January 27, 2006

Deutsche Asset Management announces proxy statement filing

Deutsche Asset Management ("DeAM") announced that the Scudder Funds have submitted for review by the Staff of the Securities and Exchange Commission ("SEC") proxy statements soliciting approval from the Scudder Funds' shareholders of various proposals, including changes to the Scudder Funds' organization documents, investment advisory agreements, fundamental investment restrictions, consolidation of certain Scudder Funds' Boards of Directors, and mergers of certain funds.  Based on information provided by DeAM, the proxy statements, among other things, disclose the status of regulatory inquiries and investigations ("inquiries") with respect to investment advisory entities of DeAM, and its affiliates.  This release reports on the status of those inquiries as well as related matters with respect to DeAM and Deutsche Bank Securities Inc. ("DBSI"), a broker dealer affiliate of Deutsche Bank AG ("Deutsche Bank").

Since July 2003, Deutsche Bank and its affiliates, including DeAM and DBSI, have been cooperating in connection with industry-wide inquiries by federal, state and self-regulatory agencies related to market timing, and are in discussions with the regulators concerning proposed settlements regarding those matters.  DeAM and DBSI expect to reach settlement agreements with the SEC, the Attorney General of New York ("NYAG"), the New York Stock Exchange ("NYSE") and the Illinois Secretary of State ("ILSOS") in early 2006 that would resolve those inquiries.  Although there is no certainty as to the terms and conditions of any such settlements, DeAM and DBSI believe that settlements with the regulators will provide for payment of disgorgement, penalties, and investor education contributions totaling approximately $134 million.  Approximately $127 million of this amount would be distributed to shareholders of the affected Scudder Funds in accordance with a distribution plan to be developed by an independent distribution consultant.  The DeAM investment advisors advising the Scudder Funds do not believe these amounts will have a material adverse financial impact on them or materially affect their ability to perform under their investment management agreements with the Scudder Funds. 

Based on the settlement discussions thus far, DeAM believes that any settlement with the SEC, the NYAG, and the ILSOS would be generally consistent with settlements reached by other advisors, taking into account the particular facts and circumstances of market timing at DeAM and at the legacy Scudder and Kemper organizations prior to their acquisition by DeAM in April 2002.  Among the terms of the expected settled orders, DeAM would be subject to certain undertakings regarding the conduct of its business in the future, including maintaining existing management fee reductions for certain funds for a period of five years.  DeAM, while neither admitting nor denying charges, expects that these settlements would resolve regulatory allegations that it violated certain provisions of federal and state securities laws (i) by entering into trading arrangements that permitted certain investors to engage in market timing in the Scudder Funds and (ii) by failing more generally to take adequate measures to prevent market timing in the Scudder Funds, primarily during the 1999-2001 period.  Although there is no certainty as to what terms and conditions would appear in a final order, DeAM expects the settlement documents to include allegations related to one legacy DeAM arrangement that permitted certain investors to engage in excessive trading in the Scudder Funds, as well as three legacy Scudder and six legacy Kemper arrangements. All of these trading arrangements originated in businesses that existed prior to the current DeAM organization, which came together in April 2002 as a result of the various mergers of the legacy Scudder, Kemper and Deutsche Fund groups, and all of the arrangements were terminated prior to the start of the regulatory investigations that began in July 2003.  No current DeAM employee approved the trading arrangements. 

Based on settlement discussions so far with the SEC, NYAG and NYSE, DBSI expects that it would neither admit nor deny allegations relating to a former DBSI Client Advisor who conducted market timing business through DBSI and, in connection with that Client Advisor's business, accepted certain "replacement" trades from a client after 4 p.m. in circumstances where a trade received before 4 p.m. had been blocked by a mutual fund, and that it failed to maintain adequate books and records.  It is expected that DBSI would also be subject to disgorgement of fees and to penalties that would be included in, and would total less than 1% of, the $134 million payment described above.

Deutsche Bank is pleased at the progress that it has been able to make, in cooperation with the staffs of the various regulatory agencies, toward putting these matters behind it.

Any prospective regulatory settlement would not resolve any of the various federal and state class action and derivative lawsuits against DeAM, the Scudder Funds and related individuals and entities, or Deutsche Bank.  Deutsche Bank and its affiliates intend to defend all of these civil litigations vigorously.

 DeAM is also engaged in settlement discussions with the Enforcement Staffs of the SEC and the NASD regarding DeAM's practices during 2001-2003 with respect to directing brokerage commissions for portfolio transactions by certain Scudder Funds to broker-dealers that sold shares in the Scudder Funds and provided enhanced marketing and distribution for shares in the Scudder Funds.  In addition, on January 13, 2006, Scudder Distributors, Inc. received a Wells notice from the Enforcement Staff of the NASD regarding Scudder Distributors' payment of non-cash compensation to associated persons of NASD member firms, as well as Scudder Distributors' procedures regarding non-cash compensation regarding entertainment provided to such associated persons.


For further information, please call:

Rohini Pragasam  
Media Relations

Jezz Farr   
Media Relations

About Deutsche Asset Management

Deutsche Asset Management is the global asset management business of Deutsche Bank AG, with AUM of US$666 billion (as of 9/30/05). It is one of the world's leading investment management organizations in terms of the quality and breadth of investment products, asset management expertise and client service. DeAM provides asset management capabilities to a variety of clients worldwide including foundations, non-profit organizations, public and private superannuation funds, high-net-worth individuals and retail investors.

About Deutsche Bank

With Euro 972 billion in assets and 63,751 employees, Deutsche Bank <NYSE: DB> offers unparalleled financial services in 74 countries throughout the world. Deutsche Bank competes to be the leading global provider of financial solutions for demanding clients creating exceptional value for its shareholders and people.

Deutsche Bank ranks among the global leaders in corporate banking and securities, transaction banking, asset management, and private wealth management, and has a significant private and business banking franchise in Germany and other selected countries in Continental Europe.

Deutsche Bank Securities Inc. is the investment banking and securities arm of Deutsche Bank AG in the United States.