SCUDDER VARIABLE LIFE INVESTMENT FUND
Growth and Income Portfolio
Bond Portfolio
Supplement to Statement of Additional Information
Dated May 1, 1996
The following sentence is inserted before the second sentence of the sixth full
paragraph on page 2 and before the third sentence of the fourth full paragraph
on page 5:
The Portfolio may purchase securities of real estate investment trusts
("REITs") and certain mortgage-backed securities.
The following paragraph is inserted before "Mortgage-Backed Securities and
Mortgage Pass-Through Securities" on page 16:
Real Estate Investment Trusts. The Growth and Income Portfolio and the Bond
Portfolio may invest in REITs. REITs are sometimes informally characterized
as equity REITs, mortgage REITs and hybrid REITs. Investment in REITs may
subject a Portfolio to risks associated with the direct ownership of real
estate, such as decreases in real estate values, overbuilding, increased
competition and other risks related to local or general economic
conditions, increases in operating costs and property taxes, changes in
zoning laws, casualty or condemnation losses, possible environmental
liabilities, regulatory limitations on rent and fluctuations in rental
income. Equity REITs generally experience these risks directly through fee
or leasehold interests, whereas mortgage REITs generally experience these
risks indirectly through mortgage interests, unless the mortgage REIT
forecloses on the underlying real estate. Changes in interest rates may
also affect the value of a Portfolio's investment in REITs. For instance,
during periods of declining interest rates, certain mortgage REITs may hold
mortgages that the mortgagors elect to prepay, which prepayment may
diminish the yield on securities issued by those REITs.
Certain REITs have relatively small market capitalization, which may
tend to increase the volatility of the market price of their securities.
Furthermore, REITs are dependent upon specialized management skills, have
limited diversification and are, therefore, subject to risks inherent in
operating and financing a limited number of projects. REITs are also
subject to heavy cash flow dependency, defaults by borrowers and the
possibility of failing to qualify for tax-free pass-through of income under
the Internal Revenue Code of 1986, as amended and to maintain exemption
from the registration requirements of the 1940 Act. By investing in REITs
indirectly through a Portfolio, a shareholder will bear not only his or her
proportionate share of the expenses of the Portfolio, but also, indirectly,
similar expenses of the REITs. In addition, REITs depend generally on their
ability to generate cash flow to make distributions to shareholders.
The following sentence is submitted for the first sentence of the last paragraph
on page 16:
The Growth and Income Portfolio, the Bond Portfolio and the Balanced
Portfolio may also invest in mortgage-backed securities, which are
interests in pools of mortgage loans, including mortgage loans made by
savings and loan institutions, mortgage bankers, commercial banks and
others.
March 31, 1997
