Edgar Filing: SCUDDER STRATEGIC MUNICIPAL INCOME TRUST

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

SCHEDULE 14A

INFORMATION REQUIRED IN PROXY STATEMENT

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Scudder High Income Trust
Scudder Intermediate Government Trust
Scudder Multi-Market Income Trust
Scudder Municipal Income Trust
Scudder Strategic Municipal Income Trust
Scudder Strategic Income Trust
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PRELIMINARY COPY

SCUDDER HIGH INCOME TRUST
SCUDDER INTERMEDIATE GOVERNMENT TRUST
SCUDDER MULTI-MARKET INCOME TRUST
SCUDDER MUNICIPAL INCOME TRUST
SCUDDER STRATEGIC MUNICIPAL INCOME TRUST
SCUDDER STRATEGIC INCOME TRUST
222 SOUTH RIVERSIDE PLAZA CHICAGO, ILLINOIS 60606

NOTICE OF JOINT ANNUAL MEETING OF SHAREHOLDERS
MAY 27, 2004 AND PROXY STATEMENT

________, 2004

To the Shareholders:

You are invited to attend a joint annual meeting of the shareholders of
Scudder High Income Trust ("KHI"), Scudder Intermediate Government Trust
("KGT"), Scudder Multi-Market Income Trust ("KMM"), Scudder Municipal Income
Trust ("KTF"), Scudder Strategic Municipal Income Trust ("KSM") and Scudder
Strategic Income Trust ("KST") (individually, a "Fund" and collectively, the
"Funds"). The meeting will be held at the offices of Deutsche Investment
Management Americas Inc. ("DeIM" or the "Advisor"), 13th Floor, Two
International Place, Boston, Massachusetts 02110-4103, on Thursday, May 27, 2004
at __:00 p.m. Eastern time, for the following purposes and to transact such
other business, if any, as may properly come before the meeting:

1. To elect Trustees to the Board of each Fund as outlined below:

(a) For KHI, KGT, KMM and KST only, to elect nine Trustees to the
Board of each Fund; and

(b) For KTF and KSM only, to elect nine Trustees to the Board of
each Fund with seven Trustees to be elected by the holders of
Preferred and Common Shares voting together and two Trustees
to be elected by holders of the Preferred Shares only.

2. To ratify the selection of Ernst & Young LLP as independent auditors of
each Fund for the current fiscal year.

3. To approve the modification or elimination of certain investment
policies and the elimination of the shareholder approval requirement as
to certain other matters.

The Board of each Fund has fixed the close of business on March 31,
2004 as the record date (the "Record Date") for determining the shareholders of
each Fund entitled to notice of and to vote at the meeting or any adjournments
or postponements thereof. Shareholders are entitled to one vote for each share
held.

THE BOARD OF EACH FUND RECOMMENDS THAT YOU VOTE FOR ALL ITEMS

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PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD. SIGN, DATE
AND RETURN YOUR PROXY CARD IN THE ENVELOPE PROVIDED. TO SAVE YOUR FUND THE COST
OF ADDITIONAL SOLICITATIONS, PLEASE MAIL YOUR PROXY CARD. IF YOU WISH TO ATTEND
THE MEETING AND VOTE YOUR SHARES IN PERSON AT THAT TIME, YOU WILL STILL BE ABLE
TO DO SO.
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The accompanying proxy is solicited by the Board of each Fund for
voting at the joint annual meeting of shareholders to be held on May 27, 2004,
and at any and all postponements or adjournments thereof (the "Meeting"). The
shareholders of each Fund will vote separately on the items presented at the
Meeting. This proxy statement was first mailed to shareholders on or about
________, 2004.

The Board of each Fund recommends shareholders vote FOR ITEMS 1, 2 AND
3. The vote required to approve all three items is described under
"Miscellaneous."

The Board of each Fund has fixed the close of business on March 31,
2004 as the Record Date for the determination of shareholders entitled to notice
of and to vote at the Meeting. As of the Record Date, shares of the Funds were
issued and outstanding as follows:

FUND SHARES
---- ------

KHI
KGT
KMM
KTF
Common
Preferred
KSM
Common
Preferred
KST

KTF AND KSM ONLY. Pursuant to the Amended and Restated Agreement and
Declaration of Trust of each Fund, the Boards may authorize separate classes of
shares of beneficial interest. The Board of each Fund has authorized, and each
Fund has issued, common shares of beneficial interest (the "Common Shares") and
preferred shares of beneficial interest (the "Preferred Shares"). The Common
Shares and the Preferred Shares have different powers, rights, preferences and
privileges, qualifications, limitations and restrictions with respect to, among
other things, dividends, liquidation, redemption and voting as more fully set
forth in the Certificate of Designation for Preferred Shares that established
the Preferred Shares. For KTF, the Common Shares were first issued on October
20, 1988 and the Preferred Shares were first issued on July 24, 1989 (Series A,
B, C and D) and November 24, 1999 (Series E). For KSM, the Common Shares were
first issued on March 22, 1989 and the Preferred Shares were first issued on
September 21, 1999. At the Meeting, the holders of the Preferred Shares, voting
as a separate class, are entitled to elect two Trustees, and the holders of the
Common Shares and the Preferred Shares, voting together as a single class, are
entitled to elect the seven remaining Trustees. On Items 2 and 3, the holders of
the Common Shares and Preferred Shares will vote together as a single class.

The following table identifies the Funds entitled to vote on each
Proposal.

PROPOSAL PAGE
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Item 1: 1.a. To elect nine Trustees to the Board of the Fund.

KHI, KGT, KMM and KST........................... 4

1.b. To elect nine Trustees to the Board of the Fund with seven Trustees to be elected by
the holders of Preferred and Common Shares voting together and
two Trustees to be elected by holders of the Preferred Shares only.

KTF and KSM................................................................. 4

PROPOSAL PAGE
----------------------------------------------------------------------------------------- ----

Item 2: To ratify the selection of Ernst & Young LLP as the independent
auditors for the Fund for the Fund's current fiscal year.

All Funds................................................................... 13

Item 3: To approve the modification or elimination of certain investment
policies and the elimination of the shareholder approval requirement as
to certain other matters.

All Funds................................................................... 15

ELIMINATION OF SHAREHOLDER APPROVAL REQUIREMENT TO AMEND INVESTMENT OBJECTIVES AND
INVESTMENT POLICIES

3.0 Investment Objectives

All Funds.................................................................... 16

3.1 Investment Policies

KHI, KGT, KMM, KTF and KST.................................................. 17

REVISION OF FUNDAMENTAL POLICIES MANDATED BY THE 1940 ACT

3.2 Diversification

(a) KHI, KGT, KMM, KTF and KST.................................................. 17

(b) KSM ........................................................................ 18

3.3 Borrowing

All Funds................................................................... 18

3.4 Senior Securities

All Funds................................................................... 18

3.5 Concentration

All Funds................................................................... 19

3.6 Underwriting of Securities

All Funds................................................................... 19

3.7 Investment in Real Estate

All Funds................................................................... 20

3.8 Purchase of Commodities

All Funds................................................................... 20

3.9 Lending

All Funds................................................................... 20

PROPOSAL PAGE
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ELIMINATION OF SHAREHOLDER APPROVAL REQUIREMENT TO CHANGE OTHER FUNDAMENTAL POLICIES

3.10 Margin Purchases and Short Sales

All Funds................................................................... 21

3.11 Restricted and Illiquid Securities

KGT, KTF and KSM............................................................ 21

3.12 Investment in Other Investment Companies

KHI, KGT, KMM and KST....................................................... 22

3.13 Investment in other than Municipal Securities and Temporary Investments

KSM and KTF................................................................. 22

ITEM 1. ELECTION OF TRUSTEES TO THE BOARDS

THE BOARD OF EACH FUND RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE NOMINEES
NAMED BELOW.

At the Meeting, shareholders of each Fund will be asked to elect nine
individuals to constitute the Board of Trustees of each Fund. Board members are
elected annually pursuant to each Trust's Declaration of Trust and By-Laws. The
nine individuals nominated for election as Trustees of each Fund were nominated
after careful consideration by each Fund's present Board of Trustees. The
nominees are listed below. The nine nominees are currently Trustees of each Fund
and are currently trustees or directors of other funds advised by DeIM. One of
the nominees, Mr. Hale, is a senior executive officer of DeIM and is an
"interested person" (an "Interested Person") of the Advisor of the Funds within
the meaning of the Investment Company Act of 1940, as amended (the "1940 Act"),
due to the fact that he is an officer of the Advisor. He is referred to as an
"Interested Trustee." Each of the remaining eight nominees is not an Interested
Person of the Advisor of the Funds within the meaning of the 1940 Act and is
referred to as a "Non-interested Trustee," or "Independent Trustee." Together
with one Independent Trustee who will be retiring from the Funds' Board
coincident with the Meeting (Mr. Fred Renwick), the proposed slate of nominees
currently oversees 82 fund portfolios in the Scudder Fund Complex, and is often
referred to as the "Chicago Board."

The persons named as proxies on the enclosed proxy card(s) will vote
for the election of all the nominees (as to each relevant Fund) unless authority
to vote for any or all of the nominees is withheld in the proxy. Each Trustee so
elected will serve as a Trustee of the respective Fund until the next meeting of
shareholders, if any, called for the purpose of electing Trustees and until the
election and qualification of a successor or until such Trustee sooner dies,
resigns or is removed as provided in the organizational documents of each Fund.

KTF AND KSM ONLY. As indicated above, holders of the Preferred Shares
are entitled to elect two Trustees. Messrs. Hale and Weithers are nominees for
election by holders of the Preferred Shares of each Fund. In addition, seven
other Trustees are to be elected by holders of the Common Shares and the
Preferred Shares, voting together as a single class. Ms. Peterson and Messrs.
Ballantine, Burnham, Dunaway, Edgar, Freeman and Hoffman are nominees for
election by all shareholders.

All the nominees listed below have consented to serve as Trustees of
the respective Funds, if elected. In case any nominee shall be unable or shall
fail to act as a Trustee by virtue of an unexpected occurrence, persons named as
proxies will vote in their discretion for such other nominee or nominees as the
current Trustees may recommend. Each nominee and Trustee standing for
re-election is listed below. The address of each nominee is c/o Deutsche
Investment Management Americas Inc., 222 South Riverside Plaza, Chicago,
Illinois 60606.

NOMINEES FOR ELECTION AS TRUSTEES

NON-INTERESTED PERSONS
----------------------

NAME, AGE, POSITION WITH FUNDS, PRINCIPAL NUMBER OF PORTFOLIOS IN
OCCUPATION(S) FOR PAST 5 YEARS, AND OTHER YEAR FIRST BECAME A BOARD SCUDDER FUND COMPLEX
DIRECTORSHIPS MEMBER(1) OVERSEEN
----------------------------------------- ------------------------- -----------------------

JOHN W. BALLANTINE (58), Trustee; Retired; formerly, 2001-All Funds 82
Executive Vice President and Chief Risk Management
Officer, First Chicago NBD Corporation/The First
National Bank of Chicago (1996-1998); Executive Vice
President and Head of International Banking
(1995-1996); Director, Enron Corporation (energy
trading firm) (effective May 30, 2002); First Oak
Brook Bancshares, Inc., Oak Brook Bank; American
Healthways, Inc. (provider of disease and care
management services); FNB Corporation (bank holding
company).

LEWIS A. BURNHAM (71), Trustee; Retired; formerly, 2001-All Funds 82
Director of Management Consulting, McNulty & Company
(1990-1998); prior thereto, Executive Vice
President, Anchor Glass Container Corporation.

DONALD L. DUNAWAY (67), Trustee; Retired; formerly, 2001-All Funds 82
Executive Vice President, A.O. Smith Corporation
(diversified manufacturer) (1963-1994).

JAMES R. EDGAR (57), Trustee; Distinguished Fellow, 1999-All Funds 82
University of Illinois Institute of Government and
Public Affairs (1999-present); formerly, Governor,
State of Illinois (1991-1999); Director, Kemper
Insurance Companies; John B. Sanfilippo & Son, Inc.
(processor/packager/marketer of nuts, snacks and
candy products); Horizon Group Properties, Inc.;
Youbet.com (online wagering platform);
Alberto-Culver (manufactures, distributes, and
markets health and beauty-care products).

PAUL K. FREEMAN (53), Trustee; President, Cook 2002-All Funds 82
Street Holdings (consulting); Senior Visiting
Research Scholar, Graduate School of International
Studies, University of Denver; Consultant, World
Bank/Inter-American Development Bank; formerly,
Project Leader, International Institute for Applied
Systems Analysis (1998-2001); Chief Executive
Officer, The Eric Group, Inc. (environmental
insurance) (1986-1998).

NON-INTERESTED PERSONS
----------------------
NAME, AGE, POSITION WITH FUNDS, PRINCIPAL NUMBER OF PORTFOLIOS IN
OCCUPATION(S) FOR PAST 5 YEARS, AND OTHER YEAR FIRST BECAME A BOARD SCUDDER FUND COMPLEX
DIRECTORSHIPS MEMBER(1) OVERSEEN
----------------------------------------- ------------------------- -----------------------

ROBERT B. HOFFMAN (67), Trustee; Retired; formerly, 2001-All Funds 82
Chairman, Harnischfeger Industries, Inc. (machinery
for the mining and paper industries) (1999-2000);
prior thereto, Vice Chairman and Chief Financial
Officer, Monsanto Company (agricultural,
pharmaceutical and nutritional/food products)
(1994-1999); Director, RCP Advisors, LLC.

SHIRLEY D. PETERSON (62), Trustee; Retired; 2001-All Funds 82
formerly, President, Hood College (1995-2000);
formerly, Partner, Steptoe & Johnson (law firm);
Commissioner, Internal Revenue Service; Assistant
Attorney General (Tax), U.S. Department of Justice;
Director, Federal Mogul Corp. (supplier of
automotive components and subsystems); AK Steel
(steel production); Trustee, Bryn Mawr College;
formerly, Bethlehem Steel Corp.

JOHN G. WEITHERS (70), Trustee; Retired; formerly, 1993-All Funds
Chairman of the Board and Chief Executive Officer, except KST
Chicago Stock Exchange; Director, Federal Life 1994-KST 82
Insurance Company; Chairman of the Members of the
Corporation and Trustee, DePaul University;
formerly, Director, International Federation of
Stock Exchanges, Records Management Systems.

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(1) Each Trustee currently serves on the boards of 31 trusts/corporations
comprised of 82 funds.

INTERESTED PERSON*
------------------

RICHARD T. HALE (58), Trustee, Managing Director, 2002-All Funds 198
Deutsche Investment Management Americas, Inc.,
Deutsche Bank Securities, Inc. and Deutsche Asset
Management (1999-present); Director and President,
Investment Company Capital Corp. (registered
investment advisor) (1996-present); Director,
Deutsche Global Funds, Ltd. (2000-present), CABEI
Fund (2000-present), North American Income Fund
(2000-present)(registered investment companies);
Director, Scudder Global Opportunities Funds (since
2003); Director/Officer, Deutsche/Scudder Mutual
Funds (various dates); President, Montgomery Street
Income Securities, Inc. (registered investment
companies); Vice President, Deutsche Asset
Management Inc. (2000-present); formerly President
of the Scudder Funds (2003); Director, ISI Family of
Funds (registered investment companies; 4 funds
overseen) (1992-1999).

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* Interested person of the Advisor as defined in the 1940 Act due to his
position with the Advisor.
(1) Mr. Hale currently serves on the boards of __ trusts/corporations
comprised of ____ registered funds.

As of December 31, 2003, none of the Non-interested Trustees owned
securities beneficially of the Advisor, or any person directly or indirectly
controlling, controlled by or under common control with, the Advisor.

RESPONSIBILITIES OF THE BOARD OF TRUSTEES - BOARD AND COMMITTEE MEETINGS

The primary responsibility of each Board is to represent the interests
of the shareholders of the Funds and to provide oversight of the management of
the Funds. Each Board proposed for election at the Meeting is comprised of one
individual who is an Interested Trustee, and eight individuals who are
Independent Trustees. SEC rules require a majority of the board members of a
fund to be "independent" if the fund takes advantage of certain exemptive rules
under the 1940 Act. If the proposed Board of Trustees is approved by
shareholders, 89% will be Independent Trustees. Each of the nominees that will
be considered an Independent Trustee, if elected, has been selected and
nominated solely by the current Independent Trustees of each Fund.

Each Board meets multiple times during the year to review the
investment performance of each Fund and other operational matters, including
policies and procedures designed to assure compliance with regulatory and other
requirements. Furthermore, the Independent Trustees review the fees paid to the
Advisor and its affiliates for investment advisory services and other
administrative and shareholder services. Each Board has adopted specific
policies and guidelines that, among other things, seek to further enhance the
effectiveness of the Independent Trustees in performing their duties. Many of
these are similar to those suggested in the Investment Company Institute's 1999
Report of the Advisory Group on Best Practices for Fund Directors (the "ICI Best
Practices Report"). For example, the Independent Trustees select independent
legal counsel to work with them in reviewing fees, advisory and other contracts
and overseeing fund matters, and regularly meet privately with their counsel.

During calendar year 2003, the Board of each Fund met 8 times. Each
then current Trustee attended 100% of the respective meetings of the Board and
the Committees (if a member thereof) held during calendar year 2003, except for
one former Trustee who resigned on January 1, 2004, who attended 75% of the
Board meetings.

Each Board has an Audit Committee, a Nominating and Governance
Committee, a Valuation Committee, an Operations Committee and a Fixed-Income
Oversight Committee (each a "Committee" and collectively, the "Committees"). The
responsibilities of each Committee are described below. Each Committee has a
written charter that delineates the Committee's duties and powers.

AUDIT COMMITTEE

The Audit Committee makes recommendations regarding the selection of
independent auditors for each Fund, confers with the independent auditors
regarding each Fund's financial statements, the results of audits and related
matters, reviews and discusses each Fund's audited financial statements with
management and performs such other tasks as the full Board deems necessary or
appropriate. For the 2003 fiscal year for each Fund, the Committee reviewed and
discussed the audited financial statements with management. The Committee also
discussed with the independent auditors the matters required to be discussed by
Statement on Auditing Standards No. 61 (Communications with Audit Committees).
The Funds' independent auditors provided the Committee the written disclosure
required by Independent Standards Board Standard No. 1 (Independent Discussions
with Audit Committees), and the Committee discussed with representatives of the
independent auditors their firm's independence. Based on its review and
discussions with management and the independent auditors of each Fund's
financial statements and other written disclosure provided by the independent
auditors, the Committee recommended to each Board that the audited financial
statements be included in the annual report provided to shareholders for each
Fund's 2003 fiscal year. The Committee is comprised of only Non-interested
Trustees who are "independent" as defined in the New York Stock Exchange
("NYSE") and the Chicago Stock Exchange ("CHX") listing standards applicable to
closed-end funds. The members of the Committee are Donald L. Dunaway (Chairman),
Lewis A. Burnham and Robert B. Hoffman. The Audit Committee held 10 meetings for
all Funds except KHI, KMM, KTF, KSM and KST, which held 11 meetings, during
calendar year 2003. A copy of the Audit Committee Charter for each Fund is
attached as Appendix 1 hereto.

NOMINATING AND GOVERNANCE COMMITTEE

Each Board has a Nominating and Governance Committee, comprised of only
Non-interested Trustees, that seeks and reviews candidates for consideration as
nominees for membership on the Board and oversees the administration of each
Fund's Governance Procedures and Guidelines. Currently, the members of the
Nominating and Governance Committee are Lewis A. Burnham (Chairman), James R.
Edgar and Shirley D. Peterson. The Nominating and Governance Committee held 6
meetings during calendar year 2003. Each Fund's Nominating and Governance
Committee is governed by the Nominating and Governance Committee Charter, a copy
of which is attached as Appendix 2 hereto. The Charter is not currently
available on a website. Each member of the Committee is "independent," which
means that he or she is not an "interested person" of the Fund, as defined in
the 1940 Act.

When the Board has or expects to have a vacancy, the Nominating and
Governance Committee receives and reviews information on individuals qualified
to be recommended to the full Board as nominees for election as Trustees,
including any recommendations by shareholders. To date, the Committee has been
able to identify, and expects to continue to be able to identify, from its own
resources an ample number of qualified candidates; however, the Committee will
review shareholders' recommendations to fill vacancies on the Board if the
recommendation is submitted in writing to the

Secretary of the applicable Fund, for the attention of the Chairman of the
Nominating and Governance Committee, together with a resume of the candidate.

The Nominating and Governance Committee's principal criterion for
selection of candidates is their ability to carry out the responsibilities of
the Board. In addition, the following factors are taken into consideration: (a)
the Board collectively should represent a broad cross section of backgrounds,
functional disciplines and experience, (b) candidates should exhibit stature
commensurate with the responsibility of representing shareholders, (c)
candidates should commit to strive for high attendance levels at regular and
special Board meetings, and participate in committee meetings as needed, and (d)
candidates should represent the best choices available based upon thorough
identification, investigation and recruitment of candidates. In its evaluation
of candidates submitted by shareholders, the Nominating and Governance Committee
will verify information submitted regarding the candidate and, depending on the
results of that verification and the extent to which the candidate otherwise
satisfies the criteria for Board candidates, may interview the candidate. If the
Board is seeking a candidate to fill a specific need, the Committee will seek to
determine whether the candidate possesses the skills and background to fulfill
this need.

VALUATION COMMITTEE

Each Board has a Valuation Committee, comprised of both Interested and
Non-interested Trustees, which reviews Valuation Procedures adopted by each
Board, determines the fair value of each Fund's securities as needed in
accordance with the Valuation Procedures and performs such other tasks as the
full Board deems necessary. Currently, the members of the Valuation Committee
are John W. Ballantine and Richard T. Hale. Alternate members are Donald L.
Dunaway and John G. Weithers. The Valuation Committee held 2 meetings for all
Funds during calendar year 2003.

OPERATIONS COMMITTEE

Each Board has an Operations Committee, comprised of only
Non-interested Trustees, which oversees the operations of the Funds, such as
reviewing each Fund's administrative fees and expenses, portfolio transaction
policies, and custody and transfer agency arrangements. Currently, the members
of the Operations Committee are John W. Ballantine (Chairman), Paul K. Freeman,
Fred B. Renwick and John G. Weithers. The Operations Committee held 7 meetings
during calendar year 2003.

FIXED-INCOME OVERSIGHT COMMITTEE

Each Board has a Fixed-Income Oversight Committee, comprised of only
Non-interested Trustees, which oversees investment activities of the Funds, such
as investment performance and risk, expenses and services provided under the
investment management agreement. Currently, the members of the Fixed-Income
Oversight Committee are Paul K. Freeman (Chairman), Donald L. Dunaway and
Shirley D. Peterson. The Fixed-Income Oversight Committee held 5 meetings during
calendar year 2003.

SHAREHOLDER COMMUNICATION WITH THE TRUSTEES

The Board of each Fund provides a process for shareholders to send
communications to the Board. (These communications do not include shareholders'
proposals described below under "Miscellaneous - Proposals of Shareholders.")
Correspondence should be sent by U.S. mail or courier service to the Funds'
Secretary, Two International Place, Boston, Massachusetts 02110-4103, who will
forward it to the Lead Independent Trustee (currently Ms. Peterson) if addressed
to the Board, or to a specific Trustee if addressed to that Trustee.

COMPENSATION OF TRUSTEES

Each Fund pays its Independent Trustees a monthly retainer, paid on a
quarterly basis, plus expenses, and an attendance fee for each Board meeting and
Committee meeting attended. As reflected above, the Trustees currently serve as
board members of various investment companies for which DeIM serves as
investment manager. DeIM supervises each Fund's investments, pays the
compensation and expenses of its personnel who serve as Trustees and officers on
behalf of each Fund and receives a management fee for its services. Several of
the officers and one of the Trustees are also officers, directors, employees or
stockholders of DeIM and participate in the fees paid to DeIM, although the
Funds make no direct payments to them. The Trustee and officers of a Fund who
are "Interested Persons" receive no compensation from such Fund. The
Non-interested Trustees are not entitled to benefits under any pension or
retirement plan. The Board of Trustees of each Fund established a deferred
compensation plan for the Non-interested Trustees ("Deferred Compensation
Plan"). Under the Deferred Compensation Plan, the Non-interested Trustees may
defer receipt of all, or a portion, of the compensation they earn for their
services to the Funds in lieu of receiving current payments of such
compensation. Any deferred amount is treated as though an equivalent dollar
amount has been invested in shares of one or more funds managed by the Advisor
("Shadow Shares"). Mr. Edgar currently has elected to defer at least a portion
of his fees. In addition, previously, Mr. Dunaway elected to defer fees that
were payable, which are now included under the Deferred Compensation Plan. The
equivalent Shadow Shares are reflected in Appendix 3 in the Trustees' share
ownership.

The table below shows, for each Trustee entitled to receive
compensation from the Funds, the aggregate compensation paid or accrued during
the 2003 calendar year and the total compensation that the funds advised by DeIM
or its affiliates (collectively, the "Scudder Fund Complex") paid or accrued
during calendar year 2003.

AGGREGATE
COMPENSATION
FROM
SCUDDER FUND
AGGREGATE COMPENSATION FROM FUND COMPLEX (3)(4)
---------------------------------------------------------------------- --------------
NAME OF TRUSTEE KHI KGT KMM KTF KSM KST
-------------------------- ------ ------ ------ ------ ------ ------ --------------

John W. Ballantine........ $2,542 $3,018 $2,542 $3,864 $2,369 $1,495 $218,350
Lewis A. Burnham.......... $2,650 $3,180 $2,610 $4,000 $2,500 $1,620 $209,620
Donald L. Dunaway......... $2,768 $3,205 $2,690 $4,290 $2,538 $1,585 $239,200
James R. Edgar(1)......... $2,190 $2,610 $2,190 $3,330 $2,100 $1,350 $175,210
Paul K. Freeman........... $2,463 $2,936 $2,464 $3,762 $2,318 $1,471 $194,280
Robert B. Hoffman......... $2,371 $2,772 $2,371 $3,603 $2,261 $1,460 $189,160
Shirley D. Peterson(2).... $2,585 $3,183 $2,586 $4,018 $2,492 $1,569 $207,790
Fred B. Renwick........... $2,280 $2,700 $2,280 $3,420 $2,160 $1,380 $183,940
John G. Weithers.......... $2,305 $2,773 $2,306 $3,588 $2,212 $1,419 $185,380

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(1) Includes deferred fees for Governor Edgar. Pursuant to a Deferred
Compensation Plan, as discussed above, deferred amounts are treated as
though an equivalent dollar amount has been invested in Shadow Shares
(as defined above) of selected funds managed by the Advisor. Total
deferred fees (including interest thereon and the return from the
assumed investment in Shadow Shares) payable from the Funds to Governor
Edgar are as follows: $6,415, $7,508, $6,184, $10,544, $6,474 and $4,061
from KHI, KGT, KMM, KTF, KSM and KST, respectively.
(2) Includes $19,020 in annual retainer fees in Ms. Peterson's role as Lead
Independent Trustee.
(3) For each Trustee, total compensation includes compensation for service
on the boards of 31 trusts/corporations comprised of 81 funds. Each
Trustee currently serves on the boards of 31 trusts/corporations in the
Scudder Fund Complex, comprised of 82 funds.

(4) Aggregate compensation reflects amounts paid to the Trustees for
numerous special meetings of the Chicago Board in connection with
amending the administrative services agreements and the transfer agency
agreements and the delegation of certain fund accounting functions to
State Street Bank and Trust Company. Such amounts totaled $15,510 for
Messrs. Ballantine and Dunaway, $8,560 for Messrs. Freeman, Hoffman,
Renwick and Weithers, and $5,170 for Messrs. Burnham and Edgar and Ms.
Peterson. These meeting fees were borne by the Advisor.

Each Fund recently adopted a policy that the Board generally should be
represented at annual shareholder meetings by at least one Trustee. No Trustee
attended the Funds' annual meeting held on May 29, 2003.

FUND OFFICERS

Information about the executive officers of each Fund, with their
respective ages, terms as Fund officers indicated and principal occupation for
the past five years, is set forth below.

Richard T. Hale (58), Chief Executive Officer of each Fund since
11/19/03. Mr. Hale is a Managing Director of Deutsche Investment Management
Americas, Inc., Deutsche Asset Management (1999-present) and Deutsche Bank
Securities, Inc. (1999-present); Director and President, Investment Company
Capital Corp. (registered investment adviser) (1996-present); Director, Deutsche
Global Funds, Ltd. (2000-present), CABEI Fund (2000-present), North American
Income Fund (2000-present) (registered investment companies); Director, Scudder
Global Opportunities Funds (since 2003); Director/Officer, Deutsche/Scudder
Mutual Funds (various dates); President, Montgomery Street Income Securities,
Inc. (registered investment companies); Vice President, Deutsche Asset
Management Inc. (2000-present); formerly, President of each Fund (2003);
Director, ISI Family of Funds (registered investment companies; 4 funds
overseen) (1992-1999).

Brenda Lyons (40), President of each Fund since 12/01/03. Ms. Lyons is
also a Managing Director of Deutsche Asset Management.

Philip J. Collora (58), Vice President of each Fund except KST since
2/1/90 and KST since 3/2/90, and Assistant Secretary of each Fund since 1/24/01.
Mr. Collora is a Director of Deutsche Asset Management.

Kenneth Murphy (40), Vice President of each Fund since 1/15/03. Mr.
Murphy is also a Vice President of Deutsche Asset Management (2001-present) and
formerly, a Director of John Hancock Signature Services (1992-2001).

Charles A. Rizzo (46), Treasurer of each Fund since 11/20/02. Mr. Rizzo
is also a Managing Director of Deutsche Asset Management (February 2004-present)
and formerly, Director of Deutsche Asset Management (2000-2004); Vice President
and Fund Accounting Department Head of BT Alex. Brown Incorporated (now Deutsche
Bank Securities, Inc.) (1998-1999); and a Senior Manager of Coopers & Lybrand
L.L.P. (now PricewaterhouseCoopers LLP) (1993-1998).

Salvatore Schiavone (37), Assistant Treasurer of each Fund since
5/14/03. Mr. Schiavone is also a Director of Deutsche Asset Management.

Lucinda H. Stebbins (57), Assistant Treasurer of each Fund since
5/14/03. Ms. Stebbins is also a Director of Deutsche Asset Management.

Kathleen Sullivan D'Eramo (46), Assistant Treasurer of each Fund since
5/14/03. Ms. D'Eramo is also a Director of Deutsche Asset Management.

John Millette (41), Secretary of each Fund since 9/26/01. Mr. Millette
is also a Director of Deutsche Asset Management.

Daniel O. Hirsch (49), Assistant Secretary of each Fund since 4/5/02.
Mr. Hirsch is also a Managing Director of Deutsche Asset Management
(2002-present); a Director of Deutsche Global Funds Ltd. (2002-present); and
formerly, a Principal of BT Alex. Brown Incorporated (now Deutsche Bank
Securities Inc.) (1998-1999).

Caroline Pearson (41), Assistant Secretary of each Fund since 1/21/98.
Ms. Pearson is a Managing Director of Deutsche Asset Management.

Lisa Hertz (33), Assistant Secretary of each Fund since 9/26/03. Ms.
Hertz is also an Assistant Vice President of Deutsche Asset Management.

The officers of each Fund are elected by the Board of each Fund on an
annual basis to serve until their successors are elected and qualified.

SHAREHOLDERS. As of December 31, 2003, each executive officer, nominee
and Trustee of each Fund individually, and the officers and Trustees as a group,
owned beneficially less than 1% of the outstanding shares of each Fund. Appendix
1 hereto lists the dollar range and amount of shares of each Fund owned directly
or beneficially owned by each Trustee and nominee of the Funds individually and
as a group with the executive officers of each Fund. As of December 31, 2003,
the Trustees and executive officers did not own any Preferred Shares of KTF or
KSM. As of December 31, 2003, no person is known to any Fund to have owned
beneficially more than 5% of any class of shares of any Fund.

SECTION 16 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. Section 30(h) of
the 1940 Act and Section 16(a) of the Securities Exchange Act of 1934 require
each Fund's officers and Trustees, the Advisor, affiliated persons of the
Advisor and persons who own more than ten percent of a registered class of the
Fund's equity securities to file forms reporting their affiliation with that
Fund and reports of ownership and changes in ownership of that Fund's shares
with the Securities and Exchange Commission (the "SEC") and the NYSE. These
persons and entities are required by SEC regulation to furnish the Funds with
copies of all Section 16(a) forms they file. Based solely upon its review of the
copies of such forms received by it, and written representations from certain
reporting persons that no year-end reports were required for those persons, each
Fund believes that during the fiscal year ended November 30, 2003 (December 31,
2003 for KGT), all filings were timely, except that Phil Condon filed a Form 4
late for KTF; Sean McCaffrey filed a Form 3 late for KMM; Edwin Guiterrez, Karl
Sternberg, James Knell, Simon Kempton, Annette Fraser, David Haysey, Stephen
Illot, Matthew Linsey, Alexander Tedder and Brett Diment (current and former
officers and directors of the sub-advisor) each filed a Form 3 late for KGT; and
Brenda Lyons filed a Form 3 late for all Funds.

INVESTMENT MANAGER. Deutsche Investment Management Americas Inc.
("DeIM" or the "Advisor"), 345 Park Avenue, New York, NY 10154, serves as each
Fund's investment adviser and manager pursuant to an investment management
agreement. Deutsche Asset Management Investment Services Ltd., One Appold
Street, London, England, serves as the subadviser for Scudder Multi-Market
Income Trust, Scudder Strategic Income Trust and Scudder Intermediate Government
& Agency Trust pursuant to subadvisory agreements with the Advisor.

On April 5, 2002, Deutsche Bank acquired 100% of US-based asset manager
Zurich Scudder Investments ("Scudder"). Scudder became part of Deutsche Asset
Management and changed its name to DeIM. The combined organization is, as of
December 31, 2003, the ______ largest asset manager in the world, with
approximately $______ billion in assets under management as of December 31,
2003. Effective August 19, 2002, the Deutsche Asset Management funds were
combined with the Scudder

family of funds under the Scudder Investments brand. The Deutsche Asset
Management family of funds and the Scudder funds have been integrated into a
single fund complex, the Scudder Investments family of funds, with the
investment operations of Scudder becoming part of an integrated global
investment operation serving Deutsche Asset Management's clients worldwide.

ITEM 2. SELECTION OF INDEPENDENT AUDITORS

THE BOARD OF EACH FUND RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF THE
SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS FOR EACH FUND.

Each Board, including the Independent Trustees, has selected Ernst &
Young LLP ("E&Y") to act as independent auditors to audit the books and records
of each Fund for the current fiscal year, and recommends that shareholders
ratify such selection. E&Y has served each Fund in this capacity since the Fund
was organized and has no direct or indirect financial interest in any Fund
except as independent auditors. The selection of E&Y as independent auditors of
each Fund is being submitted to the shareholders for ratification. A
representative of E&Y is expected to be present at the Meeting and will be
available to respond to any appropriate questions raised at the Meeting and may
make a statement.

The following table shows fees paid to E&Y by each Fund during that
Fund's two most recent fiscal years: (i) for audit and non-audit services
provided to the Fund, and (ii) for engagements for non-audit services
pre-approved by the Audit Committees for the Advisor and certain entities
controlling, controlled by, or under common control with the Advisor that
provide ongoing services to the Fund (collectively, the "Advisor Entities"),
which engagements relate directly to the operations and financial reporting of
the Fund. The Audit Committee of each Board will review, at least annually,
whether E&Y's receipt of non-audit fees from the Fund, DeIM and all Advisor
Entities is compatible with maintaining E&Y's independence.

AUDIT FEES(1) AUDIT RELATED FEES(2) TAX FEES(3) ALL OTHER FEES(4)
------------- --------------------- ----------- -----------------
ADVISOR ADVISOR ADVISOR
FUND FUND ENTITIES FUND ENTITIES FUND ENTITIES
NAME OF FUND ---- ---- -------- ---- -------- ---- --------
--------------------- -------------- ------------------ ------------------ -------------------

Scudder High Income
Trust
2002............... $38,008 $0 $212,800 $ 6,707 $0 $0 $0
2003............... $40,881 $0 $112,900 $ 8,266 $0 $364 $0
Scudder Intermediate
Government &
Agency Trust
2002............... $35,951 $0 $212,800 $ 6,344 $0 $0 $0
2003............... $32,364 $0 $112,900 $ 7,231 $0 $364 $0
Scudder Multi-Market
Income Trust
2002............... $35,483 $0 $212,800 $ 6,262 $0 $0 $0
2003............... $40,882 $0 $112,900 $ 8,267 $0 $364 $0
Scudder Municipal
Income Trust
2002............... $56,801 $0 $212,800 $10,024 $0 $0 $0
2003............... $40,845 $0 $112,900 $ 6,687 $0 $364 $0
Scudder Strategic
Municipal Income
Trust
2002............... $55,679 $0 $212,800 $9,826 $0 $0 $0
2003............... $39,494 $0 $112,900 $6,687 $0 $364 $0
Scudder Strategic
Income Trust
2002............... $38,849 $0 $212,800 $6,856 $0 $0 $0
2003............... $39,099 $0 $112,900 $6,617 $0 $364 $0

(1) "Audit Fees" are the aggregate fees billed for professional services for
the audit of each Fund's annual financial statements and services
provided in connection with statutory and regulatory filings or
engagements.

(2) "Audit Related Fees" are the aggregate fees billed for assurance and
related services reasonably related to the performance of the audit or
review of financial statements and are not reported under "Audit Fees."

(3) "Tax Fees" are the aggregate fees billed for professional services for tax advice, tax compliance and tax
planning.

(4) "All Other Fees" are the aggregate fees billed for products and services
other than "Audit Fees," "Audit Related Fees" and "Tax Fees."

Audit Committee Pre-Approval Policies and Procedures. Generally, the
Audit Committee must pre-approve (i) all services to be performed for the Fund
by the Fund's independent auditors and (ii) all non-audit services to be
performed by the Fund's independent auditors for the Advisor Entities with
respect to operations and financial reporting of the Fund. There are several de
minimis exceptions. The Chairman of the Audit Committee may grant the
pre-approval for non-audit services described in items (i) and (ii) above for
non-prohibited services for engagements of less than $100,000. All such
delegated pre-approvals shall be presented to the Audit Committee no later than
the next Audit Committee meeting. Pre-approval of non-audit services described
in item (i) is not required if the aggregate amount of all non-audit services
provided to the Fund is less than 5% of the total fees paid by the Fund to the
independent auditors during the fiscal year in which the non-audit services are
provided. Pre-approval of non-audit services described in item (ii) is not
required if the aggregate amount of all non-audit services provided is less than
5% of the total fees paid by the Fund, the Advisor or any Advisor Entities
providing ongoing

services to the Fund, to the independent auditors during the fiscal year in
which the non-audit services are provided.

All Non-Audit Fees. The table below shows the aggregate non-audit fees
billed by Ernst & Young LLP for services rendered to the Funds and to the
Advisor Entities for the two most recent fiscal years for each Fund.

KHI KGT KMM KTF KSM KST
--- --- --- --- --- ---

2002 $ 970,199 $ 969,836 $ 969,754 $ 973,516 $ 973,318 $ 970,348
2003 $3,750,630 $3,749,595 $3,750,631 $3,749,051 $3,749,051 $3,748,981

In assessing E&Y's independence, the Audit Committee considers the
opinions of Fund management.

ITEM 3. APPROVAL OF THE MODIFICATION OR ELIMINATION OF CERTAIN INVESTMENT
POLICIES AND THE ELIMINATION OF THE SHAREHOLDER APPROVAL REQUIREMENT AS TO
CERTAIN OTHER MATTERS.

THE BOARD OF EACH FUND RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THE
PROPOSAL DISCUSSED BELOW FOR EACH APPLICABLE FUND.

The 1940 Act requires an investment company to adopt policies governing
certain specified activities, which can be changed only by a shareholder vote.
Policies that cannot be changed or eliminated without a shareholder vote are
referred to in this Proxy Statement as "fundamental" policies. The purposes of
this proposal are to eliminate the requirement of shareholder approval to change
policies except where required by the 1940 Act and to provide the maximum
permitted flexibility in those policies that do require shareholder approval.
Management has advised the Boards that some of the Funds' fundamental policies
that are not required to be such under the 1940 Act were adopted in the past to
reflect industry conditions at the time and no longer serve any useful purpose.
Management believes that other fundamental policies, as well as the
classification of each Fund's investment objective(s) as fundamental, are
unnecessary because the provisions of the 1940 Act or federal tax law, together
with the disclosure requirements of the federal securities laws, provide
adequate safeguards for a Fund and its shareholders. The proposal is described
in more detail below.

This proposal is sub-divided into the following three sections:

(1) Elimination of Shareholder Approval Requirement to Amend
Investment Objectives and Investment Policies. All of the Funds listed below
currently require shareholder approval to amend investment objectives and
certain investment policies. The first section of this proposal seeks
shareholder approval of the elimination of the shareholder approval requirement
for amending (a) "investment objectives" and (b) "investment policies" which are
not otherwise specifically identified as fundamental. Eliminating the
shareholder approval requirement for amending the investment objective (or
objectives) of a Fund is intended to enhance the Fund's investment flexibility
in the event of changing circumstances. Additionally, management believes that
currently it is difficult to determine precisely which policies are fundamental
on the basis of the language in the Funds' Prospectuses and, if applicable,
Statements of Additional Information, thus creating uncertainty and restricting
the Funds' investment flexibility and their ability to respond to changing
regulatory and industry conditions.

(2) Revision of Fundamental Policies Mandated by the 1940 Act.
Each of the fundamental policies proposed for revision relates to an activity
that the 1940 Act requires be governed by a fundamental policy. Each proposed
revision is, in general, intended to provide the Funds' Boards with the maximum
flexibility permitted under the 1940 Act, and to promote simplicity among the
Funds' policies.

(3) Elimination of Shareholder Approval Requirement to Change
Other Fundamental Policies. This proposal seeks to eliminate certain policies
that are specifically designated as fundamental but which are not required to be
fundamental under the 1940 Act. The Boards of the Funds anticipate adopting
certain of these policies as non-fundamental. Any policy that is not designated
as fundamental can be modified or eliminated by the Board, and, as indicated
below, management intends to recommend to the Boards the elimination of several
of them as being inappropriate or unnecessary under current conditions.

Each proposed policy is identified in bold-type below, together with a
list of Funds whose shareholders' vote is required.

Each Fund's current fundamental policies are set forth in Appendix 4.
Changes in fundamental policies that are approved by shareholders, as well as
changes in non-fundamental policies that are adopted by a Board, will be
reflected in each Fund's next annual shareholder report and other disclosure
documents. Any change in the method of operation of a Fund will require prior
Board approval. Except as specifically indicated below, the Board of each Fund
does not presently intend to change the investment objective(s) or make any
significant changes to its basic investment policies.

Approval of each item of this proposal with respect to any Fund
requires the affirmative vote of a majority of the outstanding voting securities
of that Fund. Under the 1940 Act, the vote of a majority of the outstanding
voting securities means the lesser of (A) 67% or more of the voting securities
present at a shareholder meeting, if the holders of more than 50% of the
outstanding voting securities of a Fund are present or represented by proxy, or
(B) more than 50% of the outstanding voting securities of a Fund. If the
shareholders of any Fund fail to approve the proposed modification or
elimination of policies or the elimination of the shareholder approval
requirement as to a matter, the current policy or approval requirement will
remain in effect.

ELIMINATION OF SHAREHOLDER APPROVAL REQUIREMENT TO AMEND INVESTMENT OBJECTIVES
AND INVESTMENT POLICIES

Investment Objectives
---------------------

PROPOSAL 3.0: IF THIS PROPOSAL IS APPROVED BY THE SHAREHOLDERS OF A FUND, THE
INVESTMENT OBJECTIVE(S) OF THAT FUND WILL NOT BE CLASSIFIED AS FUNDAMENTAL.

This proposal applies to all Funds.

Management believes that leaving the power to modify investment
objectives up to the discretion of the Board would strengthen each Fund's
ability to respond to changing circumstances. The Board of each Fund does not
presently intend to modify any investment objective, and would disclose any
changes to applicable shareholders in the next annual report to shareholders
following the change.

Investment Policies
-------------------

PROPOSAL 3.1: IF THIS PROPOSAL IS APPROVED BY THE SHAREHOLDERS OF A FUND, THE
"INVESTMENT POLICIES" OF THAT FUND WILL NOT BE CLASSIFIED AS FUNDAMENTAL EXCEPT
AS OTHERWISE PROVIDED IN THIS PROXY STATEMENT.

This proposal applies to:

KHI KGT KMM
KTF KST

This proposal is intended to provide the Funds with clarity of
disclosure and the investment flexibility necessary to respond to changing
circumstances by eliminating the shareholder approval requirement for amending
"investment policies" which are not specifically identified as fundamental. The
Funds' Prospectuses currently contain a statement that characterizes some or all
of the "investment policies" of a Fund as fundamental. Management believes that
these current statements are overbroad and, therefore, create difficulty for
portfolio managers in operating a Fund and for current or potential shareholders
of a Fund in determining which policies of the Fund are fundamental. The current
statements also unnecessarily restrict a Fund's flexibility and may make it more
difficult to respond to changing conditions. Management believes that removing
the fundamental characterization of all policies not otherwise specifically
identified as fundamental is consistent with industry standards and would allow
the Board of a Fund to modify its investment policies in light of changes in the
investment management industry, market conditions and the regulatory
environment, but only consistent with applicable law, the Fund's investment
objective and its clearly-identified fundamental policies.

REVISION OF FUNDAMENTAL POLICIES MANDATED BY THE 1940 ACT

Diversification
---------------

PROPOSAL 3.2(a): IF THIS PROPOSAL IS APPROVED BY THE SHAREHOLDERS OF A FUND,
THAT FUND WILL REMAIN A "DIVERSIFIED" FUND UNDER THE 1940 ACT, BUT WILL NOT BE
SUBJECT TO ADDITIONAL REQUIREMENTS THAT ARE MORE RESTRICTIVE THAN THE 1940 ACT.

This proposal applies to:

KHI KGT KMM
KTF KST

Each Fund identified above is currently classified as a diversified,
closed-end investment company. Under the 1940 Act, a "diversified" Fund may not,
with respect to 75% of the value of its total assets, invest more than 5% of the
value of its total assets in securities issued by any one issuer or purchase
more than 10% of the outstanding voting securities of any one issuer, except in
each case in U.S. Government securities or securities issued by other investment
companies. Currently, each Fund also has adopted additional diversification
policies. Each Fund, with respect to 75% of the value of its total assets, may
not invest more than 5% of the value of its total assets in the securities of
any one issuer, and with respect to 100% of the value of its total assets, may
not purchase more than 10% of the securities of any one issuer. Each of the
Funds' policies includes an exception for U.S. Government securities.

Accordingly, the elimination of the additional diversification policies
for a Fund means that the Fund must comply with only the 1940 Act
diversification requirements. As a result, the elimination of the additional
diversification policies that apply to 75% of the value of a Fund's total assets
will not

represent a substantive change to that Fund's diversification requirements.
However, the elimination of the additional diversification policies that apply
to 100% of the value of a Fund's total assets will cause that Fund to have less
restrictive diversification requirements.

PROPOSAL 3.2(b): IF THIS PROPOSAL IS APPROVED BY THE SHAREHOLDERS OF KSM, IT
WILL REMAIN A "NON-DIVERSIFIED" FUND UNDER THE 1940 ACT BUT WILL ELIMINATE AS
FUNDAMENTAL THE CURRENT DIVERSIFICATION POLICIES.

This proposal applies to: KSM.

KSM has elected to be classified as a non-diversified, closed-end
investment company. Consequently, the Fund has no diversification requirements
under the 1940 Act. However, the Fund currently has diversification policies
that restrict the Fund, with respect to 50% of the value of its total assets,
from investing more than 5% of the value of its total assets in the securities
of any one issuer, and with respect to the other 50% of its total assets, from
investing more than 25% of the value of its total assets in the securities of
any one issuer. These diversification policies reflect the requirements of the
Internal Revenue Code of 1986, as amended, for a fund to qualify for the
favorable tax status as a "regulated investment company." Whether or not this
proposal is approved by shareholders, the Fund intends to continue to meet these
requirements.

Borrowing
---------

PROPOSAL 3.3: IF THIS PROPOSAL IS APPROVED BY THE SHAREHOLDERS OF A FUND, THAT
FUND MAY NOT BORROW MONEY, EXCEPT AS PERMITTED UNDER THE INVESTMENT COMPANY ACT
OF 1940, AS AMENDED, AND AS INTERPRETED OR MODIFIED BY REGULATORY AUTHORITY
HAVING JURISDICTION, FROM TIME TO TIME.

This proposal applies to all Funds.

The current policy of KTF and KSM prohibits borrowing money, except as
a temporary measure for extraordinary or emergency purposes, in which case each
may borrow up to one-third of the value of its total assets. The current policy
of KGT prohibits borrowing except to repurchase shares, and the current policy
of KGT and KST prohibits borrowing unless immediately after each such borrowing
there is asset coverage of at least 300% (including the proceeds of such
borrowing). The current policy of KHI and KMM prohibits borrowing except to the
extent permitted by applicable law. Although these Funds' current policies are
essentially the same as the proposed policies, the Funds are participating in
this proposal so as to standardize the Funds' policies.

The proposed policy would permit each Fund to engage in borrowing in a
manner and to the full extent permitted by applicable law. The 1940 Act requires
borrowings to have 300% asset coverage, which means, in effect, that a Fund
would be permitted to borrow up to an amount equal to 33 1/3% of its total
assets under the proposed borrowing policy. Additionally, under the proposed
policy, each Fund would not be limited to borrowing for temporary or emergency
purposes, could borrow for leverage, and could purchase securities for
investment while borrowings are outstanding. To the extent a Fund borrows for
leverage, such borrowings increase the Fund's volatility and the risk of loss in
a declining market. The Advisor intends to recommend to the Board of KGT that,
if this proposal is approved, KGT be authorized to borrow for leverage purposes.

Senior Securities
-----------------

PROPOSAL 3.4: IF THIS PROPOSAL IS APPROVED BY THE SHAREHOLDERS OF A FUND, THAT
FUND MAY NOT ISSUE SENIOR SECURITIES, EXCEPT AS PERMITTED UNDER THE INVESTMENT
COMPANY ACT OF 1940, AS AMENDED, AND AS INTERPRETED OR MODIFIED BY REGULATORY
AUTHORITY HAVING JURISDICTION, FROM TIME TO TIME.

This proposal applies to all Funds.

The current policy of KHI and KGT prohibits the issuance of senior
securities, except for borrowing, and excludes collateral arrangements with
respect to options, futures contracts and options on futures contracts and
collateral arrangements meeting applicable SEC requirements with respect to
initial and variation margin, from the definition of senior securities. The
current policy of KMM prohibits the issuance of senior securities, as defined in
the 1940 Act, other than (i) preferred shares, (ii) short or intermediate term
notes, (iii) borrowing or (iv) transactions involving futures contracts or the
writing of options. The current policy of KTF and KSM prohibits the issuance of
senior securities, as defined in the 1940 Act, other than (i) preferred shares,
(ii) borrowings or (iii) transactions involving futures contracts or the writing
of options. The current policy of KST prohibits the issuance of senior
securities, as defined in the 1940 Act, other than (i) borrowings, including
reverse repurchase agreements and (ii) transactions involving futures contracts
or the writing of options.

Concentration
-------------

PROPOSAL 3.5: IF THIS PROPOSAL IS APPROVED BY THE SHAREHOLDERS OF A FUND, THAT
FUND MAY NOT CONCENTRATE ITS INVESTMENTS IN A PARTICULAR INDUSTRY, AS THAT TERM
IS USED IN THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED, AND AS INTERPRETED OR
MODIFIED BY REGULATORY AUTHORITY HAVING JURISDICTION, FROM TIME TO TIME.

This proposal applies to all Funds.

While the 1940 Act does not define what constitutes "concentration" in
an industry, the staff of the SEC takes the position that investment of more
than 25% of a fund's assets in an industry constitutes concentration. If a fund
concentrates in an industry, it must at all times have more than 25% of its
assets invested in that industry, and if its policy is not to concentrate, as is
the case with each of the Funds, it may not invest more than 25% of its assets
in the applicable industry, unless, in either case, the fund discloses the
specific conditions under which it will change from concentrating to not
concentrating or vice versa.

Each Fund's current policy in effect prohibits the purchase of
securities if it would result in more than 25% of the Fund's total assets being
invested in the same industry. For each of the Funds, there are exceptions for
U.S. Government securities and/or state securities. In some cases, what
constitutes an industry for the purposes of this restriction is included in the
policy itself. A fund is permitted to adopt reasonable definitions of what
constitutes an industry, or it may use standard classifications recognized by
the SEC, or some combination thereof. Because a fund may create its own
reasonable industry classifications, management believes that it is not
necessary to include such matters in the fundamental policy of a Fund.

Underwriting of Securities
--------------------------

PROPOSAL 3.6: IF THIS PROPOSAL IS APPROVED BY THE SHAREHOLDERS OF A FUND, THAT
FUND MAY NOT ENGAGE IN THE BUSINESS OF UNDERWRITING SECURITIES ISSUED BY OTHERS,
EXCEPT TO THE EXTENT THAT A FUND MAY BE DEEMED TO BE AN UNDERWRITER IN
CONNECTION WITH THE DISPOSITION OF PORTFOLIO SECURITIES.

This proposal applies to all Funds.

The proposed underwriting policy has been re-worded without making any
material changes.

Investment in Real Estate
-------------------------

PROPOSAL 3.7: IF THIS PROPOSAL IS APPROVED BY THE SHAREHOLDERS OF A FUND, THAT
FUND MAY NOT PURCHASE OR SELL REAL ESTATE, WHICH TERM DOES NOT INCLUDE
SECURITIES OF COMPANIES WHICH DEAL IN REAL ESTATE OR MORTGAGES, OR INVESTMENTS
SECURED BY REAL ESTATE OR INTERESTS THEREIN, EXCEPT THAT THE FUND RESERVES
FREEDOM OF ACTION TO HOLD AND TO SELL REAL ESTATE ACQUIRED AS A RESULT OF THE
FUND'S OWNERSHIP OF SECURITIES.

This proposal applies to all Funds.

The proposed real estate policy re-words the current policies without
making any material changes. The policies of KHI and KGT currently also prohibit
investment in interests in oil, gas or mineral leases, commodities or commodity
contracts in the ordinary course of the business of the Funds.

Purchase of Commodities
-----------------------

PROPOSAL 3.8: IF THIS PROPOSAL IS APPROVED BY THE SHAREHOLDERS OF A FUND, THAT
FUND MAY NOT PURCHASE PHYSICAL COMMODITIES OR CONTRACTS RELATING TO PHYSICAL
COMMODITIES.

This proposal applies to all Funds.

The Funds' current policies prohibit the purchase or sale of
commodities or commodity contracts. These policies may contain exceptions for
financial futures contracts and options on such contracts, and foreign currency
transactions. Under the proposed policy, each Fund would be prohibited from
purchasing only physical commodities or contracts relating to physical
commodities and would be permitted, subject to Board approval, to engage in
transactions in financial futures and related options and foreign currency
transactions for hedging and non-hedging purposes.

Lending
-------

PROPOSAL 3.9: IF THIS PROPOSAL IS APPROVED BY THE SHAREHOLDERS OF A FUND, THAT
FUND MAY NOT MAKE LOANS EXCEPT AS PERMITTED UNDER THE INVESTMENT COMPANY ACT OF
1940, AS AMENDED, AND AS INTERPRETED OR MODIFIED BY REGULATORY AUTHORITY HAVING
JURISDICTION, FROM TIME TO TIME.

This proposal applies to all Funds.

Each Fund's current lending policy prohibits making loans to others.
There may be exceptions for loans of portfolio securities and to the extent the
entry into repurchase agreements, the purchase of debt securities or interests
in indebtedness in accordance with a Fund's investment objective(s) and policies
are deemed to be loans. The proposed policy, unlike the current policies, does
not specify the particular types of lending in which each Fund is permitted to
engage; instead, the proposed policy permits each Fund to lend in a manner and
to an extent permitted by applicable law. The proposed change would, therefore,
permit each Fund, subject to the receipt of any necessary regulatory approval
and Board authorization, to enter into lending arrangements, including lending
agreements under which the Funds advised by DeIM could for temporary purposes
lend money directly to and borrow money directly from each other through a
credit facility. Each of the Funds believes that the flexibility provided by
this policy change could possibly reduce the Fund's borrowing costs and enhance
its ability to earn

higher rates of interest on short-term lendings in the event that the Board
determines that such arrangements are warranted in light of the Fund's
particular circumstances.

ELIMINATION OF SHAREHOLDER APPROVAL REQUIREMENT TO CHANGE OTHER FUNDAMENTAL
POLICIES

The policies listed below (Margin Purchases and Short Sales, Restricted
and Illiquid Securities, Investment in other Investment Companies and Investment
other than in Municipal Securities and Temporary Investments) reflected industry
conditions at the time. Management believes that each of these policies should
be eliminated as a fundamental policy in the interest of simplicity and
flexibility. Except as otherwise stated, if shareholders approve the elimination
of these policies as fundamental, management will recommend to the Boards that
they eliminate these policies entirely as being unnecessary.

Margin Purchases and Short Sales
--------------------------------

PROPOSAL 3.10: IF THIS PROPOSAL IS ADOPTED BY THE SHAREHOLDERS OF A FUND, THAT
FUND WILL NOT HAVE A FUNDAMENTAL RESTRICTION ON MARGIN PURCHASES AND SHORT
SALES.

This proposal applies to all Funds.

Each Fund is currently either prohibited from (1) making purchases on
margin and/or making short sales, except for options transactions, unless the
Fund has the right to obtain securities equivalent in kind and amount to those
sold and unless not more than 10% of the Fund's total assets is held as
collateral for such sales at any one time, (2) making margin purchases and short
sales, except to obtain short-term credits necessary for clearance of
transactions, and in the case of margin deposits, in connection with financial
futures, currency, interest rate and other hedging transactions, and options
transactions, or (3) writing or purchasing put or call options, except to the
extent that the purchase of a stand-by commitment may be considered the purchase
of a put. If elimination of this restriction is approved by shareholders, each
Fund's potential use of margin transactions beyond transactions in futures and
options and for the clearance of purchases and sales of securities, including
the use of margin in ordinary securities transactions, would be generally
limited by the current position taken by the staff of the SEC that margin
transactions with respect to securities are prohibited under Section 18 of the
1940 Act because they create senior securities. "Margin transactions" involve
the purchase of securities with money borrowed from a broker, with cash or
eligible securities being used as collateral against the loan. Each Fund's
ability to engage in margin transactions is also limited by its borrowing
policies, which permit a Fund to borrow money only as permitted by applicable
law.

Restricted and Illiquid Securities
----------------------------------

PROPOSAL 3.11: IF THIS PROPOSAL IS ADOPTED BY THE SHAREHOLDERS OF A FUND, THAT
FUND WILL NOT HAVE A FUNDAMENTAL RESTRICTION ON THE PURCHASE OF RESTRICTED AND
ILLIQUID SECURITIES.

This proposal applies to:

KGT KTF KSM

Each Fund is currently prohibited from entering into repurchase
agreements or purchasing securities if, as a result: (1) more than 20% of the
Fund's total assets would be invested in illiquid securities or restricted
securities; or (2) more than 10% of total assets would be invested in repurchase
agreements maturing in more than seven days.

Investment in other Investment Companies
----------------------------------------

PROPOSAL 3.12: IF THIS PROPOSAL IS ADOPTED BY THE SHAREHOLDERS OF A FUND, THAT
FUND WILL NOT HAVE A FUNDAMENTAL RESTRICTION ON INVESTMENT IN OTHER INVESTMENT
COMPANIES.

This proposal applies to:

KHI KGT KMM KST

The Funds are currently prohibited from purchasing securities of other
investment companies, if more than 3% of the outstanding voting stock of such
investment company would be held by a Fund; if more than 5% of total assets of a
Fund would be invested in any such investment company; or if a Fund would own,
in the aggregate, securities of other investment companies representing more
than 10% of its assets. The 1940 Act limits a fund's ability to invest in other
investment companies.

Investment other than in Municipal Securities and Temporary Investments
-----------------------------------------------------------------------

PROPOSAL 3.13: IF THIS PROPOSAL IS ADOPTED BY THE SHAREHOLDERS OF A FUND, THAT
FUND WILL NOT HAVE A FUNDAMENTAL RESTRICTION ON INVESTMENT OTHER THAN IN
MUNICIPAL SECURITIES AND TEMPORARY INVESTMENTS.

This proposal applies to:

KSM KTF

The Funds are currently prohibited from purchasing securities or from
the making of investments other than in municipal securities and temporary
investments. Management believes that this policy is not meaningful.

MISCELLANEOUS

GENERAL. The cost of preparing, printing and mailing the enclosed
proxy, accompanying notice and proxy statement and all other costs in connection
with solicitation of proxies will be paid by the Funds, including any additional
solicitation made by letter, telephone, facsimile or made electronically. In
addition to solicitation by mail, certain officers and representatives of the
Funds, officers and employees of the Advisor and certain financial services
firms and their representatives, who will receive no extra compensation for
their services, may solicit proxies electronically, by telephone, by telegram or
personally. The Funds have engaged Georgeson Shareholder Communications Inc.
("GSC") to assist in the solicitation of proxies at a total estimated cost of
$________ per Fund plus expenses. Failure of a quorum to be present at the
Meeting for a Fund will necessitate adjournment for that Fund and will subject
the Fund to additional expenses. As the Meeting date approaches, certain
shareholders of each Fund may receive a telephone call from a representative of
GSC if their votes have not yet been received. Authorization to permit GSC to
execute proxies may be obtained by telephonic or electronically transmitted
instructions from shareholders of each Fund. Proxies that are obtained
telephonically or electronically will be recorded in accordance with the
procedures believed by the Funds to be reasonably designed to ensure that both
the identity of the shareholder casting the vote and the voting instructions of
the shareholder are accurately determined.

If a shareholder wishes to participate in a Meeting, but does not wish
to give a proxy by telephone or electronically, the shareholder may still submit
the proxy card(s) originally sent with this Proxy Statement or attend in person.
Should shareholders require additional information regarding the proxy or

replacement proxy card(s), they may contact GSC toll free at (___) ___-____. Any
proxy given by a shareholder is revocable until voted at the Meeting.

PROPOSALS OF SHAREHOLDERS. It is currently anticipated that the 2005
annual meeting of shareholders will be held in May. A shareholder wishing to
submit a proposal for inclusion in a Fund's proxy statement for the 2005 annual
meeting of shareholders pursuant to Rule 14a-8 under the Securities Exchange Act
of 1934 should send such written proposal to the Secretary of the Fund within a
reasonable time before the solicitation of proxies for such meeting. A Fund will
treat any such proposal received no later than December __, 2004 as timely. A
shareholder wishing to provide notice in the manner prescribed by Rule
14a-4(c)(1) to a Fund of a proposal submitted outside of the process of Rule
14a-8 must submit such written notice to the Secretary of the Fund within a
reasonable time before the solicitation of proxies for such meeting. A Fund will
treat any such notice received no later than February __, 2005 as timely. The
timely submission of a proposal, however, does not guarantee its inclusion under
either rule.

OTHER MATTERS TO COME BEFORE THE MEETING. The Boards are not aware of
any matters that will be presented for action at the Meeting other than those
set forth herein. Should any other matters requiring a vote of shareholders
arise, the proxy in the accompanying form will confer upon the person or persons
entitled to vote the shares represented by such proxy the discretionary
authority to vote the shares with respect to any such other matters in
accordance with their best judgment in the interest of the Fund(s).

VOTING, QUORUM. Each valid proxy will be voted in accordance with the
instructions on the proxy and as the persons named in the proxy determine on
such other business as may come before the Meeting. If no instructions are
given, the proxy will be voted in favor of each Item referred to in this Proxy
Statement. Shareholders who execute proxies may revoke them at any time before
they are voted, either by writing to the Fund or in person at the time of the
Meeting.

Item 1, election of Trustees for a Fund, requires a plurality vote of
the shares of such Fund voting at the Meeting. As noted previously, the holders
of the Preferred Shares of KTF and KSM, voting as a separate class for each
respective Fund, are entitled to elect two Trustees and the holders of the
Common Shares and Preferred Shares of KTF and KSM, voting together as a single
class for each Fund, are entitled to elect the seven remaining Trustees. Item 2,
ratification of the selection of independent auditors for a Fund, requires the
affirmative vote of a majority of the shares of the Fund voting at the Meeting.
Item 3, approval of modification or elimination of certain investment policies
and the elimination of the shareholder approval requirement as to other matters,
requires the affirmative vote of a majority of outstanding voting securities of
the particular Fund. On Item 1, abstentions and broker non-votes will have no
effect; the persons receiving the largest number of votes will be elected. On
Item 2, abstentions and broker non-votes will not be counted as votes cast and
will have no effect on the result of the vote. On Item 3, abstentions and broker
non-votes will not be counted as votes cast and will have the effect of a "no"
vote.

At least 50% of the shares of a Fund must be present, in person or by
proxy, in order to constitute a quorum for that Fund. Thus, the meeting for a
particular Fund could not take place on its scheduled date if less than 50% of
the shares of that Fund were represented. In the event that the necessary quorum
to transact business or the vote required to approve any Item is not obtained at
a Meeting with respect to one or more Funds, the persons named as proxies may
propose one or more adjournments of the Meeting in accordance with applicable
law to permit further solicitation of proxies with respect to that Item. Any
such adjournment as to a matter will require the affirmative vote of the holders
of a majority of the concerned Fund's shares present in person or by proxy at a
Meeting. The persons named as proxies will vote in favor of any such adjournment
those proxies which they are entitled to vote in favor of that Item

and will vote against any such adjournment those proxies to be voted against
that Item. For purposes of determining the presence of a quorum for transacting
business at a Meeting, abstentions and broker "non-votes" will be treated as
shares that are present but which have not been voted. Broker non-votes are
proxies received by a Fund from brokers or nominees when the broker or nominee
neither has received instructions from the beneficial owner or other persons
entitled to vote nor has discretionary power to vote on a particular matter.
Accordingly, shareholders are urged to forward their voting instructions
promptly.

HOUSEHOLDING INFORMATION. Each Fund provides periodic reports to its
shareholders that highlight relevant information, including investment results
and a review of portfolio changes. In order to reduce the amount of mail you
receive and to help reduce expenses of the Funds, we generally send a single
copy of annual reports and proxy statements to each household. If you do not
want the mailing of these documents to be combined with those for other members
of your household, or if you are receiving multiple copies of these documents
and you want to request delivery of a single copy, please contact the Advisor at
(800) 621-1048, or write to the Advisor at 222 South Riverside Plaza, Chicago,
Illinois 60607.

A COPY OF A FUND'S ANNUAL REPORT IS AVAILABLE WITHOUT CHARGE UPON
REQUEST BY WRITING TO SUCH FUND, 222 SOUTH RIVERSIDE PLAZA, CHICAGO, ILLINOIS
60606 OR BY CALLING (800) 621-1048.

THE BOARD OF EACH FUND RECOMMENDS AN AFFIRMATIVE VOTE ON ITEMS 1, 2 AND
3.

PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) (OR TAKE
ADVANTAGE OF AVAILABLE ELECTRONIC OR TELEPHONIC VOTING PROCEDURES) PROMPTLY. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.

By order of the Boards,

___________________________________________
John Millette
Secretary

APPENDIX 1

AUDIT COMMITTEE CHARTER

A-1-1

APPENDIX 2

NOMINATING AND GOVERNANCE COMMITTEE CHARTER

A-2-1

APPENDIX 3

TRUSTEE/NOMINEE SHAREHOLDINGS

Many of the Trustees/Nominees own shares of funds in the Scudder Fund
Complex, allocating their investments among such funds based on their individual
needs. The following table sets forth, for each Trustee/Nominee, as of December
31, 2003, the number of shares beneficially owned in each Fund, the dollar range
of securities owned in each Fund, and the aggregate dollar range of all
shareholdings in all funds advised by DeIM for which such person is a board
member or nominee. As of December 31, 2003, each Trustee/Nominee individually,
and the officers and Trustees as a group, owned beneficially less than 1% of the
outstanding shares of each Fund.

NON-INTERESTED PERSONS
----------------------
AGGREGATE DOLLAR RANGE OF
NUMBER OF DOLLAR RANGE OF SECURITIES OWNED IN ALL
SHARES OWNED SECURITIES OWNED FUNDS IN THE SCUDDER FUND
NAME OF TRUSTEE/NOMINEE IN EACH FUND IN EACH FUND COMPLEX OVERSEEN BY TRUSTEE
---------------------------- ----------------- ---------------- ---------------------------

John W. Ballantine, Trustee KHI - 0 None Over $100,000
KGT - 0 None
KMM - 0 None
KSM - 0 None
KST - 0 None
KTF - 0 None

Lewis A. Burnham, Trustee KHI - 0 None Over $100,000
KGT - 0 None
KMM - 0 None
KSM - 0 None
KST - 0 None
KTF - 0 None

Donald L. Dunaway, Trustee KHI - 0 None Over $100,000
KGT - 0 None
KMM - 0 None
KSM - 0 None
KST - 0 None
KTF - 0 None

James R. Edgar, Trustee KHI - 0 None Over $100,000*
*Reflects shadow shares held by KGT - 0 None
Governor Edgar pursuant to the KMM - 0 None
Deferred Compensation Plan. KSM - 0 None
KST - 0 None
KTF -0 None

Paul K. Freeman, Trustee KHI - 0 None Over $100,000
KGT - 0 None
KMM - 0 None
KSM - 0 None
KST - 0 None
KTF - 0 None

A-3-1

Robert B. Hoffman, Trustee KHI - 0 None Over $100,000
KGT - 0 None
KMM - 0 None
KSM - 0 None
KST - 0 None
KTF - 0 None

Shirley D. Peterson, Trustee KHI - 0 None Over $100,000
KGT - 0 None
KMM - 0 None
KSM - 0 None
KST - 0 None
KTF - 0 None

John G. Weithers, Trustee KHI - 2,700 $10,001 - $50,000 Over $100,000
KGT - 1,400 $1 - $10,000
KMM - 1,200 $10,001 - $50,000
KSM - $1 - $10,000
Preferred - 0
Common - 400
KST - 1,300 $10,001 - $50,000
KTF - $1 - $10,000
Preferred - 0
Common - 500

A-3-2

INTERESTED PERSON
-----------------
AGGREGATE DOLLAR RANGE OF
NUMBER OF DOLLAR RANGE OF SECURITIES OWNED IN ALL
SHARES OWNED SECURITIES OWNED FUNDS IN THE SCUDDER FUND
NAME OF TRUSTEE/NOMINEE IN EACH FUND IN EACH FUND COMPLEX OVERSEEN BY TRUSTEE
---------------------------- ----------------- ---------------- ---------------------------

Richard T. Hale, Trustee KHI - 0 None Over $100,000
KGT - 0 None
KMM - 0 None
KSM - 0 None
KST - 0 None
KTF - 0 None

As of December 31, 2003, the Trustees and executive officers of the
Funds as a group owned beneficially the following shares of each Fund: [TO BE
UPDATED]

SHARES
BENEFICIALLY
FUND OWNED
-------- -------------

KHI -
KGT -
KMM -
KTF -
KSM -
KST -

------------------
1 Common Shares

A-3-3

APPENDIX 4

CURRENT FUNDAMENTAL INVESTMENT OBJECTIVES AND POLICIES

SCUDDER HIGH INCOME TRUST ("KHI")

INVESTMENT OBJECTIVES
---------------------

KHI has the following fundamental objectives:

1. The Fund seeks, through a professionally managed, diversified
portfolio of income-producing securities, the highest current
income obtainable consistent with reasonable risk as
determined by the Fund's investment advisor.

2. As a secondary objective, the Fund seeks capital gains where
consistent with its primary objective.

INVESTMENT POLICIES
-------------------

All of KHI's investment policies (as well as its objective and its restrictions)
have been designated as "fundamental." Specifically, as a matter of fundamental
policy, at least 65% of the Fund's assets will, in normal circumstances, be
invested in securities which provide the potential to result in high income to
the Fund, but which have speculative characteristics such as lower credit
quality, currency exchange risk, liquidity constraints and/or risk associated
with related options and hedging activities.

KHI may not, as a fundamental policy:

1. borrow money except to the extent permitted by
applicable law;

2. purchase any security or evidence of interest therein
on margin except that the Fund may obtain such short-term credit as may
be necessary for the clearance of purchases and sales of securities and
except that the Fund may make deposits on margin in connection with
currency, interest rate and other hedging transactions and options
[described in its prospectus dated April 21, 1988];

3. underwrite securities issued by other persons except
insofar as the Fund may technically be deemed an underwriter under the
Securities Act of 1993 in selling a portfolio security;

4. purchase or sell real estate (except that the Fund
may invest in securities secured by real estate or interests therein
and securities of issuers which invest or deal in real estate),
interests in oil, gas or mineral leases, commodities or commodity
contracts (except for hedging transactions and except for investments
in the securities of issuers which invest in or sponsor such programs)
in the ordinary course of the business of the Fund (the Fund reserves
the freedom of action to hold and to sell real estate acquired as a
result of the ownership of securities);

5. invest 25% or more of its total assets in securities
of issuers conducting their principal business activities in the same
industry; provided that this limitation shall not apply with respect to
investments in U.S. Government securities;

A-4-1

6. invest more than 5% of its total assets in securities
of any one issuer, except that this limitation shall not apply to
securities of the U.S. Government, its agencies and instrumentalities
or to the investment of 25% of its total assets;

7. except for the borrowing provided in Paragraph (1),
issue any "senior security" as that term is defined in the 1940 Act
(for the purpose of this restriction, collateral arrangements with
respect to options, futures contracts and options on futures contracts
and collateral arrangements meeting applicable SEC requirements with
respect to initial and variation margin are not deemed to be the
issuance of a senior security);

8. make loans to other persons except through the
lending of its portfolio securities not in excess of 30% of its total
assets (taken at market value) and except through the use of repurchase
agreements, the purchase of commercial paper or the purchase of all or
a portion of an issue of debt securities in accordance with its
investment objectives, policies and restrictions;

9. except for options transactions, make short sales of
securities or maintain a short position, unless at all times when a
short position is open it owns an equal amount of such securities or
securities convertible into or exchangeable, without payment of any
further consideration, for securities of the same issue as, and equal
in amount to, the securities sold short ("short sales against the
box"), and unless not more than 10% of the Fund's net assets (taken at
market value) is held as collateral for such sales at any one time (it
is the Fund's present intention to make such sales only for the purpose
of deferring realization of gain or loss for federal income tax
purposes; such sales would not be made of securities subject to
outstanding options); and

10. invest in the securities of any other investment
company, if more than 3% of the outstanding voting stock of such
investment company would be held by the Fund; if more than 5% of the
total assets of the Fund would be invested in any such investment
company; or if the Fund would own, in the aggregate, securities of
other investment companies representing more than 10% of its assets.

A-4-2

CURRENT FUNDAMENTAL INVESTMENT OBJECTIVE AND POLICIES

SCUDDER INTERMEDIATE GOVERNMENT TRUST ("KGT")

INVESTMENT OBJECTIVE
--------------------

The Fund has the following fundamental objective:

The Fund's investment objective is to provide high current income
consistent with preservation of capital by investing in obligations issued or
guaranteed by the U.S. Government, its agencies, authorities or
instrumentalities and in obligations issued or guaranteed by a foreign
government or any of its political subdivisions, authorities, agencies or
instrumentalities.

INVESTMENT POLICIES
-------------------

All of KGT's investment policies (as well as its objective and its restrictions)
are fundamental including, in particular, that:

At least 65% of the Fund's assets will, in normal
circumstances, be invested in U.S. Government Securities. U.S.
Government Securities shall include the following: U.S. Treasury
Securities, Obligations Issued or Guaranteed by U.S. Government
Agencies and Instrumentalities, Mortgage-Backed Securities Issued or
Guaranteed by U.S. Government Instrumentalities, and Zero Coupon U.S.
Government Securities. Options, futures and options on futures will not
be counted for purposes of satisfying the 65% policy;

The Fund will maintain a dollar weighted average portfolio
maturity of between three and ten years; and

The Fund will seek to enhance income by writing options on
U.S. Government Securities and foreign government securities and on
indices based on U.S. Government Securities and foreign government
securities and may engage in interest rate, foreign currency and other
hedging transactions.

KGT may not, as a matter of fundamental policy:

1. borrow money, except the Fund may borrow to
repurchase shares of the Fund if, after each such borrowing, the ratio
which the value of the total assets of the Fund less all liabilities
and indebtedness not represented by senior securities bears to the
aggregate amount of senior securities representing indebtedness of the
Fund is at least 300%. To the extent the Fund engages in any such
borrowings, it will be in a leveraged position;

2. purchase any security or evidence of interest therein
on margin except that the Fund may obtain such short term credit as may
be necessary for the clearance of purchases and sales of securities and
except that the Fund may make deposits on margin in connection with
currency, interest rate and other hedging transactions and options
[described in its prospectus dated July 21, 1988].

3. underwrite securities issued by other persons except
insofar as the Fund may technically be deemed an underwriter under the
Securities Act of 1933 in selling a portfolio security;

A-4-3

4. invest in illiquid investments, including securities
which are subject to legal or contractual restrictions on resale or for
which there is no readily available market (e.g., trading in the
securities is suspended or, in the case of unlisted securities, market
makers do not exist or will not entertain bids or offers), if more than
20% of the Fund's assets (taken at market value) would be invested in
such securities. For purposes of this restriction, repurchase
agreements not terminable within seven days will be deemed illiquid;

5. purchase or sell real estate (except that the Fund
may invest in securities secured by real estate or interests therein
and securities of issuers which invest or deal in real estate),
interests in oil, gas or mineral leases, commodities or commodity
contracts (except for hedging transactions and except for investments
in the securities of issuers which invest in or sponsor such programs)
in the ordinary course of the business of the Fund (the Fund reserves
the freedom of action to hold and to sell real estate acquired as a
result of the ownership of securities);

6. invest more than 5% of its total assets in securities
of any one issuer, except that this limitation shall not apply to U.S.
Government Securities or to the investment of 25% of its total assets;

8. make loans to other persons except through the
lending of its portfolio securities and except through the use of
repurchase agreements, the purchase of commercial paper or the purchase
of all or a portion of an issue of debt securities in accordance with
its investment objective, policies and restrictions;

11. invest more than 25% of its total assets in any one
industry. For this purpose "industry" does not include the U.S.
Government and agencies, authorities and instrumentalities of the U.S.
Government.

A-4-4

CURRENT FUNDAMENTAL INVESTMENT OBJECTIVE AND POLICIES

SCUDDER MULTI-MARKET INCOME TRUST ("KMM")

INVESTMENT OBJECTIVE
--------------------

KMM has the following fundamental objective:

The Fund's investment objective is to provide high current income
consistent with prudent total return asset management.

INVESTMENT POLICIES
-------------------

All of KMM's investment policies (as well as its objective and its restrictions)
are fundamental.

KMM may not, as a fundamental policy:

1. issue senior securities, as defined in the 1940 Act,
other than (i) preferred shares which immediately after issuance will
have asset coverage of at least 200%, (ii) short or intermediate term
notes which immediately after issuance will have asset coverage of at
least 300%, (iii) the borrowings described under subparagraph 10 below
or (iv) transactions involving futures contracts or the writing of
options within the limits described herein;

2. make short sales of securities or purchase any
securities on margin (except for such short term credits as are
necessary for the clearance of transactions), or write or purchase put
or call options, except to the extent that the purchase of a stand-by
commitment may be considered the purchase of a put, and except for
transactions involving options [within the limits described in its
prospectus dated January 23, 1989];

3. underwrite any issue of securities, except to the
extent that the purchase of securities in accordance with its
investment objective, policies and limitations may be deemed to be an
underwriting;

4. invest 25% or more of its total assets in securities
of issuers in any one industry; provided, however, that such limitation
shall not be applicable to securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities;

5. purchase or sell real estate, but this shall not
prevent the Fund from investing in securities secured by real estate or
interests therein;

6. purchase or sell commodities or commodities
contracts, except for transactions involving futures contracts or
options on such contracts [within the limits described in its
prospectus dated January 23, 1989];

7. make loans, other than by lending portfolio
securities and by entering into repurchase agreements and through the
purchase of securities or temporary investments in accordance with its
investment objective, policies and limitations;

8. invest more than 5% of its total assets in securities
of any one issuer, except that this limitation shall not apply to
securities of the United States government, its agencies and
instrumentalities or to the investment of 25% of its total assets;

A-4-5

9. invest in the securities of any other investment
company (including a private issuer of collateralized mortgage
obligations operating under an SEC order exempting it from registration
as an investment company under the 1940 Act), if more than 3% of the
outstanding voting stock of such investment company would be held by
the Fund; if more than 5% of the total assets of the Fund would be
invested in any such investment company; or if the Fund would own, in
the aggregate, securities of other investment companies representing
more than 10% of its assets; or

10. borrow money except to the extent permitted by
applicable law.

A-4-6

CURRENT FUNDAMENTAL INVESTMENT OBJECTIVE AND POLICIES

SCUDDER MUNICIPAL INCOME TRUST ("KTF")

INVESTMENT OBJECTIVE
--------------------

KTF has the following fundamental objective:

The Fund's investment objective is to provide a high level of current
income exempt from federal income tax.

INVESTMENT POLICIES
-------------------

As a matter of fundamental policy:

The Fund will invest substantially all of its net assets in tax-exempt
municipal securities valued at the time of purchase within the four highest
grades (Baa or BBB or better) by Moody's Investors Service, Inc. ("Moody's") or
Standard & Poor's Corporation ("S&P"), or unrated municipal securities which in
the opinion of the Advisor have credit characteristics equivalent to, and will
be of comparable quality to, municipal securities rated within the four highest
grades by Moody's or S&P. The Fund may not invest more than 20% of its net
assets in such unrated municipal securities.

The Fund intends to emphasize investments in municipal securities with
long term maturities, but the degree of such emphasis will depend upon market
conditions existing at the time of investment. The Advisor expects that the
Fund's portfolio will be primarily invested in securities with maturities
ranging from 10 to 30 years with an average weighted maturity of 20-25 years.

During temporary defensive periods, the Fund may invest any percentage
of its net assets in taxable temporary investments. The Fund will invest only in
temporary investments which are U.S. Government securities or securities rated
within the two highest grades by Moody's or S&P, and which mature within one
year from the date of purchase.

KTF may not, as a fundamental policy:

1. issue senior securities, as defined in the 1940 Act,
other than (i) Preferred Shares which immediately after issuance will
have asset coverage of at least 200%, (ii) the borrowings described
under subparagraph (3) below or (iii) transactions involving futures
contracts or the writing of options [within the limits described in its
prospectus dated October 20, 1988];

3. borrow money, except for temporary or emergency
purposes or for repurchase of its shares, and then only in an amount
not exceeding one-third of the value of the Fund's total assets
including the amount borrowed; however, the Fund will not purchase any
securities for its portfolio at any time when borrowings exceed 5% of
its total assets (taken at value);

A-4-7

4. underwrite any issue of securities, except to the
extent that the purchase of municipal securities in accordance with its
investment objective, policies and limitations may be deemed to be an
underwriting;

5. invest more than 25% of its total assets in
securities of issuers in any one industry; provided, however, that such
limitations shall not be applicable to municipal securities other than
those municipal securities backed only by the assets and revenues of
non-governmental users, nor shall it apply to municipal securities
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities;

6. purchase or sell real estate, but this shall not
prevent the Fund from investing in municipal securities secured by real
estate or interests therein;

7. purchase or sell commodities or commodities
contracts, except for transactions involving futures contracts or
options on such contracts [within the limits described in its
prospectus dated October 20, 1988];

8. make loans, other than by entering into repurchase
agreements and through the purchase of municipal securities or
temporary investments in accordance with its investment objective,
policies and limitations;

9. invest in securities other than municipal securities
and temporary investments [as those terms are defined in its prospectus
dated October 20, 1988];

10. invest more than 5% of its total assets in securities
of any one issuer, except that this limitation shall not apply to
securities of the United States government, its agencies and
instrumentalities or to the investment of 25% of its total assets; or

11. invest more than 10% of its total assets in
repurchase agreement maturing in more than seven days.

A-4-8

CURRENT FUNDAMENTAL INVESTMENT OBJECTIVE AND POLICIES

SCUDDER STRATEGIC MUNICIPAL INCOME TRUST ("KSM")

INVESTMENT OBJECTIVE
--------------------

KSM has the following fundamental objective:

The Fund's investment objective is to provide a high level of current
income exempt from federal income tax.

INVESTMENT POLICIES
-------------------

KSM may not, as a fundamental policy:

1. issue senior securities, as defined in the 1940 Act,
other than (i) preferred shares which immediately after issuance will
have asset coverage of at least 200%, (ii) the borrowings described
under subparagraph 3 below or (iii) transactions involving futures
contracts or the writing of options [within the limits described in its
prospectus dated March 22, 1989];

6. purchase or sell real estate, but this shall not
prevent the Fund from investing in municipal securities secured by real
estate or interests therein;

A-4-9

9. invest in securities other than municipal securities
and temporary investments [as those terms are defined in its prospectus
dated March 22, 1989];

10. invest more than 5% of its total assets in securities
of any one issuer, except that this limitation shall not apply to
securities of the United States government, its agencies and
instrumentalities and except that with respect to 50% of the Fund's
total assets the Fund may invest up to 25% of its total assets in
securities of any one issuer; or

11. invest more than 10% of its total assets in
repurchase agreements maturing in more than seven days.

A-4-10

CURRENT FUNDAMENTAL INVESTMENT OBJECTIVE AND POLICIES

SCUDDER STRATEGIC INCOME FUND ("KST")

INVESTMENT OBJECTIVE
--------------------

KST has the following fundamental objective:

The Fund's investment objective is to provide high current income.

INVESTMENT POLICIES
-------------------

All of KST's investment policies (as well as its objective and restrictions) are
fundamental. Specifically, as a matter of fundamental policy:

The Fund will seek to achieve its objective by investing its assets in
a combination of (1) lower rated corporate fixed income securities, (2) fixed
income securities of emerging market and other foreign issuers and (3) fixed
income securities of the U.S. Government and its agencies and instrumentalities
and private mortgage-backed issuers. Up to 70% of the Fund's total assets may be
invested in any one of such categories.

KST may not, as a fundamental policy:

1. issue senior securities, as defined in the 1940 Act,
other than (i) borrowings, including reverse repurchase agreements, if
immediately after each such borrowing there is asset coverage of at
least 300% (including the proceeds of such borrowing) and (ii)
transactions involving futures contracts or the writing of options
[within the limits described in its Statement of Additional Information
and in its prospectus dated April 29, 1994];

3. underwrite securities issued by others, except to the
extent that the Fund may be deemed to be an underwriter, under the
federal securities laws, in connection with the disposition of
portfolio securities;

5. purchase or sell real estate, but this shall not
prevent the Fund from investing in securities secured by real estate or
interests therein;

A-4-11

8. invest in the securities of any other investment
company if more than 3% of the outstanding voting stock of such
investment company would be held by the Fund; if more than 5% of the
total assets of the Fund would be invested in any such investment
company; or if the Fund would own, in the aggregate, securities of
other investment companies representing more than 10% of its assets; or

9. invest more than 5% of its total assets in securities
of any one issuer, except that this limitation shall not apply to
securities of the United States government, its agencies and
instrumentalities or to the investment of 25% of its total assets.

A-4-12

SCUDDER _______________ TRUST - PREFERRED SHARES
FOR THE JOINT ANNUAL MEETING OF SHAREHOLDERS
May 27, 2004

The signers of this proxy hereby appoint Daniel O. Hirsch, Philip J. Collora,
John Millette and Caroline Pearson, and each of them, attorneys and proxies,
with power of substitution in each, to vote all shares for the signers at the
Joint Annual Meeting of Shareholders to be held at the offices of Deutsche
Investment Management Americas Inc., Two International Place, Boston, MA 02110
on May 27, 2004, at __:00 a.m. Eastern time and at any adjournments or
postponements thereof, as specified herein, and in accordance with their best
judgment, on any other business that may properly come before this meeting. I
hereby revoke any and all proxies with respect to such shares previously given
by me. I acknowledge receipt of the Proxy Statement relating to the Joint Annual
Meeting.

This instruction may be revoked at any time prior to its exercise at the Joint
Annual Meeting by execution of a subsequent proxy card, by written notice to the
Fund's secretary or by voting in person at the Joint Annual Meeting.

YOUR VOTE IS NEEDED! IF NOT VOTING ELECTRONICALLY, PLEASE SIGN, DATE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE REQUIRED.

______________________ __________ ____________________ ______________
Signature Date Signature (Joint) Date

Note: All registered owners of accounts shown above must sign. Please sign
exactly as your name appears on this Proxy. If signing for a corporation, estate
or trust, please indicate your capacity or title.

THIS PROXY IS SOLICITED BY THE BOARD OF THE FUND WHICH RECOMMENDS A VOTE "FOR"
ALL ITEMS.

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: [X]

IF NO SPECIFICATION IS MADE HEREIN, ALL SHARES WILL BE VOTED AS RECOMMENDED BY
THE BOARD ON ITEMS 1 AND 2, AND FOR ITEM 3 ALL SHARES NOT VOTED WILL HAVE THE
EFFECT OF A "NO" VOTE.

TO VOTE BY TOUCH-TONE PHONE OR INTERNET, SEE INSTRUCTIONS ON REVERSE SIDE.

WITHHOLD FOR ALL
FOR ALL ALL EXCEPT
------- -------- --------

1. To elect nine Trustees to the Board of the Fund: [ ] [ ] [ ] ____________
01) John W. Ballantine, 02) Lewis A. Burnham,
03) Donald L. Dunaway, 04) James R. Edgar,
05) Paul K. Freeman, 06) Richard T. Hale,
07) Robert B. Hoffman, 08) Shirley D. Peterson,
09) John G. Weithers

TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "FOR ALL
EXCEPT" BOX AND WRITE THE NOMINEE'S NUMBER ON THE LINE PROVIDED BELOW.

FOR AGAINST ABSTAIN
------- --------- ---------
2. To ratify the selection of Ernst & Young LLP as the Fund's independent
auditors for the current fiscal
year. [ ] [ ] [ ]

3. To approve the modification or elimination of certain investment policies and
the elimination of the shareholder approval requirement as to certain
other matters. [ ] [ ] [ ]

If you have any questions regarding the execution of the proxy, please call
Georgeson Shareholder Communications, Inc. at ___________________.

PLEASE BE SURE TO SIGN AND DATE THIS PROXY ON THE REVERSE SIDE.

INSTRUCTIONS FOR VOTING YOUR PROXY

Scudder _______________ Trust offers shareholders of record three alternative
ways of voting their proxies:

- By Telephone
- Through the Internet (using a browser)
- By Mail (traditional method)

Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you had mailed your proxy card. We encourage you to use
these cost effective and convenient ways of voting.

TELEPHONE VOTING:
Available only until 4:00 p.m. EST May __, 2004.

- Call Toll-Free: 1-8__-___-____, Monday through Friday, 9AM-11PM EST

- Your vote will be confirmed and cast as you directed.

INTERNET VOTING:
Available only until 4:00 p.m. EST on May __, 2004.

- Visit the Internet voting Website at http://proxy.georgeson.com.

- Enter the COMPANY NUMBER AND CONTROL NUMBER shown below and follow
the instructions on your screen.

- You will incur only your usual Internet charges.

VOTING BY MAIL:
- Simply sign and date your proxy card and return it in the
postage-paid envelope.

PLEASE FOLD AND DETACH CARD AT PERFORATION BEFORE MAILING.

SCUDDER _______________ TRUST - COMMON SHARES
FOR THE JOINT ANNUAL MEETING OF SHAREHOLDERS
May 27, 2004

YOUR VOTE IS NEEDED! IF NOT VOTING ELECTRONICALLY, PLEASE SIGN, DATE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE REQUIRED.

______________________ __________ ____________________ ______________
Signature Date Signature (Joint) Date

THIS PROXY IS SOLICITED BY THE BOARD OF THE FUND WHICH RECOMMENDS A VOTE "FOR"
ALL ITEMS.

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: [X]

IF NO SPECIFICATION IS MADE HEREIN, ALL SHARES WILL BE VOTED AS RECOMMENDED BY
THE BOARD ON ITEMS 1 AND 2, AND FOR ITEM 3 ALL SHARES NOT VOTED WILL HAVE THE
EFFECT OF A "NO" VOTE.

TO VOTE BY TOUCH-TONE PHONE OR INTERNET, SEE INSTRUCTIONS ON REVERSE SIDE.

WITHHOLD FOR ALL
FOR ALL ALL EXCEPT
------- -------- --------

1. To elect seven Trustees to the Board of the Fund: [ ] [ ] [ ] ____________
01) John W. Ballantine, 02) Lewis A. Burnham,
03) Donald L. Dunaway, 04) James R. Edgar,
05) Paul K. Freeman, 06) Robert B. Hoffman,
07) Shirley D. Peterson

TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "FOR ALL
EXCEPT" BOX AND WRITE THE NOMINEE'S NUMBER ON THE LINE PROVIDED BELOW.

FOR AGAINST ABSTAIN
------- --------- ---------
2. To ratify the selection of Ernst & Young LLP as the Fund's independent
auditors for the current fiscal
year. [ ] [ ] [ ]

3. To approve the modification or elimination of certain investment policies and
the elimination of the shareholder approval requirement as to certain
other matters. [ ] [ ] [ ]

If you have any questions regarding the execution of the proxy, please call
Georgeson Shareholder Communications, Inc. at ____________________.

PLEASE BE SURE TO SIGN AND DATE THIS PROXY ON THE REVERSE SIDE.

INSTRUCTIONS FOR VOTING YOUR PROXY

Scudder _______________ Trust offers shareholders of record three alternative
ways of voting their proxies:

- By Telephone
- Through the Internet (using a browser)
- By Mail (traditional method)

TELEPHONE VOTING:
Available only until 4:00 p.m. EST May __, 2004.

- Call Toll-Free: 1-8__-___-____, Monday through Friday, 9AM-11PM EST

- Your vote will be confirmed and cast as you directed.

INTERNET VOTING:
Available only until 4:00 p.m. EST on May __, 2004.

- Visit the Internet voting Website at http://proxy.georgeson.com.

- Enter the COMPANY NUMBER AND CONTROL NUMBER shown below and follow
the instructions on your screen.

- You will incur only your usual Internet charges.

VOTING BY MAIL:
- Simply sign and date your proxy card and return it in the
postage-paid envelope.

PLEASE FOLD AND DETACH CARD AT PERFORATION BEFORE MAILING.