<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
(Address of Principal Executive Offices) (Zip Code)
John Millette
Scudder Kemper Investments, Inc.
Two International Place
Boston, Massachusetts 02110
(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 ($0.01 par value)
of Scudder Growth and Income 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
KEMPER U.S. GROWTH AND INCOME FUND
Please take notice that a Special Meeting of Shareholders (the "Meeting")
of Kemper U.S. Growth and Income Fund (the "Fund"), a series of Kemper
Securities Trust (the "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 4:00 p.m., Eastern time, for the following purposes:
Proposal 1: To elect Trustees of the Trust.
Proposal 2: 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 Growth and Income Fund, (ii)
each shareholder of the Fund would receive shares of Scudder
Growth and Income 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.
Proposal 3: To ratify the selection of Ernst & Young LLP as the
independent auditors for the Fund for the Fund's current
fiscal year.
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 any 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 Trust's (for a Trust-wide vote) or the Fund's (for a Fund-
wide vote) 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 that Proposal and will vote AGAINST any such
adjournment those proxies to be voted against that Proposal.
By Order of the Board,
/s/ Philip J. Collora
Philip J. Collora
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 1: ELECTION OF TRUSTEES....................................... __
PROPOSAL 2: APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION........... __
SYNOPSIS................................................... __
PRINCIPAL RISK FACTORS..................................... __
THE PROPOSED TRANSACTION................................... __
PROPOSAL 3: RATIFICATION OR REJECTION OF THE SELECTION OF INDEPENDENT
AUDITORS................................................... __
ADDITIONAL INFORMATION.................................................. __
</TABLE>
<PAGE>
PROXY STATEMENT/PROSPECTUS
March [ ], 2001
Relating to the acquisition of the assets of
KEMPER U.S. GROWTH AND INCOME FUND,
a separate series of
KEMPER SECURITIES TRUST (the "Acquired Trust")
222 South Riverside Plaza
Chicago, Illinois 60606
(800) [ ]
--------------------------
by and in exchange for shares of beneficial interest of
SCUDDER GROWTH AND INCOME FUND,
a separate series of
INVESTMENT TRUST (the "Acquiring Trust")
Two International Place
Boston, Massachusetts 02110-4103
(800) [ ]
--------------------------
INTRODUCTION
This Proxy Statement/Prospectus is being furnished to shareholders of
Kemper U.S. Growth and Income Fund (the "Fund") in connection with three
proposals. Proposal 1 describes the election of Trustees and Proposal 3
proposes the ratification of the selection of the Fund's auditors.
In Proposal 2, shareholders are asked to vote on 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 Growth and Income 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
Growth and Income Fund and the assumption by Scudder Growth and Income Fund of
all of the liabilities of the Fund, as described more fully below (the
"Reorganization"). Shares of Scudder Growth and Income 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 Growth and Income Fund and will receive shares of
Scudder Growth and Income 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 11, 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.
1
<PAGE>
Proposals 1 and 2 arise out of a restructuring program proposed by
Scudder Kemper Investments, Inc. ("Scudder Kemper" or the "Investment Manager"),
the investment manager of both the Fund and Scudder Growth and Income Fund,
described in more detail below. The restructuring program is designed to
respond to changing industry conditions and investor needs. Scudder Kemper
seeks to consolidate its fund line-up and offer all of the open-end funds it
advises under the "Scudder" name. 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 (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. The restructuring program will not result in any
reduction in the services currently offered to Kemper Funds shareholders.
In the descriptions of the Proposals 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 is. In addition, for simplicity,
actions are described in this Proxy Statement/Prospectus as being taken by
either the Fund or Scudder Growth and Income Fund (which are collectively
referred to as the "Funds" and each referred to as a "Fund"), although all
actions are actually taken either by the Acquired Trust or the Acquiring Trust
(together with the Acquired Trust, the "Trusts"), on behalf of the applicable
Fund.
Scudder Growth and Income Fund and the Fund are diversified series of
shares of beneficial interest of the Acquiring Trust and the Acquired Trust,
respectively, which are open-end management investment companies organized as
Massachusetts business trusts.
This Proxy Statement/Prospectus sets forth concisely the information
about Scudder Growth and Income 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 Growth and Income Fund, see Scudder Growth and Income Fund's
prospectus dated December 29, 2000, as 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 Growth and Income
Fund's statement of additional information dated December 29, 2000, as
supplemented from time to time, which may be obtained upon request and without
charge by calling or writing Scudder Growth and Income 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 Growth
and Income Fund at the telephone number or address listed above. Shareholder
inquiries regarding Scudder Growth and Income 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.
The Board of Trustees that oversees the Fund is soliciting proxies
from shareholders of the Fund for the Special Meeting of Shareholders to be held
on May 24, 2001, at Scudder Kemper's offices, 13th
2
<PAGE>
Floor, Two International Place, Boston, MA 02110-4103 at 4:00 p.m. (Eastern
time), and at any and 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.
The Board of Trustees unanimously recommends that shareholders vote
FOR the nominees listed in Proposal 1, and FOR Proposals 2 and 3.
PROPOSAL 1: ELECTION OF TRUSTEES
At the Meeting, shareholders will be asked to elect eleven individuals
to constitute the Board of Trustees of the Acquired Trust. Shareholders are
being asked to elect these individuals to the Board of Trustees in case the
Plan, as described under Proposal 2, is not approved by shareholders. However,
if the Plan is approved, the current Board of Trustees of the Acquiring Trust
will oversee the operations of the combined Fund (see "Synopsis -Other
Differences Between the Funds" under Proposal 2).
As discussed further below, Scudder Kemper commenced an initiative to
restructure and streamline the management and operations of the funds it
advises. In connection with that initiative, the Independent Trustees of the
two separate boards of Kemper Funds proposed to consolidate into a single board.
The eleven individuals who have been nominated for election as Trustees of the
Acquired Trust were nominated after careful consideration by the present Board
of Trustees. The nominees are listed below. Three of the nominees are
currently Trustees of the Acquired Trust and seven of the nominees are currently
trustees or directors of other Kemper Funds. One of the nominees, although not
currently a trustee or director of any Kemper Funds, is a senior executive
officer of Scudder Kemper and is being nominated to the board of [all]
[virtually all] of the Kemper Funds. These eleven individuals are also being
nominated for election as trustees or directors of most of the other Kemper
Funds. The proposed slate of nominees reflects the effort to consolidate the
two separate boards who have historically supervised different Kemper Funds.
The proposed consolidation is expected to provide administrative efficiencies to
both the Funds and Scudder Kemper.
The persons named as proxies on the enclosed proxy card(s) will vote
for the election of the nominees named below unless authority to vote for any or
all of the nominees is withheld in the proxy. Each Trustee so elected will
serve as a Trustee commencing on July 1, 2001 and until the next meeting of
shareholders, if any, called for the purpose of electing Trustees and until the
election and qualification of a successor or until such Trustee sooner dies,
resigns or is removed as provided in the governing documents of the Acquired
Trust. Each of the nominees has indicated that he or she is willing to serve as
a Trustee. If any or all of the nominees should become unavailable for election
due to events not now known or anticipated, the persons named as proxies will
vote for such other nominee or nominees as the current Trustees may recommend.
The following tables present information about the nominees and the Trustees not
standing for re-election. Each nominee's or Trustee's date of birth is in
parentheses after his or her name. Unless otherwise noted, (i) each of the
nominees and Trustees has engaged in the principal occupation(s) noted in the
following tables for at least the most recent five years, although not
necessarily in the same capacity, and (ii) the address of each nominee is c/o
Scudder Kemper Investments, Inc., 222 South Riverside Plaza, Chicago, Illinois
60606.
3
<PAGE>
Nominees for Election as Trustees:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
Name, (Date of Birth), Principal Occupation and Affiliations Year First
Became a
Board
Member
--------------------------------------------------------------------------------------
<S> <C>
John W. Ballantine (2/16/46),/(1)/ Retired; formerly, First Nominee
Chicago NBD Corporation/The First National Bank of
Chicago: 1996-1998 Executive Vice President and Chief Risk
Management Officer; 1995-1996 Executive Vice President and
Head of International Banking.
--------------------------------------------------------------------------------------
Lewis A. Burnham (1/8/33),/(1)/ Retired; formerly, Partner, Nominee
Business Resources Group; formerly, Executive Vice
President, Anchor Glass Container Corporation.
--------------------------------------------------------------------------------------
Linda C. Coughlin (1/1/52),*/(2)/ Managing Director, Scudder Nominee
Kemper Investments, Inc.
--------------------------------------------------------------------------------------
Donald L. Dunaway (3/8/37),/(1)/ Retired; formerly, Executive Nominee
Vice President, A.O. Smith Corporation (diversified
manufacturer).
--------------------------------------------------------------------------------------
James R. Edgar (7/22/46),/(3)/ Distinguished Fellow, 1999
University of Illinois Institute of Government and Public
Affairs; Director, Kemper Insurance Companies (not
affiliated with the Kemper Funds); formerly, Governor,
State of Illinois.
--------------------------------------------------------------------------------------
William F. Glavin (8/30/58),* Managing Director, Scudder Nominee
Kemper Investments, Inc.
--------------------------------------------------------------------------------------
Robert B. Hoffman (12/11/36),/(1)/ Retired; formerly, Nominee
Chairman, Harnischfeger Industries, Inc. (machinery for
the mining and paper industries); formerly, Vice Chairman
and Chief Financial Officer, Monsanto Company
(agricultural, pharmaceutical and nutritional/food
products); formerly, Vice President, Head of International
Operations, FMC Corporation (manufacturer of machinery and
chemicals); Director, Harnischfeger Industries, Inc.
--------------------------------------------------------------------------------------
Shirley D. Peterson (9/3/41),/(1)/ Retired; formerly, Nominee
President, Hood College; formerly, Partner, Steptoe &
Johnson (attorneys); prior thereto, Commissioner, Internal
Revenue Service; prior thereto, Assistant Attorney General
(Tax), U.S. Department of Justice; Director, Bethlehem
Steel Corp.
--------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
Name, (Date of Birth), Principal Occupation and Affiliations Year First
Became a Board
Member
--------------------------------------------------------------------------------------
<S> <C>
Fred B. Renwick (2/1/30),/(3)/ Professor of Finance, New York 1998
University, Stern School of Business; Director, the
Wartburg Foundation; Chairman, Investment Committee of
Morehouse College Board of Trustees; Director, American
Bible Society Investment Committee; previously member of
the Investment Committee of Atlanta University Board of
Trustees; formerly Director of Board of Pensions
Evangelical Lutheran Church in America.
--------------------------------------------------------------------------------------
William P. Sommers (7/22/33),/(1)/ Consultant and Director, Nominee
SRI Consulting; prior thereto, President and Chief
Executive Officer, SRI International (research and
development); prior thereto, Executive Vice President,
Iameter (medical information and educational service
provider); prior thereto, Senior Vice President and
Director, Booz, Allen & Hamilton Inc. (management
consulting firm); Director, PSI Inc., Evergreen Solar,
Inc. and Litton Industries.
--------------------------------------------------------------------------------------
John G. Weithers (8/8/33),/(3)/ Formerly, Chairman of the 1998
Board and Chief Executive Officer, Chicago Stock Exchange;
Director, Federal Life Insurance Company; President of the
Members of the Corporation and Trustee, DePaul University.
--------------------------------------------------------------------------------------
</TABLE>
* Interested person of the Acquired Trust, as defined in the Investment
Company Act of 1940, as amended (the "1940 Act").
/(1)/ Messrs. Ballantine, Burnham, Dunaway, Hoffman, Sommers and Ms. Peterson
serve as board members of 26 investment companies, with 45 portfolios
managed by Scudder Kemper.
/(2)/ Ms. Coughlin serves as a board member of 52 investment companies with 97
portfolios managed by Scudder Kemper.
/(3)/ Messrs. Edgar, Renwick and Weithers serve as board members of 16
investment companies with 58 portfolios managed by Scudder Kemper.
5
<PAGE>
Trustees Not Standing for Re-Election:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
Present Office with the Acquired Trust;
Principal Occupation or Employment
Name (Date of Birth) and Directorships
-------------------- -----------------
-----------------------------------------------------------------------------------------------------------
<S> <C>
James E. Akins (10/15/26) Trustee; Consultant on International, Political and
Economic Affairs; formerly, a career U.S. Foreign
Service Officer, Energy Adviser for the White House
and U.S. Ambassador to Saudi Arabia, 1973-1976.
-----------------------------------------------------------------------------------------------------------
Arthur Gottschalk (2/13/25) Trustee; Retired; formerly, President, Illinois
Manufacturers Association; Trustee, Illinois
Masonic Medical Center; formerly, Illinois State
Senator; formerly Vice President, The Reuben H.
Donnelley Corp.; formerly attorney.
-----------------------------------------------------------------------------------------------------------
Frederick T. Kelsey (4/25/27) Trustee; Retired; formerly Consultant to Goldman,
Sachs & Co.; formerly President, Treasurer and
Trustee of Institutional Liquid Assets and its
affiliated mutual funds; formerly, President and
Trustee, Northern Institutional Funds; formerly,
President and Trustee, Pilot Funds.
-----------------------------------------------------------------------------------------------------------
Kathryn L. Quirk (12/3/52)* Trustee and Vice President; Managing Director,
Scudder Kemper.
-----------------------------------------------------------------------------------------------------------
</TABLE>
* Interested person of the Acquired Trust, as defined in the 1940 Act.
Appendix 1 lists the number of shares of each series of the Acquired Trust
owned directly or beneficially by the Trustees and by the nominees for election.
Responsibilities of the Board of Trustees -- Board and Committee Meetings
The primary responsibility of the Board is to represent the interests of the
shareholders of the Fund and to provide oversight of the management of the Fund.
The board that is proposed for election at this Meeting is comprised of two
individuals who are considered "interested" Trustees, and nine individuals who
have no affiliation with Scudder Kemper and who are not considered "interested"
Trustees (the "Independent Trustees"). The SEC has recently proposed a rule
that would require a majority of the board members of a fund to be "independent"
if the fund were to take advantage of certain exemptive rules under the 1940
Act. If the proposed Board of Trustees is approved by shareholders, more than
75% will be Independent Trustees. The Independent Trustees have been selected
and nominated solely by the current Independent Trustees of the Acquired Trust.
The Trustees meet multiple times during the year to review the investment
performance of the Fund and other operational matters, including policies and
procedures designed to assure compliance with regulatory and other requirements.
Furthermore, the Independent Trustees review the fees paid to the Investment
Manager and its affiliates for investment advisory services and other
administrative and
6
<PAGE>
shareholder services. The Trustees have adopted specific policies and guidelines
that, among other things, seek to further enhance the effectiveness of the
Independent Trustees in performing their duties. Many of these are similar to
those suggested in the Investment Company Institute's 1999 Report of the
Advisory Group on Best Practices for Fund Directors (the "Advisory Group
Report"). For example, the Independent Trustees select independent legal counsel
to work with them in reviewing fees, advisory and other contracts and overseeing
fund matters, and regularly meet privately with their counsel.
Currently, the Board of Trustees has an Audit and Governance Committee, the
responsibilities of which are described below. In addition, the Board has a
Valuation Committee. During calendar year 2000, the Board of Trustees met eight
times. Each then current Trustee attended 75% or more of the respective
meetings of the Board and the committees (if a member thereof) held during
calendar year 2000.
Audit and Governance Committee
The Audit and Governance Committee makes recommendations regarding the
selection of independent auditors for the Fund, confers with the independent
auditors regarding the Fund's financial statements, the results of audits and
related matters, and performs such other tasks as the full Board of Trustees
deems necessary or appropriate. As suggested by the Advisory Group Report, the
Audit and Governance Committee is comprised of only Independent Trustees,
receives annual representations from the auditors as to their independence, and
has a written charter that delineates the committee's duties and powers. In
addition, the committee seeks and reviews candidates for consideration as
nominees for membership on the Board and oversees the administration of the
Fund's Governance Procedures and Guidelines. Shareholders wishing to submit the
name of a candidate for consideration by the committee should submit their
recommendation(s) to the Secretary of the Acquired Trust. Currently, the
members of the committee are Messrs. Akins, Edgar, Gottschalk, Kelsey, Renwick
and Weithers. The committee held four meetings during calendar year 2000.
Officers
The following persons are officers of the Acquired Trust:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
Present Office with the
Acquired Trust; Principal
Name (Date of Birth) Occupation or Employment Year First Became an Officer/1/
-------------------- ------------------------- -------------------------------
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mark S. Casady (9/21/60) President; Managing Director, 1998
Scudder Kemper; formerly,
Institutional Sales Manager of an
unaffiliated mutual fund
distributor.
--------------------------------------------------------------------------------------------------------------------
Philip J. Collora (11/15/45) Vice President and Secretary; 1998
Attorney, Senior Vice
President, Scudder Kemper
--------------------------------------------------------------------------------------------------------------------
Thomas W. Littauer (4/26/55) Chairman and Vice President; 1998
Managing Director, Scudder
--------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
Present Office with the
Acquired Trust; Principal
Name (Date of Birth) Occupation or Employment Year First Became an Officer/1/
-------------------- ------------------------- -------------------------------
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Kemper, Head of Broker Dealer
Division of an unaffiliated
investment management firm during
1997; prior thereto, President of
Client Management Services of an
unaffiliated investment
management firm from 1991 to 1996.
--------------------------------------------------------------------------------------------------------------------
Kathryn L. Quirk (12/3/52) Trustee; Vice President; Managing 1998
Director, Scudder Kemper.
--------------------------------------------------------------------------------------------------------------------
Linda J. Wondrack (9/12/64) Vice President; Senior Vice 1998
President, Scudder Kemper.
--------------------------------------------------------------------------------------------------------------------
John R. Hebble (6/27/58) Treasurer; Senior Vice President, 1998
Scudder Kemper.
--------------------------------------------------------------------------------------------------------------------
Brenda Lyons (2/21/63) Assistant Treasurer; Senior Vice 1998
President, Scudder Kemper.
--------------------------------------------------------------------------------------------------------------------
Maureen E. Kane (2/14/62) Assistant Secretary; Vice 1998
President, Scudder Kemper;
formerly, Assistant Vice
President of an unaffiliated
investment management firm; prior
thereto, Associate Staff Attorney
of an unaffiliated investment
management firm; Associate,
Peabody & Arnold (law firm).
--------------------------------------------------------------------------------------------------------------------
Caroline Pearson (4/1/62) Assistant Secretary; Senior Vice 1998
President, Scudder Kemper,
formerly, Associate, Dechert
Price & Rhoads (law firm) from
1989-1997.
--------------------------------------------------------------------------------------------------------------------
James M. Eysenbach (4/1/62) Vice President; Managing 2000
Director, Scudder Kemper
--------------------------------------------------------------------------------------------------------------------
Kathleen T. Millard (12/30/60) Vice President; Managing 2000
Director, Scudder Kemper.
--------------------------------------------------------------------------------------------------------------------
William F. Truscott (9/14/60) Vice President; Managing 2000
Director, Scudder Kemper.
--------------------------------------------------------------------------------------------------------------------
</TABLE>
/1/ The President, Treasurer and Secretary each holds office until the first
meeting of Trustees in each calendar year and until his or her successor has
been duly elected and qualified, and all other officers hold office as the
Trustees permit in accordance with the By-laws of the Acquired Trust.
Compensation of Trustees and Officers
8
<PAGE>
The Fund pays the Independent Trustees an annual retainer (paid in quarterly
installments) and an attendance fee, plus expenses, for each Board meeting and
committee meeting attended. As reflected below, the Trustees currently serve as
board members of various other Kemper Funds. Scudder Kemper supervises the
Fund's investments, pays the compensation and expenses of its personnel who
serve as Trustees and officers on behalf of the Fund and receives a management
fee for its services. Several of the officers and Trustees are also officers,
directors, employees or stockholders of Scudder Kemper and participate in the
fees paid to that firm, although the Fund makes no direct payments to them.
To facilitate the restructuring of the boards of the Kemper Funds, certain
Independent Trustees agreed not to stand for re-election. Independent Trustees
of the Acquired Trust are not entitled to benefits under any pension or
retirement plan. However, the Board of each Kemper Fund determined that,
particularly given the benefits that would accrue to the Kemper Funds from the
restructuring of the boards, it was appropriate to provide the four Independent
Trustees who were not standing for re-election for various Kemper Funds a one-
time benefit. The cost of such benefit is being allocated among all the Kemper
Funds, with Scudder Kemper agreeing to bear one-half of the cost of such
benefit, given that Scudder Kemper also benefits from administrative
efficiencies of a consolidated board. Messrs. Akins, Gottschalk and Kelsey,
Independent Trustees of the Acquired Trust who are not standing for re-election,
will each receive a one-time benefit. The amount received by a trustee on
behalf of each fund for which he serves as a trustee ranges from $478 to $6,124
for Mr. Akins; $159 to $2,035 for Mr. Gottschalk; and $797 to $10,194 for Mr.
Kelsey.
The following Compensation Table provides in tabular form the following data:
Column (1) All Trustees who receive compensation from the Fund.
Column (2) Aggregate compensation received by each Trustee from the Fund
during calendar year 2000.
Column (3) Total compensation received by each Trustee from funds advised by
Scudder Kemper (collectively, the "Fund Complex") during calendar year 2000.
Compensation Table
--------------------------------------------------------------------------------
Aggregate Compensation Total Compensation From
Name of Trustee from Fund Fund Complex/(2)//(3)/
--------------- --------- ----------------------
--------------------------------------------------------------------------------
James E. Akins $ [ ] $ [ ]
--------------------------------------------------------------------------------
James R. Edgar $ [ ] $ [ ]
--------------------------------------------------------------------------------
Arthur R. Gottschalk/(1)/ $ [ ] $ [ ]
--------------------------------------------------------------------------------
Frederick T. Kelsey $ [ ] $ [ ]
--------------------------------------------------------------------------------
Fred B. Renwick $ [ ] $ [ ]
--------------------------------------------------------------------------------
John G. Weithers $ [ ] $ [ ]
--------------------------------------------------------------------------------
/(1)/ Includes deferred fees. Pursuant to deferred compensation agreements with
the Fund, deferred amounts accrue interest monthly at a rate equal to the
yield of Zurich Money Funds - Zurich Money Market Fund. Total deferred
fees (including interest thereon) payable from the Fund to Mr. Gottschalk
was [$_______].
9
<PAGE>
/(2)/ Includes compensation for service on the boards of [ ] Kemper
trusts/corporations comprised of [ ] funds. Each trustee currently serves
on the boards of [ ] Kemper trusts/corporations comprised of [ ] funds.
/(3)/ Aggregate compensation does not reflect amounts paid to the Trustees for
special meetings in connection with the Scudder Kemper restructuring
initiative. Such amounts totaled $_______, $_______, $_______, $_______,
$_______ and $_______ for Messrs. Akins, Edgar, Gottschalk, Kelsey,
Renwick and Weithers, respectively.
The Board of Trustees unanimously recommends
that the shareholders of the Fund vote FOR each nominee.
PROPOSAL 2: APPROVAL OF AGREEMENT
AND PLAN OF REORGANIZATION
I. SYNOPSIS
Introduction
The Board of Trustees, including all of the Independent Trustees, approved the
Plan at a meeting held on November 29, 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 Growth and Income Fund in exchange for Class A, Class B and Class C
shares of Scudder Growth and Income 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 Growth and Income Fund, a fund
with similar investment characteristics and managed by the same investment
manager as the Fund. Immediately after the Reorganization, each shareholder of
the Fund will hold shares of the class of shares of Scudder Growth and Income
Fund that corresponds to the class of shares of the Fund held by that
shareholder on the Valuation Date, having an 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 A, Class B and Class C
shareholders of Scudder Growth and Income Fund following the Reorganization will
be identical to those currently provided to shareholders of the corresponding
class of the Fund. See "Purchase, Redemption and Exchange Information."
Background of the Reorganization
The Reorganization is part of a broader 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.
10
<PAGE>
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 further 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. 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 Kemper Funds.
Most of the Scudder Funds have recently adopted a new fee structure for
certain administrative services. Under this fee structure, in exchange for
payment by a fund of a single administrative fee rate, Scudder Kemper provides
or pays for substantially all services that the fund normally requires for its
operations, other than those provided under the fund's investment management
agreement and certain other expenses. This administrative fee enables investors
to determine with greater certainty the expense level that a fund will
experience, and, for the term of the administration agreement, transfers
substantially all of the risk of increased costs to Scudder Kemper. Likewise,
Scudder Kemper receives all of the benefits of economies of scale from increases
in asset size or decreased operating expenses. Scudder Growth and Income Fund
has implemented such an administrative fee, as described in "Administrative Fee"
below. As part of the restructuring effort, Scudder Kemper has proposed
extending this administrative fee structure to those funds currently offered
under the Kemper name.
The fund consolidations and the consolidation of the boards currently
overseeing the Kemper Funds (see Proposal 1 above) are expected to have a
positive impact on Scudder Kemper, as well. These changes 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 proposals on May 24, 2000, the Independent
Trustees have conducted a thorough review of all aspects of the proposed
restructuring program. They have been assisted in this regard by their
independent counsel and by independent consultants with special expertise in
financial and mutual fund industry matters. In the course of discussions with
representatives of Scudder Kemper, the Independent Trustees have requested, and
Scudder Kemper has accepted, numerous changes designed to protect and enhance
the interests of shareholders. See "The Proposed Transaction - Board Approval
of the Proposed Transaction" below.
In determining whether to recommend that the shareholders of the Fund
approve the Reorganization, the Board of Trustees considered that:
. As part of Scudder Kemper's overall restructuring, the Fund would be
duplicative of another similar fund advised by Scudder Kemper in the same
distribution channel.
. The combined fund would be subject to the lower fee schedule of the two
Funds' investment advisory agreements.
11
<PAGE>
. The fixed rate under the new Administration Agreement is expected to be
less than the estimated current applicable operating expenses each Class of
shares would otherwise pay.
. It is a condition of the Reorganization that each Fund receive an opinion
of tax counsel that the transaction would be a tax-free transaction.
. Although the Fund agreed to pay the estimated costs of the Reorganization
allocated to Class A shares and a portion of the estimated costs of the
Reorganization allocated to Class B and Class C shares, management has
estimated that such allocated costs will be recoverable from lower overall
expense rates within six months of the completion of the Reorganization.
Scudder Kemper agreed to pay a portion of the estimated costs of the
Reorganization allocated to Class B and Class C shares and all of the costs
of the Reorganization that exceed estimated costs.
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 Growth and Income Fund. Please be aware that this is only
a summary. More complete information may be found in the Funds' prospectuses.
The investment objectives, policies and restrictions of Scudder Growth and
Income Fund and the Fund (and, consequently, the risks of investing in either
Fund) are similar. Some differences do exist. The investment objective of
Scudder Growth and Income Fund is to seek long-term growth of capital, current
income and growth of income while actively seeking to reduce downside risk as
compared with other growth and income funds. The investment objective of the
Fund is to seek long-term growth of capital, current income and growth of
income. There can be no assurance that either Fund will achieve its investment
objective. Both Funds have the same portfolio management teams.
Scudder Growth and Income Fund invests at least 65% of its total assets in
equities, mainly common stocks, while the Fund normally invests at least 80% of
its total assets in such securities of U.S companies. Although Scudder Growth
and Income Fund can invest in companies of any size and from any country, it
invests primarily in large U.S. companies. The Fund may not invest in foreign
securities and invests primarily in companies that are similar in size to the
companies in the S&P 500 Index, an unmanaged capitalization-weighted index that
includes 500 large-cap U.S. stocks. In addition, Scudder Growth and Income Fund
does not invest in securities issued by tobacco-producing companies.
12
<PAGE>
In choosing stocks for Scudder Growth and Income Fund, the Investment Manager
considers both yield and other valuation and growth factors, focusing on U.S.
companies whose dividend and earnings prospects are believed to be attractive
relative to the S&P 500 index. The Investment Manager uses bottom-up analysis,
looking for companies with strong prospects for continued growth of capital and
earnings. In addition, the Investment Manager uses analytical tools to actively
monitor the risk profile of Scudder Growth and Income Fund's portfolio as
compared to comparable funds and appropriate benchmarks and peer groups, and
uses several strategies in seeking to reduce risk, including (i) managing risk
associated with investment in specific companies by using fundamental analysis
and valuation and by adjusting position sizes; (ii) portfolio construction
emphasizing diversification, blending stocks with a variety of different
attributes, including value and growth stocks; and (iii) diversifying across
many sectors and industries. Scudder Growth and Income Fund normally will, but
is not obligated to, sell a stock if its yield or growth prospects are expected
to be below the benchmark average. Scudder Growth and Income Fund may also sell
a stock when it reaches a target price or when the Investment Manager believes
other investments offer better opportunities.
For the Fund, the Investment Manager normally begins by screening for stocks
that pay above-average dividends, that the Investment Manager believes offer the
prospect of increasing dividends in the future and that appear undervalued. The
Investment Manager then analyzes individual companies to identify those that are
financially sound and appear to be well-managed, competitive and positioned for
long-term growth. Lastly, the Investment Manager assembles the Fund's portfolio
from among the most attractive stocks, drawing on analysis of economic outlooks
for various sectors and industries. The Fund normally will, but is not obligated
to, sell a stock when its yield is low compared to the S&P 500 or the stock's
own historical level, if it appears unlikely to pay a dividend when the
Investment Manager believes its price is unlikely to go much higher or when
other investments offer better opportunities.
Each Fund may invest in dividend paying and non-dividend paying stocks. In
addition, each Fund invests primarily in equity securities but may also invest
in debt securities, including convertible bonds, although typically, each Fund's
portfolio is composed mainly of large U.S. companies. Lastly, although each
Fund is permitted to use various types of derivatives (contracts whose value is
based on, for example, indices, currencies or securities), the managers don't
intend to use them as principal investments, and might not use them at all.
The Funds' fundamental investment restrictions and non-fundamental investment
restrictions, as such restrictions are set forth under "Investment Restrictions"
in each Fund's statement of additional information, are identical, except that
the Fund, and not Scudder Growth and Income Fund, has a stated non-fundamental
investment restriction limiting the Fund's investments in illiquid securities to
no more than 15% of its net assets. Both Funds are, however, subject to such
restriction pursuant to applicable regulation. Fundamental investment
restrictions may not be changed without the approval of Fund shareholders, while
non-fundamental restrictions may be changed by the applicable Board without
shareholder approval. Investors should refer to each Fund's statement of
additional information for a fuller description of the Fund's investment
policies and restrictions.
Portfolio Turnover
The portfolio turnover rate for Scudder Growth and Income 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 nine
month period ended September 30, 2000 was 55% (annualized). The portfolio
turnover rate for the Fund for the
13
<PAGE>
fiscal year ended September 30, 2000 was 79%.
Comparative Considerations
The portfolio characteristics of the combined Fund after the Reorganization
will reflect the blended characteristics of the Fund and Scudder Growth and
Income Fund. The following characteristics are as of _______, 2000 for both
Funds and also reflect the blended characteristics of both Funds after the
Reorganization as of that same date.
<TABLE>
<CAPTION>
Portfolio Composition (1)
---------------------------------------------------------------------------------------------------------------
% in U.S. Equities % in Non- U.S Equities % in Bonds Average Market
Capitilization ($)
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fund
---------------------------------------------------------------------------------------------------------------
Scudder Growth and
Income Fund
---------------------------------------------------------------------------------------------------------------
New (Pro Forma)(2)
---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Fund normally invests at least 80% of its total assets in equities
(mainly common stocks) of U.S. companies and may not invest in foreign
securities. Scudder Growth and Income Fund normally invests at least 65% of its
total assets in equities, also, mainly in common stocks. Both Funds invest
primarily in large U.S. companies.
(2) Reflects the blended characteristics of the Fund and Scudder Growth and
Income Fund as of _____________, 2000.
Performance
The following table shows how the returns of the Fund and Scudder Growth and
Income 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 Growth and Income Fund's performance
for the twelve-month period 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. Scudder Kemper is
a Delaware corporation located at Two International Place, Boston, Massachusetts
02110-4103.
14
<PAGE>
Pursuant to separate contracts, both Funds pay the Investment Manager a
graduated investment management fee, although the fee rates and breakpoints
differ. The fee is graduated so that increases in a 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 Growth and Income Fund
had total net assets of $11,194,149,316. For the nine month period ended
September 30, 2000, Scudder Growth and Income Fund paid the Investment Manager a
fee of 0.46% (annualized) of its average daily net assets. As of September 30,
2000, the Fund had total net assets of $35,296,495. For the fiscal year ended
September 30, 2000, the Fund paid the Investment Manager a fee of 0.45% (after
waiver) of its average daily net assets. Based upon each Fund's average net
assets for the twelve months ended September 30, 2000, the effective advisory
fee rate for Scudder Growth and Income Fund after the Reorganization would be
0.45% of average daily net assets.
The fee schedule for the combined fund after the Reorganization will be
identical to the current fee schedule for Scudder Growth and Income Fund.
Currently the fee schedules for the Fund and Scudder Growth and Income Fund are
as follows:
-------------------------------------------------------------------------------
Fund Scudder Growth and Income Fund
-------------------------------------------------------------------------------
Average Daily Net Assets Fee Rate Average Daily Net Assets Fee Rate
------------------------ -------- ------------------------ --------
First $250 million 0.60% First $14 billion 0.450%
Next $750 million 0.57% Next $2 billion 0.425%
Next $1.5 billion 0.55% Next $2 billion 0.400%
Over $2.5 billion 0.53% Over $18 billion 0.385%
-------------------------------------------------------------------------------
Administrative Fee
Scudder Growth and Income 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 the Class A, Class B and Class C shares of
Scudder Growth and Income Fund (other than those provided by Scudder Kemper
under its investment management agreement with that Fund) in exchange for the
payment by Scudder Growth and Income Fund of an annual administrative services
fee (the "Administrative Fee") equal to 0.325%, 0.375% and 0.350% of average
daily net assets attributable to the 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 services
agreement with Scudder Growth and Income Fund are not covered by, and are in
addition to, the Administrative Fee. One effect of this arrangement is to make
Scudder Growth and Income 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 Growth and
Income Fund pursuant to separate agreements. 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 Growth and Income 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 Growth
and Income 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,
15
<PAGE>
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. As custodian, State Street Bank and Trust Company holds the portfolio
securities of Scudder Growth and Income Fund, pursuant to a custodian agreement.
Other Service Providers include the independent public accountants and legal
counsel for Scudder Growth and Income Fund.
Under the Administration Agreement, each Service Provider provides the
services to Scudder Growth and Income Fund described above, except that Scudder
Kemper pays these entities for the provision of their services to Scudder Growth
and Income Fund and pays most other fund expenses, including insurance,
registration, printing and postage fees. In return, Scudder Growth and Income
Fund pays Scudder Kemper the Administrative Fee.
The Administration Agreement will remain in effect with respect to the Class
A, Class B and Class C shares for an initial term ending September 30, 2003,
subject to earlier termination by the trustees that oversee Scudder Growth and
Income Fund. The fee payable by Scudder Growth and Income Fund to Scudder
Kemper pursuant to the Administration Agreement is reduced by the amount of any
credit received from Scudder Growth and Income Fund's custodian for cash
balances.
Certain expenses of Scudder Growth and Income 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 Growth and Income Fund continues to pay the fees required by its
investment management agreement with Scudder Kemper. In addition, it pays the
fees under its services agreement and underwriting and distribution services
agreement with KDI, as described in "Distribution and Service Fees" 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 A, Class B and Class C shares of Scudder Growth and Income
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 Growth and
Income Fund following the Reorganization will be substantially lower than the
current expense ratio of the comparable class 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 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.
16
<PAGE>
Expense Comparison Table
Class A Shares
<TABLE>
<CAPTION>
Scudder
Growth and Income Pro Forma
Fund Fund Combined(1)
------ ------ -------------
<S> <C> <C> <C>
Shareholder Fees
----------------
Maximum Sales Charge (Load) Imposed on Purchases (as % 4.50% 4.50% 4.50%
of offering price)
Maximum Contingent Deferred Sales Charge (Load) (as % None None None
of redemption proceeds)(2)
Maximum Deferred Sales Charge (Load) imposed on None None None
reinvested dividends
Redemption Fee (as a percentage of amount redeemed, if None None None
applicable)
Annual Fund Operating Expenses (unaudited)
------------------------------
(as a % of average net assets)
------------------------------
Management Fees 0.60% 0.45%(3) 0.45%
Distribution and/or service (12b-1) fees None 0.25% 0.25%
Other Expenses 1.26% 0.33%(4) 0.33%
Total Annual Fund Operating Expenses 1.86% 1.03% 1.03%
Expense waiver 0.50% None None
Net Annual Fund Operating Expenses 1.36%(5) 1.03% 1.03%
Expense Example of Total Operating Expenses at the End
------------------------------------------------------
of the Period(6)
-------------
One Year $ 582 $ 550 $ 550
Three Years $ 962 $ 763 $ 763
Five Years $ 1,366 $ 993 $ 993
Ten Years $ 2,493 $ 1,653 $ 1,653
</TABLE>
_____________
Notes to Expense Comparison Table:
----------------------------------
17
<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) 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 after
purchase.
(3) Restated to reflect the adoption of a new investment management agreement.
(4) Restated to reflect the adoption of a fixed rate administrative fee of
0.325%.
(5) By contract, total operating expenses of the Class A shares of the Fund
are capped at 1.36% through 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
<TABLE>
<CAPTION>
Scudder
Growth and Income Pro Forma
Fund Fund Combined(1)
------ ------ -------------
<S> <C> <C> <C>
Shareholder Fees
----------------
Maximum Sales Charge (Load) Imposed on Purchases (as % None None None
of offering price)
Maximum Contingent Deferred Sales Charge (Load) (as % 4.00% 4.00% 4.00%
of redemption proceeds)(2)
Maximum Deferred Sales Charge (Load) imposed on None None None
reinvested dividends
Redemption Fee (as a percentage of amount redeemed, if None None None
applicable)
Annual Fund Operating Expenses (unaudited)
------------------------------
(as a % of average net assets)
------------------------------
Management Fees 0.60% 0.45%(3) 0.45%
Distribution and/or service (12b-1) fees 0.75% 1.00% 1.00%
Other Expenses 1.39% 0.38%(4) 0.38%
Total Annual Fund Operating Expenses 2.74% 1.83% 1.83%
Expense waiver 0.73% None None
Net Annual Fund Operating Expenses 2.01%(5) 1.83% 1.83%
</TABLE>
18
<PAGE>
<TABLE>
<S> <C> <C> <C>
Expense Example of Total Operating Expenses Assuming
----------------------------------------------------
Redemption at the End of the Period(6)
-----------------------------------
One Year $ 604 $ 586 $ 586
Three Years $ 1,081 $ 876 $ 876
Five Years $ 1,585 $ 1,190 $ 1,190
Ten Years $ 2,609 $ 1,745 $ 1,745
Expense Example of Total Operating Expenses Assuming No
-------------------------------------------------------
Redemption at the End of the Period(6)
-----------------------------------
One Year $ 204 $ 186 $ 186
Three Years $ 781 $ 576 $ 576
Five Years $ 1,385 $ 990 $ 990
Ten Years $ 2,609 $ 1,745 $ 1,745
</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 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 adoption of a new investment management agreement.
(4) Restated to reflect the adoption of a fixed rate administrative fee of
0.375%.
(5) By contract, total operating expenses of the Class B shares of the Fund
are capped at 2.01% through 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
Growth and
Income Pro Forma
Fund Fund Combined(1)
------ ------ -------------
<S> <C> <C> <C>
Shareholder Fees
----------------
Maximum Sales Charge (Load) Imposed on Purchases (as % None None None
of offering price)
</TABLE>
19
<PAGE>
<TABLE>
<S> <C> <C> <C>
Maximum Contingent Deferred Sales Charge (Load) 1.00% 1.00% 1.00%
(as % of redemption proceeds)(2)
Maximum Deferred Sales Charge (Load) imposed on None None None
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 0.60% 0.45%(3) 0.45%
Distribution and/or service (12b-1) fees 0.75% 1.00% 1.00%
Other Expenses 1.81% 0.35%(4) 0.35%
Total Annual Fund Operating Expenses 3.16% 1.80% 1.80%
Expense waiver 1.17% None None
Net Annual Fund Operating Expenses 1.99%(5) 1.80% 1.80%
Expense Example of Total Operating Expenses
--------------------------------------------
Assuming Redemption at the End of the Period(6)
--------------------------------------------
One Year $ 302 $ 283 $ 283
Three Years $ 865 $ 566 $ 566
Five Years $1,553 $ 975 $ 975
Ten Years $3,386 $2,116 $2,116
Expense Example of Total Operating Expenses
------------------------------------------
Assuming No Redemption at the End of the
----------------------------------------
Period(6)
------
One Year $ 202 $ 183 $ 183
Three Years $ 865 $ 566 $ 566
Five Years $1,553 $ 975 $ 975
Ten Years $3,386 $2,116 $2,116
</TABLE>
___________
Notes to Expense Comparison Table:
----------------------------------
20
<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 C shares is 1% for shares sold
during the first year after purchase.
(3) Restated to reflect the adoption of a new investment management agreement.
(4) Restated to reflect the adoption of a fixed rate administrative fee of
0.350%.
(5) By contract, total operating expenses of the Class C shares of the Fund
are capped at 1.99% through 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.
Distribution and Services Fees
Pursuant to an underwriting and distribution services agreement with
Scudder Growth and Income 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 that Fund and will act as agent of the Fund in the continuing offer of such
shares. Prior to the Closing, Scudder Growth and Income 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 Growth and Income 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
Growth and Income Fund, however, unlike the distribution plans for the Fund,
will 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 Growth and Income Fund will authorize the payment of the services fee.
The fact that the services fee will be authorized by Scudder Growth and Income
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 Growth and Income 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 Growth and Income 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 Growth and Income Fund, and may retain
any portion of the fee not paid to firms to compensate itself for administrative
functions performed for 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
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 A, Class B and Class C shares of
21
<PAGE>
Scudder Growth and Income Fund will be identical to those of the Fund. Shares of
Scudder Growth and Income Fund will be exchangeable for shares of the same class
of most other open-end funds advised by Scudder Kemper offering such shares.
At the time of the Closing, corresponding classes of shares of Scudder
Growth and Income Fund will have identical sales charges to those of the Fund.
Scudder Growth and Income Fund will have a maximum initial sales charge of 4.50%
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 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 Growth and Income 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 Growth and Income 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 Growth and Income 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 Reorganization.
Services available to shareholders of Class A, Class B and Class C shares
of Scudder Growth and Income 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, and exchanges by telephone to most other
Scudder Kemper funds that offer Class A, Class B and Class C shares, and
reinvestment privileges. Please see the Scudder Growth and Income Fund's
prospectus for additional information.
Dividends and Other Distributions
[Scudder Growth and Income Fund intends to distribute dividends from its
net investment income quarterly, while the Fund intends to distribute dividends
from its net investment income annually. Each Fund intends to distribute net
realized capital gains after utilization of capital loss carryforwards, if any,
in November or 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.
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<PAGE>
Other Differences Between the Funds
Trustees and Officers.
The Trustees of the Acquired Trust, currently and as proposed under
Proposal 1, are different from those of the Acquiring Trust. As described
in Scudder Growth and Income Fund's prospectus that has been included in
the materials that you received with this document, the following
individuals comprise the Board of Trustees of Scudder Growth and Income
Fund: Linda C. Coughlin, Henry P. Becton, Jr., Dawn-Marie Driscoll, Edgar
Fiedler, Keith R. Fox, Joan E. Spero, Jean Gleason Stromberg, Jean C.
Tempel, and Steven Zaleznick. In addition, the officers of the Acquired
Trust and the Acquiring Trust are different. (See Proposal 1 and the
Statement of Additional Information for further information.)
Transfer Agent.
The Fund's transfer agent is State Street Bank and Trust Company.
Scudder Growth and Income Fund's transfer agent is Scudder Service
Corporation.
Auditors.
The Fund's auditors are Ernst & Young LLP. Scudder Growth and Income
Fund's auditors are PricewaterhouseCoopers LLP.
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 Scudder Growth and Income Fund are similar to
those presented by the Fund. The main
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<PAGE>
risks applicable to each Fund include, among others, market risk and management
risk (i.e., securities selection by the Investment Manager). If any of the
securities held by either Fund decrease or stop their dividend payments, the
Fund will generate less income, and overall performance may suffer. To the
extent that Scudder Growth and Income Fund invests outside the U.S., it is also
subject to risks associated with foreign securities and foreign currencies. The
Fund is not subject to this risk because it is not permitted to invest in
foreign securities. To the extent that either Fund invests in debt securities,
that Fund would also be subject to risks associated with interest rates and
credit risk. In addition, Scudder Growth and Income Fund's attempt to reduce
downside risk may reduce its performance relative to other similar funds in a
strong market. 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 Growth and Income Fund in exchange for
that number of full and fractional 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 Growth and Income Fund will assume all of the
liabilities of the Fund. The Fund will distribute the Class A, Class B and
Class C shares received in the exchange to the shareholders 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 A, Class B and 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 Growth and Income 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 A, Class B and Class C shares issued to the
Fund's shareholders in the Reorganization will be in uncertificated form. If
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 A, Class B or Class C shares of Scudder
Growth and Income 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 A,
Class B or Class C shares of Scudder Growth and Income Fund received by the
shareholder in connection with the Reorganization.
The obligations of each of the Acquired Trust, on behalf of the Fund, and
the Acquiring Trust, on behalf of Scudder Growth and Income Fund, under the Plan
are subject to various conditions, as stated
24
<PAGE>
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 Growth and Income
Fund to be issued to the Fund in the Plan 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.
Board Approval of the Proposed Transaction
As discussed above, the Reorganization is part of a Scudder Kemper
initiative that is intended to restructure and streamline the management and
operations of the funds Scudder Kemper advises. Scudder Kemper first proposed
the Reorganization to the Trustees of the Fund at a meeting held on May 24,
2000, 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 Investments name, with a concentration on
intermediary distribution;
(ii) The combination of funds with similar investment objectives and
policies, including in particular the combination of the Kemper
Funds with similar Scudder 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 implementation of an administration agreement for the Kemper
Funds similar to that recently adopted by the Scudder Funds
covering, for a single fee rate, substantially all services required
for the operation of the fund (other than those provided under the
fund's investment management agreement) and most expenses; and
(v) The consolidation of certain boards overseeing funds advised by
Scudder Kemper.
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 board members. 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 May 24th meeting, the
Independent Trustees met in person or by telephone on numerous occasions
(including committee meetings) to review and discuss these proposals, both among
themselves and with representatives of Scudder Kemper, including the
"interested" Trustees. In the course of their review, the Independent Trustees
requested and received substantial additional information and suggested numerous
changes to Scudder Kemper's proposals.
25
<PAGE>
Following the conclusion of this process, the Trustees of the Fund, the
board members of other funds involved and Scudder Kemper reached general
agreement on the elements of a restructuring plan that they believed were in the
best interests of shareholders and, where required, agreed to submit elements of
the plan for approval to shareholders of those funds.
On November 29, 2000, the Board of Trustees, including the Independent
Trustees, unanimously approved the terms of the Reorganization and certain
related proposals. The Trustees have also unanimously agreed to recommend that
the Reorganization be approved by the Fund's shareholders.
In determining whether to recommend that the shareholders of the Fund
approve the Reorganization, the Board of Trustees considered that:
. As part of Scudder Kemper's overall restructuring, the Fund would be
duplicative of another similar fund advised by Scudder Kemper in the
same distribution channel.
. The combined fund would be subject to the lower fee schedule of the
two Funds' investment advisory agreements.
. The fixed rate under the new Administration Agreement is expected to
be less than the estimated current applicable operating expenses each
Class of shares would otherwise pay.
. It is a condition of the Reorganization that each Fund receive an
opinion of tax counsel that the transaction would be a tax-free
transaction.
. Although the Fund agreed to pay the estimated costs of the
Reorganization allocated to Class A shares and a portion of the
estimated costs of the Reorganization allocated to Class B and Class C
shares, management has estimated that such allocated costs will be
recoverable from lower overall expense rates within six months of the
completion of the Reorganization. Scudder Kemper agreed to pay a
portion of the estimated costs of the Reorganization allocated to
Class B and Class C shares and all of the costs of the Reorganization
that exceed estimated costs.
As part of their deliberations, the Trustees considered, among other
things: (a) the fees and expense ratios of the Funds, including comparisons
between the expenses of the Fund and the estimated operating expenses of Scudder
Growth and Income Fund after the Reorganization, and between the estimated
operating expenses of Scudder Growth and Income 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 Funds' investment
objectives, policies, restrictions and portfolios; (d) the service features
available to shareholders of each Fund; (e) prospects for Scudder Growth and
Income Fund to attract additional assets; and (f) the investment performance of
each Fund.
As part of their analysis, the Trustees considered direct and indirect
costs to shareholders including: (a) the direct costs of the Reorganization to
be borne by existing shareholders; (b) the potential costs of any necessary
rebalancing of the Fund's portfolio; and (c) the potential tax consequences to
shareholders as a result of differences in the Funds' realized or unrealized
capital gains or losses and capital loss carry-forwards.
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<PAGE>
Costs. The anticipated costs of the Reorganization allocable to the
Fund are $31,147, which includes board meeting fees, legal, accounting
and other consultant fees, and proxy solicitation costs. Class A
shares of the Fund will pay $11,261, which represents 100% of the
estimated costs allocable to such class. Class B and Class C shares
will pay a portion of their allocable costs of the Reorganization, or
$14,304 out of $15,642 (91.4%) for Class B shares and $3,277 out of
$4,244 (77.2%) for Class C shares. Scudder Kemper is bearing the
remaining costs, including any cost overruns (except that Scudder
Growth and Income Fund is bearing the SEC and state registration and
notice fees which are estimated to be $_________).
The costs of the Reorganization borne by the Fund have been (or will
soon be) expensed, resulting in a reduction of net asset value per
share of $0.0073 for Class A shares, $0.0099 for Class B shares and
$0.0101 for Class C shares, based on [ ], 2000 net assets of the
Fund. Management of the Fund expects that reduced operating expenses
resulting from the Reorganization should allow for recovery of the
allocated costs of the Reorganization within six months after the
Closing.
Portfolio Transaction Costs. To consider the potential costs of any
necessary rebalancing of the Fund's portfolio as a result of the
Reorganization, the Independent Trustees asked for, and Scudder Kemper
provided, an estimate of the expected turnover of the securities of
the Fund, as a percentage of the assets of the combined Fund, as a
result of the Reorganization. Scudder Kemper estimated such turnover,
if any, to result in transaction costs of less than $0.01 per share of
the Fund, which the Trustees considered immaterial.
Potential Tax Consequences. Although the Reorganizations will be
achieved on a federally tax-free basis (see "Federal Income Tax
Consequences" below), there are differences in the Funds' realized
or unrealized capital gains or losses and capital loss carry forwards,
which at [ ], 200[ ] were as follows (although they may differ at
the time of the Closing):
[Charts to be inserted]
As noted above, under the terms of the Plan, shareholders of the Fund
will receive shares of Scudder Growth and Income Fund in an amount
equal to the relative net asset value of their Fund shares. The
Trustees considered whether an adjustment in this formula should be
made for the above tax differentials. The Trustees determined that no
adjustment should be made because the potential tax consequences were
not material, quantifiable or predictable because of (1) uncertainties
as to the amounts of any actual future realization of capital gains or
losses in view of future changes in portfolio values, (2) the
exemption of some shareholders from federal income taxation, and (3)
the differing consequences of federal and various other income
taxation upon a
27
<PAGE>
distribution received by each shareholder whose tax liability (if any)
is determined by the net effect of a multitude of considerations that
are individual to the shareholder. Shareholders should, however,
review their own tax situation to determine what effect, if any, these
potential tax differences may have on them.
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.
Based on all 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 Growth and Income Fund is a series of the Acquiring Trust, a
Massachusetts business trust established under a Declaration of Trust dated
September 20, 1984, as amended. The Acquiring Trust's authorized capital
consists of an unlimited number of shares of beneficial interest, par value
$0.01 per share. The Trustees of the Acquiring Trust are authorized to divide
the Acquiring Trust's shares into separate series. Scudder Growth and Income
Fund is one of eight series of the Acquiring Trust. The Trustees of the
Acquiring Trust are also authorized to further divide the shares of the series
of the Acquiring Trust into classes. The shares of Scudder Growth and Income
Fund are currently divided into five classes, Class S, Class AARP, Class A,
Class B and Class C. 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 Acquiring Trust are borne
directly by the class incurring such expenses.
Each share of each class of Scudder Growth and Income Fund represents an
interest in Scudder Growth and Income Fund that is equal to and proportionate
with each other share of that class of Scudder Growth and Income Fund. Scudder
Growth and Income 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 material differences
between the rights of shareholders of the Fund and the rights of shareholders of
Scudder Growth and Income 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 Growth and Income Fund of all
or substantially all of the assets of the Fund in exchange solely for Class A,
Class B and Class C shares and the assumption by Scudder Growth and Income 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 Growth and Income 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 Growth
and Income Fund in exchange
28
<PAGE>
solely for Class A, Class B and Class C shares and the assumption by Scudder
Growth and Income Fund of all of the liabilities of the Fund or upon the
distribution of the 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 Growth and Income 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 Growth and
Income Fund will include the period during which such assets were held by the
Fund; (v) no gain or loss will be recognized by Scudder Growth and Income Fund
upon the receipt of the assets of the Fund in exchange for Class A, Class B and
Class C shares and the assumption by Scudder Growth and Income 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 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 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 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 Growth and Income 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.
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 Growth and Income Fund will be passed on by Dechert, Ten
Post Office Square, South, Boston, Massachusetts 02109.
29
<PAGE>
Capitalization
The following table shows on an unaudited basis the capitalization of
Scudder Growth and Income 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 Growth & Pro Forma Pro Forma
Fund Income Fund Adjustments Combined
<S> <C> <C> <C> <C>
Net Assets
Class S Shares 5,833,572,945 /(3)/ 5,833,572,945
Class AARP Shares 5,353,057,869 /(3)/ 5,353,057,869
Class R Shares 7,518,502 /(3)/ 7,518,502
Class A Shares 15,973,207 /(4)/ 15,973,207
Class B Shares 15,665,300 /(4)/ 15,665,300
Class C Shares 3,657,988 /(4)/ 3,657,988
----------------------------
Total Net Assets $11,229,445,811/(2)/
============================
Shares Outstanding
Class S Shares 215,936,204 215,936,204
Class AARP Shares 198,191,892 198,191,892
Class R Shares 279,889 279,889
Class A Shares 1,460,012 (868,850) 591,162
Class B Shares 1,439,438 (859,671) 579,767
Class C Shares 336,419 (201,038) 135,381
Net Asset Value per Share
Class S Shares $ 27.02 $ 27.02
Class AARP Shares $ 27.01 $ 27.01
Class R Shares $ 26.86 $ 26.86
Class A Shares $ 10.94 $ 27.02
Class B Shares $ 10.88 $ 27.02
Class C Shares $ 10.87 $ 27.02
</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 the Scudder Growth and Income 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 Growth and Income Fund that actually will be received on or after
such date.
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<PAGE>
(2) Pro forma combined net assets do not reflect expense reductions that would
result from the application of Scudder Growth and Income Fund's lower
investment management fee and its administrative fee for the twelve months
ended September 30, 2000.
(3) Represents one-time proxy, legal, accounting and other costs of the
Reorganization to be borne by Scudder Growth and Income Fund.
(4) Represents one-time proxy, legal, accounting and other costs of the
Reorganization to be borne by the Fund.
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<PAGE>
The Board of Trustees unanimously recommends that the shareholders of the
Fund vote in favor of this Proposal 2.
PROPOSAL 3: RATIFICATION OR REJECTION OF THE SELECTION OF INDEPENDENT
AUDITORS
The Board of Trustees, including all of the Independent Trustees, has
selected Ernst & Young LLP to act as independent auditors of the Fund for the
Fund's current fiscal year and recommends that shareholders ratify such
selection. However, if the Plan is approved, as described under Proposal 2,
PricewaterhouseCoopers LLP will serve as the independent auditors for the
combined fund. One or more representatives of Ernst & Young LLP are expected to
be present at the Meeting and will have an opportunity to make a statement if
they so desire. Such representatives are expected to be available to respond to
appropriate questions posed by shareholders or management.
The Board of Trustees unanimously recommends that shareholders of the
Fund vote in favor of this Proposal 3.
ADDITIONAL INFORMATION
Information about the Funds
Additional information about the Trusts, 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, MA 02110-4103,
or by calling 1-800-[ ].
The Trusts are 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
Acquiring Trust, and those filed by the Acquired 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 - Board Approval of the Proposed Transaction." In addition to
solicitation by mail, certain officers and representatives of the Fund, officers
32
<PAGE>
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
each Proposal.
The presence at any shareholders' meeting, in person or by proxy, of the
holders of one-third of the shares of the Acquired Trust (for a trust-wide
vote) or the Fund (for a fund-wide vote) entitled to be cast shall be necessary
and sufficient to constitute a quorum for the transaction of business. In the
event that the necessary quorum to transact business or the vote required to
approve any Proposal is not obtained at the 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 that
Proposal. Any such adjournment as to a matter will require the affirmative vote
of the holders of a majority of the Acquired Trust's (for a trust-wide vote) or
the Fund's (for a fund-wide vote) 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 that Proposal and will
vote against any such adjournment those proxies to be voted against that
Proposal. For purposes of determining the presence of a quorum for transacting
business at the Meeting, abstentions and broker "non-votes" will be treated as
shares that are present but which have not been voted. Broker non-votes are
proxies received by the Fund from brokers or nominees when the broker or nominee
has neither received instructions from the beneficial owner or other persons
entitled to vote nor has discretionary power to vote on a particular matter.
Accordingly, shareholders are urged to forward their voting instructions
promptly.
The election of the Trustees under Proposal 1 requires the affirmative vote
of a plurality of the shares of the Acquired Trust voting on such election.
Approval of Proposal 2 requires the affirmative vote of the holders of a
majority of the Fund's shares outstanding and entitled to vote thereon. Approval
of Proposal 3 requires the affirmative vote of a majority of the shares of the
Fund voting at the Meeting. Abstentions and broker non-votes will not be counted
in favor of, but will have no other effect on, Proposals 1 and 3, and will have
the effect of a "no" vote on Proposal 2.
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 A shares, [ ]
Class B shares and [ ] Class C shares of the Fund outstanding.
[As of December 31, 2000, the officers and Trustees of the Acquiring Trust
as a group owned beneficially less than 1% of the outstanding shares of each
class of Scudder Growth and Income Fund.] Appendix 2 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 each class of shares of each other
series of the Acquired Trust. To the best of each 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
Acquired Trust, except as stated on Appendix 2.
33
<PAGE>
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 Proposals
on the proxy card(s), and ask for the shareholder's instructions on the
Proposals. 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 Proposals. 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 on the Internet, in addition to confirming their voting
instructions prior to submission, will also receive an e-mail confirming their
instructions.
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 Acquired Trust, c/o Scudder Kemper Investments, Inc., 222 South
Riverside Plaza, Chicago, Illinois 60606, 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
34
<PAGE>
the shares as to any such other matters in accordance with their best judgment
in the interest of the Acquired 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/ Philip J. Collora
Philip J. Collora
Secretary
35
<PAGE>
INDEX OF EXHIBITS AND APPENDICES
EXHIBIT A: FORM OF AGREEMENT AND PLAN OF REORGANIZATION...............
EXHIBIT B: MANAGEMENT'S DISCUSSION OF SCUDDER GROWTH AND INCOME
FUND'S PERFORMANCE.........................................
APPENDIX 1: TRUSTEE AND NOMINEE SHAREHOLDINGS..........................
APPENDIX 2: BENEFICIAL OWNERS OF FUND SHARES...........................
36
<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
"Acquiring Trust"), a Massachusetts business trust, on behalf of Scudder Growth
and Income Fund (the "Acquiring Fund"), a separate series of the Acquiring
Trust, Kemper Securities Trust (the "Acquired Trust" and, together with the
Acquiring Trust, each a "Trust" and collectively the "Trusts"), a Massachusetts
business trust, on behalf of Kemper U.S. Growth and Income Fund (the "Acquired
Fund" and, together with the Acquiring Fund, each a "Fund" and collectively the
"Funds"), a separate series of the Acquired Trust, and Scudder Kemper
Investments, Inc. ("Scudder Kemper"), investment adviser to the Funds (for
purposes of Paragraph 10.2 of the Agreement only). The principal place of
business of the Acquiring Trust is Two International Place, Boston,
Massachusetts 02110-4103 and the principal place of business of the Acquired
Trust is 222 South Riverside Plaza, Chicago, Illinois 60606.
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 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 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 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 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").
<PAGE>
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 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 A, Class B and Class C Acquiring Fund Shares to be so credited to the
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 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.
<PAGE>
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.
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 Acquiring 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 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
shares, as applicable, shall be equal to the net asset value of one Class S
Acquiring Fund Share.]
2.3. The number of the 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 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 11, 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
<PAGE>
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 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. Kemper Service Company, 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 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 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 Acquired Trust, on behalf of the Acquired Fund, represents and
warrants to the Acquiring Fund as follows:
(a) The Acquired 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 Acquired 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
<PAGE>
Fund is a separate series of the Acquired Trust duly designated in accordance
with the applicable provisions of the Acquired Trust's Declaration of Trust. The
Acquired 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 Acquired 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 Acquired 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;
(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 Acquired Trust is not, and the execution,
delivery and performance of this Agreement by the Acquired Trust will not result
(i) in violation of Massachusetts law or of the Acquired 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 September 30, 2000, have been
audited by Ernst & Young LLP, independent auditors, 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;
<PAGE>
(g) Since September 30, 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;
(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 Kemper Service Company, 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 Acquired 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 Acquired Trust, on behalf of the Acquired
Fund, enforceable in accordance with its
<PAGE>
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, 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 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 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 Acquiring Trust, on behalf of the Acquiring Fund, represents and
warrants to the Acquired Fund as follows:
(a) The Acquiring 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 Acquiring 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 Acquiring Trust
duly designated in accordance with the applicable provisions of the Acquiring
Trust's Declaration of Trust. The Acquiring 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 Acquiring 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 Acquiring 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
<PAGE>
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 Acquiring Trust is not, and the execution, delivery and
performance of this Agreement by the Acquiring Trust will not result (i) in
violation of Massachusetts law or of the Acquiring 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 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 nine month period 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
<PAGE>
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);
(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 Acquiring 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 Acquiring 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
<PAGE>
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 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.
<PAGE>
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 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
Trusts, the Acquiring Fund nor the Acquired
<PAGE>
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 Trusts, the Acquiring Fund and the Acquired Fund will take
such action, or cause such action to be taken, as is reasonably necessary to
enable Wilkie 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 Acquiring 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 Acquired 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:
(a) The Acquiring 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 Acquiring Trust, on behalf of the
Acquiring Fund, and constitutes a valid and legally binding obligation of the
Acquiring 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
Acquiring Trust's Declaration of Trust, as amended, or By-laws; and (e) to the
knowledge of
<PAGE>
such counsel, and without any independent investigation, (i) the Acquiring Trust
is not subject to any litigation or other proceedings that might have a
materially adverse effect on the operations of the Acquiring Trust, (ii) the
Acquiring 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 each of the Acquiring
Trust and the Acquired Trust.
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 Acquired 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 the Acquiring Trust, on behalf
of the Acquiring Fund, and dated as of the Closing Date, to the effect that the
representations and warranties of the Acquired 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:
<PAGE>
(a) The Acquired 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 Acquired
Trust's registration statement under the 1940 Act; (c) the Agreement has been
duly authorized, executed and delivered by the Acquired Trust, on behalf of the
Acquired Fund, and constitutes a valid and legally binding obligation of the
Acquired 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
Acquired 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
Acquired Trust is not subject to any litigation or other proceedings that might
have a materially adverse effect on the operations of the Acquired Trust, (ii)
the Acquired 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 each of the Acquiring
Trust and the Acquired Trust.
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 Acquired 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 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,
<PAGE>
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 each of the Acquiring Trust and
Acquired 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 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.
<PAGE>
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. Each of the Acquiring Trust, on behalf of the Acquiring Fund, and the
Acquired Trust, on behalf of the Acquired Fund, represents and warrants to the
other that it has no obligations to pay any brokers or finders fees in
connection with the transactions provided for herein.
10.2. Each Fund will pay its own allocable share of expenses associated
with the Reorganization, except that Scudder Kemper will bear any such expenses
in excess of $[ ] for the Acquiring Fund and $[ ] for the Acquired Fund
(approximately $[ ] and $[ ] per share, respectively, based on [ ],
200[ ] net assets for each 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, 222 South Riverside Plaza, Chicago, Illinois 60606, 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 each Trust mean and refer to the
Board members of each 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 each Trust
conducts its business. It is expressly agreed that the obligations of each Trust
hereunder shall not be binding upon any of the Board members, shareholders,
nominees, officers, agents, or employees of the Trusts or the Funds personally,
but bind only the respective property of the Funds, as provided in each Trust's
Declaration of Trust. Moreover, no series of either Trust other than the Funds
shall be responsible for the obligations of the Trusts hereunder, and all
persons shall look only to the assets of the Funds to satisfy the obligations of
the Trusts hereunder. The execution and the delivery of this Agreement have been
authorized by each Trust's Board members, on behalf of the applicable Fund, and
this Agreement
<PAGE>
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 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 each 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 Trusts 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 Scudder Growth and Income Fund
_______________________________
Secretary
______________________________
By:___________________________
Its:__________________________
Attest: KEMPER SECURITIES TRUST
on behalf of Kemper U.S. Growth and Income
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 Growth and Income 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 Growth
and Income Fund
-- Class S S&P 500 Index*
'90 10000 10000
'91 12821 13115
'92 14433 14567
'93 17191 16461
'94 18576 17068
'95 22213 22144
'96 26684 26645
'97 37485 37426
'98 35913 40811
'99 39927 52165
'00 43455 59101
Yearly periods ended September 30
--------------------------------------------------------------------------------
Fund Index Comparison
--------------------------------------------------------------------------------
Total Return
Growth of
Page 1
<PAGE>
Average Scudder Growth
Period ended 9/30/2000 $10,000 Cumulative and Income Fund --
Annual Class S
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
1 year $ 10,884 8.84% 8.84%
-------------------------------------------------------------------------------
5 year $ 19,563 95.63% 14.36%
-------------------------------------------------------------------------------
10 year $ 43,455 334.55% 15.83%
-------------------------------------------------------------------------------
S&P 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 of the broad
Page 2
<PAGE>
domestic economy 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.
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.
Effective August 14, 2000, the Fund offers three share classes: Class
S, Class AARP and Class R Shares. On August 11, 2000, the Scudder
Shares of the Fund were redesignated as Class S. The total return
information provided is for the Fund's Class S shares class.
Portfolio Management Discussion
--------------------------------------------------------------------------------
September 30, 2000
In the following interview, lead portfolio manager Kathleen Millard and
portfolio manager Greg Adams discuss the market environment and the fund's
investment strategy during the twelve-month period ended September 30, 2000.
Q: The fund trailed its benchmark over the full year, but it has
Page 3
<PAGE>
demonstrated improved performance year-to-date. Why?
A: The fund's Class S shares' 12-month total return was 8.84%, below the 13.30%
return of its unmanaged benchmark, the S&P 500 Index. Year-to-date, however, the
Class S shares of the fund have produced a return of 2.32%, versus a loss of
1.39% for the index. We believe that the fund's recent strength demonstrates the
value of the repositioning that we undertook in October of last year. (Please
see the President's Letter on page 4 for more details.)
The bulk of the fund's underperformance was recorded in the first half of the
period, during which investors eschewed quality companies in favor of "momentum"
stocks in the technology, media, and telecommunications (TMT) areas. As stocks
in these sectors grabbed headlines with outrageous gains, the majority of stocks
outside of these areas lost ground or produced more muted returns. Since we
pursue a value-oriented strategy, the fund was not invested in the types of
high-flying technology stocks that led the market in the first half of the
reporting period. As a result, its six-month return as of March 31, 2000, stood
at 7.78%, below the 17.52% return of the S&P 500 Index.
In the last six months, however, the market environment has changed
dramatically. Higher-valuation technology stocks have declined sharply,
momentum-based strategies have fallen out of favor, and investors have turned
their attention to stocks with more reasonable valuations. The onset of a more
challenging environment allowed the value of the fund's repositioning to become
Page 4
<PAGE>
evident: over the final six months of the fiscal year, it posted a return of
0.98%, beating the -3.60% return of the S&P 500 Index. In outperforming the S&P
during this volatile period, we achieved one of the fund's key missions:
providing a margin of safety to investors at the times when the market is
falling. In fact, the fund outperformed the benchmark in four of the six months
that the S&P has fallen so far in 2000. We feel that the fund's recent
performance illustrates the potential effectiveness of a strategy that seeks to
reduce downside risk.
Q: How do you pick stocks for the fund?
A: Our investment process breaks down into three basic steps. First, on a
monthly basis, we use a quantitative screen to sort a universe of 1,000 stocks
based on traditional valuation methods, including low price-to-earnings (p/e)
ratio, low price-to-cash flow, high relative dividend yield, and other measures
such as the direction of earnings revisions.
Next, our team of in-house equity analysts looks at each of the stocks that
passed the quantitative screen to determine their fundamental strength. They
look for companies with stable or improving fundamentals, such as positive
trends in earnings and sales growth. If our analysts' findings warrant further
investigation, we will often make on-site visits to gain a better understanding
of the business objectives and strategies of our potential buy candidates.
Page 5
<PAGE>
Finally, we employ a variety of risk management techniques in an effort to limit
downside volatility and ensure that the portfolio's performance does not vary
widely from that of the fund's peer group and the S&P 500 Index.
Q: Could you describe a fund holding that helps to illustrate the way this
investment process is put into practice?
A: An excellent example is Marsh & McLennan Companies, a diversified financial
services firm that includes the world's largest insurance brokerage business. We
felt that the company was extremely attractive both in terms of its valuation --
as determined by our quantitative analysis -- and its fundamental strengths. In
addition, our insurance analyst predicted a positive turn in pricing trends in
the insurance industry, and identified Marsh & McLennan as being one of the
companies that would be the first to benefit. We increased our holdings in the
stocks on that basis, making it one of the portfolio's top ten positions. The
stock has performed well for the fund, having returned approximately 65% since
our initial purchase.
Q: What sectors helped and hurt the fund's performance during the fiscal year?
A: In terms of sector allocation, the fund is most heavily weighted in financial
and technology stocks, respectively. However, we are underweight in
Page 6
<PAGE>
technology relative to the S&P 500, reflecting a more negative view on the
sector's valuations and fundamentals. We acquired the bulk of our technology
positions during corrections in the fourth quarter of 1999 and the second
quarter of 2000. These downturns presented some extraordinary opportunities to
purchase what we believed to be fundamentally sound growth companies at
reasonable valuations. The fund's underweight position in tech stocks (relative
to the S&P 500), as well as our strong stockpicking within the group, helped
boost its relative performance over the full year.
The fund is overweight in financials, reflecting our positive view on the
sector. But as a value-oriented blend fund, the portfolio is underweighted in
financials compared to pure value funds. Specifically, the fund is overweight in
insurance, a position that helped performance significantly early in the year,
and underweight in banks. The portfolio's heavier weighting in financials proved
beneficial to performance during the second half of the period.
Strong stock selection in the consumer staples area, particularly food and
consumer products names such as Pepsi and Anheuser-Busch, was an additional
positive, as was our decision to add to the health care sector during the course
of the year. Energy stocks helped on an absolute basis, but our decision to
overweight the major integrated oils -- at the expense of oil services firms --
proved to be a
Page 7
<PAGE>
negative. A key detractor was the fund's weighting in basic materials stocks.
Individual stocks that hurt performance included the advertising agency
Interpublic Group, Wal-Mart, and phone stocks such as SBC and BellSouth.
Although these names have declined since the fund's initial purchases, we remain
positive on their outlook going forward.
Q: What is your outlook for value stocks from here?
A: Given the volatile nature of the recent market environment, it is difficult
to predict the outlook for any single group. However, we believe that given the
increasingly rational nature of the investment backdrop -- as well as growing
risk aversion among investors -- value stocks will be better positioned to
outperform than they have been during the past three years. Opportunities appear
to be broadening, and we are optimistic about the prospects for Scudder Growth
and Income Fund's systematic approach to building a value-oriented portfolio.
Page 8
<PAGE>
APPENDIX 1
Trustee and Nominee Shareholdings
The following table sets forth, for each nominee and Trustee, the number of
shares owned in each series of the Acquired Trust as of December 31, 2000. [Each
nominee's and Trustee's individual shareholdings of any series of the Acquired
Trust constitute less than 1% of the outstanding shares of such fund.] [As a
group, the Trustees and officers own less than 1% of the shares of any series of
the Acquired Trust.]
[To be provided]
<PAGE>
APPENDIX 2
Beneficial Owners of Fund Shares
<PAGE>
This Proxy Statement/Prospectus is accompanied by Scudder Growth and Income
Fund's prospectus that relates to Class A, Class B and Class C shares dated
December 29, 2000, which was previously filed with the SEC via EDGAR on October
30, 2000 (File No. 811-00043) and is incorporated by reference herein.
Kemper U.S. Growth and Income Fund's prospectus dated February 1, 2001,
which was previously filed with the Commission via EDGAR on November 30, 2000
(File No. 811-08393), is incorporated by reference herein.
Scudder Growth and Income 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 Securities and Exchange Commission (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
Kemper U.S. Growth and Income Fund, Scudder Growth and Income Fund, a series of
a series of Kemper Securities Trust, Investment Trust (the "Acquiring Trust")
222 South Riverside Plaza Two International Place
Chicago, IL 60606. Boston, MA 02110-4103
This Statement of Additional Information is available to the
shareholders of Kemper U.S. Growth and Income Fund in connection with a proposed
transaction whereby Scudder Growth and Income Fund will acquire all or
substantially all of the assets and all of the liabilities of Kemper U.S. Growth
and Income Fund in exchange for shares of the Scudder Growth and Income Fund
(the "Reorganization").
This Statement of Additional Information of the Acquiring Trust
contains material which may be of interest to investors but which is not
included in the Proxy Statement/Prospectus of the Acquiring Trust relating to
the Reorganization. This Statement of Additional Information consists of this
cover page and the following documents:
1. Scudder Growth and Income 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 Securities and Exchange Commission (the
"Commission") via EDGAR on October 30, 2000 (File No. 811-00043) and is
incorporated by reference herein.
2. Scudder Growth and Income Fund's annual report to shareholders for the
twelve month period ended September 30, 2000, which was previously filed with
the Commission via EDGAR on December 5, 2000 (File No. 811-00043) and is
incorporated by reference herein.
3. Kemper U.S. Growth and Income Fund's prospectus dated February 1, 2001,
which was previously filed with the Commission via EDGAR on November 30, 2000
(File No. 811-08393) and is incorporated by reference herein.
4. Kemper U.S. Growth and Income Fund's statement of additional
information dated February 1, 2001, which was previously filed with the
Commission via EDGAR on November 30, 2000 (File No. 811-08393) and is
incorporated by reference herein.
<PAGE>
5. Kemper U.S. Growth and Income Fund's annual report to shareholders for
the fiscal year ended September 30, 2000, which was previously filed with the
Commission via EDGAR on December 1, 2000 (File No. 811-08393) and is
incorporated by reference 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 Kemper U.S. Growth and Income Fund at 222 South Riverside
Drive, Chicago, IL 60606 or by calling [ ] at 1-800-[ ]. This Statement of
Additional Information should be read in conjunction with the Proxy
Statement/Prospectus.
<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.)
<PAGE>
(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.)
(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.
<PAGE>
(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.)
(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.)
<PAGE>
(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.)
(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.)
<PAGE>
(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.)
(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.)
<PAGE>
(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.)
(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.)
<PAGE>
(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.)
(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.)
<PAGE>
(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.)
(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.)
<PAGE>
(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.)
(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.)
<PAGE>
(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.)
(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.
<PAGE>
(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 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 14th 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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Linda C. Coughlin President and 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 E. Spero * Trustee December 14, 2000
---------------------------
Joan E. 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
*Executed pursuant to powers of attorney filed herein as an exhibit to the
Registrant's Registration Statement on Form N-14.
<PAGE>
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
