned 26.01% during the period, beating the
13.30% return of its unmanaged benchmark, the S&P 500. In addition, the fund's
returns placed it ahead of the 17.72% average of the Lipper large-cap core fund
category. While growth equity investors saw a great deal of volatility,
particularly after March of this year, our more conservative approach to growth
investing enabled the fund to hold up well relative to its peer group.
Q: Could you tell us a little more about your growth investing strategy?
A: We use an approach known as GARP, or Growth at a Reasonable Price. We believe
this approach should help us outperform on a long-term basis by fully
participating in broad advances while limiting portfolio volatility and risk in
the event that conditions become less favorable. Additionally, our approach
helps us assess opportunities in sectors that are often not represented in
traditional growth styles. We believe that good companies that offer superior
long-term growth characteristics, and the strength of a competitive franchise to
sustain them, are worth more than less reliable companies that are often "cheap"
for a reason. On the other hand, when a stock reaches a price that we believe to
be excessive in light of its long-term growth prospects, we will generally trim
the position to avoid what may be substantial downside risk in the event of a
disappointment. In short, GARP is a disciplined methodology that has allowed us
to participate in some of the market's biggest winners, and to avoid an
inordinate number of negative surprises.
Page 4
<PAGE>
Q: Please give us an overview of the market and how it impacted the fund.
A: Market volatility was quite high during much of the period. Late last year
and early this year, a combination of strong economic momentum, moderate
inflation, and an improving corporate profits outlook helped to alleviate prior
concerns about the impact of rising energy and labor prices and the threat of a
more aggressive monetary tightening by the Federal Reserve Board (the Fed).
In March, however, leadership shifted from technology and Internet stocks as
financial and cyclical sectors responded favorably to a more benign economic
outlook and interest rate stability. Throughout the summer, rapid sector
rotation resulted in increased market volatility. Many of the top contributors
to the S&P 500 in the second quarter were health care companies such as Pfizer
and Merck, while many of the poorest performers were technology stocks,
including Microsoft and Cisco Systems. In many ways, the first quarter's
laggards took the lead in the second quarter, as investors once again focused on
valuation and earnings. They shied away from companies with unproven business
plans and no current earnings, and sought out more seasoned and reasonably
valued companies.
In August, a strong rally in growth stocks gave way to profit taking brought
about by concerns as to how the now-slowing economy, higher oil pr
Page 5
<PAGE>
ices, and a weak euro currency will impact corporate earnings. In September, the
selling intensified. Many bellwether companies, across different economic
sectors, pre-announced that earnings would likely fail to meet expectations. The
most visible pre-announcements came in technology, which reinforced investor
concerns that third-quarter revenues and earnings may be significantly lower
than anticipated and not attributable to company-specific factors. Throughout
the third quarter, however, the fund's diversified approach and attention to
risk management helped mitigate losses, particularly in the technology sector.
The benefit of this approach can be seen in the performance of the fund's
technology holdings, which declined 7.73% during the quarter, compared with a
13.48% decline for the technology sector of the S&P 500.
Q: What industries and stocks have had the greatest impact on performance?
A: Over the past year, portfolio sector weightings had a slightly positive
impact on performance relative to the S&P 500 Index. The fund was helped by
underweighted positions in basic industries and communications, two of the
market's poorest performing sectors. A low inflation environment and a lack of
pricing power for many companies operating in these sectors contributed to the
weakness. The fund also benefited from its moderate overweightings, relative to
the S&P 500, in technology and health care, which both outperforme
Page 6
<PAGE>
d. These sectors have traditionally housed many of the market's top growth
companies and have historically been well represented in our investment style.
Mild underweightings in the utility and financial sectors detracted from
performance. Both groups had been fairly depressed and performed well in
reaction to declining interest rates.
The fund's outperformance versus the benchmark was primarily attributable to
good stock selection. This result is by design as we seek to identify the best
companies within the different economic sectors. Our issue selections added
value across several economic sectors but the greatest contributions came from
technology, health care, and financials. Technology holdings were led by EMC,
Corning, and Sun Microsystems, which all outperformed dramatically. Our small
allocations to biotech companies Genentech and Immunex Corp. nicely complemented
long-time holdings in drug stocks such as Eli Lilly and Pfizer. Strength in the
finance sector of the portfolio was broad as American International Group,
American Express, and Citigroup all benefited from declining interest rates and
continue to post strong operating results.
Q: Where do you see things going from here in technology?
A: First, we see no quick resolution to the antitrust litigation involving
Microsoft. However, when the legal situation stabilizes, we think investors will
focus on the company's good fundamentals and the wider acceptance
Page 7
<PAGE>
of Windows 2000 at the corporate level. Also, the market has refocused its
attention on fundamentals. This means that while investors are looking for
growth, they want growth at a reasonable price. This renewed focus on valuation
is the reason many high-flying stocks came crashing down. We don't think this is
a temporary situation. A market focused on fundamentals should benefit the
fund's portfolio. Holdings such as Pepsi and Pfizer are all solid companies with
strong earnings but with stock prices that had been depressed by the singular
focus on technology. At the same time, many of the fundamentally sound
technology companies the fund holds have begun to regain their footing. In fact,
we have recently added to select technology holdings on short-term weakness.
Q: What's your outlook for the markets in general?
A: We continue to believe the market will remain very selective, rewarding only
those companies that are able to consistently demonstrate above-average earnings
growth. In this environment, we believe our focus on risk control and
identifying companies with dominant competitive positions and the ability to
sustain superior earnings growth is particularly important.
Page 8
<PAGE>
APPENDIX
Beneficial Owners of Fund Shares
<PAGE>
This proxy statement/prospectus is accompanied by Scudder Capital
Growth Fund's prospectus that relates to Class S shares dated July 17, 2000, as
revised October 1, 2000, which was previously filed with the Commission via
EDGAR on September 29, 2000 (File No. 811-00043) and is incorporated by
reference herein.
This proxy statement/prospectus is accompanied by Scudder Capital
Growth Fund's prospectus that relates to Class A, Class B and Class C shares
dated December 29, 2000, which was previously filed with the Commission via
EDGAR on October 30, 2000 (File No. 811-00043) and is incorporated by reference
herein.
Classic Growth Fund's prospectuses dated February 1, 2001, which were
previously filed with the Commission via EDGAR on December 1, 2000 (File No.
811-00043), are incorporated by reference herein.
Scudder Capital Growth Fund's statement of additional information
that relates to Class S shares dated July 17, 2000, as revised October 1, 2000,
which was previously filed with the Commission via EDGAR on September 29, 2000
(File No. 811-00043), is incorporated by reference herein.
Scudder Capital Growth Fund's statement of additional information that
relates to Class A, Class B and Class C shares dated December 29, 2000, which
was previously filed with the Commission via EDGAR on October 30, 2000 (File No.
811-00043) is incorporated by reference herein.
<PAGE>
PART B
INVESTMENT TRUST
------------------------------------------------------------
Statement of Additional Information
March [_], 2001
------------------------------------------------------------
Acquisition of the Assets of By and in Exchange for Shares of
Classic Growth Fund, Scudder Capital Growth Fund,
a series of a series of the Trust
Investment Trust (the "Trust") Two International Place
Two International Place Boston, MA 02110-4103
Boston, MA 02110-4103
This Statement of Additional Information is available to the
shareholders of Classic Growth Fund in connection with a proposed transaction
whereby Scudder Capital Growth Fund will acquire all or substantially all of the
assets and all of the liabilities of Classic Growth Fund in exchange for shares
of Scudder Capital Growth Fund (the "Reorganization").
This Statement of Additional Information of the Trust contains
material which may be of interest to investors but which is not included in the
Proxy Statement/Prospectus of the Trust relating to the Reorganization. This
Statement of Additional Information consists of this cover page and the
following documents:
1. Scudder Capital Growth Fund's statement of additional information
that relates to Class S shares dated July 17, 2000, as revised October 1, 2000,
which was previously filed with the Securities and Exchange Commission (the
"Commission") via EDGAR on September 29, 2000 (File No. 811-00043) and is
incorporated by reference herein.
2. Scudder Capital Growth Fund's statement of additional information
that relates to Class A, Class B and Class C shares dated December 29, 2000,
which was previously filed with the Commission via EDGAR on October 30, 2000
(File No. 811-00043) and is incorporated by reference herein.
3. Scudder Capital Growth Fund's annual report to shareholders for the
fiscal year ended September 30, 2000, which was previously filed with the
Commission via EDGAR on November 28, 2000 (File No. 811-00043) and is
incorporated by reference herein.
4. Classic Growth Fund's prospectuses dated February 1, 2001, which were
previously filed with the Commission via EDGAR on December 1, 2000 (File No.
811-00043) and are incorporated by reference herein.
5. Classic Growth Fund's statements of additional information dated
February 1, 2001, which were previously filed with the Commission via EDGAR on
December 1, 2000 (File No. 811-00043) and are incorporated by reference herein.
6. Classic Growth Fund's annual report to shareholders for the fiscal
year ended October 31, 1999, which was previously filed with the Commission via
EDGAR on December 30, 1999 (File No. 811-00043) and is incorporated by reference
herein.
<PAGE>
7. Classic Growth Fund's semiannual report to shareholders for the period
ended April 30, 2000, which was previously filed with the Commission via EDGAR
on July 7, 2000 (File No. 811-00043) and is incorporated by reference herein.
8. The financial statements and schedules of Scudder Capital Growth Fund
and Classic Growth Fund required by Regulation S-X for the periods specified in
Article 3 thereof, which are filed herein.
This Statement of Additional Information is not a prospectus. A Proxy
Statement/Prospectus dated March [ ], 2001 relating to the Reorganization may
be obtained by writing Classic Growth Fund at Two International Place, Boston,
Massachusetts 02110-4103 or by calling [ ] at 1-800-[ ].
This Statement of Additional Information should be read in conjunction with the
Proxy Statement/Prospectus.
<PAGE>
<TABLE>
<CAPTION>
Pro Forma Scudder Pro Forma
Portfolio of Investments Capital Growth Classic Growth Combined
as of September 30, 2000 (Unaudited) Par/Share Par/Share Par/Share
Amount Amount Amount
---------------------------------------------------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS (3.0%)
----------------------------
Repurchase Agreement with State Street 67,642,000 19,780,000 87,422,000
Bank, 6.48%, 10/02/2000
Total Repurchase Agreements (Cost of $67,642,000, $19,780,000, and
$87,422,000 respectively)
COMMON STOCKS (97.0%)
---------------------
COMMUNICATIONS -6.8% AT&T Wireless Group 776,900 146,900 923,800
BroadWing, Inc. 880,100 167,800 1,047,900
Nokia Oyj 618,500 117,400 735,900
Qwest Communications International Inc. 575,252 109,760 685,012
JDS Uniphase Corp. 300,300 57,100 357,400
Verizon Communications 482,250 89,350 571,600
Vodafone Group PLC - Sp ADR 669,900 127,800 797,700
CONSUMER DISCRETIONARY- 4.6% Home Depot, Inc. 942,450 177,250 1,119,700
Wal-Mart Stores, Inc. 872,700 166,500 1,039,200
Target Corp. 812,500 154,400 966,900
CONSUMER STAPLES-6.4% Anheuser-Busch Companies, Inc. 635,600 121,400 757,000
Coca-Cola Co. 511,300 97,300 608,600
Colgate-Palmolive Co. 543,100 103,300 646,400
Gillette Co. 579,500 110,300 689,800
PepsiCo, Inc. 1,284,900 245,100 1,530,000
DURABLES- 1.9% United Technologies Corp. 688,000 132,300 820,300
ENERGY -7.0% Anadarko Petroleum Corp. 410,800 78,000 488,800
BJ Services Company 185,100 35,300 220,400
Nabors Industries, Inc. 451,900 85,900 537,800
Schlumberger Ltd. 718,100 137,900 856,000
Exxon Mobil Corp. 571,448 109,636 681,084
FINANCIAL- 10.2% American Express Co. 1,210,800 231,200 1,442,000
American International Group, Inc. 620,155 117,975 738,130
Citigroup, Inc. 1,158,600 215,464 1,374,064
Federal National Mortgage Association 285,100 54,100 339,200
Marsh & McLennan Companies, Inc. 270,700 51,900 322,600
HEALTH -16.3% Baxter International, Inc. 615,100 117,450 732,550
Becton, Dickinson & Co. 982,300 186,500 1,168,800
Bristol-Myers Squibb Co. 330,300 63,000 393,300
Genentech, Inc. 172,700 33,100 205,800
Immunex Corp. 322,200 61,400 383,600
Eli Lilly & Co. 461,100 87,600 548,700
MedImmune, Inc. 251,900 47,400 299,300
Medtronic, Inc. 594,200 113,200 707,400
Merck & Co., Inc. 733,200 139,700 872,900
Pfizer, Inc. 2,085,075 398,450 2,483,525
PE Corp-PE Biosystems Group 217,900 41,800 259,700
MANUFACTURING -6.5% Corning, Inc. 140,100 26,700 166,800
General Electric Co. 2,077,100 381,500 2,458,600
MEDIA- 7.2% AT&T Corp. - Liberty Media Group 2,164,600 423,500 2,588,100
Comcast Corp. 854,600 162,200 1,016,800
The Walt Disney Co. 618,000 117,300 735,300
Interpublic Group of Companies, Inc. 406,600 77,300 483,900
Omnicom Group, Inc. 307,500 58,400 365,900
Viacom, Inc 446,200 87,200 533,400
Infinity Broadcasting Corp. 543,600 104,300 647,900
SERVICE INDUSTRIES- 2.5% Electronic Data Systems Corp. 415,800 79,700 495,500
Siebel Systems, Inc. 280,200 53,600 333,800
Goldman Sachs Group, Inc. 119,600 22,400 142,000
TECHNOLOGY- 27.3% Acclaim Entertainment 20,568 20,568
Apple Computer, Inc. 58,200 58,200
Applied Materials, Inc. 562,800 106,900 669,700
Dell Computer Corp. 701,600 132,300 833,900
EMC Corp. 714,100 135,600 849,700
Intel Corp. 1,720,800 315,880 2,036,680
International Business Machines Corp. 364,300 69,300 433,600
Intuit, Inc. 639,900 121,600 761,500
i2 Technologies Inc. 77,500 14,900 92,400
Microsoft Corp. 1,187,300 225,800 1,413,100
Sun Microsystems, Inc. 624,600 118,600 743,200
Teradyne, Inc. 342,200 65,100 407,300
Vitesse Semiconductor Corp.* 302,900 57,600 360,500
Xilinx, Inc. 282,200 53,700 335,900
America Online, Inc. 724,700 137,800 862,500
Cisco Systems, Inc. 1,484,500 282,400 1,766,900
Oracle Corp. 681,200 129,800 811,000
UTILITIES-3.0% Southern Energy Inc 108,000 20,500 128,500
<CAPTION>
Pro Forma Scudder Pro Forma
Portfolio of Investments Capital Growth Classic Growth Combined
as of September 30, 2000 (Unaudited) Market Market Market
Value ($) Value ($) Value ($)
----------------------------------------------------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS (3.0%)
----------------------------
Repurchase Agreement with State Street 67,642,000 19,780,000 87,422,000
Bank, 6.48%, 10/02/2000
----------------------------------------------------------
Total Repurchase Agreements (Cost of $67,642,000, $19,780,000,
and $87,422,000 respectively) 67,642,000 19,780,000 87,422,000
==========================================================
COMMON STOCKS (97.0%)
---------------------
COMMUNICATIONS -6.8% AT&T Wireless Group 16,217,787 3,066,537 19,284,324
BroadWing, Inc. 22,497,556 4,289,387 26,786,943
Nokia Oyj 24,624,031 4,673,987 29,298,018
Qwest Communications International Inc. 27,648,049 5,275,340 32,923,389
JDS Uniphase Corp. 28,434,656 5,406,656 33,841,312
Verizon Communications 23,358,984 4,327,890 27,686,874
Vodafone Group PLC - Sp ADR 24,786,300 4,728,600 29,514,900
----------------------------------------------------------
167,567,363 31,768,397 199,335,760
==========================================================
CONSUMER DISCRETIONARY- 4.6% Home Depot, Inc. 50,008,753 9,405,328 59,414,081
Wal-Mart Stores, Inc. 41,998,687 8,012,812 50,011,499
Target Corp. 20,820,312 3,956,500 24,776,812
----------------------------------------------------------
112,827,752 21,374,640 134,202,392
==========================================================
CONSUMER STAPLES-6.4% Anheuser-Busch Companies, Inc. 26,893,825 5,136,737 32,030,562
Coca-Cola Co. 28,185,412 5,363,662 33,549,074
Colgate-Palmolive Co. 25,634,320 4,875,760 30,510,080
Gillette Co. 17,892,062 3,405,512 21,297,574
PepsiCo, Inc. 59,105,400 11,274,600 70,380,000
----------------------------------------------------------
157,711,019 30,056,271 187,767,290
==========================================================
DURABLES- 1.9% United Technologies Corp. 47,644,000 9,161,775 56,805,775
----------------------------------------------------------
47,644,000 9,161,775 56,805,775
==========================================================
ENERGY -7.0% Anadarko Petroleum Corp. 27,301,768 5,183,880 32,485,648
BJ Services Company 11,314,237 2,157,712 13,471,949
Nabors Industries, Inc. 23,679,560 4,501,160 28,180,720
Schlumberger Ltd. 59,108,606 11,350,893 70,459,499
Exxon Mobil Corp. 50,930,303 9,771,308 60,701,611
----------------------------------------------------------
172,334,474 32,964,953 205,299,427
==========================================================
FINANCIAL- 10.2% American Express Co. 73,556,100 14,045,400 87,601,500
American International Group, Inc. 59,341,075 11,288,732 70,629,807
Citigroup, Inc. 62,636,812 11,648,522 74,285,334
Federal National Mortgage Association 20,384,650 3,868,150 24,252,800
Marsh & McLennan Companies, Inc. 35,935,425 6,889,725 42,825,150
----------------------------------------------------------
251,854,062 47,740,529 299,594,591
==========================================================
HEALTH -16.3% Baxter International, Inc. 49,092,668 9,373,978 58,466,646
Becton, Dickinson & Co. 25,969,556 4,930,593 30,900,149
Bristol-Myers Squibb Co. 18,868,387 3,598,875 22,467,262
Genentech, Inc. 32,068,231 6,146,256 38,214,487
Immunex Corp. 14,015,700 2,670,900 16,686,600
Eli Lilly & Co. 37,406,737 7,106,550 44,513,287
MedImmune, Inc. 19,459,275 3,661,650 23,120,925
Medtronic, Inc. 30,786,987 5,865,175 36,652,162
Merck & Co., Inc. 54,577,575 10,398,918 64,976,493
Pfizer, Inc. 93,698,057 17,905,346 111,603,403
PE Corp-PE Biosystems Group 25,385,350 4,869,700 30,255,050
----------------------------------------------------------
401,328,523 76,527,941 477,856,464
==========================================================
MANUFACTURING -6.5% Corning, Inc. 41,609,700 7,929,900 49,539,600
General Electric Co. 119,822,706 22,007,781 141,830,487
----------------------------------------------------------
161,432,406 29,937,681 191,370,087
==========================================================
MEDIA- 7.2% AT&T Corp. - Liberty Media Group 38,962,800 7,623,000 46,585,800
Comcast Corp. 34,985,187 6,640,062 41,625,249
The Walt Disney Co. 23,638,500 4,486,725 28,125,225
Interpublic Group of Companies, Inc. 13,849,812 2,633,031 16,482,843
Omnicom Group, Inc. 22,428,281 4,259,550 26,687,831
Viacom, Inc 26,102,700 5,101,200 31,203,900
Infinity Broadcasting Corp. 17,938,800 3,441,900 21,380,700
----------------------------------------------------------
177,906,080 34,185,468 212,091,548
==========================================================
SERVICE INDUSTRIES- 2.5% Electronic Data Systems Corp. 17,255,700 3,307,550 20,563,250
Siebel Systems, Inc. 31,189,762 5,966,350 37,156,112
Goldman Sachs Group, Inc. 13,626,925 2,552,200 16,179,125
----------------------------------------------------------
62,072,387 11,826,100 73,898,487
==========================================================
TECHNOLOGY- 27.3% Acclaim Entertainment --
Apple Computer, Inc. 1,498,650 1,498,650
Applied Materials, Inc. 33,381,075 6,340,506 39,721,581
Dell Computer Corp. 21,618,050 4,076,493 25,694,543
EMC Corp. 70,785,162 13,441,350 84,226,512
Intel Corp. 71,520,750 13,128,762 84,649,512
International Business Machines Corp. 40,983,750 7,796,250 48,780,000
Intuit, Inc. 36,474,300 6,931,200 43,405,500
i2 Technologies Inc. 14,497,343 2,787,231 17,284,574
Microsoft Corp. 71,534,825 13,604,450 85,139,275
Sun Microsystems, Inc. 72,922,050 13,846,550 86,768,600
Teradyne, Inc. 11,977,000 2,278,500 14,255,500
Vitesse Semiconductor Corp.* 26,939,168 5,122,800 32,061,968
Xilinx, Inc. 24,163,375 4,598,062 28,761,437
America Online, Inc. 38,952,625 7,406,750 46,359,375
Cisco Systems, Inc. 82,018,625 15,602,600 97,621,225
Oracle Corp. 53,644,500 10,221,771 63,866,271
----------------------------------------------------------
671,412,598 128,681,925 800,094,523
==========================================================
UTILITIES-3.0% Southern Energy Inc 3,388,519 643,180 4,031,699
----------------------------------------------------------
3,388,519 643,180 4,031,699
==========================================================
----------------------------------------------------------
Total Common Stocks (Cost of $1,648,298,423, $391,854,817 and
$2,040,153,240 respectively) 2,387,479,183 454,868,860 2,842,348,043
==========================================================
----------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO - 100% (Cost of $1,715,940,423,
$411,634,817, and $2,127,575,240 respectively) 2,455,121,183 474,648,860 2,929,770,043
==========================================================
</TABLE>
<PAGE>
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINING CONDENSED STATEMENT OF ASSETS AND LIABILITIES
AS OF SEPTEMBER 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
Scudder Capital Scudder Classic Pro Forma Pro Forma
Growth Fund Growth Fund Adjustments Combined
----------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C>
Investments, at value $ 2,455,121,183 $ 474,648,860 $ 2,929,770,043
Cash 33,314 91 33,405
Other assets less liabilities 2,172,912 (2,050,710) $ -- (2) 122,202
----------------- ---------------- -------------- ----------------
Total Net assets $ 2,457,327,409 $ 472,598,241 $ -- $ 2,929,925,650
================= ================ ============== ================
Net Assets
Class S Shares $ 6,993,007 $ 188,712,618 $ 195,705,625
Class AARP Shares $ 2,450,334,402 $ -- $ 2,450,334,402
Class A Shares $ 151,807,681 $ 151,807,681
Class B Shares $ 107,604,801 $ 107,604,801
Class C Shares $ 24,473,141 $ 24,473,141
Shares Outstanding
Class S Shares 95,255 7,000,702 (4,430,036) 2,665,921
Class AARP Shares 33,379,474 -- -- 33,379,474
Class A Shares 5,617,530 (3,549,587) 2,067,943
Class B Shares 4,070,287 (2,604,481) 1,465,806
Class C Shares 928,839 (595,463) 333,376
Net Asset Value per Share
Class S Shares $ 73.41 $ 26.96 $ 73.41
Class AARP Shares $ 73.41 $ -- $ 73.41
Class A Shares $ 27.02 $ 73.41
Class B Shares $ 26.44 $ 73.41
Class C Shares $ 26.35 $ 73.41
</TABLE>
<PAGE>
PRO FORMA COMBINING CONDENSED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTH PERIOD ENDED SEPTMEBER 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
Scudder Capital Scudder Classic Pro Forma Pro Forma
Growth Fund Growth Fund Adjustments Combined
---------------- ----------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income:
Interest and dividend income $ 17,563,874 2,982,959 $ -- $ 20,546,833
-----------------------------------------------------------------------------
Total Investment Income 17,563,874 2,982,959 20,546,833
Expenses
Management fees 13,653,750 2,571,107 (841,217) (3) 15,383,640
12B-1 -- 1,215,915 1,215,915
Trustees Fees 117,381 110,410 -- (4) 227,791
All other expenses 6,951,049 2,556,892 (1,791,411) (5) 7,716,530
-----------------------------------------------------------------------------
Total expenses before reductions 20,722,180 6,454,324 (2,632,628) 24,543,876
Expense reductions (113,452) (952,004) 1,065,456 --
-----------------------------------------------------------------------------
Expenses, net 20,608,728 5,502,320 (1,567,172) 24,543,876
-----------------------------------------------------------------------------
Net investment income (loss) (3,044,854) (2,519,361) 1,567,172 (3,997,043)
-----------------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss)
on Investments:
Net realized gain (loss) from investments 265,830,606 30,526,419 -- 296,357,025
Net unrealized appreciation (depreciation)
of investments 202,013,652 33,474,870 -- 235,488,522
-----------------------------------------------------------------------------
Net increase in net assets from operations $ 464,799,404 $ 61,481,928 $ 1,567,172 $ 527,848,504
=============================================================================
</TABLE>
Notes to Pro Forma Combining Financial Statements
(Unaudited)
September 30, 2000
1. These financial statements set forth the unaudited pro forma condensed
Statement of Assets and Liabilities as of Septemeber 30, 2000, and the
unaudited pro forma condensed Statement of Operations for the twelve month
period ended September 30, 2000 for Scudder Capital Growth Fund and Scudder
Classic Growth Fund as adjusted giving effect to the Reorganization as if
it had occurred as of the beginning of the period. These statements have
been derived from the books and records utilized in calculating daily net
asset value for each fund.
2. Represents one-time proxy, legal, accounting and other costs of the
Reorganization of $xxxxxx and $xxxxxx to be borne by Scudder Capital Growth
Fund and Scudder Classic Growth Fund, respectively.
3. Represents reduction in management fees resulting from the application of
Scudder Capital Growth Fund's investment management fee for the entire
year.
4. Reduction in trustee fees resulting from the Reorganization.
5. Represents reduction in other expenses resulting from the application of
Scudder Capital Growth Fund's administrative fee for the entire year.
<PAGE>
PART C. OTHER INFORMATION
Item 15. Indemnification.
-------- ----------------
As permitted by Sections 17(h) and 17(i) of the Investment Company Act
of 1940, as amended (the "1940 Act"), pursuant to Article IV of the
Registrant's By-Laws (filed as Exhibit No. 2 to the Registration
Statement), officers, directors, employees and representatives of the Funds
may be indemnified against certain liabilities in connection with the
Funds, and pursuant to Section 12 of the Underwriting Agreement dated May
6, 1998 (filed as Exhibit No. 6(c) to the Registration Statement), Scudder
Investor Services, Inc. (formerly "Scudder Fund Distributors, Inc."), as
principal underwriter of the Registrant, may be indemnified against certain
liabilities that it may incur. Said Article IV of the By-Laws and Section
12 of the Underwriting Agreement are hereby incorporated by reference in
their entirety.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "Act"), may be permitted to
directors, officers and controlling persons of the Registrant and the
principal underwriter pursuant to the foregoing provisions or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director, officer, or
controlling person of the Registrant and the principal underwriter in
connection with the successful defense of any action, suit or proceeding)
is asserted against the Registrant by such director, officer or controlling
person or the principal underwriter in connection with the shares being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
Item 16. Exhibits.
-------- ---------
(1) (a)(1) Amended and Restated Declaration of Trust dated
November 3, 1987. (Incorporated by reference to
Post-Effective Amendment No. 78 to the
Registrant's Registration Statement on Form N-1A,
as amended (the "Registration Statement").)
(a)(2) Certificate of Amendment of Declaration of Trust
dated November 13, 1990. (Incorporated by
reference to Post-Effective Amendment No. 78 to
the Registration Statement.)
(a)(3) Certificate of Amendment of Declaration of Trust
dated February 12, 1991. (Incorporated by
reference to Post-Effective Amendment No. 78 to
the Registration Statement.)
(a)(4) Certificate of Amendment of Declaration of Trust
dated May 28, 1998. (Incorporated by reference to
Post-Effective Amendment No. 105 to the
Registration Statement.)
<PAGE>
(a)(5) Establishment and Designation of Series of Shares
of Beneficial Interest, $0.01 par value, with
respect to Scudder Growth and Income Fund and
Scudder Quality Growth Fund. (Incorporated by
reference to Post-Effective Amendment No. 78 to
the Registration Statement.)
(a)(6) Establishment and Designation of Series of Shares
of Beneficial Interest, $0.01 par value, with
respect to Scudder Classic Growth Fund.
(Incorporated by reference to Post-Effective
Amendment No. 76 to the Registration Statement.)
(a)(7) Establishment and Designation of Series of Shares
of Beneficial Interest, $0.01 par value, with
respect to Scudder Growth and Income Fund, Scudder
Large Company Growth Fund, Scudder Classic Growth
Fund, and Scudder S&P 500 Index Fund.
(Incorporated by reference to Post-Effective
Amendment No. 105 to the Registration Statement.)
(a)(8) Establishment and Designation of Series of Shares
of Beneficial Interest, $0.01 par value, with
respect to Scudder Real Estate Investment Fund.
(Incorporated by reference to Post-Effective
Amendment No. 105 to the Registration Statement.)
(a)(9) Establishment and Designation of Series of Shares
of Beneficial Interest, $0.01 par value, with
respect to Dividend + Growth Fund. (Incorporated
by reference to Post-Effective Amendment No. 105
to the Registration Statement.)
(a)(10) Establishment and Designation of Series of Shares
of Beneficial Interest, $0.01 par value, with
respect to Scudder Tax Managed Growth Fund and
Scudder Tax Managed Small Company Fund.
(Incorporated by reference to Post-Effective
Amendment No. 105 to the Registration Statement.)
(a)(11) Establishment and Designation of Classes of Shares
of Beneficial Interest, $0.01 par value, Kemper A,
B & C Shares, and Scudder S Shares, with respect
to Classic Growth Fund. (Incorporated by reference
to Post-Effective Amendment No. 94 to the
Registration Statement.)
(a)(12) Establishment and Designation of Classes of Shares
of Beneficial Interest, $0.01 par value, Class R
Shares, with respect to Scudder Growth and Income
Fund. (Incorporated by reference to Post-Effective
Amendment No. 105 to the Registration Statement.)
<PAGE>
(a)(13) Establishment and Designation of Classes of Shares
of Beneficial Interest, $0.01 par value, Class R
Shares, with respect to Scudder Large Company
Growth Fund. (Incorporated by reference to Post-
Effective Amendment No. 105 to the Registration
Statement.)
(a)(14) Redesignation of Series, Scudder Classic Growth
Fund to Classic Growth Fund. (Incorporated by
reference to Post-Effective Amendment No. 94 to
the Registration Statement.)
(a)(15) Redesignation of Series, Scudder Quality Growth
Fund to Scudder Large Company Growth Fund.
(Incorporated by reference to Post-Effective
Amendment No. 105 to the Registration Statement.)
(a)(16) Redesignation of Series, Scudder Dividend + Growth
Fund to Scudder Dividend & Growth Fund.
(Incorporated by reference to Post-Effective
Amendment No. 105 to the Registration Statement.)
(a)(17) Establishment and Designation of Classes of Shares
of Beneficial Interest, $0.01 par value, Class S
and Class AARP, with respect to Scudder Dividend
and Growth Fund. (Incorporated by reference to
Post-Effective Amendment No. 117 to the
Registration Statement.)
(a)(18) Amended and Restated Establishment and Designation
of Classes of Shares of Beneficial Interest, $0.01
par value, Class R, Class S and Class AARP with
respect to Scudder Growth and Income Fund.
(Incorporated by reference to Post-Effective
Amendment No. 117 to the Registration Statement.)
(a)(19) Establishment and Designation of Classes of Shares
of Beneficial Interest, $0.01 par value, Class S
and Class AARP, with respect to Scudder S&P 500
Index Fund. (Incorporated by reference to Post-
Effective Amendment No. 117 to the Registration
Statement.)
(a)(20) Establishment and Designation of Classes of Shares
of Beneficial Interest, $0.01 par value, Class S
and Class AARP, with respect to Scudder Small
Company Stock Fund. (Incorporated by reference to
Post-Effective Amendment No. 117 to the
Registration Statement.)
(a)(21) Establishment and Designation of Classes of Shares
of Beneficial Interest, $0.01 par value, Class S
and Class AARP, with respect to Scudder Capital
Growth Fund. (Incorporated by reference to Post-
Effective Amendment No. 117 to the Registration
Statement.)
<PAGE>
(a)(22) Amended and Restated Establishment and Designation
of Classes of Shares of Beneficial Interest, $.01
Par Value, Class R, Class S and Class AARP, with
respect to Scudder Large Company Growth Fund.
(Incorporated by reference to Post-Effective
Amendment No. 118 to the Registration Statement.)
(a)(23) Amended and Restated Establishment and Designation
of Series of Beneficial Interest, $.01 Par Value,
Class S and Class AARP, with respect to Scudder
Capital Growth Fund and Scudder Small Company
Stock Fund. (Incorporated by reference to Post-
Effective Amendment No. 118 to the Registration
Statement.)
(a)(24) Establishment and Designation of Classes of Shares
of Beneficial Interest, $.01 Par Value, Class S
and Class AARP, with respect to Scudder Capital
Growth Fund. (Incorporated by reference to Post-
Effective Amendment No. 118 to the Registration
Statement.)
(a)(25) Establishment and Designation of Classes of Shares
of Beneficial Interest, $.01 Par Value, Class S
and Class AARP, with respect to Scudder Small
Company Stock Fund. (Incorporated by reference to
Post-Effective Amendment No. 118 to the
Registration Statement.)
(2) (b)(1) Amendment to By-Laws of the Registrant dated
November 12, 1991. (Incorporated by reference to
Post-Effective Amendment No. 78 to the
Registration Statement.)
(b)(2) Amendment to By-Laws of the Registrant, dated
February 7, 2000. (Incorporated by reference to
Post-Effective Amendment No. 120 to the
Registration Statement.)
(3) Inapplicable.
(4) Form of Agreement and Plan of Reorganization is
filed herein as Exhibit A to Part A.
(5) Inapplicable.
(6) (d)(1) Investment Management Agreement between the
Registrant (on behalf of Scudder Growth and Income
Fund) and Scudder Kemper Investments, Inc. dated
September 7, 1998. (Incorporated by reference to
Post-Effective Amendment No. 100 to the
Registration Statement.)
(d)(2) Investment Management Agreement between the
Registrant (on behalf of Scudder Large Company
Growth Fund) and Scudder Kemper Investments, Inc.
dated September 7, 1998. (Incorporated by
reference to Post-Effective Amendment No. 100 to
the Registration Statement.)
<PAGE>
(d)(3) Investment Management Agreement between the
Registrant (on behalf of Classic Growth Fund) and
Scudder Kemper Investments, Inc. dated September
7, 1998. (Incorporated by reference to Post-
Effective Amendment No. 100 to the Registration
Statement.)
(d)(4) Investment Management Agreement between the
Registrant (on behalf of Scudder Real Estate
Investment Fund) and Scudder Kemper Investments,
Inc. dated September 7, 1998. (Incorporated by
reference to Post-Effective Amendment No. 100 to
the Registration Statement.)
(d)(5) Investment Management Agreement between the
Registrant (on behalf of Scudder S&P 500 Index
Fund) and Scudder Kemper Investments, Inc. dated
September 7, 1998. (Incorporated by reference to
Post-Effective Amendment No. 100 to the
Registration Statement.)
(d)(6) Investment Management Agreement between the
Registrant (on behalf of Scudder Dividend & Growth
Fund) and Scudder Kemper Investments, Inc. dated
September 7, 1998. (Incorporated by reference to
Post-Effective Amendment No. 100 to the
Registration Statement.)
(d)(7) Investment Management Agreement between the
Registrant (on behalf of Scudder Tax Managed
Growth Fund) and Scudder Kemper Investments, Inc.
dated September 7, 1998. (Incorporated by
reference to Post-Effective Amendment No. 100 to
the Registration Statement.)
(d)(8) Investment Management Agreement between the
Registrant (on behalf of Scudder Tax Managed Small
Company Fund) and Scudder Kemper Investments, Inc.
dated September 7, 1998. (Incorporated by
reference to Post-Effective Amendment No. 100 to
the Registration Statement.)
(d)(9) Investment Advisory Agreement between the
Registrant (on behalf of Scudder S&P 500 Index
Fund) and Bankers Trust Company dated September 9,
1999. (Incorporated by reference to Post-Effective
Amendment No. 109 to the Registration Statement.)
(d)(10) Investment Management Agreement between the
Registrant (on behalf of Scudder Capital Growth
Fund) and Scudder Kemper Investments, Inc. dated
July 17, 2000. (Incorporated by reference to Post-
Effective Amendment No. 120 to the Registration
Statement.)
<PAGE>
(d)(11) Investment Management Agreement between the
Registrant (on behalf of Scudder Small Company
Stock Fund) and Scudder Kemper Investments, Inc.
dated July 17, 2000. (Incorporated by reference to
Post-Effective Amendment No. 120 to the
Registration Statement.)
(d)(12) Investment Management Agreement between the
Registrant (on behalf of Scudder Growth and Income
Fund) and Scudder Kemper Investments, Inc. dated
August 14, 2000, is incorporated by reference to
Post-Effective Amendment No. 121 to the
Registration Statement.
(7) (e)(1) Underwriting Agreement and Distribution Services
Agreement between the Registrant on behalf of
Classic Growth Fund and Kemper Distributors, Inc.
dated September 7, 1998. (Incorporated by
reference to Post-Effective Amendment No. 100 to
the Registration Statement.)
(e)(2) Underwriting Agreement between the Registrant and
Scudder Investor Services, Inc. dated September 7,
1998. (Incorporated by reference to Post-Effective
Amendment No. 100 to the Registration Statement.)
(e)(3) Amendment No. 1 dated August 31, 1999 to the
Underwriting and Distribution Services Agreement
between the Registrant, on behalf of Classic
Growth Fund, and Kemper Distributors, Inc.
(Incorporated by reference to Post-Effective
Amendment No. 109 to the Registration Statement.)
(e)(4) Amendment dated November 2, 1999 to the
Underwriting and Distribution Services Agreement
between the Registrant, on behalf of Classic
Growth Fund, and Kemper Distributors, Inc.
(Incorporated by reference to Post-Effective
Amendment No. 109 to the Registration Statement.)
(e)(5) Underwriting Agreement between the Registrant and
Scudder Investor Services dated May 8, 2000.
(Incorporated by reference to Post-Effective
Amendment No. 118 to the Registration Statement.)
(8) Inapplicable.
(9) (g)(1) Custodian Agreement between the Registrant (on
behalf of Scudder Growth and Income Fund) and
State Street Bank and Trust Company ("State Street
Bank") dated December 31, 1984. (Incorporated by
reference to Post-Effective Amendment No. 78 to
the Registration Statement.)
<PAGE>
(g)(2) Amendment dated April 1, 1985 to the
Custodian Agreement between the Registrant
and State Street Bank. (Incorporated by
reference to Post-Effective Amendment No.
78 to the Registration Statement.)
(g)(3) Amendment dated August 8, 1987 to the
Custodian Agreement between the Registrant
and State Street Bank. (Incorporated by
reference to Post-Effective Amendment No.
78 to the Registration Statement.)
(g)(4) Amendment dated August 9, 1988 to the
Custodian Agreement between the Registrant
and State Street Bank. (Incorporated by
reference to Post-Effective Amendment No.
78 to the Registration Statement.)
(g)(5) Amendment dated July 29, 1991 to the
Custodian Agreement between the Registrant
and State Street Bank. (Incorporated by
reference to Post-Effective Amendment No.
78 to the Registration Statement.)
(g)(6) Amendment dated February 8, 1999 to the
Custodian Agreement between the Registrant
and State Street Bank. (Incorporated by
reference to Post-Effective Amendment No.
109 to the Registration Statement.)
(g)(7) Custodian fee schedule for Scudder S&P 500
Index Fund. (Incorporated by reference to
Post-Effective Amendment No. 84 to the
Registration Statement.)
(g)(8) Subcustodian Agreement with fee schedule
between State Street Bank and The Bank of
New York, London office, dated December 31,
1978. (Incorporated by reference to Post-
Effective Amendment No. 78 to the
Registration Statement.)
(g)(9) Subcustodian Agreement between State Street
Bank and The Chase Manhattan Bank, N.A.
dated September 1, 1986. (Incorporated by
reference to Post-Effective Amendment No.
78 to the Registration Statement.)
(g)(10) Custodian fee schedule for Scudder Quality
Growth Fund and Scudder Growth and Income
Fund. (Incorporated by reference to Post-
Effective Amendment No. 72 to the
Registration Statement.)
(g)(11) Custodian fee schedule for Scudder Classic
Growth Fund dated August 1, 1994.
(Incorporated by reference to Post-
Effective Amendment No. 77 to the
Registration Statement.)
<PAGE>
(10) (m)(1) 12b-1 Plan between the Registrant, on
behalf of Scudder Growth and Income Fund
(Class R shares) and Scudder Large Company
Growth Fund (Class R shares), and Scudder
Investor Services, Inc. (Incorporated by
reference to Post-Effective Amendment No.
105 to the Registration Statement.)
(m)(2) Mutual Funds Multi-Distribution System
Plan, Rule 18f-3 Plan. (Incorporated by
reference to Post-Effective Amendment No.
94 to the Registration Statement.)
(m)(3) Plan with respect to Scudder Growth and
Income Fund pursuant to Rule 18f-3.
(Incorporated by reference to Post-
Effective Amendment No. 105 to the
Registration Statement.)
(m)(4) Plan with respect to Scudder Large Company
Growth Fund pursuant to Rule 18f-3.
(Incorporated by reference to Post-
Effective Amendment No. 105 to the
Registration Statement.)
(m)(5) Plan with respect to Scudder Dividend and
Growth Fund pursuant to Rule 18f-3.
(Incorporated by reference to Post-
Effective Amendment No. 118 to the
Registration Statement.)
(m)(6) Plan with respect to Scudder Capital Growth
Fund pursuant to Rule 18f-3. (Incorporated
by reference to Post-Effective Amendment
No. 118 to the Registration Statement.)
(m)(7) Plan with respect to Scudder Growth and
Income Fund pursuant to Rule 18f-3.
(Incorporated by reference to Post-
Effective Amendment No. 118 to the
Registration Statement.)
(m)(8) Plan with respect to Scudder S&P 500 Index
Fund pursuant to Rule 18f-3. (Incorporated
by reference to Post-Effective Amendment
No. 118 to the Registration Statement.)
(m)(9) Plan with respect to Scudder Small Company
Stock Fund pursuant to Rule 18f-3.
(Incorporated by reference to Post-
Effective Amendment No. 118 to the
Registration Statement.)
(m)(10) Amended and Restated Plan with respect to
Scudder Dividend and Growth Fund pursuant
to Rule 18f-3. (Incorporated by reference
to Post-Effective Amendment No. 118 to the
Registration Statement.)
(m)(11) Amended and Restated Plan with respect to
Scudder Capital Growth Fund pursuant to
Rule 18f-3. (Incorporated by reference to
Post-Effective Amendment No. 118 to the
Registration Statement.)
<PAGE>
(m)(12) Amended and Restated Plan with respect to
Scudder Growth and Income Fund pursuant to
Rule 18f-3. (Incorporated by reference to
Post-Effective Amendment No. 118 to the
Registration Statement.)
(m)(13) Amended and Restated Plan with respect to
Scudder S&P 500 Index Fund pursuant to Rule
18f-3. (Incorporated by reference to Post-
Effective Amendment No. 118 to the
Registration Statement.)
(m)(14) Amended and Restated Plan with respect to
Scudder Small Company Stock Fund pursuant
to Rule 18f-3. (Incorporated by reference
to Post-Effective Amendment No. 118 to the
Registration Statement.)
(m)(15) Amended and Restated Plan with respect to
Scudder Large Company Growth Fund pursuant
to Rule 18f-3. (Incorporated by reference
to Post-Effective Amendment No. 121 to the
Registration Statement.)
(m)(16) Scudder Funds Amended and Restated Multi-
Distribution System Plan is filed herewith.
(11) Opinion and Consent of Dechert is filed
herewith.
(12) Opinion and Consent of Willkie Farr &
Gallagher is to be filed by post-effective
amendment.
(13) (h)(1) Transfer Agency and Service Agreement with
fee schedule between the Registrant and
Scudder Service Corporation dated October
2, 1989. (Incorporated by reference to
Post-Effective Amendment No. 78 to the
Registration Statement.)
(h)(1)(a) Revised fee schedule dated October 6, 1995.
(Incorporated by reference to Post-
Effective Amendment No. 76 to the
Registration Statement.)
(h)(1)(b) Form of revised fee schedule dated October
1, 1996. (Incorporated by reference to
Post-Effective Amendment No. 78 to the
Registration Statement.)
(h)(2) Transfer Agency Fee Schedule between the
Registrant, on behalf of Scudder Classic
Growth Fund, and Kemper Service Company
dated January 1, 1999. (Incorporated by
reference to Post-Effective Amendment No.
109 to the Registration Statement.)
(h)(3) Agency Agreement between the Registrant on
behalf of Classic Growth Fund and Kemper
Service Company dated April 1998.
(Incorporated by reference to Post-
Effective Amendment No. 100 to the
Registration Statement.)
<PAGE>
(h)(4) Agency Agreement between the Registrant on
behalf of Scudder Growth and Income Fund
Class R shares and Scudder Large Company
Growth Fund Class R shares, and Kemper
Service Company dated May 3, 1999.
(Incorporated by reference to Post-
Effective Amendment No. 106 to the
Registration Statement.)
(h)(5) COMPASS Service Agreement and fee schedule
between the Registrant and Scudder Trust
Company dated January 1, 1990.
(Incorporated by reference to Post-
Effective Amendment No. 78 to the
Registration Statement.)
(h)(6) COMPASS and TRAK 2000 Service Agreement
between Scudder Trust Company and the
Registrant dated October 1, 1995.
(Incorporated by reference to Post-
Effective Amendment No. 74 to the
Registration Statement.)
(h)(6)(a) Fee Schedule for Services Provided Under
Compass and TRAK 2000 Service Agreement
between Scudder Trust Company and the
Registrant dated October 1, 1996.
(Incorporated by reference to Post-
Effective Amendment No. 109 to the
Registration Statement.)
(h)(7) Fund Accounting Services Agreement between
the Registrant, on behalf of Scudder
Quality Growth Fund and Scudder Fund
Accounting Corporation dated November 1,
1994. (Incorporated by reference to Post-
Effective Amendment No. 72 to the
Registration Statement.)
(h)(8) Fund Accounting Services Agreement between
the Registrant, on behalf of Scudder Growth
and Income Fund and Scudder Fund Accounting
Corporation dated October 17, 1994.
(Incorporated by reference to Post-
Effective Amendment No. 73 to the
Registration Statement.)
(h)(9) Fund Accounting Services Agreement between
the Registrant, on behalf of Scudder
Classic Growth Fund, and Scudder Fund
Accounting Corporation dated September 9,
1996. (Incorporated by reference to Post-
Effective Amendment No. 99 to the
Registration Statement.)
(h)(10) Amendment No. 1 dated August 31, 1999 to
the Fund Accounting Services Agreement
between the Registrant, on behalf of
Classic Growth Fund, and Scudder Fund
Accounting Corporation. (Incorporated by
reference to Post-Effective Amendment No.
109 to the Registration Statement.)
<PAGE>
(h)(11) Fund Accounting Services Agreement between
the Registrant, on behalf of Scudder Tax
Managed Small Company and Scudder Fund
Accounting Corporation dated July 30, 1998.
(Incorporated by reference to Post-
Effective Amendment No. 99 to the
Registration Statement.)
(h)(12) Fund Accounting Services Agreement between
the Registrant, on behalf of Scudder Tax
Managed Growth Fund and Scudder Fund
Accounting Corporation dated July 30, 1998.
(Incorporated by reference to Post-
Effective Amendment No. 99 to the
Registration Statement.)
(h)(13) Fund Accounting Services Agreement between
the Registrant, on behalf of Scudder
Dividend & Growth Fund and Scudder Fund
Accounting Corporation dated June 1, 1998.
(Incorporated by reference to Post-
Effective Amendment No. 99 to the
Registration Statement.)
(h)(14) Scudder Accounting Fee Schedule between the
Registrant, on behalf of Scudder Large
Company Growth Fund - Class R Shares, and
Scudder Fund Accounting Corporation dated
September 14, 1999. (Incorporated by
reference to Post-Effective Amendment No.
109 to the Registration Statement.)
(h)(15) Fund Accounting Services Agreement between
the Registrant, on behalf of Scudder Real
Estate Investment Fund and Scudder Fund
Accounting Corporation dated March 2, 1998.
(Incorporated by reference to Post-
Effective Amendment No. 99 to the
Registration Statement.)
(h)(16) Investment Accounting Agreement between the
Registrant, on behalf of Scudder S&P 500
Index Fund and Scudder Fund Accounting
Corporation dated August 28, 1997.
(Incorporated by reference to Post-
Effective Amendment No. 99 to the
Registration Statement.)
(h)(17) Shareholder Services Agreement between the
Registrant and Charles Schwab & Co., Inc.
dated June 1, 1990. (Incorporated by
reference to Post-Effective Amendment No.
78 to the Registration Statement.)
(h)(18) Service Agreement between Copeland
Associates, Inc. and Scudder Service
Corporation (on behalf of Scudder Quality
Growth Fund and Scudder Growth and Income
Fund) dated June 8, 1995. (Incorporated by
reference to Post-Effective Amendment No.
74 to the Registration Statement.)
(h)(19) Administrative Services Agreement between
the Registrant on behalf of Classic Growth
Fund, and Kemper Distributors, Inc., dated
April 1998. (Incorporated by reference to
Post-Effective Amendment No. 100 to the
Registration Statement.)
<PAGE>
(h)(19)(a) Amendment No. 1 to the Administrative
Services Agreement between the Registrant
on behalf of Classic Growth Fund, and
Kemper Distributors, Inc., dated August 31,
1999. (Incorporated by reference to Post-
Effective Amendment No. 109 to the
Registration Statement.)
(h)(20) Administrative Services Agreement between
the Registrant on behalf of Scudder Growth
and Income Fund, and Scudder Investor
Services, Inc., dated May 3, 1999.
(Incorporated by reference to Post-
Effective Amendment No. 105 to the
Registration Statement.)
(h)(21) Administrative Services Agreement between
the Registrant on behalf of Scudder Large
Company Growth Fund, and Scudder Investor
Services, Inc., dated May 3, 1999.
(Incorporated by reference to Post-
Effective Amendment No. 105 to the
Registration Statement.)
(h)(22) Administrative Services Agreement between
the Registrant (on behalf of Scudder
Capital Growth Fund, Scudder Dividend and
Growth Fund, Scudder Growth and Income
Fund, Scudder Large Company Growth Fund,
Scudder S&P 500 Index Fund, Scudder Small
Company Stock Fund and Scudder Kemper
Investments, Inc.), dated July 17, 2000, is
incorporated by reference to Post-Effective
Amendment No. 121 to the Registration
Statement.
(h)(23) Fund Accounting Services Agreement between
the Registrant, on behalf of Scudder
Capital Growth Fund and Scudder Fund
Accounting Corporation, dated July 17,
2000, is incorporated by reference to Post-
Effective Amendment No. 121 to the
Registration Statement.
(h)(24) Fund Accounting Services Agreement between
the Registrant, on behalf of Scudder Small
Company Stock Fund and Scudder Fund
Accounting Corporation, dated July 17,
2000, is incorporated by reference to Post-
Effective Amendment No. 121 to the
Registration Statement.
(14) Consents of Independent Accountants is
filed herewith.
(15) Inapplicable.
(16) Powers of Attorney are filed herewith.
(17) Form of Proxy is filed herewith.
Item 17. Undertakings.
-------- -------------
(1) The undersigned registrant agrees that prior to any public
reoffering of the securities
<PAGE>
registered through the use of a prospectus which is a part of
this registration statement by any person or party who is deemed
to be an underwriter within the meaning of Rule 145(c) of the
Securities Act [17 CFR 230.145c], the reoffering prospectus will
contain the information called for by the applicable
registration form for reofferings by persons who may be deemed
underwriters, in addition to the information called for by the
other items of the applicable form.
(2) The undersigned registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as a part of an
amendment to the registration statement and will not be used
until the amendment is effective, and that, in determining any
liability under the 1933 Act, each post-effective amendment
shall be deemed to be a new registration statement for the
securities offered therein, and the offering of the securities
at that time shall be deemed to be the initial bona fide
offering of them.
(3) The undersigned Registrant undertakes to file, by post-effective
amendment, an opinion of counsel supporting the tax consequences
of the proposed reorganization within a reasonable time after
receipt of such opinion.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, Investment Trust has duly caused this
Registration Statement on Form N-14 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boston and the
Commonwealth of Massachusetts on the 14/th/ day of December, 2000.
INVESTMENT TRUST
By: /s/ Linda C. Coughlin
-------------------------
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form N-14 has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Linda C. Coughlin President & Trustee December 14, 2000
----------------------------------------
Linda C. Coughlin
/s/ Henry P. Becton, Jr.* Trustee December 14, 2000
----------------------------------------
Henry P. Becton, Jr.
/s/ Dawn-Marie Driscoll* Trustee December 14, 2000
----------------------------------------
Dawn-Marie Driscoll
/s/ Edgar R. Fiedler* Trustee December 14, 2000
----------------------------------------
Edgar R. Fiedler
/s/ Keith R. Fox* Trustee December 14, 2000
----------------------------------------
Keith R. Fox
/s/ Joan Edelman Spero* Trustee December 14, 2000
----------------------------------------
Joan Edelman Spero
/s/ Jean Gleason Stromberg* Trustee December 14, 2000
----------------------------------------
Jean Gleason Stromberg
/s/ Jean C. Tempel* Trustee December 14, 2000
----------------------------------------
Jean C. Tempel
/s/ Steven Zaleznick* Trustee December 14, 2000
----------------------------------------
Steven Zaleznick
/s/ John R. Hebble Treasurer (Principal Financial December 14, 2000
---------------------------------------- and Accounting Officer)
John R. Hebble
*By: /s/ Joseph R. Fleming December 14, 2000
-----------------------------------
Joseph R. Fleming, Attorney-in-fact
</TABLE>
*Executed pursuant to powers of attorney filed herein as an exhibit to the
Registrant's Registration Statement on Form N-14.
<PAGE>
File No. [ - ]
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS
TO
FORM N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
INVESTMENT TRUST
<PAGE>
INVESTMENT TRUST
EXHIBIT INDEX
Exhibit 10(m)(16) Scudder Funds Amended and Restated Multi-Distribution
System Plan
Exhibit 11 Opinion and Consent of Dechert
Exhibit 14 Consents of Independent Accountants
Exhibit 16 Powers of Attorney
Exhibit 17 Form of Proxy
