Scudder Variable Life Investment Fund
Supplement to Statement of Additional Information dated May 1, 1996
The following paragraph is inserted after the sixth full paragraph of
"Investment Objective and Policies" on page 3 of the Statement of Additional
Information:
The Balanced Portfolio may invest in special purpose trust securities
("Trust Preferred Securities").
The following paragraph is inserted under "Policies and Techniques Applicable to
the Portfolios" before the paragraph titled "Zero Coupon Securities" on page 16
of the Statement of Additional Information:
Trust Preferred Securities. The Bond Portfolio and Balanced Portfolio
may each invest in Trust Preferred Securities, which are hybrid
instruments issued by a special purpose trust (the "Special Trust"),
the entire equity interest of which is owned by a single issuer. The
proceeds of the issuance to the Portfolios of Trust Preferred
Securities are typically used to purchase a junior subordinated
debenture, and distributions from the Special Trust are funded by the
payments of principal and interest on the subordinated debenture.
If payments on the underlying junior subordinated debentures held
by the Special Trust are deferred by the debenture issuer, the
debentures would be treated as original issue discount ("OID")
obligations for the remainder of their term. As a result, holders of
Trust Preferred Securities, such as the Portfolios, would be required
to accrue daily for Federal income tax purposes, their share of the
stated interest and the de minimis OID on the debentures (regardless
of whether a Portfolio receives any cash distributions from the
Special Trust), and the value of Trust Preferred Securities would
likely be negatively affected. Interest payments on the underlying
junior subordinated debentures typically may only be deferred if
dividends are suspended on both common and preferred stock of the
issuer. The underlying junior subordinated debentures generally rank
slightly higher in terms of payment priority than both common and
preferred securities of the issuer, but rank below other subordinated
debentures and debt securities. Trust Preferred Securities may be
subject to mandatory prepayment under certain circumstances. The
market values of Trust Preferred Securities may be more volatile than
those of conventional debt securities. Trust Preferred Securities may
be issued in reliance on Rule 144A under the Securities Act of 1933,
as amended, and, unless and until registered, are restricted
securities; there can be no assurance as to the liquidity of Trust
Preferred Securities and the ability of holders of Trust Preferred
Securities, such as the Portfolios, to sell their holdings.
February 10, 1997
