AARP INCOME TRUST (Form Type: 497, Filing Date: 07/01/1996)

AARP INVESTMENT PROGRAM FROM SCUDDER PROSPECTUS February 1, 1996 As Revised July 1, 1996 There are nine pure no-load AARP Mutual Funds that have been developed to help meet the investment needs of AARP members. The Funds are organized into four Trusts (see page 34 for more information on the Trusts). Trusts AARP Mutual Funds ------ ----------------- AARP Cash Investment Funds AARP High Quality Money Fund AARP Income Trust AARP GNMA and U.S. Treasury Fund AARP High Quality Bond Fund AARP Tax Free Income Trust AARP High Quality Tax Free Money Fund AARP Insured Tax Free General Bond Fund AARP Growth Trust AARP Balanced Stock and Bond Fund AARP Growth and Income Fund AARP Global Growth Fund AARP Capital Growth Fund This combined Prospectus provides information about the AARP Investment Program from Scudder that a prospective investor should know before investing. Please keep it for future reference. The U.S. Government does not and has never insured or guaranteed shares of any mutual fund, including the AARP Mutual Funds. For limitations on insurance relative to the AARP Insured Tax Free General Bond Fund, see page 20. The AARP High Quality Money Fund and the AARP High Quality Tax Free Money Fund each seek to maintain a constant net asset value of $1.00 per share. The Fund Manager cannot assure investors that these funds will be able to maintain a stable $1.00 per share or constant net asset value. You may get more detailed information in the combined Statement of Additional Information (SAI) dated February 1, 1996, as amended from time to time. The SAI is considered part of this Prospectus by reference to it. The SAI is on file with the Securities and Exchange Commission (SEC). You may get a copy of the SAI or a LARGER PRINT VERSION OF THIS PROSPECTUS without charge. Call 1-800-253-2277, or write to Scudder Investor Services, Inc., P.O. Box 2540, Boston, MA 02208-2540. LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS COMBINED PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. Prospectus 1

FUND EXPENSES The AARP Mutual Funds do not charge sales fees or commissions. 100% of your investment goes to work for you. * No fees to open your account * No fees to open or maintain an AARP IRA or AARP Keogh Plan account * No fees to buy shares * No fees to exchange (move investments from one fund to another) * No fees to sell (redeem) shares * No marketing fees or distribution fees (12b-1 fees) * No fees to reinvest dividends There are Annual Fund Operating Expenses for each of the AARP Funds. You do not pay these expenses directly. The AARP Funds pay these expenses before distributing net investment income to you. These expenses include the management fee paid to the Fund Manager as well as other expenses for services such as maintaining shareholder records and furnishing shareholder statements and fund reports. The expenses are reflected in the AARP Funds' share prices or dividends and are not directly charged to shareholder accounts. The following tables present information on the projected costs and expenses of investing in an AARP Fund. You may use these tables to compare the fees and expenses of the AARP Funds with other mutual funds. Annual Fund Operating Expenses are expressed as a percentage of each AARP Fund's average daily net assets. The chart shows the expenses for each of the Funds, other than the AARP Global Growth Fund, for the fiscal year ended September 30, 1995. For the AARP Global Growth Fund, which was introduced on February 1, 1996, expenses have been estimated for the coming year. <TABLE> <CAPTION> Effective Management Other Total Fund Fund Fee Rate** Expenses Operating Expenses ---- ---------- -------- ------------------ <S> <C> <C> <C> AARP High Quality Money Fund .40% .58% .98% AARP High Quality Tax Free Money Fund .39% .48% .87% AARP GNMA and U.S. Treasury Fund .42% .25% .67% AARP High Quality Bond Fund .49% .46% .95% AARP Insured Tax Free General Bond Fund .49% .20% .69% AARP Balanced Stock and Bond Fund .49% .52% 1.01% AARP Growth and Income Fund .49% .23% .72% AARP Global Growth Fund .40%* 1.35% 1.75%* AARP Capital Growth Fund .62% .33% .95% </TABLE> Prospectus 2

EXAMPLES OF WHAT FUND EXPENSES WOULD BE ON A $1,000 INVESTMENT IN EACH AARP FUND Based on the level of assets as of September 30, 1995 (and projected September 30, 1996 assets for the AARP Global Growth Fund), we have calculated the forecasted total expenses of a $1,000 investment in each AARP Fund over specified periods. These examples assume 5% annual return. There are 3 other assumptions: (1) redemption at the end of each period, (2) reinvestment of all dividends and distributions, and (3) total fund operating expenses noted on page 2 remain the same each year. For additional information, including reference to a $5.00 wire service fee that is charged in some cases, please refer to page 41. Fund 1 Year 3 Years 5 Years 10 Years -------------------------------------------------------------------------------- AARP High Quality Money Fund $10 $31 $54 $120 AARP High Quality Tax Free Money Fund 9 28 48 107 AARP GNMA and U.S. Treasury Fund 7 21 37 83 AARP High Quality Bond Fund 10 30 53 117 AARP Insured Tax Free General Bond Fund 7 22 38 86 AARP Balanced Stock and Bond Fund 10 32 56 124 AARP Growth and Income Fund 7 23 40 89 AARP Global Growth Fund 18 55 N/A N/A AARP Capital Growth Fund 10 30 53 117 You should not consider these examples as representations of past or future expenses or returns. Actual fund expenses may be higher or lower in the future. * The AARP Global Growth Fund was introduced on February 1, 1996. Fund expenses are projected given the asset forecast as of September 30, 1996. Until September 30, 1996, the Fund Manager has agreed to waive a portion of its management fee for AARP Global Growth Fund to the extent necessary so that the total annualized expenses of the Fund do not exceed 1.75% of average daily net assets. If the Fund Manager had not agreed to waive a portion of its fee, it is estimated that the total annualized expenses of the Fund would be: investment management fee .85%, other expenses 1.35% and total operating expenses 2.20% for the initial fiscal year. To the extent that expenses fall below the current expense limitation, the Fund Manager reserves the right to recoup, during the fiscal year incurred, amounts waived during the period, but only to the extent that the Fund's expenses do not exceed 1.75%. ** The AARP Funds' fee structure is designed to recognize the degree to which the pooled resources of the Program provide economies in the management of the AARP Funds. The fee consists of two elements: a "Base Fee" and an "Individual Fund Fee." The combined Base Fee and Individual Fund Fee is called the Effective Management Fee Rate. See page 36 for information on how the Effective Management Fee Rate is calculated. Prospectus 3

FINANCIAL HIGHLIGHTS On the next six pages you will find a variety of information about the income and the expenses of each AARP Fund for the stated periods. You will also find the following: (1) the net gain or loss on the investments, (2) the distributions, if any, of income and gain, and, (3) the change in net asset value per share from the beginning to the end of the stated periods. Price Waterhouse LLP, the AARP Funds' independent accountants, have examined this information. The Annual Report to Shareholders includes their report. <TABLE> <CAPTION> For the Years Ended Net Asset Net Net Realized Total from Dividends Distributions Distributions September 30 Value at Investment & Unrealized Investment from Net from Net from Tax Beginning Income (a) Investment Operations Investment Realized Return of of Period Gain (Loss) Income Gains Capital -------------------- --------- ---------- ----------- ---------- ----------- ------------- -------------- <S> <C> <C> <C> <C> <C> <C> <C> AARP High Quality Money Fund 1996(e) (unaudited) $ 1.00 $ .023 -- $ .023 $(.023) -- -- 1995 1.00 .049 -- .049 (.049) -- -- 1994 1.00 .028 -- .028 (.028) -- -- 1993 1.00 .021 -- .021 (.021) -- -- 1992 1.00 .040 -- .040 (.040) (c) -- -- 1991 1.00 .060 -- .060 (.060) -- -- 1990 1.00 .073 -- .073 (.073) -- -- 1989 1.00 .080 -- .080 (.080) -- -- 1988 1.00 .060 -- .060 (.060) -- -- 1987 1.00 .050 -- .050 (.050) -- -- 1986 1.00 .064 -- .064 (.064) -- -- AARP High Quality Tax Free Money Fund (d) 1996(e) (unaudited) $1.000 $ .014 -- $ .014 $(.014) -- -- 1995 1.000 .029 -- .029 (.029) -- -- 1994 1.000 .017 -- .017 (.017) -- -- 1993 1.000 .016 -- .016 (.016) -- -- 1992 1.000 .026 -- .026 (.026) -- -- 1991 (d) .996 .055 $ .004 .059 (.055) -- -- 1990 .998 .061 (.002) .059 (.061) -- -- 1989 1.008 .059 (.010) .049 (.059) -- -- 1988 .998 .055 .010 .065 (.055) -- -- 1987 1.027 .049 (.026) .023 (.049) $(.003) -- 1986 .996 .048 .031 .079 (.048) -- -- AARP GNMA and U.S. Treasury Fund 1996(e) (unaudited) $15.19 $ .51 $(.13) $ .38 $(.51) -- -- 1995 14.73 1.01 .46 1.47 (.98) -- $(.03) 1994 15.96 .93 (1.23) (.30) (.93) -- -- 1993 16.19 1.15 (.23) .92 (1.15) -- -- 1992 15.72 1.22 .47 1.69 (1.22) -- -- 1991 14.95 1.26 .77 2.03 (1.26) -- -- 1990 14.98 1.31 (.03) 1.28 (1.31) -- -- 1989 15.11 1.31 (.13) 1.18 (1.31) -- -- 1988 14.89 1.37 .22 1.59 (1.37) -- -- 1987 15.99 1.35 (1.09) .26 (1.35) $(.01) -- 1986 15.52 1.54 .50 2.04 (1.54) (.03) -- (a) Reflects a per share reimbursement of expenses during the period by the Fund Manager. See last column. (b) Reflects fees not imposed by the Fund Manager of $.001 per share. (c) Includes approximately $.005 per share of net realized short-term capital gains. Prospectus 4

For a copy of the Annual Report to Shareholders which includes more detailed information concerning the Funds' performance, complete portfolio listings and audited financial statements, please contact an AARP Mutual Fund Representative at 1-800-253-2277. Total Net Asset Total Net Assets Ratio of Ratio of Net Portfolio Per Share Distributions Value at Return % End of Period Operating Investment Turnover Reimbursement End of ($ millions) Expenses to Income to Rate % of Expenses (a): Period Average Net Average Net Assets % (a) Assets % -------------- --------- ---------- ----------- ------------- ------------- ----------- ---------------- <S> <C> <C> <C> <C> <C> <C> <C> $(.023) $ 1.00 2.30(f) 381 .988(g) 4.490(g) -- -- (.049) 1.00 4.99 384 .978 4.887 -- -- (.028) 1.00 2.84 333 1.125 2.889 -- -- (.021) 1.00 2.13 254 1.312 2.123 -- -- (.040) 1.00 4.12 323 1.151 3.613 -- $ .000 (.060) 1.00 6.22 357 1.053 6.050 -- .001 (.073) 1.00 7.58 376 1.058 7.319 -- .001 (.080) 1.00 8.32 324 1.071 8.061 -- .001 (.060) 1.00 6.15 224 1.097(b) 6.025 -- .001 (.050) 1.00 5.13 178 1.160 5.090 -- .004 (.064) 1.00 6.60 104 .712 6.310 -- .009 $(.014) $1.000 1.42(f) 115 .89(g) 2.82(g) -- -- (.029) 1.000 2.99 120 .87 2.94 -- -- (.017) 1.000 1.76 129 .90 1.75 -- $ .000 (.016) 1.000 1.62 134 .93 1.60 -- .002 (.026) 1.000 2.58 127 .95 2.54 -- .002 (.055) 1.000 6.10 119 1.06 5.43 -- .001 (.061) .996 6.02 98 1.12 6.06 39.88 -- (.059) .998 4.98 90 1.17 5.85 21.28 -- (.055) 1.008 6.65 79 1.27 5.47 62.73 .005 (.052) .998 2.25 70 1.31 4.80 22.20 .006 (.048) 1.027 8.07 48 1.48 4.72 23.00 -- $(.51) $15.06 2.49(f) 5,121 .64(g) 6.66(g) 56.28(g) -- (1.01) 15.19 10.31 5,252 .67 6.77 70.35 -- (.93) 14.73 (1.90) 5,585 .66 6.09 114.54 -- (1.15) 15.96 5.89 6,712 .70 7.15 105.49 -- (1.22) 16.19 11.19 5,232 .72 7.69 74.33 -- (1.26) 15.72 14.12 3,311 .74 8.23 86.64 -- (1.31) 14.95 8.86 2,583 .79 8.71 60.54 -- (1.31) 14.98 8.17 2,518 .79 8.76 48.35 -- (1.37) 15.11 11.07 2,837 .81 9.09 84.72 -- (1.36) 14.89 1.54 2,827 .88 8.76 50.68 -- (1.57) 15.99 13.62 1,963 .90 9.49 61.92 -- (d) On August 1, 1991 the Fund implemented a 15.17 to 1.00 stock split and adopted its present name and investment objectives. Prior to that date, the Fund was known as the AARP Insured Tax Free Short Term Fund. Financial information prior to August 1, 1991 has been restated to reflect the stock split and should not be considered representative of the present Fund. (e) Operations for the period October 1, 1995 to March 31, 1996. (f) Not annualized. (g) Annualized. Prospectus 5

For the Years Ended Net Asset Net Net Realized Total from Dividends Distributions Distributions September 30 Value at Investment & Unrealized Investment from Net from Net in Excess of Beginning Income (a) Investment Operations Investment Realized Net Realized of Period Gain (Loss) Income Gains Gains -------------------- --------- ---------- ----------- ---------- ----------- ------------- -------------- <S> <C> <C> <C> <C> <C> <C> <C> AARP High Quality Bond Fund 1996(g) (unaudited) $16.01 $ .47 $(.09) $ .38 $(.47) -- -- 1995 15.05 .94 .95 1.89 (.93) -- -- 1994 17.19 .85 (1.76) (.91) (.85) -- $(.38) 1993 16.44 .93 .93 1.86 (.93) $(.18) -- 1992 15.71 1.03 .73 1.76 (1.03) -- -- 1991 14.63 1.10 1.08 2.18 (1.10) -- -- 1990 15.04 1.17 (.41) .76 (1.17) -- -- 1989 14.80 1.23 .24 1.47 (1.23) -- -- 1988 14.45 1.27 .46 1.73 (1.27) (.11)(e) -- 1987 15.87 1.22 (1.19) .03 (1.22) (.23) -- 1986 15.31 1.41 .61 2.02 (1.41) (.05) -- AARP Insured Tax Free General Bond Fund 1996(g) (unaudited) $17.74 $ .43 $ .13 $ .56 $(.43) -- -- 1995 16.93 .87 .81 1.68 (.87) -- -- 1994 19.00 .86 (1.67) (.81) (.86) $(.34) $(.06) 1993 17.88 .90 1.55 2.45 (.90) (.43) -- 1992 17.30 .93 .75 1.68 (.93) (.17) -- 1991 16.12 1.00 1.18 2.18 (1.00) -- -- 1990 16.61 1.04 (.24) .80 (1.04) (.25) -- 1989 16.02 1.08 .59 1.67 (1.08) -- -- 1988 15.00 1.08 1.02 2.10 (1.08) -- -- 1987 16.69 1.07 (1.49) (.42) (1.07) (.20) -- 1986 15.12 1.01 1.63 2.64 (1.01) (.06) -- AARP Balanced Stock and Bond Fund 1996(g) (unaudited) $16.40 $ .30 $ .99 $ 1.29 $(.32) $(.21) -- 1995 14.64 .61 1.79 2.40 (.60) (.04) -- 1994(d) 15.00 .25 (.37)(f) (.12) (.24) -- -- AARP Growth and Income Fund 1996(g) (unaudited) $38.36 $ .52 $ 4.52 $ 5.04 $(.54) $(.84) -- 1995 34.13 1.11 5.44 6.55 (1.09) (1.23) -- 1994 32.91 .94 1.62 2.56 (1.13) (.21) -- 1993 28.67 .83 4.58 5.41 (.87) (.30) -- 1992 26.97 .97 2.11 3.08 (.90) (.48) -- 1991 22.30 1.11 4.78 5.89 (1.17) (.05) -- 1990 26.11 1.11 (3.69) (2.58) (1.15) (.08) -- 1989 20.94 1.01 5.20 6.21 (1.04) -- -- 1988 25.54 1.04 (3.93) (2.89) (.94) (.77) -- 1987 20.88 .67 5.51 6.18 (.64) (.88) -- 1986 16.84 .73 4.10 4.83 (.70) (.09) -- (a) Reflects a per share reimbursement of expenses during the period by the Fund Manager. See last column. (b) Not Annualized. (c) Annualized. (d) Operations for the period of February 1, 1994 (commencement of operations) to September 30, 1994. (e) Includes $0.06 of distributions from paid-in capital. Prospectus 6

Total Net Asset Total Net Assets Ratio of Ratio of Net Portfolio Average Per Share Distributions Value at Return % End of Operating Investment Turnover Commission Reimbursement End of Period Expenses to Income to Rate % Rate Paid(h) of Period ($ millions) Average Net Average Net Expenses (a): Assets %(a) Assets % ------------ --------- ---------- ----------- ----------- ------------ --------- ----------- ------------- <S> <C> <C> <C> <C> <C> <C> <C> <C> $ (.47) $15.92 2.35(b) 529 .95(c) 5.78(c) 199.17(c) -- (.93) 16.01 12.98 533 .95 6.13 201.07 -- (1.23) 15.05 (5.55) 568 .95 5.31 63.75 -- (1.11) 17.19 11.88 604 1.01 5.64 100.98 -- (1.03) 16.44 11.56 384 1.13 6.40 63.00 -- (1.10) 15.71 15.44 201 1.17 7.26 90.43 -- (1.17) 14.63 5.21 151 1.14 7.86 47.39 $.009 (1.23) 15.04 10.38 129 1.16 8.33 57.69 .007 (1.38) 14.80 12.38 123 1.17 8.55 23.57 .005 (1.45) 14.45 (.09) 108 1.18 7.81 192.80 .034 (1.46) 15.87 13.60 88 1.30 8.86 62.72 .011 $ (.43) $17.87 3.15(b) 1,786 .67(c) 4.75(c) 41.37(c) -- (.87) 17.74 10.21 1,807 .69 5.06 17.45 -- (1.26) 16.93 (4.48) 1,914 .68 4.80 38.39 -- (1.33) 19.00 14.31 2,087 .72 4.90 47.96 -- (1.10) 17.88 10.01 1,487 .74 5.31 62.45 -- (1.00) 17.30 13.85 1,068 .77 5.92 32.18 -- (1.29) 16.12 4.89 771 .80 6.29 48.24 -- (1.08) 16.61 10.66 527 .84 6.52 148.94 -- (1.08) 16.02 14.39 312 .92 6.95 163.51 -- (1.27) 15.00 (2.94) 238 1.00 6.58 135.32 -- (1.07) 16.69 17.96 129 1.13 6.40 35.99 -- $ (.53) $17.16 7.94(b) 319 1.01(c) 3.66(c) 40.57(c) $.0551 -- (.64) 16.40 16.80 247 1.01 4.12 63.77 -- (.24) 14.64 (.78)(b) 175 1.31(c) 3.58(c) 49.32(c) -- $(1.38) $42.02 13.34(b) 3,669 .70(c) 2.66(c) 30.45(c) $.0499 -- (2.32) 38.36 20.43 3,007 .72 3.28 31.26 -- (1.34) 34.13 7.99 2,312 .76 3.00 31.82 -- (1.17) 32.91 19.38 1,560 .84 3.08 17.44 -- (1.38) 28.67 11.59 748 .91 3.84 36.40 -- (1.22) 26.97 27.19 392 .96 4.61 53.68 -- (1.23) 22.30 (10.19) 248 1.03 4.76 58.47 -- (1.04) 26.11 30.58 236 1.04 4.19 55.21 -- (1.71) 20.94 (10.75) 228 1.06 4.52 61.34 -- (1.52) 25.54 30.92 358 1.08 3.81 43.25 $.007 (.79) 20.88 29.00 99 1.21 4.55 37.44 -- (f) The amount shown for a share outstanding throughout the period does not accord with the change in the aggregate gains and losses in the portfolio securities during the period because of the timing of sales and repurchases of Fund shares in relation to fluctuating market values during the period. (g) Operations for the period October 1, 1995 to March 31, 1996. (h) Average commission rate paid per share is calculated for fiscal years beginning on or after September 1, 1995. Prospectus 7

For the Years Ended Net Asset Net Net Realized Total from Dividends Distributions September 30 Value at Investment & Unrealized Investment from Net from Net Beginning Income (a) Investment Operations Investment Realized Total of Period Gain (Loss) Income Gains Distributions -------------------- --------- ---------- ----------- ---------- ----------- ------------- -------------- <S> <C> <C> <C> <C> <C> <C> <C> AARP Global Growth Fund 1996 (b) (unaudited) $15.00 $ .02 $ .25 $ .27 -- -- -- AARP Capital Growth Fund 1996(g) (unaudited) $38.36 $ .18 $ 3.32 $ 3.50 $(.39) $(.51) $(.90) 1995 31.74 .36 6.91 7.27 (.01) (.64) (.65) 1994 36.20 .00 (1.51) (1.51) (.05) (2.90) (2.95) 1993 30.30 .06 7.19 7.25 (.14) (1.21) (1.35) 1992 30.23 .15 1.09 1.24 (.23) (.94) (1.17) 1991 23.32 .24 9.05 9.29 (.59) (1.79) (2.38) 1990 34.17 .54(f) (9.27) (8.73) (.19) (1.93) (2.12) 1989 23.88 .21 10.17 10.38 (.09) -- (.09) 1988 27.55 .10 (1.97) (1.87) (.15) (1.65) (1.80) 1987 21.13 .11 7.40 7.51 (.19) (.90) (1.09) 1986 16.95 .18 4.28 4.46 (.09) (.19) (.28) (a) Reflects a per share reimbursement of expenses during the period by the Fund Manager. See last column. (b) Operations for the period of February 1, 1996 (commencement of operations) to March 31, 1996. (c) Not Annualized. AN OVERVIEW OF THE AARP INVESTMENT PROGRAM AARP is a nonprofit organization dedicated to addressing the needs and interests of persons aged 50 and older. It seeks through education, advocacy, and service to enhance the quality of life for all by promoting independence, dignity, and purpose. In the early 1980s, research conducted by AARP indicated that many members were not taking steps to invest adequately for their future. To encourage members to plan for their retirement and beyond, AARP decided to make available a family of mutual funds. The family of funds would provide members with a limited number of distinct investment choices that were managed by an experienced investment adviser. AARP sought an investment management firm to develop and manage the funds. After interviewing a number of investment managers, AARP selected Scudder, Stevens & Clark, Inc., who will be referred to in this prospectus as Scudder or the Fund Manager. Who is Scudder, Stevens & Clark? Scudder, Stevens & Clark is America's oldest independent investment counsel firm. Its founder, Theodore T. Scudder, established the profession of long-term, fee-based investment counsel in 1919 at a time when investment firms were focused on short-term, commission-based trading. In the more than 75 years that have passed since then, Scudder has grown to be one of America's largest independent investment managers. Today, Scudder manages more than $100 billion in assets for clients around the world. Scudder manages corporate funds, pension plans, and endowments for institutions, and provides an array of investment products and services for individual clients and other investors. These include the Scudder Funds, a family of no-load mutual funds; a no-load variable annuity; 401(k) Plans; and several closed-end funds. Scudder brings decades of experience and innovation to mutual fund investing. In 1928, Scudder offered America's first no-load mutual fund. Scudder was the first company to offer an international mutual fund to U.S. investors. In 1984, Scudder was selected by AARP to develop and manage the AARP Mutual Funds. Prospectus 8

Net Asset Total Net Assets Ratio of Ratio of Net Portfolio Average Per Share Value at Return % End of Operating Investment Turnover Commission Reimbursement End of Period Expenses to Income to Rate % Rate Paid(h) of Period ($ millions) Average Net Average Net Expenses (a): Assets %(a) Assets % --------- ---------- ----------- ----------- ------------ --------- ----------- ------------- <C> <C> <C> <C> <C> <C> <C> <C> $15.27 1.80(c) 28 1.75(d) 2.06(d) -- $.0172 $ .07 $40.96 9.27(c) 762 .91(d) .93(d) 75.90(d) $.0617 -- 38.36 23.47 692 .95 1.00 98.44 -- 31.74 (4.70) 683 .97 .02 79.65 -- 36.20 24.53 607 1.05 .22 100.63 -- 30.30 3.94 424 1.13 .61 89.20 -- 30.23 42.81 242 1.17 .90 99.62 -- 23.32 (26.94) 160 1.11 2.00 83.28 $.009 34.17 43.62 180 1.16 .89 63.51 -- 23.88 (5.44) 91 1.23 .37 45.37 .044 27.55 37.02 116 1.24 .62 53.61 .025 21.13 26.65 56 1.44 1.27 46.32 -- (d) Annualized. (e) Average commission rate paid per share is calculated for fiscal years beginning on or after September 1, 1995. (f) Net investment income per share includes non recurring dividend income amounting to $.18 per share. (g) Operations for the period October 1, 1995 to March 31, 1996. </TABLE> What are the roles of AARP and Scudder? The AARP Investment Program from Scudder was established in accordance with criteria set by AARP. Specifically, these criteria include providing members with competitive investment performance, allowing easy access to investments, offering easy-to-understand information concerning investing, and delivering superior service. Fulfilling this mandate is the mission of AARP and Scudder. Both organizations work closely to ensure these criteria are met. Scudder provides investment management and administrative services for the AARP Funds and brings to the Program more than 75 years of investment counseling and management experience. AARP provides insight into the diversity and changing character of AARP members. Association staff closely monitor Program services and review all Program materials to ensure conformity to AARP's high standards. Members of AARP leadership also serve as Trustees for the AARP Funds. WHAT DOES THE AARP INVESTMENT PROGRAM OFFER ME? The Program was created to address the investment concerns of AARP members and to help you make informed investment decisions. It features several benefits that may make investing advantageous and give you greater confidence that you've made decisions appropriate for your needs: * A Unique Family of Funds: The Program offers a range of mutual funds which recognize the needs of AARP members. Each of the AARP Funds is conservatively managed, seeking to moderate share price volatility, while seeking competitive returns. This makes the AARP Funds distinct from other mutual funds, which may seek higher returns but do not focus on reducing share price volatility. * No Sales Fees or Commissions: Unlike most other mutual funds, the AARP Funds are pure no-loadt so you don't pay any sales fees or commissions to purchase, exchange or sell (redeem) shares. In addition, the Funds do not charge 12b-1 fees, which are a form of a sales charge that covers marketing and distribution expenses. Prospectus 9

* No Fees to open and maintain an AARP IRA or AARP Keogh Plan account: You'll pay no separate fees to open or maintain your retirement plan account. All your money goes to work for your retirement. * Low initial investment: Open an account for just $500 for each AARP Fund ($2,500 for the AARP High Quality Tax Free Money Fund) or $250 for each AARP Fund in an AARP IRA or AARP Keogh Plan account. So it's easy to get started. See page 38 of this prospectus for more information on minimum investments. * Professional investment management by Scudder, Stevens & Clark: Scudder brings over 75 years of investment management experience to the AARP Funds. * Responsive Service from AARP Mutual Fund Representatives: Our knowledgeable representatives are ready to answer your questions, initiate transactions or help you select the AARP Fund which meets your needs--call them toll-free. They are available Monday through Friday, from 8 a.m. to 8 p.m. Eastern time. * Access to your investment when you need it. You'll be able to redeem your investment at no charge by simply calling toll-free or writing--your investment is not locked in. See page 41 of this prospectus for more information. You'll also benefit from: * Informative Communications, such as newsletters and free educational guides; * Consolidated Monthly Statements or Quarterly AARP IRA or AARP Keogh Plan Statements; * Prompt transaction confirmations; * Special Services designed to make investing simple and convenient; and * AARP's commitment to represent your interests. WHAT DO THE AARP MUTUAL FUNDS OFFER? The nine AARP Mutual Funds offer members a choice of conservatively managed investments which vary in the potential returns and risk they offer. The Funds address four major investment needs: stability of principal, income, tax-free income and growth. Each of the AARP Mutual Funds is managed to offer you competitive returns. In addition, each AARP Fund follows a conservative investment approach which seeks to moderate share price volatility, so you can feel confident when you invest. The AARP Funds are managed with the needs of AARP investors always in mind. Other mutual funds not designed and managed for AARP investors may have higher share price volatility and have higher returns. While the AARP Funds are conservatively managed, it is important to realize that your principal is never insured or guaranteed, and the value of your investment and your return will move up and down as market conditions change. The share price of a mutual fund, other than a money market fund, typically moves up and down on a day-to-day basis. Share price volatility reflects the level of fluctuation in the value of a Fund's shares over relatively short time periods. A mutual fund that experiences large changes in its share price on a daily basis would be considered to have high share price volatility. The AARP Funds will be managed to seek to reduce share price volatility as compared to other mutual funds or securities described in a Fund's investment objective and policies. This does not mean a Fund's share price will not be affected by market forces. Market forces may include downward and upward movements of the stock market or interest rates. The result will be upward or downward movements in the Fund's share price. For a more detailed discussion of each AARP Fund, please read the "Investment Objectives and Policies" section. Information on each AARP Fund is included in this Prospectus, focusing on how the AARP Funds differ in their potential return and risk. Before investing, you should determine your investment objectives and personal time horizons. This will help you decide which Fund or combination of AARP Funds fits your investment needs. Prospectus 10

The following is a brief summary of the diversity of investment needs the AARP Funds seek to meet. The differing nature of an investment in each Fund will affect the length of time for which you should be planning to invest. If you are investing for stability of principal and income: Consider the AARP High Quality Money Fund or the AARP High Quality Tax Free Money Fund. Each provides opportunities to meet short-term needs (1 year or less) while providing a modest level of income. Both seek to provide investors with stability of principal through a constant $1.00 share price, although this may not always be achieved. Like other money funds, the AARP Money Funds invest in short-term securities whose yields tend to follow changes in short-term interest rates. If short-term interest rates rise or fall dramatically, so could the yields of the AARP Money Funds in relatively short periods of time. Keep in mind that the two AARP Money Funds differ in that the income paid by the AARP High Quality Money Fund is taxable, whereas the income paid by the AARP High Quality Tax Free Money Fund is normally free from federal income taxes. If you are investing for the longer term and are interested in monthly income: Consider the AARP GNMA and U.S. Treasury Fund, the AARP High Quality Bond Fund or the AARP Insured Tax Free General Bond Fund. When you choose one of these conservatively managed funds, remember that both the value of your shares and the yield will change daily, generally in reaction to shifting interest rates. In most cases, as interest rates rise, the value of investments in bond funds like these tends to fall. As interest rates fall, the value of investments in these bond funds tends to rise. Investing in these Funds offers the opportunity for gain through potential appreciation in the value of your investment and from the monthly income that the investment earns. While each of these Funds is managed to attempt to moderate share price volatility, the value of your investment can decline. That's why you should be prepared to tolerate some fluctuation in the value of your investment and in the income you earn and to invest for the longer term (at least 1 year or more). If you are investing for the long term and you are interested in growth: Consider the AARP Balanced Stock and Bond Fund, the AARP Growth and Income Fund, the AARP Global Growth Fund or the AARP Capital Growth Fund. When you invest in one of these Funds, remember that any investment in stocks involves risk and that the value of your shares will fluctuate daily. The share price of these AARP Funds will tend to rise when the stock market rises and decline when the stock market declines. Investing in these Funds offers the opportunity for gain through potential appreciation in the value of your investment as well as from the income that the investment earns. While each of these Funds is managed to attempt to moderate share price volatility, the value of your investment can decline. That's why you should consider your investment as one that you can afford to let work for you over time--generally for a period of 3 to 5 years or more. How is my investment managed? The AARP Mutual Funds are managed to seek both competitive returns and to moderate share price volatility. Each of the AARP Mutual Funds is managed by a team of investment professionals at Scudder. Professional portfolio managers develop investment strategies and select securities for each AARP Fund's portfolio. They are supported by Scudder's dedicated staff of economists, research analysts, traders, and other investment specialists who work in offices across the United States and abroad. At Scudder, there has always been a strong partnership between research analysts and portfolio managers. Scudder's large staff of independent research analysts helps the portfolio managers assess Prospectus 11

economic and industry trends as they make their investment decisions. Because of this emphasis on "fundamentals," the portfolio managers do not take a short-term approach to investing. Instead, they seek to add value over the long term, carefully selecting investments they believe have superior potential for achieving each Fund's objectives. INVESTMENT OBJECTIVES AND POLICIES The following pages provide detail on the investment objectives and policies of the nine AARP Mutual Funds. Included are each Fund's objectives, whom it is designed for, what it offers investors, what it can invest in, the risks involved, when distributions are paid and who at Scudder manages the Fund. As with any investment, there is no guarantee that the AARP Funds will successfully meet their investment objectives. Be sure to read the section titled "Other Investment Policies and Risk Factors" on page 28. Each Trust's Trustees can modify a Fund's objectives without the approval of a majority of that Fund's shareholders. Shareholders will be informed in writing of any changes in objectives. In that event, they should consider whether the Fund is still an appropriate investment given their then current financial position and needs. AARP HIGH QUALITY MONEY FUND Fund Objective: From investments in high quality securities, the Fund is designed to provide current income. The Fund also seeks to maintain stability and safety of principal while offering liquidity. The Fund seeks to maintain a constant net asset value of $1.00 per share. There may be circumstances under which this goal cannot be achieved. For whom is the Fund designed? The Fund may be appropriate for investors who have short-term needs or who do not want the risk that accompanies investing in stocks or bonds. These include: * Investors creating a diversified portfolio who want a portion of their assets in a conservative investment designed to offer safety and stability. * Investors seeking a short-term investment prior to making longer-term investment choices. * Investors seeking money market income to meet regular day-to-day needs. * Investors who need immediate access to their money through free checkwriting services. The Fund is also available for AARP IRA, AARP SEP-IRA, and AARP Keogh Plan accounts. What does the Fund offer to investors? The Fund is designed to offer current income, while maintaining stability and safety of principal. In addition, it provides a convenient way to easily access your money through checkwriting. What does the Fund invest in? The Fund purchases high quality short-term securities consisting of obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities; obligations of supranational organizations such as the International Bank for Reconstruction and Development (the World Bank); obligations of domestic banks and their foreign branches, including bankers' acceptances, certificates of deposit, deposit notes and time deposits; obligations of savings and loan institutions; instruments whose credit has been enhanced by: banks (letters of credit), insurance companies Prospectus 12

(surety bonds), or other corporate entities (corporate guarantees); corporate obligations, including commercial paper, notes, bonds, loans and loan participations; securities with variable or floating interest rates; asset-backed securities, including certificates, participations and notes; municipal securities including notes, bonds and participation interests, either taxable or tax-free, as described in more detail for the AARP High Quality Tax Free Money Fund; securities with put features; and repurchase agreements. These securities will have remaining maturities of 397 calendar days or less, except for U.S. Government securities, which may have maturities up to 762 calendar days. The average dollar-weighted maturity of the Fund's investments is 90 days or less. All of the securities that the Fund purchases, or that underlie its repurchase agreements, are considered to be high quality. Generally, the Fund may purchase only securities rated, or issued by an entity with comparable securities rated, within the two highest quality rating categories of one or more rating agencies such as: Moody's Investors Service, Inc. (Moody's), Standard & Poor's (S&P), and Fitch Investors Service, Inc. (Fitch). Securities rated by only one agency may be purchased if the rating falls within the categories above. Unrated securities may be purchased if the Fund Manager judges them to be comparable in quality to securities described above. Generally, the Fund will invest in securities rated in the highest quality rating by at least two of these rating agencies. All of the securities purchased are U.S. dollar-denominated. The securities must meet credit standards applied by the Fund Manager following procedures established by the Trustees. If a security ceases to be rated or is reduced below the Fund's standards, it will be sold unless the Trustees determine that disposing of the security would not be in the best interests of the Fund. The Fund has certain nonfundamental policies designed to maintain diversification. These policies may be changed without shareholder approval. With limited exceptions, the Fund may not invest more than 5% of its assets in the securities of a single issuer, except for U.S. Government securities. Nor may it invest more than 10% of its total assets in securities subject to unconditional puts by a single issuer. What are the risks? The risk to your principal is low, since the Fund seeks to maintain a stable share price of $1.00. While the Fund has maintained a stable share price since it began in June 1985, there may be situations under which this goal cannot be achieved. The level of income you receive will be affected by movements up and down in short-term interest rates. By investing generally in highest-quality securities, the Fund may offer less income than a money market fund investing in other high-quality securities in which money market funds are allowed to invest. See "Other Investment Policies and Risk Factors." When are distributions paid? Dividends are declared daily and distributed monthly to investors. Generally, net realized capital gain or loss is included in the daily declaration of income. See page 33 for additional information on distributions and taxes. Who at Scudder manages my investment? Lead Portfolio Manager Stephen L. Akers assumed responsibility for setting the Fund's investment strategy and for overseeing the Fund's day-to-day management in February 1996. Mr. Akers has been a member of the AARP High Quality Money Fund team since 1995 and has managed several other fixed-income portfolios since joining Scudder in 1984. Robert T. Neff, Portfolio Manager, focuses on securities selection and assists with the Prospectus 13

creation and implementation of investment strategy for the Fund. Mr. Neff joined Scudder in 1972 and has more than 20 years of experience managing short-term fixed-income assets. Debra A. Hanson, Portfolio Manager, assists with the development and execution of investment strategy and has been with Scudder since 1983. K. Sue Cote, Portfolio Manager, joined Scudder in 1983 and has over 10 years of experience in the investment industry. AARP HIGH QUALITY TAX FREE MONEY FUND Fund Objective: From investments in high quality municipal securities, the Fund is designed to provide current income free from federal income taxes. The Fund also seeks to maintain stability and safety of principal, while offering liquidity. The Fund seeks to maintain a constant net asset value of $1.00 per share. There may be circumstances under which this goal cannot be achieved. For whom is the Fund designed? The Fund may be appropriate for investors in high tax brackets who have short-term investment needs or who do not want the risk that accompanies investing in stocks or bonds. These include: * Investors creating a diversified portfolio who want a portion of their assets in a conservative investment designed to offer safety and stability. * Investors seeking a short-term investment prior to making longer-term investment choices. * Investors seeking tax free money market income to meet regular day-to-day expenses. * Investors who need immediate access to their money through free checkwriting services. This Fund is not available for AARP IRA, AARP SEP-IRA or AARP Keogh Plan accounts. What does the Fund offer to investors? The Fund is designed to offer current income free from federal income tax, while providing you with stability and safety of principal. Depending on your tax bracket, the after-tax income from the Fund may be higher than from a taxable investment of comparable quality and risk. In addition, it provides a convenient way to easily access your money through checkwriting. What does the Fund invest in? The Fund invests in high-quality, short-term municipal securities. These securities will have remaining maturities of 397 calendar days or less. The average dollar-weighted maturity of its investments is 90 days or less. These municipal securities may include obligations issued by or on behalf of states, territories and possessions of the United States and the District of Columbia. Interest from these securities is, in the opinion of the issuer's bond counsel, exempt from federal income taxes. The Fund has no current intention to invest in securities whose income is subject to federal income tax, including the individual alternative minimum tax (AMT). Municipal securities may include municipal notes such as tax anticipation notes, revenue anticipation notes, bond anticipation notes and construction loan notes; municipal bonds, which include general obligation bonds secured by the issuer's pledge of its faith, credit and taxing power for payment of principal and interest; and revenue bonds (including private activity bonds), which are generally paid from the revenues of a particular facility, a specific excise tax, or other source. The Fund's municipal investments may also include participation interests in bank holdings of Prospectus 14

municipal securities, municipal lease obligations, securities with variable or floating interest rates, demand obligations, and tax-exempt commercial paper. The Fund may also purchase securities on a "when-issued" or "forward delivery" basis, and may enter into stand-by commitments, which are securities that may be sold back to the seller at the Fund's option. All of the securities that the Fund purchases, or that underlie its repurchase agreements, are considered to be high quality. These securities are generally rated or issued by an issuer rated within the two highest quality ratings of two or more rating agencies such as: Moody's (Aaa and Aa, M1G1 and M1G2, and P1), S&P (AAA and AA, SP1+ and SP1, A1+ and A1) and Fitch (AAA and AA, F1 and F2). The Fund may purchase a security rated by only one rating agency if it meets the above rating standards. An unrated security may be purchased if the Fund Manager judges it to be of comparable quality to securities described above. Generally, the Fund will invest in securities rated in the highest quality rating by at least two of these rating agencies. Ordinarily, the Fund expects that 100% of its portfolio securities will be in federally tax-exempt securities. As a fundamental policy, under normal circumstances, at least 80% of the Fund's net assets will be invested in tax-exempt securities. Up to 20% of the Fund's net assets may be invested in taxable securities. For defensive purposes, or if unusual circumstances make it advisable, the Fund may purchase U.S. Government securities and repurchase agreements collateralized by such securities. For temporary defensive purposes, the Fund's investment in taxable securities may exceed 20% when the Fund Manager deems such a position advisable in light of economic or market conditions. All of the securities purchased are U.S. dollar-denominated. The securities must meet credit standards applied by the Fund Manager, following procedures established by the Trustees. If a security ceases to be rated, or its rating is reduced below the Fund's standard, it will be sold unless the Trustees determine that disposing of the security would not be in the best interests of the Fund. As a matter of nonfundamental policy, which may be changed without a shareholder vote, the Fund, with respect to 75% of its total assets, may not invest more than 5% of its total assets in securities subject to puts from any one issuer. What are the risks? The risk to your principal is low, since the Fund seeks to maintain a stable share price of $1.00. While the Fund has maintained a stable share price since it began operating as a tax-free money fund in August 1991, there may be situations under which this goal cannot be achieved. The level of income you receive will be affected by movements up and down in short-term interest rates. By investing generally in highest-quality securities, the Fund may offer less income than a money market fund investing in other high-quality securities in which money market funds are allowed to invest. See "Other Investment Policies and Risk Factors." Will I be subject to taxes on this fund? All income distributed by the Fund is expected to be exempt from federal income taxes. However, income may be subject to state and local income taxes. Each year you will be provided with a breakdown of the Fund's investments on a state by state basis so that you can determine your state and local income tax liability. Your state or local Department of Revenue or tax advisor can answer questions regarding taxability of distributions. Should there be any income from taxable securities, it would not be exempt from federal income taxes. Prospectus 15

When are distributions paid? Dividends are declared daily and distributed monthly to investors. Any net realized capital gain typically will be distributed annually after September 30 and is usually taxable. See page 33 for additional information on distributions and taxes. Who at Scudder manages my investment? Lead Portfolio Manager K. Sue Cote has been responsible for setting the Fund's investment strategy and has overseen the Fund's day-to-day management since 1991. Ms. Cote joined Scudder in 1983 and has over 10 years of experience in the investment industry. Donald C. Carleton, Portfolio Manager, focuses on securities selection and assists with the creation and implementation of investment strategy for the Fund. Mr. Carleton has more than 20 years' experience in tax-free investing and has been at Scudder since 1983. AARP GNMA AND U.S. TREASURY FUND Fund Objective: To produce a high level of current income and to keep the price of its shares more stable than that of a long-term bond. The Fund pursues this objective by investing principally in U.S. Government-guaranteed GNMA securities and U.S. Treasury obligations. For whom is the Fund designed? The Fund is suitable for conservative investors who want high current income but want a degree of protection from bond market price risk. Investors should be seeking to invest for the longer term and be comfortable with fluctuation in the value of their principal. The Fund is also available for AARP IRA, AARP SEP-IRA, and AARP Keogh Plan accounts. What does the Fund offer to investors? The Fund is designed to offer current income from a portfolio of high-quality securities. The level of income should generally be higher than available from fixed-price money market mutual funds, government-insured bank accounts and fixed-rate, government-insured CDs. By including short-term U.S. Treasury securities in its portfolio, the Fund seeks to offer less share price volatility than long-term bonds or many GNMA mutual funds, although its yield may be lower. What does the Fund invest in? The Fund invests principally in U.S. Treasury bills, notes, and bonds, and other securities issued or backed by the full faith and credit of the U.S. Government. These include Government National Mortgage Association (GNMA) securities. GNMA securities represent part ownership of a pool of U.S. Government-guaranteed mortgage loans each of which is insured by the Federal Housing Administration or guaranteed by the Veterans Administration. Each pool of mortgages is also guaranteed by GNMA as to the timely payment of principal and interest (regardless of whether the mortgagors actually make their payments). This guarantee by GNMA represents the full faith and credit of the U.S. Government. However, this guarantee is not related to the Fund's yield or the value of shareholders' investments, which will fluctuate daily. The maturities and types of securities held by the Fund may vary with current market conditions. At any time, the Fund may invest a substantial portion of its assets in securities of a particular maturity. With GNMA Prospectus 16

securities, principal is paid back to the Fund over the life of the bond, rather than at maturity. The Fund will receive monthly scheduled payments of principal and interest and may receive unscheduled principal payments resulting from prepayments of the underlying mortgages. The Fund may realize a gain or loss upon receiving principal payments. The Fund typically reinvests all payments and prepayments of principal in additional GNMA securities or other U.S. Government-guaranteed securities. The Fund may also purchase "when-issued" securities and invest in repurchase agreements. What are the risks? The Fund is not a fixed price money market fund, so the value of its shares will fluctuate up and down with changes in interest rates and other market conditions. The level of income you receive will be affected by movements up or down in interest rates. Like bonds, the value of mortgage-backed securities decreases when interest rates rise. However, when interest rates fall their value may not rise as much as does the value of bonds because of the anticipation of prepayment of the underlying mortgages. This prepayment may expose the Fund to a lower rate of return upon reinvestment. Thus, the prepayment rate may also tend to limit any increase in net asset value. See "Other Investment Policies and Risk Factors." How does the Fund seek to manage risk? The Fund actively seeks to reduce fluctuation, or price volatility to your principal, by investing in a combination of short-, intermediate-, and long-term securities. The Fund may also, on occasion, use portfolio management techniques to seek to reduce volatility. These techniques, which are subject to applicable regulatory guidelines, may include limited transactions in financial futures contracts and related option transactions which are unrated (see "Other Investment Policies and Risk Factors"). The Fund may write (sell) covered call options to enhance investment returns. These techniques will be entered into to reduce risk, but such techniques involve risks themselves and under certain conditions may reduce current income. When are distributions paid? Dividends are declared daily and distributed monthly to investors. Any net realized capital gain typically will be distributed annually after September 30. See page 33 for additional information on distributions and taxes. Who at Scudder manages my investment? Lead Portfolio Manager David H. Glen has been responsible for setting the Fund's investment strategy and overseeing security selection for the Fund's portfolio since its inception in 1985. Mr. Glen has 15 years' experience in finance and investing. Mark S. Boyadjian, Portfolio Manager, focuses on securities selection and assists with the creation and implementation of investment strategy for the Fund. Mr. Boyadjian joined the Fund's team in 1995 and has been involved in investment management since joining Scudder in 1989. AARP HIGH QUALITY BOND FUND Fund Objective: Consistent with investments primarily in high quality securities, the Fund seeks to provide a high level of income and to keep the value of its shares more stable than that of a long-term bond. Prospectus 17

For whom is the Fund designed? The Fund is suitable for investors who want high current income with moderate risk from a high quality portfolio. Investors should be seeking to invest for the longer term (at least 1 year or more) and be comfortable with fluctuation in the value of their principal. The Fund is also available for AARP IRA, AARP SEP-IRA, and AARP Keogh Plan accounts. What does the Fund offer to investors? The Fund is designed to offer a high level of current income from a portfolio of high-quality securities. Normally the level of return should be higher than that available from the AARP GNMA and U.S. Treasury Fund, with greater fluctuation in the value of your principal. By including short- and medium-term bonds in its portfolio, the Fund seeks to offer less share price volatility than long-term bonds or many long-term bond funds, although its yield may be lower. What does the Fund invest in? Under normal circumstances, at least 65% of the assets of the Fund are invested in U.S. Government, corporate and other fixed-income securities. All the Fund's securities will be rated or judged by the Fund Manager to be the equivalent of those rated in the three highest rating categories of Moody's (Aaa, Aa, and A) or S&P (AAA, AA, and A) and at least 65% of the Fund's assets must be in securities rated in the two highest rating categories by Moody's or S&P. The Fund may invest in any investment eligible for the AARP GNMA and U.S. Treasury Fund. It may also purchase corporate notes and bonds, including convertible issues, and obligations of federal agencies that are not backed by the full faith and credit of the U.S. Government. Additionally, the Fund may also purchase obligations of international agencies, U.S. dollar-denominated foreign debt securities, mortgage-backed and other asset-backed securities, and money market instruments such as commercial paper, banker's acceptances, and certificates of deposit issued by domestic and foreign branches of U.S. banks. The Fund may also purchase "when-issued" securities and invest in repurchase agreements. The Fund will invest in a broad range of short-, intermediate- and long-term securities. The maturities and types of securities held by the Fund will vary with current market conditions. The Fund may have a substantial portion of its assets in securities of a particular maturity. The non-governmental investments of the Fund will be spread among a variety of companies and will not be concentrated in any one industry. What are the risks? The Fund is not a fixed price money market fund, so the value of its shares will fluctuate up and down with changes in interest rates and other market conditions. Due to the greater market price risk of the securities in which it invests, the Fund may have a more variable share price than the AARP GNMA and U.S. Treasury Fund. See "Other Investment Policies and Risk Factors." The level of income provided will be affected by movements up and down in interest rates. Also, income from high-quality securities the Fund purchases may be lower than income from lower-quality securities. How does the Fund seek to manage risk? The Fund actively seeks to reduce fluctuation, or the price volatility of your investment, by investing in securities with varying maturities. Also, the Fund may use approved portfolio management techniques, if appropriate, Prospectus 18

such as limited transactions in financial futures contracts and related option transactions which are unrated (see "Other Investment Policies and Risk Factors"). The Fund may write (sell) covered call options to enhance investment returns. These techniques will be entered into to reduce risk, but such techniques involve risks themselves and under certain conditions may reduce current income. When are distributions paid? Dividends are declared daily and distributed monthly to investors. Any net realized capital gain typically will be distributed annually after September 30. See page 33 for additional information on distributions and taxes. Who at Scudder manages my investment? Lead Portfolio Manager David H. Glen has set the Fund's overall investment strategy and has overseen its day-to-day operations since 1995. Mr. Glen, who started at Scudder in 1982 and has been a portfolio manager since 1985, has 15 years' experience in finance and investing. William M. Hutchinson, Portfolio Manager, who is also responsible for implementing the Fund's strategy, has been involved with the Fund since 1987. Mr. Hutchinson joined Scudder in 1986 as a portfolio manager and has over 20 years of investment experience. Stephen A. Wohler, Portfolio Manager, focuses on securities selection for the Fund. Mr. Wohler joined Scudder in 1979 as a portfolio manager and has over 15 years' experience managing fixed-income investments. AARP INSURED TAX FREE GENERAL BOND FUND Fund Objective: From a portfolio consisting primarily of municipal securities covered by insurance, the Fund seeks to provide high income free from federal income taxes and to keep the value of its shares more stable than that of a long-term municipal bond. For whom is the Fund designed? The Fund is suitable for investors in higher tax brackets who want high income free from federal income taxes. Investors should invest for the longer term (at least 1 year or more) and be comfortable with fluctuation in the value of their principal. The Fund is not available for AARP IRA, AARP SEP-IRA, and AARP Keogh Plan accounts. What does the Fund offer to investors? The Fund is designed to offer high income free from federal tax. Depending on an investor's tax bracket, the after-tax income from the Fund may be higher than from a taxable investment of comparable quality and risk. The Fund will typically pay higher income than the AARP High Quality Tax Free Money Fund, although yield and principal value will fluctuate up and down with market conditions. By including short- and medium-term bonds in its portfolio, the Fund seeks to offer less share price volatility than long-term municipal bonds or many long-term municipal bond funds, although its yield may be lower. The Fund is one of a distinct group of tax-free mutual funds with insurance on the majority of its investments. Insurance on its securities protects the Fund against loss from default by the municipal issuer. However, it does not protect the investor from fluctuation in the yield or share price. Prospectus 19

What does the Fund invest in? The Fund invests primarily in a mix of short-, intermediate-, and long-term municipal securities that are insured against default by private insurers. The municipal securities purchased by the Fund will be only high-grade securities or repurchase agreements on such securities. These may include obligations issued by or on behalf of states, territories and possessions of the United States and the District of Columbia to raise money for public purposes. Interest from these securities is, in the opinion of the issuer's bond counsel, exempt from federal income taxes. The Fund has no current intention of investing in securities whose income is subject to federal income tax, including the individual alternative minimum tax (AMT). However, under unusual circumstances, the Fund may invest in taxable securities for defensive purposes or to benefit from disparities in the financial markets. Municipal securities may include municipal notes, municipal bonds, municipal lease obligations, participation interests in bank holdings of municipal securities, securities with variable or floating interest rates, demand obligations, and tax-exempt commercial paper. The Fund may purchase securities on a "when-issued" or "forward delivery" basis, and may enter into stand-by commitments in which securities may be sold back to the seller at the Fund's option. Also, the Fund may use approved portfolio techniques, if appropriate, such as limited use of financial futures contracts and related options transactions (see "Other Investment Policies and Risk Factors"). What portion of the securities is insured? At least 65% of the Fund's assets are fully insured by private insurers as to payment of face value and interest to the Fund, when due. If uninsured securities or securities not directly or indirectly backed or guaranteed by the U.S. Government are purchased and expected to be held for 60 days or more, insurance will be obtained within 30 days to ensure that 65% of the Fund's assets are insured by the issuer or arranged for by the Fund. If at least 65% of its assets are not insured securities, the Fund will obtain insurance for a portion of its U.S. Government guaranteed or backed securities so that the 65% standard is achieved. What are the risks? The Fund is not a fixed price money market fund, so the value of its shares will move up and down as interest rates and other market conditions change. The level of income you receive will be affected by movements up and down in interest rates. Income from the high-quality securities which the Fund purchases may be lower than the income from lower-quality securities. See "Other Investment Policies and Risk Factors." How does the Fund seek to manage risk? The Fund actively seeks to manage fluctuation, or the price volatility of your investment, by investing in securities of varying maturities. The Fund may also use approved portfolio management techniques. Insurance on the securities held by the Fund protects the Fund as to default by the municipal issuer. It does not protect an investor from fluctuation in the Fund's yield or value per share, which change daily. Insurance also involves a cost to the Fund which will reduce yield. Historically, the yields on insured securities have been attractive in comparison to the yields on uninsured securities of comparable quality. There can be no assurance, however, that this relationship will continue. Moreover, to the extent the Fund must purchase insurance on U.S. Government securities, this will involve a cost to the Fund while not increasing the Prospectus 20

quality rating since U.S. Government-guaranteed or backed securities are already high quality. Although the financial condition of each insurer of its securities is periodically reviewed by the Fund, there can be no guarantee that insurers can honor their obligations under all circumstances. See "Other Investment Policies and Risk Factors." Will I be subject to taxes on this fund? All income distributed by the Fund is expected to be exempt from federal income taxes. However, income may be subject to state and local income taxes. Ordinarily, the Fund expects that 100% of its portfolio securities will be in federally tax-exempt securities. As a fundamental policy, under normal circumstances, at least 80% of the Fund's net assets will be invested in federally tax-exempt securities. Up to 20% of the Fund's net assets may be invested in federally taxable securities. For defensive purposes, or if unusual circumstances make it advisable, the Fund may purchase U.S. Government securities and repurchase agreements collateralized by such securities. For temporary defensive purposes, the Fund's investment in federally taxable securities may exceed 20%. Each year you will be provided with a breakdown of the Fund's investments on a state by state basis so that you can determine your state and local income tax liability. Your state or local Department of Revenue or tax advisor can answer questions regarding the taxability of distributions. In the event there is income from taxable securities, it would not be exempt from federal income taxes. In addition, any capital gains earned by the Fund are usually taxable. When are distributions paid? Dividends are declared daily and distributed monthly to investors. Any net realized capital gain typically will be distributed annually after September 30 and is usually taxable. See page 33 for additional information on distributions and taxes. Who at Scudder manages my investment? Lead Portfolio Manager Donald C. Carleton has been responsible for setting the Fund's investment strategy and has overseen the Fund's day-to-day management since 1990. Mr. Carleton has over 20 years' experience in tax-free investing. Philip G. Condon, Portfolio Manager, focuses on securities selection and assists with the creation and implementation of investment strategy for the Fund. Mr. Condon has been with Scudder since 1983 and has more than 17 years of investment experience. AARP BALANCED STOCK AND BOND FUND Fund Objective: To seek to provide long-term growth of capital and income while attempting to keep the value of its shares more stable than other balanced mutual funds. The Fund pursues these objectives by investing in a combination of stocks, bonds, and cash reserves. For whom is the Fund designed? This Fund is suitable for conservative investors who are seeking long-term growth of their assets, but want less risk than an investment solely in stocks. Investors should invest for the longer term (at least 3 years or more) and be comfortable with the value of their principal fluctuating up and down. The Fund is also available for AARP IRA, AARP SEP-IRA, and AARP Keogh Plan accounts. Prospectus 21

What does the Fund offer to investors? The Fund offers the opportunity for long-term growth of principal through a single investment combining stocks, bonds, and cash reserves. Growth will come from possible appreciation in the value of common stocks and other equity investments. Bonds and other fixed-income investments provide current income and may, over time, help reduce fluctuation in the Fund's share price. Through a broadly diversified portfolio consisting primarily of stocks with above average dividend yields and investment-grade bonds, the Fund seeks to offer less share price volatility than many balanced mutual funds. The Fund should typically have less risk and a lower return than the AARP Growth and Income Fund, the AARP Global Growth Fund and the AARP Capital Growth Fund. The Fund does not take extreme investment positions as part of an effort to "time the market." Shifts between stocks and fixed-income investments are expected to occur in generally small increments. On occasion, the Fund will adjust its investment mix. The Fund Manager will do so after analyzing factors such as the level and direction of interest rates, capital flows, inflationary expectations, anticipated growth of corporate profits, and the financial climate worldwide. What does the Fund invest in? The Fund seeks to manage fluctuation by investing in a broadly diversified mix of equity securities, bonds, and cash reserves. The Fund may invest up to 70% of its assets in equity securities (stocks). At least 30% of the Fund will be in investment-grade fixed-income securities and cash reserves. For temporary defensive purposes, the Fund may invest without limit in money market and short-term instruments when the Fund Manager deems such a position advisable in light of economic or market conditions. These include commercial paper, bankers' acceptances, certificates of deposit issued by domestic and foreign branches of U.S. banks, and repurchase agreements. Equity securities consist of common stocks, securities convertible into common stocks, and preferred stocks. A research-oriented approach to investing is used by the Fund, taking advantage of Scudder's large research department. The Fund emphasizes securities of companies that offer the opportunity for capital growth and growth of earnings while providing dividends. The Fund will generally invest in companies domiciled in the U.S.; it may invest, however, in foreign securities without limit. All of the Fund's debt securities will be investment-grade, i.e., rated at the time of purchase Baa or higher by Moody's or BBB or higher by S&P, or deemed of comparable quality by the Fund's Manager. At least 75% of these will be securities rated within the three highest quality ratings of Moody's (Aaa, Aa and A) or S&P (AAA, AA, and A) or those the Fund Manager judges are of equivalent quality (high-grade). Securities rated BBB by S&P or Baa by Moody's are neither highly protected nor poorly secured. These securities normally pay higher yields but involve potentially greater price variability than higher-quality securities and are regarded as having adequate capacity to repay principal and pay interest. Moody's considers bonds it rates Baa to have speculative elements as well as investment-grade characteristics. If the rating agencies downgrade a security, the Fund Manager will determine whether to keep it or eliminate it based on the best interests of the Fund. The Fund does not purchase securities rated below investment-grade, commonly known as junk bonds. The Fund can invest in a broad range of corporate bonds and notes, convertible bonds, and preferred and convertible preferred securities. The Fund may also invest in U.S. Government securities, obligations of federal agencies, and instruments not backed by the full faith and credit of the U.S. Government. The latter include obligations of the Federal Home Loan Banks, Farm Credit Banks, and the Federal Home Loan Mortgage Corporation. Prospectus 22

The Fund may also invest in obligations of international agencies, U.S. and non-U.S. dollar denominated foreign debt securities, mortgage-backed and other asset-backed securities, municipal obligations, zero-coupon securities, and restricted securities issued in private placements. The Fund may make limited use of financial futures contracts and related options and may also invest in forward foreign currency exchange contracts. The Fund may write (sell) covered call options to enhance investment returns and may purchase and sell options on stock indices for hedging purposes. It may also invest in securities on a "when-issued" or forward delivery basis. What are the risks? The risk to principal is consistent with an investment primarily in stocks and bonds. The value of shares will fluctuate up and down with changes in interest rates and other market conditions. Investors should focus on the longer-term and be comfortable with fluctuation in the value of their principal. The level of income will be affected by movements up and down in interest rates and by dividends paid on the stocks held by the Fund. See "Other Investment Policies and Risk Factors." When are distributions paid? Dividends from the Fund's net ordinary income are distributed quarterly in March, June, September and December. Any net realized capital gain typically will be distributed annually after September 30. See page 33 for additional information on distributions and taxes. Who at Scudder manages my investment? Lead Portfolio Manager Robert T. Hoffman is responsible for managing the stock portion of the Fund. Mr. Hoffman, who joined Scudder in 1990, has 10 years of experience in the investment industry. William M. Hutchinson, Portfolio Manager, is responsible for the bond portion of the Fund. Messrs. Hutchinson and Hoffman have been Portfolio Managers for the Fund since it commenced operations on February 1, 1994. Benjamin W. Thorndike, Portfolio Manager, focuses on asset allocation strategy and stock selection. Mr. Thorndike, who has more than 15 years of investment experience, joined Scudder in 1986. AARP GROWTH AND INCOME FUND Fund Objective: From investments primarily in common stocks and securities convertible into common stocks, the Fund seeks to provide long-term capital growth and income, and to keep the value of its shares more stable than other growth and income mutual funds. For whom is the Fund designed? The Fund is suitable for investors who are seeking long-term growth of their assets to keep ahead of inflation. Investors should invest for the longer-term (at least 3 years or more) and be comfortable with fluctuation to their principal that is associated with investing in stocks. The Fund is also available for AARP IRA, AARP SEP-IRA, and AARP Keogh Plan accounts. What does the Fund offer to investors? The Fund offers the opportunity for long-term growth of principal with some income. This growth will come from possible appreciation in the value of shares, as well as quarterly dividend distributions if they are reinvested Prospectus 23

in additional shares of the Fund. Dividends can also produce current income for investors. Through a broadly diversified portfolio consisting primarily of stocks with above average dividend yields, the Fund seeks to offer less share price volatility than many growth and income funds. The Fund should offer a greater opportunity for share price appreciation, over time, with less income and with greater share price fluctuation than the AARP Balanced Stock and Bond Fund. What does the Fund invest in? The Fund invests primarily in common stocks and securities convertible into common stocks. The Fund may also invest in preferred stock. The Fund emphasizes securities of companies that offer the opportunity for capital growth and growth of earnings while providing dividends. A research-oriented approach to investing is used by the Fund, taking advantage of Scudder's large research department. The Fund will invest in a variety of industries and companies. Generally, the Fund will invest in companies domiciled in the United States. It may invest, however, in foreign securities without limit. Also, the Fund may write (sell) covered call options to enhance investment return, and may purchase and sell options on stock indices for hedging purposes. See "Other Investment Policies and Risk Factors." The Fund's policy is to remain substantially invested in stocks and securities convertible into stocks. However, for temporary defensive purposes, the Fund may invest without limit in high quality money market securities when the Fund Manager deems such a position advisable in light of economic or market conditions. These include U.S. Treasury bills, commercial paper, certificates of deposit issued by domestic and foreign branches of U.S. banks, bankers' acceptances, and repurchase agreements. What are the risks? The risk to principal is consistent with an investment in stocks. The stock market doesn't go up every year, and can rise and fall--sometimes quite dramatically over a short period of time. Investors should focus on the longer term (at least 3 years or more) and be comfortable with fluctuation in the value of their principal. See "Other Investment Policies and Risk Factors." The level of income you receive will be affected by dividends paid on the securities held by the Fund. When are distributions paid? Dividends from the Fund's net ordinary income are distributed quarterly in March, June, September and December. Any net realized capital gain typically will be distributed annually after September 30. See page 33 for additional information on distributions and taxes. Who at Scudder manages my investment? Lead Portfolio Manager Robert T. Hoffman has had responsibility for setting the Fund's stock investment strategy and has overseen the Fund's day-to-day management since 1991. Mr. Hoffman, who joined Scudder in 1990, has 10 years of experience in the investment industry. Benjamin W. Thorndike, Portfolio Manager, is the Fund's chief analyst and strategist for convertible securities. Mr. Thorndike, who has more than 15 years of investment experience, joined Scudder and the Fund in 1986. Kathleen T. Millard, Portfolio Manager, focuses on stock investing strategy and stock selection. Ms. Millard has worked in the investment industry since 1983 and at Scudder since 1991. Lori Ensinger, Portfolio Manager, joined the Fund in 1996 and focuses on stock selection and investment strategy. Ms. Ensinger has worked in the investment industry since 1983 and at Scudder since 1993. Prospectus 24

AARP GLOBAL GROWTH FUND Fund Objective: From investments primarily in equity securities of corporations worldwide, the Fund seeks to offer long-term capital growth in a globally diversified portfolio, and to keep the value of its shares more stable than other global equity funds. For whom is the Fund designed? This new Fund, which commenced operations on February 1, 1996, is suitable for investors who want to add worldwide equity opportunities to their portfolio. The Fund is designed for investors seeking long-term growth of their principal. Investors should invest for the longer term (at least 5 years or more) and be comfortable with the value of their principal fluctuating up and down. The Fund is also available for AARP IRA, AARP SEP-IRA, and AARP Keogh Plan accounts. What does the Fund offer to investors? The Fund offers the opportunity for long-term growth of principal from a professionally managed portfolio of securities selected from the U.S. and foreign equity markets. It also offers the opportunity for investors to further diversify their portfolios which could help to lower their overall risk. Global investing takes advantage of the investment opportunities created by the growing integration of economies around the world. The world has become highly integrated in economic, industrial and financial terms. Companies increasingly operate globally as they purchase raw materials, produce and sell their products and raise capital. The Fund affords investors access to opportunities wherever they arise, without being constrained by the location of a company's headquarters or the trading market for its shares. Because the Fund's portfolio invests globally, it provides the potential to augment returns available from the U.S. stock market. In addition, since U.S. and foreign markets do not always move in step with each other, a global portfolio will be more diversified than one invested solely in U.S. securities. Investing directly in foreign securities is usually impractical for most investors because it presents complications and extra costs. Investors often find it difficult to arrange purchases and sales, to obtain current information, to hold securities in safekeeping and to convert the value of their investments from foreign currencies into dollars. The Fund manages these problems for the investor. With a single investment, the investor has a diversified worldwide investment portfolio which is managed actively by experienced professionals. Scudder has had many years of experience investing globally and dealing with trading, custody and currency transactions around the world. Scudder has the benefit of information it receives from worldwide research and believes the Fund affords investors an efficient and cost-effective method of investing worldwide. Through a broadly diversified portfolio consisting primarily of stocks of established companies which are incorporated in the U.S. or in foreign countries, and applying a strategy of relatively low portfolio turnover, the Fund seeks to offer less share price volatility than many global growth funds. However, in pursuing long-term growth, the Fund typically will have more share price fluctuation than other AARP Funds, except the AARP Capital Growth Fund. See "What are the risks?" below. Growth will come primarily Prospectus 25

from possible appreciation in the value of shares. The Fund is not expected to provide regular income. What does the Fund invest in? The Fund will invest in securities of companies that the Fund Manager believes will benefit from global economic trends, promising technologies or products and changing geopolitical, currency or economic relationships. The Fund will normally invest at least 65% of its total assets in securities of at least three different countries. Typically it is expected that the Fund will invest in a wide variety of regions and countries, including both foreign and U.S. issues. Under normal circumstances it is expected that both foreign and U.S. investments will be represented in the Fund's portfolio. However, the Fund may be invested 100% in non-U.S. issues, and for temporary defensive purposes may be invested 100% in U.S. issues. For temporary defensive purposes, the Fund may invest without limit in high quality money market securities, including U.S. Treasury bills, repurchase agreements, commercial paper, certificates of deposit issued by domestic and foreign branches of U.S. banks, bankers' acceptances and other debt securities, such as U.S. Government obligations and corporate debt instruments when the Fund Manager deems such a position advisable in light of economic or market conditions. The Fund generally invests in equity securities of established companies listed on U.S. or foreign securities exchanges, but also may invest in securities traded over-the-counter. It also may invest in debt securities convertible into common stock, and convertible and non-convertible preferred stock. Also, fixed-income securities of governments, government agencies, supranational agencies and companies may be used when Scudder believes the potential for appreciation for these investments will equal or exceed that available from investments in equity securities. These debt and fixed-income securities will be exclusively investment-grade securities, that is, those rated Aaa, Aa, A or Baa by Moody's or AAA, AA, A or BBB by S&P or those of equivalent quality as determined by Scudder. Securities rated BBB by S&P or Baa by Moody's are neither highly protected nor poorly secured. Moody's considers bonds it rates Baa to have speculative elements as well as investment-grade characteristics. The Fund may invest in zero coupon securities and closed-end investment companies holding foreign securities. The Fund may make limited use of financial futures contracts and related options and may also invest in forward foreign currency exchange contracts. The Fund may write (sell) covered call options to enhance investment return, and may purchase and sell options on stock indices for hedging purposes. See "Other Investment Policies and Risk Factors." What is Scudder's international investing experience? Scudder has been a leader in international investment management for over 40 years. In 1953, Scudder introduced Scudder International Fund, the first mutual fund available in the U.S. investing internationally in securities of issuers in several foreign countries. Today, Scudder manages over $22 billion in assets invested in foreign markets. What are the risks? The risk to principal is consistent with the Fund's objective of seeking long-term growth through global investing. Global investing involves economic and political considerations not typically found in U.S. markets. The Fund is designed for long-term investors who can accept international investment risk. Since the Fund normally will be invested in both U.S. and foreign securities markets, changes in the Fund's share price may have a low correlation with movements in the U.S. markets. The Fund's share price Prospectus 26

will reflect the movements of both the different stock and bond markets in which it is invested and the currencies in which the investments are denominated: The strength or weakness of the U.S. dollar against foreign currencies may account for part of the Fund's investment performance. Investors should focus on the longer term (at least 5 years or more) and be comfortable with fluctuation to the value of their principal. Because of the Fund's global investment policies and the investment considerations discussed above, investment in shares of the Fund should be considered as part of a broadly diversified portfolio. See "Other Investment Policies and Risk Factors." When are distributions paid? Any dividends typically will be distributed in December. Any net realized capital gain typically will be distributed annually after September 30. See page 33 for additional information on distributions and taxes. Who at Scudder manages my investment? William E. Holzer is the Lead Portfolio Manager for the Fund. Mr. Holzer has day-to-day responsibility for setting the Fund's worldwide strategy and investment themes. Mr. Holzer has over 20 years' experience in global investing and joined Scudder in 1980. Nicholas Bratt, Portfolio Manager, directs Scudder's overall global equity investment strategies. Mr. Bratt joined Scudder in 1976. Alice Ho, Portfolio Manager, is also responsible for implementing the Fund's strategy. Ms. Ho, who joined Scudder in 1986 as a member of the institutional and private investment counsel area, has worked as a portfolio manager since 1989. AARP CAPITAL GROWTH FUND Fund Objective: From investments primarily in common stocks and securities convertible into common stocks, the Fund seeks to provide long-term capital growth, and to keep the value of its shares more stable than other capital growth mutual funds. For whom is the Fund designed? The Fund is suitable for investors seeking high long-term growth of their principal. Investors should invest for the longer term (at least 5 years or more) and be comfortable with the value of their principal fluctuating up and down. The Fund is also available for AARP IRA, AARP SEP-IRA, and AARP Keogh Plan accounts. What does the Fund offer to investors? The Fund offers the opportunity for long-term growth of principal. This growth will come primarily from possible appreciation in the value of shares. The Fund is not expected to provide regular income. In pursuing long-term growth, the Fund will typically have more share price fluctuation than the AARP Balanced Stock and Bond Fund, AARP Growth and Income Fund and AARP Global Growth Fund. Through a broadly diversified portfolio consisting primarily of high quality, medium- to large-sized companies with strong competitive positions in their industries, the Fund seeks to offer less share price volatility than many growth funds. Prospectus 27

What does the Fund invest in? The Fund invests primarily in common stocks and securities convertible into common stocks. The Fund may also invest in preferred stocks. The Fund's policy is to remain substantially invested in these securities. In seeking capital growth, the Fund will invest in stocks which will offer above-average potential for long-term growth of market value as represented by the Standard & Poor's 500 Composite Stock Price Index. A research-oriented approach to investing is used by the Fund, taking advantage of Scudder's large research department. The Fund will invest in a variety of industries and companies. Generally, the Fund will invest in companies domiciled in the U.S. It may invest, however, in foreign securities without limit. Also, the Fund may write (sell) covered call options to enhance investment return, and may purchase and sell options on stock indices for hedging purposes. See "Other Investment Policies and Risk Factors." For temporary defensive purposes, the Fund may invest without limit in high quality money market securities, including U.S. Treasury bills, repurchase agreements, commercial paper, certificates of deposit issued by domestic and foreign branches of U.S. banks, bankers' acceptances, and other debt securities, such as U.S. Government obligations and corporate debt instruments when the Fund Manager deems such a position advisable in light of economic or market conditions. What are the risks? The risk to principal is consistent with the Fund's objective of seeking long-term growth. The Fund generally has greater share price fluctuation than the other AARP Funds. The stock market doesn't go up every year, and can rise and fall--sometimes quite dramatically over a short period of time. Some of the securities selected may have above-average stock market risk. Investors should focus on the longer term (at least 5 years or more) and be comfortable with fluctuation to the value of their principal. See "Other Investment Policies and Risk Factors." When are distributions paid? Any dividends typically will be distributed in December. Any net realized capital gain typically will be distributed annually after September 30. See page 33 for additional information on distributions and taxes. Who at Scudder manages my investment? Lead Portfolio Manager William F. Gadsden has set the Fund's overall investment strategy since 1994 and has been part of the Fund's day-to-day management since 1989. He has 14 years of investment industry experience and joined Scudder in 1983. Bruce F. Beaty, Portfolio Manager, focuses on securities selection and assists with the creation and implementation of investment strategy for the Fund. He has 15 years of investment industry experience and joined Scudder in 1991. OTHER INVESTMENT POLICIES AND RISK FACTORS Below are some detailed descriptions of several types of securities and investment techniques referred to in this prospectus. Maintaining $1.00 Constant Share Price in Money Funds The AARP High Quality Money Fund and the AARP High Quality Tax Free Money Fund attempt to maintain a constant net asset value per share. To do so, they operate in accordance with a rule of the Securities and Exchange Commission (SEC) that Prospectus 28

requires all assets to be cash, cash items, and high-quality U.S. dollar-denominated investments having a remaining maturity of generally not more than 397 calendar days from the date of purchase. The AARP High Quality Money Fund, however, may invest in U.S. Government securities having maturities of up to 762 calendar days. The SEC also requires that the average dollar-weighted maturity of these Funds not exceed 90 days. When-Issued Securities All AARP Funds, except the AARP Growth and Income Fund, the AARP Global Growth Fund, and the AARP Capital Growth Fund, may purchase securities on a when-issued or forward delivery basis. That means payment and delivery of the security will be at a later date. The price and yield are generally fixed on the date of commitment to purchase. The Fund does not earn interest before delivery of the security. At the time of settlement, the market value of the security may be more or less than the purchase price. Repurchase Agreements This is an agreement under which a Fund may buy one or more U.S. Government obligations which the seller simultaneously agrees to repurchase at a specified time and price. The Fund can earn income for periods as short as overnight. Such an agreement may enhance liquidity since it is normally a short-term commitment. If the seller under a repurchase agreement becomes insolvent, the Fund's right to sell the securities may be restricted. Also, the value of such securities may decline before the Fund can sell them. The Fund might also incur transaction costs by selling the securities. Each of the AARP Funds may enter into repurchase agreements only with Federal Reserve member banks or broker-dealers recognized as reporting government securities dealers. Mortgage and other asset-backed securities The AARP GNMA and U.S. Treasury Fund, the AARP High Quality Bond Fund, and the AARP Balanced Stock and Bond Fund may invest in mortgage-backed securities, which are securities representing interests in pools of mortgage loans. These securities provide shareholders with payments consisting of both interest and principal as the mortgages in the underlying mortgage pools are paid off. The timely payment of principal and interest on mortgage-backed securities issued or guaranteed by the Government National Mortgage Association ("GNMA") is backed by GNMA and the full faith and credit of the U.S. Government. These guarantees, however, do not apply to the market value or yield of mortgage-backed securities or to the value of a Fund's shares. Also, GNMA and other mortgage-backed securities may be purchased at a premium over the maturity value of the underlying mortgages. This premium is not guaranteed and will be lost if prepayment occurs. In addition, the AARP High Quality Bond Fund and the AARP Balanced Stock and Bond Fund may invest in mortgage-backed securities issued by other issuers, such as the Federal National Mortgage Association (FNMA), which are not guaranteed by the U.S. Government. Moreover, the Funds may invest in debt securities which are secured with collateral consisting of mortgage-backed securities and in other types of mortgage-related securities. The AARP High Quality Bond Fund and the AARP Balanced Stock and Bond Fund may also invest in securities representing interests in pools of certain other consumer loans, such as automobile loans or credit card receivables. In some cases, principal and interest payments are partially guaranteed by a letter of credit from a financial institution. Prospectus 29

Zero Coupon Securities The AARP Balanced Stock and Bond Fund and the AARP Global Growth Fund may invest in zero coupon securities which pay no cash income and are issued at substantial discounts from their value at maturity. Zero coupon securities are subject to greater market value fluctuations from changing interest rates than debt obligations of comparable maturities which make current cash distributions of interest. Foreign Securities Each of the Funds in the AARP Growth Trust and the AARP High Quality Bond Fund may invest without limit in foreign securities. Investments in foreign securities may benefit a Fund by providing access to different markets and opportunities. It may also help to reduce risk by increasing diversification. However, foreign securities involve special considerations. Brokerage costs are higher. Information about foreign securities is more limited. Foreign companies or securities often have different and less stringent government regulations, different accounting standards, slower settlement of transactions, and more limited and volatile trading markets. Investments in foreign securities may also involve other risks. These include possible imposition of withholding, confiscatory and other taxes; possible currency blockages or transfer restrictions; expropriation, nationalization or other adverse political or economic developments; and the difficulty of enforcing obligations in other countries. A Fund may incur currency conversion costs of purchases made in foreign currencies. There may also be favorable or unfavorable consequences from the changes in the value of foreign currencies against the U.S. dollar. Derivatives The following descriptions of Forward Foreign Currency Exchange Contracts, Options Transactions, Futures Contracts and Related Options discuss the types of derivatives in which certain of the AARP Funds may invest. Forward Foreign Currency Exchange Contracts Each of the Funds in the AARP Growth Trust may enter into forward foreign currency exchange contracts. These contracts, which involve costs, permit the funds to purchase or sell a specific amount of a particular currency at a specified price on a specified future date. They may be used by a Fund only to hedge against possible variations in exchange rates of currencies in countries in which it may invest. A Fund will realize a benefit only to the extent that the relevant currencies move as anticipated. If the currencies do not move as anticipated, the use of these contracts may result in losses greater than if they had not been used. Options Transactions In an attempt to enhance investment returns, Funds in the AARP Growth Trust and the AARP Income Trust may each write covered call options. These are agreements to sell a particular security in the Fund's portfolio at a specified price on or before the expiration date of the option. Covered call options may be written on portfolio securities worth up to 25% of the Fund's net assets. There are risks associated with writing covered options. These include the possible inability to make closing transactions at favorable prices or because an exercise notice has been received. The Funds also risk giving up appreciation on the underlying security in excess of the exercise price. Prospectus 30

Each of the Funds in the AARP Growth Trust may purchase and sell exchange-traded options on stock indices. In addition, these Funds may engage in over-the-counter options transactions with broker-dealers who make markets in these options. Over-the-counter options may be more difficult to terminate than exchange-traded options. They are frequently illiquid, and involve counterparty credit risk. The Fund Manager will engage in such transactions to hedge against unfavorable price movements which can adversely affect the value of the Fund's securities or securities the Fund intends to buy. These transactions involve risk, including the risk that market prices may move in unanticipated directions or will not correlate well with a Fund's portfolio, causing a Fund to lose the value of the option premium and to fail to realize any benefit from the transaction. Further, a closing transaction may not be available when a Fund wishes to close out a transaction. Futures Contracts and Related Options To a limited extent, the Funds in the AARP Income Trusts and the AARP Insured Tax Free General Bond Fund, the AARP Balanced Stock and Bond Fund and the AARP Global Growth Fund may enter into financial futures contracts including futures contracts on securities indices, may purchase and write related put and call options, and may engage in related closing transactions. These techniques are used to attempt to protect against adverse effects of interest rates changes or currency changes in the case of the AARP Global Growth Fund. For example, a particular index-based futures contract may be used when the Fund Manager believes that correlation exists between price movements in an index-based futures contract and securities in a Fund's portfolio. Such correlation is not likely to be perfect. That is because a Fund's portfolio is not likely to contain the same securities used in the index. The margin deposits for futures contracts and premiums paid for related options may not be more than 5% of a Fund's total assets. These transactions require a Fund to segregate assets (such as liquid securities and cash) to cover contracts that would require it to purchase securities. These transactions also result in brokerage costs. These techniques involve some risk. A Fund may be precluded from realizing a benefit from favorable price movements in the related portfolio position of the Fund and could lose the expected benefit of the transactions if interest rates or currency changes in the case of AARP Global Growth Fund, move in an unanticipated manner. To the extent that the Fund Manager's view of market movements is incorrect, the use of such instruments may result in losses greater than if they had not been used. In addition, if the AARP Insured Tax Free General Bond Fund purchases futures contracts on taxable securities or indices of such securities, their value may not fluctuate in proportion to the value of the Fund's securities. This would limit that Fund's ability to hedge effectively against interest rate risk. Further, while a Fund buys a futures contract only if there appears to be a liquid secondary market for such contracts, there can be no assurance that a Fund will be able to close out any particular futures contract. Segregated Accounts Each Fund may be required to segregate assets (such as cash, U.S. Government securities and other high grade debt obligations) or otherwise provide coverage consistent with applicable regulatory policies. This would be in respect to the Fund's permissible obligations under the call and put options it writes, the forward foreign currency exchange contracts it enters into and the futures contracts it enters into. Convertible Securities Convertible securities include convertible bonds, notes and debentures, convertible preferred stocks, and other securities that give the holder the right to exchange the security for a specific number of shares of common stock. Prospectus 31

Convertible securities entail less credit risk than the issuer's common stock because they are considered to be "senior" to common stock. Convertible securities generally offer lower interest or dividend yields than non-convertible debt securities of similar quality. They may also reflect changes in value of the underlying common stock. Demand Obligations Each of the AARP Funds may purchase demand obligations. Demand obligations permit the holder to demand payment of a specified amount prior to maturity. The holder's right to payment depends upon the issuer's ability to pay principal and interest on demand. A Fund will purchase demand notes only to enhance liquidity. The Fund Manager will continuously monitor the creditworthiness of issuers of such obligations. Stand-by Commitments The AARP Tax Free Funds may enter into stand-by commitments (also known as puts) to facilitate liquidity. Stand-by commitments permit a Fund to resell municipal securities to the original seller at a specified price and generally involve no cost. Costs, in any event, are limited to .5% of a Fund's total assets. To minimize the risk that the seller may not be able to repurchase the security, the Fund Manager will monitor the creditworthiness of the seller. "Put" Bonds The AARP Tax Free Funds may also purchase long-term fixed rate bonds that have been coupled with an option granted by a third party financial institution. This allows the Funds to tender (or "put") bonds to the institution at specified intervals and receive the face value of them. For the AARP High Quality Tax Free Money Fund, an interval can not exceed 397 calendar days. These third party puts are available in several different forms. They may be custodial receipts or trust certificates, and may be combined with other features such as interest rate swaps. Tax-exempt Participation Interests The AARP Tax Free Funds may purchase tax-exempt participation interests from a bank representing a fully-insured portion of the bank's holdings of municipal securities. The Fund will obtain an irrevocable letter of credit or guarantee from the bank and will have, under certain circumstances, the right to resell the participation to the bank on 7 days' notice. To the extent any participation interest is illiquid, it is subject to the Fund's limit on restricted and not readily marketable securities. Municipal Lease Obligations The AARP Tax Free Funds may also invest in municipal lease obligations generally as a participation interest in a municipal obligation from a bank or other financial intermediary. Municipal lease obligations are issued by state and local governments to acquire land, equipment or facilities. Unlike general obligation or revenue bonds, these contracts are not secured by the issuer's credit, and if the issuing state or local government does not appropriate payments, the lease may terminate, leaving the funds with property that may prove costly to dispose of. In deciding which contracts to invest in, the Fund Manager evaluates the likelihood of the governmental issuer discontinuing appropriation for the leased property. Portfolio Turnover Each of the AARP Funds may buy and sell securities to take advantage of investment opportunities. The Fund Manager will do so to improve overall investment return consistent with that Fund's objectives. These transactions Prospectus 32

involve transaction costs in the form of spreads or brokerage commissions. Recent economic and market conditions have necessitated more active trading, resulting in a higher portfolio turnover rate for the AARP High Quality Bond Fund. A higher rate involves greater transaction costs to the Fund and may result in the realization of net capital gains, which would be taxable to shareholders when distributed. In the case of AARP Global Growth Fund, it is anticipated, under normal investment conditions, that the Fund's portfolio turnover rate will not exceed 75% for the initial fiscal year. However, economic and market conditions may necessitate more active trading, resulting in a higher portfolio turnover rate. INVESTMENT RESTRICTIONS To help reduce investment risk, each of the AARP Funds has adopted certain investment policies. Only the shareholders can approve changes to the following policies: * A Fund may not make loans. (A purchase of a debt security is not a loan for this purpose.) However, the Fund may lend its portfolio securities and enter into repurchase agreements. * A Fund may borrow money only for temporary or emergency purposes. The following policies may be changed without shareholder approval if applicable legal requirements change. * Each AARP Fund may not invest more than 10% of its net assets in restricted or not readily marketable securities. These "illiquid securities" include repurchase agreements maturing in more than 7 days. Funds in the AARP Growth Trust may not invest more than 5% of their net assets in restricted securities. A complete description of these and other policies and restrictions is contained in the Statement of Additional Information. ADDITIONAL INFORMATION ABOUT DISTRIBUTIONS AND TAXES Are taxes withheld? Generally, taxes are not withheld on purchases, redemptions, or distributions. However, federal tax law requires the AARP Funds to withhold 31% of taxable dividends, capital gain distributions and redemption or exchange proceeds for accounts without a certified social security or tax identification number, or other certified information. To avoid this withholding, make sure you complete and sign the Signature and Investor Information Section of your Enrollment Form. AARP IRA, AARP SEP-IRA and AARP Keogh Plan accounts are exempt from withholding regulations. The AARP Funds reserve the right to reject Enrollment Forms or close accounts without a certified Social Security or tax identification number. In such cases, Enrollment Forms received without this information will be returned to the investor with a check for the amount invested. What else should I know about distributions and taxes? * You can receive your dividend and capital gain distributions in one of three ways: 1. You can have a check sent to your address or to your bank; 2. You can reinvest them in additional shares of an AARP Fund; or 3. You can invest them in shares of another AARP Fund. Prospectus 33

* If your investment is in the form of an AARP IRA, AARP SEP-IRA or AARP Keogh Plan account, all distributions are automatically reinvested. * If you reinvest your dividends and capital gains, you will be purchasing shares at the current share price. * All taxable dividends from net investment income are taxable to you as ordinary income. This is so whether you receive dividends as cash or additional shares. * Capital gains distributions are also currently taxable, whether received in cash or reinvested. * Distributions of short-term capital gains by all the AARP Funds are taxable as ordinary income. * Distributions of long-term capital gains are taxable for federal income tax purposes as long-term capital gains regardless of the length of time you have owned shares. Any capital gain distributed by the AARP Tax Free Funds are generally taxable in the same manner as distributions by other Funds. * The AARP Tax Free Funds are managed to pay you dividends free from federal income taxes, including the Alternative Minimum Tax (AMT). However, these dividends may be subject to state and local income taxes. Also, these dividends are taken into account in determining whether your income is large enough to subject a portion of your Social Security benefits and certain Railroad Retirement benefits, if any, to federal income taxes. * If you are a shareholder in the AARP Global Growth Fund, you may be able to claim a credit or deduction on your income tax return for your pro rata portion of qualified taxes paid by the Fund to foreign countries. * Each AARP Fund annually sends you detailed tax information about the amount and type of its distributions. * A redemption involves a sale of shares and may result in a capital gain or loss for federal income tax purposes. Exchanges are treated as redemptions for federal income tax purposes. Exchanges occur when you sell shares in one AARP Fund and purchase shares in another AARP Fund. * The AARP Funds reserve the right to make extra distributions for tax purposes. FUND ORGANIZATION The AARP Investment Program Trusts The nine mutual funds described in this prospectus are organized as four Massachusetts business trusts--AARP Cash Investment Funds, AARP Income Trust, AARP Tax Free Income Trust and AARP Growth Trust. Each trust is a diversified, open-end management investment company registered under the Investment Company Act of 1940. The AARP Cash Investment Funds was organized in January 1983, and the other trusts were organized in June 1984. The AARP Tax Free Income Trust (formerly the AARP Insured Tax Free Income Trust) was renamed effective August 1, 1991. Prospectus 34

General Management The Trustees have overall responsibility for the management of their respective Trusts under Massachusetts law. Under their direction, the Fund Manager--Scudder, Stevens & Clark, Inc.--provides general investment management of the AARP Funds. The Trustees supervise each Trust's activities. The shareholders elect the Trustees and may remove them. Shareholders have one vote per share held on matters on which they are entitled to vote. The Trusts are not required to hold annual shareholder meetings and have no current intention to do so. There may be special meetings for purposes such as electing or removing Trustees, changing fundamental policies or approving an investment advisory contract. The Fund Manager will help shareholders to communicate with other shareholders in connection with removing a Trustee as if Section 16(c) of the Investment Company Act of 1940 applied. Since the Trusts use a combined prospectus, it is possible that one Trust or AARP Fund might become liable for a misstatement in this prospectus regarding another Trust or AARP Fund. The Trustees of each Trust considered this risk when approving the use of a combined prospectus. The right of the Trusts and AARP Funds to use the AARP name will end upon termination of the member services agreement with the Fund Manager unless AARP otherwise agrees to let the AARP Funds continue to use the AARP name. Management Fees Each AARP Fund pays the Fund Manager a fee for management and administrative services. The management fee consists of two elements: a Base Fee and an Individual Fund Fee. The Base Fee is calculated as a percentage of the combined net assets of all of the AARP Funds. Each AARP Fund pays, as its portion of the Base Fee, an amount equal to the ratio of its daily net assets to the daily net assets of all of the AARP Funds. The table below shows the annual Base Fee Rate at specified levels of Program assets: Annual Base Fee Rate Program Assets -------------------- -------------- .350% First $2 billion .330% Next $2 billion .300% Next $2 billion .280% Next $2 billion .260% Next $3 billion .250% Next $3 billion .240% Thereafter In addition to the Base Fee Rate, each AARP Fund pays a flat Individual Fund Fee based on the net assets of that Fund. This fee rate is not linked to the total assets of the Program. The Individual Fee Rate recognizes the different characteristics of each AARP Fund, the varying levels of complexity of investment research and securities trading required to manage each Fund, as well as the relative value that can be, and has been, added by the Fund Manager. Prospectus 35

The following table shows the Individual Fund Fee Rate for each of the AARP Funds: Fund Individual Fee Rate ---- ------------------- AARP High Quality Money Fund .10% AARP High Quality Tax Free Money Fund .10% AARP GNMA and U.S. Treasury Fund .12% AARP High Quality Bond Fund .19% AARP Insured Tax Free General Bond Fund .19% AARP Balanced Stock and Bond Fund .19% AARP Growth and Income Fund .19% AARP Global Growth Fund .55% AARP Capital Growth Fund .32% Under this fee structure, the combined Base Fee and the Individual Fund Fee, called the "Effective Management Fee Rate," would be reduced if total Program assets increase to certain levels, regardless of whether an individual AARP Fund's assets increase or decrease. The converse is also true--if assets decrease to certain levels, the Effective Management Fee Rate increases, regardless of any increase or decrease in assets of an individual AARP Fund. For the fiscal year ended September 30, 1995, fees paid to the Fund Manager totaled .40 of 1% of the average daily net assets of the AARP High Quality Money Fund, .39 of 1% of the AARP High Quality Tax Free Money Fund, .42 of 1% of the AARP GNMA and U.S. Treasury Fund, .62 of 1% of the AARP Capital Growth Fund, and .49 of 1% for each of the AARP High Quality Bond Fund, AARP Insured Tax Free General Bond Fund, AARP Growth and Income Fund, and AARP Balanced Stock and Bond Fund. The Fund Manager pays a portion of the management fee to AARP Financial Services Corporation (AFSC). AFSC provides the Fund Manager with advice and other services relating to AARP Fund investment by AARP members. The fee paid to AFSC is calculated on a daily basis and depends on the level of total assets of the AARP Investment Program. The fee rate decreases as the level of total assets increases. The fee rate for each level of assets is .07 of 1% for the first $6 billion, .06 of 1% for the next $10 billion and .05 of 1% thereafter. Under the Investment Management Agreements with the Fund Manager, the Funds are responsible for all of their expenses, including fees and expenses incurred in connection with membership in investment company organizations; brokers' commissions; legal, auditing and accounting expenses; taxes and governmental fees; the fees and expenses of the transfer agent; the expenses of and the fees for registering or qualifying securities for sale; the fees and expenses of Trustees, officers and executive employees of the Trusts who are not affiliated with the Fund Manager; the cost of printing and distributing reports and notices to shareholders; and the fees and disbursements of custodians. UNDERSTANDING FUND PERFORMANCE Performance of an AARP Fund may be included in advertisements, sales literature or shareholder reports. Important components of performance are yield, total return and cumulative total return. These components vary based on changes in market conditions, the level of interest rates and the level of the Fund's expenses. Yield, total return, and cumulative total return are based on historical earnings and are not intended to indicate future performance. Prospectus 36

What is Yield? For the AARP High Quality Money Fund, the AARP Income Funds and the AARP Tax Free Funds, yield is a measure of income. Yield refers to the net investment income generated over a specific period of time. It is always calculated using a standard industry formula so it is a useful way to compare the income produced by different mutual funds. For non-money market funds, the "SEC yield" is an annualized expression of net investment income generated by the investments in the fund over a specified 30-day period. This income is then annualized and then expressed as a percentage. This yield is calculated according to methods required by the SEC, and may not equate to the level of income paid to shareholders. For money market funds, yield refers to the net investment income generated by the fund over a specified 7-day period. This income is then annualized and expressed as a percentage. For the money market funds, effective yield is expressed similarly but, when annualized, the income earned by an investment in the fund is assumed to be reinvested. The effective yield will be slightly higher than the yield because of the compounding effect of this assumed reinvestment. For GNMA securities, net investment income includes realized gains or losses based on historic cost for principal repayments received. For other securities, net investment income includes the amortization of market premium or market discount. What is Total Return? The total return of a mutual fund refers to the average annual percentage change in value of an investment in the fund assuming that the investment has been held for the stated period. Total return quotations are expressed in terms of average annual compound rates of return for all periods quoted and assume that all dividends and capital gain distributions during the period were reinvested in shares of the fund. What is Cumulative Total Return? Cumulative total return of a mutual fund represents the cumulative change in value of an investment in a fund for various periods. It assumes that all dividends and capital gain distributions during the period were reinvested in shares of the fund. What is meant by Tax-Equivalent Yield and how is it calculated? To determine if tax-free investing is right for you, it is helpful to convert a yield from a tax-free mutual fund to its equivalent taxable yield. The tax-equivalent yields of the AARP Tax Free Funds, which may be quoted from time to time, let you determine the yield you would have to receive from a fully taxable investment to produce an after-tax yield equivalent to a tax-free fund. The calculation is as follows: Tax-Free Yield = Tax-Equivalent Yield -------------------- 100% - your tax rate Example: If a tax-free mutual fund has a 30-day average annualized yield of 5.30% and you are in the 31% tax bracket, the calculation would be: 5.30% = 7.68% ---------- 100% - 31% You would need to earn 7.68% with a taxable investment to equal the 5.30% yield of a tax-free fund. The tax-equivalent yield will vary depending upon your income tax bracket. Prospectus 37

UNDERSTANDING SHARE PRICE How is a Fund's share price determined? Share price is based on a Fund's net assets. It is calculated by dividing the current market value (amortized cost in the case of the AARP High Quality Tax Free Money Fund) of total fund assets, less all liabilities, by the total number of shares outstanding. Scudder Fund Accounting Corporation, a subsidiary of the Fund Manager, determines net asset value per share of each Fund as of the close of regular trading on the New York Stock Exchange, normally 4:00 p.m. Eastern time on each day the Exchange is open for trading. The Trusts reserve the right to suspend the sale of Fund shares after appropriate notice to shareholders if the Trustees determine that it is in the best interest of shareholders. OPENING AN ACCOUNT How do I get started? Decide on the AARP Fund or Funds which meets your needs. Then fill out, sign and return your Enrollment Form with your check in the postage paid envelope provided. Once your Enrollment Form is received, an account number will be assigned to you. Your check should only be drawn on a U.S. bank and be payable to the AARP Investment Program. If you don't want to send your check through the mail, you can send a bank wire. Simply fill out and return your Enrollment Form in the mail. Then, before you send the wire, call an AARP Mutual Fund Representative. The Representative will set up the account and contact you to provide you with your account number and further wiring instructions. To complete the wire transfer, follow the special wire transfer instructions below. Please note you cannot open AARP IRA or AARP Keogh Plan accounts by wire. What is the minimum investment? The minimum is $500 for each AARP Fund, except for the AARP High Quality Tax Free Money Fund, which has a minimum investment of $2,500. You can open an AARP IRA with as little as $250 for each applicable AARP Fund. What happens if my investment falls below its minimum balance? The Funds reserve the right to redeem accounts below the minimum balance and return the proceeds to you if you do not increase an account above the minimum within 60 days after notice. However, if your account falls below the minimum solely as a result of market activity, your account will not be closed. What is the normal processing time of checks when purchasing shares? If checks are drawn on a Federal Reserve System member bank, the Program will normally execute checks (and wire transfers) received in good order on the same business day that they are received. When do I start earning income on this purchase? For AARP Funds paying daily dividends (AARP Money Funds, AARP Income Funds and the AARP Insured Tax Free General Bond Fund), income begins to accrue on the business day following actual execution of the order. Prospectus 38

Third party transactions If purchases and redemptions of Fund shares are arranged and settlement is made at an investor's election through a member of the National Association of Securities Dealers, Inc., other than Scudder Investor Services, Inc., that member may, at its discretion, charge a fee for that service. -------------------------------------------------------------------------------- WIRE TRANSFER INSTRUCTIONS * To open an account (mail Enrollment Form first and make sure to call a Representative to obtain an account number--AARP IRA and AARP Keogh Plan accounts cannot be opened by wire) * To add to your account Contact your bank with the following information: 1) the names(s) on your account; 2) your AARP Fund account number; 3) the name of the Fund(s) you want to invest in; 4) the following name and address: State Street Bank and Trust Company, Boston MA 02101; 5) the routing numbers ABA Number 011000028 and AC-99035420. -------------------------------------------------------------------------------- Can I add another AARP Fund to my account? You can open another AARP Fund at any time. The new investment must meet the minimum initial investment described above. Your new AARP Fund will have the same account number and registration as your existing one(s). You can open a new AARP Fund in a number of ways: -------------------------------------------------------------------------------- Mail your request Send a letter stating your request and naming the new AARP Fund. Include a check made payable to the AARP Investment Program. -------------------------------------------------------------------------------- Wire the money Have your account number ready and follow the wire instructions above. -------------------------------------------------------------------------------- Exchange from See instructions on how to exchange--page 40. an AARP Fund -------------------------------------------------------------------------------- Telephone Transactions When you open an account you automatically become eligible to exchange shares by telephone and to redeem by telephone up to $50,000 to your registered address. You may also request by telephone that redemption proceeds be wired to a bank account you select. When exchange or redemption requests are made over the telephone, procedures are in place to give reasonable assurance that telephone instructions are genuine, including recording telephone calls, testing a caller's identity and sending written confirmation of such transactions. If an AARP Fund does not follow such procedures, it may be liable for losses due to unauthorized or fraudulent telephone instructions. The Trusts and their agents each reserve the right to modify, interrupt, suspend, or terminate any of the telephone services at any time, without notice. Prospectus 39

ADDING TO YOUR INVESTMENT How do I add to my investment? After your account is opened, you can add to your AARP Fund investment in any amount in the following ways: <TABLE> <CAPTION> <S> <C> ----------------------------------------------------------------------------------------------------------- Mail your request Send your check with a personalized investment slip or with a letter naming your account number and AARP Fund. ----------------------------------------------------------------------------------------------------------- Call Toll-Free If you selected the Transact By Phone service, you'll be able to call and have money transferred from your checking account to cover the purchase. See page 43. ----------------------------------------------------------------------------------------------------------- Wire the purchase Have your account number ready and follow the wire instructions on page 39. ----------------------------------------------------------------------------------------------------------- Exchange from an See Exchanging below. AARP Fund ----------------------------------------------------------------------------------------------------------- Invest See page 44 for information on the Automatic Investment Plan. Automatically ----------------------------------------------------------------------------------------------------------- </TABLE> EXCHANGING What is an exchange? You make an exchange when you sell shares in one AARP Fund to purchase shares in another. This is technically two transactions, a sale and a purchase of shares. If the value of the shares sold in the exchange was higher or lower than your original purchase price, you may have a capital gain or loss. This is important to note for tax planning purposes. You may exchange all or part of your shares in one AARP Fund for shares in another AARP Fund. Exchanges between existing AARP Funds can be for any amount. Exchanges that open a new AARP Fund must meet the minimum balance. How can I exchange shares? There are several ways to exchange, including: <TABLE> <CAPTION> <S> <C> --------------------------------------------------------------------------------------------------------------------- Mail or fax your request Tell us the AARP Fund from which to take the money and the AARP Fund to exchange to. Include your account number, registered name(s) and address, and either the dollar amount or number of shares you want to exchange. Be sure to sign your name(s) exactly as it appears on the account statement. --------------------------------------------------------------------------------------------------------------------- Call Toll-Free Call us before 4:00 p.m. Eastern time to exchange by close of business the same day. --------------------------------------------------------------------------------------------------------------------- Call the You can exchange shares through this automated toll-free line. It is available Easy-Access Line 24 hours a day, 7 days a week. Simply call toll-free and follow the recorded voice instructions. --------------------------------------------------------------------------------------------------------------------- </TABLE> Prospectus 40

ACCESS TO YOUR INVESTMENT How do I redeem? You can sell (redeem) fund shares in a number of ways. The share price may be more or less than your original purchase price. Therefore, you may have either a taxable capital gain or loss. Keep in mind that you can redeem shares of your AARP IRA or AARP Keogh Plan account only by sending your request in writing. <TABLE> <CAPTION> <S> <C> ------------------------------------------------------------------------------------------------------------------- Mail or Fax your request Tell us the name of the AARP Fund and the number of shares or dollar amount you wish to sell. Make sure to give us your account number, registered name(s) and where you want the proceeds sent. If you want the proceeds to go to an address other than your registered address, to your bank, or to someone else, please provide complete details. Under certain circumstances, this may require a special type of authorization called a Signature Guarantee (see page 42). Sign the letter exactly as it appears on your account statement. If your request requires a Signature Guarantee, you must mail the request instead of faxing it. ------------------------------------------------------------------------------------------------------------------- Call Toll-Free Call before 4:00 p.m. Eastern time business days and redeem up to $50,000 per AARP Fund. The proceeds will be mailed to your registered address or to your bank (unless you declined the Telephone Redemption to your Bank feature on your Enrollment Form). The proceeds can also be wired to your bank if it is a member of the Federal Reserve System. A $5.00 fee will be charged for each wire to your bank. Your bank may also charge you for receiving a wire. In the event that you are unable to reach us by telephone, you should write to the AARP Investment Program; see "Service Information" for the address. If you elected the Transact by Phone option on your Enrollment Form, you can have the proceeds sent electronically to your checking account. See page 43 for more information on Transact By Phone. ------------------------------------------------------------------------------------------------------------------- Call the You can redeem shares through this automated toll-free line. Initiate Easy-Access Line redemptions any time--24 hours a day. Simply call toll-free and follow the recorded voice instructions. ------------------------------------------------------------------------------------------------------------------- Sell See page 44 for information on the Automatic Withdrawal Plan or Automatically Systematic Withdrawal Plan for AARP IRA or AARP Keogh Plan accounts. ------------------------------------------------------------------------------------------------------------------- </TABLE> When are redemptions processed? Any redemption request received in good order prior to 4:00 p.m. Eastern time during normal business operations will be processed on that day. The request will be processed at that night's closing share price. Normally, requests received in good order after 4:00 p.m. Eastern time will be processed on the next business day. Prospectus 41

Shares redeemed from Funds in the AARP Income Trust, AARP Tax Free Income Trust or the AARP High Quality Money Fund will earn a dividend on the day of redemption. Normally, proceeds of your redemption will be sent on the business day following a redemption request in good order. In any event, the AARP Funds may take no more than 7 calendar days to send your redemption proceeds. When can I expect to receive my money? We will mail your redemption proceeds promptly. If you purchase shares by check or by telephone and then redeem them by letter within 7 business days of the purchase, the redemption proceeds may be held until the purchase check has cleared the banking system. When the check has cleared, we will mail your redemption proceeds promptly. We will not accept redemption requests by telephone or by checkwriting prior to the expiration of the 7 business day period. You may avoid this delay by purchasing shares by wire. -------------------------------------------------------------------------------- Short-Term Trading You should make purchases and sales for long-term investment purposes only. The AARP Funds do not permit a pattern of frequent purchases and sales in response to short-term changes in share price. When such a pattern occurs, the AARP Funds and Scudder Investor Services, Inc. reserve the right to restrict purchases or exchanges. This restriction does not apply to the AARP money funds. This right extends to individual purchasers or groups of related purchasers. -------------------------------------------------------------------------------- SIGNATURE GUARANTEES What is a "Signature Guarantee"? A "Signature Guarantee" is a certification of your signature. We require this for your protection and to prevent fraudulent redemptions. In effect, the appropriate institution (see below) guarantees that you are authorized to make certain requests. When do I need one? A "Signature Guarantee" from each person on the account registration is needed for the following redemption requests: 1) Redemptions of more than $50,000; 2) When redemption proceeds are payable to someone other than the registered shareholder(s); 3) When redemption proceeds are to be sent to an address other than the registered address; or 4) If the account's registered address has changed during the last 15 days. Transactions requiring signature guarantees cannot be faxed. Where can I get one? You can get your signature guaranteed through most banks, credit unions or savings associations, or from broker-dealers, government securities broker-dealers, national securities exchanges, registered securities associations, or clearing agencies deemed eligible by the Securities and Exchange Commission. Signature Guarantees by notary publics are not acceptable. Prospectus 42

INVESTOR SERVICES To make investing simpler and more convenient there are many free investor services available to you. Easy-Access Line -------------------------------------------------------------------------------- * Exchange between AARP Funds CALL TOLL-FREE * Exchange to open a new AARP Fund 1-800-631-4636 * Redeem money to your registered address 24 HOURS A DAY * Get current performance information 7 DAYS A WEEK * Get current account balance information * Confirm your last transaction -------------------------------------------------------------------------------- With the Easy-Access Line you can get performance, and account information. If you have a touch-tone phone, you can also exchange or redeem shares worth up to $50,000. Simply call toll-free 1-800-631-4636 using a touch-tone phone and follow the easy pre-recorded voice instructions. Transact By Phone -------------------------------------------------------------------------------- * Add to an AARP Fund by transfer from your bank checking or NOW account CALL TOLL-FREE * Redeem and send the proceeds to your 1-800-253-2277 checking or NOW account -------------------------------------------------------------------------------- Transact By Phone allows you to call toll-free to purchase and redeem shares. The money will be automatically transferred to or from your bank checking account. Your bank must be a member of the Automated Clearing House for you to take advantage of this service. -------------------------------------------------------------------------------- Buying Shares through Call us before 4:00 p.m. Eastern time, Transact By Phone: business days, when you want to buy additional shares, and money will be transferred from your bank account to your AARP Fund account to cover the purchase. Purchases must be for at least $250 but not more than $250,000. Your purchase will generally be completed in 2 business days at the closing share price on the day of your call. Requests received after 4:00 p.m. will be purchased at the next business day's closing price. Shares purchased in this manner will not be redeemable for a period of up to 7 business days. -------------------------------------------------------------------------------- Selling Shares through Call us before 4:00 p.m. Eastern time, Transact By Phone: business days, when you want to sell shares. We'll sell your shares and transfer the proceeds to your bank account--generally within 2 business days from the day of your request. You can redeem any amount greater than $250. Shares will be sold at that night's closing price on the day of your request. Requests received after 4:00 p.m. will be sold at the next business day's closing price. -------------------------------------------------------------------------------- Prospectus 43

Free Checkwriting Shareholders in the AARP High Quality Money Fund or the AARP High Quality Tax Free Money Fund have free checkwriting privileges. There is no charge to shareholders for this service, but the AARP Funds reserve the right to impose a charge in the future. To enroll, you must fill out a signature card on the Enrollment Form. If shares were purchase by your personal check, you may only write checks against your purchase 7 business days from the day that the purchase took place. Keep in mind that you cannot close your account by writing a check. This service may be suspended or terminated at any time upon notice to shareholders. Distributions Direct You may choose to have dividend and capital gain distributions automatically deposited into your bank checking or NOW account. To enroll in this service, your bank must be a member of the Automated Clearing House (ACH) network. Once you enroll, your dividends and capital gains will be automatically deposited into your personal bank account within 3 business days of the distribution date. You'll receive a statement confirming the amount. There is no charge to shareholders for the service. Systematic Plans Several other investor services are available. These include: * Automatic Investment Plan: Arrange for regular investments into your AARP Fund through automatic deductions from your bank checking account. The Automatic Investment Plan may be discontinued at any time without prior notice to a shareholder if any debit from their bank is not paid, or by written notice to the shareholder at least thirty days prior to the next scheduled payment to the Automatic Investment Plan. * Direct Deposit: At your direction, your Social Security, U.S. Government or any regular income checks (pension, dividend, interest or payroll) will be automatically deposited into your AARP Fund. * Automatic Withdrawal Plan: At your direction, we will automatically send a monthly redemption of $50 or more directly to you when you have at least $10,000 or more in an AARP Fund. * Direct Payment of Fixed Bills: With $10,000 or more in an AARP Fund, you can arrange for us to automatically pay regular bills of a fixed amount. Pay your rent, mortgage or other payments of $50 or more. * Systematic Retirement Withdrawal Plan: You can receive periodic distributions from an AARP IRA or AARP Keogh Plan account. STATEMENTS AND REPORTS What kinds of statements do I receive? You will receive a prompt confirmation statement for your transactions. You will also receive a monthly Consolidated Statement. AARP IRA or AARP Keogh Plan accounts will receive a quarterly Consolidated Statement. The Consolidated Statement details the market value of all the AARP Funds in your account. It also includes a listing of recent transactions. You should keep these statements for your records. Prospectus 44

What other reports do I get? Each year, you will receive a current prospectus, mid year report and annual report. To reduce the volume of mail, we will only send one copy of most reports to a household (same surname, same address). Please contact us if you wish to receive additional reports. SERVICE PROVIDERS OF THE AARP FUNDS Legal Counsel Dechert Price & Rhoads, Washington, DC Independent Accountants Price Waterhouse LLP, Boston, MA Underwriter Scudder Investor Services, Inc., Two International Place, Boston, MA (a subsidiary of Scudder) is principal underwriter of the AARP Funds. Scudder Investor Services, Inc. offers for sale and confirms as agent all purchases of shares of the AARP Funds. Custodians Brown Brothers Harriman & Co., Boston, MA State Street Bank and Trust Company, Boston, MA Fund Accounting Agent Scudder Fund Accounting Corporation, Two International Place, Boston, MA (a subsidiary of Scudder) is responsible for determining the daily net asset value per share and maintaining the general accounting records of the AARP Funds. Transfer and Dividend-Disbursing Agent Scudder Service Corporation, P.O. Box 2540, Boston, MA 02208-2540 (a subsidiary of Scudder) Investment Adviser Scudder, Stevens & Clark, Inc., 345 Park Avenue, New York, New York is investment adviser for the AARP Funds. TRUSTEES AND OFFICERS CAROLE LEWIS ANDERSON, Trustee (1,2), President, MASDUN Capital Advisors; Formerly Principal, Suburban Capital Markets, Inc.; Director, VICORP Restaurants, Inc.; Member of the Board, Association for Corporate Growth of Washington, D.C.; Trustee, Hasbro Children's Foundation and Mary Baldwin College. ADELAIDE ATTARD, Trustee (2,4), Consultant, Gerontology; Commissioner, County of Nassau, New York, Department of Senior Citizen Affairs (1971-1991); Chairperson, Federal Council on Aging (1981-1986). CYRIL F. BRICKFIELD, Trustee (2,3,4), Honorary Trustee (1); Honorary President and Special Counsel, American Association of Retired Persons. ROBERT N. BUTLER, M.D., Trustee (2,4), Director, International Longevity Center and Professor of Geriatrics and Adult Development; Chairman, Henry L. Schwartz Department of Geriatrics and Adult Development, Mount Sinai Medical Center; Formerly Director, National Institute on Aging, National Institute of Health. Prospectus 45

ESTHER CANJA, Trustee (5), Vice President, American Association of Retired Persons; Trustee and Chair, AARP Group Health Insurance Plan; Board Liaison, National Volunteer Leadership Network Advisory Committee; Chair, Board Operations Committee; AARP State Director of Florida (1990-1992). LINDA C. COUGHLIN, President and Trustee (5), Managing Director, Scudder, Stevens & Clark, Inc., Director, Scudder Investor Services, Inc.* HORACE B. DEETS, Vice Chairman and Trustee (5), Executive Director, American Association of Retired Persons; Member, Board of Councilors, Andrus Gerontology Center; Member of the Board, HelpAge International. EDGAR R. FIEDLER, Trustee (1,2,3), Vice President and Economic Counselor, The Conference Board, Inc. CUYLER W. FINDLAY, Chairman and Trustee (5), Managing Director, Scudder, Stevens & Clark, Inc., Senior Vice President and Director, Scudder Investor Services, Inc.* EUGENE P. FORRESTER, Trustee (2,3), Lt. General (Retired) U.S. Army; International Trade Counselor; Consultant. WAYNE F. HAEFER, Trustee (2,3,4), Director, Membership Division of AARP; Formerly Secretary, Employee's Pension and Welfare Trusts of AARP and Retired Persons Services, Inc.; Formerly Director, Administration and Data Management Division of AARP. GEORGE L. MADDOX, JR., Trustee (2,3), Professor Emeritus and Director, Long Term Care Resources Program, Duke University Medical Center; Professor Emeritus of Sociology, Departments of Sociology and Psychiatry, Duke University. ROBERT J. MYERS, Trustee (1,2,4), Actuarial Consultant; Formerly Executive Director, National Commission on Social Security Reform; Formerly Chairman, Commission on Railroad Retirement Reform. JAMES H. SCHULZ, Trustee (3,4), Professor of Economics and Kirstein Professor of Aging Policy, Policy Center on Aging, Florence Heller School, Brandeis University. GORDON SHILLINGLAW, Trustee (1,3,4), Professor Emeritus of Accounting, Columbia University Graduate School of Business. MARGARET D. HADZIMA*, Vice President (5) THOMAS W. JOSEPH*, Vice President (5) DAVID S. LEE*, Vice President and Assistant Treasurer (5) THOMAS F. McDONOUGH*, Vice President and Assistant Secretary (5) PAMELA A. McGRATH*, Vice President and Treasurer (5) EDWARD J. O'CONNELL*, Vice President and Assistant Treasurer (5) JAMES W. PASMAN*, Vice President (5) KATHRYN L. QUIRK*, Vice President and Secretary (5) HOWARD SCHNEIDER*, Vice President (5) CORNELIA M. SMALL*, Vice President (5) *Scudder, Stevens & Clark, Inc. (1) AARP Cash Investment Funds (2) AARP Income Trust (3) AARP Tax Free Income Trust (4) AARP Growth Trust (5) All Funds Prospectus 46