SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(A) of the Securities
Exchange Act of 1934 (Amendment No.__ )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
[ ] Definitive Proxy Statement Rule 14a-6(e)(2))
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
SCUDDER FUND, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identity the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
SCUDDER FUND, INC.
Two International Place
Boston, Massachusetts 02110-4103
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
Please take notice that a Special Meeting of Shareholders (the
"Meeting") of Scudder Fund, Inc. (the "Fund") will be held at the offices of
Scudder Kemper Investments, Inc., Floor 13, Two International Place, Boston, MA
02110-4103, on July 13, 2000, at 3:00 p.m., Eastern time, for the following
purposes:
Proposal 1: To elect Directors of the Fund.
Proposal 2: To approve an Agreement and Plan of Reorganization
for the Fund whereby the Fund will reorganize from a
Maryland corporation into a Massachusetts business
trust.
Proposal 3: To ratify the selection of PricewaterhouseCoopers
LLP as the independent accountants for the Fund for
the Fund's current fiscal year.
The appointed proxies will vote in their discretion on any other
business that may properly come before the Meeting or any adjournments thereof.
Holders of record of shares of the Fund at the close of business on
April 17, 2000 are entitled to vote at the Meeting and at any adjournments
thereof.
In the event that the necessary quorum to transact business or the vote
required to approve any Proposal is not obtained at the Meeting, the persons
named as proxies may propose one or more adjournments of the Meeting in
accordance with applicable law to permit further solicitation of proxies. Any
such adjournment as to a matter will require the affirmative vote of the holders
of a majority of the Fund's shares present in person or by proxy at the Meeting.
The persons named as proxies will vote FOR any such adjournment those proxies
which they are entitled to vote in favor of that Proposal and will vote AGAINST
any such adjournment those proxies to be voted against that Proposal.
By Order of the Board,
[Signature]
Kathryn L. Quirk,
Secretary
[date]
IMPORTANT -- We urge you to sign and date the enclosed proxy card(s) and return
it in the enclosed envelope which requires no postage (or to take advantage of
the electronic or telephonic voting procedures described on the proxy card(s)).
Your prompt return of the enclosed proxy card(s) (or your voting by other
available means) may save the necessity and expense of further solicitations. If
you wish to attend the Meeting and vote your shares in person at that time, you
will still be able to do so.
<PAGE>
SCUDDER FUND, INC.
Two International Place
Boston, Massachusetts 02110-4103
PROXY STATEMENT
GENERAL
This Proxy Statement is being furnished to shareholders of Scudder
Fund, Inc. (the "Fund"). The Board of Directors (the "Board", the Directors on
which are referred to as the "Directors") of the Fund is soliciting proxies from
shareholders of the Fund for use at the Special Meeting of Shareholders of the
Fund, to be held at the offices of Scudder Kemper Investments, Inc., the
investment manager of the Fund ("Scudder Kemper"), Floor 13, Two International
Place, Boston, Massachusetts 02110-4103, on July 13, 2000 at 3:00 p.m., Eastern
time, and at any and all adjournments thereof (the "Meeting").
At the Meeting, shareholders will be asked to vote on three proposals
(each a "Proposal"). Proposal 1 describes the election of Directors, and
Proposal 3 proposes the ratification of the Fund's accountants. Proposals 1 and
2 relate to a restructuring program proposed by Scudder Kemper and described in
more detail below. In Proposal 2, shareholders are asked to approve a proposed
reorganization (the "Reorganization") of the Fund from a Maryland corporation
into a Massachusetts business trust (the "Trust").
In the descriptions of the Proposals below, the word "fund" is
sometimes used to mean an investment company or series thereof in general, and
not the Fund whose proxy statement this is.
THE FUND PROVIDES PERIODIC REPORTS TO ALL OF ITS SHAREHOLDERS WHICH
HIGHLIGHT RELEVANT INFORMATION, INCLUDING INVESTMENT RESULTS AND A REVIEW OF
PORTFOLIO CHANGES. YOU MAY RECEIVE AN ADDITIONAL COPY OF THE MOST RECENT ANNUAL
REPORT FOR THE FUND AND A COPY OF ANY MORE RECENT SEMI-ANNUAL REPORT, WITHOUT
CHARGE, BY CALLING 800-728-3337 OR WRITING THE FUND, C/O SCUDDER KEMPER
INVESTMENTS, INC., AT THE ADDRESS FOR THE FUND SHOWN AT THE BEGINNING OF THIS
PROXY STATEMENT.
Background
Proposals 1 and 2 are part of a broader restructuring program proposed
by Scudder Kemper to respond to changing industry conditions and investor needs.
The mutual fund industry has grown dramatically over the last ten years. During
this period of rapid growth, investment managers expanded the range of fund
offerings that they make available to investors in an effort to meet the growing
and changing needs and desires of an increasingly large and dynamic group of
investors. With this expansion has come increased complexity and competition
among mutual funds, as well as increased confusion among investors. The group of
no-load funds advised by Scudder Kemper has followed this pattern, increasing
from 44 funds in 1990 to 77 no-load funds at present.
As a result, Scudder Kemper has sought ways to restructure and
streamline the management and operations of the funds it advises. Scudder Kemper
believes, and has advised the boards, that the consolidation of certain funds
advised by it would benefit fund shareholders. Scudder Kemper has, therefore,
proposed the consolidation of a number of no-load funds advised by it that
Scudder Kemper believes have similar or compatible investment objectives and
policies. In many cases, the proposed consolidations are designed to eliminate
the substantial overlap in current offerings by the Scudder Funds and the funds
offered through the AARP Investment Program (the "AARP Funds"), all of which are
advised by Scudder Kemper. Consolidation plans are proposed for other funds that
have not gathered enough assets to operate efficiently and have, in turn,
relatively high expense ratios. Scudder Kemper believes that these
consolidations may help to enhance investment performance of funds and increase
efficiency of operations.
Many of the proposed consolidations are also expected to result in
lower operating expenses for shareholders of acquired funds. Subject to the
approval of the shareholders of AARP Premium Money Fund, the Fund will acquire
the assets of AARP Premium Money Fund as part of the restructuring program.
There are currently five different boards for the no-load funds advised
by Scudder Kemper. Scudder Kemper believes, and has proposed to the boards, that
creating a single board responsible for most of the no-load funds advised by
Scudder Kemper would increase efficiency and benefit fund shareholders. (See
Proposal 1 below).
As part of this restructuring effort, Scudder Kemper has also proposed
the adoption of an administrative fee for most of the no-load funds advised by
Scudder Kemper. Under this fee structure, in exchange for payment by the Trust
of an administrative fee, Scudder Kemper would agree to provide or pay for
substantially all services that a fund normally requires for its operations,
other than those provided under the fund's investment management agreement and
certain other expenses. Such an administrative fee would enable investors to
determine with greater certainty the expense level that a fund will experience,
and would transfer substantially all of the risk of increased costs to Scudder
Kemper. The Trust is expected to implement such a unitary administrative fee
prior to the closing of the Reorganization, as described in "Administrative Fee"
below. The effectiveness of the unitary fee arrangement is contingent upon the
closing of a transaction in which the Fund will be acquiring the assets of AARP
Premium Money Fund, but is not contingent upon shareholder approval of the
Reorganization described herein.
PROPOSAL 1: ELECTION OF DIRECTORS
At the Meeting, shareholders will be asked to elect nine individuals to
constitute the Board of Directors of the Fund. These individuals were nominated
after a careful and deliberate selection process by the present Board of
Directors of the Fund. The nominees for election, who are listed below, include
seven persons who currently serve as Independent Trustees (as defined below) of
the Fund or of other no-load funds advised by Scudder Kemper and who have no
affiliation with Scudder Kemper or the American Association of Retired Persons
("AARP"). The nominees listed below are also being nominated for election as
trustees or directors of most of the other no-load funds advised by Scudder
Kemper.
Currently five different boards of trustees or directors are
responsible for overseeing different groups of no-load funds advised by Scudder
Kemper. As part of a broader restructuring effort described above, Scudder
Kemper has recommended, and the Board of Trustees has agreed, that shareholder
interests can more effectively be represented by a single board with
responsibility for overseeing substantially all of the Scudder no-load funds.
Creation of a single, consolidated board should also provide certain
administrative efficiencies and potential future cost savings for both the Funds
and Scudder Kemper.
Election of each of the listed nominees for Director on the Board
requires the affirmative vote of a plurality of the votes cast at the Meeting,
in person or by proxy. The persons named as proxies on the enclosed proxy card
will vote for the election of the nominees named below unless authority to vote
for any or all of the nominees is withheld in the proxy. Each Director so
elected will serve as a Director of the Fund until the next meeting of
shareholders, if any, called for the purpose of electing Directors and until the
election and qualification of a successor or until such Director sooner dies,
resigns or is removed as provided in the governing documents of the Fund. Each
of the nominees has indicated that he or she is willing to serve as a Director.
If any or all of the nominees should become unavailable for election due to
events not now known or anticipated, the persons named as proxies will vote for
such other nominee or nominees as the current Directors may recommend. The
following paragraphs and table set forth information concerning the nominees and
the Directors not standing for re-election. Each nominee's or Director's age is
in parentheses after his or her name. Unless otherwise noted, (i) each of the
nominees and Directors has engaged in the principal occupation(s) listed in the
following paragraphs and table for at least the most recent five years, although
not necessarily in the same capacity, and (ii) the address of each nominee is
c/o Scudder Kemper Investments, Inc., Two International Place, Boston, MA
02110-4103.
Nominees for Election as Directors:
Henry P. Becton, Jr. (56)
Henry P. Becton, Jr. is president of the WGBH Educational Foundation, producer
and distributor of public broadcasting programming and educational and
interactive software. He graduated from Yale University in 1965, where he was
elected to Phi Beta Kappa. He received his J.D. degree cum laude from Harvard
Law School in 1968. Mr. Becton is a member of the PBS Board of Directors, a
Trustee of American Public Television, the New England Aquarium, the Boston
Museum of Science, Concord Academy, and the Massachusetts Corporation for
Educational Telecommunications, an Overseer of the Boston Museum of Fine Arts,
and a member of the Board of Governors of the Banff International Television
Festival Foundation. He is also a Director of Becton Dickinson and Company and
A.H. Belo Company, a Trustee of the Committee for Economic Development, and a
member of the Board of Visitors of the Dimock Community Health Center, the
Dean's Council of Harvard University's Graduate School of Education, and the
Massachusetts Bar. Mr. Becton has served as a trustee of various mutual funds
advised by Scudder Kemper since 1990.
Linda C. Coughlin (48)*
Linda C. Coughlin, a Managing Director of Scudder Kemper, is head of Scudder
Kemper's U.S. Retail Mutual Funds Business. Ms. Coughlin joined Scudder Kemper
in 1986 and was a member of the firm's Board of Directors. She currently
oversees the marketing, service and operations of Scudder Kemper retail
businesses in the United States, which include the Scudder, Kemper, AARP, and
closed-end fund families, and the direct and intermediary channels. She also
serves as Chairperson of the AARP Investment Program from Scudder and as a
Trustee of the Program's mutual funds. Ms. Coughlin is also a member of the
Mutual Funds Management Group. Previously, she served as a regional Marketing
Director in the retail banking division of Citibank and at the American Express
Company as Director of Consumer Marketing for the mutual fund group. Ms.
Coughlin received a B.A. degree in economics (summa cum laude) from Fordham
University. Ms. Coughlin has served on the boards of various funds advised by
Scudder Kemper, including the AARP Investment Program Funds, since 1996.
Dawn-Marie Driscoll (53)
Dawn-Marie Driscoll is an Executive Fellow and Advisory Board member of the
Center for Business Ethics at Bentley College, one of the nation's leading
institutes devoted to the study and practice of business ethics. Ms. Driscoll is
also president of Driscoll Associates, a consulting firm. She is a member of the
Board of Governors of the Investment Company Institute and serves as Chairman of
the Directors Services Committee. Ms. Driscoll was recently named 1999 "Fund
Trustee of the Year" by Fund Directions, a publication of Institutional
Investor, Inc. She has been a director, trustee and overseer of many civic and
business institutions, including The Massachusetts Bay United Way and Regis
College. Ms. Driscoll was formerly a law partner at Palmer & Dodge in Boston and
served for over a decade as Vice President of Corporate Affairs and General
Counsel of Filene's, the Boston-based department store chain. Ms. Driscoll
received a B.A. from Regis College, a J.D. from Suffolk University Law School, a
D.H.L. (honorary) from Suffolk University and a D.C.S. (honorary) from Bentley
College Graduate School of Business. Ms. Driscoll has served as a trustee of
various mutual funds advised by Scudder Kemper since 1987.
Edgar R. Fiedler (70)
Edgar R. Fiedler is Senior Fellow and Economic Counsellor at The Conference
Board. He served as the Board's Vice President, Economic Research from 1975 to
1986 and as Vice President and Economic Counsellor from 1986 to 1996. Mr.
Fiedler's business experience includes positions at Eastman Kodak in Rochester
(1956-59), Doubleday and Company in New York City (1959-60), and Bankers Trust
Company in New York City (1960-69). He also served as Assistant Secretary of the
Treasury for Economic Policy from 1971 to 1975. Mr. Fiedler graduated from the
University of Wisconsin in 1951. He received his M.B.A. from the University of
Michigan and his doctorate from New York University. During the 1980's, Mr.
Fiedler was an Adjunct Professor of Economics at the Columbia University
Graduate School of Business. From 1990 to 1991, he was the Stephen Edward Scarff
Distinguished Professor at Lawrence University in Wisconsin. Mr. Fiedler is a
Director of The Stanley Works, Harris Insight Funds, Brazil Fund, and PEG
Capital Management, Inc. He is currently a Director a Director of the Fund and
has served as a board member of various mutual funds advised by Scudder Kemper,
including the AARP Investment Program Funds, since 1984.
Keith R. Fox (46)
Keith R. Fox is the managing partner of the Exeter Group of Funds, a series of
private equity funds with offices in New York and Boston, which he founded in
1986. The Exeter Group invests in a wide range of private equity situations,
including venture capital, expansion financings, recapitalizations and
management buyouts. Prior to forming Exeter, Mr. Fox was a director and vice
president of BT Capital Corporation, a subsidiary of Bankers Trust New York
Corporation organized as a small business investment company and based in New
York City. Mr. Fox graduated from Oxford University in 1976 and in 1981 received
an M.B.A. degree from the Harvard Business School. Mr. Fox is also a qualified
accountant. He is a board member and former Chairman of the National Association
of Small Business Investment Companies, and a director of Golden State Vintners,
K-Communications, Progressive Holding Corporation and Facts On File, as well as
a former director of over twenty companies. Mr. Fox has served as a trustee of
various mutual funds advised by Scudder Kemper since 1996.
Joan Edelman Spero (55)
Joan E. Spero is the president of the Doris Duke Charitable Foundation, a
position to which she was named in January 1997. From 1993 to 1997, Ms. Spero
served as Undersecretary of State for Economic, Business and Agricultural
Affairs under President Clinton. From 1981 to 1993, she was an executive at the
American Express Company, where her last position was executive vice president
for Corporate Affairs and Communications. Ms. Spero served as U.N. Ambassador to
the United Nations Economic and Social Council under President Carter from 1980
to 1981. She was an assistant professor at Columbia University from 1973 to
1979. She graduated Phi Beta Kappa from the University of Wisconsin and holds a
master's degree in international affairs and a doctorate in political science
from Columbia University. Ms. Spero is a member of the Council on Foreign
Relations and the Council of American Ambassadors. She also serves as a trustee
of the Wisconsin Alumni Research Foundation, The Brookings Institution and
Columbia University and is a Director of First Data Corporation. Ms. Spero has
served as a trustee of various mutual funds advised by Scudder Kemper since
1998.
Jean Gleason Stromberg (56)
Ms. Stromberg acts as a consultant on regulatory matters. From 1996 to 1997, Ms.
Stromberg represented the U.S. General Accounting Office before Congress and
elsewhere on issues involving banking, securities, securities markets, and
government-sponsored enterprises. Prior to that, Ms. Stromberg was a corporate
and securities law partner at the Washington, D.C. law office of Fulbright and
Jaworski, a national law firm. She served as Associate Director of the SEC's
Division of Investment Management from 1977 to 1979 and prior to that was
Special Counsel for the Division of Corporation Finance from 1972 to 1977. Ms.
Stromberg graduated Phi Beta Kappa from Wellesley College and received her law
degree from Harvard Law School. From 1988 to 1991 and 1993 to 1996, she was a
Trustee of the American Bar Retirement Association, the funding vehicle for
American Bar Association-sponsored retirement plans. Ms. Stromberg serves on the
Wellesley College Business Leadership Council and the Council for Mutual Fund
Director Education at Northwestern University Law School and was a panelist at
the SEC's Investment Company Director's Roundtable. Ms. Stromberg has served as
a board member of the AARP Investment Program Funds since 1997.
Jean C. Tempel (56)
Jean C. Tempel is a venture partner for Internet Capital Group, a strategic
network of Internet partnership companies whose principal offices are in Wayne,
Pennsylvania. Ms. Tempel concentrates on investment opportunities in the Boston
area. She spent 25 years in technology/operations executive management at
various New England banks, building custody operations and real time
financial/securities processing systems, most recently as Chief Operations
Officer at The Boston Company. From 1991 until 1993 she was president/COO of
Safeguard Scientifics, a Pennsylvania technology venture company. In that role
she was a founding investor, director and vice chairman of Cambridge Technology
Partners. She is a director of XLVision, Inc., Marathon Technologies, Inc.,
Aberdeen Group and Sonesta Hotels International, and is a Trustee of
Northeastern University, Connecticut College, and The Commonwealth Institute.
She received a B.A. from Connecticut College, an M.S. from Rensselaer
Polytechnic Institute of New York, and attended Harvard Business School's
Advanced Management Program. Ms. Tempel has served as a trustee of various
mutual funds advised by Scudder Kemper since 1994.
Steven Zaleznick (45)*
Steven Zaleznick is President and CEO of AARP Services, Inc., a wholly-owned and
independently-operated subsidiary of AARP which manages a range of products and
services offered to AARP members, provides marketing services to AARP and its
member service providers and establishes an electronic commerce presence for
AARP members. Mr. Zaleznick previously served as AARP's general counsel for nine
years. He was responsible for the legal affairs of the AARP, which included tax
and legal matters affecting non-profit organizations, contract negotiations,
publication review and public policy litigation. In 1979, he joined the AARP as
a legislation representative responsible for issues involving taxes, pensions,
age discrimination, and other national issues affecting older Americans. Mr.
Zaleznick is President of the Board of Cradle of Hope Adoption Center in
Washington, D.C. He is a former treasurer and currently a board member of the
National Senior Citizens Law Center. Mr. Zaleznick received his B.A. in
economics from Brown University. He received his J.D. degree from Georgetown
University Law Center and is a member of the District of Columbia Bar
Association.
Directors Not Standing for Re-election:
- --------------------------------------------------------------------------------
Present Office with the Fund;
Name (Age) Principal Occupation or Employment
- ---------- and Directorships
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Rosita P. Chang (45) Director; Professor of Finance, University of Hawaii.
Dr. Chang serves on the Boards of an additional 3
trusts or corporations whose funds are advised by
Scudder Kemper.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
J.D. Hammond (66) Director; Dean Emeritus, Smeal College of Business
Administration, Pennsylvania State University. Dr.
Hammond serves on the Boards of an additional 3 trusts
or corporations whose funds are advised by Scudder
Kemper.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Richard M. Hunt (73) Director; University Marshall and Senior Lecturer,
Harvard University. Mr. Hunt serves on the Boards of
an additional 2 trusts or corporations whose funds are
advised by Scudder Kemper.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Peter B. Freeman (67) Director; Corporate Director and Trustee. Mr. Freeman
serves on the Boards of an additional 13 trusts or
corporations whose funds are advised by Scudder Kemper.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Kathryn L. Quirk (47)* Director, Vice President and Assistant Secretary;
Managing Director of Scudder Kemper. Ms. Quirk serves
on the Boards of an additional 18 trusts or
corporations whose funds are advised by Scudder Kemper.
- --------------------------------------------------------------------------------
* Nominee or Director considered by the Fund and its counsel to be an
"interested person" (as defined in the Investment Company Act of 1940,
as amended (the "1940 Act")) of the Fund, Scudder Kemper or AARP
because of his or her employment by Scudder Kemper or AARP, and, in
some cases, holding offices with the Fund.
Responsibilities of the Board -- Board and Committee Meetings
A fund's board is responsible for the general oversight of fund
business. The board that is proposed for shareholder voting at this Meeting is
comprised of two individuals who are considered "interested" Directors, and
seven individuals who have no affiliation with Scudder Kemper and who are called
"independent" Directors (the "Independent Directors"). The SEC has recently
proposed a rule that would require a majority of the board members of a fund to
be "independent" if the fund were to take advantage of certain exemptive rules
under the 1940 Act. On the proposed Board of Directors, if approved by
shareholders, nearly 78% will be Independent Directors. These Independent
Directors have been nominated solely by the current Independent Directors of the
Fund, a practice also favored by the SEC. The Independent Directors have primary
responsibility for assuring that the Acquired Fund is managed in the best
interests of its shareholders.
The Directors meet several times during the year to review the
investment performance of the Fund and other operational matters, including
policies and procedures designed to assure compliance with regulatory and other
requirements. In 1999, the Independent Directors conducted over 10 meetings to
deal with fund issues (including committee and subcommittee meetings and special
meetings of the Independent Directors). Furthermore, the Independent Directors
review the fees paid to the Investment Manager and its affiliates for investment
advisory services and other administrative and shareholder services. The
Directors have adopted several policies and practices which help ensure their
effectiveness and independence in reviewing fees and representing shareholders.
Many of these are similar to those suggested in the Investment Company
Institute's 1999 Report of the Advisory Group on Best Practices for Fund
Directors (the "Advisory Group Report"). For example, the Independent Directors
select independent legal counsel to work with them in reviewing fees, advisory
and other contracts and overseeing fund matters. The Directors are also assisted
in this regard by the funds' independent public accountants and other
independent experts retained from time to time for this purpose. The Independent
Directors regularly meet privately with their counsel and other advisors. In
addition, the Independent Directors from time to time have appointed task forces
and subcommittees from their members to focus on particular matters such as
investment, accounting and shareholder servicing issues.
The Board has an Audit Committee and a Committee on Independent
Directors, the responsibilities of which are described below. In addition, the
Board has an Executive Committee and a Valuation Committee.
Audit Committee
The Audit Committee reviews with management and the independent public
accountants for each series of the Corporation, among other things, the scope of
the audit and the internal controls of the Fund and its agents, reviews and
approves in advance the type of services to be rendered by independent
accountants, recommends the selection of independent accountants for the Fund to
the Board, reviews the independence of such firm and, in general, considers and
reports to the Board on matters regarding the accounting and financial reporting
practices of the Fund.
As suggested by the Advisory Group Report, the Fund's Audit Committee
is comprised of the Independent Directors, meets privately with the independent
accountants of the Fund, will receive annual representations from the
accountants as to their independence, and has a written charter that delineates
the committee's duties and powers.
Committee on Independent Directors
The Board of Directors of the Fund has a Committee on Independent
Directors, comprised solely of Independent Directors, charged with the duty of
making all nominations of Independent Directors, establishing Directors'
compensation policies, retirement policies and fund ownership policies,
reviewing Directors' affiliations and relationships annually, and periodically
assessing and reviewing evaluations of the Board of Directors' effectiveness.
Attendance
As noted above, the Directors conducted over ten meetings in calendar
year 1999 to deal with fund matters, including various committee and
subcommittee meetings and special meetings of the Independent Directors. The
full Board of Directors of the Fund met seven times and the Audit Committee met
one time during calendar year 1999. The Independent Directors held four special
meetings during that period. Each then current Director attended 100% of the
total meetings of the full Board of Directors and each above-named committee on
which he or she served as a regular member that were held during calendar year
1999.
Officers
The following persons are officers of the Fund:
- ------------------------------ ----------------------------------- ----------
Present Office with Year First
the Fund; Principal Became an
Occupation or Officer(2)
Name (Age) Employment(1)
- ------------------------------ ----------------------------------- ---------
Kathryn L. Quirk (47) Chairperson, President and Assistant 1997
Secretary; Managing Director of
Scudder Kemper
- ------------------------------ ------------------------------------ --------
Frank J. Rachwalski, Jr. Vice President; Managing Director of 1999
(55) Scudder Kemper
- ------------------------------ ------------------------------------ --------
Ann M. McCreary (43) Vice President; Managing Director of 1998
Scudder Kemper
- ------------------------------ ------------------------------------ --------
John Millette (38) Vice President and Secretary; Vice 1999
President of Scudder Kemper
- ------------------------------ ------------------------------------ --------
John R. Hebble (41) Treasurer; Senior Vice President of 1998
Scudder Kemper
- ------------------------------ ------------------------------------ --------
Caroline Pearson (38) Assistant Secretary; Senior Vice 1997
President of Scudder Kemper;
Associate, Dechert Price & Rhoads
(law firm) 1989 to 1997
1 Unless otherwise stated, all of the officers have been associated
with their respective companies for more than five years, although
not necessarily in the same capacity.
2 The President, Treasurer and Secretary each holds office until his
or her successor has been duly elected and qualified, and all other
officers hold offices in accordance with the By-laws of the Acquired
Trust.
Compensation of Directors and Officers
The Fund pays each Independent Director an annual Director's fee plus
specified amounts for Board and committee meetings attended and reimburses
expenses related to the business of the Fund. Each Independent Director receives
an annual Director's fee of $1,500 if the Fund's total net assets do not exceed
$100 million and $4,500 if the Fund's total net assets exceed $100 million. Each
Independent Director also receives fees of $150 for attending each meeting of
the Board and $150 for attending each committee meeting, or meeting held for the
purpose of considering arrangements between the Fund and Scudder Kemper, or any
of its other affiliates. The newly-constituted Board may determine to change its
compensation structure.
The Independent Directors of the Fund are not entitled to benefits
under any pension or retirement plan. It is currently anticipated that a
one-time benefit will be provided to those Independent Directors who have
volunteered to leave the board prior to their normal retirement date in order to
facilitate the nomination of a consolidated board. The amount of such benefit
has not been finally determined, but is expected to be based on a Director's
years of service and remaining years to normal retirement. [Further detail to be
provided when available.] [Inasmuch as Scudder Kemper will also benefit from the
administrative efficiencies of a consolidated board, Scudder Kemper has agreed
to bear one-half of the cost of any such benefit.]
Scudder Kemper supervises the Fund's investments, pays the compensation
and certain expenses of its personnel who serve as Directors and officers of the
Fund and receives a management fee for its services. Several of the Fund's
officers and Directors are also officers, directors, employees or stockholders
of Scudder Kemper and participate in the fees paid to that firm, although the
Fund makes no direct payments to them other than for reimbursement of travel
expenses in connection with their attendance at Board and committee meetings.
The following Compensation Table provides in tabular form the following
data:
Column (1) All Directors who receive compensation from the Fund.
Column (2) Aggregate compensation received by each Director of the Fund
during the calendar year 1999.
Column (3) Total compensation received by each Director from funds
managed by Scudder Kemper (collectively, the "Fund Complex") during the calendar
year 1999.
Compensation Table
- --------------------- ---------------------------- ----------------------------
Total Compensation
Aggregate from Fund Complex
Compensation (number Paid to Director
Director of funds) (number of funds)
- --------------------- ---------------------------- ----------------------------
Rosita P. Chang $ 9,900 (3 funds) $ 51,072 (35 funds)
- --------------------- ---------------------------- ----------------------------
J.D. Hammond $ 9,900 (3 funds) $ 51,072 (39 funds)
- --------------------- ---------------------------- ----------------------------
Richard M. Hunt $ 9,450 (3 funds) $ 30,728 (31 funds)
- --------------------- ---------------------------- ----------------------------
Edgar R. Fiedler $22,599 (3 funds)* $ 54,495 (29 funds)
- --------------------- ---------------------------- ----------------------------
Peter B. Freeman $ 9,900 (3 funds) $179,783 (57 funds)
- --------------------- ---------------------------- ----------------------------
* Mr. Fiedler has accrued, but did not receive, $22,599 through a
deferred compensation program. As of December 31, 1999, Mr. Fiedler had
a total of $266,291 accrued over a number of years in a deferred
compensation program for serving on the Board of Directors of Scudder
Fund, Inc.
The Board of Directors of Scudder Fund, Inc. unanimously recommends that the
shareholders of the Fund vote in favor of this Proposal 1.
PROPOSAL 2: REORGANIZATION OF THE FUND INTO A MASSACHUSETTS BUSINESS TRUST
On February 7, 2000, the Board of Directors of the Fund unanimously
approved an Agreement and Plan of Reorganization (the "Plan") in the form
attached hereto as Exhibit A. The Plan provides for the Reorganization of the
Fund, which is currently incorporated as a Maryland corporation, into a
Massachusetts business trust named Scudder Fund. Other than the different
composition of the Board, the adoption of the administrative fee and the fact
that the Fund will be governed by different constitutional documents and service
agreements, and be subject to Massachusetts, instead of Maryland, law, all as
described below, there will be no differences between the operation of the Fund
now and the operation of the Trust after the Reorganization. Specifically,
shareholders will not pay higher fees, the investment objectives and policies of
the Trust will be identical to those of the Fund, and shareholders will have the
same services available to them.
Reasons for the Proposed Reorganization
The principal reasons that the Board approved, and unanimously
recommends to shareholders that they approve, the Reorganization are that the
Fund will be easier to administer as a Massachusetts business trust than as a
Maryland corporation and that the risk of the Fund issuing more shares than it
has authorized will be eliminated. First, almost all the mutual funds that are
managed by Scudder Kemper are organized as Massachusetts business trusts.
Therefore, the Reorganization will allow the Fund to fit more appropriately
within the Scudder Family of Funds. Scudder Kemper will not need to monitor
changes in Maryland law and keep up with the additional filing requirements in
Maryland but will instead be able to administer the Fund's compliance with state
requirements consistently with the numerous other Massachusetts business trusts
that it manages. Second, there are advantages to being organized as a
Massachusetts business trust rather than a Maryland corporation. A Maryland
corporation must register a fixed number of shares, and pay a fee in Maryland
for such registration. A Massachusetts business trust, on the other hand, may
have an unlimited number of shares and there is no fee for registering such
shares in Massachusetts. Thus, if the Fund continued in its current form,
Scudder Kemper would have to continue to monitor the number of shares that are
authorized to be issued under Maryland law and would run the risk of running out
of authorized shares to sell, or selling unauthorized shares, which could result
in liability to the Fund. To eliminate that risk, a Maryland corporation could
register an extremely large number of shares, but that would result in a larger
registration expense. Reorganizing as a Massachusetts business trust will
eliminate any need to monitor the number of shares the Fund has registered along
with avoiding any future registration costs.
In addition to the reasons outlines above, Massachusetts has been
chosen for the Trust's domicile because Scudder Kemper believes that its law
with respect to business trusts is the most developed of any state, although it
is less developed than Maryland corporation law. The Board of Directors has
determined that Massachusetts law affords additional advantages to the operation
of a mutual fund as compared to those available under Maryland law. In addition,
the Board of Trustees of the Trust generally will have greater flexibility in
carrying on the business affairs of the Trust than if the Fund remained a
Maryland corporation.
Principal Features of the Proposed Reorganization
The Trust is an open-end diversified management investment company as
defined in the 1940 Act that was organized for the purpose of succeeding to the
business of the Fund. The Reorganization contemplates that the Fund will
transfer all of its assets to the Trust; the liabilities of the Fund will be
assumed by the Trust; and each shareholder's shares of the Fund will
automatically be exchanged for an equal number of shares of the same class
(including any fractional share) of the Trust. In connection with the
Reorganization and prior to its completion, one share of the Trust will be
issued to Scudder Kemper. (See "Procedures for Reorganization" and "Federal
Income Tax Consequences" below.) Scudder Kemper, as the sole shareholder of the
Trust, will approve various service agreements for the Trust and will elect the
Board of Trustees. In connection with the Reorganization, the Trust has entered
into an Investment Management Agreement that is different from the one that the
Fund has entered with Scudder Kemper. [The new investment management agreement
provides for a lower fee rate to be paid by the Trust to Scudder Kemper - 0.10%
under the new investment management agreement compared with 0.25% under the
current agreement.]
Administrative Fee
On or prior to the Closing, the Trust will have entered into an
administrative services agreement with Scudder Kemper (the "Administration
Agreement"), pursuant to which Scudder Kemper will provide or pay others to
provide substantially all of the administrative services required by the Trust
(other than those provided by Scudder Kemper under its investment management
agreement with the Trust, as described above) in exchange for the payment by the
Trust of an administrative services fee (the "Administrative Fee") at the rate
of 0.10% for the Institutional Class, 0.25% for the Managed Shares and Premium
Class, and 0.40% for the Prime Reserve Class, each based on the applicable
class' average daily net assets. One effect of this arrangement is to make the
Trust's future expense ratio more predictable. The details of the proposal
(including expenses that are not covered) are set out below.
Various third-party service providers (the "Service Providers"), some
of which are affiliated with Scudder Kemper, provide certain services to the
Fund pursuant to separate agreements with the Fund subject to oversight and
approval by the Fund's Directors. Scudder Fund Accounting Corporation, a
subsidiary of Scudder Kemper, computes net asset value for the Fund and
maintains its accounting records. Scudder Service Corporation, also a subsidiary
of Scudder Kemper, is the transfer, shareholder servicing and dividend-paying
agent for the shares of the Fund. Scudder Trust Company, an affiliate of Scudder
Kemper, provides subaccounting and recordkeeping services for shareholder
accounts in certain retirement and employee benefit plans. As custodian, Brown
Brothers Harriman & Co. holds the portfolio securities of the Fund, pursuant to
a custodian agreement. PricewaterhouseCoopers LLP audits the financial
statements of the Fund and provides other audit, tax, and related services.
Dechert Price & Rhoads acts as general counsel for the Fund. In addition to the
fees it pays under its current investment management agreement with Scudder
Kemper, the Fund pays the fees and expenses associated with these service
agreements, as well as the Fund's insurance, registration, printing, postage and
other costs.
Once the Administration Agreement becomes effective, each Service
Provider will provide to the Trust the services that it currently provides to
the Fund, as described above, under the current arrangements, except that
Scudder Kemper will pay these entities for the provision of their services to
the Trust and will pay most other Trust expenses, including insurance,
registration, printing and postage fees. In return, the Trust will pay Scudder
Kemper the Administrative Fee.
The proposed Administration Agreement will have an initial term of
three years, subject to earlier termination by the Trust's trustees. The fee
payable by the Trust to Scudder Kemper pursuant to the Administration Agreement
would be reduced by the amount of any credit received from the Acquiring Fund's
custodian for cash balances.
Certain expenses of the Trust would not be borne by Scudder Kemper
under the Administration Agreement, such as taxes, brokerage, interest and
extraordinary expenses; and the fees and expenses of the Independent Directors
(including the fees and expenses of their independent counsel). In addition, the
Trust would continue to pay the fees required by its investment management
agreement with Scudder Kemper.
Procedures for Proposed Reorganization
If the shareholders approve the Reorganization, the Fund will transfer
all of its assets to the Trust; the Trust will assume all of the liabilities of
the Fund and issue to each shareholder of the Fund shares of the Trust of the
same class of shares held by each shareholder in a number equal to the number of
shares (including any fractional share) of the Fund then owned by such
shareholder, in exchange for all of the shares of the Fund owned by the
shareholder; the share of the Trust owned by Scudder Kemper will be cancelled;
and the Fund will then be dissolved. A shareholder of the Fund will acquire the
same pro rata interest in the Trust as of the effective time of the
Reorganization as the shareholder had in the Fund immediately prior to the
Reorganization. The Trust will operate in the same manner and with the same
investment objectives and policies as those of the Fund.
Confirmations of the shares of the Trust received in the Reorganization
in exchange for shares of the Fund will not be issued to shareholders, because
the number of shares held by a shareholder will not be changed by the
Reorganization.
It will not be necessary for a shareholder holding certificates
representing shares of the Fund to exchange those certificates for new
certificates representing shares of the Trust following consummation of the
Reorganization. Certificates for shares of the Fund issued prior to the
Reorganization will represent outstanding shares of the Trust after the
Reorganization. New certificates will not be issued by the Trust after the
Reorganization unless specifically requested in writing. Shares of the Fund not
represented by certificates will automatically be exchanged for the same number
of shares of the Trust.
If approved by shareholders of the Fund, it is expected that the
Reorganization will be made effective at [ ], on [ ],2000, but it may be made
effective at a different time. At any time before the Reorganization is
effective, the Trust and the Fund may agree to terminate the Agreement and Plan
of Reorganization, and if the Reorganization has not been made effective by [ ],
2000 either the Trust or the Fund may terminate the Agreement and Plan of
Reorganization, in either case whether or not it has been approved by the Fund's
shareholders.
Certain Comparative Information on the Fund and the Trust
As a Massachusetts business trust, the Trust's operations are governed
by its declaration of trust ("Declaration of Trust") and By-laws and by
Massachusetts law, rather than by the Articles of Incorporation, as amended (the
"Articles of Incorporation") and By-laws, as amended (the "By-laws") of the Fund
and Maryland law. Certain differences between the two forms of organization and
governing corporate documents are summarized below.
Shareholders of the Fund entitled to vote at the meeting may obtain
copies of the Declaration of Trust and the Trust's By-laws, and the Fund's
Articles of Incorporation and By-laws, without charge, upon written request to
the Secretary of the Fund. The Trust and the Fund are each subject to the 1940
Act and the rules and regulations thereunder.
Trustees. The affairs of the Trust are managed by a Board of Trustees
rather than a Board of Directors as under Maryland law.
Shares. The shares of beneficial interest of the Trust (and any series
which may be authorized in the future) are transferable shares, $.01 par value
per share. The Trust can issue an unlimited number of shares of beneficial
interest with varying par value. Each share of the Trust (or of any series of
the Trust) currently represents an equal proportionate interest in the assets
owned by, and the liabilities of, the Trust (or of any series of the Trust). As
such, each share of the Trust is entitled to dividends and distributions when
and as declared on shares of the Trust by the Board of Trustees. Under the
Articles of Incorporation of the Fund, the Fund is currently authorized to issue
up to nineteen billion shares, par value $.001 per share. However, the Fund's
Board of Directors, with or without approval by the shareholders, may amend the
Articles of Incorporation to increase or decrease the number of authorized
shares.
Separate Series and Classes of Shares. The Declaration of Trust
authorizes the issuance of shares in different series, and authorizes the Board
of Trustees of the Trust, without further shareholder action, to establish and
create additional series and to designate the rights and preferences of the
shareholders of each of the respective series. Each series would represent
interests in a separate portfolio of securities and other assets, with its own
investment objectives and policies. All consideration received for the sales of
shares of a particular series of the Trust, all assets in which such
consideration is invested, all income, earnings and profits derived from such
investments, and all liabilities incurred by or for the series, will be
allocated to and belong or attach to that series. Currently shares of the Trust
are not divided into series.
Under the Fund's Articles of Incorporation, the Board may classify the
Fund's shares into various classes and sub-classes. The Fund currently has four
classes of shares. The Trust will also have the same four classes of shares, and
the Board of Trustees will have the power to classify the Trust's shares into
various other classes and sub-classes.
Shareholder Voting Rights. Under the Maryland General Corporation Law
(the "Maryland Code"), a Maryland corporation registered under the 1940 Act is
not required to hold annual meetings unless so required by the 1940 Act. Under
Massachusetts law, the Trust is not required to hold annual shareholder
meetings. Under the Declaration of Trust and the 1940 Act, however, shareholder
meetings are required to be called for various purposes, such as electing or
removing trustees of the Trust (although trustees may be elected to fill
vacancies or be removed by the Board of Trustees without a vote of shareholders,
subject to certain restrictions in the 1940 Act), changing fundamental
investment policies, approving or disapproving an investment advisory contract,
and ratifying or rejecting a selection of different auditors. If the Trust
establishes series, any matter submitted to a vote of shareholders would be
voted by series unless otherwise required by the 1940 Act or as determined by
the Board of Trustees.
The Maryland Code and the By-laws of the Fund provide that a meeting of
shareholders shall be called upon the written request of shareholders
representing 50% of the outstanding shares of the Fund. The Declaration of Trust
provides that a meeting of shareholders shall be called upon the written request
of the holders of at least 10% of the outstanding shares of the Trust, if
shareholders of all series are required to vote in the aggregate, or of any
series, if shareholders of such series are entitled to vote by series.
The By-Laws of both the Fund and the Trust provide that a quorum for a
meeting of shareholders is met if one-third of the shares entitled to be voted
are present at the shareholder meeting. Thus, a meeting of shareholders of the
Trust could take place even if less than a majority of the shares were
represented at the meeting. Some matters under the Declaration of Trust
requiring approval by a majority or greater percentage of the shares entitled to
vote would not be affected by this provision, nor would matters that under the
1940 Act require the vote of a "majority" of the outstanding shares.
Under the Declaration of Trust, each Trustee of the Trust serves until
the next meeting of shareholders, if any, and until the election and
qualification of his successor, or until he sooner dies, resigns, declares
bankruptcy, is adjudicated to be incompetent or becomes otherwise incapacitated.
Any Trustee may also be removed for cause by a vote of shareholders of the Trust
holding not less than two-thirds of the shares then outstanding or by a vote of
two-thirds of the trustees then in office. The Maryland Code and the By-laws of
the Fund permit removal of a director by the holders of a majority of the
outstanding shares of the Fund.
The Declaration of Trust specifically authorizes the Board of Trustees
to terminate the Trust (or any series) by notice to the shareholders without
shareholder approval. The dissolution of the Fund is subject to shareholder
approval under the Maryland Code, although all shares of a series of the Fund
could be involuntarily redeemed by the Fund.
Liability of Shareholders. Under Massachusetts law, shareholders of a
Massachusetts business trust could, under certain circumstances, be held
personally liable for the obligations of the Trust. However, the Declaration of
Trust disclaims shareholder liability for acts or obligations of the Trust, and
provides that notice of such disclaimer may be given in each obligation,
contract, instrument, certificate, share, other security of the Trust or
undertaking made or issued by the Trust or the trustees. Moreover, the
Declaration of Trust provides for indemnification out of Trust property for all
claims and liabilities to which any shareholder may become subject for the
obligations of the Trust. Thus, the risk of a shareholder's incurring financial
loss on account of shareholder liability is considered by the Trust to be
remote, since it is limited to circumstances in which the disclaimer is
inoperative and the Trust itself is unable to meet its obligations. Under the
current form of organization of the Fund as a Maryland corporation, its
shareholders have no personal liability for the Fund's acts or obligations,
except that a shareholder may be liable to the extent that: (1) the purchase
price of his shares has not been received by the Fund in the amount or manner
required by Maryland law; (2) he receives a dividend or distribution made
contrary to Maryland law; (3) the consideration to him from the Fund upon
redemption of his shares was paid in violation of Maryland law or (4) the
consideration to him from the Fund upon liquidation of the Fund was paid in
violation of Maryland law.
Liability of Directors and Trustees. Under the Declaration of Trust, a
trustee is personally liable only for bad faith, willful misfeasance, gross
negligence or reckless disregard of his duties in the conduct of his office,
although a trustee may be personally liable to persons dealing with the Trust in
the absence of notice that the trustee is not personally liable. Under the
Declaration of Trust, trustees and officers will be indemnified against
liabilities and expenses incurred in connection with the defense or disposition
of any proceeding in which they are involved by reason of their position with
the Trust, except that they are not indemnified against liabilities or expenses
arising from conduct adjudicated to constitute willful misfeasance, bad faith,
gross negligence or reckless disregard of their duties. The Trust may also
advance money for these expenses, provided that the trustee or officer
undertakes to repay the Trust if his conduct is later adjudicated to preclude
indemnification and certain other conditions are met.
Maryland law provides that in addition to any other liability imposed
by law, the Directors may be liable to the Fund for: (1) voting for or assenting
to the declaration of any dividend or other distribution of assets to
shareholders contrary to Maryland law; (2) voting for or assenting in certain
circumstances to distributions of assets to shareholders during liquidation of
the Fund; and (3) voting for or assenting to a repurchase of the shares of the
Fund contrary to Maryland law. A Director is not liable, however, if he acts in
good faith, in a manner he reasonably believes to be in the best interest of the
Fund, and with the care that an ordinarily prudent person in a like position
would use under similar circumstances. In the event of any litigation against
the Directors or officers of the Fund, Maryland law and the Fund's By-Laws
permit the Fund to indemnify a Director or officer for certain expenses unless
he acted with willful misfeasance, bad faith, gross negligence or reckless
disregard for the duties involved in the conduct of his office. Maryland law and
the Fund's By-Laws permit the Fund to advance expenses to a Director or officer
if the facts then known do not preclude indemnification based on the foregoing
standard and on receipt of an undertaking similar to the undertaking that would
be required by the Trust.
Involuntary Redemption. The Declaration of Trust permits the Board of
Trustees to authorize the Trust to redeem shares in an account if at any time
the shares in the account do not have at least a minimum value set by the Board
of Trustees. The Declaration of Trust also authorizes the Trust to redeem shares
under certain other circumstances as may be specified by the Board of Trustees.
The Trust currently does not intend to redeem shares involuntarily, but reserves
the right to do so in the future.
The foregoing is only a summary of certain of the differences between
(1) the Trust, its Declaration of Trust and By-laws and Massachusetts law, and
(2) the Fund, its Articles of Incorporation and By-laws and Maryland law. It is
not a complete list of differences. Shareholders may refer to the provisions of
the Articles of Incorporation, the Fund's By-Laws and Maryland law, and the
Declaration of Trust, the Trust's By-Laws and Massachusetts law for a more
thorough comparison.
Federal Income Tax Consequences
The Reorganization is conditioned upon the receipt by the Fund and the
Trust of an opinion from Willkie Farr & Gallagher, substantially to the effect
that, based upon certain facts, assumptions and representations of the parties,
for federal income tax purposes: (i) the transfer to the Trust of all or
substantially all of the assets of the Fund in exchange solely for Trust shares
and the assumption by the Trust of all of the liabilities of the Fund, followed
by the issuance of such shares to the Fund's shareholders in exchange for their
shares of the Fund in complete liquidation of the Fund, will constitute a
"reorganization" within the meaning of Section 368(a)(1) of the Code, and the
Trust and the Fund will each be "a party to a reorganization" within the meaning
of Section 368(b) of the Code; (ii) no gain or loss will be recognized by the
Fund upon the transfer of all or substantially all of its assets to the Trust in
exchange solely for Trust shares and the assumption by the Trust of all of the
liabilities of the Fund or upon the issuance of the Trust shares to the Fund's
shareholders in exchange for their shares of the Fund; (iii) the basis of the
assets of the Fund in the hands of the Trust will be the same as the basis of
such assets of the Fund immediately prior to the transfer; (iv) the holding
period of the assets of the Fund in the hands of the Trust will include the
period during which such assets were held by the Fund; (v) no gain or loss will
be recognized by the Trust upon the receipt of the assets of the Fund in
exchange for Trust shares and the assumption by the Trust of all of the
liabilities of the Fund; (vi) no gain or loss will be recognized by the
shareholders of the Fund upon the receipt of the Trust shares solely in exchange
for their shares of the Fund as part of the transaction; (vii) the basis of the
Trust shares received by the shareholders of the Fund will be the same as the
basis of the shares of the Fund exchanged therefor; and (viii) the holding
period of Trust shares received by the shareholders of the Fund will include the
holding period during which the shares of the Fund exchanged therefor were held,
provided that at the time of the exchange the shares of the Fund were held as
capital assets in the hands of the shareholders of the Fund.
While the Fund is not aware of any adverse state or local tax
consequences of the proposed Reorganization, it has not requested any ruling or
opinion with respect to such consequences and shareholders may wish to consult
their own tax advisers with respect to such matters.
The Board of Directors of Scudder Fund, Inc. unanimously recommends that the
shareholders of the Fund vote in favor of this Proposal 2.
PROPOSAL 3: RATIFICATION OR REJECTION OF THE SELECTION OF
INDEPENDENT ACCOUNTANTS
The Board, including a majority of the Independent Directors, has
selected PricewaterhouseCoopers LLP to act as independent accountants of the
Fund for the Fund's current fiscal year. One or more representatives of
PricewaterhouseCoopers LLP are expected to be present at the Meeting and will
have an opportunity to make a statement if they so desire. Such representatives
are expected to be available to respond to appropriate questions posed by
shareholders or management.
The Board of Directors of Scudder Fund, Inc. unanimously recommends that the
shareholders of the Fund vote in favor of this Proposal 3.
ADDITIONAL INFORMATION
General
The Fund will pay the cost of preparing, printing and mailing the
enclosed proxy card and proxy statement and all other costs incurred in
connection with the solicitation of proxies, including any additional
solicitation made by letter, telephone or telegraph, except that Scudder Kemper
will bear any such expenses in excess of $________ (approximately $_______ per
share), based on December 31, 1999 net assets for each Fund). In addition to
solicitation by mail, certain officers and representatives of the Fund, officers
and employees of Scudder Kemper and certain financial services firms and their
representatives, who will receive no extra compensation for their services, may
solicit proxies by telephone, telegram or personally.
This Proxy Statement, the Notice of Special Meeting and the proxy cards
are first being mailed to shareholders on or about April 18, 2000 or as soon as
practicable thereafter. Any shareholder giving a proxy has the power to revoke
it by mail (addressed to the Secretary at the principal executive office of the
Fund, c/o Scudder Kemper Investments, Inc., at the address for the Fund shown at
the beginning of this Proxy Statement) or in person at the Meeting, by executing
a superseding proxy or by submitting a notice of revocation to the Fund. All
properly executed proxies received in time for the Meeting will be voted as
specified in the proxy or, if no specification is made, in favor of the
Proposals referred to in the Proxy Statement.
The presence at any shareholders' meeting, in person or by proxy, of
the holders of one-third of the Fund's shares entitled to be cast shall be
necessary and sufficient to constitute a quorum for the transaction of business.
In the event that the necessary quorum to transact business or the vote required
to approve any Proposal is not obtained at the Meeting, the persons named as
proxies may propose one or more adjournments of the Meeting in accordance with
applicable law to permit further solicitation of proxies with respect to the
Proposal. Any such adjournment as to a matter will require the affirmative vote
of the holders of a majority of the Fund's shares present in person or by proxy
at the Meeting. The persons named as proxies will vote in favor of any such
adjournment those proxies which they are entitled to vote in favor of that
Proposal and will vote against any such adjournment those proxies to be voted
against that Proposal. For purposes of determining the presence of a quorum for
transacting business at the Meeting, abstentions and broker "non-votes" will be
treated as shares that are present but which have not been voted. Broker
non-votes are proxies received by the Fund from brokers or nominees when the
broker or nominee has neither received instructions from the beneficial owner or
other persons entitled to vote nor has discretionary power to vote on a
particular matter. Accordingly, shareholders are urged to forward their voting
instructions promptly.
Approval of Proposal 1 requires the affirmative vote of a plurality of
the shares of the Fund voting at the Meeting. Approval of Proposal 2 requires
the affirmative vote of the holders of a majority of the Fund's shares
outstanding and entitled to vote. Approval of Proposal 3 requires the
affirmative vote of a majority of the shares of the Fund voting at the Meeting.
Abstentions and broker non-votes will not be counted in favor of, but will have
no other effect on, Proposal 1 and will have the effect of a "no" vote on
Proposals 2 and 3.
Holders of record of the shares of the Fund at the close of business on
April 17, 2000 (the "Record Date"), as to any matter on which they are entitled
to vote, will be entitled to one vote per share on all business of the Meeting.
As of [date], there were [ ], [ ], [ ] and [ ] shares of the Institutional
Class, the Managed Shares Class, the Premium Class and the Prime Reserve Class
outstanding, respectively.
As of [date], the officers and Directors of the Fund as a group owned
beneficially [less than 1%] [_____%] of each class of the Fund's Shares.
Appendix 1 sets forth the beneficial owners of at least 5% of the Fund's shares.
To the best of the Fund's knowledge, as of [date], no person owned beneficially
more than 5% of the Fund's outstanding shares, except as stated in Appendix 1.
Appendix 2 hereto sets forth the number of shares of the Fund owned
directly or beneficially by the Directors of the Fund and by the nominees for
election.
Shareholder Communications Corporation ("SCC") has been engaged to
assist in the solicitation of proxies, at an estimated cost of $8,461.34. As the
Meeting date approaches, certain shareholders of the Fund may receive a
telephone call from a representative of SCC if their votes have not yet been
received. Authorization to permit SCC to execute proxies may be obtained by
telephonic or electronically transmitted instructions from shareholders of the
Fund. Proxies that are obtained telephonically will be recorded in accordance
with the procedures set forth below. The Directors believe that these procedures
are reasonably designed to ensure that both the identity of the shareholder
casting the vote and the voting instructions of the shareholder are accurately
determined.
In all cases where a telephonic proxy is solicited, the SCC
representative is required to ask for each shareholder's full name, address,
social security or employer identification number, title (if the shareholder is
authorized to act on behalf of an entity, such as a corporation), and the number
of shares owned, and to confirm that the shareholder has received the proxy
materials in the mail. If the information solicited agrees with the information
provided to SCC, then the SCC representative has the responsibility to explain
the process, read the Proposals on the proxy card, and ask for the shareholder's
instructions on the Proposals. Although the SCC representative is permitted to
answer questions about the process, he or she is not permitted to recommend to
the shareholder how to vote, other than to read any recommendation set forth in
the proxy statement. SCC will record the shareholder's instructions on the card.
Within 72 hours, the shareholder will be sent a letter or mailgram to confirm
his or her vote and asking the shareholder to call SCC immediately if his or her
instructions are not correctly reflected in the confirmation.
If a shareholder wishes to participate in the Meeting, but does not
wish to give a proxy by telephone or electronically, the shareholder may still
submit the proxy card originally sent with the proxy statement or attend in
person. Should shareholders require additional information regarding the proxy
or replacement proxy cards, they may contact SCC toll-free at 1-800-605-1203.
Any proxy given by a shareholder is revocable until voted at the Meeting.
Shareholders may also provide their voting instructions through
telephone touch-tone voting or Internet voting. These options require
shareholders to input a control number which is located on each voting
instruction card. After inputting this number, shareholders will be prompted to
provide their voting instructions on the Proposals. Shareholders will have an
opportunity to review their voting instructions and make any necessary changes
before submitting their voting instructions and terminating their telephone call
or Internet link. Shareholders who vote on the Internet, in addition to
confirming their voting instructions prior to submission, will also receive an
e-mail confirming their instructions.
Principal Underwriter
Scudder Investor Services, Inc., Two International Place, Boston,
Massachusetts 02110, is the principal underwriter for the Fund.
Shareholder Proposals for Subsequent Meetings
Shareholders wishing to submit proposals for inclusion in a proxy
statement for a shareholder meeting subsequent to the Meeting, if any, should
send their written proposals to the Secretary of the Fund, c/o Scudder Kemper
Investments, Inc., Two International Place, Boston, MA 02110-4103, within a
reasonable time before the solicitation of proxies for such meeting. The timely
submission of a proposal does not guarantee its inclusion.
Other Matters to Come Before the Meeting
No Director is aware of any matters that will be presented for action
at the Meeting other than the matters 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 as to any such other
matters in accordance with their best judgment in the interest of the Fund.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) (OR TAKE
ADVANTAGE OF AVAILABLE ELECTRONIC OR TELEPHONIC VOTING PROCEDURES)
PROMPTLY. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
By Order of the Board,
[Kathryn L. Quirk signature]
Kathryn L. Quirk
Secretary
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of this ________ day of __________________, 2000, by and between [Scudder Fund]
(the "Acquiring Trust"), a Massachusetts business trust with its principal place
of business at ___________________, and Scudder Fund, Inc. (the "Acquired
Corporation", and, together with the Acquiring Trust, the "Funds" and each a
"Fund"), a Maryland Corporation with its principal place of business at
________________.
This Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"). The reorganization (the
"Reorganization") will consist of the transfer of all or substantially all of
the assets of the Acquired Corporation to the Acquiring Trust in exchange solely
for voting shares of beneficial interest ($__ par value per share) of the
Acquiring Trust (the "Acquiring Trust Shares"), the assumption by the Acquiring
Trust of all of the liabilities of the Acquired Corporation and the distribution
of the Acquiring Trust Shares to the shareholders of the Acquired Corporation in
complete liquidation of the Acquired Corporation as provided herein, all upon
the terms and conditions hereinafter set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED CORPORATION TO THE ACQUIRING
TRUST IN EXCHANGE FOR ACQUIRING TRUST SHARES, THE ASSUMPTION OF ALL
ACQUIRED CORPORATION LIABILITIES AND THE LIQUIDATION OF THE ACQUIRED
CORPORATION
1.1. Subject to the terms and conditions herein set forth and on the basis of
the representations and warranties contained herein, the Acquired Corporation
agrees to transfer to the Acquiring Trust all or substantially all of the
Acquired Corporation's assets as set forth in section 1.2, and the Acquiring
Trust agrees in exchange therefor (i) to deliver to the Acquired Corporation
that number of full and fractional Acquiring Trust Shares determined by dividing
the value of the Acquired Corporation's net assets, computed in the manner and
as of the time and date set forth in section 2.1, by the net asset value of one
Acquiring Trust Share, computed in the manner and as of the time and date set
forth in section 2.2; and (ii) to assume all of the liabilities of the Acquired
Corporation. Such transactions shall take place at the closing provided for in
section 3.1 (the "Closing").
1.2. The assets of the Acquired Corporation to be acquired by the Acquiring
Trust (the "Assets") shall consist of all assets, including, without limitation,
all cash, cash equivalents, securities, commodities and futures interests and
dividends or interest or other receivables that are owned by the Acquired
Corporation and any deferred or prepaid expenses shown on the unaudited
statement of assets and liabilities of the Acquired Corporation prepared as of
the effective time of the closing in accordance with generally accepted
accounting principles ("GAAP") applied consistently with those of the Acquired
Corporation's most recent audited balance sheet. The Assets shall constitute at
least 90% of the fair market value of the net assets, and at least 70% of the
fair market value of the gross assets, held by the Acquired Corporation
immediately before the Closing (excluding for these purposes assets used to pay
the dividends and other distributions paid pursuant to section 1.4).
1.3. The Acquired Corporation will endeavor to discharge all of its known
liabilities and obligations prior to the Closing Date as defined in section 3.1.
1.4. On or as soon as practicable prior to the Closing Date as defined in
section 3.1, the Acquired Corporation will declare and pay to its shareholders
of record one or more dividends and/or other distributions so that it will have
distributed substantially all of its investment company taxable income (computed
without regard to any deduction for dividends paid) and realized net capital
gain, if any, for the current taxable year through the Closing Date.
1.5. Immediately after the transfer of Assets provided for in section 1.1, the
Acquired Corporation will distribute to the Acquired Corporation's shareholders
of record (the "Acquired Corporation Shareholders"), determined as of the
Valuation Time (as defined in section 2.1), on a pro rata basis, the Acquiring
Trust Shares received by the Acquired Corporation pursuant to section 1.1 and
will completely liquidate. Such distribution and liquidation will be
accomplished by the transfer of the Acquiring Trust Shares then credited to the
account of the Acquired Corporation on the books of the Acquiring Trust to open
accounts on the share records of the Acquiring Trust in the names of the
Acquired Corporation Shareholders. The aggregate net asset value of Acquiring
Trust Shares to be so credited to Acquired Corporation Shareholders shall be
equal to the aggregate net asset value of the Acquired Corporation shares owned
by such shareholders as of the Valuation Time. All issued and outstanding shares
of the Acquired Corporation will simultaneously be cancelled on the books of the
Acquired Corporation, although share certificates representing interests in
shares of the Acquired Corporation will represent a number of Acquiring Trust
Shares after the Closing Date as determined in accordance with section 2.3. The
Acquiring Trust will not issue certificates representing Acquiring Trust Shares
in connection with such exchange.
1.6. Ownership of Acquiring Trust Shares will be shown on the books of the
Acquiring Trust. Shares of the Acquiring Trust will be issued in the manner
described in the Acquiring Trust's then-current prospectus and statement of
additional information.
1.7. Any reporting responsibility of the Acquired Corporation including, without
limitation, the responsibility for filing of regulatory reports, tax returns, or
other documents with the Securities and Exchange Commission (the "Commission"),
any state securities commission, and any federal, state or local tax authorities
or any other relevant regulatory authority, is and shall remain the
responsibility of the Acquired Corporation.
1.8. All books and records of the Acquired Corporation, including all books and
records required to be maintained under the 1940 Act and the rules and
regulations thereunder, shall be available to the Acquiring Trust from and after
the Closing Date and shall be turned over to the Acquiring Trust as soon as
practicable following the Closing Date.
2. VALUATION
2.1. The value of the Assets shall be computed as of the close of regular
trading on The New York Stock Exchange, Inc. (the "NYSE") on the business day
immediately preceding the Closing Date, as defined in Section 3.1 (such time and
date being hereinafter called the "Valuation Time") after the declaration and
payment of any dividends and/or other distributions on that date, using the
valuation procedures set forth in the Acquiring Trust's Declaration of Trust, as
amended, and then-current prospectus or statement of additional information.
2.2. The net asset value of an Acquiring Trust share shall be the net asset
value per share computed as of the Valuation Time using the valuation procedures
referred to in section 2.1.
2.3. The number of the Acquiring Trust Shares to be issued (including fractional
shares, if any) in exchange for the Assets shall be determined by dividing the
value of the Assets with respect to shares of the Acquired Corporation
determined in accordance with section 2.1 by the net asset value of an Acquiring
Trust Share determined in accordance with section 2.2.
2.4. All computations of value hereunder shall be made by or under the direction
of each Fund's respective accounting agent, if applicable, in accordance with
its regular practice and the requirements of the 1940 Act and shall be subject
to confirmation by each Fund's respective independent accountants upon the
reasonable request of the other Fund.
3. CLOSING AND CLOSING DATE
3.1. The Closing of the transactions contemplated by this Agreement shall be
_________________________, or such later date as the parties may agree in
writing (the "Closing Date"). All acts taking place at the Closing shall be
deemed to take place simultaneously as of ___:____ _.m.., Eastern time, on the
Closing Date, unless otherwise agreed to by the parties. The Closing shall be
held at the offices of Dechert Price & Rhoads, Ten Post Office Square - South,
Boston, MA 02109, or at such other place and time as the parties may agree.
3.2. The Acquired Corporation shall deliver to the Acquiring Trust on the
Closing Date a schedule of Assets.
3.3. __________________, custodian for the Acquired Corporation, shall deliver
at the Closing a certificate of an authorized officer stating that (a) the
Assets shall have been delivered in proper form to ________________, custodian
for the Acquiring Trust, prior to or on the Closing Date and (b) all necessary
taxes in connection with the delivery of the Assets, including all applicable
federal and state stock transfer stamps, if any, have been paid or provision for
payment has been made. The Acquired Corporation's portfolio securities
represented by a certificate or other written instrument shall be presented by
the custodian for the Acquired Corporation to the custodian for the Acquiring
Trust for examination no later than five business days preceding the Closing
Date and transferred and delivered by the Acquired Corporation as of the Closing
Date by the Acquired Corporation for the account of the Acquiring Trust duly
endorsed in proper form for transfer in such condition as to constitute good
delivery thereof. The Acquired Corporation's portfolio securities and
instruments deposited with a securities depository, as defined in Rule 17f-4
under the 1940 Act, shall be delivered as of the Closing Date by book entry in
accordance with the customary practices of such depositories and the custodian
for the Acquiring Trust. The cash to be transferred by the Acquired Corporation
shall be delivered by wire transfer of federal funds on the Closing Date.
3.4. __________ (the "Transfer Agent"), on behalf of the Acquired Corporation,
shall deliver at the Closing a certificate of an authorized officer stating that
its records contain the names and addresses of the Acquired Corporation
Shareholders and the number and percentage ownership (to three decimal places)
of outstanding Acquired Corporation Shares owned by each such shareholder
immediately prior to the Closing. The Acquiring Trust shall issue and deliver a
confirmation evidencing the Acquiring Trust Shares to be credited on the Closing
Date to the Acquired Corporation or provide evidence satisfactory to the
Acquired Corporation that such Acquiring Trust Shares have been credited to the
Acquired Corporation's account on the books of the Acquiring Trust. At the
Closing, each party shall deliver to the other such bills of sale, checks,
assignments, share certificates, if any, receipts or other documents as such
other party or its counsel may reasonably request to effect the transactions
contemplated by this Agreement.
3.5. In the event that immediately prior to the Valuation Time (a) the NYSE or
another primary trading market for portfolio securities of the Acquiring Trust
or the Acquired Corporation shall be closed to trading or trading thereupon
shall be restricted, or (b) trading or the reporting of trading on such Exchange
or elsewhere shall be disrupted so that, in the judgment of the Board members of
either party to this Agreement, accurate appraisal of the value of the net
assets with respect to the Acquiring Trust Shares or the Acquired Corporation
Shares is impracticable, the Closing Date shall be postponed until the first
business day after the day when trading shall have been fully resumed and
reporting shall have been restored.
4. REPRESENTATIONS AND WARRANTIES
4.1. The Acquired Corporation represents and warrants to the Acquiring Trust
as follows:
(a) The Acquired Corporation is a corporation duly organized and
validly existing under the laws of the state of Maryland with power under the
Acquired Corporation's Articles of Incorporation, as amended, to own all of its
properties and assets and to carry on its business as it is now being conducted;
(b) The Acquired Corporation is registered with the Commission as an
open-end management investment company under the Investment Company Act of 1940,
as amended (the "1940 Act"), and such registration is in full force and effect;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquired
Corporation of the transactions contemplated herein, except such as have been
obtained under the Securities Act of 1933, as amended (the "1933 Act"), the
Securities Exchange Act of 1934, as amended (the "1934 Act") and the 1940 Act
and such as may be required by state securities laws;
(d) Other than with respect to contracts entered into in connection
with the portfolio management of the Acquired Corporation which shall terminate
on or prior to the Closing Date, the Acquired Corporation is not, and the
execution, delivery and performance of this Agreement by the Acquired
Corporation will not result, in violation of Maryland or of the Acquired
Corporation's Articles of Incorporation, as amended, or By-Laws, or of any
material agreement, indenture, instrument, contract, lease or other undertaking
known to counsel to which the Acquired Corporation is a party or by which it is
bound, and the execution, delivery and performance of this Agreement by the
Acquired Corporation will not result in the acceleration of any obligation, or
the imposition of any penalty, under any agreement, indenture, instrument,
contract, lease, judgment or decree to which the Acquired Corporation is a party
or by which it is bound;
(e) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or to its knowledge threatened against the Acquired Corporation or any
properties or assets held by it. The Acquired Corporation knows of no facts
which might form the basis for the institution of such proceedings which would
materially and adversely affect its business and is not a party to or subject to
the provisions of any order, decree or judgment of any court or governmental
body which materially and adversely affects its business or its ability to
consummate the transactions herein contemplated;
(f) The Statement of Assets and Liabilities, Operations, and Changes in
Net Assets, the Supplementary Information, and the Investment Portfolio of the
Acquired Corporation at and for the fiscal year ended _____________________, has
been audited by PricewaterhouseCoopers LLP, independent certified public
accountants, and is in accordance with GAAP consistently applied, and such
statements (copies of which have been furnished to the Acquiring Trust) present
fairly, in all material respects, the financial position of the Acquired
Corporation as of such date in accordance with GAAP, and there are no known
contingent liabilities of the Acquired Corporation required to be reflected on a
balance sheet (including the notes thereto) in accordance with GAAP as of such
date not disclosed therein;
(g) Since _________________ [date of last fiscal year above], there has
not been any material adverse change in the Acquired Corporation's financial
condition, assets, liabilities or business other than changes occurring in the
ordinary course of business, or any incurrence by the Acquired Corporation of
indebtedness maturing more than one year from the date such indebtedness was
incurred except as otherwise disclosed to and accepted in writing by the
Acquiring Trust. For purposes of this subsection (g), a decline in net asset
value per share of the Acquired Corporation due to declines in market values of
securities in the Acquired Corporation's portfolio, the discharge of Acquired
Corporation liabilities, or the redemption of Acquired Corporation shares by
Acquired Corporation Shareholders shall not constitute a material adverse
change;
(h) At the date hereof and at the Closing Date, all federal and other
tax returns and reports of the Acquired Corporation required by law to have been
filed by such dates (including any extensions) shall have been filed and are or
will be correct in all material respects, and all federal and other taxes shown
as due or required to be shown as due on said returns and reports shall have
been paid or provision shall have been made for the payment thereof, and, to the
best of the Acquired Corporation's knowledge, no such return is currently under
audit and no assessment has been asserted with respect to such returns;
(i) For each taxable year of its operation (including the taxable year
ending on the Closing Date), the Acquired Corporation has met the requirements
of Subchapter M of the Code for qualification as a regulated investment company
and has elected to be treated as such, has been eligible to and has computed its
federal income tax under Section 852 of the Code, and will have distributed all
of its investment company taxable income and net capital gain (as defined in the
Code) that has accrued through the Closing Date;
(j) All issued and outstanding shares of the Acquired Corporation (i)
have been offered and sold in every state and the District of Columbia in
compliance in all material respects with applicable registration requirements of
the 1933 Act and state securities laws, (ii) are, and on the Closing Date will
be, duly and validly issued and outstanding, fully paid and non-assessable, and
(iii) will be held at the time of the Closing by the persons and in the amounts
set forth in the records of the Transfer Agent, as provided in section 3.4. The
Acquired Corporation does not have outstanding any options, warrants or other
rights to subscribe for or purchase any of the Acquired Corporation shares, nor
is there outstanding any security convertible into any of the Acquired
Corporation shares;
(k) At the Closing Date, the Acquired Corporation will have good and
marketable title to the Acquired Corporation's assets to be transferred to the
Acquiring Trust pursuant to section 1.2 and full right, power, and authority to
sell, assign, transfer and deliver such assets hereunder free of any liens or
other encumbrances, except those liens or encumbrances as to which the Acquiring
Trust has received notice at or prior to the Closing, and upon delivery and
payment for such assets, the Acquiring Trust will acquire good and marketable
title thereto, subject to no restrictions on the full transfer thereof,
including such restrictions as might arise under the 1933 Act and the 1940 Act,
except those restrictions as to which the Acquiring Trust has received notice
and necessary documentation at or prior to the Closing;
(l) The execution, delivery and performance of this Agreement will have
been duly authorized prior to the Closing Date by all necessary action on the
part of the Board members of the Acquired Corporation, and, subject to the
approval of the Acquired Corporation Shareholders, this Agreement constitutes a
valid and binding obligation of the Acquired Corporation, enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and other laws
relating to or affecting creditors' rights and to general equity principles;
(m) The information to be furnished by the Acquired Corporation for use
in applications for orders, registration statements or proxy materials or for
use in any other document filed or to be filed with any federal, state or local
regulatory authority (including the National Association of Securities Dealers,
Inc. (the "NASD")), which may be necessary in connection with the transactions
contemplated hereby, shall be accurate and complete in all material respects and
shall comply in all material respects with federal securities and other laws and
regulations applicable thereto;
(n) The current prospectus and statement of additional information of
the Acquired Corporation conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules and regulations of
the Commission thereunder and do not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not materially misleading; and
(o) The proxy statement of the Acquired Corporation to be included in
the Registration Statement referred to in section 5.7 (the "Proxy Statement"),
insofar as it relates to the Acquired Corporation, will, on the effective date
of the Registration Statement and on the Closing Date, not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which such statements are made, not materially misleading;
provided, however, that the representations and warranties in this section shall
not apply to statements in or omissions from the Proxy Statement and the
Registration Statement made in reliance upon and in conformity with information
that was furnished or should have been furnished by the Acquiring Trust for use
therein.
4.2. The Acquiring Trust represents and warrants to the Acquired Corporation
as follows:
(a) The Acquiring Trust is a business trust duly organized and validly
existing under the laws of the Commonwealth of Massachusetts with power under
the Acquiring Trust's Declaration of Trust, as amended, to own all of its
properties and assets and to carry on its business as it is now being conducted;
(b) The Acquiring Trust is registered with the Commission as an
open-end management investment company under the 1940 Act, and such registration
is in full force and effect;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquiring Trust
of the transactions contemplated herein, except such as have been obtained under
the 1933 Act, the 1934 Act and the 1940 Act and such as may be required by state
securities laws;
(d) The Acquiring Trust is not, and the execution, delivery and
performance of this Agreement by the Acquiring Trust will not result, in
violation of Massachusetts law or of the Acquiring Trust's Declaration of Trust,
as amended, or By-Laws, or of any material agreement, indenture, instrument,
contract, lease or other undertaking known to counsel to which the Acquiring
Trust is a party or by which it is bound, and the execution, delivery and
performance of this Agreement by the Acquiring Trust will not result in the
acceleration of any obligation, or the imposition of any penalty, under any
agreement, indenture, instrument, contract, lease, judgment or decree to which
the Acquiring Trust is a party or by which it is bound;
(e) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or to its knowledge threatened against the Acquiring Trust or any properties or
assets held by it. The Acquiring Trust knows of no facts which might form the
basis for the institution of such proceedings which would materially and
adversely affect its business and is not a party to or subject to the provisions
of any order, decree or judgment of any court or governmental body which
materially and adversely affects its business or its ability to consummate the
transactions herein contemplated;
(f) The Statement of Assets and Liabilities, Operations, and Changes in
Net Assets, the Supplementary Information, and the Investment Portfolio of the
Acquiring Trust at and for the fiscal year ended______________________ has been
audited by PricewaterhouseCoopers LLP, independent certified public accountants,
and is in accordance with GAAP consistently applied, and such statement (a copy
of which has been furnished to the Acquired Corporation) presents fairly, in all
material respects, the financial position of the Acquiring Trust as of such date
in accordance with GAAP, and there are no known contingent liabilities of the
Acquiring Trust required to be reflected on a balance sheet (including the notes
thereto) in accordance with GAAP as of such date not disclosed therein;
(g) The Acquiring Trust has conducted no operations except those
incident to its organization.
(h) The Acquiring Trust Shares to be issued and delivered to the
Acquired Corporation, for the account of the Acquired Corporation Shareholders,
pursuant to the terms of this Agreement, will at the Closing Date have been duly
authorized and, when so issued and delivered, will be duly and validly issued
and outstanding Acquiring Trust Shares, and will be fully paid and
non-assessable (recognizing that, under Massachusetts law, Acquiring Trust
Shareholders, under certain circumstances, could be held personally liable for
the obligations of the Acquired Corporation).
(i) At the Closing Date, the Acquiring Trust will have good and
marketable title to the Acquiring Trust's assets, free of any liens or other
encumbrances, except those liens or encumbrances as to which the Acquired
Corporation has received notice at or prior to the Closing;
(j) The execution, delivery and performance of this Agreement will have
been duly authorized prior to the Closing Date by all necessary action on the
part of the Board members of the Acquiring Trust and this Agreement will
constitute a valid and binding obligation of the Acquiring Trust enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and other laws
relating to or affecting creditors' rights and to general equity principles;
(k) The information to be furnished by the Acquiring Trust for use in
applications for orders, registration statements or proxy materials or for use
in any other document filed or to be filed with any federal, state or local
regulatory authority (including the NASD), which may be necessary in connection
with the transactions contemplated hereby, shall be accurate and complete in all
material respects and shall comply in all material respects with federal
securities and other laws and regulations applicable thereto;
(l) The Proxy Statement to be included in the Registration Statement,
only insofar as it relates to the Acquiring Trust, will, on the effective date
of the Registration Statement and on the Closing Date, not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which such statements were made, not materially misleading;
provided, however, that the representations and warranties in this section shall
not apply to statements in or omissions from the Proxy Statement and the
Registration Statement made in reliance upon and in conformity with information
that was furnished or should have been furnished by the Acquired Corporation for
use therein; and
(m) The Acquiring Trust agrees to use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act, the 1940 Act and such
of the state securities laws as may be necessary in order to continue its
operations after the Closing Date.
5. COVENANTS OF THE ACQUIRING TRUST AND THE ACQUIRED CORPORATION
5.1. The Acquiring Trust and the Acquired Corporation each covenants to operate
its business in the ordinary course between the date hereof and the Closing
Date, it being understood that, with respect to the Acquired Corporation, (a)
such ordinary course of business will include (i) the declaration and payment of
customary dividends and other distributions and (ii) such changes as are
contemplated by Acquired Corporation's normal operations; and (b) the Acquired
Corporation shall retain exclusive control of the composition of its portfolio
until the Closing Date.
5.2. Upon reasonable notice, the Acquiring Trust's officers and agents shall
have reasonable access to the Acquired Corporation's books and records necessary
to maintain current knowledge of the Acquired Corporation and to ensure that the
representations and warranties made by the Acquired Corporation are accurate.
5.3. The Acquired Corporation covenants to call a meeting of the Acquired
Corporation Shareholders entitled to vote thereon to consider and act upon this
Agreement and to take all other reasonable action necessary to obtain approval
of the transactions contemplated herein. Such meeting shall be scheduled for no
later than .
5.4. The Acquired Corporation covenants that the Acquiring Trust Shares to be
issued hereunder are not being acquired for the purpose of making any
distribution thereof other than in accordance with the terms of this Agreement.
5.5. The Acquired Corporation covenants that it will assist the Acquiring Trust
in obtaining such information as the Acquiring Trust reasonably requests
concerning the beneficial ownership of the Acquired Corporation Shares and will
provide the Acquiring Trust with a list of affiliates of the Acquired
Corporation.
5.6. Subject to the provisions of this Agreement, the Acquiring Trust and the
Acquired Corporation will each take, or cause to be taken, all actions, and do
or cause to be done, all things reasonably necessary, proper, and/or advisable
to consummate and make effective the transactions contemplated by this
Agreement.
5.7. Each Fund covenants to prepare the 1934 Act and the 1940 Act proxy
materials in connection with the meeting of the Acquired Corporation
Shareholders to consider approval of this Agreement and the transactions
contemplated herein. The Acquired Trust will file the proxy materials with the
Commission.
5.8. The Acquired Corporation covenants that it will, from time to time, as and
when reasonably requested by the Acquiring Trust, execute and deliver or cause
to be executed and delivered all such assignments and other instruments, and
will take or cause to be taken such further action as the Acquiring Trust may
reasonably deem necessary or desirable in order to vest in and confirm the
Acquiring Trust's title to and possession of all the assets and otherwise to
carry out the intent and purpose of this Agreement.
5.9. The Acquiring Trust covenants to use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act and 1940 Act, and such of
the state securities laws as it deems appropriate in order to continue its
operations after the Closing Date and to consummate the transactions
contemplated herein; provided, however, that the Acquiring Trust may take such
actions it reasonably deems advisable after the Closing Date as circumstances
change.
5.10. The Acquiring Trust covenants that it will, from time to time, as and when
reasonably requested by the Acquired Corporation, execute and deliver or cause
to be executed and delivered all such assignments, assumption agreements,
releases, and other instruments, and will take or cause to be taken such further
action, as the Acquired Corporation may reasonably deem necessary or desirable
in order to (i) vest and confirm to the Acquired Corporation title to and
possession of all Acquiring Trust shares to be transferred to Acquired
Corporation pursuant to this Agreement and (ii) assume the liabilities from the
Acquired Corporation.
5.11. As soon as reasonably practicable after the Closing, the Acquired
Corporation shall make a liquidating distribution to its shareholders consisting
of the Acquiring Trust Shares received at the Closing.
5.12. The Acquiring Trust and the Acquired Corporation shall each use its
reasonable best efforts to fulfill or obtain the fulfillment of the conditions
precedent to effect the transactions contemplated by this Agreement as promptly
as practicable.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED CORPORATION
The obligations of the Acquired Corporation to consummate the
transactions provided for herein shall be subject, at its election, to the
performance by the Acquiring Trust of all the obligations to be performed by it
hereunder on or before the Closing Date, and, in addition thereto, the following
further conditions:
6.1. All representations and warranties of the Acquired Corporation contained in
this Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as of the Closing Date, with the same force and effect as if
made on and as of the Closing Date; and there shall be (i) no pending or
threatened litigation brought by any person (other than Acquiring Trust, its
adviser or any of their affiliates) against the Acquired Corporation or its
investment adviser(s), Board members or officers arising out of this Agreement
and (ii) no facts known to the Acquired Corporation which the Acquired
Corporation reasonably believes might result in such litigation.
6.2. The Acquiring Trust shall have delivered to the Acquired Corporation on the
Closing Date a certificate executed in its name by its President or a Vice
President, in a form reasonably satisfactory to the Acquired Corporation and
dated as of the Closing Date, to the effect that the representations and
warranties of the Acquiring Trust, with respect to the Acquiring Trust, made in
this Agreement are true and correct on and as of the Closing Date, except as
they may be affected by the transactions contemplated by this Agreement, and as
to such other matters as the Acquired Corporation shall reasonably request;
6.3. The Acquired Corporation shall have received on the Closing Date an opinion
of Dechert Price & Rhoads, in a form reasonably satisfactory to the Acquired
Corporation, and dated as of the Closing Date, to the effect that:
(a) The Acquiring Trust has been duly formed and is an existing
business trust; (b) the Acquiring Trust has the power to carry on its business
as presently conducted in accordance with the description thereof in the
Acquiring Trust's registration statement under the 1940 Act; (c) the Agreement
has been duly authorized, executed and delivered by the Acquiring Trust and
constitutes a valid and legally binding obligation of the Acquiring Trust
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and laws of general
applicability relating to or affecting creditors' rights and to general equity
principles; (d) the execution and delivery of the Agreement did not, and the
exchange of the Acquired Corporation's assets for Acquiring Trust Shares
pursuant to the Agreement will not, violate the Acquiring Trust's Declaration of
Trust, as amended, or By-laws; and (e) to the knowledge of such counsel, all
regulatory consents, authorizations, approvals or filings required to be
obtained or made by the Acquiring Trust under the Federal laws of the United
States or the laws of the Commonwealth of Massachusetts for the exchange of the
Acquired Corporation's assets for Acquiring Trust Shares, pursuant to the
Agreement have been obtained or made; and
6.4. The Acquiring Trust shall have performed all of the covenants and complied
with all of the provisions required by this Agreement to be performed or
complied with by the Acquiring Trust on or before the Closing Date.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING TRUST
The obligations of the Acquiring Trust to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquired Corporation of all of the obligations to be performed by it hereunder
on or before the Closing Date and, in addition thereto, the following further
conditions:
7.1. All representations and warranties of the Acquired Corporation contained in
this Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as of the Closing Date, with the same force and effect as if
made on and as of the Closing Date; and there shall be (i) no pending or
threatened litigation brought by any person (other than Acquired Corporation,
its adviser or any of their affiliates) against the Acquiring Trust or its
investment adviser(s), Board members or officers arising out of this Agreement
and (ii) no facts known to the Acquiring Trust which the Acquiring Trust
reasonably believes might result in such litigation.
7.2. The Acquired Corporation shall have delivered to the Acquiring Trust a
statement of the Acquired Corporation's assets and liabilities as of the Closing
Date, certified by the Treasurer of the Acquired Corporation;
7.3. The Acquired Corporation shall have delivered to the Acquiring Trust on the
Closing Date a certificate executed in its name by its President or a Vice
President, in a form reasonably satisfactory to the Acquiring Trust and dated as
of the Closing Date, to the effect that the representations and warranties of
the Trust with respect to the Acquired Corporation made in this Agreement are
true and correct on and as of the Closing Date, except as they may be affected
by the transactions contemplated by this Agreement, and as to such other matters
as the Acquiring Trust shall reasonably request;
7.4. The Acquiring Trust shall have received on the Closing Date an opinion of
Dechert Price & Rhoads, in a form reasonably satisfactory to the Acquiring
Trust, and dated as of the Closing Date, to the effect that:
(a) The Acquired Corporation has been duly formed and is an existing
corporation; (b) the Acquired Corporation has the corporate power to carry on
its business as presently conducted in accordance with the description thereof
in the Acquired Corporation's registration statement under the 1940 Act; (c) the
Agreement has been duly authorized, executed and delivered by the Acquired
Corporation and constitutes a valid and legally binding obligation of the
Acquired Corporation enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and laws
of general applicability relating to or affecting creditors' rights and to
general equity principles; (d) the execution and delivery of the Agreement did
not, and the exchange of the Acquired Corporation's assets for Acquiring Trust
Shares pursuant to the Agreement will not, violate the Acquired Corporation's
Articles of Incorporation, as amended, or By-laws; and (e) to the knowledge of
such counsel, all regulatory consents, authorizations, approvals or filings
required to be obtained or made by the Acquired Corporation under the Federal
laws of the United States or the laws of the state of Maryland for the exchange
of the Acquired Corporation's assets for Acquiring Trust Shares, pursuant to the
Agreement have been obtained or made; and
7.5. The Acquired Corporation shall have performed all of the covenants and
complied with all of the provisions required by this Agreement to be performed
or complied with by the Acquired Corporation on or before the Closing Date.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING TRUST AND
THE ACQUIRED CORPORATION
If any of the conditions set forth below have not been met on or before
the Closing Date with respect to the Acquired Corporation or the Acquiring
Trust, the other party to this Agreement shall, at its option, not be required
to consummate the transactions contemplated by this Agreement:
8.1. This Agreement and the transactions contemplated herein shall have been
approved by the requisite vote of the holders of the outstanding shares of the
Acquired Corporation in accordance with the provisions of the Acquired
Corporation's Articles of Incorporation, as amended, and By-Laws, applicable
Maryland law and the 1940 Act, and certified copies of the resolutions
evidencing such approval shall have been delivered to the Acquiring Trust.
Notwithstanding anything herein to the contrary, neither the Acquiring Trust nor
the Acquired Corporation may waive the conditions set forth in this section 8.1;
8.2. On the Closing Date, no action, suit or other proceeding shall be pending
or to its knowledge threatened before any court or governmental agency in which
it is sought to restrain or prohibit, or obtain material damages or other relief
in connection with, this Agreement or the transactions contemplated herein;
8.3. All consents of other parties and all other consents, orders and permits of
Federal, state and local regulatory authorities deemed necessary by the
Acquiring Trust or the Acquired Corporation to permit consummation, in all
material respects, of the transactions contemplated hereby shall have been
obtained, except where failure to obtain any such consent, order or permit would
not involve a risk of a material adverse effect on the assets or properties of
the Acquiring Trust or the Acquired Corporation, provided that either party
hereto may for itself waive any of such conditions;
8.4. The parties shall have received an opinion of Willkie Farr & Gallagher
addressed to each of the Acquiring Trust and the Acquired Corporation, in a form
reasonably satisfactory to each such party to this Agreement, substantially to
the effect that, based upon certain facts, assumptions and representations of
the parties, for federal income tax purposes: (i) the transfer to the Acquiring
Trust of all or substantially all of the assets of the Acquired Corporation in
exchange solely for Acquiring Trust shares and the assumption by the Acquiring
Trust of all of the liabilities of the Acquired Corporation, followed by the
distribution of such shares to the Acquired Corporation's shareholders in
exchange for their shares of the Acquired Corporation in complete liquidation of
the Acquired Corporation, will constitute a "reorganization" within the meaning
of Section 368(a)(1) of the Code, and the Acquiring Trust and the Acquired
Corporation will each be "a party to a reorganization" within the meaning of
Section 368(b) of the Code; (ii) no gain or loss will be recognized by the
Acquired Corporation upon the transfer of all or substantially all of its assets
to the Acquiring Trust in exchange solely for Acquiring Trust shares and the
assumption by the Acquiring Trust of all of the liabilities of the Acquired
Corporation; (iii) the basis of the assets of the Acquired Corporation in the
hands of the Acquiring Trust will be the same as the basis of such assets of the
Acquired Corporation immediately prior to the transfer; (iv) the holding period
of the assets of the Acquired Corporation in the hands of the Acquiring Trust
will include the period during which such assets were held by the Acquired
Corporation; (v) no gain or loss will be recognized by the Acquiring Trust upon
the receipt of the assets of the Acquired Corporation in exchange for Acquiring
Trust shares and the assumption by the Acquiring Trust of all of the liabilities
of the Acquired Corporation; (vi) no gain or loss will be recognized by the
shareholders of the Acquired Corporation upon the receipt of the Acquiring Trust
shares solely in exchange for their shares of the Acquired Corporation as part
of the transaction; (vii) the basis of the Acquiring Trust shares received by
the shareholders of the Acquired Corporation will be the same as the basis of
the shares of the Acquired Corporation exchanged therefor; and (viii) the
holding period of Acquiring Trust shares received by the shareholders of the
Acquired Corporation will include the holding period during which the shares of
the Acquired Corporation exchanged therefor were held, provided that at the time
of the exchange the shares of the Acquired Corporation were held as capital
assets in the hands of the shareholders of the Acquired Corporation. The
delivery of such opinion is conditioned upon receipt by Willkie Farr & Gallagher
of representations it shall request of each of the Acquiring Trust and Acquired
Corporation. Notwithstanding anything herein to the contrary, neither the
Acquiring Trust nor the Acquired Corporation may waive the condition set forth
in this section 8.5.
9. INDEMNIFICATION
9.1. The Acquiring Trust agrees to indemnify and hold harmless the Acquired
Corporation and each of the Acquired Corporation's Board members and officers
from and against any and all losses, claims, damages, liabilities or expenses
(including, without limitation, the payment of reasonable legal fees and
reasonable costs of investigation) to which jointly and severally, the Acquired
Corporation or any of its Board members or officers may become subject, insofar
as any such loss, claim damage liability or expense (or actions with respect
thereto) arises out of or is based on any breach by the Acquiring Trust of any
of its representations, warranties, covenants or agreements set forth in this
Agreement.
9.2. The Acquired Corporation agrees to indemnify and hold harmless the
Acquiring Trust and each of the Acquiring Trust's Board members and officers
from and against any and all losses, claims, damages, liabilities or expenses
(including, without limitation, the payment of reasonable legal fees and
reasonable costs of investigation) to which jointly and severally, the Acquiring
Trust or any of its Board members or officers may become subject, insofar as any
such loss, claim damage liability or expense (or actions with respect thereto)
arises out of or is based on any breach by the Acquired Corporation of any of
its representations, warranties, covenants or agreements set forth in this
Agreement.
10. FEES AND EXPENSES
10.1. Each of the Acquiring Trust and the Acquired Corporation represents and
warrants to the other that it has no obligations to pay any brokers or finders
fees in connection with the transactions provided for herein.
10.2. [Each Fund will pay its own allocable share of expenses associated with
the Reorganization, except that Scudder Kemper Investments, Inc. ("Scudder
Kemper") will bear any such expenses in excess of $_____ for the Acquiring Trust
and $_____ for the Acquired Corporation (approximately $_____ and $_____ per
share, respectively, based on current net assets for each Fund).] [Any such
expenses which are so borne by Scudder Kemper will be solely and directly
related to the Reorganization within the meaning of Revenue Ruling 73-54, 1973-1
C.B. 187.] [Scudder Kemper should either sign this Agreement for purposes of
10.2 only or enter into a separate contract with each Fund regarding the
allocation expenses of the Reorganization.] The Acquired Corporation
shareholders will pay their own expenses, if any, incurred in connection with
the Reorganization.
11. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
11.1. The Acquiring Trust and the Acquired Corporation agree that neither party
has made any representation, warranty or covenant not set forth herein and that
this Agreement constitutes the entire agreement between the parties.
11.2. Except as specified in the next sentence set forth in this section 11.2,
the representations, warranties and covenants contained in this Agreement or in
any document delivered pursuant hereto or in connection herewith shall not
survive the consummation of the transactions contemplated hereunder. The
covenants to be performed after the Closing and the obligations of each of the
Acquired Corporation and Acquired Corporation in Sections 9.1 and 9.2 shall
survive the Closing.
12. TERMINATION
This Agreement may be terminated and the transactions contemplated
hereby may be abandoned by either party by (i) mutual agreement of the parties,
or (ii) by either party if the Closing shall not have occurred on or before ,
unless such date is extended by mutual agreement of the parties, or (iii) by
either party if the other party shall have materially breached its obligations
under this Agreement or made a material and intentional misrepresentation herein
or in connection herewith. In the event of any such termination, this Agreement
shall become void and there shall be no liability hereunder on the part of any
party or their respective Board members or officers, except for any such
material breach or intentional misrepresentation, as to each of which all
remedies at law or in equity of the party adversely affected shall survive.
13. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner
as may be mutually agreed upon in writing by any authorized officer of the
Acquired Corporation and any authorized officer of the Acquiring Trust;
provided, however, that following the meeting of the Acquired Corporation
Shareholders called by the Acquired Corporation pursuant to section 5.2 of this
Agreement, no such amendment may have the effect of changing the provisions for
determining the number of the Acquiring Trust Shares to be issued to the
Acquired Corporation shareholders under this Agreement to the detriment of such
shareholders without their further approval.
14. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be deemed duly given
if delivered by hand (including by Federal Express or similar express courier)
or transmitted by facsimile or three days after being mailed by prepaid
registered or certified mail, return receipt requested, addressed to the
Acquired Corporation, ______________[address], with a copy to Dechert Price &
Rhoads, Ten Post Office Square South, Boston, MA 02109-4603, Attention: Sheldon
A. Jones, Esq., or to the Acquiring Trust, ___________________[address], with a
copy to Dechert Price & Rhoads, Ten Post Office Square South, Boston, MA
02109-4603, Attention: Sheldon A. Jones, Esq., or to any other address that the
Acquired Corporation or the Acquiring Trust shall have last designated by notice
to the other party.
15. HEADINGS; COUNTERPARTS; ASSIGNMENT; LIMITATION OF LIABILITY
15.1. The Article and section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
15.2. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
15.3. This Agreement shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns, but no assignment or transfer
hereof or of any rights or obligations hereunder shall be made by any party
without the written consent of the other party. Nothing herein expressed or
implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and the shareholders of the
Acquiring Trust and the Acquired Corporation and their respective successors and
assigns, any rights or remedies under or by reason of this Agreement.
15.4. The Acquiring Trust is organized as a Massachusetts business trust, and
references in this Agreement to the Acquiring Trust mean and refer to the Board
members from time to time serving under its Declaration of Trust on file with
the Secretary of State of the Commonwealth of Massachusetts, as the same may be
amended from time to time, pursuant to which the Acquiring Trust conducts its
business. It is expressly agreed that the obligations of the Acquiring Trust
hereunder shall not be binding upon any of the Board members, shareholders,
nominees, officers, agents, or employees of the Acquiring Trust, personally, but
bind only the respective property of the Acquiring Trust, as provided in the
Acquiring Trust's Declaration of Trust. The execution and the delivery of this
Agreement have been authorized by the Acquiring Trust's Board members, on behalf
of the Acquiring Trust and this Agreement has been signed by authorized officers
of the Acquiring Trust acting as such, and neither such authorization by such
Board members, nor such execution and delivery by such officers, shall be deemed
to have been made by any of them individually or to impose any liability on any
of them personally, but shall bind only the property of the Acquiring Trust, as
provided in the Acquiring Trust's Declaration of Trust.
15.5. This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Massachusetts, without regard to its
principles of conflicts of laws.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its President or Vice President and its seal to be
affixed thereto and attested by its Secretary or Assistant Secretary.
Attest: Scudder Fund, Inc.
_________________________
Secretary
______________________________
By:___________________________
Its:____________________________
Attest: [Scudder Fund]
_________________________
Secretary
______________________________
By:___________________________
Its:____________________________
<PAGE>
APPENDIX 1
Beneficial Ownership of Fund Shares
<PAGE>
APPENDIX 2
Fund Shares Owned by Nominees and Directors
Many of the Nominees and Directors own shares of the series of the Fund
and of other funds in the Scudder Family of Funds and AARP Funds, allocating
their investments among such funds based on their individual investment needs.
The following table sets forth, for each Nominee and Director, the number of
shares owned in each series of the Fund as of January 31, 2000. The information
as to beneficial ownership is based on statements furnished to the Fund by each
Nominee and Director. Unless otherwise noted, beneficial ownership is based on
sole voting and investment power. [Each Nominee's and Director's individual
shareholdings of any series of the Fund constitute less than 1% of the shares
outstanding of such fund.] [As a group, the Directors and officers own less than
1% of the shares of any series of the Fund.]
- ---------------------------- ----------------- ---------------- ----------------
Scudder Money Scudder Scudder Tax
Market Series Government Free Money
Money Market Market Series
Series
- ---------------------------- ----------------- ---------------- ----------------
- ---------------------------- ----------------- ---------------- ----------------
Henry P. Becton, Jr.(1)
- ---------------------------- ----------------- ---------------- ----------------
- ---------------------------- ----------------- ---------------- ----------------
Rosita P. Chang(2)
- ---------------------------- ----------------- ---------------- ----------------
- ---------------------------- ----------------- ---------------- ----------------
Linda C. Coughlin(3)
- ---------------------------- ----------------- ---------------- ----------------
- ---------------------------- ----------------- ---------------- ----------------
Dawn-Marie Driscoll(4)
- ---------------------------- ----------------- ---------------- ----------------
- ---------------------------- ----------------- ---------------- ----------------
Edgar R. Fiedler(5)
- ---------------------------- ----------------- ---------------- ----------------
- ---------------------------- ----------------- ---------------- ----------------
Keith R. Fox(6)
- ---------------------------- ----------------- ---------------- ----------------
- ---------------------------- ----------------- ---------------- ----------------
Peter B. Freeman(7)
- ---------------------------- ----------------- ---------------- ----------------
- ---------------------------- ----------------- ---------------- ----------------
J. D. Hammond(8)
- ---------------------------- ----------------- ---------------- ----------------
- ---------------------------- ----------------- ---------------- ----------------
Richard M. Hunt(9)
- ---------------------------- ----------------- ---------------- ----------------
- ---------------------------- ----------------- ---------------- ----------------
Kathryn L. Quirk(10)
- ---------------------------- ----------------- ---------------- ----------------
- ---------------------------- ----------------- ---------------- ----------------
Joan Edelman Spero(11)
- ---------------------------- ----------------- ---------------- ----------------
- ---------------------------- ----------------- ---------------- ----------------
Jean Gleason Stromberg(12)
- ---------------------------- ----------------- ---------------- ----------------
- ---------------------------- ----------------- ---------------- ----------------
Jean C. Tempel(13)
- ---------------------------- ----------------- ---------------- ----------------
- ---------------------------- ----------------- ---------------- ----------------
Steven Zaleznick(14)
- ---------------------------- ----------------- ---------------- ----------------
- ---------------------------- ----------------- ---------------- ----------------
[All Directors and
Officers as a Group]
- ---------------------------- ----------------- ---------------- ----------------
1 As of January 31, 2000, Mr. Becton's total aggregate holdings in each
series of the Fund listed above and all other funds in the Scudder Family
of Funds and AARP Funds ranged between $___________ and $___________.
2 As of January 31, 2000, Dr. Chang's total aggregate holdings in each series
of the Fund listed above and all other funds in the Scudder Family of Funds
and AARP Funds ranged between $___________ and $___________.
3 As of January 31, 2000, Ms. Coughlin's total aggregate holdings in each
series of the Fund listed above and all other funds in the Scudder Family
of Funds and AARP Funds ranged between $___________ and $___________.
4 As of January 31, 2000, Ms. Driscoll's total aggregate holdings in each
series of the Fund listed above and all other funds in the Scudder Family
of Funds and AARP Funds ranged between $___________ and $___________.
5 As of January 31, 2000, Mr. Fiedler's total aggregate holdings in each
series of the Fund listed above and all other funds in the Scudder Family
of Funds and AARP Funds ranged between $___________ and $___________.
6 As of January 31, 2000, Mr. Fox's total aggregate holdings in each series
of the Fund listed above and all other funds in the Scudder Family of Funds
and AARP Funds ranged between $___________ and $___________.
7 As of January 31, 2000, Mr. Freeman's total aggregate holdings in each
series of the Fund listed above and all other funds in the Scudder Family
of Funds and AARP Funds ranged between $___________ and $___________.
8 As of January 31, 2000, Dr. Hammond's total aggregate holdings in each
series of the Fund listed above and all other funds in the Scudder Family
of Funds and AARP Funds ranged between $___________ and $___________.
9 As of January 31, 2000, Mr. Hunt's total aggregate holdings in each series
of the Fund listed above and all other funds in the Scudder Family of Funds
and AARP Funds ranged between $___________ and $___________.
10 As of January 31, 2000, Ms. Quirk's total aggregate holdings in each series
of the Fund listed above and all other funds in the Scudder Family of Funds
and AARP Funds ranged between $___________ and $___________.
11 As of January 31, 2000, Ms. Spero's total aggregate holdings in each series
of the Fund listed above and all other funds in the Scudder Family of Funds
and AARP Funds ranged between $___________ and $___________.
12 As of January 31, 2000, Ms. Stromberg's total aggregate holdings in each
series of the Fund listed above and all other funds in the Scudder Family
of Funds and AARP Funds ranged between $___________ and $___________.
13 As of January 31, 2000, Ms. Tempel's total aggregate holdings in each
series of the Fund listed above and all other funds in the Scudder Family
of Funds and AARP Funds ranged between $___________ and $___________.
14 As of January 31, 2000, Mr. Zaleznick's total aggregate holdings in each
series of the Fund listed above and all other funds in the Scudder Family
of Funds and AARP Funds ranged between $___________ and $___________.
<PAGE>
FORM OF PROXY
[Logo] YOUR VOTE IS IMPORTANT!
[Address]
VOTE TODAY BY MAIL,
TOUCH-TONE PHONE OR THE INTERNET
CALL TOLL FREE 1-XXX-XXX-XXXX OR
LOG ON TO WWW.PROXYWEB.COM/XXXXX
*** CONTROL NUMBER: xxx xxx xxx xxx xx *** Please fold and detach card at
perforation before mailing.
SCUDDER FUND, INC.
Two International Place
Boston, Massachusetts 02110-4603
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
3:00 p.m., Eastern Time, on July 13, 2000
The undersigned hereby appoints __________, ____________ and
____________, and each of them, the proxies of the undersigned, with the power
of substitution to each of them, to vote all shares of Scudder Fund, Inc. (the
"Fund") which the undersigned is entitled to vote at the Special Meeting of
Shareholders of the Fund to be held at the offices of Scudder Kemper
Investments, Inc., Two International Place, Boston, Massachusetts 02110-4603, on
July 13, 2000 at 3:00 p.m., Eastern time, and at any adjournments thereof.
PLEASE SIGN AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE. NO POSTAGE IS
REQUIRED.
Dated ____________________________,2000
Please sign exactly as your name or
names appear. When signing as an
attorney, executor, administrator,
trustee or guardian, please give your
full title as such.
---------------------------------------
[Name]
[Address]
---------------------------------------
Signature(s) of Shareholder(s)
<PAGE>
[Logo] YOUR VOTE IS IMPORTANT!
[Address]
VOTE TODAY BY MAIL,
TOUCH-TONE PHONE OR THE INTERNET
CALL TOLL FREE 1-xxx-xxx-xxxx OR
LOG ON TO WWW.PROXYWEB.COM/xxxxx
Please fold and detach card at perforation before mailing.
All properly executed proxies will be voted as directed. If no
instructions are indicated on a properly executed proxy, the proxy will be voted
FOR approval of the proposals.
THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF SCUDDER FUND, INC.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSALS. ---
Please vote by filling in the boxes below.
FOR all WITHHOLD ABSTAIN
nominees authority
listed to vote
(except as for all
noted in nominees
space listed
provided)
PROPOSAL 1
To elect Directors to the
Board of Directors of the
Fund, to hold office until _________ __________ __________
their respective successors
have been duly elected and
qualified or until their
earlier resignation or
removal.
NOMINEES:
(01) Henry P. Becton, Jr.,
(02) Linda C. Coughlin, (03)
Dawn-Marie Driscoll, (04)
Edgar R. Fiedler, (05) Keith
R. Fox, (06) Joan Edelman
Spero, (07) Jean Gleason
Stromberg, (08) Jean C.
Tempel, (09) Steven Zaleznick.
INSTRUCTION: To withhold
authority to vote for any
individual nominee, write the
name(s) on the line
immediately below.
- ----------------------------------------------------
PROPOSAL 2 FOR AGAINST ABSTAIN
To approve an Agreement and
Plan of Reorganization for the
Fund whereby the Fund will _________ __________ __________
reorganize from a Maryland
corporation into a
Massachusetts business trust.
PROPOSAL 3 FOR AGAINST ABSTAIN
To ratify the selection of
PricewaterhouseCoopers LLP as
the Fund's independent _________ __________ __________
accountants for the current
fiscal year.
The proxies are authorized to
vote in their discretion on
any other business which may
properly come before the
meeting and any adjournments
thereof.
PLEASE SIGN ON REVERSE SIDE
