THE JAPAN FUND, INC.
Supplement to Statement of Additional Information
Dated May 1, 1997
The Fund's investment adviser, Scudder, Stevens & Clark, Inc. ("Scudder"), and
Zurich Insurance Company ("Zurich"), an international insurance and financial
services organization, have formed a new global investment organization by
combining Scudder's business with that of Zurich's subsidiary, Zurich Kemper
Investments, Inc., and Scudder has changed its name to Scudder Kemper
Investments, Inc. ("Scudder Kemper"). As a result of the transaction, Zurich
owns approximately 70% of Scudder Kemper, with the balance owned by Scudder
Kemper's officers and employees. Scudder Kemper now manages in excess of $200
billion in assets.
Following the transaction, the Scudder Family of Funds will continue to be pure
no-load. The Scudder Family of Funds consists of those Funds or classes of Funds
advised by Scudder Kemper which are offered without commissions to purchase or
redeem shares or to exchange from one Fund to another.
The transaction between Scudder and Zurich resulted in the termination of the
Fund's investment management agreement with Scudder. However, a new investment
management agreement between the Fund and Scudder Kemper was approved by the
Board of Directors. A special meeting of stockholders (the "Special Meeting")
was held in October 1997, at which time the stockholders also approved a new
investment management agreement. The new investment management agreement is
effective as of December 31, 1997 and will be in effect for an initial term
ending on the same date as would the previous investment management agreement.
The Fund's Investment Management Agreement is the same in all material respects
as its previous investment management agreement, except that Scudder Kemper is
the new investment adviser to the Fund.
The Fund's fundamental policies have been amended by a vote of stockholders at
the Fund's Special Meeting. Following is a list of the Fund's amended and
restated fundamental policies. As a matter of fundamental policy, the Fund will
not:
o 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;
o 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;
o concentrate its investments in a particular industry, as that term
is used in the Investment Company Act of 1940, as amended and
interpreted by regulatory authority having jurisdiction, from time
to time;
o engage in the business of underwriting securities issued by others,
except to the extent that the Fund may be deemed to be an
underwriter in connection with the disposition of portfolio
securities;
o 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;
o purchase physical commodities or contracts relating to physical
commodities;
o make loans to other persons, except (i) loans of portfolio
securities, and (ii) to the extent that entry into repurchase
agreements and the purchase of debt instruments or interests in
indebtedness in accordance with the Fund's investment objective and
policies may be deemed to be loans.
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The Fund's non-fundamental policies have been amended by the Board of Directors.
The Fund currently does not intend to:
o borrow money in an amount greater than 5% of its total assets,
except (i) for temporary or emergency purposes and (ii) by engaging
in reverse repurchase agreements, dollar rolls, or other investments
or transactions described in the Fund's registration statement which
may be deemed to be borrowings.
o enter into either of reverse repurchase agreements or dollar rolls
in an amount greater than 5% of its total assets;
o purchase securities on margin or make short sales, except (i) short
sales against the box, (ii) in connection with arbitrage
transactions, (iii) for margin deposits in connection with futures
contracts, options or other permitted investments, (iv) that
transactions in futures contracts and options shall not be deemed to
constitute selling securities short, and (v) that the Fund may
obtain such short-term credits as may be necessary for the clearance
of securities transactions;
o purchase options, unless the aggregate premiums paid on all such
options held by the Fund at any time do not exceed 20% of its total
assets; or sell put options, if as a result, the aggregate value of
the obligations underlying such put options would exceed 50% of its
total assets;
o enter into futures contracts or purchase options thereon, unless
immediately after the purchase, the value of the aggregate initial
margin with respect to such futures contracts entered into on behalf
of the Fund and the premiums paid for such options on futures
contracts does not exceed 5% of the fair market value of the Fund's
total assets; provided that in the case of an option that is
in-the-money at the time of purchase, the in-the-money amount may be
excluded in computing the 5% limit;
o purchase warrants if as a result, such securities, taken at the
lower of cost or market value, would represent more than 5% of the
value of the Fund's total assets (for this purpose, warrants
acquired in units or attached to securities will be deemed to have
no value);
o purchase any securities of the Government of Japan or any
instrumentality thereof, if as a result, the aggregate amount of
such securities held by the Fund would be more than 25% of the total
assets of the Fund;
o invest more than 30% of its net assets in equity securities which
are traded in an over-the-counter-market;
o lend portfolio securities in an amount greater than 5% of its total
assets;
o The Fund may invest in securities of issuers having their principal
place of business in developing or newly industrializing countries,
but has no present intention to invest more than 5% of its net
assets in such securities.
Compensation of Directors
The information contained in the following chart replaces the chart in the
Fund's Statement of Additional Information. The following table shows the
aggregate compensation received by each Independent Director during 1996 from
the Fund and from all Scudder funds as a group. Please refer to the section
titled "REMUNERATION" in the Fund's Statement of Additional Information.
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<TABLE>
<CAPTION>
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Pension or Estimated Total
Retirement Benefits Annual Compensation From
Aggregate Accrued As Part of Benefits Upon the Fund and Fund
Name of Director Compensation* Fund Expenses Retirement Complex **
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
William L. Givens $16,250 $4,183 $6,000 $20,433 (1 Fund)
- ---------------------------------------------------------------------------------------------------------------------
William H. Gleysteen, Jr $16,250 $4,888 $3,000 $135,224 (13 Funds)
- ---------------------------------------------------------------------------------------------------------------------
John F. Loughran $14,500 $4,313 $6,000 $18,813 (1 Fund)
- ---------------------------------------------------------------------------------------------------------------------
Yoshihiko Miyauchi+ $5,456 $2,149+ $6,000 $5,456 (1 Fund)
- ---------------------------------------------------------------------------------------------------------------------
William V. Rapp $16,250 $2,301 $6,000 $18,551 (1 Fund)
- ---------------------------------------------------------------------------------------------------------------------
Henry Rosovsky $24,000 $2,568 $6,000 $26,568 (1 Fund)
- ---------------------------------------------------------------------------------------------------------------------
Hiroshi Yamanaka $6,000 $7,725 $6,000 $13,725 (1 Fund)
- ---------------------------------------------------------------------------------------------------------------------
Tristan E. Beplat $2,000 $200 N/A $2,200 (1 Fund)
Honorary Director
- ---------------------------------------------------------------------------------------------------------------------
Allan Comrie $5,196 $4,969 $5,196 $10,165 (1 Fund)
Honorary Director
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Jonathan Mason $6,000 $6,911 $6,000 $12,911 (1 Fund)
Honorary Director
- ---------------------------------------------------------------------------------------------------------------------
James W. Morley $7,000 $6,176 $6,000 $13,176 (1 Fund)
Honorary Director
- ---------------------------------------------------------------------------------------------------------------------
Robert G. Stone, Jr $11,000 $6,189 $6,000 $18,461 (2 Funds)
Honorary Director
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</TABLE>
* Includes pension or retirement benefits.
** Includes pension or retirement benefits accrued
+ Mr. Miyauchi became a Director of the Fund effective July 19, 1996.
Accordingly, this figure represents projected accrued benefits for the
calendar year 1997 and is not reflected in "Total Compensation From the
Fund and Fund Complex."
DIRECTORS
Name, Age, Address of Directors Principal Occupation***
------------------------------- -----------------------
William L. Givens (68) President, Twain Associates
Twain Associates, Inc.
553 Boylston St.
Brookline, MA 02146
William H. Gleysteen, Jr. (71) Consultant
4937 Crescent St.
Bethesda, MD 20816
John F. Loughran (65) Retired Senior Adviser for Asia
711 Silvergate Avenue Pacific to J.P. Morgan & Co., Inc.
Point Loma
San Diego, CA 92106
Yoshihiko Miyauchi (61) President and Chief Executive
World Trade Center Officer, ORIX Corporation
Building 2-4-1
Hamamatsu-cho, Minato-ku
Tokyo, Japan
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<PAGE>
Name, Age, Address of Directors Principal Occupation***
------------------------------- -----------------------
William V. Rapp (58) Managing Director, Rue Associates;
131 Begbie Academic Director, International
University of Victoria Relations, Yale University; Senior
Victoria, BC Canada Research Associate, Columbia
University-Center on Japan Economy
and Business
Henry Rosovsky (70)* Professor, Harvard University;
Loeb House Professor Emeritus, Geyser University
17 Quincy Street
Harvard University
Cambridge, MA 02138
O. Robert Theurkauf (69) ** # Advisory Managing Director, Scudder
Kemper Investments, Inc.
Hiroshi Yamanaka (84) Advisor to the Board of Meiji Mutual
Meiji Mutual Life Insurance Co. Life Insurance Company
2-1-1 Marunouchi, Chiyoda-ku
Tokyo, Japan
Allan Comrie (77) # Director, Petroleum & Resources
40 Sheridan Drive Corp., The Adams Express Co.
New Canaan, CT 06840
Jonathan Mason (81) # Retired First Vice President,
12092 Longwood Green Drive Prudential-Bache Securities, Inc.
West Palm Beach, FL 33414
James W. Morley (75) # Professor Political Science,
145 Piermont Road Emeritus, Columbia University
Closter, NJ 07624
Robert G. Stone, Jr. # Chairman of the Board and Director,
405 Lexington Avenue Kirby Corporation
39th Floor
New York, NY 10174
Shoji Umemura (77) # Board Counselor, The Nikko Securities
The Nikko Securities Co. Ltd. Co. Ltd.
3-1-1 Marunouchi, Chiyoda-ku
Tokyo, Japan
* Director considered by the Fund and its counsel to be an "interested person"
(as defined in the 1940 Act) of the Fund or of its investment manager
because of his affiliation with a broker-dealer
** Director considered by the Fund and its counsel to be an "interested person"
(as defined in the 1940 Act) of the Fund or of its investment manager
because of his employment by Scudder Kemper
*** Unless otherwise stated, the Directors have been associated with their
respective companies for more than five years, but not necessarily in the
same capacity.
# Messrs. Comrie, Mason, Morley, Stone and Umemura serve as Honorary Directors
of the Fund. Honorary Directors are invited to attend all Board meetings and
to participate in Board discussions, but are not entitled to vote on any
matter presented to the Board.
+ Address: 345 Park Avenue, New York, New York
February 6, 1998
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